1 CHURCHILL V REFFERTY, 32 PHIL 580 (1915)
remedial actions which prevail between citizen and citizen. The
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.
Attorney-General Avanceña for appellant.
Aitken and DeSelms for appellees.
TRENT, J.:
The judgment appealed from in this case perpetually restrains
and prohibits the defendant and his deputies from collecting and
enforcing against the plaintiffs and their property the annual tax
mentioned and described in subsection (b) of section 100 of Act
No. 2339, effective July 1, 1914, and from destroying or
removing any sign, signboard, or billboard, the property of the
plaintiffs, for the sole reason that such sign, signboard, or
billboard is, or may be, offensive to the sight; and decrees the
cancellation of the bond given by the plaintiffs to secure the
issuance of the preliminary injunction granted soon after the
commencement of this action.
This case divides itself into two parts and gives rise to two main
questions; (1) that relating to the power of the court to restrain
by injunction the collection of the tax complained of, and (2) that remedy at law. This is the settled law in the United States, even
relating to the validity of those provisions of subsection (b) of
section 100 of Act No. 2339, conferring power upon the Collector 140. (Hannewinkle vs. Mayor, etc., of Georgetown, 82 U.S., 547;
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 first question is one of the jurisdiction and is of vital
importance to the Government. The sections of Act No. 2339,
which bear directly upon the subject, are 139 and 140. The first
expressly forbids the use of an injunction to stay the collection of
any internal revenue tax; the second provides a remedy for any
wrong in connection with such taxes, and this remedy was
intended to be exclusive, thereby precluding the remedy by
injunction, which remedy is claimed to be constitutional. The
two sections, then, involve the right of a dissatisfied taxpayers to
use an exceptional remedy to test the validity of any tax or to
determine any other question connected therewith, and the
question whether the remedy by injunction is exceptional.
Preventive remedies of the courts are extraordinary and are not
the usual remedies. The origin and history of the writ of
injunction show that it has always been regarded as an
extraordinary, preventive remedy, as distinguished from the
common course of the law to redress evils after they have been
consummated. No injunction issues as of course, but is granted
only upon the oath of a party and when there is no adequate
remedy at law. The Government does, by section 139 and 140,
take away the preventive remedy of injunction, if it ever existed,
and leaves the taxpayer, in a contest with it, the same ordinary
Attorney-General, on behalf of the defendant, contends that
there is no provisions of the paramount law which prohibits such
a course. While, on the other hand, counsel for plaintiffs urge
that the two sections are unconstitutional because (a) they
attempt to deprive aggrieved taxpayers of all substantial remedy
for the protection of their property, thereby, in effect, depriving
them of their property without due process of law, and (b) they
attempt to diminish the jurisdiction of the courts, as conferred
upon them by Acts Nos. 136 and 190, which jurisdiction was
ratified and confirmed by the Act of Congress of July 1, 1902.
In the first place, it has been suggested that section 139 does not
apply to the tax in question because the section, in speaking of a
"tax," means only legal taxes; and that an illegal tax (the one
complained of) is not a tax, and, therefore, does not fall within
the inhibition of the section, and may be restrained by
injunction. There is no force in this suggestion. The inhibition
applies to all internal revenue taxes imposes, or authorized to be
imposed, by Act No. 2339. (Snyder vs. Marks, 109 U.S., 189.)
And, furthermore, the mere fact that a tax is illegal, or that the
law, by virtue of which it is imposed, is unconstitutional, does
not authorize a court of equity to restrain its collection by
injunction. There must be a further showing that there are
special circumstances which bring the case under some well
recognized head of equity jurisprudence, such as that irreparable
injury, multiplicity of suits, or a cloud upon title to real estate will
result, and also that there is, as we have indicated, no adequate
in the absence of statutory enactments such as sections 139 and
Indiana Mfg. Co. vs. Koehne, 188 U.S., 681; Ohio Tax cases, 232
U. S., 576, 587; Pittsburgh C. C. & St. L. R. Co. vs. Board of Public
Works, 172 U. S., 32; Shelton vs. Plat, 139 U.S., 591; State
Railroad Tax Cases, 92 U. S., 575.) Therefore, this branch of the
case must be controlled by sections 139 and 140, unless the
same be held unconstitutional, and consequently, null and void.
The right and power of judicial tribunals to declare
whether enactments of the legislature exceed the
constitutional limitations and are invalid has always
been considered a grave responsibility, as well as a
solemn duty. The courts invariably give the most careful
consideration to questions involving the interpretation
and application of the Constitution, and approach
constitutional questions with great deliberation,
exercising their power in this respect with the greatest
possible caution and even reluctance; and they should
never declare a statute void, unless its invalidity is, in
their judgment, beyond reasonable doubt. To justify a
court in pronouncing a legislative act unconstitutional,
or a provision of a state constitution to be in
contravention of the Constitution of the United States,
the case must be so clear to be free from doubt, and the
conflict of the statute with the constitution must be
irreconcilable, because it is but a decent respect to the
wisdom, the integrity, and the patriotism of the
 legislative body by which any law is passed to presume
in favor of its validity until the contrary is shown beyond
reasonable doubt. Therefore, in no doubtful case will
the judiciary pronounce a legislative act to be contrary
to the constitution. To doubt the constitutionality of a
law is to resolve the doubt in favor of its validity. (6
Ruling Case Law, secs. 71, 72, and 73, and cases cited
therein.)
It is also the settled law in the United States that "due process of
law" does not always require, in respect to the Government, the
same process that is required between citizens, though it
generally implies and includes regular allegations, opportunity to
answer, and a trial according to some well settled course of
judicial proceedings. The case with which we are dealing is in
point. A citizen's property, both real and personal, may be taken,
and usually is taken, by the government in payment of its taxes
without any judicial proceedings whatever. In this country, as
well as in the United States, the officer charged with the
collection of taxes is authorized to seize and sell the property of
delinquent taxpayers without applying to the courts for
assistance, and the constitutionality of the law authorizing this
procedure never has been seriously questioned. (City of
Philadelphia vs. [Diehl] The Collector, 5 Wall., 720;
Nicholl vs. U.S., 7 Wall., 122, and cases cited.) This must
necessarily be the course, because it is upon taxation that the
Government chiefly relies to obtain the means to carry on its
operations, and it is of the utmost importance that the modes
adopted to enforce the collection of the taxes levied should be
summary and interfered with as little as possible. No
government could exist if every litigious man were permitted to
delay the collection of its taxes. This principle of public policy
must be constantly borne in mind in determining cases such as
the one under consideration.
With these principles to guide us, we will proceed to inquire
whether there is any merit in the two propositions insisted upon
by counsel for the plaintiffs. Section 5 of the Philippine Bill
provides: "That no law shall be enacted in said Islands which
shall deprive any person of life, liberty, or property without due
process of law, or deny to any person therein the equal
protection of the law."
The origin and history of these provisions are well-known. They
are found in substance in the Constitution of the United States
and in that of ever state in the Union.
Section 3224 of the Revised Statutes of the United States,
effective since 1867, provides that: "No suit for the purpose of
restraining the assessment or collection of any tax shall be
maintained in any court."
Section 139, with which we have been dealing, reads: "No court
shall have authority to grant an injunction to restrain the
collection of any internal-revenue tax."
A comparison of these two sections show that they are
essentially the same. Both expressly prohibit the restraining of
taxes by injunction. If the Supreme Court of the United States
has clearly and definitely held that the provisions of section 3224
do not violate the "due process of law" and "equal protection of
the law" clauses in the Constitution, we would be going too far
to hold that section 139 violates those same provisions in the
Philippine Bill. That the Supreme Court of the United States has
so held, cannot be doubted.
In Cheatham vs. United States (92 U.S., 85,89) which involved the
validity of an income tax levied by an act of Congress prior to the
one in issue in the case of Pollock vs. Farmers' Loan & Trust Co.
(157 U.S., 429) the court, through Mr. Justice Miller, said: "If
there existed in the courts, state or National, any general power
of impeding or controlling the collection of taxes, or relieving the
hardship incident to taxation, the very existence of the
government might be placed in the power of a hostile judiciary.
(Dows vs. The City of Chicago, 11 Wall., 108.) While a free course
of remonstrance and appeal is allowed within the departments
before the money is finally exacted, the General Government has
wisely made the payment of the tax claimed, whether of
customs or of internal revenue, a condition precedent to a resort
to the courts by the party against whom the tax is assessed. In
the internal revenue branch it has further prescribed that no
such suit shall be brought until the remedy by appeal has been
tried; and, if brought after this, it must be within six months after
the decision on the appeal. We regard this as a condition on
which alone the government consents to litigate the lawfulness
of the original tax. It is not a hard condition. Few governments
have conceded such a right on any condition. If the compliance
with this condition requires the party aggrieved to pay the
money, he must do it."
Again, in State Railroad Tax Cases (92 U.S., 575, 613), the court
said: "That there might be no misunderstanding of the
universality of this principle, it was expressly enacted, in 1867,
that "no suit for the purpose of restraining the assessment or
collection of any tax shall be maintained in any court." (Rev,
Stat., sec. 3224.) And though this was intended to apply alone to
taxes levied by the United States, it shows the sense of Congress
of the evils to be feared if courts of justice could, in any case,
interfere with the process of collecting taxes on which the
government depends for its continued existence. It is a wise
policy. It is founded in the simple philosophy derived from the
experience of ages, that the payment of taxes has to be enforced
by summary and stringent means against a reluctant and often
adverse sentiment; and to do this successfully, other
instrumentalities and other modes of procedure are necessary,
than those which belong to courts of justice."
And again, in Snyder vs. Marks (109 U.S., 189), the court said:
"The remedy of a suit to recover back the tax after it is paid is
provided by statute, and a suit to restrain its collection is
forbidden. The remedy so given is exclusive, and no other
remedy can be substituted for it. Such has been the current of
decisions in the Circuit Courts of the United States, and we are
satisfied it is a correct view of the law."itc-a1f
In the consideration of the plaintiffs' second proposition, we will
attempt to show (1) that the Philippine courts never have had,
since the American occupation, the power to restrain by
injunction the collection of any tax imposed by the Insular
Government for its own purpose and benefit, and (2) that
assuming that our courts had or have such power, this power has
not been diminished or curtailed by sections 139 and 140.
We will first review briefly the former and present systems of
taxation. Upon the American occupation of the Philippine, there
was found a fairly complete system of taxation. This system was
continued in force by the military authorities, with but few
changes, until the Civil Government assumed charge of the
subject. The principal sources of revenue under the Spanish
regime were derived from customs receipts, the so-called
industrial taxes, the urbana taxes, the stamp tax, the personal
cedula tax, and the sale of the public domain. The industrial and
urbana taxes constituted practically an income tax of some 5 per
cent on the net income of persons engaged in industrial and
commercial pursuits and on the income of owners of improved
city property. The sale of stamped paper and adhesive stamp tax.
The cedula tax was a graduated tax, ranging from nothing up to
P37.50. The revenue derived from the sale of the public domain
was not considered a tax. The American authorities at once
abolished the cedula tax, but later restored it in a modified form,
charging for each cedula twenty centavos, an amount which was
supposed to be just sufficient to cover the cost of issuance. The
urbana tax was abolished by Act No. 223, effective September 6,
1901.
The "Municipal Code" (Act No. 82) and the Provincial
Government Act (No. 83), both enacted in 1901, authorize
municipal councils and provincial boards to impose an ad
valorem tax on real estate. The Municipal Code did not apply to
the city of Manila. This city was given a special charter (Act No.
183), effective August 30, 1901; Under this charter the Municipal
Board of Manila is authorized and empowered to impose taxes
upon real estate and, like municipal councils, to license and
regulate certain occupations. Customs matters were completely
reorganized by Act No. 355, effective at the port of Manila on
February 7, 1902, and at other ports in the Philippine Islands the
day after the receipt of a certified copy of the Act. The Internal
Revenue Law of 1904 (Act No. 1189), repealed all existing laws,
ordinances, etc., imposing taxes upon the persons, objects, or
occupations taxed under that act, and all industrial taxes and
stamp taxes imposed under the Spanish regime were eliminated,
but the industrial tax was continued in force until January 1,
1905. This Internal Revenue Law did not take away from
municipal councils, provincial boards, and the Municipal Board of
the city of Manila the power to impose taxes upon real estate.
This Act (No. 1189), with its amendments, was repealed by Act
No. 2339, an act "revising and consolidating the laws relative to
internal revenue."
Section 84 of Act No. 82 provides that "No court shall entertain
any suit assailing the validity of a tax assessed under this act until
the taxpayer shall have paid, under protest, the taxes assessed
against him, . . . ."
This inhibition was inserted in section 17 of Act No. 83 and
applies to taxes imposed by provincial boards. The inhibition was
not inserted in the Manila Charter until the passage of Act No.
1793, effective October 12, 1907. Act No. 355 expressly makes
the payment of the exactions claimed a condition precedent to a
resort to the courts by dissatisfied importers. Section 52 of Act
No. 1189 provides "That no courts shall have authority to grant
an injunction restraining the collection of any taxes imposed by
virtue of the provisions of this Act, but the remedy of the
taxpayer who claims that he is unjustly assessed or taxed shall be
by payment under protest of the sum claimed from him by the
Collector of Internal Revenue and by action to recover back the
sum claimed to have been illegally collected."
Sections 139 and 140 of Act No. 2339 contain, as we have
indicated, the same prohibition and remedy. The result is that
the courts have been expressly forbidden, in every act creating
or imposing taxes or imposts enacted by the legislative body of
the Philippines since the American occupation, to entertain any
suit assailing the validity of any tax or impost thus imposed until
the tax shall have been paid under protest. The only taxes which
have not been brought within the express inhibition were those
included in that part of the old Spanish system which completely
disappeared on or before January 1, 1905, and possibly the old
customs duties which disappeared in February, 1902.
Section 56 of the Organic Act (No. 136), effective June 16, 1901,
provides that "Courts of First Instance shall have original
jurisdiction:
xxx xxx xxx
2. In all civil actions which involve the ... legality of any
tax, impost, or assessment, . . . .
xxx xxx xxx
7. Said courts and their judges, or any of them, shall
have power to issue writs of
injunction, mandamus, certiorari, prohibition, quo
warranto, and habeas corpus in their respective
provinces and districts, in the manner provided in the
Code of Civil Procedure.
The provisions of the Code of Civil Procedure (Act No. 190),
effective October 1, 1901, which deals with the subject of
injunctions, are sections 162 to 172, inclusive. Injunctions, as
here defined, are of two kinds; preliminary and final. The former
may be granted at any time after the commencement of the
action and before final judgment, and the latter at the
termination of the trial as the relief or part of the relief prayed
for (sec. 162). Any judge of the Supreme Court may grant a
preliminary injunction in any action pending in that court or in
any Court of First Instance. A preliminary injunction may also be
granted by a judge of the Court of First Instance in actions
pending in his district in which he has original jurisdiction (sec.
163). But such injunctions may be granted only when the
complaint shows facts entitling the plaintiff to the relief
demanded (sec. 166), and before a final or permanent injunction
can be granted, it must appear upon the trial of the action that
the plaintiff is entitled to have commission or continuance of the
acts complained of perpetually restrained (sec. 171). These
provisions authorize the institution in Courts of First Instance of
what are known as "injunction suits," the sole object of which is
to obtain the issuance of a final injunction. They also authorize
the granting of injunctions as aiders in ordinary civil actions. We
have defined in Davesa vs. Arbes (13 Phil. Rep., 273), an
injunction to be "A "special remedy" adopted in that code (Act
190) from American practice, and originally borrowed from
English legal procedure, which was there issued by the authority
and under the seal of a court of equity, and limited, as in other
cases where equitable relief is sought, to those cases where
there is no "plain, adequate, and complete remedy at law,"which
will not be granted while the rights between the parties are
undetermined, except in extraordinary cases where material and
irreparable injury will be done,"which cannot be compensated in
damages . . .
By paragraph 2 of section 56 of Act No. 136, supra, and the
provisions of the various subsequent Acts heretofore mentioned,
the Insular Government has consented to litigate with aggrieved
persons the validity of any original tax or impost imposed by it
on condition that this be done in ordinary civil actions after the
taxes or exactions shall have been paid. But it is said that
paragraph 2 confers original jurisdiction upon Courts of First
Instance to hear and determine "all civil actions" which involve
the validity of any tax, impost or assessment, and that if the all-
inclusive words "all" and "any" be given their natural and
unrestricted meaning, no action wherein that question is
involved can arise over which such courts do not have
jurisdiction. (Barrameda vs. Moir, 25 Phil. Rep., 44.) This is true.
But the term "civil actions" had its well defined meaning at the
time the paragraph was enacted. The same legislative body
which enacted paragraph 2 on June 16, 1901, had, just a few
months prior to that time, defined the only kind of action in
which the legality of any tax imposed by it might be assailed.
(Sec. 84, Act 82, enacted January 31, 1901, and sec. 17, Act No.
83, enacted February 6, 1901.) That kind of action being
payment of the tax under protest and an ordinary suit to recover
and no other, there can be no doubt that Courts of First Instance
have jurisdiction over all such actions. The subsequent legislation
on the same subject shows clearly that the Commission, in
enacting paragraph 2, supra, did not intend to change or modify
in any way section 84 of Act No. 82 and section 17 of Act No. 83,
but, on the contrary, it was intended that "civil actions,"
mentioned in said paragraph, should be understood to mean, in
so far as testing the legality of taxes were concerned, only those
of the kind and character provided for in the two sections above
mentioned. It is also urged that the power to restrain by
injunction the collection of taxes or imposts is conferred upon
Courts of First Instance by paragraph 7 of section 56, supra. This
paragraph does empower those courts to grant injunctions, both
preliminary and final, in any civil action pending in their districts,
provided always, that the complaint shows facts entitling the
plaintiff to the relief demanded. Injunction suits, such as the one
at bar, are "civil actions," but of a special or extraordinary
character. It cannot be said that the Commission intended to
give a broader or different meaning to the word "action," used in
Chapter 9 of the Code of Civil Procedure in connection with
injunctions, than it gave to the same word found in paragraph 2
of section 56 of the Organic Act. The Insular Government, in
exercising the power conferred upon it by the Congress of the
United States, has declared that the citizens and residents of this
country shall pay certain specified taxes and imposts. The power
to tax necessarily carries with it the power to collect the taxes.
This being true, the weight of authority supports the proposition
that the Government may fix the conditions upon which it will
consent to litigate the validity of its original taxes.
(Tennessee vs. Sneed, 96 U.S., 69.)
We must, therefore, conclude that paragraph 2 and 7 of section
56 of Act No. 136, construed in the light of the prior and
subsequent legislation to which we have referred, and the
legislative and judicial history of the same subject in the United
States with which the Commission was familiar, do not empower
Courts of firs Instance to interfere by injunction with the
collection of the taxes in question in this case.1awphil.net
If we are in error as to the scope of paragraph 2 and 7, supra,
and the Commission did intend to confer the power upon the
courts to restrain the collection of taxes, it does not necessarily
follow that this power or jurisdiction has been taken away by
section 139 of Act No. 2339, for the reason that all agree that an
injunction will not issue in any case if there is an adequate
remedy at law. The very nature of the writ itself prevents its
issuance under such circumstances. Legislation forbidding the
issuing of injunctions in such cases is unnecessary. So the only
question to be here determined is whether the remedy provided
for in section 140 of Act No. 2339 is adequate. If it is, the writs
which form the basis of this appeal should not have been issued.
If this is the correct view, the authority to issue injunctions will
not have been taken away by section 139, but rendered
inoperative only by reason of an adequate remedy having been
made available.
The legislative body of the Philippine Islands has declared from
the beginning (Act No. 82) that payment under protest and suit
to recover is an adequate remedy to test the legality of any tax
or impost, and that this remedy is exclusive. Can we say that the
remedy is not adequate or that it is not exclusive, or both? The
plaintiffs in the case at bar are the first, in so far as we are aware,
to question either the adequacy or exclusiveness of this remedy.
We will refer to a few cases in the United States where statutes
similar to sections 139 and 140 have been construed and
applied.
In May, 1874, one Bloomstein presented a petition to the circuit
court sitting in Nashville, Tennessee, stating that his real and
personal property had been assessed for state taxes in the year
1872 to the amount of $132.60; that he tendered to the collector
this amount in "funds receivable by law for such purposes;" and
that the collector refused to receive the same. He prayed for an
alternative writ of mandamus to compel the collector to receive
the bills in payment for such taxes, or to show cause to the
contrary. To this petition the collector, in his answer, set up the
defense that the petitioner's suit was expressly prohibited by the
Act of the General Assembly of the State of Tennessee, passed in
1873. The petition was dismissed and the relief prayed for
refused. An appeal to the supreme court of the State resulted in
the affirmance of the judgment of the lower court. The case was
then carried to the Supreme Court of the United States
(Tennessee vs. Sneed, 96 U. S., 69), where the judgment was
again affirmed.
The two sections of the Act of [March 21,] 1873, drawn in
question in that cases, read as follows:
1. That in all cases in which an officer, charged by law
with the collection of revenue due the State, shall
institute any proceeding, or take any steps for the
collection of the same, alleged or claimed to be due by
said officer from any citizen, the party against whom the
proceeding or step is taken shall, if he conceives the
same to be unjust or illegal, or against any statute or
clause of the Constitution of the State, pay the same
under protest; and, upon his making said payment, the
officer or collector shall pay such revenue into the State
Treasury, giving notice at the time of payment to the
Comptroller that the same was paid under protest; and
the party paying said revenue may, at any time within
thirty days after making said payment, and not longer
thereafter, sue the said officer having collected said
sum, for the recovery thereof. And the same may be
tried in any court having the jurisdiction of the amount
and parties; and, if it be determined that the same was
wrongfully collected, as not being due from said party
to the State, for any reason going to the merits of the
same, then the court trying the case may certify of
record that the same was wrongfully paid and ought to
be refunded; and thereupon the Comptroller shall issue
his warrant for the same, which shall be paid in
preference to other claims on the Treasury.
2. That there shall be no other remedy, in any case of
the collection of revenue, or attempt to collect revenue
illegally, or attempt to collect revenue in funds only
receivable by said officer under the law, the same being
other or different funds than such as the tax payer may
tender, or claim the right to pay, than that above
provided; and no writ for the prevention of the
collection of any revenue claimed, or to hinder or delay
the collection of the same, shall in anywise issue, either
injunction, supersedeas, prohibition, or any other writ
or process whatever; but in all cases in which, for any
reason, any person shall claim that the tax so collected
was wrongfully or illegally collected, the remedy for said
party shall be as above provided, and in no other
manner."
In discussing the adequacy of the remedy provided by the
Tennessee Legislature, as above set forth, the Supreme Court of
the United States, in the case just cited, said: "This remedy is
simple and effective. A suit at law to recover money unlawfully
exacted is as speedy, as easily tried, and less complicated than a
proceeding by mandamus. ... In revenue cases, whether arising
upon its (United States) Internal Revenue Laws or those
providing for the collection of duties upon foreign imports, it
(United States) adopts the rule prescribed by the State of
Tennessee. It requires the contestant to pay the amount as fixed
by the Government, and gives him power to sue the collector,
and in such suit to test the legality of the tax. There is nothing
illegal or even harsh in this. It is a wise and reasonable
precaution for the security of the Government."
Thomas C. Platt commenced an action in the Circuit Court of the
United States for the Eastern District of Tennessee to restrain the
collection of a license tax from the company which he
represented. The defense was that sections 1 and 2 of the Act of
1873, supra, prohibited the bringing of that suit. This case also
reached the Supreme Court of the United States.
(Shelton vs. Platt, 139 U. 591.) In speaking of the inhibitory
provisions of sections 1 and 2 of the Act of 1873, the court said:
"This Act has been sanctioned and applied by the Courts of
Tennessee. (Nashville vs.Smith, 86 Tenn., 213; Louisville & N. R.
Co. vs. State, 8 Heisk., 663, 804.) It is, as counsel observe, similar
to the Act of Congress forbidding suit for the purpose of
restraining the assessment or collection of taxes under the
Internal Revenue Laws, in respect to which this court held that
the remedy by suit to recover back the tax after payment,
provided for by the Statute, was exclusive. (Snyder vs. Marks, of
this character has been called for by the embarrassments
resulting from the improvident employment of the writ of
injunction in arresting the collection of the public revenue; and,
even in its absence, the strong arm of the court of chancery
ought not to be interposed in that direction except where resort
to that court is grounded upon the settled principles which
govern its jurisdiction."
In Louisville & N.R. Co. vs. State (8 Heisk. [64 Tenn.], 663, 804),
cited by the Supreme Court of the United States in
Shelton vs. Platt, supra, the court said: "It was urged that this
statute (sections 1 and 2 of the Act of 1873, supra) is
unconstitutional and void, as it deprives the citizen of the
remedy by certiorari, guaranteed by the organic law."
By the 10th section of the sixth article of the Constitution,
[Tennessee] it is provided that: "The judges or justices of inferior
courts of law and equity shall have power in all civil cases to
issue writs of certiorari, to remove any cause, or the transcript of
the record thereof, from any inferior jurisdiction into such court
of law, on sufficient cause, supported by oath or affirmation."
The court held the act valid as not being in conflict with these
provisions of the State constitution.
In Eddy vs. The Township of Lee (73 Mich., 123), the
complainants sought to enjoin the collection of certain taxes for
the year 1886. The defendants, in support of their demurrer,
insisted that the remedy by injunction had been taken away by
section 107 of the Act of 1885, which section reads as follows:
"No injunction shall issue to stay proceedings for the assessment
or collection of taxes under this Act."
It was claimed by the complainants that the above quoted
provisions of the Act of 1885 were unconstitutional and void as
being in conflict with article 6, sec. 8, of the Constitution, which
provides that: "The circuit courts shall have original jurisdiction
in all matters, civil and criminal, not excepted in this
Constitution, and not prohibited by law. ... They shall also have
power to issue writs of habeas corpus, mandamus,
injunction, quo warranto, certiorari, and other writs necessary to
carry into effect their orders, judgments, and decrees."
Mr. Justice Champlin, speaking for the court, said: "I have no
doubt that the Legislature has the constitutional authority,
where it has provided a plain, adequate, and complete remedy
at law to recover back taxes illegally assessed and collected, to
take away the remedy by injunction to restrain their collection."
Section 9 of the Philippine Bill reads in part as follows: "That the
Supreme Court and the Courts of First Instance of the Philippine
Islands shall possess and exercise jurisdiction as heretofore
provided and such additional jurisdiction as shall hereafter be
prescribed by the Government of said Islands, subject to the
power of said Government to change the practice and method of
procedure."
It will be seen that this section has not taken away from the
Philippine Government the power to change the practice and
method of procedure. If sections 139 and 140, considered
together, and this must always be done, are nothing more than a
mode of procedure, then it would seem that the Legislature did
not exceed its constitutional authority in enacting them.
Conceding for the moment that the duly authorized procedure
for the determination of the validity of any tax, impost, or
assessment was by injunction suits and that this method was
available to aggrieved taxpayers prior to the passage of Act No.
2339, may the Legislature change this method of procedure?
That the Legislature has the power to do this, there can be no
doubt, provided some other adequate remedy is substituted in
lieu thereof. In speaking of the modes of enforcing rights created
by contracts, the Supreme Court of the United States, in
Tennessee vs. Sneed, supra, said: "The rule seems to be that in
modes of proceedings and of forms to enforce the contract the
Legislature has the control, and may enlarge, limit or alter them,
provided that it does not deny a remedy, or so embarrass it with
conditions and restrictions as seriously to impair the value of the
right."
In that case the petitioner urged that the Acts of 1873 were laws
impairing the obligation of the contract contained in the charter
of the Bank of Tennessee, which contract was entered into with
the State in 1838. It was claimed that this was done by placing
such impediments and obstructions in the way of its
enforcement, thereby so impairing the remedies as practically to
render the obligation of no value. In disposing of this contention,
the court said: "If we assume that prior to 1873 the relator had
authority to prosecute his claim against the State by mandamus,
and that by the statutes of that year the further use of that form
was prohibited to him, the question remains. whether an
effectual remedy was left to him or provided for him. We think
the regulation of the statute gave him an abundant means of
enforcing such right as he possessed. It provided that he might
pay his claim to the collector under protest, giving notice thereof
to the Comptroller of the Treasury; that at any time within thirty
days thereafter he might sue the officer making the collection;
that the case should be tried by any court having jurisdiction
and, if found in favor of the plaintiff on the merits, the court
should certify that the same was wrongfully paid and ought to be
refunded and the Comptroller should thereupon issue his
warrant therefor, which should be paid in preference to other
claim on the Treasury."
But great stress is laid upon the fact that the plaintiffs in the case
under consideration are unable to pay the taxes assessed against
them and that if the law is enforced, they will be compelled to
suspend business. This point may be best answered by quoting
from the case of Youngblood vs. Sexton (32 Mich., 406), wherein
Judge Cooley, speaking for the court, said: "But if this
consideration is sufficient to justify the transfer of a controversy
from a court of law to a court of equity, then every controversy
where money is demanded may be made the subject of
equitable cognizance. To enforce against a dealer a promissory
note may in some cases as effectually break up his business as to
collect from him a tax of equal amount. This is not what is known
to the law as irreparable injury. The courts have never
recognized the consequences of the mere enforcement of a
money demand as falling within that category."
Certain specified sections of Act No. 2339 were amended by Act
No. 2432, enacted December 23, 1914, effective January 1, 1915,
by imposing increased and additional taxes. Act No. 2432 was
amended, were ratified by the Congress of the United States on
March 4, 1915. The opposition manifested against the taxes
imposed by Acts Nos. 2339 and 2432 is a matter of local history.
A great many business men thought the taxes thus imposed
were too high. If the collection of the new taxes on signs,
signboards, and billboards may be restrained, we see no well-
founded reason why injunctions cannot be granted restraining
the collection of all or at least a number of the other increased
taxes. The fact that this may be done, shows the wisdom of the
Legislature in denying the use of the writ of injunction to restrain
the collection of any tax imposed by the Acts. When this was
done, an equitable remedy was made available to all dissatisfied
taxpayers.
The question now arises whether, the case being one of which
the court below had no jurisdiction, this court, on appeal, shall
proceed to express an opinion upon the validity of provisions of
subsection (b) of section 100 of Act No. 2339, imposing the taxes
complained of. As a general rule, an opinion on the merits of a
controversy ought to be declined when the court is powerless to
give the relief demanded. But it is claimed that this case is, in
many particulars, exceptional. It is true that it has been argued
on the merits, and there is no reason for any suggestion or
suspicion that it is not a bona fide controversy. The legal points
involved in the merits have been presented with force, clearness,
and great ability by the learned counsel of both sides. If the law
assailed were still in force, we would feel that an opinion on its
validity would be justifiable, but, as the amendment became
effective on January 1, 1915, we think it advisable to proceed no
further with this branch of the case.
The next question arises in connection with the supplementary
complaint, the object of which is to enjoin the Collector of
Internal Revenue from removing certain billboards, the property
of the plaintiffs located upon private lands in the Province of
Rizal. The plaintiffs allege that the billboards here 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." The defendant denies these allegations in his answer
and claims that after due investigation made upon the
complaints of the British and German Consuls, he "decided that
the billboard complained of was and still is offensive to the sight,
and is otherwise a nuisance." The plaintiffs proved by Mr.
Churchill that the "billboards were quite a distance from the road
and that they were strongly built, not dangerous to the safety of
the people, and contained no advertising matter which is filthy,
indecent, or deleterious to the morals of the community." The
defendant presented no testimony upon this point. In the agreed
statement of facts submitted by the parties, the plaintiffs "admit
that the billboards mentioned were and still are offensive to the
sight."
The pertinent provisions of subsection (b) of section 100 of Act
No. 2339 read: "If after due investigation the Collector of
Internal Revenue shall decide that any sign, signboard, or
billboard displayed or exposed to public view is offensive to the
sight or is otherwise a nuisance, he may by summary order direct
the removal of such sign, signboard, or billboard, and if same is
not removed within ten days after he has issued such order he
my himself cause its removal, and the sign, signboard, or
billboard shall thereupon be forfeited to the Government, and
the owner thereof charged with the expenses of the removal so
effected. When the sign, signboard, or billboard ordered to be
removed as herein provided shall not comply with the provisions
of the general regulations of the Collector of Internal Revenue,
no rebate or refund shall be allowed for any portion of a year for
which the tax may have been paid. Otherwise, the Collector of
Internal Revenue may in his discretion make a proportionate
refund of the tax for the portion of the year remaining for which
the taxes were paid. An appeal may be had from the order of the
Collector of Internal Revenue to the Secretary of Finance and
Justice whose decision thereon shall be final."
The Attorney-General, on behalf of the defendant, says: "The
question which the case presents under this head for
determination, resolves itself into this inquiry: Is the suppression
of advertising signs displayed or exposed to public view, which
are admittedly offensive to the sight, conducive to the public
interest?"
And cunsel for the plaintiffs states the question thus: "We
contend that that portion of section 100 of Act No. 2339,
empowering the Collector of Internal Revenue to remove
billboards as nuisances, if objectionable to the sight, is
unconstitutional, as constituting a deprivation of
property without due process of law."
From the position taken by counsel for both sides, it is clear that
our inquiry is limited to the question whether the enactment
assailed by the plaintiffs was a legitimate exercise of the police
power of the Government; for all property is held subject to that
power.
As a consequence of the foregoing, all discussion and authorities
cited, which go to the power of the state to authorize
administrative officers to find, as a fact, that legitimate trades,
callings, and businesses are, under certain circumstances,
statutory nuisances, and whether the procedure prescribed for
this purpose is due process of law, are foreign to the issue here
presented.
There can be no doubt that the exercise of the police power of
the Philippine Government belongs to the Legislature and that
this power is limited only by the Acts of Congress and those
fundamentals principles which lie at the foundation of all
republican forms of government. An Act of the Legislature which
is obviously and undoubtedly foreign to any of the purposes of
the police power and interferes with the ordinary enjoyment of
property would, without doubt, be held to be invalid. But where
the Act is reasonably within a proper consideration of and care
for the public health, safety, or comfort, it should not be
disturbed by the courts. The courts cannot substitute their own
views for what is proper in the premises for those of the
Legislature. In Munn vs. Illinois (94 U.S., 113), the United States
Supreme Court states the rule thus: "If no state of circumstances
could exist to justify such statute, then we may declare this one
void because in excess of the legislative power of this state; but
if it could, we must presume it did. Of the propriety of legislative
interference, within the scope of the legislative power, a
legislature is the exclusive judge."
This rule very fully discussed and declared in
Powell vs. Pennsylvania (127 U.S., 678) — "oleo-margarine" case.
(See also Crowley vs. Christensen, 137 U.S., 86, 87;
Camfield vs. U.S., 167 U.S., 518.) While the state may interfere
wherever the public interests demand it, and in this particular a
large discretion is necessarily vested in the legislature to
determine, not only what the interest of the public require, but
what measures are necessary for the protection of such
interests; yet, its determination in these matters is not final or
conclusive, but is subject to the supervision of the courts.
(Lawton vs. Steele, 152 U.S., 133.) Can it be said judicially that
signs, signboards, and billboards, which are admittedly offensive
to the sight, are not with the category of things which interfere
with the public safety, welfare, and comfort, and therefore
beyond the reach of the police power of the Philippine
Government?
The numerous attempts which have been made to limit by
definition the scope of the police power are only interesting as
illustrating its rapid extension within comparatively recent years
to points heretofore deemed entirely within the field of private
liberty and property rights. Blackstone's definition of the police
power was as follows: "The due regulation and domestic order of
the kingdom, whereby the individuals of the state, like members
of a well governed family, are bound to conform their general
behavior to the rules of propriety, good neigborhood, and good
manners, to be decent, industrious, and inoffensive in their
respective stations." (Commentaries, vol. 4, p. 162.)
Chanceller Kent considered the police power the authority of the
state "to regulate unwholesome trades, slaughter houses,
operations offensive to the senses." Chief Justice Shaw of
Massachusetts defined it as follows: "The 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."
(Com. vs. Alger, 7 Cush., 53.)
In the case of Butchers' Union Slaughter-house, etc.
Co. vs. Crescent City Live Stock Landing, etc. Co. (111 U.S., 746),
it was suggested that the public health and public morals are
matters of legislative concern of which the legislature cannot
divest itself. (See State vs. Mountain Timber Co. [1913], 75
Wash., 581, where these definitions are collated.)
In Champer vs. Greencastle (138 Ind., 339), it was said: "The
police power of the State, so far, has not received a full and
complete definition. It may be said, however, to be the right of
the State, or state functionary, to prescribe regulations for the
good order, peace, health, protection, comfort, convenience and
morals of the community, which do not ... violate any of the
provisions of the organic law." (Quoted with approval in
Hopkins vs. Richmond [Va., 1915], 86 S.E., 139.)
In Com. vs. Plymouth Coal Co. ([1911] 232 Pa., 141), it was said:
"The police power of the state is difficult of definition, but it has
been held by the courts to be the right to prescribe regulations
for the good order, peace, health, protection, comfort,
convenience and morals of the community, which does not
encroach on a like power vested in congress or state legislatures
by the federal constitution, or does not violate the provisions of
the organic law; and it has been expressly held that the
fourteenth amendment to the federal constitution was not
designed to interfere with the exercise of that power by the
state."
In People vs. Brazee ([Mich., 1914], 149 N.W., 1053), it was said:
"It [the police power] has for its object the improvement of
social and economic conditioned affecting the community at
large and collectively with a view to bring about "he greatest
good of the greatest number."Courts have consistently and
wisely declined to set any fixed limitations upon subjects calling
for the exercise of this power. It is elastic and is exercised from
time to time as varying social conditions demand correction."
In 8 Cyc., 863, it is said: "Police power is the name given to that
inherent sovereignty which it is the right and duty of the
government or its agents to exercise whenever public policy, in a
broad sense, demands, for the benefit of society at large,
regulations to guard its morals, safety, health, order or to insure
in any respect such economic conditions as an advancing
civilization of a high complex character requires." (As quoted
with approval in Stettler vs.O'Hara [1914], 69 Ore, 519.)
Finally, the Supreme Court of the United States has said in Noble
State Bank vs. Haskell (219 U.S. [1911], 575: "It may be said in a
general way that the police power extends to all the great public
needs. It may be put forth in aid of what is sanctioned by usage,
or held by the prevailing morality or strong and preponderant
opinion to be greatly and immediately necessary to the public
welfare."
This statement, recent as it is, has been quoted with approval by
several courts. (Cunningham vs. Northwestern Imp. Co. [1911],
44 Mont., 180; State vs. Mountain Timber Co. [1913], 75 Wash.,
581; McDavid vs. Bank of Bay Minette [Ala., 1915], 69 Sou., 452;
Hopkins vs. City of Richmond [Va., 1915], 86 S.E., 139;
State vs. Philipps [Miss. 1915], 67 Sou., 651.)
It was said in Com. vs. Alger (7 Cush., 53, 85), per Shaw, C.J., that:
"It is much easier to perceive and realize the existence and
sources of this police power than to mark its boundaries, or to
prescribe limits to its exercise." In Stone vs. Mississippi (101 U.S.,
814), it was said: "Many attempts have been made in this court
and elsewhere to define the police power, but never with entire
success. It is always easier to determine whether a particular
case comes within the general scope of the power, than to give
an abstract definition of the power itself, which will be in all
respects accurate."
Other courts have held the same vow of efforts to evolve a
satisfactory definition of the police power. Manifestly,
definitions which fail to anticipate cases properly within the
scope of the police power are deficient. It is necessary,
therefore, to confine our discussion to the principle involved and
determine whether the cases as they come up are within that
principle. The basic idea of civil polity in the United States is that
government should interfere with individual effort only to the
extent necessary to preserve a healthy social and economic
condition of the country. State interference with the use of
private property may be exercised in three ways. First, through
the power of taxation, second, through the power of eminent
domain, and third, through the police power. Buy the first
method it is assumed that the individual receives the equivalent
of the tax in the form of protection and benefit he receives from
the government as such. By the second method he receives the
market value of the property taken from him. But under the
third method the benefits he derived are only such as may arise
from the maintenance of a healthy economic standard of society
and is often referred to as damnum absque
injuria. (Com. vs. Plymouth Coal Co. 232 Pa., 141; Bemis vs. Guirl
Drainage Co., 182 Ind., 36.) There was a time when state
interference with the use of private property under the guise of
the police power was practically confined to the suppression of
common nuisances. At the present day, however, industry is
organized along lines which make it possible for large
combinations of capital to profit at the expense of the socio-
economic progress of the nation by controlling prices and
dictating to industrial workers wages and conditions of labor.
Not only this but the universal use of mechanical contrivances by
producers and common carriers has enormously increased the
toll of human life and limb in the production and distribution of
consumption goods. To the extent that these businesses affect
not only the public health, safety, and morals, but also the
general social and economic life of the nation, it has been and
will continue to be necessary for the state to interfere by
regulation. By so doing, it is true that the enjoyment of private
property is interfered with in no small degree and in ways that
would have been considered entirely unnecessary in years gone
by. The regulation of rates charged by common carriers, for
instance, or the limitation of hours of work in industrial
establishments have only a very indirect bearing upon the public
health, safety, and morals, but do bear directly upon social and
economic conditions. To permit each individual unit of society to
feel that his industry will bring a fair return; to see that his work
shall be done under conditions that will not either immediately
or eventually ruin his health; to prevent the artificial inflation of
prices of the things which are necessary for his physical well
being are matters which the individual is no longer capable of
attending to himself. It is within the province of the police power
to render assistance to the people to the extent that may be
necessary to safeguard these rights. Hence, laws providing for
the regulation of wages and hours of labor of coal miners (Rail &
River Coal Co. vs. Taylor, 234 U.S., 224); requiring payment of
employees of railroads and other industrial concerns in legal
tender and requiring salaries to be paid semimonthly (Erie R.R.
Co. vs. Williams, 233 U.S., 685); providing a maximum number of
hours of labor for women (Miller vs. Wilson, U.S. Sup. Ct. [Feb.
23, 1915], Adv. Opns., p. 342); prohibiting child labor (Sturges &
Burn vs. Beauchamp, 231 U.S., 320); restricting the hours of
labor in public laundries (In re Wong Wing, 167 Cal., 109);
limiting hours of labor in industrial establishment generally
(State vs. Bunting, 71 Ore., 259); Sunday Closing Laws
(State vs. Nicholls [Ore., 1915], 151 Pac., 473; People vs. C. Klinck
Packing Co. [N.Y., 1915], 108 N. E., 278; Hiller vs. State [Md.,
1914], 92 Atl., 842; State vs. Penny, 42 Mont., 118; City of
Springfield vs. Richter, 257 Ill., 578, 580; State vs. Hondros [S.C.,
1915], 84 S.E., 781); have all been upheld as a valid exercise of
the police power. Again, workmen's compensation laws have
been quite generally upheld. These statutes discard the common
law theory that employers are not liable for industrial accidents
and make them responsible for all accidents resulting from trade
risks, it being considered that such accidents are a legitimate
charge against production and that the employer by controlling
the prices of his product may shift the burden to the community.
Laws requiring state banks to join in establishing a depositors'
guarantee fund have also been upheld by the Federal Supreme
Court in Noble State Bank vs. Haskell (219 U. S., 104), and Assaria
State Bank vs. Dolley (219 U.S., 121).
Offensive noises and smells have been for a long time considered
susceptible of suppression in thickly populated districts. Barring
livery stables from such locations was approved of in
Reinman vs. Little Rock (U.S. Sup. Ct. [Apr. 5, 1915], U.S. Adv.
Opns., p. 511). And a municipal ordinance was recently upheld
(People vs. Ericsson, 263 Ill., 368), which prohibited the location
of garages within two hundred feet of any hospital, church, or
school, or in any block used exclusively for residential purposes,
unless the consent of the majority of the property owners be
obtained. Such statutes as these are usually upheld on the
theory of safeguarding the public health. But we apprehend that
in point of fact they have little bearing upon the health of the
normal person, but a great deal to do with his physical comfort
and convenience and not a little to do with his peace of mind.
Without entering into the realm of psychology, we think it quite
demonstrable that sight is as valuable to a human being as any of
his other senses, and that the proper ministration to this sense
conduces as much to his contentment as the care bestowed
upon the senses of hearing or smell, and probably as much as
both together. Objects may be offensive to the eye as well as to
the nose or ear. Man's esthetic feelings are constantly being
appealed to through his sense of sight. Large investments have
been made in theaters and other forms of amusement, in
paintings and spectacular displays, the success of which depends
in great part upon the appeal made through the sense of sight.
Moving picture shows could not possible without the sense of
sight. Governments have spent millions on parks and boulevards
and other forms of civic beauty, the first aim of which is to
appeal to the sense of sight. Why, then, should the Government
not interpose to protect from annoyance this most valuable of
man's senses as readily as to protect him from offensive noises
and smells?
The advertising industry is a legitimate one. It is at the same time
a cause and an effect of the great industrial age through which
the world is now passing. Millions are spent each year in this
manner to guide the consumer to the articles which he needs.
The sense of sight is the primary essential to advertising success.
Billboard advertising, as it is now conducted, is a comparatively
recent form of advertising. It is conducted out of doors and along
the arteries of travel, and compels attention by the strategic
locations of the boards, which obstruct the range of vision at
points where travelers are most likely to direct their eyes.
Beautiful landscapes are marred or may not be seen at all by the
traveler because of the gaudy array of posters announcing a
particular kind of breakfast food, or underwear, the coming of a
circus, an incomparable soap, nostrums or medicines for the
curing of all the ills to which the flesh is heir, etc. It is quite
natural for people to protest against this indiscriminate and
wholesale use of the landscape by advertisers and the intrusion
of tradesmen upon their hours of leisure and relaxation from
work. Outdoor life must lose much of its charm and pleasure if
this form of advertising is permitted to continue unhampered
until it converts the streets and highways into veritable canyons
through which the world must travel in going to work or in
search of outdoor pleasure.
The success of billboard advertising depends not so much upon
the use of private property as it does upon the use of the
channels of travel used by the general public. Suppose that the
owner of private property, who so vigorously objects to the
restriction of this form of advertising, should require the
advertiser to paste his posters upon the billboards so that they
would face the interior of the property instead of the exterior.
Billboard advertising would die a natural death if this were done,
and its real dependency not upon the unrestricted use of private
property but upon the unrestricted use of the public highways is
at once apparent. Ostensibly located on private property, the
real and sole value of the billboard is its proximity to the public
thoroughfares. Hence, we conceive that the regulation of
billboards and their restriction is not so much a regulation of
private property as it is a regulation of the use of the streets and
other public thoroughfares.
We would not be understood as saying that billboard advertising
is not a legitimate business any more than we would say that a
livery stable or an automobile garage is not. Even a billboard is
more sightly than piles of rubbish or an open sewer. But all these
businesses are offensive to the senses under certain conditions.
It has been urged against ministering to the sense of sight that
tastes are so diversified that there is no safe standard of
legislation in this direction. We answer in the language of the
Supreme Court in Noble State Bank vs.Haskell (219 U.S., 104),
and which has already been adopted by several state courts (see
supra), that "the prevailing morality or strong and
preponderating opinion" demands such legislation. The agitation
against the unrestrained development of the billboard business
has produced results in nearly all the countries of Europe. (Ency.
Britannica, vol. 1, pp. 237-240.) Many drastic ordinances and
state laws have been passed in the United States seeking to
make the business amenable to regulation. But their regulation
in the United states is hampered by what we conceive an
unwarranted restriction upon the scope of the police power by
the courts. 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. A source of annoyance and
irritation to the public does not minister to the comfort and
convenience of the public. And we are of the opinion that the
prevailing sentiment is manifestly against the erection of
billboards which are offensive to the sight.
We do not consider that we are in conflict with the decision in
Eubank vs. Richmond (226 U.S., 137), where a municipal
ordinance establishing a building line to which property owners
must conform was held unconstitutional. As we have pointed
out, billboard advertising is not so much a use of private
property as it is a use of the public thoroughfares. It derives its
value to the power solely because the posters are exposed to the
public gaze. It may well be that the state may not require private
property owners to conform to a building line, but may prescribe
the conditions under which they shall make use of the adjoining
streets and highways. Nor is the law in question to be held
invalid as denying equal protection of the laws. In Keokee Coke
Co. vs. Taylor (234 U.S., 224), it was said: "It is more pressed that
the act discriminates unconstitutionally against certain classes.
But while there are differences of opinion as to the degree and
kind of discrimination permitted by the Fourteenth Amendment,
it is established by repeated decisions that a statute aimed at
what is deemed an evil, and hitting it presumably where
experience shows it to be most felt, is not to be upset by thinking
up and enumerating other instances to which it might have been
applied equally well, so far as the court can see. That is for the
legislature to judge unless the case is very clear."
But we have not overlooked the fact that we are not in harmony
with the highest courts of a number of the states in the American
Union upon this point. Those courts being of the opinion that
statutes which are prompted and inspired by esthetic
considerations merely, having for their sole purpose the
promotion and gratification of the esthetic sense, and not the
promotion or protection of the public safety, the public peace
and good order of society, must be held invalid and contrary to
constitutional provisions holding inviolate the rights of private
property. Or, in other words, the police power cannot interfere
with private property rights for purely esthetic purposes. The
courts, taking this view, rest their decisions upon the proposition
that the esthetic sense is disassociated entirely from any relation
to the public health, morals, comfort, or general welfare and is,
therefore, beyond the police power of the state. But we are of
the opinion, as above indicated, 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. (Fruend on Police Power, p. 166.)
For the foregoing reasons the judgment appealed from is hereby
reversed and the action dismissed upon the merits, with costs.
So ordered.
Arellano, C.J., Torres, Carson, and Araullo, JJ., concur.
DECISION ON THE MOTION FOR A REHEARING, JANUARY 24,
1916.
TRENT, J.:
Counsel for the plaintiffs call our attention to the case of Ex
parte Young (209 U.S., 123); and say that they are of the opinion
that this case "is the absolutely determinative of the question of
jurisdiction in injunctions of this kind." We did not refer to this
case in our former opinion because we were satisfied that the
reasoning of the case is not applicable to section 100 (b), 139
and 140 of Act No. 2339. The principles announced in the Young
case are stated as follows: "It may therefore be said that when
the penalties for disobedience are by fines so enormous and
imprisonment so severe as to intimidate the company and its
officers from resorting to the courts to test the validity of the
legislation, the result is the same as if the law in terms prohibited
the company from seeking judicial construction of laws which
deeply affect its rights.
It is urged that there is no principle upon which to base
the claim that a person is entitled to disobey a statute
at least once, for the purpose of testing its validity
without subjecting himself to the penalties for
disobedience provided by the statute in case it is valid.
This is not an accurate statement of the case. Ordinarily
a law creating offenses in the nature of misdemeanors
or felonies relates to a subject over which the
jurisdiction of the legislature is complete in any event.
In these case, however, of the establishment of certain
rates without any hearing, the validity of such rates
necessarily depends upon whether they are high
enough to permit at least some return upon the
investment (how much it is not now necessary to state),
and an inquiry as to that fact is a proper subject of
judicial investigation. If it turns out that the rates are
too low for that purpose, then they are illegal. Now, to
impose upon a party interested the burden of obtaining
a judicial decision of such a question (no prior hearing
having ever been given) only upon the condition that, if
unsuccessful, he must suffer imprisonment and pay
fines as provided in these acts, is, in effect, to close up
all approaches to the courts, and thus prevent any
hearing upon the question whether the rates as
provided by the acts are not too low, and therefore
invalid. The distinction is obvious between a case where
the validity of the acts depends upon the existence of a
fact which can be determined only after investigation of
a very complicated and technical character, and the
ordinary case of a statute upon a subject requiring no
such investigation and over which the jurisdiction of the
legislature is complete in any event.
An examination of the sections of our Internal Revenue Law and
of the circumstances under which and the purposes for which
they were enacted, will show that, unlike the statutes under
consideration in the above cited case, their enactment involved
no attempt on the part of the Legislature to prevent dissatisfied
taxpayers "from resorting to the courts to test the validity of the
legislation;" no effort to prevent any inquiry as to their validity.
While section 139 does prevent the testing of the validity of
subsection (b) of section 100 in injunction suits instituted for the
purpose of restraining the collection of internal revenue taxes,
section 140 provides a complete remedy for that purpose. And
furthermore, the validity of subsection (b) does not depend upon
"the existence of a fact which can be determined only after
investigation of a very complicated and technical character," but
the jurisdiction of the Legislature over the subject with which the
subsection deals "is complete in any event." The judgment of the
court in the Young case rests upon the proposition that the
aggrieved parties had no adequate remedy at law.
Neither did we overlook the case of General Oil
Co. vs. Crain (209 U.S., 211), decided the same day and
citing Ex parte Young, supra. In that case the plaintiff
was a Tennessee corporation, with its principal place of
business in Memphis, Tennessee. It was engaged in the
manufacture and sale of coal oil, etc. Its wells and plant
were located in Pennsylvania and Ohio. Memphis was
not only its place of business, at which place it sold oil
to the residents of Tennessee, but also a distributing
point to which oils were shipped from Pennsylvania and
Ohio and unloaded into various tanks for the purpose of
being forwarded to the Arkansas, Louisiana, and
Mississippi customers. Notwithstanding the fact that
the company separated its oils, which were designated
to meet the requirements of the orders from those
States, from the oils for sale in Tennessee, the
defendant insisted that he had a right, under the Act of
the Tennessee Legislature, approved April 21, 1899, to
inspect all the oils unlocated in Memphis, whether for
sale in that State or not, and charge and collect for such
inspection a regular fee of twenty-five cents per barrel.
The company, being advised that the defendant had no
such right, instituted this action in the inferior States
court for the purpose of enjoining the defendant, upon
the grounds stated in the bill, from inspecting or
attempting to inspect its oils. Upon trial, the preliminary
injunction which had been granted at the
commencement of the action, was continued in force.
Upon appeal, the supreme court of the State of
Tennessee decided that the suit was one against the
State and reversed the judgment of the Chancellor. In
the Supreme Court of the United States, where the case
was reviewed upon a writ of error, the contentions of
the parties were stated by the court as follows: "It is
contended by defendant in error that this court is
without jurisdiction because no matter sought to be
litigated by plaintiff in error was determined by the
Supreme Court of Tennessee. The court simply held, it is
paid, that, under the laws of the State, it had no
jurisdiction to entertain the suit for any purpose. And it
is insisted "hat this holding involved no Federal
question, but only the powers and jurisdiction of the
courts of the State of Tennessee, in respect to which the
Supreme Court of Tennessee is the final arbiter."
Opposing these contentions, plaintiff in error urges that
whether a suit is one against a State cannot depend
upon the declaration of a statute, but depends upon the
essential nature ofthe suit, and that the Supreme Court
recognized that the statute "aded nothing to the
axiomatic principle that the State, as a sovereign, is not
subject to suit save by its own consent."And it is hence
insisted that the court by dismissing the bill gave effect
to the law which was attacked. It is further insisted that
the bill undoubtedly present rights under the
Constitution of the United States and conditions which
entitle plaintiff in error to an injunction for the
protection of such rights, and that a statute of the State
which operates to deny such rights, or such relief, `is
 itself in conflict with the Constitution of the United — while the Act approved February 28, 1873, prohibits suits
States." against the State.

That statute of Tennessee, which the supreme court of that State In upholding the statute which authorizes the removal of
construed and held to be prohibitory of the suit, was an act signboards or billboards upon the sole ground that they are
passed February 28, 1873, which provides: "That no court in the offensive to the sight, we recognized the fact that we are not in
State of Tennessee has, nor shall hereafter have, any power, harmony with various state courts in the American Union. We
jurisdiction, or authority to entertain any suit against the State, have just examined the decision of the Supreme Court of the
or any officer acting by the authority of the State, with a view to State of Illinois in the recent case (October [December], 1914) of
reach the State, its treasury, funds or property; and all such suits Thomas Cusack Co. vs. City of Chicago (267 Ill., 344), wherein the
now pending, or hereafter brought, shall be dismissed as to the court upheld the validity of a municipal ordinances, which reads
State, or such officer, on motion, plea or demurrer of the law as follows: "707. Frontage consents required. It shall be unlawful
officer of the State, or counsel employed by the State." for any person, firm or corporation to erect or construct any bill-
board or sign-board in any block on any public street in which
The Supreme Court of the United States, after reviewing many one-half of the buildings on both sides of the street are used
cases, said: "Necessarily, to give adequate protection to exclusively for residence purposes, without first obtaining the
constitutional rights a distinction must be made between valid consent, in writing, of the owners or duly authorized agents of
and invalid state laws, as determining the character of the suit said owners owning a majority of the frontage of the property,
against state officers. And the suit at bar illustrates the necessity. on both sides of the street, in the block in which such bill-board
If a suit against state officer is precluded in the national courts by or sign-board is to be erected, constructed or located. Such
the Eleventh Amendment to the Constitution, and may be written consent shall be filed with the commissioner of buildings
forbidden by a State to its courts, as it is contended in the case at before a permit shall be issued for the erection, construction or
bar that it may be, without power of review by this court, it must location of such bill-board or sign-board."
be evident that an easy way is open to prevent the enforcement
of many provisions of the Constitution; and the Fourteenth The evidence which the Illinois court relied upon was the danger
Amendment, which is directed at state action, could be nullified of fires, the fact that billboards promote the commission of
as to much of its operation. ... It being then the right of a party to various immoral and filthy acts by disorderly persons, and the
be protected against a law which violates a constitutional right, inadequate police protection furnished to residential districts.
whether by its terms or the manner of its enforcement, it is The last objection has no virtue unless one or the other of the
manifest that a decision which denies such protection gives other objections are valid. If the billboard industry does, in fact,
effect to the law, and the decision is reviewable by this court." promote such municipal evils to noticeable extent, it seems a
curious inconsistency that a majority of the property owners on
The court then proceeded to consider whether the law of 1899 a given block may legalize the business. However, the decision is
would, if administered against the oils in question, violate any undoubtedly a considerable advance over the views taken by
constitutional right of the plaintiff and after finding and other high courts in the United States and distinguishes several
adjudging that the oils were not in movement through the Illinois decisions. It is an advance because it permits the
States, that they had reached the destination of their first suppression of billboards where they are undesirable. The
shipment, and were held there, not in necessary delay at means ordinance which the court approved will no doubt cause the
of transportation but for the business purposes and profit of the virtual suppression of the business in the residential districts.
company, and resting its judgment upon the taxing power of the Hence, it is recognized that under certain circumstances
State, affirmed the decree of the supreme court of the State of billboards may be suppressed as an unlawful use of private
Tennessee. property. Logically, it would seem that the premise of fact relied
upon is not very solid. Objections to the billboard upon police,
From the foregoing it will be seen that the Supreme Court of sanitary, and moral grounds have been, as pointed out by
Tennessee dismissed the case for want of jurisdiction because counsel for Churchill and Tait, duly considered by numerous high
the suit was one against the State, which was prohibited by the courts in the United States, and, with one exception, have been
Tennessee Legislature. The Supreme Court of the United States rejected as without foundation. The exception is the Supreme
took jurisdiction of the controversy for the reasons above quoted Court of Missouri, which advances practically the same line of
and sustained the Act of 1899 as a revenue law. reasoning as has the Illinois court in this recent case. (St. Louis
Gunning Advt. Co. vs. City of St. Louis, 137 S. W., 929.) In fact, the
Illinois court, in Haller Sign Works vs. Physical Culture Training
The case of Tennessee vs. Sneed (96 U.S., 69), and
School (249 Ill., 436), "distinguished" in the recent case, said:
Shelton vs. Platt (139 U.S., 591), relied upon in our former
"There is nothing inherently dangerous to the health or safety of
opinion, were not cited in General Oil Co. vs. Crain, supra,
the public in structures that are properly erected for advertising
because the questions presented and the statutes under
purposes."
consideration were entirely different. The Act approved March
31, 1873, expressly prohibits the courts from restraining the
collection of any tax, leaving the dissatisfied taxpayer to his If a billboard is so constructed as to offer no room for objections
exclusive remedy — payment under protest and suit to recover on sanitary or moral grounds, it would seem that the ordinance
above quoted would have to be sustained upon the very grounds
which we have advanced in sustaining our own statute.
It might be well to note that billboard legislation in the United
States is attempting to eradicate a business which has already
been firmly established. This business was allowed to expand
unchecked until its very extent called attention to its
objectionable features. In the Philippine Islands such legislation
has almost anticipated the business, which is not yet of such
proportions that it can be said to be fairly established. It may be
that the courts in the United States have committed themselves
to a course of decisions with respect to billboard advertising, the
full consequences of which were not perceived for the reason
that the development of the business has been so recent that
the objectionable features of it did not present themselves
clearly to the courts nor to the people. We, in this country, have
the benefit of the experience of the people of the United States
and may make our legislation preventive rather than corrective.
There are in this country, moreover, on every hand in those
districts where Spanish civilization has held sway for so many
centuries, examples of architecture now belonging to a past age,
and which are attractive not only to the residents of the country
but to visitors. If the billboard industry is permitted without
constraint or control to hide these historic sites from the
passerby, the country will be less attractive to the tourist and the
people will suffer a district economic loss.
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. Judgmentreversed.

The motion for a rehearing is therefore denied. 2 ICHONG V HERNANDE, 101 PHIL 1155

Arellano, C.J., Torres, and Carson, JJ., concur. G.R. No. L-7995 May 31, 1957

Churchill & Tait v. Rafferty LAO H. ICHONG, in his own behalf and in behalf of
other alien residents, corporations and partnerships
32 Phil. 580 (1915) adversely affected. by Republic Act No.
In re: Police power of the State, Lawful Subject of police power 1180, petitioner,
vs.
This is an appeal from a judgment of the Court of First Instance JAIME HERNANDEZ, Secretary of Finance, and
of Manila. The case involves a dual question one involving the MARCELINO SARMIENTO, City Treasurer of
power of the court to restrain by injunction the collection of the Manila,respondents.
tax in question and the other relating to the power of the
Collector of Internal Revenue to remove any sign, signboard, or Ozaeta, Lichauco and Picazo and Sycip, Quisumbing,
billboard upon the ground that the same is offensive to the sightSalazar and Associates for petitioner.
or is otherwise a nuisance. Office of the Solicitor General Ambrosio Padilla and
The focus of this digest is to highlight the cases’ latter aspect as
Solicitor Pacifico P. de Castro for respondent Secretary
correlated to the police power of the State. of Finance.
City Fiscal Eugenio Angeles and Assistant City Fiscal
Facts Eulogio S. Serrano for respondent City Treasurer.
Dionisio Reyes as Amicus Curiae.
Appellees, Francis A. Churchill and Stewart Tait are involved in Marcial G. Mendiola as Amicus Curiae.
the advertising business, particularly in billboard advertising. Emiliano R. Navarro as Amicus Curiae.
Their billboards located upon private lands in the Province of
Rizal were removed upon complaints and by the orders of the LABRADOR, J.:
defendant Collector of Internal Revenue by virtue of the
provisions of subsection (b) of section 100 of Act No. 2339. I. The case and issue, in general
Appellees, in their supplementary complaint challenge the power
of the of the Collector of Internal Revenue to remove any sign,
This Court has before it the delicate task of passing upon the
signboard, or billboard upon the ground that the same is
validity and constitutionality of a legislative enactment,
offensive to the sight or is otherwise a nuisance and maintain
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
resident's daily needs, food in all its increasing forms, and the
various little gadgets and things needed for home and daily life.
He provides his customers around his store with the rice or corn,
the fish, the salt, the vinegar, the spices needed for the daily
cooking. He has cloths to sell, even the needle and the thread to
sew them or darn the clothes that wear out. The retailer,
therefore, from the lowly peddler, the owner of a small sari-
sari store, to the operator of a department store or, a
supermarket is so much a part of day-to-day existence.
b. The alien retailer's trait. —
so many 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 of the
legislature and beyond our prerogative to pass upon and decide.
The best evidence are the statistics on the retail trade, which put
down the figures in black and white. Between 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 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:
Assets
Year and Retailers No.- Per cent
Pesos
Nationality Establishments Distributio

The alien retailer must have started plying his trades in this 1941:
country in the bigger centers of population (Time there was Filipino .......... 106,671 200,323,138 55.8
when he was unknown in provincial towns and villages). Slowly Chinese ........... 15,356 118,348,692 32.9
but gradually be invaded towns and villages; now he
predominates in the cities and big centers of population. He even Others ............ 1,646 40,187,090 11.2
pioneers, in far away nooks where the beginnings of community 1947:
life appear, ministering to the daily needs of the residents and
Filipino .......... 111,107 208,658,946 65.0
purchasing their agricultural produce for sale in the towns. It is
an undeniable fact that in many communities the alien has Chinese ........... 13,774 106,156,218 33.5
replaced the native retailer. He has shown in this trade, industry Others ........... 354 8,761,260 .4
without limit, and the patience and forbearance of a slave.
1948: (Census)
Derogatory epithets are hurled at him, but he laughs these off Filipino .......... 113,631 213,342,264 67.3
without murmur; insults of ill-bred and insolent neighbors and Chinese .......... 12,087 93,155,459 29.3
customers are made in his face, but he heeds them not, and he
Others .......... 422 10,514,675 3.3
forgets and forgives. The community takes note of him, as he
appears to be harmless and extremely useful. 1949:
Filipino .......... 113,659 213,451,602 60.8
c. Alleged alien control and dominance. —
Chinese .......... 16,248 125,223,336 35.7

There is a general feeling on the part of the public, which Others .......... 486 12,056,365 3.3
appears to be true to fact, about the controlling and dominant 1951:
position that the alien retailer holds in the nation's economy.
Filipino ......... 119,352 224,053,620 61.0
Food and other essentials, clothing, almost all articles of daily life
reach the residents mostly through him. In big cities and centers Chinese .......... 17,429 134,325,303 36.6
of population he has acquired not only predominance, but Others .......... 347 8,614,025 2.3
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 AVERAGE
Facomas and the Acefa, his control over principal foods and ASSETS AND GROSS SALES PER ESTABLISHMENT
products would easily become full and complete.
Item
Year and Retailer's
Petitioner denies that there is alien predominance and control in Assets
Nationality
the retail trade. In one breath it is said that the fear is unfounded (Pesos)
and the threat is imagined; in another, it is charged that the law
1941:
is merely the result of radicalism and pure and unabashed
nationalism. Alienage, it is said, is not an element of control; also Filipino ............................................. 1,8

Chinese ..............................................
Others ...............................................
1947:
Filipino .............................................
Chinese ...........................................
Others ..............................................
1948: (Census)
Filipino .............................................
Chinese .............................................
Others ..............................................
1949:
Filipino .............................................
Chinese ..............................................
Others ..............................................
1951:
Filipino .............................................
Chinese .............................................
Others ...............................................
(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,
7,707 9,691
price and supply.
24,415 8,281
d. Alien control and threat, subject of apprehension in
Constitutional convention. —
It is 1,878 2,516
this domination and control, which we believe has been
sufficiently shown to exist, that is the legislature's target in the
7,707 14,934
enactment of the disputed nationalization would never have
been adopted. The framers of our Constitution also believed in
24,749 13,919
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
1,878requires the
4,111nationalization of the retail trade; . . . ." (II
Aruego, The Framing of the Philippine Constitution, 662-663,
quoted on page 24,398
7,707 67 of Petitioner.) That was twenty-two years
ago; and the events since then have not been either pleasant or
24,916 Dean
comforting. 23,686
Sinco of the University of the Philippines
College of Law, commenting on the patrimony clause of the
Preamble opines that the fathers of our Constitution were
merely translating the general preoccupation of Filipinos "of the
1,878from alien
dangers 4,069
interests that had already brought under
their control the commercial and other economic activities of the
7,707 24,152
country" (Sinco, Phil. Political Law, 10th ed., p. 114); and
analyzing
24,807 the concern
20,737of the members of the constitutional
convention for the economic life of the citizens, in connection
with the nationalistic provisions of the Constitution, he says:
1,877But there3,905
has been a general feeling that alien
dominance over the economic life of the country is not
7,707desirable33,207
and that if such a situation should remain,
political independence alone is no guarantee to national
24,824stability22,033
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
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
somewhat the same way that it did in the crusade for
political freedom. Thus . . . it (the Constitution)
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. Political Law
by Sinco, 10th ed., p. 476.)
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 laws, smuggled goods and money into and out of the land,
alien domination and control to be a fact, a reality proved by violated import and export prohibitions, control laws and the
official statistics, and felt by all the sections and groups that like, in derision and contempt of lawful authority. It is also
compose the Filipino community. believed that they have engaged in corrupting public officials
with fabulous bribes, indirectly causing the prevalence of graft
e. Dangers of alien control and dominance in retail. — and corruption in the Government. As a matter of fact appeals to
unscrupulous aliens have been made both by the Government
But the dangers arising from alien participation in the retail trade and by their own lawful diplomatic representatives, action which
does not seem to lie in the predominance alone; there is a impliedly admits a prevailing feeling about the existence of many
prevailing feeling that such predominance may truly endanger of the above practices.
the national interest. With ample capital, unity of purpose and
action and thorough organization, alien retailers and merchants The circumstances above set forth create well founded fears that
can act in such complete unison and concert on such vital worse things may come in the future. The present dominance of
matters as the fixing of prices, the determination of the amount the alien retailer, especially in the big centers of population,
of goods or articles to be made available in the market, and even therefore, becomes a potential source of danger on occasions of
the choice of the goods or articles they would or would not war or other calamity. We do not have here in this country
patronize or distribute, that fears of dislocation of the national isolated groups of harmless aliens retailing goods among
economy and of the complete subservience of national economy nationals; what we have are well organized and powerful groups
and of the consuming public are not entirely unfounded. that dominate the distribution of goods and commodities in the
Nationals, producers and consumers alike can be placed communities and big centers of population. They owe no
completely at their mercy. This is easily illustrated. Suppose an allegiance or loyalty to the State, and the State cannot rely upon
article of daily use is desired to be prescribed by the aliens, them in times of crisis or emergency. While the national holds his
because the producer or importer does not offer them sufficient life, his person and his property subject to the needs of his
profits, or because a new competing article offers bigger profits country, the alien may even become the potential enemy of the
for its introduction. All that aliens would do is to agree to refuse State.
to sell the first article, eliminating it from their stocks, offering
the new one as a substitute. Hence, the producers or importers f. Law enacted in interest of national economic survival and
of the prescribed article, or its consumers, find the article security. —
suddenly out of the prescribed article, or its consumers, find the
article suddenly out of circulation. Freedom of trade is thus We are fully satisfied upon a consideration of all the facts and
curtailed and free enterprise correspondingly suppressed. circumstances that the disputed law is not the product of racial
hostility, prejudice or discrimination, but the expression of the
We can even go farther than theoretical illustrations to show the legitimate desire and determination of the people, thru their
pernicious influences of alien domination. Grave abuses have authorized representatives, to free the nation from the
characterized the exercise of the retail trade by aliens. It is a fact economic situation that has unfortunately been saddled upon it
within judicial notice, which courts of justice may not properly rightly or wrongly, to its disadvantage. The law is clearly in the
overlook or ignore in the interests of truth and justice, that there interest of the public, nay of the national security itself, and
exists a general feeling on the part of the public that alien indisputably falls within the scope of police power, thru which
participation in the retail trade has been attended by a and by which the State insures its existence and security and the
pernicious and intolerable practices, the mention of a few of supreme welfare of its citizens.
which would suffice for our purposes; that at some time or other
they have cornered the market of essential commodities, like VI. The Equal Protection Limitation
corn and rice, creating artificial scarcities to justify and enhance
profits to unreasonable proportions; that they have hoarded a. Objections to alien participation in retail trade. — The next
essential foods to the inconvenience and prejudice of the question that now poses solution is, Does the law deny the equal
consuming public, so much so that the Government has had to protection of the laws? As pointed out above, the mere fact of
establish the National Rice and Corn Corporation to save the alienage is the root and cause of the distinction between the
public from their continuous hoarding practices and tendencies; alien and the national as a trader. The alien resident owes
that they have violated price control laws, especially on foods allegiance to the country of his birth or his adopted country; his
and essential commodities, such that the legislature had to enact stay here is for personal convenience; he is attracted by the lure
a law (Sec. 9, Republic Act No. 1168), authorizing their of gain and profit. His aim or purpose of stay, we admit, is
immediate and automatic deportation for price control neither illegitimate nor immoral, but he is naturally lacking in
convictions; that they have secret combinations among that spirit of loyalty and enthusiasm for this country where he
themselves to control prices, cheating the operation of the law temporarily stays and makes his living, or of that spirit of regard,
of supply and demand; that they have connived to boycott sympathy and consideration for his Filipino customers as would
honest merchants and traders who would not cater or yield to prevent him from taking advantage of their weakness and
their demands, in unlawful restraint of freedom of trade and exploiting them. The faster he makes his pile, the earlier can the
enterprise. They are believed by the public to have evaded tax alien go back to his beloved country and his beloved kin and
countrymen. The experience of the country is that the alien protection clause to a law sought to be voided as contrary
retailer has shown such utter disregard for his customers and the thereto:
people on whom he makes his profit, that it has been found
necessary to adopt the legislation, radical as it may seem. . . . . "1. The equal protection clause of the Fourteenth
Amendment does not take from the state the power to
Another objection to the alien retailer in this country is that he classify in the adoption of police laws, but admits of the
never really makes a genuine contribution to national income exercise of the wide scope of discretion in that regard,
and wealth. He undoubtedly contributes to general distribution, and avoids what is done only when it is without any
but the gains and profits he makes are not invested in industries reasonable basis, and therefore is purely arbitrary. 2. A
that would help the country's economy and increase national classification having some reasonable basis does not
wealth. The alien's interest in this country being merely transient offend against that clause merely because it is not made
and temporary, it would indeed be ill-advised to continue with mathematical nicety, or because in practice it
entrusting the very important function of retail distribution to his results in some inequality. 3. When the classification in
hands. such a law is called in question, if any state of facts
reasonably can be conceived that would sustain it, the
The practices resorted to by aliens in the control of distribution, existence of that state of facts at the time the law was
as already pointed out above, their secret manipulations of enacted must be assumed. 4. One who assails the
stocks of commodities and prices, their utter disregard of the classification in such a law must carry the burden of
welfare of their customers and of the ultimate happiness of the showing that it does not rest upon any reasonable basis
people of the nation of which they are mere guests, which but is essentially arbitrary."
practices, manipulations and disregard do not attend the
exercise of the trade by the nationals, show the existence of real c. Authorities recognizing citizenship as basis for classification. —
and actual, positive and fundamental differences between an
alien and a national which fully justify the legislative The question as to whether or not citizenship is a legal and valid
classification adopted in the retail trade measure. These ground for classification has already been affirmatively decided
differences are certainly a valid reason for the State to prefer the in this jurisdiction as well as in various courts in the United
national over the alien in the retail trade. We would be doing States. In the case of Smith Bell & Co. vs. Natividad, 40 Phil. 136,
violence to fact and reality were we to hold that no reason or where the validity of Act No. 2761 of the Philippine Legislature
ground for a legitimate distinction can be found between one was in issue, because of a condition therein limiting the
and the other. ownership of vessels engaged in coastwise trade to corporations
formed by citizens of the Philippine Islands or the United States,
b. Difference in alien aims and purposes sufficient basis for thus denying the right to aliens, it was held that the Philippine
distinction. — Legislature did not violate the equal protection clause of the
Philippine Bill of Rights. The legislature in enacting the law had as
The above objectionable characteristics of the exercise of the ultimate purpose the encouragement of Philippine shipbuilding
retail trade by the aliens, which are actual and real, furnish and the safety for these Islands from foreign interlopers. We
sufficient grounds for legislative classification of retail traders held that this was a valid exercise of the police power, and all
into nationals and aliens. Some may disagree with the wisdom of presumptions are in favor of its constitutionality. In substance,
the legislature's classification. To this we answer, that this is the we held that the limitation of domestic ownership of vessels
prerogative of the law-making power. Since the Court finds that engaged in coastwise trade to citizens of the Philippines does not
the classification is actual, real and reasonable, and all persons of violate the equal protection of the law and due process or law
one class are treated alike, and as it cannot be said that the clauses of the Philippine Bill of Rights. In rendering said decision
classification is patently unreasonable and unfounded, it is in we quoted with approval the concurring opinion of Justice
duty bound to declare that the legislature acted within its Johnson in the case of Gibbons vs. Ogden, 9 Wheat., I, as follows:
legitimate prerogative and it can not declare that the act
transcends the limit of equal protection established by the "Licensing acts, in fact, in legislation, are universally
Constitution. restraining acts; as, for example, acts licensing gaming
houses, retailers of spirituous liquors, etc. The act, in
Broadly speaking, the power of the legislature to make this instance, is distinctly of that character, and forms
distinctions and classifications among persons is not curtailed or part of an extensive system, the object of which is to
denied by the equal protection of the laws clause. The legislative encourage American shipping, and place them on an
power admits of a wide scope of discretion, and a law can be equal footing with the shipping of other nations. Almost
violative of the constitutional limitation only when the every commercial nation reserves to its own subjects a
classification is without reasonable basis. In addition to the monopoly of its coasting trade; and a countervailing
authorities we have earlier cited, we can also refer to the case privilege in favor of American shipping is contemplated,
of Linsey vs. Natural Carbonic Fas Co. (1911), 55 L. ed., 369, in the whole legislation of the United States on this
which clearly and succinctly defined the application of equal 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. licenses to them for the business of pawnbroker, pool, billiard,
But it is to confer on her American privileges, as contra card room, dance hall, is not an infringement of constitutional
distinguished from foreign; and to preserve the rights. In Templar vs. Michigan State Board of Examiners, 90
Government from fraud by foreigners; in surreptitiously N.W. 1058 (Michigan, 1902), a law prohibiting the licensing of
intruding themselves into the American commercial aliens as barbers was held void, but the reason for the decision
marine, as well as frauds upon the revenue in the trade was the court's findings that the exercise of the business by the
coastwise, that this whole system is projected." aliens does not in any way affect the morals, the health, or even
the convenience of the community. In Takahashi vs. Fish and
The rule in general is as follows: Game Commission, 92 L. ed. 1479 (1947), a California statute
banning the issuance of commercial fishing licenses to person
Aliens are under no special constitutional protection ineligible to citizenship was held void, because the law conflicts
which forbids a classification otherwise justified simply with Federal power over immigration, and because there is no
because the limitation of the class falls along the lines of public interest in the mere claim of ownership of the waters and
nationality. That would be requiring a higher degree of the fish in them, so there was no adequate justification for the
protection for aliens as a class than for similar classes discrimination. It further added that the law was the outgrowth
than for similar classes of American citizens. Broadly of antagonism toward the persons of Japanese ancestry.
speaking, the difference in status between citizens and However, two Justices dissented on the theory that fishing rights
aliens constitutes a basis for reasonable classification in have been treated traditionally as natural resources. In Fraser vs.
the exercise of police power. (2 Am., Jur. 468-469.) 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
In Commonwealth vs. Hana, 81 N. E. 149 (Massachusetts, 1907),
void because the court found that there was no reason for the
a statute on the licensing of hawkers and peddlers, which
classification and the tax was an arbitrary deduction from the
provided that no one can obtain a license unless he is, or has
daily wage of an employee.
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 d. Authorities contra explained. —
have regard for the welfare, good order and happiness of the
community, and the court cannot question this judgment and It is true that some decisions of the Federal court and of the
conclusion. In Bloomfield vs. State, 99 N. E. 309 (Ohio, 1912), a State courts in the United States hold that the distinction
statute which prevented certain persons, among them aliens, between aliens and citizens is not a valid ground for
from engaging in the traffic of liquors, was found not to be the classification. But in this decision the laws declared invalid were
result of race hatred, or in hospitality, or a deliberate purpose to found to be either arbitrary, unreasonable or capricious, or were
discriminate, but was based on the belief that an alien cannot be the result or product of racial antagonism and hostility, and
sufficiently acquainted with "our institutions and our life as to there was no question of public interest involved or pursued.
enable him to appreciate the relation of this particular business In Yu Cong Eng vs. Trinidad, 70 L. ed. 1059 (1925), the United
to our entire social fabric", and was not, therefore, invalid. In States Supreme Court declared invalid a Philippine law making
Ohio ex rel. Clarke vs. Deckebach, 274 U. S. 392, 71 L. ed. 115 unlawful the keeping of books of account in any language other
(1926), the U.S. Supreme Court had under consideration an than English, Spanish or any other local dialect, but the main
ordinance of the city of Cincinnati prohibiting the issuance of reasons for the decisions are: (1) that if Chinese were driven out
licenses (pools and billiard rooms) to aliens. It held that plainly of business there would be no other system of distribution, and
irrational discrimination against aliens is prohibited, but it does (2) that the Chinese would fall prey to all kinds of fraud, because
not follow that alien race and allegiance may not bear in some they would be deprived of their right to be advised of their
instances such a relation to a legitimate object of legislation as to business and to direct its conduct. The real reason for the
be made the basis of permitted classification, and that it could decision, therefore, is the court's belief that no public benefit
not state that the legislation is clearly wrong; and that latitude would be derived from the operations of the law and on the
must be allowed for the legislative appraisement of local other hand it would deprive Chinese of something indispensable
conditions and for the legislative choice of methods for for carrying on their business. In Yick Wo vs. Hopkins, 30 L. ed
controlling an apprehended evil. The case of State vs. Carrol, 124 220 (1885) an ordinance conferring powers on officials to
N. E. 129 (Ohio, 1919) is a parallel case to the one at bar. withhold consent in the operation of laundries both as to
In Asakura vs. City of Seattle, 210 P. 30 (Washington, 1922), the persons and place, was declared invalid, but the court said that
business of pawn brooking was considered as having tendencies the power granted was arbitrary, that there was no reason for
injuring public interest, and limiting it to citizens is within the the discrimination which attended the administration and
scope of police power. A similar statute denying aliens the right implementation of the law, and that the motive thereof was
to engage in auctioneering was also sustained in Wright vs. May, mere racial hostility. In State vs. Montgomery, 47 A. 165 (Maine,
L.R.A., 1915 P. 151 (Minnesota, 1914). So also in Anton vs. Van 1900), a law prohibiting aliens to engage as hawkers and
Winkle, 297 F. 340 (Oregon, 1924), the court said that aliens are peddlers was declared void, because the discrimination bore no
judicially known to have different interests, knowledge, attitude, reasonable and just relation to the act in respect to which the
psychology and loyalty, hence the prohibitions of issuance of 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
In the case of Lawton vs. Steele, 38 L. ed. 385, 388. it was also
confidence that the Legislature was without plausible
held:
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. —
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. . . .
xxx xxx xxx
. . . . 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.)
. . . . 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. . . .

We now come to due process as a limitation on the exercise of

Prata Undertaking Co. vs. State Board of Embalming, 104 ALR,
the police power. It has been stated by the highest authority in
389, 395, fixes this test of constitutionality:
the United States that:
In determining whether a given act of the Legislature,
. . . . And the guaranty of due process, as has often been
passed in the exercise of the police power to regulate
held, demands only that the law shall not be
the operation of a business, is or is not constitutional,
unreasonable, arbitrary or capricious, and that the
one of the first questions to be considered by the court
means selected shall have a real and substantial relation
is whether the power as exercised has a sufficient
to the subject sought to be attained. . . . .
foundation in reason in connection with the matter
involved, or is an arbitrary, oppressive, and capricious
xxx xxx xxx use of that power, without substantial relation to the
health, safety, morals, comfort, and general welfare of
So far as the requirement of due process is concerned the public.
and in the absence of other constitutional restriction a
state is free to adopt whatever economic policy may b. Petitioner's argument considered. —
reasonably be deemed to promote public welfare, and
to enforce that policy by legislation adapted to its
Petitioner's main argument is that retail is a common, ordinary
purpose. The courts are without authority either to
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 3QUEZON CITY V ERICTA 122 SCRA 759
in the safeguard of the ownership of private agricultural lands
which together with the lands of the public domain constitute G.R. No. L-34915 June 24, 1983
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.
chong vs Hernandez
G.R. No. L-7995 , 101 Phil. 115
May 31, 1957
[Petitioner: Lao H. Ichong, in his own behalf and in behalf of
other alien residents, corporations and partnerships adversely
affected by RA 1180
Respondents: Jamie Hernandez, Secretary of Finance and
Marcelino Sarmiento, City Treasurer of Manila]
Facts:
Petitioner Lao H. Ichong brought this action to obtain a judicial
declaration that Republic Act 1180 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. In answer, the Solicitor-General and the Fiscal of
the City of Manila contend that 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.
Issue:
Whether or not Republic Act 1180 violates the equal protection
of laws.
Held/Ruling:
No. According to the Court, RA 1180 is a valid exercise of police
power. It was also then provided that police power cannot be
bargained away through the medium of a treaty or a contract.
The enactment clearly falls within the scope of the police power
of the State. 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. The petition is hereby denied, with costs
against petitioner.
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 :
... Under the provisions of municipal charters
which are known as the general welfare
clauses, a city, by virtue of its police power,
may adopt ordinances to the peace, safety,
health, morals and the best and 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 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 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 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 private respondent when it accepted the permits to commence
power, is possessed with plenary power to deal operations.
with all matters relating to the general health,
morals, and safety of the people, so long as it WHEREFORE, the petition for review is hereby DISMISSED. The
does not contravene any positive inhibition of decision of the respondent court is affirmed.
the organic law and providing that such power
is not exercised in such a manner as to justify SO ORDERED.
the interference of the courts to prevent
positive wrong and oppression.
Teehankee (Chairman), Melencio-Herrera, Plana, Vasquez and
Relova, JJ., concur.
but find them not applicable to the facts of this case. CITY GOVERNMENT OF QUEZON CITY v. JUDGE VICENTE G.
ERICTA AS JUDGE OF COURT OF FIRST INSTANCE OF RIZAL, GR
There is no reasonable relation between the setting aside of at No. L-34915, 1983-06-24
least six (6) percent of the total area of an private cemeteries for Facts:
charity burial grounds of deceased paupers and the promotion of Section 9 of ordinance No. 6118, S-64, entitled "ORDINANCE
health, morals, good order, safety, or the general welfare of the REGULATING THE ESTABLISHMENT, MAINTENANCE AND
people. The ordinance is actually a taking without compensation OPERATION OF PRIVATE MEMORIAL TYPE CEMETERY OR BURIAL
of a certain area from a private cemetery to benefit paupers who GROUND WITHIN THE JURISDICTION OF QUEZON CITY AND
are charges of the municipal corporation. Instead of building or PROVIDING PENALTIES FOR THE VIOLATION THEREOF" provides:
maintaining a public cemetery for this purpose, the city passes "Sec. 9. At least six (6) percent of the total area of the memorial
the burden to private cemeteries. park cemetery shall be set aside for charity burial of deceased
persons who are paupers and have been residents of Quezon
The expropriation without compensation of a portion of private City for at least 5 years prior to their death, to be determined by
cemeteries is not covered by Section 12(t) of Republic Act 537, competent City
the Revised Charter of Quezon City which empowers the city Authorities. The area so designated shall immediately be
council to prohibit the burial of the dead within the center of developed and should be open for operation not later than six
population of the city and to provide for their burial in a proper months from the date of approval of the application."
place subject to the provisions of general law regulating burial For several years, the aforequoted section of the Ordinance was
grounds and cemeteries. When the Local Government Code, not enforced by city authorities but seven years after the
Batas Pambansa Blg. 337 provides in Section 177 (q) that a enactment of the ordinance, the Quezon City Council passed the
Sangguniang panlungsod may "provide for the burial of the dead following resolution:
in such place and in such manner as prescribed by law or "RESOLVED by the council of Quezon assembled, to request, as it
ordinance" it simply authorizes the city to provide its own city does hereby request the City Engineer, Quezon City, to stop any
owned land or to buy or expropriate private properties to further selling and/or transaction of memorial park lots in
construct public cemeteries. This has been the law and practise Quezon City where the owners thereof have failed to donate the
in the past. It continues to the present. Expropriation, however, required 6%... space intended for paupers burial."
requires payment of just compensation. The questioned Pursuant to this resolution, the Quezon City Engineer notified
ordinance is different from laws and regulations requiring respondent Himlayang Pilipino, Inc. in writing that Section 9 of
owners of subdivisions to set aside certain areas for streets, Ordinance No. 6118, S-64 would be enforced.
parks, playgrounds, and other public facilities from the land they There being no issue of fact and the questions raised being
sell to buyers of subdivision lots. The necessities of public safety, purely legal, both petitioners and respondent agreed to the
health, and convenience are very clear from said requirements rendition of a judgment on the pleadings.
which are intended to insure the development of communities The respondent court, therefore, rendered the decision declaring
with salubrious and wholesome environments. The beneficiaries Section 9 of ordinance No. 6118, S-64 null and... void
of the regulation, in turn, are made to pay by the subdivision A motion for reconsideration having been denied, the City
developer when individual lots are sold to home-owners. Government and City Council filed the instant petition
Petitioners argue that the taking of the respondent's property is
As a matter of fact, the petitioners rely solely on the general a valid and reasonable exercise of police power and that the land
welfare clause or on implied powers of the municipal is taken for a public use as it is intended for the burial ground of
corporation, not on any express provision of law as statutory paupers.
basis of their exercise of power. The clause has always received On the other hand, respondent Himlayang Pilipino, Inc. contends
broad and liberal interpretation but we cannot stretch it to cover that the taking or confiscation of property is obvious because the
this particular taking. Moreover, the questioned ordinance was questioned ordinance permanently restricts the use of the
passed after Himlayang Pilipino, Inc. had incorporated. received property such that it cannot be used for any reasonable purpose
necessary licenses and permits and commenced operating. The and deprives the owner... of all beneficial use of his property.
sequestration of six percent of the cemetery cannot even be Issues:
considered as having been impliedly acknowledged by the "The issue is: Is Section 9 of the ordinance in question a valid
exercise of the police power?
We now come to the question whether or not Section 9 of the
ordinance in question is a valid exercise of police power.
Ruling:
We find the stand of the private respondent as well as the
decision of the respondent Judge to be well-founded.
There is no reasonable relation between the setting aside of at
least six (6) percent of the total area of all 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.
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.
WHEREFORE, the petition for review is hereby DISMISSED. The
decision of the respondent court is affirmed.
Principles:
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 powers of promoting
the public welfare by restraining and regulating the use of liberty
and property' (Quoted in Political Law by Tañada and Carreon, V-
II, p. 50). It is usually exerted in order to merely regulate the use
and... enjoyment of property of the owner.
4ERMITA-MALATE HOTEL AND MOTEL OPERATORS V CITY OF
MANILA
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 Philippines, both with offices in the City of Manila, while
again on due process grounds, not only for being arbitrary, the petitioner Go Chin is the president and general
unreasonable or oppressive but also for being vague, indefinite manager of Hotel del Mar Inc., and the intervenor Victor
and uncertain, and likewise for the alleged invasion of the right Alabanza is a resident of Baguio City, all having the
to privacy and the guaranty against self-incrimination; that capacity to sue and be sued;
Section 2 of the challenged ordinance classifying motels into two
classes and requiring the maintenance of certain minimum 2. That the respondent Mayor is the duly elected and
facilities in first class motels such as a telephone in each room, a incumbent City Mayor and chief executive of the City of
dining room or, restaurant and laundry similarly offends against Manila charged with the general power and duty to
the due process clause for being arbitrary, unreasonable and enforce ordinances of the City of Manila and to give the
oppressive, a conclusion which applies to the portion of the necessary orders for the faithful execution and
ordinance requiring second class motels to have a dining room; enforcement of such ordinances;
that the provision of Section 2 of the challenged ordinance
prohibiting a person less than 18 years old from being accepted 3. That the petitioners are duly licensed to engage in the
in such hotels, motels, lodging houses, tavern or common inn business of operating hotels and motels in Malate and
unless accompanied by parents or a lawful guardian and making Ermita districts in Manila;
it unlawful for the owner, manager, keeper or duly authorized
representative of such establishments to lease any room or
4. That on June 13, 1963, the Municipal Board of the
portion thereof more than twice every 24 hours, runs counter to
City of Manila enacted Ordinance No. 4760, which was
the due process guaranty for lack of certainty and for its
approved on June 14, 1963, by Vice-Mayor Herminio
unreasonable, arbitrary and oppressive character; and that
Astorga, then the acting City Mayor of Manila, in the
insofar as the penalty provided for in Section 4 of the challenged
absence of the respondent regular City Mayor,
ordinance for a subsequent conviction would, cause the
amending sections 661, 662, 668-a, 668-b and 669 of
automatic cancellation of the license of the offended party, in
the compilation of the ordinances of the City of Manila
effect causing the destruction of the business and loss of its
besides inserting therein three new sections. This
investments, there is once again a transgression of the due
ordinance is similar to the one vetoed by the
process clause.
respondent Mayor (Annex A) for the reasons stated in
its 4th Indorsement dated February 15, 1963 (Annex B);
There was a plea for the issuance of preliminary injunction and
for a final judgment declaring the above ordinance null and void
5. That the explanatory note signed by then Councilor
and unenforceable. The lower court on July 6, 1963 issued a writ
Herminio Astorga was submitted with the proposed
of preliminary injunction ordering respondent Mayor to refrain
ordinance (now Ordinance 4760) to the Municipal
from enforcing said Ordinance No. 4760 from and after July 8,
Board, copy of which is attached hereto as Annex C;
1963.
6. That the City of Manila derived in 1963 an annual
In the a answer filed on August 3, 1963, there was an admission
income of P101,904.05 from license fees paid by the
of the personal circumstances regarding the respondent Mayor
105 hotels and motels (including herein petitioners)
and of the fact that petitioners are licensed to engage in the
operating in the City of Manila.1äwphï1.ñët
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
Thereafter came a memorandum for respondent on January 22,
statutory or constitutional grounds. After setting forth that the
1965, wherein stress was laid on the presumption of the validity
petition did fail to state a cause of action and that the challenged
of the challenged ordinance, the burden of showing its lack of
ordinance bears a reasonable relation, to a proper purpose,
conformity to the Constitution resting on the party who assails it,
which is to curb immorality, a valid and proper exercise of the
citing not only U.S. v. Salaveria, but likewise applicable American
police power and that only the guests or customers not before
authorities. Such a memorandum likewise refuted point by point
the court could complain of the alleged invasion of the right to
the arguments advanced by petitioners against its validity. Then
privacy and the guaranty against self incrimination, with the
barely two weeks later, on February 4, 1965, the memorandum
assertion that the issuance of the preliminary injunction ex
for petitioners was filed reiterating in detail what was set forth in
parte was contrary to law, respondent Mayor prayed for, its
the petition, with citations of what they considered to be
dissolution and the dismissal of the petition.
applicable American authorities and praying for a judgment
declaring the challenged ordinance "null and void and
Instead of evidence being offered by both parties, there was
unenforceable" and making permanent the writ of preliminary
submitted a stipulation of facts dated September 28, 1964,
injunction issued.
which reads:
After referring to the motels and hotels, which are members of
1. That the petitioners Ermita-Malate Hotel and Motel
the petitioners association, and referring to the alleged
Operators Association, Inc. and Hotel del Mar Inc. are
constitutional questions raised by the party, the lower court
duly organized and existing under the laws of the
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
1
The 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.
2
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 Eboña v. Daet, (1950) 85 Phil. 369.
3
282 US 251, 328, January 5, 1931.
4
Cf. 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).
5
Noble state Bank v. Haskell, 219 U.S. 412.
6
U.S. v. Gomez-Jesus, (1915) 31 Phil. 218.
7 City of New Orleans, 31 La. Ann. 646; People ex
Rubi v. Provincial Board, (1918) 39 Phil. 660.
8
U.S. vs. Giner Cruz, (1918) 38 Phil. 677.
9
U.S. vs. Rodriguez, (1918) 38 Phil. 759. See also
Sarmiento v. Belderol, L-15719, May 31, 1961; Lapera v.
Vicente, L-18102, June 30, 1962.
10
U.S. v. Pacis, (1915) 31 Phil. 524.
11
U.S. vs. Espiritu-Santo, (1912) 23 Phil. 610; U.S. vs.
Joson, (1913) 26 Phil. 1; People vs. Chan Hong, (1938)
65 Phil. 625.
12
U.S. v. Tamparong, (1915) 31 Phil. 321.
13
U.S. v. Salaveria, (1918) 39 Phil. 102.
14
Uy Ha v. The City Mayor, L-14149, May 30, 1969;
Miranda v. City of Manila, L-17252, May 31, 1961.
15
U.S. v. Ten Yu, (1912) 24 Phil. 1.
16
There 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.
17
Frankfurter, Mr. Justice Holmes and the Supreme
Court, (1938) pp. 32- 33.
18
Frankfurter, Hannah v. Larche, (1960) 363 U.S. 420, at
487.
19
Cafeteria Workers v. McElroy, (1961) 367 U.S. 1230.
20
Bartkus v. Illinois, (1959) 359 U.S. 121.
21
Pearson v. McGraw, (1939) 308 U.S. 313.
22
Cu Unjieng v. Postpone, (1922) 42 Phil. 818, 828.
23
Citing 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. 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.
rel., Cramer v. Medberry, 39 N.Y.S. 207; 17 Misc. Rep., 8
; McGuigan v. 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.
24
98 Phil. 148 (1955), citing Great Atl & Pac. Tea Co. v
Grosjean, 301 U.S. 412, 81 L. Ed. 1193; U.S. v. Butler,
297 US 1, 80 L. Ed 477; M'Culloch v. Maryland, 4 Wheat
316, 4 L. Ed 579. The Lutz decision was followed in
Republic v. Bacolod Murcia Milling, L-19824, July 9,
1966.
 25
Ormoc Sugar Co. v. Municipal Board of Ormoc City, L-
24322, July 21, 1967.
26
Physical Therapy Organization v. Municipal Board,
(1957) 101 Phil. 1142.
27
Co Kian & Lee Ban v. City of Manila, (1955) 96 Phil.
649, 654, citing City of New Orleans v. Stafford, 27 L.
Ann. 417.
28
Rubi v. 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.
29
Calalang v. Williams (1940), 70 Phil. 726, at 733-734.
30
46 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.
31
Antamok 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.
32
Cf. "In weighing arguments of the parties it is
important to distinguish between the due process
clause of the Fourteenth Amendment as an instrument
for transmitting the principles of the First Amendment
and those cases in 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 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 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 the
state may lawfully protect." (West Virginia State Bd. of
Edu v. Barnette, (1942), 319 U.S. 624, at 639).
33
269 U.S. 385 (1926).
34
17 L. ed. 2d 149, Nov. 14, 1966.
35
Roschen v. Ward (1929), 279 U. S. 337,339.
Ermita Malate v City of Manila 20 SCRA 849 (1967)
J. Fernando
Facts:
Ermita-Malate Hotel and Motel Operators Association, and one
of its members Hotel del Mar Inc. petitioned for the prohibition
of Ordinance 4670 on June 14, 1963 to be applicable in the city
of Manila.
They claimed that the ordinance was beyond the powers of the
Manila City Board to regulate due to the fact that hotels were
not part of its regulatory powers. They also asserted that Section
1 of the challenged ordinance was unconstitutional and void for
being unreasonable and violative of due process insofar because
it would impose P6,000.00 license fee per annum for first class
motels and P4,500.00 for second class motels; there was also
the requirement that the guests would fill up a form specifying
their personal information.
There was also a provision that the premises and facilities of
such hotels, motels and lodging houses would be open for
inspection from city authorites. They claimed this to be violative
of due process for being vague.
The law also classified motels into two classes and required the
maintenance of certain minimum facilities in first class motels
such as a telephone in each room, a dining room or, restaurant
and laundry. The petitioners also invoked the lack of due process
on this for being arbitrary.
It was also unlawful for the owner to lease any room or portion
thereof more than twice every 24 hours.
There was also a prohibition for persons below 18 in the hotel.
The challenged ordinance also caused the automatic cancellation
of the license of the hotels that violated the ordinance.
The lower court declared the ordinance unconstitutional.
Hence, this appeal by the city of Manila.
Issue:
Whether Ordinance No. 4760 of the City of Manila is violative of
the due process clause?
Held: No. Judgment reversed.
Ratio:
"The presumption is towards the validity of a law.” However, 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.
O'Gorman & Young v. Hartford Fire Insurance Co- Case was in
the scope of police power. 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.”
There is no question but that the challenged ordinance was
precisely enacted to minimize certain practices hurtful to public
morals, particularly fornication and prostitution. 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."
Police power 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 constitutionalguaranties, however, the power must
not be unreasonable or violative of due process.
There is no controlling and precise definition of due process. It
has 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
from legal infirmity? It is responsiveness to the supremacy of
reason, obedience to the dictates of justice. Negatively put,
arbitrariness is ruled out and unfairness avoided.
Due process is not a narrow or "technical conception with fixed
content unrelated to time, place and circumstances," decisions
based on such a clause requiring a "close and perceptive inquiry
into fundamental principles of our society." Questions of due
process are not to be treated narrowly or pedantically in slavery
to form or phrase.
Nothing in the petition is sufficient to prove the ordinance’s
nullity for an alleged failure to meet the due process
requirement.
Cu Unjieng case: 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. Eg. Sale of liquors.
Lutz v. Araneta- Taxation may be made to supplement the state’s
police power.
In one case- “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.
On the impairment of freedom to contract by limiting duration of
use to twice every 24 hours- It was not violative of due process.
'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.
Laurel- 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.
The freedom to contract no longer "retains its virtuality as a
living principle, unlike in the sole case of People v Pomar. 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.
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.
On the law being vague on the issue of personal information, the
maintenance of establishments, and the “full rate of payment”-
Holmes- “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."
ERMITA-MALATE HOTEL & MOTEL OPERATORS v. CITY MAYOR
OF MANILA (G.R. No. L-24693)
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 has the following provisions:
1. Refraining from entertaining or accepting any guest or
customer unless it fills out a prescribed form in the lobby in
open view;
2. prohibiting admission o less than 18 years old;
3. usurious increase of license fee to P4,500 and 6,000 o 150%
and 200% respectively (tax issue also);
4. making unlawful lease or rent more than twice every 24
hours; and
5. cancellation of license for subsequent violation.
The lower court ruled in favor of the petitioners. Hence, the
appeal.
ISSUE:
Whether or not Ord 4760 is against the due process clause.
HELD:
The SC ruled in favor of Astorga. There is a presumption that
the laws enacted by Congress (in this case Mun Board) is valid.
W/o a showing or a strong foundation of invalidity, the
presumption stays. As in this case, there was only a stipulation
of facts and such cannot prevail over the presumption. Further,
the ordinance is a valid exercise of Police Power. There is no
question but that the challenged ordinance was precisely
enacted to minimize certain practices hurtful to public morals.
This is to minimize prostitution. The increase in taxes not only
discourages hotels/motels in doing any business other than
legal but also increases the revenue of the LGU concerned. And
taxation is a valid exercise of police power as well.
The due process contention is likewise untenable, There is no
controlling and precise definition of due process. It has 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 Old and Dilapidated Taxis
process which must exist both as a procedural and a
substantive requisite to free the challenged ordinance from
legal infirmity? It is responsiveness to the supremacy of reason,
obedience to the dictates of justice. Negatively put,
arbitrariness is ruled out and unfairness avoided. Nothing in the
petition is sufficient to prove the ordinance’s nullity for an
alleged failure to meet the due process requirement.
On the impairment of freedom to contract by limiting duration
of use to twice every 24 hours- It was not violative of due
process. '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.
The Court reversed the judgment of the lower court and lifted
the injuction on the Ordinance in question
5
EN BANC
G.R. No. L-59234 September 30, 1982
TAXICAB OPERATORS OF METRO MANILA, INC., FELICISIMO
CABIGAO and ACE TRANSPORTATION
CORPORATION, petitioners,
vs.
THE BOARD OF TRANSPORTATION and THE DIRECTOR OF THE
BUREAU OF LAND TRANSPORTATION, respondents.
MELENCIO-HERRERA, J.:
This Petition for "Certiorari, Prohibition and mandamus with
Preliminary Injunction and Temporary Restraining Order" filed by
the Taxicab Operators of Metro Manila, Inc., Felicisimo Cabigao
and Ace Transportation, seeks to declare the nullity of
Memorandum Circular No. 77-42, dated October 10, 1977, of the
Board of Transportation, and Memorandum Circular No. 52,
dated August 15, 1980, of the Bureau of Land Transportation.
Petitioner Taxicab Operators of Metro Manila, Inc. (TOMMI) is a
domestic corporation composed of taxicab operators, who are
grantees of Certificates of Public Convenience to operate
taxicabs within the City of Manila and to any other place in Luzon
accessible to vehicular traffic. Petitioners Ace Transportation
Corporation and Felicisimo Cabigao are two of the members of
TOMMI, each being an operator and grantee of such certificate
of public convenience.
On October 10, 1977, respondent Board of Transportation (BOT)
issued Memorandum Circular No. 77-42 which reads:
SUBJECT: Phasing out and Replacement of
WHEREAS, it is the policy of the government to
insure that only safe and comfortable units are
used as public conveyances;
WHEREAS, the riding public, particularly in
Metro-Manila, has, time and again, complained
against, and condemned, the continued
operation of old and dilapidated taxis;
WHEREAS, in order that the commuting public
may be assured of comfort, convenience, and
safety, a program of phasing out of old and
dilapidated taxis should be adopted;
WHEREAS, after studies and inquiries made by
the Board of Transportation, the latter believes
that in six years of operation, a taxi operator
has not only covered the cost of his taxis, but
has made reasonable profit for his
investments;
NOW, THEREFORE, pursuant to this policy, the
Board hereby declares that no car beyond six
years shall be operated as taxi, and in
implementation of the same hereby
promulgates the following rules and
regulations:
1. As of December 31, 1977, all taxis of Model
1971 and earlier are ordered withdrawn from
public service and thereafter may no longer be
registered and operated as taxis. In the
registration of cards for 1978, only taxis of
Model 1972 and later shall be accepted for
registration and allowed for operation;
2. As of December 31, 1978, all taxis of Model
1972 are ordered withdrawn from public
service and thereafter may no longer be
registered and operated as taxis. In the
registration of cars for 1979, only taxis of
Model 1973 and later shall be accepted for
registration and allowed for operation; and
every year thereafter, there shall be a six-year
lifetime of taxi, to wit:
1980 — Model 1974
1981 — Model 1975, etc.
All taxis of earlier models than those provided
above are hereby ordered withdrawn from
public service as of the last day of registration
of each particular year and their respective
plates shall be surrendered directly to the
 Board of Transportation for subsequent
turnover to the Land Transportation
Commission.
For an orderly implementation of this
Memorandum Circular, the rules herein shall
immediately be effective in Metro-Manila. Its
implementation outside Metro- Manila shall be
carried out only after the project has been
implemented in Metro-Manila and only after
the date has been determined by the Board. 1
Pursuant to the above BOT circular, respondent Director of the
Bureau of Land Transportation (BLT) issued Implementing
Circular No. 52, dated August 15, 1980, instructing the Regional
Director, the MV Registrars and other personnel of BLT, all within "Manifestation, Presentation of Additional Evidence and
the National Capitol Region, to implement said Circular, and
formulating a schedule of phase-out of vehicles to be allowed
and accepted for registration as public conveyances. To quote
said Circular:
Pursuant to BOT Memo-Circular No. 77-42, taxi than December 10, 1981 to enable them, in case of denial, to
units with year models over six (6) years old
are now banned from operating as public
utilities in Metro Manila. As such the units
involved should be considered as automatically
dropped as public utilities and, therefore, do
not require any further dropping order from
the BOT.
Henceforth, taxi units within the National
Capitol Region having year models over 6 years
old shall be refused registration. The following
schedule of phase-out is herewith prescribed
for the guidance of all concerned:
Year Model Automatic
Phase-Out
Year
1980
1974 1981
1975 1982
1976 1983
1977
etc. etc.
Strict compliance here is desired. 2
In accordance therewith, cabs of model 1971 were phase-out in
registration year 1978; those of model 1972, in 1979; those of
model 1973, in 1980; and those of model 1974, in 1981.
On January 27, 1981, petitioners filed a Petition with the BOT,
docketed as Case No. 80-7553, seeking to nullify MC No. 77-42 or
to stop its implementation; to allow the registration and
operation in 1981 and subsequent years of taxicabs of model
1974, as well as those of earlier models which were phased-out,
provided that, at the time of registration, they are roadworthy
and fit for operation.
On February 16, 1981, petitioners filed before the BOT a
"Manifestation and Urgent Motion", praying for an early hearing
of their petition. The case was heard on February 20, 1981.
Petitioners presented testimonial and documentary evidence,
offered the same, and manifested that they would submit
additional documentary proofs. Said proofs were submitted on
March 27, 1981 attached to petitioners' pleading entitled,
Submission of the Case for Resolution." 3
On November 28, 1981, petitioners filed before the same Board
a "Manifestation and Urgent Motion to Resolve or Decide Main
Petition" praying that the case be resolved or decided not later
avail of whatever remedy they may have under the law for the
protection of their interests before their 1975 model cabs are
phased-out on January 1, 1982.
Petitioners, through its President, allegedly made personal
follow-ups of the case, but was later informed that the records of
the case could not be located.
On December 29, 1981, the present Petition was instituted
wherein the following queries were posed for consideration by
this Court:
A. Did BOT and BLT promulgate the questioned
memorandum circulars in accord with the
manner required by Presidential Decree No.
101, thereby safeguarding the petitioners'
constitutional right to procedural due process?
B. Granting, arguendo, that respondents did
comply with the procedural requirements
imposed by Presidential Decree No. 101, would
the implementation and enforcement of the
assailed memorandum circulars violate the
petitioners' constitutional rights to.
(1) Equal
protection
of the law;
(2)
Substantive
due
process;
and
 (3)
Protection
against
arbitrary
and
unreasonab
le
classificatio
n and
standard?
On Procedural and Substantive Due Process:
Presidential Decree No. 101 grants to the Board of
Transportation the power
4. To fix just and reasonable standards,
classification, regulations, practices,
measurements, or service to be furnished,
imposed, observed, and followed by operators
of public utility motor vehicles.
Section 2 of said Decree provides procedural guidelines for said
agency to follow in the exercise of its powers:
Sec. 2. Exercise of powers. — In the exercise of
the powers granted in the preceding section,
the Board shag proceed promptly along the
method of legislative inquiry.
Apart from its own investigation and studies,
the Board, in its discretion, may require the
cooperation and assistance of the Bureau of
Transportation, the Philippine Constabulary,
particularly the Highway Patrol Group, the
support agencies within the Department of
Public Works, Transportation and
Communications, or any other government
office or agency that may be able to furnish
useful information or data in the formulation
of the Board of any policy, plan or program in
the implementation of this Decree.
The Board may also can conferences, require
the submission of position papers or other
documents, information, or data by operators
or other persons that may be affected by the
implementation of this Decree, or employ any
other suitable means of inquiry.
In support of their submission that they were denied procedural
due process, petitioners contend that they were not caged upon
to submit their position papers, nor were they ever summoned
to attend any conference prior to the issuance of the questioned
BOT Circular.
It is clear from the provision aforequoted, however, that the
leeway accorded the Board gives it a wide range of choice in
gathering necessary information or data in the formulation of
any policy, plan or program. It is not mandatory that it should
first call a conference or require the submission of position
papers or other documents from operators or persons who may
be affected, this being only one of the options open to the
Board, which is given wide discretionary authority. Petitioners
cannot justifiably claim, therefore, that they were deprived of
procedural due process. Neither can they state with certainty
that public respondents had not availed of other sources of
inquiry prior to issuing the challenged Circulars. operators of
public conveyances are not the only primary sources of the data
and information that may be desired by the BOT.
Dispensing with a public hearing prior to the issuance of the
Circulars is neither violative of procedural due process. As held in
Central Bank vs. Hon. Cloribel and Banco Filipino, 44 SCRA 307
(1972):
Pevious notice and hearing as elements of due
process, are constitutionally required for the
protection of life or vested property rights, as
well as of liberty, when its limitation or loss
takes place in consequence of a judicial or
quasi-judicial proceeding, generally dependent
upon a past act or event which has to be
established or ascertained. It is not essential to
the validity of general rules or regulations
promulgated to govern future conduct of a
class or persons or enterprises, unless the law
provides otherwise. (Emphasis supplied)
Petitioners further take the position that fixing the ceiling at six
(6) years is arbitrary and oppressive because the roadworthiness
of taxicabs depends upon their kind of maintenance and the use
to which they are subjected, and, therefore, their actual physical
condition should be taken into consideration at the time of
registration. As public contend, however, it is impractical to
subject every taxicab to constant and recurring evaluation, not
to speak of the fact that it can open the door to the adoption of
multiple standards, possible collusion, and even graft and
corruption. A reasonable standard must be adopted to apply to
an vehicles affected uniformly, fairly, and justly. The span of six
years supplies that reasonable standard. The product of
experience shows that by that time taxis have fully depreciated,
their cost recovered, and a fair return on investment obtained.
They are also generally dilapidated and no longer fit for safe and
comfortable service to the public specially considering that they
are in continuous operation practically 24 hours everyday in
three shifts of eight hours per shift. With that standard of
reasonableness and absence of arbitrariness, the requirement of
due process has been met.
On Equal Protection of the Law:
Petitioners alleged that the Circular in question violates their
right to equal protection of the law because the same is being
enforced in Metro Manila only and is directed solely towards the
taxi industry. At the outset it should be pointed out that
implementation outside Metro Manila is also envisioned in
Memorandum Circular No. 77-42. To repeat the pertinent
portion:
unconstitutional, the infringement of constitutional right must
be clear, categorical and undeniable. 10
WHEREFORE, the Writs prayed for are denied and this Petition is
hereby dismissed. No costs.

For an orderly implementation of this SO ORDERED.

Memorandum Circular, the rules herein shall
immediately be effective in Metro Manila. Its Fernando, CJ., Barredo, Makasiar, Concepcion, Jr., Guerrero,
implementation outside Metro Manila shall be Abad Santos, De Castro, Plana, Escolin, Vasquez, Relova and
carried out only after the project has been Gutierrez, Jr., JJ., concur.
implemented in Metro Manila and only after
the date has been determined by the Board. 4
Teehankee and Aquino, JJ., concur in the result.

In fact, it is the understanding of the Court that implementation

of the Circulars in Cebu City is already being effected, with the
BOT in the process of conducting studies regarding the operation
of taxicabs in other cities. Footnotes

1 Annex "A", pp. 26-27, Rollo.

The Board's reason for enforcing the Circular initially in Metro
Manila is that taxicabs in this city, compared to those of other
places, are subjected to heavier traffic pressure and more 2 Annex "B", p. 28, Ibid.
constant use. This is of common knowledge. Considering that
traffic conditions are not the same in every city, a substantial 3 Annex "D", pp. 38-53, Ibid.
distinction exists so that infringement of the equal protection
clause can hardly be successfully claimed. 4 p. 19, Ibid

As enunciated in the preambular clauses of the challenged BOT 5 Edu vs. Ericta, 35 SCRA 481 (1970).
Circular, the overriding consideration is the safety and comfort of
the riding public from the dangers posed by old and dilapidated 6 Samson vs. Mayor of Bacolod City, 60 SCRA
taxis. The State, in the exercise, of its police power, can prescribe 267 (1974).
regulations to promote the health, morals, peace, good order,
safety and general welfare of the people. It can prohibit all things 7 The Constitution of the Philippines, Second
hurtful to comfort, safety and welfare of society. 5 It may also Edition, p. 548.
regulate property rights. 6 In the language of Chief Justice
Enrique M. Fernando "the necessities imposed by public welfare
8 People vs. Vera, 65 Phil. 56; People vs. Cayat,
may justify the exercise of governmental authority to regulate
68 Phil. 12; Central Bank vs. Cloribel 44 SCRA
even if thereby certain groups may plausibly assert that their
307 (1972); Anucension vs. National Labor
interests are disregarded". 7
Union, 80 SCRA 350 (1977) citing Victoriano vs.
Elizalde Rope Workers 'Union, 59 SCRA 54
In so far as the non-application of the assailed Circulars to other (1974) & Basa vs. Federacion Obrera de la
transportation services is concerned, it need only be recalled Industria Tabaquera y Otros Trabajadores de
that the equal protection clause does not imply that the same Filipinas, 61 SCRA 93 (1974).
treatment be accorded all and sundry. It applies to things or
persons Identically or similarly situated. It permits of
9 Gumabon vs. Director of Prisons, 37 SCRA
classification of the object or subject of the law provided
420 (1971).
classification is reasonable or based on substantial distinction,
which make for real differences, and that it must apply equally to
each member of the class. 8 What is required under the equal 10 Morfe vs. Mutuc, 22 SCRA 424 (1868).
protection clause is the uniform operation by legal means so that
all persons under Identical or similar circumstance would be Saturday, February 4, 2012
accorded the same treatment both in privilege conferred and the TAXICAB OPERATORS OF METRO MANILA, INC vs. THE BOARD OF
liabilities imposed. 9 The challenged Circulars satisfy the TRANSPORTATION (1982)
foregoing criteria.
TAXICAB OPERATORS OF METRO MANILA, INC vs. THE BOARD
Evident then is the conclusion that the questioned Circulars do OF TRANSPORTATION (1982)
not suffer from any constitutional infirmity. To declare a law MELENCIO-HERRERA, J.:
 Sec. 2. Exercise of powers. — In the exercise of the powers
· On October 10, 1977, BOT issued Memorandum Circular No. granted in the preceding section, the Board shall proceed
77-42 that aimed to phase out and replace old dilapidated taxis promptly along the method of legislative inquiry.
to insure only safe comfortable units are used by the public, to Apart from its own investigation and studies, the Board, in its
respond to complaints by metro manila residents regarding the discretion, may require the cooperation and assistance of the
old dilapidated taxis, to make the commuting public more Bureau of Transportation, the Philippine Constabulary,
comfortable, have more convenience and safety. 6 years is particularly the Highway Patrol Group, the support agencies
enough for taxi operators to get back cost of unit plus profits. à within the Department of Public Works, Transportation and
no car beyond 6 years can still be operated as taxi. Communications, or any other government office or agency that
· Taxis model 1971 were considered withdrawn on Dec 31, 1977 may be able to furnish useful information or data in the
à applied it to succeeding years just add one year to both dates. formulation of the Board of any policy, plan or program in the
à they had to surrender the expired taxi’s plates to the BoT for implementation of this Decree.
turnover to Land Transpo Commission. The Board may also call conferences, require the submission of
· Pursuant to the above BOT circular, respondent Director of the position papers or other documents, information, or data by
Bureau of Land Transportation (BLT) issued Implementing operators or other persons that may be affected by the
Circular No. 52, dated August 15, 1980, instructing the Regional implementation of this Decree, or employ any other suitable
Director, the MV Registrars and other personnel of BLT, all within means of inquiry.
the NCR, to implement the phasing out of the taxis. · PET claim that they were denied due process because they
· On January 27, 1981, petitioners filed a Petition with the BOT, were not asked to submit position papers or to attend
docketed as Case No. 80-7553, seeking to nullify MC No. 77-42 or conferences regarding the assailed circ.
to stop its implementation; to allow the registration and o SC held that the PD provides a wide leeway as to how the board
operation in 1981 and subsequent years of taxicabs of model will choose to gather data in formulating its policy. NOT ALL
1974, as well as those of earlier models which were phased-out, OPTIONS ARE REQUIRED TO BE DONE FOR POLICY TO BE VALID à
provided that, at the time of registration, they are roadworthy the board has the choice of which avenue to pursue in collecting
and fit for operation. data.
· PET also claim that 6 year limit was arbitrarily set à oppressive à
The issues were in the form of questions that the petitioners they want each taxi cab to be inspected regarding their condition
presented to the SC through a query. WON it was still safe and roadworthy despite age.
A. Did BOT and BLT promulgate the questioned memorandum o Court held that their proposed standard is not practicable and can
circulars in accord with the manner required by Presidential open the door to multiple standards and corruption
Decree No. 101, thereby safeguarding the petitioners' o Court furthers aid that 6 years is a reasonable time based on
constitutional right to procedural due process? experience and based on cost and fair returns on the units
B. Granting, arguendo, that respondents did comply with the o Court held that a uniform standard is best and fair
procedural requirements imposed by Presidential Decree No.
101, would the implementation and enforcement of the assailed On Equal Protection of the Law:
memorandum circulars violate the petitioners' constitutional PET allege that the circular targets and singles out the taxi
rights to. industry = violation of their equal protection rights
(1) Equal protection of the law; è Court said NO. Circs of the same kind are also being implemented
(2) Substantive due process; and in other cities like Cebu and is also in the process of conducting
(3) Protection against arbitrary and unreasonable classification the same studies and policy formulations in other cities.
and standard? è Manila was first because of the heavier traffic pressure and the
more constant use of the taxis in MM.
HELD: è SUBSTANTIAL DISTINCTION à the traffic conditions in the various
The court here did not answer the queries directly they just dealt cities
with the ff issues
1. WON the procedural and substantive due process rights of the CONCLUSIONS:
taxi operators were violated à NO. è Manila has more traffic which means that taxis in Metro Manila are
2. WON their equal protection rights were violatedà NO. more heavily used and more likely to deteriorate.
è The public has a right to convenience, comfort and safety in their
On Procedural and Substantive Due Process: public commute.
Presidential Decree No. 101 grants to the Board èof The danger posed by the dilapidated and old taxis is a valid
Transportation the power nuisance that the Board can abate through the circular that it
4. To fix just and reasonable standards, classification, passed.
regulations, practices, measurements, or service to be furnished,
è Absent a clear showing of any repugnancy of the circular it is
imposed, observed, and followed by operators of public utility deemed valid.
motor vehicles. Petition DISMISSED
Section 2 of said Decree provides procedural guidelines for said Taxicab Operators vs. Board of Transportation
agency to follow in the exercise of its powers: G.R. No. L-59234. September 30, 1982.

Facts:
Petitioners who are taxicab operators assail the constitutionality
of Memorandum Circular No. 77-42 issued by the Board of
Transportation (BOT) providing for the phasing out and
replacement of old and dilapidated taxicabs; as well as
Implementing Circular No. 52 issued pursuant thereto by the
Bureau of Land Transportation (BLT) instructing personnel of the
BLT within the National Capital Region to implement the said
BOT Circular, and formulating a schedule of phase-out of vehicles
to be allowed and accepted for registration as public
conveyances.
Petitioners allege that the questioned Circulars did not afford
them procedural and substantive due process, equal protection
of the law, and protection against arbitrary and unreasonable
classification and standard. Among others, they question the
issuance of the Circulars without first calling them to a
conference or requiring them to submit position papers or other
documents enforceability thereof only in Metro Manila; and
their being applicable only to taxicabs and not to other
transportation services.
Issues:
Whether or not the constitutional guarantee of due process was
denied to the taxicab operators and/or other persons affected by
the assailed Circular No. 52.
Held:
The Supreme Court held that there was no denial of due process
since calling the taxicab operators or persons who may be
affected by the questioned Circulars to a conference or requiring
them to submit position papers or other documents is only one
of the options open to the BOT which is given wide discretionary
authority under P.D. No. 101; and fixing a six- year ceiling for a
car to be operated as taxicab is a reasonable standard adopted
to apply to all vehicles affected uniformly, fairly, and justly.
The Court also ruled that neither has the equal protection clause
been violated by initially enforcing the Circulars only in Metro
Manila since it is of common knowledge that taxicabs in this city,
compared to those of other places, are subjected to heavier
traffic pressure and more constant use, thus making for a
substantial distinction; nor by non-application of the Circulars to
other transportation services because the said Circulars satisfy
the criteria required under the equal protection clause, which is
the uniform operation by legal means so that all persons under
identical or similar circumstances would be accorded the same
treatment both in privilege conferred and the liabilities imposed.
It is clear from the provision of Section 2 of P.D. 101
aforequoted, that the leeway accorded the Board gives it a wide
range of choice in gathering necessary information or data in the
formulation of any policy, plan or program. It is not mandatory
that it should first call a conference or require the submission of
position papers or other documents from operators or persons
who maybe affected, this being only one of the options open to
the Board, which is given wide discretionary authority.
Petitioners cannot justifiably claim, therefore, that they were
deprived of procedural due process. Neither can they state with
certainty that public respondents had not availed of other
sources of inquiry prior to issuing the challenged Circulars.
Operators of public conveyances are not the only primary
sources of the data and information that may be desired by the
BOT.
6
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY ENERGY
REGULATORY BOARD petitioner, vs. MANILA ELECTRIC
COMPANY, respondent.
[G.R. No. 141369. November 15, 2002]
LAWYERS AGAINST MONOPOLY AND POVERTY (LAMP)
consisting of CEFERINO PADUA, Chairman, G. FULTON
ACOSTA,GALILEO BRION, ANATALIA BUENAVENTURA,
PEDRO CASTILLO, NAPOLEON CORONADO, ROMEO
ECHAUZ, FERNANDO GAITE, ALFREDO DE GUZMAN,
ROGELIO KARAGDAG, JR., MA. LUZ ARZAGA-
MENDOZA, ANSBERTO PAREDES, AQUILINO PIMENTEL
III, MARIO REYES, EMMANUEL SANTOS, RUDEGELIO
TACORDA, members, and ROLANDO ARZAGA,
Secretary-General, JUSTICE ABRAHAM SARMIENTO,
SENATOR AQUILINO PIMENTEL, JR. and
COMMISSIONER BARTOLOME FERNANDEZ, JR., Board
of Consultants, and Lawyer GENARO
LUALHATI, petitioners, vs. MANILA ELECTRIC
COMPANY (MERALCO), respondent.
DECISION
PUNO, J.:
In third world countries like the Philippines, equal justice
will have a synthetic ring unless the economic rights of the
people, especially the poor, are protected with the same
resoluteness as their right to liberty. The cases at bar are of
utmost significance for they concern the right of our people to
electricity and to be reasonably charged for their consumption.
In configuring the contours of this economic right to a basic
necessity of life, the Court shall define the limits of the power of
respondent MERALCO, a giant public utility and a monopoly, to
charge our people for their electric consumption. The question
is: should public interest prevail over private profits?
The facts are brief and undisputed. On December 23, 1993,
MERALCO filed with the ERB an application for the revision of its
rate schedules. The application reflected an average increase of
21 centavos per kilowatthour (kwh) in its distribution charge. The
application also included a prayer for provisional approval of the
increase pursuant to Section 16(c) of the Public Service Act and
Section 8 of Executive Order No. 172.
 On January 28, 1994, the ERB issued an Order granting a Petitioners are now before the Court seeking a reversal of
provisional increase of P0.184 per kwh, subject to the following the decision of the Court of Appeals by arguing primarily that the
condition: Court of Appeals erred: a) in ruling that income tax paid by
MERALCO should be treated as part of its operating expenses
In the event, however, that the Board finds, after hearing and and thus considered in determining the amount of increase in
submission by the Commission on Audit of an audit report on the rates imposed by MERALCO and b) in rejecting the net average
books and records of the applicant that the latter is entitled to a investment method used by the COA and the ERB and instead
lesser increase in rates, all excess amounts collected from the adopted the average investment method used by MERALCO.
applicants customers as a result of this Order shall either be
We grant the petition.
refunded to them or correspondingly credited in their favor for
application to electric bills covering future consumptions.[1] The regulation of rates to be charged by public utilities is
founded upon the police powers of the State and statutes
In the same Order, the ERB requested the Commission on
prescribing rules for the control and regulation of public utilities
Audit (COA) to conduct an audit and examination of the books
are a valid exercise thereof. When private property is used for a
and other records of account of the applicant for such period of
public purpose and is affected with public interest, it ceases to
time, which in no case shall be less than 12 consecutive months,
be juris privati only and becomes subject to regulation. The
as it may deem appropriate and to submit a copy thereof to the
regulation is to promote the common good. Submission to
ERB immediately upon completion.[2]
regulation may be withdrawn by the owner by discontinuing use;
On February 11, 1997, the COA submitted its Audit Report but as long as use of the property is continued, the same is
[9]
SAO No. 95-07 (the COA Report) which contained, among others, subject to public regulation.
the recommendation not to include income taxes paid by
In regulating rates charged by public utilities, the State
MERALCO as part of its operating expenses for purposes of rate
protects the public against arbitrary and excessive rates while
determination and the use of the net average investment
maintaining the efficiency and quality of services rendered.
method for the computation of the proportionate value of the
However, the power to regulate rates does not give the State the
properties used by MERALCO during the test year for the
right to prescribe rates which are so low as to deprive the public
determination of the rate base.[3]
utility of a reasonable return on investment. Thus, the rates
Subsequently, the ERB rendered its decision adopting the prescribed by the State must be one that yields a fair return on
above recommendations and authorized MERALCO to the public utility upon the value of the property performing the
implement a rate adjustment in the average amount of P0.017 service and one that is reasonable to the public for the services
[10]
per kwh, effective with respect to MERALCOs billing cycles rendered. The fixing of just and reasonable rates involves a
[11]
beginning February 1994. The ERB further ordered that the balancing of the investor and the consumer interests.
provisional relief in the amount of P0.184 per kilowatthour
In his famous dissenting opinion in the 1923 case
granted under the Boards Order dated January 28, 1994 is
of Southwestern Bell Tel. Co. v. Public Service
hereby superseded and modified and the excess average amount
Commission,[12] Mr. Justice Brandeis wrote:
of P0.167 per kilowatthour starting with [MERALCOs] billing
cycles beginning February 1994 until its billing cycles beginning
February 1998, be refunded to [MERALCOs] customers or The thing devoted by the investor to the public use is not specific
property, tangible and intangible, but capital embarked in an
correspondingly credited in their favor for future consumption. [4]
enterprise. Upon the capital so invested, the Federal
The ERB held that income tax should not be treated as Constitution guarantees to the utility the opportunity to earn
operating expense as this should be borne by the stockholders a fair return The Constitution does not guarantee to the utility
who are recipients of the income or profits realized from the the opportunity to earn a return on the value of all items of
operation of their business hence, should not be passed on to property used by the utility, or of any of them.
the consumers.[5] Further, in applying the net average
investment method, the ERB adopted the recommendation of .
COA that in computing the rate base, only the proportionate
value of the property should be included, determined in The investor agrees, by embarking capital in a utility, that
accordance with the number of months the same was actually its charges to the public shall be reasonable. His company is the
used in service during the test year.[6] substitute for the State in the performance of the public
On appeal, the Court of Appeals set aside the ERB decision service, thus becoming a public servant. The compensation
insofar as it directed the reduction of the MERALCO rates by an which the Constitution guarantees an opportunity to earn is the
average of P0.167 per kwh and the refund of such amount to reasonable cost of conducting the business.
MERALCOs customers beginning February 1994 and until its While the power to fix rates is a legislative function,
billing cycle beginning February 1998.[7] Separate Motions for whether exercised by the legislature itself or delegated through
Reconsideration filed by the petitioners were denied by the an administrative agency, a determination of whether the rates
Court of Appeals.[8] so fixed are reasonable and just is a purely judicial question and
is subject to the review of the courts.[13]
 The ERB was created under Executive Order No. 172 to a fair return and the proper valuation of the rate base or the
regulate, among others, the distribution of energy resources and value of the property entitled to a return.
to fix rates to be charged by public utilities involved in the I
distribution of electricity. In the fixing of rates, the only
standard which the legislature is required to prescribe for the
guidance of the administrative authority is that the rate be Income Tax as Operating Expense Cannot be Allowed For Rate-
reasonable and just. It has been held that even in the absence of Determination Purposes
an express requirement as to reasonableness, this standard may
be implied.[14] What is a just and reasonable rate is a question of In determining whether or not a rate yields a fair return to
fact calling for the exercise of discretion, good sense, and a fair, the utility, the operating expenses of the utility must be
enlightened and independent judgment. The requirement of considered. The return allowed to a public utility in accordance
reasonableness comprehends such rates which must not be so with the prescribed rate must be sufficient to provide for the
low as to be confiscatory, or too high as to be oppressive. In payment of such reasonable operating expenses incurred by the
determining whether a rate is confiscatory, it is essential also to public utility in the provision of its services to the public. Thus,
consider the given situation, requirements and opportunities of the public utility is allowed a return on capital over and above
the utility.[15] operating expenses. However, only such expenses and in such
amounts as are reasonable for the efficient operation of the
Settled jurisprudence holds that factual findings of utility should be allowed for determination of the rates to be
administrative bodies on technical matters within their area of charged by a public utility.
expertise should be accorded not only respect but even finality if
they are supported by substantial evidence even if not The ERB correctly ruled that income tax should not be
overwhelming or preponderant.[16] In one case, [17] we cautioned included in the computation of operating expenses of a public
that courts should "refrain from substituting their discretion on utility. Income tax paid by a public utility is inconsistent with the
the weight of the evidence for the discretion of the Public nature of operating expenses. In general, operating expenses are
Service Commission on questions of fact and will only reverse or those which are reasonably incurred in connection with business
modify such orders of the Public Service Commission when it operations to yield revenue or income. They are items of
really appears that the evidence is insufficient to support their expenses which contribute or are attributable to the production
conclusions."[18] of income or revenue. As correctly put by the ERB, operating
expenses should be a requisite of or necessary in the operation
In the cases at bar, findings and conclusions of the ERB on of a utility, recurring, and that it redounds to the service or
the rate that can be charged by MERALCO to the public should benefit of customers.[26]
be respected.[19] The function of the court, in exercising its power
of judicial review, is to determine whether under the facts and Income tax, it should be stressed, is imposed on an
circumstances, the final order entered by the administrative individual or entity as a form of excise tax or a tax on the
agency is unlawful or unreasonable.[20] Thus, to the extent that privilege of earning income.[27] In exchange for the protection
the administrative agency has not been arbitrary or capricious in extended by the State to the taxpayer, the government collects
the exercise of its power, the time-honored principle is that taxes as a source of revenue to finance its activities. Clearly, by
courts should not interfere. The principle of separation of its nature, income tax payments of a public utility are not
powers dictates that courts should hesitate to review the acts of expenses which contribute to or are incurred in connection with
administrative officers except in clear cases of grave abuse of the production of profit of a public utility. Income tax should be
discretion.[21] borne by the taxpayer alone as they are payments made in
exchange for benefits received by the taxpayer from the State.
In determining the just and reasonable rates to be charged No benefit is derived by the customers of a public utility for the
by a public utility, three major factors are considered by the taxes paid by such entity and no direct contribution is made by
regulating agency: a) rate of return; b) rate base and c) the the payment of income tax to the operation of a public utility for
return itself or the computed revenue to be earned by the purposes of generating revenue or profit. Accordingly, the
public utility based on the rate of return and rate base. [22] The burden of paying income tax should be Meralcos alone and
rate of return is a judgment percentage which, if multiplied with should not be shifted to the consumers by including the same in
the rate base, provides a fair return on the public utility for the the computation of its operating expenses.
use of its property for service to the public.[23] The rate of return
of a public utility is not prescribed by statute but by The principle behind the inclusion of operating expenses in
administrative and judicial pronouncements. This Court has the determination of a just and reasonable rate is to allow the
consistently adopted a 12% rate of return for public public utility to recoup the reasonable amount of expenses it has
utilities.[24] The rate base, on the other hand, is an evaluation of incurred in connection with the services it provides. It does not
the property devoted by the utility to the public service or the give the public utility the license to indiscriminately charge any
value of invested capital or property which the utility is entitled and all types of expenses incurred without regard to the nature
to a return.[25] thereof, i.e., whether or not the expense is attributable to the
In the cases at bar, the resolution of the issues involved hinges production of services by the public utility. To charge consumers
on the determination of the kind and the amount of operating for expenses incurred by a public utility which are not related to
expenses that should be allowed to a public utility to generate
the service or benefit derived by the customers from the public within a particular state.[32] A significant aspect of state and local
utility is unjustified and inequitable. taxation of public utilities in the United States is that they have
been singled out for special taxation, i.e., they are required to
While the public utility is entitled to a reasonable return on
pay one or more taxes that are not levied upon other industries.
the fair value of the property being used for the service of the
In contrast, in this jurisdiction, public utilities are subject to the
public, no less than the Federal Supreme Court of the United
same tax treatment as any other corporation and local taxes paid
States emphasized: [t]he public cannot properly be subjected to by it to various local government units are substantially the
unreasonable rates in order simply that stockholders may earn
same. The reason for this is that the power to tax resides in our
dividends If a corporation cannot maintain such a [facility] and
legislature which may prescribe the limits of both national and
earn dividends for stockholders, it is a misfortune for it and them
local taxation, unlike in the federal system of the United States
which the Constitution does not require to be remedied by where state legislature may prescribe taxes to be levied in their
imposing unjust burdens on the public.[28]
respective jurisdictions.
We are not impressed by the reliance by MERALCO on
MERALCO likewise cites decisions of the ERB[33] allowing the
some American case law allowing the treatment of income tax application of a tax recovery clause for the imposition of an
paid by a public utility as operating expense for rate-making
additional charge on consumers for taxes paid by the public
purposes. Suffice to state that with regard to rate-determination,
utility. A close look at these decisions will show they
the government is not hidebound to apply any particular method
are inappropos. In the said cases, the ERB approved the adoption
or formula.[29] The question of what constitutes a reasonable of a formula which will allow the public utility to recover from its
return for the public utility is necessarily determined and
customers taxes already paid by it. However, in the cases at bar,
controlled by its peculiar environmental milieu. Aside from the
the income tax component added to the operating expenses of a
financial condition of the public utility, there are other critical
public utility is based on an estimate or approximate figure of
factors to consider for purposes of rate regulation. Among income tax to be paid by the public utility. It is this estimated
others, they are: particular reasons involved for the request of
amount of income tax to be paid by MERALCO which is included
the rate increase, the quality of services rendered by the public
in the amount of operating expenses and used as basis in
utility, the existence of competition, the element of risk or determining the reasonable rate to be charged to the customers.
hazard involved in the investment, the capacity of consumers,
Accordingly, the varying factual circumstances in the said cases
etc.[30] Rate regulation is the art of reaching a result that is good
prohibit a square application of the rule under the previous ERB
for the public utility and is best for the public.
decisions.
For these reasons, the Court cannot give in to the II
importunings of MERALCO that we blindly apply the rulings of
American courts on the treatment of income tax as operating
expenses in rate regulation cases. An approach allowing the
indiscriminate inclusion of income tax payments as operating Use of Net Average Investment Method is Not Unreasonable
expenses may create an undesirable precedent and serve as a In the determination of the rate base, property used in the
blanket authority for public utilities to charge their income tax operation of the public utility must be subject to appraisal and
payments to operating expenses and unjustly shift the tax evaluation to determine the fair value thereof entitled to a fair
burden to the customer. To be sure, public utility taxation in the return. With respect to those properties which have not been
United States is going through the eye of criticism. Some used by the public utility for the entire duration of the test
commentators are of the view that by allowing the public utility year, i.e., the year subject to audit examination for rate-making
to collect its income tax payment from its customers, a form of purposes, a valuation method must be adopted to determine the
sales tax is, in effect, imposed on the public for consumption of proportionate value of the property. Petitioners maintain that
public utility services. By charging their income tax payments to the net average investment method (also known as actual
their customers, public utilities virtually become tax collectors number of months use method) recommended by COA and
rather than taxpayers.[31] In the cases at bar, MERALCO has not adopted by the ERB should be used, while MERALCO argues that
justified why its income tax should be treated as an operating the average investment method (also known as the trending
expense to enable it to derive a fair return for its services. method) to determine the proportionate value of properties
It is also noteworthy that under American laws, public should be applied.
utilities are taxed differently from other types of corporations Under the net average investment method, properties and
and thus carry a heavier tax burden. Moreover, different types of equipment used in the operation of a public utility are entitled to
taxes, charges, tolls or fees are assessed on a public utility a return only on the actual number of months they are in service
depending on the state or locality where it operates. At a federal during the period.[34] In contrast, the average investment method
level, public utilities are subject to corporate income taxes and computes the proportionate value of the property by adding the
Social Security taxesin the same manner as other business value of the property at the beginning and at the end of the test
corporations. At the state and local levels, public utilities are year with the resulting sum divided by two.[35]
subject to a wide variety of taxes, not all of which are imposed
on each state. Thus, it is not unusual to find different taxes or The ERB did not abuse its discretion when it applied the net
combinations of taxes applicable to respective utility industries average investment method. The reasonableness of net average
investment method is borne by the records of the case. In its
report, the COA explained that the computation of the
proportionate value of the property and equipment in
accordance with the actual number of months such property or
equipment is in service for purposes of determining the rate
base is favored, as against the trending method employed by
MERALCO, to reflect the real status of the property. [36] By using
the net average investment method, the ERB and the COA
considered for determination of the rate base the value of
properties and equipment used by MERALCO in proportion to
the period that the same were actually used during the period in
question. This treatment is consistent with the settled rule in
rate regulation that the determination of the rate base of a
public utility entitled to a return must be based on properties
and equipment actually being used or are useful to the
operations of the public utility.[37]
MERALCO does not seriously contest this treatment of
actual usage of property but opposes the method of
computation or valuation thereof adopted by the ERB and the
COA on the ground that the net average investment method
assumes an ideal situation where a utility, like MERALCO, is able
to record in its books within any given month the value of all the
properties actually placed in service during that
month.[38] MERALCO contends that immediate recordal in its
books of the property or equipment is not possible as MERALCOs
franchise covers a wide area and that due to the volume of
properties and equipment put into service and the amount of
paper work required to be accomplished for recording in the
books of the company, it takes three to six months (often longer)
before an asset placed in service is recorded in the books of
MERALCO.[39] Hence, MERALCO adopted the average investment
method or the trending method which computes the average
value of the property at the beginning and at the end of the test
year to compensate for the irregular recording in its books.
MERALCOS stance is belied by the COA Report which states
that the verification of the records, as confirmed by the
Management Staff, disclosed that properties are recorded in the
books as these are actually placed in service.[40] Moreover, while
the case was pending trial before the ERB, the ERB conducted an
ocular inspection to examine the assets in service, records and
books of accounts of MERALCO to ascertain the physical
existence, ownership, valuation and usefulness of the assets
contained in the COA Report.[41] Thus, MERALCOs contention
that the date of recordal in the books does not reflect the date
when the asset is placed in service is baseless.
Further, computing the proportionate value of assets used
in service in accordance with the actual number of months the
same is used during the test year is a more accurate method of
determining the value of the properties of a public utility entitled
to a return. If, as determined by COA, the date of recordal in the
books of MERALCO reflects the actual date the equipment or
property is used in service, there is no reason for the ERB to
adopt the trending method applied by MERALCO if a more
precise method is available for determining the proportionate
value of the assets placed in service.
If we were to sustain the application of the trending
method, the public utility may easily manipulate the valuation of
its property entitled to a return (rate base) by simply including a
highly capitalized asset in the computation of the rate base even
if the same was used for a limited period of time during the test
year. With the inexactness of the trending method and the
possibility that the valuation of certain properties may be subject
to the control of and abuse by the public utility, the Court finds
no reasonable basis to overturn the recommendation of COA
and the decision of the ERB.
MERALCO further insists that the Court should sustain the
trending method in view of previous decisions by the Public
Service Commission and of this Court which upheld the use of
this method. By refusing to adopt the trending method,
MERALCO argues that the ERB violated the rule on stare decisis.
Again, we are not impressed. It is a settled rule that the
goal of rate-making is to arrive at a just and reasonable rate for
both the public utility and the public which avails of the formers
products and services.[42] However, what is a just and reasonable
rate cannot be fixed by any immutable method or formula.
Hence, it has been held that no public utility has a vested right to
any particular method of valuation.[43] Accordingly, with respect
to a determination of the proper method to be used in the
valuation of property and equipment used by a public utility for
rate-making purposes, the administrative agency is not bound to
apply any one particular formula or method simply because the
same method has been previously used and applied. In fact,
nowhere in the previous decisions cited by MERALCO which
applied the trending method did the Court rule that the same
should be the only method to be applied in all instances.
At any rate, MERALCO has not adequately shown that the
rates prescribed by the ERB are unjust or confiscatory as to
deprive its stockholders a reasonable return on investment. In
the early case of Ynchausti S.S. Co. v. Public Utility
Commissioner, this Court held: [t]here is a legal presumption
that the rates fixed by an administrative agency are reasonable,
and it must be conceded that the fixing of rates by the
Government, through its authorized agents, involves the exercise
of reasonable discretion and, unless there is an abuse of that
discretion, the courts will not interfere.[44] Thus, the burden is
upon the oppositor, MERALCO, to prove that the rates fixed by
the ERB are unreasonable or otherwise confiscatory as to merit
the reversal of the ERB. In the instant cases, MERALCO was
unable to discharge this burden.
WHEREFORE, in view of the foregoing, the instant petitions
are GRANTED and the decision of the Court of Appeals in C.A.
G.R. SP No. 46888 is REVERSED. RespondentMERALCO is
authorized to adopt a rate adjustment in the amount of P0.017
per kilowatthour, effective with respect to MERALCOs billing
cycles beginning February 1994. Further, in accordance with the
decision of the ERB dated February 16, 1998, the excess average
amount of P0.167 per kilwatthour starting with the applicants
billing cycles beginning February 1998 is ordered to be refunded
to MERALCOs customers or correspondingly credited in their
favor for future consumption.
SO ORDERED.
 Panganiban, Sandoval-Gutierrez, Corona, and Carpio-
Morales, JJ., concur.
Republic vs. Meralco [G.R. No. 141314. November 15, 2002.]
Facts:
On 23 December 1993, Manila Electric Company (MERALCO)
filed with the Energy Regulatory Board (ERB) an application for
the revision of its rate schedules. The application reflected an
average increase of P0.21/kwh in its distribution charge. The
application also included a prayer for provisional approval of the
increase pursuant to Section 16(c) of the Public Service Act and
Section 8 of Executive Order 172. On 28 January 1994, the ERB
issued an Order granting a provisional increase of P0.184/kwh,
subject to the condition that in the event that the Board finds
that MERALCO is entitled to a lesser increase in rates, all excess
amounts collected from the applicant’s customers as a result of
this Order shall either be refunded to them or correspondingly
credited in their favor for application to electric bills covering
future consumptions. Subsequent to an audit by the Commission
on Audit (COA), the ERB rendered its decision adopting COA’s
recommendations and authorized MERALCO to implement a rate
adjustment in the average amount of P0.017/kwh, effective with
respect to MERALCO’s billing cycles beginning February 1994.
The ERB further ordered that “the provisional relief in the
amount of P0.184/kwh granted under the Board’s Order dated
28 January 1994 is hereby superseded and modified and the
excess average amount of P0.167/kwh starting with MERALCO’s
billing cycles beginning February 1994 until its billing cycles
beginning February 1998, be refunded to MERALCO’s customers
or correspondingly credited in their favor for future
consumption.” The ERB held that income tax should not be
treated as operating expense as this should be “borne by the
stockholders who are recipients of the income or profits realized
from the operation of their business” hence, should not be
passed on to the consumers. Further, in applying the net average
investment method, the ERB adopted the recommendation of
COA that in computing the rate base, only the proportionate
value of the property should be included, determined in
accordance with the number of months the same was actually
used in service during the test year.
On appeal (CA GR SP 46888), the Court of Appeals set aside the
ERB decision insofar as it directed the reduction of the MERALCO
rates by an average of P0.167/ kwh and the refund of such
amount to MERALCO’s customers beginning February 1994 and
until its billing cycle beginning February 1998. Separate Motions
for Reconsideration filed by the petitioners were denied by the
Court of Appeals. Hence, the petition before the Supreme Court.
The Supreme Court granted the petitions and reversed the
decision of the Court of Appeals. MERALCO was authorized to
adopt a rate adjustment in the amount of P0.017/kwh, effective
with respect to MERALCO’s billing cycles beginning February
1994. Further, in accordance with the decision of the ERB dated
16 February 1998, the excess average amount of P0.167/kwh
starting with the applicant’s billing cycles beginning February
1998 is ordered to be refunded to MERALCO’s customers or
correspondingly credited in their favor for future consumption.
1. Regulation of rates by public utilities founded on the State’s
police powers
The regulation of rates to be charged by public utilities is
founded upon the police powers of the State and statutes
prescribing rules for the control and regulation of public utilities
are a valid exercise thereof. When private property is used for a
public purpose and is affected with public interest, it ceases to
be juris privati only and becomes subject to regulation. The
regulation is to promote the common good. Submission to
regulation may be withdrawn by the owner by discontinuing use;
but as long as use of the property is continued, the same is
subject to public regulation.
RP represented by ERB vs Manila Electric Company
Chester Cabalza recommends his visitors to please read the
original & full text of the case cited. Xie xie!
G.R. No. 141314 November 15, 2002
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY ENERGY
REGULATORY BOARD petitioner,
vs.
MANILA ELECTRIC COMPANY, respondent.
-----------------------------
G.R. No. 141369 November 15, 2002
LAWYERS AGAINST MONOPOLY AND POVERTY (LAMP)
consisting of CEFERINO PADUA, Chairman, G. FULTON ACOSTA,
GALILEO BRION, ANATALIA BUENAVENTURA,
PEDRO CASTILLO, NAPOLEON CORONADO, ROMEO ECHAUZ,
FERNANDO GAITE, ALFREDO DE GUZMAN, ROGELIO
KARAGDAG, JR., MA. LUZ ARZAGA-MENDOZA, ANSBERTO
PAREDES, AQUILINO PIMENTEL III, MARIO REYES, EMMANUEL
SANTOS, RUDEGELIO TACORDA, members, and ROLANDO
ARZAGA, Secretary-General,
JUSTICE ABRAHAM SARMIENTO, SENATOR AQUILINO
PIMENTEL, JR. and COMMISSIONER BARTOLOME FERNANDEZ,
JR., Board of Consultants, and Lawyer GENARO LUALHATI,
petitioners,
vs.
MANILA ELECTRIC COMPANY (MERALCO), respondent.
Facts:
The MERALCO filed with the energy Regulatory Body (ERB), an
application for the revision of its rate schedules. The application
reflected an average increase of 21 centavos per kilowatthour
(kwh) in its distribution charge. The application also included a
prayer for provisional approval of the increase pursuant to
Section 16(c) of the Public Service Act and Section 8 of Executive
Order No. 172.
On January 28, 1994, the ERB issued an Order granting a
provisional increase of P0.184 per kwh, subject to the following
condition. In the same Order, the ERB requested the Commission
on Audit (COA) to conduct an audit and examination of the
books and other records of account of the applicant for such
period of time and to submit a copy thereof to the ERB
immediately upon completion.
In February 1997, COA submitted its "COA Report" which
contained, among others, the recommendation not to include
income taxes paid by MERALCO as part of its operating expenses
for purposes of rate determination and the use of the net
average investment method for the computation of the
proportionate value of the properties used by MERALCO during
the test year for the determination of the rate base.
Subsequently, the ERB rendered its decision adopting the above
recommendations and authorized MERALCO to implement a rate
adjustment. The ERB held that income tax should not be treated
as operating expense as this should be borne by the stockholders
who are recipients of the income or profits realized from the
operation of their business.
On appeal, the Court of Appeals set aside the ERB decision
insofar as it directed the reduction of the MERALCO rates by an
average of P0.167 per kwh and the refund of such amount to
MERALCO's customers beginning February 1994 and until its
billing cycle beginning February 1998. Separate Motions for
Reconsideration filed by the petitioners were denied by the
Court of Appeals.
Issues:
1. Whether in ruling that income tax paid by MERALCO should be
treated as part of its operating expenses and thus considered in
determining the amount of increase in rates imposed by
MERALCO; and
2. Whether in rejecting the net average investment method used
by the COA and the ERB, it should adopt the average investment
method used by MERALCO.
Held:
The regulation of rates to be charged by public utilities is
founded upon the police powers of the State and statutes
prescribing rules for the control and regulation of public utilities
are a valid exercise thereof.
When private property is used for a public purpose and is
affected with public interest, it ceases to be juris privati only and
becomes subject to regulation. The regulation is to promote the
common good. Submission to regulation may be withdrawn by
the owner by discontinuing use; but as long as use of the
property is continued, the same is subject to public regulation.
In regulating rates charged by public utilities, the State protects
the public against arbitrary and excessive rates while maintaining
the efficiency and quality of services rendered. However, the
power to regulate rates does not give the State the right to
prescribe rates which are so low as to deprive the public utility of
a reasonable return on investment. Thus, the rates prescribed by
the State must be one that yields a fair return on the public
utility upon the value of the property performing the service and
one that is reasonable to the public for the services rendered.
While the power to fix rates is a legislative function, whether
exercised by the legislature itself or delegated through an
administrative agency, a determination of whether the rates so
fixed are reasonable and just is a purely judicial question and is
subject to the review of the courts.
The ERB was created under Executive Order No. 172 to regulate,
among others, the distribution of energy resources and to fix
rates to be charged by public utilities involved in the distribution
of electricity. In the fixing of rates, the only standard which the
legislature is required to prescribe for the guidance of the
administrative authority is that the rate be reasonable and just.
In the cases at bar, findings and conclusions of the ERB on the
rate that can be charged by MERALCO to the public should be
respected. The function of the court, in exercising its power of
judicial review, is to determine whether under the facts and
circumstances, the final order entered by the administrative
agency is unlawful or unreasonable. The ERB correctly ruled that
income tax should not be included in the computation of
operating expenses of a public utility. Accordingly, the burden of
paying income tax should be Meralco's alone and should not be
shifted to the consumers by including the same in the
computation of its operating expenses.
The principle behind the inclusion of operating expenses in the
determination of a just and reasonable rate is to allow the public
utility to recoup the reasonable amount of expenses it has
incurred in connection with the services it provides. Under the
"net average investment method," properties and equipment
used in the operation of a public utility are entitled to a return
only on the actual number of months they are in service during
the period.
The petitions are granted but the decision of the Court of
Appeals is reversed. Respondent Meralco is authorized to adopt
a rate adjustment in the amount of P0.017 per kilowatthour,
effective with respect to MERALCO's billing cycles beginning
February 1994. Further, in accordance with the decision of the
ERB dated February 16, 1998, the excess average amount of
P0.167 per kilowatt-hour starting with the applicant's billing
cycles beginning February 1998 is ordered to be refunded to
MERALCO's customers or correspondingly credited in their favor
for future consumption.
7
G.R. No. 115044 January 27, 1995
HON. ALFREDO S. LIM, in his capacity as Mayor of Manila, and
the City of Manila, petitioners,
vs.
HON. FELIPE G. PACQUING, as Judge, branch 40, Regional Trial
Court of Manila and ASSOCIATED CORPORATION, respondents.
G.R. No. 117263 January 27, 1995
TEOFISTO GUINGONA, JR. and DOMINADOR R.
CEPEDA, petitioners,
vs.
HON. VETINO REYES and ASSOCIATED DEVELOPMENT
CORPORATION, respondents.
PADILLA, J.:
These two (2) cases which are inter-related actually involve
simple issues. if these issues have apparently become
complicated, it is not by reason of their nature because of the
events and dramatis personae involved.
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 respondent judge
[Pacquing]", in issuing the questioned orders. Judge Pacquing
had earlier issued in Civil Case No. 88-45660, RTC of Manila,
Branch 40, the following orders which were assailed by the
Mayor of the City of Manila, Hon. Alfredo S. Lim, in said G.R. No.
115044:
a. order dated 28 March 1994 directing Manila
mayor Alfredo S. Lim to issue
the permit/license to operate the jai-alai in
favor of Associated Development Corporation
(ADC).
b. order dated 11 April 1994 directing mayor
Lim to explain why he should not be cited for
contempt for non-compliance with the order
dated 28 March 1994.
c. order dated 20 April 1994 reiterating the
previous order directing Mayor Lim to
immediately issue thepermit/license to
Associated Development Corporation (ADC).
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 the permit/license to operate the jai-
alai in Manila, under Manila Ordinance No. 7065.
On 13 September 1994, petitioner Guingona (as executive
secretary) issued a directive to then chairman of the 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 jai-alai in the City of Manila, until the
following legal questions are properly resolved:
1. Whether P.D. 771 which revoked all existing
Jai-Alai franchisers issued by local governments
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
valied 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.1
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 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 Judge Vetino
Reyes, issued a temporary restraining order enjoining the GAB
from withdrawing ADC's provisional 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
Subsequently, also in G.R. No. 115044, the Republic of the
Philippines, through the Games and Amusements Board, filed a
"Motion for Intervention; for Leave to File a Motion for
reconsideration in Intervention; and to Refer the case to the
Court En Banc" and later a "Motion for Leave to File
Supplemental Motion for Reconsideration-in-Intervention and to
Admit Attached Supplemental Motion for Reconsideration-in-
Intervention".
In an En Banc Resolution dated 20 September 1994, this Court
referred G.R. No. 115044 to the Court En Banc and required the
respondents therein to comment on the aforementioned
motions.
Meanwhile, Judge Reyes on 19 October 1994 issued another
order, this time, granting ADC a writ of
preliminary mandatory injunction against Guingona and GAB to
compel them to issue in favor of ADC the authority to operate
jai-alai.
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.
On 25 October 1994, in G.R. No. 117263, this Court granted In the present case, the resulting injustice and injury, should the
petitioner's motion for leave to file supplemental petition and to national government's allegations be proven correct, are
admit attached supplemental petition with urgent prayer for manifest, since the latter has squarely questioned the very
restraining order. The Court further required respondents to file existence of a valid franchise to maintain and operate the jai-alai
their comment on the petition and supplemental petition with (which is a gambling operation) in favor of ADC. As will be more
urgent prayer for restraining order. The Court likewise set the extensively discussed later, the national government contends
case and all incidents thereof for hearing on 10 November 1994. that Manila Ordinance No. 7065 which purported to grant to
ADC a franchise to conduct jai-alai operations is void and ultra
At the hearing on 10 November 1994, the issues to be resolved vires since Republic Act No. 954, approved on 20 June 1953, or
were formulated by the Court as follows: very much earlier than said Ordinance No. 7065, the latter
approved 7 September 1971, in Section 4 thereof, requires
1. whether or not intervention by the Republic a legislative franchise, not a municipal franchise, for the
of the Philippines at this stage of the operation of jai-alai. Additionally, the national government
proceedings is proper; 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
2. assuming such intervention is proper,
1975, Sec. 3 of which expressly revoked all existing franchises
whether or not the Associated Development
and permits to operate all forms of gambling facilities (including
Corporation has a valid and subsisting franchise
the jai-alai) issued by local governments.
to maintain and operate the jai-alai;

On the other hand, ADC's position is that Ordinance No. 7065

3. whether or not there was grave abuse of
was validly enacted by the City of Manila pursuant to its
discretion committed by respondent Judge
delegated powers under it charter, Republic Act No. 409. ADC
Reyes in issuing the aforementioned temporary
also squarely assails the constitutionality of PD No. 771 as
restraining order (later writ of preliminary
violative of the equal protection and non-impairment clauses of
injunction); and
the Constitution. In this connection, counsel for ADC contends
that this Court should really rule on the validity of PD No. 771 to
4. whether or not there was grave abuse of
be able to determine whether ADC continues to possess a valid
discretion committed by respondent Judge
franchise.
Reyes in issuing the aforementioned writ of
preliminary mandatory injunction.
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
On the issue of the propriety of the intervention by the Republic
constitutionality of PD No. 771. Such issue has, in our view,
of the Philippines, a question was raised during the hearing on
become the very lis mota in resolving the present controversy, in
10 November 1994 as to whether intervention in G.R. No.
view of ADC's insistence that it was granted a valid and legal
115044 was the proper remedy for the national government to
franchise by Ordinance No. 7065 to operate the jai-alai.
take in questioning the existence of a valid ADC franchise to
operate the jai-alai or whether a separate action for quo
The time-honored doctrine is that all laws (PD No. 771 included)
warranto under Section 2, Rule 66 of the Rules of Court was the
are presumed valid and constitutional until or unless otherwise
proper remedy.
ruled by this Court. Not only this; Article XVIII Section 3 of the
Constitution states:
We need not belabor this issue since counsel for respondent ADC
agreed to the suggestion that this Court once and for all settle all
Sec. 3. All existing laws, decrees, executive
substantive issues raised by the parties in these cases. Moreover,
orders, proclamations, letters of instructions
this Court can consider the petition filed in G.R. No. 117263 as
and other executive issuances not inconsistent
one for quo warranto which is within the original jurisdiction of
with this Constitution shall remain operative
the Court under section 5(1), Article VIII of the Constitution. 3
until amended, repealed or revoked.
On the propriety of intervention by the Republic, however, it will
There is nothing on record to show or even suggest that PD No.
be recalled that this Court in Director of Lands v. Court of
771 has been repealed, altered or amended by any subsequent
Appeals (93 SCRA 238) allowed intervention even beyond the
law or presidential issuance (when the executive still exercised
period prescribed in Section 2 Rule 12 of the Rules of Court. The
legislative powers).
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 Neither can it be tenably stated that the issue of the continued
purchasers for value and in good faith and thereby open the existence of ADC's franchise by reason of the unconstitutionality
door to fraud, falsehood and misrepresentation, should of PD No. 771 was settled in G.R. No. 115044, for the decision of
intervenors' claim be proven to be true." 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 is essentially gambling and whether it should be permitted and,
the current drive of our law enforcement
agencies against vices and illegal gambling,
these social ills are still prevalent in many areas and local interests. Here, it is the police power of the State that
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
if so, under what conditions are questions primarily for the
lawmaking authority to determine, talking into account national
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 respondent Judge Vetino
Reyes in civil Case No. 94-71656.
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.
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 The government sought leave to file a supplemental petition
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 respondents therein to file their comment on October 25, 1994.
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 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 governments to the GAB the power to regulate jai-
alai.
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.
(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
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 national government may well validly require operators of such
Manila;
b. That the games to be played daily shall
commence not earlier than 5:00 o'clock (sic) in granted to them by local legislative bodies pursuant to the
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 gambling franchise issued by the local governments. When
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 7065 can stand alongside each other if one looks at the authority
City of Manila under Section 18 (jj) thereof.
The absence of authority of the Manila Municipal Board to issue "permit" the operation of jai-alai facilities within the City of
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, Supreme Court in Ashwander v. TVA that where a controversy
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
establishments to first secure a legislative franchise before
starting their operations. After securing the proper legislative
franchise, they may take then exercise whatever authority
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
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
granted by the charter of the City of Manila together with
Ordinance No. 7065 merely as an authority to "allow" and
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
4
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, motion may be allowed only before or during a trial. Said section
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
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
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 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 Subsequently, and on the different dates, the Republic filed in
and Amusements Board the G.R. No. 115044 the following pleadings: "Motion for Leave to
power to regulate Jai-Alai. File Supplemental Motion for Reconsideration-In-Intervention"
(Rollo, pp. 262-265); "Supplemental Motion for Reconsideration-
This Office has directed the solicitor General to In-Intervention" (Rollo, pp. 266-280); "Motion for Leave to File
bring before the proper court the foregoing Second Supplemental Motion for Reconsideration-In-
issues for resolution. Pending such resolution, Intervention and to Admit attached Second Supplemental
you are directed to hold in abeyance the grant Motion For Reconsideration-In-intervention" (Rollo, pp. 380-
of authority, or if any has been issued, to 382); and "Second Supplemental Motion for Reconsideration-In-
withdraw such grant of authority, to Associated Intervention" (Rollo, pp. 383-400).
Development corporation to operate he Jai-Alai
in the city of Manila (G.R. No. Acting on the motion of the Republic dated September 16, 1994,
117263, Rollo, pp. 7-8, 48, 1939; Emphasis the First Division referred, in its Resolution dated September 19,
supplied). 1994, Case G.R. No. 115044 to the Court en banc, and the latter
accepted the same in its Resolution dated September 20, 1994
On September 14, 1994, Chairman Sumulong issued a (Rollo, p. 255).
Memorandum to ADC that:
In the meantime, Chairman Sumulong resigned and Dominador
In view of the directive from the Office of the R. Cepeda, jr. was appointed as his successor.
President dated 13 September 1994,
Associated Development Corporation is hereby On September 30, 1994, Judge Reyes issued a writ of preliminary
ordered to cease and desist issues raised in the injunction (G.R. No. 117263, Rollo, pp. 2, 47).
said directive are resolved by the proper
court. The provisional authority issued pending On October 11, 1994, Executive Secretary Guingona and GAB
further scrutiny and evaluation to ADC on 9 Chairman Cepeda, Jr. filed with this Court a petition
September 1994 is hereby withdrawn (G.R. No. for certiorari, prohibition and mandamus (G.R. No.
117263, Rollo, pp. 51, 194; Emphasis supplied). 117263, Rollo, pp. 1-151) and on October 24, 1994, a
supplemental petition (G.R. No. 117263, Rollo, pp. 161-165, 166-
On September 15, 1994, ADC filed with the Regional Trial Court, 306). Petitioners assailed the following issuances of Judge Reyes
Branch 4, Manila a petition for prohibition, mandamus, Civil Case No. 94-71656:
injunction and damages with prayer for temporary restraining
order or writ of preliminary injunction (Case No. 94-71656) (1.) Temporary Restraining Order dated
against Executive Secretary Guingona and Chairman Sumulong September 15, 1994 directing Executive
assailing the former's Directive and the latter's Memorandum Secretary Guingona and chairman Sumulong to
(G.R. No. 117263, Rollo, pp. 3, 20-21, 53-75, 167-168). desist from enforcing the Directive dated
September 13, 1994 and the memorandum
On the same day, Judge Vetino Reyes issued a temporary dated September 15, 1994 (Rollo, p. 44);
restraining order enjoining Executive Secretary Guingona and
Chairman Sumulong from implementing their respective (2.) Order dated September 25, 1994 denying
Directive and memorandum (G.R. No. 117263, Rollo, pp. 2, 10, the Urgent Motion to Recall Temporary
44). Restraining Order and the Urgent
Supplemental Motion to Recall Temporary
On September 16, 1994, Executive Secretary Guingona and Restraining Order (Rollo, p. 46);
Chairman Sumulong filed an urgent motion to recall the
temporary restraining order, with opposition to the motion for (3.) Order dated September 30, 1994 directing
issuance of a writ of preliminary injunction. The said motion was the issuance of a Writ of preliminary Injunction
reiterated in the supplemental motion filed on September 20, directed against the aforesaid Directive and
1994 (G.R. No. 117263, Rollo, pp. 66-75, 76-86). Memorandum (Rollo, p. 47);

Meanwhile, on September 16, 1994, the Republic of the (4.) order dated October 19, 1994 granting
Philippines, represented by GAB, filed in G.R. No. 115044 a ADC's Motion to Amend the petition to
motion for intervention; for leave to file a motion for Conform to the Evidence and directing the
reconsideration-in-intervention; to admit the attached motion issuance of a writ of preliminary mandatory
for reconsideration-in-intervention; and to refer the case to the injunction "directing (Executive Secretary and
Court en banc (Rollo, pp. 219-249). 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 Republic merely claimed that Ordinance No. 7065 had been
(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.
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
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

II
September 9, 1988 in Civil Case No. 88-45660 is
null and void for failure to rule that P.D. No.
G.R. No. 115044
771 had revoked Ordinance No. 7065; and
Motion for Intervention
(2) The decision of Judge Villarin could not be
The Republic of the Philippines (Republic) represented by GAB
executed by a mere motion filed on March 14,
justifies its belated intervention in G.R. No. 115044 on the
1994, or more than five years and six months
grounds that "it has an interest involved in this case and will be after its promulgation.
affected by the Decision dated September 1, 1994" (G.R. No.
115044, Rollo, p. 225).
In resolving the first issue, the First Division of this court
explained that there was no way to declare the Villarin decision
The purpose of its intervention is to nullify the decision of Judge null and void because the trial court had jurisdiction over the
Augusto E. Villarin of the Regional Trial Court, Branch 40, Manila,
subject matter of the action and if it failed to rule that ordinance
dated September 1, 1994" (G.R. No. 115044, Rollo, p. 225).
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
The purpose of its intervention is to nullify the decision of Judge
Augusto E. Villarin of the Regional Trial Court, Branch 40, Manila,
and an erroneous judgment and between jurisdiction and the The case of Director of Lands v. Court of Appeals, 93 SCRA 238
exercise of jurisdiction. (1979), can not, serve as authority in support of the Republic's
intervention at this late stage. while said case involved an
In Tan v. Intermediate Appellate Court, 163 SCRA 752 (1988), the intervention for the first time in the Supreme court, the motion
Court held: to be allowed to intervene was filed before the appeal could be
decided on the merits. The intervention allowed in Republic v.
It is settled jurisprudence that except in the Sandiganbayan, G.R. No. 96073, Resolution, March 3, 1992, was
case of judgments which are void ab initio or also made before the decision on the merits by this Court. In
null and voidper se for lack of jurisdiction which contrast, the intervention of the Republic was sought after this
can be questioned at any time — and the Court had decided the petition in G.R. No. 115044 and
decision here is not of this character — once a petitioners had complied with and satisfied the judgment. While
decision becomes final, even the court which the intervention in Director of Lands was in a case that was
has rendered it can no longer alter or modify it, timely appealed from the Regional Trial Court to the Court of
except to correct clerical errors or mistakes. Appeals and from the Court of Appeals to the Supreme Court,
otherwise, there would be no end to litigation, the intervention of the Republic was in a case that had become
thus setting to naught the main role of courts final and executory more than five years prior to the filing of the
of justice, which is, to assist in the enforcement motion to intervene.
of the rule of law and the maintenance of
peace and order, by settling justifiable As of September 16, 1994, therefore, when the republic moved
controversies with finality. (See also Fabular v. to intervene, there was no longer any pending litigation between
Court of Appeals, 119 SCRA 329 [1982]; Fariscal the parties in G.R. no. 115044. Intervention is an auxiliary and
Vda. de Emnas v. Emnas, 95 SCRA 470 [1980]; supplemental remedy to an existing, not a settled litigation (cf.
Ocampo v. Caluag, 19 SCRA 917 [1967]). Clareza v. Rosales, 2 SCRA 455 [1961]). An intervention was
disallowed in a case which has becomes final and executory
As to the second issue, the First Division held that the five-year (Trazo v. Manila Pencil Co., 77 SCRA 181 [1977])
period for executing a judgment by simple motion under Section
6 of Rule 39 of the Revised Rules of Court should be counted The case of Suson v. Court of Appeals, 172 SCRA 70 (1989)
from the finality of the judgment and not from the date of its invoked by the Republic (G.R. No. 117263, Rollo, pp. 517-518) is
promulgation as was done by Mayor Lim and the City of Manila. inappropriate because the intervention therein was before the
Inasmuch as the Villarin decision was appealed to the Court of trial court, not in this Court.
Appeals and the authority to withdraw the appeal was approved
by the Court of Appeals only on may 26, 1989, the five-year In its Reply, the Republic admitted that the First Division only
period should be counted, at the earliest, from May 26, 1989. ruled on the procedural issues raised in the petition and not on
Reckoning the five-year period from said date, the motion for the constitutionality of P.D. No. 771. It even urged that GAB was
execution of the Villarin decision was filed timely on March 14, not a party to the case and therefore was not bound by
1994. the Villarin decision because under Section 49 of Rule 39, a
judgment is conclusive only "between the parties and their
Intervention as contemplated by Section 9, Rule 12 of the successor-in-interest by title subsequent to the commencement
Revised Rules of Court is a proceeding whereby a third person is of the action or special proceeding, litigating for the same thing
permitted by the court "before or during a trial" to make himself and under the same title and in the same capacity" (Rollo, pp.
a party by joining plaintiff or uniting with defendant or taking a 228-234, 431).
position adverse to both of them Gutierrez v. Villegas, 5 SCRA
313 [1962]). the term "trial" is used in its restrictive sense and With more reason then that the Republic should have ventilated
means the period for the introduction of evidence by both its claim against ADC in a separate proceeding.
parties (Bool v. Mendoza, 92 Phil. 892 [1953]; Provincial
Government of Sorsogon v. Stamatelaky, 65 Phil. 206 [1937]). Lastly, an intervenor should not be permitted to just sit idly and
The period of trial terminates when the period of judgment watch the passing scene as an uninterested overlooker before he
begins (El Hogar Filipino v. Philippine National Bank, 64 Phil. 582 wakes up to seek judicial relief (Pacursa v. Del Rosario, 24 SCRA
[1937]). 125 [1968]).

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 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 conditions as he (the Mayor) may prescribe for
good reasons of general interest:
Be that as it may, the Court may consider the motion to
intervene, motion for reconsideration-in-intervention, a. That the construction,
supplemental motion for reconsideration-in-intervention and establishment and
second supplemental motion-in-intervention as a petition maintenance of the jai-alai
for quo warranto under Rule 66 of the revised Rules of Court. In shall be at a place permissible
the liberal construction of the Rules in order to attain substantial under existing zoning
justice, the Court has treated petitions filed under one Rule as ordinances of Manila;
petitions filed under the more appropriate Rule (Davao Fruits
Corporation v. Associated Labor Union, 225 SCRA [1993]). b. That the games to be
played daily shall commence
In quo warranto, the government can require a corporation to not earlier than 5:00 o'clock
show cause by what right it exercises a privilege, which ordinarily (sic) in the afternoon;
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 c. That the City of Manila will
franchise or exercise of an office and to oust the holder from its received a share of 2 ½% on
enjoyment if his claim is not well-founded (Castro v. Del Rosario, the annual gross receipts on
19 SCRA 196 [1967]). all wagers or bets, ½% of
which will accrue to the
All the essential requisites for a petition for quo warranto are Games and Amusements
compresent. The motions were filed by the Solicitor General for Board as now provided by
the Republic of the Philippines, represented by GAB, to question law;
the right of ADC to operate and maintain the jai-alai.
d. That the corporation will,
The motions qua petition for quo warranto assert that the in addition, pay to the city an
authority of the City of Manila to issue to ADC a jai-alai franchise annual license fee of
in 1971 had been withdrawn by E.O. No. 392 in 1951 and by R.A. P3,000.00 and a daily permit
No. 954 in 1954 and that assuming the issuance of the franchise fee of P200.00;
to ADC in 1971 under Ordinance No. 7065 was valid, such
franchise, together with whatever authority of the City of Manila e. That the corporation will,
to grant the same, was voided by P.D. No. 771 in 1975. to insure its faithful
compliance of all the terms
In the case of Stone v. State of Mississippi, 101 U.S. 814, cited by and conditions under this
the Republic, the State Attorney General resorted to a quo ordinance, put up a
warranto proceeding to question the authority of petitioner performance bond from a
therein to operate and maintain a gambling establishment. surety acceptable to the city,
in the amount of at least
The franchise of ADC granted by the City of Manila under P30,000.00.
Ordinance No. 7065 reads as follows:
Sec. 2. The Mayor and the
AN ORDINANCE AUTHORIZING THE MAYOR TO City Treasurer of their duly
ALLOW AND PERMIT THE ASSOCIATED authorized representatives
DEVELOPMENT CORPORATION TO ESTABLISH, are hereby empowered to
MAINTAIN AND OPERATE A JAI-ALAI IN THE inspect at all times during
CITY OF MANILA, UNDER CERTAIN TERMS AND regular business hours the
CONDITIONS AND FOR OTHER PURPOSES. books, records and accounts
of the establishment, as well
Be it ordained by the Municipal Board of the as to prescribe the manner in
City of Manila, that: which the books and financial
statement of the
entrepreneur shall be kept.
Sec. 1. The Mayor is authorized, as he is hereby
authorized to allow and permit the Associated
Development Corporation to establish, Sec. 3. This ordinance shall take effect upon its
maintain and operate a jai-alai in the City of approval.
Manila, under the following terms and
conditions and such other terms and
 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 Republic Act No. 954 did not expressly repeal Section 18 (jj). In
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 Philippine American Management employees Association, 49
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 the new and old law (Iloilo Palay and Corn Planters Association,
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 been enacted by the Municipal Board of the City of Manila
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.
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
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
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
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 The motivation behind its issuance notwithstanding, there can
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.
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 Once fixed by the courts, the period cannot be
operated "within a radius of 200 lineal meters from any city hall changed by them.
or municipal building, provincial capital building, national capital
building, public plaza or park, public school, church, hospital, III
athletic stadium, or any institution of learning or charity."
G.R. No. 117263
According to the certificate issued by the National Mapping
Information Authority, the ADC fronton is within the proscribed The petition in G.R. No. 117263 seeks to nullify the following
radius from the Central Bank of the Philippines, the Rizal orders of respondent Judge Reyes:
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.
(1) the Temporary Restraining Order dated
No. 115044, Rollo, pp. 424-427).
September 15, 1994;

On the other hand, a certificate issued by the Officer-in-charge of

(2) the Order dated September 25, 1994; and
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 (3) the Writ of Preliminary Injunction dated
September 30, 1994 (Rollo, pp. 1-2).
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 The supplemental petition in said case seeks to nullify the Order
for determination. dated October 19, 1994 (Rollo, pp. 166-225).

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).
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

F. The Republic also questions the lack of the period of the grant
of the Revised Rules of Court does not require that the
under Ordinance No. 7065, thus making it indeterminate (G.R.
assignment of cases to the different branches of a trial court
No. 117263, Rollo, pp. 500-505). The ordinance leaves it to the
should always be by raffle. The Rule talks of assignment
Mayor of the City of Manila to lay down other terms and
"whether by raffle or otherwise." What it requires is the giving of
conditions of the grant in addition to those specified therein. It is
written notice to counsel or the parties "so that they may be
up to the parties to agree on the life or term of the grant. In case
present therein if they so desire."
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: Section 7 of Rule 22 provides:

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.
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

In every case, the courts shall determine such
temporary restraining order to prevent irreparable injury on the
period as may under the circumstances have
petitioner.
been probably contemplated by the parties.
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 The Public On Horse And Dog Races, Jai-Alai, Or Basque pelota
Associated Development Corporation (ADC) still possesses a valid And Other Forms of Gambling." its Text states:
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
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 contention is anchored on two (2) submissions: first, ADC has no
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. interpretation by petitioners. the titles of R.A. No. 954 will
7065 by president Marcos could have been
raised as a special defense in Civil Case No. 88- a special purpose. It states: "An Act To Prohibit Certain
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
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
immediately reveal that the law was enacted to achieve
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 MR. CINCO. Mr. Speaker, I
operation of jai-alai only to entities with franchise given by withdraw my motion for
Congress. what the title trumpets as the sole subject of the law is postponement.
the criminalization of certain practices relating to jai-alai games.
The title of a law is a valuable intrinsic aid in determining MR. CALO. Mr. Speaker, will
legislative intent.3 the gentleman may yield, if
he so desires.
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 MR. ZOSA. Willingly.
criminalize the practice of illegal bookies and game-fixing in jai-
alai. It states: MR. CALO. What is the
national import of this bill?
This bill seeks to prohibit certain anomalous
practice of "bookies" in connection with the MR. ZOSA. Mr. Speaker, this
holding of horse races or "basque pelota" bill prohibits certain activities
games. The term "bookie" as commonly in connection with horse
understood refers to a person, who without races and jai-Alai games
any license therefor, operates outside the which are
compounds of racing clubs and accepts bets licensed by the government.
from the public. They pay dividends to winners At present, there are many
minus a commission, which is usually 10%. practices in connection with
Prosecutions of said persons have been the holding of these games
instituted under Act No. 4240 which was which deprive the
enacted in 1935. However, in a recent opinion government of income that
released by the City Fiscal of Manila he should
maintains that Act No. 4240 has already been legally go into the
repealed, so that the present law regulating government coffers as taxes.
ordinary horse races permits "bookies" to ply
their trade, but not on sweepstakes races and
MR. CALO. Is not this matter
other races held for charitable purposes. With
of national importance
the operation of "booking" places in the City of
because Jai-Alai
Manila, the Government has been losing no
games and horse races are
less than P600,000.00 a year, which amount
held only in Manila?
represents the tax that should have been
collected from bets made in such places. for
these reasons, the approval of the bill is MR. ZOSA. Precisely, Mr.
Speaker, they are played on a
earnestly recommended.
big scale, and
there are many practices
As said Explanatory Note is expressive of the purpose of the bill,
which deprive the
it gives a reliable keyhole on the scope and coverage of R.A. No.
government of
954.5 Nothing from the Explanatory Note remotely suggests any
income to which it is entitled.
intent of the law to revoke the power of the City of Manila to
I think the gentleman from
issue permits to operate jai-alai games within its territorial
Agusan is a member of the
jurisdiction.
Committee on
Appropriations.
The Debates6 in Congress likewise reject the reading of R.A. No. The governments will have
954 by petitioners, thus: more revenues, if we shall
approve this bill.
xxx xxx xxx
Again, legislative debate is a good source to determine the intent
RESUMPTION OF SESSION of a
law.7
THE SPEAKER. The session is
resumed 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 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 governments to the GAB the power to regulate jai-
alai.
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 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 regulating the same and raising revenue. In other words, the
Manila;
b. That the games to be played daily shall
commence not earlier than 5:00 o'clock (sic) in franchise, they may take then exercise whatever authority
the afternoon;
c. That the City of Manila will receive a share of the spirit ordained by at least two legislative issuances relating to
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
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
granted to them by local legislative bodies pursuant to the
permits or licenses granted by these bodies. This is essentially
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 The grant of an intervention is left to the discretion of the court.
injunction and preliminary mandatory Paragraph (b), Section 2, Rule 12 of the Rules of Court provides:
injunction issued by Judge Vetino Reyes.
(b) Discretion of court. — In allowing or
DAVIDE, JR., J., concurring: disallowing a motion for intervention, the
court, in the exercise of discretion, shall
The core issues submitted for the Court's resolution are: (1) in consider whether or not the intervention will
G.R. No. 115044, whether intervention by the republic of the unduly delay or prejudice the adjudication of
Philippines is proper, and (2) in G.R. No. 117263, whether public the rights of the original parties and whether
respondent Judge Vetino Reyes acted with grave abuse of or not the intervenor's rights may be fully
discretion in issuing the temporary restraining order and protected in a separate proceeding.
subsequently the writ of preliminary mandatory injunction in
Civil case No. 94-71656. It is thus clear that, by its very nature, intervention presupposes
an existing litigation or a pending case,8 and by the opening
I 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
As to the first issue, I submit that unless we either amend the case. Even if it is filed before or during the trial, it should be
rule on intervention or suspend it, the motion to intervene must denied if it will unduly delay or prejudice the adjudication of the
be denied. Under Section 2, Rule 12 of the Rules of Court, such rights of the original parties and if the intervenor's rights may be
motion may be allowed only before or during a trial. Said section fully protected in a separate proceeding. 9
reads:
It is not disputed that the motion to intervene was filed only on
Sec. 2. Intervention. — A person may, before or 16 September 1994, or on the fifteenth (15th) day after the First
during a trial, be permitted by the court, in its Division had promulgated the decision, and after petitioner
discretion, to intervene in an action, if he has Mayor Alfredo Lim complied with or voluntarily satisfied the
legal interest in the matter in litigation, or in judgment. The latter act brought to a definite end or effectively
the success of either of the parties, or an terminated G.R. No. 115044. Consequently, intervention herein
interest against both, or when he is so situated is impermissible under the rules. To grant it would be a
as to be adversely affected by a distribution or capricious exercise of discretion. The decision of this Court
other disposition of property in the custody of in Director of Lands vs. Court of
the court or of an officer thereof. 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
This provision was taken from Section 1, Rule 13 of the old Rules
intervene in the said case were filed before the rendition by this
of Court with the modification that the phrase "at any period of a
1 Court of its decision therein. In the second place, there were
trial" in the latter was changed to "before or during a trial."
unusual and peculiar circumstances in the said case which this
Court took into account. Of paramount importance was the fact
Section 1, Rule 13 of the old Rules of Court was based on Section
that the prospective intervenors were indispensable parties, and
121 of the Code of Civil Procedure which, in turn, was taken from
so this Court stated therein:
Section 387 of the Code of Civil procedure of California.2
But over and above these considerations and
The phrase "at any period of a trial" in Section 1, Rule 13 of the
circumstances which We have pointed out,
old Rules of Court has been construed to mean the period for the
there is the basic and fundamental
representation of evidence by both parties.3 And the phrase
requirement under the Rules of Court, Section
"before or during the trial" in Section 2, Rule 12 of the present
7, Rule 3, that "Parties in interest without
Rules of Court "simply means anytime before the rendition of
whom no final determination can be had of an
the final judgment."4Accordingly, intervention could not be
action shall be joined either as plaintiff or
allowed after the trial had been concluded5 or after the trial and
defendants." The joinder of indispensable
decision of the original case.6
parties is compulsory under any and all
conditions, their presence being a sine qua
Fundamentally then, intervention is never an independent action non of the exercise of judicial power. [Borlasa
but is ancillary and supplemental to an existing litigation. Its vs. Polistico, 47 Phil. 345, 348].
purpose is not to obstruct nor unnecessarily delay the placid
operation of the machinery of trial, but merely to afford one not
The herein movants, Greenfield Development
an original party, yet having a certain right or interest in the
Corporation, Alabang Development
pending case, the opportunity to appear and be joined so he
Corporation, Ramon D. Bagatsing, and all
could assert or protect such right or interest.7
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, of the Board. No person
softball, baseball; chess; other than the grantee or its
boxing bouts, "jai-alai," duly authorized agents shall
"sipa," "pelota" and all other take or arrange bets on any
sports contests, games; as pelotari or on the game, or
well as betting therein except maintain or use a totalizator
as may be authorized by law, or other device, method or
is hereby declared unlawful. system to bet on any pelotari
or on the game within or
The succeeding Section 3 provides for the without the place, enclosure
penalties. or court where the games are
held by the grantee. Any
On 11 June 1978, P.D. No. 1602 (75 O.G. No. violation of this section shall
15, 3270), Prescribing Stiffer Penalties on Illegal be punished by a fine of not
Gambling, was enacted to increase the more than two thousand
penalties provided in various "Philippine pesos or by imprisonment of
Gambling Laws such as Articles 195-199 of the not more than six months, or
Revised Penal Code (Forms of Gambling and both in the discretion of the
Betting), R.A. No. 3063 (Horse Racing Bookies), Court. If the offender is a
P.D. No. 449 (Cockfighting), P.D. No. 483 (Game partnership, corporation or
Fixing), P.D. No. 510 (Slot Machines) in relation association, the criminal
to Opinion Nos. 33 and 97 of the Ministry of liability shall devolve upon its
Justice, P.D. No. 1306 (Jai-alai Bookies), and president, directors or any
other City and Municipal Ordinances on officials responsible for the
gambling all over the country." Section 1 violation.
thereof reads:
However, as stated in the ponencia, P.D. No.
xxx xxx xxx 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
Both P.D. No. 483 and P.D. No. 1602 were
betting in jai-alai. It follows then that while the
promulgated in the exercise of the police
private respondent may operate the jai-alai
power of the State.
fronton and conduct jai-alai games, it can do so
solely as a sports contest. Betting on the
Pursuant to Section 2 of P.D. No. 483, which
results thereof, whether within or off-fronton,
was not repealed by P.D. No. 1602 since the
is illegal and the City of Manila cannot, under
former is not inconsistent with the latter in
the present state of the law, license such
that respect, betting in
betting. The dismissal of the petition in this
jai-alai is illegal unless allowed by law. There
case sustaining the challenged orders of the
was such a law. P.D. No. 810, which authorized
trial court does not legalize betting, for this
the Philippine Jai-Alai and Amusement
Court is not the legislature under our system of
Corporation as follows:
government.

Sec. 2. The grantee or its duly

Accordingly, I vote to grant the petition in G.R. No. 117263 and
authorized agent may offer,
to set aside the questioned temporary restraining order and the
take or arrange bets within or
writ of preliminary mandatory injunction but only to the extent
outside the place, enclosure
that they allow wagering or betting on the results of jai-alai.
or court where the Basque
pelota games are
QUIASON, J., dissenting:
held: Provided, That bets
offered, taken or arranged
outside the place, enclosure I vote: (1) to deny the motion to intervene and motion for
or court where the games are reconsideration qua petition for quo warranto in G.R. No.
held, shall be offered, taken 115044, and (2) to dismiss the petition for certiorari in G.R. No.
or arranged only in places 117263. I shall set forth the reason why.
duly licensed by the
corporation, Provided, I
however, That the same shall
be subject to the supervision
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 Vda. de Emnas v. Emnas, 95 SCRA 470 [1980];
filed with the Regional Trial Court, Branch 37, Manila, a petition Ocampo v. Caluag, 19 SCRA 917 [1967]).
to compel Mayor Lopez to cancel the permit and license he
issued in favor of ADC pursuant to ordinance No. 7065 (Civil Case As to the second issue, the First Division held that the five-year
No. 91-58930). The petition was dismissed on June 4, 1992. No period for executing a judgment by simple motion under Section
appeal was taken from said dismissal of the case. 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
In the Motion for Reconsideration-In-Intervention, Supplemental promulgation as was done by Mayor Lim and the City of Manila.
Motion for Reconsideration-in-Intervention and Second Inasmuch as the Villarin decision was appealed to the Court of
Supplemental Motion for Reconsideration-in-Intervention, the Appeals and the authority to withdraw the appeal was approved
Republic merely claimed that Ordinance No. 7065 had been by the Court of Appeals only on may 26, 1989, the five-year
repealed by P.D. No. 771 (Rollo, pp. 228-248), that the authority period should be counted, at the earliest, from May 26, 1989.
to issue permits and licenses for the operation of jai-alai had Reckoning the five-year period from said date, the motion for
been transferred to GAB by E.O. No. 392 of President Quirino execution of the Villarin decision was filed timely on March 14,
effective July 1, 1951 and that ADC was never issued a franchise 1994.
by Congress (Rollo, pp. 383-390). Nowhere in its pleadings did
the Republic point out where the first Division erred in resolving Intervention as contemplated by Section 9, Rule 12 of the
the two grounds of the petition for certiorari in G.R. No. 115044, Revised Rules of Court is a proceeding whereby a third person is
which were: permitted by the court "before or during a trial" to make himself
a party by joining plaintiff or uniting with defendant or taking a
(1) The decision of Judge Villarin dated position adverse to both of them Gutierrez v. Villegas, 5 SCRA
September 9, 1988 in Civil Case No. 88-45660 is 313 [1962]). the term "trial" is used in its restrictive sense and
null and void for failure to rule that P.D. No. means the period for the introduction of evidence by both
771 had revoked Ordinance No. 7065; and parties (Bool v. Mendoza, 92 Phil. 892 [1953]; Provincial
Government of Sorsogon v. Stamatelaky, 65 Phil. 206 [1937]).
(2) The decision of Judge Villarin could not be The period of trial terminates when the period of judgment
executed by a mere motion filed on March 14, begins (El Hogar Filipino v. Philippine National Bank, 64 Phil. 582
1994, or more than five years and six months [1937]).
after its promulgation.
Intervention as an action is not compulsory. As deduced from the
In resolving the first issue, the First Division of this court permissive word "may" in the rule, the availment of the remedy
explained that there was no way to declare the Villarin decision is discretionary on the courts (Garcia v. David, 67 Phil. 279
null and void because the trial court had jurisdiction over the [1939]). an important factor taken into consideration by the
subject matter of the action and if it failed to rule that ordinance courts in exercising their discretion is whether the intervenor's
No. 7065 was nullified by P.D. No. 771, that was only an error of rights may be fully protected in a separate proceeding (Peyer v.
judgment. The First Division noted the distinction between a void Martines, 88 Phil. 72 [1951]).
and an erroneous judgment and between jurisdiction and the
exercise of jurisdiction. 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
In Tan v. Intermediate Appellate Court, 163 SCRA 752 (1988), the intervention at this late stage. while said case involved an
Court held: intervention for the first time in the Supreme court, the motion
to be allowed to intervene was filed before the appeal could be
It is settled jurisprudence that except in the decided on the merits. The intervention allowed in Republic v.
case of judgments which are void ab initio or Sandiganbayan, G.R. No. 96073, Resolution, March 3, 1992, was
null and voidper se for lack of jurisdiction which also made before the decision on the merits by this Court. In
can be questioned at any time — and the contrast, the intervention of the Republic was sought after this
decision here is not of this character — once a Court had decided the petition in G.R. No. 115044 and
decision becomes final, even the court which petitioners had complied with and satisfied the judgment. While
has rendered it can no longer alter or modify it, the intervention in Director of Lands was in a case that was
except to correct clerical errors or mistakes. timely appealed from the Regional Trial Court to the Court of
otherwise, there would be no end to litigation, Appeals and from the Court of Appeals to the Supreme Court,
thus setting to naught the main role of courts the intervention of the Republic was in a case that had become
of justice, which is, to assist in the enforcement final and executory more than five years prior to the filing of the
of the rule of law and the maintenance of motion to intervene.
peace and order, by settling justifiable
controversies with finality. (See also Fabular v. As of September 16, 1994, therefore, when the republic moved
Court of Appeals, 119 SCRA 329 [1982]; Fariscal 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 Judge. The presumption of regularity of official acts therefore
preliminary injunction because: (1) Civil Case No. prevails.
94-71656 was not properly assigned to him in accordance with
Section 7, Rule 22 of the Revised Rules of Court; (2) the Going back to Section 7 of Rule 22, this Court has rules
enforcement of the Directive and Memorandum sought to be in Commissioner of Immigration v. Reyes, 12 SCRA 728 (12964)
enjoined had already been performed or were already fait that the purpose of the notice is to afford the parties a chance to
accompli; and (3) respondent judge pre-empted this Court in be heard in the assignment of their cases and this purpose is
resolving the basic issues raised in G.R. No. 115044 when he took deemed accomplished if the parties were subsequently heard. In
cognizance of Civil Case No. 94-71656. the instant case, Executive Secretary Guingona and GAB
Chairman Cepeda were given a hearing on the matter of the lack
A. At the outset, it should be made clear that Section 7 of Rule 22 of notice to them of the raffle when the court heard on
of the Revised Rules of Court does not require that the September 23, 1994 their Motion to Recall Temporary
assignment of cases to the different branches of a trial court Restraining Order, Urgent Supplemental Motion to Recall
should always be by raffle. The Rule talks of assignment Temporary Restraining Order and Opposition to Issuance of a
"whether by raffle or otherwise." What it requires is the giving of Writ of Preliminary Issuance of a Writ of Preliminary Injunction
written notice to counsel or the parties "so that they may be (G.R. No. 117263, Rollo p. 434).
present therein if they so desire."
Petitioners in G.R. No. 117263 failed to shown any irregularity
Section 7 of Rule 22 provides: 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-
Assignment of cases. In the assignment of 71656.
cases to the different branches of a Court of
First Instance, or their transfer from one On the other hand, petitioners never asked for a re-raffle of the
branch to another whether by raffle or case or for any affirmative relief from the trial court and
otherwise, the parties or their counsel shall be proceeded with the presentation of evidence of ADC in
given written notice sufficiently in advance so connection with the motion for preliminary injunction.
that they may be present therein if they so
desire. B. The purpose of a temporary restraining order or preliminary
injunction, whether preventive or mandatory, is merely to
However, there may be cases necessitating the issuance of a prevent a threatened wrong and to protect the property or
temporary restraining order to prevent irreparable injury on the rights involved from further injury, until the issues can be
petitioner. 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,
To await the regular raffle before the court can act on the 58 Or. 14, 111 p. 49, 113, p. 57). What is intended to be
motion for temporary restraining order may render the case preserved is the status quo ante litem motam or the last actual,
moot and academic. Hence, Administrative Circular No. 1 dated peaceable, noncontested status (Annotation, 15 ALR 2d 237).
January 28, 1988 was issued by this Court allowing a special
raffle. Said Circular provides: In the case at bench, the status quo which the questioned orders
of Judge Reyes sought to maintain was that ADC was operating
8.3. Special raffles should not be permitted the jai-alai pursuant to Ordinance No. 7065 of the City of Manila,
except on verified application of the interested the various decisions of the different courts, including the
party who seeks issuance of a provisional Supreme Court, and the licenses, permits and provisional
remedy and only upon a finding by the authority issued by GAB itself.
Executive Judge that unless a special raffle is
conducted irreparable damage shall be At times, it may be necessary for the courts to take some
suffered by the applicant. The special raffle affirmative act essential to restore the status quo (Iowa Natural
shall be conducted by at least two judges in a Resources Council v. Van See [Iowa] 158 N.W. 2d. 111).
multiple-sala station.
The right to conduct a business or to pursue one's business or
In a case where a verified application for special raffle is filed, trade without wrongful interference by others is a property right
the notice to the adverse parties may be dispensed with but the which equity will, in proper cases, protect by injunction,
raffle has to "be conducted by at least two judges in a multiple- provided of course, that such occupation or vocation is legal and
sala station." not prohibited by law (Rance v. Sperry & Hutchinson Co., 410 P.
2d 859).
The Republic does not claim that Administrative Circular No. 1
has been violated in the assignment of the case to respondent 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:
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.

The petitions at bench involve great principles of law in tension. On September 7, 1971, the Municipal Board of Manila approved
On balance at one end is the high prerogative of the State to Ordinance No. 7065 "authorizing the Mayor to Allow and Permit
promote the general welfare of the people thru the use of police the Associated Development Corporation to Establish, Maintain
power; on the opposite end is the right of an entity to have its and Operate a Jai-Alai in the city of Manila, Under Certain Terms
property protected against unreasonable impairment by the and Conditions And For Other Purposes."
State. courts accord the State wide latitude in the exercise of its
police power to bring about the greatest good of the greatest On September 21, 1972, martial law was declared by then
number. But when its purpose is putrefied by private interest, president Ferdinand E. Marcos. The 1971 Constitution, as
the use of police power becomes a farce and must be struck amended, authorized the former President to exercise legislative
down just as every arbitrary exercise of government power powers. Among the laws he decreed is P.D. No. 771, "Revoking
should be stamped out. All Powers And Authority Of Local Government(s) to Grant
Franchise, License Or Permit And Regulate Wagers Or Betting By
I will confine myself to the jugular issue of whether or not The Public On Horse And Dog Races, Jai-Alai, Or Basque pelota
Associated Development Corporation (ADC) still possesses a valid And Other Forms of Gambling." its Text states:
franchise to operate jai-alai in manila. The issue is multi-
dimensional considering its constitutional complexion. xxx xxx xxx

First, the matrix of facts. On June 18, 1949, congress enacted Sec. 1. Any provision of law to the contrary
Republic Act No. 409, otherwise known as the Charter of Manila. notwithstanding, the authority of Chartered
Section 18 (jj) gave to the Municipal Board (now City Council) the Cities and other local governments to issue
following power: license, permit or any form of franchise to
operate, maintain and establish horse and dog
(jj) To tax, license, permit and regulate wagers race tracks, jai-alai or other forms of gambling
or betting by the public on boxing, sipa, is hereby revoked.
bowling, billiards, pools, horse or dog races,
cockpits, jai-alai, roller or ice skating or any Sec. 2. Hereafter all permit or franchise to
porting or athletic contest, as well as grant operate, maintain and establish horse and dog
exclusive rights to establishments for this race tracks, jai-alai and other forms of
purpose, notwithstanding any existing law to gambling shall be issued by the national
the contrary. government upon proper application and
verification of the qualifications of the
On June 20, 1953, congress passed Republic Act No. 954 entitled applicant: Provided, That local governments
"An Act to Prohibit Certain Activities in Connection with Horse may, upon clearance from the chief of
Races and Basque pelota Games (Jai-Alai) and to Prescribe constabulary and during town fiestas and
penalties for its Violation." Sections 4 and 5 of the law provide: 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 legislative franchise as required by R.A. No. 954, and second,
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
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
4
The Explanatory Note 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 legally inferior to a regular franchise. Through the years, the
government coffers as taxes. permit given by the City endows the grantee complete right to
operate. Not once, except in these cases, has the national
MR. CALO. Is not this matter government questioned the completeness of his right. For this
of national importance reason, P.D. No. 771 has to take revoke all existing franchises
because Jai-Alai and permits without making any distinction. It treated permits in
games and horse races are the same class as franchises.
held only in Manila?
Petitioners' second line of argument urges that in any event,
MR. ZOSA. Precisely, Mr. Section 3 of P.D. No. 771 expressly revoked all existing franchises
Speaker, they are played on a and permits to operate jai-alai games granted by local
big scale, and governments, including the permit issued to ADC by the City of
there are many practices Manila through Ordinance No. 7065. For its resolution,
which deprive the petitioners' argument requires a re-statement of the
government of requirements for the valid exercise of police power.
income to which it is entitled.
I think the gentleman from It was the legendary Chief Justice Marshall who first used the
Agusan is a member of the phrase police power in 1824.8 Early attempts to fix the metes
Committee on and bounds of police power were unsuccessful. 9 For of all the
Appropriations. inherent powers of the State, police power is indubitably the
The governments will have most pervasive, 10 the most insistent and the least
more revenues, if we shall limitable. 11 Rooted on the latin maxims, salus populi suprema
approve this bill. 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
Again, legislative debate is a good source to determine the intent injure the property of others), it was not without reason for
of a Justice Holmes to stress that its reach extends "to all the great
law. 7 public needs." 12 A similar sentiment was echoed by our own
Justice Laurel in Alalang v. Williams 13 who defined police power
To top it all, the text of R.A. no. 954 itself does not intimate that as the "state authority to enact legislation that may interfere
it is repealing any existing law, especially section 18 (jj) of R.A. with personal liberty or property in order to promote the general
no. 409, otherwise known as the Charter of Manila. Indeed, R.A. welfare." Over the years, courts recognized the power of
No. 954 has no repealing provision. The reason is obvious — it legislature to enact police regulations on broad areas of state
simply prohibited certain practices in jai-alai then still concern: (a) the preservation of the state itself and the
unregulated by the laws of the land. It did not regulate aspects of unhindered execution of its legitimate functions; (b) the
jai-alai already regulated by existing laws, like the matter of prevention and punishment of crime; (c) the preservation of the
whether it is the national government alone that should issue public peace and order; (d) the preservation of the public safety;
franchises to operate jai-alai games. (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
The subsequent enactment of P.D. No. 771 on August 20, 1975
affect one or other of the objects just enumerated; (h) the
further demolished the submission of petitioners. In clear and
regulation of property and rights of property so far as to prevent
certain language, P.D. no. 771 recalled the owner of local
its being used in a manner dangerous or detrimental to others;
governments to issue jai-alai franchises and permits. It also
(i) the prevention of fraud, extortion, and oppression; (j) roads
revoked existing franchises and permits issued by local
and streets, and their preservation and repair; and (k) the
governments. If R.A. no. 954 had already disauthorized local
preservation of game and fish. 14
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 But while the State is bestowed near boundless authority to
redundancy. 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
The passage of P.D. No. 771, also negates petitioners' insistence
police measure as follows: (1) the interest of the public
that for ADC to continue operating, it must show it has a
generally, as distinguished from those of particular class,
franchise from Congress, not just a permit from the City of
requires its exercise; and (2) the means employed are reasonably
Manila. The suggested dichotomy between a legislative franchise
necessary for the accomplishment of the purpose and not unduly
and city permit does not impress. If the City of Manila is
oppresive upon individuals. 15 Deeper relexion will reveal that
empowered to license the ADC it is because the power was
the test reiterates the essence of our constitutional guarantees
delegated to it by Congress. The acts of the City of Manila in the
of substantive due process, equal protection, and non-
exercise of its delegated power bind Congress as well. Stated
impairment of property rights.
otherwise, the permit given by the City to ADC is not any whit
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.
Here's the FACTS.. recit style.. bullet form:
1. (1949) RA 409- CONGRESS ACT – CHARTER of MANILA
2. (1951) EO 392 – Transferring Authority JAIALAI - LG to
GAB (Local Govt – Games & Amusement Board)
3. (1971) MBM C.O. 7065 – Authorizing Mayor to establish &
operate JAIALAI in MANILA . (Municipal Board of Manila)
4. (1975) PD 771 was issued by Marcos. REVOKING All Powers
and Authority of LG to Grant Franchise, License or Permit to
Regulate Horse and Dog Races, Jai-Alai or Pelota
5. (1988) ASSOCIATED DEVELOPMENT CORPORATION (ADC)
tried to operate a Jai-Alai. Government thru GAB intervened
and invoked PD 771
6. ADC assails the CONSTITUTIONALITY of P.D. No. 771.
ISSUE:
W/N P.D. No. 771 is violative of the EQUAL PROTECTION and
NON-IMPAIRMENT clauses of the Constitution.
RULING:
NO. P.D. No. 771 is VALID AND CONSTITUTIONAL.
RATIO:
Presumption against unconstitutionality. 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.
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)
8 the city limits.
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

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.
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)
CRUZ, J.: Suspension
of the
There was instant opposition when PAGCOR announced the business
opening of a casino in Cagayan de Oro City. Civic organizations permit for
angrily denounced the project. The religious elements echoed sixty (60)
the objection and so did the women's groups and the youth. days for the
Demonstrations were led by the mayor and the city legislators. first offense
The media trumpeted the protest, describing the casino as an and a fine
affront to the welfare of the city. of
P1,000.00/
day
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 b)
portion of a building belonging to Pryce Properties Corporation, Suspension
Inc., one of the herein private respondents, renovated and of the
equipped the same, and prepared to inaugurate its casino there business
during the Christmas season. permit for
Six (6)
months for
The reaction of the Sangguniang Panlungsod of Cagayan de Oro
the second
City was swift and hostile. On December 7, 1992, it enacted
offense,
Ordinance No. 3353 reading as follows:
and a fine
of
ORDINANCE NO. 3353
P3,000.00/
day
AN ORDINANCE PROHIBITING THE ISSUANCE
OF BUSINESS PERMIT AND CANCELLING
c)
EXISTING BUSINESS PERMIT TO ANY
Permanent
ESTABLISHMENT FOR THE USING AND
revocation
ALLOWING TO BE USED ITS PREMISES OR
of the
PORTION THEREOF FOR THE OPERATION OF
business
CASINO.
permit and
imprisonme
nt 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 (1) Approve ordinances and pass resolutions
policy of the State. necessary for an efficient and effective city
government, and in this connection, shall:
6. It had no option but to follow the ruling in
the case of Basco, et al. v. PAGCOR, G.R. No. xxx xxx xxx
91649, May 14, 1991, 197 SCRA 53 in disposing
of the issues presented in this present case. (v) Enact
ordinances
PAGCOR is a corporation created directly by P.D. 1869 to help intended to
centralize and regulate all games of chance, including casinos on prevent,
land and sea within the territorial jurisdiction of the Philippines. suppress
In Basco v. Philippine Amusements and Gaming and impose
Corporation, 4 this Court sustained the constitutionality of the appropriate
decree and even cited the benefits of the entity to the national penalties
economy as the third highest revenue-earner in the government, for habitual
next only to the BIR and the Bureau of Customs. drunkennes
s in public
Cagayan de Oro City, like other local political subdivisions, is places,
empowered to enact ordinances for the purposes indicated in vagrancy,
the Local Government Code. It is expressly vested with the police mendicancy
power under what is known as the General Welfare Clause now ,
embodied in Section 16 as follows: prostitution
,
Sec. 16. — General Welfare. — Every local establishme
government unit shall exercise the powers nt and
expressly granted, those necessarily implied maintenanc
therefrom, as well as powers necessary, e of houses
appropriate, or incidental for its efficient and of ill
effective governance, and those which are repute, ga
essential to the promotion of the general mblingand
welfare. Within their respective territorial other
jurisdictions, local government units shall prohibited
ensure and support, among other things, the games of
preservation and enrichment of culture, chance,
promote health and safety, enhance the right fraudulent
of the people to a balanced ecology, encourage devices and
and support the development of appropriate ways to
and self-reliant scientific and technological obtain
capabilities, improve public morals, enhance money or
economic prosperity and social justice, property,
promote full employment among their drug
residents, maintain peace and order, and addiction,
preserve the comfort and convenience of their maintenanc
inhabitants. e of drug
dens, drug
pushing,
In addition, Section 458 of the said Code specifically declares
juvenile
that:
delinquenc
y, the
Sec. 458. — Powers, Duties, Functions and printing,
Compensation. — (a) The Sangguniang
distribution
Panlungsod, as the legislative body of the city,
or
shall enact ordinances, approve resolutions
exhibition
and appropriate funds for the general welfare
of obscene
of the city and its inhabitants pursuant to
or
Section 16 of this Code and in the proper
pornograph
exercise of the corporate powers of the city as ic materials
provided for under Section 22 of this Code, and
or
shall:
 publications philosophy and provisions, pursuant to Par. (f) of its repealing
, 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
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 It seems to us that the petitioners are playing with words. While
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 provision which painstakingly mentions the specific laws or the
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 the omission:
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.
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
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
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, I concur with the majority holding that the city ordinances in
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:
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 tactical considerations. A dismissal of the petition by the Court of
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
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 under Section 9(1) of B.P. Blg. 129. As I see it, however, the
that the prohibition, control, and regulation of
the entire activity known as gambling properly declare null and unconstitutional — for, inter alia, having been
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 Vasquez (217 SCRA 633 [1993]). In Cuaresma, this Court stated:
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
principal cause of action therein is one for declaratory relief: to
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.
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.
Magtajas v. Pryce Properties Corp. (G.R. No. 111097)
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.
9 activities, or it may enter into co-production,
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 regalia2 that 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
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 the
exploration, development and utilization of the natural resources
of the country. Article XII, Section 2 of the said Charter explicitly
ordains that the exploration, development and utilization of
natural resources shall be under the full control and supervision
of the State. Consonant therewith, the exploration, development
and 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-owned corporations
involving either technical or financial assistance for large-scale
exploration, development, and utilization of minerals, MR. DAVIDE: Under the
petroleum, and other mineral oils according to the general terms proposal, I notice that except
and conditions provided by law, based on real contributions to for the [inalienable] lands of
the economic growth and general welfare of the country. the public domain, all other
natural resources cannot be
Given these considerations, there is no clear showing that alienated and in respect to
respondent DENR Secretary has transcended the bounds [alienable] lands of the public
demarcated by Executive Order No. 279 for the exercise of his domain, private corporations
rule-making power tantamount to a grave abuse of discretion. with the required ownership
Section 6 of Executive Order No. 279 specifically authorizes said by Filipino citizens can only
official to promulgate such supplementary rules and regulations lease the same. Necessarily,
as may be necessary to effectively implement the provisions insofar as other natural
thereof. Moreover, the subject sought to be governed and resources are concerned, it
regulated by the questioned orders is germane to the objects would only be the State
and purposes of Executive Order No. 279 specifically issued to which can exploit, develop,
carry out the mandate of Article XII, Section 2 of the 1987 explore and utilize the same.
Constitution. However, the State may
enter into a joint venture, co-
Petitioner likewise maintains that Administrative Order No. 57, in production or production-
relation to Administrative Order No. 82, impairs vested rights as sharing. Is that not correct?
to violate the non-impairment of contract doctrine guaranteed
under Article III, Section 10 of the 1987 Constitution because MR. VILLEGAS: Yes.
Article 9 of Administrative Order No. 57 unduly pre-terminates
and automatically converts mining leases and other mining MR. DAVIDE: Consequently,
agreements into production-sharing agreements within one (1) henceforth upon, the
year from effectivity of said guideline, while Section 3 of approval of this Constitution,
Administrative Order No. 82, declares that failure to submit no timber or forest
Letters of Intent (LOIs) and MPSAs within two (2) years from the concession, permits or
effectivity of Administrative Order No. 57 or until July 17, 1991 authorization can be
shall cause the abandonment of mining, quarry, and sand gravel exclusively granted to any
permits. citizen of the Philippines nor
to any corporation qualified
In Support of the above contention, it is argued by petitioner to acquire lands of the public
that Executive Order No. 279 does not contemplate automatic domain?
conversion of mining lease agreements into mining production-
sharing agreement as provided under Article 9, Administrative MR. VILLEGAS: Would
Order No. 57 and/or the consequent abandonment of mining Commissioner Monsod like to
claims for failure to submit LOIs and MPSAs under Section 3, comment on that? I think his
Administrative Order No. 82 because Section 1 of said Executive answer is "yes."
Order No. 279 empowers the DENR Secretary to negotiate and
enter into voluntary agreements which must set forth the MR. DAVIDE: So, what will
minimum terms and conditions provided under Section 2 happen now license or
thereof. Moreover, petitioner contends that the power to concessions earlier granted
regulate and enter into mining agreements does not include the by the Philippine government
power to preterminate existing mining lease agreements. to private corporations or to
Filipino citizens? Would they
To begin with, we dispel the impression created by petitioner's be deemed repealed?
argument that the questioned administrative orders unduly
preterminate existing mining leases in general. A distinction MR. VILLEGAS: This is not
which spells a real difference must be drawn. Article XII, Section applied retroactively. They
2 of the 1987 Constitution does not apply retroactively to will be respected.
"license, concession or lease" granted by the government under
the 1973 Constitution or before the effectivity of the 1987 MR. DAVIDE: In effect, they
Constitution on February 2, 1987. The intent to apply will be deemed repealed?
prospectively said constitutional provision was stressed during
the deliberations in the Constitutional Commission, 19 thus:
MR. VILLEGAS: No. (Emphasis
supplied)
During the transition period or after the effectivity of the 1987
Constitution on February 2, 1987 until the first 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, development and utilization of
minerals. To carry out the purposes of said laws, the questioned
Administrative Order Nos. 57 and 82, now being assailed, were
issued by the DENR Secretary.
Article 9 of Administrative Order No. 57 provides:
ARTICLE 9
TRANSITORY PROVISION
9.1. 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 subject to these
guidelines. All such leases or agreements shall
be converted into production sharing
agreement 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.
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 Marble Corporation has not sufficiently shown that
it falls under any of the categories mentioned above. The refusal
of the DENR, Regional Office No. 3, San Fernando, Pampanga to
renew its Mines Temporary Permit does not justify such an
intervention by Continental Marble Corporation for the purpose
of obtaining a directive from this Court for the issuance of said
permit. Whether or not Continental Marble matter best
addressed to the appropriate government body but certainly,
not through this Court. Intervention is hereby DENIED.
WHEREFORE, the petition is DISMISSED for lack of merit. The
Temporary Restraining Order issued on July 2, 1991 is hereby
LIFTED.
SO ORDERED.
Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr.,
Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan and Mendoza,
JJ., concur.
Footnotes
1 Article XIII, Section 1 of the 1935 Constitution
provides:
Section 1. All agricultural, timber, and mineral
lands of the public domain, waters, minerals,
coal, petroleum and other mineral oils, all
forces of potential energy, and other natural
resources of the Philippines belong to the
State, and their disposition, exploitation,
development, or utilization shall be limited to
citizens of the Philippines, or to corporation or
associations at least sixty per centum of the
capital of which is owned by such citizens,
subject to any existing right, grant, lease or
concession at the time of the inauguration of
the Government established under this
Constitution. Natural resources, with the
exception of public agricultural land, shall not
be alienated, and no license, concession, or
lease for the exploitation, development, or
utilization of any of the natural resources shall
be granted for a period exceeding twenty-five
years, renewable for another 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.
xxx xxx xxx
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.
6 Published in the July 3, 1989 issue of the
Philippine Daily Inquirer, a newspaper of
general circulation, and became effective on
July 18, 1989.
7 Published in the December 21, 1990 issue of
the Philippine Daily Inquirer, a newspaper of
general circulation, and became effective on
January 5, 1991.
8 A non-stock and non-profit organization duly
formed and existing under and by virtue of the
laws of the Philippines with principal office at
Suite 609 Don Santiago Building whose
members include mining prospectors and
claimowners or claimholders.
9 Rollo, pp. 46-48.
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
exporting its finished products (marble tiles) by
virtue of a Mines Temporary Permit issued by
the DENR.
11 Rollo, pp. 99-104.
12 Rollo, p. 114.
13 Presidential Decree No. 463, as amended,
otherwise known as "The Mineral Resources
Development Decree of 1974" promulgated on
May 17, 1974.
14 Section 7, Executive Order No. 279 provides:
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.
15 11 Phil. 327, 330 (1908).
16 29 Phil. 120, 124 (1914).
17 No. L-32166, October 18, 1977, 79 SCRA
450.
18 De Leon v. Esguerra, G.R. No. 78058, August
31, 187, 153 SCRA 602.
19 Record of the Constitutional Commission,
Proceedings and Debate, Vol. III, p. 260.
20 Article III, Section 10 of the 1987
Constitutions provides:
No law impairing the obligation of contracts
shall be passed.
21 86 Phil. 50 (1950).
 22 86 Phil. at 54-55.
23 120 Phil. 168 (1964).
6. Utilization of natural resourcesA. Miners Association vs
Factoran Jr.Facts: The petition seeks a ruling from this
court on the validity of two AdministrativeOrders 57 and
82 issued by the Secretary of the Department of Environment
and NaturalResources to carry out the provisions of
Executive Orders 279 and 211. This
petitiona r o s e f r o m t h e f a c t t h a t t h e 1 9 8 7 C
onstitution provided for a different syste
m o f exploration, development and utilization of the
country’s natural resources. Unlike the1935 and 1973
Constitutions that allow the utilization of inalienable
lands of publicdomain through “license, concession or lease”,
the 1987 Constitution provides for the fullcontrol and
supervision by the state of the exploration, development and
utilization of thecountry’s natural resources. Pres. Cory
Aquino promulgated EO 211, which prescribesthe
interim procedures in the processing and approval of
applications for the
exploration,d e v e l o p m e n t a n d u t i l i z a t i o n o f m i n e r a l
s i n a c c o r d a n c e t o t h e 1 9 8 7 C o n s t i t u t i o n . I n addi
tion, Pres. Aquino also promulgated EO 279
authorizing the DENR Secretary tonegotiate and conclude
joint venture, co-production or production-sharing agreements
for the exploration, development and utilization of
mineral resources and prescribing theguidelines for
such agreements and those agreements involving
technical or financialassistance by foreign-owned
corporations for large-scale exploration, development,
andu t i l i z a t i o n o f m i n e r a l s . I n l i n e w i t h E O
2 7 9 , t h e D E N R S e c r e t a r y i s s u e d A O 5 7 “Gui
delines of Mineral Production Sharing Agreeme
n t u n d e r E O 2 7 9 ” a n d A O 8 2 “Procedural Guidelines on
the Award of Mineral Production Sharing Agreement
(MPSA)through negotiation. Petitioner, Miners
Association of the Philippines, mainly contendthat the
DENR Secretary issued both AOs 57 and 82 in excess of his rule-
making power because these are inconsistent with the
provisions of EO 279.Issue: whether AO Nos. 57 and 82,
which are promulgated by the DENR, are valid
andconstitutionalHeld: AO Nos. 57 and 82 are both
constitutional and valid. This is due to the fact that EO279, in
effect, gave the Secretary of Natural Resources the
authority to conclude jointv e n t u r e , c o -
production, or production sharing agreem
e n t s f o r t h e e x p l o r a t i o n , development and
utilization of mineral resources. Furthermore, the
constitutionality of these administrative orders goes to show
that the utilization of inalienable lands of publicdomain is not
merely done through “license, concession or lease”
since the options arenow also open to the State through
direct undertaking or by entering into co-production, joint
venture, or production sharing agreements.
10
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.
1
SO ORDERED.
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 Section 5 of the Effluent Regulations of 1982 4 sets out the
posed such a threat. maximum permissible levels of physical and chemical substances
which effluents from domestic wastewater treatment plants and
The Court is not persuaded by Solar's contention. Section 7(a) of industrial plants" must not exceed "when discharged into bodies
P.D. No. 984 authorized petitioner Board to issue ex parte cease of water classified as Class A, B, C, D, SB and SC in accordance
and desist orders under the following circumstances: with the 1978 NPCC Rules and Regulations." The waters of
Tullahan-Tinejeros River are classified as inland waters Class D
P.D. 984, Section 7, paragraph (a), provides: under Section 68 of the 1978 NPCC Rules and Regulations 5 which
in part provides that:
(a) Public Hearing. . . . Provided, That whenever the
Commission finds prima facie evidence that the Sec. 68. Water Usage and Classification. — The quality
discharged sewage or wastes are of immediate threat to of Philippine waters shall be maintained in a safe and
life, public health, safety or welfare, or to animal or satisfactory condition according to their best usages. For
plant life, or exceeds the allowable standards set by the this purpose, all water shall be classified according to
Commission, the Commissioner may issue an ex-parte the following beneficial usages:
order directing the discontinuance of the same or the (a) Fresh Surface Water
temporary suspension or cessation of operation of the Classification Best usage
establishment or person generating such sewage or
wastes without the necessity of a prior public xxx xxx xxx
hearing. The said ex-parte order shall be immediately Class D For agriculture, irrigation,
executory and shall remain in force until said livestock watering
establishment or person prevents or abates the said and industrial cooling and
pollution within the allowable standards or modified or processing.
nullified by a competent court. (Emphasis supplied)
xxx xxx xxx
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 (Emphases supplied)
by the Board (a) whenever the wastes discharged by an
establishment pose an "immediate threat to life, public health, The reports on the inspections carried on Solar's wastewater
safety or welfare, or to animal or plant life," or (b) whenever treatment facilities on 5 and 12 November 1986 and 6
such discharges or wastes exceed "the allowable standards set September 1988 set forth the following Identical finding:
by the [NPCC]." On the one hand, it is not essential that the
Board prove that an "immediate threat to life, public health, a. For legal action in [view of] implementing rules and
safety or welfare, or to animal or plant life" exists before an ex regulations of P.D. No. 984 and Section 5 of the Effluent
parte cease and desist order may be issued. It is enough if the Regulations of 1982.6
Board finds that the wastes discharged do exceed "the allowable
standards set by the [NPCC]." In respect of discharges of wastes Placing the maximum allowable standards set in Section 5 of the
as to which allowable standards have been set by the Effluent Regulations of 1982 alongside the findings of the
Commission, the Board may issue an ex parte cease and desist November 1986 and September 1988 inspection reports, we get
order when there is prima facie evidence of an establishment the following results:
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
"Inland November September
act on an ex parte basis when it finds at least prima facie proof
Waters 1986 1988
that the wastewater or material involved presents an
(Class C & D7 Report8 Report9
"immediate threat to life, public health, safety or welfare or to
Station 1 Station 1
animal or plant life." Since the applicable standards set by the
Commission existing at any given time may well not cover every a) Color in 100 a) Color units 250 125
possible or imaginable kind of effluent or waste discharge, the platinum (Apparent
general standard of an "immediate threat to life, public health, cobalt Color)
safety or welfare, or to animal and plant life" remains necessary. units
b) pH 6- b) pH 9.3 8.7
Upon the other hand, the Court must assume that the extant 8.5
allowable standards have been set by the Commission or Board c) Tempera- 40 c) Temperature
precisely in order to avoid or neutralize an "immediate threat to ture in °C (°C)
life, public health, safety or welfare, or to animal or plant life.'' d) Phenols in 0.1 d) Phenols in
mg.1 mg./1.
 e) Suspended 75 e) Suspended 340 80 1. The plant was undertaking dyeing, bleaching and
solids in solids in rinsing operations during the inspection. The combined
mg./1. mg./1. wastewater generated from the said operations was
f) BOD in 80 f) BOD (5-day) 1,100 152 estimated at about 30 gallons per minute. About 80% of
mg./1. mg./1 the wastewater was traced directly discharged into a
drainage canal leading to the Tullahan-Tinejeros river by
g) oil/Grease 10 g) Oil/Grease means of a bypass. The remaining 20% was channeled
in mg./1. mg./1. into the plant's existing wastewater treatment plant
h) Detergents 5 h) Detergents 2.93 (WTP).
mg./1." mg./1. MBAS
i) Dissolved 0 2. The WTP was noted not yet fully operational- some
oxygen, accessories were not yet installed.1âwphi1 Only the
mg./1. sump pit and the holding/collecting tank are functional
j) Settleable 0.4 1.5 but appeared seldom used. The wastewater mentioned
Matter, channeled was noted held indefinitely into the
mg./1. collection tank for primary treatment. There was no
effluent discharge [from such collection tank].
k) Total Dis 800 610
solved Solids
mg./1. 3. A sample from the bypass wastewater was collected
for laboratory analyses. Result of the analyses show that
l) Total Solids 1,400 690
the bypass wastewater is polluted in terms of color
m) Turbidity NTU / 70 units, BOD and suspended solids, among others. (Please
ppm, SiO3 see attached laboratory resul .)11

The November 1986 inspections report concluded that:
Records of the Commission show that the plant under
its previous owner, Fine Touch Finishing Corporation,
was issued a Notice of Violation on 20 December 1985
directing same to cease and desist from conducting
dyeing operation until such time the waste treatment
plant is already completed and operational. The new
owner Solar Textile Corporation informed the
Commission of the plant acquisition thru its letter dated
March 1986 (sic).
The new owner was summoned to a hearing held on 13
October 1986 based on the adverse findings 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.
Based on the above findings, it is clear that the new
owner continuously violates the directive of the
Commission by undertaking dyeing operation without
completing first and operating its existing WTP. The
analysis of results on water samples taken showed that
the untreated wastewater from the firm pollutes our
water resources. In this connection, it is recommended
that appropriate legal action be instituted immediately
against the firm. . . .10
The September 1988 inspection report's conclusions were:
From the foregoing reports, it is clear to this Court that there
was at least prima facie evidence before the Board that the
effluents emanating from Solar's plant exceeded the maximum
allowable levels of physical and chemical substances set by the
NPCC and that accordingly there was adequate basis supporting
the ex parte cease and 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 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 August 1986. Petitioner Board
refrained from issuing an ex parte cease and desist order until
after the November 1986 and September 1988 re-inspections
were conducted and the violation of applicable standards was
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:
xxx xxx xxx
(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)
xxx xxx xxx
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.
Footnotes
1
Rollo, pp. 17-18.
2
Section 19 of Executive Order No. 192, dated 10 June
1987, abolished the NPCC and transferred its powers
and functions relating to the adjudication of pollution
cases under R.A. No. 3931 and P.D. No. 984 to the
Board.
3
Rollo, p. 33.
4 SolarTextile Finishing Corporation. YES.RULING:Section 7(a) of
78 Official Gazette No. 1, p. 52 (4 January 1982).
5
74 Official Gazette No. 23, p. 4453 (5 June 1978).
6
Rollo, pp. 64 and 66.
7 Provided
78 Official Gazette No. 1, p. 53 (4 January 1982).
8
Rollo, p. 68.
9
Id., P. 66.
10
Rollo, p. 67; emphases supplied.
11
Id., p. 65; emphases supplied.
12
G.R. No. 94759, promulgated 21 January 1991.
Pollution Adjudication Board (PAB) vs. CA
[G.R. No. 93891 March 11, 1991]Facts:Respondent, Solar Textile
Finishing Corporation is involved in bleaching, rinsing and dyeing
textiles with untreated wastewater whichwere being discharged
directly into a canal leading to the adjacent Tullahan-Tinejeros
River. On September 22, 1988, petitionerPollution Adjudication
Board issued an
ex parte
Order based on 2 findings made on Solar Textile Finishing
Corportion’s plant,
directing Solar immediately to cease and desist from utilizing its
wastewater pollution source installations as they were clearly
inviolation of Section 8 of Presidential Decree No. 984 (Pollution
Control Law) and Section 103 of its Implementing Rules
andRegulations and the 1982 Effluent Regulations.Solar then
filed a motion for reconsideration which was granted by the
Pollution Adjudication Board for a temporary
operation.However, Solar went to the RTC for certiorari and
preliminary injunction against the Board but the same
was dismissed. On appeal,the CA reversed the Order of dismissal
of the trial court and remanded the case for further
proceedings.Petitioner Board claims that under P.D. No. 984,
Section 7(a), it has legal authority to issue
ex parte
orders to suspend the operationsof an establishment when there
is
prima facie
evidence that such establishment is discharging effluents or
wastewater, the pollutionlevel of which exceeds the maximum
permissible standards set by the NPCC (now, the Board). Solar,
on the other hand, contendsthat under the Board's own rules
and regulations, an
ex parte
order may issue only if the effluents discharged pose an
"immediatethreat to life, public health, safety or welfare, or to
animal and plant life" and argued that there were no findings
that Solar'swastewater discharged posed such a threat.ISSUE:
Whether or not the Pollution Adjudication Board has legal
authority to issue the Order and Writ of Execution against
P.D. No. 984 authorized petitioner Board to issue
ex parte
cease and desist orders under the following circumstances:(a)
Public Hearing
....
, That
whenever the Commission finds prima facie evidence that the
discharged sewage or wastes areof immediate threat to life,
public health, safety or welfare, or to animal or plant life,
or exceeds the allowable standards set by theCommission, the
Commissioner may issue an ex-parte order directing the
discontinuance of the same or the temporary suspension
orcessation of operation of the establishment
or person generating such sewage or wastes
without the necessity of a prior publichearing
.
The said ex-parte order shall be immediately executory
and shall remain in force until said establishment or person
preventsor abates the said pollution within the allowable
standards or modified or nullified by a competent court.The
Court found that the Order and Writ of Execution issued
by petitioner Board were entirely within its lawful authority
Ex partecease and desist orders are permitted by law and
regulations in situations like in this case. The relevant pollution
control statute andimplementing 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 thepolice power. It is a constitutional
commonplace that the ordinary requirements of procedural due
process yield to the necessities ofprotecting vital public interests
like those here involved, through the exercise of police power.
Hence, the trial court did not errwhen it dismissed Solar's
petition for certiorari. It follows that the proper remedy was an
appeal from the trial court to the Court ofAppeals, as Solar did in
fact appeal. The Court gave due course on the Petition for
Review and the Decision of the Court of Appealsand its
Resolution were set aside. The Order of petitioner Board and the
Writ of Execution, as well as the decision of the trial courtwere
reinstated, without prejudice to the right of Solar to contest the
correctness of the basis of the Board's Order and Writ
ofExecution at a public hearing before the Board
11
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.
xxx xxx x x x (Emphasis supplied)
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.
xxx xxx xxx
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 (1900).
70 Phil., at 229; underscoring supplied.
4 People v. Love, 298 Ill 304, 131 NE 809, 16 ALR 703
35 SCRA 481 (1970).
5
35 SCRA, 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
Barsky v. 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
10
(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).
Facts: 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. The trial court denied said petition on 20 April
1987. The NMAT was conducted and administered as previously
scheduled.
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."
The statute, among other things, created a Board of Medical
Education. Its functions as specified in Section 5 of the statute
include the following:
"(a) To determine and prescribe requirements for admission into
a recognized college of medicine;
xxx
(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 shallaccrue to the operating fund
of the Board of Medical Education;”
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 requirementsthat 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
admissionrequirements as presently called for under existing
rules, shall serve as a basis for the issuance of the prescribed
certificate of eligibility for admission into the medical colleges.
Issue: Whether or not Section 5 (a) and (f) of Republic Act No.
2382, as amended, and MECS Order No. 52, s. 1985 are
constitutional.
Held: Yes. 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.
The police power, it is commonplace learning, is the pervasive
and non-waivable power and authority of the sovereign to
secure and promote all the important interests and needs — in a
word, the public order — of the general community. 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. 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.
MECS Order No. 52, s. 1985 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. 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.
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.
12
June 18, 1987
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.
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

1. The Constitutional requirement that "every bill shall embrace

2. Petitioner also submits that the thirty percent (30%) tax
only one subject which shall be expressed in the title thereof" 1 is
imposed is harsh and oppressive, confiscatory, and in restraint of
sufficiently complied with if the title be comprehensive enough
trade. However, it is beyond serious question that a tax does not
to include the general purpose which a statute seeks to achieve.
cease to be valid merely because it regulates, discourages, or
It is not necessary that the title express each and every end that
even definitely deters the activities taxed. 8 The power to impose
the statute wishes to accomplish. The requirement is satisfied if
taxes is one so unlimited in force and so searching in extent, that
all the parts of the statute are related, and are germane to the
the courts scarcely venture to declare that it is subject to any
subject matter expressed in the title, or as long as they are not
restrictions whatever, except such as rest in the discretion of the
inconsistent with or foreign to the general subject and title. 2An
authority which exercises it. 9 In imposing a tax, the legislature
act having a single general subject, indicated in the title, may
acts upon its constituents. This is, in general, a sufficient security
contain any number of provisions, no matter how diverse they
against erroneous and oppressive taxation. 10
may be, so long as they are not inconsistent with or foreign to
the general subject, and may be considered in furtherance of
The tax imposed by the DECREE is not only a regulatory but also
such subject by providing for the method and means of carrying
a revenue measure prompted by the realization that earnings of
out the general object." 3 The rule also is that the constitutional
videogram establishments of around P600 million per annum
requirement as to the title of a bill should not be so narrowly
have not been subjected to tax, thereby depriving the
construed as to cripple or impede the power of legislation. 4 It
Government of an additional source of revenue. It is an end-user
should be given practical rather than technical construction. 5
tax, imposed on retailers for every videogram they make
available for public viewing. It is similar to the 30% amusement
Tested by the foregoing criteria, petitioner's contention that the
tax imposed or borne by the movie industry which the theater-
tax provision of the DECREE is a rider is without merit. That
owners pay to the government, but which is passed on to the
section reads, inter alia:
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
Section 10. Tax on Sale, Lease or Disposition of uniformly on all videogram operators.
Videograms. — Notwithstanding any provision of law to
the contrary, the province shall collect a tax of thirty
The levy of the 30% tax is for a public purpose. It was imposed
percent (30%) of the purchase price or rental rate, as
primarily to answer the need for regulating the video industry,
the case may be, for every sale, lease or disposition of a
particularly because of the rampant film piracy, the flagrant
videogram containing a reproduction of any motion
violation of intellectual property rights, and the proliferation of
picture or audiovisual program. Fifty percent (50%) of
pornographic video tapes. And while it was also an objective of
the proceeds of the tax collected shall accrue to the
the DECREE to protect the movie industry, the tax remains a
province, and the other fifty percent (50%) shall acrrue valid imposition.
to the municipality where the tax is collected;
PROVIDED, That in Metropolitan Manila, the tax shall be
The public purpose of a tax may legally exist even if the
shared equally by the City/Municipality and the
motive which impelled the legislature to impose the tax
Metropolitan Manila Commission.
was to favor one industry over another. 11
xxx xxx xxx
It is inherent in the power to tax that a state be free to
select the subjects of taxation, and it has been
The foregoing provision is allied and germane to, and is repeatedly held that "inequities which result from a
reasonably necessary for the accomplishment of, the general
singling out of one particular class for taxation or
object of the DECREE, which is the regulation of the video
exemption infringe no constitutional
industry through the Videogram Regulatory Board as expressed
limitation". 12 Taxation has been made the implement of
in its title. The tax provision is not inconsistent with, nor foreign
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.
Teehankee, (C.J.), Yap, Fernan, Narvasa, Gutierrez, Jr., Cruz,
Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento and Cortes,
JJ., concur.
Facts: The case is a petition filed by petitioner on behalf of
videogram operators adversely affected by Presidential Decree
No. 1987, “An Act Creating the Videogram Regulatory Board"
with broad powers to regulate and supervise the videogram
industry.
A month after the promulgation of the said Presidential Decree,
theamended the National Internal Revenue Code provided that:
"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."
"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 accrue 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 rationale behind the tax provision is to curb 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 movie houses and theaters. Such unregulated
circulation 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.
Videogram(s) establishments collectively earn around P600
Million per annum from rentals, sales and disposition of
videograms, and theseearnings have not been subjected to tax,
thereby depriving the Government of approximately P180
Million in taxes each year.
The unregulated activities of videogram establishments have also
affected the viability of the movie industry.
Issues:
(1) Whether or not tax imposed by the DECREE is a valid exercise
of police power.
(2) Whether or nor the DECREE is constitutional.
Held: Taxation has been made the implement of the state's
police power. 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.

We find no clear violation of the Constitution which would justify
us in pronouncing Presidential Decree No. 1987 as
unconstitutional and void. 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."
WHEREFORE, the instant Petition is hereby dismissed. No costs.
13
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.
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.

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

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 P is invalid because it is
imposed without according the owner ar right to be heard before
a competent and impartial court as guaranteed
e by due process.
He complains that the measure should snot have been presumed,
and so sustained, as constitutional. There i is also a challenge to
the improper exercise of the legislativedpower by the former
President under Amendment No. 6 of the e 1973 Constitution. 4
n
While also involving the same executivet order, the case
of Pesigan v. Angeles 5 is not applicable here. The question raised
there was the necessity R of the previous publication of the
measure in the Official e Gazette before it could be considered
enforceable. We imposed p the requirement then on the basis of
due process of law. Inudoing so, however, this Court did not, as
contended by the Solicitor
b General, impliedly affirm the
constitutionality of Executive
l Order No. 626-A. That is an entirely
different matter. i
c
This Court has declared that while lower courts should observe a
becoming modesty inoexamining constitutional questions, they
f
are nonetheless not prevented from resolving the same
whenever warranted, subject only to review by the highest
t
tribunal. 6 We have jurisdiction under the Constitution to
h modify or affirm on appeal
"review, revise, reverse,
e or rules of court may provide," final
or certiorari, as the law
judgments and orders of lower courts in, among others, all cases
P
involving the constitutionality of certain measures. 7 This simply
h
means that the resolution of such cases may be made in the first
instance by these lower i courts.
l
i laws are presumed to be constitutional,
And while it is true that
that presumption is not p by any means conclusive and in fact may
be rebutted. Indeed, pif there be a clear showing of their
invalidity, and of the ineed to declare them so, then "will be the
time to make the hammer n fall, and heavily," 8 to recall Justice
e
Laurel's trenchant warning. Stated otherwise, courts should not
follow the path of leasts 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.
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.

Aware of this, the courts have also hesitated to adopt their own This is not to say that notice and hearing are imperative in every
specific description of due process lest they confine themselves case for, to be sure, there are a number of admitted exceptions.
in a legal straitjacket that will deprive them of the elbow room The conclusive presumption, for example, bars the admission of
they may need to vary the meaning of the clause whenever contrary evidence as long as such presumption is based on
indicated. Instead, they have preferred to leave the import of the human experience or there is a rational connection between the
protection open-ended, as it were, to be "gradually ascertained fact proved and the fact ultimately presumed
by the process of inclusion and exclusion in the course of the therefrom. 15 There are instances when the need for expeditions
decision of cases as they arise." 11 Thus, Justice Felix Frankfurteraction will justify omission of these requisites, as in the summary
of the U.S. Supreme Court, for example, would go no farther abatement of a nuisance per se, like a mad dog on the loose,
than to define due process — and in so doing sums it all up — as which may be killed on sight because of the immediate danger it
nothing more and nothing less than "the embodiment of the poses to the safety and lives of the people. Pornographic
sporting Idea of fair play." 12 materials, contaminated meat and narcotic drugs are inherently
pernicious and may be summarily destroyed. The passport of a
When the barons of England extracted from their sovereign liege person sought for a criminal offense may be cancelled without
the reluctant promise that that Crown would thenceforth not hearing, to compel his return to the country he has fled. 16 Filthy
proceed against the life liberty or property of any of its subjects restaurants may be summarily padlocked in the interest of the
except by the lawful judgment of his peers or the law of the land, public health and bawdy houses to protect the public
they thereby won for themselves and their progeny that splendid morals. 17 In such instances, previous judicial hearing may be
guaranty of fairness that is now the hallmark of the free society. omitted without violation of due process in view of the nature of
The solemn vow that King John made at Runnymede in 1215 has the property involved or the urgency of the need to protect the
since then resounded through the ages, as a ringing reminder to general welfare from a clear and present danger.
all rulers, benevolent or base, that every person, when
confronted by the stern visage of the law, is entitled to have his The protection of the general welfare is the particular function of
say in a fair and open hearing of his cause. 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 supplied.) The phrase "may see fit" is an extremely generous and
were to be assumed, we would still have to reckon with the dangerous condition, if condition it is. It is laden with perilous
sanction that the measure applies for violation of the opportunities for partiality and abuse, and even corruption. One
prohibition. The penalty is outright confiscation of the carabao or searches in vain for the usual standard and the reasonable
carabeef being transported, to be meted out by the executive guidelines, or better still, the limitations that the said officers
authorities, usually the police only. In the Toribio Case, the must observe when they make their distribution. There is none.
statute was sustained because the penalty prescribed was fine Their options are apparently boundless. Who shall be the
and imprisonment, to be imposed by the court after trial and fortunate beneficiaries of their generosity and by what criteria
conviction of the accused. Under the challenged measure, shall they be chosen? Only the officers named can supply the
significantly, no such trial is prescribed, and the property being answer, they and they alone may choose the grantee as they see
transported is immediately impounded by the police and fit, and in their own exclusive discretion. Definitely, there is here
declared, by the measure itself, as forfeited to the government. a "roving commission," a wide and sweeping authority that is not
"canalized within banks that keep it from overflowing," in short,
In the instant case, the carabaos were arbitrarily confiscated by a clearly profligate and therefore invalid delegation of legislative
the police station commander, were returned to the petitioner powers.
only after he had filed a complaint for recovery and given
a supersedeas bond of P12,000.00, which was ordered To sum up then, we find that the challenged measure is an
confiscated upon his failure to produce the carabaos when invalid exercise of the police power because the method
ordered by the trial court. The executive order defined the employed to conserve the carabaos is not reasonably necessary
prohibition, convicted the petitioner and immediately imposed to the purpose of the law and, worse, is unduly oppressive. Due
punishment, which was carried out forthright. The measure process is violated because the owner of the property
struck at once and pounced upon the petitioner without giving confiscated is denied the right to be heard in his defense and is
him a chance to be heard, thus denying him the centuries-old immediately condemned and punished. The conferment on the
guaranty of elementary fair play. administrative authorities of the power to adjudge the guilt of
the supposed offender is a clear encroachment on judicial
It has already been remarked that there are occasions when functions and militates against the doctrine of separation of
notice and hearing may be validly dispensed with powers. There is, finally, also an invalid delegation of legislative
notwithstanding the usual requirement for these minimum powers to the officers mentioned therein who are granted
guarantees of due process. It is also conceded that summary unlimited discretion in the distribution of the properties
action may be validly taken in administrative proceedings as arbitrarily taken. For these reasons, we hereby declare Executive
procedural due process is not necessarily judicial only. 20 In the Order No. 626-A unconstitutional.
exceptional cases accepted, however. there is a justification for
the omission of the right to a previous hearing, to wit, We agree with the respondent court, however, that the police
the immediacy of the problem sought to be corrected and station commander who confiscated the petitioner's carabaos is
the urgency of the need to correct it. not liable in damages for enforcing the executive order in
accordance with its mandate. The law was at that time
In the case before us, there was no such pressure of time or presumptively valid, and it was his obligation, as a member of
action calling for the petitioner's peremptory treatment. The the police, to enforce it. It would have been impertinent of him,
properties involved were not even inimical per se as to require being a mere subordinate of the President, to declare the
their instant destruction. There certainly was no reason why the executive order unconstitutional and, on his own responsibility
offense prohibited by the executive order should not have been alone, refuse to execute it. Even the trial court, in fact, and the
proved first in a court of justice, with the accused being accorded Court of Appeals itself did not feel they had the competence, for
all the rights safeguarded to him under the Constitution. all their superior authority, to question the order we now annul.
Considering that, as we held in Pesigan v. Angeles, 21 Executive
Order No. 626-A is penal in nature, the violation thereof should The Court notes that if the petitioner had not seen fit to assert
have been pronounced not by the police only but by a court of and protect his rights as he saw them, this case would never
justice, which alone would have had the authority to impose the have reached us and the taking of his property under the
prescribed penalty, and only after trial and conviction of the challenged measure would have become a faitaccompli despite
accused. its invalidity. We commend him for his spirit. Without the
present challenge, the matter would have ended in that pump
We also mark, on top of all this, the questionable manner of the boat in Masbate and another violation of the Constitution, for all
disposition of the confiscated property as prescribed in the its obviousness, would have been perpetrated, allowed without
questioned executive order. It is there authorized that the seized protest, and soon forgotten in the limbo of relinquished rights.
property shall "be distributed to charitable institutions and other
similar institutions as the Chairman of the National Meat The strength of democracy lies not in the rights it guarantees but
Inspection Commission may see fit, in the case of carabeef, and in the courage of the people to invoke them whenever they are
to deserving farmers through dispersal as the Director of Animal ignored or violated. Rights are but weapons on the wall if, like
Industry may see fit, in the case of carabaos." (Emphasis 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.
WHEREFORE, Executive Order No. 626-A is hereby declared
unconstitutional. Except as affirmed above, the decision of the
Court of Appeals is reversed. The supersedeas bond is cancelled
and the amount thereof is ordered restored to the petitioner. No due to the avoidance of an “iron rule “laying down a stiff
costs.
SO ORDERED.
Teehankee, C.J., Yap, Fernan, Narvasa, Gutierrez, Jr., Paras,
Gancayco, Padilla Bidin Sarmiento and Cortes, JJ., concur.
Melencio-Herrera and Feliciano, JJ., are on leave.
Ynot v IAC (1987) 148 SCRA 659
J. Cruz
Facts:
Petitioner transported 6 caracbaos from Masbate to Iloilo in
1984 and these wer confiscated by the station commander in
Barotac, Iloilo for violating E.O. 626 A which prohibits
transportation of a carabao or carabeef from one province to
another. Confiscation will be a result of this.
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.
The same result was decided in the trial court.
In the Supreme Court, he then petitioned against the
constitutionality of the E.O. due to the
outright confiscation without giving the owner the right to heard
before an impartial court as guaranteed by due process. He also
challenged the improper exercise of legislative power by the
former president under Amendment 6 of the 1973 constitution
wherein Marcos was given emergency powers to issue letters of
instruction that had the force of law.
Issue: Is the E.O. constitutional?
Holding: The EO is unconstitutional. Petition granted.
Ratio:
The lower courts are not prevented from examining the
constitutionality of a law.
Constitutional grant to the supreme court to review.
Justice Laurel's said, “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, and so heal the wound
or excise the affliction.”
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 due to the grant of
legislative authority over the president under Amendment
number 6.
Provisions of the constitution should be cast in precise language
to avoid controvery. In the due process clause, however, the
wording was ambiguous so it would remain resilient. This was
command for all circumstances. There was flexibility to allow it
to adapt to every situation with varying degrees at protection for
the changing conditions.
Courts have also refrained to adopt a standard definition for due
processlest they be confined to its interpretation like a
straitjacket.
There must be requirements of notice and hearing as a
safeguard against arbitrariness.
There are exceptions such as conclusive presumption which bars
omission of contrary evidence as long as such presumption is
based on human experience or rational connection between
facts proved and fact presumed. An examples is a passport of a
person with a criminal offense cancelled without hearing.
The protection of the general welfare is the particular function of
police power which both restrains and is restrained by dure
process. This power was invoked in 626-A, in addition to 626
which prohibits slaughter of carabos with an exception.
While 626-A has the same lawful subjectas the original executive
order, it can’t be said that it complies with the existence of a
lawful method. The transport prohibition and the purpose
sought has a gap.
Summary action may be taken in valid admin proceedings as
procedural due process is not juridical only due to the urgency
needed to correct it.
There was no reason why the offense in the E.O. would not have
been proved in a court of justice with the accused acquired the
rights in the constitution.
The challenged measure was an invalid exercise of police power
because the method toconfiscate carabos was oppressive.
Due process was violated because the owener was denied the
right to be heard or his defense and punished immediately.
This was a clear encroachment on judicial functions and against
the separataion of powers.
The policeman wasn’t liable for damages since the law during
that time was valid.
14
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.
G.R. No. L-66839-42 December 18, 1986
LUZVIMINDA F. LOBATON petitioner,
vs.
HONORABLE GLICERIO L. CRUZ, in his capacity as Presiding
Executive Judge, Branch V, Region IV, Regional Trial Court,
sitting at Lemery, Batangas, THE PROVINCIAL FISCAL OF
BATANGAS, and MARIA LUISA TORDECILLA, respondents.
G.R No. 71654 December 18, 1986
ANTONIO DATUIN and SUSAN DATUIN, petitioners,
vs.
HONORABLE JUDGE ERNANI C. PANO, Regional Trial Court,
Quezon City, Branch LXXXVIII, HONORABLE ClTY FISCAL OF
QUEZON CITY, respondents.
G.R. No. 74524-25 December 18, 1986
OSCAR VIOLAGO, petitioner,
vs.
HONORABLE JUDGE ERNANI C. PAÑ;O Regional Trial Court,
Quezon City, Branch LXXXVIII, HONORABLE CITY FISCAL OF
QUEZON CITY, respondents.
G.R. No. 75122-49 December 18, 1986
ELINOR ABAD, petitioner,
vs.
THE HONORABLE NICOLAS A. GEROCHI, JR., in his capacity as
Presiding Judge, Regional Trial Court, National Capital Judicial
Region, Branch 139, Makati and FEDERICO L. MELOCOTTON JR.,
in his capacity as Trial Fiscal Regional Trial Court, Branch 139,
Makati, respondents.
G.R No. 75812-13 December 18, 1986
AMABLE R. AGUILUZ VII and SYLVIA V. AGUILUZ,
spouses, petitioners,
vs.
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.
G.R No. 75765-67 December 18, 1986
LUIS M. HOJAS, petitioner,
vs.
HON. JUDGE SENEN PENARANDA, Presiding Judge, Regional
Trial Court of Cagayan de Oro City, 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 Oro
City, respondents.
G.R. No. 75789 December 18, 1986
THE PEOPLE OF THE PHILIPPINES, petitioner,
vs.
HON. DAVID G. NITAFAN, Presiding Judge, Regional Trial Court,
National Capital Judicial Region, Branch 52, Manila and
THELMA SARMIENTO, respondents.
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. 75765-67 and
counsel for respondent in G.R. No. 75789.
Pio S. Canta for petitioner in G.R. Nos. 66839-42.
Hermogenes Datuin, Jr. for petitioner in G.R. No. 71654.
Abinoja, Tabalingcos, Villalon & Associates for petitioner in G.R.
Nos. 75122-49.
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.
YAP, J.:
The constitutionality of Batas Pambansa Bilang 22 (BP 22 for
short), popularly known as the Bouncing Check Law, which was
approved on April 3, 1979, is the sole issue presented by these
petitions for decision. The question is definitely one of first
impression in our jurisdiction.
These petitions arose from cases involving prosecution of
offenses under the statute. The defendants in those 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 case, which is the subject of G. R. No.
75789, wherein the trial court declared the law unconstitutional
and 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 was premature
for the accused to elevate to this Court the orders denying their
motions to quash, these orders 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 in
our mind that the instant petitions should be entertained and
the constitutional challenge to BP 22 resolved 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 enforcement of the statute.
For the purpose of resolving the constitutional issue presented
here, we do not find it necessary to delve into the specifics of the
informations involved in the cases which are the subject of the
petitions before us. 2 The language 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.
I t public interests.
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 check in full upon presentment,
which check is subsequently dishonored by the drawee bank for
insufficiency of funds or credit or would have been dishonored
for the same reason had not the drawer, without any valid
reason, ordered the bank to stop payment." The penalty
prescribed for the offense is imprisonment of not less than 30
days nor more than one year or a fine or not less than the
amount of the check nor more than double said amount, but in
no case to exceed P200,000.00, or both such fine and
imprisonment at the discretion of the court. 3
The statute likewise imposes the same penalty on "any person
who, having sufficient funds in or credit with the drawee bank
when he makes or draws and issues a check, shall fail to keep
sufficient funds or to maintain a credit to cover the full amount
of the check if presented within a period of ninety (90) days from
the date appearing thereon, for which reason it is dishonored by
the drawee bank. 4
An essential element of the offense is "knowledge" on the part
of the maker or drawer of the check of the 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 payment of the check "is refused by the
drawee because of insufficient funds in or credit with such bank
when presented within ninety (90) days from the date of the
check. 5 To mitigate the harshness of the law in its 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.
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 attached thereto, giving the
reason therefor, "shall constitute prima facie proof of "the
making or issuance of said check, and the due presentment to
the drawee for payment and the dishonor thereof ... for the
reason written, stamped or attached by the drawee on such
dishonored check." 6
The presumptions being merely prima facie, it is open to the
accused of course to present proof to the contrary to overcome
the said presumptions.
II
BP 22 is aimed at putting a stop to or curbing the practice of
issuing checks that are worthless, i.e. checks that end up being
rejected or dishonored for payment. The practice, as discussed
later, is proscribed by the state because of the injury it causes to
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 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.
The Penal Code of Spain, which was in force in the Philippines
from 1887 until it was replaced by the Revised Penal Code in
1932, contained provisions penalizing, among others, the act of
defrauding another through false pretenses. Art. 335 punished a
person who defrauded another "by falsely pretending to possess
any power, influence, qualification, property, credit, agency or
business, or by means of similar deceit." Although no explicit
mention was made therein regarding checks, this provision was
deemed to cover within its ambit the issuance of worthless or
bogus checks in exchange for money. 7
In 1926, an amendment was introduced by the Philippine
Legislature, which added a new clause (paragraph 10) to Article
335 of the old Penal Code, this time referring in explicit terms to
the issuance of worthless checks. The amendment penalized any
person who 1) issues a check in payment of a debt or for other
valuable consideration, knowing at the time of its issuance that
he does not have sufficient funds in the bank to cover its
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, does not have sufficient
deposit to cover the same.8
In 1932, as already adverted to, the old Penal Code was
superseded by the Revised Penal Code. 9 The above provisions, in
amended form, were incorporated in Article 315 of the Revised
Penal Code defining the crime of estafa. The revised text of the
provision read as follows:
Art. 315. Swindling (estafa).—Any person who shall
defraud another by any of the means mentioned
hereinbelow shall be punished by:
xxx xxx xxx
2. By means of any of the following false pretenses or
fraudulent acts executed prior to or simultaneously 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;
xxx xxx xxx
(d) By postdating a check, or issuing a check in on estafa. BP 22 addresses the problem directly and frontally and
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 The question now arises: Is B P 22 a valid law?
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 it offends the constitutional provision forbidding imprisonment
pre-existing debt, the drawer does not derive any material
benefit in return or as consideration for its issuance. On the part equal protection clause; (4) it unduly delegates legislative and
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
makes the act of issuing a worthless check malum prohibitum. 14
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)
for debt; (2) it impairs freedom of contract; (3) it contravenes the
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 exercise of its police power.
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
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. We hold that BP 22 does not conflict with the constitutional
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.
inhibition against imprisonment for debt.
V
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 the fact that during the deliberations on Second Reading (the
impairs freedom of contract. The freedom of contract which is amendment period), amendments were proposed orally and
constitutionally protected is freedom to enter into "lawful" approved by the body or accepted by the sponsor, hence, some
contracts. Contracts which contravene public policy are not members might not have gotten the complete text of the
lawful. 33 Besides, we must bear in mind that checks can not be provisions of the bill as amended and approved on Second
categorized as mere contracts. It is a commercial instrument Reading. However, it is clear from the records that the text of the
which, in this modem day and age, has become a convenient second paragraph of Section 1 of BP 22 is the text which was
substitute for money; it forms part of the banking system and actually approved by the body on Second Reading on February 7,
therefore not entirely free from the regulatory power of the 1979, as reflected in the approved Minutes for that day. In any
state. event, before the bin was submitted for final approval on Third
Reading, the Interim Batasan created a Special Committee to
Neither do we find substance in the claim that the statute in investigate the matter, and the Committee in its report, which
question denies equal protection of the laws or is discriminatory, was approved by the entire body on March 22, 1979, stated that
since it penalizes the drawer of the check, but not the payee. It is "the clause in question was ... an authorized amendment of the
contended that the payee is just as responsible for the crime as bill and the printed copy thereof reflects accurately the provision
the drawer of the check, since without the indispensable in question as approved on Second Reading. 37 We therefore,
participation of the payee by his acceptance of the check there find no merit in the petitioners' claim that in the enactment of
would be no crime. This argument is tantamount to saying that, BP 22 the provisions of Section 9 (2) of Article VIII of the 1973
to give equal protection, the law should punish both the swindler Constitution were violated.
and the swindled. The petitioners' posture ignores the well-
accepted meaning of the clause "equal protection of the laws." WHEREFORE, judgment is rendered granting the petition in G.R.
The clause does not preclude classification of individuals, who No. 75789 and setting aside the order of the respondent Judge
may be accorded different treatment under the law as long as dated August 19, 1986. The petitions in G.R. Nos. 63419, 66839-
34
the classification is no unreasonable or arbitrary. 42, 71654, 74524-25, 75122-49, 75812-13 and 75765-67 are
hereby dismissed and the temporary restraining order issued in
It is also suggested that BP 22 constitutes undue or improper G.R. Nos. 74524-25 is lifted. With costs against private
delegation of legislative powers, on the theory that the offense is petitioners.
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 SO ORDERED.
present the check to the bank for payment but instead keeps it,
there would be no crime. The logic of the argument stretches to Teehankee, C.J., Feria, Fernan, Narvasa, Melencio-Herrera,
absurdity the meaning of "delegation of legislative power." What Alampay, Gutierrez, Jr., Cruz, Paras and Feliciano, JJ., concur.
cannot be delegated is the power to legislate, or the power to
make laws. 35 which means, as applied to the present case, the Footnotes
power to define the offense sought to be punished and to G.R. No. L-63419. December 18, 1986
prescribe the penalty. By no stretch of logic or imagination can it
be said that the power to define the crime and prescribe the YAP, J.:
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 FACTS:
executive power. The suggestion that the statute unlawfully
delegates its enforcement to the offended party is farfetched. This is a consolidated case, the petition arose from cases
involving prosecution of offenses under the BP 22 also known as
Lastly, the objection has been raised that Section 9 (2) of Article Bouncing Check Law. The defendant in these case moved
VII of the 1973 Constitution was violated by the legislative body seasonably to quash the information on the ground that the acts
when it enacted BP 22 into law. This constitutional provision charged did not constitute an offense, the statute being
prohibits the introduction of amendments to a bill during the unconstitutional. The motions were denied by the respondent
Third Reading. It is claimed that during its Third Reading, the bill trial court, except in one case, which is the subject of G.R No.
which eventually became BP 22 was amended in that the text of 75789, wherein the trial court declared the law unconstitutional
the second paragraph of Section 1 of the bill as adopted on and dismissed the case. The parties adversely affected have
Second Reading was altered or changed in the printed text of the come to the court for remedy. Those who question the
bill submitted for approval on Third Reading. constitutionality of the said statute insist the following ground:
1) It offends the constitutional provision forbidding
A careful review of the record of the proceedings of the Interim imprisonment for debt;
Batasan on this matter shows that, indeed, there was some 2) it impairs freedom of contract;
confusion among Batasan Members on what was the exact text 3) it contravenes the equal protection clause;
of the paragraph in question which the body approved on 4) it unduly delegates legislative and executive powers; and
Second Reading. 36 Part of the confusion was due apparently to
5) its enactment is flawed in the sense that during its passage the On December 30, 1995, respondent received from petitioner,
interim Batasan violated the constitutional provision prohibiting through its Chairman, a notice dated December 22, 1995
to a bill on Third Reading.
ISSUE:
Whether or not BP 22 or the Bouncing Check Law is
unconstitutional.
RULING:
No, the enactment of the assailed statute is a valid exercise of
Police power and is not repugnant to the constitutional
inhibition against imprisonment for debt. It may be
constitutionally impermissible for the legislature to penalize a
person for non-payment of debt ex contractu, but certainly it is
within the prerogative of the lawmaking body to prescribe
certain acts deemed pernicious and inimical to public welfare.
Acts mala in se are not 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 enactment of the said statute is a declaration by the
legislature that, as a matter of public policy, the making and
issuance of a worthless check is deemed a public nuisance to be
abated by the imposition of penal sanctions.
15
G.R. No. 135962 March 27, 2000
METROPOLITAN MANILA DEVELOPMENT
AUTHORITY, petitioner,
vs.
BEL-AIR VILLAGE ASSOCIATION, INC., respondent.
PUNO, J.:
Not infrequently, the government is tempted to take legal
shortcuts 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.
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.
requesting respondent to open Neptune Street to public
vehicular traffic starting January 2, 1996. The notice reads:
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.
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 MMDA's
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:
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.
Petitioner MMDA raises the following questions:
I legislature to make, ordain, and establish all manner of
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?
IV
WAS RESPONDENT DEPRIVED OF DUE PROCESS DESPITE
THE SEVERAL MEETINGS HELD BETWEEN MMDA AND
THE AFFECTED EEL-AIR RESIDENTS AND BAVA
OFFICERS?
V
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.
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
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:
 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. 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 . . . " 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:
(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:
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;
(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.
The implementation of the MMDA's plans, programs and
projects is undertaken by the local government units, national
government agencies, accredited people's 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
arrangements with these bodies for the delivery of the required
services 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 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 promulgate 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:
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.
Clearly, the scope of the MMDA's 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 the 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.
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 appropriate
funds for the general welfare" of the inhabitants of Metro
Manila. The MMDA is, as termed in the charter itself,
"development authority." 30 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. — . . . .
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.
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 petitioner's 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.
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.
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:
Sec. 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 P.D. No. 824 further provided:
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;
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.
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.
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.
xxx xxx xxx
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
MMC's 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.
Thus, Metropolitan Manila had a "central government," i.e., the
MMC which fully possessed legislative 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:
Sec. 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.
Sec. 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:
Sec. 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.
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 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:
Sec. 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 MMA's
power was limited to the "delivery of basic urban services
requiring coordination in Metropolitan Manila." 47 The MMA's
governing body, the Metropolitan Manila Council, although
composed of the mayors of the component cities and
municipalities, was merely given power of: (1) formulation of
policies on the delivery of basic services requiring coordination
and consolidation; and (2) promulgation 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 MMA's 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. It's a special . . . we can create a special
metropolitan political subdivision.
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: That's 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.
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.
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. It's before our eyes. Sewerage, flood
control, water system, peace and order, we cannot deny
these. It's 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, it's alright. We may call it a council
or maybe a management agency.
xxx xxx x x x 51
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 MMDA's 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 bill's
presentation to Congress. Thus:
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, it's very
clear that those policies must be followed. Otherwise,
 what's 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. You've got the power to set a
policy, the body wants to follow your policy, then we
say let's call it an ordinance and see if they will not
follow it.
THE CHAIRMAN: That's very nice. I like that. However,
there is a constitutional impediment.1âwphi1 You are
making this MMDA a political subdivision. The creation
of the MMDA would be subject to a plebiscite. That is
what I'm trying to avoid. I've 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. I'm trying to make this as
administrative. That's 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.
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.
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.1âwphi1 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.
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.
We stress that this decision does not make light of the MMDA's
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 people's 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.1âwphi1.nêt
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.
SO ORDERED.
The Sangguniang Panlungsod of Makati City did not pass any
Davide, Jr., C.J., Kapunan, Pardo and Ynares-Santiago, JJ., concur. ordinance or resolution ordering the opening of Neptune
Street, hence, its proposed opening by the MMDA is illegal.
Facts:
On December 30, 1995, respondent received from petitioner a Wherefore, the petition is denied.
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 16
separating the subdivision from Kalayaan Avenue would be
demolished. G.R. No. 130230 April 15, 2005

Respondent instituted a petition for injunction against METROPOLITAN MANILA DEVELOPMENT

petitioner, praying for the issuance of a TRO and preliminary AUTHORITY, Petitioner,
injunction enjoining the opening of Neptune Street and vs.
prohibiting the demolition of the perimeter wall. The trial court DANTE O. GARIN, respondent.
denied issuance of a preliminary injunction. On appeal, the
appellate court ruled that the MMDA has no authority to order DECISION
the opening of Neptune Street, and cause the demolition of its
perimeter walls. It held that the authority is lodged in the City
CHICO-NAZARIO, J.:
Council of Makati by ordinance.
At issue in this case is the validity of Section 5(f) of Republic Act
MMDA said it has the authority to open Neptune St. because it
No. 7924 creating the Metropolitan Manila Development
is an agent of the Government endowed with police power in
Authority (MMDA), which authorizes it to confiscate and
the delivery of basic services in Metro Manila. From the
suspend or revoke driver's licenses in the enforcement of traffic
premise of police powers, it follow then that it need not for an
laws and regulations.
ordinance to be enacted first.

Hence this petition. The issue arose from an incident involving the respondent Dante
O. Garin, a lawyer, who was issued a traffic violation receipt
Issue: (TVR) and his driver's license confiscated for parking illegally
Does MMDA has the mandate to open Neptune Street to public along Gandara Street, Binondo, Manila, on 05 August 1995. The
traffic pursuant to its regulatory and police powers? following statements were printed on the TVR:

Ruling: You are hereby directed to report to the MMDA Traffic

According to SC, Police power is an inherent attribute of Operations Center Port Area Manila after 48 hours from date of
sovereignty. Police power is lodged primarily in the National apprehension for disposition/appropriate action
Legislature, which the latter can delegate to the President and thereon. Criminal case shall be filed for failure to redeem license
administrative boards, LGU or other lawmaking bodies. after 30 days.

LGU is a political subdivision for local affairs. Which has a Valid as temporary DRIVER'S license for seven days from date of
legislative body empowered to enact ordinances, approved apprehension.1
resolutions and appropriate funds for the general welfare of
the province/city/municipality. Shortly before the expiration of the TVR's validity, the
respondent addressed a letter2 to then MMDA Chairman
The MMDA is, as termed in the charter itself, "development Prospero Oreta requesting the return of his driver's license, and
authority." All its functions are administrative in nature.The expressing his preference for his case to be filed in court.
powers of the MMDA are limited to the following acts:
formulation, coordination, regulation,implementation, Receiving no immediate reply, Garin filed the original
preparation, management, monitoring, setting of policies, complaint3 with application for preliminary injunction in Branch
installation of a system and administration. There is no syllable 260 of the Regional Trial Court (RTC) of Parañaque, on 12
in R.A. No. 7924 that grants the MMDA police power, let alone September 1995, contending that, in the absence of any
legislative power implementing rules and regulations, Sec. 5(f) of Rep. Act No.
7924 grants the MMDA unbridled discretion to deprive erring
In sum, the MMDA has no power to enact ordinances for the motorists of their licenses, pre-empting a judicial determination
welfare of the community. It is the LGUs, acting through their of the validity of the deprivation, thereby violating the due
respective legislative councils, that possess legislative power process clause of the Constitution. The respondent further
and police power. 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 Garin's 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 court's 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 driver's license for twenty more days. A
preliminary mandatory injunction was granted on 23 October
1995, and the MMDA was directed to return the respondent's
driver's license.
On 14 August 1997, the trial court rendered the assailed
decision5 in favor of the herein respondent and held that:
a. There was indeed no quorum in that First Regular Meeting any Metrobank branch. Traffic enforcers may no longer
of the MMDA Council held on March 23, 1995, hence MMDA
Memorandum Circular No. TT-95-001, authorizing confiscation of traffic violations. All motorists with unredeemed TVRs were
driver's licenses upon issuance of a TVR, is void ab initio.
b. The summary confiscation of a driver's license without
first giving the driver an opportunity to be heard; depriving him
of a property right (driver's license) without DUE PROCESS; not
filling (sic) in Court the complaint of supposed traffic infraction, facie case to enjoin the petitioner from confiscating drivers'
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 driver's license; th(e) MMDA is likewise ordered to
desist from confiscating driver's 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
Prosecutor's 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 court's 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
confiscate drivers' licenses as a matter of course in cases of
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
licenses is concerned, recent events have overtaken the Court's
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 petitioner's 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 Rizal8 on the license to operate a cockpit, Tan
v. Director of Forestry9 and Oposa v. Factoran10 on timber
licensing agreements, and Surigao Electric Co., Inc. v.
Municipality of Surigao11 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."16Local 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 MMDA's 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. 413618 and P.D. No. 160519 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, people's 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
MMDA's 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.
Footnotes
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 apprehending any driver for violations of this
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 driver's license.- Law
enforcement and peace officers duly
designated by the Commissioner shall, in
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 date of
apprehension will cause suspension and
revocation of his license. (emphasis supplied)
19
Entitled "Granting the Metropolitan Manila
Commission Certain Powers Related to Traffic
Management and Control in Metropolitan Manila,
Providing Penalties, and for Other Purposes," dated 21
November 1978.
SEC. 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
Veteran's 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 worker's 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 July 1987 152 SCRA
540; Peralta v. COMELEC, G.R. No. L-47791, 11 March
1978, 82 SCRA 55; People v. Vera, GR No. 45685, 65 Phil
56 [1937].)
23
Section 3(b), Republic Act No. 7924.
G.R. No. 130230. April 15, 2005]METROPOLITAN MANILA
DEVELOPMENT AUTHORITY, petitioner, vs. DANTE O. GARIN,
respondent.Facts:One day, Respondent, Dante O. Garin, a
lawyer, was issued a traffic violation receipt (TVR) and his
driver’s licensewas confiscated for parking illegally along
Gandara Street, Binondo, Manila, on 05 August 1995.Shortly
before the expiration of the TVR’s validity (which is 48
hours from date of apprehension), the
respondentaddressed a letter to then MMDA Chairman
Prospero Oreta requesting the return of his driver’s license, and
expressinghis preference for his case to be filed in courtSince
there was no reply, Garin filed the original complaint with
application for preliminary injunction in Branch 260of the
Regional Trial Court (RTC) of Parañaque, on 12
September 1995, contending that, in the absence of
anyimplementing rules and regulations, Sec. 5(f) of Rep. Act No.
7924 grants the MMDA unbridled discretion to depriveerring
motorists of their licenses, pre-empting a judicial
determination of the validity of the deprivation,
therebyviolating the due process clause of the Constitution. The
respondent further contended that the provision violates
theconstitutional prohibition against undue delegation of
legislative authority, allowing as it does the MMDA to fix
andimpose unspecified – and therefore unlimited - fines and
other penalties on erring motorists.For its part, the MMDA,
represented by the Office of the Solicitor General, pointed out
that the powers granted to it bySec. 5(f) of Rep. Act No.
7924 are limited to the fixing, collection and
imposition of fines and penalties for trafficviolations,
which powers are legislative and executive in nature; the
judiciary retains the right to determine the validityof the
penalty imposed. The MMDA also refuted Garin’s
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 court’s attention to MMDA Memo
randum Circular No. TT-95-001 dated 15 April 1995which
authorizes confiscation of driver’s licenses upon issuance of a
TVR. Respondent Garin, however, questioned thevalidity of
MMDA Memorandum Circular No. TT-95-001, as he claims that it
was passed by the Metro Manila Councilin the absence of a
quorum.On 23 October 1995, the RTC granted the preliminary
mandatory injunction which ordered the MMDA to return
therespondent’s driver’s license. On 14 August 1997, the RTC
rendered the decision in favor of the respondent.Meanwhile,
on 12 August 2004, the MMDA, through its Chairman
Bayani Fernando, implemented MemorandumCircular
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 enforcersmay
no longer confiscate drivers’ licenses as a matter
of course in cases of traffic violations. All motorists
withunredeemed TVRs were given seven days from the date of
implementation of the new system to pay their fines andredeem
their license or vehicle platesAlthough this case was
considered as moot and academic by the
implementation of Memorandum Circular
No. 04,S e r i e s o f 2 0 0 4 , t h e
Supreme Court believed that it was but proper
to address the current issue for the
p r o p e r implementation of the petitioner’s future
programs.Issue:Whether or not Section 5(f) of Republic Act No.
7924, which created the Metropolitan Manila Development
Authority(MMDA), authorizes the MMDA to confiscate and
suspend or revoke driver’s licenses in the enforcement of
trafficlaws and regulationsRuling:B y v i r t u e o f t h e
doctrine promulgated in the case of
Metro Manila Development Authority v. Bel-
Air Village Association, Inc.,
Rep. Act No. 7924 does not grant the MMDA with police power,
let alone legislative power, and thatall its functions
are administrative in nature.Police power, having been lodged
primarily in the National Legislature, 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 governmen
units (LGUs). Once delegated, the agents can exercise only such
legislative powers as are conferred on them by thenational
lawmaking body.Thus, as held in the aforementioned case, . .
.“[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 nosyllable in R. A. No. 7924 that grants the MMDA
police power, let alone legislative power
. x --------------------------------------------- x
Even the Metro ManilaCouncil 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, approveresolutions
and appropriate funds for the general welfare" of the
inhabitants of Metro Manila
. The MMDA is,
astermed in the charter itself, a "development authorit
y."
It is an agency created for the purpose of laying
downpolicies and coordinating with the various natio
nal government agencies, people's organizations, non
-governmental organizations and the private sector for the
efficient and expeditious delivery of basic services inthe vast
metropolitan area
.
All its functions are administrative in nature
and these are actually summed up in thecharter itself,
viz:..”Although petitioner is not precluded – and in fact is duty-
bound – to confiscate and suspend or revoke drivers’ licensesin
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, it still needs
a
valid law
,or
ordinance
, or
regulation arising from a legitimate source
. This is consistent with the ruling in
Bel-Air
that theMMDA is a development authority created for the
purpose of laying down policies and coordinating with the
variousnational government agencies, people’s organizations,
non-governmental organizations and the private sector,
whichmay
enforce
, but not
enact
, ordinances
.Hence, the power of MMDA to confiscate and suspend
or revoke drivers’ licenses
without need of any other legislative enactment
, is an unauthorized exercise of police power
17
G.R. No. 170656 August 15, 2007
THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY and
BAYANI FERNANDO as Chairman of the Metropolitan Manila
Development Authority, petitioners,
vs.
VIRON TRANSPORTATION CO., INC., respondent.
G.R. No. 170657 August 15, 2007
HON. ALBERTO G. ROMULO, Executive Secretary, the
METROPOLITAN MANILA DEVELOPMENT AUTHORITY and
BAYANI FERNANDO as Chairman of the Metropolitan Manila
Development Authority,petitioners,
vs.
MENCORP TRANSPORTATION SYSTEM, INC., respondent.
DECISION
CARPIO MORALES, J.:
The following conditions in 1969, as observed by this Court:
 Vehicles have increased in number. Traffic congestion
has moved from bad to worse, from tolerable to critical.
The number of people who use the thoroughfares has
multiplied x x x,1
have remained unchecked and have reverberated to this day.
Traffic jams continue to clog the streets of Metro Manila,
bringing vehicles to a standstill at main road arteries during rush
hour traffic and sapping people’s energies and patience in the
process.
The present petition for review on certiorari, rooted in the traffic
congestion problem, questions the authority of the Metropolitan
Manila Development Authority (MMDA) to order the closure of
provincial bus terminals along Epifanio de los Santos Avenue
(EDSA) and major thoroughfares of Metro Manila.
Specifically challenged are two Orders issued by Judge Silvino T.
Pampilo, Jr. of the Regional Trial Court (RTC) of Manila, Branch
26 in Civil Case Nos. 03-105850 and 03-106224.
The first assailed Order of September 8, 2005,2 which resolved a
motion for reconsideration filed by herein respondents, declared
Executive Order (E.O.) No. 179, hereafter referred to as the E.O.,
"unconstitutional as it constitutes an unreasonable exercise of
police power." The second assailed Order of November 23,
20053 denied petitioners’ motion for reconsideration.
The following facts are not disputed:
President Gloria Macapagal Arroyo issued the E.O. on February
10, 2003, "Providing for the Establishment 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 Greater Metro Manila area;
WHEREAS, the traffic situation in Metro Manila
has affected the adjacent provinces of Bulacan,
Cavite, Laguna, and Rizal, owing to the
continued movement of residents and
industries to more affordable and economically
viable locations in these provinces;
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;
WHEREAS, a primary cause of traffic
congestion in Metro Manila has been the
numerous buses plying the streets that
impedes [sic] the flow of vehicles and
commuters due to the inefficient connectivity
of the different transport modes;
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 transport
system to the commuting public through the
provision of mass transport terminal
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:
Section 1. THE PROJECT. – The project shall be
identified as GREATER MANILA TRANSPORT
SYSTEM 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 modes, as well
as those that shall hereafter be developed, to
serve the commuting public in the 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 commuters as hereinafter described.
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,
manage the project until it may be turned-over
to more appropriate agencies, if found suitable
and convenient. Specifically, MMDA shall have
the following functions and responsibilities:
a) Cause the preparation of
the Master Plan for the
projects, including the
designs and costing;
b) Coordinate the use of the
land and/or properties
needed for the project with
the respective agencies
and/or entities owning them;
c) Supervise and manage the
construction of the necessary
structures and facilities;
d) Execute such contracts or
agreements as may be
necessary, with the
appropriate government
agencies, entities, and/or
private persons, in
accordance with existing laws
and pertinent regulations, to
facilitate the implementation
of the project;
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
audit polices and practice in
government.
f) Enlist the assistance of any
national government agency,
office or department,
including local government
units, government-owned or
controlled corporations, as
may be necessary;
g) Assign or hire the
necessary personnel for the
above purposes; and
h) Perform such other related and related laws which mandate public utilities to provide and
functions as may be
necessary to enable it to
accomplish the objectives
and purposes of this
Executive Order.4 (Emphasis
in the original; underscoring declaratory relief14 against Executive Secretary Alberto G.
supplied)
As the above-quoted portions of the E.O. noted, the primary
cause of traffic congestion in Metro Manila has been the
numerous buses plying the streets and the inefficient
connectivity of the different transport modes;5 and the MMDA
had "recommended a plan to decongest traffic by eliminating the
bus terminals now located along major Metro 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).
The E.O. thus designated the MMDA as the implementing agency
for the Project.
Pursuant to the E.O., the Metro Manila Council (MMC), the
governing board and policymaking body of the MMDA, issued
Resolution No. 03-07 series of 20037 expressing full support of
the Project. Recognizing the imperative to integrate the different
transport modes via the establishment of common bus parking
terminal areas, the MMC cited the need to remove the bus
terminals located along major thoroughfares of Metro Manila.8
On February 24, 2003, Viron Transport Co., Inc. (Viron), a
domestic corporation engaged in the business of public
transportation with a provincial bus operation,9 filed a petition
for declaratory relief10 before the RTC11 of Manila.
In its petition which was docketed as Civil Case No. 03-105850,
Viron alleged that the MMDA, through Chairman Fernando, was
"poised to issue a Circular, Memorandum or Order closing, or
tantamount to closing, all provincial bus terminals along EDSA
and in the whole of the Metropolis under the pretext of traffic
regulation."12 This impending move, it stressed, would mean the
closure of its bus terminal in Sampaloc, Manila and two others in
Quezon City.
Alleging that the MMDA’s authority does not include the power
to direct provincial bus operators to abandon their existing bus
terminals to thus deprive them of the use of their property,
Viron asked the court to construe the scope, extent and
limitation of the power of the MMDA to regulate traffic under
R.A. No. 7924, "An Act Creating the Metropolitan Manila
Development Authority, Defining its Powers and Functions,
Providing Funds Therefor and For Other Purposes."
Viron also asked for a ruling on whether the planned closure of
provincial bus terminals would contravene the Public Service Act
maintain their own terminals as a requisite for the privilege of
operating as common carriers.13
Mencorp Transportation System, Inc. (Mencorp), another
provincial bus operator, later filed a similar petition for
Romulo and MMDA Chairman Fernando.
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.
Mencorp’s petition was consolidated on June 19, 2003 with
Viron’s petition which was raffled to Branch 26 of the RTC,
Manila.
Mencorp’s 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 Order17 issued by the trial court, the issues were
narrowed down to whether 1) the MMDA’s 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 Decision18 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
Manila’s 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, Viron’s and Mencorp’s
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 Viron’s and Mencorp’s 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 Viron’s petition,20 their Comment of April 29,
2003 opposing Mencorp’s 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 MMDA’s 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 MMDA’s 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 Viron’s 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.lawphil
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 6330 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
President’s 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
transportationand 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 country’s intermodal
transportation and communications
systems in a most practical,
expeditious, and orderly fashion for
maximum safety, service, and cost
effectiveness; (Emphasis and
underscoring supplied)
xxxx
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 integrated programs for transportation and communications.
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 order the implementation of the Project, which admittedly is one
public or private, whose development for transportation.
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)
xxxx
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 establishand administer comprehensive and
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
Such authority springs from the President’s 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 President’s 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 President’s 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 boards37 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
area39 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 MMDA’s 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, 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:
‘SECTION 2. Creation of the Metropolitan Manila
Development Authority. — . . .
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.’42 (Emphasis and underscoring
supplied)
In light of the administrative nature of its powers and functions,
the MMDA is devoid of authority to implement the Project as
envisioned by the E.O; hence, it could not have been validly
designated by the President to undertake the Project. It follows
that the MMDA cannot validly order the elimination of
respondents’ terminals.
Even the MMDA’s claimed authority under the police power
must necessarily fail in consonance with the above-quoted ruling
in MMDA v. Bel-Air Village Association, Inc. and this Court’s
subsequent ruling in Metropolitan Manila Development
Authority v. Garin43 that the MMDA is not vested with police
power.
Even assuming arguendo that police power was delegated to the
MMDA, its exercise of such power does not satisfy the two tests
of a valid police power measure, viz: (1) the interest of the public
generally, as distinguished from that of a particular class,
requires its exercise; and (2) the means employed are reasonably
necessary for the accomplishment of the purpose and not unduly
oppressive upon individuals.44 Stated differently, the police
power legislation must be firmly grounded on public interest and
welfare and a reasonable relation must exist between the
purposes and the means.
As early as Calalang v. Williams,45 this Court recognized that
traffic congestion is a public, not merely a private, concern. The
Court therein held that public welfare underlies the contested
statute authorizing the Director of Public Works to promulgate
rules and regulations to regulate and control traffic on national
roads.
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 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 they not duly
oppressive?
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 carriers with terminals along
the major thoroughfares of Metro Manila would thus be
compelled to close down their existing bus terminals and use the
MMDA-designated common parking areas.
In Lucena Grand Central Terminal, Inc. v. JAC Liner, Inc.,49 two
city ordinances were passed by the Sangguniang Panlungsod of
Lucena, directing public utility vehicles to unload and load
passengers at the Lucena Grand Central Terminal, which was
given the exclusive franchise to operate a single common
terminal. Declaring that no other terminals shall be situated,
constructed, maintained or established inside or within the city
of Lucena, the sanggunian declared as inoperable all temporary
terminals therein.
The ordinances were challenged before this Court for being
unconstitutional on the ground that, inter alia, the measures
constituted an invalid exercise of police power, an undue taking
of private property, and a violation of the constitutional
prohibition against monopolies.
Citing De la Cruz v. Paras50 and Lupangco v. Court of
Appeals,51 this Court held that the assailed ordinances were
characterized by overbreadth, as they went beyond what was
reasonably necessary to solve the traffic problem in the city. And
it found that the compulsory use of the Lucena Grand Terminal
was unduly oppressive because it would subject its users to fees,
rentals and charges.
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 This Court commiserates with the MMDA for the roadblocks
such, these must yield to legislation safeguarding the interest of
the people.
Even then, for reasons which bear reiteration, the MMDA cannot traffic situation of our roads day in and day out. This Court can
order the closure of respondents’ terminals not only because no only interpret, not change, the law, however. It needs only to be
authority to implement the Project has been granted nor
legislative or police power been delegated to it, but also because programming, coordinating, implementing, regulating and
the elimination of the terminals does not satisfy the standards of administrative entity to promote, develop and regulate networks
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
Act54 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.
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
reiterated that it is the DOTC ─ as the primary policy, planning,
of transportation and communications ─ which has the power to
establish and administer a transportation project like the
Project subject of the case at bar.
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.
WHEREFORE, the Petition is, in light of the foregoing
disquisition, DENIED. E.O. No. 179 is declared NULL and VOID
for being ultra vires.
SO ORDERED.
Puno, C.J., Quisumbing, Ynares-Santiago, Sandoval-Gutierrez,
Carpio, Austria-Martinez, Corona, Azcuna, Tinga, Chico-Nazario,
Garcia, Velasco, Jr., Nachura, Reyes, JJ., concur.
MMDA v Viron Transport G.R. No. 170656 August 15, 2007
J. Carpio Morales
Facts:
GMA declared Executive Order (E.O.) No. 179 operational,
thereby creating the MMDA in 2003. Due to traffic congestion,
the MMDA recommended a plan to “decongest traffic by
eliminating the bus terminals now located along major Metro
Manila thoroughfares and providing more and convenient access
to the mass transport system.” The MMC gave a go signal for the
project. Viron Transit, a bus company assailed the move. They
alleged that the MMDA didn’t have the power to direct
operators to abandon their terminals. In doing so they asked the
court to interpret the extent and scope of MMDA’s power under
RA 7924. They also asked if the MMDA law contravened the
Public Service Act.
Another bus operator, Mencorp, prayed for a TRO for the
implementation in a trial court. In the Pre-Trial
Order17 issued by the trial court, the issues were narrowed
down to whether 1) the MMDA’s 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. The
trial court sustained the constitutionality.
Both bus lines filed for a MFR in the trial court. It, on 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 Viron’s and Mencorp’s
existing bus terminals; and that the E.O. is inconsistent with the
provisions of the Public Service Act.
MMDA filed a petition in the Supreme Court. 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. To them, Viron and
Mencorp 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.
Issues:
1. Is there a justiciable controversy?
2. Is the elimination of bus terminals unconstitutional?
Held: Yes to both. Petition dismissed.
Ratio:
1. Requisites: (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
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." 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.
2. Under E.O. 125 A, the DOTC was given the objective of guiding
government and private investment in the development of the
country’s intermodal transportation and communications
systems. It was also tasked to administer all laws, rules and
regulations in the field of transportation and communications.
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.
There was no grant of authority to MMDA. It was delegated only
to 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.
In light of the administrative nature of its powers and functions,
the MMDA is devoid of authority to implement the Project as
envisioned by the E.O; hence, it could not have been validly
designated by the President to undertake the Project.
MMDA’s move didn’t satisfy police power requirements such as
that (1) the interest of the public generally, as distinguished from
that of a particular class, requires its exercise; and (2) the means
employed are reasonably necessary for the accomplishment of
the purpose and not unduly oppressive upon individuals. Stated
differently, the police power legislation must be firmly grounded
on public interest and welfare and a reasonable relation must
exist between the purposes and the means.
As early as Calalang v. Williams, this Court recognized that traffic
congestion is a public, not merely a private, concern. The Court
therein held that public welfare underlies the contested statute
authorizing the Director of Public Works to promulgate rules and
regulations to regulate and control traffic on national roads.
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." 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. Are the
means employed appropriate and reasonably necessary for the
accomplishment of the purpose. Are they not duly oppressive?
De la Cruz v. Paras- 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
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.
Finally, an order for the closure of respondents’ terminals is not
in line with the provisions of the Public Service Act.
Consonant with such grant of authority, the PSC (now the
ltfrb)was empowered to "impose such conditions as to
construction, equipment, maintenance, service, or operation as
the public interests and convenience may reasonably require" in
approving any franchise or privilege. The law mandates the ltfrb
to require any public service to establish, construct, maintain,
and operate any reasonable extension of its existing facilities.
18
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,Petitioner,
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 Court's 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 Petition1 under Rule 45 (then Rule 42) of
the Revised Rules on Civil Procedure seeking the reversal of
the Decision2 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 Order7 (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 Council9 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 8. Flower shops

2. Massage Parlors 9. Music lounge and sing-along restaurants,

with well-defined activities for wholesome
3. Karaoke Bars family entertainment that cater to both local
and foreign clientele.
4. Beerhouses
10. Theaters engaged in the exhibition, not
5. Night Clubs only of motion pictures but also of cultural
shows, stage and theatrical plays, art
exhibitions, concerts and the like.
6. Day Clubs

11. Businesses allowable within the law and

7. Super Clubs
medium intensity districts as provided for in
the zoning ordinances for Metropolitan Manila,
8. Discotheques
except new warehouse or open-storage depot,
dock or yard, motor repair shop, gasoline
9. Cabarets service station, light industry with any
machinery, or funeral establishments.
10. Dance Halls
SEC. 4. Any person violating any provisions of this
11. Motels ordinance, shall upon conviction, be punished by
imprisonment of one (1) year or fine of FIVE
12. Inns THOUSAND (P5,000.00) PESOS, or both, at the
discretion of the Court, PROVIDED, that in case of
SEC. 2 The City Mayor, the City Treasurer or any person juridical person, the President, the General Manager, or
acting in behalf of the said officials are prohibited from person-in-charge of operation shall be liable thereof;
issuing permits, temporary or otherwise, or from PROVIDED FURTHER, that in case of subsequent
granting licenses and accepting payments for the violation and conviction, the premises of the erring
operation of business enumerated in the preceding establishment shall be closed and padlocked
section. permanently.

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
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 MTDC's 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

5. Records and music shops 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
6. Restaurants
(a) 4 (iv)12 of the Local Government Code of 1991 (the Code)
grants to the City Council only the power to regulate the
7. Coffee shops 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. 49913 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 MTDC's
constitutional rights in that: (a) it is confiscatory and constitutes
an invasion of plaintiff's 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 Answer15 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 Decision reads: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 Appeal29 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 Ordinancecontravenes P.D. 49931 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 Memorandum36 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 Court's deep sentiment
and tenderness for the Ermita-Malate area being its home for
several decades. A long-time resident, the Court witnessed the
area's 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; "substantive due process."
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 procedures that the government must follow before it deprives a
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,49and 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
Procedural due process, as the phrase implies, refers to the
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
person's life, liberty, or property. In other words, substantive due
process looks to whether there is a sufficient justification for the
government's 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 despotically57 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 reasonable relation to the accomplishment of its purposes.
legitimate demands of public interest or public welfare.58 Due Otherwise stated, the prohibition of the enumerated
process requires the intrinsic validity of the law in interfering establishments will not per seprotect and promote the social and
with the rights of the person to his life, liberty and property. 59 moral welfare of the community; it will not in itself eradicate the
alluded social ills of prostitution, adultery, fornication nor will it
Requisites for the valid exercise arrest the spread of sexual disease in Manila.
of Police Power are not met
Conceding for the nonce that the Ermita-Malate area teems with
To successfully invoke the exercise of police power as the houses of ill-repute and establishments of the like which the City
rationale for the enactment of the Ordinance, and to free it from Council may lawfully prohibit,65 it is baseless and insupportable
the imputation of constitutional infirmity, not only must it to bring within that classification sauna parlors, massage parlors,
appear that the interests of the public generally, as distinguished karaoke bars, night clubs, day clubs, super clubs, discotheques,
from those of a particular class, require an interference with cabarets, dance halls, motels and inns. This is not warranted
private rights, but the means adopted must be reasonably under the accepted definitions of these terms. The enumerated
necessary for the accomplishment of the purpose and not unduly establishments are lawful pursuits which are not per se offensive
oppressive upon individuals.60It must be evident that no other to the moral welfare of the community.
alternative for the accomplishment of the purpose less intrusive
of private rights can work. A reasonable relation must exist That these are used as arenas to consummate illicit sexual affairs
between the purposes of the police measure and the means and as venues to further the illegal prostitution is of no moment.
employed for its accomplishment, for even under the guise of We lay stress on the acrid truth that sexual immorality, being a
protecting the public interest, personal rights and those human frailty, may take place in the most innocent of places that
pertaining to private property will not be permitted to be it may even take place in the substitute establishments
arbitrarily invaded.61 enumerated under Section 3 of the Ordinance. If the flawed
logic of the Ordinance were to be followed, in the remote
Lacking a concurrence of these two requisites, the police instance that an immoral sexual act transpires in a church
measure shall be struck down as an arbitrary intrusion into cloister or a court chamber, we would behold the spectacle of
private rights a violation of the due process clause.
62 the City of Manila ordering the closure of the church or court
concerned. Every house, building, park, curb, street or even
The Ordinance was enacted to address and arrest the social ills vehicles for that matter will not be exempt from the prohibition.
purportedly spawned by the establishments in the Ermita-Malate Simply because there are no "pure" places where there are
area which are allegedly operated under the deceptive veneer of impure men. Indeed, even the Scripture and the Tradition of
legitimate, licensed and tax-paying nightclubs, bars, karaoke Christians churches continually recall the presence
bars, girlie houses, cocktail lounges, hotels and and universality of sin in man's history.66
motels. Petitioners insist that even the Court in the case
of Ermita-Malate Hotel and Motel Operators Association, Inc. v. The problem, it needs to be pointed out, is not the
City Mayor of Manila63 had already taken judicial notice of the establishment, which by its nature cannot be said to be injurious
"alarming increase in the rate of prostitution, adultery and to the health or comfort of the community and which in itself is
fornication in Manila traceable in great part to existence of amoral, but the deplorable human activity that may occur within
motels, which provide a necessary atmosphere for clandestine its premises. While a motel may be used as a venue for immoral
entry, presence and exit and thus become the ideal haven for sexual activity, it cannot for that reason alone be punished. It
prostitutes and thrill-seekers."64 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
The object of the Ordinance was, accordingly, the promotion and and if that were allowed, then the Ermita-Malate area would not
protection of the social and moral values of the community. only be purged of its supposed social ills, it would be
Granting for the sake of argument that the objectives of extinguished of its soul as well as every human activity,
the Ordinance are within the scope of the City Council's police reprehensible or not, in its every nook and cranny would be laid
powers, the means employed for the accomplishment thereof bare to the estimation of the authorities.
were unreasonable and unduly oppressive.
The Ordinance seeks to legislate morality but fails to address the
It is undoubtedly one of the fundamental duties of the City of core issues of morality. Try as the Ordinance may to shape
Manila to make all reasonable regulations looking to the morality, it should not foster the illusion that it can make a moral
promotion of the moral and social values of the community. man out of it because immorality is not a thing, a building or
However, the worthy aim of fostering public morals and the establishment; it is in the hearts of men. The City Council instead
eradication of the community's social ills can be achieved should regulate human conduct that occurs inside the
through means less restrictive of private rights; it can be attained establishments, but not to the detriment of liberty and privacy
by reasonable restrictions rather than by an absolute prohibition. which are covenants, premiums and blessings of democracy.
The closing down and transfer of businesses or their conversion
into businesses "allowed" under the Ordinance have no
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 Ordinance within 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 person's 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
recognized…as 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
one's 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 Ordinancemay 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 motel's premisesbe 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 freedomit 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 person's 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 government's 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 owner's 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 regulation's 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 them. The police powers of local government units which have
not reasonably necessary to the effectuation of a substantial always received broad and liberal interpretation cannot be
public purpose or if it has an unduly harsh impact on the distinct stretched to cover this particular taking.
investment-backed expectations of the owner.88
Distinction should be made between destruction from necessity
The Ordinance gives the owners and operators of the and eminent domain. It needs restating that the property taken
"prohibited" establishments three (3) months from its approval in the exercise of police power is destroyed because it is noxious
within which to "wind up business operations or to transfer to or intended for a noxious purpose while the property taken
any place outside of the Ermita-Malate area or convert said under the power of eminent domain is intended for a public use
businesses to other kinds of business allowable within the area." or purpose and is therefore "wholesome."89 If it be of public
The directive to "wind up business operations" amounts to a benefit that a "wholesome" property remain unused or
closure of the establishment, a permanent deprivation of relegated to a particular purpose, then certainly the public
property, and is practically confiscatory. Unless the owner should bear the cost of reasonable compensation for the
converts his establishment to accommodate an "allowed" condemnation of private property for public use.90
business, the structure which housed the previous business will
be left empty and gathering dust. Suppose he transfers it to Further, the Ordinance fails to set up any standard to guide or
another area, he will likewise leave the entire establishment idle. limit the petitioners' actions. It in no way controls or guides the
Consideration must be given to the substantial amount of money discretion vested in them. It provides no definition of the
invested to build the edifices which the owner reasonably establishments covered by it and it fails to set forth the
expects to be returned within a period of time. It is apparent that conditions when the establishments come within its ambit of
the Ordinance leaves no reasonable economically viable use of prohibition. The Ordinance confers upon the mayor arbitrary and
property in a manner that interferes with reasonable unrestricted power to close down establishments. Ordinances
expectations for use. such as this, which make possible abuses in its execution,
depending upon no conditions or qualifications whatsoever
The second and third options to transfer to any place outside other than the unregulated arbitrary will of the city authorities
of the Ermita-Malate area or to convert into allowed as the touchstone by which its validity is to be tested, are
businessesare confiscatory as well. The penalty of permanent unreasonable and invalid. The Ordinance should have
closure in cases of subsequent violations found in Section 4 of established a rule by which its impartial enforcement could be
the Ordinance is also equivalent to a "taking" of private property. secured.91

The second option instructs the owners to abandon their Ordinances placing restrictions upon the lawful use of property
property and build another one outside the Ermita-Malate must, in order to be valid and constitutional, specify the rules
area. In every sense, it qualifies as a taking without just and conditions to be observed and conduct to avoid; and must
compensation with an additional burden imposed on the owner not admit of the exercise, or of an opportunity for the exercise,
to build another establishment solely from his coffers. The of unbridled discretion by the law enforcers in carrying out its
proffered solution does not put an end to the "problem," it provisions.92
merely relocates it. Not only is this impractical, it is
unreasonable, onerous and oppressive. The conversion into Thus, in Coates v. City of Cincinnati,93 as cited in People v.
allowed enterprises is just as ridiculous. How may the Nazario,94 the U.S. Supreme Court struck down an ordinance
respondent convert a motel into a restaurant or a coffee shop, that had made it illegal for "three or more persons to assemble
art gallery or music lounge without essentially destroying its on any sidewalk and there conduct themselves in a manner
property? This is a taking of private property without due annoying to persons passing by." The ordinance was nullified as
process of law, nay, even without compensation. it imposed no standard at all "because one may never know in
advance what 'annoys some people but does not annoy others.'
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 Similarly, the Ordinance does not specify the standards to
closed permanently after a subsequent violation should be borne ascertain which establishments "tend to disturb the community,"
by the public as this end benefits them as a whole. "annoy the inhabitants," and "adversely affect the social and
moral welfare of the community." The cited case supports the
Petitioners cannot take refuge in classifying the measure as a nullification of the Ordinance for lack of comprehensible
zoning ordinance. A zoning ordinance, although a valid exercise standards to guide the law enforcers in carrying out its
of police power, which limits a "wholesome" property to a use provisions.
which can not reasonably be made of it constitutes the taking of
such property without just compensation. Private property Petitioners cannot therefore order the closure of the
which is not noxious nor intended for noxious purposes may not, enumerated establishments without infringing the due process
by zoning, be destroyed without compensation. Such principle clause. These lawful establishments may be regulated, but not
finds no support in the principles of justice as we know 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
city's 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 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." 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.
104
4) It must apply equally to all members of the class.
In the Court's 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 prostitutionone of the
hinted ills the Ordinance aims to banishis 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 Manila106 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 latter's 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 Council's 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. 121As
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 Ordinancevoid 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.
City of Manila vs. Judge Laguio (G.R. No. 118127)
Facts:
The private respondent, Malate Tourist Development
Corporation (MTOC) is a corporation engaged in the business of
operating hotels, motels, hostels, and lodging houses. 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.
March 30, 1993 - City Mayor Alfredo S. Lim approved an
ordinance enacted which prohibited 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. The
Ordinance prohibited the establishment of sauna parlors,
massage parlors, karaoke bars, beerhouses, night clubs, day
clubs, cabarets, motels, inns. Owners and operators of the
enumerated establishments are given three months to wind up
business operations or transfer to any place outside Ermita-
Malate or convert said businesses to other kinds allowable
within the area. The Ordinance also provided that in case of
violation and conviction, the premises of the erring
establishment shall be closed and padlocked permanently.
June 28, 1993 - MTOC filed a Petition with the lower court,
praying that the Ordinance, insofar as it included motels and
inns as among its prohibited establishments, be declared
invalid and unconstitutional for several reasons but mainly
because it is not a valid exercise of police power and it
constitutes a denial of equal protection under the law.
Judge Laguio ruled for the petitioners. The case was elevated to
the Supreme Court.
Issue:
WON the Ordinance is constitutional.
Held:
SC held that the ordinance is unconstitutional for several
reasons.
First, it did not meet the valid exercise of police power. To
successfully invoke the exercise of police power, not only must
it appear that (1)the interest of the public generally, as
distinguished from those of a particular class, require an
interference with private rights, but (2)the means employed
must be reasonably necessary for the accomplishment of the
purpose and not unduly oppressive. The object of the
ordinance was the promotion and protection of the social and
moral values of the community. The closing down and transfer
of businesses or their conversion into businesses allowed under
the ordinance have no reasonable relation to its purpose.
Otherwise stated, the prohibition of the enumerated
establishments will not per se protect and promote social and
moral welfare of the community. It will not itself eradicate
prostitution, adultery, fornication nor will it arrest the spread
of sexual disease in Manila.
Second. The modality employed constitutes unlawful taking.
The ordinance is unreasonable and oppressive as it
substantially divests the respondent of the beneficial use of its
property. The ordinance forbids running of the enumerated
businesses in Ermita-Malate area and instructs
owners/operators to wind up their business operations or to
transfer outside the area or convert said business into allowed
business. An ordinance which permanently restricts the use of
property that it cannot be used for any reasonable purpose
goes beyond regulation and must be recognized as a taking of
the property without just compensation. It is intrusive and
violative of the private property rights of individuals. There are
two types of taking: A “possessory” taking and a “regulatory”
taking. The latter occurs when the government’s regulation
leaves no reasonable economically viable use of the property,
as in this case.
Third. The ordinance violates the equal protection clause. Equal
protection requires that all persons or things similarly situated
should be treated alike, both as to the rights conferred and
responsibilities imposed. Similar subjects, in other words,
should not be treated differently, so as to give undue favor to
some. Legislative bodies are allowed to classify the subjects of
legislation provided the classification is reasonable. To be valid,
it must conform to the following requirements: (1)It must be
based on substantial distinction; (2)It must be germane to the
purpose of the law; (3)It must not be limited to existing
conditions only; and (4)It must apply equally to all members of
the class. In the Court’s view, there are no substantial
distinction 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 Court
likewise cannot see the logic for prohibiting the business and
operation of motels in the Ermita-Malate area but not outside
this area. A noxious establishment does not become any less
noxious if located outside the area.
Fourth. The ordinance is repugnant to general laws, thus it is
ultra vires. The ordinance is in contravention of the Revised
Administrative Code as the Code merely empowers the local
government units to regulate, and not prohibit, the
establishments enumerated. Not only that, it likewise runs
counter to the provisions of P.D. 499. The P.D. 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.
Wherefore, the petition was DENIED and the decision of the
RTC was AFFIRMED.
19
EN BANC
CARLOS SUPERDRUG CORP., G.R. No. 166494
doing business under the name
and style Carlos Superdrug, Present:
ELSIE M. CANO, doing business
under the name and style Advance PUNO, C.J.,
Drug, Dr. SIMPLICIO L. YAP, JR., QUISUMBING,*
doing business under the name and YNARES-SANTIAGO,
style City Pharmacy, MELVIN S. SANDOVAL-GUTIERREZ,**
DELA SERNA, doing business under CARPIO,
the name and style Botica dela Serna, AUSTRIA-MARTINEZ,
and LEYTE SERV-WELL CORP., CORONA,
doing business under the name and CARPIO MORALES,
style Leyte Serv-Well Drugstore, AZCUNA,
Petitioners, TINGA,
CHICO-NAZARIO,
- versus - GARCIA,
VELASCO, JR., and
DEPARTMENT OF SOCIAL NACHURA, JJ.
WELFARE and DEVELOPMENT
(DSWD), DEPARTMENT OF Promulgated:
HEALTH (DOH), DEPARTMENT
OF FINANCE (DOF), DEPARTMENT June 29, 2007
OF JUSTICE (DOJ), and
DEPARTMENT OF INTERIOR and
LOCAL GOVERNMENT (DILG),
Respondents.
x ------------------------------------------------------------------------------------
---- x
DECISION
AZCUNA, J.:
This is a petition[1] for Prohibition with Prayer for
Preliminary Injunction assailing the constitutionality of Section
4(a) of Republic Act (R.A.) No. 9257,[2] otherwise known as the
Expanded Senior Citizens Act of 2003.
Petitioners are domestic corporations and proprietors
operating drugstores in the Philippines.
Public respondents, on the other hand, include the Department
of Social Welfare and Development (DSWD), the 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 drugstores compliance with the law; promulgate the
implementing rules and regulations for the effective
implementation of the law; and prosecute and revoke the
licenses of erring drugstore establishments.
The antecedents are as follows:
On February 26, 2004, R.A. No. 9257, amending R.A. No.
7432,[3] was signed into law by President Gloria Macapagal-
Arroyo and it became effective on March 21, 2004. Section 4(a)
of the Act states:
SEC. 4. Privileges for the Senior Citizens. The
senior citizens shall be entitled to the
following:
(a) the grant of twenty percent (20%)
discount from all establishments relative to the
utilization of services in hotels and similar
lodging establishments, restaurants and
recreation centers, and purchase of medicines
in all establishments for the exclusive use or
enjoyment of senior citizens, including funeral
and burial services for the death of senior
citizens;
...
The establishment may claim the
discounts granted under (a), (f), (g) and (h)
as tax deduction based on the net cost of the
goods sold or services rendered: Provided, That
the cost of the discount shall be allowed as
deduction from gross income for the same
taxable year 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 Code, as amended.[4]
On May 28, 2004, the DSWD approved and adopted the
Implementing Rules and Regulations of R.A. No. 9257, Rule VI,
Article 8 of which states:
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 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 cost of
the discount shall be allowed as deduction
from gross income for the same taxable year
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
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 by the Department of Finance
(DOF).[9]
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 Director IV Ma. Lourdes B. Recente,
clarified as follows:
1) The difference between the Tax
Credit (under the Old Senior Citizens Act) and
Tax Deduction (under the Expanded Senior
Citizens Act).
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,
hotels and similar lodging
establishment, restaurants and
recreation centers and purchase of
medicines anywhere in the country,
the costs of which may be claimed by
the private establishments concerned
as tax credit.
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
establishment recovers the full
amount of discount given to a senior
citizen and hence, the government
shoulders 100% of the discounts
granted.
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 to recover this
tax payment from his/her income tax
due. The tax credit scheme under R.A.
No. 7432 is, therefore, inapplicable
since no tax payments have previously
occurred.
1.2. The provision
under R.A. No. 9257, on the other
hand, provides that the 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.
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 government
loses in terms of foregone revenues
an amount equivalent to the marginal
tax rate the 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 the granted
discounts.
It may be necessary to note
that while the burden on [the]
government is slightly diminished in
terms of its percentage share on the
discounts granted to senior citizens,
the number of potential
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 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 medical facilities,
operators of domestic air and sea
transport services, public railways and
skyways and bus transport services.
A simple illustration might
help amplify the points discussed
above, as follows:
Tax
Deduc
tion T
ax
Credit
Gross Sales x x x x x x x x x x x x
Less : Cost of goods sold x x x x x x x x
xx
Net Sales x x x x x x x x x x x x
Less: Operating Expenses:
Tax Deduction on Discounts x x x x --
Other deductions: x x x x x x x x
Net Taxable Income x x x x x x x x x x
Tax Due x x x x x x
Less: Tax Credit -- ______x x
Net Tax Due -- x x
As shown above, under a tax
deduction scheme, the tax deduction on
discounts was subtracted from Net Sales
together with other deductions which are
considered 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 credit item, was deducted
directly from the tax due amount.[10]
Meanwhile, on October 1, 2004, Administrative Order
(A.O.) No. 171 or the Policies and Guidelines to Implement the
Relevant Provisions of Republic Act 9257, otherwise known as the
Expanded Senior Citizens Act of 2003[11] was issued by the DOH,
providing the grant of twenty percent (20%) discount in the
purchase of unbranded generic medicines from all
establishments dispensing medicines for the exclusive use of the
senior citizens.
On November 12, 2004, the DOH issued Administrative Order No
177[12] amending A.O. No. 171. Under A.O. No. 177, the twenty
percent discount shall not be limited to the purchase of
unbranded generic medicines only, but shall extend to both
prescription and non-prescription medicines whether branded or
generic. Thus, it stated that [t]he grant of twenty percent (20%)
discount shall be provided in the purchase of medicines from all
establishments dispensing medicines for the exclusive use of the
senior citizens.
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 maximize the contribution of senior citizens to nation-building,
discount will result in a loss of profit
and capital because 1) drugstores impose a mark-up of only 5% integral part of our society.[20]
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
and to grant benefits and privileges to them for their
improvement and well-being as the State considers them an
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 illustrate this point, petitioner Carlos Super Drug
To implement the above policy, the law grants a twenty percent cited the anti-hypertensive maintenance drug Norvasc as an
discount to senior citizens for medical and dental services, and example. According to the latter, it acquires Norvasc from the
diagnostic and laboratory fees; admission fees charged by distributors at P37.57 per tablet, and retails it at P39.60 (or at a
theaters, concert halls, circuses, carnivals, and other similar margin of 5%). If it grants a 20% discount to senior citizens or an
places of culture, leisure and amusement; fares for domestic amount equivalent to P7.92, then it would have to
land, air and sea travel; utilization of services in hotels and sell Norvasc at P31.68 which translates to a loss from capital
similar lodging establishments, restaurants and recreation of P5.89 per tablet. Even if the government will allow a tax
centers; and purchases of medicines for the exclusive use or deduction, only P2.53 per tablet will be refunded and not the full
enjoyment of senior citizens. As a form of reimbursement, the amount of the discount which is P7.92. In short, only 32% of the
law provides that business establishments extending the twenty 20% discount will be reimbursed to the drugstores.[28]
percent discount to senior citizens may claim the discount as a
tax deduction. Petitioners computation is flawed. For purposes of
reimbursement, the law states that the cost of the discount shall
The law is a legitimate exercise of police power which, similar to be deducted from gross income,[29] the amount of income
the power of eminent domain, has general welfare for its object. derived from all sources before deducting allowable expenses,
Police power is not capable of an exact definition, but has been which will result in net income. Here, petitioners tried to show a
purposely veiled in general terms to underscore its loss on a per transaction basis, which should not be the case. An
comprehensiveness to meet all exigencies and provide enough income statement, showing an accounting of petitioners sales,
room for an efficient and flexible response to conditions and expenses, and net profit (or loss) for a given period could have
circumstances, thus assuring the greatestaccurately reflected the effect of the discount on their income.
benefits. [22] Accordingly, it has been described as the most Absent any financial statement, petitioners cannot substantiate
essential, insistent and the least limitable of powers, extending their claim that they will be operating at a loss should they give
as it does to all the great public needs.[23] It is [t]he power vestedthe discount. In addition, the computation was erroneously
in the legislature by the constitution to make, ordain, and based on the assumption that their customers consisted wholly
establish all manner of wholesome and reasonable laws, of senior citizens. Lastly, the 32% tax rate is to be imposed on
statutes, and ordinances, either with penalties or without, not income, not on the amount of the discount.
repugnant to the constitution, as they shall judge to be for the
good and welfare of the commonwealth, and of the subjects of Furthermore, it is unfair for petitioners to criticize the
the same.[24] law because they cannot raise the prices of their medicines given
the cutthroat nature of the players in the industry. It is a
For this reason, when the conditions so demand as business decision on the part of petitioners to peg the mark-up
determined by the legislature, property rights must bow to the at 5%. Selling the medicines below acquisition cost, as alleged by
primacy of police power because property rights, though petitioners, is merely a result of this decision. Inasmuch as
sheltered by due process, must yield to general welfare.[25] pricing is a property right, petitioners cannot reproach the law
for being oppressive, simply because they cannot afford to raise
Police power as an attribute to promote the common their prices for fear of losing their customers to competition.
good would be diluted considerably if on the mere plea of
petitioners that they will suffer loss of earnings and capital, the The Court is not oblivious of the retail side of the
questioned provision is invalidated. Moreover, in the absence of pharmaceutical industry and the competitive pricing component
evidence demonstrating the alleged confiscatory effect of the of the business. While the Constitution protects property rights,
provision in question, there is no basis for its nullification in view petitioners must accept the realities of business and the State, in
of the presumption of validity which every law has in its favor.[26] the exercise of police power, can intervene in the operations of a
business which may result in an impairment of property rights in
Given these, it is incorrect for petitioners to insist that the process.
the grant of the senior citizen discount is unduly oppressive to
their business, because petitioners have not taken time to Moreover, the right to property has a social dimension.
calculate correctly and come up with a financial report, so that While Article XIII of the Constitution provides the precept for the
they have not been able to show properly whether or not the tax protection of property, various laws and jurisprudence,
deduction scheme really works greatly to their disadvantage.[27] particularly on agrarian reform and the regulation of contracts
and public utilities, continuously serve as a reminder that the
In treating the discount as a tax deduction, petitioners right to property can be relinquished upon the command of the
insist that they will incur losses because, referring to the DOF State for the promotion of public good.[30]
Opinion, for every P1.00 senior citizen discount that petitioners
would give, P0.68 will be shouldered by them as only P0.32 will Undeniably, the success of the senior citizens program
be refunded by the government by way of a tax deduction. rests largely on the support imparted by petitioners and the
other private establishments concerned. This being the case, the
means employed in invoking the active participation of the
 private sector, in order to achieve the purpose or objective of CONCHITA CARPIO MORALES
the law, is reasonably and directly related. Without sufficient Associate Justice
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 MINITA V. CHICO-NAZARIO
merit. Associate Justice

No costs.

SO ORDERED.
PRESBITERO J. VELASCO, JR. ANT
Associate Justice

ADOLFO S. AZCUNA
Associate Justice

WE CONCUR:

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it
REYNATO S. PUNO is hereby certified that the conclusions in the above Decision
Chief Justice were reached in consultation before the case was assigned to
the writer of the opinion of the Court.

(On Official Leave) REYNATO

LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO S. PUNO
Associate Justice Associate Justice Chief
Justice
20

(On Leave) G.R. No. 71169 August 30, 1989

ANGELINA SANDOVAL-GUTIERREZ ANTONIO T. CARPIO
Associate Justice Associate Justice
JOSE D. SANGALANG and LUTGARDA D. SANGALANG,
petitioners, FELIX C. GASTON and DOLORES R. GASTON, JOSE V.
BRIONES and ALICIA R. BRIONES, and BEL-AIR VILLAGE
ASSOCIATION, INC., intervenors-petitioners,
vs.
INTERMEDIATE APPELLATE COURT and AYALA
MA. ALICIA AUSTRIA-MARTINEZ RENATO
CORPORATION, C. CORONA
respondents.
Associate Justice Associate Justice
G.R. No. 74376 August 30, 1989

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,

vs.
THE INTERMEDIATE APPELLATE COURT, ROSARIO DE JESUS
TENORIO, and CECILIA GONZALEZ, respondents.

G.R. No. 76394 August 30, 1989

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,
vs.
THE COURT OF APPEAL and EDUARDO and BUENA
ROMUALDEZ respondents.
G.R. No. 78182 August 30, 1989
BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,
vs.
COURT OF APPEALS, DOLORES FILLEY and J. ROMERO &
ASSOCIATES, respondents.
G.R. No. 82281 August 30, 1989
BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,
vs.
COURT OF APPEALS, VIOLETA MONCAL, and MAJAL
DEVELOPMENT CORPORATION, respondents.
RESOLUTION
SARMIENTO, J.:
The incident before the Court refers to charges for contempt
against Atty. J. Cezar Sangco, counsel for the petitioners Spouses
Jose and Lutgarda Sangalang. (G.R. No. 71169.)
On February 2, 1989, the Court issued a Resolution, requiring,
among other things, Atty. Sangco to show cause why he should
not be punished for contempt "for using intemperate and
accusatory language." 1 On March 2, 1989, Atty. Sangco filed an
explanation.
The Court finds Atty. Sangco's remarks in his motion for
reconsideration, reproduced as follows:
...
This Decision of this Court in the above-entitled
case reads more like a Brief for Ayala ... 2
... [t]he Court not only put to serious question
its own integrity and competence but also
jeopardized its own campaign against graft and
corruption undeniably pervading the judiciary
... 3
...
The blatant disregard of controlling,
documented and admitted facts not put in
issue, such as those summarily ignored in this
case; the extraordinary efforts exerted to
justify such arbitrariness and the very strained
and unwarranted conclusions drawn
therefrom, are unparalleled in the history of
this Court ... 4
...
... [T]o ignore the fact that Jupiter Street was
originally constructed for the exclusive benefit
of the residents of Bel- Air Village, or rule that
respondent Court's admission of said fact is
"inaccurate," as Ayala's Counsel himself would
like to do but did not even contend, is a
manifestation of this Court's unusual partiality
to Ayala and puts to serious question its
integrity on that account. 5
...
[i]t is submitted that this ruling is the most
serious reflection on the Court's competence
and integrity and exemplifies its manifest
partiality towards Ayala. It is a blatant
disregard of documented and incontrovertible
and uncontroverted factual findings of the trial
court fully supported by the records and the
true significance of those facts which both the
respondent court and this Court did not bother
to read and consequently did not consider and
discuss, least of all in the manner it did with
respect to those in which it arrived at
conclusions favorable to Ayala. 6
To totally disregard Ayala's written letter of
application for special membership in BAVA
which clearly state that such membership is
necessary because it is a new development in
their relationship with respect to its intention
to give its commercial lot buyers an equal right
to the use of Jupiter Street without giving any
reason therefor, smacks of judicial arrogance
... 7
...
... [A]re all these unusual exercise of such
arbitrariness above suspicion? Will the current
campaign of this Court against graft and
corruption in the judiciary be enhanced by such
broad discretionary power of courts? 8
disparaging, intemperate, and uncalled for. His suggestions that
the Court might have been guilty of graft and corruption in acting
on these cases are not only unbecoming, but comes, as well, as
an open assault upon the Court's honor and integrity. In
rendering its judgment, the Court yielded to the records before
it, and to the records alone, and not to outside influences, much
less, the influence of any of the parties. Atty. Sangco, as a former
judge of an inferior court, should know better that in any
litigation, one party prevails, but his success will not justify
indictments of bribery by the other party. He should be aware
that because of his accusations, he has done an enormous
disservice to the integrity of the highest tribunal and to the
stability of the administration of justice in general.
As a former judge, Atty. Sangco also has to be aware that we are
not bound by the findings of the trial court (in which his clients
prevailed).lâwphî1.ñèt But if we did not agree with the findings
of the court a quo, it does not follow that we had acted
arbitrarily because, precisely, it is the office of an appeal to
review the findings of the inferior court.
To be sure, Atty. Sangco is entitled to his opinion, but not to a
license to insult the Court with derogatory statements and
recourses to argumenta ad hominem. In that event, it is the
Court's duty "to act to preserve the honor and dignity ... and to
safeguard the morals and ethics of the legal profession." 9
We are not satisfied with his explanation that he was merely
defending the interests of his clients. As we held in Laureta, a
lawyer's "first duty is not to his client but to the administration of
justice; to that end, his client's success is wholly subordinate; and
his conduct ought to and must always be scrupulously observant
of law and ethics." 10 And while a lawyer must advocate his
client's cause in utmost earnest and with the maximum skill he
can marshal, he is not at liberty to resort to arrogance,
intimidation, and innuendo.
That "[t]he questions propounded were not meant or intended
to accuse but to ... challenge the thinking in the
Decision, 11 comes as an eleventh-hour effort to cleanse what is
in fact and plainly, an unfounded accusation. Certainly, it is the
prerogative of an unsuccessful party to ask for reconsideration,
but as we held in Laureta, litigants should not "'think that they
will win a hearing by the sheer multiplication of words' ". 12 As
we indicated (see Decision denying the motions for
reconsideration in G.R. Nos. 71169, 74376, 76394, 78182, and
82281, and deciding G.R. No. 60727, dated August 25, 1989), the
movants have raised no new arguments to warrant
reconsideration and they can not veil that fact with inflammatory
language.
Atty. Sangco himself admits that "[a]s a judge I have learned to
live with and accept with grace criticisms of my
decisions". 13 Apparently, he does not practice what he preaches.
Of course, the Court is not unreceptive to comment and critique
of its decisions, but provided they are fair and dignified. Atty.
Sangco has transcended the limits of fair comment for which he
deserves this Court's rebuke.
In our "show-cause" Resolution, we sought to hold Atty. Sangco
in contempt, specifically, for resort to insulting language
amounting to disrespect toward the Court within the meaning of
Section 1, of Rule 71, of the Rules of Court. Clearly, however, his
act also constitutes malpractice as the term is defined by Canon
11 of the Code of Professional Responsibility, as follows:
CANON 11-A LAWYER SHALL OBSERVE AND MAINTAIN THE
RESPECT DUE TO THE COURTS AND TO JUDICIAL OFFICERS AND
SHOULD INSIST ON SIMILAR CONDUCT BY OTHERS.
Rule 11.01...
Rule 11.02...
Rule 11.03-A lawyer shall abstain from
scandalous, offensive or menacing language or
behavior before the Courts.
Rule 11.04-A lawyer should not attribute to a
Judge motives not supported by the record or
have no materiality to the case.
Rule 11.05...
Thus, aside from contempt, Atty. Sangco faces punishment for
professional misconduct or malpractice.
WHEREFORE Atty. J. Cezar Sangco is (1) SUSPENDED from the
practice of law for three (3) months effective from receipt
hereof, and (2) ORDERED to pay a fine of P 500.00 payable from
receipt hereof. Let a copy of this Resolution be entered in his
record.
IT IS SO ORDERED.
Fernan, C.J., Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco,
Padilla, Bidin, Cortes, Griñ;o-Aquino, Medialdea and Regalado,
JJ., concur.
Narvasa, and Gutierrez, Jr., JJ., took no part.
FACTS:
The Mayor of Makati directed Bel-Air Village Association (BAVA)
to opening of several streets to the general public, after a series
of developments in zoning regulations. All but Jupiter St. was
voluntarily opened. The strong opposition later gave way when
the municipal officials force-opened the gates of said street for
public use. The area ceased to be purely residential. Action for
damages was brought against Ayala Corporation and BAVA for
alleged breach of contract, to maintain the purely residential
status of the area. Other similarly situated also filed their
respective cases. All were dismissed in the trial court. The Court
of Appeals affirmed the said dismissals.
ISSUE:
Whether or not there is a contract between homeowners and
Ayala Corporation violated in opening the Jupiter street for
public use.
HELD:
No. There was no contract to speak of in the case, hence nothing
was violated.
RATIO:
Petitioners cannot successfully rely on the alleged promise by
Ayala Corporation, to build a “[f]ence along Jupiter [street] with
gate for entrance and/or exit as evidence of Ayala’s alleged
continuing obligation to maintain a wall between the residential
and commercial sections. Assuming there was a contract
violated, it was still overtaken by the passage of zoning
ordinances which represent a legitimate exercise of police
power. The petitioners have not shown why Courts should hold
otherwise other than for the supposed “non-impairment”
guaranty of the Constitution, which 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