Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 40243 March 11, 1992
CELESTINO TATEL, petitioner,
vs.
MUNICIPALITY OF VIRAC, SALVAOR A. SURTIA, !" h!# ca$ac!%& a# Ma&or o'
V!rac, Ca%a"()a"*#+ GAVINO V. GUERRERO, !" h!# ca$ac!%& a# V!c*,Ma&or o'
V!rac, Ca%a"()a"*#+ -OSE T. .UE.OS, !" h!# ca$ac!%& a# Co)"c!/or o' V!rac,
Ca%a"()a"*#+ ANGELES TA.LI0O, !" h!# ca$ac!%& a# Co)"c!/or o' V!rac,
Ca%a"()a"*#+ ELPIIO T. 0AFE, !" h!# ca$ac!%& a# Co)"c!/or o' V!rac,
Ca%a"()a"*#+ MARIANO AL.ERTO, !" h!# ca$ac!%& a# Co)"c!/or o' V!rac,
Ca%a"()a"*#+ -ULIA A. GARCIA, !" h*r ca$ac!%& a# Co)"c!/or o' V!rac,
Ca%a"()a"*#+ a"( PERO A. GUERRERO, !" h!# ca$ac!%& a# Co)"c!/or o' V!rac,
Ca%a"()a"*#, respondents.

NOCON, J.:
This is a Petition for Prohibition with Preliminary Injunction with the Court of First
Instance of Catanduanes filed by appellant, Celestino Tatel, a businessman engaged in
the import and export of abaca and other products against the unicipal Council of
!irac, Catanduanes and its municipal officials enjoining them from enforcing "esolution
#o $%
1
of the Council, declaring the warehouse of petitioner in barrio &ta. 'lena of the
said municipality a public nuisance within the purview of (rticle )%* of the Civil Code of
the Philippines and directing the petitioner to remove and transfer said warehouse to a
more suitable place within two +$, months from receipt of the said resolution.
It appears from the records that on the basis of complaints received from the residents
of barrio &ta. 'lena on arch -., -%)) against the disturbance caused by the operation
of the abaca bailing machine inside the warehouse of petitioner which affected the
peace and tran/uility of the neighborhood due to the smo0e, obnoxious odor and dust
emitted by the machine, a committee was appointed by the municipal council of !irac to
investigate the matter. The committee noted the crowded nature of the neighborhood
with narrow roads and the surrounding residential houses, so much so that an
accidental fire within the warehouse of the petitioner occasioned by the continuance of
the activity inside the warehouse and the storing of inflammable materials created a
danger to the lives and properties of the people within the neighborhood.
"esultantly, "esolution #o. $% was passed by the unicipal Council of !irac on (pril $$,
-%)) declaring the warehouse owned and operated by petitioner a public nuisance
within the purview of (rticle )%* of the #ew Civil Code.
2
1is motion for reconsideration having been denied by the unicipal Council of !irac,
petitioner instituted the present petition for prohibition with preliminary injunction.
"espondent municipal officials contend that petitioner2s warehouse was constructed in
violation of 3rdinance #o. -4, series of -%5$, prohibiting the construction of
warehouses near a bloc0 of houses either in the poblacion or barrios without
maintaining the necessary distance of $66 meters from said bloc0 of houses to avoid
loss of lives and properties by accidental fire.
3n the other hand, petitioner contends that said ordinance is unconstitutional, contrary
to the due process and e/ual protection clause of the Constitution and null and void for
not having been passed in accordance with law.
The issue then boils down on whether petitioner2s warehouse is a nuisance within the
meaning of (rticle )%* of the Civil Code and whether 3rdinance #o. -4, &. -%5$ of the
unicipality of !irac is unconstitutional and void.
In a decision dated &eptember -., -%)%, the court a quo ruled as follows7
-. The warehouse in /uestion was legally constructed under a valid permit issued by the
municipality of !irac in accordance with existing regulations and may not be destroyed or
removed from its present location8
$. 3rdinance #o. -4, series of -%5$, is a legitimate and valid exercise of police power by
the unicipal Council of !irac is not +sic, unconstitutional and void as claimed by the
petitioner8
4. The storage by the petitioner of abaca and copra in the warehouse is not only in
violation of the provisions of the ordinance but poses a grave danger to the safety of the
lives and properties of the residents of the neighborhood due to accidental fire and
constitutes a public nuisance under the provisions of (rticle )%* of the #ew Civil code of
the Philippines and may be abated8
*. (ccordingly, the petitioner is hereby directed to remove from the said warehouse all
abaca and copra and other inflammable articles stored therein which are prohibited under
the provisions of 3rdinance #o. -4, within a period of two +$, months from the time this
decision becomes final and that henceforth, the petitioner is enjoined from storing such
prohibited articles in the warehouse. 9ith costs against petitioner.
&ee0ing appellate review, petitioner raised as errors of the court a quo:
-. In holding that 3rdinance #o. -4, series of -%5$, of the unicipality of !irac,
Catanduanes, is a legitimate and valid exercise of police power of the unicipal Council,
and therefore, constitutional8
$. In giving the ordinance a meaning other than and different from what it provided by
declaring that petitioner violated the same by using the warehouse for storage of abaca
and copra when what is prohibited and penali:ed by the ordinance is the construction of
warehouses.
4. In refusing to ta0e judicial notice of the fact that in the municipality, there are numerous
establishments similarly situated as appellants2 warehouses but which are not
prosecuted.
9e find no merit in the Petition.
3rdinance #o. -4, series of -%5$, was passed by the unicipal Council of !irac in the
exercise of its police power. It is a settled principle of law that municipal corporations are
agencies of the &tate for the promotion and maintenance of local self;government and
as such are endowed with the police powers in order to effectively accomplish and carry
out the declared objects of their creation.
3
Its authority emanates from the general
welfare clause under the (dministrative Code, which reads7
The municipal council shall enact such ordinances and ma0e such regulations, not
repugnant to law, as may be necessary to carry into effect and discharge the powers and
duties conferred upon it by law and such as shall seem necessary and proper to provide
for the health and safety, promote the prosperity, improve the morals, peace, good order,
comfort and convenience of the municipality and the inhabitants thereof, and for the
protection of property therein.
4
For an ordinance to be valid, it must not only be within the corporate powers of the
municipality to enact but must also be passed according to the procedure prescribed by
law, and must be in consonance with certain well established and basic principles of a
substantive nature. These principles re/uire that a municipal ordinance +-, must not
contravene the Constitution or any statute +$, must not be unfair or oppressive +4, must
not be partial or discriminatory +*, must not prohibit but may regulate trade +5, must be
general and consistent with public policy, and +), must not be unreasonable.
1

3rdinance #o. -4, &eries of -%5$, meets these criteria.
(s to the petitioner2s second assignment of error, the trial court did not give the
ordinance in /uestion a meaning other than what it says. 3rdinance #o. -4 passed by
the unicipal Council of !irac on <ecember $%, -%5$,
2
reads7
(# 3"<I#(#C' &T"ICT=> P"31I?ITI#@ T1' C3#&T"ACTI3# 3F 9("'13A&'
I# (#> F3" #'(" ( ?=3CB 3F 13A&'& 'IT1'" I# P3?=(CI3# 3" ?(""I3
9IT1 #'C'&&("> <I&T(#C' T3 (!3I< @"'(T =3&&'& 3F P"3P'"T> (#<
=I!'& ?> FI"' (CCI<'#T.
&ection - provides7
It is strictly prohibited to construct warehouses in any form to any person, persons, entity,
corporation or merchants, wherein to 0eep or store copra, hemp, gasoline, petroleum,
alcohol, crude oil, oil of turpentine and the li0e products or materials if not within the
distance of $66 meters from a bloc0 of houses either in the poblacion or barrios to avoid
great losses of properties inclusive lives by fire accident.
&ection $ provides7
3
3wners of warehouses in any form, are hereby given advice to remove their said
warehouses this ordinance by the unicipal Council, provided however, that if those
warehouses now in existence should no longer be utili:ed as such warehouse for the
above;described products in &ection - of this ordinance after a lapse of the time given for
the removal of the said warehouses now in existence, same warehouses shall be
exempted from the spirit of the provision of section - of this ordinance, provided further,
that these warehouses now in existence, shall in the future be converted into non;
inflammable products and materials warehouses.
In spite of its fractured syntax, basically, what is regulated by the ordinance is the
construction of warehouses wherein inflammable materials are stored where such
warehouses are located at a distance of $66 meters from a bloc0 of houses and not the
construction per se of a warehouse. The purpose is to avoid the loss of life and property
in case of fire which is one of the primordial obligation of the government.
This was also the observation of the trial court7
( casual glance of the ordinance at once reveals a manifest disregard of the elemental
rules of syntax. 'xperience, however, will show that this is not uncommon in law ma0ing
bodies in small towns where local authorities and in particular the persons charged with
the drafting and preparation of municipal resolutions and ordinances lac0 sufficient
education and training and are not well grounded even on the basic and fundamental
elements of the 'nglish language commonly used throughout the country in such
matters. #evertheless, if one scrutini:es the terms of the ordinance, it is clear that what is
prohibited is the construction of warehouses by any person, entity or corporation wherein
copra, hemp, gasoline and other inflammable products mentioned in &ection - may be
stored unless at a distance of not less than $66 meters from a bloc0 of houses either in
the poblacion or barrios in order to avoid loss of property and life due to fire. Ander
&ection $, existing warehouses for the storage of the prohibited articles were given one
year after the approval of the ordinance within which to remove them but were allowed to
remain in operation if they had ceased to store such prohibited articles.
The ambiguity therefore is more apparent than real and springs from simple error in
grammatical construction but otherwise, the meaning and intent is clear that what is
prohibited is the construction or maintenance of warehouses for the storage of
inflammable articles at a distance within $66 meters from a bloc0 of houses either in the
poblacion or in the barrios. (nd the purpose of the ordinance is to avoid loss of life and
property in case of accidental fire which is one of the primordial and basic obligation of
any government. 4
Clearly, the lower court did #3T add meaning other than or differrent from what was
provided in the ordinance in /uestion. It merely stated the purpose of the ordinance and
what it intends to prohibit to accomplish its purpose.
(s to the third assignment of error, that warehouses similarly situated as that of the
petitioner were not prosecuted, suffice it to say that the mere fact that the municipal
authorities of !irac have not proceeded against other warehouses in the municipality
allegedly violating 3rdinance #o. -4 is no reason to claim that the ordinance is
discriminatory. ( distinction must be made between the law itself and the manner in
which said law is implemented by the agencies in charge with its administration and
enforcement. There is no valid reason for the petitioner to complain, in the absence of
proof that the other bodegas mentioned by him are operating in violation of the
ordinance and that the complaints have been lodged against the bodegas concerned
without the municipal authorities doing anything about it.
The objections interposed by the petitioner to the validity of the ordinance have not
been substantiated. Its purpose is well within the objectives of sound government. #o
undue restraint is placed upon the petitioner or for anybody to engage in trade but
merely a prohibition from storing inflammable products in the warehouse because of the
danger of fire to the lives and properties of the people residing in the vicinity. (s far as
public policy is concerned, there can be no better policy than what has been conceived
by the municipal government.
(s to petitioner2s contention of want of jurisdiction by the lower court we find no merit in
the same. The case is a simple civil suit for abatement of a nuisance, the original
jurisdiction of which falls under the then Court of First Instance.
91'"'F3"', for lac0 of merit, the petition is hereby <I&I&&'<. Costs against
petitioner.
&3 3"<'"'<.
Melencio-Herrera, Paras, Padilla and Regalado, JJ., concur.

Foo%"o%*#
- (nnex C(C, p. $*, "ecord on (ppeal.
$ Ibid.
4 !elasco vs. ayor !illegas, @.". #o. $*-54, -$6 &C"( 5)., +-%.4,.
* &ection $$4., (dministrative Code of -%-D. This is in consonance with the general
welfare clause as provided in &ection -), ?oo0 I of the =ocal @overnment Code of -%%-.
5 A.&. vs. (benden, $* Phil. -)5, +-%-4,.
) 'xhibit C-C, p. *5, "ecord on (ppeal.
D p. *), Ibid.
. (nnex CFC, pp. .5;.), "ecord on (ppeal.
The =awphil Project ; (rellano =aw Foundation
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 111044 -a")ar& 23, 1991
5ON. ALFREO S. LIM, !" h!# ca$ac!%& a# Ma&or o' Ma"!/a, a"( %h* C!%& o' Ma"!/a,
petitioners,
vs.
5ON. FELIPE G. PAC6UING, a# -)(7*, 8ra"ch 40, R*7!o"a/ Tr!a/ Co)r% o' Ma"!/a
a"( ASSOCIATE CORPORATION, respondents.
G.R. No. 113223 -a")ar& 23, 1991
TEOFISTO GUINGONA, -R. a"( OMINAOR R. CEPEA, petitioners,
vs.
5ON. VETINO REYES a"( ASSOCIATE EVELOPMENT CORPORATION,
respondents.

PAILLA, J.:
These two +$, 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 @.". #o. --56** was dismissed by the First <ivision of this Court on 6-
&eptember -%%* based on a finding that there was Cno abuse of discretion, much less
lac0 of or excess of jurisdiction, on the part of respondent judge EPac/uingFC, in issuing
the /uestioned orders. Gudge Pac/uing had earlier issued in Civil Case #o. ..;*5))6,
"TC of anila, ?ranch *6, the following orders which were assailed by the ayor of the
City of anila, 1on. (lfredo &. =im, in said @.". #o. --56**7
a. order dated $. arch -%%* directing anila mayor (lfredo &. =im to issue the
permit/license to operate the jai;alai in favor of (ssociated <evelopment Corporation
+(<C,.
b. order dated -- (pril -%%* directing mayor =im to explain why he should not be cited for
contempt for non;compliance with the order dated $. arch -%%*.
c. order dated $6 (pril -%%* reiterating the previous order directing ayor =im to
immediately issue the permit/license to (ssociated <evelopment Corporation +(<C,.
The order dated $. march -%%* was in turn issued upon motion by (<C for execution of
a final judgment rendered on % &eptember -%.. which ordered the anila ayor to
immediately issue to (<C the permit/license to operate the jai;alai in anila, under
anila 3rdinance #o. D6)5.
3n -4 &eptember -%%*, petitioner @uingona +as executive secretary, issued a directive
to then chairman of the @ames and (musements ?oard +@(?, Francisco ". &umulong,
jr. to hold in abeyance the grant of authority, or if any had been issued, to withdraw such
grant of authority, to (ssociated <evelopment Corporation to operate the jai;alai in the
City of anila, until the following legal /uestions are properly resolved7
-. 9hether P.<. DD- which revo0ed all existing Gai;(lai franchisers issued by local
governments as of $6 (ugust -%D5 is unconstitutional.
$. (ssuming that the City of anila had the power on D &eptember -%D- to issue a Gai;
(lai franchise to (ssociated <evelopment Corporation, whether the franchise granted is
valied considering that the franchise has no duration, and appears to be granted in
perpetuity.
4. 9hether the City of anila had the power to issue a Gai;(lai franchise to (ssociated
<evelopment Corporation on D &eptember -%D- in view of executive 3rder #o. 4%$
dated - Ganuary -%5- which transferred from local governments to the @ames and
(musements ?oard the power to regulate Gai;(lai.
1

3n -5 &eptember -%%*, respondent (ssociated <evelopment Corporation +(<C, filed a
petition for prohibition, mandamus, injunction and damages with prayer for temporary
restraining order andHor writ of preliminary injunction in the "egional Trial Court of
anila against petitioner @uingona and then @(? chairman &umulong, doc0eted as
Civil Case #o. %*;D-)5), see0ing to prevent @(? from withdrawing the provisional
authority that had earlier been granted to (<C. 3n the same day, the "TC of anila,
?ranch *, through presiding Gudge !etino "eyes, issued a temporary restraining order
enjoining the @(? from withdrawing (<C2s provisional authority. This temporary
restraining order was converted into a writ of preliminary injunction upon (<C2s posting
of a bond in the amount of P$,666,666.66.
2
&ubse/uently, also in @.". #o. --56**, the "epublic of the Philippines, through the
@ames and (musements ?oard, filed a Cotion for Intervention8 for =eave to File a
otion for reconsideration in Intervention8 and to "efer the case to the Court En ancC
and later a Cotion for =eave to File &upplemental otion for "econsideration;in;
Intervention and to (dmit (ttached &upplemental otion for "econsideration;in;
InterventionC.
In an En anc "esolution dated $6 &eptember -%%*, this Court referred @.". #o.
--56** to the Court En anc and re/uired the respondents therein to comment on the
aforementioned motions.
eanwhile, Gudge "eyes on -% 3ctober -%%* issued another order, this time, granting
(<C a writ of preliminary mandator! injunction against @uingona and @(? to compel
them to issue in favor of (<C the authority to operate jai;alai.
@uingona, as executive secretary, and <ominador Cepeda, Gr. as the new @(?
chairman, then filed the petition in @.". #o. --D$)4 assailing the abovementioned
orders of respondent Gudge !etino "eyes.
3n $5 3ctober -%%*, in @.". #o. --D$)4, this Court granted petitioner2s motion for
leave to file supplemental petition and to admit attached supplemental petition with
urgent prayer for restraining order. The Court further re/uired respondents to file their
comment on the petition and supplemental petition with urgent prayer for restraining
order. The Court li0ewise set the case and all incidents thereof for hearing on -6
#ovember -%%*.
(t the hearing on -6 #ovember -%%*, the issues to be resolved were formulated by the
Court as follows7
-. whether or not intervention by the "epublic of the Philippines at this stage of the
proceedings is proper8
$. assuming such intervention is proper, whether or not the (ssociated <evelopment
Corporation has a valid and subsisting franchise to maintain and operate the jai;alai8
4. whether or not there was grave abuse of discretion committed by respondent Gudge
"eyes in issuing the aforementioned temporary restraining order +later writ of preliminary
injunction,8 and
*. whether or not there was grave abuse of discretion committed by respondent Gudge
"eyes in issuing the aforementioned writ of preliminary mandator! injunction.
3n the issue of the propriety of the intervention by the "epublic of the Philippines, a
/uestion was raised during the hearing on -6 #ovember -%%* as to whether
intervention in @.". #o. --56** was the proper remedy for the national government to
ta0e in /uestioning the existence of a valid (<C franchise to operate the jai;alai or
whether a separate action for quo "arranto under &ection $, "ule )) of the "ules of
Court was the proper remedy.
9e need not belabor this issue since counsel for respondent (<C agreed to the
suggestion that this Court once and for all settle all substantive issues raised by the
parties in these cases. oreover, this Court can consider the petition filed in @.". #o.
--D$)4 as one for /uo warranto which is within the original jurisdiction of the Court
under section 5+-,, (rticle !III of the Constitution.
3

3n the propriety of intervention by the "epublic, however, it will be recalled that this
Court in #irector o$ %ands v. &ourt o$ 'ppeals +%4 &C"( $4., allowed intervention even
beyond the period prescribed in &ection $ "ule -$ of the "ules of Court. The Court
ruled in said case that a denial of the motions for intervention would Clead the Court to
commit an act of injustice to the movants, to their successor;in;interest and to all
purchasers for value and in good faith and thereby open the door to fraud, falsehood
and misrepresentation, should intervenors2 claim be proven to be true.C
In the present case, the resulting injustice and injury, should the national government2s
allegations be proven correct, are manifest, since the latter has s/uarely /uestioned the
very existence of a valid franchise to maintain and operate the jai;alai +which is a
gambling operation, in favor of (<C. (s will be more extensively discussed later, the
national government contends that anila 3rdinance #o. D6)5 which purported to grant
to (<C a franchise to conduct jai;alai operations is void and ultra vires since "epublic
(ct #o. %5*, approved on $6 Gune -%54, or very much earlier than said 3rdinance #o.
D6)5, the latter approved D &eptember -%D-, in &ection * thereof, re/uires a legislative
$ranc(ise, not a municipal franchise, for the operation of jai;alai. (dditionally, the
national government argues that even assuming, arguendo, that the abovementioned
ordinance is valid, (<C2s franchise was nonetheless effectively revo0ed by Presidential
decree #o. DD-, issued on $6 (ugust -%D5, &ec. 4 of which expressly revo0ed all
existing franchises and permits to operate all forms of gambling facilities +including the
jai;alai, issued by local governments.
3n the other hand, (<C2s position is that 3rdinance #o. D6)5 was validly enacted by
the City of anila pursuant to its delegated powers under it charter, "epublic (ct #o.
*6%. (<C also s/uarely assails the constitutionality of P< #o. DD- as violative of the
e/ual protection and non;impairment clauses of the Constitution. In this connection,
counsel for (<C contends that this Court should really rule on the validity of P< #o. DD-
to be able to determine whether (<C continues to possess a valid franchise.
It will undoubtedly be a grave injustice to bot( parties in this case if this Court were to
shir0 from ruling on the issue of constitutionality of P< #o. DD-. &uch issue has, in our
view, become the very lis mota in resolving the present controversy, in view of (<C2s
insistence that it was granted a valid and legal franchise by 3rdinance #o. D6)5 to
operate the jai;alai.
The time;honored doctrine is that all laws +P< #o. DD- included, are presumed valid
and constitutional until or unless otherwise ruled by this Court. #ot only this8 (rticle I!III
&ection 4 of the Constitution states7
&ec. 4. (ll existing laws, decrees, executive orders, proclamations, letters of instructions
and other executive issuances not inconsistent with this Constitution shall remain
operative until amended, repealed or revo0ed.
There is nothing on record to show or even suggest that P< #o. DD- has been
repealed, altered or amended by any subse/uent law or presidential issuance +when
the executive still exercised legislative powers,.
#either can it be tenably stated that the issue of the continued existence of (<C2s
franchise by reason of the unconstitutionality of P< #o. DD- was settled in @.". #o.
--56**, for the decision of the Court2s First <ivision in said case, aside from not being
final, cannot have the effect of nullifying P< #o. DD- as unconstitutional, since only the
Court En anc has that power under (rticle !III, &ection *+$, of the Constitution.
4

(nd on the /uestion of whether or not the government is estopped from contesting
(<C2s possession of a valid franchise, the well;settled rule is that the &tate cannot be
put in estoppel by the mista0es or errors, if any, of its officials or agents +Republic v.
Intermediate 'ppellate &ourt, $6% &C"( %6,
Conse/uently, in the light of the foregoing expostulation, we conclude that the republic
+in contra distinction to the City of anila, may be allowed to intervene in @.". #o.
--56**. The "epublic is intervening in @.". #o. --56** 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
(nent the /uestion of whether (<C has a valid franchise to operate the Gai;(lai de
anila, a statement of the pertinent laws is in order.
-. The Charter of the City of anila was enacted by Congress on -. Gune -%*%. &ection
-. thereof provides7
&ec. -.. =egislative Powers. J The unicipal ?oard shall have the following legislative
powers7
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, coc0pits, jai;alai, roller or ice;s0ating on
any sporting or athletic contests, as well as grant exclusive rights to establishments for
this purpose, notwithstanding any existing law to the contrary.
$. 3n - Ganuary -%5-, 'xecutive 3rder #o. 4%$ was issued transferring the authority to
regulate jai;alais from local government to the @ames and (musements ?oard +@(?,.
4. 3n $6 Gune -%54, Congress enacted "epublic (ct #o. %5*, entitled C(n (ct to
Prohibit 9ith 1orse "aces and ?as/ue Pelota @ames +Gai;(lai,, (nd To Prescribe
Penalties For Its !iolationC. The provisions of "epublic (ct #o. %5* relating to jai;alai
are as follows7
&ec. *. )o person, or group of persons ot(er than the operator or maintainer of a fronton
"it( legislative $ranc(ise to conduct bas/ue pelota games +Gai;alai,, s(all o$$er, to ta0e or
arrange bets on any bas/ue pelota game or event, or maintain or use a totali:ator or
other device, method or system to bet or gamble on any bas/ue pelota game or event.
+emphasis supplied,.
&ec. 5. )o person, operator or maintainer of a fronton "it( legislative $ranc(ise to
conduct bas/ue pelota games s(all o$$er, ta0e, or arrange bets on any bas/ue pelota
game or event, or maintain or use a totali:ator or other device, method or system to bet
or gamble on any bas/ue pelota game or event outside t(e place, enclosure, or $ronton
"(ere t(e basque pelota game is (eld. +emphasis supplied,.
*. 3n 6D &eptember -%D-, however, the unicipal ?oard of anila nonetheless passed
3rdinance #o. D6)5 entitled C(n 3rdinance (uthori:ing the ayor To (llow (nd Permit
The (ssociated <evelopment Corporation To 'stablish, aintain (nd 3perate ( Gai;(lai
In The City 3f anila, Ander Certain Terms (nd Conditions (nd For 3ther Purposes.C
5. 3n $6 (ugust -%D5, Presidential <ecree #o. DD- was issued by then President
arcos. The decree, entitled C"evo0ing (ll Powers and (uthority of =ocal
@overnment+s, To @rant Franchise, =icense or Permit (nd "egulate 9agers 3r ?etting
?y The Public 3n 1orse (nd <og "aces, Gai;(lai 3r ?as/ue Pelota, (nd 3ther Forms
3f @amblingC, in *ection + t(ereo$, e,pressl! revo-ed all e,isting $ranc(ises and
permits issued b! local governments.
). 3n -) 3ctober -%D5, Presidential <ecree #o. .-6, entitled C(n (ct granting The
Philippine Gai;(lai (nd (musement Corporation ( Franchise To 3perate, Construct (nd
aintain ( Fronton For ?as/ue Pelota (nd &imilar @ames of &0ill In T1' @reater
anila (rea,C was promulgated.
D 3n 6. ay -%.D, then President (/uino, by virtue of (rticle I!III, &ection ), of the
Constitution, which allowed the incumbent legislative powers until the first Congress
was convened, issued 'xecutive 3rder #o. -)% expressly repealing P< .-6 and
revo0ing and cancelling the franchise granted to the Philippine Gai;(lai and (musement
Corporation.
Petitioners in @.". #o. --D$)4 argue that "epublic (ct #o. %5* effectively removed the
power of the unicipal ?oard of anila to grant franchises for gambling operations. It is
argued that the term Clegislative franchiseC in "ep. (ct #o. %5* is used to refer to
franchises issued by Congress.
3n the other hand, (<C contends that "epublic (ct #. *6% +anila Chapter, gives
legislative powers to the unicipal ?oard to grant franchises, and since "epublic (ct
#o. %5* does not specifically /ualify the word ClegislativeC as referring exclusively to
Congress, then "ep. (ct #o. %5* did not remove the power of the unicipal ?oard
under &ection -.+jj, of "epublic (ct #o. *6% and conse/uently it was within the power of
the City of anila to allow (<C to operate the jai;alai in the City of anila.
3n this point, the government counter;argues that the term Clegislative powersC is used
in "ep. (ct #o. *6% merely to distinguish the powers under &ection -. of the law from
the other powers of the unicipal ?oard, but that the term Clegislative franchiseC in "ep.
(ct #o. %5* refers to a franchise granted solely by Congress.
Further, the government argues that 'xecutive 3rder #o. 4%$ dated 6- Ganuary -%5-
transferred even the power to regulate Gai;(lai from the local governments to the
@ames and (musements ?oard +@(?,, a national government agency.
It is worthy of note that neither of the authorities relied upon by (<C to support its
alleged possession of a valid franchise, namely the Charter of the City of anila +"ep.
(ct #o. *6%, and anila 3rdinance #o. D6)5 uses the word CfranchiseC. "ep. (ct #o.
*6% empowers the unicipal ?oard of anila to Cta,, license, permit and regulate
wagers or bettingC and to Cgrant exclusive rig(ts to establishmentsC, while 3rdinance
#o. D6)5 authori:ed the anila City ayor to Callo" and permitC (<C to operate jai;alai
facilities in the City of anila.
It is clear from the foregoing that Congress did not delegate to the City of anila the
power Cto franchiseC wagers or betting, including the jai;alai, but retained for itself such
power Cto franchiseC. 9hat Congress delegated to the City of anila in "ep. (ct #o.
*6%, with respect to wagers or betting, was the power to Clicense, permit, or regulateC
which therefore means that a license or permit issued by the City of anila to operate a
wager or betting activity, such as the jai;alai where bets are accepted, would not amount
to something meaningful A#='&& the holder of the permit or license was also
F"(#C1I&'< by the national government to so operate. oreover, even this power to
license, permit, or regulate wagers or betting on jai;alai was removed from local
governments, including the City of anila, and transferred to the @(? on - Ganuary
-%5- by 'xecutive 3rder #o. 4%$. 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 @(?.
In relation, therefore, to the facts of this case, since (<C 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 ayor to operate the jai;alai in the City of anila.
It cannot be overloo0ed, in this connection, that the "evised Penal Code punishes
gambling and betting under (rticles -%5 to -%% thereof. @ambling is thus generally
prohibited by law, unless another law is enacted by &ongress e,pressl! e,empting or
e,cluding certain $orms o$ gambling $rom t(e reac( o$ criminal la". (mong these form
the reach of criminal law. (mong these forms of gambling allowed by special law are the
horse races authori:ed by "epublic (cts #os. 46% and %.4 and gambling casinos
authori:ed under Presidential <ecree #o. -.)%.
9hile 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 (rticles -%5;-%% of the "evised Penal Code, unless it is shown that a
later or special law had been passed allowing it. (<C has not shown any such special
law.
"epublic (ct #o. *6% +the "evised Charter of the City of anila, which was enacted by
Congress on -. Gune -%*% gave the unicipal ?oard certain delegated legislative
powers under &ection -.. ( perusal of the powers enumerated under &ection -. shows
that these powers are basically regulatory in nature.
1
The regulatory nature of these
powers finds support not only in the plain words of the enumerations under &ection $.
but also in this Court2s ruling in People v. .era +)5 Phil. 5),.
In .era, this Court declared that a law which gives the Provincial ?oard the discretion to
determine whether or not a law of general application +such as, the Probation law;(ct
#o. *$$-, would or would not be operative within the province, is unconstitutional for
being an undue delegation of legislative power.
From the ruling in .era, it would be logical to conclude that, if (<C2s arguments were to
prevail, this Court would li0ewise declare &ection -.+jj, of the "evised Charter of anila
unconstitutional for the power it would delegate to the unicipal ?oard of anila 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 anila.
9e 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
"ep. (cts #os. *6% and %5* and 3rdinance #o. D6)5 should be ta0en together and it
should then be clear that the legislative powers of the unicipal ?oard should be
understood to be regulatory in nature and that "epublic (ct #o. %5* should be
understood to refer to congressional $ranc(ises, as a necessity for the operation of jai;
alai.
9e need not, however, again belabor this issue further since the tas0 at hand which will
ultimately, and with finality, decide the issues in this case is to determine whether P<
#o. DD- validly revo0ed (<C2s franchise to operate the jai;alai, assuming +without
conceding, that it indeed possessed such franchise under 3rdinance #o. D6)5.
(<C argues that P< #o. DD- is unconstitutional for being violative of the e/ual
protection and non;impairment provisions of the Constitution. 3n the other hand, the
government contends that P< #o. DD- is a valid exercise of the in(erent police power of
the &tate.
The police power has been described as the least limitable of the inherent powers of the
&tate. It is based on the ancient doctrine J salus populi est suprema le, +the welfare of
the people is the supreme law., In the early case of Rubi v. Provincial oard o$ Mindoro
+4% Phil. ))6,, this Court through r. Gustice @eorge (. alcolm stated thus7
The police power of the &tate . . . is a power co;extensive with self;protection, and is not
inaptly termed the Claw of overruling necessity.C It may be said to be that inherent and
plenary power in the &tate 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 P< #o. DD-, the purpose of the law is clearly stated in the Cwhereas
clauseC as follows7
91'"'(&, it has been reported that in spite of the current drive of our law enforcement
agencies against vices and illegal gambling, these social ills are still prevalent in many
areas of the country8
91'"'(&, there is need to consolidate all the efforts of the government to eradicate and
minimi:e vices and other forms of social ills in pursuance of the social and economic
development program under the new society8
91'"'(&, 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 andHor franchise from local government to the #ational
@overnment.
It cannot be argued that the control and regulation of gambling do not promote public
morals and welfare. @ambling is essentially antagonistic and self;reliance. It breeds
indolence and erodes the value of good, honest and hard wor0. It is, as very aptly stated
by P< #o. DD-, a vice and a social ill which government must minimi:e +if not eradicate,
in pursuit of social and economic development.
In Magta/as v. Pr!ce Properties &orporation +$6 Guly -%%*, @.". #o. ---6%D,, this Court
stated thru r. Gustice Isagani (. Cru:7
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
/ueteng and monte but permits lotteries, coc0fighting and horse;racing. In ma0ing such
choices, Congress has consulted its own wisdom, which this Court has no aut(orit! to
revie", much less reverse. 9ell 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 /uestions 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. +'mphasis
supplied,
Tal0s regarding the supposed vanishing line between rig(t and privilege in (merican
constitutional law has no relevance in the context of these cases since the reference
there is to economic regulations. 3n the other hand, jai;alai is not a mere economic
activity which the law see0s to regulate. It is essentially gambling and whether it should
be permitted and, if so, under what conditions are /uestions primarily for the lawma0ing
authority to determine, tal0ing into account national and local interests. 1ere, it is the
police power of the &tate that is paramount.
(<C /uestions the motive for the issuance of P< #os. DD-. Clearly, however, this Court
cannot loo0 into allegations that P< #o. DD- was enacted to benefit a select group
which was later given authority to operate the jai;alai under P< #o. .-6. The
examination of legislative motivation is generally prohibited. +Palmer v. 0(ompson, *64
A.&. $-D, $% =. 'd. $d *4. E-%D-F per ?lac0, J., 0(ere is, t(e $irst place, absolute lac- o$
evidence to support '#&1s allegation o$ improper motivation in t(e issuance o$ P# )o.
223. In t(e second place, as alread! averred, t(is &ourt cannot go be(ind t(e
e,pressed and proclaimed purposes o$ P# )o. 223, "(ic( are reasonable and even
laudable.
It should also be remembered that P< #o. DD- provides that the national government
can subse/uently grant franchises Cupon proper application and verification of the
/ualifications of the applicant.C (<C has not alleged that it filed an application for a
franchise with the national government subse/uent to the enactment of P< #o. DD-8
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.
3n the other hand, it is noteworthy that while then president (/uino issued 'xecutive
3rder #o. -)% revo0ing P< #o. .-6 +which granted a franchise to a arcos;crony to
operate the jai;alai,, she did not scrap or repeal P< #o. DD- which had revo0ed 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.
3n the alleged violation of the non;impairment and e/ual 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 government2s 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 R&PI v. )0& +-56 &C"( *56,, we held that7
( franchise started out as a Croyal privilege or +a, branch of the Bing2s prerogative,
subsisting in the hands of a subject.C This definition was given by Finch, adopted by
?lac0stone, 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 (<C2s permit to be a mere privilege because jai;
alai, when played for bets, is pure and simple gambling. To analogi:e a gambling
franchise for the operation of a public utility, such as public transportation company, is to
triviali:e the great historic origin of this branch of royal privilege.
(s earlier noted, (<C has not alleged ever applying for a franchise under the provisions
of P< #o. DD-. and yet, the purpose of P< #o. DD- is /uite 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 revo0ed but were made subject to reissuance by
the national government upon compliance by the applicant with government;set
/ualifications and re/uirements.
There was no violation by P< #o. DD- of the e/ual protection clause since the decree
revo0ed all franchises issued by local governments without /ualification or exception.
(<C cannot allege violation of the e/ual protection clause simply because it was the
only one affected by the decree, for as correctly pointed out by the government, (<C
was not singled out when all jai;alai franchises were revo0ed. ?esides, it is too late in
the day for (<C to see0 redress for alleged violation of its constitutional rights for it
could have raised these issues as early as -%D5, almost twenty %$6, years ago.
Finally, we do not agree that &ection 4 of P< #o. DD- and the re/uirement of a
legislative franchise in "epublic (ct #o. %5* are CridersC to the two %$, laws and are
violative of the rule that laws should embrace one subject which shall be expressed in
the title, as argued by (<C. In &ordero v. &abatuando +) &C"( *-.,, this Court ruled
that the re/uirement 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
see0s to effect, without expressing each and every end and means necessary or
convenient for the accomplishing of the objective.
III
3n the issue of whether or not there was grave abuse of discretion committed by
respondent Gudge "eyes in issuing the temporary restraining order +later converted to a
writ of preliminary injunction, and the writ of preliminary mandator! injunction, we hold
and rule there was.
&ection 4, "ule 5. of the rules of Court provides for the grounds for the issuance of a
preliminary injunction. 9hile (<C could allege these grounds, respondent judge should
have ta0en judicial notice of "epublic (ct #o. %5* and P< DD-, under &ection - rule -$%
of the "ules of court. These laws negate the existence of any legal right on the part of
(<C to the reliefs it sought so as to justify the issuance of a writ of preliminary
injunction. since P< #o. DD- and "epublic (ct #o. %5* are presumed valid and
constitutional until ruled otherwise by the &upreme Court after due hearing, (<C was
not entitled to the writs issued and conse/uently there was grave abuse of discretion in
issuing them.
91'"'F3"', for the foregoing reasons, judgment is hereby rendered7
-. allowing the "epublic of the Philippines to intervene in @.". #o. --56**.
$. declaring Presidential <ecree #o. DD- valid and constitutional.
4. declaring that respondent (ssociated <evelopment corporation +(<C, does not
possess the re/uired congressional franchise to operate and conduct the jai;alai under
"epublic (ct #o. %5* and Presidential <ecree #o. DD-.
*. setting aside the writs of preliminary injunction and preliminary mandatory injunction
issued by respondent Gudge !etino "eyes in civil Case #o. %*;D-)5).
&3 3"<'"'<.
4eliciano, idin, Regalado, Romero, ellosillo and Mendo5a, JJ., concur.
)arvasa, &.J. and 4rancisco, JJ., too- no part.



S*$ara%* O$!"!o"#

9APUNAN, J., concurring7
@overnment 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 &tate2s inherent and almost
illimitable prerogative to promote the general welfare and the common good. (s the
challenge involves a facile conflict between good and evil, between a universally
recogni:ed vice and the &tate2s virtuous posture, the instant case lends itself to easy
adjudication.
#ot necessarily. 'conomic realities have blurred distinctions. The &tate 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. (s the system has never been perfect, conflict, such as that which existed in
the case at bench, occasionally arises.
The constitutionality of P.<. DD- was not in issue in %im vs. Pacquing, promulgated by
the court2s first <ivision last &eptember, -%%*, where this court sustained an order by
Gudge Pac/uing issued in Civil Case #o. ..;*5))6 compelling anila ayor (lfredo &.
=im to issue a permit to operate a jail fronton in favor of the (ssociated <evelopment
Corporation +(<C, pursuant to anila City 3rdinance #o. D6)5.
(fter the City of anila subse/uently granted (<C a permit to operate the jai;alai
fronton, Chairman Francisco &umulong, Gr. of the @ames and (musements ?oard
issued on &eptember %, -%%* a provisional authority to open the fronton subject to
certain conditions imposed therein. In relation to this, the @(? li0ewise issued to the
(<C, on -$ &eptember -%%*, =icense #o. %*;66. upon payment of the corresponding
fees.
3n &eptember -4, -%%*, 'xecutive &ecretary Teofisto @uingona directed @(?
Chairman &umulong Cto hold in abeyance the grant of authority or if any has been
issued, to withdraw such grant of authorityC
1
to the (<C. Conse/uently, on &eptember
-*, -%%*, the @(? Chairman revo0ed the provisional authority issued by his office, until
the legal issues raised in the &eptember -4 directive of the 'xecutive &ecretary are
resolved in the proper court. &aid directive identified the legal issues as centering on -,
the constitutionality of P.<. DD-8 $, the validity of the apparent grant in perpetuity of a
municipal franchise to maintain jai;alai operations8 and, 4, the power of the city of
anila to issue a jai;alai franchise in view of 'xecutive 3rder 4%$ which transferred
from local governments to the @(? the power to regulate jai;alai.
"eacting to the cancellation of its provisional authority to maintain jai;alai operations,
(<C, on &eptember -5, -%%* filed a petition for prohibition, mandamus, injunction and
damages with prayer for temporary restraining order and writ of preliminary injunction in
the anila "egional Trial Court of against 'xecutive &ecretary @uingona and Chairman
&umulong. The "egional Trial court of manila, ?ranch *, through Gudge !etino "eyes
on the same day issued an order enjoining the 'xecutive &ecretary and the @(?
Chairman from implementing their directive and memorandum, respectively.
3n &eptember -), -%%* @(?, representing the "epublic 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 @.". #o. --56**. (cting on this
motion, the First <ivision referred the case to the Court en banc, which, in a resolution
dated $6 &eptember -%%*, accepted the same and re/uired the respondents therein to
comment.
3n 3ctober --, -%%* the 'xecutive &ecretary and the new @(? Chairman <omingo
Cepeda, Gr. filed with this Court a petition for certiorari, prohibition and mandamus
assailing Gudge !etino "eyes2 earlier order.
3n 3ctober -%. -%%*, Gudge "eyes issued another order granting the (<?2s motion for
a writ of preliminary mandator! injunction against the 'xecutive &ecretary and the @(?
Chairman and to compel them to issue the necessary authority, licenses and wor0ing
permits to the (<C, 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 3ctober
-%, -%%* 3rder of Gudge "eyes. 9e granted leave to file said supplemental petition and
to admit supplemental petition and re/uired respondents therein to file their comment on
3ctober $5, -%%*.
The (<C maintains it original position that 3rdinance #o. D6)5, enacted pursuant to the
Charter of the City of anila under "epublic (ct #o. *6% granted a valid and subsisting
municipal franchise for the operation of the ?as/ue pelota game jai alai. In response to
the government2s vehement objections against (<C2s operation of its gambling
operations
2
the (<C for the first time challenged the constitutional validity of P.<. #o.
DD- insofar as it revo0ed the authority granted to it by 3rdinance #o. D6)5 as violative
of the non;impairment of contracts and e/ual protection clauses of the constitution.
3rdinance D6)5 reads7
&ec. -. The ayor is authori:ed, as he is hereby authori:ed to allow and permit the
(ssociated <evelopment Corporation to establish, maintain and operate a jai;alai in the
City of anila under the following terms and conditions and such other terms and
conditions as he +the ayor, may prescribe for good reasons of general interest7
a. That the construction, establishment, and maintenance of the jai;alai shall be at a
place permissible under existing :oning ordinances of anila8
b. That the games to be played daily shall commence not earlier than 5766 o2cloc0 +sic, in
the afternoon8
c. That the City of anila will receive a share of $-H$K of the annual gross receipts of all
wagers or bets LK of which will accrue to the @ames and (musements ?oard as now
provided by law8
d. That the corporation will in addition pay to the city an annual license fee of P4,666.66
and a daily permit fee of P$66.668
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 P46,666.66.
xxx xxx xxx
&ec. 4 This ordinance shall ta0e effect upon its approval.
The above;/uoted ordinance is notable in two respects7 -, the absence of a period of
expiration suggests that the grant of authority to operate the ?as/ue pelota game jai;
alai seems to have been granted in perpetuity and $, while the grant of authority under
the 3rdinance was made pursuant to ".(. *6%, the City Charter of anila, the authority
granted could best be viewed as a grant of license or permit, not a franchise. #owhere
is it pretended that 3rdinance D6)5 is a franchise enacted pursuant to the legislative
powers of the unicipal ?oard of the City of anila under &ection -. +jj, thereof.
The absence of authority of the anila unicipal ?oard to issue a franchise,
notwithstanding its legislative powers, is furthermore evident in the above;cited Charter
provision regulating gambling and other gaming establishments which enumerates the
following powers7
+jj, To tax, license, permit and regulate wagers of betting by the public on boxing . . .
coc0pits, jai;alai . . . as well as this purpose, notwithstanding any existing law to the
contrary.
Clearly the, if 3rdinance D6)5 merely grants a permit or a license to operate the jai;alai
fronton, I see no conflict with a national law, duly enacted pursuant to legitime franchise
to operate certain gambling and gaming operations, generally viewed as deleterious to
the public welfare and morals, for the purpose of regulating the same and raising
revenue. In other words, the national government may well validly re/uire operators of
such establishments to first secure a legislative franchise before starting their
operations. (fter securing the proper legislative franchise, they may ta0e then exercise
whatever authority granted to them by local legislative bodies pursuant to the permits or
licenses granted by these bodies. This is essentially the spirit ordained by at least two
legislative issuances relating to jai;alai and other gambling operations passed before
and after the anila City Council issued the (<C2s permit to operate.
In Gune of -%5$, Congress enacted ".(. 4%$ which forbade the ta0ing or arranging of
bets on any bas/ue pelota game by any person or entity other than one with a
legislative franchise.
3
(fter the (<C was issued its permit by the City of anila in -%D-,
President arcos issued P.<. DD- pursuant to his legislative powers during martial =aw,
which revo0ed local authority to grant franchise to certain gambling operations including
jai;alai. &ection 4 thereof expressly revo0ed existing gambling franchise issued by the
local governments. 9hen President Cora:on (/uino cancelled the franchise granted to
the Philippine Gai;alai and (musement Corporation in -%.D, she 0ept P.<. DD-, which
revo0ed all authority by local governments to issue $ranc(ises for gambling and gaming
establishments on one hand, and the municipal ordinance of the City of anila, granting
a permit or license to operate subject to compliance with the provisions found therein,
on the other hand, a legislative franchise may be re/uired by the government as a
condition for certain gambling operations. (fter 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 re/uirements. 9hile the City of anila
granted a permit to operate under 3rdinance #o. D6)5, this permit or authority was at
best only a local permit to operate and could be exercised by the (<C only after it shall
have obtained a legislative franchise.
This s0irts the constitutional issue. ?oth P.<. DD- and 3rdinance D6)5 can stand
alongside each other if one loo0s at the authority granted by the charter of the City of
anila together with 3rdinance #o. D6)5 merely as an authority to CallowC and CpermitC
the operation of jai;alai facilities "it(in the City of anila. 9hile 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 Anited &tates &upreme Court in
(shwander v. T!(
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 /uestion.
The &tate has every legitimate right, under the police power, to regulate gambling
operations
1
by re/uiring legislative franchises for such operations. @ambling, in all its
forms, unless specifically authori:ed 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 Cstate policyC on various forms of gambling, the political branches of
government are best e/uipped to regulate and control such activities and therefore
assume full responsibility to the people for such policy.
2
Parenthetically, gambling in all
its forms, is generally immoral.
The disturbing implications of a grant of a Cfranchise,C in perpetuity, to the (<C militates
against its posture that the government2s insistence that the (<C first obtain a
legislative franchise violates the e/ual protection and impairment of Contracts clauses
of the Constitution. ?y their very nature, franchise are subject to amendment, alteration
or revocation by the &tate whenever appropriate. Ander the exercise of its police power,
the &tate through its re/uirement for permits, licenses and franchises to operate,
underta0es 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.
3

In Edu v Ericta
4
we defined the police power as Cthe state authority to enact legislation
that may interfere with personal liberty or property in order to promote the general
welfare.C In its exercise, the &tate may impose appropriate impositions or restraints
upon liberty or property in order to foster the common good.
9
&uch imposition or
restraint neither violates the impairment of contracts nor the e/ual protection clauses of
the Constitution if the purpose is ultimately the public good.
10
"estraints on property are not examined with the same microscopic scrutiny as
restrictions on liberty.
11
&uch 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. Gustice 1olmes in )oble *tate an- v. Has-el
12
once expansively
described the police power as Cextending to all public needs.C 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 %im vs. Pacquing, I voted to sustain the (<C2s position on issues almost purely
procedural. ( thorough analysis of the new issues raised this time, compels a different
result since it is plainly obvious that the (<C, while possessing a permit to operate
pursuant to 3rdinance D6)5 of the City of anila, still has to obtain a legislative
franchise, P.<. DD- being valid and constitutional.
3n the /uestion of the propriety of the "epublic of the Philippine2s intervention late in
the proceedings in @.". #o. --D$)4, the (<C counsel2s agreeing to have all the issues
raised by the parties in the case at bench paves the way for us to consider the petition
filed in @.". #o. --D$)4 as one for quo "arranto.
91'"'F3"', on the basis of the foregoing premises, judgment is hereby rendered7
-. (llowing the republic to intervene in @.". #o. --56**.
$. <eclaring that P.<. DD- is a valid and subsisting law.
4. <eclaring that the (<C does not possess the re/uired legislative franchise to operate
the jai;alai under ".(. %5* and P.<. DD-.
*. &etting aside the writs of preliminary injunction and preliminary mandatory injunction
issued by Gudge !etino "eyes.
AVIE, -R., J., concurring7
The core issues submitted for the Court2s resolution are7 +-, in @.". #o. --56**,
whether intervention by the republic of the Philippines is proper, and +$, in @.". #o.
--D$)4, whether public respondent Gudge !etino "eyes acted with grave abuse of
discretion in issuing the temporary restraining order and subse/uently the writ of
preliminary mandatory injunction in Civil case #o. %*;D-)5).
I
(s 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. Ander &ection $, "ule -$ of the
"ules of Court, such motion may be allowed only be$ore or during a trial. &aid section
reads7
&ec. $. Intervention. J ( person may, before or during a trial, be permitted by the court,
in its discretion, to intervene in an action, if he has legal interest in the matter in litigation,
or in the success of either of the parties, or an interest against both, or when he is so
situated as to be adversely affected by a distribution or other disposition of property in the
custody of the court or of an officer thereof.
This provision was ta0en from &ection -, "ule -4 of the old "ules of Court with the
modification that the phrase Cat any period of a trialC in the latter was changed to Cbefore
or during a trial.C
1
&ection -, "ule -4 of the old "ules of Court was based on &ection -$- of the Code of
Civil Procedure which, in turn, was ta0en from &ection 4.D of the Code of Civil
procedure of California.
2
The phrase Cat any period of a trialC in &ection -, "ule -4 of the old "ules of Court has
been construed to mean the period for the representation of evidence by both parties.
3

(nd the phrase Cbefore or during the trialC in &ection $, "ule -$ of the present "ules of
Court Csimply means anytime before the rendition of the final judgment.C
4
(ccordingly,
intervention could not be allowed after the trial had been concluded
1
or after the trial
and decision of the original case.
2
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.
3
The grant of an intervention is left to the discretion of the court. Paragraph +b,, &ection
$, "ule -$ of the "ules of Court provides7
+b, #iscretion o$ court. J 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
intervenor2s rights may be fully protected in a separate proceeding.
It is thus clear that, by its very nature, intervention presupposes an e,isting litigation or
a pending case,
4
and by the opening paragraph of &ection $, "ule -$ of the "ules the
"ules of Court, it may be properly filed only before or during the trial of the said case.
'ven 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 intervenor2s rights
may be fully protected in a separate proceeding.
9
It is not disputed that the motion to intervene was filed only on -) &eptember -%%*, or
on the fifteenth +-5th, day after the First <ivision had promulgated the decision, and
after petitioner ayor (lfredo =im complied with or voluntarily satisfied the judgment.
The latter act brought to a definite end or effectively terminated @.". #o. --56**.
Conse/uently, intervention herein is impermissible under the rules. To grant it would be
a capricious exercise of discretion. The decision of this Court in #irector o$ %ands vs.
&ourt o$
'ppeals
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 too0 into account. 3f paramount importance was the fact that the
prospective intervenors were indispensable parties, and so this Court stated therein7
?ut over and above these considerations and circumstances which 9e have pointed out,
there is the basic and fundamental re/uirement under the "ules of Court, &ection D, "ule
4, that CParties in interest without whom no final determination can be had of an action
shall be joined either as plaintiff or defendants.C 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. E?orlasa vs. Polistico, *D Phil. 4*5, 4*.F.
The herein movants, @reenfield <evelopment Corporation, (labang <evelopment
Corporation, "amon <. ?agatsing, and all buyers from them, at least those with
ostensible proprietary interests as the '"(=C3, (labang 1ills &ubdivision, Cielito
1omes &ubdivision, Tahanan !illage, the inistry of 1ighways insofar as the &outh
&uper 1ighway 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.
(nd, s/uarely 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 intervenors2 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 3pposition
that, according to the <irector of =ands, the overlapping embraces some .D 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. (fter trial, the Court of First Instance
issued an order denying the petition for insufficiency of evidence. (fter 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
(ppeals which thereafter promulgated a decision reversing the aforesaid orders of the
trial court. The <irector of =and, 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. 9ithout waiting for the
resolution of the motion, the <irector filed a motion to admit the motion for
reconsideration attaching thereto said motion for reconsideration. The Court of (ppeals
issued a resolution denying both motions on the ground that the decision had already
become final. This was the resolution which the <irector 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 "ules to accommodate the motion for
intervention and the intervention itself would be arbitrary. The @overnment is not without
any other recourse to protect any right or interest which the decision might have
impaired.
ay the motion to intervene and intervention proper be, nevertheless, treated as a
petition for quo "arrantoM The majority opinion answers it in the affirmative because all
the essential re/uisites for a petition for quo "arranto 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 "egional Trial Court of anila Civil Case #o. %*;D-)5) which is a petition for
prohibition, mandamus, injunction, and damages filed by the (ssociated <evelopment
Corporation against 'xecutive &ecretary @uingona and then @ames and (musement
?oard +@(?, Chairman &umulong. That is the more appropriate forum where the
@overnment and petitioner @uingona may challenge the validity of (<C2s franchise. Its
filing was provo0ed by the withdrawal by the @(? of the provisional authority it granted
to (<C in view of the -4 &eptember -%%* directive of 'xecutive &ecretary @uingona
informing the @(? of sufficient bases to hold in abeyance the operation of the jai;alai
until the legal /uestions into the validity of the franchise issued to (<C. Conse/uently, it
is to be logically presumed that for its affirmative defenses in Civil Case #o. %*;D-)5)
the @overnment would raise the same issues raised in the intervention in @.". #o.
--D$)4.
(ccordingly, I vote to deny the motion for intervention in @.". #o. --56**.
II
1owever, I vote to partially grant the petition in @.". #o. --D$)4 insofar as wagering or
betting on the results order and the preliminary mandatory injunction issued by
respondent Gudge 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
@.". #o. --56** and @.". #o. --D$)4 to restrain wagering or betting. I wish to reiterate
here what I stated in my supplemental concurring opinion in @.". #o. --56**7
&econdly, to ma0e my position clear that the dismissal of the petition should not be
construed as compelling the City of anila to authori:e gambling by allowing betting on
the results of jai;alai. The decision merely dismissed the petition because the Court found
C no abuse of discretion, much less lac0 of excess of jurisdiction, on the part of the
respondent judgeC in issuing the challenged order directing the petitioner to issue a
permit or license in favor of the private respondent pursuant to 3rdinance #o. D6)5. That
order was to enforce the final and executory decision of the "egional Trial Court of %
&eptember -%.. in Civil Case #o. ..;*5))6, the appeal therefrom to the Court of
(ppeals by the City of anila having been withdrawn by it on % February -%.%. That
decision ordered the City of anila to immediately issue to the private respondent Cthe
permitHlicense re/uired under 3rdinance #o. D6)5.C The City of anila did in fact issue
the re/uired permit or license to the private respondent for the operation of the jai;alai in
anila for the years -%.. to -%%$. #evertheless, when the jai;alai complex was almost
completed, the City ayor refused to renew the ayor2s Permit.
There is a clear distinction between the initial duty of the City ayor under 3rdinance #o.
D6)5 to issue the necessary license or permit to establish the jai;alai fronton and to
maintain and operate the jai;alai, and his subse/uent discretion to impose other terms
and conditions for the $inal contract relative to such operation. The trial court specifically
said so in its decision of % &eptember -%.%. Thus7
( suggestion has been made in the (nswer that a writ of mandamus will
not lie against respondents, particularly the ayor, because Cthe
availment of the franchise . . . is subject to the terms and conditions
which the respondent ayor may impose.C
( careful reading however, of 3rdinances D6)5 will readily show that the
discretion, if any, allowed respondent ayor, 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 ayor is authori:ed Cto allow and permit petitioner to
establish, maintain and operate a jai;alai in the City of anila,C under the
five conditions enumerated in subparagraphs CaC to CeC of &ection - of
the 3rdinance. ?y a simple reading of these Cterms and conditionsC
patently shows that subparagraphs CbC to CeC are clearly conditions that
will only come into play after the jai;alai has been put up or established8
while the condition under subparagraph CaC 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 $5,666 s/. m. land area behind the present 1arrison Pla:a
Complex located at 'rmita, anila.
Conse/uently, the ayor2s Permit sough to be renewed or the motion before the lower
court to compel the ayor to renew it, has reference only to subparagraph +a,, &ection -
of 3rdinance #o. D6)5. The renewal of the permit can by no stretch of the imagination be
ta0en as a final contract between the private respondent and the City of anila for
otherwise it would remove the power and authority of the ayor under the ordinance to
impose Cother terms and conditions as he may prescribe for good reasons of general
interest.C
It follows then that the ayor2s Permit ordered by the trial court to be issued to the private
respondent is not a license or authority to allow betting or wagering on the results of the
/ai-alai games. Jai-alai is a sport based on s0ill. Ander (rticle -%D of the "evised Penal
Code, before it was amended by P.<. #o. -)6$, betting upon the result of any boxing or
other sports contests was penali:ed with arresto menor or a fine not exceeding P$66.66,
or both. (rticle $6-% of the Civil Code provides that CEbFetting on the results of sports,
athletic competitions, or games of s0ill may be prohibited by local ordinances.C
P.<. #o. *.4, enacted on -4 Gune -%D*, penali:es betting, game fixing or point shaving
and machinations in sports contests, including /ai-alai. &ection $ thereof expressly
provides7
&ec. $. ?etting, game fixing, point shaving or game machinations
unlawful. J @ame fixing, point shaving, machination, as defined in the
preceding &ection, in connection with the games of bas0etball, volleyball,
softball, baseball8 chess8 boxing bouts, Cjai;alai,C Csipa,C CpelotaC and all
other sports contests, games8 as "ell as betting t(erein e,cept as ma!
be aut(ori5ed b! la", is hereby declared unla"$ul.
The succeeding &ection 4 provides for the penalties.
3n -- Gune -%D., P.<. #o. -)6$ +D5 3.@. #o. -5, 4$D6,, Prescribing *ti$$er Penalties on
Illegal 6ambling, was enacted to increase the penalties provided in various CPhilippine
@ambling =aws such as (rticles -%5;-%% of the "evised Penal Code +Forms of @ambling
and ?etting,, ".(. #o. 46)4 +1orse "acing ?oo0ies,, P.<. #o. **% +Coc0fighting,, P.<.
#o. *.4 +@ame Fixing,, P.<. #o. 5-6 +&lot achines, in relation to 3pinion #os. 44 and
%D of the inistry of Gustice, P.<. #o. -46) +Gai;alai ?oo0ies,, and other City and
unicipal 3rdinances on gambling all over the country.C &ection - thereof reads7
xxx xxx xxx
?oth P.<. #o. *.4 and P.<. #o. -)6$ were promulgated in the exercise of the police
power of the &tate.
Pursuant to &ection $ of P.<. #o. *.4, which was not repealed by P.<. #o. -)6$ since the
former is not inconsistent with the latter in that respect, betting in
/ai-alai is illegal unless allowed by law. There was such a law. P.<. #o. .-6, which
authori:ed the Philippine Jai-'lai and (musement Corporation as follows7
&ec. $. The grantee or its duly authori:ed agent may offer, ta0e or
arrange bets within or outside the place, enclosure or court where the
?as/ue pelota games are held7 Provided, That bets offered, ta0en or
arranged outside the place, enclosure or court where the games are
held, shall be offered, ta0en or arranged only in places duly licensed by
the corporation, Provided, (o"ever, That the same shall be subject to the
supervision of the ?oard. #o person other than the grantee or its duly
authori:ed agents shall ta0e or arrange bets on any pelotari or on the
game, or maintain or use a totali:ator 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. (ny
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.
1owever, as stated in the ponencia, P.<. #o. .-6 was repealed by '.3. #o. -)% issued
by then President Cora:on C. (/uino. I am not aware of any other law which authori:es
betting in /ai-alai. It follows then that while the private respondent may operate the jai;alai
fronton and conduct /ai-alai games, it can do so solely as a sports contest. ?etting on the
results thereof, whether within or off;fronton, is illegal and the City of anila 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 legali:e betting, for
this Court is not the legislature under our system of government.
(ccordingly, I vote to grant the petition in @.". #o. --D$)4 and to set aside the
/uestioned 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.
6UIASON, J., dissenting7
I vote7 +-, to deny the motion to intervene and motion for reconsideration qua petition for
quo "arranto in @.". #o. --56**, and +$, to dismiss the petition for certiorari in @.".
#o. --D$)4. I shall set forth the reason why.
I
Following the decision of the First <ivision of this Court on &eptember -, -%%* in @.".
#o. --56**, the City of anila issued on &eptember D, -%%* the ayor2s permit and
unicipal license to (ssociate <evelopment Corporation +(<C, upon the latter2s
payment of the re/uired fees +@.". #o. --56**, Rollo, pp. $54;$5*, 46-,.
In his letter dated &eptember ., -%%* to President Fidel !. "amos, Chairman Francisco
&umulong, Gr. of the @ames and (musement ?oard +@(?, said that he would not
authori:e the opening of (<C2s jai;alai unless he was given a clearance from the
President and until after (<C had complied with Call the re/uirements of the law, such
as, the distribution of wager funds, EandF licensing of Pelotaris and other personnelC
+'xh. F, Civil Case #o. %*;D-)5), "TC, ?r. *, anila8 @.". #o. --D$)4, Rollo, p. 46*,.
In the position paper annexed to the letter, the @(? Chairman recommended the
reopening and operation of the jai;alai, stating in pertinent part7
There are several reasons to justify the operation of Gai;(lai, first and foremost of which
is the generation of much needed revenues for the national and local governments. 3ther
significant justifications are its tourism potential, the provision for employment, and the
development of ?as/ue pelota as an amateur and professional sport.
&pecifically, the establishment, maintenance and operation of a Gai;(lai fronton in etro;
anila shall be by virtue o$ t(e original and still legall! e,isting $ranc(ise granted to t(e
'ssociated #evelopment &orporation +(<C, b! t(e &it! 6overnment o$ Manila in 3723
+@.". #o. --56**, "ollo, p. 4568 'mphasis supplied,.
3n &eptember %, -%%*, Chairman &umulong granted (<C provisional authority to open,
subject to the following conditions7
-. 9e prohibit you from offering to the public CPic0 )C and Cwinner Ta0e (llC betting events
until such time as this ?oard shall have approved the rules and regulations prepared by
management governing the mechanics of these events.
$. =icensing of officials and employees whose duties are connected directly or indirectly
with the supervision and operation of jai;alai games, as mandated by 'xecutive 3rder
-*- dated February $5, -%)5, shall be fully complied with by you within thirty %46, days
from date hereof.
4. (ny other deficiencies we may discover will be accordingly rectified by management as
directed by the ?oard.
*. Failure to comply with any of the rules and regulations prescribed by existing laws and
lawful orders of the ?oard, may justify withdrawalHrevocation of this provisional authority
without prejudice to such administrative sanctions that the ?oard may deem proper to
impose under the circumstances.
5. ?y accepting this provisional authority, (ssociated <evelopment Corporation +(<C, is
deemed to have agreed to the conditions above provided +@.". #o. --D$)4, Rollo, pp. .;
%, *%, $4., $..,.
3n &eptember -$, -%%*, the @(? issued to (<C jai;alai =icense #o. %*;66. upon
payment of the corresponding permit fee. The license reads as follows7
Ander and by virtue of the provisions of &ection D of 'xecutive 3rder #o. 4%$, series of
-%56, in conjunction with 'xecutive order #o. .$*, series of -%.$, this ?oard has this
date granted (<C "epresented by @en. (lfredo ?. >son permit to hold or conduct a EsicF
jai;alai contestsHexhibition on &eptember -$ to -*, -%%*, at the harrison Pla:a Complex,
located in 1arrison Pla:a, alate, anila.
This permit is issued subject to the condition that the promoter shall comply with the
provisions of 'xecutive order #o. .$*, &. -%.$, the rules and regulations, orders andHor
policies adopted or which may hereafter be adopted by the ?oard, and with the
conditions set forth in the application for which this permit has been granted8 and failure
on the part of the promoter to comply with any of which shall be deemed sufficient cause
for the revocation thereof +@.". #o. --D$)4, Rollo, pp. 56, $4., $.%,.
In compliance with @(? "ules and "egulations, (<C submitted its programs of jai;alai
events for approval +'xhs. 3, P and N, civil Case #o. %*;D-)5), "TC, ?r. *, anila8
@.". #o. --D$)4, Rollo, pp. $%6;$%$,.
It appears that as early as may $4, -%%*, Gai;(lai de anila +the business name of
(<C2s fronton, had in/uired from @(? about the laws and rules governing its jai;alai
operation. In reply, chairman &umulong furnished Gai;(lai de anila with copies of '.3.
#os. 4%$ and .$* and the "evised rules and "egulations for bas/ue pelota @ames
+'xhs. B and =, Civil Case #o. %*;D-)5), "TC, ?r. *, anila8 @.". #o. --D$)4, Rollo,
pp. 46-;46$,.
3n &eptember -4, -%%*, 'xecutive &ecretary Teofisto @uingona, jr. issued the following
<irective to @(? Chairman &umulong7
In reply to your letter dated % &eptember -%%* re/uesting for the President2s approval to
re;open the Gai;(lai in anila, please be informed that after a review and study of
existing laws, there is sufficient basis to hold in abeyance the operation of the Gai;(lai
until the following legal /uestions are properly resolved7
-. 9hether P.<. DD- which revo0ed all existing Gai;(lai franchises issued
by local government as of $6 (ugust -%D5 is unconstitutional.
$. (ssuming that the City of anila had the power on D &eptember -%D-
to issue a Gai;(lai franchise to (ssociated <evelopment Corporation,
whether the franchise granted is valid considering that the franchise has
no duration, and appears to be granted in perpetuity.
4. 9hether the City of anila had the power to issue a Gai;(lai franchise
to (ssociated <evelopment Corporation on D &eptember -%D- in view of
'xecutive order #o. 4%$ dated - Ganuary -%5- which transferred from
local governments to the @ames and (musements ?oard the power to
regulate Gai;(lai.
0(is 8$$ice (as directed t(e solicitor 6eneral to bring be$ore t(e proper court t(e
$oregoing issues $or resolution. Pending suc( resolution, !ou are directed to (old in
abe!ance t(e grant o$ aut(orit!, or i$ an! (as been issued, to "it(dra" suc( grant o$
aut(orit!, to 'ssociated #evelopment corporation to operate (e Jai-'lai in t(e cit! o$
Manila +@.". #o. --D$)4, Rollo, pp. D;., *., -%4%8 Emp(asis supplied9.
3n &eptember -*, -%%*, Chairman &umulong issued a emorandum to (<C that7
In view of the directive from the 3ffice of the President dated -4 &eptember -%%*,
(ssociated <evelopment Corporation is hereby ordered to cease and desist issues
raised in the said directive are resolved by the proper court. 0(e provisional aut(orit!
issued pending $urt(er scrutin! and evaluation to '#& on 7 *eptember 377: is (ereb!
"it(dra"n +@.". #o. --D$)4, Rollo, pp. 5-, -%*8 'mphasis supplied,.
3n &eptember -5, -%%*, (<C filed with the "egional Trial Court, ?ranch *, anila a
petition for prohibition, mandamus, injunction and damages with prayer for temporary
restraining order or writ of preliminary injunction +Case #o. %*;D-)5), against 'xecutive
&ecretary @uingona and Chairman &umulong assailing the former2s <irective and the
latter2s emorandum +@.". #o. --D$)4, Rollo, pp. 4, $6;$-, 54;D5, -)D;-).,.
3n the same day, Gudge !etino "eyes issued a temporary restraining order enjoining
'xecutive &ecretary @uingona and Chairman &umulong from implementing their
respective <irective and memorandum +@.". #o. --D$)4, Rollo, pp. $, -6, **,.
3n &eptember -), -%%*, 'xecutive &ecretary @uingona and Chairman &umulong 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 &eptember $6, -%%* +@.". #o. --D$)4, Rollo, pp. ));D5,
D);.),.
eanwhile, on &eptember -), -%%*, the "epublic of the Philippines, represented by
@(?, filed in @.". #o. --56** a motion for intervention8 for leave to file a motion for
reconsideration;in;intervention8 to admit the attached motion for reconsideration;in;
intervention8 and to refer the case to the Court en banc +Rollo, pp. $-%;$*%,.
&ubse/uently, and on the different dates, the "epublic filed in @.". #o. --56** the
following pleadings7 Cotion for =eave to File &upplemental otion for "econsideration;
In;InterventionC +Rollo, pp. $)$;$)5,8 C&upplemental otion for "econsideration;In;
InterventionC +Rollo, pp. $));$.6,8 Cotion for =eave to File &econd &upplemental
otion for "econsideration;In;Intervention and to (dmit attached &econd &upplemental
otion For "econsideration;In;interventionC ;Rollo, pp. 4.6;4.$,8 and C&econd
&upplemental otion for "econsideration;In;InterventionC +Rollo, pp. 4.4;*66,.
(cting on the motion of the "epublic dated &eptember -), -%%*, the First <ivision
referred, in its "esolution dated &eptember -%, -%%*, Case @.". #o. --56** to the
Court en banc, and the latter accepted the same in its "esolution dated &eptember $6,
-%%* +Rollo, p. $55,.
In the meantime, Chairman &umulong resigned and <ominador ". Cepeda, jr. was
appointed as his successor.
3n &eptember 46, -%%*, Gudge "eyes issued a writ of preliminary injunction +@.". #o.
--D$)4, Rollo, pp. $, *D,.
3n 3ctober --, -%%*, 'xecutive &ecretary @uingona and @(? Chairman Cepeda, Gr.
filed with this Court a petition for certiorari, prohibition and mandamus +@.". #o.
--D$)4, Rollo, pp. -;-5-, and on 3ctober $*, -%%*, a supplemental petition +@.". #o.
--D$)4, Rollo, pp. -)-;-)5, -));46),. Petitioners assailed the following issuances of
Gudge "eyes Civil Case #o. %*;D-)5)7
+-., Temporary "estraining 3rder dated &eptember -5, -%%* directing 'xecutive
&ecretary @uingona and chairman &umulong to desist from enforcing the <irective dated
&eptember -4, -%%* and the memorandum dated &eptember -5, -%%* +Rollo, p. **,8
+$., 3rder dated &eptember $5, -%%* denying the Argent otion to "ecall Temporary
"estraining 3rder and the Argent &upplemental otion to "ecall Temporary "estraining
3rder +Rollo, p. *),8
+4., 3rder dated &eptember 46, -%%* directing the issuance of a 9rit of preliminary
Injunction directed against the aforesaid <irective and emorandum +Rollo, p. *D,8
+*., order dated 3ctober -%, -%%* granting (<C2s otion to (mend the petition to
Conform to the 'vidence and directing the issuance of a writ of preliminary mandatory
injunction Cdirecting +'xecutive &ecretary and the @(? Chairman,, their successors,
representatives and any government officeHagency 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 &eptember 46, -%%*, to issue the necessary authority, licenses and
wor0ing permits to . . . (ssociated <evelopment Corporation, and its personnel and
players +Rollo, pp. $-);$-D,.
They prayed that the trial court be enjoined from conducting further proceedings in Civil
Case #o. %*;D-)5) and that said case be dismissed. they also filed a motion for
consolidation of @.". #o. --D$)4 with @.". #o. --56** +@.". #o. --D$)4, Rollo, pp.
-5$;-)6,. (s prayed for, we considered the two cases together.
In their petition in @.". #o. --D$)4, 'xecutive &ecretary @uingona and Chairman
Cepeda claimed that (<C had no clear right to the issuance of the preliminary
mandatory injunction because7
+-, (<C had no legislative franchise8
+$, (<C admitted in @.". #o. --56** that @(? had no authority to issue the license or
permit subject of the order in /uestion8 and
+4, Mandamus was not available to compel the performance of a discretionary function
+@.". #o. --D$)4, Rollo, pp. -.$;-.%,.
3n #ovember $, -%%*, (<C and Gudge "eyes filed their consolidated Comment to the
petition and supplemental petition +@.". #o. --D$)4, Rollo, pp. $46;465,.
3n #ovember $5, -%%*, the "epublic, 'xecutive &ecretary @uingona and @(?
Chairman Cepeda moved for the issuance of a restraining order enjoining Gudge
Pac/uing and Gudge "eyes from enforcing their /uestioned orders and (<C from
operating the jai;alai fronton +@.". #o. -D$)4, Rollo, pp. )$%;)45,. (ction on the motion
deferred.
II
@.". #o. --56**
otion for Intervention
The "epublic of the Philippines +"epublic, represented by @(? justifies its belated
intervention in @.". #o. --56** on the grounds that Cit has an interest involved in this
case and will be affected by the <ecision dated &eptember -, -%%*C +@.". #o. --56**,
Rollo, p. $$5,.
The purpose of its intervention is to nullify the decision of Gudge (ugusto '. !illarin of
the "egional Trial Court, ?ranch *6, anila, dated &eptember -, -%%*C +@.". #o.
--56**, Rollo, p. $$5,.
The purpose of its intervention is to nullify the decision of Gudge (ugusto '. !illarin of
the "egional Trial Court, ?ranch *6, anila, dated &eptember %, -%.% in Civil Case #o.
..;*5))6, which upheld the validity of 3rdinance #o. D6)5 of the City of anila granting
(<C a franchise to operate a jai;alai fronton. ayor @emiliano =ope: appealed said
decision to the Court of (ppeals, but on February %, -%.%, he filed a 9ithdrawal of
(ppeal. The Court of (ppeals approved the withdrawal in a resolution dated ay 5,
-%.%. (n entry of judgment was made by the court of (ppeals on ay $), -%.% and by
the "egional Trial Court, branch *6, anila, on 3ctober $D, -%%$.
In -%%-, the City of anila filed an action to annul the franchise of (<C with the
"egional Trial Court, ?ranch $4, anila +Civil Case #o. %-;5.%-4,. The complaint was
dismissed on <ecember $-, -%%-. #o appeal was ta0en from said dismissal of the
case.
The City of anila filed with this Court a petition for declaratory judgment to nullify the
franchise of (<C +@.". #o. -6-D).,. The petition was dismissed in a resolution dated
3ctober 4, -%%- Cfor lac0 of jurisdiction.C
Three members of the &angguniang Panglunsod of anila also filed with the "egional
Trial Court, ?ranch 4D, anila, a petition to compel ayor =ope: to cancel the permit
and license he issued in favor of (<C pursuant to ordinance #o. D6)5 +Civil Case #o.
%-;5.%46,. The petition was dismissed on Gune *, -%%$. #o appeal was ta0en from said
dismissal of the case.
In the otion for "econsideration;In;Intervention, &upplemental otion for
"econsideration;in;Intervention and &econd &upplemental otion for "econsideration;
in;Intervention, the "epublic merely claimed that 3rdinance #o. D6)5 had been
repealed by P.<. #o. DD- +Rollo, pp. $$.;$*.,, that the authority to issue permits and
licenses for the operation of jai;alai had been transferred to @(? by '.3. #o. 4%$ of
President Nuirino effective Guly -, -%5- and that (<C was never issued a franchise by
Congress +Rollo, pp. 4.4;4%6,. #owhere in its pleadings did the "epublic point out
where the first <ivision erred in resolving the two grounds of the petition for certiorari in
@.". #o. --56**,
which were7
+-, The decision of Gudge !illarin dated &eptember %, -%.. in Civil Case #o. ..;*5))6 is
null and void for failure to rule that P.<. #o. DD- had revo0ed 3rdinance #o. D6)58 and
+$, The decision of Gudge !illarin could not be executed by a mere motion filed on arch
-*, -%%*, or more than five years and six months after its promulgation.
In resolving the first issue, the First <ivision of this court explained that there was no
way to declare the .illarin decision null and void because the trial court had jurisdiction
over the subject matter of the action and if it failed to rule that ordinance #o. D6)5 was
nullified by P.<. #o. DD-, that was only an error of judgment. The First <ivision noted the
distinction between a void and an erroneous judgment and between jurisdiction and the
exercise of jurisdiction.
In 0an v. Intermediate 'ppellate &ourt, -)4 &C"( D5$ +-%..,, the Court held7
It is settled jurisprudence that except in the case of judgments which are void ab initio or
null and void per se for lac0 of jurisdiction which can be /uestioned at any time J and
the decision here is not of this character J once a decision becomes final, even the court
which has rendered it can no longer alter or modify it, except to correct clerical errors or
mista0es. otherwise, there would be no end to litigation, thus setting to naught the main
role of courts of justice, which is, to assist in the enforcement of the rule of law and the
maintenance of peace and order, by settling justifiable controversies with finality. +&ee
also Fabular v. Court of (ppeals, --% &C"( 4$% E-%.$F8 Fariscal !da. de 'mnas v.
'mnas, %5 &C"( *D6 E-%.6F8 3campo v. Caluag, -% &C"( %-D E-%)DF,.
(s to the second issue, the First <ivision held that the five;year period for executing a
judgment by simple motion under &ection ) of "ule 4% of the "evised "ules of Court
should be counted from the finality of the judgment and not from the date of its
promulgation as was done by ayor =im and the City of anila. Inasmuch as the
.illarin decision was appealed to the Court of (ppeals and the authority to withdraw the
appeal was approved by the Court of (ppeals only on may $), -%.%, the five;year
period should be counted, at the earliest, from ay $), -%.%. "ec0oning the five;year
period from said date, the motion for execution of the .illarin decision was filed timely
on arch -*, -%%*.
Intervention as contemplated by &ection %, "ule -$ of the "evised "ules of Court is a
proceeding whereby a third person is permitted by the court Cbefore or during a trialC to
ma0e himself a party by joining plaintiff or uniting with defendant or ta0ing a position
adverse to both of them @utierre: v. !illegas, 5 &C"( 4-4 E-%)$F,. the term CtrialC is
used in its restrictive sense and means the period for the introduction of evidence by
both parties +?ool v. endo:a, %$ Phil. .%$ E-%54F8 Provincial @overnment of &orsogon
v. &tamatela0y, )5 Phil. $6) E-%4DF,. The period of trial terminates when the period of
judgment begins +'l 1ogar Filipino v. Philippine #ational ?an0, )* Phil. 5.$ E-%4DF,.
Intervention as an action is not compulsory. (s deduced from the permissive word CmayC
in the rule, the availment of the remedy is discretionary on the courts +@arcia v. <avid,
)D Phil. $D% E-%4%F,. an important factor ta0en into consideration by the courts in
exercising their discretion is whether the intervenor2s rights may be fully protected in a
separate proceeding +Peyer v. artines, .. Phil. D$ E-%5-F,.
The case of #irector o$ %ands v. &ourt o$ 'ppeals, %4 &C"( $4. +-%D%,, can not, serve
as authority in support of the "epublic2s intervention at this late stage. while said case
involved an intervention for the first time in the &upreme court, the motion to be allowed
to intervene was filed before the appeal could be decided on the merits. The
intervention allowed in Republic v. *andiganba!an, @.". #o. %)6D4, "esolution, arch
4, -%%$, was also made before the decision on the merits by this Court. In contrast, the
intervention of the "epublic was sought after this Court had decided the petition in @.".
#o. --56** and petitioners had complied with and satisfied the judgment. 9hile the
intervention in <irector of =ands was in a case that was timely appealed from the
"egional Trial Court to the Court of (ppeals and from the Court of (ppeals to the
&upreme Court, the intervention of the "epublic was in a case that had become final
and executory more than five years prior to the filing of the motion to intervene.
(s of &eptember -), -%%*, therefore, when the republic moved to intervene, there was
no longer any pending litigation between the parties in @.". no. --56**. Intervention is
an auxiliary and supplemental remedy to an existing, not a settled litigation +cf. Clare:a
v. "osales, $ &C"( *55 E-%)-F,. (n intervention was disallowed in a case which has
becomes final and executory +Tra:o v. anila Pencil Co., DD &C"( -.- E-%DDF,
The case of *uson v. &ourt o$ 'ppeals, -D$ &C"( D6 +-%.%, invo0ed by the "epublic
+@.". #o. --D$)4, Rollo, pp. 5-D;5-., is inappropriate because the intervention therein
was before the trial court, not in this Court.
In its "eply, the "epublic admitted that the First <ivision only ruled on the procedural
issues raised in the petition and not on the constitutionality of P.<. #o. DD-. It even
urged that @(? was not a party to the case and therefore was not bound by the .illarin
decision because under &ection *% of "ule 4%, a judgment is conclusive only Cbetween
the parties and their successor;in;interest by title subse/uent to the commencement of
the action or special proceeding, litigating for the same thing and under the same title
and in the same capacityC +Rollo, pp. $$.;$4*, *4-,.
9ith more reason then that the "epublic should have ventilated its claim against (<C in
a separate proceeding.
=astly, an intervenor should not be permitted to just sit idly and watch the passing scene
as an uninterested overloo0er before he wa0es up to see0 judicial relief +Pacursa v. <el
"osario, $* &C"( -$5 E-%).F,.
The 3ffice of the President was aware of the plans of (<C to start operation as early as
-%... 3n ay 5, -%.., (<C informed said 3ffice of its intention to operate under
3rdinance #o. D6)5. The said 3ffice perfuntorily referred the letter of (<C to the anila
mayor, implying that the matter was not the concern of the #ational @overnment.
otion qua <uo =arranto petition
?e 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 "arranto under
"ule )) of the revised "ules of Court. In the liberal construction of the "ules in order to
attain substantial justice, the Court has treated petitions filed under one "ule as
petitions filed under the more appropriate "ule +<avao Fruits Corporation v. (ssociated
=abor Anion, $$5 &C"( E-%%4F,.
In quo "arranto, the government can re/uire 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. <el "osario, -% &C"( -%) E-%)DF,.
(ll the essential re/uisites for a petition for quo "arranto are compresent. The motions
were filed by the &olicitor @eneral for the "epublic of the Philippines, represented by
@(?, to /uestion the right of (<C to operate and maintain the jai;alai.
The motions qua petition for quo "arranto assert that the authority of the City of anila
to issue to (<C a jai;alai franchise in -%D- had been withdrawn by '.3. #o. 4%$ in -%5-
and by ".(. #o. %5* in -%5* and that assuming the issuance of the franchise to (<C in
-%D- under 3rdinance #o. D6)5 was valid, such franchise, together with whatever
authority of the City of anila to grant the same, was voided by P.<. #o. DD- in -%D5.
In the case of *tone v. *tate o$ Mississippi, -6- A.&. .-*, cited by the "epublic, the
&tate (ttorney @eneral resorted to a quo "arranto proceeding to /uestion the authority
of petitioner therein to operate and maintain a gambling establishment.
The franchise of (<C granted by the City of anila under 3rdinance #o. D6)5 reads as
follows7
(# 3"<I#(#C' (AT13"IOI#@ T1' (>3" T3 (==39 (#< P'"IT T1'
(&&3CI(T'< <'!'=3P'#T C3"P3"(TI3# T3 '&T(?=I&1, (I#T(I# (#<
3P'"(T' ( G(I;(=(I I# T1' CIT> 3F (#I=(, A#<'" C'"T(I# T'"& (#<
C3#<ITI3#& (#< F3" 3T1'" PA"P3&'&.
?e it ordained by the unicipal ?oard of the City of anila, that7
&ec. -. The ayor is authori:ed, as he is hereby authori:ed to allow and permit the
(ssociated <evelopment Corporation to establish, maintain and operate a jai;alai in the
City of anila, under the following terms and conditions and such other terms and
conditions as he +the ayor, may prescribe for good reasons of general interest7
a. That the construction, establishment and maintenance of the jai;alai
shall be at a place permissible under existing :oning ordinances of
anila8
b. That the games to be played daily shall commence not earlier than
5766 o2cloc0 +sic, in the afternoon8
c. That the City of anila will received a share of $ LK on the annual
gross receipts on all wagers or bets, LK of which will accrue to the
@ames and (musements ?oard as now provided by law8
d. That the corporation will, in addition, pay to the city an annual license
fee of P4,666.66 and a daily permit fee of P$66.668
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 P46,666.66.
&ec. $. The ayor and the City Treasurer of their duly authori:ed
representatives are hereby empowered to inspect at all times during
regular business hours the boo0s, records and accounts of the
establishment, as well as to prescribe the manner in which the boo0s and
financial statement of the entrepreneur shall be 0ept.
&ec. 4. This ordinance shall ta0e effect upon its approval.
'nacted originally by the unicipal ?oard on &eptember D, -%D-8 vetoed by the ayor on
&eptember $D, -%D-8 modified and amended by the unicipal ?oard at its regular
session today, 3ctober -$, -%D-.
(pproved by 1is 1onor, the ayor on -4 #ovember -%D-.
The said 3rdinance was enacted pursuant to &ection -. +jj,, the Charter of the City of
anila +".(. #o. *6%,, which too0 effect in -%*%. The charters of two other cities J
Nue:on City and Cebu City J contained a similar delegation of authority to grant jai;alai
franchises.
&aid &ection -.+jj, provides7
=egislative powers. J The unicipal ?oard shall have the following legislative powers7
xxx xxx xxx
+jj, To tax, license, permit and regulate wagers or betting by the public on boxing, billiards,
pools, horse or dog races, coc0pits, jai;alai, roller of ice;s0ating or any sporting or athletic
contests, as well as grant exclusive rights to establishments for this purpose,
notwithstanding any existing law to the contrary.
(. It is the posture of the "epublic that the power of local governments to issue
franchisers for the operation of jai;alai was Cconsolidated and transferredC to the @(?
under '.3. #o. 4%$. In its &upplemental otion for reconsideration;In;Intervention filed
on &eptember $D, -%%*, the "epublic averred7
-$. (s early as -%5-, the power of the local governments to issue licenses and permits
for the operation of jai;alai was Cconsolidated and transferredC to the @ames and
(musements ?oard under '.3. #o. 4%$ issued by then President 'lpidio Nuirino +sic,
too0 effect on Ganuary -, -%5-. Thus, in -%D-, the City of anila was without authority to
enact an ordinance authori:ing the City ayor to issue a licenseHpermit to private
respondent for the operation of jai;alai in anila +Rollo, pp. $D-;$D$,.
Furthermore, the republic alleged7
-4. &uch consolidation and transfer of power manifest the policy of the @overnment to
centrali:e the regulation, through appropriate institutions, of all games of chance
authori:ed by existing franchises of permitted by law. . . . +Rollo, p. $D$,.
There is no need to dwell upon this argument for suprisingly it was the "epublic itself
that repudiated it albeit after wrongfully attributing the argument to (<C.
In its "eply filed on #ovember %, -%%*, the "epublic stated that7 CContrary to
respondent (<C2s claim, it is not the position of the @(? that it is the body which grants
franchisers for the jai;alai either under '.3. #o. 4%$ or under P.<. #o. DD- . . .C +Rollo,
pp. *$6,.
For certain, '.3. #o. 4%$ merely reorgani:ed the different departments, bureaus, offices
and agencies of the government. There is absolutely nothing in the executive issuances
which vests on @(? the power to grant, much less revo0e, franchisers to operate jai;
alais.
?. (fter its volte-$ace, the "epublic next claims that ".(. #o. %5* had repealed &ection
-. +jj, and that after the effectivity of said law, only Congress could grant franchise to
operate jai;alais.
&ection * of ".(. #o. %5* provides7
#o person, or group of persons, other than the operator or maintainer of a fronton with
legislative franchise to conduct bas/ue pelota +jai;alai,, shall offer, ta0e or arrange bets
on any bas/ue pelota game or event, or maintain or use a totali:er or other device,
method or system to bet or gamble or any bas/ue pelota game or event.
"epublic (ct #o. %5* did not expressly repeal &ection -. +jj,. In such a case, if there is
any repeal of the prior law by the latter law, it can only be by implication. &uch 0ind of
repeals is not favored. There is even a presumption against repeal by implication +The
Philippine (merican anagement Co. Inc. v. The Philippine (merican anagement
employees (ssociation, *% &C"( -%* E-%D4F,.
In the same absence of an express repeal, a subse/uent 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 (ssociation, Inc. v.
Feliciano, -4 &C"( 4DD E-%)5F,.
?ut more importantly, the rule in legal hermeneutics is that a special law, li0e the
Charter of the City of anila, is not deemed repealed by a general law, li0e ".(. #o.
%5* +Commissioner of Internal "evenue v. Court of (ppeals, $6D &C"( *.D E-%%$F,.
In a way also, 3rdinance #o. D6)5 can be considered a Clegislative franchiseC within the
purview of ".(. #o. %5*, having been enacted by the unicipal ?oard of the City of
anila pursuant to the powers delegated to it by the legislature. ( grant, under a
delegated authority, binds the public and is considered the act of the state. CThe
franchise Egranted by the delegateF is a legislative grant, whether made directly by the
legislature itself or by any one of its properly constituted instrumentalitiesC +4) (m Gur
$d. D4*,.
(s held in =rig(t v. )agle, -6- A.&. %$-, the grant of a franchise by the legislature may
be done in two ways7
It ma! e,ercise t(is aut(orit! b! direct legislation, or t(roug( agencies dul! establis(ed
(aving po"er $or t(at purpose. 0(is grant "(en made binds t(e public, and is, directl! or
indirectl!, t(e 'ct o$ t(e *tate. 0(e easement is a legislative grant, "(et(er made directl!
b! t(e legislature itsel$, or b! an! one o$ its properl! constituted instrumentalities +Gustice
of Pi0e Co. v. Plan0 road, -- @a. $*)8 'mphasis supplied,.
If the intention of Congress in enacting ".(. #o. %5* was to repeal &ection -. +jj,, it
could have used explicit language to that effect in order not to leave room for
interpretation.
If ".(. #o. %5* repealed &ection -. +jj,, why did President arcos still issue P.<. #o.
DD-, expressly revo0ing the authority of the local governments to issue jai;alai
franchisesM It can never be presumed that the President deliberately performed useless
acts.
C. The claim of the "epublic that P.<. #o. DD- 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 (<C is whether &ection 4 of P.<. #o. DD- validly cancelled
3rdinance #o. D6)5, an issue entirely different from the claim of the "epublic that P.<.
#o. DD- had revo0ed the power of the City of anila to grant jai;alai franchisers.
Insofar as it is applied to 3rdinance #o. D6)5, &ection 4 of P.<. #o. DD- suffers from
constitutional infirmities and transgresses several constitutional provisions. &aid &ection
4 provides7
(ll existing franchisers and permits issued by local governments are hereby revo0ed and
may be renewed only in accordance with third decree.
&ection 4 violated the e/ual protection clause +&ection - of (rticle I!, of the -%D4
Constitution, which provided7
#o person shall be deprived of life, liberty, or property without due process of law, nor
shall any person be denied the e/ual protection of the laws.
=ess than two months after the promulgation of P.<. no. DD-, President arcos issued
P.<. #o. .-6, granting the Philippine Gai;(lai and (musement Corporation +PG(C, a
franchise to operate jai;alai within the @reater anila (rea. It is obvious that P.<. #o.
DD- was decreed to cancel the franchise of (<C so that the same could be given to
another entity under P.<. #o. .-6.
( facially neutral statute +P.<. #o. DD-, may become discriminatory by the enactment of
another statute +P.<. #o. .-6, which allocates to a favored individual benefits withdrawn
under the first statute +3rdinance #o. D6)5,, and when there is no valid basis for
classification of the first and second grantees. The only basis for distinction we can thin0
of is that the second grantee was ?enjamin "omualde:, a brother;in;law of President
arcos.
&ection 4 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 &ection - of
(rticle I! of the -%D4 Constitution.
3rdinance #o. D6)5, li0e any franchise, is a valuable property by itself. The concept of
CpropertyC protected by the due process clause has been expanded to include economic
interests and investments. The rudiments of fair play under the Cprocedural due
processC doctrine re/uire that (<C 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.
Ander the Csubstantive due processC 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 'llge!er v. %ouisiana, -)5 A.&. 5D.
+-.%D, can be easily stated, thus7 the government has to employ means +legislation,
which bear some reasonable relation to a legitimate end +#owa0, "otunda and >oung,
Constitutional =aw *4), **4 E$d edF,.
9hen President arcos issued P.<. #o. DD-, he did not have public interest in mind8
otherwise, he would have simply outlawed jai;alai as something pernicious to the public.
"ather, all what he wanted to accomplish was to monopoli:e the grant of jai;alai
franchisers.
The motivation behind its issuance notwithstanding, there can be no constitutional
objection to P.<. #o. DD- insofar as it removed the power to grant jai;alai franchisers
from the local governments. 9e said so in asco v. Pagcor, -%D &C"( 5$ +-%%-,. The
constitutional objection arises, however, when P.<. #o. DD- cancelled al the existing
franchises. 9e search in vain to find any reasonable relation between &ection 4 of P.<.
#o. DD- and any legitimate ends of government intended to be achieved by its
issuances. ?esides, the grant of a franchise to PG(C exposed P.<. #o. DD- as an
exercise of arbitrary power to divest (<C of its property rights.
&ection 4 also violated &ection - of (rticle !III of the -%D4 Constitution, which provided7
'very bill shall embrace only one subject which shall be expressed in the title thereof.
The title of P.<. #o. DD- reads as follows7
"'!3BI#@ (== P39'"& (#< (AT13"IT> 3F =3C(= @3!'"#'#T T3 @"(#T
F"(#C1I&', =IC'#&' 3" P'"IT (#< "'@A=(T' 9(@'"& 3" ?'TTI#@ ?> T1'
PA?=IC 3# 13"&' (#< <3@ "(C'&, G(I;(=(I 3" ?(&NA' P'=3T(, (#< 3T1'"
F3"& 3F @(I#@.
The title of P.<. #o. DD- 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.
=astly, &ection 4 impaired the obligation of contracts prohibited by &ection -- of (rticle
I! of the -%D4 Constitution.
(s authori:ed by &ection -.+jj,, 3rdinance #o. D6)5 grants (<C a permit Cto establish,
maintain and operate a jai;alai in the City of anila, under the following terms and
conditions and such other terms and conditions as he Ethe ayorF may prescribe for
good reasons of general interest.C +Rollo, p. $*,.
&ection -- of (rticle I! of the -%D4 Constitution provided7
#o law impairing the obligation of contracts shall be passed.
(ny law which enlarges, abridges, or in any manner changes the intention of the
parties, necessarily impairs the contract itself +A.&. v. Conde, *$ Phil. D)) E-%$$F8
Clemens v. #olting, *$ Phil. D6$ E-%$$F,. ( franchise constitutes a contract between the
grantor and the grantee. 3nce granted, it may not be invo0ed unless there are valid
reasons for doing so. +Papa v. &antiago, -65 Phil. $54 E-%5%F,. ( franchise is not
revocable at the will of the grantor after contractual or property rights thereunder have
become vested in the grantee, in the absence of any provision therefor in the grant or in
the general law +@rand Trun0 9estern ". Co. v. &outh ?end, $$D A.&. 5**,.
<. The "epublic hypothesi:ed that the said Constitutional guarantees presuppose the
existence of a contract or property right in favor of (<C. It claims that 3rdinance #o.
D6)5 is not a franchise nor is it a contract but merely a privilege for the purpose of
regulation.
3rdinance #o. D6)5 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 ma0e up the valuable consideration
for the contract. That is why the grantee is first re/uired to signify his acceptance of the
terms and conditions of the grant. 3nce the grantee accepts the terms and conditions
thereof, the grant becomes a binding contract between the grantor and the grantee.
(nother test used to distinguish a franchise from a privilege is the big investment ris0ed
by the grantee. In Papa v. *antiago, supra, we held that this factor should be
considered in favor of the grantee. ( franchise in which money has been expended
assumes the character of a vested right +?ra:osport &avings and =oan (ssociation v.
(merican &avings and =oan (ssociation, -)- Tex. 5*4, 4*$ &.9. $d. D*D,.
The cases cited by the "epublic to the effect that gambling permits or license issued by
municipalities can be revo0ed when public interest so re/uires, have never addressed
this issue, obviously because there were no significant financial investments involved in
the operation of the permits or licenses.
?ut assuming that 3rdinance #o. D6)5 is a mere privilege, still over the years, the
concept of a privilege has changed. Ander the traditional form a property ownership,
recipients of privileges, benefits or largesse from the government may be said to have
no property rights because they have no traditionally recogni:ed proprietary interest
therein. The case of .inco v. Municipalit! o$ Hinigaran, *- Phil. D%6 +-%-D, and Pedro v.
Provincial oard o$ Ri5al, 5) Phil -$4 +-%4-,, holding that a license to operate coc0pits
is a mere privilege, belong to this vintage. 1owever, the right;privilege dichotomy has
come to an end when the courts have reali:ed that individuals should not be subjected
to the unfettered whims of government officials to withhold privileges previously given
them +!an (lstyne, 0(e #emise o$ t(e Rig(t > Privilege #istinction in &onstitutional
%a", .- 1arvard =. ". -*4% E-%).F,. To perpetuate such distinction would leave many
individuals at the mercy of government officials and threaten the liberties protected by
the ?ill of "ights +#owa0, "otunda and >oung, Constitutional =aw 5*) E$nd edF,.
That a franchise is subject to regulation by the state by virtue of its police power is
conceded. 9hat is not acceptable is the "epublic2s proposition that the power to
regulate and supervise includes the power to cancel the franchise altogether.
The stance of the "epublic 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 "epublic on the evils of gambling fall to the ground
upon a showing that (<C is operating under an existing and valid franchise +Rollo, pp.
*$$;*$4,.
'. The "epublic /uestioned the siting of the (<C2s fronton as violative of '.3. #o. -45
of President Nuirino. Ander said executive issuance, no pelota fronton can be
maintained and operated Cwithin a radius of $66 lineal meters from any city hall or
municipal building, provincial capital building, national capital building, public pla:a or
par0, public school, church, hospital, athletic stadium, or any institution of learning or
charity.C
(ccording to the certificate issued by the #ational apping Information (uthority, the
(<C fronton is within the proscribed radius from the Central ?an0 of the Philippines, the
"i:al &tadium, the anila Ooo, the public par0 or pla:a in front of the :oo, the 3spital ng
aynila, a police precinct and a church +@.". #o. --56**, Rollo, pp. *$*;*$D,.
3n the other hand, a certificate issued by the 3fficer;in;charge of the 3ffice of the City
'ngineer of the City of anila attests to the fact that not one of the buildings or places
mentioned in the certificate submitted by the "epublic is within the $66;meter radial
distance, Ccenter to centerC from the (<C2s jai;alai building +Rollo, p. $)6,. 1ow this
variance in measurement came about is a matter that should have been submitted
before the trial court for determination.
1owever, the operative law on the siting of jai;alai establishments is no longer '.3. #o.
-45 of President Nuirino but ".(. #o. %4. as amended by ".(. #o. -$$*.
Ander said law only night clubs, cabarets, pavillions, or other similar places are covered
by the $66;lineal meter radius. In the case of all other places of amusements except
coc0pits, the proscribed radial distance has been reduced to 56 meters. 9ith respect to
coc0pits, the determination of the radial distance is left to the discretion of the municipal
council or city board +&ec. -,.
F. The "epublic also /uestions the lac0 of the period of the grant under 3rdinance #o.
D6)5, thus ma0ing it indeterminate +@.". #o. --D$)4, Rollo, pp. 566;565,. The
ordinance leaves it to the ayor of the City of anila 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 (rticle --%D of the Civil Code of the
Philippines, which provides as follows7
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. 3nce fixed by the courts, the period
cannot be changed by them.
III
@.". #o. --D$)4
The petition in @.". #o. --D$)4 see0s to nullify the following orders of respondent
Gudge "eyes7
+-, the Temporary "estraining 3rder dated &eptember -5, -%%*8
+$, the 3rder dated &eptember $5, -%%*8 and
+4, the 9rit of Preliminary Injunction dated &eptember 46, -%%* +Rollo, pp. -;$,.
The supplemental petition in said case see0s to nullify the 3rder dated 3ctober -%,
-%%* +Rollo, pp. -));$$5,.
(ccording to 'xecutive &ecretary @uingona and @(? Chairman Cepeda, respondent
Gudge "eyes acted without jurisdiction and with grave abuse of discretion in issuing
said orders and writ of preliminary injunction because7 +-, Civil Case #o.
%*;D-)5) was not properly assigned to him in accordance with &ection D, "ule $$ of the
"evised "ules of Court8 +$, the enforcement of the <irective and emorandum sought
to be enjoined had already been performed or were already fait accompli8 and +4,
respondent judge pre;empted this Court in resolving the basic issues raised in @.". #o.
--56** when he too0 cogni:ance of Civil Case #o. %*;D-)5).
(. (t the outset, it should be made clear that &ection D of "ule $$ of the "evised "ules
of Court does not re/uire that the assignment of cases to the different branches of a trial
court should always be by raffle. The "ule tal0s of assignment Cwhether by raffle or
otherwise.C 9hat it re/uires is the giving of written notice to counsel or the parties Cso
that they may be present therein if they so desire.C
&ection D of "ule $$ provides7
'ssignment o$ 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.
1owever, there may be cases necessitating the issuance of a temporary restraining
order to prevent irreparable injury on the petitioner.
To await the regular raffle before the court can act on the motion for temporary
restraining order may render the case moot and academic. 1ence, (dministrative
Circular #o. - dated Ganuary $., -%.. was issued by this Court allowing a special raffle.
&aid Circular provides7
..4. &pecial raffles should not be permitted except on verified application of the interested
party who see0s issuance of a provisional remedy and only upon a finding by the
'xecutive Gudge 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 Cbe conducted by at least two judges
in a multiple;sala station.C
The "epublic does not claim that (dministrative Circular #o. - has been violated in the
assignment of the case to respondent Gudge. The presumption of regularity of official
acts therefore prevails.
@oing bac0 to &ection D of "ule $$, this Court has rules in &ommissioner o$
Immigration v. Re!es, -$ &C"( D$. +-$%)*, 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 subse/uently heard. In the instant case,
'xecutive &ecretary @uingona and @(? Chairman Cepeda were given a hearing on the
matter of the lac0 of notice to them of the raffle when the court heard on &eptember $4,
-%%* their otion to "ecall Temporary "estraining 3rder, Argent &upplemental otion
to "ecall Temporary "estraining 3rder and 3pposition to Issuance of a 9rit of
Preliminary Issuance of a 9rit of Preliminary Injunction +@.". #o. --D$)4, Rollo p. *4*,.
Petitioners in @.". #o. --D$)4 failed to shown any irregularity attendant to the raffle or
any prejudice which befell them as a result of the lac0 of notice of the raffle of Civil Case
#o. %*;D-)5).
3n the other hand, petitioners never as0ed for a re;raffle of the case or for any
affirmative relief from the trial court and proceeded with the presentation of evidence of
(<C in connection with the motion for preliminary injunction.
?. 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 +3hio 3il Co. v. Conway, $D% A.&. .-4, D4 =. 'd. %D$, *% &.
Ct. $5)8 @obbi v. <ilao, 5. 3r. -*, --- p. *%, --4, p. 5D,. 9hat is intended to be
preserved is the status quo ante litem motam or the last actual, peaceable,
noncontested status +(nnotation, -5 (=" $d $4D,.
In the case at bench, the status quo which the /uestioned orders of Gudge "eyes
sought to maintain was that (<C was operating the jai;alai pursuant to 3rdinance #o.
D6)5 of the City of anila, the various decisions of the different courts, including the
&upreme Court, and the licenses, permits and provisional authority issued by @(?
itself.
(t times, it may be necessary for the courts to ta0e some affirmative act essential to
restore the status quo +Iowa #atural "esources Council v. !an &ee EIowaF -5. #.9. $d.
---,.
The right to conduct a business or to pursue one2s business or trade without wrongful
interference by others is a property right which e/uity will, in proper cases, protect by
injunction, provided of course, that such occupation or vocation is legal and not
prohibited by law +"ance v. &perry P 1utchinson Co., *-6 P. $d .5%,.
1ad not the <irective to close the operation of (<C2s jai;alai and the implementing
emorandum been issued, there would have been no need for the issuance of the
orders of the "egional Trial Court. The need for said e/uitable reliefs becomes more
evident if we consider that the 'xecutive &ecretary himself had entertained doubts as to
the legality of his action because in the same <irective he instructed the &olicitor
@eneral to obtain a judicial ruling on the legal issues raised.
C. "espondent Gudge "eyes did not pre;empt this Court in deciding the basic issues
raised in @.". #o. --56** when it assumed jurisdiction over Civil Case #o. %*;D-)5)
and issued the orders /uestioned in @.". #o. --D$)4.
The orders of Gudge "eyes are provisional in nature and do not touch on the merits of
the case. The issues raised in Civil Case #o. %*;D-)5) are the validity of the <irective
and emorandum, which were issued after the decision of this Court in @.". #o.
--56**. The respondent in the civil case before the trial court are not even parties in
@.". #o. --56**.
PUNO, J., dissenting7
The petitions at bench involve great principles of law in tension. 3n balance at one end
is the high prerogative of the &tate to promote the general welfare of the people thru the
use of police power8 on the opposite end is the right of an entity to have its property
protected against unreasonable impairment by the &tate. courts accord the &tate wide
latitude in the exercise of its police power to bring about the greatest good of the
greatest number. ?ut when its purpose is putrefied by private interest, the use of police
power becomes a farce and must be struc0 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 (ssociated <evelopment
Corporation +(<C, still possesses a valid franchise to operate jai;alai in manila. The
issue is multi;dimensional considering its constitutional complexion.
First, the matrix of facts. 3n Gune -., -%*%, congress enacted "epublic (ct #o. *6%,
otherwise 0nown as the Charter of anila. &ection -. +jj, gave to the unicipal ?oard
+now City Council, the following power7
+jj, To tax, license, permit and regulate wagers or betting by the public on boxing, sipa,
bowling, billiards, pools, horse or dog races, coc0pits, /ai-alai, roller or ice s0ating or any
porting or athletic contest, as well as grant exclusive rights to establishments for this
purpose, notwithstanding any existing law to the contrary.
3n Gune $6, -%54, congress passed "epublic (ct #o. %5* entitled C(n (ct to Prohibit
Certain (ctivities in Connection with 1orse "aces and ?as/ue pelota @ames +Gai;(lai,
and to Prescribe penalties for its !iolation.C &ections * and 5 of the law provide7
xxx xxx xxx
&ec. *. #o person, or group of persons, other than the operator or maintainer of a fronton
with legislative franchise to conduct bas/ue pelota games +Gai;(lai,, shall offer, ta0e or
arrange bets on any bas/ue pelota game or event, or maintain or use a totali:er or other
device, method or system to bet or gamble on any bas/ue pelota game or event.
&ec. 5. #o person, operator, or maintainer of a fronton with legislative franchise to
conduct bas/ue pelota games shall offer, ta0e, or arrange bets on any bas/ue pelota
game or event, or maintain or use a totali:ator or to her device, method or system to bet
or gamble on any bas/ue pelota game or event outside the place, enclosure, or fronton
where the bas/ue pelota game is held.
3n &eptember D, -%D-, the unicipal ?oard of anila approved 3rdinance #o. D6)5
Cauthori:ing the ayor to (llow and Permit the (ssociated <evelopment Corporation to
'stablish, aintain and 3perate a Gai;(lai in the city of anila, Ander Certain Terms
and Conditions (nd For 3ther Purposes.C
3n &eptember $-, -%D$, martial law was declared by then president Ferdinand '.
arcos. The -%D- Constitution, as amended, authori:ed the former President to
exercise legislative powers. (mong the laws he decreed is P.<. #o. DD-, C"evo0ing (ll
Powers (nd (uthority 3f =ocal @overnment+s, to @rant Franchise, =icense 3r Permit
(nd "egulate 9agers 3r ?etting ?y The Public 3n 1orse (nd <og "aces, Gai;(lai, 3r
?as/ue pelota (nd 3ther Forms of @ambling.C its Text states7
xxx xxx xxx
&ec. -. (ny 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 trac0s, jai;alai or other forms of
gambling is hereby revo0ed.
&ec. $. 1ereafter all permit or franchise to operate, maintain and establish horse and dog
race trac0s, jai;alai and other forms of gambling shall be issued by the national
government upon proper application and verification of the /ualifications of the applicant7
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.
&ec. 4. (ll existing franchises and permits issued by local government are hereby
revo0ed and may be renewed only in accordance with this <ecree.
P.<. #o. DD- was enacted on (ugust $6, -%D5 and purportedly revo0ed the permit of
(<C to operate. ?efore two +$, months could elapse or on 3ctober -), -%D5, then
President arcos issued P.<. #o. .-6 granting a franchise to Philippine Gai;(lai and
(musements corporation to conduct jai;alai games in anila. it is not disputed that his
brother;in;law, r. (lfredo C?erjoC "omualde:, held the controlling interest in Philippine
Gai;alai and (musements Corporation. apparently, the favored treatment given to r.
"omualde: and company did not sit well with former President Cora:on C. (/uino. 3n
ay ., -%.D, she issued 'xecutive 3rder #o. -)% repealing P.<. #o. .-6.
#evertheless, she allowed P.<. #o. DD- to stay in our statutes boo0.
(<C thought it could resume its jai;alai operation. 3n ay 5, -%.., it sought from then
mayor @emiliano C. =ope:, Gr., of anila a permit to operate on the strength of
3rdinance #o. D6)5. The re/uest was refused and this &pawned suits
1
all won by (<C.
In Civil Case #o. ..;*5))6, filed in ?r. *6, "TC, anila, Gudge (ugusto '. !illarin ruled
that 3rdinance #o. D6)5 created a binding contract between the city of anila and
(<C, and hence, the City ayor had no discretion to deny (<C2s permit. The ruling was
appealed to the Court of (ppeals where it was doc0eted as C(;@.". &P #o. -)*DD. 3n
February %, -%.%, however, ayor =ope: withdrew the city2s appeal. &till, the legal
problems of (<C did not disappear. anila ayor (lfredo =im who succeeded ayor
=ope: again refused to issue (<C2s permit despite orders of Gudge Felipe @. Pac/uing.

2
Threatened with contempt, ayor =im filed with this Court @.". #o. --56**, a petition
for certiorari. 1e alleged that he could not be compelled to enforce the <ecision in Civil
Case #o. ..;*5))6 as the same is null and void for want of jurisdiction of the court that
rendered it. 1e li0ewise contended that 3rdinance #o. D6)5 had been revo0ed by P.<.
#o. DD-. 3n &eptember -, -%%*, the First division of this court, spea0ing thru r.
Gustice Camilo Nuiason, dismissed ayor =im2s petition. It held7
xxx xxx xxx
Petitioners failed to appreciate the distinction between a void and an erroneous judgment
and between jurisdiction and the exercise of jurisdiction.
1aving jurisdiction over the civil case, whatever error may be attributed to the trial court,
is simply one of judgment, not of jurisdiction. an error of judgment cannot be corrected by
certiorari but by appeal +"obles v. 1ouse of "epresentatives 'lectoral Tribunal, -.-
&C"( D.6 E-%%6F8 <e Castro v. <elta otor &ales Corporation, 5D &C"( 4** E-%D.F8
@alang v. 'ndencia, D4 Phil. 4%- E-%*-F.
The issue on the cancellation of 3rdinance #o. D6)5 by president arcos could have
been raised as a special defense in Civil Case #o. ..;5*))6 but was not . . .
The City of anila should have pursued in the appellate courts its appeal /uestioning the
dismissal of Civil Case #o. %-;5.%-4, where the trial court ruled that ayor =ope: and
the city could no longer claim that 3rdinance #o. D6)5 had been cancelled by president
arcos because they failed to raise this issue in Civil Case #o. ..;5*))6.
(t 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
=aw prevails +Poses v. Toledo Transportation Co., )$ Phil. $%D E-%45F8 anila electric Co.,
v. Public utility commissioners, 46 Phil. 4.D E-%-5F.
Apon its receipt, ayor =im manifested he would comply with the <ecision. 1e did not
file a motion for reconsideration. it was then that the "epublic started its own legal battle
against (<C. it intervened in @.". #o. --56**, raising several issues, especially (<C2s
lac0 of a valid legislative franchise to operate jai;alai. #o less than 'xecutive &ecretary
Teofisto @uingona directed the @ames and (musement ?oard, then headed by r.
Francisco ". &umulong, jr., to hold in abeyance the grant of authority, or if any had been
issued, to withdraw such grant of authority in favor of (<C. The @(? dutifully ordered
(<C to cease and desist from operating the anila jai;alai. (<C again rushed to the
"TC of anila and filed Civil Case #o. %*;D-)5) which was raffled to ?r. -*, presided
by respondent Gudge !etino "eyes. (cting with dispatch, respondent judge temporarily
restrained the @(? from withdrawing the provisional authority of (<C to operate. (fter
hearing, the temporary restraining order was converted into writs of preliminary
injunction and preliminary mandatory injunction upon posting by (<C of a P$ million
bond. these writs are challenged in these consolidated petitions as having been issued
in grave abuse of discretion amounting to lac0 of jurisdiction.
9hile the petitions at bench are chec0ered with significant substantive and procedural
issues, I will only address the contention that (<C has no existing legislative franchise.
The contention is anchored on two +$, submissions7 first, (<C has no legislative
franchise as re/uired by ".(. #o. %5*, and second, even if the city of anila licensed
(<C to operate jai;alai, its authority was nevertheless revo0ed by section 4 of P.<. #o.
DD-.
I find as completely baseless petitioners2 submission that ".(. #o. %5* re/uires a
legislative franchise to operate a jai;alai, in effect, revo0ing the power of the City of
anila to issue permits for the same purpose as granted by its Charter. ( $6;$6 visual
reading of ".(. #o. %5* will not yield the suggested interpretation by petitioners. the
titles of ".(. #o. %5* will immediately reveal that the law was enacted to achieve a
special purpose. It states7 C'n 'ct 0o Pro(ibit &ertain 'ctivities In Connection 9ith
1orse "aces (nd ?as/ue pelota @ames +Gai;(lai,, (nd To Prescribe Penalties For its
!iolation.C The pro(ibited activities related to jai;alai games are specified in sections *
to ), vi57
&ec. *. #o person, or group of persons, other than the operator or maintainer of a $ronton
with legislative franchise to conduct basque pelota games +Gai;(lai,, shall offer, ta0e or
arrange bets on any basque pelota game or event, or maintain or use a totali:ator or
other device, method or system to bet or gamble on any basque pelota game or event.
&ec. 5. #o person, operator, or maintainer of $ronton with legislative franchise to conduct
basque pelota games shall offer, ta0e or arrange bets on any basque pelota game or
event, or maintain or use a totali:ator or other device, method or system to bet or gamble
on any basque pelota game or event outside the place, enclosure, or $ronton where the
basque pelota game is held.
&ec. ). #o 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 ".(. #o. %5* does not show that it see0s 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 criminali:ation of certain practices relating to jai;alai games. The title of
a law is a valuable intrinsic aid in determining legislative intent.
3
The 'xplanatory #ote
4
of 1ouse ?ill 4$6*, the precursor of ".(. #o. %5*, also reveals
that the intent of the law is only to criminali:e the practice of illegal boo0ies and game;
fixing in jai;alai. It states7
0(is bill see-s to pro(ibit certain anomalous practice o$ ?boo-ies? in connection "it( t(e
(olding o$ (orse races or ?basque pelota? games. The term Cboo0ieC 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 -6K. Prosecutions of said persons have
been instituted under (ct #o. *$*6 which was enacted in -%45. 1owever, in a recent
opinion released by the City Fiscal of anila he maintains that (ct #o. *$*6 has already
been repealed, so that the present law regulating ordinary horse races permits Cboo0iesC
to ply their trade, but not on sweepsta0es races and other races held for charitable
purposes. 9ith the operation of Cboo0ingC places in the City of anila, the @overnment
has been losing no less than P)66,666.66 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.
(s said 'xplanatory #ote is expressive of the purpose of the bill, it gives a reliable
0eyhole on the scope and coverage of ".(. #o. %5*.
1
#othing from the 'xplanatory
#ote remotely suggests any intent of the law to revo0e the power of the City of anila to
issue permits to operate jai;alai games within its territorial jurisdiction.
The <ebates
2
in Congress li0ewise reject the reading of ".(. #o. %5* by petitioners,
thus7
xxx xxx xxx
"'&APTI3# 3F &'&&I3#
T1' &P'(B'". The session is resumed
". CI#C3. r. &pea0er, I withdraw my motion for postponement.
". C(=3. r. &pea0er, will the gentleman may yield, if he so desires.
". O3&(. 9illingly.
". C(=3. 9hat is the national import of this billM
". O3&(. r. &pea0er, this bill prohibits certain activities in connection
with horse races and jai;(lai games which are
licensed by the government. (t present, there are many
practices in connection with the holding of these games
"(ic( deprive t(e government o$ income t(at s(ould
legall! go into t(e government co$$ers as ta,es.
". C(=3. Is not this matter of national importance because Gai;(lai
games and horse races are (eld onl! in ManilaM
". O3&(. Precisely, r. &pea0er, they are played on a big scale, and
there are many practices which deprive the government of
income to which it is entitled. I thin0 the gentleman from
(gusan is a member of the Committee on (ppropriations.
The governments will have more revenues, if we shall
approve this bill.
(gain, legislative debate is a good source to determine the intent of a
law.
3

To top it all, the text of ".(. no. %5* itself does not intimate that it is repealing any
existing law, especially section -. +jj, of ".(. no. *6%, otherwise 0nown as the Charter of
anila. Indeed, ".(. #o. %5* has no repealing provision. The reason is obvious J 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 alread! regulated by existing laws, li0e the
matter of whether it is the national government alone that should issue franchises to
operate jai;alai games.
The subse/uent enactment of P.<. #o. DD- on (ugust $6, -%D5 further demolished the
submission of petitioners. In clear and certain language, P.<. no. DD- recalled the owner
of local governments to issue jai;alai franchises and permits. It also revo0ed existing
franchises and permits issued by local governments. If ".(. no. %5* had already
disauthori:ed local governments from granting franchisers and permits, there would be
no need to enact P.<. no. DD-. #o rule of statutory construction will be considered any
law a meaningless redundancy.
The passage of P.<. #o. DD-, also negates petitioners2 insistence that for (<C to
continue operating, it must show it has a franchise from Congress, not just a permit from
the City of anila. The suggested dichotomy between a legislative franchise and city
permit does not impress. If the City of anila is empowered to license the (<C it is
because the power was delegated to it by Congress. The acts of the City of anila in
the exercise of its delegated power bind Congress as well. &tated otherwise, the permit
given by the City to (<C is not any whit legally inferior to a regular franchise. Through
the years, the permit given by the City endows the grantee complete right to operate.
#ot once, except in these cases, has the national government /uestioned the
completeness of his right. For this reason, P.<. #o. DD- has to ta0e revo0e all existing
franchises and permits without ma0ing any distinction. It treated permits in the same
class as franchises.
Petitioners2 second line of argument urges that in any event, &ection 4 of P.<. #o. DD-
expressly revo0ed all existing franchises and permits to operate jai;alai games granted
by local governments, including the permit issued to (<C by the City of anila through
3rdinance #o. D6)5. For its resolution, petitioners2 argument re/uires a re;statement of
the re/uirements for the valid exercise of police power.
It was the legendary Chief Gustice arshall who first used the phrase police power in
-.$*.
4
'arly attempts to fix the metes and bounds of police power were unsuccessful.
9

For of all the inherent powers of the &tate, police power is indubitably the most
pervasive,
10
the most insistent and the least limitable.
11
"ooted on the latin maxims,
salus populi suprema est le, +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 Gustice 1olmes to stress that its reach extends Cto
all the great public needs.C
12
( similar sentiment was echoed by our own Gustice =aurel
in 'lalang v. =illiams
13
who defined police power as the Cstate authority to enact
legislation that may interfere with personal liberty or property in order to promote the
general welfare.C 3ver the years, courts recogni:ed the power of legislature to enact
police regulations on broad areas of state concern7 +a, the preservation of the state itself
and the unhindered execution of its legitimate functions8 +b, the prevention and
punishment of crime8 +c, the preservation of the public peace and order8 +d, the
preservation of the public safety8 +e, the purity and preservation of the public morals8 +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
enumerated8 +h, the regulation of property and rights of property so far as to prevent its
being used in a manner dangerous or detrimental to others8 +i, the prevention of fraud,
extortion, and oppression8 +j, roads and streets, and their preservation and repair8 and
+0, the preservation of game and fish.
14

?ut while the &tate is bestowed near boundless authority to promote public welfare, still
t(e e,ercise o$ police po"er cannot be allo"ed to run riot in a republic ruled b! reason.
Thus, our courts have laid down the test to determine the validity of a police measure as
follows7 +-, the interest of the public generally, as distinguished from those of particular
class, re/uires its exercise8 and +$, the means employed are reasonably necessary for
the accomplishment of the purpose and not unduly oppresive upon individuals.
11

<eeper relexion will reveal that the test reiterates the essence of our constitutional
guarantees of substantive due process, e/ual protection, and non;impairment of
property rights.
9e now apply this lucidly;lined test to the petitions at bench. To reiterate, P.<. #o. DD-
utili:ed two methods to regulate jai;alai7 First, it reverted the power to issue franchise
and permit to the national government, second, it revo0ed all existing franchise and
permit issued by local governments.
I concede that the first method is invulnerable even to the strongest of constitutional
attac0. Part of the plenary power of Congress to ma0e 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 anila when
it granted its charter on Gune -., -%*% thru ".(. no. *6%. Congress can also revo0e the
delegated power and choose to wield the power itself as it did thru then President
arcos who exercised legislative powers by enacting P.<. #o. DD-. In the petitions at
bench, Congress revo0ed 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, 'xecutive &ecretary @uingona established the fact that at the time of
the enactment of P.<. #o. DD-, 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 minimi:e their ill effects, the law centrali:ed 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.
'pplicants 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 &ection 4 of P.<. #o. DD- which revo0ed all existing
franchises and permits is, however, constitutionally impermissible. 3n its face, section 4
purports to revo0e all existing franchises and permits. <uring the oral argument of the
petitions at bench, however, it was admitted
that at the time P.<. #o. DD- was enacted, only (<C is actually operating a jai;alai.
12

The purported revocation of all franchises and permits when there was only one existing
permit at that time is an unmista0eable attempt to mas0 the law with impartiality. #o
other permit was affected by said sec. 4 except (<C.
Truth, however, has its own time of sprouting out. The truth behind the revocation of
(<C2s franchise revealed itself when former President arcos transferred (<C2s
franchise to the Philippine Gai;(lai and (musements Corporation then under the control
of his brother;in;law, r. (lfredo C?ejoC "omualde:. The favored treatment was
extended hardly two +$, months after the revocation of (<C2s franchise and it left
Philippine Gai;(lai and (musements Corporation the sole jai;alai operator in the
Philippines. The Court is not informed of any distinction of PG(C that will justify its
different treatment. The evidence is thus clear and the conclusion is irresistable that
section 4 of P.#. )o. 223 "as designed "it( a malignant e!e against '#&.
In light of the established facts in field, section 4 of P.<. #o. DD- must be struc0 down as
constitutionally infirmed. despite its cosmetics, section 4 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 (<C is reasonably
necessary to enable the &tate to grapple to the ground the evil of jai;alai as a form of
gambling. Petitioners have not demonstrated that government lac0s alternative options
to succeed in its effort except to cancel the lone franchise of (<C. 9ell to stress, it is
not the lofty aim of P.<. #o. DD- to completely eradicate jai;alai games8 it merely see0s
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 r. Gustice Nuiason that
sec. 4 of P.<. #o. DD- offends the Constitution which demands faithful compliance with
the re/uirements of substantive due process, e/ual protection of the law, and non;
impairment of contracts. capsuli:ing their essence, substantive due process exacts
fairness8 e/ual protection disallows distinction to the distinctless8 and the guaranty of
non;impairment of contract protects its integrity unless demanded otherwise by the
public good. Constitutionalism eschews the exercise of unchec0ed 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 &tate not just to achieve
order or liberty but to attain ordered libert!, however elusive the balance may be.
Cogni:ant of the truism that in life the only constant is change, the Constitution did not
design that the point that can stri0e 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 4 of P.<. #o.
DD- was not cured when former President (/uino used it in revo0ing P.<. #o. .-6 which
granted Philippine Gai;(lai and (musements Corporation a franchise to operate jai;alai
in anila. The subse/uent use of said section should not obfuscate the fact that the law
was enacted in the wrongful exercise of the police power of the &tate. There is no
sidestepping the truth that its enactment inflicted undue injury on the right s of (<C and
there can be no reparation of these rights until and unless its permit to continue
operating jai;alai in anila is restored. Cancelling the franchise of Philippine Gai;(lai
and (musements Corporation is an act of Gustice to (<C if its franchise would be left
unrecogni:ed. &ince the unconstitutionality of section 4 is congenital, it is beyond
redemption.
?ut while I wholeheartedly subscribe to the many impeccable theses of r. Gustice
Nuiason, it is with regret that I cannot join his submittal that sec. 4 of P.<. #o. DD-
violates procedural due process. 9e are dealing with the plenary power of the
legislature to ma0e and amend laws. Congress has previously delegated to the City of
anila the power to grant permits to operate jai;alai within its territorial jurisdiction and
(<C2s permit could have been validly revo0ed 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 see0s when engaged in lawma0ing does not focus on the liability of a person
or entity which would re/uire fair hearing of the latter2s side. In fine, the legislature while
ma0ing 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. 1owever heavily laden with property
rights a franchise to operate jai;alai maybe, it is still a contract which under appropriate
circumstances can be revo0ed to enhance public interest. Gai;alai may be a game of a
thousand thrills but its true thrill comes from the gambling on its indeterminate result.
?eyond 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 youth2s
physical, moral, spiritual, intellectual, and social well;being,
13
there is no right to
gamble, neither a right to promote gambling for gambling is contra bonos mores. To
re/uire the legislature to strictly observe procedural before it can revo0e a gambling due
process before it can revo0e a gambling franchise is to put too much primacy on
property rights. 9e then stand in danger of reviving the long lamented -%65 ruling in
%oc(ner v. )e" @or-
14
which unwisely struc0 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 %oc(ner from its sarcophagus. 9e
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 r. Gustice Nuiason which resisted the stance that the Court
should close its eyes to allegations that section 4 of P.<. #o. DD- was conceived and
effected to give na0ed preference to a favored entity due to pedigree. I reiterate the
view that section -, (rticle !III of the Constitution expanding the jurisdiction of this Court
to determine whether or not there has been a grave abuse of discretion amounting to
lac0 or excess of jurisdiction on the part of any branch or agency of government is not a
pointless postulate. 9ithout the grant of this new power, it would be difficult, if not
impossible, to pierce through the pretentious purposes of P.<. #o. DD-. P.<. #o. DD-
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. "ather, it is the dictate of a public official who then had
a monopoly of executive and legislative powers. (s it was not infre/uently 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 4 of P.<. #o. DD- unconstitutional and to dismiss the
petitions.

S*$ara%* O$!"!o"#
9APUNAN, J., concurring7
@overnment 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 &tate2s inherent and almost
illimitable prerogative to promote the general welfare and the common good. (s the
challenge involves a facile conflict between good and evil, between a universally
recogni:ed vice and the &tate2s virtuous posture, the instant case lends itself to easy
adjudication.
#ot necessarily. 'conomic realities have blurred distinctions. The &tate 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. (s the system has never been perfect, conflict, such as that which existed in
the case at bench, occasionally arises.
The constitutionality of P.<. DD- was not in issue in %im vs. Pacquing, promulgated by
the court2s first <ivision last &eptember, -%%*, where this court sustained an order by
Gudge Pac/uing issued in Civil Case #o. ..;*5))6 compelling anila ayor (lfredo &.
=im to issue a permit to operate a jail fronton in favor of the (ssociated <evelopment
Corporation +(<C, pursuant to anila City 3rdinance #o. D6)5.
(fter the City of anila subse/uently granted (<C a permit to operate the jai;alai
fronton, Chairman Francisco &umulong, Gr. of the @ames and (musements ?oard
issued on &eptember %, -%%* a provisional authority to open the fronton subject to
certain conditions imposed therein. In relation to this, the @(? li0ewise issued to the
(<C, on -$ &eptember -%%*, =icense #o. %*;66. upon payment of the corresponding
fees.
3n &eptember -4, -%%*, 'xecutive &ecretary Teofisto @uingona directed @(?
Chairman &umulong Cto hold in abeyance the grant of authority or if any has been
issued, to withdraw such grant of authorityC
1
to the (<C. Conse/uently, on &eptember
-*, -%%*, the @(? Chairman revo0ed the provisional authority issued by his office, until
the legal issues raised in the &eptember -4 directive of the 'xecutive &ecretary are
resolved in the proper court. &aid directive identified the legal issues as centering on -,
the constitutionality of P.<. DD-8 $, the validity of the apparent grant in perpetuity of a
municipal franchise to maintain jai;alai operations8 and, 4, the power of the city of
anila to issue a jai;alai franchise in view of 'xecutive 3rder 4%$ which transferred
from local governments to the @(? the power to regulate jai;alai.
"eacting to the cancellation of its provisional authority to maintain jai;alai operations,
(<C, on &eptember -5, -%%* filed a petition for prohibition, mandamus, injunction and
damages with prayer for temporary restraining order and writ of preliminary injunction in
the anila "egional Trial Court of against 'xecutive &ecretary @uingona and Chairman
&umulong. The "egional Trial court of manila, ?ranch *, through Gudge !etino "eyes
on the same day issued an order enjoining the 'xecutive &ecretary and the @(?
Chairman from implementing their directive and memorandum, respectively.
3n &eptember -), -%%* @(?, representing the "epublic 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 @.". #o. --56**. (cting on this
motion, the First <ivision referred the case to the Court en banc, which, in a resolution
dated $6 &eptember -%%*, accepted the same and re/uired the respondents therein to
comment.
3n 3ctober --, -%%* the 'xecutive &ecretary and the new @(? Chairman <omingo
Cepeda, Gr. filed with this Court a petition for certiorari, prohibition and mandamus
assailing Gudge !etino "eyes2 earlier order.
3n 3ctober -%. -%%*, Gudge "eyes issued another order granting the (<?2s motion for
a writ of preliminary mandator! injunction against the 'xecutive &ecretary and the @(?
Chairman and to compel them to issue the necessary authority, licenses and wor0ing
permits to the (<C, 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 3ctober
-%, -%%* 3rder of Gudge "eyes. 9e granted leave to file said supplemental petition and
to admit supplemental petition and re/uired respondents therein to file their comment on
3ctober $5, -%%*.
The (<C maintains it original position that 3rdinance #o. D6)5, enacted pursuant to the
Charter of the City of anila under "epublic (ct #o. *6% granted a valid and subsisting
municipal franchise for the operation of the ?as/ue pelota game jai alai. In response to
the government2s vehement objections against (<C2s operation of its gambling
operations
2
the (<C for the first time challenged the constitutional validity of P.<. #o.
DD- insofar as it revo0ed the authority granted to it by 3rdinance #o. D6)5 as violative
of the non;impairment of contracts and e/ual protection clauses of the constitution.
3rdinance D6)5 reads7
&ec. -. The ayor is authori:ed, as he is hereby authori:ed to allow and permit the
(ssociated <evelopment Corporation to establish, maintain and operate a jai;alai in the
City of anila under the following terms and conditions and such other terms and
conditions as he +the ayor, may prescribe for good reasons of general interest7
a. That the construction, establishment, and maintenance of the jai;alai shall be at a
place permissible under existing :oning ordinances of anila8
b. That the games to be played daily shall commence not earlier than 5766 o2cloc0 +sic, in
the afternoon8
c. That the City of anila will receive a share of $-H$K of the annual gross receipts of all
wagers or bets LK of which will accrue to the @ames and (musements ?oard as now
provided by law8
d. That the corporation will in addition pay to the city an annual license fee of P4,666.66
and a daily permit fee of P$66.668
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 P46,666.66.
xxx xxx xxx
&ec. 4 This ordinance shall ta0e effect upon its approval.
The above;/uoted ordinance is notable in two respects7 -, the absence of a period of
expiration suggests that the grant of authority to operate the ?as/ue pelota game jai;
alai seems to have been granted in perpetuity and $, while the grant of authority under
the 3rdinance was made pursuant to ".(. *6%, the City Charter of anila, the authority
granted could best be viewed as a grant of license or permit, not a franchise. #owhere
is it pretended that 3rdinance D6)5 is a franchise enacted pursuant to the legislative
powers of the unicipal ?oard of the City of anila under &ection -. +jj, thereof.
The absence of authority of the anila unicipal ?oard to issue a franchise,
notwithstanding its legislative powers, is furthermore evident in the above;cited Charter
provision regulating gambling and other gaming establishments which enumerates the
following powers7
+jj, To tax, license, permit and regulate wagers of betting by the public on boxing . . .
coc0pits, jai;alai . . . as well as this purpose, notwithstanding any existing law to the
contrary.
Clearly the, if 3rdinance D6)5 merely grants a permit or a license to operate the jai;alai
fronton, I see no conflict with a national law, duly enacted pursuant to legitime franchise
to operate certain gambling and gaming operations, generally viewed as deleterious to
the public welfare and morals, for the purpose of regulating the same and raising
revenue. In other words, the national government may well validly re/uire operators of
such establishments to first secure a legislative franchise before starting their
operations. (fter securing the proper legislative franchise, they may ta0e then exercise
whatever authority granted to them by local legislative bodies pursuant to the permits or
licenses granted by these bodies. This is essentially the spirit ordained by at least two
legislative issuances relating to jai;alai and other gambling operations passed before
and after the anila City Council issued the (<C2s permit to operate.
In Gune of -%5$, Congress enacted ".(. 4%$ which forbade the ta0ing or arranging of
bets on any bas/ue pelota game by any person or entity other than one with a
legislative franchise.
3
(fter the (<C was issued its permit by the City of anila in -%D-,
President arcos issued P.<. DD- pursuant to his legislative powers during martial =aw,
which revo0ed local authority to grant franchise to certain gambling operations including
jai;alai. &ection 4 thereof expressly revo0ed existing gambling franchise issued by the
local governments. 9hen President Cora:on (/uino cancelled the franchise granted to
the Philippine Gai;alai and (musement Corporation in -%.D, she 0ept P.<. DD-, which
revo0ed all authority by local governments to issue $ranc(ises for gambling and gaming
establishments on one hand, and the municipal ordinance of the City of anila, granting
a permit or license to operate subject to compliance with the provisions found therein,
on the other hand, a legislative franchise may be re/uired by the government as a
condition for certain gambling operations. (fter 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 re/uirements. 9hile the City of anila
granted a permit to operate under 3rdinance #o. D6)5, this permit or authority was at
best only a local permit to operate and could be exercised by the (<C only after it shall
have obtained a legislative franchise.
This s0irts the constitutional issue. ?oth P.<. DD- and 3rdinance D6)5 can stand
alongside each other if one loo0s at the authority granted by the charter of the City of
anila together with 3rdinance #o. D6)5 merely as an authority to CallowC and CpermitC
the operation of jai;alai facilities "it(in the City of anila. 9hile 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 Anited &tates &upreme Court in
(shwander v. T!(
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 /uestion.
The &tate has every legitimate right, under the police power, to regulate gambling
operations
1
by re/uiring legislative franchises for such operations. @ambling, in all its
forms, unless specifically authori:ed 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 Cstate policyC on various forms of gambling, the political branches of
government are best e/uipped to regulate and control such activities and therefore
assume full responsibility to the people for such policy.
2
Parenthetically, gambling in all
its forms, is generally immoral.
The disturbing implications of a grant of a Cfranchise,C in perpetuity, to the (<C militates
against its posture that the government2s insistence that the (<C first obtain a
legislative franchise violates the e/ual protection and impairment of Contracts clauses
of the Constitution. ?y their very nature, franchise are subject to amendment, alteration
or revocation by the &tate whenever appropriate. Ander the exercise of its police power,
the &tate through its re/uirement for permits, licenses and franchises to operate,
underta0es 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.
3

In Edu v Ericta
4
we defined the police power as Cthe state authority to enact legislation
that may interfere with personal liberty or property in order to promote the general
welfare.C In its exercise, the &tate may impose appropriate impositions or restraints
upon liberty or property in order to foster the common good.
9
&uch imposition or
restraint neither violates the impairment of contracts nor the e/ual protection clauses of
the Constitution if the purpose is ultimately the public good.
10
"estraints on property are not examined with the same microscopic scrutiny as
restrictions on liberty.
11
&uch 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. Gustice 1olmes in )oble *tate an- v. Has-el
12
once expansively
described the police power as Cextending to all public needs.C 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 %im vs. Pacquing, I voted to sustain the (<C2s position on issues almost purely
procedural. ( thorough analysis of the new issues raised this time, compels a different
result since it is plainly obvious that the (<C, while possessing a permit to operate
pursuant to 3rdinance D6)5 of the City of anila, still has to obtain a legislative
franchise, P.<. DD- being valid and constitutional.
3n the /uestion of the propriety of the "epublic of the Philippine2s intervention late in
the proceedings in @.". #o. --D$)4, the (<C counsel2s agreeing to have all the issues
raised by the parties in the case at bench paves the way for us to consider the petition
filed in @.". #o. --D$)4 as one for quo "arranto.
91'"'F3"', on the basis of the foregoing premises, judgment is hereby rendered7
-. (llowing the republic to intervene in @.". #o. --56**.
$. <eclaring that P.<. DD- is a valid and subsisting law.
4. <eclaring that the (<C does not possess the re/uired legislative franchise to operate
the jai;alai under ".(. %5* and P.<. DD-.
*. &etting aside the writs of preliminary injunction and preliminary mandatory injunction
issued by Gudge !etino "eyes.
AVIE, -R., J., concurring7
The core issues submitted for the Court2s resolution are7 +-, in @.". #o. --56**,
whether intervention by the republic of the Philippines is proper, and +$, in @.". #o.
--D$)4, whether public respondent Gudge !etino "eyes acted with grave abuse of
discretion in issuing the temporary restraining order and subse/uently the writ of
preliminary mandatory injunction in Civil case #o. %*;D-)5).
I
(s 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. Ander &ection $, "ule -$ of the
"ules of Court, such motion may be allowed only be$ore or during a trial. &aid section
reads7
&ec. $. Intervention. J ( person may, before or during a trial, be permitted by the court,
in its discretion, to intervene in an action, if he has legal interest in the matter in litigation,
or in the success of either of the parties, or an interest against both, or when he is so
situated as to be adversely affected by a distribution or other disposition of property in the
custody of the court or of an officer thereof.
This provision was ta0en from &ection -, "ule -4 of the old "ules of Court with the
modification that the phrase Cat any period of a trialC in the latter was changed to Cbefore
or during a trial.C
1
&ection -, "ule -4 of the old "ules of Court was based on &ection -$- of the Code of
Civil Procedure which, in turn, was ta0en from &ection 4.D of the Code of Civil
procedure of California.
2
The phrase Cat any period of a trialC in &ection -, "ule -4 of the old "ules of Court has
been construed to mean the period for the representation of evidence by both parties.
3

(nd the phrase Cbefore or during the trialC in &ection $, "ule -$ of the present "ules of
Court Csimply means anytime before the rendition of the final judgment.C
4
(ccordingly,
intervention could not be allowed after the trial had been concluded
1
or after the trial
and decision of the original case.
2
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.
3
The grant of an intervention is left to the discretion of the court. Paragraph +b,, &ection
$, "ule -$ of the "ules of Court provides7
+b, #iscretion o$ court. J 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
intervenor2s rights may be fully protected in a separate proceeding.
It is thus clear that, by its very nature, intervention presupposes an e,isting litigation or
a pending case,
4
and by the opening paragraph of &ection $, "ule -$ of the "ules the
"ules of Court, it may be properly filed only before or during the trial of the said case.
'ven 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 intervenor2s rights
may be fully protected in a separate proceeding.
9
It is not disputed that the motion to intervene was filed only on -) &eptember -%%*, or
on the fifteenth +-5th, day after the First <ivision had promulgated the decision, and
after petitioner ayor (lfredo =im complied with or voluntarily satisfied the judgment.
The latter act brought to a definite end or effectively terminated @.". #o. --56**.
Conse/uently, intervention herein is impermissible under the rules. To grant it would be
a capricious exercise of discretion. The decision of this Court in #irector o$ %ands vs.
&ourt o$
'ppeals
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 too0 into account. 3f paramount importance was the fact that the
prospective intervenors were indispensable parties, and so this Court stated therein7
?ut over and above these considerations and circumstances which 9e have pointed out,
there is the basic and fundamental re/uirement under the "ules of Court, &ection D, "ule
4, that CParties in interest without whom no final determination can be had of an action
shall be joined either as plaintiff or defendants.C 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. E?orlasa vs. Polistico, *D Phil. 4*5, 4*.F.
The herein movants, @reenfield <evelopment Corporation, (labang <evelopment
Corporation, "amon <. ?agatsing, and all buyers from them, at least those with
ostensible proprietary interests as the '"(=C3, (labang 1ills &ubdivision, Cielito
1omes &ubdivision, Tahanan !illage, the inistry of 1ighways insofar as the &outh
&uper 1ighway 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.
(nd, s/uarely 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 intervenors2 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 3pposition
that, according to the <irector of =ands, the overlapping embraces some .D 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. (fter trial, the Court of First Instance
issued an order denying the petition for insufficiency of evidence. (fter 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
(ppeals which thereafter promulgated a decision reversing the aforesaid orders of the
trial court. The <irector of =and, 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. 9ithout waiting for the
resolution of the motion, the <irector filed a motion to admit the motion for
reconsideration attaching thereto said motion for reconsideration. The Court of (ppeals
issued a resolution denying both motions on the ground that the decision had already
become final. This was the resolution which the <irector 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 "ules to accommodate the motion for
intervention and the intervention itself would be arbitrary. The @overnment is not without
any other recourse to protect any right or interest which the decision might have
impaired.
ay the motion to intervene and intervention proper be, nevertheless, treated as a
petition for quo "arrantoM The majority opinion answers it in the affirmative because all
the essential re/uisites for a petition for quo "arranto 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 "egional Trial Court of anila Civil Case #o. %*;D-)5) which is a petition for
prohibition, mandamus, injunction, and damages filed by the (ssociated <evelopment
Corporation against 'xecutive &ecretary @uingona and then @ames and (musement
?oard +@(?, Chairman &umulong. That is the more appropriate forum where the
@overnment and petitioner @uingona may challenge the validity of (<C2s franchise. Its
filing was provo0ed by the withdrawal by the @(? of the provisional authority it granted
to (<C in view of the -4 &eptember -%%* directive of 'xecutive &ecretary @uingona
informing the @(? of sufficient bases to hold in abeyance the operation of the jai;alai
until the legal /uestions into the validity of the franchise issued to (<C. Conse/uently, it
is to be logically presumed that for its affirmative defenses in Civil Case #o. %*;D-)5)
the @overnment would raise the same issues raised in the intervention in @.". #o.
--D$)4.
(ccordingly, I vote to deny the motion for intervention in @.". #o. --56**.
II
1owever, I vote to partially grant the petition in @.". #o. --D$)4 insofar as wagering or
betting on the results order and the preliminary mandatory injunction issued by
respondent Gudge 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
@.". #o. --56** and @.". #o. --D$)4 to restrain wagering or betting. I wish to reiterate
here what I stated in my supplemental concurring opinion in @.". #o. --56**7
&econdly, to ma0e my position clear that the dismissal of the petition should not be
construed as compelling the City of anila to authori:e gambling by allowing betting on
the results of jai;alai. The decision merely dismissed the petition because the Court found
C no abuse of discretion, much less lac0 of excess of jurisdiction, on the part of the
respondent judgeC in issuing the challenged order directing the petitioner to issue a
permit or license in favor of the private respondent pursuant to 3rdinance #o. D6)5. That
order was to enforce the final and executory decision of the "egional Trial Court of %
&eptember -%.. in Civil Case #o. ..;*5))6, the appeal therefrom to the Court of
(ppeals by the City of anila having been withdrawn by it on % February -%.%. That
decision ordered the City of anila to immediately issue to the private respondent Cthe
permitHlicense re/uired under 3rdinance #o. D6)5.C The City of anila did in fact issue
the re/uired permit or license to the private respondent for the operation of the jai;alai in
anila for the years -%.. to -%%$. #evertheless, when the jai;alai complex was almost
completed, the City ayor refused to renew the ayor2s Permit.
There is a clear distinction between the initial duty of the City ayor under 3rdinance #o.
D6)5 to issue the necessary license or permit to establish the jai;alai fronton and to
maintain and operate the jai;alai, and his subse/uent discretion to impose other terms
and conditions for the $inal contract relative to such operation. The trial court specifically
said so in its decision of % &eptember -%.%. Thus7
( suggestion has been made in the (nswer that a writ of mandamus will
not lie against respondents, particularly the ayor, because Cthe
availment of the franchise . . . is subject to the terms and conditions
which the respondent ayor may impose.C
( careful reading however, of 3rdinances D6)5 will readily show that the
discretion, if any, allowed respondent ayor, 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 ayor is authori:ed Cto allow and permit petitioner to
establish, maintain and operate a jai;alai in the City of anila,C under the
five conditions enumerated in subparagraphs CaC to CeC of &ection - of
the 3rdinance. ?y a simple reading of these Cterms and conditionsC
patently shows that subparagraphs CbC to CeC are clearly conditions that
will only come into play after the jai;alai has been put up or established8
while the condition under subparagraph CaC 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 $5,666 s/. m. land area behind the present 1arrison Pla:a
Complex located at 'rmita, anila.
Conse/uently, the ayor2s Permit sough to be renewed or the motion before the lower
court to compel the ayor to renew it, has reference only to subparagraph +a,, &ection -
of 3rdinance #o. D6)5. The renewal of the permit can by no stretch of the imagination be
ta0en as a final contract between the private respondent and the City of anila for
otherwise it would remove the power and authority of the ayor under the ordinance to
impose Cother terms and conditions as he may prescribe for good reasons of general
interest.C
It follows then that the ayor2s Permit ordered by the trial court to be issued to the private
respondent is not a license or authority to allow betting or wagering on the results of the
/ai-alai games. Jai-alai is a sport based on s0ill. Ander (rticle -%D of the "evised Penal
Code, before it was amended by P.<. #o. -)6$, betting upon the result of any boxing or
other sports contests was penali:ed with arresto menor or a fine not exceeding P$66.66,
or both. (rticle $6-% of the Civil Code provides that CEbFetting on the results of sports,
athletic competitions, or games of s0ill may be prohibited by local ordinances.C
P.<. #o. *.4, enacted on -4 Gune -%D*, penali:es betting, game fixing or point shaving
and machinations in sports contests, including /ai-alai. &ection $ thereof expressly
provides7
&ec. $. ?etting, game fixing, point shaving or game machinations
unlawful. J @ame fixing, point shaving, machination, as defined in the
preceding &ection, in connection with the games of bas0etball, volleyball,
softball, baseball8 chess8 boxing bouts, Cjai;alai,C Csipa,C CpelotaC and all
other sports contests, games8 as "ell as betting t(erein e,cept as ma!
be aut(ori5ed b! la", is hereby declared unla"$ul.
The succeeding &ection 4 provides for the penalties.
3n -- Gune -%D., P.<. #o. -)6$ +D5 3.@. #o. -5, 4$D6,, Prescribing *ti$$er Penalties on
Illegal 6ambling, was enacted to increase the penalties provided in various CPhilippine
@ambling =aws such as (rticles -%5;-%% of the "evised Penal Code +Forms of @ambling
and ?etting,, ".(. #o. 46)4 +1orse "acing ?oo0ies,, P.<. #o. **% +Coc0fighting,, P.<.
#o. *.4 +@ame Fixing,, P.<. #o. 5-6 +&lot achines, in relation to 3pinion #os. 44 and
%D of the inistry of Gustice, P.<. #o. -46) +Gai;alai ?oo0ies,, and other City and
unicipal 3rdinances on gambling all over the country.C &ection - thereof reads7
xxx xxx xxx
?oth P.<. #o. *.4 and P.<. #o. -)6$ were promulgated in the exercise of the police
power of the &tate.
Pursuant to &ection $ of P.<. #o. *.4, which was not repealed by P.<. #o. -)6$ since the
former is not inconsistent with the latter in that respect, betting in
/ai-alai is illegal unless allowed by law. There was such a law. P.<. #o. .-6, which
authori:ed the Philippine Jai-'lai and (musement Corporation as follows7
&ec. $. The grantee or its duly authori:ed agent may offer, ta0e or
arrange bets within or outside the place, enclosure or court where the
?as/ue pelota games are held7 Provided, That bets offered, ta0en or
arranged outside the place, enclosure or court where the games are
held, shall be offered, ta0en or arranged only in places duly licensed by
the corporation, Provided, (o"ever, That the same shall be subject to the
supervision of the ?oard. #o person other than the grantee or its duly
authori:ed agents shall ta0e or arrange bets on any pelotari or on the
game, or maintain or use a totali:ator 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. (ny
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.
1owever, as stated in the ponencia, P.<. #o. .-6 was repealed by '.3. #o. -)% issued
by then President Cora:on C. (/uino. I am not aware of any other law which authori:es
betting in /ai-alai. It follows then that while the private respondent may operate the jai;alai
fronton and conduct /ai-alai games, it can do so solely as a sports contest. ?etting on the
results thereof, whether within or off;fronton, is illegal and the City of anila 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 legali:e betting, for
this Court is not the legislature under our system of government.
(ccordingly, I vote to grant the petition in @.". #o. --D$)4 and to set aside the
/uestioned 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.
6UIASON, J., dissenting7
I vote7 +-, to deny the motion to intervene and motion for reconsideration qua petition for
quo "arranto in @.". #o. --56**, and +$, to dismiss the petition for certiorari in @.".
#o. --D$)4. I shall set forth the reason why.
I
Following the decision of the First <ivision of this Court on &eptember -, -%%* in @.".
#o. --56**, the City of anila issued on &eptember D, -%%* the ayor2s permit and
unicipal license to (ssociate <evelopment Corporation +(<C, upon the latter2s
payment of the re/uired fees +@.". #o. --56**, Rollo, pp. $54;$5*, 46-,.
In his letter dated &eptember ., -%%* to President Fidel !. "amos, Chairman Francisco
&umulong, Gr. of the @ames and (musement ?oard +@(?, said that he would not
authori:e the opening of (<C2s jai;alai unless he was given a clearance from the
President and until after (<C had complied with Call the re/uirements of the law, such
as, the distribution of wager funds, EandF licensing of Pelotaris and other personnelC
+'xh. F, Civil Case #o. %*;D-)5), "TC, ?r. *, anila8 @.". #o. --D$)4, Rollo, p. 46*,.
In the position paper annexed to the letter, the @(? Chairman recommended the
reopening and operation of the jai;alai, stating in pertinent part7
There are several reasons to justify the operation of Gai;(lai, first and foremost of which
is the generation of much needed revenues for the national and local governments. 3ther
significant justifications are its tourism potential, the provision for employment, and the
development of ?as/ue pelota as an amateur and professional sport.
&pecifically, the establishment, maintenance and operation of a Gai;(lai fronton in etro;
anila shall be by virtue o$ t(e original and still legall! e,isting $ranc(ise granted to t(e
'ssociated #evelopment &orporation +(<C, b! t(e &it! 6overnment o$ Manila in 3723
+@.". #o. --56**, "ollo, p. 4568 'mphasis supplied,.
3n &eptember %, -%%*, Chairman &umulong granted (<C provisional authority to open,
subject to the following conditions7
-. 9e prohibit you from offering to the public CPic0 )C and Cwinner Ta0e (llC betting events
until such time as this ?oard shall have approved the rules and regulations prepared by
management governing the mechanics of these events.
$. =icensing of officials and employees whose duties are connected directly or indirectly
with the supervision and operation of jai;alai games, as mandated by 'xecutive 3rder
-*- dated February $5, -%)5, shall be fully complied with by you within thirty %46, days
from date hereof.
4. (ny other deficiencies we may discover will be accordingly rectified by management as
directed by the ?oard.
*. Failure to comply with any of the rules and regulations prescribed by existing laws and
lawful orders of the ?oard, may justify withdrawalHrevocation of this provisional authority
without prejudice to such administrative sanctions that the ?oard may deem proper to
impose under the circumstances.
5. ?y accepting this provisional authority, (ssociated <evelopment Corporation +(<C, is
deemed to have agreed to the conditions above provided +@.". #o. --D$)4, Rollo, pp. .;
%, *%, $4., $..,.
3n &eptember -$, -%%*, the @(? issued to (<C jai;alai =icense #o. %*;66. upon
payment of the corresponding permit fee. The license reads as follows7
Ander and by virtue of the provisions of &ection D of 'xecutive 3rder #o. 4%$, series of
-%56, in conjunction with 'xecutive order #o. .$*, series of -%.$, this ?oard has this
date granted (<C "epresented by @en. (lfredo ?. >son permit to hold or conduct a EsicF
jai;alai contestsHexhibition on &eptember -$ to -*, -%%*, at the harrison Pla:a Complex,
located in 1arrison Pla:a, alate, anila.
This permit is issued subject to the condition that the promoter shall comply with the
provisions of 'xecutive order #o. .$*, &. -%.$, the rules and regulations, orders andHor
policies adopted or which may hereafter be adopted by the ?oard, and with the
conditions set forth in the application for which this permit has been granted8 and failure
on the part of the promoter to comply with any of which shall be deemed sufficient cause
for the revocation thereof +@.". #o. --D$)4, Rollo, pp. 56, $4., $.%,.
In compliance with @(? "ules and "egulations, (<C submitted its programs of jai;alai
events for approval +'xhs. 3, P and N, civil Case #o. %*;D-)5), "TC, ?r. *, anila8
@.". #o. --D$)4, Rollo, pp. $%6;$%$,.
It appears that as early as may $4, -%%*, Gai;(lai de anila +the business name of
(<C2s fronton, had in/uired from @(? about the laws and rules governing its jai;alai
operation. In reply, chairman &umulong furnished Gai;(lai de anila with copies of '.3.
#os. 4%$ and .$* and the "evised rules and "egulations for bas/ue pelota @ames
+'xhs. B and =, Civil Case #o. %*;D-)5), "TC, ?r. *, anila8 @.". #o. --D$)4, Rollo,
pp. 46-;46$,.
3n &eptember -4, -%%*, 'xecutive &ecretary Teofisto @uingona, jr. issued the following
<irective to @(? Chairman &umulong7
In reply to your letter dated % &eptember -%%* re/uesting for the President2s approval to
re;open the Gai;(lai in anila, please be informed that after a review and study of
existing laws, there is sufficient basis to hold in abeyance the operation of the Gai;(lai
until the following legal /uestions are properly resolved7
-. 9hether P.<. DD- which revo0ed all existing Gai;(lai franchises issued
by local government as of $6 (ugust -%D5 is unconstitutional.
$. (ssuming that the City of anila had the power on D &eptember -%D-
to issue a Gai;(lai franchise to (ssociated <evelopment Corporation,
whether the franchise granted is valid considering that the franchise has
no duration, and appears to be granted in perpetuity.
4. 9hether the City of anila had the power to issue a Gai;(lai franchise
to (ssociated <evelopment Corporation on D &eptember -%D- in view of
'xecutive order #o. 4%$ dated - Ganuary -%5- which transferred from
local governments to the @ames and (musements ?oard the power to
regulate Gai;(lai.
0(is 8$$ice (as directed t(e solicitor 6eneral to bring be$ore t(e proper court t(e
$oregoing issues $or resolution. Pending suc( resolution, !ou are directed to (old in
abe!ance t(e grant o$ aut(orit!, or i$ an! (as been issued, to "it(dra" suc( grant o$
aut(orit!, to 'ssociated #evelopment corporation to operate (e Jai-'lai in t(e cit! o$
Manila +@.". #o. --D$)4, Rollo, pp. D;., *., -%4%8 Emp(asis supplied9.
3n &eptember -*, -%%*, Chairman &umulong issued a emorandum to (<C that7
In view of the directive from the 3ffice of the President dated -4 &eptember -%%*,
(ssociated <evelopment Corporation is hereby ordered to cease and desist issues
raised in the said directive are resolved by the proper court. 0(e provisional aut(orit!
issued pending $urt(er scrutin! and evaluation to '#& on 7 *eptember 377: is (ereb!
"it(dra"n +@.". #o. --D$)4, Rollo, pp. 5-, -%*8 'mphasis supplied,.
3n &eptember -5, -%%*, (<C filed with the "egional Trial Court, ?ranch *, anila a
petition for prohibition, mandamus, injunction and damages with prayer for temporary
restraining order or writ of preliminary injunction +Case #o. %*;D-)5), against 'xecutive
&ecretary @uingona and Chairman &umulong assailing the former2s <irective and the
latter2s emorandum +@.". #o. --D$)4, Rollo, pp. 4, $6;$-, 54;D5, -)D;-).,.
3n the same day, Gudge !etino "eyes issued a temporary restraining order enjoining
'xecutive &ecretary @uingona and Chairman &umulong from implementing their
respective <irective and memorandum +@.". #o. --D$)4, Rollo, pp. $, -6, **,.
3n &eptember -), -%%*, 'xecutive &ecretary @uingona and Chairman &umulong 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 &eptember $6, -%%* +@.". #o. --D$)4, Rollo, pp. ));D5,
D);.),.
eanwhile, on &eptember -), -%%*, the "epublic of the Philippines, represented by
@(?, filed in @.". #o. --56** a motion for intervention8 for leave to file a motion for
reconsideration;in;intervention8 to admit the attached motion for reconsideration;in;
intervention8 and to refer the case to the Court en banc +Rollo, pp. $-%;$*%,.
&ubse/uently, and on the different dates, the "epublic filed in @.". #o. --56** the
following pleadings7 Cotion for =eave to File &upplemental otion for "econsideration;
In;InterventionC +Rollo, pp. $)$;$)5,8 C&upplemental otion for "econsideration;In;
InterventionC +Rollo, pp. $));$.6,8 Cotion for =eave to File &econd &upplemental
otion for "econsideration;In;Intervention and to (dmit attached &econd &upplemental
otion For "econsideration;In;interventionC ;Rollo, pp. 4.6;4.$,8 and C&econd
&upplemental otion for "econsideration;In;InterventionC +Rollo, pp. 4.4;*66,.
(cting on the motion of the "epublic dated &eptember -), -%%*, the First <ivision
referred, in its "esolution dated &eptember -%, -%%*, Case @.". #o. --56** to the
Court en banc, and the latter accepted the same in its "esolution dated &eptember $6,
-%%* +Rollo, p. $55,.
In the meantime, Chairman &umulong resigned and <ominador ". Cepeda, jr. was
appointed as his successor.
3n &eptember 46, -%%*, Gudge "eyes issued a writ of preliminary injunction +@.". #o.
--D$)4, Rollo, pp. $, *D,.
3n 3ctober --, -%%*, 'xecutive &ecretary @uingona and @(? Chairman Cepeda, Gr.
filed with this Court a petition for certiorari, prohibition and mandamus +@.". #o.
--D$)4, Rollo, pp. -;-5-, and on 3ctober $*, -%%*, a supplemental petition +@.". #o.
--D$)4, Rollo, pp. -)-;-)5, -));46),. Petitioners assailed the following issuances of
Gudge "eyes Civil Case #o. %*;D-)5)7
+-., Temporary "estraining 3rder dated &eptember -5, -%%* directing 'xecutive
&ecretary @uingona and chairman &umulong to desist from enforcing the <irective dated
&eptember -4, -%%* and the memorandum dated &eptember -5, -%%* +Rollo, p. **,8
+$., 3rder dated &eptember $5, -%%* denying the Argent otion to "ecall Temporary
"estraining 3rder and the Argent &upplemental otion to "ecall Temporary "estraining
3rder +Rollo, p. *),8
+4., 3rder dated &eptember 46, -%%* directing the issuance of a 9rit of preliminary
Injunction directed against the aforesaid <irective and emorandum +Rollo, p. *D,8
+*., order dated 3ctober -%, -%%* granting (<C2s otion to (mend the petition to
Conform to the 'vidence and directing the issuance of a writ of preliminary mandatory
injunction Cdirecting +'xecutive &ecretary and the @(? Chairman,, their successors,
representatives and any government officeHagency 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 &eptember 46, -%%*, to issue the necessary authority, licenses and
wor0ing permits to . . . (ssociated <evelopment Corporation, and its personnel and
players +Rollo, pp. $-);$-D,.
They prayed that the trial court be enjoined from conducting further proceedings in Civil
Case #o. %*;D-)5) and that said case be dismissed. they also filed a motion for
consolidation of @.". #o. --D$)4 with @.". #o. --56** +@.". #o. --D$)4, Rollo, pp.
-5$;-)6,. (s prayed for, we considered the two cases together.
In their petition in @.". #o. --D$)4, 'xecutive &ecretary @uingona and Chairman
Cepeda claimed that (<C had no clear right to the issuance of the preliminary
mandatory injunction because7
+-, (<C had no legislative franchise8
+$, (<C admitted in @.". #o. --56** that @(? had no authority to issue the license or
permit subject of the order in /uestion8 and
+4, Mandamus was not available to compel the performance of a discretionary function
+@.". #o. --D$)4, Rollo, pp. -.$;-.%,.
3n #ovember $, -%%*, (<C and Gudge "eyes filed their consolidated Comment to the
petition and supplemental petition +@.". #o. --D$)4, Rollo, pp. $46;465,.
3n #ovember $5, -%%*, the "epublic, 'xecutive &ecretary @uingona and @(?
Chairman Cepeda moved for the issuance of a restraining order enjoining Gudge
Pac/uing and Gudge "eyes from enforcing their /uestioned orders and (<C from
operating the jai;alai fronton +@.". #o. -D$)4, Rollo, pp. )$%;)45,. (ction on the motion
deferred.
II
@.". #o. --56**
otion for Intervention
The "epublic of the Philippines +"epublic, represented by @(? justifies its belated
intervention in @.". #o. --56** on the grounds that Cit has an interest involved in this
case and will be affected by the <ecision dated &eptember -, -%%*C +@.". #o. --56**,
Rollo, p. $$5,.
The purpose of its intervention is to nullify the decision of Gudge (ugusto '. !illarin of
the "egional Trial Court, ?ranch *6, anila, dated &eptember -, -%%*C +@.". #o.
--56**, Rollo, p. $$5,.
The purpose of its intervention is to nullify the decision of Gudge (ugusto '. !illarin of
the "egional Trial Court, ?ranch *6, anila, dated &eptember %, -%.% in Civil Case #o.
..;*5))6, which upheld the validity of 3rdinance #o. D6)5 of the City of anila granting
(<C a franchise to operate a jai;alai fronton. ayor @emiliano =ope: appealed said
decision to the Court of (ppeals, but on February %, -%.%, he filed a 9ithdrawal of
(ppeal. The Court of (ppeals approved the withdrawal in a resolution dated ay 5,
-%.%. (n entry of judgment was made by the court of (ppeals on ay $), -%.% and by
the "egional Trial Court, branch *6, anila, on 3ctober $D, -%%$.
In -%%-, the City of anila filed an action to annul the franchise of (<C with the
"egional Trial Court, ?ranch $4, anila +Civil Case #o. %-;5.%-4,. The complaint was
dismissed on <ecember $-, -%%-. #o appeal was ta0en from said dismissal of the
case.
The City of anila filed with this Court a petition for declaratory judgment to nullify the
franchise of (<C +@.". #o. -6-D).,. The petition was dismissed in a resolution dated
3ctober 4, -%%- Cfor lac0 of jurisdiction.C
Three members of the &angguniang Panglunsod of anila also filed with the "egional
Trial Court, ?ranch 4D, anila, a petition to compel ayor =ope: to cancel the permit
and license he issued in favor of (<C pursuant to ordinance #o. D6)5 +Civil Case #o.
%-;5.%46,. The petition was dismissed on Gune *, -%%$. #o appeal was ta0en from said
dismissal of the case.
In the otion for "econsideration;In;Intervention, &upplemental otion for
"econsideration;in;Intervention and &econd &upplemental otion for "econsideration;
in;Intervention, the "epublic merely claimed that 3rdinance #o. D6)5 had been
repealed by P.<. #o. DD- +Rollo, pp. $$.;$*.,, that the authority to issue permits and
licenses for the operation of jai;alai had been transferred to @(? by '.3. #o. 4%$ of
President Nuirino effective Guly -, -%5- and that (<C was never issued a franchise by
Congress +Rollo, pp. 4.4;4%6,. #owhere in its pleadings did the "epublic point out
where the first <ivision erred in resolving the two grounds of the petition for certiorari in
@.". #o. --56**,
which were7
+-, The decision of Gudge !illarin dated &eptember %, -%.. in Civil Case #o. ..;*5))6 is
null and void for failure to rule that P.<. #o. DD- had revo0ed 3rdinance #o. D6)58 and
+$, The decision of Gudge !illarin could not be executed by a mere motion filed on arch
-*, -%%*, or more than five years and six months after its promulgation.
In resolving the first issue, the First <ivision of this court explained that there was no
way to declare the .illarin decision null and void because the trial court had jurisdiction
over the subject matter of the action and if it failed to rule that ordinance #o. D6)5 was
nullified by P.<. #o. DD-, that was only an error of judgment. The First <ivision noted the
distinction between a void and an erroneous judgment and between jurisdiction and the
exercise of jurisdiction.
In 0an v. Intermediate 'ppellate &ourt, -)4 &C"( D5$ +-%..,, the Court held7
It is settled jurisprudence that except in the case of judgments which are void ab initio or
null and void per se for lac0 of jurisdiction which can be /uestioned at any time J and
the decision here is not of this character J once a decision becomes final, even the court
which has rendered it can no longer alter or modify it, except to correct clerical errors or
mista0es. otherwise, there would be no end to litigation, thus setting to naught the main
role of courts of justice, which is, to assist in the enforcement of the rule of law and the
maintenance of peace and order, by settling justifiable controversies with finality. +&ee
also Fabular v. Court of (ppeals, --% &C"( 4$% E-%.$F8 Fariscal !da. de 'mnas v.
'mnas, %5 &C"( *D6 E-%.6F8 3campo v. Caluag, -% &C"( %-D E-%)DF,.
(s to the second issue, the First <ivision held that the five;year period for executing a
judgment by simple motion under &ection ) of "ule 4% of the "evised "ules of Court
should be counted from the finality of the judgment and not from the date of its
promulgation as was done by ayor =im and the City of anila. Inasmuch as the
.illarin decision was appealed to the Court of (ppeals and the authority to withdraw the
appeal was approved by the Court of (ppeals only on may $), -%.%, the five;year
period should be counted, at the earliest, from ay $), -%.%. "ec0oning the five;year
period from said date, the motion for execution of the .illarin decision was filed timely
on arch -*, -%%*.
Intervention as contemplated by &ection %, "ule -$ of the "evised "ules of Court is a
proceeding whereby a third person is permitted by the court Cbefore or during a trialC to
ma0e himself a party by joining plaintiff or uniting with defendant or ta0ing a position
adverse to both of them @utierre: v. !illegas, 5 &C"( 4-4 E-%)$F,. the term CtrialC is
used in its restrictive sense and means the period for the introduction of evidence by
both parties +?ool v. endo:a, %$ Phil. .%$ E-%54F8 Provincial @overnment of &orsogon
v. &tamatela0y, )5 Phil. $6) E-%4DF,. The period of trial terminates when the period of
judgment begins +'l 1ogar Filipino v. Philippine #ational ?an0, )* Phil. 5.$ E-%4DF,.
Intervention as an action is not compulsory. (s deduced from the permissive word CmayC
in the rule, the availment of the remedy is discretionary on the courts +@arcia v. <avid,
)D Phil. $D% E-%4%F,. an important factor ta0en into consideration by the courts in
exercising their discretion is whether the intervenor2s rights may be fully protected in a
separate proceeding +Peyer v. artines, .. Phil. D$ E-%5-F,.
The case of #irector o$ %ands v. &ourt o$ 'ppeals, %4 &C"( $4. +-%D%,, can not, serve
as authority in support of the "epublic2s intervention at this late stage. while said case
involved an intervention for the first time in the &upreme court, the motion to be allowed
to intervene was filed before the appeal could be decided on the merits. The
intervention allowed in Republic v. *andiganba!an, @.". #o. %)6D4, "esolution, arch
4, -%%$, was also made before the decision on the merits by this Court. In contrast, the
intervention of the "epublic was sought after this Court had decided the petition in @.".
#o. --56** and petitioners had complied with and satisfied the judgment. 9hile the
intervention in <irector of =ands was in a case that was timely appealed from the
"egional Trial Court to the Court of (ppeals and from the Court of (ppeals to the
&upreme Court, the intervention of the "epublic was in a case that had become final
and executory more than five years prior to the filing of the motion to intervene.
(s of &eptember -), -%%*, therefore, when the republic moved to intervene, there was
no longer any pending litigation between the parties in @.". no. --56**. Intervention is
an auxiliary and supplemental remedy to an existing, not a settled litigation +cf. Clare:a
v. "osales, $ &C"( *55 E-%)-F,. (n intervention was disallowed in a case which has
becomes final and executory +Tra:o v. anila Pencil Co., DD &C"( -.- E-%DDF,
The case of *uson v. &ourt o$ 'ppeals, -D$ &C"( D6 +-%.%, invo0ed by the "epublic
+@.". #o. --D$)4, Rollo, pp. 5-D;5-., is inappropriate because the intervention therein
was before the trial court, not in this Court.
In its "eply, the "epublic admitted that the First <ivision only ruled on the procedural
issues raised in the petition and not on the constitutionality of P.<. #o. DD-. It even
urged that @(? was not a party to the case and therefore was not bound by the .illarin
decision because under &ection *% of "ule 4%, a judgment is conclusive only Cbetween
the parties and their successor;in;interest by title subse/uent to the commencement of
the action or special proceeding, litigating for the same thing and under the same title
and in the same capacityC +Rollo, pp. $$.;$4*, *4-,.
9ith more reason then that the "epublic should have ventilated its claim against (<C in
a separate proceeding.
=astly, an intervenor should not be permitted to just sit idly and watch the passing scene
as an uninterested overloo0er before he wa0es up to see0 judicial relief +Pacursa v. <el
"osario, $* &C"( -$5 E-%).F,.
The 3ffice of the President was aware of the plans of (<C to start operation as early as
-%... 3n ay 5, -%.., (<C informed said 3ffice of its intention to operate under
3rdinance #o. D6)5. The said 3ffice perfuntorily referred the letter of (<C to the anila
mayor, implying that the matter was not the concern of the #ational @overnment.
otion qua
<uo =arranto petition
?e 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 "arranto under
"ule )) of the revised "ules of Court. In the liberal construction of the "ules in order to
attain substantial justice, the Court has treated petitions filed under one "ule as
petitions filed under the more appropriate "ule +<avao Fruits Corporation v. (ssociated
=abor Anion, $$5 &C"( E-%%4F,.
In quo "arranto, the government can re/uire 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. <el "osario, -% &C"( -%) E-%)DF,.
(ll the essential re/uisites for a petition for quo "arranto are compresent. The motions
were filed by the &olicitor @eneral for the "epublic of the Philippines, represented by
@(?, to /uestion the right of (<C to operate and maintain the jai;alai.
The motions qua petition for quo "arranto assert that the authority of the City of anila
to issue to (<C a jai;alai franchise in -%D- had been withdrawn by '.3. #o. 4%$ in -%5-
and by ".(. #o. %5* in -%5* and that assuming the issuance of the franchise to (<C in
-%D- under 3rdinance #o. D6)5 was valid, such franchise, together with whatever
authority of the City of anila to grant the same, was voided by P.<. #o. DD- in -%D5.
In the case of *tone v. *tate o$ Mississippi, -6- A.&. .-*, cited by the "epublic, the
&tate (ttorney @eneral resorted to a quo "arranto proceeding to /uestion the authority
of petitioner therein to operate and maintain a gambling establishment.
The franchise of (<C granted by the City of anila under 3rdinance #o. D6)5 reads as
follows7
(# 3"<I#(#C' (AT13"IOI#@ T1' (>3" T3 (==39 (#< P'"IT T1'
(&&3CI(T'< <'!'=3P'#T C3"P3"(TI3# T3 '&T(?=I&1, (I#T(I# (#<
3P'"(T' ( G(I;(=(I I# T1' CIT> 3F (#I=(, A#<'" C'"T(I# T'"& (#<
C3#<ITI3#& (#< F3" 3T1'" PA"P3&'&.
?e it ordained by the unicipal ?oard of the City of anila, that7
&ec. -. The ayor is authori:ed, as he is hereby authori:ed to allow and permit the
(ssociated <evelopment Corporation to establish, maintain and operate a jai;alai in the
City of anila, under the following terms and conditions and such other terms and
conditions as he +the ayor, may prescribe for good reasons of general interest7
a. That the construction, establishment and maintenance of the jai;alai
shall be at a place permissible under existing :oning ordinances of
anila8
b. That the games to be played daily shall commence not earlier than
5766 o2cloc0 +sic, in the afternoon8
c. That the City of anila will received a share of $ LK on the annual
gross receipts on all wagers or bets, LK of which will accrue to the
@ames and (musements ?oard as now provided by law8
d. That the corporation will, in addition, pay to the city an annual license
fee of P4,666.66 and a daily permit fee of P$66.668
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 P46,666.66.
&ec. $. The ayor and the City Treasurer of their duly authori:ed representatives are
hereby empowered to inspect at all times during regular business hours the boo0s,
records and accounts of the establishment, as well as to prescribe the manner in which
the boo0s and financial statement of the entrepreneur shall be 0ept.
&ec. 4. This ordinance shall ta0e effect upon its approval.
'nacted originally by the unicipal ?oard on &eptember D, -%D-8 vetoed by the ayor on
&eptember $D, -%D-8 modified and amended by the unicipal ?oard at its regular
session today, 3ctober -$, -%D-.
(pproved by 1is 1onor, the ayor on -4 #ovember -%D-.
The said 3rdinance was enacted pursuant to &ection -. +jj,, the Charter of the City of
anila +".(. #o. *6%,, which too0 effect in -%*%. The charters of two other cities J
Nue:on City and Cebu City J contained a similar delegation of authority to grant jai;alai
franchises.
&aid &ection -.+jj, provides7
=egislative powers. J The unicipal ?oard shall have the following legislative powers7
xxx xxx xxx
+jj, To tax, license, permit and regulate wagers or betting by the public on boxing, billiards,
pools, horse or dog races, coc0pits, jai;alai, roller of ice;s0ating or any sporting or athletic
contests, as well as grant exclusive rights to establishments for this purpose,
notwithstanding any existing law to the contrary.
(. It is the posture of the "epublic that the power of local governments to issue
franchisers for the operation of jai;alai was Cconsolidated and transferredC to the @(?
under '.3. #o. 4%$. In its &upplemental otion for reconsideration;In;Intervention filed
on &eptember $D, -%%*, the "epublic averred7
-$. (s early as -%5-, the power of the local governments to issue licenses and permits
for the operation of jai;alai was Cconsolidated and transferredC to the @ames and
(musements ?oard under '.3. #o. 4%$ issued by then President 'lpidio Nuirino +sic,
too0 effect on Ganuary -, -%5-. Thus, in -%D-, the City of anila was without authority to
enact an ordinance authori:ing the City ayor to issue a licenseHpermit to private
respondent for the operation of jai;alai in anila +Rollo, pp. $D-;$D$,.
Furthermore, the republic alleged7
-4. &uch consolidation and transfer of power manifest the policy of the @overnment to
centrali:e the regulation, through appropriate institutions, of all games of chance
authori:ed by existing franchises of permitted by law. . . . +Rollo, p. $D$,.
There is no need to dwell upon this argument for suprisingly it was the "epublic itself
that repudiated it albeit after wrongfully attributing the argument to (<C.
In its "eply filed on #ovember %, -%%*, the "epublic stated that7 CContrary to
respondent (<C2s claim, it is not the position of the @(? that it is the body which grants
franchisers for the jai;alai either under '.3. #o. 4%$ or under P.<. #o. DD- . . .C +Rollo,
pp. *$6,.
For certain, '.3. #o. 4%$ merely reorgani:ed the different departments, bureaus, offices
and agencies of the government. There is absolutely nothing in the executive issuances
which vests on @(? the power to grant, much less revo0e, franchisers to operate jai;
alais.
?. (fter its volte-$ace, the "epublic next claims that ".(. #o. %5* had repealed &ection
-. +jj, and that after the effectivity of said law, only Congress could grant franchise to
operate jai;alais.
&ection * of ".(. #o. %5* provides7
#o person, or group of persons, other than the operator or maintainer of a fronton with
legislative franchise to conduct bas/ue pelota +jai;alai,, shall offer, ta0e or arrange bets
on any bas/ue pelota game or event, or maintain or use a totali:er or other device,
method or system to bet or gamble or any bas/ue pelota game or event.
"epublic (ct #o. %5* did not expressly repeal &ection -. +jj,. In such a case, if there is
any repeal of the prior law by the latter law, it can only be by implication. &uch 0ind of
repeals is not favored. There is even a presumption against repeal by implication +The
Philippine (merican anagement Co. Inc. v. The Philippine (merican anagement
employees (ssociation, *% &C"( -%* E-%D4F,.
In the same absence of an express repeal, a subse/uent 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 (ssociation, Inc. v.
Feliciano, -4 &C"( 4DD E-%)5F,.
?ut more importantly, the rule in legal hermeneutics is that a special law, li0e the
Charter of the City of anila, is not deemed repealed by a general law, li0e ".(. #o.
%5* +Commissioner of Internal "evenue v. Court of (ppeals, $6D &C"( *.D E-%%$F,.
In a way also, 3rdinance #o. D6)5 can be considered a Clegislative franchiseC within the
purview of ".(. #o. %5*, having been enacted by the unicipal ?oard of the City of
anila pursuant to the powers delegated to it by the legislature. ( grant, under a
delegated authority, binds the public and is considered the act of the state. CThe
franchise Egranted by the delegateF is a legislative grant, whether made directly by the
legislature itself or by any one of its properly constituted instrumentalitiesC +4) (m Gur
$d. D4*,.
(s held in =rig(t v. )agle, -6- A.&. %$-, the grant of a franchise by the legislature may
be done in two ways7
It ma! e,ercise t(is aut(orit! b! direct legislation, or t(roug( agencies dul! establis(ed
(aving po"er $or t(at purpose. 0(is grant "(en made binds t(e public, and is, directl! or
indirectl!, t(e 'ct o$ t(e *tate. 0(e easement is a legislative grant, "(et(er made directl!
b! t(e legislature itsel$, or b! an! one o$ its properl! constituted instrumentalities +Gustice
of Pi0e Co. v. Plan0 road, -- @a. $*)8 'mphasis supplied,.
If the intention of Congress in enacting ".(. #o. %5* was to repeal &ection -. +jj,, it
could have used explicit language to that effect in order not to leave room for
interpretation.
If ".(. #o. %5* repealed &ection -. +jj,, why did President arcos still issue P.<. #o.
DD-, expressly revo0ing the authority of the local governments to issue jai;alai
franchisesM It can never be presumed that the President deliberately performed useless
acts.
C. The claim of the "epublic that P.<. #o. DD- 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 (<C is whether &ection 4 of P.<. #o. DD- validly cancelled
3rdinance #o. D6)5, an issue entirely different from the claim of the "epublic that P.<.
#o. DD- had revo0ed the power of the City of anila to grant jai;alai franchisers.
Insofar as it is applied to 3rdinance #o. D6)5, &ection 4 of P.<. #o. DD- suffers from
constitutional infirmities and transgresses several constitutional provisions. &aid &ection
4 provides7
(ll existing franchisers and permits issued by local governments are hereby revo0ed and
may be renewed only in accordance with third decree.
&ection 4 violated the e/ual protection clause +&ection - of (rticle I!, of the -%D4
Constitution, which provided7
#o person shall be deprived of life, liberty, or property without due process of law, nor
shall any person be denied the e/ual protection of the laws.
=ess than two months after the promulgation of P.<. no. DD-, President arcos issued
P.<. #o. .-6, granting the Philippine Gai;(lai and (musement Corporation +PG(C, a
franchise to operate jai;alai within the @reater anila (rea. It is obvious that P.<. #o.
DD- was decreed to cancel the franchise of (<C so that the same could be given to
another entity under P.<. #o. .-6.
( facially neutral statute +P.<. #o. DD-, may become discriminatory by the enactment of
another statute +P.<. #o. .-6, which allocates to a favored individual benefits withdrawn
under the first statute +3rdinance #o. D6)5,, and when there is no valid basis for
classification of the first and second grantees. The only basis for distinction we can thin0
of is that the second grantee was ?enjamin "omualde:, a brother;in;law of President
arcos.
&ection 4 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 &ection - of
(rticle I! of the -%D4 Constitution.
3rdinance #o. D6)5, li0e any franchise, is a valuable property by itself. The concept of
CpropertyC protected by the due process clause has been expanded to include economic
interests and investments. The rudiments of fair play under the Cprocedural due
processC doctrine re/uire that (<C 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.
Ander the Csubstantive due processC 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 'llge!er v. %ouisiana, -)5 A.&. 5D.
+-.%D, can be easily stated, thus7 the government has to employ means +legislation,
which bear some reasonable relation to a legitimate end +#owa0, "otunda and >oung,
Constitutional =aw *4), **4 E$d edF,.
9hen President arcos issued P.<. #o. DD-, he did not have public interest in mind8
otherwise, he would have simply outlawed jai;alai as something pernicious to the public.
"ather, all what he wanted to accomplish was to monopoli:e the grant of jai;alai
franchisers.
The motivation behind its issuance notwithstanding, there can be no constitutional
objection to P.<. #o. DD- insofar as it removed the power to grant jai;alai franchisers
from the local governments. 9e said so in asco v. Pagcor, -%D &C"( 5$ +-%%-,. The
constitutional objection arises, however, when P.<. #o. DD- cancelled al the existing
franchises. 9e search in vain to find any reasonable relation between &ection 4 of P.<.
#o. DD- and any legitimate ends of government intended to be achieved by its
issuances. ?esides, the grant of a franchise to PG(C exposed P.<. #o. DD- as an
exercise of arbitrary power to divest (<C of its property rights.
&ection 4 also violated &ection - of (rticle !III of the -%D4 Constitution, which provided7
'very bill shall embrace only one subject which shall be expressed in the title thereof.
The title of P.<. #o. DD- reads as follows7
"'!3BI#@ (== P39'"& (#< (AT13"IT> 3F =3C(= @3!'"#'#T T3 @"(#T
F"(#C1I&', =IC'#&' 3" P'"IT (#< "'@A=(T' 9(@'"& 3" ?'TTI#@ ?> T1'
PA?=IC 3# 13"&' (#< <3@ "(C'&, G(I;(=(I 3" ?(&NA' P'=3T(, (#< 3T1'"
F3"& 3F @(I#@.
The title of P.<. #o. DD- 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.
=astly, &ection 4 impaired the obligation of contracts prohibited by &ection -- of (rticle
I! of the -%D4 Constitution.
(s authori:ed by &ection -.+jj,, 3rdinance #o. D6)5 grants (<C a permit Cto establish,
maintain and operate a jai;alai in the City of anila, under the following terms and
conditions and such other terms and conditions as he Ethe ayorF may prescribe for
good reasons of general interest.C +Rollo, p. $*,.
&ection -- of (rticle I! of the -%D4 Constitution provided7
#o law impairing the obligation of contracts shall be passed.
(ny law which enlarges, abridges, or in any manner changes the intention of the
parties, necessarily impairs the contract itself +A.&. v. Conde, *$ Phil. D)) E-%$$F8
Clemens v. #olting, *$ Phil. D6$ E-%$$F,. ( franchise constitutes a contract between the
grantor and the grantee. 3nce granted, it may not be invo0ed unless there are valid
reasons for doing so. +Papa v. &antiago, -65 Phil. $54 E-%5%F,. ( franchise is not
revocable at the will of the grantor after contractual or property rights thereunder have
become vested in the grantee, in the absence of any provision therefor in the grant or in
the general law +@rand Trun0 9estern ". Co. v. &outh ?end, $$D A.&. 5**,.
<. The "epublic hypothesi:ed that the said Constitutional guarantees presuppose the
existence of a contract or property right in favor of (<C. It claims that 3rdinance #o.
D6)5 is not a franchise nor is it a contract but merely a privilege for the purpose of
regulation.
3rdinance #o. D6)5 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 ma0e up the valuable consideration
for the contract. That is why the grantee is first re/uired to signify his acceptance of the
terms and conditions of the grant. 3nce the grantee accepts the terms and conditions
thereof, the grant becomes a binding contract between the grantor and the grantee.
(nother test used to distinguish a franchise from a privilege is the big investment ris0ed
by the grantee. In Papa v. *antiago, supra, we held that this factor should be
considered in favor of the grantee. ( franchise in which money has been expended
assumes the character of a vested right +?ra:osport &avings and =oan (ssociation v.
(merican &avings and =oan (ssociation, -)- Tex. 5*4, 4*$ &.9. $d. D*D,.
The cases cited by the "epublic to the effect that gambling permits or license issued by
municipalities can be revo0ed when public interest so re/uires, have never addressed
this issue, obviously because there were no significant financial investments involved in
the operation of the permits or licenses.
?ut assuming that 3rdinance #o. D6)5 is a mere privilege, still over the years, the
concept of a privilege has changed. Ander the traditional form a property ownership,
recipients of privileges, benefits or largesse from the government may be said to have
no property rights because they have no traditionally recogni:ed proprietary interest
therein. The case of .inco v. Municipalit! o$ Hinigaran, *- Phil. D%6 +-%-D, and Pedro v.
Provincial oard o$ Ri5al, 5) Phil -$4 +-%4-,, holding that a license to operate coc0pits
is a mere privilege, belong to this vintage. 1owever, the right;privilege dichotomy has
come to an end when the courts have reali:ed that individuals should not be subjected
to the unfettered whims of government officials to withhold privileges previously given
them +!an (lstyne, 0(e #emise o$ t(e Rig(t > Privilege #istinction in &onstitutional
%a", .- 1arvard =. ". -*4% E-%).F,. To perpetuate such distinction would leave many
individuals at the mercy of government officials and threaten the liberties protected by
the ?ill of "ights +#owa0, "otunda and >oung, Constitutional =aw 5*) E$nd edF,.
That a franchise is subject to regulation by the state by virtue of its police power is
conceded. 9hat is not acceptable is the "epublic2s proposition that the power to
regulate and supervise includes the power to cancel the franchise altogether.
The stance of the "epublic 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 "epublic on the evils of gambling fall to the ground
upon a showing that (<C is operating under an existing and valid franchise +Rollo, pp.
*$$;*$4,.
'. The "epublic /uestioned the siting of the (<C2s fronton as violative of '.3. #o. -45
of President Nuirino. Ander said executive issuance, no pelota fronton can be
maintained and operated Cwithin a radius of $66 lineal meters from any city hall or
municipal building, provincial capital building, national capital building, public pla:a or
par0, public school, church, hospital, athletic stadium, or any institution of learning or
charity.C
(ccording to the certificate issued by the #ational apping Information (uthority, the
(<C fronton is within the proscribed radius from the Central ?an0 of the Philippines, the
"i:al &tadium, the anila Ooo, the public par0 or pla:a in front of the :oo, the 3spital ng
aynila, a police precinct and a church +@.". #o. --56**, Rollo, pp. *$*;*$D,.
3n the other hand, a certificate issued by the 3fficer;in;charge of the 3ffice of the City
'ngineer of the City of anila attests to the fact that not one of the buildings or places
mentioned in the certificate submitted by the "epublic is within the $66;meter radial
distance, Ccenter to centerC from the (<C2s jai;alai building +Rollo, p. $)6,. 1ow this
variance in measurement came about is a matter that should have been submitted
before the trial court for determination.
1owever, the operative law on the siting of jai;alai establishments is no longer '.3. #o.
-45 of President Nuirino but ".(. #o. %4. as amended by ".(. #o. -$$*.
Ander said law only night clubs, cabarets, pavillions, or other similar places are covered
by the $66;lineal meter radius. In the case of all other places of amusements except
coc0pits, the proscribed radial distance has been reduced to 56 meters. 9ith respect to
coc0pits, the determination of the radial distance is left to the discretion of the municipal
council or city board +&ec. -,.
F. The "epublic also /uestions the lac0 of the period of the grant under 3rdinance #o.
D6)5, thus ma0ing it indeterminate +@.". #o. --D$)4, Rollo, pp. 566;565,. The
ordinance leaves it to the ayor of the City of anila 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 (rticle --%D of the Civil Code of the
Philippines, which provides as follows7
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. 3nce fixed by the courts, the period
cannot be changed by them.
III
@.". #o. --D$)4
The petition in @.". #o. --D$)4 see0s to nullify the following orders of respondent
Gudge "eyes7
+-, the Temporary "estraining 3rder dated &eptember -5, -%%*8
+$, the 3rder dated &eptember $5, -%%*8 and
+4, the 9rit of Preliminary Injunction dated &eptember 46, -%%* +Rollo, pp. -;$,.
The supplemental petition in said case see0s to nullify the 3rder dated 3ctober -%,
-%%* +Rollo, pp. -));$$5,.
(ccording to 'xecutive &ecretary @uingona and @(? Chairman Cepeda, respondent
Gudge "eyes acted without jurisdiction and with grave abuse of discretion in issuing
said orders and writ of preliminary injunction because7 +-, Civil Case #o.
%*;D-)5) was not properly assigned to him in accordance with &ection D, "ule $$ of the
"evised "ules of Court8 +$, the enforcement of the <irective and emorandum sought
to be enjoined had already been performed or were already fait accompli8 and +4,
respondent judge pre;empted this Court in resolving the basic issues raised in @.". #o.
--56** when he too0 cogni:ance of Civil Case #o. %*;D-)5).
(. (t the outset, it should be made clear that &ection D of "ule $$ of the "evised "ules
of Court does not re/uire that the assignment of cases to the different branches of a trial
court should always be by raffle. The "ule tal0s of assignment Cwhether by raffle or
otherwise.C 9hat it re/uires is the giving of written notice to counsel or the parties Cso
that they may be present therein if they so desire.C
&ection D of "ule $$ provides7
'ssignment o$ 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.
1owever, there may be cases necessitating the issuance of a temporary restraining
order to prevent irreparable injury on the petitioner.
To await the regular raffle before the court can act on the motion for temporary
restraining order may render the case moot and academic. 1ence, (dministrative
Circular #o. - dated Ganuary $., -%.. was issued by this Court allowing a special raffle.
&aid Circular provides7
..4. &pecial raffles should not be permitted except on verified application of the interested
party who see0s issuance of a provisional remedy and only upon a finding by the
'xecutive Gudge 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 Cbe conducted by at least two judges
in a multiple;sala station.C
The "epublic does not claim that (dministrative Circular #o. - has been violated in the
assignment of the case to respondent Gudge. The presumption of regularity of official
acts therefore prevails.
@oing bac0 to &ection D of "ule $$, this Court has rules in &ommissioner o$
Immigration v. Re!es, -$ &C"( D$. +-$%)*, 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 subse/uently heard. In the instant case,
'xecutive &ecretary @uingona and @(? Chairman Cepeda were given a hearing on the
matter of the lac0 of notice to them of the raffle when the court heard on &eptember $4,
-%%* their otion to "ecall Temporary "estraining 3rder, Argent &upplemental otion
to "ecall Temporary "estraining 3rder and 3pposition to Issuance of a 9rit of
Preliminary Issuance of a 9rit of Preliminary Injunction +@.". #o. --D$)4, Rollo p. *4*,.
Petitioners in @.". #o. --D$)4 failed to shown any irregularity attendant to the raffle or
any prejudice which befell them as a result of the lac0 of notice of the raffle of Civil Case
#o. %*;D-)5).
3n the other hand, petitioners never as0ed for a re;raffle of the case or for any
affirmative relief from the trial court and proceeded with the presentation of evidence of
(<C in connection with the motion for preliminary injunction.
?. 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 +3hio 3il Co. v. Conway, $D% A.&. .-4, D4 =. 'd. %D$, *% &.
Ct. $5)8 @obbi v. <ilao, 5. 3r. -*, --- p. *%, --4, p. 5D,. 9hat is intended to be
preserved is the status quo ante litem motam or the last actual, peaceable,
noncontested status +(nnotation, -5 (=" $d $4D,.
In the case at bench, the status quo which the /uestioned orders of Gudge "eyes
sought to maintain was that (<C was operating the jai;alai pursuant to 3rdinance #o.
D6)5 of the City of anila, the various decisions of the different courts, including the
&upreme Court, and the licenses, permits and provisional authority issued by @(?
itself.
(t times, it may be necessary for the courts to ta0e some affirmative act essential to
restore the status quo +Iowa #atural "esources Council v. !an &ee EIowaF -5. #.9. $d.
---,.
The right to conduct a business or to pursue one2s business or trade without wrongful
interference by others is a property right which e/uity will, in proper cases, protect by
injunction, provided of course, that such occupation or vocation is legal and not
prohibited by law +"ance v. &perry P 1utchinson Co., *-6 P. $d .5%,.
1ad not the <irective to close the operation of (<C2s jai;alai and the implementing
emorandum been issued, there would have been no need for the issuance of the
orders of the "egional Trial Court. The need for said e/uitable reliefs becomes more
evident if we consider that the 'xecutive &ecretary himself had entertained doubts as to
the legality of his action because in the same <irective he instructed the &olicitor
@eneral to obtain a judicial ruling on the legal issues raised.
C. "espondent Gudge "eyes did not pre;empt this Court in deciding the basic issues
raised in @.". #o. --56** when it assumed jurisdiction over Civil Case #o. %*;D-)5)
and issued the orders /uestioned in @.". #o. --D$)4.
The orders of Gudge "eyes are provisional in nature and do not touch on the merits of
the case. The issues raised in Civil Case #o. %*;D-)5) are the validity of the <irective
and emorandum, which were issued after the decision of this Court in @.". #o.
--56**. The respondent in the civil case before the trial court are not even parties in
@.". #o. --56**.
PUNO, J., dissenting7
The petitions at bench involve great principles of law in tension. 3n balance at one end
is the high prerogative of the &tate to promote the general welfare of the people thru the
use of police power8 on the opposite end is the right of an entity to have its property
protected against unreasonable impairment by the &tate. courts accord the &tate wide
latitude in the exercise of its police power to bring about the greatest good of the
greatest number. ?ut when its purpose is putrefied by private interest, the use of police
power becomes a farce and must be struc0 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 (ssociated <evelopment
Corporation +(<C, still possesses a valid franchise to operate jai;alai in manila. The
issue is multi;dimensional considering its constitutional complexion.
First, the matrix of facts. 3n Gune -., -%*%, congress enacted "epublic (ct #o. *6%,
otherwise 0nown as the Charter of anila. &ection -. +jj, gave to the unicipal ?oard
+now City Council, the following power7
+jj, To tax, license, permit and regulate wagers or betting by the public on boxing, sipa,
bowling, billiards, pools, horse or dog races, coc0pits, /ai-alai, roller or ice s0ating or any
porting or athletic contest, as well as grant exclusive rights to establishments for this
purpose, notwithstanding any existing law to the contrary.
3n Gune $6, -%54, congress passed "epublic (ct #o. %5* entitled C(n (ct to Prohibit
Certain (ctivities in Connection with 1orse "aces and ?as/ue pelota @ames +Gai;(lai,
and to Prescribe penalties for its !iolation.C &ections * and 5 of the law provide7
xxx xxx xxx
&ec. *. #o person, or group of persons, other than the operator or maintainer of a fronton
with legislative franchise to conduct bas/ue pelota games +Gai;(lai,, shall offer, ta0e or
arrange bets on any bas/ue pelota game or event, or maintain or use a totali:er or other
device, method or system to bet or gamble on any bas/ue pelota game or event.
&ec. 5. #o person, operator, or maintainer of a fronton with legislative franchise to
conduct bas/ue pelota games shall offer, ta0e, or arrange bets on any bas/ue pelota
game or event, or maintain or use a totali:ator or to her device, method or system to bet
or gamble on any bas/ue pelota game or event outside the place, enclosure, or fronton
where the bas/ue pelota game is held.
3n &eptember D, -%D-, the unicipal ?oard of anila approved 3rdinance #o. D6)5
Cauthori:ing the ayor to (llow and Permit the (ssociated <evelopment Corporation to
'stablish, aintain and 3perate a Gai;(lai in the city of anila, Ander Certain Terms
and Conditions (nd For 3ther Purposes.C
3n &eptember $-, -%D$, martial law was declared by then president Ferdinand '.
arcos. The -%D- Constitution, as amended, authori:ed the former President to
exercise legislative powers. (mong the laws he decreed is P.<. #o. DD-, C"evo0ing (ll
Powers (nd (uthority 3f =ocal @overnment+s, to @rant Franchise, =icense 3r Permit
(nd "egulate 9agers 3r ?etting ?y The Public 3n 1orse (nd <og "aces, Gai;(lai, 3r
?as/ue pelota (nd 3ther Forms of @ambling.C its Text states7
xxx xxx xxx
&ec. -. (ny 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 trac0s, jai;alai or other forms of
gambling is hereby revo0ed.
&ec. $. 1ereafter all permit or franchise to operate, maintain and establish horse and dog
race trac0s, jai;alai and other forms of gambling shall be issued by the national
government upon proper application and verification of the /ualifications of the applicant7
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.
&ec. 4. (ll existing franchises and permits issued by local government are hereby
revo0ed and may be renewed only in accordance with this <ecree.
P.<. #o. DD- was enacted on (ugust $6, -%D5 and purportedly revo0ed the permit of
(<C to operate. ?efore two +$, months could elapse or on 3ctober -), -%D5, then
President arcos issued P.<. #o. .-6 granting a franchise to Philippine Gai;(lai and
(musements corporation to conduct jai;alai games in anila. it is not disputed that his
brother;in;law, r. (lfredo C?erjoC "omualde:, held the controlling interest in Philippine
Gai;alai and (musements Corporation. apparently, the favored treatment given to r.
"omualde: and company did not sit well with former President Cora:on C. (/uino. 3n
ay ., -%.D, she issued 'xecutive 3rder #o. -)% repealing P.<. #o. .-6.
#evertheless, she allowed P.<. #o. DD- to stay in our statutes boo0.
(<C thought it could resume its jai;alai operation. 3n ay 5, -%.., it sought from then
mayor @emiliano C. =ope:, Gr., of anila a permit to operate on the strength of
3rdinance #o. D6)5. The re/uest was refused and this &pawned suits
1
all won by (<C.
In Civil Case #o. ..;*5))6, filed in ?r. *6, "TC, anila, Gudge (ugusto '. !illarin ruled
that 3rdinance #o. D6)5 created a binding contract between the city of anila and
(<C, and hence, the City ayor had no discretion to deny (<C2s permit. The ruling was
appealed to the Court of (ppeals where it was doc0eted as C(;@.". &P #o. -)*DD. 3n
February %, -%.%, however, ayor =ope: withdrew the city2s appeal. &till, the legal
problems of (<C did not disappear. anila ayor (lfredo =im who succeeded ayor
=ope: again refused to issue (<C2s permit despite orders of Gudge Felipe @. Pac/uing.

2
Threatened with contempt, ayor =im filed with this Court @.". #o. --56**, a petition
for certiorari. 1e alleged that he could not be compelled to enforce the <ecision in Civil
Case #o. ..;*5))6 as the same is null and void for want of jurisdiction of the court that
rendered it. 1e li0ewise contended that 3rdinance #o. D6)5 had been revo0ed by P.<.
#o. DD-. 3n &eptember -, -%%*, the First division of this court, spea0ing thru r.
Gustice Camilo Nuiason, dismissed ayor =im2s petition. It held7
xxx xxx xxx
Petitioners failed to appreciate the distinction between a void and an erroneous judgment
and between jurisdiction and the exercise of jurisdiction.
1aving jurisdiction over the civil case, whatever error may be attributed to the trial court,
is simply one of judgment, not of jurisdiction. an error of judgment cannot be corrected by
certiorari but by appeal +"obles v. 1ouse of "epresentatives 'lectoral Tribunal, -.-
&C"( D.6 E-%%6F8 <e Castro v. <elta otor &ales Corporation, 5D &C"( 4** E-%D.F8
@alang v. 'ndencia, D4 Phil. 4%- E-%*-F.
The issue on the cancellation of 3rdinance #o. D6)5 by president arcos could have
been raised as a special defense in Civil Case #o. ..;5*))6 but was not . . .
The City of anila should have pursued in the appellate courts its appeal /uestioning the
dismissal of Civil Case #o. %-;5.%-4, where the trial court ruled that ayor =ope: and
the city could no longer claim that 3rdinance #o. D6)5 had been cancelled by president
arcos because they failed to raise this issue in Civil Case #o. ..;5*))6.
(t 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
=aw prevails +Poses v. Toledo Transportation Co., )$ Phil. $%D E-%45F8 anila electric Co.,
v. Public utility commissioners, 46 Phil. 4.D E-%-5F.
Apon its receipt, ayor =im manifested he would comply with the <ecision. 1e did not
file a motion for reconsideration. it was then that the "epublic started its own legal battle
against (<C. it intervened in @.". #o. --56**, raising several issues, especially (<C2s
lac0 of a valid legislative franchise to operate jai;alai. #o less than 'xecutive &ecretary
Teofisto @uingona directed the @ames and (musement ?oard, then headed by r.
Francisco ". &umulong, jr., to hold in abeyance the grant of authority, or if any had been
issued, to withdraw such grant of authority in favor of (<C. The @(? dutifully ordered
(<C to cease and desist from operating the anila jai;alai. (<C again rushed to the
"TC of anila and filed Civil Case #o. %*;D-)5) which was raffled to ?r. -*, presided
by respondent Gudge !etino "eyes. (cting with dispatch, respondent judge temporarily
restrained the @(? from withdrawing the provisional authority of (<C to operate. (fter
hearing, the temporary restraining order was converted into writs of preliminary
injunction and preliminary mandatory injunction upon posting by (<C of a P$ million
bond. these writs are challenged in these consolidated petitions as having been issued
in grave abuse of discretion amounting to lac0 of jurisdiction.
9hile the petitions at bench are chec0ered with significant substantive and procedural
issues, I will only address the contention that (<C has no existing legislative franchise.
The contention is anchored on two +$, submissions7 first, (<C has no legislative
franchise as re/uired by ".(. #o. %5*, and second, even if the city of anila licensed
(<C to operate jai;alai, its authority was nevertheless revo0ed by section 4 of P.<. #o.
DD-.
I find as completely baseless petitioners2 submission that ".(. #o. %5* re/uires a
legislative franchise to operate a jai;alai, in effect, revo0ing the power of the City of
anila to issue permits for the same purpose as granted by its Charter. ( $6;$6 visual
reading of ".(. #o. %5* will not yield the suggested interpretation by petitioners. the
titles of ".(. #o. %5* will immediately reveal that the law was enacted to achieve a
special purpose. It states7 C'n 'ct 0o Pro(ibit &ertain 'ctivities In Connection 9ith
1orse "aces (nd ?as/ue pelota @ames +Gai;(lai,, (nd To Prescribe Penalties For its
!iolation.C The pro(ibited activities related to jai;alai games are specified in sections *
to ), vi57
&ec. *. #o person, or group of persons, other than the operator or maintainer of a $ronton
with legislative franchise to conduct basque pelota games +Gai;(lai,, shall offer, ta0e or
arrange bets on any basque pelota game or event, or maintain or use a totali:ator or
other device, method or system to bet or gamble on any basque pelota game or event.
&ec. 5. #o person, operator, or maintainer of $ronton with legislative franchise to conduct
basque pelota games shall offer, ta0e or arrange bets on any basque pelota game or
event, or maintain or use a totali:ator or other device, method or system to bet or gamble
on any basque pelota game or event outside the place, enclosure, or $ronton where the
basque pelota game is held.
&ec. ). #o 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 ".(. #o. %5* does not show that it see0s 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 criminali:ation of certain practices relating to jai;alai games. The title of
a law is a valuable intrinsic aid in determining legislative intent.
3
The 'xplanatory #ote
4
of 1ouse ?ill 4$6*, the precursor of ".(. #o. %5*, also reveals
that the intent of the law is only to criminali:e the practice of illegal boo0ies and game;
fixing in jai;alai. It states7
0(is bill see-s to pro(ibit certain anomalous practice o$ ?boo-ies? in connection "it( t(e
(olding o$ (orse races or ?basque pelota? games. The term Cboo0ieC 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 -6K. Prosecutions of said persons have
been instituted under (ct #o. *$*6 which was enacted in -%45. 1owever, in a recent
opinion released by the City Fiscal of anila he maintains that (ct #o. *$*6 has already
been repealed, so that the present law regulating ordinary horse races permits Cboo0iesC
to ply their trade, but not on sweepsta0es races and other races held for charitable
purposes. 9ith the operation of Cboo0ingC places in the City of anila, the @overnment
has been losing no less than P)66,666.66 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.
(s said 'xplanatory #ote is expressive of the purpose of the bill, it gives a reliable
0eyhole on the scope and coverage of ".(. #o. %5*.
1
#othing from the 'xplanatory
#ote remotely suggests any intent of the law to revo0e the power of the City of anila to
issue permits to operate jai;alai games within its territorial jurisdiction.
The <ebates
2
in Congress li0ewise reject the reading of ".(. #o. %5* by petitioners,
thus7
xxx xxx xxx
"'&APTI3# 3F &'&&I3#
T1' &P'(B'". The session is resumed
". CI#C3. r. &pea0er, I withdraw my motion for postponement.
". C(=3. r. &pea0er, will the gentleman may yield, if he so desires.
". O3&(. 9illingly.
". C(=3. 9hat is the national import of this billM
". O3&(. r. &pea0er, this bill prohibits certain activities in connection
with horse races and jai;(lai games which are
licensed by the government. (t present, there are many
practices in connection with the holding of these games
"(ic( deprive t(e government o$ income t(at s(ould
legall! go into t(e government co$$ers as ta,es.
". C(=3. Is not this matter of national importance because Gai;(lai
games and horse races are (eld onl! in ManilaM
". O3&(. Precisely, r. &pea0er, they are played on a big scale, and
there are many practices which deprive the government of
income to which it is entitled. I thin0 the gentleman from
(gusan is a member of the Committee on (ppropriations.
The governments will have more revenues, if we shall
approve this bill.
(gain, legislative debate is a good source to determine the intent of a
law.
3

To top it all, the text of ".(. no. %5* itself does not intimate that it is repealing any
existing law, especially section -. +jj, of ".(. no. *6%, otherwise 0nown as the Charter of
anila. Indeed, ".(. #o. %5* has no repealing provision. The reason is obvious J 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 alread! regulated by existing laws, li0e the
matter of whether it is the national government alone that should issue franchises to
operate jai;alai games.
The subse/uent enactment of P.<. #o. DD- on (ugust $6, -%D5 further demolished the
submission of petitioners. In clear and certain language, P.<. no. DD- recalled the owner
of local governments to issue jai;alai franchises and permits. It also revo0ed existing
franchises and permits issued by local governments. If ".(. no. %5* had already
disauthori:ed local governments from granting franchisers and permits, there would be
no need to enact P.<. no. DD-. #o rule of statutory construction will be considered any
law a meaningless redundancy.
The passage of P.<. #o. DD-, also negates petitioners2 insistence that for (<C to
continue operating, it must show it has a franchise from Congress, not just a permit from
the City of anila. The suggested dichotomy between a legislative franchise and city
permit does not impress. If the City of anila is empowered to license the (<C it is
because the power was delegated to it by Congress. The acts of the City of anila in
the exercise of its delegated power bind Congress as well. &tated otherwise, the permit
given by the City to (<C is not any whit legally inferior to a regular franchise. Through
the years, the permit given by the City endows the grantee complete right to operate.
#ot once, except in these cases, has the national government /uestioned the
completeness of his right. For this reason, P.<. #o. DD- has to ta0e revo0e all existing
franchises and permits without ma0ing any distinction. It treated permits in the same
class as franchises.
Petitioners2 second line of argument urges that in any event, &ection 4 of P.<. #o. DD-
expressly revo0ed all existing franchises and permits to operate jai;alai games granted
by local governments, including the permit issued to (<C by the City of anila through
3rdinance #o. D6)5. For its resolution, petitioners2 argument re/uires a re;statement of
the re/uirements for the valid exercise of police power.
It was the legendary Chief Gustice arshall who first used the phrase police power in
-.$*.
4
'arly attempts to fix the metes and bounds of police power were unsuccessful.
9

For of all the inherent powers of the &tate, police power is indubitably the most
pervasive,
10
the most insistent and the least limitable.
11
"ooted on the latin maxims,
salus populi suprema est le, +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 Gustice 1olmes to stress that its reach extends Cto
all the great public needs.C
12
( similar sentiment was echoed by our own Gustice =aurel
in 'lalang v. =illiams
13
who defined police power as the Cstate authority to enact
legislation that may interfere with personal liberty or property in order to promote the
general welfare.C 3ver the years, courts recogni:ed the power of legislature to enact
police regulations on broad areas of state concern7 +a, the preservation of the state itself
and the unhindered execution of its legitimate functions8 +b, the prevention and
punishment of crime8 +c, the preservation of the public peace and order8 +d, the
preservation of the public safety8 +e, the purity and preservation of the public morals8 +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
enumerated8 +h, the regulation of property and rights of property so far as to prevent its
being used in a manner dangerous or detrimental to others8 +i, the prevention of fraud,
extortion, and oppression8 +j, roads and streets, and their preservation and repair8 and
+0, the preservation of game and fish.
14

?ut while the &tate is bestowed near boundless authority to promote public welfare, still
t(e e,ercise o$ police po"er cannot be allo"ed to run riot in a republic ruled b! reason.
Thus, our courts have laid down the test to determine the validity of a police measure as
follows7 +-, the interest of the public generally, as distinguished from those of particular
class, re/uires its exercise8 and +$, the means employed are reasonably necessary for
the accomplishment of the purpose and not unduly oppresive upon individuals.
11

<eeper relexion will reveal that the test reiterates the essence of our constitutional
guarantees of substantive due process, e/ual protection, and non;impairment of
property rights.
9e now apply this lucidly;lined test to the petitions at bench. To reiterate, P.<. #o. DD-
utili:ed two methods to regulate jai;alai7 First, it reverted the power to issue franchise
and permit to the national government, second, it revo0ed all existing franchise and
permit issued by local governments.
I concede that the first method is invulnerable even to the strongest of constitutional
attac0. Part of the plenary power of Congress to ma0e 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 anila when
it granted its charter on Gune -., -%*% thru ".(. no. *6%. Congress can also revo0e the
delegated power and choose to wield the power itself as it did thru then President
arcos who exercised legislative powers by enacting P.<. #o. DD-. In the petitions at
bench, Congress revo0ed 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, 'xecutive &ecretary @uingona established the fact that at the time of
the enactment of P.<. #o. DD-, 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 minimi:e their ill effects, the law centrali:ed 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.
'pplicants 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 &ection 4 of P.<. #o. DD- which revo0ed all existing
franchises and permits is, however, constitutionally impermissible. 3n its face, section 4
purports to revo0e all existing franchises and permits. <uring the oral argument of the
petitions at bench, however, it was admitted
that at the time P.<. #o. DD- was enacted, only (<C is actually operating a jai;alai.
12

The purported revocation of all franchises and permits when there was only one existing
permit at that time is an unmista0eable attempt to mas0 the law with impartiality. #o
other permit was affected by said sec. 4 except (<C.
Truth, however, has its own time of sprouting out. The truth behind the revocation of
(<C2s franchise revealed itself when former President arcos transferred (<C2s
franchise to the Philippine Gai;(lai and (musements Corporation then under the control
of his brother;in;law, r. (lfredo C?ejoC "omualde:. The favored treatment was
extended hardly two +$, months after the revocation of (<C2s franchise and it left
Philippine Gai;(lai and (musements Corporation the sole jai;alai operator in the
Philippines. The Court is not informed of any distinction of PG(C that will justify its
different treatment. The evidence is thus clear and the conclusion is irresistable that
section 4 of P.#. )o. 223 "as designed "it( a malignant e!e against '#&.
In light of the established facts in field, section 4 of P.<. #o. DD- must be struc0 down as
constitutionally infirmed. despite its cosmetics, section 4 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 (<C is reasonably
necessary to enable the &tate to grapple to the ground the evil of jai;alai as a form of
gambling. Petitioners have not demonstrated that government lac0s alternative options
to succeed in its effort except to cancel the lone franchise of (<C. 9ell to stress, it is
not the lofty aim of P.<. #o. DD- to completely eradicate jai;alai games8 it merely see0s
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 r. Gustice Nuiason that
sec. 4 of P.<. #o. DD- offends the Constitution which demands faithful compliance with
the re/uirements of substantive due process, e/ual protection of the law, and non;
impairment of contracts. capsuli:ing their essence, substantive due process exacts
fairness8 e/ual protection disallows distinction to the distinctless8 and the guaranty of
non;impairment of contract protects its integrity unless demanded otherwise by the
public good. Constitutionalism eschews the exercise of unchec0ed 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 &tate not just to achieve
order or liberty but to attain ordered libert!, however elusive the balance may be.
Cogni:ant of the truism that in life the only constant is change, the Constitution did not
design that the point that can stri0e 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 4 of P.<. #o.
DD- was not cured when former President (/uino used it in revo0ing P.<. #o. .-6 which
granted Philippine Gai;(lai and (musements Corporation a franchise to operate jai;alai
in anila. The subse/uent use of said section should not obfuscate the fact that the law
was enacted in the wrongful exercise of the police power of the &tate. There is no
sidestepping the truth that its enactment inflicted undue injury on the right s of (<C and
there can be no reparation of these rights until and unless its permit to continue
operating jai;alai in anila is restored. Cancelling the franchise of Philippine Gai;(lai
and (musements Corporation is an act of Gustice to (<C if its franchise would be left
unrecogni:ed. &ince the unconstitutionality of section 4 is congenital, it is beyond
redemption.
?ut while I wholeheartedly subscribe to the many impeccable theses of r. Gustice
Nuiason, it is with regret that I cannot join his submittal that sec. 4 of P.<. #o. DD-
violates procedural due process. 9e are dealing with the plenary power of the
legislature to ma0e and amend laws. Congress has previously delegated to the City of
anila the power to grant permits to operate jai;alai within its territorial jurisdiction and
(<C2s permit could have been validly revo0ed 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 see0s when engaged in lawma0ing does not focus on the liability of a person
or entity which would re/uire fair hearing of the latter2s side. In fine, the legislature while
ma0ing 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. 1owever heavily laden with property
rights a franchise to operate jai;alai maybe, it is still a contract which under appropriate
circumstances can be revo0ed to enhance public interest. Gai;alai may be a game of a
thousand thrills but its true thrill comes from the gambling on its indeterminate result.
?eyond 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 youth2s
physical, moral, spiritual, intellectual, and social well;being,
13
there is no right to
gamble, neither a right to promote gambling for gambling is contra bonos mores. To
re/uire the legislature to strictly observe procedural before it can revo0e a gambling due
process before it can revo0e a gambling franchise is to put too much primacy on
property rights. 9e then stand in danger of reviving the long lamented -%65 ruling in
%oc(ner v. )e" @or-
14
which unwisely struc0 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 %oc(ner from its sarcophagus. 9e
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 r. Gustice Nuiason which resisted the stance that the Court
should close its eyes to allegations that section 4 of P.<. #o. DD- was conceived and
effected to give na0ed preference to a favored entity due to pedigree. I reiterate the
view that section -, (rticle !III of the Constitution expanding the jurisdiction of this Court
to determine whether or not there has been a grave abuse of discretion amounting to
lac0 or excess of jurisdiction on the part of any branch or agency of government is not a
pointless postulate. 9ithout the grant of this new power, it would be difficult, if not
impossible, to pierce through the pretentious purposes of P.<. #o. DD-. P.<. #o. DD-
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. "ather, it is the dictate of a public official who then had
a monopoly of executive and legislative powers. (s it was not infre/uently 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 4 of P.<. #o. DD- unconstitutional and to dismiss the
petitions.
Foo%"o%*#
P(<I==(, G., concurring7
- (nnex C<C, Petition in @.". #o. --D$)4.
$ (nnex CCC, Petition in @.". #o. --D$)4.
4 &ec. 5. The &upreme Court shall have the following powers7
+-, 'xercise original jurisdiction . . . petitions for certiorari, prohibition, mandamus, quo
"arranto, and (abeas corpus. . . .
* &ec. * . . .
+$, (ll cases involving the constitutionality of a treaty, international or executive
agreement, or law, which shall be heard by the &upreme Court en banc . . . shall be
decided with the concurrence of a majority of the embers who actually too0 part in the
deliberations on the issues in the case and voted thereon.
5 It will be noted that under 'xecutive 3rder #o. 4%$, issued on - Ganuary -%5-, even
the power to regulate jai;alais was transferred from the local governments to the @ames
and (musement ?oard +@(?,.
B(PA#(#, G., concurring7
- @.". #o. --D$)4, Rollo, pp. D;..
$ The government contends that -, "epublic (ct #o. %5* approved on Gune $6, -%54
re/uires a legislative not a municipal franchise and that $, &ec. 4 of P.<. DD- issued on
$6 (ugust -%D5 expressly revo0ed all existing franchises and permits issued by local
governments to operate all forms of gambling facilities. In @.". #o. --D$)4 the
government contends that the (<C has no right to the issuance of a preliminary
mandatory injunction because the (<C had no legislative franchise and that mandamus
was not available to compel performance of a discretionary function.
4 ".(. #o. %5*, sec. * and 5.
* It is a cardinal principle that this court will first ascertain whether a construction of a
statute is fairly possible by which the constitutional /uestion may be avoided. $%D &( $..
+-%4),.
5 ?asco vs. Pagcor -%D &C"( 5$ +-%%-,.
) Id.
D CIt has almost become impossible to limit its sweep.C ?arbier vs. Connoly, --4 A.&. $D
+-..*, CIt may be said to be that inherent and plenary power in the &tate which enables it
to prohibit all things hurtful to the comfort, safety and welfare of society.C =a0e !iew vs
"ose 1ill Cemetery Co. D6 Ill. -%- +-.D4, *ee also, A.&. v. Toribio, -5 Phil. .58 A.&. vs.
@ome: Gesus 4- Phil. $-.8 A.&. vs. Pompeya 4- Phil. $*58 "ubi vs. Provincial ?oard 4%
Phil. )66, and 'du v. 'ricta, in$ra, note ).
. 45 &C"( *.-, *.D.
% '#"INA' . F'"#(#<3, T1' C3#&TITATI3# 3F T1' P1I=IPPI#'&, 5-5 +-%.D,.
-6 *upra, note 5.
-- *upra, note D, at 5-..
-$ $-% A.&. -6* +-%--,.
<(!I<', G"., G., concurring7
- - !IC'#T' G. F"(#CI&C3, 0(e Revised Rules o$ &ourt in t(e P(ilippines D-. +-%D4
ed.,
$ @arcia vs. <avid, )D Phil. $D%, $.4 E-%4%F.
4 Tra:o vs. anila Pencil Co., - &C"( *64 E-%)-F, citing Felismino vs. @loria, supra note
$8 ?ool vs. endo:a, @.". #o. 544%, -D (pril -%54.
* =ichauco vs. Court of (ppeals, )4 &C"( -$4 E-%D5F.
5 Tra:o vs. anila Pencil Co., supra note 4, citing =im Te0 @oan vs. (:ores, D) Phil. 4)4
E-%*)F8 'l 1ogar Filipino vs. #ational ?an0 , )* Phil. 5.$ E-%4DF.
) "i:al &urety and Insurance Co. vs. Tan, .4 Phil. D4$ E-%*%F.
D @arcia vs. <avid, supra note $ at $.$8 5% (m Gur $d 5D58 )D C.G.&. %D58 Clare:a vs.
"osales, @.". #o. =;-54)*, 4- ay -%)-, 5% 3.@. #o. $4, 4)65.
. @arcia vs. <avid, supra note $.
% ?atama Farmers2 Cooperative ar0eting (ssociation, Inc. vs. "osal, *$ &C"( *6.
E-%D-F.
-6 %4 &C"( $4. E-%D%F.
PA#3, G., dissenting7
- Civil Case #o. ..;*5))68 Civil Case #o. %-;5.%-48 Civil Case #o. %-;5.%468 @.". #o.
-6-D)4.
$ 1e succeeded Gudge !illarin as Presiding Gudge of ?r. *6, "TC, anila.
4 (gpalo, &tatutory Construction, -%.) ed., p. -$ citing @overnment v. unicipality of
?inalonan, 4$ Phil. )4* E-%-5F.
* &ee emorandum of "espondents, p. -5.
5 (gpalo, op cit., pp. D6;D- citing ?aga v. P#?, %% Phil. ..% E-%5)F8 #epomuceno v.
3campo, %5 Phil. $%$ E-%5*F.
) Congressional "ecord, Proceedings and <ebates, !ol. III, Part II, #o. ., Guly -, -%5$
cited in "eply emorandum of "espondents, p. D.
D (gpalo, op cit, pp. D-;D$ citing (renas v. City of &an Carloos, .$ &C"( 4-. E-%D.F8
People v. 3larte, -6. Phil. D56 E-%)6F.
. Tribe, (merican Constitutional law, Foundation Press, Inc., -%D. ed., p. 4$48 @ibbons v.
3gden, $$ AF +% 9heat, -, $6. E-.$*F.
% &tone v. ississippi, -6- A& .-*.
-6 Cru:, Isagani, Constitutional =aw, -%%- ed., p. 4%.
-- &mith ?ell and Co. v. #atividad, *6 Phil. -4) E-%-%F.
-$ #oble &tate ?an0 v. 1as0ell, $-% A& --$ E-%--F.
-4 D6 Phil. D$) E-%*6F.
-* ?lac0, 1enry Campbell, 1andboo0 on Constitutional =aw, $nd ed., -%.5 ed., p. 4*$.
-5 Cru:, op cit p. *. citing A& v. Toribio, -5 Phil. .5 E-%-6F8 Fabie v. City of anila, $-
Phil. *.) E-%-$F8 Case v. ?oard of 1ealth, $* Phil. $5) E-%-4F.
-) 1earing on #ovember -6, -%%*, T&#, pp. .;%.
-D (rticle II, section -4 on &tate Policies.
-. -%. A& $5 &CT 54%, *% = ed %4D E-%65F, where Gustice 1olmes vigorously dissented,
stating among others that Cthe Fourteenth (mendment does not enact r. 1erbert
&pencer2s &ocial &tatistics . . .C and Cgeneral propositions do not decide concrete cases.C
-% The %oc(ner ruling was jun0ed in -%4D but recent writings on possible revival of
economic activism include7 'sptein, "ichard, Ta0ings. Private Property and the Power of
'mminent <omain E-%.5F8 &unstein, Class Interest @roups in (merican Public =aw, 4.
&tan =. "eo. $%, ).;.5 E-%.5F8 ashaw, Gerry, Constitutional <eregulation7 #otes Toward
a Public, Public =aw, 5* Tnl. =. "ev. .*. E-%.6F.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No#. 120421,31 *c*:8*r 3, 1991
LAGUNA LA9E EVELOPMENT AUT5ORITY, petitioner,
vs.
COURT OF APPEALS+ 5ON. -UGE 5ERCULANO TEC5, PRESIING -UGE,
.RANC5 30, REGIONAL TRIAL COURT OF .INANGONAN RI0AL+ FLEET
EVELOPMENT, INC. a"( CARLITO ARROYO+ T5E MUNICIPALITY OF
.INANGONAN a"(;or MAYOR ISIRO .. PACIS, respondents.
LAGUNA LA9E EVELOPMENT AUT5ORITY, petitioner,
vs.
COURT OF APPEALS+ 5ON. -UGE AURELIO C. TRAMPE, PRESIING -UGE,
.RANC5 123, REGIONAL TRIAL COURT OF PASIG+ MANILA MARINE LIFE
.USINESS RESOURCES, INC. r*$r*#*"%*( 8&, MR. TO.IAS REYNAL M.
TIANGCO+ MUNICIPALITY OF TAGUIG, METRO MANILA a"(;or MAYOR RICARO
. PAPA, -R., respondents.
LAGUNA LA9E EVELOPMENT AUT5ORITY, petitioner,
vs.
COURT OF APPEALS+ 5ON. -UGE ALE-ANRO A. MAR6UE0, PRESIING
-UGE, .RANC5 39, REGIONAL TRIAL COURT OF MORONG, RI0AL+
GREENFIEL VENTURES INUSTRIAL EVELOPMENT CORPORATION a"( R. -.
ORION EVELOPMENT CORPORATION+ MUNICIPALITY OF -ALA,-ALA a"(;or
MAYOR <ALFREO M. E LA VEGA, respondents.
LAGUNA LA9E EVELOPMENT AUT5ORITY, petitioner,
vs.
COURT OF APPEALS+ 5ON. -UGE MANUEL S. PAOLINA, PRESIING -UGE,
.RANC5 122, REGIONAL TRIAL COURT OF PASIG, METRO MANILA+ IRMA
FIS5ING = TRAING CORP.+ ARTM FIS5ING CORP.+ .R CORPORATION, MIRT
CORPORATION a"( TRIM CORPORATION+ MUNICIPALITY OF .INANGONAN
a"(;or MAYOR ISIRO .. PACIS, respondents.
LAGUNA LA9E EVELOPMENT AUT5ORITY, petitioner,
vs.
COURT OF APPEALS+ 5ON. -UGE ARTURO A. MARAVE, PRESIING -UGE,
.RANC5 34, REGIONAL TRIAL COURT OF MORONG, RI0AL+ .LUE LAGOON
FIS5ING CORP. a"( ALCRIS C5IC9EN GRO<ERS, INC.+ MUNICIPALITY OF -ALA,
-ALA a"(;or MAYOR <ALFREO M. E LA VEGA, respondents.
LAGUNA LA9E EVELOPMENT AUT5ORITY, petitioner,
vs.
COURT OF APPEALS+ 5ON. -UGE ARTURO A. MARAVE, PRESIING -UGE,
.RANC5 34, REGIONAL TRIAL COURT OF MORONG, RI0AL+ AGP FIS5
VENTURES, INC., r*$r*#*"%*( 8& !%# PRESIENT ALFONSO PUYAT+
MUNICIPALITY OF -ALA,-ALA a"(;or MAYOR <ALFREO M. E LA VEGA,
respondents.
LAGUNA LA9E EVELOPMENT AUT5ORITY, petitioner,
vs.
COURT OF APPEALS+ 5ON. -UGE EUGENIO S. LA.ITORIA, PRESIING -UGE,
.RANC5 121, REGIONAL TRIAL COURT OF PASIG, METRO MANILA+ SEA MAR
TRAING CO. INC.+ EASTERN LAGOON FIS5ING CORP.+ MINAMAR FIS5ING
CORP.+ MUNICIPALITY OF .INANGONAN a"(;or MAYOR ISIRO .. PACIS,
respondents.

5ERMOSISIMA, -R., J.:
It is difficult for a man, scavenging on the garbage dump created by affluence and
profligate consumption and extravagance of the rich or fishing in the mur0y waters of
the Pasig "iver and the =aguna =a0e or ma0ing a clearing in the forest so that he can
produce food for his family, to understand why protecting birds, fish, and trees is more
important than protecting him and 0eeping his family alive.
1ow do we stri0e a balance between environmental protection, on the one hand, and
the individual personal interests of people, on the otherM
Towards environmental protection and ecology, navigational safety, and sustainable
development, "epublic (ct #o. *.56 created the C=aguna =a0e <evelopment (uthority.C
This @overnment (gency is supposed to carry out and effectuate the aforesaid declared
policy, so as to accelerate the development and balanced growth of the =aguna =a0e
area and the surrounding provinces, cities and towns, in the act clearly named, within
the context of the national and regional plans and policies for social and economic
development.
Presidential <ecree #o. .-4 of former President Ferdinand '. arcos amended certain
sections of "epublic (ct #o. *.56 because of the concern for the rapid expansion of
etropolitan anila, the suburbs and the la0eshore towns of =aguna de ?ay, combined
with current and prospective uses of the la0e for municipal;industrial water supply,
irrigation, fisheries, and the li0e. Concern on the part of the @overnment and the general
public over7 J the environment impact of development on the water /uality and ecology
of the la0e and its related river systems8 the inflow of polluted water from the Pasig
"iver, industrial, domestic and agricultural wastes from developed areas around the
la0e8 the increasing urbani:ation which induced the deterioration of the la0e, since water
/uality studies have shown that the la0e will deteriorate further if steps are not ta0en to
chec0 the same8 and the floods in etropolitan anila area and the la0eshore towns
which will influence the hydraulic system of =aguna de ?ay, since any scheme of
controlling the floods will necessarily involve the la0e and its river systems, J li0ewise
gave impetus to the creation of the (uthority.
&ection - of "epublic (ct #o. *.56 was amended to read as follows7
&ec. -. #eclaration o$ Polic!. It is hereby declared to be the national policy to promote,
and accelerate the development and balanced growth of the =aguna =a0e area and the
surrounding provinces, cities and towns hereinafter referred to as the region, within the
context of the national and regional plans and policies for social and economic
development and to carry out the development of the =aguna =a0e region with due
regard and ade/uate provisions for environmental management and control, preservation
of the /uality of human life and ecological systems, and the prevention of undue
ecological disturbances, deterioration and pollution.
1
&pecial powers of the (uthority, pertinent to the issues in this case, include7
&ec. 4. &ection * of the same (ct is hereby further amended by adding thereto seven
new paragraphs to be 0nown as paragraphs +j,, +0,, +l,, +m,, +n,, +o,, and +p, which shall
read as follows7
xxx xxx xxx
+j, The provisions of existing laws to the contrary notwithstanding, to
engage in fish production and other a/ua;culture projects in =aguna de
?ay and other bodies of water within its jurisdiction and in pursuance
thereof to conduct studies and ma0e experiments, whenever necessary,
with the collaboration and assistance of the ?ureau of Fisheries and
(/uatic "esources, with the end in view of improving present techni/ues
and practices. Provided, that until modified, altered or amended by the
procedure provided in the following sub;paragraph, the present laws,
rules and permits or authori:ations remain in force8
+0, For the purpose of effectively regulating and monitoring activities in
=aguna de ?ay, t(e 'ut(orit! s(all (ave e,clusive /urisdiction to issue
ne" permit $or t(e use o$ t(e la-e "aters $or an! pro/ects or activities in
or a$$ecting t(e said la-e including navigation, construction, and
operation o$ $is(pens, $is( enclosures, $is( corrals and t(e li-e, and to
impose necessary safeguards for la0e /uality control and management
and to collect necessary fees for said activities and projects7 Provided,
That the fees collected for fisheries may be shared between the (uthority
and other government agencies and political sub;divisions in such
proportion as may be determined by the President of the Philippines
upon recommendation of the (uthority2s ?oard7 Provided, $urt(er, That
the (uthority2s ?oard may determine new areas of fishery development
or activities which it may place under the supervision of the ?ureau of
Fisheries and (/uatic "esources ta0ing into account the overall
development plans and programs for =aguna de ?ay and related bodies
of water7 Provided, $inall!, That the (uthority shall subject to the approval
of the President of the Philippines promulgate such rules and regulations
which shall govern fisheries development activities in =aguna de ?ay
which shall ta0e into consideration among others the following7 socio;
economic amelioration of bonafide resident fishermen whether
individually or collectively in the form of cooperatives, la0eshore town
development, a master plan for fishpen construction and operation,
communal fishing ground for la0e shore town residents, and preference
to la0e shore town residents in hiring laborer for fishery projects8
+l, To re/uire the cities and municipalities embraced within the region to
pass appropriate :oning ordinances and other regulatory measures
necessary to carry out the objectives of the (uthority and enforce the
same with the assistance of the (uthority8
+m, The provisions of existing laws to the contrary notwithstanding, to
exercise water rights over public waters within the =aguna de ?ay region
whenever necessary to carry out the (uthority2s projects8
+n, To act in coordination with existing governmental agencies in
establishing water /uality standards for industrial, agricultural and
municipal waste discharges into the la0e and to cooperate with said
existing agencies of the government of the Philippines in enforcing such
standards, or to separately pursue enforcement and penalty actions as
provided for in &ection * +d, and &ection 4%;( of this (ct7 Provided, That
in case of conflict on the appropriate water /uality standard to be
enforced such conflict shall be resolved thru the #'<( ?oard.
2
To more effectively perform the role of the (uthority under "epublic (ct #o. *.56, as
though Presidential <ecree #o. .-4 were not thought to be completely effective, the
Chief 'xecutive, feeling that the land and waters of the =aguna =a0e "egion are limited
natural resources re/uiring judicious management to their optimal utili:ation to insure
renewability and to preserve the ecological balance, the competing options for the use
of such resources and conflicting jurisdictions over such uses having created undue
constraints on the institutional capabilities of the (uthority in the light of the limited
powers vested in it by its charter, 'xecutive 3rder #o. %$D further defined and enlarged
the functions and powers of the (uthority and named and enumerated the towns, cities
and provinces encompassed by the term C=aguna de ?ay "egionC.
(lso, pertinent to the issues in this case are the following provisions of 'xecutive 3rder
#o. %$D which include in particular the sharing of fees7
&ec $. 9ater "ights 3ver =aguna de ?ay and 3ther ?odies of 9ater within the =a0e
"egion7 To effectively regulate and monitor activities in the =aguna de ?ay region, the
(uthority shall have exclusive jurisdiction to issue permit for the use of all surface water
for any projects or activities in or affecting the said region including navigation,
construction, and operation of fishpens, fish enclosures, fish corrals and the li0e.
For the purpose of this 'xecutive 3rder, the term C=aguna de ?ay "egionC shall refer to
the Provinces of "i:al and =aguna8 the Cities of &an Pablo, Pasay, Caloocan, Nue:on,
anila and Tagaytay8 the towns of Tanauan, &to. Tomas and alvar in ?atangas
Province8 the towns of &ilang and Carmona in Cavite Province8 the town of =ucban in
Nue:on Province8 and the towns of ari0ina, Pasig, Taguig, untinlupa, and Pateros in
etro anila.
&ec 4. &ollection o$ 4ees. The (uthority is hereby empowered to collect fees for the use
of the la0e water and its tributaries for all beneficial purposes including but not limited to
fisheries, recreation, municipal, industrial, agricultural, navigation, irrigation, and waste
disposal purpose8 Provided, that the rates of the fees to be collected, and the s(aring
"it( ot(er government agencies and political subdivisions, i$ necessar!, s(all be sub/ect
to t(e approval o$ t(e President o$ t(e P(ilippines upon recommendation of the
(uthority2s ?oard, e,cept $is(pen $ee, which will be shared in the following manner8 AB
percent o$ t(e $ee s(all go to t(e la-es(ore local governments, 5 percent shall go to the
Project <evelopment Fund which shall be administered by a Council and the remaining
D5 percent shall constitute the share of ==<(. 1owever, a$ter t(e implementation "it(in
t(e t(ree-!ear period o$ t(e %aguna %a-e 4is(er! Coning and Management Plan, the
sharing will be modified as follows7 +D percent o$ t(e $is(pen $ee goes to t(e la-es(ore
local governments, 5 percent goes to the Project <evelopment Fund and the remaining
)6 percent shall be retained by ==<(8 Provided, (o"ever, that the share of ==<( shall
form part of its corporate funds and shall not be remitted to the #ational Treasury as an
exception to the provisions of Presidential <ecree #o. -$4*. +'mphasis supplied,
It is important to note that &ection $% of Presidential <ecree #o. .-4 defined the term
C=aguna =a0eC in this manner7
&ec *-. #e$inition o$ 0erms.
+--, =aguna =a0e or =a0e. 9henever =aguna =a0e or la0e is used in this (ct, the same
shall refer to =aguna de ?ay which is that area covered by the la0e water when it is at the
average annual maximum la0e level of elevation -$.56 meters, as referred to a datum
-6.66 meters below mean lower low water +.=.=.9,. =ands located at and below such
elevation are public lands which form part of the bed of said la0e.
Then came "epublic (ct #o. D-)6, the =ocal @overnment Code of -%%-. The
municipalities in the =aguna =a0e "egion interpreted the provisions of this law to mean
that the newly passed law gave municipal governments the exclusive jurisdiction to
issue fishing privileges within their municipal waters because ".(. D-)6 provides7
&ec. -*%. Fishery "entals, Fees and Charges.
+a, unicipalities shall have the exclusive authority to grant fishery privileges in the
municipal waters and impose rental fees or charges therefor in accordance with the
provisions of this &ection.
+b, The &angguniang ?ayan may7
+-, @rant fishing privileges to erect fish corrals, oyster, mussel or other
a/uatic beds or bangus fry areas, within a definite :one of the municipal
waters, as determined by it8 . . . .
+$, @rant privilege to gather, ta0e or catch bangus fry, prawn fry or
-a"ag--a"ag or fry of other species and fish from the municipal waters
by nets, traps or other fishing gears to marginal fishermen free from any
rental fee, charges or any other imposition whatsoever.
xxx xxx xxx
&ec. **D. Po"er, #uties, 4unctions and &ompensation. . . . .
xxx xxx xxx
+II, &ubject to the provisions of ?oo0 II of this Code, grant exclusive
privileges of constructing fish corrals or fishpens, or the ta0ing or
catching of bangus fry, prawn fry or -a"ag--a"ag or fry of any species or
fish within the municipal waters.
xxx xxx xxx
unicipal governments thereupon assumed the authority to issue fishing privileges and
fishpen permits. ?ig fishpen operators too0 advantage of the occasion to establish
fishpens and fishcages to the consternation of the (uthority. Anregulated fishpens and
fishcages, as of Guly, -%%5, occupied almost one;third of the entire la0e water surface
area, increasing the occupation drastically from D,666 hectares in -%%6 to almost
$-,666 hectares in -%%5. The ayor2s permit to construct fishpens and fishcages were
all underta0en in violation of the policies adopted by the (uthority on fishpen :oning and
the =aguna =a0e carrying capacity.
To be sure, the implementation by the la0eshore municipalities of separate independent
policies in the operation of fishpens and fishcages within their claimed territorial
municipal waters in the la0e and their indiscriminate grant of fishpen permits have
already saturated the la0e area with fishpens, thereby aggravating the current
environmental problems and ecological stress of =aguna =a0e.
In view of the foregoing circumstances, the (uthority served notice to the general public
that7
In compliance with the instructions of 1is 'xcellency P"'&I<'#T FI<'= !. "(3&
given on Gune $4, -%%4 at Pila, =aguna pursuant to "epublic (ct *.56 as amended by
Presidential <ecree .-4 and 'xecutive 3rder %$D series of -%.4 and in line with the
policies and programs of the Presidential Tas0 Force on Illegal Fishpens and Illegal
Fishing, the general public is hereby notified that7
-. (ll fishpens, fishcages and other a/ua;culture structures in the =aguna de ?ay "egion,
which were not registered or to which no application for registration andHor permit has
been filed with =aguna =a0e <evelopment (uthority as of arch 4-, -%%4 are hereby
declared outrightly as illegal.
$. (ll fishpens, fishcages and other a/ua;culture structures so declared as illegal shall be
subject to demolition which shall be underta0en by the Presidential Tas0 Force for Illegal
Fishpen and Illegal Fishing.
4. 3wners of fishpens, fishcages and other a/ua;culture structures declared as illegal
shall, without prejudice to demolition of their structures be criminally charged in
accordance with &ection 4%;( of "epublic (ct *.56 as amended by P.<. .-4 for violation
of the same laws. !iolations of these laws carries a penalty of imprisonment of not
exceeding 4 years or a fine not exceeding Five Thousand Pesos or both at the discretion
of the court.
(ll operators of fishpens, fishcages and other a/ua;culture structures declared as illegal
in accordance with the foregoing #otice shall have one +-, month on or before $D
3ctober -%%4 to show cause before the ==<( why their said fishpens, fishcages and
other a/ua;culture structures should not be demolishedHdismantled.
3ne month, thereafter, the (uthority sent notices to the concerned owners of the
illegally constructed fishpens, fishcages and other a/ua;culture structures advising them
to dismantle their respective structures within -6 days from receipt thereof, otherwise,
demolition shall be effected.
"eacting thereto, the affected fishpen owners filed injunction cases against the (uthority
before various regional trial courts, to wit7 +a, Civil Case #o. D5%;?, for Prohibition,
Injunction and <amages, "egional Trial Court, ?ranch D6, ?inangonan, "i:al, filed by
Fleet <evelopment, Inc. and Carlito (rroyo8 +b, Civil Case #o. )*6*%, for Injunction,
"egional Trial Court, ?ranch -)$, Pasig, filed by I"( Fishing and Trading Corp.,
("T Fishing Corp., ?<" Corp., I"T Corp. and T"I Corp.8 +c, Civil Case #o. 5)),
for <eclaratory "elief and Injunction, "egional Trial Court, ?ranch -)4, Pasig, filed by
anila arine =ife ?usiness "esources, Inc. and Tobias "eynaldo . Tianco8 +d, Civil
Case #o. 55);, for Prohibition, Injunction and <amages, "egional Trial Court, ?ranch
D., orong, "i:al, filed by (@P Fishing !entures, Inc.8 +e, Civil Case #o. 5$$;, for
Prohibition, Injunction and <amages, "egional Trial Court, ?ranch D., orong, "i:al,
filed by ?lue =agoon and (lcris Chic0en @rowers, Inc.8 +f, Civil Case #o. 55*;, for
&ertiorari and Prohibition, "egional Trial Court, ?ranch D%, orong, "i:al, filed by
@reenfields !entures Industrial Corp. and ".G. 3rion <evelopment Corp.8 and +g, Civil
Case #o. )*-$*, for Injunction, "egional Trial Court, ?ranch -5, Pasig, filed by &'(;
(" Trading Co., Inc. and 'astern =agoon Fishing Corp. and inamar Fishing
Corporation.
The (uthority filed motions to dismiss the cases against it on jurisdictional grounds. The
motions to dismiss were invariably denied. eanwhile, temporary restraining orderHwrits
of preliminary mandatory injunction were issued in Civil Cases #os. )*-$*, D5% and 5))
enjoining the (uthority from demolishing the fishpens and similar structures in /uestion.
1ence, the herein petition for certiorari, prohibition and injunction, @.". #os. -$6.)5;D-,
were filed by the (uthority with this court. Impleaded as parties;respondents are
concerned regional trial courts and respective private parties, and the municipalities
andHor respective ayors of ?inangonan, Taguig and Gala;jala, who issued permits for
the construction and operation of fishpens in =aguna de ?ay. The (uthority sought the
following reliefs, vi5.7
+(, #ullification of the temporary restraining orderHwrits of preliminary injunction issued in
Civil Cases #os. )*-$5, D5% and 5))8
+?, Permanent prohibition against the regional trial courts from exercising jurisdiction over
cases involving the (uthority which is a co;e/ual body8
+C, Gudicial pronouncement that ".(. D)-6 +=ocal @overnment Code of -%%-, did not
repeal, alter or modify the provisions of ".(. *.56, as amended, empowering the
(uthority to issue permits for fishpens, fishcages and other a/ua;culture structures in
=aguna de ?ay and that, the (uthority the government agency vested with exclusive
authority to issue said permits.
?y this Court2s resolution of ay $, -%%*, the (uthority2s consolidated petitions were
referred to the Court of (ppeals.
In a <ecision, dated Gune $%, -%%5, the Court of (ppeals dismissed the (uthority2s
consolidated petitions, the Court of (ppeals holding that7 +(, ==<( is not among those
/uasi;judicial agencies of government whose decision or order are appealable only to
the Court of (ppeals8 +?, the ==<( charter does vest ==<( with /uasi;judicial functions
insofar as fishpens are concerned8 +C, the provisions of the ==<( charter insofar as
fishing privileges in =aguna de ?ay are concerned had been repealed by the =ocal
@overnment Code of -%%-8 +<, in view of the aforesaid repeal, the power to grant
permits devolved to and is now vested with their respective local government units
concerned.
#ot satisfied with the Court of (ppeals decision, the (uthority has returned to this Court
charging the following errors7
-. T1' 13#3"(?=' C3A"T 3F (PP'(=& P"3?(?=> C3ITT'< (# '""3"
91'# IT "A='< T1(T T1' =(@A#( =(B' <'!'=3P'#T (AT13"IT> I& #3T (
NA(&I;GA<ICI(= (@'#C>.
$. T1' 13#3"(?=' C3A"T 3F (PP'(=& C3ITT'< &'"I3A& '""3" 91'# IT
"A='< T1(T ".(. *.56 (& ('#<'< ?> P.<. .-4 (#< '.3. %$D &'"I'& 3F -%.4
1(& ?''# "'P'(='< ?> "'PA?=IC (CT D-)6. T1' &(I< "A=I#@ I& C3#T"(">
T3 '&T(?=I&1'< P"I#CIP='& (#< GA"I&P"A<'#C' 3F &T(TAT3">
C3#&T"ACTI3#.
4. T1' 13#3"(?=' C3A"T 3F (PP'(=& C3ITT'< &'"I3A& '""3" 91'# IT
"A='< T1(T T1' P39'" T3 I&&A' FI&1P'# P'"IT& I# =(@A#( <' ?(> 1(&
?''# <'!3=!'< T3 C3#C'"#'< +=(B'&13"', =3C(= @3!'"#'#T A#IT&.
9e ta0e a simplistic view of the controversy. (ctually, the main and only issue posed is7
9hich agency of the @overnment J the =aguna =a0e <evelopment (uthority or the
towns and municipalities comprising the region J should exercise jurisdiction over the
=aguna =a0e and its environs insofar as the issuance of permits for fishery privileges is
concernedM
&ection * +0, of the charter of the =aguna =a0e <evelopment (uthority, "epublic (ct #o.
*.56, the provisions of Presidential <ecree #o. .-4, and &ection $ of 'xecutive 3rder
#o. %$D, cited above, specifically provide that the =aguna =a0e <evelopment (uthority
shall have exclusive jurisdiction to issue permits for the use of all surface water for any
projects or activities in or affecting the said region, including navigation, construction,
and operation of fishpens, fish enclosures, fish corrals and the li0e. 3n the other hand,
"epublic (ct #o. D-)6, the =ocal @overnment Code of -%%-, has granted to the
municipalities the exclusive authority to grant fishery privileges in municipal waters. The
&angguniang ?ayan may grant fishery privileges to erect fish corrals, oyster, mussels or
other a/uatic beds or bangus fry area within a definite :one of the municipal waters.
9e hold that the provisions of "epublic (ct #o. D-)6 do not necessarily repeal the
aforementioned laws creating the =aguna =a0e <evelopment (uthority and granting the
latter water rights authority over =aguna de ?ay and the la0e region.
The =ocal @overnment Code of -%%- does not contain any express provision which
categorically expressly repeal the charter of the (uthority. It has to be conceded that
there was no intent on the part of the legislature to repeal "epublic (ct #o. *.56 and its
amendments. The repeal of laws should be made clear and expressed.
It has to be conceded that the charter of the =aguna =a0e <evelopment (uthority
constitutes a special law. "epublic (ct #o. D-)6, the =ocal @overnment Code of -%%-,
is a general law. It is basic in statutory construction that the enactment of a later
legislation which is a general law cannot be construed to have repealed a special law. It
is a well;settled rule in this jurisdiction that Ca special statute, provided for a particular
case or class of cases, is not repealed by a subse/uent statute, general in its terms,
provisions and application, unless the intent to repeal or alter is manifest, although the
terms of the general law are broad enough to include the cases embraced in the special
law.C
3
9here there is a conflict between a general law and a special statute, the special
statute should prevail since it evinces the legislative intent more clearly than the general
statute. The special law is to be ta0en as an exception to the general law in the absence
of special circumstances forcing a contrary conclusion. This is because implied repeals
are not favored and as much as possible, effect must be given to all enactments of the
legislature. ( special law cannot be repealed, amended or altered by a subse/uent
general law by mere implication.
4
Thus, it has to be concluded that the charter of the (uthority should prevail over the
=ocal @overnment Code of -%%-.
Considering the reasons behind the establishment of the (uthority, which are
environmental protection, navigational safety, and sustainable development, there is
every indication that the legislative intent is for the (uthority to proceed with its mission.
9e are on all fours with the manifestation of petitioner =aguna =a0e <evelopment
(uthority that C=aguna de ?ay, li0e any other single body of water has its own uni/ue
natural ecosystem. The %66 0mQ la0e surface water, the eight +., major river tributaries
and several other smaller rivers that drain into the la0e, the $,%$6 0mQ basin or
watershed transcending the boundaries of =aguna and "i:al provinces, greater portion
of etro anila, parts of Cavite, ?atangas, and Nue:on provinces, constitute one
integrated delicate natural ecosystem that needs to be protected with uniform set of
policies8 if we are to be serious in our aims of attaining sustainable development. This is
an exhaustible natural resource J a very limited one J which re/uires judicious
management and optimal utili:ation to ensure renewability and preserve its ecological
integrity and balance.C
Canaging the la0e resources would mean the implementation of a national policy
geared towards the protection, conservation, balanced growth and sustainable
development of the region with due regard to the inter;generational use of its resources
by the inhabitants in this part of the earth. The authors of "epublic (ct *.56 have
foreseen this need when they passed this ==<( law J the special law designed to
govern the management of our =aguna de ?ay la0e resources.C
C=aguna de ?ay therefore cannot be subjected to fragmented concepts of management
policies where la0eshore local government units exercise exclusive dominion over
specific portions of the la0e water. The garbage thrown or sewage discharged into the
la0e, abstraction of water therefrom or construction of fishpens by enclosing its certain
area, affect not only that specific portion but the entire %66 0mQ of la0e water. The
implementation of a cohesive and integrated la0e water resource management policy,
therefore, is necessary to conserve, protect and sustainably develop =aguna de ?ay.C
1
The power of the local government units to issue fishing privileges was clearly granted
for revenue purposes. This is evident from the fact that &ection -*% of the #ew =ocal
@overnment Code empowering local governments to issue fishing permits is embodied
in Chapter $, ?oo0 II, of "epublic (ct #o. D-)6 under the heading, C&pecific Provisions
3n The Taxing (nd 3ther "evenue "aising Power 3f =ocal @overnment Anits.C
3n the other hand, the power of the (uthority to grant permits for fishpens, fishcages
and other a/ua;culture structures is for the purpose of effectively regulating and
monitoring activities in the =aguna de ?ay region +&ection $, 'xecutive 3rder #o. %$D,
and for la0e /uality control and management.
2
It does parta0e of the nature of police
power which is the most pervasive, the least limitable and the most demanding of all
&tate powers including the power of taxation. (ccordingly, the charter of the (uthority
which embodies a valid exercise of police power should prevail over the =ocal
@overnment Code of -%%- on matters affecting =aguna de ?ay.
There should be no /uarrel over permit fees for fishpens, fishcages and other a/ua;
culture structures in the =aguna de ?ay area. &ection 4 of 'xecutive 3rder #o. %$D
provides for the proper sharing of fees collected.
In respect to the /uestion as to whether the (uthority is a /uasi;judicial agency or not, it
is our holding that, considering the provisions of &ection * of "epublic (ct #o. *.56 and
&ection * of 'xecutive 3rder #o. %$D, series of -%.4, and the ruling of this Court in
%aguna %a-e #evelopment 'ut(orit! vs. &ourt o$ 'ppeals, $4- &C"( 46*, 46), which
we /uote7
xxx xxx xxx
(s a general rule, the adjudication of pollution cases generally pertains to the Pollution
(djudication ?oard +P(?,, except in cases where the special law provides for another
forum. It must be recogni:ed in this regard that the ==<(, as a speciali:ed administrative
agency, is specifically mandated under "epublic (ct #o. *.56 and its amendatory laws to
carry out and ma0e effective the declared national policy of promoting and accelerating
the development and balanced growth of the =aguna =a0e area and the surrounding
provinces of "i:al and =aguna and the cities of &an Pablo, anila, Pasay, Nue:on and
Caloocan with due regard and ade/uate provisions for environmental management and
control, preservation of the /uality of human life and ecological systems, and the
prevention of undue ecological disturbances, deterioration and pollution. Ander such a
broad grant of power and authority, the ==<(, by virtue of its special charter, obviously
has the responsibility to protect the inhabitants of the =aguna =a0e region from the
deleterious effects of pollutants emanating from the discharge of wastes from the
surrounding areas. In carrying out the aforementioned declared policy, the ==<( is
mandated, among others, to pass upon and approve or disapprove all plans, programs,
and projects proposed by local government officesHagencies within the region, public
corporations, and private persons or enterprises where such plans, programs andHor
projects are related to those of the ==<( for the development of the region.
xxx xxx xxx
. . . . 9hile it is a fundamental rule that an administrative agency has only such powers as
are expressly granted to it by law, it is li0ewise a settled rule that an administrative
agency has also such powers as are necessarily implied in the exercise of its express
powers. In the exercise, therefore, of its express powers under its charter, as a regulatory
and /uasi;judicial body with respect to pollution cases in the =aguna =a0e region, the
authority of the ==<( to issue a Ccease and desist orderC is, perforce, implied. 3therwise,
it may well be reduced to a CtoothlessC paper agency.
there is no /uestion that the (uthority has express powers as a regulatory and
/uasi;judicial body in respect to pollution cases with authority to issue a Ccease
and desist orderC and on matters affecting the construction of illegal fishpens,
fishcages and other a/ua;culture structures in =aguna de ?ay. The (uthority2s
pretense, however, that it is co;e/ual to the "egional Trial Courts such that all
actions against it may only be instituted before the Court of (ppeals cannot be
sustained. 3n actions necessitating the resolution of legal /uestions affecting the
powers of the (uthority as provided for in its charter, the "egional Trial Courts
have jurisdiction.
In view of the foregoing, this Court holds that &ection -*% of "epublic (ct #o. D-)6,
otherwise 0nown as the =ocal @overnment Code of -%%-, has not repealed the
provisions of the charter of the =aguna =a0e <evelopment (uthority, "epublic (ct #o.
*.56, as amended. Thus, the (uthority has the exclusive jurisdiction to issue permits for
the enjoyment of fishery privileges in =aguna de ?ay to the exclusion of municipalities
situated therein and the authority to exercise such powers as are by its charter vested
on it.
"emoval from the (uthority of the aforesaid licensing authority will render nugatory its
avowed purpose of protecting and developing the =aguna =a0e "egion. 3therwise
stated, the abrogation of this power would render useless its reason for being and will in
effect denigrate, if not abolish, the =aguna =a0e <evelopment (uthority. This, the =ocal
@overnment Code of -%%- had never intended to do.
91'"'F3"', the petitions for prohibition, certiorari and injunction are hereby granted,
insofar as they relate to the authority of the =aguna =a0e <evelopment (uthority to
grant fishing privileges within the =aguna =a0e "egion.
The restraining orders andHor writs of injunction issued by Gudge (rturo arave, "TC,
?ranch D., orong, "i:al8 Gudge 1erculano Tech, "TC, ?ranch D6, ?inangonan, "i:al8
and Gudge (urelio Trampe, "TC, ?ranch -)4, Pasig, etro anila, are hereby declared
null and void and ordered set aside for having been issued with grave abuse of
discretion.
The unicipal ayors of the =aguna =a0e "egion are hereby prohibited from issuing
permits to construct and operate fishpens, fishcages and other a/ua;culture structures
within the =aguna =a0e "egion, their previous issuances being declared null and void.
Thus, the fishing permits issued by ayors Isidro ?. Pacis, unicipality of ?inangonan8
"icardo <. Papa, unicipality of Taguig8 and 9alfredo . de la !ega, unicipality of
Gala;jala, specifically, are li0ewise declared null and void and ordered cancelled.
The fishpens, fishcages and other a/ua;culture structures put up by operators by virtue
of permits issued by unicipal ayors within the =aguna =a0e "egion, specifically,
permits issued to Fleet <evelopment, Inc. and Carlito (rroyo8 anila arine =ife
?usiness "esources, Inc., represented by, r. Tobias "eynald . Tiangco8 @reenfield
!entures Industrial <evelopment Corporation and ".G. 3rion <evelopment Corporation8
I"( Fishing (nd Trading Corporation, ("T Fishing Corporation, ?<" Corporation,
irt Corporation and Trim Corporation8 ?lue =agoon Fishing Corporation and (=C"I&
Chic0en @rowers, Inc.8 (@P Fish !entures, Inc., represented by its President (lfonso
Puyat8 &'( (" Trading Co., Inc., 'astern =agoon Fishing Corporation, and
I#((" Fishing Corporation, are hereby declared illegal structures subject to
demolition by the =aguna =a0e <evelopment (uthority.
&3 3"<'"'<.
#avide, Jr., ellosillo and Eapunan, JJ., concur.



S*$ara%* O$!"!o"#

PAILLA, J., concurring7
I fully concur with the decision written by r. Gustice ". 1ermosisima, Gr.. I would only
li0e to stress what the decision already states, i.e., that the local government units in the
=aguna =a0e area are not precluded from imposing permits on fishery operations for
revenue raising purposes of such local government units. In other words, while the
exclusive jurisdiction to determine whether or not projects or activities in the la0e area
should be allowed, as well as their regulation, is with the =aguna =a0e <evelopment
(uthority, once the (uthority grants a permit, the permittee may still be subjected to an
additional local permit or license for revenue purposes of the local government units
concerned. This approach would clearly harmoni:e the special law, "ep. (ct #o. *.56,
as amended, with "ep. (ct #o. D-)6, the =ocal @overnment Code. It will also enable
small towns and municipalities in the la0e area, li0e Gala;Gala, to rise to some level of
economic viability.
S*$ara%* O$!"!o"#
PAILLA, J., concurring7
I fully concur with the decision written by r. Gustice ". 1ermosisima, Gr.. I would only
li0e to stress what the decision already states, i.e., that the local government units in the
=aguna =a0e area are not precluded from imposing permits on fishery operations for
revenue raising purposes of such local government units. In other words, while the
exclusive jurisdiction to determine whether or not projects or activities in the la0e area
should be allowed, as well as their regulation, is with the =aguna =a0e <evelopment
(uthority, once the (uthority grants a permit, the permittee may still be subjected to an
additional local permit or license for revenue purposes of the local government units
concerned. This approach would clearly harmoni:e the special law, "ep. (ct #o. *.56,
as amended, with "ep. (ct #o. D-)6, the =ocal @overnment Code. It will also enable
small towns and municipalities in the la0e area, li0e Gala;Gala, to rise to some level of
economic viability.
Foo%"o%*#
- &ection -, P< #o. .-4.
$ (t pages )*;)5.
4 anila "ailroad Company vs. "afferty, *6 Phils. $$58 #ational Power
Corporation vs. (rca, $5 &C"( %458 Province of isamis 3riental vs. Cagayan
'lectric Power and =ight Company, Inc., -.- &C"( *4.
* Fajardo vs. !illafuerte, @.". #o. .%-45, <ecember $-, -%.%.
5 Petition, under caption, C#ature of PetitionC.
) &ection 4 +0,, Presidential <ecree #o. .-4.
The =awphil Project ; (rellano =aw Foundation
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L,31249 A)7)#% 19, 1942
SALVAOR VILLACORTA a# C!%& E"7!"**r o' a7)$a" C!%&, a"( -UAN S.
CAGUIOA a# R*7!#%*r o' **(# o' a7)$a" C!%&, petitioners,
vs.
GREGORIO .ERNARO a"( 5ON. MACARIO OFILAA a# -)(7* o' %h* Co)r% o'
F!r#% I"#%a"c* o' Pa"7a#!"a" respondents.
.ictor 0. %lamas, Jr. $or respondents.

CRU0, J.:
This is a petition for certiorari against a decision of the Court of First Instance of
Pangasinan annulling an ordinance adopted by the municipal board of <agupan City.
The ordinance reads in full as follows7
3"<I#(#C' $$
(# 3"<I#(#C' "'@A=(TI#@ &A?<I!I&I3# P=(#& 3!'" P("C'=& 3F =(#< I#
T1' CIT> 3F <(@AP(#.
?e it ordained by the unicipal ?oard of <agupan City in session assembled7
&ection -. 'very proposed subdivision plan over any lot in the City of <agupan, shalt
before the same is submitted for approval andHor verification by the ?ureau of =ands
andHor the =and "egistration Commission, be previously submitted to the City 'ngineer
of the City who shall see to it that no encroachment is made on any portion of the public
domain, that the :oning ordinance and all other pertinent rules and regulations are
observed.
&ection $. (s service fee thereof, an amount e/uivalent to P6.46 per s/uare meter of
every lot resulting or win result from such subdivision shall be charged by the City
'ngineer2s 3ffice.
&ection 4. It shall be unlawful for the "egister of <eeds of <agupan City to allow the
registration of a subdivision plan unless there is prior written certification issued by the
City 'ngineer that such plan has already been submitted to his office and that the same
is in order.
&ection *. (ny violation of this ordinance shall be punished by a fine not exceeding two
hundred +P$66.66, pesos or imprisonment not exceeding six +), months or both in the
discretion of the judge.
&ection 5. This ordinance shall ta0e effect immediately upon approval.
In declaring the said ordinance null and void, the court a quo declared7
From the above;recited re/uirements, there is no showing that would justify the
enactment of the /uestioned ordinance. &ection - of said ordinance clearly conflicts with
&ection ** of (ct *%), because the latter law does not re/uire subdivision plans to be
submitted to the City 'ngineer before the same is submitted for approval to and
verification by the @eneral =and "egistration 3ffice or by the <irector of =ands as
provided for in &ection 5. of said (ct. &ection $ of the same ordinance also contravenes
the provisions of &ection ** of (ct *%), the latter being silent on a service fee of P3.64
per s/uare meter of every lot subject of such subdivision application8 &ection 4 of the
ordinance in /uestion also conflicts with &ection ** of (ct *%), because the latter law
does not mention of a certification to be made by the City 'ngineer before the "egister of
<eeds allows registration of the subdivision plan8 and the last section of said ordinance
imposes a penalty for its violation, which &ection ** of (ct *%) does not impose. In other
words, 3rdinance $$ of the City of <agupan imposes upon a subdivision owner additional
conditions.
xxx xxx xxx
The Court ta0es note of the laudable purpose of the ordinance in bringing to a halt the
surreptitious registration of lands belonging to the government. ?ut as already intimidated
above, the powers of the board in enacting such a laudable ordinance cannot be held
valid when it shall impede the exercise of rights granted in a general law andHor ma0e a
general law subordinated to a local ordinance.
9e affirm.
To sustain the ordinance would be to open the floodgates to other ordinances amending
and so violating national laws in the guise of implementing them. Thus, ordinances
could be passed imposing additional re/uirements for the issuance of marriage
licenses, to prevent bigamy8 the registration of vehicles, to minimi:e carnaping8 the
execution of contracts, to forestall fraud8 the validation of passports, to deter imposture8
the exercise of freedom of speech, to reduce disorder8 and so on. The list is endless,
but the means, even if the end be valid, would be ultra vires.
&o many excesses are attempted in the name of the police power that it is time, we feel,
for a brief admonition.
"egulation is a fact of life in any well;ordered community. (s society becomes more and
more complex, the police power becomes correspondingly ubi/uitous. This has to be so
for the individual must subordinate his interests to the common good, on the time
honored justification of *alus populi est suprema le,.
In this prolix age, practically everything a person does and owns affects the public
interest directly or at least vicariously, unavoidably drawing him within the embrace of
the police power. Increasingly, he is hemmed in by all manner of statutory,
administrative and municipal re/uirements and restrictions that he may find officious
and even oppressive.
It is necessary to stress that unless the creeping interference of the government in
essentially private matters is moderated, it is li0ely to destroy that pri:ed and peculiar
virtue of the free society7 individualism.
'very member of society, while paying proper deference to the general welfare, must
not be deprived of the right to be left alone or, in the Idiom of the day, Cto do his thing.C
(s long as he does not prejudice others, his freedom as an individual must not be
unduly curtailed.
9e therefore urge that proper care attend the exercise of the police power lest it
deteriorate into an unreasonable intrusion into the purely private affairs of the individual.
The so;called Cgeneral welfareC is too amorphous and convenient an excuse for official
arbitrariness.
=et it always be remembered that in the truly democratic state, protecting the rights of
the individual is as important as, if not more so than, protecting the rights of the public.
This advice is especially addressed to the local governments which exercise the police
power only by virtue of a valid delegation from the national legislature under the general
welfare clause. In the instant case, 3rdinance #o. $$ suffers from the additional defect
of violating this authority for legislation in contravention of the national law by adding to
its re/uirements.
91'"'F3"', the decision of the lower court annulling the challenged ordinance is
(FFI"'<, without any pronouncement as to costs.
&3 3"<'"'<.
@ap ;&(airman9, )arvasa, Melencio-Herrera and Paras, JJ., concur.
The =awphil Project ; (rellano =aw Foundation
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L,42131,32 -)/& 21, 1943
VICENTE E LA CRU0, RENATO ALIPIO, -OSE TORRES III, LEONCIO CORPU0,
TERESITA CALOT, ROSALIA FERNANE0, ELI0A.ET5 VELASCO, NANETTE
VILLANUEVA, 5ONORATO .UENAVENTURA, RU.EN E CASTRO, VICENTE
RO>AS, RICARO AMIAN, OMINO ROMINA, ANGELINA O.LIGACION,
CONRAO GREGORIO, TEOORO REYES, LYIA ATRACTIVO, NAPOLEON
MENO0A, PERFECTO GUMATAY, ANRES SA.ANGAN, ROSITA URAN,
SOCORRO .ERNARE0, a"( PERO GA.RIEL, petitioners,
vs.
T5E 5ONORA.LE EGARO L. PARAS, MATIAS RAMIRE0 a# %h* M)"!c!$a/
Ma&or, MARIO MENO0A a# %h* M)"!c!$a/ V!c*,Ma&or, a"( T5E MUNICIPAL
COUNCIL OF .OCAUE, .ULACAN, respondents.
4ederico ). 'lda! $or petitioners.
#a-ila 4. &astro $or respondents.

FERNANO, C.J.:
The crucial /uestion posed by this certiorari proceeding is whether or not a municipal
corporation, ?ocaue, ?ulacan, represented by respondents,
1
can, prohibit the exercise
of a lawful trade, the operation of night clubs, and the pursuit of a lawful occupation,
such clubs employing hostesses. It is contended that the ordinance assailed as invalid
is tainted with nullity, the municipality being devoid of power to prohibit a lawful
business, occupation or calling, petitioners at the same time alleging that their rights to
due process and e/ual protection of the laws were violated as the licenses previously
given to them was in effect withdrawn without judicial hearing.
2

The assailed ordinance
3
is worded as follows7 C&ection -.J 0itle o$ 8rdinance.J This
3rdinance shall be 0nown and may be cited as the EProhibition and Closure 3rdinanceF
of ?ocaue, ?ulacan. &ection $. J #e$initions o$ 0erms > +a, 2#ight Club2 shall include
any place or establishment selling to the public food or drin0s where customers are
allowed to dance. +b, 2Cabaret2 or 2<ance 1all2 shall include any place or establishment
where dancing is permitted to the public and where professional hostesses or hospitality
girls and professional dancers are employed. +c, 2Professional hostesses2 or 2hospitality
girls2 shall include any woman employed by any of the establishments herein defined to
entertain guests and customers at their table or to dance with them. +d, 2Professional
dancer2 shall include any woman who dances at any of the establishments herein
defined for a fee or remuneration paid directly or indirectly by the operator or by the
persons she dances with. +e, 23perator2 shall include the owner, manager, administrator
or any person who operates and is responsible for the operation of any night club,
cabaret or dance hall. &ection 4. J Pro(ibition in t(e Issuance and Rene"al o$
%icenses, Permits. J ?eing the principal cause in the decadence of morality and
because of their other adverse effects on this community as explained above, no
operator of night clubs, cabarets or dance halls shall henceforth be issued
permitsHlicenses to operate within the jurisdiction of the municipality and no
licenseHpermit shall be issued to any professional hostess, hospitality girls and
professional dancer for employment in any of the aforementioned establishments. The
prohibition in the issuance of licensesHpermits to said persons and operators of said
establishments shall include prohibition in the renewal thereof. &ection *.J Revocation
o$ Permits and %icenses.J The licenses and permits issued to operators of night clubs,
cabarets or dance halls which are now in operation including permits issued to
professional hostesses, hospitality girls and professional dancers are hereby revo0ed
upon the expiration of the thirty;day period given them as provided in &ection . hereof
and thenceforth, the operation of these establishments within the jurisdiction of the
municipality shall be illegal. &ection 5.J Penalt! in case o$ violation. J !iolation of any
of the provisions of this 3rdinance shall be punishable by imprisonment not exceeding
three +4, months or a fine not exceeding P$66.66 or both at the discretion of the Court.
If the offense is committed by a juridical entity, the person charged with the
management andHor operation thereof shall be liable for the penalty provided herein.
&ection ). J *eparabilit! &lause.J If, for any reason, any section or provision of this
3rdinance is held unconstitutional or invalid, no other section or provision hereof shall
be affected thereby. &ection D.J Repealing &lause.J (ll ordinance, resolutions,
circulars, memoranda or parts thereof that are inconsistent with the provisions of this
3rdinance are hereby repealed. &ection ..J E$$ectivit!.J This 3rdinance shall ta0e
effect immediately upon its approval8 provided, however, that operators of night clubs,
cabarets and dance halls now in operation including professional hostesses, hospitality
girls and professional dancers are given a period of thirty days from the approval hereof
within which to wind up their businesses and comply with the provisions of this
3rdinance.C
4
3n #ovember 5, -%D5, two cases for prohibition with preliminary injunction were filed
with the Court of First Instance of ?ulacan.
1
The grounds alleged follow7
-. 3rdinance #o. .* is null and void as a municipality has no authority to prohibit a
lawful business, occupation or calling.
$. 3rdinance #o. .* is violative of the petitioners2 right to due process and the e/ual
protection of the law, as the license previously given to petitioners was in effect
withdrawn without judicial hearing. 4. That under Presidential <ecree #o. -.%, as
amended, by Presidential <ecree #o. $5%, the power to license and regulate tourist;
oriented businesses including night clubs, has been transferred to the <epartment of
Tourism.C
2
The cases were assigned to respondent Gudge, now (ssociate Gustice Paras
of the Intermediate (ppellate Court, who issued a restraining order on #ovember D,
-%D5. The answers were thereafter filed. It was therein alleged7 C -. That the unicipal
Council is authori:ed by law not only to regulate but to prohibit the establishment,
maintenance and operation of night clubs invo0ing &ection $$*4 of the "(C, C( )6-,
"epublic (cts #os. %4., %D. and -$$*. $. The 3rdinance #o. .* is not violative of
petitioners2 right to due process and the e/ual protection of the law, since property rights
are subordinate to public interests. 4. That Presidential <ecree #o. -.%, as amended,
did not deprive unicipal Councils of their jurisdiction to regulate or prohibit night clubs.C
3
There was the admission of the following facts as having been established7 Cl. That
petitioners !icente de la Cru:, et al. in Civil Case #o. *D55; had been previously
issued licenses by the unicipal ayor of ?ocaue;petitioner Gose Torres III, since -%5.8
petitioner !icente de la Cru:, since -%)68 petitioner "enato (lipio, since -%)- and
petitioner =eoncio Corpu:, since -%D$8 $. That petitioners had invested large sums of
money in their businesses8 4. That the night clubs are well;lighted and have no
partitions, the tables being near each other8 *. That the petitioners ownersHoperators of
these clubs do not allow the hospitality girls therein to engage in immoral acts and to go
out with customers8 5. That these hospitality girls are made to go through periodic
medical chec0;ups and not one of them is suffering from any venereal disease and that
those who fail to submit to a medical chec0;up or those who are found to be infected
with venereal disease are not allowed to wor08 ). That the crime rate there is better than
in other parts of ?ocaue or in other towns of ?ulacan.C
4
Then came on Ganuary -5,
-%D) the decision upholding the constitutionality and validity of 3rdinance #o. .* and
dismissing the cases. 1ence this petition for certiorari by way of appeal.
In an exhaustive as well as scholarly opinion, the lower court dismissed the petitions. Its
rationale is set forth in the opening paragraph thus7 CThose who lust cannot last. This in
essence is why the unicipality of ?ocaue, Province of ?ulacan, stigmati:ed as it has
been by innuendos of sexual titillation and fearful of what the awesome future holds for
it, had no alternative except to order thru its legislative machinery, and even at the ris0
of partial economic dislocation, the closure of its night clubs andHor cabarets. This in
essence is also why this Court, obedient to the mandates of good government, and
cogni:ant of the categorical imperatives of the current legal and social revolution,
hereby EupholdsF in the name of police power the validity and constitutionality of
3rdinance #o. .*, &eries of -%D5, of the unicipal Council of ?ocaue, ?ulacan. The
restraining orders heretofore issued in these two cases are therefore hereby rifted,
effective the first day of February, -%D), the purpose of the grace period being to enable
the petitioners herein to apply to the proper appellate tribunals for any contemplated
redress.C
9
This Court is, however, unable to agree with such a conclusion and for
reasons herein set forth, holds that reliance on the police power is insufficient to justify
the enactment of the assailed ordinance. It must be declared null and void.
-. Police power is granted to municipal corporations in general terms as follows7
?6eneral po"er o$ council to enact ordinances and ma-e regulations. ; The municipal
council shall enact such ordinances and ma0e such regulations, not repugnant to law,
as may be necessary to carry into effect and discharge the powers and duties conferred
upon it by law and such as shall seem necessary and proper to provide for the health
and safety, promote the prosperity, improve the morals, peace, good order, comfort, and
convenience of the municipality and the inhabitants thereof, and for the protection of
property therein.C
10
It is practically a reproduction of the former &ection 4% of unicipal
Code.
11
(n ordinance enacted by virtue thereof, according to Gustice oreland,
spea0ing for the Court in the leading case of Fnited *tates v. 'bendan
12
Cis valid,
unless it contravenes the fundamental law of the Philippine Islands, or an (ct of the
Philippine =egislature, or unless it is against public policy, or is unreasonable,
oppressive, partial, discriminating, or in derogation of common right. 9here the power
to legislate upon a given subject, and the mode of its exercise and the details of such
legislation are not prescribed, the ordinance passed pursuant thereto must be a
reasonable exercise of the power, or it will be pronounced invalid.C
13
In another leading
case, Fnited *tates v. *alaveria,
14
the ponente this time being Gustice alcolm, where
the present (dministrative Code provision was applied, it was stated by this Court7 CThe
general welfare clause has two branches7 3ne branch attaches itself to the main trun0
of municipal authority, and relates to such ordinances and regulations as may be
necessary to carry into effect and discharge the powers and duties conferred upon the
municipal council by law. 9ith this class we are not here directly concerned. The
second branch of the clause is much more independent of the specific functions of the
council which are enumerated by law. It authori:es such ordinances as shall seem
necessary and proper to provide for the health and safety, promote the prosperity,
improve the morals, peace, good order, comfort, and convenience of the municipality
and the inhabitants thereof, and for the protection of property therein.2 It is a general rule
that ordinances passed by virtue of the implied power found in the general welfare
clause must be reasonable, consonant with the general powersand purposes of the
corporation, and not inconsistent with the laws or policy of the &tate.C
11
If night clubs
were merely then regulated and not prohibited, certainly the assailed ordinance would
pass the test of validity. In the two leading cases above set forth, this Court had
stressed reasonableness, consonant with the general powers and purposes of
municipal corporations, as well as consistency with the laws or policy of the &tate. It
cannot be said that such a sweeping exercise of a lawma0ing power by ?ocaue could
/ualify under the term reasonable. The objective of fostering public morals, a worthy
and desirable end can be attained by a measure that does not encompass too wide a
field. Certainly the ordinance on its face is characteri:ed by overbreadth. The purpose
sought to be achieved could have been attained by reasonable restrictions rather than
by an absolute prohibition. The admonition in &alaveria should be heeded7 CThe
Gudiciary 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.C
12
It is clear that in
the guise of a police regulation, there was in this instance a clear invasion of personal or
property rights, personal in the case of those individuals desirous of patroni:ing those
night clubs and property in terms of the investments made and salaries to be earned by
those therein employed.
$. The decision now under review refers to "epublic (ct #o. %4. as amended.
13
It was
originally enacted on Gune $6, -%54. It is entitled7 C(# (CT @"(#TI#@ A#ICIP(= 3"
CIT> ?3("<& (#< C3A#CI=& T1' P39'" T3 "'@A=(T' T1'
'&T(?=I&1'#T, (I#T'#(#C' (#< 3P'"(TI3# 3F C'"T(I# P=(C'& 3F
(A&''#T 9IT1I# T1'I" "'&P'CTI!' T'""IT3"I(= GA"I&<ICTI3#&.2
14
Its
first section insofar as pertinent reads7 CThe municipal or city board or council of each
chartered city shall have the power to regulate by ordinance the establishment,
maintenance and operation of night clubs, cabarets, dancing schools, pavilions,
coc0pits, bars, saloons, bowling alleys, billiard pools, and other similar places of
amusement within its territorial jurisdiction7 ... C
19
Then on ay $-, -%5*, the first section
was amended to include not merely Cthe power to regulate, but li0ewise CProhibit ... C
20

The title, however, remained the same. It is worded exactly as "epublic (ct #o. %4.. It
is to be admitted that as thus amended, if only the above portion of the (ct were
considered, a municipal council may go as far as to prohibit the operation of night clubs.
If that were all, then the appealed decision is not devoid of support in law. That is not all,
however. The title was not in any way altered. It was not changed one whit. The exact
wording was followed. The power granted remains that of regulation, not pro(ibition.
There is thus support for the view advanced by petitioners that to construe "epublic (ct
#o. %4. as allowing the prohibition of the operation of night clubs would give rise to a
constitutional /uestion. The Constitution mandates7 C'very bill shall embrace only one
subject which shall be expressed in the title thereof. C
21
&ince there is no dispute as the
title limits the power to regulating, not prohibiting, it would result in the statute being
invalid if, as was done by the unicipality of ?ocaue, the operation of a night club was
prohibited. There is a wide gap between the exercise of a regulatory power Cto provide
for the health and safety, promote the prosperity, improve the morals,
22
in the language
of the (dministrative Code, such competence extending to all Cthe great public needs,
23

to /uote from 1olmes, and to interdict any calling, occupation, or enterprise. In
accordance with the well;settled principle of constitutional construction that between two
possible interpretations by one of which it will be free from constitutional infirmity and by
the other tainted by such grave defect, the former is to be preferred. ( construction that
would save rather than one that would affix the seal of doom certainly commends itself.
9e have done so before 9e do so again.
24

4. There is reinforcement to the conclusion reached by virtue of a specific provision of
the recently;enacted =ocal @overnment Code.
21
The general welfare clause, a
reiteration of the (dministrative Code provision, is set forth in the first paragraph of
&ection -*% defining the powers and duties of the sangguniang ba!an. It read as
follows7 C+a, 'nact such ordinances and issue such regulations as may be necessary to
carry out and discharge the responsibilities conferred upon it by law, and such as shall
be necessary and proper to provide for the health, safety, comfort and convenience,
maintain peace and order, improve public morals, promote the prosperity and general
welfare of the municipality and the inhabitants thereof, and insure the protection of
property therein8 ...C
22
There are in addition provisions that may have a bearing on the
/uestion now before this Court. Thus the sangguniang ba!an shall C+rr, "egulate cafes,
restaurants, beer;houses, hotels, motels, inns, pension houses and lodging houses,
except travel agencies, tourist guides, tourist transports, hotels, resorts, de luxe
restaurants, and tourist inns of international standards which shall remain under the
licensing and regulatory power of the inistry of Tourism which shall exercise such
authority without infringing on the taxing or regulatory powers of the municipality8 +ss,
"egulate public dancing schools, public dance halls, and sauna baths or massage
parlors8 +tt, "egulate the establishment and operation of billiard pools, theatrical
performances, circuses and other forms of entertainment8 ...C
23
It is clear that municipal
corporations cannot prohibit the operation of night clubs. They may be regulated, but
not prevented from carrying on their business. It would be, therefore, an exercise in
futility if the decision under review were sustained. (ll that petitioners would have to do
is to apply once more for licenses to operate night clubs. ( refusal to grant licenses,
because no such businesses could legally open, would be subject to judicial correction.
That is to comply with the legislative will to allow the operation and continued existence
of night clubs subject to appropriate regulations. In the meanwhile, to compel petitioners
to close their establishments, the necessary result of an affirmance, would amount to no
more than a temporary termination of their business. <uring such time, their employees
would undergo a period of deprivation. Certainly, if such an undesirable outcome can be
avoided, it should be. The law should not be susceptible to the reproach that it displays
less than sympathetic concern for the plight of those who, under a mista0en
appreciation of a municipal power, were thus left without employment. &uch a
deplorable conse/uence is to be avoided. If it were not thus, then the element of
arbitrariness enters the picture. That is to pay less, very much less, than full deference
to the due process clause with its mandate of fairness and reasonableness.
*. The conclusion reached by this Court is not to be interpreted as a retreat from its
resolute stand sustaining police power legislation to promote public morals. The
commitment to such an Ideal forbids such a bac0ward step. =egislation of that character
is deserving of the fullest sympathy from the judiciary. (ccordingly, the judiciary has not
been hesitant to lend the weight of its support to measures that can be characteri:ed as
falling within that aspect of the police power. "eference is made by respondents to
Ermita-Malate Hotel and Motel 8perators 'ssociation, Inc. v. &it! Ma!or o$ Manila.
24

There is a misapprehension as to what was decided by this Court. That was a
regulatory measure. #ecessarily, there was no valid objection on due process or e/ual
protection grounds. It did not prohibit motels. It merely regulated the mode in which it
may conduct business in order precisely to put an end to practices which could
encourage vice and immorality. This is an entirely different case. 9hat was involved is a
measure not embraced within the regulatory power but an exercise of an assumed
power to prohibit. oreover, while it was pointed out in the aforesaid 'rmita;alate
1otel and otel 3perators (ssociation, Inc. decision that there must be a factual
foundation of invalidity, it was li0ewise made clear that there is no need to satisfy such a
re/uirement if a statute were void on its face. That it certainly is if the power to enact
such ordinance is at the most dubious and under the present =ocal @overnment Code
non;existent.
91'"'F3"', the writ of certiorari is granted and the decision of the lower court dated
Ganuary -5, -%D) reversed, set aside, and nullied. 3rdinance #o. .*, &eries of -%D5 of
the unicipality of ?ocaue is declared void and unconstitutional. The temporary
restraining order issued by this Court is hereby made permanent. #o costs.
0ee(an-ee, 'quino, &oncepcion Jr., 6uerrero, 'bad *antos, Plana, Escolin Relova and
6utierre5, Jr., JJ., concur.
Ma-asiar, J, reserves (is rig(t to $ile a dissent.
#e &astro, Melencio-Herrera and .asque5, JJ., are on leave.

Foo%"o%*#
- unicipal ayor atias "amire: and unicipal !ice;ayor ario endo:a.
$ Petition, D. The other /uestion raised was the jurisdiction of a municipal council to prohibit the operation of nightclubs,
it being alleged that the power of regulating tourist;oriented businesses being granted to the then <epartment, now
inistry, of Tourism.
4 3rdinance #o. .*, &eries of -%D5.
* Ibid.
5 !icente de la Cru:, et al. v. atias "amire:, et al., and Teresita Calot, et al. v. The unicipal ayor, doc0eted as Civil
Cases #os. *D55; and *D5);, respectively. 3n #ovember $-, -%D5, the petition in one of the above cases was
amended to raise the further issue of lac0 of authority of respondent unicipal 3fficials to pass the ordinance in
/uestion, since the power to license, supervise and regulate night clubs has been transferred to the <epartment of
Tourism by virtue of Presidential <ecree #o. -.%, as amended.
) Petition, D.
D Ibid, ..
. Ibid, .;%.
% <ecision, (nnex ( to Petition -.
-6 &ection $$4., "evised (dministrative Code of the Philippines +-%-D,.
-- (ct #o. .$ +-%6-,.
-$ $* Phil. -)5 +-%-4,. (bendan is followed in Anited &tates v. Tamparong, 4- Phil. 4$- +-%-5,8 Anited &tates v.
@aspay, 44 Phil. %) +-%-5, and &armiento v. ?alderol, --$ Phil. 4%* +-%)-,.
-4 Ibid, -).. Cf. Anited &tates v. Ten >u, $* Phil. - +-%-$,8 Case v. ?oard of 1ealth, $* Phil. $56 +-%-4,.
-* 4% Phil. -6$ +-%-.,.
-5 Ibid, -6%;--6.
-) Ibid, ---. In &alaveria though the ordinance penali:ing the playing of panguingue on days not &undays or legal
holidays was declared as valid.
-D It was amended by "epublic (ct #o. %D% and "epublic (ct #o. -$$*.
-. Title of "epublic (ct #o. %4. as amended.
-% "epublic (ct #o. %4., &ection -.
$6 "epublic (ct #o. %D%, &ection -.
$- (rticle !III, &ection -%, par. - of the Constitution.
$$ &ection $$4..
$4 3tis v. Par0er, -.D A& )6) +-%6$,.
$* Cf. #uRe: v. &andiganbayan, @.". #os. 565.-;56)-D, Ganuary 46, -%.$, --- &C"( *44. &eparate opinion of
Gustice a0asiar. <e la =lana v. (lba, @.". #o. 5D..4, arch -$,-%.$,--$ &C"( $%*.
$5 ?atas Pambansa ?lg. 44D +-%.4,. Ander &ection $4* of the Code it too0 effect one month after its publication in the
3fficial @a:ette. It was published in the issue of February -*,-%.4.
$) Ibid, &ection -*% +-, +a,.
$D Ibid, &ection -*% +-, +rr, ss and tt ,.
$. =;$*)%4, $6 &C"( .*%, Guly 4-, -%)D.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L,24230 *c*:8*r 14, 1939
ORTIGAS = CO., LIMITE PARTNERS5IP, plaintiff;appellant,
vs.
FEATI .AN9 AN TRUST CO., defendant;appellee.
Ramire5 G 8rtigas $or appellant.
0aHada, 0ee(an-ee G &arreon $or appellee.

SANTOS, J.:
(n appeal interposed on Gune $4, -%)5 by plaintiff;appellant, 3rtigas P Co., =imited
Partnership, from the decision of the Court of First Instance of "i:al, ?ranch !I, at
Pasig, 1on. (ndres "eyes presiding, which dismissed its complaint in Civil Case #o.
DD6), entitled, C3rtigas P Company, =imited Partnership, plaintiff, v. Feati ?an0 and
Trust Company, defendant,C for lac0 of merit.
The following facts J a reproduction of the lower court2s findings, which, in turn, are
based on a stipulation of facts entered into by the parties are not disputed. Plaintiff
+formerly 0nown as C3rtigas, adrigal y CiaC, is a limited partnership and defendant
Feati ?an0 and Trust Co., is a corporation duly organi:ed and existing in accordance
with the laws of the Philippines. Plaintiff is engaged in real estate business, developing
and selling lots to the public, particularly the 1ighway 1ills &ubdivision along 'pifanio
de los &antos (venue, andaluyong, "i:al.
1
3n arch *, -%5$, plaintiff, as vendor, and (ugusto Padilla y (ngeles and #atividad
(ngeles, as vendees, entered into separate agreements of sale on installments over
two parcels of land, 0nown as =ots #os. 5 and ), ?loc0 4-, of the 1ighway 1ills
&ubdivision, situated at andaluyong, "i:al. 3n Guly -%, -%)$, the said vendees
transferred their rights and interests over the aforesaid lots in favor of one 'mma
Chave:. Apon completion of payment of the purchase price, the plaintiff executed the
corresponding deeds of sale in favor of 'mma Chave:. ?oth the agreements +of sale on
installment, and the deeds of sale contained the stipulations or restrictions that7
-. The parcel of land subject of this deed of sale shall be used the ?uyer exclusively for
residential purposes, and she shall not be entitled to ta0e or remove soil, stones or gravel
from it or any other lots belonging to the &eller.
$. (ll buildings and other improvements +except the fence, which may be constructed at
any time in said lot must be, +a, of strong materials and properly painted, +b, provided
with modern sanitary installations connected either to the public sewer or to an approved
septic tan0, and +c, shall not be at a distance of less than two +$, meters from its
boundary lines.
2

The above restrictions were later annotated in TCT #os. -6-56% and -6-5-- of the
"egister of <eeds of "i:al, covering the said lots and issued in the name of 'mma
Chave:.
3
'ventually, defendant;appellee ac/uired =ots #os. 5 and ), with TCT #os. -6-)-4 and
-6)6%$ issued in its name, respectively and the building restrictions were also
annotated therein.
4
<efendant;appellee bought =ot #o. 5 directly from 'mma Chave:,
Cfree from all liens and encumbrances as stated in (nnex 2<2,
1
while =ot #o. ) was
ac/uired from "epublic Flour ills through a C<eed of 'xchange,C (nnex C'C.
2
TCT #o.
-6-D-% in the name of "epublic Flour ills li0ewise contained the same restrictions,
although defendant;appellee claims that "epublic Flour ills purchased the said =ot #o.
) Cin good faith. free from all liens and encumbrances,C as stated in the <eed of &ale,
(nnex CFC
3
between it and 'mma Chave:.
Plaintiff;appellant claims that the restrictions annotated on TCT #os. -6-56%, -6-5--,
-6-D-%, -6-)-4, and -6)6%$ were imposed as part of its general building scheme
designed for the beautification and development of the 1ighway 1ills &ubdivision which
forms part of the big landed estate of plaintiff;appellant where commercial and industrial
sites are also designated or established.
4
<efendant;appellee, upon the other hand, maintains that the area along the western
part of 'pifanio de los &antos (venue +'<&(, from &haw ?oulevard to Pasig "iver, has
been declared a commercial and industrial :one, per "esolution #o. $D, dated February
*, -%)6 of the unicipal Council of andaluyong, "i:al.
9
It alleges that plaintiff;
appellant 2completely sold and transferred to third persons all lots in said subdivision
facing 'pifanio de los &antos (venueC
10
and the subject lots thereunder were ac/uired
by it Conly on Guly $4, -%)$ or more than two +$, years after the area ... had been
declared a commercial and industrial :one ...
11

3n or about ay 5, -%)4, defendant;appellee began laying the foundation and
commenced the construction of a building on =ots #os. 5 and ), to be devoted to
ban0ing purposes, but which defendant;appellee claims could also be devoted to, and
used exclusively for, residential purposes. The following day, plaintiff;appellant
demanded in writing that defendant;appellee stop the construction of the commerical
building on the said lots. The latter refused to comply with the demand, contending that
the building was being constructed in accordance with the :oning regulations,
defendant;appellee having filed building and planning permit applications with the
unicipality of andaluyong, and it had accordingly obtained building and planning
permits to proceed with the construction.
12

3n the basis of the foregoing facts, Civil Case #o. DD6), supra, was submitted in the
lower court for decision. The complaint sought, among other things, the issuance of Ca
writ of preliminary injunction ... restraining and enjoining defendant, its agents, assigns,
and those acting on its or their behalf from continuing or completing the construction of
a commercial ban0 building in the premises ... involved, with the view to commanding
the defendant to observe and comply with the building restrictions annotated in the
defendant2s transfer certificate of title.C
In deciding the said case, the trial court considered, as the fundamental issue, whether
or not the resolution of the unicipal Council of andaluyong declaring =ots #os. 5 and
), among others, as part of the commercial and industrial :one of the municipality,
prevailed over the building restrictions imposed by plaintiff;appellant on the lots in
/uestion.
13
The records do not show that a writ of preliminary injunction was issued.
The trial court upheld the defendant;appellee and dismissed the complaint, holding that
the subject restrictions were subordinate to unicipal "esolution #o. $D, supra. It
predicated its conclusion on the exercise of police power of the said municipality, and
stressed that private interest should Cbow down to general interest and welfare. C In
short, it upheld the classification by the unicipal Council of the area along 'pifanio de
los &antos (venue as a commercial and industrial :one, and held that the same
rendered Cineffective and unenforceableC the restrictions in /uestion as against
defendant;appellee.
14
The trial court decision further emphasi:ed that it Cassumes said
resolution to be valid, considering that there is no issue raised by either of the parties as
to whether the same is null and void.
11

3n arch $, -%)5, plaintiff;appellant filed a motion for reconsideration of the above
decision,
12
which motion was opposed by defendant;appellee on arch -D, -%)5.
13
It
averred, among others, in the motion for reconsideration that defendant; appellee Cwas
duty bound to comply with the conditions of the contract of sale in its favor, which
conditions were duly annotated in the Transfer Certificates of Title issued in her +'mma
Chave:, favor.C It also invited the trial court2s attention to its claim that the unicipal
Council had +no, power to nullify the contractual obligations assumed by the defendant
corporation.C
14
The trial court denied the motion for reconsideration in its order of arch $), -%)5.
19
3n (pril $, -%)5 plaintiff;appellant filed its notice of appeal from the decision dismissing
the complaint and from the order of arch $), -%)5 denying the motion for
reconsideration, its record on appeal, and a cash appeal bond.C
20
3n (pril -*, the
appeal was given due course
21
and the records of the case were elevated directly to
this Court, since only /uestions of law are raised.
22

Plaintiff;appellant alleges in its brief that the trial court erred J
I. 9hen it sustained the view that "esolution #o. $D, series of -%)6 of the unicipal
Council of andaluyong, "i:al declaring =ots #os. 5 and ), among others, as part of the
commercial and industrial :one, is valid because it did so in the exercise of its police
power8 and
II. 9hen it failed to consider whether or not the unicipal Council had the power to nullify
the contractual obligations assumed by defendant;appellee and when it did not ma0e a
finding that the building was erected along the property line, when it should have been
erected two meters away from said property line.
23

The defendant;appellee submitted its counter;assignment of errors. In this connection,
9e already had occasion to hold in Relativo v. &astro
24
that C+I,t is not incumbent on the
appellee, who occupies a purely defensive position, and is see0ing no affirmative relief,
to ma0e assignments of error, C
The only issues to be resolved, therefore, are7 +-, whether "esolution #o. $D s;-%)6 is
a valid exercise of police power8 and +$, whether the said "esolution can nullify or
supersede the contractual obligations assumed by defendant;appellee.
-. The contention that the trial court erred in sustaining the validity of "esolution #o. $D
as an exercise of police power is without merit. In the first place, the validity of the said
resolution was never /uestioned before it. The rule is that the /uestion of law or of fact
which may be included in the appellant2s assignment of errors must be those which
have been raised in the court below, and are within the issues framed by the parties.
21

The object of re/uiring the parties to present all /uestions and issues to the lower court
before they can be presented to the appellate court is to enable the lower court to pass
thereon, so that the appellate court upon appeal may determine whether or not such
ruling was erroneous. The re/uirement is in furtherance of justice in that the other party
may not be ta0en by surprise.
22
The rule against the practice of blowing Chot and coldC
by assuming one position in the trial court and another on appeal will, in the words of
'lliot, prevent deception.
23
For it is well;settled that issues or defenses not raised
24
or
properly litigated
29
or pleaded
30
in the Court below cannot be raised or entertained on
appeal.
In this particular case, the validity of the resolution was admitted at least impliedly, in the
stipulation of facts below. when plaintiff;appellant did not dispute the same. The only
controversy then as stated by the trial court was whether or not the resolution of the
unicipal Council of andaluyong ... which declared lots #os. * and 5 among others,
as a part of the commercial and industrial :one of the municipality, prevails over the
restrictions constituting as encumbrances on the lots in /uestion.
31
1aving admitted the
validity of the subject resolution below, even if impliedly, plaintiff;appellant cannot now
change its position on appeal.
?ut, assuming arguendo that it is not yet too late in the day for plaintiff;appellant to raise
the issue of the invalidity of the municipal resolution in /uestion, 9e are of the opinion
that its posture is unsustainable. &ection 4 of ".(. #o. $$)*, otherwise 0nown as the
=ocal (utonomy (ct,C
32
empowers a unicipal Council Cto adopt :oning and subdivision
ordinances or regulationsC8
33
for the municipality. Clearly, the law does not restrict the
exercise of the power through an ordinance. Therefore, granting that "esolution #o. $D
is not an ordinance, it certainly is a regulatory measure within the intendment or ambit of
the word CregulationC under the provision. (s a matter of fact the same section declares
that the power exists C+(,ny provision of law to the contrary notwithstanding ... C
(n examination of &ection -$ of the same law
34
which prescribes the rules for its
interpretation li0ewise reveals that the implied power of a municipality should be
Cliberally construed in its favorC and that C+(,ny fair and reasonable doubt as to the
existence of the power should be interpreted in favor of the local government and it shall
be presumed to exist.C The same section further mandates that the general welfare
clause be liberally interpreted in case of doubt, so as to give more power to local
governments in promoting the economic conditions, social welfare and material
progress of the people in the community. The only exceptions under &ection -$ are
existing vested rights arising out of a contract between Ca province, city or municipality
on one hand and a third party on the other,C in which case the original terms and
provisions of the contract should govern. The exceptions, clearly, do not apply in the
case at bar.
$. 9ith regard to the contention that said resolution cannot nullify the contractual
obligations assumed by the defendant;appellee S referring to the restrictions
incorporated in the deeds of sale and later in the corresponding Transfer Certificates of
Title issued to defendant;appellee S it should be stressed, that while non;impairment of
contracts is constitutionally guaranteed, the rule is not absolute, since it has to be
reconciled with the legitimate exercise of police power, i.e., Cthe power to prescribe
regulations to promote the health, morals, peace, education, good order or safety and
general welfare of the people.
31
Invariably described as Cthe most essential, insistent,
and illimitable of powersC
32
and Cin a sense, the greatest and most powerful attribute of
government,
33
the exercise of the power may be judicially in/uired into and corrected
only if it is capricious, 2whimsical, unjust or unreasonable, there having been a denial of
due process or a violation of any other applicable constitutional guarantee.
34
(s this
Court held through Gustice Gose P. ?eng:on in P(ilippine %ong #istance &ompan! vs.
&it! o$ #avao, et al.
39
police power Cis elastic and must be responsive to various social
conditions8 it is not, confined within narrow circumscriptions of precedents resting on
past conditions8 it must follow the legal progress of a democratic way of life.C 9e were
even more emphatic in .da. de 6enuino vs. 0(e &ourt o$ 'grarian Relations, et al.,
40

when 9e declared7 C9e do not see why public welfare when clashing with the individual
right to property should not be made to prevail through the state2s exercise of its police
power.
"esolution #o. $D, s;-%)6 declaring the western part of highway 5*, now '. de los
&antos (venue +'<&(, for short, from &haw ?oulevard to the Pasig "iver as an
industrial and commercial :one, was obviously passed by the unicipal Council of
andaluyong, "i:al in the exercise of police power to safeguard or promote the health,
safety, peace, good order and general welfare of the people in the locality, Gudicial
notice may be ta0en of the conditions prevailing in the area, especially where lots #os.
5 and ) are located. The lots themselves not only front the highway8 industrial and
commercial complexes have flourished about the place. '<&(, a main traffic artery
which runs through several cities and municipalities in the etro anila area, supports
an endless stream of traffic and the resulting activity, noise and pollution are hardly
conducive to the health, safety or welfare of the residents in its route. 1aving been
expressly granted the power to adopt :oning and subdivision ordinances or regulations,
the municipality of andaluyong, through its unicipal 2council, was reasonably, if not
perfectly, justified under the circumstances, in passing the subject resolution.
The scope of police power 0eeps expanding as civili:ation advances, stressed this
Court, spea0ing thru Gustice =aurel in the leading case of &alalang v. =illiams et al.,
41

Thus;
(s was said in the case of #obbins v. %os 'ngeles +-%5 A& $$4, $4. *% =. ed. -)%,, 1t(e
rig(t to e,ercise t(e police po"er is a continuing one, and a business la"$ul toda! ma! in
t(e $uture, because o$ c(anged situation, t(e gro"t( o$ population or ot(er causes,
become a menace to t(e public (ealt( and "el$are, and be required to !ield to t(e public
good.2 (nd in People v. Pomar +*) Phil. **6,, it was observed that 1advancing civili5ation
is bringing "it(in t(e scope o$ police po"er o$ t(e state toda! t(ings "(ic( "ere not
t(oug(t o$ as being "it( in suc( po"er !esterda!. The development of civili:ation,, the
rapidly increasing population, the growth of public opinion, with an increasing desire on
the part of the masses and of the government to loo0 after and care for the interests of
the individuals of the state, have brought within the police power many /uestions for
regulation which formerly were not so considered.
42
+'mphasis, supplied.,
Thus, the state, in order to promote the general welfare, may interfere with personal
liberty, with property, and with business and occupations. Persons may be subjected to
all 0inds of restraints and burdens, in order to secure the general comfort health and
prosperity of the state
43
and to this fundamental aim of our @overnment, the rights of
the individual are subordinated.
44
The need for reconciling the non;impairment clause of the Constitution and the valid
exercise of police power may also be gleaned from Helvering v. #avis
41
wherein r.
Gustice Cardo:o, spea0ing for the Court, resolved the conflict Cbetween one welfare and
another, between particular and general, thus J
#or is the concept of the general welfare static. )eeds t(at "ere narro" or paroc(ial a
centur! ago ma! be inter"oven in our da! "it( t(e "ell-being o$ t(e nation 9hat is critical
or urgent changes with the times.
42

The motives behind the passage of the /uestioned resolution being reasonable, and it
being a C legitimate response to a felt public need,C
43
not whimsical or oppressive, the
non;impairment of contracts clause of the Constitution will not bar the municipality2s
proper exercise of the power. #ow Chief Gustice Fernando puts it aptly when he
declared7 CPolice power legislation then is not li0ely to succumb to the challenge that
thereby contractual rights are rendered nugatory.C
44
Furthermore, 9e restated in P(ilippine 'merican %i$e Ins. &o. v. 'uditor 6eneral
49
that
laws and reservation of essential attributes of sovereign power are read into contracts
agreed upon by the parties. Thus J
#ot only are existing laws read into contracts in order to fix obligations as between the
parties, but t(e reservation o$ essential attributes o$ sovereign po"er is also read into
contracts as a postulate o$ t(e legal order. The policy of protecting contracts against
impairments presupposes the maintenance of a government by virtue of which
contractual relations are worthwhile S a government which retains ade/uate authority to
secure the peace and good order of society.
(gain, 9e held in %iberation *teams(ip &o., Inc. v. &ourt o$ Industrial Relations,
10

through Gustice G.?.=. "eyes, that ... the law forms part of, and is read into, every
contract, unless clearly excluded therefrom in those cases where such exclusion is
allowed.C The decision in Maritime &ompan! o$ t(e P(ilippines v. Reparations
&ommission,
11
written for the Court by Gustice Fernando, now Chief Gustice, restates
the rule.
3ne last observation. (ppellant has placed un/ualified reliance on (merican
jurisprudence and authorities
12
to bolster its theory that the municipal resolution in
/uestion cannot nullify or supersede the agreement of the parties embodied in the sales
contract, as that, it claims, would impair the obligation of contracts in violation of the
Constitution. &uch reliance is misplaced.
In the first place, the views set forth in (merican decisions and authorities are not per
se controlling in the Philippines, the laws of which must necessarily be construed in
accordance with the intention of its own lawma0ers and such intent may be deduced
from the language of each law and the context of other local legislation related thereto.
13
and urgess, et al v. Magarian, et al.,
11
two 3f the cases cited by plaintiff;appellant,
lend support to the conclusion reached by the trial court, i.e. that the municipal
resolution supersedesHsupervenes over the contractual underta0ing between the
parties. #olan v. ro"n, states that C'/uity will not, as a rule, enforce a restriction upon
the use of property by injunction "(ere t(e propert! (as so c(anged in c(aracter and
environment as to ma-e it un$it or unpro$itable $or use s(ould t(e restriction be
en$orced, but will, in such a case, leave the complainant to whatever remedy he may
have at law.
12
+'mphasis supplied., 1ence, the remedy of injunction in #olan vs. ro"n
was denied on the specific holding that C( grantor may lawfully insert in his deed
conditions or restrictions which are not against public policy and do not materially impair
the beneficial enjoyment of the estate.
13
(pplying the principle just stated to the present
controversy, 9e can say that since it is now unprofitable, nay a ha:ard to the health and
comfort, to use =ots #os. 5 and ) for strictly residential purposes, defendants; appellees
should be permitted, on the strength of the resolution promulgated under the police
power of the municipality, to use the same for commercial purposes. In urgess v.
Magarian et al. it was, held that Crestrictive covenants running with the land are binding
on all subse/uent purchasers ... C 1owever, &ection $4 of the :oning ordinance involved
therein contained a proviso expressly declaring that the ordinance was not intended Cto
interfere with or abrogate or annul any easements, covenants or other agreement
between parties.C
14
In the case at bar, no such proviso is found in the subject resolution.
It is, therefore, clear that even if the subject building restrictions were assumed by the
defendant;appellee as vendee of =ots #os. 5 and ), in the corresponding deeds of sale,
and later, in Transfer Certificates of Title #os. -6-)-4 and -6)6%$, the contractual
obligations so assumed cannot prevail over "esolution #o. $D, of the unicipality of
andaluyong, which has validly exercised its police power through the said resolution.
(ccordingly, the building restrictions, which declare =ots #os. 5 and ) as residential,
cannot be enforced.
I# !I'9 3F T1' F3"'@3I#@, the decision appealed from, dismissing the complaint,
is hereby (FFI"'<. Cwithout pronouncement as to costs.
&3 3"<'"'<.

Ma-asiar, 'ntonio, &oncepcion, Jr., 4ernande5, 6uerrero, #e &astro and Melencio-
Herrera, JJ., concur.
0ee(an-ee I and 'quino,JJ., too- no part.
S*$ara%* O$!"!o"#

.ARREO, J., concurring7
I hold it is a matter of public 0nowledge that the place in /uestion is commercial. It
would be worse if the same were to be left as residential and all around are already
commercial.
FERNANO, C.J., concurring7
The exhaustive and lucid opinion of the Court penned by Gustice @uillermo &. &antos
commends itself for approval. I feel no hesitancy, therefore, in yielding concurrence, The
observation, however, in the dissent of Gustice !icente (bad &antos relative to
restrictive covenants calls, to my mind, for further reflection as to the respect to which
they are entitled whenever police power legislation, whether on the national or local
level, is assailed. ?efore doing so, however, it may not be amiss to consider further the
effect of such all;embracing attribute on existing contracts.
-. "eference was made in the opinion of the Court to P(ilippine 'merican %i$e
Insurance &ompan! v. 'uditor 6eneral.
1
The ponente in that case was Gustice
&anche:. ( concurrence came from me. It contained this /ualification7 CIt cannot be
said, without rendering nugatory the constitutional guarantee of non;impairment, and for
that matter both the e/ual protection and due process clauses which e/ually serve to
protect property rights, that at the mere invocation of the police power, the objection on
non;impairment grounds automatically loses force. 1ere, as in other cases where
governmental authority may trench upon property rights, the process of balancing,
adjustment or harmoni:ation is called for.
2
(fter referring to three leading Fnited *tates
*upreme &ourt decisions, Home uilding and %oan 'ssociation v. laisdell,
3
)ebbia v.
)e" @or-,
4
and )orman v. altimore and 8(io Railroad &o.,
1
I stated7 C(ll of the above
decisions reflect the view that an enactment of a police power measure does not per se
call for the overruling of objections based on either due process or non;impairment
based on either due process or non;impairment grounds. There must be that balancing,
or adjustment, or harmoni:ation of the conflicting claims posed by an exercise of state
regulatory power on the one hand and assertion of rights to property, whether of natural
or of juridical persons, on the other. 2That is the only way by which the constitutional
guarantees may serve the high ends that call for their inclusion in the Constitution and
thus effectively preclude ally abusive exercise of governmental authority.C
2
#or did my
concurrence stop there7 CIn the opinion of the ?laisdell case, penned by the then Chief
Gustice 1ughes, there was this understandable stress on balancing or harmoni:ing,
which is called for in litigations of this character7 2The policy of protecting contracts
against impairment presupposes the maintenance of a government by virtue of which
contractual relations are worthwhile a government which retains ade/uate authority to
secure the peace and good order of society. This principle of harmoni:ing the
constitutional prohibition with the necessary residuum of state power has had
progressive recognition in the decisions of this Court.2 (lso to the same effect7
2Andoubtedly, whatever is reserved of state power must be consistent with the fair intent
of the constitutional limitation of that power. The reserve power cannot be construed so
as to destroy the limitation, nor is the limitation to be construed to destroy the reserved
power in its essential aspects. 2They must be construed in harmony with each other.
This principle precludes a construction which would permit the &tate to adopt as its
policy the repudiation of debts or the destruction of contracts or the denial of means to
enforce them. ?ut it does not follow that conditions may not arise in which a temporary
restraint of enforcement may be consistent with the spirit and purpose of the
constitutional provision and thus be found to be within the range of the reserved power
of the &tate to protect the vital interests of the community.2 Further on, Chief Gustice
1ughes li0ewise stated7 2It is manifest from this review of our decisions that there has
been a growing appreciation of public needs and of the necessity of finding ground for a
rational compromise between individual rights and public welfare. C
3
This is the
concluding paragraph of my concurrence in the Philippine (merican =ife Insurance Co.
case7 CIf emphasis be therefore laid, as this concurring opinion does, on the pressing
and inescapable need for such an approach whenever a possible collision between
state authority and an assertion of constitutional right to property may exist, it is not to
depart from what sound constitutional orthodoxy dictates. It is rather to abide by what is
compels. In litigations of this character then, perhaps much more so than in other
disputes, where there is a reliance on a constitutional provision, the judiciary cannot
escape what 1olmes fitly referred to as the sovereign prerogative of choice, the
exercise of which might possibly be impugned if there be no attempt, however slight, at
such an effort of adjusting or reconciling the respective claims of state regulatory power
and constitutionally protected rights.C
4
I adhere to such a view. This is not to say that there is a departure therefrom in the able
and scholarly opinion of Gustice &antos. It is merely to stress what to my mind is a
fundamental postulate of our Constitution. The only point I would wish to add is that in
the process of such balancing and adjustment, the present Constitution, the Philippine
(merican =ife Insurance Co. decision having been promulgated under the -%45 Charter,
leaves no doubt that the claim to property rights based on the non;impairment clause
has a lesser weight. For as explicitly provided by our present fundamental law7 CThe
&tate shall promote social Gustice to ensure the dignity, welfare, and security of all the
people. Towards this end, the
&tate shall regulate the ac/uisition, ownership, use, enjoyment, and disposition of
private property, and e/uitably diffuse property ownership and profits.
9

$. #ow as to restrictive convenants, accurately included by 1art and &ac0s under the
category of Cprivate directive arrangements. C
10
Through them people are enable to
agree on how to order their affairs. They could be utili:ed to govern their affairs. They
could be utili:ed to govern their future conduct. It is a well;0nown fact that the common
law relies to a great extent on such private directive arrangements to attain a desirable
social condition. ore specifically, such covenants are an important means of ordering
one aspect of property relationships. Through them, there could be delimitation of land
use rights. It is /uite understandable why the law should ordinarily accord them
deference, It does so, it has been said, both on grounds of morality and utility.
#onetheless, there are limits to the literal enforcement of their terms. To the extent that
they ignore technological or economic progress, they are not automatically entitled to
judicial protection. Clearly, they must Cspea0 from one point of time to another.C
11
The
parties, li0e all mortal, do not have the power of predicting the future with unfailing
certainty. In cases therefore where societal welfare calls for police power legislation, the
parties adversely affected should reali:e that arrangements dealing with property rights
are not impressed with sanctity. That approach, in my view, was the guiding principle of
the opinion of the Court. f fence my full and entire concurrence.
A.A SANTOS, J:, dissenting7
(lthough "esolution #o. $D, series of -%)6, of the unicipal Council of andaluyong,
"i:al, is valid until otherwise declared, I do not believe that its enactment was by virtue
of the police power of that municipality. I do not here dispute the concept of police
power as stated in Primicias vs. 4ugoso, .6 Phil. DD +-%*., for as a matter of fact I
accept it. (nd I agree also that it is elastic and must be responsive to various social
conditions, etc. as ruled in P%#0 vs. &it! o$ #avao, =;$46.6, 3ct. $), -%)5, -5 &C"(
$**. ?ut "esolution #o. $D, cannot be described as promotive of the health, morals,
peace, education, good order or safety and general welfare of the people of
andaluyong. 3n the contrary, its effect is the opposite. For the serenity, peace and
/uite of a residential section would by the resolution be replaced by the chaos, turmoil
and fren:y of commerce and industry. 9here there would be no industrial and noise
pollution these bane of so;called progress would now pervade and suffocate the
environment to the detriment of the ecology. To characteri:e the ordinance as an
exercise of police power would be retrogressive. It will set bac0 all the efforts of the
inistry of 1uman &ettlements to improve the /uality of life especially in etro anila. It
will ma0e etro anila, not the city of man as envisioned by its @overnor but a city of
commerce and industry.
Considering, therefore, that "esolution #o, $;- was not enacted in the legitimate
exercise of police power, it cannot impair the restrictive covenants which go with the
lands that were sold by the plaintiff;appellant. I vote for the reversal of the appealed
decision.




? S*$ara%* O$!"!o"#
.ARREO, J., concurring7
I hold it is a matter of public 0nowledge that the place in /uestion is commercial. It
would be worse if the same were to be left as residential and all around are already
commercial.
FERNANO, C.J., concurring7
The exhaustive and lucid opinion of the Court penned by Gustice @uillermo &. &antos
commends itself for approval. I feel no hesitancy, therefore, in yielding concurrence, The
observation, however, in the dissent of Gustice !icente (bad &antos relative to
restrictive covenants calls, to my mind, for further reflection as to the respect to which
they are entitled whenever police power legislation, whether on the national or local
level, is assailed. ?efore doing so, however, it may not be amiss to consider further the
effect of such all;embracing attribute on existing contracts.
-. "eference was made in the opinion of the Court to P(ilippine 'merican %i$e
Insurance &ompan! v. 'uditor 6eneral.
1
The ponente in that case was Gustice
&anche:. ( concurrence came from me. It contained this /ualification7 CIt cannot be
said, without rendering nugatory the constitutional guarantee of non;impairment, and for
that matter both the e/ual protection and due process clauses which e/ually serve to
protect property rights, that at the mere invocation of the police power, the objection on
non;impairment grounds automatically loses force. 1ere, as in other cases where
governmental authority may trench upon property rights, the process of balancing,
adjustment or harmoni:ation is called for.
2
(fter referring to three leading Fnited *tates
*upreme &ourt decisions, Home uilding and %oan 'ssociation v. laisdell,
3
)ebbia v.
)e" @or-,
4
and )orman v. altimore and 8(io Railroad &o.,
1
I stated7 C(ll of the above
decisions reflect the view that an enactment of a police power measure does not per se
call for the overruling of objections based on either due process or non;impairment
based on either due process or non;impairment grounds. There must be that balancing,
or adjustment, or harmoni:ation of the conflicting claims posed by an exercise of state
regulatory power on the one hand and assertion of rights to property, whether of natural
or of juridical persons, on the other. 2That is the only way by which the constitutional
guarantees may serve the high ends that call for their inclusion in the Constitution and
thus effectively preclude ally abusive exercise of governmental authority.C
2
#or did my
concurrence stop there7 CIn the opinion of the ?laisdell case, penned by the then Chief
Gustice 1ughes, there was this understandable stress on balancing or harmoni:ing,
which is called for in litigations of this character7 2The policy of protecting contracts
against impairment presupposes the maintenance of a government by virtue of which
contractual relations are worthwhile a government which retains ade/uate authority to
secure the peace and good order of society. This principle of harmoni:ing the
constitutional prohibition with the necessary residuum of state power has had
progressive recognition in the decisions of this Court.2 (lso to the same effect7
2Andoubtedly, whatever is reserved of state power must be consistent with the fair intent
of the constitutional limitation of that power. The reserve power cannot be construed so
as to destroy the limitation, nor is the limitation to be construed to destroy the reserved
power in its essential aspects. 2They must be construed in harmony with each other.
This principle precludes a construction which would permit the &tate to adopt as its
policy the repudiation of debts or the destruction of contracts or the denial of means to
enforce them. ?ut it does not follow that conditions may not arise in which a temporary
restraint of enforcement may be consistent with the spirit and purpose of the
constitutional provision and thus be found to be within the range of the reserved power
of the &tate to protect the vital interests of the community.2 Further on, Chief Gustice
1ughes li0ewise stated7 2It is manifest from this review of our decisions that there has
been a growing appreciation of public needs and of the necessity of finding ground for a
rational compromise between individual rights and public welfare. C
3
This is the
concluding paragraph of my concurrence in the Philippine (merican =ife Insurance Co.
case7 CIf emphasis be therefore laid, as this concurring opinion does, on the pressing
and inescapable need for such an approach whenever a possible collision between
state authority and an assertion of constitutional right to property may exist, it is not to
depart from what sound constitutional orthodoxy dictates. It is rather to abide by what is
compels. In litigations of this character then, perhaps much more so than in other
disputes, where there is a reliance on a constitutional provision, the judiciary cannot
escape what 1olmes fitly referred to as the sovereign prerogative of choice, the
exercise of which might possibly be impugned if there be no attempt, however slight, at
such an effort of adjusting or reconciling the respective claims of state regulatory power
and constitutionally protected rights.C
4
I adhere to such a view. This is not to say that there is a departure therefrom in the able
and scholarly opinion of Gustice &antos. It is merely to stress what to my mind is a
fundamental postulate of our Constitution. The only point I would wish to add is that in
the process of such balancing and adjustment, the present Constitution, the Philippine
(merican =ife Insurance Co. decision having been promulgated under the -%45 Charter,
leaves no doubt that the claim to property rights based on the non;impairment clause
has a lesser weight. For as explicitly provided by our present fundamental law7 CThe
&tate shall promote social Gustice to ensure the dignity, welfare, and security of all the
people. Towards this end, the
&tate shall regulate the ac/uisition, ownership, use, enjoyment, and disposition of
private property, and e/uitably diffuse property ownership and profits.
9

$. #ow as to restrictive convenants, accurately included by 1art and &ac0s under the
category of Cprivate directive arrangements. C
10
Through them people are enable to
agree on how to order their affairs. They could be utili:ed to govern their affairs. They
could be utili:ed to govern their future conduct. It is a well;0nown fact that the common
law relies to a great extent on such private directive arrangements to attain a desirable
social condition. ore specifically, such covenants are an important means of ordering
one aspect of property relationships. Through them, there could be delimitation of land
use rights. It is /uite understandable why the law should ordinarily accord them
deference, It does so, it has been said, both on grounds of morality and utility.
#onetheless, there are limits to the literal enforcement of their terms. To the extent that
they ignore technological or economic progress, they are not automatically entitled to
judicial protection. Clearly, they must Cspea0 from one point of time to another.C
11
The
parties, li0e all mortal, do not have the power of predicting the future with unfailing
certainty. In cases therefore where societal welfare calls for police power legislation, the
parties adversely affected should reali:e that arrangements dealing with property rights
are not impressed with sanctity. That approach, in my view, was the guiding principle of
the opinion of the Court. f fence my full and entire concurrence.
A.A SANTOS, J:, dissenting7
(lthough "esolution #o. $D, series of -%)6, of the unicipal Council of andaluyong,
"i:al, is valid until otherwise declared, I do not believe that its enactment was by virtue
of the police power of that municipality. I do not here dispute the concept of police
power as stated in Primicias vs. 4ugoso, .6 Phil. DD +-%*., for as a matter of fact I
accept it. (nd I agree also that it is elastic and must be responsive to various social
conditions, etc. as ruled in P%#0 vs. &it! o$ #avao, =;$46.6, 3ct. $), -%)5, -5 &C"(
$**. ?ut "esolution #o. $D, cannot be described as promotive of the health, morals,
peace, education, good order or safety and general welfare of the people of
andaluyong. 3n the contrary, its effect is the opposite. For the serenity, peace and
/uite of a residential section would by the resolution be replaced by the chaos, turmoil
and fren:y of commerce and industry. 9here there would be no industrial and noise
pollution these bane of so;called progress would now pervade and suffocate the
environment to the detriment of the ecology. To characteri:e the ordinance as an
exercise of police power would be retrogressive. It will set bac0 all the efforts of the
inistry of 1uman &ettlements to improve the /uality of life especially in etro anila. It
will ma0e etro anila, not the city of man as envisioned by its @overnor but a city of
commerce and industry.
Considering, therefore, that "esolution #o, $;- was not enacted in the legitimate
exercise of police power, it cannot impair the restrictive covenants which go with the
lands that were sold by the plaintiff;appellant. I vote for the reversal of the appealed
decision.
?Foo%"o%*#
- "ecord on (ppeal, p. --6.
$ Id., pp. *;5. 'mphasis supplied.
4 Id pp. ---;--$.
* Id., p. --$.
5 Id., p. .6.
) Id., p. .).
D Id., p. %*.
. Id., pp. -- $;--4.
% Id., pp. )6 and --4.
-6 ?rief for <efendant;(ppellee, p. $.
-- Id, p. 4.
-$ "ecord on (ppeal, pp. --4;--*.
-4 Id., p. --*.
-* Id., pp. --*;--5.
-5 Id., p. --*.
-) Id., p. --).
-D Id., p.--..
-. Id., p. --D.
-% Id., p. -$D.
$6 Id., pp. -$D;-$%.
$- Id., p. -46.
$$ Ibid.
$4 &ee ?rief for <efendant;(ppellee, pp. 46;4-.
$* D) Phil. 5)4, 5)D +-%*),.
$5 &ec. -., "ule *), "evised "ules of Court8 Tan achan v. <e la Trinidad 4 Phil. ).*, +-%*),.
$) Francisco, The "evised "ules of Court, !ol. ---, -%). 'd., p. )*., citing Gones v. &eymour, %5 (rt. 5%4, 5%D, -46
&.9. 5)6.
$D Id., pp.)4.;)*%, cit 'lliot on (ppellate Procedure, *-);*-D.
$. &umerari:, et al. vs. <evelopment ?an0 of the Philippines, et al., =;$4D)*, <ec. $), -%)D, $- &C"( -4D*7 &an
iguel ?rewery, et al. vs. !da. de Goves. et al., =;$*$5., Gune $), -%)., $4 &C"( -6%4, -6%D. &ee also Tuason vs.
1on. (rca, et al., =; $*4*), Gune $%, -%)., $4 &C"( -46., -4-$.
$% Plaridel &urety and Ins. Co. vs. Commissioner of Internal "evenue, =;$-5$6, <ec. --, -%)D, $- &C"( --.D.
46 anila Port &ervice, et al vs, Court of (ppeals, et al., =$-.%6, arch $%. -%)., $$ &C"( -4)*.
4- "ecord on (ppeal, p. --*.
4$ &ec. 4 reads7
&ec. 4. (dditional powers of provincial boards, municipal boards or city councils and municipal and regularly organi:ed
municipal district councils.
xxx xxx xxx
Power to adopt :oning and planning ordinances. (ny provision of law to the contrary notwithstanding unicipal ?oards
or City Councils in cities, and unicipal Councils in municipalities are hereby authori:ed to adopt :oning and
subdivision ordinances or regulations for their respective cities and municipalities subject to the approval of the City
ayor or unicipal ayor, as the case may be. Cities and municipalities may, however, consult the #ational Planning
Commission on matters pertaining to planning and :oning. +'mphasis supplied,.
44 'mphasis supplied.
4* The full text of &ection -$ follows7
&'C. -$. "ules for the Interpretation of the =ocal (utonomy (ct. J
-. Implied power of a province, a city or municipality shall be liberally construed in its favor. (ny
fair and reasonable doubt as to the existence of the power should be interpreted infavor of the
local government and it shall be presumed to exist.
$. The general welfare clause be liberally interpreted in case of local governments in promoting
the economic condition, social welfare and material progress of the people in the community.
4. !ested rights existing at the time of the promulgation of this arising out of a contract between a
province, city or municipality on one hand and third party on the other, should be governed by the
original terms and provisions of the same, and in no case would this act infringe existing right.
45 Primicias vs. Fugoso .6 Phil, DD +-%*.,.
4) &mith ?ell P Co. v. #atividad, *6 Phil. -4) +-%-%,, citing earlier authorities, Gustice alcolm ponente.
4D 'du v. 'ricta, =;4$6), 3ct. $*, -%D6, 45 &C"( *.D, Gustice Fernando, now Chief Gustice, spea0ing for the court.
4. &ee 'rmita;alate 1otel and otel 3perators (ssociation, Inc. v. City ayor of anila, =;$*)%4, Guly 4-, -%)D, $6
&C"( .*%, Gustice Fernando, now Chief Gustice, also wrote the decision for the Court.
4% =;$46.6, 3ct. $6, -%)5, -5 &C"( $**, $*D;$*..
*6 =;$5645, Feb. $), -%)., $$ &C"( D%$, D%D.
*- D6 Phil. D$) +-%*6,.
*$ Id., P. D4*8 'mphasis supplied.
*4 Id., p. D44, citing A.&. v. @ome: Gesus, 4- Phil. $-. +-%-5,.
** Id., p. D44.
*5 46- A.&. )-% +-%4D,.
*) 'mphasis supplied.
*D 'du v. 'ricta, supra, p. *.%.
*. Fernando on the Philippine Constitution, -%D* ed., p. 55..
*% =;-%$55, Ganuary -., -%)., $$ &C"( -45, citing 1ome ?uilding and =oan (ssociation v. ?laisedell, D. =. ed., *-4,
*$..
56 =;$54.%;%6, Gune $D, -%)., $. &C"( ---5, citing anresa, Comm. !ol. ., part $ +5th 'd., p. 545.
5- =;$%$64, Guly $), -%D-, *6 &C"( D5.
5$ ?rief for Plaintiff;(ppellant, pp. %;-D.
54 Proctor P @amble Philippine anufacturing Corporation vs. Commissioner of Customs, =;$*-D4, ay $4, -%)., $4
&C"( )%-.
5* -D6 #' *$5, *$. Illinois +-%46,.
55 $*4 #9 45), 45.;45% Iowa +-%4$,.
5) 3p. Cit at p. *$D.
5D Id., Id.
5. 3p. Cit. at p. 45..
- =;-%$**, Ganuary -., -%)., $$ &C"( -45.
$ Ibid, -*..
4 $%6 A& 4%. +-%4*,.
T Gustice Teehan0ee was co;counsel for defendant;appellee.
* $%- A& 56$ +-%4*,.
5 $%* A& $*6 +-%45,.
) Ibid, -5-;-5$.
D Ibid., -5$;-54.
. Ibid., -55.
% (rticle II, &ection ) of the Constitution.
-6 1. 1art and (. &ac0s, The =egal Process, -$*.
-- Ibid, -$5.
The =awphil Project ; (rellano =aw Foundation