B.

GOVERNMENTAL POWERS

1.
Section 16.
General Welfare. - Every local government unit shall exercise the powers expressly
granted, those necessarily implied therefrom, as well as powers necessary, appropriate,
or incidental for its efficient and effective governance, and those which are essential to
the promotion of the general welfare.

G.R. No. L-42571-72 July 25, 1983

VICENTE DE LA CRUZ, vs.THE HONORABLE EDGARDO L. PARAS

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previously given to them was in effect withdrawn without judicial hearing. 2

The assailed ordinance 3 is worded as follows: "Section 1.— Title of Ordinance.— This Ordinance
shall be known and may be cited as the [Prohibition and Closure Ordinance] of Bocaue, Bulacan.
Section 2. — Definitions of Terms — (a) 'Night Club' shall include any place or establishment selling
to the public food or drinks where customers are allowed to dance. (b) 'Cabaret' or 'Dance Hall' shall
include any place or establishment where dancing is permitted to the public and where professional
hostesses or hospitality girls and professional dancers are employed. (c) 'Professional hostesses' or
'hospitality girls' shall include any woman employed by any of the establishments herein defined to
entertain guests and customers at their table or to dance with them. (d) 'Professional dancer' shall
include any woman who dances at any of the establishments herein defined for a fee or
remuneration paid directly or indirectly by the operator or by the persons she dances with. (e)
'Operator' shall include the owner, manager, administrator or any person who operates and is
responsible for the operation of any night club, cabaret or dance hall. Section 3. — Prohibition in the
Issuance and Renewal of Licenses, Permits. — Being the principal cause in the decadence of
morality and because of their other adverse effects on this community as explained above, no
operator of night clubs, cabarets or dance halls shall henceforth be issued permits/licenses to
operate within the jurisdiction of the municipality and no license/permit shall be issued to any
professional hostess, hospitality girls and professional dancer for employment in any of the
aforementioned establishments. The prohibition in the issuance of licenses/permits to said persons
and operators of said establishments shall include prohibition in the renewal thereof. Section 4.—
Revocation of Permits and Licenses.— The licenses and permits issued to operators of night clubs,
cabarets or dance halls which are now in operation including permits issued to professional
hostesses, hospitality girls and professional dancers are hereby revoked upon the expiration of the
thirty-day period given them as provided in Section 8 hereof and thenceforth, the operation of these
establishments within the jurisdiction of the municipality shall be illegal. Section 5.— Penalty in case
of violation. — Violation of any of the provisions of this Ordinance shall be punishable by
imprisonment not exceeding three (3) months or a fine not exceeding P200.00 or both at the
discretion of the Court. If the offense is committed by a juridical entity, the person charged with the
management and/or operation thereof shall be liable for the penalty provided herein. Section 6. —
Separability Clause.— If, for any reason, any section or provision of this Ordinance is held
unconstitutional or invalid, no other section or provision hereof shall be affected thereby. Section

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7.— Repealing Clause.— All ordinance, resolutions, circulars, memoranda or parts thereof that are
inconsistent with the provisions of this Ordinance are hereby repealed. Section 8.— Effectivity.—
This Ordinance shall take effect immediately upon its approval; provided, however, that operators of
night clubs, cabarets and dance halls now in operation including professional hostesses, hospitality
girls and professional dancers are given a period of thirty days from the approval hereof within which
to wind up their businesses and comply with the provisions of this Ordinance." 4

On November 5, 1975, two cases for prohibition with preliminary injunction were filed with the Court
of First Instance of Bulacan. 5 The grounds alleged follow:

1. Ordinance No. 84 is null and void as a municipality has no authority to prohibit a lawful business,
occupation or calling.

2. Ordinance No. 84 is violative of the petitioners' right to due process and the equal protection of the
law, as the license previously given to petitioners was in effect withdrawn without judicial hearing. 3.
That under Presidential Decree No. 189, as amended, by Presidential Decree No. 259, the power to
license and regulate tourist-oriented businesses including night clubs, has been transferred to the
Department of Tourism." 6 The cases were assigned to respondent Judge, now Associate Justice
Paras of the Intermediate Appellate Court, who issued a restraining order on November 7, 1975. The
answers were thereafter filed. It was therein alleged: " 1. That the Municipal Council is authorized by
law not only to regulate but to prohibit the establishment, maintenance and operation of night clubs
invoking Section 2243 of the RAC, CA 601, Republic Acts Nos. 938, 978 and 1224. 2. The
Ordinance No. 84 is not violative of petitioners' right to due process and the equal protection of the
law, since property rights are subordinate to public interests. 3. That Presidential Decree No. 189, as
amended, did not deprive Municipal Councils of their jurisdiction to regulate or prohibit night
clubs." 7 There was the admission of the following facts as having been established: "l. That
petitioners Vicente de la Cruz, et al. in Civil Case No. 4755-M had been previously issued licenses
by the Municipal Mayor of Bocaue-petitioner Jose Torres III, since 1958; petitioner Vicente de la
Cruz, since 1960; petitioner Renato Alipio, since 1961 and petitioner Leoncio Corpuz, since 1972; 2.
That petitioners had invested large sums of money in their businesses; 3. That the night clubs are
well-lighted and have no partitions, the tables being near each other; 4. That the petitioners
owners/operators of these clubs do not allow the hospitality girls therein to engage in immoral acts
and to go out with customers; 5. That these hospitality girls are made to go through periodic medical
check-ups and not one of them is suffering from any venereal disease and that those who fail to
submit to a medical check-up or those who are found to be infected with venereal disease are not
allowed to work; 6. That the crime rate there is better than in other parts of Bocaue or in other towns
of Bulacan." 8 Then came on January 15, 1976 the decision upholding the constitutionality and
validity of Ordinance No. 84 and dismissing the cases. Hence this petition for certiorari by way of
appeal.

In an exhaustive as well as scholarly opinion, the lower court dismissed the petitions. Its rationale is
set forth in the opening paragraph thus: "Those who lust cannot last. This in essence is why the
Municipality of Bocaue, Province of Bulacan, stigmatized as it has been by innuendos of sexual
titillation and fearful of what the awesome future holds for it, had no alternative except to order thru
its legislative machinery, and even at the risk of partial economic dislocation, the closure of its night
clubs and/or cabarets. This in essence is also why this Court, obedient to the mandates of good
government, and cognizant of the categorical imperatives of the current legal and social revolution,
hereby [upholds] in the name of police power the validity and constitutionality of Ordinance No. 84,
Series of 1975, of the Municipal Council of Bocaue, Bulacan. The restraining orders heretofore
issued in these two cases are therefore hereby rifted, effective the first day of February, 1976, the
purpose of the grace period being to enable the petitioners herein to apply to the proper appellate
tribunals for any contemplated redress."9 This Court is, however, unable to agree with such a

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conclusion and for reasons herein set forth, holds that reliance on the police power is insufficient to
justify the enactment of the assailed ordinance. It must be declared null and void.

1. Police power is granted to municipal corporations in general terms as follows: "General power of
council to enact ordinances and make regulations. - The municipal council shall enact such
ordinances and make such regulations, not repugnant to law, as may be necessary to carry into
effect and discharge the powers and duties conferred upon it by law and such as shall seem
necessary and proper to provide for the health and safety, promote the prosperity, improve the
morals, peace, good order, comfort, and convenience of the municipality and the inhabitants thereof,
and for the protection of property therein." 10 It is practically a reproduction of the former Section 39 of
Municipal Code.11 An ordinance enacted by virtue thereof, according to Justice Moreland, speaking
for the Court in the leading case of United States v. Abendan 12 "is valid, unless it contravenes the
fundamental law of the Philippine Islands, or an Act of the Philippine Legislature, or unless it is
against public policy, or is unreasonable, oppressive, partial, discriminating, or in derogation of
common right. Where the power to legislate upon a given subject, and the mode of its exercise and
the details of such legislation are not prescribed, the ordinance passed pursuant thereto must be a
reasonable exercise of the power, or it will be pronounced invalid." 13 In another leading case, United
States v. Salaveria, 14 the ponente this time being Justice Malcolm, where the present Administrative
Code provision was applied, it was stated by this Court: "The general welfare clause has two
branches: One branch attaches itself to the main trunk of municipal authority, and relates to such
ordinances and regulations as may be necessary to carry into effect and discharge the powers and
duties conferred upon the municipal council by law. With this class we are not here directly
concerned. The second branch of the clause is much more independent of the specific functions of
the council which are enumerated by law. It authorizes such ordinances as shall seem necessary
and proper to provide for the health and safety, promote the prosperity, improve the morals, peace,
good order, comfort, and convenience of the municipality and the inhabitants thereof, and for the
protection of property therein.' It is a general rule that ordinances passed by virtue of the implied
power found in the general welfare clause must be reasonable, consonant with the general
powersand purposes of the corporation, and not inconsistent with the laws or policy of the State." 15 If
night clubs were merely then regulated and not prohibited, certainly the assailed ordinance would
pass the test of validity. In the two leading cases above set forth, this Court had stressed
reasonableness, consonant with the general powers and purposes of municipal corporations, as well
as consistency with the laws or policy of the State. It cannot be said that such a sweeping exercise
of a lawmaking power by Bocaue could qualify under the term reasonable. The objective of fostering
public morals, a worthy and desirable end can be attained by a measure that does not encompass
too wide a field. Certainly the ordinance on its face is characterized by overbreadth. The purpose
sought to be achieved could have been attained by reasonable restrictions rather than by an
absolute prohibition. The admonition in Salaveria should be heeded: "The Judiciary should not lightly
set aside legislative action when there is not a clear invasion of personal or property rights under the
guise of police regulation." 16 It is clear that in the guise of a police regulation, there was in this
instance a clear invasion of personal or property rights, personal in the case of those individuals
desirous of patronizing those night clubs and property in terms of the investments made and salaries
to be earned by those therein employed.

2. The decision now under review refers to Republic Act No. 938 as amended. 17 It was originally
enacted on June 20, 1953. It is entitled: "AN ACT GRANTING MUNICIPAL OR CITY BOARDS AND
COUNCILS THE POWER TO REGULATE THE ESTABLISHMENT, MAINTENANCE AND
OPERATION OF CERTAIN PLACES OF AMUSEMENT WITHIN THEIR RESPECTIVE
TERRITORIAL JURISDICTIONS.' 18 Its first section insofar as pertinent reads: "The municipal or city
board or council of each chartered city shall have the power to regulate by ordinance the
establishment, maintenance and operation of night clubs, cabarets, dancing schools, pavilions,
cockpits, bars, saloons, bowling alleys, billiard pools, and other similar places of amusement within
its territorial jurisdiction: ... " 19Then on May 21, 1954, the first section was amended to include not

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merely "the power to regulate, but likewise "Prohibit ... " 20 The title, however, remained the same. It
is worded exactly as Republic Act No. 938. It is to be admitted that as thus amended, if only the
above portion of the Act were considered, a municipal council may go as far as to prohibit the
operation of night clubs. If that were all, then the appealed decision is not devoid of support in law.
That is not all, however. The title was not in any way altered. It was not changed one whit. The exact
wording was followed. The power granted remains that of regulation, not prohibition. There is thus
support for the view advanced by petitioners that to construe Republic Act No. 938 as allowing the
prohibition of the operation of night clubs would give rise to a constitutional question. The
Constitution mandates: "Every bill shall embrace only one subject which shall be expressed in the
title thereof. " 21 Since there is no dispute as the title limits the power to regulating, not prohibiting, it
would result in the statute being invalid if, as was done by the Municipality of Bocaue, the operation
of a night club was prohibited. There is a wide gap between the exercise of a regulatory power "to
provide for the health and safety, promote the prosperity, improve the morals, 22 in the language of
the Administrative Code, such competence extending to all "the great public needs, 23 to quote from
Holmes, and to interdict any calling, occupation, or enterprise. In accordance with the well-settled
principle of constitutional construction that between two possible interpretations by one of which it
will be free from constitutional infirmity and by the other tainted by such grave defect, the former is to
be preferred. A construction that would save rather than one that would affix the seal of doom
certainly commends itself. We have done so before We do so again. 24

3. There is reinforcement to the conclusion reached by virtue of a specific provision of the recently-
enacted Local Government Code. 25 The general welfare clause, a reiteration of the Administrative
Code provision, is set forth in the first paragraph of Section 149 defining the powers and duties of
the sangguniang bayan. It read as follows: "(a) Enact such ordinances and issue such regulations as
may be necessary to carry out and discharge the responsibilities conferred upon it by law, and such
as shall be necessary and proper to provide for the health, safety, comfort and convenience,
maintain peace and order, improve public morals, promote the prosperity and general welfare of the
municipality and the inhabitants thereof, and insure the protection of property therein; ..." 26 There are
in addition provisions that may have a bearing on the question now before this Court. Thus
the sangguniang bayanshall "(rr) Regulate cafes, restaurants, beer-houses, hotels, motels, inns,
pension houses and lodging houses, except travel agencies, tourist guides, tourist transports, hotels,
resorts, de luxe restaurants, and tourist inns of international standards which shall remain under the
licensing and regulatory power of the Ministry of Tourism which shall exercise such authority without
infringing on the taxing or regulatory powers of the municipality; (ss) Regulate public dancing
schools, public dance halls, and sauna baths or massage parlors; (tt) Regulate the establishment
and operation of billiard pools, theatrical performances, circuses and other forms of entertainment;
..." 27 It is clear that municipal corporations cannot prohibit the operation of night clubs. They may be
regulated, but not prevented from carrying on their business. It would be, therefore, an exercise in
futility if the decision under review were sustained. All that petitioners would have to do is to apply
once more for licenses to operate night clubs. A 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.
During 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 mistaken
appreciation of a municipal power, were thus left without employment. Such a deplorable
consequence 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.

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4. 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 backward step. Legislation of that character is deserving of the fullest sympathy from
the judiciary. Accordingly, the judiciary has not been hesitant to lend the weight of its support to
measures that can be characterized as falling within that aspect of the police power. Reference is
made by respondents to Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of
Manila. 28 There is a misapprehension as to what was decided by this Court. That was a regulatory
measure. Necessarily, there was no valid objection on due process or equal 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. What was involved is a measure not embraced within the regulatory power but an
exercise of an assumed power to prohibit. Moreover, while it was pointed out in the aforesaid Ermita-
Malate Hotel and Motel Operators Association, Inc. decision that there must be a factual foundation
of invalidity, it was likewise made clear that there is no need to satisfy such a requirement if a statute
were void on its face. That it certainly is if the power to enact such ordinance is at the most dubious
and under the present Local Government Code non-existent.

WHEREFORE, the writ of certiorari is granted and the decision of the lower court dated January 15,
1976 reversed, set aside, and nullied. Ordinance No. 84, Series of 1975 of the Municipality of
Bocaue is declared void and unconstitutional. The temporary restraining order issued by this Court is
hereby made permanent. No costs.

G.R. No. 92389 September 11, 1991

HON. JEJOMAR C. BINAY v. HON. EUFEMIO DOMINGO

The only pivotal issue before Us is whether or not Resolution No. 60, re-enacted under Resolution
No. 243, of the Municipality of Makati is a valid exercise of police power under the general welfare
clause.

The pertinent facts are:

On September 27, 1988, petitioner Municipality, through its Council, approved Resolution No. 60
which reads:

A RESOLUTION TO CONFIRM AND/OR RATIFY THE ONGOING BURIAL ASSISTANCE

PROGRAM INITIATED BY THE OFFICE OF THE MAYOR, OF EXTENDING FINANCIAL
ASSISTANCE OF FIVE HUNDRED PESOS (P500.00) TO A BEREAVED FAMILY, FUNDS
TO BE TAKEN OUT OF UNAPPROPRIATED AVAILABLE FUNDS EXISTING IN THE
MUNICIPAL TREASURY. (Rollo, Annnex "A" p. 39)

Qualified beneficiaries, under the Burial Assistance Program, are bereaved families of Makati whose
gross family income does not exceed two thousand pesos (P2,000.00) a month. The beneficiaries,
upon fulfillment of other requirements, would receive the amount of five hundred pesos (P500.00)
cash relief from the Municipality of Makati. (Reno, Annex "13", p. 41)

Metro Manila Commission approved Resolution No. 60. Thereafter, the municipal secretary certified
a disbursement fired of four hundred thousand pesos (P400,000.00) for the implementation of the
Burial Assistance Program. (Rollo, Annex "C", p. 43).

Resolution No. 60 was referred to respondent Commission on Audit (COA) for its expected
allowance in audit. Based on its preliminary findings, respondent COA disapproved Resolution No.

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60 and disallowed in audit the disbursement of finds for the implementation thereof. (Rollo, Annex
"D", P. 44)

Two letters for reconsideration (Annexes "E" and "F", Rollo, pp. 45 and 48, respectively) filed by
petitioners Mayor Jejomar Binay, were denied by respondent in its Decision No. 1159, in the
following manner:

Your request for reconsideration is predicated on the following grounds, to wit:

1. Subject Resolution No. 60, s. 1988, of the Municipal Council of Makati and the intended
disbursements fall within the twin principles of 'police power and parens patriae and

2. The Metropolitan Manila Commission (MMC), under a Certification, dated June 5, 1989,
has already appropriated the amount of P400,000.00 to implement the Id resolution, and the
only function of COA on the matter is to allow the financial assistance in question.

The first contention is believed untenable. Suffice it to state that:

a statute or ordinance must have a real substantial, or rational relation to the public
safety, health, morals, or general welfare to be sustained as a legitimate exercise of
the police power. The mere assertion by the legislature that a statute relates to the
public health, safety, or welfare does not in itself bring the statute within the police
power of a state for there must always be an obvious and real connection between
the actual provisions of a police regulations and its avowed purpose, and the
regulation adopted must be reasonably adapted to accomplish the end sought to be
attained. 16 Am. Jur 2d, pp. 542-543; emphasis supplied).

Here, we see no perceptible connection or relation between the objective sought to be

attained under Resolution No. 60, s. 1988, supra, and the alleged public safety, general
welfare, etc. of the inhabitants of Makati.

Anent the second contention, let it be stressed that Resolution No. 60 is still subject to the
limitation that the expenditure covered thereby should be for a public purpose, i.e., that the
disbursement of the amount of P500.00 as burial assistance to a bereaved family of the
Municipality of Makati, or a total of P400,000.00 appropriated under the Resolution, should
be for the benefit of the whole, if not the majority, of the inhabitants of the Municipality and
not for the benefit of only a few individuals as in the present case. On this point government
funds or property shall be spent or used solely for public purposes. (Cf. Section 4[2], P.D.
1445). (pp. 50-51, Rollo)

Bent on pursuing the Burial Assistance Program the Municipality of Makati, through its Council,
passed Resolution No. 243, re-affirming Resolution No. 60 (Rollo, Annex "H", p. 52).

However, the Burial Assistance Program has been stayed by COA Decision No. 1159. Petitioner,
through its Mayor, was constrained to file this special civil action of certiorari praying that COA
Decision No. 1159 be set aside as null and void.

The police power is a governmental function, an inherent attribute of sovereignty, which was born
with civilized government. It is founded largely on the maxims, "Sic utere tuo et ahenum non laedas
and "Salus populi est suprema lex Its fundamental purpose is securing the general welfare, comfort
and convenience of the people.

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Police power is inherent in the state but not in municipal corporations (Balacuit v. CFI of Agusan del
Norte, 163 SCRA 182). Before a municipal corporation may exercise such power, there must be a
valid delegation of such power by the legislature which is the repository of the inherent powers of the
State. A valid delegation of police power may arise from express delegation, or be inferred from the
mere fact of the creation of the municipal corporation; and as a general rule, municipal corporations
may exercise police powers within the fair intent and purpose of their creation which are reasonably
proper to give effect to the powers expressly granted, and statutes conferring powers on public
corporations have been construed as empowering them to do the things essential to the enjoyment
of life and desirable for the safety of the people. (62 C.J.S., p. 277). The so-called inferred police
powers of such corporations are as much delegated powers as are those conferred in express
terms, the inference of their delegation growing out of the fact of the creation of the municipal
corporation and the additional fact that the corporation can only fully accomplish the objects of its
creation by exercising such powers. (Crawfordsville vs. Braden, 28 N.E. 849). Furthermore,
municipal corporations, as governmental agencies, must have such measures of the power as are
necessary to enable them to perform their governmental functions. The power is a continuing one,
founded on public necessity. (62 C.J.S. p. 273) Thus, not only does the State effectuate its purposes
through the exercise of the police power but the municipality does also. (U.S. v. Salaveria, 39 Phil.
102).

Municipal governments exercise this power under the general welfare clause: pursuant thereto they
are clothed with authority to "enact such ordinances and issue such regulations as may be
necessary to carry out and discharge the responsibilities conferred upon it by law, and such as shall
be necessary and proper to provide for the health, safety, comfort and convenience, maintain peace
and order, improve public morals, promote the prosperity and general welfare of the municipality and
the inhabitants thereof, and insure the protection of property therein." (Sections 91, 149, 177 and
208, BP 337). And under Section 7 of BP 337, "every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as powers necessary and
proper for governance such as to promote health and safety, enhance prosperity, improve morals,
and maintain peace and order in the local government unit, and preserve the comfort and
convenience of the inhabitants therein."

Police power is the power to prescribe regulations to promote the health, morals, peace, education,
good order or safety and general welfare of the people. It is the most essential, insistent, and
illimitable of powers. In a sense it is the greatest and most powerful attribute of the government. It is
elastic and must be responsive to various social conditions. (Sangalang, et al. vs. IAC, 176 SCRA
719). On it depends the security of social order, the life and health of the citizen, the comfort of an
existence in a thickly populated community, the enjoyment of private and social life, and the
beneficial use of property, and it has been said to be the very foundation on which our social system
rests. (16 C.J.S., P. 896) However, it is not confined within narrow circumstances of precedents
resting on past conditions; it must follow the legal progress of a democratic way of life. (Sangalang,
et al. vs. IAC, supra).

In the case at bar, COA is of the position that there is "no perceptible connection or relation between
the objective sought to be attained under Resolution No. 60, s. 1988, supra, and the alleged public
safety, general welfare. etc. of the inhabitants of Makati." (Rollo, Annex "G", p. 51).

Apparently, COA tries to re-define the scope of police power by circumscribing its exercise to "public
safety, general welfare, etc. of the inhabitants of Makati."

In the case of Sangalang vs. IAC, supra, We ruled that police power is not capable of an exact
definition but has been, purposely, veiled in general terms to underscore its all comprehensiveness.
Its scope, over-expanding to meet the exigencies of the times, even to anticipate the future where it

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could be done, provides enough room for an efficient and flexible response to conditions and
circumstances thus assuring the greatest benefits.

The police power of a municipal corporation is broad, and has been said to be commensurate with,
but not to exceed, the duty to provide for the real needs of the people in their health, safety, comfort,
and convenience as consistently as may be with private rights. It extends to all the great public
needs, and, in a broad sense includes all legislation and almost every function of the municipal
government. It covers a wide scope of subjects, and, while it is especially occupied with whatever
affects the peace, security, health, morals, and general welfare of the community, it is not limited
thereto, but is broadened to deal with conditions which exists so as to bring out of them the greatest
welfare of the people by promoting public convenience or general prosperity, and to everything
worthwhile for the preservation of comfort of the inhabitants of the corporation (62 C.J.S. Sec. 128).
Thus, it is deemed inadvisable to attempt to frame any definition which shall absolutely indicate the
limits of police power.

COA's additional objection is based on its contention that "Resolution No. 60 is still subject to the
limitation that the expenditure covered thereby should be for a public purpose, ... should be for the
benefit of the whole, if not the majority, of the inhabitants of the Municipality and not for the benefit of
only a few individuals as in the present case." (Rollo, Annex "G", p. 51).

COA is not attuned to the changing of the times. Public purpose is not unconstitutional merely
because it incidentally benefits a limited number of persons. As correctly pointed out by the Office of
the Solicitor General, "the drift is towards social welfare legislation geared towards state policies to
provide adequate social services (Section 9, Art. II, Constitution), the promotion of the general
welfare (Section 5, Ibid) social justice (Section 10, Ibid) as well as human dignity and respect for
human rights. (Section 11, Ibid." (Comment, p. 12)

The care for the poor is generally recognized as a public duty. The support for the poor has long
been an accepted exercise of police power in the promotion of the common good.

There is no violation of the equal protection clause in classifying paupers as subject of legislation.
Paupers may be reasonably classified. Different groups may receive varying treatment. Precious to
the hearts of our legislators, down to our local councilors, is the welfare of the paupers. Thus,
statutes have been passed giving rights and benefits to the disabled, emancipating the tenant-farmer
from the bondage of the soil, housing the urban poor, etc.

Resolution No. 60, re-enacted under Resolution No. 243, of the Municipality of Makati is a paragon
of the continuing program of our government towards social justice. The Burial Assistance Program
is a relief of pauperism, though not complete. The loss of a member of a family is a painful
experience, and it is more painful for the poor to be financially burdened by such death. Resolution
No. 60 vivifies the very words of the late President Ramon Magsaysay 'those who have less in life,
should have more in law." This decision, however must not be taken as a precedent, or as an official
go-signal for municipal governments to embark on a philanthropic orgy of inordinate dole-outs for
motives political or otherwise.

PREMISES CONSIDERED, and with the afore-mentioned caveat, this petition is hereby GRANTED
and the Commission on Audit's Decision No. 1159 is hereby SET ASIDE.

SO ORDERED

G.R. No. 110249 August 21, 1997

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ALFREDO TANO vs.HON. GOV. SALVADOR P. SOCRATES

Petitioners caption their petition as one for "Certiorari, Injunction With Preliminary and Mandatory
Injunction, with Prayer for Temporary Restraining Order" and pray that this Court: (1) declare as
unconstitutional: (a) Ordinance No. 15-92, dated 15 December 1992, of the Sangguniang
Panglungsod of Puerto Princesa; (b) Office Order No. 23, Series of 1993, dated 22 January 1993,
issued by Acting City Mayor Amado L. Lucero of Puerto Princesa City; and (c) Resolution No. 33,
Ordinance No. 2, Series of 1993, dated 19 February 1993, of the Sangguniang Panlalawigan of
Palawan; (2) enjoin the enforcement thereof; and (3) restrain respondents Provincial and City
Prosecutors of Palawan and Puerto Princesa City and Judges of the Regional Trial Courts,
Metropolitan Trial Courts 1 and Municipal Circuit Trial Courts in Palawan from assuming jurisdiction over and hearing cases
concerning the violation of the Ordinances and of the Office Order.

More appropriately, the petition is, and shall be treated as, a special civil action for certiorari and
prohibition.

The following is petitioners' summary of the factual antecedents giving rise to the petition:

1. On December 15, 1992, the Sangguniang Panlungsod ng Puerto Princesa City enacted
Ordinance No. 15-92 which took effect on January 1, 1993 entitled: "AN ORDINANCE
BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE PUERTO
PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998 AND PROVIDING
EXEMPTIONS, PENALTIES AND FOR OTHER PURPOSES THEREOF", the full text of
which reads as follows:

Sec. 1. Title of the Ordinance. — This Ordinance is entitled: AN

ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH AND
LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993
TO JANUARY 1, 1998 AND PROVIDING EXEMPTIONS, PENALTIES AND
FOR OTHER PURPOSES THEREOF.

Sec. 2. Purpose, Scope and Coverage. — To effectively free our City Sea
Waters from Cyanide and other Obnoxious substance[s], and shall cover all
persons and/or entities operating within and outside the City of Puerto
Princesa who is are (sic) directly or indirectly in the business or shipment of
live fish and lobster outside the City.

Sec. 3. Definition of terms. — For purpose of this Ordinance the following are
hereby defined:

A. SEA BASS — A kind of fish under the

family of Centropomidae, better known as
APAHAP;

B. CATFISH — A kind of fish under the family

of Plotosidae, better known as HITO-HITO;

C. MUDFISH — A kind of fish under the family

of Orphicaphalisae better known as DALAG;

9|Page
 D. ALL LIVE FISH — All alive, breathing not
necessarily moving of all specie[s] use[d] for
food and for aquarium purposes.

E. LIVE LOBSTER — Several relatively, large

marine crusteceans [sic] of the genus
Homarus that are alive and breathing not
necessarily moving.

Sec. 4. It shall be unlawful [for] any person or any business enterprise or

company to ship out from Puerto Princesa City to any point of destination
either via aircraft or seacraft of any live fish and lobster except SEA BASS,
CATFISH, MUDFISH, AND MILKFISH FRIES.

Sec. 5. Penalty Clause. — Any person/s and or business entity violating this
Ordinance shall be penalized with a fine of not more than P5,000.00 or
imprisonment of not more than twelve (12) months, cancellation of their
permit to do business in the City of Puerto Princesa or all of the herein stated
penalties, upon the discretion of the court.

Sec. 6. If the owner and/or operator of the establishment found violating the
provisions of this ordinance is a corporation or a partnership, the penalty
prescribed in Section 5 hereof shall be imposed upon its president and/or
General Manager or Managing Partner and/or Manager, as the case maybe
[sic].

Sec. 7. Any existing ordinance or any provision of any ordinance inconsistent

to [sic] this ordinance is deemed repealed.

Sec. 8. This Ordinance shall take effect on January 1, 1993.

SO ORDAINED.

xxx xxx xxx

2. To implement said city ordinance, then Acting City Mayor Amado L. Lucero issued Office
Order No. 23, Series of 1993 dated January 22, 1993 which reads as follows:

In the interest of public service and for purposes of City Ordinance No. PD 426-14-74,
otherwise known as "AN ORDINANCE REQUIRING ANY PERSON ENGAGED OR
INTENDING TO ENGAGE IN ANY BUSINESS, TRADE, OCCUPATION, CALLING OR
PROFESSION OR HAVING IN HIS POSSESSION ANY OF THE ARTICLES FOR WHICH A
PERMIT IS REQUIRED TO BE HAD, TO OBTAIN FIRST A MAYOR'S PERMIT" and "City
Ordinance No. 15-92, AN ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH
AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO
JANUARY 1, 1998, you are hereby authorized and directed to check or conduct necessary
inspections on cargoes containing live fish and lobster being shipped out from the Puerto
Princesa Airport, Puerto Princesa Wharf or at any port within the jurisdiction of the City to
any point of destinations [sic] either via aircraft or seacraft.

10 | P a g e
The purpose of the inspection is to ascertain whether the shipper possessed the required
Mayor's Permit issued by this Office and the shipment is covered by invoice or clearance
issued by the local office of the Bureau of Fisheries and Aquatic Resources and as to
compliance with all other existing rules and regulations on the matter.

Any cargo containing live fish and lobster without the required documents as stated herein
must be held for proper disposition.

In the pursuit of this Order, you are hereby authorized to coordinate with the PAL Manager,
the PPA Manager, the local PNP Station and other offices concerned for the needed support
and cooperation. Further, that the usual courtesy and diplomacy must be observed at all
times in the conduct of the inspection.

Please be guided accordingly.

xxx xxx xxx

3. On February 19, 1993, the Sangguniang Panlalawigan, Provincial Government of Palawan

enacted Resolution No. 33 entitled: "A RESOLUTION PROHIBITING THE CATCHING,
GATHERING, POSSESSING, BUYING, SELLING AND SHIPMENT OF LIVE MARINE
CORAL DWELLING AQUATIC ORGANISMS, TO WIT:
FAMILY: SCARIDAE (MAMENG), EPINE PHELUS FASCIATUS (SUNO). CROMILEPTES
ALTIVELIS(PANTHER OR SENORITA), LOBSTER BELOW 200 GRAMS AND
SPAWNING, TRIDACNA GIGAS(TAKLOBO), PINCTADA MARGARITEFERA (MOTHER
PEARL, OYSTERS, GIANT CLAMS AND OTHER SPECIES), PENAEUS
MONODON (TIGER PRAWN-BREEDER SIZE OR MOTHER), EPINEPHELUS
SUILLUS (LOBA OR GREEN GROUPER) AND FAMILY: BALISTIDAE (TROPICAL
AQUARIUM FISHES) FOR A PERIOD FIVE (5) YEARS IN AND COMING FROM
PALAWAN WATERS", the full text of which reads as follows:

WHEREAS, scientific and factual researches [sic] and studies disclose that
only five (5) percent of the corals of our province remain to be in excellent
condition as [a] habitat of marine coral dwelling aquatic organisms;

WHEREAS, it cannot be gainsaid that the destruction and devastation of the

corals of our province were principally due to illegal fishing activities like
dynamite fishing, sodium cyanide fishing, use of other obnoxious substances
and other related activities;

WHEREAS, there is an imperative and urgent need to protect and preserve

the existence of the remaining excellent corals and allow the devastated
ones to reinvigorate and regenerate themselves into vitality within the span of
five (5) years;

WHEREAS, Sec. 468, Par. 1, Sub-Par. VI of the [sic] R.A. 7160 otherwise
known as the Local Government Code of 1991 empowers the Sangguniang
Panlalawigan to protect the environment and impose appropriate penalties
[upon] acts which endanger the environment such as dynamite fishing and
other forms of destructive fishing, among others.

NOW, THEREFORE, on motion by Kagawad Nelson P. Peneyra and upon

unanimous decision of all the members present;

11 | P a g e
 Be it resolved as it is hereby resolved, to approve Resolution No. 33, Series
of 1993 of the Sangguniang Panlalawigan and to enact Ordinance No. 2 for
the purpose, to wit:

ORDINANCE NO. 2
Series of 1993

BE IT ORDAINED BY THE SANGGUNIANG PANLALAWIGAN IN SESSION ASSEMBLED:

Sec. 1. TITLE — This Ordinance shall be known as an "Ordinance

Prohibiting the catching, gathering, possessing, buying, selling and shipment
of live marine coral dwelling aquatic organisms, to wit: 1. Family: Scaridae
(Mameng), 2. Epinephelus Fasciatus (Suno) 3. Cromileptes altivelis (Panther
or Senorita), lobster below 200 grams and spawning), 4. Tridacna Gigas
(Taklobo), 5. Pinctada Margaretefera (Mother Pearl, Oysters, Giant Clams
and other species), 6. Penaeus Monodon (Tiger Prawn-breeder size or
mother), 7. Epinephelus Suillus (Loba or Green Grouper) and 8. Family:
Balistidae (T[r]opical Aquarium Fishes) for a period of five (5) years in and
coming from Palawan Waters.

Sec. II. PRELIMINARY CONSIDERATIONS

1. Sec. 2-A (Rep. Act 7160). It is hereby declared, the policy of the state that
the territorial and political subdivisions of the State shall enjoy genuine and
meaningful local autonomy to enable them to attain their fullest development
as self-reliant communities and make them more effective partners in the
attainment of national goals. Toward this end, the State shall provide for [a]
more responsive and accountable local government structure instituted
through a system of decentralization whereby local government units shall be
given more powers, authority, responsibilities and resources.

2. Sec. 5-A (R.A. 7160). Any provision on a power of [a] local Government
Unit shall be liberally interpreted in its favor, and in case of doubt, any
question thereon shall be resolved in favor of devolution of powers and of the
lower government units. "Any fair and reasonable doubts as to the existence
of the power shall be interpreted in favor of the Local Government Unit
concerned."

3. Sec. 5-C (R.A. 7160). The general welfare provisions in this Code shall be
liberally interpreted to give more powers to local government units in
accelerating economic development and upgrading the quality of life for the
people in the community.

4. Sec. 16 (R.A. 7160). General Welfare. — Every local government unit shall
exercise the powers expressly granted, those necessarily implied therefrom,
as well as powers necessary, appropriate, or incidental for its efficient and
effective governance; and those which are essential to the promotion of the
general welfare.

Sec. III. DECLARATION OF POLICY. — It is hereby declared to be the policy

of the Province of Palawan to protect and conserve the marine resources of
Palawan not only for the greatest good of the majority of the present

12 | P a g e
 generation but with [the] proper perspective and consideration of [sic] their
prosperity, and to attain this end, the Sangguniang Panlalawigan henceforth
declares that is (sic) shall be unlawful for any person or any business entity
to engage in catching, gathering, possessing, buying, selling and shipment of
live marine coral dwelling aquatic organisms as enumerated in Section 1
hereof in and coming out of Palawan Waters for a period of five (5) years;

Sec. IV. PENALTY CLAUSE. — Any person and/or business entity violating
this Ordinance shall be penalized with a fine of not more than Five Thousand
Pesos (P5,000.00), Philippine Currency, and/or imprisonment of six (6)
months to twelve (12) months and confiscation and forfeiture of
paraphernalias [sic] and equipment in favor of the government at the
discretion of the Court;

Sec. V. SEPARABILITY CLAUSE. — If for any reason, a Section or provision

of this Ordinance shall be held as unconditional [sic] or invalid, it shall not
affect the other provisions hereof.

Sec. VI. REPEALING CLAUSE. — Any existing Ordinance or a provision of

any ordinance inconsistent herewith is deemed modified, amended or
repealed.

Sec. VII. EFFECTIVITY — This Ordinance shall take effect ten (10) days
after its publication.

SO ORDAINED.

xxx xxx xxx

4. The respondents implemented the said ordinances, Annexes "A" and "C" hereof thereby
depriving all the fishermen of the whole province of Palawan and the City of Puerto Princesa
of their only means of livelihood and the petitioners Airline Shippers Association of Palawan
and other marine merchants from performing their lawful occupation and trade;

5. Petitioners Alfredo Tano, Baldomero Tano, Teocenes Midello, Angel de Mesa, Eulogio
Tremocha, and Felipe Ongonion, Jr. were even charged criminally under criminal case no.
93-05-C in the 1st Municipal Circuit Trial Court of Cuyo-Agutaya-Magsaysay, an original
carbon copy of the criminal complaint dated April 12, 1993 is hereto attached as Annex "D";
while xerox copies are attached as Annex "D" to the copies of the petition;

6. Petitioners Robert Lim and Virginia Lim, on the other hand, were charged by the
respondent PNP with the respondent City Prosecutor of Puerto Princess City, a xerox copy
of the complaint is hereto attached as Annex "E";

Without seeking redress from the concerned local government units, prosecutor's office and courts,
petitioners directly invoked our original jurisdiction by filing this petition on 4 June 1993. In sum,
petitioners contend that:

First, the Ordinances deprived them of due process of law, their livelihood, and unduly restricted
them from the practice of their trade, in violation of Section 2, Article XII and Sections 2 and 7 of
Article XIII of the 1987 Constitution.

13 | P a g e
Second, Office Order No. 23 contained no regulation nor condition under which the Mayor's permit
could be granted or denied; in other words, the Mayor had the absolute authority to determine
whether or not to issue the permit.

Third, as Ordinance No. 2 of the Province of Palawan "altogether prohibited the catching, gathering,
possession, buying, selling and shipping of live marine coral dwelling organisms, without any
distinction whether it was caught or gathered through lawful fishing method," the Ordinance took
away the right of petitioners-fishermen to earn their livelihood in lawful ways; and insofar as
petitioners-members of Airline Shippers Association are concerned, they were unduly prevented
from pursuing their vocation and entering "into contracts which are proper, necessary, and essential
to carry out their business endeavors to a successful conclusion."

Finally, as Ordinance No. 2 of the Sangguniang Panlalawigan is null and void, the criminal cases
based thereon against petitioners Tano and the others have to be dismissed.

In the Resolution of 15 June 1993 we required respondents to comment on the petition, and
furnished the Office of the Solicitor General with a copy thereof.

In their comment filed on 13 August 1993, public respondents Governor Socrates and Members of
the Sangguniang Panlalawigan of Palawan defended the validity of Ordinance No. 2, Series of 1993,
as a valid exercise of the Provincial Government's power under the general welfare clause (Section
16 of the Local Government Code of 1991 [hereafter, LGC]), and its specific power to protect the
environment and impose appropriate penalties for acts which endanger the environment, such as
dynamite fishing and other forms of destructive fishing under Section 447 (a) (1) (vi), Section 458 (a)
(1) (vi), and Section 468 (a) (1) (vi), of the LGC. They claimed that in the exercise of such powers,
the Province of Palawan had "the right and responsibility . . . to insure that the remaining coral reefs,
where fish dwells [sic], within its territory remain healthy for the future generation." The Ordinance,
they further asserted, covered only live marine coral dwelling aquatic organisms which were
enumerated in the ordinance and excluded other kinds of live marine aquatic organisms not dwelling
in coral reefs; besides the prohibition was for only five (5) years to protect and preserve the pristine
coral and allow those damaged to regenerate.

Aforementioned respondents likewise maintained that there was no violation of the due process and
equal protection clauses of the Constitution. As to the former, public hearings were conducted before
the enactment of the Ordinance which, undoubtedly, had a lawful purpose and employed reasonable
means; while as to the latter, a substantial distinction existed "between a fisherman who catches live
fish with the intention of selling it live, and a fisherman who catches live fish with no intention at all of
selling it live," i.e., "the former uses sodium cyanide while the latter does not." Further, the Ordinance
applied equally to all those belonging to one class.

On 25 October 1993 petitioners filed an Urgent Plea for the Immediate Issuance of a Temporary
Restraining Order, claiming that despite the pendency of this case, Branch 50 of the Regional Trial
Court of Palawan was bent on proceeding with Criminal Case No. 11223 against petitioners Danilo
Tano, Alfredo Tano, Eulogio Tremocha, Romualdo Tano, Baldomero Tano, Andres Linijan and Angel
de Mesa for violation of Ordinance No. 2 of the Sangguniang Panlalawigan of Palawan. Acting on
said plea, we issued on 11 November 1993 a temporary restraining order directing Judge Angel
Miclat of said court to cease and desist from proceeding with the arraignment and pre-trial of
Criminal Case No. 11223.

On 12 July 1994, we excused the Office of the Solicitor General from filing a comment, considering
that as claimed by said office in its Manifestation of 28 June 1994, respondents were already
represented by counsel.

14 | P a g e
The rest of the respondents did not file any comment on the petition.

In the resolution of 15 September 1994, we resolved to consider the comment on the petition as the
Answer, gave due course to the petition and required the parties to submit their respective
memoranda. 2

On 22 April 1997 we ordered impleaded as party respondents the Department of Agriculture and the Bureau of Fisheries and Aquatic
Resources and required the Office of the Solicitor General to comment on their behalf. But in light of the latter's motion of 9 July 1997 for an
extension of time to file the comment which would only result in further delay, we dispensed with said comment.

After due deliberation on the pleadings filed, we resolved to dismiss this petition for want of merit,
and on 22 July 1997, assigned it to the ponente to write the opinion of the Court.

There are actually two sets of petitioners in this case. The first is composed of Alfredo Tano,
Baldomero Tano, Danilo Tano, Romualdo Tano, Teocenes Midello, Angel de Mesa, Eulogio
Tremocha, Felipe Ongonion, Jr., Andres Linijan, and Felimon de Mesa, who were criminally charged
with violating Sangguniang Panlalawigan Resolution No. 33 and Ordinance No. 2, Series of 1993, of
the Province of Palawan, in Criminal Case No. 93-05-C of the 1st Municipal Circuit Trial Court
(MCTC) of Palawan; 3 and Robert Lim and Virginia Lim who were charged with violating City Ordinance No. 15-92 of Puerto
Princesa City and Ordinance No. 2, Series of 1993, of the Province of Palawan before the Office of the City Prosecutor of Puerto
Princesa. 4 All of them, with the exception of Teocenes Midello, Felipe Ongonion, Jr., Felimon de Mesa, Robert Lim and Virginia Lim, are
likewise the accused in Criminal Case No. 11223 for the violation of Ordinance No. 2 of the Sangguniang Panlalawigan of Palawan, pending
before Branch 50 of the Regional Trial Court of Palawan. 5

The second set of petitioners is composed of the rest of the petitioners numbering seventy-seven (77), all of whom, except the Airline
Shippers Association of Palawan — an alleged private association of several marine merchants — are natural persons who claim to be
fishermen.

The primary interest of the first set of petitioners is, of course, to prevent the prosecution, trial and
determination of the criminal cases until the constitutionality or legality of the Ordinances they
allegedly violated shall have been resolved. The second set of petitioners merely claim that being
fishermen or marine merchants, they would be adversely affected by the ordinance's.

As to the first set of petitioners, this special civil for certiorari must fail on the ground of prematurity
amounting to a lack of cause of action. There is no showing that said petitioners, as the accused in
the criminal cases, have filed motions to quash the informations therein and that the same were
denied. The ground available for such motions is that the facts charged therein do not constitute an
offense because the ordinances in question are unconstitutional. 6It cannot then be said that the lower courts acted
without or in excess of jurisdiction or with grave abuse of discretion to justify recourse to the extraordinary remedy of certiorari or prohibition.
It must further be stressed that even if petitioners did file motions to quash, the denial thereof would not forthwith give rise to a cause of
action under Rule 65 of the Rules of Court. The general rule is that where a motion to quash is denied, the remedy therefrom is not certiorari,
but for the party aggrieved thereby to go to trial without prejudice to reiterating special defenses involved in said motion, and if, after trial on
the merits an adverse decision is rendered, to appeal therefrom in the manner authorized by law. 7 And, even where in an exceptional
circumstance such denial may be the subject of a special civil action for certiorari, a motion for reconsideration must have to be filed to allow
the court concerned an opportunity to correct its errors, unless such motion may be dispensed with because of existing exceptional
circumstances. 8 Finally, even if a motion for reconsideration has been filed and denied, the remedy under Rule 65 is still unavailable absent
any showing of the grounds provided for in Section 1 thereof. 9 For obvious reasons, the petition at bar does not, and could not have, alleged
any of such grounds.

As to the second set of petitioners, the instant petition is obviously one for DECLARATORY
RELIEF, i.e., for a declaration that the Ordinances in question are a "nullity . . . for being
unconstitutional."10 As such, their petition must likewise fail, as this Court is not possessed of original
jurisdiction over petitions for declaratory relief even if only questions of law are involved,11 it being
settled that the Court merely exercises appellate jurisdiction over such petitions.12

15 | P a g e
 II

Even granting arguendo that the first set of petitioners have a cause of action ripe for the
extraordinary writ of certiorari, there is here a clear disregard of the hierarchy of courts, and no
special and important reason or exceptional and compelling circumstance has been adduced why
direct recourse to us should be allowed. While we have concurrent jurisdiction with Regional Trial
courts and with the Court of Appeals to issue writs of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction, such concurrence gives petitioners no unrestricted freedom
of choice of court forum, so we held in People v. Cuaresma.13

This concurrence of jurisdiction is not . . . to be taken as according to parties seeking any of

the writs an absolute unrestrained freedom of choice of the court to which application
therefor will be directed. There is after all hierarchy of courts. That hierarchy is determinative
of the venue of appeals, and should also serve as a general determinant of the appropriate
forum for petitions for the extraordinary writs. A becoming regard for that judicial hierarchy
most certainly indicates that petitions for the issuance of extraordinary writs against first level
("inferior") courts should be filed with the Regional Trial Court, and those against the latter,
with the Court of Appeals. A direct invocation of the Supreme Court's original jurisdiction to
issue these writs should be allowed only when there are special and important reasons
therefor, clearly and specifically set out in the petition. This is established policy. It is a policy
necessary to prevent inordinate demands upon the Court's time and attention which are
better devoted to those matters within its exclusive jurisdiction, and to prevent further over-
crowding of the Court's docket. . . .

The Court feels the need to reaffirm that policy at this time, and to enjoin strict adherence
thereto in the light of what it perceives to be a growing tendency on the part of litigants and
lawyers to have their applications for the so-called extraordinary writs, and sometimes even
their appeals, passed upon and adjudicated directly and immediately by the highest tribunal
of the land. . . .

In Santiago v. Vasquez,14 this Court forcefully expressed that the propensity of litigants and lawyers
to disregard the hierarchy of courts must be put to a halt, not only because of the imposition upon
the precious time of this Court, but also because of the inevitable and resultant delay, intended or
otherwise, in the adjudication of the case which often has to be remanded or referred to the lower
court, the proper forum under the rules of procedure, or as better equipped to resolve the issues
since this Court is not a trier of facts. We reiterated "the judicial policy that this Court will not
entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts or
where exceptional and compelling circumstances justify availment of a remedy within and calling for
the exercise of [its] primary jurisdiction."

III

Notwithstanding the foregoing procedural obstacles against the first set of petitioners, we opt to
resolve this case on its merits considering that the lifetime of the challenged Ordinances is about to
end. Ordinance No. 15-92 of the City of Puerto Princesa is effective only up to 1 January 1998, while
Ordinance No. 2 of the Province of Palawan, enacted on 19 February 1993, is effective for only five
(5) years. Besides, these Ordinances were undoubtedly enacted in the exercise of powers under the
new LGC relative to the protection and preservation of the environment and are thus novel and of
paramount importance. No further delay then may be allowed in the resolution of the issues raised.

It is of course settled that laws (including ordinances enacted by local government units) enjoy the
presumption of constitutionality. 15 To overthrow this presumption, there must be a clear and

16 | P a g e
unequivocal breach of the Constitution, not merely a doubtful or argumentative contradiction. In
short, the conflict with the Constitution must be shown beyond reasonable doubt.16 Where doubt
exists, even if well-founded, there can be no finding of unconstitutionality. To doubt is to sustain.17

After a scrutiny of the challenged Ordinances and the provisions of the Constitution petitioners claim
to have been violated, we find petitioners' contentions baseless and so hold that the former do not
suffer from any infirmity, both under the Constitution and applicable laws.

Petitioners specifically point to Section 2, Article XII and Sections 2 and 7, Article XIII of the
Constitution as having been transgressed by the Ordinances.

The pertinent portion of Section 2 of Article XII reads:

Sec. 2. . . .

The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea,
and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino
citizens.

The Congress may, by law, allow small-scale utilization of natural resources by Filipino
citizens, as well as cooperative fish farming, with priority to subsistence fishermen and
fishworkers in rivers, lakes, bays, and lagoons.

Sections 2 and 7 of Article XIII provide:

Sec. 2. The promotion of social justice shall include the commitment to create
economic opportunities based on freedom of initiative and self-reliance.

xxx xxx xxx

Sec. 7. The State shall protect the rights of subsistence fishermen, especially of local
communities, to the preferential use of the communal marine and fishing resources,
both inland and offshore. It shall provide support to such fishermen through
appropriate technology and research, adequate financial, production, and marketing
assistance, and other services. The State shall also protect, develop, and conserve
such resources. The protection shall extend to offshore fishing grounds of
subsistence fishermen against foreign intrusion. Fishworkers shall receive a just
share from their labor in the utilization of marine and fishing resources.

There is absolutely no showing that any of the petitioners qualifies as a subsistence or

marginal fisherman. In their petition, petitioner Airline Shippers Association of Palawan is
self-described as "a private association composed of Marine Merchants;" petitioners Robert
Lim and Virginia Lim, as "merchants;" while the rest of the petitioners claim to be
"fishermen," without any qualification, however, as to their status.

Since the Constitution does not specifically provide a definition of the terms "subsistence" or
"marginal" fishermen,18 they should be construed in their general and ordinary sense.
A marginal fisherman is an individual engaged in fishing whose margin of return or reward in
his harvest of fish as measured by existing price levels is barely sufficient to yield a profit or
cover the cost of gathering the fish,19 while a subsistence fisherman is one whose catch
yields but the irreducible minimum for his livelihood.20 Section 131(p) of the LGC (R.A. No.

17 | P a g e
7160) defines a marginal farmer or fisherman as "an individual engaged in subsistence
farming or fishing which shall be limited to the sale, barter or exchange of agricultural or
marine products produced by himself and his immediate family." It bears repeating that
nothing in the record supports a finding that any petitioner falls within these definitions.

Besides, Section 2 of Article XII aims primarily not to bestow any right to subsistence
fishermen, but to lay stress on the duty of the State to protect the nation's marine wealth.
What the provision merely recognizes is that the State may allow, by law, cooperative fish
farming, with priority to subsistence fishermen and fishworkers in rivers, lakes, bays and
lagoons. Our survey of the statute books reveals that the only provision of law which speaks
of a preferential right of marginal fishermen is Section 149 of the LGC, which pertinently
provides:

Sec. 149. Fishery Rentals, Fees and Charges. — . . .

(b) The sangguniang bayan may:

(1) Grant fishery privileges to erect fish corrals,

oyster, mussels or other aquatic beds or bangus fry
areas, within a definite zone of the municipal waters,
as determined by it: Provided, however, That duly
registered organizations and cooperatives of marginal
fishermen shall have the preferential right to such
fishery privileges . . . .

In a Joint Administrative Order No. 3 dated 25 April 1996, the Secretary of the Department of
Agriculture and the Secretary of the Department of Interior and Local Government prescribed
guidelines concerning the preferential treatment of small fisherfolk relative to the fishery right
mentioned in Section 149. This case, however, does not involve such fishery right.

Anent Section 7 of Article XIII, it speaks not only of the use of communal marine and fishing
resources, but of their protection, development and conservation. As hereafter shown, the
ordinances in question are meant precisely to protect and conserve our marine resources to
the end that their enjoyment may be guaranteed not only for the present generation, but also
for the generations to come.

The so-called "preferential right" of subsistence or marginal fishermen to the use of marine
resources is not at all absolute. In accordance with the Regalian Doctrine, marine resources
belong to the State, and, pursuant to the first paragraph of Section 2, Article XII of the
Constitution, their "exploration, development and utilization . . . shall be under the full control
and supervision of the State." Moreover, their mandated protection, development and
conservation as necessarily recognized by the framers of the Constitution, imply certain
restrictions on whatever right of enjoyment there may be in favor of anyone. Thus, as to the
curtailment of the preferential treatment of marginal fishermen, the following exchange
between Commissioner Francisco Rodrigo and Commissioner Jose F.S. Bengzon, Jr., took
place at the plenary session of the Constitutional Commission:

MR. RODRIGO:

Let us discuss the implementation of this because I would not raise

the hopes of our people, and afterwards fail in the implementation.
How will this be implemented? Will there be a licensing or giving of

18 | P a g e
 permits so that government officials will know that one is really a
marginal fisherman? Or if policeman say that a person is not a
marginal fisherman, he can show his permit, to prove that indeed he
is one.

MR. BENGZON:

Certainly, there will be some mode of licensing insofar as this is

concerned and this particular question could be tackled when we
discuss the Article on Local Governments — whether we will leave to
the local governments or to Congress on how these things will be
implemented. But certainly, I think our congressmen and our local
officials will not be bereft of ideas on how to implement this mandate.

xxx xxx xxx

MR. RODRIGO:

So, once one is licensed as a marginal fisherman, he can go

anywhere in the Philippines and fish in any fishing grounds.

MR. BENGZON:

Subject to whatever rules and regulations and local laws that may be
passed, may be existing or will be passed.21 (emphasis supplied)

What must likewise be borne in mind is the state policy enshrined in the Constitution
regarding the duty of the State to protect and advance the right of the people to a balanced
and healthful ecology in accord with the rhythm and harmony of nature. 22 On this score,
in Oposa v. Factoran, 23 this Court declared:

While the right to a balanced and healthful ecology is to be found under the
Declaration of Principles the State Policies and not under the Bill of Rights, it does
not follow that it is less important than any of the civil and political rights enumerated
in the latter. Such a right belongs to a different category of rights altogether for it
concerns nothing less than self-preservation and self-perpetuation — aptly and
fittingly stressed by the petitioners — the advancement of which may even be said to
predate all governments and constitutions. As a matter of fact, these basic rights
need not even be written in the Constitution for they are assumed to exist from the
inception of humankind. If they are now explicitly mentioned in the fundamental
charter, it is because of the well-founded fear of its framers that unless the rights to a
balanced and healthful ecology and to health are mandated as state policies by the
Constitution itself, thereby highlighting their continuing importance and imposing
upon the state a solemn obligation to preserve the first and protect and advance the
second, the day would not be too far when all else would be lost not only for the
present generation, but also for those to come — generations which stand to inherit
nothing but parched earth incapable of sustaining life.

The right to a balanced and healthful ecology carries with it a correlative duty to
refrain from impairing the environment. . . .

19 | P a g e
The LGC provisions invoked by private respondents merely seek to give flesh and blood to
the right of the people to a balanced and healthful ecology. In fact, the General Welfare
Clause, expressly mentions this right:

Sec. 16. General Welfare. — Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and effective governance, and
those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support,
among other things, the preservation and enrichment of culture, promote health and
safety, enhance the right of the people to a balanced ecology, encourage and
support the development of appropriate and self-reliant scientific and technological
capabilities, improve public morals, enhance economic prosperity and social justice,
promote full employment among their residents, maintain peace and order, and
preserve the comfort and convenience of their inhabitants. (emphasis supplied).

Moreover, Section 5(c) of the LGC explicitly mandates that the general welfare provisions of
the LGC "shall be liberally interpreted to give more powers to the local government units in
accelerating economic development and upgrading the quality of life for the people of the
community."

The LGC vests municipalities with the power to grant fishery privileges in municipal waters
and impose rentals, fees or charges therefor; to penalize, by appropriate ordinances, the use
of explosives, noxious or poisonous substances, electricity, muro-ami, and other deleterious
methods of fishing; and to prosecute any violation of the provisions of applicable fishery
laws.24 Further, the sangguniang bayan, the sangguniang panlungsod and the sangguniang
panlalawigan are directed to enact ordinances for the general welfare of the municipality and
its inhabitants, which shall include, inter alia, ordinances that "[p]rotect the environment and
impose appropriate penalties for acts which endanger the environment such as dynamite
fishing and other forms of destructive fishing . . . and such other activities which result in
pollution, acceleration of eutrophication of rivers and lakes, or of ecological
imbalance."25

Finally, the centerpiece of LGC is the system of decentralization26 as expressly mandated by

the Constitution.27 Indispensable to decentralization is devolution and the LGC expressly
provides that "[a]ny provision on a power of a local government unit shall be liberally
interpreted in its favor, and in case of doubt, any question thereon shall be resolved in favor
of devolution of powers and of the lower local government unit. Any fair and reasonable
doubt as to the existence of the power shall be interpreted in favor of the local government
unit concerned."28 Devolution refers to the act by which the National Government confers
power and authority upon the various local government units to perform specific functions
and responsibilities.29

One of the devolved powers enumerated in the section of the LGC on devolution is the
enforcement of fishery laws in municipal waters including the conservation of
mangroves.30 This necessarily includes the enactment of ordinances to effectively carry out
such fishery laws within the municipal waters.

The term "municipal waters," in turn, includes not only streams, lakes, and tidal waters within
the municipality, not being the subject of private ownership and not comprised within the
national parks, public forest, timber lands, forest reserves, or fishery reserves, but also
marine waters included between two lines drawn perpendicularly to the general coastline

20 | P a g e
from points where the boundary lines of the municipality or city touch the sea at low tide and
a third line parallel with the general coastline and fifteen kilometers from
it.31 Under P.D. No. 704, the marine waters included in municipal waters is limited to three
nautical miles from the general coastline using the above perpendicular lines and a third
parallel line.

These "fishery laws" which local government units may enforce under Section 17(b)(2)(i) in
municipal waters include: (1) P.D. No. 704; (2) P.D. No. 1015 which, inter alia, authorizes the
establishment of a "closed season" in any Philippine water if necessary for conservation or
ecological purposes; (3) P.D. No. 1219 which provides for the exploration, exploitation,
utilization and conservation of coral resources; (4) R.A. No. 5474, as amended by B.P. Blg.
58, which makes it unlawful for any person, association or corporation to catch or cause to
be caught, sell, offer to sell, purchase, or have in possession any of the fish specie
called gobiidae or "ipon" during closed season; and (5) R.A. No. 6451 which prohibits and
punishes electrofishing, as well as various issuances of the BFAR.

To those specifically devolved insofar as the control and regulation of fishing in municipal
waters and the protection of its marine environment are concerned, must be added the
following:

1. Issuance of permits to construct fish cages within municipal waters;

2. Issuance of permits to gather aquarium fishes within municipal

waters;

3. Issuance of permits to gather kapis shells within municipal waters;

4. Issuance of permits to gather/culture shelled mollusks within

municipal waters;

5. Issuance of licenses to establish seaweed farms within municipal

waters;

6. Issuance of licenses to establish culture pearls within municipal

waters;

7. Issuance of auxiliary invoice to transport fish and fishery products;

and

8. Establishment of "closed season" in municipal waters.

These functions are covered in the Memorandum of Agreement of 5 April 1994 between the
Department of Agriculture and the Department of Interior and Local Government.

In light then of the principles of decentralization and devolution enshrined in the LGC and the
powers granted therein to local government units under Section 16 (the General Welfare
Clause), and under Sections 149, 447(a) (1) (vi), 458 (a) (1) (vi) and 468 (a) (1) (vi), which
unquestionably involve the exercise of police power, the validity of the questioned
Ordinances cannot be doubted.

21 | P a g e
Parenthetically, we wish to add that these Ordinances find full support under R.A. No. 7611,
otherwise known as the Strategic Environmental Plan (SEP) for Palawan Act, approved on
19 June 1992. This statute adopts a "comprehensive framework for the sustainable
development of Palawan compatible with protecting and enhancing the natural resources
and endangered environment of the province," which "shall serve to guide the local
government of Palawan and the government agencies concerned in the formulation and
implementation of plans, programs and projects affecting said province."32

At this time then, it would be appropriate to determine the relation between the assailed
Ordinances and the aforesaid powers of the Sangguniang Panlungsod of the City of Puerto
Princesa and the Sangguniang Panlalawigan of the Province of Palawan to protect the
environment. To begin, we ascertain the purpose of the Ordinances as set forth in the
statement of purposes or declaration of policies quoted earlier.

It is clear to the Court that both Ordinances have two principal objectives or purposes: (1) to
establish a "closed season" for the species of fish or aquatic animals covered therein for a
period of five years; and (2) to protect the coral in the marine waters of the City of Puerto
Princesa and the Province of Palawan from further destruction due to illegal fishing activities.

The accomplishment of the first objective is well within the devolved power to enforce fishery
laws in municipal waters, such as P.D. No. 1015, which allows the establishment of "closed
seasons." The devolution of such power has been expressly confirmed in the Memorandum
of Agreement of 5 April 1994 between the Department of Agriculture and the Department of
Interior and Local Government.

The realization of the second objective clearly falls within both the general welfare clause of
the LGC and the express mandate thereunder to cities and provinces to protect the
environment and impose appropriate penalties for acts which endanger the environment.33

The destruction of coral reefs results in serious, if not irreparable, ecological imbalance, for
coral reefs are among nature's life-support systems.34 They collect, retain and recycle
nutrients for adjacent nearshore areas such as mangroves, seagrass beds, and reef flats;
provide food for marine plants and animals; and serve as a protective shelter for aquatic
organisms.35 It is said that "[e]cologically, the reefs are to the oceans what forests are to
continents: they are shelter and breeding grounds for fish and plant species that will
disappear without them."36

The prohibition against catching live fish stems, in part, from the modern phenomenon of
live-fish trade which entails the catching of so-called exotic species of tropical fish, not only
for aquarium use in the West, but also for "the market for live banquet fish [which] is virtually
insatiable in ever more affluent Asia.37 These exotic species are coral-dwellers, and
fishermen catch them by "diving in shallow water with corraline habitats and squirting sodium
cyanide poison at passing fish directly or onto coral crevices; once affected the fish are
immobilized [merely stunned] and then scooped by hand."38 The diver then surfaces and
dumps his catch into a submerged net attached to the skiff. Twenty minutes later, the fish
can swim normally. Back on shore, they are placed in holding pens, and within a few weeks,
they expel the cyanide from their system and are ready to be hauled. They are then placed in
saltwater tanks or packaged in plastic bags filled with seawater for shipment by air freight to
major markets for live food fish.39 While the fish are meant to survive, the opposite holds true
for their former home as "[a]fter the fisherman squirts the cyanide, the first thing to perish is
the reef algae, on which fish feed. Days later, the living coral starts to expire. Soon the reef
loses its function as habitat for the fish, which eat both the algae and invertebrates that cling

22 | P a g e
to the coral. The reef becomes an underwater graveyard, its skeletal remains brittle,
bleached of all color and vulnerable to erosion from the pounding of the waves."40 It has been
found that cyanide fishing kills most hard and soft corals within three months of repeated
application.41

The nexus then between the activities barred by Ordinance No. 15-92 of the City of Puerto
Princesa and the prohibited acts provided in Ordinance No. 2, Series of 1993 of the Province
of Palawan, on one hand, and the use of sodium cyanide, on the other, is painfully obvious.
In sum, the public purpose and reasonableness of the Ordinances may not then be
controverted.

As to Office Order No. 23, Series of 1993, issued by Acting City Mayor Amado L. Lucero of
the City of Puerto Princesa, we find nothing therein violative of any constitutional or statutory
provision. The Order refers to the implementation of the challenged ordinance and is not the
Mayor's Permit.

The dissenting opinion of Mr. Justice Josue N. Bellosillo relies upon the lack of authority on
the part of the Sangguniang Panglungsod of Puerto Princesa to enact Ordinance No. 15,
Series of 1992, on the theory that the subject thereof is within the jurisdiction and
responsibility of the Bureau of Fisheries and Aquatic Resources (BFAR) under P.D. No. 704,
otherwise known as the Fisheries Decree of 1975; and that, in any event, the Ordinance is
unenforceable for lack of approval by the Secretary of the Department of Natural Resources
(DNR), likewise in accordance with P.D. No. 704.

The majority is unable to accommodate this view. The jurisdiction and responsibility of the
BFAR under P.D. No. 704, over the management, conservation, development, protection,
utilization and disposition of all fishery and aquatic resources of the country is not all-
encompassing. First, Section 4 thereof excludes from such jurisdiction and responsibility
municipal waters, which shall be under the municipal or city government concerned, except
insofar as fishpens and seaweed culture in municipal centers are concerned. This section
provides, however, that all municipal or city ordinances and resolutions affecting fishing and
fisheries and any disposition thereunder shall be submitted to the Secretary of the
Department of Natural Resources for appropriate action and shall have full force and effect
only upon his approval.42

Second, it must at once be pointed out that the BFAR is no longer under the Department of
Natural Resources (now Department of Environment and Natural Resources). Executive
Order No. 967 of 30 June 1984 transferred the BFAR from the control and supervision of the
Minister (formerly Secretary) Of Natural Resources to the Ministry of Agriculture and Food
(MAF) and converted it into a mere staff agency thereof, integrating its functions with the
regional offices of the MAF.

In Executive Order No. 116 of 30 January 1987, which reorganized the MAF, the BFAR was
retained as an attached agency of the MAF. And under the Administrative Code of
1987,43 the BFAR is placed under the Title concerning the Department of Agriculture.44

Therefore, it is incorrect to say that the challenged Ordinance of the City of Puerto Princesa
is invalid or unenforceable because it was not approved by the Secretary of the DENR. If at
all, the approval that should be sought would be that of the Secretary of the Department of
Agriculture. However, the requirement of approval by the Secretary of the Department of
Agriculture (not DENR) of municipal ordinances affecting fishing and fisheries in municipal
waters has been dispensed with in view of the following reasons:

23 | P a g e
 (1) Section 534 (Repealing Clause) of the LGC expressly repeals or amends Sections 16
and 29 of P.D. No. 70445 insofar as they are inconsistent with the provisions of the LGC.

(2) As discussed earlier, under the general welfare clause of the LGC, local government
units have the power, inter alia, to enact ordinances to enhance the right of the people to a
balanced ecology. It likewise specifically vests municipalities with the power to grant fishery
privileges in municipal waters, and impose rentals, fees or charges therefor; to penalize, by
appropriate ordinances, the use of explosives, noxious or poisonous substances,
electricity, muro-ami, and other deleterious methods of fishing; and to prosecute any violation
of the provisions of applicable fishery laws.46 Finally, it imposes upon the sangguniang bayan,
the sangguniang panlungsod, and the sangguniang panlalawigan the duty to enact
ordinances to "[p]rotect the environment and impose appropriate penalties for acts which
endanger the environment such as dynamite fishing and other forms of destructive fishing . .
. and such other activities which result in pollution, acceleration of eutrophication of rivers
and lakes or of ecological imbalance."47

In closing, we commend the Sangguniang Panlungsod of the City of Puerto Princesa and
Sangguniang Panlalawigan of the Province of Palawan for exercising the requisite political
will to enact urgently needed legislation to protect and enhance the marine environment,
thereby sharing in the herculean task of arresting the tide of ecological destruction. We hope
that other local government units shall now be roused from their lethargy and adopt a more
vigilant stand in the battle against the decimation of our legacy to future generations. At this
time, the repercussions of any further delay in their response may prove disastrous, if not,
irreversible.

WHEREFORE, the instant petition is DISMISSED for lack of merit and the temporary
restraining order issued on 11 November 1993 is LIFTED.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 122846 January 20, 2009

WHITE LIGHT CORPORATION vs.CITY OF MANILA

With another city ordinance of Manila also principally involving the tourist district as subject, the
Court is confronted anew with the incessant clash between government power and individual liberty
in tandem with the archetypal tension between law and morality.

In City of Manila v. Laguio, Jr.,1 the Court affirmed the nullification of a city ordinance barring the
operation of motels and inns, among other establishments, within the Ermita-Malate area. The
petition at bar assails a similarly-motivated city ordinance that prohibits those same establishments
from offering short-time admission, as well as pro-rated or "wash up" rates for such abbreviated
stays. Our earlier decision tested the city ordinance against our sacred constitutional rights to liberty,
due process and equal protection of law. The same parameters apply to the present petition.

This Petition2 under Rule 45 of the Revised Rules on Civil Procedure, which seeks the reversal of
the Decision3 in C.A.-G.R. S.P. No. 33316 of the Court of Appeals, challenges the validity of Manila

24 | P a g e
City Ordinance No. 7774 entitled, "An Ordinance Prohibiting Short-Time Admission, Short-Time
Admission Rates, and Wash-Up Rate Schemes in Hotels, Motels, Inns, Lodging Houses, Pension
Houses, and Similar Establishments in the City of Manila" (the Ordinance).

I.

The facts are as follows:

On December 3, 1992, City Mayor Alfredo S. Lim (Mayor Lim) signed into law the Ordinance.4 The
Ordinance is reproduced in full, hereunder:

SECTION 1. Declaration of Policy. It is hereby the declared policy of the City Government to protect
the best interest, health and welfare, and the morality of its constituents in general and the youth in
particular.

SEC. 2. Title. This ordinance shall be known as "An Ordinance" prohibiting short time admission in
hotels, motels, lodging houses, pension houses and similar establishments in the City of Manila.

SEC. 3. Pursuant to the above policy, short-time admission and rate [sic], wash-up rate or other
similarly concocted terms, are hereby prohibited in hotels, motels, inns, lodging houses, pension
houses and similar establishments in the City of Manila.

SEC. 4. Definition of Term[s]. Short-time admission shall mean admittance and charging of room
rate for less than twelve (12) hours at any given time or the renting out of rooms more than twice a
day or any other term that may be concocted by owners or managers of said establishments but
would mean the same or would bear the same meaning.

SEC. 5. Penalty Clause. Any person or corporation who shall violate any provision of this ordinance
shall upon conviction thereof be punished by a fine of Five Thousand (₱5,000.00) Pesos or
imprisonment for a period of not exceeding one (1) year or both such fine and imprisonment at the
discretion of the court; Provided, That in case of [a] juridical person, the president, the manager, or
the persons in charge of the operation thereof shall be liable: Provided, further, That in case of
subsequent conviction for the same offense, the business license of the guilty party shall
automatically be cancelled.

SEC. 6. Repealing Clause. Any or all provisions of City ordinances not consistent with or contrary to
this measure or any portion hereof are hereby deemed repealed.

SEC. 7. Effectivity. This ordinance shall take effect immediately upon approval.

Enacted by the city Council of Manila at its regular session today, November 10, 1992.

Approved by His Honor, the Mayor on December 3, 1992.

On December 15, 1992, the Malate Tourist and Development Corporation (MTDC) filed a complaint
for declaratory relief with prayer for a writ of preliminary injunction and/or temporary restraining order
( TRO)5 with the Regional Trial Court (RTC) of Manila, Branch 9 impleading as defendant, herein
respondent City of Manila (the City) represented by Mayor Lim.6 MTDC prayed that the Ordinance,
insofar as it includes motels and inns as among its prohibited establishments, be declared invalid
and unconstitutional. MTDC claimed that as owner and operator of the Victoria Court in Malate,

25 | P a g e
Manila it was authorized by Presidential Decree (P.D.) No. 259 to admit customers on a short time
basis as well as to charge customers wash up rates for stays of only three hours.

On December 21, 1992, petitioners White Light Corporation (WLC), Titanium Corporation (TC) and
Sta. Mesa Tourist and Development Corporation (STDC) filed a motion to intervene and to admit
attached complaint-in-intervention7 on the ground that the Ordinance directly affects their business
interests as operators of drive-in-hotels and motels in Manila.8 The three companies are components
of the Anito Group of Companies which owns and operates several hotels and motels in Metro
Manila.9

On December 23, 1992, the RTC granted the motion to intervene.10 The RTC also notified the
Solicitor General of the proceedings pursuant to then Rule 64, Section 4 of the Rules of Court. On
the same date, MTDC moved to withdraw as plaintiff.11

On December 28, 1992, the RTC granted MTDC's motion to withdraw.12 The RTC issued a TRO on
January 14, 1993, directing the City to cease and desist from enforcing the Ordinance.13 The City
filed an Answer dated January 22, 1993 alleging that the Ordinance is a legitimate exercise of police
power.14

On February 8, 1993, the RTC issued a writ of preliminary injunction ordering the city to desist from
the enforcement of the Ordinance.15 A month later, on March 8, 1993, the Solicitor General filed his
Comment arguing that the Ordinance is constitutional.

During the pre-trial conference, the WLC, TC and STDC agreed to submit the case for decision
without trial as the case involved a purely legal question.16 On October 20, 1993, the RTC rendered
a decision declaring the Ordinance null and void. The dispositive portion of the decision reads:

WHEREFORE, in view of all the foregoing, [O]rdinance No. 7774 of the City of Manila is hereby
declared null and void.

Accordingly, the preliminary injunction heretofor issued is hereby made permanent.

SO ORDERED.17

The RTC noted that the ordinance "strikes at the personal liberty of the individual guaranteed and
jealously guarded by the Constitution."18 Reference was made to the provisions of the Constitution
encouraging private enterprises and the incentive to needed investment, as well as the right to
operate economic enterprises. Finally, from the observation that the illicit relationships the Ordinance
sought to dissuade could nonetheless be consummated by simply paying for a 12-hour stay, the
RTC likened the law to the ordinance annulled in Ynot v. Intermediate Appellate Court,19 where the
legitimate purpose of preventing indiscriminate slaughter of carabaos was sought to be effected
through an inter-province ban on the transport of carabaos and carabeef.

The City later filed a petition for review on certiorari with the Supreme Court.20 The petition was
docketed as G.R. No. 112471. However in a resolution dated January 26, 1994, the Court treated
the petition as a petition for certiorari and referred the petition to the Court of Appeals.21

Before the Court of Appeals, the City asserted that the Ordinance is a valid exercise of police power
pursuant to Section 458 (4)(iv) of the Local Government Code which confers on cities, among other
local government units, the power:

26 | P a g e
[To] regulate the establishment, operation and maintenance of cafes, restaurants, beerhouses,
hotels, motels, inns, pension houses, lodging houses and other similar establishments, including
tourist guides and transports.22

The Ordinance, it is argued, is also a valid exercise of the power of the City under Article III, Section
18(kk) of the Revised Manila Charter, thus:

"to enact all ordinances it may deem necessary and proper for the sanitation and safety, the
furtherance of the prosperity and the promotion of the morality, peace, good order, comfort,
convenience and general welfare of the city and its inhabitants, and such others as be necessary to
carry into effect and discharge the powers and duties conferred by this Chapter; and to fix penalties
for the violation of ordinances which shall not exceed two hundred pesos fine or six months
imprisonment, or both such fine and imprisonment for a single offense.23

Petitioners argued that the Ordinance is unconstitutional and void since it violates the right to privacy
and the freedom of movement; it is an invalid exercise of police power; and it is an unreasonable
and oppressive interference in their business.

The Court of Appeals reversed the decision of the RTC and affirmed the constitutionality of the
Ordinance.24 First, it held that the Ordinance did not violate the right to privacy or the freedom of
movement, as it only penalizes the owners or operators of establishments that admit individuals for
short time stays. Second, the virtually limitless reach of police power is only constrained by having a
lawful object obtained through a lawful method. The lawful objective of the Ordinance is satisfied
since it aims to curb immoral activities. There is a lawful method since the establishments are still
allowed to operate. Third, the adverse effect on the establishments is justified by the well-being of its
constituents in general. Finally, as held in Ermita-Malate Motel Operators Association v. City Mayor
of Manila, liberty is regulated by law.

TC, WLC and STDC come to this Court via petition for review on certiorari.25 In their petition and
Memorandum, petitioners in essence repeat the assertions they made before the Court of Appeals.
They contend that the assailed Ordinance is an invalid exercise of police power.

II.

We must address the threshold issue of petitioners’ standing. Petitioners allege that as owners of
establishments offering "wash-up" rates, their business is being unlawfully interfered with by the
Ordinance. However, petitioners also allege that the equal protection rights of their clients are also
being interfered with. Thus, the crux of the matter is whether or not these establishments have the
requisite standing to plead for protection of their patrons' equal protection rights.

Standing or locus standi is the ability of a party to demonstrate to the court sufficient connection to
and harm from the law or action challenged to support that party's participation in the case. More
importantly, the doctrine of standing is built on the principle of separation of powers,26 sparing as it
does unnecessary interference or invalidation by the judicial branch of the actions rendered by its
co-equal branches of government.

The requirement of standing is a core component of the judicial system derived directly from the
Constitution.27 The constitutional component of standing doctrine incorporates concepts which
concededly are not susceptible of precise definition.28 In this jurisdiction, the extancy of "a direct and
personal interest" presents the most obvious cause, as well as the standard test for a petitioner's
standing.29 In a similar vein, the United States Supreme Court reviewed and elaborated on the

27 | P a g e
meaning of the three constitutional standing requirements of injury, causation, and redressability
in Allen v. Wright.30

Nonetheless, the general rules on standing admit of several exceptions such as the overbreadth
doctrine, taxpayer suits, third party standing and, especially in the Philippines, the doctrine of
transcendental importance.31

For this particular set of facts, the concept of third party standing as an exception and the
overbreadth doctrine are appropriate. In Powers v. Ohio,32 the United States Supreme Court wrote
that: "We have recognized the right of litigants to bring actions on behalf of third parties, provided
three important criteria are satisfied: the litigant must have suffered an ‘injury-in-fact,’ thus giving him
or her a "sufficiently concrete interest" in the outcome of the issue in dispute; the litigant must have a
close relation to the third party; and there must exist some hindrance to the third party's ability to
protect his or her own interests."33 Herein, it is clear that the business interests of the petitioners are
likewise injured by the Ordinance. They rely on the patronage of their customers for their continued
viability which appears to be threatened by the enforcement of the Ordinance. The relative silence in
constitutional litigation of such special interest groups in our nation such as the American Civil
Liberties Union in the United States may also be construed as a hindrance for customers to bring
suit.34

American jurisprudence is replete with examples where parties-in-interest were allowed standing to
advocate or invoke the fundamental due process or equal protection claims of other persons or
classes of persons injured by state action. In Griswold v. Connecticut,35 the United States Supreme
Court held that physicians had standing to challenge a reproductive health statute that would
penalize them as accessories as well as to plead the constitutional protections available to their
patients. The Court held that:

"The rights of husband and wife, pressed here, are likely to be diluted or adversely affected unless
those rights are considered in a suit involving those who have this kind of confidential relation to
them."36

An even more analogous example may be found in Craig v. Boren,37 wherein the United States
Supreme Court held that a licensed beverage vendor has standing to raise the equal protection
claim of a male customer challenging a statutory scheme prohibiting the sale of beer to males under
the age of 21 and to females under the age of 18. The United States High Court explained that the
vendors had standing "by acting as advocates of the rights of third parties who seek access to their
market or function."38

Assuming arguendo that petitioners do not have a relationship with their patrons for the former to
assert the rights of the latter, the overbreadth doctrine comes into play. In overbreadth analysis,
challengers to government action are in effect permitted to raise the rights of third parties. Generally
applied to statutes infringing on the freedom of speech, the overbreadth doctrine applies when a
statute needlessly restrains even constitutionally guaranteed rights.39 In this case, the petitioners
claim that the Ordinance makes a sweeping intrusion into the right to liberty of their clients. We can
see that based on the allegations in the petition, the Ordinance suffers from overbreadth.

We thus recognize that the petitioners have a right to assert the constitutional rights of their clients to
patronize their establishments for a "wash-rate" time frame.

III.

28 | P a g e
To students of jurisprudence, the facts of this case will recall to mind not only the recent City of
Manila ruling, but our 1967 decision in Ermita-Malate Hotel and Motel Operations Association, Inc.,
v. Hon. City Mayor of Manila.40Ermita-Malate concerned the City ordinance requiring patrons to fill up
a prescribed form stating personal information such as name, gender, nationality, age, address and
occupation before they could be admitted to a motel, hotel or lodging house. This earlier ordinance
was precisely enacted to minimize certain practices deemed harmful to public morals. A purpose
similar to the annulled ordinance in City of Manila which sought a blanket ban on motels, inns and
similar establishments in the Ermita-Malate area. However, the constitutionality of the ordinance
in Ermita-Malate was sustained by the Court.

The common thread that runs through those decisions and the case at bar goes beyond the
singularity of the localities covered under the respective ordinances. All three ordinances were
enacted with a view of regulating public morals including particular illicit activity in transient lodging
establishments. This could be described as the middle case, wherein there is no wholesale ban on
motels and hotels but the services offered by these establishments have been severely restricted. At
its core, this is another case about the extent to which the State can intrude into and regulate the
lives of its citizens.

The test of a valid ordinance is well established. A long line of decisions including City of Manila has
held that for an ordinance to be valid, it must not only be within the corporate powers of the local
government unit to enact and pass according to the procedure prescribed by law, it must also
conform to the following substantive requirements: (1) must not contravene the Constitution or any
statute; (2) must not be unfair or oppressive; (3) must not be partial or discriminatory; (4) must not
prohibit but may regulate trade; (5) must be general and consistent with public policy; and (6) must
not be unreasonable.41

The Ordinance prohibits two specific and distinct business practices, namely wash rate admissions
and renting out a room more than twice a day. The ban is evidently sought to be rooted in the police
power as conferred on local government units by the Local Government Code through such
implements as the general welfare clause.

A.

Police power, while incapable of an exact definition, has been purposely veiled in general terms to
underscore its comprehensiveness to meet all exigencies and provide enough room for an efficient
and flexible response as the conditions warrant.42 Police power is based upon the concept of
necessity of the State and its corresponding right to protect itself and its people.43 Police power has
been used as justification for numerous and varied actions by the State. These range from the
regulation of dance halls,44 movie theaters,45 gas stations46 and cockpits.47 The awesome scope of
police power is best demonstrated by the fact that in its hundred or so years of presence in our
nation’s legal system, its use has rarely been denied.

The apparent goal of the Ordinance is to minimize if not eliminate the use of the covered
establishments for illicit sex, prostitution, drug use and alike. These goals, by themselves, are
unimpeachable and certainly fall within the ambit of the police power of the State. Yet the desirability
of these ends do not sanctify any and all means for their achievement. Those means must align with
the Constitution, and our emerging sophisticated analysis of its guarantees to the people. The Bill of
Rights stands as a rebuke to the seductive theory of Macchiavelli, and, sometimes even, the political
majorities animated by his cynicism.

Even as we design the precedents that establish the framework for analysis of due process or equal
protection questions, the courts are naturally inhibited by a due deference to the co-equal branches

29 | P a g e
of government as they exercise their political functions. But when we are compelled to nullify
executive or legislative actions, yet another form of caution emerges. If the Court were animated by
the same passing fancies or turbulent emotions that motivate many political decisions, judicial
integrity is compromised by any perception that the judiciary is merely the third political branch of
government. We derive our respect and good standing in the annals of history by acting as judicious
and neutral arbiters of the rule of law, and there is no surer way to that end than through the
development of rigorous and sophisticated legal standards through which the courts analyze the
most fundamental and far-reaching constitutional questions of the day.

B.

The primary constitutional question that confronts us is one of due process, as guaranteed under
Section 1, Article III of the Constitution. Due process evades a precise definition.48 The purpose of
the guaranty is to prevent arbitrary governmental encroachment against the life, liberty and property
of individuals. The due process guaranty serves as a protection against arbitrary regulation or
seizure. Even corporations and partnerships are protected by the guaranty insofar as their property
is concerned.

The due process guaranty has traditionally been interpreted as imposing two related but distinct
restrictions on government, "procedural due process" and "substantive due process." Procedural due
process refers to the procedures that the government must follow before it deprives a person of life,
liberty, or property.49 Procedural due process concerns itself with government action adhering to the
established process when it makes an intrusion into the private sphere. Examples range from the
form of notice given to the level of formality of a hearing.

If due process were confined solely to its procedural aspects, there would arise absurd situation of
arbitrary government action, provided the proper formalities are followed. Substantive due process
completes the protection envisioned by the due process clause. It inquires whether the government
has sufficient justification for depriving a person of life, liberty, or property.50

The question of substantive due process, moreso than most other fields of law, has reflected
dynamism in progressive legal thought tied with the expanded acceptance of fundamental freedoms.
Police power, traditionally awesome as it may be, is now confronted with a more rigorous level of
analysis before it can be upheld. The vitality though of constitutional due process has not been
predicated on the frequency with which it has been utilized to achieve a liberal result for, after all, the
libertarian ends should sometimes yield to the prerogatives of the State. Instead, the due process
clause has acquired potency because of the sophisticated methodology that has emerged to
determine the proper metes and bounds for its application.

C.

The general test of the validity of an ordinance on substantive due process grounds is best tested
when assessed with the evolved footnote 4 test laid down by the U.S. Supreme Court in U.S. v.
Carolene Products.51 Footnote 4 of the Carolene Products case acknowledged that the judiciary
would defer to the legislature unless there is a discrimination against a "discrete and insular" minority
or infringement of a "fundamental right."52 Consequently, two standards of judicial review were
established: strict scrutiny for laws dealing with freedom of the mind or restricting the political
process, and the rational basis standard of review for economic legislation.

A third standard, denominated as heightened or immediate scrutiny, was later adopted by the U.S.
Supreme Court for evaluating classifications based on gender53 and legitimacy.54 Immediate scrutiny
was adopted by the U.S. Supreme Court in Craig,55 after the Court declined to do so in Reed v.

30 | P a g e
Reed.56 While the test may have first been articulated in equal protection analysis, it has in the
United States since been applied in all substantive due process cases as well.

We ourselves have often applied the rational basis test mainly in analysis of equal protection
challenges.57 Using the rational basis examination, laws or ordinances are upheld if they rationally
further a legitimate governmental interest.58 Under intermediate review, governmental interest is
extensively examined and the availability of less restrictive measures is considered.59 Applying strict
scrutiny, the focus is on the presence of compelling, rather than substantial, governmental interest
and on the absence of less restrictive means for achieving that interest.

In terms of judicial review of statutes or ordinances, strict scrutiny refers to the standard for
determining the quality and the amount of governmental interest brought to justify the regulation of
fundamental freedoms.60 Strict scrutiny is used today to test the validity of laws dealing with the
regulation of speech, gender, or race as well as other fundamental rights as expansion from its
earlier applications to equal protection.61 The United States Supreme Court has expanded the scope
of strict scrutiny to protect fundamental rights such as suffrage,62 judicial access63and interstate
travel.64

If we were to take the myopic view that an Ordinance should be analyzed strictly as to its effect only
on the petitioners at bar, then it would seem that the only restraint imposed by the law which we are
capacitated to act upon is the injury to property sustained by the petitioners, an injury that would
warrant the application of the most deferential standard – the rational basis test. Yet as earlier
stated, we recognize the capacity of the petitioners to invoke as well the constitutional rights of their
patrons – those persons who would be deprived of availing short time access or wash-up rates to
the lodging establishments in question.

Viewed cynically, one might say that the infringed rights of these customers were are trivial since
they seem shorn of political consequence. Concededly, these are not the sort of cherished rights
that, when proscribed, would impel the people to tear up their cedulas. Still, the Bill of Rights does
not shelter gravitas alone. Indeed, it is those "trivial" yet fundamental freedoms – which the people
reflexively exercise any day without the impairing awareness of their constitutional consequence –
that accurately reflect the degree of liberty enjoyed by the people. Liberty, as integrally incorporated
as a fundamental right in the Constitution, is not a Ten Commandments-style enumeration of what
may or what may not be done; but rather an atmosphere of freedom where the people do not feel
labored under a Big Brother presence as they interact with each other, their society and nature, in a
manner innately understood by them as inherent, without doing harm or injury to others.

D.

The rights at stake herein fall within the same fundamental rights to liberty which we upheld in City of
Manila v. Hon. Laguio, Jr. We expounded on that most primordial of rights, thus:

Liberty as guaranteed by the Constitution was defined by Justice Malcolm to include "the right to
exist and the right to be free from arbitrary restraint or servitude. The term cannot be dwarfed into
mere freedom from physical restraint of the person of the citizen, but is deemed to embrace the right
of man to enjoy the facilities with which he has been endowed by his Creator, subject only to such
restraint as are necessary for the common welfare."[65] In accordance with this case, the rights of the
citizen to be free to use his faculties in all lawful ways; to live and work where he will; to earn his
livelihood by any lawful calling; and to pursue any avocation are all deemed embraced in the
concept of liberty.[66]

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The U.S. Supreme Court in the case of Roth v. Board of Regents, sought to clarify the meaning of
"liberty." It said:

While the Court has not attempted to define with exactness the liberty . . . guaranteed [by the Fifth
and Fourteenth Amendments], the term denotes not merely freedom from bodily restraint but also
the right of the individual to contract, to engage in any of the common occupations of life, to acquire
useful knowledge, to marry, establish a home and bring up children, to worship God according to the
dictates of his own conscience, and generally to enjoy those privileges long recognized . . . as
essential to the orderly pursuit of happiness by free men. In a Constitution for a free people, there
can be no doubt that the meaning of "liberty" must be broad indeed.67 [Citations omitted]

It cannot be denied that the primary animus behind the ordinance is the curtailment of sexual
behavior. The City asserts before this Court that the subject establishments "have gained notoriety
as venue of ‘prostitution, adultery and fornications’ in Manila since they ‘provide the necessary
atmosphere for clandestine entry, presence and exit and thus became the ‘ideal haven for
prostitutes and thrill-seekers.’"68 Whether or not this depiction of a mise-en-scene of vice is accurate,
it cannot be denied that legitimate sexual behavior among willing married or consenting single adults
which is constitutionally protected69 will be curtailed as well, as it was in the City of Manila case. Our
holding therein retains significance for our purposes:

The concept of liberty compels respect for the individual whose claim to privacy and interference
demands respect. As the case of Morfe v. Mutuc, borrowing the words of Laski, so very aptly stated:

Man is one among many, obstinately refusing reduction to unity. His separateness, his isolation, are
indefeasible; indeed, they are so fundamental that they are the basis on which his civic obligations
are built. He cannot abandon the consequences of his isolation, which are, broadly speaking, that
his experience is private, and the will built out of that experience personal to himself. If he surrenders
his will to others, he surrenders himself. If his will is set by the will of others, he ceases to be a
master of himself. I cannot believe that a man no longer a master of himself is in any real sense free.

Indeed, the right to privacy as a constitutional right was recognized in Morfe, the invasion of which
should be justified by a compelling state interest. Morfe accorded recognition to the right to privacy
independently of its identification with liberty; in itself it is fully deserving of constitutional protection.
Governmental powers should stop short of certain intrusions into the personal life of the citizen.70

We cannot discount other legitimate activities which the Ordinance would proscribe or impair. There
are very legitimate uses for a wash rate or renting the room out for more than twice a day. Entire
families are known to choose pass the time in a motel or hotel whilst the power is momentarily out in
their homes. In transit passengers who wish to wash up and rest between trips have a legitimate
purpose for abbreviated stays in motels or hotels. Indeed any person or groups of persons in need of
comfortable private spaces for a span of a few hours with purposes other than having sex or using
illegal drugs can legitimately look to staying in a motel or hotel as a convenient alternative.

E.

That the Ordinance prevents the lawful uses of a wash rate depriving patrons of a product and the
petitioners of lucrative business ties in with another constitutional requisite for the legitimacy of the
Ordinance as a police power measure. It must appear that the interests of the public generally, as
distinguished from those of a particular class, require an interference with private rights and the
means must be reasonably necessary for the accomplishment of the purpose and not unduly
oppressive of private rights.71 It must also be evident that no other alternative for the accomplishment
of the purpose less intrusive of private rights can work. More importantly, a reasonable relation must

32 | P a g e
exist between the purposes of the measure and the means employed for its accomplishment, for
even under the guise of protecting the public interest, personal rights and those pertaining to private
property will not be permitted to be arbitrarily invaded.72

Lacking a concurrence of these requisites, the police measure shall be struck down as an arbitrary
intrusion into private rights. As held in Morfe v. Mutuc, the exercise of police power is subject to
judicial review when life, liberty or property is affected.73 However, this is not in any way meant to
take it away from the vastness of State police power whose exercise enjoys the presumption of
validity.74

Similar to the Comelec resolution requiring newspapers to donate advertising space to candidates,
this Ordinance is a blunt and heavy instrument.75 The Ordinance makes no distinction between
places frequented by patrons engaged in illicit activities and patrons engaged in legitimate actions.
Thus it prevents legitimate use of places where illicit activities are rare or even unheard of. A plain
reading of section 3 of the Ordinance shows it makes no classification of places of lodging, thus
deems them all susceptible to illicit patronage and subject them without exception to the unjustified
prohibition.

The Court has professed its deep sentiment and tenderness of the Ermita-Malate area, its longtime
home,76 and it is skeptical of those who wish to depict our capital city – the Pearl of the Orient – as a
modern-day Sodom or Gomorrah for the Third World set. Those still steeped in Nick Joaquin-dreams
of the grandeur of Old Manila will have to accept that Manila like all evolving big cities, will have its
problems. Urban decay is a fact of mega cities such as Manila, and vice is a common problem
confronted by the modern metropolis wherever in the world. The solution to such perceived decay is
not to prevent legitimate businesses from offering a legitimate product. Rather, cities revive
themselves by offering incentives for new businesses to sprout up thus attracting the dynamism of
individuals that would bring a new grandeur to Manila.

The behavior which the Ordinance seeks to curtail is in fact already prohibited and could in fact be
diminished simply by applying existing laws. Less intrusive measures such as curbing the
proliferation of prostitutes and drug dealers through active police work would be more effective in
easing the situation. So would the strict enforcement of existing laws and regulations penalizing
prostitution and drug use. These measures would have minimal intrusion on the businesses of the
petitioners and other legitimate merchants. Further, it is apparent that the Ordinance can easily be
circumvented by merely paying the whole day rate without any hindrance to those engaged in illicit
activities. Moreover, drug dealers and prostitutes can in fact collect "wash rates" from their clientele
by charging their customers a portion of the rent for motel rooms and even apartments.

IV.

We reiterate that individual rights may be adversely affected only to the extent that may fairly be
required by the legitimate demands of public interest or public welfare. The State is a leviathan that
must be restrained from needlessly intruding into the lives of its citizens. However well-intentioned
the Ordinance may be, it is in effect an arbitrary and whimsical intrusion into the rights of the
establishments as well as their patrons. The Ordinance needlessly restrains the operation of the
businesses of the petitioners as well as restricting the rights of their patrons without sufficient
justification. The Ordinance rashly equates wash rates and renting out a room more than twice a day
with immorality without accommodating innocuous intentions.

The promotion of public welfare and a sense of morality among citizens deserves the full
endorsement of the judiciary provided that such measures do not trample rights this Court is sworn
to protect.77 The notion that the promotion of public morality is a function of the State is as old as

33 | P a g e
Aristotle.78 The advancement of moral relativism as a school of philosophy does not de-legitimize the
role of morality in law, even if it may foster wider debate on which particular behavior to penalize. It
is conceivable that a society with relatively little shared morality among its citizens could be
functional so long as the pursuit of sharply variant moral perspectives yields an adequate
accommodation of different interests.79

To be candid about it, the oft-quoted American maxim that "you cannot legislate morality" is
ultimately illegitimate as a matter of law, since as explained by Calabresi, that phrase is more
accurately interpreted as meaning that efforts to legislate morality will fail if they are widely at
variance with public attitudes about right and wrong.80 Our penal laws, for one, are founded on age-
old moral traditions, and as long as there are widely accepted distinctions between right and wrong,
they will remain so oriented.

Yet the continuing progression of the human story has seen not only the acceptance of the right-
wrong distinction, but also the advent of fundamental liberties as the key to the enjoyment of life to
the fullest. Our democracy is distinguished from non-free societies not with any more extensive
elaboration on our part of what is moral and immoral, but from our recognition that the individual
liberty to make the choices in our lives is innate, and protected by the State. Independent and fair-
minded judges themselves are under a moral duty to uphold the Constitution as the embodiment of
the rule of law, by reason of their expression of consent to do so when they take the oath of office,
and because they are entrusted by the people to uphold the law.81

Even as the implementation of moral norms remains an indispensable complement to governance,

that prerogative is hardly absolute, especially in the face of the norms of due process of liberty. And
while the tension may often be left to the courts to relieve, it is possible for the government to avoid
the constitutional conflict by employing more judicious, less drastic means to promote morality.

WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals is REVERSED, and
the Decision of the Regional Trial Court of Manila, Branch 9, is REINSTATED. Ordinance No. 7774
is hereby declared UNCONSTITUTIONAL. No pronouncement as to costs.

SO ORDERED.

G.R. No. 156052 March 7, 2007

SOCIAL JUSTICE SOCIETY vs.HON. JOSE L. ATIENZA, JR.,

In this original petition for mandamus,1 petitioners Social Justice Society (SJS), Vladimir Alarique T.
Cabigao and Bonifacio S. Tumbokon seek to compel respondent Hon. Jose L. Atienza, Jr., mayor of
the City of Manila, to enforce Ordinance No. 8027.

The antecedents are as follows.

On November 20, 2001, the Sangguniang Panlungsod of Manila enacted Ordinance No.
8027.2 Respondent mayor approved the ordinance on November 28, 2001.3 It became effective on
December 28, 2001, after its publication.4

Ordinance No. 8027 was enacted pursuant to the police power delegated to local government units,
a principle described as the power inherent in a government to enact laws, within constitutional
limits, to promote the order, safety, health, morals and general welfare of the society.5 This is evident
from Sections 1 and 3 thereof which state:

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SECTION 1. For the purpose of promoting sound urban planning and ensuring health, public safety,
and general welfare of the residents of Pandacan and Sta. Ana as well as its adjoining areas, the
land use of [those] portions of land bounded by the Pasig River in the north, PNR Railroad Track in
the east, Beata St. in the south, Palumpong St. in the southwest, and Estero de Pancacan in the
west[,] PNR Railroad in the northwest area, Estero de Pandacan in the [n]ortheast, Pasig River in
the southeast and Dr. M.L. Carreon in the southwest. The area of Punta, Sta. Ana bounded by the
Pasig River, Marcelino Obrero St., Mayo 28 St., and F. Manalo Street, are hereby reclassified from
Industrial II to Commercial I.

xxx xxx xxx

SEC. 3. Owners or operators of industries and other businesses, the operation of which are no
longer permitted under Section 1 hereof, are hereby given a period of six (6) months from the date of
effectivity of this Ordinance within which to cease and desist from the operation of businesses which
are hereby in consequence, disallowed.

Ordinance No. 8027 reclassified the area described therein from industrial to commercial and
directed the owners and operators of businesses disallowed under Section 1 to cease and desist
from operating their businesses within six months from the date of effectivity of the ordinance.
Among the businesses situated in the area are the so-called "Pandacan Terminals" of the oil
companies Caltex (Philippines), Inc., Petron Corporation and Pilipinas Shell Petroleum Corporation.

However, on June 26, 2002, the City of Manila and the Department of Energy (DOE) entered into a
memorandum of understanding (MOU)6 with the oil companies in which they agreed that "the scaling
down of the Pandacan Terminals [was] the most viable and practicable option." Under the MOU, the
oil companies agreed to perform the following:

Section 1. - Consistent with the objectives stated above, the OIL COMPANIES shall, upon signing
of this MOU, undertake a program to scale down the Pandacan Terminals which shall include,
among others, the immediate removal/decommissioning process of TWENTY EIGHT (28) tanks
starting with the LPG spheres and the commencing of works for the creation of safety buffer and
green zones surrounding the Pandacan Terminals. xxx

Section 2. – Consistent with the scale-down program mentioned above, the OIL COMPANIES shall
establish joint operations and management, including the operation of common, integrated and/or
shared facilities, consistent with international and domestic technical, safety, environmental and
economic considerations and standards. Consequently, the joint operations of the OIL COMPANIES
in the Pandacan Terminals shall be limited to the common and integrated areas/facilities. A separate
agreement covering the commercial and operational terms and conditions of the joint operations,
shall be entered into by the OIL COMPANIES.

Section 3. - The development and maintenance of the safety and green buffer zones mentioned
therein, which shall be taken from the properties of the OIL COMPANIES and not from the
surrounding communities, shall be the sole responsibility of the OIL COMPANIES.

The City of Manila and the DOE, on the other hand, committed to do the following:

Section 1. - The City Mayor shall endorse to the City Council this MOU for its appropriate action with
the view of implementing the spirit and intent thereof.

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Section 2. - The City Mayor and the DOE shall, consistent with the spirit and intent of this MOU,
enable the OIL COMPANIES to continuously operate in compliance with legal requirements, within
the limited area resulting from the joint operations and the scale down program.

Section 3. - The DOE and the City Mayor shall monitor the OIL COMPANIES’ compliance with the
provisions of this MOU.

Section 4. - The CITY OF MANILA and the national government shall protect the safety buffer and
green zones and shall exert all efforts at preventing future occupation or encroachment into these
areas by illegal settlers and other unauthorized parties.

The Sangguniang Panlungsod ratified the MOU in Resolution No. 97.7 In the same resolution,
the Sangguniandeclared that the MOU was effective only for a period of six months starting July 25,
2002.8 Thereafter, on January 30, 2003, the Sanggunian adopted Resolution No. 139 extending the
validity of Resolution No. 97 to April 30, 2003 and authorizing Mayor Atienza to issue special
business permits to the oil companies. Resolution No. 13, s. 2003 also called for a reassessment of
the ordinance.10

Meanwhile, petitioners filed this original action for mandamus on December 4, 2002 praying that
Mayor Atienza be compelled to enforce Ordinance No. 8027 and order the immediate removal of the
terminals of the oil companies.11

The issues raised by petitioners are as follows:

1. whether respondent has the mandatory legal duty to enforce Ordinance No. 8027 and
order the removal of the Pandacan Terminals, and

2. whether the June 26, 2002 MOU and the resolutions ratifying it can amend or repeal
Ordinance No. 8027.12

Petitioners contend that respondent has the mandatory legal duty, under Section 455 (b) (2) of the
Local Government Code (RA 7160),13 to enforce Ordinance No. 8027 and order the removal of the
Pandacan Terminals of the oil companies. Instead, he has allowed them to stay.

Respondent’s defense is that Ordinance No. 8027 has been superseded by the MOU and the
resolutions.14However, he also confusingly argues that the ordinance and MOU are not inconsistent
with each other and that the latter has not amended the former. He insists that the ordinance
remains valid and in full force and effect and that the MOU did not in any way prevent him from
enforcing and implementing it. He maintains that the MOU should be considered as a mere guideline
for its full implementation.15

Under Rule 65, Section 316 of the Rules of Court, a petition for mandamus may be filed when any
tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which
the law specifically enjoins as a duty resulting from an office, trust or station. Mandamus is an
extraordinary writ that is employed to compel the performance, when refused, of a ministerial duty
that is already imposed on the respondent and there is no other plain, speedy and adequate remedy
in the ordinary course of law. The petitioner should have a well-defined, clear and certain legal right
to the performance of the act and it must be the clear and imperative duty of respondent to do the
act required to be done.17

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Mandamus will not issue to enforce a right, or to compel compliance with a duty, which is
questionable or over which a substantial doubt exists. The principal function of the writ
of mandamus is to command and to expedite, not to inquire and to adjudicate; thus, it is neither the
office nor the aim of the writ to secure a legal right but to implement that which is already
established. Unless the right to the relief sought is unclouded, mandamus will not issue.18

To support the assertion that petitioners have a clear legal right to the enforcement of the ordinance,
petitioner SJS states that it is a political party registered with the Commission on Elections and has
its offices in Manila. It claims to have many members who are residents of Manila. The other
petitioners, Cabigao and Tumbokon, are allegedly residents of Manila.

We need not belabor this point. We have ruled in previous cases that when a mandamus proceeding
concerns a public right and its object is to compel a public duty, the people who are interested in the
execution of the laws are regarded as the real parties in interest and they need not show any
specific interest.19 Besides, as residents of Manila, petitioners have a direct interest in the
enforcement of the city’s ordinances. Respondent never questioned the right of petitioners to
institute this proceeding.

On the other hand, the Local Government Code imposes upon respondent the duty, as city
mayor, to "enforce all laws and ordinances relative to the governance of the city.">20 One of
these is Ordinance No. 8027. As the chief executive of the city, he has the duty to enforce
Ordinance No. 8027 as long as it has not been repealed by the Sanggunian or annulled by the
courts.21 He has no other choice. It is his ministerial duty to do so. In Dimaporo v. Mitra, Jr.,22 we
stated the reason for this:
These officers cannot refuse to perform their duty on the ground of an alleged invalidity of the statute
imposing the duty. The reason for this is obvious. It might seriously hinder the transaction of public
business if these officers were to be permitted in all cases to question the constitutionality of statutes
and ordinances imposing duties upon them and which have not judicially been declared
unconstitutional. Officers of the government from the highest to the lowest are creatures of the law
and are bound to obey it.23
The question now is whether the MOU entered into by respondent with the oil companies and the
subsequent resolutions passed by the Sanggunian have made the respondent’s duty to enforce
Ordinance No. 8027 doubtful, unclear or uncertain. This is also connected to the second issue raised
by petitioners, that is, whether the MOU and Resolution Nos. 97, s. 2002 and 13, s. 2003 of
the Sanggunian can amend or repeal Ordinance No. 8027.
We need not resolve this issue. Assuming that the terms of the MOU were inconsistent with
Ordinance No. 8027, the resolutions which ratified it and made it binding on the City of Manila
expressly gave it full force and effect only until April 30, 2003. Thus, at present, there is nothing
that legally hinders respondent from enforcing Ordinance No. 8027.24
Ordinance No. 8027 was enacted right after the Philippines, along with the rest of the world,
witnessed the horror of the September 11, 2001 attack on the Twin Towers of the World Trade
Center in New York City. The objective of the ordinance is to protect the residents of Manila from the

37 | P a g e
catastrophic devastation that will surely occur in case of a terrorist attack25 on the Pandacan
Terminals. No reason exists why such a protective measure should be delayed.
WHEREFORE, the petition is hereby GRANTED. Respondent Hon. Jose L. Atienza, Jr., as mayor of
the City of Manila, is directed to immediately enforce Ordinance No. 8027.
SO ORDERED.

G.R. No. 187836 November 25, 2014

SOCIAL JUSTICE SOCIETY (SJS) OFFICERS vs.ALFREDO S. LIM

Challenged in these consolidated petitions2 is the validity of Ordinance No. 81873 entitled "AN
ORDINANCE AMENDING ORDINANCE NO. 8119, OTHERWISE KNOWN AS ‘THE MANILA
COMPREHENSIVE LAND USE PLAN AND ZONING ORDINANCE OF 2006,’ BY CREATING A
MEDIUM INDUSTRIAL ZONE (1-2) AND HEAVY INDUSTRIAL ZONE (1-3), AND PROVIDING FOR
ITS ENFORCEMENT" enacted by the Sangguniang Panlungsod of Manila (Sangguniang
Panlungsod) on 14 May 2009.

The creation of a medium industrial zone (1-2) and heavy industrial zone (1-3) effectively lifted the
prohibition against owners and operators of businesses, including herein intervenors Chevron
Philippines, Inc. (Chevron), Pilipinas Shell Petroleum Corporation (Shell), and Petron Corporation
(Petron), collectively referred to as the oil companies, from operating in the designated commercial
zone – an industrial zone prior to the enactment of Ordinance No. 80274 entitled "AN ORDINANCE
RECLASSIFYING THE LAND USE OF THAT PORTION OF LAND BOUNDED BY THE
PASIGRIVER IN THE NORTH, PNR RAILROAD TRACK IN THE EAST, BEATA ST. IN THE
SOUTH, PALUMPONG ST. IN THE SOUTHWEST AND ESTERO DE PANDACAN IN THE WEST,
PNR RAILROAD IN THE NORTHWEST AREA, ESTERO DE PANDACAN IN THE NORTHEAST,
PASIG RIVER IN THE SOUTHEAST AND DR. M. L. CARREON IN THE SOUTHWEST, THE AREA
OF PUNTA, STA.ANA BOUNDED BY THE PASIG RIVER, MARCELINO OBRERO ST., MAYO 28
ST. AND THE F. MANALO STREET FROM INDUSTRIAL II TO COMMERCIAL I," and Ordinance
No. 81195 entitled "AN ORDINANCE ADOPTING THE MANILA COMPREHENSIVE LAND USE
PLAN AND ZONING REGULATIONS OF 2006 AND PROVIDING FOR THE ADMINISTRATION,
ENFORCEMENT AND AMENDMENT THERETO."

The Parties

Petitioners allege the parties’ respective capacity to sue and be sued, viz:

Petitioners Residence Suing capacity aside from being

in Manila residents of Manila other personal
circumstances

G.R. No. 187836

SJS Officer Samson S. Alcantara Not mentioned in Manila taxpayer;

(Alcantara) the petition; One of the petitioners in SJS v.
holding office in Atienza (G.R. No. 156052);*

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SJS Officer Vladimir Alarique T.
Cabigao (Cabigao)
Ermita, Manila Pesident of ABAKADA GURO
PARTY LIST with members who
are residents of the City of Manila
Pandacan One of the petitioners in SJS v.
Atienza (G.R. No. 156052)

* The allegation is inaccurate. SJS Officer Alcantara is actually one of the counsels for petitioner SJS
in G.R. No. 156052. The petitioners in that case are the SJS itself, Cabigao and Bonifacio S.
Tumbokon (Tumbokon).

G.R. No. 187916

Former Mayor Jose L. Atienza, Jr. San Andres Former Mayor of Manila;
(Mayor Atienza) Secretary of Department of
Environment and Natural
Resources (DENR)
Bienvinido M. Abante Sta. Ana Citizen and taxpayer;
member of the House of
Representatives
Ma. Lourdes M. Isip-Garcia San Miguel Incumbent City Councilor of the
City of Manila
Rafael P. Borromeo Paco Incumbent City Councilor of the
City of Manila
Jocelyn Dawis-Asuncion Sta. Mesa Incumbent City Councilor of the
City of Manila
Minors Marian Regina B. Taran, Paco Citizens, real estate owners and
Macalia Ricci B. Taran, Richard taxpayers
Kenneth B. Taran, represented and
joined by their parents Richard and
Marites Taran
Minors Czarina Alysandra C. Tondo Citizens, real estate owners and
Ramos, Cezarah Adrianna C. taxpayers
Ramos, and Cristen Aidan C. Ramos
represented and joined by
their mother Donna c. Ramos
Minors Jasmin Syllita T. Vila and Sta. Ana Citizens, real estate owners and
Antonio T. Cruz IV, represented and taxpayers
joined by their mother Maureen C.
Tolentino

Respondents Sued in their capacity as

G.R. Nos. 187836 and 187916

Former Mayor Alfredo S. Lim (Mayor Lim) Incumbent Mayor of Manila at

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 the time of the filing of the
present petitions

Respondents Sued in their capacity as

G.R. No. 187916

Vice-Mayor Francisco Domagoso (Vice-Mayor Vice-Mayor and Presiding Officer

Domagoso) of the City Council of Manila
Arlene Woo Koa Principal author of City
Ordinance No. 8187
Moises T. Lim, Jesus Fajardo, Louisito N. Chua, Personal and official capacities as
Victoriano A. Melendez, John Marvin Nieto, Rolando M. councilors who voted and approved
Valeriano, Raymondo R. Yupangco, Edward VP City Ordinance No. 8187
Maceda, Roderick D. Valbuena, Josefina M. Siscar,
Phillip H. Lacuna, Luciano M. Veloso, Carlo V. Lopez,
Ernesto F. Rivera,6 Danilo Victor H. Lacuna, Jr., Ernesto
G. Isip, Honey H. Lacuna-Pangan, Ernesto M. Dionisio,
Jr., Erick Ian O. Nieva

The following intervenors, all of which are corporations organized under Philippine laws, intervened:7

Intervenors Nature of Business

Chevron Philippines, importing, distributing and marketing of petroleum

Inc. (CHEVRON)
Pilipinas Shell Petroleum
Corporation (SHELL)
Petron Corporation (PETRON)
products in the Philippines since 1922
manufacturing, refining, importing, distributing and
marketing of petroleum products in the Philippines
manufacturing, refining, importing, distributing and
marketing of petroleum products in the Philippines

They claim that their rights with respect to the oil depots in Pandacan would be directly affected by
the outcome of these cases.

The Antecedents

These petitions are a sequel to the case of Social Justice Society v. Mayor Atienza, Jr.8 (hereinafter
referred to asG.R. No. 156052), where the Court found: (1) that the ordinance subject thereof –
Ordinance No. 8027 – was enacted "to safeguard the rights to life, security and safety of the
inhabitants of Manila;"9 (2) that it had passed the tests of a valid ordinance; and (3) that it is not
superseded by Ordinance No. 8119.10 Declaring that it is constitutional and valid,11 the Court
accordingly ordered its immediate enforcement with a specific directive on the relocation and
transfer of the Pandacan oil terminals.12

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Highlighting that the Court has soruled that the Pandacan oil depots should leave, herein petitioners
now seek the nullification of Ordinance No. 8187, which contains provisions contrary to those
embodied in Ordinance No. 8027. Allegations of violation of the right to health and the right to a
healthful and balanced environment are also included.

For a better perspective of the facts of these cases, we again trace the history of the Pandacan oil
terminals, aswell as the intervening events prior to the reclassification of the land use from Industrial
II to Commercial I under Ordinance No. 8027 until the creation of Medium Industrial Zone and Heavy
Industrial Zone pursuant to Ordinance No. 8187.

History of the Pandacan

Oil Terminals

We quote the following from the Resolution of the Court in G.R. No. 156052:

Pandacan (one of the districts of the City of Manila) is situated along the banks of the Pasig [R]iver.
Atthe turn of the twentieth century, Pandacan was unofficially designated as the industrial center of
Manila. The area, then largely uninhabited, was ideal for various emerging industries as the nearby
river facilitated the transportation of goods and products. In the 1920s, it was classifiedas an
industrial zone. Among its early industrial settlers werethe oil companies. x x x On December 8,
1941, the Second World War reached the shores of the Philippine Islands. x x x [I]n their zealous
attempt to fend off the Japanese Imperial Army, the United States Army took control of the
Pandacan Terminals and hastily made plans to destroy the storage facilities to deprive the
advancing Japanese Army of a valuable logistics weapon. The U.S. Army burned unused petroleum,
causing a frightening conflagration. Historian Nick Joaquin recounted the events as follows:

After the USAFFE evacuated the City late in December 1941, all army fuel storage dumps were set
on fire. The flames spread, enveloping the City in smoke, setting even the rivers ablaze,
endangering bridges and all riverside buildings. … For one week longer, the "open city" blazed—a
cloud of smoke by day, a pillar of fire by night.

The fire consequently destroyed the Pandacan Terminals and rendered its network of depots and
service stations inoperative.

After the war, the oil depots were reconstructed. Pandacan changed as Manila rebuilt itself. The
three major oil companies resumed the operation of their depots. But the district was no longer a
sparsely populated industrial zone; it had evolved into a bustling, hodgepodge community. Today,
Pandacan has become a densely populated area inhabited by about 84,000 people, majority of
whom are urban poor who call it home. Aside from numerous industrial installations, there are also
small businesses, churches, restaurants, schools, daycare centers and residences situated there.
Malacañang Palace, the official residence of the President of the Philippines and the seat of
governmental power, is just two kilometers away. There is a private school near the Petron depot.
Along the walls of the Shell facility are shanties of informal settlers. More than 15,000 students are
enrolled in elementary and high schools situated near these facilities. A university with a student
population of about 25,000 is located directly across the depot on the banks of the Pasig [R]iver.

The 36-hectare Pandacan Terminals house the oil companies’ distribution terminals and depot
facilities. The refineries of Chevron and Shell in Tabangao and Bauan, both in Batangas,
1âwphi 1

respectively, are connected to the Pandacan Terminals through a 114-kilometer underground

pipeline system. Petron’s refinery in Limay, Bataan, on the other hand, also services the depot. The
terminals store fuel and other petroleum products and supply 95% of the fuel requirements of Metro

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Manila, 50% of Luzon’s consumption and 35% nationwide. Fuel can also be transported through
barges along the Pasig [R]iver ortank trucks via the South Luzon Expressway.13 (Citations omitted)

Memorandum of Agreement (MOA)

dated 12 October 2001 between the oil companies
and the Department of Energy (DOE)

On 12 October 2001, the oil companies and the DOE entered into a MOA14 "in light of recent
international developments involving acts of terrorism on civilian and government
landmarks,"15 "potential new security risks relating to the Pandacan oil terminals and the impact on
the surrounding community which may be affected,"16 and "to address the perceived risks posed by
the proximity of communities, businesses and offices to the Pandacan oil terminals, consistent with
the principle of sustainable development."17 The stakeholders acknowledged that "there is a need for
a comprehensive study to address the economic, social, environmental and security concerns with
the end in view of formulating a Master Plan to address and minimize the potential risks and hazards
posed by the proximity of communities, businesses and offices to the Pandacan oil terminals without
adversely affecting the security and reliability of supply and distribution of petroleum products to
Metro Manila and the rest of Luzon, and the interests of consumers and users of such petroleum
products in those areas."18

The enactment of Ordinance No. 8027

against the continued stay of the oil depots

The MOA, however, was short-lived.

On 20 November 2001, during the incumbency of former Mayor Jose L. Atienza, Jr. (Mayor Atienza)
– nowone of the petitioners in G.R. No. 187916 – the Sangguniang Panlungsod enacted Ordinance
No. 802719 reclassifying the use of the land in Pandacan, Sta. Ana, and its adjoining areas from
Industrial II to Commercial I.

The owners and operators of the businesses thus affected by the reclassification were given six
months from the date of effectivity of the Ordinance within which to stop the operation of their
businesses.

Nevertheless, the oil companies weregranted an extension of until 30 April 2003 within which to
comply with the Ordinance pursuant to the following:

(1) Memorandum of Understanding (MOU)20 dated 26 June 2002 between the City of Manila
and the Department of Energy (DOE), on the one hand, and the oil companies, on the other,
where the parties agreed that "the scaling down of the Pandacan Terminals [was] the most
viable and practicable option"21 and committed to adopt specific measures22 consistent with
the said objective;

(2) Resolution No. 97 dated 25 July 200223 of the Sangguniang Panlungsod, which ratified
the 26 June 2002 MOU but limited the extension of the period within which to comply to six
months from 25 July 2002; and

(3) Resolution No. 13 dated 30 January 200324 of the Sanguniang Panlungsod, which
extended the validity of Resolution No. 97 to 30 April 2003, authorized then Mayor Atienza to
issue special business permits to the oil companies, and called for a reassessment of the
ordinance.

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Social Justice Society v. Atienza (G.R. No. 156052):
The filing of an action for mandamus
before the Supreme Court
to enforce Ordinance No. 8027

In the interim, an original action for mandamus entitled Social Justice Society v. Atienza, Jr.
docketed as G.R. No. 15605225 was filed on 4 December 2002 by Tumbokon and herein petitioners
SJS and Cabigao against then Mayor Atienza. The petitioners sought to compel former Mayor
Atienza to enforce Ordinance No. 8027 and cause the immediate removal of the terminals of the oil
companies.26

Issuance by the Regional Trial Court (RTC)

of writs of preliminary prohibitory injunction
and preliminary mandatory injunction,
and status quo order in favor of the oil companies

Unknown to the Court, during the pendency of G.R. No. 156052, and before the expiration of the
validity ofResolution No. 13, the oil companies filed the following actions before the Regional Trial
Court of Manila: (1) an action for the annulment of Ordinance No. 8027 with application for writs of
preliminary prohibitory injunction and preliminary mandatory injunction – by Chevron; (2) a petition
for prohibition and mandamus also for the annulment of the Ordinance with application for writs of
preliminary prohibitory injunction and preliminary mandatory injunction – by Shell; and (3) a petition
assailing the validity of the Ordinance with prayer for the issuance of a writ of preliminary injunction
and/or temporary restraining order (TRO) – by Petron.27

Writs of preliminary prohibitory injunction and preliminary mandatory injunction were issued in favor
of Chevron and Shell on 19 May 2003. Petron, on the other hand, obtained a status quo order on 4
August 2004.28

The Enactment of Ordinance No. 8119 defining the Manila land use plan and zoning regulations

On 16 June 2006, then Mayor Atienza approved Ordinance No. 8119 entitled "An Ordinance
Adopting the Manila Comprehensive Land Use Plan and Zoning Regulations of 2006 and Providing
for the Administration, Enforcement and Amendment thereto."29

Pertinent provisions relative to these cases are the following:

(a) Article IV, Sec. 730 enumerating the existing zones or districts in the City of Manila;

(b) Article V, Sec. 2331 designating the Pandacan oil depot area as a "Planned Unit
Development/Overlay Zone" (O-PUD); and

(c) the repealing clause, which reads:

SEC. 84. Repealing Clause. – All ordinances, rules, regulations in conflict with the provisions of this
Ordinance are hereby repealed; PROVIDED, That the rights that are vested upon the effectivity of
this Ordinance shall not be impaired.32

7 March 2007 Decision in G.R. No. 156052;

The mayor has the mandatory legal duty to enforce
Ordinance No. 8027 and order the removal of the Pandacan terminals

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On 7 March 2007, the Court granted the petition for mandamus, and directed then respondent Mayor
Atienza to immediately enforce Ordinance No. 8027.33

Confined to the resolution of the following issues raised by the petitioners, to wit:

1. whether respondent [Mayor Atienza]has the mandatory legal duty to enforce Ordinance
No. 8027 and order the removal of the Pandacan Terminals, and

2. whether the June 26, 2002 MOU and the resolutions ratifying it can amend or repeal
Ordinance No. 8027.34

the Court declared:

x x x [T]he Local Government Code imposes upon respondent the duty, as city mayor, to "enforce all
laws and ordinances relative to the governance of the city." One of these is Ordinance No. 8027. As
the chief executive of the city, he has the duty to enforce Ordinance No. 8027 as long as it has not
been repealed by the Sanggunian or annulled by the courts. He has no other choice. It is his
ministerial duty to do so. x x x

xxxx

The question now is whether the MOU entered into by respondent with the oil companies and the
subsequent resolutions passed by the Sanggunianhave made the respondent’s duty to enforce
Ordinance No. 8027 doubtful, unclear or uncertain. x x x

We need not resolve this issue. Assuming that the terms of the MOU were inconsistent with
Ordinance No. 8027, the resolutions which ratified it and made it binding on the Cityof Manila
expressly gave it full force and effect only until April 30, 2003. Thus, at present, there is nothing that
legally hinders respondent from enforcing Ordinance No. 8027.

Ordinance No. 8027 was enacted right after the Philippines, along with the rest of the world,
witnessed the horror of the September 11, 2001 attack on the Twin Towers of the World Trade
Center in New York City. The objective of the ordinance is toprotect the residents of Manila from the
catastrophic devastation that will surely occur in case of a terrorist attack on the Pandacan
Terminals. No reason exists why such a protective measure should be delayed.35 (Emphasis
supplied; citations omitted)

13 February 2008 Resolution in G.R. No. 156052;

Ordinance No. 8027 is constitutional

The oil companies and the Republic of the Philippines, represented by the DOE, filed their motions
for leave to intervene and for reconsideration of the 7 March 2007 Decision. During the oral
arguments, the parties submitted to the power of the Court torule on the constitutionality and validity
of the assailed Ordinance despite the pendency of the cases in the RTC.36

On 13 February 2008, the Court granted the motions for leave to intervene of the oil companies and
the Republic of the Philippines but denied their respective motions for reconsideration. The
dispositive portion of the Resolution reads:

WHEREFORE, x x x

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We reiterate our order to respondent Mayor of the City of Manila to enforce Ordinance No. 8027. In
coordination with the appropriate agencies and other parties involved, respondent Mayor is hereby
ordered to oversee the relocation and transfer of the Pandacan Terminals out of its present site.37

13 February 2008 Resolution in G.R. No. 156052;

Ordinance No. 8027 was not impliedly repealed
by Ordinance No. 8119

The Court also ruled that Ordinance No. 8027 was not impliedly repealed by Ordinance No. 8119.
On this score, the Court ratiocinated:

For the first kind of implied repeal, there must be an irreconcilable conflict between the two
ordinances. There is no conflict between the two ordinances. Ordinance No. 8027 reclassified the
Pandacan area from Industrial II to Commercial I. Ordinance No. 8119, Section 23, designated it as
a "Planned Unit Development/Overlay Zone (O-PUD)." In its Annex "C" which defined the zone
boundaries, the Pandacan area was shown to be within the "High Density Residential/Mixed Use
Zone (R-3/MXD)." x x x [B]oth ordinances actually have a common objective, i.e., to shift the zoning
classification from industrial to commercial (Ordinance No. 8027) or mixed residential commercial
(Ordinance No. 8119)

xxxx

Ordinance No. 8027 is a special law since it deals specifically with a certain area described therein
(the Pandacan oil depot area) whereas Ordinance No. 8119 can be considered a general law as it
covers the entire city of Manila.

xxxx

x x x The repealing clause of Ordinance No. 8119 cannot be taken to indicate the legislative intent to
repeal all prior inconsistent laws on the subject matter, including Ordinance No. 8027, a special
enactment, since the aforequoted minutes (an official record of the discussions in the Sanggunian)
actually indicated the clear intent to preserve the provisions of Ordinance No. 8027.38

Filing of a draft Resolution amending Ordinance No. 8027 effectively allowing

the oil depots to stay in the Pandacan area; Manifestation and
Motion to forestall the passing of the new Ordinance filed in G.R. No. 156052

On 5 March 2009, respondent then Councilor Arlene W. Koa, filed with the Sangguniang
Panlungsod a draft resolution entitled "An Ordinance Amending Ordinance No. 8119 Otherwise
Known as ‘The Manila Comprehensive Land Use Plan and Zoning Ordinance of 2006’ by Creating a
Medium Industrial Zone (1-2) and Heavy Industrial Zone (1-3) and Providing for its
Enforcement."39 Initially numbered as Draft Ordinance No. 7177, this was later renumbered as
Ordinance No. 8187, the assailed Ordinance in these instant petitions.

Considering that the provisions thereof run contrary to Ordinance No. 8027, the petitioners in G.R.
No. 156052 filed a "Manifestation and Motion to: a) Stop the City Council of Manila from further
hearing the amending ordinance to Ordinance No. 8027; [and] b) Transfer the monitoring of the
enforcement of the Resolution of the Honorable Court on this case dated 13 February 2008 from
Branch 39, Manila Regional Trial Court to the Supreme Court."40

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28 April 2009 Resolution in G.R. No. 156052;
Second Motion for Reconsideration denied with finality;
succeeding motions likewise denied or otherwise noted without action

On 28 April 2009, pending the resolution of the Manifestation and Motion, the Court denied with
finalitythe second motion for reconsideration dated 27 February 2008 of the oil companies.41

It further ruled that no further pleadings shall be entertained in the case.42

Succeeding motions were thus deniedand/or noted without action. And, after the "Very Urgent
Motion to Stop the Mayor of the City of Manila from Signing Draft Ordinance No. 7177 and to Cite
Him for Contempt if He Would Do So" filed on 19 May 2009 was denied on 2 June 2009 for being
moot,43 all pleadings pertaining to the earlier motion against the drafting of an ordinance to amend
Ordinance No. 8027 were noted without action.44

The Enactment of Ordinance No. 8187

allowing the continued stay of the oil depots

On 14 May 2009, during the incumbency of former Mayor Alfredo S. Lim (Mayor Lim), who
succeeded Mayor Atienza, the Sangguniang Panlungsod enacted Ordinance No. 8187.45

The new Ordinance repealed, amended, rescinded or otherwise modified Ordinance No. 8027,
Section 23 of Ordinance No. 8119, and all other Ordinances or provisions inconsistent
therewith46 thereby allowing, once again, the operation of "Pollutive/Non-Hazardous and
Pollutive/Hazardous manufacturing and processing establishments" and "Highly Pollutive/Non-
Hazardous[,] Pollutive/Hazardous[,] Highly Pollutive/Extremely Hazardous[,] Non-Pollutive/Extremely
Hazardous; and Pollutive/Extremely Hazardous; and Pollutive/Extremely Hazardous manufacturing
and processing establishments" within the newly created Medium Industrial Zone (1-2) and Heavy
Industrial Zone (1-3) in the Pandacan area.

Thus, where the Industrial Zoneunder Ordinance No. 8119 was limited to Light Industrial Zone (I-1),
Ordinance No. 8187 appended to the list a Medium Industrial Zone (I-2) and a Heavy Industrial Zone
(I-3), where petroleum refineries and oil depots are now among those expressly allowed.

Hence these petitions.

The Petitions

G.R. No. 187836

To support their petition for prohibition against the enforcement of Ordinance No. 8187, the petitioner
Social Justice Society (SJS) officers allege that:

1. The enactment of the assailed Ordinance is not a valid exercise of police power because
the measures provided therein do not promote the general welfare of the people within the
contemplation of the following provisions of law:

a) Article III, Section 18 (kk)47 of Republic Act No. 409 otherwise known as the
"Revised Charter of the City of Manila," which provides that the Municipal Board shall
have the legislative power to enact all ordinances it may deem necessary and
proper;

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 b) Section 1648 of Republic Act No. 7160 known as the Local Government Code,
which defines the scope of the general welfare clause;

2. The conditions at the time the Court declared Ordinance No. 8027 constitutional in G.R.
No. 156052 exist to this date;

3. Despite the finality of the Decision in G.R. No. 156052, and notwithstanding that the
conditions and circumstances warranting the validity of the Ordinance remain the same, the
Manila City Council passed a contrary Ordinance, thereby refusing to recognize that "judicial
decisions applying or interpreting the laws or the Constitution form part of the legal system of
the Philippines;"49 and

4. Ordinance No. 8187 is violative of Sections 15 and 16, Article II of the Constitution of the
Philippines on the duty of the State "to protect and promote the right to health of the
people"50 and "protect and advance the right of the people to a balanced and healthful
ecology."51 Petitioners pray that Ordinance No. 8187 of the City of Manila be declared null
and void, and that respondent, and all persons acting under him, be prohibited from
enforcing the same.

G.R. No. 187916

The petition for Prohibition, Mandamus and Certiorari with Prayer for Temporary Restraining Order
and/or Injunction against the enforcement of Ordinance No. 8187 of former Secretary of Department
of Environment and Natural Resources and then Mayor Atienza, together with other residents and
taxpayers of the City of Manila, also alleges violation of the right to health of the people and the right
to a healthful and balanced environment under Sections 15 and 16 of the Constitution.

Petitioners likewise claim that the Ordinance is in violation of the following health and environment-
related municipal laws, and international conventions and treaties to which the Philippines is a state
party:

1. Municipal Laws –

(a) Sections 4,52 12,53 1954 and 3055 of Republic Act No. 8749 otherwise known as the
Philippine Clean Air Act;

(b) Environment Code (Presidential Decree No. 1152);

(c) Toxic and Hazardous Wastes Law (Republic Act No. 6969); and

(d) Civil Code provisions on nuisance and human relations;

2. International Conventions and Treaties to which the Philippines is a state party –

a. Section 1 of the Universal Declaration of Human Rights, which states that

"[e]veryone has the right to life, liberty and security of person;"

b. Articles 6,56 2457 and 2758 of the Convention on the Rights of the Child, summarized
by the petitioners in the following manner:

1. the human right to safe and healthy environment[;]

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 2. human right to the highest attainable standard of health[;]

3. the human right to ecologically sustainable development[;]

4. the human right to an adequate standard of living, including access to safe food and
water[;]

5. the human right of the child to live in an environment appropriate for physical and mental
development[; and]

6. the human right to full and equal participation for all persons in environmental decision-
making and development planning, and in shaping decisions and policies affecting one’s
community, at the local, national and international levels.59

Petitioners likewise posit that the title of Ordinance No. 8187 purports to amend or repeal Ordinance
No. 8119 when it actually intends to repeal Ordinance No. 8027. According to them, Ordinance No.
8027 was never mentioned in the title and the body of the new ordinance in violation of Section 26,
Article VI of the 1987 Constitution, which provides that every bill passed by Congress shall embrace
only one subject which shall be expressed in the title thereof.

Also pointed out by the petitioners is a specific procedure outlined in Ordinance No. 8119 that should
be observed when amending the zoning ordinance. This is provided for under Section 81 thereof,
which reads:

SEC. 81. Amendments to the Zoning Ordinance. The proposed amendments to the Zoning
Ordinance asreviewed and evaluated by the City Planning and Development Office (CPDO)shall be
submitted to the City Council for approval of the majority of the Sangguniang Panlungsod members.
The amendments shall be acceptable and eventually approved: PROVIDED, That there is sufficient
evidence and justification for such proposal; PROVIDED FURTHER,That such proposal is consistent
with the development goals, planning objectives, and strategies of the Manila Comprehensive Land
Use Plan. Said amendments shall take effect immediately upon approval or after thirty (30) days
from application.

Petitioners thus pray that:

1. upon filing of [the] petition, [the] case be referred to the Court [E]n Banc, and setting (sic)
the case for oral argument;

2. upon the filing of [the] petition, a temporary restraining order be issued enjoining the
respondents from publishing and posting Manila City Ordinance No. 8187 and/or posting of
Manila City Ordinance No. 8187; and/or taking any steps to implementing (sic) and/or
enforce the same and after due hearing, the temporary restraining order be converted to a
permanent injunction;

3. x x x Manila City Ordinance 8187 [be declared] as null and void for being repugnant to the
Constitution and existing municipal laws and international covenants;

4. x x x the respondents [be ordered] to refrain from enforcing and/or implementing Manila
City Ordinance No. 8187;

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 5. x x x respondent City Mayor Alfredo S. Lim [be enjoined] from issuing any permits
(business or otherwise) to all industries whose allowable uses are anchored under the
provisions of Manila Ordinance No. 8187; and

6. x x x respondent Mayor of Manila Alfredo S. Lim [be ordered] to comply with the Order of
the Honorable Court in G.R. 156052 dated February 13, 2008.60

The Respondents’ Position on the Consolidated Petitions

Respondent former Mayor Lim

In his Memorandum,61 former Mayor Lim, through the City Legal Officer, attacks the petitioners’ lack
of legal standing to sue. He likewise points out that the petitioners failed to observe the principle of
hierarchy of courts.

Maintaining that Ordinance No. 8187 is valid and constitutional, he expounds on the following
arguments:

On the procedural issues, he contends that: (1) it is the function of the Sangguniang Panlungsod to
enact zoning ordinances, for which reason, it may proceed to amend or repeal Ordinance No. 8119
without prior referral to the Manila Zoning Board of Adjustment and Appeals (MZBAA) as prescribed
under Section 80 (Procedure for Re-Zoning) and the City Planning and Development Office (CPDO)
pursuant to Section 81 (Amendments to the Zoning Ordinance) of Ordinance No. 8119, especially
when the action actually originated from the Sangguniang Panlungsod itself; (2) the Sangguniang
Panlungsod may, in the later ordinance, expressly repeal all or part of the zoning ordinance sought
to be modified; and (3) the provision repealing Section 23 of Ordinance No. 8119 is not violative of
Section 26, Article VI of the 1987 Constitution, which requires that every bill must embrace only one
subject and that such shall be expressed in the title.

On the substantive issues, he posits that the petitions are based on unfounded fears; that the
assailed ordinance is a valid exercise of police power; that it is consistent with the general welfare
clause and public policy, and is not unreasonable; that it does not run contrary to the Constitution,
municipal laws, and international conventions; and that the petitioners failed to overcome the
presumption of validity of the assailed ordinance.

Respondents Vice-Mayor Domagoso and the City Councilors who voted in favor of the assailed
ordinance

On 14 September 2012, after the Court gave the respondents several chances to submit their
Memorandum,62 they, through the Secretary of the Sangguniang Panlungsod, prayed that the Court
dispense with the filing thereof.

In their Comment,63 however, respondents offered a position essentially similar to those proffered by
former Mayor Lim.

The Intervenors’ Position on the Consolidated Petitions

On the other hand, the oil companies sought the outright dismissal of the petitions based on alleged
procedural infirmities, among others, incomplete requisites of judicial review, violation of the principle
of hierarchy of courts, improper remedy, submission of a defective verification and certification
against forum shopping, and forum shopping.

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As to the substantive issues, they maintain, among others, that the assailed ordinance is
constitutional and valid; that the Sangguniang Panlalawigan is in the best position to determine the
needs of its constituents; that it is a valid exercise of legislative power; that it does not violate health
and environment-related provisions of the Constitution, laws, and international conventions and
treaties to which the Philippines is a party; that the oil depots are not likely targets of terrorists; that
the scaling down of the operations in Pandacan pursuant to the MOU has been followed; and that
the people are safe in view of the safety measures installed in the Pandacan terminals.

Incidentally, in its Manifestation dated 30 November 2010,64 Petron informed the Court that it will
"cease [the] operation of its petroleum product storage facilities"65 in the Pandacan oil terminal not
later than January 2016 on account of the following:

2.01 Environmental issues, many of which are unfounded, continually crop up and tarnish the
Company’s image.

2.02. The location of its Pandacanterminal is continually threatened, and made uncertain preventing
long-term planning, by the changing local government composition. Indeed, the relevant zoning
ordinances have been amended three (3) times, and their validity subjected to litigation.66

Intervening Events

On 28 August 2012, while the Court was awaiting the submission of the Memorandum of
respondents Vice-Mayor Domagoso and the councilors who voted in favor of the assailed
Ordinance, the Sangguniang Panlungsod, which composition had already substantially changed,
enacted Ordinance No. 828367 entitled "AN ORDINANCE AMENDING SECTION 2 OF ORDINANCE
NO. 8187 BY RECLASSIFYING THE AREA WHERE PETROLEUM REFINERIES AND OIL
DEPOTS ARE LOCATED FROM HEAVY INDUSTRIAL (1-3) TO HIGH INTENSITY
COMMERCIAL/MIXED USE ZONE (C3/MXD).

The new ordinance essentially amended the assailed ordinance to exclude the area where
petroleum refineries and oil depots are located from the Industrial Zone.

Ordinance No. 8283 thus permits the operation of the industries operating within the Industrial Zone.
However, the oil companies, whose oil depots are located in the High Intensity Commercial/Mixed
Use Zone (C3/MXD), are given until the end of January 2016 within which to relocate their terminals.

Former Mayor Lim, who was then the incumbent mayor, did not support the amendment. Maintaining
that the removal of the oil depots was prejudicial to public welfare, and, on account of the pending
cases in the Supreme Court, he vetoed Ordinance No. 8283 on 11 September 2012.68

On 28 November 2012, former Mayor Lim filed a Manifestation informing this Court that the
Sangguniang Panlungsod voted to override the veto, and that he, in turn, returned it again with his
veto. He likewise directed the Sangguniang Panlungsod to append his written reasons for his veto of
the Ordinance, so that the same will be forwarded to the President for his consideration in the event
that his veto is overridden again.69

On 11 December 2012, Shell also filed a similar Manifestation.70

Meanwhile, three days after former Mayor Lim vetoed the new ordinance, Atty. Luch R. Gempis, Jr.
(Atty. Gempis), Secretary of the Sangguniang Panlungsod, writing on behalf of respondents Vice-
Mayor Domagoso and the City Councilors of Manila who voted in favor of the assailed Ordinance,

50 | P a g e
finally complied with this Court’s Resolution dated 17 July 2012 reiterating its earlier directives71 to
submit the said respondents’ Memorandum.

In his Compliance/Explanation with Urgent Manifestation72 dated 13 September 2012, Atty. Gempis
explained that it was not his intention to show disrespect to this Court or to delay or prejudice the
disposition of the cases.

According to him, he signed the Comment prepared by respondents Vice-Mayor and the City
Councilors only to attest that the pleading was personally signed by the respondents. He clarified
that he was not designated as the legal counsel of the respondents as, in fact, he was of the
impression that, pursuant to Section 481(b)(3) of the Local Government Code,73 it is the City Legal
Officer who isauthorized to represent the local government unit or any official thereof in a litigation. It
was for the same reason that he thought that the filing of a Memorandum may already be dispensed
with when the City Legal Officer filed its own on 8 February 2010. He further explained that the
Ordinance subject of these cases was passed during the 7th Council (2007-2010); that the
composition of the 8th Council (2010-2013) had already changed after the 2010 elections; and that
steps were already taken to amend the ordinance again. Hence, he was in a dilemma as to the
position of the Sangguniang Panlungsod at the time he received the Court’s Resolution of 31 May
2011.

Atty. Gempis, thus, prayed that the Court dispense with the filing of the required memorandum in
view of the passing of Ordinance No. 8283.

Issue

The petitioners’ arguments are primarily anchored on the ruling of the Court in G. R. No. 156052
declaring Ordinance No. 8027 constitutional and valid after finding that the presence of the oil
terminals in Pandacan is a threat to the life and security of the people of Manila. From thence, the
petitioners enumerated constitutional provisions, municipal laws and international treaties and
conventions on health and environment protection allegedly violated by the enactment of the
assailed Ordinance to support their position.

The resolution of the present controversy is, thus, confined to the determination of whether or not the
enactment of the assailed Ordinance allowing the continued stay of the oil companies in the depots
is, indeed, invalid and unconstitutional.

Our Ruling

We see no reason why Ordinance No. 8187 should not be stricken down insofar as the presence of
the oil depots in Pandacan is concerned.

We first rule on the procedural issues raised by the respondents and the oil companies.

At the outset, let it be emphasized that the Court, in G.R. No. 156052, has already pronounced that
the matter of whether or not the oil depots should remain in the Pandacan area is of transcendental
importance to the residents of Manila.74

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We may, thus, brush aside procedural infirmities, if any, as we had in the past, and take cognizance
of the cases75 if only to determine if the acts complained of are no longer within the bounds of the
Constitution and the laws in place.76

Put otherwise, there can be no valid objection to this Court’s discretion to waive one or some
procedural requirements if only to remove any impediment to address and resolve the serious
constitutional question77 raised in these petitions of transcendental importance, the same having
farreaching implications insofar as the safety and general welfare of the residents of Manila, and
even its neighboring communities, are concerned.

Proper Remedy

Respondents and intervenors argue that the petitions should be outrightly dismissed for failure on
the part of the petitioners to properly apply related provisions of the Constitution, the Rules of Court,
and/or the Rules of Procedure for Environmental Cases relative to the appropriate remedy available
to them.

To begin with, questioned is the applicability of Rule 6578 of the Rules of Court to assail the validity
and constitutionality of the Ordinance.

… there is no appeal, or any plain,

speedy, and adequate remedy

in the ordinary course of law…

Rule 65 specifically requires that the remedy may be availed of only when "there is no appeal, or any
plain, speedy, and adequate remedy in the ordinary course of law."79

Shell argues that the petitioners should have sought recourse before the first and second level
courts under the Rules of Procedure for Environmental Cases,80 which govern "the enforcement or
violations of environmental and other related laws, rules and regulations."81 Petron additionally
submits that the most adequate remedy available to petitioners is to have the assailed ordinance
repealed by the Sangguniang Panlungsod. In the alternative, a local referendum may be had. And,
assuming that there were laws violated, the petitioners may file an action for each alleged violation
of law against the particular individuals that transgressed the law.

It would appear, however, that the remedies identified by the intervenors prove to be inadequate
toresolve the present controversies in their entirety owing to the intricacies of the circumstances
herein prevailing.

The scope of the Rules of Procedure for Environmental Cases is embodied in Sec. 2, Part I, Rule I
thereof. It states that the Rules shall govern the procedure in civil, criminal and special civil actions
before the Metropolitan Trial Courts, Municipal Trial Courts in Cities, Municipal Trial Courts and
Municipal Circuit Trial Courts, and the Regional Trial Courts involving enforcement or violations of
environmental and other related laws, rules and regulations such as but not limited to the following:

(k) R.A. No. 6969, Toxic Substances and Hazardous Waste Act;

xxxx

52 | P a g e
 (r) R.A. No. 8749, Clean Air Act;

xxxx

(y) Provisions in C.A. No. 141, x x x; and other existing laws that relate to the conservation,
development, preservation, protection and utilization of the environment and natural
resources.82 (Emphasis supplied)

Notably, the aforesaid Rules are limited in scope. While, indeed, there are allegations of violations of
environmental laws in the petitions, these only serve as collateral attacks that would support the
other position of the petitioners – the protection of the rightto life, security and safety. Moreover, it
bears emphasis that the promulgation of the said Rules was specifically intended to meet the
following objectives:

SEC. 3. Objectives.—The objectives of these Rules are:

(a) To protect and advance the constitutional right of the people to a balanced and healthful
ecology;

(b) To provide a simplified, speedy and inexpensive procedure for the enforcement of
environmental rights and duties recognized under the Constitution, existing laws, rules and
regulations, and international agreements;

(c) To introduce and adopt innovations and best practices ensuring the effective enforcement
of remedies and redress for violation of environmental laws; and

(d) To enable the courts to monitor and exact compliance with orders and judgments in
environmental cases.83

Surely, the instant petitions are not within the contemplation of these Rules.

Relative to the position of Petron, it failed to consider that these petitions are already a sequel to
G.R. No. 156052, and that there are some issues herein raised that the remedies available at the
level of the Sangguniang Panlungsod could not address. Neither could the filing of an individual
action for each law violated be harmonized with the essence of a "plain, speedy, and adequate"
remedy.

From another perspective, Shell finds fault with the petitioners’ direct recourse to this Court when,
pursuant to Section 5, Article VIII of the Constitution, the Supreme Court exercises only appellate
jurisdiction over cases involving the constitutionality or validity of an ordinance.84 Thus:

Section 5.The Supreme Court shall have the following powers:

xxxx

2. Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the Rules of Court
may provide, final judgments and orders of lower courtsin:

a. All cases in which the constitutionality or validity of any treaty, international or executive
agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in
question. (Emphasis supplied)

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To further support its position, it cites the case of Liga ng mga Barangay National v. City Mayor of
Manila,85 where the petitioners sought the nullification of the mayor’s executive order and the
council’s ordinance concerning certain functions of the petitioners that are vested in them by law.
There, the Court held:

Second, although the instant petition is styled as a petition for certiorari, in essence, it seeks the
declaration by this Court of the unconstitutionality or illegality of the questioned ordinance and
executive order. It, thus, partakes of the nature of a petition for declaratory relief over which this
Court has only appellate, not original, jurisdiction.86 Section 5, Article VIII of the Constitution provides:
xxx

As such, this petition must necessary fail, as this Court does not have original jurisdiction over a
petition for declaratory relief even if only questions of law are involved.87

Assuming that a petition for declaratory relief is the proper remedy, and that the petitions should
have been filed with the Regional Trial Court, we have, time and again, resolved to treat such a
petition as one for prohibition, provided that the case has far-reaching implications and
transcendental issues that need to be resolved,88 as in these present petitions.

On a related issue, we initially found convincing the argument that the petitions should have been
filed with the Regional Trial Court, it having concurrent jurisdiction with this Court over a special civil
action for prohibition, and original jurisdiction over petitions for declaratory relief. However, as we
have repeatedly said, the petitions at bar are of transcendental importance warranting a relaxation of
the doctrine of hierarchy of courts.89 In the case of Jaworski v. PAGCOR,90 the Court ratiocinated:

Granting arguendothat the present action cannot be properly treated as a petition for prohibition, the
transcendental importance of the issues involved in this case warrants that weset aside the technical
defects and take primary jurisdiction over the petition at bar. x x x This is in accordance with the well-
entrenched principle that rules of procedure are not inflexible tools designed to hinder or delay, but
to facilitate and promote the administration of justice.Their strict and rigid application, which would
result in technicalities that tend to frustrate, rather than promote substantial justice, must always be
eschewed. (Emphasis supplied)

…persons aggrieved thereby…

As to who may file a petition for certiorari, prohibition or mandamus, Petron posits that petitioners
are not among the "persons aggrieved" contemplated under Sections 1 to 3 of Rule 65 of the Rules
of Court.

Chevron argues that petitioners, whether as "citizens," taxpayers," or legislators," lack the legal
standing toassail the validity and constitutionality of Ordinance No. 8187. It further claims that
petitioners failed to show that they have suffered any injury and/or threatened injury as a result of the
act complained of.91

Shell also points out that the petitions cannot be considered taxpayers’ suit, for then, there should be
a claim that public funds were illegally disbursed and that petitioners have sufficient interest
concerning the prevention of illegal expenditure of public money.92 In G.R. No. 187916, Shell
maintains that the petitioners failed to show their personal interest in the case and/or to establish
that they may represent the general sentiments of the constituents of the City of Manila so as to be
treated as a class suit. Even the minors, it argues, are not numerous and representative enough for
the petition to be treated as a class suit. Asto the city councilors who joined the petitioners in
assailing the validity of Ordinance No. 8187, Shell posits that they cannot invoke the ruling in Prof.

54 | P a g e
David v. Pres. Macapagal-Arroyo,93 where the Court held that legislators may question the
constitutionality of a statute, if and when it infringes upon their prerogatives as legislators, because
of the absence of the allegation that the assailed ordinance indeed infringes upon their prerogatives.

Former Mayor Lim submitted a similar position supported by a number of cases on the concept of
locus standi,94 the direct injury test,95 an outline of the stringent requirements of legal standing when
suing as a citizen,96 as a taxpayer,97 as a legislator and in cases where class suits are filed in behalf
of all citizens.98

Their arguments are misplaced.

In G.R. No. 156052, we ruled that the petitioners in that case have a legal right to seek the
enforcement of Ordinance No. 8027 because the subject of the petition concerns a public right, and
they, as residents of Manila, have a direct interest in the implementation of the ordinances of the
city. Thus:

To support the assertion that petitioners have a clear legal right to the enforcement of the ordinance,
petitioner SJS states that it is a political party registered with the Commission on Elections and has
its offices in Manila. It claims to have many members who are residents of Manila. The other
petitioners, Cabigao and Tumbokon, are allegedly residents of Manila.

We need not belabor this point. We have ruled in previous cases that when a mandamus proceeding
concerns a public right and its object is to compel a public duty, the people who are interested in the
execution of the laws are regarded as the real parties in interest and they need not show any
specific interest. Besides, as residents of Manila, petitioners have a direct interest in the
enforcement of the city’s ordinances.99 x x x (Citations omitted)

No different are herein petitioners who seek to prohibit the enforcement of the assailed ordinance,
and who deal with the same subject matter that concerns a public right. Necessarily, the people who
are interested in the nullification of such an ordinance are themselves the real parties in interest, for
which reason, they are no longer required to show any specific interest therein. Moreover, it is worth
mentioning that SJS, now represented by SJS Officer Alcantara, has been recognized by the Court
in G.R. No. 156052 to have legal standing to sue in connection with the same subject matter herein
considered. The rest of the petitioners are residents of Manila. Hence, all of them have a direct
interest in the prohibition proceedings against the enforcement of the assailed ordinance.

In the case of Initiatives for Dialogue and Empowerment through Alternative Legal Services, Inc.
(IDEALS, INC.) v. Power Sector Assets and Liabilities Management Corporation
(PSALM),100 involving a petition for certiorari and prohibition to permanently enjoin PSALM from
selling the Angat Hydro-Electric Power Plant (AHEPP) to Korea Water Resources Corporation (K-
Water), the Court ruled:

"Legal standing" or locus standihas been defined as a personal and substantial interest in the case
such that the party has sustained or will sustain direct injury as a result of the governmental act that
is being challenged, alleging more than a generalized grievance. x x x This Court, however, has
adopted a liberal attitude on the locus standi of a petitioner where the petitioner is able to craft
anissue of transcendental significance to the people, as when the issues raised are of paramount
importance to the public. Thus, when the proceeding involves the assertion of a public right, the
mere fact that the petitioner is a citizen satisfies the requirement of personal interest.

There can be no doubt that the matter of ensuring adequate water supply for domestic use is one of
paramount importance to the public. That the continued availability of potable water in Metro Manila

55 | P a g e
might be compromised if PSALM proceeds with the privatization of the hydroelectric power plant in
the Angat Dam Complex confers upon petitioners such personal stake in the resolution of legal
issues in a petition to stop its implementation.101 (Emphasis supplied; citations omitted)

In like manner, the preservation of the life, security and safety of the people is indisputably a right of
utmost importance to the public. Certainly, the petitioners, as residents of Manila, have the required
personal interest to seek relief from this Court to protect such right.

… in excess of its or his jurisdiction,

or with grave abuse of discretion
amounting to lack or excess of jurisdiction…

Petron takes issue with the alleged failure of the petitioners to establish the facts with certainty that
would show that the acts of the respondents fall within the parameters of the grave abuse of
discretion clause settled by jurisprudence, to wit:

x x x "[G]rave abuse of discretion" means such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction. The abuse of discretion must be grave as where the power is
exercised in an arbitrary or despotic manner by reason of passion or personal hostility and must be
so patent and gross asto amount to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined by or to act all in contemplation of law.102

It is pointless to discuss the matter at length in these instant cases of transcendental importance in
view of the Court’s pronouncement, in Magallona v. Ermita.103 There it held that the writs of
certiorariand prohibition are proper remedies to test the constitutionality of statutes, notwithstanding
the following defects:

In praying for the dismissal of the petition on preliminary grounds, respondents seek a strict
observance of the offices of the writs of certiorari and prohibition, noting that the writs cannot
issue absent any showing of grave abuse of discretion in the exercise of judicial, quasi-
judicial or ministerial powers on the part of respondents and resulting prejudice on the part of
petitioners.

Respondents’ submission holds true in ordinary civil proceedings. When this Court exercises its
constitutional power of judicial review, however, we have, by tradition, viewed the writs of
certiorariand prohibition as proper remedial vehicles to test the constitutionality of statutes, and
indeed, of acts of other branches of government. Issues of constitutional importx x x carry
such relevance in the life of this nation that the Court inevitably finds itself constrained to
take cognizance of the case and pass upon the issues raised, noncompliance with the letter
of procedural rules notwithstanding. The statute sought to be reviewed here is one such
law.104 (Emphasis supplied; citations omitted)

Requisites of judicial review

For a valid exercise of the power of judicial review, the following requisites shall concur: (1) the
existence of a legal controversy; (2) legal standing to sue of the party raising the constitutional
question; (3) a plea that judicial review be exercised at the earliest opportunity; and (4) the
constitutional question is the lis mota of the case.105

Only the first two requisites are put in issue in these cases.

56 | P a g e
On the matter of the existence of a legal controversy, we reject the contention that the petitions
consist of bare allegations based on speculations, surmises, conjectures and hypothetical grounds.

The Court declared Ordinance No. 8027 valid and constitutional and ordered its implementation.
Withthe passing of the new ordinance containing the contrary provisions, it cannot be any clearer
that here lies an actual case or controversy for judicial review. The allegation on this, alone, is
sufficient for the purpose.

The second requisite has already been exhaustively discussed.

Proof of identification required in the notarization

of the verification and certification against forum
shopping in G.R. No. 187916

At the bottom of the Verification and Certification against Forum Shopping of the petition in G.R. No.
187916 is the statement of the notary public to the effect that the affiant, in his presence and after
presenting "an integrally competent proof of identification with signature and photograph,"106 signed
the document under oath.

Citing Sec. 163 of the Local Government Code,107 which provides that an individual acknowledging
any document before a notary public shall present his Community Tax Certificate (CTC), Chevron
posits that the petitioner’s failure to present his CTC rendered the petition fatally defective warranting
the outright dismissal of the petition.

We disagree.

The verification and certification against forum shopping are governed specifically by Sections 4 and
5,Rule 7 of the Rules of Court.

Section 4 provides that a pleading, when required to be verified, shall be treated as an unsigned
pleading if it lacks a proper verification while Section 5 requires that the certification to be executed
by the plaintiff or principal party be under oath.

These sections, in turn, should be read together with Sections 6 and 12, Rule 2 of the 2004 Rules on
Notarial Practice.

Section 6108 of the latter Rules, specifically, likewise provides that any competent evidence of identity
specified under Section 12 thereof may now be presented before the notary public, to wit:

SEC. 12. Competent Evidence of Identity. - The phrase "competent evidence of identity" refers to the
identification of an individual based on:

(a) at least one current identification document issued by an official agency bearing
the photograph and signature of the individual, such as but not limited to passport,
driver’s license, Professional Regulations Commission ID, National Bureau of
Investigation clearance, police clearance, postal ID, voter’s ID, Barangay
certification, Government Service and Insurance System (GSIS) e-card, Social
Security System (SSS) card, Philhealth card, senior citizen card, Overseas Workers
Welfare Administration (OWWA) ID, OFW ID, seaman’s book, alien certificate of
registration/immigrant certificate of registration, government office ID, certification

57 | P a g e
 from the National Council for the Welfare of Disable Persons (NCWDP), Department
of Social Welfare and Development (DSWD) certification; or

(b) x x x.109

Forum shopping

Shell contends that the petitioners in G.R. No. 187836 violated the rule against forum shopping
allegedly because all the elements thereof are present in relation to G.R. No. 156052, to wit:

1. "identity of parties, or at least such parties who represent the same interests in both
actions" – According to Shell, the interest of petitioner SJS in G.R. No. 156052 and the
officers of SJS in G.R. No. 187836 are clearly the same. Moreover, both actions implead the
incumbent mayor of the City of Manila as respondent. Both then respondent Mayor Atienza
in G.R. No. 156052 and respondent former Mayor Lim in G.R. No. 187836 are sued in their
capacity as Manila mayor.

2. "identity of rights asserted and relief prayed for, the relief being founded on the same
fact(s)" – Shell contends that, in both actions, petitioners assert the same rights to health and
to a balanced and healthful ecology relative to the fate of the Pandacan terminal, and seek
essentially the same reliefs, that is, the removal of the oil depots from the present site.

3. "the identity of the two preceding particulars is such that any judgment rendered in the
pending case, regardless of which party is successful, would amount to res judicata in the
other" – Relative to the filing of the Manifestation and Motion to: a) Stop the City Council of
Manila from further hearing the amending ordinance to Ordinance No. 8027 x x x
(Manifestation and Motion) and Very Urgent Motion to Stop the Mayor of the City of Manila
from Signing Draft Ordinance No. 7177 [now Ordinance No. 8187] and to Cite Him for
Contempt if He Would Do So (Urgent Motion) both in G.R. No. 156052, Shell points out the
possibility that the Court would have rendered conflicting rulings "on cases involving the
same facts, parties, issues and reliefs prayed for."110

We are not persuaded.

In Spouses Cruz v. Spouses Caraos,111 the Court expounded on the nature of forum shopping. Thus:

Forum shopping is an act of a party, against whom an adverse judgment or order has been rendered
in one forum, of seeking and possibly getting a favorable opinion in another forum, other than by
appeal or special civil action for certiorari. It may also be the institution of two or more actions or
proceedings grounded on the same cause on the supposition that one or the other court would make
a favorable disposition. The established rule is that for forum shopping to exist, both actions must
involve the same transactions, same essential facts and circumstances and must raise identical
causes of actions, subject matter, and issues. x x x112 (Citations omitted) It bears to stress that the
present petitions were initially filed, not to secure a judgment adverse to the first decision, but,
precisely, to enforce the earlier ruling to relocate the oil depots from the Pandacan area.

As to the matter of the denial of the petitioners’ Manifestation and Urgent Motion in G.R. No. 156052,
which wereboth incidental to the enforcement of the decision favorable to them brought about by the
intervening events after the judgment had become final and executory, and which involve the same
Ordinance assailed in these petitions, we so hold that the filing of the instant petitions is not barred
by res judicata.

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In the same case of Spouses Cruz v. Spouses Caraos involving the refiling of a complaint, which
had been earlier dismissed without qualification that the dismissal was with prejudice, and which had
not been decided on the merits, the Court declared that such re-filing did not amount to forum
shopping. It ratiocinated:

It is not controverted that the allegations of the respective complaints in both Civil Case No. 95-1387
and Civil Case No. 96-0225 are similarly worded, and are identical in all relevant details, including
typographical errors, except for the additional allegations in support of respondents’ prayer for the
issuance of preliminary injunction in Civil Case No. 95-1387. It is similarly not disputed that both
actions involve the same transactions; same essential facts and circumstances; and raise identical
causes of actions, subject matter, and issues.

xxxx

x x x The dismissal of Civil Case No. 95-1387 was without prejudice. Indeed, the Order dated 20
November 1995, dismissing Civil Case No. 95-1387 was an unqualified dismissal. More significantly,
its dismissal was not based on grounds under paragraphs (f), (h), and (i) of Section 1 of Rule 16 of
the Rules of Court, which dismissal shall bar the refiling of the same action or claim as crystallized in
Section 5 of Rule 16 thereof, thus:

SEC. 5. Effect of dismissal. – Subject to the right of appeal, an order granting a motion to dismiss
based on paragraphs (f), (h), and (i) of section 1 hereof shall bar the refiling of the same action or
claim.

From the foregoing, it is clear that dismissals under paragraphs (f), (h), and (i) of Section 1 of Rule
16 of the Rules of Court constitute res judicata, to wit:

(f) That the cause of action isbarred by a prior judgment or by the statute of limitations;

xxxx

(h) That the claim or demand set forth in the plaintiff’s pleading has been paid, waived, abandoned,
or otherwise extinguished;

(i) That the claim on which the action is founded is unenforceable under the provisions of the statute
of frauds.

Res judicata or bar by prior judgmentis a doctrine which holds that a matter that has been
adjudicated by a court of competent jurisdiction must be deemed to have been finally and
conclusively settled if it arises in any subsequent litigation between the same parties and for the
same cause. Res judicata exists when the following elements are present: (a) the former judgment
must be final; (b) the court which rendered judgment had jurisdiction over the parties and the subject
matter; (3)it must be a judgment on the merits; and (d) and there must be, between the first and
second actions, identity ofparties, subject matter, and cause of action.113 (Emphasis supplied;
citations omitted)

Here, it should be noted that this Court denied the said Manifestation and Urgent Motion, and
refused to act on the succeeding pleadings, for being moot.114 Clearly, the merits of the motion were
not considered by the Court. The following disquisition of the Court in Spouses Cruz v. Spouses
Caraosis further enlightening:

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The judgment of dismissal in Civil Case No. 95-1387 does not constitute res judicata to sufficiently
bar the refiling thereof in Civil Case No. 96-0225. As earlier underscored, the dismissal was one
without prejudice. Verily, it was not a judgment on the merits. It bears reiterating that a judgment on
the merits is one rendered after a determination of which party is right, as distinguished from a
judgment rendered upon some preliminary or formal or merely technical point. The dismissal of the
case without prejudice indicates the absence of a decision on the merits and leaves the parties free
to litigate the matter in a subsequent action asthough the dismissed action had not been
commenced.115(Emphasis supplied; citations omitted)

Considering that there is definitely no forum shopping in the instant cases, we need not discuss in
detail the elements of forum shopping.

II

The Local Government Code of 1991 expressly provides that the Sangguniang Panlungsod is
vested with the power to "reclassify land within the jurisdiction of the city"116 subject to the pertinent
provisions of the Code. It is also settled that an ordinance may be modified or repealed by another
ordinance.117 These have been properly applied in G.R. No. 156052, where the Court upheld the
position of the Sangguniang Panlungsod to reclassify the land subject of the Ordinance,118 and
declared that the mayor has the duty to enforce Ordinance No. 8027, provided that it has not been
repealed by the Sangguniang Panlungsod or otherwise annulled by the courts.119 In the same case,
the Court also used the principle that the Sanguniang Panlungsod is in the best position to
determine the needs of its Constituents120 – that the removal of the oil depots from the Pandacan
area is necessary "to protect the residents of Manila from catastrophic devastation in case of a
terrorist attack on the Pandacan Terminals."121

Do all these principles equally apply to the cases at bar involving the same subject matter to justify
the contrary provisions of the assailed Ordinance?

We answer in the negative.

We summarize the position of the Sangguniang Panlungsodon the matter subject of these petitions.
In 2001, the Sanggunian found the relocation of the Pandacan oil depots necessary. Hence, the
enactment of Ordinance No. 8027.

In 2009, when the composition of the Sanggunian had already changed, Ordinance No. 8187 was
passed in favor of the retention of the oil depots. In 2012, again when some of the previous
members were no longer re-elected, but with the Vice-Mayor still holding the same seat, and
pending the resolution of these petitions, Ordinance No. 8283 was enacted to give the oil depots
until the end of January 2016 within which to transfer to another site. Former Mayor Lim stood his
groundand vetoed the last ordinance.

In its Comment, the 7th Council (2007-2010) alleged that the assailed Ordinance was enacted to
alleviate the economic condition of its constituents.122

Expressing the same position, former Mayor Lim even went to the extent of detailing the steps123 he
took prior to the signing of the Ordinance, if only to show his honest intention to make the right
decision.

The fact remains, however, that notwithstanding that the conditions with respect to the operations of
the oil depots existing prior to the enactment of Ordinance No. 8027 do not substantially differ to this
day, as would later be discussed, the position of the Sangguniang Panlungsod on the matter has

60 | P a g e
thrice changed, largely depending on the new composition of the council and/or political affiliations.
The foregoing, thus, shows that its determination of the "general welfare" of the city does not after all
gear towards the protection of the people in its true sense and meaning, but is, one way or another,
dependent on the personal preference of the members who sit in the council as to which particular
sector among its constituents it wishes to favor.

Now that the City of Manila, through the mayor and the city councilors, has changed its view on the
matter, favoring the city’s economic related benefits, through the continued stay of the oil terminals,
over the protection of the very lives and safety of its constituents, it is imperative for this Court to
make a final determination on the basis of the facts on the table as to which specific right of the
inhabitants of Manila should prevail. For, in this present controversy, history reveals that there is
truly no such thing as "the will of Manila" insofar as the general welfare of the people is concerned.

If in sacrilege, in free translation of Angara124 by Justice Laurel, we say when the judiciary mediates
we do notin reality nullify or invalidate an act of the Manila Sangguniang Panlungsod, but only
asserts the solemn and sacred obligation assigned to the Court by the Constitution to determine
conflicting claims of authority under the Constitution and to establish for the parties in an actual
controversy the rights which that instrument secures and guarantees to them.

III

The measures taken by the intervenors to lend support to their position that Manila is now safe
despite the presence of the oil terminals remain ineffective. These have not completely removed the
threat to the lives of the in habitants of Manila.

In G.R. No. 156052, the validity and constitutionality of Ordinance No. 8027 was declared as a
guarantee for the protection of the constitutional right to life of the residents of Manila. There, the
Court said that the enactment of the said ordinance was a valid exercise of police power with the
concurrence of the two requisites: a lawful subject – "to safeguard the rights to life, security and
safety of all the inhabitants of Manila;"125 and a lawful method – the enactment of Ordinance No. 8027
reclassifying the land use from industrial to commercial, which effectively ends the continued stay of
the oil depots in Pandacan.126

In the present petitions, the respondents and the oil companies plead that the Pandacan Terminal
has never been one of the targets of terrorist attacks;127 that the petitions were based on unfounded
fears and mere conjectures;128and that the possibility that it would be picked by the terrorists is nil
given the security measures installed thereat.129

The intervenors went on to identify the measures taken to ensure the safety of the people even with
the presence of the Pandacan Terminals. Thus:

1. Chevron claims that it, together with Shell and Petron, continues to enhance the safety
and security features of the terminals. They likewise adopt fire and product spill prevention
measures in accordance with the local standards set by the Bureau of Fire Protection,
among others, and with the international standards of the American Petroleum Industry
("API") and the National Fire Prevention and Safety Association ("NFPSA"); that since 1914,
the oil depots had not experienced "any incident beyond the ordinary risks and
expectations"130 of the residents of Manila; and that it received a passing grade on the safety
measures they installed in the facilities from the representatives of the City of Manila who
conducted an ocular inspection on 22 May 2009; and

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 2. Referring to the old MOU entered into between the City of Manila and the DOE, on the
one hand, and the oil companies, on the other, where the parties thereto conceded and
acknowledged that the scale-down option for the Pandacan Terminal operations is the best
alternative to the relocation of the terminals, Shell enumeratesthe steps taken to scale down
its operations.

As to the number of main fuel tanks, the entire Pandacan Terminal has already decommissioned
twenty-eight out of sixty-four tanks. Speaking for Shell alone, its LPG Spheres, which it claims is the
only product that may cause explosion, was part of those decommissioned, thereby allegedly
removing the danger of explosion. Safety buffer zones and linear/green parks were likewise created
to separate the terminal from the nearest residential area. Shell’s portion of the oil depot is likewise
allegedly equipped with the latest technology to ensure air-quality control and waterquality control,
and to prevent and cope with possible oil spills with a crisis management plan in place in the event
that an oil spill occurs. Finally, Shell claims that the recommendations of EQE International in its
Quantitative Risk Assessment (QRA) study, which it says is one of the leading independent risk
assessment providers in the world and largest risk management consultancy, were sufficiently
complied with; and that, on its own initiative, it adopted additional measures for the purpose, for
which reason, "the individual risk level resulting from any incident occurring from the Pandacan
Terminal, per the QRA study, is twenty (20) times lower compared to the individual risk level of an
average working or domestic environment."131

We are not persuaded.

The issue of whether or not the Pandacan Terminal is not a likely target of terrorist attacks has
already been passed upon in G. R. No. 156052. Based on the assessment of the Committee on
Housing, Resettlement and Urban Development of the City of Manila and the then position of the
Sangguniang Panlungsod,132 the Court was convinced that the threat of terrorism is imminent. It
remains so convinced.

Even assuming that the respondents and intervenors were correct, the very nature of the depots
where millions of liters of highly flammable and highly volatile products, regardless of whether ornot
the composition may cause explosions, has no place in a densely populated area. Surely, any
untoward incident in the oil depots, beit related to terrorism of whatever origin or otherwise, would
definitely cause not only destruction to properties within and among the neighboring communities but
certainly mass deaths and injuries.

With regard to the scaling down of the operations in the Pandacan Terminals, which the oil
companies continue to insist to have been validated and recognized by the MOU, the Court,in G.R.
No. 156052, has already put this issue to rest. It specifically declared that even assuming that the
terms of the MOU and Ordinance No. 8027 were inconsistent, the resolutions ratifying the MOU
gave it full force and effect only until 30 April 2003.133

The steps taken by the oil companies, therefore, remain insufficient to convince the Court that the
dangers posed by the presence of the terminals in a thickly populated area have already been
completely removed.

For, given that the threat sought to be prevented may strike at one point or another, no matter how
remote it is as perceived by one or some, we cannot allow the right to life to bedependent on the
unlikelihood of an event. Statistics and theories of probability have no place in situations where the
very life of not just an individual but of residents of big neighborhoods is at stake.

IV

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It is the removal of the danger to life not the mere subdual of risk of catastrophe, that we saw in and
made us favor Ordinance No. 8027. That reason, unaffected by Ordinance No. 8187, compels the
affirmance of our Decision in G.R. No. 156052.

In striking down the contrary provisions of the assailed Ordinance relative to the continued stay of
the oil depots, we follow the same line of reasoning used in G.R. No. 156052, to wit: Ordinance No.
8027 was enacted "for the purpose of promoting sound urban planning, ensuring health, public
safety and general welfare" of the residents of Manila. The Sanggunian was impelled to take
measures to protect the residents of Manila from catastrophic devastation in case of a terrorist attack
on the Pandacan Terminals. Towards this objective, the Sanggunian reclassified the area defined in
the ordinance from industrial to commercial.

The following facts were found by the Committee on Housing, Resettlement and Urban Development
of the City of Manila which recommended the approval of the ordinance:

(1) the depot facilities contained 313.5 million liters of highly flammable and highly volatile
products which include petroleum gas, liquefied petroleum gas, aviation fuel, diesel,
gasoline, kerosene and fuel oil among others;

(2) the depot is open to attack through land, water or air;

(3) it is situated in a densely populated place and near Malacañang Palace; and

(4) in case of an explosion or conflagration in the depot, the fire could spread to the
neighboring communities.

The ordinance was intended to safeguard the rights to life, security and safety of all the inhabitants
of Manila and not just of a particular class. The depot is perceived, rightly or wrongly, as a
representation of western interests which means that it is a terrorist target. As long as it (sic) there is
such a target in their midst, the residents of Manila are not safe. It therefore became necessary to
remove these terminals to dissipate the threat. According to respondent:

Such a public need became apparent after the 9/11 incident which showed that what was perceived
to be impossible to happen, to the most powerful country in the world at that, is actually possible.
The destruction of property and the loss of thousands of lives on that fateful day became the impetus
for a public need. Inthe aftermath of the 9/11 tragedy, the threats of terrorism continued [such] that it
became imperative for governments to take measures to combat their effects.

xxxx

Both law and jurisprudence support the constitutionality and validity of Ordinance No. 8027. Without
a doubt, there are no impediments to its enforcement and implementation. Any delay is unfair to the
inhabitants of the City of Manila and its leaders who have categorically expressed their desire for the
relocation of the terminals. Their power to chart and control their own destiny and preserve their lives
and safety should not be curtailed by the intervenors’ warnings of doomsday scenarios and threats
of economic disorder if the ordinance is enforced.134

The same best interest of the public guides the present decision. The Pandacan oil depot remains a
terrorist target even if the contents have been lessened. In the absence of any convincing reason to
persuade this Court that the life, security and safety of the inhabitants of Manila are no longer put at

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risk by the presence of the oil depots, we hold that Ordinance No. 8187 in relation to the Pandacan
Terminals is invalid and unconstitutional.

There is, therefore, no need to resolve the rest of the issues.

Neither is it necessary to discuss at length the test of police power against the assailed ordinance.
Suffice it to state that the objective adopted by the Sangguniang Panlungsod to promote the
constituents’ general welfare in terms of economic benefits cannot override the very basic rights to
life, security and safety of the people.

In. G.R. No. 156052, the Court explained:

Essentially, the oil companies are fighting for their right to property. They allege that they stand
tolose billions of pesos if forced to relocate. However, based on the hierarchy of constitutionally
protected rights, the right to life enjoys precedence over the right to property. The reason is obvious:
life is irreplaceable, property is not. When the state or LGU’s exercise of police power clashes with a
few individuals’ right to property, the former should prevail.135

We thus conclude with the very final words in G.R. No. 156052:

On Wednesday, January 23, 2008, a defective tanker containing 2,000 liters of gasoline and 14,000
liters of diesel exploded in the middle of the street a short distance from the exit gate of the
Pandacan Terminals, causing death, extensive damage and a frightening conflagration in the vicinity
of the incident. Need we say anthing about what will happen if it is the estimated 162 to 211 million
liters [or whatever is left of the 26 tanks] of petroleum products in the terminal complex will blow
up?136

As in the prequel case, we note that as early as October 2001, the oil companies signed a MOA with
the DOE obliging themselves to:

... undertake a comprehensive and comparative study ... [which] shall include the preparation ofa
Master Plan, whose aim is to determine the scope and timing of the feasible location of the
Pandacan oil terminals and all associated facilities and infrastructure including government support
essential for the relocation such as the necessary transportation infrastructure, land and right of way
acquisition, resettlement of displaced residents and environmental and social acceptability which
shall be based on mutual benefit of the Parties and the public.

such that:

Now that they are being compelled to discontinue their operations in the Pandacan Terminals, they
cannot feign unreadiness considering that they had years to prepare for this eventuality.137

On the matter of the details of the relocation, the Court gave the oil companies the following time
frames for compliance:

To ensure the orderly transfer, movement and relocation of assets and personnel, the intervenors
Chevron Philippines Inc., Petron Corporation and Pilipinas Shell Petroleum Corporation shall, within
a nonextendible period of ninety (90) days, submit to the Regional Trial Court of Manila, Branch 39,

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the comprehensive plan and relocation schedule which have allegedly been prepared. The presiding
judge of Manila RTC, Branch 39 will monitor the strict enforcement of this resolution.138

The periods were given in the Decision in G.R. No. 156052 which became final on 23 April 2009.
Five years have passed, since then. The years of non-compliance may be excused by the swing of
local legislative leads. We now stay the sway and begin a final count.

A comprehensive and well-coordinated plan within a specific timeframe shall, therefore, be observed
in the relocation of the Pandacan Terminals. The oil companies shall begiven a fresh non-extendible
period of forty-five (45) days from notice within which to submit to the Regional Trial Court, Branch
39, Manila an updated comprehensive plan and relocation schedule. The relocation, inturn, shall be
completed not later than six months from the date of their submission. Finally, let it be underscored
that after the last Manifestation filed by Shell informing this Court that respondent former Mayor Lim
vetoed Ordinance No. 8283 for the second time, and was anticipating its referral to the President for
the latter’s consideration, nothing was heard from any of the parties until the present petitions as to
the status of the approval or disapproval of the said ordinance. As it is, the fate of the Pandacan
Terminals remains dependent on this final disposition of these cases.

VI

On the matter of the failure of Atty. Gempis to immediately comply with the directives of this Court to
file the Memorandum for the Vice-Mayor and the city councilors who voted in favor of the assailed
Ordinance, the records do not bear proof that he received a copy of any of the resolutions pertaining
to the filing of the Memorandum.

A narration of the events from his end would show, however, that he was aware of the directive
issued in 2009 when he stated that "when the City Legal Officer filed its Memorandum dated 8
February 2010, [he] thought the filing of a Memorandum for the other respondent city officials could
be dispensed with."139 There was also a categorical admission that he received the later Resolution of
31 May 2011 but that he could not prepare a Memorandum defending the position of respondents
vice-mayor and the city councilors who voted in favor of Ordinance No. 8187 in view of the ongoing
drafting of Ordinance No. 8283, which would change the position of the Sanggunian, if subsequently
approved.

The reasons he submitted are notimpressed with merit.

That he was not officially designated as the counsel for the vicemayor and the city councilors is
beside the point. As an officer of the court, he cannot feign ignorance of the fact that"a resolution of
this Court is not a mere request but an order which should be complied with promptly and
completely."140 As early as 2009, he should have immediately responded and filed a Manifestation
and therein set forth his reasons why he cannot represent the vice-mayor and the city councilors.
And, even assuming that the 31 May 2011 Resolution was the first directive he personally received,
he had no valid excuse for disregarding the same. Worse, the Court had to issue a show cause
order before he finally heeded.

Atty. Gempis should "strive harderto live up to his duties of observing and maintaining the respect
dueto the courts, respect for law and for legal processes and of upholding the integrity and dignity of
the legal profession in order to perform his responsibilities asa lawyer effectively."141

In Sibulo v. Ilagan,142 which involves a lawyer’s repeated failure to comply with the directives of the
Court, the penalty recommended by the Integrated Bar of the Philippines was reduced from
suspension to reprimand and a warning. The Court ratiocinated:

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Considering, however, that respondent was absolved of the administrative charge against him and is
being taken to task for his intransigence and lack of respect, the Court finds that the penalty of
suspension would not be warranted under the circumstances.

xxxx

To the Court’s mind, a reprimand and a warning are sufficient sanctions for respondent’s
disrespectful actuations directed against the Court and the IBP. The imposition of these sanctions in
the present case would be more consistent with the avowed purpose of disciplinary case, which is
"not so much to punish the individual attorney as to protect the dispensation of justice by sheltering
the judiciary and the public from the misconduct or inefficiency of officers of the court."143

We consider the participation of Atty. Gempis in this case and opt to be lenient even as we reiterate
the objective of protecting the dispensation of justice. We deem it sufficient to remind Atty. Gempis
to be more mindful of his duty as a lawyer towards the Court.

WHEREFORE, in light of all the foregoing, Ordinance No. 8187 is hereby declared
UNCONSTITUTIONAL and INVALID with respect to the continued stay of the Pandacan Oil
Terminals.

The incumbent mayor of the City of Manila is hereby ordered to CEASE and DESIST from enforcing
Ordinance No. 8187. In coordination with the appropriate government agencies and the parties
1âwphi 1

herein involved, he is further ordered to oversee the relocation and transfer of the oil terminals out of
the Pandacan area.

As likewise required in G.R. No. 156052, the intervenors Chevron Philippines, Inc., Pilipinas Shell
Petroleum Corporation, and Petron Corporation shall, within a non-extendible period of forty-five (45)
days, submit to the Regional Trial Court, Branch 39, Manila an updated comprehensive plan and
relocation schedule, which relocation shall be completed not later than six (6) months from the date
the required documents are submitted. The presiding judge of Branch 39 shall monitor the strict
enforcement of this Decision.

For failure to observe the respect due to the Court, Atty. Luch R. Gempis, Jr., Secretary of the
Sangguniang Panlungsod, is REMINDED of his duties towards the Court and WARNED that a
repetition of an act similar to that here committed shall be dealt with more severely.

SO ORDERED.

2. TAXING POWER

G.R. No. 155650 July 20, 2006

MANILA INTERNATIONAL AIRPORT AUTHORITY vs. COURT OF APPEALS

The Antecedents

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Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino International
Airport (NAIA) Complex in Parañaque City under Executive Order No. 903, otherwise known as
the Revised Charter of the Manila International Airport Authority ("MIAA Charter"). Executive Order
No. 903 was issued on 21 July 1983 by then President Ferdinand E. Marcos. Subsequently,
Executive Order Nos. 9091 and 2982 amended the MIAA Charter.

As operator of the international airport, MIAA administers the land, improvements and equipment
within the NAIA Complex. The MIAA Charter transferred to MIAA approximately 600 hectares of
land,3 including the runways and buildings ("Airport Lands and Buildings") then under the Bureau of
Air Transportation.4 The MIAA Charter further provides that no portion of the land transferred to
MIAA shall be disposed of through sale or any other mode unless specifically approved by the
President of the Philippines.5

On 21 March 1997, the Office of the Government Corporate Counsel (OGCC) issued Opinion No.
061. The OGCC opined that the Local Government Code of 1991 withdrew the exemption from real
estate tax granted to MIAA under Section 21 of the MIAA Charter. Thus, MIAA negotiated with
respondent City of Parañaque to pay the real estate tax imposed by the City. MIAA then paid some
of the real estate tax already due.

On 28 June 2001, MIAA received Final Notices of Real Estate Tax Delinquency from the City of
Parañaque for the taxable years 1992 to 2001. MIAA's real estate tax delinquency is broken down as
follows:

TAX
TAXABLE YEAR TAX DUE PENALTY TOTAL
DECLARATION
E-016-01370 1992-2001 19,558,160.00 11,201,083.20 30,789,243.20
E-016-01374 1992-2001 111,689,424.90 68,149,479.59 179,838,904.49
E-016-01375 1992-2001 20,276,058.00 12,371,832.00 32,647,890.00
E-016-01376 1992-2001 58,144,028.00 35,477,712.00 93,621,740.00
E-016-01377 1992-2001 18,134,614.65 11,065,188.59 29,199,803.24
E-016-01378 1992-2001 111,107,950.40 67,794,681.59 178,902,631.99
E-016-01379 1992-2001 4,322,340.00 2,637,360.00 6,959,700.00
E-016-01380 1992-2001 7,776,436.00 4,744,944.00 12,521,380.00
*E-016-013-85 1998-2001 6,444,810.00 2,900,164.50 9,344,974.50
*E-016-01387 1998-2001 34,876,800.00 5,694,560.00 50,571,360.00
*E-016-01396 1998-2001 75,240.00 33,858.00 109,098.00
GRAND TOTAL P392,435,861.95 P232,070,863.47 P 624,506,725.42

1992-1997 RPT was paid on Dec. 24, 1997 as per O.R.#9476102 for P4,207,028.75

#9476101 for P28,676,480.00

#9476103 for P49,115.006

On 17 July 2001, the City of Parañaque, through its City Treasurer, issued notices of levy and
warrants of levy on the Airport Lands and Buildings. The Mayor of the City of Parañaque threatened
to sell at public auction the Airport Lands and Buildings should MIAA fail to pay the real estate tax
delinquency. MIAA thus sought a clarification of OGCC Opinion No. 061.

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On 9 August 2001, the OGCC issued Opinion No. 147 clarifying OGCC Opinion No. 061. The OGCC
pointed out that Section 206 of the Local Government Code requires persons exempt from real
estate tax to show proof of exemption. The OGCC opined that Section 21 of the MIAA Charter is the
proof that MIAA is exempt from real estate tax.

On 1 October 2001, MIAA filed with the Court of Appeals an original petition for prohibition and
injunction, with prayer for preliminary injunction or temporary restraining order. The petition sought to
restrain the City of Parañaque from imposing real estate tax on, levying against, and auctioning for
public sale the Airport Lands and Buildings. The petition was docketed as CA-G.R. SP No. 66878.

On 5 October 2001, the Court of Appeals dismissed the petition because MIAA filed it beyond the
60-day reglementary period. The Court of Appeals also denied on 27 September 2002 MIAA's
motion for reconsideration and supplemental motion for reconsideration. Hence, MIAA filed on 5
December 2002 the present petition for review.7

Meanwhile, in January 2003, the City of Parañaque posted notices of auction sale at the Barangay
Halls of Barangays Vitalez, Sto. Niño, and Tambo, Parañaque City; in the public market of Barangay
La Huerta; and in the main lobby of the Parañaque City Hall. The City of Parañaque published the
notices in the 3 and 10 January 2003 issues of the Philippine Daily Inquirer, a newspaper of general
circulation in the Philippines. The notices announced the public auction sale of the Airport Lands and
Buildings to the highest bidder on 7 February 2003, 10:00 a.m., at the Legislative Session Hall
Building of Parañaque City.

A day before the public auction, or on 6 February 2003, at 5:10 p.m., MIAA filed before this Court an
Urgent Ex-Parte and Reiteratory Motion for the Issuance of a Temporary Restraining Order. The
motion sought to restrain respondents — the City of Parañaque, City Mayor of
Parañaque, Sangguniang Panglungsod ng Parañaque, City Treasurer of Parañaque, and the City
Assessor of Parañaque ("respondents") — from auctioning the Airport Lands and Buildings.

On 7 February 2003, this Court issued a temporary restraining order (TRO) effective immediately.
The Court ordered respondents to cease and desist from selling at public auction the Airport Lands
and Buildings. Respondents received the TRO on the same day that the Court issued it. However,
respondents received the TRO only at 1:25 p.m. or three hours after the conclusion of the public
auction.

On 10 February 2003, this Court issued a Resolution confirming nunc pro tunc the TRO.

On 29 March 2005, the Court heard the parties in oral arguments. In compliance with the directive
issued during the hearing, MIAA, respondent City of Parañaque, and the Solicitor General
subsequently submitted their respective Memoranda.

MIAA admits that the MIAA Charter has placed the title to the Airport Lands and Buildings in the
name of MIAA. However, MIAA points out that it cannot claim ownership over these properties since
the real owner of the Airport Lands and Buildings is the Republic of the Philippines. The MIAA
Charter mandates MIAA to devote the Airport Lands and Buildings for the benefit of the general
public. Since the Airport Lands and Buildings are devoted to public use and public service, the
ownership of these properties remains with the State. The Airport Lands and Buildings are thus
inalienable and are not subject to real estate tax by local governments.

MIAA also points out that Section 21 of the MIAA Charter specifically exempts MIAA from the
payment of real estate tax. MIAA insists that it is also exempt from real estate tax under Section 234
of the Local Government Code because the Airport Lands and Buildings are owned by the Republic.

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To justify the exemption, MIAA invokes the principle that the government cannot tax itself. MIAA
points out that the reason for tax exemption of public property is that its taxation would not inure to
any public advantage, since in such a case the tax debtor is also the tax creditor.

Respondents invoke Section 193 of the Local Government Code, which expressly withdrew the tax
exemption privileges of "government-owned and-controlled corporations" upon the effectivity of
the Local Government Code. Respondents also argue that a basic rule of statutory construction is
that the express mention of one person, thing, or act excludes all others. An international airport is
not among the exceptions mentioned in Section 193 of the Local Government Code. Thus,
respondents assert that MIAA cannot claim that the Airport Lands and Buildings are exempt from
real estate tax.

Respondents also cite the ruling of this Court in Mactan International Airport v. Marcos8 where we
held that the Local Government Code has withdrawn the exemption from real estate tax granted to
international airports. Respondents further argue that since MIAA has already paid some of the real
estate tax assessments, it is now estopped from claiming that the Airport Lands and Buildings are
exempt from real estate tax.

The Issue

This petition raises the threshold issue of whether the Airport Lands and Buildings of MIAA are
exempt from real estate tax under existing laws. If so exempt, then the real estate tax assessments
issued by the City of Parañaque, and all proceedings taken pursuant to such assessments, are void.
In such event, the other issues raised in this petition become moot.

The Court's Ruling

We rule that MIAA's Airport Lands and Buildings are exempt from real estate tax imposed by local
governments.

First, MIAA is not a government-owned or controlled corporation but an instrumentality of the

National Government and thus exempt from local taxation. Second, the real properties of MIAA
are owned by the Republic of the Philippines and thus exempt from real estate tax.

1. MIAA is Not a Government-Owned or Controlled Corporation

Respondents argue that MIAA, being a government-owned or controlled corporation, is not exempt
from real estate tax. Respondents claim that the deletion of the phrase "any government-owned or
controlled so exempt by its charter" in Section 234(e) of the Local Government Code withdrew the
real estate tax exemption of government-owned or controlled corporations. The deleted phrase
appeared in Section 40(a) of the 1974 Real Property Tax Code enumerating the entities exempt
from real estate tax.

There is no dispute that a government-owned or controlled corporation is not exempt from real
estate tax. However, MIAA is not a government-owned or controlled corporation. Section 2(13) of the
Introductory Provisions of the Administrative Code of 1987 defines a government-owned or
controlled corporation as follows:

SEC. 2. General Terms Defined. – x x x x

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 (13) Government-owned or controlled corporation refers to any agency organized as a
stock or non-stock corporation, vested with functions relating to public needs whether
governmental or proprietary in nature, and owned by the Government directly or through its
instrumentalities either wholly, or, where applicable as in the case of stock corporations, to
the extent of at least fifty-one (51) percent of its capital stock: x x x. (Emphasis supplied)

A government-owned or controlled corporation must be "organized as a stock or non-stock

corporation." MIAA is not organized as a stock or non-stock corporation. MIAA is not a stock
corporation because it has no capital stock divided into shares. MIAA has no stockholders or
voting shares. Section 10 of the MIAA Charter9 provides:

SECTION 10. Capital. — The capital of the Authority to be contributed by the National
Government shall be increased from Two and One-half Billion (P2,500,000,000.00) Pesos to
Ten Billion (P10,000,000,000.00) Pesos to consist of:

(a) The value of fixed assets including airport facilities, runways and equipment and such
other properties, movable and immovable[,] which may be contributed by the National
Government or transferred by it from any of its agencies, the valuation of which shall be
determined jointly with the Department of Budget and Management and the Commission on
Audit on the date of such contribution or transfer after making due allowances for
depreciation and other deductions taking into account the loans and other liabilities of the
Authority at the time of the takeover of the assets and other properties;

(b) That the amount of P605 million as of December 31, 1986 representing about seventy
percentum (70%) of the unremitted share of the National Government from 1983 to 1986 to
be remitted to the National Treasury as provided for in Section 11 of E. O. No. 903 as
amended, shall be converted into the equity of the National Government in the Authority.
Thereafter, the Government contribution to the capital of the Authority shall be provided in
the General Appropriations Act.

Clearly, under its Charter, MIAA does not have capital stock that is divided into shares.

Section 3 of the Corporation Code10 defines a stock corporation as one whose "capital stock is
divided into shares and x x x authorized to distribute to the holders of such shares dividends
x x x." MIAA has capital but it is not divided into shares of stock. MIAA has no stockholders or voting
shares. Hence, MIAA is not a stock corporation.

MIAA is also not a non-stock corporation because it has no members. Section 87 of the Corporation
Code defines a non-stock corporation as "one where no part of its income is distributable as
dividends to its members, trustees or officers." A non-stock corporation must have members. Even if
we assume that the Government is considered as the sole member of MIAA, this will not make MIAA
a non-stock corporation. Non-stock corporations cannot distribute any part of their income to their
members. Section 11 of the MIAA Charter mandates MIAA to remit 20% of its annual gross
operating income to the National Treasury.11 This prevents MIAA from qualifying as a non-stock
corporation.

Section 88 of the Corporation Code provides that non-stock corporations are "organized for
charitable, religious, educational, professional, cultural, recreational, fraternal, literary, scientific,
social, civil service, or similar purposes, like trade, industry, agriculture and like chambers." MIAA is
not organized for any of these purposes. MIAA, a public utility, is organized to operate an
international and domestic airport for public use.

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Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a government-
owned or controlled corporation. What then is the legal status of MIAA within the National
Government?

MIAA is a government instrumentality vested with corporate powers to perform efficiently its
governmental functions. MIAA is like any other government instrumentality, the only difference is that
MIAA is vested with corporate powers. Section 2(10) of the Introductory Provisions of the
Administrative Code defines a government "instrumentality" as follows:

SEC. 2. General Terms Defined. –– x x x x

(10) Instrumentality refers to any agency of the National Government, not integrated within
the department framework, vested with special functions or jurisdiction by law, endowed
with some if not all corporate powers, administering special funds, and enjoying
operational autonomy, usually through a charter. x x x (Emphasis supplied)

When the law vests in a government instrumentality corporate powers, the instrumentality does not
become a corporation. Unless the government instrumentality is organized as a stock or non-stock
corporation, it remains a government instrumentality exercising not only governmental but also
corporate powers. Thus, MIAA exercises the governmental powers of eminent domain,12 police
authority13 and the levying of fees and charges.14 At the same time, MIAA exercises "all the powers
of a corporation under the Corporation Law, insofar as these powers are not inconsistent with the
provisions of this Executive Order."15

Likewise, when the law makes a government instrumentality operationally autonomous, the
instrumentality remains part of the National Government machinery although not integrated with the
department framework. The MIAA Charter expressly states that transforming MIAA into a "separate
and autonomous body"16 will make its operation more "financially viable."17

Many government instrumentalities are vested with corporate powers but they do not become stock
or non-stock corporations, which is a necessary condition before an agency or instrumentality is
deemed a government-owned or controlled corporation. Examples are the Mactan International
Airport Authority, the Philippine Ports Authority, the University of the Philippines and Bangko Sentral
ng Pilipinas. All these government instrumentalities exercise corporate powers but they are not
organized as stock or non-stock corporations as required by Section 2(13) of the Introductory
Provisions of the Administrative Code. These government instrumentalities are sometimes loosely
called government corporate entities. However, they are not government-owned or controlled
corporations in the strict sense as understood under the Administrative Code, which is the governing
law defining the legal relationship and status of government entities.

A government instrumentality like MIAA falls under Section 133(o) of the Local Government Code,
which states:

SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. – Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the following:

xxxx

(o) Taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalitiesand local government units.(Emphasis and underscoring supplied)

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Section 133(o) recognizes the basic principle that local governments cannot tax the national
government, which historically merely delegated to local governments the power to tax. While the
1987 Constitution now includes taxation as one of the powers of local governments, local
governments may only exercise such power "subject to such guidelines and limitations as the
Congress may provide."18

When local governments invoke the power to tax on national government instrumentalities, such
power is construed strictly against local governments. The rule is that a tax is never presumed and
there must be clear language in the law imposing the tax. Any doubt whether a person, article or
activity is taxable is resolved against taxation. This rule applies with greater force when local
governments seek to tax national government instrumentalities.

Another rule is that a tax exemption is strictly construed against the taxpayer claiming the
exemption. However, when Congress grants an exemption to a national government instrumentality
from local taxation, such exemption is construed liberally in favor of the national government
instrumentality. As this Court declared in Maceda v. Macaraig, Jr.:

The reason for the rule does not apply in the case of exemptions running to the benefit of the
government itself or its agencies. In such case the practical effect of an exemption is merely
to reduce the amount of money that has to be handled by government in the course of its
operations. For these reasons, provisions granting exemptions to government agencies may
be construed liberally, in favor of non tax-liability of such agencies.19

There is, moreover, no point in national and local governments taxing each other, unless a sound
and compelling policy requires such transfer of public funds from one government pocket to another.

There is also no reason for local governments to tax national government instrumentalities for
rendering essential public services to inhabitants of local governments. The only exception is
when the legislature clearly intended to tax government instrumentalities for the delivery of
essential public services for sound and compelling policy considerations. There must be
express language in the law empowering local governments to tax national government
instrumentalities. Any doubt whether such power exists is resolved against local governments.

Thus, Section 133 of the Local Government Code states that "unless otherwise provided" in the
Code, local governments cannot tax national government instrumentalities. As this Court held
in Basco v. Philippine Amusements and Gaming Corporation:

The states have no power by taxation or otherwise, to retard, impede, burden or in

any manner control the operation of constitutional laws enacted by Congress to carry
into execution the powers vested in the federal government. (MC Culloch v.
Maryland, 4 Wheat 316, 4 L Ed. 579)

This doctrine emanates from the "supremacy" of the National Government over local
governments.

"Justice Holmes, speaking for the Supreme Court, made reference to the entire
absence of power on the part of the States to touch, in that way (taxation) at least,
the instrumentalities of the United States (Johnson v. Maryland, 254 US 51) and it
can be agreed that no state or political subdivision can regulate a federal
instrumentality in such a way as to prevent it from consummating its federal
responsibilities, or even to seriously burden it in the accomplishment of them."
(Antieau, Modern Constitutional Law, Vol. 2, p. 140, emphasis supplied)

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 Otherwise, mere creatures of the State can defeat National policies thru extermination of
what local authorities may perceive to be undesirable activities or enterprise using the power
to tax as "a tool for regulation" (U.S. v. Sanchez, 340 US 42).

The power to tax which was called by Justice Marshall as the "power to destroy" (Mc Culloch
v. Maryland, supra) cannot be allowed to defeat an instrumentality or creation of the very
entity which has the inherent power to wield it. 20

2. Airport Lands and Buildings of MIAA are Owned by the Republic

a. Airport Lands and Buildings are of Public Dominion

The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by
the State or the Republic of the Philippines. The Civil Code provides:

ARTICLE 419. Property is either of public dominion or of private ownership.

ARTICLE 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads, and others of similar
character;

(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth. (Emphasis supplied)

ARTICLE 421. All other property of the State, which is not of the character stated in the
preceding article, is patrimonial property.

ARTICLE 422. Property of public dominion, when no longer intended for public use or for
public service, shall form part of the patrimonial property of the State.

No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like
"roads, canals, rivers, torrents, ports and bridges constructed by the State," are owned by the
State. The term "ports" includes seaports and airports. The MIAA Airport Lands and Buildings
constitute a "port" constructed by the State. Under Article 420 of the Civil Code, the MIAA Airport
Lands and Buildings are properties of public dominion and thus owned by the State or the Republic
of the Philippines.

The Airport Lands and Buildings are devoted to public use because they are used by the public for
international and domestic travel and transportation. The fact that the MIAA collects terminal
fees and other charges from the public does not remove the character of the Airport Lands and
Buildings as properties for public use. The operation by the government of a tollway does not
change the character of the road as one for public use. Someone must pay for the maintenance of
the road, either the public indirectly through the taxes they pay the government, or only those among
the public who actually use the road through the toll fees they pay upon using the road. The tollway
system is even a more efficient and equitable manner of taxing the public for the maintenance of
public roads.

The charging of fees to the public does not determine the character of the property whether it is of
public dominion or not. Article 420 of the Civil Code defines property of public dominion as one

73 | P a g e
"intended for public use." Even if the government collects toll fees, the road is still "intended for
public use" if anyone can use the road under the same terms and conditions as the rest of the public.
The charging of fees, the limitation on the kind of vehicles that can use the road, the speed
restrictions and other conditions for the use of the road do not affect the public character of the road.

The terminal fees MIAA charges to passengers, as well as the landing fees MIAA charges to airlines,
constitute the bulk of the income that maintains the operations of MIAA. The collection of such fees
does not change the character of MIAA as an airport for public use. Such fees are often termed
user's tax. This means taxing those among the public who actually use a public facility instead of
taxing all the public including those who never use the particular public facility. A user's tax is more
equitable — a principle of taxation mandated in the 1987 Constitution.21

The Airport Lands and Buildings of MIAA, which its Charter calls the "principal airport of the
Philippines for both international and domestic air traffic,"22 are properties of public dominion
because they are intended for public use. As properties of public dominion, they indisputably
belong to the State or the Republic of the Philippines.

b. Airport Lands and Buildings are Outside the Commerce of Man

The Airport Lands and Buildings of MIAA are devoted to public use and thus are properties of public
dominion. As properties of public dominion, the Airport Lands and Buildings are outside the
commerce of man. The Court has ruled repeatedly that properties of public dominion are outside
the commerce of man. As early as 1915, this Court already ruled in Municipality of Cavite v.
Rojas that properties devoted to public use are outside the commerce of man, thus:

According to article 344 of the Civil Code: "Property for public use in provinces and in towns
comprises the provincial and town roads, the squares, streets, fountains, and public waters,
the promenades, and public works of general service supported by said towns or provinces."

The said Plaza Soledad being a promenade for public use, the municipal council of Cavite
could not in 1907 withdraw or exclude from public use a portion thereof in order to lease it for
the sole benefit of the defendant Hilaria Rojas. In leasing a portion of said plaza or public
place to the defendant for private use the plaintiff municipality exceeded its authority in the
exercise of its powers by executing a contract over a thing of which it could not dispose, nor
is it empowered so to do.

The Civil Code, article 1271, prescribes that everything which is not outside the commerce of
man may be the object of a contract, and plazas and streets are outside of this commerce,
as was decided by the supreme court of Spain in its decision of February 12, 1895, which
says: "Communal things that cannot be sold because they are by their very nature
outside of commerce are those for public use, such as the plazas, streets, common
lands, rivers, fountains, etc." (Emphasis supplied) 23

Again in Espiritu v. Municipal Council, the Court declared that properties of public dominion are
outside the commerce of man:

xxx Town plazas are properties of public dominion, to be devoted to public use and to be
made available to the public in general. They are outside the commerce of man and
cannot be disposed of or even leased by the municipality to private parties. While in case of
war or during an emergency, town plazas may be occupied temporarily by private
individuals, as was done and as was tolerated by the Municipality of Pozorrubio, when the
emergency has ceased, said temporary occupation or use must also cease, and the town

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 officials should see to it that the town plazas should ever be kept open to the public and free
from encumbrances or illegal private constructions.24 (Emphasis supplied)

The Court has also ruled that property of public dominion, being outside the commerce of man,
cannot be the subject of an auction sale.25

Properties of public dominion, being for public use, are not subject to levy, encumbrance or
disposition through public or private sale. Any encumbrance, levy on execution or auction sale of any
property of public dominion is void for being contrary to public policy. Essential public services will
stop if properties of public dominion are subject to encumbrances, foreclosures and auction sale.
This will happen if the City of Parañaque can foreclose and compel the auction sale of the 600-
hectare runway of the MIAA for non-payment of real estate tax.

Before MIAA can encumber26 the Airport Lands and Buildings, the President must first withdraw
from public usethe Airport Lands and Buildings. Sections 83 and 88 of the Public Land Law or
Commonwealth Act No. 141, which "remains to this day the existing general law governing the
classification and disposition of lands of the public domain other than timber and mineral
lands,"27 provide:

SECTION 83. Upon the recommendation of the Secretary of Agriculture and Natural
Resources, the President may designate by proclamation any tract or tracts of land of the
public domain as reservations for the use of the Republic of the Philippines or of any of its
branches, or of the inhabitants thereof, in accordance with regulations prescribed for this
purposes, or for quasi-public uses or purposes when the public interest requires it, including
reservations for highways, rights of way for railroads, hydraulic power sites, irrigation
systems, communal pastures or lequas communales, public parks, public quarries, public
fishponds, working men's village and other improvements for the public benefit.

SECTION 88. The tract or tracts of land reserved under the provisions of Section
eighty-three shall be non-alienable and shall not be subject to occupation, entry, sale,
lease, or other disposition until again declared alienable under the provisions of this
Act or by proclamation of the President. (Emphasis and underscoring supplied)

Thus, unless the President issues a proclamation withdrawing the Airport Lands and Buildings from
public use, these properties remain properties of public dominion and are inalienable. Since the
Airport Lands and Buildings are inalienable in their present status as properties of public dominion,
they are not subject to levy on execution or foreclosure sale. As long as the Airport Lands and
Buildings are reserved for public use, their ownership remains with the State or the Republic of the
Philippines.

The authority of the President to reserve lands of the public domain for public use, and to withdraw
such public use, is reiterated in Section 14, Chapter 4, Title I, Book III of the Administrative Code of
1987, which states:

SEC. 14. Power to Reserve Lands of the Public and Private Domain of the Government. —
(1) The President shall have the power to reserve for settlement or public use, and for
specific public purposes, any of the lands of the public domain, the use of which is
not otherwise directed by law. The reserved land shall thereafter remain subject to the
specific public purpose indicated until otherwise provided by law or proclamation;

x x x x. (Emphasis supplied)

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There is no question, therefore, that unless the Airport Lands and Buildings are withdrawn by law or
presidential proclamation from public use, they are properties of public dominion, owned by the
Republic and outside the commerce of man.

c. MIAA is a Mere Trustee of the Republic

MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. Section 48,
Chapter 12, Book I of the Administrative Code allows instrumentalities like MIAA to hold title to
real properties owned by the Republic, thus:

SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be executed
in behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the Philippines, by the
President, unless the authority therefor is expressly vested by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the name of
any political subdivision or of any corporate agency or instrumentality, by the
executive head of the agency or instrumentality. (Emphasis supplied)

In MIAA's case, its status as a mere trustee of the Airport Lands and Buildings is clearer because
even its executive head cannot sign the deed of conveyance on behalf of the Republic. Only the
President of the Republic can sign such deed of conveyance.28

d. Transfer to MIAA was Meant to Implement a Reorganization

The MIAA Charter, which is a law, transferred to MIAA the title to the Airport Lands and Buildings
from the Bureau of Air Transportation of the Department of Transportation and Communications.
The MIAA Charter provides:

SECTION 3. Creation of the Manila International Airport Authority. — x x x x

The land where the Airport is presently located as well as the surrounding land area of
approximately six hundred hectares, are hereby transferred, conveyed and assigned
to the ownership and administration of the Authority, subject to existing rights, if any.
The Bureau of Lands and other appropriate government agencies shall undertake an actual
survey of the area transferred within one year from the promulgation of this Executive Order
and the corresponding title to be issued in the name of the Authority. Any portion thereof
shall not be disposed through sale or through any other mode unless specifically
approved by the President of the Philippines. (Emphasis supplied)

SECTION 22. Transfer of Existing Facilities and Intangible Assets. — All existing public
airport facilities, runways, lands, buildings and other property, movable or immovable,
belonging to the Airport, and all assets, powers, rights, interests and privileges belonging to
the Bureau of Air Transportation relating to airport works or air operations, including all
equipment which are necessary for the operation of crash fire and rescue facilities, are
hereby transferred to the Authority. (Emphasis supplied)

SECTION 25. Abolition of the Manila International Airport as a Division in the Bureau of Air
Transportation and Transitory Provisions. — The Manila International Airport including the

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 Manila Domestic Airport as a division under the Bureau of Air Transportation is hereby
abolished.

x x x x.

The MIAA Charter transferred the Airport Lands and Buildings to MIAA without the Republic
receiving cash, promissory notes or even stock since MIAA is not a stock corporation.

The whereas clauses of the MIAA Charter explain the rationale for the transfer of the Airport Lands
and Buildings to MIAA, thus:

WHEREAS, the Manila International Airport as the principal airport of the Philippines for both
international and domestic air traffic, is required to provide standards of airport
accommodation and service comparable with the best airports in the world;

WHEREAS, domestic and other terminals, general aviation and other facilities, have to be
upgraded to meet the current and future air traffic and other demands of aviation in Metro
Manila;

WHEREAS, a management and organization study has indicated that the objectives of
providing high standards of accommodation and service within the context of a
financially viable operation, will best be achieved by a separate and autonomous
body; and

WHEREAS, under Presidential Decree No. 1416, as amended by Presidential Decree No.
1772, the President of the Philippines is given continuing authority to reorganize the
National Government, which authority includes the creation of new entities, agencies
and instrumentalities of the Government[.] (Emphasis supplied)

The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was
not meant to transfer beneficial ownership of these assets from the Republic to MIAA. The purpose
was merely to reorganize a division in the Bureau of Air Transportation into a separate and
autonomous body. The Republic remains the beneficial owner of the Airport Lands and Buildings.
MIAA itself is owned solely by the Republic. No party claims any ownership rights over MIAA's
assets adverse to the Republic.

The MIAA Charter expressly provides that the Airport Lands and Buildings "shall not be disposed
through sale or through any other mode unless specifically approved by the President of the
Philippines." This only means that the Republic retained the beneficial ownership of the Airport
Lands and Buildings because under Article 428 of the Civil Code, only the "owner has the right to x x
x dispose of a thing." Since MIAA cannot dispose of the Airport Lands and Buildings, MIAA does not
own the Airport Lands and Buildings.

At any time, the President can transfer back to the Republic title to the Airport Lands and Buildings
without the Republic paying MIAA any consideration. Under Section 3 of the MIAA Charter, the
President is the only one who can authorize the sale or disposition of the Airport Lands and
Buildings. This only confirms that the Airport Lands and Buildings belong to the Republic.

e. Real Property Owned by the Republic is Not Taxable

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Section 234(a) of the Local Government Code exempts from real estate tax any "[r]eal property
owned by the Republic of the Philippines." Section 234(a) provides:

SEC. 234. Exemptions from Real Property Tax. — The following are exempted from
payment of the real property tax:

(a) Real property owned by the Republic of the Philippines or any of its political
subdivisions except when the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person;

x x x. (Emphasis supplied)

This exemption should be read in relation with Section 133(o) of the same Code, which prohibits
local governments from imposing "[t]axes, fees or charges of any kind on the National Government,
its agencies and instrumentalitiesx x x." The real properties owned by the Republic are titled either
in the name of the Republic itself or in the name of agencies or instrumentalities of the National
Government. The Administrative Code allows real property owned by the Republic to be titled in the
name of agencies or instrumentalities of the national government. Such real properties remain
owned by the Republic and continue to be exempt from real estate tax.

The Republic may grant the beneficial use of its real property to an agency or instrumentality of the
national government. This happens when title of the real property is transferred to an agency or
instrumentality even as the Republic remains the owner of the real property. Such arrangement does
not result in the loss of the tax exemption. Section 234(a) of the Local Government Code states that
real property owned by the Republic loses its tax exemption only if the "beneficial use thereof has
been granted, for consideration or otherwise, to a taxable person." MIAA, as a government
instrumentality, is not a taxable person under Section 133(o) of the Local Government Code. Thus,
even if we assume that the Republic has granted to MIAA the beneficial use of the Airport Lands and
Buildings, such fact does not make these real properties subject to real estate tax.

However, portions of the Airport Lands and Buildings that MIAA leases to private entities are not
exempt from real estate tax. For example, the land area occupied by hangars that MIAA leases to
private corporations is subject to real estate tax. In such a case, MIAA has granted the beneficial use
of such land area for a consideration to a taxable person and therefore such land area is subject to
real estate tax. In Lung Center of the Philippines v. Quezon City, the Court ruled:

Accordingly, we hold that the portions of the land leased to private entities as well as those
parts of the hospital leased to private individuals are not exempt from such taxes. On the
other hand, the portions of the land occupied by the hospital and portions of the hospital
used for its patients, whether paying or non-paying, are exempt from real property taxes.29

3. Refutation of Arguments of Minority

The minority asserts that the MIAA is not exempt from real estate tax because Section 193 of the
Local Government Code of 1991 withdrew the tax exemption of "all persons, whether natural or
juridical" upon the effectivity of the Code. Section 193 provides:

SEC. 193. Withdrawal of Tax Exemption Privileges – Unless otherwise provided in this
Code, tax exemptions or incentives granted to, or presently enjoyed by all persons,
whether natural or juridical, including government-owned or controlled corporations,
except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and

78 | P a g e
 non-profit hospitals and educational institutions are hereby withdrawn upon effectivity of this
Code. (Emphasis supplied)

The minority states that MIAA is indisputably a juridical person. The minority argues that since the
Local Government Code withdrew the tax exemption of all juridical persons, then MIAA is not
exempt from real estate tax. Thus, the minority declares:

It is evident from the quoted provisions of the Local Government Code that the
withdrawn exemptions from realty tax cover not just GOCCs, but all persons. To
repeat, the provisions lay down the explicit proposition that the withdrawal of realty tax
exemption applies to all persons. The reference to or the inclusion of GOCCs is only
clarificatory or illustrative of the explicit provision.

The term "All persons" encompasses the two classes of persons recognized under
our laws, natural and juridical persons. Obviously, MIAA is not a natural person. Thus,
the determinative test is not just whether MIAA is a GOCC, but whether MIAA is a
juridical person at all. (Emphasis and underscoring in the original)

The minority posits that the "determinative test" whether MIAA is exempt from local taxation is its
status — whether MIAA is a juridical person or not. The minority also insists that "Sections 193 and
234 may be examined in isolation from Section 133(o) to ascertain MIAA's claim of exemption."

The argument of the minority is fatally flawed. Section 193 of the Local Government Code expressly
withdrew the tax exemption of all juridical persons "[u]nless otherwise provided in this Code."
Now, Section 133(o) of the Local Government Code expressly provides otherwise,
specifically prohibiting local governments from imposing any kind of tax on national government
instrumentalities. Section 133(o) states:

SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. – Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the following:

xxxx

(o) Taxes, fees or charges of any kinds on the National Government, its agencies and
instrumentalities, and local government units. (Emphasis and underscoring supplied)

By express mandate of the Local Government Code, local governments cannot impose any kind of
tax on national government instrumentalities like the MIAA. Local governments are devoid of power
to tax the national government, its agencies and instrumentalities. The taxing powers of local
governments do not extend to the national government, its agencies and instrumentalities, "[u]nless
otherwise provided in this Code" as stated in the saving clause of Section 133. The saving clause
refers to Section 234(a) on the exception to the exemption from real estate tax of real property
owned by the Republic.

The minority, however, theorizes that unless exempted in Section 193 itself, all juridical persons are
subject to tax by local governments. The minority insists that the juridical persons exempt from local
taxation are limited to the three classes of entities specifically enumerated as exempt in Section 193.
Thus, the minority states:

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 x x x Under Section 193, the exemption is limited to (a) local water districts; (b) cooperatives
duly registered under Republic Act No. 6938; and (c) non-stock and non-profit hospitals and
educational institutions. It would be belaboring the obvious why the MIAA does not fall within
any of the exempt entities under Section 193. (Emphasis supplied)

The minority's theory directly contradicts and completely negates Section 133(o) of the Local
Government Code. This theory will result in gross absurdities. It will make the national government,
which itself is a juridical person, subject to tax by local governments since the national government is
not included in the enumeration of exempt entities in Section 193. Under this theory, local
governments can impose any kind of local tax, and not only real estate tax, on the national
government.

Under the minority's theory, many national government instrumentalities with juridical personalities
will also be subject to any kind of local tax, and not only real estate tax. Some of the national
government instrumentalities vested by law with juridical personalities are: Bangko Sentral ng
Pilipinas,30 Philippine Rice Research Institute,31Laguna Lake

Development Authority,32 Fisheries Development Authority,33 Bases Conversion Development

Authority,34Philippine Ports Authority,35 Cagayan de Oro Port Authority,36 San Fernando Port
Authority,37 Cebu Port Authority,38 and Philippine National Railways.39

The minority's theory violates Section 133(o) of the Local Government Code which expressly
prohibits local governments from imposing any kind of tax on national government instrumentalities.
Section 133(o) does not distinguish between national government instrumentalities with or without
juridical personalities. Where the law does not distinguish, courts should not distinguish. Thus,
Section 133(o) applies to all national government instrumentalities, with or without juridical
personalities. The determinative test whether MIAA is exempt from local taxation is not whether
MIAA is a juridical person, but whether it is a national government instrumentality under Section
133(o) of the Local Government Code. Section 133(o) is the specific provision of law prohibiting local
governments from imposing any kind of tax on the national government, its agencies and
instrumentalities.

Section 133 of the Local Government Code starts with the saving clause "[u]nless otherwise
provided in this Code." This means that unless the Local Government Code grants an express
authorization, local governments have no power to tax the national government, its agencies and
instrumentalities. Clearly, the rule is local governments have no power to tax the national
government, its agencies and instrumentalities. As an exception to this rule, local governments may
tax the national government, its agencies and instrumentalities only if the Local Government Code
expressly so provides.

The saving clause in Section 133 refers to the exception to the exemption in Section 234(a) of the
Code, which makes the national government subject to real estate tax when it gives the beneficial
use of its real properties to a taxable entity. Section 234(a) of the Local Government Code provides:

SEC. 234. Exemptions from Real Property Tax – The following are exempted from payment
of the real property tax:

(a) Real property owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted, for consideration or otherwise, to a
taxable person.

x x x. (Emphasis supplied)

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Under Section 234(a), real property owned by the Republic is exempt from real estate tax. The
exception to this exemption is when the government gives the beneficial use of the real property to a
taxable entity.

The exception to the exemption in Section 234(a) is the only instance when the national government,
its agencies and instrumentalities are subject to any kind of tax by local governments. The exception
to the exemption applies only to real estate tax and not to any other tax. The justification for the
exception to the exemption is that the real property, although owned by the Republic, is not devoted
to public use or public service but devoted to the private gain of a taxable person.

The minority also argues that since Section 133 precedes Section 193 and 234 of the Local
Government Code, the later provisions prevail over Section 133. Thus, the minority asserts:

x x x Moreover, sequentially Section 133 antecedes Section 193 and 234. Following an
accepted rule of construction, in case of conflict the subsequent provisions should prevail.
Therefore, MIAA, as a juridical person, is subject to real property taxes, the general
exemptions attaching to instrumentalities under Section 133(o) of the Local Government
Code being qualified by Sections 193 and 234 of the same law. (Emphasis supplied)

The minority assumes that there is an irreconcilable conflict between Section 133 on one hand, and
Sections 193 and 234 on the other. No one has urged that there is such a conflict, much less has
any one presenteda persuasive argument that there is such a conflict. The minority's assumption of
an irreconcilable conflict in the statutory provisions is an egregious error for two reasons.

First, there is no conflict whatsoever between Sections 133 and 193 because Section 193 expressly
admits its subordination to other provisions of the Code when Section 193 states "[u]nless otherwise
provided in this Code." By its own words, Section 193 admits the superiority of other provisions of
the Local Government Code that limit the exercise of the taxing power in Section 193. When a
provision of law grants a power but withholds such power on certain matters, there is no conflict
between the grant of power and the withholding of power. The grantee of the power simply cannot
exercise the power on matters withheld from its power.

Second, Section 133 is entitled "Common Limitations on the Taxing Powers of Local Government
Units." Section 133 limits the grant to local governments of the power to tax, and not merely the
exercise of a delegated power to tax. Section 133 states that the taxing powers of local governments
"shall not extend to the levy" of any kind of tax on the national government, its agencies and
instrumentalities. There is no clearer limitation on the taxing power than this.

Since Section 133 prescribes the "common limitations" on the taxing powers of local governments,
Section 133 logically prevails over Section 193 which grants local governments such taxing powers.
By their very meaning and purpose, the "common limitations" on the taxing power prevail over the
grant or exercise of the taxing power. If the taxing power of local governments in Section 193
prevails over the limitations on such taxing power in Section 133, then local governments can
impose any kind of tax on the national government, its agencies and instrumentalities — a gross
absurdity.

Local governments have no power to tax the national government, its agencies and
instrumentalities, except as otherwise provided in the Local Government Code pursuant to the
saving clause in Section 133 stating "[u]nless otherwise provided in this Code." This exception —
which is an exception to the exemption of the Republic from real estate tax imposed by local
governments — refers to Section 234(a) of the Code. The exception to the exemption in Section
234(a) subjects real property owned by the Republic, whether titled in the name of the national

81 | P a g e
government, its agencies or instrumentalities, to real estate tax if the beneficial use of such property
is given to a taxable entity.

The minority also claims that the definition in the Administrative Code of the phrase "government-
owned or controlled corporation" is not controlling. The minority points out that Section 2 of the
Introductory Provisions of the Administrative Code admits that its definitions are not controlling when
it provides:

SEC. 2. General Terms Defined. — Unless the specific words of the text, or the context as a
whole, or a particular statute, shall require a different meaning:

xxxx

The minority then concludes that reliance on the Administrative Code definition is "flawed."

The minority's argument is a non sequitur. True, Section 2 of the Administrative Code recognizes
that a statute may require a different meaning than that defined in the Administrative Code.
However, this does not automatically mean that the definition in the Administrative Code does not
apply to the Local Government Code. Section 2 of the Administrative Code clearly states that
"unless the specific words x x x of a particular statute shall require a different meaning," the definition
in Section 2 of the Administrative Code shall apply. Thus, unless there is specific language in the
Local Government Code defining the phrase "government-owned or controlled corporation"
differently from the definition in the Administrative Code, the definition in the Administrative Code
prevails.

The minority does not point to any provision in the Local Government Code defining the phrase
"government-owned or controlled corporation" differently from the definition in the Administrative
Code. Indeed, there is none. The Local Government Code is silent on the definition of the phrase
"government-owned or controlled corporation." The Administrative Code, however, expressly defines
the phrase "government-owned or controlled corporation." The inescapable conclusion is that the
Administrative Code definition of the phrase "government-owned or controlled corporation" applies to
the Local Government Code.

The third whereas clause of the Administrative Code states that the Code "incorporates in a unified
document the major structural, functional and procedural principles and rules of governance." Thus,
the Administrative Code is the governing law defining the status and relationship of government
departments, bureaus, offices, agencies and instrumentalities. Unless a statute expressly provides
for a different status and relationship for a specific government unit or entity, the provisions of the
Administrative Code prevail.

The minority also contends that the phrase "government-owned or controlled corporation" should
apply only to corporations organized under the Corporation Code, the general incorporation law, and
not to corporations created by special charters. The minority sees no reason why government
corporations with special charters should have a capital stock. Thus, the minority declares:

I submit that the definition of "government-owned or controlled corporations" under the

Administrative Code refer to those corporations owned by the government or its
instrumentalities which are created not by legislative enactment, but formed and organized
under the Corporation Code through registration with the Securities and Exchange
Commission. In short, these are GOCCs without original charters.

xxxx

82 | P a g e
 It might as well be worth pointing out that there is no point in requiring a capital structure for
GOCCs whose full ownership is limited by its charter to the State or Republic. Such GOCCs
are not empowered to declare dividends or alienate their capital shares.

The contention of the minority is seriously flawed. It is not in accord with the Constitution and
existing legislations. It will also result in gross absurdities.

First, the Administrative Code definition of the phrase "government-owned or controlled corporation"
does not distinguish between one incorporated under the Corporation Code or under a special
charter. Where the law does not distinguish, courts should not distinguish.

Second, Congress has created through special charters several government-owned corporations
organized as stock corporations. Prime examples are the Land Bank of the Philippines and the
Development Bank of the Philippines. The special charter40 of the Land Bank of the Philippines
provides:

SECTION 81. Capital. — The authorized capital stock of the Bank shall be nine billion pesos,
divided into seven hundred and eighty million common shares with a par value of ten pesos
each, which shall be fully subscribed by the Government, and one hundred and twenty
million preferred shares with a par value of ten pesos each, which shall be issued in
accordance with the provisions of Sections seventy-seven and eighty-three of this Code.
(Emphasis supplied)

Likewise, the special charter41 of the Development Bank of the Philippines provides:

SECTION 7. Authorized Capital Stock – Par value. — The capital stock of the Bank shall be
Five Billion Pesos to be divided into Fifty Million common shares with par value of P100 per
share. These shares are available for subscription by the National Government. Upon the
effectivity of this Charter, the National Government shall subscribe to Twenty-Five Million
common shares of stock worth Two Billion Five Hundred Million which shall be deemed paid
for by the Government with the net asset values of the Bank remaining after the transfer of
assets and liabilities as provided in Section 30 hereof. (Emphasis supplied)

Other government-owned corporations organized as stock corporations under their special charters
are the Philippine Crop Insurance Corporation,42 Philippine International Trading Corporation,43 and
the Philippine National Bank44 before it was reorganized as a stock corporation under the
Corporation Code. All these government-owned corporations organized under special charters as
stock corporations are subject to real estate tax on real properties owned by them. To rule that they
are not government-owned or controlled corporations because they are not registered with the
Securities and Exchange Commission would remove them from the reach of Section 234 of the
Local Government Code, thus exempting them from real estate tax.

Third, the government-owned or controlled corporations created through special charters are those
that meet the two conditions prescribed in Section 16, Article XII of the Constitution. The first
condition is that the government-owned or controlled corporation must be established for the
common good. The second condition is that the government-owned or controlled corporation must
meet the test of economic viability. Section 16, Article XII of the 1987 Constitution provides:

SEC. 16. The Congress shall not, except by general law, provide for the formation,
organization, or regulation of private corporations. Government-owned or controlled
corporations may be created or established by special charters in the interest of the common
good and subject to the test of economic viability. (Emphasis and underscoring supplied)

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The Constitution expressly authorizes the legislature to create "government-owned or controlled
corporations" through special charters only if these entities are required to meet the twin conditions
of common good and economic viability. In other words, Congress has no power to create
government-owned or controlled corporations with special charters unless they are made to comply
with the two conditions of common good and economic viability. The test of economic viability
applies only to government-owned or controlled corporations that perform economic or commercial
activities and need to compete in the market place. Being essentially economic vehicles of the State
for the common good — meaning for economic development purposes — these government-owned
or controlled corporations with special charters are usually organized as stock corporations just like
ordinary private corporations.

In contrast, government instrumentalities vested with corporate powers and performing

governmental or public functions need not meet the test of economic viability. These
instrumentalities perform essential public services for the common good, services that every modern
State must provide its citizens. These instrumentalities need not be economically viable since the
government may even subsidize their entire operations. These instrumentalities are not the
"government-owned or controlled corporations" referred to in Section 16, Article XII of the 1987
Constitution.

Thus, the Constitution imposes no limitation when the legislature creates government
instrumentalities vested with corporate powers but performing essential governmental or public
functions. Congress has plenary authority to create government instrumentalities vested with
corporate powers provided these instrumentalities perform essential government functions or public
services. However, when the legislature creates through special charters corporations that perform
economic or commercial activities, such entities — known as "government-owned or controlled
corporations" — must meet the test of economic viability because they compete in the market place.

This is the situation of the Land Bank of the Philippines and the Development Bank of the Philippines
and similar government-owned or controlled corporations, which derive their income to meet
operating expenses solely from commercial transactions in competition with the private sector. The
intent of the Constitution is to prevent the creation of government-owned or controlled corporations
that cannot survive on their own in the market place and thus merely drain the public coffers.

Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the
Constitutional Commission the purpose of this test, as follows:

MR. OPLE: Madam President, the reason for this concern is really that when the government
creates a corporation, there is a sense in which this corporation becomes exempt from the
test of economic performance. We know what happened in the past. If a government
corporation loses, then it makes its claim upon the taxpayers' money through new equity
infusions from the government and what is always invoked is the common good. That is the
reason why this year, out of a budget of P115 billion for the entire government, about P28
billion of this will go into equity infusions to support a few government financial institutions.
And this is all taxpayers' money which could have been relocated to agrarian reform, to
social services like health and education, to augment the salaries of grossly underpaid public
employees. And yet this is all going down the drain.

Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the "common
good," this becomes a restraint on future enthusiasts for state capitalism to excuse
themselves from the responsibility of meeting the market test so that they become viable.
And so, Madam President, I reiterate, for the committee's consideration and I am glad that I

84 | P a g e
 am joined in this proposal by Commissioner Foz, the insertion of the standard of
"ECONOMIC VIABILITY OR THE ECONOMIC TEST," together with the common good.45

Father Joaquin G. Bernas, a leading member of the Constitutional Commission, explains in his
textbook The 1987 Constitution of the Republic of the Philippines: A Commentary:

The second sentence was added by the 1986 Constitutional Commission. The significant
addition, however, is the phrase "in the interest of the common good and subject to the test
of economic viability." The addition includes the ideas that they must show capacity to
function efficiently in business and that they should not go into activities which the private
sector can do better. Moreover, economic viability is more than financial viability but also
includes capability to make profit and generate benefits not quantifiable in financial
terms.46(Emphasis supplied)

Clearly, the test of economic viability does not apply to government entities vested with corporate
powers and performing essential public services. The State is obligated to render essential public
services regardless of the economic viability of providing such service. The non-economic viability of
rendering such essential public service does not excuse the State from withholding such essential
services from the public.

However, government-owned or controlled corporations with special charters, organized essentially

for economic or commercial objectives, must meet the test of economic viability. These are the
government-owned or controlled corporations that are usually organized under their special charters
as stock corporations, like the Land Bank of the Philippines and the Development Bank of the
Philippines. These are the government-owned or controlled corporations, along with government-
owned or controlled corporations organized under the Corporation Code, that fall under the definition
of "government-owned or controlled corporations" in Section 2(10) of the Administrative Code.

The MIAA need not meet the test of economic viability because the legislature did not create MIAA
to compete in the market place. MIAA does not compete in the market place because there is no
competing international airport operated by the private sector. MIAA performs an essential public
service as the primary domestic and international airport of the Philippines. The operation of an
international airport requires the presence of personnel from the following government agencies:

1. The Bureau of Immigration and Deportation, to document the arrival and departure of
passengers, screening out those without visas or travel documents, or those with hold
departure orders;

2. The Bureau of Customs, to collect import duties or enforce the ban on prohibited
importations;

3. The quarantine office of the Department of Health, to enforce health measures against the
spread of infectious diseases into the country;

4. The Department of Agriculture, to enforce measures against the spread of plant and
animal diseases into the country;

5. The Aviation Security Command of the Philippine National Police, to prevent the entry of
terrorists and the escape of criminals, as well as to secure the airport premises from terrorist
attack or seizure;

85 | P a g e
 6. The Air Traffic Office of the Department of Transportation and Communications, to
authorize aircraft to enter or leave Philippine airspace, as well as to land on, or take off from,
the airport; and

7. The MIAA, to provide the proper premises — such as runway and buildings — for the
government personnel, passengers, and airlines, and to manage the airport operations.

All these agencies of government perform government functions essential to the operation of an
international airport.

MIAA performs an essential public service that every modern State must provide its citizens. MIAA
derives its revenues principally from the mandatory fees and charges MIAA imposes on passengers
and airlines. The terminal fees that MIAA charges every passenger are regulatory or administrative
fees47 and not income from commercial transactions.

MIAA falls under the definition of a government instrumentality under Section 2(10) of the
Introductory Provisions of the Administrative Code, which provides:

SEC. 2. General Terms Defined. – x x x x

(10) Instrumentality refers to any agency of the National Government, not integrated within
the department framework, vested with special functions or jurisdiction by law, endowed with
some if not all corporate powers, administering special funds, and enjoying operational
autonomy, usually through a charter. x x x (Emphasis supplied)

The fact alone that MIAA is endowed with corporate powers does not make MIAA a government-
owned or controlled corporation. Without a change in its capital structure, MIAA remains a
government instrumentality under Section 2(10) of the Introductory Provisions of the Administrative
Code. More importantly, as long as MIAA renders essential public services, it need not comply with
the test of economic viability. Thus, MIAA is outside the scope of the phrase "government-owned or
controlled corporations" under Section 16, Article XII of the 1987 Constitution.

The minority belittles the use in the Local Government Code of the phrase "government-owned or
controlled corporation" as merely "clarificatory or illustrative." This is fatal. The 1987 Constitution
prescribes explicit conditions for the creation of "government-owned or controlled corporations." The
Administrative Code defines what constitutes a "government-owned or controlled corporation." To
belittle this phrase as "clarificatory or illustrative" is grave error.

To summarize, MIAA is not a government-owned or controlled corporation under Section 2(13) of

the Introductory Provisions of the Administrative Code because it is not organized as a stock or non-
stock corporation. Neither is MIAA a government-owned or controlled corporation under Section 16,
Article XII of the 1987 Constitution because MIAA is not required to meet the test of economic
viability. MIAA is a government instrumentality vested with corporate powers and performing
essential public services pursuant to Section 2(10) of the Introductory Provisions of the
Administrative Code. As a government instrumentality, MIAA is not subject to any kind of tax by local
governments under Section 133(o) of the Local Government Code. The exception to the exemption
in Section 234(a) does not apply to MIAA because MIAA is not a taxable entity under the Local
Government Code. Such exception applies only if the beneficial use of real property owned by the
Republic is given to a taxable entity.

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Finally, the Airport Lands and Buildings of MIAA are properties devoted to public use and thus are
properties of public dominion. Properties of public dominion are owned by the State or the Republic.
Article 420 of the Civil Code provides:

Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth. (Emphasis supplied)

The term "ports x x x constructed by the State" includes airports and seaports. The Airport Lands
and Buildings of MIAA are intended for public use, and at the very least intended for public service.
Whether intended for public use or public service, the Airport Lands and Buildings are properties of
public dominion. As properties of public dominion, the Airport Lands and Buildings are owned by the
Republic and thus exempt from real estate tax under Section 234(a) of the Local Government Code.

4. Conclusion

Under Section 2(10) and (13) of the Introductory Provisions of the Administrative Code, which
governs the legal relation and status of government units, agencies and offices within the entire
government machinery, MIAA is a government instrumentality and not a government-owned or
controlled corporation. Under Section 133(o) of the Local Government Code, MIAA as a government
instrumentality is not a taxable person because it is not subject to "[t]axes, fees or charges of any
kind" by local governments. The only exception is when MIAA leases its real property to a "taxable
person" as provided in Section 234(a) of the Local Government Code, in which case the specific real
property leased becomes subject to real estate tax. Thus, only portions of the Airport Lands and
Buildings leased to taxable persons like private parties are subject to real estate tax by the City of
Parañaque.

Under Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA, being devoted to public
use, are properties of public dominion and thus owned by the State or the Republic of the
Philippines. Article 420 specifically mentions "ports x x x constructed by the State," which includes
public airports and seaports, as properties of public dominion and owned by the Republic. As
properties of public dominion owned by the Republic, there is no doubt whatsoever that the Airport
Lands and Buildings are expressly exempt from real estate tax under Section 234(a) of the Local
Government Code. This Court has also repeatedly ruled that properties of public dominion are not
subject to execution or foreclosure sale.

WHEREFORE, we GRANT the petition. We SET ASIDE the assailed Resolutions of the Court of
Appeals of 5 October 2001 and 27 September 2002 in CA-G.R. SP No. 66878. We DECLARE the
Airport Lands and Buildings of the Manila International Airport Authority EXEMPT from the real
estate tax imposed by the City of Parañaque. We declare VOID all the real estate tax assessments,
including the final notices of real estate tax delinquencies, issued by the City of Parañaque on the
Airport Lands and Buildings of the Manila International Airport Authority, except for the portions that
the Manila International Airport Authority has leased to private parties. We also declare VOID the
assailed auction sale, and all its effects, of the Airport Lands and Buildings of the Manila
International Airport Authority.

No costs.

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SO ORDERED

G.R. No. 120082 September 11, 1996

MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY vs.HON. FERDINAND J. MARCOS

For review under Rule 45 of the Rules of Court on a pure question of law are the decision of 22
March 19951of the Regional Trial Court (RTC) of Cebu City, Branch 20, dismissing the petition for
declaratory relief in Civil Case No. CEB-16900 entitled "Mactan Cebu International Airport Authority
vs. City of Cebu", and its order of 4, May 19952 denying the motion to reconsider the decision.

We resolved to give due course to this petition for its raises issues dwelling on the scope of the
taxing power of local government-owned and controlled corporations.

The uncontradicted factual antecedents are summarized in the instant petition as follows:

Petitioner Mactan Cebu International Airport Authority (MCIAA) was created by virtue of
Republic Act No. 6958, mandated to "principally undertake the economical, efficient and
effective control, management and supervision of the Mactan International Airport in the
Province of Cebu and the Lahug Airport in Cebu City, . . . and such other Airports as may be
established in the Province of Cebu . . . (Sec. 3, RA 6958). It is also mandated to:

a) encourage, promote and develop international and

domestic air traffic in the Central Visayas and Mindanao
regions as a means of making the regions centers of
international trade and tourism, and accelerating the
development of the means of transportation and
communication in the country; and

b) upgrade the services and facilities of the airports and to

formulate internationally acceptable standards of airport
accommodation and service.

Since the time of its creation, petitioner MCIAA enjoyed the privilege of exemption from
payment of realty taxes in accordance with Section 14 of its Charter.

Sec. 14. Tax Exemptions. — The authority shall be exempt from realty taxes
imposed by the National Government or any of its political subdivisions,
agencies and instrumentalities . . .

On October 11, 1994, however, Mr. Eustaquio B. Cesa, Officer-in-Charge, Office of the
Treasurer of the City of Cebu, demanded payment for realty taxes on several parcels of land
belonging to the petitioner (Lot Nos. 913-G, 743, 88 SWO, 948-A, 989-A, 474, 109(931), I-M,
918, 919, 913-F, 941, 942, 947, 77 Psd., 746 and 991-A), located at Barrio Apas and Barrio
Kasambagan, Lahug, Cebu City, in the total amount of P2,229,078.79.

Petitioner objected to such demand for payment as baseless and unjustified, claiming in its
favor the aforecited Section 14 of RA 6958 which exempt it from payment of realty taxes. It
was also asserted that it is an instrumentality of the government performing governmental
functions, citing section 133 of the Local Government Code of 1991 which puts limitations on
the taxing powers of local government units:

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 Sec. 133. Common Limitations on the Taxing Powers of Local Government
Units. — Unless otherwise provided herein, the exercise of the taxing powers
of provinces, cities, municipalities, and barangay shall not extend to the levy
of the following:

a) . . .

xxx xxx xxx

o) Taxes, fees or charges of any kind on the National

Government, its agencies and instrumentalities, and local
government units. (Emphasis supplied)

Respondent City refused to cancel and set aside petitioner's realty tax account, insisting that
the MCIAA is a government-controlled corporation whose tax exemption privilege has been
withdrawn by virtue of Sections 193 and 234 of the Local Governmental Code that took effect
on January 1, 1992:

Sec. 193. Withdrawal of Tax Exemption Privilege. — Unless otherwise provided in this Code,
tax exemptions or incentives granted to, or presently enjoyed by all persons whether natural
or juridical, including government-owned or controlled corporations, except local water
districts, cooperatives duly registered under RA No. 6938, non-stock, and non-profit hospitals
and educational institutions, are hereby withdrawn upon the effectivity of this Code.
(Emphasis supplied)

xxx xxx xxx

Sec. 234. Exemptions from Real Property taxes. — . . .

(a) . . .

xxx xxx xxx

(c) . . .

Except as provided herein, any exemption from payment of real property tax
previously granted to, or presently enjoyed by all persons, whether natural or
juridical, including government-owned or controlled corporations are hereby
withdrawn upon the effectivity of this Code.

As the City of Cebu was about to issue a warrant of levy against the properties of petitioner,
the latter was compelled to pay its tax account "under protest" and thereafter filed a Petition
for Declaratory Relief with the Regional Trial Court of Cebu, Branch 20, on December 29,
1994. MCIAA basically contended that the taxing powers of local government units do not
extend to the levy of taxes or fees of any kind on an instrumentality of the national
government. Petitioner insisted that while it is indeed a government-owned corporation, it
nonetheless stands on the same footing as an agency or instrumentality of the national
government. Petitioner insisted that while it is indeed a government-owned corporation, it
nonetheless stands on the same footing as an agency or instrumentality of the national
government by the very nature of its powers and functions.

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 Respondent City, however, asserted that MACIAA is not an instrumentality of the
government but merely a government-owned corporation performing proprietary functions As
such, all exemptions previously granted to it were deemed withdrawn by operation of law, as
provided under Sections 193 and 234 of the Local Government Code when it took effect on
January 1, 1992.3

The petition for declaratory relief was docketed as Civil Case No. CEB-16900.

In its decision of 22 March 1995,4 the trial court dismissed the petition in light of its findings, to wit:

A close reading of the New Local Government Code of 1991 or RA 7160 provides the
express cancellation and withdrawal of exemption of taxes by government owned and
controlled corporation per Sections after the effectivity of said Code on January 1, 1992, to
wit: [proceeds to quote Sections 193 and 234]

Petitioners claimed that its real properties assessed by respondent City Government of Cebu
are exempted from paying realty taxes in view of the exemption granted under RA 6958 to
pay the same (citing Section 14 of RA 6958).

However, RA 7160 expressly provides that "All general and special laws, acts, city charters,
decress [sic], executive orders, proclamations and administrative regulations, or part or parts
thereof which are inconsistent with any of the provisions of this Code are hereby repealed or
modified accordingly." ([f], Section 534, RA 7160).

With that repealing clause in RA 7160, it is safe to infer and state that the tax exemption
provided for in RA 6958 creating petitioner had been expressly repealed by the provisions of
the New Local Government Code of 1991.

So that petitioner in this case has to pay the assessed realty tax of its properties effective
after January 1, 1992 until the present.

This Court's ruling finds expression to give impetus and meaning to the overall objectives of
the New Local Government Code of 1991, RA 7160. "It is hereby declared the policy of the
State that the territorial and political subdivisions of the State shall enjoy genuine and
meaningful local autonomy to enable them to attain their fullest development as self-reliant
communities and make them more effective partners in the attainment of national goals.
Towards this end, the State shall provide for a more responsive and accountable local
government structure instituted through a system of decentralization whereby local
government units shall be given more powers, authority, responsibilities, and resources. The
process of decentralization shall proceed from the national government to the local
government units. . . .5

Its motion for reconsideration having been denied by the trial court in its 4 May 1995 order, the
petitioner filed the instant petition based on the following assignment of errors:

I RESPONDENT JUDGE ERRED IN FAILING TO RULE THAT THE

PETITIONER IS VESTED WITH GOVERNMENT POWERS AND
FUNCTIONS WHICH PLACE IT IN THE SAME CATEGORY AS AN
INSTRUMENTALITY OR AGENCY OF THE GOVERNMENT.

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 II RESPONDENT JUDGE ERRED IN RULING THAT PETITIONER IS
LIABLE TO PAY REAL PROPERTY TAXES TO THE CITY OF CEBU.

Anent the first assigned error, the petitioner asserts that although it is a government-owned or
controlled corporation it is mandated to perform functions in the same category as an instrumentality
of Government. An instrumentality of Government is one created to perform governmental functions
primarily to promote certain aspects of the economic life of the people.6 Considering its task "not
merely to efficiently operate and manage the Mactan-Cebu International Airport, but more
importantly, to carry out the Government policies of promoting and developing the Central Visayas
and Mindanao regions as centers of international trade and tourism, and accelerating the
development of the means of transportation and communication in the country,"7and that it is an
attached agency of the Department of Transportation and Communication (DOTC),8 the petitioner
"may stand in [sic] the same footing as an agency or instrumentality of the national government."
Hence, its tax exemption privilege under Section 14 of its Charter "cannot be considered withdrawn
with the passage of the Local Government Code of 1991 (hereinafter LGC) because Section 133
thereof specifically states that the taxing powers of local government units shall not extend to the
levy of taxes of fees or charges of any kind on the national government its agencies and
instrumentalities."

As to the second assigned error, the petitioner contends that being an instrumentality of the National
Government, respondent City of Cebu has no power nor authority to impose realty taxes upon it in
accordance with the aforesaid Section 133 of the LGC, as explained in Basco vs. Philippine
Amusement and Gaming Corporation;9

Local governments have no power to tax instrumentalities of the National Government.

PAGCOR is a government owned or controlled corporation with an original character, PD
1869. All its shares of stock are owned by the National Government. . . .

PAGCOR has a dual role, to operate and regulate gambling casinos. The latter joke is
governmental, which places it in the category of an agency or instrumentality of the
Government. Being an instrumentality of the Government, PAGCOR should be and actually
is exempt from local taxes. Otherwise, its operation might be burdened, impeded or
subjected to control by a mere Local government.

The states have no power by taxation or otherwise, to retard, impede, burden or in any
manner control the operation of constitutional laws enacted by Congress to carry into
execution the powers vested in the federal government. (McCulloch v. Maryland, 4 Wheat
316, 4 L Ed. 579).

This doctrine emanates from the "supremacy" of the National Government over local
government.

Justice Holmes, speaking for the Supreme Court, make references to the entire absence of
power on the part of the States to touch, in that way (taxation) at least, the instrumentalities
of the United States (Johnson v. Maryland, 254 US 51) and it can be agreed that no state or
political subdivision can regulate a federal instrumentality in such a way as to prevent it from
consummating its federal responsibilities, or even to seriously burden it in the
accomplishment of them. (Antieau Modern Constitutional Law, Vol. 2, p. 140)

Otherwise mere creature of the State can defeat National policies thru extermination of what
local authorities may perceive to be undesirable activities or enterprise using the power to
tax as "a toll for regulation" (U.S. v. Sanchez, 340 US 42). The power to tax which was called

91 | P a g e
 by Justice Marshall as the "power to destroy" (McCulloch v. Maryland, supra) cannot be
allowed to defeat an instrumentality or creation of the very entity which has the inherent
power to wield it. (Emphasis supplied)

It then concludes that the respondent Judge "cannot therefore correctly say that the questioned
provisions of the Code do not contain any distinction between a governmental function as against
one performing merely proprietary ones such that the exemption privilege withdrawn under the said
Code would apply to allgovernment corporations." For it is clear from Section 133, in relation to
Section 234, of the LGC that the legislature meant to exclude instrumentalities of the national
government from the taxing power of the local government units.

In its comment respondent City of Cebu alleges that as local a government unit and a political
subdivision, it has the power to impose, levy, assess, and collect taxes within its jurisdiction. Such
power is guaranteed by the Constitution10 and enhanced further by the LGC. While it may be true that
under its Charter the petitioner was exempt from the payment of realty taxes,11 this exemption was
withdrawn by Section 234 of the LGC. In response to the petitioner's claim that such exemption was
not repealed because being an instrumentality of the National Government, Section 133 of the LGC
prohibits local government units from imposing taxes, fees, or charges of any kind on it, respondent
City of Cebu points out that the petitioner is likewise a government-owned corporation, and Section
234 thereof does not distinguish between government-owned corporation, and Section 234 thereof
does not distinguish between government-owned corporation, and Section 234 thereof does not
distinguish between government-owned or controlled corporations performing governmental and
purely proprietary functions. Respondent city of Cebu urges this the Manila International Airport
Authority is a governmental-owned corporation, 12 and to reject the application of Basco because it
was "promulgated . . . before the enactment and the singing into law of R.A. No. 7160," and was not,
therefore, decided "in the light of the spirit and intention of the framers of the said law.

As a general rule, the power to tax is an incident of sovereignty and is unlimited in its range,
acknowledging in its very nature no limits, so that security against its abuse is to be found only in the
responsibility of the legislature which imposes the tax on the constituency who are to pay it.
Nevertheless, effective limitations thereon may be imposed by the people through their
Constitutions.13 Our Constitution, for instance, provides that the rule of taxation shall be uniform and
equitable and Congress shall evolve a progressive system of taxation.14 So potent indeed is the
power that it was once opined that "the power to tax involves the power to destroy."15 Verily, taxation
is a destructive power which interferes with the personal and property for the support of the
government. Accordingly, tax statutes must be construed strictly against the government and
liberally in favor of the taxpayer.16 But since taxes are what we pay for civilized society,17 or are the
lifeblood of the nation, the law frowns against exemptions from taxation and statutes granting tax
exemptions are thus construed strictissimi juris against the taxpayers and liberally in favor of the
taxing authority.18 A claim of exemption from tax payment must be clearly shown and based on
language in the law too plain to be mistaken.19 Elsewise stated, taxation is the rule, exemption
therefrom is the exception.20 However, if the grantee of the exemption is a political subdivision or
instrumentality, the rigid rule of construction does not apply because the practical effect of the
exemption is merely to reduce the amount of money that has to be handled by the government in the
course of its operations.21

The power to tax is primarily vested in the Congress; however, in our jurisdiction, it may be
exercised by local legislative bodies, no longer merely by virtue of a valid delegation as before, but
pursuant to direct authority conferred by Section 5, Article X of the Constitution.22 Under the latter,
the exercise of the power may be subject to such guidelines and limitations as the Congress may
provide which, however, must be consistent with the basic policy of local autonomy.

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There can be no question that under Section 14 of R.A. No. 6958 the petitioner is exempt from the
payment of realty taxes imposed by the National Government or any of its political subdivisions,
agencies, and instrumentalities. Nevertheless, since taxation is the rule and exemption therefrom the
exception, the exemption may thus be withdrawn at the pleasure of the taxing authority. The only
exception to this rule is where the exemption was granted to private parties based on material
consideration of a mutual nature, which then becomes contractual and is thus covered by the non-
impairment clause of the Constitution.23

The LGC, enacted pursuant to Section 3, Article X of the constitution provides for the exercise by
local government units of their power to tax, the scope thereof or its limitations, and the exemption
from taxation.

Section 133 of the LGC prescribes the common limitations on the taxing powers of local government
units as follows:

Sec. 133. Common Limitations on the Taxing Power of Local Government Units. — Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the following:

(a) Income tax, except when levied on banks and other financial institutions;

(b) Documentary stamp tax;

(c) Taxes on estates, "inheritance, gifts, legacies and other

acquisitions mortis causa, except as otherwise provided herein

(d) Customs duties, registration fees of vessels and wharfage on wharves,

tonnage dues, and all other kinds of customs fees charges and dues except
wharfage on wharves constructed and maintained by the local government
unit concerned:

(e) Taxes, fees and charges and other imposition upon goods carried into or
out of, or passing through, the territorial jurisdictions of local government
units in the guise or charges for wharfages, tolls for bridges or otherwise, or
other taxes, fees or charges in any form whatsoever upon such goods or
merchandise;

(f) Taxes fees or charges on agricultural and aquatic products when sold by
marginal farmers or fishermen;

(g) Taxes on business enterprise certified to be the Board of Investment as

pioneer or non-pioneer for a period of six (6) and four (4) years, respectively
from the date of registration;

(h) Excise taxes on articles enumerated under the National Internal Revenue
Code, as amended, and taxes, fees or charges on petroleum products;

(i) Percentage or value added tax (VAT) on sales, barters or exchanges or

similar transactions on goods or services except as otherwise provided
herein;

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 (j) Taxes on the gross receipts of transportation contractor and person
engage in the transportation of passengers of freight by hire and common
carriers by air, land, or water, except as provided in this code;

(k) Taxes on premiums paid by ways reinsurance or retrocession;

(l) Taxes, fees, or charges for the registration of motor vehicles and for the
issuance of all kinds of licenses or permits for the driving of thereof, except,
tricycles;

(m) Taxes, fees, or other charges on Philippine product actually exported,

except as otherwise provided herein;

(n) Taxes, fees, or charges, on Countryside and Barangay Business

Enterprise and Cooperatives duly registered under R.A. No. 6810 and
Republic Act Numbered Sixty nine hundred thirty-eight (R.A. No. 6938)
otherwise known as the "Cooperative Code of the Philippines; and

(o) TAXES, FEES, OR CHARGES OF ANY KIND ON THE NATIONAL

GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES, AND LOCAL
GOVERNMENT UNITS. (emphasis supplied)

Needless to say the last item (item o) is pertinent in this case. The "taxes, fees or charges" referred
to are "of any kind", hence they include all of these, unless otherwise provided by the LGC. The term
"taxes" is well understood so as to need no further elaboration, especially in the light of the above
enumeration. The term "fees" means charges fixed by law or Ordinance for the regulation or
inspection of business activity,24 while "charges" are pecuniary liabilities such as rents or fees against
person or property.25

Among the "taxes" enumerated in the LGC is real property tax, which is governed by Section 232. It
reads as follows:

Sec. 232. Power to Levy Real Property Tax. — A province or city or a municipality within the
Metropolitan Manila Area may levy on an annual ad valorem tax on real property such as
land, building, machinery and other improvements not hereafter specifically exempted.

Section 234 of LGC provides for the exemptions from payment of real property taxes and withdraws
previous exemptions therefrom granted to natural and juridical persons, including government
owned and controlled corporations, except as provided therein. It provides:

Sec. 234. Exemptions from Real Property Tax. — The following are exempted from payment
of the real property tax:

(a) Real property owned by the Republic of the Philippines or any of its
political subdivisions except when the beneficial use thereof had been
granted, for reconsideration or otherwise, to a taxable person;

(b) Charitable institutions, churches, parsonages or convents appurtenants

thereto, mosques nonprofits or religious cemeteries and all lands, building
and improvements actually, directly, and exclusively used for religious
charitable or educational purposes;

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 (c) All machineries and equipment that are actually, directly and exclusively
used by local water districts and government-owned or controlled
corporations engaged in the supply and distribution of water and/or
generation and transmission of electric power;

(d) All real property owned by duly registered cooperatives as provided for
under R.A. No. 6938; and;

(e) Machinery and equipment used for pollution control and environmental
protection.

Except as provided herein, any exemptions from payment of real property tax
previously granted to or presently enjoyed by, all persons whether natural or
juridical, including all government owned or controlled corporations are
hereby withdrawn upon the effectivity of his Code.

These exemptions are based on the ownership, character, and use of the property. Thus;

(a) Ownership Exemptions. Exemptions from real property taxes on the basis
of ownership are real properties owned by: (i) the Republic, (ii) a province,
(iii) a city, (iv) a municipality, (v) a barangay, and (vi) registered cooperatives.

(b) Character Exemptions. Exempted from real property taxes on the basis of
their character are: (i) charitable institutions, (ii) houses and temples of
prayer like churches, parsonages or convents appurtenant thereto, mosques,
and (iii) non profit or religious cemeteries.

(c) Usage exemptions. Exempted from real property taxes on the basis of the
actual, direct and exclusive use to which they are devoted are: (i) all lands
buildings and improvements which are actually, directed and exclusively
used for religious, charitable or educational purpose; (ii) all machineries and
equipment actually, directly and exclusively used or by local water districts or
by government-owned or controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of electric power;
and (iii) all machinery and equipment used for pollution control and
environmental protection.

To help provide a healthy environment in the midst of the modernization of the country, all
machinery and equipment for pollution control and environmental protection may not be
taxed by local governments.

2. Other Exemptions Withdrawn. All other exemptions previously granted to

natural or juridical persons including government-owned or controlled
corporations are withdrawn upon the effectivity of the Code.26

Section 193 of the LGC is the general provision on withdrawal of tax exemption privileges. It
provides:

Sec. 193. Withdrawal of Tax Exemption Privileges. — Unless otherwise provided in this
code, tax exemptions or incentives granted to or presently enjoyed by all persons, whether
natural or juridical, including government-owned, or controlled corporations, except local

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 water districts, cooperatives duly registered under R.A. 6938, non stock and non profit
hospitals and educational constitutions, are hereby withdrawn upon the effectivity of this
Code.

On the other hand, the LGC authorizes local government units to grant tax exemption privileges.
Thus, Section 192 thereof provides:

Sec. 192. Authority to Grant Tax Exemption Privileges. — Local government units may,
through ordinances duly approved, grant tax exemptions, incentives or reliefs under such
terms and conditions as they may deem necessary.

The foregoing sections of the LGC speaks of: (a) the limitations on the taxing powers of local
government units and the exceptions to such limitations; and (b) the rule on tax exemptions and the
exceptions thereto. The use of exceptions of provisos in these section, as shown by the following
clauses:

(1) "unless otherwise provided herein" in the opening paragraph of Section

133;

(2) "Unless otherwise provided in this Code" in section 193;

(3) "not hereafter specifically exempted" in Section 232; and

(4) "Except as provided herein" in the last paragraph of Section 234

initially hampers a ready understanding of the sections. Note, too, that the aforementioned clause in
section 133 seems to be inaccurately worded. Instead of the clause "unless otherwise provided
herein," with the "herein" to mean, of course, the section, it should have used the clause "unless
otherwise provided in this Code." The former results in absurdity since the section itself enumerates
what are beyond the taxing powers of local government units and, where exceptions were intended,
the exceptions were explicitly indicated in the text. For instance, in item (a) which excepts the
income taxes "when livied on banks and other financial institutions", item (d) which excepts
"wharfage on wharves constructed and maintained by the local government until concerned"; and
item (1) which excepts taxes, fees, and charges for the registration and issuance of license or
permits for the driving of "tricycles". It may also be observed that within the body itself of the section,
there are exceptions which can be found only in other parts of the LGC, but the section
interchangeably uses therein the clause "except as otherwise provided herein" as in items (c) and (i),
or the clause "except as otherwise provided herein" as in items (c) and (i), or the clause "excepts as
provided in this Code" in item (j). These clauses would be obviously unnecessary or mere surplus-
ages if the opening clause of the section were" "Unless otherwise provided in this Code" instead of
"Unless otherwise provided herein". In any event, even if the latter is used, since under Section 232
local government units have the power to levy real property tax, except those exempted therefrom
under Section 234, then Section 232 must be deemed to qualify Section 133.

Thus, reading together Section 133, 232 and 234 of the LGC, we conclude that as a general rule, as
laid down in Section 133 the taxing powers of local government units cannot extend to the levy
of inter alia, "taxes, fees, and charges of any kind of the National Government, its agencies and
instrumentalties, and local government units"; however, pursuant to Section 232, provinces, cities,
municipalities in the Metropolitan Manila Area may impose the real property tax except on, inter alia,
"real property owned by the Republic of the Philippines or any of its political subdivisions except
when the beneficial used thereof has been granted, for consideration or otherwise, to a taxable
person", as provided in item (a) of the first paragraph of Section 234.

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As to tax exemptions or incentives granted to or presently enjoyed by natural or juridical persons,
including government-owned and controlled corporations, Section 193 of the LGC prescribes the
general rule, viz., they are withdrawn upon the effectivity of the LGC, except upon the effectivity of
the LGC, except those granted to local water districts, cooperatives duly registered under R.A. No.
6938, non stock and non-profit hospitals and educational institutions, and unless otherwise provided
in the LGC. The latter proviso could refer to Section 234, which enumerates the properties exempt
from real property tax. But the last paragraph of Section 234 further qualifies the retention of the
exemption in so far as the real property taxes are concerned by limiting the retention only to those
enumerated there-in; all others not included in the enumeration lost the privilege upon the effectivity
of the LGC. Moreover, even as the real property is owned by the Republic of the Philippines, or any
of its political subdivisions covered by item (a) of the first paragraph of Section 234, the exemption is
withdrawn if the beneficial use of such property has been granted to taxable person for consideration
or otherwise.

Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the LGC,
exemptions from real property taxes granted to natural or juridical persons, including government-
owned or controlled corporations, except as provided in the said section, and the petitioner is,
undoubtedly, a government-owned corporation, it necessarily follows that its exemption from such
tax granted it in Section 14 of its charter, R.A. No. 6958, has been withdrawn. Any claim to the
contrary can only be justified if the petitioner can seek refuge under any of the exceptions provided
in Section 234, but not under Section 133, as it now asserts, since, as shown above, the said section
is qualified by Section 232 and 234.

In short, the petitioner can no longer invoke the general rule in Section 133 that the taxing powers of
the local government units cannot extend to the levy of:

(o) taxes, fees, or charges of any kind on the National Government, its
agencies, or instrumentalities, and local government units.

I must show that the parcels of land in question, which are real property, are any one of those
enumerated in Section 234, either by virtue of ownership, character, or use of the property. Most
likely, it could only be the first, but not under any explicit provision of the said section, for one exists.
In light of the petitioner's theory that it is an "instrumentality of the Government", it could only be
within be first item of the first paragraph of the section by expanding the scope of the terms Republic
of the Philippines" to embrace . . . . . . "instrumentalities" and "agencies" or expediency we quote:

(a) real property owned by the Republic of the Philippines, or any of the
Philippines, or any of its political subdivisions except when the beneficial use
thereof has been granted, for consideration or otherwise, to a taxable person.

This view does not persuade us. In the first place, the petitioner's claim that it is an instrumentality of
the Government is based on Section 133(o), which expressly mentions the word "instrumentalities";
and in the second place it fails to consider the fact that the legislature used the phrase "National
Government, its agencies and instrumentalities" "in Section 133(o),but only the phrase "Republic of
the Philippines or any of its political subdivision "in Section 234(a).

The terms "Republic of the Philippines" and "National Government" are not interchangeable. The
former is boarder and synonymous with "Government of the Republic of the Philippines" which the
Administrative Code of the 1987 defines as the "corporate governmental entity though which the
functions of the government are exercised through at the Philippines, including, saves as the
contrary appears from the context, the various arms through which political authority is made
effective in the Philippines, whether pertaining to the autonomous reason, the provincial, city,

97 | P a g e
municipal or barangay subdivision or other forms of local government."27 These autonomous regions,
provincial, city, municipal or barangay subdivisions" are the political subdivision.28

On the other hand, "National Government" refers "to the entire machinery of the central government,
as distinguished from the different forms of local Governments."29 The National Government then is
composed of the three great departments the executive, the legislative and the judicial.30

An "agency" of the Government refers to "any of the various units of the Government, including a
department, bureau, office instrumentality, or government-owned or controlled corporation, or a local
government or a distinct unit therein;"31 while an "instrumentality" refers to "any agency of the
National Government, not integrated within the department framework, vested with special functions
or jurisdiction by law, endowed with some if not all corporate powers, administering special funds,
and enjoying operational autonomy; usually through a charter. This term includes regulatory
agencies, chartered institutions and government-owned and controlled corporations".32

If Section 234(a) intended to extend the exception therein to the withdrawal of the exemption from
payment of real property taxes under the last sentence of the said section to the agencies and
instrumentalities of the National Government mentioned in Section 133(o), then it should have
restated the wording of the latter. Yet, it did not Moreover, that Congress did not wish to expand the
scope of the exemption in Section 234(a) to include real property owned by other instrumentalities or
agencies of the government including government-owned and controlled corporations is further
borne out by the fact that the source of this exemption is Section 40(a) of P.D. No. 646, otherwise
known as the Real Property Tax Code, which reads:

Sec 40. Exemption from Real Property Tax. — The exemption shall be as follows:

(a) Real property owned by the Republic of the Philippines or

any of its political subdivisions and any government-owned or
controlled corporations so exempt by is charter: Provided,
however, that this exemption shall not apply to real property
of the above mentioned entities the beneficial use of which
has been granted, for consideration or otherwise, to a taxable
person.

Note that as a reproduced in Section 234(a), the phrase "and any government-owned or controlled
corporation so exempt by its charter" was excluded. The justification for this restricted exemption in
Section 234(a) seems obvious: to limit further tax exemption privileges, specially in light of the
general provision on withdrawal of exemption from payment of real property taxes in the last
paragraph of property taxes in the last paragraph of Section 234. These policy considerations are
consistent with the State policy to ensure autonomy to local governments33 and the objective of the
LGC that they enjoy genuine and meaningful local autonomy to enable them to attain their fullest
development as self-reliant communities and make them effective partners in the attainment of
national goals.34 The power to tax is the most effective instrument to raise needed revenues to
finance and support myriad activities of local government units for the delivery of basic services
essential to the promotion of the general welfare and the enhancement of peace, progress, and
prosperity of the people. It may also be relevant to recall that the original reasons for the withdrawal
of tax exemption privileges granted to government-owned and controlled corporations and all other
units of government were that such privilege resulted in serious tax base erosion and distortions in
the tax treatment of similarly situated enterprises, and there was a need for this entities to share in
the requirements of the development, fiscal or otherwise, by paying the taxes and other charges due
from them.35

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The crucial issues then to be addressed are: (a) whether the parcels of land in question belong to
the Republic of the Philippines whose beneficial use has been granted to the petitioner, and (b)
whether the petitioner is a "taxable person".

Section 15 of the petitioner's Charter provides:

Sec. 15. Transfer of Existing Facilities and Intangible Assets. — All existing public airport
facilities, runways, lands, buildings and other properties, movable or immovable, belonging to
or presently administered by the airports, and all assets, powers, rights, interests and
privileges relating on airport works, or air operations, including all equipment which are
necessary for the operations of air navigation, acrodrome control towers, crash, fire, and
rescue facilities are hereby transferred to the Authority: Provided however, that the
operations control of all equipment necessary for the operation of radio aids to air navigation,
airways communication, the approach control office, and the area control center shall be
retained by the Air Transportation Office. No equipment, however, shall be removed by the
Air Transportation Office from Mactan without the concurrence of the authority. The authority
may assist in the maintenance of the Air Transportation Office equipment.

The "airports" referred to are the "Lahug Air Port" in Cebu City and the "Mactan International AirPort
in the Province of Cebu",36 which belonged to the Republic of the Philippines, then under the Air
Transportation Office (ATO).37

It may be reasonable to assume that the term "lands" refer to "lands" in Cebu City then administered
by the Lahug Air Port and includes the parcels of land the respondent City of Cebu seeks to levy on
for real property taxes. This section involves a "transfer" of the "lands" among other things, to the
petitioner and not just the transfer of the beneficial use thereof, with the ownership being retained by
the Republic of the Philippines.

This "transfer" is actually an absolute conveyance of the ownership thereof because the petitioner's
authorized capital stock consists of, inter alia "the value of such real estate owned and/or
administered by the airports."38 Hence, the petitioner is now the owner of the land in question and the
exception in Section 234(c) of the LGC is inapplicable.

Moreover, the petitioner cannot claim that it was never a "taxable person" under its Charter. It
was only exempted from the payment of real property taxes. The grant of the privilege only in
respect of this tax is conclusive proof of the legislative intent to make it a taxable person subject to
all taxes, except real property tax.

Finally, even if the petitioner was originally not a taxable person for purposes of real property tax, in
light of the forgoing disquisitions, it had already become even if it be conceded to be an "agency" or
"instrumentality" of the Government, a taxable person for such purpose in view of the withdrawal in
the last paragraph of Section 234 of exemptions from the payment of real property taxes, which, as
earlier adverted to, applies to the petitioner.

Accordingly, the position taken by the petitioner is untenable. Reliance on Basco vs. Philippine
Amusement and Gaming Corporation39 is unavailing since it was decided before the effectivity of the
LGC. Besides, nothing can prevent Congress from decreeing that even instrumentalities or agencies
of the government performing governmental functions may be subject to tax. Where it is done
precisely to fulfill a constitutional mandate and national policy, no one can doubt its wisdom.

WHEREFORE, the instant petition is DENIED. The challenged decision and order of the Regional
Trial Court of Cebu, Branch 20, in Civil Case No. CEB-16900 are AFFIRMED.

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No pronouncement as to costs.

SO ORDERED.

GR NO. 162015, Mar 06, 2006 CITY GOVERNMENT OF QUEZON CITY v. BAYAN
TELECOMMUNICATIONS

Before the Court, on pure questions of law, is this petition for review on certiorari under Rule 45 of
the Rules of Court to nullify and set aside the following issuances of the Regional Trial Court (RTC)
of Quezon City, Branch 227, in its Civil Case No. Q-02-47292, to wit:

1) Decision[1] dated June 6, 2003, declaring respondent Bayan Telecommunications, Inc. exempt
from real estate taxation on its real properties located in Quezon City; and

2) Order[2] dated December 30, 2003, denying petitioners' motion for reconsideration.
The facts:

Respondent Bayan Telecommunications, Inc.[3] (Bayantel) is a legislative franchise holder under

Republic Act (Rep. Act) No. 3259[4] to establish and operate radio stations for domestic
telecommunications, radiophone, broadcasting and telecasting.

Of relevance to this controversy is the tax provision of Rep. Act No. 3259, embodied in Section 14
thereof, which reads:

SECTION 14. (a) The grantee shall be liable to pay the same taxes on its real estate, buildings and
personal property, exclusive of the franchise, as other persons or corporations are now or hereafter
may be required by law to pay. (b) The grantee shall further pay to the Treasurer of the Philippines
each year, within ten days after the audit and approval of the accounts as prescribed in this Act, one
and one-half per centum of all gross receipts from the business transacted under this franchise by
the said grantee (Emphasis supplied)
On January 1, 1992, Rep. Act No. 7160, otherwise known as the "Local Government Code of 1991"
(LGC), took effect. Section 232 of the Code grants local government units within the Metro Manila
Area the power to levy tax on real properties, thus:

SEC. 232. Power to Levy Real Property Tax. A province or city or a municipality within the
Metropolitan Manila Area may levy an annual ad valorem tax on real property such as land, building,
machinery and other improvements not hereinafter specifically exempted.
Complementing the aforequoted provision is the second paragraph of Section 234 of the same
Code which withdrew any exemption from realty tax heretofore granted to or enjoyed by all persons,
natural or juridical, to wit:

SEC. 234 Exemptions from Real Property Tax. The following are exempted from payment of the real
property tax:

xxx xxx xxx

Except as provided herein, any exemption from payment of real property tax previously granted to,
or enjoyed by, all persons, whether natural or juridical, including government-owned-or-controlled
corporations is hereby withdrawn upon effectivity of this Code (Emphasis supplied).
On July 20, 1992, barely few months after the LGC took effect, Congress enacted Rep. Act No.
7633, amending Bayantel's original franchise. The amendatory law (Rep. Act No. 7633) contained
the following tax provision:

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SEC. 11. The grantee, its successors or assigns shall be liable to pay the same taxes on their real
estate, buildings and personal property, exclusive of this franchise, as other persons or corporations
are now or hereafter may be required by law to pay. In addition thereto, the grantee, its successors
or assigns shall pay a franchise tax equivalent to three percent (3%) of all gross receipts of the
telephone or other telecommunications businesses transacted under this franchise by the grantee,
its successors or assigns and the said percentage shall be in lieu of all taxes on this franchise or
earnings thereof. Provided, That the grantee, its successors or assigns shall continue to be liable for
income taxes payable under Title II of the National Internal Revenue Code .... xxx. [Emphasis
supplied]
It is undisputed that within the territorial boundary of Quezon City, Bayantel owned several real
properties on which it maintained various telecommunications facilities. These real properties, as
hereunder described, are covered by the following tax declarations:

(a) Tax Declaration Nos. D-096-04071, D-096-04074, D-096-04072 and D-096-04073 pertaining to
Bayantel's Head Office and Operations Center in Roosevelt St., San Francisco del Monte, Quezon
City allegedly the nerve center of petitioner's telecommunications franchise operations, said
Operation Center housing mainly petitioner's Network Operations Group and switching, transmission
and related equipment;

(b) Tax Declaration Nos. D-124-01013, D-124-00939, D-124-00920 and D-124-00941 covering
Bayantel's land, building and equipment in Maginhawa St., Barangay East Teacher's Village,
Quezon City which houses telecommunications facilities; and

(c) Tax Declaration Nos. D-011-10809, D-011-10810, D-011-10811, and D-011-11540 referring to
Bayantel's Exchange Center located in Proj. 8, Brgy. Bahay Toro, Tandang Sora, Quezon City which
houses the Network Operations Group and cover switching, transmission and other related
equipment.
In 1993, the government of Quezon City, pursuant to the taxing power vested on local government
units by Section 5, Article X of the 1987 Constitution, infra, in relation to Section 232 of the
LGC, supra, enacted City Ordinance No. SP-91, S-93, otherwise known as the Quezon City
Revenue Code (QCRC),[5] imposing, under Section 5 thereof, a real property tax on all real
properties in Quezon City, and, reiterating in its Section 6, the withdrawal of exemption from real
property tax under Section 234 of the LGC, supra. Furthermore, much like the LGC, the QCRC,
under its Section 230, withdrew tax exemption privileges in general, as follows:

SEC. 230. Withdrawal of Tax Exemption Privileges. Unless otherwise provided in this Code, tax
exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or
juridical, including government owned or controlled corporations, except local water districts,
cooperatives duly registered under RA 6938, non-stock and non-profit hospitals and educational
institutions, business enterprises certified by the Board of Investments (BOI) as pioneer or non-
pioneer for a period of six (6) and four (4) years, respectively, ... are hereby withdrawn effective upon
approval of this Code (Emphasis supplied).
Conformably with the City's Revenue Code, new tax declarations for Bayantel's real properties in
Quezon City were issued by the City Assessor and were received by Bayantel on August 13, 1998,
except one (Tax Declaration No. 124-01013) which was received on July 14, 1999.

Meanwhile, on March 16, 1995, Rep. Act No. 7925,[6] otherwise known as the "Public
Telecommunications Policy Act of the Philippines,"envisaged to level the playing field among
telecommunications companies, took effect. Section 23 of the Act provides:

SEC. 23. Equality of Treatment in the Telecommunications Industry. Any advantage, favor, privilege,
exemption, or immunity granted under existing franchises, or may hereafter be granted, shall ipso
facto become part of previously granted telecommunications franchises and shall be accorded

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immediately and unconditionally to the grantees of such franchises: Provided,however, That the
foregoing shall neither apply to nor affect provisions of telecommunications franchises concerning
territory covered by the franchise, the life span of the franchise, or the type of service authorized by
the franchise.
On January 7, 1999, Bayantel wrote the office of the City Assessor seeking the exclusion of its real
properties in the city from the roll of taxable real properties. With its request having been denied,
Bayantel interposed an appeal with the Local Board of Assessment Appeals (LBAA). And, evidently
on its firm belief of its exempt status, Bayantel did not pay the real property taxes assessed against it
by the Quezon City government.

On account thereof, the Quezon City Treasurer sent out notices of delinquency for the total amount
of P43,878,208.18, followed by the issuance of several warrants of levy against Bayantel's
properties preparatory to their sale at a public auction set on July 30, 2002.

Threatened with the imminent loss of its properties, Bayantel immediately withdrew its appeal with
the LBAA and instead filed with the RTC of Quezon City a petition for prohibition with an urgent
application for a temporary restraining order (TRO) and/or writ of preliminary injunction, thereat
docketed as Civil Case No. Q-02-47292, which was raffled to Branch 227 of the court.

On July 29, 2002, or in the eve of the public auction scheduled the following day, the lower court
issued a TRO, followed, after due hearing, by a writ of preliminary injunction via its order of August
20, 2002.

And, having heard the parties on the merits, the same court came out with its challenged Decision of
June 6, 2003, the dispositive portion of which reads:

WHEREFORE, premises considered, pursuant to the enabling franchise under Section 11 of

Republic Act No. 7633, the real estate properties and buildings of petitioner [now, respondent
Bayantel] which have been admitted to be used in the operation of petitioner's franchise described in
the following tax declarations are hereby DECLARED exempt from real estate taxation:

(1) Tax Declaration No. D-096-04071

(2) Tax Declaration No. D-096-04074
(3) Tax Declaration No. D-124-01013
(4) Tax Declaration No. D-011-10810
(5) Tax Declaration No. D-011-10811
(6) Tax Declaration No. D-011-10809
(7) Tax Declaration No. D-124-00941
(8) Tax Declaration No. D-124-00940
(9) Tax Declaration No. D-124-00939
(10) Tax Declaration No. D-096-04072
(11) Tax Declaration No. D-096-04073
(12) Tax Declaration No. D-011-11540

The preliminary prohibitory injunction issued in the August 20, 2002 Order of this Court is hereby
made permanent. Since this is a resolution of a purely legal issue, there is no pronouncement as to
costs.

SO ORDERED.
Their motion for reconsideration having been denied by the court in its Order dated December 30,
2003, petitioners elevated the case directly to this Court on pure questions of law, ascribing to the
lower court the following errors:

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I. [I]n declaring the real properties of respondent exempt from real property taxes notwithstanding
the fact that the tax exemption granted to Bayantel in its original franchise had been withdrawn by
the [LGC] and that the said exemption was not restored by the enactment of RA 7633.

II. [In] declaring the real properties of respondent exempt from real property taxes notwithstanding
the enactment of the [QCRC] which withdrew the tax exemption which may have been granted by
RA 7633.

III. [In] declaring the real properties of respondent exempt from real property taxes notwithstanding
the vague and ambiguous grant of tax exemption provided under Section 11 of RA 7633.

IV. [In] declaring the real properties of respondent exempt from real property taxes notwithstanding
the fact that [it] had failed to exhaust administrative remedies in its claim for real property tax
exemption. (Words in bracket added.)
As we see it, the errors assigned may ultimately be reduced to two (2) basic issues, namely:

1. Whether or not Bayantel's real properties in Quezon City are exempt from real property taxes
under its legislative franchise; and

2. Whether or not Bayantel is required to exhaust administrative remedies before seeking

judicial relief with the trial court.

We shall first address the second issue, the same being procedural in nature.

Petitioners argue that Bayantel had failed to avail itself of the administrative remedies provided for
under the LGC, adding that the trial court erred in giving due course to Bayantel's petition for
prohibition. To petitioners, the appeal mechanics under the LGC constitute Bayantel's plain and
speedy remedy in this case.

The Court does not agree.

Petitions for prohibition are governed by the following provision of Rule 65 of the Rules of Court:

SEC. 2. Petition for prohibition. When the proceedings of any tribunal, are without or in excess of its
or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and
there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered commanding the respondent to desist from further
proceedings in the action or matter specified therein, or otherwise, granting such incidental reliefs as
law and justice may require.
With the reality that Bayantel's real properties were already levied upon on account of its
nonpayment of real estate taxes thereon, the Court agrees with Bayantel that an appeal to the LBAA
is not a speedy and adequate remedy within the context of the aforequoted Section 2 of Rule 65.
This is not to mention of the auction sale of said properties already scheduled on July 30, 2002.

Moreover, one of the recognized exceptions to the exhaustion- of-administrative remedies rule is
when, as here, only legal issues are to be resolved. In fact, the Court, cognizant of the nature of the
questions presently involved, gave due course to the instant petition. As the Court has said in Ty vs.
Trampe:[7]

xxx. Although as a rule, administrative remedies must first be exhausted before resort to judicial
action can prosper, there is a well-settled exception in cases where the controversy does not involve
questions of fact but only of law. xxx.

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Lest it be overlooked, an appeal to the LBAA, to be properly considered, required prior payment
under protest of the amount of P43,878,208.18, a figure which, in the light of the then prevailing
Asian financial crisis, may have been difficult to raise up. Given this reality, an appeal to the LBAA
may not be considered as a plain, speedy and adequate remedy. It is thus understandable why
Bayantel opted to withdraw its earlier appeal with the LBAA and, instead, filed its petition for
prohibition with urgent application for injunctive relief in Civil Case No. Q-02-47292. The remedy
availed of by Bayantel under Section 2, Rule 65 of the Rules of Court must be upheld.

This brings the Court to the more weighty question of whether or not Bayantel's real properties in
Quezon City are, under its franchise, exempt from real property tax.

The lower court resolved the issue in the affirmative, basically owing to the phrase "exclusive of this
franchise" found in Section 11 of Bayantel's amended franchise, Rep. Act No. 7633. To petitioners,
however, the language of Section 11 of Rep. Act No. 7633 is neither clear nor unequivocal. The
elaborate and extensive discussion devoted by the trial court on the meaning and import of said
phrase, they add, suggests as much. It is petitioners' thesis that Bayantel was in no time given
any express exemption from the payment of real property tax under its amendatory franchise.

There seems to be no issue as to Bayantel's exemption from real estate taxes by virtue of the term
"exclusive of the franchise" qualifying the phrase "same taxes on its real estate, buildings and
personal property," found in Section 14, supra, of its franchise, Rep. Act No. 3259, as originally
granted.

The legislative intent expressed in the phrase "exclusive of this franchise" cannot be construed other
than distinguishing between two (2) sets of properties, be they real or personal, owned by the
franchisee, namely, (a) those actually, directly and exclusively used in its radio or
telecommunications business, and (b) those properties which are not so used. It is worthy to note
that the properties subject of the present controversy are only those which are admittedly falling
under the first category.

To the mind of the Court, Section 14 of Rep. Act No. 3259 effectively works to grant or delegate to
local governments of Congress' inherent power to tax the franchisee's properties belonging to the
second group of properties indicated above, that is, all properties which, "exclusive of this franchise,"
are not actually and directly used in the pursuit of its franchise. As may be recalled, the taxing power
of local governments under both the 1935 and the 1973 Constitutions solely depended upon
an enabling law. Absent such enabling law, local government units were without authority to impose
and collect taxes on real properties within their respective territorial jurisdictions. While Section 14 of
Rep. Act No. 3259 may be validly viewed as an implied delegation of power to tax, the delegation
under that provision, as couched, is limited to impositions over properties of the franchisee which are
not actually, directly and exclusively used in the pursuit of its franchise. Necessarily, other properties
of Bayantel directly used in the pursuit of its business are beyond the pale of the delegated taxing
power of local governments. In a very real sense, therefore, real properties of Bayantel, save
those exclusive of its franchise, are subject to realty taxes. Ultimately, therefore, the inevitable result
was that all realties which are actually, directly and exclusively used in the operation of its franchise
are "exempted" from any property tax.

Bayantel's franchise being national in character, the "exemption" thus granted under Section 14 of
Rep. Act No. 3259 applies to all its real or personal properties found anywhere within the Philippine
archipelago.

However, with the LGC's taking effect on January 1, 1992, Bayantel's "exemption" from real estate
taxes for properties of whatever kind located within the Metro Manila area was, by force of Section
234 of the Code, supra, expressly withdrawn. But, not long thereafter, however, or on July 20, 1992,

104 | P a g e
Congress passed Rep. Act No. 7633 amending Bayantel's original franchise. Worthy of note is that
Section 11 of Rep. Act No. 7633 is a virtual reenacment of the tax provision, i.e., Section 14, supra,
of Bayantel's original franchise under Rep. Act No. 3259. Stated otherwise, Section 14 of Rep. Act
No. 3259 which was deemed impliedly repealed by Section 234 of the LGC was expressly revived
under Section 14 of Rep. Act No. 7633. In concrete terms, the realty tax exemption heretofore
enjoyed by Bayantel under its original franchise, but subsequently withdrawn by force of Section 234
of the LGC, has been restored by Section 14 of Rep. Act No. 7633.

The Court has taken stock of the fact that by virtue of Section 5, Article X of the 1987
Constitution,[8] local governments are empowered to levy taxes. And pursuant to this constitutional
empowerment, juxtaposed with Section 232[9] of the LGC, the Quezon City government enacted in
1993 its local Revenue Code, imposing real property tax on all real properties found within its
territorial jurisdiction. And as earlier stated, the City's Revenue Code, just like the LGC, expressly
withdrew, under Section 230 thereof, supra, all tax exemption privileges in general.

This thus raises the question of whether or not the City's Revenue Code pursuant to which the city
treasurer of Quezon City levied real property taxes against Bayantel's real properties located within
the City effectively withdrew the tax exemption enjoyed by Bayantel under its franchise, as
amended.

Bayantel answers the poser in the negative arguing that once again it is only "liable to pay the same
taxes, as any other persons or corporations on all its real or personal properties, exclusive of its
franchise."

Bayantel's posture is well-taken. While the system of local government taxation has changed with
the onset of the 1987 Constitution, the power of local government units to tax is still limited. As we
explained in Mactan Cebu International Airport Authority:[10]

The power to tax is primarily vested in the Congress; however, in our jurisdiction, it may be
exercised by local legislative bodies, no longer merely be virtue of a valid delegation as before, but
pursuant to direct authority conferred by Section 5, Article X of the Constitution. Under the latter, the
exercise of the power may be subject to such guidelines and limitations as the Congress may
provide which, however, must be consistent with the basic policy of local autonomy. (at p. 680;
Emphasis supplied.)
Clearly then, while a new slant on the subject of local taxation now prevails in the sense that the
former doctrine of local government units' delegated power to tax had been effectively modified with
Article X, Section 5 of the 1987 Constitution now in place, .the basic doctrine on local taxation
remains essentially the same. For as the Court stressed in Mactan, "the power to tax is [still]
primarily vested in the Congress."

This new perspective is best articulated by Fr. Joaquin G. Bernas, S.J., himself a Commissioner of
the 1986 Constitutional Commission which crafted the 1987 Constitution, thus:

What is the effect of Section 5 on the fiscal position of municipal corporations' Section 5 does not
change the doctrine that municipal corporations do not possess inherent powers of taxation. What it
does is to confer municipal corporations a general power to levy taxes and otherwise create sources
of revenue. They no longer have to wait for a statutory grant of these powers. The power of the
legislative authority relative to the fiscal powers of local governments has been reduced to the
authority to impose limitations on municipal powers. Moreover, these limitations must be "consistent
with the basic policy of local autonomy." The important legal effect of Section 5 is thus to reverse the
principle that doubts are resolved against municipal corporations. Henceforth, in interpreting
statutory provisions on municipal fiscal powers, doubts will be resolved in favor of municipal
corporations. It is understood, however, that taxes imposed by local government must be for a public

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purpose, uniform within a locality, must not be confiscatory, and must be within the jurisdiction of the
local unit to pass.[11] (Emphasis supplied).
In net effect, the controversy presently before the Court involves, at bottom, a clash between the
inherent taxing power of the legislature, which necessarily includes the power to exempt, and the
local government's delegated power to tax under the aegis of the 1987 Constitution.

Now to go back to the Quezon City Revenue Code which imposed real estate taxes on all real
properties within the city's territory and removed exemptions theretofore "previously granted to, or
presently enjoyed by all persons, whether natural or juridical ....,"[12] there can really be no dispute
that the power of the Quezon City Government to tax is limited by Section 232 of the LGC which
expressly provides that "a province or city or municipality within the Metropolitan Manila Area may
levy an annual ad valorem tax on real property such as land, building, machinery, and other
improvement not hereinafter specifically exempted." Under this law, the Legislature highlighted its
power to thereafter exempt certain realties from the taxing power of local government units. An
interpretation denying Congress such power to exempt would reduce the phrase "not hereinafter
specifically exempted" as a pure jargon, without meaning whatsoever. Needless to state, such
absurd situation is unacceptable.

For sure, in Philippine Long Distance Telephone Company, Inc. (PLDT) vs. City of Davao,[13] this
Court has upheld the power of Congress to grant exemptions over the power of local government
units to impose taxes. There, the Court wrote:

Indeed, the grant of taxing powers to local government units under the Constitution and the LGC
does not affect the power of Congress to grant exemptions to certain persons, pursuant to a
declared national policy. The legal effect of the constitutional grant to local governments simply
means that in interpreting statutory provisions on municipal taxing powers, doubts must be resolved
in favor of municipal corporations. (Emphasis supplied.)

As we see it, then, the issue in this case no longer dwells on whether Congress has the power to
exempt Bayantel's properties from realty taxes by its enactment of Rep. Act No. 7633 which
amended Bayantel's original franchise. The more decisive question turns on whether Congress
actually did exempt Bayantel's properties at all by virtue of Section 11 of Rep. Act No. 7633.

Admittedly, Rep. Act No. 7633 was enacted subsequent to the LGC. Perfectly aware that the LGC
has already withdrawn Bayantel's former exemption from realty taxes, Congress opted to pass Rep.
Act No. 7633 using, under Section 11 thereof, exactly the same defining phrase"exclusive of this
franchise" which was the basis for Bayantel's exemption from realty taxes prior to the LGC. In plain
language, Section 11 of Rep. Act No. 7633 states that "the grantee, its successors or assigns shall
be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this
franchise, as other persons or corporations are now or hereafter may be required by law to pay." The
Court views this subsequent piece of legislation as an express and real intention on the part of
Congress to once again remove from the LGC's delegated taxing power, all of the franchisee's
(Bayantel's) properties that are actually, directly and exclusively used in the pursuit of its franchise.

WHEREFORE, the petition is DENIED.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 112497 August 4, 1994

HON. FRANKLIN M. DRILON vs.MAYOR ALFREDO S. LIM

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The principal issue in this case is the constitutionality of Section 187 of the Local Government Code
reading as follows:

Procedure For Approval And Effectivity Of Tax Ordinances And Revenue Measures;
Mandatory Public Hearings. — The procedure for approval of local tax ordinances
and revenue measures shall be in accordance with the provisions of this Code:
Provided, That public hearings shall be conducted for the purpose prior to the
enactment thereof; Provided, further, That any question on the constitutionality or
legality of tax ordinances or revenue measures may be raised on appeal within thirty
(30) days from the effectivity thereof to the Secretary of Justice who shall render a
decision within sixty (60) days from the date of receipt of the appeal: Provided,
however, That such appeal shall not have the effect of suspending the effectivity of
the ordinance and the accrual and payment of the tax, fee, or charge levied therein:
Provided, finally, That within thirty (30) days after receipt of the decision or the lapse
of the sixty-day period without the Secretary of Justice acting upon the appeal, the
aggrieved party may file appropriate proceedings with a court of competent
jurisdiction.

Pursuant thereto, the Secretary of Justice had, on appeal to him of four oil companies and a
taxpayer, declared Ordinance No. 7794, otherwise known as the Manila Revenue Code, null and
void for non-compliance with the prescribed procedure in the enactment of tax ordinances and for
containing certain provisions contrary to law and public policy.1

In a petition for certiorari filed by the City of Manila, the Regional Trial Court of Manila revoked the
Secretary's resolution and sustained the ordinance, holding inter alia that the procedural
requirements had been observed. More importantly, it declared Section 187 of the Local
Government Code as unconstitutional because of its vesture in the Secretary of Justice of the power
of control over local governments in violation of the policy of local autonomy mandated in the
Constitution and of the specific provision therein conferring on the President of the Philippines only
the power of supervision over local governments.2

The present petition would have us reverse that decision. The Secretary argues that the annulled
Section 187 is constitutional and that the procedural requirements for the enactment of tax
ordinances as specified in the Local Government Code had indeed not been observed.

Parenthetically, this petition was originally dismissed by the Court for non-compliance with Circular
1-88, the Solicitor General having failed to submit a certified true copy of the challenged
decision.3 However, on motion for reconsideration with the required certified true copy of the decision
attached, the petition was reinstated in view of the importance of the issues raised therein.

We stress at the outset that the lower court had jurisdiction to consider the constitutionality of
Section 187, this authority being embraced in the general definition of the judicial power to determine
what are the valid and binding laws by the criterion of their conformity to the fundamental law.
Specifically, BP 129 vests in the regional trial courts jurisdiction over all civil cases in which the
subject of the litigation is incapable of pecuniary estimation,4 even as the accused in a criminal action
has the right to question in his defense the constitutionality of a law he is charged with violating and
of the proceedings taken against him, particularly as they contravene the Bill of Rights. Moreover,
Article X, Section 5(2), of the Constitution vests in the Supreme Court appellate jurisdiction over final
judgments and orders of lower courts in all cases in which the constitutionality or validity of any
treaty, international or executive agreement, law, presidential decree, proclamation, order,
instruction, ordinance, or regulation is in question.

107 | P a g e
In the exercise of this jurisdiction, lower courts are advised to act with the utmost circumspection,
bearing in mind the consequences of a declaration of unconstitutionality upon the stability of laws, no
less than on the doctrine of separation of powers. As the questioned act is usually the handiwork of
the legislative or the executive departments, or both, it will be prudent for such courts, if only out of a
becoming modesty, to defer to the higher judgment of this Court in the consideration of its validity,
which is better determined after a thorough deliberation by a collegiate body and with the
concurrence of the majority of those who participated in its discussion.5

It is also emphasized that every court, including this Court, is charged with the duty of a purposeful
hesitation before declaring a law unconstitutional, on the theory that the measure was first carefully
studied by the executive and the legislative departments and determined by them to be in
accordance with the fundamental law before it was finally approved. To doubt is to sustain. The
presumption of constitutionality can be overcome only by the clearest showing that there was indeed
an infraction of the Constitution, and only when such a conclusion is reached by the required
majority may the Court pronounce, in the discharge of the duty it cannot escape, that the challenged
act must be struck down.

In the case before us, Judge Rodolfo C. Palattao declared Section 187 of the Local Government
Code unconstitutional insofar as it empowered the Secretary of Justice to review tax ordinances and,
inferentially, to annul them. He cited the familiar distinction between control and supervision, the first
being "the power of an officer to alter or modify or set aside what a subordinate officer had done in
the performance of his duties and to substitute the judgment of the former for the latter," while the
second is "the power of a superior officer to see to it that lower officers perform their functions in
accordance with law."6 His conclusion was that the challenged section gave to the Secretary the
power of control and not of supervision only as vested by the Constitution in the President of the
Philippines. This was, in his view, a violation not only of Article X, specifically Section 4 thereof, 7 and
of Section 5 on the taxing powers of local governments,8 and the policy of local autonomy in general.

We do not share that view. The lower court was rather hasty in invalidating the provision.

Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality of the
tax ordinance and, if warranted, to revoke it on either or both of these grounds. When he alters or
modifies or sets aside a tax ordinance, he is not also permitted to substitute his own judgment for the
judgment of the local government that enacted the measure. Secretary Drilon did set aside the
Manila Revenue Code, but he did not replace it with his own version of what the Code should be. He
did not pronounce the ordinance unwise or unreasonable as a basis for its annulment. He did not
say that in his judgment it was a bad law. What he found only was that it was illegal. All he did in
reviewing the said measure was determine if the petitioners were performing their functions in
accordance with law, that is, with the prescribed procedure for the enactment of tax ordinances and
the grant of powers to the city government under the Local Government Code. As we see it, that was
an act not of control but of mere supervision.

An officer in control lays down the rules in the doing of an act. If they are not followed, he may, in his
discretion, order the act undone or re-done by his subordinate or he may even decide to do it
himself. Supervision does not cover such authority. The supervisor or superintendent merely sees to
it that the rules are followed, but he himself does not lay down such rules, nor does he have the
discretion to modify or replace them. If the rules are not observed, he may order the work done or re-
done but only to conform to the prescribed rules. He may not prescribe his own manner for the doing
of the act. He has no judgment on this matter except to see to it that the rules are followed. In the
opinion of the Court, Secretary Drilon did precisely this, and no more nor less than this, and so
performed an act not of control but of mere supervision.

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The case of Taule v. Santos 9 cited in the decision has no application here because the jurisdiction
claimed by the Secretary of Local Governments over election contests in the Katipunan ng Mga
Barangay was held to belong to the Commission on Elections by constitutional provision. The
conflict was over jurisdiction, not supervision or control.

Significantly, a rule similar to Section 187 appeared in the Local Autonomy Act, which provided in its
Section 2 as follows:

A tax ordinance shall go into effect on the fifteenth day after its passage, unless the
ordinance shall provide otherwise: Provided, however, That the Secretary of Finance
shall have authority to suspend the effectivity of any ordinance within one hundred
and twenty days after receipt by him of a copy thereof, if, in his opinion, the tax or fee
therein levied or imposed is unjust, excessive, oppressive, or confiscatory, or when it
is contrary to declared national economy policy, and when the said Secretary
exercises this authority the effectivity of such ordinance shall be suspended, either in
part or as a whole, for a period of thirty days within which period the local legislative
body may either modify the tax ordinance to meet the objections thereto, or file an
appeal with a court of competent jurisdiction; otherwise, the tax ordinance or the part
or parts thereof declared suspended, shall be considered as revoked. Thereafter, the
local legislative body may not reimpose the same tax or fee until such time as the
grounds for the suspension thereof shall have ceased to exist.

That section allowed the Secretary of Finance to suspend the effectivity of a tax ordinance if, in his
opinion, the tax or fee levied was unjust, excessive, oppressive or confiscatory. Determination of
these flaws would involve the exercise of judgment or discretion and not merely an examination of
whether or not the requirements or limitations of the law had been observed; hence, it would smack
of control rather than mere supervision. That power was never questioned before this Court but, at
any rate, the Secretary of Justice is not given the same latitude under Section 187. All he is
permitted to do is ascertain the constitutionality or legality of the tax measure, without the right to
declare that, in his opinion, it is unjust, excessive, oppressive or confiscatory. He has no discretion
on this matter. In fact, Secretary Drilon set aside the Manila Revenue Code only on two grounds, to
with, the inclusion therein of certain ultra vires provisions and non-compliance with the prescribed
procedure in its enactment. These grounds affected the legality, not the wisdom or reasonableness,
of the tax measure.

The issue of non-compliance with the prescribed procedure in the enactment of the Manila Revenue
Code is another matter.

In his resolution, Secretary Drilon declared that there were no written notices of public hearings on
the proposed Manila Revenue Code that were sent to interested parties as required by Art. 276(b) of
the Implementing Rules of the Local Government Code nor were copies of the proposed ordinance
published in three successive issues of a newspaper of general circulation pursuant to Art. 276(a).
No minutes were submitted to show that the obligatory public hearings had been held. Neither were
copies of the measure as approved posted in prominent places in the city in accordance with Sec.
511(a) of the Local Government Code. Finally, the Manila Revenue Code was not translated into
Pilipino or Tagalog and disseminated among the people for their information and guidance,
conformably to Sec. 59(b) of the Code.

Judge Palattao found otherwise. He declared that all the procedural requirements had been
observed in the enactment of the Manila Revenue Code and that the City of Manila had not been
able to prove such compliance before the Secretary only because he had given it only five days

109 | P a g e
within which to gather and present to him all the evidence (consisting of 25 exhibits) later submitted
to the trial court.

To get to the bottom of this question, the Court acceded to the motion of the respondents and called
for the elevation to it of the said exhibits. We have carefully examined every one of these exhibits
and agree with the trial court that the procedural requirements have indeed been observed. Notices
of the public hearings were sent to interested parties as evidenced by Exhibits G-1 to 17. The
minutes of the hearings are found in Exhibits M, M-1, M-2, and M-3. Exhibits B and C show that the
proposed ordinances were published in the Balita and the Manila Standard on April 21 and 25, 1993,
respectively, and the approved ordinance was published in the July 3, 4, 5, 1993 issues of the
Manila Standard and in the July 6, 1993 issue of Balita, as shown by Exhibits Q, Q-1, Q-2, and Q-3.

The only exceptions are the posting of the ordinance as approved but this omission does not affect
its validity, considering that its publication in three successive issues of a newspaper of general
circulation will satisfy due process. It has also not been shown that the text of the ordinance has
been translated and disseminated, but this requirement applies to the approval of local development
plans and public investment programs of the local government unit and not to tax ordinances.

We make no ruling on the substantive provisions of the Manila Revenue Code as their validity has
not been raised in issue in the present petition.

WHEREFORE, the judgment is hereby rendered REVERSING the challenged decision of the
Regional Trial Court insofar as it declared Section 187 of the Local Government Code
unconstitutional but AFFIRMING its finding that the procedural requirements in the enactment of the
Manila Revenue Code have been observed. No pronouncement as to costs.

SO ORDERED.

G.R. No. 187631 July 8, 2015

BATANGAS CITY, MARIA TERESA GERON vs.PILIPINAS SHELL PETROLEUM

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing
the Decision1dated January 22, 2009 and Resolution2 dated April 13, 2009 of the Court of Tax
Appeals (CTA) En Banc in CTA EB No. 350 which affirmed in toto the Amended Decision3 dated July
31, 2007 and Resolution4 dated November 21, 2007 of the CTA Second Division in CTA AC Case
No. 10.

The facts follow.

Petitioner Batangas City is a local government unit (LGU) with the capacity to sue and be sued
under its Charter and Section 22(a)(2) of the Local Government Code (LGC) of 1991. Petitioners
Teodulfo A. Deguito and Benjamin E. Pargas are the CityLegal Officer and City Treasurer,
respectively, of Batangas City.

Respondent Pilipinas Shell Petroleum Corporation operates an oil refinery and depot in Tabagao,
Batangas City, which manufactures and produces petroleum products that are distributed
nationwide.

In 2002, respondent was only paying the amount of ₱98,964.71 for fees and other charges which
include the amount of ₱1,180.34 as Mayor’s Permit. However, on February 20, 2001, petitioner

110 | P a g e
Batangas City, through its City Legal Officer, sent a notice of assessment to respondent demanding
the payment of ₱92,373,720.50 and ₱312,656,253.04 as business taxes for its manufacture and
distribution of petroleum products. In addition, respondent was also required and assessed to pay
the amount of ₱4,299,851.00 as Mayor’s Permit Fee based on the gross sales of its Tabagao
Refinery. The assessment was allegedly pursuant of Section 134 of the LGC of 1991 and Section 23
of its Batangas City Tax Code of 2002.

In response, respondent filed a protest on April 17, 2002 contending among others that it is not liable
for the payment of the local business tax either as a manufacturer or distributor of petroleum
products. It further argued that the Mayor’s Permit Fees are exorbitant, confiscatory, arbitrary,
unreasonable and not commensurable with the cost of issuing a license.

On May 13, 2002, petitioners denied respondent’s protest and declared that under Section 14 of the
Batangas City Tax Code of 2002, they are empowered to withhold the issuance of the Mayor’s
Permit for failure of respondent to pay the business taxes on its manufacture and distribution of
petroleum products.

On June 17, 2002, respondent filed a Petition for Review pursuant to Section 195 of the LGC of
1991 before the Regional Trial Court (RTC) of Batangas City. 1âwphi1

In its petition, respondent maintained that petitioners have no authority to impose the said taxes and
fees, and argued that the levy of local business taxes on the business of manufacturing and
distributing gasoline and other petroleum products is contrary to law and against national policy. It
further contended that the Mayor’s Permit Fee levied by petitioners were unreasonable and
confiscatory.

In its Answer, petitioners contended that the City of Batangas can legally impose taxes on the
business of manufacturing and distribution of petroleum products, including the Mayor’s Permit Fees
upon respondent.

Trial thereafter ensued.

In the interim, respondent paid under protest the Mayor’s Permit Fees for the year 2003 amounting
to ₱774,840.50 as manufacturer and ₱3,525,010.50 as distributor. When respondent applied for the
issuance of the Mayor’s Permit in 2004, it offered the amount of ₱150,000.00 as compromise
Mayor’s Permit Fee without prejudice to the outcome of the case then pending, which was rejected
by petitioners.

On October 29, 2004, the RTC of Batangas City rendered a Decision5 sustaining the imposition of
business taxes by petitioners upon the manufacture and distribution of petroleum products by
respondent. However, the RTC withheld the imposition of Mayor’s Permit Fee in deference to the
provisions of Section 147 of the LGC, in relation to Section 143(h) of the same Code, which imposed
a limit to the power of petitioners to collect the said business taxes. The fallo of said decision reads:

WHEREFORE, in view of the foregoing premises, this Court hereby renders judgment as follows:

1. The taxes on the privilege of engaging in the business of manufacturing, distribution or dealing in
petroleum products in the amount of ₱92,373,750.50 and ₱312,656,253.04, respectively, imposed
by Batangas City on Pilipinas Shell, is VALID.

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2. Declaring the Mayor’s Permit Fee in the amount of ₱4,299,851.00 based on gross receipts/sales
as grossly excessive and unreasonable considering the aforesaid business taxes. ACCORDINGLY,
THE PETITIONER, PILIPINAS SHELL PETROLEUM CORPORATION (PSPC), IS HEREBY
ORDERED TO PAY THE AMOUNT OF PH₱405,030,003.54 AS TAX ON ITS BUSINESS OF
ENGAGING IN THE MANUFACTURE AND DISTRIBUTION OF PETROLEUM PRODUCTS, WHILE
THE ASSESSMENT OF PH₱4,299,851.00 AS MAYOR’S PERMIT FEE IS HEREBY ORDERED
REVOKED WITHOUT PREJUDICE TO ITS MODIFICATION BY THE RESPONDENTS,
BATANGAS CITY, ET AL.

SO ORDERED.6

Unsatisfied, respondent filed a "Motion for Partial Reconsideration."

In an Order7 dated February 28, 2005, the RTC denied respondent’s motion for lack of merit.

Hence, respondent filed a Petition for Review with Extremely Urgent Application for a Temporary
Restraining Order and/or a Writ of Preliminary Injunction with the CTA Second Division on April 27,
2005.

Considering the urgency of the resolution of respondent’s Application for the Issuance of a Writ of
Preliminary Injunction, the CTA Second Division granted the said application and ordered petitioners
to hold in abeyance the collection of the questioned manufacturer and distributor’s taxes,
conditioned upon the filing of respondent of a surety bond in the amount of ₱500,000,000.00.

In a Decision dated June 21, 2007,the CTA Second Division granted respondent’s petition. It held
that respondent is not subject to the business taxes on the manufacture and distribution of petroleum
products because of the express limitation provided under Section 133(h) of the LGC. The
dispositive portion of said Decision reads:

WHEREFORE, premises considered, the judgment/order of the RTC Branch II of Batangas City is
hereby MODIFIED. As to the business taxes on the manufacture and distribution of petroleum
products, We find the [respondent] not liable for the same. As to the Mayor’s permit, We find that it is
excessive. Accordingly, the [petitioner] is hereby (a) declared legally proscribed from imposing
business taxes on the manufacture and distribution of petroleum products and (b) to refund in the
form of tax credit the excessive mayor’s permit in the amount of THREE MILLION FIVE HUDNRED
TWENTY-FIVE THOUSAND TEN PESOS and FIFTY CENTAVOS (₱3,525,010.50)

SO ORDERED.8

On July 13, 2007, respondent filed a "Motion for Clarification" on the exact amount to be refunded by
petitioners as regards the Mayor’s Permit Fees. After a perusal of the "Motion for Clarification," the
1âw phi 1

CTA Second Division found the motion partly meritorious. Thus:

Indeed, there is a discrepancy in the amount to be refunded and to clarify, the amount should be
₱3,870,860.00 as written in the body of the decisions as follows:

Since [petitioners] failed to modify the computation of the mayor’s permit fee and based on justice
and equity, [respondent] should be refunded with the mayor’s permit fees ordered revoked by the
court a quo.

The details of the additional amount of ₱4,299,851.00 mayor’s permit fees are as follows:

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 Manufacturer Distributor
Mayor’s Permit Fee ₱704,305.00 ₱3,166,555.00

License Fee 70,535.50

Prot. Fee Res/Bus 25,000.00

Fire Insp. Fee 1,000.00
Occ./Prof.Tax
San Permit & San Insp. Fee 12,000.00

Fire Code Fee 320,455.00

Total Amount ₱774,840.50 ₱3,525,010.50

The amount to be refunded is not the full amount of ₱4,299,851.00 but the excessive mayor’s permit
for manufacturing and distributing in the amount of ₱704,305.00 and ₱3,166,555.00, respectively, or
in the total amount of ₱3,870,860.00.

To conform to this aforequoted pronouncement, the dispositive portion of the assailed decision
should be amended so that the exact amount of the Mayor’s Permit Fees to be refunded be changed
from ₱3,525,010.50 to ₱3,870,860.00.

Section 2, Rule 36 of the Rules of Court reads as follows:

SEC. 2. Entry of Judgments and final orders.- If no appeal or motion for new trial or reconsideration
is filed within the time provided in these Rules, the judgment or final order shall forthwith be entered
by the clerk in the book of entries of judgments. The date of finality of the judgment or final order
shall be deemed to be the date of its entry.

In this case, PSPC received the Decision on June 28, 2007 and it filed its motion for clarification
(treated as a motion for reconsideration) on July 13, 2007 which is within the period allowed by law.
In effect, our Decision has not yet become final and executory. Hence, our Decision may be
amended.

Moreover, pursuant to Section 5(g), Rule 135 of the Revised Rules of Court that every court shall
have the power to amend or control its process and orders so as to make them conformable to law
and justice, the Second Division of this Court resolves to amend its Decision dated June 21, 2007 by
making the necessary corrections.

WHEREFORE, in view of the foregoing, [respondent]’s Motion for Clarification is partly GRANTED.
Accordingly, the dispositive portion of this Court’s Decision dated June 21, 2007 is hereby
AMENDED as follows:

WHEREFORE, premises considered, the judgment/order of the RTC Branch II of Batangas City is
hereby MODIFIED. As to the business taxes on the manufacture and distribution of petroleum
products, We find the [respondent] not liable for the same. As to the mayor’s permit, We find that it is
excessive. Accordingly, the [petitioner] is hereby (a) declared legally proscribed from imposing
business taxes on the manufacture and distribution of petroleum products and (b) to refund in the

113 | P a g e
form of tax credit the excessive mayor’s permit in the amount of THREE MILLION EIGHT
HUNDRED SEVENTY THOUSAND EIGHT HUDNRED SIXTY PESOS (₱3,870,860.00)

SO ORDERED.

SO ORDERED.9

Petitioners filed a motion for reconsideration against said decision but the same was denied by the
CTA Second Division in a Resolution dated November 21, 2007.

Not satisfied, petitioners filed a Petition for Review praying for the reversal of the Amended Decision
and Resolution of the CTA Second Division.

On January 22, 2009, the CTA En Banc promulgated a Decision affirming in toto the Amended
Decision of the CTA Second Division. The CTA En Banc found no cogent reason to disturb the
findings and conclusions of the CTA Second Division. The dispositive portion of said Decision reads:

WHEREFORE, the instant Petition for Review is hereby DENIED DUE COURSE and DISMISSED
for lack of merit. Accordingly, the July 31, 2007 Amended Decision and November 21, 2007
Resolution of the CTA Second Division in CTA AC Case No. 10 entitled, "PILIPINAS SHELL
PETROLEUM CORPORATION, petitioner vs. BATANGAS CITY, BENJAMIN E. PARGAS in his
capacity as CITY TREASURER and TEODULFO A. DEGUITO in his capacity as CITY LEGAL
OFFICER OF BATANGAS CITY, [petitioners]," are hereby AFFIRMED in toto.

SO ORDERED.10

Unfazed, petitioners filed a motion for reconsideration.

In a Resolution dated April 13, 2009, the CTA En Banc denied petitioners’ motion for reconsideration
for lace of merit.

Hence, this petition.

Petitioner raises the following assignment of errors:

1. THE COURT OF TAX APPEALS EN BANC ERRED IN NOT RULING THAT THE POWER
OF LOCAL GOVERNMENT UNITS TO TAX BUSINESS IS SOLELY GOVERNED BY SEC.
143 AND 143(h) OF THE LOCAL GOVENRMENT CODE OF 1991.

2. THE COURT OF TAX APPEALS EN BANC ERRED IN NOT RULING THAT THE WORD
"TAXES" IN SEC. 133(h) DOES NOT INCLUDE BUSINESS TAXES.

3. THE COURT OF TAX APPEALS EN BANC ERRED IN DISREGARDING THE

DISTINCTION BETWEEN TAXES ON ARTICLES AND TAXES ON BUSINESS.

4. THE COURT OF TAX APPEALS EN BANC INCORRECTLY CONSTRUED A CLEAR

PROVISION OF LAW, SPECIFICALLY SECTION 133(h) OF THE LOCAL GOVERNMENT
CODE OF 1991, AS AN EXPRESS LIMITATION ON THE POWER OF LOCAL
GOVENRMENT UNITS TO IMPOSE TAXES ON THE BUSINESS OF MANUFACTURE
AND DISTRIBUTION OF PETROLEUM PRODUCTS.11

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In essence, the issue is whether a LGU is empowered under the LGC to impose business taxes on
persons or entities engaged in the business of manufacturing and distribution of petroleum products.

It its petition, petitioners assert that any activity that involves the production or manufacture and the
distribution or selling of any kind or nature as a means of livelihood or with a view to profit can be
taxed by the LGUs. They posit that the authority granted to them by Section 143(h) of the LGC is so
broad that it practically covers any business that the sanggunian concerned may deem proper to tax,
even including businesses which are already subject to excise, value-added or percentage tax under
the National Internal Revenue Code (NIRC) provided that the same shall not exceed two percent of
the gross sales or receipts of the preceding calendar year.

We do not agree.

At the outset, it must be emphasized that although the power to tax is inherent in the State, the same
is not true for LGUs because although the mandate to impose taxes granted to LGUs is categorical
and long established in the 1987 Philippine Constitution, the same is not all encompassing as it is
subject to limitations as explicitly stated in Section 5, Article X of the 1987 Constitution, viz.:

SECTION 5. Each local government unit shall have the power to create its own sources of revenues
and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall
accrue exclusively to the local governments.

In the consolidated cases of City of Manila, et al. v. Hon. Colet and Malaysian Airline system;
Maersk-Filipinas, Inc., et al. v. City of Manila, et al,; Eastern Shipping Lines, Inc. v. City Council of
Manila, et al.; William Lines, Inc., et al. v. Regional Trial Court of Manila, et al.; PNOC Shipping and
Transport Corporation v. Hon. Nabong, et al.; Maersk-Filipinas, Inc., et al. v. City of Manila, et al.,
and with Intervenors William Lines, Inc., et al.; Cosco Container Lines and HEUNG-A Shipping Co.,
Ltd., et al. v. City of Manila; Sulpicio Lines, Inc. v. Regional Trial Court of Manila, et al.; Association
of International Shipping Lines, Inc. v. City of Manila, et al.; Dongnama Shipping Co., Ltd., et al. v.
Court of Appeals, et al.,12 this Court expounded that the LGUs’ power to tax is subject to the
limitations set forth under Section 133 of the LGC. Thus: It is already well-settled that although the
power to tax is inherent in the State, the same is not true for the LGUs to whom the power must be
delegated by Congress and must be exercised within the guidelines and limitations that Congress
may provide. The Court expounded in Pelizloy Realty Corporation v. The Province of Benguet that:

The power to tax "is an attribute of sovereignty," and as such, inheres in the State. Such, however, is
not true for provinces, cities, municipalities and barangays as they are not the sovereign; rather,
there are mere "territorial and political subdivisions of the Republic of the Philippines."

The rule governing the taxing power of provinces, cities, municipalities and barangays is
summarized in Icard v. City Council of Baguio:

It is settled that a municipal corporation unlike a sovereign state is clothed with no inherent power of
taxation. The charter or statute must plainly show an intent to confer that power or the municipality,
cannot assume it. And the power when granted is to be construed in strictissimi juris. Any doubt or
ambiguity arising out of the term used in granting that power must be resolved against the
municipality. Inferences, implication, deductions – all these- have no place in the interpretation of the
taxing power of a municipal corporation.

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Therefore, the power of a province to tax is limited to the extent that such power is delegated to it
either by the Constitution or by statute. Section 5, Article X of the 1987 Constitution is clear on this
point:

xxxx

Per Section 5, Article X of the 1987 Constitution, "the power to tax is no longer vested exclusively on
Congress; local legislative bodies are now given direct authority to levy taxes, fees and other
charges." Nevertheless, such authority is "subject to such guidelines and limitations as the Congress
may provide."

In conformity with Section 3, Article X of the 1987 Constitution, Congress enacted Republic Act No.
7160, otherwise known as the local Government Code of 1991. Book II of the LGC governs local
taxation and fiscal matters.

Relevant provisions of Book II of the LGC establish the parameters of the taxing powers of LGUs
found below.

First, Section 130 provides for the following fundamental principles governing the taxing powers of
LGUs:

1. Taxation shall be uniform in each LGU.

2. Taxes, fees, charges and other impositions shall:

a. be equitable and based as far as practicable on the taxpayer’s ability to pay;

b. be levied and collected only for public purposes;

c. not be unjust, excessive, oppressive or confiscatory;

d. not be contrary to law, public policy, national economic policy, or in the restraint of
trade.

3. The collection of local taxes, fees, charges and other impositions shall in no case be left to
any private person.

4. The revenue collected pursuant to the provisions of the LGC shall inure solely to the
benefit of, and be subject to the disposition by, the LGU levying the tax, fee, charge or other
imposition unless otherwise specifically provided by the LGC.

5. Each LGU shall, as far as practicable, evolve a progressive system of taxation.

Second, Section 133 provides for the common limitations on the taxing powers of LGUs.

Among the common limitations on the taxing powers of LGUs under Section 133 of the LGC is
paragraph (h) which states:

116 | P a g e
SECTION 133. Common Limitations on the Taxing Powers of Local Government Units. – Unless
otherwise provided herein, the exercise of taxing powers of provinces, cities, municipalities, and
barangays shall not extend to the levy of the following:

xxxx

(h) Excise taxes on articles enumerated under the National Internal Revenue Code, as amended,
and taxes, fees or charges on petroleum products.;13

From the foregoing, Section 133(h) clearly specifies the two kinds of taxes which cannot be imposed
by LGUs: (1) excise taxes on articles enumerated under the NIRC, as amended; and (2) taxes, fees
or charges on petroleum products.

Indisputably, the power of LGUs to impose business taxes derives from Section 14314 of the LGC.
However, the same is subject to the explicit statutory impediment provided for under Section 133(h)
of the same Code which prohibits LGUs from imposing "taxes, fees or charges on petroleum
products." It can, therefore, be deduced that although petroleum products are subject to excise tax,
the same is specifically excluded from the broad power granted to LGUs under Section 143(h) of the
LGC to impose business taxes.

Additionally, Section 133(h) of the LGC makes plain that the prohibition with respect to petroleum
products extends not only to excise taxes thereon, but all "taxes, fees or charges." The earlier
reference in paragraph 143(h) to excise taxes comprehends a wider range of subject of taxation: all
articles already covered by excise taxation under the NIRC, such as alcohol products, tobacco
products, mineral products, automobiles, and such non-essential goods as jewelry, goods made of
precious metals, perfumes, and yachts and other vessels intended for pleasure or sports. In
contrast, the later reference to "taxes, fees and charges" pertains only to one class of articles of the
many subjects of excise taxes, specifically, "petroleum products." While LGUs are authorized to
burden all such other class of goods with "taxes, fees and charges," excepting excise taxes, a
specific prohibition is imposed barring the levying of any other type of taxes with respect to
petroleum products.15

It is likewise irrefutable that the specific exemption provided under Section 133 of the LGC prevails
over Section 143 of the same Code.

First, Section 133 of the LGC is a specific provision that explicitly withhold from LGUs the power to
impose taxes, fees and charges on petroleum products.

Strictly speaking, as long as the subject matter of the taxing powers of the LGUs is the petroleum
products per se or even the activity or privilege related to the petroleum products, such as
manufacturing and distribution of said products, it is covered by the said limitation and thus, no levy
can be imposed.16

On the contrary, Section 143 of the LGC defines the general power of LGUs to tax businesses within
its jurisdiction. Thus, the omnibus grant of power to LGUs under Section 143(h)of the LGC cannot
overcome the specific exception or exemption in Section 133(h) of the same Code. This is in accord
with the rule on statutory construction that specific provisions must prevail over general ones. A
special and specific provision prevails over a general provision irrespective of their relative positions
in the statute. Generalia specialibus non derogant. Where there is in the same statute a particular
enactment and also a general one which in its most comprehensive sense would include what is
embraced in the former, the particular enactment must be operative, and the general enactment

117 | P a g e
must be taken to affect only such cases within its general language as are not within the provisions
of the particular enactment.17

Second, Article 232(h) of the Implementing Rules and Regulations (IRR) of the LGC of 1991 states:

ARTICLE 232. Tax on Business.– The Municipality may impose taxes on the following businesses:

xxxx

(h) On any business not otherwise specified in the preceding paragraphs which the sanggunian
concerned may deem proper to tax provided that that on any business subject to the excise tax, VAT
or percentage tax under the NIRC, as amended, the rate of tax shall not exceed two percent (2%) of
gross sales or receipts of the preceding calendar year and provided further, that in line with existing
national policy, any business engaged in the production, manufacture, refining, distribution or sale of
oil, gasoline, and other petroleum products shall not be subject to any local tax imposed in this
Article.18

Article 232 defines with more particularity the capacity of a municipality to impose taxes on
businesses. However, it admits of certain exceptions, specifically, that businesses engaged in the
production, manufacture, refining, distribution or sale of oil, gasoline, and other petroleum products,
shall not be subject to any local tax imposed by Article 232.

WHEREFORE, in view of the foregoing, the Court hereby resolves to DENY present petition. The
Decision dated January 22, 2009 and Resolution dated April 13, 2009 of the Court of Tax Appeals
En Banc in CTA EB No. 350 are AFFIRMED.

SO ORDERED.

EMINENT DOMAIN

G.R. No. L-34915 June 24, 1983

CITY GOVERNMENT OF QUEZON CITY vs. HON. JUDGE VICENTE G. ERICTA

This is a petition for review which seeks the reversal of the decision of the Court of First Instance of
Rizal, Branch XVIII declaring Section 9 of Ordinance No. 6118, S-64, of the Quezon City Council null
and void.

Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE REGULATING THE

ESTABLISHMENT, MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL TYPE
CEMETERY OR BURIAL GROUND WITHIN THE JURISDICTION OF QUEZON CITY AND
PROVIDING PENALTIES FOR THE VIOLATION THEREOF" provides:

Sec. 9. At least six (6) percent of the total area of the memorial park cemetery shall
be set aside for charity burial of deceased persons who are paupers and have been
residents of Quezon City for at least 5 years prior to their death, to be determined by
competent City Authorities. The area so designated shall immediately be developed
and should be open for operation not later than six months from the date of approval
of the application.

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For several years, the aforequoted section of the Ordinance was not enforced by city authorities but
seven years after the enactment of the ordinance, the Quezon City Council passed the following
resolution:

RESOLVED by the council of Quezon assembled, to request, as it does hereby

request the City Engineer, Quezon City, to stop any further selling and/or transaction
of memorial park lots in Quezon City where the owners thereof have failed to donate
the required 6% space intended for paupers burial.

Pursuant to this petition, the Quezon City Engineer notified respondent Himlayang Pilipino, Inc. in
writing that Section 9 of Ordinance No. 6118, S-64 would be enforced

Respondent Himlayang Pilipino reacted by filing with the Court of First Instance of Rizal Branch XVIII
at Quezon City, a petition for declaratory relief, prohibition and mandamus with preliminary injunction
(Sp. Proc. No. Q-16002) seeking to annul Section 9 of the Ordinance in question The respondent
alleged that the same is contrary to the Constitution, the Quezon City Charter, the Local Autonomy
Act, and the Revised Administrative Code.

There being no issue of fact and the questions raised being purely legal both petitioners and
respondent agreed to the rendition of a judgment on the pleadings. The respondent court, therefore,
rendered the decision declaring Section 9 of Ordinance No. 6118, S-64 null and void.

A motion for reconsideration having been denied, the City Government and City Council filed the
instant petition.

Petitioners argue that the taking of the respondent's property is a valid and reasonable exercise of
police power and that the land is taken for a public use as it is intended for the burial ground of
paupers. They further argue that the Quezon City Council is authorized under its charter, in the
exercise of local police power, " to make such further ordinances and resolutions not repugnant to
law as may be necessary to carry into effect and discharge the powers and duties conferred by this
Act and such as it shall deem necessary and proper to provide for the health and safety, promote the
prosperity, improve the morals, peace, good order, comfort and convenience of the city and the
inhabitants thereof, and for the protection of property therein."

On the other hand, respondent Himlayang Pilipino, Inc. contends that the taking or confiscation of
property is obvious because the questioned ordinance permanently restricts the use of the property
such that it cannot be used for any reasonable purpose and deprives the owner of all beneficial use
of his property.

The respondent also stresses that the general welfare clause is not available as a source of power
for the taking of the property in this case because it refers to "the power of promoting the public
welfare by restraining and regulating the use of liberty and property." The respondent points out that
if an owner is deprived of his property outright under the State's police power, the property is
generally not taken for public use but is urgently and summarily destroyed in order to promote the
general welfare. The respondent cites the case of a nuisance per se or the destruction of a house to
prevent the spread of a conflagration.

We find the stand of the private respondent as well as the decision of the respondent Judge to be
well-founded. We quote with approval the lower court's ruling which declared null and void Section 9
of the questioned city ordinance:

119 | P a g e
The issue is: Is Section 9 of the ordinance in question a valid exercise of the police
power?

An examination of the Charter of Quezon City (Rep. Act No. 537), does not reveal
any provision that would justify the ordinance in question except the provision
granting police power to the City. Section 9 cannot be justified under the power
granted to Quezon City to tax, fix the license fee, and regulate such other business,
trades, and occupation as may be established or practised in the City.' (Subsections
'C', Sec. 12, R.A. 537).

The power to regulate does not include the power to prohibit (People vs. Esguerra,
81 PhiL 33, Vega vs. Municipal Board of Iloilo, L-6765, May 12, 1954; 39 N.J. Law,
70, Mich. 396). A fortiori, the power to regulate does not include the power to
confiscate. The ordinance in question not only confiscates but also prohibits the
operation of a memorial park cemetery, because under Section 13 of said ordinance,
'Violation of the provision thereof is punishable with a fine and/or imprisonment and
that upon conviction thereof the permit to operate and maintain a private cemetery
shall be revoked or cancelled.' The confiscatory clause and the penal provision in
effect deter one from operating a memorial park cemetery. Neither can the ordinance
in question be justified under sub- section "t", Section 12 of Republic Act 537 which
authorizes the City Council to-

'prohibit the burial of the dead within the center of population of the
city and provide for their burial in such proper place and in such
manner as the council may determine, subject to the provisions of the
general law regulating burial grounds and cemeteries and governing
funerals and disposal of the dead.' (Sub-sec. (t), Sec. 12, Rep. Act
No. 537).

There is nothing in the above provision which authorizes confiscation or as

euphemistically termed by the respondents, 'donation'

We now come to the question whether or not Section 9 of the ordinance in question
is a valid exercise of police power. The police power of Quezon City is defined in
sub-section 00, Sec. 12, Rep. Act 537 which reads as follows:

(00) To make such further ordinance and regulations not repugnant to

law as may be necessary to carry into effect and discharge the
powers and duties conferred by this act and such as it shall deem
necessary and proper to provide for the health and safety, promote,
the prosperity, improve the morals, peace, good order, comfort and
convenience of the city and the inhabitants thereof, and for the
protection of property therein; and enforce obedience thereto with
such lawful fines or penalties as the City Council may prescribe under
the provisions of subsection (jj) of this section.

We start the discussion with a restatement of certain basic principles. Occupying the
forefront in the bill of rights is the provision which states that 'no person shall be
deprived of life, liberty or property without due process of law' (Art. Ill, Section 1
subparagraph 1, Constitution).

120 | P a g e
 On the other hand, there are three inherent powers of government by which the state
interferes with the property rights, namely-. (1) police power, (2) eminent domain, (3)
taxation. These are said to exist independently of the Constitution as necessary
attributes of sovereignty.

Police power is defined by Freund as 'the power of promoting the public welfare by
restraining and regulating the use of liberty and property' (Quoted in Political Law by
Tanada and Carreon, V-11, p. 50). It is usually exerted in order to merely regulate
the use and enjoyment of property of the owner. If he is deprived of his property
outright, it is not taken for public use but rather to destroy in order to promote the
general welfare. In police power, the owner does not recover from the government
for injury sustained in consequence thereof (12 C.J. 623). It has been said that police
power is the most essential of government powers, at times the most insistent, and
always one of the least limitable of the powers of government (Ruby vs. Provincial
Board, 39 PhiL 660; Ichong vs. Hernandez, 1,7995, May 31, 1957). This power
embraces the whole system of public regulation (U.S. vs. Linsuya Fan, 10 PhiL 104).
The Supreme Court has said that police power is so far-reaching in scope that it has
almost become impossible to limit its sweep. As it derives its existence from the very
existence of the state itself, it does not need to be expressed or defined in its scope.
Being coextensive with self-preservation and survival itself, it is the most positive and
active of all governmental processes, the most essential insistent and illimitable
Especially it is so under the modern democratic framework where the demands of
society and nations have multiplied to almost unimaginable proportions. The field and
scope of police power have become almost boundless, just as the fields of public
interest and public welfare have become almost all embracing and have transcended
human foresight. Since the Courts cannot foresee the needs and demands of public
interest and welfare, they cannot delimit beforehand the extent or scope of the police
power by which and through which the state seeks to attain or achieve public interest
and welfare. (Ichong vs. Hernandez, L-7995, May 31, 1957).

The police power being the most active power of the government and the due
process clause being the broadest station on governmental power, the conflict
between this power of government and the due process clause of the Constitution is
oftentimes inevitable.

It will be seen from the foregoing authorities that police power is usually exercised in
the form of mere regulation or restriction in the use of liberty or property for the
promotion of the general welfare. It does not involve the taking or confiscation of
property with the exception of a few cases where there is a necessity to confiscate
private property in order to destroy it for the purpose of protecting the peace and
order and of promoting the general welfare as for instance, the confiscation of an
illegally possessed article, such as opium and firearms.

It seems to the court that Section 9 of Ordinance No. 6118, Series of 1964 of Quezon
City is not a mere police regulation but an outright confiscation. It deprives a person
of his private property without due process of law, nay, even without compensation.

In sustaining the decision of the respondent court, we are not unmindful of the heavy burden
shouldered by whoever challenges the validity of duly enacted legislation whether national or local
As early as 1913, this Court ruled in Case v. Board of Health (24 PhiL 250) that the courts resolve
every presumption in favor of validity and, more so, where the ma corporation asserts that the
ordinance was enacted to promote the common good and general welfare.

121 | P a g e
In the leading case of Ermita-Malate Hotel and Motel Operators Association Inc. v. City Mayor of
Manila (20 SCRA 849) the Court speaking through the then Associate Justice and now Chief Justice
Enrique M. Fernando stated

Primarily what calls for a reversal of such a decision is the a of any evidence to offset
the presumption of validity that attaches to a statute or ordinance. As was expressed
categorically by Justice Malcolm 'The presumption is all in favor of validity. ... The
action of the elected representatives of the people cannot be lightly set aside. The
councilors must, in the very nature of things, be familiar with the necessities of their
particular ... municipality and with all the facts and lances which surround the subject
and necessitate action. The local legislative body, by enacting the ordinance, has in
effect given notice that the regulations are essential to the well-being of the people.
... The Judiciary should not lightly set aside legislative action when there is not a
clear invasion of personal or property rights under the guise of police regulation.
(U.S. v. Salaveria (1918], 39 Phil. 102, at p. 111. There was an affirmation of the
presumption of validity of municipal ordinance as announced in the leading Salaveria
decision in Ebona v. Daet, [1950]85 Phil. 369.)

We have likewise considered the principles earlier stated in Case v. Board of

Health supra :

... Under the provisions of municipal charters which are known as the general welfare
clauses, a city, by virtue of its police power, may adopt ordinances to the peace,
safety, health, morals and the best and highest interests of the municipality. It is a
well-settled principle, growing out of the nature of well-ordered and society, that
every holder of property, however absolute and may be his title, holds it under the
implied liability that his use of it shall not be injurious to the equal enjoyment of others
having an equal right to the enjoyment of their property, nor injurious to the rights of
the community. An property in the state is held subject to its general regulations,
which are necessary to the common good and general welfare. Rights of property,
like all other social and conventional rights, are subject to such reasonable limitations
in their enjoyment as shall prevent them from being injurious, and to such reasonable
restraints and regulations, established by law, as the legislature, under the governing
and controlling power vested in them by the constitution, may think necessary and
expedient. The state, under the police power, is possessed with plenary power to
deal with all matters relating to the general health, morals, and safety of the people,
so long as it does not contravene any positive inhibition of the organic law and
providing that such power is not exercised in such a manner as to justify the
interference of the courts to prevent positive wrong and oppression.

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

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

The expropriation without compensation of a portion of private cemeteries is not covered by Section
12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers the city council to
prohibit the burial of the dead within the center of population of the city and to provide for their burial

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in a proper place subject to the provisions of general law regulating burial grounds and cemeteries.
When the Local Government Code, Batas Pambansa Blg. 337 provides in Section 177 (q) that a
Sangguniang panlungsod may "provide for the burial of the dead in such place and in such manner
as prescribed by law or ordinance" it simply authorizes the city to provide its own city owned land or
to buy or expropriate private properties to construct public cemeteries. This has been the law and
practise in the past. It continues to the present. Expropriation, however, requires payment of just
compensation. The questioned ordinance is different from laws and regulations requiring owners of
subdivisions to set aside certain areas for streets, parks, playgrounds, and other public facilities from
the land they sell to buyers of subdivision lots. The necessities of public safety, health, and
convenience are very clear from said requirements which are intended to insure the development of
communities with salubrious and wholesome environments. The beneficiaries of the regulation, in
turn, are made to pay by the subdivision developer when individual lots are sold to home-owners.

As a matter of fact, the petitioners rely solely on the general welfare clause or on implied powers of
the municipal corporation, not on any express provision of law as statutory basis of their exercise of
power. The clause has always received broad and liberal interpretation but we cannot stretch it to
cover this particular taking. Moreover, the questioned ordinance was passed after Himlayang
Pilipino, Inc. had incorporated. received necessary licenses and permits and commenced operating.
The sequestration of six percent of the cemetery cannot even be considered as having been
impliedly acknowledged by the private respondent when it accepted the permits to commence
operations.

WHEREFORE, the petition for review is hereby DISMISSED. The decision of the respondent court is
affirmed.

SO ORDERED.

G.R. No. 142971 May 7, 2002

THE CITY OF CEBU vs.SPOUSES APOLONIO

In its petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, petitioner
City of Cebu assails the decision of 11 October 1999 of the Court of Appeals in CA-G.R. CV No.
592041 affirming the judgment of 7 May 1996 of the Regional Trial Court, Branch 13, Cebu City, in
Civil Case No. CEB-14632, a case for eminent domain, which fixed the valuation of the land subject
thereof on the basis of the recommendation of the commissioners appointed by it.

The material operation facts are not disputed.

On 17 September 1993, petitioner City of Cebu filed in Civil Case No. CEB-14632 a complaint for
eminent domain against respondents spouses Apolonio and Blasa Dedamo. The petitioner alleged
therein that it needed the following parcels of land of respondents, to wit:

Lot No. 1527

Area------------------------------------------------ 1,146 square

meters

Tax Declaration--------------------------------- 03472

-

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 Title No. ------------------------------------------ 31833

Market value------------------------------------- P240,660.00

Assessed Value--------------------------------- P72,200.00

-

Lot No. 1528

Area------------------------------------------------ 793 square meters

Area sought to be expropriated ------------ 478 square meters

----

Tax Declaration -------------------------------- 03450

---

Title No. ------------------------------------------ 31832

--

Market value for the whole lot -------------- P1,666,530.00

----

Market value of the Area to be P100,380.00

expropriated --

Assessed Value -------------------------------- P49,960.00

----

for a public purpose, i.e., for the construction of a public road which shall serve as an access/relief
road of Gorordo Avenue to extend to the General Maxilum Avenue and the back of Magellan
International Hotel Roads in Cebu City. The lots are the most suitable site for the purpose. The total
area sought to be expropriated is 1,624 square meters with an assessed value of P1,786.400.
Petitioner deposited with the Philippine National Bank the amount of P51,156 representing 15% of
the fair market value of the property to enable the petitioner to take immediate possession of the
property pursuant to Section 19 of R.A. No. 7160.2

Respondents, filed a motion to dismiss the complaint because the purpose for which their property
was to be expropriated was not for a public purpose but for benefit of a single private entity, the
Cebu Holdings, Inc. Petitioner could simply buy directly from them the property at its fair market
value if it wanted to, just like what it did with the neighboring lots. Besides, the price offered was very
low in light of the consideration of P20,000 per square meter, more or less, which petitioner paid to
the neighboring lots. Finally, respondents alleged that they have no other land in Cebu City.

A pre-trial was thereafter had.

On 23 August 1994, petitioner filed a motion for the issuance of a writ of possession pursuant to
Section 19 of R.A. No. 7160. The motion was granted by the trial court on 21 September 1994.3

On 14 December 1994, the parties executed and submitted to the trial court an Agreement4 wherein
they declared that they have partially settled the case and in consideration thereof they agreed:

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 1. That the SECOND PARTY hereby conforms to the intention to [sic] the FIRST PARTY in
expropriating their parcels of land in the above-cited case as for public purpose and for the
benefit of the general public;

2. That the SECOND PARTY agrees to part with the ownership of the subject parcels of land
in favor of the FIRST PARTY provided the latter will pay just compensation for the same in
the amount determined by the court after due notice and hearing;

3. That in the meantime the SECOND PARTY agrees to receive the amount of ONE
MILLION SEVEN HUNDRED EIGHTY SIX THOUSAND FOUR HUNDRED PESOS
(1,786,400.00) as provisional payment for the subject parcels of land, without prejudice to
the final valuation as maybe determined by the court;

4. That the FIRST PARTY in the light of the issuance of the Writ of Possession Order dated
September 21, 1994 issued by the Honorable Court, agreed to take possession over that
portion of the lot sought to be expropriated where the house of the SECOND PARTY was
located only after fifteen (15) days upon the receipt of the SECOND PARTY of the amount of
P1,786,400.00;

5. That the SECOND PARTY upon receipt of the aforesaid provisional amount, shall turn
over to the FIRST PARTY the title of the lot and within the lapse of the fifteen (15) days
grace period will voluntarily demolish their house and the other structure that may be located
thereon at their own expense;

6. That the FIRST PARTY and the SECOND PARTY jointly petition the Honorable Court to
render judgment in said Civil Case No. CEB-14632 in accordance with this AGREEMENT;

7. That the judgment sought to be rendered under this agreement shall be followed by a
supplemental judgment fixing the just compensation for the property of the SECOND PARTY
after the Commissioners appointed by this Honorable Court to determine the same shall
have rendered their report and approved by the court.

Pursuant to said agreement, the trial court appointed three commissioners to determine the just
compensation of the lots sought to be expropriated. The commissioners were Palermo M. Lugo, who
was nominated by petitioner and who was designated as Chairman; Alfredo Cisneros, who was
nominated by respondents; and Herbert E. Buot, who was designated by the trial court. The parties
agreed to their appointment.

Thereafter, the commissioners submitted their report, which contained their respective assessments
of and recommendation as to the valuation of the property. 1âwphi 1.nêt

On the basis of the commissioners' report and after due deliberation thereon, the trial court rendered
its decision on 7 May 1996,5 the decretal portion o which reads:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in accordance with the
report of the commissioners.

Plaintiff is directed to pay Spouses Apolonio S. Dedamo and Blasa Dedamo the sum of
pesos: TWENTY FOUR MILLION EIGHT HUNDRED SIXTY-FIVE THOUSAND AND NINE
HUNDRED THIRTY (P24,865.930.00) representing the compensation mentioned in the
Complaint.

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 Plaintiff and defendants are directed to pay the following commissioner's fee;

1. To Palermo Lugo - P21,000.00

2. To Herbert Buot - P19,000.00

3. To Alfredo Cisneros - P19,000.00

Without pronouncement as to cost.

SO ORDERED.

Petitioner filed a motion for reconsideration on the ground that the commissioners' report was
inaccurate since it included an area which was not subject to expropriation. More specifically, it
contended that Lot No. 1528 contains 793 square meters but the actual area to be expropriated is
only 478 square meters. The remaining 315 square meters is the subject of a separate expropriation
proceeding in Civil Case No. CEB-8348, then pending before Branch 9 of the Regional Trial Court of
Cebu City.

On 16 August 1996, the commissioners submitted an amended assessment for the 478 square
meters of Lot No. 1528 and fixed it at P12,824.10 per square meter, or in the amount of
P20,826,339.50. The assessment was approved as the just compensation thereof by the trial court
in its Order of 27 December 1996.6 Accordingly, the dispositive portion of the decision was amended
to reflect the new valuation.

Petitioner elevated the case to the Court of Appeals, which docketed the case as CA-G.R. CV No.
59204. Petitioner alleged that the lower court erred in fixing the amount of just compensation at
P20,826,339.50. The just compensation should be based on the prevailing market price of the
property at the commencement of the expropriation proceedings.

The petitioner did not convince the Court of Appeals. In its decision of 11 October 1999,7 the Court of
Appeals affirmed in toto the decision of the trial court.

Still unsatisfied, petitioner filed with us the petition for review in the case at bar. It raises the sole
issue of whether just compensation should be determined as of the date of the filing of the
complaint. It asserts that it should be, which in this case should be 17 September 1993 and not at
the time the property was actually taken in 1994, pursuant to the decision in "National Power
Corporation vs. Court of Appeals."8

In their Comment, respondents maintain that the Court of Appeals did not err in affirming the
decision of the trial court because (1) the trial court decided the case on the basis of the agreement
of the parties that just compensation shall be fixed by commissioners appointed by the court; (2)
petitioner did not interpose any serious objection to the commissioners' report of 12 August 1996
fixing the just compensation of the 1,624-square meter lot at P20,826,339.50; hence, it was
estopped from attacking the report on which the decision was based; and (3) the determined just
compensation fixed is even lower than the actual value of the property at the time of the actual
taking in 1994.

Eminent domain is a fundamental State power that is inseparable from sovereignty. It is the
Government's right to appropriate, in the nature of a compulsory sale to the State, private property

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for public use or purpose.9 However, the Government must pay the owner thereof just compensation
as consideration therefor.

In the case at bar, the applicable law as to the point of reckoning for the determination of just
compensation is Section 19 of R.A. No. 7160, which expressly provides that just compensation shall
be determined as of the time of actual taking. The Section reads as follows:

SECTION 19. Eminent Domain. – A local government unit may, through its chief executive
and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or
purpose or welfare for the benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided,
however, That the power of eminent domain may not be exercised unless a valid and definite
offer has been previously made to the owner, and such offer was not accepted: Provided,
further, That the local government unit may immediately take possession of the property
upon the filing of the expropriation proceedings and upon making a deposit with the proper
court of at least fifteen percent (15%) of the fair market value of the property based on the
current tax declaration of the property to be expropriated: Provided finally, That, the amount
to be paid for the expropriated property shall be determined by the proper court, based on
the fair market value at the time of the taking of the property.

The petitioner has misread our ruling in The National Power Corp. vs. Court of Appeals.10 We did not
categorically rule in that case that just compensation should be determined as of the filing of the
complaint. We explicitly stated therein that although the general rule in determining just
compensation in eminent domain is the value of the property as of the date of the filing of the
complaint, the rule "admits of an exception: where this Court fixed the value of the property as of the
date it was taken and not at the date of the commencement of the expropriation proceedings."

Also, the trial court followed the then governing procedural law on the matter, which was Section 5 of
Rule 67 of the Rules of Court, which provided as follows:

SEC. 5. Ascertainment of compensation. – Upon the entry of the order of condemnation, the
court shall appoint not more than three (3) competent and disinterested persons as
commissioners to ascertain and report to the court the just compensation for the property
sought to be taken. The order of appointment shall designate the time and place of the first
session of the hearing to be held by the commissioners and specify the time within which
their report is to be filed with the court.

More than anything else, the parties, by a solemn document freely and voluntarily agreed upon by
them, agreed to be bound by the report of the commission and approved by the trial court. The
agreement is a contract between the parties. It has the force of law between them and should be
complied with in good faith. Article 1159 and 1315 of the Civil Code explicitly provides:

Art. 1159. Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith.

Art. 1315. Contracts are perfected by mere consent, and from that moment the parties are
bound not only to the fulfillment of what has been expressly stipulated but also to all the
consequences which, according to their nature, may be in keeping with good faith, usage
and law.

Furthermore, during the hearing on 22 November 1996, petitioner did not interpose a serious
objection.11 It is therefore too late for petitioner to question the valuation now without violating the

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principle of equitable estoppel. Estoppel in pais arises when one, by his acts, representations or
admissions, or by his own silence when he ought to speak out, intentionally or through culpable
negligence, induces another to believe certain facts to exist and such other rightfully relies and acts
on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such
facts.12 Records show that petitioner consented to conform with the valuation recommended by the
commissioners. It cannot detract from its agreement now and assail correctness of the
commissioners' assessment. 1âwphi1.nêt

Finally, while Section 4, Rule 67 of the Rules of Court provides that just compensation shall be
determined at the time of the filing of the complaint for expropriation,13 such law cannot prevail over
R.A. 7160, which is a substantive law.14

WHEREFORE, finding no reversible error in the assailed judgment on the Court of Appeals in CA-
G.R. CV No. 59204, the petition in this case is hereby DENIED.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 146587 July 2, 2002

REPUBLIC OF THE PHILIPPINES vs.THE HONORABLE COURT OF APPEALS

Petitioner instituted expropriation proceedings on 19 September 1969 before the Regional Trial
Court ("RTC") of Bulacan, docketed Civil Cases No. 3839-M, No. 3840-M, No. 3841-M and No.
3842-M, covering a total of 544,980 square meters of contiguous land situated along MacArthur
Highway, Malolos, Bulacan, to be utilized for the continued broadcast operation and use of radio
transmitter facilities for the "Voice of the Philippines" project. Petitioner, through the Philippine
Information Agency ("PIA"), took over the premises after the previous lessee, the "Voice of America,"
had ceased its operations thereat. Petitioner made a deposit of P517,558.80, the sum provisionally
fixed as being the reasonable value of the property. On 26 February 1979, or more than nine years
after the institution of the expropriation proceedings, the trial court issued this order -

"WHEREFORE, premises considered, judgment is hereby rendered:

"Condemning the properties of the defendants in Civil Cases Nos. 3839-M to 3842-M located at KM
43, MacArthur Highway, Malolos, Bulacan and covered by several transfer certificates of title
appearing in the Commissioners’ Appraisal Report consisting of the total area of 544,980 square
meters, as indicated in plan, Exhibit A, for plaintiff, also marked as Exhibit I for the defendants, and
as Appendix ‘A’ attached to the Commissioners’ Appraisal Report, for the purpose stated by the
plaintiff in its complaint;

"Ordering the plaintiff to pay the defendants the just compensation for said property which is the fair
market value of the land condemned, computed at the rate of six pesos (P6.00) per square meter,
with legal rate of interest from September 19, 1969, until fully paid; and

"Ordering the plaintiff to pay the costs of suit, which includes the aforesaid fees of commissioners,
Atty. Victorino P. Evangelista and Mr. Pablo Domingo."1

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The bone of contention in the instant controversy is the 76,589-square meter property previously
owned by Luis Santos, predecessor-in-interest of herein respondents, which forms part of the
expropriated area.

It would appear that the national government failed to pay to herein respondents the compensation
pursuant to the foregoing decision, such that a little over five years later, or on 09 May 1984,
respondents filed a manifestation with a motion seeking payment for the expropriated property. On
07 June 1984, the Bulacan RTC, after ascertaining that the heirs remained unpaid in the sum of
P1,058,655.05, issued a writ of execution served on the plaintiff, through the Office of the Solicitor
General, for the implementation thereof. When the order was not complied with, respondents again
filed a motion urging the trial court to direct the provincial treasurer of Bulacan to release to them the
amount of P72,683.55, a portion of the sum deposited by petitioner at the inception of the
expropriation proceedings in 1969, corresponding to their share of the deposit. The trial court, in its
order of 10 July 1984, granted the motion.

In the meantime, President Joseph Ejercito Estrada issued Proclamation No. 22,2 transferring 20
hectares of the expropriated property to the Bulacan State University for the expansion of its facilities
and another 5 hectares to be used exclusively for the propagation of the Philippine carabao. The
remaining portion was retained by the PIA. This fact notwithstanding, and despite the 1984 court
order, the Santos heirs remained unpaid, and no action was taken on their case until 16 September
1999 when petitioner filed its manifestation and motion to permit the deposit in court of the amount of
P4,664,000.00 by way of just compensation for the expropriated property of the late Luis Santos
subject to such final computation as might be approved by the court. This time, the Santos heirs,
opposing the manifestation and motion, submitted a counter-motion to adjust the compensation from
P6.00 per square meter previously fixed in the 1979 decision to its current zonal valuation pegged at
P5,000.00 per square meter or, in the alternative, to cause the return to them of the expropriated
property. On 01 March 2000, the Bulacan RTC ruled in favor of respondents and issued the assailed
order, vacating its decision of 26 February 1979 and declaring it to be unenforceable on the ground
of prescription -

"WHEREFORE, premises considered, the court hereby:

"1) declares the decision rendered by this Court on February 26, 1979 no longer
enforceable, execution of the same by either a motion or an independent action
having already prescribed in accordance with Section 6, Rule 39 of both the 1964
Revised Rules of Court and the 1997 Rules of Civil Procedure;

"2) denies the plaintiff’s Manifestation and Motion to Permit Plaintiff to Deposit in
Court Payment for Expropriated Properties dated September 16, 1999 for the reason
stated in the next preceding paragraph hereof; and

"3) orders the return of the expropriated property of the late defendant Luis Santos to
his heirs conformably with the ruling of the Supreme Court in Government of
Sorsogon vs. Vda. De Villaroya, 153 SCRA 291, without prejudice to any case which
the parties may deem appropriate to institute in relation with the amount already paid
to herein oppositors and the purported transfer of a portion of the said realty to the
Bulacan State University pursuant to Proclamation No. 22 issued by President
Joseph Ejercito."3

Petitioner brought the matter up to the Court of Appeals but the petition was outrightly denied. It
would appear that the denial was based on Section 4, Rule 65, of the 1997 Rules of Civil Procedure
which provided that the filing of a motion for reconsideration in due time after filing of the judgment,

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order or resolution interrupted the running of the sixty-day period within which to file a petition
for certiorari; and that if a motion for reconsideration was denied, the aggrieved party could file the
petition only within the remaining period, but which should not be less than five days in any event,
reckoned from the notice of such denial. The reglementary period, however, was later modified by
A.M. No. 00-2-03 S.C., now reading thusly:

"Sec. 4. When and where petition filed. --- The petition shall be filed not later than sixty (60) days
from notice of the judgment, order or resolution. In case a motion for reconsideration or new trial is
timely filed, whether such motion is required or not, the sixty (60) day period shall be counted from
notice of the denial of said motion."

The amendatory provision, being curative in nature, should be made applicable to all cases still
pending with the courts at the time of its effectivity.

In Narzoles vs. NLRC,4 the Court has said:

"The Court has observed that Circular No. 39-98 has generated tremendous confusion resulting in
the dismissal of numerous cases for late filing. This may have been because, historically, i.e., even
before the 1997 revision to the Rules of Civil Procedure, a party had a fresh period from receipt of
the order denying the motion for reconsideration to file a petition for certiorari. Were it not for the
amendments brought about by Circular No. 39-98, the cases so dismissed would have been
resolved on the merits. Hence, the Court deemed it wise to revert to the old rule allowing a party a
fresh 60-day period from notice of the denial of the motion for reconsideration to file a petition for
certiorari. x x x

"The latest amendments took effect on September 1, 2000, following its publication in the Manila
Bulletin on August 4, 2000 and in the Philippine Daily Inquirer on August 7, 2000, two newspapers of
general circulation.

"In view of its purpose, the Resolution further amending Section 4, Rule 65, can only be described
as curative in nature, and the principles governing curative statutes are applicable.

"Curative statutes are enacted to cure defects in a prior law or to validate legal proceedings which
would otherwise be void for want of conformity with certain legal requirements. (Erectors, Inc. vs.
National Labor Relations Commission, 256 SCRA 629 [1996].) They are intended to supply defects,
abridge superfluities and curb certain evils. They are intended to enable persons to carry into effect
that which they have designed or intended, but has failed of expected legal consequence by reason
of some statutory disability or irregularity in their own action. They make valid that which, before the
enactment of the statute was invalid. Their purpose is to give validity to acts done that would have
been invalid under existing laws, as if existing laws have been complied with. (Batong Buhay Gold
Mines, Inc. vs. Dela Serna, 312 SCRA 22 [1999].) Curative statutes, therefore, by their very
essence, are retroactive. (Municipality of San Narciso, Quezon vs. Mendez, Sr., 239 SCRA 11
[1994].)"5

At all events, petitioner has a valid point in emphasizing the "public nature" of the expropriated
property. The petition being imbued with public interest, the Court has resolved to give it due course
and to decide the case on its merits.

Assailing the finding of prescription by the trial court, petitioner here posited that a motion which
respondents had filed on 17 February 1984, followed up by other motions subsequent thereto, was
made within the reglementary period that thereby interrupted the 5-year prescriptive period within
which to enforce the 1979 judgment. Furthermore, petitioner claimed, the receipt by respondents of

130 | P a g e
partial compensation in the sum of P72,683.55 on 23 July 1984 constituted partial compliance on the
part of petitioners and effectively estopped respondents from invoking prescription expressed in
Section 6, Rule 39, of the Rules of Court.6

In opposing the petition, respondents advanced the view that pursuant to Section 6, Rule 39, of the
Rules of Court, the failure of petitioner to execute the judgment, dated 26 February 1979, within five
years after it had become final and executory, rendered it unenforceable by mere motion. The
motion for payment, dated 09 May 1984, as well as the subsequent disbursement to them of the
sum of P72,683.55 by the provincial treasurer of Bulacan, could not be considered as having
interrupted the five-year period, since a motion, to be considered otherwise, should instead be made
by the prevailing party, in this case by petitioner. Respondents maintained that the P72,683.55 paid
to them by the provincial treasurer of Bulacan pursuant to the 1984 order of the trial court was part of
the initial deposit made by petitioner when it first entered possession of the property in 1969 and
should not be so regarded as a partial payment. Respondents further questioned the right of PIA to
transfer ownership of a portion of the property to the Bulacan State University even while the just
compensation due the heirs had yet to be finally settled.

The right of eminent domain is usually understood to be an ultimate right of the sovereign power to
appropriate any property within its territorial sovereignty for a public purpose.7 Fundamental to the
independent existence of a State, it requires no recognition by the Constitution, whose provisions
are taken as being merely confirmatory of its presence and as being regulatory, at most, in the due
exercise of the power. In the hands of the legislature, the power is inherent, its scope matching that
of taxation, even that of police power itself, in many respects. It reaches to every form of property the
State needs for public use and, as an old case so puts it, all separate interests of individuals in
property are held under a tacit agreement or implied reservation vesting upon the sovereign the right
to resume the possession of the property whenever the public interest so requires it.8

The ubiquitous character of eminent domain is manifest in the nature of the expropriation
proceedings. Expropriation proceedings are not adversarial in the conventional sense, for the
condemning authority is not required to assert any conflicting interest in the property. Thus, by filing
the action, the condemnor in effect merely serves notice that it is taking title and possession of the
property, and the defendant asserts title or interest in the property, not to prove a right to
possession, but to prove a right to compensation for the taking.9

Obviously, however, the power is not without its limits: first, the taking must be for public use,
and second, that just compensation must be given to the private owner of the property.10 These twin
proscriptions have their origin in the recognition of the necessity for achieving balance between the
State interests, on the one hand, and private rights, upon the other hand, by effectively restraining
the former and affording protection to the latter.11 In determining "public use," two approaches are
utilized - the first is public employment or the actual use by the public, and the second is public
advantage or benefit.12 It is also useful to view the matter as being subject to constant growth, which
is to say that as society advances, its demands upon the individual so increases, and each demand
is a new use to which the resources of the individual may be devoted.13

The expropriated property has been shown to be for the continued utilization by the PIA, a significant
portion thereof being ceded for the expansion of the facilities of the Bulacan State University and for
the propagation of the Philippine carabao, themselves in line with the requirements of public
purpose. Respondents question the public nature of the utilization by petitioner of the condemned
property, pointing out that its present use differs from the purpose originally contemplated in the
1969 expropriation proceedings. The argument is of no moment. The property has assumed a public
character upon its expropriation. Surely, petitioner, as the condemnor and as the owner of the

131 | P a g e
property, is well within its rights to alter and decide the use of that property, the only limitation being
that it be for public use, which, decidedly, it is.

In insisting on the return of the expropriated property, respondents would exhort on the
pronouncement in Provincial Government of Sorsogon vs. Vda. de Villaroya14 where the unpaid
landowners were allowed the alternative remedy of recovery of the property there in question. It
might be borne in mind that the case involved the municipal government of Sorsogon, to which the
power of eminent domain is not inherent, but merely delegated and of limited application. The grant
of the power of eminent domain to local governments under Republic Act No. 716015 cannot be
understood as being the pervasive and all-encompassing power vested in the legislative branch of
government. For local governments to be able to wield the power, it must, by enabling law, be
delegated to it by the national legislature, but even then, this delegated power of eminent domain is
not, strictly speaking, a power of eminent, but only of inferior, domain or only as broad or confined as
the real authority would want it to be.16

Thus, in Valdehueza vs. Republic17 where the private landowners had remained unpaid ten years
after the termination of the expropriation proceedings, this Court ruled -

"The points in dispute are whether such payment can still be made and, if so, in what amount. Said
lots have been the subject of expropriation proceedings. By final and executory judgment in said
proceedings, they were condemned for public use, as part of an airport, and ordered sold to the
government. x x x It follows that both by virtue of the judgment, long final, in the expropriation suit, as
well as the annotations upon their title certificates, plaintiffs are not entitled to recover possession of
their expropriated lots - which are still devoted to the public use for which they were expropriated -
but only to demand the fair market value of the same.

"Said relief may be granted under plaintiffs' prayer for: `such other remedies, which may be deemed
just and equitable under the premises'."18

The Court proceeded to reiterate its pronouncement in Alfonso vs. Pasay City19 where the recovery of
possession of property taken for public use prayed for by the unpaid landowner was denied even
while no requisite expropriation proceedings were first instituted. The landowner was merely given
the relief of recovering compensation for his property computed at its market value at the time it was
taken and appropriated by the State.

The judgment rendered by the Bulacan RTC in 1979 on the expropriation proceedings provides not
only for the payment of just compensation to herein respondents but likewise adjudges the property
condemned in favor of petitioner over which parties, as well as their privies, are bound.20 Petitioner
has occupied, utilized and, for all intents and purposes, exercised dominion over the property
pursuant to the judgment. The exercise of such rights vested to it as the condemnee indeed has
amounted to at least a partial compliance or satisfaction of the 1979 judgment, thereby preempting
any claim of bar by prescription on grounds of non-execution. In arguing for the return of their
property on the basis of non-payment, respondents ignore the fact that the right of the expropriatory
authority is far from that of an unpaid seller in ordinary sales, to which the remedy of rescission
might perhaps apply. An in rem proceeding, condemnation acts upon the property.21 After
condemnation, the paramount title is in the public under a new and independent title;22 thus, by giving
notice to all claimants to a disputed title, condemnation proceedings provide a judicial process for
securing better title against all the world than may be obtained by voluntary conveyance.23

Respondents, in arguing laches against petitioner did not take into account that the same argument
could likewise apply against them. Respondents first instituted proceedings for payment against
petitioner on 09 May 1984, or five years after the 1979 judgment had become final. The unusually

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long delay in bringing the action to compel payment against herein petitioner would militate against
them. Consistently with the rule that one should take good care of his own concern, respondents
should have commenced the proper action upon the finality of the judgment which, indeed, resulted
in a permanent deprivation of their ownership and possession of the property.24

The constitutional limitation of "just compensation" is considered to be the sum equivalent to the
market value of the property, broadly described to be the price fixed by the seller in open market in
the usual and ordinary course of legal action and competition or the fair value of the property as
between one who receives, and one who desires to sell, it fixed at the time of the actual taking by
the government.25 Thus, if property is taken for public use before compensation is deposited with the
court having jurisdiction over the case, the final compensation must include interests on its just value
to be computed from the time the property is taken to the time when compensation is actually paid or
deposited with the court.26 In fine, between the taking of the property and the actual payment, legal
interests accrue in order to place the owner in a position as good as (but not better than) the position
he was in before the taking occurred.27

The Bulacan trial court, in its 1979 decision, was correct in imposing interests on the zonal value of
the property to be computed from the time petitioner instituted condemnation proceedings and "took"
the property in September 1969. This allowance of interest on the amount found to be the value of
the property as of the time of the taking computed, being an effective forbearance, at 12% per
annum28 should help eliminate the issue of the constant fluctuation and inflation of the value of the
currency over time.29 Article 1250 of the Civil Code, providing that, in case of extraordinary inflation or
deflation, the value of the currency at the time of the establishment of the obligation shall be the
basis for the payment when no agreement to the contrary is stipulated, has strict application only to
contractual obligations.30 In other words, a contractual agreement is needed for the effects of
extraordinary inflation to be taken into account to alter the value of the currency.31

All given, the trial court of Bulacan in issuing its order, dated 01 March 2000, vacating its decision of
26 February 1979 has acted beyond its lawful cognizance, the only authority left to it being to order
its execution. Verily, private respondents, although not entitled to the return of the expropriated
property, deserve to be paid promptly on the yet unpaid award of just compensation already fixed by
final judgment of the Bulacan RTC on 26 February 1979 at P6.00 per square meter, with legal
interest thereon at 12% per annum computed from the date of "taking" of the property, i.e., 19
September 1969, until the due amount shall have been fully paid.

WHEREFORE, the petition is GRANTED. The resolution, dated 31 July 2000, of the Court of
Appeals dismissing the petition for certiorari, as well as its resolution of 04 January 2001 denying the
motion for reconsideration, and the decision of the Regional Trial Court of Bulacan, dated 01 March
2000, are SET ASIDE. Let the case be forthwith remanded to the Regional Trial Court of Bulacan for
the proper execution of its decision promulgated on 26 February 1979 which is hereby
REINSTATED. No costs.

SO ORDERED.

RECLASSIFICATION OF LANDS

[G.R. NO. 165547 : January 24, 2007]

DEPARTMENT OF AGRARIAN REFORM, v. SARANGANI AGRICULTURE CO

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This is a Petition for Review 1 by the Department of Agrarian Reform (DAR) seeking the reversal
of the Decision and Resolution, dated July 19, 2004 and September 24, 2004, respectively, of
the Court of Appeals in CA-G.R. SP No. 79899, entitled "Sarangani Agricultural Co, Inc., et al. v.
Hon. Manuel Domingo, et al."

Respondents are the owners of the lands in question which have been reclassified from
agricultural into non-agricultural uses by virtue of a municipal zoning ordinance, and are
included in the comprehensive land use plan of the Municipality of Alabel.

The antecedents are as follows:

The Province of Sarangani was created pursuant to Republic Act No. 7228 on March 16, 1992,
composed of seven (7) municipalities, namely, Alabel, Glan, Maasin, Maitum, Malapatan,
Malungon and Kiamba which were segregated from the Province of South Cotabato. Under said
Act, the Municipality of Alabel was made the capital of the new province where the capitol
building and all other national and provincial offices shall be established.2

On February 14, 1997, the Sangguniang Bayan of Alabel passed Resolution No. 97-08 or
"Resolution Adopting and Endorsing the Ten-Year Municipal Comprehensive Development Plan
(MCDP 1995-2005) of the Municipality of Alabel and Its Land Use Development Plan and
Zoning Ordinance for Adoption and Approval of the Provincial Governor, Honorable Priscilla L.
Chiongbian, Thru The Honorable Sangguniang Panlalawigan of Sarangani Province."

On January 30, 1998, pursuant to Municipal Zoning Ordinance No. 08, Series of 1997, and to
accelerate the development and urbanization of Alabel, the Sangguniang Bayan of Alabel
passed Resolution No. 98-03 reclassifying lots that were located within the built-up areas, based
on the 1995-2005 Land Use Plan of the municipality, from agricultural to non-agricultural uses.3

On March 2, 1998, the Sangguniang Panlalawigan of Sarangani approved Resolution No. 98-
018 or the "Resolution Adopting the Ten-Year Municipal Comprehensive Development Plan
(MCDP 1995-2205) and the Land Use Development Plan and Zoning Ordinance of the
Municipality of Alabel, Sarangani Per Resolution No. 97-08 and Municipal Ordinance No. 97-08,
S. of 1997 of the Sangguniang Bayan of Alabel." A portion of the area involving 376.5424
hectares, however, was covered by the Comprehensive Agrarian Reform Law (R.A. No. 6657)
commercial farms deferment scheme.4

The Zoning Certification issued by the office of the Municipal Planning and Development
Council (MPDC) showed that respondents' properties located at Barangay Maribulan, Alabel
were among those reclassified from agricultural and pasture land to residential, commercial
institutional, light industrial and open space in the 1995-2005 land use plan of Alabel.5

On July 2, 1998, respondent Sarangani Agricultural Company, Inc. (SACI) filed an application
for land use conversion of the following parcels of land with an aggregate area of 1,005
hectares:

Registered Owner TCT No. Lot No. Area (Ha.) Area Applied
(Ha.)
SACI T-7207 1-C 52.4365 52.4365

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SACI T -48807 (T-4807) 2 181.3353 181.3353
SAC I T -48808 (T-4808) 3 281.0874 281.0874
SACI T -48809 (T-4809) 4 241.7880 241.7880
SAC I T-48810 (T-4810) 5 40.6738 40.6738
SACI T -48811 (T-4811) 6 137.0340 137.0340
SACI T-48812 (T-4812) 7 12.3265 12.3265
Nicasio Alcantara T - (10885) T-44538 10 20.9149 20.9149
SACI T-9210 2 12.1425 12.1425
Tomas Alcantara T-14359 (T-1185) 39 10.9390 10.9390
Nicasio Alcantara Untitled 53 5.0672 5.0672
ACIL Corporation T - (41758) (T-4150) 806 3.3115 3.3115
SACI Untitled 807 6.7871 6.7871

Accompanying SACI's application for conversion were the documents required under the
Department of Agrarian Reform (DAR) Administrative Order No. 7, Series of 1997. 6

Subsequently, a Site Inspection Report was prepared by the Housing and Land Use Regulatory
Board (HLURB) Regional Office (Region XI) and was indorsed to DAR Secretary Horacio R.
Morales, Jr.

On March 16, 1999, the Provincial Agrarian Reform Council (PARC) and the Provincial Land
Use Technical Committee (PLUTC)7conducted an inspection of the subject properties. In a
Memorandum dated July 9, 1999, the PLUTC recommended that SACI's application be made
subject to the following conditions: 1) presentation by SACI of its development plan; 2)
submission of the lacking documents; 3) re-survey and segregation of the property according to
use or project in coordination with the DAR Regional Office; and, 4) submission of the resulting
map indicating the technical description of the area per actual use/project attested by the
Regional Director.

Meanwhile, on March 22, 1999, members of the Sarangani Agrarian Reform Beneficiaries
Association, Inc. (SARBAI) sent a letter-petition to the DAR Secretary oppposing the application
for land use conversion filed by SACI. SARBAI alleged that its members were merely forced to
sign the waiver of rights, considering that the commercial farm deferment period ended on June
15, 1998. Later, an "Urgent Petition for the Denial of Land Use Conversion Application of
Banana Commercial Farm of SACI" was filed by SARBAI and was received by the PARC
Secretariat on July 14, 1999.

In the March 30, 2000 deliberation of the PLUTC, the committee agreed to recommend the
disapproval of 158.0672 hectares that had been planted with bananas and coconuts. The
committee noted that said portion of the property was still viable for agriculture, irrigated, with
Notice of Coverage, and under protest or with opposition from SARBAI. It likewise
recommended that the decision as to the rest of the area applied for conversion shall be

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deferred subject to the submission of the following within a period of thirty (30) days: 1) a five-
year comprehensive development plan; 2) a survey plan signed by the Regional Technical
Director of Land Management Service and noted by the DAR Regional Director (Region XI); 3)
SACI's proof of undertaking, which will contain the package of benefits it intends to give to the
affected farm workers except those working in the banana plantation; 4) the concurrence of all
the workers who would be affected by the proposed conversion, which concurrence should be
noted by the Municipal Agrarian Reform Office (MARO) and acknowledged by a notary public.

On its part, SACI contended that 1) its projects were aligned to address the current and
anticipated commercial and residential needs of Sarangani province, and the removal of any
portion of its property included in its comprehensive development plan will affect the viability of
the plan; 2) the banana plantations will be transformed into a socialized housing subdivision
which will be made available to the displaced workers and the other low income earners of
Alabel; 3) the company will construct and install power generation facilities in the entire area; 4)
at the time the application for land use conversion was filed, no Notice of Coverage was ever
issued by DAR, and the subsequent issuance of such notice was highly irregular because the
same may be issued only after the final resolution of the application for land use conversion;
and 5) the previous Order of Deferment cannot be a legal barrier to the filing of an application
for land use conversion.

On November 9, 2000, DAR Secretary Horacio R. Morales, Jr. denied SACI's application for
land use conversion. The pertinent portion of the Order reads:

'The proponent also submitted another DA certification stating that 12 parcels of land (Lot Nos.
2, 3, 4, 5, 6, 7, 12, 807, 53, 10, 39 and 806) with an area of 816.7401 hectares, located at
Maribulan, Alabel, Sarangani are part of expansion for urbanizing areas. Though discussed on
several meetings, no decision was made on the application since the applicant was not able to
comply with the documentary requirements and clarify the issues raised by the Committee.

[I]n [the] 30 March 2000 Meeting of the PLUTC, the Committee deliberated again [on] the
subject application and agreed to recommend the disapproval of 158.0672 hectares area
planted to banana[s] and coconuts. The Committee noted that said portion of the property is still
viable for agriculture, irrigated, with Notice of Coverage and with protest or opposition from
SARBAI. The Committee also agreed to request the DAR to determine the metes and bounds of
the area planted to banana[s] and coconuts vis - Ã -vis areas devoted to other enterprises.
Relative to the rest of the area applied for conversion, the committee deferred its decision
subject to the submission of a 5-year comprehensive development plan, showing among others,
the schedule of development by phase, the specific lots involved and the corresponding
proposed use.

'The Committee acceded to the request of SACI and deferred its recommendation to deny
conversion of that portion of the property planted to banana[s] and coconut[s] pending
submission of a manifesto or SACI's proof of undertaking that it will compensate farm workers
affected by showing, among others, the schedule of development by phase, the specific lots
involved and the corresponding proposed use [of] the conversion, concurred by the
workers/oppositors, noted by the MARO and duly notarized. The Committee also requested
SACI to submit details of the pomelo farm in Malandag being offered as a replacement farm for
the relocation of the farm workers. SACI was given a 30-day period to submit these documents.

136 | P a g e
SACI, however, failed to submit the oath of undertaking to pay disturbance compensation to
affected workers being required by the Committee and as provided under DAR Administrative
Order No. 01, Series of 1999. Instead, SACI submitted an undertaking executed by the affected
workers stating that they are amenable to the package of benefits offered by the company.
Nevertheless, those who executed the deed of undertaking did not represent the majority of the
farm workers. Out of the 95 regular banana workers only 45 and eight (8) supervisors including
four (4) workers who were not included in the workers' master list of SACI executed a deed of
undertaking. As regards the 105-hectare pomelo farm, SACI failed to affirm whether they are
going to pursue their offer. Likewise, DAR Region XI reported that coverage of the same area is
on-going, and a different group of potential beneficiaries have already been identified.
Therefore, it could no longer be offered as a relocation site. Foregoing considered, the
Committee, during its 18 August 2000 Meeting, sustained its earlier recommendation to deny
the conversion of that portion of the property planted to bananas and coconuts.

With regard to the rest. of the area, the Committee deferred its decision subject to the
delineation by the SACI of the total area that they can develop within the allowed five' -year
period. Likewise, the PLUTC is requesting the SACI to submit a revised five-year development
plan that will show the schedule of development by phase, by year, and the proposed use for
each parcel of land.

WHEREFORE, premises considered, it is hereby ordered that:

1. The application filed by the Sarangani Agricultural Company, Inc. (SACI), represented by
Cynthia Adao-Prat, involving parcels of land planted to banana[s] and coconut[s] and with
Notice of Coverage identified as TCT Nos. T-10885 (20.9149 ha.), T-14359 (10.9390 ha.), T-
41718 (3.3115 ha.), OCT No. V-19574 or T-9210 (12.1425 ha.), Lot 807 (6.7871 ha.) and
portion of P-V-125 (95.00 ha.) and [an] area covered by Lot 53 (5.0672 ha.) with an aggregate
area of 154.622 [actually it is 154.1622] hectares is hereby DENIED. The Dar Regional Office of
Region XI is hereby instructed to determine the metes and bounds of the area subject for
distribution to the qualified FWBs.

2. The resolution of the application involving the rest of the area applied for conversion is
DEFERRED pending submission by the applicant of a revised five-year development plan
indicating the specific use of each parcel of land.

SO ORDERED.8

Petitioner filed a Motion for Reconsideration of the above decision but the same was denied by
the Court of Appeals in a Resolution, dated September 24, 2004.

Their Motion for Reconsideration of the above Order having been denied, respondents
appealed to the Office of the President (O.P. Case No. 02-1-47.4, alleging that the Secretary of
Agrarian Reform committed serious errors in 1) finding that a notice of coverage had been
issued for the banana area of the landholdings; 2) giving undue significance to the protest or
opposition by SARBAI; 3) requiring a deed of undertaking even after applicant-appellant's
written commitment to pay whatever lawful obligation SACI may incur as a consequence of the
conversion; 4) holding that farms with commercial farm deferment cannot be applied for
conversion; 5) ruling that irrigated lands suitable for agriculture were disqualified for conversion;
and 6) ruling that applicant - 'appellant had not submitted a five-year development plan.9

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In a Decision dated June 30, 2003, the Office of the President through Presidential Assistant
Manuel C. Domingo dismissed the appeal and affirmed in toto the challenged DAR Orders.
Respondents' motion for reconsideration was denied,10 so they filed with the Court of Appeals a
Petition for Review raising substantially the same issues.

On July 19, 2004, the Court of Appeals rendered a Decision granting the petition, the dispositive
portion of which reads:

WHEREFORE, premises considered, the present petition is hereby GIVEN DUE COURSE.
Consequently, the assailed Decision and Order dated June 30, 2003 and September 12, 2003,
respectively, of the Office of the President, as well as the Orders dated November 9, 2000 and
August 28, 2002 of the DAR Secretary are hereby REVERSED and SET ASIDE insofar as the
DAR directs the MARO of Alabel, Sarangani to proceed with the distribution of the banana and
coconut areas subject of the June 16, 1998 Notice of Coverage. The Secretary of the
Department of Agrarian Reform is hereby directed to issue a conversion order covering the
aforesaid area under the terms and conditions as provided in pertinent guidelines of the
department. As to the rest of the area applied for conversion, action on which has been
deferred, the DAR Regional Office (DAR Region No. XI) is hereby DIRECTED to expedite the
processing and evaluation of petitioners' land use conversion application in accordance with the
provisions of DAR AO No.7, Series of 1997, and DAR AO No. 01-99 whenever the provisions of
the latter issuance are made applicable to those applications filed before its effectivity.

The DAR Secretary and all officers and employees acting on his behalf are hereby enjoined
from proceeding with the distribution of petitioners' lands under compulsory acquisition provided
in Sec. 16 of R.A. No. 6657. Whatever actions already taken in pursuance of the June 16, 1998
Notice of Coverage under CARP are hereby nullified for DAR's failure to observe due process
therein.

No pronouncement as to costs.

SO ORDERED.11

Hence, this petition alleging that the Court of Appeals erred:

WHEN IT RULED THAT THE JUNE 16, 1998 NOTICE OF COVERAGE WAS ILLEGAL AS
DAR ALLEGEDLY FAILED TO OBSERVE DUE PROCESS.

II

WHEN IT RULED THAT DAR SHOULD USE THE COMPREHENSIVE LAND USE PLANS AND
ACCOMPANYING ORDINANCE OF THE LOCAL SANGGUNIAN AS PRIMARY REFERENCE
SO AS NOT TO DEFEAT THE VERY PURPOSE OF THE LOCAL GOVERNMENT UNIT (LGU)
CONCERNED IN RECLASSIFYING CERTAIN AREAS TO ACHIEVE SOCIAL AND
ECONOMIC BENEFITS IN PURSUANCE TO ITS MANDATE TOWARDS THE GENERAL
WELFARE.

III

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WHEN IT FAILED TO TAKE INTO CONSIDERATION THE BASIC PROVISIONS AND
PRINCIPLES OF LAW WITH SPECIAL ATTENTION TO THE REQUIREMENTS OR
PRECONDITIONS FOR LAND CLASSIFICATION/CONVERSION AND THE BASIC MANDATE
OF THE CARP.

With regard to the first issue on due process, this Court holds that, under the circumstances, a
notice of coverage is not an indispensable requirement before DAR can acquire the subject lots
or commercial farms, which are covered by a deferment period12 under the Comprehensive
Agrarian Reform Law (CARL) or R.A. No 6657 upon its effectivity on June 15, 1998. The
pertinent provision of the law states:

Sec. 11. Commercial Farming. - Commercial farms, which are private agricultural lands devoted
to saltbeds, fruit farms, orchards, vegetables and cut-flower farms, cacao, coffee and rubber
plantations, shall be subject to immediate compulsory acquisition and distribution after ten (10)
years from the effectivity of this Act.13 In the case of new farms, the ten-year period shall begin
from the first year of commercial production and operation, as determined by the DAR. During
the ten-year period, the Government shall initiate steps necessary to acquire these lands, upon
payment of just compensation for the land and the improvements thereon, preferably in favor of
organized cooperatives or associations, which shall thereafter manage the said lands for the
workers-beneficiaries. (AS amended by R.A. 7881; Rules and regulations on the acquisition,
valuation compensation and distribution of deferred commercial farms - DAR AO No. 09, s.
1998)

DAR Administrative Order No.9, Series of 1998,14 on the Rules and Regulations on the
Acquisition, Valuation, Compensation and Distribution of Deferred Commercial Farms applies to
all commercial farms as defined under Section 11 of R.A. No. 6657:15

SEC. 2. Statement of Policies. - The acquisition, valuation, compensation, distribution, operation

and management of deferred commercial farms shall be governed by the following policies:

(a) All commercial farms whose deferment expired as of June 15, 1998 shall be subject to
immediate acquisition and distribution under the Comprehensive Agrarian Reform Program
(CARP). Those whose deferments have yet to expire will be acquired and distributed only upon
expiration of their respective deferment period as originally determined by the Department of
Agrarian reform (DAR), or earlier if the DAR determines that the purpose for which it was
deferred no longer exists and revokes its deferment;

The process of acquisition of these commercial farms by DAR is specifically provided under
Article III, Section 9 of the above administrative order, to wit:

SEC. 9. Procedure for Acquisition.' The acquisition of deferred commercial farms shall be
governed by the following procedures:

(a) Voluntary Offer to Sell/Compulsory Acquisition

1) The Order of Deferment previously issued over the landholding shall serve, upon expiration
of the deferment period of the subject commercial farm, as the Notice of
Coverage,[16] supported by the Compliance Work Program and Summary of Exceptions (Form
A) originally submitted with the approved deferment application. However, for record purposes,

139 | P a g e
the landowner shall be served a Notice of Expiration of Deferment (Annex 2) which shall contain
a reminder of his right of retention, should he wish to exercise the same;

2) In general, the procedure for acquisition shall follow DAR Administrative Order No. 01, Series
of 1998, as amended by DAR Administrative Order No. 02, Series of 1996, entitled "Revised
Rules and Procedures governing the Acquisition of Agricultural Lands subject of Voluntary offer
to Sell and Compulsory Acquisition Pursuant to Republic Act No. 6657," subject to certain
modifications intended to expedite the process as provided herein.

Clearly, it was unnecessary for petitioner to issue a notice of coverage to respondents in order
to place the properties in question under CARP coverage. Hence, the contention by
respondents that due process was not duly observed by petitioner must fail. Accordingly, the
denial of the application for conversion must be upheld.

As regards the second issue, DAR Administrative Order No. 7, Series of 1997, or the Omnibus
Rules and Procedures Governing Conversion of Agricultural Lands to Non-agricultural
Uses prescribes the guidelines for land use conversion:

VI. POLICIES AND GUIDELINES

A.'

B. General Guidelines

b) Conversion may be allowed if at the time of the application, the lands are reclassified as
commercial, industrial, residential or other non-agricultural in the new or revised town plans
promulgated by the local government unit (LGU) and approved by the Housing and Land Use
Regulatory Board (HLURB) or by the Sangguniang Panlalawigan (SP) after June 15, 1988, in
accordance with Section 20 of R.A. No. 7160, as implemented by MC No. 54, and Executive
Order No. 72, Series of 199317 of the Office of the President.

In connection with the afore-stated administrative order, Section 20 of Republic Act No. 7160,
otherwise known as the Local Government Code of 1991, empowers the local government units
to reclassify agricultural lands:

Sec. 20. Reclassification of Lands. - (a) A city or municipality may, through an ordinance
passed by the Sanggunian after conducting public hearings for the purpose, authorize the
reclassification of agricultural lands and provide for the manner of their utilization or disposition
in the following cases: (1) when the land ceases to be economically feasible and sound for
agricultural purposes as determined by the Department of Agriculture or (2) where the land shall
have substantially greater economic value for residential, commercial, or industrial purposes, as
determined by the Sanggunian concerned: Provided, That such reclassification shall be limited
to the following percentage of the total agricultural land area at the time of the passage of the
ordinance:

(1) For highly urbanized and independent component cities, FIFTEEN PERCENT (15%);

(2) For component cities and first to third class municipalities, ten percent (10%), and

140 | P a g e
(3) For fourth to sixth class municipalities, five percent (5%); Provided further, That agricultural
lands distributed to agrarian reform beneficiaries pursuant to Republic Act No. 6657, otherwise
known as "The Comprehensive Agrarian Reform Law," shall not be affected by the said
reclassification and the conversion of such lands into other purposes shall be governed by
Section 65 of said Act.

(c) The local government units shall in conformity with existing laws, continue to prepare their
respective comprehensive land use plans enacted though zoning ordinances which shall be the
primary and dominant bases for the future use of land resources: Provided, That the
requirements for food production, human settlements, and industrial expansion shall be taken
into consideration in the preparation of such
plans.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

(e) Nothing in this section shall be construed as repealing, amending or modifying in any
manner the provisions of R.A. No. 6657.18

Memorandum Circular No. 54 "Prescribing the Guidelines Governing Section 20 of R.A. No.
7160 Otherwise Known as the Local Government Code of 1991 Authorizing Cities and
Municipalities to Reclassify Agricultural Lands Into Non-Agricultural Uses" issued by President
Fidel V. Ramos on June 8, 1993 specified the scope and limitations on the power of the cities
and municipalities to reclassify agricultural lands into other uses. It provided that all ordinances
authorizing reclassification of agricultural lands shall be subject to the review and approval of
the province in the case of component cities or municipalities, or by the HLURB for highly
urbanized or independent component cities in accordance with Executive Order No. 72, Series
of 1993, thus:

SECTION 4. Use of the comprehensive land use plans19 and ordinances as primary reference
documents in land use conversions. - Pursuant to RA 6657 and EO 129-A, actions on
applications for land use conversions on individual landholdings shall remain as the
responsibility of DAR, which shall utilize as its primary reference documents the comprehensive
land use plans and accompanying ordinance passed upon and approved by the LGUs
concerned, together with the National Land Use Policy.

Hence, with regard to agricultural lands that have been reclassified for non-agricultural uses by
the local government unit concerned, the CA is correct in declaring that DAR should refer to the
comprehensive land use plans and the ordinances of the Sanggunian in assessing land use
conversion applications, thus:

Construing Sec. 20 of the Local Government Code and the subsequent administrative
issuances implementing the same, we are of the opinion that while the DAR retains the
responsibility for approving or disapproving applications for land use conversion filed by
individual landowners on their landholdings, the exercise of such authority should be confined to
compliance with the requirements and limitations under existing laws and regulations, such as
the allowable percentage of agricultural [area] to be reclassified, ensuring sufficient food
production, areas non-negotiable for conversion and those falling under environmentally critical
areas or highly restricted for conversion under the NIPAS law. Definitely, the DAR's power in
such cases may not be exercised in such a manner as to defeat the very purpose of the LGU
concerned in reclassifying certain areas to achieve social and economic benefits in pursuit of its
mandate towards the general welfare. Precisely, therefore, the DAR is required to use the
comprehensive land use plans and accompanying ordinances of the local Sanggunian as

141 | P a g e
primary references in evaluating applications for land use conversion filed by individual
landowners. In this case, petitioners have already complied with the standard requirements laid
down under the applicable rules and regulations of the DAR....20

The conversion of agricultural lands into non-agricultural uses shall be strictly regulated and
may be allowed only when the conditions prescribed under R.A. No. 6657 are present.21 In this
regard, the Court agrees with the ratiocination of the CA that DAR's scope of authority in
assessing land use conversion applications is limited to examining whether the requirements
prescribed by law and existing rules and regulations have been complied with. This holds true in
the present case where, because of the creation of the Province of Sarangani and in view of its
thrust to urbanize, particularly its provincial capital which is the Municipality of Alabel, the local
government has reclassified certain portions of its land area from agricultural to non-agricultural.
Thus, to reiterate, in accordance with E.O. No. 72, Series of 1993, and subject to the limitations
prescribed by law, DAR should utilize the comprehensive land use plans in evaluating the land
use conversion application of respondents whose lands have already been reclassified by the
local government for non - 'agricultural uses.

This is not to say, however, that every property of respondents which is included in the
comprehensive land use plan of the Municipality of Alabel shall be automatically granted non-
coverage. As mentioned earlier, said application is subject to the limitations and conditions
prescribed by law. One such limitation that is present here is that a portion of respondents'
property of 376.5424 hectares, a portion totaling 154.622 [or 154.1622] hectares which are
planted to bananas and coconuts, are covered by CARL's ten-year deferment scheme, which
has expired on June 15, 1998. By law, these lands are subject to redistribution to CARP
beneficiaries upon the lapse of the ten-year period, counted from the date of the effectivity of the
CARL or R.A. No. 6657 on June 15, 1988, which was way before the creation of the Province of
Sarangani and the eventual reclassification of the agricultural lands into non-agricultural in the
Municipality of Alabel where respondents' properties are located.

In short, the creation of the new Province of Sarangani, and the reclassification that was
effected by the Municipality of Alabel did not operate to supersede the applicable provisions of
R.A. No. 6657.

Moreover, Section 20 of the LGC of 1991 on the reclassification of lands explicitly states that
"[n]othing in this section shall be construed as repealing, amending or modifying in any manner
the provisions of R.A. No. 6657." Thus, where the law speaks in clear and categorical language,
there is no room for interpretation. There is only room for application.22

In view of the foregoing, the Court deems it unnecessary to discuss the third issue presented in
the petition.

WHEREFORE, the petition is PARTLY GRANTED insofar as the issue on due process is
concerned. In connection with this, the denial by the Department of Agrarian Reform (DAR) of
respondents' application for conversion with regard to the 154.622 [or 154.1622] hectares, the
deferment period of which has already expired, is AFFIRMED; and the Orders of the DAR dated
November 9, 2000 and August 28, 2002, directing the MARO of Alabel, Sarangani to proceed
with the distribution of the banana and coconut areas subject of the June 16, 1998 Notice of
Coverage, are REINSTATED. The Decision and Resolution, dated July 19, 2004 and
September 24, 2004, respectively, of the Court of Appeals in CA-G.R. SP No. 79899, are
hereby MODIFIED accordingly.

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No costs.

SO ORDERED.

CLOSSURE AND OPENING OF ROADS

G.R. No. 71169 25 AUGUST 1989

JOSE D. SANGALANG vs.INTERMEDIATE APPELLATE COURT

Before the Court are: (1) two motions for reconsideration (G.R. No. 71169) of our Decision,
promulgated on December 22, 1988, the first one having been filed by Atty. J. Cezar Sangco on
behalf of the spouses Jose and Lutgarda Sangalang, and the second, by Atty. Raul Sison,
counsel for Bel-Air Village Association (BAVA); and (2) a motion for reconsideration and/or
motion for clarification filed by Atty. Richard Funk (G.R. Nos. 74376, 76394, 78182, and 82281)
of the said Decision.

The motion for reconsideration (G.R. No. 71169), filed by the Sangalangs, is anchored on two
grounds: (1) that contrary to our decision, Jupiter Street is for the exclusive use of Bel-Air
Village residents; and (b) that the Ayala Corporation did contrive to acquire membership at the
Bel-Air Village Association (BAVA) purposely to bargain for access to Jupiter Street by the
general public. Subsequently, BAVA informed the Court that it was adopting the Sangalangs’
motion for reconsideration. The motion for reconsideration (in G.R. Nos. 74376, 76394, 78182,
and 82281) raises more or less the same questions and asks furthermore that we delete the
award of damages granted by the Court of Appeals.

The Court: (1) DENIES the motions filed by both the Sangalangs and BAVA with finality, no new
arguments having been presented to warrant reconsideration, and (2) DENIES Atty. Richard
Funk’s own motion for the same reason, with the further word that the grant of attorney’s fees
has been deemed to be just and proper under Article 2208, par. II, of the Civil Code.

II

The lone issue in G.R. No. 67027 is whether or not the Mayor of Makati could have validly
opened Jupiter and Orbit Streets to vehicular traffic. The facts, as stated in the assailed decision
of the respondent court, in CA-G.R. No. 11803-SP, entitled, "Bel-Air Village Association, Inc.,
Petitioner, v. Hon. Celso L. Magsino, Presiding Judge of the Court of First Instance of Rizal,
Branch XX, Pasig, Metro Manila; Mayor Nemesio Yabut, Municipal Mayor of Makati, Metro
Manila, Arturo R. Gabuna, Secretary to the Mayor for Administration, Makati, Josefo S. Lingad,
Acting Municipal Engineer, Nelson Erasga, of the Municipal Engineer’s Office, Makati; and
Ruperto Acle, Station Commander, Southern Police District, Makati, Respondents," are as
follows:chanrob1es virtual 1aw library

In its chronological sequence, the petition avers as follows: On October 24, 1979, petitioner
instituted a petition for prohibition and damages with preliminary injunction with the respondent
Court docketed as Civil Case No. 34948. On October 25, 1979, the respondent court issued an
order directing respondents to answer and denying the issuance of a temporary restraining
order. Petitioner filed an urgent motion for reconsideration of the denial of its prayer for the
issuance of a temporary restraining order, adding as new ground the continuation of the

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commission of acts of dispossession by the respondents. The said urgent motion was denied.

On November 6, 1979, the parties were directed to submit their affidavits and counter-affidavits
as well as memoranda as basis for resolving the application for preliminary injunction. In due
time, the parties complied. On December 11, 1979, respondents filed their answer to the
petition.

On March 4, 1980, the respondent Court denied the application for preliminary injunction. On
November 14, 1980, an order was issued denying the motion for reconsideration.

It is alleged by petitioner that by its orders of March 4, 1980 and November 14, 1980, the
respondent Court has unlawfully deprived the petitioner of its right to due process to which it is
entitled under the Constitution, and that respondents’ acts are tantamount to grave abuse of
discretion and in excess of jurisdiction.

In their comment, respondents allege that prior to January, 1977, upon the instructions of
respondent Mayor Nemesio T. Yabut of Makati, Metro Manila, studies were made by the other
respondents on the feasibility of opening streets in Bel-Air Village calculated to alleviate traffic
congestions along the public streets adjacent to Bel-Air Village. The studies revealed that the
subdivision plan of Bel-Air Village was approved by the Court of First Instance of Rizal on
condition, among others, that its major thoroughfares connecting to public streets and highways
shall be opened to public traffic. Accordingly, it was deemed necessary by the Municipality of
Makati in the interest of the general public to open to traffic Amapola, Mercedes, Zodiac, Jupiter,
Neptune, Orbit and Paseo de Roxas streets. On January 28, 1977, a meeting was held between
representatives of the Municipality of Makati and petitioner.

At this meeting, respondents claim that the representatives of petitioner, particularly Rufino R.
Santos, president of petitioner, had agreed to the opening of Bel-Air Village streets. Regarding
Jupiter Street, the Municipality opened it because public welfare demanded its opening which
allegation the petitioner never questioned. With respect to Orbit Street, whose opening was
temporarily suspended until the flood control project from Buendia Extension up to the mouth of
the Pasig River, was about to be completed, it was opened only after another meeting attended
by Rufino R. Santos who agreed to the opening of the street from J.P. Rizal Avenue up to
Imelda Avenue and later up to Jupiter Street, subject to certain conditions.

To bolster their side, respondents cite: specifically, Section 44 of the Land Registration Act No.
496, as amended, the deeds of donation of Jupiter and Orbit streets executed by and between
the Ayala Corporation and the petitioner, Presidential Decrees No. 957, Secs. 22 and 29
thereof, and No. 1216, Sec. 2 thereof, and Municipal Ordinance No. 17 of the Municipal
Government of Makati, Metro Manila, as amended by Resolution No. 139, dated November 21,
1948, and contend that the opening of the two (2) streets was demanded by public necessity
and in the exercise of its police powers, and, ultimately on the argument that petitioner has not
shown a clear legal right to the writ of preliminary injunction.

With leave of court, petitioner filed a reply to the respondents’ comment. They assert that the
streets mentioned in the comment, other than Jupiter and Orbit streets, have always been kept
open voluntarily by the Association, that Rufino R. Santos, president of petitioner, has never
agreed on the opening of Jupiter and Orbit streets, and that the Torrens titles covering these
streets do not contain similar conditions as those titles for the other street lots.

Petitioner relies on its ownership of the streets of which it should not (be) deprived without due

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process of law, and without just compensation, Article 539 of the Civil Code, an existing
Ordinance of the Metro Manila Commission No. 2, Sec. 14 thereof, and the concurrence of all
the requisites for the issuance of a writ of preliminary injunction. 1

The Court of Appeals found that the certificates of title (Transfer Certificates of Titles Nos. S-
76020, S-76021, S-76022, S-76024, and S-76055, for Jupiter Street, and 206824, for Orbit
Street) do not contain the restrictions imposed by Section 44 of Act No. 496, now, Section 50 of
Presidential Decree No. 1529, for which reason, and so the Appellate Court held, the Mayor of
Makati did not have the legal right to open them up to traffic.

In Sangalang v. Intermediate Appellate Court, 2 we held that Ayala Corporation, the former
owner of the Bel-Air subdivision, can not be held responsible for the opening of Jupiter Street,
among other things, because it was the Mayor of Makati who ordered such an opening. 3 The
issue herein, as we indicated, is whether or not the Mayor could legally have done it. With
respect, specifically, to Jupiter Street, Sangalang avers:chanrobles lawlibrary : rednad

Among other things, there is a recognition under both Ordinances Nos. 81 and 81-01 that
Jupiter Street lies as the boundary between Bel-Air Village and Ayala Corporation’s commercial
section. And since 1957, it had been considered as a boundary — not as a part of either the
residential or commercial zones of Ayala Corporation’s real estate development projects. Thus,
the Bel-Air Village Association’s articles of incorporation state that Bel-Air Village is "bounded on
the NE., from Amapola St., to de los Santos Ave., by Estrella St., on the SE., from Estrella St.,
to Pedestrian Lane, by E. De los Santos Ave., on the SW., from Pedestrian Lane to Reposo St.,
by Jupiter Street.." Hence, it cannot be said to have been "for the exclusive benefit" of Bel-Air
Village residents. 4

Sangalang also had occasion to invoke Ortigas & Co., Limited Partnership v. Feati Bank and
Trust Co. 5 We reiterate Ortigas herein:chanrob1es virtual 1aw library

x x x

2. With regard to the contention that said resolution cannot nullify the contractual obligations
assumed by the defendant-appellee — referring to the restrictions incorporated in the deeds of
sale and later in the corresponding Transfer Certificates of Title issued to defendant-appellee —
it should be stressed, that while non-impairment of contracts is constitutionally guaranteed, the
rule is not absolute, since it has to be reconciled with the legitimate exercise of police power,
i.e., "the power to prescribe regulations to promote the health, morals, peace, education, good
order or safety and general welfare of the people." Invariably described as "the most essential,
insistent, and illimitable of powers" and "in a sense, the greatest and most powerful attribute of
government," the exercise of the power may be judicially inquired into and corrected only if it is
capricious, whimsical, unjust or unreasonable, there having been a denial of due process or a
violation of any other applicable constitutional guarantee. As this Court held through Justice
Jose P. Bengzon in Philippine Long Distance Company v. City of Davao, et. al., police power "is
elastic and must be responsive to various social conditions; it is not confined within narrow
circumscriptions of precedents resting on past condition; it must follow the legal progress of a
democratic way of life." We were even more emphatic in Vda. de Genuino v. The Court of
Agrarian Relations, Et Al., when We declared: ‘We do not see why public welfare when clashing
with the individual right to property should not be made to prevail through the state’s exercise of
its police power."cralaw virtua1aw library

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Resolution No. 27, s-1960 declaring the western part of Highway 54, now E. de los Santos
Avenue (EDSA, for short) from Shaw Boulevard to the Pasig River as an industrial and
commercial zone, was obviously passed by the Municipal Council of Mandaluyong, Rizal in the
exercise of police power to safeguard or promote the health, safety, peace, good order and
general welfare of the people in the locality. Judicial notice may be taken of the conditions
prevailing in the area, especially where Lots Nos. 5 and 6 are located. The lots themselves not
only front the highway; industrial and commercial complexes have flourished about the place.
EDSA, a main traffic artery which runs through several cities and municipalities in the Metro
Manila area, supports an endless stream of traffic and the resulting activity, noise and pollution
are hardly conducive to the health, safety or welfare of the residents in its route. Having been
expressly granted the power to adopt zoning and subdivision ordinances or regulations, the
municipality of Mandaluyong, through its Municipal Council, was reasonably, if not perfectly,
justified under the circumstances, in passing the subject resolution. 6

The Bel-Air Village Association can not therefore rightfully complain that His Honor, the Mayor
of Makati, in opening up Jupiter Street, had acted arbitrarily.

In connection with Orbit Street, the Court reaches the same conclusion. We repudiate,
therefore, that part of the assailed decision of the Court of Appeals insofar as it held that the
condition imposed by Section 44, of Act No. 496, now Section 50, of Presidential Decree No.
1529, 7 that "no portion of any street or passageway .. shall be closed or otherwise disposed of
by the registered owner without approval of the court of first instance (being first) had ." 8 does
riot apply for lack of an annotation of such a condition on the certificate of title (Transfer
Certificate of Title No. 206824). To begin with, Transfer Certificate of Title No. 206824 does
contain the annotation in question:chanrob1es virtual 1aw library

. . . subject to such of the encumbrances mentioned in Section 39 of said Act as may be

subsisting, and the condition that the above lots are subject to the conditions imposed by
Republic Act 440. 9

Furthermore, the very Deed of Donation executed by the Ayala Corporation 10 covering Jupiter
and Orbit Streets, amongst others, and so we found in Sangalang, effectively required both
passageways open to the general public. We quote:chanrob1es virtual 1aw library

The alleged undertaking, finally, by Ayala in the deed of donation (over Jupiter Street) to leave
Jupiter Street for the private use of Bel-Air residents is belied by the very provisions of the deed.
We quote:chanrob1es virtual 1aw library

x x x

"IV. That the offer made by the DONOR had been accepted by the DONEE subject to the
condition that the property will be used as a street for the use of the members of the DONEE,
their families, personnel, guests, domestic help and, under certain reasonable conditions and
restrictions, by the general public, and in the event that said lots or parts thereof cease to be
used as such, ownership thereof shall automatically revert to the DONOR. The DONEE shall
always have Reposo Street, Makati Avenue, and Paseo de Roxas open for the use of the
general public. It is also understood that the DONOR SHALL continue the maintenance of the
street at its expense for a period of three years from date hereof. (Deed of Donation, p. 6, Exh.
7).

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 x x x

The donation on the contrary, gave the general public equal right to it. 11

As regards Orbit Street, it was stipulated:chanrob1es virtual 1aw library

1. That the property donated shall be used and maintained as "private roads or streets for the
use of the members of the Donee, their families, personnel, domestic helps and under certain
reasonable conditions and restrictions, by the general public;

2. In the event that the properties covered by this donation are no longer used as such, the
same shall automatically revert to the Donor; and

3. That the Donee shall always have Reposo Street open for the use of the general public and
shall transfer its present gate barrier located in the intersection of Orbit and Jupiter to the
southern boundary of street Lot 8 of the Plan (LRC) Psd-77820." 12

As we asserted in Sangalang, the opening of Jupiter Street was warranted by the demands of
the common good, in terms of traffic decongestion and public convenience. 13 We also uphold
the opening of Orbit Street for the same rationale.

There is no merit in BAVA’s claims that the demolition of the gates at Orbit and Jupiter Streets
amounts to deprivation of property without due process of law or expropriation without just
compensation. 14 There is no taking of property involved here. The act of the Mayor now
challenged is, rather, in the concept of police power. In the case of Philippine Association of
Service Exporters, Inc. v. Drilon, 15 we said:cralawnad

The concept of police power is well-established in this jurisdiction. It has been defined as the
"state authority to enact legislation that may interfere with personal liberty or property in order to
promote the general welfare." As defined, it consists of (1) an imposition of restraint upon liberty
or property, (2) in order to foster the common good. It is not capable of an exact definition but
has been, purposely, veiled in general terms to underscore its all-comprehensive embrace.

"Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future
where it could be done provides enough room for an efficient and flexible response to conditions
and circumstances thus assuring the greatest benefits."cralaw virtua1aw library

It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the
Charter. Along with the taxing power and eminent domain, it is inborn in the very fact of
statehood and sovereignty. It is a fundamental attribute of government that has enabled it to
perform the most vital functions of governance. Marshall, to whom the expression has been
credited, refers to it succinctly as the plenary power of the State "to govern its citizens."cralaw
virtua1aw library

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"The police power of the State . . . is a power coextensive with self-protection, and it is not
inaptly termed the ‘law of overwhelming necessity.’ It may be said to be that inherent and
plenary power in the State which enables it to prohibit all things hurtful to the comfort, safety,
and welfare of society."cralaw virtua1aw library

It constitutes an implied limitation on the Bill of Rights. According to Fernando, it is "rooted in the
conception that men in organizing the state and imposing upon its government limitations to
safeguard constitutional rights did not intend thereby to enable an individual citizen or a group of
citizens to obstruct unreasonably the enactment of such salutary measures calculated to ensure
communal peace, safety, good order, and welfare." Significantly, the Bill of Rights itself does not
purport to be an absolute guaranty of individual rights and liberties "Even liberty itself, the
greatest of all rights, is not unrestricted license to act accordingly to one’s will." It is subject to
the far more overriding demands and requirements of the greater number. 16

Unlike the power of eminent domain, police power is exercised without provision for just
compensation:chanrob1es virtual 1aw library

Art. 436. When any property is condemned or seized by competent authority in the interest of
health, safety or security, the owner thereof shall not be entitled to compensation, unless he can
show that such condemnation or seizure is unjustified. 17

However, it may not be done arbitrarily or unreasonably. 18 But the burden of showing that it is
unjustified lies on the aggrieved party. 19

Our considered opinion is that BAVA has failed to show that the opening up of Orbit Street was
unjustified, or that the Mayor acted unreasonably. The fact that it has led to the loss of privacy of
BAVA residents is no argument against the Municipality’s effort to ease vehicular traffic in
Makati. Certainly, the duty of a local executive is to take care of the needs of the greater
number, in many cases, at the expense of the minority.

The next question is whether or not the Mayor, by himself, is vested with the power to order the
demolition so questioned, without the backing of a proper ordinance. On this score, the Mayor
submitted in evidence Municipal Ordinance No. 17, as amended by Resolution No. 139, dated
November 21, 1948, 20 requiring a Mayor’s permit to erect construction anywhere in Makati.
The respondent court rejected, however, the Mayor’s reliance on the Ordinance. We
quote:chanrob1es virtual 1aw library

Respondents also invoke Municipal Ordinance No. 17, as amended by Resolution No. 139,
dated November 21, 1948, requiring a Mayor’s permit before any construction of any kind shall
be built, erected or constructed in any place in the Municipality, and empowering the
corresponding authorities especially the Mayor to remove and demolish any such illegal
construction. For a long time the gates and fences removed by agents of respondents have
been in the sites where they were removed. We fail to comprehend why the respondents did not

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invoke the Ordinance much earlier. They cannot pretend ignorance of a condition or situation
which was never concealed from respondents and their agents. At any rate, the Torrens titles of
these street lots which bore no restrictions whatsoever was authority for its owner to close them.
21

Quite to the contrary, the Court is convinced that Ordinance No. 17 is a valid justification for the
questioned act of the Mayor. The fact that some time had elapsed before the Mayor acted, can
not render the ordinance uneforceable or void. At any rate, the gate, the destruction of which
opened Orbit Street, has the character of a public nuisance, 22 in the sense that it "hinders or
impairs the use of property," 23 which the Civil Code disposes of as follows:chanrob1es virtual
1aw library

Art. 699. The remedies against a public nuisance are:chanrob1es virtual 1aw library

(1) A prosecution under the Penal Code or any local ordinance; or

(2) A civil action; or

(3) Abatement, without judicial proceedings. 24

In The Homeowners Associations of El Deposito, Barrio Corazon de Jesus, San Juan, Rizal v.
Lood, 25 we held:chanrob1es virtual 1aw library

At any rate, the decisive point is that independently of the said ordinance, petitioners’
constructions which have been duly found to be public nuisances per se (without provision for
accumulation or disposal of waste matters and constructed without building permits
contiguously to and therefore liable to pollute one of the main water pipelines which supplies
potable water to the Greater Manila area) may be abated without judicial proceedings under our
Civil Code. 26

In addition, under Article 701 of the Code, summary abatement may be carried out by the Mayor
himself.chanrobles.com : virtual law library

Although estoppel is a valid defense against abatement of nuisance, 27 judicially or summarily,

the Mayor is not being condemned for estoppel here, but, rather, for inaction. Under, however,
the Civil Code:chanrob1es virtual 1aw library

Art. 698. Lapse of time cannot legalize any nuisance, whether public or private. 28

Other than BAVA’s claims that the opening of Orbit Street led to the loss of privacy of BAVA
residents, there is no showing that the Mayor, in carrying out the demolition of the Orbit gate,
had acted in disregard of due process or, as the respondent court would put it, with a "show of
arrogance." 29 As we said, the gate in question was a nuisance, which could have been legally
abated by summary means. The fact that it was accomplished summarily does not lend to it a

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"show of arrogance" because, precisely, a summary method is allowed by law. In any event,
there is a showing that the Mayor notified BAVA that Orbit (and Jupiter) Streets would be
opened up. 30 The Court finds that such a notice is compliance enough with due process. 31

What has been left unsaid is that the nation today is witnessing profound changes occurring in
its midst. A decade ago, we were a people of forty or so million. Today, the number is knocking
on sixty million. We are reaping the cost that population explosion carries with it. Housing the
homeless has been one of the first casualties. And so has been the transport system. Giving the
homeless homes and bringing them there safely is a formidable burden and the task of the hour.
Parochial concerns can not be an impediment to the greater needs of the greatest number.

WHEREFORE, the petition in G.R. No. 60727 is GRANTED; the motions for reconsiderations in
G.R. Nos. 71169, 74376, 76394, 78182, and 82281 are DENIED with FINALITY.

IT IS SO ORDERED.

G.R. No. 135962 March 27, 2000

METROPOLITAN MANILA DEVELOPMENT AUTHORITY vs.BEL-AIR VILLAGE ASSOCIATION,

INC

Not infrequently, the government is tempted to take legal shortcuts solve urgent problems of the
people. But even when government is armed with the best of intention, we cannot allow it to run
roughshod over the rule of law. Again, we let the hammer fall and fall hard on the illegal attempt of
the MMDA to open for public use a private road in a private subdivision. While we hold that the
general welfare should be promoted, we stress that it should not be achieved at the expense of the
rule of law.

Petitioner MMDA is a government agency tasked with the delivery of basic services in Metro Manila.
Respondent Bel-Air Village Association, Inc. (BAVA) is a non-stock, non-profit corporation whose
members are homeowners in Bel-Air Village, a private subdivision in Makati City. Respondent BAVA
is the registered owner of Neptune Street, a road inside Bel-Air Village.

On December 30, 1995, respondent received from petitioner, through its Chairman, a notice dated
December 22, 1995 requesting respondent to open Neptune Street to public vehicular traffic starting
January 2, 1996. The notice reads:

SUBJECT: NOTICE of the Opening of Neptune Street to Traffic.

Dear President Lindo,

Please be informed that pursuant to the mandate of the MMDA law or Republic Act No. 7924
which requires the Authority to rationalize the use of roads and/or thoroughfares for the safe
and convenient movement of persons, Neptune Street shall be opened to vehicular traffic
effective January 2, 1996.

In view whereof, the undersigned requests you to voluntarily open the points of entry and exit
on said street.

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 Thank you for your cooperation and whatever assistance that may be extended by your
association to the MMDA personnel who will be directing traffic in the area.

Finally, we are furnishing you with a copy of the handwritten instruction of the President on
the matter.

Very truly yours,

PROSPERO I. ORETA

Chairman 1

On the same day, respondent was apprised that the perimeter wall separating the
subdivision from the adjacent Kalayaan Avenue would be demolished.

On January 2, 1996, respondent instituted against petitioner before the Regional Trial Court, Branch
136, Makati City, Civil Case No. 96-001 for injunction. Respondent prayed for the issuance of a
temporary restraining order and preliminary injunction enjoining the opening of Neptune Street and
prohibiting the demolition of the perimeter wall. The trial court issued a temporary restraining order
the following day.

On January 23, 1996, after due hearing, the trial court denied issuance of a preliminary
injunction. 2 Respondent questioned the denial before the Court of Appeals in CA-G.R. SP No.
39549. The appellate court conducted an ocular inspection of Neptune Street 3 and on February 13,
1996, it issued a writ of preliminary injunction enjoining the implementation of the MMDA's proposed
action. 4

On January 28, 1997, the appellate court rendered a Decision on the merits of the case finding that
the MMDA has no authority to order the opening of Neptune Street, a private subdivision road and
cause the demolition of its perimeter walls. It held that the authority is lodged in the City Council of
Makati by ordinance. The decision disposed of as follows:

WHEREFORE, the Petition is GRANTED; the challenged Order dated January 23, 1995, in
Civil Case No. 96-001, is SET ASIDE and the Writ of Preliminary Injunction issued on
February 13, 1996 is hereby made permanent.

For want of sustainable substantiation, the Motion to Cite Roberto L. del Rosario in contempt
is denied. 5

No pronouncement as to costs.

SO ORDERED. 6

The Motion for Reconsideration of the decision was denied on September 28, 1998. Hence, this
recourse.

Petitioner MMDA raises the following questions:

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 HAS THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY (MMDA) THE
MANDATE TO OPEN NEPTUNE STREET TO PUBLIC TRAFFIC PURSUANT TO ITS
REGULATORY AND POLICE POWERS?

II

IS THE PASSAGE OF AN ORDINANCE A CONDITION PRECEDENT BEFORE THE

MMDA MAY ORDER THE OPENING OF SUBDIVISION ROADS TO PUBLIC TRAFFIC?

III

IS RESPONDENT BEL-AIR VILLAGE ASSOCIATION, INC. ESTOPPED FROM DENYING

OR ASSAILING THE AUTHORITY OF THE MMDA TO OPEN THE SUBJECT STREET?

IV

WAS RESPONDENT DEPRIVED OF DUE PROCESS DESPITE THE SEVERAL

MEETINGS HELD BETWEEN MMDA AND THE AFFECTED EEL-AIR RESIDENTS AND
BAVA OFFICERS?

HAS RESPONDENT COME TO COURT WITH UNCLEAN HANDS?7

Neptune Street is owned by respondent BAVA. It is a private road inside Bel-Air Village, a private
residential subdivision in the heart of the financial and commercial district of Makati City. It runs
parallel to Kalayaan Avenue, a national road open to the general public. Dividing the two (2) streets
is a concrete perimeter wall approximately fifteen (15) feet high. The western end of Neptune Street
intersects Nicanor Garcia, formerly Reposo Street, a subdivision road open to public vehicular traffic,
while its eastern end intersects Makati Avenue, a national road. Both ends of Neptune Street are
guarded by iron gates.

Petitioner MMDA claims that it has the authority to open Neptune Street to public traffic because it is
an agent of the state endowed with police power in the delivery of basic services in Metro Manila.
One of these basic services is traffic management which involves the regulation of the use of
thoroughfares to insure the safety, convenience and welfare of the general public. It is alleged that
the police power of MMDA was affirmed by this Court in the consolidated cases of Sangalang
v. Intermediate Appellate Court. 8 From the premise that it has police power, it is now urged that there
is no need for the City of Makati to enact an ordinance opening Neptune street to the public. 9

Police power is an inherent attribute of sovereignty. It has been defined as the power vested by the
Constitution in the legislature to make, ordain, and establish all manner of wholesome and
reasonable laws, statutes and ordinances, either with penalties or without, not repugnant to the
Constitution, as they shall judge to be for the good and welfare of the commonwealth, and for the
subjects of the same. 10 The power is plenary and its scope is vast and pervasive, reaching and
justifying measures for public health, public safety, public morals, and the general welfare. 11

It bears stressing that police power is lodged primarily in the National Legislature. 12 It cannot be
exercised by any group or body of individuals not possessing legislative power. 13 The National
Legislature, however, may delegate this power to the President and administrative boards as well as
the lawmaking bodies of municipal corporations or local government units. 14 Once delegated, the

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agents can exercise only such legislative powers as are conferred on them by the national
lawmaking body. 15

A local government is a "political subdivision of a nation or state which is constituted by law and has
substantial control of local affairs." 16 The Local Government Code of 1991 defines a local
government unit as a "body politic and corporate." 17 — one endowed with powers as a political
subdivision of the National Government and as a corporate entity representing the inhabitants of its
territory. 18 Local government units are the provinces, cities, municipalities and barangays. 19 They are
also the territorial and political subdivisions of the state. 20

Our Congress delegated police power to the local government units in the Local Government Code
of 1991. This delegation is found in Section 16 of the same Code, known as the general welfare
clause, viz:

Sec. 16. General Welfare. — Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among other things, the
preservation and enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of appropriate and
self-reliant scientific and technological capabilities, improve public morals, enhance
economic prosperity and social justice, promote full employment among their residents,
maintain peace and order, and preserve the comfort and convenience of their inhabitants. 21

Local government units exercise police power through their respective legislative bodies. The
legislative body of the provincial government is the sangguniang panlalawigan, that of the city
government is the sangguniang panlungsod, that of the municipal government is the sangguniang
bayan, and that of the barangay is the sangguniang barangay. The Local Government Code of 1991
empowers the sangguniang panlalawigan, sangguniang panlungsod and sangguniang bayan to
"enact ordinances, approve resolutions and appropriate funds for the general welfare of the
[province, city or municipality, as the case may be], and its inhabitants pursuant to Section 16 of the
Code and in the proper exercise of the corporate powers of the [province, city municipality] provided
under the Code . . . " 22 The same Code gives the sangguniang barangay the power to "enact
ordinances as may be necessary to discharge the responsibilities conferred upon it by law or
ordinance and to promote the general welfare of the inhabitants thereon." 23

Metropolitan or Metro Manila is a body composed of several local government units — i.e., twelve
(12) cities and five (5) municipalities, namely, the cities of Caloocan, Manila, Mandaluyong, Makati,
Pasay, Pasig, Quezon, Muntinlupa, Las Pinas, Marikina, Paranaque and Valenzuela, and the
municipalities of Malabon, Navotas, Pateros, San Juan and Taguig. With the passage of Republic
Act (R. A.) No. 7924 24 in 1995, Metropolitan Manila was declared as a "special development and
administrative region" and the Administration of "metro-wide" basic services affecting the region
placed under "a development authority" referred to as the MMDA. 25

"Metro-wide services" are those "services which have metro-wide impact and transcend local
political boundaries or entail huge expenditures such that it would not be viable for said services to
be provided by the individual local government units comprising Metro Manila." 26 There are seven (7)
basic metro-wide services and the scope of these services cover the following: (1) development
planning; (2) transport and traffic management; (3) solid waste disposal and management; (4) flood
control and sewerage management; (5) urban renewal, zoning and land use planning, and shelter

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services; (6) health and sanitation, urban protection and pollution control; and (7) public safety. The
basic service of transport and traffic management includes the following:

(b) Transport and traffic management which include the formulation, coordination, and
monitoring of policies, standards, programs and projects to rationalize the existing transport
operations, infrastructure requirements,the use of thoroughfares, and promotion of safe and
convenient movement of persons and goods; provision for the mass transport system and
the institution of a system to regulate road users; administration and implementation of all
traffic enforcement operations, traffic engineering services and traffic education
programs, including the institution of a single ticketing system in Metropolitan Manila;" 27

In the delivery of the seven (7) basic services, the MMDA has the following powers and functions:

Sec. 5. Functions and powers of the Metro Manila Development Authority. — The MMDA
shall:

(a) Formulate, coordinate and regulate the implementation of medium and long-term plans
and programs for the delivery of metro-wide services, land use and physical development
within Metropolitan Manila, consistent with national development objectives and priorities;

(b) Prepare, coordinate and regulate the implementation of medium-term investment

programs for metro-wide services which shall indicate sources and uses of funds for priority
programs and projects, and which shall include the packaging of projects and presentation to
funding institutions;

(c) Undertake and manage on its own metro-wide programs and projects for the delivery of
specific services under its jurisdiction, subject to the approval of the Council. For this
purpose, MMDA can create appropriate project management offices;

(d) Coordinate and monitor the implementation of such plans, programs and projects in
Metro Manila; identify bottlenecks and adopt solutions to problems of implementation;

(e) The MMDA shall set the policies concerning traffic in Metro Manila, and shall coordinate
and regulate the implementation of all programs and projects concerning traffic
management, specifically pertaining to enforcement, engineering and education. Upon
request, it shall be extended assistance and cooperation, including but not limited
to, assignment of personnel, by all other government agencies and offices concerned;

(f) Install and administer a single ticketing system, fix, impose and collect fines and penalties
for all kinds of violations of traffic rules and regulations, whether moving or non-moving in
nature, and confiscate and suspend or revoke drivers' licenses in the enforcement of such
traffic laws and regulations, the provisions of RA 4136 and PD 1605 to the contrary
notwithstanding. For this purpose, the Authority shall impose all traffic laws and regulations
in Metro Manila, through its traffic operation center, and may deputize members of the
PNP, traffic enforcers of local government units, duly licensed security guards, or members
of non-governmental organizations to whom may be delegated certain authority, subject to
such conditions and requirements as the Authority may impose; and

(g) Perform other related functions required to achieve the objectives of the MMDA, including
the undertaking of delivery of basic services to the local government units, when deemed
necessary subject to prior coordination with and consent of the local government unit
concerned.

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The implementation of the MMDA's plans, programs and projects is undertaken by the local
government units, national government agencies, accredited people's organizations, non-
governmental organizations, and the private sector as well as by the MMDA itself. For this purpose,
the MMDA has the power to enter into contracts, memoranda of agreement and other arrangements
with these bodies for the delivery of the required services Metro Manila. 28

The governing board of the MMDA is the Metro Manila Council. The Council is composed of the
mayors of the component 12 cities and 5 municipalities, the president of the Metro Manila Vice-
Mayors' League and the president of the Metro Manila Councilors' League. 29 The Council is headed
by Chairman who is appointed by the President and vested with the rank of cabinet member. As the
policy-making body of the MMDA, the Metro Manila Council approves metro-wide plans, programs
and projects, and issues the necessary rules and regulations for the implementation of said plans; it
approves the annual budget of the MMDA and promulgate the rules and regulations for the delivery
of basic services, collection of service and regulatory fees, fines and penalties. These functions are
particularly enumerated as follows:

Sec. 6. Functions of the Metro Manila Council. —

(a) The Council shall be the policy-making body of the MMDA;

(b) It shall approve metro-wide plans, programs and projects and issue rules and regulations
deemed necessary by the MMDA to carry out the purposes of this Act;

(c) It may increase the rate of allowances and per diems of the members of the Council to be
effective during the term of the succeeding Council. It shall fix the compensation of the
officers and personnel of the MMDA, and approve the annual budget thereof for submission
to the Department of Budget and Management (DBM);

(d) It shall promulgate rules and regulations and set policies and standards for metro-wide
application governing the delivery of basic services, prescribe and collect service and
regulatory fees, and impose and collect fines and penalties.

Clearly, the scope of the MMDA's function is limited to the delivery of the seven (7) basic services.
One of these is transport and traffic management which includes the formulation and monitoring of
policies, standards and projects to rationalize the existing transport operations, infrastructure
requirements, the use of thoroughfares and promotion of the safe movement of persons and goods.
It also covers the mass transport system and the institution of a system of road regulation, the
administration of all traffic enforcement operations, traffic engineering services and traffic education
programs, including the institution of a single ticketing system in Metro Manila for traffic violations.
Under the service, the MMDA is expressly authorized "to set the policies concerning traffic" and
"coordinate and regulate the implementation of all traffic management programs." In addition, the
MMDA may "install and administer a single ticketing system," fix, impose and collect fines and
penalties for all traffic violations.

It will be noted that the powers of the MMDA are limited to the following acts: formulation,
coordination, regulation, implementation, preparation, management, monitoring, setting of policies,
installation of a system and administration. There is no syllable in R.A. No. 7924 that grants the
MMDA police power, let alone legislative power. Even the Metro Manila Council has not been
delegated any legislative power. Unlike the legislative bodies of the local government units, there is
no provision in R.A. No. 7924 that empowers the MMDA or its Council to "enact ordinances, approve
resolutions appropriate funds for the general welfare" of the inhabitants of Metro Manila. The MMDA
is, as termed in the charter itself, "development authority." 30 It is an agency created for the purpose

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of laying down policies and coordinating with the various national government agencies, people's
organizations, non-governmental organizations and the private sector for the efficient and
expeditious delivery of basic services in the vast metropolitan area. All its functions are
administrative in nature and these are actually summed up in the charter itself, viz:

Sec. 2. Creation of the Metropolitan Manila Development Authority. — . . . .

The MMDA shall perform planning, monitoring and coordinative functions, and in the process
exercise regulatory and supervisory authority over the delivery of metro-wide services within
Metro Manila, without diminution of the autonomy of the local government units concerning
purely local matters. 31

Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate Appellate Court 32 where we
upheld a zoning ordinance issued by the Metro Manila Commission (MMC), the predecessor of the
MMDA, as an exercise of police power. The first Sangalang decision was on the merits of the
petition, 33 while the second decision denied reconsideration of the first case and in addition
discussed the case of Yabut v. Court of Appeals. 34

Sangalang v. IAC involved five (5) consolidated petitions filed by respondent BAVA and three
residents of Bel-Air Village against other residents of the Village and the Ayala Corporation, formerly
the Makati Development Corporation, as the developer of the subdivision. The petitioners sought to
enforce certain restrictive easements in the deeds of sale over their respective lots in the
subdivision. These were the prohibition on the setting up of commercial and advertising signs on the
lots, and the condition that the lots be used only for residential purposes. Petitioners alleged that
respondents, who were residents along Jupiter Street of the subdivision, converted their residences
into commercial establishments in violation of the "deed restrictions," and that respondent Ayala
Corporation ushered in the full commercialization" of Jupiter Street by tearing down the perimeter
wall that separated the commercial from the residential section of the village. 35

The petitions were dismissed based on Ordinance No. 81 of the Municipal Council of Makati and
Ordinance No. 81-01 of the Metro Manila Commission (MMC). Municipal Ordinance No. 81 classified
Bel-Air Village as a Class A Residential Zone, with its boundary in the south extending to the center
line of Jupiter Street. The Municipal Ordinance was adopted by the MMC under the Comprehensive
Zoning Ordinance for the National Capital Region and promulgated as MMC Ordinance No. 81-01.
Bel-Air Village was indicated therein as bounded by Jupiter Street and the block adjacent thereto
was classified as a High Intensity Commercial Zone. 36

We ruled that since both Ordinances recognized Jupiter Street as the boundary between Bel-Air
Village and the commercial district, Jupiter Street was not for the exclusive benefit of Bel-Air
residents. We also held that the perimeter wall on said street was constructed not to separate the
residential from the commercial blocks but simply for security reasons, hence, in tearing down said
wall, Ayala Corporation did not violate the "deed restrictions" in the deeds of sale.

We upheld the ordinances, specifically MMC Ordinance No. 81-01, as a legitimate exercise of police
power. 37 The power of the MMC and the Makati Municipal Council to enact zoning ordinances for the
general welfare prevailed over the "deed restrictions".

In the second Sangalang/Yabut decision, we held that the opening of Jupiter Street was warranted
by the demands of the common good in terms of "traffic decongestion and public convenience."
Jupiter was opened by the Municipal Mayor to alleviate traffic congestion along the public streets
adjacent to the Village. 38 The same reason was given for the opening to public vehicular traffic of
Orbit Street, a road inside the same village. The destruction of the gate in Orbit Street was also

156 | P a g e
made under the police power of the municipal government. The gate, like the perimeter wall along
Jupiter, was a public nuisance because it hindered and impaired the use of property, hence, its
summary abatement by the mayor was proper and legal. 39

Contrary to petitioner's claim, the two Sangalang cases do not apply to the case at bar. Firstly, both
involved zoning ordinances passed by the municipal council of Makati and the MMC. In the instant
case, the basis for the proposed opening of Neptune Street is contained in the notice of December
22, 1995 sent by petitioner to respondent BAVA, through its president. The notice does not cite any
ordinance or law, either by the Sangguniang Panlungsod of Makati City or by the MMDA, as the
legal basis for the proposed opening of Neptune Street. Petitioner MMDA simply relied on its
authority under its charter "to rationalize the use of roads and/or thoroughfares for the safe and
convenient movement of persons." Rationalizing the use of roads and thoroughfares is one of the
acts that fall within the scope of transport and traffic management. By no stretch of the imagination,
however, can this be interpreted as an express or implied grant of ordinance-making power, much
less police power.

Secondly, the MMDA is not the same entity as the MMC in Sangalang. Although the MMC is the
forerunner of the present MMDA, an examination of Presidential Decree (P. D.) No. 824, the charter
of the MMC, shows that the latter possessed greater powers which were not bestowed on the
present MMDA.

Metropolitan Manila was first created in 1975 by Presidential Decree (P.D.) No. 824. It comprised the
Greater Manila Area composed of the contiguous four (4) cities of Manila, Quezon, Pasay and
Caloocan, and the thirteen (13) municipalities of Makati, Mandaluyong, San Juan, Las Pinas,
Malabon, Navotas, Pasig, Pateros, Paranaque, Marikina, Muntinlupa and Taguig in the province of
Rizal, and Valenzuela in the province of Bulacan. 40 Metropolitan Manila was created as a response
to the finding that the rapid growth of population and the increase of social and economic
requirements in these areas demand a call for simultaneous and unified development; that the public
services rendered by the respective local governments could be administered more efficiently and
economically if integrated under a system of central planning; and this coordination, "especially in
the maintenance of peace and order and the eradication of social and economic ills that fanned the
flames of rebellion and discontent [were] part of reform measures under Martial Law essential to the
safety and security of the State." 41

Metropolitan Manila was established as a "public corporation" with the following powers:

Sec. 1. Creation of the Metropolitan Manila. — There is hereby created a public corporation,
to be known as the Metropolitan Manila, vested with powers and attributes of a corporation
including the power to make contracts, sue and be
sued, acquire, purchase, expropriate, hold, transfer and dispose of property and such other
powers as are necessary to carry out its purposes. The Corporation shall be administered by
a Commission created under this Decree. 42

The administration of Metropolitan Manila was placed under the Metro Manila Commission (MMC)
vested with the following powers:

Sec. 4. Powers and Functions of the Commission. — The Commission shall have the following
powers and functions:

1. To act as a central government to establish and administer programs and provide services
common to the area;

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 2. To levy and collect taxes and special assessments, borrow and expend money and issue
bonds, revenue certificates, and other obligations of indebtedness. Existing tax measures
should, however, continue to be operative until otherwise modified or repealed by the
Commission;

3. To charge and collect fees for the use of public service facilities;

4. To appropriate money for the operation of the metropolitan government and review
appropriations for the city and municipal units within its jurisdiction with authority to
disapprove the same if found to be not in accordance with the established policies of the
Commission, without prejudice to any contractual obligation of the local government units
involved existing at the time of approval of this Decree;

5. To review, amend, revise or repeal all ordinances, resolutions and acts of cities and
municipalities within Metropolitan Manila;

6. To enact or approve ordinances, resolutions and to fix penalties for any violation thereof
which shall not exceed a fine of P10,000.00 or imprisonment of six years or both such fine
and imprisonment for a single offense;

7. To perform general administrative, executive and policy-making functions;

8. To establish a fire control operation center, which shall direct the fire services of the city
and municipal governments in the metropolitan area;

9. To establish a garbage disposal operation center, which shall direct garbage collection
and disposal in the metropolitan area;

10. To establish and operate a transport and traffic center, which shall direct traffic activities;

11. To coordinate and monitor governmental and private activities pertaining to essential
services such as transportation, flood control and drainage, water supply and sewerage,
social, health and environmental services, housing, park development, and others;

12. To insure and monitor the undertaking of a comprehensive social, economic and physical
planning and development of the area;

13. To study the feasibility of increasing barangay participation in the affairs of their
respective local governments and to propose to the President of the Philippines definite
programs and policies for implementation;

14. To submit within thirty (30) days after the close of each fiscal year an annual report to the
President of the Philippines and to submit a periodic report whenever deemed necessary;
and

15. To perform such other tasks as may be assigned or directed by the President of the
Philippines.

The MMC was the "central government" of Metro Manila for the purpose of establishing and
administering programs providing services common to the area. As a "central government" it had the
power to levy and collect taxes and special assessments, the power to charge and collect fees; the

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power to appropriate money for its operation, and at the same time, review appropriations for the city
and municipal units within its jurisdiction. It was bestowed the power to enact or approve ordinances,
resolutions and fix penalties for violation of such ordinances and resolutions. It also had the power to
review, amend, revise or repeal all ordinances, resolutions and acts of any of the four (4) cities and
thirteen (13) municipalities comprising Metro Manila.

P.D. No. 824 further provided:

Sec. 9. Until otherwise provided, the governments of the four cities and thirteen
municipalities in the Metropolitan Manila shall continue to exist in their present form except
as may be inconsistent with this Decree. The members of the existing city and municipal
councils in Metropolitan Manila shall, upon promulgation of this Decree, and until December
31, 1975, become members of the Sangguniang Bayan which is hereby created for every
city and municipality of Metropolitan Manila.

In addition, the Sangguniang Bayan shall be composed of as many barangay captains as

may be determined and chosen by the Commission, and such number of representatives
from other sectors of the society as may be appointed by the President upon
recommendation of the Commission.

xxx xxx xxx

The Sangguniang Bayan may recommend to the Commission ordinances, resolutions or

such measures as it may adopt; Provided, that no such ordinance, resolution or measure
shall become effective, until after its approval by the Commission; and Provided further, that
the power to impose taxes and other levies, the power to appropriate money and the power
to pass ordinances or resolutions with penal sanctions shall be vested exclusively in the
Commission.

The creation of the MMC also carried with it the creation of the Sangguniang Bayan. This was
composed of the members of the component city and municipal councils, barangay captains chosen
by the MMC and sectoral representatives appointed by the President. The Sangguniang Bayan had
the power to recommend to the MMC the adoption of ordinances, resolutions or measures. It was
the MMC itself, however, that possessed legislative powers. All ordinances, resolutions and
measures recommended by the Sangguniang Bayan were subject to the MMC's approval. Moreover,
the power to impose taxes and other levies, the power to appropriate money, and the power to pass
ordinances or resolutions with penal sanctions were vested exclusively in the MMC.

Thus, Metropolitan Manila had a "central government," i.e., the MMC which fully possessed
legislative police powers. Whatever legislative powers the component cities and municipalities had
were all subject to review and approval by the MMC.

After President Corazon Aquino assumed power, there was a clamor to restore the autonomy of the
local government units in Metro Manila. Hence, Sections 1 and 2 of Article X of the 1987 Constitution
provided:

Sec. 1. The territorial and political subdivisions of the Republic of the Philippines are the
provinces, cities, municipalities and barangays. There shall be autonomous regions in
Muslim Mindanao and the Cordilleras as herein provided.

Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.

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The Constitution, however, recognized the necessity of creating metropolitan regions not only in the
existing National Capital Region but also in potential equivalents in the Visayas and
Mindanao. 43 Section 11 of the same Article X thus provided:

Sec. 11. The Congress may, by law, create special metropolitan political subdivisions,
subject to a plebiscite as set forth in Section 10 hereof. The component cities and
municipalities shall retain their basic autonomy and shall be entitled to their own local
executives and legislative assemblies. The jurisdiction of the metropolitan authority that will
thereby be created shall be limited to basic services requiring coordination.

Constitution itself expressly provides that Congress may, by law, create "special metropolitan
political subdivisions" which shall be subject to approval by a majority of the votes cast in a plebiscite
in the political units directly affected; the jurisdiction of this subdivision shall be limited to basic
services requiring coordination; and the cities and municipalities comprising this subdivision shall
retain their basic services requiring coordination; and the cities and municipalities comprising this
subdivision shall retain their basic autonomy and their own local executive and legislative
assemblies. 44 Pending enactment of this law, the Transitory Provisions of the Constitution gave the
President of the Philippines the power to constitute the Metropolitan Authority, viz:

Sec. 8. Until otherwise provided by Congress, the President may constitute the Metropolitan
Authority to be composed of the heads of all local government units comprising the
Metropolitan Manila area. 45

In 1990, President Aquino issued Executive Order (E. O.) No. 392 and constituted the Metropolitan
Manila Authority (MMA). The powers and functions of the MMC were devolved to the MMA. 46 It ought
to be stressed, however, that not all powers and functions of the MMC were passed to the MMA.
The MMA's power was limited to the "delivery of basic urban services requiring coordination in
Metropolitan Manila." 47 The MMA's governing body, the Metropolitan Manila Council, although
composed of the mayors of the component cities and municipalities, was merely given power of: (1)
formulation of policies on the delivery of basic services requiring coordination and consolidation; and
(2) promulgation resolutions and other issuances, approval of a code of basic services and the
exercise of its rule-making power. 48

Under the 1987 Constitution, the local government units became primarily responsible for the
governance of their respective political subdivisions. The MMA's jurisdiction was limited to
addressing common problems involving basic services that transcended local boundaries. It did not
have legislative power. Its power was merely to provide the local government units technical
assistance in the preparation of local development plans. Any semblance of legislative power it had
was confined to a "review [of] legislation proposed by the local legislative assemblies to ensure
consistency among local governments and with the comprehensive development plan of Metro
Manila," and to "advise the local governments accordingly." 49

When R.A. No. 7924 took effect, Metropolitan Manila became a "special development and
administrative region" and the MMDA a "special development authority" whose functions were
"without prejudice to the autonomy of the affected local government units." The character of the
MMDA was clearly defined in the legislative debates enacting its charter.

R.A. No. 7924 originated as House Bill No. 14170/11116 and was introduced by several legislators
led by Dante Tinga, Roilo Golez and Feliciano Belmonte. It was presented to the House of
Representatives by the Committee on Local Governments chaired by Congressman Ciriaco R.
Alfelor. The bill was a product of Committee consultations with the local government units in the
National Capital Region (NCR), with former Chairmen of the MMC and MMA, 50 and career officials of

160 | P a g e
said agencies. When the bill was first taken up by the Committee on Local Governments, the
following debate took place:

THE CHAIRMAN [Hon. Ciriaco Alfelor]: Okay, Let me explain. This has been debated a long
time ago, you know. It's a special . . . we can create a special metropolitan political
subdivision.

Actually, there are only six (6) political subdivisions provided for in the Constitution:
barangay, municipality, city, province, and we have the Autonomous Region of Mindanao
and we have the Cordillera. So we have 6. Now. . . . .

HON. [Elias] LOPEZ: May I interrupt, Mr. Chairman. In the case of the Autonomous Region,
that is also specifically mandated by the Constitution.

THE CHAIRMAN: That's correct. But it is considered to be a political subdivision. What is the
meaning of a political subdivision? Meaning to say, that it has its own government, it has its
own political personality, it has the power to tax, and all governmental powers: police power
and everything. All right. Authority is different; because it does not have its own government.
It is only a council, it is an organization of political subdivision, powers, "no, which is not
imbued with any political power.

If you go over Section 6, where the powers and functions of the Metro Manila Development
Authority, it is purely coordinative. And it provides here that the council is policy-making. All
right.

Under the Constitution is a Metropolitan Authority with coordinative power. Meaning to say, it
coordinates all of the different basic services which have to be delivered to the constituency.
All right.

There is now a problem. Each local government unit is given its respective . . . as a political
subdivision. Kalookan has its powers, as provided for and protected and guaranteed by the
Constitution. All right, the exercise. However, in the exercise of that power, it might be
deleterious and disadvantageous to other local government units. So, we are forming an
authority where all of these will be members and then set up a policy in order that the basic
services can be effectively coordinated. All right.

Of course, we cannot deny that the MMDA has to survive. We have to provide some funds,
resources. But it does not possess any political power. We do not elect the Governor. We do
not have the power to tax. As a matter of fact, I was trying to intimate to the author that it
must have the power to sue and be sued because it coordinates. All right. It coordinates
practically all these basic services so that the flow and the distribution of the basic services
will be continuous. Like traffic, we cannot deny that. It's before our eyes. Sewerage, flood
control, water system, peace and order, we cannot deny these. It's right on our face. We
have to look for a solution. What would be the right solution? All right, we envision that there
should be a coordinating agency and it is called an authority. All right, if you do not want to
call it an authority, it's alright. We may call it a council or maybe a management agency.

xxx xxx x x x 51

Clearly, the MMDA is not a political unit of government. The power delegated to the MMDA is that
given to the Metro Manila Council to promulgate administrative rules and regulations in the
implementation of the MMDA's functions. There is no grant of authority to enact ordinances and

161 | P a g e
regulations for the general welfare of the inhabitants of the metropolis. This was explicitly stated in
the last Committee deliberations prior to the bill's presentation to Congress. Thus:

THE CHAIRMAN: Yeah, but we have to go over the suggested revision. I think this was
already approved before, but it was reconsidered in view of the proposals, set-up, to make
the MMDA stronger. Okay, so if there is no objection to paragraph "f". . . And then next is
paragraph "b," under Section 6. "It shall approve metro-wide plans, programs and projects
and issue ordinances or resolutions deemed necessary by the MMDA to carry out the
purposes of this Act." Do you have the powers? Does the MMDA... because that takes the
form of a local government unit, a political subdivision.

HON. [Feliciano] BELMONTE: Yes, I believe so, your Honor. When we say that it has the
policies, it's very clear that those policies must be followed. Otherwise, what's the use of
empowering it to come out with policies. Now, the policies may be in the form of a resolution
or it may be in the form of a ordinance. The term "ordinance" in this case really gives it more
teeth, your honor. Otherwise, we are going to see a situation where you have the power to
adopt the policy but you cannot really make it stick as in the case now, and I think here is
Chairman Bunye. I think he will agree that that is the case now. You've got the power to set a
policy, the body wants to follow your policy, then we say let's call it an ordinance and see if
they will not follow it.

THE CHAIRMAN: That's very nice. I like that. However, there is a constitutional
impediment. You are making this MMDA a political subdivision. The creation of the MMDA
1âw phi 1

would be subject to a plebiscite. That is what I'm trying to avoid. I've been trying to avoid this
kind of predicament. Under the Constitution it states: if it is a political subdivision, once it is
created it has to be subject to a plebiscite. I'm trying to make this as administrative. That's
why we place the Chairman as a cabinet rank.

HON. BELMONTE: All right, Mr. Chairman, okay, what you are saying there is . . . . .

THE CHAIRMAN: In setting up ordinances, it is a political exercise, Believe me.

HON. [Elias] LOPEZ: Mr. Chairman, it can be changed into issuances of rules and
regulations. That would be . . . it shall also be enforced.

HON. BELMONTE: Okay, I will . . . .

HON. LOPEZ: And you can also say that violation of such rule, you impose a sanction. But
you know, ordinance has a different legal connotation.

HON. BELMONTE: All right, I defer to that opinion, your Honor.

THE CHAIRMAN: So instead of ordinances, say rules and regulations.

HON. BELMONTE: Or resolutions. Actually, they are actually considering resolutions now.

THE CHAIRMAN: Rules and resolutions.

HON. BELMONTE: Rules, regulations and resolutions. 52

162 | P a g e
The draft of H. B. No. 14170/11116 was presented by the Committee to the House of
Representatives. The explanatory note to the bill stated that the proposed MMDA is a "development
authority" which is a "national agency, not a political government unit." 53 The explanatory note was
adopted as the sponsorship speech of the Committee on Local Governments. No interpellations or
debates were made on the floor and no amendments introduced. The bill was approved on second
reading on the same day it was presented. 54

When the bill was forwarded to the Senate, several amendments were made. These amendments,
1âwphi1

however, did not affect the nature of the MMDA as originally conceived in the House of
Representatives. 55

It is thus beyond doubt that the MMDA is not a local government unit or a public corporation
endowed with legislative power. It is not even a "special metropolitan political subdivision" as
contemplated in Section 11, Article X of the Constitution. The creation of a "special metropolitan
political subdivision" requires the approval by a majority of the votes cast in a plebiscite in the
political units directly affected." 56 R. A. No. 7924 was not submitted to the inhabitants of Metro Manila
in a plebiscite. The Chairman of the MMDA is not an official elected by the people, but appointed by
the President with the rank and privileges of a cabinet member. In fact, part of his function is to
perform such other duties as may be assigned to him by the President, 57 whereas in local
government units, the President merely exercises supervisory authority. This emphasizes the
administrative character of the MMDA.

Clearly then, the MMC under P.D. No. 824 is not the same entity as the MMDA under R.A. No. 7924.
Unlike the MMC, the MMDA has no power to enact ordinances for the welfare of the community. It is
the local government units, acting through their respective legislative councils, that possess
legislative power and police power. In the case at bar, the Sangguniang Panlungsod of Makati City
did not pass any ordinance or resolution ordering the opening of Neptune Street, hence, its
proposed opening by petitioner MMDA is illegal and the respondent Court of Appeals did not err in
so ruling. We desist from ruling on the other issues as they are unnecessary.

We stress that this decision does not make light of the MMDA's noble efforts to solve the chaotic
traffic condition in Metro Manila. Everyday, traffic jams and traffic bottlenecks plague the metropolis.
Even our once sprawling boulevards and avenues are now crammed with cars while city streets are
clogged with motorists and pedestrians. Traffic has become a social malaise affecting our people's
productivity and the efficient delivery of goods and services in the country. The MMDA was created
to put some order in the metropolitan transportation system but unfortunately the powers granted by
its charter are limited. Its good intentions cannot justify the opening for public use of a private street
in a private subdivision without any legal warrant. The promotion of the general welfare is not
antithetical to the preservation of the rule of law.
1âwphi1.nêt

IN VIEW WHEREOF, the petition is denied. The Decision and Resolution of the Court of Appeals in
CA-G.R. SP No. 39549 are affirmed.

SO ORDERED.

G.R. No. 148339 February 23, 2005

LUCENA GRAND CENTRAL TERMINAL, INC V.JAC LINER, INC.,

Respondent, JAC Liner, Inc., a common carrier operating buses which ply various routes to and from
Lucena City, assailed, via a petition for prohibition and injunction1 against the City of Lucena, its
Mayor, and the Sangguniang Panlungsod of Lucena before the Regional Trial Court (RTC) of

163 | P a g e
Lucena City, City Ordinance Nos. 1631 and 1778 as unconstitutional on the ground that, inter alia,
the same constituted an invalid exercise of police power, an undue taking of private property, and a
violation of the constitutional prohibition against monopolies. The salient provisions of the ordinances
are:

Ordinance No. 16312

AN ORDINANCE GRANTING THE LUCENA GRAND CENTRAL TERMINAL, INC., A

FRANCHISE TO CONSTRUCT, FINANCE, ESTABLISH, OPERATE AND MAINTAIN A COMMON
BUS-JEEPNEY TERMINAL FACILITY IN THE CITY OF LUCENA

xxx

SECTION 1. – There is hereby granted to the Lucena Grand Central Terminal, Inc., its successors or
assigns, hereinafter referred to as the "grantee", a franchise to construct, finance, establish, operate,
and maintain a common bus-jeepney terminal facility in the City of Lucena.

SECTION 2. – This franchise shall continue for a period of twenty-five years, counted from the
approval of this Ordinance, and renewable at the option of the grantee for another period of twenty-
five (25) years upon such expiration.

xxx

SECTION 4. – Responsibilities and Obligations of the City Government of Lucena. – During the
existence of the franchise, the City Government of Lucena shall have the following responsibilities
and obligations:

xxx

(c) It shall not grant any third party any privilege and/or concession to operate a bus, mini-bus and/or
jeepney terminal.

xxx

Ordinance No. 17783

AN ORDINANCE REGULATING THE ENTRANCE TO THE CITY OF LUCENA OF ALL BUSES,

MINI-BUSES AND OUT-OF-TOWN PASSENGER JEEPNEYS AND FOR THIS PURPOSE,
AMENDING ORDINACE NO. 1420, SERIES OF 1993, AND ORDINANCE NO. 1557, SERIES OF
1995

xxx

SECTION 1. – The entrance to the City of Lucena of all buses, mini-buses and out-of-town
passenger jeepneys is hereby regulated as follows:

(a) All buses, mini-buses and out-of-town passenger jeepneys shall be prohibited from
entering the cityand are hereby directed to proceed to the common terminal, for picking-up
and/or dropping of their passengers.

164 | P a g e
 (b) All temporary terminals in the City of Lucena are hereby declared inoperable starting
from the effectivity of this ordinance.

xxx

SECTION 3. – a) Section 1 of Ordinance No. 1557, Series of 1995, is hereby amended to read as
follows:

Buses, mini-buses, and jeepney type mini-buses from other municipalities and/or local government
units going to Lucena City are directed to proceed to the Common Terminal located at Diversion
Road, Brgy. Ilayang Dupay, to unload and load passengers.

xxx

c) Section 3 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows:

Passenger buses, mini-buses, and jeepney type mini-buses coming from other municipalities
and/or local government units shall utilize the facilities of the Lucena Grand Central Terminal
at Diversion Road, Brgy. Ilayang Dupay, this City, and no other terminals shall be situated
inside or within the City of Lucena;

d) Section 4 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows:

Passenger buses, mini-buses, and jeepney type mini-buses coming from other municipalities
and/or local government units shall avail of the facilities of the Lucena Grand Central
Terminal which is hereby designated as the officially sanctioned common terminal for the
City of Lucena;

e) Section 5 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows:

The Lucena Grand Central Terminal is the permanent common terminal as this is the entity w
hich was giventhe exclusive franchise by the Sangguniang Panglungsod under Ordinance No
. 1631; (Emphasis and underscoring supplied)

These ordinances, by granting an exclusive franchise for twenty five years, renewable for another
twenty five years, to one entity for the construction and operation of one common bus and jeepney
terminal facility in Lucena City, to be located outside the city proper, were professedly aimed towards
alleviating the traffic congestion alleged to have been caused by the existence of various bus and
jeepney terminals within the city, as the "Explanatory Note"-Whereas Clause adopting Ordinance
No. 1778 states:

WHEREAS, in line with the worsening traffic condition of the City of Lucena, and with the purpose of
easing and regulating the flow of the same, it is imperative that the Buses, Mini-Buses and out-of-
town jeepneys be prohibited from maintaining terminals within the City, but instead directing to
proceed to the Lucena Grand Central Terminal for purposes of picking-up and/or dropping off their
passengers;4

Respondent, who had maintained a terminal within the city, was one of those affected by the
ordinances.

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Petitioner, Lucena Grand Central Terminal, Inc., claiming legal interest as the grantee of the
exclusive franchise for the operation of the common terminal,5 was allowed to intervene in the petition
before the trial court.

In the hearing conducted on November 25, 1998, all the parties agreed to dispense with the
presentation of evidence and to submit the case for resolution solely on the basis of the pleadings
filed.6

By Order of March 31, 1999,7 Branch 54 of the Lucena RTC rendered judgment, the dispositive
portion of which reads:

WHEREFORE, in view of the foregoing premises, judgment is hereby rendered, as follows:

1. Declaring City Ordinance No. 1631 as valid, having been issued in the exercise of the
police power of the City Government of Lucena insofar as the grant of franchise to the
Lucena Grand Central Terminal, Inc., to construct, finance, establish, operate and maintain
common bus-jeepney terminal facility in the City of Lucena;

2. But however, declaring the provision of Sec. 4(c) of Ordinance No. 1631 to the effect that
the City Government shall not grant any third party any privilege and/or concession to
operate a bus, mini-bus and/or jeepney terminal, as illegal and ultra vires because it
contravenes the provisions of Republic Act No. 7160, otherwise known as "The Local
Government Code";

3. Declaring City Ordinance No. 1778 as null and void, the same being also an ultra vires act
of the City Government of Lucena arising from an invalid, oppressive and unreasonable
exercise of the police power, more specifically, declaring illegal [sections 1(b), 3(c) and 3(e)];

4. Ordering the issuance of a Writ of Prohibition and/or Injunction directing the respondents
public officials, the City Mayor and the Sangguniang Panglungsod of Lucena, to cease and
desist from implementing Ordinance No. 1778 insofar as said ordinance prohibits or
curtails petitioner from maintaining and operating its own bus terminal subject to the
conditions provided for in Ordinance No. 1557, Sec. 3, which authorizes the construction of
terminal outside the poblacion of Lucena City; and likewise, insofar as said ordinance
directs and compels the petitioner to use the Lucena Grand Central Terminal Inc., and
furthermore, insofar as it declares that no other terminals shall be situated,
constructed, maintained or established inside or within the City of Lucena; and
furthermore,

5. The Motion to Dismiss filed by the Intervenor, Lucena Grand Central Terminal Inc., dated
October 19, 1998, is hereby DENIED for lack of merit.

SO ORDERED. (Emphasis and underscoring supplied)8

Petitioner’s Motion for Reconsideration9 of the trial court’s order having been denied by Order of
August 6, 1999,10 it elevated it via petition for review under Rule 45 before this Court.11 This Court, by
Resolution of November 24, 1999,12 referred the petition to the Court of Appeals with which it has
concurrent jurisdiction, no special and important reason having been cited for it to take cognizance
thereof in the first instance.

166 | P a g e
By Decision of December 15, 2000,13 the appellate court dismissed the petition and affirmed the
challenged orders of the trial court. Its motion for reconsideration14 having been denied by the
appellate court by Resolution dated June 5, 2001,15 petitioner once again comes to this Court via
petition for review,16 this time assailing the Decision and Resolution of the Court of Appeals.

Decision on the petition hinges on two issues, to wit: (1) whether the trial court has jurisdiction over
the case, it not having furnished the Office of the Solicitor General copy of the orders it issued
therein, and (2) whether the City of Lucena properly exercised its police power when it enacted the
subject ordinances.

Petitioner argues that since the trial court failed to serve a copy of its assailed orders upon the Office
of the Solicitor General, it never acquired jurisdiction over the case, it citing Section 22, Rule 3 of
the Rules which provides:

SEC. 22. Notice to the Solicitor General.—In any action involving the validity of any treaty,
law, ordinance, executive order, presidential decree, rules or regulations, the court in its discretion,
may require the appearance of the Solicitor General who may be heard in person or through
representative duly designated by him. (Emphasis and underscoring supplied)

Furthermore, petitioner invokes Sections 3 and 4 of Rule 63 which respectively provide:

SEC. 3. Notice on Solicitor General. – In any action which involves the validity of a statute, executive
order or regulation, or any other governmental regulation, the Solicitor General shall be notified by
the party assailing the same and shall be entitled to be heard upon such question.

SEC. 4. Local government ordinances. – In any action involving the validity of a local government
ordinance, the corresponding prosecutor or attorney of the local government unit involved shall be
similarly notified and entitled to be heard. If such ordinance is alleged to be unconstitutional, the
Solicitor General shall also be notified and entitled to be heard. (Emphasis and underscoring
supplied)

Nowhere, however, is it stated in the above-quoted rules that failure to notify the Solicitor General
about the action is a jurisdictional defect.

In fact, Rule 3, Section 22 gives the courts in any action involving the "validity" of
any ordinance, inter alia, "discretion" to notify the Solicitor General.

Section 4 of Rule 63, which more specifically deals with cases assailing the constitutionality, not just
the validity, of a local government ordinance, directs that the Solicitor General "shall also be notified
and entitled to be heard." Who will notify him, Sec. 3 of the same rule provides — it is the party
which is assailing the local government’s ordinance.

More importantly, however, this Court finds that no procedural defect, fatal or otherwise, attended
the disposition of the case. For respondent actually served a copy of its petition upon the Office of
the Solicitor General on October 1, 1998, two days after it was filed. The Solicitor General has
issued a Certification to that effect.17 There was thus compliance with above-quoted rules.

Respecting the issue of whether police power was properly exercised when the subject ordinances
were enacted: As with the State, the local government may be considered as having properly
exercised its police power only if the following requisites are met: (1) the interests of the public
generally, as distinguished from those of a particular class, require the interference of the State, and

167 | P a g e
(2) the means employed are reasonably necessary for the attainment of the object sought to be
accomplished and not unduly oppressive upon individuals. Otherwise stated, there must be a
concurrence of a lawful subject and lawful method.18

That traffic congestion is a public, not merely a private, concern, cannot be gainsaid. In Calalang v.
Williams19 which involved a statute authorizing the Director of Public Works to promulgate rules and
regulations to regulate and control traffic on national roads, this Court held:

In enacting said law, therefore, the National Assembly was prompted by considerations of public
convenience and welfare. It was inspired by a desire to relieve congestion of traffic, which is, to
say the least, a menace to public safety. Public welfare, then, lies at the bottom of the enactment of
said law, and the state in order to promote the general welfare may interfere with personal liberty,
with property, and with business and occupations.20 (Emphasis supplied)

The questioned ordinances having been enacted with the objective of relieving traffic congestion in
the City of Lucena, they involve public interest warranting the interference of the State. The first
requisite for the proper exercise of police power is thus present.

Respondent’s suggestion to have this Court look behind the explicit objective of the ordinances
which, to it, was actually to benefit the private interest of petitioner by coercing all bus operators to
patronize its terminal does not lie.21 Lim v. Pacquing22 instructs:

. . . [T]his Court cannot look into allegations that PD No. 771 was enacted to benefit a select group
which was later given authority to operate the jai-alai under PD No. 810. The examination of
legislative motivation is generally prohibited. (Palmer v. Thompson, 403 U.S. 217, 29 L. Ed. 2d 438
[1971] per Black, J.) There is, in the first place, absolute lack of evidence to support ADC’s allegation
of improper motivation in the issuance of PD No. 771. In the second place, as already averred, this
Court cannot go behind the expressed and proclaimed purposes of PD No. 771, which are
reasonable and even laudable. (Underscoring supplied)23

This leaves for determination the issue of whether the means employed by the Lucena Sangguniang
Panlungsod to attain its professed objective were reasonably necessary and not unduly oppressive
upon individuals.

With the aim of localizing the source of traffic congestion in the city to a single location,24 the subject
ordinances prohibit the operation of all bus and jeepney terminals within Lucena, including those
already existing, and allow the operation of only one common terminal located outside the city
proper, the franchise for which was granted to petitioner. The common carriers plying routes to and
from Lucena City are thus compelled to close down their existing terminals and use the facilities of
petitioner.

In De la Cruz v. Paras,25 this Court declared unconstitutional an ordinance characterized by

overbreadth. In that case, the Municipality of Bocaue, Bulacan prohibited the operation of all night
clubs, cabarets and dance halls within its jurisdiction for the protection of public morals. Held the
Court:

It cannot be said that such a sweeping exercise of a lawmaking power by Bocaue could qualify unde
r the termreasonable. The objective of fostering public morals, a worthy and desirable end can be att
ained by a measure thatdoes not encompass too wide a field. Certainly the ordinance on its face is c
haracterized by overbreadth. Thepurpose sought to be achieved could have been attained by reason
able restrictions rather than by an absoluteprohibition. The admonition in Salaveria should be
heeded: "The Judiciary should not lightly set aside legislative action when there is not a clear

168 | P a g e
invasion of personal or property rights under the guise of police regulation." It is clear that in the
guise of a police regulation, there was in this instance a clear invasion of personal or property rights,
personal in the case of those individuals desirous of patronizing those night clubs and property in
terms of the investments made and salaries to be earned by those therein employed. (Underscoring
supplied)26

In Lupangco v. Court of Appeals,27 this Court, in declaring unconstitutional the resolution subject
thereof, advanced a similar consideration. That case involved a resolution issued by the Professional
Regulation Commission which prohibited examinees from attending review classes and receiving
handout materials, tips, and the like three days before the date of examination in order to preserve
the integrity and purity of the licensure examinations in accountancy. Besides being unreasonable
on its face and violative of academic freedom, the measure was found to be more sweeping than
what was necessary, viz:

Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the alleged leakages
in the licensure examinations will be eradicated or at least minimized. Making the examinees suffer
by depriving them of legitimate means of review or preparation on those last three precious days
when they should be refreshing themselves with all that they have learned in the review classes and
preparing their mental and psychological make-up for the examination day itself — would be like
uprooting the tree to get rid of a rotten branch. What is needed to be done by the respondent
is to find out the source of such leakages and stop it right there. If corrupt officials or personnel
should be terminated from their loss, then so be it. Fixers or swindlers should be flushed out. Strict
guidelines to be observed by examiners should be set up and if violations are committed, then
licenses should be suspended or revoked. x x x (Emphasis and underscoring supplied)28

As in De la Cruz29 and Lupangco,30 the ordinances assailed herein are characterized by overbreadth.
They go beyond what is reasonably necessary to solve the traffic problem. Additionally, since the
compulsory use of the terminal operated by petitioner would subject the users thereof to fees, rentals
and charges, such measure is unduly oppressive, as correctly found by the appellate court. 31 What
should have been done was to determine exactly where the problem lies and then to stop it right
there.

The true role of Constitutional Law is to effect an equilibrium between authority and liberty so that
rights are exercised within the framework of the law and the laws are enacted with due deference to
rights. (Underscoring supplied)32

A due deference to the rights of the individual thus requires a more careful formulation of solutions to
societal problems.

From the memorandum33 filed before this Court by petitioner, it is gathered that the Sangguniang
Panlungsod had identified the cause of traffic congestion to be the indiscriminate loading and
unloading of passengers by buses on the streets of the city proper, hence, the conclusion that the
terminals contributed to the proliferation of buses obstructing traffic on the city streets.

Bus terminals per se do not, however, impede or help impede the flow of traffic. How the outright
proscription against the existence of all terminals, apart from that franchised to petitioner, can be
considered as reasonably necessary to solve the traffic problem, this Court has not been
enlightened. If terminals lack adequate space such that bus drivers are compelled to load and
unload passengers on the streets instead of inside the terminals, then reasonable specifications for
the size of terminals could be instituted, with permits to operate the same denied those which are
unable to meet the specifications.

169 | P a g e
In the subject ordinances, however, the scope of the proscription against the maintenance of
terminals is so broad that even entities which might be able to provide facilities better than the
franchised terminal are barred from operating at all.

Petitioner argues, however, that other solutions for the traffic problem have already been tried but
proven ineffective. But the grant of an exclusive franchise to petitioner has not been shown to be the
only solution to the problem.

While the Sangguniang Panlungsod, via Ordinance No. 1557,34 previously directed bus owners and
operators to put up their terminals "outside the poblacion of Lucena City," petitioner informs that said
ordinance only resulted in the relocation of terminals to other well-populated barangays, thereby
giving rise to traffic congestion in those areas.35Assuming that information to be true, the
Sangguniang Panlungsod was not without remedy. It could have defined, among other
considerations, in a more precise manner, the area of relocation to avoid such consequences.

As for petitioner’s argument that the challenged ordinances were enacted pursuant to the power of
the Sangguniang Panlungsod to "[r]egulate traffic on all streets and bridges; prohibit encroachments
or obstacles thereon and, when necessary in the interest of public welfare, authorize the removal of
encroachments and illegal constructions in public places":36 Absent any showing, nay allegation, that
the terminals are encroaching upon public roads, they are not obstacles. The buses which
indiscriminately load and unload passengers on the city streets are. The power then of the
Sangguniang Panlungsod to prohibit encroachments and obstacles does not extend to terminals. 1a\^/phi1.net

Neither are terminals public nuisances as petitioner argues. For their operation is a legitimate
business which, by itself, cannot be said to be injurious to the rights of property, health, or comfort of
the community.

But even assuming that terminals are nuisances due to their alleged indirect effects upon the flow of
traffic, at most they are nuisance per accidens, not per se.

Unless a thing is nuisance per se, however, it may not be abated via an ordinance, without judicial
proceedings, as was done in the case at bar.

In Estate of Gregoria Francisco v. Court of Appeals,37 this Court held:

Respondents can not seek cover under the general welfare clause authorizing the abatement of
nuisances without judicial proceedings. That tenet applies to a nuisance per se, or one which affects
the immediate safety of persons and property and may be summarily abated under the undefined
law of necessity (Monteverde v. Generoso, 52 Phil. 123 [1982]). The storage of copra in the quonset
building is a legitimate business. By its nature, it can not be said to be injurious to rights of property,
of health or of comfort of the community. If it be a nuisance per accidens it may be so proven in a
hearing conducted for that purpose. It is not per se a nuisance warranting its summary abatement
without judicial intervention. (Underscoring supplied)38
l^vvphi 1.net 1awphi1.nét

In Pampanga Bus Co., Inc. v. Municipality of Tarlac39 where the appellant-municipality similarly
argued that the terminal involved therein is a nuisance that may be abated by the Municipal Council
via an ordinance, this Court held: "Suffice it to say that in the abatement of nuisances the provisions
of the Civil Code (Articles 694-707) must be observed and followed. This appellant failed to do."

As for petitioner’s claim that the challenged ordinances have actually been proven effective in easing
traffic congestion: Whether an ordinance is effective is an issue different from whether it is
reasonably necessary. It is its reasonableness, not its effectiveness, which bears upon its

170 | P a g e
constitutionality. If the constitutionality of a law were measured by its effectiveness, then even
tyrannical laws may be justified whenever they happen to be effective.

The Court is not unaware of the resolutions of various barangays in Lucena City supporting the
establishment of a common terminal, and similar expressions of support from the private sector,
copies of which were submitted to this Court by petitioner. The weight of popular opinion, however,
must be balanced with that of an individual’s rights.

There is no question that not even the strongest moral conviction or the most urgent public need,
subject only to a few notable exceptions, will excuse the bypassing of an individual's rights. It is no
exaggeration to say that a person invoking a right guaranteed under Article III of the Constitution is a
majority of one even as against the rest of the nation who would deny him that right.40

WHEREFORE, the petition is hereby DENIED.

SO ORDERED.

LEGISLATIVE POWER

A) Requisite for a valid ordinance

G.R. No. 118127 April 12, 2005

CITY OF MANILA vs.HON. PERFECTO A.S. LAGUIO, JR

I know only that what is moral is what you feel good after and what is immoral is what you
feel bad after.

Ernest Hermingway
Death in the Afternoon, Ch. 1

It is a moral and political axiom that any dishonorable act, if performed by oneself, is less
immoral than if performed by someone else, who would be well-intentioned in his dishonesty.

J. Christopher Gerald
Bonaparte in Egypt, Ch. I

The Court's commitment to the protection of morals is secondary to its fealty to the fundamental law
of the land. It is foremost a guardian of the Constitution but not the conscience of individuals. And if it
need be, the Court will not hesitate to "make the hammer fall, and heavily" in the words of Justice
Laurel, and uphold the constitutional guarantees when faced with laws that, though not lacking in
zeal to promote morality, nevertheless fail to pass the test of constitutionality.

The pivotal issue in this Petition1 under Rule 45 (then Rule 42) of the Revised Rules on Civil
Procedure seeking the reversal of the Decision2 in Civil Case No. 93-66511 of the Regional Trial
Court (RTC) of Manila, Branch 18 (lower court),3 is the validity of Ordinance No. 7783
(the Ordinance) of the City of Manila.4

The antecedents are as follows:

171 | P a g e
Private respondent Malate Tourist Development Corporation (MTDC) is a corporation engaged in the
business of operating hotels, motels, hostels and lodging houses.5 It built and opened Victoria Court
in Malate which was licensed as a motel although duly accredited with the Department of Tourism as
a hotel.6 On 28 June 1993, MTDC filed a Petition for Declaratory Relief with Prayer for a Writ of
Preliminary Injunction and/or Temporary Restraining Order7 (RTC Petition) with the lower court
impleading as defendants, herein petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito
L. Atienza, and the members of the City Council of Manila (City Council). MTDC prayed that
the Ordinance, insofar as it includes motels and inns as among its prohibited establishments, be
declared invalid and unconstitutional.8

Enacted by the City Council9 on 9 March 1993 and approved by petitioner City Mayor on 30 March
1993, the said Ordinance is entitled–

AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF

BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT, ENTERTAINMENT,
SERVICES AND FACILITIES IN THE ERMITA-MALATE AREA, PRESCRIBING
PENALTIES FOR VIOLATION THEREOF, AND FOR OTHER PURPOSES.10

The Ordinance is reproduced in full, hereunder:

SECTION 1. Any provision of existing laws and ordinances to the contrary

notwithstanding, no person, partnership, corporation or entity shall, in the Ermita-
Malate area bounded by Teodoro M. Kalaw Sr. Street in the North, Taft Avenue in the East,
Vito Cruz Street in the South and Roxas Boulevard in the West, pursuant to P.D. 499 be
allowed or authorized to contract and engage in, any business providing certain forms
of amusement, entertainment, services and facilities where women are used as tools
in entertainment and which tend to disturb the community, annoy the inhabitants, and
adversely affect the social and moral welfare of the community, such as but not limited
to:

1. Sauna Parlors

2. Massage Parlors

3. Karaoke Bars

4. Beerhouses

5. Night Clubs

6. Day Clubs

7. Super Clubs

8. Discotheques

9. Cabarets

10. Dance Halls

11. Motels

172 | P a g e
 12. Inns

SEC. 2 The City Mayor, the City Treasurer or any person acting in behalf of the said
officials are prohibited from issuing permits, temporary or otherwise, or from granting
licenses and accepting payments for the operation of business enumerated in the
preceding section.

SEC. 3. Owners and/or operator of establishments engaged in, or devoted to, the
businesses enumerated in Section 1 hereof are hereby given three (3) months from the
date of approval of this ordinance within which to wind up business operations or to
transfer to any place outside of the Ermita-Malate area or convert said businesses to
other kinds of business allowable within the area, such as but not limited to:

1. Curio or antique shop

2. Souvenir Shops

3. Handicrafts display centers

4. Art galleries

5. Records and music shops

6. Restaurants

7. Coffee shops

8. Flower shops

9. Music lounge and sing-along restaurants, with well-defined activities for

wholesome family entertainment that cater to both local and foreign clientele.

10. Theaters engaged in the exhibition, not only of motion pictures but also of cultural
shows, stage and theatrical plays, art exhibitions, concerts and the like.

11. Businesses allowable within the law and medium intensity districts as provided
for in the zoning ordinances for Metropolitan Manila, except new warehouse or open-
storage depot, dock or yard, motor repair shop, gasoline service station, light industry
with any machinery, or funeral establishments.

SEC. 4. Any person violating any provisions of this ordinance, shall upon conviction,
be punished by imprisonment of one (1) year or fine of FIVE THOUSAND (P5,000.00)
PESOS, or both, at the discretion of the Court, PROVIDED, that in case of juridical person,
the President, the General Manager, or person-in-charge of operation shall be liable thereof;
PROVIDED FURTHER, that in case of subsequent violation and conviction, the
premises of the erring establishment shall be closed and padlocked permanently.

SEC. 5. This ordinance shall take effect upon approval.

Enacted by the City Council of Manila at its regular session today, March 9, 1993.

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 Approved by His Honor, the Mayor on March 30, 1993. (Emphasis supplied)

In the RTC Petition, MTDC argued that the Ordinance erroneously and improperly included in its
enumeration of prohibited establishments, motels and inns such as MTDC's Victoria Court
considering that these were not establishments for "amusement" or "entertainment" and they were
not "services or facilities for entertainment," nor did they use women as "tools for entertainment," and
neither did they "disturb the community," "annoy the inhabitants" or "adversely affect the social and
moral welfare of the community."11

MTDC further advanced that the Ordinance was invalid and unconstitutional for the following
reasons: (1) The City Council has no power to prohibit the operation of motels as Section 458 (a) 4
(iv)12 of the Local Government Code of 1991 (the Code) grants to the City Council only the power to
regulate the establishment, operation and maintenance of hotels, motels, inns, pension houses,
lodging houses and other similar establishments; (2) The Ordinance is void as it is violative of
Presidential Decree (P.D.) No. 49913 which specifically declared portions of the Ermita-Malate area as
a commercial zone with certain restrictions; (3) The Ordinance does not constitute a proper exercise
of police power as the compulsory closure of the motel business has no reasonable relation to the
legitimate municipal interests sought to be protected; (4) The Ordinance constitutes an ex post
facto law by punishing the operation of Victoria Court which was a legitimate business prior to its
enactment; (5) The Ordinance violates MTDC's constitutional rights in that: (a) it is confiscatory and
constitutes an invasion of plaintiff's property rights; (b) the City Council has no power to find as a fact
that a particular thing is a nuisance per se nor does it have the power to extrajudicially destroy it; and
(6) The Ordinance constitutes a denial of equal protection under the law as no reasonable basis
exists for prohibiting the operation of motels and inns, but not pension houses, hotels, lodging
houses or other similar establishments, and for prohibiting said business in the Ermita-Malate area
but not outside of this area.14

In their Answer15 dated 23 July 1993, petitioners City of Manila and Lim maintained that the City
Council had the power to "prohibit certain forms of entertainment in order to protect the social and
moral welfare of the community" as provided for in Section 458 (a) 4 (vii) of the Local Government
Code,16 which reads, thus:

Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang
panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions
and appropriate funds for the general welfare of the city and its inhabitants pursuant to
Section 16 of this Code and in the proper exercise of the corporate powers of the city as
provided for under Section 22 of this Code, and shall:

....

(4) Regulate activities relative to the use of land, buildings and structures within the city in
order to promote the general welfare and for said purpose shall:

....

(vii) Regulate the establishment, operation, and maintenance of any entertainment or

amusement facilities, including theatrical performances, circuses, billiard pools,
public dancing schools, public dance halls, sauna baths, massage parlors, and other
places for entertainment or amusement; regulate such other events or activities for
amusement or entertainment, particularly those which tend to disturb the community
or annoy the inhabitants, or require the suspension or suppression of the same; or,

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 prohibit certain forms of amusement or entertainment in order to protect the social
and moral welfare of the community.

Citing Kwong Sing v. City of Manila,17 petitioners insisted that the power of regulation spoken of in the
above-quoted provision included the power to control, to govern and to restrain places of exhibition
and amusement.18

Petitioners likewise asserted that the Ordinance was enacted by the City Council of Manila to protect
the social and moral welfare of the community in conjunction with its police power as found in Article
III, Section 18(kk) of Republic Act No. 409,19 otherwise known as the Revised Charter of the City of
Manila (Revised Charter of Manila)20 which reads, thus:

ARTICLE III

THE MUNICIPAL BOARD

. . .

Section 18. Legislative powers. – The Municipal Board shall have the following legislative
powers:

. . .

(kk) To enact all ordinances it may deem necessary and proper for the sanitation and safety,
the furtherance of the prosperity, and the promotion of the morality, peace, good order,
comfort, convenience, and general welfare of the city and its inhabitants, and such others as
may be necessary to carry into effect and discharge the powers and duties conferred by this
chapter; and to fix penalties for the violation of ordinances which shall not exceed two
hundred pesos fine or six months' imprisonment, or both such fine and imprisonment, for a
single offense.

Further, the petitioners noted, the Ordinance had the presumption of validity; hence, private
respondent had the burden to prove its illegality or unconstitutionality.21

Petitioners also maintained that there was no inconsistency between P.D. 499 and the Ordinance as
the latter simply disauthorized certain forms of businesses and allowed the Ermita-Malate area to
remain a commercial zone.22 The Ordinance, the petitioners likewise claimed, cannot be assailed
as ex post facto as it was prospective in operation.23 The Ordinance also did not infringe the equal
protection clause and cannot be denounced as class legislation as there existed substantial and real
differences between the Ermita-Malate area and other places in the City of Manila.24

On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr. (Judge Laguio) issued an ex-parte
temporary restraining order against the enforcement of the Ordinance.25 And on 16 July 1993, again
in an intrepid gesture, he granted the writ of preliminary injunction prayed for by MTDC.26

After trial, on 25 November 1994, Judge Laguio rendered the assailed Decision, enjoining the
petitioners from implementing the Ordinance. The dispositive portion of said Decision reads:27

WHEREFORE, judgment is hereby rendered declaring Ordinance No. 778[3], Series of

1993, of the City of Manila null and void, and making permanent the writ of preliminary
injunction that had been issued by this Court against the defendant. No costs.

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 SO ORDERED.28

Petitioners filed with the lower court a Notice of Appeal29 on 12 December 1994, manifesting that they
are elevating the case to this Court under then Rule 42 on pure questions of law.30

On 11 January 1995, petitioners filed the present Petition, alleging that the following errors were
committed by the lower court in its ruling: (1) It erred in concluding that the subject ordinance is ultra
vires, or otherwise, unfair, unreasonable and oppressive exercise of police power; (2) It erred in
holding that the questioned Ordinancecontravenes P.D. 49931 which allows operators of all kinds of
commercial establishments, except those specified therein; and (3) It erred in declaring
the Ordinance void and unconstitutional.32

In the Petition and in its Memorandum,33 petitioners in essence repeat the assertions they made
before the lower court. They contend that the assailed Ordinance was enacted in the exercise of the
inherent and plenary power of the State and the general welfare clause exercised by local
government units provided for in Art. 3, Sec. 18 (kk) of the Revised Charter of Manila and
conjunctively, Section 458 (a) 4 (vii) of the Code.34 They allege that the Ordinance is a valid exercise
of police power; it does not contravene P.D. 499; and that it enjoys the presumption of validity.35

In its Memorandum36 dated 27 May 1996, private respondent maintains that the Ordinance is ultra
vires and that it is void for being repugnant to the general law. It reiterates that the
questioned Ordinance is not a valid exercise of police power; that it is violative of due process,
confiscatory and amounts to an arbitrary interference with its lawful business; that it is violative of the
equal protection clause; and that it confers on petitioner City Mayor or any officer unregulated
discretion in the execution of the Ordinance absent rules to guide and control his actions.

This is an opportune time to express the Court's deep sentiment and tenderness for the Ermita-
Malate area being its home for several decades. A long-time resident, the Court witnessed the area's
many turn of events. It relished its glory days and endured its days of infamy. Much as the Court
harks back to the resplendent era of the Old Manila and yearns to restore its lost grandeur, it
believes that the Ordinance is not the fitting means to that end. The Court is of the opinion, and so
holds, that the lower court did not err in declaring the Ordinance, as it did, ultra vires and therefore
null and void.

The Ordinance is so replete with constitutional infirmities that almost every sentence thereof violates
a constitutional provision. The prohibitions and sanctions therein transgress the cardinal rights of
persons enshrined by the Constitution. The Court is called upon to shelter these rights from attempts
at rendering them worthless.

The tests of a valid ordinance are well established. A long line of decisions has held that for an
ordinance to be valid, it must not only be within the corporate powers of the local government unit to
enact and must be passed according to the procedure prescribed by law, it must also conform to the
following substantive requirements: (1) must not contravene the Constitution or any statute; (2) must
not be unfair or oppressive; (3) must not be partial or discriminatory; (4) must not prohibit but may
regulate trade; (5) must be general and consistent with public policy; and (6) must not be
unreasonable.37

Anent the first criterion, ordinances shall only be valid when they are not contrary to the Constitution
and to the laws.38 The Ordinance must satisfy two requirements: it must pass muster under the test of
constitutionality and the test of consistency with the prevailing laws. That ordinances should be
constitutional uphold the principle of the supremacy of the Constitution. The requirement that the
enactment must not violate existing law gives stress to the precept that local government units are

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able to legislate only by virtue of their derivative legislative power, a delegation of legislative power
from the national legislature. The delegate cannot be superior to the principal or exercise powers
higher than those of the latter.39

This relationship between the national legislature and the local government units has not been
enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy. The
national legislature is still the principal of the local government units, which cannot defy its will or
modify or violate it.40

The Ordinance was passed by the City Council in the exercise of its police power, an enactment of
the City Council acting as agent of Congress. Local government units, as agencies of the State, are
endowed with police power in order to effectively accomplish and carry out the declared objects of
their creation.41 This delegated police power is found in Section 16 of the Code, known as the general
welfare clause, viz:

SECTION 16. General Welfare.Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among other things, the
preservation and enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of appropriate and
self-reliant scientific and technological capabilities, improve public morals, enhance
economic prosperity and social justice, promote full employment among their residents,
maintain peace and order, and preserve the comfort and convenience of their inhabitants.

Local government units exercise police power through their respective legislative bodies; in this
case, the sangguniang panlungsod or the city council. The Code empowers the legislative bodies to
"enact ordinances, approve resolutions and appropriate funds for the general welfare of the
province/city/municipality and its inhabitants pursuant to Section 16 of the Code and in the proper
exercise of the corporate powers of the province/city/ municipality provided under the Code.42 The
inquiry in this Petition is concerned with the validity of the exercise of such delegated power.

The Ordinance contravenes

the Constitution

The police power of the City Council, however broad and far-reaching, is subordinate to the
constitutional limitations thereon; and is subject to the limitation that its exercise must be reasonable
and for the public good.43 In the case at bar, the enactment of the Ordinance was an invalid exercise
of delegated power as it is unconstitutional and repugnant to general laws.

The relevant constitutional provisions are the following:

SEC. 5. The maintenance of peace and order, the protection of life, liberty, and property, and
the promotion of the general welfare are essential for the enjoyment by all the people of the
blessings of democracy.44

SEC. 14. The State recognizes the role of women in nation-building, and shall ensure the
fundamental equality before the law of women and men.45

SEC. 1. No person shall be deprived of life, liberty or property without due process of law,
nor shall any person be denied the equal protection of laws.46

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 Sec. 9. Private property shall not be taken for public use without just compensation.47

A. The Ordinance infringes

the Due Process Clause

The constitutional safeguard of due process is embodied in the fiat "(N)o person shall be deprived of
life, liberty or property without due process of law. . . ."48

There is no controlling and precise definition of due process. It furnishes though a standard to which
governmental action should conform in order that deprivation of life, liberty or property, in each
appropriate case, be valid. This standard is aptly described as a responsiveness to the supremacy
of reason, obedience to the dictates of justice,49and as such it is a limitation upon the exercise of the
police power.50

The purpose of the guaranty is to prevent governmental encroachment against the life, liberty and
property of individuals; to secure the individual from the arbitrary exercise of the powers of the
government, unrestrained by the established principles of private rights and distributive justice; to
protect property from confiscation by legislative enactments, from seizure, forfeiture, and destruction
without a trial and conviction by the ordinary mode of judicial procedure; and to secure to all persons
equal and impartial justice and the benefit of the general law.51

The guaranty serves as a protection against arbitrary regulation, and private corporations and
partnerships are "persons" within the scope of the guaranty insofar as their property is concerned.52

This clause has been interpreted as imposing two separate limits on government, usually called
"procedural due process" and "substantive due process."

Procedural due process, as the phrase implies, refers to the procedures that the government must
follow before it deprives a person of life, liberty, or property. Classic procedural due process issues
are concerned with what kind of notice and what form of hearing the government must provide when
it takes a particular action.53

Substantive due process, as that phrase connotes, asks whether the government has an adequate
reason for taking away a person's life, liberty, or property. In other words, substantive due process
looks to whether there is a sufficient justification for the government's action.54 Case law in the United
States (U.S.) tells us that whether there is such a justification depends very much on the level of
scrutiny used.55 For example, if a law is in an area where only rational basis review is applied,
substantive due process is met so long as the law is rationally related to a legitimate government
purpose. But if it is an area where strict scrutiny is used, such as for protecting fundamental rights,
then the government will meet substantive due process only if it can prove that the law is necessary
to achieve a compelling government purpose.56

The police power granted to local government units must always be exercised with utmost
observance of the rights of the people to due process and equal protection of the law. Such power
cannot be exercised whimsically, arbitrarily or despotically57 as its exercise is subject to a
qualification, limitation or restriction demanded by the respect and regard due to the prescription of
the fundamental law, particularly those forming part of the Bill of Rights. Individual rights, it bears
emphasis, may be adversely affected only to the extent that may fairly be required by the legitimate
demands of public interest or public welfare.58 Due process requires the intrinsic validity of the law in
interfering with the rights of the person to his life, liberty and property.59

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Requisites for the valid exercise
of Police Power are not met

To successfully invoke the exercise of police power as the rationale for the enactment of
the Ordinance, and to free it from the imputation of constitutional infirmity, not only must it appear
that the interests of the public generally, as distinguished from those of a particular class, require an
interference with private rights, but the means adopted must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals.60It must be evident that
no other alternative for the accomplishment of the purpose less intrusive of private rights can
work. A reasonable relation must exist between the purposes of the police measure and the means
employed for its accomplishment, for even under the guise of protecting the public interest, personal
rights and those pertaining to private property will not be permitted to be arbitrarily invaded.61

Lacking a concurrence of these two requisites, the police measure shall be struck down as an
arbitrary intrusion into private rights62 a violation of the due process clause.

The Ordinance was enacted to address and arrest the social ills purportedly spawned by the
establishments in the Ermita-Malate area which are allegedly operated under the deceptive veneer
of legitimate, licensed and tax-paying nightclubs, bars, karaoke bars, girlie houses, cocktail lounges,
hotels and motels. Petitioners insist that even the Court in the case of Ermita-Malate Hotel and
Motel Operators Association, Inc. v. City Mayor of Manila63 had already taken judicial notice of the
"alarming increase in the rate of prostitution, adultery and fornication in Manila traceable in great part
to existence of motels, which provide a necessary atmosphere for clandestine entry, presence and
exit and thus become the ideal haven for prostitutes and thrill-seekers."64

The object of the Ordinance was, accordingly, the promotion and protection of the social and moral
values of the community. Granting for the sake of argument that the objectives of the Ordinance are
within the scope of the City Council's police powers, the means employed for the accomplishment
thereof were unreasonable and unduly oppressive.

It is undoubtedly one of the fundamental duties of the City of Manila to make all reasonable
regulations looking to the promotion of the moral and social values of the community. However, the
worthy aim of fostering public morals and the eradication of the community's social ills can be
achieved through means less restrictive of private rights; it can be attained by reasonable restrictions
rather than by an absolute prohibition. The closing down and transfer of businesses or their
conversion into businesses "allowed" under the Ordinance have no reasonable relation to the
accomplishment of its purposes. Otherwise stated, the prohibition of the enumerated establishments
will not per seprotect and promote the social and moral welfare of the community; it will not in itself
eradicate the alluded social ills of prostitution, adultery, fornication nor will it arrest the spread of
sexual disease in Manila.

Conceding for the nonce that the Ermita-Malate area teems with houses of ill-repute and
establishments of the like which the City Council may lawfully prohibit,65 it is baseless and
insupportable to bring within that classification sauna parlors, massage parlors, karaoke bars, night
clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and inns. This is not
warranted under the accepted definitions of these terms. The enumerated establishments are lawful
pursuits which are not per se offensive to the moral welfare of the community.

That these are used as arenas to consummate illicit sexual affairs and as venues to further the
illegal prostitution is of no moment. We lay stress on the acrid truth that sexual immorality, being a
human frailty, may take place in the most innocent of places that it may even take place in the
substitute establishments enumerated under Section 3 of the Ordinance. If the flawed logic of

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the Ordinance were to be followed, in the remote instance that an immoral sexual act transpires in a
church cloister or a court chamber, we would behold the spectacle of the City of Manila ordering the
closure of the church or court concerned. Every house, building, park, curb, street or even vehicles
for that matter will not be exempt from the prohibition. Simply because there are no "pure" places
where there are impure men. Indeed, even the Scripture and the Tradition of Christians churches
continually recall the presence and universality of sin in man's history.66

The problem, it needs to be pointed out, is not the establishment, which by its nature cannot be said
to be injurious to the health or comfort of the community and which in itself is amoral, but the
deplorable human activity that may occur within its premises. While a motel may be used as a venue
for immoral sexual activity, it cannot for that reason alone be punished. It cannot be classified as a
house of ill-repute or as a nuisance per se on a mere likelihood or a naked assumption. If that were
so and if that were allowed, then the Ermita-Malate area would not only be purged of its supposed
social ills, it would be extinguished of its soul as well as every human activity, reprehensible or not,
in its every nook and cranny would be laid bare to the estimation of the authorities.

The Ordinance seeks to legislate morality but fails to address the core issues of morality. Try as
the Ordinance may to shape morality, it should not foster the illusion that it can make a moral man
out of it because immorality is not a thing, a building or establishment; it is in the hearts of men. The
City Council instead should regulate human conduct that occurs inside the establishments, but not to
the detriment of liberty and privacy which are covenants, premiums and blessings of democracy.

While petitioners' earnestness at curbing clearly objectionable social ills is commendable, they
unwittingly punish even the proprietors and operators of "wholesome," "innocent" establishments. In
the instant case, there is a clear invasion of personal or property rights, personal in the case of those
individuals desirous of owning, operating and patronizing those motels and property in terms of the
investments made and the salaries to be paid to those therein employed. If the City of Manila so
desires to put an end to prostitution, fornication and other social ills, it can instead impose
reasonable regulations such as daily inspections of the establishments for any violation of the
conditions of their licenses or permits; it may exercise its authority to suspend or revoke their
licenses for these violations;67 and it may even impose increased license fees. In other words, there
are other means to reasonably accomplish the desired end.

Means employed are

constitutionally infirm

The Ordinance disallows the operation of sauna parlors, massage parlors, karaoke bars,
beerhouses, night clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and
inns in the Ermita-Malate area. In Section 3 thereof, owners and/or operators of the enumerated
establishments are given three (3) months from the date of approval of the Ordinance within which
"to wind up business operations or to transfer to any place outside the Ermita-Malate area or convert
said businesses to other kinds of business allowable within the area." Further, it states in Section 4
that in cases of subsequent violations of the provisions of the Ordinance, the "premises of the erring
establishment shall be closed and padlocked permanently."

It is readily apparent that the means employed by the Ordinance for the achievement of its purposes,
the governmental interference itself, infringes on the constitutional guarantees of a person's
fundamental right to liberty and property.

Liberty as guaranteed by the Constitution was defined by Justice Malcolm to include "the right to
exist and the right to be free from arbitrary restraint or servitude. The term cannot be dwarfed into
mere freedom from physical restraint of the person of the citizen, but is deemed to embrace the right

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of man to enjoy the facilities with which he has been endowed by his Creator, subject only to such
restraint as are necessary for the common welfare."68 In accordance with this case, the rights of the
citizen to be free to use his faculties in all lawful ways; to live and work where he will; to earn his
livelihood by any lawful calling; and to pursue any avocation are all deemed embraced in the
concept of liberty.69

The U.S. Supreme Court in the case of Roth v. Board of Regents,70 sought to clarify the meaning of
"liberty." It said:

While the Court has not attempted to define with exactness the liberty. . . guaranteed [by the
Fifth and Fourteenth Amendments], the term denotes not merely freedom from bodily
restraint but also the right of the individual to contract, to engage in any of the common
occupations of life, to acquire useful knowledge, to marry, establish a home and bring up
children, to worship God according to the dictates of his own conscience, and generally to
enjoy those privileges long recognized…as essential to the orderly pursuit of happiness by
free men. In a Constitution for a free people, there can be no doubt that the meaning of
"liberty" must be broad indeed.

In another case, it also confirmed that liberty protected by the due process clause includes personal
decisions relating to marriage, procreation, contraception, family relationships, child rearing, and
education. In explaining the respect the Constitution demands for the autonomy of the person in
making these choices, the U.S. Supreme Court explained:

These matters, involving the most intimate and personal choices a person may make in a
lifetime, choices central to personal dignity and autonomy, are central to the liberty protected
by the Fourteenth Amendment. At the heart of liberty is the right to define one's own concept
of existence, of meaning, of universe, and of the mystery of human life. Beliefs about these
matters could not define the attributes of personhood where they formed under compulsion
of the State.71

Persons desirous to own, operate and patronize the enumerated establishments under Section 1 of
the Ordinancemay seek autonomy for these purposes.

Motel patrons who are single and unmarried may invoke this right to autonomy to consummate their
bonds in intimate sexual conduct within the motel's premisesbe it stressed that their consensual
sexual behavior does not contravene any fundamental state policy as contained in the
Constitution.72 Adults have a right to choose to forge such relationships with others in the confines of
their own private lives and still retain their dignity as free persons. The liberty protected by the
Constitution allows persons the right to make this choice.73 Their right to liberty under the due process
clause gives them the full right to engage in their conduct without intervention of the government, as
long as they do not run afoul of the law. Liberty should be the rule and restraint the exception.

Liberty in the constitutional sense not only means freedom from unlawful government restraint; it
must include privacy as well, if it is to be a repository of freedom. The right to be let alone is the
beginning of all freedomit is the most comprehensive of rights and the right most valued by
civilized men.74

The concept of liberty compels respect for the individual whose claim to privacy and interference
demands respect. As the case of Morfe v. Mutuc,75 borrowing the words of Laski, so very aptly stated:

Man is one among many, obstinately refusing reduction to unity. His separateness, his
isolation, are indefeasible; indeed, they are so fundamental that they are the basis on which

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 his civic obligations are built. He cannot abandon the consequences of his isolation, which
are, broadly speaking, that his experience is private, and the will built out of that experience
personal to himself. If he surrenders his will to others, he surrenders himself. If his will is set
by the will of others, he ceases to be a master of himself. I cannot believe that a man no
longer a master of himself is in any real sense free.

Indeed, the right to privacy as a constitutional right was recognized in Morfe, the invasion of which
should be justified by a compelling state interest. Morfe accorded recognition to the right to privacy
independently of its identification with liberty; in itself it is fully deserving of constitutional protection.
Governmental powers should stop short of certain intrusions into the personal life of the citizen.76

There is a great temptation to have an extended discussion on these civil liberties but the Court
chooses to exercise restraint and restrict itself to the issues presented when it should. The previous
pronouncements of the Court are not to be interpreted as a license for adults to engage in criminal
conduct. The reprehensibility of such conduct is not diminished. The Court only reaffirms and
guarantees their right to make this choice. Should they be prosecuted for their illegal conduct, they
should suffer the consequences of the choice they have made. That, ultimately, is their choice.

Modality employed is
unlawful taking

In addition, the Ordinance is unreasonable and oppressive as it substantially divests the respondent
of the beneficial use of its property.77 The Ordinance in Section 1 thereof forbids the running of the
enumerated businesses in the Ermita-Malate area and in Section 3 instructs its owners/operators to
wind up business operations or to transfer outside the area or convert said businesses into allowed
businesses. An ordinance which permanently restricts the use of property that it can not be used for
any reasonable purpose goes beyond regulation and must be recognized as a taking of the property
without just compensation.78 It is intrusive and violative of the private property rights of individuals.

The Constitution expressly provides in Article III, Section 9, that "private property shall not be taken
for public use without just compensation." The provision is the most important protection of property
rights in the Constitution. This is a restriction on the general power of the government to take
property. The constitutional provision is about ensuring that the government does not confiscate the
property of some to give it to others. In part too, it is about loss spreading. If the government takes
away a person's property to benefit society, then society should pay. The principal purpose of the
guarantee is "to bar the Government from forcing some people alone to bear public burdens which,
in all fairness and justice, should be borne by the public as a whole.79

There are two different types of taking that can be identified. A "possessory" taking occurs when the
government confiscates or physically occupies property. A "regulatory" taking occurs when the
government's regulation leaves no reasonable economically viable use of the property.80

In the landmark case of Pennsylvania Coal v. Mahon,81 it was held that a taking also could be found if
government regulation of the use of property went "too far." When regulation reaches a certain
magnitude, in most if not in all cases there must be an exercise of eminent domain and
compensation to support the act. While property may be regulated to a certain extent, if regulation
goes too far it will be recognized as a taking.82

No formula or rule can be devised to answer the questions of what is too far and when regulation
becomes a taking. In Mahon, Justice Holmes recognized that it was "a question of degree and
therefore cannot be disposed of by general propositions." On many other occasions as well, the U.S.
Supreme Court has said that the issue of when regulation constitutes a taking is a matter of

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considering the facts in each case. The Court asks whether justice and fairness require that the
economic loss caused by public action must be compensated by the government and thus borne by
the public as a whole, or whether the loss should remain concentrated on those few persons subject
to the public action.83

What is crucial in judicial consideration of regulatory takings is that government regulation is a taking
if it leaves no reasonable economically viable use of property in a manner that interferes with
reasonable expectations for use.84 A regulation that permanently denies all economically beneficial or
productive use of land is, from the owner's point of view, equivalent to a "taking" unless principles of
nuisance or property law that existed when the owner acquired the land make the use
prohibitable.85 When the owner of real property has been called upon to sacrifice all economically
beneficial uses in the name of the common good, that is, to leave his property economically idle, he
has suffered a taking.86

A regulation which denies all economically beneficial or productive use of land will require
compensation under the takings clause. Where a regulation places limitations on land that fall short
of eliminating all economically beneficial use, a taking nonetheless may have occurred, depending
on a complex of factors including the regulation's economic effect on the landowner, the extent to
which the regulation interferes with reasonable investment-backed expectations and the character of
government action. These inquiries are informed by the purpose of the takings clause which is to
prevent the government from forcing some people alone to bear public burdens which, in all fairness
and justice, should be borne by the public as a whole.87

A restriction on use of property may also constitute a "taking" if not reasonably necessary to the
effectuation of a substantial public purpose or if it has an unduly harsh impact on the distinct
investment-backed expectations of the owner.88

The Ordinance gives the owners and operators of the "prohibited" establishments three (3) months
from its approval within which to "wind up business operations or to transfer to any place outside of
the Ermita-Malate area or convert said businesses to other kinds of business allowable within the
area." The directive to "wind up business operations" amounts to a closure of the establishment, a
permanent deprivation of property, and is practically confiscatory. Unless the owner converts his
establishment to accommodate an "allowed" business, the structure which housed the previous
business will be left empty and gathering dust. Suppose he transfers it to another area, he will
likewise leave the entire establishment idle. Consideration must be given to the substantial amount
of money invested to build the edifices which the owner reasonably expects to be returned within a
period of time. It is apparent that the Ordinance leaves no reasonable economically viable use of
property in a manner that interferes with reasonable expectations for use.

The second and third options to transfer to any place outside of the Ermita-Malate area or to
convert into allowed businessesare confiscatory as well. The penalty of permanent closure in
cases of subsequent violations found in Section 4 of the Ordinance is also equivalent to a "taking" of
private property.

The second option instructs the owners to abandon their property and build another one outside the
Ermita-Malate area. In every sense, it qualifies as a taking without just compensation with an
additional burden imposed on the owner to build another establishment solely from his coffers. The
proffered solution does not put an end to the "problem," it merely relocates it. Not only is this
impractical, it is unreasonable, onerous and oppressive. The conversion into allowed enterprises is
just as ridiculous. How may the respondent convert a motel into a restaurant or a coffee shop, art
gallery or music lounge without essentially destroying its property? This is a taking of private
property without due process of law, nay, even without compensation.

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The penalty of closure likewise constitutes unlawful taking that should be compensated by the
government. The burden on the owner to convert or transfer his business, otherwise it will be closed
permanently after a subsequent violation should be borne by the public as this end benefits them as
a whole.

Petitioners cannot take refuge in classifying the measure as a zoning ordinance. A zoning ordinance,
although a valid exercise of police power, which limits a "wholesome" property to a use which can
not reasonably be made of it constitutes the taking of such property without just
compensation. Private property which is not noxious nor intended for noxious purposes may not, by
zoning, be destroyed without compensation. Such principle finds no support in the principles of
justice as we know them. The police powers of local government units which have always received
broad and liberal interpretation cannot be stretched to cover this particular taking.

Distinction should be made between destruction from necessity and eminent domain. It needs
restating that the property taken in the exercise of police power is destroyed because it is noxious or
intended for a noxious purpose while the property taken under the power of eminent domain is
intended for a public use or purpose and is therefore "wholesome."89 If it be of public benefit that a
"wholesome" property remain unused or relegated to a particular purpose, then certainly the public
should bear the cost of reasonable compensation for the condemnation of private property for public
use.90

Further, the Ordinance fails to set up any standard to guide or limit the petitioners' actions. It in no
way controls or guides the discretion vested in them. It provides no definition of the establishments
covered by it and it fails to set forth the conditions when the establishments come within its ambit of
prohibition. The Ordinance confers upon the mayor arbitrary and unrestricted power to close down
establishments. Ordinances such as this, which make possible abuses in its execution, depending
upon no conditions or qualifications whatsoever other than the unregulated arbitrary will of the city
authorities as the touchstone by which its validity is to be tested, are unreasonable and invalid.
The Ordinance should have established a rule by which its impartial enforcement could be secured.91

Ordinances placing restrictions upon the lawful use of property must, in order to be valid and
constitutional, specify the rules and conditions to be observed and conduct to avoid; and must not
admit of the exercise, or of an opportunity for the exercise, of unbridled discretion by the law
enforcers in carrying out its provisions.92

Thus, in Coates v. City of Cincinnati,93 as cited in People v. Nazario,94 the U.S. Supreme Court
struck down an ordinance that had made it illegal for "three or more persons to assemble on any
sidewalk and there conduct themselves in a manner annoying to persons passing by." The
ordinance was nullified as it imposed no standard at all "because one may never know in advance
what 'annoys some people but does not annoy others.' "

Similarly, the Ordinance does not specify the standards to ascertain which establishments "tend to
disturb the community," "annoy the inhabitants," and "adversely affect the social and moral welfare
of the community." The cited case supports the nullification of the Ordinance for lack of
comprehensible standards to guide the law enforcers in carrying out its provisions.

Petitioners cannot therefore order the closure of the enumerated establishments without infringing
the due process clause. These lawful establishments may be regulated, but not prevented from
carrying on their business. This is a sweeping exercise of police power that is a result of a lack of
imagination on the part of the City Council and which amounts to an interference into personal and
private rights which the Court will not countenance. In this regard, we take a resolute stand to uphold
the constitutional guarantee of the right to liberty and property.

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Worthy of note is an example derived from the U.S. of a reasonable regulation which is a far cry from
the ill-considered Ordinance enacted by the City Council.

In FW/PBS, INC. v. Dallas,95 the city of Dallas adopted a comprehensive ordinance regulating
"sexually oriented businesses," which are defined to include adult arcades, bookstores, video stores,
cabarets, motels, and theaters as well as escort agencies, nude model studio and sexual encounter
centers. Among other things, the ordinance required that such businesses be licensed. A group of
motel owners were among the three groups of businesses that filed separate suits challenging the
ordinance. The motel owners asserted that the city violated the due process clause by failing to
produce adequate support for its supposition that renting room for fewer than ten (10) hours resulted
in increased crime and other secondary effects. They likewise argued than the ten (10)-hour
limitation on the rental of motel rooms placed an unconstitutional burden on the right to freedom of
association. Anent the first contention, the U.S. Supreme Court held that the reasonableness of the
legislative judgment combined with a study which the city considered, was adequate to support the
city's determination that motels permitting room rentals for fewer than ten (10 ) hours should be
included within the licensing scheme. As regards the second point, the Court held that limiting motel
room rentals to ten (10) hours will have no discernible effect on personal bonds as those bonds that
are formed from the use of a motel room for fewer than ten (10) hours are not those that have played
a critical role in the culture and traditions of the nation by cultivating and transmitting shared ideals
and beliefs.

The ordinance challenged in the above-cited case merely regulated the targeted businesses. It
imposed reasonable restrictions; hence, its validity was upheld.

The case of Ermita Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila,96 it
needs pointing out, is also different from this case in that what was involved therein was a measure
which regulated the mode in which motels may conduct business in order to put an end to practices
which could encourage vice and immorality. Necessarily, there was no valid objection on due
process or equal protection grounds as the ordinance did not prohibit motels. The Ordinance in this
case however is not a regulatory measure but is an exercise of an assumed power to prohibit.97

The foregoing premises show that the Ordinance is an unwarranted and unlawful curtailment of
property and personal rights of citizens. For being unreasonable and an undue restraint of trade, it
cannot, even under the guise of exercising police power, be upheld as valid.

B. The Ordinance violates Equal

Protection Clause

Equal protection requires that all persons or things similarly situated should be treated alike, both as
to rights conferred and responsibilities imposed. Similar subjects, in other words, should not be
treated differently, so as to give undue favor to some and unjustly discriminate against others.98 The
guarantee means that no person or class of persons shall be denied the same protection of laws
which is enjoyed by other persons or other classes in like circumstances.99 The "equal protection of
the laws is a pledge of the protection of equal laws."100 It limits governmental discrimination. The
equal protection clause extends to artificial persons but only insofar as their property is concerned.101

The Court has explained the scope of the equal protection clause in this wise:

… What does it signify? To quote from J.M. Tuason & Co. v. Land Tenure Administration:
"The ideal situation is for the law's benefits to be available to all, that none be placed outside
the sphere of its coverage. Only thus could chance and favor be excluded and the affairs of
men governed by that serene and impartial uniformity, which is of the very essence of the

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 idea of law." There is recognition, however, in the opinion that what in fact exists "cannot
approximate the ideal. Nor is the law susceptible to the reproach that it does not take into
account the realities of the situation. The constitutional guarantee then is not to be given a
meaning that disregards what is, what does in fact exist. To assure that the general welfare
be promoted, which is the end of law, a regulatory measure may cut into the rights to liberty
and property. Those adversely affected may under such circumstances invoke the equal
protection clause only if they can show that the governmental act assailed, far from being
inspired by the attainment of the common weal was prompted by the spirit of hostility, or at
the very least, discrimination that finds no support in reason." Classification is thus not ruled
out, it being sufficient to quote from the Tuason decision anew "that the laws operate equally
and uniformly on all persons under similar circumstances or that all persons must be treated
in the same manner, the conditions not being different, both in the privileges conferred and
the liabilities imposed. Favoritism and undue preference cannot be allowed. For the principle
is that equal protection and security shall be given to every person under circumstances
which, if not identical, are analogous. If law be looked upon in terms of burden or charges,
those that fall within a class should be treated in the same fashion, whatever restrictions cast
on some in the group equally binding on the rest.102

Legislative bodies are allowed to classify the subjects of legislation. If the classification is
reasonable, the law may operate only on some and not all of the people without violating the equal
protection clause.103 The classification must, as an indispensable requisite, not be arbitrary. To be
valid, it must conform to the following requirements:

1) It must be based on substantial distinctions.

2) It must be germane to the purposes of the law.

3) It must not be limited to existing conditions only.

4) It must apply equally to all members of the class.104

In the Court's view, there are no substantial distinctions between motels, inns, pension houses,
hotels, lodging houses or other similar establishments. By definition, all are commercial
establishments providing lodging and usually meals and other services for the public. No reason
exists for prohibiting motels and inns but not pension houses, hotels, lodging houses or other similar
establishments. The classification in the instant case is invalid as similar subjects are not similarly
treated, both as to rights conferred and obligations imposed. It is arbitrary as it does not rest on
substantial distinctions bearing a just and fair relation to the purpose of the Ordinance.

The Court likewise cannot see the logic for prohibiting the business and operation of motels in the
Ermita-Malate area but not outside of this area. A noxious establishment does not become any less
noxious if located outside the area.

The standard "where women are used as tools for entertainment" is also discriminatory as
prostitutionone of the hinted ills the Ordinance aims to banishis not a profession exclusive to
women. Both men and women have an equal propensity to engage in prostitution. It is not any less
grave a sin when men engage in it. And why would the assumption that there is an ongoing immoral
activity apply only when women are employed and be inapposite when men are in harness? This
discrimination based on gender violates equal protection as it is not substantially related to important
government objectives.105 Thus, the discrimination is invalid.

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Failing the test of constitutionality, the Ordinance likewise failed to pass the test of consistency with
prevailing laws.

C. The Ordinance is repugnant

to general laws; it is ultra vires

The Ordinance is in contravention of the Code as the latter merely empowers local government units
to regulate, and not prohibit, the establishments enumerated in Section 1 thereof.

The power of the City Council to regulate by ordinances the establishment, operation, and
maintenance of motels, hotels and other similar establishments is found in Section 458 (a) 4 (iv),
which provides that:

Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang
panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions
and appropriate funds for the general welfare of the city and its inhabitants pursuant to
Section 16 of this Code and in the proper exercise of the corporate powers of the city as
provided for under Section 22 of this Code, and shall:

. . .

(4) Regulate activities relative to the use of land, buildings and structures within the city in
order to promote the general welfare and for said purpose shall:

. . .

(iv) Regulate the establishment, operation and maintenance of cafes, restaurants,

beerhouses, hotels, motels, inns, pension houses, lodging houses, and other similar
establishments, including tourist guides and transports . . . .

While its power to regulate the establishment, operation and maintenance of any entertainment or
amusement facilities, and to prohibit certain forms of amusement or entertainment is provided under
Section 458 (a) 4 (vii) of the Code, which reads as follows:

Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang
panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions
and appropriate funds for the general welfare of the city and its inhabitants pursuant to
Section 16 of this Code and in the proper exercise of the corporate powers of the city as
provided for under Section 22 of this Code, and shall:

. . .

(4) Regulate activities relative to the use of land, buildings and structures within the city in
order to promote the general welfare and for said purpose shall:

. . .

(vii) Regulate the establishment, operation, and maintenance of any entertainment or

amusement facilities, including theatrical performances, circuses, billiard pools,
public dancing schools, public dance halls, sauna baths, massage parlors, and other
places for entertainment or amusement; regulate such other events or activities for

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 amusement or entertainment, particularly those which tend to disturb the community
or annoy the inhabitants, or require the suspension or suppression of the same; or,
prohibit certain forms of amusement or entertainment in order to protect the social
and moral welfare of the community.

Clearly, with respect to cafes, restaurants, beerhouses, hotels, motels, inns, pension houses,
lodging houses, and other similar establishments, the only power of the City Council to legislate
relative thereto is to regulate them to promote the general welfare. The Code still withholds from
cities the power to suppress and prohibit altogether the establishment, operation and maintenance of
such establishments. It is well to recall the rulings of the Court in Kwong Sing v. City of Manila106 that:

The word "regulate," as used in subsection (l), section 2444 of the Administrative Code,
means and includes the power to control, to govern, and to restrain; but "regulate" should not
be construed as synonymous with "suppress" or "prohibit." Consequently, under the power to
regulate laundries, the municipal authorities could make proper police regulations as to the
mode in which the employment or business shall be exercised.107

And in People v. Esguerra,108 wherein the Court nullified an ordinance of the Municipality of Tacloban
which prohibited the selling, giving and dispensing of liquor ratiocinating that the municipality is
empowered only to regulate the same and not prohibit. The Court therein declared that:

(A)s a general rule when a municipal corporation is specifically given authority or power to
regulate or to license and regulate the liquor traffic, power to prohibit is impliedly withheld.109

These doctrines still hold contrary to petitioners' assertion110 that they were modified by the Code
vesting upon City Councils prohibitory powers.

Similarly, the City Council exercises regulatory powers over public dancing schools, public dance
halls, sauna baths, massage parlors, and other places for entertainment or amusement as found in
the first clause of Section 458 (a) 4 (vii). Its powers to regulate, suppress and suspend "such other
events or activities for amusement or entertainment, particularly those which tend to disturb the
community or annoy the inhabitants" and to "prohibit certain forms of amusement or entertainment in
order to protect the social and moral welfare of the community" are stated in the second and third
clauses, respectively of the same Section. The several powers of the City Council as provided in
Section 458 (a) 4 (vii) of the Code, it is pertinent to emphasize, are separated by semi-colons (;), the
use of which indicates that the clauses in which these powers are set forth are independent of each
other albeit closely related to justify being put together in a single enumeration or paragraph.111 These
powers, therefore, should not be confused, commingled or consolidated as to create a
conglomerated and unified power of regulation, suppression and prohibition.112

The Congress unequivocably specified the establishments and forms of amusement or

entertainment subject to regulation among which are beerhouses, hotels, motels, inns, pension
houses, lodging houses, and other similar establishments (Section 458 (a) 4 (iv)), public dancing
schools, public dance halls, sauna baths, massage parlors, and other places for entertainment or
amusement (Section 458 (a) 4 (vii)). This enumeration therefore cannot be included as among "other
events or activities for amusement or entertainment, particularly those which tend to disturb the
community or annoy the inhabitants" or "certain forms of amusement or entertainment" which the
City Council may suspend, suppress or prohibit.

The rule is that the City Council has only such powers as are expressly granted to it and those which
are necessarily implied or incidental to the exercise thereof. By reason of its limited powers and the
nature thereof, said powers are to be construed strictissimi juris and any doubt or ambiguity arising

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out of the terms used in granting said powers must be construed against the City
Council.113 Moreover, it is a general rule in statutory construction that the express mention of one
person, thing, or consequence is tantamount to an express exclusion of all others. Expressio unius
est exclusio alterium. This maxim is based upon the rules of logic and the natural workings of human
mind. It is particularly applicable in the construction of such statutes as create new rights or
remedies, impose penalties or punishments, or otherwise come under the rule of strict
construction.114

The argument that the City Council is empowered to enact the Ordinance by virtue of the general
welfare clause of the Code and of Art. 3, Sec. 18 (kk) of the Revised Charter of Manila is likewise
without merit. On the first point, the ruling of the Court in People v. Esguerra,115 is instructive. It held
that:

The powers conferred upon a municipal council in the general welfare clause, or section
2238 of the Revised Administrative Code, refers to matters not covered by the other
provisions of the same Code, and therefore it can not be applied to intoxicating liquors, for
the power to regulate the selling, giving away and dispensing thereof is granted specifically
by section 2242 (g) to municipal councils. To hold that, under the general power granted by
section 2238, a municipal council may enact the ordinance in question, notwithstanding the
provision of section 2242 (g), would be to make the latter superfluous and nugatory, because
the power to prohibit, includes the power to regulate, the selling, giving away and dispensing
of intoxicating liquors.

On the second point, it suffices to say that the Code being a later expression of the legislative will
must necessarily prevail and override the earlier law, the Revised Charter of Manila. Legis
posteriores priores contrarias abrogant, or later statute repeals prior ones which are repugnant
thereto. As between two laws on the same subject matter, which are irreconcilably inconsistent, that
which is passed later prevails, since it is the latest expression of legislative will.116 If there is an
inconsistency or repugnance between two statutes, both relating to the same subject matter, which
cannot be removed by any fair and reasonable method of interpretation, it is the latest expression of
the legislative will which must prevail and override the earlier.117

Implied repeals are those which take place when a subsequently enacted law contains provisions
contrary to those of an existing law but no provisions expressly repealing them. Such repeals have
been divided into two general classes: those which occur where an act is so inconsistent or
irreconcilable with an existing prior act that only one of the two can remain in force and those which
occur when an act covers the whole subject of an earlier act and is intended to be a substitute
therefor. The validity of such a repeal is sustained on the ground that the latest expression of the
legislative will should prevail.118

In addition, Section 534(f) of the Code states that "All general and special laws, acts, city charters,
decrees, executive orders, proclamations and administrative regulations, or part or parts thereof
which are inconsistent with any of the provisions of this Code are hereby repealed or modified
accordingly." Thus, submitting to petitioners' interpretation that the Revised Charter of Manila
empowers the City Council to prohibit motels, that portion of the Charter stating such must be
considered repealed by the Code as it is at variance with the latter's provisions granting the City
Council mere regulatory powers.

It is well to point out that petitioners also cannot seek cover under the general welfare clause
authorizing the abatement of nuisances without judicial proceedings. That tenet applies to a
nuisance per se, or one which affects the immediate safety of persons and property and may be
summarily abated under the undefined law of necessity. It can not be said that motels are injurious

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to the rights of property, health or comfort of the community. It is a legitimate business. If it be a
nuisance per accidens it may be so proven in a hearing conducted for that purpose. A motel is
not per se a nuisance warranting its summary abatement without judicial intervention.119

Notably, the City Council was conferred powers to prevent and prohibit certain activities and
establishments in another section of the Code which is reproduced as follows:

Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang
panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions
and appropriate funds for the general welfare of the city and its inhabitants pursuant to
Section 16 of this Code and in the proper exercise of the corporate powers of the city as
provided for under Section 22 of this Code, and shall:

(1) Approve ordinances and pass resolutions necessary for an efficient and effective city
government, and in this connection, shall:

. . .

(v) Enact ordinances intended to prevent, suppress and impose appropriate penalties for
habitual drunkenness in public places, vagrancy, mendicancy, prostitution, establishment
and maintenance of houses of ill repute, gambling and other prohibited games of
chance, fraudulent devices and ways to obtain money or property, drug addiction,
maintenance of drug dens, drug pushing, juvenile delinquency, the printing, distribution or
exhibition of obscene or pornographic materials or publications, and such other activities
inimical to the welfare and morals of the inhabitants of the city;

. . .

If it were the intention of Congress to confer upon the City Council the power to prohibit the
establishments enumerated in Section 1 of the Ordinance, it would have so declared in uncertain
terms by adding them to the list of the matters it may prohibit under the above-quoted Section.
The Ordinance now vainly attempts to lump these establishments with houses of ill-repute and
expand the City Council's powers in the second and third clauses of Section 458 (a) 4 (vii) of the
Code in an effort to overreach its prohibitory powers. It is evident that these establishments may only
be regulated in their establishment, operation and maintenance.

It is important to distinguish the punishable activities from the establishments themselves. That these
establishments are recognized legitimate enterprises can be gleaned from another Section of the
Code. Section 131 under the Title on Local Government Taxation expressly mentioned proprietors or
operators of massage clinics, sauna, Turkish and Swedish baths, hotels, motels and lodging houses
as among the "contractors" defined in paragraph (h) thereof. The same Section also defined
"amusement" as a "pleasurable diversion and entertainment," "synonymous to relaxation, avocation,
pastime or fun;" and "amusement places" to include "theaters, cinemas, concert halls, circuses and
other places of amusement where one seeks admission to entertain oneself by seeing or viewing the
show or performances." Thus, it can be inferred that the Code considers these establishments as
legitimate enterprises and activities. It is well to recall the maxim reddendo singula singulis which
means that words in different parts of a statute must be referred to their appropriate connection,
giving to each in its place, its proper force and effect, and, if possible, rendering none of them
useless or superfluous, even if strict grammatical construction demands otherwise. Likewise, where
words under consideration appear in different sections or are widely dispersed throughout an act the
same principle applies.120

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Not only does the Ordinance contravene the Code, it likewise runs counter to the provisions of P.D.
499. As correctly argued by MTDC, the statute had already converted the residential Ermita-Malate
area into a commercial area. The decree allowed the establishment and operation of all kinds of
commercial establishments except warehouse or open storage depot, dump or yard, motor repair
shop, gasoline service station, light industry with any machinery or funeral establishment. The rule is
that for an ordinance to be valid and to have force and effect, it must not only be within the powers of
the council to enact but the same must not be in conflict with or repugnant to the general law.121As
succinctly illustrated in Solicitor General v. Metropolitan Manila Authority:122

The requirement that the enactment must not violate existing law explains itself. Local
political subdivisions are able to legislate only by virtue of a valid delegation of legislative
power from the national legislature (except only that the power to create their own sources of
revenue and to levy taxes is conferred by the Constitution itself). They are mere agents
vested with what is called the power of subordinate legislation. As delegates of the
Congress, the local government units cannot contravene but must obey at all times the will of
their principal. In the case before us, the enactment in question, which are merely local in
origin cannot prevail against the decree, which has the force and effect of a statute.123

Petitioners contend that the Ordinance enjoys the presumption of validity. While this may be the rule,
it has already been held that although the presumption is always in favor of the validity or
reasonableness of the ordinance, such presumption must nevertheless be set aside when the
invalidity or unreasonableness appears on the face of the ordinance itself or is established by proper
evidence. The exercise of police power by the local government is valid unless it contravenes the
fundamental law of the land, or an act of the legislature, or unless it is against public policy or is
unreasonable, oppressive, partial, discriminating or in derogation of a common right.124

Conclusion

All considered, the Ordinance invades fundamental personal and property rights and impairs
personal privileges. It is constitutionally infirm. The Ordinance contravenes statutes; it is
discriminatory and unreasonable in its operation; it is not sufficiently detailed and explicit that abuses
may attend the enforcement of its sanctions. And not to be forgotten, the City Council under the
Code had no power to enact the Ordinance and is therefore ultra vires, null and void.

Concededly, the challenged Ordinance was enacted with the best of motives and shares the
concern of the public for the cleansing of the Ermita-Malate area of its social sins. Police power
legislation of such character deserves the full endorsement of the judiciary we reiterate our
support for it. But inspite of its virtuous aims, the enactment of the Ordinance has no statutory or
constitutional authority to stand on. Local legislative bodies, in this case, the City Council, cannot
prohibit the operation of the enumerated establishments under Section 1 thereof or order their
transfer or conversion without infringing the constitutional guarantees of due process and equal
protection of laws not even under the guise of police power.

WHEREFORE, the Petition is hereby DENIED and the decision of the Regional Trial Court declaring
the Ordinancevoid is AFFIRMED. Costs against petitioners.

SO ORDERED.

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