FUNDAMENTAL POWERS OF THE STATE

Power of the state is to regulate liberty and property for the promotion of the general welfare.
A. PRINCIPLES
The inherent powers of a state are all powers not designated to the federal government
as specified in the tenth amendment, specifically the "policing power:" this power grants the
states the right to police their citizenry in the interest of their health, safety, welfare and morality.

Fundamental Powers of the State

1. Police Power. It is the power of the state to regulate liberty and property for the promotion of
the general welfare.

2. Power of Eminent Domain. It enables the State to forcibly acquire private property, upon
payment of just compensation, for some intended public use.

3. Power of Taxation. It enables the State to demand from the members of society their
proportionate share or contributions in the maintenance of the government.

2. Similarities of the Three Inherent Powers of the State

1. They are inherent in the State and may be exercised by it without need of express
constitutional grant.

2. They are not only necessary but indispensable. The State cannot continue or be effective
unless it is able to exercise them.

3. They are methods by which the State interferes with private rights.

4. They all presuppose an equivalent compensation for the private rights interfered with.
5. They are exercised primarily by the legislature.

Differences of the Three Inherent Powers of the State

POLICE POWER
regulates liberty and property, exercised by govt, property taken is destroyed for being
noxious and intended for noxious purposes, compensation is the altruistic feeling that he has
contributed to the general welfare)

Power of EMINENT DOMAIN

affects property rights only, may be exercised by both the govt and private entities,
property taken is intended for public use, compensation is more concrete, to wit, a full and fair
equivalent of the property expropriated or protection)

Power of TAXATION
affects property rights only, property taken is intended for public use, exercised by the
govt, compensation is more concrete, a full and fair equivalent of the public improvements for
the taxes paid)

3. Limitations of These Powers

A. The basic limitations of due process and equal protection are found in the following
provisions of our Constitution:

SECTION 1. (1) No person shall be deprived of life, liberty or property without due
process of neither law, nor any person be denied the equal protection of the laws. (Article III,
Phil. Constitution)

B. The presumption of libertarian societies is in favor of private rights and against attempts
on the part of the State to interfere with them.

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 C. The exercise of these fundamental powers is subject at all times to the limitations and
requirements of the Constitution and may in proper cases be annulled by the courts of justice.

a. City Government of QC vs Ericta G.R. No. L-34915 June 24, 1983

Facts: Respondent Himlayang Pilipino filed a petition to annul Section 9 of 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, which
stated that 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. Respondent
alleged that the same is contrary to the Constitution, the Quezon City Charter, the Local
Autonomy Act, and the Revised Administrative Code.

Petitioners argue that the taking of the respondents 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 States police power, the property is generally not taken for public use but is urgently and
summarily destroyed in order to promote the general welfare.

Issue: Whether there is, according to respondent, a taking or confiscation of property

Held:
Yes. There is, according to respondent, a taking or confiscation of property.
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.

Petitioners contention that the taking is justified by the exercise of valid police power is
untenable since the same 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

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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.

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 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 of a certain area from a private cemetery to
benefit paupers who are charges of the municipal corporation. Instead of building or maintaining
a public cemetery for this purpose, the city passes the burden to private cemeteries.

The expropriation without compensation of a portion of private cemeteries is not covered by

Section 12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers the city
council to prohibit the burial of the dead within the center of population of the city and to provide
for their burial in a proper place subject to the provisions of general law regulating burial
grounds and cemeteries. When the Local Government Code, Batas Pambansa Blg. 337
provides in Section 177 (q) that a Sangguniang panlungsod may provide for the burial of the
dead in such place and in such manner as prescribed by law or ordinance it simply authorizes
the city to provide its own city owned land or to buy or expropriate private properties to construct
public cemeteries. This has been the law and practice in the past. It continues to the present.
Expropriation, however, requires payment of just compensation.

b. Phil. Press Institute v. COMELEC May 22, 1995 g.r 119694 G.R. No.119694

Petitioner: Philippine Press Institute, Inc. Respondent: Commission on Elections

Facts:
On 2 March 1995, Comelec promulgated Resolution No. 2772 which reads in part Sec.
2. Comelec Space. The Commission shall procure free print space of not less than one half
(1/2) page in at least one newspaper of general circulation in every province or city for use as
"Comelec Space" from March 6, 1995 in the case of candidates for senator and from March 21,
1995 until May 12, 1995. In the absence of said newspaper, "Comelec Space" shall be obtained
from any magazine or periodical of said province or city.

In this Petition for Certiorari and Prohibition with prayer for the issuance of a Temporary
Restraining Order, PPI asks us to declare Comelec Resolution No. 2772 unconstitutional and
void on the ground that it violates the prohibition imposed by the Constitution upon the
government, and any of its agencies, against the taking of private property for public use without
just compensation.

Issue: Whether Section 2 of Resolution No. 2772 constitute a valid exercise of the power of
eminent domain

Ruling: The taking of private property for public use is, of course, authorized by the
Constitution, but not without payment of "just compensation" (Article III, Section 9). And
apparently the necessity of paying compensation for "Comelec space" is precisely what is
sought to be avoided by respondent Commission, whether Section 2 of Resolution No. 2772 is
read as petitioner PPI reads it, as an assertion of authority to require newspaper publishers to
"donate" free print space for Comelec purposes, or as an exhortation, or perhaps an appeal, to
publishers to donate free print space, as Section 1 of Resolution No. 2772-A attempts to
suggest. There is nothing at all to prevent newspaper and magazine publishers from voluntarily
giving free print space to Comelec for the purposes contemplated in Resolution No. 2772.
Section 2 of Resolution No. 2772 does not, however, provide a constitutional basis for
compelling publishers, against their will, in the kind of factual context here present, to provide

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free print space for Comelec purposes. Section 2 does not constitute a valid exercise of the
power of eminent domain.

Facts: Respondent Comelec promulgated Resolution No. 2772 directing newspapers to provide
free Comelec space of not less than one-half page for the common use of political parties and
candidates. The Comelec space shall be allocated by the Commission, free of charge, among
all candidates to enable them to make known their qualifications, their stand on public Issue and
their platforms of government. The Comelec space shall also be used by the Commission for
dissemination of vital election information.

Petitioner Philippine Press Institute, Inc. (PPI), a non-profit organization of newspaper and
magazine publishers, asks the Supreme Court to declare Comelec Resolution No. 2772
unconstitutional and void on the ground that it violates the prohibition imposed by the
Constitution upon the government against the taking of private property for public use without
just compensation. On behalf of the respondent Comelec, the Solicitor General claimed that the
Resolution is a permissible exercise of the power of supervision (police power) of the Comelec
over the information operations of print media enterprises during the election period to
safeguard and ensure a fair, impartial and credible election.

Issue:
Whether or not Comelec Resolution No. 2772 is unconstitutional.

Held: The Supreme Court declared the Resolution as unconstitutional. It held that to compel
print media companies to donate Comelec space amounts to taking of private personal
property without payment of the just compensation required in expropriation cases. Moreover,
the element of necessity for the taking has not been established by respondent Comelec,
considering that the newspapers were not unwilling to sell advertising space. The taking of
private property for public use is authorized by the constitution, but not without payment of just
compensation. Also Resolution No. 2772 does not constitute a valid exercise of the police
power of the state. In the case at bench, there is no showing of existence of a national
emergency to take private property of newspaper or magazine publishers.

B. POLICE POWER

Police power - is the power vested in the legislature by the Constitution to make, ordain,
establish all manner of wholesome and reasonable laws for the good and welfare of the State
and its people.
- Is the power to enact and enforce the law for regulation of public order and welfare.

The basic purposes of police power are:

a. To promote the general welfare, comfort and convenience of the people.

b. To promote and preserve public health.

2. Scope/Characteristics
Police power
a. Is considered the most pervasive, the least limitable and the most
demanding power.
b. Is dynamic, not static and must move with the moving society it is supposed to
regulate.
c. May sometimes use taxing power as an implement for the attainment of a
legitimate police objective.

a. LUTZ v. ARANETA GR No. L-7859, December 22, 1955 98 PHIL 148

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FACTS:
Plaintiff Walter Lutz, in his capacity as judicial administrator of the intestate estate of
Antonio Ledesma, sought to recover from the CIR the sum of P14,666.40 paid by the estate as
taxes, under section 3 of the CA 567 or the Sugar Adjustment Act thereby assailing its
constitutionality, for it provided for an increase of the existing tax on the manufacture of sugar,
alleging that such enactment is not being levied for a public purpose but solely and exclusively
for the aid and support of the sugar industry thus making it void and unconstitutional. The sugar
industry situation at the time of the enactment was in an imminent threat of loss and needed to
be stabilized by imposition of emergency measures.

ISSUE:
Is CA 567 constitutional, despite its being allegedly violative of the equal protection
clause, the purpose of which is not for the benefit of the general public but for the rehabilitation
only of the sugar industry?

HELD:
Yes. The protection and promotion of the sugar industry is a matter of public concern, it
follows that the Legislature may determine within reasonable bounds what is necessary for its
protection and expedient for its promotion. Here, the legislative discretion must be allowed to
fully play, subject only to the test of reasonableness; and it is not contended that the means
provided in the law bear no relation to the objective pursued or are oppressive in character. If
objective and methods are alike constitutionally valid, no reason is seen why the state may not
levy taxes to raise funds for their prosecution and attainment. Taxation may be made the
implement of the state's police power.

This case was initiated in the Court of First Instance of Negros Occidental to test the legality of
the taxes imposed by Commonwealth Act No. 567, otherwise known as the Sugar Adjustment
Act. Promulgated in 1940, the law in question opens (section 1) with a declaration of emergency,
due to the threat to our industry by the imminent imposition of export taxes upon sugar as
provided in the Tydings-McDuffie Act, and the "eventual loss of its preferential position in the
United States market"; wherefore, the national policy was expressed "to obtain a readjustment of
the benefits derived from the sugar industry by the component elements thereof" and "to stabilize
the sugar industry so as to prepare it for the eventuality of the loss of its preferential position in
the United States market and the imposition of the export taxes."

In section 2, Commonwealth Act 567 provides for an increase of the existing tax on the
manufacture of sugar, on a graduated basis, on each picul of sugar manufactured; while section 3,
levies on owners or persons in control of lands devoted to the cultivation of sugar cane and
ceded to others for a consideration, oh lease or otherwise "a tax equivalent to the difference
between the money value 6f the rental or consideration collected and the amount representing
'l2 per centum of the assessed value of such land."
According to section 6 of the law
Sec. 6. All collections made under this Act shall accrue to a special fund in the Philippine Treasury,
to be known as the 'Sugar Adjustment and Stabilization Fund,' and shall be paid out only for any
or all of the following purposes or to attain any or all of the following objectives, as may be
provided by law.
First, to place the sugar industry in a position to maintain itself despite the gradual loss of the
preferential position of the Philippine sugar in the United States market, and ultimately to insure
its continued existence notwithstanding the loss of that market and the consequent necessity of
meeting competition in the free markets of the world;
Second, to readjust the benefits derived from the sugar industry by all of the component
elements thereof the mill, the landowner, the planter of the sugar cane, and the laborers in the
factory, and in the field so that all might continue profitably to engage therein;"
Third, to limit the production of sugar to areas more economically suited to the production
thereof; and

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Fourth, to afford labor employed in the industry a living wage and to improve their living and
working conditions: Provided, that the President of the Philippines may, until the adjournment of
the next regular session of the National Assembly, make the necessary disbursements from the
fund herein created

1. for the establishment and operation of sugar experiment station, or stations and the
undertaking of researchers

a. to increase the recoveries of the centrifugal sugar factories with the view of reducing
manufacturing costs
b. to produce and propagate higher yielding varieties of sugar cane more adaptable to different
district conditions in the Philippines
c. to lower the costs of raising sugar Cane.
d. to improve the buying quality of denatured alcohol from molasses for motor fuel.
e. to .determine the possibility of utilizing the other by-products of the industry.
f. to determine what crop or crops are suitable for rotation and for the utilization of excess cane
lands, and
g. on other problems the solution of which would help rehabilitate and stabilize the industry.

2. for the improvement of living and working conditions in sugar mills and sugar plantations,
authorizing him to organize the necessary agency or agencies to take charge of the expenditure
and allocation of said funds to carry out the purpose hereinbefore enumerated, and, likewise,
authorizing the disbursement from the fund herein created of the necessary amount; or amounts
needed for salaries, wages, travelling expenses, equipment, and other sundry expenses of said
agency or agencies."

Plaintiff, Walter Lutz, in his capacity as Judicial Administrator of the Intestate Estate of Antonio
Jayme Ledesma, seeks to recover from the Collector of Internal Revenue the sum of P14,666.40
paid by the estate as taxes, under section 3 of the Act, for the crop years 1948-1949 and 1949-
1950; alleging that such tax is unconstitutional and void, being levied for the aid and support of
the sugar industry exclusively, which in plaintiff's opinion is not a public purpose for which a tax
may be constitutionally levied. The action having been dismissed by the Court of First Instance,
the plaintiffs appealed the ease directly to this Court (Judiciary Act, section 17),
The basic defect in the plaintiff's position is his assumption that the tax provided for in
Commonwealth Act No. 567 is a pure exercise of the taxing power. Analysis of the Act; and
particularly of section 6 (heretofore quoted in full), will show that the tax is levied with a
regulatory purpose, to provide means for the rehabilitation aid stabilization of the threatened
sugar industry. In other words, the act is primarily an exercise of the police power.
This Court can take judicial notice of the fact that sugar production is one of the great industries
of our nation, Sugar occupying a leading position among its export products; that it gives
employment to thousands of laborers in fields and factories; that it is a great source of the state's
wealth, is one of the important sources of foreign exchange needed by our government, and is
thus pivotal in the plans of a regime committed to a policy of currency stability. Its promotion,
protection and advancement, therefore redounds greatly to the general welfare. Hence it was
competent for the legislature to find that the general welfare demanded that the sugar industry
should be stabilized in turn; and in the wide field of its police power, the law-making body could
provide that the distribution of benefits there from be readjusted among its components to
enable it to resist the added strain of the increase in taxes that it had to sustain (Sligh vs.
Kirkwood, 237 U. S. 52, 59 L. Ed. 835; Johnson vs. State ex rel. Marey, 99 Fla. 1311, 128 So.
853.; Maxcy Inc. vs. Mayo, 103 Fla. 552, 139 So. 121).
As stated in Johnson vs. State ex rel. Marey, with reference to the citrus industry in Florida
"The protection of a large industry constituting one of the great sources of the state's wealth and
therefore directly or indirectly affecting the welfare of so great a portion of the population of the
State is affected to such an extent by public interests as to be within the police power of the
sovereign." (128 So. 857).

Once it is conceded, as it must, that the protection and promotion of the sugar industry is a
matter of public concern, it follows that the Legislature may determine within reasonable bounds

6
 what is necessary for its protection and expedient for its promotion'. Here, the legislative
discretion must be allowed full play, subject only to the test of reasonableness; and it is not
contended that the means provided in section 6 of the law (above quoted) bear no relation to
the objective pursued or are oppressive in character. If objective and methods are alike
constitutionally valid, no reason is seen why the state may not levy taxes to raise funds for their
prosecution and attainment. Taxation may be made the implement of the state's police power
(Great Atl. & Pac. Tea Co. vs. Grosjean, 301 U. S. 412, 81 L. Ed. 1193; U. S. vs. Butler, 297 U. S. 1,
80 L. Ed. 477; M'Culloch vs. Maryland, 4 Wheat. 316, 4 L. Ed. 579).
That the tax to be levied should burden the sugar producers themselves can hardly be a ground
of complaint; indeed, it appears rational that the tax be obtained precisely from those who are
to be benefited from the expenditure of the funds derived from it. At any rate, it is inherent in
the power to tax that a state be free to select the subjects of taxation, and it has been repeatedly
held that "inequalities which result from a singling out of one particular class for taxation, or
exemption infringe no constitutional limitation" (Carmichael vs. Southern Coal & Coke Co., 301
U. S. 495, 81 L. Ed. 1245, citing numerous authorities, at p. 1251).
From the point of view we have taken it appears of no moment that the funds raised under the
Sugar Stabilization Act, now in question, .should be exclusively spent in aid of the sugar industry,
since it is that very enterprise that is being protected. It may be that other industries are also in
need of similar protection; but the legislature is not required by the Constitution to adhere to a
policy of "all or none." Aa ruled in Minnesota ex rel. Pearson vs. Probate Court, 309 U. S. 270,
84 L. Ed. 744, "if the law presumably hits the evil where it is most felt, it is not to be overthrown
because there are other instances to which it might have been applied;" and that "the legislative
authority, exerted within its proper field, need not embrace all the evils within its reach" (N. L. R.
B. vs. Jones & Laughlin Steel Corp. 301 U. S. 1, 81 L. Ed. 893).
Even from the standpoint that the Act is a pure tax measure, it cannot be said that the devotion
of tax money to experimental stations to seek increase of efficiency in sugar production,
utilization of by-products and solution of allied problems, as well as to the improvement of living
and working conditions in sugar mills or plantations, without any part of such money being
channeled directly to private persons, constitutes expenditure of tax money for private purposes,
(compare Everson vs. Board of Education, 91 L. Ed. 472, 168 ALR 1392, 1400).
The decision appealed from is affirmed, with coats against appellant. So ordered.

2. Tio v Videogram G.R. No. L-75697 June 18, 1987 Melencio-Herrera, J.:

Facts:

1. Petitioner on his own behalf and purportedly on behalf of other videogram operators adversely
affected assailed the constitutionality of PD 1987 entitled "An Act Creating the Videogram
Regulatory Board" with broad powers to regulate and supervise the videogram industry. The
Decree promulgated on October 5, 1985, took effect on April 10, 1986, fifteen (15) days after
completion of its publication in the Official Gazette.

2. PD 1994 issued a month thereafter reinforced PD 1987 and in effect amended the National
Internal Revenue Code (NIRC). Petitioner contended among others that the tax provision of the
decree is a rider.

ISSUE: Whether or not the PD 1987 is unconstitutional due to the tax provision included

RULING: PD 1987 is constitutional.

1. The title of the decree, which calls for the creation of the VRB is comprehensive enough to include
the purposes expressed in its Preamble and reasonably covered in all its provisions. It is
unnecessary to express all those objectives in the title or that the latter be an index to the body of
the decree.

2. The foregoing provision is allied and germane to, and is reasonably necessary for the
accomplishment of the general object of the decree, which is the regulation of the video industry

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 through the VRB as expressed in its title. The tax provision is neither inconsistent with nor foreign
to the general subject and title. As a tool for regulation it is simply one of the regulatory and
control mechanisms scattered throughout the decree.

3. The express purpose of PD 1987 to include taxation of the video industry in order to regulate and
rationalize the heretofore uncontrolled distribution of videos is evident from Preambles 2 and 5.
Those preambles explain the motives of the lawmaker in presenting the measure.

OR

FACTS:
The petition assails the constitutionality of PD No 1987 entitled An act creating the Video gram
Regulatory Board based on several grounds, including the following: (1) Section 10 of PD No
1987 which imposes a tax of 30% on the gross receipts payable to the local government is a rider
and the same is not germane to the subject thereof; (2) the tax imposed is harsh, confiscatory,
oppressive and/or in unlawful restraint of trade in violation of the due process of the
Constitution; and (3) undue delegation of power and authority.

ISSUE:
Is PD 1987 constitutional?

RULING: Yes.

1. The contention that the tax provision of the Decree is a rider is bereft and devoid of merit
because the title of the Decree, which is the creation of the Video gram Regulatory Board (VRB)
aimed at regulating and controlling the video industry, is comprehensive enough to include the
purposes expressed in its preamble and reasonably covers all its provisions. Moreover, it is
unnecessary to express all those objectives in the title or that the latter be an index to the body of
the decree.

2. It is axiomatic that a tax does not cease to be valid merely because it regulates, discourages, or
even definitely deters the activities taxed. The legislature acts upon its constituents in imposing a
tax; thus, in general, a sufficient security against erroneous and oppressive taxation is afforded the
taxpayer. Also, the tax imposed by the Decree is a revenue measure. The tax of 30% is exacted
for a public purpose i.e. to answer the need for regulating the video industry, particularly
because of the rampant film piracy, the flagrant violation of intellectual property rights and the
proliferation of pornographic video tapes.

3. The grant in Section 11 of the Decree of authority to the VRB to solicit the direct assistance of
other agencies & units of the government and deputize, for a fixed and limited period, the heads
or personnel of such agencies and units to perform enforcement functions for the Board is NOT
a delegation of the power to legislate but merely a conferment of authority or discretion as to its
execution, enforcement and implementation.

3. Osmea v Orbos GR No 99886, March 31, 1993

FACTS:
President Marcos created a special account in the General Fund designated as the Oil Price
Stabilization Fund (OPSF). The OPSF was designated to reimburse oil companies for cost increases
in crude oil. Subsequently, EO 137 expanded the grounds for reimbursement to oil companies for
cost under recovery. Now, the petition avers that the creation of the trust fund violates the

8
Constitution that if a special tax is collected for a specific purpose, the revenue generated as a
special fund to be used only for the purpose indicated.

ISSUE:
Is the OPSF constitutional?

RULING:
Yes. The tax collected is not in pure exercise of the taxing power. It is levied with a regulatory
purpose, to provide a means for the stabilization of the petroleum products industry. The levy is
primarily in the exercise of the police power of the State.

OR

To avoid the taint of unlawful delegation of the power to tax, there must be a standard which
implies that the legislature determines matter of principle and lays down fundamental policy."

FACTS: Senator John Osmea assails the constitutionality of paragraph 1c of PD 1956, as

amended by EO 137, empowering the Energy Regulatory Board (ERB) to approve the increase of
fuel prices or impose additional amounts on petroleum products which proceeds shall accrue to
the Oil Price Stabilization Fund (OPSF) established for the reimbursement to ailing oil companies
in the event of sudden price increases. The petitioner avers that the collection on oil products
establishments is an undue and invalid delegation of legislative power to tax. Further, the
petitioner points out that since a 'special fund' consists of monies collected through the taxing
power of a State, such amounts belong to the State, although the use thereof is limited to the
special purpose/objective for which it was created. It thus appears that the challenge posed by
the petitioner is premised primarily on the view that the powers granted to the ERB under P.D.
1956, as amended, partake of the nature of the taxation power of the State.

ISSUE: Is there an undue delegation of the legislative power of taxation?

HELD: None. It seems clear that while the funds collected may be referred to as taxes, they are
exacted in the exercise of the police power of the State. Moreover, that the OPSF as a special
fund is plain from the special treatment given it by E.O. 137. It is segregated from the general
fund; and while it is placed in what the law refers to as a "trust liability account," the fund
nonetheless remains subject to the scrutiny and review of the COA. The Court is satisfied that
these measures comply with the constitutional description of a "special fund." With regard to
the alleged undue delegation of legislative power, the Court finds that the provision conferring
the authority upon the ERB to impose additional amounts on petroleum products provides a
sufficient standard by which the authority must be exercised. In addition to the general policy of
the law to protect the local consumer by stabilizing and subsidizing domestic pump rates, P.D.
1956 expressly authorizes the ERB to impose additional amounts to augment the resources of the
Fund.

4. ASSOCIATION OF SMALL LANDOWNERS V. SECRETARY OF DAR, G.R. No. 78742 (175

SCRA 343), July 14, 1989

FACTS:

These are consolidated cases involving common legal questions including serious challenges to the
constitutionality of R.A. No. 6657 also known as the "Comprehensive Agrarian Reform Law of
1988"

In G.R. No. 79777, the petitioners are questioning the P.D No. 27 and E.O Nos. 228 and 229 on
the grounds inter alia of separation of powers, due process, equal protection and the
constitutional limitation that no private property shall be taken for public use without just
compensation.

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In G.R. No. 79310, the petitioners in this case claim that the power to provide for a
Comprehensive Agrarian Reform Program as decreed by the Constitution belongs to the Congress
and not to the President, they also allege that Proclamation No. 131 and E.O No. 229 should be
annulled for violation of the constitutional provisions on just compensation, due process and
equal protection. They contended that the taking must be simultaneous with payment of just
compensation which such payment is not contemplated in Section 5 of the E.O No. 229.

In G.R. No. 79744, the petitioner argues that E.O Nos. 228 and 229 were invalidly issued by the
President and that the said executive orders violate the constitutional provision that no private
property shall be taken without due process or just compensation which was denied to the
petitioners.

In G.R. No 78742 the petitioners claim that they cannot eject their tenants and so are unable to
enjoy their right of retention because the Department of Agrarian Reform has so far
not issued the implementing rules of the decree. They therefore ask the Honorable Court for a
writ of mandamus to compel the respondents to issue the said rules.

ISSUE:

Whether or not the laws being challenged is a valid exercise of Police power or Power of
Eminent Domain.

RULING:

Police Power through the Power of Eminent Domain, though there are traditional distinction
between the police power and the power of eminent domain, property condemned under police
power is noxious or intended for noxious purpose, the compensation for the taking of such
property is not subject to compensation, unlike the taking of the property in Eminent Domain or
the power of expropriation which requires the payment of just compensation to the owner of
the property expropriated.
OR

Facts: Several petitions are the root of the case:

a. A petition alleging the constitutionality of PD No. 27, EO 228 and 229 and RA 6657. Subjects
of the petition are a 9-hectare and 5 hectare Riceland worked by four tenants. Tenants were
declared full owners by EO 228 as qualified farmers under PD 27. The petitioners now contend
that President Aquino usurped the legislatures power.

b. A petition by landowners and sugar planters in Victorias Mill Negros Occidental against
Proclamation 131 and EO 229. Proclamation 131 is the creation of Agrarian Reform Fund with
initial fund of P50Billion.

c. A petition by owners of land which was placed by the DAR under the coverage of Operation
Land Transfer.

d. A petition invoking the right of retention under PD 27 to owners of rice and corn lands not
exceeding seven hectares.

Issue: Whether or Not the aforementioned EOs, PD, and RA were constitutional.

Held: The promulgation of PD 27 by President Marcos was valid in exercise of Police power
and eminent domain.

The power of President Aquino to promulgate Proc. 131 and EO 228 and 229 was authorized
under Sec. 6 of the Transitory Provisions of the 1987 Constitution. Therefore it is a valid exercise
of Police Power and Eminent Domain.

RA 6657 is likewise valid. The carrying out of the regulation under CARP becomes necessary to

10
deprive owners of whatever lands they may own in excess of the maximum area allowed, there
is definitely a taking under the power of eminent domain for which payment of just
compensation is imperative. The taking contemplated is not a mere limitation of the use of the
land. What is required is the surrender of the title and the physical possession of said excess and
all beneficial rights accruing to the owner in favour of the farmer.

A statute may be sustained under the police power only if there is concurrence of the lawful
subject and the method.

Subject and purpose of the Agrarian Reform Law is valid, however what is to be determined is
the method employed to achieve it.

5. Ortigas & Co. v. CA (G.R. No. 126102. December 4, 2000)

FACTS:
Ortigas & Co. sold to Emilia Hermoso a parcel of land located in Green hills Subdivision, San
Juan with several restrictions in the contract of sale that said lot be used exclusively for residential
purposes, among others, until December 31, 2025. Later, a zoning ordinance was issued by MMC
(now MMDA) reclassifying the area as commercial. Private respondent (Ismael Mathay III) leased
the subject lot from Hermoso and built a single storey building for Green hills Autohaus, Inc., a
car sales company. Ortigas & Co. filed a petition a complaint which sought the demolition of the
constructed car sales company to against Hermoso as it violated the terms and conditions of the
Deed of Sale. Trial court ruled in favor of Ortigas & Co. Mathay raised the issue to the Court of
Appeals from which he sought favorable ruling. Hence, the instant petition.

ISSUE:
Whether or not the zoning ordinance may impair contracts entered prior to its effectivity.

HELD:
Yes. The zoning ordinance, as a valid exercise of police power may be given effect over any
standing contract. Hence, petition is denied.
RATIO:
A law enacted in the exercise of police power to regulate or govern certain activities or
transactions could be given retroactive effect and may reasonably impair vested rights or
contracts. Police power legislation is applicable not only to future contracts, but equally to those
already in existence. Non-impairment of contracts or vested rights clauses will have to yield to
the superior and legitimate exercise by the State of police power to promote the health, morals,
peace, education, good order, safety, and general welfare of the people. Moreover, statutes in
exercise of valid police power must be read into every contract. Noteworthy, in Sangalang vs.
Intermediate Appellate Court, the Supreme Court already upheld subject ordinance as a
legitimate police power measure.

6. PNB vs. Office of the President, Housing and Land Use Regulatory Board, Maglaya, et al.GR No.
1 !"#$. %anuary 1$, 1&&'.(acts) Maglaya, et al. *ere +uyers on instal ent of su+division
lots fro Mari-ina illage, /nc.0es ite the land urchase agree ents it e2ecuted over

11
said lots, M / ortgaged the lots infavor of PNB. Una*are of this ortgage, Maglaya, et
al. duly co lied *ith their o+ligations aslot +uyers and constructed their houses on the
lots in 3uestion. 4u+se3uently, M / defaultedand PNB foreclosed on the ortgage
and, as the highest +idder, +eca e o*ner of the lots.HLURB rules that PNB ay
collect fro Maglaya et al. only the 5re aining a orti6ations, inaccordance *ith the
land urchase agree ents they had reviously entered into *ith7 M /*ithout
re8udice to see-ing relief against M /. OP, invo-ing P0 &"9, or the 4u+division
and:ondo iniu Buyers Protective 0ecree, concurred *ith HLURB. PNB contends that
the OPerred in a lying P0 &"9 +ecause said la* *as enacted only on %uly 1#, 1&9' *hile the
su+8ect ortgage *as e2ecuted on 0ece +er 1$, 1&9".

/ssue)
May a buyer of a property at a foreclosure
s a l e d i s p o s s e s s p r i o r p u r c h a s e r s o n installment of individual lots therein,
or compel them to pay again for the lots which they previously
bought from the defaulting mortgagor-subdivision developer, on the theory that PD957
!he "ubdivision and #ondominium $uyers Protective Decree% is not
applicable to themortgage contract in &uestion, the same having been e'ecuted prior
to the enactment of PD957()

*+
May PD 957 be given retroactive effect in the case at bar?
Held) ;<4. Nor ally, ursuant to =rt. ! of the :ivil :ode, la*s shall have no retroactive
effectu n l e s s t h e c o n t r a r y i s r o v i d e d . H o * e v e r , i t i s o + v i o u s a n d i n d u
+ i t a + l e t h a t P 0 & " 9 * a s intended to cover even those real estate ortgages, li-e
the one at issue in this case, e2ecuted rior to its rior enact ents and such intent >as
succinctly ca tured in the rea +le? ust +egiven effect if the lauda+le ur ose of
rotecting innocent urchasers is to +e achieved. @hela*As retroactive a lication
ay +e inferred fro the intent of the la* to rotect innocent lot+uyers fro sche ing
su+division develo ers to rovide a rotective antle over
hel lessciti6ens *ho ay fall rey to the ra66 ata66 of *hat P0 &"9 ter ed
5unscru ulous su+divisionand condo iniu sellers7.

7. Case Brief: St. Lukes Medical Center Employees Foundation AFW v NLRC

G.R. No. 162053 March 7, 2007

Facts:
Congress passed and enacted Republic Act No. 7431 known as the Radiologic
Technology Act of 1992. Said law requires that no person shall practice or offer to
practice as a radiology and/or x-ray technologist in the Philippines without having
obtained the proper certificate of registration from the Board of Radiologic Technology.
Petitioner Maribel Santos was hired as X-Ray Technician in the Radiology department
of private respondent St. Lukes Medical Center, Inc. (SLMC).

Pursuant to RA 7431 the assistant Executive Director-Ancillary Services and HR

Director of private respondent SLMC issued a final notice to all practitioners of
Radiologic Technology to comply with the requirement otherwise, the unlicensed
employee will be transferred to an area which does not require a license to practice if a
slot is available.

The Director of the Institute of Radiology issued another memorandum to petitioner

Maribel S. Santos advising her that only a license can assure her of her continued
employment at the Institute of Radiology of the private respondent SLMC and that the
latter is giving her the last chance to take and pass the forthcoming board examination
scheduled in June 1998; otherwise, private respondent SLMC shall be constrained to
take action which may include her separation from employment. On November 23,

12
 1998, the Director of the Institute of Radiology issued a notice to petitioner Maribel S.
Santos informing the latter that the management of private respondent SLMC has
approved her retirement in lieu of separation pay. SLMC issued a Notice of Separation
from the Company to petitioner Maribel S. Santos effective December 30, 1998 in view
of the latters refusal to accept private respondent SLMCs offer for early retirement.

Petitioner Maribel Santos files a complaint against private respondent illegal dismissal
and non-payment of salaries, allowances and other monetary benefits. She
further contends that her failure to pass the board licensure exam for exam for X-ray
technicians did not constitute just cause for termination as it violated her
constitutional right to security of tenure. The appellate court finds this contention
untenable, hence this petition for certiorari.

Issue:
Whether or not the petitioner is legally dismissed pursuant to R.A. 7431
exercising police power of the State?

Held:
Yes, the petitioner dismissal is valid due to her inability to secure a certificate
of registration from Board of Radiologic Technology.

While the right of workers to security of tenure is guaranteed by the Constitution,

its exercise may be reasonably regulated pursuant to the police power of the
State to safeguard health, morals, peace, education, order, safety, and the general
welfare of the people. Consequently, persons who desire to engage in the learned
professions requiring scientific or technical knowledge may be required to take an
examination as a prerequisite to engaging in their chosen careers. The state is justified
in prescribing the specific requirements for x-ray technicians and/or any other
professions connected with the health and safety of its citizens. Respondent being
engaged in the hospital and health care business, is a proper subject of the cited law;
thus, having in mind the legal requirements of these laws, the latter cannot close its
eyes and complainant private interest override public interest. The law is clear that the
Certificate of Registration cannot be substituted by any other requirement to allow a
person to practice as a Radiologic Technologist and/or X-ray Technologist (Technician).

8. Chavez vs. Romulo G.R. No. 157036, June 9, 2004

o A mere license is always revocable

FACTS:
This case is about the ban on the carrying of firearms outside of residence in order to
deter the rising crime rates. Petitioner questions the ban as a violation of his right to
property.

ISSUE:

o Whether or not the revocation of permit to carry firearms is unconstitutional

o Whether or not the right to carry firearms is a vested property right

HELD:

Petitioner cannot find solace to the above-quoted Constitutional provision.

In evaluating a due process claim, the first and foremost consideration must be whether
life, liberty or property interest exists. The bulk of jurisprudence is that a license

13
authorizing a person to enjoy a certain privilege is neither a property nor property right.
In Tan vs. The Director of Forestry, we ruled that a license is merely a permit or
privilege to do what otherwise would be unlawful, and is not a contract between the
authority granting it and the person to whom it is granted; neither is it property or a
property right, nor does it create a vested right. In a more emphatic pronouncement, we
held in Oposa vs. Factoran, Jr. that:

Needless to say, all licenses may thus be revoked or rescinded by executive action. It
is not a contract, property or a property right protected by the due process clause of the
Constitution.

In our jurisdiction, the PNP Chief is granted broad discretion in the issuance of
PTCFOR. This is evident from the tenor of the Implementing Rules and Regulations of
P.D. No. 1866 which state that the Chief of Constabulary may, in meritorious cases as
determined by him and under such conditions as he may impose, authorize lawful
holders of firearms to carry them outside of residence. Following the American
doctrine, it is indeed logical to say that a PTCFOR does not constitute a property right
protected under our Constitution.

Consequently, a PTCFOR, just like ordinary licenses in other regulated fields, may be
revoked any time. It does not confer an absolute right, but only a personal privilege to
be exercised under existing restrictions, and such as may thereafter be reasonably
imposed. A licensee takes his license subject to such conditions as the Legislature sees
fit to impose, and one of the statutory conditions of this license is that it might be
revoked by the selectmen at their pleasure. Such a license is not a contract, and a
revocation of it does not deprive the defendant of any property, immunity, or privilege
within the meaning of these words in the Declaration of Rights. The US Supreme Court,
in Doyle vs. Continental Ins. Co, held: The correlative power to revoke or recall a
permission is a necessary consequence of the main power. A mere license by the State
is always revocable.

Facts: GMA delivered a speech to PNP directing PNP Chief Hermogenes Ebdane to
suspend the issuance pf Permit to Carry Firearms Outside of Residence PTCFOR).
Ebdane issued guidelines banning carrying firearms outside of residence. Petitioner,
Francisco Chaves requested DILG to reconsider the implementation. The request was
denied. Hence the petition for prohibition and injunction against Executive Secretary
Alberto Romulo and PNP Chief Ebdane.
Issue: Whether or not revocation of PTCFOR is a violation of right to property? Whether
or not the banning of carrying firearms outside the residence is a valid exercise of police
power?
Decision: Petition dismissed. Just like ordinary licenses in other regulated fields,
PTCFOR may be revoked any time. It does not confer an absolute right, but only a
personal privilege to be exercised under existing restrictions. A licensee takes his
license subject to such conditions as the Legislature sees fit to impose, and one of the
statutory conditions of this license is that it might be revoked. Revocation of it does not
deprive the defendant of any property, immunity, or privilege.
The basis for its issuance was the need for peace and order in the society. The assailed
Guidelines do not entirely prohibit possession of firearms. What they proscribe is merely

14
the carrying of firearms outside of residence. However, those who wish to carry their
firearms outside of their residences may re-apply for a new PTCFOR. This is a
reasonable regulation. If the carrying of firearms is regulated, necessarily, crime
incidents will be curtailed.

9. SOUTHEAST MINDANAO GOLDMINING CORP. vs. BALITE PORTALMINING

COOP., et al.[G.R. No. 135190, April 3, 2002

FACTS:

On Ma rch 10 , 19 88, Marcop per Min in g Co rpo rat ion (Ma rco ppe r)
wa s gran ted E xplorat io n P erm it No. 133 (EP No. 133 ) o ve r 4,49 1
he ct ares of land, wh ich in cluded th e Diwalwal area. On June 27, 2991,
Congress enacted Republic Act No. 7076, or the People's Small-
Scale Mining Act. The law established a People's Small
S c a l e M i n i n g P r o g r a m t o b e implemented by the Secretary of the DENR and
created the Provincial Mining Regulatory Board (PMRB) under the DENR Secretary's
direct supervision and control.

Sub se qu en tly, a p et it ion f or t he can ce llat ion of EP No . 13 3 an d

t he a dmissio n of a Mineral Production Sharing Arrangement (MPSA) proposal over
Diwalwal was filed before the DENR Regional Executive Director, docketed as RED
Mines Case.

On February 16, 1994, while the RED Mines case was pending, Marcopper
assigned its EP No. 133 to petitioner Southeast Mindanao Gold Mining
Corporation (SEM), which in turn applied for an integrated MPSA over the land
covered by the permit. In due time, the Mines and Geosciences Bureau Regional
Office No. XI in Davao City (MGB-XI) accepted and registered the integrated MPSA
application of petitioner and thereafter, several MAC cases were filed.

On March 3, 1995, Republic Act No. 7942, the Philippine Mining Act,
was enacted. Pursuant to this statute, the MAC cases were referred to a Regional
Panel of Arbitrators (RPA) tasked to resolve disputes involving conflicting mining
rights. The RPA subsequently took cognizance of the RED Mines case, which was
consolidated with the MAC cases.

On June 24, 1997, the DENR Secretary issued Memorandum Order

No. 97-03
which p ro vid ed that the DENR sh all stud y tho rou gh ly and e xh aust ive ly t h
e opt io n of d iret sta te utilization of the mineral resources in the Diwalwal Gold-
Rush Area.

On July 16, 1997, petitioner filed a special civil action for certiorari,
prohibition and mandamus before the Court of Appeals against PMRB-Davao, the
DENR Secretary and Balite Communal Portal Mining Cooperative (BCPMC). It prayed
for the nullification of the above-quoted Memorandum Order No. 97-03 on the ground
that the "direct state utilization" espoused therein would effectively impair its vested
rights under EP No. 133; and that the memorandum order arbitrarily imposed the
unwarranted condition that certain studies be conducted before mining and
environmental laws are enforced by the DENR.

ISSUE:

Whether or not the "direct state utilization scheme" espoused in MO

97-03 divested petitioner of its vested right to the gold rush area under its EP No. 133.

15
HELD:

No. MO 9 7 -03 d id n ot con clu sive ly adop t "d ire ct sta te u tilizat ion "
a s a po licy in resolving the Diwalwal dispute. The terms of the memorandum
clearly indicate that what was directed hereunder was merely a study of this option
and nothing else. Contrary to petitioner's contention, it did not grant any
management/operating or profit-sharing agreement to small-scale miners or to any
party, for that matter, but simply instructed the DENR officials concerned
to undertake studies to determine its feasibility. As to the alleged "vested rights"
claimed by petitioner, it is well to note that the same is invariably based on EP No. 133,
whose validity is still being disputed in the Consolidated Mines cases. A reading of the
appealed MAB decision reveals that the continued efficacy of EP No. 133 is one of the
issues raised in said cases, with respondents therein asserting that
Marcopper cannot legally assign the permit which purportedly had expired. In other
words, whether or not petitioner actually has a vested right over Diwalwal under
EP No. 133 is still an indefinite and unsettled matter. And until a positive
pronouncement is made by the appellate court in the Consolidated Mines cases,
EP No. 133 cannot be deemed as a source of any conclusive rights that can be
impaired by the issuance of MO 97-03. It must likewise be pointed out that under no
circumstances may petitioner's rights under EP No. 133 be regarded as total and
absolute. As correctly held by the Court of Appeals EP No.133 merely evidences a
privilege granted by the State, which may be amended, modified or rescinded
when the national interest so requires. This is necessarily so since the
exploration, development and utilization of the country's natural mineral resources are
matters impressed with great public interest. Like timber permits, mining exploration
permits do not vest in the grantee any permanent or irrevocable right within the purview
of the non-impairment of contract and due process clauses of the Constitution,
since the State, under its all-encompassing police power, may alter, modify or
amend the same, in accordance with the demands of the general
welfare. Ad dit iona lly, th ere can be n o va lid oppo sit ion raised
a gainst a mere stud y of a n alternative which the State, through the DENR, is
authorized to undertake in the first place. Worth noting is Article XII, Section 2, of the
1987 Constitution and Section 4, Chapter II of the Philippine Mining Act of 1995. Thus,
the State may pursue the constitutional policy of full control and supervision of the
exploration, development and utilization of the country's natural mineral
resources, by either directly undertaking the same or by entering into agreements
with qualified entities. The DENR Secretary acted within his authority when he
ordered a study of the first option, which may be undertaken consistently in
accordance with the constitutional policy enunciated above. Obviously, the
State may not be precluded from considering a direct takeover of the mines, if
it is the only plausible remedy in sight to the gnawing complexities generated
by the gold rush.

10. MMDA V. GARIN

Facts: The issue arose from an incident involving the respondent Dante O. Garin, a
lawyer, who was issued a traffic violation receipt (TVR) by MMDA and his driver's
license confiscated for parking illegally along Gandara Street, Binondo, Manila, on
August 1995.

Shortly before the expiration of the TVR's validity, the respondent addressed a letter to
then MMDA Chairman Prospero Oreta requesting the return of his driver's license, and
expressing his preference for his case to be filed in court.

Receiving no immediate reply, Garin filed the original complaint with application for
preliminary injunction, contending that, in the absence of any implementing rules and
regulations, Sec. 5(f) of Rep. Act No. 7924 grants the MMDA unbridled discretion to

16
deprive erring motorists of their licenses, pre-empting a judicial determination of the
validity of the deprivation, thereby violating the due process clause of the Constitution.

The respondent further contended that the provision violates the constitutional
prohibition against undue delegation of legislative authority, allowing as it does the
MMDA to fix and impose unspecified and therefore unlimited fines and other
penalties on erring motorists.

The trial court rendered the assailed decision in favor of herein respondent.

Issue:

1. WON MMDA, through Sec. 5(f) of Rep. Act No. 7924 could validly exercise
police power.

HELD: Police Power, having been lodged primarily in the National Legislature, cannot
be exercised by any group or body of individuals not possessing legislative power. The
National Legislature, however, may delegate this power to the president and
administrative boards as well as the lawmaking bodies of municipal corporations or local
government units (LGUs). Once delegated, the agents can exercise only such
legislative powers as are conferred on them by the national lawmaking body.

Our Congress delegated police power to the LGUs in the Local Government Code of
1991. 15 A local government is a "political subdivision of a nation or state which is
constituted by law and has substantial control of local affairs." 16 Local government
units are the provinces, cities, municipalities and barangays, which exercise police
power through their respective legislative bodies.

Metropolitan or Metro Manila is a body composed of several local government units.

With the passage of Rep. Act No. 7924 in 1995, Metropolitan Manila was declared as a
"special development and administrative region" and the administration of "metro-wide"
basic services affecting the region placed under "a development authority" referred to
as the MMDA. Thus: The MMDA is, as termed in the charter itself, a "development
authority." It is an agency created for the purpose of laying down policies and
coordinating with the various national government agencies, people's organizations,
non-governmental organizations and the private sector for the efficient and expeditious
delivery of basic services in the vast metropolitan area. All its functions are
administrative in nature and these are actually summed up in the charter itself
* Section 5 of Rep. Act No. 7924 enumerates the "Functions and Powers of the Metro
Manila Development Authority." The contested clause in Sec. 5(f) states that the
petitioner shall "install and administer a single ticketing system, fix, impose and collect
fines and penalties for all kinds of violations of traffic rules and regulations, whether
moving or non-moving in nature, and confiscate and suspend or revoke drivers' licenses
in the enforcement of such traffic laws and regulations, the provisions of Rep. Act No.
4136 and P.D. No. 1605 to the contrary notwithstanding," and that "(f)or this purpose,
the Authority shall enforce all traffic laws and regulations in Metro Manila, through its
traffic operation center, and may deputize members of the PNP, traffic enforcers of local
government units, duly licensed security guards, or members of non-governmental
organizations to whom may be delegated certain authority, subject to such conditions
and requirements as the Authority may impose."

11. Carlos Superdrug Corp. v. DSWD, 526 SCRA 130 (2007)

Facts: Petitioners are domestic corporations and proprietors operating drugstores in the
Philippines. Petitioners assail the constitutionality of Section 4(a) of RA 9257, otherwise
known as the Expanded Senior Citizens Act of 2003. Section 4(a) of RA 9257 grants

17
twenty percent (20%) discount as privileges for the Senior Citizens. Petitioner contends
that said law is unconstitutional because it constitutes deprivation of private property.

Issue: Whether or not RA 9257 is unconstitutional

Held: Petition is dismissed. The law is a legitimate exercise of police power which,
similar to the power of eminent domain, has general welfare for its object.

Accordingly, it has been described as the most essential, insistent and the least
limitable of powers, extending as it does to all the great public needs. It is the power
vested in the legislature by the constitution to make, ordain, and establish all manner of
wholesome and reasonable laws, statutes, and ordinances, either with penalties or
without, not repugnant to the constitution, as they shall judge to be for the good and
welfare of the commonwealth, and of the subjects of the same.

For this reason, when the conditions so demand as determined by the legislature,
property rights must bow to the primacy of police power because property rights, though
sheltered by due process, must yield to general welfare.
FACTS:
Petitioners, belonging to domestic corporations and proprietors operating
drugstores in the Philippines, are praying for preliminary injunction assailing the
constitutionality of Section 4(a) of Republic Act (R.A.) No. 9257, otherwise known as the
Expanded Senior Citizens Act of 2003. On February 26, 2004, R.A. No. 9257,
amending R.A. No. 7432, was signed into law by President Gloria Macapagal-Arroyo
and it became effective on March 21, 2004. Section 4(a) of the Act states:

SEC. 4. Privileges for the Senior Citizens. The senior citizens shall be entitled to the
following:

(a) the grant of twenty percent (20%) discount from all establishments relative to the
utilization of services in hotels and similar lodging establishments, restaurants and
recreation centers, and purchase of medicines in all establishments for the exclusive
use or enjoyment of senior citizens, including funeral and burial services for the death of
senior citizens;

The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax
deduction based on the net cost of the goods sold or services rendered: Provided, That
the cost of the discount shall be allowed as deduction from gross income for the same
taxable year that the discount is granted. Provided, further, That the total amount of the
claimed tax deduction net of value added tax if applicable, shall be included in their
gross sales receipts for tax purposes and shall be subject to proper documentation and
to the provisions of the National Internal Revenue Code, as amended.

The DSWD, on May 8, 2004, approved and adopted the Implementing Rules and
Regulations of RA No. 9275, Rule VI, Article 8 which contains the proviso that the
implementation of the tax deduction shall be subject to the Revenue Regulations to be
issued by the BIR and approved by the DOF. With the new law, the Drug Stores
Association of the Philippines wanted a clarification of the meaning of tax deduction.
The DOF clarified that under a tax deduction scheme, the tax deduction on discounts
was subtracted from Net Sales together with other deductions which are considered as

18
operating expenses before the Tax Due was computed based on the Net Taxable
Income. On the other hand, under a tax credit scheme, the amount of discounts which is
the tax credit item, was deducted directly from the tax due amount.

The DOH issued an Administrative Order that the twenty percent discount shall include
both prescription and non-prescription medicines, whether branded or generic. It stated
that such discount would be provided in the purchase of medicines from all
establishments supplying medicines for the exclusive use of the senior citizens.

Drug store owners assail the law with the contention that granting the discount would
result to loss of profit and capital especially that such law failed to provide a scheme to
justly compensate the discount.

ISSUE: WON Section 4(a) of the Expanded Senior Citizens Act is unconstitutional or
not violative of Article 3 Section 9 of the Constitution which provides that private
property shall not be taken for public use without just compensation and the equal
protection clause of Article 3 Section 1.

HELD:
The permanent reduction in their total revenues is a forced subsidy corresponding to the
taking of private property for public use or benefit. This constitutes compensable taking
for which petitioners would ordinarily become entitled to a just compensation. Just
compensation is defined as the full and fair equivalent of the property taken from its
owner by the expropriator. The measure is not the takers gain but the owners loss. The
word just is used to intensify the meaning of the word compensation, and to convey the
idea that the equivalent to be rendered for the property to be taken shall be real,
substantial, full and ample.

The law grants a twenty percent discount to senior citizens for medical and dental
services, and diagnostic and laboratory fees; admission fees charged by theaters,
concert halls, circuses, carnivals, and other similar places of culture, leisure and
amusement; fares for domestic land, air and sea travel; utilization of services in hotels
and similar lodging establishments, restaurants and recreation centers; and purchases
of medicines for the exclusive use or enjoyment of senior citizens. As a form of
reimbursement, the law provides that business establishments extending the twenty
percent discount to senior citizens may claim the discount as a tax deduction.

The law is a legitimate exercise of police power which, similar to the power of eminent
domain, has general welfare for its object. Police power is not capable of an exact
definition, but has been purposely veiled in general terms to underscore its
comprehensiveness to meet all exigencies and provide enough room for an efficient and
flexible response to conditions and circumstances, thus assuring the greatest
benefits. Accordingly, it has been described as the most essential, insistent and the
least limitable of powers, extending as it does to all the great public needs. It is t]he
power vested in the legislature by the constitution to make, ordain, and establish all
manner of wholesome and reasonable laws, statutes, and ordinances, either with
penalties or without, not repugnant to the constitution, as they shall judge to be for the
good and welfare of the commonwealth, and of the subjects of the same.

19
12. SURIGAO DEL NORTE ELECTRIC COOPERATIVE, INC. (SURNECO), Petitioner,
v. ENERGY REGULATORY COMMISSION, Respondent. NACHURA,J.: G.R. No.
183626 : October 4, 2010

FACTS:

The Association of Mindanao Rural Electric Cooperatives, as representative of

SURNECO and of the other 33 rural electric cooperatives in Mindanao, filed a petition
before the then Energy Regulatory Board (ERB) for the approval of the formula for
automatic cost adjustment and adoption of the National Power Corporation (NPC)
restructured rate adjustment to comply with Republic Act (R.A.) No. 7832.

The ERB granted SURNECO and other rural electric cooperatives provisional authority
to use and implement the Purchased Power Adjustment (PPA). In the meantime, the
passage of R.A. No. 9136led to the creation of the Energy Regulatory Commission
(ERC), replacing and succeeding the ERB. All pending cases before the ERB were
transferred to the ERC. Thereafter, the ERC continued its review, verification, and
confirmation of the electric cooperatives implementation of the PPA formula based on
the available data and information submitted by the latter.

The ERC issued its assailed Order, mandating that the discounts earned by SURNECO
from its power supplier should be deducted from the computation of the power cost.
SURNECO filed a motion for reconsideration, but it was denied. Aggrieved, SURNECO
filed a petition for review to the CA but the same was denied. Upon denial of the motion
for reconsideration, SURNECO files the instant petition.

ISSUE: Whether or not the CA erred in affirming the ERC Decision

HELD: No. CA Decision Affirmed

POLITICAL LAW- The State, in its exercise of police power, can regulate the rates
imposed by a public utility such as SURNECO

The ERC was merely implementing the system loss caps in R.A. No. 7832 when it
reviewed and confirmed SURNECOS PPA charges, and ordered the refund of the
amount collected in excess of the allowable system loss caps through its continued use
of the multiplier scheme. The Commission deemed it appropriate to clarify its PPA
confirmation process particularly on the treatment of the Prompt Payment Discount
(PPD) granted to distribution utilities (DUs) by their power suppliers. The foregoing
clarification was intended to ensure that only the actual costs of purchased power are
recovered by the DUs.

In directing SURNECO to refund its over-recoveries based on PPA policies, which only
ensured that the PPA mechanism remains a purely cost-recovery mechanism and not a
revenue-generating scheme for the electric cooperatives, the ERC merely exercised its
authority to regulate and approve the rates imposed by the electric cooperatives on their
consumers. The ERC simply performed its mandate to protect the public interest
imbued in those rates.

As held in the case of Republic v. Manila Electric Company, the regulation of rates to be
20
charged by public utilities is founded upon the police powers of the State and statutes
prescribing rules for the control and regulation of public utilities are a valid exercise
thereof. When private property is used for a public purpose and is affected with public
interest, it ceases to be juris privati only and becomes subject to regulation. The
regulation is to promote the common good. Submission to regulation may be withdrawn
by the owner by discontinuing use; but as long as use of the property is continued, the
same is subject to public regulation.

Likewise, SURNECO cannot validly assert that the caps set by R.A. No. 7832 are
arbitrary, or that they violate the non-impairment clause of the Constitution for allegedly
traversing the loan agreement between NEA and ADB. Striking down a legislative
enactment, or any of its provisions, can be done only by way of a direct action, not
through a collateral attack, and more so, not for the first time on appeal in order to avoid
compliance. The challenge to the laws constitutionality should also be raised at the
earliest opportunity.

Even assuming, merely for arguments sake, that the ERC issuances violated the NEA
and ADB covenant, the contract had to yield to the greater authority of the States
exercise of police power. It has long been settled that police power legislation, adopted
by the State to promote the health, morals, peace, education, good order, safety, and
general welfare of the people prevail not only over future contracts but even over those
already in existence, for all private contracts must yield to the superior and legitimate
measures taken by the State to promote public welfare.

POLITICAL LAW- Administrative due process simply requires an opportunity to explain

ones side or to seek reconsideration of the action or ruling complained of.

Verily, the PPA confirmation necessitated a review of the electric cooperatives monthly
documentary submissions to substantiate their PPA charges. The cooperatives were
duly informed of the need for other required supporting documents and were allowed to
submit them accordingly. In fact, hearings were conducted. Moreover, the ERC
conducted exit conferences with the electric cooperatives representatives, SURNECO
included, to discuss preliminary figures and to double-check these figures for
inaccuracies, if there were any. In addition, after the issuance of the ERC Orders, the
electric cooperatives were allowed to file their respective motions for reconsideration. It
cannot be gainsaid, therefore, that SURNECO was not denied due process

Petition Denied

21
3. Who May Exercise

1. Camarines Norte Electric Cooperative vs. Torres

DAVIDE, JR., J.:

May the Office of the President validly constitute an ad hoc committee to take over and manage
the affairs of an electric cooperative?
This is the key issue in this original action for certiorari and prohibition under Rule 65 of the
Rules of Court wherein the petitioners seek to (a) annul and set aside Memorandum Order No.
409 of the Office of the President dated 3 December 1996 constituting an Ad HocCommittee to
take over and manage the affairs of the Camarines Norte Electric Cooperative, Inc., (hereafter
CANORECO) "until such time as a general membership meeting can be called to decide the
serious issues affecting the said cooperative and normalcy in operations is restored"; and (b)
prohibit the respondents from performing acts or continuing proceedings pursuant to the
Memorandum Order.
The factual backdrop of this case is not complicated.
Petitioner CANORECO is an electric cooperative organized under the provisions of P.D. No.
269, otherwise known as the National Electrification Administration Decree, as amended by P.D.
No. 1645.
On 10 March 1990, then President Corazon C. Aquino signed into law R.A. No. 6938 and R.A.
No. 6939. The former is the Cooperative Code of the Philippines, while the latter created the
Cooperative Development Authority (CDA) and vested solely upon the CDA the power to
register cooperatives.
Article 122 of the Cooperative Code expressly provides that electric cooperatives shall be covered
by the Code. Article 128 of the said Code and Section 17 of R.A. No. 6939 similarly provide that
cooperatives created under P.D. No. 269, as amended by P.D. No. 1645, shall have three years
within which to qualify and register with the CDA and that after they shall have so qualified and
registered, the provisions of Sections 3 and 5 of P.D. No. 1645 shall no longer be applicable to
them. These Sections 3 and 5 read as follows:
SEC. 3. Section 5(a), Chapter II of Presidential Decree No. 269 is hereby amended by adding sub-
paragraph (6) to read as follows:

"(6) To authorize the NEA Administrator to designate, subject to the confirmation of the Board
Administrators, an Acting General Manager and/or Project Supervisor for a Cooperative where
vacancies in the said positions occur and/or when the interest of the Cooperative and the
program so requires, and to prescribe the functions of said Acting General Manager and/or
Project Supervisor, which powers shall not be nullified, altered or diminished by any policy or
resolution of the Board of Directors of the Cooperative concerned."
...

SEC. 5. Section 10, Chapter II of Presidential Decree No. 269 is hereby amended to read as
follows:

"Section 10. Enforcement Powers and Remedies. -- In the exercise of its power of supervision and
control over electric cooperatives and other borrower, supervised or controlled entities, the NEA
is empowered to issue orders, rules and regulations and motu proprio or upon petition of third
parties, to conduct investigations, referenda and other similar actions in all matters affecting said
electric cooperatives and other borrower, or supervised or controlled entities."
...
Finally, the repealing clause (Article 127) of the Cooperative Code provides:
Provided, however, That nothing in this Code shall be interpreted to mean the amendment or
repeal of any provision of Presidential Decree No. 269: Provided, further, That the electric
cooperatives which qualify as such under this Code shall fall under the coverage thereof.

22
CANORECO registered with the CDA pursuant to R.A. No. 6938 and R.A. No. 6939. On 8
March 1993, the CDA issued a Certificate of Provisional Registration (T-003-93) to CANORECO
effective for two years. On 1 March 1995, the CDA extended this provisional registration until 4
May 1997.[2] However, on 10 July 1996, CANORECO filed with the CDA its approved
amendments to its Articles of Cooperation converting itself from a non-stock to a stock
cooperative pursuant to the provisions of R.A. No. 6938 and the Omnibus Implementing Rules
and Regulations on Electric Cooperatives. On the same date the CDA issued a Certificate of
Registration[3] of the amendments to CANORECO Articles of Cooperation certifying that
CANORECO is "registered as a full-[f]ledged cooperative under and by virtue of R.A. 6938."
Previously, on 11 March 1995, the Board of Directors of CANORECO[4] approved Resolution No.
22 appointing petitioner Reynaldo V. Abundo as permanent General Manager. The Board was
composed of
Ruben N. Barrameda -- President

Elvis L. Espiritu -- Vice president

Merardo G. Enero, Jr. -- Secretary

Marcelito B. Abas -- Treasurer

Antonio R. Obias -- Director

Luis A. Pascua -- Director

Norberto Z. Ochoa -- Director

Leonida Z. Manalo -- OIC GM/Ex-Officio

On 28 May 1995, Antonio Obias, Norberto Ochoa, Luis Pascua, and Felicito Ilan held a special
meeting of the Board of Directors of CANORECO. The minutes of the meeting[5] showed that
President Ruben Barrameda, Vice-President Elvis Espiritu, and Treasurer Marcelito Abas were
absent; that Obias acted as temporary chairman; that the latter informed those present that it
was the responsibility of the Board after the annual meeting to meet and elect the new set of
officers, but that despite the fact that he had called the attention of President Barrameda and
Directors Abas and Espiritu for the holding thereof, the three chose not to appear; and that those
present in the special meeting declared all positions in the board vacant and thereafter proceeded
to hold elections by secret balloting with all the directors present considered candidates for the
positions. The following won and were declared as the newly elected officers of the
CANORECO:
President . . . . . . . . Norberto Ochoa

Vice President . . . . Antonio Obias

Secretary . . . . . . . . Felicito Ilan

Treasurer. . . . . . . . Luis Pascua

Thereupon, these newly elected officers approved the following resolutions:

1) Resolution No. 27, c.s. -- confirming the election of the new set of officers of the Board of
Directors of CANORECO

2) Resolution No. 28, c.s. -- recalling Resolution No. 22, c.s. appointing Mr. Reynaldo V.
Abundo as permanent General Manager in view of the fact that such appointment was in
violation of the provisions of R.A. 6713; declaring the position of General Manager as vacant;
and designating Mr. Oscar Acobera as Officer-in-Charge

3) Resolution No. 29, c.s. -- authorizing the Board President, or in his absence, the Vice-
President, countersigned by the Treasurer, or in his absence, the Secretary, to be the only officers
who can transfer funds from savings to current accounts; and authorizing the Officer-in-Charge,
Mr. Acobera, to issue checks without countersignature in an amount not to exceed P3,000.00
and in excess thereof, to be countersigned by the President and/or the Treasurer

23
4) Resolution No. 30, c.s. -- hiring the services of Atty. Juanito Subia as retainer-lawyer for
CANORECO.[6]

The petitioners challenged the above resolutions and the election of officers by filing with the
CDA a Petition for Declaration of Nullity of Board Resolutions and Election of Officers with
Prayer for Issuance of Injunction/Temporary Restraining Order, which the CDA docketed as
CDA-CO Case No. 95-010.
In its Resolution of 15 February 1996,[7] the CDA resolved the petition in favor of the petitioners
and decreed as follows:
WHEREFORE, premises considered, the Board Meeting of May 28, 1995, participated by the
respondents, and all the Resolutions issued on such occasion, are hereby declared NULL AND
VOID AB INITIO.

Likewise, the election of respondents Norberto Ochoa, Antonio Obias, Felicito Ilan, and Luis
Pascua, as President, Vice-President, Secretary, and Treasurer, respectively, of CANORECO is
hereby declared NULL AND VOID AB INITIO.

Hence, respondents Norberto Ochoa, Antonio Obias, Felicito Ilan, and Luis Pascua are hereby
ordered to refrain from representing themselves as President, Vice-President, Secretary, and
Treasurer, respectively, of CANORECO. The same respondents are further ordered to refrain
from acting as authorized signatories to the bank accounts of CANORECO.

Further respondent Felicito Ilan is hereby ordered to refrain from exercising the duties and
functions of a member of the Board of CANORECO until the election protest is resolved with
finality by the proper forum. In the meantime, the incumbency of petitioner Merardo Enero, Jr.
as Director of the CANORECO Board is hereby recognized.

A status quo is hereby ordered as regards the position of General Manager, being held by Mr.
Reynaldo Abundo, considering that the recall of his appointment was done under a void
Resolution, and that the designation of Mr. Oscar Acodera as Officer-in-Charge, under the same
void Resolution, has no force and effect.

Finally, respondents Antonio Obias, Norberto Ochoa, Luisito Pascua, and petitioners Ruben
Barrameda, Elvis Espiritu, Marcelito Abas and Merardo Enero, Jr. are hereby ordered to work
together, as Board of Directors, for the common good of CANORECO and its consumer-
members, and to maintain an atmosphere of sincere cooperation among the officers and
members of CANORECO.

On 28 June 1996, in defiance of the abovementioned Resolution of the CDA and with the active
participation of some officials of the National Electrification Administration (NEA), the group of
Norberto Ochoa, Antonio Obias, Felicito Ilan, and Luis Pascua forcibly took possession of the
offices of CANORECO and assumed the duties as officers thereof.[8]
On 26 September 1996, pursuant to the writ of execution and order to vacate issued by the
CDA, the petitioners were able to reassume control of the CANORECO and to perform their
respective functions.[9]
On 3 December 1996, the President of the Philippines issued Memorandum Order No.
409[10] constituting an Ad Hoc Committee to temporarily take over and manage the affairs of
CANORECO. It reads as follows:
To efficiently and effectively address the worsening problem of the Camarines Norte Electric
Cooperative, Inc. (CANORECO) and in order not to prejudice and endanger the interest of the
people who rely on the said cooperative for their supply of electricity, an AD HOC Committee is
hereby constituted to take over and manage the affairs of CANORECO until such time as a
general membership meeting can be called to decide the serious issues affecting the said
cooperative and normalcy in operations is restored. Further, if and when warranted, the present
Board of Directors may be called upon by the Committee for advisory services without prejudice
to the receipt of their per diems as may be authorized by existing rules and regulations.

The AD HOC Committee shall be composed of the following:

24
REX TANTIONGCO -- Chairman

Presidential Assistant on Energy Affairs

HONESTO DE JESUS -- Member

Cooperative Development Authority Nominee

ANDRES IBASCO -- Member

Cooperative Development Authority Nominee

TEODULO M. MEA -- Member

National Electrification Administration Nominee

VICENTE LUKBAN -- Member

National Electrification Administration Nominee

The said Committee shall have the following functions:

1. Designate the following upon the recommendation of the Chairman:

1.1 an Acting General Manager who shall handle the day-to-day operations of the Cooperative.
In the meantime, the General Manager shall be deemed to be on leave without prejudice to the
payment of his salaries legally due him; and
1.2 a Comptroller who shall handle the financial affairs of the Cooperative.
2. Ensure that:

The AD HOC Committee shall submit a written report to the President, through the Office of the
Executive Secretary, every two (2) weeks from the effectivity of this Order.

A General Membership Meeting shall be called by the AD HOC Committee to determine

whether or not there is a need to change the composition of the membership of the
Cooperative's Board of Directors. If the need exists, the AD HOC Committee shall call for
elections. Once the composition of the Board of Directors is finally settled, it shall decide on the
appointment of a General Manager in accordance with prescribed laws, rules and regulations.
Upon the appointment of a General Manager, the Committee shall become functus officio.

This Memorandum Order shall take effect immediately.

On 11 December 1996, the petitioners filed this petition wherein they claim that
I. THE PRESIDENT HAS NO POWER TO TAKE OVER AND MANAGE OR TO ORDER THE
TAKE-OVER OR MANAGEMENT OF CANORECO.
II. [THE] TAKE-OVER OF CANORECO BY THE AD HOC COMMITTEE IS UNLAWFUL DESPITE
DESIGNATION OF CANORECO CONSUMERS AS MEMBERS OF AD HOC COMMITTEE.
III. [THE] RELEGATION OF PETITIONERS AS MERE ADVISERS TO THE AD HOC COMMITTEE
AMOUNTS TO REMOVAL FROM OFFICE WHICH THE PRESIDENT HAS NO POWER TO DO.
MOREOVER, PETITIONERS' REMOVAL VIOLATES PETITIONERS' RIGHT TO DUE PROCESS OF
LAW.
IV. THE PRESIDENT IS LIKEWISE WITHOUT POWER TO DESIGNATE OR ORDER THE
DESIGNATION OF AN ACTING GENERAL MANAGER FOR CANORECO AND TO CONSIDER
THE INCUMBENT REYNALDO V. ABUNDO TO BE ON LEAVE.
The petitioners assert that there is no provision in the Constitution or in a statute expressly, or
even impliedly, authorizing the President or his representatives to take over or order the take-
over of electric cooperatives. Although conceding that while the State, through its police power,
has the right to interfere with private business or commerce, they maintain that the exercise

25
thereof is generally limited to the regulation of the business or commerce and that the power to
regulate does not include the power to take over, control, manage, or direct the operation of the
business. Accordingly, the creation of the Ad Hoc Committee for the purpose of take-over was
illegal and void.
The petitioners further claim that Memorandum Order No. 409 removed them from their
positions as members of the Board of Directors of CANORECO. The President does not have the
authority to appoint, much less to remove, members of the board of directors of a private
enterprise including electric cooperatives. He cannot rely on his power of supervision over the
NEA to justify the designation of an acting general manager for CANORECO under P.D. No. 269
as amended by P.D. No. 1645, for CANORECO had already registered with the CDA pursuant to
R.A. No. 6938 and R.A. No. 6939; hence, the latter laws now govern the internal affairs of
CANORECO.
On 3 January 1997, the petitioners filed an Urgent Motion for Issuance of a Temporary
Restraining Order.
On 9 January 1997, the petitioners filed a Manifestation and Motion informing the Court that on
8 January 1997 respondent Rex Tantiongco notified the petitioners that the Ad Hoc Committee
was taking over the affairs and management of CANORECO effective as of that date.[11] They
reiterated their plea for the issuance of a temporary restraining order because the Ad
Hoc Committee has taken control of CANORECO and usurped the functions of the individual
petitioners.
In the Resolution dated 13 January 1997, we required respondents to comment on the petition.
Despite four extensions granted it, the Office of the Solicitor General (OSG) failed to file its
Comment. Hence, in the resolution of 16 July 1997 we deemed the OSG to have waived the
filing of its Comment and declared this case submitted for decision. The OSG's motion to admit
its Comment, as well as the attached Comment, belatedly filed on 24 July 1997 was merely
noted without action in the resolution of 13 August 1997. We also subsequently denied for lack
of merit its motion for reconsideration.
We find the instant petition impressed with merit.
Having registered itself with the CDA pursuant to Section 128 of R.A. No. 6938 and Section 17 of
R.A. No. 6939, CANORECO was brought under the coverage of said laws. Article 38 of R.A.
No. 6938 vests upon the board of directors the conduct and management of the affairs of
cooperatives, and Article 39 provides for the powers of the board of directors. These sections
read:
Article 38. Composition of the Board of Directors. -- The conduct and management of
the affairs of a cooperative shall be vested in a board of directors which shall be composed of not
less than five (5) nor more than fifteen (15) members elected by the general assembly for a term
fixed in the by-laws but not exceeding a term of two (2) years and shall hold office until their
successors are duly elected and qualified, or until duly removed. However, no director shall serve
for more than three (3) consecutive terms.

Article 39. Powers of the Board of Directors. -- The board of directors shall direct and supervise
the business, manage the property of the cooperative and may, by resolution, exercise all such
powers of the cooperative as are not reserved for the general assembly under this Code and the
by-laws.

As to the officers of cooperatives, Article 43 of the Code provides:

ART. 43. Officers of the Cooperatives. The board of directors shall elect from among themselves
only the chairman and vice-chairman, and elect or appoint other officers of the cooperative from
outside of the board in accordance with their by-laws. All officers shall serve during good
behavior and shall not be removed except for cause and after due hearing. Loss of confidence
shall not be a valid ground for removal unless evidenced by acts or omissions causing loss of
confidence in the honesty and integrity of such officer. No two (2) or more persons with
relationship up to the third degree of consanguinity or affinity shall serve as elective or
appointive officers in the same board.[12]

26
Under Article 34 of the Code, the general assembly of cooperatives has the exclusive power,
which cannot be delegated, to elect or appoint the members of the board of directors and to
remove them for cause. Article 51 thereof provides for removal of directors and officers as
follows:
ART. 51. Removal. -- An elective officer, director, or committee member may be removed by a
vote of two-thirds (2/3) of the voting members present and constituting a quorum, in a regular
or special general assembly meeting called for the purpose. The person involved shall be given an
opportunity to be heard at said assembly.

Memorandum Order No. 409 clearly removed from the Board of Directors of CANORECO the
power to manage the affairs of CANORECO and transferred such power to the Ad
Hoc Committee, albeit temporarily. Considering that (1) the take-over will be "until such time
that a general membership meeting can be called to decide the serious issues affecting the said
cooperative and normalcy in operations is restored, and (2) the date such meeting shall be called
and the determination of whether there is a need to change the composition of the membership
of CANORECO's Board of Directors are exclusively left to the Ad Hoc Committee, it necessarily
follows that the incumbent directors were, for all intents and purposes, suspended at the least,
and removed, at the most, from their office. The said Memorandum did no less to the lawfully
appointed General Manager by directing that upon the settlement of the issue concerning the
composition of the board of directors the Committee shall decide on the appointment of a
general manager. In the meantime, it authorized the Committee to designate upon the
recommendation of the Chairman an Acting Manager, with the lawfully appointed Manager
considered on leave, but who is, however, entitled to the payment of his salaries.
Nothing in law supported the take-over of the management of the affairs of CANORECO, and
the "suspension," if not "removal," of the Board of Directors and the officers thereof.
It must be pointed out that the controversy which resulted in the issuance of the Memorandum
Order stemmed from a struggle between two groups vying for control of the management of
CANORECO. One faction was led by the group of Norberto Ochoa, while the other was
petitioners' group whose members were, at that time, the incumbent directors and officers. It was
the action of Ochoa and his cohorts in holding a special meeting on 28 May 1995 and then
declaring vacant the positions of cooperative officers and thereafter electing themselves to the
positions of president, vice-president, treasurer, and secretary of CANORECO which compelled
the petitioners to file a petition with the CDA. The CDA thereafter came out with a decision
favorable to the petitioners.
Obviously there was a clear case of intra-cooperative dispute. Article 121 of the Cooperative
Code is explicit on how the dispute should be resolved; thus:
ART. 121. Settlement of Disputes. -- Disputes among members, officers, directors, and committee
members, and intra-cooperative disputes shall, as far as practicable, be settled amicably in
accordance with the conciliation or mediation mechanisms embodied in the by-laws of the
cooperative, and in applicable laws.

Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court of
competent jurisdiction.

Complementing this Article is Section 8 of R.A. No. 6939, which provides:

SEC. 8. Mediation and Conciliation. Upon request of either or both or both parties, the [CDA]
shall mediate and conciliate disputes with the cooperative or between cooperatives: Provided,
That if no mediation or conciliation succeeds within three (3) months from request thereof, a
certificate of non-resolution shall be issued by the commission prior to the filing of appropriate
action before the proper courts.

Even granting for the sake of argument that the party aggrieved by a decision of the CDA could
pursue an administrative appeal to the Office of the President on the theory that the CDA is an
agency under its direct supervision and control, still the Office of the President could not in this
case, motu proprio or upon request of a party, supplant or overturn the decision of the CDA.
The record does not disclose that the group of Norberto Ochoa appealed from the decision of
the CDA in CDA-CO Case No. 95-010 to the Office of the President as the head of the Executive

27
Department exercising supervision and control over said agency. In fact the CDA had already
issued a Cease and Desist Order dated 14 August 1996 ordering Antonio Obias, Norberto Ochoa,
Luis Pascua, Felicito Ilan and their followers "to cease and desist from acting as the Board of
Directors and Officers of Camarines Norte Electric Cooperative (CANORECO) and to refrain
from implementing their Resolution calling for the District V Election on August 17 and 24,
1996."[13] Consequently, the said decision of the CDA had long become final and executory when
Memorandum Order No. 409 was issued on 3 December 1996. That Memorandum cannot then
be considered as one reversing the decision of the CDA which had attained finality.
Under Section 15, Chapter III of Book VII of the Administrative Code of 1987 (Executive Order
No. 292), decisions of administrative agencies become final and executory fifteen days after
receipt of a copy thereof by the party adversely affected unless within that period an
administrative appeal or judicial review, if proper, has been perfected. One motion for
reconsideration is allowed. A final resolution or decision of an administrative agency also binds
the Office of the President even if such agency is under the administrative supervision and control
of the latter.
We have stated before, and reiterate it now, that administrative decisions must end sometime, as
fully as public policy demands that finality be written on judicial controversies. Public interest
requires that proceedings already terminated should not be altered at every step, for the rule
of non quieta movere prescribes that what had already been terminated should not be disturbed.
A disregard of this principle does not commend itself to sound public policy.[14]
Neither can police power be invoked to clothe with validity the assailed Memorandum Order
No. 409. Police power is the power inherent in a government to enact laws, within
constitutional limits, to promote the order, safety, health, morals, and general welfare of
society.[15]It is lodged primarily in the legislature. By virtue of a valid delegation of legislative
power, it may also be exercised by the President and administrative boards, as well as the
lawmaking bodies on all municipal levels, including the barangay.[16] Delegation of legislative
powers to the President is permitted in Sections 23(2) and 28(2) of Article VI of the
Constitution.[17] The pertinent laws on cooperatives, namely, R.A. No. 6938, R.A. No. 6939, and
P.D. No. 269 as amended by P.D. No. 1645 do not provide for the President or any other
administrative body to take over the internal management of a cooperative. Article 98 of R.A.
6938 instead provides:
ART. 98. Regulation of Public Service Cooperatives. -- (1) The internal affairs of public service
cooperatives such as the rights and privileges of members, the rules and procedures for meetings
of the general assembly, board of directors and committees; for the election and qualification of
officers, directors, and committee members; allocation and distribution of surpluses, and all other
matters relating to their internal affairs shall be governed by this Code.

We do not then hesitate to rule that Memorandum Order No. 409 has no constitutional and
statutory basis. It violates the basic underlying principle enshrined in Article 4(2) of R.A. No.
6938 that cooperatives are democratic organizations and that their affairs shall be administered
by persons elected or appointed in a manner agreed upon by the members. Likewise, it runs
counter to the policy set forth in Section 1 of R.A. No. 6939 that the State shall, except as
provided in said Act, maintain a policy of non-interference in the management and operation of
cooperatives.
WHEREFORE, the instant petition is GRANTEDand Memorandum Order No. 409 of the
President is hereby declared INVALID.
SO ORDERED.
Narvasa, Regalado, Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza,
Panganiban,and Martinez, JJ., concur.
Quisumbing, No part. Involve in O.P. matter.
Purisima, No part. Did not take in the deliberation.

28
 Annex "B" of Petition, Rollo, 34.
[1]

[2] Annex "C" of Petition, Id., 35.

[3] Annex "D" of Petition, Id., 36-37.
[4] Annex "E" of Petition, Id., 38-39.
[5] Annex "F" of Petition, Id., 40-43.
[6] Rollo, 41-43.
[7] Annex "G" of Petition, Rollo, 44-52.
[8] Rollo, 8.
[9] Ibid.
[10] Id., 31.
[11] Rollo, 96.
This is a substantial departure from Section 26 of P.D. No. 269 which provided that the officers
[12]

of a cooperative shall consist of a president, vice-president, secretary and treasurer, who shall be
elected annually by and from the board; that when a person holding such office ceases to be a
director, he shall ipso facto cease to hold such office; that the offices of secretary and of treasurer
may be held by the same person; that the board may also elect or appoint such other officers,
agents, or employees as it deems necessary or advisable; and that any officer may be removed
from said office and his successor elected in the manner prescribed in the by-laws.
[13] Rollo, 142.
[14] Antique Sawmills, Inc. v. Zayco, 17 SCRA 316, 320-321 [1966].
[15] 16 C.J.S. Constitutional Law 195 (1956).
[16] Isagani A. Cruz, Constitutional Law 44 (1995).
[17] These sections read as follows:
Sec. 23.

(2) times of war or other national emergency, the Congress may, by law, authorize the President,
for a limited period and subject to such restrictions as it may prescribe, to exercise powers
necessary and proper to carry out a declared national policy. Unless sooner withdrawn by
resolution of the Congress, such powers shall cease upon the next adjournment thereof.

Sec. 28.

(2) The Congress may, by law, authorize the president to fix within specified limits, and subject
to such limitations and restrictions as it may impose, tariff rates, import and export quotas,
tonnage and wharfage dues, and other duties or imposts within the framework of the national
development program of the Government.

2. Gancayco vs. City Government of Quezon City

FACTS: The consolidated petitions of Retired Justice Emilio Gancayco, City Government of
Quezon City and the Metro Manila Development Authority stemmed from a local ordinance
pertaining to Construction of Arcades, and the clearing of Public Obstructions. Gaycanco owns a

29
property, of which he was able to obtain a building permit for a two-storey commercial building,
which was situated along EDSA, in an area which was designated as part of a
Business/Commercial Zone by the Quezon City Council. The Quezon City Council also issued
Ordinance No. 2904, which orders the construction of Arcades for Commercial Buildings. The
ordinance was amended to not require the properties located at the Quezon City - San Juan
boundary, and commercial buildings from Balete - Seattle Street to construct the arcades,
moreover, Gancayco had been successful in his petition to have his property, already covered by
the amended ordinance, exempted from the ordinance. MMDA on April 28, 2003, sent a notice
to Gancayco, under Ordinance no. 2904, part of his property had to be demolished, if he did
not clear that part within 15 days, which Gancayco did not comply with, and so the MMDA had
to demolish the party wall, or wing walls. Gancayco then filed a temporary restraining order
and/or writ of preliminary injunction before the RTC of Quezon City, seeking to prohibit the
demolition of his property, without due process and just compensation, claiming that Ordinance
no. 2904 was discriminatory and selective. He sought the declaration of nullity of the ordinance
and payment for damages. MMDA contended that Gancayco cannot seek nullification of an
ordinance that he already violated, and that the ordinance had the presumption of
constitutionality, and it was approved by the Quezon City Council, taking to note that the
Mayor signed the ordinance. The RTC, however, declared that the Ordinance was
unconstitutional, invalid and void ab initio. MMDA appealed to the Court of Appeals, and the
CA partly granted the appeal, with the contention that the ordinance was to be modified; it was
constitutional because the intention of the ordinance was to uplift the standard of living, and
business in the commercial area, as well as to protect the welfare of the general public passing by
the area, however the injunction against the enforcement and implementation of the ordinance is
lifted. With that decision, the MMDA and Gancayco filed Motions for Reconsideration, which
the CA denied, as both parties have no new issues raised. Therefore they petitioned to the Court.

ISSUES: Whether or not the wing wall of Gancaycos property can be constituted as a public
nuisance. Whether or not MMDA was in their authority to demolish Gancaycos property.

HELD: The court affirmed the decision of the Court of Appeals. The court decided that the wing
wall of Gancaycos building was not a nuisance per se, as under Art. 694 of the Civil Code of the
Philippines, nuisance is defined as any act, omission, establishment, business, condition or
property, or anything else that (1) injures of endangers the health or safety of the others; (2)
annoys or offends the senses; (3) shocks, defies or disregards decency or morality; (4) obstruct or
interferes with the free passage of any public highway or street, or any body of water; or (5)
hinders or impairs the use of property. A nuisance may be a nuisance per se or a nuisance per
accidens. A nuisance per se are those which affect the immediate safety of persons and property
and may summarily be abated under the undefined law of necessity. As Gaycanco was able to
procure a building permit to construct the building, it was implied that the city engineer did not
consider the building as such of a public nuisance, or a threat to the safety of persons and
property. The MMDA was only to enforce Authoritative power on development of Metro
Manila, and was not supposed to act with Police Power as they were not given the authority to
do such by the constitution, nor was it expressed by the DPWH when the ordinance was
enacted. Therefore, MMDA acted on its own when it illegally demolished Gancaycos property,
and was solely liable for the damage.

30
3. SOCIAL JUSTICE SOCIETY VS. ATIENZA

(Just the other day, the Supreme Court affirmed the authority of Manila City to issue and
enforce an Ordinance reclassifying certain areas within the city. The reclassification adversely
affected the oil companies, which are now forced to relocate their oil terminals in Pandacan.This
is a digest of Social Justice Society vs. Atienza, G.R. No. 156052, 13 February 2008. Other
procedural issues are not discussed.)

Facts:

The Social Justice Society sought to compel respondent Hon. Jose L. Atienza, Jr., then mayor of
the City of Manila, to enforce Ordinance No. 8027 that was enacted by the Sangguniang
Panlungsod of Manila in 2001. Ordinance No. 8027 reclassified the area described therein from
industrial to commercial and directed the owners and operators of businesses disallowed under
the reclassification 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 (the brief history of the Pandacan Oil Terminals is
here).

In 2002, the City of Manila and the Department of Energy (DOE) entered into a memorandum
of understanding (MOU) with the oil companies. They agreed that the scaling down of the
Pandacan Terminals [was] the most viable and practicable option. The Sangguniang Panlungsod
ratified the MOU in Resolution No. 97. In the same resolution, the Sanggunian declared that the
MOU was effective only for a period of six months starting 25 July 2002, which period was
extended up to 30 April 2003.

This is the factual backdrop of the Supreme Courts 7 March 2007 Decision. The SC ruled that
respondent had the ministerial duty under the Local Government Code (LGC) to enforce all laws
and ordinances relative to the governance of the city including Ordinance No. 8027. After the
SC promulgated its Decision, Chevron Philippines Inc. (Chevron), Petron Corporation (Petron)
and Pilipinas Shell Petroleum Corporation (Shell) (the oil companies) and the Republic of the
Philippines, represented by the DOE, sought to intervene and ask for a reconsideration of
the decision.

Intervention of the oil companies and the DOE allowed in the interest of justice

Intervention is a remedy by which a third party, not originally impleaded in the proceedings,
becomes a litigant therein to enable him, her or it to protect or preserve a right or interest which
may be affected by such proceedings. The allowance or disallowance of a motion to intervene is
addressed to the sound discretion of the court. While the motions to intervene respectively filed
by the oil companies and the DOE were filed out of time, these motions were granted because
they presented novel issues and arguments. DOE intervention was also allowed considering the
transcendental importance of this case.

Ordinance No. 8119 did not impliedly repeal Ordinance No. 8027

Repeal by implication proceeds on the premise that where a statute of later date clearly reveals
the intention of the legislature to abrogate a prior act on the subject, that intention must be given
effect. Implied repeals are not favored and will not be so declared unless the intent of the
legislators is manifest.

There are two kinds of implied repeal. The first is: where the provisions in the two acts on the
same subject matter are irreconcilably contradictory, the latter act, to the extent of the conflict,
constitutes an implied repeal of the earlier one. The second is: if the later act covers the whole
subject of the earlier one and is clearly intended as a substitute, it will operate to repeal the
earlier law. The oil companies argue that the situation here falls under the first category.

For the first kind of implied repeal, there must be an irreconcilable conflict between the two
ordinances. However, there was no legislative purpose to repeal Ordinance No. 8027. There is

31
no conflict since both 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). While it is true that both ordinances relate to the
same subject matter, i.e., classification of the land use of the area where Pandacan oil depot is
located, if there is no intent to repeal the earlier enactment, every effort at reasonable
construction must be made to reconcile the ordinances so that both can be given effect.

Moreover, it is a well-settled rule in statutory construction that a subsequent general law does
not repeal a prior special law on the same subject unless it clearly appears that the legislature has
intended by the latter general act to modify or repeal the earlier special law. The special law
must be taken as intended to constitute an exception to, or a qualification of, the general act or
provision. 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.

Mandamus lies to compel respondent Mayor to enforce Ordinance No. 8027

The oil companies insist that mandamus does not lie against respondent in consideration of the
separation of powers of the executive and judiciary. However, while it is true that Courts will
not interfere by mandamus proceedings with the legislative or executive departments of the
government in the legitimate exercise of its powers, there is an exception to enforce mere
ministerial acts required by law to be performed by some officer thereof. A writ of mandamus is
the power to compel the performance of an act which the law specifically enjoins as a duty
resulting from office, trust or station.

The oil companies also argue that petitioners had a plain, speedy and adequate remedy to
compel respondent to enforce Ordinance No. 8027, which was to seek relief from the President
of the Philippines through the Secretary of the Department of Interior and Local Government
(DILG) by virtue of the Presidents power of supervision over local government units. This
suggested process, however, would be unreasonably long, tedious and consequently injurious to
the interests of the local government unit (LGU) and its constituents whose welfare is sought to
be protected. A party need not go first to the DILG in order to compel the enforcement of an
ordinance. Besides, the resort to an original action for mandamus before the SC is undeniably
allowed by the Constitution.

Ordinance No. 8027 is constitutional and valid

The tests of a valid ordinance are well established. For an ordinance to be valid, it must not only
be within the corporate powers of the LGU to enact and 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. There is no showing that the
Ordinance is unconstitutional.

The City of Manila has the power to enact Ordinance No. 8027

Ordinance No. 8027 was passed by the Sangguniang Panlungsod of Manila in the exercise of its
police power. Police power is the plenary power vested in the legislature to make statutes and
ordinances to promote the health, morals, peace, education, good order or safety and general
welfare of the people. This power flows from the recognition that salus populi est suprema lex
(the welfare of the people is the supreme law).

While police power rests primarily with the national legislature, such power may be delegated.
Section 16 of the LGC, known as the general welfare clause, encapsulates the delegated police
power to local governments. LGUs like the City of Manila exercise police power through their
respective legislative bodies, in this case, the Sangguniang Panlungsod or the city council.
Specifically, the Sanggunian can enact ordinances for the general welfare of the city.

32
This police power was also provided for in RA 409 or the Revised Charter of the City of Manila.
Specifically, the Sanggunian has the power to reclassify land within the jurisdiction of the city.

The enactment of Ordinance No. 8027 is a legitimate exercise of police power

As with the State, local governments may be considered as having properly exercised their 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 its exercise; and (2) the means employed are
reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon
individuals. In short, there must be a concurrence of a lawful subject and a lawful method.

Ordinance No. 8027 is a valid police power measure because there is a concurrence of lawful
subject and lawful method. It 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 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 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. Wide discretion is vested on the
legislative authority to determine not only what the interests of the public require but also what
measures are necessary for the protection of such interests. Clearly, the Sanggunian was in the
best position to determine the needs of its constituents.

In the exercise of police power, property rights of individuals may be subjected to restraints and
burdens in order to fulfill the objectives of the government. Otherwise stated, the government
may enact legislation that may interfere with personal liberty, property, lawful businesses and
occupations to promote the general welfare. However, the interference must be reasonable and
not arbitrary. And to forestall arbitrariness, the methods or means used to protect public health,
morals, safety or welfare must have a reasonable relation to the end in view.

The means adopted by the Sanggunian was the enactment of a zoning ordinance which
reclassified the area where the depot is situated from industrial to commercial. A zoning
ordinance is defined as a local city or municipal legislation which logically arranges, prescribes,
defines and apportions a given political subdivision into specific land uses as present and future
projection of needs. As a result of the zoning, the continued operation of the businesses of the oil
companies in their present location will no longer be permitted. The power to establish zones for
industrial, commercial and residential uses is derived from the police power itself and is exercised
for the protection and benefit of the residents of a locality. Consequently, the enactment of
Ordinance No. 8027 is within the power of the Sangguniang Panlungsod of the City of Manila
and any resulting burden on those affected cannot be said to be unjust.

Ordinance No. 8027 is not unfair, oppressive or confiscatory which amounts to taking without
compensation

According to the oil companies, Ordinance No. 8027 is unfair and oppressive as it does not only
regulate but also absolutely prohibits them from conducting operations in the City of Manila.
However, the oil companies are not prohibited from doing business in other appropriate zones
in Manila. The City of Manila merely exercised its power to regulate the businesses and industries
in the zones it established.

The oil companies also argue that the ordinance is unfair and oppressive because they have
invested billions of pesos in the depot, and the forced closure will result in huge losses in income
and tremendous costs in constructing new facilities. This argument has no merit. In the exercise of
police power, there is a limitation on or restriction of property interests to promote public
welfare which involves no compensable taking. Compensation is necessary only when the states

33
power of eminent domain is exercised. In eminent domain, property is appropriated and applied
to some public purpose. Property condemned under the exercise of police power, on the other
hand, is noxious or intended for a noxious or forbidden purpose and, consequently, is not
compensable. The restriction imposed to protect lives, public health and safety from danger is
not a taking. It is merely the prohibition or abatement of a noxious use which interferes with
paramount rights of the public. In the regulation of the use of the property, nobody else acquires
the use or interest therein, hence there is no compensable taking.

In this case, the properties of the oil companies and other businesses situated in the affected area
remain theirs. Only their use is restricted although they can be applied to other profitable uses
permitted in the commercial zone.

Ordinance No. 8027 is not partial and discriminatory

The oil companies take the position that the ordinance has discriminated against and singled out
the Pandacan Terminals despite the fact that the Pandacan area is congested with buildings and
residences that do not comply with the National Building Code, Fire Code and Health and
Sanitation Code.

An ordinance based on reasonable classification does not violate the constitutional guaranty of
the equal protection of the law. The requirements for a valid and reasonable classification are: (1)
it must rest on substantial distinctions; (2) it must be germane to the purpose of the law; (3) it
must not be limited to existing conditions only; and (4) it must apply equally to all members of
the same class. The law may treat and regulate one class differently from another class provided
there are real and substantial differences to distinguish one class from another.

Here, there is a reasonable classification. What the ordinance seeks to prevent is a catastrophic
devastation that will result from a terrorist attack. Unlike the depot, the surrounding community
is not a high-value terrorist target. Any damage caused by fire or explosion occurring in those
areas would be nothing compared to the damage caused by a fire or explosion in the depot
itself. Accordingly, there is a substantial distinction. The enactment of the ordinance which
provides for the cessation of the operations of these terminals removes the threat they pose.
Therefore it is germane to the purpose of the ordinance. The classification is not limited to the
conditions existing when the ordinance was enacted but to future conditions as well. Finally, the
ordinance is applicable to all businesses and industries in the area it delineated.

Ordinance No. 8027 is not inconsistent with RA 7638 and RA 8479

The oil companies and the DOE assert that Ordinance No. 8027 is unconstitutional because it
contravenes RA 7638 (DOE Act of 1992) and RA 8479 (Downstream Oil Industry Deregulation
Law of 1998).

It is true that ordinances should not contravene existing statutes enacted by Congress. However,
a brief survey of decisions where the police power measure of the LGU clashed with national
laws shows that the common dominator is that the national laws were clearly and expressly in
conflict with the ordinances/resolutions of the LGUs. The inconsistencies were so patent that
there was no room for doubt. This is not the case here. The laws cited merely gave DOE general
powers to establish and administer programs for the exploration, transportation, marketing,
distribution, utilization, conservation, stockpiling, and storage of energy resources and to
encourage certain practices in the [oil] industry which serve the public interest and are intended
to achieve efficiency and cost reduction, ensure continuous supply of petroleum products.
These powers can be exercised without emasculating the LGUs of the powers granted them.
When these ambiguous powers are pitted against the unequivocal power of the LGU to enact
police power and zoning ordinances for the general welfare of its constituents, it is not difficult to
rule in favor of the latter. Considering that the powers of the DOE regarding the Pandacan
Terminals are not categorical, the doubt must be resolved in favor of the City of Manila.

The principle of local autonomy is enshrined in and zealously protected under the Constitution.
An entire article (Article X) of the Constitution has been devoted to guaranteeing and promoting

34
the autonomy of LGUs. The LGC was specially promulgated by Congress to ensure the autonomy
of local governments as mandated by the Constitution. There is no showing how the laws relied
upon by the oil companies and DOE stripped the City of Manila of its power to enact ordinances
in the exercise of its police power and to reclassify the land uses within its jurisdiction.

The DOE cannot exercise the power of control over LGUs

Another reason that militates against the DOEs assertions is that Section 4 of Article X of the
Constitution confines the Presidents power over LGUs to one of general supervision.
Consequently, the Chief Executive or his or her alter egos, cannot exercise the power of control
over them. The President and his or her alter egos, the department heads, cannot interfere with
the activities of local governments, so long as they act within the scope of their authority.
Accordingly, the DOE cannot substitute its own discretion for the discretion exercised by the
sanggunian of the City of Manila. In local affairs, the wisdom of local officials must prevail as
long as they are acting within the parameters of the Constitution and the law.

Ordinance No. 8027 is not invalid for failure to comply with RA 7924 and EO 72

The oil companies argue that zoning ordinances of LGUs are required to be submitted to the
Metropolitan Manila Development Authority (MMDA) for review and if found to be in
compliance with its metropolitan physical framework plan and regulations, it shall endorse the
same to the Housing and Land Use Regulatory Board (HLURB). Their basis is Section 3 (e) of RA
7924 and Section 1 of E.O. 72. They argue that because Ordinance No. 8027 did not go through
this review process, it is invalid.

The argument is flawed. RA 7942 does not give MMDA the authority to review land use plans
and zoning ordinances of cities and municipalities. This was only found in its implementing rules
which made a reference to EO 72. EO 72 expressly refers to comprehensive land use plans
(CLUPs) only. Ordinance No. 8027 is admittedly not a CLUP nor intended to be one. Instead, it
is a very specific ordinance which reclassified the land use of a defined area in order to prevent
the massive effects of a possible terrorist attack. It is Ordinance No. 8119 which was explicitly
formulated as the Manila [CLUP] and Zoning Ordinance of 2006. CLUPs are the ordinances
which should be submitted to the MMDA for integration in its metropolitan physical framework
plan and approved by the HLURB to ensure that they conform with national guidelines and
policies. Moreover, even assuming that the MMDA review and HLURB ratification are necessary,
the oil companies did not present any evidence to show that these were not complied with. In
accordance with the presumption of validity in favor of an ordinance, its constitutionality or
legality should be upheld in the absence of proof showing that the procedure prescribed by law
was not observed.

Conclusion

Essentially, the oil companies are fighting for their right to property. They allege that they stand
to lose 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 LGUs exercise of police power
clashes with a few individuals right to property, the former should prevail.

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.

Just the same, the Court noted that it is not about to provoke a crisis by ordering the immediate
relocation of the Pandacan Terminals out of its present site. The enforcement of a decision,
especially one with far-reaching consequences, should always be within the bounds of reason, in
accordance with a comprehensive and well-coordinated plan, and within a time-frame that

35
complies with the letter and spirit of our resolution. To this end, the oil companies have no
choice but to obey the law.

4. The Metropolitan Manila Development Authority (MMDA), et al. v. Viron Transportation

Co., Inc., et al. 530 Scra 341 (2007)

To solve the worsening traffic congestions problem in Metro Manila the

President issued Executive Order (E.O.) 179, Providing for the Establishment of Greater Manila
Mass Transportation System. As determined in E.O. 179, the primary cause of traffic congestion in
Metro Manila has been the numerous buses plying the streets that impede the flow of vehicles
and commuters and the inefficient connectivity of the different transport modes. To decongest
traffic, petitioner Metropolitan Manila Development Authority (MMDA) came up with a
recommendation, proposing the elimination of bus terminals located along major Metro Manila
thoroughfares, and the construction of mass transport terminal facilities to provide a more
convenient access to mass transport system to the commuting public. The project provided for
under this E.O. was called Greater Manila Transport System (Project) wherein the MMDA was
designated as the implementing agency. Accordingly, the Metro Manila Council the governing
board of the MMDA issued a resolution, expressing full support of the project. The respondents,
which are engaged in the business of public transportation with a provincial bus operation, Viron
Transport Co., Inc. and Men corp. Transportation System, Inc., assailed the constitutionality of
E.O. 179 before the Regional Trial Court of Manila. They alleged that the E.O., insofar as it
permitted the closure of existing bus terminal, constituted a deprivation of property without due
process; that it contravened the Public Service Act which mandates public utilities to provide
and maintain their own terminals as a requisite for the privilege of operating as common carriers;
and that Republic Act 7924, which created MMDA, did not authorize the latter to order
the closure of bus terminals. The trial court declared the E.O. unconstitutional. The MMDA
argued before the Court that there was no justiciable controversy in the case for declaratory relief
filed by the respondents; that E.O. 179 was only an administrative directive to
government agencies to coordinate with the MMDA, and as such did not bind third persons; that
the President has the authority to implement the Project pursuant to E.O. 125; and that E.O. 179
was a valid exercise of police power.

ISSUE:

Whether or not E.O, 179 is constitutional.

HELD:

By designating the MMDA as implementing agency of the Greater Manila Transport System,
the President clearly overstepped the limits of the authority conferred by law, rendering E.O. 179
ultra vires. Executive Order 125, invoked by the MMDA, was issued by former President Aquino
in her exercise of legislative powers. This executive order reorganized the Ministry (now
Department) of Transportation and Communications (DOTC), and defined its powers and
functions. It mandated the DOTC to be the primary policy, planning, programming,
coordinating, implementing, regulating and administrative entity to promote, develop and
regulate networks of transportation and communications. The grant of authority to the DOTC
includes the power to establish and administer comprehensive and integrated programs for
transportation and communications. Accordingly, it is the DOTC Secretary who is authorized to
issue such orders, rules, regulations and other issuances as may be necessary to ensure the
effective implementation of the law. The President may also exercise the same power and
authority to order the implementation of the mass transport system project, which admittedly is
one for transportation. Such authority springs from the Presidents power of control over all
executive departments as well as for the faithful execution of the laws under the
Constitution. Thus, the President, although authorized to establish or cause the implementation
of the Project, must exercise the authority through the instrumentality of the DOTC, which, by
law, is the primary implementing and administrative entity in the promotion, development and
regulation of networks of transportation. It is the DOTC, and not the MMDA, which
is authorized to establish and implement a project such as the mass transport system. By
designating the MMDA as implementing agency of the Project, the President clearly overstepped

36
the limits of the authority conferred by law, rendering E.O. 179 ultra vires. In the absence of a
specific grant of authority to it under R.A. 7924, MMDA cannot issue order for the closure of
existing bus terminals Republic Act (R.A.) 7924 authorizes the MMDA to perform planning,
monitoring and coordinative functions, and in the process exercises regulatory and supervisory
authority over the delivery of metro-wide services, including transport and traffic management.
While traffic decongestion has been recognized as a valid ground in the exercise of police power,
MMDA is not granted police power, let alone legislative power. Unlike the legislative bodies of
the local government units, there is no provision in R.A. 7924 that empowers the MMDA or the
Metro Manila Council to enact ordinances, approve resolutions and appropriate funds for the
general welfare of the inhabitants of Metro Manila. In light of the administrative nature of its
powers and functions, the MMDA is devoid of authority to implement the Greater Manila
Transport System as envisioned by E.O. 179; hence, it could not have been validly designated by
the President to undertake the project. It follows that the MMDA cannot validly order
the elimination of respondentsterminals. Even assuming arguendo that police power was
delegated to the MMDA, its exercise of such power does not satisfy the two sets of a valid police
power measure: (1) the interest of the public generally, as distinguished from that of a particular
class, requires its exercise; and (2) the means employed are reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals. In various cases, the
Court has recognized that traffic congestion is a public, not merely a private concern. Indeed, the
E.O. was issued due to the felt need to address the worsening traffic congestion in Metro Manila
which, the MMDA so determined is caused by the increasing volume of buses plying the major
thoroughfares and the inefficient connectivity of existing transport system. With the avowed
objective of decongesting traffic in Metro Manila the E.O. seeks to eliminate the bus terminals
now located along major Metro Manila thoroughfares and provide more convenient access to
the mass transport system to the commuting public through the provision of mass transport
terminal facilities. Common carriers with terminals along the major thoroughfares of Metro
Manila would thus be compelled to close down their existing bus terminals and use the MMDA-
designated common parking areas. The Court fails to see how the prohibition against
respondentsterminals can be considered a reasonable necessity to ease traffic congestion in the
metropolis. On the contrary, the elimination of respondentsbus terminals brings forth the distinct
possibility and the equally harrowing reality of traffic congestion in the common parking areas, a
case of transference from one site to another. Moreover, an order for the closure of bus terminals
is not in line with the provisions of the Public Service Act. The establishment, as well as the
maintenance of vehicle parking areas or passenger terminals, is generally considered a necessary
service by provincial bus operators, hence, the investments they have poured into the acquisition
or lease of suitable terminal sites.

4. LIMITATIONS

1. LUCENA GRAND CENTRAL TERMINAL, INC., petitioner, vs. JAC LINER, INC., respondent.
G.R. No. 148339. February 23, 2005 - POLICE POWER

Facts:

The City of Lucena enacted an ordinance which provides, inter alia, that: all buses, mini-buses
and out-of-town passenger jeepneys shall be prohibited from entering the city and are hereby
directed to proceed to the common terminal, for picking-up and/or dropping of their passengers;
and (b) all temporary terminals in the City of Lucena are hereby declared inoperable starting
from the effectivity of this ordinance. It also provides that all jeepneys, mini-buses, and buses
shall use the grand central terminal of the city. JAC Liner, Inc. assailed the city ordinance 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.

Issue:

Whether or not the ordinance satisfies the requisite of valid exercise of police power, i.e. lawful
subject and lawful means.

37
Held:

The local government may be considered as having properly exercised its police power only if
the following requisites are met: (1) the interests of the public generally, as distinguished from
those of a particular class, require the interference of the State, and (2) the means employed are
reasonably necessary for the attainment of the object sought to be accomplished and not unduly
oppressive upon individuals. Otherwise stated, there must be a concurrence of a lawful subject
and lawful method.
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. 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. 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. 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. It is its reasonableness, not its effectiveness, which bears upon its
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.

2. Taxicab Operators of Metro Manila v. Board of Transportation Gr No. L-

59234, Sep 30, 1982

MELENCIO-HERRERA, J.:
This Petition for "Certiorari, Prohibition and Mandamus with Preliminary Injunction and
Temporary Restraining Order" filed by the Taxicab Operators of Metro Manila, Inc., Felicisimo
Cabigao and Ace Transportation, seeks to declare the nullity of Memorandum Circular No. 77-
42, dated October 10, 1977, of the Board of Transportation, and Memorandum Circular No. 52,
dated August 15, 1980, of the Bureau of Land Transportation.

Petitioner Taxicab Operators of Metro Manila, Inc. (TOMMI) is a domestic corporation

composed of taxicab operators, who are grantees of Certificates of Public Convenience to
operate taxicabs within the City of Manila and to any other place in Luzon accessible to vehicular
traffic. Petitioners Ace Transportation Corporation and Felicisimo Cabigao are two of the
members of TOMMI, each being an operator and grantee of such certificate of public
convenience.
On October 10, 1977, respondent Board of Transportation (BOT) issued Memorandum Circular
No. 77-42 which reads:
SUBJECT: Phasing out and Replacement of Old and Dilapidated Taxis
"WHEREAS, it is the policy of the government to insure that only safe and comfortable units are
used as public conveyances;
WHEREAS, the riding public, particularly in Metro-Manila, has, time and again, complained
against, and condemned, the continued operation of old and dilapidated taxis;
WHEREAS, in order that the commuting public may be assured of comfort, convenience, and
safety, a program of phasing out of old and dilapidated taxis should be adopted;

38
WHEREAS, after studies and inquiries made by the Board of Transportation, the latter believes
that in six years of operation, a taxi operator has not only covered the cost of his taxis, but has
made reasonable profit for his investments;

NOW, THEREFORE, pursuant to this policy, the Board hereby declares that no car beyond six
years shall be operated as taxi, and in implementation of the same hereby promulgates the
following rules and regulations:
1. As of December 31, 1977, all taxis of Model 1971 and earlier are ordered withdrawn from
public service and thereafter may no longer be registered and operated as taxis. In the
registration of cars for 1978, only taxis of Model 1972 and later shall be accepted for registration
and allowed for operation;
2. As of December 31, 1978, all taxis of Model 1972 are ordered withdrawn from public service
and thereafter may no longer be registered and operated as taxis. In the registration of cars for
1979, only taxis of Model 1973 and later shall be accepted for registration and allowed for
operation; and every year thereafter, there shall be a six-year lifetime of taxi, to wit:
1980 - Model 1974
1981 - Model 1975, etc.
All taxis of earlier models than those provided above are hereby ordered withdrawn from public
service as of the last day of registration of each particular year and their respective plates shall be
surrendered directly to the Board of Transportation for subsequent turnover to the Land
Transportation Commission.

For an orderly implementation of this Memorandum Circular, the rules herein shall immediately
be effective in Metro-Manila. Its implementation outside Metro-Manila shall be carried out only
after the project has been implemented in Metro-Manila and only after the date has been
determined by the Board."[1]
Pursuant to the above BOT circular, respondent Director of the Bureau of Land Transportation
(BLT) issued Implementing Circular No. 52, dated August 15, 1980, instructing the Regional
Director, the MV Registrars and other personnel of BLT, all within the National Capitol Region,
to implement said Circular, and formulating a schedule of phase-out of vehicles to be allowed
and accepted for registration as public conveyances. To quote said Circular:
"Pursuant to BOT Memo-Circular No. 77-42, taxi units with year models over six (6) years old
are now banned from operating as public utilities in Metro Manila. As such the units involved
should be considered as automatically dropped as public utilities and, therefore, do not require
any further dropping order from the BOT.
"Henceforth, taxi units within the National Capitol Region having year models over 6 years old
shall be refused registration. The following schedule of phase-out is herewith prescribed for the
guidance of all concerned:
"Year Model Automatic Phase-Out Year
1974 1980
1975 1981
1976 1982
1977 1983
etc. etc.

Strict compliance here is desired."[2]

In accordance therewith, cabs of model 1971 were phased-out in registration year 1978; those of
model 1972, in 1979; those of model 1973, in 1980; and those of model 1974, in 1981.
On January 27, 1981, petitioners filed a Petition with the BOT, docketed as Case No. 80-7553,
seeking to nullify MC No. 77-42 or to stop its implementation; to allow the registration and ope-
ration in 1981 and subsequent years of taxicabs of model 1974, as well as those of earlier models
which were phased-out, provided that, at the time of registration, they are roadworthy and fit
for operation.

39
On February 16, 1981, petitioners filed before the BOT a "Manifestation and Urgent Motion",
praying for an early hearing of their petition. The case was heard on February 20, 1981.
Petitioners presented testimonial and documentary evidence, offered the same, and manifested
that they would submit additional documentary proofs. Said proofs were submitted on March
27, 1981 attached to petitioners' pleading entitled, "Manifestation, Presentation of Additional
Evidence and Submission of the Case for Resolution."[3]
On November 28, 1981, petitioners filed before the same Board a "Manifestation and Urgent
Motion to Resolve or Decide Main Petition" praying that the case be resolved or decided not
later than December 10, 1981 to enable them, in case of denial, to avail of whatever remedy they
may have under the law for the protection of their interests before their 1975 model cabs are
phased-out on January 1, 1982.
Petitioners, through its President, allegedly made personal follow-ups of the case, but was later
informed that the records of the case could not be located.
On December 29, 1981, the present Petition was instituted wherein the following queries were
posed for consideration by this Court:
"A. Did BOT and BLT promulgate the questioned memorandum circulars in accord with the
manner required by Presidential Decree No. 101, thereby safeguarding the petitioners'
constitutional right to procedural due process?
B. Granting, arguendo, that respondents did comply with the procedural requirements imposed
by Presidential Decree No. 101, would the implementation and enforcement of the assailed
memorandum circulars violate the petitioners' constitutional rights to:
(1) Equal protection of the law;
(2) Substantive due process; and
(3) Protection against arbitrary and unreasonable classification and standard?

On Procedural and Substantive Due Process:

Presidential Decree No. 101 grants to the Board of Transportation the power
"4. To fix just and reasonable standards, classification, regulations, practices, measurements, or
service to be furnished, imposed, observed, and followed by operators of public utility motor
vehicles."

Section 2 of said Decree provides procedural guidelines for said agency to follow in the exercise
of its powers:
"Sec. 2. Exercise of powers. - In the exercise of the powers granted in the preceding section, the
Board shall proceed promptly along the method of legislative inquiry.

Apart from its own investigation and studies, the Board, in its discretion, may require the
cooperation and assistance of the Bureau of Transportation, the Philippine Constabulary,
particularly the Highway Patrol Group, the support agencies within the Department of Public
Works, Transportation and Communications, or any other government office or agency that may
be able to furnish useful information or data in the formulation of the Board of any policy, plan
or program in the implementation of this Decree.
The Board may also call conferences, require the submission of position papers or other
documents, information, or data by operators or other persons that may be affected by the
implementation of this Decree, or employ any other suitable means of inquiry."
In support of their submission that they were denied procedural due process, petitioners contend
that they were not called upon to submit their position papers, nor were they ever summoned to
attend any conference prior to the issuance of the questioned BOT Circular.
It is clear from the provision afore quoted, however, that the leeway accorded the Board gives it
a wide range of choice in gathering necessary information or data in the formulation of any
policy, plan or program. It is not mandatory that it should first call a conference or require the
submission of position papers or other documents from operators or persons who may be

40
affected, this being only one of the options open to the Board, which is given wide discretionary
authority. Petitioners cannot justifiably claim, therefore, that they were deprived of procedural
due process. Neither can they state with certainty that public respondents had not availed of
other sources of inquiry prior to issuing the challenged Circulars. Operators of public conveyances
are not the only primary sources of the data and information that may be desired by the BOT.
Dispensing with a public hearing prior to the issuance of the Circulars is neither violative of
procedural due process. As held in Central Bank vs. Hon. Cloribel and Banco Filipino, 44 SCRA
307 (1972):
"Previous notice and hearing as elements of due process, are constitutionally required for the
protection of life or vested property rights, as well as of liberty, when its limitation or loss takes
place in consequence of a judicial or quasi-judicial proceeding, generally dependent upon a past
act or event which has to be established or ascertained. It is not essential to the validity of
general rules or regulations promulgated to govern future conduct of a class or persons or
enterprises, unless the law provides otherwise." (Emphasis supplied)

Petitioners further take the position that fixing the ceiling at six (6) years is arbitrary and
oppressive because the roadworthiness of taxicabs depends upon their kind of maintenance and
the use to which they are subjected, and, therefore, their actual physical condition should be
taken into consideration at the time of registration. As public respondents contend, however, it is
impractical to subject every taxicab to constant and recurring evaluation, not to speak of the fact
that it can open the door to the adoption of multiple standards, possible collusion, and even
graft and corruption. A reasonable standard must be adopted to apply to all vehicles affected
uniformly, fairly, and justly. The span of six years supplies that reasonable standard. The product
of experience shows that by that time taxis have fully depreciated, their cost recovered, and a fair
return on investment obtained. They are also generally dilapidated and no longer fit for safe and
comfortable service to the public specially considering that they are in continuous operation
practically 24 hours everyday in three shifts of eight hours per shift. With that standard of
reasonableness and absence of arbitrariness, the requirement of due process has been met.
On Equal Protection of the Law:
Petitioners allege that the Circular in question violates their right to equal protection of the law
because the same is being enforced in Metro Manila only and is directed solely towards the taxi
industry. At the outset it should be pointed out that implementation outside Metro Manila is also
envisioned in Memorandum Circular No. 77-42. To repeat the pertinent portion:
"For an orderly implementation of this Memorandum Circular, the rules herein shall immediately
be effective in Metro Manila. Its implementation outside Manila shall be carried out only after
the project has been implemented in Metro Manila and only after the date has been determined
by the Board."[4]

In fact, it is the understanding of the Court that implementation of the Circulars in Cebu City is
already being effected, with the BOT in the process of conducting studies regarding the operation
of taxicabs in other cities.
The Board's reason for enforcing the Circular initially in Metro Manila is that taxicabs in this city,
compared to those of other places, are subjected to heavier traffic pressure and more constant
use. This is of common knowledge. Considering that traffic conditions are not the same in every
city, a substantial distinction exists so that infringement of the equal protection clause can hardly
be successfully claimed.
As enunciated in the preambular clauses of the challenged BOT Circular, the overriding
consideration is the safety and comfort of the riding public from the dangers posed by old and
dilapidated taxis. The State, in the exercise of its police power, can prescribe regulations to
promote the health, morals, peace, good order, safety and general welfare of the people. It can
prohibit all things hurtful to comfort, safety and welfare of society.[5] It may also regulate
property rights.[6] In the language of Chief Justice Enrique M. Fernando "the necessities imposed
by public welfare may justify the exercise of governmental authority to regulate even if thereby
certain groups may plausibly assert that their interests are disregarded".[7]

41
In so far as the non-application of the assailed Circulars to other transportation services is
concerned, it need only be recalled that the equal protection clause does not imply that the same
treatment be accorded all and sundry. It applies to things or persons identically or similarly
situated. It permits of classification of the object or subject of the law provided classification is
reasonable or based on substantial distinction, which make for real differences, and that it must
apply equally to each member of the class.[8] What is required under the equal protection clause
is the uniform operation by legal means so that all persons under identical or similar circumstance
would be accorded the same treatment both in privilege conferred and the liabilities
imposed.[9] The challenged Circulars satisfy the foregoing criteria.
Evident then is the conclusion that the questioned Circulars do not suffer from any constitutional
infirmity. To declare a law unconstitutional, the infringement of constitutional right must be
clear, categorical and undeniable.[10]
WHEREFORE, the Writs prayed for are denied and this Petition is hereby dismissed. No costs.
SO ORDERED.

Or

Taxicab Operators v. The Board of Transportation GR L-59234, 30 September 1982

Facts:

Taxicab Operators of Metro Manila, Inc. (TOMMI) is a domestic corporation composed of taxicab
operators, who are grantees of Certificates of Public Convenience to operate taxicabs within the City of
Manila and to any other place in Luzon accessible to vehicular traffic. Ace Transportation Corporation and
Felicisimo Cabigao are two of the members of TOMMI, each being an operator and grantee of such
certificate of public convenience.

On 10 October 1977, Board of Transportation (BOT) issued Memorandum Circular 77-42 which phases
out old and dilapidated taxis; refusing registration to taxi units within the National Capitol Region having
year models over 6 years old. Pursuant to the above BOT circular, Director of the Bureau of Land
Transportation (BLT) issued Implementing Circular 52, dated 15 August 1980, instructing the Regional
Director, the MV Registrars and other personnel of BLT, all within the NCR, to implement said Circular,
and formulating a schedule of phase-out of vehicles to be allowed and accepted for registration as public
conveyances. In accordance therewith, cabs of model 1971 were phase-out in registration year 1978;
those of model 1972, in 1979; those of model 1973, in 1980; and those of model 1974, in 1981.

On 27 January 1981, petitioners filed a Petition with the BOT (Case 80-7553), seeking to nullify MC 77-42
or to stop its implementation; to allow the registration and operation in 1981 and subsequent years of
taxicabs of model 1974, as well as those of earlier models which were phased-out, provided that, at the
time of registration, they are roadworthy and fit for operation. On 16 February 1981, petitioners filed
before the BOT a Manifestation and Urgent Motion, praying for an early hearing of their petition. The
case was heard on 20 February 1981. On 28 November 1981, petitioners filed before the same Board a
Manifestation and Urgent Motion to Resolve or Decide Main Petition praying that the case be resolved
or decided not later than 10 December 1981 to enable them, in case of denial, to avail of whatever
remedy they may have under the law for the protection of their interests before their 1975 model cabs are
phased-out on 1 January 1982. Petitioners, through its President, allegedly made personal follow-ups of
the case, but was later informed that the records of the case could not be located. On 29 December 1981,
the present Petition was instituted.

The Supreme Court denied the writs prayed for and dismissed the petition; without costs.

1. Rationale behind exercise of police power

The overriding consideration is the safety and comfort of the riding public from the dangers posed by old
and dilapidated taxis. The State, in the exercise of its police power, can prescribe regulations to promote
the health, morals, peace, good order, safety and general welfare of the people. It can prohibit all things
hurtful to comfort, safety and welfare of society. It may also regulate property rights. The necessities
imposed by public welfare may justify the exercise of governmental authority to regulate even if thereby
certain groups may plausibly assert that their interests are disregarded.

42
3. Bautista vs. Juinio GR L-50908, 31 January 1984

FACTS: The President of the Philippines issued a Letter of Instruction No. 869 on May 31, 1979
in response to the protracted oil crisis that dated back to 1974. Pursuant thereto, respondent
Alfredo L. Juinio, then Minister of Public Works, Transportation and Communications and
respondent Romeo P. Edu, then Commissioner of Land Transportation Commission issued
Memorandum Circular No. 39, which imposed "the penalties of fine, confiscation of vehicle and
cancellation of registration on owners of the specified vehicles" found violating such Letter of
Instruction. Spouses Mary Concepcion Bautista and Enrique Bautista questioned the validity of
the energy conservation measure through a prohibition proceeding with the Supreme Court. It
was alleged by petitioners that "while the purpose for the issuance of the LOI 869 is laudable, to
wit, energy conservation, the provision banning the use private motor vehicles with H and EH
plates is unfair, discriminatory, [amounting to an] arbitrary classification" and thus in
contravention of the equal protection clause. Moreover, for them, such Letter of Instruction is a
denial of due process, more specifically, of their right to use and enjoy their private property
and of their freedom to travel and hold family gatherings, reunions and outings on week-ends
and holidays." It would follow, so they contend that Memorandum Circular No. 39 imposing
penalties of fine, confiscation of the vehicle and cancellation of license is likewise
unconstitutional, for being violative of the doctrine of "undue delegation of legislative power."

ISSUE: Whether or not Letter of Instruction 869 as implemented by Memorandum Circular No.
39 is violative of certain constitutional rights.

HELD: The petition was dismissed because of the "presumption of constitutionality" or in slightly
different words "a presumption that such an act falls within constitutional limitations." There is
need then for a factual foundation of invalidity. The principle has been nowhere better expressed
than in the leading case of O'Gorman & Young v. Hartford Fire Insurance Co., where the
American Supreme Court summed up the matter thus: 'The statute here questioned deals with a
subject clearly within the scope of the police power. We are asked to declare it void on the
ground that the specific method of regulation prescribed is unreasonable and hence deprives the
plaintiff of due process of law. As underlying questions of fact may condition the constitutionality
of legislation of this character, the presumption of constitutionality must prevail in the absence of
some factual foundation of record for overthrowing the statute.' "

In fact, the recital of the whereas clauses of the Letter of Instruction makes it clear that the
substantive due process, which is the epitome of reasonableness and fair play, was not ignored,
much less infringed. Furthermore, in the interplay between such a fundamental right and police
power, especially so where the assailed governmental action deals with the use of one's property,
the latter is accorded much leeway. Due process, therefore, cannot be validly invoked. As
stressed in the Ermita-Malate Hotel decision: "To hold otherwise would be to unduly restrict and
narrow the scope of police power which has been properly characterized as the most essential,
insistent and the least limitable of powers, extending as it does 'to all the great public needs.' It
would be to destroy the very purpose of the state if it could be deprived or allowed itself to be
deprived of its competence to promote public health, public morals, public safety and the general
welfare. Negatively put, police power is 'that inherent and plenary power in the State which
enables it to prohibit all that is hurtful to the comfort, safety, and welfare of society.' "

Furthermore, the Court observed that there was no violation of equal protection. There was a
situation that called for a corrective measure and LOI was the solution which for the President
expressing a power validly lodged in him, recommended itself. He decided that what was issued
by him would do just that or, at the very least, help in easing the situation. If it did not cover
other matters which could very well have been regulated does not call for a declaration of

43
nullity. The President "is not required by the Constitution to adhere to the policy of all or none"
(Lutz v. Araneta).

Absent, therefore, of the alleged infringement of constitutional rights, more precisely the due
process and equal protection guarantees, the Court cannot adjudge Letter of Instruction No. 869
as tainted by unconstitutionality. The Memorandum Circular No. 39 was likewise considered
valid for as long as it is limited to what is provided for in the legislative enactment and it relates
solely to carrying into effect the provisions of the law.

4. Sangalang v. IAC G.R. No. 71169. December 22, 1988

FACTS:
The Mayor of Makati directed Bel-Air Village Association (BAVA) to opening of several streets to
the general public, after a series of developments in zoning regulations. All but Jupiter St. was
voluntarily opened. The strong opposition later gave way when the municipal officials force-
opened the gates of said street for public use. The area ceased to be purely residential. Action for
damages was brought against Ayala Corporation and BAVA for alleged breach of contract, to
maintain the purely residential status of the area. Other similarly situated also filed their
respective cases. All were dismissed in the trial court. The Court of Appeals affirmed the said
dismissals.

ISSUE:
Whether or not there is a contract between homeowners and Ayala Corporation violated in
opening the Jupiter street for public use.

HELD:
No. There was no contract to speak of in the case, hence nothing was violated.

RATIO:
Petitioners cannot successfully rely on the alleged promise by Ayala Corporation, to build a
fence along Jupiter street with gate for entrance and/or exit as evidence of Ayalas alleged
continuing obligation to maintain a wall between the residential and commercial sections.
Assuming there was a contract violated, it was still overtaken by the passage of zoning ordinances
which represent a legitimate exercise of police power. The petitioners have not shown why
Courts should hold otherwise other than for the supposed non-impairment guaranty of the
Constitution, which is secondary to the more compelling interests of general welfare. The
Ordinance has not been shown to be capricious or arbitrary or unreasonable to warrant the
reversal of the judgments so appealed.

Or

G.R. No. 71169 December 22, 1988

JOSE D. SANGALANG and LUTGARDA D. SANGALANG, petitioners, FELIX C. GASTON and

DOLORES R. GASTON, JOSE V. BRIONES and ALICIA R. BRIONES, and BEL-AIR VILLAGE
ASSOCIATION, INC., intervenors-petitioners,
vs.
INTERMEDIATE APPELLATE COURT, and AYALA CORPORATION, respondents.

G.R. No. 74376 December 22, 1988

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,

vs.

44
THE INTERMEDIATE APPELLATE COURT, ROSARIO DE JESUS TENORIO, and CECILIA
GONZALVEZ, respondents.

G.R. No. 76394 December 22, 1988

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,

vs.
THE COURT OF APPEALS, and EDUARDO and BUENA ROMUALDEZ respondents.

G.R. No. 78182 December 22, 1988

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,

vs.
COURT OF APPEALS, DOLORES FILLEY, and J. ROMERO & ASSOCIATES, respondents.

G.R. No. 82281 December 22, 1988

BEL-AIR VILLAGE ASSOCIATION, INC, petitioner,

vs.
COURT OF APPEALS, VIOLETA MONCAL, and MAJAL DEVELOPMENT
CORPORATION, respondents.

Sangco, Anastacio, Castaneda & Duran Law Office for petitioners & private intervenors- petitioners.

Raul S. Sison Law Offices for intervenor-petitioner Bel-Air Village Association, Inc. Renato L. Dela
Fuente for respondent Ayala Corporation.

G.R. No. L-74376:

Raul S. Sison Law Offices for petitioner.

Sergio L. Guadiz for private respondents.

G.R. No. L-76394:

Raul S. Sison Law Offices for petitioner.

Gruba, Tanlimco Lamso and Apuhin Law Offices for respondents.

G.R. No. L-78182:

Funk & Associates for petitioners.

Tee Tomas & Associates for respondents.

G.R. No. L-82281:

Funk & Associates for petitioner.

Castillo, Laman, Tan & Associates for private respondents.

SARMIENTO, J.:

Before the Court are five consolidated petitions, 1 docketed as G.R. Nos. 71169, 74376, 76394, 78182, and 82281 hereof, in the nature of
appeals (by certiorari under Rule 45 of the Rules of Court) from five decisions of the Court of Appeals, denying specific performance and
damages.

The proceedings were commenced at the first instance by Jose Sangalang, joined by his wife
Lutgarda Sangalang, both residents of No. 110 Jupiter Street, Makati, Metro Manila (G.R. No.
71169) to enforce by specific performance restrictive easement upon property, specifically the Bel-

45
Air Village subdivision in Makati, Metro Manila, pursuant to stipulations embodied in the deeds of
sale covering the subdivision, and for damages. Later, the Sangalangs were joined by Felix Gaston,
a resident of No. 64 Jupiter Street of the same municipality, and by Mr. and Mrs. Jose and Alicia
Briones, both of No. 66 Jupiter Street. Pending further proceedings, the Bel-Air Village Association,
Inc. (BAVA), an incorporated homeowners' association, entered its appearance as plaintiff-in-
intervention.

BAVA itself had brought its own complaints, four in number, likewise for specific performance and
damages to enforce the same 'deed restrictions.' (See G.R. Nos. 74376, 76394, 78182, and 82281.)

ANTECEDENTS FACTS

I. G.R. No. 71169

The facts are stated in the decision appealed from. We quote:

xxxxxxxxx

(1) Bel-Air Village is located north of Buendia Avenue extension (now Sen. Gil J.
Puyat Ave.) across a stretch of commercial block from Reposo Street in the west up
to Zodiac Street in the east, When Bel-Air Village was planned, this block between
Reposo and Zodiac Streets adjoining Buendia Avenue in front of the village was
designated as a commercial block. (Copuyoc TSN, p. 10, Feb. 12, 1982).

(2) Bel-Air Village was owned and developed into a residential subdivision in the
1950s by Makati Development Corporation (hereinafter referred to as MDC), which in
1968 was merged with appellant Ayala Corporation.

(3) Appellees-spouses Sangalang reside at No. 11O Jupiter Street between Makati
Avenue and Reposo Street; appellees-spouses Gaston reside at No. 64 Jupiter
Street between Makati Avenue and Zodiac Street; appellees-spouses Briones reside
at No. 66 Jupiter Street also between Makati Avenue and Zodiac Street; while
appellee Bel-Air Village Association, Inc. (hereinafter referred to as BAVA) is the
homeowners' association in Bel-Air Village which takes care of the sanitation,
security, traffic regulations and general welfare of the village.

(4) The lots which were acquired by appellees Sangalang and spouse Gaston and
spouse and Briones and spouse in 1960, 1957 and 1958, respectively, were all sold
by MDC subject to certain conditions and easements contained in Deed Restrictions
which formed a part of each deed of sale. The pertinent provisions in said Deed
Restrictions, which are common to all lot owners in Bel-Air Village, are as follows:

I-BEL-AIR ASSOCIATION

The owner of this lot/s or his successors in interest is required to be and is

automatically a member of the Bel-Air Association and must abide by such rules and
regulations laid down by the Association in the interest of the sanitation, security and
the general welfare of the community.

The association will also provide for and collect assessments, which will constitute as
a lien on the property junior only to liens of the government for taxes and to voluntary
mortgages for sufficient consideration entered into in good faith.

II-USE OF LOTS

Subject to such amendments and additional restrictions, reservations, servitudes,

etc., as the Bel- Air Association may from time to time adopt and prescribe, this lot is
subject to the following restrictions:

a. This lot/s shall not be subdivided. However, three or more lots may be
consolidated and subdivided into a lesser number of lots provided that none of the
resulting lots be smaller in area than the smallest lot before the consolidation and

46
that the consolidation and subdivision plan be duly approved by the governing body
of the Bel-Air Association.

b. This lot/s shall only be used for residential purposes.

c. Only one single family house may be constructed on a single lot, although
separate servants' quarters or garage may be built.

d. Commercial or advertising signs shall not be placed, constructed, or erected on

this lot. Name plates and professional signs of homeowners are permitted so long as
they do not exceed 80 x 40 centimeters in size.

e. No cattle, pigs, sheep, goats, ducks, geese, roosters or rabbits shall be maintained
in the lot, except that pets may be maintained but must be controlled in accordance
with the rulings of the Association. The term "pets' includes chickens not in
commercial quantities.

f. The property is subject to an easement of two (2) meters within the lot and
adjacent to the rear and sides thereof not fronting a street for the purpose of
drainage, sewage, water and other public facilities as may be necessary and
desirable; and the owner, lessee or his representative shall permit access thereto by
authorized representatives of the Bel-Air Association or public utility entities for the
purposes for which the easement is created.

g. This lot shall not be used for any immoral or illegal trade or activity.

h. The owner and/or lessee of this lot/s shall at all times keep the grass cut and
trimmed to reduce the fire hazard of the property.

xxx xxx xxx

VI-TERM OF RESTRICTIONS

The foregoing restrictions shall remain in force for fifty years from January 15, 1957,
unless sooner cancelled in its entirety by two thirds vote of members in good
standing of the Bel-Air Association. However, the Association may, from time to time,
add new ones, amend or abolish particular restrictions or parts thereof by majority
rule.

VII--ENFORCEMENT OF RESTRICTIONS

The foregoing restrictions may be enjoined and/or enforced by court action by the
Bel-Air Association, or by the Makati Development Corporation or its assigns, or by
any registered owner of land within the boundaries of the Bel-Air Subdivision (Sub-
division plan PSD-49226 and Lot 7-B, Psd-47848) or by any member in good
standing of the Bel-Air association." (Exh. 1 -b; Exh. 22, Annex "B"). (Appellant's
Brief, pp. 4- 6)

(5) When MDC sold the above-mentioned lots to appellees' predecessors-in-interest,

the whole stretch of the commercial block between Buendia Avenue and Jupiter
Street, from Reposo Street in the west to Zodiac Street in the east, was still
undeveloped. Access, therefore, to Bel-Air Village was opened to all kinds of people
and even animals. So in 1966, although it was not part of the original plan, MDC
constructed a fence or wall on the commercial block along Jupiter Street. In 1970,
the fence or wall was partly destroyed by typhoon "Yoling." The destroyed portions
were subsequently rebuilt by the appellant. (Copuyoc TSN, pp. 31-34, Feb. 12,
1982). When Jupiter Street was widened in 1972 by 3.5 meters, the fence or wall had
to be destroyed. Upon request of BAVA, the wall was rebuilt inside the boundary of
the commercial block. (Copuyoc TSN, pp. 4447, Feb. 12,1982).

(6) When the appellant finally decided to subdivide and sell the lots in the commercial
block between Buendia and Jupiter, BAVA wrote the appellant on May 9, 1972,
requesting for confirmation on the use of the commercial lots. The appellant replied

47
 on May 16, 1972, informing BAVA of the restrictions intended to be imposed in the
sale and use of the lots. Among these restrictions are: that the building shall have a
setback of 19 meters; and that with respect to vehicular traffic along Buendia
Avenue, entrance only will be allowed, and along Jupiter Street and side streets, both
entrance and exit will be allowed.

(7) On June 30, 1972, appellant informed BAVA that in a few months it shall
subdivide and sell the commercial lots bordering the north side of Buendia Avenue
Extension from Reposo Street up to Zodiac Street. Appellant also informed BAVA
that it had taken all precautions and will impose upon the commercial lot owners
deed restrictions which will harmonize and blend with the development and welfare
of Bel-Air Village. Appellant further applied for special membership in BAVA of the
commercial lot owners. A copy of the deed restrictions for the commercial lots was
also enclosed. The proposed deed restrictions shall include the 19 meter set back of
buildings from Jupiter Street, the requirement for parking space within the lot of one
(1) parking slot for every seventy five (75) meters of office space in the building and
the limitation of vehicular traffic along Buendia to entrance only, but allowing both
vehicular entrance and vehicular exit through Jupiter Street and any side street.

In its letter of July 10, 1972, BAVA acknowledged the above letter of appellant and
informed the latter that the application for special membership of the commercial lot
owners in BAVA would be submitted to BAVA's board of governors for decision.

(8) On September 25, 1972, appellant notified BAVA that, after a careful study, it was
finally decided that the height limitation of buildings on the commercial lots shall be
increased from 12.5 meters to 15 meters. Appellant further informed BAVA that
Jupiter Street shall be widened by 3.5 meters to improve traffic flow in said street.
BAVA did not reply to said letter, but on January 22, 1973, BAVA wrote a letter to the
appellant informing the latter that the Association had assessed the appellant, as
special member of the association, the amount of P40,795.00 (based on 81,590
square meters at P.50 per square meter) representing the membership dues to the
commercial lot owners for the year 1973, and requested the appellant to remit the
amount which its board of governors had already included in its current budget. In
reply, appellant on January 31, 1973 informed BAVA that due to the widening of
Jupiter Street, the area of the lots which were accepted by the Association as
members was reduced to 76,726 square meters. Thus, the corresponding dues at
P.50 per square meter should be reduced to P38,363.00. This amount, therefore,
was remitted by the appellant to BAVA. Since then, the latter has been collecting
membership dues from the owners of the commercial lots as special members of the
Association. As a matter of fact, the dues were increased several times. In 1980, the
commercial lot owners were already being charged dues at the rate of P3.00 per
square meter. (Domingo, TSN, p. 36, March 19, 1980). At this rate, the total
membership dues of the commercial lot owners amount to P230,178. 00 annually
based on the total area of 76,726 square meters of the commercial lots.

(9) Meantime, on April 4, 1975, the municipal council of Makati enacted its ordinance
No. 81, providing for the zonification of Makati (Exh. 18). Under this Ordinance, Bel-
Air Village was classified as a Class A Residential Zone, with its boundary in the
south extending to the center line of Jupiter Street (Exh. 18-A).

Thus, Chapter III, Article 1, Section 3.03, par. F. of the Ordinance provides:

F. Bel-Air Village area, as bounded on the N by Polaris and Mercedes streets and on
the NE by Estrella Street; on the SE by Epifanio de los Santos Avenue and on the
SW by the center line of Jupiter Street. Then bounded on the N by the abandoned
MRR Pasig Line; on the E by Makati Avenue; on the S by the center line of Jupiter
Street and on the W by the center line of Reposo Street." (Exh. 18-A)

Similarly, the Buendia Avenue Extension area was classified as Administrative Office
Zone with its boundary in the North-North East Extending also up to the center line of
Jupiter Street (Exh. 18b).

Thus, Chapter III, Article I, Section 3.05, par. C. of the Ordinance provides:

48
 C. The Buendia Avenue Extension areas, as bounded on the N-NE by the center line
of Jupiter Street, on the SE by Epifanio de los Santos Avenue; on the SW by
Buendia Avenue and on the NW by the center line of Reposo Street, then on the NE
by Malugay Street; on the SE by Buendia Avenue and on the W by Ayala Avenue
Extension." (Exh. 18-B)

The Residential Zone and the Administrative Office Zone, therefore, have a common
boundary along the center line of Jupiter Street.

The above zoning under Ordinance No. 81 of Makati was later followed under the
Comprehensive Zoning Ordinance for the National Capital Region adopted by the
Metro Manila Commission as Ordinance 81 -01 on March 14, 1981 (Exh. 19).
However, under this ordinance, Bel-Air Village is simply bounded in the South-
Southeast by Jupiter Street-not anymore up to the center line of Jupiter Street (Exh.
B). Likewise, the blockdeep strip along the northwest side of Buendia Avenue
Extension from Reposo to EDSA was classified as a High Intensity Commercial Zone
(Exh. 19-c).

Thus, the Zoning District Boundaries -Makati, in Annex B of the Ordinance provides:

R-I-Low Intensity Residential

xxxxxxxxx

4. Bel-Air 1, 3, 4

Bounded on the North -- J.P. Rizal and Amapola St.

South - Rockwell

Northwest - P. Burgos

Southeast - Jupiter

Southwest - Epifanio de los Santos Ave. (EDSA)

5. Bel-Air 2

Bounded on the Northwest - J.P. Rizal

Southwest - Makati Avenue

South --- Jupiter

Southeast -- Pasig Line

East - South Avenue" (Exh. 19-b)

xxxxxxxxx

C-3-High Intensity Commercial Zone

2. A block deep strip along the northwest side of Buendia Ave. Ext. from Reposo to
EDSA." (Exh, 19-c)

Under the above zoning classifications, Jupiter Street, therefore, is a common

boundary of Bel-Air Village and the commercial zone.

(10) Meanwhile, in 1972, BAVA had installed gates at strategic locations across
Jupiter Street which were manned and operated by its own security guards who were
employed to maintain, supervise and enforce traffic regulations in the roads and

49
streets of the village. (Villavicencio, TSN, pp, 22-25, Oct. 30, 1980; BAVA Petition,
par. 11, Exh. 17).

Then, on January 17, 1977, the Office of the Mayor of Makati wrote BAVA directing
that, in the interest of public welfare and for the purpose of easing traffic congestion,
the following streets in Bel-Air Village should be opened for public use:

Amapola Street - from Estrella Street to Mercedes Street

Amapola Street -junction of Palma Street gate going to J. Villena Street

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

Zodiac Street - from Mercedes Street to Buendia Avenue

Jupiter Street -- from Zodiac Street to Reposo Street connecting Metropolitan

Avenue to Pasong Tamo and V. Cruz Extension intersection

Neptune Street - from Makati Avenue to Reposo Street Orbit Street - from F. Zobel-
Candelaria intersection to Jupiter Street

Paseo de Roxas - from Mercedes Street to Buendia Avenue (Exh. 17, Annex A,
BAVA Petition)

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

However, BAVA voluntarily opened to the public Amapola, Mercedes, Zodiac,

Neptune and Paseo de Roxas streets. (Exh. 17-A, Answer of Makati par. 3-7).

Later, on June 17,1977, the Barangay Captain of Bel-Air Village was advised by the
Office of the Mayor that, in accordance with the agreement entered into during the
meeting on January 28, 1 977, the Municipal Engineer and the Station Commander
of the Makati Police were ordered to open for public use Jupiter Street from Makati
Avenue to Reposo Street. Accordingly, he was requested to advise the village
residents of the necessity of the opening of the street in the interest of public welfare.
(Exh. 17, Annex E, BAVA Petition).

Then, on June 10, 1977, the Municipal Engineer of Makati in a letter addressed to
BAVA advised the latter to open for vehicular and pedestrian traffic the entire portion
of Jupiter Street from Makati Avenue to Reposo Street (Exh. 17, BAVA Petition, par.
14).

Finally, on August 12, 1977, the municipal officials of Makati concerned allegedly
opened, destroyed and removed the gates constructed/located at the corner of
Reposo Street and Jupiter Street as well as the gates/fences located/constructed at
Jupiter Street and Makati Avenue forcibly, and then opened the entire length of
Jupiter Street to public traffic. (Exh. 17, BAVA Petition, pars. 16 and 17).

(11) Before the gates were-removed, there was no parking problem or traffic problem
in Jupiter Street, because Jupiter Street was not allowed to be used by the general
public (Villavicencio, TSN, pp. 24-25, Oct. 30, 1980). However, with the opening of
Zodiac Street from Estrella Street to Jupiter Street and also the opening to the public
of the entire length of Jupiter Street, there was a tremendous increase in the volume
of traffic passing along Jupiter Street coming from EDSA to Estrella Street, then to
Zodiac Street to Jupiter Street, and along the entire length of Jupiter Street to its
other end at Reposo Street. (Villavicencio, TSN, pp. 30-32, Oct. 30, 1980).

In the meantime, the purchasers of the commercial lots between Jupiter Street and
Buendia Avenue extension had started constructing their respective buildings in
1974-1975. They demolished the portions of the fence or wall standing within the

50
boundary of their lots. Many of the owners constructed their own fences or walls in
lieu of the wall and they employed their own security guards. (TSN, p. 83, Feb.
20,1981; TSN, pp. 53-54; 72-74, March 20,1981; TSN, pp. 54-55, July 23, 1981).

(12) Then, on January 27, 1978, appellant donated the entire Jupiter Street from
Metropolitan Avenue to Zodiac Street to BAVA (Exh. 7)- However, even before 1978,
the Makati Police and the security force of BAVA were already the ones regulating
the traffic along Jupiter Street after the gates were opened in 1977. Sancianco TSN,
pp. 26-30, Oct. 2,1981).

In October, 1979, the fence at the corner of Orbit and Neptune Streets was opened
and removed (BAVA Petition, par. 22, Exh. 17). The opening of the whole stretch of
Orbit Street from J.P. Rizal Avenue up to Imelda Avenue and later to Jupiter Street
was agreed to at the conference attended by the President of BAVA in the office of
the Station Commander of Makati, subject to certain conditions, to wit:

That, maintenance of Orbit St. up to Jupiter St. shall be shouldered by the

Municipality of Makati.

That, street lights will be installed and maintenance of the same along Orbit St. from
J.P. Rizal Ave. up to Jupiter St. shall be undertaken by the Municipality.

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

(13) Thus, with the opening of the entire length of Jupiter Street to public traffic, the
different residential lots located in the northern side of Jupiter Street ceased to be
used for purely residential purposes. They became, for all purposes, commercial in
character.

(14) Subsequently, on October 29, 1979, the plaintiffs-appellees Jose D. Sangalang

and Lutgarda D. Sangalang brought the present action for damages against the
defendant-appellant Ayala Corporation predicated on both breach of contract and on
tort or quasi-delict A supplemental complaint was later filed by said appellees
seeking to augment the reliefs prayed for in the original complaint because of alleged
supervening events which occurred during the trial of the case. Claiming to be
similarly situated as the plaintiffs-appellees, the spouses Felix C. Gaston and
Dolores R. Gaston, Jose V. Briones and Alicia R. Briones, and the homeowners'
association (BAVA) intervened in the case.

(15) After trial on the merits, the then Court of First Instance of Rizal, Pasig, Metro
Manila, rendered a decision in favor of the appellees the dispositive portion of which
is as follows:

WHEREFORE, judgment is hereby accordingly rendered as follows:

ON PLAINTIFFS' COMPLAINT:

Defendant is ordered to pay to the plaintiffs-spouses Sangalang the following

damages:

1. The sum of P500,000.00 as actual and consequential damages;

2. The sum of P2,000,000.00 as moral damages;

3. The sum of P500,000.00 as exemplary damages;

4. The sum of P100,000.00 as attorney's fees; and

51
5. The costs of suit.

ON INTERVENORS FELIX and DOLORES GASTON'S COMPLAINT:

Defendant is ordered to pay to the spouses Felix and Dolores Gaston, the following
damages:

1 . The sum of P400,000.00 as consequential damages;

2 The sum of P500,000.00 as moral damages;

3 The sum of P500,000.00 as exemplary damages:

4 The sum of P50,000.00 as attorney's fees; and

5 The costs of suit.

ON INTERVENORS JOSE and ALICIA BRIONES' COMPLAINT:

Defendant is ordered to pay to the spouses Jose and Alicia Briones, the following
damages:

1 . The sum of P400,000.00 as consequential damages;

2 The sum of P500,000.00 as moral damages;

3 The sum of P500,000.00 as exemplary damages;

4 The sum of P50,000.00 as attorney's fees; and

5 The costs of suit.

ON INTERVENOR BAVA'S COMPLAINT:

Defendant is ordered to pay intervenor BAVA, the following damages:

1. The sum of P400,000.00 as consequential damages;

2. The sum of P500,000.00 as exemplary damages;

3. The sum of P50,000.00 as attorney's fees; and

4. The costs of suit.

The above damages awarded to the plaintiffs and intervenors shall bear legal interest
from the filing of the complaint.

Defendant is further ordered to restore/reconstruct the perimeter wall at its original

position in 1966 from Reposo Street in the west to Zodiac Street in the east, at its
own expense, within SIX (6) MONTHS from finality of judgment.

SO ORDERED.

(Record on Appeal, pp. 400-401) 2

xxxxxxxxx

On appeal, the Court of Appeals 3 rendered a reversal, and disposed as follows:

52
 ACCORDINGLY, finding the decision appealed from as not supported by the facts
and the law on the matter, the same is hereby SET ASIDE and another one entered
dismissing the case for lack of a cause of action. Without pronouncement as to costs.

SO ORDERED

5. Lim vs. Pacquing G.R. No. 115044. January 27, 1995

Ponente: PADILLA, J.

FACTS:
The Charter of the City of Manila was enacted by Congress on 18 June 1949 (R.A. No. 409).

On 1 January 1951, Executive Order No. 392 was issued transferring the authority
to regulate jai-alais from local government to the Games and Amusements Board (GAB).
On 07 September 1971, however, the Municipal Board of Manila nonetheless passed
Ordinance No. 7065 entitled An Ordinance Authorizing the Mayor To Allow And Permit
The Associated Development Corporation To Establish, Maintain And Operate A Jai-Alai In
The City Of Manila, Under Certain Terms And Conditions And For Other Purposes.
On 20 August 1975, Presidential Decree No. 771 was issued by then President Marcos. The
decree, entitled Revoking All Powers and Authority of Local Government(s) To Grant
Franchise, License or Permit And Regulate Wagers Or Betting By The Public On Horse And
Dog Races, Jai-Alai Or Basque Pelota, And Other Forms Of Gambling, in Section 3 thereof,
expressly revoked all existing franchises and permits issued by local governments.
In May 1988, Associated Development Corporation (ADC) tried to operate a Jai-Alai. The
government through Games and Amusement Board intervened and invoked Presidential Decree
No. 771 which expressly revoked all existing franchises and permits to operate all forms of
gambling facilities (including Jai-Alai) by local governments. ADC assails the constitutionality of
P.D. No. 771.

ISSUE:
Whether or not P.D. No. 771 is violative of the equal protection and non-impairment clauses of
the Constitution.

HELD:
NO. P.D. No. 771 is valid and constitutional.

RATIO:
Presumption against unconstitutionality. There is nothing on record to show or even suggest that
PD No. 771 has been repealed, altered or amended by any subsequent law or presidential
issuance (when the executive still exercised legislative powers).
Neither can it be tenably stated that the issue of the continued existence of ADCs franchise by
reason of the unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for the decision
of the Courts First Division in said case, aside from not being final, cannot have the effect of
nullifying PD No. 771 as unconstitutional, since only the Court En Banc has that power under
Article VIII, Section 4(2) of the Constitution.
And on the question of whether or not the government is estopped from contesting ADCs
possession of a valid franchise, the well-settled rule is that the State cannot be put in estoppel by
the mistakes or errors, if any, of its officials or agents. (Republic v. Intermediate Appellate Court,
209 SCRA 90)

Or

53
Alfredo S. Lim V. Felipe G. Pacquing G.R No. 115044, Jan 27, 1995

PADILLA, J.:
These two (2) cases which are inter-related actually involve simple issues. If these issues have
apparently become complicated, it is not by reason of their nature but because of the events
and dramatis personae involved.

The petition in G.R. No. 115044 was dismissed by the First Division of this Court on 01
September 1994 based on a finding that there was "no abuse of discretion, much less lack of or
excess of jurisdiction, on the part of respondent judge [Pacquing]", in issuing the questioned
orders. Judge Pacquing had earlier issued in Civil Case No. 88-45660, RTC of Manila, Branch 40,
the following orders which were assailed by the Mayor of the City of Manila, Hon. Alfredo S.
Lim, in said G.R. No. 115044:

a. order dated 28 March 1994 directing Manila Mayor Alfredo S. Lim to issue
the permit/license to operate the jai-alai in favor of Associated Development Corporation (ADC).

b. order dated 11 April 1994 directing Mayor Lim to explain why he should not be cited for
contempt for non-compliance with the order dated 28 March 1994.

c. order dated 20 April 1994 reiterating the previous order directing Mayor Lim to immediately
issue the permit/license to Associated Development Corporation (ADC).

The order dated 28 March 1994 was in turn issued upon motion by ADC for execution of a final
judgment rendered on 9 September 1988 which ordered the Manila Mayor to immediately issue
to ADC the permit/license to operate the jai-alai in Manila, under Manila Ordinance No. 7065.

On 13 September 1994, petitioner Guingona (as executive secretary) issued a directive to then
chairman of the Games and Amusements Board (GAB) Francisco R. Sumulong, Jr. to hold in
abeyance the grant of authority, or if any had been issued, to withdraw such grant of authority,
to Associated Development Corporation to operate the jai-alai in the City of Manila, until the
following legal questions are properly resolved:

"1. Whether P.D. 771 which revoked all existing Jai-Alai franchises issued by local governments as
of 20 August 1975 is unconstitutional.

2. Assuming that the City of Manila had the power on 7 September 1971 to issue a Jai-Alai
franchise to Associated Development Corporation, whether the franchise granted is valid
considering that the franchise has no duration, and appears to be granted in perpetuity.

3. Whether the City of Manila had the power to issue a Jai-Alai franchise to Associated
Development Corporation on 7 September 1971 in view of Executive Order No. 392 dated 1
January 1951 which transferred from local governments to the Games and Amusements Board
the power to regulate Jai-Alai."

On 15 September 1994, respondent Associated Development Corporation (ADC) filed a petition

for prohibition, mandamus, injunction and damages with prayer for temporary restraining order
and/or writ of preliminary injunction in the Regional Trial Court of Manila against petitioner
Guingona and then GAB chairman Sumulong, docketed as Civil Case No. 94-71656, seeking to
prevent GAB from withdrawing the provisional authority that had earlier been granted to ADC.
On the same day, the RTC of Manila, Branch 4, through presiding Judge Vetino Reyes, issued a
temporary restraining order enjoining the GAB from withdrawing ADC's provisional authority.
This temporary restraining order was converted into a writ of preliminary injunction upon ADC's
posting of a bond in the amount of P2,000,000.00.

Subsequently, also in G.R. No. 115044, the Republic of the Philippines, through the Games and
Amusements Board, filed a "Motion for Intervention; for Leave To File a Motion For

54
Reconsideration in Intervention; and to Refer the Case to the Court En Banc" and later a "Motion
for Leave to File Supplemental Motion for Reconsideration-in-Intervention and to Admit
Attached Supplemental Motion for Reconsideration-in-Intervention".

In an En Banc Resolution dated 20 September 1994, this Court referred G.R. No. 115044 to the
Court En Banc and required the respondents therein to comment on the aforementioned
motions.

Meanwhile, Judge Reyes on 19 October 1994 issued another order, this time, granting ADC a
writ of preliminary mandatory injunction against Guingona and GAB to compel them to issue in
favor of ADC the authority to operate the jai-alai.

Guingona, as executive secretary, and Dominador Cepeda, Jr. as the new GAB chairman, then
filed the petition in G.R. No. 117263 assailing the abovementioned orders of respondent Judge
Vetino Reyes.

On 25 October 1994, in G.R. No. 117263, this Court granted petitioners' motion for leave to file
supplemental petition and to admit attached supplemental petition with urgent prayer for
restraining order. The Court further required respondents to file their comment on the petition
and supplemental petition with urgent prayer for restraining order. The Court likewise set the
case and all incidents thereof for hearing on 10 November 1994.

At the hearing on 10 November 1994, the issues to be resolved were formulated by the Court as
follows:

1. whether or not intervention by the Republic of the Philippines at this stage of the proceedings
is proper;

2. assuming such intervention is proper, whether or not the Associated Development

Corporation has a valid and subsisting franchise to maintain and operate the jai-alai;

3. whether or not there was grave abuse of discretion committed by respondent Judge Reyes in
issuing the aforementioned temporary restraining order (later, writ of preliminary injunction);
and

4. whether or not there was grave abuse of discretion committed by respondent Judge Reyes in
issuing the aforementioned writ of preliminary mandatory injunction.

On the issue of the propriety of the intervention by the Republic of the Philippines, a question
was raised during the hearing on 10 November 1994 as to whether intervention in G.R. No.
115044 was the proper remedy for the national government to take in questioning the existence
of a valid ADC franchise to operate the jai-alai or whether a separate action for quo
warranto under Section 2, Rule 66 of the Rules of Court was the proper remedy.

We need not belabor this issue since counsel for respondent ADC agreed to the suggestion that
this Court once and for all settle all substantive issues raised by the parties in these cases.
Moreover, this Court can consider the petition filed in G.R. No. 117263 as one for quo
warranto which is within the original jurisdiction of the Court under Section 5(1), Article VIII of
the Constitution. [3]

On the propriety of intervention by the Republic, however, it will be recalled that this Court
in Director of Lands v. Court of Appeals (93 SCRA 238) allowed intervention even beyond the
period prescribed in Section 2 Rule 12 of the Rules of Court. The Court ruled in said case that a
denial of the motions for intervention would "lead the Court to commit an act of injustice to the
movants, to their successor-in-interest and to all purchasers for value and in good faith and
thereby open the door to fraud, falsehood and misrepresentation, should intervenors' claim be
proven to be true."

In the present case, the resulting injustice and injury, should the national government's allegations
be proven correct, are manifest, since the latter has squarely questioned the very existence of a

55
valid franchise to maintain and operate the jai-alai (which is a gambling operation) in favor of
ADC. As will be more extensively discussed later, the national government contends that Manila
Ordinance No. 7065 which purported to grant to ADC a franchise to conduct jai-alai operations
is void and ultra vires since Republic Act No. 954, approved on 20 June 1953, or very much
earlier than said Ordinance No. 7065, the latter approved 7 September 1971, in Section 4
thereof, requires a legislative franchise, not a municipal franchise, for the operation of jai-alai.

Additionally, the national government argues that even assuming, arguendo, that the
abovementioned ordinance is valid, ADC's franchise was nonetheless effectively revoked by
Presidential Decree No. 771, issued on 20 August 1975, Sec. 3 of which expressly
revoked allexisting franchises and permits to operate all forms of gambling facilities (including the
jai-alai) issued by local governments.

On the other hand, ADC's position is that Ordinance No. 7065 was validly enacted by the City
of Manila pursuant to its delegated powers under its charter, Republic Act No. 409. ADC also
squarely assails the constitutionality of PD No. 771 as violative of the equal protection and non-
impairment clauses of the Constitution. In this connection, counsel for ADC contends that this
Court should really rule on the validity of PD No. 771 to be able to determine whether ADC
continues to possess a valid franchise.

It will undoubtedly be a grave injustice to both parties in this case if this Court were to shirk from
ruling on the issue of constitutionality of PD No. 771. Such issue has, in our view, become the
very lis mota in resolving the present controversy, in view of ADC's insistence that it was granted
a valid and legal franchise by Ordinance No. 7065 to operate the jai-alai.

The time-honored doctrine is that all laws (PD No. 771 included) are presumed valid and
constitutional until or unless otherwise ruled by this Court. Not only this; Article XVIII Section 3
of the Constitution states:

"Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of instructions and
other executive issuances not inconsistent with this Constitution shall remain operative until
amended, repealed or revoked."

There is nothing on record to show or even suggest that PD No. 771 has been repealed, altered
or amended by any subsequent law or presidential issuance (when the executive still exercised
legislative powers).

Neither can it be tenably stated that the issue of the continued existence of ADC's franchise by
reason of the unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for the decision
of the Court's First Division in said case, aside from not being final, cannot have the effect of
nullifying PD No. 771 as unconstitutional, since only the Court En Banc has that power under
Article VIII, Section 4(2) of the Constitution. [4]

And on the question of whether or not the government is estopped from contesting ADC's
possession of a valid franchise, the well-settled rule is that the State cannot be put in estoppel by
the mistakes or errors, if any, of its officials or agents (Republic v. Intermediate Appellate Court,
209 SCRA 90).

Consequently, in the light of the foregoing expostulation, we conclude that the Republic (in
contra distinction to the City of Manila) may be allowed to intervene in G.R. No. 115044. The
Republic is intervening in G.R. No. 115044 in the exercise, not of its business or proprietary
functions, but in the exercise of its governmental functions to protect public morals and promote
the general welfare.

II

Anent the question of whether ADC has a valid franchise to operate the Jai-Alai de Manila, a
statement of the pertinent laws is in order.

56
1. The Charter of the City of Manila was enacted by Congress on 18 June 1949. Section 18 thereof
provides:

"Section 18. Legislative Powers. - The Municipal Board shall have the following legislative powers:

xxx

(jj) To tax, license, permit and regulate wagers or betting by the public on boxing, sipa, bowling,
billiards, pools, horse and dog races, cockpits, jai-alai, roller or ice-skating on any sporting or
athletic contests, as well as grant exclusive rights to establishments for this purpose,
notwithstanding any existing law to the contrary."

2. On 1 January 1951, Executive Order No. 392 was issued transferring the authority
to regulate jai-alais from local governments to the Games and Amusements Board (GAB).

3. On 20 June 1953, Congress enacted Republic Act No. 954, entitled "An Act To Prohibit
Certain Activities In Connection With Horse Races and Basque Pelota Games (Jai-Alai), And To
Prescribe Penalties For Its Violation". The provisions of Republic Act No. 954 relating to jai-alai
are as follows:

"Sec. 4. No person, or group of persons other than the operator or maintainer of a fronton
with legislative franchise to conduct basque pelota games (Jai-Alai), shall offer, take or arrange
bets on any basque pelota game or event, or maintain or use a totalizator or other device,
method or system to bet or gamble on any basque pelota game or event. (underscoring
supplied).

Sec. 5. No person, operator or maintainer of a fronton with legislative franchise to conduct

basque pelota games shall offer, take, or arrange bets on any basque pelota game or event, or
maintain or use a totalizator or other device, method or system to bet or gamble on any basque
pelota game or event outside the place, enclosure, or fronton where the basque pelota game is
held." (Underscoring supplied).

4. On 07 September 1971, however, the Municipal Board of Manila nonetheless passed

Ordinance No. 7065 entitled "An Ordinance Authorizing the Mayor To Allow And Permit The
Associated Development Corporation To Establish, Maintain And Operate A Jai-Alai In The City
Of Manila, Under Certain Terms And Conditions And For Other Purposes."

5. On 20 August 1975, Presidential Decree No. 771 was issued by then President Marcos. The
decree, entitled "Revoking All Powers and Authority of Local Government(s) To Grant Franchise,
License or Permit And Regulate Wagers Or Betting By The Public On Horse And Dog Races, Jai-
Alai Or Basque Pelota, And Other Forms Of Gambling", in Section 3 thereof, expressly revoked
all existing franchises and permits issued by local governments.

6. On 16 October 1975, Presidential Decree No. 810, entitled "An Act Granting The Philippine
Jai-Alai And Amusement Corporation A Franchise To Operate, Construct And Maintain A
Fronton For Basque Pelota And Similar Games Of Skill In The Greater Manila Area," was
promulgated.

7. On 08 May 1987, then President Aquino, by virtue of Article XVIII, Section 6, of the
Constitution, which allowed the incumbent President to continue exercising legislative powers
until the first Congress was convened, issued Executive Order No. 169 expressly repealing PD 810
and revoking and cancelling the franchise granted to the Philippine Jai-Alai and Amusement
Corporation.

Petitioners in G.R. No. 117263 argue that Republic Act No. 954 effectively removed the power
of the Municipal Board of Manila to grant franchises for gambling operations. It is argued that
the term "legislative franchise" in Rep. Act No. 954 is used to refer to franchises issued by
Congress.

57
On the other hand, ADC contends that Republic Act No. 409 (Manila Charter) gives legislative
powers to the Municipal Board to grant franchises, and since Republic Act No. 954 does not
specifically qualify the word "legislative" as referring exclusively to Congress, then Rep. Act No.
954 did not remove the power of the Municipal Board under Section 18(jj) of Republic Act No.
409 and consequently it was within the power of the City of Manila to allow ADC to operate
the jai-alai in the City of Manila.

On this point, the government counter-argues that the term "legislative powers" is used in Rep.
Act No. 409 merely to distinguish the powers under Section 18 of the law from the other powers
of the Municipal Board, but that the term "legislative franchise" in Rep. Act No. 954 refers to a
franchise granted solely by Congress.

Further, the government argues that Executive Order No. 392 dated 01 January 1951 transferred
even the power to regulate Jai-Alai from the local governments to the Games and Amusements
Board (GAB), a national government agency.

It is worthy of note that neither of the authorities relied upon by ADC to support its alleged
possession of a valid franchise, namely, the Charter of the City of Manila (Rep. Act No. 409) and
Manila Ordinance No. 7065 uses the word "franchise". Rep. Act No. 409 empowers the
Municipal Board of Manila to "tax, license, permit and regulate wagers or betting" and to "grant
exclusive rights to establishments", while Ordinance No. 7065 authorized the Manila City Mayor
to "allow and permit" ADC to operate jai-alai facilities in the City of Manila.

It is clear from the foregoing that Congress did not delegate to the City of Manila the power "to
franchise" wagers or betting, including the jai-alai, but retained for itself such power "to
franchise". What Congress delegated to the City of Manila in Rep. Act No. 409, with respect to
wagers or betting, was the power to "license, permit, or regulate" which therefore means that a
license or permit issued by the City of Manila to operate a wager or betting activity, such as the
jai-alai where bets are accepted, would not amount to something meaningful UNLESS the holder
of the permit or license was also FRANCHISED by the national government to so operate.
Moreover, even this power to license, permit, or regulate wagers or betting on jai-alai was
removed from local governments, including the City of Manila, and transferred to the GAB on 1
January 1951 by Executive Order No. 392. The net result is that the authority to grant franchises
for the operation of jai-alai frontons is in Congress, while the regulatory function is vested in the
GAB.

In relation, therefore, to the facts of this case, since ADC has no franchise from Congress to
operate the jai-alai, it may not so operate even if it has a license or permit from the City Mayor
to operate the jai-alai in the City of Manila.

It cannot be overlooked, in this connection, that the Revised Penal Code punishes gambling and
betting under Articles 195 to 199 thereof. Gambling is thus generally prohibited by law, unless
another law is enacted by Congress expressly exempting or excluding certain forms of gambling
from the reach of criminal law. Among these forms of gambling allowed by special law are the
horse races authorized by Republic Acts Nos. 309 and 983 and gambling casinos authorized
under Presidential Decree No. 1869.

While jai-alai as a sport is not illegal per se, the accepting of bets or wagers on the results of jai-
alai games is undoubtedly gambling and, therefore, a criminal offense punishable under Articles
195-199 of the Revised Penal Code, unless it is shown that a later or special law had been passed
allowing it. ADC has not shown any such special law.

Republic Act No. 409 (the Revised Charter of the City of Manila) which was enacted by Congress
on 18 June 1949 gave the Municipal Board certain delegated legislative powers under Section 18.
A perusal of the powers enumerated under Section 18 shows that these powers are basically
regulatory in nature. [5] The regulatory nature of these powers finds support not only in the plain
words of the enumerations under Section 18 but also in this Court's ruling in People v. Vera (65
Phil. 56).

58
In Vera, this Court declared that a law which gives the Provincial Board the discretion to
determine whether or not a law of general application (such as, the Probation law-Act No. 4221)
would or would not be operative within the province, is unconstitutional for being an undue
delegation of legislative power.

From the ruling in Vera, it would be logical to conclude that, if ADC's arguments were to prevail,
this Court would likewise declare Section 18(jj) of the Revised Charter of Manila unconstitutional
for the power it would delegate to the Municipal Board of Manila would give the latter the
absolute and unlimited discretion to render the penal code provisions on gambling inapplicable
or inoperative to persons or entities issued permits to operate gambling establishments in the City
of Manila.

We need not go to this extent, however, since the rule is that laws must be presumed valid,
constitutional and in harmony with other laws. Thus, the relevant provisions of Rep. Acts Nos.
409 and 954 and Ordinance No. 7065 should be taken together and it should then be clear that
the legislative powers of the Municipal Board should be understood to be regulatory in nature
and that Republic Act No. 954 should be understood to refer to congressional franchises, as a
necessity for the operation of jai-alais.

We need not, however, again belabor this issue further since the task at hand which will
ultimately, and with finality, decide the issues in this case is to determine whether PD No. 771
validly revoked ADC's franchise to operate the jai-alai, assuming (without conceding) that it
indeed possessed such franchise under Ordinance No. 7065.

ADC argues that PD No. 771 is unconstitutional for being violative of the equal protection and
non-impairment provisions of the Constitution. On the other hand, the government contends
that PD No. 771 is a valid exercise of the inherent police power of the State.

The police power has been described as the least limitable of the inherent powers of the State. It
is based on the ancient doctrine - salus populi est suprema lex (the welfare of the people is the
supreme law.) In the early case of Rubi v. Provincial Board of Mindoro (39 Phil. 660), this Court
through Mr. Justice George A. Malcolm stated thus:

"The police power of the State x x x is a power coextensive with self-protection, and is not
inaptly termed the 'law of overruling necessity.' It may be said to be that inherent and plenary
power in the State which enables it to prohibit all things hurtful to the comfort, safety and
welfare of society. Carried onward by the current of legislation, the judiciary rarely attempts to
dam the onrushing power of legislative discretion, provided the purposes of the law do not go
beyond the great principles that mean security for the public welfare or do not arbitrarily
interfere with the right of the individual."

In the matter of PD No. 771, the purpose of the law is clearly stated in the "whereas clauses" as
follows:

"WHEREAS, it has been reported that in spite of the current drive of our law enforcement
agencies against vices and illegal gambling, these social ills are still prevalent in many areas of the
country;

"WHEREAS, there is need to consolidate all the efforts of the government to eradicate and
minimize vices and other forms of social ills in pursuance of the social and economic
development program under the new society;

"WHEREAS, in order to effectively control and regulate wagers or betting by the public on horse
and dog races, jai-alai and other forms of gambling there is a necessity to transfer the issuance of
permit and/ or franchise from local government to the National Government."

It cannot be argued that the control and regulation of gambling do not promote public morals
and welfare. Gambling is essentially antagonistic to the objectives of national productivity and

59
self-reliance. It breeds indolence and erodes the value of good, honest and hard work. It is, as
very aptly stated by PD No. 771, a vice and a social ill which government must minimize (if not
eradicate) in pursuit of social and economic development.

In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R. No. 111097), this Court stated
thru Mr. Justice Isagani A. Cruz:

"In the exercise of its own discretion, the legislative power may prohibit gambling altogether or
allow it without limitation or it may prohibit some forms of gambling and allow others for
whatever reasons it may consider sufficient. Thus, it has prohibited jueteng and monte but
permits lotteries, cockfighting and horse-racing. In making such choices, Congress has consulted its
own wisdom, which this Court has no authority to review, much less reverse. Well has it been
said that courts do not sit to resolve the merits of conflicting theories. That is the prerogative of
the political departments. It is settled that questions regarding wisdom, morality and
practicability of statutes are not addressed to the judiciary but may be resolved only by the
executive and legislative departments, to which the function belongs in our scheme of
government." (Underscoring supplied)

Talks regarding the supposed vanishing line between right and privilege in American
constitutional law has no relevance in the context of these cases since the reference there is to
economic regulations. On the other hand, jai-alai is not a mere economic activity which the law
seeks to regulate. It is essentially gambling and whether it should be permitted and, if so, under
what conditions are questions primarily for the lawmaking authority to determine, taking into
account national and local interests. Here, it is the police power of the State that is paramount.

ADC questions the motive for the issuance of PD Nos. 771. Clearly, however, this Court cannot
look into allegations that PD No. 771 was enacted to benefit a select group which was later given
authority to operate the jai-alai under PD No. 810. The examination of legislative motivation is
generally prohibited. (Palmer v. Thompson, 403 U.S. 217, 29 L. Ed. 2d 438 [1971], per Black,
J.) There is, 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.

It should also be remembered that PD No. 771 provides that the national government can
subsequently grant franchises "upon proper application and verification of the qualifications of
the applicant." ADC has not alleged that it filed an application for a franchise with the national
government subsequent to the enactment of PD No. 771; thus, the allegations abovementioned
(of preference to a select group) are based on conjectures, speculations and imagined biases
which do not warrant the consideration of this Court.

On the other hand, it is noteworthy that while then President Aquino issued Executive Order No.
169 revoking PD No. 810 (which granted a franchise to a Marcos-crony to operate the jai-alai),
she did not scrap or repeal PD No. 771 which had revoked all franchises to operate jai-alais
issued by local governments, thereby re-affirming the government policy that franchises to
operate jai-alais are for the national government (not local governments) to consider and
approve.

On the alleged violation of the non-impairment and equal protection clauses of the Constitution,
it should be remembered that a franchise is not in the strict sense a simple contract but rather it is,
more importantly, a mere privilege specially in matters which are within the government's power
to regulate and even prohibit through the exercise of the police power. Thus, a gambling
franchise is always subject to the exercise of police power for the public welfare.

In RCPI v. NTC (150 SCRA 450), we held that:

"A franchise started out as a 'royal privilege or (a) branch of the King's prerogative, subsisting in
the hands of a subject.' This definition was given by Finch, adopted by Blackstone, and accepted
by every authority since x x x Today, a franchise, being merely a privilege emanating from the

60
sovereign power of the state and owing its existence to a grant, is subject to regulation by the
state itself by virtue of its police power through its administrative agencies."

There is a stronger reason for holding ADC's permit to be a mere privilege because jai-alai, when
played for bets, is pure and simple gambling. To analogize a gambling franchise to a franchise for
the operation of a public utility, such as public transportation company, is to trivialize the great
historic origin of this branch of royal privilege.

As earlier noted, ADC has not alleged ever applying for a franchise under the provisions of PD
No. 771. And yet, the purpose of PD No. 771 is quite clear from its provisions, i.e., to give to
the national government the exclusive power to grant gambling franchises. Thus, all franchises
then existing were revoked but were made subject to reissuance by the national government
upon compliance by the applicant with government-set qualifications and requirements.

There was no violation by PD No. 771 of the equal protection clause since the decree
revoked all franchises issued by local governments without qualification or exception. ADC
cannot allege violation of the equal protection clause simply because it was the only one affected
by the decree, for as correctly pointed out by the government, ADC was not singled out when all
jai-alai franchises were revoked. Besides, it is too late in the day for ADC to seek redress for
alleged violation of its constitutional rights for it could have raised these issues as early as 1975,
almost twenty (20) years ago.

Finally, we do not agree that Section 3 of PD No. 771 and the requirement of a legislative
franchise in Republic Act No. 954 are "riders" to the two (2) laws and are violative of the rule
that laws should embrace one subject which shall be expressed in the title, as argued by ADC.
In Cordero v. Cabatuando (6 SCRA 418), this Court ruled that the requirement under the
Constitution that all laws should embrace only one subject which shall be expressed in the title is
sufficiently met if the title is comprehensive enough reasonably to include the general object
which the statute seeks to effect, without expressing each and every end and means necessary or
convenient for the accomplishing of the objective.

III

On the issue of whether or not there was grave abuse of discretion committed by respondent
Judge Reyes in issuing the temporary restraining order (later converted to a writ of preliminary
injunction) and the writ of preliminary mandatory injunction, we hold and rule there was.

Section 3, Rule 58 of the Rules of Court provides for the grounds for the issuance of a
preliminary injunction. While ADC could allege these grounds, respondent judge should have
taken judicial notice of Republic Act No. 954 and PD 771, under Section 1 Rule 129 of the Rules
of Court. These laws negate the existence of any legal right on the part of ADC to the reliefs it
sought so as to justify the issuance of a writ of preliminary injunction. Since PD No. 771 and
Republic Act No. 954 are presumed valid and constitutional until ruled otherwise by the
Supreme Court after due hearing, ADC was not entitled to the writs issued and consequently
there was grave abuse of discretion in issuing them.

WHEREFORE, for the foregoing reasons, judgment is hereby rendered:

1. allowing the Republic of the Philippines to intervene in G.R. No. 115044.

2. declaring Presidential Decree No. 771 valid and constitutional.

3. declaring that respondent Associated Development Corporation (ADC) does not possess
the required congressional franchise to operate and conduct the jai-alai under Republic Act No.
954 and Presidential Decree No. 771.

4. setting aside the writs of preliminary injunction and preliminary mandatory injunction
issued by respondent Judge Vetino Reyes in Civil Case No. 94-71656.

SO ORDERED.

61
6. Miners Association of Philippines v. Fulgencio S. Factoran GR No. 98332, Jan 16, 1995

ROMERO, J.:
The instant petition seeks a ruling from this Court on the validity of two Administrative Orders
issued by the Secretary of the Department of Environment and Natural Resources to carry out the
provisions of certain Executive Orders promulgated by the President in the lawful exercise of
legislative powers.

Herein controversy was precipitated by the change introduced by Article XII, Section 2 of the
1987 Constitution on the system of exploration, development and utilization of the country's
natural resources. No longer is the utilization of inalienable lands of public domain through
"license, concession or lease" under the 1935 and 1973 Constitutions [1] allowed under the 1987
Constitution.

The adoption of the concept of jura regalia [2] that all natural resources are owned by the State
embodied in the 1935, 1973 and 1987 Constitutions, as well as the recognition of the importance
of the country's natural resources, not only for national economic development, but also for its
security and national defense, [3] ushered in the adoption of the constitutional policy of "full
control and supervision by the State" in the exploration, development and utilization of the
country's natural resources. The options open to the State are through direct undertaking or by
entering into co-production, joint venture, or production-sharing agreements, or by entering into
agreement with foreign-owned corporations for large-scale exploration, development and
utilization.

Article XII, Section 2 of the 1987 Constitution provides:

"SEC. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils,
all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other
natural resources are owned by the State. With the exception of agricultural lands, all other
natural resources shall not be alienated. The exploration, development, and utilization of natural
resources shall be under the full control and supervision of the State. The State may directly
undertake such activities, or it may enter into co-production, joint venture, or production-sharing
agreements with Filipino citizens, or corporations or associations at least sixty per centum of
whose capital is owned by such citizens. Such agreements may be for a period not exceeding
twenty-five years, renewable for not more than twenty-five years, and under such terms and
conditions as may be provided by law. In cases of water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water power, beneficial use may be the
measure and limit of the grant.

xxx xxx xxx

The President may enter into agreements with foreign-owned corporations involving either
technical or financial assistance for large-scale exploration, development, and utilization of
minerals, petroleum, and other mineral oils according to the general terms and conditions
provided by law, based on real contributions to the economic growth and general welfare of the
country. In such agreements, the State shall promote the development and use of local scientific
and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this
provision, within thirty days from its execution." (Underscoring supplied)

Pursuant to the mandate of the above-quoted provision, legislative acts [4] were successively
issued by the President in the exercise of her legislative power. [5]

To implement said legislative acts, the Secretary of the Department of Environment and Natural
Resources (DENR) in turn promulgated Administrative Order Nos. 57 and 82, the validity and
constitutionality of which are being challenged in this petition.

On July 10, 1987, President Corazon C. Aquino, in the exercise of her then legislative powers

62
under Article II, Section 1 of the Provisional Constitution and Article XIII, Section 6 of the 1987
Constitution, promulgated Executive Order No. 211 prescribing the interim procedures in the
processing and approval of applications for the exploration, development and utilization of
minerals pursuant to the 1987 Constitution in order to ensure the continuity of mining operations
and activities and to hasten the development of mineral resources. The pertinent provisions read
as follows:

"SECTION 1. Existing mining permits, licenses, leases and other mining grants issued by the
Department of Environment and Natural Resources and Bureau of Mines and Geo-Sciences,
including existing operating agreements and mining service contracts, shall continue and remain
in full force and effect, subject to the same terms and conditions as originally granted and/or
approved.

"SECTION 2. Applications for the exploration, development and utilization of mineral resources,
including renewal applications and applications for approval of operating agreements and mining
service contracts, shall be accepted and processed and may be approved; concomitantly thereto,
declarations of locations and all other kinds of mining applications shall be accepted and
registered by the Bureau of Mines and Geo-Sciences.

"SECTION 3. The processing, evaluation and approval of all mining applications, declarations of
locations, operating agreements and service contracts as provided for in Section 2 above, shall be
governed by Presidential Decree No. 463, as amended, other existing mining laws and their
implementing rules and regulations: Provided, however, that the privileges granted, as well as the
terms and conditions thereof shall be subject to any and all modifications or alterations which
Congress may adopt pursuant to Section 2, Article XII of the 1987 Constitution."

On July 25, 1987, President Aquino likewise promulgated Executive Order No. 279 authorizing
the DENR Secretary to negotiate and conclude joint venture, co-production, or production-
sharing agreements for the exploration, development and utilization of mineral resources, and
prescribing the guidelines for such agreements and those agreements involving technical or
financial assistance by foreign-owned corporations for large-scale exploration, development, and
utilization of minerals. The pertinent provisions relevant to this petition are as follows:

"SECTION 1. The Secretary of the Department of Environment and Natural Resources (hereinafter
referred to as "the Secretary") is hereby authorized to negotiate and enter into, for and in behalf
of the Government, joint venture, co-production, or production-sharing agreements for the
exploration, development, and utilization of mineral resources with any Filipino citizens, or
corporation or association at least sixty percent (60%) of whose capital is owned by Filipino
citizens. Such joint venture, co-production, or production-sharing agreements may be for a
period not exceeding twenty-five years, renewable for not more than twenty-five years, and shall
include the minimum terms and conditions prescribed in Section 2 hereof. In the execution of a
joint venture, co-production or production agreements, the contracting parties, including the
Government, may consolidate two or more contiguous or geologically - related mining claims or
leases and consider them as one contract area for purposes of determining the subject of the joint
venture, co-production, or production-sharing agreement.

xxx xxx xxx

SECTION 6. The Secretary shall promulgate such supplementary rules and regulations as may be
necessary to effectively implement the provisions of this Executive Order.

SECTION 7. All provisions of Presidential Decree No. 463, as amended, other existing mining
laws, and their implementing rules and regulations, or parts thereof, which are not inconsistent
with the provisions of this Executive Order, shall continue in force and effect."

Pursuant to Section 6 of Executive Order No. 279, the DENR Secretary issued on June 23, 1989
DENR Administrative Order No. 57, series of 1989, captioned "Guidelines on Mineral Production
Sharing Agreement under Executive Order No. 279." [6] Under the transitory provision of said
DENR Administrative Order No. 57, embodied in its Article 9, all existing mining leases or
agreements which were granted after the effectivity of the 1987 Constitution pursuant to

63
Executive Order No. 211, except small scale mining leases and those pertaining to sand and gravel
and quarry resources covering an area of twenty (20) hectares or less, shall be converted into
production-sharing agreements within one (1) year from the effectivity of these guidelines.

On November 20, 1990, the Secretary of the DENR issued DENR Administrative Order No. 82,
series of 1990, laying down the "Procedural Guidelines on the Award of Mineral Production
Sharing Agreement (MPSA) through Negotiation." [7]

Section 3 of the aforementioned DENR Administrative Order No. 82 enumerates the persons or
entities required to submit Letter of Intent (LOIs) and Mineral Production Sharing Agreement
(MPSAs) within two (2) years from the effectivity of DENR Administrative Order No. 57 or until
July 17, 1991. Failure to do so within the prescribed period shall cause the abandonment of
mining, quarry and sand and gravel claims. Section 3 of DENR Administrative Order No. 82
provides:

"Section 3. Submission of Letter of Intent (LOIs) and MPSAs. The following shall submit their LOIs
and MPSAs within two (2) years from the effectivity of DENR A.O. 57 or until July 17, 1991.

"i. Declaration of Location (DOL) holders, mining lease applicants, exploration permitees, quarry
applicants and other mining applicants whose mining/quarry applications have not been
perfected prior to the effectivity of DENR Administrative Order No. 57.

"ii. All holders of DOL acquired after the effectivity of DENR A.O. No. 57.

"iii. Holders of mining leases or similar agreements which were granted after (the) effectivity of
1987 Constitution.

"Failure to submit letters of intent and MPSA applications/proposals within the prescribed period
shall cause the abandonment of mining, quarry and sand and gravel claims."

The issuance and the impending implementation by the DENR of Administrative Order Nos. 57
and 82 after their respective effectivity dates compelled the Miners Association of the Philippines,
Inc. to file the instant petition assailing their validity and constitutionality before this Court.

In this petition for certiorari, petitioner Miners Association of the Philippines, Inc., mainly
contends that respondent Secretary of DENR issued both Administrative Order Nos. 57 and 82 in
excess of his rule-making power under Section 6 of Executive Order No. 279. On the assumption
that the questioned administrative orders do not conform with Executive Order Nos. 211 and
279, petitioner contends that both orders violate the non-impairment of contract provision
under Article III, Section 10 of the 1987 Constitution on the ground that Administrative Order
No. 57 unduly pre-terminates existing mining leases and other mining agreements and
automatically converts them into production-sharing agreements within one (1) year from its
effectivity date. On the other hand, Administrative Order No. 82 declares that failure to submit
Letters of Intent and Mineral Production-Sharing Agreements within two (2) years from the date
of effectivity of said guideline or on July 17, 1991 shall cause the abandonment of their mining,
quarry and sand gravel permits.

On July 2, 1991, the Court, acting on petitioner's urgent ex-parte petition for issuance of a
restraining order/preliminary injunction, issued a Temporary Restraining Order, upon posting of
a P500,000.00 bond, enjoining the enforcement and implementation of DENR Administrative
Order Nos. 57 and 82, as amended, Series of 1989 and 1990, respectively.

On November 13, 1991, Continental Marble Corporation, thru its President, Felipe A. David,
sought to intervene in this case alleging that because of the temporary restraining order issued by
the Court, the DENR, Regional Office No. 3 in San Fernando, Pampanga refused to renew its
Mines Temporary Permit after it expired on July 31, 1991. Claiming that its rights and interests are
prejudicially affected by the implementation of DENR Administrative Order Nos. 57 and 82, it
joined petitioner herein in seeking to annul Administrative Order Nos. 57 and 82 and prayed
that the DENR, Regional Office No. 3 be ordered to issue a Mines Temporary Permit in its favor
to enable it to operate during the pendency of the suit.

64
Public respondents were required to comment on the Continental Marble Corporation's petition
for intervention in the resolution of November 28, 1991.

Now to the main petition. It is argued that Administrative Order Nos. 57 and 82 have the effect
of repealing or abrogating existing mining laws which are not inconsistent with the provisions of
Executive Order No. 279. Invoking Section 7 of said Executive Order No. 279, petitioner
maintains that respondent DENR Secretary cannot provide guidelines such as Administrative
Order Nos. 57 and 82 which are inconsistent with the provisions of Executive Order No. 279
because both Executive Order Nos. 211 and 279 merely reiterated the acceptance and registration
of declarations of location and all other kinds of mining applications by the Bureau of Mines and
Geo-Sciences under the provisions of Presidential Decree No. 463, as amended, until Congress
opts to modify or alter the same.

In other words, petitioner would have us rule that DENR Administrative Order Nos. 57 and 82
issued by the DENR Secretary in the exercise of his rule-making power are tainted with invalidity
inasmuch as both contravene or subvert the provisions of Executive Order Nos. 211 and 279 or
embrace matters not covered, nor intended to be covered, by the aforesaid laws.

We disagree.

We reiterate the principle that the power of administrative officials to promulgate rules and
regulations in the implementation of a statute is necessarily limited only to carrying into effect
what is provided in the legislative enactment. The principle was enunciated as early as 1908 in
the case of United States v. Barrias. The scope of the exercise of such rule-making power was
clearly expressed in the case of United States v. Tupasi Molina, decided in 1914, thus: "Of course,
the regulations adopted under legislative authority by a particular department must be in
harmony with the provisions of the law, and for the sole purpose of carrying into effect its
general provisions. By such regulations, of course, the law itself cannot be extended. So long,
however, as the regulations relate solely to carrying into effect the provision of the law, they are
valid."

Recently, the case of People v. Maceren gave a brief delineation of the scope of said power of
administrative officials:

"Administrative regulations adopted under legislative authority by a particular department must

be in harmony with the provisions of the law, and should be for the sole purpose of carrying
into effect its general provisions. By such regulations, of course, the law itself cannot be extended
(U.S. v. Tupasi Molina, supra). An administrative agency cannot amend an act of Congress
(Santos vs. Estenzo, 109 Phil. 419, 422; Teoxon vs. Members of the Board of Administrators, L-
25619, June 30, 1970, 33 SCRA 585; Manuel vs. General Auditing Office, L-28952, December
29, 1971, 42 SCRA 660; Deluao v. Casteel, L-21906, August 29, 1969, 29 SCRA 350).

"The rule-making power must be confined to details for regulating the mode or proceeding to
carry into effect the law as it has been enacted. The power cannot be extended to amending or
expanding the statutory requirements or to embrace matters not covered by the statute. Rules
that subvert the statute cannot he sanctioned (University of Santo Tomas v. Board of Tax
Appeals, 93 Phil. 376, 382, citing 12 C.J. 845-46. As to invalid regulations, see Collector of
Internal Revenue v. Villaflor, 69 Phil. 319; Wise & Co. v. Meer, 78 Phil. 655, 676; Del Mar v.
Phil. Veterans Administration, L- 27299, June 27, 1973, 51 SCRA 340, 349).

xxx xxx xxx

"x x x The rule or regulations should be within the scope of the statutory authority granted by
the legislature to the administrative agency (Davis, Administrative Law, p. 194, 197, cited in
Victorias Milling Co., Inc. v. Social Security Commission, 114 Phil. 555, 558).

"In case of discrepancy between the basic law and a rule or regulation issued to implement said
law, the basic law prevails because said rule or regulations cannot go beyond the terms and
provisions of the basic law (People v. Lim, 108 Phil. 1091)."

65
Considering that administrative rules draw life from the statute which they seek to implement, it
is obvious that the spring cannot rise higher than its source. We now examine petitioner's
argument that DENR Administrative Order Nos. 57 and 82 contravene Executive Order Nos. 211
and 279 as both operate to repeal or abrogate Presidential Decree No. 463, as amended, and
other mining laws allegedly acknowledged as the principal law under Executive Order Nos. 211
and 279.

Petitioner's insistence on the application of Presidential Decree No. 463, as amended, as the
governing law on the acceptance and approval of declarations of location and all other kinds of
applications for the exploration, development, and utilization of mineral resources pursuant to
Executive Order No. 211, is erroneous. Presidential Decree No. 463, as amended, pertains to the
old system of exploration, development and utilization of natural resources through "license,
concession or lease" which, however, has been disallowed by Article XII, Section 2 of the 1987
Constitution. By virtue of the said constitutional mandate and its implementing law, Executive
Order No. 279 which superseded Executive Order No. 211, the provisions dealing on "license,
concession, or lease" of mineral resources under Presidential Decree No. 463, as amended, and
other existing mining laws are deemed repealed and, therefore, ceased to operate as the
governing law. In other words, in all other areas of administration and management of mineral
lands, the provisions of Presidential Decree No. 463, as amended, and other existing mining
laws, still govern. Section 7 of Executive Order No. 279 provides, thus:

"SEC. 7. All provisions of Presidential Decree No. 463, as amended, other existing mining laws,
and their implementing rules and regulations, or parts thereof, which are not inconsistent with
the provisions of this Executive Order, shall continue in force and effect."

Specifically, the provisions of Presidential Decree No. 463, as amended, on lease of mining claims
under Chapter VIII, quarry permits on privately-owned lands or quarry license on public lands
under Chapter XIII and other related provisions on lease, license and permits are not only
inconsistent with the raison d'etre for which Executive Order No. 279 was passed, but
contravene the express mandate of Article XII, Section 2 of the 1987 Constitution. Its force and
effectivity is thus foreclosed.

Upon the effectivity of the 1987 Constitution on February 2, 1987, the State assumed a more
dynamic role in the exploration, development and utilization of the natural resources of the
country. Article XII, Section 2 of the said Charter explicitly ordains that the exploration,
development and utilization of natural resources shall be under the full control and supervision
of the State. Consonant therewith, the exploration, development and utilization of natural
resources may be undertaken by means of direct act of the State, or it may opt to enter into co-
production, joint venture, or production-sharing agreements, or it may enter into agreements
with foreign-owned corporations involving either technical or financial assistance for large-scale
exploration, development, and utilization of minerals, petroleum, and other mineral oils
according to the general terms and conditions provided by law, based on real contributions to
the economic growth and general welfare of the country.

Given these considerations, there is no clear showing that respondent DENR Secretary has
transcended the bounds demarcated by Executive Order No. 279 for the exercise of his rule-
making power tantamount to a grave abuse of discretion. Section 6 of Executive Order No. 279
specifically authorizes said official to promulgate such supplementary rules and regulations as may
be necessary to effectively implement the provisions thereof. Moreover, the subject sought to be
governed and regulated by the questioned orders is germane to the objects and purposes of
Executive Order No. 279 specifically issued to carry out the mandate of Article XII, Section 2 of
the 1987 Constitution.

Petitioner likewise maintains that Administrative Order No. 57, in relation to Administrative
Order No. 82, impairs vested rights as to violate the non-impairment of contract doctrine
guaranteed under Article III, Section 10 of the 1987 Constitution because Article 9 of
Administrative Order No. 57 unduly pre-terminates and automatically converts mining leases and
other mining agreements into production-sharing agreements within one (1) year from effectivity
of said guideline, while Section 3 of Administrative Order No. 82 declares that failure to submit

66
Letters of Intent (LOIs) and MPSAs within two (2) years from the effectivity of Administrative
Order No. 57 or until July 17, 1991 shall cause the abandonment of mining, quarry, and sand
gravel permits.

In support of the above contention, it is argued by petitioner that Executive Order No. 279 does
not contemplate automatic conversion of mining lease agreements into mining production-
sharing agreement as provided under Article 9, Administrative Order No. 57 and/or the
consequent abandonment of mining claims for failure to submit LOIs and MPSAs under Section 3,
Administrative Order No. 82 because Section 1 of said Executive Order No. 279 empowers the
DENR Secretary to negotiate and enter into voluntary agreements which must set forth the
minimum terms and conditions provided under Section 2 thereof. Moreover, petitioner contends
that the power to regulate and enter into mining agreements does not include the power to
preterminate existing mining lease agreements.

To begin with, we dispel the impression created by petitioner's argument that the questioned
administrative orders unduly preterminate existing mining leases in general. A distinction which
spells a real difference must be drawn. Article XII, Section 2 of the 1987 Constitution does not
apply retroactively to "license, concession or lease" granted by the government under the 1973
Constitution or before the effectivity of the 1987 Constitution on February 2, 1987. The intent to
apply prospectively said constitutional provision was stressed during the deliberations in the
Constitutional Commission, thus:

Under the proposal, I notice that except for the [inalienable] lands of the
public domain, all other natural resources cannot be alienated and in respect
to [alienable] lands of the public domain, private corporations with the
required ownership by Filipino citizens can only lease the same. Necessarily,
"MR. DAVIDE:
insofar as other natural resources are concerned, it would only be the State
which can exploit, develop, explore and utilize the same. However, the State
may enter into a joint venture, co- production or production-sharing. Is that
not correct?
"MR. VILLEGAS: Yes.
Consequently, henceforth upon the approval of this Constitution, no timber or
forest concession, permits or authorization can be exclusively granted to any
"MR. DAVIDE:
citizen of the Philippines nor to any corporation qualified to acquire lands of
the public domain?
Would Commissioner Monsod like to comment on that? I think his answer is
"MR. VILLEGAS:
"yes."
So, what will happen now to licenses or concessions earlier granted by the
"MR. DAVIDE: Philippine government to private corporations or to Filipino citizens? Would
they be deemed repealed?
"MR. VILLEGAS: This is not applied retroactively. They will be respected.
"MR. DAVIDE: In effect, they will be deemed repealed?
"MR. VILLEGAS: No." (Underscoring supplied)

During the transition period or after the effectivity of the 1987 Constitution on February 2, 1987
until the first Congress under said Constitution was convened on July 27, 1987, two (2)
successive laws, Executive Order Nos. 211 and 279, were promulgated to govern the processing
and approval of applications for the exploration, development and utilization of minerals. To
carry out the purposes of said laws, the questioned Administrative Order Nos. 57 and 82, now
being assailed, were issued by the DENR Secretary.

Article 9 of Administrative Order No. 57 provides:

"ARTICLE 9

"TRANSITORY PROVISION

67
"9.1. All existing mining leases or agreements which were granted after the effectivity of the 1987
Constitution pursuant to Executive Order No. 211, except small scale mining leases and those
pertaining to sand and gravel and quarry resources covering an area of twenty (20) hectares or
less shall be subject to these guidelines. All such leases or agreements shall be converted into
production sharing agreement within one (1) year from the effectivity of these guidelines.
However, any mining firm which has established mining rights under Presidential Decree 463 or
other laws may avail of the provisions of EO 279 by following the procedures set down in this
document."

It is clear from the aforestated provision that Administrative Order No. 57 applies only to all
existing mining leases or agreements which were granted after the effectivity of the 1987
Constitution pursuant to Executive Order No. 211. It bears mention that under the text of
Executive Order No. 211, there is a reservation clause which provides that the privileges as well as
the terms and conditions of all existing mining leases or agreements granted after the effectivity
of the 1987 Constitution, pursuant to Executive Order No. 211, shall be subject to any and all
modifications or alterations which Congress may adopt pursuant to Article XII, Section 2 of the
1987 Constitution. Hence, the strictures of the non-impairment of contract clause under Article
III, Section 10 of the 1987 Constitution do not apply to the aforesaid mining leases or agreements
granted after the effectivity of the 1987 Constitution, pursuant to Executive Order No. 211. They
can be amended, modified or altered by a statute passed by Congress to achieve the purposes of
Article XII, Section 2 of the 1987 Constitution.

Clearly, Executive Order No. 279 issued on July 25, 1987 by President Corazon C. Aquino in the
exercise of her legislative power has the force and effect of a statute or law passed by Congress.
As such, it validly modified or altered the privileges granted, as well as the terms and conditions
of mining leases and agreements under Executive Order No. 211 after the effectivity of the 1987
Constitution by authorizing the DENR Secretary to negotiate and conclude joint venture, co-
production, or production-sharing agreements for the exploration, development and utilization
of mineral resources and prescribing the guidelines for such agreements and those agreements
involving technical or financial assistance by foreign-owned corporations for large-scale
exploration, development, and utilization of minerals.

Well-settled is the rule, however, that regardless of the reservation clause, mining leases or
agreements granted by the State, such as those granted pursuant to Executive Order No. 211
referred to in this petition, are subject to alterations through a reasonable exercise of the police
power of the State. In the 1950 case of Ongsiako v. Gamboa, where the constitutionality of
Republic Act No. 34 changing the 50-50 sharecropping system in existing agricultural tenancy
contracts to 55-45 in favor of tenants was challenged, the Court, upholding the constitutionality
of the law, emphasized the superiority of the police power of the State over the sanctity of the
contract:

"The prohibition contained in constitutional provisions against impairing the obligation of

contracts is not an absolute one and it is not to be read with literal exactness like a mathematical
formula. Such provisions are restricted to contracts which respect property, or some object or
value, and confer rights which may be asserted in a court of justice, and have no application to
statute relating to public subjects within the domain of the general legislative powers of the State,
and involving the public rights and public welfare of the entire community affected by it. They
do not prevent a proper exercise by the State of its police powers. By enacting regulations
reasonably necessary to secure the health, safety, morals, comfort, or general welfare of the
community, even the contracts may thereby be affected; for such matter cannot be placed by
contract beyond the power of the State to regulate and control them."

In Ramas v. CAR and Ramos where the constitutionality of Section 14 of Republic Act No. 1199
authorizing the tenants to change from share to leasehold tenancy was challenged on the ground
that it impairs the obligation of contracts, the Court ruled that obligations of contracts mast yield
to a proper exercise of the police power when such power is exercised to preserve the security of
the State and the means adopted are reasonably adapted to the accomplishment of that end and
are, therefore, not arbitrary or oppressive.

68
The economic policy on the exploration, development and utilization of the country's natural
resources under Article XII, Section 2 of the 1987 Constitution could not be any clearer. As
enunciated in Article XII, Section I of the 1987 Constitution, the exploration, development and
utilization of natural resources under the new system mandated in Section 2, is geared towards a
more equitable distribution of opportunities, income, and wealth; a sustained increase in the
amount of goods and services produced by the nation for the benefit of the people; and an
expanding productivity as the key to raising the quality of life for all, especially the
underprivileged.

The exploration, development and utilization of the country's natural resources are matters vital
to the public interest and the general welfare of the people. The recognition of the importance of
the country's natural resources was expressed as early as the 1934 Constitutional Convention. In
connection therewith, the 1986 U.P. Constitution Project observed: "The 1934 Constitutional
Convention recognized the importance of our natural resources not only for its security and
national defense. Our natural resources which constitute the exclusive heritage of the Filipino
nation, should be preserved for those under the sovereign authority of that nation and for their
posterity. This will ensure the country's survival as a viable and sovereign republic."

Accordingly, the State, in the exercise of its police power in this regard, may not be precluded by
the constitutional restriction on non-impairment of contract from altering, modifying and
amending the mining leases or agreements granted under Presidential Decree No. 463, as
amended, pursuant to Executive Order No. 211. Police power, being co-extensive with the
necessities of the case and the demands of public interest, extends to all the vital public needs.
The passage of Executive Order No. 279 which superseded Executive Order No. 211 provided
legal basis for the DENR Secretary to carry into effect the mandate of Article XII, Section 2 of the
1987 Constitution.

Nowhere in Administrative Order No. 57 is there any provision which would lead us to conclude
that the questioned order authorizes the automatic conversion of mining leases and agreements
granted after the effectivity of the 1987 Constitution, pursuant to Executive Order No. 211, to
production-sharing agreements. The provision in Article 9 of Administrative Order No. 57 that
"all such leases or agreements shall be converted into production sharing agreements within one
(1) year from the effectivity of these guidelines" could not possibly contemplate a unilateral
declaration on the part of the Government that all existing mining leases and agreements are
automatically converted into production-sharing agreements. On the contrary, the use of the
term "production-sharing agreement" in the same provision implies negotiation between the
Government and the applicants, if they are so minded. Negotiation negates compulsion or
automatic conversion as suggested by petitioner in the instant petition. A mineral production-
sharing agreement (MPSA) requires a meeting of the minds of the parties after negotiations
arrived at in good faith and in accordance with the procedure laid down in the subsequent
Administrative Order No. 82.

We, therefore, rule that the questioned administrative orders are reasonably directed to the
accomplishment of the purposes of the law under which they were issued and were intended to
secure the paramount interest of the public, their economic growth and welfare. The validity and
constitutionality of Administrative Order Nos. 57 and 82 must be sustained, and their force and
effect upheld.

We now proceed to the petition-in-intervention. Under Section 2, Rule 12 of the Revised Rules
of Court, an intervention in a case is proper when the intervenor has a "legal interest in the
matter in litigation, or in the success of either of the parties, or an interest against both, or when
he is so situated as to be adversely affected by a distribution or other disposition of property in
the custody of the court or of an officer thereof." Continental Marble Corporation has not
sufficiently shown that it falls under any of the categories mentioned above. The refusal of the
DENR, Regional Office No. 3, San Fernando, Pampanga to renew its Mines Temporary Permit
does not justify such an intervention by Continental Marble Corporation for the purpose of
obtaining a directive from this Court for the issuance of said permit. Whether or not Continental
Marble matter best addressed to the appropriate government body but certainly, not through
this Court. Intervention is hereby DENIED.

69
WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining Order
issued on July 2, 1991 is hereby LIFTED. SO ORDERED.

Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Bellosillo, Melo, Quiason, Puno,
Vitug, Kapunan, and Mendoza, JJ.,concur.

Article XIII, Section 1 of the 1935 Constitution provides:

"Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal,
petroleum and other mineral oils, all forces of potential energy, and other natural resources of
the Philippines belong to the State, and their disposition, exploitation, development, or
utilization shall be limited to citizens of the Philippines, or to corporations or associations at least
sixty per centum of the capital of which is owned by such citizens, subject to any existing right,
grant, lease or concession at the time of the inauguration of the Government established under
this Constitution. Natural resources, with the exception of public agricultural land, shall not be
alienated, and no license, concession, or lease for the exploitation, development, or utilization of
any of the natural resources shall be granted for a period exceeding twenty-five years, renewable
for another twenty-five years, except as to water rights for irrigation, water supply, fisheries, or
industrial uses other than the development of water power, in which cases beneficial use may be
the measure and the limit of the grant.

xxx xxx xxx

Article XIV, Section 8 of the 1973 Constitution provides:

"Section 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral
oils, all forces of potential energy, fisheries, wildlife, and other natural resources of the
Philippines belong to the State. With the exception of agricultural, industrial or commercial,
residential, and resettlement lands of the public domain, natural resources shall not be alienated,
and no license, concession, or lease for the exploration, development, exploitation, or utilization
of any of the natural resources shall be granted for a period exceeding twenty-five years,
renewable for not more than twenty-five years, except as to water rights for irrigation, water
supply, fisheries, or industrial uses other than the development of water power, in which cases,
beneficial use may be the measure and the limit of the grant."

Lawful Means

1. G.R. No. 74457 March 20, 1987 RESTITUTO YNOT, petitioner, vs. INTERMEDIATE
APPELLATE COURT, THE STATION COMMANDER, INTEGRATED NATIONAL POLICE,
BAROTAC NUEVO, ILOILO and THE REGIONAL DIRECTOR, BUREAU OF ANIMAL
INDUSTRY, REGION IV, ILOILO CITY, respondents.

Facts:
On January 13, 1984, the petitioner transported six carabaos in a pump boat from Masbate to
Iloilo when the same was confiscated by the police station commander of Barotac Nuevo, Iloilo
for the violation of E.O. 626-A. A case was filed by the petitioner questioning the
constitutionality of executive order and the recovery of the carabaos. After considering the merits
of the case, the confiscation was sustained and the court declined to rule on the constitutionality
issue. The petitioner appealed the decision to the Intermediate Appellate Court but it also upheld
the ruling of RTC.

Issue:

Is E.O. 626-A unconstitutional?

70
Ruling:

The Respondent contends that it is a valid exercise of police power to justify EO 626-A amending
EO 626 in asic rule prohibiting the slaughter of carabaos except under certain conditions. The
supreme court said that The reasonable connection between the means employed and the
purpose sought to be achieved by the questioned measure is missing the Supreme Court do not
see how the prohibition of the inter-provincial transport of carabaos can prevent their
indiscriminate slaughter, considering that they can be killed anywhere, with no less difficulty in
one province than in another. Obviously, retaining the carabaos in one province will not prevent
their slaughter there, any more than moving them to another province will make it easier to kill
them there

The Supreme Court found E.O. 626-A unconstitutional. The executive act defined the
prohibition, convicted the petitioner and immediately imposed punishment, which was carried
out forthright. Due process was not properly observed. In the instant case, the carabaos were
arbitrarily confiscated by the police station commander, were returned to the petitioner only
after he had filed a complaint for recovery and given a supersedeas bond of P12,000.00. The
measure struck at once and pounced upon the petitioner without giving him a chance to be
heard, thus denying due process.

Or

RESTITUTO YNOT v. IAC GR No. 74457, Mar 20, 1987

232 Phil. 615

CRUZ, J.:
The essence of due process is distilled in the immortal cry of Themistocles to Alcibiades: "Strike
but hear me first!" It is this cry that the petitioner in effect repeats here as he challenges the
constitutionality of Executive Order No. 626-A.

The said executive order reads in full as follows:

"WHEREAS, the President has given orders prohibiting the interprovincial movement of carabaos
and the slaughtering of carabaos not complying with the requirements of Executive Order No.
626 particularly with respect to age;

"WHEREAS, it has been observed that despite such orders the violators still manage to circumvent
the prohibition against interprovincial movement of carabaos by transporting carabeef instead;
and

"WHEREAS, in order to achieve the purposes and objectives of Executive Order No. 626 and the
prohibition against interprovincial movement of carabaos, it is necessary to strengthen the said
Executive Order and provide for the disposition of the carabaos and carabeef subject of the
violation.

"NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the

powers vested in me by the Constitution, do hereby promulgate the following:

"SECTION 1. Executive Order No. 626 is hereby amended such that henceforth, no carabao
regardless of age, sex, physical condition or purpose and no carabeef shall be transported from
one province to another. The carabao or carabeef transported in violation of this Executive
Order as amended shall be subject to confiscation and forfeiture by the government, to be
distributed to charitable institutions and other similar institutions as the Chairman of the National
Meat Inspection Commission may see fit, in the case of carabeef, and to deserving farmers
through dispersal as the Director of Animal Industry may see fit, in the case of carabaos.

"SECTION 2. This Executive Order shall take effect immediately.

71
"Done in the City of Manila, this 25th day of October, in the year of Our Lord, nineteen hundred
and eighty.

(SGD.) FERDINAND E.
MARCOS
President
Republic of the Philippines"

The petitioner had transported six carabaos in a pump boat from Masbate to Iloilo on January
13, 1984, when they were confiscated by the police station commander of Barotac Nuevo, Iloilo,
for violation of the above measure.[1] The petitioner sued for recovery, and the Regional Trial
Court of Iloilo City issued a writ of replevin upon his filing of a supersedeas bond of
P12,000.00. After considering the merits of the case, the court sustained the confiscation of the
carabaos and, since they could no longer be produced, ordered the confiscation of the bond.
The court also declined to rule on the constitutionality of the executive order, as raised by the
petitioner, for lack of authority and also for its presumed validity.[2]

The petitioner appealed the decision to the Intermediate Appellate Court,[*] [3] which upheld the
trial court,[**] and he has now come before us in this petition for review on certiorari.

The thrust of his petition is that the executive order is unconstitutional insofar as it authorizes
outright confiscation of the carabao or carabeef being transported across provincial boundaries.
His claim is that the penalty is invalid because it is imposed without according the owner a right
to be heard before a competent and impartial court as guaranteed by due process. He complains
that the measure should not have been presumed, and so sustained, as constitutional. There is
also a challenge to the improper exercise of the legislative power by the former President under
Amendment No. 6 of the 1973 Constitution.[4]

While also involving the same executive order, the case of Pesigan v. Angeles[5] is not applicable
here. The question raised there was the necessity of the previous publication of the measure in
the Official Gazette before it could be considered enforceable. We imposed the requirement
then on the basis of due process of law. In doing so, however, this Court did not, as contended
by the Solicitor General, impliedly affirm the constitutionality of Executive Order No. 626-A.
That is an entirely different matter.

This Court has declared that while lower courts should observe a becoming modesty in
examining constitutional questions, they are nonetheless not prevented from resolving the same
whenever warranted, subject only to review by the highest tribunal. We have jurisdiction under
the Constitution to "review, revise, reverse, modify or affirm on appeal or certiorari, as the law
or rules of court may provide," final judgments and orders of lower courts in, among others, all
cases involving the constitutionality of certain measures.[7] This simply means that the resolution
of such cases may be made in the first instance by these lower courts.

And while it is true that laws are presumed to be constitutional, that presumption is not by any
means conclusive and in fact may be rebutted. Indeed, if there be a clear showing of their
invalidity, and of the need to declare them so, then "will be the time to make the hammer fall,
and heavily," to recall Justice Laurel's trenchant warning. Stated otherwise, courts should not
follow the path of least resistance by simply presuming the constitutionality of a law when it is
questioned. On the contrary, they should probe the issue more deeply, to relieve the abscess,
paraphrasing another distinguished jurist, and so heal the wound or excise the affliction.

Judicial power authorizes this; and when the exercise is demanded, there should be no shirking of
the task for fear of retaliation, or loss of favor, or popular censure, or any other similar inhibition
unworthy of the bench, especially this Court.

The challenged measure is denominated an executive order but it is really a presidential decree,
promulgating a new rule instead of merely implementing an existing law. It was issued by
President Marcos not for the purpose of taking care that the laws were faithfully executed but in
the exercise of his legislative authority under Amendment No. 6. It was provided there under

72
that whenever in his judgment there existed a grave emergency or a threat or imminence thereof
or whenever the legislature failed or was unable to act adequately on any matter that in his
judgment required immediate action, he could, in order to meet the exigency, issue decrees,
orders or letters of instruction that were to have the force and effect of law. As there is no
showing of any exigency to justify the exercise of that extraordinary power then, the petitioner
has reason, indeed, to question the validity of the executive order. Nevertheless, since the
determination of the grounds was supposed to have been made by the President "in his
judgment," a phrase that will lead to protracted discussion not really necessary at this time; we
reserve resolution of this matter until a more appropriate occasion. For the nonce, we confine
ourselves to the more fundamental question of due process.

It is part of the art of constitution-making that the provisions of the charter be cast in precise and
unmistakable language to avoid controversies that might arise on their correct interpretation.
That is the ideal. In the case of the due process clause, however, this rule was deliberately not
followed and the wording was purposely kept ambiguous. In fact, a proposal to delineate it
more clearly was submitted in the Constitutional Convention of 1934, but it was rejected by
Delegate Jose P. Laurel, Chairman of the Committee on the Bill of Rights, who forcefully argued
against it. He was sustained by the body.

The due process clause was kept intentionally vague so it would remain also conveniently
resilient. This was felt necessary because due process is not, like some provisions of the
fundamental law, an "iron rule" laying down an implacable and immutable command for all
seasons and all persons. Flexibility must be the best virtue of the guaranty. The very elasticity of
the due process clause was meant to make it adapt easily to every situation, enlarging or
constricting its protection as the changing times and circumstances may require.

Aware of this, the courts have also hesitated to adopt their own specific description of due
process lest they confine themselves in a legal straitjacket that will deprive them of the elbow
room they may need to vary the meaning of the clause whenever indicated. Instead, they have
preferred to leave the import of the protection open-ended, as it were, to be "gradually
ascertained by the process of inclusion and exclusion in the course of the decision of cases as they
arise. Thus, Justice Felix Frankfurter of the U.S. Supreme Court, for example, would go no farther
than to define due process and in so doing sums it all up as nothing more and nothing less than
the embodiment of the sporting idea of fair play.

When the barons of England extracted from their sovereign liege the reluctant promise that the
Crown would thenceforth not proceed against the life, liberty or property of any of its subjects
except by the lawful judgment of his peers or the law of the land, they thereby won for
themselves and their progeny that splendid guaranty of fairness that is now the hallmark of the
free society. The solemn vow that King John made at Runnymede in 1215 has since then
resounded through the ages, as a ringing reminder to all rulers, benevolent or base, that every
person, when confronted by the stern visage of the law, is entitled to have his say in a fair and
open hearing of his cause.

The closed mind has no place in the open society. It is part of the sporting idea of fair play to
hear the other side" before an opinion is formed or a decision is made by those who sit in
judgment. Obviously, one side is only one-half of the question; the other half must also be
considered if an impartial verdict is to be reached based on an informed appreciation of the
issues in contention. It is indispensable that the two sides complement each other, as unto the
bow the arrow, in leading to the correct ruling after examination of the problem not from one
or the other perspective only but in its totality. A judgment based on less that this full appraisal,
on the pretext that a hearing is unnecessary or useless, is tainted with the vice of bias or
intolerance or ignorance, or worst of all, in repressive regimes, the insolence of power.

The minimum requirements of due process are notice and hearing which, generally speaking, may
not be dispensed with because they are intended as a safeguard against official arbitrariness. It is
a gratifying commentary on our judicial system that the jurisprudence of this country is rich with
applications of this guaranty as proof of our fealty to the rule of law and the ancient rudiments
of fair play. We have consistently declared that every person, faced by the awesome power of
the State, is entitled to "the law of the land," which Daniel Webster described almost two

73
hundred years ago in the famous Dartmouth College Case, as the law which hears before it
condemns, which proceeds upon inquiry and renders judgment only after trial." It has to be so if
the rights of every person are to be secured beyond the reach of officials who, out of mistaken
zeal or plain arrogance, would degrade the due process clause into a worn and empty
catchword.

This is not to say that notice and hearing are imperative in every case for, to be sure, there are a
number of admitted exceptions. The conclusive presumption, for example, bars the admission of
contrary evidence as long as such presumption is based on human experience or there is a
rational connection between the fact proved and the fact ultimately presumed there from. There
are instances when the need for expeditious action will justify omission of these requisites, as in
the summary abatement of a nuisance per se, like a mad dog on the loose, which may be killed
on sight because of the immediate danger it poses to the safety and lives of the people.
Pornographic materials, contaminated meat and narcotic drugs are inherently pernicious and may
be summarily destroyed. The passport of a person sought for a criminal offense may be canceled
without hearing, to compel his return to the country he has fled. Filthy restaurants may be
summarily padlocked in the interest of the public health and bawdy houses to protect the public
morals. In such instances, previous judicial hearing may be omitted without violation of due
process in view of the nature of the property involved or the urgency of the need to protect the
general welfare from a clear and present danger.

The protection of the general welfare is the particular function of the police power which both
restrains and is restrained by due process. The police power is simply defined as the power
inherent in the State to regulate liberty and property for the promotion of the general welfare.
By reason of its function, it extends to all the great public needs and is described as the most
pervasive, the least limitable and the most demanding of the three inherent powers of the State,
far outpacing taxation and eminent domain. The individual, as a member of society, is hemmed
in by the police power, which affects him even before he is born and follows him still after he is
dead - from the womb to beyond the tomb - in practically everything he does or owns. Its reach
is virtually limitless. It is a ubiquitous and often unwelcome intrusion. Even so, as long as the
activity or the property has some relevance to the public welfare, its regulation under the police
power is not only proper but necessary. And the justification is found in the venerable Latin
maxims, Salus populi est suprema lex and Sic utere tuo ut alienum non laedas, which call for the
subordination of individual interests to the benefit of the greater number.

It is this power that is now invoked by the government to justify Executive Order No. 626-A,
amending the basic rule in Executive Order No. 626, prohibiting the slaughter of carabaos except
under certain conditions. The original measure was issued for the reason, as expressed in one of
its Whereas, that present conditions demand that the carabaos and the buffaloes be conserved for
the benefit of the small farmers who rely on them for energy needs." We affirm at the outset the
need for such a measure. In the face of the worsening energy crisis and the increased dependence
of our farms on these traditional beasts of burden, the government would have been remiss,
indeed, if it had not taken steps to protect and preserve them.

A similar prohibition was challenged in United States v. Toribio, where a law regulating the
registration, branding and slaughter of large cattle was claimed to be a deprivation of property
without due process of law. The defendant had been convicted there under for having
slaughtered his own carabao without the required permit, and he appealed to the Supreme
Court. The conviction was affirmed. The law was sustained as a valid police measure to prevent
the indiscriminate killing of carabaos, which were then badly needed by farmers. An epidemic
had stricken many of these animals and the reduction of their number had resulted in an acute
decline in agricultural output, which in turn had caused an incipient famine. Furthermore,
because of the scarcity of the animals and the consequent increase in their price, cattle-rustling
had spread alarmingly, necessitating more effective measures for the registration and branding of
these animals. The Court held that the questioned statute was a valid exercise of the police
power and declared in part as follows:
"To justify the State in thus interposing its authority in behalf of the public, it must appear, first,
that the interests of the public generally, as distinguished from those of a particular class, require
such interference; and second, that the means are reasonably necessary for the accomplishment of

74
the purpose, and not unduly oppressive upon individuals. x x x x x.

From what has been said, we think it is clear that the enactment of the provisions of the statute
under consideration was required by 'the interests of the public generally, as distinguished from
those of a particular class' and that the prohibition of the slaughter of carabaos for human
consumption, so long as these animals are fit for agricultural work or draft purposes was a
'reasonably necessary' limitation on private ownership, to protect the community from the loss of
the services of such animals by their slaughter by improvident owners, tempted either by greed of
momentary gain, or by a desire to enjoy the luxury of animal food, even when by so doing the
productive power of the community may be measurably and dangerously affected."

In the light of the tests mentioned above, we hold with the Toribio Case that the carabao, as the
poor man's tractor, so to speak, has a direct relevance to the public welfare and so is a lawful
subject of Executive Order No. 626. The method chosen in the basic measure is also reasonably
necessary for the purpose sought to be achieved and not unduly oppressive upon individuals,
again following the above-cited doctrine. There is no doubt that by banning the slaughter of
these animals except where they are at least seven years old if male and eleven years old if
female upon issuance of the necessary permit, the executive order will be conserving those still fit
for farm work or breeding and preventing their improvident depletion.

But while conceding that the amendatory measure has the same lawful subject as the original
executive order, we cannot say with equal certainty that it complies with the second
requirement, viz., that there be a lawful method. We note that to strengthen the original
measure, Executive Order No. 626-A imposes an absolute ban not on the slaughter of the
carabaos but on their movement, providing that "no carabao regardless of age, sex, physical
condition or purpose (sic) and no carabeef shall be transported from one province to another."
The object of the prohibition escapes us. The reasonable connection between the means
employed and the purpose sought to be achieved by the questioned measure is missing.

We do not see how the prohibition of the interprovincial transport of carabaos can prevent their
indiscriminate slaughter, considering that they can be killed anywhere, with no less difficulty in
one province than in another. Obviously, retaining the carabaos in one province will not
prevent their slaughter there, any more than moving them to another province will make it
easier to kill them there. As for the carabeef, the prohibition is made to apply to it as otherwise,
so says executive order, it could be easily circumvented by simply killing the animal. Perhaps so.
However, if the movement of the live animals for the purpose of preventing their slaughter
cannot be prohibited, it should follow that there is no reason either to prohibit their transfer as,
not to be flippant, dead meat.

Even if a reasonable relation between the means and the end were to be assumed, we would still
have to reckon with the sanction that the measure applies for violation of the prohibition. The
penalty is outright confiscation of the carabao or carabeef being transported, to be meted out by
the executive authorities, usually the police only. In the Toribio Case, the statute was sustained
because the penalty prescribed was fine and imprisonment, to be imposed by the court after trial
and conviction of the accused. Under the challenged measure, significantly, no such trial is
prescribed, and the property being transported is immediately impounded by the police and
declared, by the measure itself, as forfeited to the government.

In the instant case, the carabaos were arbitrarily confiscated by the police station commander,
were returned to the petitioner only after he had filed a complaint for recovery and given
a supersedeas bond of P12,000.00, which was ordered confiscated upon his failure to produce
the carabaos when ordered by the trial court. The executive order defined the prohibition,
convicted the petitioner and immediately imposed punishment, which was carried out
forthright. The measure struck at once and pounced upon the petitioner without giving him a
chance to be heard, thus denying him the centuriesfold guaranty of elementary fair play.

It has already been remarked that there are occasions when notice and hearing may be validly
dispensed with notwithstanding the usual requirement for these minimum guarantees of due
process. It is also conceded that summary action may be validly taken in administrative

75
proceedings as procedural due process is not necessarily judicial only.[20] In the exceptional cases
accepted, however, there is a justification for the omission of the right to a previous hearing, to
wit, the immediacy of the problem sought to be corrected and the urgency of the need to correct
it.

In the case before us, there was no such pressure of time or action calling for the petitioner's
peremptory treatment. The properties involved were not even inimical per se as to require their
instant destruction. There certainly was no reason why the offense prohibited by the executive
order should not have been proved first in a court of justice, with the accused being accorded all
the rights safeguarded to him under the Constitution. Considering that, as we held in Pesigan v.
Angeles,[21] Executive Order No. 626-A is penal in nature, the violation thereof should have been
pronounced not by the police only but by a court of justice, which alone would have had the
authority to impose the prescribed penalty, and only after trial and conviction of the accused.

We also mark, on top of all this, the questionable manner of the disposition of the confiscated
property as prescribed in the questioned executive order. It is there authorized that the seized
property shall "be distributed to charitable institutions and other similar institutions as the
Chairman of the National Meat Inspection Commission may see fit, in the case of carabeef, and
to deserving farmers through dispersal as the Director of Animal Industry may see fit, in the case
of carabaos." (Emphasis supplied.) The phrase "may see fit" is an extremely generous and
dangerous condition, if condition it is. It is laden with perilous opportunities for partiality and
abuse, and even corruption. One searches in vain for the usual standard and the reasonable
guidelines, or better still, the limitations that the said officers must observe when they make their
distribution. There is none. Their options are apparently boundless. Who shall be the fortunate
beneficiaries of their generosity and by what criteria shall they be chosen? Only the officers
named can supply the answer, they and they alone may choose the grantee as they see fit, and in
their own exclusive discretion. Definitely, there is here a "roving commission," a wide and
sweeping authority that is not "canalized within banks that keep it from overflowing," in short, a
clearly profligate and therefore invalid delegation of legislative powers.

To sum up then, we find that the challenged measure is an invalid exercise of the police power
because the method employed to conserve the carabaos is not reasonably necessary to the
purpose of the law and, worse, is unduly oppressive. Due process is violated because the owner
of the property confiscated is denied the right to be heard in his defense and is immediately
condemned and punished. The conferment on the administrative authorities of the power to
adjudge the guilt of the supposed offender is a clear encroachment on judicial functions and
militates against the doctrine of separation of powers. There is, finally, also an invalid delegation
of legislative powers to the officers mentioned therein who are granted unlimited discretion in
the distribution of the properties arbitrarily taken. For these reasons, we hereby declare
Executive Order No. 626-A unconstitutional.

We agree with the respondent court, however, that the police station commander who
confiscated the petitioner's carabaos is not liable in damages for enforcing the executive order in
accordance with its mandate. The law was at that time presumptively valid, and it was his
obligation, as a member of the police, to enforce it. It would have been impertinent of him,
being a mere subordinate of the President, to declare the executive order unconstitutional and,
on his own responsibility alone, refuse to execute it. Even the trial court, in fact, and the Court
of Appeals itself did not feel they had the competence, for all their superior authority, to
question the order we now annul.

The Court notes that if the petitioner had not seen fit to assert and protect his rights as he saw
them, this case would never have reached us and the taking of his property under the challenged
measure would have become a fait accompli despite its invalidity. We commend him for his
spirit. Without the present challenge, the matter would have ended in that pump boat in
Masbate and another violation of the Constitution, for all its obviousness, would have been
perpetrated, allowed without protest, and soon forgotten in the limbo of relinquished rights.

The strength of democracy lies not in the rights it guarantees but in the courage of the people to
invoke them whenever they are ignored or violated. Rights are but weapons on the wall if, like
expensive tapestry, all they do is embellish and impress. Rights, as weapons, must be a promise

76
of protection. They become truly meaningful, and fulfill the role assigned to them in the free
society, if they are kept bright and sharp with use by those who are not afraid to assert them.

WHEREFORE, Executive Order No. 626-A is hereby declared unconstitutional. Except as

affirmed above, the decision of the Court of Appeals is reversed. The supersedeas bond is
cancelled and the amount thereof is ordered restored to the petitioner. No costs.

SO ORDERED.

2. Balacuit vs. Court of First Instance (CFI) GR L-38429 30 June 1988

Facts:
The Municipal Board of City of Butuan passed Oridinance No 640 on 21 April 1969, penalizing
any person , group of persons , entity or engeged in the business of selling admission tickets to
any movie to require children between 7-12 years of age to pay full payment for ticket should
only be charged one half. Petitioners Carlos Balacuit , et al as managers of theaters assailed the
validity and constitutionality of the said ordinance. The court adjudged in favour of the
respondents hence the petition for review. Petitioners contend that it violates due process clause
of the Constitution for being oppressive , unfair , unjust, confiscatory and an undue restraint of
trade.

Issue:
Whether or not Ordinance 640 prohibiting selling of theatre admission tickets to children 7-12
y/o at full price is constitutional or not?

Decision:
Decision reversed. Ordinance 640 declared unconstitutional. For the assailed ordinance be held
constitutional it must pass the test of police power. To invoke the exercise the police power, it
must be for the interest of the public without interfering with private rights and adoptive means
must be reasonably necessary for the accomplishment of the purpose and not unduly oppressive
upon individuals.
While it is true that a business may be regulated, it is equally true that such regulation must be
within the bounds of reason, that is, the regulatory ordinance must be reasonable, and its
provisions cannot be oppressive amounting to an arbitrary interference with the business or
calling subject of regulation. The right of the owner to fix a price at which his property shall be
sold or used is an inherent attribute of the property itself and, as such, within the protection of
the due process clause. Hence, the proprietors of a theater have a right to manage their property
in their own way, to fix what prices of admission they think most for their own advantage, and
that any person who did not approve could stay away.

3. JMM Promotion and Management, Inc. vs. CA, G.R. No. 120095, August 5, 1996; 260
SCRA 319
(Labor Standards Artist Record Book as a requirement for overseas employment contract)

Facts: The deployment of female entertainers to Japan was controlled by the government
through Department Order No. 3, wherein said entertainers were required an Artist Record Book
as a precondition to the processing by the POEA of any contract for overseas employment.
Petitioners contends that overseas employment is a property right within the meaning of the

77
Constitution and avers that the alleged deprivation thereof through the onerous requirement of
an ARB violates due process and constitutes an invalid exercise of police power.

Issue: WON an Artist Record Book is a valid requirement for overseas employment.

Held: Yes. The ARB requirement and the questioned Department order related to its issuance
were issued pursuant to a valid exercise of police power which considers the welfare of Filipino
performing artists, particularly the women.

Or

FACTS:

The Federation of Entertainment Talent Managers of the Philippines (FETMOP for brevity) filed a
class suit on January 27, 1995 assailing that the Department Order No. 3 which establishes
various procedures and requirements for screening performing artists under a new system of
training, testing, certification and deployment of the former and other related issuance,
principally contending that the said orders, 1.) Violated the constitutional right to travel; 2.)
abridged existing contracts for employment; and 3.) Deprived individual artists of their licenses
without due process of law. FETMOP also averred that the issuance of the Artist Record Book
(ARB) was discriminatory and illegal and in gross violation of the constitutional right to life
liberty and property. FETMOP prayed for the issuance of the writ of preliminary injunction
against the orders.

JMM Promotion and Management, Inc. (JMM for brevity) and Kary International, Inc. (Kary for
brevity) filed a motion for intervention in the civil case which was granted by the trial court on
February 15, 1995. However, on February 21, 1995, the trial court issued an order denying
petitioner's prayer for writ of preliminary injunction and dismissed the compliant. An appeal was
made to the trial court regarding its decision but it was also however, dismissed. As a
consequences, ARB requirement was issued. The Court of Appeals upheld the trial court's decision
and concluded that the said issuance constituted a valid exercise of Police power.

ISSUE:

Whether or not the the said issuance is a valid exercise of Police Power.

RULING:

Yes, the ARB requirement and questioned Department Order related to its issuance were issued
by the Secretary of Labor pursuant to a valid exercise of Police Power by the State. The proper
regulation of a profession, calling, business or trade has always been upheld as a legitimate
subject of a valid exercise of police power by the state particularly when their conduct affects
either the execution of a legitimate governmental functions, the preservation of the State, the
public health and welfare and public morals. According to the maxim sic utere tuo ut alienum
non laedas (use your property in such a fashion so as to not disturb others) it must of course be
within the legitimate range of legislative action to define the mode and manner in which every
one may so use his own property so as not to pose injury to himself or others.

In any case, where the liberty curtailed affects at most the right of property, the permissible scope
of regulatory measures is certainly much wider. To pretend that licensing or accreditation
requirements violates due process clause is to ignore the settled practice, under the mantle of the
police power, of regulating entry to the practice of various trades or profession. Professional
leaving for abroad are required to pass rigid written and practical exams before they are deemed
fit to practice their trade. It is not claimed that these requirements pose an unwarranted
deprivation of a property right under the due process clause. So long as professionals and
other workers meet reasonable regulatory standards no such deprivation exists.

78
4. Philippine Press Institute vs COMELEC GR 119694 22 May 1995

Facts: COMELEC promulgated Resolution No 2772 directing newspapers to provide free print
space of not less than page for use as Comelec Space from 06March1995 to 06May1995.
COMELEC Commisssioner sent letters to publishers informing them of the same. PPI seek to
declare the resolution unconstitutional and void on the ground of taking private property w/o
just compensation. TRO was enforced. Soc Gen argues that even if the questioned Resolution
and its implementing letter directives are viewed as mandatory, the same would nevertheless be
valid as an exercise of the police power of the State. COMELEC Chair stated that they will clarify
the resolution that the letter was intended to solicit and not to compel. Resolution No. 2772-A
was promulgated.

Issue: Whether or not Resolution 2772 is void on the ground of deprivation of use w/o
compensation of newspaper?

Decision: To compel print media companies to donate Comelec-space amounts to taking of

private personal property for public use. The extent of the taking or deprivation is not
insubstantial measured by the advertising rates ordinarily charged by newspaper publishers
whether in cities or in non-urban areas.
The taking of print space here sought to be effected may first be appraised under the rubric of
expropriation of private personal property for public use. The threshold requisites for a lawful
taking of private property for public use need to be examined here: one is the necessity for the
taking; another is the legal authority to effect the taking. The element of necessity for the taking
has not been shown by respondent Comelec. It has not been suggested that the members of PPI
are unwilling to sell print space at their normal rates to Comelec for election purposes. It has not
been suggested that Comelec has been granted the power of eminent domain either by the
Constitution or by the legislative authority. A reasonable relationship between that power and
the enforcement and administration of election laws by Comelec must be shown.

The taking of private property for public use is, of course, authorized by the Constitution, but
not without payment of just compensation.

5. AMELIA CABRERA, G.R. No. 129098

Petitioner,
Present:

QUISUMBING, J.,
- versus - Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
MANUEL LAPID, FERNANDO VELASCO, JR., JJ.
BALTAZAR, REYNALDO F.
CABRERA and DIONY VENTURA,
Respondents. Promulgated:
December 6, 2006

x-------------------------------------------------------------------x

79
 DECISION

TINGA, J.:

The instant petition for review on certiorari seeks the reversal of the Resolution dated 13 May
1996 and the Order dated 21 March 1997, both issued by the Office of the Ombudsman. The
Resolution dismissed the complaint-affidavit filed by petitioner against respondents and the
Order denied her motion for reconsideration.

The instant petition originated from a Complaint-Affidavit filed in November 1995 by

petitioner Amelia M. Cabrera with the Office of the Ombudsman (Ombudsman). Named
respondents were Manuel Lapid, Fernando Baltazar, Reynaldo F. Cabrera and Superintendent
Diony Ventura, respectively, in their capacities as Governor of Pampanga, Mayor of Sasmuan,
Pampanga, Vice-Mayor of Sasmuan, Pampanga and Superintendent of the Philippine National
Police (PNP)-Region 3, Pampanga. In her three (3)-page affidavit, petitioner accused respondents
of violating Section 3(e) of the Anti-Graft and Corrupt Practices Act and Article 324 of the
Revised Penal Code.

In her Complaint-Affidavit, petitioner stated that she entered into a lease agreement with
the Municipality of Sasmuan over a tract of land for the purpose of devoting it to fishpond
operations. According to petitioner, she had spent approximately P5,000,000.00 for its
construction before the fishpond operations commenced in August 1995. A month later,
petitioner learned from newspaper reports of the impending demolition of her fishpond as it was
purportedly illegal and blocked the flow of the Pasak River. Thus, petitioner sent the fishpond
administrator to dissuade respondents from destroying her property.

Despite pleas from petitioner, respondents ordered the destruction of petitioners

fishpond. The property was demolished on 10 October 1995 by dynamite blasting. Petitioner
alleged that the demolition was purposely carried out in the presence of media representatives
and other government officials to gain media mileage. Petitioner imputed evident bad faith on
respondents Mayor Baltazar and Vice-Mayor Cabrera in allowing the destruction of the fishpond
despite their prior knowledge of the existence of the lease agreement. She also charged
respondents Governor Lapid and Senior Superintendent Ventura with gross inexcusable
negligence for ordering the destruction of the fishpond without first verifying its legality.

At the preliminary investigation, respondents, except Senior Superintendent Ventura,

submitted counter-affidavits, denying the accusations against them. In the counter-affidavit jointly
filed by Mayor Baltazar and Vice-Mayor Cabrera, they insisted that contrary to petitioners claim,
the fishpond was an illegal structure because it was erected on the seashore, at the mouth of

80
the Pasak River, and sat on an inalienable land. They claimed that the demolition was done by
the Task Force Bilis Daloy upon the directive of then President Fidel V. Ramos.

In his Counter-Affidavit, Governor Lapid averred that the contract of lease between
petitioner and the Municipality of Sasmuan, represented by then Mayor Abelardo Panlaqui, was
executed two weeks before respondent Mayor Baltazar took his oath of office in 1995. Governor
Lapid also argued that under the law, the Department of Agriculture (DA) is the government
agency authorized to enter into licensing agreements for fishpond operations, and as per
certification by the DA Regional Director, petitioners fishpond operation was not covered by a
fishpond lease agreement or application. Governor Lapid also referred to the certification by the
Municipal Health Officer of Sasmuan issued before the actual demolition of the fishpond,
describing it as a nuisance per se and recommending its abatement.

On 13 May 1996, the Ombudsman issued the assailed Resolution, dismissing petitioners
complaint. The dismissal was based on the declaration that the fishpond was a nuisance per
se and, thus, may be abated by respondents in the exercise of the police power of the State.

Petitioner sought reconsideration of the Resolution, arguing that under Sec. 149 of
Republic Act (R.A.) No. 7160, otherwise known as the Local Government Code of 1991, the
exclusive authority to grant fishery privileges is vested in the municipalities. Petitioner also
questioned the certification by the Municipal Health Officer, alleging that the same was issued
before the ocular inspection of the property which took place only on the day of the demolition.
Petitioner also contended that a judicial proceeding was necessary to determine whether the
property indeed had caused the flooding. Respondents filed separate oppositions to petitioners
motion for reconsideration. Petitioner filed a reply to the oppositionand respondent Governor
Lapid filed a rejoinder to the reply.

In the Order dated 21 March 1997, the Ombudsman affirmed its 13 May 1996 Resolution.
It ruled that the repealing clause of R.A. No. 7160 expressly repealed only Sec. 2, 6 and 29 of
Presidential Decree (P.D.) No. 704 so that in harmonizing the remaining provisions of P.D. No.
704 and the provisions of R.A. No. 7160 applicable to the grant of fishery privileges, the Bureau
of Fisheries and Aquatic Resources (BFAR) is the government agency authorized to grant fishpond
license or permit in areas not identified as municipal waters or not declared as alienable or
disposable by the Department of Environment and Natural Resources (DENR). Since it appears
from DENR records that the subject property has not been declared disposable or included in
areas devoted for fishpond development, the Ombudsman concluded that the lease agreement
entered into by petitioner was void ab initio. In view of the illegality of the lease agreement, the
Ombudsman ruled that its demolition was justified. The Ombudsman described the demolition as
a valid exercise of police power and in accordance with the provision of Sec. 28 of P.D. No. 704
directing the removal of any fishpen or fishpond that obstructed the free navigation of a stream

81
or lake. It also upheld the authority of the district health officer to determine the abatement of a
nuisance without need of judicial proceedings.

Petitioner elevated the matter to this Court via a petition for review on certiorari under
Rule 45 of the Rules of Court to assail the 13 May 1996 Resolution and 21 March 1997 Order of
the Ombudsman. Petitioner subsequently filed an amended petition for review on certiorari to
implead the Ombudsman as respondent, although in a petition for review on certiorari, the
tribunal whose issuance is assailed need not be impleaded as respondent.

The petition imputes the following errors on the Ombudsman:

I.

THE OFFICE OF THE OMBUDSMAN ERRED AND EXCEEDED ITS

AUTHORITY IN RULING THAT THE LEASE CONTRACT BETWEEN
THE MUNICIPALITYOF SASMUAN AND PETITIONER IS NULL AND VOID.

II.

THE OFFICE OF THE OMBUDSMAN ERRED IN RULING THAT THE

DEMOLITION OF THE FISHPOND WAS VALIDLY MADE BY VIRTUE OF THE
DECLARATION BY THE HEALTH OFFICER THAT IT WAS A NUISANCE PER SE.

III.

THE OFFICE OF THE OMBUDSMAN ERRED IN RULING THAT THE

DEMOLITION IS PART OF THE PROPER EXERCISE OF THE POLICE POWER OF
THE STATE.
IV.

THE OFFICE OF THE OMBUDSMAN ERRED IN RULING THAT

PETITIONER WAS GIVEN DUE NOTICE AND HEARING BEFORE THE
FISHPOND WAS BLASTED.
V.

THE OFFICE OF THE OMBUDSMAN ERRED IN RULING THAT

PROBABLE CAUSE DOES NOT EXIST TO INDICT RESPONDENTS FOR
VIOLATION OF THE SUBJECT OFFENSES.
Clearly, this is an appeal from the questioned issuances of the Ombudsman. However, such direct
resort to this Court from a resolution or order of the Ombudsman is not sanctioned by any rule
of procedure.

Neither can petitioner avail of Sec. 27 of R.A. No. 6770, otherwise known as The
Ombudsman Act of 1989. The provision allowed direct appeals in administrative disciplinary
cases from the Office of the Ombudsman to the Supreme Court. The right to appeal is granted
only in respect to orders or decisions of the Ombudsman in administrative cases. The provision
does not cover resolutions of the Ombudsman in criminal cases. More importantly, Sec. 27 of
R.A. No. 6770 insofar as it allowed a direct appeal to this Court was declared unconstitutional
in Fabian v. Hon. Desierto

82
 However, an aggrieved party in criminal actions is not without any recourse. Where
grave abuse of discretion amounting to lack or excess of jurisdiction taints the findings of the
Ombudsman on the existence of probable cause, the aggrieved party may file a petition for
certiorari under Rule 65. The remedy from resolutions of the Ombudsman in preliminary
investigations of criminal cases is a petition for certiorari under Rule 65, not a petition for review
on certiorari under Rule 45.

But in this case, petitioner has taken the position that the Ombudsman has decided
questions of substance contrary to law and the applicable decisions of the Supreme Court. That is
a ground under a Rule 45 petition. Indeed, from a reading of the assignment of errors, it is clear
that petitioner does not impute grave abuse of discretion to the Ombudsman in issuing the
assailed Resolution and Order. Rather, she merely questions his findings and conclusions. As
stated earlier, direct appeal to the Supreme Court via a petition for review on certiorari is not
sanctioned by any rule of procedure. By availing of a wrong remedy, the petition should be
dismissed outright.
Even if the Court treats the instant appeal as a petition for certiorari under Rule 65, its
dismissal is nevertheless warranted because petitioner failed to present, much more substantiate,
any grave abuse of discretion on the part of the Ombudsman.

A careful reading of the questioned Resolution reveals that the Ombudsman dismissed
petitioners criminal complaint because respondents had validly resorted to the police power of
the State when they effected the demolition of the illegal fishpond in question following the
declaration thereof as a nuisance per se. Thus, the Ombudsman was of the opinion that no
violation of Section 3(e), of the Anti-Graft and Corrupt Practices Act or of Article 324 of the
Revised Penal Code was committed by respondents. In the words of the Ombudsman, those who
participated in the blasting of the subject fishpond were only impelled by their desire to serve the
best interest of the general public; for the good and the highest good.

By grave abuse of discretion is meant capricious and whimsical exercise of judgment as is

equivalent to lack of jurisdiction. Mere abuse of discretion is not enough. It must be grave abuse
of discretion as when the power is exercised in an arbitrary or despotic manner by reason of
passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a
positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation
of law.

Grave abuse of discretion should be differentiated from an error in judgment. An error of

judgment is one which the court may commit in the exercise of its jurisdiction, and which error is
reversible only by an appeal. As long as the court acts within its jurisdiction, any alleged errors
committed in the exercise of its discretion will amount to nothing more than mere errors of
judgment, correctible by an appeal or a petition for review under Rule 45 of the Rules of Court.

83
An error of jurisdiction is one where the act complained of was issued by the court without or in
excess of jurisdiction and which error is correctible only by the extraordinary writ of certiorari.[

The other errors raised by petitioner pertain to the Ombudsmans opinion on the lack of
probable cause to indict respondents. These are purported errors in judgment which can be
corrected by an appeal, although not via a direct appeal to this Court. Direct resort to this Court
may be had only through the extraordinary writ of certiorari and upon showing that the
Ombudsman committed grave abuse of discretion, which petitioner failed to demonstrate.

Absent any grave abuse of discretion tainting it, the courts will not interfere with the
Ombudsmans supervision and control over the preliminary investigation conducted by him. It is
beyond the ambit of this Court to review the exercise of discretion of the Ombudsman in
prosecuting or dismissing a complaint filed before it. The rule is based not only upon respect for
the investigatory and prosecutory powers granted by the Constitution to the Office of the
Ombudsman but upon practicality as well. Otherwise, the functions of the courts will be
grievously hampered by innumerable petitions assailing the dismissal of investigatory proceedings
conducted by the Office of the Ombudsman with regard to complaints filed before it, in much
the same way that the courts would be extremely swamped if they would be compelled to
review the exercise of discretion on the part of the fiscals or prosecuting attorneys each time they
decide to file an information in court or dismiss a complaint by a private complainant.

WHEREFORE, the instant petition for review on certiorari is DENIED. No costs.

SO ORDERED.

5. LGU
1. Magtajas Vs Pryce Properties G.R. No. 111097 July 20, 1994

FACTS: There was instant opposition when PAGCOR announced the opening of a casino in
Cagayan de Oro City. Civic organizations angrily denounced the project.The trouble arose when
in 1992, flush with its tremendous success in several cities, PAGCOR decided to expand its
operations to Cagayan de Oro City.he reaction of the Sangguniang Panlungsod of Cagayan de
Oro City was swift and hostile. On December 7, 1992, it enacted Ordinance No. 3353.Nor was
this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93Pryce assailed the
ordinances before the Court of Appeals, where it was joined by PAGCOR as intervenor and
supplemental petitioner. Their challenge succeeded. On March 31, 1993, the Court of Appeals
declared the ordinances invalid and issued the writ prayed for to prohibit their enforcement

ISSUE: WON Ordinance 3353 and 3375-93 valid

HELD: No

Local Government Code, local government units are authorized to prevent or suppress, among
others, "gambling and other prohibited games of chance." Obviously, this provision excludes
games of chance which are not prohibited but are in fact permitted by law. The rationale of the
requirement that the ordinances should not contravene a statute is obvious. Casino gambling is

84
authorized by P.D. 1869. This decree has the status of a statute that cannot be amended or
nullified by a mere ordinance. Hence, it was not competent for the Sangguniang Panlungsod of
Cagayan de Oro City to enact Ordinance No. 3353 prohibiting the use of buildings for the
operation of a casino and Ordinance No. 3375-93 prohibiting the operation of casinos. For all
their praiseworthy motives, these ordinances are contrary to P.D. 1869 and the public policy
announced therein and are therefore ultra vires and void.

Or

FACTS: Petitioners opposed the opening of a casino in Cagayan de Oro and enacted Ordinance
No. 3353, prohibiting the issuance of business permit and cancelling existing business permit to
establishment for the operation of casino, and Ordinance No. 3375-93, prohibiting the operation
of casino and providing penalty for its violation.

Respondents assailed the validity of the ordinances on the ground that both violated P.D. 1869,
permitting the operation of casinos centralized and regulated by PAGCOR.

Petitioners contends that pursuant to the Local Government Code, they have the police power
authority to prohibit the operation of casino for the general welfare.

ISSUE: Whether or not Ordinance No. 3353 and Ordinance No. 3375-93 are valid exercise of
police power.

HELD: No. The ordinances violate P.D. 1869, which has the character and force of a statute as
well as the public policy expressed in the decree allowing the playing of certain games of chance
despite the prohibition of gambling in general. Ordinances should not contravene a statute
because local councils exercise only delegated legislative powers conferred to them by Congress.

Petition is denied.

2. Felicisima De La Cruz v. Edgardo L. Paras G.R. No. L-41053, Feb 27, 1976
161 Phil. 715

MARTIN, J.:
The prime issue presented to us in this special civil action for certiorari and/or mandamus, which
was certified by the Court of Appeals on July 15, 1975, involves the rule in determining whether
an order is final and appealable or is merely interlocutory.
Sometime in 1962, Pedro San Miguel, the predecessor-in-interest of the herein petitioners,
commenced a "Complaint for Partition of Real Estate" before the Court of First Instance of
Bulacan against private respondent Pablo San Miguel. The complaint, docketed as Civil Case No.
2624, sought the partition of Lot No. 4543 of the Lolomboy Estate, which is a portion of
original Lot No. 3237 and covered by Transfer Certificate of Title No. T-15369 of the Registry of
Deeds of Bulacan. Traversing the complaint, respondent Pablo San Miguel disclaimed co-
ownership and asserted exclusive ownership of Lot No. 4543.
Subsequently, on March 19, 1964, the then trial judge, Ricardo C. Puno, ordered the dismissal of
the case pursuant to Section 3, Rule 17 of the Revised Rules of Court for "apparent lack of interest
in the prosecution of the respective claims of the litigants."
Eleven years thereafter, another complaint for partition, docketed as Civil Case No. 4300-M of
the Court of First Instance of Bulacan, was instituted by the same Pedro San Miguel against
private respondent Pablo San Miguel. This time, the complaint prayed for the partition of Lot
No. 4543 (covered by TCT No. T-15369, Bulacan) and Lot No. 3269 (covered by TCT No. T-
15370, Bulacan). In due time, Pablo San Miguel filed his answer, pleading therein the defense
of res judicata. For him, the same subject matter and cause of action had already been litigated
upon and resolved in the previous Civil Case No. 2624. After preliminary hearing, the
respondent Judge issued an order on December 10, 1973, dismissing Civil Case No. 4300-M
"insofar as Lot 4543 is concerned" in view of the principle of res judicata.

85
The case was ordered to proceed as regards Lot No. 3269, and on July 31, 1974, respondent
Judge rendered a decision ordering the parties "as CO-OWNERS to present to this Court within
ten (10) days from receipt hereof, a PROJECT OF PARTITION, dividing Lot No. 3269 (Transfer
Certificate of Title No. T-15370, Bulacan) into two equal parts." Petitioners received a copy of
this decision on August 13, 1974.
On September 12, 1974, petitioners interposed their appeal from this judgment of the trial court.
On said date, their notice of appeal, appeal bond and record on appeal were filed.
On December 9, 1974, respondent Judge approved petitioners' corrected record on appeal but
"insofar only as Lot No. 3269 is concerned * * * because the case with respect to Lot 4543 has
long became (sic) FINAL, cannot be appealed anymore, and therefore any record on appeal
thereon will be useless, moot and academic * * *."
After the denial of their motion for reconsideration, petitioners filed a "Petition for Certiorari
and/or Mandamus" before the Court of Appeals on February 5, 1975, but the latter court
elevated the petition to Us upon discovering that only questions of law are raised.
It is readily discernible that the decisive question in this case is whether or not the order of the
respondent Judge, dated December 10, 1973, dismissing Civil Case No. 4300-M as regards Lot
No. 4543, is final and appealable.
Section 2, Rule 41 of the Revised Rules of Court provides that only final judgments or orders shall
be subject to appeal." Interlocutory or incidental judgments or orders do not stay the progress of
an action nor are they subject of appeal "until final judgment or order is rendered for one party
or the other." The test to determine whether an order or judgment is interlocutory or final is this:
"Does it leave something to be done in the trial court with respect to the merits of the case? If it
does, it is interlocutory; if it does not, it is final. A court order is final in character if it puts an end
to the particular matter resolved or settles definitely the matter therein disposed of, such that no
further questions can come before the court except the execution of the order. The term "final"
judgment or order signifies a judgment or an order which disposes of the cause as to all the
parties, reserving no further questions or directions for future determination. The order or
judgment may validly refer to the entire controversy or to some definite and separate branch
thereof. "In the absence of a statutory definition, a final judgment, order or decree has been held
to be * * * one that finally disposes of, adjudicates, or determines the rights, or some right or
rights of the parties, either on the entire controversy or on some definite and separate branch
thereof, and which concludes them until it is reversed or set aside. The central point to consider
is, therefore, the effects of the order on the rights of the parties. A court order, on the other
hand, is merely interlocutory in character if it is provisional and leaves substantial proceeding to
be had in connection with its subject. The word "interlocutory" refers to "something intervening
between the commencement and the end of a suit which decides some point or matter but is not
a final decision of the whole controversy.
1. We find that the order of dismissal entered by respondent Judge in Civil Case No. 4300-M on
December 10, 1973, is a clear final and appealable order. The said order is a final disposition of
the whole controversy between the parties with respect to the ownership of Lot No. 4543. It is
absolute and conclusive on all questions in regard thereto. The trial court's order is not a mere
narrow acceptance of private respondent's plea of res judicata. It has more the far-ranging effect
of confirming private respondent's claim of exclusive ownership of Lot No. 4543, as previously
adjudicated in the prior Civil Case No. 2624. It imports that private respondent is the sole owner
of this specific lot; as a result of which, the deceased Pedro San Miguel or his successors-in-interest
for that matter stand to suffer the loss of what they claim is their rightful share thereto. After the
issuance of this order, nothing more was left for the trial court to try or decide, as the conflicting
claims of the parties over the subject lot have already been resolved. As a matter of fact, this final
order of dismissal cannot even be assailed by certiorari. The remedy is appeal, which petitioners
herein have failed to undertake. The fact that the other lot, Lot No. 3269, remained under
litigation and the respective claims of the parties thereto yet to be settled by the trial court would
not affect the final nature of the subject order, because a decree is nonetheless final although
some independent branch of the case is reserved for future consideration.
2. Reason lies in the order of the respondent Judge, dated December 10, 1973, foreclosing the re-
litigation of Lot No. 4543 because of the March 19, 1964 order of the then trial Judge, Ricardo

86
C. Puno, in Civil Case No. 2624, which involves the same lot, dismissing the case for lack of
interest to prosecute. This dismissal order of the said trial Judge has the effect and consequences
of a dismissal on the merits under Section 3, Rule 17 of the Revised Rules of Court since it was
neither without prejudice nor based upon lack of jurisdiction. It is worthy to note that the
deceased Pedro San Miguel interposed no appeal there from. Instead, he attempted to revive the
subject matter of that Civil Case No. 2624 (Lot No. 4543) eleven years thereafter, when he
commenced Civil Case No. 4300-M, praying for the partition of Lot No. 3629 and Lot No.
4543. This, the deceased Pedro San Miguel could not do so. Litigation on this particular Lot No.
4543 must reach a terminal point. The principle of estoppel by judgment, one of the aspects of
the doctrine of res judicata, precludes the re-litigation in another action of a specific
question actually litigated and determined in a former one. The second case, Civil Case No.
4300-M, is barred by the prior judgment in the first case, Civil Case No. 2624, insofar as it relates
to Lot No. 4543. For, there is identity of parties, subject matter and cause of action between the
first case where the judgment was rendered and the second case which is sought to be barred as
far as Lot No. 4543 is concerned. Likewise, the judgment in the first case is a final one rendered
by a court of competent jurisdiction upon the merits.
3. There is no doubt that access to the courts is a constitutional guarantee. This is, however,
subject to limitations. Once the rights of a party-litigant have been adjudicated in a valid final
judgment of a competent court, the party-litigant can no longer litigate the same again. A right,
question or fact distinctly placed in issue and directly determined by a court of competent
jurisdiction, cannot be disputed in a subsequent suit between the same parties or their privies;
and even if the second suit is for a different cause of action, the right, question or fact once so
determined must, as between the same parties or privies, be taken as conclusively established, so
long as the judgment in the first suit remains unmodified. Public policy and sound practice
demand that "at the risk of occasional errors, judgments of courts should become final at some
definite date fixed by law. Reipublicae ut sit finis litium.
It results, therefore, that respondent Judge did not abuse his discretion when he issued the order
of December 9, 1974, approving petitioners' corrected record on appeal "insofar only as Lot
3269 is concerned * * * because the case with respect to Lot 4543 has long became (sic) FINAL *
* *."
Accordingly, the order of December 9, 1974, subject matter of this petition, issued by respondent
Judge in his Civil Case No. 4300-M, approving petitioners' corrected record on appeal with
respect only to Lot 3269, is hereby affirmed. Costs against petitioners. So ordered.

3. CITY OF MANILA VS. LAGUIO G.R. No. 118127, April 12, 2005

City of Manila, Hon. Alfredo S. Lim as the Mayor of the City of Manila, Hon. Joselito L. Atienza,
in his Capacity as Vice-Mayor of the City of Manila And Presiding Officer of the City Council of
Manila, et.al vs. Hon. Perfecto A.S. Laguio, Jr., As Presiding Judge, RTC, Manila and Malate
Tourist Development Corporation

FACTS: Private respondent Malate Tourist Development Corporation (MTDC) is a corporation

engaged in the business of operating hotels, motels, hostels and lodging houses. It built and
opened Victoria Court in Malate which was licensed as a motel although duly accredited with the
DOT as a hotel. On 28 June 1993, MTDC filed a Petition for Declaratory Relief with Prayer for a
Writ of Preliminary Injunction and/or Temporary Restraining Order7 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.

87
Enacted by the City Council and approved by petitioner City Mayor, 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.
Judge Laguio rendered the assailed Decision (in favor of respondent).

On 11 January 1995, petitioners filed the present Petition, alleging that the following errors were
committed by the lower court in its ruling:

(1) It erred in concluding that the subject ordinance is ultra vires, or otherwise, unfair,
unreasonable and oppressive exercise of police power;
(2) It erred in holding that the questioned Ordinance contravenes P.D. 499 which allows
operators of all kinds of commercial establishments, except those specified therein; and
(3) It erred in declaring the Ordinance void and unconstitutional.

ISSUE: WON the ordinance is unconstitutional.

HELD: 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 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.
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. This delegated police power is found in Section
16 of the LGC, known as the general welfare clause.
The inquiry in this Petition is concerned with the validity of the exercise of such delegated power.

A. The Ordinance contravenes the Constitution

88
The enactment of the Ordinance was an invalid exercise of delegated power as it is
unconstitutional and repugnant to general laws.
The police power granted to LGUs must always be exercised with utmost observance of the rights
of the people to due process and equal protection of the law. Due process requires the intrinsic
validity of the law in interfering with the rights of the person to his life, liberty and property.

Requisites for the valid exercise of Police Power are not met

To successfully invoke the exercise of police power as the rationale for the enactment of the
Ordinance, and to free it from the imputation of constitutional infirmity, not only must it appear
that the interests of the public generally, as distinguished from those of a particular class, require
an interference with private rights, but the means adopted must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals.60 It must be
evident that no other alternative for the accomplishment of the purpose less intrusive of private
rights can work. A reasonable relation must exist between the purposes of the police measure
and the means employed for its accomplishment, for even under the guise of protecting the
public interest, personal rights and those pertaining to private property will not be permitted to
be arbitrarily invaded.
a violation of the due process clause.Lacking a concurrence of these two requisites, the police
measure shall be struck down as an arbitrary intrusion into private rights

The object of the Ordinance was, accordingly, the promotion and protection of the social and
moral values of the community. Granting for the sake of argument that the objectives of the
Ordinance are within the scope of the City Councils police powers, the means employed for the
accomplishment thereof were unreasonable and unduly oppressive.

The worthy aim of fostering public morals and the eradication of the communitys social ills can
be achieved through means less restrictive of private rights; it can be attained by reasonable
restrictions rather than by an absolute prohibition. The closing down and transfer of businesses or
their conversion into businesses allowed under the Ordinance have no reasonable relation to
the accomplishment of its purposes. Otherwise stated, the prohibition of the enumerated
establishments will not per se protect and promote the social and moral welfare of the
community; it will not in itself eradicate the alluded social ills of prostitution, adultery,
fornication nor will it arrest the spread of sexual disease in Manila.

The enumerated establishments are lawful pursuits which are not per se offensive to the moral
welfare of the community. While a motel may be used as a venue for immoral sexual activity, it

89
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 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; and it may even impose increased license fees. In other
words, there are other means to reasonably accomplish the desired end.

It is readily apparent that the means employed by the Ordinance for the achievement of its
purposes, the governmental interference itself, infringes on the constitutional guarantees of a
persons fundamental right to liberty and property.

Modality employed is unlawful taking

It is an ordinance which permanently restricts the use of property that it cannot be used for any
reasonable purpose goes beyond regulation and must be recognized as a taking of the property
without just compensation.78 It is intrusive and violative of the private property rights of
individuals.
There are two different types of taking that can be identified. A possessory taking occurs when
the government confiscates or physically occupies property. A regulatory taking occurs when
the governments regulation leaves no reasonable economically viable use of the property.

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. 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.

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. It is apparent that the
Ordinance leaves no reasonable economically viable use of property in a manner that interferes
with reasonable expectations for use.
are confiscatory as well. The penalty of permanent closure in cases of subsequent violations

90
found in Section 4 of the Ordinance is also equivalent to a taking of private property. to
transfer to any place outside of the Ermita-Malate area or to convert into allowed
businessesThe second and third options

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 cannot 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.

Further, 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. 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.

B. The Ordinance violates Equal Protection Clause

In the Courts view, there are no substantial distinctions between motels, inns, pension houses,
hotels, lodging houses or other similar establishments. By definition, all are commercial
establishments providing lodging and usually meals and other services for the public. No reason
exists for prohibiting motels and inns but not pension houses, hotels, lodging houses or other
similar establishments. The classification in the instant case is invalid as similar subjects are not
similarly treated, both as to rights conferred and obligations imposed. It is arbitrary as it does not
rest on substantial distinctions bearing a just and fair relation to the purpose of the Ordinance.

91
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 is not a profession exclusive to women. Both men
and women have an equal propensity to engage in prostitution. Thus, the discrimination is
invalid.one of the hinted ills the Ordinance aims to banishfor entertainment is also
discriminatory as prostitution

C. The Ordinance is repugnant to general laws; it is ultra vires

The Ordinance is in contravention of the Code (Sec 458) as the latter merely empowers local
government units to regulate, and not prohibit, the establishments enumerated in Section 1
thereof.

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 point out that petitioners also cannot seek cover under the general welfare clause
authorizing the abatement of nuisances without judicial proceedings. That tenet applies to a
nuisance per se, or one which affects the immediate safety of persons and property and may be
summarily abated under the undefined law of necessity. It can not be said that motels are
injurious to the rights of property, health or comfort of the community. It is a legitimate business.
If it be a nuisance per accidens it may be so proven in a hearing conducted for that purpose. A
motel is not per se a nuisance warranting its summary abatement without judicial intervention.

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.

92
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.

Petition Denied.

Or

CITY OF MANILA VS. LAGUIO G.R. No. 118127, April 12, 2005

FACTS:

The private respondent, Malate Tourist Development Corporation (MTOC) is a corporation

engaged in the business of operating hotels, motels, hostels, and lodging houses. It built and
opened Victoria Court in Malate which was licensed as a motel although duly accredited with the
Department of Tourism as a hotel.

March 30, 1993 - City Mayor Alfredo S. Lim approved an ordinance enacted which prohibited
certain forms of amusement, entertainment, services and facilities where women are used as tools
in entertainment and which tend to disturb the community, annoy the inhabitants, and adversely
affect the social and moral welfare of the community. The Ordinance also provided that in case
of violation and conviction, the premises of the erring establishment shall be closed and
padlocked permanently.

June 28, 1993 - MTOC filed a Petition with the lower court, praying that the Ordinance, insofar
as it included motels and inns as among its prohibited establishments, be declared invalid and
unconstitutional for several reasons but mainly because it is not a valid exercise of police power
and it constitutes a denial of equal protection under the law.

Judge Laguio ruled for the petitioners. The case was elevated to the Supreme Court.

ISSUES:

W/N the City of Manila validly exercised police power

W/N there was a denial of equal protection under the law

HELD:

The Ordinance infringes the due process clause since the requisites for a valid exercise of police
power are not met. The prohibition of the enumerated establishments will not per se protect and
promote the social and moral welfare of the community; it will not in itself eradicate the alluded
social ills fo prostitution, adultery, fornication nor will it arrest the spread of sexual diseases in
Manila. 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. These are lawful pursuits which are not per se offensive to the moral welfare of
the community.

Sexual immorality, being a human frailty, may take place in the most innocent places.... 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.

93
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 Ordinance violates equal protection clause and is repugnant to general laws; it is ultra vires.
The Local Government Code merely empowers local government units to regulate, and not
prohibit, the establishments enumerated in Section 1 thereof.

All considered, the Ordinance invades fundamental personal and property rights adn 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.

4. Pasong Bayabas Farmers Association, INC., represented by DOMINGO BANAAG, JR.,

President; BERNARDO POBLETE, Vice-President, and its Members, petitioners, vs. The
Honorable COURT OF APPEALS, CREDITO ASIATIC, INC., ERNESTO TANCHI, SR., GEN.
DIONISIO OJEDA (deceased), ELENA P. BIGAY, and LANRICO MINISTERIO, respondents. G.R.
NO. 142359. May 25, 2004

[G.R. No. 142980. May 25, 2004]

DEPARTMENT OF AGRARIAN REFORM (DEPARTMENT OF AGRARIAN Reform
ADJUDICATION BOARD), petitioners, vs. The Honorable COURT OF APPEALS,
CREDITO ASIATIC, INC., ERNESTO TANCHI, SR., GEN. DIONISIO OJEDA (deceased),
ELENA P. BIGAY, and LANRICO MINISTERIO, respondents.

DECISION
CALLEJO, SR., J.:

Before the Court are petitions for review on certiorari of the Decision of the Court of
Appeals, in C.A.-G.R. SP No. 49363, which set aside and reversed the decision of the Department
of Agrarian Reform Adjudication Board (DARAB), in DARAB Case No. 5191, and reinstated the
decision of the Provincial Agrarian Reform Adjudication Board (PARAD) of Trece Martirez City,
in DARAB Case No. CA-0285-95 which, in turn, ordered the dismissal of the complaint for
Maintenance for Peaceful Possession and Cultivation with Damages with Prayer for the Issuance
of a Temporary Restraining Order/Preliminary Injunction of petitioner Pasong Bayabas Farmers
Association, Inc. (PBFAI).
The Antecedents
Sometime in 1964, Lakeview Development Corporation (LDC, for brevity) bought a parcel
of land with an area of 753,610 square meters (75.3610 hectares) located at Barrio Kabilang-
Baybay, Carmona, Cavite, covered by Transfer Certificate of Titles (TCT) No. T- 91584 and T-
91585. On September 20, 1977, the aforesaid titles were cancelled by TCT No. T-62972 issued to
and in the name of the LDCs successor, the Credito Asiatic, Incorporated (CAI). The property was
subsequently subdivided into two parcels of land, one of which was covered by TCT No. 116658,
with an area of 365,753 square meters, and the other covered by TCT No. 116659 with an area
of 387,853 square meters.
Meanwhile, the LDC/CAI undertook to develop its 75-hectare property into a residential
and industrial estate, where industrial sites and a low cost housing project inceptually called the
Tamanli Housing Project would be established. The LDC applied with the Municipal Council of
Carmona for an ordinance approving the zoning and the subdivision of the property. The
subdivision plan was referred by the council to the National Planning Commission as mandated
by Administrative Order No. 152, Series of 1968. The Commission approved the plan and on
May 30, 1976, the Tanggapan Ng Sangguniang Bayan ng Karmona (Municipal Council of
Carmona) approved Kapasiyahang Bilang 30, granting the application and affirming the
project. The resolution reads:

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Kapasiyahang Bilang 30

Sapagkat, ang TAMANLI HOUSING PROJECT at LAKEVIEW DEVELOPMENT CORP. ay

nagharap ng kanilang kahilingan dito sa ating Kapulungan, sa pamamagitan ni G. BENJAMIN F.
GOMEZ, Chief, Physical Environmental Planning Service ng DLGCD, upang makapagpatayo sila
ng murang pabahay sa may Lote Blg. E-Psd-11882, na nasa Bo. Cabilang Baybay ng bayang ito at
Lote Blg. 4 (LRC) PCS 15453 saklaw ng bayang ito, ayon sa pagkakasunod-sunod;

SAPAGKAT, ang bagay na ito ay makatutulong ng malaki sa ating mga kababayan, dahil sa ito ay
nagbibigay ng murang pabahay;

SAPAGKAT, DAHIL DITO, sa mungkahi ni G. DOMINADOR ESPIRITU na pinangalawahan ni G.

MELQUIADES MAHABO, ay pinagtibay, tulad nang itoy pinagtitibay, na pagtibayin ang
kahilingan ng Tamanli Housing Project at Lakeview Development Corp. na makapaglagay ng
murang pabahay dito sa ating bayan, sa isang pasubaling ang mga ito ay kailangang pumailalim
sa hinihingi ng Administrative Order No. 152, S-1968 ng Pangulo ng Bansang Pilipinas at sa
umiiral ng mga kautusan at patakaran ng ating Pamahalaang Pambansa at Pamahalaang
Pambayan.

Subsequently, after a consolidated survey was approved by the Bureau of Lands, the lots
were subdivided and the aforesaid titles were cancelled. TCT Nos. 144149, 144150 and T-144151
were issued in lieu of the said titles.
The CAI embarked on the development of the housing project into three phases: First Phase,
the Hakone Subdivision; Second Phase, the Sunshine Village & Casa de Monteverde; and, Third
Phase, the Mandarin Homes. The project was registered with the National Housing Authority
(NHA) as required by Presidential Decree No. 957 which issued, on July 7, 1977, a license in
favor of the LDC to sell the subdivision lots.
The property was subdivided into 728 residential lots per the consolidation subdivision plan
approved by the Bureau of Lands, each with an average area of 240 square meters. Separate
titles for each of the 728 lots were issued by the Register of Deeds of Cavite to and in the name
of the CAI on September 20, 1977.
Meanwhile, the CAI secured a locational clearance for the project from the Human
Settlements Regulatory Commission (HSRC).[ Although the Municipal Council of Carmona had
already approved the conversion of the property into a residential area, nevertheless, the CAI
filed an application under Republic Act No. 3844 with the Office of the Minister of Agrarian
Reform for the conversion of a portion of the 75-hectare property consisting of 35.80 hectares
covered by TCT No. 62972 located in Barrio Kabilang-Baybay, Carmona, Cavite, from
agricultural to residential. The property was to be used for the Hakone Housing Project. The
Minister referred the matter to the Regional Director for investigation and recommendation and
to the Ministry of Local Government and Community Development. On July 3, 1979, then
Minister of Agrarian Reform Conrado F. Estrella issued an Order granting the petition and
approved the conversion of the 35.80 hectare portion of TCT-62972 into a residential
subdivision, pursuant to Rep. Act No. 3844, as amended. In so doing, it took into account the
resolution of the Municipal Council of Carmona, the recommendation of the Regional Director
of the Ministry of Agrarian Reform, the clearance from the HSRC as well as the Ministry of Local
Government and Community Development. The order in part reads:

Considering the parcel of land to be not covered by P.D. 27, it being untenanted and not
devoted to the production of palay and/or corn as reported by the Agrarian Reform Team
Leader concerned and favorably recommended for conversion by him and further, by the
Regional Director for Region IV, Pasig, Metro Manila, and considering further, that the parcel of
land subject hereof was found to be suitable for conversion to residential subdivision by the
Ministry of Local Government and Community Development and considering finally, that the
herein petitioner was issued a locational clearance by the Human Settlements Regulatory
Commission, the instant request of the petitioner is hereby GRANTED pursuant to the provisions
of R.A. 3844, as amended, and P.D. 815.

The grant was, however, subjected to the fulfillment of the following conditions:

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 1. Physical development shall commence within one (1) year from receipt hereof;

2. A setback of three (3) meters measured from the property lines to the edge of the
normal high waterline of the Pasong Bayabas and Patayod Rivers shall be
observed pursuant to the Water Code (P.D. 705);

3. Applicant-proponent shall undertake flood protective measures such as the

construction of rip-rap walls or terracing and cribbing along the river banks to
avoid erosion and flood;

4. Clearance from the Laguna Lake Development Authority shall be secured since the
proposed project is within the Laguna Lake Basin; and

5. A permit to operate from the National Pollution Control Commission shall be

secured and Anti-Pollution laws (R.A. 3981, P.D. 984 and others) shall be strictly
observed.

Failure, however, to comply with the afore stated terms and conditions, this Ministry shall
consider such violations as sufficient ground for the cancellation of the permit-order and this
Ministry by reason thereof may take any or all course of action mentioned in the Memorandum-
Agreement between this Ministry, the Ministry of Local Government and Community
Development and the Human Settlements Regulatory Commission in addition to the penalties
provided for in Presidential Decree 815, if so applicable.

On March 14, 1980, the Sangguniang Panlalawigan ng Cavite (Provincial Board of Cavite)
passed Resolution No. 40 declaring the midland areas composed of Carmona, Dasmarias, parts
of Silang and Trece Martirez (where the subject property is situated) and parts of Imus, as
industrial areas. Under Batas Pambansa Blg. 76, approved on June 13, 1980, the resettlement
areas under the administration of the NHA in the barangays of San Gabriel, San Jose and a
portion of Cabilang Baybay, all in the Municipality of Carmona, were separated from the said
municipality and constituted into a new and independent municipality known as General
Mariano Alvarez (GMA), Cavite. In 1983, Asiatic Development Corporation (ADC), a sister
company of CAI, started developing the property located in GMA covered by TCT No. 144150
into a residential housing project, called the Sunshine Village Phase IV (originally Hakone) with
an area of 20.05 hectares. The ADC also secured in 1983 a preliminary approval and locational
clearance from the HSRC for Sunshine Village Phase IV.
The CAI also secured the following for its Hakone Housing Project:

1. HLURB License to Sell No. 0613 on November 7, 1983

2. HSRC Development Permit on April 11, 1984

3. HLURB Preliminary Approval and Locational Clearance on November 11, 1985

4. HSRC Preliminary Approval and Locational Clearance on November 17, 1983

5. HSRC Certificate of Registration No. 1069 on February 1, 1985

6. HSRC License to Sell No. 1053 on March 18, 1985.

In 1987, the CAI decided to continue with the development of its Hakone Housing Project
and contracted with E.M. Aragon Enterprises for the bulldozing of the property. However, the
project was stymied by a Complaint for Damages with Prayer for Temporary Restraining Order
and Preliminary Injunction filed on May 22, 1987 against the CAI in the Regional Trial Court of
Cavite. The case was docketed as Civil Case No. BCV-87-13 and was raffled to Branch 19.[17]
The plaintiffs alleged, inter alia, that while the defendant CAI was the owner of the 75.36-
hectare land covered by TCT-62972, they were the actual tillers of the land. The defendant had
surreptitiously applied for the conversion of the 35.8-hectare portion of the aforesaid property

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from agricultural to residential and the same was granted by the Ministry of Agrarian Reform, as
can be gleaned from the July 3, 1979 Order of Agrarian Reform Minister Estrella. According to
the plaintiffs, they came to know of the conversion only in January 1987. Notwithstanding the
issuance of the order of conversion, Ramie Cabusbusan, the representative of the CAI, allowed
them to continue cultivating the aforementioned property. They were, however, required to pay
a rental of P400 a year per hectare. They paid the rental and continued to occupy and till the
aforesaid property pursuant to the agreement. On October 28, 1986 and November 11, 1986, the
plaintiffs, together with other tillers of the land, met Cabusbusan at the Municipal Branch of the
then Ministry of Agrarian Reform and reached an agreement that the plaintiffs would remain in
the peaceful possession of their farm holdings. Notwithstanding such agreement, the defendant
ordered the bulldozing of the property, by reason of which the plaintiffs suffered actual
damages. Furthermore, the plaintiffs alleged that the bulldozing was done without any permit
from the concerned public authorities.
The plaintiffs, thus, prayed that a temporary restraining order be issued against the CAI from
continuing with the bulldozing of the property, and that after due hearing, judgment be
rendered in their favor, ordering the defendants to refrain from implementing the July 3, 1979
Order of Agrarian Reform Minister Estrella.
In its answer to the complaint, the CAI admitted its ownership of the 753,610 square meter
property covered and described under TCT No. 62972 and the issuance of the Order of
Conversion of the 35.8 hectare portion thereof. However, it denied that it allowed the plaintiffs
to possess and cultivate the landholding with fixed rentals therefore. The CAI prayed that the
prayer for preliminary injunction be denied and that judgment be issued dismissing the complaint
and absolving it from any liability. It counterclaimed for the amount paid by it to E.M. Aragon
Enterprises for expenses for the rent of the bulldozer and moral damages.
Meanwhile, the CAI and six of the fourteen plaintiffs, namely, Medy Vinzon, Luz Alvarez,
Godofredo Inciong, Bernardo Poblete, Estelita Gaut and Victoria Valerio, entered into a
compromise agreement whereby the defendant donated parcels of land in consideration of the
execution of deeds of quitclaims and waivers. Conformably to the said agreement, the plaintiffs
executed separate deeds of quitclaim in favor of the CAI over the portion of the property which
they claimed they occupied. The six plaintiffs filed a Motion to dismiss the complaint on June 19,
1989. On June 20, 1989, the RTC of Cavite issued an Order dismissing the complaint but only
insofar as the plaintiffs Vinzon, Alvarez, Inciong, Poblete, Gaut and Valerio were
concerned. With respect to the other eight (8) plaintiffs, the court proceeded with the scheduled
hearing.
The civil case notwithstanding, the CAI decided to proceed with the third phase of its
project. It developed its eleven-hectare property into a residential property called the Mandarin
Homes. The CAI applied for and was granted a separate Order of Conversion on January 2,
1990 by the Department of Agrarian Reform (DAR). In 1991, the CAI started selling the houses in
its Mandarin Homes Project.
In the meantime, the remaining plaintiffs in Civil Case No. BCV-87-13 entered into a
compromise agreement in which the CAI executed Deeds of Donation in their favor over parcels
of land. The said plaintiffs, in turn, executed quitclaims and waivers over the portions of the
property which they claimed they occupied. Thereafter, the plaintiffs and the CAI filed a motion
to dismiss the complaint. The trial court issued an Order granting the motion and dismissing the
complaint on June 20, 1991. Consequently, all the plaintiffs were issued separate titles over the
parcels of land donated to them by the CAI which were declared, for taxation purposes, in the
names of the latter.
With the settlement of the civil case, the CAI continued with its development of the rest of
the Hakone Housing Project by causing a survey of the property. However, the CAI was stymied
anew when, on November 25, 1992, a Petition for Compulsory Coverage under Rep. Act No.
6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL) was filed before the
DAR by seventeen (17) individuals. They alleged that they were farmers of Bo. 14, Pasong
Bayabas River, Barangay F. De Castro, GMA, Cavite. The petitioners claimed that since 1961, they
had been occupying a parcel of public agricultural land originally owned by General Dionisio
Ojeda with an area of twenty-seven hectares, more or less, adjacent to Pasong Bayabas

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River. They tilled the said agricultural lands and planted it with rice, corn, vegetables, root crops,
fruit trees and raised small livestock for daily survival.
The petitioners requested that the DAR order an official survey of the aforesaid agricultural
lands. Pending resolution of their petition, the petitioners and twenty (20) others banded
together and formed a group called Pasong Bayabas Farmers Association, Inc. (PBFAI) affiliated
with Kalipunan ng Samahan ng Mamamayan, Inc. (KASAMA).
On June 10, 1994, Domingo Banaag, in his capacity as President of PBFAI, filed a petition for
compulsory coverage of a portion of the CAI property covered by TCT No. 91585, with an area
of 47 hectares under Rep. Act No. 6657. On August 18, 1994, Legal Officer Maria Laarni N.
Morallos of the DAR, in her Memorandum to Regional Director Percival C. Dalugdug, reported
that the Municipal Agrarian Reform Office (MARO) had taken preliminary steps for the
compulsory coverage of the property and, in fact, had interviewed its occupants. The processing
was stalled, however, because documents such as the titles and tax declarations covering the
property had not yet been submitted, and the formal application had yet to be made by the
petitioners. She recommended that the petition be indorsed to the MARO Office. Pending the
resolution of the petition of the PBFAI, the CAI decided to continue with its Hakone Housing
Project and ordered a survey of the property on October 6, 1995. The survey was completed on
October 9, 1995.On October 14 and 15, 1995, the CAI caused the bulldozing and other
development activities, which resulted in the destruction of plants and trees.
The PBFAI-KASAMA, representing the farmers-tenants, filed a complaint for Maintenance of
Peaceful Possession and Cultivation with Damages with Prayer for the Issuance of a Temporary
Restraining Order and Preliminary Injunction before the Department of Agrarian Reform
Adjudication Board (DARAB), Region IV, Trece Martirez City, Cavite, against the CAI, Tan Chi,
Dionisio Ojeda, Elena Bigay, Lanrico Ministerio and Alfredo Espiritu over a portion of the
property of the CAI. The case was docketed as DARAB Case No. CA-0285-95.
The plaintiffs therein alleged that since 1961, its members had been in actual possession, as
tenants of General Dionisio Ojeda, of the 27-hectare property, located in Pasong Bayabas,
Cabilang Baybay, Carmona, Cavite covered by TCT No. T-69813 in the name of Pan Asiatic
Commercial Co., Inc.; T-91584 and T-69810 owned by the LDC. They applied for the
compulsory coverage of the property under CARL before the DAR in 1992, and on October 6,
1995, the CAI caused the survey of the property. The CAI commenced the bulldozing activities
on the property on October 14, 1995 without any permit from the Department of Environment
and Natural Resources (DENR) or from the Office of the Barangay Captain. According to the
petitioners, the said illegal bulldozing activities would convert the land from agricultural to non-
agricultural land, thereby depriving the members of the PBFAI of their tenancy rights over the
property. For this reason, the petitioners prayed that a temporary restraining order be issued ex-
parte to stop the bulldozing of the property, and that a preliminary injunction or a status
quo order be later issued to enjoin the same.
The complainants prayed that, after due proceedings, judgment be rendered in their
favor, viz:

3. That the Defendants Tan Chi and Dionisio Ojeda, as the most responsible officers of
the Defendant Corporation be ordered to direct persons acting under their
authority to respect the peaceful possession and cultivation of the Plaintiffs, of the
subject land;

4. That the Defendants Lanrico Ministerio and Alfredo Espiritu be ordered to respect
and maintain the peaceful tenancy of the Plaintiffs, of the subject land;

5. That the Defendants be ordered jointly and severally to pay to the Plaintiffs:

P500,000.00 as moral damages;

P250,000.00 by way of exemplary damages;
P50,000.00 in reimbursement of litigation expenses.

6. That the Defendants pay for the costs of this suit; and

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 7. That other reliefs and remedies be afforded to the Plaintiffs as may be just and
equitable under the premises.

On October 27, 1995, Provincial Adjudicator Barbara P. Tan issued a Temporary Restraining
Order worded as follows:

WHEREFORE, premises considered let a TEMPORARY RESTRAINING ORDER hereby issue to

take effect for a period of twenty (20) days from receipt hereof;

1) Enjoining the defendant landowner and any/all persons acting for and in its behalf or under its
authority to cease and desist from further bulldozing the premises in question and committing
acts of dispossession or tending to disturb the peaceful possession and cultivation of the
complainants of the landholdings in question.

Meantime, let the hearing of the Preliminary Injunction incident be set on November 9, 1995 at
1:30 P.M.

The defendants filed their Answer with Motion to Lift Restraining Order and Preliminary
Injunction. Therein, they denied the personal circumstances of the plaintiffs and the personal
circumstances of the defendants Lanrico Ministerio and Alfredo Espiritu. The defendants admitted
that the CAI was the registered owner of the property, but specifically denied that the plaintiffs
were recognized by the CAI as tenants-occupants of the aforesaid property since 1961. They
asserted that the CAI did not consent to the cultivation of the property nor to the erection of the
plaintiffs houses. They further averred that the CAI had entered into a compromise agreement
with the occupants of the property, the plaintiffs in Civil Case No. BCV-87-13 in the RTC of
Cavite. They also alleged that they secured a permit from the Municipal Planning and
Development Offices before bulldozing activities on the property were ordered.
The defendants raised the following as their special and affirmative defenses: (a) the plaintiffs
action is barred by the dismissal of their complaint in Civil Case No. BCV-87-13, per Order of the
RTC of Cavite, Branch 19, dated June 20, 1991; (b) the plaintiffs had waived their rights and
interests over the property when they executed deeds of waiver and quitclaim in favor of the
defendant CAI; (c) then Agrarian Reform Minister Estrella had issued an Order dated July 3,
1979, converting the property into a residential area and withdrawing the property from the
coverage of the CARL; (d) the defendant partitioned the development of the area into Phase I, II,
III and IV, while the residential property subject of the petition is in Phase IV thereof; (e) before
embarking in the development of the property, the respondent CAI secured the following: (1)
preliminary approval and locational clearance for phase IV; (2) development permit for 844
units; (3) Certificate of Registration No. 1069 issued by the HSRC; and (4) License to Sell No.
1053. Finally, the defendants contended that the property had an 18% slope and was
undeveloped; as such, it was exempt from the coverage of the CARL, under Section 10 of Rep.
Act No. 6657.
As compulsory counterclaim, the defendants alleged that it had entered into an Equipment
Rental Requisition Contract with E.M. Aragon Enterprises for the bulldozing of the property, for
which it incurred the following expenses: an advance payment of P200, 000; rental rate of P1,
000 per hour for 8 hours a day plus transportation of P50, 000; and, salaries of not less than P5,
000 per month for the mechanics and drivers. They prayed that after due proceedings, judgment
be rendered dismissing the plaintiffs complaint and absolving it of any liability.
The plaintiffs, for their part, averred that Civil Case No. BCV-87-13 was not decided on the
merits, but was merely based upon a compromise agreement between the parties. Moreover,
there was no identity of parties between Civil Case No. BCV-87-13 and the present case, as the
sole defendant was the CAI, while of the plaintiffs in DARAB Case No. CA No. 0285-95, only
Domingo Banaag and Leoncio Banaag were the plaintiffs in Civil Case No. BCV-87-13. On the
claim of the defendants that the CAI was released and discharged from any and all liabilities of
the plaintiffs by virtue of the Deeds of Waiver and Quitclaim executed by the fourteen plaintiffs
in Civil Case No. BCV-87-13, the plaintiffs averred that only two of the plaintiffs, namely,
Domingo Banaag and Leoncio Banaag were among the thirty-seven (37) complainants-members
of PBFAI who filed the petition before the DARAB.

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 The plaintiffs posited that the conversion orders and other deeds issued by the HSRC and its
successor, the HLURB, were issued before the effectivity of Rep. Act No. 6657 when agricultural
land was limited to those planted with rice and corn crops. But upon the enactment of Rep. Act
No. 6657, the reclassification of agricultural lands included those planted with fruit-bearing trees,
such as, the subject property. Hence, Agrarian Reform Minister Estrella did not have the authority
to exempt the property from the coverage of Rep. Act No. 6657. The plaintiffs averred that the
documents procured by the respondents from the HSRC and the HLURB cannot be given
probative weight, as the authority to issue the said clearance/license is vested solely in the DAR.
As to the defense that the property subject of the suit has some parts with an 18% slope, the
plaintiffs contended that what the law exempts are undeveloped parcels of land with an 18%
slope. The entire property, however, was fully developed and planted with fruit-bearing trees of
varied kinds, with houses of strong materials constructed thereon by the members of the PBFAI.
To determine the veracity of the conflicting claims of the parties, the Provincial Agrarian
Reform Adjudicator (PARAD) issued an Order on November 23, 1995, setting an ocular
inspection of the property. The parties were required to submit their respective position
papers. The ocular inspection proceeded as scheduled. On December 12, 1995, the PARAD issued
an Order containing the results of the inspection.
The individual tillages of the complainants were not inspected, and, as agreed upon, the
physical inventory thereof was to be undertaken by Brgy. Captain Lanrico Ministerio.The
inventory was designed to determine who among the petitioners were actual tillers, the area of
tillage and the crops produced thereon; and to determine the value of the improvements in
connection with a possible pay off, as the landowner had offered to reimburse the planters the
value of their permanent improvements. The PARAD noted that the area over which the
respondent CAI conducted quarrying activities had not been cultivated by any of the members of
the PBFAI, and permitted the grading and leveling activities thereon.
On April 16, 1996, the PARAD issued an order directing the provincial sheriff of Cavite to
conduct a physical inventory of the permanent improvements introduced by each of the
complainants consisting of fruits and other horticultural growths, in substitution of the Barangay
Captain.
On July 15, 1996, the DAR Region IV issued a Cease and Desist Order against the
respondents. The defendants, in a Letter dated July 16, 1996, informed the DAR, Region IV
Office, that the land subject of the cease and desist order was also subject of DARAB Case No.
0285-95 and, as such, was under the jurisdiction of PARAD Barbara Tan. The defendants,
likewise, raised the issue of forum shopping, per our ruling in Crisostomo v. SEC.
After due hearings, PARAD Barbara P. Tan rendered a Decision on August 8, 1996 in DARAB
Case No. CA-0285-95 in favor of the defendants. The dispositive portion of the decision reads:

WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered:

1. Finding Plaintiffs Domingo Banaag, Conrado Banaag, Leoncio Banaag, Herminia Demillo,
Myrna Javier, Elena, Layaban, Maria Layaban and Oscar Layaban to have abandoned and
renounced their tenancy rights over the land in question and barred from instituting the instant
complaint on the ground of Res Judicata;

2. Finding the remaining Twenty-Nine (29) other Plaintiffs not bonafide tenants but mere
interlopers on the land in question and consequently not entitled to security of tenure;

3. Ordering the instant complaint DISMISSED for lack of merit.

No pronouncement as to damages, attorneys fees, litigation expenses and cost of suit.

The PARAD held that the plaintiffs were bound by the order of dismissal of the RTC in Civil
Case No. BCV-87-13. It declared that the plaintiffs in Civil Case No. BCV-87-13 were the kins,
siblings or spouses of the complainants in the case before it. Moreover, the complainants had
executed deeds of quitclaim or waiver covering the portions of the property which they

100
purportedly occupied. Thus, the complainants had already waived their rights of possession and
cultivation over the portions of the property which they claimed to be occupying.
As to the remaining complainants, the PARAD ruled that they failed to prove that their
cultivation and possession, were based on a valid agricultural tenancy. It held that the
complainants were merely farm helpers of their relatives. However, the PARAD ruled that it had
no jurisdiction to resolve the issues of whether the property was covered by Rep. Act No. 6657
and exempted from the said coverage, or whether the conversion of the property to non-
agricultural was legal and efficacious; hence, the PARAD declined to resolve the same.
Aggrieved, the plaintiffs interposed an appeal to the Department of Agrarian Reform
Adjudication Board on the following grounds:

1. That errors in the findings of fact and conclusions of law were committed which, if
not corrected, would cause grave and irreparable damage and injury to the
plaintiffs/complainants-appellants; and

2. That there is grave abuse of discretion on the part of the Provincial Agrarian Reform
Adjudicator of Cavite.

The appeal was docketed as DARAB Case No. 5191. The defendants, for their part, filed a
motion for reconsideration of the decision, on the ground that it failed to rule that the order of
conversion of then Agrarian Reform Minister Estrella merely confirmed the re-classification of the
property, from agricultural to residential, made by the Municipal Council of Carmona, the HSRC
and the HLURB as early as 1976, and that the PARAD failed to order the eviction of the
complainants despite its finding that some had abandoned their tenancy rights by entering into a
compromise settlement and executing quitclaims with the CAI. The respondents, thus, prayed:

a. That the subject property has been reclassified as residential land as early as 30 May
1976;

b. That the Certificate of Registration No. RS-0495, dated 9 July 1977 and License to
Sell LS-0449, dated 09 July 1977 were issued in compliance to NHA Circular No.
1, Series of 1976;

c. That the approval of the Consolidation Subdivision Plan and the consequent issuance
of individual titles by the Bureau of Lands were made in compliance of the
requirements of NHA Circular No. 1;

d. That the Order of Conversion dated 3 July 1979 was merely a confirmation of a 1976
valid re-classification of the subject property from agricultural to residential and
said Order is still valid and subsisting;

e. That an Order of ejectment be issued against the complainants.

As a corollary, other reliefs which are just and proper under the premises are likewise prayed.

The PARAD treated the motion as an appeal, and transmitted the same to the DARAB.
On September 26, 1996, the plaintiffs Clarito Sanganbayan, Edgardo Uniforme and Francisco
Joven, in consideration of P40,000, executed quitclaims, waiving their rights from the property
in suit. Likewise, plaintiffs Manuel Layaban, Dante Javier, Ederlinda dela Cruz, Conrado Banaag,
Eduardo Sabalsa, Diosdado Canaria, Herminia Demillo, Elizabeth Cristo, Buena Layaban, Elena
Layaban, Maria Layaban, Betty Banaag, Oscar Layaban, Carmelita Caalete, Manuel Canaria,
Alfredo Diaz, Alejandro Sanganbayan, Soledad Alcantara, Felicisimo Galzote, Vivencio Boral,
Edilberto Banaag and Jose Canaria, executed quitclaims in favor of the CAI after receiving money
from it.
On October 16, 1996, the respondents filed a Motion to Lift Status Quo Order and Motion
to Dismiss alleging that the status quo order illegally extended the restraining order issued on
September 13, 1996. It was also alleged that the complainants-appellants were not qualified

101
beneficiaries of the CARL. The CAI asserted that the re-classification of the land use was valid and
legal, and concluded that since the property was not agricultural, it was not covered by the CARL
and, thus, beyond the jurisdiction of the DARAB.The CAI, thus, prayed:

WHEREFORE, premises considered, it is respectfully prayed that the status quo order be
immediately lifted and the writ of preliminary injunction applied for be denied for utter lack of
merit by upholding the Decision of the Honorable Provincial Adjudicator dated 8 August 1996
with a modification which shall include an order of ejectment.

In the meantime, more members of the PBFAI executed deeds of quitclaims on October 1,
1996, October 9, 1996, November 18, 1996, February 28, 1997 and March 6, 1997, respectively,
all in favor of the respondent CAI over the property subject of their petition. All in all, during the
period from September 26 1996 to March 6, 1997, twenty-five complainants (members of PBFAI)
executed separate deeds of quitclaims in favor of the CAI. The foregoing notwithstanding, the
DARAB rendered a Decision on September 2, 1997 reversing the decision of PARAD. The
dispositive portion of the decision reads:

WHEREFORE, premises considered the challenged decision is hereby REVERSED and a new
judgment is hereby rendered as follows:

1. Declaring the subject landholding to be within the coverage of Section 4 of R.A. 6657;

2. Ordering the PARO, MARO and all DAR officials concerned to take the necessary steps
for the acquisition of the subject land pursuant to Administrative Order No. 9, Series of
1990; and

3. Ordering the PARO, MARO and all DAR officials concerned to distribute the subject land
to qualified farmer-beneficiaries pursuant to Administrative Order No. 10, series of
1990, giving preference to the plaintiffs as actual occupants and cultivators of the
subject land.

The respondents-appellees filed a motion for reconsideration of the decision which was
denied by the DARAB in a Resolution dated August 28, 1998.

The Case in the Court of Appeals

Aggrieved, the CAI filed a petition for review in the Court of Appeals under Rule 45 of the
Revised Rules of Court seeking the reversal of the Resolution dated August 28, 1998. The
following issues were raised:

1. WHETHER OR NOT THE LAND IN SUIT IS COVERED BY CARP;

2. WHETHER OR NOT THE MEMBERS OF PBFAI NUMBERING 37 ARE LEGITIMATE

TENANTS THEREOF;

3. WHETHER OR NOT THE DARAB APPRECIATED THE FACTS AND LAW OF THE
CASE;

4. WHETHER OR NOT THE DARAB IN THE EXERCISE OF ITS POWERS ACTED WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION.

On March 15, 2000, the CA rendered a Decision reversing the decision of the DARAB and
reinstating the decision of the PARAD, to wit:

WHEREFORE, the petition is GIVEN DUE COURSE, the assailed DARAB Decision is hereby
REVERSED and SET ASIDE, while the PARO Decision is REINSTATED and AFFIRMED.

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 The CA ruled that under Section 10 of Rep. Act No. 6657, all lands with eighteen percent
(18%) slope and over, except those already developed, shall be exempt from the coverage of the
said Act. The CA noted that the exception speaks of 18% in slope and undeveloped land. Per
report of the PARAD, the property subject of the suit has an 18% slope and was still
undeveloped; hence, it falls within the exemption.
Further, the CA held that as early as May 30, 1976, the Municipality of Carmona, Cavite,
already reclassified the land as residential in Resolution No. 30, when it allowed the LDC to build
low-cost housing projects in the subject area. According to the Court, the ruling in Fortich v.
Corona and reiterated in Province of Camarines Sur, et al. v. Court of Appeals, settled is the rule
that local government units need not obtain the approval of DAR to convert or reclassify lands
from agricultural to non-agricultural use. Thus, the subject land was validly declared residential
since 1976 by competent authority through Kapasiyahang Bilang 30. As such, the DARAB erred in
ruling that the land in suit was still covered by Rep. Act No. 6657. Consequently, since the
subject land is not agricultural and not covered by the CARL, the PBFAI members could not be
considered tillers/beneficiaries thereof.
Aggrieved, the PBFAI filed a petition for review under Rule 45 of the Rules of Court on April
11, 2000 before this Court. For its part, DARAB filed a motion for extension of time to file a
petition for the reversal of the decision in CA-GR SP No. 49363. The same was docketed as G.R.
No. 142980. On May 11, 2000, the DARAB manifested that it was adopting as its own the
petition for review filed by PBFAI. In our Resolution dated June 28, 2000, we granted the
motion of the DARAB and ordered the consolidation of G.R. Nos. 142980 and 142359.
The Issues

The core issues for resolution are the following: (1) whether the property subject of the suit is
covered by Rep. Act No. 6657, the Agrarian Reform Law (CARL); (2) whether the DARAB had
original and appellate jurisdiction over the complaint of the petitioner PBFAI against the private
respondent; (3) whether the petitioners-members of the PBFAI have a cause of action against the
private respondent for possession and cultivation of the property in suit; (4) whether the
dismissal by the RTC of the complaint in Civil Case No. BCV-87-13 is a bar to the complaint of
the petitioners-members of the PBFAI; and (5) whether the appellate court committed a
reversible error in dismissing the petition for review in CA-G.R. SP No. 49363.
It is well-settled that in a petition for review on certiorari under Rule 45 of the Rules of
Court, only questions of law may be raised. We have time and again ruled that the factual
findings of fact by administrative agencies are generally accorded great respect, if not finality, by
the courts because of the special knowledge and expertise of administrative departments over
matters falling under their jurisdiction. However, due to the divergence of the findings of the
PARAD, on the one hand, and the DARAB on the other, and considering the findings of the
DARAB and the Court of Appeals, we are constrained to review the records and resolve the
factual and the legal issues involved.
On the first and second issues, the petitioners contend that the property subject of the suit is
agricultural land; hence, covered by the CARL, more particularly, Rep. Act No. 6657. They assert
that the reclassification of the property made by the Municipal Council of Carmona, Cavite,
under Kapasiyahang Blg. 30 on May 30, 1976 was subject to the approval of the HSRC, now the
HLURB, as provided for by Section 5 of Executive Order No. 648. Since there was no such
approval, the said resolution of the Municipal Council of Carmona was ineffective. The
petitioners aver that, the appellate courts reliance on the ruling of this Court in Province of
Camarines Sur v. Court of Appeals, et al. is misplaced because the said case involves the power
of local government units to initiate condemnation proceedings of properties for public use or
purpose. They argue that under Section 65 of Rep. Act No. 6657, the DAR is vested with
exclusive authority to reclassify a landholding from agricultural to residential. The petitioners
submit that the exclusive authority of the DAR is not negated by Section 20 of Rep. Act No.
7160, otherwise known as the Local Government Code of 1991. They also insist that the
conversion of the property under Kapasiyahang Blg. 30 of the Municipal Council of Carmona on
May 30, 1976, was subject to the approval of the DAR, conformably to DOJ Opinion No. 44,
Series of 1990. Moreover, the development of the property had not yet been completed even
after Rep. Act No. 6657 took effect. Hence, it was incumbent upon the respondent to secure an
exemption thereto, after complying with DAR Administrative Order No. 6, Series of 1994.

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 In its Comment on the petition, the respondent CAI asserts that the property was validly
reclassified by the Municipal Council of Carmona on May 30, 1976, pursuant to its authority
under Section 3, Rep. Act No. 2264, otherwise known as the Local Autonomy Act of 1959. Until
revoked, the reclassification made by the council remained valid. Per DOJ Opinion No. 40, Series
of 1990, the private respondent was not required to secure clearance or approval from the DAR
since the reclassification took place on June 15, 1988, when Rep. Act No. 6657 took effect. The
respondent asserts that it had complied with all the requirements under P.D. No. 957, as
amended.
The respondent contends that, aside from the Municipal Council of Carmona, the Secretary
of Agrarian Reform and administrative agencies of the government such as the NHA, the Bureau
of Lands, the HSRC, and the HLURB, found the property unsuitable for agricultural purposes. The
respondent asserts that the petitioners-individuals are mere squatters and not tenants on the
property of the private respondent. Hence, the PARAD had no jurisdiction over the petition of
the PBFAI, as well as the individual petitioners. Consequently, the DARAB had no appellate
jurisdiction over the appeals from the decision of the PARAD.
The Courts Ruling
The contention of the petitioners has no merit.
Under Section 3(c) of Rep. Act No. 6657, agricultural lands refer to lands devoted to
agriculture as conferred in the said law and not classified as industrial land. Agricultural lands are
only those lands which are arable or suitable lands that do not include commercial, industrial and
residential lands. Section 4(e) of the law provides that it covers all private lands devoted to or
suitable for agriculture regardless of the agricultural products raised or that can be raised
thereon. Rep. Act No. 6657 took effect only on June 15, 1988. But long before the law took
effect, the property subject of the suit had already been reclassified and converted from
agricultural to non-agricultural or residential land by the following administrative agencies: (a)
the Bureau of Lands, when it approved the subdivision plan of the property consisting of 728
subdivision lots; (b) the National Planning Commission which approved the subdivision plan
subdivided by the LDC/CAI for the development of the property into a low-cost housing project;
(c) the Municipal Council of Carmona, Cavite, when it approved Kapasiyahang Blg. 30 on May
30, 1976; (d) Agrarian Reform Minister Conrado F. Estrella, on July 3, 1979, when he granted
the application of the respondent for the development of the Hakone Housing Project with an
area of 35.80 hectares upon the recommendation of the Agrarian Reform Team, Regional
Director of Region IV, which found, after verification and investigation, that the property was
not covered by P.D. No. 27, it being untenanted and not devoted to the production of palay/or
corn and that the property was suitable for conversion to residential subdivision; (e) by the
Ministry of Local Government and Community Development; (f) the Human Settlements
Regulatory Commission which issued a location clearance, development permit, Certificate of
Inspection and License to Sell to the LDC/private respondent; and, (g) the Housing and Land Use
Regulatory Board which also issued to the respondent CAI/LDC a license to sell the subdivision
lots.
In issuing a location clearance, a development permit, a certificate of inspection over the
housing project, and a license to sell the subdivision lots in favor of LDC/CAI pursuant to its
charter, the HSRC approved and confirmed the reclassification and conversion of the land made
by the Municipal Council of Carmona and Agrarian Reform Minister Estrella.
In Natalia Realty Inc. and Estate Developers and Investors Corp. v. Department of Agrarian
Reform, et al., we held, thus:

We now determine whether such lands are covered by the CARL. Section 4 of R.A. 6657
provides that the CARL shall cover, regardless of tenurial arrangement and commodity produced,
all public and private agricultural lands. As to what constitutes agricultural land it is referred to as
land devoted to agricultural activity as defined in this Act and not classified as mineral, forest,
residential, commercial or industrial land. The deliberations of the Constitutional Commission
confirm this limitation. Agricultural lands are only those lands which are arable and suitable
agricultural lands and do not include commercial, industrial and residential lands.

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Based on the foregoing, it is clear that the undeveloped portions of the Antipolo Hills Subdivision
cannot in any language be considered as agricultural lands. These lots were intended for
residential use. They ceased to be agricultural lands upon approval of their inclusion in the
Lungsod Silangan Reservation. Even today, the areas in question continued to be developed as a
low-cost housing subdivision, albeit at a snails pace. This can readily be gleaned from the fact that
SAMBA members even instituted an action to restrain petitioners from continuing with such
development. The enormity of the resources needed for developing a subdivision may have
delayed its completion but this does not detract from the fact that these lands are still residential
lands and outside the ambit of the CARL.

Indeed, lands not devoted to agricultural activity are outside the coverage of CARL. These
include lands previously converted to non-agricultural uses prior to the effectivity of CARL by
government agencies other than respondent DAR. In its Revised Rules and Regulations Governing
Conversion of Private Agricultural Lands to Non-Agricultural Uses, DAR itself defined agricultural
land thus

x x x Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657 and
not classified as mineral or forest by the Department of Environment and Natural Resources
(DENR) and its predecessor agencies, and not classified in town plans and zoning ordinances as
approved by the Housing and Land Use Regulatory Board (HLURB) and its preceding competent
authorities prior to 15 June 1988 for residential, commercial or industrial use.

Our ruling in Natalia Realty, Inc. v. DAR was reiterated in National Housing Authority v.
Allarde, and Sta. Rosa Realty Development Corporation v. Court of Appeals, where we stated,
viz:

The authority of the municipality of Cabuyao, Laguna to issue zoning classification is an exercise
of its police power, not the power of eminent domain. A zoning ordinance is defined as a local
city or municipal legislation which logically arranges, prescribed, defines and apportions a given
political subdivision into specific land uses as present and future projection of needs.

Section 3 of Rep. Act No. 2264, amending the Local Government Code, specifically
empowers municipal and/or city councils to adopt zoning and subdivision ordinances or
regulations in consultation with the National Planning Commission. A zoning ordinance
prescribes, defines, and apportions a given political subdivision into specific land uses as present
and future projection of needs. The power of the local government to convert or reclassify lands
to residential lands to non-agricultural lands reclassified is not subject to the approval of the
Department of Agrarian Reform. Section 65 of Rep. Act No. 6657 relied upon by the petitioner
applies only to applications by the landlord or the beneficiary for the conversion of lands
previously placed under the agrarian reform law after the lapse of five years from its award. It
does not apply to agricultural lands already converted as residential lands prior to the passage of
Rep. Act No. 6657.
When Agrarian Reform Minister Conrado F. Estrella confirmed the reclassification of the
property by the Municipal Council of Carmona to non-agricultural land when he approved, on
July 3, 1979, the application of the private respondent/LDC for the conversion of 35.80 hectares
of the property covered by TCT No. 62972 into non-agricultural land, he did so pursuant to his
authority under Rep. Act No. 3844, as amended, by P.D. No. 815 and P.D. No. 946.
It bears stressing that in his Order, the Agrarian Reform Minister declared that the property
was not tenanted and not devoted to the production of palay and/or corn, and that the land
was suitable for conversion to a residential subdivision. The order of the Minister was not
reversed by the Office of the President; as such, it became final and executory. By declaring, in its
Decision of September 2, 1997, that the property subject of the suit, was agricultural land, the
petitioner DARAB thereby reversed the Order of Agrarian Reform Minister Estrella, issued almost
eighteen (18) years before, and nullified Resolution No. 30 of the Municipal Council of Carmona,
approved twenty-one (21) years earlier, on May 30, 1976, as well as the issuances of the NHA,
the HSRC, the HLURB, the Ministry of Local Government and the National Planning
Commission. Thus, the petitioner DARAB acted with grave abuse of its discretion amounting to
excess or lack of jurisdiction.

105
 The failure of the respondent to complete the housing project before June 15, 1988, even if
true, did not have the effect of reverting the property as agricultural land.
The petitioners reliance on DOJ Opinion No. 44, Series of 1990 and DAR Administrative
Order No. 6, Series of 1994 is misplaced. In the said opinion, the Secretary of Justice
declared, viz:

Based on the foregoing premises, we reiterate the view that with respect to conversions of
agricultural lands covered by R.A. No. 6657 to non-agricultural uses, the authority of DAR to
approve such conversions may be exercised from the date of the laws effectivity on June 15,
1988. This conclusion is based on a liberal interpretation of R.A. No. 6657 in the light of DARs
mandate and the extensive coverage of the agrarian reform program.

Following the DOJ opinion, the DAR issued Administrative Order No. 6, Series of 1994,
stating that lands already classified as non-agricultural before the enactment of Rep. Act No.
6657 no longer needed any conversion clearance:

I. Prefatory Statement

In order to streamline the issuance of exemption clearances, based on DOJ Opinion No. 44, the
following guidelines are being issued for the guidance of the DAR and the public in general.

II. Legal Basis

Sec. 3(c) of RA 6657 states that agricultural lands refers to the land devoted to agricultural
activity as defined in this act and not classified as mineral, forest, residential, commercial or
industrial land.

Department of Justice Opinion No. 44, series of 1990 has ruled that, with respect to the
conversion of agricultural lands covered by RA No. 6657 to non-agricultural uses, the authority
of DAR to approve such conversion may be exercised from the date of its effectivity, on June 15,
1988. Thus, all lands that are already classified as commercial, industrial, or residential before 15
June 1988 no longer need any conversion clearance.

With our finding that the property subject of the suit was classified as residential land since
1976, the DARAB had no original and appellate jurisdiction over the property subject of the
action of the petitioner PBFAI and its members. Consequently, the DARAB should have ordered
the dismissal of the complaint.
The jurisdiction of a tribunal or quasi-judicial body over the subject matter is determined by
the averments of the complaint/petition and the law extant at the time of the commencement of
the suit/complaint/petition. All proceedings before a tribunal or quasi-judicial agency bereft of
jurisdiction over the subject matter of the action are null and void.
Section 1, Rule II of the Revised Rules of Procedure of the DARAB provides that:

SECTION 1. Primary. Original and appellate jurisdiction The Agrarian Reform Adjudication Board
shall have primary jurisdiction, both original and appellate, to determine and adjudicate all
agrarian disputes, cases, controversies, and matters or incidents involving the implementation of
the Comprehensive Agrarian Reform Program under Republic Act No. 6657, Executive Order
Nos. 229, 228 and 129-A, Republic Act No. 3844 as amended by Republic Act No. 6389,
Presidential Decree No. 27 and other agrarian laws and their implementing rules and regulations.

Section 3(d) of Rep. Act No. 6657 defines an agrarian dispute as:

Agrarian Dispute refers to any controversy relating to tenurial arrangements, whether leasehold,
tenancy, stewardship or otherwise, over lands devoted to agriculture, including disputes
concerning farm workers associations or representation of persons negotiating, fixing,
maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements.

106
It includes any controversy relating to compensation of lands acquired under this Act and other
terms and conditions of transfer of ownership from landowners to farm workers, tenants and
other agrarian reform beneficiaries, whether the disputants stand in the proximate relation of
farm operator and beneficiary, landowner and tenant, or lessor and lessee.

In Monsanto v. Zerna, we held that for the DARAB to have jurisdiction over a case, there
must exist a tenancy relationship between the parties. In order for a tenancy agreement to take
hold over a dispute, it is essential to establish all the indispensable elements, to wit:

(1) The parties are the landowner and the tenant or agricultural lessee;

(2) The subject matter of the relationship is an agricultural land;

(3) There is consent between the parties to the relationship;

(4) The purpose of the relationship is to bring about agricultural production;

(5) There is personal cultivation on the part of the tenant or agricultural lessee; and

(6) The harvest is shared between the landowner and the tenant or agricultural lessee.[85]

There is no allegation in the complaint of the petitioner PBFAI in DARAB Case No. CA-
0285-95 that its members were tenants of the private respondent CAI. Neither did the petitioner
adduce substantial evidence that the private respondent was the landlord of its members from
1961, nor at any time for that matter. Indeed, as found by the PARAD:

Moreover, their waiver of rights constitutes abandonment of their rights of possession and
cultivation which may yet be borne out of a legitimate tenancy relationship. Their re-entry or
continuous possession and cultivation of the land in question without the landowners
knowledge and/or consent negates the existence of tenancy relationship. Since security of tenure
is a right to which only a bona fide tenant farmer is entitled their lack of such tenurial status
denies them of its exercise and enjoyment.

As to the remaining twenty and more other complainants, it is unfortunate that they have not
shown that their cultivation, possession and enjoyment of the lands they claim to till have been
by authority of a valid contract of agricultural tenancy. On the contrary, as admitted in their
complaint a number of them have simply occupied the premises in suit without any specific area
of tillage being primarily mere farm helpers of their relatives. Banking on their application for
CARP coverage still awaiting action and disposition in some DAR operations office, these
complainants have tenaciously held on to their occupied areas in the hope of eventual
redemption under the Comprehensive Agrarian Reform Program.

Since the members of the petitioner PBFAI were not the tenants of the private respondent
CAI, the petitioners and its members had no cause of action against the private respondent for
possession of the landholding to maintain possession thereof and for damages. Besides, when the
complaint was filed, twenty-five (25) of the thirty-seven (37) members of the petitioners had
already executed separate deeds of quitclaim in favor of the private respondent CAI over the
portions of the landholding they respectively claimed, after receiving from the private
respondent CAI varied sums of money. In executing the said deeds, the members of the
petitioner PBFAI thereby waived their respective claims over the property. Hence, they have no
right whatsoever to still remain in possession of the same.
IN LIGHT OF THE FOREGOING, the petitions are DENIED. The assailed decision of the
Court of Appeals is AFFIRMED WITH MODIFICATIONS. The complaint of the petitioner PBFAI
in DARAB Case No. CA-0285-95 is DISMISSED. The counterclaim of the private respondent for
damages in DARAB Case No. CA-0285-95 is, likewise, DISMISSED. The thirty-seven (37)
members of the petitioner PBFAI and all those occupying the property subject of the complaint in
DARAB Case No. CA-0285-95 in their behalf are ORDERED to vacate the landholding.
SO ORDERED.

107
108
5. Legaspi vs. City of Cebu G.R. No. 159110: December 10, 2013

VALENTINO L. LEGASPI, Petitioner, v. CITY OF CEBU, T.C. (TITO) SAYSON AND RICARDO
HAPITAN,Respondents.

FACTS:

On January 27, 1997 the Sangguniang Panlungsod of the City of Cebu enacted Ordinance No.
1664 to authorize the traffic enforcers of Cebu City to immobilize any motor vehicle violating the
parking restrictions and prohibitions defined in the Traffic Code of Cebu City.

On July 29, 1997, Atty. Bienvenido Jaban (Jaban,Sr.) and his son Atty. Bienvenido Douglas Luke
Bradbury Jaban (Jaban,Jr.) brought suit in the RTC against the City of Cebu, then represented by
Hon. Alvin Garcia, its City Mayor, the Sangguniang Panlungsod of Cebu City and its Presiding
Officer, Hon. Renato V. Osme, and the chairman and operatives or officers of the City Traffic
Operations Management (CITOM),seeking the declaration of Ordinance No. 1644 as
unconstitutional for being in violation of due process and for being contrary to law, and
damages.

Their complaint alleged that on June 23, 1997, Jaban Sr. had properly parked his car in a paying
parking area on Manalili Street, Cebu City to get certain records and documents from his office
and after less than 10 minutes, he had found his car being immobilized by a steel clamp. His car
was impounded for three days, and was informed at the office of the CITOM that he had first to
pay P4,200.00 as a fine to the City Treasurer of Cebu City for the release of his car but such
imposition the fine was without any court hearing and without due process of law. He was also
compelled to payP1,500.00 (itemized as P500.00 for the clamping andP1,000.00 for the
violation) without any court hearing and final judgment;

That on May 19, 1997, Jaban, Jr. parked his car in a very secluded place where there was no sign
prohibiting parking; that his car was immobilized by CITOM operative and that he was
compelled to pay the total sum ofP1,400.00 for the release of his car without a court hearing and
a final judgment rendered by a court of justice.

On August 11, 1997, Valentino Legaspi (Legaspi) likewise sued in the RTC the City of Cebu,
demanded the delivery of personal property, declaration of nullity of the Traffic Code of Cebu
City, and damages.

He averred that on the morning of July 29, 1997, he had left his car occupying a portion of the
sidewalk and the street outside the gate of his house to make way for the vehicle of the anay
exterminator, upon returning outside, his car was towed by the group even if it was not
obstructing the flow of traffic.

The cases were consolidated. The RTC rendered its decision declaring Ordinance No. 1664 as null
and void.

The City of Cebu and its co-defendants appealed to the CA. The CA reversed the decision of the
RTC declaring the Ordinance No. 1664 valid.

Upon the denial of their respective motions for reconsideration the Jabans and Legaspi came to
the Court via separate petitions for review on certiorari. The appeals were consolidated.

ISSUE: Whether or not Ordinance No. 1664 is valid and constitutional.

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HELD: The Court of Appeals decision is sustained.

CONSTITUTIONAL LAW - Tests for a valid ordinance

In City of Manila v. Laguio, Jr., G.R. No. 118127, April 12, 2005the Court restates the tests of a
valid ordinance thusly:

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.

As jurisprudence indicates, the tests are divided into the formal (i.e., whether the ordinance was
enacted within the corporate powers of the LGU, and whether it was passed in accordance with
the procedure prescribed by law), and the substantive (i.e., involving inherent merit, like the
conformity of the ordinance with the limitations under the Constitution and the statutes, as well
as with the requirements of fairness and reason, and its consistency with public policy).

InMetropolitan Manila Development Authorityv. Bel-Air Village Association,Inc., G.R. No.

135962, March 27, 2000the Court cogently observed that police power is lodged primarily in
the National Legislature. It cannot be exercised by any group or body of individuals not
possessing legislative power. The National Legislature, however, may delegate this power to the
President and administrative boards as well as the lawmaking bodies of municipal corporations
or local government units. Once delegated, the agents can exercise only such legislative powers
as are conferred on them by the national lawmaking body.

In the present case, delegated police power was exercised by the LGU of the City of Cebu.

The CA opined, and correctly so, that vesting cities like the City of Cebu with the legislative
power to enact traffic rules and regulations was expressly done through Section 458 of the LGC,
and also generally by virtue of the General Welfare Clause embodied in Section 16 of the LGC.

The police power granted to local government units must always be exercised with utmost
observance of the rights of the people to due process and equal protection of the law. Such
power cannot be exercised whimsically, arbitrarily or despotically 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. Due process requires the intrinsic validity
of the law in interfering with the rights of the person to his life, liberty and property.

Judged according to the foregoing enunciation of the guaranty of due process of law, the
contentions of the petitioners cannot be sustained. Even under strict scrutiny review, Ordinance
No. 1664 met the substantive tests of validity and constitutionality by its conformity with the
limitations under the Constitution and the statutes, as well as with the requirements of fairness
and reason, and its consistency with public policy.

The subject of Ordinance No. 1664 is to ensure "a smooth flow of vehicular traffic in all the

110
streets in the City of Cebu at all times".

To reiterate, the clamping of the illegally parked vehicles was a fair and reasonable way to
enforce the ordinance against its transgressors; otherwise, the transgressors would evade liability
by simply driving away. DENIED.

6. Social Justice Society Officers V. Alfredo S. Lim G.R No. 187836, Nov 25, 2014
PEREZ, J.:
Challenged in these consolidated petitions is the validity of Ordinance No. 8187] 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. 8027] entitled "AN
ORDINANCE RECLASSIFYING THE LAND USE OF THAT PORTION 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 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. 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."

The Parties

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

Suing capacity aside from being residents of

Petitioners Residence in Manila
Manila/other personal circumstances
G.R. No. 187836
Manila taxpayer;
One of the petitioners in SJS v. Atienza (G.R.
Not mentioned in the
SJS Officer Samson S. No. 156052);*
petition; holding office in
Alcantara (Alcantara) Pesident of ABAKADA GURO PARTY LIST
Ermita, Manila
with members who are residents of the City
of Manila
SJS Officer Vladimir
One of the petitioners in SJS v. Atienza (G.R.
Alarique T. Cabigao Pandacan
No. 156052)
(Cabigao)
* 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 of Manila;

Former Mayor Jose L. Atienza, Jr. Secretary of Department of
San Andres
(Mayor Atienza) Environment and Natural
Resources (DENR)

111
 Citizen and taxpayer;
Bienvinido M. Abante Sta. Ana member of the House of
Representatives
Incumbent City Councilor of
Ma. Lourdes M. Isip-Garcia San Miguel
the City of Manila
Incumbent City Councilor of
Rafael P. Borromeo Paco
the City of Manila
Incumbent City Councilor of
Jocelyn Dawis-Asuncion Sta. Mesa
the City of Manila
Minors Marian Regina B. Taran,
Macalia Ricci B. Taran, Richard
Citizens, real estate owners
Kenneth B. Taran, represented and Paco
and taxpayers
joined by their parents Richard and
Marites Taran
Minors Czarina Alysandra C. Ramos,
Cezarah Adrianna C. Ramos, and
Citizens, real estate owners
Cristen Aidan C. Ramos represented Tondo
and taxpayers
and joined by their mother Donna c.
Ramos
Minors Jasmin Syllita T. Vila and
Antonio T. Cruz IV, represented and Citizens, real estate owners
Sta. Ana
joined by their mother Maureen C. and taxpayers
Tolentino
Respondents Sued in their capacity as

G.R. Nos. 187836 and 187916

Incumbent Mayor of Manila at the time of the

Former Mayor Alfredo S. Lim (Mayor Lim)
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 of the City
Domagoso) Council of Manila
Arlene Woo Koa Principal author of City Ordinance No. 8187
Moises T. Lim, Jesus Fajardo, Louisito N. Chua,
Victoriano A. Melendez, John Marvin Nieto,
Rolando M. Valeriano, Raymondo R.
Yupangco, Edward VP Maceda, Roderick D.
Personal and official capacities as councilors who
Valbuena, Josefina M. Siscar, Phillip H. Lacuna,
voted and approved City Ordinance No. 8187
Luciano M. Veloso, Carlo V. Lopez, Ernesto F.
Rivera, 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:
Intervenors Nature of Business

Chevron Philippines, Inc. importing, distributing and marketing of petroleum products in the
(CHEVRON) Philippines since 1922
Pilipinas Shell Petroleum manufacturing, refining, importing, distributing and marketing of
Corporation (SHELL) petroleum products in the Philippines
Petron Corporation manufacturing, refining, importing, distributing and marketing of
(PETRON) 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
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These petitions are a sequel to the case of Social Justice Society v. Mayor Atienza, Jr. (hereinafter
referred to as G.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;" (2) that it had passed the tests of a valid ordinance; and (3) that it is not
superseded by Ordinance No. 8119. Declaring that it is constitutional and valid, the Court
accordingly ordered its immediate enforcement with a specific directive on the relocation and
transfer of the Pandacan oil terminals.

Highlighting that the Court has so ruled 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, as well 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. At the 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 classified as an industrial zone. Among its early industrial settlers were the 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. Malacaang 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 River.

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,

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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 Manila, 50% of Luzon's consumption and 35% nationwide. Fuel can also be
transported through barges along the Pasig River or tank trucks via the South Luzon Expressway.

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 MOA in light of recent
international developments involving acts of terrorism on civilian and government landmarks,
potential new security risks relating to the Pandacan oil terminals and the impact on the
surrounding community which may be affected, 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. 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.

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) now one of the petitioners in G.R. No. 187916 the Sangguniang Panlungsod enacted
Ordinance No. 8027 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 were granted an extension of until 30 April 2003 within which
to comply with the Ordinance pursuant to the following:

(1) Memorandum of Understanding (MOU) 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 and committed to adopt specific measures consistent with the said objective;

(2) Resolution No. 97 dated 25 July 2002 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 2003 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.

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. 156052[25] was filed on 4 December 2002 by Tumbokon and herein
petitioners SJS and Cabigao against then Mayor Atienza. The petitioners sought to compel former

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Mayor Atienza to enforce Ordinance No. 8027 and cause the immediate removal of the
terminals of the oil companies.

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 of Resolution 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.

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.

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.

Pertinent provisions relative to these cases are the following:

(a) Article IV, Sec. 7 enumerating the existing zones or districts in the City of Manila;

(b) Article V, Sec. 23 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.

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

On 7 March 2007, the Court granted the petition for mandamus, and directed then respondent
Mayor Atienza to immediately enforce Ordinance No. 8027.

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.

The Court declared:

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. 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

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xxxx

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. 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 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.

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 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. 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 to rule on the constitutionality
and validity of the assailed Ordinance despite the pendency of the cases in the RTC.

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

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.

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

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the Sanggunian) actually indicated the clear intent to preserve the provisions of Ordinance No.
8027.
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. 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.

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 finality the second motion for reconsideration dated 27 February 2008 of the oil
companies. It further ruled that no further pleadings shall be entertained in the case.

Succeeding motions were thus denied and/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, all pleadings pertaining to the earlier motion against the drafting of an ordinance
to amend Ordinance No. 8027 were noted without action.

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.

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
therewith 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 Zone under 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

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 measures provided therein do not promote the general welfare of the people within the
contemplation of the following provisions of law:
Article III, Section 18 of Republic Act No. 409 otherwise known as the Revised Charter of
a) 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;
Section 16 of Republic Act No. 7160 known as the Local Government Code, which defines
b)
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; 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 and "protect and advance the right of the people to a balanced and healthful ecology.

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.

C. Eminent Domain/Power of Expropriation

1. a. ARTICLE III - BILL OF RIGHTS

Section 9. Private property shall not be taken for public use without just compensation.

b. ARTICLE XII - NATIONAL ECONOMY AND PATRIMONY

Section 18. The State may, in the interest of national welfare or defense, establish and operate
vital industries and, upon payment of just compensation, transfer to public ownership utilities
and other private enterprises to be operated by the Government.

c. ARTICLE XIII - SOCIAL JUSTICE AND HUMAN RIGHTS

AGRARIAN AND NATURAL RESOURCES REFORM

Section 4. The State shall, by law, undertake an agrarian reform program founded on the right of
farmers and regular farm workers who are landless, to own directly or collectively the lands they
till or, in the case of other farm workers, to receive a just share of the fruits thereof. To this end,
the State shall encourage and undertake the just distribution of all agricultural lands, subject to
such priorities and reasonable retention limits as the Congress may prescribe, taking into account
ecological, developmental, or equity considerations, and subject to the payment of just
compensation. In determining retention limits, the State shall respect the right of small
landowners. The State shall further provide incentives for voluntary land-sharing.

URBAN LAND REFORM AND HOUSING

Section 9. The State shall, by law, and for the common good, undertake, in cooperation with the
private sector, a continuing program of urban land reform and housing which will make available
at affordable cost, decent housing and basic services to under-privileged and homeless citizens in
urban centers and resettlement areas. It shall also promote adequate employment opportunities
to such citizens. In the implementation of such program the State shall respect the rights of small
property owners.

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