CITY OF MANILA v.

LAGUIO 455 SCRA 308 Facts: 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 Department of Tourism 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 Order with the RTC against petitioners City of Manila. It prayed that the Ordinance1, insofar as it includes motels and inns as among its prohibited establishments, be declared invalid and unconstitutional. In the RTC Petition, MTDC argued that the Ordinance erroneously and improperly included in its enumeration of prohibited establishments, motels and inns such as MTDC's Victoria Court considering that these were not establishments for "amusement" or "entertainment" and they were not "services or facilities for entertainment," nor did they use women as "tools for entertainment," and neither did they "disturb the community," "annoy the inhabitants" or "adversely affect the social and moral welfare of the community” and further advanced that the Ordinance was unconsti. MTDC further advanced that the Ordinance was invalid and unconstitutional for the following reasons: (3) The Ordinance does not constitute a proper exercise of police power as the compulsory closure of the motel business has no reasonable relation to the legitimate municipal interests sought to be protected; (5) The Ordinance violates MTDC's constitutional rights in that: (a) it is confiscatory and constitutes an invasion of plaintiff's property rights; RTC: issued TRO against enforcement of Ordinance and after trial rendered such unconsti Issue: w/n ordinance is unconsti (YES) 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. Local government units, as agencies of the State, are endowed with police power in order to effectively accomplish and carry out the declared objects of their creation. Modality employed is unlawful taking (ONLY CONSTI issue I put, which is on Sec 9) In addition, the Ordinance is unreasonable and oppressive as it substantially divests the respondent of the beneficial use of its property. The Ordinance in Section 1 thereof forbids the running of the enumerated businesses in the Ermita-Malate area and in Section 3 instructs its owners/operators to wind up business operations or to transfer outside the area or convert said businesses into allowed businesses. An ordinance which permanently restricts the use of property that it cannot be used for any reasonable purpose goes beyond regulation and must be recognized as a taking of the property without just compensation. It is intrusive and violative of the private property rights of individuals. The Constitution expressly provides in Article III, Section 9, that "private property shall not be taken for public use without just compensation." The provision is the most important protection of property rights in the Constitution. This is a restriction on the general power of the government to take property. The constitutional provision is about ensuring that the government does not confiscate the property of some to give it to others. In part too, it is about loss spreading. If the government takes away a person's property to benefit society, then society should pay.

1 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 Basically this  no person, partnership, corporation or entity shall, in the Ermita-Malate area bounded by Teodoro M. Kalaw Sr. Street in the North, Taft Avenue in the East, Vito Cruz Street in the South and Roxas Boulevard in the West, pursuant to P.D. 499 be allowed or authorized to contract and engage in, any business providing certain forms of amusement, entertainment, services and facilities where women are used as tools in entertainment and which tend to disturb the community, annoy the inhabitants, and adversely affect the social and moral welfare of the community

if regulation goes too far it will be recognized as a taking. It is apparent that the Ordinance leaves no reasonable economically viable use of property in a manner that interferes with reasonable expectations for use. The second and third options to transfer to any place outside of the Ermita-Malate area or to convert into allowed businessesare confiscatory as well. Ordinances placing restrictions upon the lawful use of property must. although a valid exercise of police power. 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. or of an opportunity for the exercise. otherwise it will be closed permanently after a subsequent violation should be borne by the public as this end benefits them as a whole. from the owner's point of view. A "possessory" taking occurs when the government confiscates or physically occupies property. he has suffered a taking. are unreasonable and invalid. it was held that a taking also could be found if government regulation of the use of property went "too far." it merely relocates it. The proffered solution does not put an end to the "problem. In the landmark case of Pennsylvania Coal v. Petitioners cannot therefore order the closure of the enumerated establishments without infringing the due process clause. A "regulatory" taking occurs when the government's regulation leaves no reasonable economically viable use of the property. it qualifies as a taking without just compensation with an additional burden imposed on the owner to build another establishment solely from his coffers. which make possible abuses in its execution. The penalty of permanent closure in cases of subsequent violations found in Section 4 of the Ordinance is also equivalent to a "taking" of private property. It provides no definition of the establishments covered by it and it fails to set forth the conditions when the establishments come within its ambit of prohibition. Ordinances such as this." The directive to "wind up business operations" amounts to a closure of the establishment. and is practically confiscatory. but not prevented from carrying on their .There are two different types of taking that can be identified. The burden on the owner to convert or transfer his business. in most if not in all cases there must be an exercise of eminent domain and compensation to support the act. 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 ErmitaMalate area or convert said businesses to other kinds of business allowable within the area. When the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good. Similarly. A restriction on use of property may also constitute a "taking" if not reasonably necessary to the effectuation of a substantial public purpose or if it has an unduly harsh impact on the distinct investment-backed expectations of the owner. which limits a "wholesome" property to a use which can not reasonably be made of it constitutes the taking of such property without just compensation." The cited case supports the nullification of the Ordinance for lack of comprehensible standards to guide the law enforcers in carrying out its provisions. The Ordinance confers upon the mayor arbitrary and unrestricted power to close down establishments. Mahon. Consideration must be given to the substantial amount of money invested to build the edifices which the owner reasonably expects to be returned within a period of time." "annoy the inhabitants. A regulation that permanently denies all economically beneficial or productive use of land is. the Ordinance fails to set up any standard to guide or limit the petitioners' actions." and "adversely affect the social and moral welfare of the community. the Ordinance does not specify the standards to ascertain which establishments "tend to disturb the community. These lawful establishments may be regulated. In every sense. The Ordinance should have established a rule by which its impartial enforcement could be secured. Unless the owner converts his establishment to accommodate an "allowed" business." When regulation reaches a certain magnitude. The penalty of closure likewise constitutes unlawful taking that should be compensated by the government. a permanent deprivation of property. Suppose he transfers it to another area. The second option instructs the owners to abandon their property and build another one outside the ErmitaMalate area. While property may be regulated to a certain extent. to leave his property economically idle. of unbridled discretion by the law enforcers in carrying out its provisions. Further. Petitioners cannot take refuge in classifying the measure as a zoning ordinance. in order to be valid and constitutional. the structure which housed the previous business will be left empty and gathering dust. It in no way controls or guides the discretion vested in them. A zoning ordinance. he will likewise leave the entire establishment idle. equivalent to a "taking" unless principles of nuisance or property law that existed when the owner acquired the land make the use prohibitable. that is. 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. and must not admit of the exercise. specify the rules and conditions to be observed and conduct to avoid.

and to impose upon said establishments penal sanctions under the National Building Code. the Senate Committees on Trade and Commerce and on Justice and Human Rights conducted a joint investigation for the following purposes: (1) to inquire into the legality of the prevalent practice of shopping malls of charging parking fees. After three public hearings the Senate Committees jointly issued Senate Committee Report No. and (3) to determine the legality of the policy of shopping malls of denying liability in cases of theft. Respondents Ayala Land. (2) assuming arguendo that the collection of parking fees was legally authorized. and Shangri-la maintain and operate shopping malls in various locations in Metro Manila. it cannot. the Ordinance invades fundamental personal and property rights and impairs personal privileges. be upheld as valid. which were constructed for the lessor’s account. With the threatened action against it. the Code has "expropriated" the land for parking. Moreover." Obviously. Office of the Solicitor General v.A. 7394. an action to enjoin respondent SM Prime and similar establishments from collecting parking fees. to find out the basis and reasonableness of the parking rates charged by shopping malls. without specifying whether it is free or not. Figuratively speaking. Article II of R. This is a sweeping exercise of police power that is a result of a lack of imagination on the part of the City Council and which amounts to an interference into personal and private rights which the Court will not countenance. Conclusion All considered. In this regard.e. Pursuant to Senate Committee Report No. No. While it is true that the Code merely requires malls to provide parking spaces. The shopping malls operated or leased out by respondents have parking facilities for all kinds of motor vehicles. we take a resolute stand to uphold the constitutional guarantee of the right to liberty and property. both Committees believe that the reasonable and logical interpretation of the Code is that the parking spaces are for free. operates. Respondents expend for the maintenance and administration of their respective parking facilities. Respondent Shangri-la is renting its parking facilities. Quezon City. and SM Prime spent for the construction of their own parking facilities. promote the general welfare and establish standards of conduct for business and industry. they collect parking fees from the persons making use of their parking facilities. even under the guise of exercising police power. and leases out commercial buildings and other structures. Robinsons. or carnapping. robbery. 9734 (Consumer Act of the Philippines) provides that "it is the policy of the State to protect the interest of the consumers. consisting of land and building specifically used as parking spaces. a contrary interpretation (i. justifying the collection of parking fees) would be going against the declared policy of R. 225. respondent SM Prime filed a Petition for Declaratory Relief. Ayala Land Inc. They provide security personnel to protect the vehicles parked in their parking facilities and maintain order within the area. the City Council under the Code had no power to enact the Ordinance and is therefore ultra vires. It is constitutionally infirm.business. In turn. And not to be forgotten. The parking tickets or cards issued by respondents to vehicle owners contain the stipulation that respondents shall not be responsible for any loss or damage to the vehicles parked in respondents’ parking facilities. 225 in which they concluded that the collection of parking fees by shopping malls is contrary to the National Building Code and is therefor illegal. The foregoing premises show that the Ordinance is an unwarranted and unlawful curtailment of property and personal rights of citizens. regardless of whether said persons are mall patrons or not. 600 SCRA 60 Facts: Respondents Ayala Land. For being unreasonable and an undue restraint of trade. and Las Piñas intended to institute.. it is discriminatory and unreasonable in its operation. . Robinsons. by invoking the waiver clause at the back of the parking tickets. through the OSG. In 1999. the DPWH Secretary and the local building officials of Manila. it is not sufficiently detailed and explicit that abuses may attend the enforcement of its sanctions. null and void. The Ordinance contravenes statutes. Respondent SM Prime constructs.A.

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 peace and order and of promoting the general welfare. garnered from a plain reading thereof. Normally. but another of its inherent powers. and possession of. In fact. Shangri-la Plaza Corporation and SM Prime Holdings[.] Inc. The power to regulate. of course. eminent domain. Robinsons. the State is no longer exercising police power. Police power is the power of promoting the public welfare by restraining and regulating the use of liberty and property. Shangri-La and SM [Prime] to provide parking spaces for free can be considered as an unlawful taking of property right without just compensation. the term "parking fees" cannot even be found at all in the entire National Building Code and its IRR. When there is a taking or confiscation of private property for public use. is already tantamount to a taking or confiscation of their properties. the OSG is actually invoking police power (they argue that free parking will alleviate traffic congestion in areas surrounding these buildings) to justify the regulation by the State.] Inc. namely. the State would be acting beyond the bounds of police power. and the owner may recover therefor. the power to regulate does not include the power to confiscate. free of charge. A fortiori. x x x To compel Ayala Land. the prohibition against their collection of parking fees from the public. does not include the power to prohibit. is that respondents. for the use of said facilities. Robinsons Land Corporation. are not obligated to provide parking spaces in their malls for the use of their patrons or public in general. should provide parking and loading spaces. The explicit directive of the afore-quoted statutory and regulatory provisions. The State is not only requiring that respondents devote a portion of the latter’s properties for use as parking spaces. title to and/or possession of the parking facilities remain/s with respondents. Police power does not involve the taking or confiscation of property. a police regulation that unreasonably restricts the right to use business property for business purposes amounts to a taking of private property. the expropriated property. Such is already an excessive intrusion into the property rights . The Court finds.. the OSG filed a Petition for Declaratory Relief and Injunction (with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction) against respondents. Issue: Whether or not obligating malls to provide free parking constitutes an unlawful taking of property without just compensation (YES) Held: The Court finds no merit in the present Petition. in accordance with the minimum ratio of one slot per 100 square meters of shopping floor area. Similarly. It is usually exerted in order to merely regulate the use and enjoyment of the property of the owner. however. Shangri-la and SM [Prime] are under no obligation to provide them for free. which is the enabling law and the Implementing Rules and Regulations do not impose that parking spaces shall be provided by the mall owners free of charge. as operators/lessors of neighborhood shopping centers. Robinsons. the power of eminent domain results in the taking or appropriation of title to. this instant petition. Hence. unless the invasion of rights is so slight as to permit the regulation to be justified under the police power. Although in the present case. however.] Ayala Land. xxx [T]he Court declares that Ayala Land[. Without using the term outright.The very next day. CA affirmed. that in totally prohibiting respondents from collecting parking fees from the public for the use of the mall parking facilities. The cases were consolidated and the RTC held that: The Building Code. but is also mandating that they give the public access to said parking spaces for free. but no cogent reason appears why the said power may not be availed of only to impose a burden upon the owner of condemned property. There is nothing therein pertaining to the collection (or non-collection) of parking fees by respondents. A regulation that deprives any person of the profitable use of his property constitutes a taking and entitles him to compensation. without loss of title and possession. It is usually in cases where title remains with the private owner that inquiry should be made to determine whether the impairment of a property is merely regulated or amounts to a compensable taking. It is a settled rule that neither acquisition of title nor total destruction of value is essential to taking. Eminent domain enables the State to forcibly acquire private lands intended for public use upon payment of just compensation to the owner. Absent such directive[.

the total prohibition against the collection by respondents of parking fees from persons who use the mall parking facilities has no basis in the National Building Code or its IRR. Not only are they being deprived of the right to use a portion of their properties as they wish. in Civil Cases No.R. since said prohibition amounts to a taking of respondents’ property without payment of just compensation. SO ORDERED. 00-1208 and No. WHEREFORE. 00-1210 are hereby AFFIRMED. affirming in toto the Joint Decision dated 29 May 2002 of the Regional Trial Court of Makati City. Branch 138. the instant Petition for Review on Certiorari is hereby DENIED.of respondents. No costs. In conclusion. The State also cannot impose the same prohibition by generally invoking police power. CV No. The Decision dated 25 January 2007 and Resolution dated 14 March 2007 of the Court of Appeals in CA-G. . 76298. they are further prohibited from profiting from its use or even just recovering therefrom the expenses for the maintenance and operation of the required parking facilities.

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