LUZON STEVEDORING CORPORATION, petitioner,

vs.
WORKMEN'S COMPENSATION COMMISSION and ROSARIO VDA. DE ROSANO respondents.
H. San Luis and L. V. Simbulan for petitioner.
Juan B. Moreno for respondent Rosario Vda. de Rosano.
Villavieja, Villanueva and Ocampo for respondent Workmen's Compensation Commission.
REYES, J.B.L., Actg. C.J .:
Petition filed by the Luzon Stevedoring Corporation for review of the decision of the Workmen's Compensation
Commissioner (in R04 WC Case No. 3941), ordering it to pay claimants Rosario Vda. de Rosano, minors Rebecca,
Edgardo and Baltazar, all surnamed Rosano death compensation benefits, burial expenses and attorney's fees for the
death of Pastor Rosano; as well as of the resolution of the Workmen's Compensation Commission en banc denying
petitioner's motion for reconsideration of the aforesaid decision.
As found by the Acting Referee of the Department of Labor, supported by the evidence on record, the facts of the case
are as follows:
At about 6 o'clock in the morning of 30 November 1964, stevedore Pastor Rosano went to Pier 9, Manila, to await the
arrival of a barge of herein petitioner corporation, scheduled to dock at 9 o'clock in the morning. While thus waiting
for the vessel Rosano had a heated verbal argument with one Benjamin Valdez, another stevedore engaged by
petitioner corporation, over the possession of a platform used in the loading and unloading of cargoes taken into or
out of the watercraft. Rosano was able to get it. As the barge did not arrive as scheduled, Rosano went home for
lunch. When he returned at about 1 o'clock in the afternoon, he found the platform again in the possession of Valdez.
Rosano's demand for delivery to him of said platform precipitated another argument which almost ended in fist fight.
Valdez finally gave up the platform, but not before he had uttered threats against the life of Rosano. Later, informed
that the barge they were waiting for definitely was not arriving, Rosano, with two companions, boarded a passenger
jeep bound for Tondo. When he got off from the jeep near his house, he was met by Valdez, who whipped out a knife
and stabbed him. Rosano fell to the ground. He was immediately brought to the hospital where he expired at 2:30 in
the afternoon of that same day, 30 November 1964 (Exhibit C).
On 1 March 1965, the widow, Rosario Vda. de Rosano, for herself and on behalf of her 3 minor children filed with
the Department of Labor a formal claim for death compensation benefits against petitioner Luzon Stevedoring
Corporation for the death of her husband, Pastor Rosano. The company answered, denying the allegations of the
complaint and raising the defense of prescription, in that the claim was filed beyond the 3-month period from the
death of Rosano, as provided in the Workmen's Compensation law.
On 15 September 1965, after due hearing, the Acting Referee rendered judgment, ordering the company to pay to the
claimants death compensation benefits in the sum of P6,000.00; P200.00 as reimbursement for burial expenses;
P200.00, as attorney's fees; and P61.00 as fees payable to the office. The award was based on the finding that Rosano
was an employee of the company and that death arose out of his said employment. The defense of prescription was
rejected, it appearing that the company had failed to controvert the claimants' right to compensation within the period
prescribed in Section 45 of Act 3428. The company appealed to the Workmen's Compensation Commission, which
affirmed the decision of the Referee. And when its motion for reconsideration of said decision was denied by the
Commission en banc, the company filed the present petition for review, assigning as all errors committed by the
Commission its finding on the existence of employee-employer relationship between the petitioner and the deceased
and the ruling that the right to demand compensation benefits has not prescribed.
The contention that there existed no employer-employee relationship between petitioner and the late Pastor Rosano is
premised on the allegation that the latter was a "gang boss" working with the petitioner on an "on and off" basis; that
Rosano worked for petitioner when so assigned by the union, of which he was a member, that, if at all, the employer-
employee relationship existed only whenever the deceased rendered actual service for the petitioner. Since on 30
November 1964 Rosano was not able to work (because the barge did not arrive), then, according to petitioner, he was
not an employee when he (Rosano) met his death.
There is no merit to this contention. In the first place, while petitioner company failed to submit any evidence that the
work rendered by the deceased was purely casual,
1
it has been established that prior to the stabbing incident the
deceased, with other stevedores, was in the pier prepared to do hauling jobs for the petitioner's business. And there is
unrebutted testimony that the deceased had been doing stevedoring work for said petitioner for 15 years.
2
Secondly,
even assuming petitioner's allegations to be true, that the deceased was a union member, and that it was the union that
furnished laborers and stevedors when required by petitioner company, presumably with the latter delivering the
stevedoring charges directly to the union for distribution to the individual laborers, these facts did not make the union
an independent contractor whose intervention relieved the said company of liability for the death of a laborer specially
where no contractor's bond was required for the union's performance of its undertaking.
3
The union here was no more
than an agent of the company and whose fiction is merely to save the latter from the necessity of dealing with
individual laborers. And in this kind of indirect employment, it has been repeatedly held, the employer is not relieved
of liability under the Workmen's Compensation law.
4

It is next claimed for the petitioner that even if he were an employee, Rosano's death is not compensable because it
came when he was outside of the company premises and not at work.
We do not agree with the appellant. From the proved sequence of events that took place on 30 November 1964
involving the deceased Pastor Rosano, it is evident that the cause of his fatal stabbing by Benjamin Valdez (who was
thereafter accused and convicted) can be traced to their disagreement over the possession of a platform that was to be
used in their work for petitioner that although the altercation started in the morning the same was resumed when they
returned in the afternoon and carried on when Valdez left, lay in wait near Rosario's house, and there met and stabbed
the latter when he alighted from the jeep. Neither can it be said that the employer is exempt from liability under the
Workmen's Compensation law because the cause of death arose outside of the company premises,
5
whereas the
quarrel happened at the waterfront at Pier 9.
For an injury to be compensable, it is not necessary that the cause therefor shall take place within the place of
employment. If a workman is acting within the scope of his employment, his protection "in the course of" the
employment usually continues, regard of the place of injury.
6
Thus, in one case,
7
an employee went to the House of
the employer across the warehouse where he worked to get a drink of water, that there, while trying to drive away a
puppy that he saw eating fish in the employer's kitchen, he was bitten in the hand, as a result of which he later died of
hydrophobia. The death of the employee was held compensable, on the ground that his trip to the kitchen was
occasioned by the employer's fault in not providing adequate drinking water at the warehouse. In the present case, it
cannot be disputed that it is inherent in the stevedoring work for the petitioner that the laborers, like the deceased, stay
in the pier and wait for the docking of petitioner's vessels.
Furthermore, jurisprudence is to the effect that injuries sustained by an employee while in the course of his
employment, as the result of an assault upon his person by another employee, or by a third person, no question of the
injured employee's own culpability being involved, is compensable where, from the evidence presented, a rational
mind is able to trace the injury to a cause set in motion by the nature of the employment, or some condition,
obligation or incident therein, and not by some other agency.
8

The rule as stated by the Connecticut Supreme Court is that ... when the employee is assaulted while he is
defending his employer, or his employer's interests, or when the assault was incidental to some duty of his
employment, the injuries he suffers in consequence of the assault will, as a rule, arise out of the employment.
He will then be serving his employer's ends and not of his own. (Jacquemin vs. Turner and Sermour
Manufacturing Co., Conn., 103 A. 115; Goldshirch vs. American Character Doll Co., 135 Misc. 817, 238 N.
Y. 519.)
Similarly, in Appleford vs. Kimmel, 296 NW, 861, it appeared that a theater employee's job required him to handle
disturbances in the theater; that several patrons were ordered by him to leave the theater because of disturbances they
were causing; and that after the theater closed the employee started for home and was subjected to injurious assault by
those he had previously ordered to leave; the court held that the evidence sustained the finding that the employee's
injury arose out of, and in the course of, the employment.
In the leading case of Field vs. Charmette Knitted Fabric Co., 245 N.Y. 138, where a superintendent was injured on
the sidewalk by workmen with whom he had quarreled in the mill, the late Justice Cardozo (then of the New York
Supreme Court) declared the injury compensable, reasoning that the quarrel outside of the mill was merely a
continuation or extension of the quarrel begun within; that continuity of the case had been so combined with
continuity in time and space "that the quarrel from origin to ending must be taken to be one".
The rationale applies to the case at bar, where the facts, shown by the evidence found by the referee and affirmed by
the Commission, are that Rosano had been assaulted by the man with whom he had quarreled barely a half hour after
leaving the place of work where the quarrel occurred, in connection with the possession of the platform to be used in
unloading cargo, without any independent agency or cause for the assault being shown. As pointed out by Larson
(Workmen's Compensation Law, Vol. I, section 29.21)
since the ultimate test applied by Judge Cardozo was whether "the quarrel from origin to ending must be taken
to be one" it should make no difference how widely separated the assault was from the employment in time
and space if it remained an inherent part of an employment incident.
Other cases applying the same principle are collated in Schneider, "Workmen's Compensation", Perm. Ed., Vol. 6,
page 131, et seq.
As regards the defense of prescription raised by petitioner, it is true that the formal demand for compensation for the
death of Pastor Rosano on 30 November 1964 was made by the dependent widow and minor children only on 1
March 1965, or beyond the 3-month period provided for 'in section 24 of the Workmen's Compensation Act. But we
are not impressed by petitioner's disclaimer that it had no knowledge of the stabbing incident prior to its notification
by the Regional Office of the filing of the claim. It may be pointed out that the law does not speak of "formal notice"
by the employer of the accident; it specifies only "knowledge of the accident". For petitioner to say that it had no
actual knowledge of the stabbing incident on 30 November 1964 would run counter to the ordinary course of human
behavior. An employer could scarcely have been spared the news of the killing of one of its laborers by another
laborer, especially where the cause therefor started in the place where the laborers gather and work. When the widow
went to the company premises to demand compensation for the death of her husband a week after his burial, she was
able to talk to an unknown employee inside the compound, who told her that she could not get anything because the
death of her husband did not occur in the company premises. Far from showing lack of knowledge by the employer,
this fact constitutes sufficient indication that the death of Rosano was already a matter of common knowledge in
petitioner's office that even an allegedly unidentified employee could advance the exact defense that the employer
later set up in the case.lawphi1.nt
The fact remains that the petitioner failed to controvert in due time the right of the claimants to compensation, as
required by section 45 of Act 3428. And the rule is now well-settled that the requirements (for claimants) of giving of
notice of injury and filing of claim within the prescribed period is non-jurisdictional and does not constitute a bar to
compensation proceedings if the employer, who had knowledge of the accident, failed to controvert the claimant's
right to compensation pursuant to section 45 of the law. 9 For such failure of the employer to controvert the claimant's
constitutes a waiver (or a forfeiture by law) of its right to question the validity and reasonableness of the claim and
precludes the setting up of all non-jurisdictional defenses, such as non-compensability of injuries, prescription, and
the like.
10

WHEREFORE, finding no error in the appealed decision of the Workmen's Compensation Commission and its
resolution en banc, the petition for review is hereby dismissed, with costs against the petitioner.

G.R. No. L-46200 July 30, 1979
FELIXBERTO VILLONES, petitioner,
vs.
EMPLOYEES COMPENSATION COMMISSION, GOVERNMENT SERVICE INSURANCE SYSTEM (DEPARTMENT OF
EDUCATION AND CULTURE), respondents.
Alan A. Leynes for petitioner.
Nicasio & Palaganas for respondent ECC.
Manuel Lazaro for respondent GSIS.

MAKASIAR, J .:1wph1.t
This is a petition for review of the decision of the Employees' Compensation Commission affirming the decision of the
GSIS Medicare-Employees' Compensation, which denied the claim of herein petitioner for income benefits in connection
with the death of his son, the late Rolando M. Villones.
The records show that the late Rolando M. Villones was employed as a secondary school teacher in the Department of
Education and Culture assigned at Dayhagan Barrio High School in Bongabon, Oriental Mindoro, from July 3,1972 up to
the time of his death on September 2, 1975 with a basic salary of P347.60 per month, plus P50.00 monthly allowance. He
died of pulmonary tuberculosis. On December 23, 1975, the deceased's father and herein petitioner, filed with the
Government Service Insurance System, in the prescribed form, a claim for income benefits for the death of his son under
the provision of Presidential Decree No. 626, attaching thereto a xerox copy of the decedent's death certificate (see pages
1 & 4 of ECC Case No. 0137). On February 4, 1976, additional documents were submitted to the GSIS consisting of: (a) a
medical certificate showing that deceased Rolando M. Villones was on sick leave of absence from December 4 to 20,
1972 due to influenza; (b) a medical certificate issued by Dr. Fernando B. Viloria, Municipal Health Officer of Bongabon,
Oriental Mindoro certifying that he examined Rolando M. Villones on July 19, 1972 and found him to be physically and
mentally fit for employment; and (c) a certification from the principal of Bongabon (South District), Oriental Mindoro to the
effect that the actual duties of the deceased as secondary school teacher "were teaching secondary school subjects
specifically the following: chemistry, science, history, and English. He also led students in some curricular work like green
revolution projects, youth civic programs, and the like. Aside from these, he also did community work like helping in the
organization of puroks and barangay youth clubs" (pp. 5, 6 and 8, ECC rec.).
On March 9, 1976, the GSIS Medicare-Employees' Compensation denied the claim on the ground that "the cause of your
son's death, Pulmonary Tuberculosis, although listed as an occupational disease, has failed to satisfy other conditions in
order to be compensable," stating further that: t. hqw
For Tuberculosis and its resulting disability or death to be compensable, the employee manifesting
this disease should have an occupation involving close and frequent contact with a source or
sources of tuberculosis infection by reason of employment: (a) In the medical treatment or nursing
of a person or persons suffering from tuberculosis, (b) As a laboratory worker, pathologist or post-
mortem worker, where occupation involves working with material which is a source of tuberculous
infection. The nature of your son's duties as a Teacher as well as the working conditions of his
employment did not expose him to the source or sources of tuberculous infection aforementioned
(p. 7, ECC rec.).
After petitioner's request for reconsideration of the denial of his claim was denied on June 10, 1976 by the GSIS Medicare
Employees' Compensation, the entire record of the case was elevated on September 2, 1976 to the Employees'
Compensation Commission for review in accordance with the law and rules (pp. 12-15, ECC rec.).
On February 17, 1977, the Employees' Compensation Commission (En Banc) rendered its decision affirming the earlier
denial made by the GSIS Medicare-Employees' Compensation of herein petitioner's claim for income benefits, pertinent
portions thereof read as follows: t. hqw
Pulmonary Tuberculosis having been ruled out as an occupational disease in the occupation in
which the deceased was engaged in, appellant is repudiating pulmonary tuberculosis as the cause
of death. Appellant insisted that the Municipal Health Officer might have erred in indicating in the
Death Certificate that his son died of Pulmonary Tuberculosis, there being no autopsy conducted.
In other words, appellant would like to make it appear that hemoptysis which was the only visible
sign immediately before the teacher's death, could have been due to other illness traceable to
employment and not necessarily as a result of Pulmonary Tuberculosis.
Be this as it may, a research has been made on the possible causes of hemoptysis. Medical
studies show that blood-streaked sputum or gross bleeding coming from the respiratory tract may
be caused by: (1) inflammable inflammatory causes are hose of tuberculosis, extending in
severity from the smallest amount to death from rapid exsanguination. Other common causes, mild
or profuse, are bronchiectasis bronchitis, lung abscess or pneumonia; (2) Neoplastic-bronchogenic
carcinoma or bronchial adenoma; (3) Vascular-mitral stenosis and pulmonary infarct, are the most
frequent conditions associated with pulmonary hemorrhage. Other causes are left ventricular
failure arteriovenous mal-formations, etc.; (4) Traumatic such as foreign body or lung contusion;
and (5) Hemorrhagic Hemorrhagic diathesis or anti-coagulant therapy. (Principles of Internal
Medicines by Harrison). All of the above causes of hemoptysis are neither related in any way to the
nature of the duties of the deceased as a teacher, nor to his working conditions.
As correctly ruled by the GSIS, the nature and conditions of the deceased's employment could
have just aggravated his physical condition. Aggravation of a pre-existing illness is, however, no
longer compensable under the present Employees' Compensation Program. (pp. 17-19, ECC rec.
in ECC Case No. 0137).
WE find the petition meritorious.
In the case before US, it is undisputed that petitioner's son, the late Rolando M. Villones, who was employed on July 3,
1972 as a secondary public school teacher in Dayhagan Barrio High School in Bongabon, Oriental Mindoro, died on
September 2, 1975, which was a working day. The cause of his death, according to the municipal health officer of
Bongabon, Dr. Fernando B. Viloria, was PTB, hemoptysis (p. 2, ECC rec.).
The records reveal that the deceased, prior to his employment as a teacher, was physically and mentally fit to perform his
duties (p. 5, ECC rec.). While employed as such teacher, he went on sick leave from December 4 to 20, 1972 (16 days).
Dr. Fernando B. Viloria, who was his attending physician, diagnosed his sickness as "influenza" (p. 6, ECC rec.).
Considering, however, the limited medical facilities in municipal health centers, it is possible that what was diagnosed as
influenza was actually pulmonary tuberculosis in its incipient stage, which may not be easily detected by physical
examination but by extensive x-ray. In the case of Batangas Transportation Co. vs. Perez and WCC (11 SCRA 793
[19641) WE stated that: "... Tuberculosis is not an instantaneous disease, it is an imperceptible germ disease that feeds
on the lungs whose presence in the body cannot be easily discerned and its incipient stage may not be readily discovered"
(see also Bautista vs. WCC, L-43027, January 31, 1979; Lorenzo vs. WCC, 85 SCRA 440, 441 [1978], emphasis
supplied).
By the very nature of tuberculosis, the deceased could not have instantly acquired such illness on September 2, 1975 and
died as a result of that on the same day. And the observation of petitioner's counsel that "pulmonary tuberculosis does not
belong to that category of sickness which is instantaneously fatal to its victim upon contracting thereof, but takes months, if
not years, before the person afflicted dies" is realistic as it is confirmed by several compensation cases that reached this
Court (p. 5, Petition for Review, p. 11, rec.). Thus, in the case of Manila Railroad Company vs. Ferrer & WCC (109 Phil.
716 [1960]). the employee was found to be afflicted with moderately advance PTB on November 19, 1953 but he was able
continue working until a few months before he died of said illness on January 27, 1958, or a period of more than four
(4)years from the time he contracted the disease. In Vda. de Calado vs. WCC (38 SCRA 567 [1971]), the employee was
diagnosed to be suffering from advanced PTB on December 18, 1959 and died two and a half (2 1/2) years later on June
4, 1962. In Lambino vs. Del Rosario (6 SCRA 1017 [1962]), the employee was found to be afflicted with a far advanced
PTB in April, 1952 but he was able to work briefly up to the time of his death, by reason of said illness, on May 7, 1953, or
after thirteen (13) months. In another case, the employee was treated for pulmonary tuberculosis from December, 1952
until he died of said illness on January 23, 1954 or thirteen (13) months later (National Development Company vs. WCC,
19 SCRA 861 [1967]). And in Manila Railroad Company vs. Vda. de Chavez (12 SCRA 142 [1964]), the employee was
confined in the hospital from November 22 to December 2, 1956 for PTB, after which he was able to work briefly only to be
confined again, and he died of the aforesaid illness on August 10, 1957 or nine (9) months later.
Considering, therefore, the undisputed nature of the deceased's employment as certified by the principal of Bongabon
(South District); and in addition, the fact that he had plenty of homework to do after his regular working hours such as
preparing the lesson plans for the next day's classes, correcting test papers and making various school reports and in
doing all these, he would usually stay up-late at night; that with a meager monthly pay of P397.60, with his parents, a
sister, and two (2) brothers depending on him for support, he could barely afford to buy and eat good food; and that as
such teacher, it becomes inevitable for him to be in constant contact with students and other types of people who may be
afflicted with PTB, which is a highly communicable disease, it is not surprising that he should contract tuberculosis, so that
from December 4 to 20, 1972, only five (5) months after he was employed as a teacher, he was forced to go on sick leave
by reason of the aforestated illness. When he was able to resume work, he was again exposed to same working
conditions thus aggravating his illness until he suddenly died on September 2, 1975 of sever hemoptysis due to PTB as
certified by Dr. Fernando B. Viloria.
It has been clearly shown that the deceased did not only engage in teaching such academic subjects as chemistry,
science, history and English but he was also assigned to such co-curricular courses like green revolution projects, youth
civic action programs (YCAP), and in such other community works as helping organize purok and barangay youth clubs.
And as noted in the decision of the Employees' Compensation Commission, one of the causes of hemoptysis a
condition which includes both blood-streaked sputum or gross bleeding coming from the respiratory tract is
tuberculosis, extending in severity from the smallest amount to death from rapid exsanguination (pp. 17-19, ECC rec.).
Likewise, in her findings submitted to the Employees' Compensation Commission, Dr. Mercia C. Abrenica, a medical
officer of the Employees' Compensation Commission, stated that of the inflammatory causes of hemoptysis, tuberculosis
is still the major cause, and that while PTB is the most probable diagnosis in the instant case, it can be considered
occupational only when the occupation involves exposure to source or sources of tuberculosis infection (p. 10, ECC rec.).
Consequently, in the instant case, the cause of action accrued as early as December 4, 1972 when the late Rolando
Villones contracted his illness and continued to run until September 2, 1975 when he died by reason thereof; hence, the
cause of action accrued before the effectivity of the New Labor Code. And WE ruled in Corales vs. ECC, et al. (L-44063,
February 27, 1979) that the governing law in the prosecution of the cause of action which accrued prior to the effectivity of
a new law on the same subject matter, shall be the law in force at the time of the accrual of said cause of action. Since the
Workmen's Compensation Act was then in full force and effect, then it should govern in the case at bar. It is based on the
principle that t. hqw
Rights accrued and vested while a statute was in force ordinarily survive its repeal.
The repeal of a statute does not operate to impair or otherwise affect rights which have been
vested or accrued while the statute was in force. This rule is applicable alike to rights acquired
under contracts and to rights of action to recover damages for torts. Where a new statute continues
in force provisions of an old statute, although in form it repeals then at the moment of its passage,
a right of action created by the old statute is not thereby destroyed ... (82 CJS 1010).
It must be pointed out that as early as December 4 to 20, 1972, the deceased Villones was already entitled to disability
benefits under Section 14 of the Workmen's Compensation Act, as amended, because his illness prevented him from
reporting to his work for more than three (3) days; and under such a situation, his employer (Department of Education and
Culture) was obligated under Section 37 of the same Act to file a notice of illness with the Workmen's Compensation
Commission and to manifest its intention of whether or not to controvert his right to compensation. There is no showing
that respondent employer has complied with its duty under Sections 37 and 45 of the Workmen, s Compensation Act, as
amended, of filing with the Workmen's Compensation Commission a notice of the initial illness of its employee, Rolando
Villones, as well as his subsequent death on September 2, 1975, and of controverting the right to compensation within the
prescribed period of fourteen (14) days from the occurrence of the disability or death, or within ten (10) days from
knowledge thereof.
It cannot be denied that respondent employer had knowledge of the illness of the deceased Villones because he applied
for sick leave from December 4 to 20, 1972 which presumably was acted upon by his principal and/or supervisor, they
being his immediate superiors (Gallemit vs. Republic, 75 SCRA 382, 383, 385, 386 [1977]). Likewise, respondent
employer had knowledge of the subsequent death of Rolando Villones on September 2, 1975 because he died on a
regular working day; hence, the fact of death could not have escaped the notice or knowledge of the principal and/or
supervisor. Such knowledge of the illness and death of Rolando Villones by the principal and/or supervisor, being agents
of the respondent employer, is deemed in law as knowledge of the respondent employer, which is sufficient to charge it
with its duty under Sections 37 and 45 of the Workmen's Compensation Act, as amended (Gallemit vs. Republic, supra;
MRR vs. WCC, 10 SCRA 665 [1961]). WE have repeatedly ruled that failure to comply with said sections constitutes a
renunciation of the employer's right to controvert the claim, resulting in the waiver of all its non-jurisdictional defenses,
such as the non-compensability of the claim (Paraiso vs. Castelo-Sotto, 85 SCRA 419 [1978]; Republic vs. WCC, 85
SCRA 107 [1978]; Lamco vs. WCC, 84 SCRA 401 [1978]; and Canonero vs. WCC, 81 SCRA 712 [1978]).
Moreover, this Court, in consistently holding that the disease of tuberculosis is an occupational disease or work connected
in such occupations as that of a teacher, laborer, driver, land inspector and such other occupations, hence compensable,
aptly stated and WE quote: "Medical science has it that tuberculosis as an ailment is latent in man regardless of his age,
sex and occupation. When given favorable conditions, this disease becomes active and prominent. Some of these
favorable conditions are: too much physical exertion without the corresponding rest; exposure to excessive heat and cold;
lack of good food as to weaken the body constituents and contact with people suffering from tuberculosis ..." (Corales vs.
ECC, supra).
It is heartening to note that the ECC, in its Resolutions Nos. 233 and 432, respectively dated March 16, 1977 and July 20,
1977, adopted a more compassionate construction of the otherwise restrictive provisions of the new Labor Code (PD No.
442, as amended by PD Nos. 570-A, 626, 643, 823, 849, 850, 865-A, 891, 928, 1389) by including in the list of
compensable ailments and diseases, cardiovascular disease which comprehends myocardial infarction, pneumonia and
bronchial asthma (Sepulveda vs. ECC, et al., L-46290, Aug. 25, 1978).
Finally, the grant of compensation benefits to herein petitioner will not be impaired even if he (petitioner himself entertains
doubts as to the real cause of the death of his son when he stated that no autopsy was made nor was there anybody who
actually examined the deceased prior to or after his death. At any rate, as aforestate, pulmonary tuberculosis is
concededly one of the causes of hemoptysis. Even unexplained deaths, the occasion and circumstances of which are
unknown or undertermined, are usually deemed compensable, as long as there is some basis in the facts for inferring a
work-connection, a casual relation between the death and the employment (Mulingtapang vs. WCC, 80 SCRA 610 [1977];
Castro vs. WCC, 75 SCRA 179 [1977]; ITEMCOP vs. Florzo, 16 SCRA 2104 [1966]). And, in case of doubt in the
implementation and interpretation of the provisions of the Labor Code, including its implementing rules and regulations,
the same shall be resolved in favor of the laborer (Art. 4, PD No. 442, as amended; Art. 1702, New Civil Code).
WHEREFORE, THE DECISION OF RESPONDENT EMPLOYEES' COMPENSATION COMMISSION IS HEREBY SET
ASIDE AND THE GOVERNMENT SERVICE INSURANCE SYSTEM IS HEREBY ORDERED
1. TO DAY HEREIN PETITIONER THE SUM OF SIX THOUSAND (P6,000.00) PESOS AS DEATH BENEFITS;
2. TO REFUND PETITIONER's MEDICAL AND HOSPITAL EXPENSES DULY SUPPORTED BY PROPER
3. TO PAY PETITIONER BURIAL EXPENSES IN THE AMOUNT OF TWO HUNDRED (P200.00) PESOS;
4. TO PAY SIX HUNDRED (P600.00) PESOS AS ATTORNEY' FEES; AND
5. TO PAY ADMINISTRATIVE COST.
SO ORDERED.

G.R. No. L-43390 February 28, 1977
ANTONIO GALLEMIT, petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, (Board of Liquidators) respondent.
Leoncio S. Solidum for petitioner.
Office of the Solicitor General, for respondent.

MARTIN, J .:
This is a petition for review
1
of the decision of the respondent Commission setting aside the decision of the Workmen's
Compensation Section, Regional Office No. 4, Manila awarding to petitioner the sum of P6,000.00 for his disability benefits and
the sum of P61.00 as decisional fees pursuant to Section 55 of the Workmen's Compensation Act.
Petitioner Antonio Gallemit was first employed with the respondent Republic of the Philippines (Board of Liquidators) on
June 30, 1955 as clerk-helper. From said position he was promoted to typist-clerk I, bookkeeper and Accountant I. In the
course of his employment with respondent Republic (Board of Liquidators), he was afflicted with pulmonary tuberculosis
which constrained him to apply for frequent sick leaves until such time that his rapidly deteriorating health forced him to
retire on September 15, 1972 at the age of 51 years old. His physician, Dr. Magdalena Reyes diagnosed his illness as
moderately advanced PTB. His salary when he retired was P494.00 a month.
On March 12, 1974 petitioner filed a claim for compensation benfits with the Workmen's Compensation Section, Regional
Office No. 4 (W.C.C. case No. RO4 150223). The claim was set for hearing and based on the evidence presented, the
hearing officer of the Regional Office rendered a decision on October 14, 1975 ordering the respondent Republic (Board of
Liquidators) to pay petitioner the sum of P6,000.00 as disability benefits and the sum of P61.00 as administrative fees.
The Solicitor General did not move to reconsider the decision of the hearing officer of the Regional Office. In fact on
November 7, 1975, the Assistant Solicitor General recommended payment of the disability benfits to petitioner as ordered
in the aforesaid decision.
Later on December 10, 1975, the Office of the Solicitor General filed a Petitioner for Relief from Judgment stating that
since the Office of the Solicitor General was not furnished a copy of the Notice of Sickness and Claim for Compensation,
the Regional Office did not acquire jurisdiction over the respondent Republic (board of Liquidators). It therefore prayed that
the decision of the Regional Office on October 14, 1975 be set aside for having been rendered without jurisdiction properly
acquired over the respondent Republic (Board of Liquidators).
On February 19, 1976, a decision of the respondent Commission was rendered setting aside the decision of the Regional
Office of October 14, 1975 and dismissing the claim of petitioner on the ground that the Notice of Sickness and claim for
compensation filed with the Regional Office was not transmitted to the Board of Liquidators and to the Office of the
Solicitor General.
Not satisfied with the ruling of the respondent Commission, petitioner has come to this Court raising the issue as to
whether or not the respondent Commission has committed a grave abuse of discretion in dismissing the claim of petitioner
for alleged lack of jurisdiction due to the failure of the Regional Office to transmit to the respondent Board of Liquidators a
copy of the Notice of Sickness and Claim for Compensation and to furnish the Solicitor General a copy of the said Notice
of Sickness and Claim for Compensation.
It is true that under Section 24 of the Workmen's Compensation Act
2
it is required that the Notice of Sickness and Claim for
Compensation be given to the employer but according to Section 27 of the same Act,
3
there is already sufficient notice so as not
to bar the proceeding even if there was a failure or delay in giving such notice to the employer provided it is shown that the
employer, his agent or representative had knowledge of the illness of the employee. In the case before Us, there can be no
dispute that the respondent has knowledge of the illness of the petitioner or that it was fully aware of the poor condition of his
health, because for several times petitioner had applied for sick leaves due to illness. Certainly, when the head of the
respondent office acted on his application for sick leaves, he must have been duly informed, and therefore, has knowledge of the
illness of the petitioner. There is here, no doubt, sufficient compliance with the requirements of Section 27 of the Workmen' s
Compensation Act regarding the giving of Notice of Sickness and Claim for Compensation to the employer.
But what is objected to is the fact that the Regional Office with whom petitioner has filed his claim for compensation did not
furnish a copy of the Notice of Claim to the respondent Republic (Board of Liquidators). It will be noted from Section 1,
Rule 8 of the Rules of the Workmen's Compensation Commission that:
Upon the filing of the claim the unit shall immediately transmit a copy thereof by personal delivery
or by registered mail to the employer who shall in a letter of transmittal be required to submit within
ten (10) days from notice, the report of the accident or illness of the claimant employee or the
deceased laborer, if no such report has as yet been submitted in accordance with the provisions of
Sections 37 and 47 of the "Act."
Then pursuant to a circular issued by the Workmen's Compensation Commission on January 22, 1973, it is so provided
that "In all claims for compensation against the Republic of the Philippines, the Chief of the Workmen's Compensation
Section or Unit shall see to it that a copy of the Notice and Claim for Compensation is transmitted to the Office of the
Solicitor General in his capacity as counsel for the National Government even if the claim is uncontroverted. Violation of
this mandatory requirement may subject the offices to administrative action as hinted in the case of Republic of the
Philippines (Department of Justice vs. WCC & Cleofe R. Azana, G.R. No. 29019, May 18, 1972). From the wordings of
both Section 1, Rule 8 of the Workmen's Compensation Commission and its Circular of January 22, 1973, what is required
is that a copy of the Notice of Sickness and Claim for Compensation be sent to the Solicitor General by the Unit or
Section. It is doubted whether the failure of the Unit or Section to comply with this requirement will render its decision
invalid. At most, it will subject the head of the unit or section to administrative action but it can't nullify its decision. To hold
that failure to send a copy of the Notice of Sickness and Claim for Compensation to the Solicitor General will render the
decision of the Regional Office null and void, will place the laborer at a disadvantage contrary to the avowed objectives of
Act 3428, as amended. As held in the Azana case, disregard by the officer concerned of the provisions of law governing
the transmittal of claims against the government shall not prejudice the claimant worker or employee.
4

IN VIEW OF THE FOREGOING, the judgment of the respondent Commission is hereby reversed and set aside and a new
one rendered ordering respondent Republic (Board of Liquidators)
(1) To pay petitioner the sum of P6,000.00 as disability compensation benefits;
(2) To reimburse petitioner of her medical and hospital expenses which are supported by receipts of payment;
(3) To pay petitioner's lawyer the amount of P600.00 as qqqitttoi qqqneys fees; and
(4) To pay the amount of P61.00 as administrative fees. Without pronouncement as to costs.
SO ORDERED.
Teehankee, (Chairman), Makasiar, and Muoz Palma, JJ., concur.

Footnotes
1 Treated as a Special Civil Action
2 See. 24. Notice of the inquiry and claim for compensation.No Compensation proceeding under
this Act shall prosper unless the employer has been given notice of the injury as soon as possible
after the same was received, and unless a claim for compensation was made not later than two
months after the date of the injury, or in case of death, not later than three months after death,
regardless of whether or not compensation was claimed by the employee himself. Such notice may
be given and such claim made by any person considering himself entitled to the compensation or
by any other person in his behalf. In case medical, surgical and hospital services and supplies
have been furnished voluntarily by the employer, notice of the injury within the time limit above
mentioned shall not be necessary, and if the employer has voluntarily made the compensation
payments, the claim for compensation to be made within the time limits above established shall no
longer be necessary.
3 Sec. 27. Sufficient notice.Any notice given in accordance with the provisions of section twenty-
five of this Act shall not be considered as invalid or insufficient by reason of any incorrectness in
the statement of time, place, nature or cause of the injury or of anything else, unless it be shown
that the employer has been actually ni is informed respecting the injury. Failure to or delay in giving
notice shall not be a bar to the proceeding herein provided for, if it shown that the employer, his
agent or representative had knowledge of the accident or that the employer did not suffer by such
delay or failure.
4 Wifredo Bael, etc. et al. vs. Workmen's Compensation Commission, (Republic of the Philippines)
G.R. No. L-42255, January 31, 1977.















Tano vs Socrates GR. 110249 21 August 1997 Ponente: Davide, Jr.
Petitioners: Tano et al Respondents: Gov Socrates of Palawan et al
Facts:
The Sangguniang Panlungsod ng Puerto Princesa enacted Ordinance No15-92 which banned all live fish and lobster
outside Puerto Princesa city from January 1 to January 1998. The ordinance provided that it shall be unlawful for any
person or any business enterprise or company to ship out from Puerto Princesa to any point of destination wither via
aircraft or sea craft of any live fish and lobster except sea bass, catfish, mudfish, and milkfish fries. To implement the
said ordinance, Office Order No.23 was enacted which provide that any person engaged or intending to engage any
business, trade, occupation, calling or profession or having his possession any of the articles which a permit is
required to had to obtain first a mayor's permit. On 19, 1993, the Sangguniang Panlalawigan, Provincial Government
of Palawan enacted Resolution 33 which prohibited the catching, gathering, possessing, buying, selling and shipment
of the marine coral dwelling aquatic organisms, to wit: Mameng, Suno, Panter or Senorita, Lobster below 200 grams
and spawning, Taklobo, Mother Pearl Oysters, and Giant Clams for a period of 5 years in and coming from Palawan.
The respondents implemented the said ordinances. Petitioners Alfredo Tano et al were charged criminally in the
Municipal Circuit Trial Court. Without seeking redress form the concerned local government units, prosecutor's office
and courts, petitioner directly invoked our original jurisdiction by filing this petition. The petitioners contended that:
(1) the ordinances deprived them of due process of law, their livelihood and unduly restricted they form the practice
of their trade, in violation of section 2, Art. XII of the 1987 Constitution; (2) were conducted before the enactment of
Office Order No. 23 contained no regulation nor condition under which the Mayor's Permit could be granted or
denied; (3)Ordinance NO.2 of Palawan altogether prohibited the catching, gathering, possession, buying, selling and
shipping of live marine coral dwelling organisms, without any distinction whether it was caught or gated through the
lawful fishing method; (4) the Ordinance No. 2 was null and void , the criminal cases based thereon against the
petitioners have to be dismissed. On 15 June 1993, the OSG was required to comment on the petition. The
Respondents Governor Socrates and the members of the Sangguniang defended the validity of the said Ordinance No
2 as a valid exercise of the Provincial Governments power under the general welfare clause of RA 7160. They
claimed that in the exercise of such powers, the Province of Palawan had the right and responsibility to insure that the
remaining coral reefs, where fish dwell, within its territory remain healthy for the future generation. They also further
maintained that there was no violation of the due process and equal protection clauses because public hearings for the
Ordinance were conducted. On 25 October 1993, petitioners filed an urgent plea for the issuance of TRO, claiming
that despite the pendency of this case, Branch 50 of the RTC was bent on proceeding with the criminal case against
petitioners. Acting on the said plea, the judge ceased and desist from proceeding with the arraignment and pretrial. On
22 April 1997, the Department of Agriculture and the Bureau of Fisheries and Aquatic Resources were required to
comment. There were two sets of petitioners in this case. The first composed of Alfredo Tan et al; the second is
composed of 77 all of whom are natural persons who claim to be fishermen, except the Airline Shippers Association
of Palawan. The primary concern of the first petitioner is to prevent the prosecution, trial and determination of the
criminal cases until the constitutionality or legality of the princes they allegedly violated shall have been resolved. As
to the second set of petitioners, the instant case is one for Declaratory Relief.
Issue: Whether or not the Ordinances in question are unconstitutional. Held: No
In light then of the principles of decentralization and devolution enshrined in the LGC and the powers granted therein
to local government units under Section 16 (the General Welfare Clause), and under Sections 149, 447(a) (1) (vi), 458
(a) (1) (vi) and 468 (a) (1) (vi), which unquestionably involve the exercise of police power, the validity of the
questioned Ordinances cannot be doubted. General Welfare .

Every local government unit shall exercise the powers expressly granted, those necessarily implied there from, as
well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government
units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and
safety, Enhance the right of the people to a balanced ecology , encourage and support the development of appropriate
and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and
social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort
and convenience of their inhabitants. (emphasis supplied).It is clear to the Court that both Ordinances have two
principal objectives or purposes: (1) to establish a "closed season" for the species of fish or aquatic animals covered
therein for a period of five years; and (2) to protect the coral in the marine waters of the City of Puerto Princesa and
the Province of Palawan from further destruction due to illegal fishing activities. It imposes upon the Sangguniang
banyan, the Sangguniang panlungsod, and the Sangguniang Panlalawigan the duty to enact ordinances to "[p]protect
the environment and impose appropriate penalties for acts which endanger the environment such as dynamite fishing
and other forms of destructive fishing . . . and such other activities which result in pollution, acceleration of
eutrophication of rivers and lakes or of ecological imbalance."

The petition is dismissed. Sections 2 and 7 of Article XIII provide: Sec. 2. The promotion of social justice shall
include the commitment to create economic opportunities based on freedom of initiative and self-reliance.xxx xxx
xxxSec. 7. The State shall protect the rights of subsistence fishermen, especially of local communities, to the
preferential use of the communal marine and fishing resources, both inland and offshore. It shall provide support to
such fishermen through appropriate technology and research, adequate financial, production, and marketing
assistance, and other services. The State shall also protect, develop, and conserve such resources. The protection shall
extend to offshore fishing grounds of subsistence fishermen against foreign intrusion. Fish workers shall receive a just
share from their labor in the utilization of marine and fishing resources.











G.R. No. 110249 August 21, 1997
ALFREDO TANO, BALDOMERO TANO, DANILO TANO, ROMUALDO TANO, TEOCENES MIDELLO, ANGEL DE
MESA, EULOGIO TREMOCHA, FELIPE ONGONION, JR., ANDRES LINIJAN, ROBERT LIM, VIRGINIA LIM, FELIMON
DE MESA, GENEROSO ARAGON, TEODORICO ANDRE, ROMULO DEL ROSARIO, CHOLITO ANDRE, ERICK
MONTANO, ANDRES OLIVA, VITTORIO SALVADOR, LEOPOLDO ARAGON, RAFAEL RIBA, ALEJANDRO
LEONILA, JOSE DAMACINTO, RAMIRO MANAEG, RUBEN MARGATE, ROBERTO REYES, DANILO PANGARUTAN,
NOE GOLPAN, ESTANISLAO ROMERO, NICANOR DOMINGO, ROLDAN TABANG, ADRIANO TABANG, FREDDIE
SACAMAY, MIGUEL TRIMOCHA, PACENCIO LABABIT, PABLO H. OMPAD, CELESTINO A. ABANO, ALLAN
ALMODAI, BILLY D. BARTOLAY, ALBINO D. LIQUE, MECHOR J. LAYSON, MELANIE AMANTE, CLARO E. YATOC,
MERGELDO B. BALDEO, EDGAR M. ALMASETA, JOSELITO MANAEG, LIBERATO ANDRADA, JR., ROBERTO
BERRY, RONALD VILLANUEVA, EDUARDO VALMORIA, WILFREDO MENDOZA, NAPOLEON BABANGGA,
ROBERTO TADEPA, RUBEN ASINGUA, SILVERIO GABO, JERRY ROMERO, DAVID PANGGARUTAN, DANIEL
PANGGARUTAN, ROMEO AGAWIN, FERNANDO EQUIZ, DITO LEQUIZ, RONILO MODERABLE, BENEDICTO
TORRES, ROSITO A. VALDEZ, CRESENCIO A. SAYANG, NICOMEDES S. ACOSTA, ERENEO A. SEGARINO, JR.,
WILFREDO A. RAUTO, DIOSDADO A. ACOSTA, BONIFACIO G. SISMO, TACIO ALUBA, DANIEL B. BATERZAL,
ELISEO YBAEZ, DIOSDADO E. HANCHIC, EDDIE ESCALICAS, ELEAZAR B. BATERZAL, DOMINADOR HALICHIC,
ROOSEVELT RISMO-AN, ROBERT C. MERCADER, TIRSO ARESGADO, DANIEL CHAVEZ, DANILO CHAVEZ,
VICTOR VILLAROEL, ERNESTO C. YBAEZ, ARMANDO T. SANTILLAN, RUDY S. SANTILLAN, JODJEN
ILUSTRISIMO, NESTOR SALANGRON, ALBERTO SALANGRON, ROGER L. ROXAS, FRANCISCO T. ANTICANO,
PASTOR SALANGRON, BIENVENIDO SANTILLAN, GILBUENA LADDY, FIDEL BENJAMIN, JOVELITO BELGANO,
HONEY PARIOL, ANTONIO SALANGRON, NICASIO SALANGRON, & AIRLINE SHIPPERS ASSOCIATION OF
PALAWAN, petitioners,
vs.
HON. GOV. SALVADOR P. SOCRATES, MEMBERS OF SANGGUNIANG PANLALAWIGAN OF PALAWAN, namely,
VICE-GOVERNOR JOEL T. REYES, JOSE D. ZABALA, ROSALINO R. ACOSTA, JOSELITO A. CADLAON, ANDRES
R. BAACO, NELSON P. PENEYRA, CIPRIANO C. BARROMA, CLARO E. ORDINARIO, ERNESTO A. LLACUNA,
RODOLFO C. FLORDELIZA, GILBERT S. BAACO, WINSTON G. ARZAGA, NAPOLEON F. ORDONEZ and GIL P.
ACOSTA, CITY MAYOR EDWARD HAGEDORN, MEMBERS OF SANGGUNIANG PANLUNGSOD NG PUERTO
PRINCESA, ALL MEMBERS OF BANTAY DAGAT, MEMBERS OF PHILIPPINE NATIONAL POLICE OF PALAWAN,
PROVINCIAL AND CITY PROSECUTORS OF PALAWAN and PUERTO PRINCESA CITY, and ALL JUDGES OF
PALAWAN, REGIONAL, MUNICIPAL AND METROPOLITAN, respondents.

DAVIDE, JR., J .:
Petitioners caption their petition as one for "Certiorari, Injunction With Preliminary and Mandatory Injunction, with Prayer
for Temporary Restraining Order" and pray that this Court: (1) declare as unconstitutional: (a) Ordinance No. 15-92, dated
15 December 1992, of the Sangguniang Panglungsod of Puerto Princesa; (b) Office Order No. 23, Series of 1993, dated
22 January 1993, issued by Acting City Mayor Amado L. Lucero of Puerto Princesa City; and (c) Resolution No. 33,
Ordinance No. 2, Series of 1993, dated 19 February 1993, of the Sangguniang Panlalawigan of Palawan; (2) enjoin the
enforcement thereof; and (3) restrain respondents Provincial and City Prosecutors of Palawan and Puerto Princesa City
and Judges of the Regional Trial Courts, Metropolitan Trial Courts 1 and Municipal Circuit Trial Courts in Palawan from assuming jurisdiction
over and hearing cases concerning the violation of the Ordinances and of the Office Order.
More appropriately, the petition is, and shall be treated as, a special civil action for certiorari and prohibition.
The following is petitioners' summary of the factual antecedents giving rise to the petition:
1. On December 15, 1992, the Sangguniang Panlungsod ng Puerto Princesa City enacted Ordinance No. 15-92
which took effect on January 1, 1993 entitled: "AN ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH
AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998 AND
PROVIDING EXEMPTIONS, PENALTIES AND FOR OTHER PURPOSES THEREOF", the full text of which reads
as follows:
Sec. 1. Title of the Ordinance. This Ordinance is entitled: AN ORDINANCE BANNING THE
SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM
JANUARY 1, 1993 TO JANUARY 1, 1998 AND PROVIDING EXEMPTIONS, PENALTIES AND
FOR OTHER PURPOSES THEREOF.
Sec. 2. Purpose, Scope and Coverage. To effectively free our City Sea Waters from Cyanide
and other Obnoxious substance[s], and shall cover all persons and/or entities operating within and
outside the City of Puerto Princesa who is are (sic) directly or indirectly in the business or shipment
of live fish and lobster outside the City.
Sec. 3. Definition of terms. For purpose of this Ordinance the following are hereby defined:
A. SEA BASS A kind of fish under the family of Centropomidae,
better known as APAHAP;
B. CATFISH A kind of fish under the family of Plotosidae, better
known as HITO-HITO;
C. MUDFISH A kind of fish under the family of Orphicaphalisae
better known as DALAG;
D. ALL LIVE FISH All alive, breathing not necessarily moving of
all specie[s] use[d] for food and for aquarium purposes.
E. LIVE LOBSTER Several relatively, large marine crusteceans
[sic] of the genus Homarus that are alive and breathing not
necessarily moving.
Sec. 4. It shall be unlawful [for] any person or any business enterprise or company to ship out from
Puerto Princesa City to any point of destination either via aircraft or seacraft of any live fish and
lobster except SEA BASS, CATFISH, MUDFISH, AND MILKFISH FRIES.
Sec. 5. Penalty Clause. Any person/s and or business entity violating this Ordinance shall be
penalized with a fine of not more than P5,000.00 or imprisonment of not more than twelve (12)
months, cancellation of their permit to do business in the City of Puerto Princesa or all of the herein
stated penalties, upon the discretion of the court.
Sec. 6. If the owner and/or operator of the establishment found violating the provisions of this
ordinance is a corporation or a partnership, the penalty prescribed in Section 5 hereof shall be
imposed upon its president and/or General Manager or Managing Partner and/or Manager, as the
case maybe [sic].
Sec. 7. Any existing ordinance or any provision of any ordinance inconsistent to [sic] this ordinance
is deemed repealed.
Sec. 8. This Ordinance shall take effect on January 1, 1993.
SO ORDAINED.
xxx xxx xxx
2. To implement said city ordinance, then Acting City Mayor Amado L. Lucero issued Office Order No. 23, Series
of 1993 dated January 22, 1993 which reads as follows:
In the interest of public service and for purposes of City Ordinance No. PD 426-14-74, otherwise known as "AN
ORDINANCE REQUIRING ANY PERSON ENGAGED OR INTENDING TO ENGAGE IN ANY BUSINESS,
TRADE, OCCUPATION, CALLING OR PROFESSION OR HAVING IN HIS POSSESSION ANY OF THE
ARTICLES FOR WHICH A PERMIT IS REQUIRED TO BE HAD, TO OBTAIN FIRST A MAYOR'S PERMIT" and
"City Ordinance No. 15-92, AN ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER
OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998, you are hereby
authorized and directed to check or conduct necessary inspections on cargoes containing live fish and lobster
being shipped out from the Puerto Princesa Airport, Puerto Princesa Wharf or at any port within the jurisdiction of
the City to any point of destinations [sic] either via aircraft or seacraft.
The purpose of the inspection is to ascertain whether the shipper possessed the required Mayor's Permit issued
by this Office and the shipment is covered by invoice or clearance issued by the local office of the Bureau of
Fisheries and Aquatic Resources and as to compliance with all other existing rules and regulations on the matter.
Any cargo containing live fish and lobster without the required documents as stated herein must be held for proper
disposition.
In the pursuit of this Order, you are hereby authorized to coordinate with the PAL Manager, the PPA Manager, the
local PNP Station and other offices concerned for the needed support and cooperation. Further, that the usual
courtesy and diplomacy must be observed at all times in the conduct of the inspection.
Please be guided accordingly.
xxx xxx xxx
3. On February 19, 1993, the Sangguniang Panlalawigan, Provincial Government of Palawan enacted Resolution
No. 33 entitled: "A RESOLUTION PROHIBITING THE CATCHING, GATHERING, POSSESSING, BUYING,
SELLING AND SHIPMENT OF LIVE MARINE CORAL DWELLING AQUATIC ORGANISMS, TO WIT: FAMILY:
SCARIDAE (MAMENG), EPINE PHELUS FASCIATUS (SUNO). CROMILEPTES ALTIVELIS (PANTHER OR
SENORITA), LOBSTER BELOW 200 GRAMS AND SPAWNING, TRIDACNA GIGAS (TAKLOBO), PINCTADA
MARGARITEFERA (MOTHER PEARL, OYSTERS, GIANT CLAMS AND OTHER SPECIES), PENAEUS
MONODON (TIGER PRAWN-BREEDER SIZE OR MOTHER), EPINEPHELUS SUILLUS (LOBA OR GREEN
GROUPER) AND FAMILY: BALISTIDAE (TROPICAL AQUARIUM FISHES) FOR A PERIOD FIVE (5) YEARS IN
AND COMING FROM PALAWAN WATERS", the full text of which reads as follows:
WHEREAS, scientific and factual researches [sic] and studies disclose that only five (5) percent of
the corals of our province remain to be in excellent condition as [a] habitat of marine coral dwelling
aquatic organisms;
WHEREAS, it cannot be gainsaid that the destruction and devastation of the corals of our province
were principally due to illegal fishing activities like dynamite fishing, sodium cyanide fishing, use of
other obnoxious substances and other related activities;
WHEREAS, there is an imperative and urgent need to protect and preserve the existence of the
remaining excellent corals and allow the devastated ones to reinvigorate and regenerate
themselves into vitality within the span of five (5) years;
WHEREAS, Sec. 468, Par. 1, Sub-Par. VI of the [sic] R.A. 7160 otherwise known as the Local
Government Code of 1991 empowers the Sangguniang Panlalawigan to protect the environment
and impose appropriate penalties [upon] acts which endanger the environment such as dynamite
fishing and other forms of destructive fishing, among others.
NOW, THEREFORE, on motion by Kagawad Nelson P. Peneyra and upon unanimous decision of
all the members present;
Be it resolved as it is hereby resolved, to approve Resolution No. 33, Series of 1993 of the
Sangguniang Panlalawigan and to enact Ordinance No. 2 for the purpose, to wit:
ORDINANCE NO. 2
Series of 1993
BE IT ORDAINED BY THE SANGGUNIANG PANLALAWIGAN IN SESSION ASSEMBLED:
Sec. 1. TITLE This Ordinance shall be known as an "Ordinance Prohibiting the catching,
gathering, possessing, buying, selling and shipment of live marine coral dwelling aquatic
organisms, to wit: 1. Family: Scaridae (Mameng), 2. Epinephelus Fasciatus (Suno) 3. Cromileptes
altivelis (Panther or Senorita), lobster below 200 grams and spawning), 4. Tridacna Gigas
(Taklobo), 5. Pinctada Margaretefera (Mother Pearl, Oysters, Giant Clams and other species), 6.
Penaeus Monodon (Tiger Prawn-breeder size or mother), 7. Epinephelus Suillus (Loba or Green
Grouper) and 8. Family: Balistidae (T[r]opical Aquarium Fishes) for a period of five (5) years in and
coming from Palawan Waters.
Sec. II. PRELIMINARY CONSIDERATIONS
1. Sec. 2-A (Rep. Act 7160). It is hereby declared, the policy of the state that the territorial and
political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable
them to attain their fullest development as self-reliant communities and make them more effective
partners in the attainment of national goals. Toward this end, the State shall provide for [a] more
responsive and accountable local government structure instituted through a system of
decentralization whereby local government units shall be given more powers, authority,
responsibilities and resources.
2. Sec. 5-A (R.A. 7160). Any provision on a power of [a] local Government Unit shall be liberally
interpreted in its favor, and in case of doubt, any question thereon shall be resolved in favor of
devolution of powers and of the lower government units. "Any fair and reasonable doubts as to the
existence of the power shall be interpreted in favor of the Local Government Unit concerned."
3. Sec. 5-C (R.A. 7160). The general welfare provisions in this Code shall be liberally interpreted to
give more powers to local government units in accelerating economic development and upgrading
the quality of life for the people in the community.
4. Sec. 16 (R.A. 7160). General Welfare. Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate,
or incidental for its efficient and effective governance; and those which are essential to the
promotion of the general welfare.
Sec. III. DECLARATION OF POLICY. It is hereby declared to be the policy of the Province of
Palawan to protect and conserve the marine resources of Palawan not only for the greatest good of
the majority of the present generation but with [the] proper perspective and consideration of [sic]
their prosperity, and to attain this end, the Sangguniang Panlalawigan henceforth declares that is
(sic) shall be unlawful for any person or any business entity to engage in catching, gathering,
possessing, buying, selling and shipment of live marine coral dwelling aquatic organisms as
enumerated in Section 1 hereof in and coming out of Palawan Waters for a period of five (5) years;
Sec. IV. PENALTY CLAUSE. Any person and/or business entity violating this Ordinance shall
be penalized with a fine of not more than Five Thousand Pesos (P5,000.00), Philippine Currency,
and/or imprisonment of six (6) months to twelve (12) months and confiscation and forfeiture of
paraphernalias [sic] and equipment in favor of the government at the discretion of the Court;
Sec. V. SEPARABILITY CLAUSE. If for any reason, a Section or provision of this Ordinance
shall be held as unconditional [sic] or invalid, it shall not affect the other provisions hereof.
Sec. VI. REPEALING CLAUSE. Any existing Ordinance or a provision of any ordinance
inconsistent herewith is deemed modified, amended or repealed.
Sec. VII. EFFECTIVITY This Ordinance shall take effect ten (10) days after its publication.
SO ORDAINED.
xxx xxx xxx
4. The respondents implemented the said ordinances, Annexes "A" and "C" hereof thereby depriving all the
fishermen of the whole province of Palawan and the City of Puerto Princesa of their only means of livelihood and
the petitioners Airline Shippers Association of Palawan and other marine merchants from performing their lawful
occupation and trade;
5. Petitioners Alfredo Tano, Baldomero Tano, Teocenes Midello, Angel de Mesa, Eulogio Tremocha, and Felipe
Ongonion, Jr. were even charged criminally under criminal case no. 93-05-C in the 1st Municipal Circuit Trial Court
of Cuyo-Agutaya-Magsaysay, an original carbon copy of the criminal complaint dated April 12, 1993 is hereto
attached as Annex "D"; while xerox copies are attached as Annex "D" to the copies of the petition;
6. Petitioners Robert Lim and Virginia Lim, on the other hand, were charged by the respondent PNP with the
respondent City Prosecutor of Puerto Princess City, a xerox copy of the complaint is hereto attached as Annex "E";
Without seeking redress from the concerned local government units, prosecutor's office and courts, petitioners directly
invoked our original jurisdiction by filing this petition on 4 June 1993. In sum, petitioners contend that:
First, the Ordinances deprived them of due process of law, their livelihood, and unduly restricted them from the practice of
their trade, in violation of Section 2, Article XII and Sections 2 and 7 of Article XIII of the 1987 Constitution.
Second, Office Order No. 23 contained no regulation nor condition under which the Mayor's permit could be granted or
denied; in other words, the Mayor had the absolute authority to determine whether or not to issue the permit.
Third, as Ordinance No. 2 of the Province of Palawan "altogether prohibited the catching, gathering, possession, buying,
selling and shipping of live marine coral dwelling organisms, without any distinction whether it was caught or gathered
through lawful fishing method," the Ordinance took away the right of petitioners-fishermen to earn their livelihood in lawful
ways; and insofar as petitioners-members of Airline Shippers Association are concerned, they were unduly prevented from
pursuing their vocation and entering "into contracts which are proper, necessary, and essential to carry out their business
endeavors to a successful conclusion."
Finally, as Ordinance No. 2 of the Sangguniang Panlalawigan is null and void, the criminal cases based thereon against
petitioners Tano and the others have to be dismissed.
In the Resolution of 15 June 1993 we required respondents to comment on the petition, and furnished the Office of the
Solicitor General with a copy thereof.
In their comment filed on 13 August 1993, public respondents Governor Socrates and Members of the Sangguniang
Panlalawigan of Palawan defended the validity of Ordinance No. 2, Series of 1993, as a valid exercise of the Provincial
Government's power under the general welfare clause (Section 16 of the Local Government Code of 1991 [hereafter,
LGC]), and its specific power to protect the environment and impose appropriate penalties for acts which endanger the
environment, such as dynamite fishing and other forms of destructive fishing under Section 447 (a) (1) (vi), Section 458 (a)
(1) (vi), and Section 468 (a) (1) (vi), of the LGC. They claimed that in the exercise of such powers, the Province of
Palawan had "the right and responsibility . . . to insure that the remaining coral reefs, where fish dwells [sic], within its
territory remain healthy for the future generation." The Ordinance, they further asserted, covered only live marine coral
dwelling aquatic organisms which were enumerated in the ordinance and excluded other kinds of live marine aquatic
organisms not dwelling in coral reefs; besides the prohibition was for only five (5) years to protect and preserve the pristine
coral and allow those damaged to regenerate.
Aforementioned respondents likewise maintained that there was no violation of the due process and equal protection
clauses of the Constitution. As to the former, public hearings were conducted before the enactment of the Ordinance
which, undoubtedly, had a lawful purpose and employed reasonable means; while as to the latter, a substantial distinction
existed "between a fisherman who catches live fish with the intention of selling it live, and a fisherman who catches live
fish with no intention at all of selling it live," i.e., "the former uses sodium cyanide while the latter does not." Further, the
Ordinance applied equally to all those belonging to one class.
On 25 October 1993 petitioners filed an Urgent Plea for the Immediate Issuance of a Temporary Restraining Order,
claiming that despite the pendency of this case, Branch 50 of the Regional Trial Court of Palawan was bent on proceeding
with Criminal Case No. 11223 against petitioners Danilo Tano, Alfredo Tano, Eulogio Tremocha, Romualdo Tano,
Baldomero Tano, Andres Linijan and Angel de Mesa for violation of Ordinance No. 2 of the Sangguniang Panlalawigan of
Palawan. Acting on said plea, we issued on 11 November 1993 a temporary restraining order directing Judge Angel Miclat
of said court to cease and desist from proceeding with the arraignment and pre-trial of Criminal Case No. 11223.
On 12 July 1994, we excused the Office of the Solicitor General from filing a comment, considering that as claimed by said
office in its Manifestation of 28 June 1994, respondents were already represented by counsel.
The rest of the respondents did not file any comment on the petition.
In the resolution of 15 September 1994, we resolved to consider the comment on the petition as the Answer, gave due
course to the petition and required the parties to submit their respective memoranda. 2
On 22 April 1997 we ordered impleaded as party respondents the Department of Agriculture and the Bureau of Fisheries
and Aquatic Resources and required the Office of the Solicitor General to comment on their behalf. But in light of the
latter's motion of 9 July 1997 for an extension of time to file the comment which would only result in further delay, we
dispensed with said comment.
After due deliberation on the pleadings filed, we resolved to dismiss this petition for want of merit, and on 22 July 1997,
assigned it to the ponente to write the opinion of the Court.
I
There are actually two sets of petitioners in this case. The first is composed of Alfredo Tano, Baldomero Tano, Danilo
Tano, Romualdo Tano, Teocenes Midello, Angel de Mesa, Eulogio Tremocha, Felipe Ongonion, Jr., Andres Linijan, and
Felimon de Mesa, who were criminally charged with violating Sangguniang Panlalawigan Resolution No. 33 and
Ordinance No. 2, Series of 1993, of the Province of Palawan, in Criminal Case No. 93-05-C of the 1st Municipal Circuit
Trial Court (MCTC) of Palawan; 3 and Robert Lim and Virginia Lim who were charged with violating City Ordinance No. 15-92 of Puerto Princesa City and
Ordinance No. 2, Series of 1993, of the Province of Palawan before the Office of the City Prosecutor of Puerto Princesa. 4 All of them, with the exception of Teocenes
Midello, Felipe Ongonion, Jr., Felimon de Mesa, Robert Lim and Virginia Lim, are likewise the accused in Criminal Case No. 11223 for the violation of Ordinance No. 2 of
the Sangguniang Panlalawigan of Palawan, pending before Branch 50 of the Regional Trial Court of Palawan. 5
The second set of petitioners is composed of the rest of the petitioners numbering seventy-seven (77), all of whom, except
the Airline Shippers Association of Palawan an alleged private association of several marine merchants are natural
persons who claim to be fishermen.
The primary interest of the first set of petitioners is, of course, to prevent the prosecution, trial and determination of the
criminal cases until the constitutionality or legality of the Ordinances they allegedly violated shall have been resolved. The
second set of petitioners merely claim that being fishermen or marine merchants, they would be adversely affected by the
ordinance's.
As to the first set of petitioners, this special civil for certiorari must fail on the ground of prematurity amounting to a lack of
cause of action. There is no showing that said petitioners, as the accused in the criminal cases, have filed motions to
quash the informations therein and that the same were denied. The ground available for such motions is that the facts
charged therein do not constitute an offense because the ordinances in question are unconstitutional. 6 It cannot then be said that
the lower courts acted without or in excess of jurisdiction or with grave abuse of discretion to justify recourse to the extraordinary remedy of certiorari or prohibition. It must
further be stressed that even if petitioners did file motions to quash, the denial thereof would not forthwith give rise to a cause of action under Rule 65 of the Rules of Court.
The general rule is that where a motion to quash is denied, the remedy therefrom is not certiorari, but for the party aggrieved thereby to go to trial without prejudice to
reiterating special defenses involved in said motion, and if, after trial on the merits an adverse decision is rendered, to appeal therefrom in the manner authorized by law. 7
And, even where in an exceptional circumstance such denial may be the subject of a special civil action for certiorari, a motion for reconsideration must have to be filed to
allow the court concerned an opportunity to correct its errors, unless such motion may be dispensed with because of existing exceptional circumstances. 8 Finally, even if a
motion for reconsideration has been filed and denied, the remedy under Rule 65 is still unavailable absent any showing of the grounds provided for in Section 1 thereof. 9
For obvious reasons, the petition at bar does not, and could not have, alleged any of such grounds.
As to the second set of petitioners, the instant petition is obviously one for DECLARATORY RELIEF, i.e., for a declaration
that the Ordinances in question are a "nullity . . . for being unconstitutional."
10
As such, their petition must likewise fail, as this
Court is not possessed of original jurisdiction over petitions for declaratory relief even if only questions of law are involved,
11
it
being settled that the Court merely exercises appellate jurisdiction over such petitions.
12

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

This concurrence of jurisdiction is not . . . to be taken as according to parties seeking any of the writs an absolute
unrestrained freedom of choice of the court to which application therefor will be directed. There is after all hierarchy of
courts. That hierarchy is determinative of the venue of appeals, and should also serve as a general determinant of the
appropriate forum for petitions for the extraordinary writs. A becoming regard for that judicial hierarchy most certainly
indicates that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed with the
Regional Trial Court, and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court's
original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor,
clearly and specifically set out in the petition. This is established policy. It is a policy necessary to prevent inordinate
demands upon the Court's time and attention which are better devoted to those matters within its exclusive jurisdiction,
and to prevent further over-crowding of the Court's docket. . . .
The Court feels the need to reaffirm that policy at this time, and to enjoin strict adherence thereto in the light of
what it perceives to be a growing tendency on the part of litigants and lawyers to have their applications for the so-
called extraordinary writs, and sometimes even their appeals, passed upon and adjudicated directly and
immediately by the highest tribunal of the land. . . .
In Santiago v. Vasquez,
14
this Court forcefully expressed that the propensity of litigants and lawyers to disregard the hierarchy
of courts must be put to a halt, not only because of the imposition upon the precious time of this Court, but also because of the
inevitable and resultant delay, intended or otherwise, in the adjudication of the case which often has to be remanded or referred
to the lower court, the proper forum under the rules of procedure, or as better equipped to resolve the issues since this Court is
not a trier of facts. We reiterated "the judicial policy that this Court will not entertain direct resort to it unless the redress desired
cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify availment of a remedy
within and calling for the exercise of [its] primary jurisdiction."
III
Notwithstanding the foregoing procedural obstacles against the first set of petitioners, we opt to resolve this case on its
merits considering that the lifetime of the challenged Ordinances is about to end. Ordinance No. 15-92 of the City of
Puerto Princesa is effective only up to 1 January 1998, while Ordinance No. 2 of the Province of Palawan, enacted on 19
February 1993, is effective for only five (5) years. Besides, these Ordinances were undoubtedly enacted in the exercise of
powers under the new LGC relative to the protection and preservation of the environment and are thus novel and of
paramount importance. No further delay then may be allowed in the resolution of the issues raised.
It is of course settled that laws (including ordinances enacted by local government units) enjoy the presumption of
constitutionality.
15
To overthrow this presumption, there must be a clear and unequivocal breach of the Constitution, not merely
a doubtful or argumentative contradiction. In short, the conflict with the Constitution must be shown beyond reasonable doubt.
16

Where doubt exists, even if well-founded, there can be no finding of unconstitutionality. To doubt is to sustain.
17

After a scrutiny of the challenged Ordinances and the provisions of the Constitution petitioners claim to have been
violated, we find petitioners' contentions baseless and so hold that the former do not suffer from any infirmity, both under
the Constitution and applicable laws.
Petitioners specifically point to Section 2, Article XII and Sections 2 and 7, Article XIII of the Constitution as having been
transgressed by the Ordinances.
The pertinent portion of Section 2 of Article XII reads:
Sec. 2. . . .
The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive economic
zone, and reserve its use and enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as
cooperative fish farming, with priority to subsistence fishermen and fishworkers in rivers, lakes, bays, and lagoons.
Sections 2 and 7 of Article XIII provide:
Sec. 2. The promotion of social justice shall include the commitment to create economic opportunities
based on freedom of initiative and self-reliance.
xxx xxx xxx
Sec. 7. The State shall protect the rights of subsistence fishermen, especially of local communities, to the
preferential use of the communal marine and fishing resources, both inland and offshore. It shall provide
support to such fishermen through appropriate technology and research, adequate financial, production,
and marketing assistance, and other services. The State shall also protect, develop, and conserve such
resources. The protection shall extend to offshore fishing grounds of subsistence fishermen against foreign
intrusion. Fishworkers shall receive a just share from their labor in the utilization of marine and fishing
resources.
There is absolutely no showing that any of the petitioners qualifies as a subsistence or marginal fisherman. In their
petition, petitioner Airline Shippers Association of Palawan is self-described as "a private association composed of
Marine Merchants;" petitioners Robert Lim and Virginia Lim, as "merchants;" while the rest of the petitioners claim
to be "fishermen," without any qualification, however, as to their status.
Since the Constitution does not specifically provide a definition of the terms "subsistence" or "marginal" fishermen,

18
they should be construed in their general and ordinary sense. A marginal fisherman is an individual engaged in fishing
whose margin of return or reward in his harvest of fish as measured by existing price levels is barely sufficient to yield a
profit or cover the cost of gathering the fish,
19
while a subsistence fisherman is one whose catch yields but the
irreducible minimum for his livelihood.
20
Section 131(p) of the LGC (R.A. No. 7160) defines a marginal farmer or
fisherman as "an individual engaged in subsistence farming or fishing which shall be limited to the sale, barter or
exchange of agricultural or marine products produced by himself and his immediate family." It bears repeating that
nothing in the record supports a finding that any petitioner falls within these definitions.
Besides, Section 2 of Article XII aims primarily not to bestow any right to subsistence fishermen, but to lay stress
on the duty of the State to protect the nation's marine wealth. What the provision merely recognizes is that the
State may allow, by law, cooperative fish farming, with priority to subsistence fishermen and fishworkers in rivers,
lakes, bays and lagoons. Our survey of the statute books reveals that the only provision of law which speaks of a
preferential right of marginal fishermen is Section 149 of the LGC, which pertinently provides:
Sec. 149. Fishery Rentals, Fees and Charges. . . .
(b) The sangguniang bayan may:
(1) Grant fishery privileges to erect fish corrals, oyster, mussels or other
aquatic beds or bangus fry areas, within a definite zone of the municipal
waters, as determined by it: Provided, however, That duly registered
organizations and cooperatives of marginal fishermen shall have the
preferential right to such fishery privileges . . . .
In a Joint Administrative Order No. 3 dated 25 April 1996, the Secretary of the Department of Agriculture and the
Secretary of the Department of Interior and Local Government prescribed guidelines concerning the preferential
treatment of small fisherfolk relative to the fishery right mentioned in Section 149. This case, however, does not
involve such fishery right.
Anent Section 7 of Article XIII, it speaks not only of the use of communal marine and fishing resources, but of their
protection, development and conservation. As hereafter shown, the ordinances in question are meant precisely to
protect and conserve our marine resources to the end that their enjoyment may be guaranteed not only for the
present generation, but also for the generations to come.
The so-called "preferential right" of subsistence or marginal fishermen to the use of marine resources is not at all
absolute. In accordance with the Regalian Doctrine, marine resources belong to the State, and, pursuant to the
first paragraph of Section 2, Article XII of the Constitution, their "exploration, development and utilization . . . shall
be under the full control and supervision of the State." Moreover, their mandated protection, development and
conservation as necessarily recognized by the framers of the Constitution, imply certain restrictions on whatever
right of enjoyment there may be in favor of anyone. Thus, as to the curtailment of the preferential treatment of
marginal fishermen, the following exchange between Commissioner Francisco Rodrigo and Commissioner Jose
F.S. Bengzon, Jr., took place at the plenary session of the Constitutional Commission:
MR. RODRIGO:
Let us discuss the implementation of this because I would not raise the hopes of our
people, and afterwards fail in the implementation. How will this be implemented? Will there
be a licensing or giving of permits so that government officials will know that one is really a
marginal fisherman? Or if policeman say that a person is not a marginal fisherman, he can
show his permit, to prove that indeed he is one.
MR. BENGZON:
Certainly, there will be some mode of licensing insofar as this is concerned and this
particular question could be tackled when we discuss the Article on Local Governments
whether we will leave to the local governments or to Congress on how these things will be
implemented. But certainly, I think our congressmen and our local officials will not be bereft
of ideas on how to implement this mandate.
xxx xxx xxx
MR. RODRIGO:
So, once one is licensed as a marginal fisherman, he can go anywhere in the Philippines
and fish in any fishing grounds.
MR. BENGZON:
Subject to whatever rules and regulations and local laws that may be passed, may be
existing or will be passed.
21
(emphasis supplied)
What must likewise be borne in mind is the state policy enshrined in the Constitution regarding the duty of the
State to protect and advance the right of the people to a balanced and healthful ecology in accord with the rhythm
and harmony of nature.
22
On this score, in Oposa v. Factoran,
23
this Court declared:
While the right to a balanced and healthful ecology is to be found under the Declaration of Principles the
State Policies and not under the Bill of Rights, it does not follow that it is less important than any of the civil
and political rights enumerated in the latter. Such a right belongs to a different category of rights altogether
for it concerns nothing less than self-preservation and self-perpetuation aptly and fittingly stressed by
the petitioners the advancement of which may even be said to predate all governments and
constitutions. As a matter of fact, these basic rights need not even be written in the Constitution for they
are assumed to exist from the inception of humankind. If they are now explicitly mentioned in the
fundamental charter, it is because of the well-founded fear of its framers that unless the rights to a
balanced and healthful ecology and to health are mandated as state policies by the Constitution itself,
thereby highlighting their continuing importance and imposing upon the state a solemn obligation to
preserve the first and protect and advance the second, the day would not be too far when all else would be
lost not only for the present generation, but also for those to come generations which stand to inherit
nothing but parched earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it a correlative duty to refrain from impairing the
environment. . . .
The LGC provisions invoked by private respondents merely seek to give flesh and blood to the right of the people
to a balanced and healthful ecology. In fact, the General Welfare Clause, expressly mentions this right:
Sec. 16. General Welfare. Every local government unit shall exercise the powers expressly granted,
those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient
and effective governance, and those which are essential to the promotion of the general welfare. Within
their respective territorial jurisdictions, local government units shall ensure and support, among other
things, the preservation and enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of appropriate and self-reliant
scientific and technological capabilities, improve public morals, enhance economic prosperity and social
justice, promote full employment among their residents, maintain peace and order, and preserve the
comfort and convenience of their inhabitants. (emphasis supplied).
Moreover, Section 5(c) of the LGC explicitly mandates that the general welfare provisions of the LGC "shall be
liberally interpreted to give more powers to the local government units in accelerating economic development and
upgrading the quality of life for the people of the community."
The LGC vests municipalities with the power to grant fishery privileges in municipal waters and impose rentals,
fees or charges therefor; to penalize, by appropriate ordinances, the use of explosives, noxious or poisonous
substances, electricity, muro-ami, and other deleterious methods of fishing; and to prosecute any violation of the
provisions of applicable fishery laws.
24
Further, the sangguniang bayan, the sangguniang panlungsod and the
sangguniang panlalawigan are directed to enact ordinances for the general welfare of the municipality and its
inhabitants, which shall include, inter alia, ordinances that "[p]rotect the environment and impose appropriate penalties
for acts which endanger the environment such as dynamite fishing and other forms of destructive fishing . . . and such
other activities which result in pollution, acceleration of eutrophication of rivers and lakes, or of ecological
imbalance."
25

Finally, the centerpiece of LGC is the system of decentralization
26
as expressly mandated by the Constitution.
27

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

One of the devolved powers enumerated in the section of the LGC on devolution is the enforcement of fishery laws
in municipal waters including the conservation of mangroves.
30
This necessarily includes the enactment of
ordinances to effectively carry out such fishery laws within the municipal waters.
The term "municipal waters," in turn, includes not only streams, lakes, and tidal waters within the municipality, not
being the subject of private ownership and not comprised within the national parks, public forest, timber lands,
forest reserves, or fishery reserves, but also marine waters included between two lines drawn perpendicularly to
the general coastline from points where the boundary lines of the municipality or city touch the sea at low tide and
a third line parallel with the general coastline and fifteen kilometers from
it.
31
Under P.D. No. 704, the marine waters included in municipal waters is limited to three nautical miles from the
general coastline using the above perpendicular lines and a third parallel line.
These "fishery laws" which local government units may enforce under Section 17(b)(2)(i) in municipal waters
include: (1) P.D. No. 704; (2) P.D. No. 1015 which, inter alia, authorizes the establishment of a "closed season" in
any Philippine water if necessary for conservation or ecological purposes; (3) P.D. No. 1219 which provides for the
exploration, exploitation, utilization and conservation of coral resources; (4) R.A. No. 5474, as amended by B.P.
Blg. 58, which makes it unlawful for any person, association or corporation to catch or cause to be caught, sell,
offer to sell, purchase, or have in possession any of the fish specie called gobiidae or "ipon" during closed season;
and (5) R.A. No. 6451 which prohibits and punishes electrofishing, as well as various issuances of the BFAR.
To those specifically devolved insofar as the control and regulation of fishing in municipal waters and the
protection of its marine environment are concerned, must be added the following:
1. Issuance of permits to construct fish cages within municipal waters;
2. Issuance of permits to gather aquarium fishes within municipal waters;
3. Issuance of permits to gather kapis shells within municipal waters;
4. Issuance of permits to gather/culture shelled mollusks within municipal waters;
5. Issuance of licenses to establish seaweed farms within municipal waters;
6. Issuance of licenses to establish culture pearls within municipal waters;
7. Issuance of auxiliary invoice to transport fish and fishery products; and
8. Establishment of "closed season" in municipal waters.
These functions are covered in the Memorandum of Agreement of 5 April 1994 between the Department of
Agriculture and the Department of Interior and Local Government.
In light then of the principles of decentralization and devolution enshrined in the LGC and the powers granted
therein to local government units under Section 16 (the General Welfare Clause), and under Sections 149, 447(a)
(1) (vi), 458 (a) (1) (vi) and 468 (a) (1) (vi), which unquestionably involve the exercise of police power, the validity
of the questioned Ordinances cannot be doubted.
Parenthetically, we wish to add that these Ordinances find full support under R.A. No. 7611, otherwise known as
the Strategic Environmental Plan (SEP) for Palawan Act, approved on 19 June 1992. This statute adopts a
"comprehensive framework for the sustainable development of Palawan compatible with protecting and enhancing
the natural resources and endangered environment of the province," which "shall serve to guide the local
government of Palawan and the government agencies concerned in the formulation and implementation of plans,
programs and projects affecting said province."
32

At this time then, it would be appropriate to determine the relation between the assailed Ordinances and the
aforesaid powers of the Sangguniang Panlungsod of the City of Puerto Princesa and the Sangguniang
Panlalawigan of the Province of Palawan to protect the environment. To begin, we ascertain the purpose of the
Ordinances as set forth in the statement of purposes or declaration of policies quoted earlier.
It is clear to the Court that both Ordinances have two principal objectives or purposes: (1) to establish a "closed
season" for the species of fish or aquatic animals covered therein for a period of five years; and (2) to protect the
coral in the marine waters of the City of Puerto Princesa and the Province of Palawan from further destruction due
to illegal fishing activities.
The accomplishment of the first objective is well within the devolved power to enforce fishery laws in municipal
waters, such as P.D. No. 1015, which allows the establishment of "closed seasons." The devolution of such power
has been expressly confirmed in the Memorandum of Agreement of 5 April 1994 between the Department of
Agriculture and the Department of Interior and Local Government.
The realization of the second objective clearly falls within both the general welfare clause of the LGC and the
express mandate thereunder to cities and provinces to protect the environment and impose appropriate penalties
for acts which endanger the environment.
33

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

The prohibition against catching live fish stems, in part, from the modern phenomenon of live-fish trade which
entails the catching of so-called exotic species of tropical fish, not only for aquarium use in the West, but also for
"the market for live banquet fish [which] is virtually insatiable in ever more affluent Asia.
37
These exotic species are
coral-dwellers, and fishermen catch them by "diving in shallow water with corraline habitats and squirting sodium
cyanide poison at passing fish directly or onto coral crevices; once affected the fish are immobilized [merely stunned]
and then scooped by hand."
38
The diver then surfaces and dumps his catch into a submerged net attached to the skiff.
Twenty minutes later, the fish can swim normally. Back on shore, they are placed in holding pens, and within a few
weeks, they expel the cyanide from their system and are ready to be hauled. They are then placed in saltwater tanks or
packaged in plastic bags filled with seawater for shipment by air freight to major markets for live food fish.
39
While the
fish are meant to survive, the opposite holds true for their former home as "[a]fter the fisherman squirts the cyanide, the
first thing to perish is the reef algae, on which fish feed. Days later, the living coral starts to expire. Soon the reef loses
its function as habitat for the fish, which eat both the algae and invertebrates that cling to the coral. The reef becomes an
underwater graveyard, its skeletal remains brittle, bleached of all color and vulnerable to erosion from the pounding of
the waves."
40
It has been found that cyanide fishing kills most hard and soft corals within three months of repeated
application.
41

The nexus then between the activities barred by Ordinance No. 15-92 of the City of Puerto Princesa and the
prohibited acts provided in Ordinance No. 2, Series of 1993 of the Province of Palawan, on one hand, and the use
of sodium cyanide, on the other, is painfully obvious. In sum, the public purpose and reasonableness of the
Ordinances may not then be controverted.
As to Office Order No. 23, Series of 1993, issued by Acting City Mayor Amado L. Lucero of the City of Puerto
Princesa, we find nothing therein violative of any constitutional or statutory provision. The Order refers to the
implementation of the challenged ordinance and is not the Mayor's Permit.
The dissenting opinion of Mr. Justice Josue N. Bellosillo relies upon the lack of authority on the part of the
Sangguniang Panglungsod of Puerto Princesa to enact Ordinance No. 15, Series of 1992, on the theory that the
subject thereof is within the jurisdiction and responsibility of the Bureau of Fisheries and Aquatic Resources
(BFAR) under P.D. No. 704, otherwise known as the Fisheries Decree of 1975; and that, in any event, the
Ordinance is unenforceable for lack of approval by the Secretary of the Department of Natural Resources (DNR),
likewise in accordance with P.D. No. 704.
The majority is unable to accommodate this view. The jurisdiction and responsibility of the BFAR under P.D. No.
704, over the management, conservation, development, protection, utilization and disposition of all fishery and
aquatic resources of the country is not all-encompassing. First, Section 4 thereof excludes from such jurisdiction
and responsibility municipal waters, which shall be under the municipal or city government concerned, except
insofar as fishpens and seaweed culture in municipal centers are concerned. This section provides, however, that
all municipal or city ordinances and resolutions affecting fishing and fisheries and any disposition thereunder shall
be submitted to the Secretary of the Department of Natural Resources for appropriate action and shall have full
force and effect only upon his approval.
42

Second, it must at once be pointed out that the BFAR is no longer under the Department of Natural Resources
(now Department of Environment and Natural Resources). Executive Order No. 967 of 30 June 1984 transferred
the BFAR from the control and supervision of the Minister (formerly Secretary) Of Natural Resources to the
Ministry of Agriculture and Food (MAF) and converted it into a mere staff agency thereof, integrating its functions
with the regional offices of the MAF.
In Executive Order No. 116 of 30 January 1987, which reorganized the MAF, the BFAR was retained as an
attached agency of the MAF. And under the Administrative Code of 1987,
43
the BFAR is placed under the Title
concerning the Department of Agriculture.
44

Therefore, it is incorrect to say that the challenged Ordinance of the City of Puerto Princesa is invalid or
unenforceable because it was not approved by the Secretary of the DENR. If at all, the approval that should be
sought would be that of the Secretary of the Department of Agriculture. However, the requirement of approval by
the Secretary of the Department of Agriculture (not DENR) of municipal ordinances affecting fishing and fisheries
in municipal waters has been dispensed with in view of the following reasons:
(1) Section 534 (Repealing Clause) of the LGC expressly repeals or amends Sections 16 and 29 of P.D. No. 704
45

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

In closing, we commend the Sangguniang Panlungsod of the City of Puerto Princesa and Sangguniang
Panlalawigan of the Province of Palawan for exercising the requisite political will to enact urgently needed
legislation to protect and enhance the marine environment, thereby sharing in the herculean task of arresting the
tide of ecological destruction. We hope that other local government units shall now be roused from their lethargy
and adopt a more vigilant stand in the battle against the decimation of our legacy to future generations. At this
time, the repercussions of any further delay in their response may prove disastrous, if not, irreversible.
WHEREFORE, the instant petition is DISMISSED for lack of merit and the temporary restraining order issued on
11 November 1993 is LIFTED.
No pronouncement as to costs.
SO ORDERED.













City of Manila vs. Laguio
G.R. No. 118127, April 12, 2005

Due Process
Equal Protection
Requisites of a Valid Exercise of Police Power by LGU

FACTS:

The private respondent, Malate Tourist Development Corporation (MTOC) is a corporation engaged in the business of operating
hotels, motels, hostels, and lodgin 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.

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 unde the Code had no power to enact the Ordinance and is therefore ultra vires null and void.
[G.R. No. 118127. April 12, 2005]
CITY OF MANILA vs. HON. PERFECTO A.S. LAGUIO, JR.

I know only that what is moral is what you feel good after and what is immoral is what you feel bad
after.
Ernest Hermingway
Death in the Afternoon, Ch. 1
It is a moral and political axiom that any dishonorable act, if performed by oneself, is less immoral than
if performed by someone else, who would be well-intentioned in his dishonesty.
J. Christopher Gerald
Bonaparte in Egypt, Ch. I
The Courts commitment to the protection of morals is secondary to its fealty to the fundamental law of
the land. It is foremost a guardian of the Constitution but not the conscience of individuals. And if it need
be, the Court will not hesitate to make the hammer fall, and heavily in the words of Justice Laurel, and
uphold the constitutional guarantees when faced with laws that, though not lacking in zeal to promote
morality, nevertheless fail to pass the test of constitutionality.
The pivotal issue in this Petition
[1]
under Rule 45 (then Rule 42) of the Revised Rules on Civil Procedure
seeking the reversal of the Decision
[2]
in Civil Case No. 93-66511 of the Regional Trial Court (RTC) of
Manila, Branch 18 (lower court),
[3]
is the validity of Ordinance No. 7783 (the Ordinance) of the City of
Manila.
[4]

The antecedents are as follows:
Private respondent Malate Tourist Development Corporation (MTDC) is a corporation engaged in the
business of operating hotels, motels, hostels and lodging houses.
[5]
It built and opened Victoria Court in
Malate which was licensed as a motel although duly accredited with the Department of Tourism as a
hotel.
[6]
On 28 June 1993, MTDC filed a Petition for Declaratory Relief with Prayer for a Writ of Preliminary
Injunction and/or Temporary Restraining Order
[7]
(RTC Petition) with the lower court impleading as
defendants, herein petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza, and the
members of the City Council of Manila (City Council). MTDC prayed that the Ordinance, insofar as it
includes motels and inns as among its prohibited establishments, be declared invalid and unconstitutional.
[8]

Enacted by the City Council
[9]
on 9 March 1993 and approved by petitioner City Mayor on 30 March
1993, the said Ordinance is entitled
AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF BUSINESSES
PROVIDING CERTAIN FORMS OF AMUSEMENT, ENTERTAINMENT, SERVICES AND FACILITIES IN
THE ERMITA-MALATE AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR
OTHER PURPOSES.
[10]

The Ordinance is reproduced in full, hereunder:
SECTION 1. Any provision of existing laws and ordinances to the contrary notwithstanding, no person,
partnership, corporation or entity shall, in the Ermita-Malate area bounded by Teodoro M. Kalaw Sr.
Street in the North, Taft Avenue in the East, Vito Cruz Street in the South and Roxas Boulevard in the West,
pursuant to P.D. 499 be allowed or authorized to contract and engage in, any business providing
certain forms of amusement, entertainment, services and facilities where women are used as tools
in entertainment and which tend to disturb the community, annoy the inhabitants, and adversely
affect the social and moral welfare of the community, such as but not limited to:
1. Sauna Parlors
2. Massage Parlors
3. Karaoke Bars
4. Beerhouses
5. Night Clubs
6. Day Clubs
7. Super Clubs
8. Discotheques
9. Cabarets
10. Dance Halls
11. Motels
12. Inns
SEC. 2 The City Mayor, the City Treasurer or any person acting in behalf of the said officials are
prohibited from issuing permits, temporary or otherwise, or from granting licenses and accepting
payments for the operation of business enumerated in the preceding section.
SEC. 3. Owners and/or operator of establishments engaged in, or devoted to, the businesses
enumerated in Section 1 hereof are hereby given three (3) months from the date of approval of this
ordinance within which to wind up business operations or to transfer to any place outside of the
Ermita-Malate area or convert said businesses to other kinds of business allowable within the area,
such as but not limited to:
1. Curio or antique shop
2. Souvenir Shops
3. Handicrafts display centers
4. Art galleries
5. Records and music shops
6. Restaurants
7. Coffee shops
8. Flower shops
9. Music lounge and sing-along restaurants, with well-defined activities for wholesome family
entertainment that cater to both local and foreign clientele.
10. Theaters engaged in the exhibition, not only of motion pictures but also of cultural shows,
stage and theatrical plays, art exhibitions, concerts and the like.
11. Businesses allowable within the law and medium intensity districts as provided for in the
zoning ordinances for Metropolitan Manila, except new warehouse or open-storage depot, dock or yard,
motor repair shop, gasoline service station, light industry with any machinery, or funeral establishments.
SEC. 4. Any person violating any provisions of this ordinance, shall upon conviction, be
punished by imprisonment of one (1) year or fine of FIVE THOUSAND (P5,000.00) PESOS, or both, at
the discretion of the Court, PROVIDED, that in case of juridical person, the President, the General Manager,
or person-in-charge of operation shall be liable thereof; PROVIDED FURTHER, that in case of
subsequent violation and conviction, the premises of the erring establishment shall be closed and
padlocked permanently.
SEC. 5. This ordinance shall take effect upon approval.
Enacted by the City Council of Manila at its regular session today, March 9, 1993.
Approved by His Honor, the Mayor on March 30, 1993. (Emphasis supplied)
In the RTC Petition, MTDC argued that the Ordinance erroneously and improperly included in its
enumeration of prohibited establishments, motels and inns such as MTDCs Victoria Court considering that
these were not establishments for amusement or entertainment and they were not services or facilities
for entertainment, nor did they use women as tools for entertainment, and neither did they disturb the
community, annoy the inhabitants or adversely affect the social and moral welfare of the community.
[11]

MTDC further advanced that the Ordinance was invalid and unconstitutional for the following reasons:
(1) The City Council has no power to prohibit the operation of motels as Section 458 (a) 4 (iv)
[12]
of the Local
Government Code of 1991 (the Code) grants to the City Council only the power to regulate the
establishment, operation and maintenance of hotels, motels, inns, pension houses, lodging houses and
other similar establishments; (2) The Ordinance is void as it is violative of Presidential Decree (P.D.) No.
499
[13]
which specifically declared portions of the Ermita-Malate area as a commercial zone with certain
restrictions; (3) The Ordinance does not constitute a proper exercise of police power as the compulsory
closure of the motel business has no reasonable relation to the legitimate municipal interests sought to be
protected; (4) The Ordinance constitutes an ex post facto law by punishing the operation of Victoria Court
which was a legitimate business prior to its enactment; (5) The Ordinance violates MTDCs constitutional
rights in that: (a) it is confiscatory and constitutes an invasion of plaintiffs property rights; (b) the City
Council has no power to find as a fact that a particular thing is a nuisance per se nor does it have the
power to extrajudicially destroy it; and (6) The Ordinance constitutes a denial of equal protection under the
law as no reasonable basis exists for prohibiting the operation of motels and inns, but not pension houses,
hotels, lodging houses or other similar establishments, and for prohibiting said business in the Ermita-
Malate area but not outside of this area.
[14]

In their Answer
[15]
dated 23 July 1993, petitioners City of Manila and Lim maintained that the City
Council had the power to prohibit certain forms of entertainment in order to protect the social and moral
welfare of the community as provided for in Section 458 (a) 4 (vii) of the Local Government Code,
[16]

which reads, thus:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the
legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise
of the corporate powers of the city as provided for under Section 22 of this Code, and shall:
. . . .
(4) Regulate activities relative to the use of land, buildings and structures within the city in order to
promote the general welfare and for said purpose shall:
. . . .
(vii) Regulate the establishment, operation, and maintenance of any entertainment or amusement
facilities, including theatrical performances, circuses, billiard pools, public dancing schools, public
dance halls, sauna baths, massage parlors, and other places for entertainment or amusement; regulate
such other events or activities for amusement or entertainment, particularly those which tend to disturb
the community or annoy the inhabitants, or require the suspension or suppression of the same; or,
prohibit certain forms of amusement or entertainment in order to protect the social and moral welfare of
the community.
Citing Kwong Sing v. City of Manila,
[17]
petitioners insisted that the power of regulation spoken of in the
above-quoted provision included the power to control, to govern and to restrain places of exhibition and
amusement.
[18]

Petitioners likewise asserted that the Ordinance was enacted by the City Council of Manila to protect
the social and moral welfare of the community in conjunction with its police power as found in Article III,
Section 18(kk) of Republic Act No. 409,
[19]
otherwise known as the Revised Charter of the City of Manila
(Revised Charter of Manila)
[20]
which reads, thus:
ARTICLE III
THE MUNICIPAL BOARD
Section 18. Legislative powers. The Municipal Board shall have the following legislative powers:
(kk) To enact all ordinances it may deem necessary and proper for the sanitation and safety, the
furtherance of the prosperity, and the promotion of the morality, peace, good order, comfort,
convenience, and general welfare of the city and its inhabitants, and such others as may be necessary
to carry into effect and discharge the powers and duties conferred by this chapter; and to fix penalties
for the violation of ordinances which shall not exceed two hundred pesos fine or six months
imprisonment, or both such fine and imprisonment, for a single offense.
Further, the petitioners noted, the Ordinance had the presumption of validity; hence, private
respondent had the burden to prove its illegality or unconstitutionality.
[21]

Petitioners also maintained that there was no inconsistency between P.D. 499 and the Ordinance as
the latter simply disauthorized certain forms of businesses and allowed the Ermita-Malate area to remain a
commercial zone.
[22]
The Ordinance, the petitioners likewise claimed, cannot be assailed as ex post facto as
it was prospective in operation.
[23]
The Ordinance also did not infringe the equal protection clause and
cannot be denounced as class legislation as there existed substantial and real differences between the
Ermita-Malate area and other places in the City of Manila.
[24]

On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr. (Judge Laguio) issued an ex-parte
temporary restraining order against the enforcement of the Ordinance.
[25]
And on 16 July 1993, again in an
intrepid gesture, he granted the writ of preliminary injunction prayed for by MTDC.
[26]

After trial, on 25 November 1994, Judge Laguio rendered the assailed Decision, enjoining the
petitioners from implementing the Ordinance. The dispositive portion of said Decision reads:
[27]

WHEREFORE, judgment is hereby rendered declaring Ordinance No. 778[3], Series of 1993, of the
City of Manila null and void, and making permanent the writ of preliminary injunction that had been issued
by this Court against the defendant. No costs.
SO ORDERED.
[28]

Petitioners filed with the lower court a Notice of Appeal
[29]
on 12 December 1994, manifesting that they
are elevating the case to this Court under then Rule 42 on pure questions of law.
[30]

On 11 January 1995, petitioners filed the present Petition, alleging that the following errors were
committed by the lower court in its ruling: (1) It erred in concluding that the subject ordinance is ultra vires,
or otherwise, unfair, unreasonable and oppressive exercise of police power; (2) It erred in holding that the
questioned Ordinance contravenes P.D. 499
[31]
which allows operators of all kinds of commercial
establishments, except those specified therein; and (3) It erred in declaring the Ordinance void and
unconstitutional.
[32]

In the Petition and in its Memorandum,
[33]
petitioners in essence repeat the assertions they made before
the lower court. They contend that the assailed Ordinance was enacted in the exercise of the inherent and
plenary power of the State and the general welfare clause exercised by local government units provided for
in Art. 3, Sec. 18 (kk) of the Revised Charter of Manila and conjunctively, Section 458 (a) 4 (vii) of the
Code.
[34]
They allege that the Ordinance is a valid exercise of police power; it does not contravene P.D. 499;
and that it enjoys the presumption of validity.
[35]

In its Memorandum
[36]
dated 27 May 1996, private respondent maintains that the Ordinance is ultra
vires and that it is void for being repugnant to the general law. It reiterates that the questioned Ordinance is
not a valid exercise of police power; that it is violative of due process, confiscatory and amounts to an
arbitrary interference with its lawful business; that it is violative of the equal protection clause; and that it
confers on petitioner City Mayor or any officer unregulated discretion in the execution of the Ordinance
absent rules to guide and control his actions.
This is an opportune time to express the Courts deep sentiment and tenderness for the Ermita-Malate
area being its home for several decades. A long-time resident, the Court witnessed the areas many turn of
events. It relished its glory days and endured its days of infamy. Much as the Court harks back to the
resplendent era of the Old Manila and yearns to restore its lost grandeur, it believes that the Ordinance is
not the fitting means to that end. The Court is of the opinion, and so holds, that the lower court did not err
in declaring the Ordinance, as it did, ultra vires and therefore null and void.
The Ordinance is so replete with constitutional infirmities that almost every sentence thereof violates a
constitutional provision. The prohibitions and sanctions therein transgress the cardinal rights of persons
enshrined by the Constitution. The Court is called upon to shelter these rights from attempts at rendering
them worthless.
The tests of a valid ordinance are well established. A long line of decisions has held that for an
ordinance to be valid, it must not only be within the corporate powers of the local government unit to enact
and must be passed according to the procedure prescribed by law, it must also conform to the following
substantive requirements: (1) must not contravene the Constitution or any statute; (2) must not be unfair or
oppressive; (3) must not be partial or discriminatory; (4) must not prohibit but may regulate trade; (5) must
be general and consistent with public policy; and (6) must not be unreasonable.
[37]

Anent the first criterion, ordinances shall only be valid when they are not contrary to the Constitution
and to the laws.
[38]
The Ordinance must satisfy two requirements: it must pass muster under the test of
constitutionality and the test of consistency with the prevailing laws. That ordinances should be
constitutional uphold the principle of the supremacy of the Constitution. The requirement that the
enactment must not violate existing law gives stress to the precept that local government units are able to
legislate only by virtue of their derivative legislative power, a delegation of legislative power from the
national legislature. The delegate cannot be superior to the principal or exercise powers higher than those
of the latter.
[39]

This relationship between the national legislature and the local government units has not been
enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy. The
national legislature is still the principal of the local government units, which cannot defy its will or modify or
violate it.
[40]

The Ordinance was passed by the City Council in the exercise of its police power, an enactment of the
City Council acting as agent of Congress. Local government units, as agencies of the State, are endowed
with police power in order to effectively accomplish and carry out the declared objects of their creation.
[41]

This delegated police power is found in Section 16 of the Code, known as the general welfare clause, viz:
SECTION 16. General Welfare.Every local government unit shall exercise the powers expressly
granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its
efficient and effective governance, and those which are essential to the promotion of the general welfare.
Within their respective territorial jurisdictions, local government units shall ensure and support, among other
things, the preservation and enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of appropriate and self-reliant
scientific and technological capabilities, improve public morals, enhance economic prosperity and social
justice, promote full employment among their residents, maintain peace and order, and preserve the
comfort and convenience of their inhabitants.
Local government units exercise police power through their respective legislative bodies; in this case,
the sangguniang panlungsod or the city council. The Code empowers the legislative bodies to enact
ordinances, approve resolutions and appropriate funds for the general welfare of the
province/city/municipality and its inhabitants pursuant to Section 16 of the Code and in the proper exercise
of the corporate powers of the province/city/ municipality provided under the Code.
[42]
The inquiry in this
Petition is concerned with the validity of the exercise of such delegated power.
The Ordinance contravenes the Constitution
The police power of the City Council, however broad and far-reaching, is subordinate to the
constitutional limitations thereon; and is subject to the limitation that its exercise must be reasonable and
for the public good.
[43]
In the case at bar, the enactment of the Ordinance was an invalid exercise of
delegated power as it is unconstitutional and repugnant to general laws.
The relevant constitutional provisions are the following:
SEC. 5. The maintenance of peace and order, the protection of life, liberty, and property, and the promotion
of the general welfare are essential for the enjoyment by all the people of the blessings of democracy.
[44]

SEC. 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental
equality before the law of women and men.
[45]

SEC. 1. No person shall be deprived of life, liberty or property without due process of law, nor shall any
person be denied the equal protection of laws.
[46]

Sec. 9. Private property shall not be taken for public use without just compensation.
[47]

A. The Ordinance infringes the Due Process Clause
The constitutional safeguard of due process is embodied in the fiat (N)o person shall be deprived of
life, liberty or property without due process of law. . . .
[48]

There is no controlling and precise definition of due process. It furnishes though a standard to which
governmental action should conform in order that deprivation of life, liberty or property, in each appropriate
case, be valid. This standard is aptly described as a responsiveness to the supremacy of reason,
obedience to the dictates of justice,
[49]
and as such it is a limitation upon the exercise of the police power.
[50]

The purpose of the guaranty is to prevent governmental encroachment against the life, liberty and
property of individuals; to secure the individual from the arbitrary exercise of the powers of the government,
unrestrained by the established principles of private rights and distributive justice; to protect property from
confiscation by legislative enactments, from seizure, forfeiture, and destruction without a trial and
conviction by the ordinary mode of judicial procedure; and to secure to all persons equal and impartial
justice and the benefit of the general law.
[51]

The guaranty serves as a protection against arbitrary regulation, and private corporations and
partnerships are persons within the scope of the guaranty insofar as their property is concerned.
[52]

This clause has been interpreted as imposing two separate limits on government, usually called
procedural due process and substantive due process.
Procedural due process, as the phrase implies, refers to the procedures that the government must
follow before it deprives a person of life, liberty, or property. Classic procedural due process issues are
concerned with what kind of notice and what form of hearing the government must provide when it takes a
particular action.
[53]

Substantive due process, as that phrase connotes, asks whether the government has an adequate
reason for taking away a persons life, liberty, or property. In other words, substantive due process looks to
whether there is a sufficient justification for the governments action.
[54]
Case law in the United States (U.S.)
tells us that whether there is such a justification depends very much on the level of scrutiny used.
[55]
For
example, if a law is in an area where only rational basis review is applied, substantive due process is met
so long as the law is rationally related to a legitimate government purpose. But if it is an area where strict
scrutiny is used, such as for protecting fundamental rights, then the government will meet substantive due
process only if it can prove that the law is necessary to achieve a compelling government purpose.
[56]

The police power granted to local government units must always be exercised with utmost observance
of the rights of the people to due process and equal protection of the law. Such power cannot be exercised
whimsically, arbitrarily or despotically
[57]
as its exercise is subject to a qualification, limitation or restriction
demanded by the respect and regard due to the prescription of the fundamental law, particularly those
forming part of the Bill of Rights. Individual rights, it bears emphasis, may be adversely affected only to the
extent that may fairly be required by the legitimate demands of public interest or public welfare.
[58]
Due
process requires the intrinsic validity of the law in interfering with the rights of the person to his life, liberty
and property.
[59]

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.
[61]

Lacking a concurrence of these two requisites, the police measure shall be struck down as an arbitrary
intrusion into private rights
[62]
a violation of the due process clause.
The Ordinance was enacted to address and arrest the social ills purportedly spawned by the
establishments in the Ermita-Malate area which are allegedly operated under the deceptive veneer of
legitimate, licensed and tax-paying nightclubs, bars, karaoke bars, girlie houses, cocktail lounges, hotels
and motels. Petitioners insist that even the Court in the case of Ermita-Malate Hotel and Motel Operators
Association, Inc. v. City Mayor of Manila
[63]
had already taken judicial notice of the alarming increase in the
rate of prostitution, adultery and fornication in Manila traceable in great part to existence of motels, which
provide a necessary atmosphere for clandestine entry, presence and exit and thus become the ideal haven
for prostitutes and thrill-seekers.
[64]

The object of the Ordinance was, accordingly, the promotion and protection of the social and moral
values of the community. Granting for the sake of argument that the objectives of the Ordinance are within
the scope of the City Councils police powers, the means employed for the accomplishment thereof were
unreasonable and unduly oppressive.
It is undoubtedly one of the fundamental duties of the City of Manila to make all reasonable regulations
looking to the promotion of the moral and social values of the community. However, the worthy aim of
fostering public morals and the eradication of the 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.
Conceding for the nonce that the Ermita-Malate area teems with houses of ill-repute and
establishments of the like which the City Council may lawfully prohibit,
[65]
it is baseless and insupportable to
bring within that classification sauna parlors, massage parlors, karaoke bars, night clubs, day clubs, super
clubs, discotheques, cabarets, dance halls, motels and inns. This is not warranted under the accepted
definitions of these terms. The enumerated establishments are lawful pursuits which are not per se
offensive to the moral welfare of the community.
That these are used as arenas to consummate illicit sexual affairs and as venues to further the illegal
prostitution is of no moment. We lay stress on the acrid truth that sexual immorality, being a human frailty,
may take place in the most innocent of places that it may even take place in the substitute establishments
enumerated under Section 3 of the Ordinance. If the flawed logic of the Ordinance were to be followed, in
the remote instance that an immoral sexual act transpires in a church cloister or a court chamber, we
would behold the spectacle of the City of Manila ordering the closure of the church or court
concerned. Every house, building, park, curb, street or even vehicles for that matter will not be exempt
from the prohibition. Simply because there are no pure places where there are impure men. Indeed, even
the Scripture and the Tradition of Christians churches continually recall the presence and universality of sin
in mans history.
[66]

The problem, it needs to be pointed out, is not the establishment, which by its nature cannot be said to
be injurious to the health or comfort of the community and which in itself is amoral, but the deplorable
human activity that may occur within its premises. While a motel may be used as a venue for immoral
sexual activity, it cannot for that reason alone be punished. It cannot be classified as a house of ill-repute
or as a nuisance per se on a mere likelihood or a naked assumption. If that were so and if that were
allowed, then the Ermita-Malate area would not only be purged of its supposed social ills, it would be
extinguished of its soul as well as every human activity, reprehensible or not, in its every nook and cranny
would be laid bare to the estimation of the authorities.
The Ordinance seeks to legislate morality but fails to address the core issues of morality. Try as the
Ordinance may to shape morality, it should not foster the illusion that it can make a moral man out of it
because immorality is not a thing, a building or establishment; it is in the hearts of men. The City Council
instead should regulate human conduct that occurs inside the establishments, but not to the detriment of
liberty and privacy which are covenants, premiums and blessings of democracy.
While petitioners earnestness at curbing clearly objectionable social ills is commendable, they
unwittingly punish even the proprietors and operators of wholesome, innocent establishments. In the
instant case, there is a clear invasion of personal or property rights, personal in the case of those
individuals desirous of owning, operating and patronizing those motels and property in terms of the
investments made and the salaries to be paid to those therein employed. If the City of Manila so desires to
put an end to prostitution, fornication and other social ills, it can instead impose reasonable regulations
such as daily inspections of the establishments for any violation of the conditions of their licenses or
permits; it may exercise its authority to suspend or revoke their licenses for these violations;
[67]
and it may
even impose increased license fees. In other words, there are other means to reasonably accomplish the
desired end.
Means employed are constitutionally infirm
The Ordinance disallows the operation of sauna parlors, massage parlors, karaoke bars, beerhouses,
night clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and inns in the Ermita-
Malate area. In Section 3 thereof, owners and/or operators of the enumerated establishments are given
three (3) months from the date of approval of the Ordinance within which to wind up business operations
or to transfer to any place outside the Ermita-Malate area or convert said businesses to other kinds of
business allowable within the area. Further, it states in Section 4 that in cases of subsequent violations of
the provisions of the Ordinance, the premises of the erring establishment shall be closed and padlocked
permanently.
It is readily apparent that the means employed by the Ordinance for the achievement of its purposes,
the governmental interference itself, infringes on the constitutional guarantees of a persons fundamental
right to liberty and property.
Liberty as guaranteed by the Constitution was defined by Justice Malcolm to include the right to exist
and the right to be free from arbitrary restraint or servitude. The term cannot be dwarfed into mere freedom
from physical restraint of the person of the citizen, but is deemed to embrace the right of man to enjoy the
facilities with which he has been endowed by his Creator, subject only to such restraint as are necessary
for the common welfare.
[68]
In accordance with this case, the rights of the citizen to be free to use his
faculties in all lawful ways; to live and work where he will; to earn his livelihood by any lawful calling; and to
pursue any avocation are all deemed embraced in the concept of liberty.
[69]

The U.S. Supreme Court in the case of Roth v. Board of Regents,
[70]
sought to clarify the meaning of
liberty. It said:
While the Court has not attempted to define with exactness the liberty. . . guaranteed [by the Fifth and
Fourteenth Amendments], the term denotes not merely freedom from bodily restraint but also the right of the
individual to contract, to engage in any of the common occupations of life, to acquire useful knowledge, to
marry, establish a home and bring up children, to worship God according to the dictates of his own
conscience, and generally to enjoy those privileges long recognizedas essential to the orderly pursuit of
happiness by free men. In a Constitution for a free people, there can be no doubt that the meaning of
liberty must be broad indeed.
In another case, it also confirmed that liberty protected by the due process clause includes personal
decisions relating to marriage, procreation, contraception, family relationships, child rearing, and education.
In explaining the respect the Constitution demands for the autonomy of the person in making these
choices, the U.S. Supreme Court explained:
These matters, involving the most intimate and personal choices a person may make in a lifetime,
choices central to personal dignity and autonomy, are central to the liberty protected by the Fourteenth
Amendment. At the heart of liberty is the right to define ones own concept of existence, of meaning, of
universe, and of the mystery of human life. Beliefs about these matters could not define the attributes of
personhood where they formed under compulsion of the State.
[71]

Persons desirous to own, operate and patronize the enumerated establishments under Section 1 of the
Ordinance may seek autonomy for these purposes.
Motel patrons who are single and unmarried may invoke this right to autonomy to consummate their
bonds in intimate sexual conduct within the motels premisesbe it stressed that their consensual sexual
behavior does not contravene any fundamental state policy as contained in the Constitution.
[72]
Adults have
a right to choose to forge such relationships with others in the confines of their own private lives and still
retain their dignity as free persons. The liberty protected by the Constitution allows persons the right to
make this choice.
[73]
Their right to liberty under the due process clause gives them the full right to engage in
their conduct without intervention of the government, as long as they do not run afoul of the law. Liberty
should be the rule and restraint the exception.
Liberty in the constitutional sense not only means freedom from unlawful government restraint; it must
include privacy as well, if it is to be a repository of freedom. The right to be let alone is the beginning of all
freedomit is the most comprehensive of rights and the right most valued by civilized men.
[74]

The concept of liberty compels respect for the individual whose claim to privacy and interference
demands respect. As the case of Morfe v. Mutuc,
[75]
borrowing the words of Laski, so very aptly stated:
Man is one among many, obstinately refusing reduction to unity. His separateness, his isolation, are
indefeasible; indeed, they are so fundamental that they are the basis on which his civic obligations are built.
He cannot abandon the consequences of his isolation, which are, broadly speaking, that his experience is
private, and the will built out of that experience personal to himself. If he surrenders his will to others, he
surrenders himself. If his will is set by the will of others, he ceases to be a master of himself. I cannot
believe that a man no longer a master of himself is in any real sense free.
Indeed, the right to privacy as a constitutional right was recognized in Morfe, the invasion of which
should be justified by a compelling state interest. Morfe accorded recognition to the right to privacy
independently of its identification with liberty; in itself it is fully deserving of constitutional protection.
Governmental powers should stop short of certain intrusions into the personal life of the citizen.
[76]

There is a great temptation to have an extended discussion on these civil liberties but the Court
chooses to exercise restraint and restrict itself to the issues presented when it should. The previous
pronouncements of the Court are not to be interpreted as a license for adults to engage in criminal
conduct. The reprehensibility of such conduct is not diminished. The Court only reaffirms and guarantees
their right to make this choice. Should they be prosecuted for their illegal conduct, they should suffer the
consequences of the choice they have made. That, ultimately, is their choice.
Modality employed is unlawful taking
In addition, the Ordinance is unreasonable and oppressive as it substantially divests the respondent of
the beneficial use of its property.
[77]
The Ordinance in Section 1 thereof forbids the running of the
enumerated businesses in the Ermita-Malate area and in Section 3 instructs its owners/operators to wind
up business operations or to transfer outside the area or convert said businesses into allowed businesses.
An ordinance which permanently restricts the use of property that it can not be used for any reasonable
purpose goes beyond regulation and must be recognized as a taking of the property without just
compensation.
[78]
It is intrusive and violative of the private property rights of individuals.
The Constitution expressly provides in Article III, Section 9, that private property shall not be taken for
public use without just compensation. The provision is the most important protection of property rights in
the Constitution. This is a restriction on the general power of the government to take property. The
constitutional provision is about ensuring that the government does not confiscate the property of some to
give it to others. In part too, it is about loss spreading. If the government takes away a persons property to
benefit society, then society should pay. The principal purpose of the guarantee is to bar the Government
from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne
by the public as a whole.
[79]

There are two different types of taking that can be identified. A possessory taking occurs when the
government confiscates or physically occupies property. A regulatory taking occurs when the
governments regulation leaves no reasonable economically viable use of the property.
[80]

In the landmark case of Pennsylvania Coal v. Mahon,
[81]
it was held that a taking also could be found if
government regulation of the use of property went too far. When regulation reaches a certain magnitude,
in most if not in all cases there must be an exercise of eminent domain and compensation to support the
act. While property may be regulated to a certain extent, if regulation goes too far it will be recognized as a
taking.
[82]

No formula or rule can be devised to answer the questions of what is too far and when regulation
becomes a taking. In Mahon, Justice Holmes recognized that it was a question of degree and therefore
cannot be disposed of by general propositions. On many other occasions as well, the U.S. Supreme Court
has said that the issue of when regulation constitutes a taking is a matter of considering the facts in each
case. The Court asks whether justice and fairness require that the economic loss caused by public action
must be compensated by the government and thus borne by the public as a whole, or whether the loss
should remain concentrated on those few persons subject to the public action.
[83]

What is crucial in judicial consideration of regulatory takings is that government regulation is a taking if
it leaves no reasonable economically viable use of property in a manner that interferes with reasonable
expectations for use.
[84]
A regulation that permanently denies all economically beneficial or productive use of
land is, from the owners point of view, equivalent to a taking unless principles of nuisance or property law
that existed when the owner acquired the land make the use prohibitable.
[85]
When the owner of real
property has been called upon to sacrifice all economically beneficial uses in the name of the common
good, that is, to leave his property economically idle, he has suffered a taking.
[86]

A regulation which denies all economically beneficial or productive use of land will require
compensation under the takings clause. Where a regulation places limitations on land that fall short of
eliminating all economically beneficial use, a taking nonetheless may have occurred, depending on a
complex of factors including the regulations economic effect on the landowner, the extent to which the
regulation interferes with reasonable investment-backed expectations and the character of government
action. These inquiries are informed by the purpose of the takings clause which is to prevent the
government from forcing some people alone to bear public burdens which, in all fairness and justice,
should be borne by the public as a whole.
[87]

A restriction on use of property may also constitute a taking if not reasonably necessary to the
effectuation of a substantial public purpose or if it has an unduly harsh impact on the distinct investment-
backed expectations of the owner.
[88]

The Ordinance gives the owners and operators of the prohibited establishments three (3) months
from its approval within which to wind up business operations or to transfer to any place outside of the
Ermita-Malate area or convert said businesses to other kinds of business allowable within the area. The
directive to wind up business operations amounts to a closure of the establishment, a permanent
deprivation of property, and is practically confiscatory. Unless the owner converts his establishment to
accommodate an allowed business, the structure which housed the previous business will be left empty
and gathering dust. Suppose he transfers it to another area, he will likewise leave the entire establishment
idle. Consideration must be given to the substantial amount of money invested to build the edifices which
the owner reasonably expects to be returned within a period of time. It is apparent that the Ordinance
leaves no reasonable economically viable use of property in a manner that interferes with reasonable
expectations for use.
The second and third options to transfer to any place outside of the Ermita-Malate area or to convert
into allowed businessesare confiscatory as well. The penalty of permanent closure in cases of
subsequent violations found in Section 4 of the Ordinance is also equivalent to a taking of private
property.
The second option instructs the owners to abandon their property and build another one outside the
Ermita-Malate area. In every sense, it qualifies as a taking without just compensation with an additional
burden imposed on the owner to build another establishment solely from his coffers. The proffered solution
does not put an end to the problem, it merely relocates it. Not only is this impractical, it is unreasonable,
onerous and oppressive. The conversion into allowed enterprises is just as ridiculous. How may the
respondent convert a motel into a restaurant or a coffee shop, art gallery or music lounge without
essentially destroying its property? This is a taking of private property without due process of law, nay,
even without compensation.
The penalty of closure likewise constitutes unlawful taking that should be compensated by the
government. The burden on the owner to convert or transfer his business, otherwise it will be closed
permanently after a subsequent violation should be borne by the public as this end benefits them as a
whole.
Petitioners cannot take refuge in classifying the measure as a zoning ordinance. A zoning ordinance,
although a valid exercise of police power, which limits a wholesome property to a use which can not
reasonably be made of it constitutes the taking of such property without just compensation. Private
property which is not noxious nor intended for noxious purposes may not, by zoning, be destroyed without
compensation. Such principle finds no support in the principles of justice as we know them. The police
powers of local government units which have always received broad and liberal interpretation cannot be
stretched to cover this particular taking.
Distinction should be made between destruction from necessity and eminent domain. It needs
restating that the property taken in the exercise of police power is destroyed because it is noxious or
intended for a noxious purpose while the property taken under the power of eminent domain is intended for
a public use or purpose and is therefore wholesome.
[89]
If it be of public benefit that a wholesome
property remain unused or relegated to a particular purpose, then certainly the public should bear the cost
of reasonable compensation for the condemnation of private property for public use.
[90]

Further, the Ordinance fails to set up any standard to guide or limit the petitioners actions. It in no way
controls or guides the discretion vested in them. It provides no definition of the establishments covered by
it and it fails to set forth the conditions when the establishments come within its ambit of prohibition. The
Ordinance confers upon the mayor arbitrary and unrestricted power to close down establishments.
Ordinances such as this, which make possible abuses in its execution, depending upon no conditions or
qualifications whatsoever other than the unregulated arbitrary will of the city authorities as the touchstone
by which its validity is to be tested, are unreasonable and invalid. The Ordinance should have established
a rule by which its impartial enforcement could be secured.
[91]

Ordinances placing restrictions upon the lawful use of property must, in order to be valid and
constitutional, specify the rules and conditions to be observed and conduct to avoid; and must not admit of
the exercise, or of an opportunity for the exercise, of unbridled discretion by the law enforcers in carrying
out its provisions.
[92]

Thus, in Coates v. City of Cincinnati,
[93]
as cited in People v. Nazario,
[94]
the U.S. Supreme Court
struck down an ordinance that had made it illegal for three or more persons to assemble on any sidewalk
and there conduct themselves in a manner annoying to persons passing by. The ordinance was nullified
as it imposed no standard at all because one may never know in advance what annoys some people but
does not annoy others.
Similarly, the Ordinance does not specify the standards to ascertain which establishments tend to
disturb the community, annoy the inhabitants, and adversely affect the social and moral welfare of the
community. The cited case supports the nullification of the Ordinance for lack of comprehensible
standards to guide the law enforcers in carrying out its provisions.
Petitioners cannot therefore order the closure of the enumerated establishments without infringing the
due process clause. These lawful establishments may be regulated, but not prevented from carrying on
their business. This is a sweeping exercise of police power that is a result of a lack of imagination on the
part of the City Council and which amounts to an interference into personal and private rights which the
Court will not countenance. In this regard, we take a resolute stand to uphold the constitutional guarantee
of the right to liberty and property.
Worthy of note is an example derived from the U.S. of a reasonable regulation which is a far cry from
the ill-considered Ordinance enacted by the City Council.
In FW/PBS, INC. v. Dallas,
[95]
the city of Dallas adopted a comprehensive ordinance regulating sexually
oriented businesses, which are defined to include adult arcades, bookstores, video stores, cabarets,
motels, and theaters as well as escort agencies, nude model studio and sexual encounter centers. Among
other things, the ordinance required that such businesses be licensed. A group of motel owners were
among the three groups of businesses that filed separate suits challenging the ordinance. The motel
owners asserted that the city violated the due process clause by failing to produce adequate support for its
supposition that renting room for fewer than ten (10) hours resulted in increased crime and other
secondary effects. They likewise argued than the ten (10)-hour limitation on the rental of motel rooms
placed an unconstitutional burden on the right to freedom of association. Anent the first contention, the
U.S. Supreme Court held that the reasonableness of the legislative judgment combined with a study which
the city considered, was adequate to support the citys determination that motels permitting room rentals
for fewer than ten (10 ) hours should be included within the licensing scheme. As regards the second point,
the Court held that limiting motel room rentals to ten (10) hours will have no discernible effect on personal
bonds as those bonds that are formed from the use of a motel room for fewer than ten (10) hours are not
those that have played a critical role in the culture and traditions of the nation by cultivating and
transmitting shared ideals and beliefs.
The ordinance challenged in the above-cited case merely regulated the targeted businesses. It
imposed reasonable restrictions; hence, its validity was upheld.
The case of Ermita Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila,
[96]
it
needs pointing out, is also different from this case in that what was involved therein was a measure which
regulated the mode in which motels may conduct business in order to put an end to practices which could
encourage vice and immorality. Necessarily, there was no valid objection on due process or equal
protection grounds as the ordinance did not prohibit motels. The Ordinance in this case however is not a
regulatory measure but is an exercise of an assumed power to prohibit.
[97]

The foregoing premises show that the Ordinance is an unwarranted and unlawful curtailment of
property and personal rights of citizens. For being unreasonable and an undue restraint of trade, it cannot,
even under the guise of exercising police power, be upheld as valid.
B. The Ordinance violates Equal Protection Clause
Equal protection requires that all persons or things similarly situated should be treated alike, both as to
rights conferred and responsibilities imposed. Similar subjects, in other words, should not be treated
differently, so as to give undue favor to some and unjustly discriminate against others.
[98]
The guarantee
means that no person or class of persons shall be denied the same protection of laws which is enjoyed by
other persons or other classes in like circumstances.
[99]
The equal protection of the laws is a pledge of the
protection of equal laws.
[100]
It limits governmental discrimination. The equal protection clause extends to
artificial persons but only insofar as their property is concerned.
[101]

The Court has explained the scope of the equal protection clause in this wise:
What does it signify? To quote from J.M. Tuason & Co. v. Land Tenure Administration: The ideal
situation is for the laws benefits to be available to all, that none be placed outside the sphere of its
coverage. Only thus could chance and favor be excluded and the affairs of men governed by that serene
and impartial uniformity, which is of the very essence of the idea of law. There is recognition, however, in
the opinion that what in fact exists cannot approximate the ideal. Nor is the law susceptible to the reproach
that it does not take into account the realities of the situation. The constitutional guarantee then is not to be
given a meaning that disregards what is, what does in fact exist. To assure that the general welfare be
promoted, which is the end of law, a regulatory measure may cut into the rights to liberty and property.
Those adversely affected may under such circumstances invoke the equal protection clause only if they can
show that the governmental act assailed, far from being inspired by the attainment of the common weal was
prompted by the spirit of hostility, or at the very least, discrimination that finds no support in reason.
Classification is thus not ruled out, it being sufficient to quote from the Tuason decision anew that the laws
operate equally and uniformly on all persons under similar circumstances or that all persons must be treated
in the same manner, the conditions not being different, both in the privileges conferred and the liabilities
imposed. Favoritism and undue preference cannot be allowed. For the principle is that equal protection and
security shall be given to every person under circumstances which, if not identical, are analogous. If law be
looked upon in terms of burden or charges, those that fall within a class should be treated in the same
fashion, whatever restrictions cast on some in the group equally binding on the rest.
[102]

Legislative bodies are allowed to classify the subjects of legislation. If the classification is reasonable,
the law may operate only on some and not all of the people without violating the equal protection clause.
[103]

The classification must, as an indispensable requisite, not be arbitrary. To be valid, it must conform to the
following requirements:
1) It must be based on substantial distinctions.
2) It must be germane to the purposes of the law.
3) It must not be limited to existing conditions only.
4) It must apply equally to all members of the class.
[104]

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.
The Court likewise cannot see the logic for prohibiting the business and operation of motels in the
Ermita-Malate area but not outside of this area. A noxious establishment does not become any less
noxious if located outside the area.
The standard where women are used as tools for entertainment is also discriminatory as
prostitutionone of the hinted ills the Ordinance aims to banishis not a profession exclusive to women.
Both men and women have an equal propensity to engage in prostitution. It is not any less grave a sin
when men engage in it. And why would the assumption that there is an ongoing immoral activity apply only
when women are employed and be inapposite when men are in harness? This discrimination based on
gender violates equal protection as it is not substantially related to important government objectives.
[105]

Thus, the discrimination is invalid.
Failing the test of constitutionality, the Ordinance likewise failed to pass the test of consistency with
prevailing laws.
C. The Ordinance is repugnant to general laws; it is ultra vires
The Ordinance is in contravention of the Code as the latter merely empowers local government units to
regulate, and not prohibit, the establishments enumerated in Section 1 thereof.
The power of the City Council to regulate by ordinances the establishment, operation, and
maintenance of motels, hotels and other similar establishments is found in Section 458 (a) 4 (iv), which
provides that:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the
legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise
of the corporate powers of the city as provided for under Section 22 of this Code, and shall:
(4) Regulate activities relative to the use of land, buildings and structures within the city in order to
promote the general welfare and for said purpose shall:
(iv) Regulate the establishment, operation and maintenance of cafes, restaurants, beerhouses, hotels,
motels, inns, pension houses, lodging houses, and other similar establishments, including tourist guides and
transports . . . .
While its power to regulate the establishment, operation and maintenance of any entertainment or
amusement facilities, and to prohibit certain forms of amusement or entertainment is provided under
Section 458 (a) 4 (vii) of the Code, which reads as follows:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the
legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise
of the corporate powers of the city as provided for under Section 22 of this Code, and shall:
(4) Regulate activities relative to the use of land, buildings and structures within the city in order to
promote the general welfare and for said purpose shall:
(vii) Regulate the establishment, operation, and maintenance of any entertainment or
amusement facilities, including theatrical performances, circuses, billiard pools, public dancing
schools, public dance halls, sauna baths, massage parlors, and other places for entertainment or
amusement; regulate such other events or activities for amusement or entertainment, particularly
those which tend to disturb the community or annoy the inhabitants, or require the suspension or
suppression of the same; or, prohibit certain forms of amusement or entertainment in order to
protect the social and moral welfare of the community.
Clearly, with respect to cafes, restaurants, beerhouses, hotels, motels, inns, pension houses, lodging
houses, and other similar establishments, the only power of the City Council to legislate relative thereto is
to regulate them to promote the general welfare. The Code still withholds from cities the power to suppress
and prohibit altogether the establishment, operation and maintenance of such establishments. It is well to
recall the rulings of the Court in Kwong Sing v. City of Manila
[106]
that:
The word regulate, as used in subsection (l), section 2444 of the Administrative Code, means and
includes the power to control, to govern, and to restrain; but regulate should not be construed as
synonymous with suppress or prohibit. Consequently, under the power to regulate laundries, the
municipal authorities could make proper police regulations as to the mode in which the employment or
business shall be exercised.
[107]

And in People v. Esguerra,
[108]
wherein the Court nullified an ordinance of the Municipality of Tacloban
which prohibited the selling, giving and dispensing of liquor ratiocinating that the municipality is empowered
only to regulate the same and not prohibit. The Court therein declared that:
(A)s a general rule when a municipal corporation is specifically given authority or power to regulate or
to license and regulate the liquor traffic, power to prohibit is impliedly withheld.
[109]

These doctrines still hold contrary to petitioners assertion
[110]
that they were modified by the Code
vesting upon City Councils prohibitory powers.
Similarly, the City Council exercises regulatory powers over public dancing schools, public dance halls,
sauna baths, massage parlors, and other places for entertainment or amusement as found in the first
clause of Section 458 (a) 4 (vii). Its powers to regulate, suppress and suspend such other events or
activities for amusement or entertainment, particularly those which tend to disturb the community or annoy
the inhabitants and to prohibit certain forms of amusement or entertainment in order to protect the social
and moral welfare of the community are stated in the second and third clauses, respectively of the same
Section. The several powers of the City Council as provided in Section 458 (a) 4 (vii) of the Code, it is
pertinent to emphasize, are separated by semi-colons (;), the use of which indicates that the clauses in
which these powers are set forth are independent of each other albeit closely related to justify being put
together in a single enumeration or paragraph.
[111]
These powers, therefore, should not be confused,
commingled or consolidated as to create a conglomerated and unified power of regulation, suppression
and prohibition.
[112]

The Congress unequivocably specified the establishments and forms of amusement or entertainment
subject to regulation among which are beerhouses, hotels, motels, inns, pension houses, lodging houses,
and other similar establishments (Section 458 (a) 4 (iv)), public dancing schools, public dance halls, sauna
baths, massage parlors, and other places for entertainment or amusement (Section 458 (a) 4 (vii)). This
enumeration therefore cannot be included as among other events or activities for amusement or
entertainment, particularly those which tend to disturb the community or annoy the inhabitants or certain
forms of amusement or entertainment which the City Council may suspend, suppress or prohibit.
The rule is that the City Council has only such powers as are expressly granted to it and those which
are necessarily implied or incidental to the exercise thereof. By reason of its limited powers and the nature
thereof, said powers are to be construed strictissimi juris and any doubt or ambiguity arising out of the
terms used in granting said powers must be construed against the City Council.
[113]
Moreover, it is a general
rule in statutory construction that the express mention of one person, thing, or consequence is tantamount
to an express exclusion of all others. Expressio unius est exclusio alterium. This maxim is based upon the
rules of logic and the natural workings of human mind. It is particularly applicable in the construction of
such statutes as create new rights or remedies, impose penalties or punishments, or otherwise come
under the rule of strict construction.
[114]

The argument that the City Council is empowered to enact the Ordinance by virtue of the general
welfare clause of the Code and of Art. 3, Sec. 18 (kk) of the Revised Charter of Manila is likewise without
merit. On the first point, the ruling of the Court in People v. Esguerra,
[115]
is instructive. It held that:
The powers conferred upon a municipal council in the general welfare clause, or section 2238 of the
Revised Administrative Code, refers to matters not covered by the other provisions of the same Code, and
therefore it can not be applied to intoxicating liquors, for the power to regulate the selling, giving away and
dispensing thereof is granted specifically by section 2242 (g) to municipal councils. To hold that, under the
general power granted by section 2238, a municipal council may enact the ordinance in question,
notwithstanding the provision of section 2242 (g), would be to make the latter superfluous and nugatory,
because the power to prohibit, includes the power to regulate, the selling, giving away and dispensing of
intoxicating liquors.
On the second point, it suffices to say that the Code being a later expression of the legislative will must
necessarily prevail and override the earlier law, the Revised Charter of Manila. Legis posteriores priores
contrarias abrogant, or later statute repeals prior ones which are repugnant thereto. As between two laws
on the same subject matter, which are irreconcilably inconsistent, that which is passed later prevails, since
it is the latest expression of legislative will.
[116]
If there is an inconsistency or repugnance between two
statutes, both relating to the same subject matter, which cannot be removed by any fair and reasonable
method of interpretation, it is the latest expression of the legislative will which must prevail and override the
earlier.
[117]

Implied repeals are those which take place when a subsequently enacted law contains provisions
contrary to those of an existing law but no provisions expressly repealing them. Such repeals have been
divided into two general classes: those which occur where an act is so inconsistent or irreconcilable with an
existing prior act that only one of the two can remain in force and those which occur when an act covers
the whole subject of an earlier act and is intended to be a substitute therefor. The validity of such a repeal
is sustained on the ground that the latest expression of the legislative will should prevail.
[118]

In addition, Section 534(f) of the Code states that All general and special laws, acts, city charters,
decrees, executive orders, proclamations and administrative regulations, or part or parts thereof which are
inconsistent with any of the provisions of this Code are hereby repealed or modified accordingly. Thus,
submitting to petitioners interpretation that the Revised Charter of Manila empowers the City Council to
prohibit motels, that portion of the Charter stating such must be considered repealed by the Code as it is at
variance with the latters provisions granting the City Council mere regulatory powers.
It is well to point out that petitioners also cannot seek cover under the general welfare clause
authorizing the abatement of nuisances without judicial proceedings. That tenet applies to a nuisance per
se, or one which affects the immediate safety of persons and property and may be summarily abated under
the undefined law of necessity. It can not be said that motels are injurious to the rights of property, health
or comfort of the community. It is a legitimate business. If it be a nuisance per accidens it may be so
proven in a hearing conducted for that purpose. A motel is not per se a nuisance warranting its summary
abatement without judicial intervention.
[119]

Notably, the City Council was conferred powers to prevent and prohibit certain activities and
establishments in another section of the Code which is reproduced as follows:
Section 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panlungsod, as the
legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper exercise
of the corporate powers of the city as provided for under Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and effective city government,
and in this connection, shall:
(v) Enact ordinances intended to prevent, suppress and impose appropriate penalties for habitual
drunkenness in public places, vagrancy, mendicancy, prostitution, establishment and maintenance
of houses of ill repute, gambling and other prohibited games of chance, fraudulent devices and ways to
obtain money or property, drug addiction, maintenance of drug dens, drug pushing, juvenile delinquency,
the printing, distribution or exhibition of obscene or pornographic materials or publications, and such other
activities inimical to the welfare and morals of the inhabitants of the city;
If it were the intention of Congress to confer upon the City Council the power to prohibit the
establishments enumerated in Section 1 of the Ordinance, it would have so declared in uncertain terms by
adding them to the list of the matters it may prohibit under the above-quoted Section. The Ordinance now
vainly attempts to lump these establishments with houses of ill-repute and expand the City Councils
powers in the second and third clauses of Section 458 (a) 4 (vii) of the Code in an effort to overreach its
prohibitory powers. It is evident that these establishments may only be regulated in their establishment,
operation and maintenance.
It is important to distinguish the punishable activities from the establishments themselves. That these
establishments are recognized legitimate enterprises can be gleaned from another Section of the Code.
Section 131 under the Title on Local Government Taxation expressly mentioned proprietors or operators of
massage clinics, sauna, Turkish and Swedish baths, hotels, motels and lodging houses as among the
contractors defined in paragraph (h) thereof. The same Section also defined amusement as a
pleasurable diversion and entertainment, synonymous to relaxation, avocation, pastime or fun; and
amusement places to include theaters, cinemas, concert halls, circuses and other places of amusement
where one seeks admission to entertain oneself by seeing or viewing the show or performances. Thus, it
can be inferred that the Code considers these establishments as legitimate enterprises and activities. It is
well to recall the maxim reddendo singula singulis which means that words in different parts of a statute
must be referred to their appropriate connection, giving to each in its place, its proper force and effect, and,
if possible, rendering none of them useless or superfluous, even if strict grammatical construction demands
otherwise. Likewise, where words under consideration appear in different sections or are widely dispersed
throughout an act the same principle applies.
[120]

Not only does the Ordinance contravene the Code, it likewise runs counter to the provisions of P.D.
499. As correctly argued by MTDC, the statute had already converted the residential Ermita-Malate area
into a commercial area. The decree allowed the establishment and operation of all kinds of commercial
establishments except warehouse or open storage depot, dump or yard, motor repair shop, gasoline
service station, light industry with any machinery or funeral establishment. The rule is that for an ordinance
to be valid and to have force and effect, it must not only be within the powers of the council to enact but the
same must not be in conflict with or repugnant to the general law.
[121]
As succinctly illustrated in Solicitor
General v. Metropolitan Manila Authority:
[122]

The requirement that the enactment must not violate existing law explains itself. Local political
subdivisions are able to legislate only by virtue of a valid delegation of legislative power from the national
legislature (except only that the power to create their own sources of revenue and to levy taxes is conferred
by the Constitution itself). They are mere agents vested with what is called the power of subordinate
legislation. As delegates of the Congress, the local government units cannot contravene but must obey at
all times the will of their principal. In the case before us, the enactment in question, which are merely local in
origin cannot prevail against the decree, which has the force and effect of a statute.
[123]

Petitioners contend that the Ordinance enjoys the presumption of validity. While this may be the rule, it
has already been held that although the presumption is always in favor of the validity or reasonableness of
the ordinance, such presumption must nevertheless be set aside when the invalidity or unreasonableness
appears on the face of the ordinance itself or is established by proper evidence. The exercise of police
power by the local government is valid unless it contravenes the fundamental law of the land, or an act of
the legislature, or unless it is against public policy or is unreasonable, oppressive, partial, discriminating or
in derogation of a common right.
[124]

Conclusion
All considered, the Ordinance invades fundamental personal and property rights and impairs personal
privileges. It is constitutionally infirm. The Ordinance contravenes statutes; it is discriminatory and
unreasonable in its operation; it is not sufficiently detailed and explicit that abuses may attend the
enforcement of its sanctions. And not to be forgotten, the City Council under the Code had no power to
enact the Ordinance and is therefore ultra vires, null and void.
Concededly, the challenged Ordinance was enacted with the best of motives and shares the concern
of the public for the cleansing of the Ermita-Malate area of its social sins. Police power legislation of such
character deserves the full endorsement of the judiciary we reiterate our support for it. But inspite of its
virtuous aims, the enactment of the Ordinance has no statutory or constitutional authority to stand on.
Local legislative bodies, in this case, the City Council, cannot prohibit the operation of the enumerated
establishments under Section 1 thereof or order their transfer or conversion without infringing the
constitutional guarantees of due process and equal protection of laws not even under the guise of police
power.
WHEREFORE, the Petition is hereby DENIED and the decision of the Regional Trial Court declaring
the Ordinance void is AFFIRMED. Costs against petitioners.
SO ORDERED.








[G.R. No. 127105. June 25, 1999]
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. S.C. JOHNSON AND SON,
INC., and COURT OF APPEALS, respondents.
D E C I S I O N
GONZAGA-REYES, J .:
This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to set aside the decision of
the Court of Appeals dated November 7, 1996 in CA-GR SP No. 40802 affirming the decision of the Court of Tax
Appeals in CTA Case No. 5136.
The antecedent facts as found by the Court of Tax Appeals are not disputed, to wit:
[Respondent], a domestic corporation organized and operating under the Philippine laws, entered into a license agreement
with SC Johnson and Son, United States of America (USA), a non-resident foreign corporation based in the U.S.A. pursuant to
which the [respondent] was granted the right to use the trademark, patents and technology owned by the latter including the right
to manufacture, package and distribute the products covered by the Agreement and secure assistance in management, marketing
and production from SC Johnson and Son, U. S. A.
The said License Agreement was duly registered with the Technology Transfer Board of the Bureau of Patents, Trade
Marks and Technology Transfer under Certificate of Registration No. 8064 (Exh. A).
For the use of the trademark or technology, [respondent] was obliged to pay SC Johnson and Son, USA royalties based on a
percentage of net sales and subjected the same to 25% withholding tax on royalty payments which [respondent] paid for the
period covering July 1992 to May 1993 in the total amount of P1,603,443.00 (Exhs. B to L and submarkings).
On October 29, 1993, [respondent] filed with the International Tax Affairs Division (ITAD) of the BIR a claim for refund
of overpaid withholding tax on royalties arguing that, the antecedent facts attending [respondents] case fall squarely within the
same circumstances under which said MacGeorge and Gillete rulings were issued. Since the agreement was approved by the
Technology Transfer Board, the preferential tax rate of 10% should apply to the [respondent]. We therefore submit that royalties
paid by the [respondent] to SC Johnson and Son, USA is only subject to 10% withholding tax pursuant to the most-favored
nation clause of the RP-US Tax Treaty [Article 13 Paragraph 2 (b) (iii)] in relation to the RP-West Germany Tax Treaty [Article
12 (2) (b)] (Petition for Review [filed with the Court of Appeals], par. 12). [Respondents] claim for the refund of P963,266.00
was computed as follows:
Gross 25% 10%
Month/ Royalty Withholding Withholding
Year Fee Tax Paid Tax Balance
______ _______ __________ __________ ______
July 1992 559,878 139,970 55,988 83,982
August 567,935 141,984 56,794 85,190
September 595,956 148,989 59,596 89,393
October 634,405 158,601 63,441 95,161
November 620,885 155,221 62,089 93,133
December 383,276 95,819 36,328 57,491
Jan 1993 602,451 170,630 68,245 102,368
February 565,845 141,461 56,585 84,877
March 547,253 136,813 54,725 82,088
April 660,810 165,203 66,081 99,122
May 603,076 150,769 60,308 90,461
P6,421,770 P1,605,443 P642,177 P963,266
i

======== ======== ======= =======
The Commissioner did not act on said claim for refund. Private respondent S.C. Johnson & Son, Inc. (S.C.
Johnson) then filed a petition for review before the Court of Tax Appeals (CTA) where the case was docketed as CTA
Case No. 5136, to claim a refund of the overpaid withholding tax on royalty payments from July 1992 to May 1993.
On May 7, 1996, the Court of Tax Appeals rendered its decision in favor of S.C. Johnson and ordered the
Commissioner of Internal Revenue to issue a tax credit certificate in the amount of P963,266.00 representing overpaid
withholding tax on royalty payments beginning July, 1992 to May, 1993.
ii

The Commissioner of Internal Revenue thus filed a petition for review with the Court of Appeals which rendered
the decision subject of this appeal on November 7, 1996 finding no merit in the petition and affirming in toto the CTA
ruling.
iii

This petition for review was filed by the Commissioner of Internal Revenue raising the following issue:
THE COURT OF APPEALS ERRED IN RULING THAT SC JOHNSON AND SON, USA IS ENTITLED TO THE
MOST FAVORED NATION TAX RATE OF 10% ON ROYALTIES AS PROVIDED IN THE RP-US TAX TREATY IN
RELATION TO THE RP-WEST GERMANY TAX TREATY.
Petitioner contends that under Article 13(2) (b) (iii) of the RP-US Tax Treaty, which is known as the most
favored nation clause, the lowest rate of the Philippine tax at 10% may be imposed on royalties derived by a resident
of the United States from sources within the Philippines only if the circumstances of the resident of the United States
are similar to those of the resident of West Germany. Since the RP-US Tax Treaty contains no matching credit
provision as that provided under Article 24 of the RP-West Germany Tax Treaty, the tax on royalties under the RP-
US Tax Treaty is not paid under similar circumstances as those obtaining in the RP-West Germany Tax Treaty. Even
assuming that the phrase paid under similar circumstances refers to the payment of royalties, and not taxes, as held
by the Court of Appeals, still, the most favored nation clause cannot be invoked for the reason that when a tax
treaty contemplates circumstances attendant to the payment of a tax, or royalty remittances for that matter, these must
necessarily refer to circumstances that are tax-related. Finally, petitioner argues that since S.C. Johnsons invocation
of the most favored nation clause is in the nature of a claim for exemption from the application of the regular tax
rate of 25% for royalties, the provisions of the treaty must be construed strictly against it.
In its Comment, private respondent S.C. Johnson avers that the instant petition should be denied (1) because it
contains a defective certification against forum shopping as required under SC Circular No. 28-91, that is, the
certification was not executed by the petitioner herself but by her counsel; and (2) that the most favored nation
clause under the RP-US Tax Treaty refers to royalties paid under similar circumstances as those royalties subject to
tax in other treaties; that the phrase paid under similar circumstances does not refer to payment of the tax but to the
subject matter of the tax, that is, royalties, because the most favored nation clause is intended to allow the taxpayer
in one state to avail of more liberal provisions contained in another tax treaty wherein the country of residence of such
taxpayer is also a party thereto, subject to the basic condition that the subject matter of taxation in that other tax treaty
is the same as that in the original tax treaty under which the taxpayer is liable; thus, the RP-US Tax Treaty speaks of
royalties of the same kind paid under similar circumstances. S.C. Johnson also contends that the Commissioner is
estopped from insisting on her interpretation that the phrase paid under similar circumstances refers to the manner
in which the tax is paid, for the reason that said interpretation is embodied in Revenue Memorandum Circular
(RMC) 39-92 which was already abandoned by the Commissioners predecessor in 1993; and was expressly
revoked in BIR Ruling No. 052-95 which stated that royalties paid to an American licensor are subject only to 10%
withholding tax pursuant to Art 13(2)(b)(iii) of the RP-US Tax Treaty in relation to the RP-West Germany Tax
Treaty. Said ruling should be given retroactive effect except if such is prejudicial to the taxpayer pursuant to Section
246 of the National Internal Revenue Code.
Petitioner filed Reply alleging that the fact that the certification against forum shopping was signed by
petitioners counsel is not a fatal defect as to warrant the dismissal of this petition since Circular No. 28-91 applies
only to original actions and not to appeals, as in the instant case. Moreover, the requirement that the certification
should be signed by petitioner and not by counsel does not apply to petitioner who has only the Office of the Solicitor
General as statutory counsel. Petitioner reiterates that even if the phrase paid under similar circumstances
embodied in the most favored nation clause of the RP-US Tax Treaty refers to the payment of royalties and not taxes,
still the presence or absence of a matching credit provision in the said RP-US Tax Treaty would constitute a
material circumstance to such payment and would be determinative of the said clauses application.
We address first the objection raised by private respondent that the certification against forum shopping was not
executed by the petitioner herself but by her counsel, the Office of the Solicitor General (O.S.G.) through one of its
Solicitors, Atty. Tomas M. Navarro.
SC Circular No. 28-91 provides:
SUBJECT: ADDITIONAL REQUISITES FOR PETITIONS FILED WITH THE SUPREME COURT AND THE
COURT OF APPEALS TO PREVENT FORUM SHOPPING OR MULTIPLE FILING OF PETITIONS AND COMPLAINTS
TO : xxx xxx xxx
The attention of the Court has been called to the filing of multiple petitions and complaints involving the same issues in the
Supreme Court, the Court of Appeals or other tribunals or agencies, with the result that said courts, tribunals or agencies have to
resolve the same issues.
(1) To avoid the foregoing, in every petition filed with the Supreme Court or the Court of Appeals, the petitioner aside from
complying with pertinent provisions of the Rules of Court and existing circulars, must certify under oath to all of the following
facts or undertakings: (a) he has not theretofore commenced any other action or proceeding involving the same issues in the
Supreme Court, the Court of Appeals, or any tribunal or agency; xxx
(2) Any violation of this revised Circular will entail the following sanctions: (a) it shall be a cause for the summary
dismissal of the multiple petitions or complaints; xxx
The circular expressly requires that a certificate of non-forum shopping should be attached to petitions filed
before this Court and the Court of Appeals. Petitioners allegation that Circular No. 28-91 applies only to original
actions and not to appeals as in the instant case is not supported by the text nor by the obvious intent of the Circular
which is to prevent multiple petitions that will result in the same issue being resolved by different courts.
Anent the requirement that the party, not counsel, must certify under oath that he has not commenced any other
action involving the same issues in this Court or the Court of Appeals or any other tribunal or agency, we are inclined
to accept petitioners submission that since the OSG is the only lawyer for the petitioner, which is a government
agency mandated under Section 35, Chapter 12, title III, Book IV of the 1987 Administrative Code
iv
to be represented
only by the Solicitor General, the certification executed by the OSG in this case constitutes substantial compliance
with Circular No. 28-91.
With respect to the merits of this petition, the main point of contention in this appeal is the interpretation of
Article 13 (2) (b) (iii) of the RP-US Tax Treaty regarding the rate of tax to be imposed by the Philippines upon
royalties received by a non-resident foreign corporation. The provision states insofar as pertinent that-
1) Royalties derived by a resident of one of the Contracting States from sources within the other Contracting State
may be taxed by both Contracting States.
2) However, the tax imposed by that Contracting State shall not exceed.
a) In the case of the United States, 15 percent of the gross amount of the royalties, and
b) In the case of the Philippines, the least of:
(i) 25 percent of the gross amount of the royalties;
(ii) 15 percent of the gross amount of the royalties, where the royalties are paid by a corporation
registered with the Philippine Board of Investments and engaged in preferred areas of activities; and
(iii) the lowest rate of Philippine tax that may be imposed on royalties of the same kind paid under
similar circumstances to a resident of a third State.
xxx xxx xxx
(italics supplied)
Respondent S. C. Johnson and Son, Inc. claims that on the basis of the quoted provision, it is entitled to the
concessional tax rate of 10 percent on royalties based on Article 12 (2) (b) of the RP-Germany Tax Treaty which
provides:
(2) However, such royalties may also be taxed in the Contracting State in which they arise, and according to the law of
that State, but the tax so charged shall not exceed:
x x x
b) 10 percent of the gross amount of royalties arising from the use of, or the right to use, any patent, trademark, design
or model, plan, secret formula or process, or from the use of or the right to use, industrial, commercial, or scientific
equipment, or for information concerning industrial, commercial or scientific experience.
For as long as the transfer of technology, under Philippine law, is subject to approval, the limitation of the tax rate
mentioned under b) shall, in the case of royalties arising in the Republic of the Philippines, only apply if the contract giving rise
to such royalties has been approved by the Philippine competent authorities.
Unlike the RP-US Tax Treaty, the RP-Germany Tax Treaty allows a tax credit of 20 percent of the gross amount
of such royalties against German income and corporation tax for the taxes payable in the Philippines on such royalties
where the tax rate is reduced to 10 or 15 percent under such treaty. Article 24 of the RP-Germany Tax Treaty states-
1) Tax shall be determined in the case of a resident of the Federal Republic of Germany as follows:
x x x x x x x x x
b) Subject to the provisions of German tax law regarding credit for foreign tax, there shall be allowed as a credit against
German income and corporation tax payable in respect of the following items of income arising in the Republic of the
Philippines, the tax paid under the laws of the Philippines in accordance with this Agreement on:
x x x x x x x x x
dd) royalties, as defined in paragraph 3 of Article 12;
x x x x x x x x x
c) For the purpose of the credit referred in subparagraph b) the Philippine tax shall be deemed to be
x x x x x x x x x
cc) in the case of royalties for which the tax is reduced to 10 or 15 per cent according to paragraph 2 of Article 12,
20 percent of the gross amount of such royalties.
x x x x x x x x x
According to petitioner, the taxes upon royalties under the RP-US Tax Treaty are not paid under circumstances
similar to those in the RP-West Germany Tax Treaty since there is no provision for a 20 percent matching credit in
the former convention and private respondent cannot invoke the concessional tax rate on the strength of the most
favored nation clause in the RP-US Tax Treaty. Petitioners position is explained thus:
Under the foregoing provision of the RP-West Germany Tax Treaty, the Philippine tax paid on income from sources
within the Philippines is allowed as a credit against German income and corporation tax on the same income. In the case of
royalties for which the tax is reduced to 10 or 15 percent according to paragraph 2 of Article 12 of the RP-West Germany Tax
Treaty, the credit shall be 20% of the gross amount of such royalty. To illustrate, the royalty income of a German resident from
sources within the Philippines arising from the use of, or the right to use, any patent, trade mark, design or model, plan, secret
formula or process, is taxed at 10% of the gross amount of said royalty under certain conditions. The rate of 10% is imposed if
credit against the German income and corporation tax on said royalty is allowed in favor of the German resident. That means
the rate of 10% is granted to the German taxpayer if he is similarly granted a credit against the income and corporation tax of
West Germany. The clear intent of the matching credit is to soften the impact of double taxation by different jurisdictions.
The RP-US Tax Treaty contains no similar matching credit as that provided under the RP-West Germany Tax Treaty.
Hence, the tax on royalties under the RP-US Tax Treaty is not paid under similar circumstances as those obtaining in the RP-
West Germany Tax Treaty. Therefore, the most favored nation clause in the RP-West Germany Tax Treaty cannot be availed
of in interpreting the provisions of the RP-US Tax Treaty.
v

The petition is meritorious.
We are unable to sustain the position of the Court of Tax Appeals, which was upheld by the Court of Appeals,
that the phrase paid under similar circumstances in Article 13 (2) (b), (iii) of the RP-US Tax Treaty should be
interpreted to refer to payment of royalty, and not to the payment of the tax, for the reason that the phrase paid under
similar circumstances is followed by the phrase to a resident of a third state. The respondent court held that
Words are to be understood in the context in which they are used, and since what is paid to a resident of a third state
is not a tax but a royalty logic instructs that the treaty provision in question should refer to royalties of the same
kind paid under similar circumstances.
The above construction is based principally on syntax or sentence structure but fails to take into account the
purpose animating the treaty provisions in point. To begin with, we are not aware of any law or rule pertinent to the
payment of royalties, and none has been brought to our attention, which provides for the payment of royalties under
dissimilar circumstances. The tax rates on royalties and the circumstances of payment thereof are the same for all the
recipients of such royalties and there is no disparity based on nationality in the circumstances of such payment.
vi
On
the other hand, a cursory reading of the various tax treaties will show that there is no similarity in the provisions on
relief from or avoidance of double taxation
vii
as this is a matter of negotiation between the contracting parties.
viii
As
will be shown later, this dissimilarity is true particularly in the treaties between the Philippines and the United States
and between the Philippines and West Germany.
The RP-US Tax Treaty is just one of a number of bilateral treaties which the Philippines has entered into for the
avoidance of double taxation.
ix
The purpose of these international agreements is to reconcile the national fiscal
legislations of the contracting parties in order to help the taxpayer avoid simultaneous taxation in two different
jurisdictions.
x
More precisely, the tax conventions are drafted with a view towards the elimination of international
juridical double taxation, which is defined as the imposition of comparable taxes in two or more states on the same
taxpayer in respect of the same subject matter and for identical periods.
xi
, citing the Committee on Fiscal Affairs of the
Organization for Economic Co-operation and Development (OECD).11 The apparent rationale for doing away with double
taxation is to encourage the free flow of goods and services and the movement of capital, technology and persons
between countries, conditions deemed vital in creating robust and dynamic economies.
xii
Foreign investments will
only thrive in a fairly predictable and reasonable international investment climate and the protection against double
taxation is crucial in creating such a climate.
xiii

Double taxation usually takes place when a person is resident of a contracting state and derives income from, or
owns capital in, the other contracting state and both states impose tax on that income or capital. In order to eliminate
double taxation, a tax treaty resorts to several methods. First, it sets out the respective rights to tax of the state of
source or situs and of the state of residence with regard to certain classes of income or capital. In some cases, an
exclusive right to tax is conferred on one of the contracting states; however, for other items of income or capital, both
states are given the right to tax, although the amount of tax that may be imposed by the state of source is limited.
xiv

The second method for the elimination of double taxation applies whenever the state of source is given a full or
limited right to tax together with the state of residence. In this case, the treaties make it incumbent upon the state of
residence to allow relief in order to avoid double taxation. There are two methods of relief- the exemption method
and the credit method. In the exemption method, the income or capital which is taxable in the state of source or situs
is exempted in the state of residence, although in some instances it may be taken into account in determining the rate
of tax applicable to the taxpayers remaining income or capital. On the other hand, in the credit method, although the
income or capital which is taxed in the state of source is still taxable in the state of residence, the tax paid in the
former is credited against the tax levied in the latter. The basic difference between the two methods is that in the
exemption method, the focus is on the income or capital itself, whereas the credit method focuses upon the tax.
xv

In negotiating tax treaties, the underlying rationale for reducing the tax rate is that the Philippines will give up a
part of the tax in the expectation that the tax given up for this particular investment is not taxed by the other country.
xvi

Thus the petitioner correctly opined that the phrase royalties paid under similar circumstances in the most favored
nation clause of the US-RP Tax Treaty necessarily contemplated circumstances that are tax-related.
In the case at bar, the state of source is the Philippines because the royalties are paid for the right to use property
or rights, i.e. trademarks, patents and technology, located within the Philippines.
xvii
The United States is the state of
residence since the taxpayer, S. C. Johnson and Son, U. S. A., is based there. Under the RP-US Tax Treaty, the state
of residence and the state of source are both permitted to tax the royalties, with a restraint on the tax that may be
collected by the state of source.
xviii
Furthermore, the method employed to give relief from double taxation is the
allowance of a tax credit to citizens or residents of the United States (in an appropriate amount based upon the taxes
paid or accrued to the Philippines) against the United States tax, but such amount shall not exceed the limitations
provided by United States law for the taxable year.
xix
Under Article 13 thereof, the Philippines may impose one of
three rates- 25 percent of the gross amount of the royalties; 15 percent when the royalties are paid by a corporation
registered with the Philippine Board of Investments and engaged in preferred areas of activities; or the lowest rate of
Philippine tax that may be imposed on royalties of the same kind paid under similar circumstances to a resident of a
third state.
Given the purpose underlying tax treaties and the rationale for the most favored nation clause, the concessional
tax rate of 10 percent provided for in the RP-Germany Tax Treaty should apply only if the taxes imposed upon
royalties in the RP-US Tax Treaty and in the RP-Germany Tax Treaty are paid under similar circumstances. This
would mean that private respondent must prove that the RP-US Tax Treaty grants similar tax reliefs to residents of the
United States in respect of the taxes imposable upon royalties earned from sources within the Philippines as those
allowed to their German counterparts under the RP-Germany Tax Treaty.
The RP-US and the RP-West Germany Tax Treaties do not contain similar provisions on tax crediting. Article
24 of the RP-Germany Tax Treaty, supra, expressly allows crediting against German income and corporation tax of
20% of the gross amount of royalties paid under the law of the Philippines. On the other hand, Article 23 of the RP-
US Tax Treaty, which is the counterpart provision with respect to relief for double taxation, does not provide for
similar crediting of 20% of the gross amount of royalties paid. Said Article 23 reads:
Article 23
Relief from double taxation
Double taxation of income shall be avoided in the following manner:
1) In accordance with the provisions and subject to the limitations of the law of the United States (as it may be
amended from time to time without changing the general principle thereof), the United States shall allow to a
citizen or resident of the United States as a credit against the United States tax the appropriate amount of taxes paid
or accrued to the Philippines and, in the case of a United States corporation owning at least 10 percent of the voting
stock of a Philippine corporation from which it receives dividends in any taxable year, shall allow credit for the
appropriate amount of taxes paid or accrued to the Philippines by the Philippine corporation paying such dividends
with respect to the profits out of which such dividends are paid. Such appropriate amount shall be based upon the
amount of tax paid or accrued to the Philippines, but the credit shall not exceed the limitations (for the purpose of
limiting the credit to the United States tax on income from sources within the Philippines or on income from
sources outside the United States) provided by United States law for the taxable year. xxx.
The reason for construing the phrase paid under similar circumstances as used in Article 13 (2) (b) (iii) of the
RP-US Tax Treaty as referring to taxes is anchored upon a logical reading of the text in the light of the fundamental
purpose of such treaty which is to grant an incentive to the foreign investor by lowering the tax and at the same time
crediting against the domestic tax abroad a figure higher than what was collected in the Philippines.
In one case, the Supreme Court pointed out that laws are not just mere compositions, but have ends to be
achieved and that the general purpose is a more important aid to the meaning of a law than any rule which grammar
may lay down.
xx
It is the duty of the courts to look to the object to be accomplished, the evils to be remedied, or the
purpose to be subserved, and should give the law a reasonable or liberal construction which will best effectuate its
purpose.
xxi
The Vienna Convention on the Law of Treaties states that a treaty shall be interpreted in good faith in
accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its
object and purpose.
xxii

As stated earlier, the ultimate reason for avoiding double taxation is to encourage foreign investors to invest in
the Philippines - a crucial economic goal for developing countries.
xxiii
The goal of double taxation conventions would
be thwarted if such treaties did not provide for effective measures to minimize, if not completely eliminate, the tax
burden laid upon the income or capital of the investor. Thus, if the rates of tax are lowered by the state of source, in
this case, by the Philippines, there should be a concomitant commitment on the part of the state of residence to grant
some form of tax relief, whether this be in the form of a tax credit or exemption.
xxiv
Otherwise, the tax which could
have been collected by the Philippine government will simply be collected by another state, defeating the object of the
tax treaty since the tax burden imposed upon the investor would remain unrelieved. If the state of residence does not
grant some form of tax relief to the investor, no benefit would redound to the Philippines, i.e., increased investment
resulting from a favorable tax regime, should it impose a lower tax rate on the royalty earnings of the investor, and it
would be better to impose the regular rate rather than lose much-needed revenues to another country.
At the same time, the intention behind the adoption of the provision on relief from double taxation in the two
tax treaties in question should be considered in light of the purpose behind the most favored nation clause.
The purpose of a most favored nation clause is to grant to the contracting party treatment not less favorable than
that which has been or may be granted to the most favored among other countries.
xxv
The most favored nation clause
is intended to establish the principle of equality of international treatment by providing that the citizens or subjects of
the contracting nations may enjoy the privileges accorded by either party to those of the most favored nation.
xxvi
The
essence of the principle is to allow the taxpayer in one state to avail of more liberal provisions granted in another tax
treaty to which the country of residence of such taxpayer is also a party provided that the subject matter of taxation, in
this case royalty income, is the same as that in the tax treaty under which the taxpayer is liable. Both Article 13 of the
RP-US Tax Treaty and Article 12 (2) (b) of the RP-West Germany Tax Treaty, above-quoted, speaks of tax on
royalties for the use of trademark, patent, and technology. The entitlement of the 10% rate by U.S. firms despite the
absence of a matching credit (20% for royalties) would derogate from the design behind the most favored nation
clause to grant equality of international treatment since the tax burden laid upon the income of the investor is not the
same in the two countries. The similarity in the circumstances of payment of taxes is a condition for the enjoyment of
most favored nation treatment precisely to underscore the need for equality of treatment.
We accordingly agree with petitioner that since the RP-US Tax Treaty does not give a matching tax credit of 20
percent for the taxes paid to the Philippines on royalties as allowed under the RP-West Germany Tax Treaty, private
respondent cannot be deemed entitled to the 10 percent rate granted under the latter treaty for the reason that there is
no payment of taxes on royalties under similar circumstances.
It bears stress that tax refunds are in the nature of tax exemptions. As such they are regarded as in derogation of
sovereign authority and to be construed strictissimi juris against the person or entity claiming the exemption.
xxvii
The
burden of proof is upon him who claims the exemption in his favor and he must be able to justify his claim by the
clearest grant of organic or statute law.
xxviii
Private respondent is claiming for a refund of the alleged overpayment of
tax on royalties; however, there is nothing on record to support a claim that the tax on royalties under the RP-US Tax
Treaty is paid under similar circumstances as the tax on royalties under the RP-West Germany Tax Treaty.
WHEREFORE, for all the foregoing, the instant petition is GRANTED. The decision dated May 7, 1996 of the
Court of Tax Appeals and the decision dated November 7, 1996 of the Court of Appeals are hereby SET ASIDE.
SO ORDERED.