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1 CHURCHILL V REFFERTY, 32 PHIL 580 (1915) and leaves the taxpayer, in a contest with it, the same ordinary

remedial actions which prevail between citizen and citizen. The


G.R. No. L-10572 December 21, 1915 Attorney-General, on behalf of the defendant, contends that
there is no provisions of the paramount law which prohibits such
FRANCIS A. CHURCHILL and STEWART TAIT, plaintiffs-appellees, a course. While, on the other hand, counsel for plaintiffs urge
vs. that the two sections are unconstitutional because (a) they
JAMES J. RAFFERTY, Collector of Internal Revenue, defendant- attempt to deprive aggrieved taxpayers of all substantial remedy
appellant. for the protection of their property, thereby, in effect, depriving
them of their property without due process of law, and (b) they
attempt to diminish the jurisdiction of the courts, as conferred
Attorney-General Avanceña for appellant.
upon them by Acts Nos. 136 and 190, which jurisdiction was
Aitken and DeSelms for appellees.
ratified and confirmed by the Act of Congress of July 1, 1902.
TRENT, J.:
In the first place, it has been suggested that section 139 does not
apply to the tax in question because the section, in speaking of a
The judgment appealed from in this case perpetually restrains
"tax," means only legal taxes; and that an illegal tax (the one
and prohibits the defendant and his deputies from collecting and
complained of) is not a tax, and, therefore, does not fall within
enforcing against the plaintiffs and their property the annual tax
the inhibition of the section, and may be restrained by
mentioned and described in subsection (b) of section 100 of Act
injunction. There is no force in this suggestion. The inhibition
No. 2339, effective July 1, 1914, and from destroying or
applies to all internal revenue taxes imposes, or authorized to be
removing any sign, signboard, or billboard, the property of the
imposed, by Act No. 2339. (Snyder vs. Marks, 109 U.S., 189.)
plaintiffs, for the sole reason that such sign, signboard, or
And, furthermore, the mere fact that a tax is illegal, or that the
billboard is, or may be, offensive to the sight; and decrees the
law, by virtue of which it is imposed, is unconstitutional, does
cancellation of the bond given by the plaintiffs to secure the
not authorize a court of equity to restrain its collection by
issuance of the preliminary injunction granted soon after the
injunction. There must be a further showing that there are
commencement of this action.
special circumstances which bring the case under some well
recognized head of equity jurisprudence, such as that irreparable
This case divides itself into two parts and gives rise to two main injury, multiplicity of suits, or a cloud upon title to real estate will
questions; (1) that relating to the power of the court to restrain result, and also that there is, as we have indicated, no adequate
by injunction the collection of the tax complained of, and (2) that remedy at law. This is the settled law in the United States, even
relating to the validity of those provisions of subsection (b) of in the absence of statutory enactments such as sections 139 and
section 100 of Act No. 2339, conferring power upon the Collector 140. (Hannewinkle vs. Mayor, etc., of Georgetown, 82 U.S., 547;
of Internal Revenue to remove any sign, signboard, or billboard Indiana Mfg. Co. vs. Koehne, 188 U.S., 681; Ohio Tax cases, 232
upon the ground that the same is offensive to the sight or is U. S., 576, 587; Pittsburgh C. C. & St. L. R. Co. vs. Board of Public
otherwise a nuisance. Works, 172 U. S., 32; Shelton vs. Plat, 139 U.S., 591; State
Railroad Tax Cases, 92 U. S., 575.) Therefore, this branch of the
The first question is one of the jurisdiction and is of vital case must be controlled by sections 139 and 140, unless the
importance to the Government. The sections of Act No. 2339, same be held unconstitutional, and consequently, null and void.
which bear directly upon the subject, are 139 and 140. The first
expressly forbids the use of an injunction to stay the collection of The right and power of judicial tribunals to declare
any internal revenue tax; the second provides a remedy for any whether enactments of the legislature exceed the
wrong in connection with such taxes, and this remedy was constitutional limitations and are invalid has always
intended to be exclusive, thereby precluding the remedy by been considered a grave responsibility, as well as a
injunction, which remedy is claimed to be constitutional. The solemn duty. The courts invariably give the most careful
two sections, then, involve the right of a dissatisfied taxpayers to consideration to questions involving the interpretation
use an exceptional remedy to test the validity of any tax or to and application of the Constitution, and approach
determine any other question connected therewith, and the constitutional questions with great deliberation,
question whether the remedy by injunction is exceptional. exercising their power in this respect with the greatest
possible caution and even reluctance; and they should
Preventive remedies of the courts are extraordinary and are not never declare a statute void, unless its invalidity is, in
the usual remedies. The origin and history of the writ of their judgment, beyond reasonable doubt. To justify a
injunction show that it has always been regarded as an court in pronouncing a legislative act unconstitutional,
extraordinary, preventive remedy, as distinguished from the or a provision of a state constitution to be in
common course of the law to redress evils after they have been contravention of the Constitution of the United States,
consummated. No injunction issues as of course, but is granted the case must be so clear to be free from doubt, and the
only upon the oath of a party and when there is no adequate conflict of the statute with the constitution must be
remedy at law. The Government does, by section 139 and 140, irreconcilable, because it is but a decent respect to the
take away the preventive remedy of injunction, if it ever existed, wisdom, the integrity, and the patriotism of the
legislative body by which any law is passed to presume taxes by injunction. If the Supreme Court of the United States
in favor of its validity until the contrary is shown beyond has clearly and definitely held that the provisions of section 3224
reasonable doubt. Therefore, in no doubtful case will do not violate the "due process of law" and "equal protection of
the judiciary pronounce a legislative act to be contrary the law" clauses in the Constitution, we would be going too far
to the constitution. To doubt the constitutionality of a to hold that section 139 violates those same provisions in the
law is to resolve the doubt in favor of its validity. (6 Philippine Bill. That the Supreme Court of the United States has
Ruling Case Law, secs. 71, 72, and 73, and cases cited so held, cannot be doubted.
therein.)
In Cheatham vs. United States (92 U.S., 85,89) which involved the
It is also the settled law in the United States that "due process of validity of an income tax levied by an act of Congress prior to the
law" does not always require, in respect to the Government, the one in issue in the case of Pollock vs. Farmers' Loan & Trust Co.
same process that is required between citizens, though it (157 U.S., 429) the court, through Mr. Justice Miller, said: "If
generally implies and includes regular allegations, opportunity to there existed in the courts, state or National, any general power
answer, and a trial according to some well settled course of of impeding or controlling the collection of taxes, or relieving the
judicial proceedings. The case with which we are dealing is in hardship incident to taxation, the very existence of the
point. A citizen's property, both real and personal, may be taken, government might be placed in the power of a hostile judiciary.
and usually is taken, by the government in payment of its taxes (Dows vs. The City of Chicago, 11 Wall., 108.) While a free course
without any judicial proceedings whatever. In this country, as of remonstrance and appeal is allowed within the departments
well as in the United States, the officer charged with the before the money is finally exacted, the General Government has
collection of taxes is authorized to seize and sell the property of wisely made the payment of the tax claimed, whether of
delinquent taxpayers without applying to the courts for customs or of internal revenue, a condition precedent to a resort
assistance, and the constitutionality of the law authorizing this to the courts by the party against whom the tax is assessed. In
procedure never has been seriously questioned. (City of the internal revenue branch it has further prescribed that no
Philadelphia vs. [Diehl] The Collector, 5 Wall., 720; such suit shall be brought until the remedy by appeal has been
Nicholl vs. U.S., 7 Wall., 122, and cases cited.) This must tried; and, if brought after this, it must be within six months after
necessarily be the course, because it is upon taxation that the the decision on the appeal. We regard this as a condition on
Government chiefly relies to obtain the means to carry on its which alone the government consents to litigate the lawfulness
operations, and it is of the utmost importance that the modes of the original tax. It is not a hard condition. Few governments
adopted to enforce the collection of the taxes levied should be have conceded such a right on any condition. If the compliance
summary and interfered with as little as possible. No with this condition requires the party aggrieved to pay the
government could exist if every litigious man were permitted to money, he must do it."
delay the collection of its taxes. This principle of public policy
must be constantly borne in mind in determining cases such as Again, in State Railroad Tax Cases (92 U.S., 575, 613), the court
the one under consideration. said: "That there might be no misunderstanding of the
universality of this principle, it was expressly enacted, in 1867,
With these principles to guide us, we will proceed to inquire that "no suit for the purpose of restraining the assessment or
whether there is any merit in the two propositions insisted upon collection of any tax shall be maintained in any court." (Rev,
by counsel for the plaintiffs. Section 5 of the Philippine Bill Stat., sec. 3224.) And though this was intended to apply alone to
provides: "That no law shall be enacted in said Islands which taxes levied by the United States, it shows the sense of Congress
shall deprive any person of life, liberty, or property without due of the evils to be feared if courts of justice could, in any case,
process of law, or deny to any person therein the equal interfere with the process of collecting taxes on which the
protection of the law." government depends for its continued existence. It is a wise
policy. It is founded in the simple philosophy derived from the
The origin and history of these provisions are well-known. They experience of ages, that the payment of taxes has to be enforced
are found in substance in the Constitution of the United States by summary and stringent means against a reluctant and often
and in that of ever state in the Union. adverse sentiment; and to do this successfully, other
instrumentalities and other modes of procedure are necessary,
Section 3224 of the Revised Statutes of the United States, than those which belong to courts of justice."
effective since 1867, provides that: "No suit for the purpose of
restraining the assessment or collection of any tax shall be And again, in Snyder vs. Marks (109 U.S., 189), the court said:
maintained in any court." "The remedy of a suit to recover back the tax after it is paid is
provided by statute, and a suit to restrain its collection is
Section 139, with which we have been dealing, reads: "No court forbidden. The remedy so given is exclusive, and no other
shall have authority to grant an injunction to restrain the remedy can be substituted for it. Such has been the current of
collection of any internal-revenue tax." decisions in the Circuit Courts of the United States, and we are
satisfied it is a correct view of the law."itc-a1f
A comparison of these two sections show that they are
essentially the same. Both expressly prohibit the restraining of
In the consideration of the plaintiffs' second proposition, we will This inhibition was inserted in section 17 of Act No. 83 and
attempt to show (1) that the Philippine courts never have had, applies to taxes imposed by provincial boards. The inhibition was
since the American occupation, the power to restrain by not inserted in the Manila Charter until the passage of Act No.
injunction the collection of any tax imposed by the Insular 1793, effective October 12, 1907. Act No. 355 expressly makes
Government for its own purpose and benefit, and (2) that the payment of the exactions claimed a condition precedent to a
assuming that our courts had or have such power, this power has resort to the courts by dissatisfied importers. Section 52 of Act
not been diminished or curtailed by sections 139 and 140. No. 1189 provides "That no courts shall have authority to grant
an injunction restraining the collection of any taxes imposed by
We will first review briefly the former and present systems of virtue of the provisions of this Act, but the remedy of the
taxation. Upon the American occupation of the Philippine, there taxpayer who claims that he is unjustly assessed or taxed shall be
was found a fairly complete system of taxation. This system was by payment under protest of the sum claimed from him by the
continued in force by the military authorities, with but few Collector of Internal Revenue and by action to recover back the
changes, until the Civil Government assumed charge of the sum claimed to have been illegally collected."
subject. The principal sources of revenue under the Spanish
regime were derived from customs receipts, the so-called Sections 139 and 140 of Act No. 2339 contain, as we have
industrial taxes, the urbana taxes, the stamp tax, the personal indicated, the same prohibition and remedy. The result is that
cedula tax, and the sale of the public domain. The industrial and the courts have been expressly forbidden, in every act creating
urbana taxes constituted practically an income tax of some 5 per or imposing taxes or imposts enacted by the legislative body of
cent on the net income of persons engaged in industrial and the Philippines since the American occupation, to entertain any
commercial pursuits and on the income of owners of improved suit assailing the validity of any tax or impost thus imposed until
city property. The sale of stamped paper and adhesive stamp tax. the tax shall have been paid under protest. The only taxes which
The cedula tax was a graduated tax, ranging from nothing up to have not been brought within the express inhibition were those
P37.50. The revenue derived from the sale of the public domain included in that part of the old Spanish system which completely
was not considered a tax. The American authorities at once disappeared on or before January 1, 1905, and possibly the old
abolished the cedula tax, but later restored it in a modified form, customs duties which disappeared in February, 1902.
charging for each cedula twenty centavos, an amount which was
supposed to be just sufficient to cover the cost of issuance. The Section 56 of the Organic Act (No. 136), effective June 16, 1901,
urbana tax was abolished by Act No. 223, effective September 6, provides that "Courts of First Instance shall have original
1901. jurisdiction:

The "Municipal Code" (Act No. 82) and the Provincial xxx xxx xxx
Government Act (No. 83), both enacted in 1901, authorize
municipal councils and provincial boards to impose an ad 2. In all civil actions which involve the ... legality of any
valorem tax on real estate. The Municipal Code did not apply to tax, impost, or assessment, . . . .
the city of Manila. This city was given a special charter (Act No.
183), effective August 30, 1901; Under this charter the Municipal
xxx xxx xxx
Board of Manila is authorized and empowered to impose taxes
upon real estate and, like municipal councils, to license and
regulate certain occupations. Customs matters were completely 7. Said courts and their judges, or any of them, shall
have power to issue writs of
reorganized by Act No. 355, effective at the port of Manila on
injunction, mandamus, certiorari, prohibition, quo
February 7, 1902, and at other ports in the Philippine Islands the
warranto, and habeas corpus in their respective
day after the receipt of a certified copy of the Act. The Internal
provinces and districts, in the manner provided in the
Revenue Law of 1904 (Act No. 1189), repealed all existing laws,
Code of Civil Procedure.
ordinances, etc., imposing taxes upon the persons, objects, or
occupations taxed under that act, and all industrial taxes and
stamp taxes imposed under the Spanish regime were eliminated, The provisions of the Code of Civil Procedure (Act No. 190),
but the industrial tax was continued in force until January 1, effective October 1, 1901, which deals with the subject of
1905. This Internal Revenue Law did not take away from injunctions, are sections 162 to 172, inclusive. Injunctions, as
municipal councils, provincial boards, and the Municipal Board of here defined, are of two kinds; preliminary and final. The former
the city of Manila the power to impose taxes upon real estate. may be granted at any time after the commencement of the
This Act (No. 1189), with its amendments, was repealed by Act action and before final judgment, and the latter at the
No. 2339, an act "revising and consolidating the laws relative to termination of the trial as the relief or part of the relief prayed
internal revenue." for (sec. 162). Any judge of the Supreme Court may grant a
preliminary injunction in any action pending in that court or in
any Court of First Instance. A preliminary injunction may also be
Section 84 of Act No. 82 provides that "No court shall entertain
granted by a judge of the Court of First Instance in actions
any suit assailing the validity of a tax assessed under this act until
pending in his district in which he has original jurisdiction (sec.
the taxpayer shall have paid, under protest, the taxes assessed
163). But such injunctions may be granted only when the
against him, . . . ."
complaint shows facts entitling the plaintiff to the relief at bar, are "civil actions," but of a special or extraordinary
demanded (sec. 166), and before a final or permanent injunction character. It cannot be said that the Commission intended to
can be granted, it must appear upon the trial of the action that give a broader or different meaning to the word "action," used in
the plaintiff is entitled to have commission or continuance of the Chapter 9 of the Code of Civil Procedure in connection with
acts complained of perpetually restrained (sec. 171). These injunctions, than it gave to the same word found in paragraph 2
provisions authorize the institution in Courts of First Instance of of section 56 of the Organic Act. The Insular Government, in
what are known as "injunction suits," the sole object of which is exercising the power conferred upon it by the Congress of the
to obtain the issuance of a final injunction. They also authorize United States, has declared that the citizens and residents of this
the granting of injunctions as aiders in ordinary civil actions. We country shall pay certain specified taxes and imposts. The power
have defined in Davesa vs. Arbes (13 Phil. Rep., 273), an to tax necessarily carries with it the power to collect the taxes.
injunction to be "A "special remedy" adopted in that code (Act This being true, the weight of authority supports the proposition
190) from American practice, and originally borrowed from that the Government may fix the conditions upon which it will
English legal procedure, which was there issued by the authority consent to litigate the validity of its original taxes.
and under the seal of a court of equity, and limited, as in other (Tennessee vs. Sneed, 96 U.S., 69.)
cases where equitable relief is sought, to those cases where
there is no "plain, adequate, and complete remedy at law,"which We must, therefore, conclude that paragraph 2 and 7 of section
will not be granted while the rights between the parties are 56 of Act No. 136, construed in the light of the prior and
undetermined, except in extraordinary cases where material and subsequent legislation to which we have referred, and the
irreparable injury will be done,"which cannot be compensated in legislative and judicial history of the same subject in the United
damages . . . States with which the Commission was familiar, do not empower
Courts of firs Instance to interfere by injunction with the
By paragraph 2 of section 56 of Act No. 136, supra, and the collection of the taxes in question in this case.1awphil.net
provisions of the various subsequent Acts heretofore mentioned,
the Insular Government has consented to litigate with aggrieved If we are in error as to the scope of paragraph 2 and 7, supra,
persons the validity of any original tax or impost imposed by it and the Commission did intend to confer the power upon the
on condition that this be done in ordinary civil actions after the courts to restrain the collection of taxes, it does not necessarily
taxes or exactions shall have been paid. But it is said that follow that this power or jurisdiction has been taken away by
paragraph 2 confers original jurisdiction upon Courts of First section 139 of Act No. 2339, for the reason that all agree that an
Instance to hear and determine "all civil actions" which involve injunction will not issue in any case if there is an adequate
the validity of any tax, impost or assessment, and that if the all- remedy at law. The very nature of the writ itself prevents its
inclusive words "all" and "any" be given their natural and issuance under such circumstances. Legislation forbidding the
unrestricted meaning, no action wherein that question is issuing of injunctions in such cases is unnecessary. So the only
involved can arise over which such courts do not have question to be here determined is whether the remedy provided
jurisdiction. (Barrameda vs. Moir, 25 Phil. Rep., 44.) This is true. for in section 140 of Act No. 2339 is adequate. If it is, the writs
But the term "civil actions" had its well defined meaning at the which form the basis of this appeal should not have been issued.
time the paragraph was enacted. The same legislative body If this is the correct view, the authority to issue injunctions will
which enacted paragraph 2 on June 16, 1901, had, just a few not have been taken away by section 139, but rendered
months prior to that time, defined the only kind of action in inoperative only by reason of an adequate remedy having been
which the legality of any tax imposed by it might be assailed. made available.
(Sec. 84, Act 82, enacted January 31, 1901, and sec. 17, Act No.
83, enacted February 6, 1901.) That kind of action being The legislative body of the Philippine Islands has declared from
payment of the tax under protest and an ordinary suit to recover the beginning (Act No. 82) that payment under protest and suit
and no other, there can be no doubt that Courts of First Instance to recover is an adequate remedy to test the legality of any tax
have jurisdiction over all such actions. The subsequent legislation or impost, and that this remedy is exclusive. Can we say that the
on the same subject shows clearly that the Commission, in remedy is not adequate or that it is not exclusive, or both? The
enacting paragraph 2, supra, did not intend to change or modify plaintiffs in the case at bar are the first, in so far as we are aware,
in any way section 84 of Act No. 82 and section 17 of Act No. 83, to question either the adequacy or exclusiveness of this remedy.
but, on the contrary, it was intended that "civil actions," We will refer to a few cases in the United States where statutes
mentioned in said paragraph, should be understood to mean, in similar to sections 139 and 140 have been construed and
so far as testing the legality of taxes were concerned, only those applied.
of the kind and character provided for in the two sections above
mentioned. It is also urged that the power to restrain by
In May, 1874, one Bloomstein presented a petition to the circuit
injunction the collection of taxes or imposts is conferred upon
court sitting in Nashville, Tennessee, stating that his real and
Courts of First Instance by paragraph 7 of section 56, supra. This
personal property had been assessed for state taxes in the year
paragraph does empower those courts to grant injunctions, both
1872 to the amount of $132.60; that he tendered to the collector
preliminary and final, in any civil action pending in their districts,
this amount in "funds receivable by law for such purposes;" and
provided always, that the complaint shows facts entitling the
that the collector refused to receive the same. He prayed for an
plaintiff to the relief demanded. Injunction suits, such as the one
alternative writ of mandamus to compel the collector to receive
the bills in payment for such taxes, or to show cause to the the United States, in the case just cited, said: "This remedy is
contrary. To this petition the collector, in his answer, set up the simple and effective. A suit at law to recover money unlawfully
defense that the petitioner's suit was expressly prohibited by the exacted is as speedy, as easily tried, and less complicated than a
Act of the General Assembly of the State of Tennessee, passed in proceeding by mandamus. ... In revenue cases, whether arising
1873. The petition was dismissed and the relief prayed for upon its (United States) Internal Revenue Laws or those
refused. An appeal to the supreme court of the State resulted in providing for the collection of duties upon foreign imports, it
the affirmance of the judgment of the lower court. The case was (United States) adopts the rule prescribed by the State of
then carried to the Supreme Court of the United States Tennessee. It requires the contestant to pay the amount as fixed
(Tennessee vs. Sneed, 96 U. S., 69), where the judgment was by the Government, and gives him power to sue the collector,
again affirmed. and in such suit to test the legality of the tax. There is nothing
illegal or even harsh in this. It is a wise and reasonable
The two sections of the Act of [March 21,] 1873, drawn in precaution for the security of the Government."
question in that cases, read as follows:
Thomas C. Platt commenced an action in the Circuit Court of the
1. That in all cases in which an officer, charged by law United States for the Eastern District of Tennessee to restrain the
with the collection of revenue due the State, shall collection of a license tax from the company which he
institute any proceeding, or take any steps for the represented. The defense was that sections 1 and 2 of the Act of
collection of the same, alleged or claimed to be due by 1873, supra, prohibited the bringing of that suit. This case also
said officer from any citizen, the party against whom the reached the Supreme Court of the United States.
proceeding or step is taken shall, if he conceives the (Shelton vs. Platt, 139 U. 591.) In speaking of the inhibitory
same to be unjust or illegal, or against any statute or provisions of sections 1 and 2 of the Act of 1873, the court said:
clause of the Constitution of the State, pay the same "This Act has been sanctioned and applied by the Courts of
under protest; and, upon his making said payment, the Tennessee. (Nashville vs.Smith, 86 Tenn., 213; Louisville & N. R.
officer or collector shall pay such revenue into the State Co. vs. State, 8 Heisk., 663, 804.) It is, as counsel observe, similar
Treasury, giving notice at the time of payment to the to the Act of Congress forbidding suit for the purpose of
Comptroller that the same was paid under protest; and restraining the assessment or collection of taxes under the
the party paying said revenue may, at any time within Internal Revenue Laws, in respect to which this court held that
thirty days after making said payment, and not longer the remedy by suit to recover back the tax after payment,
thereafter, sue the said officer having collected said provided for by the Statute, was exclusive. (Snyder vs. Marks, of
sum, for the recovery thereof. And the same may be this character has been called for by the embarrassments
tried in any court having the jurisdiction of the amount resulting from the improvident employment of the writ of
and parties; and, if it be determined that the same was injunction in arresting the collection of the public revenue; and,
wrongfully collected, as not being due from said party even in its absence, the strong arm of the court of chancery
to the State, for any reason going to the merits of the ought not to be interposed in that direction except where resort
same, then the court trying the case may certify of to that court is grounded upon the settled principles which
record that the same was wrongfully paid and ought to govern its jurisdiction."
be refunded; and thereupon the Comptroller shall issue
his warrant for the same, which shall be paid in In Louisville & N.R. Co. vs. State (8 Heisk. [64 Tenn.], 663, 804),
preference to other claims on the Treasury. cited by the Supreme Court of the United States in
Shelton vs. Platt, supra, the court said: "It was urged that this
2. That there shall be no other remedy, in any case of statute (sections 1 and 2 of the Act of 1873, supra) is
the collection of revenue, or attempt to collect revenue unconstitutional and void, as it deprives the citizen of the
illegally, or attempt to collect revenue in funds only remedy by certiorari, guaranteed by the organic law."
receivable by said officer under the law, the same being
other or different funds than such as the tax payer may By the 10th section of the sixth article of the Constitution,
tender, or claim the right to pay, than that above [Tennessee] it is provided that: "The judges or justices of inferior
provided; and no writ for the prevention of the courts of law and equity shall have power in all civil cases to
collection of any revenue claimed, or to hinder or delay issue writs of certiorari, to remove any cause, or the transcript of
the collection of the same, shall in anywise issue, either the record thereof, from any inferior jurisdiction into such court
injunction, supersedeas, prohibition, or any other writ of law, on sufficient cause, supported by oath or affirmation."
or process whatever; but in all cases in which, for any
reason, any person shall claim that the tax so collected The court held the act valid as not being in conflict with these
was wrongfully or illegally collected, the remedy for said provisions of the State constitution.
party shall be as above provided, and in no other
manner." In Eddy vs. The Township of Lee (73 Mich., 123), the
complainants sought to enjoin the collection of certain taxes for
In discussing the adequacy of the remedy provided by the the year 1886. The defendants, in support of their demurrer,
Tennessee Legislature, as above set forth, the Supreme Court of insisted that the remedy by injunction had been taken away by
section 107 of the Act of 1885, which section reads as follows: authority to prosecute his claim against the State by mandamus,
"No injunction shall issue to stay proceedings for the assessment and that by the statutes of that year the further use of that form
or collection of taxes under this Act." was prohibited to him, the question remains. whether an
effectual remedy was left to him or provided for him. We think
It was claimed by the complainants that the above quoted the regulation of the statute gave him an abundant means of
provisions of the Act of 1885 were unconstitutional and void as enforcing such right as he possessed. It provided that he might
being in conflict with article 6, sec. 8, of the Constitution, which pay his claim to the collector under protest, giving notice thereof
provides that: "The circuit courts shall have original jurisdiction to the Comptroller of the Treasury; that at any time within thirty
in all matters, civil and criminal, not excepted in this days thereafter he might sue the officer making the collection;
Constitution, and not prohibited by law. ... They shall also have that the case should be tried by any court having jurisdiction
power to issue writs of habeas corpus, mandamus, and, if found in favor of the plaintiff on the merits, the court
injunction, quo warranto, certiorari, and other writs necessary to should certify that the same was wrongfully paid and ought to be
carry into effect their orders, judgments, and decrees." refunded and the Comptroller should thereupon issue his
warrant therefor, which should be paid in preference to other
Mr. Justice Champlin, speaking for the court, said: "I have no claim on the Treasury."
doubt that the Legislature has the constitutional authority,
where it has provided a plain, adequate, and complete remedy But great stress is laid upon the fact that the plaintiffs in the case
at law to recover back taxes illegally assessed and collected, to under consideration are unable to pay the taxes assessed against
take away the remedy by injunction to restrain their collection." them and that if the law is enforced, they will be compelled to
suspend business. This point may be best answered by quoting
Section 9 of the Philippine Bill reads in part as follows: "That the from the case of Youngblood vs. Sexton (32 Mich., 406), wherein
Supreme Court and the Courts of First Instance of the Philippine Judge Cooley, speaking for the court, said: "But if this
Islands shall possess and exercise jurisdiction as heretofore consideration is sufficient to justify the transfer of a controversy
provided and such additional jurisdiction as shall hereafter be from a court of law to a court of equity, then every controversy
prescribed by the Government of said Islands, subject to the where money is demanded may be made the subject of
power of said Government to change the practice and method of equitable cognizance. To enforce against a dealer a promissory
procedure." note may in some cases as effectually break up his business as to
collect from him a tax of equal amount. This is not what is known
to the law as irreparable injury. The courts have never
It will be seen that this section has not taken away from the
recognized the consequences of the mere enforcement of a
Philippine Government the power to change the practice and
money demand as falling within that category."
method of procedure. If sections 139 and 140, considered
together, and this must always be done, are nothing more than a
mode of procedure, then it would seem that the Legislature did Certain specified sections of Act No. 2339 were amended by Act
not exceed its constitutional authority in enacting them. No. 2432, enacted December 23, 1914, effective January 1, 1915,
Conceding for the moment that the duly authorized procedure by imposing increased and additional taxes. Act No. 2432 was
for the determination of the validity of any tax, impost, or amended, were ratified by the Congress of the United States on
assessment was by injunction suits and that this method was March 4, 1915. The opposition manifested against the taxes
available to aggrieved taxpayers prior to the passage of Act No. imposed by Acts Nos. 2339 and 2432 is a matter of local history.
2339, may the Legislature change this method of procedure? A great many business men thought the taxes thus imposed
That the Legislature has the power to do this, there can be no were too high. If the collection of the new taxes on signs,
doubt, provided some other adequate remedy is substituted in signboards, and billboards may be restrained, we see no well-
lieu thereof. In speaking of the modes of enforcing rights created founded reason why injunctions cannot be granted restraining
by contracts, the Supreme Court of the United States, in the collection of all or at least a number of the other increased
Tennessee vs. Sneed, supra, said: "The rule seems to be that in taxes. The fact that this may be done, shows the wisdom of the
modes of proceedings and of forms to enforce the contract the Legislature in denying the use of the writ of injunction to restrain
Legislature has the control, and may enlarge, limit or alter them, the collection of any tax imposed by the Acts. When this was
provided that it does not deny a remedy, or so embarrass it with done, an equitable remedy was made available to all dissatisfied
conditions and restrictions as seriously to impair the value of the taxpayers.
right."
The question now arises whether, the case being one of which
In that case the petitioner urged that the Acts of 1873 were laws the court below had no jurisdiction, this court, on appeal, shall
impairing the obligation of the contract contained in the charter proceed to express an opinion upon the validity of provisions of
of the Bank of Tennessee, which contract was entered into with subsection (b) of section 100 of Act No. 2339, imposing the taxes
the State in 1838. It was claimed that this was done by placing complained of. As a general rule, an opinion on the merits of a
such impediments and obstructions in the way of its controversy ought to be declined when the court is powerless to
enforcement, thereby so impairing the remedies as practically to give the relief demanded. But it is claimed that this case is, in
render the obligation of no value. In disposing of this contention, many particulars, exceptional. It is true that it has been argued
the court said: "If we assume that prior to 1873 the relator had on the merits, and there is no reason for any suggestion or
suspicion that it is not a bona fide controversy. The legal points And cunsel for the plaintiffs states the question thus: "We
involved in the merits have been presented with force, clearness, contend that that portion of section 100 of Act No. 2339,
and great ability by the learned counsel of both sides. If the law empowering the Collector of Internal Revenue to remove
assailed were still in force, we would feel that an opinion on its billboards as nuisances, if objectionable to the sight, is
validity would be justifiable, but, as the amendment became unconstitutional, as constituting a deprivation of
effective on January 1, 1915, we think it advisable to proceed no property without due process of law."
further with this branch of the case.
From the position taken by counsel for both sides, it is clear that
The next question arises in connection with the supplementary our inquiry is limited to the question whether the enactment
complaint, the object of which is to enjoin the Collector of assailed by the plaintiffs was a legitimate exercise of the police
Internal Revenue from removing certain billboards, the property power of the Government; for all property is held subject to that
of the plaintiffs located upon private lands in the Province of power.
Rizal. The plaintiffs allege that the billboards here in question "in
no sense constitute a nuisance and are not deleterious to the As a consequence of the foregoing, all discussion and authorities
health, morals, or general welfare of the community, or of any cited, which go to the power of the state to authorize
persons." The defendant denies these allegations in his answer administrative officers to find, as a fact, that legitimate trades,
and claims that after due investigation made upon the callings, and businesses are, under certain circumstances,
complaints of the British and German Consuls, he "decided that statutory nuisances, and whether the procedure prescribed for
the billboard complained of was and still is offensive to the sight, this purpose is due process of law, are foreign to the issue here
and is otherwise a nuisance." The plaintiffs proved by Mr. presented.
Churchill that the "billboards were quite a distance from the road
and that they were strongly built, not dangerous to the safety of There can be no doubt that the exercise of the police power of
the people, and contained no advertising matter which is filthy, the Philippine Government belongs to the Legislature and that
indecent, or deleterious to the morals of the community." The this power is limited only by the Acts of Congress and those
defendant presented no testimony upon this point. In the agreed fundamentals principles which lie at the foundation of all
statement of facts submitted by the parties, the plaintiffs "admit republican forms of government. An Act of the Legislature which
that the billboards mentioned were and still are offensive to the is obviously and undoubtedly foreign to any of the purposes of
sight." the police power and interferes with the ordinary enjoyment of
property would, without doubt, be held to be invalid. But where
The pertinent provisions of subsection (b) of section 100 of Act the Act is reasonably within a proper consideration of and care
No. 2339 read: "If after due investigation the Collector of for the public health, safety, or comfort, it should not be
Internal Revenue shall decide that any sign, signboard, or disturbed by the courts. The courts cannot substitute their own
billboard displayed or exposed to public view is offensive to the views for what is proper in the premises for those of the
sight or is otherwise a nuisance, he may by summary order direct Legislature. In Munn vs. Illinois (94 U.S., 113), the United States
the removal of such sign, signboard, or billboard, and if same is Supreme Court states the rule thus: "If no state of circumstances
not removed within ten days after he has issued such order he could exist to justify such statute, then we may declare this one
my himself cause its removal, and the sign, signboard, or void because in excess of the legislative power of this state; but
billboard shall thereupon be forfeited to the Government, and if it could, we must presume it did. Of the propriety of legislative
the owner thereof charged with the expenses of the removal so interference, within the scope of the legislative power, a
effected. When the sign, signboard, or billboard ordered to be legislature is the exclusive judge."
removed as herein provided shall not comply with the provisions
of the general regulations of the Collector of Internal Revenue, This rule very fully discussed and declared in
no rebate or refund shall be allowed for any portion of a year for Powell vs. Pennsylvania (127 U.S., 678) — "oleo-margarine" case.
which the tax may have been paid. Otherwise, the Collector of (See also Crowley vs. Christensen, 137 U.S., 86, 87;
Internal Revenue may in his discretion make a proportionate Camfield vs. U.S., 167 U.S., 518.) While the state may interfere
refund of the tax for the portion of the year remaining for which wherever the public interests demand it, and in this particular a
the taxes were paid. An appeal may be had from the order of the large discretion is necessarily vested in the legislature to
Collector of Internal Revenue to the Secretary of Finance and determine, not only what the interest of the public require, but
Justice whose decision thereon shall be final." what measures are necessary for the protection of such
interests; yet, its determination in these matters is not final or
The Attorney-General, on behalf of the defendant, says: "The conclusive, but is subject to the supervision of the courts.
question which the case presents under this head for (Lawton vs. Steele, 152 U.S., 133.) Can it be said judicially that
determination, resolves itself into this inquiry: Is the suppression signs, signboards, and billboards, which are admittedly offensive
of advertising signs displayed or exposed to public view, which to the sight, are not with the category of things which interfere
are admittedly offensive to the sight, conducive to the public with the public safety, welfare, and comfort, and therefore
interest?" beyond the reach of the police power of the Philippine
Government?
The numerous attempts which have been made to limit by for the exercise of this power. It is elastic and is exercised from
definition the scope of the police power are only interesting as time to time as varying social conditions demand correction."
illustrating its rapid extension within comparatively recent years
to points heretofore deemed entirely within the field of private In 8 Cyc., 863, it is said: "Police power is the name given to that
liberty and property rights. Blackstone's definition of the police inherent sovereignty which it is the right and duty of the
power was as follows: "The due regulation and domestic order of government or its agents to exercise whenever public policy, in a
the kingdom, whereby the individuals of the state, like members broad sense, demands, for the benefit of society at large,
of a well governed family, are bound to conform their general regulations to guard its morals, safety, health, order or to insure
behavior to the rules of propriety, good neigborhood, and good in any respect such economic conditions as an advancing
manners, to be decent, industrious, and inoffensive in their civilization of a high complex character requires." (As quoted
respective stations." (Commentaries, vol. 4, p. 162.) with approval in Stettler vs.O'Hara [1914], 69 Ore, 519.)

Chanceller Kent considered the police power the authority of the Finally, the Supreme Court of the United States has said in Noble
state "to regulate unwholesome trades, slaughter houses, State Bank vs. Haskell (219 U.S. [1911], 575: "It may be said in a
operations offensive to the senses." Chief Justice Shaw of general way that the police power extends to all the great public
Massachusetts defined it as follows: "The power vested in the needs. It may be put forth in aid of what is sanctioned by usage,
legislature by the constitution to make, ordain, and establish all or held by the prevailing morality or strong and preponderant
manner of wholesome and reasonable laws, statutes, and opinion to be greatly and immediately necessary to the public
ordinances, either with penalties or without, not repugnant to welfare."
the constitution, as they shall judge to be for the good and
welfare of the commonwealth, and of the subjects of the same." This statement, recent as it is, has been quoted with approval by
(Com. vs. Alger, 7 Cush., 53.) several courts. (Cunningham vs. Northwestern Imp. Co. [1911],
44 Mont., 180; State vs. Mountain Timber Co. [1913], 75 Wash.,
In the case of Butchers' Union Slaughter-house, etc. 581; McDavid vs. Bank of Bay Minette [Ala., 1915], 69 Sou., 452;
Co. vs. Crescent City Live Stock Landing, etc. Co. (111 U.S., 746), Hopkins vs. City of Richmond [Va., 1915], 86 S.E., 139;
it was suggested that the public health and public morals are State vs. Philipps [Miss. 1915], 67 Sou., 651.)
matters of legislative concern of which the legislature cannot
divest itself. (See State vs. Mountain Timber Co. [1913], 75 It was said in Com. vs. Alger (7 Cush., 53, 85), per Shaw, C.J., that:
Wash., 581, where these definitions are collated.) "It is much easier to perceive and realize the existence and
sources of this police power than to mark its boundaries, or to
In Champer vs. Greencastle (138 Ind., 339), it was said: "The prescribe limits to its exercise." In Stone vs. Mississippi (101 U.S.,
police power of the State, so far, has not received a full and 814), it was said: "Many attempts have been made in this court
complete definition. It may be said, however, to be the right of and elsewhere to define the police power, but never with entire
the State, or state functionary, to prescribe regulations for the success. It is always easier to determine whether a particular
good order, peace, health, protection, comfort, convenience and case comes within the general scope of the power, than to give
morals of the community, which do not ... violate any of the an abstract definition of the power itself, which will be in all
provisions of the organic law." (Quoted with approval in respects accurate."
Hopkins vs. Richmond [Va., 1915], 86 S.E., 139.)
Other courts have held the same vow of efforts to evolve a
In Com. vs. Plymouth Coal Co. ([1911] 232 Pa., 141), it was said: satisfactory definition of the police power. Manifestly,
"The police power of the state is difficult of definition, but it has definitions which fail to anticipate cases properly within the
been held by the courts to be the right to prescribe regulations scope of the police power are deficient. It is necessary,
for the good order, peace, health, protection, comfort, therefore, to confine our discussion to the principle involved and
convenience and morals of the community, which does not determine whether the cases as they come up are within that
encroach on a like power vested in congress or state legislatures principle. The basic idea of civil polity in the United States is that
by the federal constitution, or does not violate the provisions of government should interfere with individual effort only to the
the organic law; and it has been expressly held that the extent necessary to preserve a healthy social and economic
fourteenth amendment to the federal constitution was not condition of the country. State interference with the use of
designed to interfere with the exercise of that power by the private property may be exercised in three ways. First, through
state." the power of taxation, second, through the power of eminent
domain, and third, through the police power. Buy the first
In People vs. Brazee ([Mich., 1914], 149 N.W., 1053), it was said: method it is assumed that the individual receives the equivalent
"It [the police power] has for its object the improvement of of the tax in the form of protection and benefit he receives from
social and economic conditioned affecting the community at the government as such. By the second method he receives the
large and collectively with a view to bring about "he greatest market value of the property taken from him. But under the
good of the greatest number."Courts have consistently and third method the benefits he derived are only such as may arise
wisely declined to set any fixed limitations upon subjects calling from the maintenance of a healthy economic standard of society
and is often referred to as damnum absque
injuria. (Com. vs. Plymouth Coal Co. 232 Pa., 141; Bemis vs. Guirl Court in Noble State Bank vs. Haskell (219 U. S., 104), and Assaria
Drainage Co., 182 Ind., 36.) There was a time when state State Bank vs. Dolley (219 U.S., 121).
interference with the use of private property under the guise of
the police power was practically confined to the suppression of Offensive noises and smells have been for a long time considered
common nuisances. At the present day, however, industry is susceptible of suppression in thickly populated districts. Barring
organized along lines which make it possible for large livery stables from such locations was approved of in
combinations of capital to profit at the expense of the socio- Reinman vs. Little Rock (U.S. Sup. Ct. [Apr. 5, 1915], U.S. Adv.
economic progress of the nation by controlling prices and Opns., p. 511). And a municipal ordinance was recently upheld
dictating to industrial workers wages and conditions of labor. (People vs. Ericsson, 263 Ill., 368), which prohibited the location
Not only this but the universal use of mechanical contrivances by of garages within two hundred feet of any hospital, church, or
producers and common carriers has enormously increased the school, or in any block used exclusively for residential purposes,
toll of human life and limb in the production and distribution of unless the consent of the majority of the property owners be
consumption goods. To the extent that these businesses affect obtained. Such statutes as these are usually upheld on the
not only the public health, safety, and morals, but also the theory of safeguarding the public health. But we apprehend that
general social and economic life of the nation, it has been and in point of fact they have little bearing upon the health of the
will continue to be necessary for the state to interfere by normal person, but a great deal to do with his physical comfort
regulation. By so doing, it is true that the enjoyment of private and convenience and not a little to do with his peace of mind.
property is interfered with in no small degree and in ways that Without entering into the realm of psychology, we think it quite
would have been considered entirely unnecessary in years gone demonstrable that sight is as valuable to a human being as any of
by. The regulation of rates charged by common carriers, for his other senses, and that the proper ministration to this sense
instance, or the limitation of hours of work in industrial conduces as much to his contentment as the care bestowed
establishments have only a very indirect bearing upon the public upon the senses of hearing or smell, and probably as much as
health, safety, and morals, but do bear directly upon social and both together. Objects may be offensive to the eye as well as to
economic conditions. To permit each individual unit of society to the nose or ear. Man's esthetic feelings are constantly being
feel that his industry will bring a fair return; to see that his work appealed to through his sense of sight. Large investments have
shall be done under conditions that will not either immediately been made in theaters and other forms of amusement, in
or eventually ruin his health; to prevent the artificial inflation of paintings and spectacular displays, the success of which depends
prices of the things which are necessary for his physical well in great part upon the appeal made through the sense of sight.
being are matters which the individual is no longer capable of Moving picture shows could not possible without the sense of
attending to himself. It is within the province of the police power sight. Governments have spent millions on parks and boulevards
to render assistance to the people to the extent that may be and other forms of civic beauty, the first aim of which is to
necessary to safeguard these rights. Hence, laws providing for appeal to the sense of sight. Why, then, should the Government
the regulation of wages and hours of labor of coal miners (Rail & not interpose to protect from annoyance this most valuable of
River Coal Co. vs. Taylor, 234 U.S., 224); requiring payment of man's senses as readily as to protect him from offensive noises
employees of railroads and other industrial concerns in legal and smells?
tender and requiring salaries to be paid semimonthly (Erie R.R.
Co. vs. Williams, 233 U.S., 685); providing a maximum number of The advertising industry is a legitimate one. It is at the same time
hours of labor for women (Miller vs. Wilson, U.S. Sup. Ct. [Feb. a cause and an effect of the great industrial age through which
23, 1915], Adv. Opns., p. 342); prohibiting child labor (Sturges & the world is now passing. Millions are spent each year in this
Burn vs. Beauchamp, 231 U.S., 320); restricting the hours of manner to guide the consumer to the articles which he needs.
labor in public laundries (In re Wong Wing, 167 Cal., 109); The sense of sight is the primary essential to advertising success.
limiting hours of labor in industrial establishment generally Billboard advertising, as it is now conducted, is a comparatively
(State vs. Bunting, 71 Ore., 259); Sunday Closing Laws recent form of advertising. It is conducted out of doors and along
(State vs. Nicholls [Ore., 1915], 151 Pac., 473; People vs. C. Klinck the arteries of travel, and compels attention by the strategic
Packing Co. [N.Y., 1915], 108 N. E., 278; Hiller vs. State [Md., locations of the boards, which obstruct the range of vision at
1914], 92 Atl., 842; State vs. Penny, 42 Mont., 118; City of points where travelers are most likely to direct their eyes.
Springfield vs. Richter, 257 Ill., 578, 580; State vs. Hondros [S.C., Beautiful landscapes are marred or may not be seen at all by the
1915], 84 S.E., 781); have all been upheld as a valid exercise of traveler because of the gaudy array of posters announcing a
the police power. Again, workmen's compensation laws have particular kind of breakfast food, or underwear, the coming of a
been quite generally upheld. These statutes discard the common circus, an incomparable soap, nostrums or medicines for the
law theory that employers are not liable for industrial accidents curing of all the ills to which the flesh is heir, etc. It is quite
and make them responsible for all accidents resulting from trade natural for people to protest against this indiscriminate and
risks, it being considered that such accidents are a legitimate wholesale use of the landscape by advertisers and the intrusion
charge against production and that the employer by controlling of tradesmen upon their hours of leisure and relaxation from
the prices of his product may shift the burden to the community. work. Outdoor life must lose much of its charm and pleasure if
Laws requiring state banks to join in establishing a depositors' this form of advertising is permitted to continue unhampered
guarantee fund have also been upheld by the Federal Supreme until it converts the streets and highways into veritable canyons
through which the world must travel in going to work or in property owners to conform to a building line, but may prescribe
search of outdoor pleasure. the conditions under which they shall make use of the adjoining
streets and highways. Nor is the law in question to be held
The success of billboard advertising depends not so much upon invalid as denying equal protection of the laws. In Keokee Coke
the use of private property as it does upon the use of the Co. vs. Taylor (234 U.S., 224), it was said: "It is more pressed that
channels of travel used by the general public. Suppose that the the act discriminates unconstitutionally against certain classes.
owner of private property, who so vigorously objects to the But while there are differences of opinion as to the degree and
restriction of this form of advertising, should require the kind of discrimination permitted by the Fourteenth Amendment,
advertiser to paste his posters upon the billboards so that they it is established by repeated decisions that a statute aimed at
would face the interior of the property instead of the exterior. what is deemed an evil, and hitting it presumably where
Billboard advertising would die a natural death if this were done, experience shows it to be most felt, is not to be upset by thinking
and its real dependency not upon the unrestricted use of private up and enumerating other instances to which it might have been
property but upon the unrestricted use of the public highways is applied equally well, so far as the court can see. That is for the
at once apparent. Ostensibly located on private property, the legislature to judge unless the case is very clear."
real and sole value of the billboard is its proximity to the public
thoroughfares. Hence, we conceive that the regulation of But we have not overlooked the fact that we are not in harmony
billboards and their restriction is not so much a regulation of with the highest courts of a number of the states in the American
private property as it is a regulation of the use of the streets and Union upon this point. Those courts being of the opinion that
other public thoroughfares. statutes which are prompted and inspired by esthetic
considerations merely, having for their sole purpose the
We would not be understood as saying that billboard advertising promotion and gratification of the esthetic sense, and not the
is not a legitimate business any more than we would say that a promotion or protection of the public safety, the public peace
livery stable or an automobile garage is not. Even a billboard is and good order of society, must be held invalid and contrary to
more sightly than piles of rubbish or an open sewer. But all these constitutional provisions holding inviolate the rights of private
businesses are offensive to the senses under certain conditions. property. Or, in other words, the police power cannot interfere
with private property rights for purely esthetic purposes. The
It has been urged against ministering to the sense of sight that courts, taking this view, rest their decisions upon the proposition
tastes are so diversified that there is no safe standard of that the esthetic sense is disassociated entirely from any relation
legislation in this direction. We answer in the language of the to the public health, morals, comfort, or general welfare and is,
Supreme Court in Noble State Bank vs.Haskell (219 U.S., 104), therefore, beyond the police power of the state. But we are of
and which has already been adopted by several state courts (see the opinion, as above indicated, that unsightly advertisements or
supra), that "the prevailing morality or strong and signs, signboards, or billboards which are offensive to the sight,
preponderating opinion" demands such legislation. The agitation are not disassociated from the general welfare of the public. This
against the unrestrained development of the billboard business is not establishing a new principle, but carrying a well recognized
has produced results in nearly all the countries of Europe. (Ency. principle to further application. (Fruend on Police Power, p. 166.)
Britannica, vol. 1, pp. 237-240.) Many drastic ordinances and
state laws have been passed in the United States seeking to For the foregoing reasons the judgment appealed from is hereby
make the business amenable to regulation. But their regulation reversed and the action dismissed upon the merits, with costs.
in the United states is hampered by what we conceive an So ordered.
unwarranted restriction upon the scope of the police power by
the courts. If the police power may be exercised to encourage a Arellano, C.J., Torres, Carson, and Araullo, JJ., concur.
healthy social and economic condition in the country, and if the
comfort and convenience of the people are included within DECISION ON THE MOTION FOR A REHEARING, JANUARY 24,
those subjects, everything which encroaches upon such territory 1916.
is amenable to the police power. A source of annoyance and
irritation to the public does not minister to the comfort and TRENT, J.:
convenience of the public. And we are of the opinion that the
prevailing sentiment is manifestly against the erection of
Counsel for the plaintiffs call our attention to the case of Ex
billboards which are offensive to the sight.
parte Young (209 U.S., 123); and say that they are of the opinion
that this case "is the absolutely determinative of the question of
We do not consider that we are in conflict with the decision in jurisdiction in injunctions of this kind." We did not refer to this
Eubank vs. Richmond (226 U.S., 137), where a municipal case in our former opinion because we were satisfied that the
ordinance establishing a building line to which property owners reasoning of the case is not applicable to section 100 (b), 139
must conform was held unconstitutional. As we have pointed and 140 of Act No. 2339. The principles announced in the Young
out, billboard advertising is not so much a use of private case are stated as follows: "It may therefore be said that when
property as it is a use of the public thoroughfares. It derives its the penalties for disobedience are by fines so enormous and
value to the power solely because the posters are exposed to the imprisonment so severe as to intimidate the company and its
public gaze. It may well be that the state may not require private officers from resorting to the courts to test the validity of the
legislation, the result is the same as if the law in terms prohibited citing Ex parte Young, supra. In that case the plaintiff
the company from seeking judicial construction of laws which was a Tennessee corporation, with its principal place of
deeply affect its rights. business in Memphis, Tennessee. It was engaged in the
manufacture and sale of coal oil, etc. Its wells and plant
It is urged that there is no principle upon which to base were located in Pennsylvania and Ohio. Memphis was
the claim that a person is entitled to disobey a statute not only its place of business, at which place it sold oil
at least once, for the purpose of testing its validity to the residents of Tennessee, but also a distributing
without subjecting himself to the penalties for point to which oils were shipped from Pennsylvania and
disobedience provided by the statute in case it is valid. Ohio and unloaded into various tanks for the purpose of
This is not an accurate statement of the case. Ordinarily being forwarded to the Arkansas, Louisiana, and
a law creating offenses in the nature of misdemeanors Mississippi customers. Notwithstanding the fact that
or felonies relates to a subject over which the the company separated its oils, which were designated
jurisdiction of the legislature is complete in any event. to meet the requirements of the orders from those
In these case, however, of the establishment of certain States, from the oils for sale in Tennessee, the
rates without any hearing, the validity of such rates defendant insisted that he had a right, under the Act of
necessarily depends upon whether they are high the Tennessee Legislature, approved April 21, 1899, to
enough to permit at least some return upon the inspect all the oils unlocated in Memphis, whether for
investment (how much it is not now necessary to state), sale in that State or not, and charge and collect for such
and an inquiry as to that fact is a proper subject of inspection a regular fee of twenty-five cents per barrel.
judicial investigation. If it turns out that the rates are The company, being advised that the defendant had no
too low for that purpose, then they are illegal. Now, to such right, instituted this action in the inferior States
impose upon a party interested the burden of obtaining court for the purpose of enjoining the defendant, upon
a judicial decision of such a question (no prior hearing the grounds stated in the bill, from inspecting or
having ever been given) only upon the condition that, if attempting to inspect its oils. Upon trial, the preliminary
unsuccessful, he must suffer imprisonment and pay injunction which had been granted at the
fines as provided in these acts, is, in effect, to close up commencement of the action, was continued in force.
all approaches to the courts, and thus prevent any Upon appeal, the supreme court of the State of
hearing upon the question whether the rates as Tennessee decided that the suit was one against the
provided by the acts are not too low, and therefore State and reversed the judgment of the Chancellor. In
invalid. The distinction is obvious between a case where the Supreme Court of the United States, where the case
the validity of the acts depends upon the existence of a was reviewed upon a writ of error, the contentions of
fact which can be determined only after investigation of the parties were stated by the court as follows: "It is
a very complicated and technical character, and the contended by defendant in error that this court is
ordinary case of a statute upon a subject requiring no without jurisdiction because no matter sought to be
such investigation and over which the jurisdiction of the litigated by plaintiff in error was determined by the
legislature is complete in any event. Supreme Court of Tennessee. The court simply held, it is
paid, that, under the laws of the State, it had no
An examination of the sections of our Internal Revenue Law and jurisdiction to entertain the suit for any purpose. And it
of the circumstances under which and the purposes for which is insisted "hat this holding involved no Federal
they were enacted, will show that, unlike the statutes under question, but only the powers and jurisdiction of the
consideration in the above cited case, their enactment involved courts of the State of Tennessee, in respect to which the
no attempt on the part of the Legislature to prevent dissatisfied Supreme Court of Tennessee is the final arbiter."
taxpayers "from resorting to the courts to test the validity of the
legislation;" no effort to prevent any inquiry as to their validity. Opposing these contentions, plaintiff in error urges that
While section 139 does prevent the testing of the validity of whether a suit is one against a State cannot depend
subsection (b) of section 100 in injunction suits instituted for the upon the declaration of a statute, but depends upon the
purpose of restraining the collection of internal revenue taxes, essential nature ofthe suit, and that the Supreme Court
section 140 provides a complete remedy for that purpose. And recognized that the statute "aded nothing to the
furthermore, the validity of subsection (b) does not depend upon axiomatic principle that the State, as a sovereign, is not
"the existence of a fact which can be determined only after subject to suit save by its own consent."And it is hence
investigation of a very complicated and technical character," but insisted that the court by dismissing the bill gave effect
the jurisdiction of the Legislature over the subject with which the to the law which was attacked. It is further insisted that
subsection deals "is complete in any event." The judgment of the the bill undoubtedly present rights under the
court in the Young case rests upon the proposition that the Constitution of the United States and conditions which
aggrieved parties had no adequate remedy at law. entitle plaintiff in error to an injunction for the
protection of such rights, and that a statute of the State
Neither did we overlook the case of General Oil which operates to deny such rights, or such relief, `is
Co. vs. Crain (209 U.S., 211), decided the same day and
itself in conflict with the Constitution of the United — while the Act approved February 28, 1873, prohibits suits
States." against the State.

That statute of Tennessee, which the supreme court of that State In upholding the statute which authorizes the removal of
construed and held to be prohibitory of the suit, was an act signboards or billboards upon the sole ground that they are
passed February 28, 1873, which provides: "That no court in the offensive to the sight, we recognized the fact that we are not in
State of Tennessee has, nor shall hereafter have, any power, harmony with various state courts in the American Union. We
jurisdiction, or authority to entertain any suit against the State, have just examined the decision of the Supreme Court of the
or any officer acting by the authority of the State, with a view to State of Illinois in the recent case (October [December], 1914) of
reach the State, its treasury, funds or property; and all such suits Thomas Cusack Co. vs. City of Chicago (267 Ill., 344), wherein the
now pending, or hereafter brought, shall be dismissed as to the court upheld the validity of a municipal ordinances, which reads
State, or such officer, on motion, plea or demurrer of the law as follows: "707. Frontage consents required. It shall be unlawful
officer of the State, or counsel employed by the State." for any person, firm or corporation to erect or construct any bill-
board or sign-board in any block on any public street in which
The Supreme Court of the United States, after reviewing many one-half of the buildings on both sides of the street are used
cases, said: "Necessarily, to give adequate protection to exclusively for residence purposes, without first obtaining the
constitutional rights a distinction must be made between valid consent, in writing, of the owners or duly authorized agents of
and invalid state laws, as determining the character of the suit said owners owning a majority of the frontage of the property,
against state officers. And the suit at bar illustrates the necessity. on both sides of the street, in the block in which such bill-board
If a suit against state officer is precluded in the national courts by or sign-board is to be erected, constructed or located. Such
the Eleventh Amendment to the Constitution, and may be written consent shall be filed with the commissioner of buildings
forbidden by a State to its courts, as it is contended in the case at before a permit shall be issued for the erection, construction or
bar that it may be, without power of review by this court, it must location of such bill-board or sign-board."
be evident that an easy way is open to prevent the enforcement
of many provisions of the Constitution; and the Fourteenth The evidence which the Illinois court relied upon was the danger
Amendment, which is directed at state action, could be nullified of fires, the fact that billboards promote the commission of
as to much of its operation. ... It being then the right of a party to various immoral and filthy acts by disorderly persons, and the
be protected against a law which violates a constitutional right, inadequate police protection furnished to residential districts.
whether by its terms or the manner of its enforcement, it is The last objection has no virtue unless one or the other of the
manifest that a decision which denies such protection gives other objections are valid. If the billboard industry does, in fact,
effect to the law, and the decision is reviewable by this court." promote such municipal evils to noticeable extent, it seems a
curious inconsistency that a majority of the property owners on
The court then proceeded to consider whether the law of 1899 a given block may legalize the business. However, the decision is
would, if administered against the oils in question, violate any undoubtedly a considerable advance over the views taken by
constitutional right of the plaintiff and after finding and other high courts in the United States and distinguishes several
adjudging that the oils were not in movement through the Illinois decisions. It is an advance because it permits the
States, that they had reached the destination of their first suppression of billboards where they are undesirable. The
shipment, and were held there, not in necessary delay at means ordinance which the court approved will no doubt cause the
of transportation but for the business purposes and profit of the virtual suppression of the business in the residential districts.
company, and resting its judgment upon the taxing power of the Hence, it is recognized that under certain circumstances
State, affirmed the decree of the supreme court of the State of billboards may be suppressed as an unlawful use of private
Tennessee. property. Logically, it would seem that the premise of fact relied
upon is not very solid. Objections to the billboard upon police,
From the foregoing it will be seen that the Supreme Court of sanitary, and moral grounds have been, as pointed out by
Tennessee dismissed the case for want of jurisdiction because counsel for Churchill and Tait, duly considered by numerous high
the suit was one against the State, which was prohibited by the courts in the United States, and, with one exception, have been
Tennessee Legislature. The Supreme Court of the United States rejected as without foundation. The exception is the Supreme
took jurisdiction of the controversy for the reasons above quoted Court of Missouri, which advances practically the same line of
and sustained the Act of 1899 as a revenue law. reasoning as has the Illinois court in this recent case. (St. Louis
Gunning Advt. Co. vs. City of St. Louis, 137 S. W., 929.) In fact, the
Illinois court, in Haller Sign Works vs. Physical Culture Training
The case of Tennessee vs. Sneed (96 U.S., 69), and
School (249 Ill., 436), "distinguished" in the recent case, said:
Shelton vs. Platt (139 U.S., 591), relied upon in our former
"There is nothing inherently dangerous to the health or safety of
opinion, were not cited in General Oil Co. vs. Crain, supra,
the public in structures that are properly erected for advertising
because the questions presented and the statutes under
purposes."
consideration were entirely different. The Act approved March
31, 1873, expressly prohibits the courts from restraining the
collection of any tax, leaving the dissatisfied taxpayer to his If a billboard is so constructed as to offer no room for objections
exclusive remedy — payment under protest and suit to recover on sanitary or moral grounds, it would seem that the ordinance
above quoted would have to be sustained upon the very grounds that the billboards in question “in no sense constitute a nuisance
which we have advanced in sustaining our own statute. and are not deleterious to the health, morals, or general welfare
of the community, or of any persons.” Defendant Collector of
It might be well to note that billboard legislation in the United Internal Revenue avers that after due investigation made upon
States is attempting to eradicate a business which has already the complaints of the British and German Consuls, the defendant
been firmly established. This business was allowed to expand “decided that the billboard complained of was and still offensive
unchecked until its very extent called attention to its to the sight and is otherwise a nuisance.”
objectionable features. In the Philippine Islands such legislation
has almost anticipated the business, which is not yet of such Issue
proportions that it can be said to be fairly established. It may be
that the courts in the United States have committed themselves 1. Was the enactment assailed by the plaintiffs was a
to a course of decisions with respect to billboard advertising, the legitimate exercise of the police power of
full consequences of which were not perceived for the reason the Government?
that the development of the business has been so recent that
the objectionable features of it did not present themselves Held
clearly to the courts nor to the people. We, in this country, have
the benefit of the experience of the people of the United States The High Court is of the opinion that unsightly advertisements or
and may make our legislation preventive rather than corrective. signs, signboards, or billboards which are offensive to the sight,
There are in this country, moreover, on every hand in those are not disassociated from the general welfare of the public. This
districts where Spanish civilization has held sway for so many is not establishing a new principle, but carrying a well-
centuries, examples of architecture now belonging to a past age, recognized principle to further application. Moreover, if the
and which are attractive not only to the residents of the country police power may be exercised to encourage a healthy social and
but to visitors. If the billboard industry is permitted without economic condition in the country, and if the comfort and
constraint or control to hide these historic sites from the convenience of the people are included within those subjects,
passerby, the country will be less attractive to the tourist and the everything which encroaches upon such territory is amenable to
people will suffer a district economic loss. the police power. Judgmentreversed.

The motion for a rehearing is therefore denied. 2 ICHONG V HERNANDE, 101 PHIL 1155

Arellano, C.J., Torres, and Carson, JJ., concur. G.R. No. L-7995 May 31, 1957

Churchill & Tait v. Rafferty LAO H. ICHONG, in his own behalf and in behalf of
other alien residents, corporations and partnerships
32 Phil. 580 (1915) adversely affected. by Republic Act No.
In re: Police power of the State, Lawful Subject of police power 1180, petitioner,
vs.
This is an appeal from a judgment of the Court of First Instance JAIME HERNANDEZ, Secretary of Finance, and
of Manila. The case involves a dual question one involving the MARCELINO SARMIENTO, City Treasurer of
power of the court to restrain by injunction the collection of the Manila,respondents.
tax in question and the other relating to the power of the
Collector of Internal Revenue to remove any sign, signboard, or Ozaeta, Lichauco and Picazo and Sycip, Quisumbing,
billboard upon the ground that the same is offensive to the sightSalazar and Associates for petitioner.
or is otherwise a nuisance. Office of the Solicitor General Ambrosio Padilla and
The focus of this digest is to highlight the cases’ latter aspect as
Solicitor Pacifico P. de Castro for respondent Secretary
correlated to the police power of the State. of Finance.
City Fiscal Eugenio Angeles and Assistant City Fiscal
Facts Eulogio S. Serrano for respondent City Treasurer.
Dionisio Reyes as Amicus Curiae.
Appellees, Francis A. Churchill and Stewart Tait are involved in Marcial G. Mendiola as Amicus Curiae.
the advertising business, particularly in billboard advertising. Emiliano R. Navarro as Amicus Curiae.
Their billboards located upon private lands in the Province of
Rizal were removed upon complaints and by the orders of the LABRADOR, J.:
defendant Collector of Internal Revenue by virtue of the
provisions of subsection (b) of section 100 of Act No. 2339. I. The case and issue, in general
Appellees, in their supplementary complaint challenge the power
of the of the Collector of Internal Revenue to remove any sign,
This Court has before it the delicate task of passing upon the
signboard, or billboard upon the ground that the same is
validity and constitutionality of a legislative enactment,
offensive to the sight or is otherwise a nuisance and maintain
fundamental and far-reaching in significance. The enactment
poses questions of due process, police power and equal property without due process of law ; (2) the subject of the Act is
protection of the laws. It also poses an important issue of fact, not expressed or comprehended in the title thereof; (3) the Act
that is whether the conditions which the disputed law purports violates international and treaty obligations of the Republic of
to remedy really or actually exist. Admittedly springing from a the Philippines; (4) the provisions of the Act against the
deep, militant, and positive nationalistic impulse, the law transmission by aliens of their retail business thru hereditary
purports to protect citizen and country from the alien retailer. succession, and those requiring 100% Filipino capitalization for a
Through it, and within the field of economy it regulates, corporation or entity to entitle it to engage in the retail business,
Congress attempts to translate national aspirations for economic violate the spirit of Sections 1 and 5, Article XIII and Section 8 of
independence and national security, rooted in the drive and urge Article XIV of the Constitution.
for national survival and welfare, into a concrete and tangible
measures designed to free the national retailer from the In answer, the Solicitor-General and the Fiscal of the City of
competing dominance of the alien, so that the country and the Manila contend that: (1) the Act was passed in the valid exercise
nation may be free from a supposed economic dependence and of the police power of the State, which exercise is authorized in
bondage. Do the facts and circumstances justify the enactment? the Constitution in the interest of national economic survival; (2)
the Act has only one subject embraced in the title; (3) no treaty
II. Pertinent provisions of Republic Act No. 1180 or international obligations are infringed; (4) as regards
hereditary succession, only the form is affected but the value of
Republic Act No. 1180 is entitled "An Act to Regulate the Retail the property is not impaired, and the institution of inheritance is
Business." In effect it nationalizes the retail trade business. The only of statutory origin.
main provisions of the Act are: (1) a prohibition against persons,
not citizens of the Philippines, and against associations, IV. Preliminary consideration of legal principles involved
partnerships, or corporations the capital of which are not wholly
owned by citizens of the Philippines, from engaging directly or a. The police power. —
indirectly in the retail trade; (2) an exception from the above
prohibition in favor of aliens actually engaged in said business on There is no question that the Act was approved in the exercise of
May 15, 1954, who are allowed to continue to engaged therein, the police power, but petitioner claims that its exercise in this
unless their licenses are forfeited in accordance with the law, instance is attended by a violation of the constitutional
until their death or voluntary retirement in case of natural requirements of due process and equal protection of the laws.
persons, and for ten years after the approval of the Act or until But before proceeding to the consideration and resolution of the
the expiration of term in case of juridical persons; (3) an ultimate issue involved, it would be well to bear in mind certain
exception therefrom in favor of citizens and juridical entities of basic and fundamental, albeit preliminary, considerations in the
the United States; (4) a provision for the forfeiture of licenses (to determination of the ever recurrent conflict between police
engage in the retail business) for violation of the laws on power and the guarantees of due process and equal protection
nationalization, control weights and measures and labor and of the laws. What is the scope of police power, and how are the
other laws relating to trade, commerce and industry; (5) a due process and equal protection clauses related to it? What is
prohibition against the establishment or opening by aliens the province and power of the legislature, and what is the
actually engaged in the retail business of additional stores or function and duty of the courts? These consideration must be
branches of retail business, (6) a provision requiring aliens clearly and correctly understood that their application to the
actually engaged in the retail business to present for registration facts of the case may be brought forth with clarity and the issue
with the proper authorities a verified statement concerning their accordingly resolved.
businesses, giving, among other matters, the nature of the
business, their assets and liabilities and their offices and principal
It has been said the police power is so far - reaching in scope,
offices of judicial entities; and (7) a provision allowing the heirs
that it has become almost impossible to limit its sweep. As it
of aliens now engaged in the retail business who die, to continue
derives its existence from the very existence of the State itself, it
such business for a period of six months for purposes of
does not need to be expressed or defined in its scope; it is said to
liquidation.
be co-extensive with self-protection and survival, and as such it is
the most positive and active of all governmental processes, the
III. Grounds upon which petition is based-Answer thereto most essential, insistent and illimitable. Especially is it so under a
modern democratic framework where the demands of society
Petitioner, for and in his own behalf and on behalf of other alien and of nations have multiplied to almost unimaginable
residents corporations and partnerships adversely affected by proportions; the field and scope of police power has become
the provisions of Republic Act. No. 1180, brought this action to almost boundless, just as the fields of public interest and public
obtain a judicial declaration that said Act is unconstitutional, and welfare have become almost all-embracing and have
to enjoin the Secretary of Finance and all other persons acting transcended human foresight. Otherwise stated, as we cannot
under him, particularly city and municipal treasurers, from foresee the needs and demands of public interest and welfare in
enforcing its provisions. Petitioner attacks the constitutionality this constantly changing and progressive world, so we cannot
of the Act, contending that: (1) it denies to alien residents the delimit beforehand the extent or scope of police power by which
equal protection of the laws and deprives of their liberty and and through which the State seeks to attain or achieve interest
or welfare. So it is that Constitutions do not define the scope or legitimate aspirations of any democratic society. There can be no
extent of the police power of the State; what they do is to set absolute power, whoever exercise it, for that would be tyranny.
forth the limitations thereof. The most important of these are Yet there can neither be absolute liberty, for that would mean
the due process clause and the equal protection clause. license and anarchy. So the State can deprive persons of life,
liberty and property, provided there is due process of law; and
b. Limitations on police power. — persons may be classified into classes and groups, provided
everyone is given the equal protection of the law. The test or
The basic limitations of due process and equal protection are standard, as always, is reason. The police power legislation must
found in the following provisions of our Constitution: be firmly grounded on public interest and welfare, and a
reasonable relation must exist between purposes and means.
And if distinction and classification has been made, there must
SECTION 1.(1) No person shall be deprived of life, liberty
be a reasonable basis for said distinction.
or property without due process of law, nor any person
be denied the equal protection of the laws. (Article III,
Phil. Constitution) e. Legislative discretion not subject to judicial review. —

These constitutional guarantees which embody the essence of Now, in this matter of equitable balancing, what is the proper
individual liberty and freedom in democracies, are not limited to place and role of the courts? It must not be overlooked, in the
citizens alone but are admittedly universal in their application, first place, that the legislature, which is the constitutional
without regard to any differences of race, of color, or of repository of police power and exercises the prerogative of
nationality. (Yick Wo vs. Hopkins, 30, L. ed. 220, 226.) determining the policy of the State, is by force of circumstances
primarily the judge of necessity, adequacy or reasonableness and
wisdom, of any law promulgated in the exercise of the police
c. The, equal protection clause. —
power, or of the measures adopted to implement the public
policy or to achieve public interest. On the other hand, courts,
The equal protection of the law clause is against undue favor and although zealous guardians of individual liberty and right, have
individual or class privilege, as well as hostile discrimination or
nevertheless evinced a reluctance to interfere with the exercise
the oppression of inequality. It is not intended to prohibit
of the legislative prerogative. They have done so early where
legislation, which is limited either in the object to which it is there has been a clear, patent or palpable arbitrary and
directed or by territory within which is to operate. It does not
unreasonable abuse of the legislative prerogative. Moreover,
demand absolute equality among residents; it merely requires
courts are not supposed to override legitimate policy, and courts
that all persons shall be treated alike, under like circumstances
never inquire into the wisdom of the law.
and conditions both as to privileges conferred and liabilities
enforced. The equal protection clause is not infringed by
V. Economic problems sought to be remedied
legislation which applies only to those persons falling within a
specified class, if it applies alike to all persons within such class,
and reasonable grounds exists for making a distinction between With the above considerations in mind, we will now proceed to
those who fall within such class and those who do not. (2 Cooley, delve directly into the issue involved. If the disputed legislation
Constitutional Limitations, 824-825.) were merely a regulation, as its title indicates, there would be no
question that it falls within the legitimate scope of legislative
power. But it goes further and prohibits a group of residents, the
d. The due process clause. —
aliens, from engaging therein. The problem becomes more
complex because its subject is a common, trade or occupation,
The due process clause has to do with the reasonableness of
as old as society itself, which from the immemorial has always
legislation enacted in pursuance of the police power. Is there
been open to residents, irrespective of race, color or citizenship.
public interest, a public purpose; is public welfare involved? Is
the Act reasonably necessary for the accomplishment of the
a. Importance of retail trade in the economy of the nation. —
legislature's purpose; is it not unreasonable, arbitrary or
oppressive? Is there sufficient foundation or reason in
connection with the matter involved; or has there not been a In a primitive economy where families produce all that they
capricious use of the legislative power? Can the aims conceived consume and consume all that they produce, the dealer, of
be achieved by the means used, or is it not merely an unjustified course, is unknown. But as group life develops and families begin
interference with private interest? These are the questions that to live in communities producing more than what they consume
we ask when the due process test is applied. and needing an infinite number of things they do not produce,
the dealer comes into existence. As villages develop into big
communities and specialization in production begins, the
The conflict, therefore, between police power and the
dealer's importance is enhanced. Under modern conditions and
guarantees of due process and equal protection of the laws is
standards of living, in which man's needs have multiplied and
more apparent than real. Properly related, the power and the
diversified to unlimited extents and proportions, the retailer
guarantees are supposed to coexist. The balancing is the essence
comes as essential as the producer, because thru him the infinite
or, shall it be said, the indispensable means for the attainment of
variety of articles, goods and needed for daily life are placed
within the easy reach of consumers. Retail dealers perform the so many unmanageable factors in the retail business make
functions of capillaries in the human body, thru which all the control virtually impossible. The first argument which brings up
needed food and supplies are ministered to members of the an issue of fact merits serious consideration. The others are
communities comprising the nation. matters of opinion within the exclusive competence of the
legislature and beyond our prerogative to pass upon and decide.
There cannot be any question about the importance of the
retailer in the life of the community. He ministers to the The best evidence are the statistics on the retail trade, which put
resident's daily needs, food in all its increasing forms, and the down the figures in black and white. Between the constitutional
various little gadgets and things needed for home and daily life. convention year (1935), when the fear of alien domination and
He provides his customers around his store with the rice or corn, control of the retail trade already filled the minds of our leaders
the fish, the salt, the vinegar, the spices needed for the daily with fears and misgivings, and the year of the enactment of the
cooking. He has cloths to sell, even the needle and the thread to nationalization of the retail trade act (1954), official statistics
sew them or darn the clothes that wear out. The retailer, unmistakably point out to the ever-increasing dominance and
therefore, from the lowly peddler, the owner of a small sari- control by the alien of the retail trade, as witness the following
sari store, to the operator of a department store or, a tables:
supermarket is so much a part of day-to-day existence. Assets
Year and Retailers No.- Per cent
b. The alien retailer's trait. — Pesos
Nationality Establishments Distributio

The alien retailer must have started plying his trades in this 1941:
country in the bigger centers of population (Time there was Filipino .......... 106,671 200,323,138 55.8
when he was unknown in provincial towns and villages). Slowly Chinese ........... 15,356 118,348,692 32.9
but gradually be invaded towns and villages; now he
predominates in the cities and big centers of population. He even Others ............ 1,646 40,187,090 11.2
pioneers, in far away nooks where the beginnings of community 1947:
life appear, ministering to the daily needs of the residents and
Filipino .......... 111,107 208,658,946 65.0
purchasing their agricultural produce for sale in the towns. It is
an undeniable fact that in many communities the alien has Chinese ........... 13,774 106,156,218 33.5
replaced the native retailer. He has shown in this trade, industry Others ........... 354 8,761,260 .4
without limit, and the patience and forbearance of a slave.
1948: (Census)
Derogatory epithets are hurled at him, but he laughs these off Filipino .......... 113,631 213,342,264 67.3
without murmur; insults of ill-bred and insolent neighbors and Chinese .......... 12,087 93,155,459 29.3
customers are made in his face, but he heeds them not, and he
Others .......... 422 10,514,675 3.3
forgets and forgives. The community takes note of him, as he
appears to be harmless and extremely useful. 1949:
Filipino .......... 113,659 213,451,602 60.8
c. Alleged alien control and dominance. —
Chinese .......... 16,248 125,223,336 35.7

There is a general feeling on the part of the public, which Others .......... 486 12,056,365 3.3
appears to be true to fact, about the controlling and dominant 1951:
position that the alien retailer holds in the nation's economy.
Filipino ......... 119,352 224,053,620 61.0
Food and other essentials, clothing, almost all articles of daily life
reach the residents mostly through him. In big cities and centers Chinese .......... 17,429 134,325,303 36.6
of population he has acquired not only predominance, but Others .......... 347 8,614,025 2.3
apparent control over distribution of almost all kinds of goods,
such as lumber, hardware, textiles, groceries, drugs, sugar, flour,
garlic, and scores of other goods and articles. And were it not for
some national corporations like the Naric, the Namarco, the AVERAGE
Facomas and the Acefa, his control over principal foods and ASSETS AND GROSS SALES PER ESTABLISHMENT
products would easily become full and complete.
Item
Year and Retailer's
Petitioner denies that there is alien predominance and control in Assets
Nationality
the retail trade. In one breath it is said that the fear is unfounded (Pesos)
and the threat is imagined; in another, it is charged that the law
1941:
is merely the result of radicalism and pure and unabashed
nationalism. Alienage, it is said, is not an element of control; also Filipino ............................................. 1,8
Filipino retailer is practically helpless in matters of capital, credit,
Chinese .............................................. 7,707 9,691
price and supply.
Others ............................................... 24,415 8,281
d. Alien control and threat, subject of apprehension in
1947: Constitutional convention. —

Filipino ............................................. It is 1,878 2,516


this domination and control, which we believe has been
sufficiently shown to exist, that is the legislature's target in the
Chinese ........................................... 7,707 14,934
enactment of the disputed nationalization would never have
been adopted. The framers of our Constitution also believed in
Others .............................................. 24,749 13,919
the existence of this alien dominance and control when they
1948: (Census) approved a resolution categorically declaring among other
things, that "it is the sense of the Convention that the public
Filipino ............................................. interest
1,878requires the
4,111nationalization of the retail trade; . . . ." (II
Aruego, The Framing of the Philippine Constitution, 662-663,
Chinese ............................................. quoted on page 24,398
7,707 67 of Petitioner.) That was twenty-two years
ago; and the events since then have not been either pleasant or
Others .............................................. 24,916 Dean
comforting. 23,686
Sinco of the University of the Philippines
College of Law, commenting on the patrimony clause of the
1949: Preamble opines that the fathers of our Constitution were
merely translating the general preoccupation of Filipinos "of the
Filipino ............................................. 1,878from alien
dangers 4,069
interests that had already brought under
their control the commercial and other economic activities of the
Chinese .............................................. 7,707 24,152
country" (Sinco, Phil. Political Law, 10th ed., p. 114); and
Others .............................................. analyzing
24,807 the concern
20,737of the members of the constitutional
convention for the economic life of the citizens, in connection
1951: with the nationalistic provisions of the Constitution, he says:

Filipino ............................................. 1,877But there3,905


has been a general feeling that alien
dominance over the economic life of the country is not
Chinese ............................................. 7,707desirable33,207
and that if such a situation should remain,
political independence alone is no guarantee to national
Others ............................................... 24,824stability22,033
and strength. Filipino private capital is not big
enough to wrest from alien hands the control of the
(Estimated Assets and Gross Sales of Retail national economy. Moreover, it is but of recent
Establishments, By Year and Nationality of Owners, formation and hence, largely inexperienced, timid and
Benchmark: 1948 Census, issued by the Bureau of hesitant. Under such conditions, the government as the
Census and Statistics, Department of Commerce and instrumentality of the national will, has to step in and
Industry; pp. 18-19 of Answer.) assume the initiative, if not the leadership, in the
struggle for the economic freedom of the nation in
The above statistics do not include corporations and somewhat the same way that it did in the crusade for
partnerships, while the figures on Filipino establishments already political freedom. Thus . . . it (the Constitution)
include mere market vendors, whose capital is necessarily small.. envisages an organized movement for the protection of
the nation not only against the possibilities of armed
invasion but also against its economic subjugation by
The above figures reveal that in percentage distribution of
alien interests in the economic field. (Phil. Political Law
assests and gross sales, alien participation has steadily increased
by Sinco, 10th ed., p. 476.)
during the years. It is true, of course, that Filipinos have the edge
in the number of retailers, but aliens more than make up for the
numerical gap through their assests and gross sales which Belief in the existence of alien control and predominance is felt
average between six and seven times those of the very many in other quarters. Filipino businessmen, manufacturers and
Filipino retailers. Numbers in retailers, here, do not imply producers believe so; they fear the dangers coming from alien
superiority; the alien invests more capital, buys and sells six to control, and they express sentiments of economic independence.
seven times more, and gains much more. The same official Witness thereto is Resolution No. 1, approved on July 18, 1953,
report, pointing out to the known predominance of foreign of the Fifth National convention of Filipino Businessmen, and a
elements in the retail trade, remarks that the Filipino retailers similar resolution, approved on March 20, 1954, of the Second
were largely engaged in minor retailer enterprises. As observed National Convention of Manufacturers and Producers. The man
by respondents, the native investment is thinly spread, and the in the street also believes, and fears, alien predominance and
control; so our newspapers, which have editorially pointed out
not only to control but to alien stranglehold. We, therefore, find laws, smuggled goods and money into and out of the land,
alien domination and control to be a fact, a reality proved by violated import and export prohibitions, control laws and the
official statistics, and felt by all the sections and groups that like, in derision and contempt of lawful authority. It is also
compose the Filipino community. believed that they have engaged in corrupting public officials
with fabulous bribes, indirectly causing the prevalence of graft
e. Dangers of alien control and dominance in retail. — and corruption in the Government. As a matter of fact appeals to
unscrupulous aliens have been made both by the Government
But the dangers arising from alien participation in the retail trade and by their own lawful diplomatic representatives, action which
does not seem to lie in the predominance alone; there is a impliedly admits a prevailing feeling about the existence of many
prevailing feeling that such predominance may truly endanger of the above practices.
the national interest. With ample capital, unity of purpose and
action and thorough organization, alien retailers and merchants The circumstances above set forth create well founded fears that
can act in such complete unison and concert on such vital worse things may come in the future. The present dominance of
matters as the fixing of prices, the determination of the amount the alien retailer, especially in the big centers of population,
of goods or articles to be made available in the market, and even therefore, becomes a potential source of danger on occasions of
the choice of the goods or articles they would or would not war or other calamity. We do not have here in this country
patronize or distribute, that fears of dislocation of the national isolated groups of harmless aliens retailing goods among
economy and of the complete subservience of national economy nationals; what we have are well organized and powerful groups
and of the consuming public are not entirely unfounded. that dominate the distribution of goods and commodities in the
Nationals, producers and consumers alike can be placed communities and big centers of population. They owe no
completely at their mercy. This is easily illustrated. Suppose an allegiance or loyalty to the State, and the State cannot rely upon
article of daily use is desired to be prescribed by the aliens, them in times of crisis or emergency. While the national holds his
because the producer or importer does not offer them sufficient life, his person and his property subject to the needs of his
profits, or because a new competing article offers bigger profits country, the alien may even become the potential enemy of the
for its introduction. All that aliens would do is to agree to refuse State.
to sell the first article, eliminating it from their stocks, offering
the new one as a substitute. Hence, the producers or importers f. Law enacted in interest of national economic survival and
of the prescribed article, or its consumers, find the article security. —
suddenly out of the prescribed article, or its consumers, find the
article suddenly out of circulation. Freedom of trade is thus We are fully satisfied upon a consideration of all the facts and
curtailed and free enterprise correspondingly suppressed. circumstances that the disputed law is not the product of racial
hostility, prejudice or discrimination, but the expression of the
We can even go farther than theoretical illustrations to show the legitimate desire and determination of the people, thru their
pernicious influences of alien domination. Grave abuses have authorized representatives, to free the nation from the
characterized the exercise of the retail trade by aliens. It is a fact economic situation that has unfortunately been saddled upon it
within judicial notice, which courts of justice may not properly rightly or wrongly, to its disadvantage. The law is clearly in the
overlook or ignore in the interests of truth and justice, that there interest of the public, nay of the national security itself, and
exists a general feeling on the part of the public that alien indisputably falls within the scope of police power, thru which
participation in the retail trade has been attended by a and by which the State insures its existence and security and the
pernicious and intolerable practices, the mention of a few of supreme welfare of its citizens.
which would suffice for our purposes; that at some time or other
they have cornered the market of essential commodities, like VI. The Equal Protection Limitation
corn and rice, creating artificial scarcities to justify and enhance
profits to unreasonable proportions; that they have hoarded a. Objections to alien participation in retail trade. — The next
essential foods to the inconvenience and prejudice of the question that now poses solution is, Does the law deny the equal
consuming public, so much so that the Government has had to protection of the laws? As pointed out above, the mere fact of
establish the National Rice and Corn Corporation to save the alienage is the root and cause of the distinction between the
public from their continuous hoarding practices and tendencies; alien and the national as a trader. The alien resident owes
that they have violated price control laws, especially on foods allegiance to the country of his birth or his adopted country; his
and essential commodities, such that the legislature had to enact stay here is for personal convenience; he is attracted by the lure
a law (Sec. 9, Republic Act No. 1168), authorizing their of gain and profit. His aim or purpose of stay, we admit, is
immediate and automatic deportation for price control neither illegitimate nor immoral, but he is naturally lacking in
convictions; that they have secret combinations among that spirit of loyalty and enthusiasm for this country where he
themselves to control prices, cheating the operation of the law temporarily stays and makes his living, or of that spirit of regard,
of supply and demand; that they have connived to boycott sympathy and consideration for his Filipino customers as would
honest merchants and traders who would not cater or yield to prevent him from taking advantage of their weakness and
their demands, in unlawful restraint of freedom of trade and exploiting them. The faster he makes his pile, the earlier can the
enterprise. They are believed by the public to have evaded tax alien go back to his beloved country and his beloved kin and
countrymen. The experience of the country is that the alien protection clause to a law sought to be voided as contrary
retailer has shown such utter disregard for his customers and the thereto:
people on whom he makes his profit, that it has been found
necessary to adopt the legislation, radical as it may seem. . . . . "1. The equal protection clause of the Fourteenth
Amendment does not take from the state the power to
Another objection to the alien retailer in this country is that he classify in the adoption of police laws, but admits of the
never really makes a genuine contribution to national income exercise of the wide scope of discretion in that regard,
and wealth. He undoubtedly contributes to general distribution, and avoids what is done only when it is without any
but the gains and profits he makes are not invested in industries reasonable basis, and therefore is purely arbitrary. 2. A
that would help the country's economy and increase national classification having some reasonable basis does not
wealth. The alien's interest in this country being merely transient offend against that clause merely because it is not made
and temporary, it would indeed be ill-advised to continue with mathematical nicety, or because in practice it
entrusting the very important function of retail distribution to his results in some inequality. 3. When the classification in
hands. such a law is called in question, if any state of facts
reasonably can be conceived that would sustain it, the
The practices resorted to by aliens in the control of distribution, existence of that state of facts at the time the law was
as already pointed out above, their secret manipulations of enacted must be assumed. 4. One who assails the
stocks of commodities and prices, their utter disregard of the classification in such a law must carry the burden of
welfare of their customers and of the ultimate happiness of the showing that it does not rest upon any reasonable basis
people of the nation of which they are mere guests, which but is essentially arbitrary."
practices, manipulations and disregard do not attend the
exercise of the trade by the nationals, show the existence of real c. Authorities recognizing citizenship as basis for classification. —
and actual, positive and fundamental differences between an
alien and a national which fully justify the legislative The question as to whether or not citizenship is a legal and valid
classification adopted in the retail trade measure. These ground for classification has already been affirmatively decided
differences are certainly a valid reason for the State to prefer the in this jurisdiction as well as in various courts in the United
national over the alien in the retail trade. We would be doing States. In the case of Smith Bell & Co. vs. Natividad, 40 Phil. 136,
violence to fact and reality were we to hold that no reason or where the validity of Act No. 2761 of the Philippine Legislature
ground for a legitimate distinction can be found between one was in issue, because of a condition therein limiting the
and the other. ownership of vessels engaged in coastwise trade to corporations
formed by citizens of the Philippine Islands or the United States,
b. Difference in alien aims and purposes sufficient basis for thus denying the right to aliens, it was held that the Philippine
distinction. — Legislature did not violate the equal protection clause of the
Philippine Bill of Rights. The legislature in enacting the law had as
The above objectionable characteristics of the exercise of the ultimate purpose the encouragement of Philippine shipbuilding
retail trade by the aliens, which are actual and real, furnish and the safety for these Islands from foreign interlopers. We
sufficient grounds for legislative classification of retail traders held that this was a valid exercise of the police power, and all
into nationals and aliens. Some may disagree with the wisdom of presumptions are in favor of its constitutionality. In substance,
the legislature's classification. To this we answer, that this is the we held that the limitation of domestic ownership of vessels
prerogative of the law-making power. Since the Court finds that engaged in coastwise trade to citizens of the Philippines does not
the classification is actual, real and reasonable, and all persons of violate the equal protection of the law and due process or law
one class are treated alike, and as it cannot be said that the clauses of the Philippine Bill of Rights. In rendering said decision
classification is patently unreasonable and unfounded, it is in we quoted with approval the concurring opinion of Justice
duty bound to declare that the legislature acted within its Johnson in the case of Gibbons vs. Ogden, 9 Wheat., I, as follows:
legitimate prerogative and it can not declare that the act
transcends the limit of equal protection established by the "Licensing acts, in fact, in legislation, are universally
Constitution. restraining acts; as, for example, acts licensing gaming
houses, retailers of spirituous liquors, etc. The act, in
Broadly speaking, the power of the legislature to make this instance, is distinctly of that character, and forms
distinctions and classifications among persons is not curtailed or part of an extensive system, the object of which is to
denied by the equal protection of the laws clause. The legislative encourage American shipping, and place them on an
power admits of a wide scope of discretion, and a law can be equal footing with the shipping of other nations. Almost
violative of the constitutional limitation only when the every commercial nation reserves to its own subjects a
classification is without reasonable basis. In addition to the monopoly of its coasting trade; and a countervailing
authorities we have earlier cited, we can also refer to the case privilege in favor of American shipping is contemplated,
of Linsey vs. Natural Carbonic Fas Co. (1911), 55 L. ed., 369, in the whole legislation of the United States on this
which clearly and succinctly defined the application of equal subject. It is not to give the vessel an American
character, that the license is granted; that effect has
been correctly attributed to the act of her enrollment. licenses to them for the business of pawnbroker, pool, billiard,
But it is to confer on her American privileges, as contra card room, dance hall, is not an infringement of constitutional
distinguished from foreign; and to preserve the rights. In Templar vs. Michigan State Board of Examiners, 90
Government from fraud by foreigners; in surreptitiously N.W. 1058 (Michigan, 1902), a law prohibiting the licensing of
intruding themselves into the American commercial aliens as barbers was held void, but the reason for the decision
marine, as well as frauds upon the revenue in the trade was the court's findings that the exercise of the business by the
coastwise, that this whole system is projected." aliens does not in any way affect the morals, the health, or even
the convenience of the community. In Takahashi vs. Fish and
The rule in general is as follows: Game Commission, 92 L. ed. 1479 (1947), a California statute
banning the issuance of commercial fishing licenses to person
Aliens are under no special constitutional protection ineligible to citizenship was held void, because the law conflicts
which forbids a classification otherwise justified simply with Federal power over immigration, and because there is no
because the limitation of the class falls along the lines of public interest in the mere claim of ownership of the waters and
nationality. That would be requiring a higher degree of the fish in them, so there was no adequate justification for the
protection for aliens as a class than for similar classes discrimination. It further added that the law was the outgrowth
than for similar classes of American citizens. Broadly of antagonism toward the persons of Japanese ancestry.
speaking, the difference in status between citizens and However, two Justices dissented on the theory that fishing rights
aliens constitutes a basis for reasonable classification in have been treated traditionally as natural resources. In Fraser vs.
the exercise of police power. (2 Am., Jur. 468-469.) McConway & Tarley Co., 82 Fed. 257 (Pennsylvania, 1897), a
state law which imposed a tax on every employer of foreign-born
unnaturalized male persons over 21 years of age, was declared
In Commonwealth vs. Hana, 81 N. E. 149 (Massachusetts, 1907),
void because the court found that there was no reason for the
a statute on the licensing of hawkers and peddlers, which
classification and the tax was an arbitrary deduction from the
provided that no one can obtain a license unless he is, or has
daily wage of an employee.
declared his intention, to become a citizen of the United States,
was held valid, for the following reason: It may seem wise to the
legislature to limit the business of those who are supposed to d. Authorities contra explained. —
have regard for the welfare, good order and happiness of the
community, and the court cannot question this judgment and It is true that some decisions of the Federal court and of the
conclusion. In Bloomfield vs. State, 99 N. E. 309 (Ohio, 1912), a State courts in the United States hold that the distinction
statute which prevented certain persons, among them aliens, between aliens and citizens is not a valid ground for
from engaging in the traffic of liquors, was found not to be the classification. But in this decision the laws declared invalid were
result of race hatred, or in hospitality, or a deliberate purpose to found to be either arbitrary, unreasonable or capricious, or were
discriminate, but was based on the belief that an alien cannot be the result or product of racial antagonism and hostility, and
sufficiently acquainted with "our institutions and our life as to there was no question of public interest involved or pursued.
enable him to appreciate the relation of this particular business In Yu Cong Eng vs. Trinidad, 70 L. ed. 1059 (1925), the United
to our entire social fabric", and was not, therefore, invalid. In States Supreme Court declared invalid a Philippine law making
Ohio ex rel. Clarke vs. Deckebach, 274 U. S. 392, 71 L. ed. 115 unlawful the keeping of books of account in any language other
(1926), the U.S. Supreme Court had under consideration an than English, Spanish or any other local dialect, but the main
ordinance of the city of Cincinnati prohibiting the issuance of reasons for the decisions are: (1) that if Chinese were driven out
licenses (pools and billiard rooms) to aliens. It held that plainly of business there would be no other system of distribution, and
irrational discrimination against aliens is prohibited, but it does (2) that the Chinese would fall prey to all kinds of fraud, because
not follow that alien race and allegiance may not bear in some they would be deprived of their right to be advised of their
instances such a relation to a legitimate object of legislation as to business and to direct its conduct. The real reason for the
be made the basis of permitted classification, and that it could decision, therefore, is the court's belief that no public benefit
not state that the legislation is clearly wrong; and that latitude would be derived from the operations of the law and on the
must be allowed for the legislative appraisement of local other hand it would deprive Chinese of something indispensable
conditions and for the legislative choice of methods for for carrying on their business. In Yick Wo vs. Hopkins, 30 L. ed
controlling an apprehended evil. The case of State vs. Carrol, 124 220 (1885) an ordinance conferring powers on officials to
N. E. 129 (Ohio, 1919) is a parallel case to the one at bar. withhold consent in the operation of laundries both as to
In Asakura vs. City of Seattle, 210 P. 30 (Washington, 1922), the persons and place, was declared invalid, but the court said that
business of pawn brooking was considered as having tendencies the power granted was arbitrary, that there was no reason for
injuring public interest, and limiting it to citizens is within the the discrimination which attended the administration and
scope of police power. A similar statute denying aliens the right implementation of the law, and that the motive thereof was
to engage in auctioneering was also sustained in Wright vs. May, mere racial hostility. In State vs. Montgomery, 47 A. 165 (Maine,
L.R.A., 1915 P. 151 (Minnesota, 1914). So also in Anton vs. Van 1900), a law prohibiting aliens to engage as hawkers and
Winkle, 297 F. 340 (Oregon, 1924), the court said that aliens are peddlers was declared void, because the discrimination bore no
judicially known to have different interests, knowledge, attitude, reasonable and just relation to the act in respect to which the
psychology and loyalty, hence the prohibitions of issuance of classification was proposed.
The case at bar is radically different, and the facts make them so. declare such policy, or, when it is declared by the
As we already have said, aliens do not naturally possess the legislature, to override it. If the laws passed are seen to
sympathetic consideration and regard for the customers with have a reasonable relation to a proper legislative
whom they come in daily contact, nor the patriotic desire to help purpose, and are neither arbitrary nor discriminatory,
bolster the nation's economy, except in so far as it enhances the requirements of due process are satisfied, and
their profit, nor the loyalty and allegiance which the national judicial determination to that effect renders a
owes to the land. These limitations on the qualifications of the court functus officio. . . . (Nebbia vs. New York, 78 L. ed.
aliens have been shown on many occasions and instances, 940, 950, 957.)
especially in times of crisis and emergency. We can do no better
than borrow the language of Anton vs. Van Winkle, 297 F. 340, Another authority states the principle thus:
342, to drive home the reality and significance of the distinction
between the alien and the national, thus: . . . . Too much significance cannot be given to the word
"reasonable" in considering the scope of the police
. . . . It may be judicially known, however, that alien power in a constitutional sense, for the test used to
coming into this country are without the intimate determine the constitutionality of the means employed
knowledge of our laws, customs, and usages that our by the legislature is to inquire whether the restriction it
own people have. So it is likewise known that certain imposes on rights secured to individuals by the Bill of
classes of aliens are of different psychology from our Rights are unreasonable, and not whether it imposes
fellow countrymen. Furthermore, it is natural and any restrictions on such rights. . . .
reasonable to suppose that the foreign born, whose
allegiance is first to their own country, and whose ideals xxx xxx xxx
of governmental environment and control have been
engendered and formed under entirely different
. . . . A statute to be within this power must also be
regimes and political systems, have not the same
reasonable in its operation upon the persons whom it
inspiration for the public weal, nor are they as well
affects, must not be for the annoyance of a particular
disposed toward the United States, as those who by
class, and must not be unduly oppressive. (11 Am. Jur.
citizenship, are a part of the government itself. Further
Sec. 302., 1:1)- 1074-1075.)
enlargement, is unnecessary. I have said enough so that
obviously it cannot be affirmed with absolute
In the case of Lawton vs. Steele, 38 L. ed. 385, 388. it was also
confidence that the Legislature was without plausible
held:
reason for making the classification, and therefore
appropriate discriminations against aliens as it relates to
the subject of legislation. . . . . . . . . To justify the state in thus interposing its authority
in behalf of the public, it must appear, first, that the
interests of the public generally, as distinguished from
VII. The Due Process of Law Limitation.
those of a particular class, require such interference;
and second, that the means are reasonably necessary
a. Reasonability, the test of the limitation; determination by
for the accomplishment of the purpose, and not unduly
legislature decisive. —
oppressive upon individuals. . . .

We now come to due process as a limitation on the exercise of


Prata Undertaking Co. vs. State Board of Embalming, 104 ALR,
the police power. It has been stated by the highest authority in
389, 395, fixes this test of constitutionality:
the United States that:
In determining whether a given act of the Legislature,
. . . . And the guaranty of due process, as has often been
passed in the exercise of the police power to regulate
held, demands only that the law shall not be
the operation of a business, is or is not constitutional,
unreasonable, arbitrary or capricious, and that the
one of the first questions to be considered by the court
means selected shall have a real and substantial relation
is whether the power as exercised has a sufficient
to the subject sought to be attained. . . . .
foundation in reason in connection with the matter
involved, or is an arbitrary, oppressive, and capricious
xxx xxx xxx use of that power, without substantial relation to the
health, safety, morals, comfort, and general welfare of
So far as the requirement of due process is concerned the public.
and in the absence of other constitutional restriction a
state is free to adopt whatever economic policy may b. Petitioner's argument considered. —
reasonably be deemed to promote public welfare, and
to enforce that policy by legislation adapted to its
Petitioner's main argument is that retail is a common, ordinary
purpose. The courts are without authority either to
occupation, one of those privileges long ago recognized as
essential to the orderly pursuant of happiness by free men; that endanger our national security it respects existing
it is a gainful and honest occupation and therefore beyond the rights.
power of the legislature to prohibit and penalized. This
arguments overlooks fact and reality and rests on an incorrect The approval of this bill is necessary for our national
assumption and premise, i.e., that in this country where the survival.
occupation is engaged in by petitioner, it has been so engaged by
him, by the alien in an honest creditable and unimpeachable If political independence is a legitimate aspiration of a people,
manner, without harm or injury to the citizens and without then economic independence is none the less legitimate.
ultimate danger to their economic peace, tranquility and Freedom and liberty are not real and positive if the people are
welfare. But the Legislature has found, as we have also found subject to the economic control and domination of others,
and indicated, that the privilege has been so grossly abused by especially if not of their own race or country. The removal and
the alien, thru the illegitimate use of pernicious designs and eradication of the shackles of foreign economic control and
practices, that he now enjoys a monopolistic control of the domination, is one of the noblest motives that a national
occupation and threatens a deadly stranglehold on the nation's legislature may pursue. It is impossible to conceive that
economy endangering the national security in times of crisis and legislation that seeks to bring it about can infringe the
emergency. constitutional limitation of due process. The attainment of a
legitimate aspiration of a people can never be beyond the limits
The real question at issue, therefore, is not that posed by of legislative authority.
petitioner, which overlooks and ignores the facts and
circumstances, but this, Is the exclusion in the future of aliens c. Law expressly held by Constitutional Convention to be within
from the retail trade unreasonable. Arbitrary capricious, taking the sphere of legislative action. —
into account the illegitimate and pernicious form and manner in
which the aliens have heretofore engaged therein? As thus
The framers of the Constitution could not have intended to
correctly stated the answer is clear. The law in question is
impose the constitutional restrictions of due process on the
deemed absolutely necessary to bring about the desired
attainment of such a noble motive as freedom from economic
legislative objective, i.e., to free national economy from alien
control and domination, thru the exercise of the police power.
control and dominance. It is not necessarily unreasonable
The fathers of the Constitution must have given to the legislature
because it affects private rights and privileges (11 Am. Jur. pp.
full authority and power to enact legislation that would promote
1080-1081.) The test of reasonableness of a law is the
the supreme happiness of the people, their freedom and liberty.
appropriateness or adequacy under all circumstances of the
On the precise issue now before us, they expressly made their
means adopted to carry out its purpose into effect (Id.) Judged
voice clear; they adopted a resolution expressing their belief that
by this test, disputed legislation, which is not merely reasonable
the legislation in question is within the scope of the legislative
but actually necessary, must be considered not to have infringed
power. Thus they declared the their Resolution:
the constitutional limitation of reasonableness.
That it is the sense of the Convention that the public
The necessity of the law in question is explained in the
interest requires the nationalization of retail trade; but
explanatory note that accompanied the bill, which later was
it abstain from approving the amendment introduced
enacted into law:
by the Delegate for Manila, Mr. Araneta, and others on
this matter because it is convinced that the National
This bill proposes to regulate the retail business. Its Assembly is authorized to promulgate a law which limits
purpose is to prevent persons who are not citizens of to Filipino and American citizens the privilege to engage
the Philippines from having a strangle hold upon our in the retail trade. (11 Aruego, The Framing of the
economic life. If the persons who control this vital Philippine Constitution, quoted on pages 66 and 67 of
artery of our economic life are the ones who owe no the Memorandum for the Petitioner.)
allegiance to this Republic, who have no profound
devotion to our free institutions, and who have no
It would do well to refer to the nationalistic tendency manifested
permanent stake in our people's welfare, we are not
in various provisions of the Constitution. Thus in the preamble, a
really the masters of our destiny. All aspects of our life,
principle objective is the conservation of the patrimony of the
even our national security, will be at the mercy of other
nation and as corollary the provision limiting to citizens of the
people.
Philippines the exploitation, development and utilization of its
natural resources. And in Section 8 of Article XIV, it is provided
In seeking to accomplish the foregoing purpose, we do that "no franchise, certificate, or any other form of authorization
not propose to deprive persons who are not citizens of for the operation of the public utility shall be granted except to
the Philippines of their means of livelihood. While this citizens of the Philippines." The nationalization of the retail trade
bill seeks to take away from the hands of persons who is only a continuance of the nationalistic protective policy laid
are not citizens of the Philippines a power that can be down as a primary objective of the Constitution. Can it be said
wielded to paralyze all aspects of our national life and that a law imbued with the same purpose and spirit underlying
many of the provisions of the Constitution is unreasonable, constitutional provision which is claimed to be violated in Section
invalid and unconstitutional? 21 (1) of Article VI, which reads:

The seriousness of the Legislature's concern for the plight of the No bill which may be enacted in the law shall embrace
nationals as manifested in the approval of the radical measures more than one subject which shall be expressed in the
is, therefore, fully justified. It would have been recreant to its title of the bill.
duties towards the country and its people would it view the sorry
plight of the nationals with the complacency and refuse or What the above provision prohibits is duplicity, that is, if its title
neglect to adopt a remedy commensurate with the demands of completely fails to appraise the legislators or the public of the
public interest and national survival. As the repository of the nature, scope and consequences of the law or its operation (I
sovereign power of legislation, the Legislature was in duty bound Sutherland, Statutory Construction, Sec. 1707, p. 297.) A cursory
to face the problem and meet, through adequate measures, the consideration of the title and the provisions of the bill fails to
danger and threat that alien domination of retail trade poses to show the presence of duplicity. It is true that the term "regulate"
national economy. does not and may not readily and at first glance convey the idea
of "nationalization" and "prohibition", which terms express the
d. Provisions of law not unreasonable. — two main purposes and objectives of the law. But "regulate" is a
broader term than either prohibition or nationalization. Both of
A cursory study of the provisions of the law immediately reveals these have always been included within the term regulation.
how tolerant, how reasonable the Legislature has been. The law
is made prospective and recognizes the right and privilege of Under the title of an act to "regulate", the sale of
those already engaged in the occupation to continue therein intoxicating liquors, the Legislature may prohibit the
during the rest of their lives; and similar recognition of the right sale of intoxicating liquors. (Sweet vs. City of Wabash,
to continue is accorded associations of aliens. The right or 41 Ind., 7; quoted in page 41 of Answer.)
privilege is denied to those only upon conviction of certain
offenses. In the deliberations of the Court on this case, attention Within the meaning of the Constitution requiring that
was called to the fact that the privilege should not have been the subject of every act of the Legislature shall be stated
denied to children and heirs of aliens now engaged in the retail in the tale, the title to regulate the sale of intoxicating
trade. Such provision would defeat the law itself, its aims and liquors, etc." sufficiently expresses the subject of an
purposes. Beside, the exercise of legislative discretion is not actprohibiting the sale of such liquors to minors and to
subject to judicial review. It is well settled that the Court will not persons in the habit of getting intoxicated; such matters
inquire into the motives of the Legislature, nor pass upon being properly included within the subject of regulating
general matters of legislative judgment. The Legislature is the sale. (Williams vs. State, 48 Ind. 306, 308, quoted in
primarily the judge of the necessity of an enactment or of any of p. 42 of Answer.)
its provisions, and every presumption is in favor of its validity,
and though the Court may hold views inconsistent with the The word "regulate" is of broad import, and
wisdom of the law, it may not annul the legislation if not necessarily implies some degree of restraint and
palpably in excess of the legislative power. Furthermore, the test prohibition of acts usually done in connection with the
of the validity of a law attacked as a violation of due process, is thing to be regulated. While word regulate does not
not its reasonableness, but its unreasonableness, and we find ordinarily convey meaning of prohibit, there is no
the provisions are not unreasonable. These principles also absolute reason why it should not have such meaning
answer various other arguments raised against the law, some of when used in delegating police power in connection
which are: that the law does not promote general welfare; that with a thing the best or only efficacious regulation of
thousands of aliens would be thrown out of employment; that which involves suppression. (State vs. Morton, 162 So.
prices will increase because of the elimination of competition; 718, 182 La. 887, quoted in p. 42 of Answer.)
that there is no need for the legislation; that adequate
replacement is problematical; that there may be general
The general rule is for the use of general terms in the title of a
breakdown; that there would be repercussions from foreigners;
bill; it has also been said that the title need not be an index to
etc. Many of these arguments are directed against the supposed
the entire contents of the law (I Sutherland, Statutory
wisdom of the law which lies solely within the legislative
Construction, See. 4803, p. 345.) The above rule was followed
prerogative; they do not import invalidity.
the title of the Act in question adopted the more general term
"regulate" instead of "nationalize" or "prohibit". Furthermore,
VIII. Alleged defect in the title of the law the law also contains other rules for the regulation of the retail
trade which may not be included in the terms "nationalization"
A subordinate ground or reason for the alleged invalidity of the or "prohibition"; so were the title changed from "regulate" to
law is the claim that the title thereof is misleading or deceptive, "nationalize" or "prohibit", there would have been many
as it conceals the real purpose of the bill which is to nationalize provisions not falling within the scope of the title which would
the retail business and prohibit aliens from engaging therein. The have made the Act invalid. The use of the term "regulate",
therefore, is in accord with the principle governing the drafting
of statutes, under which a simple or general term should be the scope of the police power of the State, thru which and by
adopted in the title, which would include all other provisions which it protects its own personality and insures its security and
found in the body of the Act. future; that the law does not violate the equal protection clause
of the Constitution because sufficient grounds exist for the
One purpose of the constitutional directive that the subject of a distinction between alien and citizen in the exercise of the
bill should be embraced in its title is to apprise the legislators of occupation regulated, nor the due process of law clause, because
the purposes, the nature and scope of its provisions, and prevent the law is prospective in operation and recognizes the privilege
the enactment into law of matters which have received the of aliens already engaged in the occupation and reasonably
notice, action and study of the legislators or of the public. In the protects their privilege; that the wisdom and efficacy of the law
case at bar it cannot be claimed that the legislators have been to carry out its objectives appear to us to be plainly evident — as
appraised of the nature of the law, especially the nationalization a matter of fact it seems not only appropriate but actually
and the prohibition provisions. The legislators took active necessary — and that in any case such matter falls within the
interest in the discussion of the law, and a great many of the prerogative of the Legislature, with whose power and discretion
persons affected by the prohibitions in the law conducted a the Judicial department of the Government may not interfere;
campaign against its approval. It cannot be claimed, therefore, that the provisions of the law are clearly embraced in the title,
that the reasons for declaring the law invalid ever existed. The and this suffers from no duplicity and has not misled the
objection must therefore, be overruled. legislators or the segment of the population affected; and that it
cannot be said to be void for supposed conflict with treaty
IX. Alleged violation of international treaties and obligations obligations because no treaty has actually been entered into on
the subject and the police power may not be curtailed or
surrendered by any treaty or any other conventional agreement.
Another subordinate argument against the validity of the law is
the supposed violation thereby of the Charter of the United
Nations and of the Declaration of the Human Rights adopted by Some members of the Court are of the opinion that the radical
the United Nations General Assembly. We find no merit in the effects of the law could have been made less harsh in its impact
Nations Charter imposes no strict or legal obligations regarding on the aliens. Thus it is stated that the more time should have
the rights and freedom of their subjects (Hans Kelsen, The Law of been given in the law for the liquidation of existing businesses
the United Nations, 1951 ed. pp. 29-32), and the Declaration of when the time comes for them to close. Our legal duty, however,
Human Rights contains nothing more than a mere is merely to determine if the law falls within the scope of
recommendation or a common standard of achievement for all legislative authority and does not transcend the limitations of
peoples and all nations (Id. p. 39.) That such is the import of the due process and equal protection guaranteed in the
United Nations Charter aid of the Declaration of Human Rights Constitution. Remedies against the harshness of the law should
can be inferred the fact that members of the United Nations be addressed to the Legislature; they are beyond our power and
Organizations, such as Norway and Denmark, prohibit foreigners jurisdiction.
from engaging in retail trade, and in most nations of the world
laws against foreigners engaged in domestic trade are adopted. The petition is hereby denied, with costs against petitioner.

The Treaty of Amity between the Republic of the Philippines and Paras, C.J., Bengzon, Reyes, A., Bautista Angelo, Concepcion,
the Republic of China of April 18, 1947 is also claimed to be Reyes, J.B.L., Endencia and Felix, JJ., concur.
violated by the law in question. All that the treaty guarantees is
equality of treatment to the Chinese nationals "upon the same
terms as the nationals of any other country." But the nationals of
China are not discriminating against because nationals of all Separate Opinions
other countries, except those of the United States, who are
granted special rights by the Constitution, are all prohibited from PADILLA, J., concurring and dissenting:
engaging in the retail trade. But even supposing that the law
infringes upon the said treaty, the treaty is always subject to I agree to the proposition, principle or rule that courts may not
qualification or amendment by a subsequent law (U. S. vs. inquire into the wisdom of an the Act passed by the Congress
Thompson, 258, Fed. 257, 260), and the same may never curtail and duly approved by the President of the Republic. But the rule
or restrict the scope of the police power of the State (plaston vs. does not preclude courts from inquiring and determining
Pennsylvania, 58 L. ed. 539.) whether the Act offends against a provision or provisions of the
Constitution. I am satisfied that the Act assailed as violative of
X. Conclusion the due process of law and the equal protection of the laws
clauses of the Constitution does not infringe upon them, insofar
Resuming what we have set forth above we hold that the as it affects associations, partnership or corporations, the capital
disputed law was enacted to remedy a real actual threat and of which is not wholly owned by the citizens of the Philippines,
danger to national economy posed by alien dominance and and aliens, who are not and have not been engaged in the retail
control of the retail business and free citizens and country from business. I am, however, unable to persuade myself that it does
dominance and control; that the enactment clearly falls within not violate said clauses insofar as the Act applies to associations
and partnerships referred to in the Act and to aliens, who are the priceless patrimony and mainstay of the nation; yet, they did
and have heretofore been engaged in said business. When they not deem it wise and prudent to deprive aliens and their heirs of
did engage in the retail business there was no prohibition on or such lands.4
against them to engage in it. They assumed and believed in good
faith they were entitled to engaged in the business. The Act For these reasons, I am of the opinion that section 1 of the Act,
allows aliens to continue in business until their death or insofar as it compels associations and partnership referred to
voluntary retirement from the business or forfeiture of their therein to wind up their retail business within ten years from the
license; and corporations, associations or partnership, the capital date of the approval of the Act even before the expiry of the
of which is not wholly owned by the citizens of the Philippines to term of their existence as agreed upon by the associates and
continue in the business for a period of ten years from the date partners and section 3 of the Act, insofar as it compels the aliens
of the approval of the Act (19 June 1954) or until the expiry of engaged in the retail business in his lifetime his executor or
term of the existence of the association or partnership or administrator, to liquidate the business, are invalid, for they
corporation, whichever event comes first. The prohibition on violate the due process of law and the equal protection of the
corporations, the capital of which is not wholly owned by citizens laws clauses of the Constitution.
of the Philippines, to engage in the retail business for a period of chong vs Hernandez
more than ten years from the date of the approval of the Act or G.R. No. L-7995 , 101 Phil. 115
beyond the term of their corporate existence, whichever event May 31, 1957
comes first, is valid and lawful, because the continuance of the [Petitioner: Lao H. Ichong, in his own behalf and in behalf of
existence of such corporations is subject to whatever the other alien residents, corporations and partnerships adversely
Congress may impose reasonably upon them by subsequent affected by RA 1180
legislation.1 But the prohibition to engage in the retail business Respondents: Jamie Hernandez, Secretary of Finance and
by associations and partnerships, the capital of which is not Marcelino Sarmiento, City Treasurer of Manila]
wholly owned by citizen of the Philippines, after ten years from Facts:
the date of the approval of the Act, even before the end of the Petitioner Lao H. Ichong brought this action to obtain a judicial
term of their existence as agreed upon by the associates and declaration that Republic Act 1180 is unconstitutional, and to
partners, and by alien heirs to whom the retail business is enjoin the Secretary of Finance and all other persons acting
transmitted by the death of an alien engaged in the business, or under him, particularly city and municipal treasurers, from
by his executor or administrator, amounts to a deprivation of enforcing its provisions. Petitioner attacks the constitutionality
their property without due process of law. To my mind, the ten- of the Act, contending that: (1) it denies to alien residents the
year period from the date of the approval of the Act or until the equal protection of the laws and deprives of their liberty and
expiration of the term of the existence of the association and property without due process of law; (2) the subject of the Act is
partnership, whichever event comes first, and the six-month not expressed or comprehended in the title thereof; (3) the Act
period granted to alien heirs of a deceased alien, his executor or violates international and treaty obligations of the Republic of
administrator, to liquidate the business, do not cure the defect the Philippines. In answer, the Solicitor-General and the Fiscal of
of the law, because the effect of the prohibition is to compel the City of Manila contend that the Act was passed in the valid
them to sell or dispose of their business. The price obtainable at exercise of the police power of the State, which exercise is
such forced sale of the business would be inadequate to authorized in the Constitution in the interest of national
reimburse and compensate the associates or partners of the economic survival.
associations or partnership, and the alien heirs of a deceased Issue:
alien, engaged in the retail business for the capital invested in it. Whether or not Republic Act 1180 violates the equal protection
The stock of merchandise bought and sold at retail does not of laws.
alone constitute the business. The goodwill that the association, Held/Ruling:
partnership and the alien had built up during a long period of No. According to the Court, RA 1180 is a valid exercise of police
effort, patience and perseverance forms part of such business. power. It was also then provided that police power cannot be
The constitutional provisions that no person shall be deprived of bargained away through the medium of a treaty or a contract.
his property without due process of law2 and that no person The enactment clearly falls within the scope of the police power
shall be denied the equal protection of the laws3 would have no of the State. The law does not violate the equal protection clause
meaning as applied to associations or partnership and alien heirs of the Constitution because sufficient grounds exist for the
of an alien engaged in the retail business if they were to be distinction between alien and citizen in the exercise of the
compelled to sell or dispose of their business within ten years occupation regulated, nor the due process of law clause, because
from the date of the approval of the Act and before the end of the law is prospective in operation and recognizes the privilege
the term of the existence of the associations and partnership as of aliens already engaged in the occupation and reasonably
agreed upon by the associations and partners and within six protects their privilege. The petition is hereby denied, with costs
months after the death of their predecessor-in-interest. against petitioner.

The authors of the Constitution were vigilant, careful and zealous 3QUEZON CITY V ERICTA 122 SCRA 759
in the safeguard of the ownership of private agricultural lands
which together with the lands of the public domain constitute G.R. No. L-34915 June 24, 1983
CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF Section 9 of the Ordinance in question The respondent alleged
QUEZON CITY, petitioners, that the same is contrary to the Constitution, the Quezon City
vs. Charter, the Local Autonomy Act, and the Revised Administrative
HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First Code.
Instance of Rizal, Quezon City, Branch XVIII; HIMLAYANG
PILIPINO, INC., respondents. There being no issue of fact and the questions raised being
purely legal both petitioners and respondent agreed to the
City Fiscal for petitioners. rendition of a judgment on the pleadings. The respondent court,
therefore, rendered the decision declaring Section 9 of
Manuel Villaruel, Jr. and Feliciano Tumale for respondents. Ordinance No. 6118, S-64 null and void.

A motion for reconsideration having been denied, the City


GUTIERREZ, JR., J.: Government and City Council filed the instant petition.

This is a petition for review which seeks the reversal of the Petitioners argue that the taking of the respondent's property is
decision of the Court of First Instance of Rizal, Branch XVIII a valid and reasonable exercise of police power and that the land
declaring Section 9 of Ordinance No. 6118, S-64, of the Quezon is taken for a public use as it is intended for the burial ground of
City Council null and void. paupers. They further argue that the Quezon City Council is
authorized under its charter, in the exercise of local police
Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE power, " to make such further ordinances and resolutions not
REGULATING THE ESTABLISHMENT, MAINTENANCE AND repugnant to law as may be necessary to carry into effect and
OPERATION OF PRIVATE MEMORIAL TYPE CEMETERY OR BURIAL discharge the powers and duties conferred by this Act and such
GROUND WITHIN THE JURISDICTION OF QUEZON CITY AND as it shall deem necessary and proper to provide for the health
PROVIDING PENALTIES FOR THE VIOLATION THEREOF" provides: and safety, promote the prosperity, improve the morals, peace,
good order, comfort and convenience of the city and the
inhabitants thereof, and for the protection of property therein."
Sec. 9. At least six (6) percent of the total area
of the memorial park cemetery shall be set
aside for charity burial of deceased persons On the other hand, respondent Himlayang Pilipino, Inc. contends
who are paupers and have been residents of that the taking or confiscation of property is obvious because the
Quezon City for at least 5 years prior to their questioned ordinance permanently restricts the use of the
death, to be determined by competent City property such that it cannot be used for any reasonable purpose
Authorities. The area so designated shall and deprives the owner of all beneficial use of his property.
immediately be developed and should be open
for operation not later than six months from The respondent also stresses that the general welfare clause is
the date of approval of the application. not available as a source of power for the taking of the property
in this case because it refers to "the power of promoting the
For several years, the aforequoted section of the Ordinance was public welfare by restraining and regulating the use of liberty and
not enforced by city authorities but seven years after the property." The respondent points out that if an owner is
enactment of the ordinance, the Quezon City Council passed the deprived of his property outright under the State's police power,
following resolution: the property is generally not taken for public use but is urgently
and summarily destroyed in order to promote the general
welfare. The respondent cites the case of a nuisance per se or
RESOLVED by the council of Quezon assembled,
the destruction of a house to prevent the spread of a
to request, as it does hereby request the City
conflagration.
Engineer, Quezon City, to stop any further
selling and/or transaction of memorial park
lots in Quezon City where the owners thereof We find the stand of the private respondent as well as the
have failed to donate the required 6% space decision of the respondent Judge to be well-founded. We quote
intended for paupers burial. with approval the lower court's ruling which declared null and
void Section 9 of the questioned city ordinance:
Pursuant to this petition, the Quezon City Engineer notified
respondent Himlayang Pilipino, Inc. in writing that Section 9 of The issue is: Is Section 9 of the ordinance in
Ordinance No. 6118, S-64 would be enforced question a valid exercise of the police power?

Respondent Himlayang Pilipino reacted by filing with the Court An examination of the Charter of Quezon City
of First Instance of Rizal Branch XVIII at Quezon City, a petition (Rep. Act No. 537), does not reveal any
for declaratory relief, prohibition and mandamus with provision that would justify the ordinance in
preliminary injunction (Sp. Proc. No. Q-16002) seeking to annul question except the provision granting police
power to the City. Section 9 cannot be justified deem necessary and proper
under the power granted to Quezon City to tax, to provide for the health and
fix the license fee, and regulate such other safety, promote, the
business, trades, and occupation as may be prosperity, improve the
established or practised in the City.' morals, peace, good order,
(Subsections 'C', Sec. 12, R.A. 537). comfort and convenience of
the city and the inhabitants
The power to regulate does not include the thereof, and for the
power to prohibit (People vs. Esguerra, 81 PhiL protection of property
33, Vega vs. Municipal Board of Iloilo, L-6765, therein; and enforce
May 12, 1954; 39 N.J. Law, 70, Mich. 396). A obedience thereto with such
fortiori, the power to regulate does not include lawful fines or penalties as
the power to confiscate. The ordinance in the City Council may
question not only confiscates but also prohibits prescribe under the
the operation of a memorial park cemetery, provisions of subsection (jj)
because under Section 13 of said ordinance, of this section.
'Violation of the provision thereof is punishable
with a fine and/or imprisonment and that upon We start the discussion with a restatement of
conviction thereof the permit to operate and certain basic principles. Occupying the
maintain a private cemetery shall be revoked forefront in the bill of rights is the provision
or cancelled.' The confiscatory clause and the which states that 'no person shall be deprived
penal provision in effect deter one from of life, liberty or property without due process
operating a memorial park cemetery. Neither of law' (Art. Ill, Section 1 subparagraph 1,
can the ordinance in question be justified Constitution).
under sub- section "t", Section 12 of Republic
Act 537 which authorizes the City Council to- On the other hand, there are three inherent
powers of government by which the state
'prohibit the burial of the interferes with the property rights, namely-. (1)
dead within the center of police power, (2) eminent domain, (3) taxation.
population of the city and These are said to exist independently of the
provide for their burial in Constitution as necessary attributes of
such proper place and in such sovereignty.
manner as the council may
determine, subject to the Police power is defined by Freund as 'the
provisions of the general law power of promoting the public welfare by
regulating burial grounds and restraining and regulating the use of liberty
cemeteries and governing and property' (Quoted in Political Law by
funerals and disposal of the Tanada and Carreon, V-11, p. 50). It is usually
dead.' (Sub-sec. (t), Sec. 12, exerted in order to merely regulate the use and
Rep. Act No. 537). enjoyment of property of the owner. If he is
deprived of his property outright, it is not
There is nothing in the above provision which taken for public use but rather to destroy in
authorizes confiscation or as euphemistically order to promote the general welfare. In police
termed by the respondents, 'donation' power, the owner does not recover from the
government for injury sustained in
We now come to the question whether or not consequence thereof (12 C.J. 623). It has been
Section 9 of the ordinance in question is a valid said that police power is the most essential of
exercise of police power. The police power of government powers, at times the most
Quezon City is defined in sub-section 00, Sec. insistent, and always one of the least limitable
12, Rep. Act 537 which reads as follows: of the powers of government (Ruby vs.
Provincial Board, 39 PhiL 660; Ichong vs.
(00) To make such further Hernandez, 1,7995, May 31, 1957). This power
ordinance and regulations embraces the whole system of public
not repugnant to law as may regulation (U.S. vs. Linsuya Fan, 10 PhiL 104).
be necessary to carry into The Supreme Court has said that police power
effect and discharge the is so far-reaching in scope that it has almost
powers and duties conferred become impossible to limit its sweep. As it
by this act and such as it shall derives its existence from the very existence of
the state itself, it does not need to be In the leading case of Ermita-Malate Hotel and Motel Operators
expressed or defined in its scope. Being Association Inc. v. City Mayor of Manila (20 SCRA 849) the Court
coextensive with self-preservation and survival speaking through the then Associate Justice and now Chief
itself, it is the most positive and active of all Justice Enrique M. Fernando stated
governmental processes, the most essential
insistent and illimitable Especially it is so under Primarily what calls for a reversal of such a
the modern democratic framework where the decision is the a of any evidence to offset the
demands of society and nations have presumption of validity that attaches to a
multiplied to almost unimaginable proportions. statute or ordinance. As was expressed
The field and scope of police power have categorically by Justice Malcolm 'The
become almost boundless, just as the fields of presumption is all in favor of validity. ... The
public interest and public welfare have become action of the elected representatives of the
almost all embracing and have transcended people cannot be lightly set aside. The
human foresight. Since the Courts cannot councilors must, in the very nature of things,
foresee the needs and demands of public be familiar with the necessities of their
interest and welfare, they cannot delimit particular ... municipality and with all the facts
beforehand the extent or scope of the police and lances which surround the subject and
power by which and through which the state necessitate action. The local legislative body,
seeks to attain or achieve public interest and by enacting the ordinance, has in effect given
welfare. (Ichong vs. Hernandez, L-7995, May notice that the regulations are essential to the
31, 1957). well-being of the people. ... The Judiciary
should not lightly set aside legislative action
The police power being the most active power when there is not a clear invasion of personal
of the government and the due process clause or property rights under the guise of police
being the broadest station on governmental regulation. (U.S. v. Salaveria (1918], 39 Phil.
power, the conflict between this power of 102, at p. 111. There was an affirmation of the
government and the due process clause of the presumption of validity of municipal ordinance
Constitution is oftentimes inevitable. as announced in the leading Salaveria decision
in Ebona v. Daet, [1950]85 Phil. 369.)
It will be seen from the foregoing authorities
that police power is usually exercised in the We have likewise considered the principles
form of mere regulation or restriction in the earlier stated in Case v. Board of Health supra :
use of liberty or property for the promotion of
the general welfare. It does not involve the ... Under the provisions of municipal charters
taking or confiscation of property with the which are known as the general welfare
exception of a few cases where there is a clauses, a city, by virtue of its police power,
necessity to confiscate private property in may adopt ordinances to the peace, safety,
order to destroy it for the purpose of health, morals and the best and highest
protecting the peace and order and of interests of the municipality. It is a well-settled
promoting the general welfare as for instance, principle, growing out of the nature of well-
the confiscation of an illegally possessed ordered and society, that every holder of
article, such as opium and firearms. property, however absolute and may be his
title, holds it under the implied liability that his
It seems to the court that Section 9 of use of it shall not be injurious to the equal
Ordinance No. 6118, Series of 1964 of Quezon enjoyment of others having an equal right to
City is not a mere police regulation but an the enjoyment of their property, nor injurious
outright confiscation. It deprives a person of to the rights of the community. An property in
his private property without due process of the state is held subject to its general
law, nay, even without compensation. regulations, which are necessary to the
common good and general welfare. Rights of
In sustaining the decision of the respondent court, we are not property, like all other social and conventional
unmindful of the heavy burden shouldered by whoever rights, are subject to such reasonable
challenges the validity of duly enacted legislation whether limitations in their enjoyment as shall prevent
national or local As early as 1913, this Court ruled in Case v. them from being injurious, and to such
Board of Health (24 PhiL 250) that the courts resolve every reasonable restraints and regulations,
presumption in favor of validity and, more so, where the ma established by law, as the legislature, under
corporation asserts that the ordinance was enacted to promote the governing and controlling power vested in
the common good and general welfare. them by the constitution, may think necessary
and expedient. The state, under the police private respondent when it accepted the permits to commence
power, is possessed with plenary power to deal operations.
with all matters relating to the general health,
morals, and safety of the people, so long as it WHEREFORE, the petition for review is hereby DISMISSED. The
does not contravene any positive inhibition of decision of the respondent court is affirmed.
the organic law and providing that such power
is not exercised in such a manner as to justify SO ORDERED.
the interference of the courts to prevent
positive wrong and oppression.
Teehankee (Chairman), Melencio-Herrera, Plana, Vasquez and
Relova, JJ., concur.
but find them not applicable to the facts of this case. CITY GOVERNMENT OF QUEZON CITY v. JUDGE VICENTE G.
ERICTA AS JUDGE OF COURT OF FIRST INSTANCE OF RIZAL, GR
There is no reasonable relation between the setting aside of at No. L-34915, 1983-06-24
least six (6) percent of the total area of an private cemeteries for Facts:
charity burial grounds of deceased paupers and the promotion of Section 9 of ordinance No. 6118, S-64, entitled "ORDINANCE
health, morals, good order, safety, or the general welfare of the REGULATING THE ESTABLISHMENT, MAINTENANCE AND
people. The ordinance is actually a taking without compensation OPERATION OF PRIVATE MEMORIAL TYPE CEMETERY OR BURIAL
of a certain area from a private cemetery to benefit paupers who GROUND WITHIN THE JURISDICTION OF QUEZON CITY AND
are charges of the municipal corporation. Instead of building or PROVIDING PENALTIES FOR THE VIOLATION THEREOF" provides:
maintaining a public cemetery for this purpose, the city passes "Sec. 9. At least six (6) percent of the total area of the memorial
the burden to private cemeteries. park cemetery shall be set aside for charity burial of deceased
persons who are paupers and have been residents of Quezon
The expropriation without compensation of a portion of private City for at least 5 years prior to their death, to be determined by
cemeteries is not covered by Section 12(t) of Republic Act 537, competent City
the Revised Charter of Quezon City which empowers the city Authorities. The area so designated shall immediately be
council to prohibit the burial of the dead within the center of developed and should be open for operation not later than six
population of the city and to provide for their burial in a proper months from the date of approval of the application."
place subject to the provisions of general law regulating burial For several years, the aforequoted section of the Ordinance was
grounds and cemeteries. When the Local Government Code, not enforced by city authorities but seven years after the
Batas Pambansa Blg. 337 provides in Section 177 (q) that a enactment of the ordinance, the Quezon City Council passed the
Sangguniang panlungsod may "provide for the burial of the dead following resolution:
in such place and in such manner as prescribed by law or "RESOLVED by the council of Quezon assembled, to request, as it
ordinance" it simply authorizes the city to provide its own city does hereby request the City Engineer, Quezon City, to stop any
owned land or to buy or expropriate private properties to further selling and/or transaction of memorial park lots in
construct public cemeteries. This has been the law and practise Quezon City where the owners thereof have failed to donate the
in the past. It continues to the present. Expropriation, however, required 6%... space intended for paupers burial."
requires payment of just compensation. The questioned Pursuant to this resolution, the Quezon City Engineer notified
ordinance is different from laws and regulations requiring respondent Himlayang Pilipino, Inc. in writing that Section 9 of
owners of subdivisions to set aside certain areas for streets, Ordinance No. 6118, S-64 would be enforced.
parks, playgrounds, and other public facilities from the land they There being no issue of fact and the questions raised being
sell to buyers of subdivision lots. The necessities of public safety, purely legal, both petitioners and respondent agreed to the
health, and convenience are very clear from said requirements rendition of a judgment on the pleadings.
which are intended to insure the development of communities The respondent court, therefore, rendered the decision declaring
with salubrious and wholesome environments. The beneficiaries Section 9 of ordinance No. 6118, S-64 null and... void
of the regulation, in turn, are made to pay by the subdivision A motion for reconsideration having been denied, the City
developer when individual lots are sold to home-owners. Government and City Council filed the instant petition
Petitioners argue that the taking of the respondent's property is
As a matter of fact, the petitioners rely solely on the general a valid and reasonable exercise of police power and that the land
welfare clause or on implied powers of the municipal is taken for a public use as it is intended for the burial ground of
corporation, not on any express provision of law as statutory paupers.
basis of their exercise of power. The clause has always received On the other hand, respondent Himlayang Pilipino, Inc. contends
broad and liberal interpretation but we cannot stretch it to cover that the taking or confiscation of property is obvious because the
this particular taking. Moreover, the questioned ordinance was questioned ordinance permanently restricts the use of the
passed after Himlayang Pilipino, Inc. had incorporated. received property such that it cannot be used for any reasonable purpose
necessary licenses and permits and commenced operating. The and deprives the owner... of all beneficial use of his property.
sequestration of six percent of the cemetery cannot even be Issues:
considered as having been impliedly acknowledged by the "The issue is: Is Section 9 of the ordinance in question a valid
exercise of the police power?
We now come to the question whether or not Section 9 of the The principal question in this appeal from a judgment of the
ordinance in question is a valid exercise of police power. lower court in an action for prohibition is whether Ordinance No.
Ruling: 4760 of the City of Manila is violative of the due process clause.
We find the stand of the private respondent as well as the The lower court held that it is and adjudged it "unconstitutional,
decision of the respondent Judge to be well-founded. and, therefore, null and void." For reasons to be more
There is no reasonable relation between the setting aside of at specifically set forth, such judgment must be reversed, there
least six (6) percent of the total area of all private cemeteries for being a failure of the requisite showing to sustain an attack
charity burial grounds of deceased paupers and the promotion of against its validity.
health, morals, good order, safety, or the general welfare of the
people. The... ordinance is actually a taking without The petition for prohibition against Ordinance No. 4760 was filed
compensation of a certain area from a private cemetery to on July 5, 1963 by the petitioners, Ermita-Malate Hotel and
benefit paupers who are charges of the municipal corporation. Motel Operators Association, one of its members, Hotel del Mar
Instead of building or maintaining a public cemetery for this Inc., and a certain Go Chiu, who is "the president and general
purpose, the city passes the burden to private... cemeteries. manager of the second petitioner" against the respondent
The expropriation without compensation of a portion of private Mayor of the City of Manila who was sued in his capacity as such
cemeteries is not covered by Section 12(t) of Republic Act 537, "charged with the general power and duty to enforce ordinances
the Revised Charter of Quezon City which empowers the city of the City of Manila and to give the necessary orders for the
council to prohibit the burial of the dead within the center of faithful execution and enforcement of such ordinances." (par. 1).
population of the city and... to provide for their burial in a proper It was alleged that the petitioner non-stock corporation is
place subject to the provisions of general law regulating burial dedicated to the promotion and protection of the interest of its
grounds and cemeteries. eighteen (18) members "operating hotels and motels,
As a matter of fact, the petitioners rely solely on the general characterized as legitimate businesses duly licensed by both
welfare clause or on implied powers of the municipal national and city authorities, regularly paying taxes, employing
corporation, not on any express provision of law as statutory and giving livelihood to not less than 2,500 person and
basis of their exercise of power. representing an investment of more than P3 million."1 (par. 2). It
WHEREFORE, the petition for review is hereby DISMISSED. The was then alleged that on June 13, 1963, the Municipal Board of
decision of the respondent court is affirmed. the City of Manila enacted Ordinance No. 4760, approved on
Principles: June 14, 1963 by the then Vice-Mayor Herminio Astorga, who
there are three inherent powers of government by which the was at the time acting as Mayor of the City of Manila. (par. 3).
state interferes with the property rights, namely: (1) police
power, (2) eminent domain, (3) taxation. These are said to exist After which the alleged grievances against the ordinance were
independently of the Constitution as necessary attributes of... set forth in detail. There was the assertion of its being beyond
sovereignty. the powers of the Municipal Board of the City of Manila to enact
"Police power is defined by Freund as 'the powers of promoting insofar as it would regulate motels, on the ground that in the
the public welfare by restraining and regulating the use of liberty revised charter of the City of Manila or in any other law, no
and property' (Quoted in Political Law by Tañada and Carreon, V- reference is made to motels; that Section 1 of the challenged
II, p. 50). It is usually exerted in order to merely regulate the use ordinance is unconstitutional and void for being unreasonable
and... enjoyment of property of the owner. and violative of due process insofar as it would impose P6,000.00
fee per annum for first class motels and P4,500.00 for second
4ERMITA-MALATE HOTEL AND MOTEL OPERATORS V CITY OF class motels; that the provision in the same section which would
MANILA require the owner, manager, keeper or duly authorized
representative of a hotel, motel, or lodging house to refrain from
G.R. No. L-24693 July 31, 1967 entertaining or accepting any guest or customer or letting any
room or other quarter to any person or persons without his
ERMITA-MALATE HOTEL AND MOTEL OPERATORS filling up the prescribed form in a lobby open to public view at all
ASSOCIATION, INC., HOTEL DEL MAR INC. and GO times and in his presence, wherein the surname, given name and
CHIU, petitioners-appellees, middle name, the date of birth, the address, the occupation, the
vs. sex, the nationality, the length of stay and the number of
THE HONORABLE CITY MAYOR OF MANILA, respondent- companions in the room, if any, with the name, relationship, age
appellant. and sex would be specified, with data furnished as to his
VICTOR ALABANZA, intervenor-appellee. residence certificate as well as his passport number, if any,
coupled with a certification that a person signing such form has
Panganiban, Abad and Associates Law Office for respondent- personally filled it up and affixed his signature in the presence of
appellant. such owner, manager, keeper or duly authorized representative,
J. M. Aruego, Tenchavez and Associates for intervenor-appellee. with such registration forms and records kept and bound
together, it also being provided that the premises and facilities of
FERNANDO, J.: such hotels, motels and lodging houses would be open for
inspection either by the City Mayor, or the Chief of Police, or
their duly authorized representatives is unconstitutional and void Philippines, both with offices in the City of Manila, while
again on due process grounds, not only for being arbitrary, the petitioner Go Chin is the president and general
unreasonable or oppressive but also for being vague, indefinite manager of Hotel del Mar Inc., and the intervenor Victor
and uncertain, and likewise for the alleged invasion of the right Alabanza is a resident of Baguio City, all having the
to privacy and the guaranty against self-incrimination; that capacity to sue and be sued;
Section 2 of the challenged ordinance classifying motels into two
classes and requiring the maintenance of certain minimum 2. That the respondent Mayor is the duly elected and
facilities in first class motels such as a telephone in each room, a incumbent City Mayor and chief executive of the City of
dining room or, restaurant and laundry similarly offends against Manila charged with the general power and duty to
the due process clause for being arbitrary, unreasonable and enforce ordinances of the City of Manila and to give the
oppressive, a conclusion which applies to the portion of the necessary orders for the faithful execution and
ordinance requiring second class motels to have a dining room; enforcement of such ordinances;
that the provision of Section 2 of the challenged ordinance
prohibiting a person less than 18 years old from being accepted 3. That the petitioners are duly licensed to engage in the
in such hotels, motels, lodging houses, tavern or common inn business of operating hotels and motels in Malate and
unless accompanied by parents or a lawful guardian and making Ermita districts in Manila;
it unlawful for the owner, manager, keeper or duly authorized
representative of such establishments to lease any room or
4. That on June 13, 1963, the Municipal Board of the
portion thereof more than twice every 24 hours, runs counter to
City of Manila enacted Ordinance No. 4760, which was
the due process guaranty for lack of certainty and for its
approved on June 14, 1963, by Vice-Mayor Herminio
unreasonable, arbitrary and oppressive character; and that
Astorga, then the acting City Mayor of Manila, in the
insofar as the penalty provided for in Section 4 of the challenged
absence of the respondent regular City Mayor,
ordinance for a subsequent conviction would, cause the
amending sections 661, 662, 668-a, 668-b and 669 of
automatic cancellation of the license of the offended party, in
the compilation of the ordinances of the City of Manila
effect causing the destruction of the business and loss of its
besides inserting therein three new sections. This
investments, there is once again a transgression of the due
ordinance is similar to the one vetoed by the
process clause.
respondent Mayor (Annex A) for the reasons stated in
its 4th Indorsement dated February 15, 1963 (Annex B);
There was a plea for the issuance of preliminary injunction and
for a final judgment declaring the above ordinance null and void
5. That the explanatory note signed by then Councilor
and unenforceable. The lower court on July 6, 1963 issued a writ
Herminio Astorga was submitted with the proposed
of preliminary injunction ordering respondent Mayor to refrain
ordinance (now Ordinance 4760) to the Municipal
from enforcing said Ordinance No. 4760 from and after July 8,
Board, copy of which is attached hereto as Annex C;
1963.
6. That the City of Manila derived in 1963 an annual
In the a answer filed on August 3, 1963, there was an admission
income of P101,904.05 from license fees paid by the
of the personal circumstances regarding the respondent Mayor
105 hotels and motels (including herein petitioners)
and of the fact that petitioners are licensed to engage in the
operating in the City of Manila.1äwphï1.ñët
hotel or motel business in the City of Manila, of the provisions of
the cited Ordinance but a denial of its alleged nullity, whether on
Thereafter came a memorandum for respondent on January 22,
statutory or constitutional grounds. After setting forth that the
1965, wherein stress was laid on the presumption of the validity
petition did fail to state a cause of action and that the challenged
of the challenged ordinance, the burden of showing its lack of
ordinance bears a reasonable relation, to a proper purpose,
conformity to the Constitution resting on the party who assails it,
which is to curb immorality, a valid and proper exercise of the
citing not only U.S. v. Salaveria, but likewise applicable American
police power and that only the guests or customers not before
authorities. Such a memorandum likewise refuted point by point
the court could complain of the alleged invasion of the right to
the arguments advanced by petitioners against its validity. Then
privacy and the guaranty against self incrimination, with the
barely two weeks later, on February 4, 1965, the memorandum
assertion that the issuance of the preliminary injunction ex
for petitioners was filed reiterating in detail what was set forth in
parte was contrary to law, respondent Mayor prayed for, its
the petition, with citations of what they considered to be
dissolution and the dismissal of the petition.
applicable American authorities and praying for a judgment
declaring the challenged ordinance "null and void and
Instead of evidence being offered by both parties, there was
unenforceable" and making permanent the writ of preliminary
submitted a stipulation of facts dated September 28, 1964,
injunction issued.
which reads:
After referring to the motels and hotels, which are members of
1. That the petitioners Ermita-Malate Hotel and Motel
the petitioners association, and referring to the alleged
Operators Association, Inc. and Hotel del Mar Inc. are
constitutional questions raised by the party, the lower court
duly organized and existing under the laws of the
observed: "The only remaining issue here being purely a Nor may petitioners assert with plausibility that on its face the
question of law, the parties, with the nod of the Court, agreed to ordinance is fatally defective as being repugnant to the due
file memoranda and thereafter, to submit the case for decision process clause of the Constitution. The mantle of protection
of the Court." It does appear obvious then that without any associated with the due process guaranty does not cover
evidence submitted by the parties, the decision passed upon the petitioners. This particular manifestation of a police power
alleged infirmity on constitutional grounds of the challenged measure being specifically aimed to safeguard public morals is
ordinance, dismissing as is undoubtedly right and proper the immune from such imputation of nullity resting purely on
untenable objection on the alleged lack of authority of the City of conjecture and unsupported by anything of substance. To hold
Manila to regulate motels, and came to the conclusion that "the otherwise would be to unduly restrict and narrow the scope of
challenged Ordinance No. 4760 of the City of Manila, would be police power which has been properly characterized as the most
unconstitutional and, therefore, null and void." It made essential, insistent and the least limitable of powers,4 extending
permanent the preliminary injunction issued against respondent as it does "to all the great public needs."5 It would be, to
Mayor and his agents "to restrain him from enforcing the paraphrase another leading decision, to destroy the very
ordinance in question." Hence this appeal. purpose of the state if it could be deprived or allowed itself to be
deprived of its competence to promote public health, public
As noted at the outset, the judgment must be reversed. A decent morals, public safety and the genera welfare.6 Negatively put,
regard for constitutional doctrines of a fundamental character police power is "that inherent and plenary power in the State
ought to have admonished the lower court against such a which enables it to prohibit all that is hurt full to the comfort,
sweeping condemnation of the challenged ordinance. Its safety, and welfare of society.7
decision cannot be allowed to stand, consistently with what has
hitherto been the accepted standards of constitutional There is no question but that the challenged ordinance was
adjudication, in both procedural and substantive aspects. precisely enacted to minimize certain practices hurtful to public
morals. The explanatory note of the Councilor Herminio Astorga
Primarily what calls for a reversal of such a decision is the included as annex to the stipulation of facts, speaks of the
absence of any evidence to offset the presumption of validity alarming increase in the rate of prostitution, adultery and
that attaches to a challenged statute or ordinance. As was fornication in Manila traceable in great part to the existence of
expressed categorically by Justice Malcolm: "The presumption is motels, which "provide a necessary atmosphere for clandestine
all in favor of validity x x x . The action of the elected entry, presence and exit" and thus become the "ideal haven for
representatives of the people cannot be lightly set aside. The prostitutes and thrill-seekers." The challenged ordinance then
councilors must, in the very nature of things, be familiar with the proposes to check the clandestine harboring of transients and
necessities of their particular municipality and with all the facts guests of these establishments by requiring these transients and
and circumstances which surround the subject and necessitate guests to fill up a registration form, prepared for the purpose, in
action. The local legislative body, by enacting the ordinance, has a lobby open to public view at all times, and by introducing
in effect given notice that the regulations are essential to the several other amendatory provisions calculated to shatter the
well being of the people x x x . The Judiciary should not lightly set privacy that characterizes the registration of transients and
aside legislative action when there is not a clear invasion of guests." Moreover, the increase in the licensed fees was
personal or property rights under the guise of police regulation. 2 intended to discourage "establishments of the kind from
operating for purpose other than legal" and at the same time, to
It admits of no doubt therefore that there being a presumption increase "the income of the city government." It would appear
of validity, the necessity for evidence to rebut it is unavoidable, therefore that the stipulation of facts, far from sustaining any
unless the statute or ordinance is void on its face which is not attack against the validity of the ordinance, argues eloquently for
the case here. The principle has been nowhere better expressed it.
than in the leading case of O'Gorman & Young v. Hartford Fire
Insurance Co.,3 where the American Supreme Court through It is a fact worth noting that this Court has invariably stamped
Justice Brandeis tersely and succinctly summed up the matter with the seal of its approval, ordinances punishing vagrancy and
thus: The statute here questioned deals with a subject clearly classifying a pimp or procurer as a vagrant;8 provide a license tax
within the scope of the police power. We are asked to declare it for and regulating the maintenance or operation of public dance
void on the ground that the specific method of regulation halls;9 prohibiting gambling;10 prohibiting jueteng;11 and
prescribed is unreasonable and hence deprives the plaintiff of monte;12 prohibiting playing of panguingui on days other than
due process of law. As underlying questions of fact may Sundays or legal holidays;13 prohibiting the operation of pinball
condition the constitutionality of legislation of this character, the machines;14 and prohibiting any person from keeping,
resumption of constitutionality must prevail in the absence of conducting or maintaining an opium joint or visiting a place
some factual foundation of record for overthrowing the statute." where opium is smoked or otherwise used,15 all of which are
No such factual foundation being laid in the present case, the intended to protect public morals.
lower court deciding the matter on the pleadings and the
stipulation of facts, the presumption of validity must prevail and On the legislative organs of the government, whether national or
the judgment against the ordinance set aside. local, primarily rest the exercise of the police power, which, it
cannot be too often emphasized, is the power to prescribe
regulations to promote the health, morals, peace, good order, Admittedly there was a decided increase of the annual license
safety and general welfare of the people. In view of the fees provided for by the challenged ordinance for hotels and
requirements of due process, equal protection and other motels, 150% for the former and over 200% for the latter, first-
applicable constitutional guaranties however, the exercise of class motels being required to pay a P6,000 annual fee and
such police power insofar as it may affect the life, liberty or second-class motels, P4,500 yearly. It has been the settled law
property of any person is subject to judicial inquiry. Where such however, as far back as 1922 that municipal license fees could be
exercise of police power may be considered as either capricious, classified into those imposed for regulating occupations or
whimsical, unjust or unreasonable, a denial of due process or a regular enterprises, for the regulation or restriction of non-useful
violation of any other applicable constitutional guaranty may call occupations or enterprises and for revenue purposes only.22 As
for correction by the courts. was explained more in detail in the above Cu Unjieng case: (2)
Licenses for non-useful occupations are also incidental to the
We are thus led to considering the insistent, almost shrill tone, in police power and the right to exact a fee may be implied from
which the objection is raised to the question of due the power to license and regulate, but in fixing amount of the
process.16 There is no controlling and precise definition of due license fees the municipal corporations are allowed a much
process. It furnishes though a standard to which the wider discretion in this class of cases than in the former, and
governmental action should conform in order that deprivation of aside from applying the well-known legal principle that municipal
life, liberty or property, in each appropriate case, be valid. What ordinances must not be unreasonable, oppressive, or tyrannical,
then is the standard of due process which must exist both as a courts have, as a general rule, declined to interfere with such
procedural and a substantive requisite to free the challenged discretion. The desirability of imposing restraint upon the
ordinance, or any governmental action for that matter, from the number of persons who might otherwise engage in non-useful
imputation of legal infirmity sufficient to spell its doom? It is enterprises is, of course, generally an important factor in the
responsiveness to the supremacy of reason, obedience to the determination of the amount of this kind of license fee. Hence
dictates of justice. Negatively put, arbitrariness is ruled out and license fees clearly in the nature of privilege taxes for revenue
unfairness avoided. To satisfy the due process requirement, have frequently been upheld, especially in of licenses for the sale
official action, to paraphrase Cardozo, must not outrun the of liquors. In fact, in the latter cases the fees have rarely been
bounds of reason and result in sheer oppression. Due process is declared unreasonable.23
thus hostile to any official action marred by lack of
reasonableness. Correctly it has been identified as freedom from Moreover in the equally leading case of Lutz v. Araneta24 this
arbitrariness. It is the embodiment of the sporting idea of fair Court affirmed the doctrine earlier announced by the American
play.17 It exacts fealty "to those strivings for justice" and judges Supreme Court that taxation may be made to implement the
the act of officialdom of whatever branch "in the light of reason state's police power. Only the other day, this Court had occasion
drawn from considerations of fairness that reflect [democratic] to affirm that the broad taxing authority conferred by the Local
traditions of legal and political thought."18 It is not a narrow or Autonomy Act of 1959 to cities and municipalities is sufficiently
"technical conception with fixed content unrelated to time, place plenary to cover a wide range of subjects with the only limitation
and circumstances,"19 decisions based on such a clause requiring that the tax so levied is for public purposes, just and uniform. 25
a "close and perceptive inquiry into fundamental principles of
our society."20 Questions of due process are not to be treated As a matter of fact, even without reference to the wide latitude
narrowly or pedantically in slavery to form or phrases. 21 enjoyed by the City of Manila in imposing licenses for revenue, it
has been explicitly held in one case that "much discretion is
It would thus be an affront to reason to stigmatize an ordinance given to municipal corporations in determining the amount,"
enacted precisely to meet what a municipal lawmaking body here the license fee of the operator of a massage clinic, even if it
considers an evil of rather serious proportion an arbitrary and were viewed purely as a police power measure.26 The discussion
capricious exercise of authority. It would seem that what should of this particular matter may fitly close with this pertinent
be deemed unreasonable and what would amount to an citation from another decision of significance: "It is urged on
abdication of the power to govern is inaction in the face of an behalf of the plaintiffs-appellees that the enforcement of the
admitted deterioration of the state of public morals. To be more ordinance could deprive them of their lawful occupation and
specific, the Municipal Board of the City of Manila felt the need means of livelihood because they can not rent stalls in the public
for a remedial measure. It provided it with the enactment of the markets. But it appears that plaintiffs are also dealers in
challenged ordinance. A strong case must be found in the refrigerated or cold storage meat, the sale of which outside the
records, and, as has been set forth, none is even attempted here city markets under certain conditions is permitted x x x . And
to attach to an ordinance of such character the taint of nullity for surely, the mere fact, that some individuals in the community
an alleged failure to meet the due process requirement. Nor may be deprived of their present business or a particular mode
does it lend any semblance even of deceptive plausibility to of earning a living cannot prevent the exercise of the police
petitioners' indictment of Ordinance No. 4760 on due process power. As was said in a case, persons licensed to pursue
grounds to single out such features as the increased fees for occupations which may in the public need and interest be
motels and hotels, the curtailment of the area of freedom to affected by the exercise of the police power embark in these
contract, and, in certain particulars, its alleged vagueness. occupations subject to the disadvantages which may result from
the legal exercise of that power."27
Nor does the restriction on the freedom to contract, insofar as rights of property, the permissible scope of regulatory measure
the challenged ordinance makes it unlawful for the owner, is wider.32 How justify then the allegation of a denial of due
manager, keeper or duly authorized representative of any hotel, process?
motel, lodging house, tavern, common inn or the like, to lease or
rent room or portion thereof more than twice every 24 hours, Lastly, there is the attempt to impugn the ordinance on another
with a proviso that in all cases full payment shall be charged, call due process ground by invoking the principles of vagueness or
for a different conclusion. Again, such a limitation cannot be uncertainty. It would appear from a recital in the petition itself
viewed as a transgression against the command of due process. that what seems to be the gravamen of the alleged grievance is
It is neither unreasonable nor arbitrary. Precisely it was intended that the provisions are too detailed and specific rather than
to curb the opportunity for the immoral or illegitimate use to vague or uncertain. Petitioners, however, point to the
which such premises could be, and, according to the explanatory requirement that a guest should give the name, relationship, age
note, are being devoted. How could it then be arbitrary or and sex of the companion or companions as indefinite and
oppressive when there appears a correspondence between the uncertain in view of the necessity for determining whether the
undeniable existence of an undesirable situation and the companion or companions referred to are those arriving with the
legislative attempt at correction. Moreover, petitioners cannot customer or guest at the time of the registry or entering the
be unaware that every regulation of conduct amounts to room With him at about the same time or coming at any
curtailment of liberty which as pointed out by Justice Malcolm indefinite time later to join him; a proviso in one of its sections
cannot be absolute. Thus: "One thought which runs through all which cast doubt as to whether the maintenance of a restaurant
these different conceptions of liberty is plainly apparent. It is in a motel is dependent upon the discretion of its owners or
this: 'Liberty' as understood in democracies, is not license; it is operators; another proviso which from their standpoint would
'liberty regulated by law.' Implied in the term is restraint by law require a guess as to whether the "full rate of payment" to be
for the good of the individual and for the greater good of the charged for every such lease thereof means a full day's or merely
peace and order of society and the general well-being. No man a half-day's rate. It may be asked, do these allegations suffice to
can do exactly as he pleases. Every man must renounce render the ordinance void on its face for alleged vagueness or
unbridled license. The right of the individual is necessarily uncertainty? To ask the question is to answer it. From Connally v.
subject to reasonable restraint by general law for the common General Construction Co.33 to Adderley v. Florida,34 the principle
good x x x The liberty of the citizen may be restrained in the has been consistently upheld that what makes a statute
interest of the public health, or of the public order and safety, or susceptible to such a charge is an enactment either forbidding or
otherwise within the proper scope of the police power." 28 requiring the doing of an act that men of common intelligence
must necessarily guess at its meaning and differ as to its
A similar observation was made by Justice Laurel: "Public application. Is this the situation before us? A citation from Justice
welfare, then, lies at the bottom of the enactment of said law, Holmes would prove illuminating: "We agree to all the
and the state in order to promote the general welfare may generalities about not supplying criminal laws with what they
interfere with personal liberty, with property, and with business omit but there is no canon against using common sense in
and occupations. Persons and property may be subjected to all construing laws as saying what they obviously mean." 35
kinds of restraints and burdens, in order to secure the general
comfort, health, and prosperity of the state x x x To this That is all then that this case presents. As it stands, with all due
fundamental aim of our Government the rights of the individual allowance for the arguments pressed with such vigor and
are subordinated. Liberty is a blessing without which life is a determination, the attack against the validity of the challenged
misery, but liberty should not be made to prevail over authority ordinance cannot be considered a success. Far from it. Respect
because then society will fall into anarchy. Neither should for constitutional law principles so uniformly held and so
authority be made to prevail over liberty because then the uninterruptedly adhered to by this Court compels a reversal of
individual will fall into slavery. The citizen should achieve the the appealed decision.
required balance of liberty and authority in his mind through
education and personal discipline, so that there may be Wherefore, the judgment of the lower court is reversed and the
established the resultant equilibrium, which means peace and injunction issued lifted forthwith. With costs.
order and happiness for all.29
Reyes, J.B.L., Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro
It is noteworthy that the only decision of this Court nullifying and Angeles, JJ., concur.
legislation because of undue deprivation of freedom to Concepcion, C.J. and Dizon, J., are on leave.
contract, People v. Pomar,30 no longer "retains its virtuality as a
living principle. The policy of laissez faire has to some extent
Footnotes
given way to the assumption by the government of the right of
intervention even in contractual relations affected with public 1
The eighteen members are Waldorf Hotel, Hotel Monte
interest.31 What may be stressed sufficiently is that if the liberty
Carlo, Golden Gate Motel, Miami Hotel, Palm Spring
involved were freedom of the mind or the person, the standard
for the validity of governmental acts is much more rigorous and Hotel, Flamingo Motel, Holiday Motel, Rainbow Motel,
Palo Alto Hotel, Paradise Hotel, Mayfair Hotel, Siesta
exacting, but where the liberty curtailed affects at the most
13
Court, Sun Valley Hotel, Springfield Hotel, New Palace U.S. v. Salaveria, (1918) 39 Phil. 102.
Hotel, Hotel del Mar Longbeach Hotel and Ritz Motel.
14
Uy Ha v. The City Mayor, L-14149, May 30, 1969;
2
U.S. V. Salaveria (1918), 39 Phil. 102, at p. 111. There Miranda v. City of Manila, L-17252, May 31, 1961.
was an affirmation of the presumption of validity of
municipal ordinance as announced in the leading 15
U.S. v. Ten Yu, (1912) 24 Phil. 1.
Salaveria decision in Eboña v. Daet, (1950) 85 Phil. 369.
16
There is no occasion to consider even cursorily the
3
282 US 251, 328, January 5, 1931. alleged invasion of the right of privacy or the prohibition
against self-incrimination. Petitioners obviously are not
4
Cf. Ichong v. Hernandez, (1957) 101 Phil. 1155, at p. the proper parties to do so. Nor may such an incurable
1163. Also: "To Frankfurter the police power, true to its defect be remedied by an accommodating intervenor
etymology is the power to shape policy. It defies legal "who has always taken advantage of as he exclusively
definition; as a response to the dynamic aspects of relies on, the facilities, services and accommodations
society, it cannot be reduced to a constitutional offered by petitioner-motels. A general merchant, doing
formula. The law must be sensitive to life; in resolving business not only in Baguio City but in the City of
cases, it must not fall back upon sterile claims; its Manila, has no legitimate cause for complaint. At least,
judgments are not derived from an abstract duel not according to the case as it has been developed.
between liberty and the police power. Instead, in a
world of trusts and unions and large-scale industry, it 17
Frankfurter, Mr. Justice Holmes and the Supreme
must meet the challenge of drastic social change. For Court, (1938) pp. 32- 33.
him as for Holmes, 'society is more than bargain and
business' and the jurist's art rises to no higher peak than 18
Frankfurter, Hannah v. Larche, (1960) 363 U.S. 420, at
in vindicating interests not represented by the items in 487.
a balance-sheet. In a progressive society, new interests
emerge, new attitudes appeal, social consciousness 19
Cafeteria Workers v. McElroy, (1961) 367 U.S. 1230.
quickens. In the face of the unknown one cannot choose
with certainty. Nor as yet, has the whole of truth been 20
brought up from its bottomless well and how fragile in Bartkus v. Illinois, (1959) 359 U.S. 121.
scientific proof is the ultimate validity of any particular
21
economic adjustment. Social development is a process Pearson v. McGraw, (1939) 308 U.S. 313.
of trial and error; in the making of policy the fullest
22
possible opportunity must be given for the play of the Cu Unjieng v. Postpone, (1922) 42 Phil. 818, 828.
human mind. If Congress or legislature does not
regulate, laissez faire — not the individual — must be 23
Citing Swarth v. People, 109 Ill. 621; Dennehy v. City of
the regulator. (Hamilton, Preview of a Justice (1939) 48 Chicago, 120 Ill. 627; 12 N.E., 227; United States
Yale Law Journal, 819). Distilling Co. v. City of Chicago, 112 Ill. 19: Drew County
v. Bennet, 43 Ark. 364; Merced County v. Fleming, Ill
5
Noble state Bank v. Haskell, 219 U.S. 412. Cal. 46; 43 Pac. 392; Williams v. City Council of West
Point, 68 Ga. 816; Cheny v. Shellbyville, 19 Ind. 84;
6
U.S. v. Gomez-Jesus, (1915) 31 Phil. 218. Wiley y. Owens, 39 Ind. 429; Sweet v. City of Wabash,
41 Ind. 7; Jones v. Grady, 25 La. Ann. 586; Goldsmith v.
7 City of New Orleans, 31 La. Ann. 646; People ex
Rubi v. Provincial Board, (1918) 39 Phil. 660.
rel., Cramer v. Medberry, 39 N.Y.S. 207; 17 Misc. Rep., 8
8
; McGuigan v. Town of Belmont, 89 Wis. 637; 62 N.W.,
U.S. vs. Giner Cruz, (1918) 38 Phil. 677.
421; Ex parte Burnett 30 Ala. 461; Craig v. Burnett 32
Ala., 728, and Muhlenbrinck v. Long Branch
9
U.S. vs. Rodriguez, (1918) 38 Phil. 759. See also Commissioner, 42 N.J.L. 364; 36 Am. Rep., 518. At pp.
Sarmiento v. Belderol, L-15719, May 31, 1961; Lapera v. 829-830.
Vicente, L-18102, June 30, 1962.
24
98 Phil. 148 (1955), citing Great Atl & Pac. Tea Co. v
10
U.S. v. Pacis, (1915) 31 Phil. 524. Grosjean, 301 U.S. 412, 81 L. Ed. 1193; U.S. v. Butler,
297 US 1, 80 L. Ed 477; M'Culloch v. Maryland, 4 Wheat
11
U.S. vs. Espiritu-Santo, (1912) 23 Phil. 610; U.S. vs. 316, 4 L. Ed 579. The Lutz decision was followed in
Joson, (1913) 26 Phil. 1; People vs. Chan Hong, (1938) Republic v. Bacolod Murcia Milling, L-19824, July 9,
65 Phil. 625. 1966.

12
U.S. v. Tamparong, (1915) 31 Phil. 321.
25
Ormoc Sugar Co. v. Municipal Board of Ormoc City, L-
24322, July 21, 1967. Facts:
Ermita-Malate Hotel and Motel Operators Association, and one
26
Physical Therapy Organization v. Municipal Board, of its members Hotel del Mar Inc. petitioned for the prohibition
(1957) 101 Phil. 1142. of Ordinance 4670 on June 14, 1963 to be applicable in the city
of Manila.
27
Co Kian & Lee Ban v. City of Manila, (1955) 96 Phil. They claimed that the ordinance was beyond the powers of the
649, 654, citing City of New Orleans v. Stafford, 27 L. Manila City Board to regulate due to the fact that hotels were
Ann. 417. not part of its regulatory powers. They also asserted that Section
1 of the challenged ordinance was unconstitutional and void for
28 being unreasonable and violative of due process insofar because
Rubi v. Provincial Board, (1919) 39 Phil. 660, at 706,
it would impose P6,000.00 license fee per annum for first class
citing Hall v. Geiger-Jones (1916), 242 U.S. 539; Hardie-
motels and P4,500.00 for second class motels; there was also
Tynes Manufacturing Co. vs. Cruz (1914), 189 Ala. 66.
the requirement that the guests would fill up a form specifying
29
their personal information.
Calalang v. Williams (1940), 70 Phil. 726, at 733-734.
There was also a provision that the premises and facilities of
such hotels, motels and lodging houses would be open for
30
46 Phil. 440 (1924). The Philippines was then under inspection from city authorites. They claimed this to be violative
American sovereignty, American Supreme Court of due process for being vague.
decisions having thus an obligatory effect. No The law also classified motels into two classes and required the
alternative was left to this Court except to follow the maintenance of certain minimum facilities in first class motels
then controlling decision in Adkins v. Children's Hospital such as a telephone in each room, a dining room or, restaurant
(1924), 261 U.S. 525, which subsequently was overruled and laundry. The petitioners also invoked the lack of due process
in West Coast Hotel v. Parrish (1937), 300 U.S. 379. on this for being arbitrary.
It was also unlawful for the owner to lease any room or portion
31
Antamok Goldfields Mining Co. v. Court (1940), 70 thereof more than twice every 24 hours.
Phil. 340, at 360, quoting a concurring opinion of Justice There was also a prohibition for persons below 18 in the hotel.
Laurel in Ang Tibay v. Court, G.R. No. 46496. The challenged ordinance also caused the automatic cancellation
of the license of the hotels that violated the ordinance.
32 The lower court declared the ordinance unconstitutional.
Cf. "In weighing arguments of the parties it is
important to distinguish between the due process Hence, this appeal by the city of Manila.
clause of the Fourteenth Amendment as an instrument
for transmitting the principles of the First Amendment Issue:
and those cases in which it is applied for its own sake. Whether Ordinance No. 4760 of the City of Manila is violative of
The test of legislation which collides with the the due process clause?
Fourteenth Amendment because it also collides with
the principles of the First, is much more definite than Held: No. Judgment reversed.
the test when only the Fourteen is involved. Much of
the vagueness of the due process clause disappears Ratio:
when the specific prohibition of the First become its "The presumption is towards the validity of a law.” However, the
standard. The right of a State to regulate, for example, a Judiciary should not lightly set aside legislative action when there
public utility may well include, so far as the due process is not a clear invasion of personal or property rights under the
test is concerned, power to impose all of the restrictions guise of police regulation.
which a legislature may have a 'rational basis' for O'Gorman & Young v. Hartford Fire Insurance Co- Case was in
adopting. But freedoms of speech and of press, of the scope of police power. As underlying questions of fact may
assembly, and of worship may well be infringed on such condition the constitutionality of legislation of this character, the
slender grounds. They are susceptible of restriction only resumption of constitutionality must prevail in the absence of
to prevent an immediate danger to interests which the some factual foundation of record for overthrowing the statute."
state may lawfully protect." (West Virginia State Bd. of No such factual foundation being laid in the present case, the
Edu v. Barnette, (1942), 319 U.S. 624, at 639). lower court deciding the matter on the pleadings and the
stipulation of facts, the presumption of validity must prevail and
33
269 U.S. 385 (1926). the judgment against the ordinance set aside.”
There is no question but that the challenged ordinance was
34
17 L. ed. 2d 149, Nov. 14, 1966. precisely enacted to minimize certain practices hurtful to public
morals, particularly fornication and prostitution. Moreover, the
35 increase in the licensed fees was intended to discourage
Roschen v. Ward (1929), 279 U. S. 337,339.
"establishments of the kind from operating for purpose other
Ermita Malate v City of Manila 20 SCRA 849 (1967)
J. Fernando
than legal" and at the same time, to increase "the income of the What may be stressed sufficiently is that if the liberty involved
city government." were freedom of the mind or the person, the standard for the
Police power is the power to prescribe regulations to promote validity of governmental acts is much more rigorous and
the health, morals, peace, good order, safety and general exacting, but where the liberty curtailed affects at the most
welfare of the people. In view of the requirements of due rights of property, the permissible scope of regulatory measure
process, equal protection and other is wider.
applicable constitutionalguaranties, however, the power must On the law being vague on the issue of personal information, the
not be unreasonable or violative of due process. maintenance of establishments, and the “full rate of payment”-
There is no controlling and precise definition of due process. It Holmes- “We agree to all the generalities about not
has a standard to which the governmental action supplying criminal laws with what they omit but there is no
should conform in order that deprivation of life, liberty or canon against using common sense in construing laws as saying
property, in each appropriate case, be valid. What then is the what they obviously mean."
standard of due process which must exist both as a procedural ERMITA-MALATE HOTEL & MOTEL OPERATORS v. CITY MAYOR
and a substantive requisite to free the challenged ordinance OF MANILA (G.R. No. L-24693)
from legal infirmity? It is responsiveness to the supremacy of Facts:
reason, obedience to the dictates of justice. Negatively put, The petitioners filed a petition for prohibition against
arbitrariness is ruled out and unfairness avoided. Ordinance No. 4760 for being violative of the due process
Due process is not a narrow or "technical conception with fixed clause, contending that said ordinance is not only arbitrary,
content unrelated to time, place and circumstances," decisions unreasonable or oppressive but also vague, indefinite and
based on such a clause requiring a "close and perceptive inquiry uncertain, and likewise allege the invasion of the right to
into fundamental principles of our society." Questions of due privacy and the guaranty against self-incrimination.
process are not to be treated narrowly or pedantically in slavery
to form or phrase. Ordinance No. 4760 has the following provisions:
Nothing in the petition is sufficient to prove the ordinance’s 1. Refraining from entertaining or accepting any guest or
nullity for an alleged failure to meet the due process customer unless it fills out a prescribed form in the lobby in
requirement. open view;
Cu Unjieng case: Licenses for non-useful occupations are also 2. prohibiting admission o less than 18 years old;
incidental to the police power and the right to exact a fee may 3. usurious increase of license fee to P4,500 and 6,000 o 150%
be implied from the power to license and regulate, but in fixing and 200% respectively (tax issue also);
amount of the license fees the municipal corporations are 4. making unlawful lease or rent more than twice every 24
allowed a much wider discretion in this class of cases than in the hours; and
former, and aside from applying the well-known legal principle 5. cancellation of license for subsequent violation.
that municipal ordinances must not be unreasonable,
oppressive, or tyrannical, courts have, as a general rule, declined The lower court ruled in favor of the petitioners. Hence, the
to interfere with such discretion. Eg. Sale of liquors. appeal.
Lutz v. Araneta- Taxation may be made to supplement the state’s
police power. ISSUE:
In one case- “much discretion is given to municipal corporations Whether or not Ord 4760 is against the due process clause.
in determining the amount," here the license fee of the operator
of a massage clinic, even if it were viewed purely as a police
power measure. HELD:
On the impairment of freedom to contract by limiting duration of The SC ruled in favor of Astorga. There is a presumption that
use to twice every 24 hours- It was not violative of due process. the laws enacted by Congress (in this case Mun Board) is valid.
'Liberty' as understood in democracies, is not license; it is 'liberty W/o a showing or a strong foundation of invalidity, the
regulated by law.' Implied in the term is restraint by law for the presumption stays. As in this case, there was only a stipulation
good of the individual and for the greater good of the peace and of facts and such cannot prevail over the presumption. Further,
order of society and the general well-being. the ordinance is a valid exercise of Police Power. There is no
Laurel- The citizen should achieve the required balance of liberty question but that the challenged ordinance was precisely
and authority in his mind through education and personal enacted to minimize certain practices hurtful to public morals.
discipline, so that there may be established the This is to minimize prostitution. The increase in taxes not only
resultant equilibrium, which means peace and order and discourages hotels/motels in doing any business other than
happiness for all. legal but also increases the revenue of the LGU concerned. And
The freedom to contract no longer "retains its virtuality as a taxation is a valid exercise of police power as well.
living principle, unlike in the sole case of People v Pomar. The
policy of laissez faire has to some extent given way to the The due process contention is likewise untenable, There is no
assumption by the government of the right of intervention even controlling and precise definition of due process. It has a
in contractual relations affected with public interest. standard to which the governmental action should conform in
order that deprivation of life, liberty or property, in each
appropriate case, be valid. What then is the standard of due Old and Dilapidated Taxis
process which must exist both as a procedural and a
substantive requisite to free the challenged ordinance from WHEREAS, it is the policy of the government to
legal infirmity? It is responsiveness to the supremacy of reason, insure that only safe and comfortable units are
obedience to the dictates of justice. Negatively put, used as public conveyances;
arbitrariness is ruled out and unfairness avoided. Nothing in the
petition is sufficient to prove the ordinance’s nullity for an WHEREAS, the riding public, particularly in
alleged failure to meet the due process requirement. Metro-Manila, has, time and again, complained
against, and condemned, the continued
On the impairment of freedom to contract by limiting duration operation of old and dilapidated taxis;
of use to twice every 24 hours- It was not violative of due
process. 'Liberty' as understood in democracies, is not license;
WHEREAS, in order that the commuting public
it is 'liberty regulated by law.' Implied in the term is restraint by
may be assured of comfort, convenience, and
law for the good of the individual and for the greater good of
safety, a program of phasing out of old and
the peace and order of society and the general well-being.
dilapidated taxis should be adopted;
The Court reversed the judgment of the lower court and lifted
the injuction on the Ordinance in question WHEREAS, after studies and inquiries made by
the Board of Transportation, the latter believes
that in six years of operation, a taxi operator
5
has not only covered the cost of his taxis, but
has made reasonable profit for his
EN BANC
investments;

G.R. No. L-59234 September 30, 1982


NOW, THEREFORE, pursuant to this policy, the
Board hereby declares that no car beyond six
TAXICAB OPERATORS OF METRO MANILA, INC., FELICISIMO years shall be operated as taxi, and in
CABIGAO and ACE TRANSPORTATION implementation of the same hereby
CORPORATION, petitioners, promulgates the following rules and
vs. regulations:
THE BOARD OF TRANSPORTATION and THE DIRECTOR OF THE
BUREAU OF LAND TRANSPORTATION, respondents.
1. As of December 31, 1977, all taxis of Model
1971 and earlier are ordered withdrawn from
public service and thereafter may no longer be
MELENCIO-HERRERA, J.: registered and operated as taxis. In the
registration of cards for 1978, only taxis of
This Petition for "Certiorari, Prohibition and mandamus with Model 1972 and later shall be accepted for
Preliminary Injunction and Temporary Restraining Order" filed by registration and allowed for operation;
the Taxicab Operators of Metro Manila, Inc., Felicisimo Cabigao
and Ace Transportation, seeks to declare the nullity of 2. As of December 31, 1978, all taxis of Model
Memorandum Circular No. 77-42, dated October 10, 1977, of the 1972 are ordered withdrawn from public
Board of Transportation, and Memorandum Circular No. 52, service and thereafter may no longer be
dated August 15, 1980, of the Bureau of Land Transportation. registered and operated as taxis. In the
registration of cars for 1979, only taxis of
Petitioner Taxicab Operators of Metro Manila, Inc. (TOMMI) is a Model 1973 and later shall be accepted for
domestic corporation composed of taxicab operators, who are registration and allowed for operation; and
grantees of Certificates of Public Convenience to operate every year thereafter, there shall be a six-year
taxicabs within the City of Manila and to any other place in Luzon lifetime of taxi, to wit:
accessible to vehicular traffic. Petitioners Ace Transportation
Corporation and Felicisimo Cabigao are two of the members of 1980 — Model 1974
TOMMI, each being an operator and grantee of such certificate
of public convenience.
1981 — Model 1975, etc.

On October 10, 1977, respondent Board of Transportation (BOT)


All taxis of earlier models than those provided
issued Memorandum Circular No. 77-42 which reads:
above are hereby ordered withdrawn from
public service as of the last day of registration
SUBJECT: Phasing out and Replacement of of each particular year and their respective
plates shall be surrendered directly to the
Board of Transportation for subsequent On January 27, 1981, petitioners filed a Petition with the BOT,
turnover to the Land Transportation docketed as Case No. 80-7553, seeking to nullify MC No. 77-42 or
Commission. to stop its implementation; to allow the registration and
operation in 1981 and subsequent years of taxicabs of model
For an orderly implementation of this 1974, as well as those of earlier models which were phased-out,
Memorandum Circular, the rules herein shall provided that, at the time of registration, they are roadworthy
immediately be effective in Metro-Manila. Its and fit for operation.
implementation outside Metro- Manila shall be
carried out only after the project has been On February 16, 1981, petitioners filed before the BOT a
implemented in Metro-Manila and only after "Manifestation and Urgent Motion", praying for an early hearing
the date has been determined by the Board. 1 of their petition. The case was heard on February 20, 1981.
Petitioners presented testimonial and documentary evidence,
Pursuant to the above BOT circular, respondent Director of the offered the same, and manifested that they would submit
Bureau of Land Transportation (BLT) issued Implementing additional documentary proofs. Said proofs were submitted on
Circular No. 52, dated August 15, 1980, instructing the Regional March 27, 1981 attached to petitioners' pleading entitled,
Director, the MV Registrars and other personnel of BLT, all within "Manifestation, Presentation of Additional Evidence and
the National Capitol Region, to implement said Circular, and Submission of the Case for Resolution." 3
formulating a schedule of phase-out of vehicles to be allowed
and accepted for registration as public conveyances. To quote On November 28, 1981, petitioners filed before the same Board
said Circular: a "Manifestation and Urgent Motion to Resolve or Decide Main
Petition" praying that the case be resolved or decided not later
Pursuant to BOT Memo-Circular No. 77-42, taxi than December 10, 1981 to enable them, in case of denial, to
units with year models over six (6) years old avail of whatever remedy they may have under the law for the
are now banned from operating as public protection of their interests before their 1975 model cabs are
utilities in Metro Manila. As such the units phased-out on January 1, 1982.
involved should be considered as automatically
dropped as public utilities and, therefore, do Petitioners, through its President, allegedly made personal
not require any further dropping order from follow-ups of the case, but was later informed that the records of
the BOT. the case could not be located.

Henceforth, taxi units within the National On December 29, 1981, the present Petition was instituted
Capitol Region having year models over 6 years wherein the following queries were posed for consideration by
old shall be refused registration. The following this Court:
schedule of phase-out is herewith prescribed
for the guidance of all concerned: A. Did BOT and BLT promulgate the questioned
Year Model Automatic memorandum circulars in accord with the
Phase-Out manner required by Presidential Decree No.
Year 101, thereby safeguarding the petitioners'
constitutional right to procedural due process?
1980
B. Granting, arguendo, that respondents did
1974 1981 comply with the procedural requirements
imposed by Presidential Decree No. 101, would
1975 1982 the implementation and enforcement of the
assailed memorandum circulars violate the
1976 1983
petitioners' constitutional rights to.
1977
(1) Equal
etc. etc. protection
of the law;

Strict compliance here is desired. 2


(2)
Substantive
In accordance therewith, cabs of model 1971 were phase-out in due
registration year 1978; those of model 1972, in 1979; those of process;
model 1973, in 1980; and those of model 1974, in 1981. and
(3) It is clear from the provision aforequoted, however, that the
Protection leeway accorded the Board gives it a wide range of choice in
against gathering necessary information or data in the formulation of
arbitrary any policy, plan or program. It is not mandatory that it should
and first call a conference or require the submission of position
unreasonab papers or other documents from operators or persons who may
le be affected, this being only one of the options open to the
classificatio Board, which is given wide discretionary authority. Petitioners
n and cannot justifiably claim, therefore, that they were deprived of
standard? procedural due process. Neither can they state with certainty
that public respondents had not availed of other sources of
On Procedural and Substantive Due Process: inquiry prior to issuing the challenged Circulars. operators of
public conveyances are not the only primary sources of the data
Presidential Decree No. 101 grants to the Board of and information that may be desired by the BOT.
Transportation the power
Dispensing with a public hearing prior to the issuance of the
4. To fix just and reasonable standards, Circulars is neither violative of procedural due process. As held in
classification, regulations, practices, Central Bank vs. Hon. Cloribel and Banco Filipino, 44 SCRA 307
measurements, or service to be furnished, (1972):
imposed, observed, and followed by operators
of public utility motor vehicles. Pevious notice and hearing as elements of due
process, are constitutionally required for the
Section 2 of said Decree provides procedural guidelines for said protection of life or vested property rights, as
agency to follow in the exercise of its powers: well as of liberty, when its limitation or loss
takes place in consequence of a judicial or
quasi-judicial proceeding, generally dependent
Sec. 2. Exercise of powers. — In the exercise of
upon a past act or event which has to be
the powers granted in the preceding section,
established or ascertained. It is not essential to
the Board shag proceed promptly along the
the validity of general rules or regulations
method of legislative inquiry.
promulgated to govern future conduct of a
class or persons or enterprises, unless the law
Apart from its own investigation and studies, provides otherwise. (Emphasis supplied)
the Board, in its discretion, may require the
cooperation and assistance of the Bureau of
Petitioners further take the position that fixing the ceiling at six
Transportation, the Philippine Constabulary,
(6) years is arbitrary and oppressive because the roadworthiness
particularly the Highway Patrol Group, the
of taxicabs depends upon their kind of maintenance and the use
support agencies within the Department of
to which they are subjected, and, therefore, their actual physical
Public Works, Transportation and
condition should be taken into consideration at the time of
Communications, or any other government
registration. As public contend, however, it is impractical to
office or agency that may be able to furnish
subject every taxicab to constant and recurring evaluation, not
useful information or data in the formulation
to speak of the fact that it can open the door to the adoption of
of the Board of any policy, plan or program in
multiple standards, possible collusion, and even graft and
the implementation of this Decree.
corruption. A reasonable standard must be adopted to apply to
an vehicles affected uniformly, fairly, and justly. The span of six
The Board may also can conferences, require
years supplies that reasonable standard. The product of
the submission of position papers or other experience shows that by that time taxis have fully depreciated,
documents, information, or data by operators
their cost recovered, and a fair return on investment obtained.
or other persons that may be affected by the
They are also generally dilapidated and no longer fit for safe and
implementation of this Decree, or employ any
comfortable service to the public specially considering that they
other suitable means of inquiry.
are in continuous operation practically 24 hours everyday in
three shifts of eight hours per shift. With that standard of
In support of their submission that they were denied procedural reasonableness and absence of arbitrariness, the requirement of
due process, petitioners contend that they were not caged upon due process has been met.
to submit their position papers, nor were they ever summoned
to attend any conference prior to the issuance of the questioned
On Equal Protection of the Law:
BOT Circular.
Petitioners alleged that the Circular in question violates their
right to equal protection of the law because the same is being
enforced in Metro Manila only and is directed solely towards the unconstitutional, the infringement of constitutional right must
taxi industry. At the outset it should be pointed out that be clear, categorical and undeniable. 10
implementation outside Metro Manila is also envisioned in
Memorandum Circular No. 77-42. To repeat the pertinent WHEREFORE, the Writs prayed for are denied and this Petition is
portion: hereby dismissed. No costs.

For an orderly implementation of this SO ORDERED.


Memorandum Circular, the rules herein shall
immediately be effective in Metro Manila. Its Fernando, CJ., Barredo, Makasiar, Concepcion, Jr., Guerrero,
implementation outside Metro Manila shall be Abad Santos, De Castro, Plana, Escolin, Vasquez, Relova and
carried out only after the project has been Gutierrez, Jr., JJ., concur.
implemented in Metro Manila and only after
the date has been determined by the Board. 4
Teehankee and Aquino, JJ., concur in the result.

In fact, it is the understanding of the Court that implementation


of the Circulars in Cebu City is already being effected, with the
BOT in the process of conducting studies regarding the operation
of taxicabs in other cities. Footnotes

1 Annex "A", pp. 26-27, Rollo.


The Board's reason for enforcing the Circular initially in Metro
Manila is that taxicabs in this city, compared to those of other
places, are subjected to heavier traffic pressure and more 2 Annex "B", p. 28, Ibid.
constant use. This is of common knowledge. Considering that
traffic conditions are not the same in every city, a substantial 3 Annex "D", pp. 38-53, Ibid.
distinction exists so that infringement of the equal protection
clause can hardly be successfully claimed. 4 p. 19, Ibid

As enunciated in the preambular clauses of the challenged BOT 5 Edu vs. Ericta, 35 SCRA 481 (1970).
Circular, the overriding consideration is the safety and comfort of
the riding public from the dangers posed by old and dilapidated 6 Samson vs. Mayor of Bacolod City, 60 SCRA
taxis. The State, in the exercise, of its police power, can prescribe 267 (1974).
regulations to promote the health, morals, peace, good order,
safety and general welfare of the people. It can prohibit all things 7 The Constitution of the Philippines, Second
hurtful to comfort, safety and welfare of society. 5 It may also Edition, p. 548.
regulate property rights. 6 In the language of Chief Justice
Enrique M. Fernando "the necessities imposed by public welfare
8 People vs. Vera, 65 Phil. 56; People vs. Cayat,
may justify the exercise of governmental authority to regulate
68 Phil. 12; Central Bank vs. Cloribel 44 SCRA
even if thereby certain groups may plausibly assert that their
307 (1972); Anucension vs. National Labor
interests are disregarded". 7
Union, 80 SCRA 350 (1977) citing Victoriano vs.
Elizalde Rope Workers 'Union, 59 SCRA 54
In so far as the non-application of the assailed Circulars to other (1974) & Basa vs. Federacion Obrera de la
transportation services is concerned, it need only be recalled Industria Tabaquera y Otros Trabajadores de
that the equal protection clause does not imply that the same Filipinas, 61 SCRA 93 (1974).
treatment be accorded all and sundry. It applies to things or
persons Identically or similarly situated. It permits of
9 Gumabon vs. Director of Prisons, 37 SCRA
classification of the object or subject of the law provided
420 (1971).
classification is reasonable or based on substantial distinction,
which make for real differences, and that it must apply equally to
each member of the class. 8 What is required under the equal 10 Morfe vs. Mutuc, 22 SCRA 424 (1868).
protection clause is the uniform operation by legal means so that
all persons under Identical or similar circumstance would be Saturday, February 4, 2012
accorded the same treatment both in privilege conferred and the TAXICAB OPERATORS OF METRO MANILA, INC vs. THE BOARD OF
liabilities imposed. 9 The challenged Circulars satisfy the TRANSPORTATION (1982)
foregoing criteria.
TAXICAB OPERATORS OF METRO MANILA, INC vs. THE BOARD
Evident then is the conclusion that the questioned Circulars do OF TRANSPORTATION (1982)
not suffer from any constitutional infirmity. To declare a law MELENCIO-HERRERA, J.:
Sec. 2. Exercise of powers. — In the exercise of the powers
· On October 10, 1977, BOT issued Memorandum Circular No. granted in the preceding section, the Board shall proceed
77-42 that aimed to phase out and replace old dilapidated taxis promptly along the method of legislative inquiry.
to insure only safe comfortable units are used by the public, to Apart from its own investigation and studies, the Board, in its
respond to complaints by metro manila residents regarding the discretion, may require the cooperation and assistance of the
old dilapidated taxis, to make the commuting public more Bureau of Transportation, the Philippine Constabulary,
comfortable, have more convenience and safety. 6 years is particularly the Highway Patrol Group, the support agencies
enough for taxi operators to get back cost of unit plus profits. à within the Department of Public Works, Transportation and
no car beyond 6 years can still be operated as taxi. Communications, or any other government office or agency that
· Taxis model 1971 were considered withdrawn on Dec 31, 1977 may be able to furnish useful information or data in the
à applied it to succeeding years just add one year to both dates. formulation of the Board of any policy, plan or program in the
à they had to surrender the expired taxi’s plates to the BoT for implementation of this Decree.
turnover to Land Transpo Commission. The Board may also call conferences, require the submission of
· Pursuant to the above BOT circular, respondent Director of the position papers or other documents, information, or data by
Bureau of Land Transportation (BLT) issued Implementing operators or other persons that may be affected by the
Circular No. 52, dated August 15, 1980, instructing the Regional implementation of this Decree, or employ any other suitable
Director, the MV Registrars and other personnel of BLT, all within means of inquiry.
the NCR, to implement the phasing out of the taxis. · PET claim that they were denied due process because they
· On January 27, 1981, petitioners filed a Petition with the BOT, were not asked to submit position papers or to attend
docketed as Case No. 80-7553, seeking to nullify MC No. 77-42 or conferences regarding the assailed circ.
to stop its implementation; to allow the registration and o SC held that the PD provides a wide leeway as to how the board
operation in 1981 and subsequent years of taxicabs of model will choose to gather data in formulating its policy. NOT ALL
1974, as well as those of earlier models which were phased-out, OPTIONS ARE REQUIRED TO BE DONE FOR POLICY TO BE VALID à
provided that, at the time of registration, they are roadworthy the board has the choice of which avenue to pursue in collecting
and fit for operation. data.
· PET also claim that 6 year limit was arbitrarily set à oppressive à
The issues were in the form of questions that the petitioners they want each taxi cab to be inspected regarding their condition
presented to the SC through a query. WON it was still safe and roadworthy despite age.
A. Did BOT and BLT promulgate the questioned memorandum o Court held that their proposed standard is not practicable and can
circulars in accord with the manner required by Presidential open the door to multiple standards and corruption
Decree No. 101, thereby safeguarding the petitioners' o Court furthers aid that 6 years is a reasonable time based on
constitutional right to procedural due process? experience and based on cost and fair returns on the units
B. Granting, arguendo, that respondents did comply with the o Court held that a uniform standard is best and fair
procedural requirements imposed by Presidential Decree No.
101, would the implementation and enforcement of the assailed On Equal Protection of the Law:
memorandum circulars violate the petitioners' constitutional PET allege that the circular targets and singles out the taxi
rights to. industry = violation of their equal protection rights
(1) Equal protection of the law; è Court said NO. Circs of the same kind are also being implemented
(2) Substantive due process; and in other cities like Cebu and is also in the process of conducting
(3) Protection against arbitrary and unreasonable classification the same studies and policy formulations in other cities.
and standard? è Manila was first because of the heavier traffic pressure and the
more constant use of the taxis in MM.
HELD: è SUBSTANTIAL DISTINCTION à the traffic conditions in the various
The court here did not answer the queries directly they just dealt cities
with the ff issues
1. WON the procedural and substantive due process rights of the CONCLUSIONS:
taxi operators were violated à NO. è Manila has more traffic which means that taxis in Metro Manila are
2. WON their equal protection rights were violatedà NO. more heavily used and more likely to deteriorate.
è The public has a right to convenience, comfort and safety in their
On Procedural and Substantive Due Process: public commute.
Presidential Decree No. 101 grants to the Board èof The danger posed by the dilapidated and old taxis is a valid
Transportation the power nuisance that the Board can abate through the circular that it
4. To fix just and reasonable standards, classification, passed.
regulations, practices, measurements, or service to be furnished,
è Absent a clear showing of any repugnancy of the circular it is
imposed, observed, and followed by operators of public utility deemed valid.
motor vehicles. Petition DISMISSED
Section 2 of said Decree provides procedural guidelines for said Taxicab Operators vs. Board of Transportation
agency to follow in the exercise of its powers: G.R. No. L-59234. September 30, 1982.
who maybe affected, this being only one of the options open to
Facts: the Board, which is given wide discretionary authority.
Petitioners who are taxicab operators assail the constitutionality Petitioners cannot justifiably claim, therefore, that they were
of Memorandum Circular No. 77-42 issued by the Board of deprived of procedural due process. Neither can they state with
Transportation (BOT) providing for the phasing out and certainty that public respondents had not availed of other
replacement of old and dilapidated taxicabs; as well as sources of inquiry prior to issuing the challenged Circulars.
Implementing Circular No. 52 issued pursuant thereto by the Operators of public conveyances are not the only primary
Bureau of Land Transportation (BLT) instructing personnel of the sources of the data and information that may be desired by the
BLT within the National Capital Region to implement the said BOT.
BOT Circular, and formulating a schedule of phase-out of vehicles
to be allowed and accepted for registration as public 6
conveyances.
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY ENERGY
Petitioners allege that the questioned Circulars did not afford REGULATORY BOARD petitioner, vs. MANILA ELECTRIC
COMPANY, respondent.
them procedural and substantive due process, equal protection
of the law, and protection against arbitrary and unreasonable
classification and standard. Among others, they question the
issuance of the Circulars without first calling them to a
[G.R. No. 141369. November 15, 2002]
conference or requiring them to submit position papers or other
documents enforceability thereof only in Metro Manila; and LAWYERS AGAINST MONOPOLY AND POVERTY (LAMP)
their being applicable only to taxicabs and not to other consisting of CEFERINO PADUA, Chairman, G. FULTON
transportation services. ACOSTA,GALILEO BRION, ANATALIA BUENAVENTURA,
PEDRO CASTILLO, NAPOLEON CORONADO, ROMEO
Issues: ECHAUZ, FERNANDO GAITE, ALFREDO DE GUZMAN,
Whether or not the constitutional guarantee of due process was ROGELIO KARAGDAG, JR., MA. LUZ ARZAGA-
denied to the taxicab operators and/or other persons affected by MENDOZA, ANSBERTO PAREDES, AQUILINO PIMENTEL
the assailed Circular No. 52. III, MARIO REYES, EMMANUEL SANTOS, RUDEGELIO
TACORDA, members, and ROLANDO ARZAGA,
Held: Secretary-General, JUSTICE ABRAHAM SARMIENTO,
SENATOR AQUILINO PIMENTEL, JR. and
The Supreme Court held that there was no denial of due process COMMISSIONER BARTOLOME FERNANDEZ, JR., Board
since calling the taxicab operators or persons who may be of Consultants, and Lawyer GENARO
affected by the questioned Circulars to a conference or requiring LUALHATI, petitioners, vs. MANILA ELECTRIC
them to submit position papers or other documents is only one COMPANY (MERALCO), respondent.
of the options open to the BOT which is given wide discretionary
authority under P.D. No. 101; and fixing a six- year ceiling for a DECISION
car to be operated as taxicab is a reasonable standard adopted
to apply to all vehicles affected uniformly, fairly, and justly. PUNO, J.:
In third world countries like the Philippines, equal justice
will have a synthetic ring unless the economic rights of the
The Court also ruled that neither has the equal protection clause
people, especially the poor, are protected with the same
been violated by initially enforcing the Circulars only in Metro
resoluteness as their right to liberty. The cases at bar are of
Manila since it is of common knowledge that taxicabs in this city,
utmost significance for they concern the right of our people to
compared to those of other places, are subjected to heavier
electricity and to be reasonably charged for their consumption.
traffic pressure and more constant use, thus making for a
In configuring the contours of this economic right to a basic
substantial distinction; nor by non-application of the Circulars to
necessity of life, the Court shall define the limits of the power of
other transportation services because the said Circulars satisfy
respondent MERALCO, a giant public utility and a monopoly, to
the criteria required under the equal protection clause, which is
charge our people for their electric consumption. The question
the uniform operation by legal means so that all persons under
is: should public interest prevail over private profits?
identical or similar circumstances would be accorded the same
treatment both in privilege conferred and the liabilities imposed. The facts are brief and undisputed. On December 23, 1993,
MERALCO filed with the ERB an application for the revision of its
It is clear from the provision of Section 2 of P.D. 101 rate schedules. The application reflected an average increase of
aforequoted, that the leeway accorded the Board gives it a wide 21 centavos per kilowatthour (kwh) in its distribution charge. The
range of choice in gathering necessary information or data in the application also included a prayer for provisional approval of the
formulation of any policy, plan or program. It is not mandatory increase pursuant to Section 16(c) of the Public Service Act and
that it should first call a conference or require the submission of Section 8 of Executive Order No. 172.
position papers or other documents from operators or persons
On January 28, 1994, the ERB issued an Order granting a Petitioners are now before the Court seeking a reversal of
provisional increase of P0.184 per kwh, subject to the following the decision of the Court of Appeals by arguing primarily that the
condition: Court of Appeals erred: a) in ruling that income tax paid by
MERALCO should be treated as part of its operating expenses
In the event, however, that the Board finds, after hearing and and thus considered in determining the amount of increase in
submission by the Commission on Audit of an audit report on the rates imposed by MERALCO and b) in rejecting the net average
books and records of the applicant that the latter is entitled to a investment method used by the COA and the ERB and instead
lesser increase in rates, all excess amounts collected from the adopted the average investment method used by MERALCO.
applicants customers as a result of this Order shall either be
We grant the petition.
refunded to them or correspondingly credited in their favor for
application to electric bills covering future consumptions.[1] The regulation of rates to be charged by public utilities is
founded upon the police powers of the State and statutes
In the same Order, the ERB requested the Commission on
prescribing rules for the control and regulation of public utilities
Audit (COA) to conduct an audit and examination of the books
are a valid exercise thereof. When private property is used for a
and other records of account of the applicant for such period of
public purpose and is affected with public interest, it ceases to
time, which in no case shall be less than 12 consecutive months,
be juris privati only and becomes subject to regulation. The
as it may deem appropriate and to submit a copy thereof to the
regulation is to promote the common good. Submission to
ERB immediately upon completion.[2]
regulation may be withdrawn by the owner by discontinuing use;
On February 11, 1997, the COA submitted its Audit Report but as long as use of the property is continued, the same is
[9]
SAO No. 95-07 (the COA Report) which contained, among others, subject to public regulation.
the recommendation not to include income taxes paid by
In regulating rates charged by public utilities, the State
MERALCO as part of its operating expenses for purposes of rate
protects the public against arbitrary and excessive rates while
determination and the use of the net average investment
maintaining the efficiency and quality of services rendered.
method for the computation of the proportionate value of the
However, the power to regulate rates does not give the State the
properties used by MERALCO during the test year for the
right to prescribe rates which are so low as to deprive the public
determination of the rate base.[3]
utility of a reasonable return on investment. Thus, the rates
Subsequently, the ERB rendered its decision adopting the prescribed by the State must be one that yields a fair return on
above recommendations and authorized MERALCO to the public utility upon the value of the property performing the
implement a rate adjustment in the average amount of P0.017 service and one that is reasonable to the public for the services
[10]
per kwh, effective with respect to MERALCOs billing cycles rendered. The fixing of just and reasonable rates involves a
[11]
beginning February 1994. The ERB further ordered that the balancing of the investor and the consumer interests.
provisional relief in the amount of P0.184 per kilowatthour
In his famous dissenting opinion in the 1923 case
granted under the Boards Order dated January 28, 1994 is
of Southwestern Bell Tel. Co. v. Public Service
hereby superseded and modified and the excess average amount
Commission,[12] Mr. Justice Brandeis wrote:
of P0.167 per kilowatthour starting with [MERALCOs] billing
cycles beginning February 1994 until its billing cycles beginning
February 1998, be refunded to [MERALCOs] customers or The thing devoted by the investor to the public use is not specific
property, tangible and intangible, but capital embarked in an
correspondingly credited in their favor for future consumption. [4]
enterprise. Upon the capital so invested, the Federal
The ERB held that income tax should not be treated as Constitution guarantees to the utility the opportunity to earn
operating expense as this should be borne by the stockholders a fair return The Constitution does not guarantee to the utility
who are recipients of the income or profits realized from the the opportunity to earn a return on the value of all items of
operation of their business hence, should not be passed on to property used by the utility, or of any of them.
the consumers.[5] Further, in applying the net average
investment method, the ERB adopted the recommendation of .
COA that in computing the rate base, only the proportionate
value of the property should be included, determined in The investor agrees, by embarking capital in a utility, that
accordance with the number of months the same was actually its charges to the public shall be reasonable. His company is the
used in service during the test year.[6] substitute for the State in the performance of the public
On appeal, the Court of Appeals set aside the ERB decision service, thus becoming a public servant. The compensation
insofar as it directed the reduction of the MERALCO rates by an which the Constitution guarantees an opportunity to earn is the
average of P0.167 per kwh and the refund of such amount to reasonable cost of conducting the business.
MERALCOs customers beginning February 1994 and until its While the power to fix rates is a legislative function,
billing cycle beginning February 1998.[7] Separate Motions for whether exercised by the legislature itself or delegated through
Reconsideration filed by the petitioners were denied by the an administrative agency, a determination of whether the rates
Court of Appeals.[8] so fixed are reasonable and just is a purely judicial question and
is subject to the review of the courts.[13]
The ERB was created under Executive Order No. 172 to a fair return and the proper valuation of the rate base or the
regulate, among others, the distribution of energy resources and value of the property entitled to a return.
to fix rates to be charged by public utilities involved in the I
distribution of electricity. In the fixing of rates, the only
standard which the legislature is required to prescribe for the
guidance of the administrative authority is that the rate be Income Tax as Operating Expense Cannot be Allowed For Rate-
reasonable and just. It has been held that even in the absence of Determination Purposes
an express requirement as to reasonableness, this standard may
be implied.[14] What is a just and reasonable rate is a question of In determining whether or not a rate yields a fair return to
fact calling for the exercise of discretion, good sense, and a fair, the utility, the operating expenses of the utility must be
enlightened and independent judgment. The requirement of considered. The return allowed to a public utility in accordance
reasonableness comprehends such rates which must not be so with the prescribed rate must be sufficient to provide for the
low as to be confiscatory, or too high as to be oppressive. In payment of such reasonable operating expenses incurred by the
determining whether a rate is confiscatory, it is essential also to public utility in the provision of its services to the public. Thus,
consider the given situation, requirements and opportunities of the public utility is allowed a return on capital over and above
the utility.[15] operating expenses. However, only such expenses and in such
amounts as are reasonable for the efficient operation of the
Settled jurisprudence holds that factual findings of utility should be allowed for determination of the rates to be
administrative bodies on technical matters within their area of charged by a public utility.
expertise should be accorded not only respect but even finality if
they are supported by substantial evidence even if not The ERB correctly ruled that income tax should not be
overwhelming or preponderant.[16] In one case, [17] we cautioned included in the computation of operating expenses of a public
that courts should "refrain from substituting their discretion on utility. Income tax paid by a public utility is inconsistent with the
the weight of the evidence for the discretion of the Public nature of operating expenses. In general, operating expenses are
Service Commission on questions of fact and will only reverse or those which are reasonably incurred in connection with business
modify such orders of the Public Service Commission when it operations to yield revenue or income. They are items of
really appears that the evidence is insufficient to support their expenses which contribute or are attributable to the production
conclusions."[18] of income or revenue. As correctly put by the ERB, operating
expenses should be a requisite of or necessary in the operation
In the cases at bar, findings and conclusions of the ERB on of a utility, recurring, and that it redounds to the service or
the rate that can be charged by MERALCO to the public should benefit of customers.[26]
be respected.[19] The function of the court, in exercising its power
of judicial review, is to determine whether under the facts and Income tax, it should be stressed, is imposed on an
circumstances, the final order entered by the administrative individual or entity as a form of excise tax or a tax on the
agency is unlawful or unreasonable.[20] Thus, to the extent that privilege of earning income.[27] In exchange for the protection
the administrative agency has not been arbitrary or capricious in extended by the State to the taxpayer, the government collects
the exercise of its power, the time-honored principle is that taxes as a source of revenue to finance its activities. Clearly, by
courts should not interfere. The principle of separation of its nature, income tax payments of a public utility are not
powers dictates that courts should hesitate to review the acts of expenses which contribute to or are incurred in connection with
administrative officers except in clear cases of grave abuse of the production of profit of a public utility. Income tax should be
discretion.[21] borne by the taxpayer alone as they are payments made in
exchange for benefits received by the taxpayer from the State.
In determining the just and reasonable rates to be charged No benefit is derived by the customers of a public utility for the
by a public utility, three major factors are considered by the taxes paid by such entity and no direct contribution is made by
regulating agency: a) rate of return; b) rate base and c) the the payment of income tax to the operation of a public utility for
return itself or the computed revenue to be earned by the purposes of generating revenue or profit. Accordingly, the
public utility based on the rate of return and rate base. [22] The burden of paying income tax should be Meralcos alone and
rate of return is a judgment percentage which, if multiplied with should not be shifted to the consumers by including the same in
the rate base, provides a fair return on the public utility for the the computation of its operating expenses.
use of its property for service to the public.[23] The rate of return
of a public utility is not prescribed by statute but by The principle behind the inclusion of operating expenses in
administrative and judicial pronouncements. This Court has the determination of a just and reasonable rate is to allow the
consistently adopted a 12% rate of return for public public utility to recoup the reasonable amount of expenses it has
utilities.[24] The rate base, on the other hand, is an evaluation of incurred in connection with the services it provides. It does not
the property devoted by the utility to the public service or the give the public utility the license to indiscriminately charge any
value of invested capital or property which the utility is entitled and all types of expenses incurred without regard to the nature
to a return.[25] thereof, i.e., whether or not the expense is attributable to the
In the cases at bar, the resolution of the issues involved hinges production of services by the public utility. To charge consumers
on the determination of the kind and the amount of operating for expenses incurred by a public utility which are not related to
expenses that should be allowed to a public utility to generate
the service or benefit derived by the customers from the public within a particular state.[32] A significant aspect of state and local
utility is unjustified and inequitable. taxation of public utilities in the United States is that they have
been singled out for special taxation, i.e., they are required to
While the public utility is entitled to a reasonable return on
pay one or more taxes that are not levied upon other industries.
the fair value of the property being used for the service of the
In contrast, in this jurisdiction, public utilities are subject to the
public, no less than the Federal Supreme Court of the United
same tax treatment as any other corporation and local taxes paid
States emphasized: [t]he public cannot properly be subjected to by it to various local government units are substantially the
unreasonable rates in order simply that stockholders may earn
same. The reason for this is that the power to tax resides in our
dividends If a corporation cannot maintain such a [facility] and
legislature which may prescribe the limits of both national and
earn dividends for stockholders, it is a misfortune for it and them
local taxation, unlike in the federal system of the United States
which the Constitution does not require to be remedied by where state legislature may prescribe taxes to be levied in their
imposing unjust burdens on the public.[28]
respective jurisdictions.
We are not impressed by the reliance by MERALCO on
MERALCO likewise cites decisions of the ERB[33] allowing the
some American case law allowing the treatment of income tax application of a tax recovery clause for the imposition of an
paid by a public utility as operating expense for rate-making
additional charge on consumers for taxes paid by the public
purposes. Suffice to state that with regard to rate-determination,
utility. A close look at these decisions will show they
the government is not hidebound to apply any particular method
are inappropos. In the said cases, the ERB approved the adoption
or formula.[29] The question of what constitutes a reasonable of a formula which will allow the public utility to recover from its
return for the public utility is necessarily determined and
customers taxes already paid by it. However, in the cases at bar,
controlled by its peculiar environmental milieu. Aside from the
the income tax component added to the operating expenses of a
financial condition of the public utility, there are other critical
public utility is based on an estimate or approximate figure of
factors to consider for purposes of rate regulation. Among income tax to be paid by the public utility. It is this estimated
others, they are: particular reasons involved for the request of
amount of income tax to be paid by MERALCO which is included
the rate increase, the quality of services rendered by the public
in the amount of operating expenses and used as basis in
utility, the existence of competition, the element of risk or determining the reasonable rate to be charged to the customers.
hazard involved in the investment, the capacity of consumers,
Accordingly, the varying factual circumstances in the said cases
etc.[30] Rate regulation is the art of reaching a result that is good
prohibit a square application of the rule under the previous ERB
for the public utility and is best for the public.
decisions.
For these reasons, the Court cannot give in to the II
importunings of MERALCO that we blindly apply the rulings of
American courts on the treatment of income tax as operating
expenses in rate regulation cases. An approach allowing the
indiscriminate inclusion of income tax payments as operating Use of Net Average Investment Method is Not Unreasonable
expenses may create an undesirable precedent and serve as a In the determination of the rate base, property used in the
blanket authority for public utilities to charge their income tax operation of the public utility must be subject to appraisal and
payments to operating expenses and unjustly shift the tax evaluation to determine the fair value thereof entitled to a fair
burden to the customer. To be sure, public utility taxation in the return. With respect to those properties which have not been
United States is going through the eye of criticism. Some used by the public utility for the entire duration of the test
commentators are of the view that by allowing the public utility year, i.e., the year subject to audit examination for rate-making
to collect its income tax payment from its customers, a form of purposes, a valuation method must be adopted to determine the
sales tax is, in effect, imposed on the public for consumption of proportionate value of the property. Petitioners maintain that
public utility services. By charging their income tax payments to the net average investment method (also known as actual
their customers, public utilities virtually become tax collectors number of months use method) recommended by COA and
rather than taxpayers.[31] In the cases at bar, MERALCO has not adopted by the ERB should be used, while MERALCO argues that
justified why its income tax should be treated as an operating the average investment method (also known as the trending
expense to enable it to derive a fair return for its services. method) to determine the proportionate value of properties
It is also noteworthy that under American laws, public should be applied.
utilities are taxed differently from other types of corporations Under the net average investment method, properties and
and thus carry a heavier tax burden. Moreover, different types of equipment used in the operation of a public utility are entitled to
taxes, charges, tolls or fees are assessed on a public utility a return only on the actual number of months they are in service
depending on the state or locality where it operates. At a federal during the period.[34] In contrast, the average investment method
level, public utilities are subject to corporate income taxes and computes the proportionate value of the property by adding the
Social Security taxesin the same manner as other business value of the property at the beginning and at the end of the test
corporations. At the state and local levels, public utilities are year with the resulting sum divided by two.[35]
subject to a wide variety of taxes, not all of which are imposed
on each state. Thus, it is not unusual to find different taxes or The ERB did not abuse its discretion when it applied the net
combinations of taxes applicable to respective utility industries average investment method. The reasonableness of net average
investment method is borne by the records of the case. In its If we were to sustain the application of the trending
report, the COA explained that the computation of the method, the public utility may easily manipulate the valuation of
proportionate value of the property and equipment in its property entitled to a return (rate base) by simply including a
accordance with the actual number of months such property or highly capitalized asset in the computation of the rate base even
equipment is in service for purposes of determining the rate if the same was used for a limited period of time during the test
base is favored, as against the trending method employed by year. With the inexactness of the trending method and the
MERALCO, to reflect the real status of the property. [36] By using possibility that the valuation of certain properties may be subject
the net average investment method, the ERB and the COA to the control of and abuse by the public utility, the Court finds
considered for determination of the rate base the value of no reasonable basis to overturn the recommendation of COA
properties and equipment used by MERALCO in proportion to and the decision of the ERB.
the period that the same were actually used during the period in
MERALCO further insists that the Court should sustain the
question. This treatment is consistent with the settled rule in
trending method in view of previous decisions by the Public
rate regulation that the determination of the rate base of a
public utility entitled to a return must be based on properties Service Commission and of this Court which upheld the use of
this method. By refusing to adopt the trending method,
and equipment actually being used or are useful to the
MERALCO argues that the ERB violated the rule on stare decisis.
operations of the public utility.[37]
Again, we are not impressed. It is a settled rule that the
MERALCO does not seriously contest this treatment of
actual usage of property but opposes the method of goal of rate-making is to arrive at a just and reasonable rate for
both the public utility and the public which avails of the formers
computation or valuation thereof adopted by the ERB and the
products and services.[42] However, what is a just and reasonable
COA on the ground that the net average investment method
rate cannot be fixed by any immutable method or formula.
assumes an ideal situation where a utility, like MERALCO, is able
to record in its books within any given month the value of all the Hence, it has been held that no public utility has a vested right to
any particular method of valuation.[43] Accordingly, with respect
properties actually placed in service during that
to a determination of the proper method to be used in the
month.[38] MERALCO contends that immediate recordal in its
books of the property or equipment is not possible as MERALCOs valuation of property and equipment used by a public utility for
rate-making purposes, the administrative agency is not bound to
franchise covers a wide area and that due to the volume of
apply any one particular formula or method simply because the
properties and equipment put into service and the amount of
same method has been previously used and applied. In fact,
paper work required to be accomplished for recording in the
books of the company, it takes three to six months (often longer) nowhere in the previous decisions cited by MERALCO which
applied the trending method did the Court rule that the same
before an asset placed in service is recorded in the books of
should be the only method to be applied in all instances.
MERALCO.[39] Hence, MERALCO adopted the average investment
method or the trending method which computes the average At any rate, MERALCO has not adequately shown that the
value of the property at the beginning and at the end of the test rates prescribed by the ERB are unjust or confiscatory as to
year to compensate for the irregular recording in its books. deprive its stockholders a reasonable return on investment. In
the early case of Ynchausti S.S. Co. v. Public Utility
MERALCOS stance is belied by the COA Report which states
that the verification of the records, as confirmed by the Commissioner, this Court held: [t]here is a legal presumption
that the rates fixed by an administrative agency are reasonable,
Management Staff, disclosed that properties are recorded in the
and it must be conceded that the fixing of rates by the
books as these are actually placed in service.[40] Moreover, while
Government, through its authorized agents, involves the exercise
the case was pending trial before the ERB, the ERB conducted an
ocular inspection to examine the assets in service, records and of reasonable discretion and, unless there is an abuse of that
discretion, the courts will not interfere.[44] Thus, the burden is
books of accounts of MERALCO to ascertain the physical
upon the oppositor, MERALCO, to prove that the rates fixed by
existence, ownership, valuation and usefulness of the assets
contained in the COA Report.[41] Thus, MERALCOs contention the ERB are unreasonable or otherwise confiscatory as to merit
the reversal of the ERB. In the instant cases, MERALCO was
that the date of recordal in the books does not reflect the date
unable to discharge this burden.
when the asset is placed in service is baseless.
WHEREFORE, in view of the foregoing, the instant petitions
Further, computing the proportionate value of assets used
in service in accordance with the actual number of months the are GRANTED and the decision of the Court of Appeals in C.A.
G.R. SP No. 46888 is REVERSED. RespondentMERALCO is
same is used during the test year is a more accurate method of
authorized to adopt a rate adjustment in the amount of P0.017
determining the value of the properties of a public utility entitled
per kilowatthour, effective with respect to MERALCOs billing
to a return. If, as determined by COA, the date of recordal in the
books of MERALCO reflects the actual date the equipment or cycles beginning February 1994. Further, in accordance with the
decision of the ERB dated February 16, 1998, the excess average
property is used in service, there is no reason for the ERB to
amount of P0.167 per kilwatthour starting with the applicants
adopt the trending method applied by MERALCO if a more
precise method is available for determining the proportionate billing cycles beginning February 1998 is ordered to be refunded
to MERALCOs customers or correspondingly credited in their
value of the assets placed in service.
favor for future consumption.
SO ORDERED.
Panganiban, Sandoval-Gutierrez, Corona, and Carpio- 1. Regulation of rates by public utilities founded on the State’s
Morales, JJ., concur. police powers
Republic vs. Meralco [G.R. No. 141314. November 15, 2002.] The regulation of rates to be charged by public utilities is
Facts: founded upon the police powers of the State and statutes
On 23 December 1993, Manila Electric Company (MERALCO) prescribing rules for the control and regulation of public utilities
filed with the Energy Regulatory Board (ERB) an application for are a valid exercise thereof. When private property is used for a
the revision of its rate schedules. The application reflected an public purpose and is affected with public interest, it ceases to
average increase of P0.21/kwh in its distribution charge. The be juris privati only and becomes subject to regulation. The
application also included a prayer for provisional approval of the regulation is to promote the common good. Submission to
increase pursuant to Section 16(c) of the Public Service Act and regulation may be withdrawn by the owner by discontinuing use;
Section 8 of Executive Order 172. On 28 January 1994, the ERB but as long as use of the property is continued, the same is
issued an Order granting a provisional increase of P0.184/kwh, subject to public regulation.
subject to the condition that in the event that the Board finds RP represented by ERB vs Manila Electric Company
that MERALCO is entitled to a lesser increase in rates, all excess Chester Cabalza recommends his visitors to please read the
amounts collected from the applicant’s customers as a result of original & full text of the case cited. Xie xie!
this Order shall either be refunded to them or correspondingly
credited in their favor for application to electric bills covering G.R. No. 141314 November 15, 2002
future consumptions. Subsequent to an audit by the Commission
on Audit (COA), the ERB rendered its decision adopting COA’s REPUBLIC OF THE PHILIPPINES, REPRESENTED BY ENERGY
recommendations and authorized MERALCO to implement a rate REGULATORY BOARD petitioner,
adjustment in the average amount of P0.017/kwh, effective with vs.
respect to MERALCO’s billing cycles beginning February 1994. MANILA ELECTRIC COMPANY, respondent.
The ERB further ordered that “the provisional relief in the
amount of P0.184/kwh granted under the Board’s Order dated -----------------------------
28 January 1994 is hereby superseded and modified and the
excess average amount of P0.167/kwh starting with MERALCO’s G.R. No. 141369 November 15, 2002
billing cycles beginning February 1994 until its billing cycles
beginning February 1998, be refunded to MERALCO’s customers LAWYERS AGAINST MONOPOLY AND POVERTY (LAMP)
or correspondingly credited in their favor for future consisting of CEFERINO PADUA, Chairman, G. FULTON ACOSTA,
consumption.” The ERB held that income tax should not be GALILEO BRION, ANATALIA BUENAVENTURA,
treated as operating expense as this should be “borne by the PEDRO CASTILLO, NAPOLEON CORONADO, ROMEO ECHAUZ,
stockholders who are recipients of the income or profits realized FERNANDO GAITE, ALFREDO DE GUZMAN, ROGELIO
from the operation of their business” hence, should not be KARAGDAG, JR., MA. LUZ ARZAGA-MENDOZA, ANSBERTO
passed on to the consumers. Further, in applying the net average PAREDES, AQUILINO PIMENTEL III, MARIO REYES, EMMANUEL
investment method, the ERB adopted the recommendation of SANTOS, RUDEGELIO TACORDA, members, and ROLANDO
COA that in computing the rate base, only the proportionate ARZAGA, Secretary-General,
value of the property should be included, determined in JUSTICE ABRAHAM SARMIENTO, SENATOR AQUILINO
accordance with the number of months the same was actually PIMENTEL, JR. and COMMISSIONER BARTOLOME FERNANDEZ,
used in service during the test year. JR., Board of Consultants, and Lawyer GENARO LUALHATI,
petitioners,
On appeal (CA GR SP 46888), the Court of Appeals set aside the vs.
ERB decision insofar as it directed the reduction of the MERALCO MANILA ELECTRIC COMPANY (MERALCO), respondent.
rates by an average of P0.167/ kwh and the refund of such
amount to MERALCO’s customers beginning February 1994 and Facts:
until its billing cycle beginning February 1998. Separate Motions
for Reconsideration filed by the petitioners were denied by the The MERALCO filed with the energy Regulatory Body (ERB), an
Court of Appeals. Hence, the petition before the Supreme Court. application for the revision of its rate schedules. The application
reflected an average increase of 21 centavos per kilowatthour
The Supreme Court granted the petitions and reversed the (kwh) in its distribution charge. The application also included a
decision of the Court of Appeals. MERALCO was authorized to prayer for provisional approval of the increase pursuant to
adopt a rate adjustment in the amount of P0.017/kwh, effective Section 16(c) of the Public Service Act and Section 8 of Executive
with respect to MERALCO’s billing cycles beginning February Order No. 172.
1994. Further, in accordance with the decision of the ERB dated
16 February 1998, the excess average amount of P0.167/kwh On January 28, 1994, the ERB issued an Order granting a
starting with the applicant’s billing cycles beginning February provisional increase of P0.184 per kwh, subject to the following
1998 is ordered to be refunded to MERALCO’s customers or condition. In the same Order, the ERB requested the Commission
correspondingly credited in their favor for future consumption. on Audit (COA) to conduct an audit and examination of the
books and other records of account of the applicant for such
period of time and to submit a copy thereof to the ERB one that is reasonable to the public for the services rendered.
immediately upon completion. While the power to fix rates is a legislative function, whether
exercised by the legislature itself or delegated through an
In February 1997, COA submitted its "COA Report" which administrative agency, a determination of whether the rates so
contained, among others, the recommendation not to include fixed are reasonable and just is a purely judicial question and is
income taxes paid by MERALCO as part of its operating expenses subject to the review of the courts.
for purposes of rate determination and the use of the net
average investment method for the computation of the The ERB was created under Executive Order No. 172 to regulate,
proportionate value of the properties used by MERALCO during among others, the distribution of energy resources and to fix
the test year for the determination of the rate base. rates to be charged by public utilities involved in the distribution
Subsequently, the ERB rendered its decision adopting the above of electricity. In the fixing of rates, the only standard which the
recommendations and authorized MERALCO to implement a rate legislature is required to prescribe for the guidance of the
adjustment. The ERB held that income tax should not be treated administrative authority is that the rate be reasonable and just.
as operating expense as this should be borne by the stockholders
who are recipients of the income or profits realized from the In the cases at bar, findings and conclusions of the ERB on the
operation of their business. rate that can be charged by MERALCO to the public should be
respected. The function of the court, in exercising its power of
On appeal, the Court of Appeals set aside the ERB decision judicial review, is to determine whether under the facts and
insofar as it directed the reduction of the MERALCO rates by an circumstances, the final order entered by the administrative
average of P0.167 per kwh and the refund of such amount to agency is unlawful or unreasonable. The ERB correctly ruled that
MERALCO's customers beginning February 1994 and until its income tax should not be included in the computation of
billing cycle beginning February 1998. Separate Motions for operating expenses of a public utility. Accordingly, the burden of
Reconsideration filed by the petitioners were denied by the paying income tax should be Meralco's alone and should not be
Court of Appeals. shifted to the consumers by including the same in the
computation of its operating expenses.
Issues:
The principle behind the inclusion of operating expenses in the
1. Whether in ruling that income tax paid by MERALCO should be determination of a just and reasonable rate is to allow the public
treated as part of its operating expenses and thus considered in utility to recoup the reasonable amount of expenses it has
determining the amount of increase in rates imposed by incurred in connection with the services it provides. Under the
MERALCO; and "net average investment method," properties and equipment
used in the operation of a public utility are entitled to a return
2. Whether in rejecting the net average investment method used only on the actual number of months they are in service during
by the COA and the ERB, it should adopt the average investment the period.
method used by MERALCO.
The petitions are granted but the decision of the Court of
Held: Appeals is reversed. Respondent Meralco is authorized to adopt
a rate adjustment in the amount of P0.017 per kilowatthour,
The regulation of rates to be charged by public utilities is effective with respect to MERALCO's billing cycles beginning
founded upon the police powers of the State and statutes February 1994. Further, in accordance with the decision of the
prescribing rules for the control and regulation of public utilities ERB dated February 16, 1998, the excess average amount of
are a valid exercise thereof. P0.167 per kilowatt-hour starting with the applicant's billing
cycles beginning February 1998 is ordered to be refunded to
When private property is used for a public purpose and is MERALCO's customers or correspondingly credited in their favor
affected with public interest, it ceases to be juris privati only and for future consumption.
becomes subject to regulation. The regulation is to promote the
common good. Submission to regulation may be withdrawn by 7
the owner by discontinuing use; but as long as use of the
property is continued, the same is subject to public regulation. G.R. No. 115044 January 27, 1995

In regulating rates charged by public utilities, the State protects HON. ALFREDO S. LIM, in his capacity as Mayor of Manila, and
the public against arbitrary and excessive rates while maintaining the City of Manila, petitioners,
the efficiency and quality of services rendered. However, the vs.
power to regulate rates does not give the State the right to HON. FELIPE G. PACQUING, as Judge, branch 40, Regional Trial
prescribe rates which are so low as to deprive the public utility of Court of Manila and ASSOCIATED CORPORATION, respondents.
a reasonable return on investment. Thus, the rates prescribed by
the State must be one that yields a fair return on the public
G.R. No. 117263 January 27, 1995
utility upon the value of the property performing the service and
TEOFISTO GUINGONA, JR. and DOMINADOR R. 2. Assuming that the City of Manila had the
CEPEDA, petitioners, power on 7 September 1971 to issue a Jai-Alai
vs. franchise to Associated Development
HON. VETINO REYES and ASSOCIATED DEVELOPMENT Corporation, whether the franchise granted is
CORPORATION, respondents. valied considering that the franchise has no
duration, and appears to be granted in
perpetuity.
PADILLA, J.:
3. Whether the City of Manila had the power to
These two (2) cases which are inter-related actually involve issue a Jai-Alai franchise to Associated
simple issues. if these issues have apparently become Development Corporation on 7 September
complicated, it is not by reason of their nature because of the 1971 in view of executive Order No. 392 dated
events and dramatis personae involved. 1 January 1951 which transferred from local
governments to the Games and Amusements
The petition in G.R. No. 115044 was dismissed by the First Board the power to regulate Jai-Alai.1
Division of this Court on 01 September 1994 based on a finding
that there was "no abuse of discretion, much less lack of or On 15 September 1994, respondent Associated Development
excess of jurisdiction, on the part of respondent judge Corporation (ADC) filed a petition for prohibition, mandamus,
[Pacquing]", in issuing the questioned orders. Judge Pacquing injunction and damages with prayer for temporary restraining
had earlier issued in Civil Case No. 88-45660, RTC of Manila, order and/or writ of preliminary injunction in the Regional Trial
Branch 40, the following orders which were assailed by the Court of Manila against petitioner Guingona and then GAB
Mayor of the City of Manila, Hon. Alfredo S. Lim, in said G.R. No. chairman Sumulong, docketed as Civil Case No. 94-71656,
115044: seeking to prevent GAB from withdrawing the provisional
authority that had earlier been granted to ADC. On the same
a. order dated 28 March 1994 directing Manila day, the RTC of Manila, Branch 4, through presiding Judge Vetino
mayor Alfredo S. Lim to issue Reyes, issued a temporary restraining order enjoining the GAB
the permit/license to operate the jai-alai in from withdrawing ADC's provisional authority. This temporary
favor of Associated Development Corporation restraining order was converted into a writ of preliminary
(ADC). injunction upon ADC's posting of a bond in the amount of
P2,000,000.00.2
b. order dated 11 April 1994 directing mayor
Lim to explain why he should not be cited for Subsequently, also in G.R. No. 115044, the Republic of the
contempt for non-compliance with the order Philippines, through the Games and Amusements Board, filed a
dated 28 March 1994. "Motion for Intervention; for Leave to File a Motion for
reconsideration in Intervention; and to Refer the case to the
Court En Banc" and later a "Motion for Leave to File
c. order dated 20 April 1994 reiterating the
Supplemental Motion for Reconsideration-in-Intervention and to
previous order directing Mayor Lim to
Admit Attached Supplemental Motion for Reconsideration-in-
immediately issue thepermit/license to
Intervention".
Associated Development Corporation (ADC).

In an En Banc Resolution dated 20 September 1994, this Court


The order dated 28 march 1994 was in turn issued upon motion
referred G.R. No. 115044 to the Court En Banc and required the
by ADC for execution of a final judgment rendered on 9
respondents therein to comment on the aforementioned
September 1988 which ordered the Manila Mayor to
motions.
immediately issue to ADC the permit/license to operate the jai-
alai in Manila, under Manila Ordinance No. 7065.
Meanwhile, Judge Reyes on 19 October 1994 issued another
order, this time, granting ADC a writ of
On 13 September 1994, petitioner Guingona (as executive
preliminary mandatory injunction against Guingona and GAB to
secretary) issued a directive to then chairman of the Games and
compel them to issue in favor of ADC the authority to operate
Amusements Board (GAB) Francisco R. Sumulong, jr. to hold in
jai-alai.
abeyance the grant of authority, or if any had been issued, to
withdraw such grant of authority, to Associated Development
Corporation to operate the jai-alai in the City of Manila, until the Guingona, as executive secretary, and Dominador Cepeda, Jr. as
following legal questions are properly resolved: the new GAB chairman, then filed the petition in G.R. No. 117263
assailing the abovementioned orders of respondent Judge Vetino
Reyes.
1. Whether P.D. 771 which revoked all existing
Jai-Alai franchisers issued by local governments
as of 20 August 1975 is unconstitutional.
On 25 October 1994, in G.R. No. 117263, this Court granted In the present case, the resulting injustice and injury, should the
petitioner's motion for leave to file supplemental petition and to national government's allegations be proven correct, are
admit attached supplemental petition with urgent prayer for manifest, since the latter has squarely questioned the very
restraining order. The Court further required respondents to file existence of a valid franchise to maintain and operate the jai-alai
their comment on the petition and supplemental petition with (which is a gambling operation) in favor of ADC. As will be more
urgent prayer for restraining order. The Court likewise set the extensively discussed later, the national government contends
case and all incidents thereof for hearing on 10 November 1994. that Manila Ordinance No. 7065 which purported to grant to
ADC a franchise to conduct jai-alai operations is void and ultra
At the hearing on 10 November 1994, the issues to be resolved vires since Republic Act No. 954, approved on 20 June 1953, or
were formulated by the Court as follows: very much earlier than said Ordinance No. 7065, the latter
approved 7 September 1971, in Section 4 thereof, requires
1. whether or not intervention by the Republic a legislative franchise, not a municipal franchise, for the
of the Philippines at this stage of the operation of jai-alai. Additionally, the national government
proceedings is proper; argues that even assuming, arguendo, that the abovementioned
ordinance is valid, ADC's franchise was nonetheless effectively
revoked by Presidential decree No. 771, issued on 20 August
2. assuming such intervention is proper,
1975, Sec. 3 of which expressly revoked all existing franchises
whether or not the Associated Development
and permits to operate all forms of gambling facilities (including
Corporation has a valid and subsisting franchise
the jai-alai) issued by local governments.
to maintain and operate the jai-alai;

On the other hand, ADC's position is that Ordinance No. 7065


3. whether or not there was grave abuse of
was validly enacted by the City of Manila pursuant to its
discretion committed by respondent Judge
delegated powers under it charter, Republic Act No. 409. ADC
Reyes in issuing the aforementioned temporary
also squarely assails the constitutionality of PD No. 771 as
restraining order (later writ of preliminary
violative of the equal protection and non-impairment clauses of
injunction); and
the Constitution. In this connection, counsel for ADC contends
that this Court should really rule on the validity of PD No. 771 to
4. whether or not there was grave abuse of
be able to determine whether ADC continues to possess a valid
discretion committed by respondent Judge
franchise.
Reyes in issuing the aforementioned writ of
preliminary mandatory injunction.
It will undoubtedly be a grave injustice to both parties in this
case if this Court were to shirk from ruling on the issue of
On the issue of the propriety of the intervention by the Republic
constitutionality of PD No. 771. Such issue has, in our view,
of the Philippines, a question was raised during the hearing on
become the very lis mota in resolving the present controversy, in
10 November 1994 as to whether intervention in G.R. No.
view of ADC's insistence that it was granted a valid and legal
115044 was the proper remedy for the national government to
franchise by Ordinance No. 7065 to operate the jai-alai.
take in questioning the existence of a valid ADC franchise to
operate the jai-alai or whether a separate action for quo
The time-honored doctrine is that all laws (PD No. 771 included)
warranto under Section 2, Rule 66 of the Rules of Court was the
are presumed valid and constitutional until or unless otherwise
proper remedy.
ruled by this Court. Not only this; Article XVIII Section 3 of the
Constitution states:
We need not belabor this issue since counsel for respondent ADC
agreed to the suggestion that this Court once and for all settle all
Sec. 3. All existing laws, decrees, executive
substantive issues raised by the parties in these cases. Moreover,
orders, proclamations, letters of instructions
this Court can consider the petition filed in G.R. No. 117263 as
and other executive issuances not inconsistent
one for quo warranto which is within the original jurisdiction of
with this Constitution shall remain operative
the Court under section 5(1), Article VIII of the Constitution. 3
until amended, repealed or revoked.
On the propriety of intervention by the Republic, however, it will
There is nothing on record to show or even suggest that PD No.
be recalled that this Court in Director of Lands v. Court of
771 has been repealed, altered or amended by any subsequent
Appeals (93 SCRA 238) allowed intervention even beyond the
law or presidential issuance (when the executive still exercised
period prescribed in Section 2 Rule 12 of the Rules of Court. The
legislative powers).
Court ruled in said case that a denial of the motions for
intervention would "lead the Court to commit an act of injustice
to the movants, to their successor-in-interest and to all Neither can it be tenably stated that the issue of the continued
purchasers for value and in good faith and thereby open the existence of ADC's franchise by reason of the unconstitutionality
door to fraud, falsehood and misrepresentation, should of PD No. 771 was settled in G.R. No. 115044, for the decision of
intervenors' claim be proven to be true." the Court's First Division in said case, aside from not being final,
cannot have the effect of nullifying PD No. 771 as
unconstitutional, since only the Court En Banc has that power totalizator or other device, method or system
under Article VIII, Section 4(2) of the Constitution.4 to bet or gamble on any basque pelota game or
event. (emphasis supplied).
And on the question of whether or not the government
is estopped from contesting ADC's possession of a valid Sec. 5. No person, operator or maintainer of a
franchise, the well-settled rule is that the State cannot be put in fronton with legislative franchise to conduct
estoppel by the mistakes or errors, if any, of its officials or agents basque pelota games shall offer, take, or
(Republic v. Intermediate Appellate Court, 209 SCRA 90) arrange bets on any basque pelota game or
event, or maintain or use a totalizator or other
Consequently, in the light of the foregoing expostulation, we device, method or system to bet or gamble on
conclude that the republic (in contra distinction to the City of any basque pelota game or event outside the
Manila) may be allowed to intervene in G.R. No. 115044. The place, enclosure, or fronton where the basque
Republic is intervening in G.R. No. 115044 in the exercise, not of pelota game is held. (emphasis supplied).
its business or proprietary functions, but in the exercise of its
governmental functions to protect public morals and promote 4. On 07 September 1971, however, the Municipal Board of
the general welfare. Manila nonetheless passed Ordinance No. 7065 entitled "An
Ordinance Authorizing the Mayor To Allow And Permit The
II Associated Development Corporation To Establish, Maintain And
Operate A Jai-Alai In The City Of Manila, Under Certain Terms
Anent the question of whether ADC has a valid franchise to And Conditions And For Other Purposes."
operate the Jai-Alai de Manila, a statement of the pertinent laws
is in order. 5. On 20 August 1975, Presidential Decree No. 771 was issued by
then President Marcos. The decree, entitled "Revoking All
1. The Charter of the City of Manila was enacted by Congress on Powers and Authority of Local Government(s) To Grant
18 June 1949. Section 18 thereof provides: Franchise, License or Permit And Regulate Wagers Or Betting By
The Public On Horse And Dog Races, Jai-Alai Or Basque Pelota,
And Other Forms Of Gambling", in Section 3 thereof, expressly
Sec. 18. Legislative Powers. — The Municipal
revoked all existing franchises and permits issued by local
Board shall have the following legislative
governments.
powers:

6. On 16 October 1975, Presidential Decree No. 810, entitled "An


xxx xxx xxx
Act granting The Philippine Jai-Alai And Amusement Corporation
A Franchise To Operate, Construct And Maintain A Fronton For
(jj) To tax, license, permit and regulate wagers
Basque Pelota And Similar Games of Skill In THE Greater Manila
or betting by the public on boxing, sipa,
Area," was promulgated.
bowling, billiards, pools, horse and dog races,
cockpits, jai-alai, roller or ice-skating on any
7 On 08 May 1987, then President Aquino, by virtue of Article
sporting or athletic contests, as well as grant
XVIII, Section 6, of the Constitution, which allowed the
exclusive rights to establishments for this
incumbent legislative powers until the first Congress was
purpose, notwithstanding any existing law to
convened, issued Executive Order No. 169 expressly repealing PD
the contrary.
810 and revoking and cancelling the franchise granted to the
Philippine Jai-Alai and Amusement Corporation.
2. On 1 January 1951, Executive Order No. 392 was issued
transferring the authority to regulate jai-alais from local
Petitioners in G.R. No. 117263 argue that Republic Act No. 954
government to the Games and Amusements Board (GAB).
effectively removed the power of the Municipal Board of Manila
to grant franchises for gambling operations. It is argued that the
3. On 20 June 1953, Congress enacted Republic Act No. 954,
term "legislative franchise" in Rep. Act No. 954 is used to refer to
entitled "An Act to Prohibit With Horse Races and Basque Pelota
franchises issued by Congress.
Games (Jai-Alai), And To Prescribe Penalties For Its Violation".
The provisions of Republic Act No. 954 relating to jai-alai are as
On the other hand, ADC contends that Republic Act N. 409
follows:
(Manila Chapter) gives legislative powers to the Municipal Board
to grant franchises, and since Republic Act No. 954 does not
Sec. 4. No person, or group of specifically qualify the word "legislative" as referring exclusively
persons other than the operator or maintainer
to Congress, then Rep. Act No. 954 did not remove the power of
of a fronton with legislative franchise to
the Municipal Board under Section 18(jj) of Republic Act No. 409
conduct basque pelota games (Jai-alai), shall and consequently it was within the power of the City of Manila
offer, to take or arrange bets on any basque
to allow ADC to operate the jai-alai in the City of Manila.
pelota game or event, or maintain or use a
On this point, the government counter-argues that the term Articles 195-199 of the Revised Penal Code, unless it is shown
"legislative powers" is used in Rep. Act No. 409 merely to that a later or special law had been passed allowing it. ADC has
distinguish the powers under Section 18 of the law from the not shown any such special law.
other powers of the Municipal Board, but that the term
"legislative franchise" in Rep. Act No. 954 refers to a franchise Republic Act No. 409 (the Revised Charter of the City of Manila)
granted solely by Congress. which was enacted by Congress on 18 June 1949 gave the
Municipal Board certain delegated legislative powers under
Further, the government argues that Executive Order No. 392 Section 18. A perusal of the powers enumerated under Section
dated 01 January 1951 transferred even the power to regulate 18 shows that these powers are basically regulatory in
Jai-Alai from the local governments to the Games and nature.5 The regulatory nature of these powers finds support not
Amusements Board (GAB), a national government agency. only in the plain words of the enumerations under Section 28 but
also in this Court's ruling in People v. Vera (65 Phil. 56).
It is worthy of note that neither of the authorities relied upon by
ADC to support its alleged possession of a valid franchise, namely In Vera, this Court declared that a law which gives the Provincial
the Charter of the City of Manila (Rep. Act No. 409) and Manila Board the discretion to determine whether or not a law of
Ordinance No. 7065 uses the word "franchise". Rep. Act No. 409 general application (such as, the Probation law-Act No. 4221)
empowers the Municipal Board of Manila to "tax, license, would or would not be operative within the province, is
permit and regulatewagers or betting" and to "grant unconstitutional for being an undue delegation of legislative
exclusive rights to establishments", while Ordinance No. 7065 power.
authorized the Manila City Mayor to "allow and permit" ADC to
operate jai-alai facilities in the City of Manila. From the ruling in Vera, it would be logical to conclude that, if
ADC's arguments were to prevail, this Court would likewise
It is clear from the foregoing that Congress did not delegate to declare Section 18(jj) of the Revised Charter of Manila
the City of Manila the power "to franchise" wagers or betting, unconstitutional for the power it would delegate to the
including the jai-alai, but retained for itself such power "to Municipal Board of Manila would give the latter the absolute and
franchise". What Congress delegated to the City of Manila in unlimited discretion to render the penal code provisions on
Rep. Act No. 409, with respect to wagers or betting, was the gambling inapplicable or inoperative to persons or entities issued
power to "license, permit, or regulate" which therefore means permits to operate gambling establishments in the City of
that a license or permit issued by the City of Manila to operate a Manila.
wager or betting activity, such as the jai-alai where bets are
accepted, would not amount to something meaningful UNLESS We need not go to this extent, however, since the rule is that
the holder of the permit or license was also FRANCHISED by the laws must be presumed valid, constitutional and in harmony
national government to so operate. Moreover, even this power with other laws. Thus, the relevant provisions of Rep. Acts Nos.
to license, permit, or regulate wagers or betting on jai-alai was 409 and 954 and Ordinance No. 7065 should be taken together
removed from local governments, including the City of Manila, and it should then be clear that the legislative powers of the
and transferred to the GAB on 1 January 1951 by Executive Order Municipal Board should be understood to be regulatory in nature
No. 392. The net result is that the authority to grant franchises and that Republic Act No. 954 should be understood to refer
for the operation of jai-alai frontons is in Congress, while the to congressional franchises, as a necessity for the operation of
regulatory function is vested in the GAB. jai-alai.

In relation, therefore, to the facts of this case, since ADC has no We need not, however, again belabor this issue further since the
franchise from Congress to operate the jai-alai, it may not so task at hand which will ultimately, and with finality, decide the
operate even if its has a license or permit from the City Mayor to issues in this case is to determine whether PD No. 771 validly
operate the jai-alai in the City of Manila. revoked ADC's franchise to operate the jai-alai, assuming
(without conceding) that it indeed possessed such franchise
It cannot be overlooked, in this connection, that the Revised under Ordinance No. 7065.
Penal Code punishes gambling and betting under Articles 195 to
199 thereof. Gambling is thus generally prohibited by law, unless ADC argues that PD No. 771 is unconstitutional for being
another law is enacted by Congress expressly exempting or violative of the equal protection and non-impairment provisions
excluding certain forms of gambling from the reach of criminal of the Constitution. On the other hand, the government
law. Among these form the reach of criminal law. Among these contends that PD No. 771 is a valid exercise of
forms of gambling allowed by special law are the horse races the inherent police power of the State.
authorized by Republic Acts Nos. 309 and 983 and gambling
casinos authorized under Presidential Decree No. 1869. The police power has been described as the least limitable of the
inherent powers of the State. It is based on the ancient doctrine
While jai-alai as a sport is not illegal per se, the accepting of bets — salus populi est suprema lex (the welfare of the people is the
or wagers on the results of jai-alai games is undoubtedly supreme law.) In the early case of Rubi v. Provincial Board of
gambling and, therefore, a criminal offense punishable under
Mindoro (39 Phil. 660), this Court through Mr. Justice George A. prohibited jueteng and monte but permits
Malcolm stated thus: lotteries, cockfighting and horse-racing. In
making such choices, Congress has consulted
The police power of the State . . . is a power co- its own wisdom, which this Court has no
extensive with self-protection, and is not authority to review, much less reverse. Well
inaptly termed the "law of overruling has it been said that courts do not sit to resolve
necessity." It may be said to be that inherent the merits of conflicting theories. That is the
and plenary power in the State which enables prerogative of the political departments. It is
it to prohibit all things hurtful to the comfort, settled that questions regarding wisdom,
safety and welfare of society. Carried onward morality and practicability of statutes are not
by the current of legislation, the judiciary rarely addressed to the judiciary but may be resolved
attempts to dam the onrushing power of only by the executive and legislative
legislative discretion, provided the purposes of departments, to which the function belongs in
the law do not go beyond the great principles our scheme of government. (Emphasis
that mean security for the public welfare or do supplied)
not arbitrarily interfere with the right of the
individual. Talks regarding the supposed vanishing line
between right and privilege in American constitutional law has
In the matter of PD No. 771, the purpose of the law is clearly no relevance in the context of these cases since the reference
stated in the "whereas clause" as follows: there is to economic regulations. On the other hand, jai-alai is
not a mere economic activity which the law seeks to regulate. It
WHEREAS, it has been reported that in spite of is essentially gambling and whether it should be permitted and,
the current drive of our law enforcement if so, under what conditions are questions primarily for the
agencies against vices and illegal gambling, lawmaking authority to determine, talking into account national
these social ills are still prevalent in many areas and local interests. Here, it is the police power of the State that
of the country; is paramount.

WHEREAS, there is need to consolidate all the ADC questions the motive for the issuance of PD Nos. 771.
efforts of the government to eradicate and Clearly, however, this Court cannot look into allegations that PD
minimize vices and other forms of social ills in No. 771 was enacted to benefit a select group which was later
pursuance of the social and economic given authority to operate the jai-alai under PD No. 810. The
development program under the new society; examination of legislative motivation is generally prohibited.
(Palmer v. Thompson, 403 U.S. 217, 29 L. Ed. 2d 438 [1971] per
Black, J.) There is, the first place, absolute lack of evidence to
WHEREAS, in order to effectively control and
support ADC's allegation of improper motivation in the issuance
regulate wagers or betting by the public on
of PD No. 771. In the second place, as already averred, this Court
horse and dog races, jai-alai and other forms of
cannot go behind the expressed and proclaimed purposes of PD
gambling there is a necessity to transfer the
No. 771, which are reasonable and even laudable.
issuance of permit and/or franchise from local
government to the National Government.
It should also be remembered that PD No. 771 provides that
the national government can subsequently grant franchises
It cannot be argued that the control and regulation of gambling
"upon proper application and verification of the qualifications of
do not promote public morals and welfare. Gambling is
the applicant." ADC has not alleged that it filed an application for
essentially antagonistic and self-reliance. It breeds indolence and
a franchise with the national government subsequent to the
erodes the value of good, honest and hard work. It is, as very
enactment of PD No. 771; thus, the allegations abovementioned
aptly stated by PD No. 771, a vice and a social ill which
(of preference to a select group) are based on conjectures,
government must minimize (if not eradicate) in pursuit of social
speculations and imagined biases which do not warrant the
and economic development.
consideration of this Court.
In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R.
On the other hand, it is noteworthy that while then president
No. 111097), this Court stated thru Mr. Justice Isagani A. Cruz:
Aquino issued Executive Order No. 169 revoking PD No. 810
(which granted a franchise to a Marcos-crony to operate the jai-
In the exercise of its own discretion, the alai), she did not scrap or repeal PD No. 771 which had revoked
legislative power may prohibit gambling
all franchises to operate jai-alais issued by local governments,
altogether or allow it without limitation or it
thereby re-affirming the government policy that franchises to
may prohibit some forms of gambling and
operate jai-alais are for the national government (not local
allow others for whatever reasons it may
governments) to consider and approve.
consider sufficient. Thus, it has
On the alleged violation of the non-impairment and equal comprehensive enough reasonably to include the general object
protection clauses of the Constitution, it should be remembered which the statute seeks to effect, without expressing each and
that a franchise is not in the strict sense a simple contract but every end and means necessary or convenient for the
rather it is more importantly, a mere privilege specially in accomplishing of the objective.
matters which are within the government's power to regulate
and even prohibit through the exercise of the police power. III
Thus, a gambling franchise is always subject to the exercise of
police power for the public welfare. On the issue of whether or not there was grave abuse of
discretion committed by respondent Judge Reyes in issuing the
In RCPI v. NTC (150 SCRA 450), we held that: temporary restraining order (later converted to a writ of
preliminary injunction) and the writ of
A franchise started out as a "royal privilege or preliminary mandatory injunction, we hold and rule there was.
(a) branch of the King's prerogative, subsisting
in the hands of a subject." This definition was Section 3, Rule 58 of the rules of Court provides for the grounds
given by Finch, adopted by Blackstone, and for the issuance of a preliminary injunction. While ADC could
accepted by every authority since . . . Today, a allege these grounds, respondent judge should have taken
franchise being merely a privilege emanating judicial notice of Republic Act No. 954 and PD 771, under Section
from the sovereign power of the state and 1 rule 129 of the Rules of court. These laws negate the existence
owing its existence to a grant, is subject to of any legal right on the part of ADC to the reliefs it sought so as
regulation by the state itself by virtue of its to justify the issuance of a writ of preliminary injunction. since
police power through its administrative PD No. 771 and Republic Act No. 954 are presumed valid and
agencies. constitutional until ruled otherwise by the Supreme Court after
due hearing, ADC was not entitled to the writs issued and
There is a stronger reason for holding ADC's permit to be a mere consequently there was grave abuse of discretion in issuing
privilege because jai-alai, when played for bets, is pure and them.
simple gambling. To analogize a gambling franchise for the
operation of a public utility, such as public transportation WHEREFORE, for the foregoing reasons, judgment is hereby
company, is to trivialize the great historic origin of this branch of rendered:
royal privilege.
1. allowing the Republic of the Philippines to
As earlier noted, ADC has not alleged ever applying for a intervene in G.R. No. 115044.
franchise under the provisions of PD No. 771. and yet, the
purpose of PD No. 771 is quite clear from its provisions, i.e., to 2. declaring Presidential Decree No. 771 valid
give to the national government the exclusive power to grant and constitutional.
gambling franchises. Thus, all franchises then existing were
revoked but were made subject to reissuance by the national
3. declaring that respondent Associated
government upon compliance by the applicant with government-
Development corporation (ADC) does not
set qualifications and requirements.
possess the required congressional franchise to
operate and conduct the jai-alai under Republic
There was no violation by PD No. 771 of the equal protection Act No. 954 and Presidential Decree No. 771.
clause since the decree revoked all franchises issued by local
governments without qualification or exception. ADC cannot
4. setting aside the writs of preliminary
allege violation of the equal protection clause simply because it
injunction and preliminary mandatory
was the only one affected by the decree, for as correctly pointed
injunction issued by respondent Judge Vetino
out by the government, ADC was not singled out when all jai-alai
Reyes in civil Case No. 94-71656.
franchises were revoked. Besides, it is too late in the day for ADC
to seek redress for alleged violation of its constitutional rights for
SO ORDERED.
it could have raised these issues as early as 1975, almost twenty
920) years ago.
Feliciano, Bidin, Regalado, Romero, Bellosillo and Mendoza, JJ.,
concur.
Finally, we do not agree that Section 3 of PD No. 771 and the
requirement of a legislative franchise in Republic Act No. 954 are
"riders" to the two 92) laws and are violative of the rule that Narvasa, C.J. and Francisco, JJ., took no part.
laws should embrace one subject which shall be expressed in the
title, as argued by ADC. In Cordero v. Cabatuando (6 SCRA 418),
this Court ruled that the requirement under the constitution that
all laws should embrace only one subject which shall be
expressed in the title is sufficiently met if the title is
from local governments to the GAB the power to regulate jai-
alai.
Separate Opinions
Reacting to the cancellation of its provisional authority to
maintain jai-alai operations, ADC, on September 15, 1994 filed a
petition for prohibition, mandamus, injunction and damages
KAPUNAN, J., concurring: with prayer for temporary restraining order and writ of
preliminary injunction in the Manila Regional Trial Court of
against Executive Secretary Guingona and Chairman Sumulong.
Government encroachments on private property however, valid,
The Regional Trial court of manila, Branch 4, through Judge
are always subject to limitations imposed by the due process and
Vetino Reyes on the same day issued an order enjoining the
impairment of contracts clauses of the Constitution. The
Executive Secretary and the GAB Chairman from implementing
government challenge in the case at bench, ostensibly involving
their directive and memorandum, respectively.
a franchise granted pursuant to legitimate local legislative
authority, on the surface appears to be an easy one, clothed, as
it were in the State's inherent and almost illimitable prerogative On September 16, 1994 GAB, representing the Republic of the
to promote the general welfare and the common good. As the Philippines, filed a motion for intervention, for leave to file a
challenge involves a facile conflict between good and evil, motion for reconsideration-in-intervention and for reference of
between a universally recognized vice and the State's virtuous the case to the Court en banc in G.R. No. 115044. Acting on this
posture, the instant case lends itself to easy adjudication. motion, the First Division referred the case to the Court en banc,
which, in a resolution dated 20 September 1994, accepted the
same and required the respondents therein to comment.
Not necessarily. Economic realities have blurred distinctions. The
State itself, though in virtuous garb, has at various times allowed
a relaxation of existing rules proscribing gambling and devised a On October 11, 1994 the Executive Secretary and the new GAB
system of regulations, local and national, through which Chairman Domingo Cepeda, Jr. filed with this Court a petition
gambling and otherwise illicit gaming operations may be for certiorari, prohibition and mandamus assailing Judge Vetino
maintained by those licensed to do so. As the system has never Reyes' earlier order.
been perfect, conflict, such as that which existed in the case at
bench, occasionally arises. On October 19. 1994, Judge Reyes issued another order granting
the ADB's motion for a writ of preliminary mandatory injunction
The constitutionality of P.D. 771 was not in issue in Lim vs. against the Executive Secretary and the GAB Chairman and to
Pacquing, promulgated by the court's first Division last compel them to issue the necessary authority, licenses and
September, 1994, where this court sustained an order by Judge working permits to the ADC, its personnel and players.
Pacquing issued in Civil Case No. 88-45660 compelling Manila
Mayor Alfredo S. Lim to issue a permit to operate a jail fronton in The government sought leave to file a supplemental petition
favor of the Associated Development Corporation (ADC) (and to admit attached supplemental petition) with urgent
pursuant to Manila City Ordinance No. 7065. prayer for a restraining order assailing the October 19, 1994
Order of Judge Reyes. We granted leave to file said supplemental
After the City of Manila subsequently granted ADC a permit to petition and to admit supplemental petition and required
operate the jai-alai fronton, Chairman Francisco Sumulong, Jr. of respondents therein to file their comment on October 25, 1994.
the Games and Amusements Board issued on September 9, 1994
a provisional authority to open the fronton subject to certain The ADC maintains it original position that Ordinance No. 7065,
conditions imposed therein. In relation to this, the GAB likewise enacted pursuant to the Charter of the City of Manila under
issued to the ADC, on 12 September 1994, License No. 94-008 Republic Act No. 409 granted a valid and
upon payment of the corresponding fees. subsisting municipal franchise for the operation of the Basque
pelota game jai alai. In response to the government's vehement
On September 13, 1994, Executive Secretary Teofisto Guingona objections against ADC's operation of its gambling
directed GAB Chairman Sumulong "to hold in abeyance the grant operations2 the ADC for the first time challenged the
of authority or if any has been issued, to withdraw such grant of constitutional validity of P.D. No. 771 insofar as it revoked the
authority"1 to the ADC. Consequently, on September 14, 1994, authority granted to it by Ordinance No. 7065 as violative of the
the GAB Chairman revoked the provisional authority issued by non-impairment of contracts and equal protection clauses of the
his office, until the legal issues raised in the September 13 constitution. Ordinance 7065 reads:
directive of the Executive Secretary are resolved in the proper
court. Said directive identified the legal issues as centering on 1) Sec. 1. The Mayor is authorized, as he is hereby
the constitutionality of P.D. 771; 2) the validity of the apparent authorized to allow and permit the Associated
grant in perpetuity of a municipal franchise to maintain jai-alai Development Corporation to establish,
operations; and, 3) the power of the city of Manila to issue a jai- maintain and operate a jai-alai in the City of
alai franchise in view of Executive Order 392 which transferred Manila under the following terms and
conditions and such other terms and Clearly the, if Ordinance 7065 merely grants a permit or a license
conditions as he (the Mayor) may prescribe for to operate the jai-alai fronton, I see no conflict with a national
good reasons of general interest: law, duly enacted pursuant to legitime franchise to operate
certain gambling and gaming operations, generally viewed as
a. That the construction, establishment, and deleterious to the public welfare and morals, for the purpose of
maintenance of the jai-alai shall be at a place regulating the same and raising revenue. In other words, the
permissible under existing zoning ordinances of national government may well validly require operators of such
Manila; establishments to first secure a legislative franchise before
starting their operations. After securing the proper legislative
b. That the games to be played daily shall franchise, they may take then exercise whatever authority
commence not earlier than 5:00 o'clock (sic) in granted to them by local legislative bodies pursuant to the
the afternoon; permits or licenses granted by these bodies. This is essentially
the spirit ordained by at least two legislative issuances relating to
jai-alai and other gambling operations passed before and after
c. That the City of Manila will receive a share of
the Manila City Council issued the ADC's permit to operate.
21/2% of the annual gross receipts of all
wagers or bets ½% of which will accrue to the
Games and Amusements Board as now In June of 1952, Congress enacted R.A. 392 which forbade the
provided by law; taking or arranging of bets on any basque pelota game by any
person or entity other than one with a legislative
franchise.3 After the ADC was issued its permit by the City of
d. That the corporation will in addition pay to
Manila in 1971, President Marcos issued P.D. 771 pursuant to his
the city an annual license fee of P3,000.00 and
legislative powers during martial Law, which revoked local
a daily permit fee of P200.00;
authority to grant franchise to certain gambling operations
including jai-alai. Section 3 thereof expressly revoked existing
e. That the corporation will to insure its faithful gambling franchise issued by the local governments. When
compliance of all the terms and conditions
President Corazon Aquino cancelled the franchise granted to the
under this ordinance, put up a performance
Philippine Jai-alai and Amusement Corporation in 1987, she kept
bond from a surety acceptable to the City, in
P.D. 771, which revoked all authority by local governments to
the amount of at least P30,000.00.
issue franchises for gambling and gaming establishments on one
hand, and the municipal ordinance of the City of Manila, granting
xxx xxx xxx a permit or license to operate subject to compliance with the
provisions found therein, on the other hand, a legislative
Sec. 3 This ordinance shall take effect upon its franchise may be required by the government as a condition for
approval. certain gambling operations. After obtaining such franchise, the
franchisee may establish operations in any city or municipality
The above-quoted ordinance is notable in two respects: 1) the allowed under the terms of the legislative franchise, subject to
absence of a period of expiration suggests that the grant of local licensing requirements. While the City of Manila granted a
authority to operate the Basque pelota game jai-alai seems to permit to operate under Ordinance No. 7065, this permit or
have been granted in perpetuity and 2) while the grant of authority was at best only a local permit to operate and could be
authority under the Ordinance was made pursuant to R.A. 409, exercised by the ADC only after it shall have obtained a
the City Charter of Manila, the authority granted could best be legislative franchise.
viewed as a grant of license or permit, not a franchise. Nowhere
is it pretended that Ordinance 7065 is a franchise enacted This skirts the constitutional issue. Both P.D. 771 and Ordinance
pursuant to the legislative powers of the Municipal Board of the 7065 can stand alongside each other if one looks at the authority
City of Manila under Section 18 (jj) thereof. granted by the charter of the City of Manila together with
Ordinance No. 7065 merely as an authority to "allow" and
The absence of authority of the Manila Municipal Board to issue "permit" the operation of jai-alai facilities within the City of
a franchise, notwithstanding its legislative powers, is Manila. While the constitutional issue was raised by the
furthermore evident in the above-cited Charter provision respondent corporation in the case at bench, I see no valid
regulating gambling and other gaming establishments which reason why we should jump into the fray of constitutional
enumerates the following powers: adjudication in this case, or on every other opportunity where a
constitutional issue is raised by parties before us. It is a settled
(jj) To tax, license, permit and regulate wagers rule of avoidance, judiciously framed by the United States
4
of betting by the public on boxing . . . cockpits, Supreme Court in Ashwander v. TVA that where a controversy
jai-alai . . . as well as this purpose, may be settled on a platform other than one involving
notwithstanding any existing law to the constitutional adjudication, the court should exercise becoming
contrary. modesty and avoid the constitutional question.
The State has every legitimate right, under the police power, to consider the petition filed in G.R. No. 117263 as one for quo
regulate gambling operations5 by requiring legislative franchises warranto.
for such operations. Gambling, in all its forms, unless specifically
authorized by law and carefully regulated pursuant to such law, WHEREFORE, on the basis of the foregoing premises, judgment is
is generally proscribed as offensive to the public morals and the hereby rendered:
public good. In maintaining a "state policy" on various forms of
gambling, the political branches of government are best 1. Allowing the republic to intervene in G.R.
equipped to regulate and control such activities and therefore No. 115044.
assume full responsibility to the people for such
policy.6 Parenthetically, gambling in all its forms, is generally
2. Declaring that P.D. 771 is a valid and
immoral.
subsisting law.

The disturbing implications of a grant of a "franchise," in


3. Declaring that the ADC does not possess the
perpetuity, to the ADC militates against its posture that the
required legislative franchise to operate the jai-
government's insistence that the ADC first obtain a legislative
alai under R.A. 954 and P.D. 771.
franchise violates the equal protection and impairment of
Contracts clauses of the Constitution. By their very nature,
franchise are subject to amendment, alteration or revocation by 4. Setting aside the writs of preliminary
injunction and preliminary mandatory
the State whenever appropriate. Under the exercise of its police
injunction issued by Judge Vetino Reyes.
power, the State through its requirement for permits, licenses
and franchises to operate, undertakes to regulate what would
otherwise be an illegal activity punished by existing penal laws. DAVIDE, JR., J., concurring:
The police power to establish all manner of regulation of
otherwise illicit, immoral and illegal activities is full, virtually The core issues submitted for the Court's resolution are: (1) in
illimitable and plenary.7 G.R. No. 115044, whether intervention by the republic of the
Philippines is proper, and (2) in G.R. No. 117263, whether public
In Edu v Ericta8 we defined the police power as "the state respondent Judge Vetino Reyes acted with grave abuse of
authority to enact legislation that may interfere with personal discretion in issuing the temporary restraining order and
liberty or property in order to promote the general welfare." In subsequently the writ of preliminary mandatory injunction in
its exercise, the State may impose appropriate impositions or Civil case No. 94-71656.
restraints upon liberty or property in order to foster the common
good.9 Such imposition or restraint neither violates the I
impairment of contracts nor the equal protection clauses of the
Constitution if the purpose is ultimately the public good.10 As to the first issue, I submit that unless we either amend the
rule on intervention or suspend it, the motion to intervene must
Restraints on property are not examined with the same be denied. Under Section 2, Rule 12 of the Rules of Court, such
microscopic scrutiny as restrictions on liberty. 11 Such restraints, motion may be allowed only before or during a trial. Said section
sometimes bordering on outright violations of the impairments reads:
of contract principle have been made by this Court for the
general welfare of the people. Justice Holmes in Noble State Sec. 2. Intervention. — A person may, before or
Bank v. Haskel 12 once expansively described the police power as during a trial, be permitted by the court, in its
"extending to all public needs." Franchise and licensing discretion, to intervene in an action, if he has
regulations aimed at protecting the public from the pernicious legal interest in the matter in litigation, or in
effects of gambling are extensions of the police power addressed the success of either of the parties, or an
to a legitimate public need. interest against both, or when he is so situated
as to be adversely affected by a distribution or
In Lim vs. Pacquing, I voted to sustain the ADC's position on other disposition of property in the custody of
issues almost purely procedural. A thorough analysis of the new the court or of an officer thereof.
issues raised this time, compels a different result since it is
plainly obvious that the ADC, while possessing a permit to This provision was taken from Section 1, Rule 13 of the old Rules
operate pursuant to Ordinance 7065 of the City of Manila, still of Court with the modification that the phrase "at any period of a
has to obtain a legislative franchise, P.D. 771 being valid and trial" in the latter was changed to "before or during a trial." 1
constitutional.
Section 1, Rule 13 of the old Rules of Court was based on Section
On the question of the propriety of the Republic of the 121 of the Code of Civil Procedure which, in turn, was taken from
Philippine's intervention late in the proceedings in G.R. No. Section 387 of the Code of Civil procedure of California.2
117263, the ADC counsel's agreeing to have all the issues raised
by the parties in the case at bench paves the way for us to
The phrase "at any period of a trial" in Section 1, Rule 13 of the But over and above these considerations and
old Rules of Court has been construed to mean the period for the circumstances which We have pointed out,
representation of evidence by both parties.3 And the phrase there is the basic and fundamental
"before or during the trial" in Section 2, Rule 12 of the present requirement under the Rules of Court, Section
Rules of Court "simply means anytime before the rendition of 7, Rule 3, that "Parties in interest without
the final judgment."4Accordingly, intervention could not be whom no final determination can be had of an
allowed after the trial had been concluded5 or after the trial and action shall be joined either as plaintiff or
decision of the original case.6 defendants." The joinder of indispensable
parties is compulsory under any and all
Fundamentally then, intervention is never an independent action conditions, their presence being a sine qua
but is ancillary and supplemental to an existing litigation. Its non of the exercise of judicial power. [Borlasa
purpose is not to obstruct nor unnecessarily delay the placid vs. Polistico, 47 Phil. 345, 348].
operation of the machinery of trial, but merely to afford one not
an original party, yet having a certain right or interest in the The herein movants, Greenfield Development
pending case, the opportunity to appear and be joined so he Corporation, Alabang Development
could assert or protect such right or interest.7 Corporation, Ramon D. Bagatsing, and all
buyers from them, at least those with
The grant of an intervention is left to the discretion of the court. ostensible proprietary interests as the
Paragraph (b), Section 2, Rule 12 of the Rules of Court provides: MERALCO, Alabang Hills Subdivision, Cielito
Homes Subdivision, Tahanan Village, the
(b) Discretion of court. — In allowing or Ministry of Highways insofar as the South
disallowing a motion for intervention, the Super Highway is affected, are indispensable
court, in the exercise of discretion, shall parties to these proceedings as it has been
consider whether or not the intervention will shown affirmatively that they have such an
unduly delay or prejudice the adjudication of interest in the controversy or subject matter
the rights of the original parties and whether that a final adjudication cannot be made, in
or not the intervenor's rights may be fully their absence, without injuring or affecting
protected in a separate proceeding. such interest. The joinder must be ordered in
order to prevent multiplicity of suits, so that
the whole matter in dispute may be
It is thus clear that, by its very nature, intervention presupposes
determined once and for all in one litigation.
an existing litigation or a pending case,8 and by the opening
paragraph of Section 2, Rule 12 of the Rules the Rules of Court, it
may be properly filed only before or during the trial of the said And, squarely on the aspect of intervention, it found that the
case. Even if it is filed before or during the trial, it should be denial thereof
denied if it will unduly delay or prejudice the adjudication of the
rights of the original parties and if the intervenor's rights may be will lead the Court to commit an act of injustice
fully protected in a separate proceeding.9 to the movants, to their successors-in-interest
and to all purchasers for value and in good
It is not disputed that the motion to intervene was filed only on faith and thereby open the door to fraud,
16 September 1994, or on the fifteenth (15th) day after the First falsehood and misrepresentation, should
Division had promulgated the decision, and after petitioner intervenors' claims be proven to be true. For it
Mayor Alfredo Lim complied with or voluntarily satisfied the cannot be gainsaid that if the petition for
judgment. The latter act brought to a definite end or effectively reconstitution is finally granted, the chaos and
terminated G.R. No. 115044. Consequently, intervention herein confusion arising from a situation where the
is impermissible under the rules. To grant it would be a certificates of title of the movants covering
capricious exercise of discretion. The decision of this Court large areas of land overlap or encroach on
in Director of Lands vs. Court of properties the title to which is being sought to
Appeals 10 cannot be used to sanction such capriciousness for be reconstituted by private respondent, who
such decision cannot be expanded further to justify a new herself indicates in her Opposition that,
doctrine on intervention. In the first place, the motions to according to the Director of Lands, the
intervene in the said case were filed before the rendition by this overlapping embraces some 87 hectares only,
Court of its decision therein. In the second place, there were is certain and inevitable.
unusual and peculiar circumstances in the said case which this
Court took into account. Of paramount importance was the fact Then too, it may be stressed that said case originated from a
that the prospective intervenors were indispensable parties, and proceeding to reconstitute a certificate of title filed by private
so this Court stated therein: respondent. After trial, the Court of First Instance issued an
order denying the petition for insufficiency of evidence. After a
motion for new trial was granted and a hearing to receive the
newly discovered evidence was completed, the court issued an stated in my supplemental concurring opinion in G.R. No.
order again denying the reconstitution sought for as it still 115044:
doubted the authenticity and genuineness of the Transfer of
Certificate of Title sought to be reconstituted. The private Secondly, to make my position clear that the
respondent appealed the order to the Court of Appeals which dismissal of the petition should not be
thereafter promulgated a decision reversing the aforesaid orders construed as compelling the City of Manila to
of the trial court. The Director of Land, which was the remaining authorize gambling by allowing betting on the
oppositor, filed a motion for a new period to file a motion for results of jai-alai. The decision merely
reconsideration of the decision alleging excusable negligence. dismissed the petition because the Court found
Private respondent filed an opposition thereto. Without waiting " no abuse of discretion, much less lack of
for the resolution of the motion, the Director filed a motion to excess of jurisdiction, on the part of the
admit the motion for reconsideration attaching thereto said respondent judge" in issuing the challenged
motion for reconsideration. The Court of Appeals issued a order directing the petitioner to issue a permit
resolution denying both motions on the ground that the decision or license in favor of the private respondent
had already become final. This was the resolution which the pursuant to Ordinance No. 7065. That order
Director assailed in his petition for review filed with this Court. was to enforce the final and executory decision
of the Regional Trial Court of 9 September
Considering then that the intervention in the case at bar was 1988 in Civil Case No. 88-45660, the appeal
commenced only after the decision had been executed, a therefrom to the Court of Appeals by the City
suspension of the Rules to accommodate the motion for of Manila having been withdrawn by it on 9
intervention and the intervention itself would be arbitrary. The February 1989. That decision ordered the City
Government is not without any other recourse to protect any of Manila to immediately issue to the private
right or interest which the decision might have impaired. respondent "the permit/license required under
Ordinance No. 7065." The City of Manila did in
May the motion to intervene and intervention proper be, fact issue the required permit or license to the
nevertheless, treated as a petition for quo warranto? The private respondent for the operation of the jai-
majority opinion answers it in the affirmative because all the alai in Manila for the years 1988 to 1992.
essential requisites for a petition for quo warranto are present in Nevertheless, when the jai-alai complex was
said pleadings. I am almost tempted to agree with that opinion if almost completed, the City Mayor refused to
not for the fact that there is pending before the Regional Trial renew the Mayor's Permit.
Court of Manila Civil Case No. 94-71656 which is a petition for
prohibition, mandamus, injunction, and damages filed by the There is a clear distinction between the initial
Associated Development Corporation against Executive Secretary duty of the City Mayor under Ordinance No.
Guingona and then Games and Amusement Board (GAB) 7065 to issue the necessary license or permit
Chairman Sumulong. That is the more appropriate forum where to establish the jai-alai fronton and to maintain
the Government and petitioner Guingona may challenge the and operate the jai-alai, and his subsequent
validity of ADC's franchise. Its filing was provoked by the discretion to impose other terms and
withdrawal by the GAB of the provisional authority it granted to conditions for the final contract relative to such
ADC in view of the 13 September 1994 directive of Executive operation. The trial court specifically said so in
Secretary Guingona informing the GAB of sufficient bases to hold its decision of 9 September 1989. Thus:
in abeyance the operation of the jai-alai until the legal questions
into the validity of the franchise issued to ADC. Consequently, it A suggestion has been made
is to be logically presumed that for its affirmative defenses in in the Answer that a writ
Civil Case No. 94-71656 the Government would raise the same of mandamus will not lie
issues raised in the intervention in G.R. No. 117263. against respondents,
particularly the Mayor,
Accordingly, I vote to deny the motion for intervention in G.R. because "the availment of
No. 115044. the franchise . . . is subject to
the terms and conditions
II which the respondent Mayor
may impose."
However, I vote to partially grant the petition in G.R. No. 117263
insofar as wagering or betting on the results order and the A careful reading however, of
preliminary mandatory injunction issued by respondent Judge Ordinances 7065 will readily
cannot legally and validly allow such wagering and betting. It was show that the discretion, if
precisely for this reason that I earlier voted to grant a temporary any, allowed respondent
restraining order in G.R. No. 115044 and G.R. No. 117263 to Mayor, under the ordinance,
restrain wagering or betting. I wish to reiterate here what I will be exercisable only after
the permit, which he is "[b]etting on the results of sports, athletic
mandated to issue, had been competitions, or games of skill may be
issued and the jai-alai fronton prohibited by local ordinances."
is already operational. The
ordinance stipulates that the P.D. No. 483, enacted on 13 June 1974,
Mayor is authorized "to allow penalizes betting, game fixing or point shaving
and permit petitioner to and machinations in sports contests,
establish, maintain and including jai-alai. Section 2 thereof expressly
operate a jai-alai in the City provides:
of Manila," under the five
conditions enumerated in Sec. 2. Betting, game fixing,
subparagraphs "a" to "e" of point shaving or game
Section 1 of the Ordinance. machinations unlawful. —
By a simple reading of these Game fixing, point shaving,
"terms and conditions" machination, as defined in
patently shows that the preceding Section, in
subparagraphs "b" to "e" are connection with the games of
clearly conditions that will basketball, volleyball,
only come into play after the softball, baseball; chess;
jai-alai has been put up or boxing bouts, "jai-alai,"
established; while the "sipa," "pelota" and all other
condition under sports contests, games; as
subparagraph "a" appears to well as betting therein except
have been complied with as may be authorized by law,
satisfactorily by the is hereby declared unlawful.
petitioner, since no objection
at all has been made by
The succeeding Section 3 provides for the
respondents to the proposed
penalties.
site for jai-alai fronton, that
is, the 25,000 sq. m. land
On 11 June 1978, P.D. No. 1602 (75 O.G. No.
area behind the present
Harrison Plaza Complex 15, 3270), Prescribing Stiffer Penalties on Illegal
Gambling, was enacted to increase the
located at Ermita, Manila.
penalties provided in various "Philippine
Gambling Laws such as Articles 195-199 of the
Consequently, the Mayor's Permit sough to be
Revised Penal Code (Forms of Gambling and
renewed or the motion before the lower court
Betting), R.A. No. 3063 (Horse Racing Bookies),
to compel the Mayor to renew it, has reference
P.D. No. 449 (Cockfighting), P.D. No. 483 (Game
only to subparagraph (a), Section 1 of
Fixing), P.D. No. 510 (Slot Machines) in relation
Ordinance No. 7065. The renewal of the permit
to Opinion Nos. 33 and 97 of the Ministry of
can by no stretch of the imagination be taken
Justice, P.D. No. 1306 (Jai-alai Bookies), and
as a final contract between the private
other City and Municipal Ordinances on
respondent and the City of Manila for
gambling all over the country." Section 1
otherwise it would remove the power and
thereof reads:
authority of the Mayor under the ordinance to
impose "other terms and conditions as he may
xxx xxx xxx
prescribe for good reasons of general interest."

Both P.D. No. 483 and P.D. No. 1602 were


It follows then that the Mayor's Permit ordered
promulgated in the exercise of the police
by the trial court to be issued to the private
power of the State.
respondent is not a license or authority to
allow betting or wagering on the results of
the jai-alai games. Jai-alai is a sport based on Pursuant to Section 2 of P.D. No. 483, which
skill. Under Article 197 of the Revised Penal was not repealed by P.D. No. 1602 since the
Code, before it was amended by P.D. No. 1602, former is not inconsistent with the latter in
betting upon the result of any boxing or other that respect, betting in
sports contests was penalized with arresto jai-alai is illegal unless allowed by law. There
menoror a fine not exceeding P200.00, or both. was such a law. P.D. No. 810, which authorized
Article 2019 of the Civil Code provides that
the Philippine Jai-Alai and Amusement trial court does not legalize betting, for this
Corporation as follows: Court is not the legislature under our system of
government.
Sec. 2. The grantee or its duly
authorized agent may offer, Accordingly, I vote to grant the petition in G.R. No. 117263 and
take or arrange bets within or to set aside the questioned temporary restraining order and the
outside the place, enclosure writ of preliminary mandatory injunction but only to the extent
or court where the Basque that they allow wagering or betting on the results of jai-alai.
pelota games are
held: Provided, That bets QUIASON, J., dissenting:
offered, taken or arranged
outside the place, enclosure I vote: (1) to deny the motion to intervene and motion for
or court where the games are reconsideration qua petition for quo warranto in G.R. No.
held, shall be offered, taken 115044, and (2) to dismiss the petition for certiorari in G.R. No.
or arranged only in places 117263. I shall set forth the reason why.
duly licensed by the
corporation, Provided,
I
however, That the same shall
be subject to the supervision
Following the decision of the First Division of this Court on
of the Board. No person
September 1, 1994 in G.R. No. 115044, the City of Manila issued
other than the grantee or its
on September 7, 1994 the Mayor's permit and Municipal license
duly authorized agents shall
to Associate Development Corporation (ADC) upon the latter's
take or arrange bets on any
payment of the required fees (G.R. No. 115044, Rollo, pp. 253-
pelotari or on the game, or
254, 301).
maintain or use a totalizator
or other device, method or
system to bet on any pelotari In his letter dated September 8, 1994 to President Fidel V.
or on the game within or Ramos, Chairman Francisco Sumulong, Jr. of the Games and
without the place, enclosure Amusement Board (GAB) said that he would not authorize the
or court where the games are opening of ADC's jai-alai unless he was given a clearance from
held by the grantee. Any the President and until after ADC had complied with "all the
violation of this section shall requirements of the law, such as, the distribution of wager
be punished by a fine of not funds, [and] licensing of Pelotaris and other personnel" (Exh. F,
more than two thousand Civil Case No. 94-71656, RTC, Br. 4, Manila; G.R. No.
pesos or by imprisonment of 117263, Rollo, p. 304).
not more than six months, or
both in the discretion of the In the position paper annexed to the letter, the GAB Chairman
Court. If the offender is a recommended the reopening and operation of the jai-alai,
partnership, corporation or stating in pertinent part:
association, the criminal
liability shall devolve upon its There are several reasons to justify the
president, directors or any operation of Jai-Alai, first and foremost of
officials responsible for the which is the generation of much needed
violation. revenues for the national and local
governments. Other significant justifications
However, as stated in the ponencia, P.D. No. are its tourism potential, the provision for
810 was repealed by E.O. No. 169 issued by employment, and the development of Basque
then President Corazon C. Aquino. I am not pelota as an amateur and professional sport.
aware of any other law which authorizes
betting in jai-alai. It follows then that while the Specifically, the establishment, maintenance
private respondent may operate the jai-alai and operation of a Jai-Alai fronton in Metro-
fronton and conduct jai-alai games, it can do so Manila shall be by virtue of the original and still
solely as a sports contest. Betting on the legally existing franchise granted to the
results thereof, whether within or off-fronton, Associated Development Corporation (ADC) by
is illegal and the City of Manila cannot, under the City Government of Manila in 1971 (G.R.
the present state of the law, license such No. 115044, Rollo, p. 350; Emphasis supplied).
betting. The dismissal of the petition in this
case sustaining the challenged orders of the
On September 9, 1994, Chairman Sumulong granted ADC adopted by the Board, and with the conditions
provisional authority to open, subject to the following set forth in the application for which this
conditions: permit has been granted; and failure on the
part of the promoter to comply with any of
1. We prohibit you from offering to the public which shall be deemed sufficient cause for the
"Pick 6" and "winner Take All" betting events revocation thereof (G.R. No. 117263, Rollo, pp.
until such time as this Board shall have 50, 238, 289).
approved the rules and regulations prepared
by management governing the mechanics of In compliance with GAB Rules and Regulations, ADC submitted
these events. its programs of jai-alai events for approval (Exhs. O, P and Q, civil
Case No. 94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo,
2. Licensing of officials and employees whose pp. 290-292).
duties are connected directly or indirectly with
the supervision and operation of jai-alai games, It appears that as early as may 23, 1994, Jai-Alai de Manila (the
as mandated by Executive Order 141 dated business name of ADC's fronton) had inquired from GAB about
February 25, 1965, shall be fully complied with the laws and rules governing its jai-alai operation. In reply,
by you within thirty 930) days from date chairman Sumulong furnished Jai-Alai de Manila with copies of
hereof. E.O. Nos. 392 and 824 and the Revised rules and Regulations for
basque pelota Games (Exhs. K and L, Civil Case No. 94-71656,
3. Any other deficiencies we may discover will RTC, Br. 4, Manila; G.R. No. 117263, Rollo, pp. 301-302).
be accordingly rectified by management as
directed by the Board. On September 13, 1994, Executive Secretary Teofisto Guingona,
jr. issued the following Directive to GAB Chairman Sumulong:
4. Failure to comply with any of the rules and
regulations prescribed by existing laws and In reply to your letter dated 9 September 1994
lawful orders of the Board, may justify requesting for the President's approval to re-
withdrawal/revocation of this provisional open the Jai-Alai in Manila, please be informed
authority without prejudice to such that after a review and study of existing laws,
administrative sanctions that the Board may there is sufficient basis to hold in abeyance the
deem proper to impose under the operation of the Jai-Alai until the following
circumstances. legal questions are properly resolved:

5. By accepting this provisional authority, 1. Whether P.D. 771 which


Associated Development Corporation (ADC) is revoked all existing Jai-Alai
deemed to have agreed to the conditions franchises issued by local
above provided (G.R. No. 117263, Rollo, pp. 8- government as of 20 August
9, 49, 238, 288). 1975 is unconstitutional.

On September 12, 1994, the GAB issued to ADC jai-alai License 2. Assuming that the City of
No. 94-008 upon payment of the corresponding permit fee. The Manila had the power on 7
license reads as follows: September 1971 to issue a
Jai-Alai franchise to
Under and by virtue of the provisions of Associated Development
Section 7 of Executive Order No. 392, series of Corporation, whether the
1950, in conjunction with Executive order No. franchise granted is valid
824, series of 1982, this Board has this date considering that the franchise
granted ADC Represented by Gen. Alfredo B. has no duration, and appears
Yson permit to hold or conduct a [sic] jai-alai to be granted in perpetuity.
contests/exhibition on September 12 to 14,
1994, at the harrison Plaza Complex, located in 3. Whether the City of Manila
Harrison Plaza, Malate, Manila. had the power to issue a Jai-
Alai franchise to Associated
This permit is issued subject to the condition Development Corporation on
that the promoter shall comply with the 7 September 1971 in view of
provisions of Executive order No. 824, S. 1982, Executive order No. 392
the rules and regulations, orders and/or dated 1 January 1951 which
policies adopted or which may hereafter be transferred from local
governments to the Games Subsequently, and on the different dates, the Republic filed in
and Amusements Board the G.R. No. 115044 the following pleadings: "Motion for Leave to
power to regulate Jai-Alai. File Supplemental Motion for Reconsideration-In-Intervention"
(Rollo, pp. 262-265); "Supplemental Motion for Reconsideration-
This Office has directed the solicitor General to In-Intervention" (Rollo, pp. 266-280); "Motion for Leave to File
bring before the proper court the foregoing Second Supplemental Motion for Reconsideration-In-
issues for resolution. Pending such resolution, Intervention and to Admit attached Second Supplemental
you are directed to hold in abeyance the grant Motion For Reconsideration-In-intervention" (Rollo, pp. 380-
of authority, or if any has been issued, to 382); and "Second Supplemental Motion for Reconsideration-In-
withdraw such grant of authority, to Associated Intervention" (Rollo, pp. 383-400).
Development corporation to operate he Jai-Alai
in the city of Manila (G.R. No. Acting on the motion of the Republic dated September 16, 1994,
117263, Rollo, pp. 7-8, 48, 1939; Emphasis the First Division referred, in its Resolution dated September 19,
supplied). 1994, Case G.R. No. 115044 to the Court en banc, and the latter
accepted the same in its Resolution dated September 20, 1994
On September 14, 1994, Chairman Sumulong issued a (Rollo, p. 255).
Memorandum to ADC that:
In the meantime, Chairman Sumulong resigned and Dominador
In view of the directive from the Office of the R. Cepeda, jr. was appointed as his successor.
President dated 13 September 1994,
Associated Development Corporation is hereby On September 30, 1994, Judge Reyes issued a writ of preliminary
ordered to cease and desist issues raised in the injunction (G.R. No. 117263, Rollo, pp. 2, 47).
said directive are resolved by the proper
court. The provisional authority issued pending On October 11, 1994, Executive Secretary Guingona and GAB
further scrutiny and evaluation to ADC on 9 Chairman Cepeda, Jr. filed with this Court a petition
September 1994 is hereby withdrawn (G.R. No. for certiorari, prohibition and mandamus (G.R. No.
117263, Rollo, pp. 51, 194; Emphasis supplied). 117263, Rollo, pp. 1-151) and on October 24, 1994, a
supplemental petition (G.R. No. 117263, Rollo, pp. 161-165, 166-
On September 15, 1994, ADC filed with the Regional Trial Court, 306). Petitioners assailed the following issuances of Judge Reyes
Branch 4, Manila a petition for prohibition, mandamus, Civil Case No. 94-71656:
injunction and damages with prayer for temporary restraining
order or writ of preliminary injunction (Case No. 94-71656) (1.) Temporary Restraining Order dated
against Executive Secretary Guingona and Chairman Sumulong September 15, 1994 directing Executive
assailing the former's Directive and the latter's Memorandum Secretary Guingona and chairman Sumulong to
(G.R. No. 117263, Rollo, pp. 3, 20-21, 53-75, 167-168). desist from enforcing the Directive dated
September 13, 1994 and the memorandum
On the same day, Judge Vetino Reyes issued a temporary dated September 15, 1994 (Rollo, p. 44);
restraining order enjoining Executive Secretary Guingona and
Chairman Sumulong from implementing their respective (2.) Order dated September 25, 1994 denying
Directive and memorandum (G.R. No. 117263, Rollo, pp. 2, 10, the Urgent Motion to Recall Temporary
44). Restraining Order and the Urgent
Supplemental Motion to Recall Temporary
On September 16, 1994, Executive Secretary Guingona and Restraining Order (Rollo, p. 46);
Chairman Sumulong filed an urgent motion to recall the
temporary restraining order, with opposition to the motion for (3.) Order dated September 30, 1994 directing
issuance of a writ of preliminary injunction. The said motion was the issuance of a Writ of preliminary Injunction
reiterated in the supplemental motion filed on September 20, directed against the aforesaid Directive and
1994 (G.R. No. 117263, Rollo, pp. 66-75, 76-86). Memorandum (Rollo, p. 47);

Meanwhile, on September 16, 1994, the Republic of the (4.) order dated October 19, 1994 granting
Philippines, represented by GAB, filed in G.R. No. 115044 a ADC's Motion to Amend the petition to
motion for intervention; for leave to file a motion for Conform to the Evidence and directing the
reconsideration-in-intervention; to admit the attached motion issuance of a writ of preliminary mandatory
for reconsideration-in-intervention; and to refer the case to the injunction "directing (Executive Secretary and
Court en banc (Rollo, pp. 219-249). the GAB Chairman), their successors,
representatives and any government
office/agency acting for an in their behalf or in
implementation of their orders earlier enjoined dated September 9, 1989 in Civil Case No. 88-45660, which
by a writ of preliminary injunction issued by upheld the validity of Ordinance No. 7065 of the City of Manila
this court on September 30, 1994, to issue the granting ADC a franchise to operate a jai-alai fronton. Mayor
necessary authority, licenses and working Gemiliano Lopez appealed said decision to the Court of Appeals,
permits to . . . Associated Development but on February 9, 1989, he filed a Withdrawal of Appeal. The
Corporation, and its personnel and players Court of Appeals approved the withdrawal in a resolution dated
(Rollo, pp. 216-217). May 5, 1989. An entry of judgment was made by the court of
Appeals on May 26, 1989 and by the Regional Trial Court, branch
They prayed that the trial court be enjoined from conducting 40, Manila, on October 27, 1992.
further proceedings in Civil Case No. 94-71656 and that said case
be dismissed. they also filed a motion for consolidation of G.R. In 1991, the City of Manila filed an action to annul the franchise
No. 117263 with G.R. No. 115044 (G.R. No. 117263, Rollo, pp. of ADC with the Regional Trial Court, Branch 23, Manila (Civil
152-160). As prayed for, we considered the two cases together. Case No. 91-58913). The complaint was dismissed on December
21, 1991. No appeal was taken from said dismissal of the case.
In their petition in G.R. No. 117263, Executive Secretary
Guingona and Chairman Cepeda claimed that ADC had no clear The City of Manila filed with this Court a petition for declaratory
right to the issuance of the preliminary mandatory injunction judgment to nullify the franchise of ADC (G.R. No. 101768). The
because: petition was dismissed in a resolution dated October 3, 1991 "for
lack of jurisdiction."
(1) ADC had no legislative franchise;
Three members of the Sangguniang Panglunsod of Manila also
(2) ADC admitted in G.R. No. 115044 that GAB filed with the Regional Trial Court, Branch 37, Manila, a petition
had no authority to issue the license or permit to compel Mayor Lopez to cancel the permit and license he
subject of the order in question; and issued in favor of ADC pursuant to ordinance No. 7065 (Civil Case
No. 91-58930). The petition was dismissed on June 4, 1992. No
(3) Mandamus was not available to compel the appeal was taken from said dismissal of the case.
performance of a discretionary function (G.R.
No. 117263, Rollo, pp. 182-189). In the Motion for Reconsideration-In-Intervention, Supplemental
Motion for Reconsideration-in-Intervention and Second
On November 2, 1994, ADC and Judge Reyes filed their Supplemental Motion for Reconsideration-in-Intervention, the
consolidated Comment to the petition and supplemental petition Republic merely claimed that Ordinance No. 7065 had been
(G.R. No. 117263, Rollo, pp. 230-305). repealed by P.D. No. 771 (Rollo, pp. 228-248), that the authority
to issue permits and licenses for the operation of jai-alai had
been transferred to GAB by E.O. No. 392 of President Quirino
On November 25, 1994, the Republic, Executive Secretary
effective July 1, 1951 and that ADC was never issued a franchise
Guingona and GAB Chairman Cepeda moved for the issuance of a
by Congress (Rollo, pp. 383-390). Nowhere in its pleadings did
restraining order enjoining Judge Pacquing and Judge Reyes from
the Republic point out where the first Division erred in resolving
enforcing their questioned orders and ADC from operating the
the two grounds of the petition for certiorari in G.R. No. 115044,
jai-alai fronton (G.R. No. 17263, Rollo, pp. 629-635). Action on
which were:
the motion deferred.

(1) The decision of Judge Villarin dated


II
September 9, 1988 in Civil Case No. 88-45660 is
null and void for failure to rule that P.D. No.
G.R. No. 115044
771 had revoked Ordinance No. 7065; and
Motion for Intervention
(2) The decision of Judge Villarin could not be
The Republic of the Philippines (Republic) represented by GAB
executed by a mere motion filed on March 14,
justifies its belated intervention in G.R. No. 115044 on the
1994, or more than five years and six months
grounds that "it has an interest involved in this case and will be after its promulgation.
affected by the Decision dated September 1, 1994" (G.R. No.
115044, Rollo, p. 225).
In resolving the first issue, the First Division of this court
explained that there was no way to declare the Villarin decision
The purpose of its intervention is to nullify the decision of Judge null and void because the trial court had jurisdiction over the
Augusto E. Villarin of the Regional Trial Court, Branch 40, Manila,
subject matter of the action and if it failed to rule that ordinance
dated September 1, 1994" (G.R. No. 115044, Rollo, p. 225).
No. 7065 was nullified by P.D. No. 771, that was only an error of
judgment. The First Division noted the distinction between a void
The purpose of its intervention is to nullify the decision of Judge
Augusto E. Villarin of the Regional Trial Court, Branch 40, Manila,
and an erroneous judgment and between jurisdiction and the The case of Director of Lands v. Court of Appeals, 93 SCRA 238
exercise of jurisdiction. (1979), can not, serve as authority in support of the Republic's
intervention at this late stage. while said case involved an
In Tan v. Intermediate Appellate Court, 163 SCRA 752 (1988), the intervention for the first time in the Supreme court, the motion
Court held: to be allowed to intervene was filed before the appeal could be
decided on the merits. The intervention allowed in Republic v.
It is settled jurisprudence that except in the Sandiganbayan, G.R. No. 96073, Resolution, March 3, 1992, was
case of judgments which are void ab initio or also made before the decision on the merits by this Court. In
null and voidper se for lack of jurisdiction which contrast, the intervention of the Republic was sought after this
can be questioned at any time — and the Court had decided the petition in G.R. No. 115044 and
decision here is not of this character — once a petitioners had complied with and satisfied the judgment. While
decision becomes final, even the court which the intervention in Director of Lands was in a case that was
has rendered it can no longer alter or modify it, timely appealed from the Regional Trial Court to the Court of
except to correct clerical errors or mistakes. Appeals and from the Court of Appeals to the Supreme Court,
otherwise, there would be no end to litigation, the intervention of the Republic was in a case that had become
thus setting to naught the main role of courts final and executory more than five years prior to the filing of the
of justice, which is, to assist in the enforcement motion to intervene.
of the rule of law and the maintenance of
peace and order, by settling justifiable As of September 16, 1994, therefore, when the republic moved
controversies with finality. (See also Fabular v. to intervene, there was no longer any pending litigation between
Court of Appeals, 119 SCRA 329 [1982]; Fariscal the parties in G.R. no. 115044. Intervention is an auxiliary and
Vda. de Emnas v. Emnas, 95 SCRA 470 [1980]; supplemental remedy to an existing, not a settled litigation (cf.
Ocampo v. Caluag, 19 SCRA 917 [1967]). Clareza v. Rosales, 2 SCRA 455 [1961]). An intervention was
disallowed in a case which has becomes final and executory
As to the second issue, the First Division held that the five-year (Trazo v. Manila Pencil Co., 77 SCRA 181 [1977])
period for executing a judgment by simple motion under Section
6 of Rule 39 of the Revised Rules of Court should be counted The case of Suson v. Court of Appeals, 172 SCRA 70 (1989)
from the finality of the judgment and not from the date of its invoked by the Republic (G.R. No. 117263, Rollo, pp. 517-518) is
promulgation as was done by Mayor Lim and the City of Manila. inappropriate because the intervention therein was before the
Inasmuch as the Villarin decision was appealed to the Court of trial court, not in this Court.
Appeals and the authority to withdraw the appeal was approved
by the Court of Appeals only on may 26, 1989, the five-year In its Reply, the Republic admitted that the First Division only
period should be counted, at the earliest, from May 26, 1989. ruled on the procedural issues raised in the petition and not on
Reckoning the five-year period from said date, the motion for the constitutionality of P.D. No. 771. It even urged that GAB was
execution of the Villarin decision was filed timely on March 14, not a party to the case and therefore was not bound by
1994. the Villarin decision because under Section 49 of Rule 39, a
judgment is conclusive only "between the parties and their
Intervention as contemplated by Section 9, Rule 12 of the successor-in-interest by title subsequent to the commencement
Revised Rules of Court is a proceeding whereby a third person is of the action or special proceeding, litigating for the same thing
permitted by the court "before or during a trial" to make himself and under the same title and in the same capacity" (Rollo, pp.
a party by joining plaintiff or uniting with defendant or taking a 228-234, 431).
position adverse to both of them Gutierrez v. Villegas, 5 SCRA
313 [1962]). the term "trial" is used in its restrictive sense and With more reason then that the Republic should have ventilated
means the period for the introduction of evidence by both its claim against ADC in a separate proceeding.
parties (Bool v. Mendoza, 92 Phil. 892 [1953]; Provincial
Government of Sorsogon v. Stamatelaky, 65 Phil. 206 [1937]). Lastly, an intervenor should not be permitted to just sit idly and
The period of trial terminates when the period of judgment watch the passing scene as an uninterested overlooker before he
begins (El Hogar Filipino v. Philippine National Bank, 64 Phil. 582 wakes up to seek judicial relief (Pacursa v. Del Rosario, 24 SCRA
[1937]). 125 [1968]).

Intervention as an action is not compulsory. As deduced from the The Office of the President was aware of the plans of ADC to
permissive word "may" in the rule, the availment of the remedy start operation as early as 1988. On May 5, 1988, ADC informed
is discretionary on the courts (Garcia v. David, 67 Phil. 279 said Office of its intention to operate under Ordinance No. 7065.
[1939]). an important factor taken into consideration by the The said Office perfuntorily referred the letter of ADC to the
courts in exercising their discretion is whether the intervenor's Manila mayor, implying that the matter was not the concern of
rights may be fully protected in a separate proceeding (Peyer v. the National Government.
Martines, 88 Phil. 72 [1951]).
Motion qua Quo Warranto petition conditions as he (the Mayor) may prescribe for
good reasons of general interest:
Be that as it may, the Court may consider the motion to
intervene, motion for reconsideration-in-intervention, a. That the construction,
supplemental motion for reconsideration-in-intervention and establishment and
second supplemental motion-in-intervention as a petition maintenance of the jai-alai
for quo warranto under Rule 66 of the revised Rules of Court. In shall be at a place permissible
the liberal construction of the Rules in order to attain substantial under existing zoning
justice, the Court has treated petitions filed under one Rule as ordinances of Manila;
petitions filed under the more appropriate Rule (Davao Fruits
Corporation v. Associated Labor Union, 225 SCRA [1993]). b. That the games to be
played daily shall commence
In quo warranto, the government can require a corporation to not earlier than 5:00 o'clock
show cause by what right it exercises a privilege, which ordinarily (sic) in the afternoon;
can not legally be exercised except by virtue of a grant from the
state. It is a proceeding to determine the right to the use of a c. That the City of Manila will
franchise or exercise of an office and to oust the holder from its received a share of 2 ½% on
enjoyment if his claim is not well-founded (Castro v. Del Rosario, the annual gross receipts on
19 SCRA 196 [1967]). all wagers or bets, ½% of
which will accrue to the
All the essential requisites for a petition for quo warranto are Games and Amusements
compresent. The motions were filed by the Solicitor General for Board as now provided by
the Republic of the Philippines, represented by GAB, to question law;
the right of ADC to operate and maintain the jai-alai.
d. That the corporation will,
The motions qua petition for quo warranto assert that the in addition, pay to the city an
authority of the City of Manila to issue to ADC a jai-alai franchise annual license fee of
in 1971 had been withdrawn by E.O. No. 392 in 1951 and by R.A. P3,000.00 and a daily permit
No. 954 in 1954 and that assuming the issuance of the franchise fee of P200.00;
to ADC in 1971 under Ordinance No. 7065 was valid, such
franchise, together with whatever authority of the City of Manila e. That the corporation will,
to grant the same, was voided by P.D. No. 771 in 1975. to insure its faithful
compliance of all the terms
In the case of Stone v. State of Mississippi, 101 U.S. 814, cited by and conditions under this
the Republic, the State Attorney General resorted to a quo ordinance, put up a
warranto proceeding to question the authority of petitioner performance bond from a
therein to operate and maintain a gambling establishment. surety acceptable to the city,
in the amount of at least
The franchise of ADC granted by the City of Manila under P30,000.00.
Ordinance No. 7065 reads as follows:
Sec. 2. The Mayor and the
AN ORDINANCE AUTHORIZING THE MAYOR TO City Treasurer of their duly
ALLOW AND PERMIT THE ASSOCIATED authorized representatives
DEVELOPMENT CORPORATION TO ESTABLISH, are hereby empowered to
MAINTAIN AND OPERATE A JAI-ALAI IN THE inspect at all times during
CITY OF MANILA, UNDER CERTAIN TERMS AND regular business hours the
CONDITIONS AND FOR OTHER PURPOSES. books, records and accounts
of the establishment, as well
Be it ordained by the Municipal Board of the as to prescribe the manner in
City of Manila, that: which the books and financial
statement of the
entrepreneur shall be kept.
Sec. 1. The Mayor is authorized, as he is hereby
authorized to allow and permit the Associated
Development Corporation to establish, Sec. 3. This ordinance shall take effect upon its
maintain and operate a jai-alai in the City of approval.
Manila, under the following terms and
conditions and such other terms and
Enacted originally by the Municipal Board on by existing franchises of permitted by law. . . .
September 7, 1971; vetoed by the Mayor on (Rollo, p. 272).
September 27, 1971; modified and amended
by the Municipal Board at its regular session There is no need to dwell upon this argument for suprisingly it
today, October 12, 1971. was the Republic itself that repudiated it albeit after wrongfully
attributing the argument to ADC.
Approved by His Honor, the Mayor on 13
November 1971. In its Reply filed on November 9, 1994, the Republic stated that:
"Contrary to respondent ADC's claim, it is not the position of the
The said Ordinance was enacted pursuant to Section 18 (jj), the GAB that it is the body which grants franchisers for the jai-alai
Charter of the City of Manila (R.A. No. 409), which took effect in either under E.O. No. 392 or under P.D. No. 771 . . ." (Rollo, pp.
1949. The charters of two other cities — Quezon City and Cebu 420).
City — contained a similar delegation of authority to grant jai-
alai franchises. For certain, E.O. No. 392 merely reorganized the different
departments, bureaus, offices and agencies of the government.
Said Section 18(jj) provides: There is absolutely nothing in the executive issuances which
vests on GAB the power to grant, much less revoke, franchisers
Legislative powers. — The Municipal Board to operate jai-alais.
shall have the following legislative powers:
B. After its volte-face, the Republic next claims that R.A. No. 954
xxx xxx xxx had repealed Section 18 (jj) and that after the effectivity of said
law, only Congress could grant franchise to operate jai-alais.
(jj) To tax, license, permit and regulate wagers
or betting by the public on boxing, billiards, Section 4 of R.A. No. 954 provides:
pools, horse or dog races, cockpits, jai-alai,
roller of ice-skating or any sporting or athletic No person, or group of persons, other than the
contests, as well as grant exclusive rights to operator or maintainer of a fronton with
establishments for this purpose, legislative franchise to conduct basque pelota
notwithstanding any existing law to the (jai-alai), shall offer, take or arrange bets on
contrary. any basque pelota game or event, or maintain
or use a totalizer or other device, method or
A. It is the posture of the Republic that the power of local system to bet or gamble or any basque pelota
governments to issue franchisers for the operation of jai-alai was game or event.
"consolidated and transferred" to the GAB under E.O. No. 392. In
its Supplemental Motion for reconsideration-In-Intervention filed Republic Act No. 954 did not expressly repeal Section 18 (jj). In
on September 27, 1994, the Republic averred: such a case, if there is any repeal of the prior law by the latter
law, it can only be by implication. Such kind of repeals is not
12. As early as 1951, the power of the local favored. There is even a presumption against repeal by
governments to issue licenses and permits for implication (The Philippine American Management Co. Inc. v. The
the operation of jai-alai was "consolidated and Philippine American Management employees Association, 49
transferred" to the Games and Amusements SCRA 194 [1973]).
Board under E.O. No. 392 issued by then
President Elpidio Quirino (sic) took effect on In the same absence of an express repeal, a subsequent law
January 1, 1951. Thus, in 1971, the City of cannot be construed as repealing a prior law unless an
Manila was without authority to enact an irreconcilable inconsistency and repugnancy exist in the terms of
ordinance authorizing the City Mayor to issue a the new and old law (Iloilo Palay and Corn Planters Association,
license/permit to private respondent for the Inc. v. Feliciano, 13 SCRA 377 [1965]).
operation of jai-alai in Manila (Rollo, pp. 271-
272). But more importantly, the rule in legal hermeneutics is that a
special law, like the Charter of the City of Manila, is not deemed
Furthermore, the republic alleged: repealed by a general law, like R.A. No. 954 (Commissioner of
Internal Revenue v. Court of Appeals, 207 SCRA 487 [1992]).
13. Such consolidation and transfer of power
manifest the policy of the Government to In a way also, Ordinance No. 7065 can be considered a
centralize the regulation, through appropriate "legislative franchise" within the purview of R.A. No. 954, having
institutions, of all games of chance authorized been enacted by the Municipal Board of the City of Manila
pursuant to the powers delegated to it by the legislature. A
grant, under a delegated authority, binds the public and is Alai and Amusement Corporation (PJAC) a franchise to operate
considered the act of the state. "The franchise [granted by the jai-alai within the Greater Manila Area. It is obvious that P.D. No.
delegate] is a legislative grant, whether made directly by the 771 was decreed to cancel the franchise of ADC so that the same
legislature itself or by any one of its properly constituted could be given to another entity under P.D. No. 810.
instrumentalities" (36 Am Jur 2d. 734).
A facially neutral statute (P.D. No. 771) may become
As held in Wright v. Nagle, 101 U.S. 921, the grant of a franchise discriminatory by the enactment of another statute (P.D. No.
by the legislature may be done in two ways: 810) which allocates to a favored individual benefits withdrawn
under the first statute (Ordinance No. 7065), and when there is
It may exercise this authority by direct no valid basis for classification of the first and second grantees.
legislation, or through agencies duly The only basis for distinction we can think of is that the second
established having power for that purpose. This grantee was Benjamin Romualdez, a brother-in-law of President
grant when made binds the public, and is, Marcos.
directly or indirectly, the Act of the State. The
easement is a legislative grant, whether made Section 3 violated the due process clause of the Constitution,
directly by the legislature itself, or by any one both in its procedural and substantive aspects. The right to due
of its properly constituted process is guaranteed by the same Section 1 of Article IV of the
instrumentalities (Justice of Pike Co. v. Plank 1973 Constitution.
road, 11 Ga. 246; Emphasis supplied).
Ordinance No. 7065, like any franchise, is a valuable property by
If the intention of Congress in enacting R.A. No. 954 was to itself. The concept of "property" protected by the due process
repeal Section 18 (jj), it could have used explicit language to that clause has been expanded to include economic interests and
effect in order not to leave room for interpretation. investments. The rudiments of fair play under the "procedural
due process" doctrine require that ADC should at least have
If R.A. No. 954 repealed Section 18 (jj), why did President Marcos been given an opportunity to be heard in its behalf before its
still issue P.D. No. 771, expressly revoking the authority of the franchise was cancelled, more so when the same franchise was
local governments to issue jai-alai franchises? It can never be given to another company.
presumed that the President deliberately performed useless
acts. Under the "substantive due process" doctrine, a law may be
voided when it does not relate to a legitimate end and when it
C. The claim of the Republic that P.D. No. 771 had removed the unreasonably infringes on contractual and property rights. The
power of local governments to grant franchises for the doctrine as enunciated in Allgeyer v. Louisiana, 165 U.S. 578
maintenance and operation of jai-alai is a non-issue. The issue (1897) can be easily stated, thus: the government has to employ
raised by ADC is whether Section 3 of P.D. No. 771 validly means (legislation) which bear some reasonable relation to a
cancelled Ordinance No. 7065, an issue entirely different from legitimate end (Nowak, Rotunda and Young, Constitutional Law
the claim of the Republic that P.D. No. 771 had revoked the 436, 443 [2d ed]).
power of the City of Manila to grant jai-alai franchisers.
When President Marcos issued P.D. No. 771, he did not have
Insofar as it is applied to Ordinance No. 7065, Section 3 of P.D. public interest in mind; otherwise, he would have simply
No. 771 suffers from constitutional infirmities and transgresses outlawed jai-alai as something pernicious to the public. Rather,
several constitutional provisions. Said Section 3 provides: all what he wanted to accomplish was to monopolize the grant
of jai-alai franchisers.
All existing franchisers and permits issued by
local governments are hereby revoked and may The motivation behind its issuance notwithstanding, there can
be renewed only in accordance with third be no constitutional objection to P.D. No. 771 insofar as it
decree. removed the power to grant jai-alai franchisers from the local
governments. We said so in Basco v. Pagcor, 197 SCRA 52 (1991).
Section 3 violated the equal protection clause (Section 1 of The constitutional objection arises, however, when P.D. No. 771
Article IV) of the 1973 Constitution, which provided: cancelled al the existing franchises. We search in vain to find any
reasonable relation between Section 3 of P.D. No. 771 and any
legitimate ends of government intended to be achieved by its
No person shall be deprived of life, liberty, or
issuances. Besides, the grant of a franchise to PJAC exposed P.D.
property without due process of law, nor shall
No. 771 as an exercise of arbitrary power to divest ADC of its
any person be denied the equal protection of
property rights.
the laws.

Section 3 also violated Section 1 of Article VIII of the 1973


Less than two months after the promulgation of P.D. no. 771,
Constitution, which provided:
President Marcos issued P.D. No. 810, granting the Philippine Jai-
Every bill shall embrace only one subject which are certain obligations assumed by the grantee which make up
shall be expressed in the title thereof. the valuable consideration for the contract. That is why the
grantee is first required to signify his acceptance of the terms
The title of P.D. No. 771 reads as follows: and conditions of the grant. Once the grantee accepts the terms
and conditions thereof, the grant becomes a binding contract
REVOKING ALL POWERS AND AUTHORITY OF between the grantor and the grantee.
LOCAL GOVERNMENT TO GRANT FRANCHISE,
LICENSE OR PERMIT AND REGULATE WAGERS Another test used to distinguish a franchise from a privilege is
OR BETTING BY THE PUBLIC ON HORSE AND the big investment risked by the grantee. In Papa v. Santiago,
DOG RACES, JAI-ALAI OR BASQUE PELOTA, AND supra, we held that this factor should be considered in favor of
OTHER FORMS OF GAMING. the grantee. A franchise in which money has been expended
assumes the character of a vested right (Brazosport Savings and
The title of P.D. No. 771 refers only to the revocation of the Loan Association v. American Savings and Loan Association, 161
power of local governments to grant jai-alai franchises. It does Tex. 543, 342 S.W. 2d. 747).
not embrace nor even intimate the revocation of existing
franchises. The cases cited by the Republic to the effect that gambling
permits or license issued by municipalities can be revoked when
Lastly, Section 3 impaired the obligation of contracts prohibited public interest so requires, have never addressed this issue,
by Section 11 of Article IV of the 1973 Constitution. obviously because there were no significant financial
investments involved in the operation of the permits or licenses.
As authorized by Section 18(jj), Ordinance No. 7065 grants ADC a
permit "to establish, maintain and operate a jai-alai in the City of But assuming that Ordinance No. 7065 is a mere privilege, still
Manila, under the following terms and conditions and such other over the years, the concept of a privilege has changed. Under the
terms and conditions as he [the Mayor] may prescribe for good traditional form a property ownership, recipients of privileges,
reasons of general interest." (Rollo, p. 24). benefits or largesse from the government may be said to have no
property rights because they have no traditionally recognized
proprietary interest therein. The case of Vinco v. Municipality of
Section 11 of Article IV of the 1973 Constitution provided:
Hinigaran, 41 Phil. 790 (1917) and Pedro v. Provincial Board of
Rizal, 56 Phil 123 (1931), holding that a license to operate
No law impairing the obligation of contracts
cockpits is a mere privilege, belong to this vintage. However, the
shall be passed.
right-privilege dichotomy has come to an end when the courts
have realized that individuals should not be subjected to the
Any law which enlarges, abridges, or in any manner changes the unfettered whims of government officials to withhold privileges
intention of the parties, necessarily impairs the contract itself previously given them (Van Alstyne, The Demise of the Right —
(U.S. v. Conde, 42 Phil. 766 [1922]; Clemens v. Nolting, 42 Phil. Privilege Distinction in Constitutional Law, 81 Harvard L. R. 1439
702 [1922]). A franchise constitutes a contract between the [1968]). To perpetuate such distinction would leave many
grantor and the grantee. Once granted, it may not be invoked individuals at the mercy of government officials and threaten the
unless there are valid reasons for doing so. (Papa v. Santiago, liberties protected by the Bill of Rights (Nowak, Rotunda and
105 Phil. 253 [1959]). A franchise is not revocable at the will of Young, Constitutional Law 546 [2nd ed]).
the grantor after contractual or property rights thereunder have
become vested in the grantee, in the absence of any provision
That a franchise is subject to regulation by the state by virtue of
therefor in the grant or in the general law (Grand Trunk Western
its police power is conceded. What is not acceptable is the
R. Co. v. South Bend, 227 U.S. 544).
Republic's proposition that the power to regulate and supervise
includes the power to cancel the franchise altogether.
D. The Republic hypothesized that the said Constitutional
guarantees presuppose the existence of a contract or property
The stance of the Republic that the gambling franchises it issues
right in favor of ADC. It claims that Ordinance No. 7065 is not a
are not covered by the constitutional mantle protecting property
franchise nor is it a contract but merely a privilege for the
rights is ill-advised considering that it is planning to operate
purpose of regulation.
gambling establishments involving substantial foreign
investments in putting up the facilities thereof.
Ordinance No. 7065 is not merely a personal privilege that can
be withdrawn at any time. It is a franchise that is protected by
The belabored arguments of the Republic on the evils of
the Constitution.
gambling fall to the ground upon a showing that ADC is operating
under an existing and valid franchise (Rollo, pp. 422-423).
The distinction between the two is that a privilege is bestowed
out of pure beneficence on the part of the government. There is
E. The Republic questioned the siting of the ADC's fronton as
no obligation or burden imposed on the grantee except maybe
violative of E.O. No. 135 of President Quirino. Under said
to pay the ordinary license and permit fees. In a franchise, there
executive issuance, no pelota fronton can be maintained and Once fixed by the courts, the period cannot be
operated "within a radius of 200 lineal meters from any city hall changed by them.
or municipal building, provincial capital building, national capital
building, public plaza or park, public school, church, hospital, III
athletic stadium, or any institution of learning or charity."
G.R. No. 117263
According to the certificate issued by the National Mapping
Information Authority, the ADC fronton is within the proscribed The petition in G.R. No. 117263 seeks to nullify the following
radius from the Central Bank of the Philippines, the Rizal orders of respondent Judge Reyes:
Stadium, the Manila Zoo, the public park or plaza in front of the
zoo, the Ospital ng Maynila, a police precinct and a church (G.R.
(1) the Temporary Restraining Order dated
No. 115044, Rollo, pp. 424-427).
September 15, 1994;

On the other hand, a certificate issued by the Officer-in-charge of


(2) the Order dated September 25, 1994; and
the Office of the City Engineer of the City of Manila attests to the
fact that not one of the buildings or places mentioned in the
certificate submitted by the Republic is within the 200-meter (3) the Writ of Preliminary Injunction dated
September 30, 1994 (Rollo, pp. 1-2).
radial distance, "center to center" from the ADC's jai-alai building
(Rollo, p. 260). How this variance in measurement came about is
a matter that should have been submitted before the trial court The supplemental petition in said case seeks to nullify the Order
for determination. dated October 19, 1994 (Rollo, pp. 166-225).

However, the operative law on the siting of jai-alai According to Executive Secretary Guingona and GAB Chairman
establishments is no longer E.O. No. 135 of President Quirino but Cepeda, respondent Judge Reyes acted without jurisdiction and
R.A. No. 938 as amended by R.A. No. 1224. with grave abuse of discretion in issuing said orders and writ of
preliminary injunction because: (1) Civil Case No.
94-71656 was not properly assigned to him in accordance with
Under said law only night clubs, cabarets, pavillions, or other
Section 7, Rule 22 of the Revised Rules of Court; (2) the
similar places are covered by the 200-lineal meter radius. In the
enforcement of the Directive and Memorandum sought to be
case of all other places of amusements except cockpits, the
enjoined had already been performed or were already fait
proscribed radial distance has been reduced to 50 meters. With
accompli; and (3) respondent judge pre-empted this Court in
respect to cockpits, the determination of the radial distance is
resolving the basic issues raised in G.R. No. 115044 when he took
left to the discretion of the municipal council or city board (Sec.
cognizance of Civil Case No. 94-71656.
1).

A. At the outset, it should be made clear that Section 7 of Rule 22


F. The Republic also questions the lack of the period of the grant
of the Revised Rules of Court does not require that the
under Ordinance No. 7065, thus making it indeterminate (G.R.
assignment of cases to the different branches of a trial court
No. 117263, Rollo, pp. 500-505). The ordinance leaves it to the
should always be by raffle. The Rule talks of assignment
Mayor of the City of Manila to lay down other terms and
"whether by raffle or otherwise." What it requires is the giving of
conditions of the grant in addition to those specified therein. It is
written notice to counsel or the parties "so that they may be
up to the parties to agree on the life or term of the grant. In case
present therein if they so desire."
the parties fail to reach an agreement on the term, the same can
be fixed by the courts under Article 1197 of the Civil Code of the
Philippines, which provides as follows: Section 7 of Rule 22 provides:

If the obligation does not fix a period, but from Assignment of cases. In the assignment of
its nature and the circumstances it can be cases to the different branches of a Court of
inferred that a period was intended, the courts First Instance, or their transfer from one
may fix the duration thereof. branch to another whether by raffle or
otherwise, the parties or their counsel shall be
given written notice sufficiently in advance so
The courts shall also fix the duration of the
that they may be present therein if they so
period when it depends upon the will of the
desire.
debtor.

However, there may be cases necessitating the issuance of a


In every case, the courts shall determine such
temporary restraining order to prevent irreparable injury on the
period as may under the circumstances have
petitioner.
been probably contemplated by the parties.
To await the regular raffle before the court can act on the preserved is the status quo ante litem motam or the last actual,
motion for temporary restraining order may render the case peaceable, noncontested status (Annotation, 15 ALR 2d 237).
moot and academic. Hence, Administrative Circular No. 1 dated
January 28, 1988 was issued by this Court allowing a special In the case at bench, the status quo which the questioned orders
raffle. Said Circular provides: of Judge Reyes sought to maintain was that ADC was operating
the jai-alai pursuant to Ordinance No. 7065 of the City of Manila,
8.3. Special raffles should not be permitted the various decisions of the different courts, including the
except on verified application of the interested Supreme Court, and the licenses, permits and provisional
party who seeks issuance of a provisional authority issued by GAB itself.
remedy and only upon a finding by the
Executive Judge that unless a special raffle is At times, it may be necessary for the courts to take some
conducted irreparable damage shall be affirmative act essential to restore the status quo (Iowa Natural
suffered by the applicant. The special raffle Resources Council v. Van See [Iowa] 158 N.W. 2d. 111).
shall be conducted by at least two judges in a
multiple-sala station. The right to conduct a business or to pursue one's business or
trade without wrongful interference by others is a property right
In a case where a verified application for special raffle is filed, which equity will, in proper cases, protect by injunction,
the notice to the adverse parties may be dispensed with but the provided of course, that such occupation or vocation is legal and
raffle has to "be conducted by at least two judges in a multiple- not prohibited by law (Rance v. Sperry & Hutchinson Co., 410 P.
sala station." 2d 859).

The Republic does not claim that Administrative Circular No. 1 Had not the Directive to close the operation of ADC's jai-alai and
has been violated in the assignment of the case to respondent the implementing Memorandum been issued, there would have
Judge. The presumption of regularity of official acts therefore been no need for the issuance of the orders of the Regional Trial
prevails. Court. The need for said equitable reliefs becomes more evident
if we consider that the Executive Secretary himself had
Going back to Section 7 of Rule 22, this Court has rules entertained doubts as to the legality of his action because in the
in Commissioner of Immigration v. Reyes, 12 SCRA 728 (12964) same Directive he instructed the Solicitor General to obtain a
that the purpose of the notice is to afford the parties a chance to judicial ruling on the legal issues raised.
be heard in the assignment of their cases and this purpose is
deemed accomplished if the parties were subsequently heard. In C. Respondent Judge Reyes did not pre-empt this Court in
the instant case, Executive Secretary Guingona and GAB deciding the basic issues raised in G.R. No. 115044 when it
Chairman Cepeda were given a hearing on the matter of the lack assumed jurisdiction over Civil Case No. 94-71656 and issued the
of notice to them of the raffle when the court heard on orders questioned in G.R. No. 117263.
September 23, 1994 their Motion to Recall Temporary
Restraining Order, Urgent Supplemental Motion to Recall The orders of Judge Reyes are provisional in nature and do not
Temporary Restraining Order and Opposition to Issuance of a touch on the merits of the case. The issues raised in Civil Case
Writ of Preliminary Issuance of a Writ of Preliminary Injunction No. 94-71656 are the validity of the Directive and Memorandum,
(G.R. No. 117263, Rollo p. 434). which were issued after the decision of this Court in G.R. No.
115044. The respondent in the civil case before the trial court
Petitioners in G.R. No. 117263 failed to shown any irregularity are not even parties in G.R. No. 115044.
attendant to the raffle or any prejudice which befell them as a
result of the lack of notice of the raffle of Civil Case No. 94- PUNO, J., dissenting:
71656.
The petitions at bench involve great principles of law in tension.
On the other hand, petitioners never asked for a re-raffle of the On balance at one end is the high prerogative of the State to
case or for any affirmative relief from the trial court and promote the general welfare of the people thru the use of police
proceeded with the presentation of evidence of ADC in power; on the opposite end is the right of an entity to have its
connection with the motion for preliminary injunction. property protected against unreasonable impairment by the
State. courts accord the State wide latitude in the exercise of its
B. The purpose of a temporary restraining order or preliminary police power to bring about the greatest good of the greatest
injunction, whether preventive or mandatory, is merely to number. But when its purpose is putrefied by private interest,
prevent a threatened wrong and to protect the property or the use of police power becomes a farce and must be struck
rights involved from further injury, until the issues can be down just as every arbitrary exercise of government power
determined after the hearing on the merits (Ohio Oil Co. v. should be stamped out.
Conway, 279 U.S. 813, 73 L. Ed. 972, 49 S. Ct. 256; Gobbi v. Dilao,
58 Or. 14, 111 p. 49, 113, p. 57). What is intended to be
I will confine myself to the jugular issue of whether or not The Public On Horse And Dog Races, Jai-Alai, Or Basque pelota
Associated Development Corporation (ADC) still possesses a valid And Other Forms of Gambling." its Text states:
franchise to operate jai-alai in manila. The issue is multi-
dimensional considering its constitutional complexion. xxx xxx xxx

First, the matrix of facts. On June 18, 1949, congress enacted Sec. 1. Any provision of law to the contrary
Republic Act No. 409, otherwise known as the Charter of Manila. notwithstanding, the authority of Chartered
Section 18 (jj) gave to the Municipal Board (now City Council) the Cities and other local governments to issue
following power: license, permit or any form of franchise to
operate, maintain and establish horse and dog
(jj) To tax, license, permit and regulate wagers race tracks, jai-alai or other forms of gambling
or betting by the public on boxing, sipa, is hereby revoked.
bowling, billiards, pools, horse or dog races,
cockpits, jai-alai, roller or ice skating or any Sec. 2. Hereafter all permit or franchise to
porting or athletic contest, as well as grant operate, maintain and establish horse and dog
exclusive rights to establishments for this race tracks, jai-alai and other forms of
purpose, notwithstanding any existing law to gambling shall be issued by the national
the contrary. government upon proper application and
verification of the qualifications of the
On June 20, 1953, congress passed Republic Act No. 954 entitled applicant: Provided, That local governments
"An Act to Prohibit Certain Activities in Connection with Horse may, upon clearance from the chief of
Races and Basque pelota Games (Jai-Alai) and to Prescribe constabulary and during town fiestas and
penalties for its Violation." Sections 4 and 5 of the law provide: holidays, continue to issue permits for minor
games which are usually enjoyed by the people
xxx xxx xxx during such celebrations.

Sec. 4. No person, or group of persons, other Sec. 3. All existing franchises and permits
than the operator or maintainer of a fronton issued by local government are hereby revoked
with legislative franchise to conduct basque and may be renewed only in accordance with
pelota games (Jai-Alai), shall offer, take or this Decree.
arrange bets on any basque pelota game or
event, or maintain or use a totalizer or other P.D. No. 771 was enacted on August 20, 1975 and purportedly
device, method or system to bet or gamble on revoked the permit of ADC to operate. Before two (2) months
any basque pelota game or event. could elapse or on October 16, 1975, then President Marcos
issued P.D. No. 810 granting a franchise to Philippine Jai-Alai and
Sec. 5. No person, operator, or maintainer of a Amusements corporation to conduct jai-alai games in Manila. it
fronton with legislative franchise to conduct is not disputed that his brother-in-law, Mr. Alfredo "Berjo"
basque pelota games shall offer, take, or Romualdez, held the controlling interest in Philippine Jai-alai and
arrange bets on any basque pelota game or Amusements Corporation. apparently, the favored treatment
event, or maintain or use a totalizator or to her given to Mr. Romualdez and company did not sit well with
device, method or system to bet or gamble on former President Corazon C. Aquino. On May 8, 1987, she issued
any basque pelota game or event outside the Executive Order No. 169 repealing P.D. No. 810. Nevertheless,
place, enclosure, or fronton where the basque she allowed P.D. No. 771 to stay in our statutes book.
pelota game is held.
ADC thought it could resume its jai-alai operation. On May 5,
On September 7, 1971, the Municipal Board of Manila approved 1988, it sought from then mayor Gemiliano C. Lopez, Jr., of
Ordinance No. 7065 "authorizing the Mayor to Allow and Permit Manila a permit to operate on the strength of Ordinance No.
the Associated Development Corporation to Establish, Maintain 7065. The request was refused and this Spawned suits1 all won
and Operate a Jai-Alai in the city of Manila, Under Certain Terms by ADC. In Civil Case No. 88-45660, filed in Br. 40, RTC, Manila,
and Conditions And For Other Purposes." Judge Augusto E. Villarin ruled that Ordinance No. 7065 created
a binding contract between the city of Manila and ADC, and
On September 21, 1972, martial law was declared by then hence, the City Mayor had no discretion to deny ADC's permit.
president Ferdinand E. Marcos. The 1971 Constitution, as The ruling was appealed to the Court of Appeals where it was
amended, authorized the former President to exercise legislative docketed as CA-G.R. SP No. 16477. On February 9, 1989,
powers. Among the laws he decreed is P.D. No. 771, "Revoking however, Mayor Lopez withdrew the city's appeal. Still, the legal
All Powers And Authority Of Local Government(s) to Grant problems of ADC did not disappear. Manila Mayor Alfredo Lim
Franchise, License Or Permit And Regulate Wagers Or Betting By who succeeded Mayor Lopez again refused to issue ADC's permit
despite orders of Judge Felipe G. Pacquing.2 Threatened with
contempt, Mayor Lim filed with this Court G.R. No. 115044, a of ADC. The GAB dutifully ordered ADC to cease and desist from
petition for certiorari. He alleged that he could not be compelled operating the Manila jai-alai. ADC again rushed to the RTC of
to enforce the Decision in Civil Case No. 88-45660 as the same is Manila and filed Civil Case No. 94-71656 which was raffled to Br.
null and void for want of jurisdiction of the court that rendered 14, presided by respondent Judge Vetino Reyes. Acting with
it. He likewise contended that Ordinance No. 7065 had been dispatch, respondent judge temporarily restrained the GAB from
revoked by P.D. No. 771. On September 1, 1994, the First division withdrawing the provisional authority of ADC to operate. After
of this court, speaking thru Mr. Justice Camilo Quiason, hearing, the temporary restraining order was converted into
dismissed Mayor Lim's petition. It held: writs of preliminary injunction and preliminary mandatory
injunction upon posting by ADC of a P2 million bond. these writs
xxx xxx xxx are challenged in these consolidated petitions as having been
issued in grave abuse of discretion amounting to lack of
Petitioners failed to appreciate the distinction jurisdiction.
between a void and an erroneous judgment
and between jurisdiction and the exercise of While the petitions at bench are checkered with significant
jurisdiction. substantive and procedural issues, I will only address the
contention that ADC has no existing legislative franchise. The
Having jurisdiction over the civil case, whatever contention is anchored on two (2) submissions: first, ADC has no
error may be attributed to the trial court, is legislative franchise as required by R.A. No. 954, and second,
simply one of judgment, not of jurisdiction. an even if the city of Manila licensed ADC to operate jai-alai, its
error of judgment cannot be corrected authority was nevertheless revoked by section 3 of P.D. No. 771.
by certiorari but by appeal (Robles v. House of
Representatives Electoral Tribunal, 181 SCRA I find as completely baseless petitioners' submission that R.A.
780 [1990]; De Castro v. Delta Motor Sales No. 954 requires a legislative franchise to operate a jai-alai, in
Corporation, 57 SCRA 344 [1978]; Galang v. effect, revoking the power of the City of Manila to issue permits
Endencia, 73 Phil. 391 [1941]. for the same purpose as granted by its Charter. A 20-20 visual
reading of R.A. No. 954 will not yield the suggested
The issue on the cancellation of Ordinance No. interpretation by petitioners. the titles of R.A. No. 954 will
7065 by president Marcos could have been immediately reveal that the law was enacted to achieve
raised as a special defense in Civil Case No. 88- a special purpose. It states: "An Act To Prohibit Certain
54660 but was not . . . Activities In Connection With Horse Races And Basque pelota
Games (Jai-Alai), And To Prescribe Penalties For its Violation."
The prohibited activities related to jai-alai games are specified in
The City of Manila should have pursued in the
sections 4 to 6, viz:
appellate courts its appeal questioning the
dismissal of Civil Case No. 91-58913, where the
trial court ruled that Mayor Lopez and the city Sec. 4. No person, or group of persons, other
could no longer claim that Ordinance No. 7065 than the operator or maintainer of
had been cancelled by president Marcos a fronton with legislative franchise to
because they failed to raise this issue in Civil conduct basque pelota games (Jai-Alai), shall
Case No. 88-54660. offer, take or arrange bets on any basque
pelota game or event, or maintain or use a
totalizator or other device, method or system
At any rate, the unilateral cancellation of the
to bet or gamble on any basque pelota game or
franchise, which has the status of a contract,
event.
without notice, hearing and justifiable cause is
intolerable in any system where the rule of Law
prevails (Poses v. Toledo Transportation Co., 62 Sec. 5. No person, operator, or maintainer
Phil. 297 [1935]; Manila electric Co., v. Public of fronton with legislative franchise to
utility commissioners, 30 Phil. 387 [1915]. conduct basque pelota games shall offer, take
or arrange bets on any basque pelota game or
event, or maintain or use a totalizator or other
Upon its receipt, Mayor Lim manifested he would comply with
device, method or system to bet or gamble on
the Decision. He did not file a motion for reconsideration. it was
any basque pelota game or event outside the
then that the Republic started its own legal battle against ADC. it
place, enclosure, or fronton where the basque
intervened in G.R. No. 115044, raising several issues, especially
pelota game is held.
ADC's lack of a valid legislative franchise to operate jai-alai. No
less than Executive Secretary Teofisto Guingona directed the
Games and Amusement Board, then headed by Mr. Francisco R. Sec. 6. No person or group of persons shall fix
Sumulong, jr., to hold in abeyance the grant of authority, or if a basque pelota game for the purpose of
any had been issued, to withdraw such grant of authority in favor insuring the winning of certain determined
pelotari or pelotaris.
The Title of R.A. No. 954 does not show that it seeks to limit the MR. CINCO. Mr. Speaker, I
operation of jai-alai only to entities with franchise given by withdraw my motion for
Congress. what the title trumpets as the sole subject of the law is postponement.
the criminalization of certain practices relating to jai-alai games.
The title of a law is a valuable intrinsic aid in determining MR. CALO. Mr. Speaker, will
legislative intent.3 the gentleman may yield, if
he so desires.
The Explanatory Note4 of House Bill 3204, the precursor of R.A.
No. 954, also reveals that the intent of the law is only to MR. ZOSA. Willingly.
criminalize the practice of illegal bookies and game-fixing in jai-
alai. It states: MR. CALO. What is the
national import of this bill?
This bill seeks to prohibit certain anomalous
practice of "bookies" in connection with the MR. ZOSA. Mr. Speaker, this
holding of horse races or "basque pelota" bill prohibits certain activities
games. The term "bookie" as commonly in connection with horse
understood refers to a person, who without races and jai-Alai games
any license therefor, operates outside the which are
compounds of racing clubs and accepts bets licensed by the government.
from the public. They pay dividends to winners At present, there are many
minus a commission, which is usually 10%. practices in connection with
Prosecutions of said persons have been the holding of these games
instituted under Act No. 4240 which was which deprive the
enacted in 1935. However, in a recent opinion government of income that
released by the City Fiscal of Manila he should
maintains that Act No. 4240 has already been legally go into the
repealed, so that the present law regulating government coffers as taxes.
ordinary horse races permits "bookies" to ply
their trade, but not on sweepstakes races and
MR. CALO. Is not this matter
other races held for charitable purposes. With
of national importance
the operation of "booking" places in the City of
because Jai-Alai
Manila, the Government has been losing no
games and horse races are
less than P600,000.00 a year, which amount
held only in Manila?
represents the tax that should have been
collected from bets made in such places. for
these reasons, the approval of the bill is MR. ZOSA. Precisely, Mr.
Speaker, they are played on a
earnestly recommended.
big scale, and
there are many practices
As said Explanatory Note is expressive of the purpose of the bill,
which deprive the
it gives a reliable keyhole on the scope and coverage of R.A. No.
government of
954.5 Nothing from the Explanatory Note remotely suggests any
income to which it is entitled.
intent of the law to revoke the power of the City of Manila to
I think the gentleman from
issue permits to operate jai-alai games within its territorial
Agusan is a member of the
jurisdiction.
Committee on
Appropriations.
The Debates6 in Congress likewise reject the reading of R.A. No. The governments will have
954 by petitioners, thus: more revenues, if we shall
approve this bill.
xxx xxx xxx
Again, legislative debate is a good source to determine the intent
RESUMPTION OF SESSION of a
law.7
THE SPEAKER. The session is
resumed To top it all, the text of R.A. no. 954 itself does not intimate that
it is repealing any existing law, especially section 18 (jj) of R.A.
no. 409, otherwise known as the Charter of Manila. Indeed, R.A.
No. 954 has no repealing provision. The reason is obvious — it
simply prohibited certain practices in jai-alai then still concern: (a) the preservation of the state itself and the
unregulated by the laws of the land. It did not regulate aspects of unhindered execution of its legitimate functions; (b) the
jai-alai already regulated by existing laws, like the matter of prevention and punishment of crime; (c) the preservation of the
whether it is the national government alone that should issue public peace and order; (d) the preservation of the public safety;
franchises to operate jai-alai games. (e) the purity and preservation of the public morals; (f) the
protection and promotion of the public health (g) the regulation
The subsequent enactment of P.D. No. 771 on August 20, 1975 of business, trades, or professions the conduct of which may
further demolished the submission of petitioners. In clear and affect one or other of the objects just enumerated; (h) the
certain language, P.D. no. 771 recalled the owner of local regulation of property and rights of property so far as to prevent
governments to issue jai-alai franchises and permits. It also its being used in a manner dangerous or detrimental to others;
revoked existing franchises and permits issued by local (i) the prevention of fraud, extortion, and oppression; (j) roads
governments. If R.A. no. 954 had already disauthorized local and streets, and their preservation and repair; and (k) the
governments from granting franchisers and permits, there would preservation of game and fish. 14
be no need to enact P.D. no. 771. No rule of statutory
construction will be considered any law a meaningless But while the State is bestowed near boundless authority to
redundancy. promote public welfare, still the exercise of police power cannot
be allowed to run riot in a republic ruled by reason. Thus, our
The passage of P.D. No. 771, also negates petitioners' insistence courts have laid down the test to determine the validity of a
that for ADC to continue operating, it must show it has a police measure as follows: (1) the interest of the public
franchise from Congress, not just a permit from the City of generally, as distinguished from those of particular class,
Manila. The suggested dichotomy between a legislative franchise requires its exercise; and (2) the means employed are reasonably
and city permit does not impress. If the City of Manila is necessary for the accomplishment of the purpose and not unduly
empowered to license the ADC it is because the power was oppresive upon individuals. 15 Deeper relexion will reveal that
delegated to it by Congress. The acts of the City of Manila in the the test reiterates the essence of our constitutional guarantees
exercise of its delegated power bind Congress as well. Stated of substantive due process, equal protection, and non-
otherwise, the permit given by the City to ADC is not any whit impairment of property rights.
legally inferior to a regular franchise. Through the years, the
permit given by the City endows the grantee complete right to We now apply this lucidly-lined test to the petitions at bench. To
operate. Not once, except in these cases, has the national reiterate, P.D. No. 771 utilized two methods to regulate jai-alai:
government questioned the completeness of his right. For this First, it reverted the power to issue franchise and permit to the
reason, P.D. No. 771 has to take revoke all existing franchises national government, second, it revoked all existing franchise
and permits without making any distinction. It treated permits in and permit issued by local governments.
the same class as franchises.
I concede that the first method is invulnerable even to the
Petitioners' second line of argument urges that in any event, strongest of constitutional attack. Part of the plenary power of
Section 3 of P.D. No. 771 expressly revoked all existing franchises Congress to make laws is the right ot grant franchise and permits
and permits to operate jai-alai games granted by local allowing the exercise of certain privileges. Congress can delegate
governments, including the permit issued to ADC by the City of the exercise of this innate power to grant franchises as it did to
Manila through Ordinance No. 7065. For its resolution, the City of Manila when it granted its charter on June 18, 1949
petitioners' argument requires a re-statement of the thru R.A. no. 409. Congress can also revoke the delegated power
requirements for the valid exercise of police power. and choose to wield the power itself as it did thru then President
Marcos who exercised legislative powers by enacting P.D. No.
It was the legendary Chief Justice Marshall who first used the 771. In the petitions at bench, Congress revoked the power of
phrase police power in 1824.8 Early attempts to fix the metes local government to issue franchises and permits which it had
and bounds of police power were unsuccessful. 9 For of all the priorly delegated. In doing so and in deciding to wield the power
inherent powers of the State, police power is indubitably the itself to meet the perceived problems of the time, the legislature
most pervasive, 10 the most insistent and the least exercised its distinct judgment and the other branches of
limitable. 11 Rooted on the latin maxims, salus populi suprema government, including this Court, cannot supplant this judgment
est lex (the welfare of the people if the supreme law) and sic without running afoul of the principle of separation powers. To
utere tuo ut alienum non laedas (so use your property as not to be sure, this particular legislative method to regulate the
injure the property of others), it was not without reason for problem of mushrooming applications for jai-alai franchise
Justice Holmes to stress that its reach extends "to all the great cannot be faulted as bereft of rationality. In the hearing of the
public needs." 12 A similar sentiment was echoed by our own petitions at bench, Executive Secretary Guingona established the
Justice Laurel in Alalang v. Williams 13 who defined police power fact that at the time of the enactment of P.D. No. 771, there
as the "state authority to enact legislation that may interfere were numerous applications to run jai-alai games in various cities
with personal liberty or property in order to promote the general and municipalities of the archipelago. To prevent the
welfare." Over the years, courts recognized the power of proliferation of these applications and minimize their ill effects,
legislature to enact police regulations on broad areas of state the law centralized their screening by the national government
alone. The law excluded local governments in the process. The meandering, aimless power ultimately tears apart the social
revocation of the delegated power to local governments does fabric of society. Thus, the grant of police power to promote
not impair any right. Applicants to franchises have no right to public welfare cannot carry with it the privilege to be oppressive.
insist that their applications be acted upon by local governments. The Constitution ordained the State not just to achieve order or
Their right to a franchise is only in purpose. liberty but to attain ordered liberty, however elusive the balance
may be. Cognizant of the truism that in life the only constant is
The second method adopted by Section 3 of P.D. No. 771 which change, the Constitution did not design that the point that can
revoked all existing franchises and permits is, however, strike the balance between order and liberty should be static for
constitutionally impermissible. On its face, section 3 purports to precisely, the process of adjusting the moving point of the
revoke all existing franchises and permits. During the oral balance gives government greater elasticity to meet the needs of
argument of the petitions at bench, however, it was admitted the time.
that at the time P.D. No. 771 was enacted, only ADC is actually
operating a jai-alai. 16 The purported revocation of all franchises It is also my respectful submission that the unconstitutionality of
and permits when there was only one existing permit at that section 3 of P.D. No. 771 was not cured when former President
time is an unmistakeable attempt to mask the law with Aquino used it in revoking P.D. No. 810 which granted Philippine
impartiality. No other permit was affected by said sec. 3 except Jai-Alai and Amusements Corporation a franchise to operate jai-
ADC. alai in Manila. The subsequent use of said section should not
obfuscate the fact that the law was enacted in the wrongful
Truth, however, has its own time of sprouting out. The truth exercise of the police power of the State. There is no
behind the revocation of ADC's franchise revealed itself when sidestepping the truth that its enactment inflicted undue injury
former President Marcos transferred ADC's franchise to the on the right s of ADC and there can be no reparation of these
Philippine Jai-Alai and Amusements Corporation then under the rights until and unless its permit to continue operating jai-alai in
control of his brother-in-law, Mr. Alfredo "Bejo" Romualdez. The Manila is restored. Cancelling the franchise of Philippine Jai-Alai
favored treatment was extended hardly two (2) months after the and Amusements Corporation is an act of Justice to ADC if its
revocation of ADC's franchise and it left Philippine Jai-Alai and franchise would be left unrecognized. Since the
Amusements Corporation the sole jai-alai operator in the unconstitutionality of section 3 is congenital, it is beyond
Philippines. The Court is not informed of any distinction of PJAC redemption.
that will justify its different treatment. The evidence is thus clear
and the conclusion is irresistable that section 3 of P.D. No. 771 But while I wholeheartedly subscribe to the many impeccable
was designed with a malignant eye against ADC. theses of Mr. Justice Quiason, it is with regret that I cannot join
his submittal that sec. 3 of P.D. No. 771 violates procedural due
In light of the established facts in field, section 3 of P.D. No. 771 process. We are dealing with the plenary power of the legislature
must be struck down as constitutionally infirmed. despite its to make and amend laws. Congress has previously delegated to
cosmetics, section 3 cannot be unblushingly foisted as a measure the City of Manila the power to grant permits to operate jai-alai
that will promote the public welfare. There is no way to treat the within its territorial jurisdiction and ADC's permit could have
self-interest of a favored entity as identical with the general been validly revoked by law if it were demonstrated that its
interest of a favored entity as identical with the general interest revocation was called for by the public good and is not
of the Filipino people. It will also be repulsive to reason to capricious. In ascertaining the public good for the purpose of
entertain the thesis that the revocation of the franchise of ADC is enacting a remedial law, it is not indispensable, albeit sometimes
reasonably necessary to enable the State to grapple to the desirable, to give notice and hearing to an affected party. The
ground the evil of jai-alai as a form of gambling. Petitioners have data the legislature seeks when engaged in lawmaking does not
not demonstrated that government lacks alternative options to focus on the liability of a person or entity which would require
succeed in its effort except to cancel the lone franchise of ADC. fair hearing of the latter's side. In fine, the legislature while
Well to stress, it is not the lofty aim of P.D. No. 771 to making laws is not involved in establishing evidence that will
completely eradicate jai-alai games; it merely seeks to control its convict, but in unearthing neutral data that will direct its
multiplication by restoring the monopoly of the national discretion in determining the general good.
government in the dispensation of franchises.
The suggested notice and hearing before a franchise can be
Prescinding from these premises, I share the scholarly view of cancelled has another undesirable dimension. It does not only
Mr. Justice Quiason that sec. 3 of P.D. No. 771 offends the unduly cramp the legislature in its method of data-gathering, it
Constitution which demands faithful compliance with the also burdens the legislature with too much encumbrance in the
requirements of substantive due process, equal protection of the exercise of its police power to regulate gambling. However
law, and non-impairment of contracts. capsulizing their essence, heavily laden with property rights a franchise to operate jai-alai
substantive due process exacts fairness; equal protection maybe, it is still a contract which under appropriate
disallows distinction to the distinctless; and the guaranty of non- circumstances can be revoked to enhance public interest. Jai-alai
impairment of contract protects its integrity unless demanded may be a game of a thousand thrills but its true thrill comes from
otherwise by the public good. Constitutionalism eschews the the gambling on its indeterminate result. Beyond debate,
exercise of unchecked power for history demonstrates that a gambling is an evil even if its advocates bleach its nefariousness
by upgrading it as a necessary evil. In a country where it is a challenge involves a facile conflict between good and evil,
policy to promote the youth's physical, moral, spiritual, between a universally recognized vice and the State's virtuous
intellectual, and social well-being, 17 there is no right to gamble, posture, the instant case lends itself to easy adjudication.
neither a right to promote gambling for gambling is contra bonos
mores. To require the legislature to strictly observe procedural Not necessarily. Economic realities have blurred distinctions. The
before it can revoke a gambling due process before it can revoke State itself, though in virtuous garb, has at various times allowed
a gambling franchise is to put too much primacy on property a relaxation of existing rules proscribing gambling and devised a
rights. We then stand in danger of reviving the long lamented system of regulations, local and national, through which
1905 ruling in Lochner v. New York 18 which unwisely struck down gambling and otherwise illicit gaming operations may be
government interference in contractual liberty. The spirit of maintained by those licensed to do so. As the system has never
liberalism which provides the main driving force of social justice been perfect, conflict, such as that which existed in the case at
rebels against the resuscitation of the ruling Lochner from its bench, occasionally arises.
sarcophagus. We should not be seduced by any judicial activism
unduly favoring private economic interest 19 at the expense of The constitutionality of P.D. 771 was not in issue in Lim vs.
the public good. Pacquing, promulgated by the court's first Division last
September, 1994, where this court sustained an order by Judge
I also support the stance of Mr. Justice Quiason which resisted Pacquing issued in Civil Case No. 88-45660 compelling Manila
the stance that the Court should close its eyes to allegations that Mayor Alfredo S. Lim to issue a permit to operate a jail fronton in
section 3 of P.D. No. 771 was conceived and effected to give favor of the Associated Development Corporation (ADC)
naked preference to a favored entity due to pedigree. I reiterate pursuant to Manila City Ordinance No. 7065.
the view that section 1, Article VIII of the Constitution expanding
the jurisdiction of this Court to determine whether or not there After the City of Manila subsequently granted ADC a permit to
has been a grave abuse of discretion amounting to lack or excess operate the jai-alai fronton, Chairman Francisco Sumulong, Jr. of
of jurisdiction on the part of any branch or agency of the Games and Amusements Board issued on September 9, 1994
government is not a pointless postulate. Without the grant of a provisional authority to open the fronton subject to certain
this new power, it would be difficult, if not impossible, to pierce conditions imposed therein. In relation to this, the GAB likewise
through the pretentious purposes of P.D. No. 771. P.D. No. 771 issued to the ADC, on 12 September 1994, License No. 94-008
has no right to a reverential treatment for it is not a real law as it upon payment of the corresponding fees.
is not the product of an authentic deliberative legislature.
Rather, it is the dictate of a public official who then had a
On September 13, 1994, Executive Secretary Teofisto Guingona
monopoly of executive and legislative powers. As it was not
directed GAB Chairman Sumulong "to hold in abeyance the grant
infrequently done at that time, the whereas clauses of laws used
of authority or if any has been issued, to withdraw such grant of
to camouflage a private purpose by the invocation of public
authority"1 to the ADC. Consequently, on September 14, 1994,
welfare. The tragedy is that the bogus invocation of public
the GAB Chairman revoked the provisional authority issued by
welfare succeeded partly due to the indefensible deference
his office, until the legal issues raised in the September 13
given to official acts of government. The new Constitution now
directive of the Executive Secretary are resolved in the proper
calls for a heightened judicial scrutiny of official acts. For this
court. Said directive identified the legal issues as centering on 1)
purpose, it has extirpated even the colonial roots of our
the constitutionality of P.D. 771; 2) the validity of the apparent
impotence. It is time to respond to this call with neither a pause
grant in perpetuity of a municipal franchise to maintain jai-alai
nor a half-pause.
operations; and, 3) the power of the city of Manila to issue a jai-
alai franchise in view of Executive Order 392 which transferred
I therefore vote to declare section 3 of P.D. No. 771 from local governments to the GAB the power to regulate jai-
unconstitutional and to dismiss the petitions. alai.

Reacting to the cancellation of its provisional authority to


maintain jai-alai operations, ADC, on September 15, 1994 filed a
Separate Opinions petition for prohibition, mandamus, injunction and damages
with prayer for temporary restraining order and writ of
KAPUNAN, J., concurring: preliminary injunction in the Manila Regional Trial Court of
against Executive Secretary Guingona and Chairman Sumulong.
Government encroachments on private property however, valid, The Regional Trial court of manila, Branch 4, through Judge
are always subject to limitations imposed by the due process and Vetino Reyes on the same day issued an order enjoining the
impairment of contracts clauses of the Constitution. The Executive Secretary and the GAB Chairman from implementing
government challenge in the case at bench, ostensibly involving their directive and memorandum, respectively.
a franchise granted pursuant to legitimate local legislative
authority, on the surface appears to be an easy one, clothed, as On September 16, 1994 GAB, representing the Republic of the
it were in the State's inherent and almost illimitable prerogative Philippines, filed a motion for intervention, for leave to file a
to promote the general welfare and the common good. As the motion for reconsideration-in-intervention and for reference of
the case to the Court en banc in G.R. No. 115044. Acting on this Games and Amusements Board as now
motion, the First Division referred the case to the Court en banc, provided by law;
which, in a resolution dated 20 September 1994, accepted the
same and required the respondents therein to comment. d. That the corporation will in addition pay to
the city an annual license fee of P3,000.00 and
On October 11, 1994 the Executive Secretary and the new GAB a daily permit fee of P200.00;
Chairman Domingo Cepeda, Jr. filed with this Court a petition
for certiorari, prohibition and mandamus assailing Judge Vetino e. That the corporation will to insure its faithful
Reyes' earlier order. compliance of all the terms and conditions
under this ordinance, put up a performance
On October 19. 1994, Judge Reyes issued another order granting bond from a surety acceptable to the City, in
the ADB's motion for a writ of preliminary mandatory injunction the amount of at least P30,000.00.
against the Executive Secretary and the GAB Chairman and to
compel them to issue the necessary authority, licenses and xxx xxx xxx
working permits to the ADC, its personnel and players.
Sec. 3 This ordinance shall take effect upon its
The government sought leave to file a supplemental petition approval.
(and to admit attached supplemental petition) with urgent
prayer for a restraining order assailing the October 19, 1994 The above-quoted ordinance is notable in two respects: 1) the
Order of Judge Reyes. We granted leave to file said supplemental absence of a period of expiration suggests that the grant of
petition and to admit supplemental petition and required authority to operate the Basque pelota game jai-alai seems to
respondents therein to file their comment on October 25, 1994. have been granted in perpetuity and 2) while the grant of
authority under the Ordinance was made pursuant to R.A. 409,
The ADC maintains it original position that Ordinance No. 7065, the City Charter of Manila, the authority granted could best be
enacted pursuant to the Charter of the City of Manila under viewed as a grant of license or permit, not a franchise. Nowhere
Republic Act No. 409 granted a valid and is it pretended that Ordinance 7065 is a franchise enacted
subsisting municipal franchise for the operation of the Basque pursuant to the legislative powers of the Municipal Board of the
pelota game jai alai. In response to the government's vehement City of Manila under Section 18 (jj) thereof.
objections against ADC's operation of its gambling
operations2 the ADC for the first time challenged the The absence of authority of the Manila Municipal Board to issue
constitutional validity of P.D. No. 771 insofar as it revoked the a franchise, notwithstanding its legislative powers, is
authority granted to it by Ordinance No. 7065 as violative of the furthermore evident in the above-cited Charter provision
non-impairment of contracts and equal protection clauses of the regulating gambling and other gaming establishments which
constitution. Ordinance 7065 reads: enumerates the following powers:

Sec. 1. The Mayor is authorized, as he is hereby (jj) To tax, license, permit and regulate wagers
authorized to allow and permit the Associated of betting by the public on boxing . . . cockpits,
Development Corporation to establish, jai-alai . . . as well as this purpose,
maintain and operate a jai-alai in the City of notwithstanding any existing law to the
Manila under the following terms and contrary.
conditions and such other terms and
conditions as he (the Mayor) may prescribe for
Clearly the, if Ordinance 7065 merely grants a permit or a license
good reasons of general interest:
to operate the jai-alai fronton, I see no conflict with a national
law, duly enacted pursuant to legitime franchise to operate
a. That the construction, establishment, and certain gambling and gaming operations, generally viewed as
maintenance of the jai-alai shall be at a place deleterious to the public welfare and morals, for the purpose of
permissible under existing zoning ordinances of regulating the same and raising revenue. In other words, the
Manila; national government may well validly require operators of such
establishments to first secure a legislative franchise before
b. That the games to be played daily shall starting their operations. After securing the proper legislative
commence not earlier than 5:00 o'clock (sic) in franchise, they may take then exercise whatever authority
the afternoon; granted to them by local legislative bodies pursuant to the
permits or licenses granted by these bodies. This is essentially
c. That the City of Manila will receive a share of the spirit ordained by at least two legislative issuances relating to
21/2% of the annual gross receipts of all jai-alai and other gambling operations passed before and after
wagers or bets ½% of which will accrue to the the Manila City Council issued the ADC's permit to operate.
In June of 1952, Congress enacted R.A. 392 which forbade the Contracts clauses of the Constitution. By their very nature,
taking or arranging of bets on any basque pelota game by any franchise are subject to amendment, alteration or revocation by
person or entity other than one with a legislative the State whenever appropriate. Under the exercise of its police
franchise.3 After the ADC was issued its permit by the City of power, the State through its requirement for permits, licenses
Manila in 1971, President Marcos issued P.D. 771 pursuant to his and franchises to operate, undertakes to regulate what would
legislative powers during martial Law, which revoked local otherwise be an illegal activity punished by existing penal laws.
authority to grant franchise to certain gambling operations The police power to establish all manner of regulation of
including jai-alai. Section 3 thereof expressly revoked existing otherwise illicit, immoral and illegal activities is full, virtually
gambling franchise issued by the local governments. When illimitable and plenary.7
President Corazon Aquino cancelled the franchise granted to the
Philippine Jai-alai and Amusement Corporation in 1987, she kept In Edu v Ericta8 we defined the police power as "the state
P.D. 771, which revoked all authority by local governments to authority to enact legislation that may interfere with personal
issue franchises for gambling and gaming establishments on one liberty or property in order to promote the general welfare." In
hand, and the municipal ordinance of the City of Manila, granting its exercise, the State may impose appropriate impositions or
a permit or license to operate subject to compliance with the restraints upon liberty or property in order to foster the common
provisions found therein, on the other hand, a legislative good.9 Such imposition or restraint neither violates the
franchise may be required by the government as a condition for impairment of contracts nor the equal protection clauses of the
certain gambling operations. After obtaining such franchise, the Constitution if the purpose is ultimately the public good.10
franchisee may establish operations in any city or municipality
allowed under the terms of the legislative franchise, subject to Restraints on property are not examined with the same
local licensing requirements. While the City of Manila granted a microscopic scrutiny as restrictions on liberty. 11 Such restraints,
permit to operate under Ordinance No. 7065, this permit or sometimes bordering on outright violations of the impairments
authority was at best only a local permit to operate and could be of contract principle have been made by this Court for the
exercised by the ADC only after it shall have obtained a general welfare of the people. Justice Holmes in Noble State
legislative franchise. Bank v. Haskel 12 once expansively described the police power as
"extending to all public needs." Franchise and licensing
This skirts the constitutional issue. Both P.D. 771 and Ordinance regulations aimed at protecting the public from the pernicious
7065 can stand alongside each other if one looks at the authority effects of gambling are extensions of the police power addressed
granted by the charter of the City of Manila together with to a legitimate public need.
Ordinance No. 7065 merely as an authority to "allow" and
"permit" the operation of jai-alai facilities within the City of In Lim vs. Pacquing, I voted to sustain the ADC's position on
Manila. While the constitutional issue was raised by the issues almost purely procedural. A thorough analysis of the new
respondent corporation in the case at bench, I see no valid issues raised this time, compels a different result since it is
reason why we should jump into the fray of constitutional plainly obvious that the ADC, while possessing a permit to
adjudication in this case, or on every other opportunity where a operate pursuant to Ordinance 7065 of the City of Manila, still
constitutional issue is raised by parties before us. It is a settled has to obtain a legislative franchise, P.D. 771 being valid and
rule of avoidance, judiciously framed by the United States constitutional.
Supreme Court in Ashwander v. TVA 4 that where a controversy
may be settled on a platform other than one involving
On the question of the propriety of the Republic of the
constitutional adjudication, the court should exercise becoming
Philippine's intervention late in the proceedings in G.R. No.
modesty and avoid the constitutional question.
117263, the ADC counsel's agreeing to have all the issues raised
by the parties in the case at bench paves the way for us to
The State has every legitimate right, under the police power, to consider the petition filed in G.R. No. 117263 as one for quo
regulate gambling operations5 by requiring legislative franchises warranto.
for such operations. Gambling, in all its forms, unless specifically
authorized by law and carefully regulated pursuant to such law,
WHEREFORE, on the basis of the foregoing premises, judgment is
is generally proscribed as offensive to the public morals and the
hereby rendered:
public good. In maintaining a "state policy" on various forms of
gambling, the political branches of government are best
equipped to regulate and control such activities and therefore 1. Allowing the republic to intervene in G.R.
No. 115044.
assume full responsibility to the people for such
policy.6 Parenthetically, gambling in all its forms, is generally
immoral. 2. Declaring that P.D. 771 is a valid and
subsisting law.
The disturbing implications of a grant of a "franchise," in
perpetuity, to the ADC militates against its posture that the 3. Declaring that the ADC does not possess the
government's insistence that the ADC first obtain a legislative required legislative franchise to operate the jai-
franchise violates the equal protection and impairment of alai under R.A. 954 and P.D. 771.
4. Setting aside the writs of preliminary The grant of an intervention is left to the discretion of the court.
injunction and preliminary mandatory Paragraph (b), Section 2, Rule 12 of the Rules of Court provides:
injunction issued by Judge Vetino Reyes.
(b) Discretion of court. — In allowing or
DAVIDE, JR., J., concurring: disallowing a motion for intervention, the
court, in the exercise of discretion, shall
The core issues submitted for the Court's resolution are: (1) in consider whether or not the intervention will
G.R. No. 115044, whether intervention by the republic of the unduly delay or prejudice the adjudication of
Philippines is proper, and (2) in G.R. No. 117263, whether public the rights of the original parties and whether
respondent Judge Vetino Reyes acted with grave abuse of or not the intervenor's rights may be fully
discretion in issuing the temporary restraining order and protected in a separate proceeding.
subsequently the writ of preliminary mandatory injunction in
Civil case No. 94-71656. It is thus clear that, by its very nature, intervention presupposes
an existing litigation or a pending case,8 and by the opening
I paragraph of Section 2, Rule 12 of the Rules the Rules of Court, it
may be properly filed only before or during the trial of the said
As to the first issue, I submit that unless we either amend the case. Even if it is filed before or during the trial, it should be
rule on intervention or suspend it, the motion to intervene must denied if it will unduly delay or prejudice the adjudication of the
be denied. Under Section 2, Rule 12 of the Rules of Court, such rights of the original parties and if the intervenor's rights may be
motion may be allowed only before or during a trial. Said section fully protected in a separate proceeding. 9
reads:
It is not disputed that the motion to intervene was filed only on
Sec. 2. Intervention. — A person may, before or 16 September 1994, or on the fifteenth (15th) day after the First
during a trial, be permitted by the court, in its Division had promulgated the decision, and after petitioner
discretion, to intervene in an action, if he has Mayor Alfredo Lim complied with or voluntarily satisfied the
legal interest in the matter in litigation, or in judgment. The latter act brought to a definite end or effectively
the success of either of the parties, or an terminated G.R. No. 115044. Consequently, intervention herein
interest against both, or when he is so situated is impermissible under the rules. To grant it would be a
as to be adversely affected by a distribution or capricious exercise of discretion. The decision of this Court
other disposition of property in the custody of in Director of Lands vs. Court of
the court or of an officer thereof. Appeals 10 cannot be used to sanction such capriciousness for
such decision cannot be expanded further to justify a new
doctrine on intervention. In the first place, the motions to
This provision was taken from Section 1, Rule 13 of the old Rules
intervene in the said case were filed before the rendition by this
of Court with the modification that the phrase "at any period of a
1 Court of its decision therein. In the second place, there were
trial" in the latter was changed to "before or during a trial."
unusual and peculiar circumstances in the said case which this
Court took into account. Of paramount importance was the fact
Section 1, Rule 13 of the old Rules of Court was based on Section
that the prospective intervenors were indispensable parties, and
121 of the Code of Civil Procedure which, in turn, was taken from
so this Court stated therein:
Section 387 of the Code of Civil procedure of California.2
But over and above these considerations and
The phrase "at any period of a trial" in Section 1, Rule 13 of the
circumstances which We have pointed out,
old Rules of Court has been construed to mean the period for the
there is the basic and fundamental
representation of evidence by both parties.3 And the phrase
requirement under the Rules of Court, Section
"before or during the trial" in Section 2, Rule 12 of the present
7, Rule 3, that "Parties in interest without
Rules of Court "simply means anytime before the rendition of
whom no final determination can be had of an
the final judgment."4Accordingly, intervention could not be
action shall be joined either as plaintiff or
allowed after the trial had been concluded5 or after the trial and
defendants." The joinder of indispensable
decision of the original case.6
parties is compulsory under any and all
conditions, their presence being a sine qua
Fundamentally then, intervention is never an independent action non of the exercise of judicial power. [Borlasa
but is ancillary and supplemental to an existing litigation. Its vs. Polistico, 47 Phil. 345, 348].
purpose is not to obstruct nor unnecessarily delay the placid
operation of the machinery of trial, but merely to afford one not
The herein movants, Greenfield Development
an original party, yet having a certain right or interest in the
Corporation, Alabang Development
pending case, the opportunity to appear and be joined so he
Corporation, Ramon D. Bagatsing, and all
could assert or protect such right or interest.7
buyers from them, at least those with
ostensible proprietary interests as the
MERALCO, Alabang Hills Subdivision, Cielito Considering then that the intervention in the case at bar was
Homes Subdivision, Tahanan Village, the commenced only after the decision had been executed, a
Ministry of Highways insofar as the South suspension of the Rules to accommodate the motion for
Super Highway is affected, are indispensable intervention and the intervention itself would be arbitrary. The
parties to these proceedings as it has been Government is not without any other recourse to protect any
shown affirmatively that they have such an right or interest which the decision might have impaired.
interest in the controversy or subject matter
that a final adjudication cannot be made, in May the motion to intervene and intervention proper be,
their absence, without injuring or affecting nevertheless, treated as a petition for quo warranto? The
such interest. The joinder must be ordered in majority opinion answers it in the affirmative because all the
order to prevent multiplicity of suits, so that essential requisites for a petition for quo warranto are present in
the whole matter in dispute may be said pleadings. I am almost tempted to agree with that opinion if
determined once and for all in one litigation. not for the fact that there is pending before the Regional Trial
Court of Manila Civil Case No. 94-71656 which is a petition for
And, squarely on the aspect of intervention, it found that the prohibition, mandamus, injunction, and damages filed by the
denial thereof Associated Development Corporation against Executive Secretary
Guingona and then Games and Amusement Board (GAB)
will lead the Court to commit an act of injustice Chairman Sumulong. That is the more appropriate forum where
to the movants, to their successors-in-interest the Government and petitioner Guingona may challenge the
and to all purchasers for value and in good validity of ADC's franchise. Its filing was provoked by the
faith and thereby open the door to fraud, withdrawal by the GAB of the provisional authority it granted to
falsehood and misrepresentation, should ADC in view of the 13 September 1994 directive of Executive
intervenors' claims be proven to be true. For it Secretary Guingona informing the GAB of sufficient bases to hold
cannot be gainsaid that if the petition for in abeyance the operation of the jai-alai until the legal questions
reconstitution is finally granted, the chaos and into the validity of the franchise issued to ADC. Consequently, it
confusion arising from a situation where the is to be logically presumed that for its affirmative defenses in
certificates of title of the movants covering Civil Case No. 94-71656 the Government would raise the same
large areas of land overlap or encroach on issues raised in the intervention in G.R. No. 117263.
properties the title to which is being sought to
be reconstituted by private respondent, who Accordingly, I vote to deny the motion for intervention in G.R.
herself indicates in her Opposition that, No. 115044.
according to the Director of Lands, the
overlapping embraces some 87 hectares only, II
is certain and inevitable.
However, I vote to partially grant the petition in G.R. No. 117263
Then too, it may be stressed that said case originated from a insofar as wagering or betting on the results order and the
proceeding to reconstitute a certificate of title filed by private preliminary mandatory injunction issued by respondent Judge
respondent. After trial, the Court of First Instance issued an cannot legally and validly allow such wagering and betting. It was
order denying the petition for insufficiency of evidence. After a precisely for this reason that I earlier voted to grant a temporary
motion for new trial was granted and a hearing to receive the restraining order in G.R. No. 115044 and G.R. No. 117263 to
newly discovered evidence was completed, the court issued an restrain wagering or betting. I wish to reiterate here what I
order again denying the reconstitution sought for as it still stated in my supplemental concurring opinion in G.R. No.
doubted the authenticity and genuineness of the Transfer of 115044:
Certificate of Title sought to be reconstituted. The private
respondent appealed the order to the Court of Appeals which Secondly, to make my position clear that the
thereafter promulgated a decision reversing the aforesaid orders dismissal of the petition should not be
of the trial court. The Director of Land, which was the remaining construed as compelling the City of Manila to
oppositor, filed a motion for a new period to file a motion for authorize gambling by allowing betting on the
reconsideration of the decision alleging excusable negligence. results of jai-alai. The decision merely
Private respondent filed an opposition thereto. Without waiting dismissed the petition because the Court found
for the resolution of the motion, the Director filed a motion to " no abuse of discretion, much less lack of
admit the motion for reconsideration attaching thereto said excess of jurisdiction, on the part of the
motion for reconsideration. The Court of Appeals issued a respondent judge" in issuing the challenged
resolution denying both motions on the ground that the decision order directing the petitioner to issue a permit
had already become final. This was the resolution which the or license in favor of the private respondent
Director assailed in his petition for review filed with this Court. pursuant to Ordinance No. 7065. That order
was to enforce the final and executory decision
of the Regional Trial Court of 9 September
1988 in Civil Case No. 88-45660, the appeal clearly conditions that will
therefrom to the Court of Appeals by the City only come into play after the
of Manila having been withdrawn by it on 9 jai-alai has been put up or
February 1989. That decision ordered the City established; while the
of Manila to immediately issue to the private condition under
respondent "the permit/license required under subparagraph "a" appears to
Ordinance No. 7065." The City of Manila did in have been complied with
fact issue the required permit or license to the satisfactorily by the
private respondent for the operation of the jai- petitioner, since no objection
alai in Manila for the years 1988 to 1992. at all has been made by
Nevertheless, when the jai-alai complex was respondents to the proposed
almost completed, the City Mayor refused to site for jai-alai fronton, that
renew the Mayor's Permit. is, the 25,000 sq. m. land
area behind the present
There is a clear distinction between the initial Harrison Plaza Complex
duty of the City Mayor under Ordinance No. located at Ermita, Manila.
7065 to issue the necessary license or permit
to establish the jai-alai fronton and to maintain Consequently, the Mayor's Permit sough to be
and operate the jai-alai, and his subsequent renewed or the motion before the lower court
discretion to impose other terms and to compel the Mayor to renew it, has reference
conditions for the final contract relative to such only to subparagraph (a), Section 1 of
operation. The trial court specifically said so in Ordinance No. 7065. The renewal of the permit
its decision of 9 September 1989. Thus: can by no stretch of the imagination be taken
as a final contract between the private
A suggestion has been made respondent and the City of Manila for
in the Answer that a writ otherwise it would remove the power and
of mandamus will not lie authority of the Mayor under the ordinance to
against respondents, impose "other terms and conditions as he may
particularly the Mayor, prescribe for good reasons of general interest."
because "the availment of
the franchise . . . is subject to It follows then that the Mayor's Permit ordered
the terms and conditions by the trial court to be issued to the private
which the respondent Mayor respondent is not a license or authority to
may impose." allow betting or wagering on the results of
the jai-alai games. Jai-alai is a sport based on
A careful reading however, of skill. Under Article 197 of the Revised Penal
Ordinances 7065 will readily Code, before it was amended by P.D. No. 1602,
show that the discretion, if betting upon the result of any boxing or other
any, allowed respondent sports contests was penalized with arresto
Mayor, under the ordinance, menoror a fine not exceeding P200.00, or both.
will be exercisable only after Article 2019 of the Civil Code provides that
the permit, which he is "[b]etting on the results of sports, athletic
mandated to issue, had been competitions, or games of skill may be
issued and the jai-alai fronton prohibited by local ordinances."
is already operational. The
ordinance stipulates that the P.D. No. 483, enacted on 13 June 1974,
Mayor is authorized "to allow penalizes betting, game fixing or point shaving
and permit petitioner to and machinations in sports contests,
establish, maintain and including jai-alai. Section 2 thereof expressly
operate a jai-alai in the City provides:
of Manila," under the five
conditions enumerated in Sec. 2. Betting, game fixing,
subparagraphs "a" to "e" of point shaving or game
Section 1 of the Ordinance. machinations unlawful. —
By a simple reading of these Game fixing, point shaving,
"terms and conditions" machination, as defined in
patently shows that the preceding Section, in
subparagraphs "b" to "e" are connection with the games of
basketball, volleyball, of the Board. No person
softball, baseball; chess; other than the grantee or its
boxing bouts, "jai-alai," duly authorized agents shall
"sipa," "pelota" and all other take or arrange bets on any
sports contests, games; as pelotari or on the game, or
well as betting therein except maintain or use a totalizator
as may be authorized by law, or other device, method or
is hereby declared unlawful. system to bet on any pelotari
or on the game within or
The succeeding Section 3 provides for the without the place, enclosure
penalties. or court where the games are
held by the grantee. Any
On 11 June 1978, P.D. No. 1602 (75 O.G. No. violation of this section shall
15, 3270), Prescribing Stiffer Penalties on Illegal be punished by a fine of not
Gambling, was enacted to increase the more than two thousand
penalties provided in various "Philippine pesos or by imprisonment of
Gambling Laws such as Articles 195-199 of the not more than six months, or
Revised Penal Code (Forms of Gambling and both in the discretion of the
Betting), R.A. No. 3063 (Horse Racing Bookies), Court. If the offender is a
P.D. No. 449 (Cockfighting), P.D. No. 483 (Game partnership, corporation or
Fixing), P.D. No. 510 (Slot Machines) in relation association, the criminal
to Opinion Nos. 33 and 97 of the Ministry of liability shall devolve upon its
Justice, P.D. No. 1306 (Jai-alai Bookies), and president, directors or any
other City and Municipal Ordinances on officials responsible for the
gambling all over the country." Section 1 violation.
thereof reads:
However, as stated in the ponencia, P.D. No.
xxx xxx xxx 810 was repealed by E.O. No. 169 issued by
then President Corazon C. Aquino. I am not
aware of any other law which authorizes
Both P.D. No. 483 and P.D. No. 1602 were
betting in jai-alai. It follows then that while the
promulgated in the exercise of the police
private respondent may operate the jai-alai
power of the State.
fronton and conduct jai-alai games, it can do so
solely as a sports contest. Betting on the
Pursuant to Section 2 of P.D. No. 483, which
results thereof, whether within or off-fronton,
was not repealed by P.D. No. 1602 since the
is illegal and the City of Manila cannot, under
former is not inconsistent with the latter in
the present state of the law, license such
that respect, betting in
betting. The dismissal of the petition in this
jai-alai is illegal unless allowed by law. There
case sustaining the challenged orders of the
was such a law. P.D. No. 810, which authorized
trial court does not legalize betting, for this
the Philippine Jai-Alai and Amusement
Court is not the legislature under our system of
Corporation as follows:
government.

Sec. 2. The grantee or its duly


Accordingly, I vote to grant the petition in G.R. No. 117263 and
authorized agent may offer,
to set aside the questioned temporary restraining order and the
take or arrange bets within or
writ of preliminary mandatory injunction but only to the extent
outside the place, enclosure
that they allow wagering or betting on the results of jai-alai.
or court where the Basque
pelota games are
QUIASON, J., dissenting:
held: Provided, That bets
offered, taken or arranged
outside the place, enclosure I vote: (1) to deny the motion to intervene and motion for
or court where the games are reconsideration qua petition for quo warranto in G.R. No.
held, shall be offered, taken 115044, and (2) to dismiss the petition for certiorari in G.R. No.
or arranged only in places 117263. I shall set forth the reason why.
duly licensed by the
corporation, Provided, I
however, That the same shall
be subject to the supervision
Following the decision of the First Division of this Court on 3. Any other deficiencies we may discover will
September 1, 1994 in G.R. No. 115044, the City of Manila issued be accordingly rectified by management as
on September 7, 1994 the Mayor's permit and Municipal license directed by the Board.
to Associate Development Corporation (ADC) upon the latter's
payment of the required fees (G.R. No. 115044, Rollo, pp. 253- 4. Failure to comply with any of the rules and
254, 301). regulations prescribed by existing laws and
lawful orders of the Board, may justify
In his letter dated September 8, 1994 to President Fidel V. withdrawal/revocation of this provisional
Ramos, Chairman Francisco Sumulong, Jr. of the Games and authority without prejudice to such
Amusement Board (GAB) said that he would not authorize the administrative sanctions that the Board may
opening of ADC's jai-alai unless he was given a clearance from deem proper to impose under the
the President and until after ADC had complied with "all the circumstances.
requirements of the law, such as, the distribution of wager
funds, [and] licensing of Pelotaris and other personnel" (Exh. F, 5. By accepting this provisional authority,
Civil Case No. 94-71656, RTC, Br. 4, Manila; G.R. No. Associated Development Corporation (ADC) is
117263, Rollo, p. 304). deemed to have agreed to the conditions
above provided (G.R. No. 117263, Rollo, pp. 8-
In the position paper annexed to the letter, the GAB Chairman 9, 49, 238, 288).
recommended the reopening and operation of the jai-alai,
stating in pertinent part: On September 12, 1994, the GAB issued to ADC jai-alai License
No. 94-008 upon payment of the corresponding permit fee. The
There are several reasons to justify the license reads as follows:
operation of Jai-Alai, first and foremost of
which is the generation of much needed Under and by virtue of the provisions of
revenues for the national and local Section 7 of Executive Order No. 392, series of
governments. Other significant justifications 1950, in conjunction with Executive order No.
are its tourism potential, the provision for 824, series of 1982, this Board has this date
employment, and the development of Basque granted ADC Represented by Gen. Alfredo B.
pelota as an amateur and professional sport. Yson permit to hold or conduct a [sic] jai-alai
contests/exhibition on September 12 to 14,
Specifically, the establishment, maintenance 1994, at the harrison Plaza Complex, located in
and operation of a Jai-Alai fronton in Metro- Harrison Plaza, Malate, Manila.
Manila shall be by virtue of the original and still
legally existing franchise granted to the This permit is issued subject to the condition
Associated Development Corporation (ADC) by that the promoter shall comply with the
the City Government of Manila in 1971 (G.R. provisions of Executive order No. 824, S. 1982,
No. 115044, Rollo, p. 350; Emphasis supplied). the rules and regulations, orders and/or
policies adopted or which may hereafter be
On September 9, 1994, Chairman Sumulong granted ADC adopted by the Board, and with the conditions
provisional authority to open, subject to the following set forth in the application for which this
conditions: permit has been granted; and failure on the
part of the promoter to comply with any of
1. We prohibit you from offering to the public which shall be deemed sufficient cause for the
"Pick 6" and "winner Take All" betting events revocation thereof (G.R. No. 117263, Rollo, pp.
until such time as this Board shall have 50, 238, 289).
approved the rules and regulations prepared
by management governing the mechanics of In compliance with GAB Rules and Regulations, ADC submitted
these events. its programs of jai-alai events for approval (Exhs. O, P and Q, civil
Case No. 94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo,
2. Licensing of officials and employees whose pp. 290-292).
duties are connected directly or indirectly with
the supervision and operation of jai-alai games, It appears that as early as may 23, 1994, Jai-Alai de Manila (the
as mandated by Executive Order 141 dated business name of ADC's fronton) had inquired from GAB about
February 25, 1965, shall be fully complied with the laws and rules governing its jai-alai operation. In reply,
by you within thirty 930) days from date chairman Sumulong furnished Jai-Alai de Manila with copies of
hereof. E.O. Nos. 392 and 824 and the Revised rules and Regulations for
basque pelota Games (Exhs. K and L, Civil Case No. 94-71656, In view of the directive from the Office of the
RTC, Br. 4, Manila; G.R. No. 117263, Rollo, pp. 301-302). President dated 13 September 1994,
Associated Development Corporation is hereby
On September 13, 1994, Executive Secretary Teofisto Guingona, ordered to cease and desist issues raised in the
jr. issued the following Directive to GAB Chairman Sumulong: said directive are resolved by the proper
court. The provisional authority issued pending
In reply to your letter dated 9 September 1994 further scrutiny and evaluation to ADC on 9
requesting for the President's approval to re- September 1994 is hereby withdrawn (G.R. No.
open the Jai-Alai in Manila, please be informed 117263, Rollo, pp. 51, 194; Emphasis supplied).
that after a review and study of existing laws,
there is sufficient basis to hold in abeyance the On September 15, 1994, ADC filed with the Regional Trial Court,
operation of the Jai-Alai until the following Branch 4, Manila a petition for prohibition, mandamus,
legal questions are properly resolved: injunction and damages with prayer for temporary restraining
order or writ of preliminary injunction (Case No. 94-71656)
1. Whether P.D. 771 which against Executive Secretary Guingona and Chairman Sumulong
revoked all existing Jai-Alai assailing the former's Directive and the latter's Memorandum
franchises issued by local (G.R. No. 117263, Rollo, pp. 3, 20-21, 53-75, 167-168).
government as of 20 August
1975 is unconstitutional. On the same day, Judge Vetino Reyes issued a temporary
restraining order enjoining Executive Secretary Guingona and
2. Assuming that the City of Chairman Sumulong from implementing their respective
Manila had the power on 7 Directive and memorandum (G.R. No. 117263, Rollo, pp. 2, 10,
September 1971 to issue a 44).
Jai-Alai franchise to
Associated Development On September 16, 1994, Executive Secretary Guingona and
Corporation, whether the Chairman Sumulong filed an urgent motion to recall the
franchise granted is valid temporary restraining order, with opposition to the motion for
considering that the franchise issuance of a writ of preliminary injunction. The said motion was
has no duration, and appears reiterated in the supplemental motion filed on September 20,
to be granted in perpetuity. 1994 (G.R. No. 117263, Rollo, pp. 66-75, 76-86).

3. Whether the City of Manila Meanwhile, on September 16, 1994, the Republic of the
had the power to issue a Jai- Philippines, represented by GAB, filed in G.R. No. 115044 a
Alai franchise to Associated motion for intervention; for leave to file a motion for
Development Corporation on reconsideration-in-intervention; to admit the attached motion
7 September 1971 in view of for reconsideration-in-intervention; and to refer the case to the
Executive order No. 392 Court en banc (Rollo, pp. 219-249).
dated 1 January 1951 which
transferred from local Subsequently, and on the different dates, the Republic filed in
governments to the Games G.R. No. 115044 the following pleadings: "Motion for Leave to
and Amusements Board the File Supplemental Motion for Reconsideration-In-Intervention"
power to regulate Jai-Alai. (Rollo, pp. 262-265); "Supplemental Motion for Reconsideration-
In-Intervention" (Rollo, pp. 266-280); "Motion for Leave to File
This Office has directed the solicitor General to Second Supplemental Motion for Reconsideration-In-
bring before the proper court the foregoing Intervention and to Admit attached Second Supplemental
issues for resolution. Pending such resolution, Motion For Reconsideration-In-intervention" (Rollo, pp. 380-
you are directed to hold in abeyance the grant 382); and "Second Supplemental Motion for Reconsideration-In-
of authority, or if any has been issued, to Intervention" (Rollo, pp. 383-400).
withdraw such grant of authority, to Associated
Development corporation to operate he Jai-Alai Acting on the motion of the Republic dated September 16, 1994,
in the city of Manila (G.R. No. the First Division referred, in its Resolution dated September 19,
117263, Rollo, pp. 7-8, 48, 1939; Emphasis 1994, Case G.R. No. 115044 to the Court en banc, and the latter
supplied). accepted the same in its Resolution dated September 20, 1994
(Rollo, p. 255).
On September 14, 1994, Chairman Sumulong issued a
Memorandum to ADC that: In the meantime, Chairman Sumulong resigned and Dominador
R. Cepeda, jr. was appointed as his successor.
On September 30, 1994, Judge Reyes issued a writ of preliminary (2) ADC admitted in G.R. No. 115044 that GAB
injunction (G.R. No. 117263, Rollo, pp. 2, 47). had no authority to issue the license or permit
subject of the order in question; and
On October 11, 1994, Executive Secretary Guingona and GAB
Chairman Cepeda, Jr. filed with this Court a petition (3) Mandamus was not available to compel the
for certiorari, prohibition and mandamus (G.R. No. performance of a discretionary function (G.R.
117263, Rollo, pp. 1-151) and on October 24, 1994, a No. 117263, Rollo, pp. 182-189).
supplemental petition (G.R. No. 117263, Rollo, pp. 161-165, 166-
306). Petitioners assailed the following issuances of Judge Reyes On November 2, 1994, ADC and Judge Reyes filed their
Civil Case No. 94-71656: consolidated Comment to the petition and supplemental petition
(G.R. No. 117263, Rollo, pp. 230-305).
(1.) Temporary Restraining Order dated
September 15, 1994 directing Executive On November 25, 1994, the Republic, Executive Secretary
Secretary Guingona and chairman Sumulong to Guingona and GAB Chairman Cepeda moved for the issuance of a
desist from enforcing the Directive dated restraining order enjoining Judge Pacquing and Judge Reyes from
September 13, 1994 and the memorandum enforcing their questioned orders and ADC from operating the
dated September 15, 1994 (Rollo, p. 44); jai-alai fronton (G.R. No. 17263, Rollo, pp. 629-635). Action on
the motion deferred.
(2.) Order dated September 25, 1994 denying
the Urgent Motion to Recall Temporary II
Restraining Order and the Urgent
Supplemental Motion to Recall Temporary G.R. No. 115044
Restraining Order (Rollo, p. 46); Motion for Intervention

(3.) Order dated September 30, 1994 directing The Republic of the Philippines (Republic) represented by GAB
the issuance of a Writ of preliminary Injunction justifies its belated intervention in G.R. No. 115044 on the
directed against the aforesaid Directive and grounds that "it has an interest involved in this case and will be
Memorandum (Rollo, p. 47); affected by the Decision dated September 1, 1994" (G.R. No.
115044, Rollo, p. 225).
(4.) order dated October 19, 1994 granting
ADC's Motion to Amend the petition to The purpose of its intervention is to nullify the decision of Judge
Conform to the Evidence and directing the Augusto E. Villarin of the Regional Trial Court, Branch 40, Manila,
issuance of a writ of preliminary mandatory dated September 1, 1994" (G.R. No. 115044, Rollo, p. 225).
injunction "directing (Executive Secretary and
the GAB Chairman), their successors,
The purpose of its intervention is to nullify the decision of Judge
representatives and any government
Augusto E. Villarin of the Regional Trial Court, Branch 40, Manila,
office/agency acting for an in their behalf or in
dated September 9, 1989 in Civil Case No. 88-45660, which
implementation of their orders earlier enjoined
upheld the validity of Ordinance No. 7065 of the City of Manila
by a writ of preliminary injunction issued by
granting ADC a franchise to operate a jai-alai fronton. Mayor
this court on September 30, 1994, to issue the
Gemiliano Lopez appealed said decision to the Court of Appeals,
necessary authority, licenses and working
but on February 9, 1989, he filed a Withdrawal of Appeal. The
permits to . . . Associated Development
Court of Appeals approved the withdrawal in a resolution dated
Corporation, and its personnel and players
May 5, 1989. An entry of judgment was made by the court of
(Rollo, pp. 216-217).
Appeals on May 26, 1989 and by the Regional Trial Court, branch
40, Manila, on October 27, 1992.
They prayed that the trial court be enjoined from conducting
further proceedings in Civil Case No. 94-71656 and that said case
In 1991, the City of Manila filed an action to annul the franchise
be dismissed. they also filed a motion for consolidation of G.R.
of ADC with the Regional Trial Court, Branch 23, Manila (Civil
No. 117263 with G.R. No. 115044 (G.R. No. 117263, Rollo, pp.
Case No. 91-58913). The complaint was dismissed on December
152-160). As prayed for, we considered the two cases together.
21, 1991. No appeal was taken from said dismissal of the case.

In their petition in G.R. No. 117263, Executive Secretary


The City of Manila filed with this Court a petition for declaratory
Guingona and Chairman Cepeda claimed that ADC had no clear
judgment to nullify the franchise of ADC (G.R. No. 101768). The
right to the issuance of the preliminary mandatory injunction
petition was dismissed in a resolution dated October 3, 1991 "for
because:
lack of jurisdiction."

(1) ADC had no legislative franchise;


Three members of the Sangguniang Panglunsod of Manila also Vda. de Emnas v. Emnas, 95 SCRA 470 [1980];
filed with the Regional Trial Court, Branch 37, Manila, a petition Ocampo v. Caluag, 19 SCRA 917 [1967]).
to compel Mayor Lopez to cancel the permit and license he
issued in favor of ADC pursuant to ordinance No. 7065 (Civil Case As to the second issue, the First Division held that the five-year
No. 91-58930). The petition was dismissed on June 4, 1992. No period for executing a judgment by simple motion under Section
appeal was taken from said dismissal of the case. 6 of Rule 39 of the Revised Rules of Court should be counted
from the finality of the judgment and not from the date of its
In the Motion for Reconsideration-In-Intervention, Supplemental promulgation as was done by Mayor Lim and the City of Manila.
Motion for Reconsideration-in-Intervention and Second Inasmuch as the Villarin decision was appealed to the Court of
Supplemental Motion for Reconsideration-in-Intervention, the Appeals and the authority to withdraw the appeal was approved
Republic merely claimed that Ordinance No. 7065 had been by the Court of Appeals only on may 26, 1989, the five-year
repealed by P.D. No. 771 (Rollo, pp. 228-248), that the authority period should be counted, at the earliest, from May 26, 1989.
to issue permits and licenses for the operation of jai-alai had Reckoning the five-year period from said date, the motion for
been transferred to GAB by E.O. No. 392 of President Quirino execution of the Villarin decision was filed timely on March 14,
effective July 1, 1951 and that ADC was never issued a franchise 1994.
by Congress (Rollo, pp. 383-390). Nowhere in its pleadings did
the Republic point out where the first Division erred in resolving Intervention as contemplated by Section 9, Rule 12 of the
the two grounds of the petition for certiorari in G.R. No. 115044, Revised Rules of Court is a proceeding whereby a third person is
which were: permitted by the court "before or during a trial" to make himself
a party by joining plaintiff or uniting with defendant or taking a
(1) The decision of Judge Villarin dated position adverse to both of them Gutierrez v. Villegas, 5 SCRA
September 9, 1988 in Civil Case No. 88-45660 is 313 [1962]). the term "trial" is used in its restrictive sense and
null and void for failure to rule that P.D. No. means the period for the introduction of evidence by both
771 had revoked Ordinance No. 7065; and parties (Bool v. Mendoza, 92 Phil. 892 [1953]; Provincial
Government of Sorsogon v. Stamatelaky, 65 Phil. 206 [1937]).
(2) The decision of Judge Villarin could not be The period of trial terminates when the period of judgment
executed by a mere motion filed on March 14, begins (El Hogar Filipino v. Philippine National Bank, 64 Phil. 582
1994, or more than five years and six months [1937]).
after its promulgation.
Intervention as an action is not compulsory. As deduced from the
In resolving the first issue, the First Division of this court permissive word "may" in the rule, the availment of the remedy
explained that there was no way to declare the Villarin decision is discretionary on the courts (Garcia v. David, 67 Phil. 279
null and void because the trial court had jurisdiction over the [1939]). an important factor taken into consideration by the
subject matter of the action and if it failed to rule that ordinance courts in exercising their discretion is whether the intervenor's
No. 7065 was nullified by P.D. No. 771, that was only an error of rights may be fully protected in a separate proceeding (Peyer v.
judgment. The First Division noted the distinction between a void Martines, 88 Phil. 72 [1951]).
and an erroneous judgment and between jurisdiction and the
exercise of jurisdiction. The case of Director of Lands v. Court of Appeals, 93 SCRA 238
(1979), can not, serve as authority in support of the Republic's
In Tan v. Intermediate Appellate Court, 163 SCRA 752 (1988), the intervention at this late stage. while said case involved an
Court held: intervention for the first time in the Supreme court, the motion
to be allowed to intervene was filed before the appeal could be
It is settled jurisprudence that except in the decided on the merits. The intervention allowed in Republic v.
case of judgments which are void ab initio or Sandiganbayan, G.R. No. 96073, Resolution, March 3, 1992, was
null and voidper se for lack of jurisdiction which also made before the decision on the merits by this Court. In
can be questioned at any time — and the contrast, the intervention of the Republic was sought after this
decision here is not of this character — once a Court had decided the petition in G.R. No. 115044 and
decision becomes final, even the court which petitioners had complied with and satisfied the judgment. While
has rendered it can no longer alter or modify it, the intervention in Director of Lands was in a case that was
except to correct clerical errors or mistakes. timely appealed from the Regional Trial Court to the Court of
otherwise, there would be no end to litigation, Appeals and from the Court of Appeals to the Supreme Court,
thus setting to naught the main role of courts the intervention of the Republic was in a case that had become
of justice, which is, to assist in the enforcement final and executory more than five years prior to the filing of the
of the rule of law and the maintenance of motion to intervene.
peace and order, by settling justifiable
controversies with finality. (See also Fabular v. As of September 16, 1994, therefore, when the republic moved
Court of Appeals, 119 SCRA 329 [1982]; Fariscal to intervene, there was no longer any pending litigation between
the parties in G.R. no. 115044. Intervention is an auxiliary and
supplemental remedy to an existing, not a settled litigation (cf. All the essential requisites for a petition for quo warranto are
Clareza v. Rosales, 2 SCRA 455 [1961]). An intervention was compresent. The motions were filed by the Solicitor General for
disallowed in a case which has becomes final and executory the Republic of the Philippines, represented by GAB, to question
(Trazo v. Manila Pencil Co., 77 SCRA 181 [1977]) the right of ADC to operate and maintain the jai-alai.

The case of Suson v. Court of Appeals, 172 SCRA 70 (1989) The motions qua petition for quo warranto assert that the
invoked by the Republic (G.R. No. 117263, Rollo, pp. 517-518) is authority of the City of Manila to issue to ADC a jai-alai franchise
inappropriate because the intervention therein was before the in 1971 had been withdrawn by E.O. No. 392 in 1951 and by R.A.
trial court, not in this Court. No. 954 in 1954 and that assuming the issuance of the franchise
to ADC in 1971 under Ordinance No. 7065 was valid, such
In its Reply, the Republic admitted that the First Division only franchise, together with whatever authority of the City of Manila
ruled on the procedural issues raised in the petition and not on to grant the same, was voided by P.D. No. 771 in 1975.
the constitutionality of P.D. No. 771. It even urged that GAB was
not a party to the case and therefore was not bound by In the case of Stone v. State of Mississippi, 101 U.S. 814, cited by
the Villarin decision because under Section 49 of Rule 39, a the Republic, the State Attorney General resorted to a quo
judgment is conclusive only "between the parties and their warranto proceeding to question the authority of petitioner
successor-in-interest by title subsequent to the commencement therein to operate and maintain a gambling establishment.
of the action or special proceeding, litigating for the same thing
and under the same title and in the same capacity" (Rollo, pp. The franchise of ADC granted by the City of Manila under
228-234, 431). Ordinance No. 7065 reads as follows:

With more reason then that the Republic should have ventilated AN ORDINANCE AUTHORIZING THE MAYOR TO
its claim against ADC in a separate proceeding. ALLOW AND PERMIT THE ASSOCIATED
DEVELOPMENT CORPORATION TO ESTABLISH,
Lastly, an intervenor should not be permitted to just sit idly and MAINTAIN AND OPERATE A JAI-ALAI IN THE
watch the passing scene as an uninterested overlooker before he CITY OF MANILA, UNDER CERTAIN TERMS AND
wakes up to seek judicial relief (Pacursa v. Del Rosario, 24 SCRA CONDITIONS AND FOR OTHER PURPOSES.
125 [1968]).
Be it ordained by the Municipal Board of the
The Office of the President was aware of the plans of ADC to City of Manila, that:
start operation as early as 1988. On May 5, 1988, ADC informed
said Office of its intention to operate under Ordinance No. 7065. Sec. 1. The Mayor is authorized, as he is hereby
The said Office perfuntorily referred the letter of ADC to the authorized to allow and permit the Associated
Manila mayor, implying that the matter was not the concern of Development Corporation to establish,
the National Government. maintain and operate a jai-alai in the City of
Manila, under the following terms and
Motion qua conditions and such other terms and
Quo Warranto petition conditions as he (the Mayor) may prescribe for
good reasons of general interest:
Be that as it may, the Court may consider the motion to
intervene, motion for reconsideration-in-intervention, a. That the construction,
supplemental motion for reconsideration-in-intervention and establishment and
second supplemental motion-in-intervention as a petition maintenance of the jai-alai
for quo warranto under Rule 66 of the revised Rules of Court. In shall be at a place permissible
the liberal construction of the Rules in order to attain substantial under existing zoning
justice, the Court has treated petitions filed under one Rule as ordinances of Manila;
petitions filed under the more appropriate Rule (Davao Fruits
Corporation v. Associated Labor Union, 225 SCRA [1993]). b. That the games to be
played daily shall commence
In quo warranto, the government can require a corporation to not earlier than 5:00 o'clock
show cause by what right it exercises a privilege, which ordinarily (sic) in the afternoon;
can not legally be exercised except by virtue of a grant from the
state. It is a proceeding to determine the right to the use of a c. That the City of Manila will
franchise or exercise of an office and to oust the holder from its received a share of 2 ½% on
enjoyment if his claim is not well-founded (Castro v. Del Rosario, the annual gross receipts on
19 SCRA 196 [1967]). all wagers or bets, ½% of
which will accrue to the
Games and Amusements roller of ice-skating or any sporting or athletic
Board as now provided by contests, as well as grant exclusive rights to
law; establishments for this purpose,
notwithstanding any existing law to the
d. That the corporation will, contrary.
in addition, pay to the city an
annual license fee of A. It is the posture of the Republic that the power of local
P3,000.00 and a daily permit governments to issue franchisers for the operation of jai-alai was
fee of P200.00; "consolidated and transferred" to the GAB under E.O. No. 392. In
its Supplemental Motion for reconsideration-In-Intervention filed
e. That the corporation will, on September 27, 1994, the Republic averred:
to insure its faithful
compliance of all the terms 12. As early as 1951, the power of the local
and conditions under this governments to issue licenses and permits for
ordinance, put up a the operation of jai-alai was "consolidated and
performance bond from a transferred" to the Games and Amusements
surety acceptable to the city, Board under E.O. No. 392 issued by then
in the amount of at least President Elpidio Quirino (sic) took effect on
P30,000.00. January 1, 1951. Thus, in 1971, the City of
Manila was without authority to enact an
Sec. 2. The Mayor and the City Treasurer of ordinance authorizing the City Mayor to issue a
their duly authorized representatives are license/permit to private respondent for the
hereby empowered to inspect at all times operation of jai-alai in Manila (Rollo, pp. 271-
during regular business hours the books, 272).
records and accounts of the establishment, as
well as to prescribe the manner in which the Furthermore, the republic alleged:
books and financial statement of the
entrepreneur shall be kept. 13. Such consolidation and transfer of power
manifest the policy of the Government to
Sec. 3. This ordinance shall take effect upon its centralize the regulation, through appropriate
approval. institutions, of all games of chance authorized
by existing franchises of permitted by law. . . .
Enacted originally by the Municipal Board on (Rollo, p. 272).
September 7, 1971; vetoed by the Mayor on
September 27, 1971; modified and amended There is no need to dwell upon this argument for suprisingly it
by the Municipal Board at its regular session was the Republic itself that repudiated it albeit after wrongfully
today, October 12, 1971. attributing the argument to ADC.

Approved by His Honor, the Mayor on 13 In its Reply filed on November 9, 1994, the Republic stated that:
November 1971. "Contrary to respondent ADC's claim, it is not the position of the
GAB that it is the body which grants franchisers for the jai-alai
The said Ordinance was enacted pursuant to Section 18 (jj), the either under E.O. No. 392 or under P.D. No. 771 . . ." (Rollo, pp.
Charter of the City of Manila (R.A. No. 409), which took effect in 420).
1949. The charters of two other cities — Quezon City and Cebu
City — contained a similar delegation of authority to grant jai- For certain, E.O. No. 392 merely reorganized the different
alai franchises. departments, bureaus, offices and agencies of the government.
There is absolutely nothing in the executive issuances which
Said Section 18(jj) provides: vests on GAB the power to grant, much less revoke, franchisers
to operate jai-alais.
Legislative powers. — The Municipal Board
shall have the following legislative powers: B. After its volte-face, the Republic next claims that R.A. No. 954
had repealed Section 18 (jj) and that after the effectivity of said
xxx xxx xxx law, only Congress could grant franchise to operate jai-alais.

(jj) To tax, license, permit and regulate wagers Section 4 of R.A. No. 954 provides:
or betting by the public on boxing, billiards,
pools, horse or dog races, cockpits, jai-alai,
No person, or group of persons, other than the If R.A. No. 954 repealed Section 18 (jj), why did President Marcos
operator or maintainer of a fronton with still issue P.D. No. 771, expressly revoking the authority of the
legislative franchise to conduct basque pelota local governments to issue jai-alai franchises? It can never be
(jai-alai), shall offer, take or arrange bets on presumed that the President deliberately performed useless
any basque pelota game or event, or maintain acts.
or use a totalizer or other device, method or
system to bet or gamble or any basque pelota C. The claim of the Republic that P.D. No. 771 had removed the
game or event. power of local governments to grant franchises for the
maintenance and operation of jai-alai is a non-issue. The issue
Republic Act No. 954 did not expressly repeal Section 18 (jj). In raised by ADC is whether Section 3 of P.D. No. 771 validly
such a case, if there is any repeal of the prior law by the latter cancelled Ordinance No. 7065, an issue entirely different from
law, it can only be by implication. Such kind of repeals is not the claim of the Republic that P.D. No. 771 had revoked the
favored. There is even a presumption against repeal by power of the City of Manila to grant jai-alai franchisers.
implication (The Philippine American Management Co. Inc. v. The
Philippine American Management employees Association, 49 Insofar as it is applied to Ordinance No. 7065, Section 3 of P.D.
SCRA 194 [1973]). No. 771 suffers from constitutional infirmities and transgresses
several constitutional provisions. Said Section 3 provides:
In the same absence of an express repeal, a subsequent law
cannot be construed as repealing a prior law unless an All existing franchisers and permits issued by
irreconcilable inconsistency and repugnancy exist in the terms of local governments are hereby revoked and may
the new and old law (Iloilo Palay and Corn Planters Association, be renewed only in accordance with third
Inc. v. Feliciano, 13 SCRA 377 [1965]). decree.

But more importantly, the rule in legal hermeneutics is that a Section 3 violated the equal protection clause (Section 1 of
special law, like the Charter of the City of Manila, is not deemed Article IV) of the 1973 Constitution, which provided:
repealed by a general law, like R.A. No. 954 (Commissioner of
Internal Revenue v. Court of Appeals, 207 SCRA 487 [1992]). No person shall be deprived of life, liberty, or
property without due process of law, nor shall
In a way also, Ordinance No. 7065 can be considered a any person be denied the equal protection of
"legislative franchise" within the purview of R.A. No. 954, having the laws.
been enacted by the Municipal Board of the City of Manila
pursuant to the powers delegated to it by the legislature. A Less than two months after the promulgation of P.D. no. 771,
grant, under a delegated authority, binds the public and is President Marcos issued P.D. No. 810, granting the Philippine Jai-
considered the act of the state. "The franchise [granted by the Alai and Amusement Corporation (PJAC) a franchise to operate
delegate] is a legislative grant, whether made directly by the jai-alai within the Greater Manila Area. It is obvious that P.D. No.
legislature itself or by any one of its properly constituted 771 was decreed to cancel the franchise of ADC so that the same
instrumentalities" (36 Am Jur 2d. 734). could be given to another entity under P.D. No. 810.

As held in Wright v. Nagle, 101 U.S. 921, the grant of a franchise A facially neutral statute (P.D. No. 771) may become
by the legislature may be done in two ways: discriminatory by the enactment of another statute (P.D. No.
810) which allocates to a favored individual benefits withdrawn
It may exercise this authority by direct under the first statute (Ordinance No. 7065), and when there is
legislation, or through agencies duly no valid basis for classification of the first and second grantees.
established having power for that purpose. This The only basis for distinction we can think of is that the second
grant when made binds the public, and is, grantee was Benjamin Romualdez, a brother-in-law of President
directly or indirectly, the Act of the State. The Marcos.
easement is a legislative grant, whether made
directly by the legislature itself, or by any one Section 3 violated the due process clause of the Constitution,
of its properly constituted both in its procedural and substantive aspects. The right to due
instrumentalities (Justice of Pike Co. v. Plank process is guaranteed by the same Section 1 of Article IV of the
road, 11 Ga. 246; Emphasis supplied). 1973 Constitution.

If the intention of Congress in enacting R.A. No. 954 was to Ordinance No. 7065, like any franchise, is a valuable property by
repeal Section 18 (jj), it could have used explicit language to that itself. The concept of "property" protected by the due process
effect in order not to leave room for interpretation. clause has been expanded to include economic interests and
investments. The rudiments of fair play under the "procedural
due process" doctrine require that ADC should at least have
been given an opportunity to be heard in its behalf before its terms and conditions as he [the Mayor] may prescribe for good
franchise was cancelled, more so when the same franchise was reasons of general interest." (Rollo, p. 24).
given to another company.
Section 11 of Article IV of the 1973 Constitution provided:
Under the "substantive due process" doctrine, a law may be
voided when it does not relate to a legitimate end and when it No law impairing the obligation of contracts
unreasonably infringes on contractual and property rights. The shall be passed.
doctrine as enunciated in Allgeyer v. Louisiana, 165 U.S. 578
(1897) can be easily stated, thus: the government has to employ Any law which enlarges, abridges, or in any manner changes the
means (legislation) which bear some reasonable relation to a intention of the parties, necessarily impairs the contract itself
legitimate end (Nowak, Rotunda and Young, Constitutional Law (U.S. v. Conde, 42 Phil. 766 [1922]; Clemens v. Nolting, 42 Phil.
436, 443 [2d ed]). 702 [1922]). A franchise constitutes a contract between the
grantor and the grantee. Once granted, it may not be invoked
When President Marcos issued P.D. No. 771, he did not have unless there are valid reasons for doing so. (Papa v. Santiago,
public interest in mind; otherwise, he would have simply 105 Phil. 253 [1959]). A franchise is not revocable at the will of
outlawed jai-alai as something pernicious to the public. Rather, the grantor after contractual or property rights thereunder have
all what he wanted to accomplish was to monopolize the grant become vested in the grantee, in the absence of any provision
of jai-alai franchisers. therefor in the grant or in the general law (Grand Trunk Western
R. Co. v. South Bend, 227 U.S. 544).
The motivation behind its issuance notwithstanding, there can
be no constitutional objection to P.D. No. 771 insofar as it D. The Republic hypothesized that the said Constitutional
removed the power to grant jai-alai franchisers from the local guarantees presuppose the existence of a contract or property
governments. We said so in Basco v. Pagcor, 197 SCRA 52 (1991). right in favor of ADC. It claims that Ordinance No. 7065 is not a
The constitutional objection arises, however, when P.D. No. 771 franchise nor is it a contract but merely a privilege for the
cancelled al the existing franchises. We search in vain to find any purpose of regulation.
reasonable relation between Section 3 of P.D. No. 771 and any
legitimate ends of government intended to be achieved by its Ordinance No. 7065 is not merely a personal privilege that can
issuances. Besides, the grant of a franchise to PJAC exposed P.D. be withdrawn at any time. It is a franchise that is protected by
No. 771 as an exercise of arbitrary power to divest ADC of its the Constitution.
property rights.
The distinction between the two is that a privilege is bestowed
Section 3 also violated Section 1 of Article VIII of the 1973 out of pure beneficence on the part of the government. There is
Constitution, which provided: no obligation or burden imposed on the grantee except maybe
to pay the ordinary license and permit fees. In a franchise, there
Every bill shall embrace only one subject which are certain obligations assumed by the grantee which make up
shall be expressed in the title thereof. the valuable consideration for the contract. That is why the
grantee is first required to signify his acceptance of the terms
The title of P.D. No. 771 reads as follows: and conditions of the grant. Once the grantee accepts the terms
and conditions thereof, the grant becomes a binding contract
REVOKING ALL POWERS AND AUTHORITY OF between the grantor and the grantee.
LOCAL GOVERNMENT TO GRANT FRANCHISE,
LICENSE OR PERMIT AND REGULATE WAGERS Another test used to distinguish a franchise from a privilege is
OR BETTING BY THE PUBLIC ON HORSE AND the big investment risked by the grantee. In Papa v. Santiago,
DOG RACES, JAI-ALAI OR BASQUE PELOTA, AND supra, we held that this factor should be considered in favor of
OTHER FORMS OF GAMING. the grantee. A franchise in which money has been expended
assumes the character of a vested right (Brazosport Savings and
The title of P.D. No. 771 refers only to the revocation of the Loan Association v. American Savings and Loan Association, 161
power of local governments to grant jai-alai franchises. It does Tex. 543, 342 S.W. 2d. 747).
not embrace nor even intimate the revocation of existing
franchises. The cases cited by the Republic to the effect that gambling
permits or license issued by municipalities can be revoked when
Lastly, Section 3 impaired the obligation of contracts prohibited public interest so requires, have never addressed this issue,
by Section 11 of Article IV of the 1973 Constitution. obviously because there were no significant financial
investments involved in the operation of the permits or licenses.
As authorized by Section 18(jj), Ordinance No. 7065 grants ADC a
permit "to establish, maintain and operate a jai-alai in the City of But assuming that Ordinance No. 7065 is a mere privilege, still
Manila, under the following terms and conditions and such other over the years, the concept of a privilege has changed. Under the
traditional form a property ownership, recipients of privileges, However, the operative law on the siting of jai-alai
benefits or largesse from the government may be said to have no establishments is no longer E.O. No. 135 of President Quirino but
property rights because they have no traditionally recognized R.A. No. 938 as amended by R.A. No. 1224.
proprietary interest therein. The case of Vinco v. Municipality of
Hinigaran, 41 Phil. 790 (1917) and Pedro v. Provincial Board of Under said law only night clubs, cabarets, pavillions, or other
Rizal, 56 Phil 123 (1931), holding that a license to operate similar places are covered by the 200-lineal meter radius. In the
cockpits is a mere privilege, belong to this vintage. However, the case of all other places of amusements except cockpits, the
right-privilege dichotomy has come to an end when the courts proscribed radial distance has been reduced to 50 meters. With
have realized that individuals should not be subjected to the respect to cockpits, the determination of the radial distance is
unfettered whims of government officials to withhold privileges left to the discretion of the municipal council or city board (Sec.
previously given them (Van Alstyne, The Demise of the Right — 1).
Privilege Distinction in Constitutional Law, 81 Harvard L. R. 1439
[1968]). To perpetuate such distinction would leave many F. The Republic also questions the lack of the period of the grant
individuals at the mercy of government officials and threaten the under Ordinance No. 7065, thus making it indeterminate (G.R.
liberties protected by the Bill of Rights (Nowak, Rotunda and No. 117263, Rollo, pp. 500-505). The ordinance leaves it to the
Young, Constitutional Law 546 [2nd ed]). Mayor of the City of Manila to lay down other terms and
conditions of the grant in addition to those specified therein. It is
That a franchise is subject to regulation by the state by virtue of up to the parties to agree on the life or term of the grant. In case
its police power is conceded. What is not acceptable is the the parties fail to reach an agreement on the term, the same can
Republic's proposition that the power to regulate and supervise be fixed by the courts under Article 1197 of the Civil Code of the
includes the power to cancel the franchise altogether. Philippines, which provides as follows:

The stance of the Republic that the gambling franchises it issues If the obligation does not fix a period, but from
are not covered by the constitutional mantle protecting property its nature and the circumstances it can be
rights is ill-advised considering that it is planning to operate inferred that a period was intended, the courts
gambling establishments involving substantial foreign may fix the duration thereof.
investments in putting up the facilities thereof.
The courts shall also fix the duration of the
The belabored arguments of the Republic on the evils of period when it depends upon the will of the
gambling fall to the ground upon a showing that ADC is operating debtor.
under an existing and valid franchise (Rollo, pp. 422-423).
In every case, the courts shall determine such
E. The Republic questioned the siting of the ADC's fronton as period as may under the circumstances have
violative of E.O. No. 135 of President Quirino. Under said been probably contemplated by the parties.
executive issuance, no pelota fronton can be maintained and Once fixed by the courts, the period cannot be
operated "within a radius of 200 lineal meters from any city hall changed by them.
or municipal building, provincial capital building, national capital
building, public plaza or park, public school, church, hospital, III
athletic stadium, or any institution of learning or charity."
G.R. No. 117263
According to the certificate issued by the National Mapping
Information Authority, the ADC fronton is within the proscribed
The petition in G.R. No. 117263 seeks to nullify the following
radius from the Central Bank of the Philippines, the Rizal
orders of respondent Judge Reyes:
Stadium, the Manila Zoo, the public park or plaza in front of the
zoo, the Ospital ng Maynila, a police precinct and a church (G.R.
No. 115044, Rollo, pp. 424-427). (1) the Temporary Restraining Order dated
September 15, 1994;
On the other hand, a certificate issued by the Officer-in-charge of
the Office of the City Engineer of the City of Manila attests to the (2) the Order dated September 25, 1994; and
fact that not one of the buildings or places mentioned in the
certificate submitted by the Republic is within the 200-meter (3) the Writ of Preliminary Injunction dated
radial distance, "center to center" from the ADC's jai-alai building September 30, 1994 (Rollo, pp. 1-2).
(Rollo, p. 260). How this variance in measurement came about is
a matter that should have been submitted before the trial court The supplemental petition in said case seeks to nullify the Order
for determination. dated October 19, 1994 (Rollo, pp. 166-225).

According to Executive Secretary Guingona and GAB Chairman


Cepeda, respondent Judge Reyes acted without jurisdiction and
with grave abuse of discretion in issuing said orders and writ of Judge. The presumption of regularity of official acts therefore
preliminary injunction because: (1) Civil Case No. prevails.
94-71656 was not properly assigned to him in accordance with
Section 7, Rule 22 of the Revised Rules of Court; (2) the Going back to Section 7 of Rule 22, this Court has rules
enforcement of the Directive and Memorandum sought to be in Commissioner of Immigration v. Reyes, 12 SCRA 728 (12964)
enjoined had already been performed or were already fait that the purpose of the notice is to afford the parties a chance to
accompli; and (3) respondent judge pre-empted this Court in be heard in the assignment of their cases and this purpose is
resolving the basic issues raised in G.R. No. 115044 when he took deemed accomplished if the parties were subsequently heard. In
cognizance of Civil Case No. 94-71656. the instant case, Executive Secretary Guingona and GAB
Chairman Cepeda were given a hearing on the matter of the lack
A. At the outset, it should be made clear that Section 7 of Rule 22 of notice to them of the raffle when the court heard on
of the Revised Rules of Court does not require that the September 23, 1994 their Motion to Recall Temporary
assignment of cases to the different branches of a trial court Restraining Order, Urgent Supplemental Motion to Recall
should always be by raffle. The Rule talks of assignment Temporary Restraining Order and Opposition to Issuance of a
"whether by raffle or otherwise." What it requires is the giving of Writ of Preliminary Issuance of a Writ of Preliminary Injunction
written notice to counsel or the parties "so that they may be (G.R. No. 117263, Rollo p. 434).
present therein if they so desire."
Petitioners in G.R. No. 117263 failed to shown any irregularity
Section 7 of Rule 22 provides: attendant to the raffle or any prejudice which befell them as a
result of the lack of notice of the raffle of Civil Case No. 94-
Assignment of cases. In the assignment of 71656.
cases to the different branches of a Court of
First Instance, or their transfer from one On the other hand, petitioners never asked for a re-raffle of the
branch to another whether by raffle or case or for any affirmative relief from the trial court and
otherwise, the parties or their counsel shall be proceeded with the presentation of evidence of ADC in
given written notice sufficiently in advance so connection with the motion for preliminary injunction.
that they may be present therein if they so
desire. B. The purpose of a temporary restraining order or preliminary
injunction, whether preventive or mandatory, is merely to
However, there may be cases necessitating the issuance of a prevent a threatened wrong and to protect the property or
temporary restraining order to prevent irreparable injury on the rights involved from further injury, until the issues can be
petitioner. determined after the hearing on the merits (Ohio Oil Co. v.
Conway, 279 U.S. 813, 73 L. Ed. 972, 49 S. Ct. 256; Gobbi v. Dilao,
To await the regular raffle before the court can act on the 58 Or. 14, 111 p. 49, 113, p. 57). What is intended to be
motion for temporary restraining order may render the case preserved is the status quo ante litem motam or the last actual,
moot and academic. Hence, Administrative Circular No. 1 dated peaceable, noncontested status (Annotation, 15 ALR 2d 237).
January 28, 1988 was issued by this Court allowing a special
raffle. Said Circular provides: In the case at bench, the status quo which the questioned orders
of Judge Reyes sought to maintain was that ADC was operating
8.3. Special raffles should not be permitted the jai-alai pursuant to Ordinance No. 7065 of the City of Manila,
except on verified application of the interested the various decisions of the different courts, including the
party who seeks issuance of a provisional Supreme Court, and the licenses, permits and provisional
remedy and only upon a finding by the authority issued by GAB itself.
Executive Judge that unless a special raffle is
conducted irreparable damage shall be At times, it may be necessary for the courts to take some
suffered by the applicant. The special raffle affirmative act essential to restore the status quo (Iowa Natural
shall be conducted by at least two judges in a Resources Council v. Van See [Iowa] 158 N.W. 2d. 111).
multiple-sala station.
The right to conduct a business or to pursue one's business or
In a case where a verified application for special raffle is filed, trade without wrongful interference by others is a property right
the notice to the adverse parties may be dispensed with but the which equity will, in proper cases, protect by injunction,
raffle has to "be conducted by at least two judges in a multiple- provided of course, that such occupation or vocation is legal and
sala station." not prohibited by law (Rance v. Sperry & Hutchinson Co., 410 P.
2d 859).
The Republic does not claim that Administrative Circular No. 1
has been violated in the assignment of the case to respondent Had not the Directive to close the operation of ADC's jai-alai and
the implementing Memorandum been issued, there would have
been no need for the issuance of the orders of the Regional Trial xxx xxx xxx
Court. The need for said equitable reliefs becomes more evident
if we consider that the Executive Secretary himself had Sec. 4. No person, or group of persons, other
entertained doubts as to the legality of his action because in the than the operator or maintainer of a fronton
same Directive he instructed the Solicitor General to obtain a with legislative franchise to conduct basque
judicial ruling on the legal issues raised. pelota games (Jai-Alai), shall offer, take or
arrange bets on any basque pelota game or
C. Respondent Judge Reyes did not pre-empt this Court in event, or maintain or use a totalizer or other
deciding the basic issues raised in G.R. No. 115044 when it device, method or system to bet or gamble on
assumed jurisdiction over Civil Case No. 94-71656 and issued the any basque pelota game or event.
orders questioned in G.R. No. 117263.
Sec. 5. No person, operator, or maintainer of a
The orders of Judge Reyes are provisional in nature and do not fronton with legislative franchise to conduct
touch on the merits of the case. The issues raised in Civil Case basque pelota games shall offer, take, or
No. 94-71656 are the validity of the Directive and Memorandum, arrange bets on any basque pelota game or
which were issued after the decision of this Court in G.R. No. event, or maintain or use a totalizator or to her
115044. The respondent in the civil case before the trial court device, method or system to bet or gamble on
are not even parties in G.R. No. 115044. any basque pelota game or event outside the
place, enclosure, or fronton where the basque
PUNO, J., dissenting: pelota game is held.

The petitions at bench involve great principles of law in tension. On September 7, 1971, the Municipal Board of Manila approved
On balance at one end is the high prerogative of the State to Ordinance No. 7065 "authorizing the Mayor to Allow and Permit
promote the general welfare of the people thru the use of police the Associated Development Corporation to Establish, Maintain
power; on the opposite end is the right of an entity to have its and Operate a Jai-Alai in the city of Manila, Under Certain Terms
property protected against unreasonable impairment by the and Conditions And For Other Purposes."
State. courts accord the State wide latitude in the exercise of its
police power to bring about the greatest good of the greatest On September 21, 1972, martial law was declared by then
number. But when its purpose is putrefied by private interest, president Ferdinand E. Marcos. The 1971 Constitution, as
the use of police power becomes a farce and must be struck amended, authorized the former President to exercise legislative
down just as every arbitrary exercise of government power powers. Among the laws he decreed is P.D. No. 771, "Revoking
should be stamped out. All Powers And Authority Of Local Government(s) to Grant
Franchise, License Or Permit And Regulate Wagers Or Betting By
I will confine myself to the jugular issue of whether or not The Public On Horse And Dog Races, Jai-Alai, Or Basque pelota
Associated Development Corporation (ADC) still possesses a valid And Other Forms of Gambling." its Text states:
franchise to operate jai-alai in manila. The issue is multi-
dimensional considering its constitutional complexion. xxx xxx xxx

First, the matrix of facts. On June 18, 1949, congress enacted Sec. 1. Any provision of law to the contrary
Republic Act No. 409, otherwise known as the Charter of Manila. notwithstanding, the authority of Chartered
Section 18 (jj) gave to the Municipal Board (now City Council) the Cities and other local governments to issue
following power: license, permit or any form of franchise to
operate, maintain and establish horse and dog
(jj) To tax, license, permit and regulate wagers race tracks, jai-alai or other forms of gambling
or betting by the public on boxing, sipa, is hereby revoked.
bowling, billiards, pools, horse or dog races,
cockpits, jai-alai, roller or ice skating or any Sec. 2. Hereafter all permit or franchise to
porting or athletic contest, as well as grant operate, maintain and establish horse and dog
exclusive rights to establishments for this race tracks, jai-alai and other forms of
purpose, notwithstanding any existing law to gambling shall be issued by the national
the contrary. government upon proper application and
verification of the qualifications of the
On June 20, 1953, congress passed Republic Act No. 954 entitled applicant: Provided, That local governments
"An Act to Prohibit Certain Activities in Connection with Horse may, upon clearance from the chief of
Races and Basque pelota Games (Jai-Alai) and to Prescribe constabulary and during town fiestas and
penalties for its Violation." Sections 4 and 5 of the law provide: holidays, continue to issue permits for minor
games which are usually enjoyed by the people Corporation, 57 SCRA 344 [1978]; Galang v.
during such celebrations. Endencia, 73 Phil. 391 [1941].

Sec. 3. All existing franchises and permits The issue on the cancellation of Ordinance No.
issued by local government are hereby revoked 7065 by president Marcos could have been
and may be renewed only in accordance with raised as a special defense in Civil Case No. 88-
this Decree. 54660 but was not . . .

P.D. No. 771 was enacted on August 20, 1975 and purportedly The City of Manila should have pursued in the
revoked the permit of ADC to operate. Before two (2) months appellate courts its appeal questioning the
could elapse or on October 16, 1975, then President Marcos dismissal of Civil Case No. 91-58913, where the
issued P.D. No. 810 granting a franchise to Philippine Jai-Alai and trial court ruled that Mayor Lopez and the city
Amusements corporation to conduct jai-alai games in Manila. it could no longer claim that Ordinance No. 7065
is not disputed that his brother-in-law, Mr. Alfredo "Berjo" had been cancelled by president Marcos
Romualdez, held the controlling interest in Philippine Jai-alai and because they failed to raise this issue in Civil
Amusements Corporation. apparently, the favored treatment Case No. 88-54660.
given to Mr. Romualdez and company did not sit well with
former President Corazon C. Aquino. On May 8, 1987, she issued At any rate, the unilateral cancellation of the
Executive Order No. 169 repealing P.D. No. 810. Nevertheless, franchise, which has the status of a contract,
she allowed P.D. No. 771 to stay in our statutes book. without notice, hearing and justifiable cause is
intolerable in any system where the rule of Law
ADC thought it could resume its jai-alai operation. On May 5, prevails (Poses v. Toledo Transportation Co., 62
1988, it sought from then mayor Gemiliano C. Lopez, Jr., of Phil. 297 [1935]; Manila electric Co., v. Public
Manila a permit to operate on the strength of Ordinance No. utility commissioners, 30 Phil. 387 [1915].
7065. The request was refused and this Spawned suits1 all won
by ADC. In Civil Case No. 88-45660, filed in Br. 40, RTC, Manila, Upon its receipt, Mayor Lim manifested he would comply with
Judge Augusto E. Villarin ruled that Ordinance No. 7065 created the Decision. He did not file a motion for reconsideration. it was
a binding contract between the city of Manila and ADC, and then that the Republic started its own legal battle against ADC. it
hence, the City Mayor had no discretion to deny ADC's permit. intervened in G.R. No. 115044, raising several issues, especially
The ruling was appealed to the Court of Appeals where it was ADC's lack of a valid legislative franchise to operate jai-alai. No
docketed as CA-G.R. SP No. 16477. On February 9, 1989, less than Executive Secretary Teofisto Guingona directed the
however, Mayor Lopez withdrew the city's appeal. Still, the legal Games and Amusement Board, then headed by Mr. Francisco R.
problems of ADC did not disappear. Manila Mayor Alfredo Lim Sumulong, jr., to hold in abeyance the grant of authority, or if
who succeeded Mayor Lopez again refused to issue ADC's permit any had been issued, to withdraw such grant of authority in favor
despite orders of Judge Felipe G. Pacquing.2 Threatened with of ADC. The GAB dutifully ordered ADC to cease and desist from
contempt, Mayor Lim filed with this Court G.R. No. 115044, a operating the Manila jai-alai. ADC again rushed to the RTC of
petition for certiorari. He alleged that he could not be compelled Manila and filed Civil Case No. 94-71656 which was raffled to Br.
to enforce the Decision in Civil Case No. 88-45660 as the same is 14, presided by respondent Judge Vetino Reyes. Acting with
null and void for want of jurisdiction of the court that rendered dispatch, respondent judge temporarily restrained the GAB from
it. He likewise contended that Ordinance No. 7065 had been withdrawing the provisional authority of ADC to operate. After
revoked by P.D. No. 771. On September 1, 1994, the First division hearing, the temporary restraining order was converted into
of this court, speaking thru Mr. Justice Camilo Quiason, writs of preliminary injunction and preliminary mandatory
dismissed Mayor Lim's petition. It held: injunction upon posting by ADC of a P2 million bond. these writs
are challenged in these consolidated petitions as having been
xxx xxx xxx issued in grave abuse of discretion amounting to lack of
jurisdiction.
Petitioners failed to appreciate the distinction
between a void and an erroneous judgment While the petitions at bench are checkered with significant
and between jurisdiction and the exercise of substantive and procedural issues, I will only address the
jurisdiction. contention that ADC has no existing legislative franchise. The
contention is anchored on two (2) submissions: first, ADC has no
Having jurisdiction over the civil case, whatever legislative franchise as required by R.A. No. 954, and second,
error may be attributed to the trial court, is even if the city of Manila licensed ADC to operate jai-alai, its
simply one of judgment, not of jurisdiction. an authority was nevertheless revoked by section 3 of P.D. No. 771.
error of judgment cannot be corrected
by certiorari but by appeal (Robles v. House of I find as completely baseless petitioners' submission that R.A.
Representatives Electoral Tribunal, 181 SCRA No. 954 requires a legislative franchise to operate a jai-alai, in
780 [1990]; De Castro v. Delta Motor Sales effect, revoking the power of the City of Manila to issue permits
for the same purpose as granted by its Charter. A 20-20 visual enacted in 1935. However, in a recent opinion
reading of R.A. No. 954 will not yield the suggested released by the City Fiscal of Manila he
interpretation by petitioners. the titles of R.A. No. 954 will maintains that Act No. 4240 has already been
immediately reveal that the law was enacted to achieve repealed, so that the present law regulating
a special purpose. It states: "An Act To Prohibit Certain ordinary horse races permits "bookies" to ply
Activities In Connection With Horse Races And Basque pelota their trade, but not on sweepstakes races and
Games (Jai-Alai), And To Prescribe Penalties For its Violation." other races held for charitable purposes. With
The prohibited activities related to jai-alai games are specified in the operation of "booking" places in the City of
sections 4 to 6, viz: Manila, the Government has been losing no
less than P600,000.00 a year, which amount
Sec. 4. No person, or group of persons, other represents the tax that should have been
than the operator or maintainer of collected from bets made in such places. for
a fronton with legislative franchise to these reasons, the approval of the bill is
conduct basque pelota games (Jai-Alai), shall earnestly recommended.
offer, take or arrange bets on any basque
pelota game or event, or maintain or use a As said Explanatory Note is expressive of the purpose of the bill,
totalizator or other device, method or system it gives a reliable keyhole on the scope and coverage of R.A. No.
to bet or gamble on any basque pelota game or 954.5 Nothing from the Explanatory Note remotely suggests any
event. intent of the law to revoke the power of the City of Manila to
issue permits to operate jai-alai games within its territorial
Sec. 5. No person, operator, or maintainer jurisdiction.
of fronton with legislative franchise to
conduct basque pelota games shall offer, take The Debates6 in Congress likewise reject the reading of R.A. No.
or arrange bets on any basque pelota game or 954 by petitioners, thus:
event, or maintain or use a totalizator or other
device, method or system to bet or gamble on xxx xxx xxx
any basque pelota game or event outside the
place, enclosure, or fronton where the basque RESUMPTION OF SESSION
pelota game is held.
THE SPEAKER. The session is
Sec. 6. No person or group of persons shall fix resumed
a basque pelota game for the purpose of
insuring the winning of certain determined
MR. CINCO. Mr. Speaker, I
pelotari or pelotaris.
withdraw my motion for
postponement.
The Title of R.A. No. 954 does not show that it seeks to limit the
operation of jai-alai only to entities with franchise given by
MR. CALO. Mr. Speaker, will
Congress. what the title trumpets as the sole subject of the law is
the gentleman may yield, if
the criminalization of certain practices relating to jai-alai games.
he so desires.
The title of a law is a valuable intrinsic aid in determining
legislative intent.3
MR. ZOSA. Willingly.
4
The Explanatory Note of House Bill 3204, the precursor of R.A.
MR. CALO. What is the
No. 954, also reveals that the intent of the law is only to
national import of this bill?
criminalize the practice of illegal bookies and game-fixing in jai-
alai. It states:
MR. ZOSA. Mr. Speaker, this
bill prohibits certain activities
This bill seeks to prohibit certain anomalous
practice of "bookies" in connection with the in connection with horse
races and jai-Alai games
holding of horse races or "basque pelota"
which are
games. The term "bookie" as commonly
licensed by the government.
understood refers to a person, who without
At present, there are many
any license therefor, operates outside the
practices in connection with
compounds of racing clubs and accepts bets
the holding of these games
from the public. They pay dividends to winners
which deprive the
minus a commission, which is usually 10%.
government of income that
Prosecutions of said persons have been
should
instituted under Act No. 4240 which was
legally go into the legally inferior to a regular franchise. Through the years, the
government coffers as taxes. permit given by the City endows the grantee complete right to
operate. Not once, except in these cases, has the national
MR. CALO. Is not this matter government questioned the completeness of his right. For this
of national importance reason, P.D. No. 771 has to take revoke all existing franchises
because Jai-Alai and permits without making any distinction. It treated permits in
games and horse races are the same class as franchises.
held only in Manila?
Petitioners' second line of argument urges that in any event,
MR. ZOSA. Precisely, Mr. Section 3 of P.D. No. 771 expressly revoked all existing franchises
Speaker, they are played on a and permits to operate jai-alai games granted by local
big scale, and governments, including the permit issued to ADC by the City of
there are many practices Manila through Ordinance No. 7065. For its resolution,
which deprive the petitioners' argument requires a re-statement of the
government of requirements for the valid exercise of police power.
income to which it is entitled.
I think the gentleman from It was the legendary Chief Justice Marshall who first used the
Agusan is a member of the phrase police power in 1824.8 Early attempts to fix the metes
Committee on and bounds of police power were unsuccessful. 9 For of all the
Appropriations. inherent powers of the State, police power is indubitably the
The governments will have most pervasive, 10 the most insistent and the least
more revenues, if we shall limitable. 11 Rooted on the latin maxims, salus populi suprema
approve this bill. est lex (the welfare of the people if the supreme law) and sic
utere tuo ut alienum non laedas (so use your property as not to
Again, legislative debate is a good source to determine the intent injure the property of others), it was not without reason for
of a Justice Holmes to stress that its reach extends "to all the great
law. 7 public needs." 12 A similar sentiment was echoed by our own
Justice Laurel in Alalang v. Williams 13 who defined police power
To top it all, the text of R.A. no. 954 itself does not intimate that as the "state authority to enact legislation that may interfere
it is repealing any existing law, especially section 18 (jj) of R.A. with personal liberty or property in order to promote the general
no. 409, otherwise known as the Charter of Manila. Indeed, R.A. welfare." Over the years, courts recognized the power of
No. 954 has no repealing provision. The reason is obvious — it legislature to enact police regulations on broad areas of state
simply prohibited certain practices in jai-alai then still concern: (a) the preservation of the state itself and the
unregulated by the laws of the land. It did not regulate aspects of unhindered execution of its legitimate functions; (b) the
jai-alai already regulated by existing laws, like the matter of prevention and punishment of crime; (c) the preservation of the
whether it is the national government alone that should issue public peace and order; (d) the preservation of the public safety;
franchises to operate jai-alai games. (e) the purity and preservation of the public morals; (f) the
protection and promotion of the public health (g) the regulation
of business, trades, or professions the conduct of which may
The subsequent enactment of P.D. No. 771 on August 20, 1975
affect one or other of the objects just enumerated; (h) the
further demolished the submission of petitioners. In clear and
regulation of property and rights of property so far as to prevent
certain language, P.D. no. 771 recalled the owner of local
its being used in a manner dangerous or detrimental to others;
governments to issue jai-alai franchises and permits. It also
(i) the prevention of fraud, extortion, and oppression; (j) roads
revoked existing franchises and permits issued by local
and streets, and their preservation and repair; and (k) the
governments. If R.A. no. 954 had already disauthorized local
preservation of game and fish. 14
governments from granting franchisers and permits, there would
be no need to enact P.D. no. 771. No rule of statutory
construction will be considered any law a meaningless But while the State is bestowed near boundless authority to
redundancy. promote public welfare, still the exercise of police power cannot
be allowed to run riot in a republic ruled by reason. Thus, our
courts have laid down the test to determine the validity of a
The passage of P.D. No. 771, also negates petitioners' insistence
police measure as follows: (1) the interest of the public
that for ADC to continue operating, it must show it has a
generally, as distinguished from those of particular class,
franchise from Congress, not just a permit from the City of
requires its exercise; and (2) the means employed are reasonably
Manila. The suggested dichotomy between a legislative franchise
necessary for the accomplishment of the purpose and not unduly
and city permit does not impress. If the City of Manila is
oppresive upon individuals. 15 Deeper relexion will reveal that
empowered to license the ADC it is because the power was
the test reiterates the essence of our constitutional guarantees
delegated to it by Congress. The acts of the City of Manila in the
of substantive due process, equal protection, and non-
exercise of its delegated power bind Congress as well. Stated
impairment of property rights.
otherwise, the permit given by the City to ADC is not any whit
We now apply this lucidly-lined test to the petitions at bench. To that will justify its different treatment. The evidence is thus clear
reiterate, P.D. No. 771 utilized two methods to regulate jai-alai: and the conclusion is irresistable that section 3 of P.D. No. 771
First, it reverted the power to issue franchise and permit to the was designed with a malignant eye against ADC.
national government, second, it revoked all existing franchise
and permit issued by local governments. In light of the established facts in field, section 3 of P.D. No. 771
must be struck down as constitutionally infirmed. despite its
I concede that the first method is invulnerable even to the cosmetics, section 3 cannot be unblushingly foisted as a measure
strongest of constitutional attack. Part of the plenary power of that will promote the public welfare. There is no way to treat the
Congress to make laws is the right ot grant franchise and permits self-interest of a favored entity as identical with the general
allowing the exercise of certain privileges. Congress can delegate interest of a favored entity as identical with the general interest
the exercise of this innate power to grant franchises as it did to of the Filipino people. It will also be repulsive to reason to
the City of Manila when it granted its charter on June 18, 1949 entertain the thesis that the revocation of the franchise of ADC is
thru R.A. no. 409. Congress can also revoke the delegated power reasonably necessary to enable the State to grapple to the
and choose to wield the power itself as it did thru then President ground the evil of jai-alai as a form of gambling. Petitioners have
Marcos who exercised legislative powers by enacting P.D. No. not demonstrated that government lacks alternative options to
771. In the petitions at bench, Congress revoked the power of succeed in its effort except to cancel the lone franchise of ADC.
local government to issue franchises and permits which it had Well to stress, it is not the lofty aim of P.D. No. 771 to
priorly delegated. In doing so and in deciding to wield the power completely eradicate jai-alai games; it merely seeks to control its
itself to meet the perceived problems of the time, the legislature multiplication by restoring the monopoly of the national
exercised its distinct judgment and the other branches of government in the dispensation of franchises.
government, including this Court, cannot supplant this judgment
without running afoul of the principle of separation powers. To Prescinding from these premises, I share the scholarly view of
be sure, this particular legislative method to regulate the Mr. Justice Quiason that sec. 3 of P.D. No. 771 offends the
problem of mushrooming applications for jai-alai franchise Constitution which demands faithful compliance with the
cannot be faulted as bereft of rationality. In the hearing of the requirements of substantive due process, equal protection of the
petitions at bench, Executive Secretary Guingona established the law, and non-impairment of contracts. capsulizing their essence,
fact that at the time of the enactment of P.D. No. 771, there substantive due process exacts fairness; equal protection
were numerous applications to run jai-alai games in various cities disallows distinction to the distinctless; and the guaranty of non-
and municipalities of the archipelago. To prevent the impairment of contract protects its integrity unless demanded
proliferation of these applications and minimize their ill effects, otherwise by the public good. Constitutionalism eschews the
the law centralized their screening by the national government exercise of unchecked power for history demonstrates that a
alone. The law excluded local governments in the process. The meandering, aimless power ultimately tears apart the social
revocation of the delegated power to local governments does fabric of society. Thus, the grant of police power to promote
not impair any right. Applicants to franchises have no right to public welfare cannot carry with it the privilege to be oppressive.
insist that their applications be acted upon by local governments. The Constitution ordained the State not just to achieve order or
Their right to a franchise is only in purpose. liberty but to attain ordered liberty, however elusive the balance
may be. Cognizant of the truism that in life the only constant is
The second method adopted by Section 3 of P.D. No. 771 which change, the Constitution did not design that the point that can
revoked all existing franchises and permits is, however, strike the balance between order and liberty should be static for
constitutionally impermissible. On its face, section 3 purports to precisely, the process of adjusting the moving point of the
revoke all existing franchises and permits. During the oral balance gives government greater elasticity to meet the needs of
argument of the petitions at bench, however, it was admitted the time.
that at the time P.D. No. 771 was enacted, only ADC is actually
operating a jai-alai. 16 The purported revocation of all franchises It is also my respectful submission that the unconstitutionality of
and permits when there was only one existing permit at that section 3 of P.D. No. 771 was not cured when former President
time is an unmistakeable attempt to mask the law with Aquino used it in revoking P.D. No. 810 which granted Philippine
impartiality. No other permit was affected by said sec. 3 except Jai-Alai and Amusements Corporation a franchise to operate jai-
ADC. alai in Manila. The subsequent use of said section should not
obfuscate the fact that the law was enacted in the wrongful
Truth, however, has its own time of sprouting out. The truth exercise of the police power of the State. There is no
behind the revocation of ADC's franchise revealed itself when sidestepping the truth that its enactment inflicted undue injury
former President Marcos transferred ADC's franchise to the on the right s of ADC and there can be no reparation of these
Philippine Jai-Alai and Amusements Corporation then under the rights until and unless its permit to continue operating jai-alai in
control of his brother-in-law, Mr. Alfredo "Bejo" Romualdez. The Manila is restored. Cancelling the franchise of Philippine Jai-Alai
favored treatment was extended hardly two (2) months after the and Amusements Corporation is an act of Justice to ADC if its
revocation of ADC's franchise and it left Philippine Jai-Alai and franchise would be left unrecognized. Since the
Amusements Corporation the sole jai-alai operator in the unconstitutionality of section 3 is congenital, it is beyond
Philippines. The Court is not informed of any distinction of PJAC redemption.
But while I wholeheartedly subscribe to the many impeccable is not the product of an authentic deliberative legislature.
theses of Mr. Justice Quiason, it is with regret that I cannot join Rather, it is the dictate of a public official who then had a
his submittal that sec. 3 of P.D. No. 771 violates procedural due monopoly of executive and legislative powers. As it was not
process. We are dealing with the plenary power of the legislature infrequently done at that time, the whereas clauses of laws used
to make and amend laws. Congress has previously delegated to to camouflage a private purpose by the invocation of public
the City of Manila the power to grant permits to operate jai-alai welfare. The tragedy is that the bogus invocation of public
within its territorial jurisdiction and ADC's permit could have welfare succeeded partly due to the indefensible deference
been validly revoked by law if it were demonstrated that its given to official acts of government. The new Constitution now
revocation was called for by the public good and is not calls for a heightened judicial scrutiny of official acts. For this
capricious. In ascertaining the public good for the purpose of purpose, it has extirpated even the colonial roots of our
enacting a remedial law, it is not indispensable, albeit sometimes impotence. It is time to respond to this call with neither a pause
desirable, to give notice and hearing to an affected party. The nor a half-pause.
data the legislature seeks when engaged in lawmaking does not
focus on the liability of a person or entity which would require I therefore vote to declare section 3 of P.D. No. 771
fair hearing of the latter's side. In fine, the legislature while unconstitutional and to dismiss the petitions.
making laws is not involved in establishing evidence that will Here's the FACTS.. recit style.. bullet form:
convict, but in unearthing neutral data that will direct its
discretion in determining the general good. 1. (1949) RA 409- CONGRESS ACT – CHARTER of MANILA

The suggested notice and hearing before a franchise can be 2. (1951) EO 392 – Transferring Authority JAIALAI - LG to
cancelled has another undesirable dimension. It does not only GAB (Local Govt – Games & Amusement Board)
unduly cramp the legislature in its method of data-gathering, it
also burdens the legislature with too much encumbrance in the 3. (1971) MBM C.O. 7065 – Authorizing Mayor to establish &
exercise of its police power to regulate gambling. However operate JAIALAI in MANILA . (Municipal Board of Manila)
heavily laden with property rights a franchise to operate jai-alai
maybe, it is still a contract which under appropriate 4. (1975) PD 771 was issued by Marcos. REVOKING All Powers
circumstances can be revoked to enhance public interest. Jai-alai and Authority of LG to Grant Franchise, License or Permit to
may be a game of a thousand thrills but its true thrill comes from Regulate Horse and Dog Races, Jai-Alai or Pelota
the gambling on its indeterminate result. Beyond debate,
gambling is an evil even if its advocates bleach its nefariousness 5. (1988) ASSOCIATED DEVELOPMENT CORPORATION (ADC)
by upgrading it as a necessary evil. In a country where it is a tried to operate a Jai-Alai. Government thru GAB intervened
policy to promote the youth's physical, moral, spiritual, and invoked PD 771
intellectual, and social well-being, 17 there is no right to gamble,
neither a right to promote gambling for gambling is contra bonos 6. ADC assails the CONSTITUTIONALITY of P.D. No. 771.
mores. To require the legislature to strictly observe procedural
before it can revoke a gambling due process before it can revoke ISSUE:
a gambling franchise is to put too much primacy on property
rights. We then stand in danger of reviving the long lamented W/N P.D. No. 771 is violative of the EQUAL PROTECTION and
1905 ruling in Lochner v. New York 18 which unwisely struck down NON-IMPAIRMENT clauses of the Constitution.
government interference in contractual liberty. The spirit of
liberalism which provides the main driving force of social justice RULING:
rebels against the resuscitation of the ruling Lochner from its
sarcophagus. We should not be seduced by any judicial activism NO. P.D. No. 771 is VALID AND CONSTITUTIONAL.
unduly favoring private economic interest 19 at the expense of
the public good. RATIO:

I also support the stance of Mr. Justice Quiason which resisted Presumption against unconstitutionality. There is nothing on
the stance that the Court should close its eyes to allegations that record to show or even suggest that PD No. 771 has been
section 3 of P.D. No. 771 was conceived and effected to give repealed, altered or amended by any subsequent law or
naked preference to a favored entity due to pedigree. I reiterate presidential issuance (when the executive still exercised
the view that section 1, Article VIII of the Constitution expanding legislative powers).
the jurisdiction of this Court to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess Neither can it be tenably stated that the issue of the continued
of jurisdiction on the part of any branch or agency of existence of ADC’s franchise by reason of the unconstitutionality
government is not a pointless postulate. Without the grant of of PD No. 771 was settled in G.R. No. 115044, for the decision of
this new power, it would be difficult, if not impossible, to pierce the Court’s First Division in said case, aside from not being final,
through the pretentious purposes of P.D. No. 771. P.D. No. 771 cannot have the effect of nullifying PD No. 771 as
has no right to a reverential treatment for it is not a real law as it
unconstitutional, since only the Court En Banc has that power BE IT ORDAINED by the Sangguniang
under Article VIII, Section 4(2) of the Constitution. Panlungsod of the City of Cagayan de Oro, in
session assembled that:
And on the question of whether or not the government is
estopped from contesting ADC’s possession of a valid franchise, Sec. 1. — That pursuant to the policy of the city
the well-settled rule is that the State cannot be put in estoppel banning the operation of casino within its
by the mistakes or errors, if any, of its officials or territorial jurisdiction, no business permit shall
agents. (Republic v. Intermediate Appellate Court, 209 SCRA 90) be issued to any person, partnership or
corporation for the operation of casino within
8 the city limits.

G.R. No. 111097 July 20, 1994 Sec. 2. — That it shall be a violation of existing
business permit by any persons, partnership or
MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE corporation to use its business establishment
ORO, petitioners, or portion thereof, or allow the use thereof by
vs. others for casino operation and other gambling
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE activities.
AMUSEMENT AND GAMING CORPORATION, respondents.
Sec. 3. — PENALTIES. — Any violation of such
Aquilino G. Pimentel, Jr. and Associates for petitioners. existing business permit as defined in the
preceding section shall suffer the following
R.R. Torralba & Associates for private respondent. penalties, to wit:

a)
CRUZ, J.: Suspension
of the
There was instant opposition when PAGCOR announced the business
opening of a casino in Cagayan de Oro City. Civic organizations permit for
angrily denounced the project. The religious elements echoed sixty (60)
the objection and so did the women's groups and the youth. days for the
Demonstrations were led by the mayor and the city legislators. first offense
The media trumpeted the protest, describing the casino as an and a fine
affront to the welfare of the city. of
P1,000.00/
day
The trouble arose when in 1992, flush with its tremendous
success in several cities, PAGCOR decided to expand its
operations to Cagayan de Oro City. To this end, it leased a b)
portion of a building belonging to Pryce Properties Corporation, Suspension
Inc., one of the herein private respondents, renovated and of the
equipped the same, and prepared to inaugurate its casino there business
during the Christmas season. permit for
Six (6)
months for
The reaction of the Sangguniang Panlungsod of Cagayan de Oro
the second
City was swift and hostile. On December 7, 1992, it enacted
offense,
Ordinance No. 3353 reading as follows:
and a fine
of
ORDINANCE NO. 3353
P3,000.00/
day
AN ORDINANCE PROHIBITING THE ISSUANCE
OF BUSINESS PERMIT AND CANCELLING
c)
EXISTING BUSINESS PERMIT TO ANY
Permanent
ESTABLISHMENT FOR THE USING AND
revocation
ALLOWING TO BE USED ITS PREMISES OR
of the
PORTION THEREOF FOR THE OPERATION OF
business
CASINO.
permit and
imprisonme
nt of One
(1) year, for Sec. 2. — Any violation of this Ordinance shall
the third be subject to the following penalties:
and
subsequent a) Administrative fine of P5,000.00 shall be
offenses. imposed against the proprietor, partnership or
corporation undertaking the operation,
Sec. 4. — This Ordinance shall take effect ten conduct, maintenance of gambling CASINO in
(10) days from publication thereof. the City and closure thereof;

Nor was this all. On January 4, 1993, it adopted a sterner b) Imprisonment of not less than six (6) months
Ordinance No. 3375-93 reading as follows: nor more than one (1) year or a fine in the
amount of P5,000.00 or both at the discretion
ORDINANCE NO. 3375-93 of the court against the manager, supervisor,
and/or any person responsible in the
AN ORDINANCE PROHIBITING THE OPERATION establishment, conduct and maintenance of
OF CASINO AND PROVIDING PENALTY FOR gambling CASINO.
VIOLATION THEREFOR.
Sec. 3. — This Ordinance shall take effect ten
WHEREAS, the City Council established a policy (10) days after its publication in a local
as early as 1990 against CASINO under its newspaper of general circulation.
Resolution No. 2295;
Pryce assailed the ordinances before the Court of Appeals, where
WHEREAS, on October 14, 1992, the City it was joined by PAGCOR as intervenor and supplemental
Council passed another Resolution No. 2673, petitioner. Their challenge succeeded. On March 31, 1993, the
reiterating its policy against the establishment Court of Appeals declared the ordinances invalid and issued the
of CASINO; writ prayed for to prohibit their enforcement. 1 Reconsideration
of this decision was denied on July 13, 1993. 2
WHEREAS, subsequently, thereafter, it likewise
passed Ordinance No. 3353, prohibiting the Cagayan de Oro City and its mayor are now before us in this
issuance of Business Permit and to cancel petition for review under Rule 45 of the Rules of Court. 3 They
existing Business Permit to any establishment aver that the respondent Court of Appeals erred in holding that:
for the using and allowing to be used its
premises or portion thereof for the operation 1. Under existing laws, the Sangguniang
of CASINO; Panlungsod of the City of Cagayan de Oro does
not have the power and authority to prohibit
WHEREAS, under Art. 3, section 458, No. (4), the establishment and operation of a PAGCOR
sub paragraph VI of the Local Government gambling casino within the City's territorial
Code of 1991 (Rep. Act 7160) and under Art. limits.
99, No. (4), Paragraph VI of the implementing
rules of the Local Government Code, the City 2. The phrase "gambling and other prohibited
Council as the Legislative Body shall enact games of chance" found in Sec. 458, par. (a),
measure to suppress any activity inimical to sub-par. (1) — (v) of R.A. 7160 could only mean
public morals and general welfare of the "illegal gambling."
people and/or regulate or prohibit such activity
pertaining to amusement or entertainment in 3. The questioned Ordinances in effect annul
order to protect social and moral welfare of P.D. 1869 and are therefore invalid on that
the community; point.

NOW THEREFORE, 4. The questioned Ordinances are


discriminatory to casino and partial to
BE IT ORDAINED by the City Council in session cockfighting and are therefore invalid on that
duly assembled that: point.

Sec. 1. — The operation of gambling CASINO in 5. The questioned Ordinances are not
the City of Cagayan de Oro is hereby reasonable, not consonant with the general
prohibited. powers and purposes of the instrumentality
concerned and inconsistent with the laws or (1) Approve ordinances and pass resolutions
policy of the State. necessary for an efficient and effective city
government, and in this connection, shall:
6. It had no option but to follow the ruling in
the case of Basco, et al. v. PAGCOR, G.R. No. xxx xxx xxx
91649, May 14, 1991, 197 SCRA 53 in disposing
of the issues presented in this present case. (v) Enact
ordinances
PAGCOR is a corporation created directly by P.D. 1869 to help intended to
centralize and regulate all games of chance, including casinos on prevent,
land and sea within the territorial jurisdiction of the Philippines. suppress
In Basco v. Philippine Amusements and Gaming and impose
Corporation, 4 this Court sustained the constitutionality of the appropriate
decree and even cited the benefits of the entity to the national penalties
economy as the third highest revenue-earner in the government, for habitual
next only to the BIR and the Bureau of Customs. drunkennes
s in public
Cagayan de Oro City, like other local political subdivisions, is places,
empowered to enact ordinances for the purposes indicated in vagrancy,
the Local Government Code. It is expressly vested with the police mendicancy
power under what is known as the General Welfare Clause now ,
embodied in Section 16 as follows: prostitution
,
Sec. 16. — General Welfare. — Every local establishme
government unit shall exercise the powers nt and
expressly granted, those necessarily implied maintenanc
therefrom, as well as powers necessary, e of houses
appropriate, or incidental for its efficient and of ill
effective governance, and those which are repute, ga
essential to the promotion of the general mblingand
welfare. Within their respective territorial other
jurisdictions, local government units shall prohibited
ensure and support, among other things, the games of
preservation and enrichment of culture, chance,
promote health and safety, enhance the right fraudulent
of the people to a balanced ecology, encourage devices and
and support the development of appropriate ways to
and self-reliant scientific and technological obtain
capabilities, improve public morals, enhance money or
economic prosperity and social justice, property,
promote full employment among their drug
residents, maintain peace and order, and addiction,
preserve the comfort and convenience of their maintenanc
inhabitants. e of drug
dens, drug
pushing,
In addition, Section 458 of the said Code specifically declares
juvenile
that:
delinquenc
y, the
Sec. 458. — Powers, Duties, Functions and printing,
Compensation. — (a) The Sangguniang
distribution
Panlungsod, as the legislative body of the city,
or
shall enact ordinances, approve resolutions
exhibition
and appropriate funds for the general welfare
of obscene
of the city and its inhabitants pursuant to
or
Section 16 of this Code and in the proper
pornograph
exercise of the corporate powers of the city as ic materials
provided for under Section 22 of this Code, and
or
shall:
publications philosophy and provisions, pursuant to Par. (f) of its repealing
, and such clause reading as follows:
other
activities (f) All general and special laws, acts, city
inimical to charters, decrees, executive orders,
the welfare proclamations and administrative regulations,
and morals or part or parts thereof which are inconsistent
of the with any of the provisions of this Code are
inhabitants hereby repealed or modified accordingly.
of the city;
It is also maintained that assuming there is doubt regarding the
This section also authorizes the local government units to effect of the Local Government Code on P.D. 1869, the doubt
regulate properties and businesses within their territorial limits must be resolved in favor of the petitioners, in accordance with
in the interest of the general welfare. 5 the direction in the Code calling for its liberal interpretation in
favor of the local government units. Section 5 of the Code
The petitioners argue that by virtue of these provisions, the specifically provides:
Sangguniang Panlungsod may prohibit the operation of casinos
because they involve games of chance, which are detrimental to Sec. 5. Rules of Interpretation. — In the
the people. Gambling is not allowed by general law and even by interpretation of the provisions of this Code,
the Constitution itself. The legislative power conferred upon the following rules shall apply:
local government units may be exercised over all kinds of
gambling and not only over "illegal gambling" as the respondents (a) Any provision on a power of a local
erroneously argue. Even if the operation of casinos may have government unit shall be liberally interpreted in
been permitted under P.D. 1869, the government of Cagayan de its favor, and in case of doubt, any question
Oro City has the authority to prohibit them within its territory thereon shall be resolved in favor of devolution
pursuant to the authority entrusted to it by the Local of powers and of the lower local government
Government Code. unit. Any fair and reasonable doubt as to the
existence of the power shall be interpreted in
It is submitted that this interpretation is consonant with the favor of the local government unit concerned;
policy of local autonomy as mandated in Article II, Section 25,
and Article X of the Constitution, as well as various other xxx xxx xxx
provisions therein seeking to strengthen the character of the
nation. In giving the local government units the power to prevent
(c) The general welfare provisions in this Code
or suppress gambling and other social problems, the Local
shall be liberally interpreted to give more
Government Code has recognized the competence of such
powers to local government units in
communities to determine and adopt the measures best
accelerating economic development and
expected to promote the general welfare of their inhabitants in
upgrading the quality of life for the people in
line with the policies of the State.
the community; . . . (Emphasis supplied.)

The petitioners also stress that when the Code expressly


Finally, the petitioners also attack gambling as intrinsically
authorized the local government units to prevent and suppress
harmful and cite various provisions of the Constitution and
gambling and other prohibited games of chance, like craps,
several decisions of this Court expressive of the general and
baccarat, blackjack and roulette, it meant allforms of gambling
official disapprobation of the vice. They invoke the State policies
without distinction. Ubi lex non distinguit, nec nos distinguere
on the family and the proper upbringing of the youth and, as
debemos. 6 Otherwise, it would have expressly excluded from the
might be expected, call attention to the old case of U.S. v.
scope of their power casinos and other forms of gambling
Salaveria,7 which sustained a municipal ordinance prohibiting
authorized by special law, as it could have easily done. The fact
the playing of panguingue. The petitioners decry the immorality
that it did not do so simply means that the local government
of gambling. They also impugn the wisdom of P.D. 1869 (which
units are permitted to prohibit all kinds of gambling within their
they describe as "a martial law instrument") in creating PAGCOR
territories, including the operation of casinos.
and authorizing it to operate casinos "on land and sea within the
territorial jurisdiction of the Philippines."
The adoption of the Local Government Code, it is pointed out,
had the effect of modifying the charter of the PAGCOR. The Code
This is the opportune time to stress an important point.
is not only a later enactment than P.D. 1869 and so is deemed to
prevail in case of inconsistencies between them. More than this,
The morality of gambling is not a justiciable issue. Gambling is
the powers of the PAGCOR under the decree are expressly
not illegal per se. While it is generally considered inimical to the
discontinued by the Code insofar as they do not conform to its
interests of the people, there is nothing in the Constitution
categorically proscribing or penalizing gambling or, for that "and other prohibited games of chance," the word should be
matter, even mentioning it at all. It is left to Congress to deal read as referring to only illegal gambling which, like
with the activity as it sees fit. In the exercise of its own the other prohibited games of chance, must be prevented or
discretion, the legislature may prohibit gambling altogether or suppressed.
allow it without limitation or it may prohibit some forms of
gambling and allow others for whatever reasons it may consider We could stop here as this interpretation should settle the
sufficient. Thus, it has prohibited jueteng and monte but permits problem quite conclusively. But we will not. The vigorous efforts
lotteries, cockfighting and horse-racing. In making such choices, of the petitioners on behalf of the inhabitants of Cagayan de Oro
Congress has consulted its own wisdom, which this Court has no City, and the earnestness of their advocacy, deserve more than
authority to review, much less reverse. Well has it been said that short shrift from this Court.
courts do not sit to resolve the merits of conflicting
theories. 8 That is the prerogative of the political departments. It The apparent flaw in the ordinances in question is that they
is settled that questions regarding the wisdom, morality, or contravene P.D. 1869 and the public policy embodied therein
practicibility of statutes are not addressed to the judiciary but insofar as they prevent PAGCOR from exercising the power
may be resolved only by the legislative and executive conferred on it to operate a casino in Cagayan de Oro City. The
departments, to which the function belongs in our scheme of petitioners have an ingenious answer to this misgiving. They
government. That function is exclusive. Whichever way these deny that it is the ordinances that have changed P.D. 1869 for an
branches decide, they are answerable only to their own ordinance admittedly cannot prevail against a statute. Their
conscience and the constituents who will ultimately judge their theory is that the change has been made by the Local
acts, and not to the courts of justice. Government Code itself, which was also enacted by the national
lawmaking authority. In their view, the decree has been, not
The only question we can and shall resolve in this petition is the really repealed by the Code, but merely "modified pro tanto" in
validity of Ordinance No. 3355 and Ordinance No. 3375-93 as the sense that PAGCOR cannot now operate a casino over the
enacted by the Sangguniang Panlungsod of Cagayan de Oro City. objection of the local government unit concerned. This
And we shall do so only by the criteria laid down by law and not modification of P.D. 1869 by the Local Government Code is
by our own convictions on the propriety of gambling. permissible because one law can change or repeal another law.

The tests of a valid ordinance are well established. A long line of It seems to us that the petitioners are playing with words. While
decisions 9 has held that to be valid, an ordinance must conform insisting that the decree has only been "modifiedpro tanto," they
to the following substantive requirements: are actually arguing that it is already dead, repealed and useless
for all intents and purposes because the Code has shorn PAGCOR
1) It must not contravene the constitution or of all power to centralize and regulate casinos. Strictly speaking,
any statute. its operations may now be not only prohibited by the local
government unit; in fact, the prohibition is not only discretionary
2) It must not be unfair or oppressive. but mandated by Section 458 of the Code if the word "shall" as
used therein is to be given its accepted meaning. Local
3) It must not be partial or discriminatory. government units have now no choice but to prevent and
suppress gambling, which in the petitioners' view includes both
legal and illegal gambling. Under this construction, PAGCOR will
4) It must not prohibit but may regulate trade.
have no more games of chance to regulate or centralize as they
must all be prohibited by the local government units pursuant to
5) It must be general and consistent with public
the mandatory duty imposed upon them by the Code. In this
policy.
situation, PAGCOR cannot continue to exist except only as a
toothless tiger or a white elephant and will no longer be able to
6) It must not be unreasonable. exercise its powers as a prime source of government revenue
through the operation of casinos.
We begin by observing that under Sec. 458 of the Local
Government Code, local government units are authorized to It is noteworthy that the petitioners have cited only Par. (f) of
prevent or suppress, among others, "gambling the repealing clause, conveniently discarding the rest of the
and other prohibited games of chance." Obviously, this provision provision which painstakingly mentions the specific laws or the
excludes games of chance which are not prohibited but are in parts thereof which are repealed (or modified) by the Code.
fact permitted by law. The petitioners are less than accurate in Significantly, P.D. 1869 is not one of them. A reading of the
claiming that the Code could have excluded such games of entire repealing clause, which is reproduced below, will disclose
chance but did not. In fact it does. The language of the section is the omission:
clear and unmistakable. Under the rule of noscitur a sociis, a
word or phrase should be interpreted in relation to, or given the
Sec. 534. Repealing Clause. — (a) Batas
same meaning of, words with which it is associated. Accordingly,
Pambansa Blg. 337, otherwise known as the
we conclude that since the word "gambling" is associated with
"Local Government Code," Executive Order No.
112 (1987), and Executive Order No. 319 Legislature when it appears that the two
(1988) are hereby repealed. statutes, or provisions, with reference to which
the question arises bear to each other the
(b) Presidential Decree Nos. 684, 1191, 1508 relation of general to special.
and such other decrees, orders, instructions,
memoranda and issuances related to or There is no sufficient indication of an implied repeal of P.D. 1869.
concerning the barangay are hereby repealed. On the contrary, as the private respondent points out, PAGCOR is
mentioned as the source of funding in two later enactments of
(c) The provisions of Sections 2, 3, and 4 of Congress, to wit, R.A. 7309, creating a Board of Claims under the
Republic Act No. 1939 regarding hospital fund; Department of Justice for the benefit of victims of unjust
Section 3, a (3) and b (2) of Republic Act. No. punishment or detention or of violent crimes, and R.A. 7648,
5447 regarding the Special Education Fund; providing for measures for the solution of the power crisis.
Presidential Decree No. 144 as amended by PAGCOR revenues are tapped by these two statutes. This would
Presidential Decree Nos. 559 and 1741; show that the PAGCOR charter has not been repealed by the
Presidential Decree No. 231 as amended; Local Government Code but has in fact been improved as it were
Presidential Decree No. 436 as amended by to make the entity more responsive to the fiscal problems of the
Presidential Decree No. 558; and Presidential government.
Decree Nos. 381, 436, 464, 477, 526, 632, 752,
and 1136 are hereby repealed and rendered of It is a canon of legal hermeneutics that instead of pitting one
no force and effect. statute against another in an inevitably destructive
confrontation, courts must exert every effort to reconcile them,
(d) Presidential Decree No. 1594 is hereby remembering that both laws deserve a becoming respect as the
repealed insofar as it governs locally-funded handiwork of a coordinate branch of the government. On the
projects. assumption of a conflict between P.D. 1869 and the Code, the
proper action is not to uphold one and annul the other but to
(e) The following provisions are hereby give effect to both by harmonizing them if possible. This is
repealed or amended insofar as they are possible in the case before us. The proper resolution of the
inconsistent with the provisions of this Code: problem at hand is to hold that under the Local Government
Sections 2, 16, and 29 of Presidential Decree Code, local government units may (and indeed must) prevent
No. 704; Sections 12 of Presidential Decree No. and suppress all kinds of gambling within their territories except
87, as amended; Sections 52, 53, 66, 67, 68, 69, only those allowed by statutes like P.D. 1869. The exception
70, 71, 72, 73, and 74 of Presidential Decree reserved in such laws must be read into the Code, to make both
No. 463, as amended; and Section 16 of the Code and such laws equally effective and mutually
Presidential Decree No. 972, as amended, and complementary.

(f) All general and special laws, acts, city This approach would also affirm that there are indeed two kinds
charters, decrees, executive orders, of gambling, to wit, the illegal and those authorized by law.
proclamations and administrative regulations, Legalized gambling is not a modern concept; it is probably as old
or part or parts thereof which are inconsistent as illegal gambling, if not indeed more so. The petitioners'
with any of the provisions of this Code are suggestion that the Code authorizes them to prohibit all kinds of
hereby repealed or modified accordingly. gambling would erase the distinction between these two forms
of gambling without a clear indication that this is the will of the
legislature. Plausibly, following this theory, the City of Manila
Furthermore, it is a familiar rule that implied repeals are not
could, by mere ordinance, prohibit the Philippine Charity
lightly presumed in the absence of a clear and unmistakable
Sweepstakes Office from conducting a lottery as authorized by
showing of such intention. In Lichauco & Co. v. Apostol, 10 this
R.A. 1169 and B.P. 42 or stop the races at the San Lazaro
Court explained:
Hippodrome as authorized by R.A. 309 and R.A. 983.
The cases relating to the subject of repeal by
In light of all the above considerations, we see no way of arriving
implication all proceed on the assumption that
at the conclusion urged on us by the petitioners that the
if the act of later date clearly reveals an
ordinances in question are valid. On the contrary, we find that
intention on the part of the lawmaking power
the ordinances violate P.D. 1869, which has the character and
to abrogate the prior law, this intention must
force of a statute, as well as the public policy expressed in the
be given effect; but there must always be a
decree allowing the playing of certain games of chance despite
sufficient revelation of this intention, and it has
the prohibition of gambling in general.
become an unbending rule of statutory
construction that the intention to repeal a
former law will not be imputed to the The rationale of the requirement that the ordinances should not
contravene a statute is obvious. Municipal governments are only
agents of the national government. Local councils exercise only We hold that the power of PAGCOR to centralize and regulate all
delegated legislative powers conferred on them by Congress as games of chance, including casinos on land and sea within the
the national lawmaking body. The delegate cannot be superior to territorial jurisdiction of the Philippines, remains unimpaired.
the principal or exercise powers higher than those of the latter. P.D. 1869 has not been modified by the Local Government Code,
It is a heresy to suggest that the local government units can undo which empowers the local government units to prevent or
the acts of Congress, from which they have derived their power suppress only those forms of gambling prohibited by law.
in the first place, and negate by mere ordinance the mandate of
the statute. Casino gambling is authorized by P.D. 1869. This decree has the
status of a statute that cannot be amended or nullified by a mere
Municipal corporations owe their origin to, and ordinance. Hence, it was not competent for the Sangguniang
derive their powers and rights wholly from the Panlungsod of Cagayan de Oro City to enact Ordinance No. 3353
legislature. It breathes into them the breath of prohibiting the use of buildings for the operation of a casino and
life, without which they cannot exist. As it Ordinance No. 3375-93 prohibiting the operation of casinos. For
creates, so it may destroy. As it may destroy, it all their praiseworthy motives, these ordinances are contrary to
may abridge and control. Unless there is some P.D. 1869 and the public policy announced therein and are
constitutional limitation on the right, the therefore ultra vires and void.
legislature might, by a single act, and if we can
suppose it capable of so great a folly and so WHEREFORE, the petition is DENIED and the challenged decision
great a wrong, sweep from existence all of the of the respondent Court of Appeals is AFFIRMED, with costs
municipal corporations in the State, and the against the petitioners. It is so ordered.
corporation could not prevent it. We know of
no limitation on the right so far as to the Narvasa, C.J., Feliciano, Bidin, Regalado, Romero,
corporation themselves are concerned. They Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan and
are, so to phrase it, the mere tenants at will of Mendoza, JJ., concur.
the legislature. 11

This basic 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. Without meaning to detract from that policy, we here
confirm that Congress retains control of the local government
units although in significantly reduced degree now than under
our previous Constitutions. The power to create still includes the Separate Opinions
power to destroy. The power to grant still includes the power to
withhold or recall. True, there are certain notable innovations in
the Constitution, like the direct conferment on the local
government units of the power to tax, 12 which cannot now be PADILLA, J., concurring:
withdrawn by mere statute. By and large, however, the national
legislature is still the principal of the local government units, I concur with the majority holding that the city ordinances in
which cannot defy its will or modify or violate it. question cannot modify much less repeal PAGCOR's general
authority to establish and maintain gambling casinos anywhere
The Court understands and admires the concern of the in the Philippines under Presidential Decree No. 1869.
petitioners for the welfare of their constituents and their
apprehensions that the welfare of Cagayan de Oro City will be In Basco v. Philippine Amusement and Gaming
endangered by the opening of the casino. We share the view Corporation (PAGCOR), 197 SCRA 52, I stated in a separate
that "the hope of large or easy gain, obtained without special opinion that:
effort, turns the head of the workman" 13 and that "habitual
gambling is a cause of laziness and ruin." 14 In People v. . . . I agree with the decision insofar as it holds
Gorostiza, 15 we declared: "The social scourge of gambling must that the prohibition, control, and regulation of
be stamped out. The laws against gambling must be enforced to the entire activity known as gambling properly
the limit." George Washington called gambling "the child of pertain to "state policy". It is, therefore, the
avarice, the brother of iniquity and the father of mischief." political departments of government, namely,
Nevertheless, we must recognize the power of the legislature to the legislative and the executive that should
decide, in its own wisdom, to legalize certain forms of gambling, decide on what government should do in the
as was done in P.D. 1869 and impliedly affirmed in the Local entire area of gambling, and assume full
Government Code. That decision can be revoked by this Court responsibility to the people for such policy."
only if it contravenes the Constitution as the touchstone of all (Emphasis supplied)
official acts. We do not find such contravention here.
However, despite the legality of the opening and operation of a (PAGCOR) further underscores the "declaratory relief" nature of
casino in Cagayan de Oro City by respondent PAGCOR, I wish to the action. PAGCOR assails the ordinances for being contrary to
reiterate my view that gambling in any form runs counter to the the non-impairment and equal protection clauses of the
government's own efforts to re-establish and resurrect the Constitution, violative of the Local Government Code, and
Filipino moral character which is generally perceived to be in a against the State's national policy declared in P.D. No. 1869.
state of continuing erosion. Accordingly, the Court of Appeals does not have jurisdiction over
the nature of the action. Even assuming arguendo that the case
It is in the light of this alarming perspective that I call upon is one for prohibition, then, under this Court's established policy
government to carefully weigh the advantages and relative to the hierarchy of courts, the petition should have been
disadvantages of setting up more gambling facilities in the filed with the Regional Trial Court of Cagayan de Oro City. I find
country. no special or compelling reason why it was not filed with the said
court. I do not wish to entertain the thought that PRYCE doubted
That the PAGCOR contributes greatly to the coffers of the a favorable verdict therefrom, in which case the filing of the
government is not enough reason for setting up more gambling petition with the Court of Appeals may have been impelled by
casinos because, undoubtedly, this will not help improve, but will tactical considerations. A dismissal of the petition by the Court of
cause a further deterioration in the Filipino moral character. Appeals would have been in order pursuant to our decisions
in People vs. Cuaresma (172 SCRA 415, [1989]) and Defensor-
Santiago vs. Vasquez (217 SCRA 633 [1993]). In Cuaresma, this
It is worth remembering in this regard that, 1) what is legal is not
Court stated:
always moral and 2) the ends do not always justify the means.

A last word. This court's original jurisdiction to


As in Basco, I can easily visualize prostitution at par
issue writs of certiorari (as well as
with gambling. And yet, legalization of the former will not render
prohibition, mandamus, quo warranto, habeas
it any less reprehensible even if substantial revenue for the
corpus and injunction) is not exclusive. It is
government can be realized from it. The same is true of
shared by this Court with Regional Trial Courts
gambling.
(formerly Courts of First Instance), which may
issue the writ, enforceable in any part of their
In the present case, it is my considered view that the national
respective regions. It is also shared by this
government (through PAGCOR) should re-examine and re-
court, and by the Regional Trial Court, with the
evaluate its decision of imposing the gambling casino on the
Court of Appeals (formerly, Intermediate
residents of Cagayan de Oro City; for it is abundantly clear that
Appellate Court), although prior to the
public opinion in the city is very much against it, and again the
effectivity of Batas Pambansa Bilang 129 on
question must be seriously deliberated: will the prospects of
August 14, 1981, the latter's competence to
revenue to be realized from the casino outweigh the further
issue the extraordinary writs was restricted by
destruction of the Filipino sense of values?
those "in aid of its appellate jurisdiction." This
concurrence of jurisdiction is not, however, to
be taken as according to parties seeking any of
the writs an absolute, unrestrained freedom of
DAVIDE, JR., J., concurring: choice of the court to which application
therefor will be directed. There is after all a
While I concur in part with the majority, I wish, however, to hierarchy of courts. That hierarchy is
express my views on certain aspects of this case. determinative of the revenue of appeals, and
should also serve as a general determinant of
I. the appropriate forum for petitions for the
extraordinary writs. A becoming regard for that
It must at once be noted that private respondent Pryce judicial hierarchy most certainly indicates that
Properties Corporation (PRYCE) directly filed with the Court of petitions for the issuance of extraordinary writs
Appeals its so-called petition for prohibition, thereby invoking against first level ("inferior") courts should be
the said court's original jurisdiction to issue writs of filed with the Regional Trial Court, and those
prohibition under Section 9(1) of B.P. Blg. 129. As I see it, against the latter, with the Court of Appeals. A
however, the principal cause of action therein is one for direct invocation of the Supreme Court's
declaratory relief: to declare null and unconstitutional — original jurisdiction to issue these writs should
for, inter alia, having been enacted without or in excess of be allowed only when there are special and
jurisdiction, for impairing the obligation of contracts, and for important reasons therefor, clearly and
being inconsistent with public policy — the challenged specifically set out in the petition. This is
ordinances enacted by the Sangguniang Panglungsod of the City established policy. It is a policy that is
of Cagayan de Oro. The intervention therein of public necessary to prevent inordinate demands upon
respondent Philippine Amusement and Gaming Corporation the Court's time and attention which are better
devoted to those matters within its exclusive lease under which the latter leased a portion of the former's
jurisdiction, and to prevent further over- Pryce Plaza Hotel for the operation of a gambling casino — which
crowding of the Court's docket. Indeed, the resolution was vigorously reiterated in Resolution No. 2673 of 19
removal of the restriction of the jurisdiction of October 1992.
the Court of Appeals in this regard, supra —
resulting from the deletion of the qualifying The challenged ordinances were enacted pursuant to the
phrase, "in aid of its appellate jurisdiction" — Sangguniang Panglungsod's express powers conferred by Section
was evidently intended precisely to relieve this 458, paragraph (a), subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv),
Court pro tanto of the burden of dealing with and (vii), Local Government Code, and pursuant to its implied
applications for extraordinary writs which, but power under Section 16 thereof (the general welfare clause)
for the expansion of the Appellate Court's which reads:
corresponding jurisdiction, would have had to
be filed with it. (citations omitted) Sec. 16. General Welfare. — Every local
government unit shall exercise the powers
And in Vasquez, this Court said: expressly granted, those necessarily implied
therefrom, as well as powers necessary,
One final observation. We discern in the appropriate, or incidental for its efficient and
proceedings in this case a propensity on the effective governance, and those which are
part of petitioner, and, for that matter, the essential to the promotion of the general
same may be said of a number of litigants who welfare. Within their respective territorial
initiate recourses before us, to disregard the jurisdictions, local government units shall
hierarchy of courts in our judicial system by ensure and support, among other things, the
seeking relief directly from this Court despite preservation and enrichment of culture,
the fact that the same is available in the lower promote health and safety, enhance the right
courts in the exercise of their original or of the people to a balanced ecology, encourage
concurrent jurisdiction, or is even mandated by and support the development of appropriate
law to be sought therein. This practice must be and self-reliant scientific and technological
stopped, not only because of the imposition capabilities, improve public morals, enhance
upon the previous time of this Court but also economic prosperity and social justice,
because of the inevitable and resultant delay, promote full employment among their
intended or otherwise, in the adjudication of residents, maintain peace and order, and
the case which often has to be remanded or preserve the comfort and convenience of their
referred to the lower court as the proper inhabitants.
forum under the rules of procedure, or as
better equipped to resolve the issues since this The issue that necessarily arises is whether in granting local
Court is not a trier of facts. We, therefore, governments (such as the City of Cagayan de Oro) the above
reiterate the judicial policy that this Court will powers and functions, the Local Government Code has, pro
not entertain direct resort to it unless the tanto, repealed P.D. No. 1869 insofar as PAGCOR's general
redress desired cannot be obtained in the authority to establish and maintain gambling casinos anywhere
appropriate courts or where exceptional and in the Philippines is concerned.
compelling circumstances justify availment of a
remedy within and calling for the exercise of I join the majority in holding that the ordinances cannot repeal
our primary jurisdiction. P.D. No. 1869.

II. III.

The challenged ordinances are (a) Ordinance No. 3353 entitled, The nullification by the Court of Appeals of the challenged
"An Ordinance Prohibiting the Issuance of Business Permit and ordinances as unconstitutional primarily because it is in
Canceling Existing Business Permit To Any Establishment for the contravention to P.D. No. 1869 is unwarranted. A contravention
Using and Allowing to be Used Its Premises or Portion Thereof for of a law is not necessarily a contravention of the constitution. In
the Operation of Casino," and (b) Ordinance No. 3375-93 any case, the ordinances can still stand even if they be conceded
entitled, "An Ordinance Prohibiting the Operation of Casino and as offending P.D. No. 1869. They can be reconciled, which is not
Providing Penalty for Violation Therefor." They were enacted to impossible to do. So reconciled, the ordinances should be
implement Resolution No. 2295 entitled, "Resolution Declaring construed as not applying to PAGCOR.
As a Matter of Policy to Prohibit and/or Not to Allow the
Establishment of the Gambling Casino in the City of Cagayan de
IV.
Oro," which was promulgated on 19 November 1990 — nearly
two years before PRYCE and PAGCOR entered into a contract of
From the pleadings, it is obvious that the government and the As in Basco, I can easily visualize prostitution at par
people of Cagayan de Oro City are, for obvious reasons, strongly with gambling. And yet, legalization of the former will not render
against the opening of the gambling casino in their city. it any less reprehensible even if substantial revenue for the
Gambling, even if legalized, would be inimical to the general government can be realized from it. The same is true of
welfare of the inhabitants of the City, or of any place for that gambling.
matter. The PAGCOR, as a government-owned corporation, must
consider the valid concerns of the people of the City of Cagayan In the present case, it is my considered view that the national
de Oro and should not impose its will upon them in an arbitrary, government (through PAGCOR) should re-examine and re-
if not despotic, manner. evaluate its decision of imposing the gambling casino on the
residents of Cagayan de Oro City; for it is abundantly clear that
public opinion in the city is very much against it, and again the
question must be seriously deliberated: will the prospects of
revenue to be realized from the casino outweigh the further
destruction of the Filipino sense of values?
# Separate Opinions

DAVIDE, JR., J., concurring:


PADILLA, J., concurring:
While I concur in part with the majority, I wish, however, to
I concur with the majority holding that the city ordinances in express my views on certain aspects of this case.
question cannot modify much less repeal PAGCOR's general
authority to establish and maintain gambling casinos anywhere I.
in the Philippines under Presidential Decree No. 1869.
It must at once be noted that private respondent Pryce
In Basco v. Philippine Amusement and Gaming Corporation Properties Corporation (PRYCE) directly filed with the Court of
(PAGCOR), 197 SCRA 52, I stated in a separate opinion that: Appeals its so-called petition for prohibition, thereby invoking
the said court's original jurisdiction to issue writs of prohibition
. . . I agree with the decision insofar as it holds under Section 9(1) of B.P. Blg. 129. As I see it, however, the
that the prohibition, control, and regulation of principal cause of action therein is one for declaratory relief: to
the entire activity known as gambling properly declare null and unconstitutional — for, inter alia, having been
pertain to "state policy". It is, therefore, the enacted without or in excess of jurisdiction, for impairing the
political departments of government, namely, obligation of contracts, and for being inconsistent with public
the legislative and the executive that should policy — the challenged ordinances enacted by the Sangguniang
decide on what government should do in the Panglungsod of the City of Cagayan de Oro. The intervention
entire area of gambling, and assume full therein of public respondent Philippine Amusement and Gaming
responsibility to the people for such policy. Corporation (PAGCOR) further underscores the "declaratory
(emphasis supplied) relief" nature of the action. PAGCOR assails the ordinances for
being contrary to the non-impairment and equal protection
clauses of the Constitution, violative of the Local Government
However, despite the legality of the opening and operation of a
Code, and against the State's national policy declared in P.D. No.
casino in Cagayan de Oro City by respondent PAGCOR, I wish to
1869. Accordingly, the Court of Appeals does not have
reiterate my view that gambling in any form runs counter to the
jurisdiction over the nature of the action. Even
government's own efforts to re-establish and resurrect the
assuming arguendo that the case is one for prohibition, then,
Filipino moral character which is generally perceived to be in a
under this Court's established policy relative to the hierarchy of
state of continuing erosion.
courts, the petition should have been filed with the Regional
Trial Court of Cagayan de Oro City. I find no special or compelling
It is in the light of this alarming perspective that I call upon reason why it was not filed with the said court. I do not wish to
government to carefully weigh the advantages and
entertain the thought that PRYCE doubted a favorable verdict
disadvantages of setting up more gambling facilities in the
therefrom, in which case the filing of the petition with the Court
country.
of Appeals may have been impelled by tactical considerations. A
dismissal of the petition by the Court of Appeals would have
That the PAGCOR contributes greatly to the coffers of the been in order pursuant to our decisions in People vs.
government is not enough reason for setting up more gambling Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago vs.
casinos because, undoubtedly, this will not help improve, but will Vasquez (217 SCRA 633 [1993]). In Cuaresma, this Court stated:
cause a further deterioration in the Filipino moral character.
A last word. This court's original jurisdiction to
It is worth remembering in this regard that, 1) what is legal is not issue writs of certiorari (as well as
always moral and 2) the ends do not always justify the means. prohibition, mandamus, quo warranto, habeas
corpus and injunction) is not exclusive. It is
shared by this Court with Regional Trial Courts courts in the exercise of their original or
(formerly Courts of First Instance), which may concurrent jurisdiction, or is even mandated by
issue the writ, enforceable in any part of their law to be sought therein. This practice must be
respective regions. It is also shared by this stopped, not only because of the imposition
court, and by the Regional Trial Court, with the upon the previous time of this Court but also
Court of Appeals (formerly, Intermediate because of the inevitable and resultant delay,
Appellate Court), although prior to the intended or otherwise, in the adjudication of
effectivity of Batas Pambansa Bilang 129 on the case which often has to be remanded or
August 14, 1981, the latter's competence to referred to the lower court as the proper
issue the extraordinary writs was restricted by forum under the rules of procedure, or as
those "in aid of its appellate jurisdiction." This better equipped to resolve the issues since this
concurrence of jurisdiction is not, however, to Court is not a trier of facts. We, therefore,
be taken as according to parties seeking any of reiterate the judicial policy that this Court will
the writs an absolute, unrestrained freedom of not entertain direct resort to it unless the
choice of the court to which application redress desired cannot be obtained in the
therefor will be directed. There is after all a appropriate courts or where exceptional and
hierarchy of courts. That hierarchy is compelling circumstances justify availment of a
determinative of the revenue of appeals, and remedy within and calling for the exercise of
should also serve as a general determinant of our primary jurisdiction.
the appropriate forum for petitions for the
extraordinary writs. A becoming regard for that II.
judicial hierarchy most certainly indicates that
petitions for the issuance of extraordinary writs The challenged ordinances are (a) Ordinance No. 3353 entitled,
against first level ("inferior") courts should be "An Ordinance Prohibiting the Issuance of Business Permit and
filed with the Regional Trial Court, and those Canceling Existing Business Permit To Any Establishment for the
against the latter, with the Court of Appeals. A Using and Allowing to be Used Its Premises or Portion Thereof for
direct invocation of the Supreme Court's the Operation of Casino," and (b) Ordinance No. 3375-93
original jurisdiction to issue these writs should entitled, "An Ordinance Prohibiting the Operation of Casino and
be allowed only when there are special and Providing Penalty for Violation Therefor." They were enacted to
important reasons therefor, clearly and implement Resolution No. 2295 entitled, "Resolution Declaring
specifically set out in the petition. This is As a Matter of Policy to Prohibit and/or Not to Allow the
established policy. It is a policy that is Establishment of the Gambling Casino in the City of Cagayan de
necessary to prevent inordinate demands upon Oro," which was promulgated on 19 November 1990 — nearly
the Court's time and attention which are better two years before PRYCE and PAGCOR entered into a contract of
devoted to those matters within its exclusive lease under which the latter leased a portion of the former's
jurisdiction, and to prevent further over- Pryce Plaza Hotel for the operation of a gambling casino — which
crowding of the Court's docket. Indeed, the resolution was vigorously reiterated in Resolution No. 2673 of 19
removal of the restriction of the jurisdiction of October 1992.
the Court of Appeals in this regard, supra —
resulting from the deletion of the qualifying
The challenged ordinances were enacted pursuant to the
phrase, "in aid of its appellate jurisdiction" —
Sangguniang Panglungsod's express powers conferred by Section
was evidently intended precisely to relieve this
458, paragraph (a), subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv),
Court pro tanto of the burden of dealing with
and (vii), Local Government Code, and pursuant to its implied
applications for extraordinary writs which, but
power under Section 16 thereof (the general welfare clause)
for the expansion of the Appellate Court's
which reads:
corresponding jurisdiction, would have had to
be filed with it. (citations omitted)
Sec. 16. General Welfare. — Every local
government unit shall exercise the powers
And in Vasquez, this Court said:
expressly granted, those necessarily implied
therefrom, as well as powers necessary,
One final observation. We discern in the appropriate, or incidental for its efficient and
proceedings in this case a propensity on the effective governance, and those which are
part of petitioner, and, for that matter, the essential to the promotion of the general
same may be said of a number of litigants who welfare. Within their respective territorial
initiate recourses before us, to disregard the jurisdictions, local government units shall
hierarchy of courts in our judicial system by ensure and support, among other things, the
seeking relief directly from this Court despite preservation and enrichment of culture,
the fact that the same is available in the lower promote health and safety, enhance the right
of the people to a balanced ecology, encourage Respondents assailed the validity of the ordinances on the
and support the development of appropriate ground that they both violated Presidential Decree No. 1869.
and self-reliant scientific and technological Petitioners contend that, pursuant to the Local Government
capabilities, improve public morals, enhance Code, they have the police power authority to prohibit the
economic prosperity and social justice, operation of casino for the general welfare.
promote full employment among their
residents, maintain peace and order, and Issue:
preserve the comfort and convenience of their Whether the Ordinances are valid.
inhabitants.
Ruling:
The issue that necessarily arises is whether in granting local No. Cagayan de Oro City, like other local political subdivisions,
governments (such as the City of Cagayan de Oro) the above is empowered to enact ordinances for the purposes indicated in
powers and functions, the Local Government Code has, pro the Local Government Code. It is expressly vested with the
tanto, repealed P.D. No. 1869 insofar as PAGCOR's general police power under what is known as the General Welfare
authority to establish and maintain gambling casinos anywhere Clause now embodied in Section 16 as follows:Sec. 16.
in the Philippines is concerned.
General Welfare. — Every local government unit shall exercise
I join the majority in holding that the ordinances cannot repeal the powers expressly granted, those necessarily implied
P.D. No. 1869. 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.
III.
Within their respective territorial jurisdictions, local
government units shall ensure and support, among other
The nullification by the Court of Appeals of the challenged
things, the preservation and enrichment of culture, promote
ordinances as unconstitutional primarily because it is in
health and safety, enhance the right of the people to a
contravention to P.D. No. 1869 is unwarranted. A contravention
balanced ecology, encourage and support the development of
of a law is not necessarily a contravention of the constitution. In
appropriate and self-reliant scientific and technological
any case, the ordinances can still stand even if they be conceded
capabilities, improve public morals, enhance economic
as offending P.D. No. 1869. They can be reconciled, which is not
prosperity and social justice, promote full employment among
impossible to do. So reconciled, the ordinances should be
their residents, maintain peace and order, and preserve the
construed as not applying to PAGCOR.
comfort and convenience of their inhabitants.

IV. Local Government Code, local government units are authorized


to prevent or suppress, among others, "gambling and other
From the pleadings, it is obvious that the government and the prohibited games of chance." Obviously, this provision excludes
people of Cagayan de Oro City are, for obvious reasons, strongly games of chance which are not prohibited but are in fact
against the opening of the gambling casino in their city. permitted by law.
Gambling, even if legalized, would be inimical to the general
welfare of the inhabitants of the City, or of any place for that The tests of a valid ordinance are well established. A long line
matter. The PAGCOR, as a government-owned corporation, must of decisions has held that to be valid, an ordinance must
consider the valid concerns of the people of the City of Cagayan conform to the following substantive requirements:
de Oro and should not impose its will upon them in an arbitrary, 1) It must not contravene the constitution or any statute.
if not despotic, manner. 2) It must not be unfair or oppressive.
Magtajas v. Pryce Properties Corp. (G.R. No. 111097) 3) It must not be partial or discriminatory.
Facts: 4) It must not prohibit but may regulate trade.
PAGCOR decided to expand its operations to Cagayan de Oro 5) It must be general and consistent with public policy.
City. It leased a portion of a building belonging to Pryce 6) It must not be unreasonable.
Properties Corporations, Inc., renovated & equipped the same,
and prepared to inaugurate its casino during the Christmas The rationale of the requirement that the ordinances should
season. not contravene a statute is obvious.Casino gambling is
authorized by P.D. 1869. This decree has the status of a statute
Civil organizations angrily denounced the project. Petitioners that cannot be amended or nullified by a mere ordinance. Local
opposed the casino’s opening and enacted Ordinance No. 3353, councils exercise only delegated legislative powers conferred
prohibiting the issuance of business permit and canceling on them by Congress as the national lawmaking body. The
existing business permit to the establishment for the operation delegate cannot be superior to the principal or exercise powers
of the casino, and Ordinance No. 3375-93, prohibiting the higher than those of the latter. It is a heresy to suggest that the
operation of the casino and providing a penalty for its violation. local government units can undo the acts of Congress, from
which they have derived their power in the first place, and
negate by mere ordinance the mandate of the statute.Hence, it Sec. 2. All lands of the public domain, waters,
was not competent for the Sangguniang Panlungsod of Cagayan minerals, coal, petroleum, and other mineral
de Oro City to enact Ordinance No. 3353 prohibiting the use of oils, all forces of potential energy, fisheries,
buildings for the operation of a casino and Ordinance No. 3375- forests or timber, wildlife, flora and fauna, and
93 prohibiting the operation of casinos. For all their other natural resources are owned by the
praiseworthy motives, these ordinances are contrary to P.D. State. With the exception of agricultural lands,
1869 and the public policy announced therein and are therefore all other natural resources shall not be
ultra vires and void. alienated. The exploration, development, and
utilization of natural resources shall be under
Wherefore, the petition is denied. the full control and supervision of the State.
The State may directly undertake such
9 activities, or it may enter into co-production,
joint venture, or product-sharing agreements
with Filipino citizens, or corporations or
G.R. No. 98332 January 16, 1995 associations at least sixty per centum of whose
capital is owned by such citizens. Such
MINERS ASSOCIATION OF THE PHILIPPINES, INC., petitioner, agreements may be for a period not exceeding
vs. twenty-five years, renewable for not more than
HON. FULGENCIO S. FACTORAN, JR., Secretary of Environment twenty-five years, and under such terms and
and Natural Resources, and JOEL D. MUYCO, Director of Mines conditions as may be provided by law. In cases
and Geosciences Bureau, respondents. of water rights for irrigation, water supply,
fisheries, or industrial uses other than the
development of water power, beneficial use
may be the measure and limit of the grant.
ROMERO, J.:

xxx xxx xxx


The instant petition seeks a ruling from this Court on the validity
of two Administrative Orders issued by the Secretary of the
Department of Environment and Natural Resources to carry out The President may enter into agreements with
the provisions of certain Executive Orders promulgated by the foreign-owned corporations involving either
President in the lawful exercise of legislative powers. technical or financial assistance for large-scale
exploration, development, and utilization of
minerals, petroleum, and other mineral oils
Herein controversy was precipitated by the change introduced
according to the general terms and conditions
by Article XII, Section 2 of the 1987 Constitution on the system of
provided by law, based on real contributions to
exploration, development and utilization of the country's natural
the economic growth and general welfare of
resources. No longer is the utilization of inalienable lands of
the country. In such agreements, the State shall
public domain through "license, concession or lease" under the
promote the development and use of local
1935 and 1973 Constitutions1allowed under the 1987
scientific and technical resources.
Constitution.

The President shall notify the Congress of every


The adoption of the concept of jura regalia2 that all natural
contract entered into in accordance with this
resources are owned by the State embodied in the 1935, 1973
provision, within thirty days from its execution.
and 1987 Constitutions, as well as the recognition of the
(Emphasis supplied)
importance of the country's natural resources, not only for
national economic development, but also for its security and
national Pursuant to the mandate of the above-quoted provision,
defense,3 ushered in the adoption of the constitutional policy of legislative acts4 were successively issued by the President in the
"full control and supervision by the State" in the exploration, exercise of her legislative
development and utilization of the country's natural resources. power.5
The options open to the State are through direct undertaking or
by entering into co-production, joint venture; or production- To implement said legislative acts, the Secretary of the
sharing agreements, or by entering into agreement with foreign- Department of Environment and Natural Resources (DENR) in
owned corporations for large-scale exploration, development turn promulgated Administrative Order Nos. 57 and 82, the
and utilization. validity and constitutionality of which are being challenged in
this petition.
Article XII, Section 2 of the 1987 Constitution provides:
On July 10, 1987, President Corazon C. Aquino, in the exercise of
her then legislative powers under Article II, Section 1 of the
Provisional Constitution and Article XIII, Section 6 of the 1987
Constitution, promulgated Executive Order No. 211 prescribing for and in behalf of the Government, joint
the interim procedures in the processing and approval of venture, co-production, or production-sharing
applications for the exploration, development and utilization of agreements for the exploration, development,
minerals pursuant to the 1987 Constitution in order to ensure and utilization of mineral resources with any
the continuity of mining operations and activities and to hasten Filipino citizens, or corporation or association
the development of mineral resources. The pertinent provisions at least sixty percent (60%) of whose capital is
read as follows: owned by Filipino citizens. Such joint venture,
co-production, or production-sharing
Sec. 1. Existing mining permits, licenses, leases agreements may be for a period not exceeding
and other mining grants issued by the twenty-five years, renewable for not more than
Department of Environment and Natural twenty-five years, and shall include the
Resources and Bureau of Mines and Geo- minimum terms and conditions prescribed in
Sciences, including existing operating Section 2 hereof. In the execution of a joint
agreements and mining service contracts, shall venture, co-production or production
continue and remain in full force and effect, agreements, the contracting parties, including
subject to the same terms and conditions as the Government, may consolidate two or more
originally granted and/or approved. contiguous or geologically — related mining
claims or leases and consider them as one
Sec. 2. Applications for the exploration, contract area for purposes of determining the
development and utilization of mineral subject of the joint venture, co-production, or
resources, including renewal applications for production-sharing agreement.
approval of operating agreements and mining
service contracts, shall be accepted and xxx xxx xxx
processed and may be approved;
concomitantly thereto, declarations of Sec. 6. The Secretary shall promulgate such
locations and all other kinds of mining supplementary rules and regulations as may be
applications shall be accepted and registered necessary to effectively implement the
by the Bureau of Mines and Geo-Sciences. provisions of this Executive Order.

Sec. 3. The processing, evaluation and approval Sec. 7. All provisions of Presidential Decree No.
of all mining applications, declarations of 463, as amended, other existing mining laws,
locations, operating agreements and service and their implementing rules and regulations,
contracts as provided for in Section 2 above, or parts thereof, which are not inconsistent
shall be governed by Presidential Decree No. with the provisions of this Executive Order,
463, as amended, other existing mining laws shall continue in force and effect.
and their implementing rules and
regulations: Provided, however, that the Pursuant to Section 6 of Executive Order No. 279, the DENR
privileges granted, as well as the terms and Secretary issued on June 23, 1989 DENR Administrative Order
conditions thereof shall be subject to any and No. 57, series of 1989, captioned "Guidelines of Mineral
all modifications or alterations which Congress Production Sharing Agreement under Executive Order No.
may adopt pursuant to Section 2, Article XII of 279."6 Under the transitory provision of said DENR
the 1987 Constitution. Administrative Order No. 57, embodied in its Article 9, all
existing mining leases or agreements which were granted after
On July 25, 1987, President Aquino likewise promulgated the effectivity of the 1987 Constitution pursuant to Executive
Executive Order No. 279 authorizing the DENR Secretary to Order No. 211, except small scale mining leases and those
negotiate and conclude joint venture, co-production, or pertaining to sand and gravel and quarry resources covering an
production-sharing agreements for the exploration, area of twenty (20) hectares or less, shall be converted into
development and utilization of mineral resources, and production-sharing agreements within one (1) year from the
prescribing the guidelines for such agreements and those effectivity of these guidelines.
agreements involving technical or financial assistance by foreign-
owned corporations for large-scale exploration, development, On November 20, 1980, the Secretary of the DENR
and utilization of minerals. The pertinent provisions relevant to Administrative Order No. 82, series of 1990, laying down the
this petition are as follows: "Procedural Guidelines on the Award of Mineral Production
Sharing Agreement (MPSA) through Negotiation."7
Sec. 1. The Secretary of the Department of
Environment and Natural Resources Section 3 of the aforementioned DENR Administrative Order No.
(hereinafter referred to as "the Secretary") is 82 enumerates the persons or entities required to submit Letter
hereby authorized to negotiate and enter into, of Intent (LOIs) and Mineral Production Sharing Agreement
(MPSAs) within two (2) years from the effectivity of DENR injunction, issued a Temporary Restraining Order, upon posting
Administrative Order No. 57 or until July 17, 1991. Failure to do of a P500,000.00 bond, enjoining the enforcement and
so within the prescribed period shall cause the abandonment of implementation of DENR Administrative Order Nos. 57 and 82, as
mining, quarry and sand and gravel claims. Section 3 of DENR amended, Series of 1989 and 1990, respectively. 9
Administrative Order No. 82 provides:
On November 13, 1991, Continental Marble Corporation, 10 thru
Sec. 3. Submission of Letter of Intent (LOIs) and its President, Felipe A. David, sought to intervene 11in this case
MPSAs). The following shall submit their LOIs alleging that because of the temporary order issued by the Court
and MPSAs within two (2) years from the , the DENR, Regional Office No. 3 in San Fernando, Pampanga
effectivity of DENR A.O. 57 or until July 17, refused to renew its Mines Temporary Permit after it expired on
1991. July 31, 1991. Claiming that its rights and interests are
prejudicially affected by the implementation of DENR
i. Declaration of Location (DOL) holders, mining Administrative Order Nos. 57 and 82, it joined petitioner herein
lease applicants, exploration permitees, quarry in seeking to annul Administrative Order Nos. 57 and 82 and
applicants and other mining applicants whose prayed that the DENR, Regional Office No. 3 be ordered to issue
mining/quarry applications have not been a Mines Temporary Permit in its favor to enable it to operate
perfected prior to the effectivity of DENR during the pendency of the suit.
Administrative Order No. 57.
Public respondents were acquired to comment on the
ii. All holders of DOL acquired after the Continental Marble Corporation's petition for intervention in the
effectivity of DENR A.O. No. 57. resolution of November 28, 1991.12

iii. Holders of mining leases or similar Now to the main petition. If its argued that Administrative Order
agreements which were granted after (the) Nos. 57 and 82 have the effect of repealing or abrogating existing
effectivity of 1987 Constitution. mining laws 13 which are not inconsistent with the provisions of
Executive Order No. 279. Invoking Section 7 of said Executive
Failure to submit letters of intent and MPSA Order No. 279, 14 petitioner maintains that respondent DENR
applications/proposals within the prescribed Secretary cannot provide guidelines such as Administrative Order
period shall cause the abandonment of mining, Nos. 57 and 82 which are inconsistent with the provisions of
quarry and sand and gravel claims. Executive Order No. 279 because both Executive Order Nos. 211
and 279 merely reiterated the acceptance and registration of
declarations of location and all other kinds of mining applications
The issuance and the impeding implementation by the DENR of
by the Bureau of Mines and Geo-Sciences under the provisions of
Administrative Order Nos. 57 and 82 after their respective
Presidential Decree No. 463, as amended, until Congress opts to
effectivity dates compelled the Miners Association of the
modify or alter the same.
Philippines, Inc.8 to file the instant petition assailing their validity
and constitutionality before this Court.
In other words, petitioner would have us rule that DENR
Administrative Order Nos. 57 and 82 issued by the DENR
In this petition for certiorari, petitioner Miners Association of the
Secretary in the exercise of his rule-making power are tainted
Philippines, Inc. mainly contends that respondent Secretary of
with invalidity inasmuch as both contravene or subvert the
DENR issued both Administrative Order Nos. 57 and 82 in excess
provisions of Executive Order Nos. 211 and 279 or embrace
of his rule-making power under Section 6 of Executive Order No.
matters not covered, nor intended to be covered, by the
279. On the assumption that the questioned administrative
aforesaid laws.
orders do not conform with Executive Order Nos. 211 and 279,
petitioner contends that both orders violate the
non-impairment of contract provision under Article III, Section 10 We disagree.
of the 1987 Constitution on the ground that Administrative
Order No. 57 unduly pre-terminates existing mining agreements We reiterate the principle that the power of administrative
and automatically converts them into production-sharing officials to promulgate rules and regulations in the
agreements within one (1) year from its effectivity date. On the implementation of a statute is necessarily limited only to
other hand, Administrative Order No. 82 declares that failure to carrying into effect what is provided in the legislative enactment.
submit Letters of Intent and Mineral Production-Sharing The principle was enunciated as early as 1908 in the case
Agreements within two (2) years from the date of effectivity of of United States v. Barrias. 15 The scope of the exercise of such
said guideline or on July 17, 1991 shall cause the abandonment rule-making power was clearly expressed in the case of United
of their mining, quarry and sand gravel permits. States v. Tupasi Molina, 16decided in 1914, thus: "Of course, the
regulations adopted under legislative authority by a particular
On July 2, 1991, the Court, acting on petitioner's urgent ex- department must be in harmony with the provisions of the law,
parte petition for issuance of a restraining order/preliminary and for the sole purpose of carrying into effect its general
provisions. By such regulations, of course, the law itself can not
be extended. So long, however, as the regulations relate solely to Considering that administrative rules draw life from the statute
carrying into effect its general provisions. By such regulations, of which they seek to implement, it is obvious that the spring
course, the law itself can not be extended. So long, however, as cannot rise higher than its source. We now examine petitioner's
the regulations relate solely to carrying into effect the provision argument that DENR Administrative Order Nos. 57 and 82
of the law, they are valid." contravene Executive Order Nos. 211 and 279 as both operate to
repeal or abrogate Presidential Decree No. 463, as amended, and
Recently, the case of People v. Maceren 17 gave a brief other mining laws allegedly acknowledged as the principal law
delienation of the scope of said power of administrative officials: under Executive Order Nos. 211 and 279.

Administrative regulations adopted under Petitioner's insistence on the application of Presidential Decree
legislative authority by a particular department No. 463, as amended, as the governing law on the acceptance
must be in harmony with the provisions of the and approval of declarations of location and all other kinds of
law, and should be for the sole purpose of applications for the exploration, development, and utilization of
carrying into effect its general provision. By mineral resources pursuant to Executive Order No. 211, is
such regulations, of course, the law itself erroneous. Presidential Decree No. 463, as amended, pertains to
cannot be extended (U.S. v. Tupasi the old system of exploration, development and utilization of
Molina, supra). An administrative agency natural resources through "license, concession or lease" which,
cannot amend an act of Congress (Santos vs. however, has been disallowed by Article XII, Section 2 of the
Estenzo, 109 Phil. 419, 422; Teoxon vs. 1987 Constitution. By virtue of the said constitutional mandate
Members of the Board of Administrators, L- and its implementing law, Executive Order No. 279 which
25619, June 30, 1970, 33 SCRA 585; Manuel vs. superseded Executive Order No. 211, the provisions dealing on
General Auditing Office, L-28952, December "license, concession or lease" of mineral resources under
29, 1971, 42 SCRA 660; Deluao v. Casteel, L- Presidential Decree No. 463, as amended, and other existing
21906, August 29, 1969, 29 SCRA 350). mining laws are deemed repealed and, therefore, ceased to
operate as the governing law. In other words, in all other areas
The rule-making power must be confined to of administration and management of mineral lands, the
details for regulating the mode or proceeding provisions of Presidential Decree No. 463, as amended, and
to carry into effect the law as it has been other existing mining laws, still govern. Section 7 of Executive
enacted. The power cannot be extended to Order No. 279 provides, thus:
amending or expanding the statutory
requirements or to embrace matters not Sec. 7. All provisions of Presidential Decree No.
covered by the statute. Rules that subvert the 463, as amended, other existing mining laws,
statute cannot be sanctioned (University of and their implementing rules and regulations,
Santo Tomas v. Board of Tax Appeals, 93 Phil. or parts thereof, which are not inconsistent
376, 382, citing 12 C.J. 845-46. As to invalid with the provisions of this Executive Order,
regulations, see Collector of Internal Revenue shall continue in force and effect.
v. Villaflor, 69 Phil. 319; Wise & Co. v. Meer, 78
Phil. 655, 676; Del Mar v. Phil. Veterans Specifically, the provisions of Presidential Decree No. 463, as
Administration, L-27299, June 27, 1973, 51 amended, on lease of mining claims under Chapter VIII, quarry
SCRA 340, 349). permits on privately-owned lands of quarry license on public
lands under Chapter XIII and other related provisions on lease,
xxx xxx xxx license and permits are not only inconsistent with the raison
d'etre for which Executive Order No. 279 was passed, but
. . . The rule or regulation should be within the contravene the express mandate of Article XII, Section 2 of the
scope of the statutory authority granted by the 1987 Constitution. It force and effectivity is thus foreclosed.
legislature to the administrative agency (Davis,
Administrative Law, p. 194, 197, cited in Upon the effectivity of the 1987 Constitution on February 2,
Victorias Milling Co., Inc. v. Social Security 1987, 18 the State assumed a more dynamic role in the
Commission, 114 Phil. 555, 558). exploration, development and utilization of the natural resources
of the country. Article XII, Section 2 of the said Charter explicitly
In case of discrepancy between the basic law ordains that the exploration, development and utilization of
and a rule or regulation issued to implement natural resources shall be under the full control and supervision
said law, the basic prevails because said rule or of the State. Consonant therewith, the exploration, development
regulations cannot go beyond the terms and and utilization of natural resources may be undertaken by means
provisions of the basic law (People v. Lim, 108 of direct act of the State, or it may opt to enter into co-
Phil. 1091). production, joint venture, or production-sharing agreements, or
it may enter into agreements with foreign-owned corporations
involving either technical or financial assistance for large-scale
exploration, development, and utilization of minerals, MR. DAVIDE: Under the
petroleum, and other mineral oils according to the general terms proposal, I notice that except
and conditions provided by law, based on real contributions to for the [inalienable] lands of
the economic growth and general welfare of the country. the public domain, all other
natural resources cannot be
Given these considerations, there is no clear showing that alienated and in respect to
respondent DENR Secretary has transcended the bounds [alienable] lands of the public
demarcated by Executive Order No. 279 for the exercise of his domain, private corporations
rule-making power tantamount to a grave abuse of discretion. with the required ownership
Section 6 of Executive Order No. 279 specifically authorizes said by Filipino citizens can only
official to promulgate such supplementary rules and regulations lease the same. Necessarily,
as may be necessary to effectively implement the provisions insofar as other natural
thereof. Moreover, the subject sought to be governed and resources are concerned, it
regulated by the questioned orders is germane to the objects would only be the State
and purposes of Executive Order No. 279 specifically issued to which can exploit, develop,
carry out the mandate of Article XII, Section 2 of the 1987 explore and utilize the same.
Constitution. However, the State may
enter into a joint venture, co-
Petitioner likewise maintains that Administrative Order No. 57, in production or production-
relation to Administrative Order No. 82, impairs vested rights as sharing. Is that not correct?
to violate the non-impairment of contract doctrine guaranteed
under Article III, Section 10 of the 1987 Constitution because MR. VILLEGAS: Yes.
Article 9 of Administrative Order No. 57 unduly pre-terminates
and automatically converts mining leases and other mining MR. DAVIDE: Consequently,
agreements into production-sharing agreements within one (1) henceforth upon, the
year from effectivity of said guideline, while Section 3 of approval of this Constitution,
Administrative Order No. 82, declares that failure to submit no timber or forest
Letters of Intent (LOIs) and MPSAs within two (2) years from the concession, permits or
effectivity of Administrative Order No. 57 or until July 17, 1991 authorization can be
shall cause the abandonment of mining, quarry, and sand gravel exclusively granted to any
permits. citizen of the Philippines nor
to any corporation qualified
In Support of the above contention, it is argued by petitioner to acquire lands of the public
that Executive Order No. 279 does not contemplate automatic domain?
conversion of mining lease agreements into mining production-
sharing agreement as provided under Article 9, Administrative MR. VILLEGAS: Would
Order No. 57 and/or the consequent abandonment of mining Commissioner Monsod like to
claims for failure to submit LOIs and MPSAs under Section 3, comment on that? I think his
Administrative Order No. 82 because Section 1 of said Executive answer is "yes."
Order No. 279 empowers the DENR Secretary to negotiate and
enter into voluntary agreements which must set forth the MR. DAVIDE: So, what will
minimum terms and conditions provided under Section 2 happen now license or
thereof. Moreover, petitioner contends that the power to concessions earlier granted
regulate and enter into mining agreements does not include the by the Philippine government
power to preterminate existing mining lease agreements. to private corporations or to
Filipino citizens? Would they
To begin with, we dispel the impression created by petitioner's be deemed repealed?
argument that the questioned administrative orders unduly
preterminate existing mining leases in general. A distinction MR. VILLEGAS: This is not
which spells a real difference must be drawn. Article XII, Section applied retroactively. They
2 of the 1987 Constitution does not apply retroactively to will be respected.
"license, concession or lease" granted by the government under
the 1973 Constitution or before the effectivity of the 1987 MR. DAVIDE: In effect, they
Constitution on February 2, 1987. The intent to apply will be deemed repealed?
prospectively said constitutional provision was stressed during
the deliberations in the Constitutional Commission, 19 thus:
MR. VILLEGAS: No. (Emphasis
supplied)
During the transition period or after the effectivity of the 1987 agreements under Executive Order No. 211 after the effectivity
Constitution on February 2, 1987 until the first Congress under of the 1987 Constitution by authorizing the DENR Secretary to
said Constitution was convened on July 27, 1987, two (2) negotiate and conclude joint venture, co-production, or
successive laws, Executive Order Nos. 211 and 279, were production-sharing agreements for the exploration,
promulgated to govern the processing and approval of development and utilization of mineral resources and prescribing
applications for the exploration, development and utilization of the guidelines for such agreements and those agreements
minerals. To carry out the purposes of said laws, the questioned involving technical or financial assistance by foreign-owned
Administrative Order Nos. 57 and 82, now being assailed, were corporations for large-scale exploration, development, and
issued by the DENR Secretary. utilization of minerals.

Article 9 of Administrative Order No. 57 provides: Well -settled is the rule, however, that regardless of the
reservation clause, mining leases or agreements granted by the
ARTICLE 9 State, such as those granted pursuant to Executive Order No. 211
referred to this petition, are subject to alterations through a
TRANSITORY PROVISION reasonable exercise of the police power of the State. In the 1950
case of Ongsiako v. Gamboa, 21 where the constitutionality of
Republic Act No. 34 changing the 50-50 sharecropping system in
9.1. All existing mining leases or agreements
existing agricultural tenancy contracts to 55-45 in favor of
which were granted after the effectivity of the
tenants was challenged, the Court, upholding the
1987 Constitution pursuant to Executive Order
constitutionality of the law, emphasized the superiority of the
No. 211, except small scale mining leases and
police power of the State over the sanctity of this contract:
those pertaining to sand and gravel and quarry
resources covering an area of twenty (20)
hectares or less shall be subject to these The prohibition contained in constitutional provisions against:
guidelines. All such leases or agreements shall impairing the obligation of contracts is not an absolute one and it
be converted into production sharing is not to be read with literal exactness like a mathematical
agreement within one (1) year from the formula. Such provisions are restricted to contracts which
effectivity of these guidelines. However, any respect property, or some object or value, and confer rights
minimum firm which has established mining which may be asserted in a court of justice, and have no
rights under Presidential Decree 463 or other application to statute relating to public subjects within the
laws may avail of the provisions of EO 279 by domain of the general legislative powers of the State, and
following the procedures set down in this involving the public rights and public welfare of the entire
document. community affected by it. They do not prevent a proper exercise
by the State of its police powers. By enacting regulations
reasonably necessary to secure the health, safety, morals,
It is clear from the aforestated provision that Administrative
comfort, or general welfare of the community, even the
Order No. 57 applies only to all existing mining leases or
contracts may thereby be affected; for such matter can not be
agreements which were granted after the effectivity of the 1987
placed by contract beyond the power of the State shall regulates
Constitution pursuant to Executive Order No. 211. It bears
and control them. 22
mention that under the text of Executive Order No. 211, there is
a reservation clause which provides that the privileges as well as
the terms and conditions of all existing mining leases or In Ramas v. CAR and Ramos 23 where the constitutionality of
agreements granted after the effectivity of the 1987 Constitution Section 14 of Republic Act No. 1199 authorizing the tenants to
pursuant to Executive Order No. 211, shall be subject to any and charge from share to leasehold tenancy was challenged on the
all modifications or alterations which Congress may adopt ground that it impairs the obligation of contracts, the Court ruled
pursuant to Article XII, Section 2 of the 1987 Constitution. Hence, that obligations of contracts must yield to a proper exercise of
the strictures of the the police power when such power is exercised to preserve the
non-impairment of contract clause under Article III, Section 10 of security of the State and the means adopted are reasonably
the 1987 Constitution 20 do not apply to the aforesaid leases or adapted to the accomplishment of that end and are, therefore,
agreements granted after the effectivity of the 1987 not arbitrary or oppressive.
Constitution, pursuant to Executive Order No. 211. They can be
amended, modified or altered by a statute passed by Congress to The economic policy on the exploration, development and
achieve the purposes of Article XII, Section 2 of the 1987 utilization of the country's natural resources under Article XII,
Constitution. Section 2 of the 1987 Constitution could not be any clearer. As
enunciated in Article XII, Section 1 of the 1987 Constitution, the
Clearly, Executive Order No. 279 issued on July 25, 1987 by exploration, development and utilization of natural resources
President Corazon C. Aquino in the exercise of her legislative under the new system mandated in Section 2, is geared towards
power has the force and effect of a statute or law passed by a more equitable distribution of opportunities, income, and
Congress. As such, it validly modified or altered the privileges wealth; a sustained increase in the amount of goods and services
granted, as well as the terms and conditions of mining leases and produced by the nation for the benefit of the people; and an
expanding productivity as the key to raising the quality of life for We now, proceed to the petition-in-intervention. Under Section
all, especially the underprivileged. 2, Rule 12 of the Revised Rules of Court, an intervention in a case
is proper when the intervenor has a "legal interest in the matter
The exploration, development and utilization of the country's in litigation, or in the success of either of the parties, or an
natural resources are matters vital to the public interest and the interest against both, or when he is so situated as to be
general welfare of the people. The recognition of the importance adversely affected by a distribution or other disposition of
of the country's natural resources was expressed as early as the property in the custody of the court or of an officer thereof.
1984 Constitutional Convention. In connection therewith, the "Continental Marble Corporation has not sufficiently shown that
1986 U.P. Constitution Project observed: "The 1984 it falls under any of the categories mentioned above. The refusal
Constitutional Convention recognized the importance of our of the DENR, Regional Office No. 3, San Fernando, Pampanga to
natural resources not only for its security and national defense. renew its Mines Temporary Permit does not justify such an
Our natural resources which constitute the exclusive heritage of intervention by Continental Marble Corporation for the purpose
the Filipino nation, should be preserved for those under the of obtaining a directive from this Court for the issuance of said
sovereign authority of that nation and for their prosperity. This permit. Whether or not Continental Marble matter best
will ensure the country's survival as a viable and sovereign addressed to the appropriate government body but certainly,
republic." not through this Court. Intervention is hereby DENIED.

Accordingly, the State, in the exercise of its police power in this WHEREFORE, the petition is DISMISSED for lack of merit. The
regard, may not be precluded by the constitutional restriction on Temporary Restraining Order issued on July 2, 1991 is hereby
non-impairment of contract from altering, modifying and LIFTED.
amending the mining leases or agreements granted under
Presidential Decree No. 463, as amended, pursuant to Executive SO ORDERED.
Order No. 211. Police Power, being co-extensive with the
necessities of the case and the demands of public interest; Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr.,
extends to all the vital public needs. The passage of Executive Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan and Mendoza,
Order No. 279 which superseded Executive Order No. 211 JJ., concur.
provided legal basis for the DENR Secretary to carry into effect
the mandate of Article XII, Section 2 of the 1987 Constitution.

Nowhere in Administrative Order No. 57 is there any provision Footnotes


which would lead us to conclude that the questioned order
authorizes the automatic conversion of mining leases and
1 Article XIII, Section 1 of the 1935 Constitution
agreements granted after the effectivity of the 1987
provides:
Constitution, pursuant to Executive Order No. 211, to
production-sharing agreements. The provision in Article 9 of
Administrative Order No. 57 that "all such leases or agreements Section 1. All agricultural, timber, and mineral
lands of the public domain, waters, minerals,
shall be converted into production sharing agreements within
coal, petroleum and other mineral oils, all
one (1) year from the effectivity of these guidelines" could not
forces of potential energy, and other natural
possibility contemplate a unilateral declaration on the part of the
resources of the Philippines belong to the
Government that all existing mining leases and agreements are
State, and their disposition, exploitation,
automatically converted into
development, or utilization shall be limited to
production-sharing agreements. On the contrary, the use of the
citizens of the Philippines, or to corporation or
term "production-sharing agreement" if they are so minded.
associations at least sixty per centum of the
Negotiation negates compulsion or automatic conversion as
capital of which is owned by such citizens,
suggested by petitioner in the instant petition. A mineral
production-sharing agreement (MPSA) requires a meeting of the subject to any existing right, grant, lease or
concession at the time of the inauguration of
minds of the parties after negotiations arrived at in good faith
the Government established under this
and in accordance with the procedure laid down in the
Constitution. Natural resources, with the
subsequent Administrative Order No. 82.
exception of public agricultural land, shall not
be alienated, and no license, concession, or
We, therefore, rule that the questioned administrative orders
lease for the exploitation, development, or
are reasonably directed to the accomplishment of the purposes
utilization of any of the natural resources shall
of the law under which they were issued and were intended to
be granted for a period exceeding twenty-five
secure the paramount interest of the public, their economic
years, renewable for another twenty-five
growth and welfare. The validity and constitutionality of
years, except as to water rights for irrigation,
Administrative Order Nos. 57 and 82 must be sustained, and
water supply, fisheries, or industrial uses other
their force and effect upheld.
than the development of water power, in
which cases beneficial use may be the measure Suite 609 Don Santiago Building whose
and the limit of the grant. members include mining prospectors and
claimowners or claimholders.
xxx xxx xxx
9 Rollo, pp. 46-48.
Article XIV, Section 8 of the 1973 Constitution
provides: 10 A domestic corporation engaged in the
business of marble mining with factory
Section 8. All lands of the public domain, processing plant at 24 General Luis St.,
waters, minerals, coal, petroleum and other Novaliches, Quezon City. It has filed a
mineral oils, all forces of potential energy, Declaration of Location dated November 13,
fisheries, wildlife, and other natural resources 1973 for a placer mine known as "MARGEL"
of the Philippines belong to the State. With the located at Matitic, Norzagaray, Bulacan. It has
exception of agricultural, industrial or been operating as a mining entity and
commercial, residential, and resettlement exporting its finished products (marble tiles) by
lands of the public domain, natural resources virtue of a Mines Temporary Permit issued by
shall not be alienated, and no license, the DENR.
concession, or lease for the exploration,
development, exploitation, or utilization of any 11 Rollo, pp. 99-104.
of the natural resources shall be granted for a
period exceeding twenty-five years, renewable 12 Rollo, p. 114.
for not more than twenty-five years, except as
to water rights for irrigation, water supply, 13 Presidential Decree No. 463, as amended,
fisheries, or industrial uses other than the otherwise known as "The Mineral Resources
development of water power, in which cases, Development Decree of 1974" promulgated on
beneficial use may be the measure and the May 17, 1974.
limit of the grant.
14 Section 7, Executive Order No. 279 provides:
2 Cariño v. Insular Government, 212 US 449
(1909); Valenton v. Mariano, 3 Phil. 537 (1904);
All provisions of Presidential Decree No. 463, as
Lee Hung Hok v. David, G.R. No. L-30389,
amended, other existing mining laws, and their
December 27, 1972, 48 SCRA 372, 377.
implementing rules and regulations, or parts
thereof, which are not inconsistent with the
3 1986 U.P. Law Constitution Project, Vol. I, pp. provisions of this Executive Order, shall
8-11. continue in force and effect.

4 Executive Order No. 211 (July 10, 1987) and 15 11 Phil. 327, 330 (1908).
Executive Order No. 279 (July 25, 1987).
16 29 Phil. 120, 124 (1914).
5 Article II, Section 1, 1987 Provisional
Constitution; Article XIII, Section 6, 1987
17 No. L-32166, October 18, 1977, 79 SCRA
Constitution; Tan v. Marquez, G.R. No. 93288,
450.
October 25, 1990, Minute Resolution, En Banc.
18 De Leon v. Esguerra, G.R. No. 78058, August
6 Published in the July 3, 1989 issue of the
31, 187, 153 SCRA 602.
Philippine Daily Inquirer, a newspaper of
general circulation, and became effective on
19 Record of the Constitutional Commission,
July 18, 1989.
Proceedings and Debate, Vol. III, p. 260.
7 Published in the December 21, 1990 issue of
20 Article III, Section 10 of the 1987
the Philippine Daily Inquirer, a newspaper of
general circulation, and became effective on Constitutions provides:
January 5, 1991.
No law impairing the obligation of contracts
shall be passed.
8 A non-stock and non-profit organization duly
formed and existing under and by virtue of the
laws of the Philippines with principal office at 21 86 Phil. 50 (1950).
22 86 Phil. at 54-55. POLLUTION ADJUDICATION BOARD, petitioner
vs.
23 120 Phil. 168 (1964). COURT OF APPEALS and SOLAR TEXTILE FINISHING
6. Utilization of natural resourcesA. Miners Association vs CORPORATION, respondents.
Factoran Jr.Facts: The petition seeks a ruling from this
court on the validity of two AdministrativeOrders 57 and Oscar A. Pascua and Charemon Clio L. Borre for petitioner.
82 issued by the Secretary of the Department of Environment Leonardo A. Aurelio for respondent Solar Textile Finishing Corp.
and NaturalResources to carry out the provisions of
Executive Orders 279 and 211. This
petitiona r o s e f r o m t h e f a c t t h a t t h e 1 9 8 7 C
onstitution provided for a different syste RESOLUTION
m o f exploration, development and utilization of the
country’s natural resources. Unlike the1935 and 1973
Constitutions that allow the utilization of inalienable
lands of publicdomain through “license, concession or lease”,
FELICIANO, J.:
the 1987 Constitution provides for the fullcontrol and
supervision by the state of the exploration, development and
utilization of thecountry’s natural resources. Pres. Cory Petitioner Pollution Adjudication Board ("Board") asks us to
review the Decision and Resolution promulgated on 7 February
Aquino promulgated EO 211, which prescribesthe
1990 and 10 May 1990, respectively, by the Court of Appeals in
interim procedures in the processing and approval of
C.A.-G R. No. SP 18821 entitled "Solar Textile Finishing
applications for the
Corporation v. Pollution Adjudication Board." In that Decision
exploration,d e v e l o p m e n t a n d u t i l i z a t i o n o f m i n e r a l
and Resolution, the Court of Appeals reversed an order of the
s i n a c c o r d a n c e t o t h e 1 9 8 7 C o n s t i t u t i o n . I n addi
Regional Trial Court, Quezon City, Branch 77, in Civil Case No. Q-
tion, Pres. Aquino also promulgated EO 279
89-2287 dismissing private respondent Solar Textile Finishing
authorizing the DENR Secretary tonegotiate and conclude
Corporation's ("Solar") petition for certiorari and remanded the
joint venture, co-production or production-sharing agreements
case to the trial court for further proceedings.
for the exploration, development and utilization of
mineral resources and prescribing theguidelines for
such agreements and those agreements involving On 22 September 1988, petitioner Board issued an ex
technical or financialassistance by foreign-owned parte Order directing Solar immediately to cease and desist from
corporations for large-scale exploration, development, utilizing its wastewater pollution source installations which were
andu t i l i z a t i o n o f m i n e r a l s . I n l i n e w i t h E O discharging untreated wastewater directly into a canal leading to
2 7 9 , t h e D E N R S e c r e t a r y i s s u e d A O 5 7 “Gui the adjacent Tullahan-Tinejeros River. The Order signed by Hon.
delines of Mineral Production Sharing Agreeme Fulgencio Factoran, Jr., as Board Chairman, reads in full as
n t u n d e r E O 2 7 9 ” a n d A O 8 2 “Procedural Guidelines on follows:
the Award of Mineral Production Sharing Agreement
(MPSA)through negotiation. Petitioner, Miners Respondent, Solar Textile Finishing Corporation with
Association of the Philippines, mainly contendthat the plant and place of business at 999 General Pascual
DENR Secretary issued both AOs 57 and 82 in excess of his rule- Avenue, Malabon, Metro Manila is involved in
making power because these are inconsistent with the bleaching, rinsing and dyeing textiles with wastewater
provisions of EO 279.Issue: whether AO Nos. 57 and 82, of about 30 gpm. being directly discharged untreated
which are promulgated by the DENR, are valid into the sewer. Based on findings in the Inspections
andconstitutionalHeld: AO Nos. 57 and 82 are both conducted on 05 November 1986 and 15 November
constitutional and valid. This is due to the fact that EO279, in 1986, the volume of untreated wastewater discharged
effect, gave the Secretary of Natural Resources the in the final out fall outside of the plant's compound was
authority to conclude jointv e n t u r e , c o - even greater. The result of inspection conducted on 06
production, or production sharing agreem September 1988 showed that respondent's Wastewater
e n t s f o r t h e e x p l o r a t i o n , development and Treatment Plant was noted unoperational and the
utilization of mineral resources. Furthermore, the combined wastewater generated from its operation was
constitutionality of these administrative orders goes to show about 30 gallons per minute and 80% of the wastewater
that the utilization of inalienable lands of publicdomain is not was being directly discharged into a drainage canal
merely done through “license, concession or lease” leading to the Tullahan-Tinejeros River by means of a
since the options arenow also open to the State through by-pass and the remaining 20% was channelled into the
direct undertaking or by entering into co-production, joint plant's existing Wastewater Treatment Plant (WTP).
venture, or production sharing agreements. Result of the analyses of the sample taken from the by-
10 pass showed that the wastewater is highly pollutive in
terms of Color units, BOD and Suspended Solids, among
G.R. No. 93891 March 11, 1991 others. These acts of respondent in spite of directives to
comply with the requirements are clearly in violation of On 21 July 1989, the Regional Trial Court dismissed Solar's
Section 8 of Presidential Decree No. 984 and Section petition upon two (2) grounds, i.e., that appeal and not certiorari
103 of its Implementing Rules and Regulations and the from the questioned Order of the Board as well as the Writ of
1982 Effluent Regulations. Execution was the proper remedy, and that the Board's
subsequent Order allowing Solar to operate temporarily had
WHEREFORE, pursuant to Section 7 of P.D. 984 and rendered Solar's petition moot and academic.
Section 38 of its Implementing Rules and Regulations,
respondent is hereby ordered to cease and desist from Dissatisfied, Solar went on appeal to the Court of Appeals which,
utilizing its wastewater pollution source installation and in the Decision here assailed, reversed the Order of dismissal of
discharging its untreated wastewater directly into the the trial court and remanded the case to that court for further
canal leading to the Tullahan-Tinejeros River effective proceedings. In addition, the Court of Appeals declared the Writ
immediately upon receipt hereof and until such time of Execution null and void. At the same time, the Court of
when it has fully complied with all the requirements and Appeals said in the dispositive portion of its Decision that:
until further orders from this Board.
. . .. Still and all, this decision is without prejudice to
1
SO ORDERED. whatever action the appellee [Board] may take relative
to the projected 'inspection and evaluation' of
We note that the above Order was based on findings of several appellant's [Solar's] water treatment facilities.3
inspections of Solar's plant:
The Court of Appeals, in so ruling, held that certiorari was a
a. inspections conducted on 5 November 1986 and 12 proper remedy since the Orders of petitioner Board may result in
November 1986 by the National Pollution Control great and irreparable injury to Solar; and that while the case
Commission ("NPCC"), the predecessor of the Board might be moot and academic, "larger issues" demanded that the
;2 and question of due process be settled. Petitioner Board moved for
reconsideration, without success.
b. the inspection conducted on 6 September 1988 by
the Department of Environment and Natural Resources The Board is now before us on a Petition for Review basically
("DENR"). arguing that:

The findings of these two (2) inspections were that Solar's 1. its ex parte Order dated 22 September 1988 and the
wastewater treatment plant was non-operational and that its Writ of Execution were issued in accordance with law
plant generated about 30 gallons per minute of wastewater, 80% and were not violative of the requirements of due
of which was being directly discharged into a drainage canal process; and
leading to the Tullahan-Tinejeros River. The remaining 20% of
the wastewater was being channeled through Solar's non- 2. the ex parte Order and the Writ of Execution are not
operational wastewater treatment plant. Chemical analysis of the proper subjects of a petition for certiorari.
samples of Solar's effluents showed the presence of pollutants
on a level in excess of what was permissible under P.D. No. 984 The only issue before us at this time is whether or not the Court
and its Implementing Regulations. of Appeals erred in reversing the trial court on the ground that
Solar had been denied due process by the Board.
A copy of the above Order was received by Solar on 26
September 1988. A Writ of Execution issued by the Board was Petitioner Board claims that under P.D. No. 984, Section 7(a), it
received by Solar on 31 March 1989. has legal authority to issue ex parte orders to suspend the
operations of an establishment when there is prima
Meantime, Solar filed a motion for reconsideration/appeal with facie evidence that such establishment is discharging effluents or
prayer for stay of execution of the Order dated 22 September wastewater, the pollution level of which exceeds the maximum
1988. Acting on this motion, the Board issued an Order dated 24 permissible standards set by the NPCC (now, the Board).
April 1989 allowing Solar to operate temporarily, to enable the Petitioner Board contends that the reports before it concerning
Board to conduct another inspection and evaluation of Solar's the effluent discharges of Solar into the Tullahan-Tinejeros River
wastewater treatment facilities. In the same Order, the Board provided prima facie evidence of violation by Solar of Section 5
directed the Regional Executive Director of the DENR/ NCR to of the 1982 Effluent Code.
conduct the inspection and evaluation within thirty (30) days.
Solar, on the other hand, contends that under the Board's own
On 21 April 1989, however, Solar went to the Regional Trial rules and regulations, an ex parte order may issue only if the
Court of Quezon City, Branch 77, on petition for certiorari with effluents discharged pose an "immediate threat to life, public
preliminary injunction against the Board, the petition being health, safety or welfare, or to animal and plant life." In the
docketed as Civil Case No. Q-89-2287. instant case, according to Solar, the inspection reports before
the Board made no finding that Solar's wastewater discharged Section 5 of the Effluent Regulations of 1982 4 sets out the
posed such a threat. maximum permissible levels of physical and chemical substances
which effluents from domestic wastewater treatment plants and
The Court is not persuaded by Solar's contention. Section 7(a) of industrial plants" must not exceed "when discharged into bodies
P.D. No. 984 authorized petitioner Board to issue ex parte cease of water classified as Class A, B, C, D, SB and SC in accordance
and desist orders under the following circumstances: with the 1978 NPCC Rules and Regulations." The waters of
Tullahan-Tinejeros River are classified as inland waters Class D
P.D. 984, Section 7, paragraph (a), provides: under Section 68 of the 1978 NPCC Rules and Regulations 5 which
in part provides that:
(a) Public Hearing. . . . Provided, That whenever the
Commission finds prima facie evidence that the Sec. 68. Water Usage and Classification. — The quality
discharged sewage or wastes are of immediate threat to of Philippine waters shall be maintained in a safe and
life