1. Pedro vs Provincial Board of Rizal G. R. No.
o. 34163, The court held: (1) That a license authorizing the operation and
September 18, 1931
Facts: Gregorio Pedro argues for the nullity of Ordinance No. 36,
series of 1928, approved on December 29, 1928, by the temporary
councillors appointed by the provincial governor of Rizal, Eligio
Naval, on the ground that (1) it impairs the acquired rights of said
appellant; (2) it was enacted on account of prejudice, because it
was intended for a special and not a general purpose, namely to
prevent, at any cost, the opening, maintenance, and exploitation of
the cockpit of the said petitioner-appellant; and (3) it provides for
special committee composed of persons who are not members of
the council, vested them with powers which of their very nature,
cannot be delegated by said council to that committee.
He further contends that, having obtained the proper permit to
maintain, exploit, and open to the public the cockpit in question,
having paid the license fee and fulfilled all the requirements
provided by Ordinance No. 35, series of 1928, he has acquired a
right which cannot be taken away from him by Ordinance No. 36,
series of 1928, which was subsequently approved.
Issue: Whether a license authorizing the operation and exploitation
of a cockpit falls under property rights which a person may not be
deprived of without due process of law
Held: No.
exploitation of a cockpit is not property of which the holder may not
be deprived without due process of law, but a mere privilege which
may be revoked when the public interests so require; (2) that the
work entrusted by a municipal council to a special sanitary
committee to make a study of the sanitary effects upon the
neighborhood of the establishment of a cockpit, is not legislative in
character, but only informational, and may be delegated; and (3) that
an ordinance, approved by a municipal council duly constituted,
which suspends the effects of another which had been enacted to
favor the grantee of a cockpit license, is valid and legal.
2. PHILRECA vs DILG
Facts: Under Presidential Decree (PD) 269, as amended, or the
National Electrification Administration Decree, it is the declared
policy of the State to provide “the total electrification of the
Philippines on an area coverage basis” the same “being vital to the
people and the sound development of the nation.”
Pursuant to this policy, PD 269 aims to “promote, encourage and
assist all public service entities engaged in supplying electric service,
particularly electric cooperatives” by “giving every tenable support
and assistance” to the electric cooperatives coming within the
purview of the law.
From 1971 to 1978, in order to finance the electrification projects
envisioned by PD 269, as amended, the Philippine Government,
acting through the National Economic Council (now National
Economic Development Authority) and the NEA (National
Electrification Administration), entered into 6 loan agreements with
the government of the United States of America through the United
States Agency for International Development (USAID) with electric
cooperatives, including Agusan Del Norte Electric Cooperative, Inc.
(ANECO); Iloilo I Electric Cooperative, Inc. (ILECO I); and Isabela I
Electric Cooperative, Inc. (ISELCO I), as beneficiaries.
The 6 loan agreements involved a total amount of approximately
US$86,000,000.00. These loan agreements are existing until today.
The loan agreements contain similarly worded provisions on the tax
application of the loan and any property or commodity acquired
through the proceeds of the loan.
On 23 May 2000, a class suit was filed by the Philippine Rural
Electric Cooperatives Association, Inc. (PHILRECA); ANECO,
ILECO I and ISELCO I; in their own behalf and in behalf of other
electric cooperatives organized and existing under PD 269, against
the Secretary of the Department of Interior and Local Government
(DILG) and the Secretary of the Department of Finance, through a
petition for prohibition, contending that pursuant to the provisions of
PD 269, as amended, and the provision in the loan agreements, they
are exempt from payment of local taxes, including payment of real
property tax.
With the passage of the Local Government Code, however, they
allege that their tax exemptions have been invalidly withdrawn, in
violation of the equal protection clause and impairing the obligation
of contracts between the Philippine Government and the United
States Government.
Issue: Whether or not the Local Government Code unduly
discriminated against electric cooperatives organized and existing
under PD 269 on the ground that it violated the equal protection
clause.
Decision: The equal protection clause under the Constitution means
that “no person or class of persons shall be deprived of the same
protection of laws which is enjoyed by other persons or other classes
in the same place and in like circumstances.” Thus, the guaranty of
the equal protection of the laws is not violated by a law based on
reasonable classification.
Classification, to be reasonable, must (1) rest on substantial
distinctions; (2) be germane to the purposes of the law; (3) not be
limited to existing conditions only; and (4) apply equally to all
members of the same class.
There is reasonable classification under the Local Government Code
to justify the different tax treatment between electric cooperatives
covered by PD 269, as amended, and electric cooperatives under
RA 6938 (Cooperative Code of the Philippines).
First, nowhere in PD 269, as amended, does it require cooperatives
to make equitable contributions to capital. Under the Cooperative
Code, the articles of cooperation of a cooperative applying for
registration must be accompanied with the bonds of the accountable
officers and a sworn statement of the treasurer elected by the
subscribers showing that at least 25% of the authorized share capital
has been subscribed and at least 25% of the total subscription has
been paid and in no case shall the paid-up share capital be less than
P2,000.00.
Second, another principle adhered to by the Cooperative Code is the
principle of subsidiarity. Pursuant to this principle, the government
may only engage in development activities where cooperatives do
not possess the capability nor the resources to do so and only upon
the request of such cooperatives. In contrast, PD 269, as amended
by PD 1645, is replete with provisions which grant the NEA, upon the
happening of certain events, the power to control and take over the
management and operations of cooperatives registered under it. The
extent of government control over electric cooperatives covered by
PD 269, as amended, is largely a function of the role of the NEA as a
primary source of funds of these electric cooperatives. It is crystal
clear that NEA incurred loans from various sources to finance the
development and operations of the electric cooperatives.
Consequently, amendments to PD 269 were primarily geared to
expand the powers of the NEA over the electric cooperatives to
ensure that loans granted to them would be repaid to the
government. In contrast, cooperatives under RA 6938 are envisioned
to be self-sufficient and independent organizations with minimal
government intervention or regulation.
Lastly, the transitory provisions of RA 6938 are indicative of the
recognition by Congress of the fundamental distinctions between
electric cooperatives organized under PD 269, as amended, and
cooperatives under the new Cooperative Code.
Article 128 of the Cooperative Code provides that all cooperatives
registered under previous laws shall be deemed registered with the
CDA upon submission of certain requirements within one year.
However, cooperatives created under PD 269, as amended, are
given three years within which to qualify and register with the CDA,
after which, provisions of PD 1645 which expand the powers of the
NEA over electric cooperatives, would no longer apply.
3. US vs. Diaz-Conde (42 Phil 766)
Facts:
On December 30, 1915, complainants Bartolome Oliveros and
Engracia Lianco entered into a contract with the defendants
concerning a debt of P300. Oliveros and co. were obligated to pay
five percent interest per month within the first ten days of every
month. On May 6, 1921, Vicente Diaz Conde and Apolinaria R. De
Conde were charged with violating the Usury Law in the Court of
First Instance of the city of Manila. They were found guilty,
sentenced to pay a fine of P120 and in case of insolvency, to suffer
subsidiary imprisonment in accordance with the provisions of law.
They took it to SC to plead.
Issues:
WoN the Usury Law has a retroactive effect in this case
WoN the law impaired the contract
Held and Ratio:
No. The Usury Law, a penal law, cannot become retroactive unless it
is favorable to the person accused. (Art. 21 and 22 Penal Code)
Yes. If a contract is legal at its inception, it cannot be rendered illegal
by any subsequent legislation.
Decision: Judgment reversed, defendants acquitted.
THE UNITED STATES v. DIAZ-CONDE
42 Phil. 766 (Outline)
G.R. No. L-18208, February 14, 1922 (Resource)
Plaintiff-appellee: THE UNITED STATES
Defendants-appellants: Vicente Diaz Conde and Apolinaria R.
De Conde
What happened:
On December 30, 1915, Bartolome Oliveros and Engracia
Lianco accomplished and delivered to the defendants a contract
(named ‘Exhibit B’) which stated that the Oliveros and Lianco had
borrowed from the latter a sum of three hundred pesos (Php 300),
and by virtue of the terms of said contract, Oliveros and Lianco
obligated themselves to pay to the defendants interest at the rate
of five percent (5%) per month, payable within the first ten days of
each and every month, the first payment to be made on the
January 10, 1916.
On May 1, 1916, Act no. 2655 or the Usury Law came into
effect. The law stated that that the legal rate of interest for the
loan or forbearance of any money, goods or credits, […] shall be
12% per annum. Any amount of interest paid or to be paid in
excess of that fixed by law is considered usurious, therefore
unlawful.
A complaint was filed in the Court of First Instance of the city of
Manila on May 6, 1921, charging the defendants with a violation of
the Usury Law (Act No. 2655). Upon said complaint they were
arrested, charged, and pleaded not guilty. On September 1, 1921,
the case was finally brought on for trial. At the end of the trial, with
consideration to the evidences cited in court, Hon. M. V. del
Rosario, judge, found that the defendants were guilty of the crime
charged in the complaint and sentenced each of them to pay a fine
of P120 and, if they cannot meet their debt obligations, the
defendants would suffer subsidiary imprisonment in accordance
with the provisions of the law. From that sentence each of the
defendants made an appeal.
Contention of the State:
The lower court, in the course of its opinion, stated that at the time
of the execution and delivery of said contract, there was no law in
force in the Philippine Islands that punishes usury. However, the
defendants had collected a usurious rate of interest after the
adoption of the Usury Law in the Philippine Islands (Act No. 2655),
Therefore, they were guilty in the violation of that law and should
be punished in accordance with its provisions.
Contention of the Accused:
(a) The contract upon which the alleged usurious interest was
collected was executed before Act No. 2655 was adopted.
(b) The time that the said contract was made (December 30,
1915), there was no usury law in force in the Philippine Islands.
(c) Act No. 2655 did not become effective until the May 1, 1916, or
four months and a half after the contract was executed.
(d) The said law could have no retroactive effect or operation
(e) The said law impairs the obligation of a contract.
For all of said reasons the judgment imposed by the lower court
should be revoked; that the complaint should be dismissed, and
that they should each be discharged from the custody of the law.
Ruling of the Supreme Court:
The Supreme Court en banc promulgated on February 14, 1922 its
ruling on the case of The United States vs Vicente Diaz Conde
and Apolinaria R. De Conde (G.R. No. L-18208). The court has
decided that the acts complained of by the defendants did not
constitute a crime at the time they were committed. A law
imposing a new penalty, liability or disability, or giving a new right
of action, must not be construed as having a retroactive effect. It
is an elementary rule of contract that the laws in force at the time
of the contract was made must govern its interpretation and
application. Laws must be construed prospectively and not
retrospectively. If a contract is legal at its commencement, it
cannot be rendered illegal by any subsequent legislation. If that
were permitted, then the obligations of a contract might be
impaired, which is prohibited by Philippine law.
Ex post facto laws, unless they are favorable to the defendant, are
prohibited in this jurisdiction. Every law that makes an action, done
before the passage of the law, and which was innocent when
done, criminal, and punishes such action, is an ex post facto law.
The Legislature is prohibited from adopting a law which will make
an act done before its adoption a crime, as in the case of Act No.
2655. A law may be given a retroactive effect in civil action,
providing it is curative in character, but ex post facto laws are
absolutely prohibited unless its retroactive effect is favorable to the
defendant.
The complaint was therefore dismissed, and the defendants were
discharged from the custody of the law with costs.
4. BPI INVESTMENT V. CA
G.R. No. 133632 February 15, 2002
Facts: Frank Roa obtained a loan at 16 1/4% interest rate per annum
from Ayala Investment and Development Corporation. For security,
Roa’s house and lot were mortgaged. Later, Roa sold the house and
lot to ALS and Antonio Litonjua who assumed Roa’s debt to Ayala
Investment. Ayala Investment, however, granted a new loan to be
applied to Roa’s debt, secured by the same property at a different
interest rate of 20% per annum. When ALS and Litonjua failed to
pay, BPIIC, successor to Ayala Investment, filed for foreclosure of
mortgage.
Issue: Whether or not compensation morae is applicable in this case.
Ruling: Yes. A contract of loan involves a reciprocal obligation,
wherein the obligation or promise of each party is the consideration
for that of the other. It is a basic principle in reciprocal obligations
that neither party incurs in delay, if the other does not comply or is
not ready to comply in a proper manner with what is incumbent upon
him. Only when a party has performed his part of the contract can he
demand that the other party also fulfills his own obligation and if the
latter fails, default set.
5. Manila Trading and Supply Co. vs. Reyes
Facts:
On December 13, 1933, following the enactment of Act
No. 4122 or the Installment Sales Law, E.M. Reyes
executed in favor of the Manila Trading & Supply Co., a
chattel mortgage on an automobile as security for the
payment of the sum of P400, which Reyes agreed to pay
in ten equal monthly installments. As found by the trial
judge, Reyes failed to pay some of the installments due
on his obligation. Thereupon the Manila Trading & Supply
Co., proceeded to foreclose its chattel mortgage. The
mortgaged property was sold at public auction by the
sheriff of the City of Manila for the sum of P200, After
applying this sum, with interest, costs, and liquidated
damages to Reyes' indebtedness, the latter owed the
company a balance of P275.47, with interest thereon at
the rate of 12 percent per annum from February 19,
1934.
When Reyes failed to pay the deficiency on the debt, the
company instituted an action in the Court of First
Instance of Manila for the recovery thereof. To plaintiff's
complaint defendant filed an answer in which he pleaded
as a defense that plaintiff, having chosen to foreclose its
chattel mortgage, had no further action against defendant
for the recovery of the unpaid balance owed by him to
plaintiff, as provided by Act No. 4122. After trial the lower
court sustained defendant's defense and rendered a
judgment absolving him from the complaint, with costs.
From this judgment, the plaintiff has taken an appeal and
here contends that the lower court erred in not declaring
Act No. 4122 of the Philippine Legislature
unconstitutional for the following reasons: (1) in that it
embraces more than one subject, (2) in that it unduly
restrains the liberty of a person to contract with respect to
his property rights, (3) in that it is class legislation, and
(4) in that it denies vendors and lessors of personal
property the equal protection of the laws.
Issues:
1.) Whether or not Act No. 4122 violates the
constitutional provision "that no bill which may be
enacted into law shall embraced more than one subject
and that subject shall be expressed in the title of the bill.
2.) Whether or not the said law violates the non-
impairment clause.
Held:
Act No. 4122 known as the enforcement sales law is
valid and enforceable.
The Philippine Legislature having had the purpose in
mind in enacting Act No. 4122 to provide legislation
concerning sales on the installment plan, this subject was
sufficiently expressed by indicating in the title that the law
had to do with an amendment of the Civil Code in the
portion thereof given to purchase and sale. Legislation
should not be embarrassed by overly strict construction.
The constitutional provision " that no bill which may be
enacted into law shall be expressed in the title of the bill"
while designed to remedy an evil was not designed to
require great particularity in stating the object of the law
in its title.
Parties have no vested rights in particular remedies or
modes of procedure, and the Legislature may change
existing remedies and modes of procedure without
impairing the obligations of contracts, provided an
efficacious remedy remains for the enforcement of a
mortgage may not, even when public policy is invoked as
an excuse, be pressed so far as to cut down the security
of a mortgage without moderation or reason or in a spirit
of oppression.
In the Philippines three remedies are available to the
vendor who has sold personal property on the installment
plan. (1) He may elect to exact fulfillment of the obligation
(Bachrach Motor Co. vs. Millan [1935], 61 Phil 409). (2) If
the vendee shall have failed to pay two or more
installments, the vendor may cancel the sale. (3) If the
vendee shall have failed to pay two or more installments,
the vendor may foreclose the mortgage if one has been
given on the property. Act 4122 does no more than
qualify the remedy.
The question of the validity of an act is solely one of
constitutional power. Questions of expediency of motive
or of results are irrelevant. Nevertheless it is not improper
to inquire as to the occasion for the enactment of a law.
Most constitutional issues are determined by the Court's
approach to them. The proper approach should be to
resolve all presumptions in favor of the validity of an act
in the absence of a clear conflict between it and the
constitution. All doubts should be resolved in its favor.
Public policy, obvious from a statute, when defined and
established by legislative authority and when violative of
no constitutional principle, should be perpetuated by the
Courts.
6. GSIS vs. KAPISANAN ng mga Manggagawa sa GSIS
510 S 623
FACTS: A four day concerted demonstration, rallies and en masse
walkout was held in front of the GSIS main building in Pasay City.
The mass action participants were GSIS personnel, among them are
members of the herein KAPISANAN, a public sector union of GSIS
rank and file employees. Said mass action targets the herein
petitioner GARCIA and his management style.
On October 10, 2004 the manager of the GSIS Investigating Unit
issued a Memo directing 131 union and non-union members to show
cause why they should not be charged administratively for
participating in the rally. KAPISANAN’s counsel, Atty. Molina sought
reconsideration of the said memo on the ground that the subject
employees resumed work in obedience of the return to work issued.
However, the plea of reconsideration was denied by the filing, on
October 25 2004, of the administrative charges against some 110
KAPISANAN members for grave misconduct and conduct prejudicial
to the best interest of the service. KAPISANAN then filed a Petition
for Prohibition before the CA, on the grounds that:
1. Members should not be made to explain why they supported
their union’s cause
2. Petitioner Garcia blatantly disregarded Civil Service Reso
No. 021316 otherwise known as the Guidelines for
Prohibited Mass Action
Pending resolution of the petition for prohibition of the CA, the GSIS
Management proceeded with the investigation of the admin cases
which resolved 207 out of 278 cases, resulting to the exoneration of
20 respondent-employees, reprimand of 182 and suspension of 5.
On June 16 2005, the CA rendered the herein ASSAILED decision
holding that Garcia’s filing of admin charges against 361 of
KAPISANAN’s members is TANTAMOUNT to GRAVE ABUSE OF
DISCRETION which may be the proper subject of the writ of
prohibition. Unable to accept the above ruling, petitioner GARCIA
sought reconsideration, which was denied. Hence this petition.
ISSUE: Whether or not the right of public sector to form unions or
associations include right to strike?
HELD: Negative. Employees in the public service may not engage in
strikes or in concerted and unauthorized stoppage of work. The right
of government employees to organize is limited to the formation of
unions or associations, without including the right to strike. Fact
remains that the erring employees, instead of exploring non-crippling
activities during their free time, had taken a disruptive approach to
attain whatever it was they were specifically after. As events evolved,
they assembled in front of the GSIS main office building during office
hours and staged rallies and protests, and even tried to convince
others to join their cause, thus provoking work stoppage and service-
delivery disruption, the very evil sought to be forestalled by the
prohibition against strikes by government personnel.
7. City of San Pablo
8. ORTIG AS & CO., LIM ITED PARTENRSHIP
V. FEATI BANK AND TRUST CO. (1979)
Facts:
Ortigas & Co., Limited Partnership engaged in real estate
business developing and selling lots to the public particularly
Highway Hills subdivision along EDSA
· March 4, 1952 – Augusto Padilla y Angeles and Natividad
Angeles entered into separate agreements of sale on installments
over Lots 5 and 6 Block 31, Highway Hills
· July 19, 1962 – Augusto and Natividad transferred their rights
and interests in favor of Emma Chavez
o Transfer contained the following restrictions and stipulations:
§ For residential purposes only
§ All buildings and improvements (except fences) should use strong
building material, have modern sanitary installations connected to
the public sewer or own septic tank and shall not be more than 2
meters from the boundary lines
· Resolution 27 – Feb 4, 1960 – reclassified the western part of
EDSA (Shaw boulevard to Pasig River) as a commercial and
industrial zone
· Such restrictions were annotated on the TCTs
· July 23, 1962 - Feati bank bought Lot 5 from Emma
Chavez while lot 6 was purchased by Republic Flour Mills
· May 5, 1963 – Feati Bank began laying foundation and
construction of a building for banking purposes on lots 5 and 6
· Ortigas & Co. Demanded that they comply with the annotated
restrictions
Feati Bank refused arguing that it was following the zoning
regulations
Ortigas & Co. filed a case in the lower courts which held that
Resolution No. 27 was a valid exercise of police power of the
municipality hence the zoning is binding and takes precedence over
the annotations in the TCTs because “private interest should bow
down to general interest and welfare.”
· March 2, 1965 – motion for reconsideration by Ortigas & Co.
which was denied on March 26, 1965
· April 2, 1965 Ortigas filed notice of appeal which was given
due course on April 14, 1965 hence this case.
Issues:
WON Resolution No. 27 is a valid exercise of police power
WON Resolution No. 27 can nullify or supersede contractual
obligations by Feati Bank and Trust Co.
Held:
YES it is a valid exercise police power.
YES it can nullify contractual obligations by Feati with Ortigas & Co.
Ratio:
The validity of the resolution was never assailed in the lower
courts and can therefore not be raised for the first time on appeal
o The rule against flip flopping issues and arguments prevents
deception in courts
o Ortigas & Co. also did not dispute the factual findings of the
lower court on the validity of the resolution
· Assuming arguendo it was properly raised the resolution is still
valid
o RA 2264 (Local Autonomy Act) Sec 3 empowers municipalities to
adopt zoning and subdivision ordinances or regulations for the
municipality
o The resolution is regulatory measure!
o RA 2264 Sec 12 à any fair and reasonable doubt as to the
existence of the power should be interpreted in favor of the local
government and it shall be presumed to exist à this gives more
power to LGUs to promote general welfare, economic conditions,
social welfare and material progress in their locality
· The non-impairment clause of contracts is not absolute since it
must be reconciled with the legitimate exercise of police power
o when general welfare and private property rights clash, the
former must prevail through police powers of the state
· Lots 5 and 6 front EDSA and has become surrounded by
industrial and commercial complexes
o Development in the area has resulted in extreme noise and air
pollution that is not conducive to health, safety and welfare of the
would-be residents à justifies the usage by Feati Bank of the land for
more reasonable purposes

Decision: Affirmed

Dissenting: Abad Santos, J.

· Resolution 27 is valid because it has not yet been struck down
but it is not a legitimate exercise of police power because its means
(zoning) do not fit with its purpose of general welfare
· Zoning the area as industrial and commercial will contribute to
chaos, frenzy, pollution; noise which suffocates and causes the
deterioration of the ecology à Lowers quality of life for residents in
Metro Manila.