area a portion of Ortigas Avenue from Madison to
ORTIGAS & CO. LTD., v. THE COURT OF APPEALS
and ISMAEL G. MATHAY III
DECISION
QUISUMBING, J.:
This petition seeks to reverse the decision of the
Court of Appeals, dated March 25, 1996, in CA-G.R.
SP No. 39193, which nullified the writ of preliminary
injunction issued by the Regional Trial Court of Pasig
City, Branch 261, in Civil Case No. 64931. It also
assails the resolution of the appellate court, dated
August 13, 1996, denying petitioners motion for
reconsideration.
The facts of this case, as culled from the records, are
as follows:
On August 25, 1976, petitioner Ortigas & Company
sold to Emilia Hermoso, a parcel of land known as Lot
1, Block 21, Psd-66759, with an area of 1,508 square
meters, located in Greenhills Subdivision IV, San
Juan, Metro Manila, and covered by Transfer
Certificate of Title No. 0737. The contract of sale
provided that the lot:
1. (1) be used exclusivelyfor residential purposes only,
and not more than one single-family residential
building will be constructed thereon,
6. The BUYER shall not erectany sign or billboard on
the rooffor advertising purposes
11. No single-family residential building shall be
erecteduntil the building plans, specificationhave been
approved by the SELLER
14....restrictions shall run with the land and shall be
construed as real covenants until December 31, 2025
when they shall cease and terminate.
These and the other conditions were duly annotated
on the certificate of title issued to Emilia.
In 1981, the Metropolitan Manila Commission (now
Metropolitan Manila Development Authority) enacted
MMC Ordinance No. 81-01, also known as the
Comprehensive Zoning Area for the National Capital
Region. The ordinance reclassified as a commercial
Roosevelt Streets of Greenhills Subdivision where the
lot is located.
On June 8, 1984, private respondent Ismael Mathay III
leased the lot from Emilia Hermoso and J.P. Hermoso
Realty Corp.. The lease contract did not specify the
purposes of the lease. Thereupon, private respondent
constructed a single story commercial building for
Greenhills Autohaus, Inc., a car sales company.
On January 18, 1995, petitioner filed a complaint
against Emilia Hermoso with the Regional Trial Court
of Pasig, Branch 261. Docketed as Civil Case No.
64931, the complaint sought the demolition of the said
commercial structure for having violated the terms and
conditions of the Deed of Sale. Complainant prayed
for the issuance of a temporary restraining order and a
writ of preliminary injunction to prohibit petitioner from
constructing the commercial building and/or engaging
in commercial activity on the lot. The complaint was
later amended to implead Ismael G. Mathay III and
J.P. Hermoso Realty Corp., which has a ten percent
(10%) interest in the lot.
In his answer, Mathay III denied any knowledge of the
restrictions on the use of the lot and filed a croslaim
against the Hermosos.
On June 16, 1995, the trial court issued the writ of
preliminary injunction. On June 29, 1995, Mathay III
moved to set aside the injunctive order, but the trial
court denied the motion.
Mathay III then filed with the Court of Appeals a
special civil action for certiorari, docketed as CA-G.R.
SP No. 39193, ascribing to the trial court grave abuse
of discretion in issuing the writ of preliminary
injunction. He claimed that MMC Ordinance No. 81-01
classified the area where the lot was located as
commercial area and said ordinance must be read into
the August 25, 1976 Deed of Sale as a concrete
exercise of police power.
Ortigas and Company averred that inasmuch as the
restrictions on the use of the lot were duly annotated
on the title it issued to Emilia Hermoso, said
restrictions must prevail over the ordinance, specially
since these restrictions were agreed upon before the
passage of MMC Ordinance No. 81-01.
On March 25, 1996, the appellate court disposed of
the case as follows:
WHEREFORE, in light of the foregoing, the petition is
hereby GRANTED. The assailed orders are hereby
nullified and set aside. chanrobles virtual law library
SO ORDERED.[2
In finding for Mathay III, the Court of Appeals held that
the MMC Ordinance No. 81-01 effectively nullified the
restrictions allowing only residential use of the
property in question.
Ortigas seasonably moved for reconsideration, but the
appellate court denied it on August 13, 1996.
Hence, the instant petition.
In its Memorandum, petitioner now submits that the
principal issue in this case is whether respondent
Court of Appeals correctly set aside the Order dated
June 16, 1995 of the trial court which issued the writ of
preliminary injunction on the sole ground that MMC
Ordinance No. 81-01 nullified the building restriction
imposing exclusive residential use on the property in
question.[3 It also asserts that Mathay III lacks legal
capacity to question the validity of conditions of the
deed of sale; and he is barred by estoppel or waiver to
raise the same question like his principals, the
owners.4 Lastly, it avers that the appellate court
unaccountably failed to address several questions of
fact.
Principally, we must resolve the issue of whether the
Court of Appeals erred in holding that the trial court
committed grave abuse of discretion when it refused
to apply MMC Ordinance No.81-01 to Civil Case No.
64931.
But first, we must address petitioners allegation that
the Court of Appeals unaccountably failed to address
questions of fact. For basic is the rule that factual
issues may not be raised before this Court in a petition
for review and this Court is not duty-bound to consider
said questions.5 CA-G.R. SP No. 39193 was a special
civil action for certiorari, and the appellate court only
had to determine if the trial court committed grave
abuse of discretion amounting to want or excess of
jurisdiction in issuing the writ of preliminary injunction.
Thus, unless vital to our determination of the issue at
hand, we shall refrain from further consideration of
factual questions.
Petitioner contends that the appellate court erred in
limiting its decision to the cited zoning ordinance. It
avers that a contractual right is not automatically
discarded once a claim is made that it conflicts with
police power. Petitioner submits that the restrictive
clauses in the questioned contract is not in conflict
with the zoning ordinance. For one, according to
petitioner, the MMC Ordinance No. 81-01 did not
prohibit the construction of residential buildings.
Petitioner argues that even with the zoning ordinance,
the seller and buyer of the re-classified lot can
voluntarily agree to an exclusive residential use
thereof. Hence, petitioner concludes that the Court of
Appeals erred in holding that the condition imposing
exclusive residential use was effectively nullified by
the zoning ordinance.
In its turn, private respondent argues that the
appellate court correctly ruled that the trial court had
acted with grave abuse of discretion in refusing to
subject the contract to the MMC Ordinance No. 81-01.
He avers that the appellate court properly held the
police power superior to the non-impairment of
contract clause in the Constitution. He concludes that
the appellate court did not err in dissolving the writ of
preliminary injunction issued by the trial court in
excess of its jurisdiction.
We note that in issuing the disputed writ of preliminary
injunction, the trial court observed that the contract of
sale was entered into in August 1976, while the zoning
ordinance was enacted only in March 1981. The trial
court reasoned that since private respondent had
failed to show that MMC Ordinance No. 81-01 had
retroactive effect, said ordinance should be given
prospective application only,6 citing Co vs.
Intermediate Appellate Court, 162 SCRA 390 (1988).
In general, we agree that laws are to be construed as
having only prospective operation. Lex prospicit, non
respicit. Equally settled, only laws existing at the time
of the execution of a contract are applicable thereto
and not later statutes, unless the latter are specifically
intended to have retroactive effect.7 A later law which
enlarges, abridges, or in any manner changes the
intent of the parties to the contract necessarily impairs
the contract itself8 and cannot be given retroactive
effect without violating the constitutional prohibition
against impairment of contracts.
But, the foregoing principles do admit of certain
exceptions. One involves police power. A law enacted
in the exercise of police power to regulate or govern
certain activities or transactions could be given
retroactive effect and may reasonably impair vested
rights or contracts. Police power legislation is
applicable not only to future contracts, but equally to
those already in existence.10 Nonimpairment of
contracts or vested rights clauses will have to yield to
the superior and legitimate exercise by the State of
police power to promote the health, morals, peace,
education, good order, safety, and general welfare of
the people.[11 Moreover, statutes in exercise of valid
police power must be read into every contract.[12
Noteworthy, in Sangalang vs. Intermediate Appellate
Court,13 we already upheld MMC Ordinance No. 81-01
as a legitimate police power measure.
The trial courts reliance on the Co vs. IAC,14 is
misplaced. In Co, the disputed area was agricultural
and Ordinance No. 81-01 did not specifically provide
that it shall have retroactive effect so as to discontinue
all rights previously acquired over lands located within
the zone which are neither residential nor light
industrial in nature,[15 and stated with respect to
agricultural areas covered that the zoning ordinance
should be given prospective operation only.16 The area
in this case involves not agricultural but urban
residential land. Ordinance No. 81-01 retroactively
affected the operation of the zoning ordinance in
Greenhills by reclassifying certain locations therein as
commercial.
Following our ruling in Ortigas & Co., Ltd. vs. Feati
Bank & Trust Co., 94 SCRA 533 (1979), the
contractual stipulations annotated on the Torrens Title,
on which Ortigas relies, must yield to the ordinance.
When that stretch of Ortigas Avenue from Roosevelt
Street to Madison Street was reclassified as a
commercial zone by the Metropolitan Manila
Commission in March 1981, the restrictions in the
contract of sale between Ortigas and Hermoso,
limiting all construction on the disputed lot to
single-family residential buildings, were deemed
extinguished by the retroactive operation of the zoning
ordinance and could no longer be enforced. While our
legal system upholds the sanctity of contract so that a
contract is deemed law between the contracting
parties,17 nonetheless, stipulations in a contract cannot
contravene law, morals, good customs, public order, or
public policy.18 Otherwise such stipulations would be
deemed null and void. Respondent court correctly
found that the trial court committed in this case a
grave abuse of discretion amounting to want of or
excess of jurisdiction in refusing to treat Ordinance
No. 81-01 as applicable to Civil Case No. 64931. In
resolving matters in litigation, judges are not only
duty-bound to ascertain the facts and the applicable
laws,[19 they are also bound by their oath of office to
apply the applicable law.
As a secondary issue, petitioner contends that
respondent Mathay III, as a mere lessee of the lot in
question, is a total stranger to the deed of sale and is
thus barred from questioning the conditions of said
deed. Petitioner points out that the owners of the lot
voluntarily agreed to the restrictions on the use of the
lot and do not question the validity of these
restrictions. Petitioner argues that Mathay III as a
lessee is merely an agent of the owners, and could not
override and rise above the status of his principals.
Petitioner submits that he could not have a higher
interest than those of the owners, the Hermosos, and
thus had no locus standi to file CA-G.R. SP No. 39193
to dissolve the injunctive writ issued by the RTC of
Pasig City.
For his part, private respondent argues that as the
lessee who built the commercial structure, it is he and
he alone who stands to be either benefited or injured
by the results of the judgment in Civil Case No. 64931.
He avers he is the party with real interest in the
subject matter of the action, as it would be his
business, not the Hermosos, which would suffer had
not the respondent court dissolved the writ of
preliminary injunction.
A real party in interest is defined as the party who
stands to be benefited or injured by the judgment or
the party entitled to the avails of the suit. Interest
within the meaning of the rule means material interest,
an interest in issue and to be affected by the decree,
as distinguished from mere interest in the question
involved, or a mere incidental interest.21 By real
interest is meant a present substantial interest, as
distinguished from a mere expectancy or a future,
contingent, subordinate, or consequential interest.
Tested by the foregoing definition, private respondent
in this case is clearly a real party in interest. It is not
disputed that he is in possession of the lot pursuant to
a valid lease. He is a possessor in the concept of a
holder of the thing under Article 525 of the Civil
Code.[23 He was impleaded as a defendant in the
amended complaint in Civil Case No. 64931. Further,
what petitioner seeks to enjoin is the building by
respondent of a commercial structure on the lot.
Clearly, it is private respondents acts which are in
issue, and his interest in said issue cannot be a mere
incidental interest. In its amended complaint, petitioner
prayed for, among others, judgment ordering the
demolition of all improvements illegally built on the lot
in question.24 These show that it is petitioner Mathay
III, doing business as Greenhills Autohaus, Inc., and
not only the Hermosos, who will be adversely affected
by the courts decree.
Petitioner also cites the rule that a stranger to a
contract has no rights or obligations under it,25 and
thus has no standing to challenge its validity.26 But in
seeking to enforce the stipulations in the deed of sale,
petitioner impleaded private respondent as a
defendant. Thus petitioner must recognize that where
a plaintiff has impleaded a party as a defendant, he
cannot subsequently question the latters standing in
court.
WHEREFORE, the instant petition is DENIED. The
challenged decision of the Court of Appeals dated
March 25, 1996, as well as the assailed resolution of
August 13, 1996, in CA-G.R. SP No. 39193 is
AFFIRMED. Costs against petitioner.
SO ORDERED.
JAMES MIRASOL, RICHARD SANTIAGO, and
LUZON MOTORCYCLISTS FEDERATION, INC.,
Petitioners,
vs.
DEPARTMENT OF PUBLIC WORKS AND
HIGHWAYS and TOLL REGULATORY BOARD,
Respondents.
CARPIO, J.:
This petition for review on certiorari1 seeks to reverse
the Decision dated 10 March 2003 of the Regional
Trial Court, Branch 147, Makati City (RTC) in Civil
Case No. 01-034, as well as the RTC’s Order dated
16 June 2003 which denied petitioners’ Motion for
Reconsideration. Petitioners assert that Department of
Public Works and Highways’ (DPWH) Department
Order No. 74 (DO 74), Department Order No. 215 (DO
215), and the Revised Rules and Regulations on
Limited Access Facilities of the Toll Regulatory Board
(TRB) violate Republic Act No. 2000 (RA 2000) or the
Limited Access Highway Act. Petitioners also seek to
declare Department Order No. 123 (DO 123) and
Administrative Order No. 1 (AO 1)2 unconstitutional.
Antecedent Facts
The facts are not in dispute. As summarized by the
Solicitor General, the facts are as follows:
1. On January 10, 2001, petitioners filed before
the trial court a Petition for Declaratory
Judgment with Application for Temporary
Restraining Order and Injunction docketed as
Civil Case No. 01-034. The petition sought the
declaration of nullity of the following
administrative issuances for being inconsistent
with the provisions of Republic Act 2000,
entitled "Limited Access Highway Act" enacted
in 1957:
a. DPWH Administrative Order No. 1,
Series of 1968;
b. DPWH Department Order No. 74,
Series of 1993;
c. Art. II, Sec. 3(a) of the Revised Rules
on Limited Access Facilities
promulgated in 199[8] by the DPWH
thru the Toll Regulatory Board (TRB).
2. Previously, pursuant to its mandate under the trial court in its Order dated June 16,
R.A. 2000, DPWH issued on June 25, 1998 2003.3
Department Order (DO) No. 215 declaring the
Manila-Cavite (Coastal Road) Toll Expressway Hence, this petition.
as limited access facilities.
The RTC’s Ruling
3. Accordingly, petitioners filed an Amended
The dispositive portion of the RTC’s Decision dated 10
Petition on February 8, 2001 wherein
March 2003 reads:
petitioners sought the declaration of nullity of
the aforesaid administrative issuances.
WHEREFORE, [t]he Petition is denied/dismissed
Moreover, petitioners prayed for the issuance
insofar as petitioners seek to declare null and void ab
of a temporary restraining order and/or
initio DPWH Department Order No. 74, Series of
preliminary injunction to prevent the
1993, Administrative Order No. 1, and Art. II, Sec. 3(a)
enforcement of the total ban on motorcycles
of the Revised Rules on Limited Access Facilities
along the entire breadth of North and South
promulgated by the DPWH thru the TRB, the
Luzon Expressways and the Manila-Cavite
presumed validity thereof not having been overcome;
(Coastal Road) Toll Expressway under DO
but the petition is granted insofar as DPWH
215.
Department Order No. 123 is concerned, declaring the
same to be invalid for being violative of the equal
4. On June 28, 2001, the trial court, thru then
protection clause of the Constitution.
Presiding Judge Teofilo Guadiz, after due
hearing, issued an order granting petitioners’
SO ORDERED.4
application for preliminary injunction. On July
16, 2001, a writ of preliminary injunction was The Issues
issued by the trial court, conditioned upon
petitioners’ filing of cash bond in the amount of Petitioners seek a reversal and raise the following
P100,000.00, which petitioners subsequently issues for resolution:
complied with.
1. WHETHER THE RTC’S DECISION IS
5. On July 18, 2001, the DPWH acting thru the ALREADY BARRED BY RES JUDICATA;
TRB, issued Department Order No. 123
allowing motorcycles with engine displacement 2. WHETHER DO 74, DO 215 AND THE TRB
of 400 cubic centimeters inside limited access REGULATIONS CONTRAVENE RA 2000;
facilities (toll ways). AND

6. Upon the assumption of Honorable 3. WHETHER AO 1 AND DO 123 ARE

Presiding Judge Ma. Cristina Cornejo, both the
petitioners and respondents were required to
file their respective Memoranda. Petitioners
likewise filed [their] Supplemental
Memorandum. Thereafter, the case was
deemed submitted for decision.
7. Consequently, on March 10, 2003, the trial
court issued the assailed decision dismissing
the petition but declaring invalid DO 123.
Petitioners moved for a reconsideration of the
dismissal of their petition; but it was denied by
UNCONSTITUTIONAL.5
The Ruling of the Court
The petition is partly meritorious.
Whether the RTC’s Decision Dismissing Petitioners’
Case is Barred by Res Judicata
Petitioners rely on the RTC’s Order dated 28 June
2001, which granted their prayer for a writ of
preliminary injunction. Since respondents did not
appeal from that Order, petitioners argue that the
Order became "a final judgment" on the issues.
Petitioners conclude that the RTC erred when it
subsequently dismissed their petition in its Decision
dated 10 March 2003.
Petitioners are mistaken. As the RTC correctly stated,
the Order dated 28 June 2001 was not an adjudication
on the merits of the case that would trigger res
judicata. A preliminary injunction does not serve as a
final determination of the issues. It is a provisional
remedy, which merely serves to preserve the status
quo until the court could hear the merits of the case.6
Thus, Section 9 of Rule 58 of the 1997 Rules of Civil
Procedure requires the issuance of a final injunction to
confirm the preliminary injunction should the court
during trial determine that the acts complained of
deserve to be permanently enjoined. A preliminary
injunction is a mere adjunct, an ancillary remedy which
exists only as an incident of the main proceeding.7
Validity of DO 74, DO 215 and the TRB Regulations
Petitioners claim that DO 74,8 DO 215,9 and the TRB’s
Rules and Regulations issued under them violate the
provisions of RA 2000. They contend that the two
issuances unduly expanded the power of the DPWH in
Section 4 of RA 2000 to regulate toll ways. Petitioners
assert that the DPWH’s regulatory authority is limited
to acts like redesigning curbings or central dividing
sections. They claim that the DPWH is only allowed to
re-design the physical structure of toll ways, and not to
determine "who or what can be qualified as toll way
users."10
Section 4 of RA 200011 reads:
SEC. 4. Design of limited access facility. — The
Department of Public Works and Communications is
authorized to so design any limited access facility and
to so regulate, restrict, or prohibit access as to best
serve the traffic for which such facility is intended; and
its determination of such design shall be final. In this
connection, it is authorized to divide and separate any
limited access facility into separate roadways by the
construction of raised curbings, central dividing
sections, or other physical separations, or by
designating such separate roadways by signs,
markers, stripes, and the proper lane for such traffic
by appropriate signs, markers, stripes and other
devices. No person, shall have any right of ingress or
egress to, from or across limited access facilities to or
from abutting lands, except at such designated points
at which access may be permitted, upon such terms
and conditions as may be specified from time to time.
(Emphasis supplied)
On 19 February 1968, Secretary Antonio V. Raquiza
of the Department of Public Works and
Communications issued AO 1, which, among others,
prohibited motorcycles on limited access highways.
The pertinent provisions of AO 1 read:
SUBJECT: Revised Rules and Regulations Governing
Limited Access Highways
By virtue of the authority granted the Secretary [of]
Public Works and Communications under Section 3 of
R.A. 2000, otherwise known as the Limited Access
Highway Act, the following rules and regulations
governing limited access highways are hereby
promulgated for the guidance of all concerned:
xxxx
Section 3 – On limited access highways, it is unlawful
for any person or group of persons to:
xxxx
(h) Drive any bicycle, tricycle, pedicab, motorcycle or
any vehicle (not motorized);
x x x x12 (Emphasis supplied)
On 5 April 1993, Acting Secretary Edmundo V. Mir of
the Department of Public Works and Highways issued
DO 74:
SUBJECT: Declaration of the North Luzon
Expressway from Balintawak to Tabang and the South
Luzon Expressway from Nichols to Alabang as Limited
Access Facilities
Pursuant to Section 2 of Republic Act No. 2000, a
limited access facility is defined as "a highway or
street especially designed for through traffic, and over,
from, or to which owners or occupants of abutting land
or other persons have no right or easement or only a
limited right or easement of access, light, air or view
by reason of the fact that their proper[t]y abuts upon
such limited access facility or for any other reason.
Such highways or streets may be parkways, from
which trucks, buses, and other commerical [sic]
vehicles shall be excluded; or they may be free ways
open to use by all customary forms of street and
highway traffic."
Section 3 of the same Act authorizes the Department
of Public Works and Communications (now
Department of Public Works and Highways) "to plan,
designate, establish, regulate, vacate, alter, improve,
maintain, and provide limited access facilities for
public use wherever it is of the opinion that traffic
conditions, present or future, will justify such special
facilities."
Therefore, by virtue of the authority granted above, the
Department of Public Works and Highways hereby
designates and declares the Balintawak to Tabang
Sections of the North Luzon Expressway, and the
Nichols to Alabang Sections of the South Luzon
Expressways, to be LIMITED ACCESS
HIGHWAYS/FACILITIES subject to such rules and
regulations that may be imposed by the DPWH thru
the Toll Regulatory Board (TRB).
In view thereof, the National Capital Region (NCR) of
this Department is hereby ordered, after consultation
with the TRB and in coordination with the Philippine
National Police (PNP), to close all illegal openings
along the said Limited Access Highways/Facilities. In
this connection, the NCR is instructed to organize its
own enforcement and security group for the purpose
of assuring the continued closure of the right-of-way
fences and the implementation of the rules and
regulations that may be imposed by the DPWH thru
the TRB.
This Order shall take effect immediately.13
On 25 June 1998, then DPWH Secretary Gregorio R.
Vigilar issued DO 215:
SUBJECT: Declaration of the R-1 Expressway, from
Seaside drive to Zapote, C-5 Link Expressway, from
Zapote to Noveleta, of the Manila Cavite Toll
Expressway as Limited Access Facility.
Pursuant to Section 2 of Republic Act No. 2000, a
limited access facility is defined as "a highway or
street especially designed for through traffic, and over,
from, or to which owners or occupants of abutting land
or other persons have no right or easement or only a
limited right or easement of access, light, air or view
by reason of the fact that their property abuts upon
such limited access facility or for any other reason.
Such highways or streets may be parkways, from
which trucks, buses, and other commercial vehicles
shall be excluded; or they may be free ways open to
use by all customary forms of street and highway
traffic."
Section 3 of the same Act authorizes the Department
of Public Works and Communications (now
Department of Public Works and Highways) "to plan,
designate, establish, regulate, vacate, alter, improve,
maintain, and provide limited access facilities for
public use wherever it is of the opinion that traffic
conditions, present or future, will justify such special
facilities."
Therefore, by virtue of the authority granted above, the
Department of Public Works and Highways hereby
designates and declares the R-1 Expressway, C-5
Link Expressway and the R-1 Extension Expressway
Sections of the Manila Cavite Toll Expressway to be
LIMITED ACCESS HIGHWAYS/FACILITIES subject to
such rules and regulations that may be imposed by
the DPWH thru the Toll Regulatory Board (TRB).
In view thereof, the National Capital Region (NCR) of
this Department is hereby ordered, after consultation
with the TRB and in coordination with the Philippine
National Police (PNP), to close all illegal openings
along the said Limited Access Highways/Facilities. In
this connection, the NCR is instructed to organize its
own enforcement and security group for the purpose
of assuring the continued closure of the right-of-way
fences and the implementation of the rules and
regulations that may be imposed by the DPWH thru
the TRB.
This Order shall take effect immediately.14
The RTC held that Section 4 of RA 2000 expressly
authorized the DPWH to design limited access
facilities and to regulate, restrict, or prohibit access as
to serve the traffic for which such facilities are
intended. According to the RTC, such authority to
regulate, restrict, or prohibit logically includes the
determination of who and what can and cannot be
permitted entry or access into the limited access
facilities. Thus, the RTC concluded that AO 1, DO 74,
and the Revised Rules and Regulations on Limited
Access Facilities, which ban motorcycles’ entry or
access to the limited access facilities, are not
inconsistent with RA 2000.
RA 2000, otherwise known as the Limited Access
Highway Act, was approved on 22 June 1957. Section
4 of RA 2000 provides that "[t]he Department of Public
Works and Communications is authorized to so design
any limited access facility and to so regulate, restrict,
or prohibit access as to best serve the traffic for which
such facility is intended." The RTC construed this
authorization to regulate, restrict, or prohibit access to
limited access facilities to apply to the Department of
Public Works and Highways (DPWH).
The RTC’s ruling is based on a wrong premise. The
RTC assumed that the DPWH derived its authority
from its predecessor, the Department of Public Works
and Communications, which is expressly authorized to
regulate, restrict, or prohibit access to limited access
facilities under Section 4 of RA 2000. However, such
assumption fails to consider the evolution of the
Department of Public Works and Communications.
Under Act No. 2711, otherwise known as the Revised
Administrative Code, approved on 10 March 1917,
there were only seven executive departments, namely:
the Department of the Interior, the Department of
Finance, the Department of Justice, the Department of
Agriculture and Commerce, the Department of Public
Works and Communications, the Department of Public
Instruction, and the Department of Labor.15 On 20
June 1964, Republic Act No. 413616 created the Land
Transportation Commission under the Department of
Public Works and Communications. Later, the
Department of Public Works and Communications was
restructured into the Department of Public Works,
Transportation and Communications.
On 16 May 1974, Presidential Decree No. 458 (PD
458) separated the Bureau of Public Highways from
the Department of Public Works, Transportation and
Communications and created it as a department to be
known as Department of Public Highways. Under
Section 3 of PD 458, the Department of Public
Highways is "responsible for developing and
implementing programs on the construction and
maintenance of roads, bridges and airport runways."
With the amendment of the 1973 Philippine
Constitution in 1976, resulting in the shift in the form of
government, national agencies were renamed from
Departments to Ministries. Thus, the Department of
Public Works, Transportation and Communications
became the Ministry of Public Works, Transportation
and Communications.
On 23 July 1979, then President Ferdinand E. Marcos
issued Executive Order No. 546 (EO 546), creating a
Ministry of Public Works and a Ministry of
Transportation and Communications.17 Under Section
1 of EO 546, the Ministry of Public Works assumed
the public works functions of the Ministry of Public
Works, Transportation and Communications. The
functions of the Ministry of Public Works were the
"construction, maintenance and repair of port works,
harbor facilities, lighthouses, navigational aids, shore
protection works, airport buildings and associated
facilities, public buildings and school buildings,
monuments and other related structures, as well as
undertaking harbor and river dredging works,
reclamation of foreshore and swampland areas, water
supply, and flood control and drainage works."18
On the other hand, the Ministry of Transportation and
Communications became the "primary policy,
planning, programming, coordinating, implementing,
regulating and administrative entity of the executive
branch of the government in the promotion,
development, and regulation of a dependable and
coordinated network of transportation and
communication systems." 19
The functions of the
Ministry of Transportation and Communications were:
a. Coordinate and supervise all activities of the
Ministry relative to transportation and
communications;
b. Formulate and recommend national policies
and guidelines for the preparation and
implementation of an integrated and
comprehensive transportation and
communications system at the national,
regional and local levels;
 c. Establish and administer comprehensive
and integrated programs for transportation and
communication, and for this purpose, may call
on any agency, corporation, or organization,
whether government or private, whose
development programs include transportation
and communications as an integral part to
participate and assist in the preparation and
implementation of such programs;
d. Regulate, whenever necessary, activities
relative to transportation and communications
and prescribe and collect fees in the exercise
of such power;
e. Assess, review and provide direction to
transportation and communications research
and development programs of the government
in coordination with other institutions
concerned; and
f. Perform such other functions as may be
necessary to carry into effect the provisions of
this Executive Order.20 (Emphasis supplied)
On 27 July 1981, then President Marcos issued
Executive Order No. 710 (EO 710), which merged the
Ministry of Public Works and the Ministry of Public
Highways for "greater simplicity and economy in
operations."21 The restructured agency became known
as the Ministry of Public Works and Highways. Under
Section 1 of EO 710 the functions of the Ministry of
Public Works and the Ministry of Public Highways22
were transferred to the Ministry of Public Works and
Highways.
Upon the ratification of the 1987 Constitution in
February 1987, the former Ministry of Public Works
and Highways became the Department of Public
Works and Highways (DPWH) and the former Ministry
of Transportation and Communications became the
Department of Transportation and Communications
(DOTC).
DPWH issued DO 74 and DO 215 declaring certain
expressways as limited access facilities on 5 April
1993 and 25 June 1998, respectively. Later, the TRB,
under the DPWH, issued the Revised Rules and
Regulations on Limited Access Facilities. However, on
23 July 1979, long before these department orders
and regulations were issued, the Ministry of Public
Works, Transportation and Communications was
divided into two agencies – the Ministry of Public
Works and the Ministry of Transportation and
Communications – by virtue of EO 546. The question
is, which of these two agencies is now authorized to
regulate, restrict, or prohibit access to limited access
facilities?23
Under Section 1 of EO 546, the Ministry of Public
Works (now DPWH) assumed the public works
functions of the Ministry of Public Works,
Transportation and Communications. On the other
hand, among the functions of the Ministry of
Transportation and Communications (now Department
of Transportation and Communications [DOTC]) were
to (1) formulate and recommend national policies and
guidelines for the preparation and implementation of
an integrated and comprehensive transportation and
communications systems at the national, regional, and
local levels; and (2) regulate, whenever necessary,
activities relative to transportation and
communications and prescribe and collect fees in the
exercise of such power. Clearly, under EO 546, it is
the DOTC, not the DPWH, which has authority to
regulate, restrict, or prohibit access to limited access
facilities.
Even under Executive Order No. 125 (EO 125)24 and
Executive Order No. 125-A (EO 125-A),25 which
further reorganized the DOTC, the authority to
administer and enforce all laws, rules and regulations
relative to transportation is clearly with the DOTC.26
Thus, DO 74 and DO 215 are void because the
DPWH has no authority to declare certain
expressways as limited access facilities. Under the
law, it is the DOTC which is authorized to administer
and enforce all laws, rules and regulations in the field
of transportation and to regulate related activities.
Since the DPWH has no authority to regulate activities
relative to transportation, the TRB27 cannot derive its
power from the DPWH to issue regulations governing
limited access facilities. The DPWH cannot delegate a
power or function which it does not possess in the first
place. Since DO 74 and DO 215 are void, it follows
that the rules implementing them are likewise void.
Whether AO 1 and DO 123 are Unconstitutional
DPWH Secretary Simeon A. Datumanong issued DO
123 on 18 July 2001. DO 123 reads in part:
SUBJECT: Revised Rules and Regulations Governing
Limited Access Highways
By virtue of the authority granted the Secretary of
Public Works and Highways under Section 3 of R.A.
2000, otherwise known as the Limited Access
Highway Act, the following revised rules and
regulations governing limited access highways are
hereby promulgated for the guidance of all concerned:
1. Administrative Order No. 1 dated February 19,
1968, issued by the Secretary of the then Department
of Public Works and Communications, is hereby
amended by deleting the word "motorcycles"
mentioned in Section 3(h) thereof. Therefore,
motorcycles are hereby allowed to operate inside the
toll roads and limited access highways, subject to the
following:
a. Motorcycles shall have an engine displacement of
at least 400 cubic centimeters (cc) provided that:
x x x x28 (Emphasis supplied)
The RTC’s Decision dated 10 March 2003 declared
DO 123 unconstitutional on the ground that it violates
the equal protection clause by allowing only
motorcycles with at least 400 cubic centimeters engine
displacement to use the toll ways. The RTC reasoned
that the creation of a distinction within the class of
motorcycles was not based on real differences.
We need not pass upon the constitutionality of the
classification of motorcycles under DO 123. As
previously discussed, the DPWH has no authority to
regulate limited access highways since EO 546 has
devolved this function to the DOTC. Thus, DO 123 is
void for want of authority of the DPWH to promulgate
it.
On the other hand, the assailed portion of AO 1 states:
Section 3. On limited access highways, it is unlawful
for any person or group of persons to:
xxxx
(h) Drive any bicycle, tricycle, pedicab, motorcycle or
any vehicle (not motorized);
xxxx
Petitioners assail the DPWH’s failure to provide
"scientific" and "objective" data on the danger of
having motorcycles plying our highways. They attack
this exercise of police power as baseless and
unwarranted. Petitioners belabor the fact that there
are studies that provide proof that motorcycles are
safe modes of transport. They also claim that AO 1
introduces an unreasonable classification by
singling-out motorcycles from other motorized modes
of transport. Finally, petitioners argue that AO 1
violates their right to travel.
Petitioners’ arguments do not convince us.
We emphasize that the Secretary of the Department of
Public Works and Communications issued AO 1 on 19
February 1968.
Section 3 of RA 200029 authorized the issuance of the
guidelines. In contrast, DPWH issued DO 74, DO 215
and DO 123 after EO 546 devolved to the DOTC the
authority to regulate limited access highways.
We now discuss the constitutionality of AO 1.
Administrative issuances have the force and effect of
law.30 They benefit from the same presumption of
validity and constitutionality enjoyed by statutes.31
These two precepts place a heavy burden upon any
party assailing governmental regulations. The burden
of proving unconstitutionality rests on such party.32
The burden becomes heavier when the police power
is at issue.
The use of public highways by motor vehicles is
subject to regulation as an exercise of the police
power of the state.33 The police power is far-reaching
in scope and is the "most essential, insistent and
illimitable" of all government powers.34 The tendency
is to extend rather than to restrict the use of police
power. The sole standard in measuring its exercise is
reasonableness.35 What is "reasonable" is not subject
to exact definition or scientific formulation. No
all-embracing test of reasonableness exists,36 for its
determination rests upon human judgment applied to
the facts and circumstances of each particular case.37
We find that AO 1 does not impose unreasonable
restrictions. It merely outlines several precautionary
measures, to which toll way users must adhere. These
rules were designed to ensure public safety and the
uninhibited flow of traffic within limited access
facilities. They cover several subjects, from what lanes
should be used by a certain vehicle, to maximum
vehicle height. The prohibition of certain types of
vehicles is but one of these. None of these rules
violates reason. The purpose of these rules and the
logic behind them are quite evident. A toll way is not
an ordinary road. The special purpose for which a toll
way is constructed necessitates the imposition of
guidelines in the manner of its use and operation.
Inevitably, such rules will restrict certain rights. But the
mere fact that certain rights are restricted does not
invalidate the rules.
Consider Section 3(g) of AO 1, which prohibits the
conduct of rallies inside toll ways.38 The regulation
affects the right to peaceably assemble. The exercise
of police power involves restriction, restriction being
implicit in the power itself. Thus, the test of
constitutionality of a police power measure is limited to
an inquiry on whether the restriction imposed on
constitutional rights is reasonable, and not whether it
imposes a restriction on those rights.
None of the rules outlined in AO 1 strikes us as
arbitrary and capricious. The DPWH, through the
Solicitor General, maintains that the toll ways were not
designed to accommodate motorcycles and that their
presence in the toll ways will compromise safety and
traffic considerations. The DPWH points out that the
same study the petitioners rely on cites that the
inability of other drivers to detect motorcycles is the
predominant cause of accidents.39 Arguably,
prohibiting the use of motorcycles in toll ways may not
be the "best" measure to ensure the safety and
comfort of those who ply the toll ways.
However, the means by which the government
chooses to act is not judged in terms of what is "best,"
rather, on simply whether the act is reasonable. The
validity of a police power measure does not depend
upon the absolute assurance that the purpose desired
can in fact be probably fully accomplished, or upon the
certainty that it will best serve the purpose intended.40
Reason, not scientific exactitude, is the measure of
the validity of the governmental regulation. Arguments
based on what is "best" are arguments reserved for
the Legislature’s discussion. Judicial intervention in
such matters will only be warranted if the assailed
regulation is patently whimsical. We do not find the
situation in this case to be so.
Neither do we find AO 1 oppressive. Petitioners are
not being deprived of their right to use the limited
access facility. They are merely being required, just
like the rest of the public, to adhere to the rules on
how to use the facility. AO 1 does not infringe upon
petitioners’ right to travel but merely bars motorcycles,
bicycles, tricycles, pedicabs, and any non-
motorized vehicles as the mode of traveling along
limited access highways.41 Several cheap, accessible
and practical alternative modes of transport are open
to petitioners. There is nothing oppressive in being
required to take a bus or drive a car instead of one’s
scooter, bicycle, calesa, or motorcycle upon using a
toll way.
Petitioners’ reliance on the studies they gathered is
misplaced. Police power does not rely upon the
existence of definitive studies to support its use.
Indeed, no requirement exists that the exercise of
police power must first be conclusively justified by
research. The yardstick has always been simply
whether the government’s act is reasonable and not
oppressive.42 The use of "reason" in this sense is
simply meant to guard against arbitrary and capricious
government action. Scientific certainty and
conclusiveness, though desirable, may not be
demanded in every situation. Otherwise, no
government will be able to act in situations demanding
the exercise of its residual powers because it will be
tied up conducting studies.
A police power measure may be assailed upon proof
that it unduly violates constitutional limitations like due
process and equal protection of the law.43 Petitioners’
attempt to seek redress from the motorcycle ban
under the aegis of equal protection must fail.
Petitioners’ contention that AO 1 unreasonably singles
out motorcycles is specious. To begin with,
classification by itself is not prohibited.44
A classification can only be assailed if it is deemed
invidious, that is, it is not based on real or substantial
differences. As explained by Chief Justice Fernando in
Bautista v. Juinio:45
x x x To assure that the general welfare be promoted,
which is the end of law, a regulatory measure may cut
into the rights to liberty and property. Those adversely
affected may under such circumstances invoked the
equal protection clause only if they can show that the
governmental act assailed, far from being inspired by
the attainment of the common weal was prompted by
the spirit of hostility, or at the very least, discrimination
that finds no support in reason. It suffices then that the
laws operate equally and uniformly on all persons
under similar circumstances or that all persons must
be treated in the same manner, the conditions not
being different, both in the privileges conferred and the
liabilities imposed. Favoritism and undue preference
cannot be allowed. For the principle is that equal
protection and security shall be given to every person
under circumstances, which if not identical is
analogous. If law be looked upon in terms of burden or
charges, those that fall within a class should be
treated in the same fashion, whatever restrictions cast
on some in the group equally binding the rest.
We find that it is neither warranted nor reasonable for
petitioners to say that the only justifiable classification
among modes of transport is the motorized against the
non-motorized. Not all motorized vehicles are created
equal. A 16-wheeler truck is substantially different
from other light vehicles. The first may be denied
access to some roads where the latter are free to
drive. Old vehicles may be reasonably differentiated
from newer models.46 We find that real and substantial
differences exist between a motorcycle and other
forms of transport sufficient to justify its classification
among those prohibited from plying the toll ways.
Amongst all types of motorized transport, it is obvious,
even to a child, that a motorcycle is quite different
from a car, a bus or a truck. The most obvious and
troubling difference would be that a two-wheeled
vehicle is less stable and more easily overturned than
a four-wheeled vehicle.
A classification based on practical convenience and
common knowledge is not unconstitutional simply
because it may lack purely theoretical or scientific
uniformity. Moreover, we take note that the Philippines
is home to a host of unique motorized modes of
transport ranging from modified hand-carts (kuliglig) to
bicycle "sidecars" outfitted with a motor. To follow
petitioners’ argument to its logical conclusion would
open up toll ways to all these contraptions. Both safety
and traffic considerations militate against any ruling
that would bring about such a nightmare.
Petitioners complain that the prohibition on the use of
motorcycles in toll ways unduly deprive them of their
right to travel.
We are not persuaded.
A toll way is not an ordinary road. As a facility
designed to promote the fastest access to certain
destinations, its use, operation, and maintenance
require close regulation. Public interest and safety
require the imposition of certain restrictions on toll
ways that do not apply to ordinary roads. As a special
kind of road, it is but reasonable that not all forms of
transport could use it.
The right to travel does not mean the right to choose
any vehicle in traversing a toll way. The right to travel
refers to the right to move from one place to another.
Petitioners can traverse the toll way any time they
choose using private or public four-wheeled vehicles.
Petitioners are not denied the right to move from Point
A to Point B along the toll way. Petitioners are free to
access the toll way, much as the rest of the public can.
The mode by which petitioners wish to travel pertains
to the manner of using the toll way, a subject that can
be validly limited by regulation.
Petitioners themselves admit that alternative routes
are available to them. Their complaint is that these
routes are not the safest and most convenient. Even if
their claim is true, it hardly qualifies as an undue
curtailment of their freedom of movement and travel.
The right to travel does not entitle a person to the best
form of transport or to the most convenient route to his
destination. The obstructions found in normal streets,
which petitioners complain of (i.e., potholes,
manholes, construction barriers, etc.), are not suffered
by them alone.
Finally, petitioners assert that their possession of a
driver’s license from the Land Transportation Office
(LTO) and the fact that their vehicles are registered
with that office entitle them to use all kinds of roads in
the country. Again, petitioners are mistaken. There
exists no absolute right to drive. On the contrary, this
privilege, is heavily regulated. Only a qualified group is
allowed to drive motor vehicles: those who pass the
tests administered by the LTO. A driver’s license
issued by the LTO merely allows one to drive a
particular mode of transport. It is not a license to drive
or operate any form of transportation on any type of
road. Vehicle registration in the LTO on the other hand
merely signifies the roadworthiness of a vehicle. This
does not preclude the government from prescribing
which roads are accessible to certain vehicles.
WHEREFORE, we PARTLY GRANT the petition. We
MODIFY the Decision dated 10 March 2003 of the
Regional Trial Court, Branch 147, Makati City and its
Order dated 16 June 2003 in Civil Case No. 01-034.
We declare VOID Department Order Nos. 74, 215,
and 123 of the Department of Public Works and
Highways, and the Revised Rules and Regulations on
Limited Access Facilities of the Toll Regulatory Board.
We declare VALID Administrative Order No. 1 of the
Department of Public Works and Communications.
SO ORDERED.
CARLOS SUPERDRUG CORP., doing business
under the name and style "Carlos Superdrug,"
ELSIE M. CANO, doing business under the name
and style "Advance Drug," Dr. SIMPLICIO L. YAP,
JR., doing business under the name and style
"City Pharmacy," MELVIN S. DELA SERNA, doing
business under the name and style "Botica dela
Serna," and LEYTE SERV-WELL CORP., doing
business under the name and style "Leyte
Serv-Well Drugstore," petitioners,
vs.
DEPARTMENT OF SOCIAL WELFARE and
DEVELOPMENT (DSWD), DEPARTMENT OF
HEALTH (DOH), DEPARTMENT OF FINANCE
(DOF), DEPARTMENT OF JUSTICE (DOJ), and
DEPARTMENT OF INTERIOR and LOCAL
GOVERNMENT (DILG), respondents.
DECISION
AZCUNA, J.:
This is a petition1 for Prohibition with Prayer for
Preliminary Injunction assailing the constitutionality of
Section 4(a) of Republic Act (R.A.) No. 9257,2
otherwise known as the "Expanded Senior Citizens
Act of 2003."
Petitioners are domestic corporations and proprietors
operating drugstores in the Philippines.
Public respondents, on the other hand, include the
Department of Social Welfare and Development
(DSWD), the Department of Health (DOH), the
Department of Finance (DOF), the Department of
Justice (DOJ), and the Department of Interior and
Local Government (DILG) which have been
specifically tasked to monitor the drugstores’
compliance with the law; promulgate the implementing
rules and regulations for the effective implementation
of the law; and prosecute and revoke the licenses of
erring drugstore establishments.
The antecedents are as follows:
On February 26, 2004, R.A. No. 9257, amending R.A.
No. 7432,3 was signed into law by President Gloria
Macapagal-Arroyo and it became effective on March
21, 2004. Section 4(a) of the Act states:
SEC. 4. Privileges for the Senior Citizens. – The
senior citizens shall be entitled to the following:
(a) the grant of twenty percent (20%) discount from all
establishments relative to the utilization of services in
hotels and similar lodging establishments, restaurants
and recreation centers, and purchase of medicines in
all establishments for the exclusive use or enjoyment
of senior citizens, including funeral and burial services
for the death of senior citizens;
...
The establishment may claim the discounts granted
under (a), (f), (g) and (h) as tax deduction based on
the net cost of the goods sold or services rendered:
Provided, That the cost of the discount shall be
allowed as deduction from gross income for the same
taxable year that the discount is granted. Provided,
further, That the total amount of the claimed tax
deduction net of value added tax if applicable, shall be
included in their gross sales receipts for tax purposes
and shall be subject to proper documentation and to
the provisions of the National Internal Revenue Code,
as amended.4
On May 28, 2004, the DSWD approved and adopted
the Implementing Rules and Regulations of R.A. No.
9257, Rule VI, Article 8 of which states:
Article 8. Tax Deduction of Establishments. – The
establishment may claim the discounts granted under
Rule V, Section 4 – Discounts for Establishments;5
Section 9, Medical and Dental Services in Private
Facilities[,]6 and Sections 107 and 118 – Air, Sea and
Land Transportation as tax deduction based on the
net cost of the goods sold or services rendered.
Provided, That the cost of the discount shall be
allowed as deduction from gross income for the same
taxable year that the discount is granted; Provided,
further, That the total amount of the claimed tax
deduction net of value added tax if applicable, shall be
included in their gross sales receipts for tax purposes
and shall be subject to proper documentation and to
the provisions of the National Internal Revenue Code,
as amended; Provided, finally, that the implementation
of the tax deduction shall be subject to the Revenue
Regulations to be issued by the Bureau of Internal
Revenue (BIR) and approved by the Department of
Finance (DOF).9
On July 10, 2004, in reference to the query of the Drug
Stores Association of the Philippines (DSAP)
concerning the meaning of a tax deduction under the
Expanded Senior Citizens Act, the DOF, through
Director IV Ma. Lourdes B. Recente, clarified as
follows:
1) The difference between the Tax Credit (under the
Old Senior Citizens Act) and Tax Deduction (under the
Expanded Senior Citizens Act).
1.1. The provision of Section 4 of R.A. No. 7432 (the
old Senior Citizens Act) grants twenty percent (20%)
discount from all establishments relative to the
utilization of transportation services, hotels and similar
lodging establishment, restaurants and recreation
centers and purchase of medicines anywhere in the
country, the costs of which may be claimed by the
private establishments concerned as tax credit.
Effectively, a tax credit is a peso-for-peso deduction
from a taxpayer’s tax liability due to the government of
the amount of discounts such establishment has
granted to a senior citizen. The establishment
recovers the full amount of discount given to a senior
citizen and hence, the government shoulders 100% of
the discounts granted.
It must be noted, however, that conceptually, a tax
credit scheme under the Philippine tax system,
necessitates that prior payments of taxes have been
made and the taxpayer is attempting to recover this
tax payment from his/her income tax due. The tax
credit scheme under R.A. No. 7432 is, therefore,
inapplicable since no tax payments have previously
occurred.
1.2. The provision under R.A. No. 9257, on the other
hand, provides that the establishment concerned may
claim the discounts under Section 4(a), (f), (g) and (h)
as tax deduction from gross income, based on the net
cost of goods sold or services rendered.
Under this scheme, the establishment concerned is
allowed to deduct from gross income, in computing for
its tax liability, the amount of discounts granted to
senior citizens. Effectively, the government loses in
terms of foregone revenues an amount equivalent to
the marginal tax rate the said establishment is liable to
pay the government. This will be an amount equivalent
to 32% of the twenty percent (20%) discounts so
granted. The establishment shoulders the remaining
portion of the granted discounts.
It may be necessary to note that while the burden on
[the] government is slightly diminished in terms of its
percentage share on the discounts granted to senior
citizens, the number of potential establishments that
may claim tax deductions, have however, been
broadened. Aside from the establishments that may
claim tax credits under the old law, more
establishments were added under the new law such
as: establishments providing medical and dental
services, diagnostic and laboratory services, including
professional fees of attending doctors in all private
hospitals and medical facilities, operators of domestic
air and sea transport services, public railways and
skyways and bus transport services.
A simple illustration might help amplify the points
discussed above, as follows:
Tax Deduction Tax Credit
Gross Sales x x x x x x x x x x x x
Less : Cost of goods sold x x x x x x x x x x
Net Sales x x x x x x x x x x x x
Less: Operating Expenses:
Tax Deduction on Discounts x x x x --
Other deductions: x x x x x x x x
Net Taxable Income x x x x x x x x x x
Tax Due x x x x x x
Less: Tax Credit -- ______x x
Net Tax Due -- x x
As shown above, under a tax deduction scheme, the
tax deduction on discounts was subtracted from Net
Sales together with other deductions which are
considered as operating expenses before the Tax Due
was computed based on the Net Taxable Income. On
the other hand, under a tax credit scheme, the amount
of discounts which is the tax credit item, was deducted
directly from the tax due amount.10
Meanwhile, on October 1, 2004, Administrative Order
(A.O.) No. 171 or the Policies and Guidelines to
Implement the Relevant Provisions of Republic Act
9257, otherwise known as the "Expanded Senior
Citizens Act of 2003"11 was issued by the DOH,
providing the grant of twenty percent (20%) discount in
the purchase of unbranded generic medicines from all
establishments dispensing medicines for the exclusive
use of the senior citizens.
On November 12, 2004, the DOH issued
Administrative Order No 17712 amending A.O. No.
171. Under A.O. No. 177, the twenty percent discount
shall not be limited to the purchase of unbranded
generic medicines only, but shall extend to both
prescription and non-prescription medicines whether
branded or generic. Thus, it stated that "[t]he grant of
twenty percent (20%) discount shall be provided in the
purchase of medicines from all establishments
dispensing medicines for the exclusive use of the
senior citizens."
Petitioners assail the constitutionality of Section 4(a)
of the Expanded Senior Citizens Act based on the
following grounds:13
1) The law is confiscatory because it infringes Art. III,
Sec. 9 of the Constitution which provides that private
property shall not be taken for public use without just
compensation;
2) It violates the equal protection clause (Art. III, Sec.
1) enshrined in our Constitution which states that "no
person shall be deprived of life, liberty or property
without due process of law, nor shall any person be
denied of the equal protection of the laws;" and
3) The 20% discount on medicines violates the
constitutional guarantee in Article XIII, Section 11 that
makes "essential goods, health and other social
services available to all people at affordable cost."14
Petitioners assert that Section 4(a) of the law is
unconstitutional because it constitutes deprivation of
private property. Compelling drugstore owners and
establishments to grant the discount will result in a
loss of profit
and capital because 1) drugstores impose a mark-up
of only 5% to 10% on branded medicines; and 2) the
law failed to provide a scheme whereby drugstores will
be justly compensated for the discount.
Examining petitioners’ arguments, it is apparent that
what petitioners are ultimately questioning is the
validity of the tax deduction scheme as a
reimbursement mechanism for the twenty percent
(20%) discount that they extend to senior citizens.
Based on the afore-stated DOF Opinion, the tax
deduction scheme does not fully reimburse petitioners
for the discount privilege accorded to senior citizens.
This is because the discount is treated as a deduction,
a tax-deductible expense that is subtracted from the
gross income and results in a lower taxable income.
Stated otherwise, it is an amount that is allowed by
law15 to reduce the income prior to the application of
the tax rate to compute the amount of tax which is
due.16 Being a tax deduction, the discount does not
reduce taxes owed on a peso for peso basis but
merely offers a fractional reduction in taxes owed.
Theoretically, the treatment of the discount as a
deduction reduces the net income of the private
establishments concerned. The discounts given would
have entered the coffers and formed part of the gross
sales of the private establishments, were it not for R.A.
No. 9257.
The permanent reduction in their total revenues is a
forced subsidy corresponding to the taking of private
property for public use or benefit.17 This constitutes
compensable taking for which petitioners would
ordinarily become entitled to a just compensation.
Just compensation is defined as the full and fair
equivalent of the property taken from its owner by the
expropriator. The measure is not the taker’s gain but
the owner’s loss. The word just is used to intensify the
meaning of the word compensation, and to convey the
idea that the equivalent to be rendered for the property
to be taken shall be real, substantial, full and ample.18
A tax deduction does not offer full reimbursement of
the senior citizen discount. As such, it would not meet
the definition of just compensation.19
Having said that, this raises the question of whether
the State, in promoting the health and welfare of a
special group of citizens, can impose upon private
establishments the burden of partly subsidizing a
government program.
The Court believes so.
The Senior Citizens Act was enacted primarily to
maximize the contribution of senior citizens to
nation-building, and to grant benefits and privileges to
them for their improvement and well-being as the
State considers them an integral part of our society.20
The priority given to senior citizens finds its basis in
the Constitution as set forth in the law itself. Thus, the
Act provides:
SEC. 2. Republic Act No. 7432 is hereby amended to
read as follows:
SECTION 1. Declaration of Policies and Objectives. –
Pursuant to Article XV, Section 4 of the Constitution, it
is the duty of the family to take care of its elderly
members while the State may design programs of
social security for them. In addition to this, Section 10
in the Declaration of Principles and State Policies
provides: "The State shall provide social justice in all
phases of national development." Further, Article XIII,
Section 11, provides: "The State shall adopt an
integrated and comprehensive approach to health
development which shall endeavor to make essential
goods, health and other social services available to all
the people at affordable cost. There shall be priority
for the needs of the underprivileged sick, elderly,
disabled, women and children." Consonant with these
constitutional principles the following are the declared
policies of this Act:
...
(f) To recognize the important role of the private sector
in the improvement of the welfare of senior citizens
and to actively seek their partnership.21
To implement the above policy, the law grants a twenty
percent discount to senior citizens for medical and
dental services, and diagnostic and laboratory fees;
admission fees charged by theaters, concert halls,
circuses, carnivals, and other similar places of culture,
leisure and amusement; fares for domestic land, air
and sea travel; utilization of services in hotels and
similar lodging establishments, restaurants and
recreation centers; and purchases of medicines for the
exclusive use or enjoyment of senior citizens. As a
form of reimbursement, the law provides that business
establishments extending the twenty percent discount
to senior citizens may claim the discount as a tax
deduction.
The law is a legitimate exercise of police power which,
similar to the power of eminent domain, has general
welfare for its object. Police power is not capable of an
exact definition, but has been purposely veiled in
general terms to underscore its comprehensiveness to
meet all exigencies and provide enough room for an
efficient and flexible response to conditions and
circumstances, thus assuring the greatest benefits. 22
Accordingly, it has been described as "the most
essential, insistent and the least limitable of powers,
extending as it does to all the great public needs."23 It
is "[t]he power vested in the legislature by the
constitution to make, ordain, and establish all manner
of wholesome and reasonable laws, statutes, and
ordinances, either with penalties or without, not
repugnant to the constitution, as they shall judge to be
for the good and welfare of the commonwealth, and of
the subjects of the same."24
For this reason, when the conditions so demand as
determined by the legislature, property rights must
bow to the primacy of police power because property
rights, though sheltered by due process, must yield to
general welfare.25
Police power as an attribute to promote the common
good would be diluted considerably if on the mere plea
of petitioners that they will suffer loss of earnings and
capital, the questioned provision is invalidated.
Moreover, in the absence of evidence demonstrating
the alleged confiscatory effect of the provision in
question, there is no basis for its nullification in view of
the presumption of validity which every law has in its
favor.26
Given these, it is incorrect for petitioners to insist that
the grant of the senior citizen discount is unduly
oppressive to their business, because petitioners have
not taken time to calculate correctly and come up with
a financial report, so that they have not been able to
show properly whether or not the tax deduction
scheme really works greatly to their disadvantage.27
In treating the discount as a tax deduction, petitioners
insist that they will incur losses because, referring to
the DOF Opinion, for every ₱1.00 senior citizen
discount that petitioners would give, ₱0.68 will be
shouldered by them as only ₱0.32 will be refunded by
the government by way of a tax deduction.
To illustrate this point, petitioner Carlos Super Drug
cited the anti-hypertensive maintenance drug Norvasc
as an example. According to the latter, it acquires
Norvasc from the distributors at ₱37.57 per tablet, and
retails it at ₱39.60 (or at a margin of 5%). If it grants a
20% discount to senior citizens or an amount
equivalent to ₱7.92, then it would have to sell Norvasc
at ₱31.68 which translates to a loss from capital of
₱5.89 per tablet. Even if the government will allow a
tax deduction, only ₱2.53 per tablet will be refunded
and not the full amount of the discount which is ₱7.92.
In short, only 32% of the 20% discount will be
reimbursed to the drugstores.28
Petitioners’ computation is flawed. For purposes of
reimbursement, the law states that the cost of the
discount shall be deducted from gross income,29 the
amount of income derived from all sources before
deducting allowable expenses, which will result in net
income. Here, petitioners tried to show a loss on a per
transaction basis, which should not be the case. An
income statement, showing an accounting of
petitioners’ sales, expenses, and net profit (or loss) for
a given period could have accurately reflected the
effect of the discount on their income. Absent any
financial statement, petitioners cannot substantiate
their claim that they will be operating at a loss should
they give the discount. In addition, the computation
was erroneously based on the assumption that their
customers consisted wholly of senior citizens. Lastly,
the 32% tax rate is to be imposed on income, not on SO ORDERED.
the amount of the discount.
DEPARTMENT OF EDUCATION, CULTURE
Furthermore, it is unfair for petitioners to criticize the AND SPORTS (DECS) and DIRECTOR OF
law because they cannot raise the prices of their CENTER FOR EDUCATIONAL
medicines given the cutthroat nature of the players in
MEASUREMENT, petitioners,
the industry. It is a business decision on the part of
petitioners to peg the mark-up at 5%. Selling the vs.
medicines below acquisition cost, as alleged by
petitioners, is merely a result of this decision. ROBERTO REY C. SAN DIEGO and JUDGE
Inasmuch as pricing is a property right, petitioners TERESITA DIZON-CAPULONG, in her capacity
cannot reproach the law for being oppressive, simply
as Presiding Judge of the Regional Trial Court
because they cannot afford to raise their prices for
of Valenzuela, Metro Manila, Branch 172,
fear of losing their customers to competition.
respondents.
The Court is not oblivious of the retail side of the
pharmaceutical industry and the competitive pricing CRUZ, J.:
component of the business. While the Constitution
protects property rights, petitioners must accept the
The issue before us is mediocrity. The question is
realities of business and the State, in the exercise of whether a person who has thrice failed the
police power, can intervene in the operations of a National Medical Admission Test (NMAT) is
business which may result in an impairment of entitled to take it again.
property rights in the process.
The petitioner contends he may not, under its rule
Moreover, the right to property has a social dimension. that-
While Article XIII of the Constitution provides the
precept for the protection of property, various laws and h) A student shall be allowed only
jurisprudence, particularly on agrarian reform and the three (3) chances to take the NMAT.
regulation of contracts and public utilities, continuously After three (3) successive failures, a
serve as a reminder that the right to property can be student shall not be allowed to take
relinquished upon the command of the State for the
the NMAT for the fourth time.
promotion of public good.30
The private respondent insists he can, on
Undeniably, the success of the senior citizens program
rests largely on the support imparted by petitioners
constitutional grounds.
and the other private establishments concerned. This
But first the facts.
being the case, the means employed in invoking the
active participation of the private sector, in order to
The private respondent is a graduate of the
achieve the purpose or objective of the law, is
University of the East with a degree of Bachelor
reasonably and directly related. Without sufficient
proof that Section 4(a) of R.A. No. 9257 is arbitrary,
of Science in Zoology. The petitioner claims that
and that the continued implementation of the same he took the NMAT three times and flunked it as
would be unconscionably detrimental to petitioners, many times.1 When he applied to take it again,
the Court will refrain from quashing a legislative act.31 the petitioner rejected his application on the basis
of the aforesaid rule. He then went to the
WHEREFORE, the petition is DISMISSED for lack of Regional Trial Court of Valenzuela, Metro Manila,
merit.
to compel his admission to the test.
No costs.
In his original petition for mandamus, he first
invoked his constitutional rights to academic
freedom and quality education. By agreement of
the parties, the private respondent was allowed to
take the NMAT scheduled on April 16, 1989,
subject to the outcome of his petition. 2 In an
amended petition filed with leave of court, he
squarely challenged the constitutionality of MECS
Order No. 12, Series of 1972, containing the
above-cited rule. The additional grounds raised
were due process and equal protection.
After hearing, the respondent judge rendered a
decision on July 4, 1989, declaring the challenged
order invalid and granting the petition. Judge
Teresita Dizon-Capulong held that the petitioner
had been deprived of his right to pursue a
medical education through an arbitrary exercise of
the police power. 3
We cannot sustain the respondent judge. Her
decision must be reversed.
In Tablarin v. Gutierrez, 4 this Court upheld the
constitutionality of the NMAT as a measure
intended to limit the admission to medical schools
only to those who have initially proved their
competence and preparation for a medical
education. Justice Florentino P. Feliciano
declared for a unanimous Court:
Perhaps the only issue that needs
some consideration is whether there
is some reasonable relation
between the prescribing of passing
the NMAT as a condition for
admission to medical school on the
one hand, and the securing of the
health and safety of the general
community, on the other hand. This
question is perhaps most usefully
approached by recalling that the
regulation of the pratice of medicine
in all its branches has long been
recognized as a reasonable method
of protecting the health and safety of
the public. That the power to
regulate and control the practice of
medicine includes the power to
regulate admission to the ranks of
those authorized to practice
medicine, is also well recognized.
Thus, legislation and administrative
regulations requiring those who wish
to practice medicine first to take and
pass medical board examinations
have long ago been recognized as
valid exercises of governmental
power. Similarly, the establishment
of minimum medical educational
requirements-i.e., the completion of
prescribed courses in a recognized
medical school-for admission to the
medical profession, has also been
sustained as a legitimate exercise of
the regulatory authority of the state.
What we have before us in the
instant case is closely related: the
regulation of access to medical
schools. MECS Order No. 52, s.
1985, as noted earlier, articulates
the rationale of regulation of this
type: the improvement of the
professional and technical quality of
the graduates of medical schools,
by upgrading the quality of those
admitted to the student body of the
medical schools. That upgrading is
sought by selectivity in the process
of admission, selectivity consisting,
among other things, of limiting
admission to those who exhibit in
the required degree the aptitude for
medical studies and eventually for
medical practice. The need to
maintain, and the difficulties of
maintaining, high standards in our
professional schools in general, and
medical schools in particular, in the
 current state of our social and
economic development, are widely
known.
We believe that the government is
entitled to prescribe an admission
test like the NMAT as a means of
achieving its stated objective of
"upgrading the selection of
applicants into [our] medical
schools" and of "improv[ing] the
quality of medical education in the
country." Given the widespread use
today of such admission tests in, for
instance, medical schools in the
United States of America (the
Medical College Admission Test
[MCAT] and quite probably, in other
countries with far more developed
educational resources than our own,
and taking into account the failure or
inability of the petitioners to even
attempt to prove otherwise, we are
entitled to hold that the NMAT is
reasonably related to the securing of
the ultimate end of legislation and
regulation in this area. That end, it is
useful to recall, is the protection of
the public from the potentially
deadly effects of incompetence and
ignorance in those who would
undertake to treat our bodies and
minds for disease or trauma.
However, the respondent judge agreed with the
petitioner that the said case was not applicable.
Her reason was that it upheld only the
requirement for the admission test and said
nothing about the so-called "three-flunk rule."
We see no reason why the rationale in the
Tablarin case cannot apply to the case at bar. The
issue raised in both cases is the academic
preparation of the applicant. This may be gauged
at least initially by the admission test and, indeed
with more reliability, by the three-flunk rule. The
latter cannot be regarded any less valid than the
former in the regulation of the medical profession.
There is no need to redefine here the police
power of the State. Suffice it to repeat that the
power is validly exercised if (a) the interests of the
public generally, as distinguished from those of a
particular class, require the interference of the
State, and (b) the means employed are
reasonably necessary to the attainment of the
object sought to be accomplished and not unduly
oppressive upon individuals.5
In other words, the proper exercise of the police
power requires the concurrence of a lawful
subject and a lawful method.
The subject of the challenged regulation is
certainly within the ambit of the police power. It is
the right and indeed the responsibility of the State
to insure that the medical profession is not
infiltrated by incompetents to whom patients may
unwarily entrust their lives and health.
The method employed by the challenged
regulation is not irrelevant to the purpose of the
law nor is it arbitrary or oppressive. The
three-flunk rule is intended to insulate the medical
schools and ultimately the medical profession
from the intrusion of those not qualified to be
doctors.
While every person is entitled to aspire to be a
doctor, he does not have a constitutional right to
be a doctor. This is true of any other calling in
which the public interest is involved; and the
closer the link, the longer the bridge to one's
ambition. The State has the responsibility to
harness its human resources and to see to it that
they are not dissipated or, no less worse, not
used at all. These resources must be applied in a
manner that will best promote the common good
while also giving the individual a sense of
satisfaction.
A person cannot insist on being a physician if he
will be a menace to his patients. If one who wants
to be a lawyer may prove better as a plumber, he
should be so advised and adviced. Of course, he
may not be forced to be a plumber, but on the
other hand he may not force his entry into the bar.
By the same token, a student who has
demonstrated promise as a pianist cannot be
shunted aside to take a course in nursing,
however appropriate this career may be for
others.
The right to quality education invoked by the
private respondent is not absolute. The
Constitution also provides that "every citizen has
the right to choose a profession or course of
study, subject to fair, reasonable and equitable
admission and academic requirements.6
The private respondent must yield to the
challenged rule and give way to those better
prepared. Where even those who have qualified
may still not be accommodated in our already
crowded medical schools, there is all the more
reason to bar those who, like him, have been
tested and found wanting.
The contention that the challenged rule violates
the equal protection clause is not well-taken. A
law does not have to operate with equal force on
all persons or things to be conformable to Article
III, Section 1 of the Constitution.
There can be no question that a substantial
distinction exists between medical students and
other students who are not subjected to the
NMAT and the three-flunk rule. The medical
profession directly affects the very lives of the
people, unlike other careers which, for this
reason, do not require more vigilant regulation.
The accountant, for example, while belonging to
an equally respectable profession, does not hold
the same delicate responsibility as that of the
physician and so need not be similarly treated.
There would be unequal protection if some
applicants who have passed the tests are
admitted and others who have also qualified are
denied entrance. In other words, what the equal
protection requires is equality among equals.
The Court feels that it is not enough to simply
invoke the right to quality education as a
guarantee of the Constitution: one must show that
he is entitled to it because of his preparation and
promise. The private respondent has failed the
NMAT five times. 7 While his persistence is
noteworthy, to say the least, it is certainly
misplaced, like a hopeless love.
No depreciation is intended or made against the
private respondent. It is stressed that a person
who does not qualify in the NMAT is not an
absolute incompetent unfit for any work or
occupation. The only inference is that he is a
probably better, not for the medical profession,
but for another calling that has not excited his
interest.
In the former, he may be a bungler or at least
lackluster; in the latter, he is more likely to
succeed and may even be outstanding. It is for
the appropriate calling that he is entitled to quality
education for the full harnessing of his potentials
and the sharpening of his latent talents toward
what may even be a brilliant future.
We cannot have a society of square pegs in
round holes, of dentists who should never have
left the farm and engineers who should have
studied banking and teachers who could be better
as merchants.
It is time indeed that the State took decisive steps
to regulate and enrich our system of education by
directing the student to the course for which he is
best suited as determined by initial tests and
evaluations. Otherwise, we may be "swamped
with mediocrity," in the words of Justice Holmes,
not because we are lacking in intelligence but
because we are a nation of misfits.
WHEREFORE, the petition is GRANTED. The
decision of the respondent court dated January
13, 1989, is REVERSED, with costs against the
private respondent. It is so ordered.
PRC vs. DE GUZMAN
TINGA, J.:
This petition for review under Rule 45 of the 1997
Rules of Civil Procedure seeks to nullify the Decision,1
dated May 16, 2000, of the Court of Appeals in
CA-G.R. SP No. 37283. The appellate court affirmed
the judgment2 dated December 19, 1994, of the
Regional Trial Court (RTC) of Manila, Branch 52, in
Civil Case No. 93-66530. The trial court allowed the
respondents to take their physician’s oath and to
register as duly licensed physicians. Equally
challenged is the Resolution3 promulgated on August
25, 2000 of the Court of Appeals, denying petitioners’
Motion for Reconsideration.
The facts of this case are as follows:
The respondents are all graduates of the
Fatima College of Medicine, Valenzuela City,
Metro Manila. They passed the Physician
Licensure Examination conducted in February
1993 by the Board of Medicine (Board).
Petitioner Professional Regulation Commission
(PRC) then released their names as successful
examinees in the medical licensure
examination.
Shortly thereafter, the Board observed that the
grades of the seventy-nine successful
examinees from Fatima College in the two
most difficult subjects in the medical licensure
exam, Biochemistry (Bio-Chem) and Obstetrics
and Gynecology (OB-Gyne), were unusually
and exceptionally high. Eleven Fatima
examinees scored 100% in Bio-Chem and ten
got 100% in OB-Gyne, another eleven got 99%
in Bio-Chem, and twenty-one scored 99% in
OB-Gyne. The Board also observed that many
of those who passed from Fatima got marks of
95% or better in both subjects, and no one got
a mark lower than 90%. A comparison of the
performances of the candidates from other
schools was made. The Board observed that
strangely, the unusually high ratings were true
only for Fatima College examinees. It was a
record-breaking phenomenon in the history of
the Physician Licensure Examination.
On June 7, 1993, the Board issued Resolution No. 19,
withholding the registration as physicians of all the
examinees from the Fatima College of Medicine.4 The
PRC asked the National Bureau of Investigation (NBI)
to investigate whether any anomaly or irregularity
marred the February 1993 Physician Licensure
Examination.
Prior to the NBI investigation, the Board requested Fr.
Bienvenido F. Nebres, S.J., an expert mathematician
and authority in statistics, and later president of the
Ateneo de Manila University, to conduct a statistical
analysis of the results in Bio-Chem and Ob-Gyne of
the said examination.
On June 10, 1993, Fr. Nebres submitted his report. He
reported that a comparison of the scores in Bio-Chem
and Ob-Gyne, of the Fatima College examinees with
those of examinees from De La Salle University and
Perpetual Help College of Medicine showed that the
scores of Fatima College examinees were not only
incredibly high but unusually clustered close to each
other. He concluded that there must be some unusual
reason creating the clustering of scores in the two
subjects. It must be a cause "strong enough to
eliminate the normal variations that one should expect
from the examinees [of Fatima College] in terms of
talent, effort, energy, etc."5
For its part, the NBI found that "the questionable
passing rate of Fatima examinees in the [1993]
Physician Examination leads to the conclusion that the
Fatima examinees gained early access to the test
questions."6
On July 5, 1993, respondents Arlene V. De Guzman,
Violeta V. Meneses, Celerina S. Navarro, Jose
Ramoncito P. Navarro, Arnel V. Herrera, and
Geraldine Elizabeth M. Pagilagan (Arlene V. De
Guzman et al., for brevity) filed a special civil action for
mandamus, with prayer for preliminary mandatory
injunction docketed as Civil Case No. 93-66530 with
the Regional Trial Court (RTC) of Manila, Branch 52.
Their petition was adopted by the other respondents
as intervenors.
Meanwhile, the Board issued Resolution No. 26, dated
July 21, 1993, charging respondents with "immorality,
dishonest conduct, fraud, and deceit" in connection
with the Bio-Chem and Ob-Gyne examinations. It
recommended that the test results of the Fatima
examinees be nullified. The case was docketed as
Adm. Case No. 1687 by the PRC.
On July 28, 1993, the RTC issued an Order in Civil
Case No. 93-66530 granting the preliminary
mandatory injunction sought by the respondents. It
ordered the petitioners to administer the physician’s
oath to Arlene V. De Guzman et al., and enter their
names in the rolls of the PRC.
The petitioners then filed a special civil action for
certiorari with the Court of Appeals to set aside the
mandatory injunctive writ, docketed as CA-G.R. SP
No. 31701.
On October 21, 1993, the appellate court decided
CA-G.R. SP No. 31701, with the dispositive portion of
the Decision ordaining as follows:
WHEREFORE, this petition is GRANTED.
Accordingly, the writ of preliminary mandatory
injunction issued by the lower court against
petitioners is hereby nullified and set aside.
SO ORDERED.7
Arlene V. de Guzman, et al., then elevated the
foregoing Decision to this Court in G.R. No. 112315. In
our Resolution dated May 23, 1994, we denied the
petition for failure to show reversible error on the part
of the appellate court.
Meanwhile, on November 22, 1993, during the
pendency of the instant petition, the pre-trial
conference in Civil Case No. 93-66530 was held.
Then, the parties, agreed to reduce the testimonies of
their respective witnesses to sworn
questions-and-answers. This was without prejudice to
cross-examination by the opposing counsel.
On December 13, 1993, petitioners’ counsel failed to
appear at the trial in the mistaken belief that the trial
was set for December 15. The trial court then ruled
that petitioners waived their right to cross-examine the
witnesses.
On January 27, 1994, counsel for petitioners filed a
Manifestation and Motion stating the reasons for her
non-appearance and praying that the
cross-examination of the witnesses for the opposing
parties be reset. The trial court denied the motion for
lack of notice to adverse counsel. It also denied the
Motion for Reconsideration that followed on the
ground that adverse counsel was notified less than
three (3) days prior to the hearing.
Meanwhile, to prevent the PRC and the Board from
proceeding with Adm. Case No. 1687, the
respondents herein moved for the issuance of a
restraining order, which the lower court granted in its
Order dated April 4, 1994.
The petitioners then filed with this Court a petition for
certiorari docketed as G.R. No. 115704, to annul the
Orders of the trial court dated November 13, 1993,
February 28, 1994, and April 4, 1994. We referred the
petition to the Court of Appeals where it was docketed
as CA-G.R. SP No. 34506.
On August 31, 1994, the appellate court decided
CA-G.R. SP No. 34506 as follows:
WHEREFORE, the present petition for
certiorari with prayer for temporary restraining
order/preliminary injunction is GRANTED and
the Orders of December 13, 1993, February 7,
1994, February 28, 1994, and April 4, 1994 of
the RTC-Manila, Branch 52, and all further
proceedings taken by it in Special Civil Action
No. 93-66530 are hereby DECLARED NULL
and VOID. The said RTC-Manila is ordered to
allow petitioners’ counsel to cross-examine the
respondents’ witnesses, to allow petitioners to
present their evidence in due course of trial,
and thereafter to decide the case on the merits
 on the basis of the evidence of the parties.
Costs against respondents.
IT IS SO ORDERED.8
The trial was then set and notices were sent to the
parties.
A day before the first hearing, on September 22, 1994,
the petitioners filed an Urgent Ex-Parte Manifestation
and Motion praying for the partial reconsideration of
the appellate court’s decision in CA-G.R. SP No.
34506, and for the outright dismissal of Civil Case No.
93-66530. The petitioners asked for the suspension of
the proceedings.
In its Order dated September 23, 1994, the trial court
granted the aforesaid motion, cancelled the scheduled
hearing dates, and reset the proceedings to October
21 and 28, 1994.
Meanwhile, on October 25, 1994, the Court of Appeals
denied the partial motion for reconsideration in
CA-G.R. SP No. 34506. Thus, petitioners filed with the
Supreme Court a petition for review docketed as G.R.
No. 117817, entitled Professional Regulation
Commission, et al. v. Court of Appeals, et al.
On November 11, 1994, counsel for the petitioners
failed to appear at the trial of Civil Case No. 93-66530.
Upon motion of the respondents herein, the trial court
ruled that herein petitioners waived their right to
cross-examine the herein respondents. Trial was reset
to November 28, 1994.
On November 25, 1994, petitioners’ counsel moved
for the inhibition of the trial court judge for alleged
partiality. On November 28, 1994, the day the Motion
to Inhibit was to be heard, petitioners failed to appear.
Thus, the trial court denied the Motion to Inhibit and
declared Civil Case No. 93-66530 deemed submitted
for decision.
On December 19, 1994, the trial court handed down
its judgment in Civil Case No. 93-66530, the fallo of
which reads:
WHEREFORE, judgment is rendered ordering
the respondents to allow the petitioners and
intervenors (except those with asterisks and
footnotes in pages 1 & 2 of this decision) [sic],9
to take the physician’s oath and to register
them as physicians.
It should be made clear that this decision is
without prejudice to any administrative
disciplinary action which may be taken against
any of the petitioners for such causes and in
the manner provided by law and consistent
with the requirements of the Constitution as
any other professionals.
No costs.
SO ORDERED.10
As a result of these developments, petitioners filed
with this Court a petition for review on certiorari
docketed as G.R. No. 118437, entitled Professional
Regulation Commission v. Hon. David G. Nitafan,
praying inter alia, that (1) G.R. No. 118437 be
consolidated with G.R. No. 117817; (2) the decision of
the Court of Appeals dated August 31, 1994 in
CA-G.R. SP No. 34506 be nullified for its failure to
decree the dismissal of Civil Case No. 93-66530, and
in the alternative, to set aside the decision of the trial
court in Civil Case No. 93-66530, order the trial court
judge to inhibit himself, and Civil Case No. 93-66530
be re-raffled to another branch.
On December 26, 1994, the petitioners herein filed
their Notice of Appeal11 in Civil Case No. 93-66530,
thereby elevating the case to the Court of Appeals,
where it was docketed as CA-G.R. SP No. 37283.
In our Resolution of June 7, 1995, G.R. No. 118437
was consolidated with G.R. No. 117817.
On July 9, 1998, we disposed of G.R. Nos. 117817
and 118437 in this wise:
WHEREFORE, the petition in G.R. No. 117817
is DISMISSED for being moot. The petition in
G.R. No. 118437 is likewise DISMISSED on
the ground that there is a pending appeal
before the Court of Appeals. Assistant Solicitor
General Amparo M. Cabotaje-Tang is advised
to be more circumspect in her dealings with the
 courts as a repetition of the same or similar
acts will be dealt with accordingly.
SO ORDERED.12
While CA-G.R. SP No. 37283 was awaiting disposition
by the appellate court, Arnel V. Herrera, one of the
original petitioners in Civil Case No. 93-66530, joined
by twenty-seven intervenors, to wit: Fernando F.
Mandapat, Ophelia C. Hidalgo, Bernadette T.
Mendoza, Ruby B. Lantin-Tan, Fernando T. Cruz,
Marissa A. Regodon, Ma. Eloisa Q. Mallari-Largoza,
Cheryl R. Triguero, Joseph A. Jao, Bernadette H.
Cabuhat, Evelyn S. Acosta-Cabanes, Laura M.
Santos, Maritel M. Echiverri, Bernadette C. Escusa,
Carlosito C. Domingo, Alicia S. Lizano, Elnora R.
Raqueno-Rabaino, Saibzur N. Edding, Derileen D.
Dorado-Edding, Robert B. Sanchez, Maria Rosario L.
Leonor-Lacandula, Geraldine Elizabeth M.
Pagilagan-Palma, Margarita Belinda L.
Vicencio-Gamilla, Herminigilda E. Conejos, Leuvina P.
Chico-Paguio, Elcin C. Arriola-Ocampo, and Jose
Ramoncito P. Navarro, manifested that they were no
longer interested in proceeding with the case and
moved for its dismissal. A similar manifestation and
motion was later filed by intervenors Mary Jean I.
Yeban-Merlan, Michael L. Serrano, Norma G.
Lafavilla, Arnulfo A. Salvador, Belinda C. Rabara,
Yolanda P. Unica, Dayminda G. Bontuyan, Clarissa B.
Baclig, Ma. Luisa S. Gutierrez, Rhoneil R.
Deveraturda, Aleli A. Gollayan, Evelyn C. Cundangan,
Frederick D. Francisco, Violeta V. Meneses, Melita J.
Cañedo, Clarisa SJ. Nicolas, Federico L. Castillo,
Karangalan D. Serrano, Danilo A. Villaver, Grace E.
Uy, Lydia C. Chan, and Melvin M. Usita. The Court of
Appeals ruled that its decision in CA-G.R. SP No.
37283 would not apply to them.
On May 16, 2000, the Court of Appeals decided
CA-G.R. SP No. 37283, with the following fallo, to wit:
WHEREFORE, finding no reversible error in
the decision appealed from, We hereby
AFFIRM the same and DISMISS the instant
appeal.
No pronouncement as to costs.
SO ORDERED.13
In sustaining the trial court’s decision, the appellate
court ratiocinated that the respondents complied with
all the statutory requirements for admission into the
licensure examination for physicians in February 1993.
They all passed the said examination. Having fulfilled
the requirements of Republic Act No. 2382,14 they
should be allowed to take their oaths as physicians
and be registered in the rolls of the PRC.
Hence, this petition raising the following issues:
I
WHETHER OR NOT RESPONDENTS HAVE
A VALID CAUSE OF ACTION FOR
MANDAMUS AGAINST PETITIONERS IN
THE LIGHT OF THE RESOLUTION OF THIS
HONORABLE COURT IN G.R. NO. 112315
AFFIRMING THE COURT OF APPEALS’
DECISION DECLARING THAT IF EVER
THERE IS SOME DOUBT AS TO THE
MORAL FITNESS OF EXAMINEES, THE
ISSUANCE OF LICENSE TO PRACTICE
MEDICINE IS NOT AUTOMATICALLY
GRANTED TO THE SUCCESSFUL
EXAMINEES.
II
WHETHER OR NOT THE PETITION FOR
MANDAMUS COULD PROCEED DESPITE
THE PENDENCY OF ADMINISTRATIVE
CASE NO. 1687, WHICH WAS PRECISELY
LODGED TO DETERMINE THE MORAL
FITNESS OF RESPONDENTS TO BECOME
DOCTORS.15
To our mind, the only issue is: Did the Court of
Appeals commit a reversible error of law in sustaining
the judgment of the trial court that respondents are
entitled to a writ of mandamus?
The petitioners submit that a writ of mandamus will not
lie in this case. They point out that for a writ of
mandamus to issue, the applicant must have a
well-defined, clear and certain legal right to the thing
demanded and it is the duty of the respondent to
perform the act required. Thus, mandamus may be
availed of only when the duty sought to be performed
is a ministerial and not a discretionary one. The
petitioners argue that the appellate court’s decision in
CA-G.R. SP No. 37283 upholding the decision of the
trial court in Civil Case No. 93-66530 overlooked its
own pronouncement in CA-G.R. SP No. 31701. The
Court of Appeals held in CA-G.R. SP No. 31701 that
the issuance of a license to engage in the practice of
medicine becomes discretionary on the PRC if there
exists some doubt that the successful examinee has
not fully met the requirements of the law. The
petitioners stress that this Court’s Resolution dated
May 24, 1994 in G.R. No. 112315 held that there was
no showing "that the Court of Appeals had committed
any reversible error in rendering the questioned
judgment" in CA-G.R. SP No. 31701. The petitioners
point out that our Resolution in G.R. No. 112315 has
long become final and executory.
Respondents counter that having passed the 1993
licensure examinations for physicians, the petitioners
have the obligation to administer to them the oath as
physicians and to issue their certificates of registration
as physicians pursuant to Section 2016 of Rep. Act No.
2382. The Court of Appeals in CA-G.R. SP No. 37283,
found that respondents complied with all the
requirements of Rep. Act No. 2382. Furthermore,
respondents were admitted by the Medical Board to
the licensure examinations and had passed the same.
Hence, pursuant to Section 20 of Rep. Act No. 2382,
the petitioners had the obligation to administer their
oaths as physicians and register them.
Mandamus is a command issuing from a court of
competent jurisdiction, in the name of the state or the
sovereign, directed to some inferior court, tribunal, or
board, or to some corporation or person requiring the
performance of a particular duty therein specified,
which duty results from the official station of the party
to whom the writ is directed, or from operation of law.17
Section 3 of Rule 6518 of the 1997 Rules of Civil
Procedure outlines two situations when a writ of
mandamus may issue, when any tribunal, corporation,
board, officer or person unlawfully (1) neglects the
performance of an act which the law specifically
enjoins as a duty resulting from an office, trust, or
station; or (2) excludes another from the use and
enjoyment of a right or office to which the other is
entitled.
We shall discuss the issues successively.
1. On The Existence of a Duty of the Board of
Medicine To Issue Certificates of Registration as
Physicians under Rep. Act No. 2382.
For mandamus to prosper, there must be a showing
that the officer, board, or official concerned, has a
clear legal duty, not involving discretion.19 Moreover,
there must be statutory authority for the performance
of the act,20 and the performance of the duty has been
refused.21 Thus, it must be pertinently asked now: Did
petitioners have the duty to administer the Hippocratic
Oath and register respondents as physicians under
the Medical Act of 1959?
As found by the Court of Appeals, on which we agree
on the basis of the records:
It bears emphasizing herein that
petitioner-appellees and intervenor-appellees
have fully complied with all the statutory
requirements for admission into the licensure
examinations for physicians conducted and
administered by the respondent-appellants on
February 12, 14, 20 and 21, 1993. Stress, too,
must be made of the fact that all of them
successfully passed the same examinations.22
The crucial query now is whether the Court of Appeals
erred in concluding that petitioners should allow the
respondents to take their oaths as physicians and
register them, steps which would enable respondents
to practice the medical profession23 pursuant to
Section 20 of the Medical Act of 1959?
The appellate court relied on a single provision,
Section 20 of Rep. Act No. 2382, in concluding that
the petitioners had the ministerial obligation to
administer the Hippocratic Oath to respondents and
register them as physicians. But it is a basic rule in
statutory construction that each part of a statute
should be construed in connection with every other
part to produce a harmonious whole, not confining
construction to only one section.24 The intent or
meaning of the statute should be ascertained from the
statute taken as a whole, not from an isolated part of
the provision. Accordingly, Section 20, of Rep. Act No.
2382, as amended should be read in conjunction with
the other provisions of the Act. Thus, to determine
whether the petitioners had the ministerial obligation to
administer the Hippocratic Oath to respondents and
register them as physicians, recourse must be had to
the entirety of the Medical Act of 1959.
A careful reading of Section 20 of the Medical Act of
1959 discloses that the law uses the word "shall" with
respect to the issuance of certificates of registration.
Thus, the petitioners "shall sign and issue certificates
of registration to those who have satisfactorily
complied with the requirements of the Board." In
statutory construction the term "shall" is a word of
command. It is given imperative meaning. Thus, when
an examinee satisfies the requirements for the grant of
his physician’s license, the Board is obliged to
administer to him his oath and register him as a
physician, pursuant to Section 20 and par. (1) of
Section 2225 of the Medical Act of 1959.
However, the surrounding circumstances in this case
call for serious inquiry concerning the satisfactory
compliance with the Board requirements by the
respondents. The unusually high scores in the two
most difficult subjects was phenomenal, according to
Fr. Nebres, the consultant of PRC on the matter, and
raised grave doubts about the integrity, if not validity,
of the tests. These doubts have to be appropriately
resolved.
Under the second paragraph of Section 22, the Board
is vested with the power to conduct administrative
investigations and "disapprove applications for
examination or registration," pursuant to the objectives
of Rep. Act No. 2382 as outlined in Section 126
thereof. In this case, after the investigation, the Board
filed before the PRC, Adm. Case No. 1687 against the
respondents to ascertain their moral and mental
fitness to practice medicine, as required by Section 927
of Rep. Act No. 2382. In its Decision dated July 1,
1997, the Board ruled:
WHEREFORE, the BOARD hereby CANCELS
the respondents[’] examination papers in the
Physician Licensure Examinations given in
February 1993 and further DEBARS them from
taking any licensure examination for a period
of ONE (1) YEAR from the date of the
promulgation of this DECISION. They may, if
they so desire, apply for the scheduled
examinations for physicians after the lapse of
the period imposed by the BOARD.
SO ORDERED.28
Until the moral and mental fitness of the respondents
could be ascertained, according to petitioners, the
Board has discretion to hold in abeyance the
administration of the Hippocratic Oath and the
issuance of the certificates to them. The writ of
mandamus does not lie to compel performance of an
act which is not duly authorized.
The respondents nevertheless argue that under
Section 20, the Board shall not issue a certificate of
registration only in the following instances: (1) to any
candidate who has been convicted by a court of
competent jurisdiction of any criminal offense involving
moral turpitude; (2) or has been found guilty of
immoral or dishonorable conduct after the
investigation by the Board; or (3) has been declared to
be of unsound mind. They aver that none of these
circumstances are present in their case.
Petitioners reject respondents’ argument. We are
informed that in Board Resolution No. 26,29 dated July
21, 1993, the Board resolved to file charges against
the examinees from Fatima College of Medicine for
"immorality, dishonesty, fraud, and deceit in the
Obstetrics-Gynecology and Biochemistry
examinations." It likewise sought to cancel the
examination results obtained by the examinees from
the Fatima College.
Section 830 of Rep. Act No. 2382 prescribes, among
others, that a person who aspires to practice medicine
in the Philippines, must have "satisfactorily passed the
corresponding Board Examination." Section 22, in
turn, provides that the oath may only be administered
"to physicians who qualified in the examinations." The
operative word here is "satisfactorily," defined as
"sufficient to meet a condition or obligation" or
"capable of dispelling doubt or ignorance."31 Gleaned
from Board Resolution No. 26, the licensing authority
apparently did not find that the respondents
"satisfactorily passed" the licensure examinations. The
Board instead sought to nullify the examination results
obtained by the respondents.
2. On the Right Of The Respondents To Be
Registered As Physicians
The function of mandamus is not to establish a right
but to enforce one that has been established by law. If
no legal right has been violated, there can be no
application of a legal remedy, and the writ of
mandamus is a legal remedy for a legal right.32 There
must be a well-defined, clear and certain legal right to
the thing demanded.33 It is long established rule that a
license to practice medicine is a privilege or franchise
granted by the government.34
It is true that this Court has upheld the constitutional
right35 of every citizen to select a profession or course
of study subject to a fair, reasonable, and equitable
admission and academic requirements.36 But like all
rights and freedoms guaranteed by the Charter, their
exercise may be so regulated pursuant to the police
power of the State to safeguard health, morals, peace,
education, order, safety, and general welfare of the
people.37 Thus, persons who desire to engage in the
learned professions requiring scientific or technical
knowledge may be required to take an examination as
a prerequisite to engaging in their chosen careers.
This regulation takes particular pertinence in the field
of medicine, to protect the public from the potentially
deadly effects of incompetence and ignorance among
those who would practice medicine. In a previous
case, it may be recalled, this Court has ordered the
Board of Medical Examiners to annul both its
resolution and certificate authorizing a Spanish
subject, with the degree of Licentiate in Medicine and
Surgery from the University of Barcelona, Spain, to
practice medicine in the Philippines, without first
passing the examination required by the Philippine
Medical Act.38 In another case worth noting, we upheld
the power of the State to upgrade the selection of
applicants into medical schools through admission
tests.39
It must be stressed, nevertheless, that the power to
regulate the exercise of a profession or pursuit of an
occupation cannot be exercised by the State or its
agents in an arbitrary, despotic, or oppressive manner.
A political body that regulates the exercise of a
particular privilege has the authority to both forbid and
grant such privilege in accordance with certain
conditions. Such conditions may not, however, require
giving up ones constitutional rights as a condition to
acquiring the license.40 Under the view that the
legislature cannot validly bestow an arbitrary power to
grant or refuse a license on a public agency or officer,
courts will generally strike down license legislation that
vests in public officials discretion to grant or refuse a
license to carry on some ordinarily lawful business,
profession, or activity without prescribing definite rules
and conditions for the guidance of said officials in the
exercise of their power.41
In the present case, the aforementioned guidelines are
provided for in Rep. Act No. 2382, as amended, which
prescribes the requirements for admission to the
practice of medicine, the qualifications of candidates
for the board examinations, the scope and conduct of
the examinations, the grounds for denying the
issuance of a physician’s license, or revoking a license
that has been issued. Verily, to be granted the
privilege to practice medicine, the applicant must show
that he possesses all the qualifications and none of
the disqualifications. Furthermore, it must appear that
he has fully complied with all the conditions and
requirements imposed by the law and the licensing
authority. Should doubt taint or mar the compliance as
being less than satisfactory, then the privilege will not
issue. For said privilege is distinguishable from a
matter of right, which may be demanded if denied.
Thus, without a definite showing that the aforesaid
requirements and conditions have been satisfactorily
met, the courts may not grant the writ of mandamus to
secure said privilege without thwarting the legislative
will.
3. On the Ripeness of the Petition for Mandamus
Lastly, the petitioners herein contend that the Court of
Appeals should have dismissed the petition for
mandamus below for being premature. They argue
that the administrative remedies had not been
exhausted. The records show that this is not the first
time that petitioners have sought the dismissal of Civil
Case No. 93-66530. This issue was raised in G.R. No.
115704, which petition we referred to the Court of
Appeals, where it was docketed as CA-G.R. SP No.
34506. On motion for reconsideration in CA-G.R. SP
No. 34506, the appellate court denied the motion to
dismiss on the ground that the prayers for the
nullification of the order of the trial court and the
dismissal of Civil Case No. 93-66530 were
inconsistent reliefs. In G.R. No. 118437, the petitioners
sought to nullify the decision of the Court of Appeals in
CA-G.R. SP No. 34506 insofar as it did not order the
dismissal of Civil Case No. 93-66530. In our
consolidated decision, dated July 9, 1998, in G.R.
Nos. 117817 & 118437, this Court speaking through
Justice Bellosillo opined that:
Indeed, the issue as to whether the Court of
Appeals erred in not ordering the dismissal of
Civil Case No. 93-66530 sought to be resolved
in the instant petition has been rendered
meaningless by an event taking place prior to
the filing of this petition and denial thereof
should follow as a logical consequence.42
There is no longer any justiciable controversy
so that any declaration thereon would be of no
practical use or value.43 It should be recalled
that in its decision of 19 December 1994 the
trial court granted the writ of mandamus
prayed for by private respondents, which
decision was received by petitioners on 20
December 1994. Three (3) days after, or on 23
December 1994, petitioners filed the instant
petition. By then, the remedy available to them
was to appeal the decision to the Court of
Appeals, which they in fact did, by filing a
notice of appeal on 26 December 1994.44
The petitioners have shown no cogent reason for us to
reverse the aforecited ruling. Nor will their reliance
upon the doctrine of the exhaustion of administrative
remedies in the instant case advance their cause any.
Section 2645 of the Medical Act of 1959 provides for
the administrative and judicial remedies that
respondents herein can avail to question Resolution
No. 26 of the Board of Medicine, namely: (a) appeal
the unfavorable judgment to the PRC; (b) should the
PRC ruling still be unfavorable, to elevate the matter
on appeal to the Office of the President; and (c)
should they still be unsatisfied, to ask for a review of
the case or to bring the case to court via a special civil
action of certiorari. Thus, as a rule, mandamus will not
lie when administrative remedies are still available.46
However, the doctrine of exhaustion of administrative
remedies does not apply where, as in this case, a pure
question of law is raised.47 On this issue, no reversible
error may, thus, be laid at the door of the appellate
court in CA-G.R. SP No. 37283, when it refused to
dismiss Civil Case No. 93-66530.
As we earlier pointed out, herein respondents Arnel V.
Herrera, Fernando F. Mandapat, Ophelia C. Hidalgo,
Bernadette T. Mendoza, Ruby B. Lantin-Tan,
Fernando T. Cruz, Marissa A. Regodon, Ma. Eloisa Q.
Mallari-Largoza, Cheryl R. Triguero, Joseph A. Jao,
Bernadette H. Cabuhat, Evelyn S. Acosta-Cabanes,
Laura M. Santos, Maritel M. Echiverri, Bernadette C.
Escusa, Carlosito C. Domingo, Alicia S. Lizano, Elnora
R. Raqueno-Rabaino, Saibzur N. Edding, Derileen D.
Dorado-Edding, Robert B. Sanchez, Maria Rosario
Leonor-Lacandula, Geraldine Elizabeth M.
Pagilagan-Palma, Margarita Belinda L.
Vicencio-Gamilla, Herminigilda E. Conejos, Leuvina P.
Chico-Paguio, Elcin C. Arriola-Ocampo, and Jose
Ramoncito P. Navarro manifested to the Court of
Appeals during the pendency of CA-G.R. SP No.
37283, that they were no longer interested in
proceeding with the case and moved for its dismissal
insofar as they were concerned. A similar
manifestation and motion were later filed by
intervenors Mary Jean I. Yeban-Merlan, Michael L.
Serrano, Norma G. Lafavilla, Arnulfo A. Salvador,
Belinda C. Rabarra, Yolanda P. Unica, Dayminda G.
Bontuyan, Clarissa B. Baclig, Ma. Luisa S. Gutierrez,
Rhoneil R. Deveraturda, Aleli A. Gollayan, Evelyn C.
Cundangan, Frederick D. Francisco, Violeta V.
Meneses, Melita J. Cañedo, Clarisa SJ. Nicolas,
Federico L. Castillo, Karangalan D. Serrano, Danilo A.
Villaver, Grace E. Uy, Lydia C. Chan, and Melvin M.
Usita. Following these manifestations and motions, the
appellate court in CA-G.R. SP No. 37283 decreed that
its ruling would not apply to them. Thus, inasmuch as
the instant case is a petition for review of the appellate
court’s ruling in CA-G.R. SP No. 37283, a decision
which is inapplicable to the aforementioned
respondents will similarly not apply to them.
As to Achilles J. Peralta, Evelyn O. Ramos, Sally B.
Bunagan, Rogelio B. Ancheta, Oscar H. Padua, Jr.,
Evelyn D. Grajo, Valentino P. Arboleda, Carlos M.
Bernardo, Jr., Mario D. Cuaresma, Violeta C. Felipe,
Percival H. Pangilinan, Corazon M. Cruz and Samuel
B. Bangoy, herein decision shall not apply pursuant to
the Orders of the trial court in Civil Case No.
93-66530, dropping their names from the suit.
Consequently, this Decision is binding only on the
remaining respondents, namely: Arlene V. de
Guzman, Celerina S. Navarro, Rafael I. Tolentino,
Bernardita B. Sy, Gloria T. Jularbal, Hubert S.
Nazareno, Nancy J. Chavez, Ernesto L. Cue,
Herminio V. Fernandez, Jr., Maria Victoria M.
Lacsamana and Merly D. Sta. Ana, as well as the
petitioners.
WHEREFORE, the instant petition is GRANTED.
Accordingly, (1) the assailed decision dated May 16,
2000, of the Court of Appeals, in CA-G.R. SP No.
37283, which affirmed the judgment dated December
19, 1994, of the Regional Trial Court of Manila, Branch
52, in Civil Case No. 93-66530, ordering petitioners to
administer the physician’s oath to herein respondents
as well as the resolution dated August 25, 2000, of the
appellate court, denying the petitioners’ motion for
reconsideration, are REVERSED and SET ASIDE;
and (2) the writ of mandamus, issued in Civil Case No.
93-66530, and affirmed by the appellate court in
CA-G.R. SP No. 37283 is NULLIFIED AND SET
ASIDE.
SO ORDERED.
ST. LUKE'S MEDICAL CENTER EMPLOYEE'S
ASSOCIATION-AFW (SLMCEA-AFW) AND
MARIBEL S. SANTOS, vs.
NATIONAL LABOR RELATIONS COMMISSION
(NLRC) AND ST. LUKE'S MEDICAL CENTER, INC.,
AZCUNA, J.:
Challenged in this petition for review on certiorari is
the Decision1 of the Court of Appeals (CA) dated
January 29, 2004 in CA-G.R. SP No. 75732 affirming
the decision2 dated August 23, 2002 rendered by the
National Labor Relations Commission (NLRC) in
NLRC CA No. 026225-00.
The antecedent facts are as follows:
Petitioner Maribel S. Santos was hired as X-Ray
Technician in the Radiology department of private
respondent St. Luke's Medical Center, Inc. (SLMC) on
October 13, 1984. She is a graduate of Associate in
Radiologic Technology from The Family Clinic
Incorporated School of Radiologic Technology.
On April 22, 1992, Congress passed and enacted
Republic Act No. 7431 known as the "Radiologic
Technology Act of 1992." Said law requires that no
person shall practice or offer to practice as a radiology
and/or x-ray technologist in the Philippines without
having obtained the proper certificate of registration
from the Board of Radiologic Technology.
On September 12, 1995, the Assistant Executive
Director-Ancillary Services and HR Director of private
respondent SLMC issued a final notice to all
practitioners of Radiologic Technology to comply with
the requirement of Republic Act No. 7431 by
December 31, 1995; otherwise, the unlicensed
employee will be transferred to an area which does
not require a license to practice if a slot is available.
On March 4, 1997, the Director of the Institute of
Radiology issued a final notice to petitioner Maribel S.
Santos requiring the latter to comply with Republic
Act. No. 7431 by taking and passing the forthcoming
examination scheduled in June 1997; otherwise,
private respondent SLMC may be compelled to retire
her from employment should there be no other
position available where she may be absorbed.
On May 14, 1997, the Director of the Institute of
Radiology, AED-Division of Ancillary Services issued a
memorandum to petitioner Maribel S. Santos directing
the latter to submit her PRC Registration
form/Examination Permit per Memorandum dated
March 4, 1997.
On March 13, 1998, the Director of the Institute of
Radiology issued another memorandum to petitioner
Maribel S. Santos advising her that only a license can
assure her of her continued employment at the
Institute of Radiology of the private respondent SLMC
and that the latter is giving her the last chance to take
and pass the forthcoming board examination
scheduled in June 1998; otherwise, private
respondent SLMC shall be constrained to take action
which may include her separation from employment.
On November 23, 1998, the Director of the Institute of
Radiology issued a notice to petitioner Maribel S.
Santos informing the latter that the management of arising from the death of an employee more than two
private respondent SLMC has approved her retirement (2) months earlier.
in lieu of separation pay.
In a letter dated September 24, 1999, Ms. Rita
On November 26, 1998, the Personnel Manager of Marasigan replied thus:
private respondent SLMC issued a "Notice of
Separation from the Company" to petitioner Maribel S. Gentlemen:
Santos effective December 30, 1998 in view of the
Thank you for your letter of September 22, 1999
latter's refusal to accept private respondent SLMC's
formally requesting to fill up the vacant regular position
offer for early retirement. The notice also states that
of a CSS Aide in Ms. Maribel Santos' behalf.
while said private respondent exerted its efforts to
transfer petitioner Maribel S. Santos to other
The position is indeed vacant. Please refer to our
position/s, her qualifications do not fit with any of the
Recruitment Policy for particulars especially on
present vacant positions in the hospital.
minimum requirements of the job and the need to
meet said requirements, as well as other
In a letter dated December 18, 1998, a certain Jack C.
pre-employment requirements, in order to be
Lappay, President of the Philippine Association of
considered for the vacant position. As a matter of fact,
Radiologic Technologists, Inc., wrote Ms. Judith Betita,
Ms. Santos is welcome to apply for any vacant
Personnel Manager of private respondent SLMC,
position on the condition that she possesses the
requesting the latter to give "due consideration" to the
necessary qualifications.
organization's three (3) regular members of his
organization (petitioner Maribel S. Santos included)
As to the consensus referred to in your letter, may I
"for not passing yet the Board of Examination for X-ray
correct you that the agreement is, regardless of the
Technology," "by giving them an assignment in any
vacant position Ms. Santos decides to apply, she must
department of your hospital awaiting their chance to
go through the usual application procedures. The
pass the future Board Exam."
formal letter, I am afraid, will not suffice for purposes
of recruitment processing. As you know, the managers
On January 6, 1999, the Personnel Manager of private
requesting to fill any vacancy has a say on the matter
respondent SLMC again issued a "Notice of
and correctly so. The manager's inputs are
Separation from the Company" to petitioner Maribel S.
necessarily factored into the standard recruitment
Santos effective February 5, 1999 after the latter failed
procedures. Hence, the need to undergo the
to present/ submit her appeal for rechecking to the
prescribed steps.
Professional Regulation Commission (PRC) of the
recent board examination which she took and failed.
Indeed we have gone through the mechanics to
accommodate Ms. Santos' transfer while she was
On March 2, 1999, petitioner Maribel S. Santos filed a
employed with SLMC given the prescribed period. She
complaint against private respondent SLMC for illegal
was given 30 days from issuance of the notice of
dismissal and non-payment of salaries, allowances
termination to look for appropriate openings which
and other monetary benefits. She likewise prayed for
incidentally she wittingly declined to utilize. She did
the award of moral and exemplary damages plus
this knowing fully well that the consequences would be
attorney's fees.
that her application beyond the 30-day period or after
In the meantime, petitioner Alliance of Filipino Workers the effective date of her termination from SLMC would
(AFW), through its President and Legal Counsel, in a be considered a re-application with loss of seniority
letter dated September 22, 1999 addressed to Ms. and shall be subjected to the pertinent application
Rita Marasigan, Human Resources Director of private procedures.
respondent SLMC, requested the latter to
Needless to mention, one of the 3 X-ray Technologists
accommodate petitioner Maribel S. Santos and assign
in similar circumstances as Ms. Santos at the time
her to the vacant position of CSS Aide in the hospital
successfully managed to get herself transferred to
E.R. because she opted to apply for the appropriate
vacant position and qualified for it within the
prescribed 30-day period. The other X-ray
Technologist, on the other hand, as you may recall,
was eventually terminated not just for his failure to
comply with the licensure requirement of the law but
for cause (refusal to serve a customer).
Why Ms. Santos opted to file a complaint before the
Labor Courts and not to avail of the opportunity given
her, or assuming she was not qualified for any vacant
position even if she tried to look for one within the
prescribed period, I simply cannot understand why she
also refused the separation pay offered by
Management in an amount beyond the minimum
required by law only to re-apply at SLMC, which option
would be available to her anyway even (if she) chose
to accept the separation pay!
Well, here's hoping that our Union can timely influence
our employees to choose their options well as it has in
the past.
(Signed)
RITA MARASIGAN
Subsequently, in a letter dated December 27, 1999,
Ms. Judith Betita, Personnel Manager of private
respondent SLMC wrote Mr. Angelito Calderon,
President of petitioner union as follows:
Dear Mr. Calderon:
This is with regard to the case of Ms. Maribel Santos.
Please recall that last Oct. 8, 1999, Ms. Rita
Marasigan, HR Director, discussed with you and Mr.
Greg Del Prado the terms regarding the re-hiring of
Ms. Maribel Santos. Ms. Marasigan offered Ms.
Santos the position of Secretary at the Dietary
Department. In that meeting, Ms. Santos replied that
she would think about the offer. To date, we still have
no definite reply from her. Again, during the
conference held on Dec. 14, 1999, Atty. Martir
promised to talk to Ms. Santos, and inform us of her
reply by Dec. 21, 1999. Again we failed to hear her
reply through him.
Please be informed that said position is in need of
immediate staffing. The Dietary Department has
already been experiencing serious backlog of work
due to the said vacancy. Please note that more than 2
months has passed since Ms. Marasigan offered this
compromise. Management cannot afford to wait for
her decision while the operation of the said
department suffers from vacancy.
Therefore, Management is giving Ms. Santos until the
end of this month to give her decision. If we fail to hear
from her or from you as her representatives by that
time, we will consider it as a waiver and we will be
forced to offer the position to other applicants so as
not to jeopardize the Dietary Department's operation.
For your immediate action.
(Signed)
JUDITH BETITA
Personnel Manager
On September 5, 2000, the Labor Arbiter came out
with a Decision ordering private respondent SLMC to
pay petitioner Maribel S. Santos the amount of One
Hundred Fifteen Thousand Five Hundred Pesos
(₱115,500.00) representing her separation pay. All
other claims of petitioner were dismissed for lack of
merit.
Dissatisfied, petitioner Maribel S. Santos perfected an
appeal with the public respondent NLRC.
On August 23, 2002, public respondent NLRC
promulgated its Decision affirming the Decision of the
Labor Arbiter. It likewise denied the Motion for
Reconsideration filed by petitioners in its Resolution
promulgated on December 27, 2002.
Petitioner thereafter filed a petition for certiorari with
the CA which, as previously mentioned, affirmed the
decision of the NLRC.
Hence, this petition raising the following issues:
I. Whether the CA overlooked certain material
facts and circumstances on petitioners' legal
claim in relation to the complaint for illegal
dismissal.
 II. Whether the CA committed grave abuse of
discretion and erred in not resolving with clarity
the issues on the merit of petitioner's
constitutional right of security of tenure.3
For its part, private respondent St. Luke's Medical
Center, Inc. (SLMC) argues in its comment4 that: 1)
the petition should be dismissed for failure of
petitioners to file a motion for reconsideration; 2) the
CA did not commit grave abuse of discretion in
upholding the NLRC and the Labor Arbiter's ruling that
petitioner was legally dismissed; 3) petitioner was
legally and validly terminated in accordance with
Republic Act Nos. 4226 and 7431; 4) private
respondent's decision to terminate petitioner Santos
was made in good faith and was not the result of
unfair discrimination; and 5) petitioner Santos'
non-transfer to another position in the SLMC was a
valid exercise of management prerogative.
The petition lacks merit.
Generally, the Court has always accorded respect and
finality to the findings of fact of the CA particularly if
they coincide with those of the Labor Arbiter and the
NLRC and are supported by substantial evidence.5
True this rule admits of certain exceptions as, for
example, when the judgment is based on a
misapprehension of facts, or the findings of fact are
not supported by the evidence on record6 or are so
glaringly erroneous as to constitute grave abuse of
discretion.7 None of these exceptions, however, has
been convincingly shown by petitioners to apply in the
present case. Hence, the Court sees no reason to
disturb such findings of fact of the CA.
Ultimately, the issue raised by the parties boils down
to whether petitioner Santos was illegally dismissed by
private respondent SLMC on the basis of her inability
to secure a certificate of registration from the Board of
Radiologic Technology.
The requirement for a certificate of registration is set
forth under R.A. No. 74318 thus:
Sec. 15. Requirement for the Practice of Radiologic
Technology and X-ray Technology. - Unless exempt
from the examinations under Sections 16 and 17
hereof, no person shall practice or offer to practice as
a radiologic and/or x-ray technologist in the Philippines
without having obtained the proper certificate of
registration from the Board.
It is significant to note that petitioners expressly
concede that the sole cause for petitioner Santos'
separation from work is her failure to pass the board
licensure exam for X-ray technicians, a precondition
for obtaining the certificate of registration from the
Board. It is argued, though, that petitioner Santos'
failure to comply with the certification requirement did
not constitute just cause for termination as it violated
her constitutional right to security of tenure. This
contention is untenable.
While the right of workers to security of tenure is
guaranteed by the Constitution, its exercise may be
reasonably regulated pursuant to the police power of
the State to safeguard health, morals, peace,
education, order, safety, and the general welfare of the
people. Consequently, persons who desire to engage
in the learned professions requiring scientific or
technical knowledge may be required to take an
examination as a prerequisite to engaging in their
chosen careers.9 The most concrete example of this
would be in the field of medicine, the practice of which
in all its branches has been closely regulated by the
State. It has long been recognized that the regulation
of this field is a reasonable method of protecting the
health and safety of the public to protect the public
from the potentially deadly effects of incompetence
and ignorance among those who would practice
medicine.10 The same rationale applies in the
regulation of the practice of radiologic and x-ray
technology. The clear and unmistakable intention of
the legislature in prescribing guidelines for persons
seeking to practice in this field is embodied in Section
2 of the law:
Sec. 2. Statement of Policy. - It is the policy of the
State to upgrade the practice of radiologic technology
in the Philippines for the purpose of protecting the
public from the hazards posed by radiation as well as
to ensure safe and proper diagnosis, treatment and
research through the application of machines and/or
equipment using radiation.11
In this regard, the Court quotes with approval the
disquisition of public respondent NLRC in its decision
dated August 23, 2002:
The enactment of R.A. (Nos.) 7431 and 4226 are
recognized as an exercise of the State's inherent
police power. It should be noted that the police power
embraces the power to prescribe regulations to
promote the health, morals, educations, good order,
safety or general welfare of the people. The state is
justified in prescribing the specific requirements for
x-ray technicians and/or any other professions
connected with the health and safety of its citizens.
Respondent-appellee being engaged in the hospital
and health care business, is a proper subject of the
cited law; thus, having in mind the legal requirements
of these laws, the latter cannot close its eyes and [let]
complainant-appellant's private interest override public
interest.
Indeed, complainant-appellant cannot insist on her
"sterling work performance without any derogatory
record" to make her qualify as an x-ray technician in
the absence of a proper certificate of Registration from
the Board of Radiologic Technology which can only be
obtained by passing the required examination. The
law is clear that the Certificate of Registration cannot
be substituted by any other requirement to allow a
person to practice as a Radiologic Technologist and/or
X-ray Technologist (Technician).12
No malice or ill-will can be imputed upon private
respondent as the separation of petitioner Santos was
undertaken by it conformably to an existing statute. It
is undeniable that her continued employment without
the required Board certification exposed the hospital to
possible sanctions and even to a revocation of its
license to operate. Certainly, private respondent could
not be expected to retain petitioner Santos despite the
inimical threat posed by the latter to its business. This
notwithstanding, the records bear out the fact that
petitioner Santos was given ample opportunity to
qualify for the position and was sufficiently warned that
her failure to do so would result in her separation from
work in the event there were no other vacant positions
to which she could be transferred. Despite these
warnings, petitioner Santos was still unable to comply
and pass the required exam. To reiterate, the
requirement for Board certification was set by statute.
Justice, fairness and due process demand that an
employer should not be penalized for situations where
it had no participation or control.13
It would be unreasonable to compel private
respondent to wait until its license is cancelled and it is
materially injured before removing the cause of the
impending evil. Neither can the courts step in to force
private respondent to reassign or transfer petitioner
Santos under these circumstances. Petitioner Santos
is not in the position to demand that she be given a
different work assignment when what necessitated her
transfer in the first place was her own fault or failing.
The prerogative to determine the place or station
where an employee is best qualified to serve the
interests of the company on the basis of the his or her
qualifications, training and performance belongs solely
to the employer.14 The Labor Code and its
implementing Rules do not vest in the Labor Arbiters
nor in the different Divisions of the NLRC (nor in the
courts) managerial authority.15
While our laws endeavor to give life to the
constitutional policy on social justice and the
protection of labor, it does not mean that every labor
dispute will be decided in favor of the workers. The
law also recognizes that management has rights
which are also entitled to respect and enforcement in
the interest of fair play.16 Labor laws, to be sure, do not
authorize interference with the employer's judgment in
the conduct of the latter's business. Private
respondent is free to determine, using its own
discretion and business judgment, all elements of
employment, "from hiring to firing" except in cases of
unlawful discrimination or those which may be
provided by law. None of these exceptions is present
in the instant case.
The fact that another employee, who likewise failed to
pass the required exam, was allowed by private
respondent to apply for and transfer to another
position with the hospital does not constitute unlawful
discrimination. This was a valid exercise of
management prerogative, petitioners not having
alleged nor proven that the reassigned employee did
not qualify for the position where she was transferred.
In the past, the Court has ruled that an objection
founded on the ground that one has better credentials
over the appointee is frowned upon so long as the
latter possesses the minimum qualifications for the
position.17 Furthermore, the records show that Ms.
Santos did not even seriously apply for another
position in the company.
WHEREFORE, the petition is DENIED for lack of
merit. Costs against petitioners.
SO ORDERED.
MINERS ASSOCIATION OF THE PHILIPPINES,
INC.,
vs.
HON. FULGENCIO S. FACTORAN, JR.,
Secretary of Environment and Natural
Resources, and JOEL D. MUYCO, Director of
Mines and Geosciences Bureau,
ROMERO, J.:
The instant petition seeks a ruling from this Court
on the validity of two Administrative Orders issued
by the Secretary of the Department of
Environment and Natural Resources to carry out
the provisions of certain Executive Orders
promulgated by the President in the lawful
exercise of legislative powers.
Herein controversy was precipitated by the
change introduced by Article XII, Section 2 of the
1987 Constitution on the system of exploration,
development and utilization of the country's
natural resources. No longer is the utilization of
inalienable lands of public domain through
"license, concession or lease" under the 1935 and
1973 Constitutions1 allowed under the 1987
Constitution.
The adoption of the concept of jura regalia2 that
all natural resources are owned by the State
embodied in the 1935, 1973 and 1987
Constitutions, as well as the recognition of the
importance of the country's natural resources, not
only for national economic development, but also
for its security and national
defense,3 ushered in the adoption of the
constitutional policy of "full control and
supervision by the State" in the exploration,
development and utilization of the country's
natural resources. The options open to the State
are through direct undertaking or by entering into
co-production, joint venture; or production-sharing
agreements, or by entering into agreement with
foreign-owned corporations for large-scale
exploration, development and utilization.
Article XII, Section 2 of the 1987 Constitution
provides:
Sec. 2. All lands of the public
domain, waters, minerals, coal,
petroleum, and other mineral oils, all
forces of potential energy, fisheries,
forests or timber, wildlife, flora and
fauna, and other natural resources
are owned by the State. With the
exception of agricultural lands, all
other natural resources shall not be
alienated. The exploration,
development, and utilization of
natural resources shall be under the
full control and supervision of the
State. The State may directly
undertake such activities, or it may
enter into co-production, joint
venture, or product-sharing
agreements with Filipino citizens, or
corporations or associations at least
sixty per centum of whose capital is
owned by such citizens. Such
agreements may be for a period not
exceeding twenty-five years,
renewable for not more than
twenty-five years, and under such
terms and conditions as may be
provided by law. In cases of water
rights for irrigation, water supply,
 fisheries, or industrial uses other
than the development of water
power, beneficial use may be the
measure and limit of the grant.
xxx xxx xxx
The President may enter into
agreements with foreign-owned
corporations involving either
technical or financial assistance for
large-scale exploration,
development, and utilization of
minerals, petroleum, and other
mineral oils according to the general
terms and conditions provided by
law, based on real contributions to
the economic growth and general
welfare of the country. In such
agreements, the State shall promote
the development and use of local
scientific and technical resources.
The President shall notify the
Congress of every contract entered
into in accordance with this
provision, within thirty days from its
execution. (Emphasis supplied)
Pursuant to the mandate of the above-quoted
provision, legislative acts4 were successively
issued by the President in the exercise of her
legislative
power.5
To implement said legislative acts, the Secretary
of the Department of Environment and Natural
Resources (DENR) in turn promulgated
Administrative Order Nos. 57 and 82, the validity
and constitutionality of which are being
challenged in this petition.
On July 10, 1987, President Corazon C. Aquino,
in the exercise of her then legislative powers
under Article II, Section 1 of the Provisional
Constitution and Article XIII, Section 6 of the 1987
Constitution, promulgated Executive Order No.
211 prescribing the interim procedures in the
processing and approval of applications for the
exploration, development and utilization of
minerals pursuant to the 1987 Constitution in
order to ensure the continuity of mining
operations and activities and to hasten the
development of mineral resources. The pertinent
provisions read as follows:
Sec. 1. Existing mining permits,
licenses, leases and other mining
grants issued by the Department of
Environment and Natural Resources
and Bureau of Mines and
Geo-Sciences, including existing
operating agreements and mining
service contracts, shall continue and
remain in full force and effect,
subject to the same terms and
conditions as originally granted
and/or approved.
Sec. 2. Applications for the
exploration, development and
utilization of mineral resources,
including renewal applications for
approval of operating agreements
and mining service contracts, shall
be accepted and processed and
may be approved; concomitantly
thereto, declarations of locations
and all other kinds of mining
applications shall be accepted and
registered by the Bureau of Mines
and Geo-Sciences.
Sec. 3. The processing, evaluation
and approval of all mining
applications, declarations of
locations, operating agreements and
service contracts as provided for in
Section 2 above, shall be governed
by Presidential Decree No. 463, as
 amended, other existing mining laws
and their implementing rules and
regulations: Provided, however, that
the privileges granted, as well as the
terms and conditions thereof shall
be subject to any and all
modifications or alterations which
Congress may adopt pursuant to
Section 2, Article XII of the 1987
Constitution.
On July 25, 1987, President Aquino likewise
promulgated Executive Order No. 279 authorizing
the DENR Secretary to negotiate and conclude
joint venture, co-production, or production-sharing
agreements for the exploration, development and
utilization of mineral resources, and prescribing
the guidelines for such agreements and those
agreements involving technical or financial
assistance by foreign-owned corporations for
large-scale exploration, development, and
utilization of minerals. The pertinent provisions
relevant to this petition are as follows:
Sec. 1. The Secretary of the
Department of Environment and
Natural Resources (hereinafter
referred to as "the Secretary") is
hereby authorized to negotiate and
enter into, for and in behalf of the
Government, joint venture,
co-production, or production-sharing
agreements for the exploration,
development, and utilization of
mineral resources with any Filipino
citizens, or corporation
association at least sixty percent
(60%) of whose capital is owned by
Filipino citizens. Such joint venture,
co-production, or production-sharing
agreements may be for a period not
exceeding twenty-five years,
renewable for not more than
twenty-five years, and shall include
the minimum terms and conditions
prescribed in Section 2 hereof. In
the execution of a joint venture,
co-production or production
agreements, the contracting parties,
including the Government, may
consolidate two or more contiguous
or geologically — related mining
claims or leases and consider them
as one contract area for purposes of
determining the subject of the joint
venture, co-production, or
production-sharing agreement.
xxx xxx xxx
Sec. 6. The Secretary shall
promulgate such supplementary
rules and regulations as may be
necessary to effectively implement
the provisions of this Executive
Order.
Sec. 7. All provisions of Presidential
Decree No. 463, as amended, other
existing mining laws, and their
implementing rules and regulations,
or parts thereof, which are not
inconsistent with the provisions of
this Executive Order, shall continue
in force and effect.
Pursuant to Section 6 of Executive Order No.
279, the DENR Secretary issued on June 23,
1989 DENR Administrative Order No. 57, series
of 1989, captioned "Guidelines of Mineral
Production Sharing Agreement under Executive
or
Order No. 279."6 Under the transitory provision of
said DENR Administrative Order No. 57,
embodied in its Article 9, all existing mining
leases or agreements which were granted after
the effectivity of the 1987 Constitution pursuant to
Executive Order No. 211, except small scale
mining leases and those pertaining to sand and
gravel and quarry resources covering an area of
twenty (20) hectares or less, shall be converted
into production-sharing agreements within one (1)
year from the effectivity of these guidelines.
On November 20, 1980, the Secretary of the
DENR Administrative Order No. 82, series of
1990, laying down the "Procedural Guidelines on
the Award of Mineral Production Sharing
Agreement (MPSA) through Negotiation."7
Section 3 of the aforementioned DENR
Administrative Order No. 82 enumerates the
persons or entities required to submit Letter of
Intent (LOIs) and Mineral Production Sharing
Agreement (MPSAs) within two (2) years from the
effectivity of DENR Administrative Order No. 57 or
until July 17, 1991. Failure to do so within the
prescribed period shall cause the abandonment
of mining, quarry and sand and gravel claims.
Section 3 of DENR Administrative Order No. 82
provides:
Sec. 3. Submission of Letter of
Intent (LOIs) and MPSAs). The
following shall submit their LOIs and
MPSAs within two (2) years from the
effectivity of DENR A.O. 57 or until
July 17, 1991.
i. Declaration of Location (DOL)
holders, mining lease applicants,
exploration permitees, quarry
applicants and other mining
applicants whose mining/quarry
applications have not been
perfected prior to the effectivity of
DENR Administrative Order No. 57.
ii. All holders of DOL acquired after
the effectivity of DENR A.O. No. 57.
iii. Holders of mining leases or
similar agreements which were
granted after (the) effectivity of 1987
Constitution.
Failure to submit letters of intent and
MPSA applications/proposals within
the prescribed period shall cause
the abandonment of mining, quarry
and sand and gravel claims.
The issuance and the impeding implementation
by the DENR of Administrative Order Nos. 57 and
82 after their respective effectivity dates
compelled the Miners Association of the
Philippines, Inc.8 to file the instant petition
assailing their validity and constitutionality before
this Court.
In this petition for certiorari, petitioner Miners
Association of the Philippines, Inc. mainly
contends that respondent Secretary of DENR
issued both Administrative Order Nos. 57 and 82
in excess of his rule-making power under Section
6 of Executive Order No. 279. On the assumption
that the questioned administrative orders do not
conform with Executive Order Nos. 211 and 279,
petitioner contends that both orders violate the
non-impairment of contract provision under Article
III, Section 10 of the 1987 Constitution on the
ground that Administrative Order No. 57 unduly
pre-terminates existing mining agreements and
automatically converts them into
production-sharing agreements within one (1)
year from its effectivity date. On the other hand,
Administrative Order No. 82 declares that failure
to submit Letters of Intent and Mineral
Production-Sharing Agreements within two (2)
years from the date of effectivity of said guideline
or on July 17, 1991 shall cause the abandonment
of their mining, quarry and sand gravel permits.
On July 2, 1991, the Court, acting on petitioner's
urgent ex-parte petition for issuance of a
restraining order/preliminary injunction, issued a
Temporary Restraining Order, upon posting of a
P500,000.00 bond, enjoining the enforcement
and implementation of DENR Administrative
Order Nos. 57 and 82, as amended, Series of
1989 and 1990, respectively.9
On November 13, 1991, Continental Marble
Corporation, 10 thru its President, Felipe A. David,
sought to intervene 11 in this case alleging that
because of the temporary order issued by the
Court , the DENR, Regional Office No. 3 in San
Fernando, Pampanga refused to renew its Mines
Temporary Permit after it expired on July 31,
1991. Claiming that its rights and interests are
prejudicially affected by the implementation of
DENR Administrative Order Nos. 57 and 82, it
joined petitioner herein in seeking to annul
Administrative Order Nos. 57 and 82 and prayed
that the DENR, Regional Office No. 3 be ordered
to issue a Mines Temporary Permit in its favor to
enable it to operate during the pendency of the
suit.
Public respondents were acquired to comment on
the Continental Marble Corporation's petition for
intervention in the resolution of November 28,
1991.12
Now to the main petition. If its argued that
Administrative Order Nos. 57 and 82 have the
effect of repealing or abrogating existing mining
laws 13 which are not inconsistent with the
provisions of Executive Order No. 279. Invoking
Section 7 of said Executive Order No. 279, 14
petitioner maintains that respondent DENR
Secretary cannot provide guidelines such as
Administrative Order Nos. 57 and 82 which are
inconsistent with the provisions of Executive
Order No. 279 because both Executive Order
Nos. 211 and 279 merely reiterated the
acceptance and registration of declarations of
location and all other kinds of mining applications
by the Bureau of Mines and Geo-Sciences under
the provisions of Presidential Decree No. 463, as
amended, until Congress opts to modify or alter
the same.
In other words, petitioner would have us rule that
DENR Administrative Order Nos. 57 and 82
issued by the DENR Secretary in the exercise of
his rule-making power are tainted with invalidity
inasmuch as both contravene or subvert the
provisions of Executive Order Nos. 211 and 279
or embrace matters not covered, nor intended to
be covered, by the aforesaid laws.
We disagree.
We reiterate the principle that the power of
administrative officials to promulgate rules and
regulations in the implementation of a statute is
necessarily limited only to carrying into effect
what is provided in the legislative enactment. The
principle was enunciated as early as 1908 in the
case of United States v. Barrias. 15 The scope of
the exercise of such rule-making power was
clearly expressed in the case of United States v.
Tupasi Molina, 16 decided in 1914, thus: "Of
course, the regulations adopted under legislative
authority by a particular department must be in
harmony with the provisions of the law, and for
the sole purpose of carrying into effect its general
provisions. By such regulations, of course, the law
itself can not be extended. So long, however, as
the regulations relate solely to 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
carrying into effect the provision of the law, they
are valid."
Recently, the case of People v. Maceren 17 gave a
brief delienation of the scope of said power of
administrative officials:
Administrative regulations adopted
under legislative authority by a
particular department must be in
harmony with the provisions of the
law, and should be for the sole
purpose of carrying into effect its
general provision. By such
regulations, of course, the law itself
cannot be extended (U.S. v. Tupasi
Molina, supra). An administrative
agency cannot amend an act of
Congress (Santos vs. Estenzo, 109
Phil. 419, 422; Teoxon vs. Members
of the Board of Administrators,
L-25619, June 30, 1970, 33 SCRA
585; Manuel vs. General Auditing
Office, L-28952, December 29,
1971, 42 SCRA 660; Deluao v.
Casteel, L-21906, August 29, 1969,
29 SCRA 350).
The rule-making power must be
confined to details for regulating the
mode or proceeding to carry into
effect the law as it has been
enacted. The power cannot be
extended to amending or expanding
the statutory requirements or to
embrace matters not covered by the
statute. Rules that subvert the
statute cannot be sanctioned
(University of Santo Tomas v. Board
of Tax Appeals, 93 Phil. 376, 382,
citing 12 C.J. 845-46. As to invalid
regulations, see Collector of Internal
Revenue v. Villaflor, 69 Phil. 319;
Wise & Co. v. Meer, 78 Phil. 655,
676; Del Mar v. Phil. Veterans
Administration, L-27299, June 27,
1973, 51 SCRA 340, 349).
xxx xxx xxx
. . . The rule or regulation should be
within the scope of the statutory
authority granted by the legislature
to the administrative agency (Davis,
Administrative Law, p. 194, 197,
cited in Victorias Milling Co., Inc. v.
Social Security Commission, 114
Phil. 555, 558).
In case of discrepancy between the
basic law and a rule or regulation
issued to implement said law, the
basic prevails because said rule or
regulations cannot go beyond the
terms and provisions of the basic
law (People v. Lim, 108 Phil. 1091).
Considering that administrative rules draw life
from the statute which they seek to implement, it
is obvious that the spring cannot rise higher than
its source. We now examine petitioner's argument
that DENR Administrative Order Nos. 57 and 82
contravene Executive Order Nos. 211 and 279 as
both operate to repeal or abrogate Presidential
Decree No. 463, as amended, and other mining
laws allegedly acknowledged as the principal law
under Executive Order Nos. 211 and 279.
Petitioner's insistence on the application of
Presidential Decree No. 463, as amended, as the
governing law on the acceptance and approval of
declarations of location and all other kinds of
applications for the exploration, development, and
utilization of mineral resources pursuant to
Executive Order No. 211, is erroneous.
Presidential Decree No. 463, as amended,
pertains to the old system of exploration,
development and utilization of natural resources
through "license, concession or lease" which,
however, has been disallowed by Article XII,
Section 2 of the 1987 Constitution. By virtue of
the said constitutional mandate and its
implementing law, Executive Order No. 279 which
superseded Executive Order No. 211, the
provisions dealing on "license, concession or
lease" of mineral resources under Presidential
Decree No. 463, as amended, and other existing
mining laws are deemed repealed and, therefore,
ceased to operate as the governing law. In other
words, in all other areas of administration and
management of mineral lands, the provisions of
Presidential Decree No. 463, as amended, and
other existing mining laws, still govern. Section 7
of Executive Order No. 279 provides, thus:
Sec. 7. All provisions of Presidential
Decree No. 463, as amended, other
existing mining laws, and their
implementing rules and regulations,
or parts thereof, which are not
inconsistent with the provisions of
this Executive Order, shall continue
in force and effect.
Specifically, the provisions of Presidential Decree
No. 463, as amended, on lease of mining claims
under Chapter VIII, quarry permits on
privately-owned lands of quarry license on public
lands under Chapter XIII and other related
provisions on lease, license and permits are not
only inconsistent with the raison d'etre for which
Executive Order No. 279 was passed, but
contravene the express mandate of Article XII,
Section 2 of the 1987 Constitution. It force and
effectivity is thus foreclosed.
Upon the effectivity of the 1987 Constitution on
February 2, 1987, 18 the State assumed a more
dynamic role in the exploration, development and
utilization of the natural resources of the country.
Article XII, Section 2 of the said Charter explicitly
ordains that the exploration, development and
utilization of natural resources shall be under the
full control and supervision of the State.
Consonant therewith, the exploration,
development and utilization of natural resources
may be undertaken by means of direct act of the
State, or it may opt to enter into co-production,
joint venture, or production-sharing agreements,
or it may enter into agreements with
foreign-owned corporations involving either
technical or financial assistance for large-scale
exploration, development, and utilization of
minerals, petroleum, and other mineral oils
according to the general terms and conditions
provided by law, based on real contributions to
the economic growth and general welfare of the
country.
Given these considerations, there is no clear
showing that respondent DENR Secretary has
transcended the bounds demarcated by
Executive Order No. 279 for the exercise of his
rule-making power tantamount to a grave abuse
of discretion. Section 6 of Executive Order No.
279 specifically authorizes said official to
promulgate such supplementary rules and
regulations as may be necessary to effectively
implement the provisions thereof. Moreover, the
subject sought to be governed and regulated by
the questioned orders is germane to the objects
and purposes of Executive Order No. 279
specifically issued to carry out the mandate of
Article XII, Section 2 of the 1987 Constitution.
Petitioner likewise maintains that Administrative
Order No. 57, in relation to Administrative Order
No. 82, impairs vested rights as to violate the
non-impairment of contract doctrine guaranteed
under Article III, Section 10 of the 1987
Constitution because Article 9 of Administrative
Order No. 57 unduly pre-terminates and
automatically converts mining leases and other
mining agreements into production-sharing
agreements within one (1) year from effectivity of
said guideline, while Section 3 of Administrative
Order No. 82, declares that failure to submit
Letters of Intent (LOIs) and MPSAs within two (2)
years from the effectivity of Administrative Order
No. 57 or until July 17, 1991 shall cause the
abandonment of mining, quarry, and sand gravel
permits.
In Support of the above contention, it is argued by
petitioner that Executive Order No. 279 does not
contemplate automatic conversion of mining lease
agreements into mining production-sharing
agreement as provided under Article 9,
Administrative Order No. 57 and/or the
consequent abandonment of mining claims for
failure to submit LOIs and MPSAs under Section
3, Administrative Order No. 82 because Section 1 develop, explore and
of said Executive Order No. 279 empowers the utilize the same.
DENR Secretary to negotiate and enter into However, the State
voluntary agreements which must set forth the may enter into a joint
minimum terms and conditions provided under venture, co-production
Section 2 thereof. Moreover, petitioner contends or production-sharing.
that the power to regulate and enter into mining Is that not correct?
agreements does not include the power to
preterminate existing mining lease agreements. MR. VILLEGAS: Yes.

To begin with, we dispel the impression created MR. DAVIDE:

by petitioner's argument that the questioned Consequently,
administrative orders unduly preterminate existing henceforth upon, the
mining leases in general. A distinction which approval of this
spells a real difference must be drawn. Article XII, Constitution, no timber
Section 2 of the 1987 Constitution does not apply or forest concession,
retroactively to "license, concession or lease" permits or
granted by the government under the 1973 authorization can be
Constitution or before the effectivity of the 1987 exclusively granted to
Constitution on February 2, 1987. The intent to any citizen of the
apply prospectively said constitutional provision Philippines nor to any
was stressed during the deliberations in the corporation qualified to
Constitutional Commission, 19 thus: acquire lands of the
public domain?
MR. DAVIDE: Under
the proposal, I notice MR. VILLEGAS:
that except for the Would Commissioner
[inalienable] lands of Monsod like to
the public domain, all comment on that? I
other natural think his answer is
resources cannot be "yes."
alienated and in
MR. DAVIDE: So,
respect to [alienable]
what will happen now
lands of the public
license or concessions
domain, private
earlier granted by the
corporations with the
Philippine government
required ownership by
to private corporations
Filipino citizens can
or to Filipino citizens?
only lease the same.
Would they be
Necessarily, insofar as
deemed repealed?
other natural
resources are MR. VILLEGAS: This
concerned, it would is not applied
only be the State
which can exploit,
 retroactively. They will
be respected.
MR. DAVIDE: In effect,
they will be deemed
repealed?
MR. VILLEGAS: No.
(Emphasis supplied)
During the transition period or after the effectivity
of the 1987 Constitution on February 2, 1987 until
the first Congress under said Constitution was
convened on July 27, 1987, two (2) successive
laws, Executive Order Nos. 211 and 279, were
promulgated to govern the processing and
approval of applications for the exploration,
development and utilization of minerals. To carry
out the purposes of said laws, the questioned
Administrative Order Nos. 57 and 82, now being
assailed, were issued by the DENR Secretary.
Article 9 of Administrative Order No. 57 provides:
ARTICLE 9
TRANSITORY PROVISION
9.1. All existing mining leases or
agreements which were granted
after the effectivity of the 1987
Constitution pursuant to Executive
Order No. 211, except small scale
mining leases and those pertaining
to sand and gravel and quarry
resources covering an area of
twenty (20) hectares or less shall be
subject to these guidelines. All such
leases or agreements shall be
converted into production sharing
agreement within one (1) year from
the effectivity of these guidelines.
However, any minimum firm which
has established mining rights under
Presidential Decree 463 or other
laws may avail of the provisions of
EO 279 by following the procedures
set down in this document.
It is clear from the aforestated provision that
Administrative Order No. 57 applies only to all
existing mining leases or agreements which were
granted after the effectivity of the 1987
Constitution pursuant to Executive Order No. 211.
It bears mention that under the text of Executive
Order No. 211, there is a reservation clause which
provides that the privileges as well as the terms
and conditions of all existing mining leases or
agreements granted after the effectivity of the
1987 Constitution pursuant to Executive Order
No. 211, shall be subject to any and all
modifications or alterations which Congress may
adopt pursuant to Article XII, Section 2 of the
1987 Constitution. Hence, the strictures of the
non-impairment of contract clause under Article
III, Section 10 of the 1987 Constitution 20 do not
apply to the aforesaid leases or agreements
granted after the effectivity of the 1987
Constitution, pursuant to Executive Order No.
211. They can be amended, modified or altered
by a statute passed by Congress to achieve the
purposes of Article XII, Section 2 of the 1987
Constitution.
Clearly, Executive Order No. 279 issued on July
25, 1987 by President Corazon C. Aquino in the
exercise of her legislative power has the force
and effect of a statute or law passed by
Congress. As such, it validly modified or altered
the privileges granted, as well as the terms and
conditions of mining leases and agreements
under Executive Order No. 211 after the effectivity
of the 1987 Constitution by authorizing the DENR
Secretary to negotiate and conclude joint venture,
co-production, or production-sharing agreements
for the exploration, development and utilization of
mineral resources and prescribing the guidelines
for such agreements and those agreements
involving technical or financial assistance by
foreign-owned corporations for large-scale
exploration, development, and utilization of
minerals.
Well -settled is the rule, however, that regardless
of the reservation clause, mining leases or
agreements granted by the State, such as those
granted pursuant to Executive Order No. 211
referred to this petition, are subject to alterations
through a reasonable exercise of the police power
of the State. In the 1950 case of Ongsiako v.
Gamboa, 21 where the constitutionality of Republic
Act No. 34 changing the 50-50 sharecropping
system in existing agricultural tenancy contracts
to 55-45 in favor of tenants was challenged, the
Court, upholding the constitutionality of the law,
emphasized the superiority of the police power of
the State over the sanctity of this contract:
The prohibition contained in constitutional
provisions against: impairing the obligation of
contracts is not an absolute one and it is not to be
read with literal exactness like a mathematical
formula. Such provisions are restricted to
contracts which respect property, or some object
or value, and confer rights which may be asserted
in a court of justice, and have no application to
statute relating to public subjects within the
domain of the general legislative powers of the
State, and involving the public rights and public
welfare of the entire community affected by it.
They do not prevent a proper exercise by the
State of its police powers. By enacting regulations
reasonably necessary to secure the health,
safety, morals, comfort, or general welfare of the
community, even the contracts may thereby be
affected; for such matter can not be placed by
contract beyond the power of the State shall
regulates and control them. 22
In Ramas v. CAR and Ramos 23 where the
constitutionality of Section 14 of Republic Act No.
1199 authorizing the tenants to charge from share
to leasehold tenancy was challenged on the
ground that it impairs the obligation of contracts,
the Court ruled that obligations of contracts must
yield to a proper exercise of the police power
when such power is exercised to preserve the
security of the State and the means adopted are
reasonably adapted to the accomplishment of that
end and are, therefore, not arbitrary or
oppressive.
The economic policy on the exploration,
development and utilization of the country's
natural resources under Article XII, Section 2 of
the 1987 Constitution could not be any clearer. As
enunciated in Article XII, Section 1 of the 1987
Constitution, the exploration, development and
utilization of natural resources under the new
system mandated in Section 2, is geared towards
a more equitable distribution of opportunities,
income, and wealth; a sustained increase in the
amount of goods and services produced by the
nation for the benefit of the people; and an
expanding productivity as the key to raising the
quality of life for all, especially the
underprivileged.
The exploration, development and utilization of
the country's natural resources are matters vital to
the public interest and the general welfare of the
people. The recognition of the importance of the
country's natural resources was expressed as
early as the 1984 Constitutional Convention. In
connection therewith, the 1986 U.P. Constitution
Project observed: "The 1984 Constitutional
Convention recognized the importance of our
natural resources not only for its security and
national defense. Our natural resources which
constitute the exclusive heritage of the Filipino
nation, should be preserved for those under the
sovereign authority of that nation and for their
prosperity. This will ensure the country's survival
as a viable and sovereign republic."
Accordingly, the State, in the exercise of its police
power in this regard, may not be precluded by the
constitutional restriction on non-impairment of
contract from altering, modifying and amending
the mining leases or agreements granted under
Presidential Decree No. 463, as amended,
pursuant to Executive Order No. 211. Police
Power, being co-extensive with the necessities of
the case and the demands of public interest;
extends to all the vital public needs. The passage
of Executive Order No. 279 which superseded
Executive Order No. 211 provided legal basis for
the DENR Secretary to carry into effect the
mandate of Article XII, Section 2 of the 1987
Constitution.
Nowhere in Administrative Order No. 57 is there
any provision which would lead us to conclude
that the questioned order authorizes the
automatic conversion of mining leases and
agreements granted after the effectivity of the
1987 Constitution, pursuant to Executive Order
No. 211, to production-sharing agreements. The
provision in Article 9 of Administrative Order No.
57 that "all such leases or agreements shall be
converted into production sharing agreements
within one (1) year from the effectivity of these
guidelines" could not possibility contemplate a
unilateral declaration on the part of the
Government that all existing mining leases and
agreements are automatically converted into
production-sharing agreements. On the contrary,
the use of the term "production-sharing
agreement" if they are so minded. Negotiation
negates compulsion or automatic conversion as
suggested by petitioner in the instant petition. A
mineral production-sharing agreement (MPSA)
requires a meeting of the minds of the parties
after negotiations arrived at in good faith and in
accordance with the procedure laid down in the
subsequent Administrative Order No. 82.
We, therefore, rule that the questioned
administrative orders are reasonably directed to
the accomplishment of the purposes of the law
under which they were issued and were intended
to secure the paramount interest of the public,
their economic growth and welfare. The validity
and constitutionality of Administrative Order Nos.
57 and 82 must be sustained, and their force and
effect upheld.
We now, proceed to the petition-in-intervention.
Under Section 2, Rule 12 of the Revised Rules of
Court, an intervention in a case is proper when
the intervenor has a "legal interest in the matter in
litigation, or in the success of either of the parties,
or an interest against both, or when he is so
situated as to be adversely affected by a
distribution or other disposition of property in the
custody of the court or of an officer thereof.
"Continental Marble Corporation has not
sufficiently shown that it falls under any of the
categories mentioned above. The refusal of the
DENR, Regional Office No. 3, San Fernando,
Pampanga to renew its Mines Temporary Permit
does not justify such an intervention by
Continental Marble Corporation for the purpose of
obtaining a directive from this Court for the
issuance of said permit. Whether or not
Continental Marble matter best addressed to the
appropriate government body but certainly, not
through this Court. Intervention is hereby
DENIED.
WHEREFORE, the petition is DISMISSED for
lack of merit. The Temporary Restraining Order
issued on July 2, 1991 is hereby LIFTED.
SO ORDERED.
HON. EXECUTIVE SECRETARY, HON. SECRETARY
OF THE DEPARTMENT OF TRANSPORTATION
AND COMMUNICATIONS (DOTC), COMMISSIONER
OF CUSTOMS, ASSISTANT SECRETARY, LAND
TRANSPORTATION OFFICE (LTO), COLLECTOR
OF CUSTOMS, SUBIC BAY FREE PORT ZONE,
AND CHIEF OF LTO, SUBIC BAY FREE PORT
ZONE, Petitioners, v. SOUTHWING HEAVY
INDUSTRIES, INC., represented by its President
JOSE T. DIZON, UNITED AUCTIONEERS, INC.,
represented by its President DOMINIC SYTIN, and
MICROVAN, INC., represented by its President
MARIANO C. SONON, Respondents.
[G.R. NO. 164172 : February 20, 2006]
HON. EXECUTIVE SECRETARY, SECRETARY OF
THE DEPARTMENT OF TRANSPORTATION AND
COMMUNICATION (DOTC), COMMISSIONER OF
CUSTOMS, ASSISTANT SECRETARY, LAND
TRANSPORTATION OFFICE (LTO), COLLECTOR
OF CUSTOMS, SUBIC BAY FREE PORT ZONE AND
CHIEF OF LTO, SUBIC BAY FREE PORT ZONE,
Petitioners, v. SUBIC INTEGRATED MACRO
VENTURES CORP., represented by its President
YOLANDA AMBAR, Respondent.
[G.R. NO. 168741 : February 20, 2006]
HON. EXECUTIVE SECRETARY, HON. SECRETARY
OF FINANCE, THE CHIEF OF THE LAND
TRANSPORTATION OFFICE, THE COMMISSIONER
OF CUSTOMS, and THE COLLECTOR OF
CUSTOMS, SUBIC SPECIAL ECONOMIC ZONE,
Petitioners, v. MOTOR VEHICLE IMPORTERS
ASSOCIATION OF SUBIC BAY FREEPORT, INC.,
represented by its President ALFREDO S.
GALANG, Respondent.
YNARES-SANTIAGO, J.:
The instant consolidated petitions seek to annul and
set aside the Decisions of the Regional Trial Court of
Olongapo City, Branch 72, in Civil Case No. 20-0-04
and Civil Case No. 22-0-04, both dated May 24, 2004;
and the February 14, 2005 Decision of the Court of
Appeals in CA-G.R. SP. No. 83284, which declared
Article 2, Section 3.1 of Executive Order No. 156 (EO
156) unconstitutional. Said executive issuance
prohibits the importation into the country, inclusive of
the Special Economic and Freeport Zone or the Subic
Bay Freeport (SBF or Freeport), of used motor
vehicles, subject to a few exceptions.
The undisputed facts show that on December 12,
2002, President Gloria Macapagal-Arroyo, through
Executive Secretary Alberto G. Romulo, issued EO
156, entitled "Providing for a comprehensive industrial
policy and directions for the motor vehicle
development program and its implementing
guidelines." The challenged provision states:
3.1 The importation into the country, inclusive of the
Freeport, of all types of used motor vehicles is
prohibited, except for the following:
3.1.1 A vehicle that is owned and for the personal use
of a returning resident or immigrant and covered by an
authority to import issued under the No-dollar
Importation Program. Such vehicles cannot be resold
for at least three (3) years;
3.1.2 A vehicle for the use of an official of the
Diplomatic Corps and authorized to be imported by the
Department of Foreign Affairs;
3.1.3 Trucks excluding pickup trucks;
1. with GVW of 2.5-6.0 tons covered by an authority to
import issued by the DTI.
2. With GVW above 6.0 tons.
3.1.4 Buses:
1. with GVW of 6-12 tons covered by an authority to
import issued by DTI;
2. with GVW above 12 tons.
3.1.5 Special purpose vehicles:
1. fire trucks
2. ambulances
3. funeral hearse/coaches
4. crane lorries
5. tractor heads and truck tractors
6. boom trucks
7. tanker trucks
8. tank lorries with high pressure spray gun
9. reefers or refrigerated trucks
10. mobile drilling derricks
11. transit/concrete mixers
12. mobile radiological units
13. wreckers or tow trucks
14. concrete pump trucks
15. aerial/bucket flat-form trucks
16. street sweepers
17. vacuum trucks
18. garbage compactors
19. self loader trucks
20. man lift trucks
21. lighting trucks
22. trucks mounted with special purpose equipment
23. all other types of vehicle designed for a specific
use.
The issuance of EO 156 spawned three separate
actions for declaratory relief before Branch 72 of the
Regional Trial Court of Olongapo City, all seeking the
declaration of the unconstitutionality of Article 2,
Section 3.1 of said executive order. The cases were
filed by herein respondent entities, who or whose
members, are classified as Subic Bay Freeport
Enterprises and engaged in the business of, among
others, importing and/or trading used motor vehicles.
[G.R. NO. 164171]
On January 16, 2004, respondents Southwing Heavy
Industries, Inc., (Southwing) United Auctioneers, Inc.
(United Auctioneers), and Microvan, Inc. (Microvan),
instituted a declaratory relief case docketed as Civil
Case No. 20-0-04,1 against the Executive Secretary,
Secretary of Transportation and Communication,
Commissioner of Customs, Assistant Secretary and
Head of the Land Transportation Office, Subic Bay
Metropolitan Authority (SBMA), Collector of Customs
for the Port at Subic Bay Freeport Zone, and the Chief
of the Land Transportation Office at Subic Bay
Freeport Zone.
Southwing, United Auctioneers and Microvan prayed
that judgment be rendered (1) declaring Article 2,
Section 3.1 of EO 156 unconstitutional and illegal; (2)
directing the Secretary of Finance, Commissioner of
Customs, Collector of Customs and the Chairman of
the SBMA to allow the importation of used motor
vehicles; (2) ordering the Land Transportation Office
and its subordinates inside the Subic Special
Economic Zone to process the registration of the
imported used motor vehicles; and (3) in general, to
allow the unimpeded entry and importation of used
motor vehicles subject only to the payment of the
required customs duties.
Upon filing of petitioners' answer/comment,
respondents Southwing and Microvan filed a motion
for summary judgment which was granted by the trial
court. On May 24, 2004, a summary judgment was
rendered declaring that Article 2, Section 3.1 of EO
156 constitutes an unlawful usurpation of legislative
power vested by the Constitution with Congress. The
trial court further held that the proviso is contrary to
the mandate of Republic Act No. 7227 (RA 7227) or
the Bases Conversion and Development Act of 1992
which allows the free flow of goods and capital within
the Freeport. The dispositive portion of the said
decision reads:
WHEREFORE, judgment is hereby rendered in favor
of petitioner declaring Executive Order 156 [Article 2,
Section] 3.1 for being unconstitutional and illegal;
directing respondents Collector of Customs based at
SBMA to allow the importation and entry of used
motor vehicles pursuant to the mandate of RA 7227;
directing respondent Chief of the Land Transportation
Office and its subordinates inside the Subic Special
Economic Zone or SBMA to process the registration of
imported used motor vehicle; and in general, to allow
unimpeded entry and importation of used motor
vehicles to the Philippines subject only to the payment
of the required customs duties.
SO ORDERED.2
From the foregoing decision, petitioners sought relief
before this Court via a Petition for Review on
Certiorari, docketed as G.R. No. 164171.
[G.R. NO. 164172]
On January 20, 2004, respondent Subic Integrated
Macro Ventures Corporation (Macro Ventures) filed
with the same trial court, a similar action for
declaratory relief docketed as Civil Case No. 22-0-04,3
with the same prayer and against the same parties4 as
those in Civil Case No. 20-0-04.
In this case, the trial court likewise rendered a
summary judgment on May 24, 2004, holding that
Article 2, Section 3.1 of EO 156, is repugnant to the
constitution.5 Elevated to this Court via a Petition for
Review on Certiorari, Civil Case No. 22-0-04 was
docketed as G.R. No. 164172.
[G.R. NO. 168741]
On January 22, 2003, respondent Motor Vehicle
Importers Association of Subic Bay Freeport, Inc.
(Association), filed another action for declaratory relief
with essentially the same prayer as those in Civil Case
No. 22-0-04 and Civil Case No. 20-0-04, against the
Executive Secretary, Secretary of Finance, Chief of
the Land Transportation Office, Commissioner of
Customs, Collector of Customs at SBMA and the
Chairman of SBMA. This was docketed as Civil Case
No. 30-0-2003,6 before the same trial court.
In a decision dated March 10, 2004, the court a quo
granted the Association's prayer and declared the
assailed proviso as contrary to the Constitution, to wit:
WHEREFORE, judgment is hereby rendered in favor
of petitioner declaring Executive Order 156 [Article 2,
Section] 3.1 for being unconstitutional and illegal;
directing respondents Collector of Customs based at
SBMA to allow the importation and entry of used
motor vehicles pursuant to the mandate of RA 7227;
directing respondent Chief of the Land Transportation
Office and its subordinates inside the Subic Special
Economic Zone or SBMA to process the registration of
imported used motor vehicles; directing the
respondent Chairman of the SBMA to allow the entry
into the Subic Special Economic Zone or SBMA
imported used motor vehicle; and in general, to allow
unimpeded entry and importation of used motor
vehicles to the Philippines subject only to the payment
of the required customs duties.
SO ORDERED.7
Aggrieved, the petitioners in Civil Case No. 30-0-2003,
filed a petition for certiorari 8 with the Court of Appeals
(CA-G.R. SP. No. 83284) which denied the petition on
February 14, 2005 and sustained the finding of the
trial court that Article 2, Section 3.1 of EO 156, is void
for being repugnant to the constitution. The dispositive
portion thereof, reads:
WHEREFORE, the instant petition for certiorari is
hereby DENIED. The assailed decision of the
Regional Trial Court, Third Judicial Region, Branch 72,
Olongapo City, in Civil Case No. 30-0-2003,
accordingly, STANDS.
SO ORDERED.9
The aforequoted decision of the Court of Appeals was
elevated to this Court and docketed as G.R. No.
168741. In a Resolution dated October 4, 2005,10 said
case was consolidated with G.R. No. 164171 and G.R.
No. 164172.
Petitioners are now before this Court contending that
Article 2, Section 3.1 of EO 156 is valid and applicable
to the entire country, including the Freeeport. In
support of their arguments, they raise procedural and
substantive issues bearing on the constitutionality of
the assailed proviso. The procedural issues are: the
lack of respondents' locus standi to question the
validity of EO 156, the propriety of challenging EO 156
in a declaratory relief proceeding and the applicability
of a judgment on the pleadings in this case.
Petitioners argue that respondents will not be affected
by the importation ban considering that their certificate
of registration and tax exemption do not authorize
them to engage in the importation and/or trading of
used cars. They also aver that the actions filed by
respondents do not qualify as declaratory relief cases.
Section 1, Rule 63 of the Rules of Court provides that
a petition for declaratory relief may be filed before
there is a breach or violation of rights. Petitioners
claim that there was already a breach of respondents'
supposed right because the cases were filed more
than a year after the issuance of EO 156. In fact, in
Civil Case No. 30-0-2003, numerous warrants of
seizure and detention were issued against imported
used motor vehicles belonging to respondent
Association's members.
Petitioners' arguments lack merit.
The established rule that the constitutionality of a law
or administrative issuance can be challenged by one
who will sustain a direct injury as a result of its
enforcement11 has been satisfied in the instant case.
The broad subject of the prohibited importation is "all
types of used motor vehicles." Respondents would
definitely suffer a direct injury from the implementation
of EO 156 because their certificate of registration and
tax exemption authorize them to trade and/or import
new and used motor vehicles and spare parts, except
"used cars."12 Other types of motor vehicles imported
and/or traded by respondents and not falling within the
category of used cars would thus be subjected to the
ban to the prejudice of their business. Undoubtedly,
respondents have the legal standing to assail the
validity of EO 156.
As to the propriety of declaratory relief as a vehicle for
assailing the executive issuance, suffice it to state that
any breach of the rights of respondents will not affect
the case. In Commission on Audit of the Province of
Cebu v. Province of Cebu,13 the Court entertained a
suit for declaratory relief to finally settle the doubt as to
the proper interpretation of the conflicting laws
involved, notwithstanding a violation of the right of the
party affected. We find no reason to deviate from said
ruling mindful of the significance of the present case to
the national economy.
So also, summary judgments were properly rendered
by the trial court because the issues involved in the
instant case were pure questions of law. A motion for
summary judgment is premised on the assumption
that the issues presented need not be tried either
because these are patently devoid of substance or
that there is no genuine issue as to any pertinent fact.
It is a method sanctioned by the Rules of Court for the
prompt disposition of a civil action in which the
pleadings raise only a legal issue, not a genuine issue
as to any material fact.14
At any rate, even assuming the procedural flaws
raised by petitioners truly exist, the Court is not
precluded from brushing aside these technicalities and
taking cognizance of the action filed by respondents
considering its importance to the public and in keeping
with the duty to determine whether the other branches
of the government have kept themselves within the
limits of the Constitution.15
We now come to the substantive issues, which are: (1)
whether there is statutory basis for the issuance of EO
156; and (2) if the answer is in the affirmative, whether
the application of Article 2, Section 3.1 of EO 156,
reasonable and within the scope provided by law.
The main thrust of the petition is that EO 156 is
constitutional because it was issued pursuant to EO
226, the Omnibus Investment Code of the Philippines
and that its application should be extended to the
Freeport because the guarantee of RA 7227 on the
free flow of goods into the said zone is merely an
exemption from customs duties and taxes on items
brought into the Freeport and not an open floodgate
for all kinds of goods and materials without restriction.
In G.R. No. 168741, the Court of Appeals invalidated
Article 2, Section 3.1 of EO 156, on the ground of lack
of any statutory basis for the President to issue the
same. It held that the prohibition on the importation of
used motor vehicles is an exercise of police power
vested on the legislature and absent any enabling law,
the exercise thereof by the President through an
executive issuance, is void.
Police power is inherent in a government to enact
laws, within constitutional limits, to promote the order,
safety, health, morals, and general welfare of society.
It is lodged primarily with the legislature. By virtue of a
valid delegation of legislative power, it may also be
exercised by the President and administrative boards,
as well as the lawmaking bodies on all municipal
levels, including the barangay.16 Such delegation
confers upon the President quasi-legislative power
which may be defined as the authority delegated by
the law-making body to the administrative body to
adopt rules and regulations intended to carry out the
provisions of the law and implement legislative
policy.17 To be valid, an administrative issuance, such
as an executive order, must comply with the following
requisites:
(1) Its promulgation must be authorized by the
legislature;
(2) It must be promulgated in accordance with the
prescribed procedure;
(3) It must be within the scope of the authority given
by the legislature;
(4) It must be reasonable.18
Contrary to the conclusion of the Court of Appeals, EO
156 actually satisfied the first requisite of a valid
administrative order. It has both constitutional and
statutory bases.
Delegation of legislative powers to the President is
permitted in Section 28(2) of Article VI of the
Constitution. It provides:
(2) The Congress may, by law, authorize the President
to fix within specified limits, and subject to such
limitations and restrictions as it may impose, tariff
rates, import and export quotas, tonnage and
wharfage dues, and other duties or imposts within the
framework of the national development program of the
Government.19 (Emphasis supplied)
The relevant statutes to execute this provision are:
1) The Tariff and Customs Code which authorizes the
President, in the interest of national economy, general
welfare and/or national security, to, inter alia, prohibit
the importation of any commodity. Section 401 thereof,
reads:
Sec. 401. Flexible Clause. -
A. In the interest of national economy, general welfare
and/or national security, and subject to the limitations
herein prescribed, the President, upon
recommendation of the National Economic and
Development Authority (hereinafter referred to as
NEDA), is hereby empowered: x x x (2) to establish
import quota or to ban imports of any commodity, as
may be necessary; x x x Provided, That upon periodic
investigations by the Tariff Commission and
recommendation of the NEDA, the President may
cause a gradual reduction of protection levels granted
in Section One hundred and four of this Code,
including those subsequently granted pursuant to this
section. (Emphasis supplied)
2) Executive Order No. 226, the Omnibus Investment
Code of the Philippines which was issued on July 16,
1987, by then President Corazon C. Aquino, in the
exercise of legislative power under the Provisional
Freedom Constitution,20 empowers the President to
approve or reject the prohibition on the importation of
any equipment or raw materials or finished products.
Pertinent provisions thereof, read:
ART. 4. Composition of the board. The Board of
Investments shall be composed of seven (7)
governors: The Secretary of Trade and Industry, three
(3) Undersecretaries of Trade and Industry to be
chosen by the President; and three (3) representatives
from the government agencies and the private sector x
x x.
ART. 7. Powers and duties of the Board.
xxx
(12) Formulate and implement rationalization
programs for certain industries whose operation may
result in dislocation, overcrowding or inefficient use of
resources, thus impeding economic growth. For this
purpose, the Board may formulate guidelines for
progressive manufacturing programs, local content
programs, mandatory sourcing requirements and
dispersal of industries. In appropriate cases and upon
approval of the President, the Board may restrict,
either totally or partially, the importation of any
equipment or raw materials or finished products
involved in the rationalization program; (Emphasis
supplied)
3) Republic Act No. 8800, otherwise known as the
"Safeguard Measures Act" (SMA), and entitled "An Act
Protecting Local Industries By Providing Safeguard
Measures To Be Undertaken In Response To
Increased Imports And Providing Penalties For
Violation Thereof,"21 designated the Secretaries22 of
the Department of Trade and Industry (DTI) and the
Department of Agriculture, in their capacity as alter
egos of the President, as the implementing authorities
of the safeguard measures, which include, inter alia,
modification or imposition of any quantitative
restriction on the importation of a product into the
Philippines. The purpose of the SMA is stated in the
declaration of policy, thus:
SEC. 2. Declaration of Policy. - The State shall
promote competitiveness of domestic industries and
producers based on sound industrial and agricultural
development policies, and efficient use of human,
natural and technical resources. In pursuit of this goal
and in the public interest, the State shall provide
safeguard measures to protect domestic industries
and producers from increased imports which cause or
threaten to cause serious injury to those domestic
industries and producers.
There are thus explicit constitutional and statutory
permission authorizing the President to ban or
regulate importation of articles and commodities into
the country.
Anent the second requisite, that is, that the order must
be issued or promulgated in accordance with the
prescribed procedure, it is necessary that the nature of
the administrative issuance is properly determined. As
in the enactment of laws, the general rule is that, the
promulgation of administrative issuances requires
previous notice and hearing, the only exception being
where the legislature itself requires it and mandates
that the regulation shall be based on certain facts as
determined at an appropriate investigation.23 This
exception pertains to the issuance of legislative rules
as distinguished from interpretative rules which give
no real consequence more than what the law itself has
already prescribed;24 and are designed merely to
provide guidelines to the law which the administrative
agency is in charge of enforcing.25 A legislative rule,
on the other hand, is in the nature of subordinate
legislation, crafted to implement a primary legislation.
In Commissioner of Internal Revenue v. Court of
Appeals,26 and Commissioner of Internal Revenue v.
Michel J. Lhuillier Pawnshop, Inc.,27 the Court
enunciated the doctrine that when an administrative
rule goes beyond merely providing for the means that
can facilitate or render less cumbersome the
implementation of the law and substantially increases
the burden of those governed, it behooves the agency
to accord at least to those directly affected a chance to
be heard and, thereafter, to be duly informed, before
the issuance is given the force and effect of law.
In the instant case, EO 156 is obviously a legislative
rule as it seeks to implement or execute primary
legislative enactments intended to protect the
domestic industry by imposing a ban on the
importation of a specified product not previously
subject to such prohibition. The due process
requirements in the issuance thereof are embodied in
Section 40128 of the Tariff and Customs Code and
Sections 5 and 9 of the SMA29 which essentially
mandate the conduct of investigation and public
hearings before the regulatory measure or importation
ban may be issued.
In the present case, respondents neither questioned
before this Court nor with the courts below the
procedure that paved the way for the issuance of EO
156. What they challenged in their petitions before the
trial court was the absence of "substantive due
process" in the issuance of the EO.30 Their main
contention before the court a quo is that the
importation ban is illogical and unfair because it
unreasonably drives them out of business to the
prejudice of the national economy.
Considering the settled principle that in the absence of
strong evidence to the contrary, acts of the other
branches of the government are presumed to be
valid,31 and there being no objection from the
respondents as to the procedure in the promulgation
of EO 156, the presumption is that said executive
issuance duly complied with the procedures and
limitations imposed by law.
To determine whether EO 156 has complied with the
third and fourth requisites of a valid administrative
issuance, to wit, that it was issued within the scope of
authority given by the legislature and that it is
reasonable, an examination of the nature of a Freeport
under RA 7227 and the primordial purpose of the
importation ban under the questioned EO is
necessary.
RA 7227 was enacted providing for, among other
things, the sound and balanced conversion of the
Clark and Subic military reservations and their
extensions into alternative productive uses in the form
of Special Economic and Freeport Zone, or the Subic
Bay Freeport, in order to promote the economic and
social development of Central Luzon in particular and
the country in general.
The Rules and Regulations Implementing RA 7227
specifically defines the territory comprising the Subic
Bay Freeport, referred to as the Special Economic and
Freeport Zone in Section 12 of RA 7227 as "a
separate customs territory consisting of the City of
Olongapo and the Municipality of Subic, Province of
Zambales, the lands occupied by the Subic Naval
Base and its contiguous extensions as embraced,
covered and defined by the 1947 Philippine-U.S.
Military Base Agreement as amended and within the
territorial jurisdiction of Morong and Hermosa,
Province of Bataan, the metes and bounds of which
shall be delineated by the President of the Philippines;
provided further that pending establishment of secure
perimeters around the entire SBF, the SBF shall refer
to the area demarcated by the SBMA pursuant to
Section 1332 hereof."
Among the salient provisions of RA 7227 are as
follows:
SECTION 12. Subic Special Economic Zone. -
xxx
The abovementioned zone shall be subject to the
following policies:
xxx
(a) Within the framework and subject to the mandate
and limitations of the Constitution and the pertinent
provisions of the Local Government Code, the Subic
Special Economic Zone shall be developed into a
self-sustaining, industrial, commercial, financial and
investment center to generate employment
opportunities in and around the zone and to attract
and promote productive foreign investments;
(b) The Subic Special Economic Zone shall be
operated and managed as a separate customs
territory ensuring free flow or movement of goods and
capital within, into and exported out of the Subic
Special Economic Zone, as well as provide incentives
such as tax and duty-free importations of raw
materials, capital and equipment. However,
exportation or removal of goods from the territory of
the Subic Special Economic Zone to the other parts of
the Philippine territory shall be subject to customs
duties and taxes under the Customs and Tariff Code
and other relevant tax laws of the Philippines;
The Freeport was designed to ensure free flow or
movement of goods and capital within a portion of the
Philippine territory in order to attract investors to invest
their capital in a business climate with the least
governmental intervention. The concept of this zone
was explained by Senator Guingona in this wise:
Senator Guingona. Mr. President, the special
economic zone is successful in many places,
particularly Hong Kong, which is a free port. The
difference between a special economic zone and an
industrial estate is simply expansive in the sense that
the commercial activities, including the establishment
of banks, services, financial institutions, agro-industrial
activities, maybe agriculture to a certain extent.
This delineates the activities that would have the least
of government intervention, and the running of the
affairs of the special economic zone would be run
principally by the investors themselves, similar to a
housing subdivision, where the subdivision owners
elect their representatives to run the affairs of the
subdivision, to set the policies, to set the guidelines.
We would like to see Subic area converted into a little
Hong Kong, Mr. President, where there is a hub of free
port and free entry, free duties and activities to a
maximum spur generation of investment and jobs.
While the investor is reluctant to come in the
Philippines, as a rule, because of red tape and
perceived delays, we envision this special economic
zone to be an area where there will be minimum
government interference.
The initial outlay may not only come from the
Government or the Authority as envisioned here, but
from them themselves, because they would be
encouraged to invest not only for the land but also for
the buildings and factories. As long as they are
convinced that in such an area they can do business
and reap reasonable profits, then many from other
parts, both local and foreign, would invest, Mr.
President.33 (Emphasis, added)
With minimum interference from the government,
investors can, in general, engage in any kind of
business as well as import and export any article into
and out of the Freeport. These are among the rights
accorded to Subic Bay Freeport Enterprises under
Section 39 of the Rules and Regulations Implementing
RA 7227, thus'
SEC. 39. Rights and Obligations. - SBF Enterprises
shall have the following rights and obligations:
A. To freely engage in any business, trade,
manufacturing, financial or service activity, and to
import and export freely all types of goods into and out
of the SBF, subject to the provisions of the Act, these
Rules and other regulations that may be promulgated
by the SBMA;
Citing, inter alia, the interpellations of Senator Enrile,
petitioners claim that the "free flow or movement of
goods and capital" only means that goods and
material brought within the Freeport shall not be
subject to customs duties and other taxes and should
not be construed as an open floodgate for entry of all
kinds of goods. They thus surmise that the importation
ban on motor vehicles is applicable within the
Freeport. Pertinent interpellations of Senator Enrile on
the concept of Freeport is as follows:
Senator Enrile: Mr. President, I think we are talking
here of sovereign concepts, not territorial concepts.
The concept that we are supposed to craft here is to
carve out a portion of our terrestrial domain as well as
our adjacent waters and say to the world: "Well, you
can set up your factories in this area that we are
circumscribing, and bringing your equipment and
bringing your goods, you are not subject to any taxes
and duties because you are not within the customs
jurisdiction of the Republic of the Philippines, whether
you store the goods or only for purposes of
transshipment or whether you make them into finished
products again to be reexported to other lands."
xxxx
My understanding of a "free port" is, we are in effect
carving out a part of our territory and make it as if it
were foreign territory for purposes of our customs
laws, and that people can come, bring their goods,
store them there and bring them out again, as long as
they do not come into the domestic commerce of the
Republic.
We do not really care whether these goods are stored
here. The only thing that we care is for our people to
have an employment because of the entry of these
goods that are being discharged, warehoused and
reloaded into the ships so that they can be exported.
That will generate employment for us. For as long as
that is done, we are saying, in effect, that we have the
least contact with our tariff and customs laws and our
tax laws. Therefore, we consider these goods as
outside of the customs jurisdiction of the Republic of
the Philippines as yet, until we draw them from this
territory and bring them inside our domestic
commerce. In which case, they have to pass through
our customs gate. I thought we are carving out this
entire area and convert it into this kind of concept.34
However, contrary to the claim of petitioners, there is
nothing in the foregoing excerpts which absolutely
limits the incentive to Freeport investors only to
exemption from customs duties and taxes. Mindful of
the legislative intent to attract investors, enhance
investment and boost the economy, the legislature
could not have limited the enticement only to
exemption from taxes. The minimum interference
policy of the government on the Freeport extends to
the kind of business that investors may embark on and
the articles which they may import or export into and
out of the zone. A contrary interpretation would defeat
the very purpose of the Freeport and drive away
investors.
It does not mean, however, that the right of Freeport
enterprises to import all types of goods and article is
absolute. Such right is of course subject to the
limitation that articles absolutely prohibited by law
cannot be imported into the Freeport.35 Nevertheless,
in determining whether the prohibition would apply to
the Freeport, resort to the purpose of the prohibition is
necessary.
In issuing EO 156, particularly the prohibition on
importation under Article 2, Section 3.1, the President
envisioned to rationalize the importation of used motor
vehicles and to enhance the capabilities of the
Philippine motor manufacturing firms to be globally
competitive producers of completely build-up units and
their parts and components for the local and export
markets.36 In justifying the issuance of EO 156,
petitioners alleged that there has been a decline in the
sales of new vehicles and a remarkable growth of the
sales of imported used motor vehicles. To address the
same, the President issued the questioned EO to
prevent further erosion of the already depressed
market base of the local motor vehicle industry and to
curtail the harmful effects of the increase in the
importation of used motor vehicles.37
Taking our bearings from the foregoing discussions,
we hold that the importation ban runs afoul the third
requisite for a valid administrative order. To be valid,
an administrative issuance must not be ultra vires or
beyond the limits of the authority conferred. It must not
supplant or modify the Constitution, its enabling
statute and other existing laws, for such is the sole
function of the legislature which the other branches of
the government cannot usurp. As held in United BF
Homeowner's Association v. BF Homes, Inc.:38
The rule-making power of a public administrative body
is a delegated legislative power, which it may not use
either to abridge the authority given it by Congress or
the Constitution or to enlarge its power beyond the
scope intended. Constitutional and statutory
provisions control what rules and regulations may be
promulgated by such a body, as well as with respect to
what fields are subject to regulation by it. It may not
make rules and regulations which are inconsistent with
the provisions of the Constitution or a statute,
particularly the statute it is administering or which
created it, or which are in derogation of, or defeat, the
purpose of a statute.
In the instant case, the subject matter of the laws
authorizing the President to regulate or forbid
importation of used motor vehicles, is the domestic
industry. EO 156, however, exceeded the scope of its
application by extending the prohibition on the
importation of used cars to the Freeport, which RA
7227, considers to some extent, a foreign territory.
The domestic industry which the EO seeks to protect
is actually the "customs territory" which is defined
under the Rules and Regulations Implementing RA
7227, as follows:
"the portion of the Philippines outside the Subic Bay
Freeport where the Tariff and Customs Code of the
Philippines and other national tariff and customs laws
are in force and effect."39
The proscription in the importation of used motor
vehicles should be operative only outside the Freeport
and the inclusion of said zone within the ambit of the
prohibition is an invalid modification of RA 7227.
Indeed, when the application of an administrative
issuance modifies existing laws or exceeds the
intended scope, as in the instant case, the issuance
becomes void, not only for being ultra vires, but also
for being unreasonable.
This brings us to the fourth requisite. It is an axiom in
administrative law that administrative authorities
should not act arbitrarily and capriciously in the
issuance of rules and regulations. To be valid, such
rules and regulations must be reasonable and fairly
adapted to secure the end in view. If shown to bear no
reasonable relation to the purposes for which they
were authorized to be issued, then they must be held
to be invalid.40
There is no doubt that the issuance of the ban to
protect the domestic industry is a reasonable exercise
of police power. The deterioration of the local motor
manufacturing firms due to the influx of imported used
motor vehicles is an urgent national concern that
needs to be swiftly addressed by the President. In the
exercise of delegated police power, the executive can
therefore validly proscribe the importation of these
vehicles. Thus, in Taxicab Operators of Metro Manila,
Inc. v. Board of Transportation,41 the Court held that a
regulation phasing out taxi cabs more than six years
old is a valid exercise of police power. The regulation
was sustained as reasonable holding that the purpose
thereof was to promote the convenience and comfort
and protect the safety of the passengers.
The problem, however, lies with respect to the
application of the importation ban to the Freeport. The
Court finds no logic in the all encompassing
application of the assailed provision to the Freeport
which is outside the customs territory. As long as the
used motor vehicles do not enter the customs territory,
the injury or harm sought to be prevented or remedied
will not arise. The application of the law should be
consistent with the purpose of and reason for the law.
Ratione cessat lex, et cessat lex. When the reason for
the law ceases, the law ceases. It is not the letter
alone but the spirit of the law also that gives it life.42 To
apply the proscription to the Freeport would not serve
the purpose of the EO. Instead of improving the
general economy of the country, the application of the
importation ban in the Freeport would subvert the
avowed purpose of RA 7227 which is to create a
market that would draw investors and ultimately boost
the national economy.
In similar cases, we also declared void the
administrative issuance or ordinances concerned for
being unreasonable. To illustrate, in De la Cruz v.
Paras,43 the Court held as unreasonable and
unconstitutional an ordinance characterized by
overbreadth. In that case, the Municipality of Bocaue,
Bulacan, prohibited the operation of all night clubs,
cabarets and dance halls within its jurisdiction for the
protection of public morals. As explained by the Court:
x x x It cannot be said that such a sweeping exercise
of a lawmaking power by Bocaue could qualify under
the term reasonable. The objective of fostering public
morals, a worthy and desirable end can be attained by
a measure that does not encompass too wide a field.
Certainly the ordinance on its face is characterized by
overbreadth. The purpose sought to be achieved
could have been attained by reasonable restrictions
rather than by an absolute prohibition. The admonition
in Salaveria should be heeded: "The Judiciary should
not lightly set aside legislative action when there is not
a clear invasion of personal or property rights under
the guise of police regulation." It is clear that in the
guise of a police regulation, there was in this instance
a clear invasion of personal or property rights,
personal in the case of those individuals desirous of
patronizing those night clubs and property in terms of
the investments made and salaries to be earned by
those therein employed.
Lupangco v. Court of Appeals,44 is a case involving a
resolution issued by the Professional Regulation
Commission which prohibited examinees from
attending review classes and receiving handout
materials, tips, and the like three days before the date
of examination in order to preserve the integrity and
purity of the licensure examinations in accountancy.
Besides being unreasonable on its face and violative
of academic freedom, the measure was found to be
more sweeping than what was necessary, viz:
Needless to say, the enforcement of Resolution No.
105 is not a guarantee that the alleged leakages in the
licensure examinations will be eradicated or at least
minimized. Making the examinees suffer by depriving
them of legitimate means of review or preparation on
those last three precious days - when they should be
refreshing themselves with all that they have learned
in the review classes and preparing their mental and
psychological make-up for the examination day itself -
would be like uprooting the tree to get rid of a rotten
branch. What is needed to be done by the respondent
is to find out the source of such leakages and stop it
right there. If corrupt officials or personnel should be
terminated from their loss, then so be it. Fixers or
swindlers should be flushed out. Strict guidelines to be
observed by examiners should be set up and if
violations are committed, then licenses should be
suspended or revoked. x x x
In Lucena Grand Central Terminal, Inc. v. JAC Liner,
Inc.,45 the Court likewise struck down as unreasonable
and overbreadth a city ordinance granting an
exclusive franchise for 25 years, renewable for
another 25 years, to one entity for the construction
and operation of one common bus and jeepney
terminal facility in Lucena City. While professedly
aimed towards alleviating the traffic congestion
alleged to have been caused by the existence of
various bus and jeepney terminals within the city, the
ordinance was held to be beyond what is reasonably
necessary to solve the traffic problem in the city.
By parity of reasoning, the importation ban in this case
should also be declared void for its too sweeping and
unnecessary application to the Freeport which has no
bearing on the objective of the prohibition. If the aim of
the EO is to prevent the entry of used motor vehicles
from the Freeport to the customs territory, the solution
is not to forbid entry of these vehicles into the
Freeport, but to intensify governmental campaign and
measures to thwart illegal ingress of used motor
vehicles into the customs territory.
At this juncture, it must be mentioned that on June 19,
1993, President Fidel V. Ramos issued Executive
Order No. 97-A, "Further Clarifying The Tax And
Duty-Free Privilege Within The Subic Special
Economic And Free Port Zone," Section 1 of which
provides:
SECTION 1. The following guidelines shall govern the
tax and duty-free privilege within the Secured Area of
the Subic Special Economic and Free Port Zone:
1.1. The Secured Area consisting of the presently
fenced-in former Subic Naval Base shall be the only
completely tax and duty-free area in the SSEFPZ.
Business enterprises and individuals (Filipinos and
foreigners) residing within the Secured Area are free
to import raw materials, capital goods, equipment, and
consumer items tax and dutry-free. Consumption
items, however, must be consumed within the Secured
Area. Removal of raw materials, capital goods,
equipment and consumer items out of the Secured
Area for sale to non-SSEFPZ registered enterprises
shall be subject to the usual taxes and duties, except
as may be provided herein.
In Tiu v. Court of Appeals46 as reiterated in Coconut
Oil Refiners Association, Inc. v. Torres,47 this provision
limiting the special privileges on tax and duty-free
importation in the presently fenced-in former Subic
Naval Base has been declared valid and constitutional
and in accordance with RA 7227. Consistent with
these rulings and for easier management and
monitoring of activities and to prevent fraudulent
importation of merchandise and smuggling, the free
flow and importation of used motor vehicles shall be
operative only within the "secured area."
In sum, the Court finds that Article 2, Section 3.1 of
EO 156 is void insofar as it is made applicable to the
presently secured fenced-in former Subic Naval Base
area as stated in Section 1.1 of EO 97-A. Pursuant to
the separability clause48 of EO 156, Section 3.1 is
declared valid insofar as it applies to the customs
territory or the Philippine territory outside the presently
secured fenced-in former Subic Naval Base area as
stated in Section 1.1 of EO 97-A. Hence, used motor
vehicles that come into the Philippine territory via the
secured fenced-in former Subic Naval Base area may
be stored, used or traded therein, or exported out of
the Philippine territory, but they cannot be imported
into the Philippine territory outside of the secured
fenced-in former Subic Naval Base area.
WHEREFORE, the petitions are PARTIALLY
GRANTED and the May 24, 2004 Decisions of Branch
72, Regional Trial Court of Olongapo City, in Civil
Case No. 20-0-04 and Civil Case No. 22-0-04; and the
February 14, 2005 Decision of the Court of Appeals in
CA-G.R. SP No. 63284, are MODIFIED insofar as
they declared Article 2, Section 3.1 of Executive Order
No. 156, void in its entirety.
Said provision is declared VALID insofar as it applies
to the Philippine territory outside the presently
fenced-in former Subic Naval Base area and VOID
with respect to its application to the secured fenced-in
former Subic Naval Base area.
SO ORDERED.
ACEBEDO OPTICAL COMPANY, INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, Hon.
MAMINDIARA MANGOTARA, in his capacity as
Presiding Judge of the RTC, 12th Judicial Region,
Br. 1, Iligan City; SAMAHANG OPTOMETRIST Sa
PILIPINAS — Iligan City Chapter, LEO T.
CAHANAP, City Legal Officer, and Hon. CAMILO P.
CABILI, City Mayor of Iligan, respondents.
PURISIMA, J.:
At bar is a petition for review under Rule 45 of the
Rules of Court seeking to nullify the dismissal by the
Court of Appeals of the original petition for certiorari,
prohibition and mandamus filed by the herein
petitioner against the City Mayor and City Legal
Officer of Iligan and the Samahang Optometrist sa
Pilipinas — Iligan Chapter (SOPI, for brevity).
The antecedent facts leading to the filing of the instant
petition are as follows:
Petitioner applied with the Office of the City Mayor of
Iligan for a business permit. After consideration of
petitioner's application and the opposition interposed
thereto by local optometrists, respondent City Mayor
issued Business Permit No. 5342 subject to the
following conditions:
1. Since it is a corporation, Acebedo cannot
put up an optical clinic but only a commercial
store;
2. Acebedo cannot examine and/or prescribe
reading and similar optical glasses for patients,
because these are functions of optical clinics;
3. Acebedo cannot sell reading and similar
eyeglasses without a prescription having first
been made by an independent optometrist (not
its employee) or independent optical clinic.
Acebedo can only sell directly to the public,
without need of a prescription, Ray-Ban and
similar eyeglasses;
4. Acebedo cannot advertise optical lenses
and eyeglasses, but can advertise Ray-Ban
and similar glasses and frames;
5. Acebedo is allowed to grind lenses but only
upon the prescription of an independent
optometrist. 1
On December 5, 1988, private respondent Samahan
ng Optometrist Sa Pilipinas (SOPI), Iligan Chapter,
through its Acting President, Dr. Frances B. Apostol,
lodged a complaint against the petitioner before the
Office of the City Mayor, alleging that Acebedo had
violated the conditions set forth in its business permit
and requesting the cancellation and/or revocation of
such permit.
Acting on such complaint, then City Mayor Camilo P.
Cabili designated City Legal Officer Leo T. Cahanap to
conduct an investigation on the matter. On July 12,
1989, respondent City Legal Officer submitted a report
to the City Mayor finding the herein petitioner guilty of
violating all the conditions of its business permit and
recommending the disqualification of petitioner from
operating its business in Iligan City. The report further
advised that no new permit shall be granted to
petitioner for the year 1989 and should only be given
time to wind up its affairs.
On July 19, 1989, the City Mayor sent petitioner a
Notice of Resolution and Cancellation of Business
Permit effective as of said date and giving petitioner
three (3) months to wind up its affairs.
On October 17, 1989, petitioner brought a petition for
certiorari, prohibition and mandamus with prayer for
restraining order/preliminary injunction against the
respondents, City Mayor, City Legal Officer and
Samahan ng Optometrists sa Pilipinas-Iligan City
Chapter (SOPI), docketed as Civil Case No. 1497
before the Regional Trial Court of Iligan City, Branch I.
Petitioner alleged that (1) it was denied due process
because it was not given an opportunity to present its
evidence during the investigation conducted by the
City Legal Officer; (2) it was denied equal protection of
the laws as the limitations imposed on its business
permit were not imposed on similar businesses in
Iligan City; (3) the City Mayor had no authority to
impose the special conditions on its business permit;
and (4) the City Legal Officer had no authority to
conduct the investigation as the matter falls within the
exclusive jurisdiction of the Professional Regulation
Commission and the Board of Optometry.
Respondent SOPI interposed a Motion to Dismiss the
Petition on the ground of non-exhaustion of
administrative remedies but on November 24, 1989,
Presiding Judge Mamindiara P. Mangotara deferred
resolution of such Motion to Dismiss until after trial of
the case on the merits. However, the prayer for a writ
of preliminary injunction was granted. Thereafter,
respondent SOPI filed its answer.
On May 30, 1990, the trial court dismissed the petition
for failure to exhaust administrative remedies, and
dissolved the writ of preliminary injunction it earlier
issued. Petitioner's motion for reconsideration met the
same fate. It was denied by an Order dated June 28,
1990.
On October 3, 1990, instead of taking an appeal,
petitioner filed a petition for certiorari, prohibition and
mandamus with the Court of Appeals seeking to set
aside the questioned Order of Dismissal, branding the
same as tainted with grave abuse of discretion on the
part of the trial court.
On January 24, 1991, the Ninth Division 2 of the Court
of Appeals dismissed the petition for lack of merit.
Petitioner's motion reconsideration was also denied in
the Resolution dated May 15, 1991.
Undaunted, petitioner has come before this court via
the present petition, theorizing that:
A.
THE RESPONDENT COURT, WHILE
CORRECTLY HOLDING THAT THE
RESPONDENT CITY MAYOR ACTED
BEYOND HIS AUTHORITY IN IMPOSING
THE SPECIAL CONDITIONS IN THE PERMIT
AS THEY HAD NO BASIS IN ANY LAW OR
ORDINANCE, ERRED IN HOLDING THAT
THE SAID SPECIAL CONDITIONS
NEVERTHELESS BECAME BINDING ON
PETITIONER UPON ITS ACCEPTANCE
THEREOF AS A PRIVATE AGREEMENT OR
CONTRACT.
B.
THE RESPONDENT COURT OF APPEALS
ERRED IN HOLDING THAT THE CONTRACT
BETWEEN PETITIONER AND THE CITY OF
ILIGAN WAS ENTERED INTO BY THE
LATTER IN THE PERFORMANCE OF ITS
PROPRIETARY FUNCTIONS.
The petition is impressed with merit.
Although petitioner agrees with the finding of the Court
of Appeals that respondent City Mayor acted beyond
the scope of his authority in imposing the assailed
conditions in subject business permit, it has excepted
to the ruling of the Court of Appeals that the said
conditions nonetheless became binding on petitioner,
once accepted, as a private agreement or contract.
Petitioner maintains that the said special conditions
are null and void for being ultra vires and cannot be
given effect; and therefore, the principle of estoppel
cannot apply against it.
On the other hand, the public respondents, City Mayor
and City Legal Officer, private respondent SOPI and
the Office of the Solicitor General contend that as a
valid exercise of police power, respondent City Mayor
has the authority to impose, as he did, special
conditions in the grant of business permits.
Police power as an inherent attribute of sovereignty is
the power to prescribe regulations to promote the
health, morals, peace, education, good order or safety
and general welfare of the people. 9 The State, through
the legislature, has delegated the exercise of police
power to local government units, as agencies of the
State, in order to effectively accomplish and carry out
the declared objects of their creation. 4 This delegation
of police power is embodied in the general welfare
clause of the Local Government Code which provides:
Sec. 6. General Welfare. — Every local
government unit shall exercise the powers
expressly granted, those necessarily implied
therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and
effective governance, and those which are
essential to the promotion of the general
welfare. Within their respective territorial
jurisdictions, local government units shall
ensure and support, among other things, the
preservation and enrichment of culture,
promote health and safety, enhance the right of
the people to a balanced ecology, encourage
and support the development of appropriate
and self-reliant scientific and technological
capabilities, improve public morals, enhance
economic prosperity and social justice,
promote full employment among their
residents, maintain peace and order, and
preserve the comfort and convenience of their
inhabitants.
The scope of police power has been held to be so
comprehensive as to encompass almost all matters
affecting the health, safety, peace, order, morals,
comfort and convenience of the community. Police
power is essentially regulatory in nature and the power
to issue licenses or grant business permits, if
exercised for a regulatory and not revenue-raising
purpose, is within the ambit of this power. 5
The authority of city mayors to issue or grant licenses
and business permits is beyond cavil. It is provided for
by law. Section 171, paragraph 2 (n) of Batas
Pambansa Bilang 337 otherwise known as the Local
Government Code of 1983, reads:
Sec. 171. The City Mayor shall:
xxx xxx xxx
n) Grant or refuse to grant, pursuant to law, city
licenses or permits, and revoke the same for
violation of law or ordinance or the conditions
upon which they are granted.
However, the power to grant or issue licenses or
business permits must always be exercised in
accordance with law, with utmost observance of the
rights of all concerned to due process and equal
protection of the law.
Succinct and in point is the ruling of this Court, that:
. . . While a business may be regulated, such
regulation must, however, be within the bounds
of reason, i.e., the regulatory ordinance must
be reasonable, and its provision cannot be
oppressive amounting to an arbitrary
interference with the business or calling
subject of regulation. A lawful business or
calling may not, under the guise of regulation,
be unreasonably interfered with even by the
exercise of police power. . . .
xxx xxx xxx
. . . The exercise of police power by the local
government is valid unless it contravenes the
fundamental law of the land or an act of the
legislature, or unless it is against public policy
or is unreasonable, oppressive, partial,
discriminating or in derogation of a common
right. 6
In the case under consideration, the business permit
granted by respondent City Mayor to petitioner was
burdened with several conditions. Petitioner agrees
with the holding by the Court of Appeals that
respondent City Mayor acted beyond his authority in
imposing such special conditions in its permit as the
same have no basis in the law or ordinance. Public
respondents and private respondent SOPI, on the
other hand, are one in saying that the imposition of
said special conditions on petitioner's business permit
is well within the authority of the City Mayor as a valid
exercise of police power.
As aptly discussed by the Solicitor General in his
Comment, the power to issue licenses and permits
necessarily includes the corollary power to revoke,
withdraw or cancel the same. And the power to revoke
or cancel, likewise includes the power to restrict
through the imposition of certain conditions. In the
case of Austin-Hardware, Inc. vs. Court of Appeals, 7 it
was held that the power to license carries with it the
authority to provide reasonable terms and conditions
under which the licensed business shall be conducted.
As the Solicitor General puts it:
If the City Mayor is empowered to grant or
refuse to grant a license, which is a broader
power, it stands to reason that he can also
exercise a lesser power that is reasonably
incidental to his express power, i.e. to restrict a
license through the imposition of certain
conditions, especially so that there is no
positive prohibition to the exercise of such
prerogative by the City Mayor, nor is there any
particular official or body vested with such
authority. 8
However, the present inquiry does not stop there, as
the Solicitor General believes. The power or authority
of the City Mayor to impose conditions or restrictions
in the business permit is indisputable. What petitioner
assails are the conditions imposed in its particular
case which, it complains, amount to a confiscation of
the business in which petitioner is engaged.
Distinction must be made between the grant of a
license or permit to do business and the issuance of a
license to engage in the practice of a particular
profession. The first is usually granted by the local
authorities and the second is issued by the Board or
Commission tasked to regulate the particular
profession. A business permit authorizes the person,
natural or otherwise, to engage in business or some
form of commercial activity. A professional license, on
the other hand, is the grant of authority to a natural
person to engage in the practice or exercise of his or
her profession.
In the case at bar, what is sought by petitioner from
respondent City Mayor is a permit to engage in the
business of running an optical shop. It does not
purport to seek a license to engage in the practice of
optometry as a corporate body or entity, although it
does have in its employ, persons who are duly
licensed to practice optometry by the Board of
Examiners in Optometry.
The case of Samahan ng Optometrists sa Pilipinas vs.
Acebedo International Corporation, G.R. No. 117097, 9
promulgated by this Court on March 21, 1997, is in
point. The factual antecedents of that case are similar
to those of the case under consideration and the issue
ultimately resolved therein is exactly the same issue
posed for resolution by this Court en banc.
In the said case, the Acebedo International
Corporation filed with the Office of the Municipal
Mayor an application for a business permit for the
operation of a branch of Acebedo Optical in Candon,
Ilocos Sur. The application was opposed by the
Samahan ng Optometrists sa Pilipinas-Ilocos Sur
Chapter, theorizing that Acebedo is a juridical entity
not qualified to practice optometry. A committee was
created by the Office of the Mayor to study private
respondent's application. Upon recommendation of
the said committee, Acebedo's application for a
business permit was denied. Acebedo filed a petition
with the Regional Trial Court but the same was
dismissed. On appeal, however, the Court of Appeals
reversed the trial court's disposition, prompting the
Samahan ng Optometrists to elevate the matter to this
Court.
The First Division of this Court, then composed of
Honorable Justice Teodoro Padilla, Josue Bellosillo,
Jose Vitug and Santiago Kapunan, with Honorable
Justice Regino Hermosisima, Jr. as ponente, denied
the petition and ruled in favor of respondent Acebedo
International Corporation, holding that "the fact that
private respondent hires optometrists who practice
their profession in the course of their employment in
private respondent's optical shops, does not translate
into a practice of optometry by private respondent
itself," 10 The Court further elucidated that in both the
old and new Optometry Law, R.A. No. 1998,
superseded by R.A. No. 8050, it is significant to note
that there is no prohibition against the hiring by
corporations of optometrists. The Court concluded
thus:
All told, there is no law that prohibits the hiring
by corporations of optometrists or considers
the hiring by corporations of optometrists as a
practice by the corporation itself of the
profession of optometry.
In the present case, the objective of the imposition of
subject conditions on petitioner's business permit
could be attained by requiring the optometrists in
petitioner's employ to produce a valid certificate of
registration as optometrist, from the Board of
Examiners in Optometry. A business permit is issued
primarily to regulate the conduct of business and the
City Mayor cannot, through the issuance of such
permit, regulate the practice of a profession, like that
of optometry. Such a function is within the exclusive
domain of the administrative agency specifically
empowered by law to supervise the profession, in this
case the Professional Regulations Commission and
the Board of Examiners in Optometry.
It is significant to note that during the deliberations of
the bicameral conference committee of the Senate
and the House of Representatives on R.A. 8050
(Senate Bill No. 1998 and House Bill No. 14100), the
committee failed to reach a consensus as to the
prohibition on indirect practice of optometry by
corporations. The proponent of the bill, former Senator
Freddie Webb, admitted thus:
Senator Webb: xxx xxx xxx
The focus of contention remains to be the
proposal of prohibiting the indirect practice of
optometry by corporations.1âwphi1 We took a
second look and even a third look at the issue
in the bicameral conference, but a compromise
remained elusive. 11
Former Senator Leticia Ramos-Shahani likewise voted
her reservation in casting her vote:
Senator Shahani: Mr. President.
The optometry bills have evoked controversial
views from the members of the panel. While
we realize the need to uplift the standards of
 optometry as a profession, the consesnsus of
both Houses was to avoid touching sensitive
issues which properly belong to judicial
determination. Thus, the bicameral conference
committee decided to leave the issue of
indirect practice of optometry and the use of
trade names open to the wisdom of the Courts
which are vested with the prerogative of
interpreting the laws. 12
From the foregoing, it is thus evident that Congress
has not adopted a unanimous position on the matter of
prohibition of indirect practice of optometry by
corporations, specifically on the hiring and
employment of licensed optometrists by optical
corporations. It is clear that Congress left the
resolution of such issue for judicial determination, and
it is therefore proper for this Court to resolve the issue.
Even in the United States, jurisprudence varies and
there is a conflict of opinions among the federal courts
as to the right of a corporation or individual not himself
licensed, to hire and employ licensed optometrists. 13
Courts have distinguished between optometry as a
learned profession in the category of law and
medicine, and optometry as a mechanical art. And,
insofar as the courts regard optometry as merely a
mechanical art, they have tended to find nothing
objectionable in the making and selling of eyeglasses,
spectacles and lenses by corporations so long as the
patient is actually examined and prescribed for by a
qualified practitioner. 14
The primary purpose of the statute regulating the
practice of optometry is to insure that optometrical
services are to be rendered by competent and
licensed persons in order to protect the health and
physical welfare of the people from the dangers
engendered by unlicensed practice. Such purpose
may be fully accomplished although the person
rendering the service is employed by a corporation. 15
Furthermore, it was ruled that the employment of a
qualified optometrist by a corporation is not against
public policy. 16 Unless prohibited by statutes, a
corporation has all the contractual rights that an
individual has 17 and it does not become the practice of
medicine or optometry because of the presence of a
physician or optometrist. 18 The manufacturing, selling,
trading and bartering of eyeglasses and spectacles as
articles of merchandise do not constitute the practice
of optometry. 19
In the case of Dvorine vs. Castelberg Jewelry
Corporation, 20 defendant corporation conducted as
part of its business, a department for the sale of
eyeglasses and the furnishing of optometrical services
to its clients. It employed a registered optometrist who
was compensated at a regular salary and commission
and who was furnished instruments and appliances
needed for the work, as well as an office. In holding
that corporation was not engaged in the practice of
optometry, the court ruled that there is no public policy
forbidding the commercialization of optometry, as in
law and medicine, and recognized the general practice
of making it a commercial business by advertising and
selling eyeglasses.
To accomplish the objective of the regulation, a state
may provide by statute that corporations cannot sell
eyeglasses, spectacles, and lenses unless a duly
licensed physician or a duly qualified optometrist is in
charge of, and in personal attendance at the place
where such articles are sold. 21 In such a case, the
patient's primary and essential safeguard lies in the
optometrist's control of the "treatment" by means of
prescription and preliminary and final examination. 22
In analogy, it is noteworthy that private hospitals are
maintained by corporations incorporated for the
purpose of furnishing medical and surgical treatment.
In the course of providing such treatments, these
corporations employ physicians, surgeons and
medical practitioners, in the same way that in the
course of manufacturing and selling eyeglasses, eye
frames and optical lenses, optical shops hire licensed
optometrists to examine, prescribe and dispense
ophthalmic lenses. No one has ever charged that
these corporations are engaged in the practice of
medicine. There is indeed no valid basis for treating
corporations engaged in the business of running
optical shops differently.
It also bears stressing, as petitioner has pointed out,
that the public and private respondents did not appeal
from the ruling of the Court of Appeals. Consequently,
the holding by the Court of Appeals that the act of
respondent City Mayor in imposing the questioned
special conditions on petitioner's business permit is
ultra vires cannot be put into issue here by the
respondents. It is well-settled that:
A party who has not appealed from the
decision may not obtain any affirmative relief
from the appellate court other than what he
had obtain from the lower court, if any, whose
decision is brought up on appeal. 23
. . . an appellee who is not an appellant may
assign errors in his brief where his purpose is
to maintain the judgment on other grounds, but
he cannot seek modification or reversal of the
judgment or affirmative relief unless he has
also appealed. 24
Thus, respondents' submission that the imposition of
subject special conditions on petitioner's business
permit is not ultra vires cannot prevail over the finding
and ruling by the Court of Appeals from which they
(respondents) did not appeal.
Anent the second assigned error, petitioner maintains
that its business permit issued by the City Mayor is not
a contract entered into by Iligan City in the exercise of
its proprietary functions, such that although petitioner
agreed to such conditions, it cannot be held in
estoppel since ultra vires acts cannot be given effect.
Respondents, on the other hand, agree with the ruling
of the Court of Appeals that the business permit in
question is in the nature of a contract between Iligan
City and the herein petitioner, the terms and conditions
of which are binding upon agreement, and that
petitioner is estopped from questioning the same.
Moreover, in the Resolution denying petitioner's
motion for reconsideration, the Court of Appeals held
that the contract between the petitioner and the City of
Iligan was entered into by the latter in the performance
of its proprietary functions.
This Court holds otherwise. It had occasion to rule that
a license or permit is not in the nature of a contract but
a special privilege.
. . . a license or a permit is not a contract
between the sovereignty and the licensee or
permitee, and is not a property in the
constitutional sense, as to which the
constitutional proscription against impairment
of the obligation of contracts may extend. A
license is rather in the nature of a special
privilege, of a permission or authority to do
what is within its terms. It is not in any way
vested, permanent or absolute. 25
It is therefore decisively clear that estoppel cannot
apply in this case. The fact that petitioner acquiesced
in the special conditions imposed by the City Mayor in
subject business permit does not preclude it from
challenging the said imposition, which is ultra vires or
beyond the ambit of authority of respondent City
Mayor. Ultra vires acts or acts which are clearly
beyond the scope of one's authority are null and void
and cannot be given any effect. The doctrine of
estoppel cannot operate to give effect to an act which
is otherwise null and void or ultra vires.
The Court of Appeals erred in adjudging subject
business permit as having been issued by responded
City Mayor in the performance of proprietary functions
of Iligan City. As hereinabove elaborated upon, the
issuance of business licenses and permits by a
municipality or city is essentially regulatory in nature.
The authority, which devolved upon local government
units to issue or grant such licenses or permits, is
essentially in the exercise of the police power of the
State within the contemplation of the general welfare
clause of the Local Government Code.
WHEREFORE, the petition is GRANTED; the Decision
of the Court of Appeals in CA-GR SP No. 22995
REVERSED: and the respondent City Mayor is hereby
ordered to reissue petitioner's business permit in
accordance with law and with this disposition. No
pronouncement as to costs.
SO ORDERED.
WHITE LIGHT CORPORATION, TITANIUM
CORPORATION and STA. MESA TOURIST &
DEVELOPMENT CORPORATION, Petitioners,
vs.
CITY OF MANILA, represented by DE CASTRO,
MAYOR ALFREDO S. LIM, Respondent.
DECISION
Tinga, J.:
With another city ordinance of Manila also principally
involving the tourist district as subject, the Court is
confronted anew with the incessant clash between
government power and individual liberty in tandem
with the archetypal tension between law and morality.
In City of Manila v. Laguio, Jr.,1 the Court affirmed the
nullification of a city ordinance barring the operation of
motels and inns, among other establishments, within
the Ermita-Malate area. The petition at bar assails a
similarly-motivated city ordinance that prohibits those
same establishments from offering short-time
admission, as well as pro-rated or "wash up" rates for
such abbreviated stays. Our earlier decision tested the
city ordinance against our sacred constitutional rights
to liberty, due process and equal protection of law. The
same parameters apply to the present petition.
This Petition2 under Rule 45 of the Revised Rules on
Civil Procedure, which seeks the reversal of the
Decision3 in C.A.-G.R. S.P. No. 33316 of the Court of
Appeals, challenges the validity of Manila City
Ordinance No. 7774 entitled, "An Ordinance
Prohibiting Short-Time Admission, Short-Time
Admission Rates, and Wash-Up Rate Schemes in
Hotels, Motels, Inns, Lodging Houses, Pension
Houses, and Similar Establishments in the City of
Manila" (the Ordinance).
I.
The facts are as follows:
On December 3, 1992, City Mayor Alfredo S. Lim
(Mayor Lim) signed into law the Ordinance.4 The
Ordinance is reproduced in full, hereunder:
SECTION 1. Declaration of Policy. It is hereby the
declared policy of the City Government to protect the
best interest, health and welfare, and the morality of
its constituents in general and the youth in particular.
SEC. 2. Title. This ordinance shall be known as "An
Ordinance" prohibiting short time admission in hotels,
motels, lodging houses, pension houses and similar
establishments in the City of Manila.
SEC. 3. Pursuant to the above policy, short-time
admission and rate [sic], wash-up rate or other
similarly concocted terms, are hereby prohibited in
hotels, motels, inns, lodging houses, pension houses
and similar establishments in the City of Manila.
SEC. 4. Definition of Term[s]. Short-time admission
shall mean admittance and charging of room rate for
less than twelve (12) hours at any given time or the
renting out of rooms more than twice a day or any
other term that may be concocted by owners or
managers of said establishments but would mean the
same or would bear the same meaning.
SEC. 5. Penalty Clause. Any person or corporation
who shall violate any provision of this ordinance shall
upon conviction thereof be punished by a fine of Five
Thousand (₱5,000.00) Pesos or imprisonment for a
period of not exceeding one (1) year or both such fine
and imprisonment at the discretion of the court;
Provided, That in case of [a] juridical person, the
president, the manager, or the persons in charge of
the operation thereof shall be liable: Provided, further,
That in case of subsequent conviction for the same
offense, the business license of the guilty party shall
automatically be cancelled.
SEC. 6. Repealing Clause. Any or all provisions of
City ordinances not consistent with or contrary to this
measure or any portion hereof are hereby deemed
repealed.
SEC. 7. Effectivity. This ordinance shall take effect
immediately upon approval.
Enacted by the city Council of Manila at its regular
session today, November 10, 1992.
Approved by His Honor, the Mayor on December 3,
1992.
On December 15, 1992, the Malate Tourist and
Development Corporation (MTDC) filed a complaint for
declaratory relief with prayer for a writ of preliminary
injunction and/or temporary restraining order ( TRO)5
with the Regional Trial Court (RTC) of Manila, Branch
9 impleading as defendant, herein respondent City of
Manila (the City) represented by Mayor Lim.6 MTDC
prayed that the Ordinance, insofar as it includes
motels and inns as among its prohibited
establishments, be declared invalid and
unconstitutional. MTDC claimed that as owner and
operator of the Victoria Court in Malate, Manila it was
authorized by Presidential Decree (P.D.) No. 259 to
admit customers on a short time basis as well as to
charge customers wash up rates for stays of only
three hours.
On December 21, 1992, petitioners White Light
Corporation (WLC), Titanium Corporation (TC) and
Sta. Mesa Tourist and Development Corporation
(STDC) filed a motion to intervene and to admit
attached complaint-in-intervention7 on the ground that
the Ordinance directly affects their business interests
as operators of drive-in-hotels and motels in Manila.8
The three companies are components of the Anito
Group of Companies which owns and operates
several hotels and motels in Metro Manila.9
On December 23, 1992, the RTC granted the motion
to intervene.10 The RTC also notified the Solicitor
General of the proceedings pursuant to then Rule 64,
Section 4 of the Rules of Court. On the same date,
MTDC moved to withdraw as plaintiff.11
On December 28, 1992, the RTC granted MTDC's
motion to withdraw.12 The RTC issued a TRO on
January 14, 1993, directing the City to cease and
desist from enforcing the Ordinance.13 The City filed
an Answer dated January 22, 1993 alleging that the
Ordinance is a legitimate exercise of police power.14
On February 8, 1993, the RTC issued a writ of
preliminary injunction ordering the city to desist from
the enforcement of the Ordinance.15 A month later, on
March 8, 1993, the Solicitor General filed his
Comment arguing that the Ordinance is constitutional.
During the pre-trial conference, the WLC, TC and
STDC agreed to submit the case for decision without
trial as the case involved a purely legal question.16 On
October 20, 1993, the RTC rendered a decision
declaring the Ordinance null and void. The dispositive
portion of the decision reads:
WHEREFORE, in view of all the foregoing,
[O]rdinance No. 7774 of the City of Manila is hereby
declared null and void.
Accordingly, the preliminary injunction heretofor issued
is hereby made permanent.
SO ORDERED.17
The RTC noted that the ordinance "strikes at the
personal liberty of the individual guaranteed and
jealously guarded by the Constitution."18 Reference
was made to the provisions of the Constitution
encouraging private enterprises and the incentive to
needed investment, as well as the right to operate
economic enterprises. Finally, from the observation
that the illicit relationships the Ordinance sought to
dissuade could nonetheless be consummated by
simply paying for a 12-hour stay, the RTC likened the
law to the ordinance annulled in Ynot v. Intermediate
Appellate Court,19 where the legitimate purpose of
preventing indiscriminate slaughter of carabaos was
sought to be effected through an inter-province ban on
the transport of carabaos and carabeef.
The City later filed a petition for review on certiorari
with the Supreme Court.20 The petition was docketed
as G.R. No. 112471. However in a resolution dated
January 26, 1994, the Court treated the petition as a
petition for certiorari and referred the petition to the
Court of Appeals.21
Before the Court of Appeals, the City asserted that the
Ordinance is a valid exercise of police power pursuant
to Section 458 (4)(iv) of the Local Government Code
which confers on cities, among other local government
units, the power:
[To] regulate the establishment, operation and
maintenance of cafes, restaurants, beerhouses,
hotels, motels, inns, pension houses, lodging houses
and other similar establishments, including tourist
guides and transports.22
The Ordinance, it is argued, is also a valid exercise of
the power of the City under Article III, Section 18(kk)
of the Revised Manila Charter, thus:
"to enact all ordinances it may deem necessary and
proper for the sanitation and safety, the furtherance of
the prosperity and the promotion of the morality,
peace, good order, comfort, convenience and general
welfare of the city and its inhabitants, and such others
as be necessary to carry into effect and discharge the
powers and duties conferred by this Chapter; and to
fix penalties for the violation of ordinances which shall
not exceed two hundred pesos fine or six months
imprisonment, or both such fine and imprisonment for
a single offense.23
Petitioners argued that the Ordinance is
unconstitutional and void since it violates the right to
privacy and the freedom of movement; it is an invalid
exercise of police power; and it is an unreasonable
and oppressive interference in their business.
The Court of Appeals reversed the decision of the
RTC and affirmed the constitutionality of the
Ordinance.24 First, it held that the Ordinance did not
violate the right to privacy or the freedom of
movement, as it only penalizes the owners or
operators of establishments that admit individuals for
short time stays. Second, the virtually limitless reach
of police power is only constrained by having a lawful
object obtained through a lawful method. The lawful
objective of the Ordinance is satisfied since it aims to
curb immoral activities. There is a lawful method since
the establishments are still allowed to operate. Third,
the adverse effect on the establishments is justified by
the well-being of its constituents in general. Finally, as
held in Ermita-Malate Motel Operators Association v.
City Mayor of Manila, liberty is regulated by law.
TC, WLC and STDC come to this Court via petition for
review on certiorari.25 In their petition and
Memorandum, petitioners in essence repeat the
assertions they made before the Court of Appeals.
They contend that the assailed Ordinance is an invalid
exercise of police power.
II.
We must address the threshold issue of petitioners’
standing. Petitioners allege that as owners of
establishments offering "wash-up" rates, their
business is being unlawfully interfered with by the
Ordinance. However, petitioners also allege that the
equal protection rights of their clients are also being
interfered with. Thus, the crux of the matter is whether
or not these establishments have the requisite
standing to plead for protection of their patrons' equal
protection rights.
Standing or locus standi is the ability of a party to
demonstrate to the court sufficient connection to and
harm from the law or action challenged to support that
party's participation in the case. More importantly, the
doctrine of standing is built on the principle of
separation of powers,26 sparing as it does
unnecessary interference or invalidation by the judicial
branch of the actions rendered by its co-equal
branches of government.
The requirement of standing is a core component of
the judicial system derived directly from the
Constitution.27 The constitutional component of
standing doctrine incorporates concepts which
concededly are not susceptible of precise definition.28
In this jurisdiction, the extancy of "a direct and
personal interest" presents the most obvious cause,
as well as the standard test for a petitioner's
standing.29 In a similar vein, the United States
Supreme Court reviewed and elaborated on the
meaning of the three constitutional standing
requirements of injury, causation, and redressability in
Allen v. Wright.30
Nonetheless, the general rules on standing admit of
several exceptions such as the overbreadth doctrine,
taxpayer suits, third party standing and, especially in
the Philippines, the doctrine of transcendental
importance.31
For this particular set of facts, the concept of third
party standing as an exception and the overbreadth
doctrine are appropriate. In Powers v. Ohio,32 the
United States Supreme Court wrote that: "We have
recognized the right of litigants to bring actions on
behalf of third parties, provided three important criteria
are satisfied: the litigant must have suffered an
‘injury-in-fact,’ thus giving him or her a "sufficiently
concrete interest" in the outcome of the issue in
dispute; the litigant must have a close relation to the
third party; and there must exist some hindrance to the
third party's ability to protect his or her own
interests."33 Herein, it is clear that the business
interests of the petitioners are likewise injured by the
Ordinance. They rely on the patronage of their
customers for their continued viability which appears
to be threatened by the enforcement of the Ordinance.
The relative silence in constitutional litigation of such
special interest groups in our nation such as the
American Civil Liberties Union in the United States
may also be construed as a hindrance for customers
to bring suit.34
American jurisprudence is replete with examples
where parties-in-interest were allowed standing to
advocate or invoke the fundamental due process or
equal protection claims of other persons or classes of
persons injured by state action. In Griswold v.
Connecticut,35 the United States Supreme Court held
that physicians had standing to challenge a
reproductive health statute that would penalize them
as accessories as well as to plead the constitutional
protections available to their patients. The Court held
that:
"The rights of husband and wife, pressed here, are
likely to be diluted or adversely affected unless those
rights are considered in a suit involving those who
have this kind of confidential relation to them."36
An even more analogous example may be found in
Craig v. Boren,37 wherein the United States Supreme
Court held that a licensed beverage vendor has
standing to raise the equal protection claim of a male
customer challenging a statutory scheme prohibiting
the sale of beer to males under the age of 21 and to
females under the age of 18. The United States High
Court explained that the vendors had standing "by
acting as advocates of the rights of third parties who
seek access to their market or function."38
Assuming arguendo that petitioners do not have a
relationship with their patrons for the former to assert
the rights of the latter, the overbreadth doctrine comes
into play. In overbreadth analysis, challengers to
government action are in effect permitted to raise the
rights of third parties. Generally applied to statutes
infringing on the freedom of speech, the overbreadth
doctrine applies when a statute needlessly restrains
even constitutionally guaranteed rights.39 In this case,
the petitioners claim that the Ordinance makes a
sweeping intrusion into the right to liberty of their
clients. We can see that based on the allegations in
the petition, the Ordinance suffers from overbreadth.
We thus recognize that the petitioners have a right to
assert the constitutional rights of their clients to
patronize their establishments for a "wash-rate" time
frame.
III.
To students of jurisprudence, the facts of this case will
recall to mind not only the recent City of Manila ruling,
but our 1967 decision in Ermita-Malate Hotel and
Motel Operations Association, Inc., v. Hon. City Mayor
of Manila.40 Ermita-Malate concerned the City
ordinance requiring patrons to fill up a prescribed form
stating personal information such as name, gender,
nationality, age, address and occupation before they
could be admitted to a motel, hotel or lodging house.
This earlier ordinance was precisely enacted to
minimize certain practices deemed harmful to public
morals. A purpose similar to the annulled ordinance in
City of Manila which sought a blanket ban on motels,
inns and similar establishments in the Ermita-Malate
area. However, the constitutionality of the ordinance in
Ermita-Malate was sustained by the Court.
The common thread that runs through those decisions
and the case at bar goes beyond the singularity of the
localities covered under the respective ordinances. All
three ordinances were enacted with a view of
regulating public morals including particular illicit
activity in transient lodging establishments. This could
be described as the middle case, wherein there is no
wholesale ban on motels and hotels but the services
offered by these establishments have been severely
restricted. At its core, this is another case about the
extent to which the State can intrude into and regulate
the lives of its citizens.
The test of a valid ordinance is well established. A
long line of decisions including City of Manila has held
that for an ordinance to be valid, it must not only be
within the corporate powers of the local government
unit to enact and pass according to the procedure
prescribed by law, it must also conform to the following
substantive requirements: (1) must not contravene the
Constitution or any statute; (2) must not be unfair or
oppressive; (3) must not be partial or discriminatory;
(4) must not prohibit but may regulate trade; (5) must
be general and consistent with public policy; and (6)
must not be unreasonable.41
The Ordinance prohibits two specific and distinct
business practices, namely wash rate admissions and
renting out a room more than twice a day. The ban is
evidently sought to be rooted in the police power as
conferred on local government units by the Local
Government Code through such implements as the
general welfare clause.
A.
Police power, while incapable of an exact definition,
has been purposely veiled in general terms to
underscore its comprehensiveness to meet all
exigencies and provide enough room for an efficient
and flexible response as the conditions warrant.42
Police power is based upon the concept of necessity
of the State and its corresponding right to protect itself
and its people.43 Police power has been used as
justification for numerous and varied actions by the
State. These range from the regulation of dance
halls,44 movie theaters,45 gas stations46 and cockpits.47
The awesome scope of police power is best
demonstrated by the fact that in its hundred or so
years of presence in our nation’s legal system, its use
has rarely been denied.
The apparent goal of the Ordinance is to minimize if
not eliminate the use of the covered establishments
for illicit sex, prostitution, drug use and alike. These
goals, by themselves, are unimpeachable and
certainly fall within the ambit of the police power of the
State. Yet the desirability of these ends do not sanctify
any and all means for their achievement. Those
means must align with the Constitution, and our
emerging sophisticated analysis of its guarantees to
the people. The Bill of Rights stands as a rebuke to
the seductive theory of Macchiavelli, and, sometimes
even, the political majorities animated by his cynicism.
Even as we design the precedents that establish the
framework for analysis of due process or equal
protection questions, the courts are naturally inhibited
by a due deference to the co-equal branches of
government as they exercise their political functions.
But when we are compelled to nullify executive or
legislative actions, yet another form of caution
emerges. If the Court were animated by the same
passing fancies or turbulent emotions that motivate
many political decisions, judicial integrity is
compromised by any perception that the judiciary is
merely the third political branch of government. We
derive our respect and good standing in the annals of
history by acting as judicious and neutral arbiters of
the rule of law, and there is no surer way to that end
than through the development of rigorous and
sophisticated legal standards through which the courts
analyze the most fundamental and far-reaching
constitutional questions of the day.
B.
The primary constitutional question that confronts us is
one of due process, as guaranteed under Section 1,
Article III of the Constitution. Due process evades a
precise definition.48 The purpose of the guaranty is to
prevent arbitrary governmental encroachment against
the life, liberty and property of individuals. The due
process guaranty serves as a protection against
arbitrary regulation or seizure. Even corporations and
partnerships are protected by the guaranty insofar as
their property is concerned.
The due process guaranty has traditionally been
interpreted as imposing two related but distinct
restrictions on government, "procedural due process"
and "substantive due process." Procedural due
process refers to the procedures that the government
must follow before it deprives a person of life, liberty,
or property.49 Procedural due process concerns itself
with government action adhering to the established
process when it makes an intrusion into the private
sphere. Examples range from the form of notice given
to the level of formality of a hearing.
If due process were confined solely to its procedural
aspects, there would arise absurd situation of arbitrary
government action, provided the proper formalities are
followed. Substantive due process completes the
protection envisioned by the due process clause. It
inquires whether the government has sufficient
justification for depriving a person of life, liberty, or
property.50
The question of substantive due process, moreso than
most other fields of law, has reflected dynamism in
progressive legal thought tied with the expanded
acceptance of fundamental freedoms. Police power,
traditionally awesome as it may be, is now confronted
with a more rigorous level of analysis before it can be
upheld. The vitality though of constitutional due
process has not been predicated on the frequency
with which it has been utilized to achieve a liberal
result for, after all, the libertarian ends should
sometimes yield to the prerogatives of the State.
Instead, the due process clause has acquired potency
because of the sophisticated methodology that has
emerged to determine the proper metes and bounds
for its application.
C.
The general test of the validity of an ordinance on
substantive due process grounds is best tested when
assessed with the evolved footnote 4 test laid down by
the U.S. Supreme Court in U.S. v. Carolene
Products.51 Footnote 4 of the Carolene Products case
acknowledged that the judiciary would defer to the
legislature unless there is a discrimination against a
"discrete and insular" minority or infringement of a
"fundamental right."52 Consequently, two standards of
judicial review were established: strict scrutiny for laws
dealing with freedom of the mind or restricting the
political process, and the rational basis standard of
review for economic legislation.
A third standard, denominated as heightened or
immediate scrutiny, was later adopted by the U.S.
Supreme Court for evaluating classifications based on
gender53 and legitimacy.54 Immediate scrutiny was
adopted by the U.S. Supreme Court in Craig,55 after
the Court declined to do so in Reed v. Reed.56 While
the test may have first been articulated in equal
protection analysis, it has in the United States since
been applied in all substantive due process cases as
well.
We ourselves have often applied the rational basis
test mainly in analysis of equal protection
challenges.57 Using the rational basis examination,
laws or ordinances are upheld if they rationally further
a legitimate governmental interest.58 Under
intermediate review, governmental interest is
extensively examined and the availability of less
restrictive measures is considered.59 Applying strict
scrutiny, the focus is on the presence of compelling,
rather than substantial, governmental interest and on
the absence of less restrictive means for achieving
that interest.
In terms of judicial review of statutes or ordinances,
strict scrutiny refers to the standard for determining
the quality and the amount of governmental interest
brought to justify the regulation of fundamental
freedoms.60 Strict scrutiny is used today to test the
validity of laws dealing with the regulation of speech,
gender, or race as well as other fundamental rights as
expansion from its earlier applications to equal
protection.61 The United States Supreme Court has
expanded the scope of strict scrutiny to protect
fundamental rights such as suffrage,62 judicial access63
and interstate travel.64
If we were to take the myopic view that an Ordinance
should be analyzed strictly as to its effect only on the
petitioners at bar, then it would seem that the only
restraint imposed by the law which we are capacitated
to act upon is the injury to property sustained by the
petitioners, an injury that would warrant the application
of the most deferential standard – the rational basis
test. Yet as earlier stated, we recognize the capacity of
the petitioners to invoke as well the constitutional
rights of their patrons – those persons who would be
deprived of availing short time access or wash-up
rates to the lodging establishments in question.
Viewed cynically, one might say that the infringed
rights of these customers were are trivial since they
seem shorn of political consequence. Concededly,
these are not the sort of cherished rights that, when
proscribed, would impel the people to tear up their
cedulas. Still, the Bill of Rights does not shelter
gravitas alone. Indeed, it is those "trivial" yet
fundamental freedoms – which the people reflexively
exercise any day without the impairing awareness of
their constitutional consequence – that accurately
reflect the degree of liberty enjoyed by the people.
Liberty, as integrally incorporated as a fundamental
right in the Constitution, is not a Ten
Commandments-style enumeration of what may or
what may not be done; but rather an atmosphere of
freedom where the people do not feel labored under a
Big Brother presence as they interact with each other,
their society and nature, in a manner innately
understood by them as inherent, without doing harm
or injury to others.
D.
The rights at stake herein fall within the same
fundamental rights to liberty which we upheld in City of
Manila v. Hon. Laguio, Jr. We expounded on that most
primordial of rights, thus:
Liberty as guaranteed by the Constitution was defined
by Justice Malcolm to include "the right to exist and
the right to be free from arbitrary restraint or servitude.
The term cannot be dwarfed into mere freedom from
physical restraint of the person of the citizen, but is
deemed to embrace the right of man to enjoy the
facilities with which he has been endowed by his
Creator, subject only to such restraint as are
necessary for the common welfare."[65] In accordance
with this case, the rights of the citizen to be free to use
his faculties in all lawful ways; to live and work where
he will; to earn his livelihood by any lawful calling; and
to pursue any avocation are all deemed embraced in
the concept of liberty.[66]
The U.S. Supreme Court in the case of Roth v. Board
of Regents, sought to clarify the meaning of "liberty." It
said:
While the Court has not attempted to define with
exactness the liberty . . . guaranteed [by the Fifth and
Fourteenth Amendments], the term denotes not
merely freedom from bodily restraint but also the right
of the individual to contract, to engage in any of the
common occupations of life, to acquire useful
knowledge, to marry, establish a home and bring up
children, to worship God according to the dictates of
his own conscience, and generally to enjoy those
privileges long recognized . . . as essential to the
orderly pursuit of happiness by free men. In a
Constitution for a free people, there can be no doubt
that the meaning of "liberty" must be broad indeed.67
[Citations omitted]
It cannot be denied that the primary animus behind the
ordinance is the curtailment of sexual behavior. The
City asserts before this Court that the subject
establishments "have gained notoriety as venue of
‘prostitution, adultery and fornications’ in Manila since
they ‘provide the necessary atmosphere for
clandestine entry, presence and exit and thus became
the ‘ideal haven for prostitutes and thrill-seekers.’"68
Whether or not this depiction of a mise-en-scene of
vice is accurate, it cannot be denied that legitimate
sexual behavior among willing married or consenting
single adults which is constitutionally protected69 will
be curtailed as well, as it was in the City of Manila
case. Our holding therein retains significance for our
purposes:
The concept of liberty compels respect for the
individual whose claim to privacy and interference
demands respect. As the case of Morfe v. Mutuc,
borrowing the words of Laski, so very aptly stated:
Man is one among many, obstinately refusing
reduction to unity. His separateness, his isolation, are
indefeasible; indeed, they are so fundamental that
they are the basis on which his civic obligations are
built. He cannot abandon the consequences of his
isolation, which are, broadly speaking, that his
experience is private, and the will built out of that
experience personal to himself. If he surrenders his
will to others, he surrenders himself. If his will is set by
the will of others, he ceases to be a master of himself.
I cannot believe that a man no longer a master of
himself is in any real sense free.
Indeed, the right to privacy as a constitutional right
was recognized in Morfe, the invasion of which should
be justified by a compelling state interest. Morfe
accorded recognition to the right to privacy
independently of its identification with liberty; in itself it
is fully deserving of constitutional protection.
Governmental powers should stop short of certain
intrusions into the personal life of the citizen.70
We cannot discount other legitimate activities which
the Ordinance would proscribe or impair. There are
very legitimate uses for a wash rate or renting the
room out for more than twice a day. Entire families are
known to choose pass the time in a motel or hotel
whilst the power is momentarily out in their homes. In
transit passengers who wish to wash up and rest
between trips have a legitimate purpose for
abbreviated stays in motels or hotels. Indeed any
person or groups of persons in need of comfortable
private spaces for a span of a few hours with purposes
other than having sex or using illegal drugs can
legitimately look to staying in a motel or hotel as a
convenient alternative.
E.
That the Ordinance prevents the lawful uses of a wash
rate depriving patrons of a product and the petitioners
of lucrative business ties in with another constitutional
requisite for the legitimacy of the Ordinance as a
police power measure. It must appear that the
interests of the public generally, as distinguished from
those of a particular class, require an interference with
private rights and the means must be reasonably
necessary for the accomplishment of the purpose and
not unduly oppressive of private rights.71 It must also
be evident that no other alternative for the
accomplishment of the purpose less intrusive of
private rights can work. More importantly, a
reasonable relation must exist between the purposes
of the measure and the means employed for its
accomplishment, for even under the guise of
protecting the public interest, personal rights and
those pertaining to private property will not be
permitted to be arbitrarily invaded.72
Lacking a concurrence of these requisites, the police
measure shall be struck down as an arbitrary intrusion
into private rights. As held in Morfe v. Mutuc, the
exercise of police power is subject to judicial review
when life, liberty or property is affected.73 However,
this is not in any way meant to take it away from the
vastness of State police power whose exercise enjoys
the presumption of validity.74
Similar to the Comelec resolution requiring
newspapers to donate advertising space to
candidates, this Ordinance is a blunt and heavy
instrument.75 The Ordinance makes no distinction
between places frequented by patrons engaged in
illicit activities and patrons engaged in legitimate
actions. Thus it prevents legitimate use of places
where illicit activities are rare or even unheard of. A
plain reading of section 3 of the Ordinance shows it
makes no classification of places of lodging, thus
deems them all susceptible to illicit patronage and
subject them without exception to the unjustified
prohibition.
The Court has professed its deep sentiment and
tenderness of the Ermita-Malate area, its longtime
home,76 and it is skeptical of those who wish to depict
our capital city – the Pearl of the Orient – as a
modern-day Sodom or Gomorrah for the Third World
set. Those still steeped in Nick Joaquin-dreams of the
grandeur of Old Manila will have to accept that Manila
like all evolving big cities, will have its problems.
Urban decay is a fact of mega cities such as Manila,
and vice is a common problem confronted by the
modern metropolis wherever in the world. The solution
to such perceived decay is not to prevent legitimate
businesses from offering a legitimate product. Rather,
cities revive themselves by offering incentives for new
businesses to sprout up thus attracting the dynamism
of individuals that would bring a new grandeur to
Manila.
The behavior which the Ordinance seeks to curtail is
in fact already prohibited and could in fact be
diminished simply by applying existing laws. Less
intrusive measures such as curbing the proliferation of
prostitutes and drug dealers through active police
work would be more effective in easing the situation.
So would the strict enforcement of existing laws and
regulations penalizing prostitution and drug use.
These measures would have minimal intrusion on the
businesses of the petitioners and other legitimate
merchants. Further, it is apparent that the Ordinance
can easily be circumvented by merely paying the
whole day rate without any hindrance to those
engaged in illicit activities. Moreover, drug dealers and
prostitutes can in fact collect "wash rates" from their
clientele by charging their customers a portion of the
rent for motel rooms and even apartments.
IV.
We reiterate that individual rights may be adversely
affected only to the extent that may fairly be required
by the legitimate demands of public interest or public
welfare. The State is a leviathan that must be
restrained from needlessly intruding into the lives of its
citizens. However well-intentioned the Ordinance may
be, it is in effect an arbitrary and whimsical intrusion
into the rights of the establishments as well as their
patrons. The Ordinance needlessly restrains the
operation of the businesses of the petitioners as well
as restricting the rights of their patrons without
sufficient justification. The Ordinance rashly equates
wash rates and renting out a room more than twice a
day with immorality without accommodating innocuous
intentions.
The promotion of public welfare and a sense of
morality among citizens deserves the full endorsement
of the judiciary provided that such measures do not
trample rights this Court is sworn to protect.77 The
notion that the promotion of public morality is a
function of the State is as old as Aristotle.78 The
advancement of moral relativism as a school of
philosophy does not de-legitimize the role of morality
in law, even if it may foster wider debate on which
particular behavior to penalize. It is conceivable that a
society with relatively little shared morality among its
citizens could be functional so long as the pursuit of
sharply variant moral perspectives yields an adequate
accommodation of different interests.79
To be candid about it, the oft-quoted American maxim
that "you cannot legislate morality" is ultimately
illegitimate as a matter of law, since as explained by
Calabresi, that phrase is more accurately interpreted
as meaning that efforts to legislate morality will fail if
they are widely at variance with public attitudes about
right and wrong.80 Our penal laws, for one, are
founded on age-old moral traditions, and as long as
there are widely accepted distinctions between right
and wrong, they will remain so oriented.
Yet the continuing progression of the human story has
seen not only the acceptance of the right-wrong
distinction, but also the advent of fundamental liberties
as the key to the enjoyment of life to the fullest. Our
democracy is distinguished from non-free societies not
with any more extensive elaboration on our part of
what is moral and immoral, but from our recognition
that the individual liberty to make the choices in our
lives is innate, and protected by the State.
Independent and fair-minded judges themselves are
under a moral duty to uphold the Constitution as the
embodiment of the rule of law, by reason of their
expression of consent to do so when they take the
oath of office, and because they are entrusted by the
people to uphold the law.81
Even as the implementation of moral norms remains
an indispensable complement to governance, that
prerogative is hardly absolute, especially in the face of
the norms of due process of liberty. And while the
tension may often be left to the courts to relieve, it is
possible for the government to avoid the constitutional
conflict by employing more judicious, less drastic
means to promote morality.
WHEREFORE, the Petition is GRANTED. The
Decision of the Court of Appeals is REVERSED, and
the Decision of the Regional Trial Court of Manila,
Branch 9, is REINSTATED. Ordinance No. 7774 is
hereby declared UNCONSTITUTIONAL. No
pronouncement as to costs.
SO ORDERED.
MAYOR PABLO P. MAGTAJAS & THE CITY OF
CAGAYAN DE ORO, petitioners,
vs.
PRYCE PROPERTIES CORPORATION, INC. &
PHILIPPINE AMUSEMENT AND GAMING
CORPORATION, respondents.
CRUZ, J.:
There was instant opposition when PAGCOR
announced the opening of a casino in Cagayan
de Oro City. Civic organizations angrily
denounced the project. The religious elements
echoed the objection and so did the women's
groups and the youth. Demonstrations were led
by the mayor and the city legislators. The media
trumpeted the protest, describing the casino as
an affront to the welfare of the city.
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 portion of a
building belonging to Pryce Properties
Corporation, Inc., one of the herein private
respondents, renovated and equipped the same,
and prepared to inaugurate its casino there during
the Christmas season.
The reaction of the Sangguniang Panlungsod of
Cagayan de Oro City was swift and hostile. On
December 7, 1992, it enacted Ordinance No.
3353 reading as follows:
ORDINANCE NO. 3353
AN ORDINANCE PROHIBITING
THE ISSUANCE OF BUSINESS
PERMIT AND CANCELLING
EXISTING BUSINESS PERMIT TO
ANY ESTABLISHMENT FOR THE
USING AND ALLOWING TO BE
USED ITS PREMISES OR
PORTION THEREOF FOR THE
OPERATION OF CASINO.
BE IT ORDAINED by the
Sangguniang Panlungsod of the
City of Cagayan de Oro, in session
assembled that:
Sec. 1. — That pursuant to the
policy of the city banning the
operation of casino within its
territorial jurisdiction, no business
permit shall be issued to any
person, partnership or corporation
for the operation of casino within the
city limits.
Sec. 2. — That it shall be a violation
of existing business permit by any
persons, partnership or corporation
to use its business establishment or
portion thereof, or allow the use
thereof by others for casino
operation and other gambling
activities.
Sec. 3. — PENALTIES. — Any
violation of such existing business
permit as defined in the preceding
section shall suffer the following
penalties, to wit:
a) Suspension of the business permit for sixty
(60) days for the first offense and a fine of
P1,000.00/day
b) Suspension of the business permit for Six (6)
months for the second offense, and a fine of
P3,000.00/day
c) Permanent revocation of the business permit
and imprisonment of One (1) year, for the third
and subsequent offenses.
Sec. 4. — This Ordinance shall take
effect ten (10) days from publication
thereof.
Nor was this all. On January 4, 1993, it adopted a
sterner Ordinance No. 3375-93 reading as
follows:
ORDINANCE NO. 3375-93
AN ORDINANCE PROHIBITING
THE OPERATION OF CASINO
AND PROVIDING PENALTY FOR
VIOLATION THEREFOR.
WHEREAS, the City Council
established a policy as early as
1990 against CASINO under its
Resolution No. 2295;
WHEREAS, on October 14, 1992,
the City Council passed another
Resolution No. 2673, reiterating its
policy against the establishment of
CASINO;
WHEREAS, subsequently,
thereafter, it likewise passed
Ordinance No. 3353, prohibiting the
issuance of Business Permit and to
cancel existing Business Permit to
any establishment for the using and
allowing to be used its premises or
portion thereof for the operation of
CASINO;
WHEREAS, under Art. 3, section
458, No. (4), sub paragraph VI of
the Local Government Code of 1991
(Rep. Act 7160) and under Art. 99,
No. (4), Paragraph VI of the
implementing rules of the Local
Government Code, the City Council
as the Legislative Body shall enact
measure to suppress any activity
inimical to public morals and general
welfare of the people and/or
regulate or prohibit such activity
pertaining to amusement or
entertainment in order to protect
social and moral welfare of the
community;
NOW THEREFORE,
BE IT ORDAINED by the City
Council in session duly assembled
that:
Sec. 1. — The operation of
gambling CASINO in the City of
Cagayan de Oro is hereby
prohibited.
Sec. 2. — Any violation of this
Ordinance shall be subject to the
following penalties:
a) Administrative fine of P5,000.00
shall be imposed against the
proprietor, partnership or
corporation undertaking the
operation, conduct, maintenance of
gambling CASINO in the City and
closure thereof;
b) Imprisonment of not less than six
(6) months nor more than one (1)
year or a fine in the amount of
P5,000.00 or both at the discretion
of the court against the manager,
supervisor, and/or any person
responsible in the establishment,
conduct and maintenance of
gambling CASINO.
Sec. 3. — This Ordinance shall take
effect ten (10) days after its
publication in a local newspaper of
general circulation.
Pryce assailed the ordinances before the Court of
Appeals, where it was joined by PAGCOR as
intervenor and supplemental petitioner. Their
challenge succeeded. On March 31, 1993, the
Court of Appeals declared the ordinances invalid
and issued the writ prayed for to prohibit their
enforcement. 1 Reconsideration of this decision
was denied on July 13, 1993. 2
Cagayan de Oro City and its mayor are now
before us in this petition for review under Rule 45
of the Rules of Court. 3 They aver that the
respondent Court of Appeals erred in holding that:
1. Under existing laws, the
Sangguniang Panlungsod of the
City of Cagayan de Oro does not
have the power and authority to
prohibit the establishment and
operation of a PAGCOR gambling
casino within the City's territorial
limits.
2. The phrase "gambling and other
prohibited games of chance" found
in Sec. 458, par. (a), sub-par. (1) —
(v) of R.A. 7160 could only mean
"illegal gambling."
 3. The questioned Ordinances in
effect annul P.D. 1869 and are
therefore invalid on that point.
4. The questioned Ordinances are
discriminatory to casino and partial
to cockfighting and are therefore
invalid on that point.
5. The questioned Ordinances are
not reasonable, not consonant with
the general powers and purposes of
the instrumentality concerned and
inconsistent with the laws or policy
of the State.
6. It had no option but to follow the
ruling in the case of Basco, et al. v.
PAGCOR, G.R. No. 91649, May 14,
1991, 197 SCRA 53 in disposing of
the issues presented in this present
case.
PAGCOR is a corporation created directly by P.D.
1869 to help centralize and regulate all games of
chance, including casinos on land and sea within
the territorial jurisdiction of the Philippines. In
Basco v. Philippine Amusements and Gaming
Corporation, 4 this Court sustained the
constitutionality of the decree and even cited the
benefits of the entity to the national economy as
the third highest revenue-earner in the
government, next only to the BIR and the Bureau
of Customs.
Cagayan de Oro City, like other local political
subdivisions, is empowered to enact ordinances
for the purposes indicated in the Local
Government Code. It is expressly vested with the
police power under what is known as the General
Welfare Clause now embodied in Section 16 as
follows:
Sec. 16. — General Welfare. —
Every local government unit shall
exercise the powers expressly
granted, those necessarily implied
therefrom, as well as powers
necessary, appropriate, or incidental
for its efficient and effective
governance, and those which are
essential to the promotion of the
general welfare. Within their
respective territorial jurisdictions,
local government units shall ensure
and support, among other things,
the preservation and enrichment of
culture, promote health and safety,
enhance the right of the people to a
balanced ecology, encourage and
support the development of
appropriate and self-reliant scientific
and technological capabilities,
improve public morals, enhance
economic prosperity and social
justice, promote full employment
among their residents, maintain
peace and order, and preserve the
comfort and convenience of their
inhabitants.
In addition, Section 458 of the said Code
specifically declares that:
Sec. 458. — Powers, Duties,
Functions and Compensation. — (a)
The Sangguniang Panlungsod, as
the legislative body of the city, shall
enact ordinances, approve
resolutions and appropriate funds
for the general welfare of the city
and its inhabitants pursuant to
Section 16 of this Code and in the
proper exercise of the corporate
powers of the city as provided for
under Section 22 of this Code, and
shall:
(1) Approve ordinances and pass
resolutions necessary for an
efficient and effective city
 government, and in this connection,
shall:
xxx xxx xxx
(v) Enact ordinances intended to prevent,
suppress and impose appropriate penalties for
habitual drunkenness in public places, vagrancy,
mendicancy, prostitution, establishment and
maintenance of houses of ill repute, gambling and
other prohibited games of chance, fraudulent
devices and ways to obtain money or property,
drug addiction, maintenance of drug dens, drug
pushing, juvenile delinquency, the printing,
distribution or exhibition of obscene or
pornographic materials or publications, and such
other activities inimical to the welfare and morals
of the inhabitants of the city;
This section also authorizes the local government
units to regulate properties and businesses within
their territorial limits in the interest of the general
welfare. 5
The petitioners argue that by virtue of these
provisions, the Sangguniang Panlungsod may
prohibit the operation of casinos because they
involve games of chance, which are detrimental to
the people. Gambling is not allowed by general
law and even by the Constitution itself. The
legislative power conferred upon local
government units may be exercised over all kinds
of gambling and not only over "illegal gambling"
as the respondents erroneously argue. Even if the
operation of casinos may have been permitted
under P.D. 1869, the government of Cagayan de
Oro City has the authority to prohibit them within
its territory pursuant to the authority entrusted to it
by the Local Government Code.
It is submitted that this interpretation is consonant
with the policy of local autonomy as mandated in
Article II, Section 25, and Article X of the
Constitution, as well as various other provisions
therein seeking to strengthen the character of the
nation. In giving the local government units the
power to prevent or suppress gambling and other
social problems, the Local Government Code has
recognized the competence of such communities
to determine and adopt the measures best
expected to promote the general welfare of their
inhabitants in line with the policies of the State.
The petitioners also stress that when the Code
expressly authorized the local government units
to prevent and suppress gambling and other
prohibited games of chance, like craps, baccarat,
blackjack and roulette, it meant all forms of
gambling without distinction. Ubi lex non
distinguit, nec nos distinguere debemos. 6
Otherwise, it would have expressly excluded from
the scope of their power casinos and other forms
of gambling authorized by special law, as it could
have easily done. The fact that it did not do so
simply means that the local government units are
permitted to prohibit all kinds of gambling within
their territories, including the operation of casinos.
The adoption of the Local Government Code, it is
pointed out, had the effect of modifying the
charter of the PAGCOR. The Code 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 powers of the PAGCOR
under the decree are expressly discontinued by
the Code insofar as they do not conform to its
philosophy and provisions, pursuant to Par. (f) of
its repealing clause reading as follows:
(f) All general and special laws,
acts, city charters, decrees,
executive orders, proclamations and
administrative regulations, or part or
parts thereof which are inconsistent
with any of the provisions of this
Code are hereby repealed or
modified accordingly.
It is also maintained that assuming there is doubt
regarding the effect of the Local Government
Code on P.D. 1869, the doubt must be resolved in
favor of the petitioners, in accordance with the
direction in the Code calling for its liberal
interpretation in favor of the local government
units. Section 5 of the Code specifically provides:
Sec. 5. Rules of Interpretation. — In
the interpretation of the provisions of
this Code, the following rules shall
apply:
(a) Any provision on a power of a
local government unit shall be
liberally interpreted in its favor, and
in case of doubt, any question
thereon shall be resolved in favor of
devolution of powers and of the
lower local government unit. Any fair
and reasonable doubt as to the
existence of the power shall be
interpreted in favor of the local
government unit concerned;
xxx xxx xxx
(c) The general welfare provisions in
this Code shall be liberally
interpreted to give more powers to
local government units in
accelerating economic development
and upgrading the quality of life for
the people in the community; . . .
(Emphasis supplied.)
Finally, the petitioners also attack gambling as
intrinsically harmful and cite various provisions of
the Constitution and several decisions of this
Court expressive of the general and official
disapprobation of the vice. They invoke the State
policies on the family and the proper upbringing of
the youth and, as might be expected, call
attention to the old case of U.S. v. Salaveria,7
which sustained a municipal ordinance prohibiting
the playing of panguingue. The petitioners decry
the immorality of gambling. They also impugn the
wisdom of P.D. 1869 (which they describe as "a
martial law instrument") in creating PAGCOR and
authorizing it to operate casinos "on land and sea
within the territorial jurisdiction of the Philippines."
This is the opportune time to stress an important
point.
The morality of gambling is not a justiciable issue.
Gambling is not illegal per se. While it is generally
considered inimical to the interests of the people,
there is nothing in the Constitution categorically
proscribing or penalizing gambling or, for that
matter, even mentioning it at all. It is left to
Congress to deal with the activity as it sees fit. In
the exercise of its own discretion, the legislature
may prohibit gambling altogether or allow it
without limitation or it may prohibit some forms of
gambling and allow others for whatever reasons it
may consider sufficient. Thus, it has prohibited
jueteng and monte but permits lotteries,
cockfighting and horse-racing. In making such
choices, Congress has consulted its own wisdom,
which this Court has no authority to review, much
less reverse. Well has it been said that courts do
not sit to resolve the merits of conflicting theories.
8
That is the prerogative of the political
departments. It is settled that questions regarding
the wisdom, morality, or practicibility of statutes
are not addressed to the judiciary but may be
resolved only by the legislative and executive
departments, to which the function belongs in our
scheme of government. That function is exclusive.
Whichever way these branches decide, they are
answerable only to their own conscience and the
constituents who will ultimately judge their acts,
and not to the courts of justice.
The only question we can and shall resolve in this
petition is the validity of Ordinance No. 3355 and
Ordinance No. 3375-93 as enacted by the
Sangguniang Panlungsod of Cagayan de Oro
City. And we shall do so only by the criteria laid
down by law and not by our own convictions on
the propriety of gambling.
The tests of a valid ordinance are well
established. A long line of decisions 9 has held
that to be valid, an ordinance must conform to the
following substantive requirements:
1) It must not contravene the
constitution or any statute.
2) It must not be unfair or
oppressive.
3) It must not be partial or
discriminatory.
4) It must not prohibit but may
regulate trade.
5) It must be general and consistent
with public policy.
6) It must not be unreasonable.
We begin by observing that under Sec. 458 of the
Local Government Code, local government units
are authorized to prevent or suppress, among
others, "gambling and other prohibited games of
chance." Obviously, this provision excludes
games of chance which are not prohibited but are
in fact permitted by law. The petitioners are less
than accurate in claiming that the Code could
have excluded such games of chance but did not.
In fact it does. The language of the section is
clear and unmistakable. Under the rule of noscitur
a sociis, a word or phrase should be interpreted in
relation to, or given the same meaning of, words
with which it is associated. Accordingly, we
conclude that since the word "gambling" is
associated with "and other prohibited games of
chance," the word should be read as referring to
only illegal gambling which, like the other
prohibited games of chance, must be prevented
or suppressed.
We could stop here as this interpretation should
settle the problem quite conclusively. But we will
not. The vigorous efforts of the petitioners on
behalf of the inhabitants of Cagayan de Oro City,
and the earnestness of their advocacy, deserve
more than short shrift from this Court.
The apparent flaw in the ordinances in question is
that they contravene P.D. 1869 and the public
policy embodied therein insofar as they prevent
PAGCOR from exercising the power conferred on
it to operate a casino in Cagayan de Oro City. The
petitioners have an ingenious answer to this
misgiving. They deny that it is the ordinances that
have changed P.D. 1869 for an ordinance
admittedly cannot prevail against a statute. Their
theory is that the change has been made by the
Local Government Code itself, which was also
enacted by the national lawmaking authority. In
their view, the decree has been, not really
repealed by the Code, but merely "modified pro
tanto" in the sense that PAGCOR cannot now
operate a casino over the objection of the local
government unit concerned. This modification of
P.D. 1869 by the Local Government Code is
permissible because one law can change or
repeal another law.
It seems to us that the petitioners are playing with
words. While insisting that the decree has only
been "modified pro tanto," they are actually
arguing that it is already dead, repealed and
useless for all intents and purposes because the
Code has shorn PAGCOR of all power to
centralize and regulate casinos. Strictly speaking,
its operations may now be not only prohibited by
the local government unit; in fact, the prohibition
is not only discretionary but mandated by Section
458 of the Code if the word "shall" as used therein
is to be given its accepted meaning. Local
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
have no more games of chance to regulate or
centralize as they must all be prohibited by the
local government units pursuant to the mandatory
duty imposed upon them by the Code. In this
situation, PAGCOR cannot continue to exist
except only as a toothless tiger or a white
elephant and will no longer be able to exercise its
powers as a prime source of government revenue
through the operation of casinos.
It is noteworthy that the petitioners have cited
only Par. (f) of the repealing clause, conveniently
discarding the rest of the provision which
painstakingly mentions the specific laws or the
parts thereof which are repealed (or modified) by
the Code. Significantly, P.D. 1869 is not one of
them. A reading of the entire repealing clause,
which is reproduced below, will disclose the
omission:
Sec. 534. Repealing Clause. — (a)
Batas Pambansa Blg. 337,
otherwise known as the "Local
Government Code," Executive
Order No. 112 (1987), and
Executive Order No. 319 (1988) are
hereby repealed.
(b) Presidential Decree Nos. 684,
1191, 1508 and such other decrees,
orders, instructions, memoranda
and issuances related to or
concerning the barangay are hereby
repealed.
(c) The provisions of Sections 2, 3,
and 4 of Republic Act No. 1939
regarding hospital fund; Section 3, a
(3) and b (2) of Republic Act. No.
5447 regarding the Special
Education Fund; Presidential
Decree No. 144 as amended by
Presidential Decree Nos. 559 and
1741; Presidential Decree No. 231
as amended; Presidential Decree
No. 436 as amended by Presidential
Decree No. 558; and Presidential
Decree Nos. 381, 436, 464, 477,
526, 632, 752, and 1136 are hereby
repealed and rendered of no force
and effect.
(d) Presidential Decree No. 1594 is
hereby repealed insofar as it
governs locally-funded projects.
(e) The following provisions are
hereby repealed or amended insofar
as they are inconsistent with the
provisions of this Code: Sections 2,
16, and 29 of Presidential Decree
No. 704; Sections 12 of Presidential
Decree No. 87, as amended;
Sections 52, 53, 66, 67, 68, 69, 70,
71, 72, 73, and 74 of Presidential
Decree No. 463, as amended; and
Section 16 of Presidential Decree
No. 972, as amended, and
(f) All general and special laws,
acts, city charters, decrees,
executive orders, proclamations and
administrative regulations, or part or
parts thereof which are inconsistent
with any of the provisions of this
Code are hereby repealed or
modified accordingly.
Furthermore, it is a familiar rule that implied
repeals are not lightly presumed in the absence of
a clear and unmistakable showing of such
intention. In Lichauco & Co. v. Apostol, 10 this
Court explained:
The cases relating to the subject of
repeal by implication all proceed on
the assumption that if the act of later
date clearly reveals an intention on
the part of the lawmaking power to
abrogate the prior law, this intention
must be given effect; but there must
 always be a sufficient revelation of
this intention, and it has become an
unbending rule of statutory
construction that the intention to
repeal a former law will not be
imputed to the Legislature when it
appears that the two statutes, or
provisions, with reference to which
the question arises bear to each
other the relation of general to
special.
There is no sufficient indication of an implied
repeal of P.D. 1869. On the contrary, as the
private respondent points out, PAGCOR is
mentioned as the source of funding in two later
enactments of Congress, to wit, R.A. 7309,
creating a Board of Claims under the Department
of Justice for the benefit of victims of unjust
punishment or detention or of violent crimes, and
R.A. 7648, providing for measures for the solution
of the power crisis. PAGCOR revenues are
tapped by these two statutes. This would show
that the PAGCOR charter has not been repealed
by the Local Government Code but has in fact
been improved as it were to make the entity more
responsive to the fiscal problems of the
government.
It is a canon of legal hermeneutics that instead of
pitting one statute against another in an inevitably
destructive confrontation, courts must exert every
effort to reconcile them, remembering that both
laws deserve a becoming respect as the
handiwork of a coordinate branch of the
government. On the 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 give effect to both by harmonizing them if
possible. This is possible in the case before us.
The proper resolution of the problem at hand is to
hold that under the Local Government Code, local
government units may (and indeed must) prevent
and suppress all kinds of gambling within their
territories except only those allowed by statutes
like P.D. 1869. The exception reserved in such
laws must be read into the Code, to make both
the Code and such laws equally effective and
mutually complementary.
This approach would also affirm that there are
indeed two kinds of gambling, to wit, the illegal
and those authorized by law. Legalized gambling
is not a modern concept; it is probably as old as
illegal gambling, if not indeed more so. The
petitioners' suggestion that the Code authorizes
them to prohibit all kinds of 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 could, by mere
ordinance, prohibit the Philippine Charity
Sweepstakes Office from conducting a lottery as
authorized by R.A. 1169 and B.P. 42 or stop the
races at the San Lazaro Hippodrome as
authorized by R.A. 309 and R.A. 983.
In light of all the above considerations, we see no
way of arriving at the conclusion urged on us by
the petitioners that the ordinances in question are
valid. On the contrary, we find that the ordinances
violate P.D. 1869, which has the character and
force of a statute, as well as the public policy
expressed in the decree allowing the playing of
certain games of chance despite the prohibition of
gambling in general.
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 delegated legislative powers
conferred on them by Congress as the national
lawmaking body. The delegate cannot be superior
to the principal or exercise powers higher than
those of the latter. It is a heresy to suggest that
the 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.
Municipal corporations owe their
origin to, and derive their powers
and rights wholly from the
legislature. It breathes into them the
breath of life, without which they
cannot exist. As it creates, so it may
destroy. As it may destroy, it may
abridge and control. Unless there is
some constitutional limitation on the
right, the legislature might, by a
single act, and if we can suppose it
capable of so great a folly and so
great a wrong, sweep from
existence all of the municipal
corporations in the State, and the
corporation could not prevent it. We
know of no limitation on the right so
far as to the corporation themselves
are concerned. They are, so to
phrase it, the mere tenants at will of
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 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 withdrawn by mere statute.
By and large, however, the national legislature is
still the principal of the local government units,
which cannot defy its will or modify or violate it.
The Court understands and admires the concern
of the petitioners for the welfare of their
constituents and their apprehensions that the
welfare of Cagayan de Oro City will be
endangered by the opening of the casino. We
share the view that "the hope of large or easy
gain, obtained without special effort, turns the
head of the workman" 13 and that "habitual
gambling is a cause of laziness and ruin." 14 In
People v. Gorostiza, 15 we declared: "The social
scourge of gambling must be stamped out. The
laws against gambling must be enforced to the
limit." George Washington called gambling "the
child of avarice, the brother of iniquity and the
father of mischief." Nevertheless, we must
recognize the power of the legislature to decide,
in its own wisdom, to legalize certain forms of
gambling, as was done in P.D. 1869 and impliedly
affirmed in the Local Government Code. That
decision can be revoked by this Court only if it
contravenes the Constitution as the touchstone of
all official acts. We do not find such contravention
here.
We hold that the power of PAGCOR to centralize
and regulate all games of chance, including
casinos on land and sea within the territorial
jurisdiction of the Philippines, remains
unimpaired. P.D. 1869 has not been modified by
the Local Government Code, which empowers the
local government units to prevent or suppress
only those forms of gambling prohibited by law.
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 ordinance. Hence,
it was not competent for the Sangguniang
Panlungsod of Cagayan de Oro City to enact
Ordinance No. 3353 prohibiting the use of
buildings for the operation of a casino and
Ordinance No. 3375-93 prohibiting the operation
of casinos. For all their praiseworthy motives,
these ordinances are contrary to P.D. 1869 and
the public policy announced therein and are PUBLIC EXHIBITIONS, GAMES,
therefore ultra vires and void. CONTESTS OR OTHER
PERFORMANCES TO REQUIRE
WHEREFORE, the petition is DENIED and the CHILDREN BETWEEN SEVEN (7)
challenged decision of the respondent Court of AND TWELVE (12) YEARS OF
Appeals is AFFIRMED, with costs against the AGE TO PAY FULL PAYMENT FOR
petitioners. It is so ordered. TICKETS INTENDED FOR ADULTS
BUT SHOULD CHARGE ONLY
ONE-HALF OF THE SAID TICKET

xxx xxx xxx

Be it ordained by the Municipal

Board of the City of Butuan in
session assembled, that:

SECTION 1—It shall be unlawful for

any person, group of persons, entity,
or corporation engaged in the
business of selling admission tickets
CARLOS BALACUIT, LAMBERTO TAN and to any movie or other public
exhibitions, games, contests, or
SERGIO YU CARCEL, petitioners-appellants,
other performances to require
vs. children between seven (7) and
twelve (12) years of age to pay full
COURT OF FIRST INSTANCE OF AGUSAN payment for admission tickets
DEL NORTE AND BUTUAN CITY, Branch 11, intended for adults but should
and the CITY OF BUTUAN, charge only one-half of the value of
respondents-appellees. the said tickets.

GANCAYCO, J.: SECTION 2—Any person violating

At issue in the petition for review before Us is the
validity and constitutionality of Ordinance No. 640
passed by the Municipal Board of the City of
Butuan on April 21, 1969, the title and text of
which are reproduced below:
ORDINANCE--640
ORDINANCE PENALIZING ANY
PERSON, GROUP OF PERSONS,
ENTITY OR CORPORATION
ENGAGED IN THE BUSINESS OF
SELLING ADMISSION TICKETS
TO ANY MOVIE OR OTHER
the provisions of this Ordinance
shall upon conviction be punished
by a fine of not less than TWO
HUNDRED PESOS (P200.00) but
not more than SIX HUNDRED
PESOS (P600.00) or an
imprisonment of not less than TWO
(2) MONTHS or not more than SIX
(6) MONTHS or both such firm and
imprisonment in the discretion of the
Court.
If the violator be a firm or
corporation the penalty shall be
 imposed upon the Manager, Agent
or Representative of such firm or
corporation.
SECTION 3—This ordinance shall
take effect upon its approval.
Petitioners are Carlos Balacuit Lamberto Tan, and
Sergio Yu Carcel managers of the Maya and
Dalisay Theaters, the Crown Theater, and the
Diamond Theater, respectively. Aggrieved by the
effect of Ordinance No. 640, they filed a complaint
before the Court of First Instance of Agusan del
Norte and Butuan City docketed as Special Civil
Case No. 237 on June 30, 1969 praying, inter
alia, that the subject ordinance be declared
unconstitutional and, therefore, void and
unenforceable. 1
2
Upon motion of the petitioners, a temporary
restraining order was issued on July 14, 1969 by
the court a quo enjoining the respondent City of
Butuan and its officials from enforcing Ordinance
No. 640. 3 On July 29, 1969, respondents filed
their answer sustaining the validity of the
ordinance.4
On January 30, 1973, the litigants filed their
stipulation of facts. 5 On June 4, 1973, the
respondent court rendered its decision, 6 the
dispositive part of which reads:
IN THE LIGHT OF ALL THE
FOREGOING, the Court hereby
adjudges in favor of the respondents
and against the petitioners, as
follows:
1. Declaring Ordinance No. 640 of
the City of Butuan constitutional and
valid: Provided, however, that the
fine for a single offense shall not
exceed TWO HUNDRED PESOS,
as prescribed in the aforequoted
Section 15 (nn) of Rep. Act No. 523;
2. Dissolving the restraining order
issued by this Court; and;
3. Dismissing the complaint, with
costs against the petitioners.
4. SO ORDERED. 7
Petitioners filed their motion for reconsideration 8
of the decision of the court a quo which was
denied in a resolution of the said court dated
November 10, 1973.9
Hence, this petition.
Petitioners attack the validity and constitutionality
of Ordinance No. 640 on the grounds that it is
ultra vires and an invalid exercise of police power.
Petitioners contend that Ordinance No. 640 is not
within the power of' the Municipal Board to enact
as provided for in Section 15(n) of Republic Act
No. 523, the Charter of the City of Butuan, which
states:
Sec. 15. General powers and duties
of the Board — Except as otherwise
provided by law, and subject to the
conditions and limitations thereof,
the Municipal Board shall have the
following legislative powers:
xxx xxx xxx
(n) To regulate and fix the amount of
the license fees for the following; . . .
theaters, theatrical performances,
cinematographs, public exhibitions
and all other performances and
places of amusements ...
xxx xxx xxx
Respondent City of Butuan, on the other hand,
attempts to justify the enactment of the ordinance
by invoking the general welfare clause embodied
in Section 15 (nn) of the cited law, which
provides:
(nn) To enact all ordinances it may
deem necessary and proper for the
sanitation and safety, the
furtherance of the prosperity, and
the promotion of the morality, peace,
good order, comfort, convenience,
and general welfare of the city and
its inhabitants, and such others as
may be necessary to carry into
effect and discharge the powers and
duties conferred by this Act, and to
fix the penalties for the violation of
the ordinances, which shall not
exceed a two hundred peso fine or
six months imprisonment, or both
such fine and imprisonment, for a
single offense.
We can see from the aforecited Section 15(n) that
the power to regulate and fix the amount of
license fees for theaters, theatrical performances,
cinematographs, public exhibitions and other
places of amusement has been expressly granted
to the City of Butuan under its charter. But the
question which needs to be resolved is this: does
this power to regulate include the authority to
interfere in the fixing of prices of admission to
these places of exhibition and amusement
whether under its general grant of power or under
the general welfare clause as invoked by the
City?
This is the first time this Court is confronted with
the question of direct interference by the local
government with the operation of theaters,
cinematographs and the like to the extent of fixing
the prices of admission to these places. Previous
decisions of this Court involved the power to
impose license fees upon businesses of this
nature as a corollary to the power of the local
government to regulate them. Ordinances which
required moviehouses or theaters to increase the
price of their admission tickets supposedly to
cover the license fees have been held to be
invalid for these impositions were considered as
not merely license fees but taxes for purposes of
revenue and not regulation which the cities have
no power to exact, 10 unless expressly granted by
its charter. 11
Applying the ruling in Kwong Sing v. City of
Manila, 12 where the word "regulate" was
interpreted to include the power to control, to
govern and to restrain, it would seem that under
its power to regulate places of exhibitions and
amusement, the Municipal Board of the City of
Butuan could make proper police regulations as
to the mode in which the business shall be
exercised.
While in a New York case, 13 an ordinance which
regulates the business of selling admission tickets
to public exhibitions or performances by virtue of
the power of cities under the General City Law "to
maintain order, enforce the laws, protect property
and preserve and care for the safety, health,
comfort and general welfare of the inhabitants of
the city and visitors thereto; and for any of said
purposes, to regulate and license occupations"
was considered not to be within the scope of any
duty or power implied in the charter. It was held
therein that the power of regulation of public
exhibitions and places of amusement within the
city granted by the charter does not carry with it
any authority to interfere with the price of
admission to such places or the resale of tickets
or tokens of admission.
In this jurisdiction, it is already settled that the
operation of theaters, cinematographs and other
places of public exhibition are subject to
regulation by the municipal council in the exercise
of delegated police power by the local
government. 14 Thus, in People v. Chan, 15 an
ordinance of the City of Manila prohibiting first run
cinematographs from selling tickets beyond their
seating capacity was upheld as constitutional for
being a valid exercise of police power. Still in
another case, 16 the validity of an ordinance of the
City of Bacolod prohibiting admission of two or
more persons in moviehouses and other
amusement places with the use of only one ticket
was sustained as a valid regulatory police
measure not only in the interest of preventing
fraud in so far as municipal taxes are concerned
but also in accordance with public health, public
safety, and the general welfare.
The City of Butuan, apparently realizing that it has
no authority to enact the ordinance in question
under its power to regulate embodied in Section
15(n), now invokes the police power as delegated
to it under the general welfare clause to justify the
enactment of said ordinance.
To invoke the exercise of police power, not only
must it appear that the interest of the public
generally requires an interference with private
rights, but the means adopted must be
reasonably necessary for the accomplishment of
the purpose and not unduly oppressive upon
individuals. 17 The legislature may not, under the
guise of protecting the public interest, arbitrarily
interfere with private business, or impose unusual
and unnecessary restrictions upon lawful
occupations. In other words, the determination as
to what is a proper exercise of its police power is
not final or conclusive, but is subject to the
supervision of the courts. 18
Petitioners maintain that Ordinance No. 640
violates the due process clause of the
Constitution for being oppressive, unfair, unjust,
confiscatory, and an undue restraint of trade, and
violative of the right of persons to enter into
contracts, considering that the theater owners are
bound under a contract with the film owners for
just admission prices for general admission,
balcony and lodge.
In Homeowners' Association of the Philippines,
Inc. v. Municipal Board of the City of Manila, 19
this Court held:
The authority of municipal
corporations to regulate is
essentially police power, Inasmuch
as the same generally entails a
curtailment of the liberty, the rights
and/or the property of persons,
which are protected and even
guaranteed by the Constitution, the
exercise of police power is
necessarily subject to a
qualification, limitation or restriction
demanded by the regard, the
respect and the obedience due to
the prescriptions of the fundamental
law, particularly those forming part
of the Constitution of Liberty,
otherwise known as the Bill of
Rights — the police power measure
must be reasonable. In other words,
individual rights may be adversely
affected by the exercise of police
power to the extent only — and only
to the extent--that may be fairly
required by the legitimate demands
of public interest or public welfare.
What is the reason behind the enactment of
Ordinance No. 640?
A reading of the minutes of the regular session of
the Municipal Board when the ordinance in
question was passed shows that a certain
Councilor Calo, the proponent of the measure,
had taken into account the complaints of parents
that for them to pay the full price of admission for
their children is too financially burdensome.
The trial court advances the view that "even if the
subject ordinance does not spell out its raison
d'etre in all probability the respondents were
impelled by the awareness that children are
entitled to share in the joys of their elders, but that
considering that, apart from size, children
between the ages of seven and twelve cannot
fully grasp the nuance of movies or other public
exhibitions, games, contests or other
performances, the admission prices with respect
to them ought to be reduced. 19a
We must bear in mind that there must be public
necessity which demands the adoption of proper
measures to secure the ends sought to be
attained by the enactment of the ordinance, and
the large discretion is necessarily vested in the
legislative authority to determine not only what
the interests of the public require, but what
measures are necessary for the protection of
such interests. 20 The methods or means used to
protect the public health, morals, safety or
welfare, must have some relation to the end in
view, for under the guise of the police power,
personal rights and those pertaining to private
property will not be permitted to be arbitralily
invaded by the legislative department. 21
We agree with petitioners that the ordinance is
not justified by any necessity for the public
interest. The police power legislation must be
firmly grounded on public interest and welfare,
and a reasonable relation must exist between
purposes and means.22 The evident purpose of
the ordinance is to help ease the burden of cost
on the part of parents who have to shell out the
same amount of money for the admission of their
children, as they would for themselves, A
reduction in the price of admission would mean
corresponding savings for the parents; however,
the petitioners are the ones made to bear the cost
of these savings. The ordinance does not only
make the petitioners suffer the loss of earnings
but it likewise penalizes them for failure to comply
with it. Furthermore, as petitioners point out, there
will be difficulty in its implementation because as
already experienced by petitioners since the
effectivity of the ordinance, children over 12 years
of age tried to pass off their age as below 12
years in order to avail of the benefit of the
ordinance. The ordinance does not provide a
safeguard against this undesirable practice and
as such, the respondent City of Butuan now
suggests that birth certificates be exhibited by
movie house patrons to prove the age of children.
This is, however, not at all practicable. We can
see that the ordinance is clearly unreasonable if
not unduly oppressive upon the business of
petitioners. Moreover, there is no discernible
relation between the ordinance and the promotion
of public health, safety, morals and the general
welfare.
Respondent City of Butuan claims that it was
impelled to protect the youth from the pernicious
practice of movie operators and other public
exhibitions promoters or the like of demanding
equal price for their admission tickets along with
the adults. This practice is allegedly repugnant
and unconscionable to the interest of the City in
the furtherance of the prosperity, peace, good
order, comfort, convenience and the general
well-being of its inhabitants.
There is nothing pernicious in demanding equal
price for both children and adults. The petitioners
are merely conducting their legitimate businesses.
The object of every business entrepreneur is to
make a profit out of his venture. There is nothing
immoral or injurious in charging the same price for
both children and adults. In fact, no person is
under compulsion to purchase a ticket. It is a
totally voluntary act on the part of the purchaser if
he buys a ticket to such performances.
Respondent City of Butuan claims that Ordinance
No. 640 is reasonable and necessary to lessen
the economic burden of parents whose minor
children are lured by the attractive nuisance being
maintained by the petitioners. Respondent further
alleges that by charging the full price, the children
are being exploited by movie house operators.
We fail to see how the children are exploited if
they pay the full price of admission. They are
treated with the same quality of entertainment as
the adults. The supposition of the trial court that
because of their age children cannot fully grasp
the nuances of such entertainment as adults do
fails to convince Us that the reduction in
admission ticket price is justifiable. In fact, by the
very claim of respondent that movies and the like
are attractive nuisances, it is difficult to
comprehend why the municipal board passed the
subject ordinance. How can the municipal
authorities consider the movies an attractive
nuisance and yet encourage parents and children
to patronize them by lowering the price of
admission for children? Perhaps, there is some
,truth to the argument of petitioners that
Ordinance No. 640 is detrimental to the public
good and the general welfare of society for it
encourages children of tender age to frequent the
movies, rather than attend to their studies in
school or be in their homes.
Moreover, as a logical consequence of the
ordinance, movie house and theater operators will
be discouraged from exhibiting wholesome
movies for general patronage, much less
children's pictures if only to avoid compliance with
the ordinance and still earn profits for themselves.
For after all, these movie house and theater
operators cannot be compelled to exhibit any
particular kind of film except those films which
may be dictated by public demand and those
which are restricted by censorship laws. So
instead of children being able to share in the joys
of their elders as envisioned by the trial court,
there will be a dearth of wholesome and
educational movies for them to enjoy.
There are a number of cases decided by the
Supreme Court and the various state courts of the
United States which upheld the right of the
proprietor of a theater to fix the price of an
admission ticket as against the right of the state
to interfere in this regard and which We consider
applicable to the case at bar.
A theater ticket has been described to be either a
mere license, revocable at the will of the
proprietor of the theater or it may be evidence of
a contract whereby, for a valuable consideration,
the purchaser has acquired the right to enter the
theater and observe the performance on condition
that he behaves properly. 23 Such ticket, therefore,
represents a right, Positive or conditional, as the
case may be, according to the terms of the
original contract of sale. This right is clearly a right
of property. The ticket which represents that right
is also, necessarily, a species of property. As
such, the owner thereof, in the absence of any
condition to the contrary in the contract by which
he obtained it, has the clear right to dispose of it,
to sell it to whom he pleases and at such price as
he can obtain. 24 So that an act prohibiting the
sale of tickets to theaters or other places of
amusement at more than the regular price was
held invalid as conflicting with the state
constitution securing the right of property. 25
In Collister vs. Hayman, 26 it was held:
The defendants were conducting a
private business, which, even if
clothed with a public interest, was
without a franchise to accommodate
the public, and they had the right to
control it, the same as the
proprietors of any other business,
subject to such obligations as were
placed upon them by statute. Unlike
a carrier of passengers, for
instance, with a franchise from the
state, and hence under obligation to
transport anyone who applies and to
continue the business year in and
year out, the proprietors of a theater
can open and close their place at
will, and no one can make a lawful
complaint. They can charge what
they choose for admission to their
theater. They can limit the number
admitted. They can refuse to sell
 tickets and collect the price of
admission at the door. They can
preserve order and enforce quiet
while the performance is going on.
They can make it a part of the
contract and condition of admission,
by giving due notice and printing the
condition in the ticket that no one
shall be admitted under 21 years of
age, or that men only or women only
shall be admitted, or that a woman
cannot enter unless she is
accompanied by a male escort, and
the like. The proprietors, in the
control of their business, may
regulate the terms of admission in
any reasonable way. If those terms
are not satisfactory, no one is
obliged to buy a ticket or make the
contract. If the terms are
satisfactory, and the contract is
made, the minds of the parties meet
upon the condition, and the
purchaser impliedly promises to
perform it.
In Tyson and Bro. — United Theater Ticket
Officers, Inc. vs. Banton, 27 the United States
Supreme Court held:
... And certainly a place of
entertainment is in no legal sense a
public utility; and quite as certainly,
its activities are not such that their
enjoyment can be regarded under
any conditions from the point of view
of an emergency.
The interest of the public in theaters
and other places of entertainment
may be more nearly, and with better
reason, assimilated to the like
interest in provision stores and
markets and in the rental of houses
and apartments for residence
purposes; although in importance it
fails below such an interest in the
proportion that food and shelter are
of more moment than amusement or
instruction. As we have shown there
is no legislative power to fix the
prices of provisions or clothing, or
the rental charges for houses and
apartments, in the absence of some
controlling emergency; and we are
unable to perceive any
dissimilarities of such quality or
degree as to justify a different rule in
respect of amusements and
entertainment ...
We are in consonance with the foregoing
observations and conclusions of American courts.
In this jurisdiction, legislation had been passed
controlling the prices of goods commodities and
drugs during periods of emergency, 28 limiting the
net profits of public utility 29 as well as regulating
rentals of residential apartments for a limited
period, 30 as a matter of national policy in the
interest of public health and safety, economic
security and the general welfare of the people.
And these laws cannot be impugned as
unconstitutional for being violative of the due
process clause.
However, the same could not be said of theaters,
cinematographs and other exhibitions. In no
sense could these businesses be considered
public utilities. The State has not found it
appropriate as a national policy to interfere with
the admission prices to these performances. This
does not mean however, that theaters and
exhibitions are not affected with public interest
even to a certain degree. Motion pictures have
been considered important both as a medium for
the communication of Ideas and expression of the
artistic impulse. Their effects on the perceptions
by our people of issues and public officials or
public figures as well as the prevailing cultural
traits are considerable. 31 People of all ages flock
to movie houses, games and other public
exhibitions for recreation and relaxation. The
government realizing their importance has seen it
fit to enact censorship laws to regulate the movie
industry. 32 Their aesthetic entertainment and
even educational values cannot be
underestimated. Even police measures regulating
the operation of these businesses have been
upheld in order to safeguard public health and
safety.
Nonetheless, as to the question of the subject
ordinance being a valid exercise of police power,
the same must be resolved in the negative. While
it is true that a business may be regulated, it is
equally true that such regulation must be within
the bounds of reason, that is, the regulatory
ordinance must be reasonable, and its provisions
cannot be oppressive amounting to an arbitrary
interference with the business or calling subject of
regulation. A lawful business or calling may not,
under the guise of regulation, be unreasonably
interfered with even by the exercise of police
power.33 A police measure for the regulation of
the conduct, control and operation of a business
should not encroach upon the legitimate and
lawful exercise by the citizens of their property
rights.34 The right of the owner to fix a price at
which his property shall be sold or used is an
inherent attribute of the property itself and, as
such, within the protection of the due process
clause."" Hence, the proprietors of a theater have
a right to manage their property in their own way,
to fix what prices of admission they think most for
their own advantage, and that any person who did
not approve could stay away. 36
Respondent City of Butuan argues that the
presumption is always in favor of the validity of
the ordinance. This maybe the rule but it has
already been held that although the presumption
is always in favor of the validity or
reasonableness of the ordinance, such
presumption must nevertheless be set aside
when the invalidity or unreasonableness appears
on the face of the ordinance itself or is
established by proper evidence.37 The exercise of
police power by the local government is valid
unless it contravenes the fundamental law of the
land, or an act of the legislature, or unless it is
against public policy or is unreasonable,
oppressive, partial, discriminating or in derogation
of a common right.38
Ordinance No. 640 clearly invades the personal
and property rights of petitioners for even if We
could assume that, on its face, the interference
was reasonable, from the foregoing
considerations, it has been fully shown that it is
an unwarranted and unlawful curtailment of the
property and personal rights of citizens. For being
unreasonable and an undue restraint of trade, it
cannot, under the guise of exercising police
power, be upheld as valid.
WHEREFORE, the decision of the trial court in
Special Civil Case No. 237 is hereby REVERSED
and SET ASIDE and a new judgment is hereby
rendered declaring Ordinance No. 640
unconstitutional and, therefore, null and void. This
decision is immediately executory.
SO ORDERED.
AGUSTIN VS. EDU
FERNANDO, J.:
The validity of a letter of Instruction 1 providing for
an early seaming device for motor vehicles is
assailed in this prohibition proceeding as being
violative of the constitutional guarantee of due
process and, insofar as the rules and regulations
for its implementation are concerned, for
transgressing the fundamental principle of non-
delegation of legislative power. The Letter of
Instruction is stigmatized by petitioner who is
possessed of the requisite standing, as being
arbitrary and oppressive. A temporary restraining
order as issued and respondents Romeo F. Edu,
Land Transportation Commissioner Juan Ponce
Enrile, Minister of National Defense; Alfredo L.
Juinio, Minister of Public Works, Transportation
and Communications; and Baltazar Aquino,
Minister of Public Highways; were to answer. That
they did in a pleading submitted by Solicitor
General Estelito P. Mendoza. 2 Impressed with a
highly persuasive quality, it makes devoid clear
that the imputation of a constitutional infirmity is
devoid of justification The Letter of Instruction on
is a valid police power measure. Nor could the
implementing rules and regulations issued by
respondent Edu be considered as amounting to
an exercise of legislative power. Accordingly, the
petition must be dismissed.
The facts are undisputed. The assailed Letter of
Instruction No. 229 of President Marcos, issued
on December 2, 1974, reads in full: "[Whereas],
statistics show that one of the major causes of
fatal or serious accidents in land transportation is
the presence of disabled, stalled or parked motor
vehicles along streets or highways without any
appropriate early warning device to signal
approaching motorists of their presence;
[Whereas], the hazards posed by such
obstructions to traffic have been recognized by
international bodies concerned with traffic safety,
the 1968 Vienna Convention on Road Signs and
Signals and the United Nations Organization
(U.N.); [Whereas], the said Vienna Convention
which was ratified by the Philippine Government
under P.D. No. 207, recommended the enactment
of local legislation for the installation of road
safety signs and devices; [Now, therefore, I,
Ferdinand E. Marcos], President of the
Philippines, in the interest of safety on all streets
and highways, including expressways or limited
access roads, do hereby direct: 1. That all
owners, users or drivers of motor vehicles shall
have at all times in their motor vehicles at least
one (1) pair of early warning device consisting of
triangular, collapsible reflectorized plates in red
and yellow colors at least 15 cms. at the base and
40 cms. at the sides. 2. Whenever any motor
vehicle is stalled or disabled or is parked for thirty
(30) minutes or more on any street or highway,
including expressways or limited access roads,
the owner, user or driver thereof shall cause the
warning device mentioned herein to be installed
at least four meters away to the front and rear of
the motor vehicle staged, disabled or parked. 3.
The Land Transportation Commissioner shall
cause Reflectorized Triangular Early Warning
Devices, as herein described, to be prepared and
issued to registered owners of motor vehicles,
except motorcycles and trailers, charging for each
piece not more than 15 % of the acquisition cost.
He shall also promulgate such rules and
regulations as are appropriate to effectively
implement this order. 4. All hereby concerned
shall closely coordinate and take such measures
as are necessary or appropriate to carry into
effect then instruction. 3 Thereafter, on November
15, 1976, it was amended by Letter of Instruction
No. 479 in this wise. "Paragraph 3 of Letter of
Instruction No. 229 is hereby amended to read as
follows: 3. The Land transportation Commissioner
shall require every motor vehicle owner to procure
from any and present at the registration of his
vehicle, one pair of a reflectorized early warning
device, as d bed of any brand or make chosen by
mid motor vehicle . The Land Transportation
Commissioner shall also promulgate such rule
and regulations as are appropriate to effectively
implement this order.'" 4 There was issued
accordingly, by respondent Edu, the implementing
rules and regulations on December 10, 1976. 5
They were not enforced as President Marcos on
January 25, 1977, ordered a six-month period of
suspension insofar as the installation of early
warning device as a pre-registration requirement
for motor vehicle was concerned. 6 Then on June
30, 1978, another Letter of Instruction 7 the lifting
of such suspension and directed the immediate
implementation of Letter of Instruction No. 229 as
amended. 8 It was not until August 29, 1978 that
respondent Edu issued Memorandum Circular
No. 32, worded thus: "In pursuance of Letter of
Instruction No. 716, dated June 30, 1978, the
implementation of Letter of Instruction No. 229, as
amended by Letter of Instructions No. 479,
requiring the use of Early Warning Devices
(EWD) on motor vehicle, the following rules and
regulations are hereby issued: 1. LTC
Administrative Order No. 1, dated December 10,
1976; shall now be implemented provided that the
device may come from whatever source and that
it shall have substantially complied with the EWD
specifications contained in Section 2 of said
administrative order; 2. In order to insure that
every motor vehicle , except motorcycles, is
equipped with the device, a pair of serially
numbered stickers, to be issued free of charge by
this Commission, shall be attached to each EWD.
The EWD. serial number shall be indicated on the
registration certificate and official receipt of
payment of current registration fees of the motor
vehicle concerned. All Orders, Circulars, and
Memoranda in conflict herewith are hereby
superseded, This Order shall take effect
immediately. 9
It was for immediate
implementation by respondent Alfredo L. Juinio,
as Minister of Public Works, transportation, and
Communications. 10
Petitioner, after setting forth that he "is the owner
of a Volkswagen Beetle Car, Model 13035,
already properly equipped when it came out from
the assembly lines with blinking lights fore and
aft, which could very well serve as an early
warning device in case of the emergencies
mentioned in Letter of Instructions No. 229, as
amended, as well as the implementing rules and
regulations in Administrative Order No. 1 issued
by the land transportation Commission," 11 alleged
that said Letter of Instruction No. 229, as
amended, "clearly violates the provisions and
delegation of police power, [sic] * * *: " For him
they are "oppressive, unreasonable, arbitrary,
confiscatory, nay unconstitutional and contrary to
the precepts of our compassionate New Society."
12
He contended that they are "infected with
arbitrariness because it is harsh, cruel and
unconscionable to the motoring public;" 13 are
"one-sided, onerous and patently illegal and
immoral because [they] will make manufacturers
and dealers instant millionaires at the expense of
car owners who are compelled to buy a set of the
so-called early warning device at the rate of P
56.00 to P72.00 per set." 14 are unlawful and
unconstitutional and contrary to the precepts of a
compassionate New Society [as being]
compulsory and confiscatory on the part of the
motorists who could very well provide a practical
alternative road safety device, or a better
substitute to the specified set of EWD's." 15 He
therefore prayed for a judgment both the assailed
Letters of Instructions and Memorandum Circular
void and unconstitutional and for a restraining
order in the meanwhile.
A resolution to this effect was handed down by
this Court on October 19, 1978: "L-49112
(Leovillo C. Agustin v. Hon. Romeo F. Edu, etc., et
al.) — Considering the allegations contained, the
issues raised and the arguments adduced in the
petition for prohibition with writ of p prohibitory
and/or mandatory injunction, the Court Resolved
to (require) the respondents to file an answer
thereto within ton (10) days from notice and not to
move to dismiss the petition. The Court further
Resolved to [issue] a [temporary restraining order]
effective as of this date and continuing until
otherwise ordered by this Court.16
Two motions for extension were filed by the Office
of the Solicitor General and granted. Then on
November 15, 1978, he Answer for respondents
was submitted. After admitting the factual
allegations and stating that they lacked
knowledge or information sufficient to form a
belief as to petitioner owning a Volkswagen
Beetle car," they "specifically deny the allegations
and stating they lacked knowledge or information
sufficient to form a belief as to petitioner owning a
Volkswagen Beetle Car, 17 they specifically deny
the allegations in paragraphs X and XI (including
its subparagraphs 1, 2, 3, 4) of Petition to the
effect that Letter of Instruction No. 229 as
amended by Letters of Instructions Nos. 479 and
716 as well as Land transportation Commission
Administrative Order No. 1 and its Memorandum
Circular No. 32 violates the constitutional
provisions on due process of law, equal protection
of law and undue delegation of police power, and
that the same are likewise oppressive, arbitrary,
confiscatory, one-sided, onerous, immoral
unreasonable and illegal the truth being that said
allegations are without legal and factual basis and
for the reasons alleged in the Special and
Affirmative Defenses of this Answer."18 Unlike
petitioner who contented himself with a rhetorical
recital of his litany of grievances and merely
invoked the sacramental phrases of constitutional
litigation, the Answer, in demonstrating that the
assailed Letter of Instruction was a valid exercise
of the police power and implementing rules and
regulations of respondent Edu not susceptible to
the charge that there was unlawful delegation of
legislative power, there was in the portion
captioned Special and Affirmative Defenses, a
citation of what respondents believed to be the
authoritative decisions of this Tribunal calling for
application. They are Calalang v. Williams, 19
Morfe v. Mutuc, 20 and Edu v. Ericta. 21 Reference
was likewise made to the 1968 Vienna
Conventions of the United Nations on road traffic,
road signs, and signals, of which the Philippines
was a signatory and which was duly ratified. 22
Solicitor General Mendoza took pains to refute in
detail, in language calm and dispassionate, the
vigorous, at times intemperate, accusation of
petitioner that the assailed Letter of Instruction
and the implementing rules and regulations
cannot survive the test of rigorous scrutiny. To
repeat, its highly-persuasive quality cannot be
denied.
This Court thus considered the petition submitted
for decision, the issues being clearly joined. As
noted at the outset, it is far from meritorious and
must be dismissed.
1. The Letter of Instruction in question was issued
in the exercise of the police power. That is
conceded by petitioner and is the main reliance of
respondents. It is the submission of the former,
however, that while embraced in such a category,
it has offended against the due process and equal
protection safeguards of the Constitution,
although the latter point was mentioned only in
passing. The broad and expansive scope of the
police power which was originally Identified by
Chief Justice Taney of the American Supreme
Court in an 1847 decision as "nothing more or
less than the powers of government inherent in
every sovereignty" 23 was stressed in the
aforementioned case of Edu v. Ericta thus:
"Justice Laurel, in the first leading decision after
the Constitution came into force, Calalang v.
Williams, Identified police power with state
authority to enact legislation that may interfere
with personal liberty or property in order to
promote the general welfare. Persons and
property could thus 'be subjected to all kinds of
restraints and burdens in order to we the general
comfort, health and prosperity of the state.'
Shortly after independence in 1948, Primicias v.
Fugoso reiterated the doctrine, such a
competence being referred to as 'the power to
prescribe regulations to promote the health,
morals, peace, education, good order or safety,
and general welfare of the people. The concept
was set forth in negative terms by Justice
Malcolm in a pre-Commonwealth decision as 'that
inherent and plenary power in the State which
enables it to prohibit all things hurtful to the
comfort, safety and welfare of society. In that
sense it could be hardly distinguishable as noted
by this Court in Morfe v. Mutuc with the totality of
legislative power. It is in the above sense the
greatest and most powerful at. tribute of
government. It is, to quote Justice Malcolm anew,
'the most essential, insistent, and at least table
powers, I extending as Justice Holmes aptly
pointed out 'to all the great public needs.' Its
scope, ever-expanding to meet the exigencies of
the times, even to anticipate the future where it
could be done, provides enough room for an
efficient and flexible response to conditions and
circumstances thus assuring the greatest
benefits. In the language of Justice Cardozo:
'Needs that were narrow or parochial in the past
may be interwoven in the present with the
well-being of the nation. What is critical or urgent
changes with the time.' The police power is thus a
dynamic agency, suitably vague and far from
precisely defined, rooted in the conception that
men in organizing the state and imposing upon its
government limitations to safeguard constitutional
rights did not intend thereby to enable an
individual citizen or a group of citizens to obstruct
unreasonably the enactment of such salutary
measures calculated to communal peace, safety,
good order, and welfare." 24
2. It was thus a heavy burden to be shouldered by
petitioner, compounded by the fact that the
particular police power measure challenged was
clearly intended to promote public safety. It would
be a rare occurrence indeed for this Court to
invalidate a legislative or executive act of that
character. None has been called to our attention,
an indication of its being non-existent. The latest
decision in point, Edu v. Ericta, sustained the
validity of the Reflector Law, 25 an enactment
conceived with the same end in view. Calalang v.
Williams found nothing objectionable in a statute,
the purpose of which was: "To promote safe
transit upon, and. avoid obstruction on roads and
streets designated as national roads * * *. 26 As a
matter of fact, the first law sought to be nullified
after the effectivity of the 1935 Constitution, the
National Defense Act, 27 with petitioner failing in
his quest, was likewise prompted by the
imperative demands of public safety.
3. The futility of petitioner's effort to nullify both
the Letter of Instruction and the implementing
rules and regulations becomes even more
apparent considering his failure to lay the
necessary factual foundation to rebut the
presumption of validity. So it was held in
Ermita-Malate Hotel and Motel Operators
Association, Inc. v. City Mayor of Manila. 28 The
rationale was clearly set forth in an excerpt from a
decision of Justice Branders of the American
Supreme Court, quoted in the opinion: "The
statute here questioned deals with a subject
clearly within the scope of the police power. We
are asked to declare it void on the ground that the
specific method of regulation prescribed is
unreasonable and hence deprives the plaintiff of
due process of law. As underlying questions of
fact may condition the constitutionality of
legislation of this character, the presumption of
constitutionality must prevail in the absence of
some factual foundation of record in overthrowing
the statute. 29
4. Nor did the Solicitor General as he very well
could, rely solely on such rebutted presumption of
validity. As was pointed out in his Answer "The
President certainly had in his possession the
necessary statistical information and data at the
time he issued said letter of instructions, and such
factual foundation cannot be defeated by
petitioner's naked assertion that early warning
devices 'are not too vital to the prevention of
nighttime vehicular accidents' because allegedly
only 390 or 1.5 per cent of the supposed 26,000
motor vehicle accidents that in 1976 involved
rear-end collisions (p. 12 of petition). Petitioner's
statistics is not backed up by demonstrable data
on record. As aptly stated by this Honorable
Court: Further: "It admits of no doubt therefore
that there being a presumption of validity, the
necessity for evidence to rebut it is unavoidable,
unless the statute or ordinance is void on its face,
which is not the case here"' * * *. But even as g
the verity of petitioner's statistics, is that not
reason enough to require the installation of early
warning devices to prevent another 390 rear-end
collisions that could mean the death of 390 or
more Filipinos and the deaths that could likewise
result from head-on or frontal collisions with
stalled vehicles?" 30 It is quite manifest then that
the issuance of such Letter of Instruction is
encased in the armor of prior, careful study by the
Executive Department. To set it aside for alleged
repugnancy to the due process clause is to give
sanction to conjectural claims that exceeded even
the broadest permissible limits of a pleader's well
known penchant for exaggeration.
5. The rather wild and fantastic nature of the
charge of oppressiveness of this Letter of
Instruction was exposed in the Answer of the
Solicitor General thus: "Such early warning device
requirement is not an expensive redundancy, nor
oppressive, for car owners whose cars are
already equipped with 1) blinking lights in the fore
and aft of said motor vehicles,' 2)
"battery-powered blinking lights inside motor
vehicles," 3) "built-in reflectorized tapes on front
and rear bumpers of motor vehicles," or 4)
"well-lighted two (2) petroleum lamps (the Kinke) *
* * because: Being universal among the signatory
countries to the said 1968 Vienna Conventions,
and visible even under adverse conditions at a
distance of at least 400 meters, any motorist from
this country or from any part of the world, who
sees a reflectorized rectangular early seaming
device installed on the roads, highways or
expressways, will conclude, without thinking, that
somewhere along the travelled portion of that
road, highway, or expressway, there is a motor
vehicle which is stationary, stalled or disabled
which obstructs or endangers passing traffic. On
the other hand, a motorist who sees any of the
aforementioned other built in warning devices or
the petroleum lamps will not immediately get
adequate advance warning because he will still
think what that blinking light is all about. Is it an
emergency vehicle? Is it a law enforcement car?
Is it an ambulance? Such confusion or uncertainty
in the mind of the motorist will thus increase,
rather than decrease, the danger of collision. 31
6. Nor did the other extravagant assertions of
constitutional deficiency go unrefuted in the
Answer of the Solicitor General "There is nothing
in the questioned Letter of Instruction No. 229, as
amended, or in Administrative Order No. 1, which
requires or compels motor vehicle owners to
purchase the early warning device prescribed
thereby. All that is required is for motor vehicle
owners concerned like petitioner, to equip their
motor vehicles with a pair of this early warning
device in question, procuring or obtaining the
same from whatever source. In fact, with a little of
industry and practical ingenuity, motor vehicle
owners can even personally make or produce this
early warning device so long as the same
substantially conforms with the specifications laid
down in said letter of instruction and
administrative order. Accordingly the early
warning device requirement can neither be
oppressive, onerous, immoral, nor confiscatory,
much less does it make manufacturers and
dealers of said devices 'instant millionaires at the
expense of car owners' as petitioner so
sweepingly concludes * * *. Petitioner's fear that
with the early warning device requirement 'a more
subtle racket may be committed by those called
upon to enforce it * * * is an unfounded
speculation. Besides, that unscrupulous officials
may try to enforce said requirement in an
unreasonable manner or to an unreasonable
degree, does not render the same illegal or
immoral where, as in the instant case, the
challenged Letter of Instruction No. 229 and
implementing order disclose none of the
constitutional defects alleged against it.32
7 It does appear clearly that petitioner's objection
to this Letter of Instruction is not premised on lack
of power, the justification for a finding of
unconstitutionality, but on the pessimistic, not to
say negative, view he entertains as to its wisdom.
That approach, it put it at its mildest, is
distinguished, if that is the appropriate word, by
its unorthodoxy. It bears repeating "that this
Court, in the language of Justice Laurel, 'does not
pass upon questions of wisdom justice or
expediency of legislation.' As expressed by
Justice Tuason: 'It is not the province of the courts
to supervise legislation and keep it within the
bounds of propriety and common sense. That is
primarily and exclusively a legislative concern.'
There can be no possible objection then to the
observation of Justice Montemayor. 'As long as
laws do not violate any Constitutional provision,
the Courts merely interpret and apply them
regardless of whether or not they are wise or
salutary. For they, according to Justice Labrador,
'are not supposed to override legitimate policy
and * * * never inquire into the wisdom of the law.'
It is thus settled, to paraphrase Chief Justice
Concepcion in Gonzales v. Commission on
Elections, that only congressional power or
competence, not the wisdom of the action taken,
may be the basis for declaring a statute invalid.
This is as it ought to be. The principle of
separation of powers has in the main wisely
allocated the respective authority of each
department and confined its jurisdiction to such a
sphere. There would then be intrusion not
allowable under the Constitution if on a matter left
to the discretion of a coordinate branch, the
judiciary would substitute its own. If there be
adherence to the rule of law, as there ought to be,
the last offender should be courts of justice, to
which rightly litigants submit their controversy
precisely to maintain unimpaired the supremacy
of legal norms and prescriptions. The attack on
the validity of the challenged provision likewise
insofar as there may be objections, even if valid
and cogent on is wisdom cannot be sustained. 33
8. The alleged infringement of the fundamental
principle of non-delegation of legislative power is
equally without any support well-settled legal
doctrines. Had petitioner taken the trouble to
acquaint himself with authoritative
pronouncements from this Tribunal, he would not
have the temerity to make such an assertion. An
exempt from the aforecited decision of Edu v.
Ericta sheds light on the matter: "To avoid the
taint of unlawful delegation, there must be a
standard, which implies at the very least that the
legislature itself determines matters of principle
and lays down fundamental policy. Otherwise, the
charge of complete abdication may be hard to
repel A standard thus defines legislative policy,
marks its maps out its boundaries and specifies
the public agency to apply it. It indicates the
circumstances under which the legislative
command is to be effected. It is the criterion by
which legislative purpose may be carried out.
Thereafter, the executive or administrative office
designated may in pursuance of the above
guidelines promulgate supplemental rules and
regulations. The standard may be either express
or implied. If the former, the non-delegation
objection is easily met. The standard though does
not have to be spelled out specifically. It could be
implied from the policy and purpose of the act
considered as a whole. In the Reflector Law
clearly, the legislative objective is public safety.
What is sought to be attained as in Calalang v.
Williams is "safe transit upon the roads.' This is to
adhere to the recognition given expression by
Justice Laurel in a decision announced not too
long after the Constitution came into force and
effect that the principle of non-delegation "has
been made to adapt itself to the complexities of
modern governments, giving rise to the adoption,
within certain limits, of the principle of
"subordinate legislation" not only in the United
States and England but in practically all modern
governments.' He continued: 'Accordingly, with
the growing complexity of modern life, the
multiplication of the subjects of governmental
regulation, and the increased difficulty of
administering the laws, there is a constantly
growing tendency toward the delegation of
greater powers by the legislature and toward the
approval of the practice by the courts.'
Consistency with the conceptual approach
requires the reminder that what is delegated is
authority non-legislative in character, the
completeness of the statute when it leaves the
hands of Congress being assumed." 34
9. The conclusion reached by this Court that this
petition must be dismissed is reinforced by this
consideration. The petition itself quoted these two
whereas clauses of the assailed Letter of
Instruction: "[Whereas], the hazards posed by
such obstructions to traffic have been recognized
by international bodies concerned with traffic
safety, the 1968 Vienna Convention on Road
Signs and Signals and the United Nations
Organization (U.N.); [Whereas], the said Vionna
Convention, which was ratified by the Philippine
Government under P.D. No. 207, recommended
the enactment of local legislation for the
installation of road safety signs and devices; * * *
" 35 It cannot be disputed then that this
Declaration of Principle found in the Constitution
possesses relevance: "The Philippines * * *
adopts the generally accepted principles of
international law as part of the law of the land * *
*." 36 The 1968 Vienna Convention on Road Signs
and Signals is impressed with such a character. It
is not for this country to repudiate a commitment
to which it had pledged its word. The concept of
Pacta sunt servanda stands in the way of such an
attitude, which is, moreover, at war with the
principle of international morality.
10. That is about all that needs be said. The
rather court reference to equal protection did not
even elicit any attempt on the Part of Petitioner to
substantiate in a manner clear, positive, and
categorical why such a casual observation should
be taken seriously. In no case is there a more
appropriate occasion for insistence on what was
referred to as "the general rule" in Santiago v. Far
Eastern Broadcasting Co., 37 namely, "that the
constitutionality of a law wig not be considered
unless the point is specially pleaded, insisted
upon, and adequately argued." 38 "Equal
protection" is not a talismanic formula at the mere
invocation of which a party to a lawsuit can
rightfully expect that success will crown his
efforts. The law is anything but that.
WHEREFORE, this petition is dismissed. The
restraining order is lifted. This decision is
immediately executory. No costs.
Castro, C.J., Barredo, Antonio, Santos,
Fernandez, Guerrero, Abad Santos, De Castro
and Melencio-Herrera, concur.
Makasiar, J, reserves the right to file a separate
opinion.
Aquino J., took no part.
Concepcion J., is on leave.
Castro, C.J., certifies that Justice Concepcion
concurs in their decision.
Separate Opinions
TEEHANKEE, J., dissenting:
I dissent from the majority's peremptory dismissal
of the petition and lifting of the restraining order
issued on October 19, 1978 against the blanket
enforcement of the requirement that all motor
vehicles be equipped with the so-called early
warning device, without even hearing the parties
in oral argument as generally required by the
Court in original cases of far-reaching
consequence such as the case at bar.
Lack of time presents my filing an extended
dissent. I only wish to state that the petition
advances grave and serious grounds of assailing
"the rules and regulations issued by the Land
Transportation Commission under Administrative
Order No. 1 and Memorandum Circular No. 32
[which] do not reflect the real intent, noble
objectives and spirit of Letter of Instructions No.
229, as amended by Letter of Instructions Nos.
479 and 716, because it is oppressive,
unreasonable, arbitrary, confiscatory, nay
unconstitutional and contrary to the precepts of
our compassionate New Society," because of the
following considerations, inter alia:
1. It is oppressive, arbitrary and discriminatory to
require owners of motor vehicles with built-in and
more effective and efficient E.W.D.'S such as "a)
blinking lights in the fore and aft of said motor
vehicles, 1)) battery-powered blinking lights inside
motor vehicles, c) built-in reflectorized tapes on
front and rear bumpers of motor vehicles....... to
purchase the E.W.D. specified in the challenged
administrative order, whose effectivity and utility
have yet to be demonstrated.
2. The public necessity for the challenged order
has yet to be shown. No valid refutation has been
made of petitioner's assertion that the "E.W.D.'s
are not too vital to the prevention of nighttime
vehicular accidents. Statistics shows that of the
26,000 motor vehicle accidents that occurred in
1976, only 390 or 1.5 per cent involved rear-end
collisions," as to require the purchase and
installation of the questioned E.W.D. for almost
900,000 vehicles throughout the country;
3. The big financial burden to be imposed on all
motorists is staggering, and petitioner's assertion
that "as of 1975, there were at least 865,037
motor vehicles all over the country requiring
E.W.D.'S and at the minimum price of 1156.00 per
set, this would mean a consumer outlay of P
48,451,872.00, or close to P 50 million for the
questioned E.W.D.'S "stands unchallenged;
4. No real effort has been made to show that
there can be practical and less burdensome
alternative road safety devices for stalled vehicles
than the prescribed E.W.D., such as the common
petroleum lamps "kinke" which can be placed just
as effectively in front of stalled vehicles on the
highways; and
5. There is no imperative need for imposing such
a bet requirement on all vehicles. The
respondents have not shown that they have
availed of the powers and prerogatives vested in
their offices such as ridding the country of
dilapidated trucks and vehicles which are the
main cause of the deplorable -highway accidents
due to stoned vehicles, establishing an honest
and foolproof system of examination and
licensing of motor vehicle drivers so as to ban the
reckless and irresponsible and a sustained
education campaign to instill safe driving habits
and attitudes that can be carried out for much
less than the P 50 million burden that would be
imposed by the challenged order.
I do feel that a greater "degree of receptivity and
sympathy" could be extended to the petitioner for
his civic mindedness in having filed the present
petition g as capricious and unreasonable the "all
pervading police power" of the State instead of
throwing the case out of court and leaving the
wrong impression that the exercise of police
power insofar as it may affect the life, liberty and
property of any person is no longer subject to
judicial inquiry.
METROPOLITAN MANILA DEVELOPMENT
AUTHORITY, petitioner,
vs.
BEL-AIR VILLAGE ASSOCIATION, INC.,
respondent.
PUNO, J.:
Not infrequently, the government is tempted to take
legal shortcuts solve urgent problems of the people.
But even when government is armed with the best of
intention, we cannot allow it to run roughshod over the
rule of law. Again, we let the hammer fall and fall hard
on the illegal attempt of the MMDA to open for public
use a private road in a private subdivision. While we
hold that the general welfare should be promoted, we
stress that it should not be achieved at the expense of
the rule of law.
Petitioner MMDA is a government agency tasked with
the delivery of basic services in Metro Manila.
Respondent Bel-Air Village Association, Inc. (BAVA) is
a non-stock, non-profit corporation whose members
are homeowners in Bel-Air Village, a private
subdivision in Makati City. Respondent BAVA is the
registered owner of Neptune Street, a road inside
Bel-Air Village.
On December 30, 1995, respondent received from
petitioner, through its Chairman, a notice dated
December 22, 1995 requesting respondent to open
Neptune Street to public vehicular traffic starting
January 2, 1996. The notice reads:
SUBJECT: NOTICE of the Opening of Neptune
Street to Traffic.
Dear President Lindo,
Please be informed that pursuant to the
mandate of the MMDA law or Republic Act No.
7924 which requires the Authority to rationalize
the use of roads and/or thoroughfares for the
safe and convenient movement of persons,
Neptune Street shall be opened to vehicular
traffic effective January 2, 1996.
In view whereof, the undersigned requests you
to voluntarily open the points of entry and exit
on said street.
Thank you for your cooperation and whatever
assistance that may be extended by your
association to the MMDA personnel who will
be directing traffic in the area.
Finally, we are furnishing you with a copy of
the handwritten instruction of the President on
the matter.
Very truly yours,
PROSPERO I. ORETA
Chairman 1
On the same day, respondent was apprised
that the perimeter wall separating the
subdivision from the adjacent Kalayaan
Avenue would be demolished.
On January 2, 1996, respondent instituted against
petitioner before the Regional Trial Court, Branch 136,
Makati City, Civil Case No. 96-001 for injunction.
Respondent prayed for the issuance of a temporary
restraining order and preliminary injunction enjoining
the opening of Neptune Street and prohibiting the
demolition of the perimeter wall. The trial court issued
a temporary restraining order the following day.
On January 23, 1996, after due hearing, the trial court
denied issuance of a preliminary injunction. 2
Respondent questioned the denial before the Court of
Appeals in CA-G.R. SP No. 39549. The appellate
court conducted an ocular inspection of Neptune
Street 3 and on February 13, 1996, it issued a writ of
preliminary injunction enjoining the implementation of
the MMDA's proposed action. 4
On January 28, 1997, the appellate court rendered a
Decision on the merits of the case finding that the
MMDA has no authority to order the opening of
Neptune Street, a private subdivision road and cause
the demolition of its perimeter walls. It held that the
authority is lodged in the City Council of Makati by
ordinance. The decision disposed of as follows:
WHEREFORE, the Petition is GRANTED; the
challenged Order dated January 23, 1995, in
Civil Case No. 96-001, is SET ASIDE and the
Writ of Preliminary Injunction issued on
February 13, 1996 is hereby made permanent.
For want of sustainable substantiation, the
Motion to Cite Roberto L. del Rosario in
contempt is denied. 5
No pronouncement as to costs.
SO ORDERED. 6
The Motion for Reconsideration of the decision was
denied on September 28, 1998. Hence, this recourse.
Petitioner MMDA raises the following questions:
I agent of the state endowed with police power in the
HAS THE METROPOLITAN MANILA
DEVELOPMENT AUTHORITY (MMDA) THE
MANDATE TO OPEN NEPTUNE STREET TO
PUBLIC TRAFFIC PURSUANT TO ITS
REGULATORY AND POLICE POWERS?
II
IS THE PASSAGE OF AN ORDINANCE A
CONDITION PRECEDENT BEFORE THE
MMDA MAY ORDER THE OPENING OF
SUBDIVISION ROADS TO PUBLIC TRAFFIC?
III
IS RESPONDENT BEL-AIR VILLAGE
ASSOCIATION, INC. ESTOPPED FROM
DENYING OR ASSAILING THE AUTHORITY
OF THE MMDA TO OPEN THE SUBJECT
STREET?
IV
WAS RESPONDENT DEPRIVED OF DUE
PROCESS DESPITE THE SEVERAL
MEETINGS HELD BETWEEN MMDA AND
THE AFFECTED EEL-AIR RESIDENTS AND
BAVA OFFICERS?
V
HAS RESPONDENT COME TO COURT WITH
UNCLEAN HANDS?7
Neptune Street is owned by respondent BAVA. It is a
private road inside Bel-Air Village, a private residential
subdivision in the heart of the financial and
commercial district of Makati City. It runs parallel to
Kalayaan Avenue, a national road open to the general
public. Dividing the two (2) streets is a concrete
perimeter wall approximately fifteen (15) feet high. The
western end of Neptune Street intersects Nicanor
Garcia, formerly Reposo Street, a subdivision road
open to public vehicular traffic, while its eastern end
intersects Makati Avenue, a national road. Both ends
of Neptune Street are guarded by iron gates.
Petitioner MMDA claims that it has the authority to
open Neptune Street to public traffic because it is an
delivery of basic services in Metro Manila. One of
these basic services is traffic management which
involves the regulation of the use of thoroughfares to
insure the safety, convenience and welfare of the
general public. It is alleged that the police power of
MMDA was affirmed by this Court in the consolidated
cases of Sangalang v. Intermediate Appellate Court. 8
From the premise that it has police power, it is now
urged that there is no need for the City of Makati to
enact an ordinance opening Neptune street to the
public. 9
Police power is an inherent attribute of sovereignty. It
has been defined as the power vested by the
Constitution in the legislature to make, ordain, and
establish all manner of wholesome and reasonable
laws, statutes and ordinances, either with penalties or
without, not repugnant to the Constitution, as they
shall judge to be for the good and welfare of the
commonwealth, and for the subjects of the same. 10
The power is plenary and its scope is vast and
pervasive, reaching and justifying measures for public
health, public safety, public morals, and the general
welfare. 11
It bears stressing that police power is lodged primarily
in the National Legislature. 12 It cannot be exercised by
any group or body of individuals not possessing
legislative power. 13 The National Legislature, however,
may delegate this power to the President and
administrative boards as well as the lawmaking bodies
of municipal corporations or local government units. 14
Once delegated, the agents can exercise only such
legislative powers as are conferred on them by the
national lawmaking body. 15
A local government is a "political subdivision of a
nation or state which is constituted by law and has
substantial control of local affairs." 16 The Local
Government Code of 1991 defines a local government
unit as a "body politic and corporate." 17 — one
endowed with powers as a political subdivision of the
National Government and as a corporate entity
representing the inhabitants of its territory. 18 Local
government units are the provinces, cities,
municipalities and barangays. 19 They are also the
territorial and political subdivisions of the state. 20
Our Congress delegated police power to the local
government units in the Local Government Code of
1991. This delegation is found in Section 16 of the
same Code, known as the general welfare clause, viz:
Sec. 16. General Welfare. — Every local
government unit shall exercise the powers
expressly granted, those necessarily implied
therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and
effective governance, and those which are
essential to the promotion of the general
welfare. Within their respective territorial
jurisdictions, local government units shall
ensure and support, among other things, the
preservation and enrichment of culture,
promote health and safety, enhance the right of
the people to a balanced ecology, encourage
and support the development of appropriate
and self-reliant scientific and technological
capabilities, improve public morals, enhance
economic prosperity and social justice,
promote full employment among their
residents, maintain peace and order, and
preserve the comfort and convenience of their
inhabitants. 21
Local government units exercise police power through
their respective legislative bodies. The legislative body
of the provincial government is the sangguniang
panlalawigan, that of the city government is the
sangguniang panlungsod, that of the municipal
government is the sangguniang bayan, and that of the
barangay is the sangguniang barangay. The Local
Government Code of 1991 empowers the
sangguniang panlalawigan, sangguniang panlungsod
and sangguniang bayan to "enact ordinances,
approve resolutions and appropriate funds for the
general welfare of the [province, city or municipality,
as the case may be], and its inhabitants pursuant to
Section 16 of the Code and in the proper exercise of
the corporate powers of the [province, city
municipality] provided under the Code . . . " 22 The
same Code gives the sangguniang barangay the
power to "enact ordinances as may be necessary to
discharge the responsibilities conferred upon it by law
or ordinance and to promote the general welfare of the
inhabitants thereon." 23
Metropolitan or Metro Manila is a body composed of
several local government units — i.e., twelve (12)
cities and five (5) municipalities, namely, the cities of
Caloocan, Manila, Mandaluyong, Makati, Pasay,
Pasig, Quezon, Muntinlupa, Las Pinas, Marikina,
Paranaque and Valenzuela, and the municipalities of
Malabon, Navotas, Pateros, San Juan and Taguig.
With the passage of Republic Act (R. A.) No. 7924 24 in
1995, Metropolitan Manila was declared as a "special
development and administrative region" and the
Administration of "metro-wide" basic services affecting
the region placed under "a development authority"
referred to as the MMDA. 25
"Metro-wide services" are those "services which have
metro-wide impact and transcend local political
boundaries or entail huge expenditures such that it
would not be viable for said services to be provided by
the individual local government units comprising Metro
Manila." 26 There are seven (7) basic metro-wide
services and the scope of these services cover the
following: (1) development planning; (2) transport and
traffic management; (3) solid waste disposal and
management; (4) flood control and sewerage
management; (5) urban renewal, zoning and land use
planning, and shelter services; (6) health and
sanitation, urban protection and pollution control; and
(7) public safety. The basic service of transport and
traffic management includes the following:
(b) Transport and traffic management which
include the formulation, coordination, and
monitoring of policies, standards, programs
and projects to rationalize the existing
transport operations, infrastructure
requirements, the use of thoroughfares, and
promotion of safe and convenient movement of
persons and goods; provision for the mass
transport system and the institution of a system
to regulate road users; administration and
implementation of all traffic enforcement
operations, traffic engineering services and
traffic education programs, including the
 institution of a single ticketing system in
Metropolitan Manila;" 27
In the delivery of the seven (7) basic services, the
MMDA has the following powers and functions:
Sec. 5. Functions and powers of the Metro
Manila Development Authority. — The MMDA
shall:
(a) Formulate, coordinate and regulate the
implementation of medium and long-term plans
and programs for the delivery of metro-wide
services, land use and physical development
within Metropolitan Manila, consistent with
national development objectives and priorities;
(b) Prepare, coordinate and regulate the
implementation of medium-term investment
programs for metro-wide services which shall
indicate sources and uses of funds for priority
programs and projects, and which shall include
the packaging of projects and presentation to
funding institutions;
(c) Undertake and manage on its own
metro-wide programs and projects for the
delivery of specific services under its
jurisdiction, subject to the approval of the
Council. For this purpose, MMDA can create
appropriate project management offices;
(d) Coordinate and monitor the implementation
of such plans, programs and projects in Metro
Manila; identify bottlenecks and adopt
solutions to problems of implementation;
(e) The MMDA shall set the policies
concerning traffic in Metro Manila, and shall
coordinate and regulate the implementation of
all programs and projects concerning traffic
management, specifically pertaining to
enforcement, engineering and education. Upon
request, it shall be extended assistance and
cooperation, including but not limited to,
assignment of personnel, by all other
government agencies and offices concerned;
(f) Install and administer a single ticketing
system, fix, impose and collect fines and
penalties for all kinds of violations of traffic
rules and regulations, whether moving or
non-moving in nature, and confiscate and
suspend or revoke drivers' licenses in the
enforcement of such traffic laws and
regulations, the provisions of RA 4136 and PD
1605 to the contrary notwithstanding. For this
purpose, the Authority shall impose all traffic
laws and regulations in Metro Manila, through
its traffic operation center, and may deputize
members of the PNP, traffic enforcers of local
government units, duly licensed security
guards, or members of non-governmental
organizations to whom may be delegated
certain authority, subject to such conditions
and requirements as the Authority may
impose; and
(g) Perform other related functions required to
achieve the objectives of the MMDA, including
the undertaking of delivery of basic services to
the local government units, when deemed
necessary subject to prior coordination with
and consent of the local government unit
concerned.
The implementation of the MMDA's plans, programs
and projects is undertaken by the local government
units, national government agencies, accredited
people's organizations, non-governmental
organizations, and the private sector as well as by the
MMDA itself. For this purpose, the MMDA has the
power to enter into contracts, memoranda of
agreement and other arrangements with these bodies
for the delivery of the required services Metro Manila.
28
The governing board of the MMDA is the Metro Manila
Council. The Council is composed of the mayors of
the component 12 cities and 5 municipalities, the
president of the Metro Manila Vice-Mayors' League
and the president of the Metro Manila Councilors'
League. 29 The Council is headed by Chairman who is
appointed by the President and vested with the rank of
cabinet member. As the policy-making body of the
MMDA, the Metro Manila Council approves
metro-wide plans, programs and projects, and issues
the necessary rules and regulations for the
implementation of said plans; it approves the annual
budget of the MMDA and promulgate the rules and may "install and administer a single ticketing system,"
regulations for the delivery of basic services, collection fix, impose and collect fines and penalties for all traffic
of service and regulatory fees, fines and penalties. violations.
These functions are particularly enumerated as
follows: It will be noted that the powers of the MMDA are
limited to the following acts: formulation, coordination,
Sec. 6. Functions of the Metro Manila Council. regulation, implementation, preparation, management,
— monitoring, setting of policies, installation of a system
and administration. There is no syllable in R.A. No.
(a) The Council shall be the policy-making 7924 that grants the MMDA police power, let alone
body of the MMDA; legislative power. Even the Metro Manila Council has
not been delegated any legislative power. Unlike the
(b) It shall approve metro-wide plans,
legislative bodies of the local government units, there
programs and projects and issue rules and
is no provision in R.A. No. 7924 that empowers the
regulations deemed necessary by the MMDA
MMDA or its Council to "enact ordinances, approve
to carry out the purposes of this Act;
resolutions appropriate funds for the general welfare"
of the inhabitants of Metro Manila. The MMDA is, as
(c) It may increase the rate of allowances and
termed in the charter itself, "development authority." 30
per diems of the members of the Council to be
It is an agency created for the purpose of laying down
effective during the term of the succeeding
policies and coordinating with the various national
Council. It shall fix the compensation of the
government agencies, people's organizations,
officers and personnel of the MMDA, and
non-governmental organizations and the private sector
approve the annual budget thereof for
for the efficient and expeditious delivery of basic
submission to the Department of Budget and
services in the vast metropolitan area. All its functions
Management (DBM);
are administrative in nature and these are actually
(d) It shall promulgate rules and regulations summed up in the charter itself, viz:
and set policies and standards for metro-wide
Sec. 2. Creation of the Metropolitan Manila
application governing the delivery of basic
Development Authority. — . . . .
services, prescribe and collect service and
regulatory fees, and impose and collect fines
The MMDA shall perform planning, monitoring
and penalties.
and coordinative functions, and in the process
exercise regulatory and supervisory authority
Clearly, the scope of the MMDA's function is limited to
over the delivery of metro-wide services within
the delivery of the seven (7) basic services. One of
Metro Manila, without diminution of the
these is transport and traffic management which
autonomy of the local government units
includes the formulation and monitoring of policies,
concerning purely local matters. 31
standards and projects to rationalize the existing
transport operations, infrastructure requirements, the
Petitioner cannot seek refuge in the cases of
use of thoroughfares and promotion of the safe
Sangalang v. Intermediate Appellate Court 32 where
movement of persons and goods. It also covers the
we upheld a zoning ordinance issued by the Metro
mass transport system and the institution of a system
Manila Commission (MMC), the predecessor of the
of road regulation, the administration of all traffic
MMDA, as an exercise of police power. The first
enforcement operations, traffic engineering services
Sangalang decision was on the merits of the petition,
and traffic education programs, including the institution 33
while the second decision denied reconsideration of
of a single ticketing system in Metro Manila for traffic
the first case and in addition discussed the case of
violations. Under the service, the MMDA is expressly
Yabut v. Court of Appeals. 34
authorized "to set the policies concerning traffic" and
"coordinate and regulate the implementation of all
traffic management programs." In addition, the MMDA
Sangalang v. IAC involved five (5) consolidated
petitions filed by respondent BAVA and three residents
of Bel-Air Village against other residents of the Village
and the Ayala Corporation, formerly the Makati
Development Corporation, as the developer of the
subdivision. The petitioners sought to enforce certain
restrictive easements in the deeds of sale over their
respective lots in the subdivision. These were the
prohibition on the setting up of commercial and
advertising signs on the lots, and the condition that the
lots be used only for residential purposes. Petitioners
alleged that respondents, who were residents along
Jupiter Street of the subdivision, converted their
residences into commercial establishments in violation
of the "deed restrictions," and that respondent Ayala
Corporation ushered in the full commercialization" of
Jupiter Street by tearing down the perimeter wall that
separated the commercial from the residential section
of the village. 35
The petitions were dismissed based on Ordinance No.
81 of the Municipal Council of Makati and Ordinance
No. 81-01 of the Metro Manila Commission (MMC).
Municipal Ordinance No. 81 classified Bel-Air Village
as a Class A Residential Zone, with its boundary in the
south extending to the center line of Jupiter Street.
The Municipal Ordinance was adopted by the MMC
under the Comprehensive Zoning Ordinance for the
National Capital Region and promulgated as MMC
Ordinance No. 81-01. Bel-Air Village was indicated
therein as bounded by Jupiter Street and the block
adjacent thereto was classified as a High Intensity
Commercial Zone. 36
We ruled that since both Ordinances recognized
Jupiter Street as the boundary between Bel-Air Village
and the commercial district, Jupiter Street was not for
the exclusive benefit of Bel-Air residents. We also held
that the perimeter wall on said street was constructed
not to separate the residential from the commercial
blocks but simply for security reasons, hence, in
tearing down said wall, Ayala Corporation did not
violate the "deed restrictions" in the deeds of sale.
We upheld the ordinances, specifically MMC
Ordinance No. 81-01, as a legitimate exercise of
police power. 37 The power of the MMC and the Makati
Municipal Council to enact zoning ordinances for the
general welfare prevailed over the "deed restrictions".
In the second Sangalang/Yabut decision, we held that
the opening of Jupiter Street was warranted by the
demands of the common good in terms of "traffic
decongestion and public convenience." Jupiter was
opened by the Municipal Mayor to alleviate traffic
congestion along the public streets adjacent to the
Village. 38 The same reason was given for the opening
to public vehicular traffic of Orbit Street, a road inside
the same village. The destruction of the gate in Orbit
Street was also made under the police power of the
municipal government. The gate, like the perimeter
wall along Jupiter, was a public nuisance because it
hindered and impaired the use of property, hence, its
summary abatement by the mayor was proper and
legal. 39
Contrary to petitioner's claim, the two Sangalang
cases do not apply to the case at bar. Firstly, both
involved zoning ordinances passed by the municipal
council of Makati and the MMC. In the instant case,
the basis for the proposed opening of Neptune Street
is contained in the notice of December 22, 1995 sent
by petitioner to respondent BAVA, through its
president. The notice does not cite any ordinance or
law, either by the Sangguniang Panlungsod of Makati
City or by the MMDA, as the legal basis for the
proposed opening of Neptune Street. Petitioner
MMDA simply relied on its authority under its charter
"to rationalize the use of roads and/or thoroughfares
for the safe and convenient movement of persons."
Rationalizing the use of roads and thoroughfares is
one of the acts that fall within the scope of transport
and traffic management. By no stretch of the
imagination, however, can this be interpreted as an
express or implied grant of ordinance-making power,
much less police power.
Secondly, the MMDA is not the same entity as the
MMC in Sangalang. Although the MMC is the
forerunner of the present MMDA, an examination of
Presidential Decree (P. D.) No. 824, the charter of the
MMC, shows that the latter possessed greater powers
which were not bestowed on the present MMDA.
Metropolitan Manila was first created in 1975 by
Presidential Decree (P.D.) No. 824. It comprised the
Greater Manila Area composed of the contiguous four issue bonds, revenue certificates, and other
(4) cities of Manila, Quezon, Pasay and Caloocan, and obligations of indebtedness. Existing tax
the thirteen (13) municipalities of Makati, measures should, however, continue to be
Mandaluyong, San Juan, Las Pinas, Malabon, operative until otherwise modified or repealed
Navotas, Pasig, Pateros, Paranaque, Marikina, by the Commission;
Muntinlupa and Taguig in the province of Rizal, and
Valenzuela in the province of Bulacan. 40 Metropolitan 3. To charge and collect fees for the use of
Manila was created as a response to the finding that public service facilities;
the rapid growth of population and the increase of
4. To appropriate money for the operation of
social and economic requirements in these areas
the metropolitan government and review
demand a call for simultaneous and unified
appropriations for the city and municipal units
development; that the public services rendered by the
within its jurisdiction with authority to
respective local governments could be administered
disapprove the same if found to be not in
more efficiently and economically if integrated under a
accordance with the established policies of the
system of central planning; and this coordination,
Commission, without prejudice to any
"especially in the maintenance of peace and order and
contractual obligation of the local government
the eradication of social and economic ills that fanned
units involved existing at the time of approval
the flames of rebellion and discontent [were] part of
of this Decree;
reform measures under Martial Law essential to the
safety and security of the State." 41
5. To review, amend, revise or repeal all
ordinances, resolutions and acts of cities and
Metropolitan Manila was established as a "public
municipalities within Metropolitan Manila;
corporation" with the following powers:
6. To enact or approve ordinances, resolutions
Sec. 1. Creation of the Metropolitan Manila. —
and to fix penalties for any violation thereof
There is hereby created a public corporation,
which shall not exceed a fine of P10,000.00 or
to be known as the Metropolitan Manila, vested
imprisonment of six years or both such fine
with powers and attributes of a corporation
and imprisonment for a single offense;
including the power to make contracts, sue and
be sued, acquire, purchase, expropriate, hold,
7. To perform general administrative, executive
transfer and dispose of property and such
and policy-making functions;
other powers as are necessary to carry out its
purposes. The Corporation shall be 8. To establish a fire control operation center,
administered by a Commission created under which shall direct the fire services of the city
this Decree. 42 and municipal governments in the metropolitan
area;
The administration of Metropolitan Manila was placed
under the Metro Manila Commission (MMC) vested 9. To establish a garbage disposal operation
with the following powers: center, which shall direct garbage collection
and disposal in the metropolitan area;
Sec. 4. Powers and Functions of the Commission. —
The Commission shall have the following powers and 10. To establish and operate a transport and
functions: traffic center, which shall direct traffic activities;

1. To act as a central government to establish 11. To coordinate and monitor governmental

and administer programs and provide services
common to the area;
2. To levy and collect taxes and special
assessments, borrow and expend money and
and private activities pertaining to essential
services such as transportation, flood control
and drainage, water supply and sewerage,
 social, health and environmental services,
housing, park development, and others;
12. To insure and monitor the undertaking of a
comprehensive social, economic and physical
planning and development of the area;
13. To study the feasibility of increasing
barangay participation in the affairs of their
respective local governments and to propose
to the President of the Philippines definite
programs and policies for implementation;
14. To submit within thirty (30) days after the
close of each fiscal year an annual report to
the President of the Philippines and to submit a
periodic report whenever deemed necessary;
and
15. To perform such other tasks as may be
assigned or directed by the President of the
Philippines.
The MMC was the "central government" of Metro
Manila for the purpose of establishing and
administering programs providing services common to
the area. As a "central government" it had the power
to levy and collect taxes and special assessments, the
power to charge and collect fees; the power to
appropriate money for its operation, and at the same
time, review appropriations for the city and municipal
units within its jurisdiction. It was bestowed the power
to enact or approve ordinances, resolutions and fix
penalties for violation of such ordinances and
resolutions. It also had the power to review, amend,
revise or repeal all ordinances, resolutions and acts of
any of the four (4) cities and thirteen (13)
municipalities comprising Metro Manila.
P.D. No. 824 further provided:
Sec. 9. Until otherwise provided, the
governments of the four cities and thirteen
municipalities in the Metropolitan Manila shall
continue to exist in their present form except
as may be inconsistent with this Decree. The
members of the existing city and municipal
councils in Metropolitan Manila shall, upon
promulgation of this Decree, and until
December 31, 1975, become members of the
Sangguniang Bayan which is hereby created
for every city and municipality of Metropolitan
Manila.
In addition, the Sangguniang Bayan shall be
composed of as many barangay captains as
may be determined and chosen by the
Commission, and such number of
representatives from other sectors of the
society as may be appointed by the President
upon recommendation of the Commission.
xxx xxx xxx
The Sangguniang Bayan may recommend to
the Commission ordinances, resolutions or
such measures as it may adopt; Provided, that
no such ordinance, resolution or measure shall
become effective, until after its approval by the
Commission; and Provided further, that the
power to impose taxes and other levies, the
power to appropriate money and the power to
pass ordinances or resolutions with penal
sanctions shall be vested exclusively in the
Commission.
The creation of the MMC also carried with it the
creation of the Sangguniang Bayan. This was
composed of the members of the component city and
municipal councils, barangay captains chosen by the
MMC and sectoral representatives appointed by the
President. The Sangguniang Bayan had the power to
recommend to the MMC the adoption of ordinances,
resolutions or measures. It was the MMC itself,
however, that possessed legislative powers. All
ordinances, resolutions and measures recommended
by the Sangguniang Bayan were subject to the MMC's
approval. Moreover, the power to impose taxes and
other levies, the power to appropriate money, and the
power to pass ordinances or resolutions with penal
sanctions were vested exclusively in the MMC.
Thus, Metropolitan Manila had a "central government,"
i.e., the MMC which fully possessed legislative police
powers. Whatever legislative powers the component
cities and municipalities had were all subject to review
and approval by the MMC.
After President Corazon Aquino assumed power, there
was a clamor to restore the autonomy of the local
government units in Metro Manila. Hence, Sections 1 local government units comprising the
and 2 of Article X of the 1987 Constitution provided: Metropolitan Manila area. 45

Sec. 1. The territorial and political subdivisions In 1990, President Aquino issued Executive Order (E.
of the Republic of the Philippines are the O.) No. 392 and constituted the Metropolitan Manila
provinces, cities, municipalities and barangays. Authority (MMA). The powers and functions of the
There shall be autonomous regions in Muslim MMC were devolved to the MMA. 46 It ought to be
Mindanao and the Cordilleras as herein stressed, however, that not all powers and functions of
provided. the MMC were passed to the MMA. The MMA's power
was limited to the "delivery of basic urban services
Sec. 2. The territorial and political subdivisions requiring coordination in Metropolitan Manila." 47 The
shall enjoy local autonomy. MMA's governing body, the Metropolitan Manila
Council, although composed of the mayors of the
The Constitution, however, recognized the necessity
component cities and municipalities, was merely given
of creating metropolitan regions not only in the existing
power of: (1) formulation of policies on the delivery of
National Capital Region but also in potential
basic services requiring coordination and
equivalents in the Visayas and Mindanao. 43 Section
consolidation; and (2) promulgation resolutions and
11 of the same Article X thus provided:
other issuances, approval of a code of basic services
and the exercise of its rule-making power. 48
Sec. 11. The Congress may, by law, create
special metropolitan political subdivisions,
Under the 1987 Constitution, the local government
subject to a plebiscite as set forth in Section 10
units became primarily responsible for the governance
hereof. The component cities and
of their respective political subdivisions. The MMA's
municipalities shall retain their basic autonomy
jurisdiction was limited to addressing common
and shall be entitled to their own local
problems involving basic services that transcended
executives and legislative assemblies. The
local boundaries. It did not have legislative power. Its
jurisdiction of the metropolitan authority that
power was merely to provide the local government
will thereby be created shall be limited to basic
units technical assistance in the preparation of local
services requiring coordination.
development plans. Any semblance of legislative
power it had was confined to a "review [of] legislation
Constitution itself expressly provides that Congress
proposed by the local legislative assemblies to ensure
may, by law, create "special metropolitan political
consistency among local governments and with the
subdivisions" which shall be subject to approval by a
comprehensive development plan of Metro Manila,"
majority of the votes cast in a plebiscite in the political
and to "advise the local governments accordingly." 49
units directly affected; the jurisdiction of this
subdivision shall be limited to basic services requiring
When R.A. No. 7924 took effect, Metropolitan Manila
coordination; and the cities and municipalities
became a "special development and administrative
comprising this subdivision shall retain their basic
region" and the MMDA a "special development
services requiring coordination; and the cities and
authority" whose functions were "without prejudice to
municipalities comprising this subdivision shall retain
the autonomy of the affected local government units."
their basic autonomy and their own local executive
The character of the MMDA was clearly defined in the
and legislative assemblies. 44 Pending enactment of
legislative debates enacting its charter.
this law, the Transitory Provisions of the Constitution
gave the President of the Philippines the power to R.A. No. 7924 originated as House Bill No.
constitute the Metropolitan Authority, viz: 14170/11116 and was introduced by several legislators
led by Dante Tinga, Roilo Golez and Feliciano
Sec. 8. Until otherwise provided by Congress,
Belmonte. It was presented to the House of
the President may constitute the Metropolitan
Representatives by the Committee on Local
Authority to be composed of the heads of all
Governments chaired by Congressman Ciriaco R.
Alfelor. The bill was a product of Committee
consultations with the local government units in the
National Capital Region (NCR), with former Chairmen
of the MMC and MMA, 50 and career officials of said
agencies. When the bill was first taken up by the
Committee on Local Governments, the following
debate took place:
THE CHAIRMAN [Hon. Ciriaco Alfelor]: Okay,
Let me explain. This has been debated a long
time ago, you know. It's a special . . . we can
create a special metropolitan political
subdivision.
Actually, there are only six (6) political
subdivisions provided for in the Constitution:
barangay, municipality, city, province, and we
have the Autonomous Region of Mindanao and
we have the Cordillera. So we have 6. Now. . .
..
HON. [Elias] LOPEZ: May I interrupt, Mr.
Chairman. In the case of the Autonomous
Region, that is also specifically mandated by
the Constitution.
THE CHAIRMAN: That's correct. But it is
considered to be a political subdivision. What
is the meaning of a political subdivision?
Meaning to say, that it has its own government,
it has its own political personality, it has the
power to tax, and all governmental powers:
police power and everything. All right. Authority
is different; because it does not have its own
government. It is only a council, it is an
organization of political subdivision, powers,
"no, which is not imbued with any political
power.
If you go over Section 6, where the powers and
functions of the Metro Manila Development
Authority, it is purely coordinative. And it
provides here that the council is policy-making.
All right.
Under the Constitution is a Metropolitan
Authority with coordinative power. Meaning to
say, it coordinates all of the different basic
services which have to be delivered to the
constituency. All right.
There is now a problem. Each local
government unit is given its respective . . . as a
political subdivision. Kalookan has its powers,
as provided for and protected and guaranteed
by the Constitution. All right, the exercise.
However, in the exercise of that power, it might
be deleterious and disadvantageous to other
local government units. So, we are forming an
authority where all of these will be members
and then set up a policy in order that the basic
services can be effectively coordinated. All
right.
Of course, we cannot deny that the MMDA has
to survive. We have to provide some funds,
resources. But it does not possess any political
power. We do not elect the Governor. We do
not have the power to tax. As a matter of fact, I
was trying to intimate to the author that it must
have the power to sue and be sued because it
coordinates. All right. It coordinates practically
all these basic services so that the flow and the
distribution of the basic services will be
continuous. Like traffic, we cannot deny that.
It's before our eyes. Sewerage, flood control,
water system, peace and order, we cannot
deny these. It's right on our face. We have to
look for a solution. What would be the right
solution? All right, we envision that there
should be a coordinating agency and it is
called an authority. All right, if you do not want
to call it an authority, it's alright. We may call it
a council or maybe a management agency.
xxx xxx x x x 51
Clearly, the MMDA is not a political unit of
government. The power delegated to the MMDA is
that given to the Metro Manila Council to promulgate
administrative rules and regulations in the
implementation of the MMDA's functions. There is no
grant of authority to enact ordinances and regulations
for the general welfare of the inhabitants of the
metropolis. This was explicitly stated in the last
Committee deliberations prior to the bill's presentation HON. BELMONTE: All right, Mr. Chairman,
to Congress. Thus: okay, what you are saying there is . . . . .

THE CHAIRMAN: Yeah, but we have to go THE CHAIRMAN: In setting up ordinances, it is

over the suggested revision. I think this was a political exercise, Believe me.
already approved before, but it was
reconsidered in view of the proposals, set-up, HON. [Elias] LOPEZ: Mr. Chairman, it can be
to make the MMDA stronger. Okay, so if there changed into issuances of rules and
is no objection to paragraph "f". . . And then regulations. That would be . . . it shall also be
next is paragraph "b," under Section 6. "It shall enforced.
approve metro-wide plans, programs and
HON. BELMONTE: Okay, I will . . . .
projects and issue ordinances or resolutions
deemed necessary by the MMDA to carry out
HON. LOPEZ: And you can also say that
the purposes of this Act." Do you have the
violation of such rule, you impose a sanction.
powers? Does the MMDA... because that takes
But you know, ordinance has a different legal
the form of a local government unit, a political
connotation.
subdivision.
HON. BELMONTE: All right, I defer to that
HON. [Feliciano] BELMONTE: Yes, I believe
opinion, your Honor.
so, your Honor. When we say that it has the
policies, it's very clear that those policies must THE CHAIRMAN: So instead of ordinances,
be followed. Otherwise, what's the use of say rules and regulations.
empowering it to come out with policies. Now,
the policies may be in the form of a resolution HON. BELMONTE: Or resolutions. Actually,
or it may be in the form of a ordinance. The they are actually considering resolutions now.
term "ordinance" in this case really gives it
more teeth, your honor. Otherwise, we are THE CHAIRMAN: Rules and resolutions.
going to see a situation where you have the
HON. BELMONTE: Rules, regulations and
power to adopt the policy but you cannot really
resolutions. 52
make it stick as in the case now, and I think
here is Chairman Bunye. I think he will agree
The draft of H. B. No. 14170/11116 was presented by
that that is the case now. You've got the power
the Committee to the House of Representatives. The
to set a policy, the body wants to follow your
explanatory note to the bill stated that the proposed
policy, then we say let's call it an ordinance
MMDA is a "development authority" which is a
and see if they will not follow it.
"national agency, not a political government unit." 53
The explanatory note was adopted as the sponsorship
THE CHAIRMAN: That's very nice. I like that.
speech of the Committee on Local Governments. No
However, there is a constitutional
interpellations or debates were made on the floor and
impediment.1âwphi1 You are making this
no amendments introduced. The bill was approved on
MMDA a political subdivision. The creation of
second reading on the same day it was presented. 54
the MMDA would be subject to a plebiscite.
That is what I'm trying to avoid. I've been trying
When the bill was forwarded to the Senate, several
to avoid this kind of predicament. Under the
amendments were made.1âwphi1 These
Constitution it states: if it is a political
amendments, however, did not affect the nature of the
subdivision, once it is created it has to be
MMDA as originally conceived in the House of
subject to a plebiscite. I'm trying to make this
Representatives. 55
as administrative. That's why we place the
Chairman as a cabinet rank. It is thus beyond doubt that the MMDA is not a local
government unit or a public corporation endowed with
legislative power. It is not even a "special metropolitan
political subdivision" as contemplated in Section 11,
Article X of the Constitution. The creation of a "special
metropolitan political subdivision" requires the
approval by a majority of the votes cast in a plebiscite
in the political units directly affected." 56 R. A. No. 7924
was not submitted to the inhabitants of Metro Manila in
a plebiscite. The Chairman of the MMDA is not an
official elected by the people, but appointed by the
President with the rank and privileges of a cabinet
member. In fact, part of his function is to perform such
other duties as may be assigned to him by the
President, 57 whereas in local government units, the
President merely exercises supervisory authority. This
emphasizes the administrative character of the
MMDA.
Clearly then, the MMC under P.D. No. 824 is not the
same entity as the MMDA under R.A. No. 7924. Unlike
the MMC, the MMDA has no power to enact
ordinances for the welfare of the community. It is the
local government units, acting through their respective
legislative councils, that possess legislative power and
police power. In the case at bar, the Sangguniang
Panlungsod of Makati City did not pass any ordinance
or resolution ordering the opening of Neptune Street,
hence, its proposed opening by petitioner MMDA is
illegal and the respondent Court of Appeals did not err
in so ruling. We desist from ruling on the other issues
as they are unnecessary.
We stress that this decision does not make light of the
MMDA's noble efforts to solve the chaotic traffic
condition in Metro Manila. Everyday, traffic jams and
traffic bottlenecks plague the metropolis. Even our
once sprawling boulevards and avenues are now
crammed with cars while city streets are clogged with
motorists and pedestrians. Traffic has become a social
malaise affecting our people's productivity and the
efficient delivery of goods and services in the country.
The MMDA was created to put some order in the
metropolitan transportation system but unfortunately
the powers granted by its charter are limited. Its good
intentions cannot justify the opening for public use of a
private street in a private subdivision without any legal
warrant. The promotion of the general welfare is not
antithetical to the preservation of the rule of
law.1âwphi1.nêt
IN VIEW WHEREOF, the petition is denied. The
Decision and Resolution of the Court of Appeals in
CA-G.R. SP No. 39549 are affirmed.
SO ORDERED.
MMDA, Petitioner, vs .DANTE O. GARIN, respondent.
CHICO-NAZARIO, J.:
At issue in this case is the validity of Section 5(f) of
Republic Act No. 7924 creating the Metropolitan
Manila Development Authority (MMDA), which
authorizes it to confiscate and suspend or revoke
driver's licenses in the enforcement of traffic laws and
regulations.
The issue arose from an incident involving the
respondent Dante O. Garin, a lawyer, who was issued
a traffic violation receipt (TVR) and his driver's license
confiscated for parking illegally along Gandara Street,
Binondo, Manila, on 05 August 1995. The following
statements were printed on the TVR:
You are hereby directed to report to the MMDA Traffic
Operations Center Port Area Manila after 48 hours
from date of apprehension for disposition/appropriate
action thereon. Criminal case shall be filed for failure
to redeem license after 30 days.
Valid as temporary DRIVER'S license for seven days
from date of apprehension.1
Shortly before the expiration of the TVR's validity, the
respondent addressed a letter2 to then MMDA
Chairman Prospero Oreta requesting the return of his
driver's license, and expressing his preference for his
case to be filed in court.
Receiving no immediate reply, Garin filed the original
complaint3 with application for preliminary injunction in
Branch 260 of the Regional Trial Court (RTC) of
Parañaque, on 12 September 1995, contending that,
in the absence of any implementing rules and
regulations, Sec. 5(f) of Rep. Act No. 7924 grants the
MMDA unbridled discretion to deprive erring motorists
of their licenses, pre-empting a judicial determination
of the validity of the deprivation, thereby violating the
due process clause of the Constitution. The
respondent further contended that the provision
violates the constitutional prohibition against undue
delegation of legislative authority, allowing as it does
the MMDA to fix and impose unspecified – and
therefore unlimited - fines and other penalties on
erring motorists.
In support of his application for a writ of preliminary
injunction, Garin alleged that he suffered and
continues to suffer great and irreparable damage
because of the deprivation of his license and that,
absent any implementing rules from the Metro Manila
Council, the TVR and the confiscation of his license
have no legal basis.
For its part, the MMDA, represented by the Office of
the Solicitor General, pointed out that the powers
granted to it by Sec. 5(f) of Rep. Act No. 7924 are
limited to the fixing, collection and imposition of fines
and penalties for traffic violations, which powers are
legislative and executive in nature; the judiciary retains
the right to determine the validity of the penalty
imposed. It further argued that the doctrine of
separation of powers does not preclude "admixture" of
the three powers of government in administrative
agencies.4
The MMDA also refuted Garin's allegation that the
Metro Manila Council, the governing board and policy
making body of the petitioner, has as yet to formulate
the implementing rules for Sec. 5(f) of Rep. Act No.
7924 and directed the court's attention to MMDA
Memorandum Circular No. TT-95-001 dated 15 April
1995. Respondent Garin, however, questioned the
validity of MMDA Memorandum Circular No.
TT-95-001, as he claims that it was passed by the
Metro Manila Council in the absence of a quorum.
Judge Helen Bautista-Ricafort issued a temporary
restraining order on 26 September 1995, extending
the validity of the TVR as a temporary driver's license
for twenty more days. A preliminary mandatory
injunction was granted on 23 October 1995, and the
MMDA was directed to return the respondent's driver's
license.
On 14 August 1997, the trial court rendered the
assailed decision5 in favor of the herein respondent
and held that:
a. There was indeed no quorum in that First
Regular Meeting of the MMDA Council held on March
23, 1995, hence MMDA Memorandum Circular No.
TT-95-001, authorizing confiscation of driver's licenses
upon issuance of a TVR, is void ab initio.
b. The summary confiscation of a driver's license
without first giving the driver an opportunity to be
heard; depriving him of a property right (driver's
license) without DUE PROCESS; not filling (sic) in
Court the complaint of supposed traffic infraction,
cannot be justified by any legislation (and is) hence
unconstitutional.
WHEREFORE, the temporary writ of preliminary
injunction is hereby made permanent; th(e) MMDA is
directed to return to plaintiff his driver's license; th(e)
MMDA is likewise ordered to desist from confiscating
driver's license without first giving the driver the
opportunity to be heard in an appropriate proceeding.
In filing this petition,6 the MMDA reiterates and
reinforces its argument in the court below and
contends that a license to operate a motor vehicle is
neither a contract nor a property right, but is a
privilege subject to reasonable regulation under the
police power in the interest of the public safety and
welfare. The petitioner further argues that revocation
or suspension of this privilege does not constitute a
taking without due process as long as the licensee is
given the right to appeal the revocation.
To buttress its argument that a licensee may indeed
appeal the taking and the judiciary retains the power
to determine the validity of the confiscation,
suspension or revocation of the license, the petitioner
points out that under the terms of the confiscation, the
licensee has three options:
1. To voluntarily pay the imposable fine,
2. To protest the apprehension by filing a
protest with the MMDA Adjudication
Committee, or
 3. To request the referral of the TVR to the
Public Prosecutor's Office.
The MMDA likewise argues that Memorandum
Circular No. TT-95-001 was validly passed in the
presence of a quorum, and that the lower court's
finding that it had not was based on a
"misapprehension of facts," which the petitioner would
have us review. Moreover, it asserts that though the
circular is the basis for the issuance of TVRs, the
basis for the summary confiscation of licenses is Sec.
5(f) of Rep. Act No. 7924 itself, and that such power is
self-executory and does not require the issuance of
any implementing regulation or circular.
Meanwhile, on 12 August 2004, the MMDA, through
its Chairman Bayani Fernando, implemented
Memorandum Circular No. 04, Series of 2004,
outlining the procedures for the use of the
Metropolitan Traffic Ticket (MTT) scheme. Under the
circular, erring motorists are issued an MTT, which can
be paid at any Metrobank branch. Traffic enforcers
may no longer confiscate drivers' licenses as a matter
of course in cases of traffic violations. All motorists
with unredeemed TVRs were given seven days from
the date of implementation of the new system to pay
their fines and redeem their license or vehicle plates.7
It would seem, therefore, that insofar as the absence
of a prima facie case to enjoin the petitioner from
confiscating drivers' licenses is concerned, recent
events have overtaken the Court's need to decide this
case, which has been rendered moot and academic
by the implementation of Memorandum Circular No.
04, Series of 2004.
The petitioner, however, is not precluded from
re-implementing Memorandum Circular No.
TT-95-001, or any other scheme, for that matter, that
would entail confiscating drivers' licenses. For the
proper implementation, therefore, of the petitioner's
future programs, this Court deems it appropriate to
make the following observations:
1. A license to operate a motor vehicle is a
privilege that the state may withhold in the
exercise of its police power.
The petitioner correctly points out that a license to
operate a motor vehicle is not a property right, but a
privilege granted by the state, which may be
suspended or revoked by the state in the exercise of
its police power, in the interest of the public safety and
welfare, subject to the procedural due process
requirements. This is consistent with our rulings in
Pedro v. Provincial Board of Rizal8 on the license to
operate a cockpit, Tan v. Director of Forestry9 and
Oposa v. Factoran10 on timber licensing agreements,
and Surigao Electric Co., Inc. v. Municipality of
Surigao11 on a legislative franchise to operate an
electric plant.
Petitioner cites a long list of American cases to prove
this point, such as State ex. Rel. Sullivan,12 which
states in part that, "the legislative power to regulate
travel over the highways and thoroughfares of the
state for the general welfare is extensive. It may be
exercised in any reasonable manner to conserve the
safety of travelers and pedestrians. Since motor
vehicles are instruments of potential danger, their
registration and the licensing of their operators have
been required almost from their first appearance. The
right to operate them in public places is not a natural
and unrestrained right, but a privilege subject to
reasonable regulation, under the police power, in the
interest of the public safety and welfare. The power to
license imports further power to withhold or to revoke
such license upon noncompliance with prescribed
conditions."
Likewise, the petitioner quotes the Pennsylvania
Supreme Court in Commonwealth v. Funk,13 to the
effect that: "Automobiles are vehicles of great speed
and power. The use of them constitutes an element of
danger to persons and property upon the highways.
Carefully operated, an automobile is still a dangerous
instrumentality, but, when operated by careless or
incompetent persons, it becomes an engine of
destruction. The Legislature, in the exercise of the
police power of the commonwealth, not only may, but
must, prescribe how and by whom motor vehicles
shall be operated on the highways. One of the
primary purposes of a system of general regulation of
the subject matter, as here by the Vehicle Code, is to
insure the competency of the operator of motor
vehicles. Such a general law is manifestly directed to
the promotion of public safety and is well within the
police power."
The common thread running through the cited cases is
that it is the legislature, in the exercise of police power,
which has the power and responsibility to regulate
how and by whom motor vehicles may be operated on
the state highways.
2. The MMDA is not vested with police power.
In Metro Manila Development Authority v. Bel-Air
Village Association, Inc.,14 we categorically stated that
Rep. Act No. 7924 does not grant the MMDA with
police power, let alone legislative power, and that all
its functions are administrative in nature.
The said case also involved the herein petitioner
MMDA which claimed that it had the authority to open
a subdivision street owned by the Bel-Air Village
Association, Inc. to public traffic because it is an agent
of the state endowed with police power in the delivery
of basic services in Metro Manila. From this premise,
the MMDA argued that there was no need for the City
of Makati to enact an ordinance opening Neptune
Street to the public.
Tracing the legislative history of Rep. Act No. 7924
creating the MMDA, we concluded that the MMDA is
not a local government unit or a public corporation
endowed with legislative power, and, unlike its
predecessor, the Metro Manila Commission, it has no
power to enact ordinances for the welfare of the
community. Thus, in the absence of an ordinance
from the City of Makati, its own order to open the
street was invalid.
We restate here the doctrine in the said decision as it
applies to the case at bar: police power, as an inherent
attribute of sovereignty, is the power vested by the
Constitution in the legislature to make, ordain, and
establish all manner of wholesome and reasonable
laws, statutes and ordinances, either with penalties or
without, not repugnant to the Constitution, as they
shall judge to be for the good and welfare of the
commonwealth, and for the subjects of the same.
Having been lodged primarily in the National
Legislature, it cannot be exercised by any group or
body of individuals not possessing legislative power.
The National Legislature, however, may delegate this
power to the president and administrative boards as
well as the lawmaking bodies of municipal
corporations or local government units (LGUs). Once
delegated, the agents can exercise only such
legislative powers as are conferred on them by the
national lawmaking body.
Our Congress delegated police power to the LGUs in
the Local Government Code of 1991.15 A local
government is a "political subdivision of a nation or
state which is constituted by law and has substantial
control of local affairs."16 Local government units are
the provinces, cities, municipalities and barangays,
which exercise police power through their respective
legislative bodies.
Metropolitan or Metro Manila is a body composed of
several local government units. With the passage of
Rep. Act No. 7924 in 1995, Metropolitan Manila was
declared as a "special development and administrative
region" and the administration of "metro-wide" basic
services affecting the region placed under "a
development authority" referred to as the MMDA.
Thus:
. . . [T]he powers of the MMDA are limited to the
following acts: formulation, coordination, regulation,
implementation, preparation, management,
monitoring, setting of policies, installation of a system
and administration. There is no syllable in R. A. No.
7924 that grants the MMDA police power, let alone
legislative power. Even the Metro Manila Council
has not been delegated any legislative power.
Unlike the legislative bodies of the local government
units, there is no provision in R. A. No. 7924 that
empowers the MMDA or its Council to "enact
ordinances, approve resolutions and appropriate
funds for the general welfare" of the inhabitants of
Metro Manila. The MMDA is, as termed in the charter
itself, a "development authority." It is an agency
created for the purpose of laying down policies
and coordinating with the various national
government agencies, people's organizations,
non-governmental organizations and the private
sector for the efficient and expeditious delivery of
basic services in the vast metropolitan area. All
its functions are administrative in nature and these
are actually summed up in the charter itself, viz:
 "Sec. 2. Creation of the Metropolitan Manila
Development Authority. -- -x x x.
The MMDA shall perform planning,
monitoring and coordinative functions,
and in the process exercise regulatory
and supervisory authority over the
delivery of metro-wide services within
Metro Manila, without diminution of the
autonomy of the local government units
concerning purely local matters."
….
Clearly, the MMDA is not a political unit of
government. The power delegated to the MMDA is
that given to the Metro Manila Council to promulgate
administrative rules and regulations in the
implementation of the MMDA's functions. There is no
grant of authority to enact ordinances and
regulations for the general welfare of the
inhabitants of the metropolis. 17 (footnotes omitted,
emphasis supplied)
Therefore, insofar as Sec. 5(f) of Rep. Act No. 7924 is
understood by the lower court and by the petitioner to
grant the MMDA the power to confiscate and suspend
or revoke drivers' licenses without need of any other
legislative enactment, such is an unauthorized
exercise of police power.
3. Sec. 5(f) grants the MMDA with the duty
to enforce existing traffic rules and regulations.
Section 5 of Rep. Act No. 7924 enumerates the
"Functions and Powers of the Metro Manila
Development Authority." The contested clause in Sec.
5(f) states that the petitioner shall "install and
administer a single ticketing system, fix, impose and
collect fines and penalties for all kinds of violations of
traffic rules and regulations, whether moving or
nonmoving in nature, and confiscate and suspend or
revoke drivers' licenses in the enforcement of such
traffic laws and regulations, the provisions of Rep. Act
No. 413618 and P.D. No. 160519 to the contrary
notwithstanding," and that "(f)or this purpose, the
Authority shall enforce all traffic laws and regulations
in Metro Manila, through its traffic operation center,
and may deputize members of the PNP, traffic
enforcers of local government units, duly licensed
security guards, or members of non-governmental
organizations to whom may be delegated certain
authority, subject to such conditions and requirements
as the Authority may impose."
Thus, where there is a traffic law or regulation validly
enacted by the legislature or those agencies to whom
legislative powers have been delegated (the City of
Manila in this case), the petitioner is not precluded –
and in fact is duty-bound – to confiscate and suspend
or revoke drivers' licenses in the exercise of its
mandate of transport and traffic management, as well
as the administration and implementation of all traffic
enforcement operations, traffic engineering services
and traffic education programs.20
This is consistent with our ruling in Bel-Air that the
MMDA is a development authority created for the
purpose of laying down policies and coordinating with
the various national government agencies, people's
organizations, non-governmental organizations and
the private sector, which may enforce, but not enact,
ordinances.
This is also consistent with the fundamental rule of
statutory construction that a statute is to be read in a
manner that would breathe life into it, rather than
defeat it,21 and is supported by the criteria in cases of
this nature that all reasonable doubts should be
resolved in favor of the constitutionality of a statute.22
A last word. The MMDA was intended to coordinate
services with metro-wide impact that transcend local
political boundaries or would entail huge expenditures
if provided by the individual LGUs, especially with
regard to transport and traffic management,23 and we
are aware of the valiant efforts of the petitioner to
untangle the increasingly traffic-snarled roads of Metro
Manila. But these laudable intentions are limited by
the MMDA's enabling law, which we can but interpret,
and petitioner must be reminded that its efforts in this
respect must be authorized by a valid law, or
ordinance, or regulation arising from a legitimate
source.
WHEREFORE, the petition is dismissed.
SO ORDERED.
THE METROPOLITAN MANILA
DEVELOPMENT AUTHORITY and BAYANI
FERNANDO as Chairman of the Metropolitan
Manila Development Authority, petitioners,
vs.
VIRON TRANSPORTATION CO., INC.,
respondent.
CARPIO MORALES, J.:
The following conditions in 1969, as observed by
this Court:
Vehicles have increased in number. Traffic
congestion has moved from bad to worse,
from tolerable to critical. The number of
people who use the thoroughfares has
multiplied x x x,1
have remained unchecked and have reverberated
to this day. Traffic jams continue to clog the
streets of Metro Manila, bringing vehicles to a
standstill at main road arteries during rush hour
traffic and sapping people’s energies and
patience in the process.
The present petition for review on certiorari,
rooted in the traffic congestion problem, questions
the authority of the Metropolitan Manila
Development Authority (MMDA) to order the
closure of provincial bus terminals along Epifanio
de los Santos Avenue (EDSA) and major
thoroughfares of Metro Manila.
Specifically challenged are two Orders issued by
Judge Silvino T. Pampilo, Jr. of the Regional Trial
Court (RTC) of Manila, Branch 26 in Civil Case
Nos. 03-105850 and 03-106224.
The first assailed Order of September 8, 2005,2
which resolved a motion for reconsideration filed
by herein respondents, declared Executive Order
(E.O.) No. 179, hereafter referred to as the E.O.,
"unconstitutional as it constitutes an
unreasonable exercise of police power." The
second assailed Order of November 23, 20053
denied petitioners’ motion for reconsideration.
The following facts are not disputed:
President Gloria Macapagal Arroyo issued the
E.O. on February 10, 2003, "Providing for the
Establishment of Greater Manila Mass Transport
System," the pertinent portions of which read:
WHEREAS, Metro Manila continues
to be the center of employment
opportunities, trade and commerce
of the Greater Metro Manila area;
WHEREAS, the traffic situation in
Metro Manila has affected the
adjacent provinces of Bulacan,
Cavite, Laguna, and Rizal, owing to
the continued movement of
residents and industries to more
affordable and economically viable
locations in these provinces;
WHEREAS, the Metropolitan Manila
Development Authority (MMDA) is
tasked to undertake measures to
ease traffic congestion in Metro
Manila and ensure the convenient
and efficient travel of commuters
within its jurisdiction;
WHEREAS, a primary cause of
traffic congestion in Metro Manila
has been the numerous buses
plying the streets that impedes [sic]
the flow of vehicles and commuters
due to the inefficient connectivity of
the different transport modes;
WHEREAS, the MMDA has
recommended a plan to decongest
traffic by eliminating the bus
terminals now located along major
Metro Manila thoroughfares and
providing more convenient access
to the mass transport system to the
commuting public through the
provision of mass transport terminal
facilities that would integrate the
existing transport modes, namely
the buses, the rail-based systems of
the LRT, MRT and PNR and to
facilitate and ensure efficient travel
through the improved connectivity of
the different transport modes;
WHEREAS, the national
government must provide the
necessary funding requirements to
immediately implement and render
operational these projects; and
extent to MMDA such other
assistance as may be warranted to
ensure their expeditious
prosecution.
immediately establishing the mass
transport terminals for the north and
south Metro Manila commuters as
hereinafter described.
Section 3. PROJECT
IMPLEMENTING AGENCY. – The
Metropolitan Manila Development
Authority (MMDA), is hereby
designated as the implementing
Agency for the project. For this
purpose, MMDA is directed to
undertake such infrastructure
development work as may be
necessary and, thereafter, manage
the project until it may be
turned-over to more appropriate
agencies, if found suitable and
convenient. Specifically, MMDA
shall have the following functions
and responsibilities:

NOW, THEREFORE, I, GLORIA a) Cause the

MACAPAGAL-ARROYO, President preparation of the
of the Philippines, by virtue of the Master Plan for the
powers vested in me by law, do projects, including the
hereby order: designs and costing;

Section 1. THE PROJECT. – The b) Coordinate the use

project shall be identified as of the land and/or
GREATER MANILA TRANSPORT properties needed for
SYSTEM Project. the project with the
respective agencies
Section 2. PROJECT and/or entities owning
OBJECTIVES. – In accordance with them;
the plan proposed by MMDA, the
project aims to develop four (4) c) Supervise and
interim intermodal mass transport manage the
terminals to integrate the different construction of the
transport modes, as well as those necessary structures
that shall hereafter be developed, to and facilities;
serve the commuting public in the
northwest, north, east, south, and d) Execute such
southwest of Metro Manila. Initially, contracts or
the project shall concentrate on agreements as may be
necessary, with the the objectives and
appropriate purposes of this
government agencies, Executive Order.4
entities, and/or private (Emphasis in the
persons, in original; underscoring
accordance with supplied)
existing laws and
pertinent regulations, As the above-quoted portions of the E.O. noted,
to facilitate the the primary cause of traffic congestion in Metro
implementation of the Manila has been the numerous buses plying the
project; streets and the inefficient connectivity of the
different transport modes;5 and the MMDA had
e) Accept, manage "recommended a plan to decongest traffic by
and disburse such eliminating the bus terminals now located along
funds as may be major Metro Manila thoroughfares and providing
necessary for the more and convenient access to the mass
construction and/or transport system to the commuting public through
implementation of the the provision of mass transport terminal facilities"6
projects, in which plan is referred to under the E.O. as the
accordance with Greater Manila Mass Transport System Project
prevailing accounting (the Project).
and audit polices and
practice in The E.O. thus designated the MMDA as the
government. implementing agency for the Project.

f) Enlist the assistance Pursuant to the E.O., the Metro Manila Council
of any national (MMC), the governing board and policymaking
government agency, body of the MMDA, issued Resolution No. 03-07
office or department, series of 20037 expressing full support of the
including local Project. Recognizing the imperative to integrate
government units, the different transport modes via the
government-owned or establishment of common bus parking terminal
controlled areas, the MMC cited the need to remove the bus
corporations, as may terminals located along major thoroughfares of
be necessary; Metro Manila.8

g) Assign or hire the On February 24, 2003, Viron Transport Co., Inc.
necessary personnel (Viron), a domestic corporation engaged in the
for the above business of public transportation with a provincial
purposes; and bus operation,9 filed a petition for declaratory
relief10 before the RTC11 of Manila.
h) Perform such other
related functions as In its petition which was docketed as Civil Case
may be necessary to No. 03-105850, Viron alleged that the MMDA,
enable it to accomplish through Chairman Fernando, was "poised to
issue a Circular, Memorandum or Order closing,
or tantamount to closing, all provincial bus
terminals along EDSA and in the whole of the
Metropolis under the pretext of traffic
regulation."12 This impending move, it stressed,
would mean the closure of its bus terminal in
Sampaloc, Manila and two others in Quezon City.
Alleging that the MMDA’s authority does not
include the power to direct provincial bus
operators to abandon their existing bus terminals
to thus deprive them of the use of their property,
Viron asked the court to construe the scope,
extent and limitation of the power of the MMDA to
regulate traffic under R.A. No. 7924, "An Act
Creating the Metropolitan Manila Development
Authority, Defining its Powers and Functions,
Providing Funds Therefor and For Other
Purposes."
Viron also asked for a ruling on whether the
planned closure of provincial bus terminals would
contravene the Public Service Act and related
laws which mandate public utilities to provide and
maintain their own terminals as a requisite for the
privilege of operating as common carriers.13
Mencorp Transportation System, Inc. (Mencorp),
another provincial bus operator, later filed a
similar petition for declaratory relief14 against
Executive Secretary Alberto G. Romulo and
MMDA Chairman Fernando.
Mencorp asked the court to declare the E.O.
unconstitutional and illegal for transgressing the
possessory rights of owners and operators of
public land transportation units over their
respective terminals.
Averring that MMDA Chairman Fernando had
begun to implement a plan to close and eliminate
all provincial bus terminals along EDSA and in the
whole of the metropolis and to transfer their
operations to common bus terminals,15 Mencorp
prayed for the issuance of a temporary restraining
order (TRO) and/or writ of preliminary injunction
to restrain the impending closure of its bus
terminals which it was leasing at the corner of
EDSA and New York Street in Cubao and at the
intersection of Blumentritt, Laon Laan and Halcon
Streets in Quezon City. The petition was docketed
as Civil Case No. 03-106224 and was raffled to
Branch 47 of the RTC of Manila.
Mencorp’s petition was consolidated on June 19,
2003 with Viron’s petition which was raffled to
Branch 26 of the RTC, Manila.
Mencorp’s prayer for a TRO and/or writ of
injunction was denied as was its application for
the issuance of a preliminary injunction.16
In the Pre-Trial Order17 issued by the trial court,
the issues were narrowed down to whether 1) the
MMDA’s power to regulate traffic in Metro Manila
included the power to direct provincial bus
operators to abandon and close their duly
established and existing bus terminals in order to
conduct business in a common terminal; (2) the
E.O. is consistent with the Public Service Act and
the Constitution; and (3) provincial bus operators
would be deprived of their real properties without
due process of law should they be required to use
the common bus terminals.
Upon the agreement of the parties, they filed their
respective position papers in lieu of hearings.
By Decision18 of January 24, 2005, the trial court
sustained the constitutionality and legality of the
E.O. pursuant to R.A. No. 7924, which
empowered the MMDA to administer Metro
Manila’s basic services including those of
transport and traffic management.
The trial court held that the E.O. was a valid
exercise of the police power of the State as it
satisfied the two tests of lawful subject matter and
lawful means, hence, Viron’s and Mencorp’s
property rights must yield to police power.
On the separate motions for reconsideration of
Viron and Mencorp, the trial court, by Order of
September 8, 2005, reversed its Decision, this
time holding that the E.O. was "an unreasonable
exercise of police power"; that the authority of the
MMDA under Section (5)(e) of R.A. No. 7924
does not include the power to order the closure of
Viron’s and Mencorp’s existing bus terminals; and
that the E.O. is inconsistent with the provisions of
the Public Service Act.
Petitioners’ motion for reconsideration was denied
by Resolution of November 23, 2005.
Hence, this petition, which faults the trial court for
failing to rule that: (1) the requisites of declaratory
relief are not present, there being no justiciable
controversy in Civil Case Nos. 03-105850 and
03-106224; and (2) the President has the
authority to undertake or cause the
19
implementation of the Project.
Petitioners contend that there is no justiciable
controversy in the cases for declaratory relief as
nothing in the body of the E.O. mentions or orders
the closure and elimination of bus terminals along
the major thoroughfares of Metro Manila. Viron
and Mencorp, they argue, failed to produce any
letter or communication from the Executive
Department apprising them of an immediate plan
to close down their bus terminals.
And petitioners maintain that the E.O. is only an
administrative directive to government agencies
to coordinate with the MMDA and to make
available for use government property along
EDSA and South Expressway corridors. They add
that the only relation created by the E.O. is that
between the Chief Executive and the
implementing officials, but not between third
persons.
The petition fails.
It is true, as respondents have pointed out, that
the alleged deficiency of the consolidated
petitions to meet the requirement of justiciability
was not among the issues defined for resolution
in the Pre-Trial Order of January 12, 2004. It is
equally true, however, that the question was
repeatedly raised by petitioners in their Answer to
Viron’s petition,20 their Comment of April 29, 2003
opposing Mencorp’s prayer for the issuance of a
TRO,21 and their Position Paper of August 23,
2004.22
In bringing their petitions before the trial court,
both respondents pleaded the existence of the
essential requisites for their respective petitions
for declaratory relief,23 and refuted petitioners’
contention that a justiciable controversy was
lacking.24 There can be no denying, therefore,
that the issue was raised and discussed by the
parties before the trial court.
The following are the essential requisites for a
declaratory relief petition: (a) there must be a
justiciable controversy; (b) the controversy must
be between persons whose interests are adverse;
(c) the party seeking declaratory relief must have
a legal interest in the controversy; and (d) the
issue invoked must be ripe for judicial
determination.25
The requirement of the presence of a justiciable
controversy is satisfied when an actual
controversy or the ripening seeds thereof exist
between the parties, all of whom are sui juris and
before the court, and the declaration sought will
help in ending the controversy.26 A question
becomes justiciable when it is translated into a
claim of right which is actually contested.27
In the present cases, respondents’ resort to court
was prompted by the issuance of the E.O. The
4th Whereas clause of the E.O. sets out in clear
strokes the MMDA’s plan to "decongest traffic by
eliminating the bus terminals now located along
major Metro Manila thoroughfares and providing
more convenient access to the mass transport
system to the commuting public through the
provision of mass transport terminal facilities x x
x." (Emphasis supplied)
Section 2 of the E.O. thereafter lays down the
immediate establishment of common bus
terminals for north- and south-bound commuters.
For this purpose, Section 8 directs the
Department of Budget and Management to
allocate funds of not more than one hundred
million pesos (P100,000,000) to cover the cost of
the construction of the north and south terminals.
And the E.O. was made effective immediately.
The MMDA’s resolve to immediately implement
the Project, its denials to the contrary
notwithstanding, is also evident from telltale
circumstances, foremost of which was the
passage by the MMC of Resolution No. 03-07,
Series of 2003 expressing its full support of the
immediate implementation of the Project.
Notable from the 5th Whereas clause of the MMC
Resolution is the plan to "remove the bus
terminals located along major thoroughfares of
Metro Manila and an urgent need to integrate the
different transport modes." The 7th Whereas
clause proceeds to mention the establishment of
the North and South terminals.
As alleged in Viron’s petition, a diagram of the
GMA-MTS North Bus/Rail Terminal had been
drawn up, and construction of the terminal is
already in progress. The MMDA, in its Answer28
and Position Paper,29 in fact affirmed that the
government had begun to implement the Project.
It thus appears that the issue has already
transcended the boundaries of what is merely
conjectural or anticipatory.lawphil
Under the circumstances, for respondents to wait
for the actual issuance by the MMDA of an order
for the closure of respondents’ bus terminals
would be foolhardy for, by then, the proper action
to bring would no longer be for declaratory relief
which, under Section 1, Rule 6330 of the Rules of
Court, must be brought before there is a breach
or violation of rights.
As for petitioners’ contention that the E.O. is a
mere administrative issuance which creates no
relation with third persons, it does not persuade.
Suffice it to stress that to ensure the success of
the Project for which the concerned government
agencies are directed to coordinate their activities
and resources, the existing bus terminals owned,
operated or leased by third persons like
respondents would have to be eliminated; and
respondents would be forced to operate from the
common bus terminals.
It cannot be gainsaid that the E.O. would have an
adverse effect on respondents. The closure of
their bus terminals would mean, among other
things, the loss of income from the operation
and/or rentals of stalls thereat. Precisely,
respondents claim a deprivation of their
constitutional right to property without due
process of law.
Respondents have thus amply demonstrated a
"personal and substantial interest in the case
such that [they have] sustained, or will sustain,
direct injury as a result of [the E.O.’s]
enforcement."31 Consequently, the established
rule that the constitutionality of a law or
administrative issuance can be challenged by one
who will sustain a direct injury as a result of its
enforcement has been satisfied by respondents.
On to the merits of the case.
Respondents posit that the MMDA is devoid of
authority to order the elimination of their bus
terminals under the E.O. which, they argue, is
unconstitutional because it violates both the
Constitution and the Public Service Act; and that
neither is the MMDA clothed with such authority
under R.A. No. 7924.
Petitioners submit, however, that the real issue
concerns the President’s authority to undertake or
to cause the implementation of the Project. They communications systems
assert that the authority of the President is in a most practical,
derived from E.O. No. 125, "Reorganizing the expeditious, and orderly
Ministry of Transportation and Communications fashion for maximum safety,
Defining its Powers and Functions and for Other service, and cost
Purposes," her residual power and/or E.O. No. effectiveness; (Emphasis and
292, otherwise known as the Administrative Code underscoring supplied)
of 1987. They add that the E.O. is also a valid
exercise of the police power. SECTION 5. Powers and Functions. — To
accomplish its mandate, the Ministry shall
E.O. No. 125,32 which former President Corazon have the following powers and functions:
Aquino issued in the exercise of legislative
powers, reorganized the then Ministry (now (a) Formulate and
Department) of Transportation and recommend national policies
Communications. Sections 4, 5, 6 and 22 of E.O. and guidelines for the
125, as amended by E.O. 125-A,33 read: preparation and
implementation of integrated
SECTION 4. Mandate. — The Ministry and comprehensive
shall be the primary policy, planning, transportation and
programming, coordinating, communications systems at
implementing, regulating and the national, regional and
administrative entity of the Executive local levels;
Branch of the government in the
promotion, development and regulation (b) Establish and
of dependable and coordinated administer comprehensive
networks of transportation and and integrated programs
communication systems as well as in the for transportation and
fast, safe, efficient and reliable postal, communications, and for
transportation and communications this purpose, may call on any
services. agency, corporation, or
organization, whether public
To accomplish such mandate, the Ministry or private, whose
shall have the following objectives: development programs
include transportation and
(a) Promote the development communications as an
of dependable and integral part thereof, to
coordinated networks of participate and assist in the
transportation and preparation and
communications systems; implementation of such
program;
(b) Guide government and
private investment in the (c) Assess, review and
development of the provide direction to
country’s intermodal transportation and
transportation and communications research
 and development programs
of the government in
coordination with other
institutions concerned;
(d) Administer all laws,
rules and regulations in the
field of transportation and
communications;
(Emphasis and underscoring
supplied)
SECTION 6. Authority and Responsibility.
— The authority and responsibility for
the exercise of the mandate of the
Ministry and for the discharge of its
powers and functions shall be vested in
the Minister of Transportation and
Communications, hereinafter referred to
as the Minister, who shall have supervision
and control over the Ministry and shall be
appointed by the President. (Emphasis and
underscoring supplied)
SECTION 22. Implementing Authority of
Minister. — The Minister shall issue such
orders, rules, regulations and other
issuances as may be necessary to
ensure the effective implementation of
the provisions of this Executive Order.
(Emphasis and underscoring supplied)
It is readily apparent from the abovequoted
provisions of E.O. No. 125, as amended, that the
President, then possessed of and exercising
legislative powers, mandated the DOTC to be the
primary policy, planning, programming,
coordinating, implementing, regulating and
administrative entity to promote, develop and
regulate networks of transportation and
communications. The grant of authority to the
DOTC includes the power to establish and
administer comprehensive and integrated
programs for transportation and communications.
As may be seen further, the Minister (now
Secretary) of the DOTC is vested with the
authority and responsibility to exercise the
mandate given to the department. Accordingly,
the DOTC Secretary is authorized to issue such
orders, rules, regulations and other issuances as
may be necessary to ensure the effective
implementation of the law.
Since, under the law, the DOTC is authorized to
establish and administer programs and projects
for transportation, it follows that the President
may exercise the same power and authority to
order the implementation of the Project, which
admittedly is one for transportation.
Such authority springs from the President’s power
of control over all executive departments as well
as the obligation for the faithful execution of the
laws under Article VII, Section 17 of the
Constitution which provides:
SECTION 17. The President shall have
control of all the executive departments,
bureaus and offices. He shall ensure that
the laws be faithfully executed.
This constitutional provision is echoed in Section
1, Book III of the Administrative Code of 1987.
Notably, Section 38, Chapter 37, Book IV of the
same Code defines the President’s power of
supervision and control over the executive
departments, viz:
SECTION 38. Definition of Administrative
Relationships. — Unless otherwise
expressly stated in the Code or in other
laws defining the special relationships of
particular agencies, administrative
relationships shall be categorized and
defined as follows:
(1) Supervision and Control. —
Supervision and control shall include
authority to act directly whenever a
specific function is entrusted by law or
 regulation to a subordinate; direct the
performance of duty; restrain the
commission of acts; review, approve,
reverse or modify acts and decisions of
subordinate officials or units; determine
priorities in the execution of plans and
programs. Unless a different meaning is
explicitly provided in the specific law
governing the relationship of particular
agencies the word "control" shall
encompass supervision and control as
defined in this paragraph. x x x (Emphasis
and underscoring supplied)
Thus, whenever a specific function is entrusted by
law or regulation to a subordinate, the President
may act directly or merely direct the performance
of a duty.34
Respecting the President’s authority to order the
implementation of the Project in the exercise of
the police power of the State, suffice it to stress
that the powers vested in the DOTC Secretary to
establish and administer comprehensive and
integrated programs for transportation and
communications and to issue orders, rules and
regulations to implement such mandate (which,
as previously discussed, may also be exercised
by the President) have been so delegated for the
good and welfare of the people. Hence, these
powers partake of the nature of police power.
Police power is the plenary power vested in the
legislature to make, ordain, and establish
wholesome and reasonable laws, statutes and
ordinances, not repugnant to the Constitution, for
the good and welfare of the people.35 This power
to prescribe regulations to promote the health,
morals, education, good order or safety, and
general welfare of the people flows from the
recognition that salus populi est suprema lex ─
the welfare of the people is the supreme law.
While police power rests primarily with the
legislature, such power may be delegated, as it is
in fact increasingly being delegated.36 By virtue of
a valid delegation, the power may be exercised
by the President and administrative boards37 as
well as by the lawmaking bodies of municipal
corporations or local governments under an
express delegation by the Local Government
Code of 1991.38
The authority of the President to order the
implementation of the Project notwithstanding, the
designation of the MMDA as the implementing
agency for the Project may not be sustained. It is
ultra vires, there being no legal basis therefor.
It bears stressing that under the provisions of
E.O. No. 125, as amended, it is the DOTC, and
not the MMDA, which is authorized to establish
and implement a project such as the one subject
of the cases at bar. Thus, the President, although
authorized to establish or cause the
implementation of the Project, must exercise the
authority through the instrumentality of the DOTC
which, by law, is the primary implementing and
administrative entity in the promotion,
development and regulation of networks of
transportation, and the one so authorized to
establish and implement a project such as the
Project in question.
By designating the MMDA as the implementing
agency of the Project, the President clearly
overstepped the limits of the authority conferred
by law, rendering E.O. No. 179 ultra vires.
In another vein, the validity of the designation of
MMDA flies in the absence of a specific grant of
authority to it under R.A. No. 7924.
To recall, R.A. No. 7924 declared the Metropolitan
Manila area39 as a "special development and
administrative region" and placed the
administration of "metro-wide" basic services
affecting the region under the MMDA.
Section 2 of R.A. No. 7924 specifically authorizes
the MMDA to perform "planning, monitoring and
coordinative functions, and in the process
exercise regulatory and supervisory authority over
the delivery of metro-wide services," including
transport and traffic management.40 Section 5 of
the same law enumerates the powers and
functions of the MMDA as follows:
(a) Formulate, coordinate and
regulate the implementation of
medium and long-term plans and
programs for the delivery of
metro-wide services, land use and
physical development within
Metropolitan Manila, consistent with
national development objectives and
priorities;
(b) Prepare, coordinate and regulate
the implementation of medium-term
investment programs for metro-wide
services which shall indicate
sources and uses of funds for
priority programs and projects, and
which shall include the packaging of
projects and presentation to funding
institutions;
(c) Undertake and manage on its
own metro-wide programs and
projects for the delivery of specific
services under its jurisdiction,
subject to the approval of the
Council. For this purpose, MMDA
can create appropriate project
management offices;
(d) Coordinate and monitor the
implementation of such plans,
programs and projects in Metro
Manila; identify bottlenecks and
adopt solutions to problems of
implementation;
(e) The MMDA shall set the
policies concerning traffic in
Metro Manila, and shall
coordinate and regulate the
implementation of all programs
and projects concerning traffic
management, specifically
pertaining to enforcement,
engineering and education. Upon
request, it shall be extended
assistance and cooperation,
including but not limited to,
assignment of personnel, by all
other government agencies and
offices concerned;
(f) Install and administer a single
ticketing system, fix, impose and
collect fines and penalties for all
kinds of violations of traffic rules
and regulations, whether moving
or non-moving in nature, and
confiscate and suspend or revoke
drivers’ licenses in the enforcement
of such traffic laws and regulations,
the provisions of RA 4136 and PD
1605 to the contrary
notwithstanding. For this purpose,
the Authority shall impose all traffic
laws and regulations in Metro
Manila, through its traffic operation
center, and may deputize members
of the PNP, traffic enforcers of local
government units, duly licensed
security guards, or members of
non-governmental organizations to
whom may be delegated certain
authority, subject to such conditions
and requirements as the Authority
may impose; and
(g) Perform other related functions
required to achieve the objectives of
the MMDA, including the
undertaking of delivery of basic
services to the local government
units, when deemed necessary
 subject to prior coordination with
and consent of the local government
unit concerned." (Emphasis and
underscoring supplied)
The scope of the function of MMDA as an
administrative, coordinating and policy-setting
body has been settled in Metropolitan Manila
Development Authority (MMDA) v. Bel-Air Village
Association, Inc.41 In that case, the Court
stressed:
Clearly, the scope of the MMDA’s function
is limited to the delivery of the seven (7)
basic services. One of these is transport
and traffic management which includes
the formulation and monitoring of policies,
standards and projects to rationalize the
existing transport operations, infrastructure
requirements, the use of thoroughfares and
promotion of the safe movement of
persons and goods. It also covers the
mass transport system and the institution
of a system of road regulation, the
administration of all traffic enforcement
operations, traffic engineering services and
traffic education programs, including the
institution of a single ticketing system in
Metro Manila for traffic violations. Under
this service, the MMDA is expressly
authorized to "to set the policies
concerning traffic" and "coordinate and
regulate the implementation of all traffic
management programs." In addition, the
MMDA may install and administer a single
ticketing system," fix, impose and collect
fines and penalties for all traffic violations.
It will be noted that the powers of the
MMDA are limited to the following acts:
formulation, coordination, regulation,
implementation, preparation, management,
monitoring, setting of policies, installation
of a system and administration. There is no
syllable in R.A. No. 7924 that grants the
MMDA police power, let alone legislative
power. Even the Metro Manila Council has
not been delegated any legislative power.
Unlike the legislative bodies of the local
government units, there is no provision
in R.A. No. 7924 that empowers the
MMDA or its Council to ‘enact
ordinances, approve resolutions and
appropriate funds for the general
welfare’ of the inhabitants of Metro
Manila. The MMDA is, as termed in the
charter itself, a ‘development authority.’
It is an agency created for the purpose
of laying down policies and
coordinating with the various national
government agencies, people’s
organizations, non-governmental
organizations and the private sector for
the efficient and expeditious delivery of
basic services in the vast metropolitan
area. All its functions are administrative
in nature and these are actually
summed up in the charter itself, viz:
‘SECTION 2. Creation of the Metropolitan
Manila Development Authority. — . . .
The MMDA shall perform
planning, monitoring and
coordinative functions, and in the
process exercise regulatory and
supervisory authority over the
delivery of metro-wide services
within Metro Manila, without
diminution of the autonomy of the
local government units concerning
purely local matters.’42 (Emphasis
and underscoring supplied)
In light of the administrative nature of its powers
and functions, the MMDA is devoid of authority to
implement the Project as envisioned by the E.O;
hence, it could not have been validly designated
by the President to undertake the Project. It
follows that the MMDA cannot validly order the
elimination of respondents’ terminals.
Even the MMDA’s claimed authority under the
police power must necessarily fail in consonance
with the above-quoted ruling in MMDA v. Bel-Air
Village Association, Inc. and this Court’s
subsequent ruling in Metropolitan Manila
Development Authority v. Garin43 that the MMDA
is not vested with police power.
Even assuming arguendo that police power was
delegated to the MMDA, its exercise of such
power does not satisfy the two tests of a valid
police power measure, viz: (1) the interest of the
public generally, as distinguished from that of a
particular class, requires its exercise; and (2) the
means employed are reasonably necessary for
the accomplishment of the purpose and not
unduly oppressive upon individuals.44 Stated
differently, the police power legislation must be
firmly grounded on public interest and welfare and
a reasonable relation must exist between the
purposes and the means.
As early as Calalang v. Williams,45 this Court
recognized that traffic congestion is a public, not
merely a private, concern. The Court therein held
that public welfare underlies the contested statute
authorizing the Director of Public Works to
promulgate rules and regulations to regulate and
control traffic on national roads.
Likewise, in Luque v. Villegas,46 this Court
emphasized that public welfare lies at the bottom
of any regulatory measure designed "to relieve
congestion of traffic, which is, to say the least, a
menace to public safety."47 As such, measures
calculated to promote the safety and convenience
of the people using the thoroughfares by the
regulation of vehicular traffic present a proper
subject for the exercise of police power.
Notably, the parties herein concede that traffic
congestion is a public concern that needs to be
addressed immediately. Indeed, the E.O. was
issued due to the felt need to address the
worsening traffic congestion in Metro Manila
which, the MMDA so determined, is caused by
the increasing volume of buses plying the major
thoroughfares and the inefficient connectivity of
existing transport systems. It is thus beyond cavil
that the motivating force behind the issuance of
the E.O. is the interest of the public in general.
Are the means employed appropriate and
reasonably necessary for the accomplishment of
the purpose. Are they not duly oppressive?
With the avowed objective of decongesting traffic
in Metro Manila, the E.O. seeks to "eliminate[e]
the bus terminals now located along major Metro
Manila thoroughfares and provid[e] more
convenient access to the mass transport system
to the commuting public through the provision of
mass transport terminal facilities x x x."48
Common carriers with terminals along the major
thoroughfares of Metro Manila would thus be
compelled to close down their existing bus
terminals and use the MMDA-designated
common parking areas.
In Lucena Grand Central Terminal, Inc. v. JAC
Liner, Inc.,49 two city ordinances were passed by
the Sangguniang Panlungsod of Lucena, directing
public utility vehicles to unload and load
passengers at the Lucena Grand Central
Terminal, which was given the exclusive franchise
to operate a single common terminal. Declaring
that no other terminals shall be situated,
constructed, maintained or established inside or
within the city of Lucena, the sanggunian
declared as inoperable all temporary terminals
therein.
The ordinances were challenged before this Court
for being unconstitutional on the ground that, inter
alia, the measures constituted an invalid exercise
of police power, an undue taking of private
property, and a violation of the constitutional
prohibition against monopolies.
Citing De la Cruz v. Paras50 and Lupangco v.
Court of Appeals,51 this Court held that the
assailed ordinances were characterized by
overbreadth, as they went beyond what was
reasonably necessary to solve the traffic problem
in the city. And it found that the compulsory use of
the Lucena Grand Terminal was unduly
oppressive because it would subject its users to
fees, rentals and charges.
The true role of Constitutional Law is to
effect an equilibrium between authority and
liberty so that rights are exercised within
the framework of the law and the laws are
enacted with due deference to rights.
A due deference to the rights of the
individual thus requires a more careful
formulation of solutions to societal
problems.
From the memorandum filed before this
Court by petitioner, it is gathered that the
Sangguniang Panlungsod had identified
the cause of traffic congestion to be the
indiscriminate loading and unloading of
passengers by buses on the streets of the
city proper, hence, the conclusion that the
terminals contributed to the proliferation of
buses obstructing traffic on the city streets.
Bus terminals per se do not, however,
impede or help impede the flow of traffic.
How the outright proscription against
the existence of all terminals, apart from
that franchised to petitioner, can be
considered as reasonably necessary to
solve the traffic problem, this Court has
not been enlightened. If terminals lack
adequate space such that bus drivers are
compelled to load and unload passengers
on the streets instead of inside the
terminals, then reasonable specifications
for the size of terminals could be instituted,
with permits to operate the same denied
those which are unable to meet the
specifications.
In the subject ordinances, however, the
scope of the proscription against the
maintenance of terminals is so broad
that even entities which might be able
to provide facilities better than the
franchised terminal are barred from
operating at all. (Emphasis and
underscoring supplied)
As in Lucena, this Court fails to see how the
prohibition against the existence of respondents’
terminals can be considered a reasonable
necessity to ease traffic congestion in the
metropolis. On the contrary, the elimination of
respondents’ bus terminals brings forth the
distinct possibility and the equally harrowing
reality of traffic congestion in the common parking
areas, a case of transference from one site to
another.
Less intrusive measures such as curbing the
proliferation of "colorum" buses, vans and taxis
entering Metro Manila and using the streets for
parking and passenger pick-up points, as
respondents suggest, might even be more
effective in easing the traffic situation. So would
the strict enforcement of traffic rules and the
removal of obstructions from major thoroughfares.
As to the alleged confiscatory character of the
E.O., it need only to be stated that respondents’
certificates of public convenience confer no
property right, and are mere licenses or
privileges.52 As such, these must yield to
legislation safeguarding the interest of the people.
Even then, for reasons which bear reiteration, the
MMDA cannot order the closure of respondents’
terminals not only because no authority to
implement the Project has been granted nor
legislative or police power been delegated to it,
but also because the elimination of the terminals
does not satisfy the standards of a valid police
power measure.
Finally, an order for the closure of respondents’
terminals is not in line with the provisions of the
Public Service Act.
Paragraph (a), Section 13 of Chapter II of the
Public Service Act (now Section 5 of Executive
Order No. 202, creating the Land Transportation
Franchising and Regulatory Board or LFTRB)
vested the Public Service Commission (PSC, now
the LTFRB) with "x x x jurisdiction, supervision
and control over all public services and their
franchises, equipment and other properties x x x."
Consonant with such grant of authority, the PSC
was empowered to "impose such conditions as
to construction, equipment, maintenance,
service, or operation as the public interests and
convenience may reasonably require"53 in
approving any franchise or privilege.
Further, Section 16 (g) and (h) of the Public
Service Act54 provided that the Commission shall
have the power, upon proper notice and hearing
in accordance with the rules and provisions of this
Act, subject to the limitations and exceptions
mentioned and saving provisions to the contrary:
(g) To compel any public service to furnish
safe, adequate, and proper service as
regards the manner of furnishing the same
as well as the maintenance of the
necessary material and equipment.
(h) To require any public service to
establish, construct, maintain, and
operate any reasonable extension of its
existing facilities, where in the judgment
of said Commission, such extension is
reasonable and practicable and will furnish
sufficient business to justify the
construction and maintenance of the same
and when the financial condition of the said
public service reasonably warrants the
original expenditure required in making and
operating such extension.(Emphasis and
underscoring supplied)
The establishment, as well as the maintenance of
vehicle parking areas or passenger terminals, is
generally considered a necessary service to be
provided by provincial bus operators like
respondents, hence, the investments they have
poured into the acquisition or lease of suitable
terminal sites. Eliminating the terminals would
thus run counter to the provisions of the Public
Service Act.
This Court commiserates with the MMDA for the
roadblocks thrown in the way of its efforts at
solving the pestering problem of traffic congestion
in Metro Manila. These efforts are commendable,
to say the least, in the face of the abominable
traffic situation of our roads day in and day out.
This Court can only interpret, not change, the law,
however. It needs only to be reiterated that it is
the DOTC ─ as the primary policy, planning,
programming, coordinating, implementing,
regulating and administrative entity to promote,
develop and regulate networks of transportation
and communications ─ which has the power to
establish and administer a transportation
project like the Project subject of the case at
bar.
No matter how noble the intentions of the MMDA
may be then, any plan, strategy or project which it
is not authorized to implement cannot pass
muster.
WHEREFORE, the Petition is, in light of the
foregoing disquisition, DENIED. E.O. No. 179 is
declared NULL and VOID for being ultra vires.
SO ORDERED.