MAGTAJAS V.

PRYCE PROPERTIES - CASE DIGEST - CONSTITUTIONAL LAW

MAGTAJAS V. PRYCE PROPERTIES G.R. No. 111097 July 20, 1994

FACTS:

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.

PAGCOR decided to expand its operations to Cagayan de Oro City. It leased a portion of a building
belonging to Pryce Properties Corporations, Inc., renovated & equipped the same, and prepared to
inaugurate its casino during the Christmas season.

Then Mayor Magtajas together with the city legislators and civil organizations of the City of Cagayan
de Oro denounced such project.

In reaction to this project, the Sangguniang Panlungsod of Cagayan de Oro City enacted two (2)
ordinances prohibiting the issuance of a business permit and canceling existing business permit to
establishment for the operation of casino (ORDINANCE NO. 3353) and an ordinance prohibiting the
operation of casino and providing penalty for its violation. (ORDINANCE NO. 3375-93).

Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as
intervenor and supplemental petitioner.

Court of Appeals declared the ordinances invalid and issued the writ prayed for to prohibit their
enforcement. 1 Reconsideration of this decision was denied against petitioners.

Hence, this petition for review under Rule 45.

ISSUE:

WON Ordinance No. 3353 and Ordinance No. 3375-93 are a valid exercise of police power.

HELD:

NO. The ordinances enacted are invalid. Ordinances should not contravene a statute. Municipal
governments are merely agents of the National Government. Local Councils exercise only delegated
powers conferred by Congress. The delegate cannot be superior to the principal powers higher than
those of the latter. PD 1869 authorized casino gambling. As a statute, it cannot be amended/nullified
by a mere ordinance.

As to petitioners attack on gambling as harmful and immoral, the Court stressed that 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. That is the prerogative of the
political departments. It is settled that questions regarding the wisdom, morality, or practicability 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.

CELESTINO TATEL v. MUNICIPALITY OF VIRAC, GR No. L-40243, 1992-03-11

Facts:

on the basis of complaints received from the residents of barrio Sta. Elena... against the disturbance
caused by the operation of the abaca bailing machine inside the warehouse of petitioner which
affected the peace and... tranquility of the neighborhood due to the smoke, obnoxious odor and dust
emitted by the machine, a committee was appointed by the municipal council of Virac to investigate
the matter.

The committee noted the crowded nature of the neighborhood with narrow roads and the...
surrounding residential houses, so much so that an accidental fire within the warehouse of petitioner
occasioned by a continuance of the activity inside the warehouse and the storing of inflammable
materials created a danger to the lives and properties of the people within the... neighborhood.

Resultantly, Resolution No. 29 was passed by the Municipal Council of Virac... declaring the
warehouse owned and operated by petitioner a public nuisance within the purview of Article 694 of
the New Civil Code... petitioner instituted the present petition for prohibition with preliminary
injunction.

Respondent municipal officials contend that petitioner's warehouse was constructed in violation of
Ordinance No. 13, series of 1952, prohibiting the construction of warehouses near a block of houses
either in the poblacion or barrios without maintaining the necessary distance... of 200 meters from
said block of houses to avoid loss of lives and properties by accidental fire.

petitioner contends that said ordinance is unconstitutional, contrary to the due process and equal
protection clause of the Constitution and null and void for not having been passed in accordance with
law.

the court a quo ruled as follows:

"1. The warehouse in question was legally constructed under a valid permit issued by the municipality
of Virac in accordance with existing regulations and may not be destroyed or removed from its
present location;

Ordinance No. 13, series of 1952, is a legitimate and valid exercise of police power by the Municipal
Council of Virac is not (sic) unconstitutional and void as claimed by the petitioner;

The storage by the petitioner of abaca and copra in the warehouse... constitutes a public nuisance
under the provisions of Article 694 of the Civil Code of the Philippines and may be abated

Accordingly, the petitioner is hereby directed to remove from the said warehouse all abaca and copra
and other inflammable articles stored therein which are prohibited under the provisions of Ordinance
No. 13... the petitioner is enjoined from storing such prohibited articles in the warehouse. With costs
against petitioner".

Seeking appellate review, petitioner raised as errors

In holding that Ordinance No. 13, series of 1952, of the Municipality of Virac, Catanduanes, is a
legitimate and valid exercise of police power of the Municipal Council, and therefore, constitutional;
Issues:

whether Ordinance No. 13, S. 1952 of the Municipality of Virac is unconstitutional and void.
Ruling:

Ordinance No. 13, series of 1952, was passed by the Municipal Council of Virac in the exercise of its
police power. It is a settled principle of law that municipal corporations are agencies of the State for
the promotion and maintenance of local self-government and as such... are endowed with police
powers in order to effectively accomplish and carry out the declared objects of their creation.[3] Its
authority emanates from the general welfare clause under the Administrative Code

"The municipal council shall enact such ordinances and make such regulations, not repugnant to law,
as may be necessary to carry into effect and discharge the powers and duties conferred upon it by law

For an ordinance to be valid, it must not only be within the corporate powers of the municipality to
enact but must also be passed according to the procedure prescribed by law, and must be in
consonance with certain well established and basic principles of a substantive... nature. These
principles require that a municipal ordinance (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.[5] Ordinance No. 13, Series of 1952, meets these criteria.

The objections interposed by the petitioner to the validity of the ordinance have not been
substantiated. Its purpose is well within the objectives of sound government. No undue restraint is
placed upon the petitioner or for anybody to engage in trade but merely a prohibition... from storing
inflammable products in the warehouse because of the danger of fire to the lives and properties of
the people residing in the vicinity. As far as public policy is concerned, there can be no better policy
than what has been conceived by the municipal government

SOLICITOR GENERAL v. METROPOLITAN MANILA AUTHORITY, GR No. 102782, 1991-12-11

Facts:

Malapira complained to the Court that when he was stopped for an alleged traffic violation, his
driver's license was confiscated by Traffic Enforcer... in Quezon City.

the Caloocan-Manila Drivers and Operators Association sent a letter to the Court asking who should
enforce the decision in the above-mentioned case, w... whether they could seek damages for
confiscation of their driver's licenses, and where they should file... their complaints.

Another letter was received by the Court... from

Monsanto, complaining against the confiscation of his driver's license by Traffic Enforcer... f... or an
alleged traffic violation in Mandaluyong.

This was followed by a letter-complaint... rom

Calderon, a lawyer, also for confiscation of his driver's license... by... the Makati Police Force.

Still another complaint was received by the Court

Trieste, another lawyer, who also protested the removal of his front license plate by

Metropolitan Manila Authority-Traffic Operations Center and the... confiscation of his driver's license

Required to submit a Comment on the complaint against him,... invoked Ordinance No. 7, Series of
1988, of Mandaluyong, authorizing the confiscation of driver's licenses and the removal of license
plates of motor vehicles for traffic violations.

A.V. Emmanuel said he confiscated Trieste's driver's license pursuant to a memorandum... from the
Philippine National Police, authorizing such sanction under certain conditions.

Nazareno of the Philippine National Police assured the Court in his own Comment that his office had
never authorized the removal of the license plates of illegally parked vehicles and that he had in fact
directed full compliance with the... above-mentioned decision in a memorandum

Tano-an... argued that the Gonong decision prohibited only the removal of license plates and not the
confiscation of driver's licenses.

Metropolitan Manila Authority issued Ordinance No. 11, Series of 1991, authorizing itself "to detach
the license plate/tow and impound attended/unattended/abandoned motor vehicles illegally parked
or obstructing the flow of traffic in Metro Manila."

S... ection 2. Authority to Detach Plate

/Tow and Impound. The Metropolitan Manila Authority... authorized to detach the license plate/tow
and impound attended/unattended/abandoned motor vehicles... illegally parked or obstructing the
flow of traffic in Metro Manila.

The provision appears to be in conflict with the decision of the Court in the case at bar... w... here it
w... held that the license plates of motor vehicles may not be detached except only under the
conditions prescribed in LOI

Additionally,... the Court has received several complaints against the confiscation by police authorities
of driver's licenses for alleged traffic violations, which sanction is,... according to the said decision, not
among those that may be imposed under PD

In its Comment, the Metropolitan Manila Authority defended the said ordinance on the ground that it
was adopted pursuant to the powers conferred upon it by EO 392. It particularly cited Section 2
thereof vesting in the Council... the... responsibility

2. Promulgation of resolutions and other issuances of metropolitan wide application, approval of a

code of basic services requiring coordination, and exercise of its rule-making powers.

The Authority argued that there was no conflict between the decision and the ordinance because the
latter was meant to supplement and not supplant the latter.

It stressed that the decision itself said that the confiscation of license plates was invalid in... the
absence of a valid law or ordinance, which was why Ordinance No. 11 was enacted.

the Solicitor General expressed the view that the ordinance was null and void because it represented
an invalid exercise of a delegated legislative power. The flaw in the measure was that it violated
existing law, specifically PD 1605, which... does not permit, and so impliedly prohibits, the removal of
license plates and the confiscation of driver's licenses for traffic violations in Metropolitan Manila.

The Solicitor General notes that the practices complained of have created a great deal of confusion
among motorists about the state of the law on the questioned sanctions. More importantly, he
maintains that these sanctions are illegal, being violative of... law and the Gonong decision, and
should therefore be stopped.

Given these considerations, the Court feels it must address the problem squarely presented to it and
decide it as categorically

Accordingly, the Court will consider the motion to resolve filed by the Solicitor General a petition for
prohibition against the enforcement of Ordinance No. 11-Series of 1991, of the Metropolitan Manila
Authority, and Ordinance No. 7, Series of 1988, of the Municipality of
Mandaluyong.

Issues:

T... he question we must resolve is the validity of the exercise of such delegated power.

Ruling:

The measures in question are enactments of local governments acting only as agents of the national
legislature. Necessarily, the acts of these agents must reflect and conform to the will of their
principal. To test the validity of such... acts in the specific case now before us, we apply the particular
requisites of a valid ordinance as laid down by the accepted principles governing municipal
corporations.

According to Elliot, a municipal ordinance, to be valid: 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 not be... unreasonable; and 7) must be general and
consistent with public policy.

A careful study of the Gonong decision will show that the measures under consideration do not pass
the first criterion because they do not conform to existing law. The pertinent law is PD 1605. PD
1605 does not allow either the removal of... license plates or the confiscation of driver's licenses for
traffic violations committed in Metropolitan Manila. There is nothing in the following provisions of
the decree authorizing the Metropolitan Manila Commission (and now the Metropolitan

Manila Authority) to impose such sanctions:

Section 1. The Metropolitan Manila Commission shall have the power to impose fines and otherwise
discipline drivers and operators of motor vehicles for violations of traffic laws, ordinances, rules and
regulations in Metropolitan Manila in... such amounts and under such penalties as are herein
prescribed.

When the proper penalty to be imposed is suspension or revocation of driver's license or certificate of
public convenience, the Metropolitan Manila Commission or its representatives shall suspend or
revoke... such license or certificate.

ection 3. Violations of traffic laws, ordinances, rules and regulations... for the third offense, a one-
year suspension of driver's license for the fourth offense, and a revocation of the driver's license for
the fifth offense

Section 5. In case of traffic violations, the driver's license shall not be confiscated but the erring driver
shall be immediately issued a traffic citation ticket prescribed by the Metropolitan Manila Commission

In fact, the above provisions prohibit the imposition of such sanctions in Metropolitan Manila. The
Commission was allowed to "impose fines and otherwise discipline" traffic violators only "in such
amounts... and under such penalties as are herein prescribed," that is, by the decree itself. Nowhere
is the removal of license plates directly imposed by the decree or at least allowed by it to be imposed
by the Commission.

Notably, Section 5 thereof... expressly provides that "in case of traffic violations, the driver's license
shall not be confiscated." These restrictions are applicable to the Metropolitan Manila Authority and
all other local political subdivisions comprising Metropolitan Manila, including the Municipality of

Mandaluyong.
The requirement that the municipal enactment must not violate existing law explains itself. Local
political subdivisions are able to legislate only by virtue of a valid delegation of legislative power
from the national legislature

They are mere agents vested with what is called the power of subordinate... legislation. As
delegates of the Congress, the local government unit cannot contravene but must obey at all times
the will of their principal. In the case before us, the enactments in question, which are merely local
in origin, cannot... prevail against the decree, which has the force and effect of a statute.

In Villacorta v. Bernardo,[9] the Court nullified an ordinance enacted by the Municipal Board of
Dagupan City for being violative of the Land Registration Act. The decision held in part:

In declaring the said ordinance null and void, the court a quo declared:

"From the above-recited requirements, there is no showing that would justify the enactment of the
questioned ordinance. Section 1 of said ordinance clearly conflicts with Section 44 of Act 496

The Court takes note of the laudable purpose of the ordinance in bringing to a halt the surreptitious
registration of lands belonging to the government. But as already intimated above, the powers of the
board in enacting such a laudable... ordinance cannot be held valid when it shall impede the exercise
of rights granted in a general law and/or make a general law subordinated to a local ordinance."

To sustain the ordinance would be to open the floodgates to other ordinances amending and so
violating national laws in the guise of implementing them.

The measures in question do not merely add to the requirement of PD 1605 but, worse, impose
sanctions the decree does not allow and in fact actually prohibits. In so doing, the ordinances
disregard and violate and in effect partially repeal the law.

We here emphasize the ruling in the Gonong Case that PD 1605 applies only to the Metropolitan
Manila area. It is an exception to the general authority conferred by R.A. No. 4136 on the
Commissioner of Land Transportation to punish violations of traffic... rules elsewhere in the country
with the sanctions therein prescribed

At any... rate, the fact is that there is no statutory authority for - and indeed there is a statutory
prohibition against the imposition of such penalties in the Metropolitan Manila area. Hence,
regardless of their merits, they cannot be imposed by the challenged... enactments by virtue only of
the delegated legislative powers.

It is for Congress to determine, in the exercise of its own discretion, whether or not to impose such
sanctions, either directly through a statute or by simply delegating authority to this effect to the local
governments in Metropolitan Manila. Without such... action, PD 1605 remains effective and
continues to prohibit the confiscation of license plates of motor vehicles (except under the conditions
prescribed in LOI 43) and of driver's licenses as well for traffic violations in Metropolitan Manila.

WHEREFORE, judgment is hereby rendered:

(1) declaring Ordinance No. 11, Series of 1991, of the Metropolitan Manila Authority and Ordinance
No. 7, Series of 1988, of the Municipality of Mandaluyong, NULL and VOID; and

(2) enjoining all law-enforcement authorities in Metropolitan Manila from removing the license plates
of motor vehicles (except when authorized under LOI 43) and confiscating driver's licenses for traffic
violations within the said area.

Principles:
In Metropolitan Traffic Command, West Traffic District v. Hon. Arsenio M. Gonong, G.R. No. 91023,
promulgated on July 13, 1990,[1] the Court held that... the confiscation of the license plates of motor
vehicles for traffic... violations was not among the sanctions that could be imposed by the Metro
Manila Commission under PD 1605 and was permitted only under the conditions laid down by LOI 43
in the case of stalled vehicles obstructing the public streets.

Rural Bank of Makati vs City of Makati

G.R. No. 150763

Subject: Public Corporation

Doctrine: General Welfare clause (Police Power of Municipality)

Facts:
Upon the request of the municipal treasurer, in August 1990, Atty. Victor A.L. Valero, then the
municipal attorney of the Municipality of Makati, went to the Rural Bank of Makati to inquire about
the bank’s payments of taxes and fees to the municipality. Petitioner Magdalena V. Landicho,
corporate secretary of the bank, said that the bank was exempt from paying taxes under Republic Act
No. 720, as amended.
On November 19, 1990, the municipality filed complaint with the Prosecutor’s Office, charging
petitioners Esteban S. Silva, president and general manager of the bank and Magdalena V. Landicho
for violation of Section 21(a), Chapter II, Article 3 in relation to Sections 105 and 169 of the
Metropolitan Tax Code. On April 5, 1991, the municipality submitted two (2) Information with the
MTC against the respondent bank: 1) for non-payment of the mayor’s permit fee and 2) for non-
payment of annual business tax. While said cases were pending with the municipal court, respondent
municipality ordered the closure of the bank. This prompted petitioners to pay, under protest, the
mayor’s permit fee and the annual fixed tax in the amount of P82,408.66.
On October 18, 1991, petitioners filed with the RTC a Complaint for Sum of Money and Damages.
Petitioners alleged that they were constrained to pay the amount of P82,408.66 because of the
closure order, issued despite the pendency of the criminal cases and the lack of any notice or
assessment of the fees to be paid. They averred that the collection of the taxes/fees was oppressive,
arbitrary, unjust and illegal. Additionally, they alleged that respondent Atty. Valero had no power to
enforce laws and ordinances, thus his action in enforcing the collection of the permit fees and
business taxes was ultra vires.
Respondent municipality asserted that petitioners’ payment of P82,408.66 was for a legal obligation
because the payment of the mayor’s permit fee as well as the municipal business license was required
of all business concerns. According to respondent, said requirement was in furtherance of the police
power of the municipality to regulate businesses.
RTC rules in favor of the municipal of Makati. According to the trial court, the bank was engaged in
business as a rural bank. Hence, it should secure the necessary permit and business license, as well as
pay the corresponding charges and fees. It found that the municipality had authority to impose
licenses and permit fees on persons engaging in business, under its police power embodied under the
general welfare clause. Also, the RTC declared unmeritorious petitioners’ claim for exemption under
Rep. Act No. 720 since said exemption had been withdrawn by Executive Order No. 93 and the Rural
Bank Act of 1992. These statutes no longer exempted rural banks from paying corporate income taxes
and local taxes, fees and charges.
The CA affirmed RTC’s decision in toto. CA also brushed aside petitioners’ claim that the general
welfare clause is limited only to legislative action. It declared that the exercise of police power by the
municipality was mandated by the general welfare clause, which authorizes the local government
units to enact ordinances, not only to carry into effect and discharge such duties as are conferred
upon them by law, but also those for the good of the municipality and its inhabitants. This mandate
includes the regulation of useful occupations and enterprises. Hence the present complaint.
Petitioner bank claims that the closure of the bank was an improper exercise of police power because
a municipal corporation has no inherent but only delegated police power, which must be exercised not
by the municipal mayor but by the municipal council through the enactment of ordinances. It also
assailed the Court of Appeals for invoking the General Welfare Clause embodied in Section 16 of the
Local Government Code of 1991, which took effect in 1992, when the closure of the bank was actually
done on July 31, 1991.
ISSUE: Whether or not the municipality’s police power covers the power to tax and the power to
order the respondent’s bank closure.

HELD:
Rep. Act No. 720, as amended by Republic Act No. 4106, approved on July 19, 1964, had exempted
rural banks with net assets not exceeding one million pesos (P1,000,000) from the payment of all
taxes, charges and fees. The records show that as of December 29, 1986, petitioner bank’s net assets
amounted only to P745,432.29. Hence, petitioner bank could claim to be exempt from payment of all
taxes, charges and fees under the aforementioned provision. However, EO 93 was issued by then
President Aquino, withdrawing all tax and duty incentives with certain exceptions. Notably, not
included among the exceptions were those granted to rural banks under Rep. Act No. 720. With the
passage of said law, petitioner could no longer claim any exemption from payment of business taxes
and permit fees.
Indeed the Local Government Code of 1991 was not yet in effect when the municipality ordered
petitioner bank’s closure on July 31, 1991. However, the general welfare clause invoked by the Court
of Appeals is not found on the provisions of said law alone. Even under the old Local Government
Code (Batas Pambansa Blg. 337) which was then in effect, a general welfare clause was provided for in
Section 7 thereof.
Municipal corporations are agencies of the State for the promotion and maintenance of local self-
government and as such are endowed with police powers in order to effectively accomplish and carry
out the declared objects of their creation. The authority of a local government unit to exercise police
power under a general welfare clause is not a recent development. This was already provided for as
early as the Administrative Code of 1917. Thus, the closure of the bank was a valid exercise of police
power pursuant to the general welfare clause contained in and restated by B.P. Blg. 337, which was
then the law governing local government units. No reversible error arises in this instance insofar as
the validity of respondent municipality’s exercise of police power for the general welfare is
concerned.
The general welfare clause has two branches. The first, known as the general legislative power,
authorizes the municipal council to enact ordinances and make regulations not repugnant to law, as
may be necessary to carry into effect and discharge the powers and duties conferred upon the
municipal council by law. The second, known as the police power proper, authorizes the municipality
to enact ordinances as may be necessary and proper for the health and safety, prosperity, morals,
peace, good order, comfort, and convenience of the municipality and its inhabitants, and for the
protection of their property.
In the present case, the ordinances imposing licenses and requiring permits for any business
establishment, for purposes of regulation enacted by the municipal council of Makati, fall within the
purview of the first branch of the general welfare clause. Moreover, the ordinance of the municipality
imposing the annual business tax is part of the power of taxation vested upon local governments as
provided for under Section 8 of B.P. Blg. 337.
Consequently, the municipal mayor, as chief executive, was clothed with authority to create a Special
Task Force headed by respondent Atty. Victor A.L. Valero to enforce and implement said ordinances
and resolutions and to file appropriate charges and prosecute violators. Respondent Valero could
hardly be faulted for performing his official duties under the cited circumstances.
On the issue of the closure of the bank, we find that the bank was not engaged in any illegal or
immoral activities to warrant its outright closure. The appropriate remedies to enforce payment of
delinquent taxes or fees are provided for in Section 62 of the Local Tax Code. Said Section 62 did not
provide for closure. Moreover, the order of closure violated petitioner’s right to due process,
considering that the records show that the bank exercised good faith and presented what it thought
was a valid and legal justification for not paying the required taxes and fees. The violation of a
municipal ordinance does not empower a municipal mayor to avail of extrajudicial remedies. It should
have observed due process before ordering the bank’s closure.
WHEREFORE, the assailed Decision dated July 17, 2001, of the Court of Appeals in CA-G.R. CV No.
58214 is AFFIRMED with MODIFICATIONS, so that (1) the order denying any claim for refunds and fees
allegedly overpaid by the bank, as well as the denial of any award for damages and unrealized profits,
is hereby SUSTAINED; (2) the order decreeing the closure of petitioner bank is SET ASIDE; and (3) the
award of moral damages and attorney’s fees to Atty. Victor A.L. Valero is DELETED. No
pronouncement as to costs.

Olivarez vs Sandiganbayan GR 118533 04 October 1995

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Facts: Paranaque Sanguaniang Bayan Resolution 744, approved by Mayor Olivarez 6 Oct 1922,
authorized Baclaran Credit Cooperative Inc (BCCI) to set up a manfacturer’s night (Christmas Agro-
Industrial Fair sa Baclaran) during the Christmas fiesta celebration, at Baclaran for 60 days, (11 Nov 92
to 15 Feb 93) for which they will use a portion of the service road of Roxas Boulevard.

Allegedly, BCCI exerted all possible efforts to secure the necessary permit but Olivarez simply refused
to issue the permit unless BCCI gives money to the latter.

On 15 Dec 1992, BCCI charged Olivarez with violation of the Anti-Graft and Corrupt Practices Act for
unreasonably refusing to issue a mayor’s permit deapite request and follow ups to implement SB
Resolution 744.

After preliminary investigations and pleadings before the Sandiganbayan, the case was remanded to
the Office of the Ombudsman. Consequently, the Ombudsman found Olivarez liable by giving
unwarranted benefit though manifest impartiality to another group on the flimsy reason that
complainant failed to apply for a business permit.

Olivarez filed the petition for certiorari and prohibition.

Issue: Whether or not Olivarez exhibited partiality in the denial/inaction over BCCI’s license
application

Decision: Olivarez issued a permit to an unidentified Baclaran-based vendor’s association by the mere
expedient of an executive order, whereas so many requirements were imposed on BCCI before it
could be granted the same permit.

Worse, Olivarez failed to show that BCCI and the unidentified association were not similarly situated
as to give at least a semblance of legality to the apparent haste with which the said executive order
was issued.

There was nothing to prevent Ollivarez from referring the BCCI letter-application to the licensing
department, but which paradoxically, he refused.

Olivarez, as a municipal mayor, is expressly authorized and has the power to issue permits and
licenses for the holding of activities for any charitable or welfare purpose. Hence, he cannot really
feign total lack of authority to act on the letter-application of BCCI.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS; HON. JUDGE EUGENIO S. LABITORIA, PRESIDING JUDGE, BRANCH 161, REGIONAL
TRIAL COURT OF PASIG, METRO MANILA; SEA MAR TRADING CO. INC.; EASTERN LAGOON FISHING
CORP.; MINAMAR FISHING CORP.; MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS,
respondents.

Facts:

The Laguna Lake Development Authority (LLDA) was created through RA No. 4850 in order to execute
the policy towards environmental protection and sustainable development so as to accelerate the
development and balanced growth of the Laguna Lake area and the surrounding provinces and towns.
Upon implementation of RA 7160 (Local Government Code of 1991), the municipalities assumed
exclusive jurisdiction & authority to issue fishing privileges within their municipal waters since Sec.149
thereof provides: “Municipal corporations shall have the authority to grant fishery privileges in the
municipal waters and impose rental fees or charges therefore…” Big fishpen operators took
advantage of the occasion to establish fishpens & fish cages to the consternation of the LLDA.

The implementation of separate independent policies in fish cages & fish pen operation and the
indiscriminate grant of fishpen permits by the lakeshore municipalities have saturated the lake with
fishpens, thereby aggravating the current environmental problems and ecological stress of Laguna
Lake.

The LLDA then served notice to the general public that:

(1) fishpens, cages & other aqua-culture structures unregistered with the LLDA as of March 31, 1993
are declared illegal;

(2) those declared illegal shall be subject to demolition by the Presidential Task Force for Illegal
Fishpen and Illegal Fishing; and

(3) owners of those declared illegal shall be criminally charged with violation of Sec.39-A of RA 4850
as amended by PD 813.

A month later, the LLDA sent notices advising the owners of the illegally constructed fishpens,
fishcages and other aqua-culture structures advising them to dismantle their respective structures
otherwise demolition shall be effected.

Issue

Which agency of the Government — the Laguna Lake Development Authority or the towns and
municipalities comprising the region — should exercise jurisdiction over the Laguna Lake and its
environs insofar as the issuance of permits for fishery privileges is concerned?

Held

LLDA has jurisdiction over such matters because the charter of the LLDA prevails over the Local
Government Code of 1991.

The said charter constitutes a special law, while the latter is a general law.

The Local Government Code of 1991, has not repealed the provisions of the charter of the Laguna
Lake Development Authority, Republic Act No. 4850, as amended.

Thus, the Authority has the exclusive jurisdiction to issue permits for the enjoyment of fishery
privileges in Laguna de Bay to the exclusion of municipalities situated therein and the authority to
exercise such powers as are by its charter vested on it.

In addition, the charter of the LLDA embodies a valid exercise of police power for the purpose of
protecting and developing the Laguna Lake region, as opposed to the Local Government Code, which
grants powers to municipalities to issue fishing permits for revenue purposes.

Thus, it has to be concluded that the charter of the LLDA should prevail over the Local Government
Code of 1991 on matters affecting Laguna de Bay.
Binay vs Domingo

Date: September 11, 1991

Petitioners: Jejomar Binay and Municipality of Makati
Respondents: Eufemio Domingo and Commission of Audit

Facts:

On September 27, 1988, petitioner Municipality , through its Council, approved Resolution No. 60, a
resolution to confirm and or to rafity the ongoing burial assistance program extending P500 to a
bereaved family, funds to be taken out of unappropriated available funds existing in the municipal
treasury. Metro Manila Commission approved Resolution No. 60. Thereafter, the municipal secretary
certified a disbursement fired of P400,000 for the implementation of the program. However, COA
disapproved Resolution 60 and disallowed in audit the disbursement of funds. COA denied the
petitioners reconsideration as Resolution 60 has no connection or relation between the objective
sought to be attained and the alleged public saftey, general welfare, etc. of the inhabitants of Makati.
Also, the Resolution will only benefit a few individuals. Public funds should only be used for public
purposes.

Issue:

WON Resolution No. 60 , re enacted under Resolution No. 243 of the Municipal of Makati is a valid
exercise of police power under the general welfare clause.

Held:

Yes.

Ratio: The police power is a governmental function, an inherent attribute of sovereignty, which was
born with civilized government. It is founded largely on the maxims, "Sic utere tuo et ahenum non
laedas and "Salus populi est suprema lex Its fundamental purpose is securing the general welfare,
comfort and convenience of the people.
Police power is inherent in the state but not in municipal corporations. Before a municipal
corporation may exercise such power, there must be a valid delegation of such power by the
legislature which is the repository of the inherent powers of the State. A valid delegation of police
power may arise from express delegation, or be inferred from the mere fact of the creation of the
municipal corporation; and as a general rule, municipal corporations may exercise police powers
within the fair intent and purpose of their creation which are reasonably proper to give effect to the
powers expressly granted, and statutes conferring powers on public corporations have been
construed as empowering them to do the things essential to the enjoyment of life and desirable for
the safety of the people. Municipal governments exercise this power under the general welfare
clause: pursuant thereto they are clothed with authority to "enact such ordinances and issue such
regulations as may be necessary to carry out and discharge the responsibilities conferred upon it by
law, and such as shall be necessary and proper to provide for the health, safety, comfort and
convenience, maintain peace and order, improve public morals, promote the prosperity and general
welfare of the municipality and the inhabitants thereof, and insure the protection of property
therein.. And under Section 7 of BP 337, "every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary and proper for
governance such as to promote health and safety, enhance prosperity, improve morals, and maintain
peace and order in the local government unit, and preserve the comfort and convenience of the
inhabitants therein."Police power is the power to prescribe regulations to promote the health,
morals, peace, education, good order or safety and general welfare of the people. It is the most
essential, insistent, and illimitable of powers. In a sense it is the greatest and most powerful attribute
of the government. The police power of a municipal corporation is broad, and has been said to be
commensurate with, but not to exceed, the duty to provide for the real needs of the people in their
health, safety, comfort, and convenience as consistently as may be with private rights. It extends to all
the great public needs, and, in a broad sense includes all legislation and almost every function of the
municipal government. It covers a wide scope of subjects, and, while it is especially occupied with
whatever affects the peace, security, health, morals, and general welfare of the community, it is not
limited thereto, but is broadened to deal with conditions which exists so as to bring out of them the
greatest welfare of the people by promoting public convenience or general prosperity, and to
everything worthwhile for the preservation of comfort of the inhabitants of the corporation. Thus, it is
deemed inadvisable to attempt to frame any definition which shall absolutely indicate the limits of
police power.

COA is not attuned to the changing of the times. Public purpose is not unconstitutional merely
because it incidentally benefits a limited number of persons. As correctly pointed out by the Office of
the Solicitor General, "the drift is towards social welfare legislation geared towards state policies to
provide adequate social services , the promotion of the general welfare social justice as well as human
dignity and respect for human rights. The care for the poor is generally recognized as a public duty.
The support for the poor has long been an accepted exercise of police power in the promotion of the
common good.There is no violation of the equal protection clause in classifying paupers as subject of
legislation. Paupers may be reasonably classified. Different groups may receive varying treatment.
Precious to the hearts of our legislators, down to our local councilors, is the welfare of the paupers.
Thus, statutes have been passed giving rights and benefits to the disabled, emancipating the tenant-
farmer from the bondage of the soil, housing the urban poor, etc.

Resolution No. 60, re-enacted under Resolution No. 243, of the Municipality of Makati is a paragon of
the continuing program of our government towards social justice. The Burial Assistance Program is a
relief of pauperism, though not complete. The loss of a member of a family is a painful experience,
and it is more painful for the poor to be financially burdened by such death. Resolution No. 60 vivifies
the very words of the late President Ramon Magsaysay 'those who have less in life, should have more
in law." This decision, however must not be taken as a precedent, or as an official go-signal for
municipal governments to embark on a philanthropic orgy of inordinate dole-outs for motives political
or otherwise.

VICENTE DE LA CRUZ v. EDGARDO L. PARAS, GR No. L-42571-72, 1983-07-25

Facts:

two cases for prohibition with preliminary injunction were filed with the Court

The grounds alleged follow: "1. Ordinance No. 84 is null and void as a municipality has no authority to
prohibit a... lawful business, occupation or calling.

Ordinance No. 84 is violative of the petitioners' right to due process and the equal protection of the
law, as the license previously given to petitioners was in effect withdrawn without judicial hearing.
petitioners... had been previously issued licenses by the Municipal Mayor

That petitioners had invested large sums of money in their businesses

Then came

January 15, 1976 the decision upholding the constitutionality and... validity of Ordinance No. 84 and
dismissing the cases. Hence this petition for certiorari by way of appeal.

the closure of its night clubs and/or cabarets.

This in essence is also... why this Court, obedient to the mandates of good government, and cognizant
of the categorical imperatives of the current legal and social revolution, hereby [upholds] in the name
of police power the validity and constitutionality of Ordinance No. 84, Series of 1975, of the
Municipal Council of Bocaue, Bulacan.

Issues:

whether or not a municipal corporation, Bocaue, Bulacan,... can prohibit the exercise of a lawful
trade, the operation of night clubs, and the... pursuit of a lawful occupation, such clubs employing
hostesses.

Ruling:

This Court is, however, unable to agree with such a conclusion and for reasons herein set forth, holds
that reliance on the police power is insufficient to justify the enactment of the assailed ordinance.

It is a general rule that ordinances passed by virtue of the... implied power found in the general
welfare clause must be reasonable, consonant with the general powers and purposes of the
corporation, and not inconsistent with the laws or policy of the State."

The purpose sought to be achieved could have been attained by reasonable restrictions rather than
by an absolute prohibition.

"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.

The power granted remains that of regulation, not prohibition.

Local Government Code.

The general welfare clause,... It is clear that municipal corporations cannot prohibit the operation of
night clubs. They may be regulated, but not prevented from carrying on their business.

All that petitioners would have to do is to apply once more for licenses to operate night clubs. A
refusal to grant licenses, because no such businesses could legally open, would be subject to judicial
correction.

That is to comply with the legislative will to allow... the operation and continued existence of night
clubs subject to appropriate regulations.

G.R. No. L-3491 June 24, 1983

CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF QUEZON CITY, petitioners,
vs.
HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First Instance of Rizal, Quezon City, Branch
XVIII; HIMLAYANG PILIPINO, INC., respondents.

Facts:

Section 9 of Ordinance No. 6118, S-64 provides that at least 6% of the total area of the memorial park
cemetery shall be set aside for the charity burial of deceased persons who are paupers and have been
residents of Quezon City for at least 5 years prior to their death. As such, the Quezon City engineer
required the respondent, Himlayang Pilipino Inc, to stop any further selling and/or transaction of
memorial park lots in Quezon City where the owners thereof have failed to donate the required 6%
space intended for paupers burial.
The then Court of First Instance and its judge, Hon. Ericta, declared Section 9 of Ordinance No. 6118,
S-64 null and void.

Petitioners argued that the taking of the respondent’s property is a valid and reasonable exercise of
police power and that the land is taken for a public use as it is intended for the burial ground of
paupers. They further argued that the Quezon City Council is authorized under its charter, in the
exercise of local police power, ” to make such further ordinances and resolutions not repugnant to
law as may be necessary to carry into effect and discharge the powers and duties conferred by this
Act and such as it shall deem necessary and proper to provide for the health and safety, promote the
prosperity, improve the morals, peace, good order, comfort and convenience of the city and the
inhabitants thereof, and for the protection of property therein.”

On the otherhand, respondent Himlayang Pilipino, Inc. contended that the taking or confiscation of
property was obvious because the questioned ordinance permanently restricts the use of the
property such that it cannot be used for any reasonable purpose and deprives the owner of all
beneficial use of his property.

Issue:
Is Section 9 of the ordinance in question a valid exercise of the police power?

Held:

No. The Sec. 9 of the ordinance is not a valid exercise of the police power.

Occupying the forefront in the bill of rights is the provision which states that ‘no person shall be
deprived of life, liberty or property without due process of law’ (Art. Ill, Section 1 subparagraph 1,
Constitution). On the other hand, there are three inherent powers of government by which the state
interferes with the property rights, namely-. (1) police power, (2) eminent domain, (3) taxation. These
are said to exist independently of the Constitution as necessary attributes of sovereignty.

An examination of the Charter of Quezon City (Rep. Act No. 537), does not reveal any provision that
would justify the ordinance in question except the provision granting police power to the City. Section
9 cannot be justified under the power granted to Quezon City to tax, fix the license fee, and regulate
such other business, trades, and occupation as may be established or practised in the City. The power
to regulate does not include the power to prohibit or confiscate. The ordinance in question not only
confiscates but also prohibits the operation of a memorial park cemetery.

Police power is defined by Freund as ‘the power of promoting the public welfare by restraining and
regulating the use of liberty and property’. It is usually exerted in order to merely regulate the use and
enjoyment of property of the owner. If he is deprived of his property outright, it is not taken for public
use but rather to destroy in order to promote the general welfare. In police power, the owner does
not recover from the government for injury sustained in consequence thereof.

Under the provisions of municipal charters which are known as the general welfare clauses, a city, by
virtue of its police power, may adopt ordinances to the peace, safety, health, morals and the best and
highest interests of the municipality. It is a well-settled principle, growing out of the nature of well-
ordered and society, that every holder of property, however absolute and may be his title, holds it
under the implied liability that his use of it shall not be injurious to the equal enjoyment of others
having an equal right to the enjoyment of their property, nor injurious to the rights of the community.
A property in the state is held subject to its general regulations, which are necessary to the common
good and general welfare. Rights of property, like all other social and conventional rights, are subject
to such reasonable limitations in their enjoyment as shall prevent them from being injurious, and to
such reasonable restraints and regulations, established by law, as the legislature, under the governing
and controlling power vested in them by the constitution, may think necessary and expedient. The
state, under the police power, is possessed with plenary power to deal with all matters relating to the
general health, morals, and safety of the people, so long as it does not contravene any positive
inhibition of the organic law and providing that such power is not exercised in such a manner as to
justify the interference of the courts to prevent positive wrong and oppression.

However, in the case at hand, there is no reasonable relation between the setting aside of at least six
(6) percent of the total area of an private cemeteries for charity burial grounds of deceased paupers
and the promotion of health, morals, good order, safety, or the general welfare of the people. The
ordinance is actually a taking without compensation of a certain area from a private cemetery to
benefit paupers who are charges of the municipal corporation. Instead of building or maintaining a
public cemetery for this purpose, the city passes the burden to private cemeteries.

The expropriation without compensation of a portion of private cemeteries is not covered by Section
12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers the city council to
prohibit the burial of the dead within the center of population of the city and to provide for their
burial in a proper place subject to the provisions of general law regulating burial grounds and
cemeteries. When the Local Government Code, Batas Pambansa Blg. 337 provides in Section 177 (q)
that a Sangguniang panlungsod may “provide for the burial of the dead in such place and in such
manner as prescribed by law or ordinance” it simply authorizes the city to provide its own city owned
land or to buy or expropriate private properties to construct public cemeteries. This has been the law
and practise in the past. It continues to the present. Expropriation, however, requires payment of just
compensation. The questioned ordinance is different from laws and regulations requiring owners of
subdivisions to set aside certain areas for streets, parks, playgrounds, and other public facilities from
the land they sell to buyers of subdivision lots. The necessities of public safety, health, and
convenience are very clear from said requirements which are intended to insure the development of
communities with salubrious and wholesome environments. The beneficiaries of the regulation, in
turn, are made to pay by the subdivision developer when individual lots are sold to home-owners.

WHEREFORE, the petition for review is hereby DISMISSED. The decision of the respondent court is
affirmed.

Velasco vs Villegas GR L-24153 14 February 1983

11
Wednesday
Mar 2015
Posted by Rachel Chan in Case Digests, Constitutional Law II≈ Leave a comment
Facts: Petitioners assailed the validity of Ordinance 4964, prohibiting barbershop to conduct
massaging customers in a separate room or in any room in the same building where the operator of
the barbershop and the room of massaging is the same. The contention being that it amounts to a
deprivation of property of petitioners-appellants of their means of livelihood without due process of
law. Lower Court dismissed the petition for declaratory relief.

Issue: Whether or not Ordinance 4964 is unconstitutional?

Held: Even if such were not the case, the attack against the validity cannot succeed. As pointed out in
the brief of respondents-appellees, it is a police power measure. The objectives behind its enactment
are:" (1) To be able to impose payment of the license fee for engaging in the business of massage
clinic under Ordinance No. 3659 as amended by Ordinance 4767, an entirely different measure than
the ordinance regulating the business of barbershops and, (2) in order to forestall possible immorality
which might grow out of the construction of separate rooms for massage of customers." 3 This Court
has been most liberal in sustaining ordinances based on the general welfare clause. As far back as U.S.
v. Salaveria, 4 a 1918 decision, this Court through Justice Malcolm made clear the significance and
scope of such a clause, which "delegates in statutory form the police power to a municipality. As
above stated, this clause has been given wide application by municipal authorities and has in its
relation to the particular circumstances of the case been liberally construed by the courts. Such, it is
well to recall, is the progressive view of Philippine jurisprudence." 5 As it was then, so it has continued
to be. 6 There is no showing, therefore, of the unconstitutionality of such ordinance.cralawn

Philippine Petroleum Corporation vs Municipality of Pililla Rizal

198 SCRA 82 [GR No. 90776 June 3, 1991]

Facts: Philippine Petroleum Corporation is a business enterprise engaged in the manufacture of

lubricated oil base stocks which is a petroleum product, with its refinery plant situated at Malaya,
Pilillia Rizal, conducting its business activities within the territorial jurisdiction of municipality of
Pilillia, Rizal and is in continuous operation up to the present. PPC owns and maintains an oil refinery
including 49 storage tanks for its petroleum products in Malaya, Pililla, Rizal. Under section 142 of
NIRC of 1939, manufactured oils and other fuels are subject to specific tax. Respondent municipality
of Pilillia, Rizal through municipal council resolution no. 25-s-1974 enacted municipal tax ordinance
no. 1-s-1974 otherwise known as “The Pililla Tax Code Of 1974” on June 14, 1974 which took effect on
July 1, 1974. Sections 9 and 10 of the said ordinance imposed a tax on business, except for those
which fixed taxes are provided in the local tax code on manufacturers, importers, or producers of any
article of commerce of whatever kind or nature, including brewers, distiller, rectifiers, repackers and
compounders of liquors distilled spirits and/or wines in accordance with the schedule found in the
local tax code, as well as mayor’s permit sanitary inspection fee and storage permit fee for flammable,
combustible or explosive substances, while section 139 of the disputed ordinance imposed surcharges
and interests on unpaid taxes, fees or charges. Enforcing the provisions of the above mentioned
ordinance, the respondent filed a complaint on April 4, 1986 docketed as civil case no. 057-T against
PPC for the collection of the business tax from 1979 to 1986; storage permit fees from 1975 to 1986;
mayor’s permit fee and sanitary permit inspection fees from 1975 to 1984. PPC, however, have
already paid the last named fees starting 1985.

Issue: Whether or not the Municipality may validly impose taxes on petitioner’s business.

Held: No. While section 2 of PD 436 prohibits the imposition of local taxes on petroleum products,
said decree did not amend sections 19 and 19 (a) of PD 231 as amended by PD 426, wherein the
municipality is granted the right to levy taxes on business of manufacturers, importers, producers of
any article of commerce of whatever kind or nature. A tax on business is distinct from a tax on the
article itself. Thus, if the imposition of tax on business of manufacturers, etc. in petroleum products
contravenes a declared national policy, it should have been expressly stated in PD No. 436.

The exercise by local governments of the power to tax is ordained by the present constitution. To
allow the continuous effectivity of the prohibition set forth in PC no. 26-73 would be tantamount to
restricting their power to tax by mere administrative issuances. Under section 5, article X of the 1987
constitution, only guidelines and limitations that may be established by congress can define and limit
such power of local governments.

The storage permit fee being imposed by Pilillia’s tax ordinance is a fee for the installation and
keeping in storage of any flammable, combustible or explosive substances. In as much as said storage
makes use of tanks owned not by the Municipality of Pilillia but by petitioner PPC, same is obviously
not a charge for any service rendered by the municipality as what is envisioned in section 37 of the
same code.

Basco vs Philippine Amusements and Gaming Corporation

197 SCRA 52 [GR No. 91649 May 14, 1991]

Facts: A TV ad proudly announces: “The New PAGCOR – Responding Through Responsible Gaming.”
But the petitioners think otherwise, that is why, they filed the instant petition seeking to annul the
PAGCOR charter – PD 1869, because it is allegedly contrary to morals, public policy and order, and
because –

a. It constitutes a waiver of a right prejudicial to a third person with a right recognized by law. It
waived the Manila city government’s right to impose taxes and license fees, which is recognized by
law;
b. For the same reason stated in the immediately preceeding paragraph, the law has intruded into the
local government’s right to impose local taxes and license fees. This, in contravention of the
constitutionally enshrined principle of local autonomy;

c. It violates the equal protection clause of the constitution in that it legalizes PAGCOR – conducted
gambling, while most other forms of gambling are outlawed, together with prostitution, drug
trafficking and other vices;

d. It violates the avowed trend of the Cory government away from the monopolistic and crony
economy, and toward free enterprise and privatization.

Issue: Whether or not the city of Manila may levy taxes on PAGCOR.

Held: No. The city of Manila, being a mere municipal corporation has no inherent right to impose
taxes. Thus, the charter or statute must plainly show an intent to confer that power or the
municipality cannot assume it. Its power to tax therefore must always yield to a legislative act which is
superior having been passed upon by the state itself which has the inherent power to tax.

The city of Manila’s power to impose license fees on gambling has long been revoked. As early as
1975, the power of local governments to regulate gambling thru the grant of “franchise, licenses or
permits” was withdrawn by PD no. 771 and was vested exclusively on the national government.

Therefore, only the national government has the power to issue “license or permits” for the operation
of gambling. Necessarily the power to demand or collect license fees which is a consequence of the
issuance of “licenses or permits” is no longer vested in the City of Manila.

Local governments has no power to tax instrumentalities of the National Government. PAGCOR is a
government owned or controlled corporation with an original charter, PD 1869. All of its shares of
stocks are owned by the national government.

The power of the local government to “impose taxes and fees” is always subject to “limitations”
which congress may provide by law. Since PD 1869 remains an operative law until amended, repealed
or revoked, its exemption clause remains as an exception to the exercise of the power of local
governments to impose taxes and fees. It cannot therefore be violative but rather is consistent with
the principle of local autonomy.

Besides, the principle of local autonomy under the 1987 constitution simply means “decentralization.”
It does not make local governments sovereign within the state or an “imperium in imperio.”

What is settled is that the matter of regulating; taxing or otherwise dealing with gambling in a state
concern and hence, it is the sole prerogative of the state to retain it or delegate it to local
governments.

Jesus Estanislao vs. Amado Costales

GRN 96516 May 8, 1991 / 196 SCRA 853

Gancayco, J.:

FACTS:

The Sanggunian Panglungsod passed ordinance No 44 of Zamboanga City. The same was sent to the
Minister of Finance where it was found out to contravenes Section 19 of the local Tax Code. The
authority of the city is limited to the imposition of a percentage tax on the gross sales or receipts of
said production. The tax being imposed in the ordinance is based on the output or production and not
on the gross sales or receipts as authorized under the local tax code. The city Mayor of Zamboanga
questioned such decision of the Finance Minister and the lower court ruled in favor of the former by
reason of prescription. The ordinance imposed P0.01 per liter of softdrinks produced, manufactured
and or bottled within the territorial jurisdiction of the City of Zamboanga.

ISSUE:

Whether or not Ordinance No. 44 contravenes the Local Tax Code of 1974.

RULING:

The court ruled that the tax ordinances issued by the local autonomy is governed by the Local Tax
Code of 1974 as it was stated in Section 64 (a) thereof all existing tax ordinances of provinces, cities,
municipalities and barrios shall be deemed ipso facto nullified on June 30, 1974. The court also
clarified that the 120 days that lapsed before the Minister of Finance acted on the ordinance did not
render the action inoperative due to prescription. Even if the Secretary of Finance failed to review or
act on the ordinance within 120 days, it does not follow as a legal consequence thereof that an
otherwise invalid ordinance is thereby validated. It does not also mean that the Secretary can no
longer act by suspending and/or revoking an invalid ordinance even after the lapse of 120 day period.

DRILON VS. LIM

July 05, 2013
GR No. 112497, August 4 1994

FACTS:

Pursuant to Section 187 of the Local Government Code or the Procedure For Approval And Effectivity
Of Tax Ordinances And Revenue Measures; Mandatory Public Hearings, Secretary of Justice had, on
appeal to him of four oil companies and a taxpayer, declared Ordinance No. 7794, otherwise known
as the Manila Revenue Code, null and void for non-compliance with the prescribed procedure in the
enactment of tax ordinances and for containing certain provisions contrary to law and public policy.

In a petition, the Regional Trial Court of Manila revoked the Secretary's resolution and sustained the
ordinance, holding inter alia that the procedural requirements had been observed. Instead, it
declared Section 187 of the Local Government Code as unconstitutional because of its vesture in the
Secretary of Justice of the power of control over local governments in violation of the policy of local
autonomy mandated in the Constitution and of the specific provision therein conferring on the
President of the Philippines only the power of supervision over local governments. By citing the
distinction between control and supervision, the lower court’s concluded that the challenged section
gave the Secretary the power of control and not of supervision only as vested by the Constitution in
the President of the Philippines. This was, in his view, a violation not only of Article X, specifically
Section 4 thereof, 7 and of Section 5 on the taxing powers of local governments, 8 and the policy of
local autonomy in general.

ISSUE:

Whether or not Section 187 of the Local Government Code is unconstitutional.

HELD:

The judgment of the Regional Trial Court is reversed insofar as it declared Section 187 of the Local
Government Code unconstitutional and affirmed the findings of the procedural requirements in the
enactment of the Manila Revenue Code have been observed.
Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality of the
tax ordinance and, if warranted, to revoke it on either or both of these grounds. When he alters or
modifies or sets aside a tax ordinance, he is not also permitted to substitute his own judgment for the
judgment of the local government that enacted the measure. Secretary Drilon did set aside the
Manila Revenue Code, but he did not replace it with his own version of what the Code should be. He
did not pronounce the ordinance unwise or unreasonable as a basis for its annulment. He did not say
that in his judgment it was a bad law. What he found only was that it was illegal. All he did in
reviewing the said measure was determine if the petitioners were performing their functions in
accordance with law, that is, with the prescribed procedure for the enactment of tax ordinances and
the grant of powers to the city government under the Local Government Code.

The Court finds that Secretary Drilon had performed an act not of control but of mere supervision. An
officer in control lays down the rules in the doing of an act. If they are not followed, he may, in his
discretion, order the act undone or re-done by his subordinate or he may even decide to do it himself.
While in supervision, it merely sees to it that the rules are followed, but he himself does not lay down
such rules, nor does he have the discretion to modify or replace them. If the rules are not observed,
he may order the work done or re-done but only to conform to the prescribed rules. He may not
prescribe his own manner for the doing of the act. He has no judgment on this matter except to see to
it that the rules are followed.

MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY v. FERDINAND J. MARCOS, GR No. 120082,

1996-09-11

Facts:

Petitioner Mactan Cebu International Airport Authority (MCIAA)

Since the time of its creation,... enjoyed the privilege of exemption from payment of realty taxes in
accordance with Section 14 of its Charter

Office of the Treasurer of the City of Cebu, demanded payment for realty taxes on several parcels of
land belonging to the petitioner

Petitioner objected to such demand for payment as baseless and unjustified, claiming in its favor the
aforecited Section 14 of RA 6958 which exempts it from payment of realty taxes. It was also asserted
that it is an instrumentality of the government performing... governmental functions, citing Section
133 of the Local Government Code of 1991 which puts limitations on the taxing powers of local
government units

Section 133. Common Limitations on the Taxing Powers of Local Government Units. -- Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and
barangays shall not extend to the levy of the... following:

Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities,
and local government units. (underscoring supplied)

Respondent City refused to cancel and set aside petitioner's realty tax account, insisting that the
MCIAA is a government-controlled corporation whose tax exemption privilege has been withdrawn by
virtue of Sections 193 and 234 of the Local Government Code... petitioner... was compelled to pay its
tax account "under protest" and thereafter filed a Petition for Declaratory Relief with the Regional
Trial Court of Cebu

MCIAA basically contended that the taxing powers of local government units do not extend to the
levy of taxes or fees of any kind on an instrumentality of the national government. Petitioner insisted
that while it is indeed a government-owned corporation, it... nonetheless stands on the same footing
as an agency or instrumentality of the national government by the very nature of its powers and
functions.
trial court dismissed the petition... infer and state that the tax exemption provided for in RA 6958
creating petitioner had been expressly repealed by the provisions of the New Local Government Code
of 1991.

So that petitioner in this case has to pay the assessed realty tax of its properties effective after
January 1, 1992 until the present.

Issues:

taxing power of local government units and the limits of tax exemption privileges of government-
owned and controlled corporations... respondent City of Cebu has no power nor authority to impose
realty taxes upon it... whether the petitioner is a "taxable person."

Ruling:

Considering its task "not merely to efficiently operate and manage the Mactan-Cebu International
Airport, but more importantly, to carry out the Government... policies of promoting and developing
the Central Visayas and Mindanao regions as centers of international trade and tourism, and
accelerating the development of the means of transportation and communication in the country,"...
and that it is an attached... agency of the Department of Transportation and Communication
(DOTC),... the petitioner "may stand in [sic] the same footing as an agency or instrumentality of the
national government." Hence, its tax exemption privilege under Section 14 of its Charter

"cannot be considered withdrawn with the passage of the Local Government Code of 1991
(hereinafter LGC) because Section 133 thereof specifically states that the `taxing powers of local
government units shall not extend to the levy of taxes or fees or charges of any kind on the... national
government, its agencies and instrumentalities.'"

There can be no question that under Section 14 of R.A. No. 6958 the petitioner is exempt from the
payment of realty taxes imposed by the National Government or any of its political subdivisions,
agencies, and instrumentalities. Nevertheless, since taxation is the rule and... exemption therefrom
the exception, the exemption may thus be withdrawn at the pleasure of the taxing authority. The
only exception to this rule is where the exemption was granted to private parties based on material
consideration of a mutual nature, which then becomes... contractual and is thus covered by the non-
impairment clause of the Constitution.

we conclude that as a general rule, as laid down in Section 133, the taxing powers of local
government units cannot extend to the levy of, inter alia, "taxes, fees and charges of any kind on the
National

Government, its agencies and instrumentalities, and local government units"; however, pursuant to
Section 232, provinces, cities, and municipalities in the Metropolitan Manila Area may impose the real
property tax except on, inter alia, "real property owned by the Republic of... the Philippines or any of
its political subdivisions except when the beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person," as provided in item (a) of the first paragraph of Section 234.

upon the effectivity of the LGC, exemptions from payment of real property taxes granted to natural or
juridical persons, including government-owned or controlled corporations, except as provided in the
said section,... and the petitioner is, undoubtedly, a government-owned corporation, it necessarily
follows that its exemption from such tax granted it in Section 14 of its Charter, R.A. No. 6958, has
been withdrawn.

In short, the petitioner can no longer invoke the general rule in Section 133 that the taxing powers of
the local government units cannot extend to the levy of:
(o) taxes, fees or charges of any kind on the National Government, its agencies or instrumentalities,
and local government units.

the petitioner cannot claim that it was never a "taxable person" under its Charter. It was only
exempted from the payment of real property taxes. The grant of the privilege only in respect of this
tax is conclusive proof of the legislative intent to... make it a taxable person subject to all taxes,
except real property tax.

Finally, even if the petitioner was originally not a taxable person for purposes of real property tax, in
light of the foregoing disquisitions, it had already become, even if it be conceded to be an "agency" or
"instrumentality" of the Government, a taxable person for such... purpose in view of the withdrawal
in the last paragraph of Section 234 of exemptions from the payment of real property taxes, which, as
earlier adverted to, applies to the petitioner.

Accordingly, the position taken by the petitioner is untenable.

nothing can prevent

Congress from decreeing that even instrumentalities or agencies of the Government performing
governmental functions may be subject to tax. Where it is done precisely to fulfill a constitutional
mandate and national policy, no one can doubt its wisdom

PERCIVAL MODAY vs COURT OF APPEALS

Posted on July 25, 2013 by winnieclaire
Standard
[G.R. No. 107916. February 20, 1997.]

FACTS:
• On July 23, 1989, the Sangguniang Bayan of the Municipality of Bunawan in Agusan del Sur passed
Resolution No. 43-89,
“Authorizing the Municipal Mayor to Initiate the Petition for Expropriation of a One (1) Hectare
Portion of Lot No. 6138-Pls-4 Along the National Highway Owned by Percival Moday for the Site of
Bunawan Farmers Center and Other Government Sports Facilities.
• In due time, Resolution No. 43-89 was approved by then Municipal Mayor Anuncio C. Bustillo and
transmitted to the Sangguniang Panlalawigan for its approval
• Sangguniang Panlalawigan disapproved said Resolution and returned it with the comment that
“expropriation is unnecessary considering that there are still available lots in Bunawan for the
establishment of the government center.”
• The Municipality of Bunawan, herein public respondent, subsequently filed a Petition for Eminent
Domain against petitioner Percival Moday before the RTC
• , public respondent municipality filed a Motion to Take or Enter Upon the Possession of Subject
Matter of This Case stating that it had already deposited with the municipal treasurer the necessary
amount in accordance with Section 2, Rule 67 of the Revised Rules of Court and that it would be in the
government’s best interest for public respondent to be allowed to take possession of the property
• the Regional Trial Court granted respondent municipality’s motion to take possession of the land
o that the Sangguniang Panlalawigan’s failure to declare the resolution invalid leaves it effective.
o that the duty of the Sangguniang Panlalawigan is merely to review the ordinances and resolutions
passed by the Sangguniang Bayan under the old LGC
o that the exercise of eminent domain is not one of the two acts enumerated in Section 19 thereof
requiring the approval of the Sangguniang Panlalawigan
CA upheld the trial court. Meanwhile, the Municipality of Bunawan had erected three buildings on the
subject property.

ISSUE: whether a municipality may expropriate private property by virtue of a municipal resolution
which was disapproved by the Sangguniang Panlalawigan.

HELD: YES.
Eminent domain, the power which the Municipality of Bunawan exercised in the instant case, is a
fundamental State power that is inseparable from sovereignty. It is government’s right to appropriate,
in the nature of a compulsory sale to the State, private property for public use or purpose. Inherently
possessed by the national legislature the power of eminent domain may be validly delegated to local
governments, other public entities and public utilities. For the taking of private property by the
government to be valid, the taking must be for public use and there must be just compensation
The Municipality of Bunawan’s power to exercise the right of eminent domain is not disputed as it is
expressly provided for in Batas Pambansa Blg. 337, the Local Government Code 18 in force at the time
expropriation proceedings were initiated. Section 9 of said law states:
“Section 9.Eminent Domain. — A local government unit may, through its head and acting pursuant to
a resolution of its sanggunian, exercise the right of eminent domain and institute condemnation
proceedings for public use or purpose.”

POLITICAL LAW; LOCAL GOVERNMENT CODE (B.P. 337); POWER OF THE SANGGUNIANG
PANLALAWIGAN TO REVIEW ORDINANCES, RESOLUTIONS AND EXECUTIVE ORDERS PROMULGATED
BY THE MUNICIPAL MAYOR; DECLARATION OF INVALIDITY MUST BE ON THE SOLE GROUND THAT IT IS
BEYOND THE POWER OF THE SANGGUNIAN BAYAN OR MAYOR TO ISSUE THE RESOLUTION,
ORDINANCE OR ORDER UNDER REVIEW. — The Sangguniang Panlalawigan’s disapproval of Municipal
Resolution No. 43-89 is an infirm action which does not render said resolution null and void. The law,
as expressed in Section 153 of B.P. BLG. 337, grants the Sangguniang Panlalawigan the power to
declare a municipal resolution invalid on the sole ground that it is beyond the power of the
Sangguniang Bayan or the Mayor to issue. Although pertaining to a similar provision of law but
different factual milieu then obtaining, the Court’s pronouncements in Velazco vs. Blas, where we
cited significant early jurisprudence, are applicable to the case at bar. “The only ground upon which a
provincial board may declare any municipal resolution, ordinance, or order invalid is when such
resolution, ordinance, or order is ‘beyond the powers conferred upon the council or president making
the same.’ Absolutely no other ground is recognized by the law. A strictly legal question is before the
provincial board in its consideration of a municipal resolution, ordinance, or order. The provincial
(board’s) disapproval of any resolution, ordinance, or order must be premised specifically upon the
fact that such resolution, ordinance, or order is outside the scope of the legal powers conferred by
law. If a provincial board passes these limits, it usurps the legislative functions of the municipal
council or president. Such has been the consistent course of executive authority.” Thus, the
Sangguniang Panlalawigan was without the authority to disapprove Municipal Resolution No. 43-89
for the Municipality of Bunawan clearly has the power to exercise the right of eminent domain and its
Sangguniang Bayan the capacity to promulgate said resolution, pursuant to the earlier-quoted Section
9 of B.P. Blg. 337. Perforce, it follows that Resolution No. 43-89 is valid and binding and could be used
as lawful authority to petition for the condemnation of petitioners’ property.

MUNICIPALITY OF PARAÑAQUE v. V.M. REALTY CORPORATION, GR No. 127820, 1998-07-20

Facts:

Pursuant to Sangguniang Bayan Resolution No. 93-95... the Municipality of Parañaque filed... a
Complaint for expropriation[7] against Private Respondent V.M. Realty Corporation over two parcels
of... land

Allegedly, the complaint was filed "for the purpose of... alleviating the living conditions of the
underprivileged by providing homes for the homeless through a socialized housing project."

Parenthetically, it was also for this stated purpose that petitioner, pursuant to its Sangguniang Bayan
Resolution No.

577... previously made an offer to enter into a negotiated sale of the property with private
respondent, which the latter did not accept.

Finding the Complaint sufficient in form and substance, the Regional Trial Court of Makati,... issued an
Order... giving it due course.
said court issued an Order... authorizing petitioner to take possession of the subject property upon
deposit with its clerk of court of an amount equivalent to 15 percent of its fair market value based on
its current tax declaration.

private respondent filed its Answer containing affirmative defenses and a counterclaim,[13] alleging in
the main that (a) the complaint failed to state a cause of action because it was filed pursuant to a
resolution and not to an... ordinance as required by RA 7160 (the Local Government Code)... and (b)
the cause of action, if any, was barred by a prior judgment or res judicata.

Thereafter, the trial court issued its

Resolution[16] nullifying its

Order and dismissing the case.

the Court of Appeals affirmed in toto the trial court's Decision.

Issues:

Whether or not the Resolution of the Parañaque Municipal Council No. 93-95, Series of 1993 is a
substantial compliance of the statutory requirement of Section 19, R.A. 7180 [sic] in the exercise of
the power of eminent domain by the... plaintiff-appellant.

Whether or not the principle of res judicata is applicable to the present case.

Ruling:

The petition is not meritorious.

First Issue:

Resolution Different from an Ordinance

The power of eminent domain is lodged in the legislative branch of government, which may delegate
the exercise thereof to LGUs, other public entities and public utilities.

An LGU may therefore exercise the power to expropriate... private property only when authorized by
Congress and subject to the latter's control and restraints, imposed "through the law conferring the
power or in other legislations."

Section 19 of RA 7160... which delegates to LGUs the power of... eminent domain, also lays down the
parameters for its exercise. It provides as follows:

"Section 19. Eminent Domain. A local government unit may, through its chief executive and acting
pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or
welfare for the benefit of the poor and the landless, upon payment of just... compensation, pursuant
to the provisions of the Constitution and pertinent laws: Provided, however, That the power of
eminent domain may not be exercised unless a valid and definite offer has been previously made to
the owner, and such offer was not accepted: Provided, further,... That the local government unit may
immediately take possession of the property upon the filing of the expropriation proceedings and
upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value
of the property based on the current tax... declaration of the property to be expropriated: Provided,
finally, That, the amount to be paid for the expropriated property shall be determined by the proper
court, based on the fair market value at the time of the taking of the property."
Thus, the following essential requisites must concur before an LGU can exercise the power of eminent
domain:

1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in
behalf of the LGU, to exercise the power of eminent domain or pursue expropriation proceedings
over a particular private property.

2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of
the poor and the landless.

3. There is payment of just compensation, as required under Section 9, Article III of the Constitution,
and other pertinent laws.

4. A valid and definite offer has been previously made to the owner of the property sought to be
expropriated, but said offer was not accepted.

In the case at bar, the local chief executive sought to exercise the power of eminent domain pursuant
to a resolution of the municipal council. Thus, there was no compliance with the first requisite that
the mayor be authorized through an ordinance.

NOT... the terms "resolution" and "ordinance" are synonymous.

A municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is merely
a declaration of the sentiment or opinion of a lawmaking body on a... specific matter.[32] An
ordinance possesses a general and permanent character, but a resolution is temporary in nature.
Additionally, the two are enacted differently -- a third reading is necessary for an ordinance, but not
for a resolution, unless decided... otherwise by a majority of all the Sanggunian members.

In a clear divergence from the previous Local Government Code, Section 19 of RA 7160... categorically
requires that the local chief executive act pursuant to an ordinance.

Petitioner relies on Article 36, Rule VI of the Implementing Rules, which requires only a resolution to
authorize an LGU to exercise eminent domain.

This is clearly misplaced, because Section 19 of RA 7160, the law itself, surely prevails over said rule
which merely seeks to... implement it.[37] It is axiomatic that the clear letter of the law is controlling
and cannot be amended by a mere administrative rule issued for its implementation.

In this ruling, the Court does not diminish the policy embodied in Section 2, Article X of the
Constitution, which provides that "territorial and political subdivisions shall enjoy local autonomy." It
merely upholds the law as worded in RA 7160.

Strictly speaking, the power of eminent domain delegated to an LGU is in reality not eminent but
"inferior"... domain, since it must conform to the limits imposed by the delegation, and thus partakes
only of a share in eminent domain.

Second Issue:

Eminent Domain Not Barred by Res Judicata... ll the requisites for the application of res judicata are
present in this case. There is a previous final judgment on the merits in a prior expropriation case...
involving identical interests, subject matter and cause of action, which has been rendered by a court
having jurisdiction over it.

Be that as it may, the Court holds that the principle of res judicata,... cannot bar the right of the State
or its agent to expropriate private property.
The very nature of eminent domain, as... an inherent power of the State, dictates that the right to
exercise the power be absolute and unfettered even by a prior judgment or res judicata. The scope of
eminent domain is plenary and, like police power, can "reach every form of property which the State
might need for... public use."

Notwithstanding the grant to individuals, the eminent domain, the highest and most exact idea of
property,... remains in the government, or in the aggregate body of the people in their sovereign
capacity; and they have the right to resume the possession of the property whenever the public
interest requires it."[47] Thus, the State or its authorized agent cannot be... forever barred from
exercising said right by reason alone of previous non-compliance with any legal requirement.

WHEREFORE, the petition is hereby DENIED without prejudice to petitioner's proper exercise of its
power of eminent domain over subject property.

Principles:

A local government unit (LGU), like the Municipality of Parañaque, cannot authorize an expropriation
of private property through a mere resolution of its lawmaking body. The Local Government Code
expressly and clearly requires an ordinance or a local law for... the purpose. A resolution that merely
expresses the sentiment or opinion of the Municipal Council will not suffice. On the other hand, the
principle of res judicata does not bar subsequent proceedings for the expropriation of the same
property when all the legal requirements for... its valid exercise are complied with.

Filstream International Inc. vs. CA

Post under Expropriation , Local Government , Political Law Case Digests

FACTS:

Filstream International is the registered owner of parcels of land located in Antonio Rivera St., Tondo
II Manila. On January 7, 1993, it filed an ejectment suit against the occupants (private respondents) of
the said parcels of land on the grounds of termination of the lease contract and non-payment of
rentals. The ejectment suit became final and executory as no further action was taken beyond the CA.

During the pendency of the ejectment proceedings private respondents filed a complaint for
Annulment of Deed of Exchange against Filstream. The City of Manila came into the picture when it
approved Ordinance No. 7813 authorizing Mayor Alfredo Lim to initiate acquisition through legal
means of certain parcels of land. Subsequently, the City of Manila approved Ordinance No. 7855
declaring the expropriation of certain parcels of land which formed part of the properties of Filstream.
The said properties were sold and distributed to qualified tenants pursuant to the Land Use
Development Program of the City of Manila. The City of Manila then filed a complaint for eminent
domain seeking to expropriate lands in Antonio Rivera St. The RTC issued a Writ of Possession in favor
of the City.

Filstream filed a motion to dismiss and a motion to quash the writ of possession. The motion to
dismiss was premised on the following grounds: no valid cause of action; the petition does not satisfy
the requirements of public use and a mere clandestine maneuver to circumvent the writ execution
issued by the RTC of Manila in the ejectment suit; violation of the constitutional guarantee against
non-impairment of obligation and contract; price offered was too low hence violative of the just
compensation provision of the constitution.

The RTC denied the two motions. Filstream filed a Petition for Certiorari with the CA which dismissed
the petition for being insufficient in form and substance, aside from the fact that copies of the
pleadings attached to the petition are blurred and unreadable.

ISSUES/HELD:
1. WON City of Manila may exercise right of eminent domain despite the existence of a final and
executory judgment ordering private respondents to vacate the lots.

YES. Petitioner Filstream anchors its claim by virtue of its ownership over the properties and the
existence of a final and executory judgment against private respondents ordering the latter’s
ejectment from the premises.

Private respondents’ claim on the other hand hinges on an alleged supervening event which has
rendered the enforcement of petitioner’s rights moot, that is, the expropriation proceedings
undertaken by the City of Manila over the disputed premises for the benefit of herein private
respondents. For its part, the City of Manila is merely exercising its power of eminent domain within
its jurisdiction by expropriating petitioner’s properties for public use.

There is no dispute as to the existence of a final and executory judgment in favor of petitioner
Filstream ordering the ejectment of private respondents from the properties subject of this dispute.
Thus, petitioner has every right to assert the execution of this decision as it had already became final
and executory.

However, it must also be conceded that the City of Manila has an undeniable right to exercise its
power of eminent domain within its jurisdiction. The right to expropriate private property for public
use is expressly granted to it under Sec 19 of the Local Government Code. Sec 100 of the Revised
Charter of the City of Manila further empowers the city government to expropriate private property
in the pursuit of its urban land reform and housing program. The city’s right to exercise these
prerogatives notwithstanding the existence of a final and executory judgment over the property to be
expropriated had already been previously upheld by the court in the case of Philippine Columbian
Association vs Panis:

“The City of Manila, acting through its legislative branch, has the express power to acquire private
lands in the city and subdivide these lands into home lots for sale to bona-fide tenants or occupants
thereof, and to laborers and low-salaried employees of the city.

That only a few could actually benefit from the expropriation of the property does not diminish its
public use character. It is simply not possible to provide all at once land and shelter for all who need
them (Sumulong v. Guerrero, 154 SCRA 461 [1987]).

Corollary to the expanded notion of public use, expropriation is not anymore confined to vast tracts of
land and landed estates. It is therefore of no moment that the land sought to be expropriated in this
case is less than the half a hectare only (Pulido v. Court of Appeals, 122 SCRA 63 [1983]).

2. WON expropriation of Filstream’s lots were legally and validly undertaken.

NO. We take judicial notice of the fact that urban land reform has become a paramount task in view
of the acute shortage of decent housing in urban areas particularly in Metro Manila. Nevertheless,
despite the existence of a serious dilemma, local government units are not given an unbridled
authority when exercising their power of eminent domain in pursuit of solutions to these problems.
Constitutional provisions on due process and just compensation for the expropriation of private
property must be complied with. Other laws have also set down specific rules in the exercise of the
power of eminent domain, to wit:

• Sec 19 of LGC provides that such exercise must be pursuant to the provisions of the Constitution
and pertinent laws.

• Sec 9 of the Urban Development and Housing Act of 1992 (UDHA) provides an order of priority in
the acquisition of land for socialized housing, with private lands listed as the last option.
• Sec 10 of UDHA provides that expropriation shall be resorted to only when other modes of
acquisition such as community mortgage, land swapping, donation to the government, etc. have been
exhausted, and, where expropriation is resorted to, parcels of land owned by small property owners
shall be exempted.

Compliance with the above legislated conditions are deemed mandatory because these are the only
safeguards in securing the right of owners of private property to DUE PROCESS when their property is
expropriated for public use.

There is nothing in the records which would indicate that the City of Manila complied with the above
conditions. Filstream’s properties were expropriated and ordered condemned in favor of the City of
Manila sans any showing that resort to the acquisition of other lands listed under Sec. 9 of RA 7279
have proved futile. Evidently, there was a violation of petitioner Filstream’s right to due process.

It must be emphasized that the State has a paramount interest in exercising its power of eminent
domain for the general good considering that the right of the State to expropriate private property as
long as it is for public use always takes precedence over the interest of private property owners.
However we must not lose sight of the fact that the individual rights affected by the exercise of such
right are also entitled to protection, bearing in mind that the exercise of this superior right cannot
override the guarantee of due process extended by the law to owners of the property to be
expropriated. (Filstream International Inc. vs. CA, G.R. No. 125218 Jan. 23, 1998)

LEVY D. MACASIANO v. ROBERTO C. DIOKNO, GR No. 97764, 1992-08-10

Facts:

the respondent municipality passed Ordinance No. 86, Series of 1990 which authorized the closure of
J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena Streets located at Baclaran,
Parañaque, Metro Manila and the establishment of a flea market... thereon.

the Metropolitan Manila Authority approved Ordinance No. 86, s. 1990 of the municipal council of
respondent municipality subject to the following conditions:

That the aforenamed streets are not used for vehicular traffic, and that the majority of the residents
do not oppose the establishment of the flea market/vending areas thereon;

That the 2-meter middle road to be used as flea market/vending area shall be marked distinctly, and
that the 2 meters on both sides of the road shall be used by pedestrians;

That the time during which the vending area is to be used shall be clearly designated;

That the use of the vending areas shall be temporary and shall be closed once the reclaimed areas are
developed and donated by the Public Estate Authority.

Brig. Gen. Macasiano, PNP Superintendent of the Metropolitan Traffic Command, ordered the
destruction and confiscation of stalls

Brig. General Macasiano wrote a letter to respondent Palanyag giving the latter ten (10) days to
discontinue the flea market; otherwise, the market stalls shall be dismantled.

espondents municipality and Palanyag filed with the trial court a joint petition for prohibition and
mandamus with damages and prayer... the trial court issued an order upholding the validity of
Ordinance No. 86 s. 1990 of the Municipality of Parañaque and enjoining petitioner Brig. Gen.
Macasiano from enforcing his letter-order against respondent Palanyag.

petitioner, contends that municipal roads are used for public service and are therefore public
properties;
Petitioner submits that a property already dedicated to public use cannot be used for another public
purpose

Petitioner also submits that assuming that the respondent municipality is authorized to close streets,
it failed to... comply with the conditions set forth by the Metropolitan Manila Authority for the
approval of the ordinance

Issues:

hether or not an ordinance or resolution issued by the municipal council of Parañaque authorizing the
lease and use of public streets or thoroughfares as sites for flea markets is valid.

Ruling:

We find the petition meritorious.

The property of provinces, cities and municipalities is divided into property for public use and
patrimonial property (Art. 423, Civil Code). As to what consists of property for public use, Article 424
of Civil Code states:

"ART. 424. Property for public use, in the provinces, cities and municipalities, consists of the provincial
roads, city streets, the squares, fountains, public waters, promenades, and public works for public
service paid for by said provinces, cities or... municipalities.

"All other property possessed by any of them is patrimonial and shall be governed by this Code,
without prejudice to the provisions of special laws."

Properties of the local government which are devoted to public... service are deemed public and are
under the absolute control of Congress (

"There is no doubt that the disputed areas from which the private respondents' market stalls are
sought to be evicted are public streets, as found by the trial court in Civil Case no. C-12921. A public
street is property for public use hence outside the commerce of... man (Arts. 420, 424, Civil Code).
Being outside the commerce of man, it may not be the subject of lease or other contract

"As the stallholders pay fees to the City Government for the right to occupy portions of the public
street, the City Government, contrary to law, has been leasing portions of the streets to them. Such
leases or licenses null and void for being contrary to law. The... right of the public to use the city
streets may not be bargained away through contract. The interests of a few should not prevail over
the good of the greater number in the community whose health, peace, safety, good order and
general welfare, the respondent city officials are... under legal obligation to protect.

Cabrera v. Court of Appeals, 195 SCRA 314 (Digested Case)

Re: Closure and opening of roads thru an ordinance (Sec. 21)

FACTS: The Provincial Board of Catanduanes adopted Resolution to close the old road leading to the
new Capitol Building of their province and to give to the owners of the properties traversed by the
new road equal area as per survey by the Highway District Engineer's office from the old road
adjacent to the respective remaining portion of their properties. Pursuant to a deed of exchange
authorized by the Provincial Governor of Catanduanes, the exchange of properties took place. Herein
petitioner, filed a petition for "Restoration of Public Road and/or Abatement of Nuisance, Annulment
of Resolutions and Documents with Damages." He alleged that the land fronting his house was a
public road owned by the Province of Catanduanes in its governmental capacity and therefore beyond
the commerce of man. He contended that Resolution No. 158 and the deeds of exchange were
invalid, as so too was the closure of the northern portion of the said road. The CA held that pursuant
to Republic Act No. 5185, municipal authorities can close, subject to the approval or direction of the
Provincial Board, thoroughfares under Section 2246 of the Revised Administrative Code. Although in
this case the road was not closed by the municipality of Catanduanes but by the provincial board of
Catanduanes, the closure, nevertheless, is valid since it was ordered by the approving authority itself.
However, while it could do so, the provincial government of Catanduanes could close the road only if
the persons prejudiced thereby were indemnified, Section 2246 of the Revised Administrative Code
being very explicit on this. Before us now, the petitioner insists that Sec. 2246 is not applicable
because the resolution is not an order for the closure of the road in question but an authority to
barter or exchange it with private properties. He maintains that the public road was owned by the
province in its governmental capacity and, without a prior order of closure, could not be the subject
of a barter. Control over public roads, he insists, is with Congress and not with the provincial board

ISSUES:
(1) WON the resolution is valid.

(2) WON the municipal, and not the provincial board has the authority to issue such resolution.

(3) WON the petitioner has sustained injuries and therefore should be indemnified.

HELD:
(1) Yes. The authority of the provincial board to close that road and use or convey it for other
purposes is derived from the provisions of RA 5185 in relation to Section 2246 of the Revised
Administrative Code. Property thus withdrawn from public servitude may be used or conveyed for any
purpose for which other real property belonging to the municipality might be lawfully used or
conveyed. Property of public dominion, when no longer intended for public use or for public service,
shall form part of the patrimonial property of the State.

(2) No. There is no reason for not applying the doctrine announced in Favis to the provincial board in
connection with the closure of provincial roads. The provincial board has, after all, the duty of
maintaining such roads for the comfort and convenience of the inhabitants of the province.
Moreover, this authority is inferable from the grant by the national legislature of the funds to the
Province of Catanduanes for the construction of provincial roads.

(3) No. The general rule is that one whose property does not abut on the closed section of a street has
no right to compensation for the closing or vacation of the street, if he still has reasonable access to
the general system of streets. The circumstances in some cases may be such as to give a right to
damages to a property owner, even though his property does not abut on the closed section. But to
warrant recovery in any such case the property owner must show that the situation is such that he
has sustained special damages differing in kind, and not merely in degree, from those sustained by
the public generally. Here, the petitioners failed to adduce evidence that he indeed sustained injuries

CEBU OXYGEN v. PASCUAL A. BERCILLES, GR No. L-40474, 1975-08-29

Facts:

This is a petition for the review of the order of the Court... dismissing petitioner's application for
registration of title over a parcel of land

The parcel of land sought to be registered was originally a portion of M. Borces Street

City Council of Cebu, through Resolution No. 2193, approved... declared the terminal portion of M.
Borces Street,... as an abandoned road

Subsequently,... the City Council of Cebu passed Resolution No. 2755, authorizing the Acting City
Mayor to sell the land through a public... bidding... he lot was awarded to the herein petitioner being
the highest bidder... the City of Cebu,... executed a deed of absolute sale to the herein petitioner
By virtue of the aforesaid deed of absolute sale, the petitioner filed an application with the Cour... to
have its title to the land registered... the Assistant Provincial Fiscal of Cebu filed a motion to dismiss
the application on the ground that the property sought to be registered being a public road intended
for public use is considered part of the public domain and therefore outside the commerce of... man.
Consequently, it cannot be subject to registration by any private individual.

trial court issued an order dismissing the petitioner's application for registration of title.[6] Hence, the
instant petition for review.

Issues:

Does the City Charter of Cebu City... alid right to declare a road as abandoned

City provides:

Revised Charter of Cebu City provides

Ruling:

Revised Charter of Cebu City provides:... the City Council shall have the following legislative powers:

x x x; to close any city road, street or alley, boulevard, avenue, park or square. Property thus
withdrawn from public servitude may be used or conveyed for any purpose for which other real
property belonging to the City may be lawfully used or conveyed."... it is undoubtedly clear that the
City of Cebu is empowered to close a city road or street.
In the case of Favis vs. City of Baguio,... Favis vs. City of Baguio,... ppellant may not challenge the city
council's act of withdrawing a strip of Lapu-Lapu Street at its dead end from public use and converting
the remainder thereof into an alley. These are acts well within the ambit of the power to close a...
city street. The city council, it would seem to us, is the authority competent to determine whether or
not a certain property is still necessary for public use.

"Such power to vacate a street or alley is discretionary. And the discretion will not ordinarily be
controlled or interfered with by the courts, absent a plain case of abuse or fraud or collusion.

So the fact... that some private interests may be served incidentally will not invalidate the vacation
ordinance."

(2) Since that portion of the city street subject of petitioner's application for registration of title was
withdrawn from public use, it follows that such withdrawn portion becomes patrimonial property
which can be the object of an ordinary contract.

rticle 422 of the Civil Code expressly provides that "Property of public dominion, when no longer
intended for public use or for public service, shall form part of the patrimonial property of the State."

Accordingly, the withdrawal of the property in question from public use and its subsequent sale to the
petitioner is valid. Hence, the petitioner has a registerable title over the lot in question.

ANTONIO C. FAVIS v. CITY OF BAGUIO, GR No. L-29910, 1969-04-25

Facts:

Favis bought a parcel of land of about 1,000 square meters... from the Assumption Convent, Inc

Said lot is bounded on the southwest by

(proposed road), owned by Assumption Convent, Inc.

Simultaneous with the sale, Assumption donated to the City - "for road purposes" - the lot indicated
in its subdivision plan as the proposed road

This donated road is used by Favis as his means of egress and ingress... from his residence to a public
street called Lapu-Lapu Street.

Lapu-Lapu Street... is a portion of a big tract of land registered in the name of the City... for all of
which the City holds

Transfer Certificate of Title

Lapu-Lapu Street is eight (8) meters... wide;[1] it abruptly ends as it meets portions of two lots - the
donated road aforementioned and the lot owned by Olmina Fernandez

Ocular inspection conducted by the trial court disclosed that at the exact connecting point of Lapu-
Lapu Street and the... donated road (which leads to appellant's land), the road opening is only 2.5
meters wide.

by virtue of Resolution No. 115, Series of 1947, of the City Council of Baguio, leased this Lot 25 to
Shell for a ten-year period renewable for another ten years. Shell constructed... thereon a service
station of about 335 square meters.

the City Council of Baguio passed Resolution No. 132 authorizing the City thru its Mayor to lease to
Shell two parcels of land

Lot 25 (Lot A), it is to be noted, is the same lot leased to Shell... and the lease of Lot B is merely an
addition thereto.

This additional area, taken from Lapu-Lapu Street is five (5) meters wide and twenty (20) meters...
long and abuts Lot 25.

the City, thru its Mayor, entered into a formal contract of lease with Shell.

Shell filed an application with the Office of the City Engineer of Baguio for a building permit for the
construction of a new and bigger gasoline station on the leased premises.

Said office, in a letter to the City Council... noted that the leased "[l]ot 'B' which consists of 100 square
meters is exactly within the road right-of-way of Lapu-Lapu Street," is for public use, and may not be
leased.

Favis lodged a letter-protest against the additional lease made in favor of Shell. He claimed that it
would diminish the width of Lapu-Lapu Street to five meters only; that it would destroy the...
symmetry of the said street thus making it look very ugly; and that the City was bereft of authority to
lease any portion of its public streets in favor of anyone.

the City Council of Baguio,... passed Resolution No. 215, amending Resolution No. 132, Series of 1961,
by converting that "portion of Lapu-Lapu

Street lying southeast from Lot B... beginning at this portion's intersection with Dagohoy Street, into
an alley 5.00 meters wide (4 m. now in actual use); declaring... for this purpose, that said Lot B shall
not be a part of this alley."

Favis commenced suit for the annulment of the lease contract with damages in the Court

He prayed that (1) defendants be ordered to stop, remove... and/or demolish whatever constructions
had been introduced at the additional leased area on Lapu-Lapu Street; (2) the building permit and
contract of lease entered into by and between the defendants be cancelled and revoked for being null
and void;... the lower court,... rendered judgment upholding the two questioned resolutions and
dismissing the complain

Issues:

resolutions directing the partial closing of Lapu-Lapu Street and the lease thereof are invalid.

. Because, so appellant avers, those resolutions contravene the City

Charter.

lack of... direct notice to owners of contiguous properties whose rights might be affected, as another
ground to show invalidity of the resolutions.

resolutions narrowed down, much to his prejudice, the width of Lapu-Lapu Street

The reduction... of the usable width from 8 meters to 4 meters... cannot be done... because said
resolutions violate Executive Order No. 113, Series of 1955, issued by President Ramon Magsaysay...
city council does not have the power to close city streets like Lapu-Lapu Street... since municipal
bodies have no inherent power to vacate or withdraw a... street from public use, there must be a
specific grant by the legislative body to the city or municipality concerned.

appellant may not challenge the city council's act of withdrawing a strip of Lapu-Lapu Street at its
dead end from public use and converting the remainder thereof into an alley.

leased strip of 100 square meters was withdrawn from public use, it necessarily follows that such
leased portion becomes patrimonial property.

by reducing the original width of Lapu-Lapu Street, his entrance and exit to and from his property has
become very difficult; that it is now impossible for his big trucks and trailers to turn... around; that it
made the area around it very dangerous in case of fire; and that it has caused perpetual danger,
annoyance, irreparable loss and damage not only to the public in general but especially to herein
plaintiff in particular.

Ruling:

He relies on subsection (L) of Section 2553 of the Revised Administrative Code. It provides that the
powers granted to the City - including the power to close streets - shall be carried "into effect by
ordinance."

This objection is directed at form, not at substance. It has been held that "even where the statute or
municipal charter requires the municipality to act by ordinance, if a resolution is passed in the manner
and with the statutory formality required in the... enactment of an ordinance, it will be binding and
effective as an ordinance."[4] Such resolution may operate regardless of the name by which it is
called.[5]

Resolutions No. 132 and 215, Series of 1961, were unanimously approved with all the councilors
present and voting, carried the seal of the city council, were signed by the City Vice-Mayor, the
Presiding Officer, approved by the City Mayor, and attested by the City

Secretary. With the presumption of validity of the resolution and the other presumption that official
duty has been regularly performed, the embattled resolutions are just as good as ordinances and have
the same force.

o carry into effect by ordinance the powers hereinbefore granted... in each and every such ordinance
provision shall be made for notice to any and all persons interested,... to each person affected
thereby and assessed thereunder... o... bjection shall be made and heard only before the city
council,... and shall decide any and ever such objection within ten days after the filing thereof and
give notice of such decision to... the person or persons interested in the manner hereinbefore
provided for notice of such assessment within five days thereafter.

The requirement of notice specified in the afore-quoted provision of the city charter is not applicable
to the case at bar. It will be observed that the notice is to be given "to any, and all persons
interested",... person affected thereby and assessed thereunder."

"to each person affected thereby and assessed thereunder." The accent is on the word and. The
person "affected" must also be "assessed". And then, "such notice shall... set forth the nature of the
proposed improvement, the estimated cost therefor, the total amount of the assessment to be levied
therefor, and the amount to be levied upon each parcel of the property or possession of the
addressee." In turn, the council,... after hearing objections, may "alter, modify, or increase the area of
[the] district, the total assessment thereof, or any individual area or assessment objected to therein."

Clearly then, this method of giving notice applies only when an ordinance calls for an assessment. So
that where no assessment has been made or is to be made, such notice need not be given.

In the case at bar, the resolutions in question do not at all call for any kind of assessment against
appellant or his land. Hence, the notice that appellant would want to have, need not be given.

"IV. MUNICIPAL ROADS:

All highways not included in the above classifications, Municipal and city roads shall have a right-of-
way of not less than ten (10) meters;

We do not go along with appellant. First, because the 2.5 meter opening connecting the donated
road and Lapu-Lapu Street has always been that wide since the donated road was... opened.

His outlet of Lapu-Lapu Streetof 2.5 meters still remains the same.

In the second place, the resolutions in question do not have the effect of decreasing the width of the
opening because said opening is far from the leased portion of Lapu-Lapu Street. The said leased
portion is on the left side of

Lapu-Lapu Street, whereas the opening lies on the right-uppermost part of Lapu-Lapu Street. That
leased strip does not reach said opening.

hirdly, the executive order could not have been violated because even before its promulgation, Lapu-
Lapu Street was only 8 meters wide, and the said executive order did not demand widening to 10
meters of existing streets.

Considering that "municipal corporations in the Philippines are mere creatures of Congress; that, as
such, said corporations possessed, and may exercise, only such power as Congress may deem fit to
grant thereto",[9] a... reference to the organic act of the City of Baguio appears to be in order.

the Revised Administrative Code (Baguio Charter), the language of the grant of authority runs thus -

"(L) To provide for... closing up,... in whole or in part, any public plaza, square, street, sidewalk, trail,
park, waterworks, or water mains, or any... cemetery, sewer, sewer connection or connections, either
on, in, or upon public or private property; x x x."

Undoubtedly, the City is explicitly empowered to close a city street

These are acts... well within the ambit of the power to close a city street. The city council, it would
seem to us, is the authority competent to determine whether or not a certain property is still ne-
cessary for public use.[12]
Such power to vacate a street or alley is discretionary. And the discretion will not ordinarily be
controlled or interfered with by the courts, absent a plain case of abuse or fraud or collusion.

We now take a look at the factors considered by the City Council of Baguio in vacating a portion of
Lapu-Lapu Street. These appear in the resolution (Resolution 215) itself, thus:... hat portion of the
road right-of-way of Lapu-Lapu Street,... does not have much traffic, being in fact a dead-end street...
conversion of this portion of Lapu-Lapu Street into a five-meter alley would neither prejudice nor
damage any person or property

Given the precept that the discretion of a municipal corporation is broad in scope and should thus be
accorded great deference in the spirit of the Local Autonomy Law (R. A. 2264), and absent a clear
abuse of discretion, we hold that the withdrawal for lease of the disputed... portion of Lapu-Lapu
Street and the conversion of the remainder of the dead-end part thereof into an alley, does not call
for, and is beyond the reach of, judicial interference.

Article 422 of the Civil Code indeed provides that property of public... domain, "when no longer
intended for public use or public service, shall form part of the patrimonial property of the State."

There is no doubt that the strip withdrawn from public use and held in private ownership may be
given in lease. For amongst the charter powers given the

City of Baguio (Section 2541, Revised Administrative Code [Charter of the City of Baguio]) is to "lease x
x x real x x x property, for the benefit of the city x... x x."

"The general rule is that one whose property does not abut on the closed section of a street has no
right to compensation for the closing or vacation of the street, if he still has reasonable access to the
general system of... streets.

The circumstances in some cases may be such as to give a right to damages to a property owner,...
Bu... ut to warrant recovery in any such case the property owner must show... that the situation is
such that he has sustained special damages differing in kind, and not merely in degree, from those
sustained by the public generally."

In the case at bar, no private right of appellant has been invaded. No special damage or damages he
will incur by reason of the closing of a portion of Lapu-Lapu Street at its dead end, His property does
not abut that street.

In fact, the court has found that the remaining portion of Lapu-Lapu Street, which actually is 4 meters
in width, is sufficient for the needs of appellant and that the leased portion - subject of this suit - "was
not necessary for public use."