Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 106588 March 24, 1997

RAUL H. SESBREO, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS and THE CITY ASSESSOR OF CEBU
CITY, respondents.

PANGANIBAN, J.:
In resolving the validity of retroactive real estate tax assessments, may the Central Board of
Assessment Appeals and thereafter the Supreme Court take up and consider issues not raised
before the Local Board of Assessment Appeals? For the purpose of assessing back taxes on
real estate, what is the meaning of the phrase "declared for the first time?" Specifically, may
such back taxes be assessed on a property initially declared as a "residential house of strong
materials" after the City Assessor discovered years later that such property was after all a
residential building consisting of four storey with a fifth storey used as roof deck?
These are some of the questions raised in this petition to annul and set aside the
Resolution 1 dated July 28, 1992 of Respondent Central Board of Assessment Appeals 2 in
CBAA Case No. 257.
The Facts
On April 3, 1980, petitioner purchased from Estrella Benedicto Tan two (2) parcels of land
covered by Transfer Certificate of Title No. T-55917 issued by the Register of Deeds of Cebu
City 3 and described in the deed of sale as
follows: 4
A parcel of land (Lot 308 of the Cadastral Survey of Cebu), with the
improvements thereon, situated in the City of Cebu (formerly Municipality of
Cebu), containing an area of Forty Nine (49) square meters, more or less . . . .
A parcel of land (Lot 309 of the Cadastral Survey of Cebu), with the
improvements thereon, situated in the City of Cebu, containing an area of Forty
Eight (48) square meters, more or less . . . .

The conveyance included "a residential house of strong materials constructed on the lots
above-mentioned" 5located in Cebu City.
Thereafter, petitioner declared the real property constructed on the said lots for purpose of tax
assessment as a residential house of strong materials with a floor area of sixty (60) square
meters. Effective in the year 1980, the declared property was assessed by Respondent City
Assessor of Cebu City under Tax Declaration No. 02-20454 at a market value of P60,000.00
and an assessed value of P36,900.00. 6
During a tax-mapping operation conducted in February 1989, the field inspectors of the Cebu
City Assessor discovered that the real property declared and assessed under Tax Declaration
No. 02-20454 was actually a residential building consisting of four (4) storeys with a fifth storey
used as a roof deck. The building had a total floor area of 500.20 square meters. The area for
each floor was 100.04 square meters. The building was found to have been made of Type II-A
materials. On October 17, 1990, these findings were confirmed by the Board of Commissioners
in an ocular inspection conducted on the subject property.
Based on the findings of the field inspectors, Respondent City Assessor of Cebu City issued Tax
Declaration No. GR-06-045-00162 effective in the year 1989, canceling Tax Declaration No. 0220454 and assessing the building therein at a net market value of P499,860.00 and an
assessed value of P374,900.00. The 1981-1984 Schedule of Market Value was applied in the
assessment. 7
Petitioner protested the new assessment for being "excessive and
unconscionable," 8 contending that it was increased by more than 1,000% as compared to its
previous market value of P60,000.00 or assessed value of P36,900.00 under Tax Declaration
No. 02-20454 and "that he bought the building including the lots for only P100,000.00 on April 3,
1980, which amount should be the market value of the building for purposes of determining its
assessed value." 9 He questioned the new assessment before the Local Board of Assessment
Appeals of Cebu City, which however dismissed petitioner's appeal on January 11,
1990. 10 Hence, petitioner elevated his case to Respondent Central Board of Assessment
Appeals.
On September 23, 1991, Respondent CBAA rendered a decision, 11 the dispositive portion of
which reads as follows: 12
WHEREFORE, premises considered, the appealed Resolution is hereby
modified, viz.:
For the purpose of determining the back taxes due on the excess area of subject
building for the years 1981 to June 30, 1987, Respondent-Appellee (Respondent
City Assessor of Cebu) is hereby directed to issue a new tax declaration effective
1981 based on the following assessments:

Type II-A Building (Residential) at

P380.00/sq. m. (Minimum Rate)
Undeclared Unit Value
Excess Area Per Sq. M. Market
Value

S1 (95-60) 35 sq. m. P380.00 P13,300.00
S2 95 sq. m. 380.00 36,100.00
S3 95 sq. m. 380.00 36,100.00
S4 95 sq. m. 380.00 36,100.00
S5 Roof deck 95 sq. m. 30% of 380.00 10,830.00

Total 415 sq. m. P132,430.00

Assessment Level x 45%

Assessed Value P59,593.50

For the purpose of determining the back taxes due on the excess area of subject
building for the years July 1, 1987 to 1989, Respondent-Appellee is hereby
ordered to issue another tax declaration effective July 1, 1987, to supersede the
tax declaration (effective 1981) to be issued above based on the following
assessments:
Type II-A Building (Residential)
at P1,400.00/sq. m. (Minimum Rate)
Undeclared Unit Value
Excess Area Per Sq. M. Market
Value

S1 (95-4) 35 sq. m. P1,400.00 P49,000.00
S2 95 sq. m. 1,400.00 133,000.00
S3 95 sq. m. 1,400.00 133,000.00
S4 95 sq. m. 1,400.00 133,000.00
S5 Roof deck 95 sq. m. 30% of 1,400.00 39,900.00

Total 415 sq. m. P487,900.00
Less: 30 % Depreciation allowance 146,370.00

Net Market Value P341,530.00

Assessment Level x 65%

Assessed Value P221,994.50

Not satisfied, petitioner then filed a motion for reconsideration. During the hearing on said
motion, the parties submitted a joint manifestation or compromise agreement which reads:

13

1. That the revised valuation of the property is P78,330.00 as ASSESSED

VALUE, classifying the property as class II-B at P1,110 per sq. m., the building
having been completed and occupied in 1950 or forty-two (42) years ago;
2. That Section 23 of Presidential Decree No. 464 APPLIES to this case
considering that the appellee has NOT YET SUBMITTED the
required CERTIFICATION to the Secretary of Finance to the effect that
the GENERAL REVISION OF PROPERTY ASSESSMENTS FOR CEBU
CITY HAS BEEN FINISHED. Sec. 23 of P.D. 464 uses the CONJUNCTIVE
WORD "AND" between the phrases: "ASSESSMENTS SHALL BECOME
EFFECTIVE and "TAXES SHALL ACCRUE AND BE PAYABLE."
Thereafter, Respondent CBAA issued the assailed Resolution accepting the joint manifestation
"for whatever purpose it may be worth to the case," raising "no objection to Manifestation No. 1
for being not contrary to law or public policy" but finding that "Manifestation No. 2 has no
bearing on the instant case because Section 25 and not Section 23 of P.D. 464 is the law
applicable
. . . ." 14 The dispositive portion of the now assailed Resolution reads: 15
WHEREFORE, our Decision on (sic) this case is hereby MODIFIED. For
purposes of determining the back taxes due on the excess area of subject
building from 1981 to 1989, Respondent-Appellee Assessor of Cebu City is
hereby ordered to issue
1. Tax Declaration effective 1981 to June 30, 1987, based on the minimum rate
per sq. m. for a Type II-B building, in accordance with the 1978-79 Schedule of
Values;
2. Tax Declaration to supersede Tax Declaration No. 1 to be effective from July 1,
1987 to the year 1988, based on the minimum rate per sq. m. for a Type II-B
building, in accordance with the 1981-1984 Schedule of Values; and
3. Tax Declaration to supersede Tax Declaration No. 2 to take effect in 1989,
based on the revised valuation provided under No. 1 of the Joint Manifestation of
the parties hereof.

The Issues
Disagreeing with the foregoing, petitioner thus filed this "APPEAL BY CERTIORARI" assigning
the following errors allegedly committed by Respondent CBAA: 16
1. Respondent CBAA gravely erred in resolving the matter of back taxes which
was never raised in issue in the Local Board of Assessment Appeals of Cebu City
or in the appeal by the petitioner before the Central Board of Assessment
Appeals (CBAA).
2. Respondent CBAA gravely erred in disregarding the jurisprudence in Reyes
vs. Almanzor 17 , 196 SCRA 328 (should be 322).
3. Respondent CBAA gravely erred in mis-interpreting or mis-applying Section 25
of P.D. 464;
4. Respondent CBAA gravely erred in disregarding or failing or refusing to apply
Section 23 of P.D. 464.
In his Memorandum dated July 23, 1993, petitioner refined the issues as follows: 18
B-1. Whether or not Respondent Central Board of Assessment Appeals erred in
resolving the issue of back taxes from 1981 to 1988 despite the fact that such
issue was not raised in the appeal, under its pretext that it is applying Section 25
of Presidential Decree No. 464.
B-2. Whether or not Respondent Central Board of Assessment Appeals erred in
not strictly applying par. n, Section 3, Presidential Decree No. 464 defining
"market value" as basis for computing the "assessed value";
B-3. Whether or not Respondent Central Board of Assessment Appeals erred in
not strictly applying or refusing to apply Section 23 of Presidential Decree No.
464.
Corollary Issues:
a. Whether or not respondent CBAA's assessment is discriminatory, unjust,
confiscatory and unconstitutional.
b. Whether or not P.D. No. 20, as invoked in the doctrinal jurisprudence of Reyes
vs. Almanzor, 196 SCRA 328, may be applied to the case at bar in relation with
par. n, Sec. 3, P.D. 464 defining "market value" which was cited in the Reyes
vs. Almanzor case (. . . ).
The Court's Ruling

The petition has no merit.

Preliminary Matters
At the outset, it should be emphasized that "appeal by certiorari" or a petition for review under
Rule 45 of the Rules of Court is not the correct remedy in questioning the decisions and
resolutions of the Central Board of Assessment Appeals. Rather, a petition for certiorari under
Rule 65 of the Rules of Court on the ground of grave abuse of discretion should be filed. 19
Moreover, the CBAA decision dared September 30, 1991 and the assailed Resolution dated
July 28, 1992 show that petitioner failed to pay under protest the tax assessed against his
property. This is a violation of Section 64 of Presidential Decree No. 464 20 which requires that,
before a court may entertain any suit assailing the validity of a tax assessment, the taxpayer
must first pay under protest the tax assessed against him. The said section provides:
Sec. 64. Restriction upon power of court to impeach tax. No court shall
entertain any suit assailing the validity of tax assessed under this Code until the
taxpayer shall have paid, under protest, the tax assessed against him nor shall
any court declare any tax invalid by reason of irregularities or informalities in the
proceedings of the officers charged with the assessment or collection of taxes, or
of failure to perform their duties within this time herein specified for their
performance unless such irregularities, informalities or failure shall have impaired
the substantial rights of the taxpayer; nor shall any court declare any portion of
the tax assessed under the provisions of Code invalid except upon condition that
the taxpayer shall pay the just amount of the tax, as determined by the court in
the pending proceeding. (Emphasis supplied)
For the foregoing lapses, if for no other, this case ought to be dismissed. However, there are
other cogent reasons showing that the petition has no merit. These will be shown as we tackle
the various issues raised by petitioner in his memorandum.
Petitioner's First Issue: Propriety of
Raising the Issue of Back Taxes
Petitioner argues that the issue of back taxes has never been raised before the Local Board of
Assessment Appeals or the Central Board of Assessment Appeals. Hence, respondents are
barred by due process and fair play from alleging them before Respondent CBAA and now
before this Court.
As a rule, no issue may be raised on appeal unless it has been brought before the lower tribunal
for its consideration. 21 The Court has held in several cases, however, that an appellate court
has an inherent authority to review unassigned errors (1) which are closely related to an error
properly raised, or (2) upon which the determination of the error properly assigned is dependent,
or (3) where the Court finds that consideration of them is necessary in arriving at a just decision
of the case.

Thus:
. . . . In line with the modern trends of procedure, we are told that, "while an
assignment of error which is required by law or rule of court has been held
essential to appellate review, and only those assigned will be considered, there
are a number of cases which appear to accord to the appellate court a broad
discretionary power to waive the lack of proper assignment of errors and
consider errors not assigned. And an unassigned error closely related to the error
properly assigned, or upon which the determination of the question raised by the
error properly assigned is dependent, will be considered by the appellate court
notwithstanding the failure to assign it as error. (4 C.J.S., 1734; 3 C.J., 1341,
footnote 77). 22
At any rate, the Court is clothed with ample authority to review matters, even if
they are not assigned as errors in their appeal, if it finds that their consideration is
necessary in arriving at a just decision of the case . . . 23
Although the foregoing citations specifically referred to "appellate courts," there appears no
reason why these should not apply to appellate administrative agencies, where rules of
procedure are liberally construed.
In the present case, we hold that Respondent CBAA did not err in considering the issue of back
taxes, the same being closely related to an error properly raised. Petitioner himself assailed the
subject assessment before the Respondent CBAA for being "excessive and unconscionable." In
resolving this issue, Respondent CBAA was duty-bound to review the factual antecedents of the
case and to apply thereon the pertinent provisions of law. In the process, Respondent CBAA
applied Section 25 of PD 464 which had authorized the imposition of back taxes. In any event,
consideration of the question of the back taxes is essential to a just decision on the case, as will
be shown below.
Second Issue: Applicability
of Section 24, PD 464
Arguing that he should not be liable for back taxes, petitioner states that Respondent CBAA
should have applied Section 24, instead of Section 25, of PD 464. These statutory provisions
read:
Sec. 24. Date of effectivity of Assessment or Reassessment. All assessments
or reassessments made after the first day of January of any year shall take effect
on the first day of January of the succeeding year: Provided, however, That the
reassessment of real property due to its (1) partial or total destruction, or to (2) a
major change in its actual use, or to any (3) great and sudden inflation or
deflation of real property values, (4) or to the gross illegality of the assessment
when made or to any other abnormal cause, shall be made within ninety days

from the date any such cause or causes occurred, the same to take effect at the
beginning of the quarter next following the reassessment.
Sec. 25. Assessment of Property Subject to Back Taxes. Real property
declared for the first time shall have back taxes assessed against it for the period
during which it would have been liable if assessed from the first in proper course
but in no case for more than ten years prior to the year of initial
assessment; Provided, however, that the back taxes shall be computed on the
basis of the applicable schedule of values in force during the corresponding
period.
If said taxes are paid before the expiration of the tax collection period next
ensuing, no penalty for delinquency shall be imposed, otherwise the taxes shall
be subject to all the penalties to which they would have been liable had they
originally become delinquent after assessment of the property in the usual
course.
Opposing the application of Section 25 of PD 464, petitioner posits that Respondent CBAA
"misread or misinterpreted" the same, specifically the phrases therein referring to "property
declared for the first time" and "prior to the year of initial assessment" 24 Without expressly
stating so, petitioner purports to argue that Section 25 is inapplicable because the property in
question has been declared for assessment as early as 1980 (and even before that, by the prior
owner), and not "for the first time" in 1989.
Petitioner's argument is not novel. In Lopez vs. Crow 25 which involved the interpretation of
Section 12 26 of Act 2238, a provision similar to Section 25 of PD 464, the Court rejected a
parallel argument that the said provision "refers solely to real estate declared for the first time
and does not apply to the area which, upon revision, has been shown to be in excess of that
which was formerly declared." 27 The Court held that the area in excess of that declared by the
taxpayer was deemed declared for the first time upon its discovery. It ratiocinated thus: 28
. . . it is neither just that another landowner should be permitted by an involuntary
mistake or through other causes, not to say bad faith, to state an area far less
than that actually contained in his land and pay to the State a tax far below that
which he should really pay. This was one of the objects of the Legislature in
ordering the revision, so that all real estate should pay the taxes that legally must
accrue to the State. Wherefore, even taking the Spanish text of the phrase in
(S)ection 12 of Act No. 2238 that "real property declared for the first time shall
have taxes assessed against it, etc.," it should not be understood to apply only to
real estate that have (sic) never been declared; as within the meaning of such
phrase, the excess areas resulting from the revision must be understood as
never having been declared before; because only that area must be deemed as
declared which is stated in the declaration sheet, and the area over and above
that can not be considered as ever having been declared. (Emphasis supplied).

Section 24 merely lays down the general rule that assessments under PD 464 are to be given
prospective application. It cannot be construed in such a manner as to eliminate the imposition
of back taxes. If Section 24, instead of Section 25, were made to apply as suggested by
petitioner, he would in effect be excused from the payment of back taxes on the undeclared
excess area of his property. The Court, clearly, cannot allow a taxpayer evade his obligation to
the government by letting him pay taxes on property based on its gross undervaluation at
P60,000.00, when the same had then a current market value of P449,860.00.
Accepting the petitioner's position will necessarily prejudice the public interest, for the
government is thereby deprived of back taxes which ought to have been paid in the first place.
This will certainly subvert the raison d'etreof the law which is to raise taxes, the lifeblood of the
government. This cannot be allowed, for 29
. . . it is another well-established rule of statutory construction that where great
inconvenience will result from a particular construction, or great public interests
would be endangered or sacrificed, or great mischief done, such construction is
to be avoided, or the court ought to presume that such construction was not
intended by the makers of the law, unless required by clear and unequivocal
words. (25 R.C.L., pp. 1025-1027).
Furthermore, if Section 24 is the only applicable provision in cases where a taxpayer has eluded
the payment of the correct amount of taxes for more than nine (9) years, as in this case, Section
25 of PD 464 which requires the payment of back taxes will be rendered superfluous and
nugatory. Such interpretation could not have been intended by the law. It is a familiar rule in
statutory construction that "(t)he legal provision being therefore susceptible of two
interpretations, we adopt the one in consonance with the presumed intention of the legislature to
give its enactments the most reasonable and beneficial construction, the one that will render
them operative and effective and harmonious with other provisions of law." 30
Third Issue: Applicability
of Par. N, Section 3, PD 464
Petitioner insists that Respondent CBAA should have computed the assessed value of the
property based on its market value as defined in paragraph n, Section 3 of PD 464, to wit:
n) Market Value is defined as "the highest price estimated in terms of money
which the property will buy if exposed for sale in the open market allowing a
reasonable time to find a purchaser who buys with knowledge of all uses to
which it is adapted and for which it is capable of being used." It is also referred to
as "the price at which a willing seller would sell and a willing buyer would buy,
neither being under abnormal pressure.
We cannot sustain petitioner's contention. The cited provision merely defines "market value." It
does not in any way direct that the market value as defined therein should be used as basis in
determining the value of a property for purposes of real property taxation. On the other hand,

Section 5 of PD 464 provides unequivocally that "(a)ll real property, whether taxable or exempt,
shall be appraised at the current and fair market value prevailing in the locality where the
property is situated." 31
Contrary to petitioner's contention, acquisition cost cannot be and is not the sole basis of the
current and fair market value of a property. The current value of like properties and their actual
or potential uses, among others, are also considered. Thus, it has been held:
. . . (A)ssessors, in fixing the value of property, have to consider all the
circumstances and elements of value, and must exercise a prudent discretion in
reaching conclusions. Courts, therefore, will not presume to interfere with the
intelligent exercise of the judgment of men specially trained in appraising
property. Where, as the Supreme Court of Louisiana says, (when) the judicial
mind is left in doubt, it is a sound rule to leave the assessment undisturbed.
(Viuda e Hijos de Pedro P. Roxas vs. Rafferty [1918], 37 Phil., 957; New Orleans
Cotton Exchange vs. Board of Assessors, supra.) 32
Other circumstances militate against the acceptance of petitioner's argument. Unscrupulous
sellers of real estate often understate the selling price in the deed of sale to minimize their tax
liability. Moreover, the value of real property does not remain stagnant; it is unrealistic to expect
that the current market value of a property is the same as its cost of acquisition ten years ago.
In this light, a general revision of real property assessment is required by law every five (5)
years 33 to ensure that real properties are assessed at their current and fair market values.
Petitioner also argues that "the number of stories that a building has or its floor area are
irrelevant, immaterial or impertinent in the determination of market value as basis for computing
the assessed value."
This deserves scant consideration. It is a matter of plain common sense that a building with
more floors has a higher market value than one with fewer floors, provided that both are of the
same materials. Hence, the tax declaration of the building in question should have accurately
reflected its actual area and number of floors, these being necessary for the accurate valuation
thereof.
Petitioner's Fourth Issue: Application of
Section 23 of PD 464
Petitioner argues that the CBAA erred in refusing to apply Section 23 of PD 464 which provides:
Sec. 23. Certification of Revised Values to the Secretary of Finance. When the
provincial or city assessor shall have finished a general revision of property
assessments for any province, municipality or city, he shall so certify to the
Secretary of Finance and the assessments shall become effective and taxes
shall accrue and be payable thereunder in accordance with the provisions of this
Code.

Petitioner claims that Respondent City Assessor of Cebu City has not yet completed the general
revision of property assessments for years 1981-1984 and has not yet submitted the
certification required by Section 23 of PD 464 to the Secretary of Finance; hence, he may not
yet be held liable to pay any
assessment. 34
This claim lacks merit. As found by Respondent CBAA, 35 the questioned assessment had not
been imposed pursuant to a general revision of property assessments that had not yet taken
effect. Respondent CBAA held:
(F)or purposes of determining the back taxes due for the years 1981 to June 30,
1987, the excess area of subject building should be assessed on the basis of the
Schedule of Base Unit Construction Costs for Buildings applicable for the 19781979 General Revision. The tax declaration covering the said assessment
became effective in 1981. To determine the back taxes due for the years July 1,
1987 to 1989, the same excess area should be assessed using the 1981-1984
Schedule of Base Unit Construction Costs of Buildings. The 1981-1984 Schedule
of Values were approved by the Secretary (Minister) of Finance on May 22, 1984
(Exh. "17") and became finally effective on July 1, 1987 (See Memorandum
Circular No. 77 dated March 1, 1987). The tax declaration covering the aforesaid
assessment became effective on July 1, 1987. 36
Petitioner, for his part, has failed to prove that this finding constitutes a grave abuse of discretion
tantamount to lack or excess of jurisdiction.
Sub-Issue: Is CBAA's Assessment
Unconstitutional?
Equally unmeritorious is petitioner's contention that the imposition of back taxes on his property
is unconstitutional for being violative of Section 22, 37 Article III of the 1987 Constitution.
When both Public Respondents CBAA and City Assessor imposed back taxes on petitioner's
property, they did not violate the rule that laws shall have only prospective applicability.
Respondents were only applying PD 464 which had been in effect since 1974. Besides, Section
25 of PD 464 is not penal in character; hence, it may not be considered as an ex post
facto law. 38
Sub Issue: Application of
Reyes Vs. Almanzor
Petitioner also claims that the assessed building is covered by PD 20; 39 thus the assessor
should have used the "income approach," as enunciated in Reyes vs. Almanzor, 40 in fixing the
valuation of the property, instead of the "comparable sales approach." To prove that his property
was covered by PD 20, petitioner submitted as annexes to his instant petition several
documents consisting of official receipts of lease rentals. 41

The submission of these documents before us cannot establish that his property is covered by
PD No. 20. The documents were never presented as documentary exhibits before the City
Assessor of Cebu City, Local Board of Assessment Appeal or CBAA. This Court, not being a
trier of facts, cannot consider these alleged evidence submitted for the first time in this special
civil action.
WHEREFORE, premises considered, the petition is DISMISSED and the assailed Resolution is
AFFIRMED. Costs against petitioner.
SO ORDERED.

__________________________________________________________________
__________________________________________________________________

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 108619 July 31, 1997

EPIFANIO LALICAN, petitioner,
vs.
HON. FILOMENO A. VERGARA, Presiding Judge, RTC Branch 52, Puerto Princesa City
and PEOPLE OF THE PHILIPPINES, respondents.

ROMERO, J.:
The issue posed for resolution in this petition for certiorari and prohibition with prayer for the
issuance of a temporary restraining order is whether or not a charge of illegal possession of
"lumber" is excluded from the crime of illegal possession of "timber" as defined in Sec. 68 of
Presidential Decree No. 705 (The Forestry Reform Code of the Philippines), as amended, to
warrant the quashal of an information charging the former offense or a "nonexistent crime."
On July 23, 1991, an information for violation of Section 68 of P.D. No. 705, as amended by
Executive Order No. 277, was filed by the City Prosecutor of Puerto Princesa City against

petitioner Epifanio Lalican, 1 Ruben Benitez, Allan Pulgar and Jose Roblo before the Regional
Trial Court of that city. Docketed as Criminal Case No. 9543, the information reads:
That on or about the 9th day of February, 1991, at Sitio Cadiz, Barangay
Bacungan, City of Puerto Princesa, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, without lawful authority or permit,
conspiring and confederating together and mutually helping one another, did then
and there willfully, unlawfully and feloniously have in their possession, custody
and control 1,800 board feet of assorted species and dimensions of lumber on
board two (2) passenger jeeps, with a value of Fourteen Thousand Pesos
(P14,000.00), Philippine Currency, to the damage and prejudice of the
Government in the amount aforestated.
CONTRARY TO LAW.
At their arraignment on August 9, 1991, all the accused pleaded not guilty to the crime charged.
On August 23, 1991, petitioner Lalican filed a motion to quash the information on the ground
that the facts charged did not constitute an offense. Contending that Sec. 68 of P.D. No. 705
refers to "timber and other forest products" and not to "lumber," and asserting that "timber"
becomes "lumber" only after it is sawed into beams, planks or boards, petitioner alleged that
said decree "does not apply to 'lumber.'" He added that the law is "vague and standardless" as it
does not specify the authority or the legal documents required by existing forest laws and
regulations. Hence, petitioner asserted that the information should be quashed as it violated his
constitutional rights to due process and equal protection of the law. 2
The prosecution opposed the motion to quash on the ground that it is not for the courts to
determine the wisdom of the law nor to set out the policy of the legislature which deemed it
proper that the word "timber" should include "lumber" which is a "product or derivative after the
timber is cut." The position of the prosecution was that to hold otherwise would result in the easy
circumvention of the law, for one could stealthily cut timber from any forest, have it sawn into
lumber and escape criminal prosecution. The prosecution asserted that the issue raised by
petitioner was more semantical than a question of law. 3
On September 24, 1991, the lower court, 4 guided by the principles that penal laws should be
construed strictly against the state and that all doubts should be resolved in favor of the
accused, issued an order quashing the information. It held that the distinction between "timber"
and "lumber" is not artificial nor a matter of semantics as the law itself distinguishes the two
terms. Sec. 3(q) of P.D. No. 705 classifies "timber" as a forest product while Sec. 3(aa) thereof
considers "lumber" as a finished wood product. Adding that unlicensed cutting, gathering and/or
collecting of "timber" is penalized under Sec. 68 while sale of "lumber" without compliance with
grading rules established by the government is prohibited by Sec. 79, the lower court
categorically stated that:

Logically, lumber, being a manufactured wood product, poses no more danger to

forest lands by being cut, gathered, collected or removed. It is in fact, only bought
and sold. Thus, Sec. 68 cannot be made to apply to lumber.
The court, however, refrained from exploring the constitutional issues raised by petitioner upon
a holding that the case could be resolved on some other grounds or issues. 5
The prosecution filed a motion for the reconsideration of this Order, pointing out that under the
Primer on Illegal Logging of the Department of Energy and Natural Resources (DENR), timber is
not just any piece of wood for it may consist of squared and manufactured timber or one which
has been sawn to pieces to facilitate transportation or hauling. It stressed that to consider a
person who had made lumber out of timber as not criminally liable is an absurd interpretation of
the law.
Moreover, the prosecution underscored the facts that when apprehended, the accused
presented Private Land Timber Permit No. 030140 dated February 10, 1991 which had expired;
that while the certificate of origin indicated Brgy. Sta. Cruz, the product actually came from Sitio
Cadiz, and that the two jeeps bearing the product were not equipped with certificates of
transport agreement. Added to this was the fact that, if the product were indeed lumber, then the
accused could have presented a certificate of lumber origin, lumber sale invoices in case of
sale, tally sheets and delivery receipts for transportation from one point to another. 6
Petitioner opposed the motion for reconsideration contending that the DENR primer's definition
of "timber" is erroneous because the law itself distinguishes "timber" from "sawn lumber." The
non-inclusion of "lumber" in Sec. 68 could only mean a clear legislative intent to exclude
possession of "lumber" from the acts penalized under that section. 7
Pending resolution of the motion for reconsideration, the Presiding Judge of Branch 49 inhibited
himself from taking cognizance of Criminal Case No. 9543. The case was subsequently
assigned to Branch 52.
On June 10, 1992, the lower court 8 issued the herein questioned order setting aside the quashal
Order of the previous judge. It declared that from the law itself, it is evident that what is sought
to be penalized is not the possession, without the required legal documents, of timber only but
also of "other forest products." It stated that even if lumber is not timber, still, lumber is a forest
product and possession thereof without legal documents is equally prohibited by the law which
includes "wood" in the definition of forest products.
Petitioner sought the reconsideration of this Order but the lower court denied it. Hence, the
instant petition arguing that the lower court gravely abused its discretion amounting to lack of
jurisdiction in setting aside the quashal order and in denying his motion for reconsideration on
the ground that Sec. 68 of P.D. No. 705 neither specifies nor includes "lumber" in the phrase
"timber or other forest products."
The petition is devoid of merit.

Sec. 68 of P.D. No. 705, as amended by Executive Order No. 277 which was issued on July 25,
1987 by then President Corazon C. Aquino, provides:
Sec. 68. Cutting, Gathering and/or collecting Timber, or Other Forest Products
Without License. Any person who shall cut, gather, collect, remove timber or
other forest products from any forest land, or timber from alienable or disposable
public land, or from private land, without any authority, or possess timber or other
forest products without the legal documents as required under existing forest
laws and regulations, shall be punished with the penalties imposed under Articles
309 and 310 of the Revised Penal Code: Provided, That in the case of
partnerships, associations, or corporations, the officers who ordered the cutting,
gathering, collection or possession shall be liable, and if such officers are aliens,
they shall, in addition to the penalty, be deported without further proceedings on
the part of the Commission on Immigration and Deportation.
The Court shall further order the confiscation in favor of the government of the
timber or any forest products cut, gathered, collected, removed, or possessed, as
well as the machinery, equipment, implements and tools illegally used in the area
where the timber or forest products are found. (Emphasis supplied.)
Punished then in this section are: (a) the cutting, gathering, collection, or removal of timber or
other forest products from the places therein mentioned without any authority; or (b) possession
of timber or other forest products without the legal documents as required under existing forest
laws and regulations.
In the recent case of Mustang, Lumber, Inc. v. Court of Appeals 9 this Court, thru Justice Hilario
Davide, held:
The Revised Forestry Code contains no definition of either timber or lumber.
While the former is included in forest products as defined in paragraph (q) of
Section 3, the latter is found in paragraph (aa) of the same section in the
definition of "Processing plant," which reads:
(aa) Processing plant is any mechanical set-up, machine or combination of
machine used for the processing of logs and other forest raw materials
into lumber, veneer, plywood, wallboard, blockboard, paper board, pulp, paper or
other finished wood product.
This simply means that lumber is a processed log or processed forest raw
material. Clearly, the Code uses the term lumber in its ordinary or common
usage. In the 1993 copyright edition of Webster's Third New International
Dictionary, lumber is defined, inter alia, as "timber or logs after being prepared for
the market ." Simply put , lumber is a processed log or timber.

It is settled that in the absence of legislative intent to the contrary, words and
phrases used in a statute should be given their plain, ordinary, and common
usage meaning. And insofar as possession of timber without the required legal
documents is concerned, Section 68 of P.D. No. 705, as amended, makes no
distinction between raw or processed timber. Neither should we. Ubi lex non
distinguit nec nos distinguere debemus.
Be that as it may, the legislative intent to include possession of lumber in Sec. 68 is clearly
gleaned from the expressed reasons for enacting the law which, under Executive Order No.
277, are the following:
WHEREAS, there is an urgency to conserve the remaining forest resources of
the country for the benefit and welfare of the present and future generations of
Filipinos;
WHEREAS, our forest resources may be effectively conserved and protected
through the vigilant enforcement and implementation of our forestry laws, rules
and regulations;
WHEREAS, the implementation of our forestry laws suffers from technical
difficulties, due to certain inadequacies in the penal provisions of the Revised
Forestry Code of the Philippines; and
WHEREAS, to overcome these difficulties, there is a need to penalize certain
acts to make our forestry laws more responsive to present situations and
realities; . . .
To exclude possession of "lumber" from the acts penalized in Sec. 68 would certainly
emasculate the law itself. A law should not be so construed as to allow the doing of an act which
is prohibited by law, nor so interpreted as to afford an opportunity to defeat compliance with its
terms, create an inconsistency, or contravene the plain words of the law. 10 After all, the phrase
"forest products" is broad enough to encompass lumber which, to reiterate, is manufactured
timber. Hence, to mention lumber in Sec. 68 would merely result in tautology. As the lower court
said:
Even should it be conceded that lumber is not timber and is thus not covered by
the prohibition, still it cannot be denied that lumber is a forest product and
possession thereof without legal documents is equally and, to the same extent,
prohibited. Sec. 3(q) of PD 705 as amended or otherwise known as the Revised
Forestry Code defines forest products, viz., . . .
Stress must be given to the term WOOD embodied in the definition of forest
product (supra). If we are to follow the rather tangential argument by the accused
that lumber is not timber, then, it will be very easy for a person to circumvent the
law. He could stealthily cut timber from any forest, have it sawn into lumber and

escape criminal prosecution. It is rather too narrow an interpretation. But the law
also provided a plug for the loophole. If lumber is not timber, then surely, lumber
is wood. . . . .
If in seeking to abate the proceedings the accused also seek to imply that lumber
seized in their possession were procured from lawful source, all they have to do
is produce the legal documents contemplated by the law. It is not the mere
cutting or possession of timber, forest products or whatever that is prohibited and
penalized by the law. What is prohibited and penalized is the act of cutting or
possessing of timber, wood, or other forest products without lawful authority.
The Court, therefore, finds that the lower court did not gravely abuse its discretion in denying
the quashal of the information. The petition simply has no legal basis. Certiorari may be issued
only where it is clearly shown that there is patent and gross abuse of discretion as to amount to
an evasion of positive duty or to virtual refusal to perform a duty enjoined by law, or to act at all
in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by
reason of passion or personal hostility. 11 Grave abuse of discretion implies a capricious and
whimsical exercise of power. 12
On the other hand, certiorari may not be availed of where it is not shown that the respondent
court lacked or exceeded its jurisdiction or committed grave abuse of discretion. 13 Where the
court has jurisdiction over the case, even if its findings are not correct, its questioned acts would
at most constitute errors of law and not abuse of discretion correctible by certiorari. 14 As this
Court said:
. . . When a court exercises its jurisdiction, an error committed while so engaged
does not deprive it of the jurisdiction being exercised when the error is
committed. If it did, every error committed by a court would deprive it of its
jurisdiction and every erroneous judgment would be a void judgment. This cannot
be allowed. The administration of justice would not survive such a rule.
Consequently, an error of judgment that the court may commit in the exercise of
its jurisdiction is not correctible through the original civil action of certiorari. 15
In other words, certiorari will issue only to correct errors of jurisdiction and not to correct
errors of procedure or mistakes in the judge's findings and conclusions. 16
The unavailability of the writ of certiorari, and even that of prohibition, in this case is borne out of
the fact that what petitioner considers as grave abuse of discretion in this case is the denial of
his motion to quash the information filed against him and three others. This Court has
consistently defined the proper procedure in case of denial of a motion to quash. The accused
has to enter a plea, go to trial without prejudice on his part to present the special defenses he
had invoked in his motion and, if after trial on the merits, an adverse decision is rendered, to
appeal therefrom in the manner authorized by law. 17

Certiorari is not the proper remedy where a motion to quash an information is denied. That the
appropriate recourse is to proceed to trial and in case of conviction, to appeal such conviction,
as well as the denial of the motion to quash, is impelled by the fact that a denial of a motion to
quash is an interlocutory procedural aspect which cannot be appealed nor can it be the subject
of a petition for certiorari. 18 The remedies of appeal and certiorari are mutually exclusive and
not alternative or successive. 19 An interlocutory order may be assailed by certiorari or
prohibition only when it is shown that the court acted without or in excess of jurisdiction or with
grave abuse of discretion. 20However, this Court generally frowns upon this remedial measure
as regards interlocutory orders. To tolerate the practice of allowing interlocutory orders to be the
subject of review by certiorari would not only delay the administration of justice but also would
unduly burden the courts. 21
Petitioner may not seek refuge under Flordelis v. Himalaloan 22 for his contention that a denial of
a motion to quash may be the subject of a petition for certiorari. That case has an entirely
different factual milieu from the one at bar. The information herein not being "patently defective"
nor that the offense charged has prescribed, 23 this case may not be considered an exception to
the rule on the proper remedy for the denial of a motion to quash.
With respect to the constitutionality of Sec. 68 of P.D. No. 705 which petitioner would have this
Court consider, 24this Court has always desisted from delving on constitutional issues. Thus,
even if all the requisites for judicial review of a constitutional matter are present in a case, 25 this
Court will not pass upon a constitutional question unless it is the lis motaof the case or if the
case can be disposed of on some other grounds, such as the application of the statute or
general law. 26
The Court can well take judicial notice of the deplorable problem of deforestation in this country,
considering that the deleterious effects of this problem are now imperiling our lives and
properties, more specifically, by causing rampaging floods in the lowlands. While it is true that
the rights of an accused must be favored in the interpretation of penal provisions of law, it is
equally true that when the general welfare and interest of the people are interwoven in the
prosecution of a crime, the Court must arrive at a solution only after a fair and just balancing of
interests. This the Court did in arriving at the foregoing interpretation of Sec. 68 of the Revised
Forestry Reform Code. This task, however, has not at all been a difficult one considering that,
contrary to petitioner's assertion, his rights to due process and equal protection of the law have
not been clearly shown to have been jeopardized.
WHEREFORE, the instant petition for certiorari and prohibition is hereby DISMISSED. The
lower court is enjoined to proceed with dispatch in the prosecution of Criminal Case No. 9543.
This Decision is immediately executory. Costs against, petitioner.
SO ORDERED.

__________________________________________________________________
__________________________________________________________________

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-14859

March 31, 1962

MACARIO KING, ET AL., petitioners-appellees,

vs.
PEDRO S. HERNAEZ, ETC., ET AL., respondents-appellants.
Sycip, Salazar and Associates for petitioners-appellees.
Office of the Solicitor General for respondents-appellants.
BAUTISTA ANGELO, J.:
On January 1, 1957, Macario King, a naturalized Filipino citizen, became the owner of the
business establishment known as "Import Meat and Produce", a grocery wholesale and retail
business, previously owned by the Philippine Cold Stores, Inc. In the business 15 persons were
employed 12 of whom are Filipinos and the other 3 Chinese. The three Chinese were old
employees of the previous owner, the Philippine Cold Stores, Inc., one having been employed
as purchaser and the other two as salesmen.
Three weeks after King had acquired the business as aforesaid, he sought permission from the
President of the Philippines to retain the services of the three Chinese employees pursuant to
Section 2-A of Commonwealth Act 108, coursing his letter thru the Secretary of Commerce and
Industry. This official recommended to the President the disapproval of King's request on the
ground that aliens may not be appointed to operate or administer a retail business under
Section 1 of Republic Act No. 1180 which requires that its capital be wholly owned by citizens of
the Philippines, the only exception thereto being the employment of technical personnel which
may be allowed after securing to that effect an authorization from the President. The President
approved the recommendation of the Secretary of Commerce and Industry since the positions
of purchaser and salesmen occupied by the three Chinese employees are not technical
positions within the meaning of Section 2-A of Commonwealth Act 108, as amended by
Republic Act No. 134.
As a result of such adverse ruling, Macario King and his three Chinese employees filed a
petition for declaratory relief, injunction and mandamus on August 25, 1958 against the

Secretary of Commerce and Industry and the Executive Secretary before the Court of First
Instance of Manila praying that they be given relief because they are "uncertain and in doubt as
to their rights and duties under Republic Act No. 1180 and Commonwealth Act No. 108, as
amended by Republic Act No. 134, in view of the aforesaid rulings of the Department of
Commerce and Industry and of the Executive Secretary." They alleged that said rulings are
illegal in view of the respective situations and positions of petitioners in the retail establishment,
the purpose and language of the laws abovementioned, and the constitutional guarantee of the
rights of an employer to employ and of an employee to work accorded to citizens and aliens
alike. The lower court issued a writ of preliminary injunction ex parte upon petitioners' filing a
bond in the amount of P5,000.00.
1wph1.t

Respondents filed an answer setting up certain affirmative and special defenses tending to
show that the petition does not allege facts sufficient to constitute a cause of action. With regard
to the declaratory relief, respondents claim that such remedy is not available to petitioners
because they have already committed a breach of the statute which is apparent on the face of
the petition, meaning that the employment of the three Chinese as salesmen and purchaser in
the store of Macario King is a violation of the Section 1 of the Retail Trade Act which provides
that only citizens of the Philippines can engage in retail trade, as well as of Section 2-A of the
Anti-Dummy Law which prohibits Chinese citizens to intervene in the management, operation,
administration or control of such business, whether as an officer, employee or laborer with or
without remuneration. Respondents further claim that the three Chinese employees are not
technical men who are exempted from the operation of the law, and even if they are, they need
the authorization of the President which they failed to obtain in their case.
With regard to the petition for preliminary injunction, respondents contend that the requisites for
its issuance have not been satisfied. And with regard to the petition for mandamus, respondents
alleged that petitioners have failed to show that respondents have unlawfully neglected any duty
which they are called upon to perform and which would make them liable for such relief. Hence,
respondents prayed that the petition be dismissed and that the writ of preliminary injunction
issued by the court ex parte be lifted.
To this answer, petitioners filed a reply, which was followed by a rejoinder and sur-rejoinder, with
a detailed discussion of the arguments advanced in support thereof. And because the motion to
dismiss filed by respondents had been denied for lack of merit, trial proceeded, after which the
lower court entered judgment holding "that petitioner Macario King may employ any person,
although not a citizen of the Philippines or of the United States of America, including the three
petitioners herein as purchaser and salesmen, in any position in his retail business not involving
participation, or intervention in the management, operation, administration or control of said
business; that petitioners Lim Pin, Chang Pak and Ng See Keng are entitled to continue as
purchaser and salesmen, respectively, in Macario King's Import Meat and Produce or in any
other retail establishment; that the writ of preliminary injunction issued against respondents
ordering the to desist from interfering by criminal and/or administrative action with the rights of
the petitioners as above defined, is hereby declared final; and, finally, respondents are hereby

ordered to allow and permit petitioners to enjoy and exercise their rights in the manner and to
the extent aforestated." Respondents took the present appeal before this Court.
The center of controversy between petitioners-appellees and respondents-appellants hinges on
the interpretation be given to Section 1, Republic Act No. 1180, in relation to Section 2-A,
Commonwealth Act 108, as amended by Republic Act No. 134. For ready reference we quote
the pertinent provisions: .
SECTION 1. No person who is not a citizen of the Philippines, and no association,
partnership, or corporation the capital of which is not wholly owned by citizens of the
Philippines, shall engage directly or indirectly in the retail business: ... (Emphasis
supplied) .
SEC. 2-A. Any person, corporation, or association which, having in its name or under its
control, a right, franchise, privilege, property or business, the exercise or enjoyment of
which is expressly reserved by the Constitution or the laws to citizens of the Philippines,
or of any other specific country, or to corporations or associations at least sixty per
centum of the capital of which is owned by such citizens, permits or allows the use,
exploitation or enjoyment thereof by a person, corporation or association not possessing
the requisites prescribed by the Constitution or the laws of the Philippines; or leases, or
in any other way transfers or conveys said right, franchise, privilege, property or
business to a person, corporation or association not otherwise qualified under the
Constitution, or the provisions of the existing laws; or in any manner permits or allows
any person, not possessing the qualifications required by the Constitution or existing
laws to acquire, use, exploit or enjoy a right, franchise, privilege, property or business,
the exercise and enjoyment of which are expressly reserved by the Constitution or
existing laws to citizens of the Philippines or of any other specific country, to intervene in
the management, operation, administration or control thereof, whether as an officer,
employee or laborer therein, with or without remuneration except technical personnel
whose employment may be specifically authorized by the President of the Philippines
upon recommendation of the Department Head concerned.... (emphasis supplied) .
With regard to the Retail Trade Law, this Court had already occasion to rule on its
constitutionality. We held that the same is valid and that its purpose is to completely nationalize
the retail trade in the Philippines. In other words, its primordial purpose is to confine the privilege
to engage in retail trade to Filipino citizens by prohibiting any person who is not a Filipino citizen
or any entity whose capital is not wholly owned by citizens of the Philippines from engaging,
directly or indirectly, in the retail business. The nationalization of retail trade is, therefore,
complete in the sense that it must be wholly owned by a Filipino citizen or Filipino controlled
entity in order that it may be licensed to operate. The law seeks a complete ban to aliens who
may not engage in it directly or indirectly. And the reasons behind such ban are the pernicious
and intolerable practices of alien retailers who in the past have either individually or in organized
groups contrived in many dubious ways to control the trade and dominate the distribution of
goods vital to the life of our people thereby resulting not only in the increasing dominance of

alien control in retail trade but at times in the strangle hold on our economic life. These reasons
were well expressed by Mr. Justice Labrador in the following wise: .
"But the dangers arising from alien participation in the retail trade does not seem to lie in
the predominance alone; there is a prevailing feeling that such predominance may truly
endanger the national interest. With ample capital, unity of purpose and action and
thorough organization, alien retailers and merchants can act in such complete unison
and concert on such vital matters as the fixing of prices, the determination of the amount
of goods or articles to be made available in the market, and even the choice of the
goods or articles they would or would not patronize or distribute, that fears of dislocation
of the national economy and of the complete subservience of national retailers and of
the producers and consumers alike, can be placed completely at their mercy...
"... Grave abuses have characterized the exercise of the retail trade by aliens. It is a fact
within judicial notice, which courts of justice may not properly overlook or ignore in the
interests of truth and justice, that there exists a general feeling on the part of the public
that alien participation in the retail trade has been attended by a pernicious and
intolerable practices, the mention of a few of which would suffice for our purposes; that
at some time or other they have cornered the market of essential commodities, like corn
and rice, creating artificial scarcities to justify and enhance profits to unreasonable
proportions; that they have hoarded essential foods to the inconvenience and prejudice
of the consuming public, so much so that the Government has had to establish the
National Rice and Corn Corporation to save the public from their continuous hoarding
practices and tendencies; that they have violated price control laws, especially on foods
and essential commodities, such that the legislature had to enact a law (Sec. 9, Republic
Act No. 1168), authorizing their immediate and automatic deportation for price control
convictions; that they have secret combinations among themselves to control prices,
cheating the operation of the law of supply and demand; that they have connived to
boycott honest merchants and traders who would not cater or yield to their demands, in
unlawful restraint of freedom of trade and enterprise. They are believed by the public to
have evaded tax laws, smuggled goods and money into and out of the land, violated
import and export prohibitions, control laws and the like, in derision and contempt of
lawful authority. It is also believed that they have engaged in corrupting public officials
with fabulous bribes, indirectly causing the prevalence of graft and corruption in the
Government. As a matter of fact appeals to unscrupulous aliens have been made both
by the Government and by their own lawful diplomatic representatives, action which
impliedly admits a prevailing feeling about the existence of many of the above practices.
The circumstances above set forth create well founded fears that worse things may
come in the future. The present dominance of the alien retailer, especially in the big
centers of population, therefore, becomes a potential source of danger on occasions of
war or other calamity. We do not have here in this country isolated groups of harmless
aliens retailing goods among nationals; what we have are well organized and powerful
groups that dominate the distribution of goods and commodities in the communities and

big centers of population. They owe no allegiance or loyalty to the State, and the State
cannot rely upon them in times of crisis or emergency. While the national holds his life,
his person and his property subject to the needs of his country, the alien may even
become the potential enemy of the State. (Lao H. Ichong v. Hernandez, et al., G.R. No.
L-7995, May 31, 1957).
The purpose of the enactment of the Retail Trade Law, therefore, is clear. As expressed by this
Court, it is to translate the general preoccupation of the Filipinos against the threat and danger
to our national economy caused by alien dominance and control of the retail business by
weeding out such threat and danger and thus prevent aliens from having a strangle hold upon
our economic life. But in so doing the legislature did not intend to deprive aliens of their means
of livelihood. This is clearly pointed out in the explanatory note of the law: .
This bill proposes to regulate the retail business. Its purpose is to prevent persons who
are not citizens of the Philippines from having a strangle hold upon our economic life. If
the persons who control this vital artery of our economic life are those who owe no
allegiance to this Republic, who have no profound devotion to our free institutions and
who have no permanent state in our people's welfare, we are not really the masters of
our own country. All aspects of our life, even our national security, will be at the mercy of
other people.
In seeking to accomplish the foregoing purpose, we do not propose to deprive persons
who are not citizens of the Philippines of their means of livelihood. While this bill seeks
to take away from the hands of persons who are not citizens of the Philippines a power
that can be wielded to paralyze all aspects of our national life and endanger our national
security, it respects existing rights.
It is in the light of this view of the Retail Trade Law that the issue was posed whether the
prohibition to aliens from engaging in such trade is intended merely to ban them from its
ownership and not from its management control or operation. However, from the context of the
law as well as from the decision of this Court in the Ichong case, it may be safely inferred that
the nationalization of the retail trade is merely confined to its ownership and not its
management, control, or operation. Nevertheless, this apparent flaw in the Retail Trade Law
cannot be availed of by an unscrupulous alien as a convenient pretext to employ in the
management of his business persons of his ilk to flout the law or subvert its nationalistic
purpose, for in pari materia with such law we have the Anti-Dummy Law (Commonwealth Act
No. 108, as amended by Republic Act No. 134), which seeks "to punish acts of evasion of the
laws of nationalization of certain rights, franchises or privileges." Read in connection with the
Retail Trade Law, the Anti-Dummy Law would punish acts intended to circumvent the provisions
of the former law which nationalize the retail business.
The question that now arises is: Is the employment of aliens in non-control positions in a retail
establishment or trade prohibited by the Anti-Dummy Law?

Petitioners contend that their employment is not prohibited either by the Retail Trade Law or the
Anti-Dummy Law. The three Chinese petitioners testified that they had nothing to do with the
management and control of the business, nor do they participate in its profits outside of their
monthly salaries. They had been employed long before the enactment of Republic Act No. 1180.
They only wait for customers and sell according to the prices appearing on the tags previously
fixed by their manager Macario King. They desire to continue in the employ of Macario King in
his business and their job is their only means of earning support for themselves and their
families. Lim Pin who is employed as buyer declared that his duties include no more than buying
the groceries appearing in a list prepared and given to him from time to time by Macario King,
and at no more than the prices indicated in said list. Respondents did not present any evidence
to contradict these facts, as they merely relied their motion to dismiss.
It is evident that petitioners' theory is that since they do not intervene in the management,
operation, administration or control of the retail establishment of Macario King they are not
covered by the Anti-Dummy Law. Indeed, they contend, Section 1 of Republic Act No. 1180
mirrors the legislative intent to nationalize the retail trade merely thru the ownership by Filipinos
of the business, and as stated by this Court in the Ichong case, the ownership of the retail
business by non-citizens lies at the foundation of the prohibition, and since there is nothing in
the Retail Trade Law which prohibits a Filipino-owned retail enterprise from employing an alien
and the dummy law merely limits the prohibition to any position that relates to management,
operation, administration or control, petitioners contend that they may be allowed to continue in
their positions without doing violence to both the Retail Trade Law and the Anti-Dummy Law. In
other words, they draw a line of distinction between one class of alien employees occupying
positions of control and another class occupying non-control positions.
Respondents, on the other hand, sustain a different view. They hold that the language of the
Anti-Dummy Law bans aliens' employment in both control and non-control positions. They
contend that the words management, operation, administration and control, followed by and
blended with the words "whether as an officer, employee or laborer therein", signify the
legislative intent to cover the entire scale of personnel activity so that even laborers are
excluded from employment, the only exemption being technical personnel whose employment
may be allowed with the previous authorization of the President. This contention, according to
respondents, results from the application of the rule known in statutory construction as redendo
singula singulis. This means that the antecedents "management, operation, administration and
control" and the consequents "officer, employee, and laborer" should be read distributively to the
effect that each word is to be applied to the subject to which it appears by context most properly
relate and to which it is most applicable (Vol. 2, Sutherland, Statutory Construction, Section
4819).
We agree to this contention of respondents not only because the context of the law seems to be
clear on what its extent and scope seem to prohibit but also because the same is in full accord
with the main objective that permeates both the Retail Trade Law and the Anti-Dummy Law. The
one advocates the complete nationalization of the retail trade by denying its ownership to any
alien, while the other limits its management, operation, administration and control to Filipino

citizens. The prevailing idea is to secure both ownership and management of the retail business
in Filipino hands. It prohibits a person not a Filipino from engaging in retail trade directly or
indirectly while it limits the management, operation, administration and control to Filipino
citizens. These words may be technically synonymous in the sense that they all refer to the
exercise of a directing, restraining or governing influence over an affair or business to which
they relate, but it cannot be denied that by reading them in connection with the positions therein
enumerated one cannot draw any other conclusion than that they cover the entire range of
employment regardless of whether they involve control or non-control activities. When the law
says that you cannot employ an alien in any position pertaining to management, operation,
administration and control, "whether as an officer, employee, or laborer therein", it only means
one thing: the employment of a person who is not a Filipino citizen even in a minor or clerical or
non-control position is prohibited. The reason is obvious: to plug any loophole or close any
avenue that an unscrupulous alien may resort to flout the law or defeat its purpose, for no one
can deny that while one may be employed in a non-control position who apparently is harmless
he may later turn out to be a mere tool to further the evil designs of the employer. It is imperative
that the law be interpreted in a manner that would stave off any attempt at circumvention of this
legislative purpose.
In this respect, we agree with the following remark of the Solicitor General: "Summing up, there
is no point in distinguishing employments in positions of control from employments in noncontrol positions except to facilitate violations of the Anti-Dummy Law. It does not require
ingenuity to realize that the law is framed up the way we find it so that no difficulties will be
encountered in its enforcement. This is not the first time to use the words of the United States
Supreme Court ... that a government wants to know, without being put to a search, that what it
forbids is carried out effectively." .
There is an intimation in the decision of the trial court that if the employment of aliens in noncontrol positions is prohibited as respondents so advocate, it may impair the right of a citizen
under our Constitution to select, pick and employ any one who in his opinion may be amenable
to his business provided he is not a criminal, a communist, or affected by a contagious disease,
in the same manner as one may not be deprived of his right to associate with people of his own
choice because those are rights that are guaranteed by our Constitution. The language of the
trial court on this matter follows: .
There is no question that a Filipino citizen has a right under the Constitution and the
laws of this Republic to engage in any lawful business, to select, pick and employ
anyone who in his opinion may be amenable, congenial, friendly, understanding and
profitable to his business provided that they are not originals, say communists, or
affected by some contagious disease or morally unfit. The right to associate with our
friends or people of our choice cannot be seriously contested in a democratic form of
government. This is one of the most cherished privileges of a citizen. Nullify it and it will
produce a communist control of action in our free movement and intercourse with our
fellow citizens as now prevails in Russia and other Soviet satellites History has amply
demonstrated that in countries where personal liberties are limited, curtailed or

hampered, communism thrives; while in the lands where personal liberties are protected,
democracy lives. We need but look at the horizon and see terrible and sinister shadows
of some catastrophic events threatening to annihilate all our hopes and love for liberty if
we are to traffic with our rights as citizens like any other ordinary commodities. It is our
sacred and bounden duty to protect individual rights so that by their benign influence real
democracy may be nurtured to full maturity.
xxx

xxx

xxx

There is no need of any lengthy discussion as to the rights of a Filipino citizen to employ
any person in his business provided the latter is not a criminal, affected with some
contagious disease, or a recognized human derelict. The right to employ is the same as
the right to associate. The right to associate is admittedly one of the most sacred
privileges of a Filipino citizen. If a Filipino citizen has the right to employ any person in
his business, has a naturalized citizen the same rights? We hold and sustain that under
the Constitution and laws of this country, there is no difference between a natural-born
citizen and a naturalized citizen, with the possible exception, as provided by the
Constitution, that while the former can be President, Vice-President or member of
Congress, the latter cannot. But outside of these exceptions, they have the same rights
and privileges.
It is hard to see how the nationalization of employment in the Philippines can run counter to any
provision of our Constitution considering that its aim is not exactly to deprive citizen of a right
that he may exercise under it but rather to promote enhance and protect those that are
expressly accorded to a citizen such as the right to life, liberty and pursuit of happiness. The
nationalization of an economic measure when founded on grounds of public policy cannot be
branded as unjust, arbitrary or oppressive or contrary to the Constitution because its aim is
merely to further the material progress and welfare of the citizens of a country. This is what we
expressed in no uncertain terms in the Ichong Case when we declared constitutional the
nationalization of the retail trade. Indeed, we said there that it is a law "clearly in the interest of
the public, nay of the national security itself, and indisputability falls within the scope police
power, thru which and by which the State insures its existence and security and the supreme
welfare of its citizens." True, this fundamental policy was expressed in a decision the subject of
which concerns the constitutionality of the Retail Trade Act, but since the Anti-Dummy Law is but
a mere complement of the former in the sense that it is designed to make effective its aims and
purposes and both tend to accomplish the same objective either by excluding aliens from
owning any retail trade or by banning their employment if the trade is owned by Filipinos, and
the target of both is "the removal and eradication of the shackles of foreign economic control
and domination" thru the nationalization of the retail trade both in ownership and employment,
the pronouncement made in one regarding its constitutionality applies equally if not with greater
reason to the other both being complementary one to the other. Indeed, in nationalizing
employment in retail trade the right of choice of an employer is not impaired but its sphere is
merely limited to the citizens to the exclusion of those of other nationalities.

We note that the case cited by the trial court to substantiate its conclusion that freedom to
employ is guaranteed by our Constitution is Meyer v. Nebraska, 67 Law Ed. 1042, which is also
the same case relied upon by petitioners in support of their proposition that "the liberty
guaranteed by the Constitution includes the right to engage in any of the common occupations
of life". We also note that this is the same case cited by counsel for Lao Itchong to support the
same proposition in his advocacy of the unconstitutionality of the nationalization of the Retail
Trade Law which did not deserve favorable consideration by this Court in the Itchong case. To
refute counsel's argument that the retail trade is a common occupation the pursuit of which
cannot be impaired and consequently the right to employ therein is guaranteed by our
Constitution, suffice it to state that we brushed aside such theory in the Itchong case in view of
the monopolistic control exercised by aliens in the retail business and their "deadly strangle hold
on the national economy endangering the national security in times of crisis and emergency".
The circumstances surrounding the enforcement of the Retail Trade Law being the very
foundation of the Anti-Dummy Law the same circumstances that justify the rejection of counsel's
proposition in the Itchong case should also apply with regard to the application of the Meyer
case in the consideration of the constitutionality of the Anti-Dummy Law.
The thinking of the lower court that the nationalization of employment in retail trade produces
communistic control or impairs a right guaranteed by the Constitution to a citizen seems to have
as basis its pronouncement that "the right to employ is the same as the right to associate". This
promise has no foundation in law for it confuses the right of employment with the right of
association embodied in the Bill of Rights of our Constitution. Section 1, paragraph 6, of said Bill
of Rights, provides that "the right to form associations or societies for purposes not contrary to
law, shall not be abridged", and this has as its main purpose "to encourage the formation of
voluntary associations so that thru the cooperative activities of individuals the welfare of the
nation may be advanced."1Petitioners have never been denied the right to form voluntary
associations. In fact, they can so organize to engage in any business venture of their own
choosing provided that they comply with the limitations prescribed by our regulatory laws. These
laws cannot be assailed as abridging our Constitution because they were adopted in the
exercise of the police power of the State (Lao Itchong case, supra).
Against the charge that this nationalization movement initiated by Congress in connection with
several measures that affect the economic life of our people places the Philippines in a unique
position in the free world, we have only to cite the cases of Commonwealth v. Hans, 81 N.E.
149, and Bloomfield v. State, 99 N.E. 309, which this Court considered as basic authorities for
nationalization of legislative measures in the Lao Ichong case. Similar laws had been declared
constitutional by the Supreme Court of California and the United States Supreme Court in a
series of cases involving contracts under the Alien Land Law, and because of the similarities of
the facts and laws involved therein we can consider the decisions rendered in said cases of
persuasive force and effect in the determination of the present case.2
We wish to add one word with regard to the procedural aspect raised in respondents' brief. It is
respondents' theory that a complaint for declaratory relief will not prosper if filed after a contract
or statute has been breached. The law does not even require that there shall be an actual

pending case. It is sufficient that there is a breach of the law, or an actionable violation, to bar a
complaint for declaratory judgment (Vol. 2, Moran, Comments on the Rules of Court, 1957 Ed.,
145). The pertinent provisions of the Anti-Dummy Law postulate that aliens cannot be employed
by Filipino retailers except for technical positions with previous authority of the President, and it
is contended that Macario King had in his employ his Chinese co-petitioners for a period of
more than 2 years in violation of Section 2-A of Republic Act No. 134. Hence, respondents
contend, due to their breach of the law petitioners have forfeited their right to file the present
action for declaratory relief.
It appears, however, that alien petitioners were already in the employ of the establishment
known as "Import Meat and Produce" previously owned by the Philippine Cold Stores, Inc. when
Macario King acquired the ownership of said establishment and because of the doubt he
entertained as regards the scope of the prohibition of the law King wrote the President of the
Philippines to request permission to continue said petitioners in his employment, and
immediately after the request was denied, he instituted the present petition for declaratory relief.
It cannot, therefore, be said that King has already breached the law when he filed the present
action..
WHEREFORE, the decision appealed from is reversed. This preliminary injunction issued by the
trial court on December 6, 1958 is hereby lifted. The petition for mandamus is dismissed, with
costs against appellees.

__________________________________________________________________
__________________________________________________________________

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 84811 August 29, 1989
SOLID HOMES, INC., petitioner,
vs.
TERESITA PAYAWAL and COURT OF APPEALS, respondents.

CRUZ, J.:

We are asked to reverse a decision of the Court of Appeals sustaining the jurisdiction of the
Regional Trial Court of Quezon City over a complaint filed by a buyer, the herein private
respondent, against the petitioner, for delivery of title to a subdivision lot. The position of the
petitioner, the defendant in that action, is that the decision of the trial court is null and void ab
initio because the case should have been heard and decided by what is now called the Housing
and Land Use Regulatory Board.
The complaint was filed on August 31, 1982, by Teresita Payawal against Solid Homes, Inc.
before the Regional Trial Court of Quezon City and docketed as Civil Case No. Q-36119. The
plaintiff alleged that the defendant contracted to sell to her a subdivision lot in Marikina on June
9, 1975, for the agreed price of P 28,080.00, and that by September 10, 1981, she had already
paid the defendant the total amount of P 38,949.87 in monthly installments and interests. Solid
Homes subsequently executed a deed of sale over the land but failed to deliver the
corresponding certificate of title despite her repeated demands because, as it appeared later,
the defendant had mortgaged the property in bad faith to a financing company. The plaintiff
asked for delivery of the title to the lot or, alternatively, the return of all the amounts paid by her
plus interest. She also claimed moral and exemplary damages, attorney's fees and the costs of
the suit.
Solid Homes moved to dismiss the complaint on the ground that the court had no jurisdiction,
this being vested in the National Housing Authority under PD No. 957. The motion was denied.
The defendant repleaded the objection in its answer, citing Section 3 of the said decree
providing that "the National Housing Authority shall have exclusive jurisdiction to regulate the
real estate trade and business in accordance with the provisions of this Decree." After trial,
judgment was rendered in favor of the plaintiff and the defendant was ordered to deliver to her
the title to the land or, failing this, to refund to her the sum of P 38,949.87 plus interest from
1975 and until the full amount was paid. She was also awarded P 5,000.00 moral damages, P
5,000.00 exemplary damages, P 10,000.00 attorney's fees, and the costs of the suit. 1
Solid Homes appealed but the decision was affirmed by the respondent court, 2 which also
berated the appellant for its obvious efforts to evade a legitimate obligation, including its dilatory
tactics during the trial. The petitioner was also reproved for its "gall" in collecting the further
amount of P 1,238.47 from the plaintiff purportedly for realty taxes and registration expenses
despite its inability to deliver the title to the land.
In holding that the trial court had jurisdiction, the respondent court referred to Section 41 of PD
No. 957 itself providing that:
SEC. 41. Other remedies.-The rights and remedies provided in this Decree shall
be in addition to any and all other rights and remedies that may be available
under existing laws.
and declared that "its clear and unambiguous tenor undermine(d) the (petitioner's) pretension
that the court a quowas bereft of jurisdiction." The decision also dismissed the contrary opinion
of the Secretary of Justice as impinging on the authority of the courts of justice. While we are

disturbed by the findings of fact of the trial court and the respondent court on the dubious
conduct of the petitioner, we nevertheless must sustain it on the jurisdictional issue.
The applicable law is PD No. 957, as amended by PD No. 1344, entitled "Empowering the
National Housing Authority to Issue Writs of Execution in the Enforcement of Its Decisions
Under Presidential Decree No. 957." Section 1 of the latter decree provides as follows:
SECTION 1. In the exercise of its function to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree No.
957, the National Housing Authority shall have exclusive jurisdiction to hear and
decide cases of the following nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker or
salesman; and
C. Cases involving specific performance of contractuala statutory obligations filed
by buyers of subdivision lot or condominium unit against the owner, developer,
dealer, broker or salesman. (Emphasis supplied.)
The language of this section, especially the italicized portions, leaves no room for doubt that
"exclusive jurisdiction" over the case between the petitioner and the private respondent is
vested not in the Regional Trial Court but in the National Housing Authority. 3
The private respondent contends that the applicable law is BP No. 129, which confers on
regional trial courts jurisdiction to hear and decide cases mentioned in its Section 19, reading in
part as follows:
SEC. 19. Jurisdiction in civil cases.-Regional Trial Courts shall exercise exclusive
original jurisdiction:
(1) In all civil actions in which the subject of the litigation is incapable of
pecuniary estimation;
(2) In all civil actions which involve the title to, or possession of, real property, or
any interest therein, except actions for forcible entry into and unlawful detainer of
lands or buildings, original jurisdiction over which is conferred upon Metropolitan
Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts;
xxx xxx xxx

(8) In all other cases in which the demand, exclusive of interest and cost or the
value of the property in controversy, amounts to more than twenty thousand
pesos (P 20,000.00).
It stresses, additionally, that BP No. 129 should control as the later enactment, having been
promulgated in 1981, after PD No. 957 was issued in 1975 and PD No. 1344 in 1978.
This construction must yield to the familiar canon that in case of conflict between a general law
and a special law, the latter must prevail regardless of the dates of their enactment. Thus, it has
been held thatThe fact that one law is special and the other general creates a presumption that
the special act is to be considered as remaining an exception of the general act,
one as a general law of the land and the other as the law of the particular case. 4
xxx xxx xxx
The circumstance that the special law is passed before or after the general act
does not change the principle. Where the special law is later, it will be regarded
as an exception to, or a qualification of, the prior general act; and where the
general act is later, the special statute will be construed as remaining an
exception to its terms, unless repealed expressly or by necessary implication. 5
It is obvious that the general law in this case is BP No. 129 and PD No. 1344 the special law.
The argument that the trial court could also assume jurisdiction because of Section 41 of PD
No. 957, earlier quoted, is also unacceptable. We do not read that provision as vesting
concurrent jurisdiction on the Regional Trial Court and the Board over the complaint mentioned
in PD No. 1344 if only because grants of power are not to be lightly inferred or merely implied.
The only purpose of this section, as we see it, is to reserve. to the aggrieved party such other
remedies as may be provided by existing law, like a prosecution for the act complained of under
the Revised Penal Code. 6
On the competence of the Board to award damages, we find that this is part of the exclusive
power conferred upon it by PD No. 1344 to hear and decide "claims involving refund and any
other claims filed by subdivision lot or condominium unit buyers against the project owner,
developer, dealer, broker or salesman." It was therefore erroneous for the respondent to brush
aside the well-taken opinion of the Secretary of Justice thatSuch claim for damages which the subdivision/condominium buyer may have
against the owner, developer, dealer or salesman, being a necessary
consequence of an adjudication of liability for non-performance of contractual or
statutory obligation, may be deemed necessarily included in the phrase "claims
involving refund and any other claims" used in the aforequoted subparagraph C
of Section 1 of PD No. 1344. The phrase "any other claims" is, we believe,

sufficiently broad to include any and all claims which are incidental to or a
necessary consequence of the claims/cases specifically included in the grant of
jurisdiction to the National Housing Authority under the subject provisions.
The same may be said with respect to claims for attorney's fees which are
recoverable either by agreement of the parties or pursuant to Art. 2208 of the
Civil Code (1) when exemplary damages are awarded and (2) where the
defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff 's
plainly valid, just and demandable claim.
xxx xxx xxx
Besides, a strict construction of the subject provisions of PD No. 1344 which
would deny the HSRC the authority to adjudicate claims for damages and for
damages and for attorney's fees would result in multiplicity of suits in that the
subdivision condominium buyer who wins a case in the HSRC and who is
thereby deemed entitled to claim damages and attorney's fees would be forced
to litigate in the regular courts for the purpose, a situation which is obviously not
in the contemplation of the law. (Emphasis supplied.) 7
As a result of the growing complexity of the modern society, it has become necessary to create
more and more administrative bodies to help in the regulation of its ramified activities.
Specialized in the particular fields assigned to them, they can deal with the problems thereof
with more expertise and dispatch than can be expected from the legislature or the courts of
justice. This is the reason for the increasing vesture of quasi-legislative and quasi-judicial
powers in what is now not unreasonably called the fourth department of the government.
Statutes conferring powers on their administrative agencies must be liberally construed to
enable them to discharge their assigned duties in accordance with the legislative
purpose. 8 Following this policy in Antipolo Realty Corporation v. National Housing
Authority, 9 the Court sustained the competence of the respondent administrative body, in the
exercise of the exclusive jurisdiction vested in it by PD No. 957 and PD No. 1344, to determine
the rights of the parties under a contract to sell a subdivision lot.
It remains to state that, contrary to the contention of the petitioner, the case of Tropical Homes v.
National Housing Authority 10 is not in point. We upheld in that case the constitutionality of the
procedure for appeal provided for in PD No. 1344, but we did not rule there that the National
Housing Authority and not the Regional Trial Court had exclusive jurisdiction over the cases
enumerated in Section I of the said decree. That is what we are doing now.
It is settled that any decision rendered without jurisdiction is a total nullity and may be struck
down at any time, even on appeal before this Court. 11 The only exception is where the party
raising the issue is barred by estoppel, 12which does not appear in the case before us. On the
contrary, the issue was raised as early as in the motion to dismiss filed in the trial court by the
petitioner, which continued to plead it in its answer and, later, on appeal to the respondent court.

We have no choice, therefore, notwithstanding the delay this decision will entail, to nullify the
proceedings in the trial court for lack of jurisdiction.
WHEREFORE, the challenged decision of the respondent court is REVERSED and the decision
of the Regional Trial Court of Quezon City in Civil Case No. Q-36119 is SET ASIDE, without
prejudice to the filing of the appropriate complaint before the Housing and Land Use Regulatory
Board. No costs.
SO ORDERED.

__________________________________________________________________
__________________________________________________________________

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 81552 May 28, 1990
DIONISIO FIESTAN and JUANITA ARCONADO, petitioners
vs.
COURT OF APPEALS; DEVELOPMENT BANK OF THE PHILIPPINES, LAOAG CITY
BRANCH; PHILIPPINE NATIONAL BANK, VIGAN BRANCH, ILOCOS SUR, FRANCISCO
PERIA and REGISTER OF DEEDS OF ILOCOS SUR, respondents.
Pedro Singson Reyes for petitioners.
The Chief Legal Counsel for PNB.
Public Assistance Office for Francisco Peria.
Ruben O. Fruto, Bonifacio M. Abad and David C. Frez for DBP Laoag Branch.

FERNAN, C.J.:
In this petition for review on certiorari, petitioners spouses Dionisio Fiestan and Juanita
Arconada owners of a parcel of land (Lot No. 2B) situated in Ilocos Sur covered by TCT T-13218
which they mortgaged to the Development Bank of the Philippines (DBP) as security for their
P22,400.00 loan, seek the reversal of the decision of the Court of Appeals 1 dated June 5, 1987

affirming the dismissal of their complaint filed against the Development Bank of the Philippines,
Laoag City Branch, Philippine National Bank, Vigan Branch, Ilocos Sur, Francisco Peria and the
Register of Deeds of Ilocos Sur, for annulment of sale, mortgage, and cancellation of transfer
certificates of title.
Records show that Lot No. 2-B was acquired by the DBP as the highest bidder at a public
auction sale on August 6, 1979 after it was extrajudicially foreclosed by the DBP in accordance
with Act No. 3135, as amended by Act No. 4118, for failure of petitioners to pay their mortgage
indebtedness. A certificate of sale was subsequently issued by the Provincial Sheriff of Ilocos
Sur on the same day and the same was registered on September 28, 1979 in the Office of the
Register of Deeds of Ilocos Sur. Earlier, or on September 26, 1979, petitioners executed a Deed
of Sale in favor of DBP which was likewise registered on September 28, 1979.
Upon failure of petitioners to redeem the property within the one (1) year period which expired
on September 28, 1980, petitioners' TCT T-13218 over Lot No. 2-B was cancelled by the
Register of Deeds and in lieu thereof TCT T-19077 was issued to the DBP upon presentation of
a duly executed affidavit of consolidation of ownership.
On April 13,1982, the DBP sold the lot to Francisco Peria in a Deed of Absolute Sale and the
same was registered on April 15, 1982 in the Office of the Register of Deeds of Ilocos Sur.
Subsequently, the DBP's title over the lot was cancelled and in lieu thereof TCT T-19229 was
issued to Francisco Peria.
After title over said lot was issued in his name, Francisco Peria secured a tax declaration for
said lot and accordingly paid the taxes due thereon. He thereafter mortgaged said lot to the
PNB Vigan Branch as security for his loan of P115,000.00 as required by the bank to increase
his original loan from P49,000.00 to P66,000.00 until it finally reached the approved amount of
P115,000.00. Since petitioners were still in possession of Lot No. 2-B, the Provincial Sheriff
ordered them to vacate the premises.
On the other hand, petitioners filed on August 23, 1982 a complaint for annulment of sale,
mortgage and cancellation of transfer certificates of title against the DBP-Laoag City, PNB Vigan
Branch, Ilocos Sur, Francisco Peria and the Register of Deeds of Ilocos Sur, docketed as Civil
Case No. 3447-V before the Regional Trial Court of Vigan, Ilocos Sur.
After trial, the RTC of Vigan, Ilocos Sur, Branch 20, rendered its decision 2 on November 14,
1983 dismissing the complaint, declaring therein, as valid the extrajudicial foreclosure sale of
the mortgaged property in favor of the DBP as highest bidder in the public auction sale held on
August 6, 1979, and its subsequent sale by DBP to Francisco Peria as well as the real estate
mortgage constituted thereon in favor of PNB Vigan as security for the P115,000.00 loan of
Francisco Peria.
The Court of Appeals affirmed the decision of the RTC of Vigan, Ilocos Sur on June 20, 1987.

The motion for reconsideration having been denied 3 on January 19, 1988, petitioners filed the
instant petition for review on certiorari with this Court. Petitioners seek to annul the extrajudicial
foreclosure sale of the mortgaged property on August 6, 1979 in favor of the Development Bank
of the Philippines (DBP) on the ground that it was conducted by the Provincial Sheriff of Ilocos
Sur without first effecting a levy on said property before selling the same at the public auction
sale. Petitioners thus maintained that the extrajudicial foreclosure sale being null and void by
virtue of lack of a valid levy, the certificate of sale issued by the Provincial Sheriff cannot transfer
ownership over the lot in question to the DBP and consequently the deed of sale executed by
the DBP in favor of Francisco Peria and the real estate mortgage constituted thereon by the
latter in favor of PNB Vigan Branch are likewise null and void.
The Court finds these contentions untenable.
The formalities of a levy, as an essential requisite of a valid execution sale under Section 15 of
Rule 39 and a valid attachment lien under Rule 57 of the Rules of Court, are not basic
requirements before an extrajudicially foreclosed property can be sold at public auction. At the
outset, distinction should be made of the three different kinds of sales under the law, namely: an
ordinary execution sale, a judicial foreclosure sale, and an extrajudicial foreclosure sale,
because a different set of law applies to each class of sale mentioned. An ordinary execution
sale is governed by the pertinent provisions of Rule 39 of the Rules of Court. Rule 68 of the
Rules of Court applies in cases of judicial foreclosure sale. On the other hand, Act No. 3135, as
amended by Act No. 4118 otherwise known as "An Act to Regulate the Sale of Property under
Special Powers Inserted in or Annexed to Real Estate Mortgages" applies in cases of
extrajudicial foreclosure sale.
The case at bar, as the facts disclose, involves an extrajudicial foreclosure sale. The public
auction sale conducted on August 6, 1979 by the Provincial Sheriff of Ilocos Sur refers to the
"sale" mentioned in Section 1 of Act No. 3135, as amended, which was made pursuant to a
special power inserted in or attached to a real estate mortgage made as security for the
payment of money or the fulfillment of any other obligation. It must be noted that in the
mortgage contract, petitioners, as mortgagor, had appointed private respondent DBP, for the
purpose of extrajudicial foreclosure, "as his attorney-in-fact to sell the property mortgaged under
Act No. 3135, as amended, to sign all documents and perform any act requisite and necessary
to accomplish said purpose .... In case of foreclosure, the Mortgagor hereby consents to the
appointment of the mortgagee or any of its employees as receiver, without any bond, to take
charge of the mortgaged property at once, and to hold possession of the same ... 4
There is no justifiable basis, therefore, to apply by analogy the provisions of Rule 39 of the
Rules of Court on ordinary execution sale, particularly Section 15 thereof as well as the
jurisprudence under said provision, to an extrajudicial foreclosure sale conducted under the
provisions of Act No. 3135, as amended. Act No. 3135, as amended, being a special law
governing extrajudicial foreclosure proceedings, the same must govern as against the
provisions on ordinary execution sale under Rule 39 of the Rules of Court.

In that sense, the case of Aparri vs. Court Of Appeals, 13 SCRA 611 (1965), cited by petitioners,
must be distinguished from the instant case. On the question of what should be done in the
event the highest bid made for the property at the extrajudicial foreclosure sale is in excess of
the mortgage debt, this Court applied the rule and practice in a judicial foreclosure sale to an
extrajudicial foreclosure sale in a similar case considering that the governing provisions of law
as mandated by Section 6 of Act No. 3135, as amended, specifically Sections 29, 30 and 34 of
Rule 39 of the Rules of Court (previously Sections 464, 465 and 466 of the Code of Civil
Procedure) are silent on the matter. The said ruling cannot, however, be construed as the legal
basis for applying the requirement of a levy under Section 15 of Rule 39 of the Rules of Court
before an extrajudicially foreclosed property can be sold at public auction when none is
expressly required under Act No. 3135, as amended.
Levy, as understood under Section 15, Rule 39 of the Rules of Court in relation to execution of
money judgments, has been defined by this Court as the act whereby a sheriff sets apart or
appropriates for the purpose of satisfying the command of the writ, a part or the whole of the
judgment-debtor's property. 5
In extrajudicial foreclosure of mortgage, the property sought to be foreclosed need not be
identified or set apart by the sheriff from the whole mass of property of the mortgagor for the
purpose of satisfying the mortgage indebtedness. For, the essence of a contract of mortgage
indebtedness is that a property has been identified or set apart from the mass of the property of
the debtor-mortgagor as security for the payment of money or the fulfillment of an obligation to
answer the amount of indebtedness, in case of default of payment. By virtue of the special
power inserted or attached to the mortgage contract, the mortgagor has authorized the
mortgagee-creditor or any other person authorized to act for him to sell said property in
accordance with the formalities required under Act No. 3135, as amended.
The Court finds that the formalities prescribed under Sections 2, 3 and 4 of Act No. 3135, as
amended, were substantially complied with in the instant case. Records show that the notices of
sale were posted by the Provincial Sheriff of Ilocos Sur and the same were published in Ilocos
Times, a newspaper of general circulation in the province of Ilocos Sur, setting the date of the
auction sale on August 6, 1979 at 10:00 a.m. in the Office of the Sheriff, Vigan, Ilocos Sur. 6
The nullity of the extrajudicial foreclosure sale in the instant case is further sought by petitioners
on the ground that the DBP cannot acquire by purchase the mortgaged property at the public
auction sale by virtue of par. (2) of Article 1491 and par. (7) of Article 1409 of the Civil Code
which prohibits agents from acquiring by purchase, even at a public or judicial auction either in
person or through the mediation of another, the property whose administration or sale may have
been entrusted to them unless the consent of the principal has been given.
The contention is erroneous.
The prohibition mandated by par. (2) of Article 1491 in relation to Article 1409 of the Civil Code
does not apply in the instant case where the sale of the property in dispute was made under a
special power inserted in or attached to the real estate mortgage pursuant to Act No. 3135, as

amended. It is a familiar rule of statutory construction that, as between a specific statute and
general statute, the former must prevail since it evinces the legislative intent more clearly than a
general statute does. 7 The Civil Code (R.A. 386) is of general character while Act No. 3135, as
amended, is a special enactment and therefore the latter must prevail. 8
Under Act No. 3135, as amended, a mortgagee-creditor is allowed to participate in the bidding
and purchase under the same conditions as any other bidder, as in the case at bar, thus:
Section 5. At any sale, the creditor, trustee, or other person authorized to act for
the creditor, may participate in the bidding and purchase under the same
conditions as any other bidder, unless the contrary has been expressly provided
in the mortgage or trust deed under which the sale is made.
In other words, Section 5 of Act No. 3135, as amended, creates and is designed to create an
exception to the general rule that a mortgagee or trustee in a mortgage or deed of trust which
contains a power of sale on default may not become the purchaser, either directly or through the
agency of a third person, at a sale which he himself makes under the power. Under such an
exception, the title of the mortgagee-creditor over the property cannot be impeached or
defeated on the ground that the mortgagee cannot be a purchaser at his own sale.
Needless to state, the power to foreclose is not an ordinary agency that contemplates
exclusively the representation of the principal by the agent but is primarily an authority conferred
upon the mortgagee for the latter's own protection. It is an ancillary stipulation supported by the
same cause or consideration for the mortgage and forms an essential and inseparable part of
that bilateral agreement. 9 Even in the absence of statutory provision, there is authority to hold
that a mortgagee may purchase at a sale under his mortgage to protect his own interest or to
avoid a loss to himself by a sale to a third person at a price below the mortgage debt. 10 The
express mandate of Section 5 of Act No. 3135, as amended, amply protects the interest of the
mortgagee in this jurisdiction.
WHEREFORE, in view of the foregoing, the petition is DENIED for lack of merit and the decision
of the Court of Appeals dated June 20, 1987 is hereby AFFIRMED. No cost.
SO ORDERED.

__________________________________________________________________
__________________________________________________________________

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 111097 July 20, 1994

MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners,
vs.
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND GAMING
CORPORATION,respondents.
Aquilino G. Pimentel, Jr. and Associates for petitioners.
R.R. Torralba & Associates for private respondent.

CRUZ, J.:
There was instant opposition when PAGCOR announced the opening of a casino in Cagayan de
Oro City. Civic organizations angrily denounced the project. The religious elements echoed the
objection and so did the women's groups and the youth. Demonstrations were led by the mayor
and the city legislators. The media trumpeted the protest, describing the casino as an affront to
the welfare of the city.
The trouble arose when in 1992, flush with its tremendous success in several cities, PAGCOR
decided to expand its operations to Cagayan de Oro City. To this end, it leased a portion of a
building belonging to Pryce Properties Corporation, Inc., one of the herein private respondents,
renovated and equipped the same, and prepared to inaugurate its casino there during the
Christmas season.
The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift and hostile. On
December 7, 1992, it enacted Ordinance No. 3353 reading as follows:
ORDINANCE NO. 3353
AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS PERMIT AND
CANCELLING EXISTING BUSINESS PERMIT TO ANY ESTABLISHMENT FOR
THE USING AND ALLOWING TO BE USED ITS PREMISES OR PORTION
THEREOF FOR THE OPERATION OF CASINO.
BE IT ORDAINED by the Sangguniang Panlungsod of the City of Cagayan de
Oro, in session assembled that:

Sec. 1. That pursuant to the policy of the city banning the operation of casino
within its territorial jurisdiction, no business permit shall be issued to any person,
partnership or corporation for the operation of casino within the city limits.
Sec. 2. That it shall be a violation of existing business permit by any persons,
partnership or corporation to use its business establishment or portion thereof, or
allow the use thereof by others for casino operation and other gambling activities.
Sec. 3. PENALTIES. Any violation of such existing business permit as
defined in the preceding section shall suffer the following penalties, to wit:
a) Suspension of the business permit for sixty (60)
days for the first offense and a fine of
P1,000.00/day
b) Suspension of the business permit for Six (6)
months for the second offense, and a fine of
P3,000.00/day
c) Permanent revocation of the business permit and
imprisonment of One (1) year, for the third and
subsequent offenses.
Sec. 4. This Ordinance shall take effect ten (10) days from publication thereof.
Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93 reading as
follows:
ORDINANCE NO. 3375-93
AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND
PROVIDING PENALTY FOR VIOLATION THEREFOR.
WHEREAS, the City Council established a policy as early as 1990 against
CASINO under its Resolution No. 2295;
WHEREAS, on October 14, 1992, the City Council passed another Resolution
No. 2673, reiterating its policy against the establishment of CASINO;
WHEREAS, subsequently, thereafter, it likewise passed Ordinance No. 3353,
prohibiting the issuance of Business Permit and to cancel existing Business
Permit to any establishment for the using and allowing to be used its premises or
portion thereof for the operation of CASINO;

WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of the Local
Government Code of 1991 (Rep. Act 7160) and under Art. 99, No. (4), Paragraph
VI of the implementing rules of the Local Government Code, the City Council as
the Legislative Body shall enact measure to suppress any activity inimical to
public morals and general welfare of the people and/or regulate or prohibit such
activity pertaining to amusement or entertainment in order to protect social and
moral welfare of the community;
NOW THEREFORE,
BE IT ORDAINED by the City Council in session duly assembled that:
Sec. 1. The operation of gambling CASINO in the City of Cagayan de Oro is
hereby prohibited.
Sec. 2. Any violation of this Ordinance shall be subject to the following
penalties:
a) Administrative fine of P5,000.00 shall be imposed against the proprietor,
partnership or corporation undertaking the operation, conduct, maintenance of
gambling CASINO in the City and closure thereof;
b) Imprisonment of not less than six (6) months nor more than one (1) year or a
fine in the amount of P5,000.00 or both at the discretion of the court against the
manager, supervisor, and/or any person responsible in the establishment,
conduct and maintenance of gambling CASINO.
Sec. 3. This Ordinance shall take effect ten (10) days after its publication in a
local newspaper of general circulation.
Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as
intervenor and supplemental petitioner. Their challenge succeeded. On March 31, 1993, the
Court of Appeals declared the ordinances invalid and issued the writ prayed for to prohibit their
enforcement. 1 Reconsideration of this decision was denied on July 13, 1993. 2
Cagayan de Oro City and its mayor are now before us in this petition for review under Rule 45
of the Rules of Court. 3 They aver that the respondent Court of Appeals erred in holding that:
1. Under existing laws, the Sangguniang Panlungsod of the City of Cagayan de
Oro does not have the power and authority to prohibit the establishment and
operation of a PAGCOR gambling casino within the City's territorial limits.
2. The phrase "gambling and other prohibited games of chance" found in Sec.
458, par. (a), sub-par. (1) (v) of R.A. 7160 could only mean "illegal gambling."

3. The questioned Ordinances in effect annul P.D. 1869 and are therefore invalid
on that point.
4. The questioned Ordinances are discriminatory to casino and partial to
cockfighting and are therefore invalid on that point.
5. The questioned Ordinances are not reasonable, not consonant with the
general powers and purposes of the instrumentality concerned and inconsistent
with the laws or policy of the State.
6. It had no option but to follow the ruling in the case of Basco, et al. v.
PAGCOR, G.R. No. 91649, May 14, 1991, 197 SCRA 53 in disposing of the
issues presented in this present case.
PAGCOR is a corporation created directly by P.D. 1869 to help centralize and regulate all
games of chance, including casinos on land and sea within the territorial jurisdiction of the
Philippines. In Basco v. Philippine Amusements and Gaming Corporation, 4 this Court sustained
the constitutionality of the decree and even cited the benefits of the entity to the national
economy as the third highest revenue-earner in the government, next only to the BIR and the
Bureau of Customs.
Cagayan de Oro City, like other local political subdivisions, is empowered to enact ordinances
for the purposes indicated in the Local Government Code. It is expressly vested with the police
power under what is known as the General Welfare Clause now embodied in Section 16 as
follows:
Sec. 16. General Welfare. Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units
shall ensure and support, among other things, the preservation and enrichment
of culture, promote health and safety, enhance the right of the people to a
balanced ecology, encourage and support the development of appropriate and
self-reliant scientific and technological capabilities, improve public morals,
enhance economic prosperity and social justice, promote full employment among
their residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants.
In addition, Section 458 of the said Code specifically declares that:
Sec. 458. Powers, Duties, Functions and Compensation. (a) The
Sangguniang Panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general welfare of
the city and its inhabitants pursuant to Section 16 of this Code and in the proper

exercise of the corporate powers of the city as provided for under Section 22 of
this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and
effective city government, and in this connection, shall:
xxx xxx xxx
(v) Enact ordinances intended to prevent, suppress
and impose appropriate penalties for habitual
drunkenness in public places, vagrancy,
mendicancy, prostitution, establishment and
maintenance of houses of ill repute, gambling and
other prohibited games of chance, fraudulent
devices and ways to obtain money or property, drug
addiction, maintenance of drug dens, drug pushing,
juvenile delinquency, the printing, distribution or
exhibition of obscene or pornographic materials or
publications, and such other activities inimical to
the welfare and morals of the inhabitants of the city;
This section also authorizes the local government units to regulate properties and businesses
within their territorial limits in the interest of the general welfare. 5
The petitioners argue that by virtue of these provisions, the Sangguniang Panlungsod may
prohibit the operation of casinos because they involve games of chance, which are detrimental
to the people. Gambling is not allowed by general law and even by the Constitution itself. The
legislative power conferred upon local government units may be exercised over all kinds of
gambling and not only over "illegal gambling" as the respondents erroneously argue. Even if the
operation of casinos may have been permitted under P.D. 1869, the government of Cagayan de
Oro City has the authority to prohibit them within its territory pursuant to the authority entrusted
to it by the Local Government Code.
It is submitted that this interpretation is consonant with the policy of local autonomy as
mandated in Article II, Section 25, and Article X of the Constitution, as well as various other
provisions therein seeking to strengthen the character of the nation. In giving the local
government units the power to prevent or suppress gambling and other social problems, the
Local Government Code has recognized the competence of such communities to determine and
adopt the measures best expected to promote the general welfare of their inhabitants in line
with the policies of the State.
The petitioners also stress that when the Code expressly authorized the local government units
to prevent and suppress gambling and other prohibited games of chance, like craps, baccarat,
blackjack and roulette, it meant allforms of gambling without distinction. Ubi lex non distinguit,
nec nos distinguere debemos. 6 Otherwise, it would have expressly excluded from the scope of

their power casinos and other forms of gambling authorized by special law, as it could have
easily done. The fact that it did not do so simply means that the local government units are
permitted to prohibit all kinds of gambling within their territories, including the operation of
casinos.
The adoption of the Local Government Code, it is pointed out, had the effect of modifying the
charter of the PAGCOR. The Code is not only a later enactment than P.D. 1869 and so is
deemed to prevail in case of inconsistencies between them. More than this, the powers of the
PAGCOR under the decree are expressly discontinued by the Code insofar as they do not
conform to its philosophy and provisions, pursuant to Par. (f) of its repealing clause reading as
follows:
(f) All general and special laws, acts, city charters, decrees, executive orders,
proclamations and administrative regulations, or part or parts thereof which are
inconsistent with any of the provisions of this Code are hereby repealed or
modified accordingly.
It is also maintained that assuming there is doubt regarding the effect of the Local Government
Code on P.D. 1869, the doubt must be resolved in favor of the petitioners, in accordance with
the direction in the Code calling for its liberal interpretation in favor of the local government
units. Section 5 of the Code specifically provides:
Sec. 5. Rules of Interpretation. In the interpretation of the provisions of this
Code, the following rules shall apply:
(a) Any provision on a power of a local government unit shall be liberally
interpreted in its favor, and in case of doubt, any question thereon shall be
resolved in favor of devolution of powers and of the lower local government unit.
Any fair and reasonable doubt as to the existence of the power shall be
interpreted in favor of the local government unit concerned;
xxx xxx xxx
(c) The general welfare provisions in this Code shall be liberally interpreted to
give more powers to local government units in accelerating economic
development and upgrading the quality of life for the people in the
community; . . . (Emphasis supplied.)
Finally, the petitioners also attack gambling as intrinsically harmful and cite various provisions of
the Constitution and several decisions of this Court expressive of the general and official
disapprobation of the vice. They invoke the State policies on the family and the proper
upbringing of the youth and, as might be expected, call attention to the old case of U.S. v.
Salaveria, 7 which sustained a municipal ordinance prohibiting the playing of panguingue. The
petitioners decry the immorality of gambling. They also impugn the wisdom of P.D. 1869 (which

they describe as "a martial law instrument") in creating PAGCOR and authorizing it to operate
casinos "on land and sea within the territorial jurisdiction of the Philippines."
This is the opportune time to stress an important point.
The morality of gambling is not a justiciable issue. Gambling is not illegal per se. While it is
generally considered inimical to the interests of the people, there is nothing in the Constitution
categorically proscribing or penalizing gambling or, for that matter, even mentioning it at all. It is
left to Congress to deal with the activity as it sees fit. In the exercise of its own discretion, the
legislature may prohibit gambling altogether or allow it without limitation or it may prohibit some
forms of gambling and allow others for whatever reasons it may consider sufficient. Thus, it has
prohibited jueteng and monte but permits lotteries, cockfighting and horse-racing. In making
such choices, Congress has consulted its own wisdom, which this Court has no authority to
review, much less reverse. Well has it been said that courts do not sit to resolve the merits of
conflicting theories. 8 That is the prerogative of the political departments. It is settled that
questions regarding the wisdom, morality, or practicibility of statutes are not addressed to the
judiciary but may be resolved only by the legislative and executive departments, to which the
function belongs in our scheme of government. That function is exclusive. Whichever way these
branches decide, they are answerable only to their own conscience and the constituents who
will ultimately judge their acts, and not to the courts of justice.
The only question we can and shall resolve in this petition is the validity of Ordinance No. 3355
and Ordinance No. 3375-93 as enacted by the Sangguniang Panlungsod of Cagayan de Oro
City. And we shall do so only by the criteria laid down by law and not by our own convictions on
the propriety of gambling.
The tests of a valid ordinance are well established. A long line of decisions 9 has held that to be
valid, an ordinance must conform to the following substantive requirements:
1) It must not contravene the constitution or any statute.
2) It must not be unfair or oppressive.
3) It must not be partial or discriminatory.
4) It must not prohibit but may regulate trade.
5) It must be general and consistent with public policy.
6) It must not be unreasonable.
We begin by observing that under Sec. 458 of the Local Government Code, local government
units are authorized to prevent or suppress, among others, "gambling and other prohibited
games of chance." Obviously, this provision excludes games of chance which are not prohibited
but are in fact permitted by law. The petitioners are less than accurate in claiming that the Code

could have excluded such games of chance but did not. In fact it does. The language of the
section is clear and unmistakable. Under the rule of noscitur a sociis, a word or phrase should
be interpreted in relation to, or given the same meaning of, words with which it is associated.
Accordingly, we conclude that since the word "gambling" is associated with
"and other prohibited games of chance," the word should be read as referring to only illegal
gambling which, like the other prohibited games of chance, must be prevented or suppressed.
We could stop here as this interpretation should settle the problem quite conclusively. But we
will not. The vigorous efforts of the petitioners on behalf of the inhabitants of Cagayan de Oro
City, and the earnestness of their advocacy, deserve more than short shrift from this Court.
The apparent flaw in the ordinances in question is that they contravene P.D. 1869 and the public
policy embodied therein insofar as they prevent PAGCOR from exercising the power conferred
on it to operate a casino in Cagayan de Oro City. The petitioners have an ingenious answer to
this misgiving. They deny that it is the ordinances that have changed P.D. 1869 for an ordinance
admittedly cannot prevail against a statute. Their theory is that the change has been made by
the Local Government Code itself, which was also enacted by the national lawmaking authority.
In their view, the decree has been, not really repealed by the Code, but merely "modified pro
tanto" in the sense that PAGCOR cannot now operate a casino over the objection of the local
government unit concerned. This modification of P.D. 1869 by the Local Government Code is
permissible because one law can change or repeal another law.
It seems to us that the petitioners are playing with words. While insisting that the decree has
only been "modifiedpro tanto," they are actually arguing that it is already dead, repealed and
useless for all intents and purposes because the Code has shorn PAGCOR of all power to
centralize and regulate casinos. Strictly speaking, its operations may now be not only prohibited
by the local government unit; in fact, the prohibition is not only discretionary but mandated by
Section 458 of the Code if the word "shall" as used therein is to be given its accepted meaning.
Local government units have now no choice but to prevent and suppress gambling, which in the
petitioners' view includes both legal and illegal gambling. Under this construction, PAGCOR will
have no more games of chance to regulate or centralize as they must all be prohibited by the
local government units pursuant to the mandatory duty imposed upon them by the Code. In this
situation, PAGCOR cannot continue to exist except only as a toothless tiger or a white elephant
and will no longer be able to exercise its powers as a prime source of government revenue
through the operation of casinos.
It is noteworthy that the petitioners have cited only Par. (f) of the repealing clause, conveniently
discarding the rest of the provision which painstakingly mentions the specific laws or the parts
thereof which are repealed (or modified) by the Code. Significantly, P.D. 1869 is not one of
them. A reading of the entire repealing clause, which is reproduced below, will disclose the
omission:

Sec. 534. Repealing Clause. (a) Batas Pambansa Blg. 337, otherwise known
as the "Local Government Code," Executive Order No. 112 (1987), and Executive
Order No. 319 (1988) are hereby repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders,
instructions, memoranda and issuances related to or concerning the barangay
are hereby repealed.
(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding
hospital fund; Section 3, a (3) and b (2) of Republic Act. No. 5447 regarding the
Special Education Fund; Presidential Decree No. 144 as amended by
Presidential Decree Nos. 559 and 1741; Presidential Decree No. 231 as
amended; Presidential Decree No. 436 as amended by Presidential Decree No.
558; and Presidential Decree Nos. 381, 436, 464, 477, 526, 632, 752, and 1136
are hereby repealed and rendered of no force and effect.
(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locallyfunded projects.
(e) The following provisions are hereby repealed or amended insofar as they are
inconsistent with the provisions of this Code: Sections 2, 16, and 29 of
Presidential Decree No. 704; Sections 12 of Presidential Decree No. 87, as
amended; Sections 52, 53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of Presidential
Decree No. 463, as amended; and Section 16 of Presidential Decree No. 972, as
amended, and
(f) All general and special laws, acts, city charters, decrees, executive orders,
proclamations and administrative regulations, or part or parts thereof which are
inconsistent with any of the provisions of this Code are hereby repealed or
modified accordingly.
Furthermore, it is a familiar rule that implied repeals are not lightly presumed in the absence of a
clear and unmistakable showing of such intention. In Lichauco & Co. v. Apostol, 10 this Court
explained:
The cases relating to the subject of repeal by implication all proceed on the
assumption that if the act of later date clearly reveals an intention on the part of
the lawmaking power to abrogate the prior law, this intention must be given
effect; but there must always be a sufficient revelation of this intention, and it has
become an unbending rule of statutory construction that the intention to repeal a
former law will not be imputed to the Legislature when it appears that the two
statutes, or provisions, with reference to which the question arises bear to each
other the relation of general to special.

There is no sufficient indication of an implied repeal of P.D. 1869. On the contrary, as the private
respondent points out, PAGCOR is mentioned as the source of funding in two later enactments
of Congress, to wit, R.A. 7309, creating a Board of Claims under the Department of Justice for
the benefit of victims of unjust punishment or detention or of violent crimes, and R.A. 7648,
providing for measures for the solution of the power crisis. PAGCOR revenues are tapped by
these two statutes. This would show that the PAGCOR charter has not been repealed by the
Local Government Code but has in fact been improved as it were to make the entity more
responsive to the fiscal problems of the government.
It is a canon of legal hermeneutics that instead of pitting one statute against another in an
inevitably destructive confrontation, courts must exert every effort to reconcile them,
remembering that both laws deserve a becoming respect as the handiwork of a coordinate
branch of the government. On the assumption of a conflict between P.D. 1869 and the Code,
the proper action is not to uphold one and annul the other but to give effect to both by
harmonizing them if possible. This is possible in the case before us. The proper resolution of the
problem at hand is to hold that under the Local Government Code, local government units may
(and indeed must) prevent and suppress all kinds of gambling within their territories except only
those allowed by statutes like P.D. 1869. The exception reserved in such laws must be read into
the Code, to make both the Code and such laws equally effective and mutually complementary.
This approach would also affirm that there are indeed two kinds of gambling, to wit, the illegal
and those authorized by law. Legalized gambling is not a modern concept; it is probably as old
as illegal gambling, if not indeed more so. The petitioners' suggestion that the Code authorizes
them to prohibit all kinds of gambling would erase the distinction between these two forms of
gambling without a clear indication that this is the will of the legislature. Plausibly, following this
theory, the City of Manila could, by mere ordinance, prohibit the Philippine Charity Sweepstakes
Office from conducting a lottery as authorized by R.A. 1169 and B.P. 42 or stop the races at the
San Lazaro Hippodrome as authorized by R.A. 309 and R.A. 983.
In light of all the above considerations, we see no way of arriving at the conclusion urged on us
by the petitioners that the ordinances in question are valid. On the contrary, we find that the
ordinances violate P.D. 1869, which has the character and force of a statute, as well as the
public policy expressed in the decree allowing the playing of certain games of chance despite
the prohibition of gambling in general.
The rationale of the requirement that the ordinances should not contravene a statute is obvious.
Municipal governments are only agents of the national government. Local councils exercise only
delegated legislative powers conferred on them by Congress as the national lawmaking body.
The delegate cannot be superior to the principal or exercise powers higher than those of the
latter. It is a heresy to suggest that the local government units can undo the acts of Congress,
from which they have derived their power in the first place, and negate by mere ordinance the
mandate of the statute.

Municipal corporations owe their origin to, and derive their powers and rights
wholly from the legislature. It breathes into them the breath of life, without which
they cannot exist. As it creates, so it may destroy. As it may destroy, it may
abridge and control. Unless there is some constitutional limitation on the right,
the legislature might, by a single act, and if we can suppose it capable of so great
a folly and so great a wrong, sweep from existence all of the municipal
corporations in the State, and the corporation could not prevent it. We know of no
limitation on the right so far as to the corporation themselves are concerned.
They are, so to phrase it, the mere tenants at will of the legislature. 11
This basic relationship between the national legislature and the local government units has not
been enfeebled by the new provisions in the Constitution strengthening the policy of local
autonomy. Without meaning to detract from that policy, we here confirm that Congress retains
control of the local government units although in significantly reduced degree now than under
our previous Constitutions. The power to create still includes the power to destroy. The power to
grant still includes the power to withhold or recall. True, there are certain notable innovations in
the Constitution, like the direct conferment on the local government units of the power to
tax, 12which cannot now be withdrawn by mere statute. By and large, however, the national
legislature is still the principal of the local government units, which cannot defy its will or modify
or violate it.
The Court understands and admires the concern of the petitioners for the welfare of their
constituents and their apprehensions that the welfare of Cagayan de Oro City will be
endangered by the opening of the casino. We share the view that "the hope of large or easy
gain, obtained without special effort, turns the head of the workman" 13 and that "habitual
gambling is a cause of laziness and ruin." 14 In People v. Gorostiza, 15 we declared: "The social
scourge of gambling must be stamped out. The laws against gambling must be enforced to the
limit." George Washington called gambling "the child of avarice, the brother of iniquity and the
father of mischief." Nevertheless, we must recognize the power of the legislature to decide, in its
own wisdom, to legalize certain forms of gambling, as was done in P.D. 1869 and impliedly
affirmed in the Local Government Code. That decision can be revoked by this Court only if it
contravenes the Constitution as the touchstone of all official acts. We do not find such
contravention here.
We hold that the power of PAGCOR to centralize and regulate all games of chance, including
casinos on land and sea within the territorial jurisdiction of the Philippines, remains unimpaired.
P.D. 1869 has not been modified by the Local Government Code, which empowers the local
government units to prevent or suppress only those forms of gambling prohibited by law.
Casino gambling is authorized by P.D. 1869. This decree has the status of a statute that cannot
be amended or nullified by a mere ordinance. Hence, it was not competent for the Sangguniang
Panlungsod of Cagayan de Oro City to enact Ordinance No. 3353 prohibiting the use of
buildings for the operation of a casino and Ordinance No. 3375-93 prohibiting the operation of

casinos. For all their praiseworthy motives, these ordinances are contrary to P.D. 1869 and the
public policy announced therein and are therefore ultra vires and void.
WHEREFORE, the petition is DENIED and the challenged decision of the respondent Court of
Appeals is AFFIRMED, with costs against the petitioners. It is so ordered.
Narvasa, C.J., Feliciano, Bidin, Regalado, Romero, Bellosillo, Melo, Quiason, Puno,
Vitug, Kapunan and Mendoza, JJ., concur.

Separate Opinions

PADILLA, J., concurring:

I concur with the majority holding that the city ordinances in question cannot modify much less
repeal PAGCOR's general authority to establish and maintain gambling casinos anywhere in the
Philippines under Presidential Decree No. 1869.
In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197 SCRA 52, I stated
in a separate opinion that:
. . . I agree with the decision insofar as it holds that the prohibition, control, and
regulation of the entire activity known as gambling properly pertain to "state
policy". It is, therefore, the political departments of government, namely, the
legislative and the executive that should decide on what government should do in
the entire area of gambling, and assume full responsibility to the people for such
policy." (Emphasis supplied)
However, despite the legality of the opening and operation of a casino in Cagayan de Oro City
by respondent PAGCOR, I wish to reiterate my view that gambling in any form runs counter to
the government's own efforts to re-establish and resurrect the Filipino moral character which is
generally perceived to be in a state of continuing erosion.
It is in the light of this alarming perspective that I call upon government to carefully weigh the
advantages and disadvantages of setting up more gambling facilities in the country.

That the PAGCOR contributes greatly to the coffers of the government is not enough reason for
setting up more gambling casinos because, undoubtedly, this will not help improve, but will
cause a further deterioration in the Filipino moral character.
It is worth remembering in this regard that, 1) what is legal is not always moral and 2) the ends
do not always justify the means.
As in Basco, I can easily visualize prostitution at par with gambling. And yet, legalization of the
former will not render it any less reprehensible even if substantial revenue for the government
can be realized from it. The same is true of gambling.
In the present case, it is my considered view that the national government (through PAGCOR)
should re-examine and re-evaluate its decision of imposing the gambling casino on the
residents of Cagayan de Oro City; for it is abundantly clear that public opinion in the city is very
much against it, and again the question must be seriously deliberated: will the prospects of
revenue to be realized from the casino outweigh the further destruction of the Filipino sense of
values?

DAVIDE, JR., J., concurring:

While I concur in part with the majority, I wish, however, to express my views on certain aspects
of this case.
I.
It must at once be noted that private respondent Pryce Properties Corporation (PRYCE) directly
filed with the Court of Appeals its so-called petition for prohibition, thereby invoking the said
court's original jurisdiction to issue writs of prohibition under Section 9(1) of B.P. Blg. 129. As I
see it, however, the principal cause of action therein is one for declaratory relief: to declare null
and unconstitutional for, inter alia, having been enacted without or in excess of jurisdiction,
for impairing the obligation of contracts, and for being inconsistent with public policy the
challenged ordinances enacted by the Sangguniang Panglungsod of the City of Cagayan de
Oro. The intervention therein of public respondent Philippine Amusement and Gaming
Corporation (PAGCOR) further underscores the "declaratory relief" nature of the action.
PAGCOR assails the ordinances for being contrary to the non-impairment and equal protection
clauses of the Constitution, violative of the Local Government Code, and against the State's
national policy declared in P.D. No. 1869. Accordingly, the Court of Appeals does not have
jurisdiction over the nature of the action. Even assuming arguendo that the case is one
for prohibition, then, under this Court's established policy relative to the hierarchy of courts, the
petition should have been filed with the Regional Trial Court of Cagayan de Oro City. I find no
special or compelling reason why it was not filed with the said court. I do not wish to entertain
the thought that PRYCE doubted a favorable verdict therefrom, in which case the filing of the
petition with the Court of Appeals may have been impelled by tactical considerations. A

dismissal of the petition by the Court of Appeals would have been in order pursuant to our
decisions in People vs. Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago vs.
Vasquez (217 SCRA 633 [1993]). In Cuaresma, this Court stated:
A last word. This court's original jurisdiction to issue writs of certiorari (as well as
prohibition, mandamus, quo warranto, habeas corpus and injunction) is not
exclusive. It is shared by this Court with Regional Trial Courts (formerly Courts of
First Instance), which may issue the writ, enforceable in any part of their
respective regions. It is also shared by this court, and by the Regional Trial Court,
with the Court of Appeals (formerly, Intermediate Appellate Court), although prior
to the effectivity of Batas Pambansa Bilang 129 on August 14, 1981, the latter's
competence to issue the extraordinary writs was restricted by those "in aid of its
appellate jurisdiction." This concurrence of jurisdiction is not, however, to be
taken as according to parties seeking any of the writs an absolute, unrestrained
freedom of choice of the court to which application therefor will be directed.
There is after all a hierarchy of courts. That hierarchy is determinative of the
revenue of appeals, and should also serve as a general determinant of the
appropriate forum for petitions for the extraordinary writs. A becoming regard for
that judicial hierarchy most certainly indicates that petitions for the issuance of
extraordinary writs against first level ("inferior") courts should be filed with the
Regional Trial Court, and those against the latter, with the Court of Appeals. A
direct invocation of the Supreme Court's original jurisdiction to issue these writs
should be allowed only when there are special and important reasons therefor,
clearly and specifically set out in the petition. This is established policy. It is a
policy that is necessary to prevent inordinate demands upon the Court's time and
attention which are better devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding of the Court's docket. Indeed,
the removal of the restriction of the jurisdiction of the Court of Appeals in this
regard, supra resulting from the deletion of the qualifying phrase, "in aid of its
appellate jurisdiction" was evidently intended precisely to relieve this
Court pro tanto of the burden of dealing with applications for extraordinary writs
which, but for the expansion of the Appellate Court's corresponding jurisdiction,
would have had to be filed with it. (citations omitted)
And in Vasquez, this Court said:
One final observation. We discern in the proceedings in this case a propensity on
the part of petitioner, and, for that matter, the same may be said of a number of
litigants who initiate recourses before us, to disregard the hierarchy of courts in
our judicial system by seeking relief directly from this Court despite the fact that
the same is available in the lower courts in the exercise of their original or
concurrent jurisdiction, or is even mandated by law to be sought therein. This
practice must be stopped, not only because of the imposition upon the previous
time of this Court but also because of the inevitable and resultant delay, intended

or otherwise, in the adjudication of the case which often has to be remanded or

referred to the lower court as the proper forum under the rules of procedure, or
as better equipped to resolve the issues since this Court is not a trier of facts.
We, therefore, reiterate the judicial policy that this Court will not entertain direct
resort to it unless the redress desired cannot be obtained in the appropriate
courts or where exceptional and compelling circumstances justify availment of a
remedy within and calling for the exercise of our primary jurisdiction.
II.
The challenged ordinances are (a) Ordinance No. 3353 entitled, "An Ordinance Prohibiting the
Issuance of Business Permit and Canceling Existing Business Permit To Any Establishment for
the Using and Allowing to be Used Its Premises or Portion Thereof for the Operation of Casino,"
and (b) Ordinance No. 3375-93 entitled, "An Ordinance Prohibiting the Operation of Casino and
Providing Penalty for Violation Therefor." They were enacted to implement Resolution No. 2295
entitled, "Resolution Declaring As a Matter of Policy to Prohibit and/or Not to Allow the
Establishment of the Gambling Casino in the City of Cagayan de Oro," which was promulgated
on 19 November 1990 nearly two years before PRYCE and PAGCOR entered into a contract
of lease under which the latter leased a portion of the former's Pryce Plaza Hotel for the
operation of a gambling casino which resolution was vigorously reiterated in Resolution No.
2673 of 19 October 1992.
The challenged ordinances were enacted pursuant to the Sangguniang Panglungsod's express
powers conferred by Section 458, paragraph (a), subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv),
and (vii), Local Government Code, and pursuant to its implied power under Section 16 thereof
(the general welfare clause) which reads:
Sec. 16. General Welfare. Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units
shall ensure and support, among other things, the preservation and enrichment
of culture, promote health and safety, enhance the right of the people to a
balanced ecology, encourage and support the development of appropriate and
self-reliant scientific and technological capabilities, improve public morals,
enhance economic prosperity and social justice, promote full employment among
their residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants.
The issue that necessarily arises is whether in granting local governments (such as the City of
Cagayan de Oro) the above powers and functions, the Local Government Code has, pro tanto,
repealed P.D. No. 1869 insofar as PAGCOR's general authority to establish and maintain
gambling casinos anywhere in the Philippines is concerned.

I join the majority in holding that the ordinances cannot repeal P.D. No. 1869.
III.
The nullification by the Court of Appeals of the challenged ordinances
as unconstitutional primarily because it is in contravention to P.D. No. 1869 is unwarranted. A
contravention of a law is not necessarily a contravention of the constitution. In any case, the
ordinances can still stand even if they be conceded as offending P.D. No. 1869. They can be
reconciled, which is not impossible to do. So reconciled, the ordinances should be construed as
not applying to PAGCOR.
IV.
From the pleadings, it is obvious that the government and the people of Cagayan de Oro City
are, for obvious reasons, strongly against the opening of the gambling casino in their city.
Gambling, even if legalized, would be inimical to the general welfare of the inhabitants of the
City, or of any place for that matter. The PAGCOR, as a government-owned corporation, must
consider the valid concerns of the people of the City of Cagayan de Oro and should not impose
its will upon them in an arbitrary, if not despotic, manner.

# Separate Opinions

PADILLA, J., concurring:

I concur with the majority holding that the city ordinances in question cannot modify much less
repeal PAGCOR's general authority to establish and maintain gambling casinos anywhere in the
Philippines under Presidential Decree No. 1869.
In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197 SCRA 52, I stated
in a separate opinion that:
. . . I agree with the decision insofar as it holds that the prohibition, control, and
regulation of the entire activity known as gambling properly pertain to "state
policy". It is, therefore, the political departments of government, namely, the
legislative and the executive that should decide on what government should do
in the entire area of gambling, and assume full responsibility to the people for
such policy. (emphasis supplied)
However, despite the legality of the opening and operation of a casino in Cagayan de Oro City
by respondent PAGCOR, I wish to reiterate my view that gambling in any form runs counter to

the government's own efforts to re-establish and resurrect the Filipino moral character which is
generally perceived to be in a state of continuing erosion.
It is in the light of this alarming perspective that I call upon government to carefully weigh the
advantages and disadvantages of setting up more gambling facilities in the country.
That the PAGCOR contributes greatly to the coffers of the government is not enough reason for
setting up more gambling casinos because, undoubtedly, this will not help improve, but will
cause a further deterioration in the Filipino moral character.
It is worth remembering in this regard that, 1) what is legal is not always moral and 2) the ends
do not always justify the means.
As in Basco, I can easily visualize prostitution at par with gambling. And yet, legalization of the
former will not render it any less reprehensible even if substantial revenue for the government
can be realized from it. The same is true of gambling.
In the present case, it is my considered view that the national government (through PAGCOR)
should re-examine and re-evaluate its decision of imposing the gambling casino on the
residents of Cagayan de Oro City; for it is abundantly clear that public opinion in the city is very
much against it, and again the question must be seriously deliberated: will the prospects of
revenue to be realized from the casino outweigh the further destruction of the Filipino sense of
values?
DAVIDE, JR., J., concurring:
While I concur in part with the majority, I wish, however, to express my views on certain aspects
of this case.
I.
It must at once be noted that private respondent Pryce Properties Corporation (PRYCE) directly
filed with the Court of Appeals its so-called petition for prohibition, thereby invoking the said
court's original jurisdiction to issue writs of prohibition under Section 9(1) of B.P. Blg. 129. As I
see it, however, the principal cause of action therein is one for declaratory relief: to declare null
and unconstitutional for, inter alia, having been enacted without or in excess of jurisdiction,
for impairing the obligation of contracts, and for being inconsistent with public policy the
challenged ordinances enacted by the Sangguniang Panglungsod of the City of Cagayan de
Oro. The intervention therein of public respondent Philippine Amusement and Gaming
Corporation (PAGCOR) further underscores the "declaratory relief" nature of the action.
PAGCOR assails the ordinances for being contrary to the non-impairment and equal protection
clauses of the Constitution, violative of the Local Government Code, and against the State's
national policy declared in P.D. No. 1869. Accordingly, the Court of Appeals does not have
jurisdiction over the nature of the action. Even assuming arguendo that the case is one
for prohibition, then, under this Court's established policy relative to the hierarchy of courts, the

petition should have been filed with the Regional Trial Court of Cagayan de Oro City. I find no
special or compelling reason why it was not filed with the said court. I do not wish to entertain
the thought that PRYCE doubted a favorable verdict therefrom, in which case the filing of the
petition with the Court of Appeals may have been impelled by tactical considerations. A
dismissal of the petition by the Court of Appeals would have been in order pursuant to our
decisions in People vs. Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago vs.
Vasquez (217 SCRA 633 [1993]). In Cuaresma, this Court stated:
A last word. This court's original jurisdiction to issue writs of certiorari (as well as
prohibition, mandamus, quo warranto, habeas corpus and injunction) is not
exclusive. It is shared by this Court with Regional Trial Courts (formerly Courts of
First Instance), which may issue the writ, enforceable in any part of their
respective regions. It is also shared by this court, and by the Regional Trial Court,
with the Court of Appeals (formerly, Intermediate Appellate Court), although prior
to the effectivity of Batas Pambansa Bilang 129 on August 14, 1981, the latter's
competence to issue the extraordinary writs was restricted by those "in aid of its
appellate jurisdiction." This concurrence of jurisdiction is not, however, to be
taken as according to parties seeking any of the writs an absolute, unrestrained
freedom of choice of the court to which application therefor will be directed.
There is after all a hierarchy of courts. That hierarchy is determinative of the
revenue of appeals, and should also serve as a general determinant of the
appropriate forum for petitions for the extraordinary writs. A becoming regard for
that judicial hierarchy most certainly indicates that petitions for the issuance of
extraordinary writs against first level ("inferior") courts should be filed with the
Regional Trial Court, and those against the latter, with the Court of Appeals. A
direct invocation of the Supreme Court's original jurisdiction to issue these writs
should be allowed only when there are special and important reasons therefor,
clearly and specifically set out in the petition. This is established policy. It is a
policy that is necessary to prevent inordinate demands upon the Court's time and
attention which are better devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding of the Court's docket. Indeed,
the removal of the restriction of the jurisdiction of the Court of Appeals in this
regard, supra resulting from the deletion of the qualifying phrase, "in aid of its
appellate jurisdiction" was evidently intended precisely to relieve this
Court pro tanto of the burden of dealing with applications for extraordinary writs
which, but for the expansion of the Appellate Court's corresponding jurisdiction,
would have had to be filed with it. (citations omitted)
And in Vasquez, this Court said:
One final observation. We discern in the proceedings in this case a propensity on
the part of petitioner, and, for that matter, the same may be said of a number of
litigants who initiate recourses before us, to disregard the hierarchy of courts in
our judicial system by seeking relief directly from this Court despite the fact that

the same is available in the lower courts in the exercise of their original or
concurrent jurisdiction, or is even mandated by law to be sought therein. This
practice must be stopped, not only because of the imposition upon the previous
time of this Court but also because of the inevitable and resultant delay, intended
or otherwise, in the adjudication of the case which often has to be remanded or
referred to the lower court as the proper forum under the rules of procedure, or
as better equipped to resolve the issues since this Court is not a trier of facts.
We, therefore, reiterate the judicial policy that this Court will not entertain direct
resort to it unless the redress desired cannot be obtained in the appropriate
courts or where exceptional and compelling circumstances justify availment of a
remedy within and calling for the exercise of our primary jurisdiction.
II.
The challenged ordinances are (a) Ordinance No. 3353 entitled, "An Ordinance Prohibiting the
Issuance of Business Permit and Canceling Existing Business Permit To Any Establishment for
the Using and Allowing to be Used Its Premises or Portion Thereof for the Operation of Casino,"
and (b) Ordinance No. 3375-93 entitled, "An Ordinance Prohibiting the Operation of Casino and
Providing Penalty for Violation Therefor." They were enacted to implement Resolution No. 2295
entitled, "Resolution Declaring As a Matter of Policy to Prohibit and/or Not to Allow the
Establishment of the Gambling Casino in the City of Cagayan de Oro," which was promulgated
on 19 November 1990 nearly two years before PRYCE and PAGCOR entered into a contract
of lease under which the latter leased a portion of the former's Pryce Plaza Hotel for the
operation of a gambling casino which resolution was vigorously reiterated in Resolution No.
2673 of 19 October 1992.
The challenged ordinances were enacted pursuant to the Sangguniang Panglungsod's express
powers conferred by Section 458, paragraph (a), subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv),
and (vii), Local Government Code, and pursuant to its implied power under Section 16 thereof
(the general welfare clause) which reads:
Sec. 16. General Welfare. Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units
shall ensure and support, among other things, the preservation and enrichment
of culture, promote health and safety, enhance the right of the people to a
balanced ecology, encourage and support the development of appropriate and
self-reliant scientific and technological capabilities, improve public morals,
enhance economic prosperity and social justice, promote full employment among
their residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants.

The issue that necessarily arises is whether in granting local governments (such as the City of
Cagayan de Oro) the above powers and functions, the Local Government Code has, pro tanto,
repealed P.D. No. 1869 insofar as PAGCOR's general authority to establish and maintain
gambling casinos anywhere in the Philippines is concerned.
I join the majority in holding that the ordinances cannot repeal P.D. No. 1869.
III.
The nullification by the Court of Appeals of the challenged ordinances
as unconstitutional primarily because it is in contravention to P.D. No. 1869 is unwarranted. A
contravention of a law is not necessarily a contravention of the constitution. In any case, the
ordinances can still stand even if they be conceded as offending P.D. No. 1869. They can be
reconciled, which is not impossible to do. So reconciled, the ordinances should be construed as
not applying to PAGCOR.
IV.
From the pleadings, it is obvious that the government and the people of Cagayan de Oro City
are, for obvious reasons, strongly against the opening of the gambling casino in their city.
Gambling, even if legalized, would be inimical to the general welfare of the inhabitants of the
City, or of any place for that matter. The PAGCOR, as a government-owned corporation, must
consider the valid concerns of the people of the City of Cagayan de Oro and should not impose
its will upon them in an arbitrary, if not despotic, manner.