Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-22008 November 3, 1924

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee,

vs.
JULIO POMAR, defendant-appellant.

Araneta and Zaragoza for appellant.

Attorney-General Villa-Real for appellee.

JOHNSON, J.:

The only question presented by this appeal is whether or not the provisions of sections 13 and 15 of Act No.
3071 are a reasonable and lawful exercise of the police power of the state.

It appears from the record that on the 26th day of October, 1923, the prosecuting attorney of the City of Manila
presented a complaint in the Court of First Instance, accusing the defendant of a violation of section 13 in
connection with section 15 of Act No. 3071 of the Philippine Legislature. The complaint alleged:

That on or about the 27th day of August, 1923, and sometime prior thereto, in the City of Manila,
Philippine Islands, the said accused, being the manager and person in charge of La Flor de la Isabela, a
tobacco factory pertaining to La Campania General de Tabacos de Filipinas, a corporation duly
authorized to transact business in said city, and having, during the year 1923, in his employ and service
as cigar-maker in said factory, a woman by the name of Macaria Fajardo, whom he granted vacation
leave which began on the 16th day of July, 1923, by reason of her pregnancy, did then and there
willfully, unlawfully, and feloniously fail and refuse to pay to said woman the sum of eighty pesos (P80),
Philippine currency, to which she was entitled as her regular wages corresponding to thirty days before
and thirty days after her delivery and confinement which took place on the 12th day of August, 1923,
despite and over the demands made by her, the said Macaria Fajardo, upon said accused, to do so.

To said complaint, the defendant demurred, alleging that the facts therein contained did not constitute an
offense. The demurrer was overruled, whereupon the defendant answered and admitted at the trial all of the
allegations contained in the complaint, and contended that the provisions of said Act No. 3071, upon which the
complaint was based were illegal, unconstitutional and void.

Upon a consideration of the facts charged in the complaint and admitted by the defendant, the Honorable C. A.
Imperial, judge, found the defendant guilty of the alleged offense described in the complaint, and sentenced him
to pay a fine of P50, in accordance with the provisions of section 15 of said Act, to suffer subsidiary
imprisonment in case of insolvency, and to pay the costs.

From that sentence the defendant appealed, and now makes the following assignments of error: That the court
erred in overruling the demurrer; in convicting him of the crime charged in the information; and in not declaring
section 13 of Act No. 3071, unconstitutional:

Section 13 of Act No. 3071 is as follows:

Every person, firm or corporation owning or managing a factory, shop or place of labor of any description
shall be obliged to grant to any woman employed by it as laborer who may be pregnant, thirty days
vacation with pay before and another thirty days after confinement: Provided, That the employer shall not
discharge such laborer without just cause, under the penalty of being required to pay to her wages
equivalent to the total of two months counted from the day of her discharge.

Section 15 of the same Act is as follows:

 Any person, firm or corporation violating any of the provisions of this Act shall be punished by a fine of
not less than fifty pesos nor more than two hundred and fifty, or by imprisonment for not less than ten
days nor more than six months, or both, in the discretion of the court.

In the case of firms or corporations, the presidents, directors or managers thereof or, in their default, the
persons acting in their stead, shall be criminally responsible for each violation of the provisions of this
Act.

Said section 13 was enacted by the Legislature of the Philippine Islands in the exercise of its supposed police
power, with the praiseworthy purpose of safeguarding the health of pregnant women laborers in "factory, shop or
place of labor of any description," and of insuring to them, to a certain extent, reasonable support for one month
before and one month after their delivery. The question presented for decision by the appeal is whether said Act
has been adopted in the reasonable and lawful exercise of the police power of the state.

In determining whether a particular law promulgated under the police power of the state is, in fact, within said
power, it becomes necessary first, to determine what that power is, its limits and scope. Literally hundreds of
decisions have been promulgated in which definitions of the police power have been attempted. An examination
of all of said decisions will show that the definitions are generally limited to particular cases and examples, which
are as varied as they are numerous.

By reason of the constant growth of public opinion in a developing civilization, the term "police power" has never
been, and we do not believe can be, clearly and definitely defined and circumscribed. One hundred years ago,
for example, it is doubtful whether the most eminent jurist, or court, or legislature would have for a moment
thought that, by any possibility, a law providing for the destruction of a building in which alcoholic liquors were
sold, was within a reasonable and lawful exercise of the police power. (Mugler vs. Kansas, 123 U. S., 623.) The
development of civilization, the rapidly increasing population, the growth of public opinion, with a desire on the
part of the masses and of the government to look after and care for the interests of the individuals of the state,
have brought within the police power of the state many questions for regulation which formerly were not so
considered. In a republican form of government public sentiment wields a tremendous influence upon what the
state may or may not do, for the protection of the health and public morals of the people. Yet, neither public
sentiment, nor a desire to ameliorate the public morals of the people of the state will justify the promulgation of a
law which contravenes the express provisions of the fundamental law of the people — the constitutional of the
state.

A definition of the police power of the state must depend upon the particular law and the particular facts to which
it is to be applied. The many definitions which have been given by the highest courts may be examined,
however, for the purpose of giving us a compass or guide to assist us in arriving at a correct conclusion in the
particular case before us. Sir William Blackstone, one of the greatest expounders of the common law, defines
the police power as "the due regulation and domestic order of the kingdom, whereby the inhabitants of a state,
like members of a well-governed family, are bound to conform their general behavior to the rules of propriety,
good neighborhood, and good manners, and to be decent, industrious, and inoffensive in their respective
stations." (4 Blackstone's Commentaries, 162.)

Mr. Jeremy Bentham, in his General View of Public Offenses, gives us the following definition: "Police is in
general a system of precaution, either for the prevention of crimes or of calamities. Its business may be
distributed into eight distinct branches: (1) Police for the prevention of offenses; (2) police for the prevention of
calamities; (3) police for the prevention of endemic diseased; (4) police of charity; (5) police of interior
communications; (6) police of public amusements; (7) police for recent intelligence; (8) police for registration."

Mr. Justice Cooley, perhaps the greatest expounder of the American Constitution, says: "The police power is the
power vested in the legislature by the constitution to make, ordain, and establish all manner of wholesome and
reasonable laws, statutes, and ordinances, either with penalties or without, not repugnant to the constitution, as
they shall judge to be for the good and welfare of the commonwealth, and of the subject of the same. . . ."
(Cooley's Constitutional Limitations, p. 830.)

In the case of Commonwealth of Massachusetts vs. Alger (7 Cushing, 53), we find a very comprehensive
definition of the police power of the state. In that case it appears that the colony of Massachusetts in 1647
adopted an Act to preserve the harbor of Boston and to prevent encroachments therein. The defendant
unlawfully erected, built, and established in said harbor, and extended beyond said lines and into and over the
tide water of the Commonwealth a certain superstructure, obstruction and encumbrance. Said Act provided a
penalty for its violation of a fine of not less than $1,000 nor more than $5,000 for every offense, and for the
destruction of said buildings, or structures, or obstructions as a public nuisance. Alger was arrested and placed
on trial for violation of said Act. His defense was that the Act of 1647 was illegal and void, because if permitted
the destruction of private property without compensation. Mr. Justice Shaw, speaking for the court in that said,
said: "We think it is a settled principle, growing out of the nature of well-ordered civil society, that every holder of
property, however absolute and unqualified may be his title, holds it under the implied liability that his use of it
may be so regulated, that it shall not be injurious to the equal environment of others having an equal right to the
enjoyment of their property nor injurious to the rights of the community. All property in this commonwealth, as
well that in the interior as that bordering on tide waters, is derived directly or indirectly from the government and
held subject to those general regulations, which are necessary to the common good and general welfare. Rights
of property, like all other social and conventional rights, are subject to such reasonable limitations in their
enjoyment, as shall prevent them from being injurious, and to such reasonable restraints and regulations
established by law, as the legislature, under the governing and controlling power vested in them by the
constitution, may think necessary and expedient." Mr. Justice Shaw further adds: ". . . The power we allude to is
rather the police power, the power vested in the legislature by the constitution, to make, ordain and establish all
manner of wholesome and reasonable laws, statutes and ordinances, either with penalties or without, not
repugnant to the constitution, as they shall judge to be for the good and welfare of the commonwealth, and of the
subjects of the same."

This court has, in the case of Case vs. Board of Health and Heiser (24 Phil., 250), in discussing the police power
of the state, had occasion to say: ". . . It is a well settled principle, growing out of the nature of well-ordered and
civilized society, that every holder of property, however absolute and unqualified may be his title, holds it under
the implied liability that his use of it shall not be injurious to the equal enjoyment of others having an equal right
to the enjoyment of their property, nor injurious to the rights of the community. All property in the state is held
subject to its general regulations, which are necessary to the common good and general welfare. Rights of
property, like all other social and conventional rights, are subject to such reasonable limitations in their
enjoyment as shall prevent them from being injurious, and to such reasonable restraints and regulations,
established by law, as the legislature, under the governing and controlling power vested in them by the
constitution, may think necessary and expedient. The state, under the police power is possessed with plenary
power to deal with all matters relating to the general health, morals, and safety of the people, so long as it does
not contravene any positive inhibition of the organic law and providing that such power is not exercised in such a
manner as to justify the interference of the courts to prevent positive wrong and oppression."

Many other definitions have been given not only by the Supreme Court of the United States but by the Supreme
Court of every state of the Union. The foregoing definitions, however, cover the general field of all of the
definitions, found in jurisprudence. From all of the definitions we conclude that it is much easier to perceive and
realize the existence and sources of the police power than to exactly mark its boundaries, or prescribe limits to
its exercise by the legislative department of the government.

The most recent definition which has been called to our attention is that found in the case of
Adkins vs. Children's Hospital of the District of Columbia (261 U. S., 525). In that case the controversy arose in
this way: A children's hospital employed a number of women at various rates of wages, which were entirely
satisfactory to both the hospital and the employees. A hotel company employed a woman as elevator operator at
P35 per month and two meals a day under healthy and satisfactory conditions, and she did not risk to lose her
position as she could not earn so much anywhere else. Her wages were less than the minimum fixed by a board
created under a law for the purpose of fixing a minimum wage for women and children, with a penalty providing
a punishment for a failure or refusal to pay the minimum wage fixed. The wage paid by the hotel company of
P35 per month and two meals a day was less than the minimum wage fixed by said board. By reason of the
order of said board, the hotel company, was about to discharge her, as it was unwilling to pay her more and
could not give her employment at that salary without risking the penalty of a fine and imprisonment under the
law. She brought action to enjoin the hotel company from discharging her upon the ground that the enforcement
of the "Minimum Wage Act" would deprive her of her employment and wages without due process of law, and
that she could not get as good a position anywhere else. The constitutionality of the Act was squarely presented
to the Supreme Court of the United States for decision.

The Supreme Court of the United States held that said Act was void on the ground that the right to contract
about one's own affairs was a part of the liberty of the individual under the constitution, and that while there was
no such thing as absolute freedom of contract, and it was necessary subject to a great variety of restraints, yet
none of the exceptional circumstances, which at times justify a limitation upon one's right to contract for his own
services, applied in the particular case.

In the course of the decision in that case (Adkins vs. Children's Hospital of the District of Columbia, 261 U. S.,
525), Mr. Justice Sutherland, after a statement of the fact and making reference to the particular law, said:
 The statute now under consideration is attacked upon the ground that it authorizes an unconstitutional
interference with the freedom of contract including within the guarantees of the due process clause of the
5th Amendment. That the right to contract about one's affairs is a part of the liberty of the individual
protected by this clause is settled by the decision of this court, and is no longer open to question. Within
this liberty are contracts of employment of labor. In making such contracts, generally speaking, the
parties have an equal right to obtain from each other the best terms they can as the result of private
bargaining. (Allgeyer vs.Louisiana, 165 U. S., 578; 591; Adair vs. United States, 208 U. S., 161;
Muller vs. Oregon, 208 U. S., 412, 421.)

xxx xxx xxx

The law takes account of the necessities of only one party to the contract. It ignores the necessities of
the employer by compelling him to pay not less than a certain sum, not only whether the employee is
capable of earning it, but irrespective of the ability of his business to sustain the burden, generously
leaving him, of course, the privilege of abandoning his business as an alternative for going on at a loss.
Within the limits of the minimum sum, he is precluded, under penalty of fine and imprisonment, from
adjusting compensation to the differing merits of his employees. It compels him to pay at least the sum
fixed in any event, because the employee needs it, but requires no service of equivalent value from the
employee. It (the law) therefore undertakes to solve but one-half of the problem. The other half is the
establishment of a corresponding standard of efficiency; and this forms no part of the policy of the
legislation, although in practice the former half without the latter must lead to ultimate failure, in
accordance with the inexorable law that no one can continue indefinitely to take out more than he puts in
without ultimately exhausting the supply. The law . . . takes no account of periods of distress and
business depression, or crippling losses, which may leave the employer himself without adequate means
of livelihood. To the extent that the sum fixed exceeds the fair value of the services rendered, it amounts
to a compulsory exaction from the employer for the support of a partially indigent person, for whose
condition there rests upon him no peculiar responsibility, and therefore, in effect, arbitrarily shifts to his
shoulders a burden which, if it belongs to anybody, belongs to society as a whole.

The failure of this state which, perhaps more than any other, puts upon it the stamp of invalidity is that it
exacts from the employer an arbitrary payment for a purpose and upon a basis having no casual
connection with his business, or the contract, or the work the employee engages to do. The declared
basis, as already pointed out, is not the value of the service rendered, but the extraneous circumstances
that the employee needs to get a prescribed sum of money to insure her subsistence, health and morals.
. . . The necessities of the employee are alone considered, and these arise outside of the employment,
are the same when there is no employment, and as great in one occupation as in another. . . . In
principle, there can be no difference between the case of selling labor and the case of selling goods. If
one goes to the butcher, the baker, or grocer to buy food, he is morally entitled to obtain the worth of his
money, but he is not entitle to more. If what he gets is worth what he pays, he is not justified in
demanding more simply because he needs more; and the shopkeeper, having dealt fairly and honestly in
that transaction, is not concerned in any peculiar sense with the question of his customer's necessities.
Should a statute undertake to vest in a commission power to determine the quantity of food necessary
for individual support, and require the shopkeeper, if he sell to the individual at all, to furnish that quantity
at not more than a fixed maximum, it would undoubtedly fall before the constitutional test. The fallacy of
any argument in support of the validity of such a statute would be quickly exposed. The argument in
support of that now being considered is equally fallacious, though the weakness of it may not be so
plain. . . .

It has been said that the particular statute before us is required in the interest of social justice for whose end
freedom of contract may lawfully be subjected to restraint. The liberty of the individual to do as he pleases, even
in innocent matters, is not absolute. That liberty must frequently yield to the common good, and the line beyond
which the power of interference may not be pressed is neither definite nor unalterable, may be made to move,
within limits not well defined, with changing needs and circumstances.

The late Mr. Justice Harlan, in the case of Adair vs. United States (208 U. S., 161, 174), said that the right of a
person to sell his labor upon such terms as he deems proper is, in its essence, the same as the right of the
purchaser of labor to prescribe the conditions upon which he will accept such labor from the person offering to
sell. In all such particulars the employer and the employee have equality of right, and any legislation that disturbs
that equality is an arbitrary interference with the liberty of contract, which no government can legally justify in a
free land, under a constitution which provides that no person shall be deprived of his liberty without due process
of law.
Mr. Justice Pitney, in the case of Coppage vs. Kansas (235 U. S., 1, 14), speaking for the Supreme Court of the
United States, said: ". . . Included in the right of personal liberty and the right of private property — partaking of
the nature of each — is the right to make contracts for the acquisition of property. Chief among such contracts is
that of personal employment, by which labor and other services are exchange for money or other forms of
property. If this right be struck down or arbitrarily interfered with, there is a substantial impairment of liberty in the
long established constitutional sense. The right is as essential to the laborer as to the capitalist, to the poor as to
the rich; for the vast majority of persons have no other honest way to begin to acquire property, save by working
for money."

The right to liberty includes the right to enter into contracts and to terminate contracts. In the case of
Gillespie vs.People (118 Ill., 176, 183-185) it was held that a statute making it unlawful to discharge an
employee because of his connection with any lawful labor organization, and providing a penalty therefor, is void,
since the right to terminate a contract, subject to liability to respond in a civil action for an unwarranted
termination, is within the protection of the state and Federal constitutions which guarantee that no person shall
be deprived of life, liberty or property without due process of law. The court said in part: ". . . One citizen cannot
be compelled to give employment to another citizen, nor can anyone be compelled to be employed against his
will. The Act of 1893, now under consideration, deprives the employer of the right to terminate his contract with
his employee. The right to terminate such a contract is guaranteed by the organic law of the state. The
legislature is forbidden to deprive the employer or employee of the exercise of that right. The legislature has no
authority to pronounce the performance of an innocent act criminal when the public health, safety, comfort or
welfare is not interfered with. The statute in question says that, if a man exercises his constitutional right to
terminate a contract with his employee, he shall, without a hearing, be punished as for the commission of a
crime.

xxx xxx xxx

Liberty includes not only the right to labor, but to refuse to labor, and, consequently, the right to contract
to labor or for labor, and to terminate such contracts, and to refuse to make such contracts. The
legislature cannot prevent persons, who are sui juris, from laboring, or from making such contracts as
they may see fit to make relative to their own lawful labor; nor has it any power by penal laws to prevent
any person, with or without cause, from refusing to employ another or to terminate a contract with him,
subject only to the liability to respond in a civil action for an unwarranted refusal to do that which has
been agreed upon. Hence, we are of the opinion that this Act contravenes those provisions of the state
and Federal constitutions, which guarantee that no person shall be deprived of life, liberty or property
without due process of law.

The statute in question is exactly analogous to the "Minimum Wage Act" referred to above. In section 13 it will be
seen that no person, firm, or corporation owning or managing a factory shop, or place of labor of any description,
can make a contract with a woman without incurring the obligation, whatever the contract of employment might
be, unless he also promise to pay to such woman employed as a laborer, who may become pregnant, her
wages for thirty days before and thirty days after confinement. In other words, said section creates a term or
condition in every contract made by every person, firm, or corporation with any woman who may, during the
course of her employment, become pregnant, and a failure to include in said contract the terms fixed to a fine
and imprisonment. Clearly, therefore, the law has deprived, every person, firm, or corporation owning or
managing a factory, shop or place of labor of any description within the Philippine Islands, of his right to enter
into contracts of employment upon such terms as he and the employee may agree upon. The law creates a term
in every such contract, without the consent of the parties. Such persons are, therefore, deprived of their liberty to
contract. The constitution of the Philippine Islands guarantees to every citizen his liberty and one of his liberties
is the liberty to contract.

It is believed and confidently asserted that no case can be found, in civilized society and well-organized
governments, where individuals have been deprived of their property, under the police power of the state,
without compensation, except in cases where the property in question was used for the purpose of violating
some legally adopted, or constitutes a nuisance. Among such cases may be mentioned: Apparatus used in
counterfeiting the money of the state; firearms illegally possessed; opium possessed in violation of law;
apparatus used for gambling in violation of law; buildings and property used for the purpose of violating laws
prohibiting the manufacture and sale of intoxicating liquors; and all cases in which the property itself has become
a nuisance and dangerous and detrimental to the public health, morals and general welfare of the state. In all of
such cases, and in many more which might be cited, the destruction of the property is permitted in the exercise
of the police power of the state. But it must first be established that such property was used as the instrument for
the violation of a valid existing law. (Mugler vs. Kansas, 123 U. S., 623; Slaughter-House Cases, 16 Wall., [U.
S.], 36; Butchers' Union, etc., Co. vs.Crescent City, etc., Co., 111 U. S., 746 John Stuart Mill — "On Liberty," 28,
29.)

Without further attempting to define what are the peculiar subjects or limits of the police power, it may safely be
affirmed, that every law for the restraint and punishment of crimes, for the preservation of the public peace,
health, and morals, must come within this category. But the state, when providing by legislation for the protection
of the public health, the public morals, or the public safety, is subject to and is controlled by the paramount
authority of the constitution of the state, and will not be permitted to violate rights secured or guaranteed by that
instrument or interfere with the execution of the powers and rights guaranteed to the people under their law —
the constitution. (Mugler vs. Kansas, 123 U. S., 623.)

The police power of the state is a growing and expanding power. As civilization develops and public conscience
becomes awakened, the police power may be extended, as has been demonstrated in the growth of public
sentiment with reference to the manufacture and sale of intoxicating liquors. But that power cannot grow faster
than the fundamental law of the state, nor transcend or violate the express inhibition of the people's law — the
constitution. If the people desire to have the police power extended and applied to conditions and things
prohibited by the organic law, they must first amend that law. 1aw phil.net

It will also be noted from an examination of said section 13, that it takes no account of contracts for the
employment of women by the day nor by the piece. The law is equally applicable to each case. It will hardly be
contended that the person, firm or corporation owning or managing a factory, shop or place of labor, who
employs women by the day or by the piece, could be compelled under the law to pay for sixty days during which
no services were rendered.

It has been decided in a long line of decisions of the Supreme Court of the United States, that the right to
contract about one's affairs is a part of the liberty of the individual, protected by the "due process of law" clause
of the constitution. (Allgeyer vs. Louisiana, 165 U. S., 578, 591; New York Life Ins. Co. vs. Dodge, 246 U. S.,
357, 373, 374; Coppage vs. Kansas, 236 U. S., 1, 10, 14; Adair vs. United States, 208 U. S., 161;
Lochner vs. New York, 198 U. S.; 45, 49; Muller vs. Oregon, 208 U. S., 412, 421.)

The rule in this jurisdiction is, that the contracting parties may establish any agreements, terms, and conditions
they may deem advisable, provided they are not contrary to law, morals or public policy. (Art. 1255, Civil Code.)

For all of the foregoing reasons, we are fully persuaded, under the facts and the law, that the provisions of
section 13, of Act No. 3071 of the Philippine Legislature, are unconstitutional and void, in that they violate and
are contrary to the provisions of the first paragraph of section 3 of the Act of Congress of the United States of
August 29, 1916. (Vol. 12, Public Laws, p. 238.)

Therefore, the sentence of the lower court is hereby revoked, the complaint is hereby dismissed, and the
defendant is hereby discharged from the custody of the law, with costs de oficio. So ordered.

Street, Malcolm, Avanceña, Villamor, Ostrand and Romualdez, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-46892 June 28, 1940

ANTAMOK GOLDFIELDS MINING COMPANY, recurrente,

vs.
COURT OF INDUSTRIAL RELATIONS, and NATIONAL LABOR UNION, INC., recurridos.

Sres. DeWitt, Perkins y Ponce Enrile en representacionde la recurrente.

Sres. Paguia y Lerum en represetacion de la recurrida, National Labor Union.

IMPERIAL, J.:
Esta es una apelacion mediante certiorari interpuesta por la recurrente contra la orden dictada por el Tribunal de
Relaciones Industriales el 6 de mayo de 1939 que le obligo a que reponga en sus anteriores trabajos o en otros
substancialmente equivalentes a los 45 obreros enumerados en la peticion del 31 de marzo de 1939 y a los 10
obreros encabezados por A. Haber que fueron excluidos indefinidamente, dentro de 10 dias desde que reciba
copia de la orden; que pague a estos 55 obreros los jornales que debieron haber percibido desde la fecha de su
suspension o separacion hasta la de su reposicion; y que pendiente de resolucion las otras cuestiones que las
partes han sometido, la recurrente se abstenga, bajo pena de desacato, de despedir o excluir, sin permiso
previo del tribunal, a cualquier obrero o empleado que se hallaba bajo su servicio en la epoca en que surgio la
disputa que este actualmente trabajando en las minas o que sea repuesto en su trabajo de conformidad con la
orden; y contra la resolucion del mismo tribunal del 17 de agosto de 1939 que denego la mocion de
reconsideracion de la recurrente presentada el 26 de mayo de 1939.

El 12 de diciembrre de 1938 la recurrida National Labor union, Inc., en representacion de los obreros y
empleados de la recurrente que eran miembros de dicha union obrera, dirigio una carta a la recurrente
solicitando 21 reclamaciones en favor de sus afiliados. La carta fue recibida por la oficina de la recurrente en
Manila en un sobre timbrado por la estafeta de Baguio el 30 de mismo mes. Los funcionarios de la recurrente
convocaron a un meeting a sus empleados el 2 de enero de 1939 y en el informaron a todos sus obreros que
algunad de las demandas se habian aceptado y se habian puesto ya en practica, otras serian consideradas y
las restantes iban a ser rechazadas por ser irrazonables, y se les aconsejo que no recurrieran a la violencia y
observaran metodos legales en el arreglo de sus diferencias con la recurrentes. En la noche del mismo dia los
obreros y empleados de la recurrente se declararon en huelga y abandonaron sus trabajos. La recurrnte dio
cuenta inmediatamente de esta huelga al Departamento del Trabajo y solicito su intervencion con el fin de
solucionarla. El Secretario del Trabajo designo a Adolfo Umengan, Investigador Especial del Departamento, y a
Eladio C. Leaño, Defensor Publico de la Provincia Montañosa, para que intervinieran y vieran la manera de
solucionar la huelga. Estos funcionarios convocaron una conferencia a la que acudieron funcionarios de la
recurrente, representante de los huelguistas y Luis Lardizabal, Jefe de la Baguio Federation of Labor, una
organizacion obrera afiliada a National Labor Union, Inc. Como resultado de la conferencia las partes
convinieron en el siguiente arreglo amistoso:

AMICABLE SETTLEMENT

In order to have the present strike of the contractors and laborers of the respondent company who
staged a walkout on January 3, 1939, amicably settled, the parties hereby mutually agree to end the said
strike under the condition that all laborers will be readmitted upon the execution of this agreement;
provided, that all laborers whose services should be dispensed with due to lack of work in those tunnels
where they are no longer needed will be given not less than fifteen days employment from the date of
this settlement or resumption of work, and provided, further, that as soon as the stopes in 1360 and 1460
levels are opened and the services of men are needed, the company will give preference to efficient
laborers when reducing the personnel as above mentioned in those working places and may transfer
them to other division to replace inefficient men.

In witness hereof, the laborers represented by a committee composed of Messrs. Luis Lardizabal,
Tomas Dirige, Victoriano Madayag, Maximo Conaoi, Daniel Lambinicio, and Juan Cerilo and the
Antamok Goldfields Mining Co. as represented by its President, Mr. Andres Soriano, have hereunto
placed their signatures this 4th day of January, 1939.

El convenio fue firmado por las partes el 4 de enero de 1939, pero los obreros no se presentaron sino a las 9 de
la mañana del 6 del mismo mes. La gerencia de la recurrente no permitio, sin embargo, a ningun obrero que
entrara en la seccion subterranea conocida como "830 level" por la razon de que el aire se habia viciado con
motivo de la huelga y era necesario renovarlo con aire puro con el fin de evitar desgracias personales. Esta
precaucion la tomaron los obreros como uan negativa de la recurrente a que ellos trabajaran de nuevo, por lo
que se declararon otra vez en huelga. A los huelguistas se unieron por simpatia los obreros que trabajaban en
la mina denominada "680 division," que es otra mina separada y situada a 3 kilometros de la fabrica. Otra vez
internivo el Departamento del Trabajo y por la mediacion de Eladio C. Leaño los obreros volvieron al trabajo en
la noche del 6 de enero de 1939 en que los trabajos de mina se reanudaron paulatinamente.

El 9 de enero de 1939 el Departamento del Trabajo endoso la disputa al Tribunal de Relaciones Industriales de
conformidad con el articulo 4 de la Ley No. 103 del Commonwealth y dicho Tribunal celebro la primera vista del
asunto el 13 del mismo mes en la Ciudad De Baguio. En esta vista se discutieron una por una las 21
reclamaciones de la recurrida National Labor Union, Inc., y se llego por las partes a un acuerdo sobre algunas
de ellas, se sometieron otras a la decision del Triunal y las demas se dejaron pendientes para ser vistas y
resueltas mas tarde.
El 31 de marzo de 1939, hallandose pendiente aun de decision la mayor parte de las reclamaciones antes
mencionadas, la recurrida National Labor Union, Inc., presento una mocion en que alego que el capataz A.
Haber y otros 9 obreros de la recurrente habian sido indefinidamente suspendidos el 29 del mismo mes; que
estos obreros habian sido transferidos anteriormente a trabajos exteriores con el fin de proporcionar a la
recurrente una excusa para separarles mas tarde del servicio; que otro grupo de cerca de 30 obreros fueron
despedidos por la compañia sin motivo alguno y sin autorizacion del tribunal; y que las suspensiones y
separaciones que asi se hicieron eran actos de venganza y discriminatorios para los obreros, por cuya razon se
pidio que los funcinarios de la recurrente responsables de dichos actos sean castigados por desacato y que la
recurrente sea obligada a reponer a los obreros en sus primitivos trabajos dentro de las minas y a pagarles sus
salarios correspondientes al periodo en que fueron separados del sevicio. La recurrente contesto la mocion
negando los hechos imputados y alego que Haber y sus 9 compañeros fueron suspendidos por su continua
holgazaneria durante las horas de trabajo y por haberse negado constantemente a trabajar, y que los 45
obreros encabezados por el capataz Victoriano Madayag fueron despedidos por haber rehusado señalar a los
responsables del maltrato del capataz Juan Moldero en la mañana del 30 de marzo de 1939. La mocion se vio
el 3 de abril de 1939 y en la vista las partes presentaron sus testigos. El tribunal designo a uno de sus agentes
especiales para que se constituya en las minas de la recurrente y practicara una investigacion con el fin de
suplementar los hechos que se probarondurante la vista. Despues de considerar las pruebas presentadas ante
el y los hechos hallados por el comisionado nombrado, el tribunal en su orden del 6 de mayo de 1939 declaro
probados los hechos siguientes:

1. The discharges and indefinite suspensions alleged in the motion were made by the respondent
without first securing the consent of the Court in violation of the order of this Court of January 23, 1939.

2. The discharges and indefinite suspensions were made by the respondent without just cause.

El la misma orden el Tribunal de Relaciones Industriales hace las siguientes consideraciones que apoyan las
conclusiones a que la llegado:

In the order of January 23, 1939, the respondent was enjoined to refrain from discharging any laborer
involved in the dispute without just cause and without previous authority of the Court. It appears and no
denial of the fact is made by the respondent that the dismissal is one case and alleged suspension for an
indefinite time in the other, which has all the effects of a discharge, were made without seeking the
authority of the Court.

The charge that Haber and the group of nine laborers were indefinitely suspended of continuous loafing
and refusal to work was not established. The real motive behind the lay was the completion of their work
"outside." Under the circumstances, the provision of the order of March 21, to the effect that these men
should be returned to their work underground after the completion of their work "outside" should have
been observed. The respondent instead of complying with the order laid off the men.

The discharge of Victoriano Madayag and his forty-four companions as a result of the Moldero incident
also lacks justification. In the case of Madayag, although he was present with Haber when Moldero was
attacked, neither one is accused of the aggression. The two of them were conversing with Moldero with
the latter was stoned from behind without anybody apparently being able to point out the aggressor.
Less justification can be found for the discharge of the forty-four men as a result of the incident. The
investigation disclosed that at the time of the assault, they were at the Creek busy with their work. Both
the distance and the topographical situation of the place where the men were working, which is far and
well below the bank of the place of the incident, precluded their hearing of seeing clearly what transpired
above them in the place where Moldero was assaulted. An ocular inspection of the premises made by
the investigator confirmed this view. So far as is known, despite the investigations conducted by the
officials of the company and the policeman of the camp and by the constabulary authorities in Baguio,
the person or persons responsible for the stoning has not been determined. The precipitate and
unwarranted dismissal of the forty-five men after the incident seems to have been spurred by an over
anxious desire on the part of the company to get rid of these men.

As previously found, in the order of this Court of March 21, 1939, about 134 underground laborers of the
respondent were transferred and made to work 'outside of the mines' or surface work. The majority of
these men were muckers, miners, timbermen, trammers, and mine helpers and had to their favor from 6
months to 5 years service in the mines of the company and not a few of them have done underground
work in several capacities and in different tunnels and divisions of the mine. Among them are found
leaders of the movement of the laborers for higher pay and better working conditions which culminated in
the strike called on January 3, 1939. These leaders have been prominent in the formation of the union its
activities and in connection with the strike. The temporary transfer of these men to "outside" work was
authorized by the Court in said order on the strength of the assurance of the respondent that no more
work suited for them inside the mines existed. It was directed, however, in the aforesaid order that as
soon as their outside was completed the laborers should be immediately returned to their respective
work inside the mines. Subsequent events and acts of the officials of the respondent in charge of the
mines have convinced the Court work existed and exists for the men inside the tunnels and their
transfers were made to provide an opportunity to the company to dispense with their services as soon as
the work is completed. The unwarranted discharges of Haber and nine others and those of Victoriano
Madayag and his forty-four companions amply demonstrated this conclusion. Upon the company's own
admission, as shown in its reports in the records and upon the findings of the investigator of the Court,
more than four hundred (400) workers of different classes among them, muckers, miners, timbermen,
trammers and capataces coming from different mines in the region have been employed by the
respondent as fresh laborers. Almost all, if not all, of these men are not members of the petitioner, the
National Laborer Union, Inc.

At the same time the work in different tunnels and division in the mines are allegedly being completed,
the old workers are being laid off. Although a small number of the men found transfer to other divisions
being operated, the majority are being left without work. Instead of laying hands on the old men laid off
and making them work in the tunnels needing hands and reinstating in the tunnel work those laborers
transferred to the 'outside' department, the respondent preferred to take in and hire other workers
coming from different places because evidently they are not members of the union.

There is no doubt in the mind of the Court that a good number of the position given of the men who were
employed after the strike numbering more than four hundred to date could have been offered to the
strikes who are now doing work "outside" and other who have been laid off on the allegation that the
underground work in which they were engaged had been completed. To believe that not a single man or
say a few among the latter could have met the requirements set by the technical men of the company to
perform the different classes of work for which the fresh men were engaged because they lack the
required efficiency, experience, physique. intelligence and skill of the four hundred fresh laborers would
be shutting the eyes of the court to realities. These men prior to the occurence of the dispute, had
worked for months and many for years in the mines of the respondent and it can not be easily accepted
that their experience gained in their particular lines in the very property of the respondent would be
inferior to that attained by the other workmen in other mines in the district for an equal period of time.
Their inefficiency as a whole group can not be successfully sustained now because they were not
transferred to surface work for this reason but because of the alleged lack of work or completion of their
work underground. Had any of them been inefficient in the past, it can not be explained why the
company laborer continued in the service as the records of the company abound with instance of
discharges made in the past of laborers who were found either inefficient or incompetent or whose
services were unsatisfactory.

The company asserts ignorance of the union affiliations of the men in the mine but the evidence stands
uncontradicted that before the strike was called a petition was presented by the men to the management
carrying the signatures of about eight hundred (800) worker demanding higher pay and better working
conditions. When the men struck, the operation of the mine was completely paralyzed and there is a
strong indication that a great majority of the workers joined openly the strike. It would not have been
difficult for the respondent, with the means at its command, to find for itself the employees and laborers
who remained loyal to the company and to consider those who struck as either members of the union or
its sympathizer.

The respondent's claim as to the motive for the suspension and discharges lacks substance and support
in the evidence and the inferences to be drawn from it. From all what appears, it is inferred that the
respondent desire to discourage membership in the union and to rout it if possible. The wholesale
discharges were the expression of such desire. The acts in the mind of the Court, are calculated to have
two effects. They will not only immediately affect the discharged laborers but would also discourage
other laborers from joining or remaining members of the union.

The allegation that it has always been policy to consider the laborer's connection with the company
terminated upon termination of the working place in which he is employed is not supported by the facts.
It has been shown that as a general rule when work in a place is completed, workers are transferred to
another working place in one level or to another level, although in some instances days may elapse
before all the men in a bunch can be absorbed in different levels.
 It is alleged that mining operations in the property vary and involve several types, and that a miner, for
example, may be good in one type, but that it does not necessarily follow that he can do good work in
another type. And that the employment of men in particular jobs not suitable for them increased the cost
of production as a result of lower output. Consequently, the respondent vehemently insists in its right of
selecting the men that it should employ and that in the exercise of this right it should not be restrained or
interfered with by the Court. It contends that as to fitness of a laborer to do a particular type of work the
opinion of the management or its technical men should be respected. But all these arguments are
meaningless in the face of the finding of the Court that the underground laborers transferred to the
'outside' work are not wanting in experience, efficiency and other conditions alleged to be found among
the fresh laborers. The special qualifications to do particular work can not rightly be invoked in favor of
the employment of new laborers most specially in those cases of common or unskilled labor like
muckers, trammers, helpers, etc.

Under normal circumstances, the exercise of judgment of the employer in selecting men he is to employ
should not be interfered with. But when such judgment is arbitrarily exercised to the prejudice of
members of a labor union whose rights should be safeguarded in consonance with the policies of the
law, the Court not only feels it justified but rightly its duty to interfere to afford protection to the laborers
affected.

La recurrente presento una extensa mocion de reconsideracion de la indicada orden, mocion que fue denegada
por la resolucion del 17 de agosto de 1939. La orden del 6 de mayo de 1939 y la resolucion del 17 de agosto del
mismo año son las que dieron lugar a la apelacion interpuesta por la recurrente.

La recurrente sostiene que la Ley No. 103 del Commonwealth, conforme ha sido enmendada por las leyes Nos.
254 y 355, es anticonstitucional (1) porque infringe el principio de separacion de poderes; (2) porque por ella la
Asamblea Nacional abdico de su facultad legislativa violando la doctrina sobre delegacion de poderes; (3)
porque las facultades judiciales que la ley confiere al Tribunal de Relaciones Industriales, consideradas
separadamente, son arbitrarias e irrazonables y permiten la privacion de la libertad y propiedad sin el debido
proceso de ley; y (4) porque suponiendo que la ley es valida y constitucional en su totalidad, la porcion, por lo
menos, del articulo 20 que dispone que el Tribunal de Relaciones Industriales "adoptara sus reglamentos de
procedimiento" debe declararse nula e invalida porque infringe el articulo 13 del Titulo VIII de la Constitucion de
Filipinas que obliga al Tribunal de Relaciones Industriales a observar las reglas generales de procedimiento
aplicables a los tribunales de justicia. La recurrente alega en este respecto que como a ella se le ha sometido a
un procedimiento arbitrario y distinto del que se aplica a los demas litigantes en los tribunales de Filipinas, se le
ha negado el debido proceso de ley y el principio de igual proteccion ante las leyes.

La Ley No. 103 del Commonwealth que, como su titulo indica, provee a la proteccion del obrero, creando un
Tribunal de Relaciones Industriales facultado para fijar un jornal minimo para los obreros y la renta maxima que
se ha de pagar por los inquilinos; para poner en vigor el arbitraje obligatorio entre patronos o propietarios y
empleados o inquilinos, respectivamente, y prescribe penas por la infraccion de sus decretos, se ha promulgado
por la Asamblea Nacional en virtud de los preceptos contenidos en el articulo 5, Titulo II; articulo 6, Titulo XIII; y
articulos 1 y 2, Titulo VIII, de la Constitucion de Filipinas que disponen:

ART. 5. El Estado cuidara de promover la justicia social a fin de asegurar el bienestar y la estabilidad
economica de todo el pueblo.

ART. 6. El Estado debera proteger a todos los trabajadores, especialmente a las mujeres y a los
menores de edad, y debera regular las relaciones entre propietarios e inquilinos, y entre el trabajo y el
capital en la industria y la agricultura. El Estado podra establecer el arbitraje obligatorio.

ART. 1. El Poder Judicial estara investido en un Tribunal Supremo y en otros tribunales inferiores que se
establezcan por ley.

ART. 2. La Asamblea Nacional tendra la facultad de definir, prescribir y distribuir la jurisdiccion de los
varios tribunales, . . .

En cumplimiento de los preceptos constitucionales transcritos, la Asamblea Nacional promulgo la Ley No. 103
del Commonwealth que crea el Tribunal de Relaciones Industriales que es un tribunal especial con facultades
judiciales (Pambusco Employees Union vs. Court of Industrial Relations et al., G.R. No. 46727; Ang Tibay et al.
vs. Court of Industrial Relations et al., G.R. No. 46496, opinion concurrente del Magistrado Jose P. Laurel). El
articulo 1 de dicha ley provee que el Tribunal de Relaciones Industriales ejercera jurisdiccion para considerar,
investigar, decidir y zanjar toda cuestion, asunto, conflicto o disputa que afecte o surja entre patronos y
empleados u obreros, y entre propietarios e inquilinos o aparceros, y para regular las relaciones entre los
mismos, con arreglo y sujecion a las disposiciones de la ley. El articulo 4 dispone que el tribunal tomara
conocimiento, para fines de prevencion, arbitraje, decision y ajuste, de cualquier conflicto agrario o industrial
que motive o de lugar a una huelga o paro a causa de diferencias que surjan en la cuestion de jornales,
participacion o compensacion, horas de trabajo o condiciones de aparceria o empleo, entre patronos y
empleados u obreros, y entre propietarios e inquilinos o aparceros, siempre que el numero de empleados,
obreros, inquilinos o aparceros afectados exceda de treinta, y que el conflicto agrario o industrial se someta al
tribunal por el Secretario del Trabajo, o por una o ambas partes interesadas, cuando el referido Secretario del
Trabajo certifique en cuanto a su existencia y la conveniencia de la intervencion del tribunal en bien del interes
publico. Y el articulo 20 preceptua que en la vista, investigacion y resolucion de cualquier cuestion o conflicto, y
en el ejercicio de cualquiera de sus deberes y facultades, el tribunal actuara de acuerdo con la justicia y la
equidad y los meritos substanciales de la causa, sin consideracion a los tecnicismos y formulismos legales, y no
estara sujeto a cualesquier reglas tecnicas de prueba legal, sino que formara juicio de la manera que crea justa
y equitativo. La Ley No. 103 confiere al Tribunal de Relaciones Industriales plena facultad disrecional para
resolver y decidir las disputas agrarias e industriales de la manera que crea justo e equitativo, prescindiendo de
los tecnicismos y formulismos legales, y la facultad asi concedida es judicial y no legislativa, por lo que no
infringe el principio de separacion de poderes, la prohibicion sobre delegacion de facultades legislativas ni la
proteccion igualitaria ante la ley. Como se ha dicho en el asunto de Cincinnati, W. & Z. R. Co. vs. Comm'rs, of
Clinton County '1852), 1 Ohio St., 88, citado en el asunto de Rubi et al. contra La Junta Provincial de Mindoro,
39 Jur. Fil., 675, "Existe una verdadera diferencia entre delegar la facultad para dictar leyes, lo cual supone
necesariamente discrecion en cuanto a lo que hayan de ser aquellas, y conferir atribucion o discrecion para
hacerlas cumplir, discrecion que debe ejecitarse con arreglo a la ley. La primera no puede hacerse en modo
alguno; contra la segunda no cabe interponer objecion alguna."

Para reforzar los argumentos en favor de la anticonstitucionalidad de la Ley No. 103 la recurrente hace hincapie
en lo resuelto en el asunto de Schechter vs. United States (1935), 295 U. S., 496, 79 Law. ed. 270, en que el
Tribunal Supremo de los Estados Unidos declaro anticonstitucional la National Recovery Act. Existe, sin
embargo, una marcada diferencia entre dicho asunto y el que se considera porque la National Recovery Act en
vez de crear un tribunal de justicia, creo juntas con facultades legislativas y autorizo al Presidente de los
Estados Unidos a promulgar codigos que prescriban las reglas de precedimiento con el fin de realizar los
propositos de la ley.

El ultimo fundamento que se alega en contra de la validez de la Ley No. 103 se hace consistir en que las
facultades judiciales que concede al Tribunal de Relaciones Industriales son tan artibrarias e irrazonables que
permiten la privacion de la libertad y la propiedad sin el debido proceso de ley; y que se articulo 20, por lo
menos, adolece de este defecto fundamental porque confiere al Tribunal de Relaciones Industriales la facultad
de dictar sus propias reglas de procedimiento, lo cual contraviene el articulo 13, Titulo VIII, de la Constitucion
que prescribe que el Tribunal Supremo dictara reglas concernientes a los escritos de alegaciones, practica y
procedimiento uniformes para todos los tribunales de la misma categoria.

El articulo 20 de la Ley No. 103 se lee asi:

ART. 20. Reglamentos del Tribunal. — El Tribunal de Relaciones Industriales promulgara sus reglas de
procedimiento y tendra las demas atribuciones que en general corresponden a un tribunal de
justicia: Entendiendose, sin embargo, Que en la vista, investigacion y resolucion de cualquier cuestion o
conflicto, y en el ejercicio de cualquier de sus deberes y faculades en virtud de esta Ley, el Tribunal
actuara de acuerdo con la justicia y la equidad y los meritos substanciales de la causa, sin
consideracion a los tecnicismos o formulismos legales, y no estara sujeto a cualquiera reglas, tecnicas
de prueba legal, sino que formara juicio de la manera que crea justo y equitativo.

Una simple lectura de dicho articulo demuestra que la ley no ha facultado al Tribunal de Relaciones Industriales
a investigar y resolver las cuestiones y conflictos entre obreros y patronos, e inquilinos y propietarios, de una
manera arbitraria y caprichosa sin someterse a una norma de conducta determinada. El articulo dispone
claramente que las reglas de procedimiento que adopte, a las cuales debera ajustarse el tribunal, deberan
insperarse en la justicia y la equidad, y prescribe que el criterio que se forma debera fundarse en los meritos
substanciales de la causa sin consideracion a los tecnicismos o formulismos legales. La Ley No. 103 que crea
un tribunal especial denominado Tribunal de Relaciones Industriales con facultad para dictar sus propios
reglamentos y para resolver y decidir los conflictos agrarios e industriales de acuerdo con los dictados de la
justicia y equidad, no puede ser impugnada bajo el fundamento de que auoriza la privacion de la libertad y
propiedad sin el debido proceso de ley; ni pugna con el precepto del articulo 13, Titulo VIII, de la Constitucion
porque el Tribunal de Relacines Industriales no es de la misma categoria que los juzgados municipales,
juzgados de paz y juzgados de primera instancia para los cuales se han dictado los reglamenos de los
tribunales por el Tribunal Supremo.

En relacion con la validez y constitucionalidad de la Ley No. 103 y sus enmiendas, insertamos a continuacion la
opinion concurrente del Magistrado Lauren en el asunto de Ang Tibay, supra, cuyas observaciones serviran
para rebustecer la proposicion sentada de que la referida ley y sus enmiendas es valida y no infringe la
Constitucion.

It should be observed at the outset that our Constitution was adopted in the midst of surging unrest and
dissatisfaction resulting from economic and social distress which was threatening the stability of
governments the world over. Alive to the social and economic forces at work, the farmers of our
Constitution boldly met the problems and difficulties which faced them and endeavored to crystallize,
with more or less fidelity, the political, social; and economic proposition of their age, and this they did,
with the consciousness that the political and philosophical aphorism of their generation will, in the
language of a great jurist, "be doubted by the next and perhaps entirely discarded by the third." (Chief
Justice Winslow in Gorgnis v. Falk Co., 147 Wis., 327; 133 N. W., 209.) Embodying the spirit of the
present epoch, general provisions were inserted in the Constitution which are intended to bring about the
needed social and economic equilibrium between component elements of society through the application
of what may be termed as the justitia communis advocated by Grotius and Leibnits many years ago to be
secured through the counterbalancing of economic and social forces and opportunities which should be
regulated, if not controlled, by the State or placed, as it were, in custodia societatis. "The promotion of
social justice to insure the well-being and economic security of all the people' was thus inserted as vital
principle in our Constitution. (Sec. 5, Art. II, Constitution.) And in order that this declaration of principle
may not just be an empty medley of words, the Constitution in various sections thereof has provided the
means towards its realization. For instance, section 6 of Articles XIII declares that the State "shall afford
protection to labor, especially to working women and minors, and shall regulated the relations between
landowner and tenant, and between labor and capital in industry and in agriculture." The same section
also states that "the State may provide for compulsory arbitration." In extraordinary cases mentioned in
section 16, Articles VI, of the Constitution, the President of the Philippines may be authorized by law, for
a limited period and subject to such restrictions as the National Assembly may prescribed, to
"promulgate rules and regulations to carry out a declared national policy." Albeit, almost at the same time
the Congress of the United States approved the National Labor Regulations Act (49 Stat., 449) on July 5,
1935, commonly known as the Wagner Act, we were in the Philippines headway towards the adoption of
our fundamental law, pursuant to congressional authority given in the Tydings-McDuffie Independence
Act, approved March 24, 1934. In our Bill of Rights we now find the following provision "The right to form
associations or societies for purposes not contrary to law shall not be abridged." (Par. 6, section 1, art.
III, Constitution.) What was an agitation in the United States which brought about the recommendation
by the Commission on Industrial Relations created by an Act of Congress in 1912 for the adoption of a
Labor Bill of Rights as an amendment to the United States Constitution is, in our case, virtually an
accepted principle, which may be expanded and vitalized by legislation to keep pace with the
development of time and circumstances.

By and large, these provisions in our Constitution all evince and express the need of shifting emphasis to
community interest with a view to affirmative enhancement of human values. In conformity with the
constitutional objective and cognizant of the historical fact that industrial and agricultural disputes had
given rise to disquietude, bloodshed and revolution in our country, the National Assembly enacted
Commonwealth Act No. 103, entitled "An Act to afford protection of labor by creating a Court of Industrial
Relations empowered to fix minimum wages for laborers and maximum rental to be paid tenants, and to
enforce compulsory arbitration between employers or landlords, and employees or tenants, respectively;
and by prescribing penalties for the violation of the orders" and, later, Commonwealth Act. No. 213,
entitled, "An Act to define and regulate legitimate labor organizations." (Asto this last act, vide "finding
and policy," preamble [sec. 1]of the Wagner Act [49 Sta., 449]).

Commonwealth Act No. 103, approved October 29, 1936, was originally Bill No. 700 of the National
Assembly. More light is shed by the explanatory statement of the Bill than by what transpired in the
course of the deliberation of the measure in the legislative chamber. "El presente proyecto de ley," thus
the explanatory statement of Bill No. 700, 'crea una Junta de Relaciones Industriales . . . y provee el
arbitraje obligatorio. . . de acuerdo con el Articulo 6, Titulo XIII de la Constitucion, el provee que "El
Estado podrs establacerel arbitraje obligatorio." "Incorporating the conclusion reached by a committee
appointed, a year or so before it was observed that 'bajo la legislacion actual' " — evidently referring to
Act No. 4055 — "no existe instrumento adecuado para evitar las huelgas. El Departamentode Trabajo
desempeña maramente el papel de pacificadorentre las partes en controversia y sus decisiones no
sonobligatorias ni para los patronos ni para los obreros. El pueblo la allegado a un grado de desarrollo
 industrial, quehace imperiosa el que la intervencion del gobierno en estosconflictos sea mas efectiva . . .
." The creation of a Court of Industrial Relations was thus proposed, endowed "no solamente del poder
de arbitrar sino tambien del deberde investigar, decidir, y hacer recomendaciones sobre las cuestiones
en conflicto y los problem as que afectan al Capitaly al Trabajo en la Industria y la Agricultuta bajola
direccion del Presidente de la Mancomunidad de Filipinaso a peticion del Secretario del Trabajo.

xxx xxx xxx

From what has been stated, it appears that the legislation which are now called upon to construe was
enacted in pursuance of what appears to be deliberate embodiment of a new social policy, founded on
the conception of a society integrated not by independent individuals dealing at arms' length, but by
interdependent members of a consolidated whole whose interests must be protected against mutual
aggression and warfare among and between divers and diverse units which are impelled by counter
vailing and opposite individual and group interests, and this is particularly true in the relationship
between labor and capital. Social and industrial disturbances which fifty years ago were feudal-like and
of isolated importance may now well result in a serious strain upon the entire economic organism of the
nation . In the United States labor legislation has undergone a long process of development too long to
nature here, culminating in the enactments of what were commonly known as the Clayton Act, the
Norris-La Guardia Act, and finally, the Wagner Act and the Fair Labor Standards Act of 1938. The
Wagner Act created the National Labor Relations Board as an instrumentality of the Federal Government
in the settlement of labor disputes, which device is aimed at the avoidance of unnecessary friction
between labor and capital and the establishment of industrial peace. Scrutiny of legislation in that
country and of pronouncement made by its Supreme Court reveals a continuous renovation and change
made necessary by the impact of changing needs and economic pressure brought about by the
irresistible momentum of new social and economic forces developed there. In the light of changes that
have occured, it is doubted if the pronouncement made by the said Supreme Court in 1905 (Lochner v.
New York, 198, U.S., 45) or in 1908 (Adair v. U.S., 52 Law. ed. 430, 208 U.S., 161, and Coppage v.
Kansas, 236 U.S., 1) — cases which are relied upon by the petitioner in its printed memorandum — still
retain their virtuality at the present time. In the Philippines, social legislation has had a similar
development although of course to a much smaller degree and of different adaptation giving rise to
several attempts at meeting and solving our peculiar social and economic problems. (See
Commonwealth to the National Assembly, September 2,1936; Executive Order No. 49, S. 1936). The
system of voluntary arbitration devised by Act No. 4055 of the defunct Philippine Legislature has
apparently been abandoned by the enactment of the aforementioned Commonwealth Acts Nos. 103 and
213. In the midst of changes that have taken place, it may likewise be doubted if the pronouncement
made by this court in the case of People vs. Pomar (46 Phil., 440) — also relied upon by the petitioner in
its printed memorandum — still retains its virtually as a living principle. The policy of laissez faire has to
some extent given way the assumption by the government of the right of intervention even in contractual
relations affected with public interests.

xxx xxx xxx

In Commonwealth Act No. 103, and it, our Government no longer performs the role of a mere mediator
or intervenor but that of the supreme arbiter.

En su siguiente senalmiento de error la recurrentealega que la conducta del investigador, la investigacion

quepracticio y la manera como conocio del asunto el Tribunalde Relaciobes Industriales le privaron de una vista
i,parcialy justa, y constituyen privacion de supropiedad sinel debido proceso de ley. Para demostrar la carencia
de fundamento del senalmiento de error, creemos suficientereproducir a continuacion la forma como se practicio
la investigacion por el comisionado nombrado por el Tribunal de Relacionbes Industriales y la manera como
secelebro la vista por dicho tribunal, tal como se expone en laorden del 6 de mayo de 1939.

Hearing was held on April 3, 1939, where witnessesfor both the petitioners and the respondent testified.
To supplement the facts brought out at the hearing, the Court ordered one of its Special Agents to
proceed to the premises of the mines to conduct a further investigation.

El comisionado fue nombrado por el Tribumal de RelacionesIndustriales en el su facultad conferidapor el

articulo 10 de la ley No. 103 de Commonwealth yel la inspeccion y vistas que celebraron el comisionado y
eltribunal, respectivamente, las partes estuvieron representadasdebidamente, fueron oidas y presentaron las
pruebasque tenian disponibles y creyeron conveniente ofrecerTales inspeccion y vistas tenian el caracter de
una vistajudicial imparcial y justa y constituyen el debido procesode ley que garantiza la Constitucion.
Sostiene igualmente la recurrente que la orden del 6 demayo de 1939 es arbitraria porque no existen
pruebassubstanciales ni competentes que la sostengan. Sobre esteextremo, las conclusiones de hecho que ha
sentado el Tribunalde Relaciones Industriales demuestran que la ordenimpugnada esta sostenida por el
resultado de la investigacion practicada por el comisionado y las pruebas que laspartes presentaron
directamente ante el Tribunal. Endichas conclusiones se han considerado y analizado por elTribunal de
Relaciones Industriales todas las pruebas quelas partes presentaron y resulta inevitable la conclusionde que la
orden no es arbitraria y esta justificada y sotenida por los hechos probados.

El ultimo senalmiento de error guarda relacion conla parte de la orden del 6 mayo de 1939 que disponeque la
recurrente pague a los 55 obreros repustos losjornales que dejaron de percibir durante su separaciondel
servicio. La recurrente sostiene que esta parte dela orden equivale a una sentencia por danos y perjuiciosque el
Tribunal de Relaciones Industriales no puede pronunciar por carecer de jurisdiccion. La pretension noes
meritoria. El Tribunal de Relaciones Industriales,conforme ya se ha dicho, es un tribunal especial y comotal
tiene facultad para disponer que la recurrente paguelos jornales de sus empleados y obreros que han sido
repuestos.Los articulos 1 y 4 de la Ley No. 103 de Commonwealth,segun ha sido enmendado el primero por
elarticulo 1 de la Ley No. 254, confieren facultad y jurisdiccion al tribunal de Relaciones Inbdustriales para
conocer, resolver y decidir todas las cuestiones, controversiasy disputas entre patronos y obreros y propietarios
y terratenientes, y los jornales de los obreros repuestos, duranteel tiempo en que fueron separados del
servicio,esteban incluidos en las controverias y disputas sometidasal Departamento del Trabajo y certificados
por este al Tribunal de Relaciones Industriales.

Se deniega el recurso de certiorari y se confiman laorden del 6 de mayo de 1939 y la resolucion del 17
deagosto del mismo ano, con las costas a la recurrente. Asise ordena.

Avanceña, Diaz, Laurel y Moran, MM., estan conformes.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 101083 July 30, 1993

JUAN ANTONIO, ANNA ROSARIO and JOSE ALFONSO, all surnamed OPOSA, minors, and represented
by their parents ANTONIO and RIZALINA OPOSA, ROBERTA NICOLE SADIUA, minor, represented by her
parents CALVIN and ROBERTA SADIUA, CARLO, AMANDA SALUD and PATRISHA, all surnamed
FLORES, minors and represented by their parents ENRICO and NIDA FLORES, GIANINA DITA R.
FORTUN, minor, represented by her parents SIGRID and DOLORES FORTUN, GEORGE II and MA.
CONCEPCION, all surnamed MISA, minors and represented by their parents GEORGE and MYRA MISA,
BENJAMIN ALAN V. PESIGAN, minor, represented by his parents ANTONIO and ALICE PESIGAN, JOVIE
MARIE ALFARO, minor, represented by her parents JOSE and MARIA VIOLETA ALFARO, MARIA
CONCEPCION T. CASTRO, minor, represented by her parents FREDENIL and JANE CASTRO, JOHANNA
DESAMPARADO,
minor, represented by her parents JOSE and ANGELA DESAMPRADO, CARLO JOAQUIN T. NARVASA,
minor, represented by his parents GREGORIO II and CRISTINE CHARITY NARVASA, MA. MARGARITA,
JESUS IGNACIO, MA. ANGELA and MARIE GABRIELLE, all surnamed SAENZ, minors, represented by
their parents ROBERTO and AURORA SAENZ, KRISTINE, MARY ELLEN, MAY, GOLDA MARTHE and
DAVID IAN, all surnamed KING, minors, represented by their parents MARIO and HAYDEE KING, DAVID,
FRANCISCO and THERESE VICTORIA, all surnamed ENDRIGA, minors, represented by their parents
BALTAZAR and TERESITA ENDRIGA, JOSE MA. and REGINA MA., all surnamed ABAYA, minors,
represented by their parents ANTONIO and MARICA ABAYA, MARILIN, MARIO, JR. and MARIETTE, all
surnamed CARDAMA, minors, represented by their parents MARIO and LINA CARDAMA, CLARISSA,
ANN MARIE, NAGEL, and IMEE LYN, all surnamed OPOSA, minors and represented by their parents
RICARDO and MARISSA OPOSA, PHILIP JOSEPH, STEPHEN JOHN and ISAIAH JAMES, all surnamed
QUIPIT, minors, represented by their parents JOSE MAX and VILMI QUIPIT, BUGHAW CIELO,
CRISANTO, ANNA, DANIEL and FRANCISCO, all surnamed BIBAL, minors, represented by their parents
FRANCISCO, JR. and MILAGROS BIBAL, and THE PHILIPPINE ECOLOGICAL NETWORK,
INC., petitioners,
vs.
THE HONORABLE FULGENCIO S. FACTORAN, JR., in his capacity as the Secretary of the Department of
Environment and Natural Resources, and THE HONORABLE ERIBERTO U. ROSARIO, Presiding Judge of
the RTC, Makati, Branch 66, respondents.

Oposa Law Office for petitioners.

The Solicitor General for respondents.

DAVIDE, JR., J.:

In a broader sense, this petition bears upon the right of Filipinos to a balanced and healthful ecology which the
petitioners dramatically associate with the twin concepts of "inter-generational responsibility" and "inter-
generational justice." Specifically, it touches on the issue of whether the said petitioners have a cause of action
to "prevent the misappropriation or impairment" of Philippine rainforests and "arrest the unabated hemorrhage of
the country's vital life support systems and continued rape of Mother Earth."

The controversy has its genesis in Civil Case No. 90-77 which was filed before Branch 66 (Makati, Metro Manila)
of the Regional Trial Court (RTC), National Capital Judicial Region. The principal plaintiffs therein, now the
principal petitioners, are all minors duly represented and joined by their respective parents. Impleaded as an
additional plaintiff is the Philippine Ecological Network, Inc. (PENI), a domestic, non-stock and non-profit
corporation organized for the purpose of, inter alia, engaging in concerted action geared for the protection of our
environment and natural resources. The original defendant was the Honorable Fulgencio S. Factoran, Jr., then
Secretary of the Department of Environment and Natural Resources (DENR). His substitution in this petition by
the new Secretary, the Honorable Angel C. Alcala, was subsequently ordered upon proper motion by the
petitioners.1 The complaint2 was instituted as a taxpayers' class suit3 and alleges that the plaintiffs "are all citizens
of the Republic of the Philippines, taxpayers, and entitled to the full benefit, use and enjoyment of the natural
resource treasure that is the country's virgin tropical forests." The same was filed for themselves and others who
are equally concerned about the preservation of said resource but are "so numerous that it is impracticable to
bring them all before the Court." The minors further asseverate that they "represent their generation as well as
generations yet unborn."4 Consequently, it is prayed for that judgment be rendered:

. . . ordering defendant, his agents, representatives and other persons acting in his behalf to —

(1) Cancel all existing timber license agreements in the country;

(2) Cease and desist from receiving, accepting, processing, renewing or approving new timber
license agreements.

and granting the plaintiffs ". . . such other reliefs just and equitable under the premises."5

The complaint starts off with the general averments that the Philippine archipelago of 7,100 islands has a land
area of thirty million (30,000,000) hectares and is endowed with rich, lush and verdant rainforests in which
varied, rare and unique species of flora and fauna may be found; these rainforests contain a genetic, biological
and chemical pool which is irreplaceable; they are also the habitat of indigenous Philippine cultures which have
existed, endured and flourished since time immemorial; scientific evidence reveals that in order to maintain a
balanced and healthful ecology, the country's land area should be utilized on the basis of a ratio of fifty-four per
cent (54%) for forest cover and forty-six per cent (46%) for agricultural, residential, industrial, commercial and
other uses; the distortion and disturbance of this balance as a consequence of deforestation have resulted in a
host of environmental tragedies, such as (a) water shortages resulting from drying up of the water table,
otherwise known as the "aquifer," as well as of rivers, brooks and streams, (b) salinization of the water table as a
result of the intrusion therein of salt water, incontrovertible examples of which may be found in the island of
Cebu and the Municipality of Bacoor, Cavite, (c) massive erosion and the consequential loss of soil fertility and
agricultural productivity, with the volume of soil eroded estimated at one billion (1,000,000,000) cubic meters per
annum — approximately the size of the entire island of Catanduanes, (d) the endangering and extinction of the
country's unique, rare and varied flora and fauna, (e) the disturbance and dislocation of cultural communities,
including the disappearance of the Filipino's indigenous cultures, (f) the siltation of rivers and seabeds and
consequential destruction of corals and other aquatic life leading to a critical reduction in marine resource
productivity, (g) recurrent spells of drought as is presently experienced by the entire country, (h) increasing
velocity of typhoon winds which result from the absence of windbreakers, (i) the floodings of lowlands and
agricultural plains arising from the absence of the absorbent mechanism of forests, (j) the siltation and
shortening of the lifespan of multi-billion peso dams constructed and operated for the purpose of supplying water
for domestic uses, irrigation and the generation of electric power, and (k) the reduction of the earth's capacity to
process carbon dioxide gases which has led to perplexing and catastrophic climatic changes such as the
phenomenon of global warming, otherwise known as the "greenhouse effect."

Plaintiffs further assert that the adverse and detrimental consequences of continued and deforestation are so
capable of unquestionable demonstration that the same may be submitted as a matter of judicial notice. This
notwithstanding, they expressed their intention to present expert witnesses as well as documentary,
photographic and film evidence in the course of the trial.

As their cause of action, they specifically allege that:

CAUSE OF ACTION

7. Plaintiffs replead by reference the foregoing allegations.

8. Twenty-five (25) years ago, the Philippines had some sixteen (16) million hectares of
rainforests constituting roughly 53% of the country's land mass.

9. Satellite images taken in 1987 reveal that there remained no more than 1.2 million hectares of
said rainforests or four per cent (4.0%) of the country's land area.

10. More recent surveys reveal that a mere 850,000 hectares of virgin old-growth rainforests are
left, barely 2.8% of the entire land mass of the Philippine archipelago and about 3.0 million
hectares of immature and uneconomical secondary growth forests.

11. Public records reveal that the defendant's, predecessors have granted timber license
agreements ('TLA's') to various corporations to cut the aggregate area of 3.89 million hectares for
commercial logging purposes.

A copy of the TLA holders and the corresponding areas covered is hereto attached as Annex "A".

12. At the present rate of deforestation, i.e. about 200,000 hectares per annum or 25 hectares
per hour — nighttime, Saturdays, Sundays and holidays included — the Philippines will be bereft
of forest resources after the end of this ensuing decade, if not earlier.

13. The adverse effects, disastrous consequences, serious injury and irreparable damage of this
continued trend of deforestation to the plaintiff minor's generation and to generations yet unborn
are evident and incontrovertible. As a matter of fact, the environmental damages enumerated in
paragraph 6 hereof are already being felt, experienced and suffered by the generation of plaintiff
adults.

14. The continued allowance by defendant of TLA holders to cut and deforest the remaining
forest stands will work great damage and irreparable injury to plaintiffs — especially plaintiff
minors and their successors — who may never see, use, benefit from and enjoy this rare and
unique natural resource treasure.

This act of defendant constitutes a misappropriation and/or impairment of the natural resource
property he holds in trust for the benefit of plaintiff minors and succeeding generations.

15. Plaintiffs have a clear and constitutional right to a balanced and healthful ecology and are
entitled to protection by the State in its capacity as the parens patriae.

16. Plaintiff have exhausted all administrative remedies with the defendant's office. On March 2,
1990, plaintiffs served upon defendant a final demand to cancel all logging permits in the country.

A copy of the plaintiffs' letter dated March 1, 1990 is hereto attached as Annex "B".

17. Defendant, however, fails and refuses to cancel the existing TLA's to the continuing serious
damage and extreme prejudice of plaintiffs.
 18. The continued failure and refusal by defendant to cancel the TLA's is an act violative of the
rights of plaintiffs, especially plaintiff minors who may be left with a country that is desertified
(sic), bare, barren and devoid of the wonderful flora, fauna and indigenous cultures which the
Philippines had been abundantly blessed with.

19. Defendant's refusal to cancel the aforementioned TLA's is manifestly contrary to the public
policy enunciated in the Philippine Environmental Policy which, in pertinent part, states that it is
the policy of the State —

(a) to create, develop, maintain and improve conditions under which man and nature can thrive in
productive and enjoyable harmony with each other;

(b) to fulfill the social, economic and other requirements of present and future generations of
Filipinos and;

(c) to ensure the attainment of an environmental quality that is conductive to a life of dignity and
well-being. (P.D. 1151, 6 June 1977)

20. Furthermore, defendant's continued refusal to cancel the aforementioned TLA's is

contradictory to the Constitutional policy of the State to —

a. effect "a more equitable distribution of opportunities, income and wealth" and "make full and
efficient use of natural resources (sic)." (Section 1, Article XII of the Constitution);

b. "protect the nation's marine wealth." (Section 2, ibid);

c. "conserve and promote the nation's cultural heritage and resources (sic)" (Section 14, Article
XIV, id.);

d. "protect and advance the right of the people to a balanced and healthful ecology in accord with
the rhythm and harmony of nature." (Section 16, Article II, id.)

21. Finally, defendant's act is contrary to the highest law of humankind — the natural law — and
violative of plaintiffs' right to self-preservation and perpetuation.

22. There is no other plain, speedy and adequate remedy in law other than the instant action to
arrest the unabated hemorrhage of the country's vital life support systems and continued rape of
Mother Earth. 6

On 22 June 1990, the original defendant, Secretary Factoran, Jr., filed a Motion to Dismiss the complaint based
on two (2) grounds, namely: (1) the plaintiffs have no cause of action against him and (2) the issue raised by the
plaintiffs is a political question which properly pertains to the legislative or executive branches of Government. In
their 12 July 1990 Opposition to the Motion, the petitioners maintain that (1) the complaint shows a clear and
unmistakable cause of action, (2) the motion is dilatory and (3) the action presents a justiciable question as it
involves the defendant's abuse of discretion.

On 18 July 1991, respondent Judge issued an order granting the aforementioned motion to dismiss.7 In the said
order, not only was the defendant's claim — that the complaint states no cause of action against him and that it
raises a political question — sustained, the respondent Judge further ruled that the granting of the relief prayed
for would result in the impairment of contracts which is prohibited by the fundamental law of the land.

Plaintiffs thus filed the instant special civil action for certiorari under Rule 65 of the Revised Rules of Court and
ask this Court to rescind and set aside the dismissal order on the ground that the respondent Judge gravely
abused his discretion in dismissing the action. Again, the parents of the plaintiffs-minors not only represent their
children, but have also joined the latter in this case.8

On 14 May 1992, We resolved to give due course to the petition and required the parties to submit their
respective Memoranda after the Office of the Solicitor General (OSG) filed a Comment in behalf of the
respondents and the petitioners filed a reply thereto.
Petitioners contend that the complaint clearly and unmistakably states a cause of action as it contains sufficient
allegations concerning their right to a sound environment based on Articles 19, 20 and 21 of the Civil Code
(Human Relations), Section 4 of Executive Order (E.O.) No. 192 creating the DENR, Section 3 of Presidential
Decree (P.D.) No. 1151 (Philippine Environmental Policy), Section 16, Article II of the 1987 Constitution
recognizing the right of the people to a balanced and healthful ecology, the concept of generational genocide in
Criminal Law and the concept of man's inalienable right to self-preservation and self-perpetuation embodied in
natural law. Petitioners likewise rely on the respondent's correlative obligation per Section 4 of E.O. No. 192, to
safeguard the people's right to a healthful environment.

It is further claimed that the issue of the respondent Secretary's alleged grave abuse of discretion in granting
Timber License Agreements (TLAs) to cover more areas for logging than what is available involves a judicial
question.

Anent the invocation by the respondent Judge of the Constitution's non-impairment clause, petitioners maintain
that the same does not apply in this case because TLAs are not contracts. They likewise submit that even if
TLAs may be considered protected by the said clause, it is well settled that they may still be revoked by the
State when the public interest so requires.

On the other hand, the respondents aver that the petitioners failed to allege in their complaint a specific legal
right violated by the respondent Secretary for which any relief is provided by law. They see nothing in the
complaint but vague and nebulous allegations concerning an "environmental right" which supposedly entitles the
petitioners to the "protection by the state in its capacity as parens patriae." Such allegations, according to them,
do not reveal a valid cause of action. They then reiterate the theory that the question of whether logging should
be permitted in the country is a political question which should be properly addressed to the executive or
legislative branches of Government. They therefore assert that the petitioners' resources is not to file an action
to court, but to lobby before Congress for the passage of a bill that would ban logging totally.

As to the matter of the cancellation of the TLAs, respondents submit that the same cannot be done by the State
without due process of law. Once issued, a TLA remains effective for a certain period of time — usually for
twenty-five (25) years. During its effectivity, the same can neither be revised nor cancelled unless the holder has
been found, after due notice and hearing, to have violated the terms of the agreement or other forestry laws and
regulations. Petitioners' proposition to have all the TLAs indiscriminately cancelled without the requisite hearing
would be violative of the requirements of due process.

Before going any further, We must first focus on some procedural matters. Petitioners instituted Civil Case No.
90-777 as a class suit. The original defendant and the present respondents did not take issue with this matter.
Nevertheless, We hereby rule that the said civil case is indeed a class suit. The subject matter of the complaint
is of common and general interest not just to several, but to all citizens of the Philippines. Consequently, since
the parties are so numerous, it, becomes impracticable, if not totally impossible, to bring all of them before the
court. We likewise declare that the plaintiffs therein are numerous and representative enough to ensure the full
protection of all concerned interests. Hence, all the requisites for the filing of a valid class suit under Section 12,
Rule 3 of the Revised Rules of Court are present both in the said civil case and in the instant petition, the latter
being but an incident to the former.

This case, however, has a special and novel element. Petitioners minors assert that they represent their
generation as well as generations yet unborn. We find no difficulty in ruling that they can, for themselves, for
others of their generation and for the succeeding generations, file a class suit. Their personality to sue in behalf
of the succeeding generations can only be based on the concept of intergenerational responsibility insofar as the
right to a balanced and healthful ecology is concerned. Such a right, as hereinafter expounded, considers
the "rhythm and harmony of nature." Nature means the created world in its entirety.9 Such rhythm and harmony
indispensably include, inter alia, the judicious disposition, utilization, management, renewal and conservation of
the country's forest, mineral, land, waters, fisheries, wildlife, off-shore areas and other natural resources to the
end that their exploration, development and utilization be equitably accessible to the present as well as future
generations. 10Needless to say, every generation has a responsibility to the next to preserve that rhythm and
harmony for the full enjoyment of a balanced and healthful ecology. Put a little differently, the minors' assertion
of their right to a sound environment constitutes, at the same time, the performance of their obligation to ensure
the protection of that right for the generations to come.

The locus standi of the petitioners having thus been addressed, We shall now proceed to the merits of the
petition.
After a careful perusal of the complaint in question and a meticulous consideration and evaluation of the issues
raised and arguments adduced by the parties, We do not hesitate to find for the petitioners and rule against the
respondent Judge's challenged order for having been issued with grave abuse of discretion amounting to lack of
jurisdiction. The pertinent portions of the said order reads as follows:

xxx xxx xxx

After a careful and circumspect evaluation of the Complaint, the Court cannot help but agree with
the defendant. For although we believe that plaintiffs have but the noblest of all intentions, it (sic)
fell short of alleging, with sufficient definiteness, a specific legal right they are seeking to enforce
and protect, or a specific legal wrong they are seeking to prevent and redress (Sec. 1, Rule 2,
RRC). Furthermore, the Court notes that the Complaint is replete with vague assumptions and
vague conclusions based on unverified data. In fine, plaintiffs fail to state a cause of action in its
Complaint against the herein defendant.

Furthermore, the Court firmly believes that the matter before it, being impressed with political
color and involving a matter of public policy, may not be taken cognizance of by this Court
without doing violence to the sacred principle of "Separation of Powers" of the three (3) co-equal
branches of the Government.

The Court is likewise of the impression that it cannot, no matter how we stretch our jurisdiction,
grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing timber license agreements
in the country and to cease and desist from receiving, accepting, processing, renewing or
approving new timber license agreements. For to do otherwise would amount to "impairment of
contracts" abhored (sic) by the fundamental law. 11

We do not agree with the trial court's conclusions that the plaintiffs failed to allege with sufficient definiteness a
specific legal right involved or a specific legal wrong committed, and that the complaint is replete with vague
assumptions and conclusions based on unverified data. A reading of the complaint itself belies these
conclusions.

The complaint focuses on one specific fundamental legal right — the right to a balanced and healthful ecology
which, for the first time in our nation's constitutional history, is solemnly incorporated in the fundamental law.
Section 16, Article II of the 1987 Constitution explicitly provides:

Sec. 16. The State shall protect and advance the right of the people to a balanced and healthful
ecology in accord with the rhythm and harmony of nature.

This right unites with the right to health which is provided for in the preceding section of the same
article:

Sec. 15. The State shall protect and promote the right to health of the people and instill health
consciousness among them.

While the right to a balanced and healthful ecology is to be found under the Declaration of Principles and State
Policies and not under the Bill of Rights, it does not follow that it is less important than any of the civil and
political rights enumerated in the latter. Such a right belongs to a different category of rights altogether for it
concerns nothing less than self-preservation and self-perpetuation — aptly and fittingly stressed by the
petitioners — the advancement of which may even be said to predate all governments and constitutions. As a
matter of fact, these basic rights need not even be written in the Constitution for they are assumed to exist from
the inception of humankind. If they are now explicitly mentioned in the fundamental charter, it is because of the
well-founded fear of its framers that unless the rights to a balanced and healthful ecology and to health are
mandated as state policies by the Constitution itself, thereby highlighting their continuing importance and
imposing upon the state a solemn obligation to preserve the first and protect and advance the second, the day
would not be too far when all else would be lost not only for the present generation, but also for those to come —
generations which stand to inherit nothing but parched earth incapable of sustaining life.

The right to a balanced and healthful ecology carries with it the correlative duty to refrain from impairing the
environment. During the debates on this right in one of the plenary sessions of the 1986 Constitutional
Commission, the following exchange transpired between Commissioner Wilfrido Villacorta and Commissioner
Adolfo Azcuna who sponsored the section in question:
 MR. VILLACORTA:

Does this section mandate the State to provide sanctions against all forms of
pollution — air, water and noise pollution?

MR. AZCUNA:

Yes, Madam President. The right to healthful (sic) environment necessarily

carries with it the correlative duty of not impairing the same and, therefore,
sanctions may be provided for impairment of environmental balance. 12

The said right implies, among many other things, the judicious management and conservation of the country's
forests.

Without such forests, the ecological or environmental balance would be irreversiby disrupted.

Conformably with the enunciated right to a balanced and healthful ecology and the right to health, as well as the
other related provisions of the Constitution concerning the conservation, development and utilization of the
country's natural resources, 13 then President Corazon C. Aquino promulgated on 10 June 1987 E.O. No.
192, 14 Section 4 of which expressly mandates that the Department of Environment and Natural Resources "shall
be the primary government agency responsible for the conservation, management, development and proper use
of the country's environment and natural resources, specifically forest and grazing lands, mineral, resources,
including those in reservation and watershed areas, and lands of the public domain, as well as the licensing and
regulation of all natural resources as may be provided for by law in order to ensure equitable sharing of the
benefits derived therefrom for the welfare of the present and future generations of Filipinos." Section 3 thereof
makes the following statement of policy:

Sec. 3. Declaration of Policy. — It is hereby declared the policy of the State to ensure the
sustainable use, development, management, renewal, and conservation of the country's forest,
mineral, land, off-shore areas and other natural resources, including the protection and
enhancement of the quality of the environment, and equitable access of the different segments of
the population to the development and the use of the country's natural resources, not only for the
present generation but for future generations as well. It is also the policy of the state to recognize
and apply a true value system including social and environmental cost implications relative to
their utilization, development and conservation of our natural resources.

This policy declaration is substantially re-stated it Title XIV, Book IV of the Administrative Code of
1987,15 specifically in Section 1 thereof which reads:

Sec. 1. Declaration of Policy. — (1) The State shall ensure, for the benefit of the Filipino people,
the full exploration and development as well as the judicious disposition, utilization, management,
renewal and conservation of the country's forest, mineral, land, waters, fisheries, wildlife, off-
shore areas and other natural resources, consistent with the necessity of maintaining a sound
ecological balance and protecting and enhancing the quality of the environment and the objective
of making the exploration, development and utilization of such natural resources equitably
accessible to the different segments of the present as well as future generations.

(2) The State shall likewise recognize and apply a true value system that takes into account
social and environmental cost implications relative to the utilization, development and
conservation of our natural resources.

The above provision stresses "the necessity of maintaining a sound ecological balance and protecting and
enhancing the quality of the environment." Section 2 of the same Title, on the other hand, specifically speaks of
the mandate of the DENR; however, it makes particular reference to the fact of the agency's being subject to law
and higher authority. Said section provides:

Sec. 2. Mandate. — (1) The Department of Environment and Natural Resources shall be
primarily responsible for the implementation of the foregoing policy.
 (2) It shall, subject to law and higher authority, be in charge of carrying out the State's
constitutional mandate to control and supervise the exploration, development, utilization, and
conservation of the country's natural resources.

Both E.O. NO. 192 and the Administrative Code of 1987 have set the objectives which will serve as the bases
for policy formulation, and have defined the powers and functions of the DENR.

It may, however, be recalled that even before the ratification of the 1987 Constitution, specific statutes already
paid special attention to the "environmental right" of the present and future generations. On 6 June 1977, P.D.
No. 1151 (Philippine Environmental Policy) and P.D. No. 1152 (Philippine Environment Code) were issued. The
former "declared a continuing policy of the State (a) to create, develop, maintain and improve conditions under
which man and nature can thrive in productive and enjoyable harmony with each other, (b) to fulfill the social,
economic and other requirements of present and future generations of Filipinos, and (c) to insure the attainment
of an environmental quality that is conducive to a life of dignity and well-being." 16 As its goal, it speaks of the
"responsibilities of each generation as trustee and guardian of the environment for succeeding
generations." 17 The latter statute, on the other hand, gave flesh to the said policy.

Thus, the right of the petitioners (and all those they represent) to a balanced and healthful ecology is as clear as
the DENR's duty — under its mandate and by virtue of its powers and functions under E.O. No. 192 and the
Administrative Code of 1987 — to protect and advance the said right.

A denial or violation of that right by the other who has the corelative duty or obligation to respect or protect the
same gives rise to a cause of action. Petitioners maintain that the granting of the TLAs, which they claim was
done with grave abuse of discretion, violated their right to a balanced and healthful ecology; hence, the full
protection thereof requires that no further TLAs should be renewed or granted.

A cause of action is defined as:

. . . an act or omission of one party in violation of the legal right or rights of the other; and its
essential elements are legal right of the plaintiff, correlative obligation of the defendant, and act
or omission of the defendant in violation of said legal right. 18

It is settled in this jurisdiction that in a motion to dismiss based on the ground that the complaint fails to state a
cause of action, 19 the question submitted to the court for resolution involves the sufficiency of the facts alleged in
the complaint itself. No other matter should be considered; furthermore, the truth of falsity of the said allegations
is beside the point for the truth thereof is deemed hypothetically admitted. The only issue to be resolved in such
a case is: admitting such alleged facts to be true, may the court render a valid judgment in accordance with the
prayer in the complaint? 20 In Militante vs. Edrosolano, 21 this Court laid down the rule that the judiciary should
"exercise the utmost care and circumspection in passing upon a motion to dismiss on the ground of the absence
thereof [cause of action] lest, by its failure to manifest a correct appreciation of the facts alleged and deemed
hypothetically admitted, what the law grants or recognizes is effectively nullified. If that happens, there is a blot
on the legal order. The law itself stands in disrepute."

After careful examination of the petitioners' complaint, We find the statements under the introductory affirmative
allegations, as well as the specific averments under the sub-heading CAUSE OF ACTION, to be adequate
enough to show, prima facie, the claimed violation of their rights. On the basis thereof, they may thus be
granted, wholly or partly, the reliefs prayed for. It bears stressing, however, that insofar as the cancellation of the
TLAs is concerned, there is the need to implead, as party defendants, the grantees thereof for they are
indispensable parties.

The foregoing considered, Civil Case No. 90-777 be said to raise a political question. Policy formulation or
determination by the executive or legislative branches of Government is not squarely put in issue. What is
principally involved is the enforcement of a right vis-a-vis policies already formulated and expressed in
legislation. It must, nonetheless, be emphasized that the political question doctrine is no longer, the
insurmountable obstacle to the exercise of judicial power or the impenetrable shield that protects executive and
legislative actions from judicial inquiry or review. The second paragraph of section 1, Article VIII of the
Constitution states that:

Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.
Commenting on this provision in his book, Philippine Political Law, 22 Mr. Justice Isagani A. Cruz, a distinguished
member of this Court, says:

The first part of the authority represents the traditional concept of judicial power, involving the
settlement of conflicting rights as conferred as law. The second part of the authority represents a
broadening of judicial power to enable the courts of justice to review what was before forbidden
territory, to wit, the discretion of the political departments of the government.

As worded, the new provision vests in the judiciary, and particularly the Supreme Court, the
power to rule upon even the wisdom of the decisions of the executive and the legislature and to
declare their acts invalid for lack or excess of jurisdiction because tainted with grave abuse of
discretion. The catch, of course, is the meaning of "grave abuse of discretion," which is a very
elastic phrase that can expand or contract according to the disposition of the judiciary.

In Daza vs. Singson, 23 Mr. Justice Cruz, now speaking for this Court, noted:

In the case now before us, the jurisdictional objection becomes even less tenable and decisive.
The reason is that, even if we were to assume that the issue presented before us was political in
nature, we would still not be precluded from revolving it under the expanded jurisdiction
conferred upon us that now covers, in proper cases, even the political question. Article VII,
Section 1, of the Constitution clearly provides: . . .

The last ground invoked by the trial court in dismissing the complaint is the non-impairment of contracts clause
found in the Constitution. The court a quo declared that:

The Court is likewise of the impression that it cannot, no matter how we stretch our jurisdiction,
grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing timber license agreements
in the country and to cease and desist from receiving, accepting, processing, renewing or
approving new timber license agreements. For to do otherwise would amount to "impairment of
contracts" abhored (sic) by the fundamental law. 24

We are not persuaded at all; on the contrary, We are amazed, if not shocked, by such a sweeping
pronouncement. In the first place, the respondent Secretary did not, for obvious reasons, even invoke in his
motion to dismiss the non-impairment clause. If he had done so, he would have acted with utmost infidelity to the
Government by providing undue and unwarranted benefits and advantages to the timber license holders
because he would have forever bound the Government to strictly respect the said licenses according to their
terms and conditions regardless of changes in policy and the demands of public interest and welfare. He was
aware that as correctly pointed out by the petitioners, into every timber license must be read Section 20 of the
Forestry Reform Code (P.D. No. 705) which provides:

. . . Provided, That when the national interest so requires, the President may amend, modify,
replace or rescind any contract, concession, permit, licenses or any other form of privilege
granted herein . . .

Needless to say, all licenses may thus be revoked or rescinded by executive action. It is not a contract,
property or a property right protested by the due process clause of the Constitution. In Tan vs. Director of
Forestry, 25 this Court held:

. . . A timber license is an instrument by which the State regulates the utilization and disposition
of forest resources to the end that public welfare is promoted. A timber license is not a contract
within the purview of the due process clause; it is only a license or privilege, which can be validly
withdrawn whenever dictated by public interest or public welfare as in this case.

A license is merely a permit or privilege to do what otherwise would be unlawful, and is not a
contract between the authority, federal, state, or municipal, granting it and the person to whom it
is granted; neither is it property or a property right, nor does it create a vested right; nor is it
taxation (37 C.J. 168). Thus, this Court held that the granting of license does not create
irrevocable rights, neither is it property or property rights (People vs. Ong Tin, 54 O.G. 7576).

We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive Secretary: 26
 . . . Timber licenses, permits and license agreements are the principal instruments by which the
State regulates the utilization and disposition of forest resources to the end that public welfare is
promoted. And it can hardly be gainsaid that they merely evidence a privilege granted by the
State to qualified entities, and do not vest in the latter a permanent or irrevocable right to the
particular concession area and the forest products therein. They may be validly amended,
modified, replaced or rescinded by the Chief Executive when national interests so require. Thus,
they are not deemed contracts within the purview of the due process of law clause [See Sections
3(ee) and 20 of Pres. Decree No. 705, as amended. Also, Tan v. Director of Forestry, G.R. No.
L-24548, October 27, 1983, 125 SCRA 302].

Since timber licenses are not contracts, the non-impairment clause, which reads:

Sec. 10. No law impairing, the obligation of contracts shall be passed. 27

cannot be invoked.

In the second place, even if it is to be assumed that the same are contracts, the instant case does not involve a
law or even an executive issuance declaring the cancellation or modification of existing timber licenses. Hence,
the non-impairment clause cannot as yet be invoked. Nevertheless, granting further that a law has actually been
passed mandating cancellations or modifications, the same cannot still be stigmatized as a violation of the non-
impairment clause. This is because by its very nature and purpose, such as law could have only been passed in
the exercise of the police power of the state for the purpose of advancing the right of the people to a balanced
and healthful ecology, promoting their health and enhancing the general welfare. In Abe vs. Foster
Wheeler Corp. 28 this Court stated:

The freedom of contract, under our system of government, is not meant to be absolute. The
same is understood to be subject to reasonable legislative regulation aimed at the promotion of
public health, moral, safety and welfare. In other words, the constitutional guaranty of non-
impairment of obligations of contract is limited by the exercise of the police power of the State, in
the interest of public health, safety, moral and general welfare.

The reason for this is emphatically set forth in Nebia vs. New York, 29 quoted in Philippine American Life
Insurance Co. vs. Auditor General,30 to wit:

Under our form of government the use of property and the making of contracts are normally
matters of private and not of public concern. The general rule is that both shall be free of
governmental interference. But neither property rights nor contract rights are absolute; for
government cannot exist if the citizen may at will use his property to the detriment of his fellows,
or exercise his freedom of contract to work them harm. Equally fundamental with the private right
is that of the public to regulate it in the common interest.

In short, the non-impairment clause must yield to the police power of the state. 31

Finally, it is difficult to imagine, as the trial court did, how the non-impairment clause could apply with respect to
the prayer to enjoin the respondent Secretary from receiving, accepting, processing, renewing or approving new
timber licenses for, save in cases of renewal, no contract would have as of yet existed in the other instances.
Moreover, with respect to renewal, the holder is not entitled to it as a matter of right.

WHEREFORE, being impressed with merit, the instant Petition is hereby GRANTED, and the challenged Order
of respondent Judge of 18 July 1991 dismissing Civil Case No. 90-777 is hereby set aside. The petitioners may
therefore amend their complaint to implead as defendants the holders or grantees of the questioned timber
license agreements.

No pronouncement as to costs.

SO ORDERED.

Cruz, Padilla, Bidin, Griño-Aquino, Regalado, Romero, Nocon, Bellosillo, Melo and Quiason, JJ., concur.

Narvasa, C.J., Puno and Vitug, JJ., took no part.

 Separate Opinions

FELICIANO, J., concurring

I join in the result reached by my distinguished brother in the Court, Davide, Jr., J., in this case which, to my
mind, is one of the most important cases decided by this Court in the last few years. The seminal principles laid
down in this decision are likely to influence profoundly the direction and course of the protection and
management of the environment, which of course embraces the utilization of all the natural resources in the
territorial base of our polity. I have therefore sought to clarify, basically to myself, what the Court appears to be
saying.

The Court explicitly states that petitioners have the locus standi necessary to sustain the bringing and,
maintenance of this suit (Decision, pp. 11-12). Locus standi is not a function of petitioners' claim that their suit is
properly regarded as a class suit. I understand locus standi to refer to the legal interest which a plaintiff must
have in the subject matter of the suit. Because of the very broadness of the concept of "class" here involved —
membership in this "class" appears to embrace everyone living in the country whether now or in the future — it
appears to me that everyone who may be expected to benefit from the course of action petitioners seek to
require public respondents to take, is vested with the necessary locus standi. The Court may be seen therefore
to be recognizing a beneficiaries' right of action in the field of environmental protection, as against both the
public administrative agency directly concerned and the private persons or entities operating in the field or sector
of activity involved. Whether such beneficiaries' right of action may be found under any and all circumstances, or
whether some failure to act, in the first instance, on the part of the governmental agency concerned must be
shown ("prior exhaustion of administrative remedies"), is not discussed in the decision and presumably is left for
future determination in an appropriate case.

The Court has also declared that the complaint has alleged and focused upon "one specific fundamental legal
right — the right to a balanced and healthful ecology" (Decision, p. 14). There is no question that "the right to a
balanced and healthful ecology" is "fundamental" and that, accordingly, it has been "constitutionalized." But
although it is fundamental in character, I suggest, with very great respect, that it cannot be characterized as
"specific," without doing excessive violence to language. It is in fact very difficult to fashion language more
comprehensive in scope and generalized in character than a right to "a balanced and healthful ecology." The list
of particular claims which can be subsumed under this rubic appears to be entirely open-ended: prevention and
control of emission of toxic fumes and smoke from factories and motor vehicles; of discharge of oil, chemical
effluents, garbage and raw sewage into rivers, inland and coastal waters by vessels, oil rigs, factories, mines
and whole communities; of dumping of organic and inorganic wastes on open land, streets and thoroughfares;
failure to rehabilitate land after strip-mining or open-pit mining; kaingin or slash-and-burn farming; destruction of
fisheries, coral reefs and other living sea resources through the use of dynamite or cyanide and other chemicals;
contamination of ground water resources; loss of certain species of fauna and flora; and so on. The other
statements pointed out by the Court: Section 3, Executive Order No. 192 dated 10 June 1987; Section 1, Title
XIV, Book IV of the 1987 Administrative Code; and P.D. No. 1151, dated 6 June 1977 — all appear to be
formulations of policy, as general and abstract as the constitutional statements of basic policy in Article II,
Section 16 ("the right — to a balanced and healthful ecology") and 15 ("the right to health").

P.D. No. 1152, also dated 6 June 1977, entitled "The Philippine Environment Code," is, upon the other hand, a
compendious collection of more "specific environment management policies" and "environment quality
standards" (fourth "Whereas" clause, Preamble) relating to an extremely wide range of topics:

(a) air quality management;

(b) water quality management;

(c) land use management;

(d) natural resources management and conservation embracing:

(i) fisheries and aquatic resources;

(ii) wild life;

 (iii) forestry and soil conservation;

(iv) flood control and natural calamities;

(v) energy development;

(vi) conservation and utilization of surface and ground water

(vii) mineral resources

Two (2) points are worth making in this connection. Firstly, neither petitioners nor the Court has identified the
particular provision or provisions (if any) of the Philippine Environment Code which give rise to a specific legal
right which petitioners are seeking to enforce. Secondly, the Philippine Environment Code identifies with notable
care the particular government agency charged with the formulation and implementation of guidelines and
programs dealing with each of the headings and sub-headings mentioned above. The Philippine Environment
Code does not, in other words, appear to contemplate action on the part of private persons who are beneficiaries
of implementation of that Code.

As a matter of logic, by finding petitioners' cause of action as anchored on a legal right comprised in the
constitutional statements above noted, the Court is in effect saying that Section 15 (and Section 16) of Article II
of the Constitution are self-executing and judicially enforceable even in their present form. The implications of
this doctrine will have to be explored in future cases; those implications are too large and far-reaching in nature
even to be hinted at here.

My suggestion is simply that petitioners must, before the trial court, show a more specific legal right — a right
cast in language of a significantly lower order of generality than Article II (15) of the Constitution — that is or may
be violated by the actions, or failures to act, imputed to the public respondent by petitioners so that the trial court
can validly render judgment granting all or part of the relief prayed for. To my mind, the Court should be
understood as simply saying that such a more specific legal right or rights may well exist in our corpus of law,
considering the general policy principles found in the Constitution and the existence of the Philippine
Environment Code, and that the trial court should have given petitioners an effective opportunity so to
demonstrate, instead of aborting the proceedings on a motion to dismiss.

It seems to me important that the legal right which is an essential component of a cause of action be a specific,
operable legal right, rather than a constitutional or statutory policy, for at least two (2) reasons. One is that
unless the legal right claimed to have been violated or disregarded is given specification in operational terms,
defendants may well be unable to defend themselves intelligently and effectively; in other words, there are due
process dimensions to this matter.

The second is a broader-gauge consideration — where a specific violation of law or applicable regulation is not
alleged or proved, petitioners can be expected to fall back on the expanded conception of judicial power in the
second paragraph of Section 1 of Article VIII of the Constitution which reads:

Section 1. . . .

Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government. (Emphasis supplied)

When substantive standards as general as "the right to a balanced and healthy ecology" and "the right to
health" are combined with remedial standards as broad ranging as "a grave abuse of discretion
amounting to lack or excess of jurisdiction," the result will be, it is respectfully submitted, to propel courts
into the uncharted ocean of social and economic policy making. At least in respect of the vast area of
environmental protection and management, our courts have no claim to special technical competence
and experience and professional qualification. Where no specific, operable norms and standards are
shown to exist, then the policy making departments — the legislative and executive departments — must
be given a real and effective opportunity to fashion and promulgate those norms and standards, and to
implement them before the courts should intervene.
My learned brother Davide, Jr., J., rightly insists that the timber companies, whose concession agreements or
TLA's petitioners demand public respondents should cancel, must be impleaded in the proceedings below. It
might be asked that, if petitioners' entitlement to the relief demanded is not dependent upon proof of breach by
the timber companies of one or more of the specific terms and conditions of their concession agreements (and
this, petitioners implicitly assume), what will those companies litigate about? The answer I suggest is that they
may seek to dispute the existence of the specific legal right petitioners should allege, as well as the reality of the
claimed factual nexus between petitioners' specific legal rights and the claimed wrongful acts or failures to act of
public respondent administrative agency. They may also controvert the appropriateness of the remedy or
remedies demanded by petitioners, under all the circumstances which exist.

I vote to grant the Petition for Certiorari because the protection of the environment, including the forest cover of
our territory, is of extreme importance for the country. The doctrines set out in the Court's decision issued today
should, however, be subjected to closer examination.

# Footnotes

1 Rollo, 164; 186.

2 Id., 62-65, exclusive of annexes.

3 Under Section 12, Rule 3, Revised Rules of Court.

4 Rollo, 67.

5 Id., 74.

6 Rollo, 70-73.

7 Annex "B" of Petitions; Id., 43-44.

8 Paragraph 7, Petition, 6; Rollo, 20.

9 Webster's Third New International Dictionary, unabridged, 1986, 1508.

10 Title XIV (Environment and Natural Resources), Book IV of the Administrative Code of 1987,
E.O. No. 292.

11 Annex "B" of Petition; Rollo, 43-44.

12 Record of the Constitutional Commission, vol. 4, 913.

13 For instance, the Preamble and Article XII on the National Economy and Patrimony.

14 The Reorganization Act of the Department of Environment and Natural Resources.

15 E.O. No. 292.

16 Section 1.

17 Section 2.

18 Ma-ao Sugar Central Co. vs. Barrios, 79 Phil. 666 [1947]; Community Investment and Finance
Corp. vs. Garcia, 88 Phil. 215 [1951]; Remitere vs. Vda. de Yulo, 16 SCRA 251 [1966]; Caseñas
vs. Rosales, 19 SCRA 462 [1967]; Virata vs. Sandiganbayan, 202 SCRA 680 [1991]; Madrona
vs. Rosal, 204 SCRA 1 [1991].

19 Section 1(q), Rule 16, Revised Rules of Court.

20 Adamos vs. J.M. Tuason and Co., Inc. 25 SCRA 529 [1968]; Virata vs. Sandiganbayn, supra;
Madrona vs. Rosal, supra.
 21 39 SCRA 473, 479 [1971].

22 1991 ed., 226-227.

23 180 SCRA 496, 501-502 [1989]. See also, Coseteng vs. Mitra, 187 SCRA 377 [1990];
Gonzales vs. Macaraig, 191 SCRA 452 [1990]; Llamas vs. Orbos, 202 SCRA 844 [1991];
Bengzon vs. Senate Blue Ribbon Committee, 203 SCRA 767 [1991].

24 Rollo, 44.

25 125 SCRA 302, 325 [1983].

26 190 SCRA 673, 684 [1990].

27 Article III, 1987 Constitution.

28 110 Phil. 198, 203 [1960]; footnotes omitted.

29 291 U.S. 502, 523, 78 L. ed. 940, 947-949.

30 22 SCRA 135, 146-147 [1968].

31 Ongsiako vs. Gamboa, 86 Phil. 50 [1950]; Abe vs. Foster Wheeler Corp. supra.; Phil.
American Life Insurance Co. vs. Auditor General, supra.; Alalayan vs. NPC, 24 SCRA 172[1968];
Victoriano vs. Elizalde Rope Workers' Union, 59 SCRA 54 [1974]; Kabiling vs. National Housing
Authority, 156 SCRA 623 [1987].

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 110120 March 16, 1994

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS, HON. MANUEL JN. SERAPIO, Presiding Judge RTC, Branch 127, Caloocan City,
HON. MACARIO A. ASISTIO, JR., City Mayor of Caloocan and/or THE CITY GOVERNMENT OF
CALOOCAN, respondents.

Alberto N. Hidalgo and Ma. Teresa T. Oledan for petitioner.

The City Legal Officer & Chief, Law Department for Mayor Macario A. Asistio, Jr. and the City Government of
Caloocan.

ROMERO, J.:

The clash between the responsibility of the City Government of Caloocan to dispose off the 350 tons of garbage
it collects daily and the growing concern and sensitivity to a pollution-free environment of the residents of
Barangay Camarin, Tala Estate, Caloocan City where these tons of garbage are dumped everyday is the hub of
this controversy elevated by the protagonists to the Laguna Lake Development Authority (LLDA) for adjudication.

The instant case stemmed from an earlier petition filed with this Court by Laguna Lake Development Authority
(LLDA for short) docketed as G.R. No. 107542 against the City Government of Caloocan, et al. In the Resolution
of November 10, 1992, this Court referred G.R. No. 107542 to the Court of Appeals for appropriate disposition.
Docketed therein as CA-G.R. SP No. 29449, the Court of Appeals, in a decision1 promulgated on January 29,
1993 ruled that the LLDA has no power and authority to issue a cease and desist order enjoining the dumping of
garbage in Barangay Camarin, Tala Estate, Caloocan City. The LLDA now seeks, in this petition, a review of the
decision of the Court of Appeals.
The facts, as disclosed in the records, are undisputed.

On March 8, 1991, the Task Force Camarin Dumpsite of Our Lady of Lourdes Parish, Barangay Camarin,
Caloocan City, filed a letter-complaint2 with the Laguna Lake Development Authority seeking to stop the
operation of the 8.6-hectare open garbage dumpsite in Tala Estate, Barangay Camarin, Caloocan City due to its
harmful effects on the health of the residents and the possibility of pollution of the water content of the
surrounding area.

On November 15, 1991, the LLDA conducted an on-site investigation, monitoring and test sampling of the
leachate3that seeps from said dumpsite to the nearby creek which is a tributary of the Marilao River. The LLDA
Legal and Technical personnel found that the City Government of Caloocan was maintaining an open dumpsite
at the Camarin area without first securing an Environmental Compliance Certificate (ECC) from the
Environmental Management Bureau (EMB) of the Department of Environment and Natural Resources, as
required under Presidential Decree No. 1586,4 and clearance from LLDA as required under Republic Act No.
4850,5 as amended by Presidential Decree No. 813 and Executive Order No. 927, series of 1983.6

After a public hearing conducted on December 4, 1991, the LLDA, acting on the complaint of Task Force
Camarin Dumpsite, found that the water collected from the leachate and the receiving streams could
considerably affect the quality, in turn, of the receiving waters since it indicates the presence of bacteria, other
than coliform, which may have contaminated the sample during collection or handling.7 On December 5, 1991,
the LLDA issued a Cease and Desist Order8 ordering the City Government of Caloocan, Metropolitan Manila
Authority, their contractors, and other entities, to completely halt, stop and desist from dumping any form or kind
of garbage and other waste matter at the Camarin dumpsite.

The dumping operation was forthwith stopped by the City Government of Caloocan. However, sometime in
August 1992 the dumping operation was resumed after a meeting held in July 1992 among the City Government
of Caloocan, the representatives of Task Force Camarin Dumpsite and LLDA at the Office of Environmental
Management Bureau Director Rodrigo U. Fuentes failed to settle the problem.

After an investigation by its team of legal and technical personnel on August 14, 1992, the LLDA issued another
order reiterating the December 5, 1991, order and issued an Alias Cease and Desist Order enjoining the City
Government of Caloocan from continuing its dumping operations at the Camarin area.

On September 25, 1992, the LLDA, with the assistance of the Philippine National Police, enforced its Alias
Cease and Desist Order by prohibiting the entry of all garbage dump trucks into the Tala Estate, Camarin area
being utilized as a dumpsite.

Pending resolution of its motion for reconsideration earlier filed on September 17, 1992 with the LLDA, the City
Government of Caloocan filed with the Regional Trial Court of Caloocan City an action for the declaration of
nullity of the cease and desist order with prayer for the issuance of writ of injunction, docketed as Civil Case No.
C-15598. In its complaint, the City Government of Caloocan sought to be declared as the sole authority
empowered to promote the health and safety and enhance the right of the people in Caloocan City to a balanced
ecology within its territorial jurisdiction.9

On September 25, 1992, the Executive Judge of the Regional Trial Court of Caloocan City issued a temporary
restraining order enjoining the LLDA from enforcing its cease and desist order. Subsequently, the case was
raffled to the Regional Trial Court, Branch 126 of Caloocan which, at the time, was presided over by Judge
Manuel Jn. Serapio of the Regional Trial Court, Branch 127, the pairing judge of the recently-retired presiding
judge.

The LLDA, for its part, filed on October 2, 1992 a motion to dismiss on the ground, among others, that under
Republic Act No. 3931, as amended by Presidential Decree No. 984, otherwise known as the Pollution Control
Law, the cease and desist order issued by it which is the subject matter of the complaint is reviewable both upon
the law and the facts of the case by the Court of Appeals and not by the Regional Trial Court. 10

On October 12, 1992 Judge Manuel Jn. Serapio issued an order consolidating Civil Case No. C-15598 with Civil
Case No. C-15580, an earlier case filed by the Task Force Camarin Dumpsite entitled "Fr. John Moran, et al. vs.
Hon. Macario Asistio." The LLDA, however, maintained during the trial that the foregoing cases, being
independent of each other, should have been treated separately.

On October 16, 1992, Judge Manuel Jn. Serapio, after hearing the motion to dismiss, issued in the consolidated
cases an order11 denying LLDA's motion to dismiss and granting the issuance of a writ of preliminary injunction
enjoining the LLDA, its agent and all persons acting for and on its behalf, from enforcing or implementing its
cease and desist order which prevents plaintiff City of Caloocan from dumping garbage at the Camarin dumpsite
during the pendency of this case and/or until further orders of the court.

On November 5, 1992, the LLDA filed a petition for certiorari, prohibition and injunction with prayer for restraining
order with the Supreme Court, docketed as G.R. No. 107542, seeking to nullify the aforesaid order dated
October 16, 1992 issued by the Regional Trial Court, Branch 127 of Caloocan City denying its motion to dismiss.

The Court, acting on the petition, issued a Resolution12 on November 10, 1992 referring the case to the Court of
Appeals for proper disposition and at the same time, without giving due course to the petition, required the
respondents to comment on the petition and file the same with the Court of Appeals within ten (10) days from
notice. In the meantime, the Court issued a temporary restraining order, effective immediately and continuing
until further orders from it, ordering the respondents: (1) Judge Manuel Jn. Serapio, Presiding Judge, Regional
Trial Court, Branch 127, Caloocan City to cease and desist from exercising jurisdiction over the case for
declaration of nullity of the cease and desist order issued by the Laguna Lake Development Authority (LLDA);
and (2) City Mayor of Caloocan and/or the City Government of Caloocan to cease and desist from dumping its
garbage at the Tala Estate, Barangay Camarin, Caloocan City.

Respondents City Government of Caloocan and Mayor Macario A. Asistio, Jr. filed on November 12, 1992 a
motion for reconsideration and/or to quash/recall the temporary restraining order and an urgent motion for
reconsideration alleging that ". . . in view of the calamitous situation that would arise if the respondent city
government fails to collect 350 tons of garbage daily for lack of dumpsite (i)t is therefore, imperative that the
issue be resolved with dispatch or with sufficient leeway to allow the respondents to find alternative solutions to
this garbage problem."

On November 17, 1992, the Court issued a Resolution13 directing the Court of Appeals to immediately set the
case for hearing for the purpose of determining whether or not the temporary restraining order issued by the
Court should be lifted and what conditions, if any, may be required if it is to be so lifted or whether the restraining
order should be maintained or converted into a preliminary injunction.

The Court of Appeals set the case for hearing on November 27, 1992, at 10:00 in the morning at the Hearing
Room, 3rd Floor, New Building, Court of Appeals.14 After the oral argument, a conference was set on December
8, 1992 at 10:00 o'clock in the morning where the Mayor of Caloocan City, the General Manager of LLDA, the
Secretary of DENR or his duly authorized representative and the Secretary of DILG or his duly authorized
representative were required to appear.

It was agreed at the conference that the LLDA had until December 15, 1992 to finish its study and review of
respondent's technical plan with respect to the dumping of its garbage and in the event of a rejection of
respondent's technical plan or a failure of settlement, the parties will submit within 10 days from notice their
respective memoranda on the merits of the case, after which the petition shall be deemed submitted for
resolution.15Notwithstanding such efforts, the parties failed to settle the dispute.

On April 30, 1993, the Court of Appeals promulgated its decision holding that: (1) the Regional Trial Court has
no jurisdiction on appeal to try, hear and decide the action for annulment of LLDA's cease and desist order,
including the issuance of a temporary restraining order and preliminary injunction in relation thereto, since
appeal therefrom is within the exclusive and appellate jurisdiction of the Court of Appeals under Section 9, par.
(3), of Batas Pambansa Blg. 129; and (2) the Laguna Lake Development Authority has no power and authority to
issue a cease and desist order under its enabling law, Republic Act No. 4850, as amended by P.D. No. 813 and
Executive Order
No. 927, series of 1983.

The Court of Appeals thus dismissed Civil Case No. 15598 and the preliminary injunction issued in the said case
was set aside; the cease and desist order of LLDA was likewise set aside and the temporary restraining order
enjoining the City Mayor of Caloocan and/or the City Government of Caloocan to cease and desist from dumping
its garbage at the Tala Estate, Barangay Camarin, Caloocan City was lifted, subject, however, to the condition
that any future dumping of garbage in said area, shall be in conformity with the procedure and protective works
contained in the proposal attached to the records of this case and found on pages 152-160 of the Rollo, which
was thereby adopted by reference and made an integral part of the decision, until the corresponding restraining
and/or injunctive relief is granted by the proper Court upon LLDA's institution of the necessary legal proceedings.

Hence, the Laguna Lake Development Authority filed the instant petition for review on certiorari, now docketed
as G.R. No. 110120, with prayer that the temporary restraining order lifted by the Court of Appeals be re-issued
until after final determination by this Court of the issue on the proper interpretation of the powers and authority of
the LLDA under its enabling law.

On July, 19, 1993, the Court issued a temporary restraining order16 enjoining the City Mayor of Caloocan and/or
the City Government of Caloocan to cease and desist from dumping its garbage at the Tala Estate, Barangay
Camarin, Caloocan City, effective as of this date and containing until otherwise ordered by the Court.

It is significant to note that while both parties in this case agree on the need to protect the environment and to
maintain the ecological balance of the surrounding areas of the Camarin open dumpsite, the question as to
which agency can lawfully exercise jurisdiction over the matter remains highly open to question.

The City Government of Caloocan claims that it is within its power, as a local government unit, pursuant to the
general welfare provision of the Local Government Code, 17 to determine the effects of the operation of the
dumpsite on the ecological balance and to see that such balance is maintained. On the basis of said contention,
it questioned, from the inception of the dispute before the Regional Trial Court of Caloocan City, the power and
authority of the LLDA to issue a cease and desist order enjoining the dumping of garbage in the Barangay
Camarin over which the City Government of Caloocan has territorial jurisdiction.

The Court of Appeals sustained the position of the City of Caloocan on the theory that Section 7 of Presidential
Decree No. 984, otherwise known as the Pollution Control law, authorizing the defunct National Pollution Control
Commission to issue an ex-parte cease and desist order was not incorporated in Presidential Decree No. 813
nor in Executive Order No. 927, series of
1983. The Court of Appeals ruled that under Section 4, par. (d), of Republic Act No. 4850, as amended, the
LLDA is instead required "to institute the necessary legal proceeding against any person who shall commence to
implement or continue implementation of any project, plan or program within the Laguna de Bay region without
previous clearance from the Authority."

The LLDA now assails, in this partition for review, the abovementioned ruling of the Court of Appeals,
contending that, as an administrative agency which was granted regulatory and adjudicatory powers and
functions by Republic Act No. 4850 and its amendatory laws, Presidential Decree No. 813 and Executive Order
No. 927, series of 1983, it is invested with the power and authority to issue a cease and desist order pursuant to
Section 4 par. (c), (d), (e), (f) and (g) of Executive Order No. 927 series of 1983 which provides, thus:

Sec. 4. Additional Powers and Functions. The authority shall have the following powers and
functions:

xxx xxx xxx

(c) Issue orders or decisions to compel compliance with the provisions of this Executive Order
and its implementing rules and regulations only after proper notice and hearing.

(d) Make, alter or modify orders requiring the discontinuance of pollution specifying the
conditions and the time within which such discontinuance must be accomplished.

(e) Issue, renew, or deny permits, under such conditions as it may determine to be reasonable,
for the prevention and abatement of pollution, for the discharge of sewage, industrial waste, or
for the installation or operation of sewage works and industrial disposal system or parts thereof.

(f) After due notice and hearing, the Authority may also revoke, suspend or modify any permit
issued under this Order whenever the same is necessary to prevent or abate pollution.

(g) Deputize in writing or request assistance of appropriate government agencies or

instrumentalities for the purpose of enforcing this Executive Order and its implementing rules and
regulations and the orders and decisions of the Authority.

The LLDA claims that the appellate court deliberately suppressed and totally disregarded the above provisions
of Executive Order No. 927, series of 1983, which granted administrative quasi-judicial functions to LLDA on
pollution abatement cases.

In light of the relevant environmental protection laws cited which are applicable in this case, and the
corresponding overlapping jurisdiction of government agencies implementing these laws, the resolution of the
issue of whether or not the LLDA has the authority and power to issue an order which, in its nature and effect
was injunctive, necessarily requires a determination of the threshold question: Does the Laguna Lake
Development Authority, under its Charter and its amendatory laws, have the authority to entertain the complaint
against the dumping of garbage in the open dumpsite in Barangay Camarin authorized by the City Government
of Caloocan which is allegedly endangering the health, safety, and welfare of the residents therein and the
sanitation and quality of the water in the area brought about by exposure to pollution caused by such open
garbage dumpsite?

The matter of determining whether there is such pollution of the environment that requires control, if not
prohibition, of the operation of a business establishment is essentially addressed to the Environmental
Management Bureau (EMB) of the DENR which, by virtue of Section 16 of Executive Order No. 192, series of
1987,18 has assumed the powers and functions of the defunct National Pollution Control Commission created
under Republic Act No. 3931. Under said Executive Order, a Pollution Adjudication Board (PAB) under the
Office of the DENR Secretary now assumes the powers and functions of the National Pollution Control
Commission with respect to adjudication of pollution cases. 19

As a general rule, the adjudication of pollution cases generally pertains to the Pollution Adjudication Board
(PAB), except in cases where the special law provides for another forum. It must be recognized in this regard
that the LLDA, as a specialized administrative agency, is specifically mandated under Republic Act No. 4850
and its amendatory laws to carry out and make effective the declared national policy20 of promoting and
accelerating the development and balanced growth of the Laguna Lake area and the surrounding provinces of
Rizal and Laguna and the cities of San Pablo, Manila, Pasay, Quezon and Caloocan 21 with due regard and
adequate provisions for environmental management and control, preservation of the quality of human life and
ecological systems, and the prevention of undue ecological disturbances, deterioration and pollution. Under such
a broad grant and power and authority, the LLDA, by virtue of its special charter, obviously has the responsibility
to protect the inhabitants of the Laguna Lake region from the deleterious effects of pollutants emanating from the
discharge of wastes from the surrounding areas. In carrying out the aforementioned declared policy, the LLDA is
mandated, among others, to pass upon and approve or disapprove all plans, programs, and projects proposed
by local government offices/agencies within the region, public corporations, and private persons or enterprises
where such plans, programs and/or projects are related to those of the LLDA for the development of the
region. 22

In the instant case, when the complainant Task Force Camarin Dumpsite of Our Lady of Lourdes Parish,
Barangay Camarin, Caloocan City, filed its letter-complaint before the LLDA, the latter's jurisdiction under its
charter was validly invoked by complainant on the basis of its allegation that the open dumpsite project of the
City Government of Caloocan in Barangay Camarin was undertaken without a clearance from the LLDA, as
required under Section 4, par. (d), of Republic Act. No. 4850, as amended by P.D. No. 813 and Executive Order
No. 927. While there is also an allegation that the said project was without an Environmental Compliance
Certificate from the Environmental Management Bureau (EMB) of the DENR, the primary jurisdiction of the
LLDA over this case was recognized by the Environmental Management Bureau of the DENR when the latter
acted as intermediary at the meeting among the representatives of the City Government of Caloocan, Task
Force Camarin Dumpsite and LLDA sometime in July 1992 to discuss the possibility of
re-opening the open dumpsite.

Having thus resolved the threshold question, the inquiry then narrows down to the following issue: Does the
LLDA have the power and authority to issue a "cease and desist" order under Republic Act No. 4850 and its
amendatory laws, on the basis of the facts presented in this case, enjoining the dumping of garbage in Tala
Estate, Barangay Camarin, Caloocan City.

The irresistible answer is in the affirmative.

The cease and desist order issued by the LLDA requiring the City Government of Caloocan to stop dumping its
garbage in the Camarin open dumpsite found by the LLDA to have been done in violation of Republic Act No.
4850, as amended, and other relevant environment laws,23 cannot be stamped as an unauthorized exercise by
the LLDA of injunctive powers. By its express terms, Republic Act No. 4850, as amended by P.D. No. 813 and
Executive Order No. 927, series of 1983, authorizes the LLDA to "make, alter or modify order requiring the
discontinuance or pollution."24 (Emphasis supplied) Section 4, par. (d) explicitly authorizes the LLDA
to make whatever order may be necessary in the exercise of its jurisdiction.

To be sure, the LLDA was not expressly conferred the power "to issue and ex-parte cease and desist order" in a
language, as suggested by the City Government of Caloocan, similar to the express grant to the defunct
National Pollution Control Commission under Section 7 of P.D. No. 984 which, admittedly was not reproduced in
P.D. No. 813 and E.O. No. 927, series of 1983. However, it would be a mistake to draw therefrom the conclusion
that there is a denial of the power to issue the order in question when the power "to make, alter or modify orders
requiring the discontinuance of pollution" is expressly and clearly bestowed upon the LLDA by Executive Order
No. 927, series of 1983.

Assuming arguendo that the authority to issue a "cease and desist order" were not expressly conferred by law,
there is jurisprudence enough to the effect that the rule granting such authority need not necessarily be
express.25 While it is a fundamental rule that an administrative agency has only such powers as are expressly
granted to it by law, it is likewise a settled rule that an administrative agency has also such powers as are
necessarily implied in the exercise of its express powers.26 In the exercise, therefore, of its express powers under
its charter as a regulatory and quasi-judicial body with respect to pollution cases in the Laguna Lake region, the
authority of the LLDA to issue a "cease and desist order" is, perforce, implied. Otherwise, it may well be reduced
to a "toothless" paper agency.

In this connection, it must be noted that in Pollution Adjudication Board v. Court of Appeals, et al.,27 the Court
ruled that the Pollution Adjudication Board (PAB) has the power to issue an ex-parte cease and desist order
when there isprima facie evidence of an establishment exceeding the allowable standards set by the anti-
pollution laws of the country. The ponente, Associate Justice Florentino P. Feliciano, declared:

Ex parte cease and desist orders are permitted by law and regulations in situations like that here
presented precisely because stopping the continuous discharge of pollutive and untreated
effluents into the rivers and other inland waters of the Philippines cannot be made to wait until
protracted litigation over the ultimate correctness or propriety of such orders has run its full
course, including multiple and sequential appeals such as those which Solar has taken, which of
course may take several years. The relevant pollution control statute and implementing
regulations were enacted and promulgated in the exercise of that pervasive, sovereign power to
protect the safety, health, and general welfare and comfort of the public, as well as the protection
of plant and animal life, commonly designated as the police power. It is a constitutional
commonplace that the ordinary requirements of procedural due process yield to the necessities
of protecting vital public interests like those here involved, through the exercise of police power. .
..

The immediate response to the demands of "the necessities of protecting vital public interests" gives vitality to
the statement on ecology embodied in the Declaration of Principles and State Policies or the 1987 Constitution.
Article II, Section 16 which provides:

The State shall protect and advance the right of the people to a balanced and healthful ecology
in accord with the rhythm and harmony of nature.

As a constitutionally guaranteed right of every person, it carries the correlative duty of non-impairment. This is
but in consonance with the declared policy of the state "to protect and promote the right to health of the people
and instill health consciousness among them."28 It is to be borne in mind that the Philippines is party to the
Universal Declaration of Human Rights and the Alma Conference Declaration of 1978 which recognize health as
a fundamental human right. 29

The issuance, therefore, of the cease and desist order by the LLDA, as a practical matter of procedure under the
circumstances of the case, is a proper exercise of its power and authority under its charter and its amendatory
laws. Had the cease and desist order issued by the LLDA been complied with by the City Government of
Caloocan as it did in the first instance, no further legal steps would have been necessary.

The charter of LLDA, Republic Act No. 4850, as amended, instead of conferring upon the LLDA the means of
directly enforcing such orders, has provided under its Section 4 (d) the power to institute "necessary legal
proceeding against any person who shall commence to implement or continue implementation of any project,
plan or program within the Laguna de Bay region without previous clearance from the LLDA."

Clearly, said provision was designed to invest the LLDA with sufficiently broad powers in the regulation of all
projects initiated in the Laguna Lake region, whether by the government or the private sector, insofar as the
implementation of these projects is concerned. It was meant to deal with cases which might possibly arise where
decisions or orders issued pursuant to the exercise of such broad powers may not be obeyed, resulting in the
thwarting of its laudabe objective. To meet such contingencies, then the writs of mandamus and injunction which
are beyond the power of the LLDA to issue, may be sought from the proper courts.
Insofar as the implementation of relevant anti-pollution laws in the Laguna Lake region and its surrounding
provinces, cities and towns are concerned, the Court will not dwell further on the related issues raised which are
more appropriately addressed to an administrative agency with the special knowledge and expertise of the
LLDA.

WHEREFORE, the petition is GRANTED. The temporary restraining order issued by the Court on July 19, 1993
enjoining the City Mayor of Caloocan and/or the City Government of Caloocan from dumping their garbage at
the Tala Estate, Barangay Camarin, Caloocan City is hereby made permanent.

SO ORDERED.

Feliciano, Bidin, Melo and Vitug, JJ., concur.

#Footnotes

1 Jorge S. Imperial, J., ponente, Vicente V. Mendoza and Quirino D. Abad Santos, Jr., JJ.,
concurring.

2 Annex "C", Petition, G.R. No. 107542, Rollo, pp. 47-51.

3 Webster's Third International Dictionary (1986) defines "leachate" as the liquid that has
percolated through soil or other medium.

4 Establishing An Environmental Impact Statement System, Including Other Environmental

Management Related Measures And For Other Purposes
(June 11, 1978).

5 An Act Creating The Laguna Lake Development Authority, Prescribing Its Powers, Functions
and Duties, Providing Funds Therefor, And For Other Purposes
(July 18, 1966).

6 Annex "D", Petition, G.R. No. 107542, Rollo, pp. 52-54.

7 Ibid.

8 Annex "G", Petition, G.R. No. 107542, Rollo, pp. 58-63.

9 Annex "M", Petition, G.R. No. 107542, Rollo, pp. 77-81.

10 Annex "O", Petition, G.R. No. 107542, Rollo, pp. 83-90.

11 Annex "A", Petition, G.R. No. 107542, Rollo, pp. 29-37.

12 G.R. No. 107542, Rollo, pp. 93-95.

13 G.R. No. 107542, Rollo, pp. 98-99.

14 Ibid, p. 97.

15 G.R. No. 107542, Rollo, pp. 129-130.

16 G.R. No. 110120, Rollo, p. 70.

17 Section 16, Republic Act No. 7160, otherwise known as "The Local Government Code of
1991."

18 Providing For The Reorganization Of The Department Of Environment, Energy And Natural
Resources, Renaming It As The Department of Environment and Natural Resources, And For
Other Purposes (June 10, 1987).
 19 Section 19, Executive Order No. 192, series of 1987.

20 Section 1, Republic Act No. 4850, as amended by P.D. No. 813 and Executive Order No. 927,
series of 1983.

21 Section 41, par. (4), Republic Act No. 4850, as amended by P.D. No. 813 and Executive
Order No. 927, series of 1983.

22 Section 4, par. (d), Republic Act No. 4850, as amended by P.D. No. 813 and Executive Order
No. 927, series of 1983. (Emphasis supplied)

23 Sections 45 and 48, Presidential Decree No. 1152, otherwise known as Philippine
Environment Code which requires that solid waste disposal shall be by sanitary landfill,
incineration, composting and other methods as may be approved by competent government
authority and, that the sites shall conform with existing zoning, land use standards, and pollution
control regulations, respectively; Section 4, Presidential Decree No. 1586.

24 Section 4, par. (d), Executive Order No. 927, series of 1983.

25 Motor Transit Co. v. Railroad Com., 189 CAL 573, 209 P 586.

26 Republic v. Court of Appeals, G.R. No. 90482, August 5, 1991, 200 SCRA 266; Guerzon v.
Court of Appeals, et al. G.R. No. 77707, August 8, 1988, 164 SCRA 182.

27 G.R. No. 93891, March 11, 1991, 195 SCRA 112.

28 Art. II, Section 15, 1987 Constitution.

29 Record of the Constitutional Commission, Proceedings and Debates, Vol. III,

p. 119.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. Nos. 120865-71 December 7, 1995

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS; HON. JUDGE HERCULANO TECH, PRESIDING JUDGE, BRANCH 70, REGIONAL
TRIAL COURT OF BINANGONAN RIZAL; FLEET DEVELOPMENT, INC. and CARLITO ARROYO; THE
MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS; HON. JUDGE AURELIO C. TRAMPE, PRESIDING JUDGE, BRANCH 163,
REGIONAL TRIAL COURT OF PASIG; MANILA MARINE LIFE BUSINESS RESOURCES, INC. represented
by, MR. TOBIAS REYNALD M. TIANGCO; MUNICIPALITY OF TAGUIG, METRO MANILA and/or MAYOR
RICARDO D. PAPA, JR., respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS; HON. JUDGE ALEJANDRO A. MARQUEZ, PRESIDING JUDGE, BRANCH 79,
REGIONAL TRIAL COURT OF MORONG, RIZAL; GREENFIELD VENTURES INDUSTRIAL DEVELOPMENT
CORPORATION and R. J. ORION DEVELOPMENT CORPORATION; MUNICIPALITY OF JALA-JALA and/or
MAYOR WALFREDO M. DE LA VEGA, respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS; HON. JUDGE MANUEL S. PADOLINA, PRESIDING JUDGE, BRANCH 162,
REGIONAL TRIAL COURT OF PASIG, METRO MANILA; IRMA FISHING & TRADING CORP.; ARTM
FISHING CORP.; BDR CORPORATION, MIRT CORPORATION and TRIM CORPORATION; MUNICIPALITY
OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL
TRIAL COURT OF MORONG, RIZAL; BLUE LAGOON FISHING CORP. and ALCRIS CHICKEN GROWERS,
INC.; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

vs.
COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL
TRIAL COURT OF MORONG, RIZAL; AGP FISH VENTURES, INC., represented by its PRESIDENT
ALFONSO PUYAT; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA
VEGA, respondents.

LAGUNA LAKE DEVELOPMENT AUTHORITY, petitioner,

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

HERMOSISIMA, JR., J.:

It is difficult for a man, scavenging on the garbage dump created by affluence and profligate consumption and
extravagance of the rich or fishing in the murky waters of the Pasig River and the Laguna Lake or making a
clearing in the forest so that he can produce food for his family, to understand why protecting birds, fish, and
trees is more important than protecting him and keeping his family alive.

How do we strike a balance between environmental protection, on the one hand, and the individual personal
interests of people, on the other?

Towards environmental protection and ecology, navigational safety, and sustainable development, Republic Act
No. 4850 created the "Laguna Lake Development Authority." This Government Agency is supposed to carry out
and effectuate the aforesaid declared policy, so as to accelerate the development and balanced growth of the
Laguna Lake area and the surrounding provinces, cities and towns, in the act clearly named, within the context
of the national and regional plans and policies for social and economic development.

Presidential Decree No. 813 of former President Ferdinand E. Marcos amended certain sections of Republic Act
No. 4850 because of the concern for the rapid expansion of Metropolitan Manila, the suburbs and the lakeshore
towns of Laguna de Bay, combined with current and prospective uses of the lake for municipal-industrial water
supply, irrigation, fisheries, and the like. Concern on the part of the Government and the general public over: —
the environment impact of development on the water quality and ecology of the lake and its related river
systems; the inflow of polluted water from the Pasig River, industrial, domestic and agricultural wastes from
developed areas around the lake; the increasing urbanization which induced the deterioration of the lake, since
water quality studies have shown that the lake will deteriorate further if steps are not taken to check the same;
and the floods in Metropolitan Manila area and the lakeshore towns which will influence the hydraulic system of
Laguna de Bay, since any scheme of controlling the floods will necessarily involve the lake and its river systems,
— likewise gave impetus to the creation of the Authority.

Section 1 of Republic Act No. 4850 was amended to read as follows:

Sec. 1. Declaration of Policy. It is hereby declared to be the national policy to promote, and
accelerate the development and balanced growth of the Laguna Lake area and the surrounding
provinces, cities and towns hereinafter referred to as the region, within the context of the national
and regional plans and policies for social and economic development and to carry out the
development of the Laguna Lake region with due regard and adequate provisions for
environmental management and control, preservation of the quality of human life and ecological
systems, and the prevention of undue ecological disturbances, deterioration and pollution.1
Special powers of the Authority, pertinent to the issues in this case, include:

Sec. 3. Section 4 of the same Act is hereby further amended by adding thereto seven new
paragraphs to be known as paragraphs (j), (k), (l), (m), (n), (o), and (p) which shall read as
follows:

xxx xxx xxx

(j) The provisions of existing laws to the contrary notwithstanding, to engage in

fish production and other aqua-culture projects in Laguna de Bay and other
bodies of water within its jurisdiction and in pursuance thereof to conduct studies
and make experiments, whenever necessary, with the collaboration and
assistance of the Bureau of Fisheries and Aquatic Resources, with the end in
view of improving present techniques and practices. Provided, that until modified,
altered or amended by the procedure provided in the following sub-paragraph,
the present laws, rules and permits or authorizations remain in force;

(k) For the purpose of effectively regulating and monitoring activities in Laguna de
Bay, the Authority shall have exclusive jurisdiction to issue new permit for the use
of the lake waters for any projects or activities in or affecting the said lake
including navigation, construction, and operation of fishpens, fish enclosures, fish
corrals and the like, and to impose necessary safeguards for lake quality control
and management and to collect necessary fees for said activities and
projects: Provided, That the fees collected for fisheries may be shared between
the Authority and other government agencies and political sub-divisions in such
proportion as may be determined by the President of the Philippines upon
recommendation of the Authority's Board: Provided, further, That the Authority's
Board may determine new areas of fishery development or activities which it may
place under the supervision of the Bureau of Fisheries and Aquatic Resources
taking into account the overall development plans and programs for Laguna de
Bay and related bodies of water: Provided, finally, That the Authority shall subject
to the approval of the President of the Philippines promulgate such rules and
regulations which shall govern fisheries development activities in Laguna de Bay
which shall take into consideration among others the following: socio-economic
amelioration of bonafide resident fishermen whether individually or collectively in
the form of cooperatives, lakeshore town development, a master plan for fishpen
construction and operation, communal fishing ground for lake shore town
residents, and preference to lake shore town residents in hiring laborer for fishery
projects;

(l) To require the cities and municipalities embraced within the region to pass
appropriate zoning ordinances and other regulatory measures necessary to carry
out the objectives of the Authority and enforce the same with the assistance of
the Authority;

(m) The provisions of existing laws to the contrary notwithstanding, to exercise

water rights over public waters within the Laguna de Bay region whenever
necessary to carry out the Authority's projects;

(n) To act in coordination with existing governmental agencies in establishing

water quality standards for industrial, agricultural and municipal waste discharges
into the lake and to cooperate with said existing agencies of the government of
the Philippines in enforcing such standards, or to separately pursue enforcement
and penalty actions as provided for in Section 4 (d) and Section 39-A of this
Act: Provided, That in case of conflict on the appropriate water quality standard to
be enforced such conflict shall be resolved thru the NEDA Board.2

To more effectively perform the role of the Authority under Republic Act No. 4850, as though Presidential Decree
No. 813 were not thought to be completely effective, the Chief Executive, feeling that the land and waters of the
Laguna Lake Region are limited natural resources requiring judicious management to their optimal utilization to
insure renewability and to preserve the ecological balance, the competing options for the use of such resources
and conflicting jurisdictions over such uses having created undue constraints on the institutional capabilities of
the Authority in the light of the limited powers vested in it by its charter, Executive Order No. 927 further defined
and enlarged the functions and powers of the Authority and named and enumerated the towns, cities and
provinces encompassed by the term "Laguna de Bay Region".

Also, pertinent to the issues in this case are the following provisions of Executive Order No. 927 which include in
particular the sharing of fees:

Sec 2. Water Rights Over Laguna de Bay and Other Bodies of Water within the Lake Region: To
effectively regulate and monitor activities in the Laguna de Bay region, the Authority shall have
exclusive jurisdiction to issue permit for the use of all surface water for any projects or activities
in or affecting the said region including navigation, construction, and operation of fishpens, fish
enclosures, fish corrals and the like.

For the purpose of this Executive Order, the term "Laguna de Bay Region" shall refer to the
Provinces of Rizal and Laguna; the Cities of San Pablo, Pasay, Caloocan, Quezon, Manila and
Tagaytay; the towns of Tanauan, Sto. Tomas and Malvar in Batangas Province; the towns of
Silang and Carmona in Cavite Province; the town of Lucban in Quezon Province; and the towns
of Marikina, Pasig, Taguig, Muntinlupa, and Pateros in Metro Manila.

Sec 3. Collection of Fees. The Authority is hereby empowered to collect fees for the use of the
lake water and its tributaries for all beneficial purposes including but not limited to fisheries,
recreation, municipal, industrial, agricultural, navigation, irrigation, and waste disposal
purpose; Provided, that the rates of the fees to be collected, and the sharing with other
government agencies and political subdivisions, if necessary, shall be subject to the approval of
the President of the Philippines upon recommendation of the Authority's Board, except fishpen
fee, which will be shared in the following manner; 20 percent of the fee shall go to the lakeshore
local governments, 5 percent shall go to the Project Development Fund which shall be
administered by a Council and the remaining 75 percent shall constitute the share of LLDA.
However, after the implementation within the three-year period of the Laguna Lake Fishery
Zoning and Management Plan, the sharing will be modified as follows: 35 percent of the fishpen
fee goes to the lakeshore local governments, 5 percent goes to the Project Development Fund
and the remaining 60 percent shall be retained by LLDA; Provided, however, that the share of
LLDA shall form part of its corporate funds and shall not be remitted to the National Treasury as
an exception to the provisions of Presidential Decree No. 1234. (Emphasis supplied)

It is important to note that Section 29 of Presidential Decree No. 813 defined the term "Laguna Lake" in this
manner:

Sec 41. Definition of Terms.

(11) Laguna Lake or Lake. Whenever Laguna Lake or lake is used in this Act, the same shall
refer to Laguna de Bay which is that area covered by the lake water when it is at the average
annual maximum lake level of elevation 12.50 meters, as referred to a datum 10.00 meters below
mean lower low water (M.L.L.W). Lands located at and below such elevation are public lands
which form part of the bed of said lake.

Then came Republic Act No. 7160, the Local Government Code of 1991. The municipalities in the Laguna Lake
Region interpreted the provisions of this law to mean that the newly passed law gave municipal governments the
exclusive jurisdiction to issue fishing privileges within their municipal waters because R.A. 7160 provides:

Sec. 149. Fishery Rentals, Fees and Charges.

(a) Municipalities shall have the exclusive authority to grant fishery privileges in the municipal
waters and impose rental fees or charges therefor in accordance with the provisions of this
Section.

(b) The Sangguniang Bayan may:

(1) Grant fishing privileges to erect fish corrals, oyster, mussel or other aquatic
beds or bangus fry areas, within a definite zone of the municipal waters, as
determined by it; . . . .
 (2) Grant privilege to gather, take or catch bangus fry, prawn fry or kawag-
kawag or fry of other species and fish from the municipal waters by nets, traps or
other fishing gears to marginal fishermen free from any rental fee, charges or any
other imposition whatsoever.

xxx xxx xxx

Sec. 447. Power, Duties, Functions and Compensation. . . . .

xxx xxx xxx

(XI) Subject to the provisions of Book II of this Code, grant exclusive privileges of
constructing fish corrals or fishpens, or the taking or catching of bangus fry,
prawn fry or kawag-kawag or fry of any species or fish within the municipal
waters.

xxx xxx xxx

Municipal governments thereupon assumed the authority to issue fishing privileges and fishpen permits. Big
fishpen operators took advantage of the occasion to establish fishpens and fishcages to the consternation of the
Authority. Unregulated fishpens and fishcages, as of July, 1995, occupied almost one-third of the entire lake
water surface area, increasing the occupation drastically from 7,000 hectares in 1990 to almost 21,000 hectares
in 1995. The Mayor's permit to construct fishpens and fishcages were all undertaken in violation of the policies
adopted by the Authority on fishpen zoning and the Laguna Lake carrying capacity.

To be sure, the implementation by the lakeshore municipalities of separate independent policies in the operation
of fishpens and fishcages within their claimed territorial municipal waters in the lake and their indiscriminate
grant of fishpen permits have already saturated the lake area with fishpens, thereby aggravating the current
environmental problems and ecological stress of Laguna Lake.

In view of the foregoing circumstances, the Authority served notice to the general public that:

In compliance with the instructions of His Excellency PRESIDENT FIDEL V. RAMOS given on
June 23, 1993 at Pila, Laguna pursuant to Republic Act 4850 as amended by Presidential
Decree 813 and Executive Order 927 series of 1983 and in line with the policies and programs of
the Presidential Task Force on Illegal Fishpens and Illegal Fishing, the general public is hereby
notified that:

1. All fishpens, fishcages and other aqua-culture structures in the Laguna de Bay Region, which
were not registered or to which no application for registration and/or permit has been filed with
Laguna Lake Development Authority as of March 31, 1993 are hereby declared outrightly as
illegal.

2. All fishpens, fishcages and other aqua-culture structures so declared as illegal shall be subject
to demolition which shall be undertaken by the Presidential Task Force for Illegal Fishpen and
Illegal Fishing.

3. Owners of fishpens, fishcages and other aqua-culture structures declared as illegal shall,
without prejudice to demolition of their structures be criminally charged in accordance with
Section 39-A of Republic Act 4850 as amended by P.D. 813 for violation of the same laws.
Violations of these laws carries a penalty of imprisonment of not exceeding 3 years or a fine not
exceeding Five Thousand Pesos or both at the discretion of the court.

All operators of fishpens, fishcages and other aqua-culture structures declared as illegal in
accordance with the foregoing Notice shall have one (1) month on or before 27 October 1993 to
show cause before the LLDA why their said fishpens, fishcages and other aqua-culture
structures should not be demolished/dismantled.

One month, thereafter, the Authority sent notices to the concerned owners of the illegally constructed fishpens,
fishcages and other aqua-culture structures advising them to dismantle their respective structures within 10 days
from receipt thereof, otherwise, demolition shall be effected.
Reacting thereto, the affected fishpen owners filed injunction cases against the Authority before various regional
trial courts, to wit: (a) Civil Case No. 759-B, for Prohibition, Injunction and Damages, Regional Trial Court,
Branch 70, Binangonan, Rizal, filed by Fleet Development, Inc. and Carlito Arroyo; (b) Civil Case No. 64049, for
Injunction, Regional Trial Court, Branch 162, Pasig, filed by IRMA Fishing and Trading Corp., ARTM Fishing
Corp., BDR Corp., MIRT Corp. and TRIM Corp.; (c) Civil Case No. 566, for Declaratory Relief and Injunction,
Regional Trial Court, Branch 163, Pasig, filed by Manila Marine Life Business Resources, Inc. and Tobias
Reynaldo M. Tianco; (d) Civil Case No. 556-M, for Prohibition, Injunction and Damages, Regional Trial Court,
Branch 78, Morong, Rizal, filed by AGP Fishing Ventures, Inc.; (e) Civil Case No. 522-M, for Prohibition,
Injunction and Damages, Regional Trial Court, Branch 78, Morong, Rizal, filed by Blue Lagoon and Alcris
Chicken Growers, Inc.; (f) Civil Case No. 554-, for Certiorari and Prohibition, Regional Trial Court, Branch 79,
Morong, Rizal, filed by Greenfields Ventures Industrial Corp. and R.J. Orion Development Corp.; and (g) Civil
Case No. 64124, for Injunction, Regional Trial Court, Branch 15, Pasig, filed by SEA-MAR Trading Co., Inc. and
Eastern Lagoon Fishing Corp. and Minamar Fishing Corporation.

The Authority filed motions to dismiss the cases against it on jurisdictional grounds. The motions to dismiss were
invariably denied. Meanwhile, temporary restraining order/writs of preliminary mandatory injunction were issued
in Civil Cases Nos. 64124, 759 and 566 enjoining the Authority from demolishing the fishpens and similar
structures in question.

Hence, the herein petition for certiorari, prohibition and injunction, G.R. Nos. 120865-71, were filed by the
Authority with this court. Impleaded as parties-respondents are concerned regional trial courts and respective
private parties, and the municipalities and/or respective Mayors of Binangonan, Taguig and Jala-jala, who issued
permits for the construction and operation of fishpens in Laguna de Bay. The Authority sought the following
reliefs, viz.:

(A) Nullification of the temporary restraining order/writs of preliminary injunction issued in Civil
Cases Nos. 64125, 759 and 566;

(B) Permanent prohibition against the regional trial courts from exercising jurisdiction over cases
involving the Authority which is a co-equal body;

(C) Judicial pronouncement that R.A. 7610 (Local Government Code of 1991) did not repeal,
alter or modify the provisions of R.A. 4850, as amended, empowering the Authority to issue
permits for fishpens, fishcages and other aqua-culture structures in Laguna de Bay and that, the
Authority the government agency vested with exclusive authority to issue said permits.

By this Court's resolution of May 2, 1994, the Authority's consolidated petitions were referred to the Court of
Appeals.

In a Decision, dated June 29, 1995, the Court of Appeals dismissed the Authority's consolidated petitions, the
Court of Appeals holding that: (A) LLDA is not among those quasi-judicial agencies of government whose
decision or order are appealable only to the Court of Appeals; (B) the LLDA charter does vest LLDA with quasi-
judicial functions insofar as fishpens are concerned; (C) the provisions of the LLDA charter insofar as fishing
privileges in Laguna de Bay are concerned had been repealed by the Local Government Code of 1991; (D) in
view of the aforesaid repeal, the power to grant permits devolved to and is now vested with their respective local
government units concerned.

Not satisfied with the Court of Appeals decision, the Authority has returned to this Court charging the following
errors:

1. THE HONORABLE COURT OF APPEALS PROBABLY COMMITTED AN ERROR WHEN IT

RULED THAT THE LAGUNA LAKE DEVELOPMENT AUTHORITY IS NOT A QUASI-JUDICIAL
AGENCY.

2. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT

RULED THAT R.A. 4850 AS AMENDED BY P.D. 813 AND E.O. 927 SERIES OF 1983 HAS
BEEN REPEALED BY REPUBLIC ACT 7160. THE SAID RULING IS CONTRARY TO
ESTABLISHED PRINCIPLES AND JURISPRUDENCE OF STATUTORY CONSTRUCTION.

3. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT

RULED THAT THE POWER TO ISSUE FISHPEN PERMITS IN LAGUNA DE BAY HAS BEEN
DEVOLVED TO CONCERNED (LAKESHORE) LOCAL GOVERNMENT UNITS.
We take a simplistic view of the controversy. Actually, the main and only issue posed is: Which agency of the
Government — the Laguna Lake Development Authority or the towns and municipalities comprising the region
— should exercise jurisdiction over the Laguna Lake and its environs insofar as the issuance of permits for
fishery privileges is concerned?

Section 4 (k) of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, the provisions of
Presidential Decree No. 813, and Section 2 of Executive Order No. 927, cited above, specifically provide that the
Laguna Lake Development Authority shall have exclusive jurisdiction to issue permits for the use of all surface
water for any projects or activities in or affecting the said region, including navigation, construction, and
operation of fishpens, fish enclosures, fish corrals and the like. On the other hand, Republic Act No. 7160, the
Local Government Code of 1991, has granted to the municipalities the exclusive authority to grant fishery
privileges in municipal waters. The Sangguniang Bayan may grant fishery privileges to erect fish corrals, oyster,
mussels or other aquatic beds or bangus fry area within a definite zone of the municipal waters.

We hold that the provisions of Republic Act No. 7160 do not necessarily repeal the aforementioned laws creating
the Laguna Lake Development Authority and granting the latter water rights authority over Laguna de Bay and
the lake region.

The Local Government Code of 1991 does not contain any express provision which categorically expressly
repeal the charter of the Authority. It has to be conceded that there was no intent on the part of the legislature to
repeal Republic Act No. 4850 and its amendments. The repeal of laws should be made clear and expressed.

It has to be conceded that the charter of the Laguna Lake Development Authority constitutes a special law.
Republic Act No. 7160, the Local Government Code of 1991, is a general law. It is basic in statutory construction
that the enactment of a later legislation which is a general law cannot be construed to have repealed a special
law. It is a well-settled rule in this jurisdiction that "a special statute, provided for a particular case or class of
cases, is not repealed by a subsequent statute, general in its terms, provisions and application, unless the intent
to repeal or alter is manifest, although the terms of the general law are broad enough to include the cases
embraced in the special law."3

Where there is a conflict between a general law and a special statute, the special statute should prevail since it
evinces the legislative intent more clearly than the general statute. The special law is to be taken as an
exception to the general law in the absence of special circumstances forcing a contrary conclusion. This is
because implied repeals are not favored and as much as possible, effect must be given to all enactments of the
legislature. A special law cannot be repealed, amended or altered by a subsequent general law by mere
implication.4

Thus, it has to be concluded that the charter of the Authority should prevail over the Local Government Code of
1991.

Considering the reasons behind the establishment of the Authority, which are environmental protection,
navigational safety, and sustainable development, there is every indication that the legislative intent is for the
Authority to proceed with its mission.

We are on all fours with the manifestation of petitioner Laguna Lake Development Authority that "Laguna de
Bay, like any other single body of water has its own unique natural ecosystem. The 900 km² lake surface water,
the eight (8) major river tributaries and several other smaller rivers that drain into the lake, the 2,920 km² basin
or watershed transcending the boundaries of Laguna and Rizal provinces, greater portion of Metro Manila, parts
of Cavite, Batangas, and Quezon provinces, constitute one integrated delicate natural ecosystem that needs to
be protected with uniform set of policies; if we are to be serious in our aims of attaining sustainable
development. This is an exhaustible natural resource — a very limited one — which requires judicious
management and optimal utilization to ensure renewability and preserve its ecological integrity and balance."

"Managing the lake resources would mean the implementation of a national policy geared towards the
protection, conservation, balanced growth and sustainable development of the region with due regard to the
inter-generational use of its resources by the inhabitants in this part of the earth. The authors of Republic Act
4850 have foreseen this need when they passed this LLDA law — the special law designed to govern the
management of our Laguna de Bay lake resources."

"Laguna de Bay therefore cannot be subjected to fragmented concepts of management policies where lakeshore
local government units exercise exclusive dominion over specific portions of the lake water. The garbage thrown
or sewage discharged into the lake, abstraction of water therefrom or construction of fishpens by enclosing its
certain area, affect not only that specific portion but the entire 900 km² of lake water. The implementation of a
cohesive and integrated lake water resource management policy, therefore, is necessary to conserve, protect
and sustainably develop Laguna de Bay."5

The power of the local government units to issue fishing privileges was clearly granted for revenue purposes.
This is evident from the fact that Section 149 of the New Local Government Code empowering local
governments to issue fishing permits is embodied in Chapter 2, Book II, of Republic Act No. 7160 under the
heading, "Specific Provisions On The Taxing And Other Revenue Raising Power Of Local Government Units."

On the other hand, the power of the Authority to grant permits for fishpens, fishcages and other aqua-culture
structures is for the purpose of effectively regulating and monitoring activities in the Laguna de Bay region
(Section 2, Executive Order No. 927) and for lake quality control and management.6 It does partake of the nature
of police power which is the most pervasive, the least limitable and the most demanding of all State powers
including the power of taxation. Accordingly, the charter of the Authority which embodies a valid exercise of
police power should prevail over the Local Government Code of 1991 on matters affecting Laguna de Bay.

There should be no quarrel over permit fees for fishpens, fishcages and other aqua-culture structures in the
Laguna de Bay area. Section 3 of Executive Order No. 927 provides for the proper sharing of fees collected.

In respect to the question as to whether the Authority is a quasi-judicial agency or not, it is our holding that,
considering the provisions of Section 4 of Republic Act No. 4850 and Section 4 of Executive Order No. 927,
series of 1983, and the ruling of this Court in Laguna Lake Development Authority vs. Court of Appeals, 231
SCRA 304, 306, which we quote:

xxx xxx xxx

As a general rule, the adjudication of pollution cases generally pertains to the Pollution
Adjudication Board (PAB), except in cases where the special law provides for another forum. It
must be recognized in this regard that the LLDA, as a specialized administrative agency, is
specifically mandated under Republic Act No. 4850 and its amendatory laws to carry out and
make effective the declared national policy of promoting and accelerating the development and
balanced growth of the Laguna Lake area and the surrounding provinces of Rizal and Laguna
and the cities of San Pablo, Manila, Pasay, Quezon and Caloocan with due regard and adequate
provisions for environmental management and control, preservation of the quality of human life
and ecological systems, and the prevention of undue ecological disturbances, deterioration and
pollution. Under such a broad grant of power and authority, the LLDA, by virtue of its special
charter, obviously has the responsibility to protect the inhabitants of the Laguna Lake region from
the deleterious effects of pollutants emanating from the discharge of wastes from the surrounding
areas. In carrying out the aforementioned declared policy, the LLDA is mandated, among others,
to pass upon and approve or disapprove all plans, programs, and projects proposed by local
government offices/agencies within the region, public corporations, and private persons or
enterprises where such plans, programs and/or projects are related to those of the LLDA for the
development of the region.

xxx xxx xxx

. . . . While it is a fundamental rule that an administrative agency has only such powers as are
expressly granted to it by law, it is likewise a settled rule that an administrative agency has also
such powers as are necessarily implied in the exercise of its express powers. In the exercise,
therefore, of its express powers under its charter, as a regulatory and quasi-judicial body with
respect to pollution cases in the Laguna Lake region, the authority of the LLDA to issue a "cease
and desist order" is, perforce, implied. Otherwise, it may well be reduced to a "toothless" paper
agency.

there is no question that the Authority has express powers as a regulatory and quasi-judicial body in
respect to pollution cases with authority to issue a "cease and desist order" and on matters affecting the
construction of illegal fishpens, fishcages and other aqua-culture structures in Laguna de Bay. The
Authority's pretense, however, that it is co-equal to the Regional Trial Courts such that all actions against
it may only be instituted before the Court of Appeals cannot be sustained. On actions necessitating the
resolution of legal questions affecting the powers of the Authority as provided for in its charter, the
Regional Trial Courts have jurisdiction.
In view of the foregoing, this Court holds that Section 149 of Republic Act No. 7160, otherwise known as the
Local Government Code of 1991, has not repealed the provisions of the charter of the Laguna Lake
Development Authority, Republic Act No. 4850, as amended. Thus, the Authority has the exclusive jurisdiction to
issue permits for the enjoyment of fishery privileges in Laguna de Bay to the exclusion of municipalities situated
therein and the authority to exercise such powers as are by its charter vested on it.

Removal from the Authority of the aforesaid licensing authority will render nugatory its avowed purpose of
protecting and developing the Laguna Lake Region. Otherwise stated, the abrogation of this power would render
useless its reason for being and will in effect denigrate, if not abolish, the Laguna Lake Development Authority.
This, the Local Government Code of 1991 had never intended to do.

WHEREFORE, the petitions for prohibition, certiorari and injunction are hereby granted, insofar as they relate to
the authority of the Laguna Lake Development Authority to grant fishing privileges within the Laguna Lake
Region.

The restraining orders and/or writs of injunction issued by Judge Arturo Marave, RTC, Branch 78, Morong, Rizal;
Judge Herculano Tech, RTC, Branch 70, Binangonan, Rizal; and Judge Aurelio Trampe, RTC, Branch 163,
Pasig, Metro Manila, are hereby declared null and void and ordered set aside for having been issued with grave
abuse of discretion.

The Municipal Mayors of the Laguna Lake Region are hereby prohibited from issuing permits to construct and
operate fishpens, fishcages and other aqua-culture structures within the Laguna Lake Region, their previous
issuances being declared null and void. Thus, the fishing permits issued by Mayors Isidro B. Pacis, Municipality
of Binangonan; Ricardo D. Papa, Municipality of Taguig; and Walfredo M. de la Vega, Municipality of Jala-jala,
specifically, are likewise declared null and void and ordered cancelled.

The fishpens, fishcages and other aqua-culture structures put up by operators by virtue of permits issued by
Municipal Mayors within the Laguna Lake Region, specifically, permits issued to Fleet Development, Inc. and
Carlito Arroyo; Manila Marine Life Business Resources, Inc., represented by, Mr. Tobias Reynald M. Tiangco;
Greenfield Ventures Industrial Development Corporation and R.J. Orion Development Corporation; IRMA
Fishing And Trading Corporation, ARTM Fishing Corporation, BDR Corporation, Mirt Corporation and Trim
Corporation; Blue Lagoon Fishing Corporation and ALCRIS Chicken Growers, Inc.; AGP Fish Ventures, Inc.,
represented by its President Alfonso Puyat; SEA MAR Trading Co., Inc., Eastern Lagoon Fishing Corporation,
and MINAMAR Fishing Corporation, are hereby declared illegal structures subject to demolition by the Laguna
Lake Development Authority.

SO ORDERED.

Davide, Jr., Bellosillo and Kapunan, JJ., concur.

Separate Opinions

PADILLA, J., concurring:

I fully concur with the decision written by Mr. Justice R. Hermosisima, Jr.. I would only like to stress what the
decision already states, i.e., that the local government units in the Laguna Lake area are not precluded from
imposing permits on fishery operations for revenue raising purposes of such local government units. In other
words, while the exclusive jurisdiction to determine whether or not projects or activities in the lake area should
be allowed, as well as their regulation, is with the Laguna Lake Development Authority, once the Authority grants
a permit, the permittee may still be subjected to an additional local permit or license for revenue purposes of the
local government units concerned. This approach would clearly harmonize the special law, Rep. Act No. 4850,
as amended, with Rep. Act No. 7160, the Local Government Code. It will also enable small towns and
municipalities in the lake area, like Jala-Jala, to rise to some level of economic viability.

Footnotes

1 Section 1, PD No. 813.

2 At pages 64-65.
 3 Manila Railroad Company vs. Rafferty, 40 Phils. 225; National Power Corporation vs.
Arca, 25 SCRA 935; Province of Misamis Oriental vs. Cagayan Electric Power and Light
Company, Inc., 181 SCRA 43.

4 Fajardo vs. Villafuerte, G.R. No. 89135, December 21, 1989.

5 Petition, under caption, "Nature of Petition".

6 Section 3 (k), Presidential Decree No. 813.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 88404 October 18, 1990

PHILIPPINE LONG DISTANCE TELEPHONE CO. [PLDT], petitioner,

vs.
THE NATIONAL TELECOMMUNICATIONS COMMISSION AND CELLCOM, INC., (EXPRESS
TELECOMMUNICATIONS CO., INC. [ETCI]), respondents.

Alampan & Manhit Law Offices for petitioner.

Gozon, Fernandez, Defensor & Parel for private respondent.

MELENCIO-HERRERA, J.:

Petitioner Philippine Long Distance Telephone Company (PLDT) assails, by way of certiorari and Prohibition under Rule 65, two (2) Orders of public
respondent National Telecommunications Commission (NTC), namely, the Order of 12 December 1988 granting private respondent Express
Telecommunications Co., Inc. (ETCI) provisional authority to install, operate and maintain a Cellular Mobile Telephone System in Metro-Manila (Phase A) in
accordance with specified conditions, and the Order, dated 8 May 1988, denying reconsideration.

On 22 June 1958, Rep. Act No. 2090, was enacted, otherwise known as "An Act Granting Felix Alberto and
Company, Incorporated, a Franchise to Establish Radio Stations for Domestic and Transoceanic
Telecommunications." Felix Alberto & Co., Inc. (FACI) was the original corporate name, which was changed to
ETCI with the amendment of the Articles of Incorporation in 1964. Much later, "CELLCOM, Inc." was the name
sought to be adopted before the Securities and Exchange Commission, but this was withdrawn and abandoned.

On 13 May 1987, alleging urgent public need, ETCI filed an application with public respondent NTC (docketed
as NTC Case No. 87-89) for the issuance of a Certificate of Public Convenience and Necessity (CPCN) to
construct, install, establish, operate and maintain a Cellular Mobile Telephone System and an Alpha Numeric
Paging System in Metro Manila and in the Southern Luzon regions, with a prayer for provisional authority to
operate Phase A of its proposal within Metro Manila.

PLDT filed an Opposition with a Motion to Dismiss, based primarily on the following grounds: (1) ETCI is not
capacitated or qualified under its legislative franchise to operate a systemwide telephone or network of
telephone service such as the one proposed in its application; (2) ETCI lacks the facilities needed and
indispensable to the successful operation of the proposed cellular mobile telephone system; (3) PLDT has itself
a pending application with NTC, Case No. 86-86, to install and operate a Cellular Mobile Telephone System for
domestic and international service not only in Manila but also in the provinces and that under the "prior operator"
or "protection of investment" doctrine, PLDT has the priority or preference in the operation of such service; and
(4) the provisional authority, if granted, will result in needless, uneconomical and harmful duplication, among
others.

In an Order, dated 12 November 1987, NTC overruled PLDT's Opposition and declared that Rep. Act No. 2090
(1958) should be liberally construed as to include among the services under said franchise the operation of a
cellular mobile telephone service.

In the same Order, ETCI was required to submit the certificate of registration of its Articles of Incorporation with
the Securities and Exchange Commission, the present capital and ownership structure of the company and such
other evidence, oral or documentary, as may be necessary to prove its legal, financial and technical capabilities
as well as the economic justifications to warrant the setting up of cellular mobile telephone and paging systems.
The continuance of the hearings was also directed.

After evaluating the reconsideration sought by PLDT, the NTC, in October 1988, maintained its ruling that
liberally construed, applicant's franchise carries with it the privilege to operate and maintain a cellular mobile
telephone service.

On 12 December 1988, NTC issued the first challenged Order. Opining that "public interest, convenience and
necessity further demand a second cellular mobile telephone service provider and finds PRIMA FACIE evidence
showing applicant's legal, financial and technical capabilities to provide a cellular mobile service using the AMPS
system," NTC granted ETCI provisional authority to install, operate and maintain a cellular mobile telephone
system initially in Metro Manila, Phase A only, subject to the terms and conditions set forth in the same Order.
One of the conditions prescribed (Condition No. 5) was that, within ninety (90) days from date of the acceptance
by ETCI of the terms and conditions of the provisional authority, ETCI and PLDT "shall enter into an
interconnection agreement for the provision of adequate interconnection facilities between applicant's cellular
mobile telephone switch and the public switched telephone network and shall jointly submit such interconnection
agreement to the Commission for approval."

In a "Motion to Set Aside the Order" granting provisional authority, PLDT alleged essentially that the
interconnection ordered was in violation of due process and that the grant of provisional authority was
jurisdictionally and procedurally infirm. On 8 May 1989, NTC denied reconsideration and set the date for
continuation of the hearings on the main proceedings. This is the second questioned Order.

PLDT urges us now to annul the NTC Orders of 12 December 1988 and 8 May 1989 and to order ETCI to desist
from, suspend, and/or discontinue any and all acts intended for its implementation.

On 15 June 1989, we resolved to dismiss the petition for its failure to comply fully with the requirements of
Circular No. 1-88. Upon satisfactory showing, however, that there was, in fact, such compliance, we
reconsidered the order, reinstated the Petition, and required the respondents NTC and ETCI to submit their
respective Comments.

On 27 February 1990, we issued a Temporary Restraining Order enjoining NTC to "Cease and Desist from all or
any of its on-going proceedings and ETCI from continuing any and all acts intended or related to or which will
amount to the implementation/execution of its provisional authority." This was upon PLDT's urgent manifestation
that it had been served an NTC Order, dated 14 February 1990, directing immediate compliance with its Order of
12 December 1988, "otherwise the Commission shall be constrained to take the necessary measures and bring
to bear upon PLDT the full sanctions provided by law."

We required PLDT to post a bond of P 5M. It has complied, with the statement that it was "post(ing) the same on
its agreement and/or consent to have the same forfeited in favor of Private Respondent ETCI/CELLCOM should
the instant Petition be dismissed for lack of merit." ETCI took exception to the sufficiency of the bond considering
its initial investment of approximately P 225M, but accepted the forfeiture proferred.

ETCI moved to have the TRO lifted, which we denied on 6 March 1990. We stated, however, that the inaugural
ceremony ETCI had scheduled for that day could proceed, as the same was not covered by the TRO.

PLDT relies on the following grounds for the issuance of the Writs prayed for:

1. Respondent NTC's subject order effectively licensed and/or authorized a corporate entity
without any franchise to operate a public utility, legislative or otherwise, to establish and operate
a telecommunications system.

2. The same order validated stock transactions of a public service enterprise contrary to and/or in
direct violation of Section 20(h) of the Public Service Act.

3. Respondent NTC adjudicated in the same order a controverted matter that was not heard at all
in the proceedings under which it was promulgated.

As correctly pointed out by respondents, this being a special civil action for certiorari and Prohibition, we only
need determine if NTC acted without jurisdiction or with grave abuse of discretion amounting to lack or excess of
jurisdiction in granting provisional authority to ETCI under the NTC questioned Orders of 12 December 1988 and
8 May 1989.

The case was set for oral argument on 21 August 1990 with the parties directed to address, but not limited to,
the following issues: (1) the status and coverage of Rep. Act No. 2090 as a franchise; (2) the transfer of shares
of stock of a corporation holding a CPCN; and (3) the principle and procedure of interconnection. The parties
were thereafter required to submit their respective Memoranda, with which they have complied.

We find no grave abuse of discretion on the part of NTC, upon the following considerations:

1. NTC Jurisdiction

There can be no question that the NTC is the regulatory agency of the national government with jurisdiction over
all telecommunications entities. It is legally clothed with authority and given ample discretion to grant a
provisional permit or authority. In fact, NTC may, on its own initiative, grant such relief even in the absence of a
motion from an applicant.

Sec. 3. Provisional Relief. — Upon the filing of an application, complaint or petition or at any
stage thereafter, the Board may grant on motion of the pleaders or on its own initiative, the relief
prayed for, based on the pleading, together with the affidavits and supporting documents
attached thereto, without prejudice to a final decision after completion of the hearing which shall
be called within thirty (30) days from grant of authority asked for. (Rule 15, Rules of Practice and
Procedure Before the Board of Communications (now NTC).

What the NTC granted was such a provisional authority, with a definite expiry period of eighteen (18) months
unless sooner renewed, and which may be revoked, amended or revised by the NTC. It is also limited to Metro
Manila only. What is more, the main proceedings are clearly to continue as stated in the NTC Order of 8 May
1989.

The provisional authority was issued after due hearing, reception of evidence and evaluation thereof, with the
hearings attended by various oppositors, including PLDT. It was granted only after a prima facie showing that
ETCI has the necessary legal, financial and technical capabilities and that public interest, convenience and
necessity so demanded.

PLDT argues, however, that a provisional authority is nothing short of a Certificate of Public Convenience and
Necessity (CPCN) and that it is merely a "distinction without a difference." That is not so. Basic differences do
exist, which need not be elaborated on. What should be borne in mind is that provisional authority would be
meaningless if the grantee were not allowed to operate. Moreover, it is clear from the very Order of 12
December 1988 itself that its scope is limited only to the first phase, out of four, of the proposed nationwide
telephone system. The installation and operation of an alpha numeric paging system was not authorized. The
provisional authority is not exclusive. Its lifetime is limited and may be revoked by the NTC at any time in
accordance with law. The initial expenditure of P130M more or less, is rendered necessary even under a
provisional authority to enable ETCI to prove its capability. And as pointed out by the Solicitor General, on behalf
of the NTC, if what had been granted were a CPCN, it would constitute a final order or award reviewable only by
ordinary appeal to the Court of Appeals pursuant to Section 9(3) of BP Blg. 129, and not by certiorari before this
Court.

The final outcome of the application rests within the exclusive prerogative of the NTC. Whether or not a CPCN
would eventually issue would depend on the evidence to be presented during the hearings still to be conducted,
and only after a full evaluation of the proof thus presented.

2. The Coverage of ETCI's Franchise

Rep. Act No. 2090 grants ETCI (formerly FACI) "the right and privilege of constructing, installing, establishing
and operating in the entire Philippines radio stations for reception and transmission of messages on radio
stations in the foreign and domestic public fixed point-to-point and public base, aeronautical and land mobile
stations, ... with the corresponding relay stations for the reception and transmission of wireless messages on
radiotelegraphy and/or radiotelephony ...." PLDT maintains that the scope of the franchise is limited to "radio
stations" and excludes telephone services such as the establishment of the proposed Cellular Mobile Telephone
System (CMTS). However, in its Order of 12 November 1987, the NTC construed the technical term
"radiotelephony" liberally as to include the operation of a cellular mobile telephone system. It said:
 In resolving the said issue, the Commission takes into consideration the different definitions of
the term "radiotelephony." As defined by the New International Webster Dictionary the term
"radiotelephony" is defined as a telephone carried on by aid of radiowaves without connecting
wires. The International Telecommunications Union (ITU) defines a "radiotelephone call" as a
"telephone call, originating in or intended on all or part of its route over the radio communications
channels of the mobile service or of the mobile satellite service." From the above definitions,
while under Republic Act 2090 a system-wide telephone or network of telephone service by
means of connecting wires may not have been contemplated, it can be construed liberally that
the operation of a cellular mobile telephone service which carries messages, either voice or
record, with the aid of radiowaves or a part of its route carried over radio communication
channels, is one included among the services under said franchise for which a certificate of
public convenience and necessity may be applied for.

The foregoing is the construction given by an administrative agency possessed of the necessary special
knowledge, expertise and experience and deserves great weight and respect (Asturias Sugar Central, Inc. v.
Commissioner of Customs, et al., L-19337, September 30, 1969, 29 SCRA 617). It can only be set aside on
proof of gross abuse of discretion, fraud, or error of law (Tupas Local Chapter No. 979 v. NLRC, et al., L-60532-
33, November 5, 1985, 139 SCRA 478). We discern none of those considerations sufficient to warrant judicial
intervention.

3. The Status of ETCI Franchise

PLDT alleges that the ETCI franchise had lapsed into nonexistence for failure of the franchise holder to begin
and complete construction of the radio system authorized under the franchise as explicitly required in Section 4
of its franchise, Rep. Act No. 2090. 1 PLDT also invokes Pres. Decree No. 36, enacted on 2 November 1972,
which legislates the mandatory cancellation or invalidation of all franchises for the operation of communications
services, which have not been availed of or used by the party or parties in whose name they were issued.

However, whether or not ETCI, and before it FACI, in contravention of its franchise, started the first of its radio
telecommunication stations within (2) years from the grant of its franchise and completed the construction within
ten (10) years from said date; and whether or not its franchise had remained unused from the time of its
issuance, are questions of fact beyond the province of this Court, besides the well-settled procedural
consideration that factual issues are not subjects of a special civil action for certiorari (Central Bank of the
Philippines vs. Court of Appeals, G.R. No. 41859, 8 March 1989, 171 SCRA 49; Ygay vs. Escareal, G.R. No.
44189, 8 February 1985, 135 SCRA 78; Filipino Merchant's Insurance Co., Inc. vs. Intermediate Appellate Court,
G.R. No. 71640, 27 June 1988, 162 SCRA 669). Moreover, neither Section 4, Rep. Act No. 2090 nor Pres.
Decree No. 36 should be construed as self-executing in working a forfeiture. Franchise holders should be given
an opportunity to be heard, particularly so, where, as in this case, ETCI does not admit any breach, in
consonance with the rudiments of fair play. Thus, the factual situation of this case differs from that in Angeles Ry
Co. vs. City of Los Angeles (92 Pacific Reporter 490) cited by PLDT, where the grantee therein admitted its
failure to complete the conditions of its franchise and yet insisted on a decree of forfeiture.

More importantly, PLDT's allegation partakes of a Collateral attack on a franchise Rep. Act No. 2090), which is
not allowed. A franchise is a property right and cannot be revoked or forfeited without due process of law. The
determination of the right to the exercise of a franchise, or whether the right to enjoy such privilege has been
forfeited by non-user, is more properly the subject of the prerogative writ of quo warranto, the right to assert
which, as a rule, belongs to the State "upon complaint or otherwise" (Sections 1, 2 and 3, Rule 66, Rules of
Court), 2 the reason being that the abuse of a franchise is a public wrong and not a private injury. A forfeiture of a
franchise will have to be declared in a direct proceeding for the purpose brought by the State because a
franchise is granted by law and its unlawful exercise is primarily a concern of Government.

A ... franchise is ... granted by law, and its ... unlawful exercise is the concern primarily of the
Government. Hence, the latter as a rule is the party called upon to bring the action for such ...
unlawful exercise of franchise. (IV-B V. FRANCISCO, 298 [1963 ed.], citing Cruz vs. Ramos, 84
Phil. 226).

4. ETCI's Stock Transactions

ETCI admits that in 1964, the Albertos, as original owners of more than 40% of the outstanding capital stock sold
their holdings to the Orbes. In 1968, the Albertos re-acquired the shares they had sold to the Orbes. In 1987, the
Albertos sold more than 40% of their shares to Horacio Yalung. Thereafter, the present stockholders acquired
their ETCI shares. Moreover, in 1964, ETCI had increased its capital stock from P40,000.00 to P360,000.00; and
in 1987, from P360,000.00 to P40M.

PLDT contends that the transfers in 1987 of the shares of stock to the new stockholders amount
to a transfer of ETCI's franchise, which needs Congressional approval pursuant to Rep. Act No.
2090, and since such approval had not been obtained, ETCI's franchise had been invalidated.
The provision relied on reads, in part, as follows:

SECTION 10. The grantee shall not lease, transfer, grant the usufruct of, sell or assign this
franchise nor the rights and privileges acquired thereunder to any person, firm, company,
corporation or other commercial or legal entity nor merge with any other person, company or
corporation organized for the same purpose, without the approval of the Congress of the
Philippines first had. ...

It should be noted, however, that the foregoing provision is, directed to the "grantee" of the franchise, which is
the corporation itself and refers to a sale, lease, or assignment of that franchise. It does not include the transfer
or sale of shares of stock of a corporation by the latter's stockholders.

The sale of shares of stock of a public utility is governed by another law, i.e., Section 20(h) of the Public Service
Act (Commonwealth Act No. 146). Pursuant thereto, the Public Service Commission (now the NTC) is the
government agency vested with the authority to approve the transfer of more than 40% of the subscribed capital
stock of a telecommunications company to a single transferee, thus:

SEC. 20. Acts requiring the approval of the Commission. Subject to established stations and
exceptions and saving provisions to the contrary, it shall be unlawful for any public service or for
the owner, lessee or operator thereof, without the approval and authorization of the Commission
previously had

xxx xxx xxx

(h) To sell or register in its books the transfer or sale of shares of its capital stock, if the result of
that sale in itself or in connection with another previous sale, shall be to vest in the transferee
more than forty per centum of the subscribed capital of said public service. Any transfer made in
violation of this provision shall be void and of no effect and shall not be registered in the books of
the public service corporation. Nothing herein contained shall be construed to prevent the holding
of shares lawfully acquired. (As amended by Com. Act No. 454).

In other words, transfers of shares of a public utility corporation need only NTC approval, not Congressional
authorization. What transpired in ETCI were a series of transfers of shares starting in 1964 until 1987. The
approval of the NTC may be deemed to have been met when it authorized the issuance of the provisional
authority to ETCI. There was full disclosure before the NTC of the transfers. In fact, the NTC Order of 12
November 1987 required ETCI to submit its "present capital and ownership structure." Further, ETCI even filed a
Motion before the NTC, dated 8 December 1987, or more than a year prior to the grant of provisional authority,
seeking approval of the increase in its capital stock from P360,000.00 to P40M, and the stock transfers made by
its stockholders.

A distinction should be made between shares of stock, which are owned by stockholders, the sale of which
requires only NTC approval, and the franchise itself which is owned by the corporation as the grantee thereof,
the sale or transfer of which requires Congressional sanction. Since stockholders own the shares of stock, they
may dispose of the same as they see fit. They may not, however, transfer or assign the property of a
corporation, like its franchise. In other words, even if the original stockholders had transferred their shares to
another group of shareholders, the franchise granted to the corporation subsists as long as the corporation, as
an entity, continues to exist The franchise is not thereby invalidated by the transfer of the shares. A corporation
has a personality separate and distinct from that of each stockholder. It has the right of continuity or perpetual
succession (Corporation Code, Sec. 2).

To all appearances, the stock transfers were not just for the purpose of acquiring the ETCI franchise,
considering that, as heretofore stated, a series of transfers was involved from 1964 to 1987. And, contrary to
PLDT's assertion, the franchise was not the only property of ETCI of meaningful value. The "zero" book value of
ETCI assets, as reflected in its balance sheet, was plausibly explained as due to the accumulated depreciation
over the years entered for accounting purposes and was not reflective of the actual value that those assets
would command in the market.
But again, whether ETCI has offended against a provision of its franchise, or has subjected it to misuse or
abuse, may more properly be inquired into in quo warranto proceedings instituted by the State. It is the condition
of every franchise that it is subject to amendment, alteration, or repeal when the common good so requires
(1987 Constitution, Article XII, Section 11).

5. The NTC Interconnection Order

In the provisional authority granted by NTC to ETCI, one of the conditions imposed was that the latter and PLDT
were to enter into an interconnection agreement to be jointly submitted to NTC for approval.

PLDT vehemently opposes interconnection with its own public switched telephone network. It contends: that
while PLDT welcomes interconnections in the furtherance of public interest, only parties who can establish that
they have valid and subsisting legislative franchises are entitled to apply for a CPCN or provisional authority,
absent which, NTC has no jurisdiction to grant them the CPCN or interconnection with PLDT; that the 73
telephone systems operating all over the Philippines have a viability and feasibility independent of any
interconnection with PLDT; that "the NTC is not empowered to compel such a private raid on PLDT's legitimate
income arising out of its gigantic investment;" that "it is not public interest, but purely a private and selfish
interest which will be served by an interconnection under ETCI's terms;" and that "to compel PLDT to
interconnect merely to give viability to a prospective competitor, which cannot stand on its own feet, cannot be
justified in the name of a non-existent public need" (PLDT Memorandum, pp. 48 and 50).

PLDT cannot justifiably refuse to interconnect.

Rep. Act No. 6849, or the Municipal Telephone Act of 1989, approved on 8 February 1990, mandates
interconnection providing as it does that "all domestic telecommunications carriers or utilities ... shall be
interconnected to the public switch telephone network." Such regulation of the use and ownership of
telecommunications systems is in the exercise of the plenary police power of the State for the promotion of the
general welfare. The 1987 Constitution recognizes the existence of that power when it provides.

SEC. 6. The use of property bears a social function, and all economic agents shall contribute to
the common good. Individuals and private groups, including corporations, cooperatives, and
similar collective organizations, shall have the right to own, establish, and operate economic
enterprises, subject to the duty of the State to promote distributive justice and to intervene when
the common good so demands (Article XII).

The interconnection which has been required of PLDT is a form of "intervention" with property rights dictated by
"the objective of government to promote the rapid expansion of telecommunications services in all areas of the
Philippines, ... to maximize the use of telecommunications facilities available, ... in recognition of the vital role of
communications in nation building ... and to ensure that all users of the public telecommunications service have
access to all other users of the service wherever they may be within the Philippines at an acceptable standard of
service and at reasonable cost" (DOTC Circular No. 90-248). Undoubtedly, the encompassing objective is the
common good. The NTC, as the regulatory agency of the State, merely exercised its delegated authority to
regulate the use of telecommunications networks when it decreed interconnection.

The importance and emphasis given to interconnection dates back to Ministry Circular No. 82-81, dated 6
December 1982, providing:

Sec. 1. That the government encourages the provision and operation of public mobile telephone
service within local sub-base stations, particularly, in the highly commercialized areas;

Sec. 5. That, in the event the authority to operate said service be granted to other applicants,
other than the franchise holder, the franchise operator shall be under obligation to enter into an
agreement with the domestic telephone network, under an interconnection agreement;

Department of Transportation and Communication (DOTC) Circular No. 87-188, issued in 1987, also decrees:

12. All public communications carriers shall interconnect their facilities pursuant to comparatively
efficient interconnection (CEI) as defined by the NTC in the interest of economic efficiency.

The sharing of revenue was an additional feature considered in DOTC Circular No. 90-248, dated 14 June 1990,
laying down the "Policy on Interconnection and Revenue Sharing by Public Communications Carriers," thus:
 WHEREAS, it is the objective of government to promote the rapid expansion of
telecommunications services in all areas of the Philippines;

WHEREAS, there is a need to maximize the use of telecommunications facilities available and
encourage investment in telecommunications infrastructure by suitably qualified service
providers;

WHEREAS, in recognition of the vital role of communications in nation building, there is a need
to ensure that all users of the public telecommunications service have access to all other users of
the service wherever they may be within the Philippines at an acceptable standard of service and
at reasonable cost.

WHEREFORE, ... the following Department policies on interconnection and revenue sharing are
hereby promulgated:

1. All facilities offering public telecommunication services shall be interconnected

into the nationwide telecommunications network/s.

xxx xxx xxx

4. The interconnection of networks shall be effected in a fair and non-

discriminatory manner and within the shortest time-frame practicable.

5. The precise points of interface between service operators shall be as defined

by the NTC; and the apportionment of costs and division of revenues resulting
from interconnection of telecommunications networks shall be as approved
and/or prescribed by the NTC.

xxx xxx xxx

Since then, the NTC, on 12 July 1990, issued Memorandum Circular No. 7-13-90 prescribing the "Rules and
Regulations Governing the Interconnection of Local Telephone Exchanges and Public Calling Offices with the
Nationwide Telecommunications Network/s, the Sharing of Revenue Derived Therefrom, and for Other
Purposes."

The NTC order to interconnect allows the parties themselves to discuss and agree upon the specific terms and
conditions of the interconnection agreement instead of the NTC itself laying down the standards of
interconnection which it can very well impose. Thus it is that PLDT cannot justifiably claim denial of clue process.
It has been heard. It will continue to be heard in the main proceedings. It will surely heard in the negotiations
concerning the interconnection agreement.

As disclosed during the hearing, the interconnection sought by ETCI is by no means a "parasitic dependence"
on PLDT. The ETCI system can operate on its own even without interconnection, but it will be limited to its own
subscribers. What interconnection seeks to accomplish is to enable the system to reach out to the greatest
number of people possible in line with governmental policies laid down. Cellular phones can access PLDT units
and vice versa in as wide an area as attainable. With the broader reach, public interest and convenience will be
better served. To be sure, ETCI could provide no mean competition (although PLDT maintains that it has nothing
to fear from the "innocuous interconnection"), and eat into PLDT's own toll revenue cream PLDT revenue," in its
own words), but all for the eventual benefit of all that the system can reach.

6. Ultimate Considerations

The decisive consideration are public need, public interest, and the common good. Those were the overriding
factors which motivated NTC in granting provisional authority to ETCI. Article II, Section 24 of the 1987
Constitution, recognizes the vital role of communication and information in nation building. It is likewise a State
policy to provide the environment for the emergence of communications structures suitable to the balanced flow
of information into, out of, and across the country (Article XVI, Section 10, Ibid.). A modern and dependable
communications network rendering efficient and reasonably priced services is also indispensable for accelerated
economic recovery and development. To these public and national interests, public utility companies must bow
and yield.
Despite the fact that there is a virtual monopoly of the telephone system in the country at present. service is
sadly inadequate. Customer demands are hardly met, whether fixed or mobile. There is a unanimous cry to
hasten the development of a modern, efficient, satisfactory and continuous telecommunications service not only
in Metro Manila but throughout the archipelago. The need therefor was dramatically emphasized by the
destructive earthquake of 16 July 1990. It may be that users of the cellular mobile telephone would initially be
limited to a few and to highly commercialized areas. However, it is a step in the right direction towards the
enhancement of the telecommunications infrastructure, the expansion of telecommunications services in,
hopefully, all areas of the country, with chances of complete disruption of communications minimized. It will thus
impact on, the total development of the country's telecommunications systems and redound to the benefit of
even those who may not be able to subscribe to ETCI.

Free competition in the industry may also provide the answer to a much-desired improvement in the quality and
delivery of this type of public utility, to improved technology, fast and handy mobile service, and reduced user
dissatisfaction. After all, neither PLDT nor any other public utility has a constitutional right to a monopoly position
in view of the Constitutional proscription that no franchise certificate or authorization shall be exclusive in
character or shall last longer than fifty (50) years (ibid., Section 11; Article XIV Section 5, 1973 Constitution;
Article XIV, Section 8, 1935 Constitution). Additionally, the State is empowered to decide whether public interest
demands that monopolies be regulated or prohibited (1987 Constitution. Article XII, Section 19).

WHEREFORE, finding no grave abuse of discretion, tantamount to lack of or excess of jurisdiction, on the part of
the National Telecommunications Commission in issuing its challenged Orders of 12 December 1988 and 8 May
1989 in NTC Case No. 87-39, this Petition is DISMISSED for lack of merit. The Temporary Restraining Order
heretofore issued is LIFTED. The bond issued as a condition for the issuance of said restraining Order is
declared forfeited in favor of private respondent Express Telecommunications Co., Inc. Costs against petitioner.

SO ORDERED.

Paras, Feliciano, Padilla, Sarmiento, Cortes, Griño-Aquino and Regalado, JJ., concur.

Separate Opinions

GUTIERREZ, JR., J., dissenting:

I share with the rest of the Court the desire to have a "modern, efficient, satisfactory, and continuous
telecommunications service" in the Philippines. I register this dissent, however, because I believe that any
frustrations over the present state of telephone services do not justify our affirming an illegal and inequitable
order of the National Telecommunications Commission (NTC). More so when it appears that the questioned
order is not really a solution to the problems bugging our telephone industry.

My dissent is based on three primary considerations, namely:

(1) The Court has sustained nothing less than the desire of respondent ETCI to set-up a profitable business
catering to an affluent clientele through the use of billions of pesos worth of another company's properties. No
issues of public welfare, breaking up of monopolies, or other high sounding principles are involved. The core
question is purely and simply whether or not to grant ETCI's desire for economic gains through riding on another
firm's investments.

(2) The Court has permitted respondent ETCI to operate a telephone system without a valid legislative franchise.
It strains the imagination too much to interpret a legislative franchise authorizing "radio stations" as including the
provisional permit for a sophisticated telephone system which has absolutely nothing to do with radio broadcasts
and transmissions. The Court subverts the legislative will when it validates a provisional permit on the basis of
authority which never envisioned much less intended its use for a regular telephone system catering to
thousands of individual receiver units. There is nothing in Rep. Act No. 2090 which remotely suggests a cellular
mobile telephone system.

(3) The authority given by Rep. Act No. 2090 has expired. ETCI is not only riding on another company's
investments and using legislative authority for a purpose never dreamed of by the legislators but is also trying to
extract life from and resurrect an unused and dead franchise.
My principal objection to the disputed NTC order arises from the fact that respondent Express
Telecommunications Co. Inc. (ETCI) cannot exist without using the facilities of Philippine Long Distance
Telephone Co. (PLDT). Practically all of its business will be conducted through another company's property.

While pretending to set up a separate phone company, ETCI's cellular phones would be useless most of the
time, if not all the time, unless they use PLDT lines. It would be different if ETCI phone owners would primarily
communicate with one another and tap into PLDT lines only rarely or occasionally.

To compare ETCI with the Government Telephone System (GTS) or with an independent phone company
serving a province or city is misleading. The defunct GTS was set up to connect government offices and
personnel with one another. It could exist independently and was not primarily or wholly dependent on PLDT
connections. A provincial or city system serves the residents of a province or city. It primarily relies on its own
investments and infrastructure. It asks for PLDT services only when long distance calls to another country, city,
or province have to be made.

I can, therefore, understand PLDT's reluctance Since it has its own franchise to operate exactly the same
services which ETCI is endeavoring to establish. PLDT would be using its own existing lines. Under the Court's
decision, it would be compelled to allow another company to use those same lines in direct competition with the
lines owner. The cellular system is actually only an adjunct to a regular telephone system, not a separate and
independent system. As an adjunct and component unit or as a parasite (if a foreign body) it must be fed by the
mother organism or unit if it is to survive.

Under the disputed order, ETCI will be completely dependent upon its use of the P16 billions worth of
infrastructure which PLDT has built over several decades. The vaunted payment of compensation everytime an
ETCI phone taps into a PLDT line is illusory. There can be no adequate payment for the use of billions of pesos
of investments built up over 60 years. Moreover, it is actually the phone owner or consumer who pays the fee.
The rate will be fixed by Government and will be based on the consumer's best interests and capacity, ignoring
or subordinating the petitioner's investments. Payment will depend on how much the phone user should be
charged for making a single phone call and will disregard the millions of pesos that ETCI will earn through its use
of billions of pesos worth of another company's investments and properties.

The "hated monopoly" and "improved services" arguments are not only misleading but also illusory.

To sustain the questioned NTC order will not in any way improve telephone services nor would any monopoly be
dismantled. The answer to inadequate telephone facilities is better administrative supervision. The NTC should
pay attention to its work and compel PLDT to improve its services instead of saddling with the burden of carrying
another company's system.

For better services, what the country needs is to improve the existing system and provide enough telephone
lines for all who really need them. The proposed ETCI cellular phones will serve mostly those who can afford to
tide in expensive cars and who already have two or three telephones in their offices and residences. Cellular
phones should legally and fairly be provided by PLDT as just another facet of its expansion program.

The mass of applicants for new telephones will not benefit from cellular phones. In fact, if PLDT is required by
NTC to open up new exchanges or interconnections for the rich ETCI consumers, this will mean an equivalent
number of low income or middle income applicants who will have to wait longer for their own PLDT lines. The
Court's resolution favors the conveniences of the rich at the expense of the necessities of the poor. *

I agree with the petitioner that what NTC granted is not merely provisional authority but what is in effect a regular
certificate of public convenience and necessity or "CPCN".

Starting with seven cell sites for 3,000 subscribers in Metro Manila, the cellular mobile system will establish 67
cell sites beginning October 1991. The initial expenses alone will amount to P130 million. At page 8 of its
Comment, ETCI admits that that "the provisional authority to operate will be useless to ETCI if it does not put up
the system and interconnnect said system with the existing PLDT network."(Emphasis supplied) The completion
of interconnection arrangements, the setting up of expensive installations, the requirements as to maintenance
and operation, and other conditions found in the NTC order are anything but provisional.

The authority given to ETCI is entirely different from the provisional authority given to MERALCO or oil
companies to increase the price of oil or electricity or to bus and jeepney operators to raise fares a few centavos.
In these cases the need for increases is not only urgent but is usually a foregone conclusion dictated by pressing
circumstances. Further hearings are needed only to fix the amount which will be finally authorized. The NTC
orders can also be easily revoked. Increased prices of oil or rates of transportation services can be lowered or
struck down if the preliminary determinations are wrong. In the instant case, NTC has authorized a new
company to start operations even if the issues have not been thoroughly threshed out. There is no urgent need
which warrants operations before a final permit is granted. Once in operation, there can be no cancelling or
revocation of the authority to operate, no dismantling of thousands of cellular phones and throwing to waste of
over P100 million worth of investments in fixed facilities. Theoretically, it can be done but it is clear from the
records that what was granted is really a CPCN.

There is no dispute that a legislative franchise is necessary for the operation of a telephone system. The NTC
has no jurisdiction to grant the authority. The fact that ETCI has to rely on a 1958 legislative franchise shows that
only Congress can give the franchise which will empower NTC to issue the certificate or CPCN.

Rep. Act No. 2090 is a franchise for the construction and operation of radio stations. Felix Alberto and Co. Inc.
(FACI) was authorized in the operation of those radio stations to acquire and handle transmitters, receivers,
electrical machinery and other related devises. The use of radio telephone was never intended or envisioned for
a regular telephone company. "Radio telephony" is governed and circumscribed by the basic purpose of
operating radio stations. Telephony may be used only to enable communications between the stations, to
transmit a radio message to a station where it would be transcribed into a form suitable for delivery to the
intended recipient. FACI was authorized to communicate to, between, and among its radio stations. There is no
authority for thousands of customers to be talking to PLDT subscribers directly. FACI was never given authority
by Rep. Act 2090 to operate switching facilities, wire-line transmissions, and telecommunication stations of a
telephone company. The entire records can be scrutinized and they will show that ETCI has all but ignored and
kept silent about the purpose of its alleged franchise-which is for the real operation of radio stations. There can
be no equating of "radio stations" with a complete cellular mobile telephone system. The two are poles apart.

The most liberal interpretation can not possibly read in a 1958 franchise for radio stations, the authority for a
mobile cellular system vintage 1990. No amount of liberal interpretation can supply the missing requirement. And
besides, we are not interpreting a Constitution which is intended to cover changing situations and must be read
liberally. Legislative franchises are always construed strictly against the franchise.

The remedy is for ETCI to go to Congress. I regret that in dismissing this petition, we may be withholding from
Congress the courtesy we owe to it as a co-equal body and denigrating its power to examine whether or not
ETCI really deserves a legislative franchise.

My third point has to do with the sudden resurrection of a dead franchise and its coming to life in an entirely
different form-no longer a radio station but a modern telephone company.

I have searched the records in vain for any plan of ETCI to operate radio stations. It has not operated and does
not plan to operate radio stations. Its sole objective is to set up a telephone company. For that purpose, it should
go to Congress and get a franchise for a telephone company. NTC cannot give it such a franchise.

Section 10 of Rep. Act No. 2090 prohibits the transfer of the franchise and the rights and privileges under that
franchise without the express approval of Congress. No amount of legal niceties can cloak the fact that ETCI is
not FACI, that the franchise was sold by FACI to ETCI, and that the permit given by NTC to ETCI is based on a
purchased franchise.

When the owners of FACI sold out their stocks, the 3,900 shares were on paper worth only 35 centavos each.
The company had no assets and physical properties. All it had was the franchise, for whatever it was worth. The
buyers paid P4,618,185.00 for the company's stocks, almost all of the amount intended for the franchise. It was,
therefore, a sale or transfer of the franchise in violation of the express terms of Rep. Act No. 2090 which call for
approval by Congress.

ETCI tried to show a series of transactions involving the sales of almost all of its stocks. Not only are the
circumstances surrounding the transfers quite suspicious, but they were effected without the approval and
authorization of the Commission as required by law.

Sec. 4 of Rep. Act No. 2090 also provides that the franchise shall be void unless the construction of radio
stations is begun within two years or June 22, 1960 and completed within ten years or June 22, 1968.

As of April 14, 1987, ETCI formally admitted that it was still in the pre-operating stage. Almost 30 years later, it
had not even started the business authorized by the franchise. It is only now that it proposes to construct, not
radio stations, but a telephone system.
During the oral arguments and in its memorandum, ETCI presented proof of several radio station construction
permits. A construction permit authorizes a construction but does not prove it. There is no proof that the entire
construction of all stations was completed within ten years. In fact, there is not the slightest intimation that ETCI,
today, is operating radio stations. What it wants is to set up a telephone system.

In addition to the franchise being void under its own charter, P.D. 36 on November 2, 1972, cancelled all unused
or dormant legislative franchises. Rep. Act No. 2090, having been voided by its own Section 4, suffered a
second death if that is at all possible.

The violations of law-(1) the giving of life to an already dead franchise, (2) the transfer of ownership against an
express statutory provision, and (3) the use of a franchise for radio stations to justify the setting up of a cellular
mobile telephone system are too glaring for us to ignore on the basis of "respect" for a questionable NTC order
and other purely technical considerations. We should not force PLDT to open its lines to enable a competitor to
operate a system which cannot survive unless it uses PLDT properties.

The NTC bases its order on alleged grounds of public need, public interest, and the common good. There is no
showing that these considerations will be satisfied, at least sufficient to warrant a strained interpretation of legal
provisions. Any slight improvement which the expensive ETCI project will accomplish cannot offset its violation
of law and fair dealing.

I, THEREFORE, VOTE to GRANT the petition.

Fernan, C.J., Narvasa, Gancayco, Bidin and Medialdea, JJ., concur.

CRUZ, J., concurring and dissenting:

As one of the many dissatisfied customers of PLDT, I should have no objection to the grant of the provisional
authority to ETCI. I have none. Its admission will improve communication facilities in the country conformably to
the constitutional objective. It will also keep PLDT on its toes and encourage it to correct its deficient service in
view of the competition.

I fully agree with all the rulings in the ponencia except the approval of the requirement for PLDT to interconnect
with ETCI. I think it violates due process. It reminds me of the story of the little red hen who found some rice and
asked who would help her plant it. None of the animals in the farm was willing and neither did they help in
watering, harvesting and finally cooking it. But when she asked, "Who will help me eat the rice?" everyone
wanted to join in. The little red hen is like PLDT.

If ETCI wants to operate its own telephone system, it should rely on its own resources instead of riding piggy-
back on PLDT. It seems to me rather unfair for the Government to require PLDT to share with a newcomer and
potential rival what it took PLDT tremendous effort and long years and billions of pesos to build .

The case of Republic of the Philippines v. PLDT, 26 SCRA 620, is not applicable because it was the
Government itself that was there seeking interconnection of its own telephone system, with PLDT. The Court
recognized the obvious public purpose that justified the special exercise (by the Government of the power of
eminent domain. But in the case before us, the intended beneficiary is a private enterprise primarily organized
for profit and, indeed, to compete with PLDT. In effect, the Government is forcing PLDT to surrender its
competitive advantage and share its resources with ETCI, which may not only supplement but, possibly, even
ultimately supplant PLDT. I do not think government authority extends that far.

The majority disposes of the question of due process by simply saying that PLDT will have frill opportunity to be
heard in the ascertainment of the just compensation ETCI will have to pay for the interconnection. That is not the
issue. What PLDT is objecting to is not the amount of the just compensation but the interconnection itself that is
being forced upon it.

I feel there is no due process where private property is taken by the Government from one private person and
given to another private person for the latter's direct benefit. The fact that compensation is paid is immaterial; the
flaw lies in the taking itself (Davidson v. New Orleans, 90 U.S. 97). The circumstance that PLDT is a public utility
is no warrant for taking undue liberties with its property, which is protected by the Bill of Rights. "Public need"
cannot be a blanket justification for favoring one investor against another in contravention of the system of free
enterprise. If PLDT has misused its franchise, I should think the solution is to revoke its authority, not to force it
to share its resources with its private competitors.
The rule is that where it is the legislature itself that directly calls for the expropriation of private property, its
determination of the thing to be condemned and the purpose of the taking is conclusive on the courts (City of
Manila v. Chinese Community, 40 Phil. 349). But where the power of eminent domain is exercised only by a
delegate of the legislature, like ETCI, the courts may inquire into the necessity or propriety of the expropriation
and, when warranted, pronounce its invalidity (Republic of the Philippines v. La Orden de PO Benedictinos de
Filipinas, 1 SCRA 649). I think this is what the Court should do in the case at bar.

A final point. It is argued that requiring ETCI to start from scratch (as PLDT did) and import its own equipment
would entail a tremendous outflow of foreign currency we can ill afford at this time. Perhaps so. But we must
remember that the Bill of Rights is not a marketable commodity, like a piece of machinery. Due process is an
indispensable requirement that cannot be assessed in dollar and cents.

Fernan, C.J., and Narvasa, J., concur.

Footnotes

1 SEC. 4. This franchise shall continue for a period of fifty years from the date the first of said
stations shall be placed in operation, and is granted upon the express condition that same shall
be void unless the construction of said station be begun within two years from the date of the
approval of this Act and be completed within ten years from said date.

2 SECTION 1. Action by Government against individuals. An action for the usurpation of office or
franchise may be brought in the name of the Republic of the Philippines against:

(a) A person who usurps, intrudes into, or unlawfully holds or exercises a public office, or a
franchise, or an office in a corporation created by authority of law;
xxx xxx xxx

SECTION 2. Like actions against corporations. — A like action may be brought against a
corporation:

(a) When it has offended against a provision of an Act for its creation or renewal;

(b) When it has forfeited its privileges and franchises by non-user;

(c) When it has committed or omitted an act which amounts to a surrender of its corporate rights,
privileges, or franchises;

(d) When it has misused a right, privilege, or franchise conferred upon it by law, or when it has
exercised a right, privilege, or franchise in contravention of law.

SECTION 3. When Solicitor General or fiscal must commence action.-The Solicitor General or a
fiscal, when directed by the President of the Philippines, or when upon complaint or otherwise he
has good reason to believe that any case specified in the last two preceding sections can be
established by proof, must commence such action.

GUTIERREZ, JR., J.: Dissenting Opinion

* The subscriber pays P38,000.00 for a vehicle borne telephone for a portable phone. and
P57,000.00 for a Pocketphone, although NTC allow 15% discounts on these amounts. There is a
basic charge which includes P750.00 a month for free answering services. If the subscriber uses
his phone from 7:00 AM to 7:00 PM, he pays P7.00 for the first minute and P5.50 for each
additional minute. For a long distance calls, the PLDT toll is added. Even for unsuccessful and
unconnected operator assisted calls there is a P4.00 charge per call.

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, gamblingand 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 locally-funded projects.

(e) The following provisions are hereby repealed or amended insofar as they are inconsistent
with the provisions of this Code: Sections 2, 16, and 29 of Presidential Decree No. 704; Sections
12 of Presidential Decree No. 87, as amended; Sections 52, 53, 66, 67, 68, 69, 70, 71, 72, 73,
and 74 of Presidential Decree No. 463, as amended; and Section 16 of Presidential Decree No.
972, as amended, and

(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and
administrative regulations, or part or parts thereof which are inconsistent with any of the
provisions of this Code are hereby repealed or modified accordingly.

Furthermore, it is a familiar rule that implied repeals are not lightly presumed in the absence of a clear and
unmistakable showing of such intention. In Lichauco & Co. v. Apostol, 10 this Court explained:

The cases relating to the subject of repeal by implication all proceed on the assumption that if the
act of later date clearly reveals an intention on the part of the lawmaking power to abrogate the
prior law, this intention must be given effect; but there must always be a sufficient revelation of
this intention, and it has become an unbending rule of statutory construction that the intention to
repeal a former law will not be imputed to the Legislature when it appears that the two statutes,
or provisions, with reference to which the question arises bear to each other the relation of
general to special.

There is no sufficient indication of an implied repeal of P.D. 1869. On the contrary, as the private respondent
points out, PAGCOR is mentioned as the source of funding in two later enactments of Congress, to wit, R.A.
7309, creating a Board of Claims under the Department of Justice for the benefit of victims of unjust punishment
or detention or of violent crimes, and R.A. 7648, providing for measures for the solution of the power crisis.
PAGCOR revenues are tapped by these two statutes. This would show that the PAGCOR charter has not been
repealed by the Local Government Code but has in fact been improved as it were to make the entity more
responsive to the fiscal problems of the government.

It is a canon of legal hermeneutics that instead of pitting one statute against another in an inevitably destructive
confrontation, courts must exert every effort to reconcile them, remembering that both laws deserve a becoming
respect as the handiwork of a coordinate branch of the government. On the assumption of a conflict between
P.D. 1869 and the Code, the proper action is not to uphold one and annul the other but to give effect to both by
harmonizing them if possible. This is possible in the case before us. The proper resolution of the problem at
hand is to hold that under the Local Government Code, local government units may (and indeed must) prevent
and suppress all kinds of gambling within their territories except only those allowed by statutes like P.D. 1869.
The exception reserved in such laws must be read into the Code, to make both the Code and such laws equally
effective and mutually complementary.

This approach would also affirm that there are indeed two kinds of gambling, to wit, the illegal and those
authorized by law. Legalized gambling is not a modern concept; it is probably as old as illegal gambling, if not
indeed more so. The petitioners' suggestion that the Code authorizes them to prohibit all kinds of gambling
would erase the distinction between these two forms of gambling without a clear indication that this is the will of
the legislature. Plausibly, following this theory, the City of Manila could, by mere ordinance, prohibit the
Philippine Charity Sweepstakes Office from conducting a lottery as authorized by R.A. 1169 and B.P. 42 or stop
the races at the San Lazaro Hippodrome as authorized by R.A. 309 and R.A. 983.

In light of all the above considerations, we see no way of arriving at the conclusion urged on us by the petitioners
that the ordinances in question are valid. On the contrary, we find that the ordinances violate P.D. 1869, which
has the character and force of a statute, as well as the public policy expressed in the decree allowing the playing
of certain games of chance despite the prohibition of gambling in general.

The rationale of the requirement that the ordinances should not contravene a statute is obvious. Municipal
governments are only agents of the national government. Local councils exercise only delegated legislative
powers conferred on them by Congress as the national lawmaking body. The delegate cannot be superior to the
principal or exercise powers higher than those of the latter. It is a heresy to suggest that the local government
units can undo the acts of Congress, from which they have derived their power in the first place, and negate by
mere ordinance the mandate of the statute.

Municipal corporations owe their origin to, and derive their powers and rights wholly from the
legislature. It breathes into them the breath of life, without which they cannot exist. As it creates,
so it may destroy. As it may destroy, it may abridge and control. Unless there is some
constitutional limitation on the right, the legislature might, by a single act, and if we can suppose
it capable of so great a folly and so great a wrong, sweep from existence all of the municipal
corporations in the State, and the corporation could not prevent it. We know of no limitation on
the right so far as to the corporation themselves are concerned. They are, so to phrase it, the
mere tenants at will of the legislature. 11

This basic relationship between the national legislature and the local government units has not been enfeebled
by the new provisions in the Constitution strengthening the policy of local autonomy. Without meaning to detract
from that policy, we here confirm that Congress retains control of the local government units although in
significantly reduced degree now than under our previous Constitutions. The power to create still includes the
power to destroy. The power to grant still includes the power to withhold or recall. True, there are certain notable
innovations in the Constitution, like the direct conferment on the local government units of the power to
tax, 12 which cannot now be withdrawn by mere statute. By and large, however, the national legislature is still the
principal of the local government units, which cannot defy its will or modify or violate it.

The Court understands and admires the concern of the petitioners for the welfare of their constituents and their
apprehensions that the welfare of Cagayan de Oro City will be endangered by the opening of the casino. We
share the view that "the hope of large or easy gain, obtained without special effort, turns the head of the
workman" 13 and that "habitual gambling is a cause of laziness and ruin." 14 In People v. Gorostiza, 15 we declared:
"The social scourge of gambling must be stamped out. The laws against gambling must be enforced to the limit."
George Washington called gambling "the child of avarice, the brother of iniquity and the father of mischief."
Nevertheless, we must recognize the power of the legislature to decide, in its own wisdom, to legalize certain
forms of gambling, as was done in P.D. 1869 and impliedly affirmed in the Local Government Code. That
decision can be revoked by this Court only if it contravenes the Constitution as the touchstone of all official acts.
We do not find such contravention here.

We hold that the power of PAGCOR to centralize and regulate all games of chance, including casinos on land
and sea within the territorial jurisdiction of the Philippines, remains unimpaired. P.D. 1869 has not been modified
by the Local Government Code, which empowers the local government units to prevent or suppress only those
forms of gambling prohibited by law.

Casino gambling is authorized by P.D. 1869. This decree has the status of a statute that cannot be amended or
nullified by a mere ordinance. Hence, it was not competent for the Sangguniang Panlungsod of Cagayan de Oro
City to enact Ordinance No. 3353 prohibiting the use of buildings for the operation of a casino and Ordinance
No. 3375-93 prohibiting the operation of casinos. For all their praiseworthy motives, these ordinances are
contrary to P.D. 1869 and the public policy announced therein and are 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.

#Footnotes

1 Rollo, pp. 64-94.

2 Ibid., pp. 53-62.

3 Pryce was dropped as private respondent in the resolution of the Court dated June 13, 1994.

4 197 SCRA 53.

5 Sec. 458, [2(vi-xv)]; [3(ii-vii)]; [4(i-ix)], Local Government Code, 1991.

6 Where the law does not distinguish, neither ought we to distinguish.

7 39 Phil. 102.

8 Garcia v. Executive Secretary, 204 SCRA 516, quoting Cooley, Constitutional Limitations, 8th
ed., 379-380.
9 Tatel v. Municipality of Virac, 207 SCRA 157; Solicitor General v. Metropolitan Manila
Authority, 204 SCRA 837; De la Cruz v. Paras, 123 SCRA 569; U.S. v. Abandan, 24 Phil. 165.

10 44 Phil. 138.

11 Clinton v. Ceder Rapids, etc. Railroad Co., 24 Iowa 455.

12 Art. X, Sec. 5, Constitution.

13 Planiol, Droit Civil, Vol. 2, No. 2210.

14 Ibid.

15 77 Phil. 88.

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