FULL TEXT

G.R. No. L-9907 June 30, 1958

LOURDES J. LARA, ET AL., plaintiffs-appellants,

vs.
BRIGIDO R. VALENCIA, defendant-appellant.

Castillo, Cervantes, Occeña, Lozano, Montana, Cunanan, Sison and Castillo and Eligio G. Lagman for
defendant-appellant.
Donato C. Endriga and Emigdio Dakanay for plaintiffs-appellants.

BAUTISTA ANGELO, J.:

This is an action for damages brought by plaintiffs against defendant in the Court of First Instance of Davao for
the death of one Demetrio Lara, Sr. allegedly caused by the negligent act of defendant. Defendant denied the
charge of negligence and set up certain affirmative defenses and a counterclaim.

The court after hearing rendered judgment ordering defendant to pay the plaintiffs the following amount: (a)
P10,000 as moral damages; (b) P3,000 as exemplary damages; and (c) P1,000 as attorney's fees, in addition to
the costs of action. Both parties appealed to this Court because the damages claimed in the complaint exceed
the sum of P50,000.

In their appeal, plaintiffs claim that the court a quo erred in disregarding their claim of P41,400 as actual or
compensatory damages and in awarding as attorneys' fees only the sum of P1,000 instead of P3,000 as agreed
upon between plaintiffs and their counsel. Defendant, on the other hand, disputes the finding of the court a quo
that the oath of Demetrio Lara, Sr. was due to the negligence of defendant and the portion of the judgment which
orders dependant to pay to plaintiffs moral and exemplary damages as well as attorneys' fees, said defendant
contending that the court should have declared that the death of Lara was due to unavoidable accident.

The deceased was an inspector of the Bureau of Forestry stationed in Davao with an annual salary of P1,800.
The defendant is engaged in the business of exporting logs from his lumber concession in Cotabato. Lara went
to said concession upon instructions of his chief to classify the logs of defendant which were about to be loaded
on a ship anchored in the port of Parang. The work Lara of lasted for six days during which he contracted
malaria fever. In the morning of January 9, 1954, Lara who then in a hurry to return to Davao asked defendant if
he could take him in his pick-up as there was then no other means of transportation, to which defendant agreed,
and in that same morning the pick-up left Parang bound for Davao taking along six passengers, including Lara.

The pick-up has a front seat where the driver and two passengers can be accommodated and the back has a
steel flooring enclosed with a steel walling of 16 to 17 inches tall on the sides and with a 19 inches tall walling at
the back. Before leaving Parang, the sitting arrangement was as follows: defendant was at the wheel and seated
with him in the front seat were Mrs. Valencia and Nicanor Quinain; on the back of the pick-up were two
improvised benches placed on each side, and seated on the right bench were Ricardo Alojipan and Antonio
Lagahit, and on the left one Bernardo and Pastor Geronimo. A person by the name of Leoning was seated on a
box located on the left side while in the middle Lara sat on a bag. Before leaving Parang, defendant invited Lara
to sit with him on the front seat but Lara declined. It was their understanding that upon reaching barrio Samoay,
Cotabato, the passengers were to alight and take a bus bound for Davao, but when they arrived at that place,
only Bernardo alighted and the other passengers requested defendant to allow them to ride with him up to
Davao because there was then no available bus that they could take in going to that place. Defendant again
accommodated the passengers.

When they continued their trip, the sitting arrangement of the passengers remained the same, Lara being seated
on a bag in the middle with his arms on a suitcase and his head cove red by a jacket. Upon reaching Km. 96,
barrio Catidtuan, Lara accidentally fell from the pick-up and as a result he suffered serious injuries. Valencia
stopped the pick-up to see what happened to Lara. He sought the help of the residents of that place and applied
water to Lara but to no avail. They brought Lara to the nearest place where they could find a doctor and not
having found any they took him to St. Joseph's Clinic of Kidapawan. But when Lara arrived he was already dead.
From there they proceeded to Davao City and immediately notified the local authorities. An investigation was
made regarding the circumstances surrounding the death of Lara but no criminal action was taken against
defendant.
It should be noted that the deceased went to the lumber concession of defendant in Parang, Cotabato upon
instructions of his chief in order to classify the logs of defendant which were then ready to be exported and to be
loaded on a ship anchored in the port of Parang. It took Lara six days to do his work during which he contracted
malaria fever and for that reason he evinced a desire to return immediately to Davao. At that time, there was no
available bus that could take him back to Davao and so he requested the defendant if he could take him in his
own pick-up. Defendant agreed and, together with Lara, other passengers tagged along, most of them were
employees of the Government. Defendant merely accommodated them and did not charge them any fee for the
service. It was also their understanding that upon reaching barrio Samoay, the passengers would alight and
transfer to a bus that regularly makes the trip to Davao but unfortunately there was none available at the time
and so the same passengers, including Lara, again requested the defendant to drive them to Davao. Defendant
again accommodated them and upon reaching Km. 96, Lara accidentally fell suffering fatal injuries.

It therefore appears that the deceased, as well his companions who rode in the pick-up of defendant, were
merely accommodation passengers who paid nothing for the service and so they can be considered as invited
guests within the meaning of the law. As accommodation passengers or invited guests, defendant as owner and
driver of the pick-up owes to them merely the duty to exercise reasonable care so that they may be transported
safely to their destination. Thus, "The rule is established by the weight of authority that the owner or operator of
an automobile owes the duty to an invited guest to exercise reasonable care in its operation, and not
unreasonably to expose him to danger and injury by increasing the hazard of travel. This rule, as frequently
stated by the courts, is that an owner of an automobile owes a guest the duty to exercise ordinary or reasonable
care to avoid injuring him. Since one riding in an automobile is no less a guest because he asked for the
privilege of doing so, the same obligation of care is imposed upon the driver as in the case of one expressly
invited to ride" (5 Am. Jur., 626-627). Defendant, therefore, is only required to observe ordinary care, and is not
in duty bound to exercise extraordinary diligence as required of a common carrier by our law (Articles 1755 and
1756, new Civil Code).

The question that now arises is: Is there enough evidence to show that defendant failed to observe ordinary care
or diligence in transporting the deceased from Parang to Davao on the date in question?

The trial court answered the question in the affirmative but in so doing it took into account only the following
facts:

No debe perderse de vista el hecho, que los negocios de exportacion de trozos del demandado tiene un
volumen de P1,200. Lara era empleado de la Oficina de Montes, asalariado por el gobierno, no pagado
por el demandado para classificar los trozos exportados; debido a los trabajos de classificacion que duro
6 dias, en su ultimo dia Lara no durmio toda la noche, al dia siguiente, Lara fue atacado de malaria,
tenia inflamada la cara y cuerpo, sufria dolores de cabeza con erupciones en la cara y cuerpo; que en la
manana, del dia 2 de enero de 1954, fecha en que Lara salio de Davao para Parang, en aeroplano para
clasificar los trozos del demandado, el automobil de este condujo a aquel al aerodromo de Davao.

xxx xxx xxx

El viaje de Cotabato a Davao no es menos de 8 horas, su carretera esta en malas condiciones,

desnivelada, con piedras salientes y baches, que hacen del vehiculo no estable en su marcha. Lara
estaba enfermo de cierta gravedad, tenia el cuerpo y cara inflamados, atacado de malaria, con dolores
de cabeza y con erupciones en la cara y cuerpo.

A la vista de estos hechos, el demandado debia de saber que era sumamente peligroso llevar 5
pasajeros en la parte trasera del pick-up; particularmente, para la salud de Lara; el permitirlo, el
demandado no ha tomado las precausiones, para evitar un posible accidente fatal. La negative de Lara
de ocupar el asiento delantero del pick-up no constituye a juicio del Juzgado una defensa, pues el
demendado conociendo el estado delicado de salud de Lara, no debio de haber permitido que aquel
regrese a Davao en su pick-up; si querria prestar a aquel un favor, debio de haver provisto a Lara de un
automobil para su regrese a Davao, ya que el demendado es un millionario; si no podia prestar a aquel
este favor, debio de haver dejado a Lara en Samuay para coger aquel un camion de pasajero de
Cotabato a Davao.

Even if we admit as true the facts found by the trial court, still we find that the same are not sufficient to show
that defendant has failed to take the precaution necessary to conduct his passengers safely to their place of
destination for there is nothing there to indicate that defendant has acted with negligence or without taking the
precaution that an ordinary prudent man would have taken under similar circumstances. It should be noted that
Lara went to the lumber concession of defendant in answer to a call of duty which he was bound to perform
because of the requirement of his office and he contracted the malaria fever in the course of the performance of
that duty. It should also be noted that defendant was not in duty bound to take the deceased in his own pick-up
to Davao because from Parang to Cotabato there was a line of transportation that regularly makes trips for the
public, and if defendant agreed to take the deceased in his own car, it was only to accommodate him
considering his feverish condition and his request that he be so accommodated. It should also be noted that the
passengers who rode in the pick-up of defendant took their respective seats therein at their own choice and not
upon indication of defendant with the particularity that defendant invited the deceased to sit with him in the front
seat but which invitation the deceased declined. The reason for this can only be attributed to his desire to be at
the back so that he could sit on a bag and travel in a reclining position because such was more convenient for
him due to his feverish condition. All the circumstances therefore clearly indicate that defendant had done what a
reasonable prudent man would have done under the circumstances.

There is every reason to believe that the unfortunate happening was only due to an unforeseen accident
accused by the fact that at the time the deceased was half asleep and must have fallen from the pick-up when it
ran into some stones causing it to jerk considering that the road was then bumpy, rough and full of stones.

The finding of the trial court that the pick-up was running at more than 40 kilometers per hour is not supported by
the evidence. This is a mere surmise made by the trial court considering the time the pick-up left barrio Samoay
and the time the accident occured in relation to the distance covered by the pick-up. And even if this is correct,
still we say that such speed is not unreasonable considering that they were traveling on a national road and the
traffic then was not heavy. We may rather attribute the incident to lack of care on the part of the deceased
considering that the pick-up was open and he was then in a crouching position. Indeed, the law provides that "A
passenger must observe the diligence of a good father of a family to avoid injury to himself" (Article 1761, new
Civil Code), which means that if the injury to the passenger has been proximately caused by his own negligence,
the carrier cannot be held liable.

All things considered, we are persuaded to conclude that the accident occurred not due to the negligence of
defendant but to circumstances beyond his control and so he should be exempt from liability.

Wherefore, the decision appealed from is reversed, without pronouncement as to costs.

G.R. No. 162267 July 4, 2008

PCI LEASING AND FINANCE, INC., petitioner,

vs.
UCPB GENERAL INSURANCE CO., INC., respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking a reversal of
the Decision1 of the Court of Appeals (CA) dated December 12, 2003 affirming with modification the Decision of
the Regional Trial Court (RTC) of Makati City which ordered petitioner and Renato Gonzaga (Gonzaga) to pay,
jointly and severally, respondent the amount of P244,500.00 plus interest; and the CA Resolution2 dated
February 18, 2004 denying petitioner's Motion for Reconsideration.

The facts, as found by the CA, are undisputed:

On October 19, 1990 at about 10:30 p.m., a Mitsubishi Lancer car with Plate Number PHD-206 owned
by United Coconut Planters Bank was traversing the Laurel Highway, Barangay Balintawak, Lipa City.
The car was insured with plantiff-appellee [UCPB General Insurance Inc.], then driven by Flaviano Isaac
with Conrado Geronimo, the Asst. Manager of said bank, was hit and bumped by an 18-wheeler Fuso
Tanker Truck with Plate No. PJE-737 and Trailer Plate No. NVM-133, owned by defendants-appellants
PCI Leasing & Finance, Inc. allegedly leased to and operated by defendant-appellant Superior Gas &
Equitable Co., Inc. (SUGECO) and driven by its employee, defendant appellant Renato Gonzaga.

The impact caused heavy damage to the Mitsubishi Lancer car resulting in an explosion of the rear part
of the car. The driver and passenger suffered physical injuries. However, the driver defendant-appellant
Gonzaga continued on its [sic] way to its [sic] destination and did not bother to bring his victims to the
hospital.
 Plaintiff-appellee paid the assured UCPB the amount of P244,500.00 representing the insurance
coverage of the damaged car.

As the 18-wheeler truck is registered under the name of PCI Leasing, repeated demands were made by
plaintiff-appellee for the payment of the aforesaid amounts. However, no payment was made. Thus,
plaintiff-appellee filed the instant case on March 13, 1991.3

PCI Leasing and Finance, Inc., (petitioner) interposed the defense that it could not be held liable for the collision,
since the driver of the truck, Gonzaga, was not its employee, but that of its co-defendant Superior Gas &
Equitable Co., Inc. (SUGECO).4 In fact, it was SUGECO, and not petitioner, that was the actual operator of the
truck, pursuant to a Contract of Lease signed by petitioner and SUGECO.5 Petitioner, however, admitted that it
was the owner of the truck in question.6

After trial, the RTC rendered its Decision dated April 15, 1999,7 the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff UCPB General
Insurance [respondent], ordering the defendants PCI Leasing and Finance, Inc., [petitioner] and Renato
Gonzaga, to pay jointly and severally the former the following amounts: the principal amount
of P244,500.00 with 12% interest as of the filing of this complaint until the same is paid; P50,000.00 as
attorney's fees; and P20,000.00 as costs of suit.

SO ORDERED.8

Aggrieved by the decision of the trial court, petitioner appealed to the CA.

In its Decision dated December 12, 2003, the CA affirmed the RTC's decision, with certain modifications, as
follows:

WHEREFORE, the appealed decision dated April 15, 1999 is hereby AFFIRMED with modification that
the award of attorney's fees is hereby deleted and the rate of interest shall be six percent (6%) per
annum computed from the time of the filing of the complaint in the trial court until the finality of the
judgment. If the adjudged principal and the interest remain unpaid thereafter, the interest rate shall be
twelve percent (12%) per annum computed from the time the judgment becomes final and executory
until it is fully satisfied.

SO ORDERED.9

Petitioner filed a Motion for Reconsideration which the CA denied in its Resolution dated February 18, 2004.

Hence, herein Petition for Review.

The issues raised by petitioner are purely legal:

Whether petitioner, as registered owner of a motor vehicle that figured in a quasi-delict may be held
liable, jointly and severally, with the driver thereof, for the damages caused to third parties.

Whether petitioner, as a financing company, is absolved from liability by the enactment of Republic Act
(R.A.) No. 8556, or the Financing Company Act of 1998.

Anent the first issue, the CA found petitioner liable for the damage caused by the collision since under the Public
Service Act, if the property covered by a franchise is transferred or leased to another without obtaining the
requisite approval, the transfer is not binding on the Public Service Commission and, in contemplation of law, the
grantee continues to be responsible under the franchise in relation to the operation of the vehicle, such as
damage or injury to third parties due to collisions.10

Petitioner claims that the CA's reliance on the Public Service Act is misplaced, since the said law applies only to
cases involving common carriers, or those which have franchises to operate as public utilities. In contrast, the
case before this Court involves a private commercial vehicle for business use, which is not offered for service to
the general public.11
Petitioner's contention has partial merit, as indeed, the vehicles involved in the case at bar are not common
carriers, which makes the Public Service Act inapplicable.

However, the registered owner of the vehicle driven by a negligent driver may still be held liable under applicable
jurisprudence involving laws on compulsory motor vehicle registration and the liabilities of employers for quasi-
delicts under the Civil Code.

The principle of holding the registered owner of a vehicle liable for quasi-delicts resulting from its use is well-
established in jurisprudence. Erezo v. Jepte,12 with Justice Labrador as ponente, wisely explained the reason
behind this principle, thus:

Registration is required not to make said registration the operative act by which ownership in vehicles is
transferred, as in land registration cases, because the administrative proceeding of registration does not
bear any essential relation to the contract of sale between the parties (Chinchilla vs. Rafael and
Verdaguer, 39 Phil. 888), but to permit the use and operation of the vehicle upon any public highway
(section 5 [a], Act No. 3992, as amended.) The main aim of motor vehicle registration is to identify the
owner so that if any accident happens, or that any damage or injury is caused by the vehicle on the
public highways, responsibility therefor can be fixed on a definite individual, the registered owner.
Instances are numerous where vehicles running on public highways caused accidents or injuries to
pedestrians or other vehicles without positive identification of the owner or drivers, or with very scant
means of identification. It is to forestall these circumstances, so inconvenient or prejudicial to the public,
that the motor vehicle registration is primarily ordained, in the interest of the determination of persons
responsible for damages or injuries caused on public highways.

"'One of the principal purposes of motor vehicles legislation is identification of the vehicle and of
the operator, in case of accident; and another is that the knowledge that means of detection are
always available may act as a deterrent from lax observance of the law and of the rules of
conservative and safe operation. Whatever purpose there may be in these statutes, it is
subordinate at the last to the primary purpose of rendering it certain that the violator of the law or
of the rules of safety shall not escape because of lack of means to discover him.' The purpose of
the statute is thwarted, and the displayed number becomes a 'snare and delusion,' if courts
would entertain such defenses as that put forward by appellee in this case. No responsible
person or corporation could be held liable for the most outrageous acts of negligence, if they
should be allowed to place a 'middleman' between them and the public, and escape liability by
the manner in which they recompense their servants." (King vs. Brenham Automobile Co., 145
S.W. 278, 279.)

With the above policy in mind, the question that defendant-appellant poses is: should not the registered
owner be allowed at the trial to prove who the actual and real owner is, and in accordance with such
proof escape or evade responsibility and lay the same on the person actually owning the vehicle? We
hold with the trial court that the law does not allow him to do so; the law, with its aim and policy in mind,
does not relieve him directly of the responsibility that the law fixes and places upon him as an incident or
consequence of registration. Were a registered owner allowed to evade responsibility by proving who the
supposed transferee or owner is, it would be easy for him, by collusion with others or otherwise, to
escape said responsibility and transfer the same to an indefinite person, or to one who possesses no
property with which to respond financially for the damage or injury done. A victim of recklessness on the
public highways is usually without means to discover or identify the person actually causing the injury or
damage. He has no means other than by a recourse to the registration in the Motor Vehicles Office to
determine who is the owner. The protection that the law aims to extend to him would become illusory
were the registered owner given the opportunity to escape liability by disproving his ownership. If the
policy of the law is to be enforced and carried out, the registered owner should not be allowed to prove
the contrary to the prejudice of the person injured, that is, to prove that a third person or another has
become the owner, so that he may thereby be relieved of the responsibility to the injured person.

The above policy and application of the law may appear quite harsh and would seem to conflict with truth
and justice. We do not think it is so. A registered owner who has already sold or transferred a vehicle
has the recourse to a third-party complaint, in the same action brought against him to recover for the
damage or injury done, against the vendee or transferee of the vehicle. The inconvenience of the suit is
no justification for relieving him of liability; said inconvenience is the price he pays for failure to comply
with the registration that the law demands and requires.
 In synthesis, we hold that the registered owner, the defendant-appellant herein, is primarily responsible
for the damage caused to the vehicle of the plaintiff-appellee, but he (defendant-appellant) has a right to
be indemnified by the real or actual owner of the amount that he may be required to pay as damage for
the injury caused to the plaintiff-appellant.13

The case is still good law and has been consistently cited in subsequent cases.14 Thus, there is no good reason
to depart from its tenets.

For damage or injuries arising out of negligence in the operation of a motor vehicle, the registered owner may be
held civilly liable with the negligent driver either 1) subsidiarily, if the aggrieved party seeks relief based on
a delict or crime under Articles 100 and 103 of the Revised Penal Code; or 2) solidarily, if the complainant seeks
relief based on a quasi-delict under Articles 2176 and 2180 of the Civil Code. It is the option of the plaintiff
whether to waive completely the filing of the civil action, or institute it with the criminal action, or file it separately
or independently of a criminal action;15 his only limitation is that he cannot recover damages twice for the same
act or omission of the defendant.16

In case a separate civil action is filed, the long-standing principle is that the registered owner of a motor vehicle
is primarily and directly responsible for the consequences of its operation, including the negligence of the driver,
with respect to the public and all third persons.17 In contemplation of law, the registered owner of a motor vehicle
is the employer of its driver, with the actual operator and employer, such as a lessee, being considered as
merely the owner's agent.18 This being the case, even if a sale has been executed before a tortious incident, the
sale, if unregistered, has no effect as to the right of the public and third persons to recover from the registered
owner.19 The public has the right to conclusively presume that the registered owner is the real owner, and may
sue accordingly.20

In the case now before the Court, there is not even a sale of the vehicle involved, but a mere lease, which
remained unregistered up to the time of the occurrence of the quasi-delict that gave rise to the case. Since a
lease, unlike a sale, does not even involve a transfer of title or ownership, but the mere use or enjoyment of
property, there is more reason, therefore, in this instance to uphold the policy behind the law, which is to protect
the unwitting public and provide it with a definite person to make accountable for losses or injuries suffered in
vehicular accidents.21 This is and has always been the rationale behind compulsory motor vehicle registration
under the Land Transportation and Traffic Code and similar laws, which, as early as Erezo, has been guiding the
courts in their disposition of cases involving motor vehicular incidents. It is also important to emphasize that such
principles apply to all vehicles in general, not just those offered for public service or utility.22

The Court recognizes that the business of financing companies has a legitimate and commendable purpose.23 In
earlier cases, it considered a financial lease or financing lease a legal contract,24 though subject to the
restrictions of the so-called Recto Law or Articles 1484 and 1485 of the Civil Code.25 In previous cases, the Court
adopted the statutory definition of a financial lease or financing lease, as:

[A] mode of extending credit through a non-cancelable lease contract under which the lessor purchases
or acquires, at the instance of the lessee, machinery, equipment, motor vehicles, appliances, business
and office machines, and other movable or immovable property in consideration of the periodic payment
by the lessee of a fixed amount of money sufficient to amortize at least seventy (70%) of the purchase
price or acquisition cost, including any incidental expenses and a margin of profit over an obligatory
period of not less than two (2) years during which the lessee has the right to hold and use the leased
property, x x x but with no obligation or option on his part to purchase the leased property from the
owner-lessor at the end of the lease contract. 26

Petitioner presented a lengthy discussion of the purported trend in other jurisdictions, which apparently tends to
favor absolving financing companies from liability for the consequences of quasi-delictual acts or omissions
involving financially leased property.27 The petition adds that these developments have been legislated in our
jurisdiction in Republic Act (R.A.) No. 8556,28 which provides:

Section 12. Liability of lessors. - Financing companies shall not be liable for loss, damage or injury
caused by a motor vehicle, aircraft, vessel, equipment, machinery or other property leased to a third
person or entity except when the motor vehicle, aircraft, vessel, equipment or other property is operated
by the financing company, its employees or agents at the time of the loss, damage or injury. 1avv phi1

Petitioner's argument that the enactment of R.A. No. 8556, especially its addition of the new Sec. 12 to the old
law, is deemed to have absolved petitioner from liability, fails to convince the Court.
These developments, indeed, point to a seeming emancipation of financing companies from the obligation to
compensate claimants for losses suffered from the operation of vehicles covered by their lease. Such, however,
are not applicable to petitioner and do not exonerate it from liability in the present case.

The new law, R.A. No. 8556, notwithstanding developments in foreign jurisdictions, do not supersede or repeal
the law on compulsory motor vehicle registration. No part of the law expressly repeals Section 5(a) and (e) of
R.A. No. 4136, as amended, otherwise known as the Land Transportation and Traffic Code, to wit:

Sec. 5. Compulsory registration of motor vehicles. - (a) All motor vehicles and trailer of any type used
or operated on or upon any highway of the Philippines must be registered with the Bureau of Land
Transportation (now the Land Transportation Office, per Executive Order No. 125, January 30, 1987,
and Executive Order No. 125-A, April 13, 1987) for the current year in accordance with the provisions of
this Act.

xxxx

(e) Encumbrances of motor vehicles. - Mortgages, attachments, and other encumbrances of motor
vehicles, in order to be valid against third parties must be recorded in the Bureau (now the Land
Transportation Office). Voluntary transactions or voluntary encumbrances shall likewise be properly
recorded on the face of all outstanding copies of the certificates of registration of the vehicle concerned.

Cancellation or foreclosure of such mortgages, attachments, and other encumbrances shall likewise be
recorded, and in the absence of such cancellation, no certificate of registration shall be issued without
the corresponding notation of mortgage, attachment and/or other encumbrances.

x x x x (Emphasis supplied)

Neither is there an implied repeal of R.A. No. 4136. As a rule, repeal by implication is frowned upon, unless
there is clear showing that the later statute is so irreconcilably inconsistent and repugnant to the existing law that
they cannot be reconciled and made to stand together.29 There is nothing in R.A. No. 4136 that is inconsistent
and incapable of reconciliation.

Thus, the rule remains the same: a sale, lease, or financial lease, for that matter, that is not registered with the
Land Transportation Office, still does not bind third persons who are aggrieved in tortious incidents, for the latter
need only to rely on the public registration of a motor vehicle as conclusive evidence of ownership.30 A lease
such as the one involved in the instant case is an encumbrance in contemplation of law, which needs to be
registered in order for it to bind third parties.31 Under this policy, the evil sought to be avoided is the exacerbation
of the suffering of victims of tragic vehicular accidents in not being able to identify a guilty party. A contrary ruling
will not serve the ends of justice. The failure to register a lease, sale, transfer or encumbrance, should not
benefit the parties responsible, to the prejudice of innocent victims.

The non-registration of the lease contract between petitioner and its lessee precludes the former from enjoying
the benefits under Section 12 of R.A. No. 8556.

This ruling may appear too severe and unpalatable to leasing and financing companies, but the Court believes
that petitioner and other companies so situated are not entirely left without recourse. They may resort to third-
party complaints against their lessees or whoever are the actual operators of their vehicles. In the case at bar,
there is, in fact, a provision in the lease contract between petitioner and SUGECO to the effect that the latter
shall indemnify and hold the former free and harmless from any "liabilities, damages, suits, claims or judgments"
arising from the latter's use of the motor vehicle.32 Whether petitioner would act against SUGECO based on this
provision is its own option.

The burden of registration of the lease contract is minuscule compared to the chaos that may result if registered
owners or operators of vehicles are freed from such responsibility. Petitioner pays the price for its failure to obey
the law on compulsory registration of motor vehicles for registration is a pre-requisite for any person to even
enjoy the privilege of putting a vehicle on public roads.

WHEREFORE, the petition is DENIED. The Decision dated December 12, 2003 and Resolution dated February
18, 2004 of the Court of Appeals are AFFIRMED.

Costs against petitioner.

SO ORDERED.

G.R. No. 158793 June 8, 2006

JAMES MIRASOL, RICHARD SANTIAGO, and LUZON MOTORCYCLISTS FEDERATION, INC., Petitioners,
vs.
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS and TOLL REGULATORY BOARD, Respondents.

DECISION

CARPIO, J.:

This petition for review on certiorari1 seeks to reverse the Decision dated 10 March 2003 of the Regional Trial
Court, Branch 147, Makati City (RTC) in Civil Case No. 01-034, as well as the RTC’s Order dated 16 June 2003
which denied petitioners’ Motion for Reconsideration. Petitioners assert that Department of Public Works and
Highways’ (DPWH) Department Order No. 74 (DO 74), Department Order No. 215 (DO 215), and the Revised
Rules and Regulations on Limited Access Facilities of the Toll Regulatory Board (TRB) violate Republic Act No.
2000 (RA 2000) or the Limited Access Highway Act. Petitioners also seek to declare Department Order No. 123
(DO 123) and Administrative Order No. 1 (AO 1)2 unconstitutional.

Antecedent Facts

The facts are not in dispute. As summarized by the Solicitor General, the facts are as follows:

1. On January 10, 2001, petitioners filed before the trial court a Petition for Declaratory Judgment with
Application for Temporary Restraining Order and Injunction docketed as Civil Case No. 01-034. The
petition sought the declaration of nullity of the following administrative issuances for being inconsistent
with the provisions of Republic Act 2000, entitled "Limited Access Highway Act" enacted in 1957:

a. DPWH Administrative Order No. 1, Series of 1968;

b. DPWH Department Order No. 74, Series of 1993;

c. Art. II, Sec. 3(a) of the Revised Rules on Limited Access Facilities promulgated in 199[8] by
the DPWH thru the Toll Regulatory Board (TRB).

2. Previously, pursuant to its mandate under R.A. 2000, DPWH issued on June 25, 1998 Department
Order (DO) No. 215 declaring the Manila-Cavite (Coastal Road) Toll Expressway as limited access
facilities.

3. Accordingly, petitioners filed an Amended Petition on February 8, 2001 wherein petitioners sought the
declaration of nullity of the aforesaid administrative issuances. Moreover, petitioners prayed for the
issuance of a temporary restraining order and/or preliminary injunction to prevent the enforcement of the
total ban on motorcycles along the entire breadth of North and South Luzon Expressways and the
Manila-Cavite (Coastal Road) Toll Expressway under DO 215.

4. On June 28, 2001, the trial court, thru then Presiding Judge Teofilo Guadiz, after due hearing, issued
an order granting petitioners’ application for preliminary injunction. On July 16, 2001, a writ of preliminary
injunction was issued by the trial court, conditioned upon petitioners’ filing of cash bond in the amount
of P100,000.00, which petitioners subsequently complied with.

5. On July 18, 2001, the DPWH acting thru the TRB, issued Department Order No. 123 allowing
motorcycles with engine displacement of 400 cubic centimeters inside limited access facilities (toll ways).

6. Upon the assumption of Honorable Presiding Judge Ma. Cristina Cornejo, both the petitioners and
respondents were required to file their respective Memoranda. Petitioners likewise filed [their]
Supplemental Memorandum. Thereafter, the case was deemed submitted for decision.

7. Consequently, on March 10, 2003, the trial court issued the assailed decision dismissing the petition
but declaring invalid DO 123. Petitioners moved for a reconsideration of the dismissal of their petition;
but it was denied by the trial court in its Order dated June 16, 2003.3
Hence, this petition.

The RTC’s Ruling

The dispositive portion of the RTC’s Decision dated 10 March 2003 reads:

WHEREFORE, [t]he Petition is denied/dismissed insofar as petitioners seek to declare null and void ab initio
DPWH Department Order No. 74, Series of 1993, Administrative Order No. 1, and Art. II, Sec. 3(a) of the
Revised Rules on Limited Access Facilities promulgated by the DPWH thru the TRB, the presumed validity
thereof not having been overcome; but the petition is granted insofar as DPWH Department Order No. 123 is
concerned, declaring the same to be invalid for being violative of the equal protection clause of the Constitution.

SO ORDERED.4

The Issues

Petitioners seek a reversal and raise the following issues for resolution:

1. WHETHER THE RTC’S DECISION IS ALREADY BARRED BY RES JUDICATA;

2. WHETHER DO 74, DO 215 AND THE TRB REGULATIONS CONTRAVENE RA 2000; AND

3. WHETHER AO 1 AND DO 123 ARE UNCONSTITUTIONAL.5

The Ruling of the Court

The petition is partly meritorious.

Whether the RTC’s Decision Dismissing Petitioners’ Case is Barred by Res Judicata

Petitioners rely on the RTC’s Order dated 28 June 2001, which granted their prayer for a writ of preliminary
injunction. Since respondents did not appeal from that Order, petitioners argue that the Order became "a final
judgment" on the issues. Petitioners conclude that the RTC erred when it subsequently dismissed their petition
in its Decision dated 10 March 2003.

Petitioners are mistaken. As the RTC correctly stated, the Order dated 28 June 2001 was not an adjudication on
the merits of the case that would trigger res judicata. A preliminary injunction does not serve as a final
determination of the issues. It is a provisional remedy, which merely serves to preserve the status quo until the
court could hear the merits of the case.6 Thus, Section 9 of Rule 58 of the 1997 Rules of Civil Procedure
requires the issuance of a final injunction to confirm the preliminary injunction should the court during trial
determine that the acts complained of deserve to be permanently enjoined. A preliminary injunction is a mere
adjunct, an ancillary remedy which exists only as an incident of the main proceeding.7

Validity of DO 74, DO 215 and the TRB Regulations

Petitioners claim that DO 74,8 DO 215,9 and the TRB’s Rules and Regulations issued under them violate the
provisions of RA 2000. They contend that the two issuances unduly expanded the power of the DPWH in
Section 4 of RA 2000 to regulate toll ways. Petitioners assert that the DPWH’s regulatory authority is limited to
acts like redesigning curbings or central dividing sections. They claim that the DPWH is only allowed to re-
design the physical structure of toll ways, and not to determine "who or what can be qualified as toll way
users."10

Section 4 of RA 200011 reads:

SEC. 4. Design of limited access facility. — The Department of Public Works and Communications is
authorized to so design any limited access facility and to so regulate, restrict, or prohibit access as to
best serve the traffic for which such facility is intended; and its determination of such design shall be final.
In this connection, it is authorized to divide and separate any limited access facility into separate roadways by
the construction of raised curbings, central dividing sections, or other physical separations, or by designating
such separate roadways by signs, markers, stripes, and the proper lane for such traffic by appropriate signs,
markers, stripes and other devices. No person, shall have any right of ingress or egress to, from or across
limited access facilities to or from abutting lands, except at such designated points at which access may be
permitted, upon such terms and conditions as may be specified from time to time. (Emphasis supplied)

On 19 February 1968, Secretary Antonio V. Raquiza of the Department of Public Works and
Communications issued AO 1, which, among others, prohibited motorcycles on limited access highways. The
pertinent provisions of AO 1 read:

SUBJECT: Revised Rules and Regulations Governing Limited Access Highways

By virtue of the authority granted the Secretary [of] Public Works and Communications under Section 3
of R.A. 2000, otherwise known as the Limited Access Highway Act, the following rules and regulations
governing limited access highways are hereby promulgated for the guidance of all concerned:

xxxx

Section 3 – On limited access highways, it is unlawful for any person or group of persons to:

xxxx

(h) Drive any bicycle, tricycle, pedicab, motorcycle or any vehicle (not motorized);

x x x x12 (Emphasis supplied)

On 5 April 1993, Acting Secretary Edmundo V. Mir of the Department of Public Works and Highways issued
DO 74:

SUBJECT: Declaration of the North Luzon Expressway from Balintawak to Tabang and the South Luzon
Expressway from Nichols to Alabang as Limited Access Facilities

Pursuant to Section 2 of Republic Act No. 2000, a limited access facility is defined as "a highway or street
especially designed for through traffic, and over, from, or to which owners or occupants of abutting land or other
persons have no right or easement or only a limited right or easement of access, light, air or view by reason of
the fact that their proper[t]y abuts upon such limited access facility or for any other reason. Such highways or
streets may be parkways, from which trucks, buses, and other commerical [sic] vehicles shall be excluded; or
they may be free ways open to use by all customary forms of street and highway traffic."

Section 3 of the same Act authorizes the Department of Public Works and Communications (now Department of
Public Works and Highways) "to plan, designate, establish, regulate, vacate, alter, improve, maintain, and
provide limited access facilities for public use wherever it is of the opinion that traffic conditions, present or
future, will justify such special facilities."

Therefore, by virtue of the authority granted above, the Department of Public Works and Highways hereby
designates and declares the Balintawak to Tabang Sections of the North Luzon Expressway, and the Nichols to
Alabang Sections of the South Luzon Expressways, to be LIMITED ACCESS HIGHWAYS/FACILITIES subject
to such rules and regulations that may be imposed by the DPWH thru the Toll Regulatory Board (TRB).

In view thereof, the National Capital Region (NCR) of this Department is hereby ordered, after consultation with
the TRB and in coordination with the Philippine National Police (PNP), to close all illegal openings along the said
Limited Access Highways/Facilities. In this connection, the NCR is instructed to organize its own enforcement
and security group for the purpose of assuring the continued closure of the right-of-way fences and the
implementation of the rules and regulations that may be imposed by the DPWH thru the TRB.

This Order shall take effect immediately.13

On 25 June 1998, then DPWH Secretary Gregorio R. Vigilar issued DO 215:

SUBJECT: Declaration of the R-1 Expressway, from Seaside drive to Zapote, C-5 Link Expressway, from Zapote
to Noveleta, of the Manila Cavite Toll Expressway as Limited Access Facility.
Pursuant to Section 2 of Republic Act No. 2000, a limited access facility is defined as "a highway or street
especially designed for through traffic, and over, from, or to which owners or occupants of abutting land or other
persons have no right or easement or only a limited right or easement of access, light, air or view by reason of
the fact that their property abuts upon such limited access facility or for any other reason. Such highways or
streets may be parkways, from which trucks, buses, and other commercial vehicles shall be excluded; or they
may be free ways open to use by all customary forms of street and highway traffic."

Section 3 of the same Act authorizes the Department of Public Works and Communications (now Department of
Public Works and Highways) "to plan, designate, establish, regulate, vacate, alter, improve, maintain, and
provide limited access facilities for public use wherever it is of the opinion that traffic conditions, present or
future, will justify such special facilities."

Therefore, by virtue of the authority granted above, the Department of Public Works and Highways hereby
designates and declares the R-1 Expressway, C-5 Link Expressway and the R-1 Extension Expressway
Sections of the Manila Cavite Toll Expressway to be LIMITED ACCESS HIGHWAYS/FACILITIES subject to
such rules and regulations that may be imposed by the DPWH thru the Toll Regulatory Board (TRB).

In view thereof, the National Capital Region (NCR) of this Department is hereby ordered, after consultation with
the TRB and in coordination with the Philippine National Police (PNP), to close all illegal openings along the said
Limited Access Highways/Facilities. In this connection, the NCR is instructed to organize its own enforcement
and security group for the purpose of assuring the continued closure of the right-of-way fences and the
implementation of the rules and regulations that may be imposed by the DPWH thru the TRB.

This Order shall take effect immediately.14

The RTC held that Section 4 of RA 2000 expressly authorized the DPWH to design limited access facilities and
to regulate, restrict, or prohibit access as to serve the traffic for which such facilities are intended. According to
the RTC, such authority to regulate, restrict, or prohibit logically includes the determination of who and what can
and cannot be permitted entry or access into the limited access facilities. Thus, the RTC concluded that AO 1,
DO 74, and the Revised Rules and Regulations on Limited Access Facilities, which ban motorcycles’ entry or
access to the limited access facilities, are not inconsistent with RA 2000.

RA 2000, otherwise known as the Limited Access Highway Act, was approved on 22 June 1957. Section 4 of RA
2000 provides that "[t]he Department of Public Works and Communications is authorized to so design any
limited access facility and to so regulate, restrict, or prohibit access as to best serve the traffic for which such
facility is intended." The RTC construed this authorization to regulate, restrict, or prohibit access to limited
access facilities to apply to the Department of Public Works and Highways (DPWH).

The RTC’s ruling is based on a wrong premise. The RTC assumed that the DPWH derived its authority from its
predecessor, the Department of Public Works and Communications, which is expressly authorized to regulate,
restrict, or prohibit access to limited access facilities under Section 4 of RA 2000. However, such assumption
fails to consider the evolution of the Department of Public Works and Communications.

Under Act No. 2711, otherwise known as the Revised Administrative Code, approved on 10 March 1917, there
were only seven executive departments, namely: the Department of the Interior, the Department of Finance, the
Department of Justice, the Department of Agriculture and Commerce, the Department of Public Works and
Communications, the Department of Public Instruction, and the Department of Labor.15 On 20 June 1964,
Republic Act No. 413616 created the Land Transportation Commission under the Department of Public Works
and Communications. Later, the Department of Public Works and Communications was restructured into
the Department of Public Works, Transportation and Communications.

On 16 May 1974, Presidential Decree No. 458 (PD 458) separated the Bureau of Public Highways from the
Department of Public Works, Transportation and Communications and created it as a department to be known
as Department of Public Highways. Under Section 3 of PD 458, the Department of Public Highways is
"responsible for developing and implementing programs on the construction and maintenance of roads, bridges
and airport runways."

With the amendment of the 1973 Philippine Constitution in 1976, resulting in the shift in the form of government,
national agencies were renamed from Departments to Ministries. Thus, the Department of Public Works,
Transportation and Communications became the Ministry of Public Works, Transportation and
Communications.
On 23 July 1979, then President Ferdinand E. Marcos issued Executive Order No. 546 (EO 546), creating
a Ministry of Public Works and a Ministry of Transportation and Communications.17 Under Section 1 of EO
546, the Ministry of Public Works assumed the public works functions of the Ministry of Public Works,
Transportation and Communications. The functions of the Ministry of Public Works were the "construction,
maintenance and repair of port works, harbor facilities, lighthouses, navigational aids, shore protection works,
airport buildings and associated facilities, public buildings and school buildings, monuments and other related
structures, as well as undertaking harbor and river dredging works, reclamation of foreshore and swampland
areas, water supply, and flood control and drainage works."18

On the other hand, the Ministry of Transportation and Communications became the "primary policy,
planning, programming, coordinating, implementing, regulating and administrative entity of the executive branch
of the government in the promotion, development, and regulation of a dependable and coordinated network of
transportation and communication systems."19 The functions of the Ministry of Transportation and
Communications were:

a. Coordinate and supervise all activities of the Ministry relative to transportation and communications;

b. Formulate and recommend national policies and guidelines for the preparation and
implementation of an integrated and comprehensive transportation and communications system
at the national, regional and local levels;

c. Establish and administer comprehensive and integrated programs for transportation and
communication, and for this purpose, may call on any agency, corporation, or organization, whether
government or private, whose development programs include transportation and communications as an
integral part to participate and assist in the preparation and implementation of such programs;

d. Regulate, whenever necessary, activities relative to transportation and communications and

prescribe and collect fees in the exercise of such power;

e. Assess, review and provide direction to transportation and communications research and
development programs of the government in coordination with other institutions concerned; and

f. Perform such other functions as may be necessary to carry into effect the provisions of this Executive
Order.20 (Emphasis supplied)

On 27 July 1981, then President Marcos issued Executive Order No. 710 (EO 710), which merged the Ministry
of Public Works and the Ministry of Public Highways for "greater simplicity and economy in operations."21 The
restructured agency became known as the Ministry of Public Works and Highways. Under Section 1 of EO
710 the functions of the Ministry of Public Works and the Ministry of Public Highways22 were transferred to the
Ministry of Public Works and Highways.

Upon the ratification of the 1987 Constitution in February 1987, the former Ministry of Public Works and
Highways became the Department of Public Works and Highways (DPWH) and the former Ministry of
Transportation and Communications became the Department of Transportation and Communications
(DOTC).

DPWH issued DO 74 and DO 215 declaring certain expressways as limited access facilities on 5 April 1993 and
25 June 1998, respectively. Later, the TRB, under the DPWH, issued the Revised Rules and Regulations on
Limited Access Facilities. However, on 23 July 1979, long before these department orders and regulations were
issued, the Ministry of Public Works, Transportation and Communications was divided into two agencies –
the Ministry of Public Works and the Ministry of Transportation and Communications – by virtue of EO
546. The question is, which of these two agencies is now authorized to regulate, restrict, or prohibit access to
limited access facilities?23

Under Section 1 of EO 546, the Ministry of Public Works (now DPWH) assumed the public works functions of
the Ministry of Public Works, Transportation and Communications. On the other hand, among the functions
of the Ministry of Transportation and Communications (now Department of Transportation and
Communications [DOTC]) were to (1) formulate and recommend national policies and guidelines for the
preparation and implementation of an integrated and comprehensive transportation and communications
systems at the national, regional, and local levels; and (2) regulate, whenever necessary, activities relative to
transportation and communications and prescribe and collect fees in the exercise of such power. Clearly, under
EO 546, it is the DOTC, not the DPWH, which has authority to regulate, restrict, or prohibit access to limited
access facilities.

Even under Executive Order No. 125 (EO 125)24 and Executive Order No. 125-A (EO 125-A),25 which further
reorganized the DOTC, the authority to administer and enforce all laws, rules and regulations relative to
transportation is clearly with the DOTC.26

Thus, DO 74 and DO 215 are void because the DPWH has no authority to declare certain expressways as
limited access facilities. Under the law, it is the DOTC which is authorized to administer and enforce all laws,
rules and regulations in the field of transportation and to regulate related activities.

Since the DPWH has no authority to regulate activities relative to transportation, the TRB27 cannot derive its
power from the DPWH to issue regulations governing limited access facilities. The DPWH cannot delegate a
power or function which it does not possess in the first place. Since DO 74 and DO 215 are void, it follows that
the rules implementing them are likewise void.

Whether AO 1 and DO 123 are Unconstitutional

DPWH Secretary Simeon A. Datumanong issued DO 123 on 18 July 2001. DO 123 reads in part:

SUBJECT: Revised Rules and Regulations Governing Limited Access Highways

By virtue of the authority granted the Secretary of Public Works and Highways under Section 3 of R.A.
2000, otherwise known as the Limited Access Highway Act, the following revised rules and regulations
governing limited access highways are hereby promulgated for the guidance of all concerned:

1. Administrative Order No. 1 dated February 19, 1968, issued by the Secretary of the then Department of Public
Works and Communications, is hereby amended by deleting the word "motorcycles" mentioned in Section 3(h)
thereof. Therefore, motorcycles are hereby allowed to operate inside the toll roads and limited access
highways, subject to the following:

a. Motorcycles shall have an engine displacement of at least 400 cubic centimeters (cc) provided that:

x x x x28 (Emphasis supplied)

The RTC’s Decision dated 10 March 2003 declared DO 123 unconstitutional on the ground that it violates the
equal protection clause by allowing only motorcycles with at least 400 cubic centimeters engine displacement to
use the toll ways. The RTC reasoned that the creation of a distinction within the class of motorcycles was not
based on real differences.

We need not pass upon the constitutionality of the classification of motorcycles under DO 123. As previously
discussed, the DPWH has no authority to regulate limited access highways since EO 546 has devolved this
function to the DOTC. Thus, DO 123 is void for want of authority of the DPWH to promulgate it.

On the other hand, the assailed portion of AO 1 states:

Section 3. On limited access highways, it is unlawful for any person or group of persons to:

xxxx

(h) Drive any bicycle, tricycle, pedicab, motorcycle or any vehicle (not motorized);

xxxx

Petitioners assail the DPWH’s failure to provide "scientific" and "objective" data on the danger of having
motorcycles plying our highways. They attack this exercise of police power as baseless and unwarranted.
Petitioners belabor the fact that there are studies that provide proof that motorcycles are safe modes of
transport. They also claim that AO 1 introduces an unreasonable classification by singling-out motorcycles from
other motorized modes of transport. Finally, petitioners argue that AO 1 violates their right to travel.
Petitioners’ arguments do not convince us.

We emphasize that the Secretary of the Department of Public Works and Communications issued AO 1
on 19 February 1968.

Section 3 of RA 200029 authorized the issuance of the guidelines. In contrast, DPWH issued DO 74, DO 215 and
DO 123 after EO 546 devolved to the DOTC the authority to regulate limited access highways.

We now discuss the constitutionality of AO 1. Administrative issuances have the force and effect of law.30 They
benefit from the same presumption of validity and constitutionality enjoyed by statutes.31 These two precepts
place a heavy burden upon any party assailing governmental regulations. The burden of proving
unconstitutionality rests on such party.32 The burden becomes heavier when the police power is at issue.

The use of public highways by motor vehicles is subject to regulation as an exercise of the police power of the
state.33 The police power is far-reaching in scope and is the "most essential, insistent and illimitable" of all
government powers.34 The tendency is to extend rather than to restrict the use of police power. The sole
standard in measuring its exercise is reasonableness.35 What is "reasonable" is not subject to exact definition or
scientific formulation. No all-embracing test of reasonableness exists,36 for its determination rests upon human
judgment applied to the facts and circumstances of each particular case.37

We find that AO 1 does not impose unreasonable restrictions. It merely outlines several precautionary
measures, to which toll way users must adhere. These rules were designed to ensure public safety and the
uninhibited flow of traffic within limited access facilities. They cover several subjects, from what lanes should be
used by a certain vehicle, to maximum vehicle height. The prohibition of certain types of vehicles is but one of
these. None of these rules violates reason. The purpose of these rules and the logic behind them are quite
evident. A toll way is not an ordinary road. The special purpose for which a toll way is constructed necessitates
the imposition of guidelines in the manner of its use and operation. Inevitably, such rules will restrict certain
rights. But the mere fact that certain rights are restricted does not invalidate the rules.

Consider Section 3(g) of AO 1, which prohibits the conduct of rallies inside toll ways.38 The regulation affects the
right to peaceably assemble. The exercise of police power involves restriction, restriction being implicit in the
power itself. Thus, the test of constitutionality of a police power measure is limited to an inquiry on whether the
restriction imposed on constitutional rights is reasonable, and not whether it imposes a restriction on those
rights.

None of the rules outlined in AO 1 strikes us as arbitrary and capricious. The DPWH, through the Solicitor
General, maintains that the toll ways were not designed to accommodate motorcycles and that their presence in
the toll ways will compromise safety and traffic considerations. The DPWH points out that the same study the
petitioners rely on cites that the inability of other drivers to detect motorcycles is the predominant cause of
accidents.39 Arguably, prohibiting the use of motorcycles in toll ways may not be the "best" measure to ensure
the safety and comfort of those who ply the toll ways.

However, the means by which the government chooses to act is not judged in terms of what is "best," rather, on
simply whether the act is reasonable. The validity of a police power measure does not depend upon the absolute
assurance that the purpose desired can in fact be probably fully accomplished, or upon the certainty that it will
best serve the purpose intended.40 Reason, not scientific exactitude, is the measure of the validity of the
governmental regulation. Arguments based on what is "best" are arguments reserved for the Legislature’s
discussion. Judicial intervention in such matters will only be warranted if the assailed regulation is patently
whimsical. We do not find the situation in this case to be so.

Neither do we find AO 1 oppressive. Petitioners are not being deprived of their right to use the limited access
facility. They are merely being required, just like the rest of the public, to adhere to the rules on how to use the
facility. AO 1 does not infringe upon petitioners’ right to travel but merely bars motorcycles, bicycles, tricycles,
pedicabs, and any non-

motorized vehicles as the mode of traveling along limited access highways.41 Several cheap, accessible and
practical alternative modes of transport are open to petitioners. There is nothing oppressive in being required to
take a bus or drive a car instead of one’s scooter, bicycle, calesa, or motorcycle upon using a toll way.

Petitioners’ reliance on the studies they gathered is misplaced. Police power does not rely upon the existence of
definitive studies to support its use. Indeed, no requirement exists that the exercise of police power must first be
conclusively justified by research. The yardstick has always been simply whether the government’s act is
reasonable and not oppressive.42 The use of "reason" in this sense is simply meant to guard against arbitrary
and capricious government action. Scientific certainty and conclusiveness, though desirable, may not be
demanded in every situation. Otherwise, no government will be able to act in situations demanding the exercise
of its residual powers because it will be tied up conducting studies.

A police power measure may be assailed upon proof that it unduly violates constitutional limitations like due
process and equal protection of the law.43 Petitioners’ attempt to seek redress from the motorcycle ban under the
aegis of equal protection must fail. Petitioners’ contention that AO 1 unreasonably singles out motorcycles is
specious. To begin with, classification by itself is not prohibited.44

A classification can only be assailed if it is deemed invidious, that is, it is not based on real or substantial
differences. As explained by Chief Justice Fernando in Bautista v. Juinio:45

x x x To assure that the general welfare be promoted, which is the end of law, a regulatory measure may cut into
the rights to liberty and property. Those adversely affected may under such circumstances invoked the equal
protection clause only if they can show that the governmental act assailed, far from being inspired by the
attainment of the common weal was prompted by the spirit of hostility, or at the very least, discrimination that
finds no support in reason. It suffices then that the laws operate equally and uniformly on all persons under
similar circumstances or that all persons must be treated in the same manner, the conditions not being different,
both in the privileges conferred and the liabilities imposed. Favoritism and undue preference cannot be allowed.
For the principle is that equal protection and security shall be given to every person under circumstances, which
if not identical is analogous. If law be looked upon in terms of burden or charges, those that fall within a class
should be treated in the same fashion, whatever restrictions cast on some in the group equally binding the rest.

We find that it is neither warranted nor reasonable for petitioners to say that the only justifiable classification
among modes of transport is the motorized against the non-motorized. Not all motorized vehicles are created
equal. A 16-wheeler truck is substantially different from other light vehicles. The first may be denied access to
some roads where the latter are free to drive. Old vehicles may be reasonably differentiated from newer
models.46 We find that real and substantial differences exist between a motorcycle and other forms of transport
sufficient to justify its classification among those prohibited from plying the toll ways. Amongst all types of
motorized transport, it is obvious, even to a child, that a motorcycle is quite different from a car, a bus or a truck.
The most obvious and troubling difference would be that a two-wheeled vehicle is less stable and more easily
overturned than a four-wheeled vehicle.

A classification based on practical convenience and common knowledge is not unconstitutional simply because
it may lack purely theoretical or scientific uniformity. Moreover, we take note that the Philippines is home to a
host of unique motorized modes of transport ranging from modified hand-carts (kuliglig) to bicycle "sidecars"
outfitted with a motor. To follow petitioners’ argument to its logical conclusion would open up toll ways to all
these contraptions. Both safety and traffic considerations militate against any ruling that would bring about such
a nightmare.

Petitioners complain that the prohibition on the use of motorcycles in toll ways unduly deprive them of their right
to travel.

We are not persuaded.

A toll way is not an ordinary road. As a facility designed to promote the fastest access to certain destinations, its
use, operation, and maintenance require close regulation. Public interest and safety require the imposition of
certain restrictions on toll ways that do not apply to ordinary roads. As a special kind of road, it is but reasonable
that not all forms of transport could use it.

The right to travel does not mean the right to choose any vehicle in traversing a toll way. The right to travel refers
to the right to move from one place to another. Petitioners can traverse the toll way any time they choose using
private or public four-wheeled vehicles. Petitioners are not denied the right to move from Point A to Point B along
the toll way. Petitioners are free to access the toll way, much as the rest of the public can. The mode by which
petitioners wish to travel pertains to the manner of using the toll way, a subject that can be validly limited by
regulation.

Petitioners themselves admit that alternative routes are available to them. Their complaint is that these routes
are not the safest and most convenient. Even if their claim is true, it hardly qualifies as an undue curtailment of
their freedom of movement and travel. The right to travel does not entitle a person to the best form of transport
or to the most convenient route to his destination. The obstructions found in normal streets, which petitioners
complain of (i.e., potholes, manholes, construction barriers, etc.), are not suffered by them alone.

Finally, petitioners assert that their possession of a driver’s license from the Land Transportation Office (LTO)
and the fact that their vehicles are registered with that office entitle them to use all kinds of roads in the country.
Again, petitioners are mistaken. There exists no absolute right to drive. On the contrary, this privilege, is heavily
regulated. Only a qualified group is allowed to drive motor vehicles: those who pass the tests administered by
the LTO. A driver’s license issued by the LTO merely allows one to drive a particular mode of transport. It is not
a license to drive or operate any form of transportation on any type of road. Vehicle registration in the LTO on
the other hand merely signifies the roadworthiness of a vehicle. This does not preclude the government from
prescribing which roads are accessible to certain vehicles.

WHEREFORE, we PARTLY GRANT the petition. We MODIFY the Decision dated 10 March 2003 of the
Regional Trial Court, Branch 147, Makati City and its Order dated 16 June 2003 in Civil Case No. 01-034. We
declare VOID Department Order Nos. 74, 215, and 123 of the Department of Public Works and Highways, and
the Revised Rules and Regulations on Limited Access Facilities of the Toll Regulatory Board. We
declare VALID Administrative Order No. 1 of the Department of Public Works and Communications.

SO ORDERED.

G.R. No. 170656 August 15, 2007

THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY and BAYANI FERNANDO as Chairman of the
Metropolitan Manila Development Authority, petitioners,
vs.
VIRON TRANSPORTATION CO., INC., respondent.

x --------------------------------------------- x

G.R. No. 170657 August 15, 2007

HON. ALBERTO G. ROMULO, Executive Secretary, the METROPOLITAN MANILA DEVELOPMENT

AUTHORITY and BAYANI FERNANDO as Chairman of the Metropolitan Manila Development
Authority, petitioners,
vs.
MENCORP TRANSPORTATION SYSTEM, INC., respondent.

DECISION

CARPIO MORALES, J.:

The following conditions in 1969, as observed by this Court:

Vehicles have increased in number. Traffic congestion has moved from bad to worse, from tolerable to
critical. The number of people who use the thoroughfares has multiplied x x x,1

have remained unchecked and have reverberated to this day. Traffic jams continue to clog the streets of Metro
Manila, bringing vehicles to a standstill at main road arteries during rush hour traffic and sapping people’s
energies and patience in the process.

The present petition for review on certiorari, rooted in the traffic congestion problem, questions the authority of
the Metropolitan Manila Development Authority (MMDA) to order the closure of provincial bus terminals along
Epifanio de los Santos Avenue (EDSA) and major thoroughfares of Metro Manila.

Specifically challenged are two Orders issued by Judge Silvino T. Pampilo, Jr. of the Regional Trial Court (RTC)
of Manila, Branch 26 in Civil Case Nos. 03-105850 and 03-106224.

The first assailed Order of September 8, 2005,2 which resolved a motion for reconsideration filed by herein
respondents, declared Executive Order (E.O.) No. 179, hereafter referred to as the E.O., "unconstitutional as it
constitutes an unreasonable exercise of police power." The second assailed Order of November 23,
20053 denied petitioners’ motion for reconsideration.

The following facts are not disputed:

President Gloria Macapagal Arroyo issued the E.O. on February 10, 2003, "Providing for the Establishment of
Greater Manila Mass Transport System," the pertinent portions of which read:

WHEREAS, Metro Manila continues to be the center of employment opportunities, trade and commerce
of the Greater Metro Manila area;

WHEREAS, the traffic situation in Metro Manila has affected the adjacent provinces of Bulacan, Cavite,
Laguna, and Rizal, owing to the continued movement of residents and industries to more affordable and
economically viable locations in these provinces;

WHEREAS, the Metropolitan Manila Development Authority (MMDA) is tasked to undertake measures to
ease traffic congestion in Metro Manila and ensure the convenient and efficient travel of commuters
within its jurisdiction;

WHEREAS, a primary cause of traffic congestion in Metro Manila has been the numerous buses plying
the streets that impedes [sic] the flow of vehicles and commuters due to the inefficient connectivity of the
different transport modes;

WHEREAS, the MMDA has recommended a plan to decongest traffic by eliminating the bus terminals
now located along major Metro Manila thoroughfares and providing more convenient access to the mass
transport system to the commuting public through the provision of mass transport terminal facilities that
would integrate the existing transport modes, namely the buses, the rail-based systems of the LRT, MRT
and PNR and to facilitate and ensure efficient travel through the improved connectivity of the different
transport modes;

WHEREAS, the national government must provide the necessary funding requirements to immediately
implement and render operational these projects; and extent to MMDA such other assistance as may be
warranted to ensure their expeditious prosecution.

NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Philippines, by virtue of the

powers vested in me by law, do hereby order:

Section 1. THE PROJECT. – The project shall be identified as GREATER MANILA TRANSPORT
SYSTEM Project.

Section 2. PROJECT OBJECTIVES. – In accordance with the plan proposed by MMDA, the project
aims to develop four (4) interim intermodal mass transport terminals to integrate the different transport
modes, as well as those that shall hereafter be developed, to serve the commuting public in the
northwest, north, east, south, and southwest of Metro Manila. Initially, the project shall concentrate on
immediately establishing the mass transport terminals for the north and south Metro Manila commuters
as hereinafter described.

Section 3. PROJECT IMPLEMENTING AGENCY. – The Metropolitan Manila Development Authority

(MMDA), is hereby designated as the implementing Agency for the project. For this purpose, MMDA is
directed to undertake such infrastructure development work as may be necessary and, thereafter,
manage the project until it may be turned-over to more appropriate agencies, if found suitable and
convenient. Specifically, MMDA shall have the following functions and responsibilities:

a) Cause the preparation of the Master Plan for the projects, including the designs and
costing;

b) Coordinate the use of the land and/or properties needed for the project with the
respective agencies and/or entities owning them;

c) Supervise and manage the construction of the necessary structures and facilities;
 d) Execute such contracts or agreements as may be necessary, with the appropriate
government agencies, entities, and/or private persons, in accordance with existing laws
and pertinent regulations, to facilitate the implementation of the project;

e) Accept, manage and disburse such funds as may be necessary for the construction
and/or implementation of the projects, in accordance with prevailing accounting and audit
polices and practice in government.

f) Enlist the assistance of any national government agency, office or department,

including local government units, government-owned or controlled corporations, as may
be necessary;

g) Assign or hire the necessary personnel for the above purposes; and

h) Perform such other related functions as may be necessary to enable it to accomplish

the objectives and purposes of this Executive Order.4 (Emphasis in the original;
underscoring supplied)

As the above-quoted portions of the E.O. noted, the primary cause of traffic congestion in Metro Manila has
been the numerous buses plying the streets and the inefficient connectivity of the different transport modes;5 and
the MMDA had "recommended a plan to decongest traffic by eliminating the bus terminals now located along
major Metro Manila thoroughfares and providing more and convenient access to the mass transport system to
the commuting public through the provision of mass transport terminal facilities"6 which plan is referred to under
the E.O. as the Greater Manila Mass Transport System Project (the Project).

The E.O. thus designated the MMDA as the implementing agency for the Project.

Pursuant to the E.O., the Metro Manila Council (MMC), the governing board and policymaking body of the
MMDA, issued Resolution No. 03-07 series of 20037 expressing full support of the Project. Recognizing the
imperative to integrate the different transport modes via the establishment of common bus parking terminal
areas, the MMC cited the need to remove the bus terminals located along major thoroughfares of Metro Manila.8

On February 24, 2003, Viron Transport Co., Inc. (Viron), a domestic corporation engaged in the business of
public transportation with a provincial bus operation,9 filed a petition for declaratory relief10 before the RTC11 of
Manila.

In its petition which was docketed as Civil Case No. 03-105850, Viron alleged that the MMDA, through Chairman
Fernando, was "poised to issue a Circular, Memorandum or Order closing, or tantamount to closing, all
provincial bus terminals along EDSA and in the whole of the Metropolis under the pretext of traffic
regulation."12 This impending move, it stressed, would mean the closure of its bus terminal in Sampaloc, Manila
and two others in Quezon City.

Alleging that the MMDA’s authority does not include the power to direct provincial bus operators to abandon their
existing bus terminals to thus deprive them of the use of their property, Viron asked the court to construe the
scope, extent and limitation of the power of the MMDA to regulate traffic under R.A. No. 7924, "An Act Creating
the Metropolitan Manila Development Authority, Defining its Powers and Functions, Providing Funds Therefor
and For Other Purposes."

Viron also asked for a ruling on whether the planned closure of provincial bus terminals would contravene the
Public Service Act and related laws which mandate public utilities to provide and maintain their own terminals as
a requisite for the privilege of operating as common carriers.13

Mencorp Transportation System, Inc. (Mencorp), another provincial bus operator, later filed a similar petition for
declaratory relief14 against Executive Secretary Alberto G. Romulo and MMDA Chairman Fernando.

Mencorp asked the court to declare the E.O. unconstitutional and illegal for transgressing the possessory rights
of owners and operators of public land transportation units over their respective terminals.

Averring that MMDA Chairman Fernando had begun to implement a plan to close and eliminate all provincial bus
terminals along EDSA and in the whole of the metropolis and to transfer their operations to common bus
terminals,15 Mencorp prayed for the issuance of a temporary restraining order (TRO) and/or writ of preliminary
injunction to restrain the impending closure of its bus terminals which it was leasing at the corner of EDSA and
New York Street in Cubao and at the intersection of Blumentritt, Laon Laan and Halcon Streets in Quezon City.
The petition was docketed as Civil Case No. 03-106224 and was raffled to Branch 47 of the RTC of Manila.

Mencorp’s petition was consolidated on June 19, 2003 with Viron’s petition which was raffled to Branch 26 of the
RTC, Manila.

Mencorp’s prayer for a TRO and/or writ of injunction was denied as was its application for the issuance of a
preliminary injunction.16

In the Pre-Trial Order17 issued by the trial court, the issues were narrowed down to whether 1) the MMDA’s
power to regulate traffic in Metro Manila included the power to direct provincial bus operators to abandon and
close their duly established and existing bus terminals in order to conduct business in a common terminal; (2)
the E.O. is consistent with the Public Service Act and the Constitution; and (3) provincial bus operators would be
deprived of their real properties without due process of law should they be required to use the common bus
terminals.

Upon the agreement of the parties, they filed their respective position papers in lieu of hearings.

By Decision18 of January 24, 2005, the trial court sustained the constitutionality and legality of the E.O. pursuant
to R.A. No. 7924, which empowered the MMDA to administer Metro Manila’s basic services including those of
transport and traffic management.

The trial court held that the E.O. was a valid exercise of the police power of the State as it satisfied the two tests
of lawful subject matter and lawful means, hence, Viron’s and Mencorp’s property rights must yield to police
power.

On the separate motions for reconsideration of Viron and Mencorp, the trial court, by Order of September 8,
2005, reversed its Decision, this time holding that the E.O. was "an unreasonable exercise of police power"; that
the authority of the MMDA under Section (5)(e) of R.A. No. 7924 does not include the power to order the closure
of Viron’s and Mencorp’s existing bus terminals; and that the E.O. is inconsistent with the provisions of the
Public Service Act.

Petitioners’ motion for reconsideration was denied by Resolution of November 23, 2005.

Hence, this petition, which faults the trial court for failing to rule that: (1) the requisites of declaratory relief are
not present, there being no justiciable controversy in Civil Case Nos. 03-105850 and 03-106224; and (2) the
President has the authority to undertake or cause the implementation of the Project.19

Petitioners contend that there is no justiciable controversy in the cases for declaratory relief as nothing in the
body of the E.O. mentions or orders the closure and elimination of bus terminals along the major thoroughfares
of Metro Manila. Viron and Mencorp, they argue, failed to produce any letter or communication from the
Executive Department apprising them of an immediate plan to close down their bus terminals.

And petitioners maintain that the E.O. is only an administrative directive to government agencies to coordinate
with the MMDA and to make available for use government property along EDSA and South Expressway
corridors. They add that the only relation created by the E.O. is that between the Chief Executive and the
implementing officials, but not between third persons.

The petition fails.

It is true, as respondents have pointed out, that the alleged deficiency of the consolidated petitions to meet the
requirement of justiciability was not among the issues defined for resolution in the Pre-Trial Order of January 12,
2004. It is equally true, however, that the question was repeatedly raised by petitioners in their Answer to Viron’s
petition,20 their Comment of April 29, 2003 opposing Mencorp’s prayer for the issuance of a TRO,21 and their
Position Paper of August 23, 2004.22

In bringing their petitions before the trial court, both respondents pleaded the existence of the essential
requisites for their respective petitions for declaratory relief,23 and refuted petitioners’ contention that a justiciable
controversy was lacking.24 There can be no denying, therefore, that the issue was raised and discussed by the
parties before the trial court.
The following are the essential requisites for a declaratory relief petition: (a) there must be a justiciable
controversy; (b) the controversy must be between persons whose interests are adverse; (c) the party seeking
declaratory relief must have a legal interest in the controversy; and (d) the issue invoked must be ripe for judicial
determination.25

The requirement of the presence of a justiciable controversy is satisfied when an actual controversy or
the ripening seeds thereof exist between the parties, all of whom are sui juris and before the court, and the
declaration sought will help in ending the controversy.26 A question becomes justiciable when it is translated into
a claim of right which is actually contested.27

In the present cases, respondents’ resort to court was prompted by the issuance of the E.O. The 4th Whereas
clause of the E.O. sets out in clear strokes the MMDA’s plan to "decongest traffic by eliminating the bus
terminals now located along major Metro Manila thoroughfares and providing more convenient access to the
mass transport system to the commuting public through the provision of mass transport terminal facilities x x x."
(Emphasis supplied)

Section 2 of the E.O. thereafter lays down the immediate establishment of common bus terminals for north- and
south-bound commuters. For this purpose, Section 8 directs the Department of Budget and Management to
allocate funds of not more than one hundred million pesos (P100,000,000) to cover the cost of the construction
of the north and south terminals. And the E.O. was made effective immediately.

The MMDA’s resolve to immediately implement the Project, its denials to the contrary notwithstanding, is also
evident from telltale circumstances, foremost of which was the passage by the MMC of Resolution No. 03-07,
Series of 2003 expressing its full support of the immediate implementation of the Project.

Notable from the 5th Whereas clause of the MMC Resolution is the plan to "remove the bus terminals located
along major thoroughfares of Metro Manila and an urgent need to integrate the different transport modes." The
7th Whereas clause proceeds to mention the establishment of the North and South terminals.

As alleged in Viron’s petition, a diagram of the GMA-MTS North Bus/Rail Terminal had been drawn up, and
construction of the terminal is already in progress. The MMDA, in its Answer28 and Position Paper,29 in fact
affirmed that the government had begun to implement the Project.

It thus appears that the issue has already transcended the boundaries of what is merely conjectural or
anticipatory.
lawphil

Under the circumstances, for respondents to wait for the actual issuance by the MMDA of an order for the
closure of respondents’ bus terminals would be foolhardy for, by then, the proper action to bring would no longer
be for declaratory relief which, under Section 1, Rule 6330 of the Rules of Court, must be brought before there is
a breach or violation of rights.

As for petitioners’ contention that the E.O. is a mere administrative issuance which creates no relation with third
persons, it does not persuade. Suffice it to stress that to ensure the success of the Project for which the
concerned government agencies are directed to coordinate their activities and resources, the existing bus
terminals owned, operated or leased by third persons like respondents would have to be eliminated; and
respondents would be forced to operate from the common bus terminals.

It cannot be gainsaid that the E.O. would have an adverse effect on respondents. The closure of their bus
terminals would mean, among other things, the loss of income from the operation and/or rentals of stalls thereat.
Precisely, respondents claim a deprivation of their constitutional right to property without due process of law.

Respondents have thus amply demonstrated a "personal and substantial interest in the case such that [they
have] sustained, or will sustain, direct injury as a result of [the E.O.’s] enforcement."31 Consequently, the
established rule that the constitutionality of a law or administrative issuance can be challenged by one who will
sustain a direct injury as a result of its enforcement has been satisfied by respondents.

On to the merits of the case.

Respondents posit that the MMDA is devoid of authority to order the elimination of their bus terminals under the
E.O. which, they argue, is unconstitutional because it violates both the Constitution and the Public Service Act;
and that neither is the MMDA clothed with such authority under R.A. No. 7924.
Petitioners submit, however, that the real issue concerns the President’s authority to undertake or to cause the
implementation of the Project. They assert that the authority of the President is derived from E.O. No. 125,
"Reorganizing the Ministry of Transportation and Communications Defining its Powers and Functions and for
Other Purposes," her residual power and/or E.O. No. 292, otherwise known as the Administrative Code of 1987.
They add that the E.O. is also a valid exercise of the police power.

E.O. No. 125,32 which former President Corazon Aquino issued in the exercise of legislative powers, reorganized
the then Ministry (now Department) of Transportation and Communications. Sections 4, 5, 6 and 22 of E.O. 125,
as amended by E.O. 125-A,33 read:

SECTION 4. Mandate. — The Ministry shall be the primary policy, planning, programming,
coordinating, implementing, regulating and administrative entity of the Executive Branch of the
government in the promotion, development and regulation of dependable and coordinated
networks of transportation and communication systems as well as in the fast, safe, efficient and
reliable postal, transportation and communications services.

To accomplish such mandate, the Ministry shall have the following objectives:

(a) Promote the development of dependable and coordinated networks of transportation

and communications systems;

(b) Guide government and private investment in the development of the country’s
intermodal transportation and communications systems in a most practical,
expeditious, and orderly fashion for maximum safety, service, and cost effectiveness;
(Emphasis and underscoring supplied)

xxxx

SECTION 5. Powers and Functions. — To accomplish its mandate, the Ministry shall have the following
powers and functions:

(a) Formulate and recommend national policies and guidelines for the preparation and
implementation of integrated and comprehensive transportation and communications
systems at the national, regional and local levels;

(b) Establish and administer comprehensive and integrated programs for

transportation and communications, and for this purpose, may call on any agency,
corporation, or organization, whether public or private, whose development programs
include transportation and communications as an integral part thereof, to participate and
assist in the preparation and implementation of such program;

(c) Assess, review and provide direction to transportation and communications research
and development programs of the government in coordination with other institutions
concerned;

(d) Administer all laws, rules and regulations in the field of transportation and
communications; (Emphasis and underscoring supplied)

xxxx

SECTION 6. Authority and Responsibility. — The authority and responsibility for the exercise of the
mandate of the Ministry and for the discharge of its powers and functions shall be vested in the
Minister of Transportation and Communications, hereinafter referred to as the Minister, who shall
have supervision and control over the Ministry and shall be appointed by the President. (Emphasis and
underscoring supplied)

SECTION 22. Implementing Authority of Minister. — The Minister shall issue such orders, rules,
regulations and other issuances as may be necessary to ensure the effective implementation of
the provisions of this Executive Order. (Emphasis and underscoring supplied)
It is readily apparent from the abovequoted provisions of E.O. No. 125, as amended, that the President, then
possessed of and exercising legislative powers, mandated the DOTC to be the primary policy, planning,
programming, coordinating, implementing, regulating and administrative entity to promote, develop and regulate
networks of transportation and communications. The grant of authority to the DOTC includes the power
to establish and administer comprehensive and integrated programs for transportation and communications.

As may be seen further, the Minister (now Secretary) of the DOTC is vested with the authority and responsibility
to exercise the mandate given to the department. Accordingly, the DOTC Secretary is authorized to issue such
orders, rules, regulations and other issuances as may be necessary to ensure the effective implementation of
the law.

Since, under the law, the DOTC is authorized to establish and administer programs and projects for
transportation, it follows that the President may exercise the same power and authority to order the
implementation of the Project, which admittedly is one for transportation.

Such authority springs from the President’s power of control over all executive departments as well as the
obligation for the faithful execution of the laws under Article VII, Section 17 of the Constitution which provides:

SECTION 17. The President shall have control of all the executive departments, bureaus and offices. He
shall ensure that the laws be faithfully executed.

This constitutional provision is echoed in Section 1, Book III of the Administrative Code of 1987. Notably, Section
38, Chapter 37, Book IV of the same Code defines the President’s power of supervision and control over the
executive departments, viz:

SECTION 38. Definition of Administrative Relationships. — Unless otherwise expressly stated in the
Code or in other laws defining the special relationships of particular agencies, administrative
relationships shall be categorized and defined as follows:

(1) Supervision and Control. — Supervision and control shall include authority to
act directly whenever a specific function is entrusted by law or regulation to a subordinate; direct
the performance of duty; restrain the commission of acts; review, approve, reverse or modify acts and
decisions of subordinate officials or units; determine priorities in the execution of plans and programs.
Unless a different meaning is explicitly provided in the specific law governing the relationship of
particular agencies the word "control" shall encompass supervision and control as defined in this
paragraph. x x x (Emphasis and underscoring supplied)

Thus, whenever a specific function is entrusted by law or regulation to a subordinate, the President may act
directly or merely direct the performance of a duty.34

Respecting the President’s authority to order the implementation of the Project in the exercise of the police
power of the State, suffice it to stress that the powers vested in the DOTC Secretary to establish and administer
comprehensive and integrated programs for transportation and communications and to issue orders, rules and
regulations to implement such mandate (which, as previously discussed, may also be exercised by the
President) have been so delegated for the good and welfare of the people. Hence, these powers partake of the
nature of police power.

Police power is the plenary power vested in the legislature to make, ordain, and establish wholesome and
reasonable laws, statutes and ordinances, not repugnant to the Constitution, for the good and welfare of the
people.35 This power to prescribe regulations to promote the health, morals, education, good order or safety, and
general welfare of the people flows from the recognition that salus populi est suprema lex ─ the welfare of the
people is the supreme law.

While police power rests primarily with the legislature, such power may be delegated, as it is in fact increasingly
being delegated.36 By virtue of a valid delegation, the power may be exercised by the President and
administrative boards37 as well as by the lawmaking bodies of municipal corporations or local governments under
an express delegation by the Local Government Code of 1991.38

The authority of the President to order the implementation of the Project notwithstanding, the designation of the
MMDA as the implementing agency for the Project may not be sustained. It is ultra vires, there being no legal
basis therefor.
It bears stressing that under the provisions of E.O. No. 125, as amended, it is the DOTC, and not the MMDA,
which is authorized to establish and implement a project such as the one subject of the cases at bar. Thus, the
President, although authorized to establish or cause the implementation of the Project, must exercise the
authority through the instrumentality of the DOTC which, by law, is the primary implementing and administrative
entity in the promotion, development and regulation of networks of transportation, and the one so authorized to
establish and implement a project such as the Project in question.

By designating the MMDA as the implementing agency of the Project, the President clearly overstepped the
limits of the authority conferred by law, rendering E.O. No. 179 ultra vires.

In another vein, the validity of the designation of MMDA flies in the absence of a specific grant of authority to it
under R.A. No. 7924.

To recall, R.A. No. 7924 declared the Metropolitan Manila area39 as a "special development and administrative
region" and placed the administration of "metro-wide" basic services affecting the region under the MMDA.

Section 2 of R.A. No. 7924 specifically authorizes the MMDA to perform "planning, monitoring and coordinative
functions, and in the process exercise regulatory and supervisory authority over the delivery of metro-wide
services," including transport and traffic management.40 Section 5 of the same law enumerates the powers and
functions of the MMDA as follows:

(a) Formulate, coordinate and regulate the implementation of medium and long-term plans and
programs for the delivery of metro-wide services, land use and physical development within
Metropolitan Manila, consistent with national development objectives and priorities;

(b) Prepare, coordinate and regulate the implementation of medium-term investment programs
for metro-wide services which shall indicate sources and uses of funds for priority programs and
projects, and which shall include the packaging of projects and presentation to funding
institutions;

(c) Undertake and manage on its own metro-wide programs and projects for the delivery of
specific services under its jurisdiction, subject to the approval of the Council. For this purpose,
MMDA can create appropriate project management offices;

(d) Coordinate and monitor the implementation of such plans, programs and projects in Metro
Manila; identify bottlenecks and adopt solutions to problems of implementation;

(e) The MMDA shall set the policies concerning traffic in Metro Manila, and shall
coordinate and regulate the implementation of all programs and projects concerning
traffic management, specifically pertaining to enforcement, engineering and
education. Upon request, it shall be extended assistance and cooperation, including but not
limited to, assignment of personnel, by all other government agencies and offices concerned;

(f) Install and administer a single ticketing system, fix, impose and collect fines and
penalties for all kinds of violations of traffic rules and regulations, whether moving or non-
moving in nature, and confiscate and suspend or revoke drivers’ licenses in the enforcement of
such traffic laws and regulations, the provisions of RA 4136 and PD 1605 to the contrary
notwithstanding. For this purpose, the Authority shall impose all traffic laws and regulations in
Metro Manila, through its traffic operation center, and may deputize members of the PNP, traffic
enforcers of local government units, duly licensed security guards, or members of non-
governmental organizations to whom may be delegated certain authority, subject to such
conditions and requirements as the Authority may impose; and

(g) Perform other related functions required to achieve the objectives of the MMDA, including the
undertaking of delivery of basic services to the local government units, when deemed necessary
subject to prior coordination with and consent of the local government unit concerned."
(Emphasis and underscoring supplied)

The scope of the function of MMDA as an administrative, coordinating and policy-setting body has been settled
in Metropolitan Manila Development Authority (MMDA) v. Bel-Air Village Association, Inc.41 In that case, the
Court stressed:
 Clearly, the scope of the MMDA’s function is limited to the delivery of the seven (7) basic services. One
of these is transport and traffic management which includes the formulation and monitoring of policies,
standards and projects to rationalize the existing transport operations, infrastructure requirements, the
use of thoroughfares and promotion of the safe movement of persons and goods. It also covers
the mass transport system and the institution of a system of road regulation, the administration of all
traffic enforcement operations, traffic engineering services and traffic education programs, including the
institution of a single ticketing system in Metro Manila for traffic violations. Under this service, the MMDA
is expressly authorized to "to set the policies concerning traffic" and "coordinate and regulate the
implementation of all traffic management programs." In addition, the MMDA may install and administer a
single ticketing system," fix, impose and collect fines and penalties for all traffic violations.

It will be noted that the powers of the MMDA are limited to the following acts: formulation, coordination,
regulation, implementation, preparation, management, monitoring, setting of policies, installation of a
system and administration. There is no syllable in R.A. No. 7924 that grants the MMDA police power, let
alone legislative power. Even the Metro Manila Council has not been delegated any legislative
power. Unlike the legislative bodies of the local government units, there is no provision in R.A.
No. 7924 that empowers the MMDA or its Council to ‘enact ordinances, approve resolutions and
appropriate funds for the general welfare’ of the inhabitants of Metro Manila. The MMDA is, as
termed in the charter itself, a ‘development authority.’ It is an agency created for the purpose of
laying down policies and coordinating with the various national government agencies, people’s
organizations, non-governmental organizations and the private sector for the efficient and
expeditious delivery of basic services in the vast metropolitan area. All its functions are
administrative in nature and these are actually summed up in the charter itself, viz:

‘SECTION 2. Creation of the Metropolitan Manila Development Authority. — . . .

The MMDA shall perform planning, monitoring and coordinative functions, and in the
process exercise regulatory and supervisory authority over the delivery of metro-wide
services within Metro Manila, without diminution of the autonomy of the local government units
concerning purely local matters.’42 (Emphasis and underscoring supplied)

In light of the administrative nature of its powers and functions, the MMDA is devoid of authority to implement the
Project as envisioned by the E.O; hence, it could not have been validly designated by the President to undertake
the Project. It follows that the MMDA cannot validly order the elimination of respondents’ terminals.

Even the MMDA’s claimed authority under the police power must necessarily fail in consonance with the above-
quoted ruling in MMDA v. Bel-Air Village Association, Inc. and this Court’s subsequent ruling in Metropolitan
Manila Development Authority v. Garin43 that the MMDA is not vested with police power.

Even assuming arguendo that police power was delegated to the MMDA, its exercise of such power does not
satisfy the two tests of a valid police power measure, viz: (1) the interest of the public generally, as distinguished
from that of a particular class, requires its exercise; and (2) the means employed are reasonably necessary for
the accomplishment of the purpose and not unduly oppressive upon individuals.44 Stated differently, the police
power legislation must be firmly grounded on public interest and welfare and a reasonable relation must exist
between the purposes and the means.

As early as Calalang v. Williams,45 this Court recognized that traffic congestion is a public, not merely a private,
concern. The Court therein held that public welfare underlies the contested statute authorizing the Director of
Public Works to promulgate rules and regulations to regulate and control traffic on national roads.

Likewise, in Luque v. Villegas,46 this Court emphasized that public welfare lies at the bottom of any regulatory
measure designed "to relieve congestion of traffic, which is, to say the least, a menace to public safety."47 As
such, measures calculated to promote the safety and convenience of the people using the thoroughfares by the
regulation of vehicular traffic present a proper subject for the exercise of police power.

Notably, the parties herein concede that traffic congestion is a public concern that needs to be addressed
immediately. Indeed, the E.O. was issued due to the felt need to address the worsening traffic congestion in
Metro Manila which, the MMDA so determined, is caused by the increasing volume of buses plying the major
thoroughfares and the inefficient connectivity of existing transport systems. It is thus beyond cavil that the
motivating force behind the issuance of the E.O. is the interest of the public in general.
Are the means employed appropriate and reasonably necessary for the accomplishment of the purpose. Are
they not duly oppressive?

With the avowed objective of decongesting traffic in Metro Manila, the E.O. seeks to "eliminate[e] the bus
terminals now located along major Metro Manila thoroughfares and provid[e] more convenient access to the
mass transport system to the commuting public through the provision of mass transport terminal facilities x x
x."48 Common carriers with terminals along the major thoroughfares of Metro Manila would thus be compelled to
close down their existing bus terminals and use the MMDA-designated common parking areas.

In Lucena Grand Central Terminal, Inc. v. JAC Liner, Inc.,49 two city ordinances were passed by
the Sangguniang Panlungsod of Lucena, directing public utility vehicles to unload and load passengers at the
Lucena Grand Central Terminal, which was given the exclusive franchise to operate a single common terminal.
Declaring that no other terminals shall be situated, constructed, maintained or established inside or within the
city of Lucena, the sanggunian declared as inoperable all temporary terminals therein.

The ordinances were challenged before this Court for being unconstitutional on the ground that, inter alia, the
measures constituted an invalid exercise of police power, an undue taking of private property, and a violation of
the constitutional prohibition against monopolies.

Citing De la Cruz v. Paras50 and Lupangco v. Court of Appeals,51 this Court held that the assailed ordinances
were characterized by overbreadth, as they went beyond what was reasonably necessary to solve the traffic
problem in the city. And it found that the compulsory use of the Lucena Grand Terminal was unduly oppressive
because it would subject its users to fees, rentals and charges.

The true role of Constitutional Law is to effect an equilibrium between authority and liberty so that rights
are exercised within the framework of the law and the laws are enacted with due deference to rights.

A due deference to the rights of the individual thus requires a more careful formulation of solutions to
societal problems.

From the memorandum filed before this Court by petitioner, it is gathered that the Sangguniang
Panlungsod had identified the cause of traffic congestion to be the indiscriminate loading and unloading
of passengers by buses on the streets of the city proper, hence, the conclusion that the terminals
contributed to the proliferation of buses obstructing traffic on the city streets.

Bus terminals per se do not, however, impede or help impede the flow of traffic. How the outright
proscription against the existence of all terminals, apart from that franchised to petitioner, can be
considered as reasonably necessary to solve the traffic problem, this Court has not been
enlightened. If terminals lack adequate space such that bus drivers are compelled to load and unload
passengers on the streets instead of inside the terminals, then reasonable specifications for the size of
terminals could be instituted, with permits to operate the same denied those which are unable to meet
the specifications.

In the subject ordinances, however, the scope of the proscription against the maintenance of
terminals is so broad that even entities which might be able to provide facilities better than the
franchised terminal are barred from operating at all. (Emphasis and underscoring supplied)

As in Lucena, this Court fails to see how the prohibition against the existence of respondents’ terminals can be
considered a reasonable necessity to ease traffic congestion in the metropolis. On the contrary, the elimination
of respondents’ bus terminals brings forth the distinct possibility and the equally harrowing reality of traffic
congestion in the common parking areas, a case of transference from one site to another.

Less intrusive measures such as curbing the proliferation of "colorum" buses, vans and taxis entering Metro
Manila and using the streets for parking and passenger pick-up points, as respondents suggest, might even be
more effective in easing the traffic situation. So would the strict enforcement of traffic rules and the removal of
obstructions from major thoroughfares.

As to the alleged confiscatory character of the E.O., it need only to be stated that respondents’ certificates of
public convenience confer no property right, and are mere licenses or privileges.52 As such, these must yield to
legislation safeguarding the interest of the people.
Even then, for reasons which bear reiteration, the MMDA cannot order the closure of respondents’ terminals not
only because no authority to implement the Project has been granted nor legislative or police power been
delegated to it, but also because the elimination of the terminals does not satisfy the standards of a valid police
power measure.

Finally, an order for the closure of respondents’ terminals is not in line with the provisions of the Public Service
Act.

Paragraph (a), Section 13 of Chapter II of the Public Service Act (now Section 5 of Executive Order No. 202,
creating the Land Transportation Franchising and Regulatory Board or LFTRB) vested the Public Service
Commission (PSC, now the LTFRB) with "x x x jurisdiction, supervision and control over all public services and
their franchises, equipment and other properties x x x."

Consonant with such grant of authority, the PSC was empowered to "impose such conditions as to
construction, equipment, maintenance, service, or operation as the public interests and convenience may
reasonably require"53 in approving any franchise or privilege.

Further, Section 16 (g) and (h) of the Public Service Act54 provided that the Commission shall have the power,
upon proper notice and hearing in accordance with the rules and provisions of this Act, subject to the limitations
and exceptions mentioned and saving provisions to the contrary:

(g) To compel any public service to furnish safe, adequate, and proper service as regards the manner
of furnishing the same as well as the maintenance of the necessary material and equipment.

(h) To require any public service to establish, construct, maintain, and operate any reasonable
extension of its existing facilities, where in the judgment of said Commission, such extension is
reasonable and practicable and will furnish sufficient business to justify the construction and
maintenance of the same and when the financial condition of the said public service reasonably warrants
the original expenditure required in making and operating such extension.(Emphasis and underscoring
supplied)

The establishment, as well as the maintenance of vehicle parking areas or passenger terminals, is generally
considered a necessary service to be provided by provincial bus operators like respondents, hence, the
investments they have poured into the acquisition or lease of suitable terminal sites. Eliminating the terminals
would thus run counter to the provisions of the Public Service Act.

This Court commiserates with the MMDA for the roadblocks thrown in the way of its efforts at solving the
pestering problem of traffic congestion in Metro Manila. These efforts are commendable, to say the least, in the
face of the abominable traffic situation of our roads day in and day out. This Court can only interpret, not change,
the law, however. It needs only to be reiterated that it is the DOTC ─ as the primary policy, planning,
programming, coordinating, implementing, regulating and administrative entity to promote, develop and regulate
networks of transportation and communications ─ which has the power to establish and administer a
transportation project like the Project subject of the case at bar.

No matter how noble the intentions of the MMDA may be then, any plan, strategy or project which it is not
authorized to implement cannot pass muster.

WHEREFORE, the Petition is, in light of the foregoing disquisition, DENIED. E.O. No. 179 is declared NULL
and VOID for being ultra vires.

SO ORDERED.