Calalang v Williams, 70 Phil.

726 (1940)

[G.R. No. 47800. December 2, 1940.]

MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents.

Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought
before this court this petition for a writ of prohibition against the respondents, A. D.
Williams, as Chairman of the National Traffic Commission; Vicente Fragante, as Director of
Public Works; Sergio Bayan, as Acting Secretary of Public Works and Communications;
Eulogio Rodriguez, as Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of
Police of Manila.

It is alleged in the petition that the National Traffic Commission, in its resolution of July 17,
1940, resolved to recommend to the Director of Public Works and to the Secretary of Public
Works and Communications that animal-drawn vehicles be prohibited from passing along
Rosario Street extending from Plaza Calderon de la Barca to Dasmariñas Street, from 7:30
a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending from
the railroad crossing at Antipolo Street to Echague Street, from 7 a.m. to 11 p.m., from a
period of one year from the date of the opening of the Colgante Bridge to traffic; that the
Chairman of the National Traffic Commission, on July 18, 1940 recommended to the
Director of Public Works the adoption of the measure proposed in the resolution
aforementioned, in pursuance of the provisions of Commonwealth Act No. 548 which
authorizes said Director of Public Works, with the approval of the Secretary of Public
Works and Communications, to promulgate rules and regulations to regulate and control
the use of and traffic on national roads; that on August 2, 1940, the Director of Public
Works, in his first indorsement to the Secretary of Public Works and Communications,
recommended to the latter the approval of the recommendation made by the Chairman of
the National Traffic Commission as aforesaid, with the modification that the closing of Rizal
Avenue to traffic to animal-drawn vehicles be limited to the portion thereof extending from
the railroad crossing at Antipolo Street to Azcarraga Street; that on August 10, 1940, the
Secretary of Public Works and Communications, in his second indorsement addressed to
the Director of Public Works, approved the recommendation of the latter that Rosario
Street and Rizal Avenue be closed to traffic of animal-drawn vehicles, between the points
and during the hours as above indicated, for a period of one year from the date of the
opening of the Colgante Bridge to traffic; that the Mayor of Manila and the Acting Chief of
Police of Manila have enforced and caused to be enforced the rules and regulations thus
adopted; that as a consequence of such enforcement, all animal-drawn vehicles are not
allowed to pass and pick up passengers in the places above-mentioned to the detriment not
only of their owners but of the riding public as well.
It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of
Public Works, with the approval of the Secretary of Public Works and Communications, is
authorized to promulgate rules and regulations for the regulation and control of the use of
and traffic on national roads and streets is unconstitutional because it constitutes an undue
delegation of legislative power. This contention is untenable. As was observed by this court
in Rubi v. Provincial Board of Mindoro (39 Phil, 660, 700), "The rule has nowhere been
better stated than in the early Ohio case decided by Judge Ranney, and since followed in a
multitude of cases, namely: ’The true distinction therefore is between the delegation of
power to make the law, which necessarily involves a discretion as to what it shall be, and
conferring an authority or discretion as to its execution, to be exercised under and in
pursuance of the law. The first cannot be done; to the latter no valid objection can be made.’
(Cincinnati, W. & Z. R. Co. v. Comm’rs. Clinton County, 1 Ohio St., 88.) Discretion, as held by
Chief Justice Marshall in Wayman v. Southard (10 Wheat., 1) may be committed by the
Legislature to an executive department or official. The Legislature may make decisions of
executive departments or subordinate officials thereof, to whom it has committed the
execution of certain acts, final on questions of fact. (U.S. v. Kinkead, 248 Fed., 141.) The
growing tendency in the decisions is to give prominence to the ’necessity’ of the
case."cralaw virtua1aw library

Section 1 of Commonwealth Act No. 548 reads as follows:jgc:chanrobles.com.ph

"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets
designated as national roads by acts of the National Assembly or by executive orders of the
President of the Philippines, the Director of Public Works, with the approval of the
Secretary of Public Works and Communications, shall promulgate the necessary rules and
regulations to regulate and control the use of and traffic on such roads and streets. Such
rules and regulations, with the approval of the President, may contain provisions
controlling or regulating the construction of buildings or other structures within a
reasonable distance from along the national roads. Such roads may be temporarily closed
to any or all classes of traffic by the Director of Public Works and his duly authorized
representatives whenever the condition of the road or the traffic thereon makes such
action necessary or advisable in the public convenience and interest, or for a specified
period, with the approval of the Secretary of Public Works and Communications."cralaw
virtua1aw library

The above provisions of law do not confer legislative power upon the Director of Public
Works and the Secretary of Public Works and Communications. The authority therein
conferred upon them and under which they promulgated the rules and regulations now
complained of is not to determine what public policy demands but merely to carry out the
legislative policy laid down by the National Assembly in said Act, to wit, "to promote safe
transit upon and avoid obstructions on, roads and streets designated as national roads by
acts of the National Assembly or by executive orders of the President of the Philippines"
and to close them temporarily to any or all classes of traffic "whenever the condition of the
road or the traffic makes such action necessary or advisable in the public convenience and
interest." The delegated power, if at all, therefore, is not the determination of what the law
shall be, but merely the ascertainment of the facts and circumstances upon which the
application of said law is to be predicated. To promulgate rules and regulations on the use
of national roads and to determine when and how long a national road should be closed to
traffic, in view of the condition of the road or the traffic thereon and the requirements of
public convenience and interest, is an administrative function which cannot be directly
discharged by the National Assembly. It must depend on the discretion of some other
government official to whom is confided the duty of determining whether the proper
occasion exists for executing the law. But it cannot be said that the exercise of such
discretion is the making of the law. As was said in Locke’s Appeal (72 Pa. 491): "To assert
that a law is less than a law, because it is made to depend on a future event or act, is to rob
the Legislature of the power to act wisely for the public welfare whenever a law is passed
relating to a state of affairs not yet developed, or to things future and impossible to fully
know." The proper distinction the court said was this: "The Legislature cannot delegate its
power to make the law; but it can make a law to delegate a power to determine some fact
or state of things upon which the law makes, or intends to make, its own action depend. To
deny this would be to stop the wheels of government. There are many things upon which
wise and useful legislation must depend which cannot be known to the law-making power,
and, must, therefore, be a subject of inquiry and determination outside of the halls of
legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)

In the case of People v. Rosenthal and Osmeña, G.R. Nos. 46076 and 46077, promulgated
June 12, 1939, and in Pangasinan Transportation v. The Public Service Commission, G.R. No.
47065, promulgated June 26, 1940, this Court had occasion to observe that the principle of
separation of powers has been made to adapt itself to the complexities of modern
governments, giving rise to the adoption, within certain limits, of the principle of
"subordinate legislation," not only in the United States and England but in practically all
modern governments. Accordingly, with the growing complexity of modern life, the
multiplication of the subjects of governmental regulations, and the increased difficulty of
administering the laws, the rigidity of the theory of separation of governmental powers
has, to a large extent, been relaxed by permitting the delegation of greater powers by the
legislative and vesting a larger amount of discretion in administrative and executive
officials, not only in the execution of the laws, but also in the promulgation of certain rules
and regulations calculated to promote public interest.
The petitioner further contends that the rules and regulations promulgated by the
respondents pursuant to the provisions of Commonwealth Act No. 548 constitute an
unlawful interference with legitimate business or trade and abridge the right to personal
liberty and freedom of locomotion. Commonwealth Act No. 548 was passed by the National
Assembly in the exercise of the paramount police power of the state.

Said Act, by virtue of which the rules and regulations complained of were promulgated,
aims to promote safe transit upon and avoid obstructions on national roads, in the interest
and convenience of the public. In enacting said law, therefore, the National Assembly was
prompted by considerations of public convenience and welfare. It was inspired by a desire
to relieve congestion of traffic. which is, to say the least, a menace to public safety. Public
welfare, then, lies at the bottom of the enactment of said law, and the state in order to
promote the general welfare may interfere with personal liberty, with property, and with
business and occupations. Persons and property may be subjected to all kinds of restraints
and burdens, in order to secure the general comfort, health, and prosperity of the state (U.S.
v. Gomez Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights of the
individual are subordinated. Liberty is a blessing without which life is a misery, but liberty
should not be made to prevail over authority because then society will fall into anarchy.
Neither should authority be made to prevail over liberty because then the individual will
fall into slavery. The citizen should achieve the required balance of liberty and authority in
his mind through education and personal discipline, so that there may be established the
resultant equilibrium, which means peace and order and happiness for all. The moment
greater authority is conferred upon the government, logically so much is withdrawn from
the residuum of liberty which resides in the people. The paradox lies in the fact that the
apparent curtailment of liberty is precisely the very means of insuring its preservation.

The scope of police power keeps expanding as civilization advances. As was said in the case
of Dobbins v. Los Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the police
power is a continuing one, and a business lawful today may in the future, because of the
changed situation, the growth of population or other causes, become a menace to the public
health and welfare, and be required to yield to the public good." And in People v. Pomar (46
Phil., 440), it was observed that "advancing civilization is bringing within the police power
of the state today things which were not thought of as being within such power yesterday.
The development of civilization, the rapidly increasing population, the growth of public
opinion, with an increasing desire on the part of the masses and of the government to look
after and care for the interests of the individuals of the state, have brought within the
police power many questions for regulation which formerly were not so
considered."cralaw virtua1aw library

The petitioner finally avers that the rules and regulations complained of infringe upon the
constitutional precept regarding the promotion of social justice to insure the well-being
and economic security of all the people. The promotion of social justice, however, is to be
achieved not through a mistaken sympathy towards any given group. Social justice is
"neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of
laws and the equalization of social and economic forces by the State so that justice in its
rational and objectively secular conception may at least be approximated. Social justice
means the promotion of the welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the competent elements of society,
through the maintenance of a proper economic and social equilibrium in the interrelations
of the members of the community, constitutionally, through the adoption of measures
legally justifiable, or extra-constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the necessity of

interdependence among divers and diverse units of a society and of the protection that
should be equally and evenly extended to all groups as a combined force in our social and
economic life, consistent with the fundamental and paramount objective of the state of
promoting the health, comfort, and quiet of all persons, and of bringing about "the greatest
good to the greatest number."cralaw virtua1aw library

In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs
against the petitioner. So ordered.
Churchill v Rafferty, 32 Phil. 580 (1915)

G.R. No. L-10572 December 21, 1915

FRANCIS A. CHURCHILL and STEWART TAIT, plaintiffs-appellees,

vs.
JAMES J. RAFFERTY, Collector of Internal Revenue, defendant-appellant.

The judgment appealed from in this case perpetually restrains and prohibits the defendant
and his deputies from collecting and enforcing against the plaintiffs and their property the
annual tax mentioned and described in subsection (b) of section 100 of Act No. 2339,
effective July 1, 1914, and from destroying or removing any sign, signboard, or billboard,
the property of the plaintiffs, for the sole reason that such sign, signboard, or billboard is,
or may be, offensive to the sight; and decrees the cancellation of the bond given by the
plaintiffs to secure the issuance of the preliminary injunction granted soon after the
commencement of this action.

This case divides itself into two parts and gives rise to two main questions; (1) that relating
to the power of the court to restrain by injunction the collection of the tax complained of,
and (2) that relating to the validity of those provisions of subsection (b) of section 100 of
Act No. 2339, conferring power upon the Collector of Internal Revenue to remove any sign,
signboard, or billboard upon the ground that the same is offensive to the sight or is
otherwise a nuisance.

The first question is one of the jurisdiction and is of vital importance to the Government.
The sections of Act No. 2339, which bear directly upon the subject, are 139 and 140. The
first expressly forbids the use of an injunction to stay the collection of any internal revenue
tax; the second provides a remedy for any wrong in connection with such taxes, and this
remedy was intended to be exclusive, thereby precluding the remedy by injunction, which
remedy is claimed to be constitutional. The two sections, then, involve the right of a
dissatisfied taxpayers to use an exceptional remedy to test the validity of any tax or to
determine any other question connected therewith, and the question whether the remedy
by injunction is exceptional.

Preventive remedies of the courts are extraordinary and are not the usual remedies. The
origin and history of the writ of injunction show that it has always been regarded as an
extraordinary, preventive remedy, as distinguished from the common course of the law to
redress evils after they have been consummated. No injunction issues as of course, but is
granted only upon the oath of a party and when there is no adequate remedy at law. The
Government does, by section 139 and 140, take away the preventive remedy of injunction,
if it ever existed, and leaves the taxpayer, in a contest with it, the same ordinary remedial
actions which prevail between citizen and citizen. The Attorney-General, on behalf of the
defendant, contends that there is no provisions of the paramount law which prohibits such
a course. While, on the other hand, counsel for plaintiffs urge that the two sections are
unconstitutional because (a) they attempt to deprive aggrieved taxpayers of all substantial
remedy for the protection of their property, thereby, in effect, depriving them of their
property without due process of law, and (b) they attempt to diminish the jurisdiction of
the courts, as conferred upon them by Acts Nos. 136 and 190, which jurisdiction was
ratified and confirmed by the Act of Congress of July 1, 1902.

In the first place, it has been suggested that section 139 does not apply to the tax in
question because the section, in speaking of a "tax," means only legal taxes; and that an
illegal tax (the one complained of) is not a tax, and, therefore, does not fall within the
inhibition of the section, and may be restrained by injunction. There is no force in this
suggestion. The inhibition applies to all internal revenue taxes imposes, or authorized to be
imposed, by Act No. 2339. (Snyder vs. Marks, 109 U.S., 189.) And, furthermore, the mere
fact that a tax is illegal, or that the law, by virtue of which it is imposed, is unconstitutional,
does not authorize a court of equity to restrain its collection by injunction. There must be a
further showing that there are special circumstances which bring the case under some well
recognized head of equity jurisprudence, such as that irreparable injury, multiplicity of
suits, or a cloud upon title to real estate will result, and also that there is, as we have
indicated, no adequate remedy at law. This is the settled law in the United States, even in
the absence of statutory enactments such as sections 139 and 140. (Hannewinkle vs. Mayor,
etc., of Georgetown, 82 U.S., 547; Indiana Mfg. Co. vs. Koehne, 188 U.S., 681; Ohio Tax cases,
232 U. S., 576, 587; Pittsburgh C. C. & St. L. R. Co. vs. Board of Public Works, 172 U. S., 32;
Shelton vs. Plat, 139 U.S., 591; State Railroad Tax Cases, 92 U. S., 575.) Therefore, this
branch of the case must be controlled by sections 139 and 140, unless the same be held
unconstitutional, and consequently, null and void.

The right and power of judicial tribunals to declare whether enactments of the
legislature exceed the constitutional limitations and are invalid has always been
considered a grave responsibility, as well as a solemn duty. The courts invariably
give the most careful consideration to questions involving the interpretation and
application of the Constitution, and approach constitutional questions with great
deliberation, exercising their power in this respect with the greatest possible
caution and even reluctance; and they should never declare a statute void, unless its
invalidity is, in their judgment, beyond reasonable doubt. To justify a court in
pronouncing a legislative act unconstitutional, or a provision of a state constitution
to be in contravention of the Constitution of the United States, the case must be so
clear to be free from doubt, and the conflict of the statute with the constitution must
 be irreconcilable, because it is but a decent respect to the wisdom, the integrity, and
the patriotism of the legislative body by which any law is passed to presume in favor
of its validity until the contrary is shown beyond reasonable doubt. Therefore, in no
doubtful case will the judiciary pronounce a legislative act to be contrary to the
constitution. To doubt the constitutionality of a law is to resolve the doubt in favor
of its validity. (6 Ruling Case Law, secs. 71, 72, and 73, and cases cited therein.)

It is also the settled law in the United States that "due process of law" does not always
require, in respect to the Government, the same process that is required between citizens,
though it generally implies and includes regular allegations, opportunity to answer, and a
trial according to some well settled course of judicial proceedings. The case with which we
are dealing is in point. A citizen's property, both real and personal, may be taken, and
usually is taken, by the government in payment of its taxes without any judicial
proceedings whatever. In this country, as well as in the United States, the officer charged
with the collection of taxes is authorized to seize and sell the property of delinquent
taxpayers without applying to the courts for assistance, and the constitutionality of the law
authorizing this procedure never has been seriously questioned. (City of
Philadelphia vs. [Diehl] The Collector, 5 Wall., 720; Nicholl vs. U.S., 7 Wall., 122, and cases
cited.) This must necessarily be the course, because it is upon taxation that the Government
chiefly relies to obtain the means to carry on its operations, and it is of the utmost
importance that the modes adopted to enforce the collection of the taxes levied should be
summary and interfered with as little as possible. No government could exist if every
litigious man were permitted to delay the collection of its taxes. This principle of public
policy must be constantly borne in mind in determining cases such as the one under
consideration.

With these principles to guide us, we will proceed to inquire whether there is any merit in
the two propositions insisted upon by counsel for the plaintiffs. Section 5 of the Philippine
Bill provides: "That no law shall be enacted in said Islands which shall deprive any person
of life, liberty, or property without due process of law, or deny to any person therein the
equal protection of the law."

The origin and history of these provisions are well-known. They are found in substance in
the Constitution of the United States and in that of ever state in the Union.

Section 3224 of the Revised Statutes of the United States, effective since 1867, provides
that: "No suit for the purpose of restraining the assessment or collection of any tax shall be
maintained in any court."
Section 139, with which we have been dealing, reads: "No court shall have authority to
grant an injunction to restrain the collection of any internal-revenue tax."

A comparison of these two sections show that they are essentially the same. Both expressly
prohibit the restraining of taxes by injunction. If the Supreme Court of the United States has
clearly and definitely held that the provisions of section 3224 do not violate the "due
process of law" and "equal protection of the law" clauses in the Constitution, we would be
going too far to hold that section 139 violates those same provisions in the Philippine Bill.
That the Supreme Court of the United States has so held, cannot be doubted.

In Cheatham vs. United States (92 U.S., 85,89) which involved the validity of an income tax
levied by an act of Congress prior to the one in issue in the case of Pollock vs. Farmers' Loan
& Trust Co. (157 U.S., 429) the court, through Mr. Justice Miller, said: "If there existed in the
courts, state or National, any general power of impeding or controlling the collection of
taxes, or relieving the hardship incident to taxation, the very existence of the government
might be placed in the power of a hostile judiciary. (Dows vs. The City of Chicago, 11 Wall.,
108.) While a free course of remonstrance and appeal is allowed within the departments
before the money is finally exacted, the General Government has wisely made the payment
of the tax claimed, whether of customs or of internal revenue, a condition precedent to a
resort to the courts by the party against whom the tax is assessed. In the internal revenue
branch it has further prescribed that no such suit shall be brought until the remedy by
appeal has been tried; and, if brought after this, it must be within six months after the
decision on the appeal. We regard this as a condition on which alone the government
consents to litigate the lawfulness of the original tax. It is not a hard condition. Few
governments have conceded such a right on any condition. If the compliance with this
condition requires the party aggrieved to pay the money, he must do it."

Again, in State Railroad Tax Cases (92 U.S., 575, 613), the court said: "That there might be
no misunderstanding of the universality of this principle, it was expressly enacted, in 1867,
that "no suit for the purpose of restraining the assessment or collection of any tax shall be
maintained in any court." (Rev, Stat., sec. 3224.) And though this was intended to apply
alone to taxes levied by the United States, it shows the sense of Congress of the evils to be
feared if courts of justice could, in any case, interfere with the process of collecting taxes on
which the government depends for its continued existence. It is a wise policy. It is founded
in the simple philosophy derived from the experience of ages, that the payment of taxes has
to be enforced by summary and stringent means against a reluctant and often adverse
sentiment; and to do this successfully, other instrumentalities and other modes of
procedure are necessary, than those which belong to courts of justice."
And again, in Snyder vs. Marks (109 U.S., 189), the court said: "The remedy of a suit to
recover back the tax after it is paid is provided by statute, and a suit to restrain its
collection is forbidden. The remedy so given is exclusive, and no other remedy can be
substituted for it. Such has been the current of decisions in the Circuit Courts of the United
States, and we are satisfied it is a correct view of the law."itc-a1f

In the consideration of the plaintiffs' second proposition, we will attempt to show (1) that
the Philippine courts never have had, since the American occupation, the power to restrain
by injunction the collection of any tax imposed by the Insular Government for its own
purpose and benefit, and (2) that assuming that our courts had or have such power, this
power has not been diminished or curtailed by sections 139 and 140.

We will first review briefly the former and present systems of taxation. Upon the American
occupation of the Philippine, there was found a fairly complete system of taxation. This
system was continued in force by the military authorities, with but few changes, until the
Civil Government assumed charge of the subject. The principal sources of revenue under
the Spanish regime were derived from customs receipts, the so-called industrial taxes, the
urbana taxes, the stamp tax, the personal cedula tax, and the sale of the public domain. The
industrial and urbana taxes constituted practically an income tax of some 5 per cent on the
net income of persons engaged in industrial and commercial pursuits and on the income of
owners of improved city property. The sale of stamped paper and adhesive stamp tax. The
cedula tax was a graduated tax, ranging from nothing up to P37.50. The revenue derived
from the sale of the public domain was not considered a tax. The American authorities at
once abolished the cedula tax, but later restored it in a modified form, charging for each
cedula twenty centavos, an amount which was supposed to be just sufficient to cover the
cost of issuance. The urbana tax was abolished by Act No. 223, effective September 6, 1901.

The "Municipal Code" (Act No. 82) and the Provincial Government Act (No. 83), both
enacted in 1901, authorize municipal councils and provincial boards to impose an ad
valorem tax on real estate. The Municipal Code did not apply to the city of Manila. This city
was given a special charter (Act No. 183), effective August 30, 1901; Under this charter the
Municipal Board of Manila is authorized and empowered to impose taxes upon real estate
and, like municipal councils, to license and regulate certain occupations. Customs matters
were completely reorganized by Act No. 355, effective at the port of Manila on February 7,
1902, and at other ports in the Philippine Islands the day after the receipt of a certified
copy of the Act. The Internal Revenue Law of 1904 (Act No. 1189), repealed all existing
laws, ordinances, etc., imposing taxes upon the persons, objects, or occupations taxed
under that act, and all industrial taxes and stamp taxes imposed under the Spanish regime
were eliminated, but the industrial tax was continued in force until January 1, 1905. This
Internal Revenue Law did not take away from municipal councils, provincial boards, and
the Municipal Board of the city of Manila the power to impose taxes upon real estate. This
Act (No. 1189), with its amendments, was repealed by Act No. 2339, an act "revising and
consolidating the laws relative to internal revenue."

Section 84 of Act No. 82 provides that "No court shall entertain any suit assailing the
validity of a tax assessed under this act until the taxpayer shall have paid, under protest,
the taxes assessed against him, . . . ."

This inhibition was inserted in section 17 of Act No. 83 and applies to taxes imposed by
provincial boards. The inhibition was not inserted in the Manila Charter until the passage
of Act No. 1793, effective October 12, 1907. Act No. 355 expressly makes the payment of
the exactions claimed a condition precedent to a resort to the courts by dissatisfied
importers. Section 52 of Act No. 1189 provides "That no courts shall have authority to
grant an injunction restraining the collection of any taxes imposed by virtue of the
provisions of this Act, but the remedy of the taxpayer who claims that he is unjustly
assessed or taxed shall be by payment under protest of the sum claimed from him by the
Collector of Internal Revenue and by action to recover back the sum claimed to have been
illegally collected."

Sections 139 and 140 of Act No. 2339 contain, as we have indicated, the same prohibition
and remedy. The result is that the courts have been expressly forbidden, in every act
creating or imposing taxes or imposts enacted by the legislative body of the Philippines
since the American occupation, to entertain any suit assailing the validity of any tax or
impost thus imposed until the tax shall have been paid under protest. The only taxes which
have not been brought within the express inhibition were those included in that part of the
old Spanish system which completely disappeared on or before January 1, 1905, and
possibly the old customs duties which disappeared in February, 1902.

Section 56 of the Organic Act (No. 136), effective June 16, 1901, provides that "Courts of
First Instance shall have original jurisdiction:

xxx xxx xxx

2. In all civil actions which involve the ... legality of any tax, impost, or assessment, . .
..

xxx xxx xxx

7. Said courts and their judges, or any of them, shall have power to issue writs of
injunction, mandamus, certiorari, prohibition, quo warranto, and habeas corpus in
 their respective provinces and districts, in the manner provided in the Code of Civil
Procedure.

The provisions of the Code of Civil Procedure (Act No. 190), effective October 1, 1901,
which deals with the subject of injunctions, are sections 162 to 172, inclusive. Injunctions,
as here defined, are of two kinds; preliminary and final. The former may be granted at any
time after the commencement of the action and before final judgment, and the latter at the
termination of the trial as the relief or part of the relief prayed for (sec. 162). Any judge of
the Supreme Court may grant a preliminary injunction in any action pending in that court
or in any Court of First Instance. A preliminary injunction may also be granted by a judge of
the Court of First Instance in actions pending in his district in which he has original
jurisdiction (sec. 163). But such injunctions may be granted only when the complaint shows
facts entitling the plaintiff to the relief demanded (sec. 166), and before a final or
permanent injunction can be granted, it must appear upon the trial of the action that the
plaintiff is entitled to have commission or continuance of the acts complained of
perpetually restrained (sec. 171). These provisions authorize the institution in Courts of
First Instance of what are known as "injunction suits," the sole object of which is to obtain
the issuance of a final injunction. They also authorize the granting of injunctions as aiders
in ordinary civil actions. We have defined in Davesa vs. Arbes (13 Phil. Rep., 273), an
injunction to be "A "special remedy" adopted in that code (Act 190) from American
practice, and originally borrowed from English legal procedure, which was there issued by
the authority and under the seal of a court of equity, and limited, as in other cases where
equitable relief is sought, to those cases where there is no "plain, adequate, and complete
remedy at law,"which will not be granted while the rights between the parties are
undetermined, except in extraordinary cases where material and irreparable injury will be
done,"which cannot be compensated in damages . . .

By paragraph 2 of section 56 of Act No. 136, supra, and the provisions of the various
subsequent Acts heretofore mentioned, the Insular Government has consented to litigate
with aggrieved persons the validity of any original tax or impost imposed by it on condition
that this be done in ordinary civil actions after the taxes or exactions shall have been paid.
But it is said that paragraph 2 confers original jurisdiction upon Courts of First Instance to
hear and determine "all civil actions" which involve the validity of any tax, impost or
assessment, and that if the all-inclusive words "all" and "any" be given their natural and
unrestricted meaning, no action wherein that question is involved can arise over which
such courts do not have jurisdiction. (Barrameda vs. Moir, 25 Phil. Rep., 44.) This is true.
But the term "civil actions" had its well defined meaning at the time the paragraph was
enacted. The same legislative body which enacted paragraph 2 on June 16, 1901, had, just a
few months prior to that time, defined the only kind of action in which the legality of any
tax imposed by it might be assailed. (Sec. 84, Act 82, enacted January 31, 1901, and sec. 17,
Act No. 83, enacted February 6, 1901.) That kind of action being payment of the tax under
protest and an ordinary suit to recover and no other, there can be no doubt that Courts of
First Instance have jurisdiction over all such actions. The subsequent legislation on the
same subject shows clearly that the Commission, in enacting paragraph 2, supra, did not
intend to change or modify in any way section 84 of Act No. 82 and section 17 of Act No. 83,
but, on the contrary, it was intended that "civil actions," mentioned in said paragraph,
should be understood to mean, in so far as testing the legality of taxes were concerned, only
those of the kind and character provided for in the two sections above mentioned. It is also
urged that the power to restrain by injunction the collection of taxes or imposts is
conferred upon Courts of First Instance by paragraph 7 of section 56, supra. This paragraph
does empower those courts to grant injunctions, both preliminary and final, in any civil
action pending in their districts, provided always, that the complaint shows facts entitling
the plaintiff to the relief demanded. Injunction suits, such as the one at bar, are "civil
actions," but of a special or extraordinary character. It cannot be said that the Commission
intended to give a broader or different meaning to the word "action," used in Chapter 9 of
the Code of Civil Procedure in connection with injunctions, than it gave to the same word
found in paragraph 2 of section 56 of the Organic Act. The Insular Government, in
exercising the power conferred upon it by the Congress of the United States, has declared
that the citizens and residents of this country shall pay certain specified taxes and imposts.
The power to tax necessarily carries with it the power to collect the taxes. This being true,
the weight of authority supports the proposition that the Government may fix the
conditions upon which it will consent to litigate the validity of its original taxes.
(Tennessee vs. Sneed, 96 U.S., 69.)

We must, therefore, conclude that paragraph 2 and 7 of section 56 of Act No. 136,
construed in the light of the prior and subsequent legislation to which we have referred,
and the legislative and judicial history of the same subject in the United States with which
the Commission was familiar, do not empower Courts of firs Instance to interfere by
injunction with the collection of the taxes in question in this case.1awphil.net

If we are in error as to the scope of paragraph 2 and 7, supra, and the Commission did
intend to confer the power upon the courts to restrain the collection of taxes, it does not
necessarily follow that this power or jurisdiction has been taken away by section 139 of Act
No. 2339, for the reason that all agree that an injunction will not issue in any case if there is
an adequate remedy at law. The very nature of the writ itself prevents its issuance under
such circumstances. Legislation forbidding the issuing of injunctions in such cases is
unnecessary. So the only question to be here determined is whether the remedy provided
for in section 140 of Act No. 2339 is adequate. If it is, the writs which form the basis of this
appeal should not have been issued. If this is the correct view, the authority to issue
injunctions will not have been taken away by section 139, but rendered inoperative only by
reason of an adequate remedy having been made available.

The legislative body of the Philippine Islands has declared from the beginning (Act No. 82)
that payment under protest and suit to recover is an adequate remedy to test the legality of
any tax or impost, and that this remedy is exclusive. Can we say that the remedy is not
adequate or that it is not exclusive, or both? The plaintiffs in the case at bar are the first, in
so far as we are aware, to question either the adequacy or exclusiveness of this remedy. We
will refer to a few cases in the United States where statutes similar to sections 139 and 140
have been construed and applied.

In May, 1874, one Bloomstein presented a petition to the circuit court sitting in Nashville,
Tennessee, stating that his real and personal property had been assessed for state taxes in
the year 1872 to the amount of $132.60; that he tendered to the collector this amount in
"funds receivable by law for such purposes;" and that the collector refused to receive the
same. He prayed for an alternative writ of mandamus to compel the collector to receive the
bills in payment for such taxes, or to show cause to the contrary. To this petition the
collector, in his answer, set up the defense that the petitioner's suit was expressly
prohibited by the Act of the General Assembly of the State of Tennessee, passed in 1873.
The petition was dismissed and the relief prayed for refused. An appeal to the supreme
court of the State resulted in the affirmance of the judgment of the lower court. The case
was then carried to the Supreme Court of the United States (Tennessee vs. Sneed, 96 U. S.,
69), where the judgment was again affirmed.

The two sections of the Act of [March 21,] 1873, drawn in question in that cases, read as
follows:

1. That in all cases in which an officer, charged by law with the collection of revenue
due the State, shall institute any proceeding, or take any steps for the collection of
the same, alleged or claimed to be due by said officer from any citizen, the party
against whom the proceeding or step is taken shall, if he conceives the same to be
unjust or illegal, or against any statute or clause of the Constitution of the State, pay
the same under protest; and, upon his making said payment, the officer or collector
shall pay such revenue into the State Treasury, giving notice at the time of payment
to the Comptroller that the same was paid under protest; and the party paying said
revenue may, at any time within thirty days after making said payment, and not
longer thereafter, sue the said officer having collected said sum, for the recovery
thereof. And the same may be tried in any court having the jurisdiction of the
amount and parties; and, if it be determined that the same was wrongfully collected,
as not being due from said party to the State, for any reason going to the merits of
 the same, then the court trying the case may certify of record that the same was
wrongfully paid and ought to be refunded; and thereupon the Comptroller shall
issue his warrant for the same, which shall be paid in preference to other claims on
the Treasury.

2. That there shall be no other remedy, in any case of the collection of revenue, or
attempt to collect revenue illegally, or attempt to collect revenue in funds only
receivable by said officer under the law, the same being other or different funds
than such as the tax payer may tender, or claim the right to pay, than that above
provided; and no writ for the prevention of the collection of any revenue claimed, or
to hinder or delay the collection of the same, shall in anywise issue, either
injunction, supersedeas, prohibition, or any other writ or process whatever; but in
all cases in which, for any reason, any person shall claim that the tax so collected
was wrongfully or illegally collected, the remedy for said party shall be as above
provided, and in no other manner."

In discussing the adequacy of the remedy provided by the Tennessee Legislature, as above
set forth, the Supreme Court of the United States, in the case just cited, said: "This remedy
is simple and effective. A suit at law to recover money unlawfully exacted is as speedy, as
easily tried, and less complicated than a proceeding by mandamus. ... In revenue cases,
whether arising upon its (United States) Internal Revenue Laws or those providing for the
collection of duties upon foreign imports, it (United States) adopts the rule prescribed by
the State of Tennessee. It requires the contestant to pay the amount as fixed by the
Government, and gives him power to sue the collector, and in such suit to test the legality of
the tax. There is nothing illegal or even harsh in this. It is a wise and reasonable precaution
for the security of the Government."

Thomas C. Platt commenced an action in the Circuit Court of the United States for the
Eastern District of Tennessee to restrain the collection of a license tax from the company
which he represented. The defense was that sections 1 and 2 of the Act of 1873, supra,
prohibited the bringing of that suit. This case also reached the Supreme Court of the United
States. (Shelton vs. Platt, 139 U. 591.) In speaking of the inhibitory provisions of sections 1
and 2 of the Act of 1873, the court said: "This Act has been sanctioned and applied by the
Courts of Tennessee. (Nashville vs. Smith, 86 Tenn., 213; Louisville & N. R. Co. vs. State, 8
Heisk., 663, 804.) It is, as counsel observe, similar to the Act of Congress forbidding suit for
the purpose of restraining the assessment or collection of taxes under the Internal Revenue
Laws, in respect to which this court held that the remedy by suit to recover back the tax
after payment, provided for by the Statute, was exclusive. (Snyder vs. Marks, of this
character has been called for by the embarrassments resulting from the improvident
employment of the writ of injunction in arresting the collection of the public revenue; and,
even in its absence, the strong arm of the court of chancery ought not to be interposed in
that direction except where resort to that court is grounded upon the settled principles
which govern its jurisdiction."

In Louisville & N.R. Co. vs. State (8 Heisk. [64 Tenn.], 663, 804), cited by the Supreme Court
of the United States in Shelton vs. Platt, supra, the court said: "It was urged that this statute
(sections 1 and 2 of the Act of 1873, supra) is unconstitutional and void, as it deprives the
citizen of the remedy by certiorari, guaranteed by the organic law."

By the 10th section of the sixth article of the Constitution, [Tennessee] it is provided that:
"The judges or justices of inferior courts of law and equity shall have power in all civil cases
to issue writs of certiorari, to remove any cause, or the transcript of the record thereof,
from any inferior jurisdiction into such court of law, on sufficient cause, supported by oath
or affirmation."

The court held the act valid as not being in conflict with these provisions of the State
constitution.

In Eddy vs. The Township of Lee (73 Mich., 123), the complainants sought to enjoin the
collection of certain taxes for the year 1886. The defendants, in support of their demurrer,
insisted that the remedy by injunction had been taken away by section 107 of the Act of
1885, which section reads as follows: "No injunction shall issue to stay proceedings for the
assessment or collection of taxes under this Act."

It was claimed by the complainants that the above quoted provisions of the Act of 1885
were unconstitutional and void as being in conflict with article 6, sec. 8, of the Constitution,
which provides that: "The circuit courts shall have original jurisdiction in all matters, civil
and criminal, not excepted in this Constitution, and not prohibited by law. ... They shall also
have power to issue writs of habeas corpus, mandamus, injunction, quo warranto, certiorari,
and other writs necessary to carry into effect their orders, judgments, and decrees."

Mr. Justice Champlin, speaking for the court, said: "I have no doubt that the Legislature has
the constitutional authority, where it has provided a plain, adequate, and complete remedy
at law to recover back taxes illegally assessed and collected, to take away the remedy by
injunction to restrain their collection."

Section 9 of the Philippine Bill reads in part as follows: "That the Supreme Court and the
Courts of First Instance of the Philippine Islands shall possess and exercise jurisdiction as
heretofore provided and such additional jurisdiction as shall hereafter be prescribed by the
Government of said Islands, subject to the power of said Government to change the practice
and method of procedure."
It will be seen that this section has not taken away from the Philippine Government the
power to change the practice and method of procedure. If sections 139 and 140, considered
together, and this must always be done, are nothing more than a mode of procedure, then it
would seem that the Legislature did not exceed its constitutional authority in enacting
them. Conceding for the moment that the duly authorized procedure for the determination
of the validity of any tax, impost, or assessment was by injunction suits and that this
method was available to aggrieved taxpayers prior to the passage of Act No. 2339, may the
Legislature change this method of procedure? That the Legislature has the power to do this,
there can be no doubt, provided some other adequate remedy is substituted in lieu thereof.
In speaking of the modes of enforcing rights created by contracts, the Supreme Court of the
United States, in Tennessee vs. Sneed, supra, said: "The rule seems to be that in modes of
proceedings and of forms to enforce the contract the Legislature has the control, and may
enlarge, limit or alter them, provided that it does not deny a remedy, or so embarrass it
with conditions and restrictions as seriously to impair the value of the right."

In that case the petitioner urged that the Acts of 1873 were laws impairing the obligation of
the contract contained in the charter of the Bank of Tennessee, which contract was entered
into with the State in 1838. It was claimed that this was done by placing such impediments
and obstructions in the way of its enforcement, thereby so impairing the remedies as
practically to render the obligation of no value. In disposing of this contention, the court
said: "If we assume that prior to 1873 the relator had authority to prosecute his claim
against the State by mandamus, and that by the statutes of that year the further use of that
form was prohibited to him, the question remains. whether an effectual remedy was left to
him or provided for him. We think the regulation of the statute gave him an abundant
means of enforcing such right as he possessed. It provided that he might pay his claim to
the collector under protest, giving notice thereof to the Comptroller of the Treasury; that at
any time within thirty days thereafter he might sue the officer making the collection; that
the case should be tried by any court having jurisdiction and, if found in favor of the
plaintiff on the merits, the court should certify that the same was wrongfully paid and
ought to be refunded and the Comptroller should thereupon issue his warrant therefor,
which should be paid in preference to other claim on the Treasury."

But great stress is laid upon the fact that the plaintiffs in the case under consideration are
unable to pay the taxes assessed against them and that if the law is enforced, they will be
compelled to suspend business. This point may be best answered by quoting from the case
of Youngblood vs. Sexton (32 Mich., 406), wherein Judge Cooley, speaking for the court,
said: "But if this consideration is sufficient to justify the transfer of a controversy from a
court of law to a court of equity, then every controversy where money is demanded may be
made the subject of equitable cognizance. To enforce against a dealer a promissory note
may in some cases as effectually break up his business as to collect from him a tax of equal
amount. This is not what is known to the law as irreparable injury. The courts have never
recognized the consequences of the mere enforcement of a money demand as falling within
that category."

Certain specified sections of Act No. 2339 were amended by Act No. 2432, enacted
December 23, 1914, effective January 1, 1915, by imposing increased and additional taxes.
Act No. 2432 was amended, were ratified by the Congress of the United States on March 4,
1915. The opposition manifested against the taxes imposed by Acts Nos. 2339 and 2432 is
a matter of local history. A great many business men thought the taxes thus imposed were
too high. If the collection of the new taxes on signs, signboards, and billboards may be
restrained, we see no well-founded reason why injunctions cannot be granted restraining
the collection of all or at least a number of the other increased taxes. The fact that this may
be done, shows the wisdom of the Legislature in denying the use of the writ of injunction to
restrain the collection of any tax imposed by the Acts. When this was done, an equitable
remedy was made available to all dissatisfied taxpayers.

The question now arises whether, the case being one of which the court below had no
jurisdiction, this court, on appeal, shall proceed to express an opinion upon the validity of
provisions of subsection (b) of section 100 of Act No. 2339, imposing the taxes complained
of. As a general rule, an opinion on the merits of a controversy ought to be declined when
the court is powerless to give the relief demanded. But it is claimed that this case is, in
many particulars, exceptional. It is true that it has been argued on the merits, and there is
no reason for any suggestion or suspicion that it is not a bona fide controversy. The legal
points involved in the merits have been presented with force, clearness, and great ability by
the learned counsel of both sides. If the law assailed were still in force, we would feel that
an opinion on its validity would be justifiable, but, as the amendment became effective on
January 1, 1915, we think it advisable to proceed no further with this branch of the case.

The next question arises in connection with the supplementary complaint, the object of
which is to enjoin the Collector of Internal Revenue from removing certain billboards, the
property of the plaintiffs located upon private lands in the Province of Rizal. The plaintiffs
allege that the billboards here in question "in no sense constitute a nuisance and are not
deleterious to the health, morals, or general welfare of the community, or of any persons."
The defendant denies these allegations in his answer and claims that after due
investigation made upon the complaints of the British and German Consuls, he "decided
that the billboard complained of was and still is offensive to the sight, and is otherwise a
nuisance." The plaintiffs proved by Mr. Churchill that the "billboards were quite a distance
from the road and that they were strongly built, not dangerous to the safety of the people,
and contained no advertising matter which is filthy, indecent, or deleterious to the morals
of the community." The defendant presented no testimony upon this point. In the agreed
statement of facts submitted by the parties, the plaintiffs "admit that the billboards
mentioned were and still are offensive to the sight."

The pertinent provisions of subsection (b) of section 100 of Act No. 2339 read: "If after due
investigation the Collector of Internal Revenue shall decide that any sign, signboard, or
billboard displayed or exposed to public view is offensive to the sight or is otherwise a
nuisance, he may by summary order direct the removal of such sign, signboard, or
billboard, and if same is not removed within ten days after he has issued such order he my
himself cause its removal, and the sign, signboard, or billboard shall thereupon be forfeited
to the Government, and the owner thereof charged with the expenses of the removal so
effected. When the sign, signboard, or billboard ordered to be removed as herein provided
shall not comply with the provisions of the general regulations of the Collector of Internal
Revenue, no rebate or refund shall be allowed for any portion of a year for which the tax
may have been paid. Otherwise, the Collector of Internal Revenue may in his discretion
make a proportionate refund of the tax for the portion of the year remaining for which the
taxes were paid. An appeal may be had from the order of the Collector of Internal Revenue
to the Secretary of Finance and Justice whose decision thereon shall be final."

The Attorney-General, on behalf of the defendant, says: "The question which the case
presents under this head for determination, resolves itself into this inquiry: Is the
suppression of advertising signs displayed or exposed to public view, which are admittedly
offensive to the sight, conducive to the public interest?"

And cunsel for the plaintiffs states the question thus: "We contend that that portion of
section 100 of Act No. 2339, empowering the Collector of Internal Revenue to remove
billboards as nuisances, if objectionable to the sight, is unconstitutional, as constituting a
deprivation of property without due process of law."

From the position taken by counsel for both sides, it is clear that our inquiry is limited to
the question whether the enactment assailed by the plaintiffs was a legitimate exercise of
the police power of the Government; for all property is held subject to that power.

As a consequence of the foregoing, all discussion and authorities cited, which go to the
power of the state to authorize administrative officers to find, as a fact, that legitimate
trades, callings, and businesses are, under certain circumstances, statutory nuisances, and
whether the procedure prescribed for this purpose is due process of law, are foreign to the
issue here presented.

There can be no doubt that the exercise of the police power of the Philippine Government
belongs to the Legislature and that this power is limited only by the Acts of Congress and
those fundamentals principles which lie at the foundation of all republican forms of
government. An Act of the Legislature which is obviously and undoubtedly foreign to any of
the purposes of the police power and interferes with the ordinary enjoyment of property
would, without doubt, be held to be invalid. But where the Act is reasonably within a
proper consideration of and care for the public health, safety, or comfort, it should not be
disturbed by the courts. The courts cannot substitute their own views for what is proper in
the premises for those of the Legislature. In Munn vs. Illinois (94 U.S., 113), the United
States Supreme Court states the rule thus: "If no state of circumstances could exist to justify
such statute, then we may declare this one void because in excess of the legislative power
of this state; but if it could, we must presume it did. Of the propriety of legislative
interference, within the scope of the legislative power, a legislature is the exclusive judge."

This rule very fully discussed and declared in Powell vs. Pennsylvania (127 U.S., 678) —
"oleo-margarine" case. (See also Crowley vs. Christensen, 137 U.S., 86, 87; Camfield vs. U.S.,
167 U.S., 518.) While the state may interfere wherever the public interests demand it, and
in this particular a large discretion is necessarily vested in the legislature to determine, not
only what the interest of the public require, but what measures are necessary for the
protection of such interests; yet, its determination in these matters is not final or
conclusive, but is subject to the supervision of the courts. (Lawton vs. Steele, 152 U.S., 133.)
Can it be said judicially that signs, signboards, and billboards, which are admittedly
offensive to the sight, are not with the category of things which interfere with the public
safety, welfare, and comfort, and therefore beyond the reach of the police power of the
Philippine Government?

The numerous attempts which have been made to limit by definition the scope of the police
power are only interesting as illustrating its rapid extension within comparatively recent
years to points heretofore deemed entirely within the field of private liberty and property
rights. Blackstone's definition of the police power was as follows: "The due regulation and
domestic order of the kingdom, whereby the individuals of the state, like members of a well
governed family, are bound to conform their general behavior to the rules of propriety,
good neigborhood, and good manners, to be decent, industrious, and inoffensive in their
respective stations." (Commentaries, vol. 4, p. 162.)

Chanceller Kent considered the police power the authority of the state "to regulate
unwholesome trades, slaughter houses, operations offensive to the senses." Chief Justice
Shaw of Massachusetts defined it as follows: "The power vested in the legislature by the
constitution to make, ordain, and establish all manner of wholesome and reasonable laws,
statutes, and ordinances, either with penalties or without, not repugnant to the
constitution, as they shall judge to be for the good and welfare of the commonwealth, and
of the subjects of the same." (Com. vs. Alger, 7 Cush., 53.)
In the case of Butchers' Union Slaughter-house, etc. Co. vs. Crescent City Live Stock Landing,
etc. Co. (111 U.S., 746), it was suggested that the public health and public morals are
matters of legislative concern of which the legislature cannot divest itself. (See
State vs. Mountain Timber Co. [1913], 75 Wash., 581, where these definitions are collated.)

In Champer vs. Greencastle (138 Ind., 339), it was said: "The police power of the State, so
far, has not received a full and complete definition. It may be said, however, to be the right
of the State, or state functionary, to prescribe regulations for the good order, peace, health,
protection, comfort, convenience and morals of the community, which do not ... violate any
of the provisions of the organic law." (Quoted with approval in Hopkins vs. Richmond [Va.,
1915], 86 S.E., 139.)

In Com. vs. Plymouth Coal Co. ([1911] 232 Pa., 141), it was said: "The police power of the
state is difficult of definition, but it has been held by the courts to be the right to prescribe
regulations for the good order, peace, health, protection, comfort, convenience and morals
of the community, which does not encroach on a like power vested in congress or state
legislatures by the federal constitution, or does not violate the provisions of the organic
law; and it has been expressly held that the fourteenth amendment to the federal
constitution was not designed to interfere with the exercise of that power by the state."

In People vs. Brazee ([Mich., 1914], 149 N.W., 1053), it was said: "It [the police power] has
for its object the improvement of social and economic conditioned affecting the community
at large and collectively with a view to bring about "he greatest good of the greatest
number."Courts have consistently and wisely declined to set any fixed limitations upon
subjects calling for the exercise of this power. It is elastic and is exercised from time to time
as varying social conditions demand correction."

In 8 Cyc., 863, it is said: "Police power is the name given to that inherent sovereignty which
it is the right and duty of the government or its agents to exercise whenever public policy,
in a broad sense, demands, for the benefit of society at large, regulations to guard its
morals, safety, health, order or to insure in any respect such economic conditions as an
advancing civilization of a high complex character requires." (As quoted with approval in
Stettler vs. O'Hara [1914], 69 Ore, 519.)

Finally, the Supreme Court of the United States has said in Noble State Bank vs. Haskell
(219 U.S. [1911], 575: "It may be said in a general way that the police power extends to all
the great public needs. It may be put forth in aid of what is sanctioned by usage, or held by
the prevailing morality or strong and preponderant opinion to be greatly and immediately
necessary to the public welfare."
This statement, recent as it is, has been quoted with approval by several courts.
(Cunningham vs. Northwestern Imp. Co. [1911], 44 Mont., 180; State vs. Mountain Timber
Co. [1913], 75 Wash., 581; McDavid vs. Bank of Bay Minette [Ala., 1915], 69 Sou., 452;
Hopkins vs. City of Richmond [Va., 1915], 86 S.E., 139; State vs. Philipps [Miss. 1915], 67
Sou., 651.)

It was said in Com. vs. Alger (7 Cush., 53, 85), per Shaw, C.J., that: "It is much easier to
perceive and realize the existence and sources of this police power than to mark its
boundaries, or to prescribe limits to its exercise." In Stone vs. Mississippi (101 U.S., 814), it
was said: "Many attempts have been made in this court and elsewhere to define the police
power, but never with entire success. It is always easier to determine whether a particular
case comes within the general scope of the power, than to give an abstract definition of the
power itself, which will be in all respects accurate."

Other courts have held the same vow of efforts to evolve a satisfactory definition of the
police power. Manifestly, definitions which fail to anticipate cases properly within the
scope of the police power are deficient. It is necessary, therefore, to confine our discussion
to the principle involved and determine whether the cases as they come up are within that
principle. The basic idea of civil polity in the United States is that government should
interfere with individual effort only to the extent necessary to preserve a healthy social and
economic condition of the country. State interference with the use of private property may
be exercised in three ways. First, through the power of taxation, second, through the power
of eminent domain, and third, through the police power. Buy the first method it is assumed
that the individual receives the equivalent of the tax in the form of protection and benefit
he receives from the government as such. By the second method he receives the market
value of the property taken from him. But under the third method the benefits he derived
are only such as may arise from the maintenance of a healthy economic standard of society
and is often referred to as damnum absque injuria. (Com. vs. Plymouth Coal Co. 232 Pa., 141;
Bemis vs. Guirl Drainage Co., 182 Ind., 36.) There was a time when state interference with
the use of private property under the guise of the police power was practically confined to
the suppression of common nuisances. At the present day, however, industry is organized
along lines which make it possible for large combinations of capital to profit at the expense
of the socio-economic progress of the nation by controlling prices and dictating to
industrial workers wages and conditions of labor. Not only this but the universal use of
mechanical contrivances by producers and common carriers has enormously increased the
toll of human life and limb in the production and distribution of consumption goods. To the
extent that these businesses affect not only the public health, safety, and morals, but also
the general social and economic life of the nation, it has been and will continue to be
necessary for the state to interfere by regulation. By so doing, it is true that the enjoyment
of private property is interfered with in no small degree and in ways that would have been
considered entirely unnecessary in years gone by. The regulation of rates charged by
common carriers, for instance, or the limitation of hours of work in industrial
establishments have only a very indirect bearing upon the public health, safety, and morals,
but do bear directly upon social and economic conditions. To permit each individual unit of
society to feel that his industry will bring a fair return; to see that his work shall be done
under conditions that will not either immediately or eventually ruin his health; to prevent
the artificial inflation of prices of the things which are necessary for his physical well being
are matters which the individual is no longer capable of attending to himself. It is within
the province of the police power to render assistance to the people to the extent that may
be necessary to safeguard these rights. Hence, laws providing for the regulation of wages
and hours of labor of coal miners (Rail & River Coal Co. vs. Taylor, 234 U.S., 224); requiring
payment of employees of railroads and other industrial concerns in legal tender and
requiring salaries to be paid semimonthly (Erie R.R. Co. vs. Williams, 233 U.S., 685);
providing a maximum number of hours of labor for women (Miller vs. Wilson, U.S. Sup. Ct.
[Feb. 23, 1915], Adv. Opns., p. 342); prohibiting child labor (Sturges & Burn vs. Beauchamp,
231 U.S., 320); restricting the hours of labor in public laundries (In re Wong Wing, 167 Cal.,
109); limiting hours of labor in industrial establishment generally (State vs. Bunting, 71
Ore., 259); Sunday Closing Laws (State vs. Nicholls [Ore., 1915], 151 Pac., 473; People vs. C.
Klinck Packing Co. [N.Y., 1915], 108 N. E., 278; Hiller vs. State [Md., 1914], 92 Atl., 842;
State vs. Penny, 42 Mont., 118; City of Springfield vs. Richter, 257 Ill., 578, 580;
State vs. Hondros [S.C., 1915], 84 S.E., 781); have all been upheld as a valid exercise of the
police power. Again, workmen's compensation laws have been quite generally upheld.
These statutes discard the common law theory that employers are not liable for industrial
accidents and make them responsible for all accidents resulting from trade risks, it being
considered that such accidents are a legitimate charge against production and that the
employer by controlling the prices of his product may shift the burden to the community.
Laws requiring state banks to join in establishing a depositors' guarantee fund have also
been upheld by the Federal Supreme Court in Noble State Bank vs. Haskell (219 U. S., 104),
and Assaria State Bank vs. Dolley (219 U.S., 121).

Offensive noises and smells have been for a long time considered susceptible of
suppression in thickly populated districts. Barring livery stables from such locations was
approved of in Reinman vs. Little Rock (U.S. Sup. Ct. [Apr. 5, 1915], U.S. Adv. Opns., p. 511).
And a municipal ordinance was recently upheld (People vs. Ericsson, 263 Ill., 368), which
prohibited the location of garages within two hundred feet of any hospital, church, or
school, or in any block used exclusively for residential purposes, unless the consent of the
majority of the property owners be obtained. Such statutes as these are usually upheld on
the theory of safeguarding the public health. But we apprehend that in point of fact they
have little bearing upon the health of the normal person, but a great deal to do with his
physical comfort and convenience and not a little to do with his peace of mind. Without
entering into the realm of psychology, we think it quite demonstrable that sight is as
valuable to a human being as any of his other senses, and that the proper ministration to
this sense conduces as much to his contentment as the care bestowed upon the senses of
hearing or smell, and probably as much as both together. Objects may be offensive to the
eye as well as to the nose or ear. Man's esthetic feelings are constantly being appealed to
through his sense of sight. Large investments have been made in theaters and other forms
of amusement, in paintings and spectacular displays, the success of which depends in great
part upon the appeal made through the sense of sight. Moving picture shows could not
possible without the sense of sight. Governments have spent millions on parks and
boulevards and other forms of civic beauty, the first aim of which is to appeal to the sense
of sight. Why, then, should the Government not interpose to protect from annoyance this
most valuable of man's senses as readily as to protect him from offensive noises and
smells?

The advertising industry is a legitimate one. It is at the same time a cause and an effect of
the great industrial age through which the world is now passing. Millions are spent each
year in this manner to guide the consumer to the articles which he needs. The sense of sight
is the primary essential to advertising success. Billboard advertising, as it is now
conducted, is a comparatively recent form of advertising. It is conducted out of doors and
along the arteries of travel, and compels attention by the strategic locations of the boards,
which obstruct the range of vision at points where travelers are most likely to direct their
eyes. Beautiful landscapes are marred or may not be seen at all by the traveler because of
the gaudy array of posters announcing a particular kind of breakfast food, or underwear,
the coming of a circus, an incomparable soap, nostrums or medicines for the curing of all
the ills to which the flesh is heir, etc. It is quite natural for people to protest against this
indiscriminate and wholesale use of the landscape by advertisers and the intrusion of
tradesmen upon their hours of leisure and relaxation from work. Outdoor life must lose
much of its charm and pleasure if this form of advertising is permitted to continue
unhampered until it converts the streets and highways into veritable canyons through
which the world must travel in going to work or in search of outdoor pleasure.

The success of billboard advertising depends not so much upon the use of private property
as it does upon the use of the channels of travel used by the general public. Suppose that
the owner of private property, who so vigorously objects to the restriction of this form of
advertising, should require the advertiser to paste his posters upon the billboards so that
they would face the interior of the property instead of the exterior. Billboard advertising
would die a natural death if this were done, and its real dependency not upon the
unrestricted use of private property but upon the unrestricted use of the public highways is
at once apparent. Ostensibly located on private property, the real and sole value of the
billboard is its proximity to the public thoroughfares. Hence, we conceive that the
regulation of billboards and their restriction is not so much a regulation of private property
as it is a regulation of the use of the streets and other public thoroughfares.

We would not be understood as saying that billboard advertising is not a legitimate

business any more than we would say that a livery stable or an automobile garage is not.
Even a billboard is more sightly than piles of rubbish or an open sewer. But all these
businesses are offensive to the senses under certain conditions.

It has been urged against ministering to the sense of sight that tastes are so diversified that
there is no safe standard of legislation in this direction. We answer in the language of the
Supreme Court in Noble State Bank vs. Haskell (219 U.S., 104), and which has already been
adopted by several state courts (see supra), that "the prevailing morality or strong and
preponderating opinion" demands such legislation. The agitation against the unrestrained
development of the billboard business has produced results in nearly all the countries of
Europe. (Ency. Britannica, vol. 1, pp. 237-240.) Many drastic ordinances and state laws
have been passed in the United States seeking to make the business amenable to regulation.
But their regulation in the United states is hampered by what we conceive an unwarranted
restriction upon the scope of the police power by the courts. If the police power may be
exercised to encourage a healthy social and economic condition in the country, and if the
comfort and convenience of the people are included within those subjects, everything
which encroaches upon such territory is amenable to the police power. A source of
annoyance and irritation to the public does not minister to the comfort and convenience of
the public. And we are of the opinion that the prevailing sentiment is manifestly against the
erection of billboards which are offensive to the sight.

We do not consider that we are in conflict with the decision in Eubank vs. Richmond (226
U.S., 137), where a municipal ordinance establishing a building line to which property
owners must conform was held unconstitutional. As we have pointed out, billboard
advertising is not so much a use of private property as it is a use of the public
thoroughfares. It derives its value to the power solely because the posters are exposed to
the public gaze. It may well be that the state may not require private property owners to
conform to a building line, but may prescribe the conditions under which they shall make
use of the adjoining streets and highways. Nor is the law in question to be held invalid as
denying equal protection of the laws. In Keokee Coke Co. vs. Taylor (234 U.S., 224), it was
said: "It is more pressed that the act discriminates unconstitutionally against certain
classes. But while there are differences of opinion as to the degree and kind of
discrimination permitted by the Fourteenth Amendment, it is established by repeated
decisions that a statute aimed at what is deemed an evil, and hitting it presumably where
experience shows it to be most felt, is not to be upset by thinking up and enumerating other
instances to which it might have been applied equally well, so far as the court can see. That
is for the legislature to judge unless the case is very clear."

But we have not overlooked the fact that we are not in harmony with the highest courts of a
number of the states in the American Union upon this point. Those courts being of the
opinion that statutes which are prompted and inspired by esthetic considerations merely,
having for their sole purpose the promotion and gratification of the esthetic sense, and not
the promotion or protection of the public safety, the public peace and good order of society,
must be held invalid and contrary to constitutional provisions holding inviolate the rights
of private property. Or, in other words, the police power cannot interfere with private
property rights for purely esthetic purposes. The courts, taking this view, rest their
decisions upon the proposition that the esthetic sense is disassociated entirely from any
relation to the public health, morals, comfort, or general welfare and is, therefore, beyond
the police power of the state. But we are of the opinion, as above indicated, that unsightly
advertisements or signs, signboards, or billboards which are offensive to the sight, are not
disassociated from the general welfare of the public. This is not establishing a new
principle, but carrying a well recognized principle to further application. (Fruend on Police
Power, p. 166.)

For the foregoing reasons the judgment appealed from is hereby reversed and the action
dismissed upon the merits, with costs. So ordered.
US v Toribio, GR No. L-5060, January 26, 1910

G.R. No. L-5060 January 26, 1910

THE UNITED STATES, plaintiff-appellee,

vs.
LUIS TORIBIO, defendant-appellant.

Rodriguez & Del Rosario, for appellant.

Attorney-General Villamor, for appellee.

CARSON, J.:

The evidence of record fully sustains the findings of the trial court that the appellant
slaughtered or caused to be slaughtered for human consumption, the carabao described in
the information, without a permit from the municipal treasure of the municipality wherein
it was slaughtered, in violation of the provisions of sections 30 and 33 of Act No. 1147, an
Act regulating the registration, branding, and slaughter of large cattle.

It appears that in the town of Carmen, in the Province of Bohol, wherein the animal was
slaughtered there is no municipal slaughterhouse, and counsel for appellant contends that
under such circumstances the provisions of Act No. 1147 do not prohibit nor penalize the
slaughter of large cattle without a permit of the municipal treasure. Sections 30, 31, 32, and
33 of the Act are as follows:

SEC. 30. No large cattle shall be slaughtered or killed for food at the municipal
slaughterhouse except upon permit secured from the municipal treasure. Before
issuing the permit for the slaughter of large cattle for human consumption, the
municipal treasurer shall require for branded cattle the production of the original
certificate of ownership and certificates of transfer showing title in the person
applying for the permit, and for unbranded cattle such evidence as may satisfy said
treasurer as to the ownership of the animals for which permit to slaughter has been
requested.

SEC. 31. No permit to slaughter has been carabaos shall be granted by the municipal
treasurer unless such animals are unfit for agricultural work or for draft purposes,
and in no event shall a permit be given to slaughter for food any animal of any kind
which is not fit for human consumption.

SEC. 32. The municipal treasurer shall keep a record of all permits for slaughter
issued by him, and such record shall show the name and residence of the owner, and
 the class, sex, age, brands, knots of radiated hair commonly know as remolinos or
cowlicks, and other marks of identification of the animal for the slaughter of which
permit is issued and the date on which such permit is issued. Names of owners shall
be alphabetically arranged in the record, together with date of permit.

A copy of the record of permits granted for slaughter shall be forwarded monthly to
the provincial treasurer, who shall file and properly index the same under the name
of the owner, together with date of permit.

SEC. 33. Any person slaughtering or causing to be slaughtered for human

consumption or killing for food at the municipal slaughterhouse any large cattle
except upon permit duly secured from the municipal treasurer, shall be punished by
a fine of not less than ten nor more than five hundred pesos, Philippine currency, or
by imprisonment for not less than one month nor more than six months, or by both
such fine and imprisonment, in the discretion of the court.

It is contended that the proper construction of the language of these provisions limits the
prohibition contained in section 30 and the penalty imposed in section 33 to cases (1) of
slaughter of large cattle for human consumption in a municipal slaughter without a permit
duly secured from the municipal treasurer, and (2) cases of killing of large cattle for food in
a municipal slaughterhouse without a permit duly secured from the municipal treasurer;
and it is urged that the municipality of Carmen not being provided with a municipal
slaughterhouse, neither the prohibition nor the penalty is applicable to cases of slaughter
of large cattle without a permit in that municipality.

We are of opinion, however, that the prohibition contained in section 30 refers (1) to the
slaughter of large cattle for human consumption, anywhere, without a permit duly secured
from the municipal treasurer, and (2) expressly and specifically to the killing for food of
large cattle at a municipal slaughterhouse without such permit; and that the penalty
provided in section 33 applies generally to the slaughter of large cattle for human
consumption, anywhere, without a permit duly secured from the municipal treasurer, and
specifically to the killing for food of large cattle at a municipal slaughterhouse without such
permit.

It may be admitted at once, that the pertinent language of those sections taken by itself and
examined apart from the context fairly admits of two constructions: one whereby the
phrase "at the municipal slaughterhouse" may be taken as limiting and restricting both the
word "slaughtered" and the words "killed for food" in section 30, and the words
"slaughtering or causing to be slaughtered for human consumption" and the words "killing
for food" in section 33; and the other whereby the phrase "at the municipal
slaughterhouse" may be taken as limiting and restricting merely the words "killed for food"
and "killing for food" as used in those sections. But upon a reading of the whole Act, and
keeping in mind the manifest and expressed purpose and object of its enactment, it is very
clear that the latter construction is that which should be adopted.

The Act primarily seeks to protect the "large cattle" of the Philippine Islands against theft
and to make easy the recovery and return of such cattle to their proper owners when lost,
strayed, or stolen. To this end it provides an elaborate and compulsory system for the
separate branding and registry of ownership of all such cattle throughout the Islands,
whereby owners are enabled readily and easily to establish their title; it prohibits and
invalidates all transfers of large cattle unaccompanied by certificates of transfer issued by
the proper officer in the municipality where the contract of sale is made; and it provides
also for the disposition of thieves or persons unlawfully in possession, so as to protect the
rights of the true owners. All this, manifestly, in order to make it difficult for any one but
the rightful owner of such cattle to retain them in his possession or to dispose of them to
others. But the usefulness of this elaborate and compulsory system of identification, resting
as it does on the official registry of the brands and marks on each separate animal
throughout the Islands, would be largely impaired, if not totally destroyed, if such animals
were requiring proof of ownership and the production of certificates of registry by the
person slaughtering or causing them to be slaughtered, and this especially if the animals
were slaughtered privately or in a clandestine manner outside of a municipal
slaughterhouse. Hence, as it would appear, sections 30 and 33 prohibit and penalize the
slaughter for human consumption or killing for food at a municipal slaughterhouse of such
animals without a permit issued by the municipal treasurer, and section 32 provides for the
keeping of detailed records of all such permits in the office of the municipal and also of the
provincial treasurer.

If, however, the construction be placed on these sections which is contended for by the
appellant, it will readily be seen that all these carefully worked out provisions for the
registry and record of the brands and marks of identification of all large cattle in the
Islands would prove in large part abortion, since thieves and persons unlawfully in
possession of such cattle, and naturally would, evade the provisions of the law by
slaughtering them outside of municipal slaughterhouses, and thus enjoy the fruits of their
wrongdoing without exposing themselves to the danger of detection incident to the
bringing of the animals to the public slaughterhouse, where the brands and other
identification marks might be scrutinized and proof of ownership required.

Where the language of a statute is fairly susceptible of two or more constructions, that
construction should be adopted which will most tend to give effect to the manifest intent of
the lawmaker and promote the object for which the statute was enacted, and a construction
should be rejected which would tend to render abortive other provisions of the statute and
to defeat the object which the legislator sought to attain by its enactment. We are of
opinion, therefore, that sections 30 and 33 of the Act prohibit and penalize the slaughtering
or causing to be slaughtered for human consumption of large cattle at any place without
the permit provided for in section 30.

It is not essential that an explanation be found for the express prohibition in these sections
of the "killing for food at a municipal slaughterhouse" of such animals, despite the fact that
this prohibition is clearly included in the general prohibition of the slaughter of such
animals for human consumption anywhere; but it is not improbable that the requirement
for the issue of a permit in such cases was expressly and specifically mentioned out of
superabundance of precaution, and to avoid all possibility of misunderstanding in the event
that some of the municipalities should be disposed to modify or vary the general provisions
of the law by the passage of local ordinances or regulations for the control of municipal
slaughterhouse.

Similar reasoning applied to the specific provisions of section 31 of the Act leads to the
same conclusion. One of the secondary purposes of the law, as set out in that section, is to
prevent the slaughter for food of carabaos fit for agricultural and draft purposes, and of all
animals unfit for human consumption. A construction which would limit the prohibitions
and penalties prescribed in the statute to the killing of such animals in municipal
slaughterhouses, leaving unprohibited and unpenalized their slaughter outside of such
establishments, so manifestly tends to defeat the purpose and object of the legislator, that
unless imperatively demanded by the language of the statute it should be rejected; and, as
we have already indicated, the language of the statute is clearly susceptible of the
construction which we have placed upon it, which tends to make effective the provisions of
this as well as all the other sections of the Act.

It appears that the defendant did in fact apply for a permit to slaughter his carabao, and
that it was denied him on the ground that the animal was not unfit "for agricultural work or
for draft purposes." Counsel for appellant contends that the statute, in so far as it
undertakes to penalize the slaughter of carabaos for human consumption as food, without
first obtaining a permit which can not be procured in the event that the animal is not unfit
"for agricultural work or draft purposes," is unconstitutional and in violation of the terms
of section 5 of the Philippine Bill (Act of Congress, July 1, 1902), which provides that "no
law shall be enacted which shall deprive any person of life, liberty, or property without due
process of law."

It is not quite clear from the argument of counsel whether his contention is that this
provision of the statute constitutes a taking of property for public use in the exercise of the
right of eminent domain without providing for the compensation of the owners, or that it is
an undue and unauthorized exercise of the police power of the State. But whatever may be
the basis of his contention, we are of opinion, appropriating, with necessary modifications
understood, the language of that great jurist, Chief Justice Shaw (in the case of
Com. vs. Tewksbury, 11 Met., 55, where the question involved was the constitutionality of a
statute prohibiting and penalizing the taking or carrying away by any person, including the
owner, of any stones, gravel, or sand, from any of the beaches in the town of Chesea,) that
the law in question "is not a taking of the property for public use, within the meaning of the
constitution, but is a just and legitimate exercise of the power of the legislature to regulate
and restrain such particular use of the property as would be inconsistent with or injurious
to the rights of the public. All property is acquired and held under the tacit condition that it
shall not be so used as to injure the equal rights of others or greatly impair the public rights
and interest of the community."

It may be conceded that the benificial use and exclusive enjoyment of the property of all
carabao owners in these Islands is to a greater or less degree interfered with by the
provisions of the statute; and that, without inquiring what quantum of interest thus passes
from the owners of such cattle, it is an interest the deprivation of which detracts from their
right and authority, and in some degree interferes with their exclusive possession and
control of their property, so that if the regulations in question were enacted for purely
private purpose, the statute, in so far as these regulations are concerned, would be a
violation of the provisions of the Philippine Bill relied on be appellant; but we are satisfied
that it is not such a taking, such an interference with the right and title of the owners, as is
involved in the exercise by the State of the right of eminent domain, so as to entitle these
owners to compensation, and that it is no more than "a just restrain of an injurious private
use of the property, which the legislature had authority to impose."

In the case of Com. vs. Alger (7 Cush., 53, 84), wherein the doctrine laid down in
Com. vs. Tewksbury (supra) was reviewed and affirmed, the same eminent jurist who wrote
the former opinion, in distinguishing the exercise of the right of eminent domain from the
exercise of the sovereign police powers of the State, said:

We think it is settled principle, growing out of the nature of well-ordered civil

society, that every holder of property, however absolute and unqualified may be his
title, holds it under the implied liability that his use of it may be so regulated that is
shall not be injurious to the equal enjoyment of others having an equal right to the
enjoyment of their property, nor injurious to the rights of the community. . . . Rights
of property, like all other social and conventional rights, are subject to such
reasonable limitations in their enjoyment as shall prevent them from being
injurious, and to such reasonable restrain and regulations establish by law, as the
 legislature, under the governing and controlling power vested in them by the
constitution, may think necessary and expedient.

This is very different from the right of eminent domain, the right of a government to
take and appropriate private property to public use, whenever the public exigency
requires it; which can be done only on condition of providing a reasonable
compensation therefor. The power we allude to is rather the police power, the
power vested in the legislature by the constitution, to make, ordain, and establish all
manner of wholesome and reasonable laws, statutes, and ordinances, either with
penalties or without, not repugnant to the constitution, as they shall judge to be for
the good and welfare of the commonwealth, and of the subjects of the same.

It is much easier to perceive and realize the existence and sources of this power
than to mark its boundaries or prescribe limits to its exercise.

Applying these principles, we are opinion that the restrain placed by the law on the
slaughter for human consumption of carabaos fit for agricultural work and draft purpose is
not an appropriation of property interests to a "public use," and is not, therefore, within the
principle of the exercise by the State of the right of eminent domain. It is fact a mere
restriction or limitation upon a private use, which the legislature deemed to be determental
to the public welfare. And we think that an examination of the general provisions of the
statute in relation to the public interest which it seeks to safeguard and the public
necessities for which it provides, leaves no room for doubt that the limitations and
restraints imposed upon the exercise of rights of ownership by the particular provisions of
the statute under consideration were imposed not for private purposes but, strictly, in the
promotion of the "general welfare" and "the public interest" in the exercise of the sovereign
police power which every State possesses for the general public welfare and which
"reaches to every species of property within the commonwealth."

For several years prior to the enactment of the statute a virulent contagious or infectious
disease had threatened the total extinction of carabaos in these Islands, in many sections
sweeping away seventy, eighty, and in some cases as much as ninety and even one hundred
per cent of these animals. Agriculture being the principal occupation of the people, and the
carabao being the work animal almost exclusively in use in the fields as well as for draft
purposes, the ravages of the disease with which they were infected struck an almost vital
blow at the material welfare of the country. large areas of productive land lay waste for
years, and the production of rice, the staple food of the inhabitants of the Islands, fell off to
such an extent that the impoverished people were compelled to spend many millions of
pesos in its importation, notwithstanding the fact that with sufficient work animals to
cultivate the fields the arable rice lands of the country could easily be made to produce a
supply more that sufficient for its own needs. The drain upon the resources of the Islands
was such that famine soon began to make itself felt, hope sank in the breast of the people,
and in many provinces the energies of the breadwinners seemed to be paralyzed by the
apparently hopeless struggle for existence with which they were confronted.

To meet these conditions, large sums of money were expended by the Government in
relieving the immediate needs of the starving people, three millions of dollars were voted
by the Congress of the United States as a relief or famine fund, public works were
undertaken to furnish employment in the provinces where the need was most pressing,
and every effort made to alleviate the suffering incident to the widespread failure of the
crops throughout the Islands, due in large measure to the lack of animals fit for agricultural
work and draft purposes.

Such measures, however, could only temporarily relieve the situation, because in an
agricultural community material progress and permanent prosperity could hardly be
hoped for in the absence of the work animals upon which such a community must
necessarily rely for the cultivation of the fields and the transportation of the products of the
fields to market. Accordingly efforts were made by the Government to increase the supply
of these animals by importation, but, as appears from the official reports on this subject,
hope for the future depended largely on the conservation of those animals which had been
spared from the ravages of the diseased, and their redistribution throughout the Islands
where the need for them was greatest.

At large expense, the services of experts were employed, with a view to the discovery and
applications of preventive and curative remedies, and it is hoped that these measures have
proved in some degree successful in protecting the present inadequate supply of large
cattle, and that the gradual increase and redistribution of these animals throughout the
Archipelago, in response to the operation of the laws of supply and demand, will ultimately
results in practically relieving those sections which suffered most by the loss of their work
animals.

As was to be expected under such conditions, the price of carabaos rapidly increase from
the three to five fold or more, and it may fairly be presumed that even if the conservative
measures now adopted prove entirely successful, the scant supply will keep the price of
these animals at a high figure until the natural increase shall have more nearly equalized
the supply to the demand.

Coincident with and probably intimately connected with this sudden rise in the price of
cattle, the crime of cattle stealing became extremely prevalent throughout the Islands,
necessitating the enactment of a special law penalizing with the severest penalties the theft
of carabaos and other personal property by roving bands; and it must be assumed from the
legislative authority found that the general welfare of the Islands necessitated the
enactment of special and somewhat burdensome provisions for the branding and
registration of large cattle, and supervision and restriction of their slaughter for food. It will
hardly be questioned that the provisions of the statute touching the branding and
registration of such cattle, and prohibiting and penalizing the slaughter of diseased cattle
for food were enacted in the due and proper exercise of the police power of the State; and
we are of opinion that, under all the circumstances, the provision of the statute prohibiting
and penalizing the slaughter for human consumption of carabaos fit for work were in like
manner enacted in the due and proper exercise of that power, justified by the exigent
necessities of existing conditions, and the right of the State to protect itself against the
overwhelming disaster incident to the further reduction of the supply of animals fit for
agricultural work or draft purposes.

It is, we think, a fact of common knowledge in these Islands, and disclosed by the official
reports and records of the administrative and legislative departments of the Government,
that not merely the material welfare and future prosperity of this agricultural community
were threatened by the ravages of the disease which swept away the work animals during
the years prior to the enactment of the law under consideration, but that the very life and
existence of the inhabitants of these Islands as a civilized people would be more or less
imperiled by the continued destruction of large cattle by disease or otherwise. Confronted
by such conditions, there can be no doubt of the right of the Legislature to adopt reasonable
measures for the preservation of work animals, even to the extent of prohibiting and
penalizing what would, under ordinary conditions, be a perfectly legitimate and proper
exercise of rights of ownership and control of the private property of the citizen. The police
power rests upon necessity and the right of self-protection and if ever the invasion of
private property by police regulation can be justified, we think that the reasonable
restriction placed upon the use of carabaos by the provision of the law under discussion
must be held to be authorized as a reasonable and proper exercise of that power.

As stated by Mr. Justice Brown in his opinion in the case of Lawton vs. Steele (152 U.S., 133,
136):

The extent and limits of what is known as the police power have been a fruitful
subject of discussion in the appellate courts of nearly every State in the Union. It is
universally conceded to include everything essential to the public safely, health, and
morals, and to justify the destruction or abatement, by summary proceedings, of
whatever may be regarded as a public nuisance. Under this power it has been held
that the State may order the destruction of a house falling to decay or otherwise
endangering the lives of passers-by; the demolition of such as are in the path of a
 conflagration; the slaughter of diseased cattle; the destruction of decayed or
unwholesome food; the prohibition of wooden buildings in cities; the regulation of
railways and other means of public conveyance, and of interments in burial
grounds; the restriction of objectionable trades to certain localities; the compulsary
vaccination of children; the confinement of the insane or those afficted with
contagious deceases; the restraint of vagrants, beggars, and habitual drunkards; the
suppression of obscene publications and houses of ill fame; and the prohibition of
gambling houses and places where intoxicating liquors are sold. Beyond this,
however, the State may interfere wherever the public interests demand it, and in this
particular a large discretion is necessarily vested in the legislature to determine, not
only what the interests of the public require, but what measures are necessary for the
protection of such interests. (Barbier vs. Connolly, 113 U. S., 27; Kidd vs. Pearson, 128
U. S., 1.) To justify the State in thus interposing its authority in behalf of the public, it
must appear, first, that the interests of the public generally, as distinguished from
those of a particular class, require such interference; and, second, that the means are
reasonably necessary for the accomplishment of the purpose, and not unduly
oppressive upon individuals. The legislature may not, under the guise of protecting
the public interests, arbitrarily interfere with private business, or impose unusual
and unnecessary restrictions upon lawful occupations. In other words, its
determination as to what is a proper exercise of its police powers is not final or
conclusive, but is subject to the supervision of the court.

From what has been said, we think it is clear that the enactment of the provisions of the
statute under consideration was required by "the interests of the public generally, as
distinguished from those of a particular class;" and that the prohibition of the slaughter of
carabaos for human consumption, so long as these animals are fit for agricultural work or
draft purposes was a "reasonably necessary" limitation on private ownership, to protect
the community from the loss of the services of such animals by their slaughter by
improvident owners, tempted either by greed of momentary gain, or by a desire to enjoy
the luxury of animal food, even when by so doing the productive power of the community
may be measurably and dangerously affected.

Chief Justice Redfield, in Thorpe vs. Rutland & Burlington R. R. Co. (27 Vt., 140), said (p.
149) that by this "general police power of the State, persons and property are subjected to
all kinds of restraints and burdens, in order to secure the general comfort, health, and
prosperity of the State; of the perfect right in the legislature to do which no question ever
was, or, upon acknowledge and general principles, ever can be made, so far as natural
persons are concerned."

And Cooley in his "Constitutional Limitations" (6th ed., p. 738) says:

 It would be quite impossible to enumerate all the instances in which the police
power is or may be exercised, because the various cases in which the exercise by
one individual of his rights may conflict with a similar exercise by others, or may be
detrimental to the public order or safety, are infinite in number and in variety. And
there are other cases where it becomes necessary for the public authorities to
interfere with the control by individuals of their property, and even to destroy it,
where the owners themselves have fully observed all their duties to their fellows
and to the State, but where, nevertheless, some controlling public necessity
demands the interference or destruction. A strong instance of this description is
where it becomes necessary to take, use, or destroy the private property of
individuals to prevent the spreading of a fire, the ravages of a pestilence, the
advance of a hostile army, or any other great public calamity. Here the individual is
in no degree in fault, but his interest must yield to that "necessity" which "knows no
law." The establishment of limits within the denser portions of cities and villages
within which buildings constructed of inflammable materials shall not be erected or
repaired may also, in some cases, be equivalent to a destruction of private property;
but regulations for this purpose have been sustained notwithstanding this result.
Wharf lines may also be established for the general good, even though they prevent
the owners of water-fronts from building out on soil which constitutes private
property. And, whenever the legislature deem it necessary to the protection of a
harbor to forbid the removal of stones, gravel, or sand from the beach, they may
establish regulations to that effect under penalties, and make them applicable to the
owners of the soil equally with other persons. Such regulations are only "a just
restraint of an injurious use of property, which the legislature have authority" to
impose.

So a particular use of property may sometimes be forbidden, where, by a change of

circumstances, and without the fault of the power, that which was once lawful,
proper, and unobjectionable has now become a public nuisance, endangering the
public health or the public safety. Milldams are sometimes destroyed upon this
grounds; and churchyards which prove, in the advance of urban population, to be
detrimental to the public health, or in danger of becoming so, are liable to be closed
against further use for cemetery purposes.

These citations from some of the highest judicial and text-book authorities in the United
States clearly indicate the wide scope and extent which has there been given to the doctrine
us in our opinion that the provision of the statute in question being a proper exercise of
that power is not in violation of the terms of section 5 of the Philippine Bill, which provide
that "no law shall be enacted which shall deprive any person of life, liberty, or property
without due process of law," a provision which itself is adopted from the Constitution of the
United States, and is found in substance in the constitution of most if not all of the States of
the Union.

The judgment of conviction and the sentence imposed by the trial court should be affirmed
with the costs of this instance against the appellant. So ordered.
Ichong v Hernandez, 101 Phil. 1155

G.R. No. L-7995 May 31, 1957

LAO H. ICHONG, in his own behalf and in behalf of other alien residents, corporations
and partnerships adversely affected. by Republic Act No. 1180, petitioner,
vs.
JAIME HERNANDEZ, Secretary of Finance, and MARCELINO SARMIENTO, City
Treasurer of Manila, respondents.

Ozaeta, Lichauco and Picazo and Sycip, Quisumbing, Salazar and Associates for petitioner.
Office of the Solicitor General Ambrosio Padilla and Solicitor Pacifico P. de Castro for
respondent Secretary of Finance.
City Fiscal Eugenio Angeles and Assistant City Fiscal Eulogio S. Serrano for respondent City
Treasurer.
Dionisio Reyes as Amicus Curiae.
Marcial G. Mendiola as Amicus Curiae.
Emiliano R. Navarro as Amicus Curiae.

LABRADOR, J.:

I. The case and issue, in general

This Court has before it the delicate task of passing upon the validity and constitutionality
of a legislative enactment, fundamental and far-reaching in significance. The enactment
poses questions of due process, police power and equal protection of the laws. It also poses
an important issue of fact, that is whether the conditions which the disputed law purports
to remedy really or actually exist. Admittedly springing from a deep, militant, and positive
nationalistic impulse, the law purports to protect citizen and country from the alien
retailer. Through it, and within the field of economy it regulates, Congress attempts to
translate national aspirations for economic independence and national security, rooted in
the drive and urge for national survival and welfare, into a concrete and tangible measures
designed to free the national retailer from the competing dominance of the alien, so that
the country and the nation may be free from a supposed economic dependence and
bondage. Do the facts and circumstances justify the enactment?

II. Pertinent provisions of Republic Act No. 1180

Republic Act No. 1180 is entitled "An Act to Regulate the Retail Business." In effect it
nationalizes the retail trade business. The main provisions of the Act are: (1) a prohibition
against persons, not citizens of the Philippines, and against associations, partnerships, or
corporations the capital of which are not wholly owned by citizens of the Philippines, from
engaging directly or indirectly in the retail trade; (2) an exception from the above
prohibition in favor of aliens actually engaged in said business on May 15, 1954, who are
allowed to continue to engaged therein, unless their licenses are forfeited in accordance
with the law, until their death or voluntary retirement in case of natural persons, and for
ten years after the approval of the Act or until the expiration of term in case of juridical
persons; (3) an exception therefrom in favor of citizens and juridical entities of the United
States; (4) a provision for the forfeiture of licenses (to engage in the retail business) for
violation of the laws on nationalization, control weights and measures and labor and other
laws relating to trade, commerce and industry; (5) a prohibition against the establishment
or opening by aliens actually engaged in the retail business of additional stores or branches
of retail business, (6) a provision requiring aliens actually engaged in the retail business to
present for registration with the proper authorities a verified statement concerning their
businesses, giving, among other matters, the nature of the business, their assets and
liabilities and their offices and principal offices of judicial entities; and (7) a provision
allowing the heirs of aliens now engaged in the retail business who die, to continue such
business for a period of six months for purposes of liquidation.

III. Grounds upon which petition is based-Answer thereto

Petitioner, for and in his own behalf and on behalf of other alien residents corporations and
partnerships adversely affected by the provisions of Republic Act. No. 1180, brought this
action to obtain a judicial declaration that said Act is unconstitutional, and to enjoin the
Secretary of Finance and all other persons acting under him, particularly city and municipal
treasurers, from enforcing its provisions. Petitioner attacks the constitutionality of the Act,
contending that: (1) it denies to alien residents the equal protection of the laws and
deprives of their liberty and property without due process of law ; (2) the subject of the Act
is not expressed or comprehended in the title thereof; (3) the Act violates international and
treaty obligations of the Republic of the Philippines; (4) the provisions of the Act against
the transmission by aliens of their retail business thru hereditary succession, and those
requiring 100% Filipino capitalization for a corporation or entity to entitle it to engage in
the retail business, violate the spirit of Sections 1 and 5, Article XIII and Section 8 of Article
XIV of the Constitution.

In answer, the Solicitor-General and the Fiscal of the City of Manila contend that: (1) the Act
was passed in the valid exercise of the police power of the State, which exercise is
authorized in the Constitution in the interest of national economic survival; (2) the Act has
only one subject embraced in the title; (3) no treaty or international obligations are
infringed; (4) as regards hereditary succession, only the form is affected but the value of
the property is not impaired, and the institution of inheritance is only of statutory origin.
 IV. Preliminary consideration of legal principles involved

a. The police power. —

There is no question that the Act was approved in the exercise of the police power, but
petitioner claims that its exercise in this instance is attended by a violation of the
constitutional requirements of due process and equal protection of the laws. But before
proceeding to the consideration and resolution of the ultimate issue involved, it would be
well to bear in mind certain basic and fundamental, albeit preliminary, considerations in
the determination of the ever recurrent conflict between police power and the guarantees
of due process and equal protection of the laws. What is the scope of police power, and how
are the due process and equal protection clauses related to it? What is the province and
power of the legislature, and what is the function and duty of the courts? These
consideration must be clearly and correctly understood that their application to the facts of
the case may be brought forth with clarity and the issue accordingly resolved.

It has been said the police power is so far - reaching in scope, that it has become almost
impossible to limit its sweep. As it derives its existence from the very existence of the State
itself, it does not need to be expressed or defined in its scope; it is said to be co-extensive
with self-protection and survival, and as such it is the most positive and active of all
governmental processes, the most essential, insistent and illimitable. Especially is it so
under a modern democratic framework where the demands of society and of nations have
multiplied to almost unimaginable proportions; the field and scope of police power has
become almost boundless, just as the fields of public interest and public welfare have
become almost all-embracing and have transcended human foresight. Otherwise stated, as
we cannot foresee the needs and demands of public interest and welfare in this constantly
changing and progressive world, so we cannot delimit beforehand the extent or scope of
police power by which and through which the State seeks to attain or achieve interest or
welfare. So it is that Constitutions do not define the scope or extent of the police power of
the State; what they do is to set forth the limitations thereof. The most important of these
are the due process clause and the equal protection clause.

b. Limitations on police power. —

The basic limitations of due process and equal protection are found in the following
provisions of our Constitution:

SECTION 1.(1) No person shall be deprived of life, liberty or property without due
process of law, nor any person be denied the equal protection of the laws. (Article
III, Phil. Constitution)
These constitutional guarantees which embody the essence of individual liberty and
freedom in democracies, are not limited to citizens alone but are admittedly universal in
their application, without regard to any differences of race, of color, or of nationality. (Yick
Wo vs. Hopkins, 30, L. ed. 220, 226.)

c. The, equal protection clause. —

The equal protection of the law clause is against undue favor and individual or class
privilege, as well as hostile discrimination or the oppression of inequality. It is not intended
to prohibit legislation, which is limited either in the object to which it is directed or by
territory within which is to operate. It does not demand absolute equality among residents;
it merely requires that all persons shall be treated alike, under like circumstances and
conditions both as to privileges conferred and liabilities enforced. The equal protection
clause is not infringed by legislation which applies only to those persons falling within a
specified class, if it applies alike to all persons within such class, and reasonable grounds
exists for making a distinction between those who fall within such class and those who do
not. (2 Cooley, Constitutional Limitations, 824-825.)

d. The due process clause. —

The due process clause has to do with the reasonableness of legislation enacted in
pursuance of the police power. Is there public interest, a public purpose; is public welfare
involved? Is the Act reasonably necessary for the accomplishment of the legislature's
purpose; is it not unreasonable, arbitrary or oppressive? Is there sufficient foundation or
reason in connection with the matter involved; or has there not been a capricious use of the
legislative power? Can the aims conceived be achieved by the means used, or is it not
merely an unjustified interference with private interest? These are the questions that we
ask when the due process test is applied.

The conflict, therefore, between police power and the guarantees of due process and equal
protection of the laws is more apparent than real. Properly related, the power and the
guarantees are supposed to coexist. The balancing is the essence or, shall it be said, the
indispensable means for the attainment of legitimate aspirations of any democratic society.
There can be no absolute power, whoever exercise it, for that would be tyranny. Yet there
can neither be absolute liberty, for that would mean license and anarchy. So the State can
deprive persons of life, liberty and property, provided there is due process of law; and
persons may be classified into classes and groups, provided everyone is given the equal
protection of the law. The test or standard, as always, is reason. The police power
legislation must be firmly grounded on public interest and welfare, and a reasonable
relation must exist between purposes and means. And if distinction and classification has
been made, there must be a reasonable basis for said distinction.

e. Legislative discretion not subject to judicial review. —

Now, in this matter of equitable balancing, what is the proper place and role of the courts?
It must not be overlooked, in the first place, that the legislature, which is the constitutional
repository of police power and exercises the prerogative of determining the policy of the
State, is by force of circumstances primarily the judge of necessity, adequacy or
reasonableness and wisdom, of any law promulgated in the exercise of the police power, or
of the measures adopted to implement the public policy or to achieve public interest. On
the other hand, courts, although zealous guardians of individual liberty and right, have
nevertheless evinced a reluctance to interfere with the exercise of the legislative
prerogative. They have done so early where there has been a clear, patent or palpable
arbitrary and unreasonable abuse of the legislative prerogative. Moreover, courts are not
supposed to override legitimate policy, and courts never inquire into the wisdom of the
law.

V. Economic problems sought to be remedied

With the above considerations in mind, we will now proceed to delve directly into the issue
involved. If the disputed legislation were merely a regulation, as its title indicates, there
would be no question that it falls within the legitimate scope of legislative power. But it
goes further and prohibits a group of residents, the aliens, from engaging therein. The
problem becomes more complex because its subject is a common, trade or occupation, as
old as society itself, which from the immemorial has always been open to residents,
irrespective of race, color or citizenship.

a. Importance of retail trade in the economy of the nation. —

In a primitive economy where families produce all that they consume and consume all that
they produce, the dealer, of course, is unknown. But as group life develops and families
begin to live in communities producing more than what they consume and needing an
infinite number of things they do not produce, the dealer comes into existence. As villages
develop into big communities and specialization in production begins, the dealer's
importance is enhanced. Under modern conditions and standards of living, in which man's
needs have multiplied and diversified to unlimited extents and proportions, the retailer
comes as essential as the producer, because thru him the infinite variety of articles, goods
and needed for daily life are placed within the easy reach of consumers. Retail dealers
perform the functions of capillaries in the human body, thru which all the needed food and
supplies are ministered to members of the communities comprising the nation.

There cannot be any question about the importance of the retailer in the life of the
community. He ministers to the resident's daily needs, food in all its increasing forms, and
the various little gadgets and things needed for home and daily life. He provides his
customers around his store with the rice or corn, the fish, the salt, the vinegar, the spices
needed for the daily cooking. He has cloths to sell, even the needle and the thread to sew
them or darn the clothes that wear out. The retailer, therefore, from the lowly peddler, the
owner of a small sari-sari store, to the operator of a department store or, a supermarket is
so much a part of day-to-day existence.

b. The alien retailer's trait. —

The alien retailer must have started plying his trades in this country in the bigger centers of
population (Time there was when he was unknown in provincial towns and villages).
Slowly but gradually be invaded towns and villages; now he predominates in the cities and
big centers of population. He even pioneers, in far away nooks where the beginnings of
community life appear, ministering to the daily needs of the residents and purchasing their
agricultural produce for sale in the towns. It is an undeniable fact that in many
communities the alien has replaced the native retailer. He has shown in this trade, industry
without limit, and the patience and forbearance of a slave.

Derogatory epithets are hurled at him, but he laughs these off without murmur; insults of
ill-bred and insolent neighbors and customers are made in his face, but he heeds them not,
and he forgets and forgives. The community takes note of him, as he appears to be harmless
and extremely useful.

c. Alleged alien control and dominance. —

There is a general feeling on the part of the public, which appears to be true to fact, about
the controlling and dominant position that the alien retailer holds in the nation's economy.
Food and other essentials, clothing, almost all articles of daily life reach the residents
mostly through him. In big cities and centers of population he has acquired not only
predominance, but apparent control over distribution of almost all kinds of goods, such as
lumber, hardware, textiles, groceries, drugs, sugar, flour, garlic, and scores of other goods
and articles. And were it not for some national corporations like the Naric, the Namarco,
the Facomas and the Acefa, his control over principal foods and products would easily
become full and complete.
Petitioner denies that there is alien predominance and control in the retail trade. In one
breath it is said that the fear is unfounded and the threat is imagined; in another, it is
charged that the law is merely the result of radicalism and pure and unabashed
nationalism. Alienage, it is said, is not an element of control; also so many unmanageable
factors in the retail business make control virtually impossible. The first argument which
brings up an issue of fact merits serious consideration. The others are matters of opinion
within the exclusive competence of the legislature and beyond our prerogative to pass
upon and decide.

The best evidence are the statistics on the retail trade, which put down the figures in black
and white. Between the constitutional convention year (1935), when the fear of alien
domination and control of the retail trade already filled the minds of our leaders with fears
and misgivings, and the year of the enactment of the nationalization of the retail trade act
(1954), official statistics unmistakably point out to the ever-increasing dominance and
control by the alien of the retail trade, as witness the following tables:

Assets Gross Sales

Year and No.- Per cent Per cent
Retailers Establishment Pesos Distributio Pesos Distributio
Nationality s n n
1941
:
Filipino 106,671 200,323,13 55.82 174,181,92 51.74
.......... 8 4
Chinese 15,356 118,348,69 32.98 148,813,23 44.21
........... 2 9
Others 1,646 40,187,090 11.20 13,630,239 4.05
............
1947
:
Filipino 111,107 208,658,94 65.05 279,583,33 57.03
.......... 6 3
Chinese 13,774 106,156,21 33.56 205,701,13 41.96
........... 8 4
Others 354 8,761,260 .49 4,927,168 1.01
...........
1948 (Census
: )
Filipino 113,631 213,342,26 67.30 467,161,66 60.51
.......... 4 7
Chinese 12,087 93,155,459 29.38 294,894,22 38.20
.......... 7
Others 422 10,514,675 3.32 9,995,402 1.29
..........
1949
:
Filipino 113,659 213,451,60 60.89 462,532,90 53.47
.......... 2 1
Chinese 16,248 125,223,33 35.72 392,414,87 45.36
.......... 6 5
Others 486 12,056,365 3.39 10,078,364 1.17
..........
1951
:
Filipino 119,352 224,053,62 61.09 466,058,05 53.07
......... 0 2
Chinese 17,429 134,325,30 36.60 404,481,38 46.06
.......... 3 4
Others 347 8,614,025 2.31 7,645,327 87
..........

AVERAGE
ASSETS AND GROSS SALES PER ESTABLISHMENT

Item Gross
Year and Retailer's
Assets Sales
Nationality
(Pesos) (Pesos)

1941:

Filipino ............................................. 1,878 1,633

 Chinese .............................................. 7,707 9,691

Others ............................................... 24,415 8,281

1947:

Filipino ............................................. 1,878 2,516

Chinese ........................................... 7,707 14,934

Others .............................................. 24,749 13,919

1948: (Census)

Filipino ............................................. 1,878 4,111

Chinese ............................................. 7,707 24,398

Others .............................................. 24,916 23,686

1949:

Filipino ............................................. 1,878 4,069

Chinese .............................................. 7,707 24,152

Others .............................................. 24,807 20,737

1951:

Filipino ............................................. 1,877 3,905

Chinese ............................................. 7,707 33,207

Others ............................................... 24,824 22,033

(Estimated Assets and Gross Sales of Retail Establishments, By Year and Nationality
of Owners, Benchmark: 1948 Census, issued by the Bureau of Census and Statistics,
Department of Commerce and Industry; pp. 18-19 of Answer.)

The above statistics do not include corporations and partnerships, while the figures on
Filipino establishments already include mere market vendors, whose capital is necessarily
small..
The above figures reveal that in percentage distribution of assests and gross sales, alien
participation has steadily increased during the years. It is true, of course, that Filipinos
have the edge in the number of retailers, but aliens more than make up for the numerical
gap through their assests and gross sales which average between six and seven times those
of the very many Filipino retailers. Numbers in retailers, here, do not imply superiority; the
alien invests more capital, buys and sells six to seven times more, and gains much more.
The same official report, pointing out to the known predominance of foreign elements in
the retail trade, remarks that the Filipino retailers were largely engaged in minor retailer
enterprises. As observed by respondents, the native investment is thinly spread, and the
Filipino retailer is practically helpless in matters of capital, credit, price and supply.

d. Alien control and threat, subject of apprehension in Constitutional convention. —

It is this domination and control, which we believe has been sufficiently shown to exist, that
is the legislature's target in the enactment of the disputed nationalization would never have
been adopted. The framers of our Constitution also believed in the existence of this alien
dominance and control when they approved a resolution categorically declaring among
other things, that "it is the sense of the Convention that the public interest requires the
nationalization of the retail trade; . . . ." (II Aruego, The Framing of the Philippine
Constitution, 662-663, quoted on page 67 of Petitioner.) That was twenty-two years ago;
and the events since then have not been either pleasant or comforting. Dean Sinco of the
University of the Philippines College of Law, commenting on the patrimony clause of the
Preamble opines that the fathers of our Constitution were merely translating the general
preoccupation of Filipinos "of the dangers from alien interests that had already brought
under their control the commercial and other economic activities of the country" (Sinco,
Phil. Political Law, 10th ed., p. 114); and analyzing the concern of the members of the
constitutional convention for the economic life of the citizens, in connection with the
nationalistic provisions of the Constitution, he says:

But there has been a general feeling that alien dominance over the economic life of
the country is not desirable and that if such a situation should remain, political
independence alone is no guarantee to national stability and strength. Filipino
private capital is not big enough to wrest from alien hands the control of the
national economy. Moreover, it is but of recent formation and hence, largely
inexperienced, timid and hesitant. Under such conditions, the government as the
instrumentality of the national will, has to step in and assume the initiative, if not
the leadership, in the struggle for the economic freedom of the nation in somewhat
the same way that it did in the crusade for political freedom. Thus . . . it (the
Constitution) envisages an organized movement for the protection of the nation not
only against the possibilities of armed invasion but also against its economic
 subjugation by alien interests in the economic field. (Phil. Political Law by Sinco,
10th ed., p. 476.)

Belief in the existence of alien control and predominance is felt in other quarters. Filipino
businessmen, manufacturers and producers believe so; they fear the dangers coming from
alien control, and they express sentiments of economic independence. Witness thereto is
Resolution No. 1, approved on July 18, 1953, of the Fifth National convention of Filipino
Businessmen, and a similar resolution, approved on March 20, 1954, of the Second National
Convention of Manufacturers and Producers. The man in the street also believes, and fears,
alien predominance and control; so our newspapers, which have editorially pointed out not
only to control but to alien stranglehold. We, therefore, find alien domination and control to
be a fact, a reality proved by official statistics, and felt by all the sections and groups that
compose the Filipino community.

e. Dangers of alien control and dominance in retail. —

But the dangers arising from alien participation in the retail trade does not seem to lie in
the predominance alone; there is a prevailing feeling that such predominance may truly
endanger the national interest. With ample capital, unity of purpose and action and
thorough organization, alien retailers and merchants can act in such complete unison and
concert on such vital matters as the fixing of prices, the determination of the amount of
goods or articles to be made available in the market, and even the choice of the goods or
articles they would or would not patronize or distribute, that fears of dislocation of the
national economy and of the complete subservience of national economy and of the
consuming public are not entirely unfounded. Nationals, producers and consumers alike
can be placed completely at their mercy. This is easily illustrated. Suppose an article of
daily use is desired to be prescribed by the aliens, because the producer or importer does
not offer them sufficient profits, or because a new competing article offers bigger profits for
its introduction. All that aliens would do is to agree to refuse to sell the first article,
eliminating it from their stocks, offering the new one as a substitute. Hence, the producers
or importers of the prescribed article, or its consumers, find the article suddenly out of the
prescribed article, or its consumers, find the article suddenly out of circulation. Freedom of
trade is thus curtailed and free enterprise correspondingly suppressed.

We can even go farther than theoretical illustrations to show the pernicious influences of
alien domination. Grave abuses have characterized the exercise of the retail trade by aliens.
It is a fact within judicial notice, which courts of justice may not properly overlook or
ignore in the interests of truth and justice, that there exists a general feeling on the part of
the public that alien participation in the retail trade has been attended by a pernicious and
intolerable practices, the mention of a few of which would suffice for our purposes; that at
some time or other they have cornered the market of essential commodities, like corn and
rice, creating artificial scarcities to justify and enhance profits to unreasonable proportions;
that they have hoarded essential foods to the inconvenience and prejudice of the
consuming public, so much so that the Government has had to establish the National Rice
and Corn Corporation to save the public from their continuous hoarding practices and
tendencies; that they have violated price control laws, especially on foods and essential
commodities, such that the legislature had to enact a law (Sec. 9, Republic Act No. 1168),
authorizing their immediate and automatic deportation for price control convictions; that
they have secret combinations among themselves to control prices, cheating the operation
of the law of supply and demand; that they have connived to boycott honest merchants and
traders who would not cater or yield to their demands, in unlawful restraint of freedom of
trade and enterprise. They are believed by the public to have evaded tax laws, smuggled
goods and money into and out of the land, violated import and export prohibitions, control
laws and the like, in derision and contempt of lawful authority. It is also believed that they
have engaged in corrupting public officials with fabulous bribes, indirectly causing the
prevalence of graft and corruption in the Government. As a matter of fact appeals to
unscrupulous aliens have been made both by the Government and by their own lawful
diplomatic representatives, action which impliedly admits a prevailing feeling about the
existence of many of the above practices.

The circumstances above set forth create well founded fears that worse things may come in
the future. The present dominance of the alien retailer, especially in the big centers of
population, therefore, becomes a potential source of danger on occasions of war or other
calamity. We do not have here in this country isolated groups of harmless aliens retailing
goods among nationals; what we have are well organized and powerful groups that
dominate the distribution of goods and commodities in the communities and big centers of
population. They owe no allegiance or loyalty to the State, and the State cannot rely upon
them in times of crisis or emergency. While the national holds his life, his person and his
property subject to the needs of his country, the alien may even become the potential
enemy of the State.

f. Law enacted in interest of national economic survival and security. —

We are fully satisfied upon a consideration of all the facts and circumstances that the
disputed law is not the product of racial hostility, prejudice or discrimination, but the
expression of the legitimate desire and determination of the people, thru their authorized
representatives, to free the nation from the economic situation that has unfortunately been
saddled upon it rightly or wrongly, to its disadvantage. The law is clearly in the interest of
the public, nay of the national security itself, and indisputably falls within the scope of
police power, thru which and by which the State insures its existence and security and the
supreme welfare of its citizens.

VI. The Equal Protection Limitation

a. Objections to alien participation in retail trade. — The next question that now poses
solution is, Does the law deny the equal protection of the laws? As pointed out above, the
mere fact of alienage is the root and cause of the distinction between the alien and the
national as a trader. The alien resident owes allegiance to the country of his birth or his
adopted country; his stay here is for personal convenience; he is attracted by the lure of
gain and profit. His aim or purpose of stay, we admit, is neither illegitimate nor immoral,
but he is naturally lacking in that spirit of loyalty and enthusiasm for this country where he
temporarily stays and makes his living, or of that spirit of regard, sympathy and
consideration for his Filipino customers as would prevent him from taking advantage of
their weakness and exploiting them. The faster he makes his pile, the earlier can the alien
go back to his beloved country and his beloved kin and countrymen. The experience of the
country is that the alien retailer has shown such utter disregard for his customers and the
people on whom he makes his profit, that it has been found necessary to adopt the
legislation, radical as it may seem.

Another objection to the alien retailer in this country is that he never really makes a
genuine contribution to national income and wealth. He undoubtedly contributes to
general distribution, but the gains and profits he makes are not invested in industries that
would help the country's economy and increase national wealth. The alien's interest in this
country being merely transient and temporary, it would indeed be ill-advised to continue
entrusting the very important function of retail distribution to his hands.

The practices resorted to by aliens in the control of distribution, as already pointed out
above, their secret manipulations of stocks of commodities and prices, their utter disregard
of the welfare of their customers and of the ultimate happiness of the people of the nation
of which they are mere guests, which practices, manipulations and disregard do not attend
the exercise of the trade by the nationals, show the existence of real and actual, positive
and fundamental differences between an alien and a national which fully justify the
legislative classification adopted in the retail trade measure. These differences are certainly
a valid reason for the State to prefer the national over the alien in the retail trade. We
would be doing violence to fact and reality were we to hold that no reason or ground for a
legitimate distinction can be found between one and the other.

b. Difference in alien aims and purposes sufficient basis for distinction. —

The above objectionable characteristics of the exercise of the retail trade by the aliens,
which are actual and real, furnish sufficient grounds for legislative classification of retail
traders into nationals and aliens. Some may disagree with the wisdom of the legislature's
classification. To this we answer, that this is the prerogative of the law-making power.
Since the Court finds that the classification is actual, real and reasonable, and all persons of
one class are treated alike, and as it cannot be said that the classification is patently
unreasonable and unfounded, it is in duty bound to declare that the legislature acted within
its legitimate prerogative and it can not declare that the act transcends the limit of equal
protection established by the Constitution.

Broadly speaking, the power of the legislature to make distinctions and classifications
among persons is not curtailed or denied by the equal protection of the laws clause. The
legislative power admits of a wide scope of discretion, and a law can be violative of the
constitutional limitation only when the classification is without reasonable basis. In
addition to the authorities we have earlier cited, we can also refer to the case of Linsey vs.
Natural Carbonic Fas Co. (1911), 55 L. ed., 369, which clearly and succinctly defined the
application of equal protection clause to a law sought to be voided as contrary thereto:

. . . . "1. The equal protection clause of the Fourteenth Amendment does not take
from the state the power to classify in the adoption of police laws, but admits of the
exercise of the wide scope of discretion in that regard, and avoids what is done only
when it is without any reasonable basis, and therefore is purely arbitrary. 2. A
classification having some reasonable basis does not offend against that clause
merely because it is not made with mathematical nicety, or because in practice it
results in some inequality. 3. When the classification in such a law is called in
question, if any state of facts reasonably can be conceived that would sustain it, the
existence of that state of facts at the time the law was enacted must be assumed. 4.
One who assails the classification in such a law must carry the burden of showing
that it does not rest upon any reasonable basis but is essentially arbitrary."

c. Authorities recognizing citizenship as basis for classification. —

The question as to whether or not citizenship is a legal and valid ground for classification
has already been affirmatively decided in this jurisdiction as well as in various courts in the
United States. In the case of Smith Bell & Co. vs. Natividad, 40 Phil. 136, where the validity of
Act No. 2761 of the Philippine Legislature was in issue, because of a condition therein
limiting the ownership of vessels engaged in coastwise trade to corporations formed by
citizens of the Philippine Islands or the United States, thus denying the right to aliens, it
was held that the Philippine Legislature did not violate the equal protection clause of the
Philippine Bill of Rights. The legislature in enacting the law had as ultimate purpose the
encouragement of Philippine shipbuilding and the safety for these Islands from foreign
interlopers. We held that this was a valid exercise of the police power, and all presumptions
are in favor of its constitutionality. In substance, we held that the limitation of domestic
ownership of vessels engaged in coastwise trade to citizens of the Philippines does not
violate the equal protection of the law and due process or law clauses of the Philippine Bill
of Rights. In rendering said decision we quoted with approval the concurring opinion of
Justice Johnson in the case of Gibbons vs. Ogden, 9 Wheat., I, as follows:

"Licensing acts, in fact, in legislation, are universally restraining acts; as, for
example, acts licensing gaming houses, retailers of spirituous liquors, etc. The act, in
this instance, is distinctly of that character, and forms part of an extensive system,
the object of which is to encourage American shipping, and place them on an equal
footing with the shipping of other nations. Almost every commercial nation reserves
to its own subjects a monopoly of its coasting trade; and a countervailing privilege
in favor of American shipping is contemplated, in the whole legislation of the United
States on this subject. It is not to give the vessel an American character, that the
license is granted; that effect has been correctly attributed to the act of her
enrollment. But it is to confer on her American privileges, as contra distinguished
from foreign; and to preserve the Government from fraud by foreigners; in
surreptitiously intruding themselves into the American commercial marine, as well
as frauds upon the revenue in the trade coastwise, that this whole system is
projected."

The rule in general is as follows:

Aliens are under no special constitutional protection which forbids a classification

otherwise justified simply because the limitation of the class falls along the lines of
nationality. That would be requiring a higher degree of protection for aliens as a
class than for similar classes than for similar classes of American citizens. Broadly
speaking, the difference in status between citizens and aliens constitutes a basis for
reasonable classification in the exercise of police power. (2 Am., Jur. 468-469.)

In Commonwealth vs. Hana, 81 N. E. 149 (Massachusetts, 1907), a statute on the licensing of

hawkers and peddlers, which provided that no one can obtain a license unless he is, or has
declared his intention, to become a citizen of the United States, was held valid, for the
following reason: It may seem wise to the legislature to limit the business of those who are
supposed to have regard for the welfare, good order and happiness of the community, and
the court cannot question this judgment and conclusion. In Bloomfield vs. State, 99 N. E. 309
(Ohio, 1912), a statute which prevented certain persons, among them aliens, from engaging
in the traffic of liquors, was found not to be the result of race hatred, or in hospitality, or a
deliberate purpose to discriminate, but was based on the belief that an alien cannot be
sufficiently acquainted with "our institutions and our life as to enable him to appreciate the
relation of this particular business to our entire social fabric", and was not, therefore,
invalid. In Ohio ex rel. Clarke vs. Deckebach, 274 U. S. 392, 71 L. ed. 115 (1926), the U.S.
Supreme Court had under consideration an ordinance of the city of Cincinnati prohibiting
the issuance of licenses (pools and billiard rooms) to aliens. It held that plainly irrational
discrimination against aliens is prohibited, but it does not follow that alien race and
allegiance may not bear in some instances such a relation to a legitimate object of
legislation as to be made the basis of permitted classification, and that it could not state
that the legislation is clearly wrong; and that latitude must be allowed for the legislative
appraisement of local conditions and for the legislative choice of methods for controlling an
apprehended evil. The case of State vs. Carrol, 124 N. E. 129 (Ohio, 1919) is a parallel case
to the one at bar. In Asakura vs. City of Seattle, 210 P. 30 (Washington, 1922), the business
of pawn brooking was considered as having tendencies injuring public interest, and
limiting it to citizens is within the scope of police power. A similar statute denying aliens
the right to engage in auctioneering was also sustained in Wright vs. May, L.R.A., 1915 P.
151 (Minnesota, 1914). So also in Anton vs. Van Winkle, 297 F. 340 (Oregon, 1924), the
court said that aliens are judicially known to have different interests, knowledge, attitude,
psychology and loyalty, hence the prohibitions of issuance of licenses to them for the
business of pawnbroker, pool, billiard, card room, dance hall, is not an infringement of
constitutional rights. In Templar vs. Michigan State Board of Examiners, 90 N.W. 1058
(Michigan, 1902), a law prohibiting the licensing of aliens as barbers was held void, but the
reason for the decision was the court's findings that the exercise of the business by the
aliens does not in any way affect the morals, the health, or even the convenience of the
community. In Takahashi vs. Fish and Game Commission, 92 L. ed. 1479 (1947), a California
statute banning the issuance of commercial fishing licenses to person ineligible to
citizenship was held void, because the law conflicts with Federal power over immigration,
and because there is no public interest in the mere claim of ownership of the waters and
the fish in them, so there was no adequate justification for the discrimination. It further
added that the law was the outgrowth of antagonism toward the persons of Japanese
ancestry. However, two Justices dissented on the theory that fishing rights have been
treated traditionally as natural resources. In Fraser vs. McConway & Tarley Co., 82 Fed. 257
(Pennsylvania, 1897), a state law which imposed a tax on every employer of foreign-born
unnaturalized male persons over 21 years of age, was declared void because the court
found that there was no reason for the classification and the tax was an arbitrary deduction
from the daily wage of an employee.

d. Authorities contra explained. —

It is true that some decisions of the Federal court and of the State courts in the United
States hold that the distinction between aliens and citizens is not a valid ground for
classification. But in this decision the laws declared invalid were found to be either
arbitrary, unreasonable or capricious, or were the result or product of racial antagonism
and hostility, and there was no question of public interest involved or pursued. In Yu Cong
Eng vs. Trinidad, 70 L. ed. 1059 (1925), the United States Supreme Court declared invalid a
Philippine law making unlawful the keeping of books of account in any language other than
English, Spanish or any other local dialect, but the main reasons for the decisions are: (1)
that if Chinese were driven out of business there would be no other system of distribution,
and (2) that the Chinese would fall prey to all kinds of fraud, because they would be
deprived of their right to be advised of their business and to direct its conduct. The real
reason for the decision, therefore, is the court's belief that no public benefit would be
derived from the operations of the law and on the other hand it would deprive Chinese of
something indispensable for carrying on their business. In Yick Wo vs. Hopkins, 30 L. ed 220
(1885) an ordinance conferring powers on officials to withhold consent in the operation of
laundries both as to persons and place, was declared invalid, but the court said that the
power granted was arbitrary, that there was no reason for the discrimination which
attended the administration and implementation of the law, and that the motive thereof
was mere racial hostility. In State vs. Montgomery, 47 A. 165 (Maine, 1900), a law
prohibiting aliens to engage as hawkers and peddlers was declared void, because the
discrimination bore no reasonable and just relation to the act in respect to which the
classification was proposed.

The case at bar is radically different, and the facts make them so. As we already have said,
aliens do not naturally possess the sympathetic consideration and regard for the customers
with whom they come in daily contact, nor the patriotic desire to help bolster the nation's
economy, except in so far as it enhances their profit, nor the loyalty and allegiance which
the national owes to the land. These limitations on the qualifications of the aliens have been
shown on many occasions and instances, especially in times of crisis and emergency. We
can do no better than borrow the language of Anton vs. Van Winkle, 297 F. 340, 342, to drive
home the reality and significance of the distinction between the alien and the national,
thus:

. . . . It may be judicially known, however, that alien coming into this country are
without the intimate knowledge of our laws, customs, and usages that our own
people have. So it is likewise known that certain classes of aliens are of different
psychology from our fellow countrymen. Furthermore, it is natural and reasonable
to suppose that the foreign born, whose allegiance is first to their own country, and
whose ideals of governmental environment and control have been engendered and
formed under entirely different regimes and political systems, have not the same
 inspiration for the public weal, nor are they as well disposed toward the United
States, as those who by citizenship, are a part of the government itself. Further
enlargement, is unnecessary. I have said enough so that obviously it cannot be
affirmed with absolute confidence that the Legislature was without plausible reason
for making the classification, and therefore appropriate discriminations against
aliens as it relates to the subject of legislation. . . . .

VII. The Due Process of Law Limitation.

a. Reasonability, the test of the limitation; determination by legislature decisive. —

We now come to due process as a limitation on the exercise of the police power. It has been
stated by the highest authority in the United States that:

. . . . And the guaranty of due process, as has often been held, demands only that the
law shall not be unreasonable, arbitrary or capricious, and that the means selected
shall have a real and substantial relation to the subject sought to be attained. . . . .

xxx xxx xxx

So far as the requirement of due process is concerned and in the absence of other
constitutional restriction a state is free to adopt whatever economic policy may
reasonably be deemed to promote public welfare, and to enforce that policy by
legislation adapted to its purpose. The courts are without authority either to declare
such policy, or, when it is declared by the legislature, to override it. If the laws
passed are seen to have a reasonable relation to a proper legislative purpose, and
are neither arbitrary nor discriminatory, the requirements of due process are
satisfied, and judicial determination to that effect renders a court functus officio. . . .
(Nebbia vs. New York, 78 L. ed. 940, 950, 957.)

Another authority states the principle thus:

. . . . Too much significance cannot be given to the word "reasonable" in considering

the scope of the police power in a constitutional sense, for the test used to
determine the constitutionality of the means employed by the legislature is to
inquire whether the restriction it imposes on rights secured to individuals by the
Bill of Rights are unreasonable, and not whether it imposes any restrictions on such
rights. . . .

xxx xxx xxx

 . . . . A statute to be within this power must also be reasonable in its operation upon
the persons whom it affects, must not be for the annoyance of a particular class, and
must not be unduly oppressive. (11 Am. Jur. Sec. 302., 1:1)- 1074-1075.)

In the case of Lawton vs. Steele, 38 L. ed. 385, 388. it was also held:

. . . . To justify the state in thus interposing its authority in behalf of the public, it
must appear, first, that the interests of the public generally, as distinguished from
those of a particular class, require such interference; and second, that the means are
reasonably necessary for the accomplishment of the purpose, and not unduly
oppressive upon individuals. . . .

Prata Undertaking Co. vs. State Board of Embalming, 104 ALR, 389, 395, fixes this test of
constitutionality:

In determining whether a given act of the Legislature, passed in the exercise of the
police power to regulate the operation of a business, is or is not constitutional, one
of the first questions to be considered by the court is whether the power as
exercised has a sufficient foundation in reason in connection with the matter
involved, or is an arbitrary, oppressive, and capricious use of that power, without
substantial relation to the health, safety, morals, comfort, and general welfare of the
public.

b. Petitioner's argument considered. —

Petitioner's main argument is that retail is a common, ordinary occupation, one of those
privileges long ago recognized as essential to the orderly pursuant of happiness by free
men; that it is a gainful and honest occupation and therefore beyond the power of the
legislature to prohibit and penalized. This arguments overlooks fact and reality and rests
on an incorrect assumption and premise, i.e., that in this country where the occupation is
engaged in by petitioner, it has been so engaged by him, by the alien in an honest creditable
and unimpeachable manner, without harm or injury to the citizens and without ultimate
danger to their economic peace, tranquility and welfare. But the Legislature has found, as
we have also found and indicated, that the privilege has been so grossly abused by the
alien, thru the illegitimate use of pernicious designs and practices, that he now enjoys a
monopolistic control of the occupation and threatens a deadly stranglehold on the nation's
economy endangering the national security in times of crisis and emergency.

The real question at issue, therefore, is not that posed by petitioner, which overlooks and
ignores the facts and circumstances, but this, Is the exclusion in the future of aliens from
the retail trade unreasonable. Arbitrary capricious, taking into account the illegitimate and
pernicious form and manner in which the aliens have heretofore engaged therein? As thus
correctly stated the answer is clear. The law in question is deemed absolutely necessary to
bring about the desired legislative objective, i.e., to free national economy from alien
control and dominance. It is not necessarily unreasonable because it affects private rights
and privileges (11 Am. Jur. pp. 1080-1081.) The test of reasonableness of a law is the
appropriateness or adequacy under all circumstances of the means adopted to carry out its
purpose into effect (Id.) Judged by this test, disputed legislation, which is not merely
reasonable but actually necessary, must be considered not to have infringed the
constitutional limitation of reasonableness.

The necessity of the law in question is explained in the explanatory note that accompanied
the bill, which later was enacted into law:

This bill proposes to regulate the retail business. Its purpose is to prevent persons
who are not citizens of the Philippines from having a strangle hold upon our
economic life. If the persons who control this vital artery of our economic life are the
ones who owe no allegiance to this Republic, who have no profound devotion to our
free institutions, and who have no permanent stake in our people's welfare, we are
not really the masters of our destiny. All aspects of our life, even our national
security, will be at the mercy of other people.

In seeking to accomplish the foregoing purpose, we do not propose to deprive

persons who are not citizens of the Philippines of their means of livelihood. While
this bill seeks to take away from the hands of persons who are not citizens of the
Philippines a power that can be wielded to paralyze all aspects of our national life
and endanger our national security it respects existing rights.

The approval of this bill is necessary for our national survival.

If political independence is a legitimate aspiration of a people, then economic

independence is none the less legitimate. Freedom and liberty are not real and positive if
the people are subject to the economic control and domination of others, especially if not of
their own race or country. The removal and eradication of the shackles of foreign economic
control and domination, is one of the noblest motives that a national legislature may
pursue. It is impossible to conceive that legislation that seeks to bring it about can infringe
the constitutional limitation of due process. The attainment of a legitimate aspiration of a
people can never be beyond the limits of legislative authority.

c. Law expressly held by Constitutional Convention to be within the sphere of legislative

action. —
The framers of the Constitution could not have intended to impose the constitutional
restrictions of due process on the attainment of such a noble motive as freedom from
economic control and domination, thru the exercise of the police power. The fathers of the
Constitution must have given to the legislature full authority and power to enact legislation
that would promote the supreme happiness of the people, their freedom and liberty. On the
precise issue now before us, they expressly made their voice clear; they adopted a
resolution expressing their belief that the legislation in question is within the scope of the
legislative power. Thus they declared the their Resolution:

That it is the sense of the Convention that the public interest requires the
nationalization of retail trade; but it abstain from approving the amendment
introduced by the Delegate for Manila, Mr. Araneta, and others on this matter
because it is convinced that the National Assembly is authorized to promulgate a
law which limits to Filipino and American citizens the privilege to engage in the
retail trade. (11 Aruego, The Framing of the Philippine Constitution, quoted on
pages 66 and 67 of the Memorandum for the Petitioner.)

It would do well to refer to the nationalistic tendency manifested in various provisions of

the Constitution. Thus in the preamble, a principle objective is the conservation of the
patrimony of the nation and as corollary the provision limiting to citizens of the Philippines
the exploitation, development and utilization of its natural resources. And in Section 8 of
Article XIV, it is provided that "no franchise, certificate, or any other form of authorization
for the operation of the public utility shall be granted except to citizens of the Philippines."
The nationalization of the retail trade is only a continuance of the nationalistic protective
policy laid down as a primary objective of the Constitution. Can it be said that a law imbued
with the same purpose and spirit underlying many of the provisions of the Constitution is
unreasonable, invalid and unconstitutional?

The seriousness of the Legislature's concern for the plight of the nationals as manifested in
the approval of the radical measures is, therefore, fully justified. It would have been
recreant to its duties towards the country and its people would it view the sorry plight of
the nationals with the complacency and refuse or neglect to adopt a remedy commensurate
with the demands of public interest and national survival. As the repository of the
sovereign power of legislation, the Legislature was in duty bound to face the problem and
meet, through adequate measures, the danger and threat that alien domination of retail
trade poses to national economy.

d. Provisions of law not unreasonable. —

A cursory study of the provisions of the law immediately reveals how tolerant, how
reasonable the Legislature has been. The law is made prospective and recognizes the right
and privilege of those already engaged in the occupation to continue therein during the rest
of their lives; and similar recognition of the right to continue is accorded associations of
aliens. The right or privilege is denied to those only upon conviction of certain offenses. In
the deliberations of the Court on this case, attention was called to the fact that the privilege
should not have been denied to children and heirs of aliens now engaged in the retail trade.
Such provision would defeat the law itself, its aims and purposes. Beside, the exercise of
legislative discretion is not subject to judicial review. It is well settled that the Court will
not inquire into the motives of the Legislature, nor pass upon general matters of legislative
judgment. The Legislature is primarily the judge of the necessity of an enactment or of any
of its provisions, and every presumption is in favor of its validity, and though the Court may
hold views inconsistent with the wisdom of the law, it may not annul the legislation if not
palpably in excess of the legislative power. Furthermore, the test of the validity of a law
attacked as a violation of due process, is not its reasonableness, but its unreasonableness,
and we find the provisions are not unreasonable. These principles also answer various
other arguments raised against the law, some of which are: that the law does not promote
general welfare; that thousands of aliens would be thrown out of employment; that prices
will increase because of the elimination of competition; that there is no need for the
legislation; that adequate replacement is problematical; that there may be general
breakdown; that there would be repercussions from foreigners; etc. Many of these
arguments are directed against the supposed wisdom of the law which lies solely within
the legislative prerogative; they do not import invalidity.

VIII. Alleged defect in the title of the law

A subordinate ground or reason for the alleged invalidity of the law is the claim that the
title thereof is misleading or deceptive, as it conceals the real purpose of the bill which is to
nationalize the retail business and prohibit aliens from engaging therein. The constitutional
provision which is claimed to be violated in Section 21 (1) of Article VI, which reads:

No bill which may be enacted in the law shall embrace more than one subject which
shall be expressed in the title of the bill.

What the above provision prohibits is duplicity, that is, if its title completely fails to
appraise the legislators or the public of the nature, scope and consequences of the law or its
operation (I Sutherland, Statutory Construction, Sec. 1707, p. 297.) A cursory consideration
of the title and the provisions of the bill fails to show the presence of duplicity. It is true
that the term "regulate" does not and may not readily and at first glance convey the idea of
"nationalization" and "prohibition", which terms express the two main purposes and
objectives of the law. But "regulate" is a broader term than either prohibition or
nationalization. Both of these have always been included within the term regulation.

Under the title of an act to "regulate", the sale of intoxicating liquors, the Legislature
may prohibit the sale of intoxicating liquors. (Sweet vs. City of Wabash, 41 Ind., 7;
quoted in page 41 of Answer.)

Within the meaning of the Constitution requiring that the subject of every act of the
Legislature shall be stated in the tale, the title to regulate the sale of intoxicating
liquors, etc." sufficiently expresses the subject of an act prohibiting the sale of such
liquors to minors and to persons in the habit of getting intoxicated; such matters
being properly included within the subject of regulating the sale. (Williams vs. State,
48 Ind. 306, 308, quoted in p. 42 of Answer.)

The word "regulate" is of broad import, and necessarily implies some degree of
restraint and prohibition of acts usually done in connection with the thing to be
regulated. While word regulate does not ordinarily convey meaning of prohibit,
there is no absolute reason why it should not have such meaning when used in
delegating police power in connection with a thing the best or only efficacious
regulation of which involves suppression. (State vs. Morton, 162 So. 718, 182 La.
887, quoted in p. 42 of Answer.)

The general rule is for the use of general terms in the title of a bill; it has also been said that
the title need not be an index to the entire contents of the law (I Sutherland, Statutory
Construction, See. 4803, p. 345.) The above rule was followed the title of the Act in question
adopted the more general term "regulate" instead of "nationalize" or "prohibit".
Furthermore, the law also contains other rules for the regulation of the retail trade which
may not be included in the terms "nationalization" or "prohibition"; so were the title
changed from "regulate" to "nationalize" or "prohibit", there would have been many
provisions not falling within the scope of the title which would have made the Act invalid.
The use of the term "regulate", therefore, is in accord with the principle governing the
drafting of statutes, under which a simple or general term should be adopted in the title,
which would include all other provisions found in the body of the Act.

One purpose of the constitutional directive that the subject of a bill should be embraced in
its title is to apprise the legislators of the purposes, the nature and scope of its provisions,
and prevent the enactment into law of matters which have received the notice, action and
study of the legislators or of the public. In the case at bar it cannot be claimed that the
legislators have been appraised of the nature of the law, especially the nationalization and
the prohibition provisions. The legislators took active interest in the discussion of the law,
and a great many of the persons affected by the prohibitions in the law conducted a
campaign against its approval. It cannot be claimed, therefore, that the reasons for
declaring the law invalid ever existed. The objection must therefore, be overruled.

IX. Alleged violation of international treaties and obligations

Another subordinate argument against the validity of the law is the supposed violation
thereby of the Charter of the United Nations and of the Declaration of the Human Rights
adopted by the United Nations General Assembly. We find no merit in the Nations Charter
imposes no strict or legal obligations regarding the rights and freedom of their subjects
(Hans Kelsen, The Law of the United Nations, 1951 ed. pp. 29-32), and the Declaration of
Human Rights contains nothing more than a mere recommendation or a common standard
of achievement for all peoples and all nations (Id. p. 39.) That such is the import of the
United Nations Charter aid of the Declaration of Human Rights can be inferred the fact that
members of the United Nations Organizations, such as Norway and Denmark, prohibit
foreigners from engaging in retail trade, and in most nations of the world laws against
foreigners engaged in domestic trade are adopted.

The Treaty of Amity between the Republic of the Philippines and the Republic of China of
April 18, 1947 is also claimed to be violated by the law in question. All that the treaty
guarantees is equality of treatment to the Chinese nationals "upon the same terms as the
nationals of any other country." But the nationals of China are not discriminating against
because nationals of all other countries, except those of the United States, who are granted
special rights by the Constitution, are all prohibited from engaging in the retail trade. But
even supposing that the law infringes upon the said treaty, the treaty is always subject to
qualification or amendment by a subsequent law (U. S. vs. Thompson, 258, Fed. 257, 260),
and the same may never curtail or restrict the scope of the police power of the State
(plaston vs. Pennsylvania, 58 L. ed. 539.)

X. Conclusion

Resuming what we have set forth above we hold that the disputed law was enacted to
remedy a real actual threat and danger to national economy posed by alien dominance and
control of the retail business and free citizens and country from dominance and control;
that the enactment clearly falls within the scope of the police power of the State, thru which
and by which it protects its own personality and insures its security and future; that the
law does not violate the equal protection clause of the Constitution because sufficient
grounds exist for the distinction between alien and citizen in the exercise of the occupation
regulated, nor the due process of law clause, because the law is prospective in operation
and recognizes the privilege of aliens already engaged in the occupation and reasonably
protects their privilege; that the wisdom and efficacy of the law to carry out its objectives
appear to us to be plainly evident — as a matter of fact it seems not only appropriate but
actually necessary — and that in any case such matter falls within the prerogative of the
Legislature, with whose power and discretion the Judicial department of the Government
may not interfere; that the provisions of the law are clearly embraced in the title, and this
suffers from no duplicity and has not misled the legislators or the segment of the
population affected; and that it cannot be said to be void for supposed conflict with treaty
obligations because no treaty has actually been entered into on the subject and the police
power may not be curtailed or surrendered by any treaty or any other conventional
agreement.

Some members of the Court are of the opinion that the radical effects of the law could have
been made less harsh in its impact on the aliens. Thus it is stated that the more time should
have been given in the law for the liquidation of existing businesses when the time comes
for them to close. Our legal duty, however, is merely to determine if the law falls within the
scope of legislative authority and does not transcend the limitations of due process and
equal protection guaranteed in the Constitution. Remedies against the harshness of the law
should be addressed to the Legislature; they are beyond our power and jurisdiction.

The petition is hereby denied, with costs against petitioner.

Lutz v Araneta, 98 Phil. 148

G.R. No. L-7859 December 22, 1955

WALTER LUTZ, as Judicial Administrator of the Intestate Estate of the deceased

Antonio Jayme Ledesma, plaintiff-appellant,
vs.
J. ANTONIO ARANETA, as the Collector of Internal Revenue, defendant-appellee.

Ernesto J. Gonzaga for appellant.

Office of the Solicitor General Ambrosio Padilla, First Assistant Solicitor General Guillermo E.
Torres and Solicitor Felicisimo R. Rosete for appellee.

REYES, J.B L., J.:

This case was initiated in the Court of First Instance of Negros Occidental to test the legality
of the taxes imposed by Commonwealth Act No. 567, otherwise known as the Sugar
Adjustment Act.

Promulgated in 1940, the law in question opens (section 1) with a declaration of

emergency, due to the threat to our industry by the imminent imposition of export taxes
upon sugar as provided in the Tydings-McDuffe Act, and the "eventual loss of its
preferential position in the United States market"; wherefore, the national policy was
expressed "to obtain a readjustment of the benefits derived from the sugar industry by the
component elements thereof" and "to stabilize the sugar industry so as to prepare it for the
eventuality of the loss of its preferential position in the United States market and the
imposition of the export taxes."

In section 2, Commonwealth Act 567 provides for an increase of the existing tax on the
manufacture of sugar, on a graduated basis, on each picul of sugar manufactured; while
section 3 levies on owners or persons in control of lands devoted to the cultivation of sugar
cane and ceded to others for a consideration, on lease or otherwise —

a tax equivalent to the difference between the money value of the rental or
consideration collected and the amount representing 12 per centum of the assessed
value of such land.

According to section 6 of the law —

SEC. 6. All collections made under this Act shall accrue to a special fund in the
Philippine Treasury, to be known as the 'Sugar Adjustment and Stabilization Fund,'
and shall be paid out only for any or all of the following purposes or to attain any or
all of the following objectives, as may be provided by law.

First, to place the sugar industry in a position to maintain itself, despite the gradual
loss of the preferntial position of the Philippine sugar in the United States market,
and ultimately to insure its continued existence notwithstanding the loss of that
market and the consequent necessity of meeting competition in the free markets of
the world;

Second, to readjust the benefits derived from the sugar industry by all of the
component elements thereof — the mill, the landowner, the planter of the sugar
cane, and the laborers in the factory and in the field — so that all might continue
profitably to engage therein;lawphi1.net

Third, to limit the production of sugar to areas more economically suited to the
production thereof; and

Fourth, to afford labor employed in the industry a living wage and to improve their
living and working conditions: Provided, That the President of the Philippines may,
until the adjourment of the next regular session of the National Assembly, make the
necessary disbursements from the fund herein created (1) for the establishment and
operation of sugar experiment station or stations and the undertaking of
researchers (a) to increase the recoveries of the centrifugal sugar factories with the
view of reducing manufacturing costs, (b) to produce and propagate higher yielding
varieties of sugar cane more adaptable to different district conditions in the
Philippines, (c) to lower the costs of raising sugar cane, (d) to improve the buying
quality of denatured alcohol from molasses for motor fuel, (e) to determine the
possibility of utilizing the other by-products of the industry, (f) to determine what
crop or crops are suitable for rotation and for the utilization of excess cane lands,
and (g) on other problems the solution of which would help rehabilitate and
stabilize the industry, and (2) for the improvement of living and working conditions
in sugar mills and sugar plantations, authorizing him to organize the necessary
agency or agencies to take charge of the expenditure and allocation of said funds to
carry out the purpose hereinbefore enumerated, and, likewise, authorizing the
disbursement from the fund herein created of the necessary amount or amounts
needed for salaries, wages, travelling expenses, equipment, and other sundry
expenses of said agency or agencies.
Plaintiff, Walter Lutz, in his capacity as Judicial Administrator of the Intestate Estate of
Antonio Jayme Ledesma, seeks to recover from the Collector of Internal Revenue the sum of
P14,666.40 paid by the estate as taxes, under section 3 of the Act, for the crop years 1948-
1949 and 1949-1950; alleging that such tax is unconstitutional and void, being levied for
the aid and support of the sugar industry exclusively, which in plaintiff's opinion is not a
public purpose for which a tax may be constitutioally levied. The action having been
dismissed by the Court of First Instance, the plaintifs appealed the case directly to this
Court (Judiciary Act, section 17).

The basic defect in the plaintiff's position is his assumption that the tax provided for in
Commonwealth Act No. 567 is a pure exercise of the taxing power. Analysis of the Act, and
particularly of section 6 (heretofore quoted in full), will show that the tax is levied with a
regulatory purpose, to provide means for the rehabilitation and stabilization of the
threatened sugar industry. In other words, the act is primarily an exercise of the police
power.

This Court can take judicial notice of the fact that sugar production is one of the great
industries of our nation, sugar occupying a leading position among its export products; that
it gives employment to thousands of laborers in fields and factories; that it is a great source
of the state's wealth, is one of the important sources of foreign exchange needed by our
government, and is thus pivotal in the plans of a regime committed to a policy of currency
stability. Its promotion, protection and advancement, therefore redounds greatly to the
general welfare. Hence it was competent for the legislature to find that the general welfare
demanded that the sugar industry should be stabilized in turn; and in the wide field of its
police power, the lawmaking body could provide that the distribution of benefits therefrom
be readjusted among its components to enable it to resist the added strain of the increase
in taxes that it had to sustain (Sligh vs. Kirkwood, 237 U. S. 52, 59 L. Ed. 835; Johnson vs.
State ex rel. Marey, 99 Fla. 1311, 128 So. 853; Maxcy Inc. vs. Mayo, 103 Fla. 552, 139 So.
121).

As stated in Johnson vs. State ex rel. Marey, with reference to the citrus industry in Florida
—

The protection of a large industry constituting one of the great sources of the state's
wealth and therefore directly or indirectly affecting the welfare of so great a portion
of the population of the State is affected to such an extent by public interests as to be
within the police power of the sovereign. (128 Sp. 857).

Once it is conceded, as it must, that the protection and promotion of the sugar industry is a
matter of public concern, it follows that the Legislature may determine within reasonable
bounds what is necessary for its protection and expedient for its promotion. Here, the
legislative discretion must be allowed fully play, subject only to the test of reasonableness;
and it is not contended that the means provided in section 6 of the law (above quoted) bear
no relation to the objective pursued or are oppressive in character. If objective and
methods are alike constitutionally valid, no reason is seen why the state may not levy taxes
to raise funds for their prosecution and attainment. Taxation may be made the implement
of the state's police power (Great Atl. & Pac. Tea Co. vs. Grosjean, 301 U. S. 412, 81 L. Ed.
1193; U. S. vs. Butler, 297 U. S. 1, 80 L. Ed. 477; M'Culloch vs. Maryland, 4 Wheat. 316, 4 L.
Ed. 579).

That the tax to be levied should burden the sugar producers themselves can hardly be a
ground of complaint; indeed, it appears rational that the tax be obtained precisely from
those who are to be benefited from the expenditure of the funds derived from it. At any
rate, it is inherent in the power to tax that a state be free to select the subjects of taxation,
and it has been repeatedly held that "inequalities which result from a singling out of one
particular class for taxation, or exemption infringe no constitutional limitation"
(Carmichael vs. Southern Coal & Coke Co., 301 U. S. 495, 81 L. Ed. 1245, citing numerous
authorities, at p. 1251).

From the point of view we have taken it appears of no moment that the funds raised under
the Sugar Stabilization Act, now in question, should be exclusively spent in aid of the sugar
industry, since it is that very enterprise that is being protected. It may be that other
industries are also in need of similar protection; that the legislature is not required by the
Constitution to adhere to a policy of "all or none." As ruled in Minnesota ex rel. Pearson vs.
Probate Court, 309 U. S. 270, 84 L. Ed. 744, "if the law presumably hits the evil where it is
most felt, it is not to be overthrown because there are other instances to which it might
have been applied;" and that "the legislative authority, exerted within its proper field, need
not embrace all the evils within its reach" (N. L. R. B. vs. Jones & Laughlin Steel Corp. 301 U.
S. 1, 81 L. Ed. 893).

Even from the standpoint that the Act is a pure tax measure, it cannot be said that the
devotion of tax money to experimental stations to seek increase of efficiency in sugar
production, utilization of by-products and solution of allied problems, as well as to the
improvements of living and working conditions in sugar mills or plantations, without any
part of such money being channeled directly to private persons, constitutes expenditure of
tax money for private purposes, (compare Everson vs. Board of Education, 91 L. Ed. 472,
168 ALR 1392, 1400).

The decision appealed from is affirmed, with costs against appellant. So ordered.
Binay v. Domingo, 201 SCRA 508 (1991)

G.R. No. 92389 September 11, 1991

HON. JEJOMAR C. BINAY and the MUNICIPALITY OF MAKATI, petitioners,

vs.
HON. EUFEMIO DOMINGO and the COMMISSION ON AUDIT, respondents.

Jejomar C. Binay for himself and for his co-petitioner.

Manuel D. Tamase and Rafael C. Marquez for respondents.

PARAS, J.:

The only pivotal issue before Us is whether or not Resolution No. 60, re-enacted under
Resolution No. 243, of the Municipality of Makati is a valid exercise of police power under
the general welfare clause.

The pertinent facts are:

On September 27, 1988, petitioner Municipality, through its Council, approved Resolution
No. 60 which reads:

A RESOLUTION TO CONFIRM AND/OR RATIFY THE ONGOING BURIAL ASSISTANCE

PROGRAM INITIATED BY THE OFFICE OF THE MAYOR, OF EXTENDING FINANCIAL
ASSISTANCE OF FIVE HUNDRED PESOS (P500.00) TO A BEREAVED FAMILY, FUNDS
TO BE TAKEN OUT OF UNAPPROPRIATED AVAILABLE FUNDS EXISTING IN THE
MUNICIPAL TREASURY. (Rollo, Annnex "A" p. 39)

Qualified beneficiaries, under the Burial Assistance Program, are bereaved families of
Makati whose gross family income does not exceed two thousand pesos (P2,000.00) a
month. The beneficiaries, upon fulfillment of other requirements, would receive the
amount of five hundred pesos (P500.00) cash relief from the Municipality of Makati. (Reno,
Annex "13", p. 41)

Metro Manila Commission approved Resolution No. 60. Thereafter, the municipal secretary
certified a disbursement fired of four hundred thousand pesos (P400,000.00) for the
implementation of the Burial Assistance Program. (Rollo, Annex "C", p. 43).
Resolution No. 60 was referred to respondent Commission on Audit (COA) for its expected
allowance in audit. Based on its preliminary findings, respondent COA disapproved
Resolution No. 60 and disallowed in audit the disbursement of finds for the implementation
thereof. (Rollo, Annex "D", P. 44)

Two letters for reconsideration (Annexes "E" and "F", Rollo, pp. 45 and 48, respectively)
filed by petitioners Mayor Jejomar Binay, were denied by respondent in its Decision No.
1159, in the following manner:

Your request for reconsideration is predicated on the following grounds, to wit:

1. Subject Resolution No. 60, s. 1988, of the Municipal Council of Makati and the
intended disbursements fall within the twin principles of 'police power and parens
patriae and

2. The Metropolitan Manila Commission (MMC), under a Certification, dated June 5,

1989, has already appropriated the amount of P400,000.00 to implement the Id
resolution, and the only function of COA on the matter is to allow the financial
assistance in question.

The first contention is believed untenable. Suffice it to state that:

a statute or ordinance must have a real substantial, or rational relation to the

public safety, health, morals, or general welfare to be sustained as a
legitimate exercise of the police power. The mere assertion by the legislature
that a statute relates to the public health, safety, or welfare does not in itself
bring the statute within the police power of a state for there must always be an
obvious and real connection between the actual provisions of a police
regulations and its avowed purpose, and the regulation adopted must be
reasonably adapted to accomplish the end sought to be attained. 16 Am. Jur 2d,
pp. 542-543; emphasis supplied).

Here, we see no perceptible connection or relation between the objective sought to

be attained under Resolution No. 60, s. 1988, supra, and the alleged public safety,
general welfare, etc. of the inhabitants of Makati.

Anent the second contention, let it be stressed that Resolution No. 60 is still subject
to the limitation that the expenditure covered thereby should be for a public
purpose, i.e., that the disbursement of the amount of P500.00 as burial assistance to
a bereaved family of the Municipality of Makati, or a total of P400,000.00
appropriated under the Resolution, should be for the benefit of the whole, if not the
 majority, of the inhabitants of the Municipality and not for the benefit of only a few
individuals as in the present case. On this point government funds or property shall
be spent or used solely for public purposes. (Cf. Section 4[2], P.D. 1445). (pp. 50-51,
Rollo)

Bent on pursuing the Burial Assistance Program the Municipality of Makati, through its
Council, passed Resolution No. 243, re-affirming Resolution No. 60 (Rollo, Annex "H", p.
52).

However, the Burial Assistance Program has been stayed by COA Decision No. 1159.
Petitioner, through its Mayor, was constrained to file this special civil action of certiorari
praying that COA Decision No. 1159 be set aside as null and void.

The police power is a governmental function, an inherent attribute of sovereignty, which

was born with civilized government. It is founded largely on the maxims, "Sic utere tuo et
ahenum non laedas and "Salus populi est suprema lex Its fundamental purpose is securing
the general welfare, comfort and convenience of the people.

Police power is inherent in the state but not in municipal corporations (Balacuit v. CFI of
Agusan del Norte, 163 SCRA 182). Before a municipal corporation may exercise such
power, there must be a valid delegation of such power by the legislature which is the
repository of the inherent powers of the State. A valid delegation of police power may arise
from express delegation, or be inferred from the mere fact of the creation of the municipal
corporation; and as a general rule, municipal corporations may exercise police powers
within the fair intent and purpose of their creation which are reasonably proper to give
effect to the powers expressly granted, and statutes conferring powers on public
corporations have been construed as empowering them to do the things essential to the
enjoyment of life and desirable for the safety of the people. (62 C.J.S., p. 277). The so-called
inferred police powers of such corporations are as much delegated powers as are those
conferred in express terms, the inference of their delegation growing out of the fact of the
creation of the municipal corporation and the additional fact that the corporation can only
fully accomplish the objects of its creation by exercising such powers. (Crawfordsville vs.
Braden, 28 N.E. 849). Furthermore, municipal corporations, as governmental agencies,
must have such measures of the power as are necessary to enable them to perform their
governmental functions. The power is a continuing one, founded on public necessity. (62
C.J.S. p. 273) Thus, not only does the State effectuate its purposes through the exercise of
the police power but the municipality does also. (U.S. v. Salaveria, 39 Phil. 102).

Municipal governments exercise this power under the general welfare clause: pursuant
thereto they are clothed with authority to "enact such ordinances and issue such
regulations as may be necessary to carry out and discharge the responsibilities conferred
upon it by law, and such as shall be necessary and proper to provide for the health, safety,
comfort and convenience, maintain peace and order, improve public morals, promote the
prosperity and general welfare of the municipality and the inhabitants thereof, and insure
the protection of property therein." (Sections 91, 149, 177 and 208, BP 337). And under
Section 7 of BP 337, "every local government unit shall exercise the powers expressly
granted, those necessarily implied therefrom, as well as powers necessary and proper for
governance such as to promote health and safety, enhance prosperity, improve morals, and
maintain peace and order in the local government unit, and preserve the comfort and
convenience of the inhabitants therein."

Police power is the power to prescribe regulations to promote the health, morals, peace,
education, good order or safety and general welfare of the people. It is the most essential,
insistent, and illimitable of powers. In a sense it is the greatest and most powerful attribute
of the government. It is elastic and must be responsive to various social conditions.
(Sangalang, et al. vs. IAC, 176 SCRA 719). On it depends the security of social order, the life
and health of the citizen, the comfort of an existence in a thickly populated community, the
enjoyment of private and social life, and the beneficial use of property, and it has been said
to be the very foundation on which our social system rests. (16 C.J.S., P. 896) However, it is
not confined within narrow circumstances of precedents resting on past conditions; it must
follow the legal progress of a democratic way of life. (Sangalang, et al. vs. IAC, supra).

In the case at bar, COA is of the position that there is "no perceptible connection or relation
between the objective sought to be attained under Resolution No. 60, s. 1988, supra, and
the alleged public safety, general welfare. etc. of the inhabitants of Makati." (Rollo, Annex
"G", p. 51).

Apparently, COA tries to re-define the scope of police power by circumscribing its exercise
to "public safety, general welfare, etc. of the inhabitants of Makati."

In the case of Sangalang vs. IAC, supra, We ruled that police power is not capable of an exact
definition but has been, purposely, veiled in general terms to underscore its all
comprehensiveness. Its scope, over-expanding to meet the exigencies of the times, even to
anticipate the future where it could be done, provides enough room for an efficient and
flexible response to conditions and circumstances thus assuring the greatest benefits.

The police power of a municipal corporation is broad, and has been said to be
commensurate with, but not to exceed, the duty to provide for the real needs of the people
in their health, safety, comfort, and convenience as consistently as may be with private
rights. It extends to all the great public needs, and, in a broad sense includes all legislation
and almost every function of the municipal government. It covers a wide scope of subjects,
and, while it is especially occupied with whatever affects the peace, security, health, morals,
and general welfare of the community, it is not limited thereto, but is broadened to deal
with conditions which exists so as to bring out of them the greatest welfare of the people by
promoting public convenience or general prosperity, and to everything worthwhile for the
preservation of comfort of the inhabitants of the corporation (62 C.J.S. Sec. 128). Thus, it is
deemed inadvisable to attempt to frame any definition which shall absolutely indicate the
limits of police power.

COA's additional objection is based on its contention that "Resolution No. 60 is still subject
to the limitation that the expenditure covered thereby should be for a public purpose, ...
should be for the benefit of the whole, if not the majority, of the inhabitants of the
Municipality and not for the benefit of only a few individuals as in the present case." (Rollo,
Annex "G", p. 51).

COA is not attuned to the changing of the times. Public purpose is not unconstitutional
merely because it incidentally benefits a limited number of persons. As correctly pointed
out by the Office of the Solicitor General, "the drift is towards social welfare legislation
geared towards state policies to provide adequate social services (Section 9, Art. II,
Constitution), the promotion of the general welfare (Section 5, Ibid) social justice (Section
10, Ibid) as well as human dignity and respect for human rights. (Section 11, Ibid."
(Comment, p. 12)

The care for the poor is generally recognized as a public duty. The support for the poor has
long been an accepted exercise of police power in the promotion of the common good.

There is no violation of the equal protection clause in classifying paupers as subject of

legislation. Paupers may be reasonably classified. Different groups may receive varying
treatment. Precious to the hearts of our legislators, down to our local councilors, is the
welfare of the paupers. Thus, statutes have been passed giving rights and benefits to the
disabled, emancipating the tenant-farmer from the bondage of the soil, housing the urban
poor, etc.

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

PREMISES CONSIDERED, and with the afore-mentioned caveat, this petition is hereby
GRANTED and the Commission on Audit's Decision No. 1159 is hereby SET ASIDE.

SO ORDERED.
Ortigas & Co. v. CA, G.R. No. 126102, Dec. 4, 2000

G.R. No. 126102 December 4, 2000

ORTIGAS & CO. LTD., petitioner,

vs.
THE COURT OF APPEALS and ISMAEL G. MATHAY III, respondents.

DECISION

QUISUMBING, J.:

This petition seeks to reverse the decision of the Court of Appeals, dated March 25, 1996, in
CA-G.R. SP No. 39193, which nullified the writ of preliminary injunction issued by the
Regional Trial Court of Pasig City, Branch 261, in Civil Case No. 64931. It also assails the
resolution of the appellate court, dated August 13, 1996, denying petitioner’s motion for
reconsideration.

The facts of this case, as culled from the records, are as follows:

On August 25, 1976, petitioner Ortigas & Company sold to Emilia Hermoso, a parcel of land
known as Lot 1, Block 21, Psd-66759, with an area of 1,508 square meters, located in
Greenhills Subdivision IV, San Juan, Metro Manila, and covered by Transfer Certificate of
Title No. 0737. The contract of sale provided that the lot:

1. …(1) be used exclusively…for residential purposes only, and not more than one
single-family residential building will be constructed thereon,…

xxx

6. The BUYER shall not erect…any sign or billboard on the roof…for advertising
purposes…

xxx

11. No single-family residential building shall be erected…until the building plans,

specification…have been approved by the SELLER…

xxx

14....restrictions shall run with the land and shall be construed as real covenants
until December 31, 2025 when they shall cease and terminate…1
These and the other conditions were duly annotated on the certificate of title issued to
Emilia.

In 1981, the Metropolitan Manila Commission (now Metropolitan Manila Development

Authority) enacted MMC Ordinance No. 81-01, also known as the Comprehensive Zoning
Area for the National Capital Region. The ordinance reclassified as a commercial area a
portion of Ortigas Avenue from Madison to Roosevelt Streets of Greenhills Subdivision
where the lot is located.

On June 8, 1984, private respondent Ismael Mathay III leased the lot from Emilia Hermoso
and J.P. Hermoso Realty Corp.. The lease contract did not specify the purposes of the lease.
Thereupon, private respondent constructed a single story commercial building for
Greenhills Autohaus, Inc., a car sales company.

On January 18, 1995, petitioner filed a complaint against Emilia Hermoso with the Regional
Trial Court of Pasig, Branch 261. Docketed as Civil Case No. 64931, the complaint sought
the demolition of the said commercial structure for having violated the terms and
conditions of the Deed of Sale. Complainant prayed for the issuance of a temporary
restraining order and a writ of preliminary injunction to prohibit petitioner from
constructing the commercial building and/or engaging in commercial activity on the lot.
The complaint was later amended to implead Ismael G. Mathay III and J.P. Hermoso Realty
Corp., which has a ten percent (10%) interest in the lot.

In his answer, Mathay III denied any knowledge of the restrictions on the use of the lot and
filed a cross-claim against the Hermosos.

On June 16, 1995, the trial court issued the writ of preliminary injunction. On June 29,
1995, Mathay III moved to set aside the injunctive order, but the trial court denied the
motion.

Mathay III then filed with the Court of Appeals a special civil action for certiorari, docketed
as CA-G.R. SP No. 39193, ascribing to the trial court grave abuse of discretion in issuing the
writ of preliminary injunction. He claimed that MMC Ordinance No. 81-01 classified the
area where the lot was located as commercial area and said ordinance must be read into
the August 25, 1976 Deed of Sale as a concrete exercise of police power.

Ortigas and Company averred that inasmuch as the restrictions on the use of the lot were
duly annotated on the title it issued to Emilia Hermoso, said restrictions must prevail over
the ordinance, specially since these restrictions were agreed upon before the passage of
MMC Ordinance No. 81-01.
On March 25, 1996, the appellate court disposed of the case as follows:

WHEREFORE, in light of the foregoing, the petition is hereby GRANTED. The assailed
orders are hereby nullified and set aside.

SO ORDERED.2

In finding for Mathay III, the Court of Appeals held that the MMC Ordinance No. 81-01
effectively nullified the restrictions allowing only residential use of the property in
question.

Ortigas seasonably moved for reconsideration, but the appellate court denied it on August
13, 1996.

Hence, the instant petition.

In its Memorandum, petitioner now submits that the "principal issue in this case is whether
respondent Court of Appeals correctly set aside the Order dated June 16, 1995 of the trial
court which issued the writ of preliminary injunction on the sole ground that MMC
Ordinance No. 81-01 nullified the building restriction imposing exclusive residential use on
the property in question."3 It also asserts that "Mathay III lacks legal capacity to question
the validity of conditions of the deed of sale; and he is barred by estoppel or waiver to raise
the same question like his principals, the owners."4 Lastly, it avers that the appellate court
"unaccountably failed to address" several questions of fact.

Principally, we must resolve the issue of whether the Court of Appeals erred in holding that
the trial court committed grave abuse of discretion when it refused to apply MMC
Ordinance No.81-01 to Civil Case No. 64931.

But first, we must address petitioner’s allegation that the Court of Appeals "unaccountably
failed to address" questions of fact. For basic is the rule that factual issues may not be
raised before this Court in a petition for review and this Court is not duty-bound to
consider said questions.5 CA-G.R. SP No. 39193 was a special civil action for certiorari, and
the appellate court only had to determine if the trial court committed grave abuse of
discretion amounting to want or excess of jurisdiction in issuing the writ of preliminary
injunction. Thus, unless vital to our determination of the issue at hand, we shall refrain
from further consideration of factual questions.

Petitioner contends that the appellate court erred in limiting its decision to the cited zoning
ordinance. It avers that a contractual right is not automatically discarded once a claim is
made that it conflicts with police power. Petitioner submits that the restrictive clauses in
the questioned contract is not in conflict with the zoning ordinance. For one, according to
petitioner, the MMC Ordinance No. 81-01 did not prohibit the construction of residential
buildings. Petitioner argues that even with the zoning ordinance, the seller and buyer of the
re-classified lot can voluntarily agree to an exclusive residential use thereof. Hence,
petitioner concludes that the Court of Appeals erred in holding that the condition imposing
exclusive residential use was effectively nullified by the zoning ordinance.

In its turn, private respondent argues that the appellate court correctly ruled that the trial
court had acted with grave abuse of discretion in refusing to subject the contract to the
MMC Ordinance No. 81-01. He avers that the appellate court properly held the police power
superior to the non-impairment of contract clause in the Constitution. He concludes that
the appellate court did not err in dissolving the writ of preliminary injunction issued by the
trial court in excess of its jurisdiction.

We note that in issuing the disputed writ of preliminary injunction, the trial court observed
that the contract of sale was entered into in August 1976, while the zoning ordinance was
enacted only in March 1981. The trial court reasoned that since private respondent had
failed to show that MMC Ordinance No. 81-01 had retroactive effect, said ordinance should
be given prospective application only,6 citing Co vs. Intermediate Appellate Court, 162 SCRA
390 (1988).

In general, we agree that laws are to be construed as having only prospective

operation. Lex prospicit, non respicit. Equally settled, only laws existing at the time of the
execution of a contract are applicable thereto and not later statutes, unless the latter are
specifically intended to have retroactive effect.7 A later law which enlarges, abridges, or in
any manner changes the intent of the parties to the contract necessarily impairs the
contract itself8 and cannot be given retroactive effect without violating the constitutional
prohibition against impairment of contracts.9

But, the foregoing principles do admit of certain exceptions. One involves police power. A
law enacted in the exercise of police power to regulate or govern certain activities or
transactions could be given retroactive effect and may reasonably impair vested rights or
contracts. Police power legislation is applicable not only to future contracts, but equally to
those already in existence.10 Nonimpairment of contracts or vested rights clauses will have
to yield to the superior and legitimate exercise by the State of police power to promote the
health, morals, peace, education, good order, safety, and general welfare of the
people.11 Moreover, statutes in exercise of valid police power must be read into every
contract.12 Noteworthy, in Sangalang vs. Intermediate Appellate Court,13 we already upheld
MMC Ordinance No. 81-01 as a legitimate police power measure.
The trial court’s reliance on the Co vs. IAC,14 is misplaced. In Co, the disputed area was
agricultural and Ordinance No. 81-01 did not specifically provide that "it shall have
retroactive effect so as to discontinue all rights previously acquired over lands located
within the zone which are neither residential nor light industrial in nature,"15 and stated
with respect to agricultural areas covered that "the zoning ordinance should be given
prospective operation only."16 The area in this case involves not agricultural but urban
residential land. Ordinance No. 81-01 retroactively affected the operation of the zoning
ordinance in Greenhills by reclassifying certain locations therein as commercial.

Following our ruling in Ortigas & Co., Ltd. vs. Feati Bank & Trust Co., 94 SCRA 533 (1979),
the contractual stipulations annotated on the Torrens Title, on which Ortigas relies, must
yield to the ordinance. When that stretch of Ortigas Avenue from Roosevelt Street to
Madison Street was reclassified as a commercial zone by the Metropolitan Manila
Commission in March 1981, the restrictions in the contract of sale between Ortigas and
Hermoso, limiting all construction on the disputed lot to single-family residential buildings,
were deemed extinguished by the retroactive operation of the zoning ordinance and could
no longer be enforced. While our legal system upholds the sanctity of contract so that a
contract is deemed law between the contracting parties,17 nonetheless, stipulations in a
contract cannot contravene "law, morals, good customs, public order, or public
policy."18 Otherwise such stipulations would be deemed null and void. Respondent court
correctly found that the trial court committed in this case a grave abuse of discretion
amounting to want of or excess of jurisdiction in refusing to treat Ordinance No. 81-01 as
applicable to Civil Case No. 64931. In resolving matters in litigation, judges are not only
duty-bound to ascertain the facts and the applicable laws,19 they are also bound by their
oath of office to apply the applicable law.20

As a secondary issue, petitioner contends that respondent Mathay III, as a mere lessee of the
lot in question, is a total stranger to the deed of sale and is thus barred from questioning
the conditions of said deed. Petitioner points out that the owners of the lot voluntarily
agreed to the restrictions on the use of the lot and do not question the validity of these
restrictions. Petitioner argues that Mathay III as a lessee is merely an agent of the owners,
and could not override and rise above the status of his principals. Petitioner submits that
he could not have a higher interest than those of the owners, the Hermosos, and thus had
no locus standi to file CA-G.R. SP No. 39193 to dissolve the injunctive writ issued by the RTC
of Pasig City.

For his part, private respondent argues that as the lessee who built the commercial
structure, it is he and he alone who stands to be either benefited or injured by the results of
the judgment in Civil Case No. 64931. He avers he is the party with real interest in the
subject matter of the action, as it would be his business, not the Hermosos’, which would
suffer had not the respondent court dissolved the writ of preliminary injunction.

A real party in interest is defined as "the party who stands to be benefited or injured by the
judgment or the party entitled to the avails of the suit." "Interest" within the meaning of the
rule means material interest, an interest in issue and to be affected by the decree, as
distinguished from mere interest in the question involved, or a mere incidental
interest.21 By real interest is meant a present substantial interest, as distinguished from a
mere expectancy or a future, contingent, subordinate, or consequential interest.22

Tested by the foregoing definition, private respondent in this case is clearly a real party in
interest.1âwphi1 It is not disputed that he is in possession of the lot pursuant to a valid
lease. He is a possessor in the concept of a "holder of the thing" under Article 525 of the
Civil Code.23 He was impleaded as a defendant in the amended complaint in Civil Case No.
64931. Further, what petitioner seeks to enjoin is the building by respondent of a
commercial structure on the lot. Clearly, it is private respondent’s acts which are in issue,
and his interest in said issue cannot be a mere incidental interest. In its amended
complaint, petitioner prayed for, among others, judgment "ordering the demolition of all
improvements illegally built on the lot in question."24 These show that it is petitioner
Mathay III, doing business as "Greenhills Autohaus, Inc.," and not only the Hermosos, who
will be adversely affected by the court’s decree.

Petitioner also cites the rule that a stranger to a contract has no rights or obligations under
it,25 and thus has no standing to challenge its validity.26 But in seeking to enforce the
stipulations in the deed of sale, petitioner impleaded private respondent as a defendant.
Thus petitioner must recognize that where a plaintiff has impleaded a party as a defendant,
he cannot subsequently question the latter’s standing in court.27

WHEREFORE, the instant petition is DENIED. The challenged decision of the Court of
Appeals dated March 25, 1996, as well as the assailed resolution of August 13, 1996, in CA-
G.R. SP No. 39193 is AFFIRMED. Costs against petitioner.

SO ORDERED.
Mirasol v DPWH, 490 SCRA 318 (2006)

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.
Carlos Superdrug Corp. V DSWD, 526 SCRA 130 (2007)

G.R. No. 166494 June 29, 2007

CARLOS SUPERDRUG CORP., doing business under the name and style "Carlos
Superdrug," ELSIE M. CANO, doing business under the name and style "Advance
Drug," Dr. SIMPLICIO L. YAP, JR., doing business under the name and style "City
Pharmacy," MELVIN S. DELA SERNA, doing business under the name and style "Botica
dela Serna," and LEYTE SERV-WELL CORP., doing business under the name and style
"Leyte Serv-Well Drugstore," petitioners,
vs.
DEPARTMENT OF SOCIAL WELFARE and DEVELOPMENT (DSWD), DEPARTMENT OF
HEALTH (DOH), DEPARTMENT OF FINANCE (DOF), DEPARTMENT OF JUSTICE (DOJ),
and DEPARTMENT OF INTERIOR and LOCAL GOVERNMENT (DILG), respondents.

DECISION

AZCUNA, J.:

This is a petition1 for Prohibition with Prayer for Preliminary Injunction assailing the
constitutionality of Section 4(a) of Republic Act (R.A.) No. 9257,2 otherwise known as the
"Expanded Senior Citizens Act of 2003."

Petitioners are domestic corporations and proprietors operating drugstores in the

Philippines.

Public respondents, on the other hand, include the Department of Social Welfare and
Development (DSWD), the Department of Health (DOH), the Department of Finance (DOF),
the Department of Justice (DOJ), and the Department of Interior and Local Government
(DILG) which have been specifically tasked to monitor the drugstores’ compliance with the
law; promulgate the implementing rules and regulations for the effective implementation
of the law; and prosecute and revoke the licenses of erring drugstore establishments.

The antecedents are as follows:

On February 26, 2004, R.A. No. 9257, amending R.A. No. 7432,3 was signed into law by
President Gloria Macapagal-Arroyo and it became effective on March 21, 2004. Section 4(a)
of the Act states:

SEC. 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the
following:
(a) the grant of twenty percent (20%) discount from all establishments relative to the
utilization of services in hotels and similar lodging establishments, restaurants and
recreation centers, and purchase of medicines in all establishments for the exclusive use or
enjoyment of senior citizens, including funeral and burial services for the death of senior
citizens;

...

The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax
deduction based on the net cost of the goods sold or services rendered: Provided, That the
cost of the discount shall be allowed as deduction from gross income for the same taxable
year that the discount is granted. Provided, further, That the total amount of the claimed tax
deduction net of value added tax if applicable, shall be included in their gross sales receipts
for tax purposes and shall be subject to proper documentation and to the provisions of the
National Internal Revenue Code, as amended.4

On May 28, 2004, the DSWD approved and adopted the Implementing Rules and
Regulations of R.A. No. 9257, Rule VI, Article 8 of which states:

Article 8. Tax Deduction of Establishments. – The establishment may claim the discounts
granted under Rule V, Section 4 – Discounts for Establishments;5 Section 9, Medical and
Dental Services in Private Facilities[,]6 and Sections 107 and 118 – Air, Sea and Land
Transportation as tax deduction based on the net cost of the goods sold or services
rendered. Provided, That the cost of the discount shall be allowed as deduction from gross
income for the same taxable year that the discount is granted; Provided, further, That the
total amount of the claimed tax deduction net of value added tax if applicable, shall be
included in their gross sales receipts for tax purposes and shall be subject to proper
documentation and to the provisions of the National Internal Revenue Code, as amended;
Provided, finally, that the implementation of the tax deduction shall be subject to the
Revenue Regulations to be issued by the Bureau of Internal Revenue (BIR) and approved
by the Department of Finance (DOF).9

On July 10, 2004, in reference to the query of the Drug Stores Association of the Philippines
(DSAP) concerning the meaning of a tax deduction under the Expanded Senior Citizens Act,
the DOF, through Director IV Ma. Lourdes B. Recente, clarified as follows:

1) The difference between the Tax Credit (under the Old Senior Citizens Act) and Tax
Deduction (under the Expanded Senior Citizens Act).

1.1. The provision of Section 4 of R.A. No. 7432 (the old Senior Citizens Act) grants twenty
percent (20%) discount from all establishments relative to the utilization of transportation
services, hotels and similar lodging establishment, restaurants and recreation centers and
purchase of medicines anywhere in the country, the costs of which may be claimed by the
private establishments concerned as tax credit.

Effectively, a tax credit is a peso-for-peso deduction from a taxpayer’s tax liability due to
the government of the amount of discounts such establishment has granted to a senior
citizen. The establishment recovers the full amount of discount given to a senior citizen and
hence, the government shoulders 100% of the discounts granted.

It must be noted, however, that conceptually, a tax credit scheme under the Philippine tax
system, necessitates that prior payments of taxes have been made and the taxpayer is
attempting to recover this tax payment from his/her income tax due. The tax credit scheme
under R.A. No. 7432 is, therefore, inapplicable since no tax payments have previously
occurred.

1.2. The provision under R.A. No. 9257, on the other hand, provides that the establishment
concerned may claim the discounts under Section 4(a), (f), (g) and (h) as tax
deduction from gross income, based on the net cost of goods sold or services rendered.

Under this scheme, the establishment concerned is allowed to deduct from gross income, in
computing for its tax liability, the amount of discounts granted to senior citizens.
Effectively, the government loses in terms of foregone revenues an amount equivalent to
the marginal tax rate the said establishment is liable to pay the government. This will be an
amount equivalent to 32% of the twenty percent (20%) discounts so granted. The
establishment shoulders the remaining portion of the granted discounts.

It may be necessary to note that while the burden on [the] government is slightly
diminished in terms of its percentage share on the discounts granted to senior citizens, the
number of potential establishments that may claim tax deductions, have however, been
broadened. Aside from the establishments that may claim tax credits under the old law,
more establishments were added under the new law such as: establishments providing
medical and dental services, diagnostic and laboratory services, including professional fees
of attending doctors in all private hospitals and medical facilities, operators of domestic air
and sea transport services, public railways and skyways and bus transport services.

A simple illustration might help amplify the points discussed above, as follows:

Tax Deduction Tax Credit

Gross Sales x x x x x x x x x x x x
Less : Cost of goods sold x x x x x x x x x x

Net Sales x x x x x x x x x x x x

Less: Operating Expenses:

Tax Deduction on Discounts x x x x --

Other deductions: x x x x x x x x

Net Taxable Income x x x x x x x x x x

Tax Due x x x x x x

Less: Tax Credit -- ______x x

Net Tax Due -- x x

As shown above, under a tax deduction scheme, the tax deduction on discounts was
subtracted from Net Sales together with other deductions which are considered as
operating expenses before the Tax Due was computed based on the Net Taxable Income. On
the other hand, under a tax credit scheme, the amount of discounts which is the tax
credit item, was deducted directly from the tax due amount.10

Meanwhile, on October 1, 2004, Administrative Order (A.O.) No. 171 or the Policies and
Guidelines to Implement the Relevant Provisions of Republic Act 9257, otherwise known as the
"Expanded Senior Citizens Act of 2003"11 was issued by the DOH, providing the grant of
twenty percent (20%) discount in the purchase of unbranded generic medicines from all
establishments dispensing medicines for the exclusive use of the senior citizens.

On November 12, 2004, the DOH issued Administrative Order No 17712 amending A.O. No.
171. Under A.O. No. 177, the twenty percent discount shall not be limited to the purchase of
unbranded generic medicines only, but shall extend to both prescription and non-
prescription medicines whether branded or generic. Thus, it stated that "[t]he grant of
twenty percent (20%) discount shall be provided in the purchase of medicines from all
establishments dispensing medicines for the exclusive use of the senior citizens."

Petitioners assail the constitutionality of Section 4(a) of the Expanded Senior Citizens Act
based on the following grounds:13
1) The law is confiscatory because it infringes Art. III, Sec. 9 of the Constitution which
provides that private property shall not be taken for public use without just compensation;

2) It violates the equal protection clause (Art. III, Sec. 1) enshrined in our Constitution
which states that "no person shall be deprived of life, liberty or property without due
process of law, nor shall any person be denied of the equal protection of the laws;" and

3) The 20% discount on medicines violates the constitutional guarantee in Article XIII,
Section 11 that makes "essential goods, health and other social services available to all
people at affordable cost."14

Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes
deprivation of private property. Compelling drugstore owners and establishments to grant
the discount will result in a loss of profit

and capital because 1) drugstores impose a mark-up of only 5% to 10% on branded

medicines; and 2) the law failed to provide a scheme whereby drugstores will be justly
compensated for the discount.

Examining petitioners’ arguments, it is apparent that what petitioners are ultimately

questioning is the validity of the tax deduction scheme as a reimbursement mechanism for
the twenty percent (20%) discount that they extend to senior citizens.

Based on the afore-stated DOF Opinion, the tax deduction scheme does not fully reimburse
petitioners for the discount privilege accorded to senior citizens. This is because the
discount is treated as a deduction, a tax-deductible expense that is subtracted from the
gross income and results in a lower taxable income. Stated otherwise, it is an amount that
is allowed by law15 to reduce the income prior to the application of the tax rate to compute
the amount of tax which is due.16 Being a tax deduction, the discount does not reduce taxes
owed on a peso for peso basis but merely offers a fractional reduction in taxes owed.

Theoretically, the treatment of the discount as a deduction reduces the net income of the
private establishments concerned. The discounts given would have entered the coffers and
formed part of the gross sales of the private establishments, were it not for R.A. No. 9257.

The permanent reduction in their total revenues is a forced subsidy corresponding to the
taking of private property for public use or benefit.17 This constitutes compensable taking
for which petitioners would ordinarily become entitled to a just compensation.

Just compensation is defined as the full and fair equivalent of the property taken from its
owner by the expropriator. The measure is not the taker’s gain but the owner’s loss. The
word just is used to intensify the meaning of the word compensation, and to convey the
idea that the equivalent to be rendered for the property to be taken shall be real,
substantial, full and ample.18

A tax deduction does not offer full reimbursement of the senior citizen discount. As such, it
would not meet the definition of just compensation.19

Having said that, this raises the question of whether the State, in promoting the health and
welfare of a special group of citizens, can impose upon private establishments the burden
of partly subsidizing a government program.

The Court believes so.

The Senior Citizens Act was enacted primarily to maximize the contribution of senior
citizens to nation-building, and to grant benefits and privileges to them for their
improvement and well-being as the State considers them an integral part of our society.20

The priority given to senior citizens finds its basis in the Constitution as set forth in the law
itself. Thus, the Act provides:

SEC. 2. Republic Act No. 7432 is hereby amended to read as follows:

SECTION 1. Declaration of Policies and Objectives. – Pursuant to Article XV, Section 4 of the
Constitution, it is the duty of the family to take care of its elderly members while the State
may design programs of social security for them. In addition to this, Section 10 in the
Declaration of Principles and State Policies provides: "The State shall provide social justice
in all phases of national development." Further, Article XIII, Section 11, provides: "The State
shall adopt an integrated and comprehensive approach to health development which shall
endeavor to make essential goods, health and other social services available to all the
people at affordable cost. There shall be priority for the needs of the underprivileged sick,
elderly, disabled, women and children." Consonant with these constitutional principles the
following are the declared policies of this Act:

...

(f) To recognize the important role of the private sector in the improvement of the
welfare of senior citizens and to actively seek their partnership.21

To implement the above policy, the law grants a twenty percent discount to senior citizens
for medical and dental services, and diagnostic and laboratory fees; admission fees charged
by theaters, concert halls, circuses, carnivals, and other similar places of culture, leisure
and amusement; fares for domestic land, air and sea travel; utilization of services in hotels
and similar lodging establishments, restaurants and recreation centers; and purchases of
medicines for the exclusive use or enjoyment of senior citizens. As a form of
reimbursement, the law provides that business establishments extending the twenty
percent discount to senior citizens may claim the discount as a tax deduction.

The law is a legitimate exercise of police power which, similar to the power of eminent
domain, has general welfare for its object. Police power is not capable of an exact definition,
but has been purposely veiled in general terms to underscore its comprehensiveness to
meet all exigencies and provide enough room for an efficient and flexible response to
conditions and circumstances, thus assuring the greatest benefits. 22 Accordingly, it has
been described as "the most essential, insistent and the least limitable of powers, extending
as it does to all the great public needs."23 It is "[t]he power vested in the legislature by the
constitution to make, ordain, and establish all manner of wholesome and reasonable laws,
statutes, and ordinances, either with penalties or without, not repugnant to the
constitution, as they shall judge to be for the good and welfare of the commonwealth, and
of the subjects of the same."24

For this reason, when the conditions so demand as determined by the legislature, property
rights must bow to the primacy of police power because property rights, though sheltered
by due process, must yield to general welfare.25

Police power as an attribute to promote the common good would be diluted considerably if
on the mere plea of petitioners that they will suffer loss of earnings and capital, the
questioned provision is invalidated. Moreover, in the absence of evidence demonstrating
the alleged confiscatory effect of the provision in question, there is no basis for its
nullification in view of the presumption of validity which every law has in its favor.26

Given these, it is incorrect for petitioners to insist that the grant of the senior citizen
discount is unduly oppressive to their business, because petitioners have not taken time to
calculate correctly and come up with a financial report, so that they have not been able to
show properly whether or not the tax deduction scheme really works greatly to their
disadvantage.27

In treating the discount as a tax deduction, petitioners insist that they will incur losses
because, referring to the DOF Opinion, for every ₱1.00 senior citizen discount that
petitioners would give, ₱0.68 will be shouldered by them as only ₱0.32 will be refunded by
the government by way of a tax deduction.
To illustrate this point, petitioner Carlos Super Drug cited the anti-hypertensive
maintenance drug Norvasc as an example. According to the latter, it acquires Norvasc from
the distributors at ₱37.57 per tablet, and retails it at ₱39.60 (or at a margin of 5%). If it
grants a 20% discount to senior citizens or an amount equivalent to ₱7.92, then it would
have to sell Norvasc at ₱31.68 which translates to a loss from capital of ₱5.89 per tablet.
Even if the government will allow a tax deduction, only ₱2.53 per tablet will be refunded
and not the full amount of the discount which is ₱7.92. In short, only 32% of the 20%
discount will be reimbursed to the drugstores.28

Petitioners’ computation is flawed. For purposes of reimbursement, the law states that the
cost of the discount shall be deducted from gross income,29 the amount of income derived
from all sources before deducting allowable expenses, which will result in net income.
Here, petitioners tried to show a loss on a per transaction basis, which should not be the
case. An income statement, showing an accounting of petitioners’ sales, expenses, and net
profit (or loss) for a given period could have accurately reflected the effect of the discount
on their income. Absent any financial statement, petitioners cannot substantiate their claim
that they will be operating at a loss should they give the discount. In addition, the
computation was erroneously based on the assumption that their customers consisted
wholly of senior citizens. Lastly, the 32% tax rate is to be imposed on income, not on the
amount of the discount.

Furthermore, it is unfair for petitioners to criticize the law because they cannot raise the
prices of their medicines given the cutthroat nature of the players in the industry. It is a
business decision on the part of petitioners to peg the mark-up at 5%. Selling the medicines
below acquisition cost, as alleged by petitioners, is merely a result of this decision.
Inasmuch as pricing is a property right, petitioners cannot reproach the law for being
oppressive, simply because they cannot afford to raise their prices for fear of losing their
customers to competition.

The Court is not oblivious of the retail side of the pharmaceutical industry and the
competitive pricing component of the business. While the Constitution protects property
rights, petitioners must accept the realities of business and the State, in the exercise of
police power, can intervene in the operations of a business which may result in an
impairment of property rights in the process.

Moreover, the right to property has a social dimension. While Article XIII of the
Constitution provides the precept for the protection of property, various laws and
jurisprudence, particularly on agrarian reform and the regulation of contracts and public
utilities, continuously serve as a reminder that the right to property can be relinquished
upon the command of the State for the promotion of public good.30
Undeniably, the success of the senior citizens program rests largely on the support
imparted by petitioners and the other private establishments concerned. This being the
case, the means employed in invoking the active participation of the private sector, in order
to achieve the purpose or objective of the law, is reasonably and directly related. Without
sufficient proof that Section 4(a) of R.A. No. 9257 is arbitrary, and that the continued
implementation of the same would be unconscionably detrimental to petitioners, the Court
will refrain from quashing a legislative act.31

WHEREFORE, the petition is DISMISSED for lack of merit.

No costs.

SO ORDERED.
Drugstores Association of the Philippines, Inc. v National Council on Disability
Affairs, 830 SCRA 25 (2016)

G.R. No. 194561, September 14, 2016

DRUGSTORES ASSOCIATION OF THE PHILIPPINES, INC. AND NORTHERN LUZON DRUG

CORPORATION, Petitioners, v. NATIONAL COUNCIL ON DISABILITY AFFAIRS;
DEPARTMENT OF HEALTH; DEPARTMENT OF FINANCE; BUREAU OF INTERNAL
REVENUE; DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT; AND
DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT, Respondent.

Before us is a Petition for Review on Certiorari1 with a Prayer for a Temporary Restraining
Order and/or Writ of Preliminary Injunction which seeks to annul and set aside the
Decision2 dated July 26, 2010, and the Resolution3 dated November 19, 2010 of the Court of
Appeals (CA) in CA-G.R. SP No. 109903. The CA dismissed petitioners' Petition for
Prohibition4 and upheld the constitutionality of the mandatory twenty percent (20%)
discount on the purchase of medicine by persons with disability (PWD).

The antecedents are as follows:

chanRoblesvirtualLawlibraryOn March 24, 1992, Republic Act (R.A.) No. 7277, entitled "An
Act Providing for the Rehabilitation, Self-Development and Self-Reliance of Disabled
Persons and their Integration into the Mainstream of Society and for Other Purposes,"
otherwise known as the "Magna Carta for Disabled Persons," was passed into law.5 The law
defines "disabled persons", "impairment" and "disability" as
follows:ChanRoblesVirtualawlibrary

SECTION 4. Definition of Terms. - For purposes of this Act, these terms are defined as
follows:

chanRoblesvirtualLawlibrary(a) Disabled Persons are those suffering from restriction of

different abilities, as a result of a mental, physical or sensory impairment, to perform an
activity in the manner or within the range considered normal for a human being;

(b) Impairment is any loss, diminution or aberration of psychological, physiological, or

anatomical structure of function;

(c) Disability shall mean (1) a physical or mental impairment that substantially limits one
or more psychological, physiological or anatomical function of an individual or activities of
such individual; (2) a record of such an impairment; or (3) being regarded as having such
an impairment.6chanroblesvirtuallawlibrary
On April 30, 2007, Republic Act No. 94427 was enacted amending R.A. No. 7277. The Title of
R.A. No. 7277 was amended to read as "Magna Carta for Persons with Disability" and all
references on the law to "disabled persons" were amended to read as "persons with
disability" (PWD).8 Specifically, R.A. No. 9442 granted the PWDs a twenty (20) percent
discount on the purchase of medicine, and a tax deduction scheme was adopted wherein
covered establishments may deduct the discount granted from gross income based on the
net cost of goods sold or services rendered:ChanRoblesVirtualawlibrary
CHAPTER 8. Other Privileges and Incentives. SEC. 32. Persons with disability shall be
entitled to the following:

chanRoblesvirtualLawlibraryx x x x

(d) At least twenty percent (20%) discount for the purchase of medicines in all
drugstores for the exclusive use or enjoyment of persons with disability;

xxxx

The abovementioned privileges are available only to persons with disability who are
Filipino citizens upon submission of any of the following as proof of his/her entitlement
thereto:

chanRoblesvirtualLawlibrary

(i) An identification card issued by the city or municipal mayor or the barangay
captain of the place where the person with disability resides;

(ii) The passport of the person with disability concerned; or

(ii) Transportation discount fare Identification Card (ID) issued by the National
Council for the Welfare of Disabled Persons (NCWDP).

xxxx
The establishments may claim the discounts granted in subsections (a), (b), (c), (f) and (g)
as tax deductions based on the net cost of the goods sold or services rendered: Provided,
however, That the cost of the discount shall be allowed as deduction from gross income for
the same taxable year that the discount is granted: Provided, further, That the total amount
of the claimed tax deduction net of value-added tax if applicable, shall be included in their
gross sales receipts for tax purposes and shall be subject to proper documentation and to
the provisions of the National Internal Revenue Code (NIRC), as
amended.9chanroblesvirtuallawlibrary
The Implementing Rules and Regulations (IRR) of R.A. No. 944210 was jointly promulgated
by the Department of Social Welfare and Development (DSWD), Department of Education,
Department of Finance (DOF), Department of Tourism, Department of Transportation and
Communication, Department of the Interior and Local Government (DILG) and Department
of Agriculture. Insofar as pertinent to this petition, the salient portions of the IRR are
hereunder quoted:11
RULE III. DEFINITION OF TERMS

Section 5. Definition of Terms. For purposes of these Rules and Regulations, these terms are
defined as follows:

chanRoblesvirtualLawlibrary5.1. Persons with Disability - are those individuals defined

under Section 4 of RA 7277 "An Act Providing for the Rehabilitation, Self-Development and
Self-Reliance of Persons with Disability as amended and their integration into the
Mainstream of Society and for Other Purposes". This is defined as a person suffering from
restriction or different abilities, as a result of a mental, physical or sensory impairment, to
perform an activity in a manner or within the range considered normal for human being.
Disability shall mean (1) a physical or mental impairment that substantially limits one or
more psychological, physiological or anatomical function of an individual or activities of
such individual; (2) a record of such an impairment; or (3) being regarded as having such
an impairment.

xxxx

RULE IV. PRIVILEGES AND INCENTIVES FOR THE PERSONS WITH DISABILITY

Section 6. Other Privileges and Incentives. Persons with disability shall be entitled to the
following:

chanRoblesvirtualLawlibraryx x x x
6.1.d. Purchase of Medicine - at least twenty percent (20%) discount on the purchase of
medicine for the exclusive use and enjoyment of persons with disability. All drugstores,
hospital, pharmacies, clinics and other similar establishments selling medicines are
required to provide at least twenty percent (20%) discount subject to the guidelines issued
by DOH and PHILHEALTH.12chanrobleslaw

xxxx

6.11 The abovementioned privileges are available only to persons with disability who are
Filipino citizens upon submission of any of the following as proof of his/her entitlement
thereto subject to the guidelines issued by the NCWDP in coordination with DSWD, DOH
and DILG.
6.11.1 An identification card issued by the city or municipal mayor or the barangay captain
of the place where the person with disability resides;

6.11.2 The passport of the persons with disability concerned; or

6.11.3 Transportation discount fare Identification Card (ID) issued by the National Council
for the Welfare of Disabled Persons (NCWDP). However, upon effectivity of this
Implementing Rules and Regulations, NCWDP will already adopt the Identification Card
issued by the Local Government Unit for purposes of uniformity in the implementation.
NCWDP will provide the design and specification of the identification card that will be
issued by the Local Government Units.13chanroblesvirtuallawlibrary
6.14. Availmenl of Tax Deductions by Establishment Granting Twenty Percent. 20% Discount -
The establishments may claim the discounts granted in sub-sections (6.1), (6.2), (6.4), (6.5)
and (6.6) as tax deductions based on the net cost of the goods sold or services rendered:
Provided, however, that the cost of the discount shall be allowed as deduction from gross
income for the same taxable year that the discount is granted: Provided, further, That the
total amount of the claimed tax deduction net of value-added tax if applicable, shall be
included in their gross sales receipts for tax purposes and shall be subject to proper
documentation and to the provisions of the National Internal Revenue Code, as amended.
On April 23, 2008, the National Council on Disability Affairs (NCDA)14 issued
Administrative Order (A.O.) No. 1, Series of 2008,15 prescribing guidelines which should
serve as a mechanism for the issuance of a PWD Identification Card (IDC) which shall be the
basis for providing privileges and discounts to bona fide PWDs in accordance with R.A.
9442:ChanRoblesVirtualawlibrary
IV. INSTITUTIONAL ARRANGEMENTS
 A. The Local Government Unit of the City or Municipal Office shall implement
these guidelines in the issuance of the PWD-IDC

xxxx

D. Issuance of the appropriate document to confirm the medical condition of the applicant
is as follows:ChanRoblesVirtualawlibrary

Disability Document Issuing Entity

Apparent Medical
Licensed Private or Government Physician
Disability Certificate

School Licensed Teacher duly signed by the School

Assessment Principal

Certificate of Head of the Business Establishment or Head of

Disability Non-Government Organization

Non-Apparent Medical
Licensed Private or Government Physician
Disability Certificate
E. PWD Registration Forms and ID Cards shall be issued and signed by the City or Municipal
Mayor, or Barangay Captain.

xxxx
V. IMPLEMENTING GUIDELINES AND PROCEDURES
Any bonafide person with permanent disability can apply for the issuance of the PWD-IDC.
His/her caregiver can assist in the application process. Procedures for the issuance of the
ID Cards are as follows:

chanRoblesvirtualLawlibraryA. Completion of the Requirements. Complete and/or make

available the following requirements:ChanRoblesVirtualawlibrary

1. Two "1x1" recent ID pictures with the names, and signatures or

thumbmarks at the back of the picture

2. One (1) Valid ID

3. Document to confirm the medical or disability condition (See Section

IV, D for the required document).
On December 9, 2008, the DOF issued Revenue Regulations No. 1-200916 prescribing rules
and regulations to implement R.A. 9442 relative to the tax privileges of PWDs and tax
incentives for establishments granting the discount. Section 4 of Revenue Regulations No.
001-09 states that drugstores can only deduct the 20% discount from their gross income
subject to some conditions.17chanrobleslaw

On May 20, 2009, the DOH issued A.O. No. 2009-001118 specifically stating that the grant of
20% discount shall be provided in the purchase of branded medicines and unbranded
generic medicines from all establishments dispensing medicines for the exclusive use of the
PWDs.19 It also detailed the guidelines for the provision of medical and related discounts
and special privileges to PWDs pursuant to R.A. 9442.20chanrobleslaw

On July 28, 2009, petitioners filed a Petition for Prohibition with application for a
Temporary Restraining Order and/or a Writ of Preliminary Injunction21 before the Court of
Appeals to annul and enjoin the implementation of the following
laws:ChanRoblesVirtualawlibrary
1) Section 32 of R.A. No. 7277 as amended by R.A. No. 9442;

2) Section 6, Rule IV of the Implementing Rules and Regulations of R.A. No. 9442;

3) NCDA A.O. No. 1;

4) DOF Revenue Regulation No. 1-2009;

5) DOH A.O. No. 2009-0011.

On July 26, 2010, the CA rendered a Decision upholding the constitutionality of R.A. 7277 as
amended, as well as the assailed administrative issuances. However, the CA suspended the
effectivity of NCDA A.O. No. 1 pending proof of respondent NCDA's compliance with filing of
said administrative order with the Office of the National Administrative Register (ONAR)
and its publication in a newspaper of general circulation. The dispositive portion of the
Decision states:ChanRoblesVirtualawlibrary
WHEREFORE, the petition is PARTLY GRANTED. The effectivity of NCDA Administrative
Order No. 1 is hereby SUSPENDED pending Respondent's compliance with the proof of
filing of NCDA Administrative Order No. 1 with the Office of the National Administrative
Register and its publication in a newspaper of general circulation.
Respondent NCDA filed a motion for reconsideration before the CA to lift the suspension of
the implementation of NCDA A.O. No. 1 attaching thereto proof of its publication in
the Philippine Star and Daily Tribune on August 12, 2010, as well as a certification from the
ONAR showing that the same was filed with the said office on October 22, 2009.22 Likewise,
petitioners filed a motion for reconsideration of the CA Decision.

In a Resolution dated November 19, 2010, the CA dismissed petitioners' motion for
reconsideration and lifted the suspension of the effectivity of NCDA A.O. No. 1 considering
the filing of the same with ONAR and its publication in a newspaper of general circulation.

Hence, the instant petition raising the following issues:ChanRoblesVirtualawlibrary

I. THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT THE
MANDATED PWD DISCOUNT IS A VALID EXERCISE OF POLICE POWER. ON THE
CONTRARY, IT IS AN INVALID EXERCISE OF THE POWER OF EMINENT DOMAIN BECAUSE
IT FAILS TO PROVIDE JUST COMPENSATION TO PETITIONERS AND OTHER SIMILARLY
SITUATED DRUGSTORES;

II. THE CA SERIOUSLY ERRED WHEN IT RULED THAT SECTION 32 OF RA 7277 AS

AMENDED BY RA 9442, NCDA AO 1 AND THE OTHER IMPLEMENTING REGULATIONS DID
NOT VIOLATE THE DUE PROCESS CLAUSE;

III. THE CA SERIOUSLY ERRED WHEN IT RULED THAT THE DEFINITIONS OF DISABILITIES
UNDER SECTION 4(A), SECTION 4(B) AND SECTION 4(C) OF RA 7277 AS AMENDED BY RA
9442, RULE 1 OF THE IMPLEMENTING RULES AND REGULATIONS23 OF RA 7277, SECTION
5.1 OF THE IMPLEMENTING RULES AND REGULATIONS OF RA 9442, NCDA AO 1 AND DOH
AO 2009-11 ARE NOT VAGUE, AMBIGUOUS AND UNCONSTITUTIONAL;

IV. THE CA SERIOUSLY ERRED WHEN IT RULED THAT THE MANDATED PWD DISCOUNT
DOES NOT VIOLATE THE EQUAL PROTECTION CLAUSE.
We deny the petition.

The CA is correct when it applied by analogy the case of Carlos Superdrug Corporation et al.
v. DSWD, et al.24 wherein We pronouced that Section 4 of R.A. No. 9257 which grants 20%
discount on the purchase of medicine of senior citizens is a legitimate exercise of police
power:ChanRoblesVirtualawlibrary
The law is a legitimate exercise of police power which, similar to the power of eminent
domain, has general welfare for its object. Police power is not capable of an exact definition,
but has been purposely veiled in general terms to underscore its comprehensiveness to
meet all exigencies and provide enough room for an efficient and flexible response to
conditions and circumstances, thus assuring the greatest benefits.25cralawred Accordingly,
it has been described as the most essential, insistent and the least limitable of powers,
extending as it does to all the great public needs.26 It is [t]he power vested in the legislature
by the constitution to make, ordain, and establish all manner of wholesome and reasonable
laws, statutes, and ordinances, either with penalties or without, not repugnant to the
constitution, as they shall judge to be for the good and welfare of the commonwealth, and
of the subjects of the same.27chanrobleslaw

For this reason, when the conditions so demand as determined by the legislature, property
rights must bow to the primacy of police power because property rights, though sheltered
by due process, must yield to general welfare.28chanrobleslaw

Police power as an attribute to promote the common good would be diluted considerably if
on the mere plea of petitioners that they will suffer loss of earnings and capital, the
questioned provision is invalidated. Moreover, in the absence of evidence demonstrating
the alleged confiscatory effect of the provision in question, there is no basis for its
nullification in view of the presumption of validity which every law has in its
favor.29chanroblesvirtuallawlibrary
Police power is the power of the state to promote public welfare by restraining and
regulating the use of liberty and property. On the other hand, the power of eminent domain
is the inherent right of the state (and of those entities to which the power has been lawfully
delegated) to condemn private property to public use upon payment of just compensation.
In the exercise of police power, property rights of private individuals are subjected to
restraints and burdens in order to secure the general comfort, health, and prosperity of the
state.30 A legislative act based on the police power requires the concurrence of a lawful
subject and a lawful method. In more familiar words, (a) the interests of the public
generally, as distinguished from those of a particular class, should justify the interference
of the state; and (b) the means employed are reasonably necessary for the accomplishment
of the purpose and not unduly oppressive upon individuals.31chanrobleslaw

R.A. No. 7277 was enacted primarily to provide full support to the improvement of the total
well-being of PWDs and their integration into the mainstream of society. The priority given
to PWDs finds its basis in the Constitution:ChanRoblesVirtualawlibrary
ARTICLE XII

NATIONAL ECONOMY AND PATRIMONY

xxxx

Section 6. The use of property bears a social function, and all economic agents shall
contribute to the common good. Individuals and private groups, including corporations,
cooperatives, and similar collective organizations, shall have the right to own, establish,
and operate economic enterprises, subject to the duty of the State to promote distributive
justice and to intervene when the common good so demands.32chanrobleslaw

ARTICLE XIII

SOCIAL JUSTICE AND HUMAN RIGHTS

xxxx

Section 11. The State shall adopt an integrated and comprehensive approach to health
development which shall endeavor to make essential goods, health and other social
services available to all the people at affordable cost. There shall be priority for the
needs of the underprivileged, sick, elderly, disabled, women, and children. The State shall
endeavor to provide free medical care to paupers.33chanroblesvirtuallawlibrary
Thus, R.A. No. 7277 provides:ChanRoblesVirtualawlibrary
SECTION 2. Declaration of Policy. The grant of the rights and privileges for disabled persons
shall be guided by the following principles:

chanRoblesvirtualLawlibrary(a). Disabled persons are part of the Philippine society, thus

the Senate shall give full support to the improvement of the total well-being of disabled
persons and their integration into the mainstream of society.

Toward this end, the State shall adopt policies ensuring the rehabilitation, self-
development and self-reliance of disabled persons.

It shall develop their skills and potentials to enable them to compete favorably for available
opportunities.

(b). Disabled persons have the same rights as other people to take their proper place in
society. They should be able to live freely and as independently as possible. This must be
the concern of everyone - the family, community and all government and non-government
organizations.

Disabled person's rights must never be perceived as welfare services by the Government.
xxxx

(d). The State also recognizes the role of the private sector in promoting the welfare of
disabled persons and shall encourage partnership in programs that address their needs
and concerns.34chanroblesvirtuallawlibrary
To implement the above policies, R.A. No. 9442 which amended R.A. No. 7277 grants
incentives and benefits including a twenty percent (20%) discount to PWDs in the
purchase of medicines; fares for domestic air, sea and land travels including public railways
and skyways; recreation and amusement centers including theaters, food chains and
restaurants.35 This is specifically stated in Section 4 of the IRR of R.A. No.
9442:ChanRoblesVirtualawlibrary
Section 4. Policies and Objectives - It is the objective of Republic Act No. 9442 to provide
persons with disability, the opportunity to participate fully into the mainstream of
society by granting them at least twenty percent (20%) discount in all basic services.
It is a declared policy of RA 7277 that persons with disability are part of Philippine society,
and thus the State shall give full support to the improvement of their total wellbeing
and their integration into the mainstream of society. They have the same rights as
other people to take their proper place in society. They should be able to live freely and as
independently as possible. This must be the concern of everyone the family, community
and all government and non-government organizations. Rights of persons with disability
must never be perceived as welfare services. Prohibitions on verbal, non-verbal ridicule
and vilification against persons with disability shall always be observed at all
times.36chanroblesvirtuallawlibrary
Hence, the PWD mandatory discount on the purchase of medicine is supported by a valid
objective or purpose as aforementioned. It has a valid subject considering that the concept
of public use is no longer confined to the traditional notion of use by the public, but held
synonymous with public interest, public benefit, public welfare, and public convenience. As in
the case of senior citizens,37 the discount privilege to which the PWDs are entitled is
actually a benefit enjoyed by the general public to which these citizens belong. The means
employed in invoking the active participation of the private sector, in order to achieve the
purpose or objective of the law, is reasonably and directly related.38 Also, the means
employed to provide a fair, just and quality health care to PWDs are reasonably related to
its accomplishment, and are not oppressive, considering that as a form of reimbursement,
the discount extended to PWDs in the purchase of medicine can be claimed by the
establishments as allowable tax deductions pursuant to Section 32 of R.A. No. 9442 as
implemented in Section 4 of DOF Revenue Regulations No. 1-2009. Otherwise stated, the
discount reduces taxable income upon which the tax liability of the establishments is
computed.

Further, petitioners aver that Section 32 of R.A. No. 7277 as amended by R.A. No. 9442 is
unconstitutional and void for violating the due process clause of the Constitution since
entitlement to the 20% discount is allegedly merely based on any of the three documents
mentioned in the provision, namely: (i) an identification card issued by the city or
municipal mayor or the barangay captain of the place where the PWD resides; (ii) the
passport of the PWD; or (iii) transportation discount fare identification card issued by
NCDA. Petitioners, thus, maintain that none of the said documents has any relation to a
medical finding of disability, and the grant of the discount is allegedly without any process
for the determination of a PWD in accordance with law.

Section 32 of R.A. No. 7277, as amended by R.A. No. 9442, must be read with its IRR which
stated that upon its effectivity, NCWDP (which is the government agency tasked to ensure
the implementation of RA 7277), would adopt the IDC issued by the local government units
for purposes of uniformity in the implementation.39 Thus, NCDA A.O. No. 1 provides the
reasonable guidelines in the issuance of IDCs to PWDs as proof of their entitlement to the
privileges and incentives under the law40 and fills the details in the implementation of the
law.

As stated in NCDA A.O. No. 1, before an IDC is issued by the city or municipal mayor or the
barangay captain,41 or the Chairman of the NCDA,42 the applicant must first secure a
medical certificate issued by a licensed private or government physician that will confirm
his medical or disability condition. If an applicant is an employee with apparent disability, a
"certificate of disability" issued by the head of the business establishment or the head of
the non-governmental organization is needed for him to be issued a PWD-IDC. For a
student with apparent disability, the "school assessment" issued by the teacher and signed
by the school principal should be presented to avail of a PWD-ID.

Petitioners' insistence that Part IV (D) of NCDA Administrative Order No. 1 is void because
it allows allegedly non-competent persons like teachers, head of establishments and heads
of Non-Governmental Organizations (NGOs) to confirm the medical condition of the
applicant is misplaced. It must be stressed that only for apparent disabilities can the
teacher or head of a business establishment validly issue the mentioned required
document because, obviously, the disability is easily seen or clearly visible. It is, therefore,
not an unqualified grant of authority for the said non-medical persons as it is simply
limited to apparent disabilities. For a non-apparent disability or a disability condition that
is not easily seen or clearly visible, the disability can only be validated by a licensed private
or government physician, and a medical certificate has to be presented in the procurement
of an IDC. Relative to this issue, the CA validly ruled, thus:ChanRoblesVirtualawlibrary
We agree with the Office of the Solicitor General's (OSG) ratiocination that teachers, heads
of business establishments and heads of NGOs can validly confirm the medical condition of
their students/employees with apparent disability for obvious reasons as compared to
non-apparent disability which can only be determined by licensed physicians. Under the
Labor Code, disabled persons are eligible as apprentices or learners provided that
their handicap are not as much as to effectively impede the performance of their job. We
find that heads of business establishments can validly issue certificates of disability of their
employees because aside from the fact that they can obviously validate the disability, they
also have medical records of the employees as a pre-requisite in the hiring of
employees. Hence, Part IV (D) of NCDA AO No. 1 is logical and
valid.43chanroblesvirtuallawlibrary
Furthermore, DOH A.O. No. 2009-11 prescribes additional guidelines for the 20% discount
in the purchase of all medicines for the exclusive use of PWD.44 To avail of the discount, the
PWD must not only present his I.D. but also the doctor's prescription stating, among others,
the generic name of the medicine, the physician's address, contact number and professional
license number, professional tax receipt number and narcotic license number, if applicable.
A purchase booklet issued by the local social/health office is also required in the purchase
of over-the-counter medicines. Likewise, any single dispensing of medicine must be in
accordance with the prescription issued by the physician and should not exceed a one (1)
month supply. Therefore, as correctly argued by the respondents, Section 32 of R.A. No.
7277 as amended by R.A. No. 9442 complies with the standards of substantive due process.

We are likewise not persuaded by the argument of petitioners that the definition of
"disabilities" under the subject laws is vague and ambiguous because it is allegedly so
general and broad that the person tasked with implementing the law will undoubtedly
arrive at different interpretations and applications of the law. Aside from the definitions of
a "person with disability" or "disabled persons" under Section 4 of R.A. No. 7277 as
amended by R.A. No. 9442 and in the IRR of RA 9442, NCDA A.O. No. 1 also
provides:ChanRoblesVirtualawlibrary

4. Identification Cards shall be issued to any bonafide PWD with permanent

disabilities due to any one or more of the following conditions: psychosocial,
chronic illness, learning, mental, visual, orthopedic, speech and hearing
conditions. This includes persons suffering from disabling diseases resulting
to the person's limitations to do day to day activities as normally as possible
such as but not limited to those undergoing dialysis, heart disorders, severe
cancer cases and such other similar cases resulting to temporary or
permanent disability.45

Similarly, DOH A.O. No. 2009-0011 defines the different categories of disability as
follows:ChanRoblesVirtualawlibrary
Rule IV, Section 4, Paragraph B of the Implementing Rules and Regulations (IRR) of this Act
required the Department of Health to address the health concerns of seven (7) different
categories of disability, which include the following: (1) Psychological and behavioral
disabilities (2) Chronic illness with disabilities (3)Learning(cognitive or intellectual)
disabilities (4) Mental disabilities (5) Visual/seeing disabilities (6) Orthopedic/moving,
and (7) communication deficits.46chanroblesvirtuallawlibrary
Elementary is the rule that when laws or rules are clear, when the law is unambiguous and
unequivocal, application not interpretation thereof is imperative. However, where the
language of a statute is vague and ambiguous, an interpretation thereof is resorted to. A law
is deemed ambiguous when it is capable of being understood by reasonably well-informed
persons in either of two or more senses. The fact that a law admits of different
interpretations is the best evidence that it is vague and ambiguous.47chanrobleslaw

In the instant case, We do not find the aforestated definition of terms as vague and
ambiguous. Settled is the rule that courts will not interfere in matters which are addressed
to the sound discretion of the government agency entrusted with the regulation of
activities coming under the special and technical training and knowledge of such
agency.48 As a matter of policy, We accord great respect to the decisions and/or actions of
administrative authorities not only because of the doctrine of separation of powers but also
for their presumed knowledge, ability, and expertise in the enforcement of laws and
regulations entrusted to their jurisdiction. The rationale for this rule relates not only to the
emergence of the multifarious needs of a modern or modernizing society and the
establishment of diverse administrative agencies for addressing and satisfying those needs;
it also relates to the accumulation of experience and growth of specialized capabilities by
the administrative agency charged with implementing a particular statute.49chanrobleslaw

Lastly, petitioners contend that R.A. No. 7227, as amended by R.A. No. 9442, violates the
equal protection clause of the Constitution because it fairly singles out drugstores to bear
the burden of the discount, and that it can hardly be said to "rationally" meet a legitimate
government objective which is the purpose of the law. The law allegedly targets only
retailers such as petitioners, and that the other enterprises in the drug industry are not
imposed with similar burden. This same argument had been raised in the case of Carlos
Superdrug Corp., et al. v. DSWD, et al.,50 and We reaffirm and apply the ruling therein in the
case at bar:ChanRoblesVirtualawlibrary
The Court is not oblivious of the retail side of the pharmaceutical industry and the
competitive pricing component of the business. While the Constitution protects property
rights, petitioners must accept the realities of business and the State, in the exercise of
police power, can intervene in the operations of a business which may result in an
impairment of property rights in the process.

Moreover, the right to property has a social dimension. While Article XIII of the
Constitution provides the precept for the protection of property, various laws and
jurisprudence, particularly on agrarian reform and the regulation of contracts and public
utilities, continuously serve as a reminder that the right to property can be relinquished
upon the command of the State for the promotion of public
good.51chanroblesvirtuallawlibrary
Under the equal protection clause, all persons or things similarly situated must be treated
alike, both in the privileges conferred and the obligations imposed. Conversely, all persons
or things differently situated should be treated differently.52 In the case of ABAKADA Guro
Party List, et al. v. Hon. Purisima, et al.,53 We held:ChanRoblesVirtualawlibrary
Equality guaranteed under the equal protection clause is equality under the same
conditions and among persons similarly situated; it is equality among equals, not similarity
of treatment of persons who are classified based on substantial differences in relation to
the object to be accomplished. When things or persons are different in fact or circumstance,
they may be treated in law differently. In Victoriano v. Elizalde Rope Workers' Union, this
Court declared:ChanRoblesVirtualawlibrary
The guaranty of equal protection of the laws is not a guaranty of equality in the application
of the laws upon all citizens of the State. It is not, therefore, a requirement, in order to avoid
the constitutional prohibition against inequality, that every man, woman and child should
be affected alike by a statute. Equality of operation of statutes does not mean
indiscriminate operation on persons merely as such, but on persons according to the
circumstances surrounding them. It guarantees equality, not identity of rights. The
Constitution does not require that things which are different in fact be treated in law
as though they were the same. The equal protection clause does not forbid
discrimination as to things that are different. It does not prohibit legislation which is
limited either in the object to which it is directed or by the territory within which it is
to operate.

The equal protection of the laws clause of the Constitution allows classification.
Classification in law, as in the other departments of knowledge or practice, is the grouping
of things in speculation or practice because they agree with one another in certain
particulars. A law is not invalid because of simple inequality. The very idea of classification
is that of inequality, so that it goes without saying that the mere fact of inequality in no
manner determines the matter of constitutionality. All that is required of a valid
classification is that it be reasonable, which means that the classification should be
based on substantial distinctions which make for real differences, that it must be
germane to the purpose of the law; that it must not be limited to existing conditions
only; and that it must apply equally to each member of the class. This Court has held
that the standard is satisfied if the classification or distinction is based on a
reasonable foundation or rational basis and is not palpably arbitrary.

In the exercise of its power to make classifications for the purpose of enacting laws over
matters within its jurisdiction, the state is recognized as enjoying a wide range of
discretion. It is not necessary that the classification be based on scientific or marked
differences of things or in their relation. Neither is it necessary that the classification be
made with mathematical nicety. Hence, legislative classification may in many cases
properly rest on narrow distinctions, for the equal protection guaranty does not preclude
the legislature from recognizing degrees of evil or harm, and legislation is addressed to
evils as they may appear.
The equal protection clause recognizes a valid classification, that is, a classification that has
a reasonable foundation or rational basis and not arbitrary.54 With respect to R.A. No. 9442,
its expressed public policy is the rehabilitation, self-development and self-reliance of
PWDs. Persons with disability form a class separate and distinct from the other citizens of
the country. Indubitably, such substantial distinction is germane and intimately related to
the purpose of the law. Hence, the classification and treatment accorded to the PWDs fully
satisfy the demands of equal protection. Thus, Congress may pass a law providing for a
different treatment to persons with disability apart from the other citizens of the country.

Subject to the determination of the courts as to what is a proper exercise of police power
using the due process clause and the equal protection clause as yardsticks, the State may
interfere wherever the public interests demand it, and in this particular, a large discretion
is necessarily vested in the legislature to determine, not only what interests of the public
require, but what measures are necessary for the protection of such interests.55 Thus, We
are mindful of the fundamental criteria in cases of this nature that all reasonable doubts
should be resolved in favor of the constitutionality of a statute.56 The burden of proof is on
him who claims that a statute is unconstitutional. Petitioners failed to discharge such
burden of proof.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated July 26,
2010, and the Resolution dated November 19, 2010, in CA-G.R. SP No. 109903
are AFFIRMED.

SO ORDERED.chanRoblesvirtualLawlibrary
DECS v San Diego, 180 SCRA 533 (1989)

G.R. No. 89572 December 21, 1989

DEPARTMENT OF EDUCATION, CULTURE AND SPORTS (DECS) and DIRECTOR OF

CENTER FOR EDUCATIONAL MEASUREMENT, petitioners,
vs.
ROBERTO REY C. SAN DIEGO and JUDGE TERESITA DIZON-CAPULONG, in her capacity
as Presiding Judge of the Regional Trial Court of Valenzuela, Metro Manila, Branch
172, respondents.

Ramon M. Guevara for private respondent.

CRUZ, J.:

The issue before us is mediocrity. The question is whether a person who has thrice failed
the National Medical Admission Test (NMAT) is entitled to take it again.

The petitioner contends he may not, under its rule that-

h) A student shall be allowed only three (3) chances to take the NMAT. After
three (3) successive failures, a student shall not be allowed to take the NMAT
for the fourth time.

The private respondent insists he can, on constitutional grounds.

But first the facts.

The private respondent is a graduate of the University of the East with a degree of Bachelor
of Science in Zoology. The petitioner claims that he took the NMAT three times and flunked
it as many times.1 When he applied to take it again, the petitioner rejected his application
on the basis of the aforesaid rule. He then went to the Regional Trial Court of Valenzuela,
Metro Manila, to compel his admission to the test.

In his original petition for mandamus, he first invoked his constitutional rights to academic
freedom and quality education. By agreement of the parties, the private respondent was
allowed to take the NMAT scheduled on April 16, 1989, subject to the outcome of his
petition. 2 In an amended petition filed with leave of court, he squarely challenged the
constitutionality of MECS Order No. 12, Series of 1972, containing the above-cited rule. The
additional grounds raised were due process and equal protection.

After hearing, the respondent judge rendered a decision on July 4, 1989, declaring the
challenged order invalid and granting the petition. Judge Teresita Dizon-Capulong held that
the petitioner had been deprived of his right to pursue a medical education through an
arbitrary exercise of the police power. 3

We cannot sustain the respondent judge. Her decision must be reversed.

In Tablarin v. Gutierrez, 4 this Court upheld the constitutionality of the NMAT as a measure
intended to limit the admission to medical schools only to those who have initially proved
their competence and preparation for a medical education. Justice Florentino P. Feliciano
declared for a unanimous Court:

Perhaps the only issue that needs some consideration is whether there is
some reasonable relation between the prescribing of passing the NMAT as a
condition for admission to medical school on the one hand, and the securing
of the health and safety of the general community, on the other hand. This
question is perhaps most usefully approached by recalling that the regulation
of the pratice of medicine in all its branches has long been recognized as a
reasonable method of protecting the health and safety of the public. That the
power to regulate and control the practice of medicine includes the power to
regulate admission to the ranks of those authorized to practice medicine, is
also well recognized. Thus, legislation and administrative regulations
requiring those who wish to practice medicine first to take and pass medical
board examinations have long ago been recognized as valid exercises of
governmental power. Similarly, the establishment of minimum medical
educational requirements-i.e., the completion of prescribed courses in a
recognized medical school-for admission to the medical profession, has also
been sustained as a legitimate exercise of the regulatory authority of the
state. What we have before us in the instant case is closely related: the
regulation of access to medical schools. MECS Order No. 52, s. 1985, as noted
earlier, articulates the rationale of regulation of this type: the improvement
of the professional and technical quality of the graduates of medical schools,
by upgrading the quality of those admitted to the student body of the medical
schools. That upgrading is sought by selectivity in the process of admission,
selectivity consisting, among other things, of limiting admission to those who
exhibit in the required degree the aptitude for medical studies and eventually
for medical practice. The need to maintain, and the difficulties of maintaining,
 high standards in our professional schools in general, and medical schools in
particular, in the current state of our social and economic development, are
widely known.

We believe that the government is entitled to prescribe an admission test like

the NMAT as a means of achieving its stated objective of "upgrading the
selection of applicants into [our] medical schools" and of "improv[ing] the
quality of medical education in the country." Given the widespread use today
of such admission tests in, for instance, medical schools in the United States
of America (the Medical College Admission Test [MCAT] and quite probably,
in other countries with far more developed educational resources than our
own, and taking into account the failure or inability of the petitioners to even
attempt to prove otherwise, we are entitled to hold that the NMAT is
reasonably related to the securing of the ultimate end of legislation and
regulation in this area. That end, it is useful to recall, is the protection of the
public from the potentially deadly effects of incompetence and ignorance in
those who would undertake to treat our bodies and minds for disease or
trauma.

However, the respondent judge agreed with the petitioner that the said case was not
applicable. Her reason was that it upheld only the requirement for the admission test and
said nothing about the so-called "three-flunk rule."

We see no reason why the rationale in the Tablarin case cannot apply to the case at bar.
The issue raised in both cases is the academic preparation of the applicant. This may be
gauged at least initially by the admission test and, indeed with more reliability, by the
three-flunk rule. The latter cannot be regarded any less valid than the former in the
regulation of the medical profession.

There is no need to redefine here the police power of the State. Suffice it to repeat that the
power is validly exercised if (a) the interests of the public generally, as distinguished from
those of a particular class, require the interference of the State, and (b) the means
employed are reasonably necessary to the attainment of the object sought to be
accomplished and not unduly oppressive upon individuals.5

In other words, the proper exercise of the police power requires the concurrence of a
lawful subject and a lawful method.

The subject of the challenged regulation is certainly within the ambit of the police power. It
is the right and indeed the responsibility of the State to insure that the medical profession
is not infiltrated by incompetents to whom patients may unwarily entrust their lives and
health.

The method employed by the challenged regulation is not irrelevant to the purpose of the
law nor is it arbitrary or oppressive. The three-flunk rule is intended to insulate the
medical schools and ultimately the medical profession from the intrusion of those not
qualified to be doctors.

While every person is entitled to aspire to be a doctor, he does not have a constitutional
right to be a doctor. This is true of any other calling in which the public interest is involved;
and the closer the link, the longer the bridge to one's ambition. The State has the
responsibility to harness its human resources and to see to it that they are not dissipated
or, no less worse, not used at all. These resources must be applied in a manner that will
best promote the common good while also giving the individual a sense of satisfaction.

A person cannot insist on being a physician if he will be a menace to his patients. If one who
wants to be a lawyer may prove better as a plumber, he should be so advised and adviced.
Of course, he may not be forced to be a plumber, but on the other hand he may not force his
entry into the bar. By the same token, a student who has demonstrated promise as a pianist
cannot be shunted aside to take a course in nursing, however appropriate this career may
be for others.

The right to quality education invoked by the private respondent is not absolute. The
Constitution also provides that "every citizen has the right to choose a profession or course
of study, subject to fair, reasonable and equitable admission and academic requirements.6

The private respondent must yield to the challenged rule and give way to those better
prepared. Where even those who have qualified may still not be accommodated in our
already crowded medical schools, there is all the more reason to bar those who, like him,
have been tested and found wanting.

The contention that the challenged rule violates the equal protection clause is not well-
taken. A law does not have to operate with equal force on all persons or things to be
conformable to Article III, Section 1 of the Constitution.

There can be no question that a substantial distinction exists between medical students
and other students who are not subjected to the NMAT and the three-flunk rule. The
medical profession directly affects the very lives of the people, unlike other careers which,
for this reason, do not require more vigilant regulation. The accountant, for example, while
belonging to an equally respectable profession, does not hold the same delicate
responsibility as that of the physician and so need not be similarly treated.
There would be unequal protection if some applicants who have passed the tests are
admitted and others who have also qualified are denied entrance. In other words, what the
equal protection requires is equality among equals.

The Court feels that it is not enough to simply invoke the right to quality education as a
guarantee of the Constitution: one must show that he is entitled to it because of his
preparation and promise. The private respondent has failed the NMAT five times. 7 While
his persistence is noteworthy, to say the least, it is certainly misplaced, like a hopeless love.

No depreciation is intended or made against the private respondent. It is stressed that a

person who does not qualify in the NMAT is not an absolute incompetent unfit for any work
or occupation. The only inference is that he is a probably better, not for the medical
profession, but for another calling that has not excited his interest.

In the former, he may be a bungler or at least lackluster; in the latter, he is more likely to
succeed and may even be outstanding. It is for the appropriate calling that he is entitled to
quality education for the full harnessing of his potentials and the sharpening of his latent
talents toward what may even be a brilliant future.

We cannot have a society of square pegs in round holes, of dentists who should never have
left the farm and engineers who should have studied banking and teachers who could be
better as merchants.

It is time indeed that the State took decisive steps to regulate and enrich our system of
education by directing the student to the course for which he is best suited as determined
by initial tests and evaluations. Otherwise, we may be "swamped with mediocrity," in the
words of Justice Holmes, not because we are lacking in intelligence but because we are a
nation of misfits.

WHEREFORE, the petition is GRANTED. The decision of the respondent court dated January
13, 1989, is REVERSED, with costs against the private respondent. It is so ordered.
PRC v. De Guzman, G.R. No. 144681, June 21, 2004

G.R. No. 144681 June 21, 2004

PROFESSIONAL REGULATION COMMISSION (PRC)

vs.
ARLENE V. DE GUZMAN

This petition for review under Rule 45 of the 1997 Rules of Civil Procedure seeks to nullify
the Decision,1 dated May 16, 2000, of the Court of Appeals in CA-G.R. SP No. 37283. The
appellate court affirmed the judgment2 dated December 19, 1994, of the Regional Trial
Court (RTC) of Manila, Branch 52, in Civil Case No. 93-66530. The trial court allowed the
respondents to take their physician’s oath and to register as duly licensed physicians.
Equally challenged is the Resolution3 promulgated on August 25, 2000 of the Court of
Appeals, denying petitioners’ Motion for Reconsideration.

The facts of this case are as follows:

The respondents are all graduates of the Fatima College of Medicine, Valenzuela
City, Metro Manila. They passed the Physician Licensure Examination conducted in
February 1993 by the Board of Medicine (Board). Petitioner Professional Regulation
Commission (PRC) then released their names as successful examinees in the medical
licensure examination.

Shortly thereafter, the Board observed that the grades of the seventy-nine
successful examinees from Fatima College in the two most difficult subjects in the
medical licensure exam, Biochemistry (Bio-Chem) and Obstetrics and Gynecology
(OB-Gyne), were unusually and exceptionally high. Eleven Fatima examinees scored
100% in Bio-Chem and ten got 100% in OB-Gyne, another eleven got 99% in Bio-
Chem, and twenty-one scored 99% in OB-Gyne. The Board also observed that many
of those who passed from Fatima got marks of 95% or better in both subjects, and
no one got a mark lower than 90%. A comparison of the performances of the
candidates from other schools was made. The Board observed that strangely, the
unusually high ratings were true only for Fatima College examinees. It was a record-
breaking phenomenon in the history of the Physician Licensure Examination.

On June 7, 1993, the Board issued Resolution No. 19, withholding the registration as
physicians of all the examinees from the Fatima College of Medicine.4 The PRC asked the
National Bureau of Investigation (NBI) to investigate whether any anomaly or irregularity
marred the February 1993 Physician Licensure Examination.
Prior to the NBI investigation, the Board requested Fr. Bienvenido F. Nebres, S.J., an expert
mathematician and authority in statistics, and later president of the Ateneo de Manila
University, to conduct a statistical analysis of the results in Bio-Chem and Ob-Gyne of the
said examination.

On June 10, 1993, Fr. Nebres submitted his report. He reported that a comparison of the
scores in Bio-Chem and Ob-Gyne, of the Fatima College examinees with those of examinees
from De La Salle University and Perpetual Help College of Medicine showed that the scores
of Fatima College examinees were not only incredibly high but unusually clustered close to
each other. He concluded that there must be some unusual reason creating the clustering of
scores in the two subjects. It must be a cause "strong enough to eliminate the normal
variations that one should expect from the examinees [of Fatima College] in terms of talent,
effort, energy, etc."5

For its part, the NBI found that "the questionable passing rate of Fatima examinees in the
[1993] Physician Examination leads to the conclusion that the Fatima examinees gained
early access to the test questions."6

On July 5, 1993, respondents Arlene V. De Guzman, Violeta V. Meneses, Celerina S. Navarro,

Jose Ramoncito P. Navarro, Arnel V. Herrera, and Geraldine Elizabeth M. Pagilagan (Arlene
V. De Guzman et al., for brevity) filed a special civil action for mandamus, with prayer for
preliminary mandatory injunction docketed as Civil Case No. 93-66530 with the Regional
Trial Court (RTC) of Manila, Branch 52. Their petition was adopted by the other
respondents as intervenors.

Meanwhile, the Board issued Resolution No. 26, dated July 21, 1993, charging respondents
with "immorality, dishonest conduct, fraud, and deceit" in connection with the Bio-Chem
and Ob-Gyne examinations. It recommended that the test results of the Fatima examinees
be nullified. The case was docketed as Adm. Case No. 1687 by the PRC.

On July 28, 1993, the RTC issued an Order in Civil Case No. 93-66530 granting the
preliminary mandatory injunction sought by the respondents. It ordered the petitioners to
administer the physician’s oath to Arlene V. De Guzman et al., and enter their names in the
rolls of the PRC.

The petitioners then filed a special civil action for certiorari with the Court of Appeals to set
aside the mandatory injunctive writ, docketed as CA-G.R. SP No. 31701.

On October 21, 1993, the appellate court decided CA-G.R. SP No. 31701, with the dispositive
portion of the Decision ordaining as follows:
 WHEREFORE, this petition is GRANTED. Accordingly, the writ of preliminary
mandatory injunction issued by the lower court against petitioners is hereby
nullified and set aside.

SO ORDERED.7

Arlene V. de Guzman, et al., then elevated the foregoing Decision to this Court in G.R. No.
112315. In our Resolution dated May 23, 1994, we denied the petition for failure to show
reversible error on the part of the appellate court.

Meanwhile, on November 22, 1993, during the pendency of the instant petition, the pre-
trial conference in Civil Case No. 93-66530 was held. Then, the parties, agreed to reduce the
testimonies of their respective witnesses to sworn questions-and-answers. This was
without prejudice to cross-examination by the opposing counsel.

On December 13, 1993, petitioners’ counsel failed to appear at the trial in the mistaken
belief that the trial was set for December 15. The trial court then ruled that petitioners
waived their right to cross-examine the witnesses.

On January 27, 1994, counsel for petitioners filed a Manifestation and Motion stating the
reasons for her non-appearance and praying that the cross-examination of the witnesses
for the opposing parties be reset. The trial court denied the motion for lack of notice to
adverse counsel. It also denied the Motion for Reconsideration that followed on the ground
that adverse counsel was notified less than three (3) days prior to the hearing.

Meanwhile, to prevent the PRC and the Board from proceeding with Adm. Case No. 1687,
the respondents herein moved for the issuance of a restraining order, which the lower
court granted in its Order dated April 4, 1994.

The petitioners then filed with this Court a petition for certiorari docketed as G.R. No.
115704, to annul the Orders of the trial court dated November 13, 1993, February 28, 1994,
and April 4, 1994. We referred the petition to the Court of Appeals where it was docketed
as CA-G.R. SP No. 34506.

On August 31, 1994, the appellate court decided CA-G.R. SP No. 34506 as follows:

WHEREFORE, the present petition for certiorari with prayer for temporary
restraining order/preliminary injunction is GRANTED and the Orders of December
13, 1993, February 7, 1994, February 28, 1994, and April 4, 1994 of the RTC-Manila,
Branch 52, and all further proceedings taken by it in Special Civil Action No. 93-
66530 are hereby DECLARED NULL and VOID. The said RTC-Manila is ordered to
 allow petitioners’ counsel to cross-examine the respondents’ witnesses, to allow
petitioners to present their evidence in due course of trial, and thereafter to decide
the case on the merits on the basis of the evidence of the parties. Costs against
respondents.

IT IS SO ORDERED.8

The trial was then set and notices were sent to the parties.

A day before the first hearing, on September 22, 1994, the petitioners filed an Urgent Ex-
Parte Manifestation and Motion praying for the partial reconsideration of the appellate
court’s decision in CA-G.R. SP No. 34506, and for the outright dismissal of Civil Case No. 93-
66530. The petitioners asked for the suspension of the proceedings.

In its Order dated September 23, 1994, the trial court granted the aforesaid motion,
cancelled the scheduled hearing dates, and reset the proceedings to October 21 and 28,
1994.

Meanwhile, on October 25, 1994, the Court of Appeals denied the partial motion for
reconsideration in CA-G.R. SP No. 34506. Thus, petitioners filed with the Supreme Court a
petition for review docketed as G.R. No. 117817, entitled Professional Regulation
Commission, et al. v. Court of Appeals, et al.

On November 11, 1994, counsel for the petitioners failed to appear at the trial of Civil Case
No. 93-66530. Upon motion of the respondents herein, the trial court ruled that herein
petitioners waived their right to cross-examine the herein respondents. Trial was reset to
November 28, 1994.

On November 25, 1994, petitioners’ counsel moved for the inhibition of the trial court
judge for alleged partiality. On November 28, 1994, the day the Motion to Inhibit was to be
heard, petitioners failed to appear. Thus, the trial court denied the Motion to Inhibit and
declared Civil Case No. 93-66530 deemed submitted for decision.

On December 19, 1994, the trial court handed down its judgment in Civil Case No. 93-
66530, the fallo of which reads:

WHEREFORE, judgment is rendered ordering the respondents to allow the

petitioners and intervenors (except those with asterisks and footnotes in pages 1 &
2 of this decision) [sic],9 to take the physician’s oath and to register them as
physicians.
 It should be made clear that this decision is without prejudice to any administrative
disciplinary action which may be taken against any of the petitioners for such causes
and in the manner provided by law and consistent with the requirements of the
Constitution as any other professionals.

No costs.

SO ORDERED.10

As a result of these developments, petitioners filed with this Court a petition for review on
certiorari docketed as G.R. No. 118437, entitled Professional Regulation Commission v.
Hon. David G. Nitafan, praying inter alia, that (1) G.R. No. 118437 be consolidated with G.R.
No. 117817; (2) the decision of the Court of Appeals dated August 31, 1994 in CA-G.R. SP
No. 34506 be nullified for its failure to decree the dismissal of Civil Case No. 93-66530, and
in the alternative, to set aside the decision of the trial court in Civil Case No. 93-66530,
order the trial court judge to inhibit himself, and Civil Case No. 93-66530 be re-raffled to
another branch.

On December 26, 1994, the petitioners herein filed their Notice of Appeal11 in Civil Case No.
93-66530, thereby elevating the case to the Court of Appeals, where it was docketed as CA-
G.R. SP No. 37283.

In our Resolution of June 7, 1995, G.R. No. 118437 was consolidated with G.R. No. 117817.

On July 9, 1998, we disposed of G.R. Nos. 117817 and 118437 in this wise:

WHEREFORE, the petition in G.R. No. 117817 is DISMISSED for being moot. The
petition in G.R. No. 118437 is likewise DISMISSED on the ground that there is a
pending appeal before the Court of Appeals. Assistant Solicitor General Amparo M.
Cabotaje-Tang is advised to be more circumspect in her dealings with the courts as a
repetition of the same or similar acts will be dealt with accordingly.

SO ORDERED.12

While CA-G.R. SP No. 37283 was awaiting disposition by the appellate court, Arnel V.
Herrera, one of the original petitioners in Civil Case No. 93-66530, joined by twenty-seven
intervenors, to wit: Fernando F. Mandapat, Ophelia C. Hidalgo, Bernadette T. Mendoza,
Ruby B. Lantin-Tan, Fernando T. Cruz, Marissa A. Regodon, Ma. Eloisa Q. Mallari-Largoza,
Cheryl R. Triguero, Joseph A. Jao, Bernadette H. Cabuhat, Evelyn S. Acosta-Cabanes, Laura
M. Santos, Maritel M. Echiverri, Bernadette C. Escusa, Carlosito C. Domingo, Alicia S. Lizano,
Elnora R. Raqueno-Rabaino, Saibzur N. Edding, Derileen D. Dorado-Edding, Robert B.
Sanchez, Maria Rosario L. Leonor-Lacandula, Geraldine Elizabeth M. Pagilagan-Palma,
Margarita Belinda L. Vicencio-Gamilla, Herminigilda E. Conejos, Leuvina P. Chico-Paguio,
Elcin C. Arriola-Ocampo, and Jose Ramoncito P. Navarro, manifested that they were no
longer interested in proceeding with the case and moved for its dismissal. A similar
manifestation and motion was later filed by intervenors Mary Jean I. Yeban-Merlan,
Michael L. Serrano, Norma G. Lafavilla, Arnulfo A. Salvador, Belinda C. Rabara, Yolanda P.
Unica, Dayminda G. Bontuyan, Clarissa B. Baclig, Ma. Luisa S. Gutierrez, Rhoneil R.
Deveraturda, Aleli A. Gollayan, Evelyn C. Cundangan, Frederick D. Francisco, Violeta V.
Meneses, Melita J. Cañedo, Clarisa SJ. Nicolas, Federico L. Castillo, Karangalan D. Serrano,
Danilo A. Villaver, Grace E. Uy, Lydia C. Chan, and Melvin M. Usita. The Court of Appeals
ruled that its decision in CA-G.R. SP No. 37283 would not apply to them.

On May 16, 2000, the Court of Appeals decided CA-G.R. SP No. 37283, with the
following fallo, to wit:

WHEREFORE, finding no reversible error in the decision appealed from, We hereby

AFFIRM the same and DISMISS the instant appeal.

No pronouncement as to costs.

SO ORDERED.13

In sustaining the trial court’s decision, the appellate court ratiocinated that the
respondents complied with all the statutory requirements for admission into the licensure
examination for physicians in February 1993. They all passed the said examination. Having
fulfilled the requirements of Republic Act No. 2382,14 they should be allowed to take their
oaths as physicians and be registered in the rolls of the PRC.

Hence, this petition raising the following issues:

WHETHER OR NOT RESPONDENTS HAVE A VALID CAUSE OF ACTION FOR

MANDAMUS AGAINST PETITIONERS IN THE LIGHT OF THE RESOLUTION OF THIS
HONORABLE COURT IN G.R. NO. 112315 AFFIRMING THE COURT OF APPEALS’
DECISION DECLARING THAT IF EVER THERE IS SOME DOUBT AS TO THE MORAL
FITNESS OF EXAMINEES, THE ISSUANCE OF LICENSE TO PRACTICE MEDICINE IS
NOT AUTOMATICALLY GRANTED TO THE SUCCESSFUL EXAMINEES.

II
 WHETHER OR NOT THE PETITION FOR MANDAMUS COULD PROCEED DESPITE
THE PENDENCY OF ADMINISTRATIVE CASE NO. 1687, WHICH WAS PRECISELY
LODGED TO DETERMINE THE MORAL FITNESS OF RESPONDENTS TO BECOME
DOCTORS.15

To our mind, the only issue is: Did the Court of Appeals commit a reversible error of law in
sustaining the judgment of the trial court that respondents are entitled to a writ of
mandamus?

The petitioners submit that a writ of mandamus will not lie in this case. They point out that
for a writ of mandamus to issue, the applicant must have a well-defined, clear and certain
legal right to the thing demanded and it is the duty of the respondent to perform the act
required. Thus, mandamus may be availed of only when the duty sought to be performed is
a ministerial and not a discretionary one. The petitioners argue that the appellate court’s
decision in CA-G.R. SP No. 37283 upholding the decision of the trial court in Civil Case No.
93-66530 overlooked its own pronouncement in CA-G.R. SP No. 31701. The Court of
Appeals held in CA-G.R. SP No. 31701 that the issuance of a license to engage in the practice
of medicine becomes discretionary on the PRC if there exists some doubt that the
successful examinee has not fully met the requirements of the law. The petitioners stress
that this Court’s Resolution dated May 24, 1994 in G.R. No. 112315 held that there was no
showing "that the Court of Appeals had committed any reversible error in rendering the
questioned judgment" in CA-G.R. SP No. 31701. The petitioners point out that
our Resolution in G.R. No. 112315 has long become final and executory.

Respondents counter that having passed the 1993 licensure examinations for physicians,
the petitioners have the obligation to administer to them the oath as physicians and to
issue their certificates of registration as physicians pursuant to Section 2016 of Rep. Act No.
2382. The Court of Appeals in CA-G.R. SP No. 37283, found that respondents complied with
all the requirements of Rep. Act No. 2382. Furthermore, respondents were admitted by the
Medical Board to the licensure examinations and had passed the same. Hence, pursuant to
Section 20 of Rep. Act No. 2382, the petitioners had the obligation to administer their oaths
as physicians and register them.

Mandamus is a command issuing from a court of competent jurisdiction, in the name of the
state or the sovereign, directed to some inferior court, tribunal, or board, or to some
corporation or person requiring the performance of a particular duty therein specified,
which duty results from the official station of the party to whom the writ is directed, or
from operation of law.17 Section 3 of Rule 6518 of the 1997 Rules of Civil Procedure outlines
two situations when a writ of mandamus may issue, when any tribunal, corporation, board,
officer or person unlawfully (1) neglects the performance of an act which the law
specifically enjoins as a duty resulting from an office, trust, or station; or (2) excludes
another from the use and enjoyment of a right or office to which the other is entitled.

We shall discuss the issues successively.

1. On The Existence of a Duty of the Board of Medicine To Issue Certificates of Registration as

Physicians under Rep. Act No. 2382.

For mandamus to prosper, there must be a showing that the officer, board, or official
concerned, has a clear legal duty, not involving discretion.19 Moreover, there must be
statutory authority for the performance of the act,20 and the performance of the duty has
been refused.21 Thus, it must be pertinently asked now: Did petitioners have the duty to
administer the Hippocratic Oath and register respondents as physicians under the Medical
Act of 1959?

As found by the Court of Appeals, on which we agree on the basis of the records:

It bears emphasizing herein that petitioner-appellees and intervenor-appellees have

fully complied with all the statutory requirements for admission into the licensure
examinations for physicians conducted and administered by the respondent-
appellants on February 12, 14, 20 and 21, 1993. Stress, too, must be made of the fact
that all of them successfully passed the same examinations.22

The crucial query now is whether the Court of Appeals erred in concluding that petitioners
should allow the respondents to take their oaths as physicians and register them, steps
which would enable respondents to practice the medical profession23 pursuant to Section
20 of the Medical Act of 1959?

The appellate court relied on a single provision, Section 20 of Rep. Act No. 2382, in
concluding that the petitioners had the ministerial obligation to administer the Hippocratic
Oath to respondents and register them as physicians. But it is a basic rule in statutory
construction that each part of a statute should be construed in connection with every other
part to produce a harmonious whole, not confining construction to only one section.24 The
intent or meaning of the statute should be ascertained from the statute taken as a whole,
not from an isolated part of the provision. Accordingly, Section 20, of Rep. Act No. 2382, as
amended should be read in conjunction with the other provisions of the Act. Thus, to
determine whether the petitioners had the ministerial obligation to administer the
Hippocratic Oath to respondents and register them as physicians, recourse must be had to
the entirety of the Medical Act of 1959.
A careful reading of Section 20 of the Medical Act of 1959 discloses that the law uses the
word "shall" with respect to the issuance of certificates of registration. Thus, the petitioners
"shall sign and issue certificates of registration to those who have satisfactorily complied
with the requirements of the Board." In statutory construction the term "shall" is a word of
command. It is given imperative meaning. Thus, when an examinee satisfies the
requirements for the grant of his physician’s license, the Board is obliged to administer to
him his oath and register him as a physician, pursuant to Section 20 and par. (1) of Section
2225 of the Medical Act of 1959.

However, the surrounding circumstances in this case call for serious inquiry concerning the
satisfactory compliance with the Board requirements by the respondents. The unusually
high scores in the two most difficult subjects was phenomenal, according to Fr. Nebres, the
consultant of PRC on the matter, and raised grave doubts about the integrity, if not validity,
of the tests. These doubts have to be appropriately resolved.

Under the second paragraph of Section 22, the Board is vested with the power to conduct
administrative investigations and "disapprove applications for examination or
registration," pursuant to the objectives of Rep. Act No. 2382 as outlined in Section
126 thereof. In this case, after the investigation, the Board filed before the PRC, Adm. Case
No. 1687 against the respondents to ascertain their moral and mental fitness to practice
medicine, as required by Section 927 of Rep. Act No. 2382. In its Decision dated July 1, 1997,
the Board ruled:

WHEREFORE, the BOARD hereby CANCELS the respondents[’] examination papers

in the Physician Licensure Examinations given in February 1993 and further
DEBARS them from taking any licensure examination for a period of ONE (1) YEAR
from the date of the promulgation of this DECISION. They may, if they so desire,
apply for the scheduled examinations for physicians after the lapse of the period
imposed by the BOARD.

SO ORDERED.28

Until the moral and mental fitness of the respondents could be ascertained, according to
petitioners, the Board has discretion to hold in abeyance the administration of the
Hippocratic Oath and the issuance of the certificates to them. The writ of mandamus does
not lie to compel performance of an act which is not duly authorized.

The respondents nevertheless argue that under Section 20, the Board shall not issue a
certificate of registration only in the following instances: (1) to any candidate who has been
convicted by a court of competent jurisdiction of any criminal offense involving moral
turpitude; (2) or has been found guilty of immoral or dishonorable conduct after the
investigation by the Board; or (3) has been declared to be of unsound mind. They aver that
none of these circumstances are present in their case.

Petitioners reject respondents’ argument. We are informed that in Board Resolution No.
26,29 dated July 21, 1993, the Board resolved to file charges against the examinees from
Fatima College of Medicine for "immorality, dishonesty, fraud, and deceit in the Obstetrics-
Gynecology and Biochemistry examinations." It likewise sought to cancel the examination
results obtained by the examinees from the Fatima College.

Section 830 of Rep. Act No. 2382 prescribes, among others, that a person who aspires to
practice medicine in the Philippines, must have "satisfactorily passed the corresponding
Board Examination." Section 22, in turn, provides that the oath may only be administered
"to physicians who qualified in the examinations." The operative word here is
"satisfactorily," defined as "sufficient to meet a condition or obligation" or "capable of
dispelling doubt or ignorance."31 Gleaned from Board Resolution No. 26, the licensing
authority apparently did not find that the respondents "satisfactorily passed" the licensure
examinations. The Board instead sought to nullify the examination results obtained by the
respondents.

2. On the Right Of The Respondents To Be Registered As Physicians

The function of mandamus is not to establish a right but to enforce one that has been
established by law. If no legal right has been violated, there can be no application of a legal
remedy, and the writ of mandamus is a legal remedy for a legal right.32 There must be a
well-defined, clear and certain legal right to the thing demanded.33 It is long established
rule that a license to practice medicine is a privilege or franchise granted by the
government.34

It is true that this Court has upheld the constitutional right35 of every citizen to select a
profession or course of study subject to a fair, reasonable, and equitable admission and
academic requirements.36 But like all rights and freedoms guaranteed by the Charter, their
exercise may be so regulated pursuant to the police power of the State to safeguard health,
morals, peace, education, order, safety, and general welfare of the people.37 Thus, persons
who desire to engage in the learned professions requiring scientific or technical knowledge
may be required to take an examination as a prerequisite to engaging in their chosen
careers. This regulation takes particular pertinence in the field of medicine, to protect the
public from the potentially deadly effects of incompetence and ignorance among those who
would practice medicine. In a previous case, it may be recalled, this Court has ordered the
Board of Medical Examiners to annul both its resolution and certificate authorizing a
Spanish subject, with the degree of Licentiate in Medicine and Surgery from the University
of Barcelona, Spain, to practice medicine in the Philippines, without first passing the
examination required by the Philippine Medical Act.38 In another case worth noting, we
upheld the power of the State to upgrade the selection of applicants into medical schools
through admission tests.39

It must be stressed, nevertheless, that the power to regulate the exercise of a profession or
pursuit of an occupation cannot be exercised by the State or its agents in an arbitrary,
despotic, or oppressive manner. A political body that regulates the exercise of a particular
privilege has the authority to both forbid and grant such privilege in accordance with
certain conditions. Such conditions may not, however, require giving up ones constitutional
rights as a condition to acquiring the license.40 Under the view that the legislature cannot
validly bestow an arbitrary power to grant or refuse a license on a public agency or officer,
courts will generally strike down license legislation that vests in public officials discretion
to grant or refuse a license to carry on some ordinarily lawful business, profession, or
activity without prescribing definite rules and conditions for the guidance of said officials
in the exercise of their power.41

In the present case, the aforementioned guidelines are provided for in Rep. Act No. 2382, as
amended, which prescribes the requirements for admission to the practice of medicine, the
qualifications of candidates for the board examinations, the scope and conduct of the
examinations, the grounds for denying the issuance of a physician’s license, or revoking a
license that has been issued. Verily, to be granted the privilege to practice medicine, the
applicant must show that he possesses all the qualifications and none of the
disqualifications. Furthermore, it must appear that he has fully complied with all the
conditions and requirements imposed by the law and the licensing authority. Should doubt
taint or mar the compliance as being less than satisfactory, then the privilege will not issue.
For said privilege is distinguishable from a matter of right, which may be demanded if
denied. Thus, without a definite showing that the aforesaid requirements and conditions
have been satisfactorily met, the courts may not grant the writ of mandamus to secure said
privilege without thwarting the legislative will.

3. On the Ripeness of the Petition for Mandamus

Lastly, the petitioners herein contend that the Court of Appeals should have dismissed the
petition for mandamus below for being premature. They argue that the administrative
remedies had not been exhausted. The records show that this is not the first time that
petitioners have sought the dismissal of Civil Case No. 93-66530. This issue was raised in
G.R. No. 115704, which petition we referred to the Court of Appeals, where it was docketed
as CA-G.R. SP No. 34506. On motion for reconsideration in CA-G.R. SP No. 34506, the
appellate court denied the motion to dismiss on the ground that the prayers for the
nullification of the order of the trial court and the dismissal of Civil Case No. 93-66530
were inconsistent reliefs. In G.R. No. 118437, the petitioners sought to nullify the decision
of the Court of Appeals in CA-G.R. SP No. 34506 insofar as it did not order the dismissal of
Civil Case No. 93-66530. In our consolidated decision, dated July 9, 1998, in G.R. Nos.
117817 & 118437, this Court speaking through Justice Bellosillo opined that:

Indeed, the issue as to whether the Court of Appeals erred in not ordering the
dismissal of Civil Case No. 93-66530 sought to be resolved in the instant petition has
been rendered meaningless by an event taking place prior to the filing of this
petition and denial thereof should follow as a logical consequence.42 There is no
longer any justiciable controversy so that any declaration thereon would be of no
practical use or value.43 It should be recalled that in its decision of 19 December
1994 the trial court granted the writ of mandamus prayed for by private
respondents, which decision was received by petitioners on 20 December 1994.
Three (3) days after, or on 23 December 1994, petitioners filed the instant petition.
By then, the remedy available to them was to appeal the decision to the Court of
Appeals, which they in fact did, by filing a notice of appeal on 26 December 1994.44

The petitioners have shown no cogent reason for us to reverse the aforecited ruling. Nor
will their reliance upon the doctrine of the exhaustion of administrative remedies in the
instant case advance their cause any.

Section 2645 of the Medical Act of 1959 provides for the administrative and judicial
remedies that respondents herein can avail to question Resolution No. 26 of the Board of
Medicine, namely: (a) appeal the unfavorable judgment to the PRC; (b) should the PRC
ruling still be unfavorable, to elevate the matter on appeal to the Office of the President;
and (c) should they still be unsatisfied, to ask for a review of the case or to bring the case to
court via a special civil action of certiorari. Thus, as a rule, mandamus will not lie when
administrative remedies are still available.46 However, the doctrine of exhaustion of
administrative remedies does not apply where, as in this case, a pure question of law is
raised.47 On this issue, no reversible error may, thus, be laid at the door of the appellate
court in CA-G.R. SP No. 37283, when it refused to dismiss Civil Case No. 93-66530.

As we earlier pointed out, herein respondents Arnel V. Herrera, Fernando F. Mandapat,

Ophelia C. Hidalgo, Bernadette T. Mendoza, Ruby B. Lantin-Tan, Fernando T. Cruz, Marissa
A. Regodon, Ma. Eloisa Q. Mallari-Largoza, Cheryl R. Triguero, Joseph A. Jao, Bernadette H.
Cabuhat, Evelyn S. Acosta-Cabanes, Laura M. Santos, Maritel M. Echiverri, Bernadette C.
Escusa, Carlosito C. Domingo, Alicia S. Lizano, Elnora R. Raqueno-Rabaino, Saibzur N.
Edding, Derileen D. Dorado-Edding, Robert B. Sanchez, Maria Rosario Leonor-Lacandula,
Geraldine Elizabeth M. Pagilagan-Palma, Margarita Belinda L. Vicencio-Gamilla,
Herminigilda E. Conejos, Leuvina P. Chico-Paguio, Elcin C. Arriola-Ocampo, and Jose
Ramoncito P. Navarro manifested to the Court of Appeals during the pendency of CA-G.R.
SP No. 37283, that they were no longer interested in proceeding with the case and moved
for its dismissal insofar as they were concerned. A similar manifestation and motion were
later filed by intervenors Mary Jean I. Yeban-Merlan, Michael L. Serrano, Norma G. Lafavilla,
Arnulfo A. Salvador, Belinda C. Rabarra, Yolanda P. Unica, Dayminda G. Bontuyan, Clarissa
B. Baclig, Ma. Luisa S. Gutierrez, Rhoneil R. Deveraturda, Aleli A. Gollayan, Evelyn C.
Cundangan, Frederick D. Francisco, Violeta V. Meneses, Melita J. Cañedo, Clarisa SJ. Nicolas,
Federico L. Castillo, Karangalan D. Serrano, Danilo A. Villaver, Grace E. Uy, Lydia C. Chan,
and Melvin M. Usita. Following these manifestations and motions, the appellate court in CA-
G.R. SP No. 37283 decreed that its ruling would not apply to them. Thus, inasmuch as the
instant case is a petition for review of the appellate court’s ruling in CA-G.R. SP No. 37283, a
decision which is inapplicable to the aforementioned respondents will similarly not apply
to them.

As to Achilles J. Peralta, Evelyn O. Ramos, Sally B. Bunagan, Rogelio B. Ancheta, Oscar H.

Padua, Jr., Evelyn D. Grajo, Valentino P. Arboleda, Carlos M. Bernardo, Jr., Mario D.
Cuaresma, Violeta C. Felipe, Percival H. Pangilinan, Corazon M. Cruz and Samuel B. Bangoy,
herein decision shall not apply pursuant to the Orders of the trial court in Civil Case No. 93-
66530, dropping their names from the suit.

Consequently, this Decision is binding only on the remaining respondents, namely: Arlene
V. de Guzman, Celerina S. Navarro, Rafael I. Tolentino, Bernardita B. Sy, Gloria T. Jularbal,
Hubert S. Nazareno, Nancy J. Chavez, Ernesto L. Cue, Herminio V. Fernandez, Jr., Maria
Victoria M. Lacsamana and Merly D. Sta. Ana, as well as the petitioners.

WHEREFORE, the instant petition is GRANTED. Accordingly, (1) the assailed decision
dated May 16, 2000, of the Court of Appeals, in CA-G.R. SP No. 37283, which affirmed the
judgment dated December 19, 1994, of the Regional Trial Court of Manila, Branch 52, in
Civil Case No. 93-66530, ordering petitioners to administer the physician’s oath to herein
respondents as well as the resolution dated August 25, 2000, of the appellate court,
denying the petitioners’ motion for reconsideration, are REVERSED and SET ASIDE; and (2)
the writ of mandamus, issued in Civil Case No. 93-66530, and affirmed by the appellate
court in CA-G.R. SP No. 37283 is NULLIFIED AND SET ASIDE.

SO ORDERED.
St. Luke’s Medical Center Employee’s Association v NLRC, 517 SCRA 677 (2007)

G.R. No. 162053 March 7, 2007

ST. LUKE'S MEDICAL CENTER EMPLOYEE'S ASSOCIATION-AFW (SLMCEA-AFW) AND

MARIBEL S. SANTOS, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND ST. LUKE'S MEDICAL
CENTER, INC., Respondents.

DECISION

AZCUNA, J.:

Challenged in this petition for review on certiorari is the Decision1 of the Court of Appeals
(CA) dated January 29, 2004 in CA-G.R. SP No. 75732 affirming the decision2 dated August
23, 2002 rendered by the National Labor Relations Commission (NLRC) in NLRC CA No.
026225-00.

The antecedent facts are as follows:

Petitioner Maribel S. Santos was hired as X-Ray Technician in the Radiology department of
private respondent St. Luke's Medical Center, Inc. (SLMC) on October 13, 1984. She is a
graduate of Associate in Radiologic Technology from The Family Clinic Incorporated School
of Radiologic Technology.

On April 22, 1992, Congress passed and enacted Republic Act No. 7431 known as the
"Radiologic Technology Act of 1992." Said law requires that no person shall practice or
offer to practice as a radiology and/or x-ray technologist in the Philippines without having
obtained the proper certificate of registration from the Board of Radiologic Technology.

On September 12, 1995, the Assistant Executive Director-Ancillary Services and HR

Director of private respondent SLMC issued a final notice to all practitioners of Radiologic
Technology to comply with the requirement of Republic Act No. 7431 by December 31,
1995; otherwise, the unlicensed employee will be transferred to an area which does not
require a license to practice if a slot is available.

On March 4, 1997, the Director of the Institute of Radiology issued a final notice to
petitioner Maribel S. Santos requiring the latter to comply with Republic Act. No. 7431 by
taking and passing the forthcoming examination scheduled in June 1997; otherwise,
private respondent SLMC may be compelled to retire her from employment should there be
no other position available where she may be absorbed.

On May 14, 1997, the Director of the Institute of Radiology, AED-Division of Ancillary
Services issued a memorandum to petitioner Maribel S. Santos directing the latter to
submit her PRC Registration form/Examination Permit per Memorandum dated March 4,
1997.

On March 13, 1998, the Director of the Institute of Radiology issued another memorandum
to petitioner Maribel S. Santos advising her that only a license can assure her of her
continued employment at the Institute of Radiology of the private respondent SLMC and
that the latter is giving her the last chance to take and pass the forthcoming board
examination scheduled in June 1998; otherwise, private respondent SLMC shall be
constrained to take action which may include her separation from employment.

On November 23, 1998, the Director of the Institute of Radiology issued a notice to
petitioner Maribel S. Santos informing the latter that the management of private
respondent SLMC has approved her retirement in lieu of separation pay.

On November 26, 1998, the Personnel Manager of private respondent SLMC issued a
"Notice of Separation from the Company" to petitioner Maribel S. Santos effective
December 30, 1998 in view of the latter's refusal to accept private respondent SLMC's offer
for early retirement. The notice also states that while said private respondent exerted its
efforts to transfer petitioner Maribel S. Santos to other position/s, her qualifications do not
fit with any of the present vacant positions in the hospital.

In a letter dated December 18, 1998, a certain Jack C. Lappay, President of the Philippine
Association of Radiologic Technologists, Inc., wrote Ms. Judith Betita, Personnel Manager of
private respondent SLMC, requesting the latter to give "due consideration" to the
organization's three (3) regular members of his organization (petitioner Maribel S. Santos
included) "for not passing yet the Board of Examination for X-ray Technology," "by giving
them an assignment in any department of your hospital awaiting their chance to pass the
future Board Exam."

On January 6, 1999, the Personnel Manager of private respondent SLMC again issued a
"Notice of Separation from the Company" to petitioner Maribel S. Santos effective February
5, 1999 after the latter failed to present/ submit her appeal for rechecking to the
Professional Regulation Commission (PRC) of the recent board examination which she took
and failed.
On March 2, 1999, petitioner Maribel S. Santos filed a complaint against private respondent
SLMC for illegal dismissal and non-payment of salaries, allowances and other monetary
benefits. She likewise prayed for the award of moral and exemplary damages plus
attorney's fees.

In the meantime, petitioner Alliance of Filipino Workers (AFW), through its President and
Legal Counsel, in a letter dated September 22, 1999 addressed to Ms. Rita Marasigan,
Human Resources Director of private respondent SLMC, requested the latter to
accommodate petitioner Maribel S. Santos and assign her to the vacant position of CSS Aide
in the hospital arising from the death of an employee more than two (2) months earlier.

In a letter dated September 24, 1999, Ms. Rita Marasigan replied thus:

Gentlemen:

Thank you for your letter of September 22, 1999 formally requesting to fill up the vacant
regular position of a CSS Aide in Ms. Maribel Santos' behalf.

The position is indeed vacant. Please refer to our Recruitment Policy for particulars
especially on minimum requirements of the job and the need to meet said requirements, as
well as other pre-employment requirements, in order to be considered for the vacant
position. As a matter of fact, Ms. Santos is welcome to apply for any vacant position on the
condition that she possesses the necessary qualifications.

As to the consensus referred to in your letter, may I correct you that the agreement is,
regardless of the vacant position Ms. Santos decides to apply, she must go through the
usual application procedures. The formal letter, I am afraid, will not suffice for purposes of
recruitment processing. As you know, the managers requesting to fill any vacancy has a say
on the matter and correctly so. The manager's inputs are necessarily factored into the
standard recruitment procedures. Hence, the need to undergo the prescribed steps.

Indeed we have gone through the mechanics to accommodate Ms. Santos' transfer while
she was employed with SLMC given the prescribed period. She was given 30 days from
issuance of the notice of termination to look for appropriate openings which incidentally
she wittingly declined to utilize. She did this knowing fully well that the consequences
would be that her application beyond the 30-day period or after the effective date of her
termination from SLMC would be considered a re-application with loss of seniority and
shall be subjected to the pertinent application procedures.

Needless to mention, one of the 3 X-ray Technologists in similar circumstances as Ms.

Santos at the time successfully managed to get herself transferred to E.R. because she opted
to apply for the appropriate vacant position and qualified for it within the prescribed 30-
day period. The other X-ray Technologist, on the other hand, as you may recall, was
eventually terminated not just for his failure to comply with the licensure requirement of
the law but for cause (refusal to serve a customer).

Why Ms. Santos opted to file a complaint before the Labor Courts and not to avail of the
opportunity given her, or assuming she was not qualified for any vacant position even if she
tried to look for one within the prescribed period, I simply cannot understand why she also
refused the separation pay offered by Management in an amount beyond the minimum
required by law only to re-apply at SLMC, which option would be available to her anyway
even (if she) chose to accept the separation pay!

Well, here's hoping that our Union can timely influence our employees to choose their
options well as it has in the past.

(Signed)
RITA MARASIGAN

Subsequently, in a letter dated December 27, 1999, Ms. Judith Betita, Personnel Manager of
private respondent SLMC wrote Mr. Angelito Calderon, President of petitioner union as
follows:

Dear Mr. Calderon:

This is with regard to the case of Ms. Maribel Santos. Please recall that last Oct. 8, 1999, Ms.
Rita Marasigan, HR Director, discussed with you and Mr. Greg Del Prado the terms
regarding the re-hiring of Ms. Maribel Santos. Ms. Marasigan offered Ms. Santos the
position of Secretary at the Dietary Department. In that meeting, Ms. Santos replied that
she would think about the offer. To date, we still have no definite reply from her. Again,
during the conference held on Dec. 14, 1999, Atty. Martir promised to talk to Ms. Santos,
and inform us of her reply by Dec. 21, 1999. Again we failed to hear her reply through him.

Please be informed that said position is in need of immediate staffing. The Dietary
Department has already been experiencing serious backlog of work due to the said
vacancy. Please note that more than 2 months has passed since Ms. Marasigan offered this
compromise. Management cannot afford to wait for her decision while the operation of the
said department suffers from vacancy.

Therefore, Management is giving Ms. Santos until the end of this month to give her decision.
If we fail to hear from her or from you as her representatives by that time, we will consider
it as a waiver and we will be forced to offer the position to other applicants so as not to
jeopardize the Dietary Department's operation.

For your immediate action.

(Signed)
JUDITH BETITA
Personnel Manager

On September 5, 2000, the Labor Arbiter came out with a Decision ordering private
respondent SLMC to pay petitioner Maribel S. Santos the amount of One Hundred Fifteen
Thousand Five Hundred Pesos (₱115,500.00) representing her separation pay. All other
claims of petitioner were dismissed for lack of merit.

Dissatisfied, petitioner Maribel S. Santos perfected an appeal with the public respondent
NLRC.

On August 23, 2002, public respondent NLRC promulgated its Decision affirming the
Decision of the Labor Arbiter. It likewise denied the Motion for Reconsideration filed by
petitioners in its Resolution promulgated on December 27, 2002.

Petitioner thereafter filed a petition for certiorari with the CA which, as previously
mentioned, affirmed the decision of the NLRC.

Hence, this petition raising the following issues:

I. Whether the CA overlooked certain material facts and circumstances on

petitioners' legal claim in relation to the complaint for illegal dismissal.

II. Whether the CA committed grave abuse of discretion and erred in not resolving
with clarity the issues on the merit of petitioner's constitutional right of security of
tenure.3

For its part, private respondent St. Luke's Medical Center, Inc. (SLMC) argues in its
comment4 that: 1) the petition should be dismissed for failure of petitioners to file a motion
for reconsideration; 2) the CA did not commit grave abuse of discretion in upholding the
NLRC and the Labor Arbiter's ruling that petitioner was legally dismissed; 3) petitioner was
legally and validly terminated in accordance with Republic Act Nos. 4226 and 7431; 4)
private respondent's decision to terminate petitioner Santos was made in good faith and
was not the result of unfair discrimination; and 5) petitioner Santos' non-transfer to
another position in the SLMC was a valid exercise of management prerogative.
The petition lacks merit.

Generally, the Court has always accorded respect and finality to the findings of fact of the
CA particularly if they coincide with those of the Labor Arbiter and the NLRC and are
supported by substantial evidence.5 True this rule admits of certain exceptions as, for
example, when the judgment is based on a misapprehension of facts, or the findings of fact
are not supported by the evidence on record6 or are so glaringly erroneous as to constitute
grave abuse of discretion.7 None of these exceptions, however, has been convincingly
shown by petitioners to apply in the present case. Hence, the Court sees no reason to
disturb such findings of fact of the CA.

Ultimately, the issue raised by the parties boils down to whether petitioner Santos was
illegally dismissed by private respondent SLMC on the basis of her inability to secure a
certificate of registration from the Board of Radiologic Technology.

The requirement for a certificate of registration is set forth under R.A. No. 74318 thus:

Sec. 15. Requirement for the Practice of Radiologic Technology and X-ray Technology. -
Unless exempt from the examinations under Sections 16 and 17 hereof, no person shall
practice or offer to practice as a radiologic and/or x-ray technologist in the Philippines
without having obtained the proper certificate of registration from the Board.

It is significant to note that petitioners expressly concede that the sole cause for petitioner
Santos' separation from work is her failure to pass the board licensure exam for X-ray
technicians, a precondition for obtaining the certificate of registration from the Board. It is
argued, though, that petitioner Santos' failure to comply with the certification requirement
did not constitute just cause for termination as it violated her constitutional right to
security of tenure. This contention is untenable.

While the right of workers to security of tenure is guaranteed by the Constitution, its
exercise may be reasonably regulated pursuant to the police power of the State to
safeguard health, morals, peace, education, order, safety, and the general welfare of the
people. Consequently, persons who desire to engage in the learned professions requiring
scientific or technical knowledge may be required to take an examination as a prerequisite
to engaging in their chosen careers.9 The most concrete example of this would be in the
field of medicine, the practice of which in all its branches has been closely regulated by the
State. It has long been recognized that the regulation of this field is a reasonable method of
protecting the health and safety of the public to protect the public from the potentially
deadly effects of incompetence and ignorance among those who would practice
medicine.10 The same rationale applies in the regulation of the practice of radiologic and x-
ray technology. The clear and unmistakable intention of the legislature in prescribing
guidelines for persons seeking to practice in this field is embodied in Section 2 of the law:

Sec. 2. Statement of Policy. - It is the policy of the State to upgrade the practice of radiologic
technology in the Philippines for the purpose of protecting the public from the hazards
posed by radiation as well as to ensure safe and proper diagnosis, treatment and research
through the application of machines and/or equipment using radiation.11

In this regard, the Court quotes with approval the disquisition of public respondent NLRC
in its decision dated August 23, 2002:

The enactment of R.A. (Nos.) 7431 and 4226 are recognized as an exercise of the State's
inherent police power. It should be noted that the police power embraces the power to
prescribe regulations to promote the health, morals, educations, good order, safety or
general welfare of the people. The state is justified in prescribing the specific requirements
for x-ray technicians and/or any other professions connected with the health and safety of
its citizens. Respondent-appellee being engaged in the hospital and health care business, is
a proper subject of the cited law; thus, having in mind the legal requirements of these laws,
the latter cannot close its eyes and [let] complainant-appellant's private interest override
public interest.

Indeed, complainant-appellant cannot insist on her "sterling work performance without

any derogatory record" to make her qualify as an x-ray technician in the absence of a
proper certificate of Registration from the Board of Radiologic Technology which can only
be obtained by passing the required examination. The law is clear that the Certificate of
Registration cannot be substituted by any other requirement to allow a person to practice
as a Radiologic Technologist and/or X-ray Technologist (Technician).12

No malice or ill-will can be imputed upon private respondent as the separation of

petitioner Santos was undertaken by it conformably to an existing statute. It is undeniable
that her continued employment without the required Board certification exposed the
hospital to possible sanctions and even to a revocation of its license to operate. Certainly,
private respondent could not be expected to retain petitioner Santos despite the inimical
threat posed by the latter to its business. This notwithstanding, the records bear out the
fact that petitioner Santos was given ample opportunity to qualify for the position and was
sufficiently warned that her failure to do so would result in her separation from work in the
event there were no other vacant positions to which she could be transferred. Despite
these warnings, petitioner Santos was still unable to comply and pass the required exam.
To reiterate, the requirement for Board certification was set by statute. Justice, fairness and
due process demand that an employer should not be penalized for situations where it had
no participation or control.13

It would be unreasonable to compel private respondent to wait until its license is cancelled
and it is materially injured before removing the cause of the impending evil. Neither can
the courts step in to force private respondent to reassign or transfer petitioner Santos
under these circumstances. Petitioner Santos is not in the position to demand that she be
given a different work assignment when what necessitated her transfer in the first place
was her own fault or failing. The prerogative to determine the place or station where an
employee is best qualified to serve the interests of the company on the basis of the his or
her qualifications, training and performance belongs solely to the employer.14 The Labor
Code and its implementing Rules do not vest in the Labor Arbiters nor in the different
Divisions of the NLRC (nor in the courts) managerial authority.15

While our laws endeavor to give life to the constitutional policy on social justice and the
protection of labor, it does not mean that every labor dispute will be decided in favor of the
workers. The law also recognizes that management has rights which are also entitled to
respect and enforcement in the interest of fair play.16 Labor laws, to be sure, do not
authorize interference with the employer's judgment in the conduct of the latter's business.
Private respondent is free to determine, using its own discretion and business judgment, all
elements of employment, "from hiring to firing" except in cases of unlawful discrimination
or those which may be provided by law. None of these exceptions is present in the instant
case.

The fact that another employee, who likewise failed to pass the required exam, was allowed
by private respondent to apply for and transfer to another position with the hospital does
not constitute unlawful discrimination. This was a valid exercise of management
prerogative, petitioners not having alleged nor proven that the reassigned employee did
not qualify for the position where she was transferred. In the past, the Court has ruled that
an objection founded on the ground that one has better credentials over the appointee is
frowned upon so long as the latter possesses the minimum qualifications for the
position.17 Furthermore, the records show that Ms. Santos did not even seriously apply for
another position in the company.

WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioners.

SO ORDERED.
Miners Association of the Phils. v. Factoran, 240 SCRA 100 (1995)

G.R. No. 98332 January 16, 1995

MINERS ASSOCIATION OF THE PHILIPPINES, INC., petitioner,

vs.
HON. FULGENCIO S. FACTORAN, JR., Secretary of Environment and Natural Resources,
and JOEL D. MUYCO, Director of Mines and Geosciences Bureau, respondents.

ROMERO, J.:

The instant petition seeks a ruling from this Court on the validity of two Administrative
Orders issued by the Secretary of the Department of Environment and Natural Resources to
carry out the provisions of certain Executive Orders promulgated by the President in the
lawful exercise of legislative powers.

Herein controversy was precipitated by the change introduced by Article XII, Section 2 of
the 1987 Constitution on the system of exploration, development and utilization of the
country's natural resources. No longer is the utilization of inalienable lands of public
domain through "license, concession or lease" under the 1935 and 1973
Constitutions1 allowed under the 1987 Constitution.

The adoption of the concept of jura regalia2 that all natural resources are owned by the
State embodied in the 1935, 1973 and 1987 Constitutions, as well as the recognition of the
importance of the country's natural resources, not only for national economic
development, but also for its security and national
defense,3 ushered in the adoption of the constitutional policy of "full control and
supervision by the State" in the exploration, development and utilization of the country's
natural resources. The options open to the State are through direct undertaking or by
entering into co-production, joint venture; or production-sharing agreements, or by
entering into agreement with foreign-owned corporations for large-scale exploration,
development and utilization.

Article XII, Section 2 of the 1987 Constitution provides:

Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural resources are owned by the State.
With the exception of agricultural lands, all other natural resources shall not
 be alienated. The exploration, development, and utilization of natural
resources shall be under the full control and supervision of the State. The State
may directly undertake such activities, or it may enter into co-production, joint
venture, or product-sharing agreements with Filipino citizens, or corporations
or associations at least sixty per centum of whose capital is owned by such
citizens. Such agreements may be for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and under such terms and
conditions as may be provided by law. In cases of water rights for irrigation,
water supply, fisheries, or industrial uses other than the development of
water power, beneficial use may be the measure and limit of the grant.

xxx xxx xxx

The President may enter into agreements with foreign-owned corporations

involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils
according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In
such agreements, the State shall promote the development and use of local
scientific and technical resources.

The President shall notify the Congress of every contract entered into in
accordance with this provision, within thirty days from its execution.
(Emphasis supplied)

Pursuant to the mandate of the above-quoted provision, legislative acts4 were successively
issued by the President in the exercise of her legislative
power.5

To implement said legislative acts, the Secretary of the Department of Environment and
Natural Resources (DENR) in turn promulgated Administrative Order Nos. 57 and 82, the
validity and constitutionality of which are being challenged in this petition.

On July 10, 1987, President Corazon C. Aquino, in the exercise of her then legislative
powers under Article II, Section 1 of the Provisional Constitution and Article XIII, Section 6
of the 1987 Constitution, promulgated Executive Order No. 211 prescribing the interim
procedures in the processing and approval of applications for the exploration, development
and utilization of minerals pursuant to the 1987 Constitution in order to ensure the
continuity of mining operations and activities and to hasten the development of mineral
resources. The pertinent provisions read as follows:
 Sec. 1. Existing mining permits, licenses, leases and other mining grants
issued by the Department of Environment and Natural Resources and Bureau
of Mines and Geo-Sciences, including existing operating agreements and
mining service contracts, shall continue and remain in full force and effect,
subject to the same terms and conditions as originally granted and/or
approved.

Sec. 2. Applications for the exploration, development and utilization of

mineral resources, including renewal applications for approval of operating
agreements and mining service contracts, shall be accepted and processed
and may be approved; concomitantly thereto, declarations of locations and
all other kinds of mining applications shall be accepted and registered by the
Bureau of Mines and Geo-Sciences.

Sec. 3. The processing, evaluation and approval of all mining applications,

declarations of locations, operating agreements and service contracts as
provided for in Section 2 above, shall be governed by Presidential Decree No.
463, as amended, other existing mining laws and their implementing rules
and regulations: Provided, however, that the privileges granted, as well as the
terms and conditions thereof shall be subject to any and all modifications or
alterations which Congress may adopt pursuant to Section 2, Article XII of the
1987 Constitution.

On July 25, 1987, President Aquino likewise promulgated Executive Order No. 279
authorizing the DENR Secretary to negotiate and conclude joint venture, co-production, or
production-sharing agreements for the exploration, development and utilization of mineral
resources, and prescribing the guidelines for such agreements and those agreements
involving technical or financial assistance by foreign-owned corporations for large-scale
exploration, development, and utilization of minerals. The pertinent provisions relevant to
this petition are as follows:

Sec. 1. The Secretary of the Department of Environment and Natural

Resources (hereinafter referred to as "the Secretary") is hereby authorized to
negotiate and enter into, for and in behalf of the Government, joint venture,
co-production, or production-sharing agreements for the exploration,
development, and utilization of mineral resources with any Filipino citizens,
or corporation or association at least sixty percent (60%) of whose capital is
owned by Filipino citizens. Such joint venture, co-production, or production-
sharing agreements may be for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and shall include the
 minimum terms and conditions prescribed in Section 2 hereof. In the
execution of a joint venture, co-production or production agreements, the
contracting parties, including the Government, may consolidate two or more
contiguous or geologically — related mining claims or leases and consider
them as one contract area for purposes of determining the subject of the joint
venture, co-production, or production-sharing agreement.

xxx xxx xxx

Sec. 6. The Secretary shall promulgate such supplementary rules and

regulations as may be necessary to effectively implement the provisions of
this Executive Order.

Sec. 7. All provisions of Presidential Decree No. 463, as amended, other

existing mining laws, and their implementing rules and regulations, or parts
thereof, which are not inconsistent with the provisions of this Executive
Order, shall continue in force and effect.

Pursuant to Section 6 of Executive Order No. 279, the DENR Secretary issued on June 23,
1989 DENR Administrative Order No. 57, series of 1989, captioned "Guidelines of Mineral
Production Sharing Agreement under Executive Order No. 279."6 Under the transitory
provision of said DENR Administrative Order No. 57, embodied in its Article 9, all existing
mining leases or agreements which were granted after the effectivity of the 1987
Constitution pursuant to Executive Order No. 211, except small scale mining leases and
those pertaining to sand and gravel and quarry resources covering an area of twenty (20)
hectares or less, shall be converted into production-sharing agreements within one (1) year
from the effectivity of these guidelines.

On November 20, 1980, the Secretary of the DENR Administrative Order No. 82, series of
1990, laying down the "Procedural Guidelines on the Award of Mineral Production Sharing
Agreement (MPSA) through Negotiation."7

Section 3 of the aforementioned DENR Administrative Order No. 82 enumerates the

persons or entities required to submit Letter of Intent (LOIs) and Mineral Production
Sharing Agreement (MPSAs) within two (2) years from the effectivity of DENR
Administrative Order No. 57 or until July 17, 1991. Failure to do so within the prescribed
period shall cause the abandonment of mining, quarry and sand and gravel claims. Section
3 of DENR Administrative Order No. 82 provides:
 Sec. 3. Submission of Letter of Intent (LOIs) and MPSAs). The following shall
submit their LOIs and MPSAs within two (2) years from the effectivity of
DENR A.O. 57 or until July 17, 1991.

i. Declaration of Location (DOL) holders, mining lease applicants, exploration

permitees, quarry applicants and other mining applicants whose
mining/quarry applications have not been perfected prior to the effectivity of
DENR Administrative Order No. 57.

ii. All holders of DOL acquired after the effectivity of DENR A.O. No. 57.

iii. Holders of mining leases or similar agreements which were granted after
(the) effectivity of 1987 Constitution.

Failure to submit letters of intent and MPSA applications/proposals within

the prescribed period shall cause the abandonment of mining, quarry and
sand and gravel claims.

The issuance and the impeding implementation by the DENR of Administrative Order Nos.
57 and 82 after their respective effectivity dates compelled the Miners Association of the
Philippines, Inc.8 to file the instant petition assailing their validity and constitutionality
before this Court.

In this petition for certiorari, petitioner Miners Association of the Philippines, Inc. mainly
contends that respondent Secretary of DENR issued both Administrative Order Nos. 57 and
82 in excess of his rule-making power under Section 6 of Executive Order No. 279. On the
assumption that the questioned administrative orders do not conform with Executive
Order Nos. 211 and 279, petitioner contends that both orders violate the
non-impairment of contract provision under Article III, Section 10 of the 1987 Constitution
on the ground that Administrative Order No. 57 unduly pre-terminates existing mining
agreements and automatically converts them into production-sharing agreements within
one (1) year from its effectivity date. On the other hand, Administrative Order No. 82
declares that failure to submit Letters of Intent and Mineral Production-Sharing
Agreements within two (2) years from the date of effectivity of said guideline or on July 17,
1991 shall cause the abandonment of their mining, quarry and sand gravel permits.

On July 2, 1991, the Court, acting on petitioner's urgent ex-parte petition for issuance of a
restraining order/preliminary injunction, issued a Temporary Restraining Order, upon
posting of a P500,000.00 bond, enjoining the enforcement and implementation of DENR
Administrative Order Nos. 57 and 82, as amended, Series of 1989 and 1990, respectively.9
On November 13, 1991, Continental Marble Corporation, 10 thru its President, Felipe A.
David, sought to intervene 11 in this case alleging that because of the temporary order
issued by the Court , the DENR, Regional Office No. 3 in San Fernando, Pampanga refused to
renew its Mines Temporary Permit after it expired on July 31, 1991. Claiming that its rights
and interests are prejudicially affected by the implementation of DENR Administrative
Order Nos. 57 and 82, it joined petitioner herein in seeking to annul Administrative Order
Nos. 57 and 82 and prayed that the DENR, Regional Office No. 3 be ordered to issue a Mines
Temporary Permit in its favor to enable it to operate during the pendency of the suit.

Public respondents were acquired to comment on the Continental Marble Corporation's

petition for intervention in the resolution of November 28, 1991.12

Now to the main petition. If its argued that Administrative Order Nos. 57 and 82 have the
effect of repealing or abrogating existing mining laws 13 which are not inconsistent with the
provisions of Executive Order No. 279. Invoking Section 7 of said Executive Order No.
279, 14 petitioner maintains that respondent DENR Secretary cannot provide guidelines
such as Administrative Order Nos. 57 and 82 which are inconsistent with the provisions of
Executive Order No. 279 because both Executive Order Nos. 211 and 279 merely reiterated
the acceptance and registration of declarations of location and all other kinds of mining
applications by the Bureau of Mines and Geo-Sciences under the provisions of Presidential
Decree No. 463, as amended, until Congress opts to modify or alter the same.

In other words, petitioner would have us rule that DENR Administrative Order Nos. 57 and
82 issued by the DENR Secretary in the exercise of his rule-making power are tainted with
invalidity inasmuch as both contravene or subvert the provisions of Executive Order Nos.
211 and 279 or embrace matters not covered, nor intended to be covered, by the aforesaid
laws.

We disagree.

We reiterate the principle that the power of administrative officials to promulgate rules
and regulations in the implementation of a statute is necessarily limited only to carrying
into effect what is provided in the legislative enactment. The principle was enunciated as
early as 1908 in the case of United States v. Barrias. 15 The scope of the exercise of such
rule-making power was clearly expressed in the case of United States v. Tupasi
Molina, 16 decided in 1914, thus: "Of course, the regulations adopted under legislative
authority by a particular department must be in harmony with the provisions of the law,
and for the sole purpose of carrying into effect its general provisions. By such regulations,
of course, the law itself can not be extended. So long, however, as the regulations relate
solely to carrying into effect its general provisions. By such regulations, of course, the law
itself can not be extended. So long, however, as the regulations relate solely to carrying into
effect the provision of the law, they are valid."

Recently, the case of People v. Maceren 17 gave a brief delienation of the scope of said power
of administrative officials:

Administrative regulations adopted under legislative authority by a

particular department must be in harmony with the provisions of the law,
and should be for the sole purpose of carrying into effect its general
provision. By such regulations, of course, the law itself cannot be extended
(U.S. v. Tupasi Molina, supra). An administrative agency cannot amend an act
of Congress (Santos vs. Estenzo, 109 Phil. 419, 422; Teoxon vs. Members of
the Board of Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel
vs. General Auditing Office, L-28952, December 29, 1971, 42 SCRA 660;
Deluao v. Casteel, L-21906, August 29, 1969, 29 SCRA 350).

The rule-making power must be confined to details for regulating the mode
or proceeding to carry into effect the law as it has been enacted. The power
cannot be extended to amending or expanding the statutory requirements or
to embrace matters not covered by the statute. Rules that subvert the statute
cannot be sanctioned (University of Santo Tomas v. Board of Tax Appeals, 93
Phil. 376, 382, citing 12 C.J. 845-46. As to invalid regulations, see Collector of
Internal Revenue v. Villaflor, 69 Phil. 319; Wise & Co. v. Meer, 78 Phil. 655,
676; Del Mar v. Phil. Veterans Administration, L-27299, June 27, 1973, 51
SCRA 340, 349).

xxx xxx xxx

. . . The rule or regulation should be within the scope of the statutory

authority granted by the legislature to the administrative agency (Davis,
Administrative Law, p. 194, 197, cited in Victorias Milling Co., Inc. v. Social
Security Commission, 114 Phil. 555, 558).

In case of discrepancy between the basic law and a rule or regulation issued
to implement said law, the basic prevails because said rule or regulations
cannot go beyond the terms and provisions of the basic law (People v. Lim,
108 Phil. 1091).

Considering that administrative rules draw life from the statute which they seek to
implement, it is obvious that the spring cannot rise higher than its source. We now examine
petitioner's argument that DENR Administrative Order Nos. 57 and 82 contravene
Executive Order Nos. 211 and 279 as both operate to repeal or abrogate Presidential
Decree No. 463, as amended, and other mining laws allegedly acknowledged as the
principal law under Executive Order Nos. 211 and 279.

Petitioner's insistence on the application of Presidential Decree No. 463, as amended, as the
governing law on the acceptance and approval of declarations of location and all other
kinds of applications for the exploration, development, and utilization of mineral resources
pursuant to Executive Order No. 211, is erroneous. Presidential Decree No. 463, as
amended, pertains to the old system of exploration, development and utilization of natural
resources through "license, concession or lease" which, however, has been disallowed by
Article XII, Section 2 of the 1987 Constitution. By virtue of the said constitutional mandate
and its implementing law, Executive Order No. 279 which superseded Executive Order No.
211, the provisions dealing on "license, concession or lease" of mineral resources under
Presidential Decree No. 463, as amended, and other existing mining laws are deemed
repealed and, therefore, ceased to operate as the governing law. In other words, in all other
areas of administration and management of mineral lands, the provisions of Presidential
Decree No. 463, as amended, and other existing mining laws, still govern. Section 7 of
Executive Order No. 279 provides, thus:

Sec. 7. All provisions of Presidential Decree No. 463, as amended, other

existing mining laws, and their implementing rules and regulations, or parts
thereof, which are not inconsistent with the provisions of this Executive
Order, shall continue in force and effect.

Specifically, the provisions of Presidential Decree No. 463, as amended, on lease of mining
claims under Chapter VIII, quarry permits on privately-owned lands of quarry license on
public lands under Chapter XIII and other related provisions on lease, license and permits
are not only inconsistent with the raison d'etre for which Executive Order No. 279 was
passed, but contravene the express mandate of Article XII, Section 2 of the 1987
Constitution. It force and effectivity is thus foreclosed.

Upon the effectivity of the 1987 Constitution on February 2, 1987, 18 the State assumed a
more dynamic role in the exploration, development and utilization of the natural resources
of the country. Article XII, Section 2 of the said Charter explicitly ordains that the
exploration, development and utilization of natural resources shall be under the full control
and supervision of the State. Consonant therewith, the exploration, development and
utilization of natural resources may be undertaken by means of direct act of the State, or it
may opt to enter into co-production, joint venture, or production-sharing agreements, or it
may enter into agreements with foreign-owned corporations involving either technical or
financial assistance for large-scale exploration, development, and utilization of minerals,
petroleum, and other mineral oils according to the general terms and conditions provided
by law, based on real contributions to the economic growth and general welfare of the
country.

Given these considerations, there is no clear showing that respondent DENR Secretary has
transcended the bounds demarcated by Executive Order No. 279 for the exercise of his
rule-making power tantamount to a grave abuse of discretion. Section 6 of Executive Order
No. 279 specifically authorizes said official to promulgate such supplementary rules and
regulations as may be necessary to effectively implement the provisions thereof. Moreover,
the subject sought to be governed and regulated by the questioned orders is germane to
the objects and purposes of Executive Order No. 279 specifically issued to carry out the
mandate of Article XII, Section 2 of the 1987 Constitution.

Petitioner likewise maintains that Administrative Order No. 57, in relation to

Administrative Order No. 82, impairs vested rights as to violate the non-impairment of
contract doctrine guaranteed under Article III, Section 10 of the 1987 Constitution because
Article 9 of Administrative Order No. 57 unduly pre-terminates and automatically converts
mining leases and other mining agreements into production-sharing agreements within
one (1) year from effectivity of said guideline, while Section 3 of Administrative Order No.
82, declares that failure to submit Letters of Intent (LOIs) and MPSAs within two (2) years
from the effectivity of Administrative Order No. 57 or until July 17, 1991 shall cause the
abandonment of mining, quarry, and sand gravel permits.

In Support of the above contention, it is argued by petitioner that Executive Order No. 279
does not contemplate automatic conversion of mining lease agreements into mining
production-sharing agreement as provided under Article 9, Administrative Order No. 57
and/or the consequent abandonment of mining claims for failure to submit LOIs and
MPSAs under Section 3, Administrative Order No. 82 because Section 1 of said Executive
Order No. 279 empowers the DENR Secretary to negotiate and enter into voluntary
agreements which must set forth the minimum terms and conditions provided under
Section 2 thereof. Moreover, petitioner contends that the power to regulate and enter into
mining agreements does not include the power to preterminate existing mining lease
agreements.

To begin with, we dispel the impression created by petitioner's argument that the
questioned administrative orders unduly preterminate existing mining leases in general. A
distinction which spells a real difference must be drawn. Article XII, Section 2 of the 1987
Constitution does not apply retroactively to "license, concession or lease" granted by the
government under the 1973 Constitution or before the effectivity of the 1987 Constitution
on February 2, 1987. The intent to apply prospectively said constitutional provision was
stressed during the deliberations in the Constitutional Commission, 19 thus:

MR. DAVIDE: Under the proposal, I notice that except for the
[inalienable] lands of the public domain, all other natural
resources cannot be alienated and in respect to [alienable]
lands of the public domain, private corporations with the
required ownership by Filipino citizens can only lease the
same. Necessarily, insofar as other natural resources are
concerned, it would only be the State which can exploit,
develop, explore and utilize the same. However, the State may
enter into a joint venture, co-production or production-
sharing. Is that not correct?

MR. VILLEGAS: Yes.

MR. DAVIDE: Consequently, henceforth upon, the approval of

this Constitution, no timber or forest concession, permits or
authorization can be exclusively granted to any citizen of the
Philippines nor to any corporation qualified to acquire lands of
the public domain?

MR. VILLEGAS: Would Commissioner Monsod like to comment

on that? I think his answer is "yes."

MR. DAVIDE: So, what will happen now license or concessions

earlier granted by the Philippine government to private
corporations or to Filipino citizens? Would they be deemed
repealed?

MR. VILLEGAS: This is not applied retroactively. They will be

respected.

MR. DAVIDE: In effect, they will be deemed repealed?

MR. VILLEGAS: No. (Emphasis supplied)

During the transition period or after the effectivity of the 1987 Constitution on February 2,
1987 until the first Congress under said Constitution was convened on July 27, 1987, two
(2) successive laws, Executive Order Nos. 211 and 279, were promulgated to govern the
processing and approval of applications for the exploration, development and utilization of
minerals. To carry out the purposes of said laws, the questioned Administrative Order Nos.
57 and 82, now being assailed, were issued by the DENR Secretary.

Article 9 of Administrative Order No. 57 provides:

ARTICLE 9

TRANSITORY PROVISION

9.1. All existing mining leases or agreements which were granted after the
effectivity of the 1987 Constitution pursuant to Executive Order No. 211,
except small scale mining leases and those pertaining to sand and gravel and
quarry resources covering an area of twenty (20) hectares or less shall be
subject to these guidelines. All such leases or agreements shall be converted
into production sharing agreement within one (1) year from the effectivity of
these guidelines. However, any minimum firm which has established mining
rights under Presidential Decree 463 or other laws may avail of the
provisions of EO 279 by following the procedures set down in this document.

It is clear from the aforestated provision that Administrative Order No. 57 applies only to
all existing mining leases or agreements which were granted after the effectivity of the
1987 Constitution pursuant to Executive Order No. 211. It bears mention that under the
text of Executive Order No. 211, there is a reservation clause which provides that the
privileges as well as the terms and conditions of all existing mining leases or agreements
granted after the effectivity of the 1987 Constitution pursuant to Executive Order No. 211,
shall be subject to any and all modifications or alterations which Congress may adopt
pursuant to Article XII, Section 2 of the 1987 Constitution. Hence, the strictures of the
non-impairment of contract clause under Article III, Section 10 of the 1987
Constitution 20 do not apply to the aforesaid leases or agreements granted after the
effectivity of the 1987 Constitution, pursuant to Executive Order No. 211. They can be
amended, modified or altered by a statute passed by Congress to achieve the purposes of
Article XII, Section 2 of the 1987 Constitution.

Clearly, Executive Order No. 279 issued on July 25, 1987 by President Corazon C. Aquino in
the exercise of her legislative power has the force and effect of a statute or law passed by
Congress. As such, it validly modified or altered the privileges granted, as well as the terms
and conditions of mining leases and agreements under Executive Order No. 211 after the
effectivity of the 1987 Constitution by authorizing the DENR Secretary to negotiate and
conclude joint venture, co-production, or production-sharing agreements for the
exploration, development and utilization of mineral resources and prescribing the
guidelines for such agreements and those agreements involving technical or financial
assistance by foreign-owned corporations for large-scale exploration, development, and
utilization of minerals.

Well -settled is the rule, however, that regardless of the reservation clause, mining leases or
agreements granted by the State, such as those granted pursuant to Executive Order No.
211 referred to this petition, are subject to alterations through a reasonable exercise of the
police power of the State. In the 1950 case of Ongsiako v. Gamboa, 21 where the
constitutionality of Republic Act No. 34 changing the 50-50 sharecropping system in
existing agricultural tenancy contracts to 55-45 in favor of tenants was challenged, the
Court, upholding the constitutionality of the law, emphasized the superiority of the police
power of the State over the sanctity of this contract:

The prohibition contained in constitutional provisions against: impairing the obligation of

contracts is not an absolute one and it is not to be read with literal exactness like a
mathematical formula. Such provisions are restricted to contracts which respect property,
or some object or value, and confer rights which may be asserted in a court of justice, and
have no application to statute relating to public subjects within the domain of the general
legislative powers of the State, and involving the public rights and public welfare of the
entire community affected by it. They do not prevent a proper exercise by the State of its
police powers. By enacting regulations reasonably necessary to secure the health, safety,
morals, comfort, or general welfare of the community, even the contracts may thereby be
affected; for such matter can not be placed by contract beyond the power of the State shall
regulates and control them. 22

In Ramas v. CAR and Ramos 23 where the constitutionality of Section 14 of Republic Act No.
1199 authorizing the tenants to charge from share to leasehold tenancy was challenged on
the ground that it impairs the obligation of contracts, the Court ruled that obligations of
contracts must yield to a proper exercise of the police power when such power is exercised
to preserve the security of the State and the means adopted are reasonably adapted to the
accomplishment of that end and are, therefore, not arbitrary or oppressive.

The economic policy on the exploration, development and utilization of the country's
natural resources under Article XII, Section 2 of the 1987 Constitution could not be any
clearer. As enunciated in Article XII, Section 1 of the 1987 Constitution, the exploration,
development and utilization of natural resources under the new system mandated in
Section 2, is geared towards a more equitable distribution of opportunities, income, and
wealth; a sustained increase in the amount of goods and services produced by the nation
for the benefit of the people; and an expanding productivity as the key to raising the quality
of life for all, especially the underprivileged.
The exploration, development and utilization of the country's natural resources are
matters vital to the public interest and the general welfare of the people. The recognition of
the importance of the country's natural resources was expressed as early as the 1984
Constitutional Convention. In connection therewith, the 1986 U.P. Constitution Project
observed: "The 1984 Constitutional Convention recognized the importance of our natural
resources not only for its security and national defense. Our natural resources which
constitute the exclusive heritage of the Filipino nation, should be preserved for those under
the sovereign authority of that nation and for their prosperity. This will ensure the
country's survival as a viable and sovereign republic."

Accordingly, the State, in the exercise of its police power in this regard, may not be
precluded by the constitutional restriction on non-impairment of contract from altering,
modifying and amending the mining leases or agreements granted under Presidential
Decree No. 463, as amended, pursuant to Executive Order No. 211. Police Power, being co-
extensive with the necessities of the case and the demands of public interest; extends to all
the vital public needs. The passage of Executive Order No. 279 which superseded Executive
Order No. 211 provided legal basis for the DENR Secretary to carry into effect the mandate
of Article XII, Section 2 of the 1987 Constitution.

Nowhere in Administrative Order No. 57 is there any provision which would lead us to
conclude that the questioned order authorizes the automatic conversion of mining leases
and agreements granted after the effectivity of the 1987 Constitution, pursuant to
Executive Order No. 211, to production-sharing agreements. The provision in Article 9 of
Administrative Order No. 57 that "all such leases or agreements shall be converted into
production sharing agreements within one (1) year from the effectivity of these guidelines"
could not possibility contemplate a unilateral declaration on the part of the Government
that all existing mining leases and agreements are automatically converted into
production-sharing agreements. On the contrary, the use of the term "production-sharing
agreement" if they are so minded. Negotiation negates compulsion or automatic conversion
as suggested by petitioner in the instant petition. A mineral production-sharing agreement
(MPSA) requires a meeting of the minds of the parties after negotiations arrived at in good
faith and in accordance with the procedure laid down in the subsequent Administrative
Order No. 82.

We, therefore, rule that the questioned administrative orders are reasonably directed to
the accomplishment of the purposes of the law under which they were issued and were
intended to secure the paramount interest of the public, their economic growth and
welfare. The validity and constitutionality of Administrative Order Nos. 57 and 82 must be
sustained, and their force and effect upheld.
We now, proceed to the petition-in-intervention. Under Section 2, Rule 12 of the Revised
Rules of Court, an intervention in a case is proper when the intervenor has a "legal interest
in the matter in litigation, or in the success of either of the parties, or an interest against
both, or when he is so situated as to be adversely affected by a distribution or other
disposition of property in the custody of the court or of an officer thereof. "Continental
Marble Corporation has not sufficiently shown that it falls under any of the categories
mentioned above. The refusal of the DENR, Regional Office No. 3, San Fernando, Pampanga
to renew its Mines Temporary Permit does not justify such an intervention by Continental
Marble Corporation for the purpose of obtaining a directive from this Court for the issuance
of said permit. Whether or not Continental Marble matter best addressed to the
appropriate government body but certainly, not through this Court. Intervention is hereby
DENIED.

WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining
Order issued on July 2, 1991 is hereby LIFTED.

SO ORDERED.
Executive Secretary v Southwing Heavy Industries, Inc., G.R. No. 164171. February
20, 2006

G.R. No. 164171 February 20, 2006

HON. EXECUTIVE SECRETARY, HON. SECRETARY OF THE DEPARTMENT OF

TRANSPORTATION AND COMMUNICATIONS (DOTC), COMMISSIONER OF CUSTOMS,
ASSISTANT SECRETARY, LAND TRANSPORTATION OFFICE (LTO), COLLECTOR OF
CUSTOMS, SUBIC BAY FREE PORT ZONE, AND CHIEF OF LTO, SUBIC BAY FREE PORT
ZONE, Petitioners,
vs.
SOUTHWING HEAVY INDUSTRIES, INC., represented by its President JOSE T. DIZON,
UNITED AUCTIONEERS, INC., represented by its President DOMINIC SYTIN, and
MICROVAN, INC., represented by its President MARIANO C. SONON, Respondents.

The instant consolidated petitions seek to annul and set aside the Decisions of the Regional
Trial Court of Olongapo City, Branch 72, in Civil Case No. 20-0-04 and Civil Case No. 22-0-
04, both dated May 24, 2004; and the February 14, 2005 Decision of the Court of Appeals in
CA-G.R. SP. No. 83284, which declared Article 2, Section 3.1 of Executive Order No. 156 (EO
156) unconstitutional. Said executive issuance prohibits the importation into the country,
inclusive of the Special Economic and Freeport Zone or the Subic Bay Freeport (SBF or
Freeport), of used motor vehicles, subject to a few exceptions.

The undisputed facts show that on December 12, 2002, President Gloria Macapagal-Arroyo,
through Executive Secretary Alberto G. Romulo, issued EO 156, entitled "Providing for a
comprehensive industrial policy and directions for the motor vehicle development
program and its implementing guidelines." The challenged provision states:

3.1 The importation into the country, inclusive of the Freeport, of all types of
used motor vehicles is prohibited, except for the following:

3.1.1 A vehicle that is owned and for the personal use of a returning resident
or immigrant and covered by an authority to import issued under the No-
dollar Importation Program. Such vehicles cannot be resold for at least three
(3) years;

3.1.2 A vehicle for the use of an official of the Diplomatic Corps and
authorized to be imported by the Department of Foreign Affairs;

3.1.3 Trucks excluding pickup trucks;

 1. with GVW of 2.5-6.0 tons covered by an authority to import issued
by the DTI.

2. With GVW above 6.0 tons.

3.1.4 Buses:

1. with GVW of 6-12 tons covered by an authority to import issued by

DTI;

2. with GVW above 12 tons.

3.1.5 Special purpose vehicles:

1. fire trucks

2. ambulances

3. funeral hearse/coaches

4. crane lorries

5. tractor heads and truck tractors

6. boom trucks

7. tanker trucks

8. tank lorries with high pressure spray gun

9. reefers or refrigerated trucks

10. mobile drilling derricks

11. transit/concrete mixers

12. mobile radiological units

13. wreckers or tow trucks

14. concrete pump trucks

 15. aerial/bucket flat-form trucks

16. street sweepers

17. vacuum trucks

18. garbage compactors

19. self loader trucks

20. man lift trucks

21. lighting trucks

22. trucks mounted with special purpose equipment

23. all other types of vehicle designed for a specific use.

The issuance of EO 156 spawned three separate actions for declaratory relief before
Branch 72 of the Regional Trial Court of Olongapo City, all seeking the declaration of the
unconstitutionality of Article 2, Section 3.1 of said executive order. The cases were filed by
herein respondent entities, who or whose members, are classified as Subic Bay Freeport
Enterprises and engaged in the business of, among others, importing and/or trading used
motor vehicles.

G.R. No. 164171:

On January 16, 2004, respondents Southwing Heavy Industries, Inc., (Southwing) United
Auctioneers, Inc. (United Auctioneers), and Microvan, Inc. (Microvan), instituted a
declaratory relief case docketed as Civil Case No. 20-0-04,1 against the Executive Secretary,
Secretary of Transportation and Communication, Commissioner of Customs, Assistant
Secretary and Head of the Land Transportation Office, Subic Bay Metropolitan Authority
(SBMA), Collector of Customs for the Port at Subic Bay Freeport Zone, and the Chief of the
Land Transportation Office at Subic Bay Freeport Zone.

Southwing, United Auctioneers and Microvan prayed that judgment be rendered (1)
declaring Article 2, Section 3.1 of EO 156 unconstitutional and illegal; (2) directing the
Secretary of Finance, Commissioner of Customs, Collector of Customs and the Chairman of
the SBMA to allow the importation of used motor vehicles; (2) ordering the Land
Transportation Office and its subordinates inside the Subic Special Economic Zone to
process the registration of the imported used motor vehicles; and (3) in general, to allow
the unimpeded entry and importation of used motor vehicles subject only to the payment
of the required customs duties.

Upon filing of petitioners’ answer/comment, respondents Southwing and Microvan filed a

motion for summary judgment which was granted by the trial court. On May 24, 2004, a
summary judgment was rendered declaring that Article 2, Section 3.1 of EO 156 constitutes
an unlawful usurpation of legislative power vested by the Constitution with Congress. The
trial court further held that the proviso is contrary to the mandate of Republic Act No. 7227
(RA 7227) or the Bases Conversion and Development Act of 1992 which allows the free
flow of goods and capital within the Freeport. The dispositive portion of the said decision
reads:

WHEREFORE, judgment is hereby rendered in favor of petitioner declaring Executive Order

156 [Article 2, Section] 3.1 for being unconstitutional and illegal; directing respondents
Collector of Customs based at SBMA to allow the importation and entry of used motor
vehicles pursuant to the mandate of RA 7227; directing respondent Chief of the Land
Transportation Office and its subordinates inside the Subic Special Economic Zone or SBMA
to process the registration of imported used motor vehicle; and in general, to allow
unimpeded entry and importation of used motor vehicles to the Philippines subject only to
the payment of the required customs duties.

SO ORDERED.2

From the foregoing decision, petitioners sought relief before this Court via a petition for
review on certiorari, docketed as G.R. No. 164171.

G.R. No. 164172:

On January 20, 2004, respondent Subic Integrated Macro Ventures Corporation (Macro
Ventures) filed with the same trial court, a similar action for declaratory relief docketed as
Civil Case No. 22-0-04,3 with the same prayer and against the same parties4 as those in Civil
Case No. 20-0-04.

In this case, the trial court likewise rendered a summary judgment on May 24, 2004,
holding that Article 2, Section 3.1 of EO 156, is repugnant to the constitution.5 Elevated to
this Court via a petition for review on certiorari, Civil Case No. 22-0-04 was docketed
as G.R. No. 164172.

G.R. No. 168741

On January 22, 2003, respondent Motor Vehicle Importers Association of Subic Bay
Freeport, Inc. (Association), filed another action for declaratory relief with essentially the
same prayer as those in Civil Case No. 22-0-04 and Civil Case No. 20-0-04, against the
Executive Secretary, Secretary of Finance, Chief of the Land Transportation Office,
Commissioner of Customs, Collector of Customs at SBMA and the Chairman of SBMA. This
was docketed as Civil Case No. 30-0-2003,6 before the same trial court.

In a decision dated March 10, 2004, the court a quo granted the Association’s prayer and
declared the assailed proviso as contrary to the Constitution, to wit:

WHEREFORE, judgment is hereby rendered in favor of petitioner declaring Executive Order

156 [Article 2, Section] 3.1 for being unconstitutional and illegal; directing respondents
Collector of Customs based at SBMA to allow the importation and entry of used motor
vehicles pursuant to the mandate of RA 7227; directing respondent Chief of the Land
Transportation Office and its subordinates inside the Subic Special Economic Zone or SBMA
to process the registration of imported used motor vehicles; directing the respondent
Chairman of the SBMA to allow the entry into the Subic Special Economic Zone or SBMA
imported used motor vehicle; and in general, to allow unimpeded entry and importation of
used motor vehicles to the Philippines subject only to the payment of the required customs
duties.

SO ORDERED.7

Aggrieved, the petitioners in Civil Case No. 30-0-2003, filed a petition for certiorari8 with
the Court of Appeals (CA-G.R. SP. No. 83284) which denied the petition on February 14,
2005 and sustained the finding of the trial court that Article 2, Section 3.1 of EO 156, is void
for being repugnant to the constitution. The dispositive portion thereof, reads:

WHEREFORE, the instant petition for certiorari is hereby DENIED. The assailed decision of
the Regional Trial Court, Third Judicial Region, Branch 72, Olongapo City, in Civil Case No.
30-0-2003, accordingly, STANDS.

SO ORDERED.9

The aforequoted decision of the Court of Appeals was elevated to this Court and docketed
as G.R. No. 168741. In a Resolution dated October 4, 2005,10 said case was consolidated
with G.R. No. 164171 and G.R. No. 164172.

Petitioners are now before this Court contending that Article 2, Section 3.1 of EO 156 is
valid and applicable to the entire country, including the Freeeport. In support of their
arguments, they raise procedural and substantive issues bearing on the constitutionality of
the assailed proviso. The procedural issues are: the lack of respondents’ locus standi to
question the validity of EO 156, the propriety of challenging EO 156 in a declaratory relief
proceeding and the applicability of a judgment on the pleadings in this case.

Petitioners argue that respondents will not be affected by the importation ban considering
that their certificate of registration and tax exemption do not authorize them to engage in
the importation and/or trading of used cars. They also aver that the actions filed by
respondents do not qualify as declaratory relief cases. Section 1, Rule 63 of the Rules of
Court provides that a petition for declaratory relief may be filed before there is a breach or
violation of rights. Petitioners claim that there was already a breach of respondents’
supposed right because the cases were filed more than a year after the issuance of EO 156.
In fact, in Civil Case No. 30-0-2003, numerous warrants of seizure and detention were
issued against imported used motor vehicles belonging to respondent Association’s
members.

Petitioners’ arguments lack merit.

The established rule that the constitutionality of a law or administrative issuance can be
challenged by one who will sustain a direct injury as a result of its enforcement11 has been
satisfied in the instant case. The broad subject of the prohibited importation is "all types of
used motor vehicles." Respondents would definitely suffer a direct injury from the
implementation of EO 156 because their certificate of registration and tax exemption
authorize them to trade and/or import new and used motor vehicles and spare parts,
except "used cars."12 Other types of motor vehicles imported and/or traded by respondents
and not falling within the category of used cars would thus be subjected to the ban to the
prejudice of their business. Undoubtedly, respondents have the legal standing to assail the
validity of EO 156.

As to the propriety of declaratory relief as a vehicle for assailing the executive issuance,
suffice it to state that any breach of the rights of respondents will not affect the case.
In Commission on Audit of the Province of Cebu v. Province of Cebu,13 the Court entertained a
suit for declaratory relief to finally settle the doubt as to the proper interpretation of the
conflicting laws involved, notwithstanding a violation of the right of the party affected. We
find no reason to deviate from said ruling mindful of the significance of the present case to
the national economy.

So also, summary judgments were properly rendered by the trial court because the issues
involved in the instant case were pure questions of law. A motion for summary judgment is
premised on the assumption that the issues presented need not be tried either because
these are patently devoid of substance or that there is no genuine issue as to any pertinent
fact. It is a method sanctioned by the Rules of Court for the prompt disposition of a civil
action in which the pleadings raise only a legal issue, not a genuine issue as to any material
fact.14

At any rate, even assuming the procedural flaws raised by petitioners truly exist, the Court
is not precluded from brushing aside these technicalities and taking cognizance of the
action filed by respondents considering its importance to the public and in keeping with
the duty to determine whether the other branches of the government have kept themselves
within the limits of the Constitution.15

We now come to the substantive issues, which are: (1) whether there is statutory basis for
the issuance of EO 156; and (2) if the answer is in the affirmative, whether the application
of Article 2, Section 3.1 of EO 156, reasonable and within the scope provided by law.

The main thrust of the petition is that EO 156 is constitutional because it was issued
pursuant to EO 226, the Omnibus Investment Code of the Philippines and that its
application should be extended to the Freeport because the guarantee of RA 7227 on the
free flow of goods into the said zone is merely an exemption from customs duties and taxes
on items brought into the Freeport and not an open floodgate for all kinds of goods and
materials without restriction.

In G.R. No. 168741, the Court of Appeals invalidated Article 2, Section 3.1 of EO 156, on the
ground of lack of any statutory basis for the President to issue the same. It held that the
prohibition on the importation of used motor vehicles is an exercise of police power vested
on the legislature and absent any enabling law, the exercise thereof by the President
through an executive issuance, is void.

Police power is inherent in a government to enact laws, within constitutional limits, to

promote the order, safety, health, morals, and general welfare of society. It is lodged
primarily with the legislature. By virtue of a valid delegation of legislative power, it may
also be exercised by the President and administrative boards, as well as the lawmaking
bodies on all municipal levels, including the barangay.16 Such delegation confers upon the
President quasi-legislative power which may be defined as the authority delegated by the
law-making body to the administrative body to adopt rules and regulations intended to
carry out the provisions of the law and implement legislative policy.17 To be valid, an
administrative issuance, such as an executive order, must comply with the following
requisites:

(1) Its promulgation must be authorized by the legislature;

(2) It must be promulgated in accordance with the prescribed procedure;

 (3) It must be within the scope of the authority given by the legislature; and

(4) It must be reasonable.18

Contrary to the conclusion of the Court of Appeals, EO 156 actually satisfied the first
requisite of a valid administrative order. It has both constitutional and statutory bases.

Delegation of legislative powers to the President is permitted in Section 28(2) of Article VI

of the Constitution. It provides:

(2) The Congress may, by law, authorize the President to fix within specified limits, and
subject to such limitations and restrictions as it may impose, tariff rates, import and export
quotas, tonnage and wharfage dues, and other duties or imposts within the framework of
the national development program of the Government.19 (Emphasis supplied)

The relevant statutes to execute this provision are:

1) The Tariff and Customs Code which authorizes the President, in the interest of national
economy, general welfare and/or national security, to, inter alia, prohibit the importation
of any commodity. Section 401 thereof, reads:

Sec. 401. Flexible Clause. —

a. In the interest of national economy, general welfare and/or national security, and
subject to the limitations herein prescribed, the President, upon recommendation of
the National Economic and Development Authority (hereinafter referred to as
NEDA), is hereby empowered: x x x (2) to establish import quota or to ban imports of
any commodity, as may be necessary; x x x Provided, That upon periodic investigations
by the Tariff Commission and recommendation of the NEDA, the President may cause a
gradual reduction of protection levels granted in Section One hundred and four of this
Code, including those subsequently granted pursuant to this section. (Emphasis supplied)

2) Executive Order No. 226, the Omnibus Investment Code of the Philippines which was
issued on July 16, 1987, by then President Corazon C. Aquino, in the exercise of legislative
power under the Provisional Freedom Constitution,20 empowers the President to approve
or reject the prohibition on the importation of any equipment or raw materials or finished
products. Pertinent provisions thereof, read:

ART. 4. Composition of the board. The Board of Investments shall be composed of seven (7)
governors: The Secretary of Trade and Industry, three (3) Undersecretaries of Trade and
Industry to be chosen by the President; and three (3) representatives from the government
agencies and the private sector x x x.

ART. 7. Powers and duties of the Board.

xxxx

(12) Formulate and implement rationalization programs for certain industries whose
operation may result in dislocation, overcrowding or inefficient use of resources, thus
impeding economic growth. For this purpose, the Board may formulate guidelines for
progressive manufacturing programs, local content programs, mandatory sourcing
requirements and dispersal of industries. In appropriate cases and upon approval of the
President, the Board may restrict, either totally or partially, the importation of any
equipment or raw materials or finished products involved in the rationalization
program; (Emphasis supplied)

3) Republic Act No. 8800, otherwise known as the "Safeguard Measures Act" (SMA), and
entitled "An Act Protecting Local Industries By Providing Safeguard Measures To Be
Undertaken In Response To Increased Imports And Providing Penalties For Violation
Thereof,"21 designated the Secretaries22 of the Department of Trade and Industry (DTI) and
the Department of Agriculture, in their capacity as alter egos of the President, as the
implementing authorities of the safeguard measures, which include, inter alia, modification
or imposition of any quantitative restriction on the importation of a product into the
Philippines. The purpose of the SMA is stated in the declaration of policy, thus:

SEC. 2. Declaration of Policy. – The State shall promote competitiveness of domestic

industries and producers based on sound industrial and agricultural development policies,
and efficient use of human, natural and technical resources. In pursuit of this goal and in
the public interest, the State shall provide safeguard measures to protect domestic
industries and producers from increased imports which cause or threaten to cause serious
injury to those domestic industries and producers.

There are thus explicit constitutional and statutory permission authorizing the President to
ban or regulate importation of articles and commodities into the country.

Anent the second requisite, that is, that the order must be issued or promulgated in
accordance with the prescribed procedure, it is necessary that the nature of the
administrative issuance is properly determined. As in the enactment of laws, the general
rule is that, the promulgation of administrative issuances requires previous notice and
hearing, the only exception being where the legislature itself requires it and mandates that
the regulation shall be based on certain facts as determined at an appropriate
investigation.23 This exception pertains to the issuance of legislative rules as
distinguished from interpretative rules which give no real consequence more than what
the law itself has already prescribed;24 and are designed merely to provide guidelines to
the law which the administrative agency is in charge of enforcing.25 A legislative rule, on
the other hand, is in the nature of subordinate legislation, crafted to implement a primary
legislation.

In Commissioner of Internal Revenue v. Court of Appeals,26 and Commissioner of Internal

Revenue v. Michel J. Lhuillier Pawnshop, Inc.,27 the Court enunciated the doctrine that when
an administrative rule goes beyond merely providing for the means that can facilitate or
render less cumbersome the implementation of the law and substantially increases the
burden of those governed, it behooves the agency to accord at least to those directly
affected a chance to be heard and, thereafter, to be duly informed, before the issuance is
given the force and effect of law.

In the instant case, EO 156 is obviously a legislative rule as it seeks to implement or execute
primary legislative enactments intended to protect the domestic industry by imposing a
ban on the importation of a specified product not previously subject to such prohibition.
The due process requirements in the issuance thereof are embodied in Section 40128 of the
Tariff and Customs Code and Sections 5 and 9 of the SMA29 which essentially mandate the
conduct of investigation and public hearings before the regulatory measure or importation
ban may be issued.

In the present case, respondents neither questioned before this Court nor with the courts
below the procedure that paved the way for the issuance of EO 156. What they challenged
in their petitions before the trial court was the absence of "substantive due process" in the
issuance of the EO.30 Their main contention before the court a quo is that the importation
ban is illogical and unfair because it unreasonably drives them out of business to the
prejudice of the national economy.

Considering the settled principle that in the absence of strong evidence to the contrary, acts
of the other branches of the government are presumed to be valid,31 and there being no
objection from the respondents as to the procedure in the promulgation of EO 156, the
presumption is that said executive issuance duly complied with the procedures and
limitations imposed by law.

To determine whether EO 156 has complied with the third and fourth requisites of a valid
administrative issuance, to wit, that it was issued within the scope of authority given by the
legislature and that it is reasonable, an examination of the nature of a Freeport under RA
7227 and the primordial purpose of the importation ban under the questioned EO is
necessary.

RA 7227 was enacted providing for, among other things, the sound and balanced
conversion of the Clark and Subic military reservations and their extensions into
alternative productive uses in the form of Special Economic and Freeport Zone, or the Subic
Bay Freeport, in order to promote the economic and social development of Central Luzon in
particular and the country in general.

The Rules and Regulations Implementing RA 7227 specifically defines the territory
comprising the Subic Bay Freeport, referred to as the Special Economic and Freeport Zone
in Section 12 of RA 7227 as "a separate customs territory consisting of the City of Olongapo
and the Municipality of Subic, Province of Zambales, the lands occupied by the Subic Naval
Base and its contiguous extensions as embraced, covered and defined by the 1947
Philippine-U.S. Military Base Agreement as amended and within the territorial jurisdiction
of Morong and Hermosa, Province of Bataan, the metes and bounds of which shall be
delineated by the President of the Philippines; provided further that pending establishment
of secure perimeters around the entire SBF, the SBF shall refer to the area demarcated by
the SBMA pursuant to Section 1332 hereof."

Among the salient provisions of RA 7227 are as follows:

SECTION 12. Subic Special Economic Zone. —

xxxx

The abovementioned zone shall be subject to the following policies:

xxxx

(a) Within the framework and subject to the mandate and limitations of the
Constitution and the pertinent provisions of the Local Government Code, the Subic
Special Economic Zone shall be developed into a self-sustaining, industrial,
commercial, financial and investment center to generate employment opportunities
in and around the zone and to attract and promote productive foreign investments;

(b) The Subic Special Economic Zone shall be operated and managed as a separate
customs territory ensuring free flow or movement of goods and capital within, into
and exported out of the Subic Special Economic Zone, as well as provide incentives
such as tax and duty-free importations of raw materials, capital and equipment.
However, exportation or removal of goods from the territory of the Subic Special
 Economic Zone to the other parts of the Philippine territory shall be subject to
customs duties and taxes under the Customs and Tariff Code and other relevant tax
laws of the Philippines;

The Freeport was designed to ensure free flow or movement of goods and capital within a
portion of the Philippine territory in order to attract investors to invest their capital in a
business climate with the least governmental intervention. The concept of this zone was
explained by Senator Guingona in this wise:

Senator Guingona. Mr. President, the special economic zone is successful in many places,
particularly Hong Kong, which is a free port. The difference between a special economic
zone and an industrial estate is simply expansive in the sense that the commercial
activities, including the establishment of banks, services, financial institutions, agro-
industrial activities, maybe agriculture to a certain extent.

This delineates the activities that would have the least of government intervention,
and the running of the affairs of the special economic zone would be run principally
by the investors themselves, similar to a housing subdivision, where the subdivision
owners elect their representatives to run the affairs of the subdivision, to set the
policies, to set the guidelines.

We would like to see Subic area converted into a little Hong Kong, Mr. President,
where there is a hub of free port and free entry, free duties and activities to a
maximum spur generation of investment and jobs.

While the investor is reluctant to come in the Philippines, as a rule, because of red tape and
perceived delays, we envision this special economic zone to be an area where there will be
minimum government interference.

The initial outlay may not only come from the Government or the Authority as envisioned
here, but from them themselves, because they would be encouraged to invest not only for
the land but also for the buildings and factories. As long as they are convinced that in such
an area they can do business and reap reasonable profits, then many from other parts, both
local and foreign, would invest, Mr. President.33 (Emphasis, added)

With minimum interference from the government, investors can, in general, engage in any
kind of business as well as import and export any article into and out of the Freeport. These
are among the rights accorded to Subic Bay Freeport Enterprises under Section 39 of the
Rules and Regulations Implementing RA 7227, thus –
SEC. 39. Rights and Obligations.- SBF Enterprises shall have the following rights and
obligations:

a. To freely engage in any business, trade, manufacturing, financial or service activity, and
to import and export freely all types of goods into and out of the SBF, subject to the
provisions of the Act, these Rules and other regulations that may be promulgated by the
SBMA;

Citing, inter alia, the interpellations of Senator Enrile, petitioners claim that the "free flow
or movement of goods and capital" only means that goods and material brought within the
Freeport shall not be subject to customs duties and other taxes and should not be
construed as an open floodgate for entry of all kinds of goods. They thus surmise that the
importation ban on motor vehicles is applicable within the Freeport. Pertinent
interpellations of Senator Enrile on the concept of Freeport is as follows:

Senator Enrile: Mr. President, I think we are talking here of sovereign concepts, not
territorial concepts. The concept that we are supposed to craft here is to carve out a
portion of our terrestrial domain as well as our adjacent waters and say to the world: "Well,
you can set up your factories in this area that we are circumscribing, and bringing your
equipment and bringing your goods, you are not subject to any taxes and duties because
you are not within the customs jurisdiction of the Republic of the Philippines, whether you
store the goods or only for purposes of transshipment or whether you make them into
finished products again to be reexported to other lands."

xxxx

My understanding of a "free port" is, we are in effect carving out a part of our
territory and make it as if it were foreign territory for purposes of our customs laws,
and that people can come, bring their goods, store them there and bring them out
again, as long as they do not come into the domestic commerce of the Republic.

We do not really care whether these goods are stored here. The only thing that we care is
for our people to have an employment because of the entry of these goods that are being
discharged, warehoused and reloaded into the ships so that they can be exported. That will
generate employment for us. For as long as that is done, we are saying, in effect, that we
have the least contact with our tariff and customs laws and our tax laws. Therefore, we
consider these goods as outside of the customs jurisdiction of the Republic of the
Philippines as yet, until we draw them from this territory and bring them inside our
domestic commerce. In which case, they have to pass through our customs gate. I thought
we are carving out this entire area and convert it into this kind of concept.34
However, contrary to the claim of petitioners, there is nothing in the foregoing excerpts
which absolutely limits the incentive to Freeport investors only to exemption from customs
duties and taxes. Mindful of the legislative intent to attract investors, enhance investment
and boost the economy, the legislature could not have limited the enticement only to
exemption from taxes. The minimum interference policy of the government on the Freeport
extends to the kind of business that investors may embark on and the articles which they
may import or export into and out of the zone. A contrary interpretation would defeat the
very purpose of the Freeport and drive away investors.

It does not mean, however, that the right of Freeport enterprises to import all types of
goods and article is absolute. Such right is of course subject to the limitation that articles
absolutely prohibited by law cannot be imported into the Freeport.35 Nevertheless, in
determining whether the prohibition would apply to the Freeport, resort to the purpose of
the prohibition is necessary.

In issuing EO 156, particularly the prohibition on importation under Article 2, Section 3.1,
the President envisioned to rationalize the importation of used motor vehicles and to
enhance the capabilities of the Philippine motor manufacturing firms to be globally
competitive producers of completely build-up units and their parts and components for the
local and export markets.36 In justifying the issuance of EO 156, petitioners alleged that
there has been a decline in the sales of new vehicles and a remarkable growth of the sales
of imported used motor vehicles. To address the same, the President issued the questioned
EO to prevent further erosion of the already depressed market base of the local motor
vehicle industry and to curtail the harmful effects of the increase in the importation of used
motor vehicles.37

Taking our bearings from the foregoing discussions, we hold that the importation ban runs
afoul the third requisite for a valid administrative order. To be valid, an administrative
issuance must not be ultra vires or beyond the limits of the authority conferred. It must not
supplant or modify the Constitution, its enabling statute and other existing laws, for such is
the sole function of the legislature which the other branches of the government cannot
usurp. As held in United BF Homeowner’s Association v. BF Homes, Inc.:38

The rule-making power of a public administrative body is a delegated legislative power,

which it may not use either to abridge the authority given it by Congress or the
Constitution or to enlarge its power beyond the scope intended. Constitutional and
statutory provisions control what rules and regulations may be promulgated by such a
body, as well as with respect to what fields are subject to regulation by it. It may not make
rules and regulations which are inconsistent with the provisions of the Constitution or a
statute, particularly the statute it is administering or which created it, or which are in
derogation of, or defeat, the purpose of a statute.

In the instant case, the subject matter of the laws authorizing the President to regulate or
forbid importation of used motor vehicles, is the domestic industry. EO 156, however,
exceeded the scope of its application by extending the prohibition on the importation of
used cars to the Freeport, which RA 7227, considers to some extent, a foreign territory.
The domestic industry which the EO seeks to protect is actually the "customs territory"
which is defined under the Rules and Regulations Implementing RA 7227, as follows:

"the portion of the Philippines outside the Subic Bay Freeport where the Tariff and
Customs Code of the Philippines and other national tariff and customs laws are in
force and effect."39

The proscription in the importation of used motor vehicles should be operative only
outside the Freeport and the inclusion of said zone within the ambit of the prohibition is an
invalid modification of RA 7227. Indeed, when the application of an administrative issuance
modifies existing laws or exceeds the intended scope, as in the instant case, the issuance
becomes void, not only for being ultra vires, but also for being unreasonable.

This brings us to the fourth requisite. It is an axiom in administrative law that

administrative authorities should not act arbitrarily and capriciously in the issuance of
rules and regulations. To be valid, such rules and regulations must be reasonable and fairly
adapted to secure the end in view. If shown to bear no reasonable relation to the purposes
for which they were authorized to be issued, then they must be held to be invalid.40

There is no doubt that the issuance of the ban to protect the domestic industry is a
reasonable exercise of police power. The deterioration of the local motor manufacturing
firms due to the influx of imported used motor vehicles is an urgent national concern that
needs to be swiftly addressed by the President. In the exercise of delegated police power,
the executive can therefore validly proscribe the importation of these vehicles. Thus,
in Taxicab Operators of Metro Manila, Inc. v. Board of Transportation,41 the Court held that a
regulation phasing out taxi cabs more than six years old is a valid exercise of police power.
The regulation was sustained as reasonable holding that the purpose thereof was to
promote the convenience and comfort and protect the safety of the passengers.

The problem, however, lies with respect to the application of the importation ban to the
Freeport. The Court finds no logic in the all encompassing application of the assailed
provision to the Freeport which is outside the customs territory. As long as the used motor
vehicles do not enter the customs territory, the injury or harm sought to be prevented or
remedied will not arise. The application of the law should be consistent with the purpose of
and reason for the law. Ratione cessat lex, et cessat lex. When the reason for the law ceases,
the law ceases. It is not the letter alone but the spirit of the law also that gives it life.42 To
apply the proscription to the Freeport would not serve the purpose of the EO. Instead of
improving the general economy of the country, the application of the importation ban in
the Freeport would subvert the avowed purpose of RA 7227 which is to create a market
that would draw investors and ultimately boost the national economy.

In similar cases, we also declared void the administrative issuance or ordinances

concerned for being unreasonable. To illustrate, in De la Cruz v. Paras,43 the Court held as
unreasonable and unconstitutional an ordinance characterized by overbreadth. In that
case, the Municipality of Bocaue, Bulacan, prohibited the operation of all night clubs,
cabarets and dance halls within its jurisdiction for the protection of public morals. As
explained by the Court:

x x x It cannot be said that such a sweeping exercise of a lawmaking power by Bocaue could
qualify under the term reasonable. The objective of fostering public morals, a worthy and
desirable end can be attained by a measure that does not encompass too wide a field.
Certainly the ordinance on its face is characterized by overbreadth. The purpose sought to
be achieved could have been attained by reasonable restrictions rather than by an absolute
prohibition. The admonition in Salaveria should be heeded: "The Judiciary should not
lightly set aside legislative action when there is not a clear invasion of personal or property
rights under the guise of police regulation." It is clear that in the guise of a police regulation,
there was in this instance a clear invasion of personal or property rights, personal in the
case of those individuals desirous of patronizing those night clubs and property in terms of
the investments made and salaries to be earned by those therein employed.

Lupangco v. Court of Appeals,44 is a case involving a resolution issued by the Professional

Regulation Commission which prohibited examinees from attending review classes and
receiving handout materials, tips, and the like three days before the date of examination in
order to preserve the integrity and purity of the licensure examinations in accountancy.
Besides being unreasonable on its face and violative of academic freedom, the measure was
found to be more sweeping than what was necessary, viz:

Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the alleged
leakages in the licensure examinations will be eradicated or at least minimized. Making the
examinees suffer by depriving them of legitimate means of review or preparation on those
last three precious days — when they should be refreshing themselves with all that they
have learned in the review classes and preparing their mental and psychological make-up
for the examination day itself — would be like uprooting the tree to get rid of a rotten
branch. What is needed to be done by the respondent is to find out the source of such
leakages and stop it right there. If corrupt officials or personnel should be terminated from
their loss, then so be it. Fixers or swindlers should be flushed out. Strict guidelines to be
observed by examiners should be set up and if violations are committed, then licenses
should be suspended or revoked. x x x

In Lucena Grand Central Terminal, Inc. v. JAC Liner, Inc.,45 the Court likewise struck down as
unreasonable and overbreadth a city ordinance granting an exclusive franchise for 25
years, renewable for another 25 years, to one entity for the construction and operation of
one common bus and jeepney terminal facility in Lucena City. While professedly aimed
towards alleviating the traffic congestion alleged to have been caused by the existence of
various bus and jeepney terminals within the city, the ordinance was held to be beyond
what is reasonably necessary to solve the traffic problem in the city.

By parity of reasoning, the importation ban in this case should also be declared void for its
too sweeping and unnecessary application to the Freeport which has no bearing on the
objective of the prohibition. If the aim of the EO is to prevent the entry of used motor
vehicles from the Freeport to the customs territory, the solution is not to forbid entry of
these vehicles into the Freeport, but to intensify governmental campaign and measures to
thwart illegal ingress of used motor vehicles into the customs territory.

At this juncture, it must be mentioned that on June 19, 1993, President Fidel V. Ramos
issued Executive Order No. 97-A, "Further Clarifying The Tax And Duty-Free Privilege
Within The Subic Special Economic And Free Port Zone," Section 1 of which provides:

SECTION 1. The following guidelines shall govern the tax and duty-free privilege within the
Secured Area of the Subic Special Economic and Free Port Zone:

1.1. The Secured Area consisting of the presently fenced-in former Subic Naval Base shall
be the only completely tax and duty-free area in the SSEFPZ. Business enterprises and
individuals (Filipinos and foreigners) residing within the Secured Area are free to import
raw materials, capital goods, equipment, and consumer items tax and dutry-free.
Consumption items, however, must be consumed within the Secured Area. Removal of raw
materials, capital goods, equipment and consumer items out of the Secured Area for sale to
non-SSEFPZ registered enterprises shall be subject to the usual taxes and duties, except as
may be provided herein.

In Tiu v. Court of Appeals46 as reiterated in Coconut Oil Refiners Association, Inc. v.

Torres,47 this provision limiting the special privileges on tax and duty-free importation in
the presently fenced-in former Subic Naval Base has been declared valid and constitutional
and in accordance with RA 7227. Consistent with these rulings and for easier management
and monitoring of activities and to prevent fraudulent importation of merchandise and
smuggling, the free flow and importation of used motor vehicles shall be operative only
within the "secured area."

In sum, the Court finds that Article 2, Section 3.1 of EO 156 is void insofar as it is made
applicable to the presently secured fenced-in former Subic Naval Base area as stated in
Section 1.1 of EO 97-A. Pursuant to the separability clause48 of EO 156, Section 3.1 is
declared valid insofar as it applies to the customs territory or the Philippine territory
outside the presently secured fenced-in former Subic Naval Base area as stated in Section
1.1 of EO 97-A. Hence, used motor vehicles that come into the Philippine territory via the
secured fenced-in former Subic Naval Base area may be stored, used or traded therein, or
exported out of the Philippine territory, but they cannot be imported into the Philippine
territory outside of the secured fenced-in former Subic Naval Base area.

WHEREFORE, the petitions are PARTIALLY GRANTED and the May 24, 2004 Decisions of
Branch 72, Regional Trial Court of Olongapo City, in Civil Case No. 20-0-04 and Civil Case
No. 22-0-04; and the February 14, 2005 Decision of the Court of Appeals in CA-G.R. SP No.
63284, are MODIFIED insofar as they declared Article 2, Section 3.1 of Executive Order No.
156, void in its entirety.

Said provision is declared VALID insofar as it applies to the Philippine territory outside the
presently fenced-in former Subic Naval Base area and VOID with respect to its application
to the secured fenced-in former Subic Naval Base area.

SO ORDERED.
Acebedo v Court of Appeals, G.R. No. 100152, March 31, 2000

G.R. No. 100152 March 31, 2000

ACEBEDO OPTICAL COMPANY, INC., petitioner,

vs.
THE HONORABLE COURT OF APPEALS, Hon. MAMINDIARA MANGOTARA, in his
capacity as Presiding Judge of the RTC, 12th Judicial Region, Br. 1, Iligan City;
SAMAHANG OPTOMETRIST Sa PILIPINAS — Iligan City Chapter, LEO T. CAHANAP, City
Legal Officer, and Hon. CAMILO P. CABILI, City Mayor of Iligan, respondents.

PURISIMA, J.:

At bar is a petition for review under Rule 45 of the Rules of Court seeking to nullify the
dismissal by the Court of Appeals of the original petition for certiorari, prohibition
and mandamus filed by the herein petitioner against the City Mayor and City Legal Officer
of Iligan and the Samahang Optometrist sa Pilipinas — Iligan Chapter (SOPI, for brevity).

The antecedent facts leading to the filing of the instant petition are as follows:

Petitioner applied with the Office of the City Mayor of Iligan for a business permit. After
consideration of petitioner's application and the opposition interposed thereto by local
optometrists, respondent City Mayor issued Business Permit No. 5342 subject to the
following conditions:

1. Since it is a corporation, Acebedo cannot put up an optical clinic but only a

commercial store;

2. Acebedo cannot examine and/or prescribe reading and similar optical glasses for
patients, because these are functions of optical clinics;

3. Acebedo cannot sell reading and similar eyeglasses without a prescription having
first been made by an independent optometrist (not its employee) or independent
optical clinic. Acebedo can only sell directly to the public, without need of a
prescription, Ray-Ban and similar eyeglasses;

4. Acebedo cannot advertise optical lenses and eyeglasses, but can advertise Ray-
Ban and similar glasses and frames;

5. Acebedo is allowed to grind lenses but only upon the prescription of an

independent optometrist. 1
On December 5, 1988, private respondent Samahan ng Optometrist Sa Pilipinas (SOPI),
Iligan Chapter, through its Acting President, Dr. Frances B. Apostol, lodged a complaint
against the petitioner before the Office of the City Mayor, alleging that Acebedo had
violated the conditions set forth in its business permit and requesting the cancellation
and/or revocation of such permit.

Acting on such complaint, then City Mayor Camilo P. Cabili designated City Legal Officer Leo
T. Cahanap to conduct an investigation on the matter. On July 12, 1989, respondent City
Legal Officer submitted a report to the City Mayor finding the herein petitioner guilty of
violating all the conditions of its business permit and recommending the disqualification of
petitioner from operating its business in Iligan City. The report further advised that no new
permit shall be granted to petitioner for the year 1989 and should only be given time to
wind up its affairs.

On July 19, 1989, the City Mayor sent petitioner a Notice of Resolution and Cancellation of
Business Permit effective as of said date and giving petitioner three (3) months to wind up
its affairs.

On October 17, 1989, petitioner brought a petition for certiorari, prohibition

and mandamus with prayer for restraining order/preliminary injunction against the
respondents, City Mayor, City Legal Officer and Samahan ng Optometrists sa Pilipinas-
Iligan City Chapter (SOPI), docketed as Civil Case No. 1497 before the Regional Trial Court
of Iligan City, Branch I. Petitioner alleged that (1) it was denied due process because it was
not given an opportunity to present its evidence during the investigation conducted by the
City Legal Officer; (2) it was denied equal protection of the laws as the limitations imposed
on its business permit were not imposed on similar businesses in Iligan City; (3) the City
Mayor had no authority to impose the special conditions on its business permit; and (4) the
City Legal Officer had no authority to conduct the investigation as the matter falls within
the exclusive jurisdiction of the Professional Regulation Commission and the Board of
Optometry.

Respondent SOPI interposed a Motion to Dismiss the Petition on the ground of non-
exhaustion of administrative remedies but on November 24, 1989, Presiding Judge
Mamindiara P. Mangotara deferred resolution of such Motion to Dismiss until after trial of
the case on the merits. However, the prayer for a writ of preliminary injunction was
granted. Thereafter, respondent SOPI filed its answer.1âwphi1.nêt

On May 30, 1990, the trial court dismissed the petition for failure to exhaust administrative
remedies, and dissolved the writ of preliminary injunction it earlier issued. Petitioner's
motion for reconsideration met the same fate. It was denied by an Order dated June 28,
1990.

On October 3, 1990, instead of taking an appeal, petitioner filed a petition for certiorari,
prohibition and mandamus with the Court of Appeals seeking to set aside the questioned
Order of Dismissal, branding the same as tainted with grave abuse of discretion on the part
of the trial court.

On January 24, 1991, the Ninth Division 2 of the Court of Appeals dismissed the petition for
lack of merit. Petitioner's motion reconsideration was also denied in the Resolution dated
May 15, 1991.

Undaunted, petitioner has come before this court via the present petition, theorizing that:

A.

THE RESPONDENT COURT, WHILE CORRECTLY HOLDING THAT THE RESPONDENT

CITY MAYOR ACTED BEYOND HIS AUTHORITY IN IMPOSING THE SPECIAL
CONDITIONS IN THE PERMIT AS THEY HAD NO BASIS IN ANY LAW OR
ORDINANCE, ERRED IN HOLDING THAT THE SAID SPECIAL CONDITIONS
NEVERTHELESS BECAME BINDING ON PETITIONER UPON ITS ACCEPTANCE
THEREOF AS A PRIVATE AGREEMENT OR CONTRACT.

B.

THE RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT THE CONTRACT

BETWEEN PETITIONER AND THE CITY OF ILIGAN WAS ENTERED INTO BY THE
LATTER IN THE PERFORMANCE OF ITS PROPRIETARY FUNCTIONS.

The petition is impressed with merit.

Although petitioner agrees with the finding of the Court of Appeals that respondent City
Mayor acted beyond the scope of his authority in imposing the assailed conditions in
subject business permit, it has excepted to the ruling of the Court of Appeals that the said
conditions nonetheless became binding on petitioner, once accepted, as a private
agreement or contract. Petitioner maintains that the said special conditions are null and
void for being ultra vires and cannot be given effect; and therefore, the principle of estoppel
cannot apply against it.

On the other hand, the public respondents, City Mayor and City Legal Officer, private
respondent SOPI and the Office of the Solicitor General contend that as a valid exercise of
police power, respondent City Mayor has the authority to impose, as he did, special
conditions in the grant of business permits.

Police power as an inherent attribute of sovereignty is the power to prescribe regulations

to promote the health, morals, peace, education, good order or safety and general welfare
of the people. 9 The State, through the legislature, has delegated the exercise of police
power to local government units, as agencies of the State, in order to effectively accomplish
and carry out the declared objects of their creation. 4 This delegation of police power is
embodied in the general welfare clause of the Local Government Code which provides:

Sec. 6. General Welfare. — Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and effective governance, and
those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support,
among other things, the preservation and enrichment of culture, promote health and
safety, enhance the right of the people to a balanced ecology, encourage and support
the development of appropriate and self-reliant scientific and technological
capabilities, improve public morals, enhance economic prosperity and social justice,
promote full employment among their residents, maintain peace and order, and
preserve the comfort and convenience of their inhabitants.

The scope of police power has been held to be so comprehensive as to encompass almost
all matters affecting the health, safety, peace, order, morals, comfort and convenience of the
community. Police power is essentially regulatory in nature and the power to issue licenses
or grant business permits, if exercised for a regulatory and not revenue-raising purpose, is
within the ambit of this power. 5

The authority of city mayors to issue or grant licenses and business permits is beyond cavil.
It is provided for by law. Section 171, paragraph 2 (n) of Batas Pambansa Bilang 337
otherwise known as the Local Government Code of 1983, reads:

Sec. 171. The City Mayor shall:

xxx xxx xxx

n) Grant or refuse to grant, pursuant to law, city licenses or permits, and revoke the
same for violation of law or ordinance or the conditions upon which they are
granted.
However, the power to grant or issue licenses or business permits must always be
exercised in accordance with law, with utmost observance of the rights of all concerned to
due process and equal protection of the law.

Succinct and in point is the ruling of this Court, that:

. . . While a business may be regulated, such regulation must, however, be within the
bounds of reason, i.e., the regulatory ordinance must be reasonable, and its
provision cannot be oppressive amounting to an arbitrary interference with the
business or calling subject of regulation. A lawful business or calling may not, under
the guise of regulation, be unreasonably interfered with even by the exercise of
police power. . . .

xxx xxx xxx

. . . The exercise of police power by the local government is valid unless it

contravenes the fundamental law of the land or an act of the legislature, or unless it
is against public policy or is unreasonable, oppressive, partial, discriminating or in
derogation of a common right. 6

In the case under consideration, the business permit granted by respondent City Mayor to
petitioner was burdened with several conditions. Petitioner agrees with the holding by the
Court of Appeals that respondent City Mayor acted beyond his authority in imposing such
special conditions in its permit as the same have no basis in the law or ordinance. Public
respondents and private respondent SOPI, on the other hand, are one in saying that the
imposition of said special conditions on petitioner's business permit is well within the
authority of the City Mayor as a valid exercise of police power.

As aptly discussed by the Solicitor General in his Comment, the power to issue licenses and
permits necessarily includes the corollary power to revoke, withdraw or cancel the same.
And the power to revoke or cancel, likewise includes the power to restrict through the
imposition of certain conditions. In the case of Austin-Hardware, Inc. vs. Court of Appeals, 7 it
was held that the power to license carries with it the authority to provide reasonable terms
and conditions under which the licensed business shall be conducted. As the Solicitor
General puts it:

If the City Mayor is empowered to grant or refuse to grant a license, which is a

broader power, it stands to reason that he can also exercise a lesser power that is
reasonably incidental to his express power, i.e. to restrict a license through the
imposition of certain conditions, especially so that there is no positive prohibition to
 the exercise of such prerogative by the City Mayor, nor is there any particular
official or body vested with such authority. 8

However, the present inquiry does not stop there, as the Solicitor General believes. The
power or authority of the City Mayor to impose conditions or restrictions in the business
permit is indisputable. What petitioner assails are the conditions imposed in its particular
case which, it complains, amount to a confiscation of the business in which petitioner is
engaged.

Distinction must be made between the grant of a license or permit to do business and the
issuance of a license to engage in the practice of a particular profession. The first is usually
granted by the local authorities and the second is issued by the Board or Commission
tasked to regulate the particular profession. A business permit authorizes the person,
natural or otherwise, to engage in business or some form of commercial activity. A
professional license, on the other hand, is the grant of authority to a natural person to
engage in the practice or exercise of his or her profession.

In the case at bar, what is sought by petitioner from respondent City Mayor is a permit to
engage in the business of running an optical shop. It does not purport to seek a license to
engage in the practice of optometry as a corporate body or entity, although it does have in
its employ, persons who are duly licensed to practice optometry by the Board of Examiners
in Optometry.

The case of Samahan ng Optometrists sa Pilipinas vs. Acebedo International Corporation, G.R.
No. 117097, 9 promulgated by this Court on March 21, 1997, is in point. The factual
antecedents of that case are similar to those of the case under consideration and the issue
ultimately resolved therein is exactly the same issue posed for resolution by this Court en
banc.

In the said case, the Acebedo International Corporation filed with the Office of the
Municipal Mayor an application for a business permit for the operation of a branch of
Acebedo Optical in Candon, Ilocos Sur. The application was opposed by the Samahan ng
Optometrists sa Pilipinas-Ilocos Sur Chapter, theorizing that Acebedo is a juridical entity
not qualified to practice optometry. A committee was created by the Office of the Mayor to
study private respondent's application. Upon recommendation of the said committee,
Acebedo's application for a business permit was denied. Acebedo filed a petition with the
Regional Trial Court but the same was dismissed. On appeal, however, the Court of Appeals
reversed the trial court's disposition, prompting the Samahan ng Optometrists to elevate
the matter to this Court.
The First Division of this Court, then composed of Honorable Justice Teodoro Padilla, Josue
Bellosillo, Jose Vitug and Santiago Kapunan, with Honorable Justice Regino Hermosisima, Jr.
as ponente, denied the petition and ruled in favor of respondent Acebedo International
Corporation, holding that "the fact that private respondent hires optometrists who practice
their profession in the course of their employment in private respondent's optical shops,
does not translate into a practice of optometry by private respondent itself," 10 The Court
further elucidated that in both the old and new Optometry Law, R.A. No. 1998, superseded
by R.A. No. 8050, it is significant to note that there is no prohibition against the hiring by
corporations of optometrists. The Court concluded thus:

All told, there is no law that prohibits the hiring by corporations of optometrists or
considers the hiring by corporations of optometrists as a practice by the corporation
itself of the profession of optometry.

In the present case, the objective of the imposition of subject conditions on petitioner's
business permit could be attained by requiring the optometrists in petitioner's employ to
produce a valid certificate of registration as optometrist, from the Board of Examiners in
Optometry. A business permit is issued primarily to regulate the conduct of business and
the City Mayor cannot, through the issuance of such permit, regulate the practice of a
profession, like that of optometry. Such a function is within the exclusive domain of the
administrative agency specifically empowered by law to supervise the profession, in this
case the Professional Regulations Commission and the Board of Examiners in Optometry.

It is significant to note that during the deliberations of the bicameral conference committee
of the Senate and the House of Representatives on R.A. 8050 (Senate Bill No. 1998 and
House Bill No. 14100), the committee failed to reach a consensus as to the prohibition on
indirect practice of optometry by corporations. The proponent of the bill, former Senator
Freddie Webb, admitted thus:

Senator Webb: xxx xxx xxx

The focus of contention remains to be the proposal of prohibiting the indirect

practice of optometry by corporations.1âwphi1 We took a second look and even a
third look at the issue in the bicameral conference, but a compromise remained
elusive. 11

Former Senator Leticia Ramos-Shahani likewise voted her reservation in casting her vote:

Senator Shahani: Mr. President.

 The optometry bills have evoked controversial views from the members of the
panel. While we realize the need to uplift the standards of optometry as a
profession, the consesnsus of both Houses was to avoid touching sensitive issues
which properly belong to judicial determination. Thus, the bicameral conference
committee decided to leave the issue of indirect practice of optometry and the use of
trade names open to the wisdom of the Courts which are vested with the
prerogative of interpreting the laws. 12

From the foregoing, it is thus evident that Congress has not adopted a unanimous position
on the matter of prohibition of indirect practice of optometry by corporations, specifically
on the hiring and employment of licensed optometrists by optical corporations. It is clear
that Congress left the resolution of such issue for judicial determination, and it is therefore
proper for this Court to resolve the issue.

Even in the United States, jurisprudence varies and there is a conflict of opinions among the
federal courts as to the right of a corporation or individual not himself licensed, to hire and
employ licensed optometrists. 13

Courts have distinguished between optometry as a learned profession in the category of

law and medicine, and optometry as a mechanical art. And, insofar as the courts regard
optometry as merely a mechanical art, they have tended to find nothing objectionable in
the making and selling of eyeglasses, spectacles and lenses by corporations so long as the
patient is actually examined and prescribed for by a qualified practitioner. 14

The primary purpose of the statute regulating the practice of optometry is to insure that
optometrical services are to be rendered by competent and licensed persons in order to
protect the health and physical welfare of the people from the dangers engendered by
unlicensed practice. Such purpose may be fully accomplished although the person
rendering the service is employed by a corporation. 15

Furthermore, it was ruled that the employment of a qualified optometrist by a corporation

is not against public policy. 16 Unless prohibited by statutes, a corporation has all the
contractual rights that an individual has 17 and it does not become the practice of medicine
or optometry because of the presence of a physician or optometrist. 18 The manufacturing,
selling, trading and bartering of eyeglasses and spectacles as articles of merchandise do not
constitute the practice of optometry. 19

In the case of Dvorine vs. Castelberg Jewelry Corporation, 20 defendant corporation

conducted as part of its business, a department for the sale of eyeglasses and the furnishing
of optometrical services to its clients. It employed a registered optometrist who was
compensated at a regular salary and commission and who was furnished instruments and
appliances needed for the work, as well as an office. In holding that corporation was not
engaged in the practice of optometry, the court ruled that there is no public policy
forbidding the commercialization of optometry, as in law and medicine, and recognized the
general practice of making it a commercial business by advertising and selling eyeglasses.

To accomplish the objective of the regulation, a state may provide by statute that
corporations cannot sell eyeglasses, spectacles, and lenses unless a duly licensed physician
or a duly qualified optometrist is in charge of, and in personal attendance at the place
where such articles are sold. 21 In such a case, the patient's primary and essential safeguard
lies in the optometrist's control of the "treatment" by means of prescription and
preliminary and final examination. 22

In analogy, it is noteworthy that private hospitals are maintained by corporations

incorporated for the purpose of furnishing medical and surgical treatment. In the course of
providing such treatments, these corporations employ physicians, surgeons and medical
practitioners, in the same way that in the course of manufacturing and selling eyeglasses,
eye frames and optical lenses, optical shops hire licensed optometrists to examine,
prescribe and dispense ophthalmic lenses. No one has ever charged that these corporations
are engaged in the practice of medicine. There is indeed no valid basis for treating
corporations engaged in the business of running optical shops differently.

It also bears stressing, as petitioner has pointed out, that the public and private
respondents did not appeal from the ruling of the Court of Appeals. Consequently, the
holding by the Court of Appeals that the act of respondent City Mayor in imposing the
questioned special conditions on petitioner's business permit is ultra vires cannot be put
into issue here by the respondents. It is well-settled that:

A party who has not appealed from the decision may not obtain any affirmative
relief from the appellate court other than what he had obtain from the lower court,
if any, whose decision is brought up on appeal. 23

. . . an appellee who is not an appellant may assign errors in his brief where his
purpose is to maintain the judgment on other grounds, but he cannot seek
modification or reversal of the judgment or affirmative relief unless he has also
appealed. 24

Thus, respondents' submission that the imposition of subject special conditions on

petitioner's business permit is not ultra vires cannot prevail over the finding and ruling by
the Court of Appeals from which they (respondents) did not appeal.
Anent the second assigned error, petitioner maintains that its business permit issued by
the City Mayor is not a contract entered into by Iligan City in the exercise of its proprietary
functions, such that although petitioner agreed to such conditions, it cannot be held in
estoppel since ultra vires acts cannot be given effect.

Respondents, on the other hand, agree with the ruling of the Court of Appeals that the
business permit in question is in the nature of a contract between Iligan City and the herein
petitioner, the terms and conditions of which are binding upon agreement, and that
petitioner is estopped from questioning the same. Moreover, in the Resolution denying
petitioner's motion for reconsideration, the Court of Appeals held that the contract
between the petitioner and the City of Iligan was entered into by the latter in the
performance of its proprietary functions.

This Court holds otherwise. It had occasion to rule that a license or permit is not in the
nature of a contract but a special privilege.

. . . a license or a permit is not a contract between the sovereignty and the licensee or
permitee, and is not a property in the constitutional sense, as to which the
constitutional proscription against impairment of the obligation of contracts may
extend. A license is rather in the nature of a special privilege, of a permission or
authority to do what is within its terms. It is not in any way vested, permanent or
absolute. 25

It is therefore decisively clear that estoppel cannot apply in this case. The fact that
petitioner acquiesced in the special conditions imposed by the City Mayor in subject
business permit does not preclude it from challenging the said imposition, which is ultra
vires or beyond the ambit of authority of respondent City Mayor. Ultra vires acts or acts
which are clearly beyond the scope of one's authority are null and void and cannot be given
any effect. The doctrine of estoppel cannot operate to give effect to an act which is
otherwise null and void or ultra vires.

The Court of Appeals erred in adjudging subject business permit as having been issued by
responded City Mayor in the performance of proprietary functions of Iligan City. As
hereinabove elaborated upon, the issuance of business licenses and permits by a
municipality or city is essentially regulatory in nature. The authority, which devolved upon
local government units to issue or grant such licenses or permits, is essentially in the
exercise of the police power of the State within the contemplation of the general welfare
clause of the Local Government Code.
WHEREFORE, the petition is GRANTED; the Decision of the Court of Appeals in CA-GR SP
No. 22995 REVERSED: and the respondent City Mayor is hereby ordered to reissue
petitioner's business permit in accordance with law and with this disposition. No
pronouncement as to costs.

SO ORDERED.
White Light Corp., vs. City of Manila, 576 SCRA 416 (2009)

G.R. No. 122846 January 20, 2009

WHITE LIGHT CORPORATION, TITANIUM CORPORATION and STA. MESA TOURIST &
DEVELOPMENT CORPORATION, Petitioners,
vs.
CITY OF MANILA, represented by DE CASTRO, MAYOR ALFREDO S. LIM, Respondent.

DECISION

Tinga, J.:

With another city ordinance of Manila also principally involving the tourist district as
subject, the Court is confronted anew with the incessant clash between government power
and individual liberty in tandem with the archetypal tension between law and morality.

In City of Manila v. Laguio, Jr.,1 the Court affirmed the nullification of a city ordinance
barring the operation of motels and inns, among other establishments, within the Ermita-
Malate area. The petition at bar assails a similarly-motivated city ordinance that prohibits
those same establishments from offering short-time admission, as well as pro-rated or
"wash up" rates for such abbreviated stays. Our earlier decision tested the city ordinance
against our sacred constitutional rights to liberty, due process and equal protection of law.
The same parameters apply to the present petition.

This Petition2 under Rule 45 of the Revised Rules on Civil Procedure, which seeks the
reversal of the Decision3 in C.A.-G.R. S.P. No. 33316 of the Court of Appeals, challenges the
validity of Manila City Ordinance No. 7774 entitled, "An Ordinance Prohibiting Short-Time
Admission, Short-Time Admission Rates, and Wash-Up Rate Schemes in Hotels, Motels,
Inns, Lodging Houses, Pension Houses, and Similar Establishments in the City of Manila"
(the Ordinance).

I.

The facts are as follows:

On December 3, 1992, City Mayor Alfredo S. Lim (Mayor Lim) signed into law the
Ordinance.4 The Ordinance is reproduced in full, hereunder:
SECTION 1. Declaration of Policy. It is hereby the declared policy of the City Government to
protect the best interest, health and welfare, and the morality of its constituents in general
and the youth in particular.

SEC. 2. Title. This ordinance shall be known as "An Ordinance" prohibiting short time
admission in hotels, motels, lodging houses, pension houses and similar establishments in
the City of Manila.

SEC. 3. Pursuant to the above policy, short-time admission and rate [sic], wash-up rate or
other similarly concocted terms, are hereby prohibited in hotels, motels, inns, lodging
houses, pension houses and similar establishments in the City of Manila.

SEC. 4. Definition of Term[s]. Short-time admission shall mean admittance and charging of
room rate for less than twelve (12) hours at any given time or the renting out of rooms
more than twice a day or any other term that may be concocted by owners or managers of
said establishments but would mean the same or would bear the same meaning.

SEC. 5. Penalty Clause. Any person or corporation who shall violate any provision of this
ordinance shall upon conviction thereof be punished by a fine of Five Thousand
(₱5,000.00) Pesos or imprisonment for a period of not exceeding one (1) year or both such
fine and imprisonment at the discretion of the court; Provided, That in case of [a] juridical
person, the president, the manager, or the persons in charge of the operation thereof shall
be liable: Provided, further, That in case of subsequent conviction for the same offense, the
business license of the guilty party shall automatically be cancelled.

SEC. 6. Repealing Clause. Any or all provisions of City ordinances not consistent with or
contrary to this measure or any portion hereof are hereby deemed repealed.

SEC. 7. Effectivity. This ordinance shall take effect immediately upon approval.

Enacted by the city Council of Manila at its regular session today, November 10, 1992.

Approved by His Honor, the Mayor on December 3, 1992.

On December 15, 1992, the Malate Tourist and Development Corporation (MTDC) filed a
complaint for declaratory relief with prayer for a writ of preliminary injunction and/or
temporary restraining order ( TRO)5 with the Regional Trial Court (RTC) of Manila, Branch
9 impleading as defendant, herein respondent City of Manila (the City) represented by
Mayor Lim.6 MTDC prayed that the Ordinance, insofar as it includes motels and inns as
among its prohibited establishments, be declared invalid and unconstitutional. MTDC
claimed that as owner and operator of the Victoria Court in Malate, Manila it was
authorized by Presidential Decree (P.D.) No. 259 to admit customers on a short time basis
as well as to charge customers wash up rates for stays of only three hours.

On December 21, 1992, petitioners White Light Corporation (WLC), Titanium Corporation
(TC) and Sta. Mesa Tourist and Development Corporation (STDC) filed a motion to
intervene and to admit attached complaint-in-intervention7 on the ground that the
Ordinance directly affects their business interests as operators of drive-in-hotels and
motels in Manila.8 The three companies are components of the Anito Group of Companies
which owns and operates several hotels and motels in Metro Manila.9

On December 23, 1992, the RTC granted the motion to intervene.10 The RTC also notified
the Solicitor General of the proceedings pursuant to then Rule 64, Section 4 of the Rules of
Court. On the same date, MTDC moved to withdraw as plaintiff.11

On December 28, 1992, the RTC granted MTDC's motion to withdraw.12 The RTC issued a
TRO on January 14, 1993, directing the City to cease and desist from enforcing the
Ordinance.13 The City filed an Answer dated January 22, 1993 alleging that the Ordinance is
a legitimate exercise of police power.14

On February 8, 1993, the RTC issued a writ of preliminary injunction ordering the city to
desist from the enforcement of the Ordinance.15 A month later, on March 8, 1993, the
Solicitor General filed his Comment arguing that the Ordinance is constitutional.

During the pre-trial conference, the WLC, TC and STDC agreed to submit the case for
decision without trial as the case involved a purely legal question.16 On October 20, 1993,
the RTC rendered a decision declaring the Ordinance null and void. The dispositive portion
of the decision reads:

WHEREFORE, in view of all the foregoing, [O]rdinance No. 7774 of the City of Manila is
hereby declared null and void.

Accordingly, the preliminary injunction heretofor issued is hereby made permanent.

SO ORDERED.17

The RTC noted that the ordinance "strikes at the personal liberty of the individual
guaranteed and jealously guarded by the Constitution."18 Reference was made to the
provisions of the Constitution encouraging private enterprises and the incentive to needed
investment, as well as the right to operate economic enterprises. Finally, from the
observation that the illicit relationships the Ordinance sought to dissuade could
nonetheless be consummated by simply paying for a 12-hour stay, the RTC likened the law
to the ordinance annulled in Ynot v. Intermediate Appellate Court,19 where the legitimate
purpose of preventing indiscriminate slaughter of carabaos was sought to be effected
through an inter-province ban on the transport of carabaos and carabeef.

The City later filed a petition for review on certiorari with the Supreme Court.20 The
petition was docketed as G.R. No. 112471. However in a resolution dated January 26, 1994,
the Court treated the petition as a petition for certiorari and referred the petition to the
Court of Appeals.21

Before the Court of Appeals, the City asserted that the Ordinance is a valid exercise of
police power pursuant to Section 458 (4)(iv) of the Local Government Code which confers
on cities, among other local government units, the power:

[To] regulate the establishment, operation and maintenance of cafes, restaurants,

beerhouses, hotels, motels, inns, pension houses, lodging houses and other similar
establishments, including tourist guides and transports.22

The Ordinance, it is argued, is also a valid exercise of the power of the City under Article III,
Section 18(kk) of the Revised Manila Charter, thus:

"to enact all ordinances it may deem necessary and proper for the sanitation and safety, the
furtherance of the prosperity and the promotion of the morality, peace, good order,
comfort, convenience and general welfare of the city and its inhabitants, and such others as
be necessary to carry into effect and discharge the powers and duties conferred by this
Chapter; and to fix penalties for the violation of ordinances which shall not exceed two
hundred pesos fine or six months imprisonment, or both such fine and imprisonment for a
single offense.23

Petitioners argued that the Ordinance is unconstitutional and void since it violates the right
to privacy and the freedom of movement; it is an invalid exercise of police power; and it is
an unreasonable and oppressive interference in their business.

The Court of Appeals reversed the decision of the RTC and affirmed the constitutionality of
the Ordinance.24 First, it held that the Ordinance did not violate the right to privacy or the
freedom of movement, as it only penalizes the owners or operators of establishments that
admit individuals for short time stays. Second, the virtually limitless reach of police power
is only constrained by having a lawful object obtained through a lawful method. The lawful
objective of the Ordinance is satisfied since it aims to curb immoral activities. There is a
lawful method since the establishments are still allowed to operate. Third, the adverse
effect on the establishments is justified by the well-being of its constituents in general.
Finally, as held in Ermita-Malate Motel Operators Association v. City Mayor of Manila, liberty
is regulated by law.

TC, WLC and STDC come to this Court via petition for review on certiorari.25 In their
petition and Memorandum, petitioners in essence repeat the assertions they made before
the Court of Appeals. They contend that the assailed Ordinance is an invalid exercise of
police power.

II.

We must address the threshold issue of petitioners’ standing. Petitioners allege that as
owners of establishments offering "wash-up" rates, their business is being unlawfully
interfered with by the Ordinance. However, petitioners also allege that the equal protection
rights of their clients are also being interfered with. Thus, the crux of the matter is whether
or not these establishments have the requisite standing to plead for protection of their
patrons' equal protection rights.

Standing or locus standi is the ability of a party to demonstrate to the court sufficient
connection to and harm from the law or action challenged to support that party's
participation in the case. More importantly, the doctrine of standing is built on the principle
of separation of powers,26 sparing as it does unnecessary interference or invalidation by
the judicial branch of the actions rendered by its co-equal branches of government.

The requirement of standing is a core component of the judicial system derived directly
from the Constitution.27 The constitutional component of standing doctrine incorporates
concepts which concededly are not susceptible of precise definition.28 In this jurisdiction,
the extancy of "a direct and personal interest" presents the most obvious cause, as well as
the standard test for a petitioner's standing.29 In a similar vein, the United States Supreme
Court reviewed and elaborated on the meaning of the three constitutional standing
requirements of injury, causation, and redressability in Allen v. Wright.30

Nonetheless, the general rules on standing admit of several exceptions such as the
overbreadth doctrine, taxpayer suits, third party standing and, especially in the Philippines,
the doctrine of transcendental importance.31

For this particular set of facts, the concept of third party standing as an exception and the
overbreadth doctrine are appropriate. In Powers v. Ohio,32 the United States Supreme Court
wrote that: "We have recognized the right of litigants to bring actions on behalf of third
parties, provided three important criteria are satisfied: the litigant must have suffered an
‘injury-in-fact,’ thus giving him or her a "sufficiently concrete interest" in the outcome of
the issue in dispute; the litigant must have a close relation to the third party; and there
must exist some hindrance to the third party's ability to protect his or her own
interests."33 Herein, it is clear that the business interests of the petitioners are likewise
injured by the Ordinance. They rely on the patronage of their customers for their continued
viability which appears to be threatened by the enforcement of the Ordinance. The relative
silence in constitutional litigation of such special interest groups in our nation such as the
American Civil Liberties Union in the United States may also be construed as a hindrance
for customers to bring suit.34

American jurisprudence is replete with examples where parties-in-interest were allowed

standing to advocate or invoke the fundamental due process or equal protection claims of
other persons or classes of persons injured by state action. In Griswold v. Connecticut,35 the
United States Supreme Court held that physicians had standing to challenge a reproductive
health statute that would penalize them as accessories as well as to plead the constitutional
protections available to their patients. The Court held that:

"The rights of husband and wife, pressed here, are likely to be diluted or adversely affected
unless those rights are considered in a suit involving those who have this kind of
confidential relation to them."36

An even more analogous example may be found in Craig v. Boren,37 wherein the United
States Supreme Court held that a licensed beverage vendor has standing to raise the equal
protection claim of a male customer challenging a statutory scheme prohibiting the sale of
beer to males under the age of 21 and to females under the age of 18. The United States
High Court explained that the vendors had standing "by acting as advocates of the rights of
third parties who seek access to their market or function."38

Assuming arguendo that petitioners do not have a relationship with their patrons for the
former to assert the rights of the latter, the overbreadth doctrine comes into play. In
overbreadth analysis, challengers to government action are in effect permitted to raise the
rights of third parties. Generally applied to statutes infringing on the freedom of speech, the
overbreadth doctrine applies when a statute needlessly restrains even constitutionally
guaranteed rights.39 In this case, the petitioners claim that the Ordinance makes a sweeping
intrusion into the right to liberty of their clients. We can see that based on the allegations in
the petition, the Ordinance suffers from overbreadth.

We thus recognize that the petitioners have a right to assert the constitutional rights of
their clients to patronize their establishments for a "wash-rate" time frame.

III.
To students of jurisprudence, the facts of this case will recall to mind not only the
recent City of Manila ruling, but our 1967 decision in Ermita-Malate Hotel and Motel
Operations Association, Inc., v. Hon. City Mayor of Manila.40 Ermita-Malate concerned the
City ordinance requiring patrons to fill up a prescribed form stating personal information
such as name, gender, nationality, age, address and occupation before they could be
admitted to a motel, hotel or lodging house. This earlier ordinance was precisely enacted to
minimize certain practices deemed harmful to public morals. A purpose similar to the
annulled ordinance in City of Manila which sought a blanket ban on motels, inns and similar
establishments in the Ermita-Malate area. However, the constitutionality of the ordinance
in Ermita-Malate was sustained by the Court.

The common thread that runs through those decisions and the case at bar goes beyond the
singularity of the localities covered under the respective ordinances. All three ordinances
were enacted with a view of regulating public morals including particular illicit activity in
transient lodging establishments. This could be described as the middle case, wherein there
is no wholesale ban on motels and hotels but the services offered by these establishments
have been severely restricted. At its core, this is another case about the extent to which the
State can intrude into and regulate the lives of its citizens.

The test of a valid ordinance is well established. A long line of decisions including City of
Manila has held that for an ordinance to be valid, it must not only be within the corporate
powers of the local government unit to enact and pass according to the procedure
prescribed by law, it must also conform to the following substantive requirements: (1)
must not contravene the Constitution or any statute; (2) must not be unfair or oppressive;
(3) must not be partial or discriminatory; (4) must not prohibit but may regulate trade; (5)
must be general and consistent with public policy; and (6) must not be unreasonable.41

The Ordinance prohibits two specific and distinct business practices, namely wash rate
admissions and renting out a room more than twice a day. The ban is evidently sought to be
rooted in the police power as conferred on local government units by the Local
Government Code through such implements as the general welfare clause.

A.

Police power, while incapable of an exact definition, has been purposely veiled in general
terms to underscore its comprehensiveness to meet all exigencies and provide enough
room for an efficient and flexible response as the conditions warrant.42 Police power is
based upon the concept of necessity of the State and its corresponding right to protect itself
and its people.43 Police power has been used as justification for numerous and varied
actions by the State. These range from the regulation of dance halls,44 movie theaters,45 gas
stations46 and cockpits.47 The awesome scope of police power is best demonstrated by the
fact that in its hundred or so years of presence in our nation’s legal system, its use has
rarely been denied.

The apparent goal of the Ordinance is to minimize if not eliminate the use of the covered
establishments for illicit sex, prostitution, drug use and alike. These goals, by themselves,
are unimpeachable and certainly fall within the ambit of the police power of the State. Yet
the desirability of these ends do not sanctify any and all means for their achievement.
Those means must align with the Constitution, and our emerging sophisticated analysis of
its guarantees to the people. The Bill of Rights stands as a rebuke to the seductive theory of
Macchiavelli, and, sometimes even, the political majorities animated by his cynicism.

Even as we design the precedents that establish the framework for analysis of due process
or equal protection questions, the courts are naturally inhibited by a due deference to the
co-equal branches of government as they exercise their political functions. But when we
are compelled to nullify executive or legislative actions, yet another form of caution
emerges. If the Court were animated by the same passing fancies or turbulent emotions
that motivate many political decisions, judicial integrity is compromised by any perception
that the judiciary is merely the third political branch of government. We derive our respect
and good standing in the annals of history by acting as judicious and neutral arbiters of the
rule of law, and there is no surer way to that end than through the development of rigorous
and sophisticated legal standards through which the courts analyze the most fundamental
and far-reaching constitutional questions of the day.

B.

The primary constitutional question that confronts us is one of due process, as guaranteed
under Section 1, Article III of the Constitution. Due process evades a precise
definition.48 The purpose of the guaranty is to prevent arbitrary governmental
encroachment against the life, liberty and property of individuals. The due process
guaranty serves as a protection against arbitrary regulation or seizure. Even corporations
and partnerships are protected by the guaranty insofar as their property is concerned.

The due process guaranty has traditionally been interpreted as imposing two related but
distinct restrictions on government, "procedural due process" and "substantive due
process." Procedural due process refers to the procedures that the government must follow
before it deprives a person of life, liberty, or property.49 Procedural due process concerns
itself with government action adhering to the established process when it makes an
intrusion into the private sphere. Examples range from the form of notice given to the level
of formality of a hearing.
If due process were confined solely to its procedural aspects, there would arise absurd
situation of arbitrary government action, provided the proper formalities are followed.
Substantive due process completes the protection envisioned by the due process clause. It
inquires whether the government has sufficient justification for depriving a person of life,
liberty, or property.50

The question of substantive due process, moreso than most other fields of law, has
reflected dynamism in progressive legal thought tied with the expanded acceptance of
fundamental freedoms. Police power, traditionally awesome as it may be, is now
confronted with a more rigorous level of analysis before it can be upheld. The vitality
though of constitutional due process has not been predicated on the frequency with which
it has been utilized to achieve a liberal result for, after all, the libertarian ends should
sometimes yield to the prerogatives of the State. Instead, the due process clause has
acquired potency because of the sophisticated methodology that has emerged to determine
the proper metes and bounds for its application.

C.

The general test of the validity of an ordinance on substantive due process grounds is best
tested when assessed with the evolved footnote 4 test laid down by the U.S. Supreme Court
in U.S. v. Carolene Products.51 Footnote 4 of the Carolene Products case acknowledged that
the judiciary would defer to the legislature unless there is a discrimination against a
"discrete and insular" minority or infringement of a "fundamental right."52 Consequently,
two standards of judicial review were established: strict scrutiny for laws dealing with
freedom of the mind or restricting the political process, and the rational basis standard of
review for economic legislation.

A third standard, denominated as heightened or immediate scrutiny, was later adopted by

the U.S. Supreme Court for evaluating classifications based on gender53 and
legitimacy.54 Immediate scrutiny was adopted by the U.S. Supreme Court in Craig,55 after
the Court declined to do so in Reed v. Reed.56 While the test may have first been articulated
in equal protection analysis, it has in the United States since been applied in all substantive
due process cases as well.

We ourselves have often applied the rational basis test mainly in analysis of equal
protection challenges.57 Using the rational basis examination, laws or ordinances are
upheld if they rationally further a legitimate governmental interest.58 Under intermediate
review, governmental interest is extensively examined and the availability of less
restrictive measures is considered.59 Applying strict scrutiny, the focus is on the presence
of compelling, rather than substantial, governmental interest and on the absence of less
restrictive means for achieving that interest.

In terms of judicial review of statutes or ordinances, strict scrutiny refers to the standard
for determining the quality and the amount of governmental interest brought to justify the
regulation of fundamental freedoms.60 Strict scrutiny is used today to test the validity of
laws dealing with the regulation of speech, gender, or race as well as other fundamental
rights as expansion from its earlier applications to equal protection.61 The United States
Supreme Court has expanded the scope of strict scrutiny to protect fundamental rights
such as suffrage,62 judicial access63 and interstate travel.64

If we were to take the myopic view that an Ordinance should be analyzed strictly as to its
effect only on the petitioners at bar, then it would seem that the only restraint imposed by
the law which we are capacitated to act upon is the injury to property sustained by the
petitioners, an injury that would warrant the application of the most deferential standard –
the rational basis test. Yet as earlier stated, we recognize the capacity of the petitioners to
invoke as well the constitutional rights of their patrons – those persons who would be
deprived of availing short time access or wash-up rates to the lodging establishments in
question.

Viewed cynically, one might say that the infringed rights of these customers were are trivial
since they seem shorn of political consequence. Concededly, these are not the sort of
cherished rights that, when proscribed, would impel the people to tear up their cedulas.
Still, the Bill of Rights does not shelter gravitas alone. Indeed, it is those "trivial" yet
fundamental freedoms – which the people reflexively exercise any day without the
impairing awareness of their constitutional consequence – that accurately reflect the
degree of liberty enjoyed by the people. Liberty, as integrally incorporated as a
fundamental right in the Constitution, is not a Ten Commandments-style enumeration of
what may or what may not be done; but rather an atmosphere of freedom where the people
do not feel labored under a Big Brother presence as they interact with each other, their
society and nature, in a manner innately understood by them as inherent, without doing
harm or injury to others.

D.

The rights at stake herein fall within the same fundamental rights to liberty which we
upheld in City of Manila v. Hon. Laguio, Jr. We expounded on that most primordial of rights,
thus:
Liberty as guaranteed by the Constitution was defined by Justice Malcolm to include "the
right to exist and the right to be free from arbitrary restraint or servitude. The term cannot
be dwarfed into mere freedom from physical restraint of the person of the citizen, but is
deemed to embrace the right of man to enjoy the facilities with which he has been endowed
by his Creator, subject only to such restraint as are necessary for the common welfare."[65]
In accordance with this case, the rights of the citizen to be free to use his faculties in all
lawful ways; to live and work where he will; to earn his livelihood by any lawful calling; and
to pursue any avocation are all deemed embraced in the concept of liberty.[66]

The U.S. Supreme Court in the case of Roth v. Board of Regents, sought to clarify the
meaning of "liberty." It said:

While the Court has not attempted to define with exactness the liberty . . . guaranteed [by
the Fifth and Fourteenth Amendments], the term denotes not merely freedom from bodily
restraint but also the right of the individual to contract, to engage in any of the common
occupations of life, to acquire useful knowledge, to marry, establish a home and bring up
children, to worship God according to the dictates of his own conscience, and generally to
enjoy those privileges long recognized . . . as essential to the orderly pursuit of happiness
by free men. In a Constitution for a free people, there can be no doubt that the meaning of
"liberty" must be broad indeed.67 [Citations omitted]

It cannot be denied that the primary animus behind the ordinance is the curtailment of
sexual behavior. The City asserts before this Court that the subject establishments "have
gained notoriety as venue of ‘prostitution, adultery and fornications’ in Manila since they
‘provide the necessary atmosphere for clandestine entry, presence and exit and thus
became the ‘ideal haven for prostitutes and thrill-seekers.’"68 Whether or not this depiction
of a mise-en-scene of vice is accurate, it cannot be denied that legitimate sexual behavior
among willing married or consenting single adults which is constitutionally protected69 will
be curtailed as well, as it was in the City of Manila case. Our holding therein retains
significance for our purposes:

The concept of liberty compels respect for the individual whose claim to privacy and
interference demands respect. As the case of Morfe v. Mutuc, borrowing the words of Laski,
so very aptly stated:

Man is one among many, obstinately refusing reduction to unity. His separateness, his
isolation, are indefeasible; indeed, they are so fundamental that they are the basis on which
his civic obligations are built. He cannot abandon the consequences of his isolation, which
are, broadly speaking, that his experience is private, and the will built out of that
experience personal to himself. If he surrenders his will to others, he surrenders himself. If
his will is set by the will of others, he ceases to be a master of himself. I cannot believe that
a man no longer a master of himself is in any real sense free.

Indeed, the right to privacy as a constitutional right was recognized in Morfe, the invasion
of which should be justified by a compelling state interest. Morfe accorded recognition to
the right to privacy independently of its identification with liberty; in itself it is fully
deserving of constitutional protection. Governmental powers should stop short of certain
intrusions into the personal life of the citizen.70

We cannot discount other legitimate activities which the Ordinance would proscribe or
impair. There are very legitimate uses for a wash rate or renting the room out for more
than twice a day. Entire families are known to choose pass the time in a motel or hotel
whilst the power is momentarily out in their homes. In transit passengers who wish to
wash up and rest between trips have a legitimate purpose for abbreviated stays in motels
or hotels. Indeed any person or groups of persons in need of comfortable private spaces for
a span of a few hours with purposes other than having sex or using illegal drugs can
legitimately look to staying in a motel or hotel as a convenient alternative.

E.

That the Ordinance prevents the lawful uses of a wash rate depriving patrons of a product
and the petitioners of lucrative business ties in with another constitutional requisite for the
legitimacy of the Ordinance as a police power measure. It must appear that the interests of
the public generally, as distinguished from those of a particular class, require an
interference with private rights and the means must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive of private rights.71 It must also
be evident that no other alternative for the accomplishment of the purpose less intrusive of
private rights can work. More importantly, a reasonable relation must exist between the
purposes of the measure and the means employed for its accomplishment, for even under
the guise of protecting the public interest, personal rights and those pertaining to private
property will not be permitted to be arbitrarily invaded.72

Lacking a concurrence of these requisites, the police measure shall be struck down as an
arbitrary intrusion into private rights. As held in Morfe v. Mutuc, the exercise of police
power is subject to judicial review when life, liberty or property is affected.73 However, this
is not in any way meant to take it away from the vastness of State police power whose
exercise enjoys the presumption of validity.74

Similar to the Comelec resolution requiring newspapers to donate advertising space to

candidates, this Ordinance is a blunt and heavy instrument.75 The Ordinance makes no
distinction between places frequented by patrons engaged in illicit activities and patrons
engaged in legitimate actions. Thus it prevents legitimate use of places where illicit
activities are rare or even unheard of. A plain reading of section 3 of the Ordinance shows it
makes no classification of places of lodging, thus deems them all susceptible to illicit
patronage and subject them without exception to the unjustified prohibition.

The Court has professed its deep sentiment and tenderness of the Ermita-Malate area, its
longtime home,76 and it is skeptical of those who wish to depict our capital city – the Pearl
of the Orient – as a modern-day Sodom or Gomorrah for the Third World set. Those still
steeped in Nick Joaquin-dreams of the grandeur of Old Manila will have to accept that
Manila like all evolving big cities, will have its problems. Urban decay is a fact of mega cities
such as Manila, and vice is a common problem confronted by the modern metropolis
wherever in the world. The solution to such perceived decay is not to prevent legitimate
businesses from offering a legitimate product. Rather, cities revive themselves by offering
incentives for new businesses to sprout up thus attracting the dynamism of individuals that
would bring a new grandeur to Manila.

The behavior which the Ordinance seeks to curtail is in fact already prohibited and could in
fact be diminished simply by applying existing laws. Less intrusive measures such as
curbing the proliferation of prostitutes and drug dealers through active police work would
be more effective in easing the situation. So would the strict enforcement of existing laws
and regulations penalizing prostitution and drug use. These measures would have minimal
intrusion on the businesses of the petitioners and other legitimate merchants. Further, it is
apparent that the Ordinance can easily be circumvented by merely paying the whole day
rate without any hindrance to those engaged in illicit activities. Moreover, drug dealers and
prostitutes can in fact collect "wash rates" from their clientele by charging their customers
a portion of the rent for motel rooms and even apartments.

IV.

We reiterate that individual rights may be adversely affected only to the extent that may
fairly be required by the legitimate demands of public interest or public welfare. The State
is a leviathan that must be restrained from needlessly intruding into the lives of its citizens.
However well-intentioned the Ordinance may be, it is in effect an arbitrary and whimsical
intrusion into the rights of the establishments as well as their patrons. The Ordinance
needlessly restrains the operation of the businesses of the petitioners as well as restricting
the rights of their patrons without sufficient justification. The Ordinance rashly equates
wash rates and renting out a room more than twice a day with immorality without
accommodating innocuous intentions.
The promotion of public welfare and a sense of morality among citizens deserves the full
endorsement of the judiciary provided that such measures do not trample rights this Court
is sworn to protect.77 The notion that the promotion of public morality is a function of the
State is as old as Aristotle.78 The advancement of moral relativism as a school of philosophy
does not de-legitimize the role of morality in law, even if it may foster wider debate on
which particular behavior to penalize. It is conceivable that a society with relatively little
shared morality among its citizens could be functional so long as the pursuit of sharply
variant moral perspectives yields an adequate accommodation of different interests.79

To be candid about it, the oft-quoted American maxim that "you cannot legislate morality"
is ultimately illegitimate as a matter of law, since as explained by Calabresi, that phrase is
more accurately interpreted as meaning that efforts to legislate morality will fail if they are
widely at variance with public attitudes about right and wrong.80 Our penal laws, for one,
are founded on age-old moral traditions, and as long as there are widely accepted
distinctions between right and wrong, they will remain so oriented.

Yet the continuing progression of the human story has seen not only the acceptance of the
right-wrong distinction, but also the advent of fundamental liberties as the key to the
enjoyment of life to the fullest. Our democracy is distinguished from non-free societies not
with any more extensive elaboration on our part of what is moral and immoral, but from
our recognition that the individual liberty to make the choices in our lives is innate, and
protected by the State. Independent and fair-minded judges themselves are under a moral
duty to uphold the Constitution as the embodiment of the rule of law, by reason of their
expression of consent to do so when they take the oath of office, and because they are
entrusted by the people to uphold the law.81

Even as the implementation of moral norms remains an indispensable complement to

governance, that prerogative is hardly absolute, especially in the face of the norms of due
process of liberty. And while the tension may often be left to the courts to relieve, it is
possible for the government to avoid the constitutional conflict by employing more
judicious, less drastic means to promote morality.

WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals

is REVERSED, and the Decision of the Regional Trial Court of Manila, Branch 9,
is REINSTATED. Ordinance No. 7774 is hereby declared UNCONSTITUTIONAL. No
pronouncement as to costs.

SO ORDERED.
Magtajas v. Pryce Properties, G.R. No. 111097, July 20, 1994

G.R. No. 111097 July 20, 1994

MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners,

vs.
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND GAMING
CORPORATION, respondents.

Aquilino G. Pimentel, Jr. and Associates for petitioners.

R.R. Torralba & Associates for private respondent.

CRUZ, J.:

There was instant opposition when PAGCOR announced the opening of a casino in Cagayan
de Oro City. Civic organizations angrily denounced the project. The religious elements
echoed the objection and so did the women's groups and the youth. Demonstrations were
led by the mayor and the city legislators. The media trumpeted the protest, describing the
casino as an affront to the welfare of the city.

The trouble arose when in 1992, flush with its tremendous success in several cities,
PAGCOR decided to expand its operations to Cagayan de Oro City. To this end, it leased a
portion of a building belonging to Pryce Properties Corporation, Inc., one of the herein
private respondents, renovated and equipped the same, and prepared to inaugurate its
casino there during the Christmas season.

The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift and hostile.
On December 7, 1992, it enacted Ordinance No. 3353 reading as follows:

ORDINANCE NO. 3353

AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS PERMIT AND

CANCELLING EXISTING BUSINESS PERMIT TO ANY ESTABLISHMENT FOR
THE USING AND ALLOWING TO BE USED ITS PREMISES OR PORTION
THEREOF FOR THE OPERATION OF CASINO.

BE IT ORDAINED by the Sangguniang Panlungsod of the City of Cagayan de

Oro, in session assembled that:
 Sec. 1. — That pursuant to the policy of the city banning the operation of
casino within its territorial jurisdiction, no business permit shall be issued to
any person, partnership or corporation for the operation of casino within the
city limits.

Sec. 2. — That it shall be a violation of existing business permit by any

persons, partnership or corporation to use its business establishment or
portion thereof, or allow the use thereof by others for casino operation and
other gambling activities.

Sec. 3. — PENALTIES. — Any violation of such existing business permit as

defined in the preceding section shall suffer the following penalties, to wit:

a) Suspension of the business permit for sixty

(60) days for the first offense and a fine of
P1,000.00/day

b) Suspension of the business permit for Six (6)

months for the second offense, and a fine of
P3,000.00/day

c) Permanent revocation of the business permit

and imprisonment of One (1) year, for the third
and subsequent offenses.

Sec. 4. — This Ordinance shall take effect ten (10) days from publication
thereof.

Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93 reading as
follows:

ORDINANCE NO. 3375-93

AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND

PROVIDING PENALTY FOR VIOLATION THEREFOR.

WHEREAS, the City Council established a policy as early as 1990 against

CASINO under its Resolution No. 2295;

WHEREAS, on October 14, 1992, the City Council passed another Resolution
No. 2673, reiterating its policy against the establishment of CASINO;
 WHEREAS, subsequently, thereafter, it likewise passed Ordinance No. 3353,
prohibiting the issuance of Business Permit and to cancel existing Business
Permit to any establishment for the using and allowing to be used its
premises or portion thereof for the operation of CASINO;

WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of the Local
Government Code of 1991 (Rep. Act 7160) and under Art. 99, No. (4),
Paragraph VI of the implementing rules of the Local Government Code, the
City Council as the Legislative Body shall enact measure to suppress any
activity inimical to public morals and general welfare of the people and/or
regulate or prohibit such activity pertaining to amusement or entertainment
in order to protect social and moral welfare of the community;

NOW THEREFORE,

BE IT ORDAINED by the City Council in session duly assembled that:

Sec. 1. — The operation of gambling CASINO in the City of Cagayan de Oro is

hereby prohibited.

Sec. 2. — Any violation of this Ordinance shall be subject to the following

penalties:

a) Administrative fine of P5,000.00 shall be imposed against the proprietor,

partnership or corporation undertaking the operation, conduct, maintenance
of gambling CASINO in the City and closure thereof;

b) Imprisonment of not less than six (6) months nor more than one (1) year
or a fine in the amount of P5,000.00 or both at the discretion of the court
against the manager, supervisor, and/or any person responsible in the
establishment, conduct and maintenance of gambling CASINO.

Sec. 3. — This Ordinance shall take effect ten (10) days after its publication in
a local newspaper of general circulation.

Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR
as intervenor and supplemental petitioner. Their challenge succeeded. On March 31, 1993,
the Court of Appeals declared the ordinances invalid and issued the writ prayed for to
prohibit their enforcement. 1 Reconsideration of this decision was denied on July 13,
1993. 2
Cagayan de Oro City and its mayor are now before us in this petition for review under Rule
45 of the Rules of Court. 3 They aver that the respondent Court of Appeals erred in holding
that:

1. Under existing laws, the Sangguniang Panlungsod of the City of Cagayan de

Oro does not have the power and authority to prohibit the establishment and
operation of a PAGCOR gambling casino within the City's territorial limits.

2. The phrase "gambling and other prohibited games of chance" found in Sec.
458, par. (a), sub-par. (1) — (v) of R.A. 7160 could only mean "illegal
gambling."

3. The questioned Ordinances in effect annul P.D. 1869 and are therefore
invalid on that point.

4. The questioned Ordinances are discriminatory to casino and partial to

cockfighting and are therefore invalid on that point.

5. The questioned Ordinances are not reasonable, not consonant with the
general powers and purposes of the instrumentality concerned and
inconsistent with the laws or policy of the State.

6. It had no option but to follow the ruling in the case of Basco, et al. v.
PAGCOR, G.R. No. 91649, May 14, 1991, 197 SCRA 53 in disposing of the
issues presented in this present case.

PAGCOR is a corporation created directly by P.D. 1869 to help centralize and regulate all
games of chance, including casinos on land and sea within the territorial jurisdiction of the
Philippines. In Basco v. Philippine Amusements and Gaming Corporation, 4 this Court
sustained the constitutionality of the decree and even cited the benefits of the entity to the
national economy as the third highest revenue-earner in the government, next only to the
BIR and the Bureau of Customs.

Cagayan de Oro City, like other local political subdivisions, is empowered to enact
ordinances for the purposes indicated in the Local Government Code. It is expressly vested
with the police power under what is known as the General Welfare Clause now embodied
in Section 16 as follows:

Sec. 16. — General Welfare. — Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
 governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government
units shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants.

In addition, Section 458 of the said Code specifically declares that:

Sec. 458. — Powers, Duties, Functions and Compensation. — (a) The

Sangguniang Panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section 16 of this Code and
in the proper exercise of the corporate powers of the city as provided for
under Section 22 of this Code, and shall:

(1) Approve ordinances and pass resolutions necessary for an efficient and
effective city government, and in this connection, shall:

xxx xxx xxx

(v) Enact ordinances intended to prevent,

suppress and impose appropriate penalties for
habitual drunkenness in public places, vagrancy,
mendicancy, prostitution, establishment and
maintenance of houses of ill
repute, gambling and other prohibited games of
chance, fraudulent devices and ways to obtain
money or property, drug addiction, maintenance
of drug dens, drug pushing, juvenile delinquency,
the printing, distribution or exhibition of
obscene or pornographic materials or
publications, and such other activities inimical to
the welfare and morals of the inhabitants of the
city;
This section also authorizes the local government units to regulate properties and
businesses within their territorial limits in the interest of the general welfare. 5

The petitioners argue that by virtue of these provisions, the Sangguniang Panlungsod may
prohibit the operation of casinos because they involve games of chance, which are
detrimental to the people. Gambling is not allowed by general law and even by the
Constitution itself. The legislative power conferred upon local government units may be
exercised over all kinds of gambling and not only over "illegal gambling" as the
respondents erroneously argue. Even if the operation of casinos may have been permitted
under P.D. 1869, the government of Cagayan de Oro City has the authority to prohibit them
within its territory pursuant to the authority entrusted to it by the Local Government Code.

It is submitted that this interpretation is consonant with the policy of local autonomy as
mandated in Article II, Section 25, and Article X of the Constitution, as well as various other
provisions therein seeking to strengthen the character of the nation. In giving the local
government units the power to prevent or suppress gambling and other social problems,
the Local Government Code has recognized the competence of such communities to
determine and adopt the measures best expected to promote the general welfare of their
inhabitants in line with the policies of the State.

The petitioners also stress that when the Code expressly authorized the local government
units to prevent and suppress gambling and other prohibited games of chance, like craps,
baccarat, blackjack and roulette, it meant all forms of gambling without distinction. Ubi lex
non distinguit, nec nos distinguere debemos. 6 Otherwise, it would have expressly excluded
from the scope of their power casinos and other forms of gambling authorized by special
law, as it could have easily done. The fact that it did not do so simply means that the local
government units are permitted to prohibit all kinds of gambling within their territories,
including the operation of casinos.

The adoption of the Local Government Code, it is pointed out, had the effect of modifying
the charter of the PAGCOR. The Code is not only a later enactment than P.D. 1869 and so is
deemed to prevail in case of inconsistencies between them. More than this, the powers of
the PAGCOR under the decree are expressly discontinued by the Code insofar as they do
not conform to its philosophy and provisions, pursuant to Par. (f) of its repealing clause
reading as follows:

(f) All general and special laws, acts, city charters, decrees, executive orders,
proclamations and administrative regulations, or part or parts thereof which
are inconsistent with any of the provisions of this Code are hereby repealed
or modified accordingly.
It is also maintained that assuming there is doubt regarding the effect of the Local
Government Code on P.D. 1869, the doubt must be resolved in favor of the petitioners, in
accordance with the direction in the Code calling for its liberal interpretation in favor of the
local government units. Section 5 of the Code specifically provides:

Sec. 5. Rules of Interpretation. — In the interpretation of the provisions of

this Code, the following rules shall apply:

(a) Any provision on a power of a local government unit shall be liberally

interpreted in its favor, and in case of doubt, any question thereon shall be
resolved in favor of devolution of powers and of the lower local government
unit. Any fair and reasonable doubt as to the existence of the power shall be
interpreted in favor of the local government unit concerned;

xxx xxx xxx

(c) The general welfare provisions in this Code shall be liberally interpreted to
give more powers to local government units in accelerating economic
development and upgrading the quality of life for the people in the
community; . . . (Emphasis supplied.)

Finally, the petitioners also attack gambling as intrinsically harmful and cite various
provisions of the Constitution and several decisions of this Court expressive of the general
and official disapprobation of the vice. They invoke the State policies on the family and the
proper upbringing of the youth and, as might be expected, call attention to the old case
of U.S. v. Salaveria,7 which sustained a municipal ordinance prohibiting the playing
of panguingue. The petitioners decry the immorality of gambling. They also impugn the
wisdom of P.D. 1869 (which they describe as "a martial law instrument") in creating
PAGCOR and authorizing it to operate casinos "on land and sea within the territorial
jurisdiction of the Philippines."

This is the opportune time to stress an important point.

The morality of gambling is not a justiciable issue. Gambling is not illegal per se. While it is
generally considered inimical to the interests of the people, there is nothing in the
Constitution categorically proscribing or penalizing gambling or, for that matter, even
mentioning it at all. It is left to Congress to deal with the activity as it sees fit. In the exercise
of its own discretion, the legislature may prohibit gambling altogether or allow it without
limitation or it may prohibit some forms of gambling and allow others for whatever
reasons it may consider sufficient. Thus, it has prohibited jueteng and monte but permits
lotteries, cockfighting and horse-racing. In making such choices, Congress has consulted its
own wisdom, which this Court has no authority to review, much less reverse. Well has it
been said that courts do not sit to resolve the merits of conflicting theories. 8 That is the
prerogative of the political departments. It is settled that questions regarding the wisdom,
morality, or practicibility of statutes are not addressed to the judiciary but may be resolved
only by the legislative and executive departments, to which the function belongs in our
scheme of government. That function is exclusive. Whichever way these branches decide,
they are answerable only to their own conscience and the constituents who will ultimately
judge their acts, and not to the courts of justice.

The only question we can and shall resolve in this petition is the validity of Ordinance No.
3355 and Ordinance No. 3375-93 as enacted by the Sangguniang Panlungsod of Cagayan de
Oro City. And we shall do so only by the criteria laid down by law and not by our own
convictions on the propriety of gambling.

The tests of a valid ordinance are well established. A long line of decisions 9 has held that to
be valid, an ordinance must conform to the following substantive requirements:

1) It must not contravene the constitution or any statute.

2) It must not be unfair or oppressive.

3) It must not be partial or discriminatory.

4) It must not prohibit but may regulate trade.

5) It must be general and consistent with public policy.

6) It must not be unreasonable.

We begin by observing that under Sec. 458 of the Local Government Code, local
government units are authorized to prevent or suppress, among others, "gambling
and other prohibited games of chance." Obviously, this provision excludes games of chance
which are not prohibited but are in fact permitted by law. The petitioners are less than
accurate in claiming that the Code could have excluded such games of chance but did not. In
fact it does. The language of the section is clear and unmistakable. Under the rule
of noscitur a sociis, a word or phrase should be interpreted in relation to, or given the same
meaning of, words with which it is associated. Accordingly, we conclude that since the
word "gambling" is associated with "and other prohibited games of chance," the word
should be read as referring to only illegal gambling which, like the other prohibited games
of chance, must be prevented or suppressed.
We could stop here as this interpretation should settle the problem quite conclusively. But
we will not. The vigorous efforts of the petitioners on behalf of the inhabitants of Cagayan
de Oro City, and the earnestness of their advocacy, deserve more than short shrift from this
Court.

The apparent flaw in the ordinances in question is that they contravene P.D. 1869 and the
public policy embodied therein insofar as they prevent PAGCOR from exercising the power
conferred on it to operate a casino in Cagayan de Oro City. The petitioners have an
ingenious answer to this misgiving. They deny that it is the ordinances that have changed
P.D. 1869 for an ordinance admittedly cannot prevail against a statute. Their theory is that
the change has been made by the Local Government Code itself, which was also enacted by
the national lawmaking authority. In their view, the decree has been, not really repealed by
the Code, but merely "modified pro tanto" in the sense that PAGCOR cannot now operate a
casino over the objection of the local government unit concerned. This modification of P.D.
1869 by the Local Government Code is permissible because one law can change or repeal
another law.

It seems to us that the petitioners are playing with words. While insisting that the decree
has only been "modified pro tanto," they are actually arguing that it is already dead,
repealed and useless for all intents and purposes because the Code has shorn PAGCOR of all
power to centralize and regulate casinos. Strictly speaking, its operations may now be not
only prohibited by the local government unit; in fact, the prohibition is not only
discretionary but mandated by Section 458 of the Code if the word "shall" as used therein is
to be given its accepted meaning. Local government units have now no choice but to
prevent and suppress gambling, which in the petitioners' view includes both legal and
illegal gambling. Under this construction, PAGCOR will have no more games of chance to
regulate or centralize as they must all be prohibited by the local government units
pursuant to the mandatory duty imposed upon them by the Code. In this situation, PAGCOR
cannot continue to exist except only as a toothless tiger or a white elephant and will no
longer be able to exercise its powers as a prime source of government revenue through the
operation of casinos.

It is noteworthy that the petitioners have cited only Par. (f) of the repealing clause,
conveniently discarding the rest of the provision which painstakingly mentions the specific
laws or the parts thereof which are repealed (or modified) by the Code. Significantly, P.D.
1869 is not one of them. A reading of the entire repealing clause, which is reproduced
below, will disclose the omission:
 Sec. 534. Repealing Clause. — (a) Batas Pambansa Blg. 337, otherwise known
as the "Local Government Code," Executive Order No. 112 (1987), and
Executive Order No. 319 (1988) are hereby repealed.

(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders,
instructions, memoranda and issuances related to or concerning the
barangay are hereby repealed.

(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding
hospital fund; Section 3, a (3) and b (2) of Republic Act. No. 5447 regarding
the Special Education Fund; Presidential Decree No. 144 as amended by
Presidential Decree Nos. 559 and 1741; Presidential Decree No. 231 as
amended; Presidential Decree No. 436 as amended by Presidential Decree
No. 558; and Presidential Decree Nos. 381, 436, 464, 477, 526, 632, 752, and
1136 are hereby repealed and rendered of no force and effect.

(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs

locally-funded projects.

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

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

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

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

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

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

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

In light of all the above considerations, we see no way of arriving at the conclusion urged
on us by the petitioners that the ordinances in question are valid. On the contrary, we find
that the ordinances violate P.D. 1869, which has the character and force of a statute, as well
as the public policy expressed in the decree allowing the playing of certain games of chance
despite the prohibition of gambling in general.
The rationale of the requirement that the ordinances should not contravene a statute is
obvious. Municipal governments are only agents of the national government. Local councils
exercise only delegated legislative powers conferred on them by Congress as the national
lawmaking body. The delegate cannot be superior to the principal or exercise powers
higher than those of the latter. It is a heresy to suggest that the local government units can
undo the acts of Congress, from which they have derived their power in the first place, and
negate by mere ordinance the mandate of the statute.

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

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

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

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

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

WHEREFORE, the petition is DENIED and the challenged decision of the respondent Court
of Appeals is AFFIRMED, with costs against the petitioners. It is so ordered.
Balacuit v. CFI of Agusan del Norte, 163 SCRA 182 (1988)

G.R. No. L-38429 June 30, 1988

CARLOS BALACUIT, LAMBERTO TAN and SERGIO YU CARCEL, petitioners-appellants,

vs.
COURT OF FIRST INSTANCE OF AGUSAN DEL NORTE AND BUTUAN CITY, Branch 11,
and the CITY OF BUTUAN, respondents-appellees.

Romeo B. Sanchez, Eduardo Deza Mercado and Wilfred D. Asis for petitioners.

The City Legal Officer for respondents-appeliees.

GANCAYCO, J.:

At issue in the petition for review before Us is the validity and constitutionality of
Ordinance No. 640 passed by the Municipal Board of the City of Butuan on April 21, 1969,
the title and text of which are reproduced below:

ORDINANCE--640

ORDINANCE PENALIZING ANY PERSON, GROUP OF PERSONS, ENTITY OR

CORPORATION ENGAGED IN THE BUSINESS OF SELLING ADMISSION
TICKETS TO ANY MOVIE OR OTHER PUBLIC EXHIBITIONS, GAMES,
CONTESTS OR OTHER PERFORMANCES TO REQUIRE CHILDREN BETWEEN
SEVEN (7) AND TWELVE (12) YEARS OF AGE TO PAY FULL PAYMENT FOR
TICKETS INTENDED FOR ADULTS BUT SHOULD CHARGE ONLY ONE-HALF
OF THE SAID TICKET

xxx xxx xxx

Be it ordained by the Municipal Board of the City of Butuan in session

assembled, that:

SECTION 1—It shall be unlawful for any person, group of persons, entity, or
corporation engaged in the business of selling admission tickets to any movie
or other public exhibitions, games, contests, or other performances to
require children between seven (7) and twelve (12) years of age to pay full
 payment for admission tickets intended for adults but should charge only
one-half of the value of the said tickets.

SECTION 2—Any person violating the provisions of this Ordinance shall

upon conviction be punished by a fine of not less than TWO HUNDRED PESOS
(P200.00) but not more than SIX HUNDRED PESOS (P600.00) or an
imprisonment of not less than TWO (2) MONTHS or not more than SIX (6)
MONTHS or both such firm and imprisonment in the discretion of the Court.

If the violator be a firm or corporation the penalty shall be imposed upon the
Manager, Agent or Representative of such firm or corporation.

SECTION 3—This ordinance shall take effect upon its approval.

Petitioners are Carlos Balacuit Lamberto Tan, and Sergio Yu Carcel managers of the Maya
and Dalisay Theaters, the Crown Theater, and the Diamond Theater, respectively.
Aggrieved by the effect of Ordinance No. 640, they filed a complaint before the Court of
First Instance of Agusan del Norte and Butuan City docketed as Special Civil Case No. 237
on June 30, 1969 praying, inter alia, that the subject ordinance be declared unconstitutional
and, therefore, void and unenforceable. 1

Upon motion of the petitioners, 2 a temporary restraining order was issued on July 14,
1969 by the court a quo enjoining the respondent City of Butuan and its officials from
enforcing Ordinance No. 640. 3 On July 29, 1969, respondents filed their answer sustaining
the validity of the ordinance.4

On January 30, 1973, the litigants filed their stipulation of facts. 5 On June 4, 1973, the
respondent court rendered its decision, 6 the dispositive part of which reads:

IN THE LIGHT OF ALL THE FOREGOING, the Court hereby adjudges in favor
of the respondents and against the petitioners, as follows:

1. Declaring Ordinance No. 640 of the City of Butuan constitutional and valid:
Provided, however, that the fine for a single offense shall not exceed TWO
HUNDRED PESOS, as prescribed in the aforequoted Section 15 (nn) of Rep.
Act No. 523;

2. Dissolving the restraining order issued by this Court; and;

3. Dismissing the complaint, with costs against the petitioners.

 4. SO ORDERED. 7

Petitioners filed their motion for reconsideration 8 of the decision of the court a quo which
was denied in a resolution of the said court dated November 10, 1973.9

Hence, this petition.

Petitioners attack the validity and constitutionality of Ordinance No. 640 on the grounds
that it is ultra vires and an invalid exercise of police power.

Petitioners contend that Ordinance No. 640 is not within the power of' the Municipal Board
to enact as provided for in Section 15(n) of Republic Act No. 523, the Charter of the City of
Butuan, which states:

Sec. 15. General powers and duties of the Board — Except as otherwise
provided by law, and subject to the conditions and limitations thereof, the
Municipal Board shall have the following legislative powers:

xxx xxx xxx

(n) To regulate and fix the amount of the license fees for the following; . . .
theaters, theatrical performances, cinematographs, public exhibitions and all
other performances and places of amusements ...

xxx xxx xxx

Respondent City of Butuan, on the other hand, attempts to justify the enactment of the
ordinance by invoking the general welfare clause embodied in Section 15 (nn) of the cited
law, which provides:

(nn) To enact all ordinances it may deem necessary and proper for the
sanitation and safety, the furtherance of the prosperity, and the promotion of
the morality, peace, good order, comfort, convenience, and general welfare of
the city and its inhabitants, and such others as may be necessary to carry into
effect and discharge the powers and duties conferred by this Act, and to fix
the penalties for the violation of the ordinances, which shall not exceed a two
hundred peso fine or six months imprisonment, or both such fine and
imprisonment, for a single offense.

We can see from the aforecited Section 15(n) that the power to regulate and fix the amount
of license fees for theaters, theatrical performances, cinematographs, public exhibitions
and other places of amusement has been expressly granted to the City of Butuan under its
charter. But the question which needs to be resolved is this: does this power to regulate
include the authority to interfere in the fixing of prices of admission to these places of
exhibition and amusement whether under its general grant of power or under the general
welfare clause as invoked by the City?

This is the first time this Court is confronted with the question of direct interference by the
local government with the operation of theaters, cinematographs and the like to the extent
of fixing the prices of admission to these places. Previous decisions of this Court involved
the power to impose license fees upon businesses of this nature as a corollary to the power
of the local government to regulate them. Ordinances which required moviehouses or
theaters to increase the price of their admission tickets supposedly to cover the license fees
have been held to be invalid for these impositions were considered as not merely license
fees but taxes for purposes of revenue and not regulation which the cities have no power to
exact, 10 unless expressly granted by its charter. 11

Applying the ruling in Kwong Sing v. City of Manila, 12 where the word "regulate" was
interpreted to include the power to control, to govern and to restrain, it would seem that
under its power to regulate places of exhibitions and amusement, the Municipal Board of
the City of Butuan could make proper police regulations as to the mode in which the
business shall be exercised.

While in a New York case, 13 an ordinance which regulates the business of selling admission
tickets to public exhibitions or performances by virtue of the power of cities under the
General City Law "to maintain order, enforce the laws, protect property and preserve and
care for the safety, health, comfort and general welfare of the inhabitants of the city and
visitors thereto; and for any of said purposes, to regulate and license occupations" was
considered not to be within the scope of any duty or power implied in the charter. It was
held therein that the power of regulation of public exhibitions and places of amusement
within the city granted by the charter does not carry with it any authority to interfere with
the price of admission to such places or the resale of tickets or tokens of admission.

In this jurisdiction, it is already settled that the operation of theaters, cinematographs and
other places of public exhibition are subject to regulation by the municipal council in the
exercise of delegated police power by the local government. 14 Thus, in People v. Chan, 15 an
ordinance of the City of Manila prohibiting first run cinematographs from selling tickets
beyond their seating capacity was upheld as constitutional for being a valid exercise of
police power. Still in another case, 16 the validity of an ordinance of the City of Bacolod
prohibiting admission of two or more persons in moviehouses and other amusement places
with the use of only one ticket was sustained as a valid regulatory police measure not only
in the interest of preventing fraud in so far as municipal taxes are concerned but also in
accordance with public health, public safety, and the general welfare.

The City of Butuan, apparently realizing that it has no authority to enact the ordinance in
question under its power to regulate embodied in Section 15(n), now invokes the police
power as delegated to it under the general welfare clause to justify the enactment of said
ordinance.

To invoke the exercise of police power, not only must it appear that the interest of the
public generally requires an interference with private rights, but the means adopted must
be reasonably necessary for the accomplishment of the purpose and not unduly oppressive
upon individuals. 17 The legislature may not, under the guise of protecting the public
interest, arbitrarily interfere with private business, or impose unusual and unnecessary
restrictions upon lawful occupations. In other words, the determination as to what is a
proper exercise of its police power is not final or conclusive, but is subject to the
supervision of the courts. 18

Petitioners maintain that Ordinance No. 640 violates the due process clause of the
Constitution for being oppressive, unfair, unjust, confiscatory, and an undue restraint of
trade, and violative of the right of persons to enter into contracts, considering that the
theater owners are bound under a contract with the film owners for just admission prices
for general admission, balcony and lodge.

In Homeowners' Association of the Philippines, Inc. v. Municipal Board of the City of

Manila, 19 this Court held:

The authority of municipal corporations to regulate is essentially police

power, Inasmuch as the same generally entails a curtailment of the liberty,
the rights and/or the property of persons, which are protected and even
guaranteed by the Constitution, the exercise of police power is necessarily
subject to a qualification, limitation or restriction demanded by the regard,
the respect and the obedience due to the prescriptions of the fundamental
law, particularly those forming part of the Constitution of Liberty, otherwise
known as the Bill of Rights — the police power measure must be reasonable.
In other words, individual rights may be adversely affected by the exercise of
police power to the extent only — and only to the extent--that may be fairly
required by the legitimate demands of public interest or public welfare.

What is the reason behind the enactment of Ordinance No. 640?

A reading of the minutes of the regular session of the Municipal Board when the ordinance
in question was passed shows that a certain Councilor Calo, the proponent of the measure,
had taken into account the complaints of parents that for them to pay the full price of
admission for their children is too financially burdensome.

The trial court advances the view that "even if the subject ordinance does not spell out
its raison d'etre in all probability the respondents were impelled by the awareness that
children are entitled to share in the joys of their elders, but that considering that, apart
from size, children between the ages of seven and twelve cannot fully grasp the nuance of
movies or other public exhibitions, games, contests or other performances, the admission
prices with respect to them ought to be reduced. 19a

We must bear in mind that there must be public necessity which demands the adoption of
proper measures to secure the ends sought to be attained by the enactment of the
ordinance, and the large discretion is necessarily vested in the legislative authority to
determine not only what the interests of the public require, but what measures are
necessary for the protection of such interests. 20 The methods or means used to protect the
public health, morals, safety or welfare, must have some relation to the end in view, for
under the guise of the police power, personal rights and those pertaining to private
property will not be permitted to be arbitralily invaded by the legislative department. 21

We agree with petitioners that the ordinance is not justified by any necessity for the public
interest. The police power legislation must be firmly grounded on public interest and
welfare, and a reasonable relation must exist between purposes and means.22 The evident
purpose of the ordinance is to help ease the burden of cost on the part of parents who have
to shell out the same amount of money for the admission of their children, as they would
for themselves, A reduction in the price of admission would mean corresponding savings
for the parents; however, the petitioners are the ones made to bear the cost of these
savings. The ordinance does not only make the petitioners suffer the loss of earnings but it
likewise penalizes them for failure to comply with it. Furthermore, as petitioners point out,
there will be difficulty in its implementation because as already experienced by petitioners
since the effectivity of the ordinance, children over 12 years of age tried to pass off their
age as below 12 years in order to avail of the benefit of the ordinance. The ordinance does
not provide a safeguard against this undesirable practice and as such, the respondent City
of Butuan now suggests that birth certificates be exhibited by movie house patrons to
prove the age of children. This is, however, not at all practicable. We can see that the
ordinance is clearly unreasonable if not unduly oppressive upon the business of
petitioners. Moreover, there is no discernible relation between the ordinance and the
promotion of public health, safety, morals and the general welfare.
Respondent City of Butuan claims that it was impelled to protect the youth from the
pernicious practice of movie operators and other public exhibitions promoters or the like
of demanding equal price for their admission tickets along with the adults. This practice is
allegedly repugnant and unconscionable to the interest of the City in the furtherance of the
prosperity, peace, good order, comfort, convenience and the general well-being of its
inhabitants.

There is nothing pernicious in demanding equal price for both children and adults. The
petitioners are merely conducting their legitimate businesses. The object of every business
entrepreneur is to make a profit out of his venture. There is nothing immoral or injurious in
charging the same price for both children and adults. In fact, no person is under
compulsion to purchase a ticket. It is a totally voluntary act on the part of the purchaser if
he buys a ticket to such performances.

Respondent City of Butuan claims that Ordinance No. 640 is reasonable and necessary to
lessen the economic burden of parents whose minor children are lured by the attractive
nuisance being maintained by the petitioners. Respondent further alleges that by charging
the full price, the children are being exploited by movie house operators. We fail to see how
the children are exploited if they pay the full price of admission. They are treated with the
same quality of entertainment as the adults. The supposition of the trial court that because
of their age children cannot fully grasp the nuances of such entertainment as adults do fails
to convince Us that the reduction in admission ticket price is justifiable. In fact, by the very
claim of respondent that movies and the like are attractive nuisances, it is difficult to
comprehend why the municipal board passed the subject ordinance. How can the
municipal authorities consider the movies an attractive nuisance and yet encourage
parents and children to patronize them by lowering the price of admission for children?
Perhaps, there is some ,truth to the argument of petitioners that Ordinance No. 640 is
detrimental to the public good and the general welfare of society for it encourages children
of tender age to frequent the movies, rather than attend to their studies in school or be in
their homes.

Moreover, as a logical consequence of the ordinance, movie house and theater operators
will be discouraged from exhibiting wholesome movies for general patronage, much less
children's pictures if only to avoid compliance with the ordinance and still earn profits for
themselves. For after all, these movie house and theater operators cannot be compelled to
exhibit any particular kind of film except those films which may be dictated by public
demand and those which are restricted by censorship laws. So instead of children being
able to share in the joys of their elders as envisioned by the trial court, there will be a
dearth of wholesome and educational movies for them to enjoy.
There are a number of cases decided by the Supreme Court and the various state courts of
the United States which upheld the right of the proprietor of a theater to fix the price of an
admission ticket as against the right of the state to interfere in this regard and which We
consider applicable to the case at bar.

A theater ticket has been described to be either a mere license, revocable at the will of the
proprietor of the theater or it may be evidence of a contract whereby, for a valuable
consideration, the purchaser has acquired the right to enter the theater and observe the
performance on condition that he behaves properly. 23 Such ticket, therefore, represents a
right, Positive or conditional, as the case may be, according to the terms of the original
contract of sale. This right is clearly a right of property. The ticket which represents that
right is also, necessarily, a species of property. As such, the owner thereof, in the absence of
any condition to the contrary in the contract by which he obtained it, has the clear right to
dispose of it, to sell it to whom he pleases and at such price as he can obtain. 24 So that an
act prohibiting the sale of tickets to theaters or other places of amusement at more than the
regular price was held invalid as conflicting with the state constitution securing the right of
property. 25

In Collister vs. Hayman, 26 it was held:

The defendants were conducting a private business, which, even if clothed

with a public interest, was without a franchise to accommodate the public,
and they had the right to control it, the same as the proprietors of any other
business, subject to such obligations as were placed upon them by statute.
Unlike a carrier of passengers, for instance, with a franchise from the state,
and hence under obligation to transport anyone who applies and to continue
the business year in and year out, the proprietors of a theater can open and
close their place at will, and no one can make a lawful complaint. They can
charge what they choose for admission to their theater. They can limit the
number admitted. They can refuse to sell tickets and collect the price of
admission at the door. They can preserve order and enforce quiet while the
performance is going on. They can make it a part of the contract and
condition of admission, by giving due notice and printing the condition in the
ticket that no one shall be admitted under 21 years of age, or that men only
or women only shall be admitted, or that a woman cannot enter unless she is
accompanied by a male escort, and the like. The proprietors, in the control of
their business, may regulate the terms of admission in any reasonable way. If
those terms are not satisfactory, no one is obliged to buy a ticket or make the
contract. If the terms are satisfactory, and the contract is made, the minds of
 the parties meet upon the condition, and the purchaser impliedly promises to
perform it.

In Tyson and Bro. — United Theater Ticket Officers, Inc. vs. Banton, 27 the United States
Supreme Court held:

... And certainly a place of entertainment is in no legal sense a public utility;

and quite as certainly, its activities are not such that their enjoyment can be
regarded under any conditions from the point of view of an emergency.

The interest of the public in theaters and other places of entertainment may
be more nearly, and with better reason, assimilated to the like interest in
provision stores and markets and in the rental of houses and apartments for
residence purposes; although in importance it fails below such an interest in
the proportion that food and shelter are of more moment than amusement or
instruction. As we have shown there is no legislative power to fix the prices
of provisions or clothing, or the rental charges for houses and apartments, in
the absence of some controlling emergency; and we are unable to perceive
any dissimilarities of such quality or degree as to justify a different rule in
respect of amusements and entertainment ...

We are in consonance with the foregoing observations and conclusions of American courts.
In this jurisdiction, legislation had been passed controlling the prices of goods commodities
and drugs during periods of emergency, 28 limiting the net profits of public utility 29 as well
as regulating rentals of residential apartments for a limited period, 30 as a matter of
national policy in the interest of public health and safety, economic security and the general
welfare of the people. And these laws cannot be impugned as unconstitutional for being
violative of the due process clause.

However, the same could not be said of theaters, cinematographs and other exhibitions. In
no sense could these businesses be considered public utilities. The State has not found it
appropriate as a national policy to interfere with the admission prices to these
performances. This does not mean however, that theaters and exhibitions are not affected
with public interest even to a certain degree. Motion pictures have been considered
important both as a medium for the communication of Ideas and expression of the artistic
impulse. Their effects on the perceptions by our people of issues and public officials or
public figures as well as the prevailing cultural traits are considerable. 31 People of all ages
flock to movie houses, games and other public exhibitions for recreation and relaxation.
The government realizing their importance has seen it fit to enact censorship laws to
regulate the movie industry. 32 Their aesthetic entertainment and even educational values
cannot be underestimated. Even police measures regulating the operation of these
businesses have been upheld in order to safeguard public health and safety.

Nonetheless, as to the question of the subject ordinance being a valid exercise of police
power, the same must be resolved in the negative. While it is true that a business may be
regulated, it is equally true that such regulation must be within the bounds of reason, that
is, the regulatory ordinance must be reasonable, and its provisions cannot be oppressive
amounting to an arbitrary interference with the business or calling subject of regulation. A
lawful business or calling may not, under the guise of regulation, be unreasonably
interfered with even by the exercise of police power.33 A police measure for the regulation
of the conduct, control and operation of a business should not encroach upon the legitimate
and lawful exercise by the citizens of their property rights.34 The right of the owner to fix a
price at which his property shall be sold or used is an inherent attribute of the property
itself and, as such, within the protection of the due process clause."" Hence, the proprietors
of a theater have a right to manage their property in their own way, to fix what prices of
admission they think most for their own advantage, and that any person who did not
approve could stay away. 36

Respondent City of Butuan argues that the presumption is always in favor of the validity of
the ordinance. This maybe the rule but it has already been held that although the
presumption is always in favor of the validity or reasonableness of the ordinance, such
presumption must nevertheless be set aside when the invalidity or unreasonableness
appears on the face of the ordinance itself or is established by proper evidence.37 The
exercise of police power by the local government is valid unless it contravenes the
fundamental law of the land, or an act of the legislature, or unless it is against public policy
or is unreasonable, oppressive, partial, discriminating or in derogation of a common right.38

Ordinance No. 640 clearly invades the personal and property rights of petitioners for even
if We could assume that, on its face, the interference was reasonable, from the foregoing
considerations, it has been fully shown that it is an unwarranted and unlawful curtailment
of the property and personal rights of citizens. For being unreasonable and an undue
restraint of trade, it cannot, under the guise of exercising police power, be upheld as valid.

WHEREFORE, the decision of the trial court in Special Civil Case No. 237 is hereby
REVERSED and SET ASIDE and a new judgment is hereby rendered declaring Ordinance
No. 640 unconstitutional and, therefore, null and void. This decision is immediately
executory.

SO ORDERED.
Agustin v Edu (1979)

G.R. No. L-49112 February 2, 1979

LEOVILLO C. AGUSTIN, petitioner,

vs.
HON. ROMEO F. EDU, in his capacity as Land Transportation Commissioner; HON.
JUAN PONCE ENRILE, in his capacity as Minister of National Defense; HON. ALFREDO
L. JUINIO, in his capacity as Minister Of Public Works, Transportation and
Communications; and HON: BALTAZAR AQUINO, in his capacity as Minister of Public
Highways, respondents.

Leovillo C. Agustin Law Office for petitioner.

Solicitor General Estelito P. Mendoza, Assistant Solicitor General Ruben E. Agpalo and
Solicitor Amado D. Aquino for respondents.

FERNANDO, J.:

The validity of a letter of Instruction 1 providing for an early seaming device for motor
vehicles is assailed in this prohibition proceeding as being violative of the constitutional
guarantee of due process and, insofar as the rules and regulations for its implementation
are concerned, for transgressing the fundamental principle of non- delegation of legislative
power. The Letter of Instruction is stigmatized by petitioner who is possessed of the
requisite standing, as being arbitrary and oppressive. A temporary restraining order as
issued and respondents Romeo F. Edu, Land Transportation Commissioner Juan Ponce
Enrile, Minister of National Defense; Alfredo L. Juinio, Minister of Public Works,
Transportation and Communications; and Baltazar Aquino, Minister of Public Highways;
were to answer. That they did in a pleading submitted by Solicitor General Estelito P.
Mendoza. 2 Impressed with a highly persuasive quality, it makes devoid clear that the
imputation of a constitutional infirmity is devoid of justification The Letter of Instruction
on is a valid police power measure. Nor could the implementing rules and regulations
issued by respondent Edu be considered as amounting to an exercise of legislative power.
Accordingly, the petition must be dismissed.

The facts are undisputed. The assailed Letter of Instruction No. 229 of President Marcos,
issued on December 2, 1974, reads in full: "[Whereas], statistics show that one of the major
causes of fatal or serious accidents in land transportation is the presence of disabled,
stalled or parked motor vehicles along streets or highways without any appropriate early
warning device to signal approaching motorists of their presence; [Whereas], the hazards
posed by such obstructions to traffic have been recognized by international bodies
concerned with traffic safety, the 1968 Vienna Convention on Road Signs and Signals and
the United Nations Organization (U.N.); [Whereas], the said Vienna Convention which was
ratified by the Philippine Government under P.D. No. 207, recommended the enactment of
local legislation for the installation of road safety signs and devices; [Now, therefore, I,
Ferdinand E. Marcos], President of the Philippines, in the interest of safety on all streets
and highways, including expressways or limited access roads, do hereby direct: 1. That all
owners, users or drivers of motor vehicles shall have at all times in their motor vehicles at
least one (1) pair of early warning device consisting of triangular, collapsible reflectorized
plates in red and yellow colors at least 15 cms. at the base and 40 cms. at the sides. 2.
Whenever any motor vehicle is stalled or disabled or is parked for thirty (30) minutes or
more on any street or highway, including expressways or limited access roads, the owner,
user or driver thereof shall cause the warning device mentioned herein to be installed at
least four meters away to the front and rear of the motor vehicle staged, disabled or
parked. 3. The Land Transportation Commissioner shall cause Reflectorized Triangular
Early Warning Devices, as herein described, to be prepared and issued to registered
owners of motor vehicles, except motorcycles and trailers, charging for each piece not
more than 15 % of the acquisition cost. He shall also promulgate such rules and regulations
as are appropriate to effectively implement this order. 4. All hereby concerned shall closely
coordinate and take such measures as are necessary or appropriate to carry into effect then
instruction. 3 Thereafter, on November 15, 1976, it was amended by Letter of Instruction
No. 479 in this wise. "Paragraph 3 of Letter of Instruction No. 229 is hereby amended to
read as follows: 3. The Land transportation Commissioner shall require every motor
vehicle owner to procure from any and present at the registration of his vehicle, one pair of
a reflectorized early warning device, as d bed of any brand or make chosen by mid motor
vehicle . The Land Transportation Commissioner shall also promulgate such rule and
regulations as are appropriate to effectively implement this order.'" 4 There was issued
accordingly, by respondent Edu, the implementing rules and regulations on December 10,
1976. 5 They were not enforced as President Marcos on January 25, 1977, ordered a six-
month period of suspension insofar as the installation of early warning device as a pre-
registration requirement for motor vehicle was concerned. 6 Then on June 30, 1978,
another Letter of Instruction 7 the lifting of such suspension and directed the immediate
implementation of Letter of Instruction No. 229 as amended. 8 It was not until August 29,
1978 that respondent Edu issued Memorandum Circular No. 32, worded thus: "In
pursuance of Letter of Instruction No. 716, dated June 30, 1978, the implementation of
Letter of Instruction No. 229, as amended by Letter of Instructions No. 479, requiring the
use of Early Warning Devices (EWD) on motor vehicle, the following rules and regulations
are hereby issued: 1. LTC Administrative Order No. 1, dated December 10, 1976; shall now
be implemented provided that the device may come from whatever source and that it shall
have substantially complied with the EWD specifications contained in Section 2 of said
administrative order; 2. In order to insure that every motor vehicle , except motorcycles, is
equipped with the device, a pair of serially numbered stickers, to be issued free of charge
by this Commission, shall be attached to each EWD. The EWD. serial number shall be
indicated on the registration certificate and official receipt of payment of current
registration fees of the motor vehicle concerned. All Orders, Circulars, and Memoranda in
conflict herewith are hereby superseded, This Order shall take effect immediately. 9 It was
for immediate implementation by respondent Alfredo L. Juinio, as Minister of Public Works,
transportation, and Communications. 10

Petitioner, after setting forth that he "is the owner of a Volkswagen Beetle Car, Model
13035, already properly equipped when it came out from the assembly lines with blinking
lights fore and aft, which could very well serve as an early warning device in case of the
emergencies mentioned in Letter of Instructions No. 229, as amended, as well as the
implementing rules and regulations in Administrative Order No. 1 issued by the land
transportation Commission," 11 alleged that said Letter of Instruction No. 229, as amended,
"clearly violates the provisions and delegation of police power, [sic] * * *: " For him they are
"oppressive, unreasonable, arbitrary, confiscatory, nay unconstitutional and contrary to the
precepts of our compassionate New Society." 12 He contended that they are "infected with
arbitrariness because it is harsh, cruel and unconscionable to the motoring public;" 13 are
"one-sided, onerous and patently illegal and immoral because [they] will make
manufacturers and dealers instant millionaires at the expense of car owners who are
compelled to buy a set of the so-called early warning device at the rate of P 56.00 to P72.00
per set." 14 are unlawful and unconstitutional and contrary to the precepts of a
compassionate New Society [as being] compulsory and confiscatory on the part of the
motorists who could very well provide a practical alternative road safety device, or a better
substitute to the specified set of EWD's." 15 He therefore prayed for a judgment both the
assailed Letters of Instructions and Memorandum Circular void and unconstitutional and
for a restraining order in the meanwhile.

A resolution to this effect was handed down by this Court on October 19, 1978: "L-49112
(Leovillo C. Agustin v. Hon. Romeo F. Edu, etc., et al.) — Considering the allegations
contained, the issues raised and the arguments adduced in the petition for prohibition with
writ of p prohibitory and/or mandatory injunction, the Court Resolved to (require) the
respondents to file an answer thereto within ton (10) days from notice and not to move to
dismiss the petition. The Court further Resolved to [issue] a [temporary restraining order]
effective as of this date and continuing until otherwise ordered by this Court.16

Two motions for extension were filed by the Office of the Solicitor General and granted.
Then on November 15, 1978, he Answer for respondents was submitted. After admitting
the factual allegations and stating that they lacked knowledge or information sufficient to
form a belief as to petitioner owning a Volkswagen Beetle car," they "specifically deny the
allegations and stating they lacked knowledge or information sufficient to form a belief as
to petitioner owning a Volkswagen Beetle Car, 17 they specifically deny the allegations in
paragraphs X and XI (including its subparagraphs 1, 2, 3, 4) of Petition to the effect that
Letter of Instruction No. 229 as amended by Letters of Instructions Nos. 479 and 716 as
well as Land transportation Commission Administrative Order No. 1 and its Memorandum
Circular No. 32 violates the constitutional provisions on due process of law, equal
protection of law and undue delegation of police power, and that the same are likewise
oppressive, arbitrary, confiscatory, one-sided, onerous, immoral unreasonable and illegal
the truth being that said allegations are without legal and factual basis and for the reasons
alleged in the Special and Affirmative Defenses of this Answer."18 Unlike petitioner who
contented himself with a rhetorical recital of his litany of grievances and merely invoked
the sacramental phrases of constitutional litigation, the Answer, in demonstrating that the
assailed Letter of Instruction was a valid exercise of the police power and implementing
rules and regulations of respondent Edu not susceptible to the charge that there was
unlawful delegation of legislative power, there was in the portion captioned Special and
Affirmative Defenses, a citation of what respondents believed to be the authoritative
decisions of this Tribunal calling for application. They are Calalang v. Williams, 19 Morfe v.
Mutuc, 20 and Edu v. Ericta. 21 Reference was likewise made to the 1968 Vienna Conventions
of the United Nations on road traffic, road signs, and signals, of which the Philippines was a
signatory and which was duly ratified. 22 Solicitor General Mendoza took pains to refute in
detail, in language calm and dispassionate, the vigorous, at times intemperate, accusation of
petitioner that the assailed Letter of Instruction and the implementing rules and
regulations cannot survive the test of rigorous scrutiny. To repeat, its highly-persuasive
quality cannot be denied.

This Court thus considered the petition submitted for decision, the issues being clearly
joined. As noted at the outset, it is far from meritorious and must be dismissed.

1. The Letter of Instruction in question was issued in the exercise of the police power. That
is conceded by petitioner and is the main reliance of respondents. It is the submission of
the former, however, that while embraced in such a category, it has offended against the
due process and equal protection safeguards of the Constitution, although the latter point
was mentioned only in passing. The broad and expansive scope of the police power which
was originally Identified by Chief Justice Taney of the American Supreme Court in an 1847
decision as "nothing more or less than the powers of government inherent in every
sovereignty" 23 was stressed in the aforementioned case of Edu v. Ericta thus: "Justice
Laurel, in the first leading decision after the Constitution came into force, Calalang v.
Williams, Identified police power with state authority to enact legislation that may interfere
with personal liberty or property in order to promote the general welfare. Persons and
property could thus 'be subjected to all kinds of restraints and burdens in order to we the
general comfort, health and prosperity of the state.' Shortly after independence in
1948, Primicias v. Fugoso reiterated the doctrine, such a competence being referred to as
'the power to prescribe regulations to promote the health, morals, peace, education, good
order or safety, and general welfare of the people. The concept was set forth in negative
terms by Justice Malcolm in a pre-Commonwealth decision as 'that inherent and plenary
power in the State which enables it to prohibit all things hurtful to the comfort, safety and
welfare of society. In that sense it could be hardly distinguishable as noted by this Court in
Morfe v. Mutuc with the totality of legislative power. It is in the above sense the greatest
and most powerful at. tribute of government. It is, to quote Justice Malcolm anew, 'the most
essential, insistent, and at least table powers, I extending as Justice Holmes aptly pointed
out 'to all the great public needs.' Its scope, ever-expanding to meet the exigencies of the
times, even to anticipate the future where it could be done, provides enough room for an
efficient and flexible response to conditions and circumstances thus assuring the greatest
benefits. In the language of Justice Cardozo: 'Needs that were narrow or parochial in the
past may be interwoven in the present with the well-being of the nation. What is critical or
urgent changes with the time.' The police power is thus a dynamic agency, suitably vague
and far from precisely defined, rooted in the conception that men in organizing the state
and imposing upon its government limitations to safeguard constitutional rights did not
intend thereby to enable an individual citizen or a group of citizens to obstruct
unreasonably the enactment of such salutary measures calculated to communal peace,
safety, good order, and welfare." 24

2. It was thus a heavy burden to be shouldered by petitioner, compounded by the fact that
the particular police power measure challenged was clearly intended to promote public
safety. It would be a rare occurrence indeed for this Court to invalidate a legislative or
executive act of that character. None has been called to our attention, an indication of its
being non-existent. The latest decision in point, Edu v. Ericta, sustained the validity of the
Reflector Law, 25 an enactment conceived with the same end in view. Calalang v.
Williams found nothing objectionable in a statute, the purpose of which was: "To promote
safe transit upon, and. avoid obstruction on roads and streets designated as national roads
* * *. 26 As a matter of fact, the first law sought to be nullified after the effectivity of the
1935 Constitution, the National Defense Act, 27 with petitioner failing in his quest, was
likewise prompted by the imperative demands of public safety.

3. The futility of petitioner's effort to nullify both the Letter of Instruction and the
implementing rules and regulations becomes even more apparent considering his failure to
lay the necessary factual foundation to rebut the presumption of validity. So it was held
in Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila. 28 The
rationale was clearly set forth in an excerpt from a decision of Justice Branders of the
American Supreme Court, quoted in the opinion: "The statute here questioned deals with a
subject clearly within the scope of the police power. We are asked to declare it void on the
ground that the specific method of regulation prescribed is unreasonable and hence
deprives the plaintiff of due process of law. As underlying questions of fact may condition
the constitutionality of legislation of this character, the presumption of constitutionality
must prevail in the absence of some factual foundation of record in overthrowing the
statute. 29

4. Nor did the Solicitor General as he very well could, rely solely on such rebutted
presumption of validity. As was pointed out in his Answer "The President certainly had in
his possession the necessary statistical information and data at the time he issued said
letter of instructions, and such factual foundation cannot be defeated by petitioner's naked
assertion that early warning devices 'are not too vital to the prevention of nighttime
vehicular accidents' because allegedly only 390 or 1.5 per cent of the supposed 26,000
motor vehicle accidents that in 1976 involved rear-end collisions (p. 12 of petition).
Petitioner's statistics is not backed up by demonstrable data on record. As aptly stated by
this Honorable Court: Further: "It admits of no doubt therefore that there being a
presumption of validity, the necessity for evidence to rebut it is unavoidable, unless the
statute or ordinance is void on its face, which is not the case here"' * * *. But even as g the
verity of petitioner's statistics, is that not reason enough to require the installation of early
warning devices to prevent another 390 rear-end collisions that could mean the death of
390 or more Filipinos and the deaths that could likewise result from head-on or frontal
collisions with stalled vehicles?" 30 It is quite manifest then that the issuance of such Letter
of Instruction is encased in the armor of prior, careful study by the Executive Department.
To set it aside for alleged repugnancy to the due process clause is to give sanction to
conjectural claims that exceeded even the broadest permissible limits of a pleader's well
known penchant for exaggeration.

5. The rather wild and fantastic nature of the charge of oppressiveness of this Letter of
Instruction was exposed in the Answer of the Solicitor General thus: "Such early warning
device requirement is not an expensive redundancy, nor oppressive, for car owners whose
cars are already equipped with 1) blinking lights in the fore and aft of said motor vehicles,'
2) "battery-powered blinking lights inside motor vehicles," 3) "built-in reflectorized tapes
on front and rear bumpers of motor vehicles," or 4) "well-lighted two (2) petroleum lamps
(the Kinke) * * * because: Being universal among the signatory countries to the said 1968
Vienna Conventions, and visible even under adverse conditions at a distance of at least 400
meters, any motorist from this country or from any part of the world, who sees a
reflectorized rectangular early seaming device installed on the roads, highways or
expressways, will conclude, without thinking, that somewhere along the travelled portion
of that road, highway, or expressway, there is a motor vehicle which is stationary, stalled or
disabled which obstructs or endangers passing traffic. On the other hand, a motorist who
sees any of the aforementioned other built in warning devices or the petroleum lamps will
not immediately get adequate advance warning because he will still think what that
blinking light is all about. Is it an emergency vehicle? Is it a law enforcement car? Is it an
ambulance? Such confusion or uncertainty in the mind of the motorist will thus increase,
rather than decrease, the danger of collision. 31

6. Nor did the other extravagant assertions of constitutional deficiency go unrefuted in the
Answer of the Solicitor General "There is nothing in the questioned Letter of Instruction
No. 229, as amended, or in Administrative Order No. 1, which requires or compels motor
vehicle owners to purchase the early warning device prescribed thereby. All that is
required is for motor vehicle owners concerned like petitioner, to equip their motor
vehicles with a pair of this early warning device in question, procuring or obtaining the
same from whatever source. In fact, with a little of industry and practical ingenuity, motor
vehicle owners can even personally make or produce this early warning device so long as
the same substantially conforms with the specifications laid down in said letter of
instruction and administrative order. Accordingly the early warning device requirement
can neither be oppressive, onerous, immoral, nor confiscatory, much less does it make
manufacturers and dealers of said devices 'instant millionaires at the expense of car
owners' as petitioner so sweepingly concludes * * *. Petitioner's fear that with the early
warning device requirement 'a more subtle racket may be committed by those called upon
to enforce it * * * is an unfounded speculation. Besides, that unscrupulous officials may try
to enforce said requirement in an unreasonable manner or to an unreasonable degree, does
not render the same illegal or immoral where, as in the instant case, the challenged Letter
of Instruction No. 229 and implementing order disclose none of the constitutional defects
alleged against it.32

7 It does appear clearly that petitioner's objection to this Letter of Instruction is not
premised on lack of power, the justification for a finding of unconstitutionality, but on the
pessimistic, not to say negative, view he entertains as to its wisdom. That approach, it put it
at its mildest, is distinguished, if that is the appropriate word, by its unorthodoxy. It bears
repeating "that this Court, in the language of Justice Laurel, 'does not pass upon questions
of wisdom justice or expediency of legislation.' As expressed by Justice Tuason: 'It is not the
province of the courts to supervise legislation and keep it within the bounds of propriety
and common sense. That is primarily and exclusively a legislative concern.' There can be no
possible objection then to the observation of Justice Montemayor. 'As long as laws do not
violate any Constitutional provision, the Courts merely interpret and apply them regardless
of whether or not they are wise or salutary. For they, according to Justice Labrador, 'are not
supposed to override legitimate policy and * * * never inquire into the wisdom of the law.'
It is thus settled, to paraphrase Chief Justice Concepcion in Gonzales v. Commission on
Elections, that only congressional power or competence, not the wisdom of the action
taken, may be the basis for declaring a statute invalid. This is as it ought to be. The principle
of separation of powers has in the main wisely allocated the respective authority of each
department and confined its jurisdiction to such a sphere. There would then be intrusion
not allowable under the Constitution if on a matter left to the discretion of a coordinate
branch, the judiciary would substitute its own. If there be adherence to the rule of law, as
there ought to be, the last offender should be courts of justice, to which rightly litigants
submit their controversy precisely to maintain unimpaired the supremacy of legal norms
and prescriptions. The attack on the validity of the challenged provision likewise insofar as
there may be objections, even if valid and cogent on is wisdom cannot be sustained. 33

8. The alleged infringement of the fundamental principle of non-delegation of legislative

power is equally without any support well-settled legal doctrines. Had petitioner taken the
trouble to acquaint himself with authoritative pronouncements from this Tribunal, he
would not have the temerity to make such an assertion. An exempt from the aforecited
decision of Edu v. Ericta sheds light on the matter: "To avoid the taint of unlawful
delegation, there must be a standard, which implies at the very least that the legislature
itself determines matters of principle and lays down fundamental policy. Otherwise, the
charge of complete abdication may be hard to repel A standard thus defines legislative
policy, marks its maps out its boundaries and specifies the public agency to apply it. It
indicates the circumstances under which the legislative command is to be effected. It is the
criterion by which legislative purpose may be carried out. Thereafter, the executive or
administrative office designated may in pursuance of the above guidelines promulgate
supplemental rules and regulations. The standard may be either express or implied. If the
former, the non-delegation objection is easily met. The standard though does not have to be
spelled out specifically. It could be implied from the policy and purpose of the act
considered as a whole. In the Reflector Law clearly, the legislative objective is public safety.
What is sought to be attained as in Calalang v. Williams is "safe transit upon the roads.' This
is to adhere to the recognition given expression by Justice Laurel in a decision announced
not too long after the Constitution came into force and effect that the principle of non-
delegation "has been made to adapt itself to the complexities of modern governments,
giving rise to the adoption, within certain limits, of the principle of "subordinate
legislation" not only in the United States and England but in practically all modern
governments.' He continued: 'Accordingly, with the growing complexity of modern life, the
multiplication of the subjects of governmental regulation, and the increased difficulty of
administering the laws, there is a constantly growing tendency toward the delegation of
greater powers by the legislature and toward the approval of the practice by the courts.'
Consistency with the conceptual approach requires the reminder that what is delegated is
authority non-legislative in character, the completeness of the statute when it leaves the
hands of Congress being assumed." 34

9. The conclusion reached by this Court that this petition must be dismissed is reinforced
by this consideration. The petition itself quoted these two whereas clauses of the assailed
Letter of Instruction: "[Whereas], the hazards posed by such obstructions to traffic have
been recognized by international bodies concerned with traffic safety, the 1968 Vienna
Convention on Road Signs and Signals and the United Nations Organization (U.N.);
[Whereas], the said Vionna Convention, which was ratified by the Philippine Government
under P.D. No. 207, recommended the enactment of local legislation for the installation of
road safety signs and devices; * * * " 35 It cannot be disputed then that this Declaration of
Principle found in the Constitution possesses relevance: "The Philippines * * * adopts the
generally accepted principles of international law as part of the law of the land * * *." 36 The
1968 Vienna Convention on Road Signs and Signals is impressed with such a character. It is
not for this country to repudiate a commitment to which it had pledged its word. The
concept of Pacta sunt servanda stands in the way of such an attitude, which is, moreover, at
war with the principle of international morality.

10. That is about all that needs be said. The rather court reference to equal protection did
not even elicit any attempt on the Part of Petitioner to substantiate in a manner clear,
positive, and categorical why such a casual observation should be taken seriously. In no
case is there a more appropriate occasion for insistence on what was referred to as "the
general rule" in Santiago v. Far Eastern Broadcasting Co., 37 namely, "that the
constitutionality of a law wig not be considered unless the point is specially pleaded,
insisted upon, and adequately argued." 38 "Equal protection" is not a talismanic formula at
the mere invocation of which a party to a lawsuit can rightfully expect that success will
crown his efforts. The law is anything but that.

WHEREFORE, this petition is dismissed. The restraining order is lifted. This decision is
immediately executory. No costs.
MMDA v. Bel Air Village Asso., Inc., G.R. No. 135962. March 27, 2000

G.R. No. 135962 March 27, 2000

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner,

vs.
BEL-AIR VILLAGE ASSOCIATION, INC., respondent.

PUNO, J.:

Not infrequently, the government is tempted to take legal shortcuts solve urgent problems
of the people. But even when government is armed with the best of intention, we cannot
allow it to run roughshod over the rule of law. Again, we let the hammer fall and fall hard
on the illegal attempt of the MMDA to open for public use a private road in a private
subdivision. While we hold that the general welfare should be promoted, we stress that it
should not be achieved at the expense of the rule of law.

Petitioner MMDA is a government agency tasked with the delivery of basic services in
Metro Manila. Respondent Bel-Air Village Association, Inc. (BAVA) is a non-stock, non-
profit corporation whose members are homeowners in Bel-Air Village, a private
subdivision in Makati City. Respondent BAVA is the registered owner of Neptune Street, a
road inside Bel-Air Village.

On December 30, 1995, respondent received from petitioner, through its Chairman, a
notice dated December 22, 1995 requesting respondent to open Neptune Street to public
vehicular traffic starting January 2, 1996. The notice reads:

SUBJECT: NOTICE of the Opening of Neptune Street to Traffic.

Dear President Lindo,

Please be informed that pursuant to the mandate of the MMDA law or Republic Act
No. 7924 which requires the Authority to rationalize the use of roads and/or
thoroughfares for the safe and convenient movement of persons, Neptune Street
shall be opened to vehicular traffic effective January 2, 1996.

In view whereof, the undersigned requests you to voluntarily open the points of
entry and exit on said street.

Thank you for your cooperation and whatever assistance that may be extended by
your association to the MMDA personnel who will be directing traffic in the area.
 Finally, we are furnishing you with a copy of the handwritten instruction of the
President on the matter.

Very truly yours,

PROSPERO I. ORETA

Chairman 1

On the same day, respondent was apprised that the perimeter wall separating the
subdivision from the adjacent Kalayaan Avenue would be demolished.

On January 2, 1996, respondent instituted against petitioner before the Regional Trial
Court, Branch 136, Makati City, Civil Case No. 96-001 for injunction. Respondent prayed for
the issuance of a temporary restraining order and preliminary injunction enjoining the
opening of Neptune Street and prohibiting the demolition of the perimeter wall. The trial
court issued a temporary restraining order the following day.

On January 23, 1996, after due hearing, the trial court denied issuance of a preliminary
injunction. 2 Respondent questioned the denial before the Court of Appeals in CA-G.R. SP
No. 39549. The appellate court conducted an ocular inspection of Neptune Street 3 and on
February 13, 1996, it issued a writ of preliminary injunction enjoining the implementation
of the MMDA's proposed action. 4

On January 28, 1997, the appellate court rendered a Decision on the merits of the case
finding that the MMDA has no authority to order the opening of Neptune Street, a private
subdivision road and cause the demolition of its perimeter walls. It held that the authority
is lodged in the City Council of Makati by ordinance. The decision disposed of as follows:

WHEREFORE, the Petition is GRANTED; the challenged Order dated January 23,
1995, in Civil Case No. 96-001, is SET ASIDE and the Writ of Preliminary Injunction
issued on February 13, 1996 is hereby made permanent.

For want of sustainable substantiation, the Motion to Cite Roberto L. del Rosario in
contempt is denied. 5

No pronouncement as to costs.

SO ORDERED. 6
The Motion for Reconsideration of the decision was denied on September 28, 1998. Hence,
this recourse.

Petitioner MMDA raises the following questions:

HAS THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY (MMDA) THE

MANDATE TO OPEN NEPTUNE STREET TO PUBLIC TRAFFIC PURSUANT TO ITS
REGULATORY AND POLICE POWERS?

II

IS THE PASSAGE OF AN ORDINANCE A CONDITION PRECEDENT BEFORE THE

MMDA MAY ORDER THE OPENING OF SUBDIVISION ROADS TO PUBLIC TRAFFIC?

III

IS RESPONDENT BEL-AIR VILLAGE ASSOCIATION, INC. ESTOPPED FROM DENYING

OR ASSAILING THE AUTHORITY OF THE MMDA TO OPEN THE SUBJECT STREET?

IV

WAS RESPONDENT DEPRIVED OF DUE PROCESS DESPITE THE SEVERAL

MEETINGS HELD BETWEEN MMDA AND THE AFFECTED EEL-AIR RESIDENTS AND
BAVA OFFICERS?

HAS RESPONDENT COME TO COURT WITH UNCLEAN HANDS?7

Neptune Street is owned by respondent BAVA. It is a private road inside Bel-Air Village, a
private residential subdivision in the heart of the financial and commercial district of
Makati City. It runs parallel to Kalayaan Avenue, a national road open to the general public.
Dividing the two (2) streets is a concrete perimeter wall approximately fifteen (15) feet
high. The western end of Neptune Street intersects Nicanor Garcia, formerly Reposo Street,
a subdivision road open to public vehicular traffic, while its eastern end intersects Makati
Avenue, a national road. Both ends of Neptune Street are guarded by iron gates.

Petitioner MMDA claims that it has the authority to open Neptune Street to public traffic
because it is an agent of the state endowed with police power in the delivery of basic
services in Metro Manila. One of these basic services is traffic management which involves
the regulation of the use of thoroughfares to insure the safety, convenience and welfare of
the general public. It is alleged that the police power of MMDA was affirmed by this Court
in the consolidated cases of Sangalang v. Intermediate Appellate Court. 8 From the premise
that it has police power, it is now urged that there is no need for the City of Makati to enact
an ordinance opening Neptune street to the public. 9

Police power is an inherent attribute of sovereignty. It has been defined as the power
vested by the Constitution in the legislature to make, ordain, and establish all manner of
wholesome and reasonable laws, statutes and ordinances, either with penalties or without,
not repugnant to the Constitution, as they shall judge to be for the good and welfare of the
commonwealth, and for the subjects of the same. 10 The power is plenary and its scope is
vast and pervasive, reaching and justifying measures for public health, public safety, public
morals, and the general welfare. 11

It bears stressing that police power is lodged primarily in the National Legislature. 12 It
cannot be exercised by any group or body of individuals not possessing legislative
power. 13 The National Legislature, however, may delegate this power to the President and
administrative boards as well as the lawmaking bodies of municipal corporations or local
government units. 14 Once delegated, the agents can exercise only such legislative powers as
are conferred on them by the national lawmaking body. 15

A local government is a "political subdivision of a nation or state which is constituted by law

and has substantial control of local affairs." 16 The Local Government Code of 1991 defines a
local government unit as a "body politic and corporate." 17 — one endowed with powers as
a political subdivision of the National Government and as a corporate entity representing
the inhabitants of its territory. 18 Local government units are the provinces, cities,
municipalities and barangays. 19 They are also the territorial and political subdivisions of
the state. 20

Our Congress delegated police power to the local government units in the Local Government
Code of 1991. This delegation is found in Section 16 of the same Code, known as the general
welfare clause, viz:

Sec. 16. General Welfare. — Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and effective governance, and
those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support,
among other things, the preservation and enrichment of culture, promote health and
 safety, enhance the right of the people to a balanced ecology, encourage and support
the development of appropriate and self-reliant scientific and technological
capabilities, improve public morals, enhance economic prosperity and social justice,
promote full employment among their residents, maintain peace and order, and
preserve the comfort and convenience of their inhabitants. 21

Local government units exercise police power through their respective legislative bodies. The
legislative body of the provincial government is the sangguniang panlalawigan, that of the
city government is the sangguniang panlungsod, that of the municipal government is
the sangguniang bayan, and that of the barangay is the sangguniang barangay. The Local
Government Code of 1991 empowers the sangguniang panlalawigan, sangguniang
panlungsod and sangguniang bayan to "enact ordinances, approve resolutions and
appropriate funds for the general welfare of the [province, city or municipality, as the case
may be], and its inhabitants pursuant to Section 16 of the Code and in the proper exercise
of the corporate powers of the [province, city municipality] provided under the Code . . .
" 22 The same Code gives the sangguniang barangay the power to "enact ordinances as may
be necessary to discharge the responsibilities conferred upon it by law or ordinance and to
promote the general welfare of the inhabitants thereon." 23

Metropolitan or Metro Manila is a body composed of several local government units — i.e.,
twelve (12) cities and five (5) municipalities, namely, the cities of Caloocan, Manila,
Mandaluyong, Makati, Pasay, Pasig, Quezon, Muntinlupa, Las Pinas, Marikina, Paranaque
and Valenzuela, and the municipalities of Malabon, Navotas, Pateros, San Juan and
Taguig. With the passage of Republic Act (R. A.) No. 7924 24 in 1995, Metropolitan Manila was
declared as a "special development and administrative region" and the Administration
of "metro-wide" basic services affecting the region placed under "a development
authority" referred to as the MMDA. 25

"Metro-wide services" are those "services which have metro-wide impact and transcend
local political boundaries or entail huge expenditures such that it would not be viable for
said services to be provided by the individual local government units comprising Metro
Manila." 26 There are seven (7) basic metro-wide services and the scope of these services
cover the following: (1) development planning; (2) transport and traffic management; (3)
solid waste disposal and management; (4) flood control and sewerage management; (5)
urban renewal, zoning and land use planning, and shelter services; (6) health and
sanitation, urban protection and pollution control; and (7) public safety. The basic service
of transport and traffic management includes the following:

(b) Transport and traffic management which include the

formulation, coordination, and monitoring of policies, standards, programs and
 projects to rationalize the existing transport operations, infrastructure
requirements, the use of thoroughfares, and promotion of safe and convenient
movement of persons and goods; provision for the mass transport system and the
institution of a system to regulate road users; administration and implementation of
all traffic enforcement operations, traffic engineering services and traffic education
programs, including the institution of a single ticketing system in Metropolitan
Manila;" 27

In the delivery of the seven (7) basic services, the MMDA has the following powers and
functions:

Sec. 5. Functions and powers of the Metro Manila Development Authority. — The
MMDA shall:

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

(b) Prepare, coordinate and regulate the implementation of medium-term

investment programs for metro-wide services which shall indicate sources and uses
of funds for priority programs and projects, and which shall include the packaging of
projects and presentation to funding institutions;

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

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

(e) The MMDA shall set the policies concerning traffic in Metro Manila, and shall
coordinate and regulate the implementation of all programs and projects concerning
traffic management, specifically pertaining to enforcement, engineering and
education. Upon request, it shall be extended assistance and cooperation, including but
not limited to, assignment of personnel, by all other government agencies and offices
concerned;
 (f) Install and administer a single ticketing system, fix, impose and collect fines and
penalties for all kinds of violations of traffic rules and regulations, whether moving or
non-moving in nature, and confiscate and suspend or revoke drivers' licenses in the
enforcement of such traffic laws and regulations, the provisions of RA 4136 and PD
1605 to the contrary notwithstanding. For this purpose, the Authority shall impose all
traffic laws and regulations in Metro Manila, through its traffic operation center, and
may deputize members of the PNP, traffic enforcers of local government units, duly
licensed security guards, or members of non-governmental organizations to whom
may be delegated certain authority, subject to such conditions and requirements as the
Authority may impose; and

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

The implementation of the MMDA's plans, programs and projects is undertaken by the local
government units, national government agencies, accredited people's organizations, non-
governmental organizations, and the private sector as well as by the MMDA itself. For this
purpose, the MMDA has the power to enter into contracts, memoranda of agreement and
other arrangements with these bodies for the delivery of the required services Metro
Manila. 28

The governing board of the MMDA is the Metro Manila Council. The Council is composed of
the mayors of the component 12 cities and 5 municipalities, the president of the Metro
Manila Vice-Mayors' League and the president of the Metro Manila Councilors'
League. 29 The Council is headed by Chairman who is appointed by the President and vested
with the rank of cabinet member. As the policy-making body of the MMDA, the Metro
Manila Council approves metro-wide plans, programs and projects, and issues the
necessary rules and regulations for the implementation of said plans; it approves the
annual budget of the MMDA and promulgate the rules and regulations for the delivery of
basic services, collection of service and regulatory fees, fines and penalties. These functions
are particularly enumerated as follows:

Sec. 6. Functions of the Metro Manila Council. —

(a) The Council shall be the policy-making body of the MMDA;

(b) It shall approve metro-wide plans, programs and projects and issue rules and
regulations deemed necessary by the MMDA to carry out the purposes of this Act;
 (c) It may increase the rate of allowances and per diems of the members of the
Council to be effective during the term of the succeeding Council. It shall fix the
compensation of the officers and personnel of the MMDA, and approve the annual
budget thereof for submission to the Department of Budget and Management
(DBM);

(d) It shall promulgate rules and regulations and set policies and standards for
metro-wide application governing the delivery of basic services, prescribe and
collect service and regulatory fees, and impose and collect fines and penalties.

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 the
service, the MMDA is expressly authorized "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 appropriate funds for the general
welfare" of the inhabitants of Metro Manila. The MMDA is, as termed in the charter itself,
"development authority." 30 It is an agency created for the purpose of laying down policies
and coordinating with the various national government agencies, people's organizations,
non-governmental organizations and the private sector for the efficient and expeditious
delivery of basic services in the vast metropolitan area. All its functions are administrative
in nature and these are actually summed up in the charter itself, viz:

Sec. 2. Creation of the Metropolitan Manila Development Authority. — . . . .

 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. 31

Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate Appellate

Court 32 where we upheld a zoning ordinance issued by the Metro Manila Commission
(MMC), the predecessor of the MMDA, as an exercise of police power. The
first Sangalang decision was on the merits of the petition, 33 while the second decision
denied reconsideration of the first case and in addition discussed the case of Yabut v. Court
of Appeals. 34

Sangalang v. IAC involved five (5) consolidated petitions filed by respondent BAVA and
three residents of Bel-Air Village against other residents of the Village and the Ayala
Corporation, formerly the Makati Development Corporation, as the developer of the
subdivision. The petitioners sought to enforce certain restrictive easements in the deeds of
sale over their respective lots in the subdivision. These were the prohibition on the setting
up of commercial and advertising signs on the lots, and the condition that the lots be used
only for residential purposes. Petitioners alleged that respondents, who were residents
along Jupiter Street of the subdivision, converted their residences into commercial
establishments in violation of the "deed restrictions," and that respondent Ayala
Corporation ushered in the full commercialization" of Jupiter Street by tearing down the
perimeter wall that separated the commercial from the residential section of the village. 35

The petitions were dismissed based on Ordinance No. 81 of the Municipal Council of Makati
and Ordinance No. 81-01 of the Metro Manila Commission (MMC). Municipal Ordinance No.
81 classified Bel-Air Village as a Class A Residential Zone, with its boundary in the south
extending to the center line of Jupiter Street. The Municipal Ordinance was adopted by the
MMC under the Comprehensive Zoning Ordinance for the National Capital Region and
promulgated as MMC Ordinance No. 81-01. Bel-Air Village was indicated therein as
bounded by Jupiter Street and the block adjacent thereto was classified as a High Intensity
Commercial Zone. 36

We ruled that since both Ordinances recognized Jupiter Street as the boundary between
Bel-Air Village and the commercial district, Jupiter Street was not for the exclusive benefit
of Bel-Air residents. We also held that the perimeter wall on said street was constructed
not to separate the residential from the commercial blocks but simply for security reasons,
hence, in tearing down said wall, Ayala Corporation did not violate the "deed restrictions"
in the deeds of sale.
We upheld the ordinances, specifically MMC Ordinance No. 81-01, as a legitimate exercise
of police power. 37 The power of the MMC and the Makati Municipal Council to enact zoning
ordinances for the general welfare prevailed over the "deed restrictions".

In the second Sangalang/Yabut decision, we held that the opening of Jupiter Street was
warranted by the demands of the common good in terms of "traffic decongestion and
public convenience." Jupiter was opened by the Municipal Mayor to alleviate traffic
congestion along the public streets adjacent to the Village. 38 The same reason was given for
the opening to public vehicular traffic of Orbit Street, a road inside the same village. The
destruction of the gate in Orbit Street was also made under the police power of the
municipal government. The gate, like the perimeter wall along Jupiter, was a public
nuisance because it hindered and impaired the use of property, hence, its summary
abatement by the mayor was proper and legal. 39

Contrary to petitioner's claim, the two Sangalang cases do not apply to the case at bar. Firstly,
both involved zoning ordinances passed by the municipal council of Makati and the MMC.
In the instant case, the basis for the proposed opening of Neptune Street is contained in the
notice of December 22, 1995 sent by petitioner to respondent BAVA, through its president.
The notice does not cite any ordinance or law, either by the Sangguniang Panlungsod of
Makati City or by the MMDA, as the legal basis for the proposed opening of Neptune Street.
Petitioner MMDA simply relied on its authority under its charter "to rationalize the use of
roads and/or thoroughfares for the safe and convenient movement of persons."
Rationalizing the use of roads and thoroughfares is one of the acts that fall within the scope
of transport and traffic management. By no stretch of the imagination, however, can this be
interpreted as an express or implied grant of ordinance-making power, much less police
power.

Secondly, the MMDA is not the same entity as the MMC in Sangalang. Although the MMC is
the forerunner of the present MMDA, an examination of Presidential Decree (P. D.) No. 824,
the charter of the MMC, shows that the latter possessed greater powers which were not
bestowed on the present MMDA.

Metropolitan Manila was first created in 1975 by Presidential Decree (P.D.) No. 824. It
comprised the Greater Manila Area composed of the contiguous four (4) cities of Manila,
Quezon, Pasay and Caloocan, and the thirteen (13) municipalities of Makati, Mandaluyong,
San Juan, Las Pinas, Malabon, Navotas, Pasig, Pateros, Paranaque, Marikina, Muntinlupa and
Taguig in the province of Rizal, and Valenzuela in the province of Bulacan. 40 Metropolitan
Manila was created as a response to the finding that the rapid growth of population and the
increase of social and economic requirements in these areas demand a call for
simultaneous and unified development; that the public services rendered by the respective
local governments could be administered more efficiently and economically if integrated
under a system of central planning; and this coordination, "especially in the maintenance of
peace and order and the eradication of social and economic ills that fanned the flames of
rebellion and discontent [were] part of reform measures under Martial Law essential to the
safety and security of the State." 41

Metropolitan Manila was established as a "public corporation" with the following powers:

Sec. 1. Creation of the Metropolitan Manila. — There is hereby created a public

corporation, to be known as the Metropolitan Manila, vested with powers and
attributes of a corporation including the power to make contracts, sue and be
sued, acquire, purchase, expropriate, hold, transfer and dispose of property and such
other powers as are necessary to carry out its purposes. The Corporation shall be
administered by a Commission created under this Decree. 42

The administration of Metropolitan Manila was placed under the Metro Manila Commission
(MMC) vested with the following powers:

Sec. 4. Powers and Functions of the Commission. — The Commission shall have the following
powers and functions:

1. To act as a central government to establish and administer programs and provide

services common to the area;

2. To levy and collect taxes and special assessments, borrow and expend money and
issue bonds, revenue certificates, and other obligations of indebtedness. Existing tax
measures should, however, continue to be operative until otherwise modified or
repealed by the Commission;

3. To charge and collect fees for the use of public service facilities;

4. To appropriate money for the operation of the metropolitan government and

review appropriations for the city and municipal units within its jurisdiction with
authority to disapprove the same if found to be not in accordance with the
established policies of the Commission, without prejudice to any contractual
obligation of the local government units involved existing at the time of approval of
this Decree;

5. To review, amend, revise or repeal all ordinances, resolutions and acts of cities
and municipalities within Metropolitan Manila;
 6. To enact or approve ordinances, resolutions and to fix penalties for any violation
thereof which shall not exceed a fine of P10,000.00 or imprisonment of six years or
both such fine and imprisonment for a single offense;

7. To perform general administrative, executive and policy-making functions;

8. To establish a fire control operation center, which shall direct the fire services of
the city and municipal governments in the metropolitan area;

9. To establish a garbage disposal operation center, which shall direct garbage

collection and disposal in the metropolitan area;

10. To establish and operate a transport and traffic center, which shall direct traffic
activities;

11. To coordinate and monitor governmental and private activities pertaining to

essential services such as transportation, flood control and drainage, water supply
and sewerage, social, health and environmental services, housing, park
development, and others;

12. To insure and monitor the undertaking of a comprehensive social, economic and
physical planning and development of the area;

13. To study the feasibility of increasing barangay participation in the affairs of their
respective local governments and to propose to the President of the Philippines
definite programs and policies for implementation;

14. To submit within thirty (30) days after the close of each fiscal year an annual
report to the President of the Philippines and to submit a periodic report whenever
deemed necessary; and

15. To perform such other tasks as may be assigned or directed by the President of
the Philippines.

The MMC was the "central government" of Metro Manila for the purpose of establishing and
administering programs providing services common to the area. As a "central government"
it had the power to levy and collect taxes and special assessments, the power to charge and
collect fees; the power to appropriate money for its operation, and at the same time, review
appropriations for the city and municipal units within its jurisdiction. It was bestowed the
power to enact or approve ordinances, resolutions and fix penalties for violation of such
ordinances and resolutions. It also had the power to review, amend, revise or repeal all
ordinances, resolutions and acts of any of the four (4) cities and thirteen (13)
municipalities comprising Metro Manila.

P.D. No. 824 further provided:

Sec. 9. Until otherwise provided, the governments of the four cities and thirteen
municipalities in the Metropolitan Manila shall continue to exist in their present
form except as may be inconsistent with this Decree. The members of the existing city
and municipal councils in Metropolitan Manila shall, upon promulgation of this
Decree, and until December 31, 1975, become members of the Sangguniang Bayan
which is hereby created for every city and municipality of Metropolitan Manila.

In addition, the Sangguniang Bayan shall be composed of as many barangay captains

as may be determined and chosen by the Commission, and such number of
representatives from other sectors of the society as may be appointed by the
President upon recommendation of the Commission.

xxx xxx xxx

The Sangguniang Bayan may recommend to the Commission ordinances, resolutions

or such measures as it may adopt; Provided, that no such ordinance, resolution or
measure shall become effective, until after its approval by the Commission; and
Provided further, that the power to impose taxes and other levies, the power to
appropriate money and the power to pass ordinances or resolutions with penal
sanctions shall be vested exclusively in the Commission.

The creation of the MMC also carried with it the creation of the Sangguniang Bayan. This was
composed of the members of the component city and municipal councils, barangay captains
chosen by the MMC and sectoral representatives appointed by the President.
The Sangguniang Bayan had the power to recommend to the MMC the adoption of
ordinances, resolutions or measures. It was the MMC itself, however, that possessed
legislative powers. All ordinances, resolutions and measures recommended by
the Sangguniang Bayan were subject to the MMC's approval. Moreover, the power to
impose taxes and other levies, the power to appropriate money, and the power to pass
ordinances or resolutions with penal sanctions were vested exclusively in the MMC.

Thus, Metropolitan Manila had a "central government," i.e., the MMC which fully possessed
legislative police powers. Whatever legislative powers the component cities and
municipalities had were all subject to review and approval by the MMC.
After President Corazon Aquino assumed power, there was a clamor to restore the
autonomy of the local government units in Metro Manila. Hence, Sections 1 and 2 of Article
X of the 1987 Constitution provided:

Sec. 1. The territorial and political subdivisions of the Republic of the Philippines are
the provinces, cities, municipalities and barangays. There shall be autonomous
regions in Muslim Mindanao and the Cordilleras as herein provided.

Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.

The Constitution, however, recognized the necessity of creating metropolitan regions not
only in the existing National Capital Region but also in potential equivalents in the Visayas
and Mindanao. 43 Section 11 of the same Article X thus provided:

Sec. 11. The Congress may, by law, create special metropolitan political subdivisions,
subject to a plebiscite as set forth in Section 10 hereof. The component cities and
municipalities shall retain their basic autonomy and shall be entitled to their own
local executives and legislative assemblies. The jurisdiction of the metropolitan
authority that will thereby be created shall be limited to basic services requiring
coordination.

Constitution itself expressly provides that Congress may, by law, create "special
metropolitan political subdivisions" which shall be subject to approval by a majority of the
votes cast in a plebiscite in the political units directly affected; the jurisdiction of this
subdivision shall be limited to basic services requiring coordination; and the cities and
municipalities comprising this subdivision shall retain their basic services requiring
coordination; and the cities and municipalities comprising this subdivision shall retain
their basic autonomy and their own local executive and legislative assemblies. 44 Pending
enactment of this law, the Transitory Provisions of the Constitution gave the President of
the Philippines the power to constitute the Metropolitan Authority, viz:

Sec. 8. Until otherwise provided by Congress, the President may constitute the
Metropolitan Authority to be composed of the heads of all local government units
comprising the Metropolitan Manila area. 45

In 1990, President Aquino issued Executive Order (E. O.) No. 392 and constituted the
Metropolitan Manila Authority (MMA). The powers and functions of the MMC were
devolved to the MMA. 46 It ought to be stressed, however, that not all powers and functions
of the MMC were passed to the MMA. The MMA's power was limited to the "delivery of
basic urban services requiring coordination in Metropolitan Manila." 47 The MMA's
governing body, the Metropolitan Manila Council, although composed of the mayors of the
component cities and municipalities, was merely given power of: (1) formulation of policies
on the delivery of basic services requiring coordination and consolidation; and (2)
promulgation resolutions and other issuances, approval of a code of basic services and the
exercise of its rule-making power. 48

Under the 1987 Constitution, the local government units became primarily responsible for
the governance of their respective political subdivisions. The MMA's jurisdiction was
limited to addressing common problems involving basic services that transcended local
boundaries. It did not have legislative power. Its power was merely to provide the local
government units technical assistance in the preparation of local development plans. Any
semblance of legislative power it had was confined to a "review [of] legislation proposed by
the local legislative assemblies to ensure consistency among local governments and with
the comprehensive development plan of Metro Manila," and to "advise the local
governments accordingly." 49

When R.A. No. 7924 took effect, Metropolitan Manila became a "special development and
administrative region" and the MMDA a "special development authority" whose functions
were "without prejudice to the autonomy of the affected local government units." The
character of the MMDA was clearly defined in the legislative debates enacting its charter.

R.A. No. 7924 originated as House Bill No. 14170/11116 and was introduced by several
legislators led by Dante Tinga, Roilo Golez and Feliciano Belmonte. It was presented to the
House of Representatives by the Committee on Local Governments chaired by
Congressman Ciriaco R. Alfelor. The bill was a product of Committee consultations with the
local government units in the National Capital Region (NCR), with former Chairmen of the
MMC and MMA, 50 and career officials of said agencies. When the bill was first taken up by
the Committee on Local Governments, the following debate took place:

THE CHAIRMAN [Hon. Ciriaco Alfelor]: Okay, Let me explain. This has been debated
a long time ago, you know. It's a special . . . we can create a special metropolitan
political subdivision.

Actually, there are only six (6) political subdivisions provided for in the
Constitution: barangay, municipality, city, province, and we have the Autonomous
Region of Mindanao and we have the Cordillera. So we have 6. Now. . . . .

HON. [Elias] LOPEZ: May I interrupt, Mr. Chairman. In the case of the Autonomous
Region, that is also specifically mandated by the Constitution.

THE CHAIRMAN: That's correct. But it is considered to be a political subdivision.

What is the meaning of a political subdivision? Meaning to say, that it has its own
 government, it has its own political personality, it has the power to tax, and all
governmental powers: police power and everything. All right. Authority is different;
because it does not have its own government. It is only a council, it is an
organization of political subdivision, powers, "no, which is not imbued with any
political power.

If you go over Section 6, where the powers and functions of the Metro Manila
Development Authority, it is purely coordinative. And it provides here that the
council is policy-making. All right.

Under the Constitution is a Metropolitan Authority with coordinative power.

Meaning to say, it coordinates all of the different basic services which have to be
delivered to the constituency. All right.

There is now a problem. Each local government unit is given its respective . . . as a
political subdivision. Kalookan has its powers, as provided for and protected and
guaranteed by the Constitution. All right, the exercise. However, in the exercise of
that power, it might be deleterious and disadvantageous to other local government
units. So, we are forming an authority where all of these will be members and then
set up a policy in order that the basic services can be effectively coordinated. All
right.

Of course, we cannot deny that the MMDA has to survive. We have to provide some
funds, resources. But it does not possess any political power. We do not elect the
Governor. We do not have the power to tax. As a matter of fact, I was trying to
intimate to the author that it must have the power to sue and be sued because it
coordinates. All right. It coordinates practically all these basic services so that the
flow and the distribution of the basic services will be continuous. Like traffic, we
cannot deny that. It's before our eyes. Sewerage, flood control, water system, peace
and order, we cannot deny these. It's right on our face. We have to look for a
solution. What would be the right solution? All right, we envision that there should
be a coordinating agency and it is called an authority. All right, if you do not want to
call it an authority, it's alright. We may call it a council or maybe a management
agency.

xxx xxx x x x 51

Clearly, the MMDA is not a political unit of government. The power delegated to the MMDA
is that given to the Metro Manila Council to promulgate administrative rules and
regulations in the implementation of the MMDA's functions. There is no grant of authority
to enact ordinances and regulations for the general welfare of the inhabitants of the
metropolis. This was explicitly stated in the last Committee deliberations prior to the bill's
presentation to Congress. Thus:

THE CHAIRMAN: Yeah, but we have to go over the suggested revision. I think this
was already approved before, but it was reconsidered in view of the proposals, set-
up, to make the MMDA stronger. Okay, so if there is no objection to paragraph "f". . .
And then next is paragraph "b," under Section 6. "It shall approve metro-wide plans,
programs and projects and issue ordinances or resolutions deemed necessary by the
MMDA to carry out the purposes of this Act." Do you have the powers? Does the
MMDA... because that takes the form of a local government unit, a political subdivision.

HON. [Feliciano] BELMONTE: Yes, I believe so, your Honor. When we say that it has
the policies, it's very clear that those policies must be followed. Otherwise, what's
the use of empowering it to come out with policies. Now, the policies may be in the
form of a resolution or it may be in the form of a ordinance. The term "ordinance" in
this case really gives it more teeth, your honor. Otherwise, we are going to see a
situation where you have the power to adopt the policy but you cannot really make
it stick as in the case now, and I think here is Chairman Bunye. I think he will agree
that that is the case now. You've got the power to set a policy, the body wants to
follow your policy, then we say let's call it an ordinance and see if they will not
follow it.

THE CHAIRMAN: That's very nice. I like that. However, there is a constitutional
impediment.1âwphi1 You are making this MMDA a political subdivision. The
creation of the MMDA would be subject to a plebiscite. That is what I'm trying to
avoid. I've been trying to avoid this kind of predicament. Under the Constitution it
states: if it is a political subdivision, once it is created it has to be subject to a
plebiscite. I'm trying to make this as administrative. That's why we place the
Chairman as a cabinet rank.

HON. BELMONTE: All right, Mr. Chairman, okay, what you are saying there is . . . . .

THE CHAIRMAN: In setting up ordinances, it is a political exercise, Believe me.

HON. [Elias] LOPEZ: Mr. Chairman, it can be changed into issuances of rules and
regulations. That would be . . . it shall also be enforced.

HON. BELMONTE: Okay, I will . . . .

 HON. LOPEZ: And you can also say that violation of such rule, you impose a sanction.
But you know, ordinance has a different legal connotation.

HON. BELMONTE: All right, I defer to that opinion, your Honor.

THE CHAIRMAN: So instead of ordinances, say rules and regulations.

HON. BELMONTE: Or resolutions. Actually, they are actually considering resolutions

now.

THE CHAIRMAN: Rules and resolutions.

HON. BELMONTE: Rules, regulations and resolutions. 52

The draft of H. B. No. 14170/11116 was presented by the Committee to the House of
Representatives. The explanatory note to the bill stated that the proposed MMDA is a
"development authority" which is a "national agency, not a political government
unit." 53 The explanatory note was adopted as the sponsorship speech of the Committee on
Local Governments. No interpellations or debates were made on the floor and no
amendments introduced. The bill was approved on second reading on the same day it was
presented. 54

When the bill was forwarded to the Senate, several amendments were made.1âwphi1 These
amendments, however, did not affect the nature of the MMDA as originally conceived in the
House of Representatives. 55

It is thus beyond doubt that the MMDA is not a local government unit or a public
corporation endowed with legislative power. It is not even a "special metropolitan political
subdivision" as contemplated in Section 11, Article X of the Constitution. The creation of a
"special metropolitan political subdivision" requires the approval by a majority of the votes
cast in a plebiscite in the political units directly affected." 56 R. A. No. 7924 was not
submitted to the inhabitants of Metro Manila in a plebiscite. The Chairman of the MMDA is
not an official elected by the people, but appointed by the President with the rank and
privileges of a cabinet member. In fact, part of his function is to perform such other duties
as may be assigned to him by the President, 57 whereas in local government units, the
President merely exercises supervisory authority. This emphasizes the administrative
character of the MMDA.

Clearly then, the MMC under P.D. No. 824 is not the same entity as the MMDA under R.A.
No. 7924. Unlike the MMC, the MMDA has no power to enact ordinances for the welfare of
the community. It is the local government units, acting through their respective legislative
councils, that possess legislative power and police power. In the case at bar, the
Sangguniang Panlungsod of Makati City did not pass any ordinance or resolution ordering
the opening of Neptune Street, hence, its proposed opening by petitioner MMDA is illegal
and the respondent Court of Appeals did not err in so ruling. We desist from ruling on the
other issues as they are unnecessary.

We stress that this decision does not make light of the MMDA's noble efforts to solve the
chaotic traffic condition in Metro Manila. Everyday, traffic jams and traffic bottlenecks
plague the metropolis. Even our once sprawling boulevards and avenues are now crammed
with cars while city streets are clogged with motorists and pedestrians. Traffic has become
a social malaise affecting our people's productivity and the efficient delivery of goods and
services in the country. The MMDA was created to put some order in the metropolitan
transportation system but unfortunately the powers granted by its charter are limited. Its
good intentions cannot justify the opening for public use of a private street in a private
subdivision without any legal warrant. The promotion of the general welfare is not
antithetical to the preservation of the rule of law.1âwphi1.nêt

IN VIEW WHEREOF, the petition is denied. The Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 39549 are affirmed.

SO ORDERED.
MMDA v Garin, GR No. 130230, April 15, 2005

G.R. No. 130230 April 15, 2005

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, Petitioner,

vs.
DANTE O. GARIN, respondent.

DECISION

CHICO-NAZARIO, J.:

At issue in this case is the validity of Section 5(f) of Republic Act No. 7924 creating the
Metropolitan Manila Development Authority (MMDA), which authorizes it to confiscate and
suspend or revoke driver's licenses in the enforcement of traffic laws and regulations.

The issue arose from an incident involving the respondent Dante O. Garin, a lawyer, who
was issued a traffic violation receipt (TVR) and his driver's license confiscated for parking
illegally along Gandara Street, Binondo, Manila, on 05 August 1995. The following
statements were printed on the TVR:

You are hereby directed to report to the MMDA Traffic Operations Center Port Area Manila
after 48 hours from date of apprehension for disposition/appropriate action
thereon. Criminal case shall be filed for failure to redeem license after 30 days.

Valid as temporary DRIVER'S license for seven days from date of apprehension.1

Shortly before the expiration of the TVR's validity, the respondent addressed a letter2 to
then MMDA Chairman Prospero Oreta requesting the return of his driver's license, and
expressing his preference for his case to be filed in court.

Receiving no immediate reply, Garin filed the original complaint3 with application for
preliminary injunction in Branch 260 of the Regional Trial Court (RTC) of Parañaque, on 12
September 1995, contending that, in the absence of any implementing rules and
regulations, Sec. 5(f) of Rep. Act No. 7924 grants the MMDA unbridled discretion to deprive
erring motorists of their licenses, pre-empting a judicial determination of the validity of the
deprivation, thereby violating the due process clause of the Constitution. The respondent
further contended that the provision violates the constitutional prohibition against undue
delegation of legislative authority, allowing as it does the MMDA to fix and impose
unspecified – and therefore unlimited - fines and other penalties on erring motorists.
In support of his application for a writ of preliminary injunction, Garin alleged that he
suffered and continues to suffer great and irreparable damage because of the deprivation
of his license and that, absent any implementing rules from the Metro Manila Council, the
TVR and the confiscation of his license have no legal basis.

For its part, the MMDA, represented by the Office of the Solicitor General, pointed out that
the powers granted to it by Sec. 5(f) of Rep. Act No. 7924 are limited to the fixing, collection
and imposition of fines and penalties for traffic violations, which powers are legislative and
executive in nature; the judiciary retains the right to determine the validity of the penalty
imposed. It further argued that the doctrine of separation of powers does not preclude
"admixture" of the three powers of government in administrative agencies.4

The MMDA also refuted Garin's allegation that the Metro Manila Council, the governing
board and policy making body of the petitioner, has as yet to formulate the implementing
rules for Sec. 5(f) of Rep. Act No. 7924 and directed the court's attention to MMDA
Memorandum Circular No. TT-95-001 dated 15 April 1995. Respondent Garin, however,
questioned the validity of MMDA Memorandum Circular No. TT-95-001, as he claims that it
was passed by the Metro Manila Council in the absence of a quorum.

Judge Helen Bautista-Ricafort issued a temporary restraining order on 26 September 1995,

extending the validity of the TVR as a temporary driver's license for twenty more days. A
preliminary mandatory injunction was granted on 23 October 1995, and the MMDA was
directed to return the respondent's driver's license.

On 14 August 1997, the trial court rendered the assailed decision5 in favor of the herein
respondent and held that:

a. There was indeed no quorum in that First Regular Meeting of the MMDA Council held
on March 23, 1995, hence MMDA Memorandum Circular No. TT-95-001, authorizing
confiscation of driver's licenses upon issuance of a TVR, is void ab initio.

b. The summary confiscation of a driver's license without first giving the driver an
opportunity to be heard; depriving him of a property right (driver's license) without DUE
PROCESS; not filling (sic) in Court the complaint of supposed traffic infraction, cannot be
justified by any legislation (and is) hence unconstitutional.

WHEREFORE, the temporary writ of preliminary injunction is hereby made permanent;

th(e) MMDA is directed to return to plaintiff his driver's license; th(e) MMDA is likewise
ordered to desist from confiscating driver's license without first giving the driver the
opportunity to be heard in an appropriate proceeding.
In filing this petition,6 the MMDA reiterates and reinforces its argument in the court below
and contends that a license to operate a motor vehicle is neither a contract nor a property
right, but is a privilege subject to reasonable regulation under the police power in the
interest of the public safety and welfare. The petitioner further argues that revocation or
suspension of this privilege does not constitute a taking without due process as long as the
licensee is given the right to appeal the revocation.

To buttress its argument that a licensee may indeed appeal the taking and the judiciary
retains the power to determine the validity of the confiscation, suspension or revocation of
the license, the petitioner points out that under the terms of the confiscation, the licensee
has three options:

1. To voluntarily pay the imposable fine,

2. To protest the apprehension by filing a protest with the MMDA Adjudication

Committee, or

3. To request the referral of the TVR to the Public Prosecutor's Office.

The MMDA likewise argues that Memorandum Circular No. TT-95-001 was validly passed
in the presence of a quorum, and that the lower court's finding that it had not was based on
a "misapprehension of facts," which the petitioner would have us review. Moreover, it
asserts that though the circular is the basis for the issuance of TVRs, the basis for the
summary confiscation of licenses is Sec. 5(f) of Rep. Act No. 7924 itself, and that such
power is self-executory and does not require the issuance of any implementing regulation
or circular.

Meanwhile, on 12 August 2004, the MMDA, through its Chairman Bayani Fernando,
implemented Memorandum Circular No. 04, Series of 2004, outlining the procedures for
the use of the Metropolitan Traffic Ticket (MTT) scheme. Under the circular, erring
motorists are issued an MTT, which can be paid at any Metrobank branch. Traffic enforcers
may no longer confiscate drivers' licenses as a matter of course in cases of traffic
violations. All motorists with unredeemed TVRs were given seven days from the date of
implementation of the new system to pay their fines and redeem their license or vehicle
plates.7

It would seem, therefore, that insofar as the absence of a prima facie case to enjoin the
petitioner from confiscating drivers' licenses is concerned, recent events have overtaken
the Court's need to decide this case, which has been rendered moot and academic by the
implementation of Memorandum Circular No. 04, Series of 2004.
The petitioner, however, is not precluded from re-implementing Memorandum Circular No.
TT-95-001, or any other scheme, for that matter, that would entail confiscating drivers'
licenses. For the proper implementation, therefore, of the petitioner's future programs,
this Court deems it appropriate to make the following observations:

1. A license to operate a motor vehicle is a privilege that the state may withhold in
the exercise of its police power.

The petitioner correctly points out that a license to operate a motor vehicle is not a
property right, but a privilege granted by the state, which may be suspended or revoked by
the state in the exercise of its police power, in the interest of the public safety and welfare,
subject to the procedural due process requirements. This is consistent with our rulings
in Pedro v. Provincial Board of Rizal8 on the license to operate a cockpit, Tan v. Director of
Forestry9 and Oposa v. Factoran10 on timber licensing agreements, and Surigao Electric Co.,
Inc. v. Municipality of Surigao11 on a legislative franchise to operate an electric plant.

Petitioner cites a long list of American cases to prove this point, such as State ex. Rel.
Sullivan,12 which states in part that, "the legislative power to regulate travel over the
highways and thoroughfares of the state for the general welfare is extensive. It may be
exercised in any reasonable manner to conserve the safety of travelers and
pedestrians. Since motor vehicles are instruments of potential danger, their registration
and the licensing of their operators have been required almost from their first
appearance. The right to operate them in public places is not a natural and unrestrained
right, but a privilege subject to reasonable regulation, under the police power, in the
interest of the public safety and welfare. The power to license imports further power to
withhold or to revoke such license upon noncompliance with prescribed conditions."

Likewise, the petitioner quotes the Pennsylvania Supreme Court in Commonwealth v.

Funk,13 to the effect that: "Automobiles are vehicles of great speed and power. The use of
them constitutes an element of danger to persons and property upon the
highways. Carefully operated, an automobile is still a dangerous instrumentality, but, when
operated by careless or incompetent persons, it becomes an engine of destruction. The
Legislature, in the exercise of the police power of the commonwealth, not only may, but
must, prescribe how and by whom motor vehicles shall be operated on the highways. One
of the primary purposes of a system of general regulation of the subject matter, as here by
the Vehicle Code, is to insure the competency of the operator of motor vehicles. Such a
general law is manifestly directed to the promotion of public safety and is well within the
police power."
The common thread running through the cited cases is that it is the legislature, in the
exercise of police power, which has the power and responsibility to regulate how and by
whom motor vehicles may be operated on the state highways.

2. The MMDA is not vested with police power.

In Metro Manila Development Authority v. Bel-Air Village Association, Inc.,14 we categorically

stated that Rep. Act No. 7924 does not grant the MMDA with police power, let alone
legislative power, and that all its functions are administrative in nature.

The said case also involved the herein petitioner MMDA which claimed that it had the
authority to open a subdivision street owned by the Bel-Air Village Association, Inc. to
public traffic because it is an agent of the state endowed with police power in the delivery
of basic services in Metro Manila. From this premise, the MMDA argued that there was no
need for the City of Makati to enact an ordinance opening Neptune Street to the public.

Tracing the legislative history of Rep. Act No. 7924 creating the MMDA, we concluded that
the MMDA is not a local government unit or a public corporation endowed with legislative
power, and, unlike its predecessor, the Metro Manila Commission, it has no power to enact
ordinances for the welfare of the community. Thus, in the absence of an ordinance from
the City of Makati, its own order to open the street was invalid.

We restate here the doctrine in the said decision as it applies to the case at bar: police
power, as an inherent attribute of sovereignty, is the power vested by the Constitution in
the legislature to make, ordain, and establish all manner of wholesome and reasonable
laws, statutes and ordinances, either with penalties or without, not repugnant to the
Constitution, as they shall judge to be for the good and welfare of the commonwealth, and
for the subjects of the same.

Having been lodged primarily in the National Legislature, it cannot be exercised by any
group or body of individuals not possessing legislative power. The National Legislature,
however, may delegate this power to the president and administrative boards as well as
the lawmaking bodies of municipal corporations or local government units (LGUs). Once
delegated, the agents can exercise only such legislative powers as are conferred on them by
the national lawmaking body.

Our Congress delegated police power to the LGUs in the Local Government Code of
1991.15 A local government is a "political subdivision of a nation or state which is
constituted by law and has substantial control of local affairs."16 Local government units are
the provinces, cities, municipalities and barangays, which exercise police power through
their respective legislative bodies.
Metropolitan or Metro Manila is a body composed of several local government units. With
the passage of Rep. Act No. 7924 in 1995, Metropolitan Manila was declared as a "special
development and administrative region" and the administration of "metro-wide" basic
services affecting the region placed under "a development authority" referred to as the
MMDA. Thus:

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

"Sec. 2. Creation of the Metropolitan Manila Development Authority. -- -x x x.

The MMDA shall perform planning, monitoring and coordinative functions,

and in the process exercise regulatory and supervisory authority over the
delivery of metro-wide services within Metro Manila, without diminution of
the autonomy of the local government units concerning purely local matters."

….

Clearly, the MMDA is not a political unit of government. The power delegated to the MMDA
is that given to the Metro Manila Council to promulgate administrative rules and
regulations in the implementation of the MMDA's functions. There is no grant of
authority to enact ordinances and regulations for the general welfare of the
inhabitants of the metropolis. 17 (footnotes omitted, emphasis supplied)

Therefore, insofar as Sec. 5(f) of Rep. Act No. 7924 is understood by the lower court and by
the petitioner to grant the MMDA the power to confiscate and suspend or revoke drivers'
licenses without need of any other legislative enactment, such is an unauthorized exercise of
police power.
 3. Sec. 5(f) grants the MMDA with the duty to enforce existing traffic rules and
regulations.

Section 5 of Rep. Act No. 7924 enumerates the "Functions and Powers of the Metro Manila
Development Authority." The contested clause in Sec. 5(f) states that the petitioner shall
"install and administer a single ticketing system, fix, impose and collect fines and penalties
for all kinds of violations of traffic rules and regulations, whether moving or nonmoving in
nature, and confiscate and suspend or revoke drivers' licenses in the enforcement of such
traffic laws and regulations, the provisions of Rep. Act No. 413618 and P.D. No. 160519 to the
contrary notwithstanding," and that "(f)or this purpose, the Authority shall enforce all
traffic laws and regulations in Metro Manila, through its traffic operation center, and may
deputize members of the PNP, traffic enforcers of local government units, duly licensed
security guards, or members of non-governmental organizations to whom may be
delegated certain authority, subject to such conditions and requirements as the Authority
may impose."

Thus, where there is a traffic law or regulation validly enacted by the legislature or those
agencies to whom legislative powers have been delegated (the City of Manila in this case),
the petitioner is not precluded – and in fact is duty-bound – to confiscate and suspend or
revoke drivers' licenses in the exercise of its mandate of transport and traffic management,
as well as the administration and implementation of all traffic enforcement operations,
traffic engineering services and traffic education programs.20

This is consistent with our ruling in Bel-Air that the MMDA is a development authority
created for the purpose of laying down policies and coordinating with the various national
government agencies, people's organizations, non-governmental organizations and the
private sector, which may enforce, but not enact, ordinances.

This is also consistent with the fundamental rule of statutory construction that a statute is
to be read in a manner that would breathe life into it, rather than defeat it,21 and is
supported by the criteria in cases of this nature that all reasonable doubts should be
resolved in favor of the constitutionality of a statute.22

A last word. The MMDA was intended to coordinate services with metro-wide impact that
transcend local political boundaries or would entail huge expenditures if provided by the
individual LGUs, especially with regard to transport and traffic management,23 and we are
aware of the valiant efforts of the petitioner to untangle the increasingly traffic-snarled
roads of Metro Manila. But these laudable intentions are limited by the MMDA's enabling
law, which we can but interpret, and petitioner must be reminded that its efforts in this
respect must be authorized by a valid law, or ordinance, or regulation arising from a
legitimate source.

WHEREFORE, the petition is dismissed.

SO ORDERED.
MMDA vs. Viron Transportation, G.R. No. 170656, Aug. 15, 2007

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.

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.