ERMITA-MALATE HOTEL AND MOTEL OPERATORS ASSOCIATION, INC.

, HOTEL DEL
MAR INC. and GO CHIU, petitioners-appellees,
vs.
THE HONORABLE CITY MAYOR OF MANILA, respondent-appellant.
VICTOR ALABANZA, intervenor-appellee.
Panganiban, Abad and Associates Law Office for respondent-appellant.
J. M. Aruego, Tenchavez and Associates for intervenor-appellee.
FERNANDO, J.:
The principal question in this appeal from a judgment of the lower court in an action for
prohibition is whether Ordinance No. 4760 of the City of Manila is violative of the due process
clause. The lower court held that it is and adjudged it "unconstitutional, and, therefore, null and
void." For reasons to be more specifically set forth, such judgment must be reversed, there
being a failure of the requisite showing to sustain an attack against its validity.
The petition for prohibition against Ordinance No. 4760 was filed on July 5, 1963 by the
petitioners, Ermita-Malate Hotel and Motel Operators Association, one of its members, Hotel del
Mar Inc., and a certain Go Chiu, who is "the president and general manager of the second
petitioner" against the respondent Mayor of the City of Manila who was sued in his capacity as
such "charged with the general power and duty to enforce ordinances of the City of Manila and
to give the necessary orders for the faithful execution and enforcement of such ordinances."
(par. 1). It was alleged that the petitioner non-stock corporation is dedicated to the promotion
and protection of the interest of its eighteen (18) members "operating hotels and motels,
characterized as legitimate businesses duly licensed by both national and city authorities,
regularly paying taxes, employing and giving livelihood to not less than 2,500 person and
representing an investment of more than P3 million."1 (par. 2). It was then alleged that on June
13, 1963, the Municipal Board of the City of Manila enacted Ordinance No. 4760, approved on
June 14, 1963 by the then Vice-Mayor Herminio Astorga, who was at the time acting as Mayor
of the City of Manila. (par. 3).
After which the alleged grievances against the ordinance were set forth in detail. There was the
assertion of its being beyond the powers of the Municipal Board of the City of Manila to enact
insofar as it would regulate motels, on the ground that in the revised charter of the City of Manila
or in any other law, no reference is made to motels; that Section 1 of the challenged ordinance
is unconstitutional and void for being unreasonable and violative of due process insofar as it
would impose P6,000.00 fee per annum for first class motels and P4,500.00 for second class
motels; that the provision in the same section which would require the owner, manager, keeper
or duly authorized representative of a hotel, motel, or lodging house to refrain from entertaining
or accepting any guest or customer or letting any room or other quarter to any person or
persons without his filling up the prescribed form in a lobby open to public view at all times and
in his presence, wherein the surname, given name and middle name, the date of birth, the
address, the occupation, the sex, the nationality, the length of stay and the number of
companions in the room, if any, with the name, relationship, age and sex would be specified,
with data furnished as to his residence certificate as well as his passport number, if any,
coupled with a certification that a person signing such form has personally filled it up and affixed
his signature in the presence of such owner, manager, keeper or duly authorized representative,
with such registration forms and records kept and bound together, it also being provided that the
premises and facilities of such hotels, motels and lodging houses would be open for inspection
either by the City Mayor, or the Chief of Police, or their duly authorized representatives is

unconstitutional and void again on due process grounds, not only for being arbitrary,
unreasonable or oppressive but also for being vague, indefinite and uncertain, and likewise for
the alleged invasion of the right to privacy and the guaranty against self-incrimination; that
Section 2 of the challenged ordinance classifying motels into two classes and requiring the
maintenance of certain minimum facilities in first class motels such as a telephone in each
room, a dining room or, restaurant and laundry similarly offends against the due process clause
for being arbitrary, unreasonable and oppressive, a conclusion which applies to the portion of
the ordinance requiring second class motels to have a dining room; that the provision of Section
2 of the challenged ordinance prohibiting a person less than 18 years old from being accepted
in such hotels, motels, lodging houses, tavern or common inn unless accompanied by parents
or a lawful guardian and making it unlawful for the owner, manager, keeper or duly authorized
representative of such establishments to lease any room or portion thereof more than twice
every 24 hours, runs counter to the due process guaranty for lack of certainty and for its
unreasonable, arbitrary and oppressive character; and that insofar as the penalty provided for in
Section 4 of the challenged ordinance for a subsequent conviction would, cause the automatic
cancellation of the license of the offended party, in effect causing the destruction of the business
and loss of its investments, there is once again a transgression of the due process clause.
There was a plea for the issuance of preliminary injunction and for a final judgment declaring the
above ordinance null and void and unenforceable. The lower court on July 6, 1963 issued a writ
of preliminary injunction ordering respondent Mayor to refrain from enforcing said Ordinance No.
4760 from and after July 8, 1963.
In the a answer filed on August 3, 1963, there was an admission of the personal circumstances
regarding the respondent Mayor and of the fact that petitioners are licensed to engage in the
hotel or motel business in the City of Manila, of the provisions of the cited Ordinance but a
denial of its alleged nullity, whether on statutory or constitutional grounds. After setting forth that
the petition did fail to state a cause of action and that the challenged ordinance bears a
reasonable relation, to a proper purpose, which is to curb immorality, a valid and proper
exercise of the police power and that only the guests or customers not before the court could
complain of the alleged invasion of the right to privacy and the guaranty against self
incrimination, with the assertion that the issuance of the preliminary injunction ex parte was
contrary to law, respondent Mayor prayed for, its dissolution and the dismissal of the petition.
Instead of evidence being offered by both parties, there was submitted a stipulation of facts
dated September 28, 1964, which reads:
1. That the petitioners Ermita-Malate Hotel and Motel Operators Association, Inc. and Hotel
del Mar Inc. are duly organized and existing under the laws of the Philippines, both with
offices in the City of Manila, while the petitioner Go Chin is the president and general
manager of Hotel del Mar Inc., and the intervenor Victor Alabanza is a resident of Baguio
City, all having the capacity to sue and be sued;
2. That the respondent Mayor is the duly elected and incumbent City Mayor and chief
executive of the City of Manila charged with the general power and duty to enforce
ordinances of the City of Manila and to give the necessary orders for the faithful execution
and enforcement of such ordinances;
3. That the petitioners are duly licensed to engage in the business of operating hotels and
motels in Malate and Ermita districts in Manila;

4. That on June 13, 1963, the Municipal Board of the City of Manila enacted Ordinance No.
4760, which was approved on June 14, 1963, by Vice-Mayor Herminio Astorga, then the
acting City Mayor of Manila, in the absence of the respondent regular City Mayor, amending
sections 661, 662, 668-a, 668-b and 669 of the compilation of the ordinances of the City of
Manila besides inserting therein three new sections. This ordinance is similar to the one
vetoed by the respondent Mayor (Annex A) for the reasons stated in its 4th Indorsement
dated February 15, 1963 (Annex B);
5. That the explanatory note signed by then Councilor Herminio Astorga was submitted with
the proposed ordinance (now Ordinance 4760) to the Municipal Board, copy of which is
attached hereto as Annex C;
6. That the City of Manila derived in 1963 an annual income of P101,904.05 from license
fees paid by the 105 hotels and motels (including herein petitioners) operating in the City of
Manila.
1wph1.t

Thereafter came a memorandum for respondent on January 22, 1965, wherein stress was laid
on the presumption of the validity of the challenged ordinance, the burden of showing its lack of
conformity to the Constitution resting on the party who assails it, citing not only U.S. v.
Salaveria, but likewise applicable American authorities. Such a memorandum likewise refuted
point by point the arguments advanced by petitioners against its validity. Then barely two weeks
later, on February 4, 1965, the memorandum for petitioners was filed reiterating in detail what
was set forth in the petition, with citations of what they considered to be applicable American
authorities and praying for a judgment declaring the challenged ordinance "null and void and
unenforceable" and making permanent the writ of preliminary injunction issued.
After referring to the motels and hotels, which are members of the petitioners association, and
referring to the alleged constitutional questions raised by the party, the lower court observed:
"The only remaining issue here being purely a question of law, the parties, with the nod of the
Court, agreed to file memoranda and thereafter, to submit the case for decision of the Court." It
does appear obvious then that without any evidence submitted by the parties, the decision
passed upon the alleged infirmity on constitutional grounds of the challenged ordinance,
dismissing as is undoubtedly right and proper the untenable objection on the alleged lack of
authority of the City of Manila to regulate motels, and came to the conclusion that "the
challenged Ordinance No. 4760 of the City of Manila, would be unconstitutional and, therefore,
null and void." It made permanent the preliminary injunction issued against respondent Mayor
and his agents "to restrain him from enforcing the ordinance in question." Hence this appeal.
As noted at the outset, the judgment must be reversed. A decent regard for constitutional
doctrines of a fundamental character ought to have admonished the lower court against such a
sweeping condemnation of the challenged ordinance. Its decision cannot be allowed to stand,
consistently with what has hitherto been the accepted standards of constitutional adjudication, in
both procedural and substantive aspects.
Primarily what calls for a reversal of such a decision is the absence of any evidence to offset the
presumption of validity that attaches to a challenged statute or ordinance. As was expressed
categorically by Justice Malcolm: "The presumption is all in favor of validity x x x . The action of
the elected representatives of the people cannot be lightly set aside. The councilors must, in the
very nature of things, be familiar with the necessities of their particular municipality and with all
the facts and circumstances which surround the subject and necessitate action. The local
legislative body, by enacting the ordinance, has in effect given notice that the regulations are

essential to the well being of the people x x x . 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.2
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. The principle has been nowhere better expressed than in the leading case
of O'Gorman & Young v. Hartford Fire Insurance Co.,3 where the American Supreme Court
through Justice Brandeis tersely and succinctly summed up the matter thus: 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 resumption of constitutionality
must prevail in the absence of some factual foundation of record for overthrowing the statute."
No such factual foundation being laid in the present case, the lower court deciding the matter on
the pleadings and the stipulation of facts, the presumption of validity must prevail and the
judgment against the ordinance set aside.
Nor may petitioners assert with plausibility that on its face the ordinance is fatally defective as
being repugnant to the due process clause of the Constitution. The mantle of protection
associated with the due process guaranty does not cover petitioners. This particular
manifestation of a police power measure being specifically aimed to safeguard public morals is
immune from such imputation of nullity resting purely on conjecture and unsupported by
anything of substance. To hold otherwise would be to unduly restrict and narrow the scope of
police power which has been properly characterized as the most essential, insistent and the
least limitable of powers,4 extending as it does "to all the great public needs."5 It would be, to
paraphrase another leading decision, to destroy the very purpose of the state if it could be
deprived or allowed itself to be deprived of its competence to promote public health, public
morals, public safety and the genera welfare.6 Negatively put, police power is "that inherent and
plenary power in the State which enables it to prohibit all that is hurt full to the comfort, safety,
and welfare of society.7
There is no question but that the challenged ordinance was precisely enacted to minimize
certain practices hurtful to public morals. The explanatory note of the Councilor Herminio
Astorga included as annex to the stipulation of facts, speaks of the alarming increase in the rate
of prostitution, adultery and fornication in Manila traceable in great part to the existence of
motels, which "provide a necessary atmosphere for clandestine entry, presence and exit" and
thus become the "ideal haven for prostitutes and thrill-seekers." The challenged ordinance then
proposes to check the clandestine harboring of transients and guests of these establishments
by requiring these transients and guests to fill up a registration form, prepared for the purpose,
in a lobby open to public view at all times, and by introducing several other amendatory
provisions calculated to shatter the privacy that characterizes the registration of transients and
guests." Moreover, the increase in the licensed fees was intended to discourage
"establishments of the kind from operating for purpose other than legal" and at the same time, to
increase "the income of the city government." It would appear therefore that the stipulation of
facts, far from sustaining any attack against the validity of the ordinance, argues eloquently for
it.
It is a fact worth noting that this Court has invariably stamped with the seal of its approval,
ordinances punishing vagrancy and classifying a pimp or procurer as a vagrant;8 provide a
license tax for and regulating the maintenance or operation of public dance halls;9 prohibiting

gambling;10 prohibiting jueteng;11 and monte;12 prohibiting playing of panguingui on days other
than Sundays or legal holidays;13 prohibiting the operation of pinball machines;14 and prohibiting
any person from keeping, conducting or maintaining an opium joint or visiting a place where
opium is smoked or otherwise used,15 all of which are intended to protect public morals.
On the legislative organs of the government, whether national or local, primarily rest the
exercise of the police power, which, it cannot be too often emphasized, is the power to prescribe
regulations to promote the health, morals, peace, good order, safety and general welfare of the
people. In view of the requirements of due process, equal protection and other applicable
constitutional guaranties however, the exercise of such police power insofar as it may affect the
life, liberty or property of any person is subject to judicial inquiry. Where such exercise of police
power may be considered as either capricious, whimsical, unjust or unreasonable, a denial of
due process or a violation of any other applicable constitutional guaranty may call for correction
by the courts.
We are thus led to considering the insistent, almost shrill tone, in which the objection is raised to
the question of due process.16 There is no controlling and precise definition of due process. It
furnishes though a standard to which the governmental action should conform in order that
deprivation of life, liberty or property, in each appropriate case, be valid. What then is the
standard of due process which must exist both as a procedural and a substantive requisite to
free the challenged ordinance, or any governmental action for that matter, from the imputation of
legal infirmity sufficient to spell its doom? It is responsiveness to the supremacy of reason,
obedience to the dictates of justice. Negatively put, arbitrariness is ruled out and unfairness
avoided. To satisfy the due process requirement, official action, to paraphrase Cardozo, must
not outrun the bounds of reason and result in sheer oppression. Due process is thus hostile to
any official action marred by lack of reasonableness. Correctly it has been identified as freedom
from arbitrariness. It is the embodiment of the sporting idea of fair play. 17 It exacts fealty "to
those strivings for justice" and judges the act of officialdom of whatever branch "in the light of
reason drawn from considerations of fairness that reflect [democratic] traditions of legal and
political thought."18 It is not a narrow or "technical conception with fixed content unrelated to
time, place and circumstances,"19 decisions based on such a clause requiring a "close and
perceptive inquiry into fundamental principles of our society."20 Questions of due process are not
to be treated narrowly or pedantically in slavery to form or phrases.21
It would thus be an affront to reason to stigmatize an ordinance enacted precisely to meet what
a municipal lawmaking body considers an evil of rather serious proportion an arbitrary and
capricious exercise of authority. It would seem that what should be deemed unreasonable and
what would amount to an abdication of the power to govern is inaction in the face of an admitted
deterioration of the state of public morals. To be more specific, the Municipal Board of the City
of Manila felt the need for a remedial measure. It provided it with the enactment of the
challenged ordinance. A strong case must be found in the records, and, as has been set forth,
none is even attempted here to attach to an ordinance of such character the taint of nullity for an
alleged failure to meet the due process requirement. Nor does it lend any semblance even of
deceptive plausibility to petitioners' indictment of Ordinance No. 4760 on due process grounds
to single out such features as the increased fees for motels and hotels, the curtailment of the
area of freedom to contract, and, in certain particulars, its alleged vagueness.
Admittedly there was a decided increase of the annual license fees provided for by the
challenged ordinance for hotels and motels, 150% for the former and over 200% for the latter,
first-class motels being required to pay a P6,000 annual fee and second-class motels, P4,500
yearly. It has been the settled law however, as far back as 1922 that municipal license fees

could be classified into those imposed for regulating occupations or regular enterprises, for the
regulation or restriction of non-useful occupations or enterprises and for revenue purposes
only.22 As was explained more in detail in the above Cu Unjieng case: (2) Licenses for nonuseful occupations are also incidental to the police power and the right to exact a fee may be
implied from the power to license and regulate, but in fixing amount of the license fees the
municipal corporations are allowed a much wider discretion in this class of cases than in the
former, and aside from applying the well-known legal principle that municipal ordinances must
not be unreasonable, oppressive, or tyrannical, courts have, as a general rule, declined to
interfere with such discretion. The desirability of imposing restraint upon the number of persons
who might otherwise engage in non-useful enterprises is, of course, generally an important
factor in the determination of the amount of this kind of license fee. Hence license fees clearly in
the nature of privilege taxes for revenue have frequently been upheld, especially in of licenses
for the sale of liquors. In fact, in the latter cases the fees have rarely been declared
unreasonable.23
Moreover in the equally leading case of Lutz v. Araneta24 this Court affirmed the doctrine earlier
announced by the American Supreme Court that taxation may be made to implement the state's
police power. Only the other day, this Court had occasion to affirm that the broad taxing
authority conferred by the Local Autonomy Act of 1959 to cities and municipalities is sufficiently
plenary to cover a wide range of subjects with the only limitation that the tax so levied is for
public purposes, just and uniform.25
As a matter of fact, even without reference to the wide latitude enjoyed by the City of Manila in
imposing licenses for revenue, it has been explicitly held in one case that "much discretion is
given to municipal corporations in determining the amount," here the license fee of the operator
of a massage clinic, even if it were viewed purely as a police power measure.26 The discussion
of this particular matter may fitly close with this pertinent citation from another decision of
significance: "It is urged on behalf of the plaintiffs-appellees that the enforcement of the
ordinance could deprive them of their lawful occupation and means of livelihood because they
can not rent stalls in the public markets. But it appears that plaintiffs are also dealers in
refrigerated or cold storage meat, the sale of which outside the city markets under certain
conditions is permitted x x x . And surely, the mere fact, that some individuals in the community
may be deprived of their present business or a particular mode of earning a living cannot
prevent the exercise of the police power. As was said in a case, persons licensed to pursue
occupations which may in the public need and interest be affected by the exercise of the police
power embark in these occupations subject to the disadvantages which may result from the
legal exercise of that power."27
Nor does the restriction on the freedom to contract, insofar as the challenged ordinance makes
it unlawful for the owner, manager, keeper or duly authorized representative of any hotel, motel,
lodging house, tavern, common inn or the like, to lease or rent room or portion thereof more
than twice every 24 hours, with a proviso that in all cases full payment shall be charged, call for
a different conclusion. Again, such a limitation cannot be viewed as a transgression against the
command of due process. It is neither unreasonable nor arbitrary. Precisely it was intended to
curb the opportunity for the immoral or illegitimate use to which such premises could be, and,
according to the explanatory note, are being devoted. How could it then be arbitrary or
oppressive when there appears a correspondence between the undeniable existence of an
undesirable situation and the legislative attempt at correction. Moreover, petitioners cannot be
unaware that every regulation of conduct amounts to curtailment of liberty which as pointed out
by Justice Malcolm cannot be absolute. Thus: "One thought which runs through all these
different conceptions of liberty is plainly apparent. It is this: 'Liberty' as understood in

democracies, is not license; it is 'liberty regulated by law.' Implied in the term is restraint by law
for the good of the individual and for the greater good of the peace and order of society and the
general well-being. No man can do exactly as he pleases. Every man must renounce unbridled
license. The right of the individual is necessarily subject to reasonable restraint by general law
for the common good x x x The liberty of the citizen may be restrained in the interest of the
public health, or of the public order and safety, or otherwise within the proper scope of the police
power."28
A similar observation was made by Justice Laurel: "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 x x x 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.29
It is noteworthy that the only decision of this Court nullifying legislation because of undue
deprivation of freedom to contract, People v. Pomar,30 no longer "retains its virtuality as a living
principle. The policy of laissez faire has to some extent given way to the assumption by the
government of the right of intervention even in contractual relations affected with public
interest.31 What may be stressed sufficiently is that if the liberty involved were freedom of the
mind or the person, the standard for the validity of governmental acts is much more rigorous
and exacting, but where the liberty curtailed affects at the most rights of property, the
permissible scope of regulatory measure is wider.32 How justify then the allegation of a denial of
due process?
Lastly, there is the attempt to impugn the ordinance on another due process ground by invoking
the principles of vagueness or uncertainty. It would appear from a recital in the petition itself that
what seems to be the gravamen of the alleged grievance is that the provisions are too detailed
and specific rather than vague or uncertain. Petitioners, however, point to the requirement that a
guest should give the name, relationship, age and sex of the companion or companions as
indefinite and uncertain in view of the necessity for determining whether the companion or
companions referred to are those arriving with the customer or guest at the time of the registry
or entering the room With him at about the same time or coming at any indefinite time later to
join him; a proviso in one of its sections which cast doubt as to whether the maintenance of a
restaurant in a motel is dependent upon the discretion of its owners or operators; another
proviso which from their standpoint would require a guess as to whether the "full rate of
payment" to be charged for every such lease thereof means a full day's or merely a half-day's
rate. It may be asked, do these allegations suffice to render the ordinance void on its face for
alleged vagueness or uncertainty? To ask the question is to answer it. From Connally v.
General Construction Co.33 to Adderley v. Florida,34 the principle has been consistently upheld
that what makes a statute susceptible to such a charge is an enactment either forbidding or
requiring the doing of an act that men of common intelligence must necessarily guess at its
meaning and differ as to its application. Is this the situation before us? A citation from Justice
Holmes would prove illuminating: "We agree to all the generalities about not supplying criminal
laws with what they omit but there is no canon against using common sense in construing laws
as saying what they obviously mean."35

That is all then that this case presents. As it stands, with all due allowance for the arguments
pressed with such vigor and determination, the attack against the validity of the challenged
ordinance cannot be considered a success. Far from it. Respect for constitutional law principles
so uniformly held and so uninterruptedly adhered to by this Court compels a reversal of the
appealed decision.
Wherefore, the judgment of the lower court is reversed and the injunction issued lifted forthwith.
With costs.
TAXICAB OPERATORS OF METRO MANILA, INC., FELICISIMO CABIGAO and ACE
TRANSPORTATION CORPORATION, petitioners,
vs.
THE BOARD OF TRANSPORTATION and THE DIRECTOR OF THE BUREAU OF LAND
TRANSPORTATION,respondents.

MELENCIO-HERRERA, J.:
This Petition for "Certiorari, Prohibition and mandamus with Preliminary Injunction and Temporary
Restraining Order" filed by the Taxicab Operators of Metro Manila, Inc., Felicisimo Cabigao and Ace
Transportation, seeks to declare the nullity of Memorandum Circular No. 77-42, dated October 10,
1977, of the Board of Transportation, and Memorandum Circular No. 52, dated August 15, 1980, of
the Bureau of Land Transportation.
Petitioner Taxicab Operators of Metro Manila, Inc. (TOMMI) is a domestic corporation composed of
taxicab operators, who are grantees of Certificates of Public Convenience to operate taxicabs within
the City of Manila and to any other place in Luzon accessible to vehicular traffic. Petitioners Ace
Transportation Corporation and Felicisimo Cabigao are two of the members of TOMMI, each being
an operator and grantee of such certificate of public convenience.
On October 10, 1977, respondent Board of Transportation (BOT) issued Memorandum Circular No.
77-42 which reads:
SUBJECT: Phasing out and Replacement of
Old and Dilapidated Taxis
WHEREAS, it is the policy of the government to insure that only safe and
comfortable units are used as public conveyances;
WHEREAS, the riding public, particularly in Metro-Manila, has, time and again,
complained against, and condemned, the continued operation of old and dilapidated
taxis;
WHEREAS, in order that the commuting public may be assured of comfort,
convenience, and safety, a program of phasing out of old and dilapidated taxis
should be adopted;

WHEREAS, after studies and inquiries made by the Board of Transportation, the
latter believes that in six years of operation, a taxi operator has not only covered the
cost of his taxis, but has made reasonable profit for his investments;
NOW, THEREFORE, pursuant to this policy, the Board hereby declares that no car
beyond six years shall be operated as taxi, and in implementation of the same
hereby promulgates the following rules and regulations:
1. As of December 31, 1977, all taxis of Model 1971 and earlier are ordered
withdrawn from public service and thereafter may no longer be registered and
operated as taxis. In the registration of cards for 1978, only taxis of Model 1972 and
later shall be accepted for registration and allowed for operation;
2. As of December 31, 1978, all taxis of Model 1972 are ordered withdrawn from
public service and thereafter may no longer be registered and operated as taxis. In
the registration of cars for 1979, only taxis of Model 1973 and later shall be accepted
for registration and allowed for operation; and every year thereafter, there shall be a
six-year lifetime of taxi, to wit:
1980 Model 1974
1981 Model 1975, etc.
All taxis of earlier models than those provided above are hereby ordered withdrawn
from public service as of the last day of registration of each particular year and their
respective plates shall be surrendered directly to the Board of Transportation for
subsequent turnover to the Land Transportation Commission.
For an orderly implementation of this Memorandum Circular, the rules herein shall
immediately be effective in Metro-Manila. Its implementation outside Metro- Manila
shall be carried out only after the project has been implemented in Metro-Manila and
only after the date has been determined by the Board. 1
Pursuant to the above BOT circular, respondent Director of the Bureau of Land Transportation (BLT)
issued Implementing Circular No. 52, dated August 15, 1980, instructing the Regional Director, the
MV Registrars and other personnel of BLT, all within the National Capitol Region, to implement said
Circular, and formulating a schedule of phase-out of vehicles to be allowed and accepted for
registration as public conveyances. To quote said Circular:
Pursuant to BOT Memo-Circular No. 77-42, taxi units with year models over six (6)
years old are now banned from operating as public utilities in Metro Manila. As such
the units involved should be considered as automatically dropped as public utilities
and, therefore, do not require any further dropping order from the BOT.
Henceforth, taxi units within the National Capitol Region having year models over 6
years old shall be refused registration. The following schedule of phase-out is
herewith prescribed for the guidance of all concerned:
Year Model

Automatic
Phase-Out
Year

1980
1974

1981

1975

1982

1976

1983

1977
etc.

etc.

Strict compliance here is desired. 2

In accordance therewith, cabs of model 1971 were phase-out in registration year 1978; those of
model 1972, in 1979; those of model 1973, in 1980; and those of model 1974, in 1981.
On January 27, 1981, petitioners filed a Petition with the BOT, docketed as Case No. 80-7553,
seeking to nullify MC No. 77-42 or to stop its implementation; to allow the registration and operation
in 1981 and subsequent years of taxicabs of model 1974, as well as those of earlier models which
were phased-out, provided that, at the time of registration, they are roadworthy and fit for operation.
On February 16, 1981, petitioners filed before the BOT a "Manifestation and Urgent Motion", praying
for an early hearing of their petition. The case was heard on February 20, 1981. Petitioners
presented testimonial and documentary evidence, offered the same, and manifested that they would
submit additional documentary proofs. Said proofs were submitted on March 27, 1981 attached to
petitioners' pleading entitled, "Manifestation, Presentation of Additional Evidence and Submission of
the Case for Resolution." 3
On November 28, 1981, petitioners filed before the same Board a "Manifestation and Urgent Motion
to Resolve or Decide Main Petition" praying that the case be resolved or decided not later than
December 10, 1981 to enable them, in case of denial, to avail of whatever remedy they may have
under the law for the protection of their interests before their 1975 model cabs are phased-out on
January 1, 1982.
Petitioners, through its President, allegedly made personal follow-ups of the case, but was later
informed that the records of the case could not be located.
On December 29, 1981, the present Petition was instituted wherein the following queries were posed
for consideration by this Court:
A. Did BOT and BLT promulgate the questioned memorandum circulars in accord
with the manner required by Presidential Decree No. 101, thereby safeguarding the
petitioners' constitutional right to procedural due process?
B. Granting, arguendo, that respondents did comply with the procedural
requirements imposed by Presidential Decree No. 101, would the implementation
and enforcement of the assailed memorandum circulars violate the petitioners'
constitutional rights to.
(1) Equal protection of the law;

(2) Substantive due process; and

(3) Protection against arbitrary and unreasonable
classification and standard?
On Procedural and Substantive Due Process:
Presidential Decree No. 101 grants to the Board of Transportation the power
4. To fix just and reasonable standards, classification, regulations, practices,
measurements, or service to be furnished, imposed, observed, and followed by
operators of public utility motor vehicles.
Section 2 of said Decree provides procedural guidelines for said agency to follow in the exercise of
its powers:
Sec. 2. Exercise of powers. In the exercise of the powers granted in the preceding
section, the Board shag proceed promptly along the method of legislative inquiry.
Apart from its own investigation and studies, the Board, in its discretion, may require
the cooperation and assistance of the Bureau of Transportation, the Philippine
Constabulary, particularly the Highway Patrol Group, the support agencies within the
Department of Public Works, Transportation and Communications, or any other
government office or agency that may be able to furnish useful information or data in
the formulation of the Board of any policy, plan or program in the implementation of
this Decree.
The Board may also can conferences, require the submission of position papers or
other documents, information, or data by operators or other persons that may be
affected by the implementation of this Decree, or employ any other suitable means of
inquiry.
In support of their submission that they were denied procedural due process, petitioners contend
that they were not caged upon to submit their position papers, nor were they ever summoned to
attend any conference prior to the issuance of the questioned BOT Circular.
It is clear from the provision aforequoted, however, that the leeway accorded the Board gives it a
wide range of choice in gathering necessary information or data in the formulation of any policy, plan
or program. It is not mandatory that it should first call a conference or require the submission of
position papers or other documents from operators or persons who may be affected, this being only
one of the options open to the Board, which is given wide discretionary authority. Petitioners cannot
justifiably claim, therefore, that they were deprived of procedural due process. Neither can they state
with certainty that public respondents had not availed of other sources of inquiry prior to issuing the
challenged Circulars. operators of public conveyances are not the only primary sources of the data
and information that may be desired by the BOT.
Dispensing with a public hearing prior to the issuance of the Circulars is neither violative of
procedural due process. As held in Central Bank vs. Hon. Cloribel and Banco Filipino, 44 SCRA 307
(1972):
Pevious notice and hearing as elements of due process, are constitutionally required
for the protection of life or vested property rights, as well as of liberty, when its

limitation or loss takes place in consequence of a judicial or quasi-judicial

proceeding, generally dependent upon a past act or event which has to be
established or ascertained. It is not essential to the validity of general rules or
regulations promulgated to govern future conduct of a class or persons or
enterprises, unless the law provides otherwise. (Emphasis supplied)
Petitioners further take the position that fixing the ceiling at six (6) years is arbitrary and oppressive
because the roadworthiness of taxicabs depends upon their kind of maintenance and the use to
which they are subjected, and, therefore, their actual physical condition should be taken into
consideration at the time of registration. As public contend, however, it is impractical to subject every
taxicab to constant and recurring evaluation, not to speak of the fact that it can open the door to the
adoption of multiple standards, possible collusion, and even graft and corruption. A reasonable
standard must be adopted to apply to an vehicles affected uniformly, fairly, and justly. The span of
six years supplies that reasonable standard. The product of experience shows that by that time taxis
have fully depreciated, their cost recovered, and a fair return on investment obtained. They are also
generally dilapidated and no longer fit for safe and comfortable service to the public specially
considering that they are in continuous operation practically 24 hours everyday in three shifts of
eight hours per shift. With that standard of reasonableness and absence of arbitrariness, the
requirement of due process has been met.
On Equal Protection of the Law:
Petitioners alleged that the Circular in question violates their right to equal protection of the law
because the same is being enforced in Metro Manila only and is directed solely towards the taxi
industry. At the outset it should be pointed out that implementation outside Metro Manila is also
envisioned in Memorandum Circular No. 77-42. To repeat the pertinent portion:
For an orderly implementation of this Memorandum Circular, the rules herein shall
immediately be effective in Metro Manila. Its implementation outside Metro Manila
shall be carried out only after the project has been implemented in Metro Manila and
only after the date has been determined by the Board. 4
In fact, it is the understanding of the Court that implementation of the Circulars in Cebu City is
already being effected, with the BOT in the process of conducting studies regarding the operation of
taxicabs in other cities.
The Board's reason for enforcing the Circular initially in Metro Manila is that taxicabs in this city,
compared to those of other places, are subjected to heavier traffic pressure and more constant use.
This is of common knowledge. Considering that traffic conditions are not the same in every city, a
substantial distinction exists so that infringement of the equal protection clause can hardly be
successfully claimed.
As enunciated in the preambular clauses of the challenged BOT Circular, the overriding
consideration is the safety and comfort of the riding public from the dangers posed by old and
dilapidated taxis. The State, in the exercise, of its police power, can prescribe regulations to promote
the health, morals, peace, good order, safety and general welfare of the people. It can prohibit all
things hurtful to comfort, safety and welfare of society. 5 It may also regulate property rights. 6 In the
language of Chief Justice Enrique M. Fernando "the necessities imposed by public welfare may justify the
exercise of governmental authority to regulate even if thereby certain groups may plausibly assert that
their interests are disregarded". 7

In so far as the non-application of the assailed Circulars to other transportation services is

concerned, it need only be recalled that the equal protection clause does not imply that the same

treatment be accorded all and sundry. It applies to things or persons Identically or similarly situated.
It permits of classification of the object or subject of the law provided classification is reasonable or
based on substantial distinction, which make for real differences, and that it must apply equally to
each member of the class. 8 What is required under the equal protection clause is the uniform operation
by legal means so that all persons under Identical or similar circumstance would be accorded the same
treatment both in privilege conferred and the liabilities imposed. 9 The challenged Circulars satisfy the
foregoing criteria.

Evident then is the conclusion that the questioned Circulars do not suffer from any constitutional
infirmity. To declare a law unconstitutional, the infringement of constitutional right must be clear,
categorical and undeniable. 10
WHEREFORE, the Writs prayed for are denied and this Petition is hereby dismissed. No costs.
SO ORDERED.

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
Year and
Retailers
Nationality

No.Establishments

Pesos

Gross Sales

Per cent
Distribution

Pesos

Per cent
Distribution

1941:
Filipino
..........

106,671 200,323,138

55.82 174,181,924

51.74

Chinese
...........

15,356 118,348,692

32.98 148,813,239

44.21

Others
............

1,646 40,187,090

11.20 13,630,239

4.05

Filipino
..........

111,107 208,658,946

65.05 279,583,333

57.03

Chinese
...........

13,774 106,156,218

33.56 205,701,134

41.96

1947:

Others
...........

354

8,761,260

.49

4,927,168

1.01

1948: (Census)
Filipino
..........

113,631 213,342,264

67.30 467,161,667

60.51

Chinese
..........

12,087 93,155,459

29.38 294,894,227

38.20

Others
..........

422 10,514,675

Filipino
..........
Chinese
..........

3.32

9,995,402

1.29

113,659 213,451,602

60.89 462,532,901

53.47

16,248 125,223,336

35.72 392,414,875

45.36

Others
..........

486 12,056,365

3.39 10,078,364

1.17

Filipino
.........

119,352 224,053,620

61.09 466,058,052

53.07

Chinese
..........

17,429 134,325,303

36.60 404,481,384

46.06

1949:

1951:

Others

347

8,614,025

2.31

7,645,327

87

..........

AVERAGE
ASSETS AND GROSS SALES PER ESTABLISHMENT
Year and Retailer's
Nationality

Item
Assets
(Pesos)

Gross
Sales
(Pesos)

1941:
Filipino .............................................

1,878

1,633

Chinese
..............................................

7,707

9,691

Others
...............................................

24,415

8,281

Filipino .............................................

1,878

2,516

Chinese ...........................................

7,707

14,934

Others ..............................................

24,749

13,919

Filipino .............................................

1,878

4,111

Chinese
.............................................

7,707

24,398

Others ..............................................

24,916

23,686

Filipino .............................................

1,878

4,069

Chinese
..............................................

7,707

24,152

Others ..............................................

24,807

20,737

Filipino .............................................

1,877

3,905

Chinese
.............................................

7,707

33,207

24,824

22,033

1947:

1948:

(Census)

1949:

1951:

Others

...............................................
(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 foreignborn 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 actprohibiting 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.
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 thath) 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 socalled "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.

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 ServWell 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 taxpayers 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"11was 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 takers gain but the owners loss. The word just is
used to intensify the meaning of the wordcompensation, 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 wellbeing 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 P1.00 senior citizen discount that petitioners would
give, P0.68 will be shouldered by them as only P0.32 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 P37.57 per tablet, and retails it atP39.60 (or at a margin of 5%). If it grants a 20% discount to
senior citizens or an amount equivalent to P7.92, then it would have to sell Norvasc at P31.68
which translates to a loss from capital of P5.89 per tablet. Even if the government will allow a
tax deduction, only P2.53 per tablet will be refunded and not the full amount of the discount
which is P7.92. 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.
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:
I
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?
V
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 delegatethis 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." 16The 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, nongovernmental 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 ViceMayors' 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 metrowide 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
exerciseregulatory 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. 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.
1w phi 1

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. These
amendments, however, did not affect the nature of the MMDA as originally conceived in the
House of Representatives. 55
1wphi1

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.
1w phi 1.nt

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.
REVIEW CENTER ASSOCIATION OF THE PHILIPPINES, Petitioner,
vs.
EXECUTIVE SECRETARY EDUARDO ERMITA and COMMISSION ON HIGHER
EDUCATION represented by its Chairman ROMULO L. NERI, Respondents.
CPA REVIEW SCHOOL OF THE PHILIPPINES, INC. (CPAR), PROFESSIONAL REVIEW
AND TRAINING CENTER, INC. (PRTC), ReSA REVIEW SCHOOL, INC. (ReSA), CRC-ACE
REVIEW SCHOOL, INC. (CRC-ACE)Petitioners-Intervenors.
PIMSAT COLLEGES, Respondent-Intervenor.
DECISION
CARPIO, J.:
The Case

Before the Court is a petition for prohibition and mandamus assailing Executive Order No. 566
(EO 566)1 and Commission on Higher Education (CHED) Memorandum Order No. 30, series of
2007 (RIRR).2
The Antecedent Facts
On 11 and 12 June 2006, the Professional Regulation Commission (PRC) conducted the
Nursing Board Examinations nationwide. In June 2006, licensure applicants wrote the PRC to
report that handwritten copies of two sets of examinations were circulated during the
examination period among the examinees reviewing at the R.A. Gapuz Review Center and
Inress Review Center. George Cordero, Inress Review Centers President, was then the
incumbent President of the Philippine Nurses Association. The examinees were provided with a
list of 500 questions and answers in two of the examinations five subjects, particularly Tests III
(Psychiatric Nursing) and V (Medical-Surgical Nursing). The PRC later admitted the leakage
and traced it to two Board of Nursing members.3 On 19 June 2006, the PRC released the
results of the Nursing Board Examinations. On 18 August 2006, the Court of Appeals restrained
the PRC from proceeding with the oath-taking of the successful examinees set on 22 August
2006.
Consequently, President Gloria Macapagal-Arroyo (President Arroyo) replaced all the members
of the PRCs Board of Nursing. President Arroyo also ordered the examinees to re-take the
Nursing Board Examinations.
On 8 September 2006, President Arroyo issued EO 566 which authorized the CHED to
supervise the establishment and operation of all review centers and similar entities in the
Philippines.
On 3 November 2006, the CHED, through its then Chairman Carlito S. Puno (Chairman Puno),
approved CHED Memorandum Order No. 49, series of 2006 (IRR).4
In a letter dated 24 November 2006,5 the Review Center Association of the Philippines
(petitioner), an organization of independent review centers, asked the CHED to "amend, if not
withdraw" the IRR arguing, among other things, that giving permits to operate a review center to
Higher Education Institutions (HEIs) or consortia of HEIs and professional organizations will
effectively abolish independent review centers.
In a letter dated 3 January 2007,6 Chairman Puno wrote petitioner, through its President Jose
Antonio Fudolig (Fudolig), that to suspend the implementation of the IRR would be inconsistent
with the mandate of EO 566. Chairman Puno wrote that the IRR was presented to the
stakeholders during a consultation process prior to its finalization and publication on 13
November 2006. Chairman Puno also wrote that petitioners comments and suggestions would
be considered in the event of revisions to the IRR.
In view of petitioners continuing request to suspend and re-evaluate the IRR, Chairman Puno,
in a letter dated 9 February 2007,7 invited petitioners representatives to a dialogue on 14 March
2007. In accordance with what was agreed upon during the dialogue, petitioner submitted to the
CHED its position paper on the IRR. Petitioner also requested the CHED to confirm in writing
Chairman Punos statements during the dialogue, particularly on lowering of the registration fee
from P400,000 to P20,000 and the requirement for reviewers to have five years teaching
experience instead of five years administrative experience. Petitioner likewise requested for a

categorical answer to their request for the suspension of the IRR. The CHED did not reply to the
letter.
On 7 May 2007, the CHED approved the RIRR. On 22 August 2007, petitioner filed before the
CHED a Petition to Clarify/Amend Revised Implementing Rules and Regulations8 praying for a
ruling:
1. Amending the RIRR by excluding independent review centers from the coverage of the
CHED;
2. Clarifying the meaning of the requirement for existing review centers to tie-up or be
integrated with HEIs, consortium or HEIs and PRC-recognized professional associations with
recognized programs, or in the alternative, to convert into schools; and
3. Revising the rules to make it conform with Republic Act No. 7722 (RA 7722)9 limiting the
CHEDs coverage to public and private institutions of higher education as well as degreegranting programs in post-secondary educational institutions.

On 8 October 2007, the CHED issued Resolution No. 718-200710 referring petitioners request to
exclude independent review centers from CHEDs supervision and regulation to the Office of the
President as the matter requires the amendment of EO 566. In a letter dated 17 October
2007,11 then CHED Chairman Romulo L. Neri (Chairman Neri) wrote petitioner regarding its
petition to be excluded from the coverage of the CHED in the RIRR. Chairman Neri stated:
While it may be true that regulation of review centers is not one of the mandates of CHED under
Republic Act 7722, however, on September 8, 2006, Her Excellency, President Gloria
Macapagal-Arroyo, issued Executive Order No. 566 directing the Commission on Higher
Education to regulate the establishment and operation of review centers and similar entities in
the entire country.
With the issuance of the aforesaid Executive Order, the CHED now is the agency that is
mandated to regulate the establishment and operation of all review centers as provided for
under Section 4 of the Executive Order which provides that "No review center or similar
entities shall be established and/or operate review classes without the favorable
expressed indorsement of the CHED and without the issuance of the necessary permits
or authorizations to conduct review classes. x x x"
To exclude the operation of independent review centers from the coverage of CHED
would clearly contradict the intention of the said Executive Order No. 566.
Considering that the requests requires the amendment of Executive Order No. 566, the
Commission, during its 305th Commission Meeting, resolved that the said request be directly
referred to the Office of the President for appropriate action.
As to the request to clarify what is meant by tie-up/be integrated with an HEI, as required under
the Revised Implementing Rules and Regulations, tie-up/be integrated simply means, to be in
partner with an HEI.12 (Boldfacing and underscoring in the original)
On 26 October 2007, petitioner filed a petition for Prohibition and Mandamus before this Court
praying for the annulment of the RIRR, the declaration of EO 566 as invalid and
unconstitutional, and the prohibition against CHED from implementing the RIRR.

Dr. Freddie T. Bernal, Director III, Officer-In-Charge, Office of the Director IV of CHED, sent a
letter13 to the President of Northcap Review Center, Inc., a member of petitioner, that it had until
27 November 2007 to comply with the RIRR.
1avvphi1.zw+

On 15 February 2008,14 PIMSAT Colleges (respondent-intervenor) filed a Motion For Leave to

Intervene and To Admit Comment-in-Intervention and a Comment-in-Intervention praying for the
dismissal of the petition. Respondent-intervenor alleges that the Office of the President and the
CHED did not commit any act of grave abuse of discretion in issuing EO 566 and the RIRR.
Respondent-intervenor alleges that the requirements of the RIRR are reasonable, doable, and
are not designed to deprive existing review centers of their review business. The Court granted
the Motion for Leave to Intervene and to Admit Comment-in-Intervention in its 11 March 2008
Resolution.15
On 23 April 2008, a Motion for Leave of Court for Intervention In Support of the Petition and a
Petition In Intervention were filed by CPA Review School of the Philippines, Inc. (CPAR),
Professional Review and Training Center, Inc. (PRTC), ReSA Review School, Inc. (ReSA),
CRC-ACE Review School, Inc. (CRC-ACE), all independent CPA review centers operating in
Manila (collectively, petitioners-intervenors). Petitioners-intervenors pray for the declaration of
EO 566 and the RIRR as invalid on the ground that both constitute an unconstitutional exercise
of legislative power. The Court granted the intervention in its 29 April 2008 Resolution.16
On 21 May 2008, the CHED issued CHED Memorandum Order No. 21, Series of 2008 (CMO
21, s. 2008)17extending the deadline for six months from 27 May 2008 for all existing
independent review centers to tie-up or be integrated with HEIs in accordance with the RIRR.
In its 25 November 2008 Resolution, this Court resolved to require the parties to observe the
status quo prevailing before the issuance of EO 566, the RIRR, and CMO 21, s. 2008.
The Assailed Executive Order and the RIRR
Executive Order No. 566 states in full:
EXECUTIVE ORDER NO. 566
DIRECTING THE COMMISSION ON HIGHER EDUCATION TO REGULATE THE
ESTABLISHMENT AND OPERATION OF REVIEW CENTERS AND SIMILAR ENTITIES
WHEREAS, the State is mandated to protect the right of all citizens to quality education at all levels
and shall take appropriate steps to make education accessible to all, pursuant to Section 1, Article
XIV of the 1987 Constitution;
WHEREAS, the State has the obligation to ensure and promote quality education through the proper
supervision and regulation of the licensure examinations given through the various Boards of
Examiners under the Professional Regulation Commission;
WHEREAS, the lack of regulatory framework for the establishment and operation of review centers
and similar entities, as shown in recent events, have adverse consequences and affect public
interest and welfare;

WHEREAS, the overriding necessity to protect the public against substandard review centers and
unethical practices committed by some review centers demand that a regulatory framework for the
establishment and operation of review centers and similar entities be immediately instituted;
WHEREAS, Republic Act No. 7722, otherwise known as the Higher Education Act of 1994, created
the Commission on Higher Education, which is best equipped to carry out the provisions pertaining
to the regulation of the establishment and operation of review centers and similar entities.
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, the President of the Republic of the
Philippines, by virtue of the powers vested in me by law, do hereby order:
SECTION 1. Establishment of a System of Regulation for Review Centers and
Similar Entities. The Commission on Higher Education (CHED), in consultation with
other concerned government agencies, is hereby directed to formulate a framework
for the regulation of review centers and similar entities, including but not limited to the
development and institutionalization of policies, standards, guidelines for the
establishment, operation and accreditation of review centers and similar entities;
maintenance of a mechanism to monitor the adequacy, transparency and propriety of
their operations; and reporting mechanisms to review performance and ethical
practice.
SEC. 2. Coordination and Support. The Professional Regulation Commission (PRC),
Technical Skills Development Authority (TESDA), Securities and Exchange
Commission (SEC), the various Boards of Examiners under the PRC, as well as
other concerned non-government organizations life professional societies, and
various government agencies, such as the Department of Justice (DOJ), National
Bureau of Investigation (NBI), Office of the Solicitor General (OSG), and others that
may be tapped later, shall provide the necessary assistance and technical support to
the CHED in the successful operationalization of the System of Regulation
envisioned by this Executive Order.
SEC. 3. Permanent Office and Staff. To ensure the effective implementation of the
System of Regulation, the CHED shall organize a permanent office under its
supervision to be headed by an official with the rank of Director and to be composed
of highly competent individuals with expertise in educational assessment, evaluation
and testing; policies and standards development, monitoring, legal and enforcement;
and statistics as well as curriculum and instructional materials development. The
CHED shall submit the staffing pattern and budgetary requirements to the
Department of Budget and Management (DBM) for approval.
SEC. 4. Indorsement Requirement. No review center or similar entities shall be
established and/or operate review classes without the favorable expressed
indorsement of the CHED and without the issuance of the necessary permits or
authorizations to conduct review classes. After due consultation with the
stakeholders, the concerned review centers and similar entities shall be given a
reasonable period, at the discretion of the CHED, to comply with the policies and
standards, within a period not exceeding three (3) years, after due publication of this
Executive Order. The CHED shall see to it that the System of Regulation including
the implementing mechanisms, policies, guidelines and other necessary procedures
and documentation for the effective implementation of the System, are completed
within sixty days (60) upon effectivity of this Executive Order.

SEC. 5. Funding. The initial amount necessary for the development and
implementation of the System of Regulation shall be sourced from the CHED Higher
Education Development Fund (HEDF), subject to the usual government accounting
and auditing practices, or from any applicable funding source identified by the DBM.
For the succeeding fiscal year, such amounts as may be necessary for the budgetary
requirement of implementing the System of Regulation and the provisions of this
Executive Order shall be provided for in the annual General Appropriations Act in the
budget of the CHED. Whenever necessary, the CHED may tap its Development
Funds as supplemental source of funding for the effective implementation of the
regulatory system. In this connection, the CHED is hereby authorized to create
special accounts in the HEDF exclusively for the purpose of implementing the
provisions of this Executive Order.
SEC. 6. Review and Reporting. The CHED shall provide for the periodic review
performance of review centers and similar entities and shall make a report to the
Office of the President of the results of such review, evaluation and monitoring.
SEC. 7. Separability. Any portion or provision of this Executive Order that may be
declared unconstitutional shall not have the effect of nullifying other provisions
hereof, as long as such remaining provisions can still subsist and be given effect in
their entirely.
SEC. 8. Repeal. All rules and regulations, other issuances or parts thereof, which are
inconsistent with this Executive Order, are hereby repealed or modified accordingly.
SEC. 9. Effectivity. This Executive Order shall take effect immediately upon its
publication in a national newspaper of general circulation.
DONE in the City of Manila, this 8th day of September, in the year of Our Lord, Two Thousand and
Six.
(Sgd.) Gloria Macapagal-Arroyo
By the President:
(Sgd.) Eduardo R. Ermita
Executive Secretary

The pertinent provisions of the RIRR affecting independent review centers are as follows:
Rule VII
IMPLEMENTING GUIDELINES AND PROCEDURES
Section 1. Authority to Establish and Operate Only CHED recognized, accredited
and reputable HEIs may be authorized to establish and operate review center/course
by the CHED upon full compliance with the conditions and requirements provided
herein and in other pertinent laws, rules and regulations. In addition, a consortium or
consortia of qualified schools and/or entities may establish and operate review
centers or conduct review classes upon compliance with the provisions of these
Rules.

Rule XIV
TRANSITORY PROVISIONS
Section 1. Review centers that are existing upon the approval of Executive Order No.
566 shall be given a grace period of up to one (1) year, to tie-up/be integrated with
existing HEIs[,] consortium of HEIs and PRC recognized Professional Associations
with recognized programs under the conditions set forth in this Order and upon
mutually acceptable covenants by the contracting parties. In the alternative, they may
convert as a school and apply for the course covered by the review subject to rules
and regulations of the CHED and the SEC with respect to the establishment of
schools. In the meantime, no permit shall be issued if there is non-compliance with
these conditions or non-compliance with the requirements set forth in these rules.
Section 2. Only after full compliance with the requirements shall a Permit be given by
the CHED to review centers contemplated under this Rule.
Section 3. Failure of existing review centers to fully comply with the above shall bar
them from existing as review centers and they shall be deemed as operating illegally
as such. In addition, appropriate administrative and legal proceedings shall be
commence[d] against the erring entities that continue to operate and appropriate
sanctions shall be imposed after due process.
The Issues
The issues raised in this case are the following:
1. Whether EO 566 is an unconstitutional exercise by the Executive of legislative
power as it expands the CHEDs jurisdiction; and
2. Whether the RIRR is an invalid exercise of the Executives rule-making power.
The Ruling of this Court

The petition has merit.

Violation of Judicial Hierarchy
The Office of the Solicitor General (OSG) prays for the dismissal of the petition. Among other
grounds, the OSG alleges that petitioner violated the rule on judicial hierarchy in filing the petition
directly with this Court.
This Courts original jurisdiction to issue a writ of certiorari, prohibition, mandamus, quo warranto,
habeas corpus, and injunction is not exclusive but is concurrent with the Regional Trial Courts and
the Court of Appeals in certain cases.18 The Court has explained:
This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any of
the writs an absolute, unrestrained freedom of choice of the court to which application therefor will
be directed. There is after all a hierarchy of courts. That hierarchy is determinative of the venue of
appeals, and also serves as a general determinant of the appropriate forum for petitions for the
extraordinary writs. A becoming regard of that judicial hierarchy most certainly indicates that
petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed
with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct

invocation of the Supreme Courts original jurisdiction to issue these writs should be allowed only
when there are special and important reasons therefor, clearly and specifically set out in the petition.
This is [an] established policy. It is a policy necessary to prevent inordinate demands upon the
Courts time and attention which are better devoted to those matters within its exclusive jurisdiction,
and to prevent further over-crowding of the Courts docket.19
The Court has further explained:
The propensity of litigants and lawyers to disregard the hierarchy of courts in our judicial system by
seeking relief directly from this Court must be put to a halt for two reasons: (1) it would be an
imposition upon the precious time of this Court; and (2) it would cause an inevitable and resultant
delay, intended or otherwise, in the adjudication of cases, which in some instances had to be
remanded or referred to the lower court as the proper forum under the rules of procedure, or as
better equipped to resolve the issues because this Court is not a trier of facts.20
The rule, however, is not absolute, as when exceptional and compelling circumstances justify the
exercise of this Court of its primary jurisdiction. In this case, petitioner alleges that EO 566 expands
the coverage of RA 7722 and in doing so, the Executive Department usurps the legislative powers of
Congress. The issue in this case is not only the validity of the RIRR. Otherwise, the proper remedy
of petitioner and petitioners-intervenors would have been an ordinary action for the nullification of the
RIRR before the Regional Trial Court.21 The alleged violation of the Constitution by the Executive
Department when it issued EO 566 justifies the exercise by the Court of its primary jurisdiction over
the case. The Court is not precluded from brushing aside technicalities and taking cognizance of an
action due to its importance to the public and in keeping with its duty to determine whether the other
branches of the Government have kept themselves within the limits of the Constitution.22
1awphi 1

OSGs Technical Objections

The OSG alleges that the petition should be dismissed because the verification and certification of
non-forum shopping were signed only by Fudolig without the express authority of any board
resolution or power of attorney. However, the records show that Fudolig was authorized under Board
Resolution No. 3, series of 200723 to file a petition before this Court on behalf of petitioner and to
execute any and all documents necessary to implement the resolution.
The OSG also alleges that the petition should be dismissed for violation of the 2004 Rules on
Notarial Practice because Fudolig only presented his community tax certificate as competent proof
of identity before the notary public. The Court would have required Fudolig to comply with the 2004
Rules on Notarial Practice except that Fudolig already presented his Philippine passport before the
notary public when petitioner submitted its reply to the OSGs comment.
EO 566 Expands the Coverage of RA 7722
The OSG alleges that Section 3 of RA 7722 should be read in conjunction with Section 8,
enumerating the CHEDs powers and functions. In particular, the OSG alleges that the CHED has
the power under paragraphs (e) and (n) of Section 8 to:
(e) monitor and evaluate the performance of programs and institutions of higher learning for
appropriate incentives as well as the imposition of sanctions such as, but not limited to, diminution or
withdrawal of subsidy, recommendation on the downgrading or withdrawal of accreditation, program
termination or school closure;

(n) promulgate such rules and regulations and exercise such other powers and functions as may be
necessary to carry out effectively the purpose and objectives of this Act[.]
The OSG justifies its stand by claiming that the term "programs x x x of higher learning" is broad
enough to include programs offered by review centers.
We do not agree.
Section 3 of RA 7722 provides:
Sec. 3. Creation of Commission on Higher Education. - In pursuance of the abovementioned
policies, the Commission on Higher Education is hereby created, hereinafter referred to as the
Commission.
The Commission shall be independent and separate from the Department of Education, Culture and
Sports (DECS), and attached to the Office of the President for administrative purposes only. Its
coverage shall be both public and private institutions of higher education as well as degreegranting programs in all post-secondary educational institutions, public and private.
(Emphasis supplied)
Neither RA 7722 nor CHED Order No. 3, series of 1994 (Implementing Rules of RA 7722)24 defines
an institution of higher learning or a program of higher learning.
"Higher education," however, is defined as "education beyond the secondary level"25 or "education
provided by a college or university."26 Under the "plain meaning" or verba legis rule in statutory
construction, if the statute is clear, plain, and free from ambiguity, it must be given its literal meaning
and applied without interpretation.27 The legislature is presumed to know the meaning of the words,
to have used words advisedly, and to have expressed its intent by use of such words as are found in
the statute.28 Hence, the term "higher education" should be taken in its ordinary sense and should be
read and interpreted together with the phrase "degree-granting programs in all post-secondary
educational institutions, public and private." Higher education should be taken to mean tertiary
education or that which grants a degree after its completion.

Further, Articles 6 and 7 of the Implementing Rules provide:

Article 6. Scope of Application. - The coverage of the Commission shall be both public and
private institutions of higher education as well as degree granting programs in all postsecondary educational institutions, public and private.
These Rules shall apply to all public and private educational institutions offering tertiary degree
programs.
The establishment, conversion, or elevation of degree-granting institutions shall be within the
responsibility of the Commission.
Article 7. Jurisdiction. - Jurisdiction over institutions of higher learning primarily offering tertiary
degree programsshall belong to the Commission. (Emphasis supplied)
Clearly, HEIs refer to degree-granting institutions, or those offering tertiary degree or postsecondary programs. In fact, Republic Act No. 8292 or the Higher Education Modernization Act

of 1997 covers chartered state universities and colleges. State universities and colleges
primarily offer degree courses and programs.
Sections 1 and 8, Rule IV of the RIRR define a review center and similar entities as follows:
Section 1. REVIEW CENTER. - refers to a center operated and owned by a duly authorized
entity pursuant to these Rules intending to offer to the public and/or to specialized groups
whether for a fee or for free a program or course of study that is intended to refresh and
enhance the knowledge and competencies and skills of reviewees obtained in the formal school
setting in preparation for the licensure examinations given by the Professional Regulations
Commission (PRC). The term review center as understood in these rules shall also embrace the
operation or conduct of review classes or courses provided by individuals whether for a fee or
not in preparation for the licensure examinations given by the Professional Regulations
Commission.
xxx
Section 8. SIMILAR ENTITIES the term refer to other review centers providing review or
tutorial services in areas not covered by licensure examinations given by the Professional
Regulations Commission including but not limited to college entrance examinations, Civil
Service examinations, tutorial services in specific fields like English, Mathematics and the like.
The same Rule defines a review course as follows:
Section 3. REVIEW COURSE refers to the set of non-degree instructional program of study
and/or instructional materials/module, offered by a school with a recognized course/program
requiring licensure examination, that are intended merely to refresh and enhance the knowledge
or competencies and skills of reviewees.
The scopes of EO 566 and the RIRR clearly expand the CHEDs coverage under RA 7722. The
CHEDs coverage under RA 7722 is limited to public and private institutions of higher
education and degree-granting programs in all public and private post-secondary
educational institutions. EO 566 directed the CHED to formulate a framework for the
regulation of review centers and similar entities.
The definition of a review center under EO 566 shows that it refers to one which offers "a
program or course of study that is intended to refresh and enhance the knowledge or
competencies and skills of reviewees obtained in the formal school setting in preparation
for the licensure examinations" given by the PRC. It also covers the operation or conduct of
review classes or courses provided by individuals whether for a fee or not in preparation for the
licensure examinations given by the PRC.
A review center is not an institution of higher learning as contemplated by RA 7722. It does not
offer a degree-granting program that would put it under the jurisdiction of the CHED. A review
course is only intended to "refresh and enhance the knowledge or competencies and skills of
reviewees." A reviewee is not even required to enroll in a review center or to take a review
course prior to taking an examination given by the PRC. Even if a reviewee enrolls in a review
center, attendance in a review course is not mandatory. The reviewee is not required to attend
each review class. He is not required to take or pass an examination, and neither is he given a
grade. He is also not required to submit any thesis or dissertation. Thus, programs given by

review centers could not be considered "programs x x x of higher learning" that would put them
under the jurisdiction of the CHED.
Further, the "similar entities" in EO 566 cover centers providing "review or tutorial services" in
areas not covered by licensure examinations given by the PRC, which include, although not
limited to, college entrance examinations, Civil Services examinations, and tutorial services.
These review and tutorial services hardly qualify as programs of higher learning.
Usurpation of Legislative Power
The OSG argues that President Arroyo was merely exercising her executive power to ensure
that the laws are faithfully executed. The OSG further argues that President Arroyo was
exercising her residual powers under Executive Order No. 292 (EO 292),29 particularly Section
20, Title I of Book III, thus:
Section 20. Residual Powers. - Unless Congress provides otherwise, the President shall
exercise such other powers and functions vested in the President which are provided for
under the laws and which are not specifically enumerated above, or which are not delegated
by the President in accordance with law. (Emphasis supplied)
1avv phi1

Section 20, Title I of Book III of EO 292 speaks of other powers vested in the President under
the law.30 The exercise of the Presidents residual powers under this provision requires
legislation,31 as the provision clearly states that the exercise of the Presidents other powers and
functions has to be "provided for under the law." There is no law granting the President the
power to amend the functions of the CHED. The President may not amend RA 7722 through an
Executive Order without a prior legislation granting her such power.
The President has no inherent or delegated legislative power to amend the functions of the
CHED under RA 7722. Legislative power is the authority to make laws and to alter or repeal
them,32 and this power is vested with the Congress under Section 1, Article VI of the 1987
Constitution which states:
Section 1. The legislative power shall be vested in the Congress of the Philippines which shall
consist of a Senate and a House of Representatives, except to the extent reserved to the
people by the provision on initiative and referendum.
In Ople v. Torres,33 the Court declared void, as a usurpation of legislative power, Administrative
Order No. 308 (AO 308) issued by the President to create a national identification system. AO
308 mandates the adoption of a national identification system even in the absence of an
enabling legislation. The Court distinguished between Legislative and Executive powers, as
follows:
The line that delineates Legislative and Executive power is not indistinct. Legislative power is
"the authority, under the Constitution, to make laws, and to alter and repeal them." The
Constitution, as the will of the people in their original, sovereign and unlimited capacity, has
vested this power in the Congress of the Philippines. The grant of legislative power to Congress
is broad, general and comprehensive. The legislative body possesses plenary power for all
purposes of civil government. Any power, deemed to be legislative by usage and tradition, is
necessarily possessed by Congress, unless the Constitution has lodged it elsewhere. In fine,

except as limited by the Constitution, either expressly or impliedly, legislative power embraces
all subjects and extends to matters of general concern or common interest.
While Congress is vested with the power to enact laws, the President executes the laws. The
executive power is vested in the President. It is generally defined as the power to enforce and
administer laws. It is the power of carrying the laws into practical operation and enforcing their
due observance.
As head of the Executive Department, the President is the Chief Executive. He represents the
government as a whole and sees to it that all laws are enforced by the officials and employees
of his department. He has control over the executive department, bureaus and offices. This
means that he has the authority to assume directly the functions of the executive department,
bureau and office, or interfere with the discretion of its officials. Corollary to the power of control,
the President also has the duty of supervising the enforcement of laws for the maintenance of
general peace and public order. Thus, he is granted administrative power over bureaus and
offices under his control to enable him to discharge his duties effectively.
Administrative power is concerned with the work of applying policies and enforcing orders as
determined by proper governmental organs. It enables the President to fix a uniform standard of
administrative efficiency and check the official conduct of his agents. To this end, he can issue
administrative orders, rules and regulations.
x x x. An administrative order is:
"Sec. 3. Administrative Orders. - Acts of the President which relate to particular aspects of
governmental operation in pursuance of his duties as administrative head shall be promulgated
in administrative orders."
An administrative order is an ordinance issued by the President which relates to specific
aspects in the administrative operation of government. It must be in harmony with the law and
should be for the sole purpose of implementing the law and carrying out the legislative policy. x
x x.34
Just like AO 308 in Ople v. Torres, EO 566 in this case is not supported by any enabling law.
The Court further stated in Ople:
x x x. As well stated by Fisher: "x x x Many regulations however, bear directly on the public. It is
here that administrative legislation must be restricted in its scope and application. Regulations
are not supposed to be a substitute for the general policy-making that Congress enacts in the
form of a public law. Although administrative regulations are entitled to respect, the authority to
prescribe rules and regulations is not an independent source of power to make laws."35
Since EO 566 is an invalid exercise of legislative power, the RIRR is also an invalid exercise of
the CHEDs quasi-legislative power.
Administrative agencies exercise their quasi-legislative or rule-making power through the
promulgation of rules and regulations.36 The CHED may only exercise its rule-making power
within the confines of its jurisdiction under RA 7722. The RIRR covers review centers and
similar entities which are neither institutions of higher education nor institutions offering degreegranting programs.

Exercise of Police Power

Police power to prescribe regulations to promote the health, morals, education, good order or
safety, and the general welfare of the people flows from the recognition that salus populi est
suprema lex the welfare of the people is the supreme law.37 Police power primarily rests with
the legislature although it may be exercised by the President and administrative boards by virtue
of a valid delegation.38 Here, no delegation of police power exists under RA 7722 authorizing the
President to regulate the operations of non-degree granting review centers.
Republic Act No. 8981 is Not the Appropriate Law
It is argued that the President of the Philippines has adequate powers under the law to regulate
review centers and this could have been done under an existing validly delegated authority, and
that the appropriate law is Republic Act No. 898139 (RA 8981). Under Section 5 of RA 8981, the
PRC is mandated to "establish and maintain a high standard of admission to the practice of all
professions and at all times ensure and safeguard the integrity of all licensure examinations."
Section 7 of RA 8981 further states that the PRC shall adopt "measures to preserve the integrity
and inviolability of licensure examinations."
There is no doubt that a principal mandate of the PRC is to preserve the integrity of licensure
examinations. The PRC has the power to adopt measures to preserve the integrity and
inviolability of licensure examinations. However, this power should properly be interpreted to
refer to the conduct of the examinations. The enumeration of PRCs powers under Section 7(e)
includes among others, the fixing of dates and places of the examinations and the appointment
of supervisors and watchers. The power to preserve the integrity and inviolability of licensure
examinations should be read together with these functions. These powers of the PRC have
nothing to do at all with the regulation of review centers.
The PRC has the power to investigate any of the members of the Professional Regulatory
Boards (PRB) for "commission of any irregularities in the licensure examinations which taint or
impugn the integrity and authenticity of the results of the said examinations."40 This is an
administrative power which the PRC exercises over members of the PRB. However, this power
has nothing to do with the regulation of review centers. The PRC has the power to bar PRB
members from conducting review classes in review centers. However, to interpret this power
to extend to the power to regulate review centers is clearly an unwarranted interpretation
of RA 8981. The PRC may prohibit the members of the PRB from conducting review classes at
review centers because the PRC has administrative supervision over the members of the PRB.
However, such power does not extend to the regulation of review centers.
Section 7(y) of RA 8981 giving the PRC the power to perform "such other functions and duties
as may be necessary to carry out the provisions" of RA 8981 does not extend to the regulation
of review centers. There is absolutely nothing in RA 8981 that mentions regulation by the
PRC of review centers.
The Court cannot likewise interpret the fact that RA 8981 penalizes "any person who
manipulates or rigs licensure examination results, secretly informs or makes known licensure
examination questions prior to the conduct of the examination or tampers with the grades in the
professional licensure examinations"41 as a grant of power to regulate review centers. The
provision simply provides for the penalties for manipulation and other corrupt practices in the
conduct of the professional examinations.

The assailed EO 566 seeks to regulate not only review centers but also "similar entities." The
questioned CHED RIRR defines "similar entities" as referring to "other review centers providing
review or tutorial services in areas not covered by licensure examinations given by the PRC
including but not limited to college entrance examinations, Civil Service examinations, tutorial
services in specific fields like English, Mathematics and the like."42 The PRC has no mandate to
supervise review centers that give courses or lectures intended to prepare examinees for
licensure examinations given by the PRC. It is like the Court regulating bar review centers just
because the Court conducts the bar examinations. Similarly, the PRC has no mandate to
regulate similar entities whose reviewees will not even take any licensure examination
given by the PRC.
WHEREFORE, we GRANT the petition and the petition-in-intervention.
We DECLARE Executive Order No. 566 and Commission on Higher Education Memorandum
Order No. 30, series of 2007 VOID for being unconstitutional.
SO ORDERED.