Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 40243 March 11, 1992
CELESTINO TATEL, petitioner,
vs.
MUNICIPALITY OF VIRAC, SALVADOR A. SURTIDA, in his capacity as
Mayor of Virac, Catanduanes; GAVINO V. GUERRERO, in his capacity as
Vice-Mayor of Virac, Catanduanes; JOSE T. BUEBOS, in his capacity as
Councilor of Virac, Catanduanes; ANGELES TABLIZO, in his capacity as
Councilor of Virac, Catanduanes; ELPIDIO T. ZAFE, in his capacity as
Councilor of Virac, Catanduanes; MARIANO ALBERTO, in his capacity as
Councilor of Virac, Catanduanes; JULIA A. GARCIA, in her capacity as
Councilor of Virac, Catanduanes; and PEDRO A. GUERRERO, in his
capacity as Councilor of Virac, Catanduanes, respondents.

NOCON, J.:
This is a Petition for Prohibition with Preliminary Injunction with the Court of First
Instance of Catanduanes filed by appellant, Celestino Tatel, a businessman
engaged in the import and export of abaca and other products against the
Municipal Council of Virac, Catanduanes and its municipal officials enjoining
them from enforcing Resolution No 29 1 of the Council, declaring the warehouse of petitioner
in barrio Sta. Elena of the said municipality a public nuisance within the purview of Article 694 of the Civil
Code of the Philippines and directing the petitioner to remove and transfer said warehouse to a more
suitable place within two (2) months from receipt of the said resolution.

It appears from the records that on the basis of complaints received from the
residents of barrio Sta. Elena on March 18, 1966 against the disturbance caused
by the operation of the abaca bailing machine inside the warehouse of petitioner
which affected the peace and tranquility of the neighborhood due to the smoke,
obnoxious odor and dust emitted by the machine, a committee was appointed by
the municipal council of Virac to investigate the matter. The committee noted the
crowded nature of the neighborhood with narrow roads and the surrounding
residential houses, so much so that an accidental fire within the warehouse of the
petitioner occasioned by the continuance of the activity inside the warehouse and
the storing of inflammable materials created a danger to the lives and properties
of the people within the neighborhood.

Resultantly, Resolution No. 29 was passed by the Municipal Council of Virac on

April 22, 1966 declaring the warehouse owned and operated by petitioner a
public nuisance within the purview of Article 694 of the New Civil Code. 2
His motion for reconsideration having been denied by the Municipal Council of
Virac, petitioner instituted the present petition for prohibition with preliminary
injunction.
Respondent municipal officials contend that petitioner's warehouse was
constructed in violation of Ordinance No. 13, series of 1952, prohibiting the
construction of warehouses near a block of houses either in the poblacion or
barrios without maintaining the necessary distance of 200 meters from said block
of houses to avoid loss of lives and properties by accidental fire.
On the other hand, petitioner contends that said ordinance is unconstitutional,
contrary to the due process and equal protection clause of the Constitution and
null and void for not having been passed in accordance with law.
The issue then boils down on whether petitioner's warehouse is a nuisance within
the meaning of Article 694 of the Civil Code and whether Ordinance No. 13, S.
1952 of the Municipality of Virac is unconstitutional and void.
In a decision dated September 18, 1969, the court a quo ruled as follows:
1. The warehouse in question was legally constructed under a valid
permit issued by the municipality of Virac in accordance with existing
regulations and may not be destroyed or removed from its present
location;
2. Ordinance No. 13, series of 1952, is a legitimate and valid
exercise of police power by the Municipal Council of Virac is not (sic)
unconstitutional and void as claimed by the petitioner;
3. The storage by the petitioner of abaca and copra in the
warehouse is not only in violation of the provisions of the ordinance
but poses a grave danger to the safety of the lives and properties of
the residents of the neighborhood due to accidental fire and
constitutes a public nuisance under the provisions of Article 694 of
the New Civil code of the Philippines and may be abated;
4. Accordingly, the petitioner is hereby directed to remove from the
said warehouse all abaca and copra and other inflammable articles
stored therein which are prohibited under the provisions of

Ordinance No. 13, within a period of two (2) months from the time
this decision becomes final and that henceforth, the petitioner is
enjoined from storing such prohibited articles in the warehouse. With
costs against petitioner.
Seeking appellate review, petitioner raised as errors of the court a quo:
1. In holding that Ordinance No. 13, series of 1952, of the
Municipality of Virac, Catanduanes, is a legitimate and valid exercise
of police power of the Municipal Council, and therefore,
constitutional;
2. In giving the ordinance a meaning other than and different from
what it provided by declaring that petitioner violated the same by
using the warehouse for storage of abaca and copra when what is
prohibited and penalized by the ordinance is the construction of
warehouses.
3. In refusing to take judicial notice of the fact that in the municipality,
there are numerous establishments similarly situated as appellants'
warehouses but which are not prosecuted.
We find no merit in the Petition.
Ordinance No. 13, series of 1952, was passed by the Municipal Council of Virac
in the exercise of its police power. It is a settled principle of law that municipal
corporations are agencies of the State for the promotion and maintenance of
local self-government and as such are endowed with the police powers in order
to effectively accomplish and carry out the declared objects of their creation. 3 Its
authority emanates from the general welfare clause under the Administrative Code, which reads:

The municipal council shall enact such ordinances and make such
regulations, not repugnant to law, as may be necessary to carry into
effect and discharge the powers and duties conferred upon it by law
and such as shall seem necessary and proper to provide for the
health and safety, promote the prosperity, improve the morals,
peace, good order, comfort and convenience of the municipality and
the inhabitants thereof, and for the protection of property therein. 4
For an ordinance to be valid, it must not only be within the corporate powers of
the municipality to enact but must also be passed according to the procedure
prescribed by law, and must be in consonance with certain well established and
basic principles of a substantive nature. These principles require that a municipal
ordinance (1) must not contravene the Constitution or any statute (2) must not be

unfair or oppressive (3) must not be partial or discriminatory (4) must not prohibit
but may regulate trade (5) must be general and consistent with public policy, and
(6) must not be unreasonable. 5Ordinance No. 13, Series of 1952, meets these criteria.
As to the petitioner's second assignment of error, the trial court did not give the
ordinance in question a meaning other than what it says. Ordinance No. 13
passed by the Municipal Council of Virac on December 29, 1952, 6 reads:
AN ORDINANCE STRICTLY PROHIBITING THE CONSTRUCTION
OF WAREHOUSE IN ANY FORM NEAR A BLOCK OF HOUSES
EITHER IN POBLACION OR BARRIO WITH NECESSARY
DISTANCE TO AVOID GREAT LOSSES OF PROPERTY AND
LIVES BY FIRE ACCIDENT.
Section 1 provides:
It is strictly prohibited to construct warehouses in any form to any
person, persons, entity, corporation or merchants, wherein to keep
or store copra, hemp, gasoline, petroleum, alcohol, crude oil, oil of
turpentine and the like products or materials if not within the distance
of 200 meters from a block of houses either in the poblacion or
barrios to avoid great losses of properties inclusive lives by fire
accident.
Section 2 provides: 7
Owners of warehouses in any form, are hereby given advice to
remove their said warehouses this ordinance by the Municipal
Council, provided however, that if those warehouses now in
existence should no longer be utilized as such warehouse for the
above-described products in Section 1 of this ordinance after a lapse
of the time given for the removal of the said warehouses now in
existence, same warehouses shall be exempted from the spirit of the
provision of section 1 of this ordinance, provided further, that these
warehouses now in existence, shall in the future be converted into
non-inflammable products and materials warehouses.
In spite of its fractured syntax, basically, what is regulated by the ordinance is the
construction of warehouses wherein inflammable materials are stored where
such warehouses are located at a distance of 200 meters from a block of houses
and not the construction per se of a warehouse. The purpose is to avoid the loss
of life and property in case of fire which is one of the primordial obligation of the
government.

This was also the observation of the trial court:

A casual glance of the ordinance at once reveals a manifest
disregard of the elemental rules of syntax. Experience, however, will
show that this is not uncommon in law making bodies in small towns
where local authorities and in particular the persons charged with
the drafting and preparation of municipal resolutions and ordinances
lack sufficient education and training and are not well grounded even
on the basic and fundamental elements of the English language
commonly used throughout the country in such matters.
Nevertheless, if one scrutinizes the terms of the ordinance, it is clear
that what is prohibited is the construction of warehouses by any
person, entity or corporation wherein copra, hemp, gasoline and
other inflammable products mentioned in Section 1 may be stored
unless at a distance of not less than 200 meters from a block of
houses either in the poblacion or barrios in order to avoid loss of
property and life due to fire. Under Section 2, existing warehouses
for the storage of the prohibited articles were given one year after
the approval of the ordinance within which to remove them but were
allowed to remain in operation if they had ceased to store such
prohibited articles.
The ambiguity therefore is more apparent than real and springs from
simple error in grammatical construction but otherwise, the meaning
and intent is clear that what is prohibited is the construction or
maintenance of warehouses for the storage of inflammable articles
at a distance within 200 meters from a block of houses either in the
poblacion or in the barrios. And the purpose of the ordinance is to
avoid loss of life and property in case of accidental fire which is one
of the primordial and basic obligation of any government. 8
Clearly, the lower court did NOT add meaning other than or differrent from what
was provided in the ordinance in question. It merely stated the purpose of the
ordinance and what it intends to prohibit to accomplish its purpose.
As to the third assignment of error, that warehouses similarly situated as that of
the petitioner were not prosecuted, suffice it to say that the mere fact that the
municipal authorities of Virac have not proceeded against other warehouses in
the municipality allegedly violating Ordinance No. 13 is no reason to claim that
the ordinance is discriminatory. A distinction must be made between the law itself
and the manner in which said law is implemented by the agencies in charge with
its administration and enforcement. There is no valid reason for the petitioner to
complain, in the absence of proof that the other bodegas mentioned by him are

operating in violation of the ordinance and that the complaints have been lodged
against the bodegas concerned without the municipal authorities doing anything
about it.
The objections interposed by the petitioner to the validity of the ordinance have
not been substantiated. Its purpose is well within the objectives of sound
government. No undue restraint is placed upon the petitioner or for anybody to
engage in trade but merely a prohibition from storing inflammable products in the
warehouse because of the danger of fire to the lives and properties of the people
residing in the vicinity. As far as public policy is concerned, there can be no better
policy than what has been conceived by the municipal government.
As to petitioner's contention of want of jurisdiction by the lower court we find no
merit in the same. The case is a simple civil suit for abatement of a nuisance, the
original jurisdiction of which falls under the then Court of First Instance.
WHEREFORE, for lack of merit, the petition is hereby DISMISSED. Costs
against petitioner.
SO ORDERED.
Melencio-Herrera, Paras, Padilla and Regalado, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-42571-72 July 25, 1983
VICENTE DE LA CRUZ, RENATO ALIPIO, JOSE TORRES III, LEONCIO
CORPUZ, TERESITA CALOT, ROSALIA FERNANDEZ, ELIZABETH
VELASCO, NANETTE VILLANUEVA, HONORATO BUENAVENTURA, RUBEN
DE CASTRO, VICENTE ROXAS, RICARDO DAMIAN, DOMDINO ROMDINA,
ANGELINA OBLIGACION, CONRADO GREGORIO, TEODORO REYES,
LYDIA ATRACTIVO, NAPOLEON MENDOZA, PERFECTO GUMATAY,
ANDRES SABANGAN, ROSITA DURAN, SOCORRO BERNARDEZ, and
PEDRO GABRIEL, petitioners,
vs.
THE HONORABLE EDGARDO L. PARAS, MATIAS RAMIREZ as the
Municipal Mayor, MARIO MENDOZA as the Municipal Vice-Mayor, and THE
MUNICIPAL COUNCIL OF BOCAUE, BULACAN, respondents.

Federico N. Alday for petitioners.

Dakila F. Castro for respondents.

FERNANDO, C.J.:
The crucial question posed by this certiorari proceeding is whether or not a
municipal corporation, Bocaue, Bulacan, represented by respondents, 1 can, prohibit
the exercise of a lawful trade, the operation of night clubs, and the pursuit of a lawful occupation, such
clubs employing hostesses. It is contended that the ordinance assailed as invalid is tainted with nullity, the
municipality being devoid of power to prohibit a lawful business, occupation or calling, petitioners at the
same time alleging that their rights to due process and equal protection of the laws were violated as the
licenses previously given to them was in effect withdrawn without judicial hearing. 2

The assailed ordinance 3 is worded as follows: "Section 1. Title of Ordinance. This Ordinance
shall be known and may be cited as the [Prohibition and Closure Ordinance] of Bocaue, Bulacan. Section
2. Definitions of Terms (a) 'Night Club' shall include any place or establishment selling to the public
food or drinks where customers are allowed to dance. (b) 'Cabaret' or 'Dance Hall' shall include any place
or establishment where dancing is permitted to the public and where professional hostesses or hospitality
girls and professional dancers are employed. (c) 'Professional hostesses' or 'hospitality girls' shall include
any woman employed by any of the establishments herein defined to entertain guests and customers at
their table or to dance with them. (d) 'Professional dancer' shall include any woman who dances at any of
the establishments herein defined for a fee or remuneration paid directly or indirectly by the operator or by
the persons she dances with. (e) 'Operator' shall include the owner, manager, administrator or any person
who operates and is responsible for the operation of any night club, cabaret or dance hall. Section 3.
Prohibition in the Issuance and Renewal of Licenses, Permits. Being the principal cause in the
decadence of morality and because of their other adverse effects on this community as explained above,
no operator of night clubs, cabarets or dance halls shall henceforth be issued permits/licenses to operate
within the jurisdiction of the municipality and no license/permit shall be issued to any professional
hostess, hospitality girls and professional dancer for employment in any of the aforementioned
establishments. The prohibition in the issuance of licenses/permits to said persons and operators of said
establishments shall include prohibition in the renewal thereof. Section 4. Revocation of Permits and
Licenses. The licenses and permits issued to operators of night clubs, cabarets or dance halls which
are now in operation including permits issued to professional hostesses, hospitality girls and professional
dancers are hereby revoked upon the expiration of the thirty-day period given them as provided in Section
8 hereof and thenceforth, the operation of these establishments within the jurisdiction of the municipality
shall be illegal. Section 5. Penalty in case of violation. Violation of any of the provisions of this
Ordinance shall be punishable by imprisonment not exceeding three (3) months or a fine not exceeding
P200.00 or both at the discretion of the Court. If the offense is committed by a juridical entity, the person
charged with the management and/or operation thereof shall be liable for the penalty provided herein.
Section 6. Separability Clause. If, for any reason, any section or provision of this Ordinance is held
unconstitutional or invalid, no other section or provision hereof shall be affected thereby. Section 7.
Repealing Clause. All ordinance, resolutions, circulars, memoranda or parts thereof that are
inconsistent with the provisions of this Ordinance are hereby repealed. Section 8. Effectivity. This
Ordinance shall take effect immediately upon its approval; provided, however, that operators of night
clubs, cabarets and dance halls now in operation including professional hostesses, hospitality girls and
professional dancers are given a period of thirty days from the approval hereof within which to wind up
their businesses and comply with the provisions of this Ordinance." 4

On November 5, 1975, two cases for prohibition with preliminary injunction were
filed with the Court of First Instance of Bulacan. 5 The grounds alleged follow:
1. Ordinance No. 84 is null and void as a municipality has no authority to prohibit
a lawful business, occupation or calling.
2. Ordinance No. 84 is violative of the petitioners' right to due process and the
equal protection of the law, as the license previously given to petitioners was in
effect withdrawn without judicial hearing. 3. That under Presidential Decree No.
189, as amended, by Presidential Decree No. 259, the power to license and
regulate tourist-oriented businesses including night clubs, has been transferred
to the Department of Tourism." 6 The cases were assigned to respondent Judge, now Associate
Justice Paras of the Intermediate Appellate Court, who issued a restraining order on November 7, 1975.
The answers were thereafter filed. It was therein alleged: " 1. That the Municipal Council is authorized by
law not only to regulate but to prohibit the establishment, maintenance and operation of night clubs
invoking Section 2243 of the RAC, CA 601, Republic Acts Nos. 938, 978 and 1224. 2. The Ordinance No.
84 is not violative of petitioners' right to due process and the equal protection of the law, since property
rights are subordinate to public interests. 3. That Presidential Decree No. 189, as amended, did not
deprive Municipal Councils of their jurisdiction to regulate or prohibit night clubs." 7 There was the
admission of the following facts as having been established: "l. That petitioners Vicente de la Cruz, et al.
in Civil Case No. 4755-M had been previously issued licenses by the Municipal Mayor of Bocauepetitioner Jose Torres III, since 1958; petitioner Vicente de la Cruz, since 1960; petitioner Renato Alipio,
since 1961 and petitioner Leoncio Corpuz, since 1972; 2. That petitioners had invested large sums of
money in their businesses; 3. That the night clubs are well-lighted and have no partitions, the tables being
near each other; 4. That the petitioners owners/operators of these clubs do not allow the hospitality girls
therein to engage in immoral acts and to go out with customers; 5. That these hospitality girls are made to
go through periodic medical check-ups and not one of them is suffering from any venereal disease and
that those who fail to submit to a medical check-up or those who are found to be infected with venereal
disease are not allowed to work; 6. That the crime rate there is better than in other parts of Bocaue or in
other towns of Bulacan." 8 Then came on January 15, 1976 the decision upholding the constitutionality
and validity of Ordinance No. 84 and dismissing the cases. Hence this petition for certiorari by way of
appeal.

In an exhaustive as well as scholarly opinion, the lower court dismissed the

petitions. Its rationale is set forth in the opening paragraph thus: "Those who lust
cannot last. This in essence is why the Municipality of Bocaue, Province of
Bulacan, stigmatized as it has been by innuendos of sexual titillation and fearful
of what the awesome future holds for it, had no alternative except to order thru its
legislative machinery, and even at the risk of partial economic dislocation, the
closure of its night clubs and/or cabarets. This in essence is also why this Court,
obedient to the mandates of good government, and cognizant of the categorical
imperatives of the current legal and social revolution, hereby [upholds] in the
name of police power the validity and constitutionality of Ordinance No. 84,
Series of 1975, of the Municipal Council of Bocaue, Bulacan. The restraining
orders heretofore issued in these two cases are therefore hereby rifted, effective
the first day of February, 1976, the purpose of the grace period being to enable
the petitioners herein to apply to the proper appellate tribunals for any

contemplated redress." 9 This Court is, however, unable to agree with such a conclusion and for
reasons herein set forth, holds that reliance on the police power is insufficient to justify the enactment of
the assailed ordinance. It must be declared null and void.

1. Police power is granted to municipal corporations in general terms as

follows: "General power of council to enact ordinances and make regulations. The municipal council shall enact such ordinances and make such regulations,
not repugnant to law, as may be necessary to carry into effect and discharge the
powers and duties conferred upon it by law and such as shall seem necessary
and proper to provide for the health and safety, promote the prosperity, improve
the morals, peace, good order, comfort, and convenience of the municipality and
the inhabitants thereof, and for the protection of property therein." 10 It is practically a
reproduction of the former Section 39 of Municipal Code. 11 An ordinance enacted by virtue thereof,
according to Justice Moreland, speaking for the Court in the leading case of United States v.
Abendan 12 "is valid, unless it contravenes the fundamental law of the Philippine Islands, or an Act of the
Philippine Legislature, or unless it is against public policy, or is unreasonable, oppressive, partial,
discriminating, or in derogation of common right. Where the power to legislate upon a given subject, and
the mode of its exercise and the details of such legislation are not prescribed, the ordinance passed
pursuant thereto must be a reasonable exercise of the power, or it will be pronounced invalid." 13 In
another leading case, United States v. Salaveria, 14 the ponente this time being Justice Malcolm, where
the present Administrative Code provision was applied, it was stated by this Court: "The general welfare
clause has two branches: One branch attaches itself to the main trunk of municipal authority, and relates
to such ordinances and regulations as may be necessary to carry into effect and discharge the powers
and duties conferred upon the municipal council by law. With this class we are not here directly
concerned. The second branch of the clause is much more independent of the specific functions of the
council which are enumerated by law. It authorizes such ordinances as shall seem necessary and proper
to provide for the health and safety, promote the prosperity, improve the morals, peace, good order,
comfort, and convenience of the municipality and the inhabitants thereof, and for the protection of
property therein.' It is a general rule that ordinances passed by virtue of the implied power found in the
general welfare clause must be reasonable, consonant with the general powersand purposes of the
corporation, and not inconsistent with the laws or policy of the State." 15 If night clubs were merely then
regulated and not prohibited, certainly the assailed ordinance would pass the test of validity. In the two
leading cases above set forth, this Court had stressed reasonableness, consonant with the general
powers and purposes of municipal corporations, as well as consistency with the laws or policy of the
State. It cannot be said that such a sweeping exercise of a lawmaking power by Bocaue could qualify
under the term reasonable. The objective of fostering public morals, a worthy and desirable end can be
attained by a measure that does not encompass too wide a field. Certainly the ordinance on its face is
characterized by overbreadth. The purpose sought to be achieved could have been attained by
reasonable restrictions rather than by an absolute prohibition. The admonition in Salaveria should be
heeded: "The Judiciary should not lightly set aside legislative action when there is not a clear invasion of
personal or property rights under the guise of police regulation." 16 It is clear that in the guise of a police
regulation, there was in this instance a clear invasion of personal or property rights, personal in the case
of those individuals desirous of patronizing those night clubs and property in terms of the investments
made and salaries to be earned by those therein employed.

2. The decision now under review refers to Republic Act No. 938 as amended. 17 It
was originally enacted on June 20, 1953. It is entitled: "AN ACT GRANTING MUNICIPAL OR CITY
BOARDS AND COUNCILS THE POWER TO REGULATE THE ESTABLISHMENT, MAINTENANCE AND
OPERATION OF CERTAIN PLACES OF AMUSEMENT WITHIN THEIR RESPECTIVE TERRITORIAL
JURISDICTIONS.' 18 Its first section insofar as pertinent reads: "The municipal or city board or council of
each chartered city shall have the power to regulate by ordinance the establishment, maintenance and
operation of night clubs, cabarets, dancing schools, pavilions, cockpits, bars, saloons, bowling alleys,

billiard pools, and other similar places of amusement within its territorial jurisdiction: ... " 19 Then on May
21, 1954, the first section was amended to include not merely "the power to regulate, but likewise
"Prohibit ... " 20 The title, however, remained the same. It is worded exactly as Republic Act No. 938. It is
to be admitted that as thus amended, if only the above portion of the Act were considered, a municipal
council may go as far as to prohibit the operation of night clubs. If that were all, then the appealed
decision is not devoid of support in law. That is not all, however. The title was not in any way altered. It
was not changed one whit. The exact wording was followed. The power granted remains that
of regulation, not prohibition. There is thus support for the view advanced by petitioners that to construe
Republic Act No. 938 as allowing the prohibition of the operation of night clubs would give rise to a
constitutional question. The Constitution mandates: "Every bill shall embrace only one subject which shall
be expressed in the title thereof. " 21 Since there is no dispute as the title limits the power to regulating,
not prohibiting, it would result in the statute being invalid if, as was done by the Municipality of Bocaue,
the operation of a night club was prohibited. There is a wide gap between the exercise of a regulatory
power "to provide for the health and safety, promote the prosperity, improve the morals, 22 in the language
of the Administrative Code, such competence extending to all "the great public needs, 23 to quote from
Holmes, and to interdict any calling, occupation, or enterprise. In accordance with the well-settled
principle of constitutional construction that between two possible interpretations by one of which it will be
free from constitutional infirmity and by the other tainted by such grave defect, the former is to be
preferred. A construction that would save rather than one that would affix the seal of doom certainly
commends itself. We have done so before We do so again. 24

3. There is reinforcement to the conclusion reached by virtue of a specific

provision of the recently-enacted Local Government Code. 25 The general welfare
clause, a reiteration of the Administrative Code provision, is set forth in the first paragraph of Section 149
defining the powers and duties of the sangguniang bayan. It read as follows: "(a) Enact such ordinances
and issue such regulations as may be necessary to carry out and discharge the responsibilities conferred
upon it by law, and such as shall be necessary and proper to provide for the health, safety, comfort and
convenience, maintain peace and order, improve public morals, promote the prosperity and general
welfare of the municipality and the inhabitants thereof, and insure the protection of property
therein; ..." 26 There are in addition provisions that may have a bearing on the question now before this
Court. Thus the sangguniang bayan shall "(rr) Regulate cafes, restaurants, beer-houses, hotels, motels,
inns, pension houses and lodging houses, except travel agencies, tourist guides, tourist transports,
hotels, resorts, de luxe restaurants, and tourist inns of international standards which shall remain under
the licensing and regulatory power of the Ministry of Tourism which shall exercise such authority without
infringing on the taxing or regulatory powers of the municipality; (ss) Regulate public dancing schools,
public dance halls, and sauna baths or massage parlors; (tt) Regulate the establishment and operation of
billiard pools, theatrical performances, circuses and other forms of entertainment; ..." 27 It is clear that
municipal corporations cannot prohibit the operation of night clubs. They may be regulated, but not
prevented from carrying on their business. It would be, therefore, an exercise in futility if the decision
under review were sustained. All that petitioners would have to do is to apply once more for licenses to
operate night clubs. A refusal to grant licenses, because no such businesses could legally open, would be
subject to judicial correction. That is to comply with the legislative will to allow the operation and continued
existence of night clubs subject to appropriate regulations. In the meanwhile, to compel petitioners to
close their establishments, the necessary result of an affirmance, would amount to no more than a
temporary termination of their business. During such time, their employees would undergo a period of
deprivation. Certainly, if such an undesirable outcome can be avoided, it should be. The law should not be
susceptible to the reproach that it displays less than sympathetic concern for the plight of those who,
under a mistaken appreciation of a municipal power, were thus left without employment. Such a
deplorable consequence is to be avoided. If it were not thus, then the element of arbitrariness enters the
picture. That is to pay less, very much less, than full deference to the due process clause with its mandate
of fairness and reasonableness.

4. The conclusion reached by this Court is not to be interpreted as a retreat from

its resolute stand sustaining police power legislation to promote public morals.
The commitment to such an Ideal forbids such a backward step. Legislation of
that character is deserving of the fullest sympathy from the judiciary. Accordingly,
the judiciary has not been hesitant to lend the weight of its support to measures
that can be characterized as falling within that aspect of the police power.
Reference is made by respondents to Ermita-Malate Hotel and Motel Operators
Association, Inc. v. City Mayor of Manila. 28 There is a misapprehension as to what was
decided by this Court. That was a regulatory measure. Necessarily, there was no valid objection on due
process or equal protection grounds. It did not prohibit motels. It merely regulated the mode in which it
may conduct business in order precisely to put an end to practices which could encourage vice and
immorality. This is an entirely different case. What was involved is a measure not embraced within the
regulatory power but an exercise of an assumed power to prohibit. Moreover, while it was pointed out in
the aforesaid Ermita-Malate Hotel and Motel Operators Association, Inc. decision that there must be a
factual foundation of invalidity, it was likewise made clear that there is no need to satisfy such a
requirement if a statute were void on its face. That it certainly is if the power to enact such ordinance is at
the most dubious and under the present Local Government Code non-existent.

WHEREFORE, the writ of certiorari is granted and the decision of the lower court
dated January 15, 1976 reversed, set aside, and nullied. Ordinance No. 84,
Series of 1975 of the Municipality of Bocaue is declared void and
unconstitutional. The temporary restraining order issued by this Court is hereby
made permanent. No costs.
Teehankee, Aquino, Concepcion Jr., Guerrero, Abad Santos, Plana, Escolin
Relova and Gutierrez, Jr., JJ., concur.
Makasiar, J, reserves his right to file a dissent.
De Castro, Melencio-Herrera and Vasquez, JJ., are on leave.

Magtajas vs. Pryce Properties and

PAGCOR (G.R. No 111097. July 20, 1994)
01JUN
MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners,
vs.
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND
GAMING CORPORATION,respondents.
Aquilino G. Pimentel, Jr. and Associates for petitioners.
R.R. Torralba & Associates for private respondent.

Ponente: CRUZ
FACTS:
The Sangguniang Panlunsod enacted Ordinance No. 3353 prohibiting the operation of
casino followed by Ordinance No. 3375-93 providing penalty therefor. Petitioners also
attack gambling as intrinsically harmful and cite various provisions of the Constitution
and several decisions of this Court expressive of the general and official disapprobation
of the vice. They invoke the State policies on the family and the proper upbringing of the
youth.
ISSUE:
Whether or not Ordinace No. 3355 and Ordinance No. 3375-93 as enacted by the
Sangguniang Panlunsod of Cagayan de Oro City are valid.
HELD:
NO. Petition was denied. Decision of respondent Court of Appeals was affirmed.
RATIO:
The morality of gambling is not a justiciable issue. Gambling is not illegal per se. While it
is generally considered inimical to the interests of the people, there is nothing in the
Constitution categorically proscribing or penalizing gambling or, for that matter, even
mentioning it at all. It is left to Congress to deal with the activity as it sees fit. In the
exercise of its own discretion, the legislature may prohibit gambling altogether or allow it
without limitation or it may prohibit some forms of gambling and allow others for
whatever

reasons

it

may

consider

sufficient.

Thus,

it

has

prohibited jueteng and monte but permits lotteries, cockfighting and horse-racing. In
making such choices, Congress has consulted its own wisdom, which this Court has no
authority to review, much less reverse. Well has it been said that courts do not sit to
resolve the merits of conflicting theories.
The tests of a valid ordinance are well established. A long line of decisions has held that
to be valid, an ordinance must conform to the following substantive requirements:
1) It must not contravene the constitution or any statute.
2) It must not be unfair or oppressive.

3) It must not be partial or discriminatory.

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

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. 111097 July 20, 1994

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

CRUZ, J.:

There was instant opposition when PAGCOR announced the opening of a casino
in Cagayan de Oro City. Civic organizations angrily denounced the project. The
religious elements echoed the objection and so did the women's groups and the
youth. Demonstrations were led by the mayor and the city legislators. The media
trumpeted the protest, describing the casino as an affront to the welfare of the
city.
The trouble arose when in 1992, flush with its tremendous success in several
cities, PAGCOR decided to expand its operations to Cagayan de Oro City. To this
end, it leased a portion of a building belonging to Pryce Properties Corporation,
Inc., one of the herein private respondents, renovated and equipped the same,
and prepared to inaugurate its casino there during the Christmas season.
The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift
and hostile. On December 7, 1992, it enacted Ordinance No. 3353 reading as
follows:
ORDINANCE NO. 3353
AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS
PERMIT AND CANCELLING EXISTING BUSINESS PERMIT TO
ANY ESTABLISHMENT FOR THE USING AND ALLOWING TO BE
USED ITS PREMISES OR PORTION THEREOF FOR THE
OPERATION OF CASINO.
BE IT ORDAINED by the Sangguniang Panlungsod of the City of
Cagayan de Oro, in session assembled that:
Sec. 1. That pursuant to the policy of the city banning the
operation of casino within its territorial jurisdiction, no business
permit shall be issued to any person, partnership or corporation for
the operation of casino within the city limits.
Sec. 2. That it shall be a violation of existing business permit by
any persons, partnership or corporation to use its business
establishment or portion thereof, or allow the use thereof by others
for casino operation and other gambling activities.
Sec. 3. PENALTIES. Any violation of such existing business
permit as defined in the preceding section shall suffer the following
penalties, to wit:

a) Suspension of the business permit for

sixty (60) days for the first offense and a
fine of P1,000.00/day
b) Suspension of the business permit for
Six (6) months for the second offense, and
a fine of P3,000.00/day
c) Permanent revocation of the business
permit and imprisonment of One (1) year,
for the third and subsequent offenses.
Sec. 4. This Ordinance shall take effect ten (10) days from
publication thereof.
Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93
reading as follows:
ORDINANCE NO. 3375-93
AN ORDINANCE PROHIBITING THE OPERATION OF CASINO
AND PROVIDING PENALTY FOR VIOLATION THEREFOR.
WHEREAS, the City Council established a policy as early as 1990
against CASINO under its Resolution No. 2295;
WHEREAS, on October 14, 1992, the City Council passed another
Resolution No. 2673, reiterating its policy against the establishment
of CASINO;
WHEREAS, subsequently, thereafter, it likewise passed Ordinance
No. 3353, prohibiting the issuance of Business Permit and to cancel
existing Business Permit to any establishment for the using and
allowing to be used its premises or portion thereof for the operation
of CASINO;
WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of
the Local Government Code of 1991 (Rep. Act 7160) and under Art.
99, No. (4), Paragraph VI of the implementing rules of the Local
Government Code, the City Council as the Legislative Body shall
enact measure to suppress any activity inimical to public morals and
general welfare of the people and/or regulate or prohibit such activity

pertaining to amusement or entertainment in order to protect social

and moral welfare of the community;
NOW THEREFORE,
BE IT ORDAINED by the City Council in session duly assembled
that:
Sec. 1. The operation of gambling CASINO in the City of
Cagayan de Oro is hereby prohibited.
Sec. 2. Any violation of this Ordinance shall be subject to the
following penalties:
a) Administrative fine of P5,000.00 shall be imposed against the
proprietor, partnership or corporation undertaking the operation,
conduct, maintenance of gambling CASINO in the City and closure
thereof;
b) Imprisonment of not less than six (6) months nor more than one
(1) year or a fine in the amount of P5,000.00 or both at the discretion
of the court against the manager, supervisor, and/or any person
responsible in the establishment, conduct and maintenance of
gambling CASINO.
Sec. 3. This Ordinance shall take effect ten (10) days after its
publication in a local newspaper of general circulation.
Pryce assailed the ordinances before the Court of Appeals, where it was joined
by PAGCOR as intervenor and supplemental petitioner. Their challenge
succeeded. On March 31, 1993, the Court of Appeals declared the ordinances
invalid and issued the writ prayed for to prohibit their enforcement. 1 Reconsideration
of this decision was denied on July 13, 1993.

Cagayan de Oro City and its mayor are now before us in this petition for review
under Rule 45 of the Rules of Court. 3 They aver that the respondent Court of Appeals erred in
holding that:

1. Under existing laws, the Sangguniang Panlungsod of the City of

Cagayan de Oro does not have the power and authority to prohibit
the establishment and operation of a PAGCOR gambling casino
within the City's territorial limits.

2. The phrase "gambling and other prohibited games of chance"

found in Sec. 458, par. (a), sub-par. (1) (v) of R.A. 7160 could
only mean "illegal gambling."
3. The questioned Ordinances in effect annul P.D. 1869 and are
therefore invalid on that point.
4. The questioned Ordinances are discriminatory to casino and
partial to cockfighting and are therefore invalid on that point.
5. The questioned Ordinances are not reasonable, not consonant
with the general powers and purposes of the instrumentality
concerned and inconsistent with the laws or policy of the State.
6. It had no option but to follow the ruling in the case of Basco, et al.
v. PAGCOR, G.R. No. 91649, May 14, 1991, 197 SCRA 53 in
disposing of the issues presented in this present case.
PAGCOR is a corporation created directly by P.D. 1869 to help centralize and
regulate all games of chance, including casinos on land and sea within the
territorial jurisdiction of the Philippines. In Basco v. Philippine Amusements and
Gaming Corporation, 4 this Court sustained the constitutionality of the decree and even cited the
benefits of the entity to the national economy as the third highest revenue-earner in the government, next
only to the BIR and the Bureau of Customs.

Cagayan de Oro City, like other local political subdivisions, is empowered to

enact ordinances for the purposes indicated in the Local Government Code. It is
expressly vested with the police power under what is known as the General
Welfare Clause now embodied in Section 16 as follows:
Sec. 16. General Welfare. Every local government unit shall
exercise the powers expressly granted, those necessarily implied
therefrom, as well as powers necessary, appropriate, or incidental
for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall
ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right
of the people to a balanced ecology, encourage and support the
development of appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance economic
prosperity and social justice, promote full employment among their
residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants.

In addition, Section 458 of the said Code specifically declares that:

Sec. 458. Powers, Duties, Functions and Compensation. (a)
The Sangguniang Panlungsod, as the legislative body of the city,
shall enact ordinances, approve resolutions and appropriate funds
for the general welfare of the city and its inhabitants pursuant to
Section 16 of this Code and in the proper exercise of the corporate
powers of the city as provided for under Section 22 of this Code, and
shall:
(1) Approve ordinances and pass resolutions necessary for an
efficient and effective city government, and in this connection, shall:
xxx xxx xxx
(v) Enact ordinances intended to prevent,
suppress and impose appropriate penalties
for habitual drunkenness in public places,
vagrancy, mendicancy, prostitution,
establishment and maintenance of houses
of ill repute, gambling and other prohibited
games of chance, fraudulent devices and
ways to obtain money or property, drug
addiction, maintenance of drug dens, drug
pushing, juvenile delinquency, the printing,
distribution or exhibition of obscene or
pornographic materials or publications, and
such other activities inimical to the welfare
and morals of the inhabitants of the city;
This section also authorizes the local government units to regulate properties and
businesses within their territorial limits in the interest of the general welfare. 5
The petitioners argue that by virtue of these provisions, the Sangguniang
Panlungsod may prohibit the operation of casinos because they involve games of
chance, which are detrimental to the people. Gambling is not allowed by general
law and even by the Constitution itself. The legislative power conferred upon
local government units may be exercised over all kinds of gambling and not only
over "illegal gambling" as the respondents erroneously argue. Even if the
operation of casinos may have been permitted under P.D. 1869, the government
of Cagayan de Oro City has the authority to prohibit them within its territory
pursuant to the authority entrusted to it by the Local Government Code.

It is submitted that this interpretation is consonant with the policy of local

autonomy as mandated in Article II, Section 25, and Article X of the Constitution,
as well as various other provisions therein seeking to strengthen the character of
the nation. In giving the local government units the power to prevent or suppress
gambling and other social problems, the Local Government Code has recognized
the competence of such communities to determine and adopt the measures best
expected to promote the general welfare of their inhabitants in line with the
policies of the State.
The petitioners also stress that when the Code expressly authorized the local
government units to prevent and suppress gambling and other prohibited games
of chance, like craps, baccarat, blackjack and roulette, it meant all forms of
gambling without distinction. Ubi lex non distinguit, nec nos distinguere
debemos. 6 Otherwise, it would have expressly excluded from the scope of their power casinos and
other forms of gambling authorized by special law, as it could have easily done. The fact that it did not do
so simply means that the local government units are permitted to prohibit all kinds of gambling within their
territories, including the operation of casinos.

The adoption of the Local Government Code, it is pointed out, had the effect of
modifying the charter of the PAGCOR. The Code is not only a later enactment
than P.D. 1869 and so is deemed to prevail in case of inconsistencies between
them. More than this, the powers of the PAGCOR under the decree are expressly
discontinued by the Code insofar as they do not conform to its philosophy and
provisions, pursuant to Par. (f) of its repealing clause reading as follows:
(f) All general and special laws, acts, city charters, decrees,
executive orders, proclamations and administrative regulations, or
part or parts thereof which are inconsistent with any of the provisions
of this Code are hereby repealed or modified accordingly.
It is also maintained that assuming there is doubt regarding the effect of the
Local Government Code on P.D. 1869, the doubt must be resolved in favor of the
petitioners, in accordance with the direction in the Code calling for its liberal
interpretation in favor of the local government units. Section 5 of the Code
specifically provides:
Sec. 5. Rules of Interpretation. In the interpretation of the
provisions of this Code, the following rules shall apply:
(a) Any provision on a power of a local government unit shall be
liberally interpreted in its favor, and in case of doubt, any question
thereon shall be resolved in favor of devolution of powers and of the
lower local government unit. Any fair and reasonable doubt as to the

existence of the power shall be interpreted in favor of the local

government unit concerned;
xxx xxx xxx
(c) The general welfare provisions in this Code shall be liberally
interpreted to give more powers to local government units in
accelerating economic development and upgrading the quality of life
for the people in the community; . . . (Emphasis supplied.)
Finally, the petitioners also attack gambling as intrinsically harmful and cite
various provisions of the Constitution and several decisions of this Court
expressive of the general and official disapprobation of the vice. They invoke the
State policies on the family and the proper upbringing of the youth and, as might
be expected, call attention to the old case ofU.S. v. Salaveria, 7 which sustained a
municipal ordinance prohibiting the playing of panguingue. The petitioners decry the immorality of
gambling. They also impugn the wisdom of P.D. 1869 (which they describe as "a martial law instrument")
in creating PAGCOR and authorizing it to operate casinos "on land and sea within the territorial
jurisdiction of the Philippines."

This is the opportune time to stress an important point.

The morality of gambling is not a justiciable issue. Gambling is not illegal per se.
While it is generally considered inimical to the interests of the people, there is
nothing in the Constitution categorically proscribing or penalizing gambling or, for
that matter, even mentioning it at all. It is left to Congress to deal with the activity
as it sees fit. In the exercise of its own discretion, the legislature may prohibit
gambling altogether or allow it without limitation or it may prohibit some forms of
gambling and allow others for whatever reasons it may consider sufficient. Thus,
it has prohibited jueteng and monte but permits lotteries, cockfighting and horseracing. In making such choices, Congress has consulted its own wisdom, which
this Court has no authority to review, much less reverse. Well has it been said
that courts do not sit to resolve the merits of conflicting theories. 8 That is the
prerogative of the political departments. It is settled that questions regarding the wisdom, morality, or
practicibility of statutes are not addressed to the judiciary but may be resolved only by the legislative and
executive departments, to which the function belongs in our scheme of government. That function is
exclusive. Whichever way these branches decide, they are answerable only to their own conscience and
the constituents who will ultimately judge their acts, and not to the courts of justice.

The only question we can and shall resolve in this petition is the validity of
Ordinance No. 3355 and Ordinance No. 3375-93 as enacted by the Sangguniang
Panlungsod of Cagayan de Oro City. And we shall do so only by the criteria laid
down by law and not by our own convictions on the propriety of gambling.
The tests of a valid ordinance are well established. A long line of decisions 9 has
held that to be valid, an ordinance must conform to the following substantive requirements:

1) It must not contravene the constitution or any statute.

2) It must not be unfair or oppressive.
3) It must not be partial or discriminatory.
4) It must not prohibit but may regulate trade.
5) It must be general and consistent with public policy.
6) It must not be unreasonable.
We begin by observing that under Sec. 458 of the Local Government Code, local
government units are authorized to prevent or suppress, among others,
"gambling and other prohibited games of chance." Obviously, this provision
excludes games of chance which are not prohibited but are in fact permitted by
law. The petitioners are less than accurate in claiming that the Code could have
excluded such games of chance but did not. In fact it does. The language of the
section is clear and unmistakable. Under the rule of noscitur a sociis, a word or
phrase should be interpreted in relation to, or given the same meaning of, words
with which it is associated. Accordingly, we conclude that since the word
"gambling" is associated with "and other prohibited games of chance," the word
should be read as referring to only illegal gambling which, like
the other prohibited games of chance, must be prevented or suppressed.
We could stop here as this interpretation should settle the problem quite
conclusively. But we will not. The vigorous efforts of the petitioners on behalf of
the inhabitants of Cagayan de Oro City, and the earnestness of their advocacy,
deserve more than short shrift from this Court.
The apparent flaw in the ordinances in question is that they contravene P.D. 1869
and the public policy embodied therein insofar as they prevent PAGCOR from
exercising the power conferred on it to operate a casino in Cagayan de Oro City.
The petitioners have an ingenious answer to this misgiving. They deny that it is
the ordinances that have changed P.D. 1869 for an ordinance admittedly cannot
prevail against a statute. Their theory is that the change has been made by the
Local Government Code itself, which was also enacted by the national
lawmaking authority. In their view, the decree has been, not really repealed by
the Code, but merely "modified pro tanto" in the sense that PAGCOR cannot now
operate a casino over the objection of the local government unit concerned. This
modification of P.D. 1869 by the Local Government Code is permissible because
one law can change or repeal another law.

It seems to us that the petitioners are playing with words. While insisting that the
decree has only been "modified pro tanto," they are actually arguing that it is
already dead, repealed and useless for all intents and purposes because the
Code has shorn PAGCOR of all power to centralize and regulate casinos. Strictly
speaking, its operations may now be not only prohibited by the local government
unit; in fact, the prohibition is not only discretionary but mandated by Section 458
of the Code if the word "shall" as used therein is to be given its accepted
meaning. Local government units have now no choice but to prevent and
suppress gambling, which in the petitioners' view includes both legal and illegal
gambling. Under this construction, PAGCOR will have no more games of chance
to regulate or centralize as they must all be prohibited by the local government
units pursuant to the mandatory duty imposed upon them by the Code. In this
situation, PAGCOR cannot continue to exist except only as a toothless tiger or a
white elephant and will no longer be able to exercise its powers as a prime
source of government revenue through the operation of casinos.
It is noteworthy that the petitioners have cited only Par. (f) of the repealing
clause, conveniently discarding the rest of the provision which painstakingly
mentions the specific laws or the parts thereof which are repealed (or modified)
by the Code. Significantly, P.D. 1869 is not one of them. A reading of the entire
repealing clause, which is reproduced below, will disclose the omission:
Sec. 534. Repealing Clause. (a) Batas Pambansa Blg. 337,
otherwise known as the "Local Government Code," Executive Order
No. 112 (1987), and Executive Order No. 319 (1988) are hereby
repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other
decrees, orders, instructions, memoranda and issuances related to
or concerning the barangay are hereby repealed.
(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939
regarding hospital fund; Section 3, a (3) and b (2) of Republic Act.
No. 5447 regarding the Special Education Fund; Presidential Decree
No. 144 as amended by Presidential Decree Nos. 559 and 1741;
Presidential Decree No. 231 as amended; Presidential Decree No.
436 as amended by Presidential Decree No. 558; and Presidential
Decree Nos. 381, 436, 464, 477, 526, 632, 752, and 1136 are
hereby repealed and rendered of no force and effect.
(d) Presidential Decree No. 1594 is hereby repealed insofar as it
governs locally-funded projects.

(e) The following provisions are hereby repealed or amended insofar

as they are inconsistent with the provisions of this Code: Sections 2,
16, and 29 of Presidential Decree No. 704; Sections 12 of
Presidential Decree No. 87, as amended; Sections 52, 53, 66, 67,
68, 69, 70, 71, 72, 73, and 74 of Presidential Decree No. 463, as
amended; and Section 16 of Presidential Decree No. 972, as
amended, and
(f) All general and special laws, acts, city charters, decrees,
executive orders, proclamations and administrative regulations, or
part or parts thereof which are inconsistent with any of the provisions
of this Code are hereby repealed or modified accordingly.
Furthermore, it is a familiar rule that implied repeals are not lightly presumed in
the absence of a clear and unmistakable showing of such intention. In Lichauco
& Co. v. Apostol, 10 this Court explained:
The cases relating to the subject of repeal by implication all proceed
on the assumption that if the act of later date clearly reveals an
intention on the part of the lawmaking power to abrogate the prior
law, this intention must be given effect; but there must always be a
sufficient revelation of this intention, and it has become an
unbending rule of statutory construction that the intention to repeal a
former law will not be imputed to the Legislature when it appears
that the two statutes, or provisions, with reference to which the
question arises bear to each other the relation of general to special.
There is no sufficient indication of an implied repeal of P.D. 1869. On the
contrary, as the private respondent points out, PAGCOR is mentioned as the
source of funding in two later enactments of Congress, to wit, R.A. 7309, creating
a Board of Claims under the Department of Justice for the benefit of victims of
unjust punishment or detention or of violent crimes, and R.A. 7648, providing for
measures for the solution of the power crisis. PAGCOR revenues are tapped by
these two statutes. This would show that the PAGCOR charter has not been
repealed by the Local Government Code but has in fact been improved as it were
to make the entity more responsive to the fiscal problems of the government.
It is a canon of legal hermeneutics that instead of pitting one statute against
another in an inevitably destructive confrontation, courts must exert every effort
to reconcile them, remembering that both laws deserve a becoming respect as
the handiwork of a coordinate branch of the government. On the assumption of a
conflict between P.D. 1869 and the Code, the proper action is not to uphold one
and annul the other but to give effect to both by harmonizing them if possible.

This is possible in the case before us. The proper resolution of the problem at
hand is to hold that under the Local Government Code, local government units
may (and indeed must) prevent and suppress all kinds of gambling within their
territories except only those allowed by statutes like P.D. 1869. The exception
reserved in such laws must be read into the Code, to make both the Code and
such laws equally effective and mutually complementary.
This approach would also affirm that there are indeed two kinds of gambling, to
wit, the illegal and those authorized by law. Legalized gambling is not a modern
concept; it is probably as old as illegal gambling, if not indeed more so. The
petitioners' suggestion that the Code authorizes them to prohibit all kinds of
gambling would erase the distinction between these two forms of gambling
without a clear indication that this is the will of the legislature. Plausibly, following
this theory, the City of Manila could, by mere ordinance, prohibit the Philippine
Charity Sweepstakes Office from conducting a lottery as authorized by R.A. 1169
and B.P. 42 or stop the races at the San Lazaro Hippodrome as authorized by
R.A. 309 and R.A. 983.
In light of all the above considerations, we see no way of arriving at the
conclusion urged on us by the petitioners that the ordinances in question are
valid. On the contrary, we find that the ordinances violate P.D. 1869, which has
the character and force of a statute, as well as the public policy expressed in the
decree allowing the playing of certain games of chance despite the prohibition of
gambling in general.
The rationale of the requirement that the ordinances should not contravene a
statute is obvious. Municipal governments are only agents of the national
government. Local councils exercise only delegated legislative powers conferred
on them by Congress as the national lawmaking body. The delegate cannot be
superior to the principal or exercise powers higher than those of the latter. It is a
heresy to suggest that the local government units can undo the acts of Congress,
from which they have derived their power in the first place, and negate by mere
ordinance the mandate of the statute.
Municipal corporations owe their origin to, and derive their powers
and rights wholly from the legislature. It breathes into them the
breath of life, without which they cannot exist. As it creates, so it may
destroy. As it may destroy, it may abridge and control. Unless there
is some constitutional limitation on the right, the legislature might, by
a single act, and if we can suppose it capable of so great a folly and
so great a wrong, sweep from existence all of the municipal
corporations in the State, and the corporation could not prevent it.
We know of no limitation on the right so far as to the corporation

themselves are concerned. They are, so to phrase it, the mere

tenants at will of the legislature. 11
This basic relationship between the national legislature and the local government
units has not been enfeebled by the new provisions in the Constitution
strengthening the policy of local autonomy. Without meaning to detract from that
policy, we here confirm that Congress retains control of the local government
units although in significantly reduced degree now than under our previous
Constitutions. The power to create still includes the power to destroy. The power
to grant still includes the power to withhold or recall. True, there are certain
notable innovations in the Constitution, like the direct conferment on the local
government units of the power to tax, 12 which cannot now be withdrawn by mere statute. By
and large, however, the national legislature is still the principal of the local government units, which
cannot defy its will or modify or violate it.

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

We hold that the power of PAGCOR to centralize and regulate all games of
chance, including casinos on land and sea within the territorial jurisdiction of the
Philippines, remains unimpaired. P.D. 1869 has not been modified by the Local
Government Code, which empowers the local government units to prevent or
suppress only those forms of gambling prohibited by law.
Casino gambling is authorized by P.D. 1869. This decree has the status of a
statute that cannot be amended or nullified by a mere ordinance. Hence, it was
not competent for the Sangguniang Panlungsod of Cagayan de Oro City to enact
Ordinance No. 3353 prohibiting the use of buildings for the operation of a casino
and Ordinance No. 3375-93 prohibiting the operation of casinos. For all their
praiseworthy motives, these ordinances are contrary to P.D. 1869 and the public
policy announced therein and are therefore ultra vires and void.
WHEREFORE, the petition is DENIED and the challenged decision of the
respondent Court of Appeals is AFFIRMED, with costs against the petitioners. It
is so ordered.

Narvasa, C.J., Feliciano, Bidin, Regalado, Romero, Bellosillo, Melo,

Quiason, Puno, Vitug, Kapunan and Mendoza, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 115044 September 1, 1994

HON. ALFREDO S. LIM, in his capacity as Mayor of Manila; and THE CITY
OF MANILA, petitioners,
vs.
HON. FELIPE G. PACQUING, as Judge, Regional Trial Court of Manila; and
ASSOCIATED DEVELOPMENT CORPORATION, respondents.
Office of the City Legal Officer for petitioners.
Cayanga, Zuiga & Angel for private respondent.

QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court to set
aside the Orders dated March 28, 1994, April 11, 1994 and April 20, 1994 of
Judge Felipe G. Pacquing, presiding judge of the Regional Trial Court, Branch
40, Manila, issued in Civil Case No. 88-45660.
The Order dated March 28, 1994 granted the motion of private respondent to
compel petitioner Mayor Alfredo S. Lim to issue a permit or license in favor of
private respondent pursuant to Ordinance No. 7065 upon compliance by private
respondent with all the requirements set thereunder.
The Order dated April 11, 1994 denied the motion for reconsideration filed by
petitioners of the Order dated May 28, 1994.

The Order dated April 20, 1994 reiterated the order of March 28, 1994, directing
Mayor Lim to immediately issue to private respondent the necessary permit or
license pursuant to Ordinance No. 7065.
I
On September 7, 1971, the Municipal Board of Manila passed Ordinance No.
7065 pursuant to Section 18(jj) of the Revised Charter of Manila, granting private
respondent a franchise to operate a jai-alai in the city. The ordinance is
reproduced as follows;
AN ORDINANCE AUTHORIZING THE MAYOR TO ALLOW AND
PERMIT THE ASSOCIATED DEVELOPMENT CORPORATION TO
ESTABLISH, MAINTAIN AND OPERATE A JAI-ALAI IN THE CITY
OF MANILA, UNDER CERTAIN TERMS AND CONDITIONS AND
FOR OTHER PURPOSES.
Be it ordained by the Municipal Board of the City of Manila, that:
Sec. 1. The Mayor is authorized, as he is hereby authorized to allow
and permit the Associated Development Corporation to establish,
maintain and operate a jai-alai in the City of Manila, under the
following terms and conditions and such other terms and conditions
as he (the Mayor) may prescribe for good reasons of general
interest:
a. That the construction, establishment and maintenance of the jaialai shall be at a place permissible under existing zoning ordinance
of Manila;
b. That the games to be played daily shall commence not earlier
than 5:00 in the afternoon;
c. That the City of Manila will receive a share of 2 1/2% on the
annual gross receipts on all wagers or bets, 1/2% of which will
accrue to the Games and Amusement Board as now provided by
law;
d. That the corporation will, in addition, pay to the city an annual
license fee of P3,000.00 and a daily permit fee of P200.00;
e. That the corporation will, to insure its faithful compliance of all the
terms and conditions under this ordinance, put up a performance

bond from a surety acceptable to the city, in the amount of at least

P30,000.00.

Sec. 2. The Mayor and the City Treasurer or their duly authorized
representatives are hereby empowered to inspect at all times during
regular business hours the books, records and accounts of the
establishment, as well as to prescribe the manner in which the
books and financial statements of the entrepreneur shall be kept.
Sec. 3. This ordinance shall take effect upon its approval.
Enacted originally by the Municipal Board on September 7, 1971;
vetoed by the Mayor on September 27, 1971; modified and
amended by the Municipal Board at its regular session today,
October 12, 1971.
Approved by His Honor, the Mayor, on 13 November 1971.
Thereafter, private respondent took steps preparatory to the establishment of the
jai-alai at Ermita, Manila. Private respondent retained the services of an
architectural firm from Hongkong to design the fronton and contracted with a
local firm for the construction of the building.
On August 20, 1975, after the declaration of Martial Law, President Ferdinand E.
Marcos promulgated Presidential Decree No. 771 revoking the powers of the
local government to grant permits or licenses and canceling all existing
franchises to operate jai-alais.
Less than two months after P.D. No. 771 was issued, the Philippine Jai-Alai and
Amusement Corporation, an enterprise controlled by Alfredo Romualdez, a
brother-in-law of President Marcos, was granted a franchise to operate a jai-alai
within the Greater Manila Area under P.D. No. 810.
However, after the EDSA Resolution, President Corazon C. Aquino issued
Executive Order No. 169, repealing P.D. No. 810.
On May 5, 1988, private respondent sought the resumption of its business
operations under its franchise issued under Ordinance No. 7065. Mayor
Gemiliano C. Lopez denied private respondent's request, as well as its motion for
reconsideration.

On August 2, 1988, private respondent filed a petition for mandamus and specific
performance with the Regional Trial Court, Branch 40, Manila, docketed as Civil
Case No. 88-45660.
In a decision dated September 9, 1989, Judge Augusto E. Villarin of Branch 40
held that Ordinance No. 7065 created a binding contract between the City of
Manila and private respondent and that the City Mayor had no discretion but "to
grant the necessary permit or license allowing it to operate and maintain a jai-alai
in the City of Manila pursuant to Ordinance No. 7065."
The trial court noted:
A careful reading, however, of Ordinance No. 7065 will readily show
that the discretion, if any, allowed respondent Mayor, under the
Ordinance, will be exercisable only after the permit, which he is
mandated to issue, has been issued and the jai-alai fronton is
already operational. The Ordinance stipulates that the Mayor is
authorized "to allow and permit petitioner to establish, maintain and
operate a jai-alai in the City of
Manila ," under the five conditions enumerated in subparagraphs "a"
to "e" of Section 1 of the Ordinance. But a simple reading of these
"terms and conditions" patently shows that subparagraphs "b" to "e"
are clearly conditions that will only come into play after the jai-alai
fronton has been put up or established; while the condition under
sub-paragraph "a" appears to have been complied with satisfactorily
by the petitioner, since no objection at all has been made by
respondents to the proposed site for the jai-alai fronton, that is, the
25,000 sq. m. land area behind the present Harrison Plaza Complex
located at Ermita, Manila.
It is therefore, quite evident to this Court that no discretion is left to
the respondent Mayor to allow or not petitioner "to establish,
maintain and operate a jai-alai in the City of Manila." The Court is
satisfied that the requirements of Sec. 3, Rule 65, have been met.
Moreover, it is well-settled that the grant of a franchise, when
accepted and acted upon by the grantee, creates a contract. And,
going by contract law, under the undisputed circumstances in this
case, respondent Mayor, in behalf of the City, is obliged to comply
with what is required of him under the Ordinance. At the very least,
the enactment and approval of Ordinance No. 7065 on November
13, 1971, created a bilateral contract between petitioner and
respondents. Petitioner has commenced the performance of its

obligation under the contract, but was prevented by events over

which it has no control from completely fulfilling what was called for
on its part to establish, operate and maintain a jai-alai in the City of
Manila (Rollo, pp. 39-40).
The trial court disposed as follows;
WHEREFORE, the petitioner is GRANTED and respondent City of
Manila, is ordered to immediately issue to petitioner, the
permit/license required under Ordinance No. 7065 (Rollo, p. 40).
Mayor Lopez appealed said decision to the Court of Appeals (CA G.R. No. 16477
SP) but on February 9, 1989, he filed a Notice of Withdrawal of Appeal.
On May 5, 1989, the Court of Appeals promulgated a resolution, the dispositive
part of which reads as follows:
For the reasons stated in the NOTICE OF WITHDRAWAL OF
APPEAL which was filed on February 9, 1989 by respondents
appellants thru counsel let their appeal from the Decision dated
September 9, 1989 and Order dated August 25, 1988, of the
Regional Trial Court of Manila in Civil Case No. 88-45660 be as it is
hereby considered WITHDRAWN (Rollo, p. 126).
With the withdrawal of the appeal, the judgment in Civil Case No. 45560 became
final and executory and was entered in the Book of Entries of Judgment of the
Court of Appeals on May 26, 1989 and in the Book of Entries of Judgment of the
Regional Trial Court on October 27, 1992.
In 1991, the City of Manila filed an action to annul the franchise of private
respondent with the Regional Trial Court, Branch 23, Manila, docketed as Civil
Case No. 91-58913.
In said complaint, the City of Manila claimed that private respondent had
abandoned its franchise granted under Ordinance No. 7065 and that said
ordinance had been repealed by P.D. Nos. 771 and 810.
Judge William Bayhon of Branch 23 noted that the issue of abandonment was
squarely raised and resolved in Civil Case No. 88-45660, while the issue of the
repeal of Ordinance No. 7065 could have been pleaded but was not by the City
of Manila as a defense in Civil Case No. 88-45660. According to him, the city had
waived such a defense. To make matters worse, the city was in estoppel to raise

said issue since it had been issuing permits pursuant to the decision in Civil Case
No. 88-45660 and collecting the corresponding fees.
Civil Case No. 91-58913, questioning the effectivity of the franchise granted
private respondent under Ordinance No. 7065, was therefore dismissed on
December 21, 1991. No appeal was taken from said dismissal of the case.
The City of Manila filed with this Court another case for declaratory judgment to
nullify the franchise to operate a jai-alai under Ordinance No. 7065 (G.R. No.
101768). The petition was dismissed in a resolution dated October 3, 1991 "for
lack of jurisdiction."
It may be of interest to note that three Manila councilors also filed an action to
compel Mayor Lopez to cancel the permit and license he issued in favor of
private petitioner pursuant to Ordinance No. 7065 (Maceda v. Lopez, Civil Case
No. 91-58930, Regional Trial Court, Branch 37, Manila). In his answer to said
petition, Mayor Lopez pointed out that in issuing the permit and license, he was
just acting in obedience to the final judgment in Civil Case No. 88-45660.
Judge Enrico A. Laxamana, presiding judge of Branch 37, made the following
observations:
The license was issued by Mayor Lopez in obedience to a final order
of a court of justice. For him to refuse to issue the license would
place him in danger of being cited in contempt of court. And for him
now to revoke or cancel such license or permit definitely would place
a greater risk and danger of being cited in contempt of court? (Rollo,
p. 184).
II
As a preliminary issue, private respondent urged the dismissal of the petition on
the grounds that it was in violation of Circular No. 28-91, prohibiting forum
shopping, and Revised Circular No. 1-88, requiring the inclusion in the petition of
a verified statement of the dates when notice of the judgment, order or resolution
subject thereof, was received, when a motion for reconsideration, if any, was
filed, and when the notice of the denial thereof was received.
Private respondent averred that the certification submitted by petitioners did not
disclose (1) that the trial court had rendered a decision in Civil Case No. 8845660 on September 9, 1988 holding that Ordinance No. 7065 was in full force
and effect; (2) that said decision had become final and executory after the
petitioners withdrew their appeal therefrom; (3) that petitioners had also filed Civil

Case No. 91-58913, questioning the effectivity of Ordinance No. 7065, which was
dismissed. Likewise, they alleged that the affidavit did not state the material
dates necessary for the Court to determine the timelines of the filing of the
petition (Rollo, pp. 108-110).
The certification submitted in compliance with Circular No. 28-91 stated that the
petitioner in said petition "has not commenced a similar action in any court or
administrative body against said respondents nor is there any pending cases of
the same nature and parties in any court or administrative body." Rightly, there
was no case filed nor was there any case pending wherein the question of
whether the decision in Civil Case No. 88-45660 can be executed by motion is
raised.
The affidavit on the material dates submitted by petitioners attested to the dates
when petitioners received the three orders of respondent judge being questioned
in the petition for certiorari. These are the dates material for reckoning the
timelines of the filing of the petition to nullify said orders. As far as the issue of
the proper mode for executing the decision is concerned, the dates given in the
affidavit are sufficient for the Court to determine whether the petition was filed
within a reasonable time contemplated in Rule 65.
There is, therefore, no violation of Circular No. 28-91 and Revised Circular No. 188 to speak of.
On their part, petitioners alleged that the decision in Civil Case No. 88-45660,
which is being implemented by the three orders in question, is null and void for
want of jurisdiction of the trial court that rendered it. They posited their claim on
the theory that Ordinance No. 7065 had been canceled by P.D. No. 771 in 1975
and that the trial court had traduced the law when it made it appear in its decision
that Ordinance No. 7065 was still in full force and effect (Rollo, pp. 10-13).
Petitioners failed to appreciate the distinction between a void and an erroneous
judgment and between jurisdiction and the exercise of jurisdiction.
Jurisdiction should be distinguished from the exercise thereof (Lamagan v. De La
Cruz, 40 SCRA 101 [1971]). The authority to decide a case at all and not the
decision rendered therein, is what makes up jurisdiction. The fact that the
decision is erroneous does not divest the court that rendered it of the jurisdiction
conferred by law to try the case (Quiason, Philippine Courts and their
Jurisdictions, p. 199 [1993 ed.]).
Since jurisdiction is the power to hear and determine a particular case, or the
jurisdiction over the subject matter, it does not depend upon the regularity of the

exercise by the court of its power (Century Insurance Co. v. Fuentes, 2 SCRA
1168 [1961]).
In the case at bench, there is no question that the Regional Trial Court has the
competence to hear and decide Civil Case No. 88-45660, a special civil action
for mandamus under Rule 65 of the Revised Rules of Court. There is also no
quarrel that said court has jurisdiction over an action for specific performance
under Section 19(1) of the Judiciary Reorganization Act of 1990 (Lapitan v.
Scandia, 24 SCRA 479 [1968]). Assuming arguendo that the Regional Trial Court
did not have jurisdiction over the said civil case, the principle of estoppel will
operate to bar petitioners from raising the question of jurisdiction for the first time
in the instant case (Tijam v. Sibonghanay, 23 SCRA 29 [1968]).
Having jurisdiction over the civil case, whatever error may be attributed to the
trial court, is simply one of judgment, not of jurisdiction. An error of judgment
cannot be corrected by certiorari but by appeal (Robles v. House of
Representatives Electoral Tribunal, 181 SCRA 780 [1990]; De Castro v. Delta
Motor Sales Corporation, 57 SCRA 344 [1978]; Galang v. Endencia, 73 Phil. 391
[1941]). In fact, Mayor Lopez availed of such a remedy when he appealed the
decision in Civil Case No. 88-45660 to the Court of Appeals (CA G.R. No. 16477SP).
The issue on the cancellation of Ordinance No. 7065 by President Marcos could
have been raised as a special defense in Civil Case No. 88-54660 but was not.
The Revised Rules of Court frown at the piecemeal presentation of issues, and
jurisprudence bars from subsequent litigation between the same parties matters
that could have been raised in a previous case (Revised Rules of Court, Rule 39,
Sec. 49[b]; Gonzales v. Gonzales, 26 SCRA 72 [1968]).
The City of Manila should have pursued in the appellate courts its appeal
questioning the dismissal of Civil Case No. 91-58913, where the trial court ruled
that Mayor Lopez and the city could no longer claim that Ordinance No. 7065 had
been canceled by President Marcos because they failed to raise this issue in
Civil Case No 88-54660.
At any rate, the unilateral cancellation of the franchise, which has the status of a
contract, without notice, hearing and justifiable cause is intolerable in any system
where the Rule of Law prevails (Poses v. Toledo Transportation Co., 62 Phil. 297
[1935]); Manila Electric Co., v. Public Utility commissioners, 30 Phil. 387 [1915]).
As a fall-back, petitioners claimed that assuming arguendo that the judgment in
Civil Case No. 88-45660 dated September 9, 1986 is valid, its execution by mere
motion on March 11, 1994 is irregular. Citing Section 6 of Rule 39 of the Revised

Rules of Court, they contended that the decision must be enforced by action, not
motion (Rollo, pp. 13-14).
Petitioners erroneously counted the five-year period under Section 6 of Rule 39
from the date of the decision. Said Rule provides:
Execution by Motion or by Independent Action. A judgment may be
executed on motion within five (5) years from the date of its entry or
from the date it becomes final and executory. After the lapse of such
time and before it is barred by the statute of limitations, a judgment
may be enforced by action.
It must be remembered that Mayor Lopez appealed the decision in Civil Case
No. 88-45660 to the Court of Appeals, that he filed the motion to withdraw the
appeal on February 9, 1989, and that the Court of Appeals approved the
withdrawal of the appeals only on May 5, 1989. The entries of judgment were
made on May 26, 1989 in the Court of Appeals, and on October 27, 1992 in the
Regional Trial Court. The motion to compel the City Mayor to issue the permit or
license pursuant to Ordinance No. 7065, was filed on March 14, 1994, or well
within the five-year period whether such period is counted from May 5, 1989,
May 26, 1989 or October 27, 1992.
Petitioners hypothesized that the withdrawal of an appeal operates as if no
appeal was taken at all and that the five-year period should be counted from
January 24, 1989, the fifteenth day from the service of a copy of the decision on
Mayor Lopez. Petitioners anchored their theory on Section 9, Rule 40 and
Section 2, Rule 50 of the Revised Rules of Court (Rollo, pp. 15-16).
We find nothing in said Rules to support petitioners' posture.
Sec. 9 of Rule 40, in pertinent part, provides:
. . . If the appeal is withdrawn, or dismissed for failure to prosecute,
the judgment shall be deemed revived and shall forthwith be
remanded to the justice of the peace or municipal court for
execution.
Rule 40 governed the procedure for appeals from the inferior courts to the Court
of First Instance before they became courts of record. A provision on the revival
of the judgment was necessary because at those times the decisions appealed
from were automatically vacated and trials de novo had to be conducted by the
Court of First Instance.

Sec. 2 of Rule 50, which governs the dismissal of an appeal by the Court of
Appeals, in pertinent part, provides:
Upon the receipt of such certification [of the Clerk of Court that the
appeal has been dismissed] in the lower court the case shall stand
there as though no appeal had ever been taken, and the judgment of
the said court may be enforced with the additional costs allowed by
the appellate court upon dismissing the appeal.
The phrase "the case shall stand there as if no appeal has been taken" refers to
the manner of how the judgment may be enforced as can be gleaned from the
phrase following it that "the judgment of said court may be enforced with the
additional costs allowed by the appellate court . . ." In other words, the judgment
shall be executed in accordance with its original disposition, no modifications
thereof having been ordered by the Court of Appeals.
Certainly, said Rule has nothing to do with the five-year period for enforcing a
judgment by motion, which is governed by Section 6 of Rule 39.
Mayor Lim's vow to clean the city of vices, like gambling, is commendable. But in
the process, he should bear in mind that there are forms of gambling, and jai-alai
is one them, that Congress has deigned to allow.
The pronouncement of Justice Isagani A. Cruz in Mayor Pablo Magtales v. Pryce
Properties Corporation, G.R. No. 111097. July 20, 1994, apropos the operation of
a gambling casino in Cagayan de Oro by the Philippine Amusement and Games
Inc., is cogent to the instant case, thus:
The morality of gambling is not a justiciable issue. Gambling is not
illegal perse. While it is generally considered inimical to the interests
of the people, there is nothing in the Constitution categorically
proscribing or penalizing gambling or, for that matter, even
mentioning it at all. It is left to Congress to deal with the activity as it
sees fit. In the exercise of its own discretion, the legislature may
prohibit gambling altogether or allow it without limitation or it may
prohibit some forms of gambling and allow others for whatever
reasons it may consider sufficient. Thus, it has
prohibited jueteng and monte but permits lotteries, cockfighting and
horse-racing. In making such choices, Congress has consulted its
own wisdom, which this Court has no authority to review, much less
reverse. Well has it been said that courts do not sit to resolve the
merits of conflicting theories. (Garcia v. Executive Secretary, 204
SCRA 516, quoting Cooley, Constitutional Limitations, 8th ed., 379-

380) That is the prerogative of the political departments. It is settled

that questions regarding the wisdom, morality, or practicability of
statutes are not addressed to the judiciary but may be resolved only
by the legislative and executive departments, to which the function
belongs in our scheme of government (Decision, p. 8).
It was Mayor Lopez himself who assessed the benefits that will accrue to the city
with the operation of the jai-alai. Explaining his motion to withdraw the appeal
from the decision in Civil Case No. 88-45660, he said:
The beneficient effects to the appellant City of Manila, especially
during this critical period in our national economy, are manifold and
undeniable. The franchise operation shall be a great boost toward
generating much needed revenues for the City coffers estimated at
P100,000.00 a day by way of franchise fees alone, not to mention
other municipal taxes and regulatory fees. Millions of pesos in real
estate taxes on the improvements would be realizable. Employment
opportunities to little less than five hundred people in the main
building and hundreds of others in the off track fronton shall also be
created. These is also the fact that the jai-alai building, together with
all the equipment therein, with an aggregate estimated cost of P100
million shall belong to the city upon termination of the franchise
terms (Rollo, p. 127).
Considerations of equity and fair play militate against the petition.
The Office of the Mayor of the City of Manila issued on January 19, 1990,
January 21, 1991 and May 25, 1992 business permits in favor of private
respondent to operate a jai-alai fronton and collected the corresponding license
and regulatory fees (Rollo, pp. 151-153; 175-177; 178-198). Private respondent
has spent close to P100,000,000.00 to finish the construction of the jai-alai
building and fronton.
The petition was brought under "Rule 42, Section 1 in relation to R.A. No. 5440,
to declare null and void ab initio for want of jurisdiction, the Decision and Orders
dated March 28, 1994, April 11, 1994 and April 20, 1994 issued in Civil Case No.
88-45660 of the Regional Trial Court of Manila, Branch 40" (Rollo, p. 2).
Said Rule and law refer to appeals to the Supreme Court from the decisions of
the Regional Trial Court. Clearly, they do not involved the review of orders of the
Regional Trial Court rendered after the decision of the trial court has become
final and executory. Such a review must be taken under
Rule 65, which can be given due course only when there is a showing of lack or

excess of jurisdiction or grave abuse of discretion on the part of the trial court
(Revised Rules of Court, Rule 67, Section 1; Planter's Products v. Court of
Appeals, 193 SCRA 563 [1991]). We find no abuse of discretion, much less lack
of or excess of jurisdiction, on the part of respondent judge.
WHEREFORE, the petition for certiorari is DISMISSED.
SO ORDERED.
Bellosillo, and Kapunan, JJ. concur.
Cruz, J., is on leave.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-31249 August 19, 1986
SALVADOR VILLACORTA as City Engineer of Dagupan City, and JUAN S.
CAGUIOA as Register of Deeds of Dagupan City, petitioners,
vs.
GREGORIO BERNARDO and HON. MACARIO OFILADA as Judge of the
Court of First Instance of Pangasinanrespondents.
Victor T. Llamas, Jr. for respondents.

CRUZ, J.:
This is a petition for certiorari against a decision of the Court of First Instance of
Pangasinan annulling an ordinance adopted by the municipal board of Dagupan
City.
The ordinance reads in full as follows:
ORDINANCE 22
AN ORDINANCE REGULATING SUBDIVISION PLANS OVER
PARCELS OF LAND IN THE CITY OF DAGUPAN.

Be it ordained by the Municipal Board of Dagupan City in session

assembled:
Section 1. Every proposed subdivision plan over any lot in the City of
Dagupan, shalt before the same is submitted for approval and/or
verification by the Bureau of Lands and/or the Land Registration
Commission, be previously submitted to the City Engineer of the City
who shall see to it that no encroachment is made on any portion of
the public domain, that the zoning ordinance and all other pertinent
rules and regulations are observed.
Section 2. As service fee thereof, an amount equivalent to P0.30 per
square meter of every lot resulting or win result from such
subdivision shall be charged by the City Engineer's Office.
Section 3. It shall be unlawful for the Register of Deeds of Dagupan
City to allow the registration of a subdivision plan unless there is
prior written certification issued by the City Engineer that such plan
has already been submitted to his office and that the same is in
order.
Section 4. Any violation of this ordinance shall be punished by a fine
not exceeding two hundred (P200.00) pesos or imprisonment not
exceeding six (6) months or both in the discretion of the judge.
Section 5. This ordinance shall take effect immediately upon
approval.
In declaring the said ordinance null and void, the court a quo declared:
From the above-recited requirements, there is no showing that
would justify the enactment of the questioned ordinance. Section 1
of said ordinance clearly conflicts with Section 44 of Act 496,
because the latter law does not require subdivision plans to be
submitted to the City Engineer before the same is submitted for
approval to and verification by the General Land Registration Office
or by the Director of Lands as provided for in Section 58 of said Act.
Section 2 of the same ordinance also contravenes the provisions of
Section 44 of Act 496, the latter being silent on a service fee of
PO.03 per square meter of every lot subject of such subdivision
application; Section 3 of the ordinance in question also conflicts with
Section 44 of Act 496, because the latter law does not mention of a
certification to be made by the City Engineer before the Register of

Deeds allows registration of the subdivision plan; and the last

section of said ordinance imposes a penalty for its violation, which
Section 44 of Act 496 does not impose. In other words, Ordinance
22 of the City of Dagupan imposes upon a subdivision owner
additional conditions.
xxx xxx xxx
The Court takes note of the laudable purpose of the ordinance in
bringing to a halt the surreptitious registration of lands belonging to
the government. But as already intimidated above, the powers of the
board in enacting such a laudable ordinance cannot be held valid
when it shall impede the exercise of rights granted in a general law
and/or make a general law subordinated to a local ordinance.
We affirm.
To sustain the ordinance would be to open the floodgates to other ordinances
amending and so violating national laws in the guise of implementing them. Thus,
ordinances could be passed imposing additional requirements for the issuance of
marriage licenses, to prevent bigamy; the registration of vehicles, to minimize
carnaping; the execution of contracts, to forestall fraud; the validation of
passports, to deter imposture; the exercise of freedom of speech, to reduce
disorder; and so on. The list is endless, but the means, even if the end be valid,
would be ultra vires.
So many excesses are attempted in the name of the police power that it is time,
we feel, for a brief admonition.
Regulation is a fact of life in any well-ordered community. As society becomes
more and more complex, the police power becomes correspondingly ubiquitous.
This has to be so for the individual must subordinate his interests to the common
good, on the time honored justification of Salus populi est suprema lex.
In this prolix age, practically everything a person does and owns affects the
public interest directly or at least vicariously, unavoidably drawing him within the
embrace of the police power. Increasingly, he is hemmed in by all manner of
statutory, administrative and municipal requirements and restrictions that he may
find officious and even oppressive.
It is necessary to stress that unless the creeping interference of the government
in essentially private matters is moderated, it is likely to destroy that prized and
peculiar virtue of the free society: individualism.

Every member of society, while paying proper deference to the general welfare,
must not be deprived of the right to be left alone or, in the Idiom of the day, "to do
his thing." As long as he does not prejudice others, his freedom as an individual
must not be unduly curtailed.
We therefore urge that proper care attend the exercise of the police power lest it
deteriorate into an unreasonable intrusion into the purely private affairs of the
individual. The so-called "general welfare" is too amorphous and convenient an
excuse for official arbitrariness.
Let it always be remembered that in the truly democratic state, protecting the
rights of the individual is as important as, if not more so than, protecting the rights
of the public.
This advice is especially addressed to the local governments which exercise the
police power only by virtue of a valid delegation from the national legislature
under the general welfare clause. In the instant case, Ordinance No. 22 suffers
from the additional defect of violating this authority for legislation in contravention
of the national law by adding to its requirements.
WHEREFORE, the decision of the lower court annulling the challenged
ordinance is AFFIRMED, without any pronouncement as to costs.
SO ORDERED.
Yap (Chairman), Narvasa, Melencio-Herrera and Paras, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-34915 June 24, 1983
CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF QUEZON
CITY, petitioners,
vs.
HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First Instance of
Rizal, Quezon City, Branch XVIII; HIMLAYANG PILIPINO, INC., respondents.
City Fiscal for petitioners.
Manuel Villaruel, Jr. and Feliciano Tumale for respondents.

GUTIERREZ, JR., J.:

This is a petition for review which seeks the reversal of the decision of the Court
of First Instance of Rizal, Branch XVIII declaring Section 9 of Ordinance No.
6118, S-64, of the Quezon City Council null and void.
Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE REGULATING
THE ESTABLISHMENT, MAINTENANCE AND OPERATION OF PRIVATE
MEMORIAL TYPE CEMETERY OR BURIAL GROUND WITHIN THE
JURISDICTION OF QUEZON CITY AND PROVIDING PENALTIES FOR THE
VIOLATION THEREOF" provides:
Sec. 9. At least six (6) percent of the total area of the memorial park
cemetery shall be set aside for charity burial of deceased persons
who are paupers and have been residents of Quezon City for at
least 5 years prior to their death, to be determined by competent City
Authorities. The area so designated shall immediately be developed
and should be open for operation not later than six months from the
date of approval of the application.
For several years, the aforequoted section of the Ordinance was not enforced by
city authorities but seven years after the enactment of the ordinance, the Quezon
City Council passed the following resolution:
RESOLVED by the council of Quezon assembled, to request, as it
does hereby request the City Engineer, Quezon City, to stop any
further selling and/or transaction of memorial park lots in Quezon
City where the owners thereof have failed to donate the required 6%
space intended for paupers burial.
Pursuant to this petition, the Quezon City Engineer notified respondent
Himlayang Pilipino, Inc. in writing that Section 9 of Ordinance No. 6118, S-64
would be enforced
Respondent Himlayang Pilipino reacted by filing with the Court of First Instance
of Rizal Branch XVIII at Quezon City, a petition for declaratory relief, prohibition
and mandamus with preliminary injunction (Sp. Proc. No. Q-16002) seeking to
annul Section 9 of the Ordinance in question The respondent alleged that the
same is contrary to the Constitution, the Quezon City Charter, the Local
Autonomy Act, and the Revised Administrative Code.

There being no issue of fact and the questions raised being purely legal both
petitioners and respondent agreed to the rendition of a judgment on the
pleadings. The respondent court, therefore, rendered the decision declaring
Section 9 of Ordinance No. 6118, S-64 null and void.
A motion for reconsideration having been denied, the City Government and City
Council filed the instant petition.
Petitioners argue that the taking of the respondent's property is a valid and
reasonable exercise of police power and that the land is taken for a public use as
it is intended for the burial ground of paupers. They further argue that the
Quezon City Council is authorized under its charter, in the exercise of local police
power, " to make such further ordinances and resolutions not repugnant to law as
may be necessary to carry into effect and discharge the powers and duties
conferred by this Act and such as it shall deem necessary and proper to provide
for the health and safety, promote the prosperity, improve the morals, peace,
good order, comfort and convenience of the city and the inhabitants thereof, and
for the protection of property therein."
On the other hand, respondent Himlayang Pilipino, Inc. contends that the taking
or confiscation of property is obvious because the questioned ordinance
permanently restricts the use of the property such that it cannot be used for any
reasonable purpose and deprives the owner of all beneficial use of his property.
The respondent also stresses that the general welfare clause is not available as
a source of power for the taking of the property in this case because it refers to
"the power of promoting the public welfare by restraining and regulating the use
of liberty and property." The respondent points out that if an owner is deprived of
his property outright under the State's police power, the property is generally not
taken for public use but is urgently and summarily destroyed in order to promote
the general welfare. The respondent cites the case of a nuisance per se or the
destruction of a house to prevent the spread of a conflagration.
We find the stand of the private respondent as well as the decision of the
respondent Judge to be well-founded. We quote with approval the lower court's
ruling which declared null and void Section 9 of the questioned city ordinance:
The issue is: Is Section 9 of the ordinance in question a valid
exercise of the police power?
An examination of the Charter of Quezon City (Rep. Act No. 537),
does not reveal any provision that would justify the ordinance in
question except the provision granting police power to the City.

Section 9 cannot be justified under the power granted to Quezon

City to tax, fix the license fee, and regulate such other business,
trades, and occupation as may be established or practised in the
City.' (Subsections 'C', Sec. 12, R.A. 537).
The power to regulate does not include the power to prohibit (People
vs. Esguerra, 81 PhiL 33, Vega vs. Municipal Board of Iloilo, L-6765,
May 12, 1954; 39 N.J. Law, 70, Mich. 396). A fortiori, the power to
regulate does not include the power to confiscate. The ordinance in
question not only confiscates but also prohibits the operation of a
memorial park cemetery, because under Section 13 of said
ordinance, 'Violation of the provision thereof is punishable with a fine
and/or imprisonment and that upon conviction thereof the permit to
operate and maintain a private cemetery shall be revoked or
cancelled.' The confiscatory clause and the penal provision in effect
deter one from operating a memorial park cemetery. Neither can the
ordinance in question be justified under sub- section "t", Section 12
of Republic Act 537 which authorizes the City Council to'prohibit the burial of the dead within the center of
population of the city and provide for their burial in such
proper place and in such manner as the council may
determine, subject to the provisions of the general law
regulating burial grounds and cemeteries and governing
funerals and disposal of the dead.' (Sub-sec. (t), Sec.
12, Rep. Act No. 537).
There is nothing in the above provision which authorizes
confiscation or as euphemistically termed by the respondents,
'donation'
We now come to the question whether or not Section 9 of the
ordinance in question is a valid exercise of police power. The police
power of Quezon City is defined in sub-section 00, Sec. 12, Rep. Act
537 which reads as follows:
(00) To make such further ordinance and regulations not
repugnant to law as may be necessary to carry into
effect and discharge the powers and duties conferred by
this act and such as it shall deem necessary and proper
to provide for the health and safety, promote, the
prosperity, improve the morals, peace, good order,
comfort and convenience of the city and the inhabitants

thereof, and for the protection of property therein; and

enforce obedience thereto with such lawful fines or
penalties as the City Council may prescribe under the
provisions of subsection (jj) of this section.
We start the discussion with a restatement of certain basic
principles. Occupying the forefront in the bill of rights is the provision
which states that 'no person shall be deprived of life, liberty or
property without due process of law' (Art. Ill, Section 1 subparagraph
1, Constitution).
On the other hand, there are three inherent powers of government
by which the state interferes with the property rights, namely-. (1)
police power, (2) eminent domain, (3) taxation. These are said to
exist independently of the Constitution as necessary attributes of
sovereignty.
Police power is defined by Freund as 'the power of promoting the
public welfare by restraining and regulating the use of liberty and
property' (Quoted in Political Law by Tanada and Carreon, V-11, p.
50). It is usually exerted in order to merely regulate the use and
enjoyment of property of the owner. If he is deprived of his property
outright, it is not taken for public use but rather to destroy in order to
promote the general welfare. In police power, the owner does not
recover from the government for injury sustained in consequence
thereof (12 C.J. 623). It has been said that police power is the most
essential of government powers, at times the most insistent, and
always one of the least limitable of the powers of government (Ruby
vs. Provincial Board, 39 PhiL 660; Ichong vs. Hernandez, 1,7995,
May 31, 1957). This power embraces the whole system of public
regulation (U.S. vs. Linsuya Fan, 10 PhiL 104). The Supreme Court
has said that police power is so far-reaching in scope that it has
almost become 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. Being coextensive with selfpreservation and survival itself, it is the most positive and active of
all governmental processes, the most essential insistent and
illimitable Especially it is so under the modern democratic framework
where the demands of society and nations have multiplied to almost
unimaginable proportions. The field and scope of police power have
become almost boundless, just as the fields of public interest and
public welfare have become almost all embracing and have
transcended human foresight. Since the Courts cannot foresee the

needs and demands of public interest and welfare, they cannot

delimit beforehand the extent or scope of the police power by which
and through which the state seeks to attain or achieve public interest
and welfare. (Ichong vs. Hernandez, L-7995, May 31, 1957).
The police power being the most active power of the government
and the due process clause being the broadest station on
governmental power, the conflict between this power of government
and the due process clause of the Constitution is oftentimes
inevitable.
It will be seen from the foregoing authorities that police power is
usually exercised in the form of mere regulation or restriction in the
use of liberty or property for the promotion of the general welfare. It
does not involve the taking or confiscation of property with the
exception of a few cases where there is a necessity to confiscate
private property in order to destroy it for the purpose of protecting
the peace and order and of promoting the general welfare as for
instance, the confiscation of an illegally possessed article, such as
opium and firearms.
It seems to the court that Section 9 of Ordinance No. 6118, Series of
1964 of Quezon City is not a mere police regulation but an outright
confiscation. It deprives a person of his private property without due
process of law, nay, even without compensation.
In sustaining the decision of the respondent court, we are not unmindful of the
heavy burden shouldered by whoever challenges the validity of duly enacted
legislation whether national or local As early as 1913, this Court ruled in Case v.
Board of Health (24 PhiL 250) that the courts resolve every presumption in favor
of validity and, more so, where the ma corporation asserts that the ordinance
was enacted to promote the common good and general welfare.
In the leading case of Ermita-Malate Hotel and Motel Operators Association Inc.
v. City Mayor of Manila (20 SCRA 849) the Court speaking through the then
Associate Justice and now Chief Justice Enrique M. Fernando stated
Primarily what calls for a reversal of such a decision is the a of any
evidence to offset the presumption of validity that attaches to a
statute or ordinance. As was expressed categorically by Justice
Malcolm 'The presumption is all in favor of validity. ... 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 lances 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. ... 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. (U.S. v. Salaveria (1918], 39
Phil. 102, at p. 111. There was an affirmation of the presumption of
validity of municipal ordinance as announced in the leading
Salaveria decision in Ebona v. Daet, [1950]85 Phil. 369.)
We have likewise considered the principles earlier stated in Case v.
Board of Health supra :
... Under the provisions of municipal charters which are known as
the general welfare clauses, a city, by virtue of its police power, may
adopt ordinances to the peace, safety, health, morals and the best
and highest interests of the municipality. It is a well-settled principle,
growing out of the nature of well-ordered and society, that every
holder of property, however absolute and may be his title, holds it
under the implied liability that his use of it shall not be injurious to the
equal enjoyment of others having an equal right to the enjoyment of
their property, nor injurious to the rights of the community. An
property in the state is held subject to its general regulations, which
are necessary to the common good and general welfare. Rights of
property, like all other social and conventional rights, are subject to
such reasonable limitations in their enjoyment as shall prevent them
from being injurious, and to such reasonable restraints and
regulations, established by law, as the legislature, under the
governing and controlling power vested in them by the constitution,
may think necessary and expedient. The state, under the police
power, is possessed with plenary power to deal with all matters
relating to the general health, morals, and safety of the people, so
long as it does not contravene any positive inhibition of the organic
law and providing that such power is not exercised in such a manner
as to justify the interference of the courts to prevent positive wrong
and oppression.
but find them not applicable to the facts of this case.
There is no reasonable relation between the setting aside of at least six (6)
percent of the total area of an private cemeteries for charity burial grounds of
deceased paupers and the promotion of health, morals, good order, safety, or the

general welfare of the people. The ordinance is actually a taking without

compensation of a certain area from a private cemetery to benefit paupers who
are charges of the municipal corporation. Instead of building or maintaining a
public cemetery for this purpose, the city passes the burden to private
cemeteries.
The expropriation without compensation of a portion of private cemeteries is not
covered by Section 12(t) of Republic Act 537, the Revised Charter of Quezon
City which empowers the city council to prohibit the burial of the dead within the
center of population of the city and to provide for their burial in a proper place
subject to the provisions of general law regulating burial grounds and cemeteries.
When the Local Government Code, Batas Pambansa Blg. 337 provides in
Section 177 (q) that a Sangguniang panlungsod may "provide for the burial of the
dead in such place and in such manner as prescribed by law or ordinance" it
simply authorizes the city to provide its own city owned land or to buy or
expropriate private properties to construct public cemeteries. This has been the
law and practise in the past. It continues to the present. Expropriation, however,
requires payment of just compensation. The questioned ordinance is different
from laws and regulations requiring owners of subdivisions to set aside certain
areas for streets, parks, playgrounds, and other public facilities from the land
they sell to buyers of subdivision lots. The necessities of public safety, health,
and convenience are very clear from said requirements which are intended to
insure the development of communities with salubrious and wholesome
environments. The beneficiaries of the regulation, in turn, are made to pay by the
subdivision developer when individual lots are sold to home-owners.
As a matter of fact, the petitioners rely solely on the general welfare clause or on
implied powers of the municipal corporation, not on any express provision of law
as statutory basis of their exercise of power. The clause has always received
broad and liberal interpretation but we cannot stretch it to cover this particular
taking. Moreover, the questioned ordinance was passed after Himlayang Pilipino,
Inc. had incorporated. received necessary licenses and permits and commenced
operating. The sequestration of six percent of the cemetery cannot even be
considered as having been impliedly acknowledged by the private respondent
when it accepted the permits to commence operations.
WHEREFORE, the petition for review is hereby DISMISSED. The decision of the
respondent court is affirmed.
SO ORDERED.
Teehankee (Chairman), Melencio-Herrera, Plana, Vasquez and Relova, JJ.,
concur.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 135962

March 27, 2000

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner,

vs.
BEL-AIR VILLAGE ASSOCIATION, INC., respondent.
PUNO, J.:
Not infrequently, the government is tempted to take legal shortcuts solve urgent
problems of the people. But even when government is armed with the best of
intention, we cannot allow it to run roughshod over the rule of law. Again, we let
the hammer fall and fall hard on the illegal attempt of the MMDA to open for
public use a private road in a private subdivision. While we hold that the general
welfare should be promoted, we stress that it should not be achieved at the
expense of the rule of law.
Petitioner MMDA is a government agency tasked with the delivery of basic
services in Metro Manila. Respondent Bel-Air Village Association, Inc. (BAVA) is
a non-stock, non-profit corporation whose members are homeowners in Bel-Air
Village, a private subdivision in Makati City. Respondent BAVA is the registered
owner of Neptune Street, a road inside Bel-Air Village.
On December 30, 1995, respondent received from petitioner, through its
Chairman, a notice dated December 22, 1995 requesting respondent to open
Neptune Street to public vehicular traffic starting January 2, 1996. The notice
reads:
SUBJECT: NOTICE of the Opening of Neptune Street to Traffic.
Dear President Lindo,
Please be informed that pursuant to the mandate of the MMDA law or
Republic Act No. 7924 which requires the Authority to rationalize the use of
roads and/or thoroughfares for the safe and convenient movement of
persons, Neptune Street shall be opened to vehicular traffic effective
January 2, 1996.

In view whereof, the undersigned requests you to voluntarily open the

points of entry and exit on said street.
Thank you for your cooperation and whatever assistance that may be
extended by your association to the MMDA personnel who will be directing
traffic in the area.
Finally, we are furnishing you with a copy of the handwritten instruction of
the President on the matter.
Very truly yours,
PROSPERO I. ORETA
Chairman 1
On the same day, respondent was apprised that the perimeter wall
separating the subdivision from the adjacent Kalayaan Avenue would be
demolished.
On January 2, 1996, respondent instituted against petitioner before the Regional
Trial Court, Branch 136, Makati City, Civil Case No. 96-001 for injunction.
Respondent prayed for the issuance of a temporary restraining order and
preliminary injunction enjoining the opening of Neptune Street and prohibiting the
demolition of the perimeter wall. The trial court issued a temporary restraining
order the following day.
On January 23, 1996, after due hearing, the trial court denied issuance of a
preliminary injunction. 2 Respondent questioned the denial before the Court of
Appeals in CA-G.R. SP No. 39549. The appellate court conducted an ocular
inspection of Neptune Street 3 and on February 13, 1996, it issued a writ of
preliminary injunction enjoining the implementation of the MMDA's proposed
action. 4
On January 28, 1997, the appellate court rendered a Decision on the merits of
the case finding that the MMDA has no authority to order the opening of Neptune
Street, a private subdivision road and cause the demolition of its perimeter walls.
It held that the authority is lodged in the City Council of Makati by ordinance. The
decision disposed of as follows:
WHEREFORE, the Petition is GRANTED; the challenged Order dated
January 23, 1995, in Civil Case No. 96-001, is SET ASIDE and the Writ of

Preliminary Injunction issued on February 13, 1996 is hereby made

permanent.
For want of sustainable substantiation, the Motion to Cite Roberto L. del
Rosario in contempt is denied. 5
No pronouncement as to costs.
SO ORDERED. 6
The Motion for Reconsideration of the decision was denied on September 28,
1998. Hence, this recourse.
Petitioner MMDA raises the following questions:
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
ofSangalang v. Intermediate Appellate Court. 8 From the premise that it has
police power, it is now urged that there is no need for the City of Makati to enact
an ordinance opening Neptune street to the public. 9
Police power is an inherent attribute of sovereignty. It has been defined as the
power vested by the Constitution in the legislature to make, ordain, and establish
all manner of wholesome and reasonable laws, statutes and ordinances, either
with penalties or without, not repugnant to the Constitution, as they shall judge to
be for the good and welfare of the commonwealth, and for the subjects of the
same. 10 The power is plenary and its scope is vast and pervasive, reaching and
justifying measures for public health, public safety, public morals, and the general
welfare. 11
It bears stressing that police power is lodged primarily in the National
Legislature. 12 It cannot be exercised by any group or body of individuals not
possessing legislative power. 13 The National Legislature, however, may
delegate this power to the President and administrative boards as well as the
lawmaking bodies of municipal corporations or local government units.14 Once
delegated, the agents can exercise only such legislative powers as are conferred
on them by the national lawmaking body. 15
A local government is a "political subdivision of a nation or state which is
constituted by law and has substantial control of local affairs." 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 "metrowide" basic services affecting the region placed under "a development
authority" referred to as the MMDA. 25

"Metro-wide services" are those "services which have metro-wide impact and
transcend local political boundaries or entail huge expenditures such that it would
not be viable for said services to be provided by the individual local government
units comprising Metro Manila." 26 There are seven (7) basic metro-wide services
and the scope of these services cover the following: (1) development planning;
(2) transport and traffic management; (3) solid waste disposal and management;
(4) flood control and sewerage management; (5) urban renewal, zoning and land
use planning, and shelter services; (6) health and sanitation, urban protection
and pollution control; and (7) public safety. The basic service of transport and
traffic management includes the following:
(b) Transport and traffic management which include the
formulation, coordination, and monitoring of policies,standards, programs
and projects to rationalize the existing transport operations, infrastructure
requirements, the use of thoroughfares, and promotion of safe and
convenient movement of persons and goods; provision for the mass
transport system and the institution of a system to regulate road
users; administration and implementation of all traffic enforcement
operations, traffic engineering services and traffic education
programs, including the institution of a single ticketing system in
Metropolitan Manila;" 27
In the delivery of the seven (7) basic services, the MMDA has the following
powers and functions:
Sec. 5. Functions and powers of the Metro Manila Development Authority.
The MMDA shall:
(a) Formulate, coordinate and regulate the implementation of medium and
long-term plans and programs for the delivery of metro-wide services, land
use and physical development within Metropolitan Manila, consistent with
national development objectives and priorities;
(b) Prepare, coordinate and regulate the implementation of medium-term
investment programs for metro-wide services which shall indicate sources
and uses of funds for priority programs and projects, and which shall
include the packaging of projects and presentation to funding institutions;
(c) Undertake and manage on its own metro-wide programs and projects
for the delivery of specific services under its jurisdiction, subject to the
approval of the Council. For this purpose, MMDA can create appropriate
project management offices;

(d) Coordinate and monitor the implementation of such plans, programs

and projects in Metro Manila; identify bottlenecks and adopt solutions to
problems of implementation;
(e) The MMDA shall set the policies concerning traffic in Metro Manila, and
shall coordinate and regulate the implementation of all programs and
projects concerning traffic management, specifically pertaining to
enforcement,engineering and education. Upon request, it shall be
extended assistance and cooperation, including but not limited
to, assignment of personnel, by all other government agencies and offices
concerned;
(f) Install and administer a single ticketing system, fix, impose and collect
fines and penalties for all kinds of violations of traffic rules and
regulations, whether moving or non-moving in nature, and confiscate and
suspend or revoke drivers' licenses in the enforcement of such traffic laws
and regulations, the provisions of RA 4136 and PD 1605 to the contrary
notwithstanding. For this purpose, the Authority shall impose all traffic laws
and regulations in Metro Manila, through its traffic operation center, and
may deputize members of the PNP, traffic enforcers of local government
units, duly licensed security guards, or members of non-governmental
organizations to whom may be delegated certain authority, subject to such
conditions and requirements as the Authority may impose; and
(g) Perform other related functions required to achieve the objectives of the
MMDA, including the undertaking of delivery of basic services to the local
government units, when deemed necessary subject to prior coordination
with and consent of the local government unit concerned.
The implementation of the MMDA's plans, programs and projects is undertaken
by the local government units, national government agencies, accredited
people's organizations, non-governmental organizations, and the private sector
as well as by the MMDA itself. For this purpose, the MMDA has the power to
enter into contracts, memoranda of agreement and other arrangements with
these bodies for the delivery of the required services Metro Manila. 28
The governing board of the MMDA is the Metro Manila Council. The Council is
composed of the mayors of the component 12 cities and 5 municipalities, the
president of the Metro Manila Vice-Mayors' League and the president of the
Metro Manila Councilors' League. 29 The Council is headed by Chairman who is
appointed by the President and vested with the rank of cabinet member. As the
policy-making body of the MMDA, the Metro Manila Council approves metro-wide
plans, programs and projects, and issues the necessary rules and regulations for

the implementation of said plans; it approves the annual budget of the MMDA
and promulgate the rules and regulations for the delivery of basic services,
collection of service and regulatory fees, fines and penalties. These functions are
particularly enumerated as follows:
Sec. 6. Functions of the Metro Manila Council.
(a) The Council shall be the policy-making body of the MMDA;
(b) It shall approve metro-wide plans, programs and projects and issue
rules and regulations deemed necessary by the MMDA to carry out the
purposes of this Act;
(c) It may increase the rate of allowances and per diems of the members of
the Council to be effective during the term of the succeeding Council. It
shall fix the compensation of the officers and personnel of the MMDA, and
approve the annual budget thereof for submission to the Department of
Budget and Management (DBM);
(d) It shall promulgate rules and regulations and set policies and standards
for metro-wide application governing the delivery of basic services,
prescribe and collect service and regulatory fees, and impose and collect
fines and penalties.
Clearly, the scope of the MMDA's function is limited to the delivery of the seven
(7) basic services. One of these is transport and traffic management which
includes the formulation and monitoring of policies, standards and projects to
rationalize the existing transport operations, infrastructure requirements, the use
of thoroughfares and promotion of the safe movement of persons and goods. It
also covers the mass transport system and the institution of a system of road
regulation, the administration of all traffic enforcement operations, traffic
engineering services and traffic education programs, including the institution of a
single ticketing system in Metro Manila for traffic violations. Under the service,
the MMDA is expressly authorized "to set the policies concerning traffic" and
"coordinate and regulate the implementation of all traffic management programs."
In addition, the MMDA may "install and administer a single ticketing system," fix,
impose and collect fines and penalties for all traffic violations.
It will be noted that the powers of the MMDA are limited to the following acts:
formulation, coordination, regulation, implementation, preparation, management,
monitoring, setting of policies, installation of a system and administration.There
is no syllable in R.A. No. 7924 that grants the MMDA police power, let alone
legislative power. Even the Metro Manila Council has not been delegated any

legislative power. Unlike the legislative bodies of the local government units,
there is no provision in R.A. No. 7924 that empowers the MMDA or its Council to
"enact ordinances, approve resolutions appropriate funds for the general welfare"
of the inhabitants of Metro Manila. The MMDA is, as termed in the charter itself,
"development authority." 30 It is an agency created for the purpose of laying down
policies and coordinating with the various national government agencies,
people's organizations, non-governmental organizations and the private sector
for the efficient and expeditious delivery of basic services in the vast metropolitan
area. All its functions are administrative in nature and these are actually summed
up in the charter itself, viz:
Sec. 2. Creation of the Metropolitan Manila Development Authority. . . . .
The MMDA shall perform planning, monitoring and coordinative functions,
and in the process exercise regulatory and supervisory authority over the
delivery of metro-wide services within Metro Manila, without diminution of
the autonomy of the local government units concerning purely local
matters. 31
Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate
Appellate Court 32 where we upheld a zoning ordinance issued by the Metro
Manila Commission (MMC), the predecessor of the MMDA, as an exercise of
police power. The first Sangalang decision was on the merits of the
petition, 33 while the second decision denied reconsideration of the first case and
in addition discussed the case of Yabut v. Court of Appeals. 34
Sangalang v. IAC involved five (5) consolidated petitions filed by respondent
BAVA and three residents of Bel-Air Village against other residents of the Village
and the Ayala Corporation, formerly the Makati Development Corporation, as the
developer of the subdivision. The petitioners sought to enforce certain restrictive
easements in the deeds of sale over their respective lots in the subdivision.
These were the prohibition on the setting up of commercial and advertising signs
on the lots, and the condition that the lots be used only for residential purposes.
Petitioners alleged that respondents, who were residents along Jupiter Street of
the subdivision, converted their residences into commercial establishments in
violation of the "deed restrictions," and that respondent Ayala Corporation
ushered in the full commercialization" of Jupiter Street by tearing down the
perimeter wall that separated the commercial from the residential section of the
village. 35
The petitions were dismissed based on Ordinance No. 81 of the Municipal
Council of Makati and Ordinance No. 81-01 of the Metro Manila Commission
(MMC). Municipal Ordinance No. 81 classified Bel-Air Village as a Class A

Residential Zone, with its boundary in the south extending to the center line of
Jupiter Street. The Municipal Ordinance was adopted by the MMC under the
Comprehensive Zoning Ordinance for the National Capital Region and
promulgated as MMC Ordinance No. 81-01. Bel-Air Village was indicated therein
as bounded by Jupiter Street and the block adjacent thereto was classified as a
High Intensity Commercial Zone. 36
We ruled that since both Ordinances recognized Jupiter Street as the boundary
between Bel-Air Village and the commercial district, Jupiter Street was not for the
exclusive benefit of Bel-Air residents. We also held that the perimeter wall on
said street was constructed not to separate the residential from the commercial
blocks but simply for security reasons, hence, in tearing down said wall, Ayala
Corporation did not violate the "deed restrictions" in the deeds of sale.
We upheld the ordinances, specifically MMC Ordinance No. 81-01, as a
legitimate exercise of police power. 37 The power of the MMC and the Makati
Municipal Council to enact zoning ordinances for the general welfare prevailed
over the "deed restrictions".
In the second Sangalang/Yabut decision, we held that the opening of Jupiter
Street was warranted by the demands of the common good in terms of "traffic
decongestion and public convenience." Jupiter was opened by the Municipal
Mayor to alleviate traffic congestion along the public streets adjacent to the
Village. 38 The same reason was given for the opening to public vehicular traffic of
Orbit Street, a road inside the same village. The destruction of the gate in Orbit
Street was also made under the police power of the municipal government. The
gate, like the perimeter wall along Jupiter, was a public nuisance because it
hindered and impaired the use of property, hence, its summary abatement by the
mayor was proper and legal. 39
Contrary to petitioner's claim, the two Sangalang cases do not apply to the case
at bar. Firstly, both involved zoning ordinances passed by the municipal council
of Makati and the MMC. In the instant case, the basis for the proposed opening
of Neptune Street is contained in the notice of December 22, 1995 sent by
petitioner to respondent BAVA, through its president. The notice does not cite any
ordinance or law, either by the Sangguniang Panlungsod of Makati City or by the
MMDA, as the legal basis for the proposed opening of Neptune Street. Petitioner
MMDA simply relied on its authority under its charter "to rationalize the use of
roads and/or thoroughfares for the safe and convenient movement of persons."
Rationalizing the use of roads and thoroughfares is one of the acts that fall within
the scope of transport and traffic management. By no stretch of the imagination,
however, can this be interpreted as an express or implied grant of ordinancemaking 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. 44Pending 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.
1wphi1

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.
1wphi1.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.
Davide, Jr., C.J., Kapunan, Pardo and Ynares-Santiago, JJ., concur.

Ortigas & Co., Limited

Partnership vs. Feati
Bank and Trust Co. L24670 (December
14, 1979)
Posted on October 23, 2012

G.R. No. L-24670

94 SCRA 533
December 14, 1979
Facts:
Plaintiff is engaged in real estate business, developing and selling
lots to the public, particularly the Highway Hills Subdivision along
EDSA, Mandaluyong, Rizal.
On March 4, 1952, plaintiff entered into separate agreements of
sale with Augusto Padilla y Angeles and Natividad Angeles over 2
parcels of land (Lots Nos. 5 and 6, Block 31, of the Highway Hills
Subdivision). On July 19, 1962 the vendees transferred their rights
and interests over the said lots to Emma Chavez. The plaintiff
executed the corresponding deeds of sale in favor of Emma
Chavez upon payment of the purchase price. Both the
agreements and the deeds of sale thereafter executed contained
the stipulation that the parcels of land subject of the deeds of sale
shall be used by the Buyer exclusively for residential purposes.

The restrictions were later annotated in the Transfer Certificates

of Titles covering the said lots issued in the name of Chavez.
Eventually, defendant-appellee acquired Lots No. 5 and 6 with the
building restrictions also annotated in their corresponding TCTs.
Lot No.5 was bought directly from Chavez free from all liens and
encumbrances while Lot No.6 was acquired through a Deed of
Exchange from Republic Flour Mills.
Plaintiff claims that the restrictions were imposed as part of its
general building scheme designed for the beautification and
development of the Highway Hills Subdivision which forms part of
its big landed estate where commercial and industrial sites are
also designated or established.
Defendant maintains that the area along the western part of
EDSA from Shaw Boulevard to the Pasig River, has been declared
a commercial and industrial zone, per Resolution No.27 of the
Municipal Council of Mandaluyong. It alleges that plaintiff
completely sold and transferred to third persons all lots in said
subdivision facing EDSA and the subject lots thereunder were
acquired by it only on June 23, 1962 or more than 2 years after
the area xxx had been declared a commercial and industrial
zone.
On or about May 5, 1963, defendant-appellee began construction
of a building devoted to banking purposes but which it claims
could also be used exclusively for residential purposes. The
following day, the plaintiff demanded in writing that the
construction of the commercial building be stopped but the
defendant refused to comply contending that the construction
was in accordance with the zoning regulations.

Issues:
1. Whether Resolution No. 27 s-1960 is a valid exercise of police
power.
2. Whether the said Resolution can nullify or supersede the
contractual obligations assumed by defendant-appellee.
Held:
1. Yes. The validity of Resolution No.27 was never questioned. In
fact, it was impliedly admitted in the stipulation of facts, when
plaintiff-appellant did not dispute the same. Having admitted the
validity of the subject resolution, plaintiff-appellant cannot now
change its position on appeal.
However, assuming that it is not yet too late to question the
validity of the said resolution, the posture is unsustainable.
Municipalities are empowered by law through Sec.3 of RA 2264
(Local Autonomy Act) to to adopt zoning and subdivision
ordinances or regulations for the municipality. The law does not
restrict the exercise of the power through an ordinance.
Therefore, granting that Resolution No.27 is not an ordinance, it
certainly is a regulatory measure within the intendment of the
word regulation under the provision.
An examination of Sec.12 of the same law reveals that the implied
power of a municipality should be liberally construed in its favor
and that any fair and reasonable doubt as to the existence of the
power should be interpreted in favor of the local government and
it shall be presumed to exist. An exception to the general welfare
powers delegated to municipalities is when the exercise of its
powers will conflict with vested rights arising from contracts. The
exception does not apply to the case at bar.

2. While non-impairment of contacts is constitutionally

guaranteed, the rule is not absolute since it has to be reconciled
with the legitimate exercise of police power. Invariably described
as the most essential, insistent and illimitable of powers and the
greatest and most powerful attribute of government, the
exercise of police power may be judicially inquired into and
corrected only if it is capricious, whimsical, unjust or
unreasonable, there having been a denial of due process or a
violation of any other applicable constitutional guarantee.
Resolution No.27, S-1960 declaring the western part of EDSA from
Shaw Boulevard to the Pasig River as an industrial or commercial
zone was passed by the Municipal Council of Mandaluyong in the
exercise of police power to safeguard/promote the health, safety,
peace, good order and general welfare of the people in the
locality. Judicial notice may be taken of the conditions prevailing in
the area, especially where Lots Nos. 5 and 6 are located. EDSA
supports an endless stream of traffic and the resulting activity,
noise and pollution which are hardly conducive to the health,
safety or welfare of the residents in its route. The Municipality of
Mandaluyong was reasonably justified under the circumstances in
passing the subject resolution.
Thus, the state, in order to promote the general welfare, may
interfere with personal liberty, with property, and with business
and occupations. Persons may be subjected to all kinds of
restraint and burdens, in order to secure the general comfort,
health and prosperity of the state, and to this fundamental aim of
the Government, the rights of the individual are subordinated.

Balacuit vs Court of First

Instance GR L-38429
30 June 1988
Facts: The Municipal Board of City of Butuan passed Oridinance No 640 on
21 April 1969, penalizing any person , group of persons , entity or engeged
in the business of selling admission tickets to any movie to require children
between 7-12 years of age to pay full payment for ticket should only be
charged one half. Petitioners Carlos Balacuit , et al as managers of theaters
assailed the validity and constitutionality of the said ordinance. The court
adjudged in favour of the respondents hence the petition for review.
Petitioners contend that it violates due process clause of the Constitution for
being oppressive , unfair , unjust, confiscatory and an undue restraint of
trade.
Issue: Whether or not Ordinance 640 prohibiting selling of theatre
admission tickets to children 7-12 y/o at full price is constitutional or not?
Decision: Decision reversed. Ordinance 640 declared unconstitutional. For
the assailed ordinance be held constitutional it must pass the test of police
power. To invoke the exercise the police power, it must be for the interest of
the public without interfering with private rights and adoptive means must
be reasonably necessary for the accomplishment of the purpose and not
unduly oppressive upon individuals.
While it is true that a business may be regulated, it is equally true that such
regulation must be within the bounds of reason, that is, the regulatory
ordinance must be reasonable, and its provisions cannot be oppressive
amounting to an arbitrary interference with the business or calling subject of
regulation. The right of the owner to fix a price at which his property shall be

sold or used is an inherent attribute of the property itself and, as such,

within the protection of the due process clause. Hence, the proprietors of a
theater have a right to manage their property in their own way, to fix what
prices of admission they think most for their own advantage, and that any
person who did not approve could stay away.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 71169 December 22, 1988
JOSE D. SANGALANG and LUTGARDA D. SANGALANG, petitioners, FELIX
C. GASTON and DOLORES R. GASTON, JOSE V. BRIONES and ALICIA R.
BRIONES, and BEL-AIR VILLAGE ASSOCIATION, INC., intervenorspetitioners,
vs.
INTERMEDIATE APPELLATE COURT, and AYALA
CORPORATION, respondents.
G.R. No. 74376 December 22, 1988
BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT, ROSARIO DE JESUS TENORIO,
and CECILIA GONZALVEZ,respondents.
G.R. No. 76394 December 22,1988
BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,
vs.
THE COURT OF APPEALS, and EDUARDO and BUENA
ROMUALDEZ respondents.
G.R. No. 78182 December 22, 1988
BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,
vs.

COURT OF APPEALS, DOLORES FILLEY, and J. ROMERO &

ASSOCIATES, respondents.
G.R. No. 82281 December 22, 1988
BEL-AIR VILLAGE ASSOCIATION, INC, petitioner,
vs.
COURT OF APPEALS, VIOLETA MONCAL, and MAJAL DEVELOPMENT
CORPORATION, respondents.
Sangco, Anastacio, Castaneda & Duran Law Office for petitioners & private
intervenors- petitioners.
Raul S. Sison Law Offices for intervenor-petitioner Bel-Air Village Association,
Inc. Renato L. Dela Fuente for respondent Ayala Corporation.
G.R. No. L-74376:
Raul S. Sison Law Offices for petitioner.
Sergio L. Guadiz for private respondents.
G.R. No. L-76394:
Raul S. Sison Law Offices for petitioner.
Gruba, Tanlimco Lamso and Apuhin Law Offices for respondents.
G.R. No. L-78182:
Funk & Associates for petitioners.
Tee Tomas & Associates for respondents.
G.R. No. L-82281:
Funk & Associates for petitioner.
Castillo, Laman, Tan & Associates for private respondents.

SARMIENTO, J.:

Before the Court are five consolidated petitions, 1 docketed as G.R. Nos. 71169, 74376,
76394, 78182, and 82281 hereof, in the nature of appeals (by certiorari under Rule 45 of the Rules of
Court) from five decisions of the Court of Appeals, denying specific performance and damages.

The proceedings were commenced at the first instance by Jose Sangalang,

joined by his wife Lutgarda Sangalang, both residents of No. 110 Jupiter Street,
Makati, Metro Manila (G.R. No. 71169) to enforce by specific performance
restrictive easement upon property, specifically the Bel- Air Village subdivision in
Makati, Metro Manila, pursuant to stipulations embodied in the deeds of sale
covering the subdivision, and for damages. Later, the Sangalangs were joined by
Felix Gaston, a resident of No. 64 Jupiter Street of the same municipality, and by
Mr. and Mrs. Jose and Alicia Briones, both of No. 66 Jupiter Street. Pending
further proceedings, the Bel-Air Village Association, Inc. (BAVA), an incorporated
homeowners' association, entered its appearance as plaintiff-in-intervention.
BAVA itself had brought its own complaints, four in number, likewise for specific
performance and damages to enforce the same 'deed restrictions.' (See G.R.
Nos. 74376, 76394, 78182, and 82281.)
ANTECEDENTS FACTS
I. G.R. No. 71169
The facts are stated in the decision appealed from. We quote:
xxxxxxxxx
(1) Bel-Air Village is located north of Buendia Avenue extension
(now Sen. Gil J. Puyat Ave.) across a stretch of commercial block
from Reposo Street in the west up to Zodiac Street in the east,
When Bel-Air Village was planned, this block between Reposo and
Zodiac Streets adjoining Buendia Avenue in front of the village was
designated as a commercial block. (Copuyoc TSN, p. 10, Feb. 12,
1982).
(2) Bel-Air Village was owned and developed into a residential
subdivision in the 1950s by Makati Development Corporation
(hereinafter referred to as MDC), which in 1968 was merged with
appellant Ayala Corporation.
(3) Appellees-spouses Sangalang reside at No. 11O Jupiter Street
between Makati Avenue and Reposo Street; appellees-spouses
Gaston reside at No. 64 Jupiter Street between Makati Avenue and
Zodiac Street; appellees-spouses Briones reside at No. 66 Jupiter

Street also between Makati Avenue and Zodiac Street; while

appellee Bel-Air Village Association, Inc. (hereinafter referred to as
BAVA) is the homeowners' association in Bel-Air Village which takes
care of the sanitation, security, traffic regulations and general welfare
of the village.
(4) The lots which were acquired by appellees Sangalang and
spouse Gaston and spouse and Briones and spouse in 1960, 1957
and 1958, respectively, were all sold by MDC subject to certain
conditions and easements contained in Deed Restrictions which
formed a part of each deed of sale. The pertinent provisions in said
Deed Restrictions, which are common to all lot owners in Bel-Air
Village, are as follows:
I-BEL-AIR ASSOCIATION
The owner of this lot/s or his successors in interest is required to be
and is automatically a member of the Bel-Air Association and must
abide by such rules and regulations laid down by the Association in
the interest of the sanitation, security and the general welfare of the
community.
The association will also provide for and collect assessments, which
will constitute as a lien on the property junior only to liens of the
government for taxes and to voluntary mortgages for sufficient
consideration entered into in good faith.
II-USE OF LOTS
Subject to such amendments and additional restrictions,
reservations, servitudes, etc., as the Bel- Air Association may from
time to time adopt and prescribe, this lot is subject to the following
restrictions:
a. This lot/s shall not be subdivided. However, three or more lots
may be consolidated and subdivided into a lesser number of lots
provided that none of the resulting lots be smaller in area than the
smallest lot before the consolidation and that the consolidation and
subdivision plan be duly approved by the governing body of the BelAir Association.
b. This lot/s shall only be used for residential purposes.

c. Only one single family house may be constructed on a single lot,

although separate servants' quarters or garage may be built.
d. Commercial or advertising signs shall not be placed, constructed,
or erected on this lot. Name plates and professional signs of
homeowners are permitted so long as they do not exceed 80 x 40
centimeters in size.
e. No cattle, pigs, sheep, goats, ducks, geese, roosters or rabbits
shall be maintained in the lot, except that pets may be maintained
but must be controlled in accordance with the rulings of the
Association. The term "pets' includes chickens not in commercial
quantities.
f. The property is subject to an easement of two (2) meters within the
lot and adjacent to the rear and sides thereof not fronting a street for
the purpose of drainage, sewage, water and other public facilities as
may be necessary and desirable; and the owner, lessee or his
representative shall permit access thereto by authorized
representatives of the Bel-Air Association or public utility entities for
the purposes for which the easement is created.
g. This lot shall not be used for any immoral or illegal trade or
activity.
h. The owner and/or lessee of this lot/s shall at all times keep the
grass cut and trimmed to reduce the fire hazard of the property.
xxx xxx xxx
VI-TERM OF RESTRICTIONS
The foregoing restrictions shall remain in force for fifty years from
January 15, 1957, unless sooner cancelled in its entirety by two
thirds vote of members in good standing of the Bel-Air Association.
However, the Association may, from time to time, add new ones,
amend or abolish particular restrictions or parts thereof by majority
rule.
VII--ENFORCEMENT OF RESTRICTIONS
The foregoing restrictions may be enjoined and/or enforced by court
action by the Bel-Air Association, or by the Makati Development

Corporation or its assigns, or by any registered owner of land within

the boundaries of the Bel-Air Subdivision (Sub-division plan PSD49226 and Lot 7-B, Psd-47848) or by any member in good standing
of the Bel-Air association." (Exh. 1 -b; Exh. 22, Annex "B").
(Appellant's Brief, pp. 4- 6)
(5) When MDC sold the above-mentioned lots to appellees'
predecessors-in-interest, the whole stretch of the commercial block
between Buendia Avenue and Jupiter Street, from Reposo Street in
the west to Zodiac Street in the east, was still undeveloped. Access,
therefore, to Bel-Air Village was opened to all kinds of people and
even animals. So in 1966, although it was not part of the original
plan, MDC constructed a fence or wall on the commercial block
along Jupiter Street. In 1970, the fence or wall was partly destroyed
by typhoon "Yoling." The destroyed portions were subsequently
rebuilt by the appellant. (Copuyoc TSN, pp. 31-34, Feb. 12, 1982).
When Jupiter Street was widened in 1972 by 3.5 meters, the fence
or wall had to be destroyed. Upon request of BAVA, the wall was
rebuilt inside the boundary of the commercial block. (Copuyoc TSN,
pp. 4447, Feb. 12,1982).
(6) When the appellant finally decided to subdivide and sell the lots
in the commercial block between Buendia and Jupiter, BAVA wrote
the appellant on May 9, 1972, requesting for confirmation on the use
of the commercial lots. The appellant replied on May 16, 1972,
informing BAVA of the restrictions intended to be imposed in the sale
and use of the lots. Among these restrictions are: that the building
shall have a set back of 19 meters; and that with respect to vehicular
traffic along Buendia Avenue, entrance only will be allowed, and
along Jupiter Street and side streets, both entrance and exit will be
allowed.
(7) On June 30, 1972, appellant informed BAVA that in a few months
it shall subdivide and sell the commercial lots bordering the north
side of Buendia Avenue Extension from Reposo Street up to Zodiac
Street. Appellant also informed BAVA that it had taken all
precautions and will impose upon the commercial lot owners deed
restrictions which will harmonize and blend with the development
and welfare of Bel-Air Village. Appellant further applied for special
membership in BAVA of the commercial lot owners. A copy of the
deed restrictions for the commercial lots was also enclosed. The
proposed deed restrictions shall include the 19 meter set back of
buildings from Jupiter Street, the requirement for parking space

within the lot of one (1) parking slot for every seventy five (75)
meters of office space in the building and the limitation of vehicular
traffic along Buendia to entrance only, but allowing both vehicular
entrance and vehicular exit through Jupiter Street and any side
street.
In its letter of July 10, 1972, BAVA acknowledged the above letter of
appellant and informed the latter that the application for special
membership of the commercial lot owners in BAVA would be
submitted to BAVA's board of governors for decision.
(8) On September 25, 1972, appellant notified BAVA that, after a
careful study, it was finally decided that the height limitation of
buildings on the commercial lots shall be increased from 12.5 meters
to 15 meters. Appellant further informed BAVA that Jupiter Street
shall be widened by 3.5 meters to improve traffic flow in said street.
BAVA did not reply to said letter, but on January 22, 1973, BAVA
wrote a letter to the appellant informing the latter that the Association
had assessed the appellant, as special member of the association,
the amount of P40,795.00 (based on 81,590 square meters at P.50
per square meter) representing the membership dues to the
commercial lot owners for the year 1973, and requested the
appellant to remit the amount which its board of governors had
already included in its current budget. In reply, appellant on January
31, 1973 informed BAVA that due to the widening of Jupiter Street,
the area of the lots which were accepted by the Association as
members was reduced to 76,726 square meters. Thus, the
corresponding dues at P.50 per square meter should be reduced to
P38,363.00. This amount, therefore, was remitted by the appellant to
BAVA. Since then, the latter has been collecting membership dues
from the owners of the commercial lots as special members of the
Association. As a matter of fact, the dues were increased several
times. In 1980, the commercial lot owners were already being
charged dues at the rate of P3.00 per square meter. (Domingo, TSN,
p. 36, March 19, 1980). At this rate, the total membership dues of
the commercial lot owners amount to P230,178. 00 annually based
on the total area of 76,726 square meters of the commercial lots.
(9) Meantime, on April 4, 1975, the municipal council of Makati
enacted its ordinance No. 81, providing for the zonification of Makati
(Exh. 18). Under this Ordinance, Bel-Air Village was classified as a
Class A Residential Zone, with its boundary in the south extending to
the center line of Jupiter Street (Exh. 18-A).

Thus, Chapter III, Article 1, Section 3.03, par. F. of the Ordinance

provides:
F. Bel-Air Village area, as bounded on the N by Polaris and
Mercedes streets and on the NE by Estrella Street; on the SE by
Epifanio de los Santos Avenue and on the SW by the center line of
Jupiter Street. Then bounded on the N by the abandoned MRR
Pasig Line; on the E by Makati Avenue; on the S by the center line of
Jupiter Street and on the W by the center line of Reposo Street."
(Exh. 18-A)
Similarly, the Buendia Avenue Extension area was classified as
Administrative Office Zone with its boundary in the North-North East
Extending also up to the center line of Jupiter Street (Exh. 18b).
Thus, Chapter III, Article I, Section 3.05, par. C. of the Ordinance provides:
C. The Buendia Avenue Extension areas, as bounded on the N-NE
by the center line of Jupiter Street, on the SE by Epifanio de los
Santos Avenue; on the SW by Buendia Avenue and on the NW by
the center line of Reposo Street, then on the NE by Malugay Street;
on the SE by Buendia Avenue and on the W by Ayala Avenue
Extension." (Exh. 18-B)
The Residential Zone and the Administrative Office Zone, therefore,
have a common boundary along the center line of Jupiter Street.
The above zoning under Ordinance No. 81 of Makati was later
followed under the Comprehensive Zoning Ordinance for the
National Capital Region adopted by the Metro Manila Commission
as Ordinance 81 -01 on March 14, 1981 (Exh. 19). However, under
this ordinance, Bel-Air Village is simply bounded in the SouthSoutheast by Jupiter Street-not anymore up to the center line of
Jupiter Street (Exh. B). Likewise, the blockdeep strip along the
northwest side of Buendia Avenue Extension from Reposo to EDSA
was classified as a High Intensity Commercial Zone (Exh. 19-c).
Thus, the Zoning District Boundaries -Makati, in Annex B of the Ordinance
provides:
R-I-Low Intensity Residential
xxxxxxxxx

4. Bel-Air 1, 3, 4
Bounded on the North -- J.P. Rizal and Amapola St.
South - Rockwell
Northwest - P. Burgos
Southeast - Jupiter
Southwest - Epifanio de los Santos Ave. (EDSA)
5. Bel-Air 2
Bounded on the Northwest - J.P. Rizal
Southwest - Makati Avenue
South --- Jupiter
Southeast -- Pasig Line
East - South Avenue" (Exh. 19-b)
xxxxxxxxx
C-3-High Intensity Commercial Zone
2. A block deep strip along the northwest side of Buendia Ave. Ext.
from Reposo to EDSA." (Exh, 19-c)
Under the above zoning classifications, Jupiter Street, therefore, is a
common boundary of Bel-Air Village and the commercial zone.
(10) Meanwhile, in 1972, BAVA had installed gates at strategic
locations across Jupiter Street which were manned and operated by
its own security guards who were employed to maintain, supervise
and enforce traffic regulations in the roads and streets of the village.
(Villavicencio, TSN, pp, 22-25, Oct. 30, 1980; BAVA Petition, par. 11,
Exh. 17).
Then, on January 17, 1977, the Office of the Mayor of Makati wrote
BAVA directing that, in the interest of public welfare and for the

purpose of easing traffic congestion, the following streets in Bel-Air

Village should be opened for public use:
Amapola Street - from Estrella Street to Mercedes Street
Amapola Street -junction of Palma Street gate going to J. Villena
Street
Mercedes Street -- from EDSA to Imelda Avenue and Amapola
junction
Zodiac Street - from Mercedes Street to Buendia Avenue
Jupiter Street -- from Zodiac Street to Reposo Street connecting
Metropolitan Avenue to Pasong Tamo and V. Cruz Extension
intersection
Neptune Street - from Makati Avenue to Reposo Street Orbit Street from F. Zobel-Candelaria intersection to Jupiter Street
Paseo de Roxas - from Mercedes Street to Buendia Avenue (Exh.
17, Annex A, BAVA Petition)
On February 10, 1977, BAVA wrote the Mayor of Makati, expressing
the concern of the residents about the opening of the streets to the
general public, and requesting specifically the indefinite
postponement of the plan to open Jupiter Street to public vehicles.
(Exh. 17, Annex B, BAVA Petition).
However, BAVA voluntarily opened to the public Amapola, Mercedes,
Zodiac, Neptune and Paseo de Roxas streets. (Exh. 17-A, Answer of
Makati par. 3-7).
Later, on June 17,1977, the Barangay Captain of Bel-Air Village was
advised by the Office of the Mayor that, in accordance with the
agreement entered into during the meeting on January 28, 1 977,
the Municipal Engineer and the Station Commander of the Makati
Police were ordered to open for public use Jupiter Street from
Makati Avenue to Reposo Street. Accordingly, he was requested to
advise the village residents of the necessity of the opening of the
street in the interest of public welfare. (Exh. 17, Annex E, BAVA
Petition).

Then, on June 10, 1977, the Municipal Engineer of Makati in a letter

addressed to BAVA advised the latter to open for vehicular and
pedestrian traffic the entire portion of Jupiter Street from Makati
Avenue to Reposo Street (Exh. 17, BAVA Petition, par. 14).
Finally, on August 12, 1977, the municipal officials of Makati
concerned allegedly opened, destroyed and removed the gates
constructed/located at the corner of Reposo Street and Jupiter
Street as well as the gates/fences located/constructed at Jupiter
Street and Makati Avenue forcibly, and then opened the entire length
of Jupiter Street to public traffic. (Exh. 17, BAVA Petition, pars. 16
and 17).
(11) Before the gates were-removed, there was no parking problem
or traffic problem in Jupiter Street, because Jupiter Street was not
allowed to be used by the general public (Villavicencio, TSN, pp. 2425, Oct. 30, 1980). However, with the opening of Zodiac Street from
Estrella Street to Jupiter Street and also the opening to the public of
the entire length of Jupiter Street, there was a tremendous increase
in the volume of traffic passing along Jupiter Street coming from
EDSA to Estrella Street, then to Zodiac Street to Jupiter Street, and
along the entire length of Jupiter Street to its other end at Reposo
Street. (Villavicencio, TSN, pp. 30-32, Oct. 30, 1980).
In the meantime, the purchasers of the commercial lots between
Jupiter Street and Buendia Avenue extension had started
constructing their respective buildings in 1974-1975. They
demolished the portions of the fence or wall standing within the
boundary of their lots. Many of the owners constructed their own
fences or walls in lieu of the wall and they employed their own
security guards. (TSN, p. 83, Feb. 20,1981; TSN, pp. 53-54; 72-74,
March 20,1981; TSN, pp. 54-55, July 23, 1981).
(12) Then, on January 27, 1978, appellant donated the entire Jupiter
Street from Metropolitan Avenue to Zodiac Street to BAVA (Exh. 7)However, even before 1978, the Makati Police and the security force
of BAVA were already the ones regulating the traffic along Jupiter
Street after the gates were opened in 1977. Sancianco TSN, pp. 2630, Oct. 2,1981).
In October, 1979, the fence at the corner of Orbit and Neptune
Streets was opened and removed (BAVA Petition, par. 22, Exh. 17).
The opening of the whole stretch of Orbit Street from J.P. Rizal

Avenue up to Imelda Avenue and later to Jupiter Street was agreed

to at the conference attended by the President of BAVA in the office
of the Station Commander of Makati, subject to certain conditions, to
wit:
That, maintenance of Orbit St. up to Jupiter St. shall be shouldered
by the Municipality of Makati.
That, street lights will be installed and maintenance of the same
along Orbit St. from J.P. Rizal Ave. up to Jupiter St. shall be
undertaken by the Municipality.
That for the security of the residents of San Miguel Village and BelAir Village, as a result of the opening of Orbit Street, police outposts
shall be constructed by the Municipality of Makati to be headed by
personnel of Station No. 4, in close coordination with the Security
Guards of San Miguel Village and Bel-Air Village." (CF. Exh. 3 to
Counter-Affidavit, of Station Commander, Ruperto Acle p. 253,
records)" (Order, Civil Case No. 34948, Exh. 17-c).
(13) Thus, with the opening of the entire length of Jupiter Street to
public traffic, the different residential lots located in the northern side
of Jupiter Street ceased to be used for purely residential purposes.
They became, for all purposes, commercial in character.
(14) Subsequently, on October 29, 1979, the plaintiffs-appellees
Jose D. Sangalang and Lutgarda D. Sangalang brought the present
action for damages against the defendant-appellant Ayala
Corporation predicated on both breach of contract and on tort or
quasi-delict A supplemental complaint was later filed by said
appellees seeking to augment the reliefs prayed for in the original
complaint because of alleged supervening events which occurred
during the trial of the case. Claiming to be similarly situated as the
plaintiffs-appellees, the spouses Felix C. Gaston and Dolores R.
Gaston, Jose V. Briones and Alicia R. Briones, and the homeowners'
association (BAVA) intervened in the case.
(15) After trial on the merits, the then Court of First Instance of Rizal,
Pasig, Metro Manila, rendered a decision in favor of the appellees
the dispositive portion of which is as follows:
WHEREFORE, judgment is hereby accordingly rendered as follows:

ON PLAINTIFFS' COMPLAINT:
Defendant is ordered to pay to the plaintiffs-spouses Sangalang the
following damages:
1. The sum of P500,000.00 as actual and consequential damages;
2. The sum of P2,000,000.00 as moral damages;
3. The sum of P500,000.00 as exemplary damages;
4. The sum of P100,000.00 as attorney's fees; and
5. The costs of suit.
ON INTERVENORS FELIX and DOLORES GASTON'S
COMPLAINT:
Defendant is ordered to pay to the spouses Felix and Dolores
Gaston, the following damages:
1 . The sum of P400,000.00 as consequential damages;
2 The sum of P500,000.00 as moral damages;
3 The sum of P500,000.00 as exemplary damages:
4 The sum of P50,000.00 as attorney's fees; and
5 The costs of suit.
ON INTERVENORS JOSE and ALICIA BRIONES' COMPLAINT:
Defendant is ordered to pay to the spouses Jose and Alicia Briones,
the following damages:
1 . The sum of P400,000.00 as consequential damages;
2 The sum of P500,000.00 as moral damages;
3 The sum of P500,000.00 as exemplary damages;
4 The sum of P50,000.00 as attorney's fees; and

5 The costs of suit.

ON INTERVENOR BAVA'S COMPLAINT:
Defendant is ordered to pay intervenor BAVA, the following
damages:
1. The sum of P400,000.00 as consequential damages;
2. The sum of P500,000.00 as exemplary damages;
3. The sum of P50,000.00 as attorney's fees; and
4. The costs of suit.
The above damages awarded to the plaintiffs and intervenors shall
bear legal interest from the filing of the complaint.
Defendant is further ordered to restore/reconstruct the perimeter wall
at its original position in 1966 from Reposo Street in the west to
Zodiac Street in the east, at its own expense, within SIX (6)
MONTHS from finality of judgment.
SO ORDERED.
(Record on Appeal, pp. 400-401) 2
xxxxxxxxx

On appeal, the Court of Appeals 3 rendered a reversal, and disposed as

follows:

ACCORDINGLY, finding the decision appealed from as not

supported by the facts and the law on the matter, the same is hereby
SET ASIDE and another one entered dismissing the case for lack of
a cause of action. Without pronouncement as to costs.
SO ORDERED. 4
II. G.R. No. 74376
This petition was similarly brought by BAVA to enforce the aforesaid restrictions
stipulated in the deeds of sale executed by the Ayala Corporation. The petitioner
originally brought the complaint in the Regional Trial Court of Makati, 5 principally for
specific performance, plaintiff [now, petitioner] alleging that the defendant [now, private respondent]

Tenorio allowed defendant [Tenorio's co-private respondent] Gonzalves to occupy and convert the house
at 50 Jupiter Street, Bel-Air Village, Makati, Metro Manila, into a restaurant, without its knowledge and
consent, and in violation of the deed restrictions which provide that the lot and building thereon must be
used only for residential purposes upon which the prayed for main relief was for 'the defendants to
permanently refrain from using the premises as commercial and to comply with the terms of the Deed
Restrictions." 6 The trial court dismissed the complaint on a procedural ground, i.e., pendency of an
Identical action, Civil Case No. 32346, entitled "Bel-Air Village Association, Inc. v. Jesus Tenorio." The
Court of Appeals 7 affirmed, and held, in addition, that Jupiter Street "is classified as High density
commercial (C-3) zone as per Comprehensive Zoning Ordinance No. 81-01 for National Capital
Region," 8 following its own ruling in AC-G.R. No. 66649, entitled "Bel-Air Village Association, Inc. vs. HyLand Realty & Development Corporation, et al."

III. G.R. No. 76394

xxxxxxxxx
Defendants-spouses Eduardo V. Romualdez, Jr. and Buena Tioseco
are the owners of a house and lot located at 108 Jupiter St., Makati,
Metro Manila as evidenced by Transfer Certificate of Title No.
332394 of the Registry of Deeds of Rizal. The fact is undisputed that
at the time the defendants acquired the subject house and lot,
several restrictions were already annotated on the reverse side of
their title; however, for purposes of this appeal we shall quote
hereunder only the pertinent ones, to wit:
(b,) This lot/shall be used only for residential purposes.
xxxxxxxxx
IV. Term of Restriction
The foregoing restriction(s) shall remain in force for fifty years from
January 15, 1957, unless sooner cancelled in its entirety by twothirds vote of the members in good standing of the Bel-Air
Association. However, the Association may from time to time, add
new ones, amend or abolish particular restrictions or parts thereof by
majority rule.
During the early part of 1979, plaintiff noted that certain renovations
and constructions were being made by the defendants on the
subject premises, for which reason the defendants were advised to
inform the plaintiff of the kind of construction that was going on.
Because the defendants failed to comply with the request of the
plaintiff, the latter's chief security officer visited the subject premises
on March 23, 1979 and found out that the defendants were putting
up a bake and coffee shop, which fact was confirmed by defendant

Mrs. Romualdez herself. Thereafter, the plaintiff reminded

defendants that they were violating the deed restriction. Despite said
reminder, the defendants proceeded with the construction of the
bake shop. Consequently, plaintiff sent defendants a letter dated
April 30, 1979 warning them that if they will not desist from using the
premises in question for commercial purposes, they will be sued for
violations of the deed restrictions.
Despite the warning, the defendants proceeded with the construction
of their bake shop. 9
xxxxxxxxx
The trial court 10 adjudged in favor of BAVA. On appeal, the Court of Appeals 11 reversed, on the
strength of its holding in AC-G.R. No. 66649 earlier referred to.

BAVA then elevated the matter to the Court by a petition for review on certiorari.
The Court 12 initially denied the petition "for lack of merit, it appearing that the conclusions of the
respondent Court of Appeals that private respondents' bake and coffee shop lies within a commercial
zone and that said private respondents are released from their obligations to maintain the lot known as
108 Jupiter Street for residential purposes by virtue of Ordinance No. 81 of the Municipality of Makati and
Comprehensive Zoning Ordinance No. 81-01 of the Metropolitan Manila Commission, are in accord with
law and jurisprudence," 13 for which BAVA sought a reconsideration. Pending resolution, the case was
referred to the Second Division of this Court, 14 and thereafter, to the Court En Banc en consulta. 15 Per
our Resolution, dated April 29, 1988, we consolidated this case with G.R. Nos. 74376 and 82281. 16

IV. G.R. No. 78182.

xxxxxxxxx
The case stemmed from the leasing by defendant Dolores Filley of
her building and lot situated at No. 205 Reposo Street, Bel-Air
Village Makati, Metro Manila to her co-defendant, the advertising
firm J. Romero and Associates, in alleged violation of deed
restrictions which stipulated that Filley's lot could only be used for
residential purposes. Plaintiff sought judgment from the lower court
ordering the defendants to "permanently refrain" from using the
premises in question "as commercial" and to comply with the terms
of the deed restrictions.
After the proper proceedings, the court granted the plaintiff the
sought for relief with the additional imposition of exemplary damages
of P50,000.00 and attorney's fees of P10,000.00. The trial court
gave emphasis to the restrictive clauses contained in Filley's deed of

sale from the plaintiff, which made the conversion of the building into
a commercial one a violation.
Defendants now seek review and reversal on three (3) assignments of errors,
namely:
I.
THE TRIAL COURT ERRED IN NOT FINDING THAT THE
REGULATIONS PROMULGATED BY THE MUNICIPAL
AUTHORITIES IN MAKATI AND THE MINISTRY OF HUMAN
SETTLEMENT'S CHANGING THE CHARACTER OF THE AREAS
IN QUESTION HAD RENDERED THE RESTRICTIVE EASEMENT
ON THE TITLE OF THE APPELLANTS VACATED.
II.
THE COURT ERRED IN NOT RULING THAT BECAUSE THE
APPELLEE(S) HAD ALLOWED THE USE OF THE PROPERTY
WITHIN THE VILLAGE FOR NON- RESIDENTIAL PURPOSES, IT
IS NOW ESTOPPED FROM ENFORCING THE RESTRICTIVE
PROHIBITIONS SUBJECT MATTER OF THIS CASE.
III.
THE COURT ERRED IN NOT FINDING THAT THERE EXISTED A
BILATERAL CONTRACT BETWEEN THE PARTIES AND THAT
SINCE APPELLEE HAD NOT PERFORMED ITS OBLIGATIONS
UNDER THIS ARRANGEMENT THE APPELLANT IN TURN WAS
UNDER NO OBLIGATION TO ANNOTATE THE RESTRICTIVE
PROHIBITIONS ON THE BACK OF THE TITLE.
Appellants anchor their appeal on the proposition that the Bel-Air
Village area, contrary to plaintiff- appellee's pretension of being a
strictly residential zone, is in fact commercial and characterize the
restrictions contained in appellant Filley's deed of sale from the
appellee as completely outmoded, which have lost all relevance to
the present-day realities in Makati, now the premier business hub of
the nation, where there is a proliferation of numerous commercial
enterprises established through the years, in fact even within the
heart of so-called "residential" villages. Thus, it may be said that
appellants base their position on the inexorable march of progress
which has rendered at naught the continued efficacy of the

restrictions. Appellant on the other hand, relies on a rigid

interpretation of the contractual stipulations agreed upon with
appellant Filley, in effect arguing that the restrictions are valid ad
infinitum.
The lower court quite properly found that other commercial
establishments exist in the same area (in fact, on the same street)
but ignored it just the same and saidThe fact that defendants were able to prove the existence of several
commercial establishments inside the village does not exempt them
from liability for violating some of the restrictions evidently choosing
to accord primacy to contractual stipulation. 17
xxxxxxxxx

The Court of Appeals 18 overturned the lower court, 19 likewise based on AC-G.R. No. 66649. The
respondent Court observed also that J. Romero & Associates had been given authority to open a
commercial office by the Human Settlements Regulatory Commission.

V. G.R. No. 82281

The facts of this case have been based on stipulation. We quote:
COMES NOW, the Parties, assisted by their respective counsel and
to this Honorable Court, respectfully enter into the following
stipulations of facts, to wit:
1. The parties admit the personal circumstances of each other as
well as their capacities to sue and be sued.
2. The parties admit that plaintiff BAVA for short) is the legally
constituted homeowners' association in Bel-Air Subdivision, Makati,
Metro Manila.
3. The parties admit that defendant Violets Moncal is the registered
owner of a parcel of land with a residential house constructed
thereon situated at No. 104 Jupiter Street, Bel-Air Village, Makati,
Metro Manila; that as such lot owner, she is a member of the plaintiff
association.
4. The parties admit that defendant Majal Development Corporation
(Majal for short) is the lessee of defendant Moncal's house and lot
located at No. 104 Jupiter Street.

5. The parties admit that a deed restrictions is annotated on the title

of defendant Moncal, which provides, among others, that the lot in
question must be used only for residential purposes;' that at time
Moncal purchased her aforesaid lot in 1959 said deed restrictions
was already annotated in the said title.
6. The parties admit that when Moncal leased her subject property to
Majal, she did not secure the consent of BAVA to lease the said
house and lot to the present lessee.
7. The parties admit that along Jupiter Street and on the same side
where Moncal's property is located, there are restaurants, clinics
placement or employment agencies and other commercial or
business establishments. These establishments, however, were
sued by BAVA in the proper court.
8. The parties admit that at the time Moncal purchased the subject
property from the Makati Development Corporation, there was a
perimeter wall, running along Jupiter Street, which wall was
constructed by the subdivision owner; that at that time the gates of
the entrances to Jupiter Street were closed to public traffic. In short,
the entire length of Jupiter which was inside the perimeter wall was
not then open to public traffic
9. The parties admit that subsequent thereto, Ayala tore down the
perimeter wall to give way to the commercial building fronting
Buendia Avenue (now Gil J. Puyat Avenue).
10. The parties admit that on August 12, 1977, the Mayor of Makati
forcibly opened and removed the street gates constructed on Jupiter
Street and Reposo Street, thereby opening said streets to the public.
11. The parties admit plaintiffs letters of October 10, 23 and 31,
1984; as well as defendants' letters-reply dated October 17 and 29,
1984. 20
xxxxxxxxx
The trial court 21 dismissed the petitioner's complaint, a dismissal affirmed on appeal, 22 According to
the appellate court, the opening of Jupiter Street to human and vehicular traffic, and the
commercialization of the Municipality of Makati in general, were circumstances that had made compliance
by Moncal with the aforesaid "deed restrictions" "extremely difficult and unreasonable," 23 a development
that had excused compliance altogether under Article 1267 of the Civil Code.

VI. The cases before the Court; the Court's decision.

In brief, G.R. Nos. 74376, 76394, 78182, and 82281 are efforts to enforce the
"deed restrictions" in question against specific residents (private respondents in
the petitions) of Jupiter Street and with respect to G.R. No. 78182, Reposo
Street. The private respondents are alleged to have converted their residences
into commercial establishments (a restaurant in G.R. No. 74376, a bakery and
coffee shop in G.R. No. 76394, an advertising firm in G.R. No. 78182; and a
construction company, apparently, in G.R. No. 82281) in violation of the said
restrictions. 24
Their mother case, G. R. No. 71169 is, on the other hand, a petition to hold the
vendor itself, Ayala Corporation (formerly Makati Development Corporation),
liable for tearing down the perimeter wall along Jupiter Street that had therefore
closed its commercial section from the residences of Bel-Air Village and ushering
in, as a consequence, the full "commercialization" of Jupiter Street, in violation of
the very restrictions it had authored.
As We indicated, the Court of Appeals dismissed all five appeals on the basis
primarily of its ruling in AC-G.R. No. 66649, "Bel-Air Village, Inc. v. Hy-Land
Realty Development Corporation, et al.," in which the appellate court explicitly
rejected claims under the same 'deed restrictions" as a result of Ordinance No.
81 enacted by the Government of the Municipality of Makati, as well as
Comprehensive Zoning Ordinance No. 8101 promulgated by the Metropolitan
Manila Commission, which two ordinances allegedly allowed the use of Jupiter
Street both for residential and commercial purposes. It was likewise held that
these twin measures were valid as a legitimate exercise of police power.
The Court of Appeals' reliance on Ordinance Nos. 81. and 8101 is now assailed
in these petitions, particularly the Sangalang, et al. petition.
Aside from this fundamental issue, the petitioners likewise raise procedural
questions. G.R. No. 71169, the mother case, begins with one.
1. G.R. No. 71169
In this petition, the following questions are specifically put to the Court:
May the Honorable Intermediate Appellate Court reverse the
decision of the trial court on issues which were neither raised by
AYALA in its Answers either to the Complaint or Supplemental
Complaint nor specifically assigned as one of the alleged errors on
appeal? 25

May the Honorable Intermediate Appellate Court arbitrarily ignore

the decisive findings of fact of the trial court, even if uncontradicted
and/or documented, and premised mainly on its own unsupported
conclusions totally reverse the trial court's decision? 26
May the Honorable Intermediate Appellate Court disregard the trial
court's documented findings that respondent Ayala for its own selfinterest and commercial purposes contrived in bad faith to do away
with the Jupiter Street perimeter wall it put up three times which wall
was really intended to separate the residential from the commercial
areas and thereby insure the privacy and security of Bel Air Village
pursuant to respondent Ayala's express continuing representation
and/or covenant to do so? 27
a.
The first question represents an attack on the appellate court's reliance on
Ordinances Nos. 81 and 81-01, a matter not supposedly taken up at the trial or
assigned as an error on appeal. As a rule, the Court of Appeals (then the
Intermediate Appellate Court) may determine only such questions as have been
properly raised to it, yet, this is not an inflexible rule of procedure. In Hernandez
v. Andal, 28 it was stated that "an unassigned error closely related to an error properly assigned, or
upon which the determination of the question raised by the error properly assigned is dependent, will be
considered by the appellate court notwithstanding the failure to assign it as error." 29

In Baquiran v. Court of Appeals, 30 we referred to the " modern trend of procedure . . . according]
the courts broad discretionary power" 31 and in which we allowed consideration of matters "having some
bearing on the issue submitted which the parties failed to raise or the lower court ignore[d]. 32 And in Vda.
de Javellana v. Court of Appeals, 33 we permitted the consideration of a 'patent error' of the trial court by
the Court of Appeals under Section 7, of Rule 51, of the Rules of Court, 34although such an error had not
been raised in the brief. But what we note is the fact that the Ayala Corporation did raise the zoning
measures as affirmative defenses, first in its answers 35 and second, in its brief, 36 and submitted at the
trial as exhibits. 37 There is accordingly no cause for complaint on the part of the petitioners for Ayala's
violation of the Rules. But while there was reason for the consideration, on appeal, of the said zoning
ordinances in question, this Court nevertheless finds as inaccurate the Court of Appeals' holding that such
measures, had "in effect, [made] Jupiter Street ... a street which could be used not only for residential
purposes," 38 and that "[It lost its character as a street for the exclusive benefit of those residing in Bel-Air
Village completely." 39

Among other things, there is a recognition under both Ordinances Nos. 81 and 8
1-01 that Jupiter Street lies as the boundary between Bel-Air Village and Ayala
Corporation's commercial section. And since 1957, it had been considered as a
boundary not as a part of either the residential or commercial zones of Ayala
Corporation's real estate development projects. Thus, the Bel-Air Village
Association's articles of incorporation state that Bel-Air Village is 'bounded on the
NE., from Amapola St., to de los Santos Ave., by Estrella St., on the SE from

Extrella St., to Pedestrian Lane by E. De los Santos Ave., on the SW., from
Pedestrian Lane to Reposo St., by Jupiter Street
. . . . 40 Hence, it cannot be said to have been "for the exclusive benefit" of Bel-Air Village residents.
We come to the perimeter wall then standing on the commercial side of Jupiter
Street the destruction of which opened the street to the public. The petitioners
contend that the opening of the thoroughfare had opened, in turn, the floodgates
to the commercialization of Bel-Air Village. The wall, so they allege, was
designed precisely to protect the peace and privacy of Bel-Air Village residents
from the din and uproar of mercantile pursuits, and that the Ayala Corporation
had committed itself to maintain it. It was the opinion of the Court of Appeals, as
we said, that Ayala's liability therefor, if one existed, had been overtaken by the
passage of Ordinances Nos. 81 and 82-01, opening Jupiter Street to commerce.
It is our ruling, we reiterate, that Jupiter Street lies as a mere boundary, a fact
acknowledged by the authorities of Makati and the National Government and, as
a scrutiny of the records themselves reveals, by the petitioners themselves, as
the articles of incorporation of Bel-Air Village Association itself would confirm. As
a consequence, Jupiter Street was intended for the use by both -the commercial
and residential blocks. It was not originally constructed, therefore, for the
exclusive use of either block, least of all the residents of Bel-Air Village, but, we
repeat, in favor of both, as distinguished from the general public.
When the wall was erected in 1966 and rebuilt twice, in 1970 and 1972, it was
not for the purpose of physically separating the two blocks. According to Ayala
Corporation, it was put up to enable the Bel-Air Village Association "better control
of the security in the area, 41 and as the Ayala Corporation's "show of goodwill " 42 a view we find
acceptable in the premises. For it cannot be denied that at that time, the commercial area was vacant,
"open for [sic] animals and people to have access to Bel-Air Village." 43 There was hence a necessity for a
wall.

In any case, we find the petitioners' theory, that maintaining the wall was a matter
of a contractual obligation on the part of Ayala, to be pure conjecture. The
records do not establish the existence of such a purported commitment. For one,
the subdivision plans submitted did not mention anything about it. For another,
there is nothing in the "deed restrictions" that would point to any covenant
regarding the construction of a wall. There is no representation or promise
whatsoever therein to that effect.
With the construction of the commercial buildings in 1974, the reason for which
the wall was built- to secure Bel-Air Village from interlopers had naturally ceased
to exist. The buildings themselves had provided formidable curtains of security
for the residents. It should be noted that the commercial lot buyers themselves

were forced to demolish parts of the wall to gain access to Jupiter Street, which
they had after all equal right to use.
In fine, we cannot hold the Ayala Corporation liable for damages for a
commitment it did not make, much less for alleged resort to machinations in
evading it. The records, on the contrary, will show that the Bel-Air Village
Association had been informed, at the very outset, about the impending use of
Jupiter Street by commercial lot buyers. We quote:
xxxxxxxxx
1. Exh. I of appellee, the memorandum of Mr. Carmelo Caluag,
President of BAVA, dated May 10, 1972, informing the BAVA Board
of Governors and Barrio Council members about the future use of
Jupiter Street by the lot owners fronting Buendia Avenue. The use of
Jupiter Street by the owners of the commercial lots would
necessarily require the demolition of the wall along the commercial
block adjoining Jupiter Street.
2. Exh. J of appellee, the minutes of the joint meeting of BAVA Board
of Governors and the Bel-Air Barrio Council where the matter that
"Buendia lot owners will have equal rights to use Jupiter Street," and
that Ayala's "plans about the sale of lots and use of Jupiter Street"
were precisely taken up. This confirms that from the start BAVA was
informed that the commercial lot owners will use Jupiter Street and
that necessarily the wall along Jupiter Street would be demolished.
3. Exh. 10, the letter of Mr. Demetrio Copuyoc to the President of
BAVA, dated May 16, 1972, expressly stating that vehicular entrance
and exit to the commercial lots would be allowed along Jupiter and
side streets.
4. Exhs. 27, 27-A, 27-B, the letter of Atty. Salvador J. Lorayes dated
June 30, 1972, with enclosed copy of proposed restriction for the
commercial lots to BAVA. He proposed restriction again expressly
stated that "Vehicular entrances and exits are allowed thru Jupiter
and any side streets."
5. Exh. L of appellee, the minutes of the meeting of the members of
BAVA, dated August 26, 1972, where it is stated "Recently, Ayala
Corporation informed the Board that the lots fronting Buendia
Avenue will soon be offered for sale, and that future lot owners will

be given equal rights to use Jupiter Street as well as members of the

Association."
6. Exh. 25, the letter of Atty. Lorayes dated September 25, 1972,
informing BAVA of the widening of Jupiter Street by 3.5 meters to
improve traffic flow in said street to benefit both the residents of BelAir and the future owners of the commercial lots. 44
The petitioners cannot successfully rely on the alleged promise by Demetrio
Copuyoc, Ayala's manager, to build a "[f]ence along Jupiter with gate for entrance
and/or exit 45 as evidence of Ayala's alleged continuing obligation to maintain a wall between the
residential and commercial sections. It should be observed that the fence referred to included a "gate for
entrance and or exit" which would have defeated the purpose of a wall, in the sense the petitioners would
put in one, that is to say, an impenetrable barrier. But as Ayala would point out subsequently, the
proposed fence was not constructed because it had become unnecessary when the commercial lot
owners commenced constructions thereon.

Be that as it may, the Court cannot visualize any purported obligation by Ayala
Corporation to keep the wall on the strength of this supposed promise alone. If
truly Ayala promised anything assuming that Capuyoc was authorized to bind the
corporation with a promise it would have been with respect to the fence. It would
not have established the pre-existing obligation alleged with respect to the wall.
Obligations arise, among other things, from contract. 46 If Ayala, then, were bound by an
obligation, it would have been pursuant to a contract. A contract, however, is characterized by a "meeting
of minds between two persons . 47 As a consensual relation, it must be shown to exist as a fact, clearly
and convincingly. But it cannot be inferred from a mishmash of circumstances alone disclosing some kind
of an "understanding," when especially, those disparate circumstances are not themselves incompatible
with contentions that no accord had existed or had been reached. 48

The petitioners cannot simply assume that the wall was there for the purpose
with which they now give it, by the bare coincidence that it had divided the
residential block from the commercial section of Bel-Air. The burden of proof
rests with them to show that it had indeed been built precisely for that objective, a
proof that must satisfy the requirements of our rules of evidence. It cannot be
made to stand on the strength of plain inferences.
b.
This likewise answers the petitioners' second query, whether or not the Court of
Appeals had "arbitrarily ignore(d) the decisive findings of the trial court." 49 i.e.,
findings pointing to alleged acts performed by the Ayala Corporation proving its commitment to maintain
the wall abovesaid. Specifically, the petitioners refer to, among other things: (1) Ayala's alleged
announcement to Bel- Air Village Association members that "[the perimeter wall along Jupiter Street will
not be demolished," 50(2) Ayala's alleged commitment "during the pendency of the case in the trial court"
to restore the wall; (3) alleged assurances by Copuyoc that the wall will not be removed; (4) alleged
contrivances by the corporation to make the association admit as members the commercial lot buyers

which provided them equal access to Jupiter Street; and (5) Ayala's donation to the association of Jupiter
Street for "private use" of Bel-Air residents. 51

682 (1903), where it was held that "whether the plaintiffs services were solicited
or whether they were offered to the defendant for his assistance, inasmuch as
these services were accepted and made use of by the latter, we must consider
that there was a tacit and mutual consent as to the rendition of services." (At
686.) In that case, the defendant had enormously benefitted from the services
that entitled the plaintiff to compensation on the theory that no one may unjustly
enrich himself at the expense of another (Solutio indebiti) The facts of this case
differ.
As we stated, the Ayala Corporation's alleged conduct prior to or during the
proceedings below are not necessarily at war with claims that no commitment
had been in fact made.
With respect to Ayala's alleged announcement before the association, the Court
does not agree that Ayala had categorically assumed as an obligation to maintain
the wall "perpetually," i.e., until the year 2007 (the expiration date under the
"deed restrictions.") There is nothing in its statement that would bare any
commitment. In connection with the conference between the parties "during the
pendency" of the trial, it is to be noted that the Ayala Corporation denies having
warranted the restoration of the said wall therein. What, on the other hand,
appears in the records is the fact that Ayala did make that promise, but provided
that the Mayor allowed it. It turned out, however, that the Mayor balked at the
Idea. 52 But assuming that Ayala did promise to rebuild the wall (in that conference), it does not seem to
us that it did consequently promise to maintain it in perpetuity.

It is unfair to say, as the trial court did, that the Ayala had "contrived to make
future commercial lot owners special members of BAVA and thereby acquire
equal right with the regular members thereof to use Jupiter Street 53 since, as we
stated, the commercial lot buyers have the right, in any event, to make use of Jupiter Street, whether or
not they are members of the association. It is not their memberships that give them the right to use it.
They share that right with Bel-Air residents from the outset.

The objective of making the commercial lot owners special members of the BelAir Village Association was not to accord them equal access to Jupiter Street and
inferentially, to give them the right to knock down the perimeter wall. It was,
rather, to regulate the use of the street owing precisely to the "planned" nature of
Ayala's development project, and real estate development in general, and this
could best be done by placing the commercial lot owners under the association's
jurisdiction.

Moreover, Ayala's overtures with the association concerning the membership of

commercial lot buyers therein have been shown to be neither perfidious nor
unethical nor devious (paraphrasing the lower court). We quote anew:
xxxxxxxxx
(7) On June 30, 1972, appellant informed BAVA that in a few months
it shall subdivide and sell the commercial lots bordering the north
side of Buendia Avenue Extension from Reposo Street up to Zodiac
Street. Appellant also informed BAVA that it had taken all
precautions and will impose upon the commercial lot owners deed
restrictions which will harmonize and blend with the development
and welfare of Bel-Air Village. Appellant further applied for special
membership in BAVA of the commercial lot owners. A copy of the
deed restrictions for the commercial lots was also enclosed. The
proposed deed restrictions shall include the 19 meter set back of
buildings from Jupiter Street, the requirement for parking space
within the lot of one (1) parking slot for every seventy five (75)
meters of office space in the building and the limitation of vehicular
traffic along Buendia to entrance only, but allowing both vehicular
entrance and vehicular exit through Jupiter Street and any side
street.
In its letter of July 10, 1972, BAVA acknowledged the above letter of appellant
and informed the latter that the application for special membership of the
commercial lot owners in BAVA would be submitted to BAVA's board of governors
for decision.
(8) On September 25,1972, appellant notified BAVA that, after a
careful study, it was finally decided that the height limitation of
buildings on the commercial lots shall be increased from 12.5 meters
to 15 meters. Appellant further informed BAVA that Jupiter Street
shall be widened by 3.5 meters to improve traffic flow in said street.
BAVA did not reply to said letter, but on January 22, 1973, BAVA
wrote a letter to the appellant informing the latter that the Association
had assessed the appellant, as special member of the association,
the amount of P40,795.00 (based on 81,590 square meters at P.50
per square meter) representing the membership dues of the
commercial lot owners for the year 1973, and requested the
appellant to remit the amount which its board of governors had
already included in its current budget. In reply, appellant on January
31, 1973 informed BAVA that due to the widening of Jupiter Street,
the area of the lots which were accepted by the Association as

members was reduced to 76,726 square meters. Thus, the

corresponding due at P.50 per square meter should be reduced to
P38,363.00. This amount, therefore, was remitted by the appellant to
BAVA. Since then, the latter has been collecting membership dues
from the owners of the commercial lots as special members of the
Association. As a matter of fact, the dues were increased several
times. In 1980, the commercial lot owners were already being
charged dues at the rate of P3.00 per square meter. (Domingo, TSN,
p. 36, March 19, 1980). At this rate, the total membership dues of
the commercial lot owners amount to P230,178.00 annually based
on the total area of 76,726 square meters of the commercial lots. 54
xxxxxxxxx
The alleged undertaking, finally, by Ayala in the deed of donation (over Jupiter
Street) to leave Jupiter Street for the private use of Bel-Air residents is belied by
the very provisions of the deed. We quote:
xxxxxxxxx
IV. That the offer made by the DONOR had been accepted by the
DONEE subject to the condition that the property will be used as a
street for the use of the members of the DONEE, their families,
personnel, guests, domestic help and, under certain reasonable
conditions and restrictions, by the general public, and in the event
that said lots or parts thereof cease to be used as such, ownership
thereof shall automatically revert to the DONOR. The DONEE shall
always have Reposo Street, Makati Avenue, and Paseo de Roxas
open for the use of the general public. It is also understood that the
DONOR shall continue the maintenance of the street at its expense
for a period of three years from date hereof." (Deed of Donation, p.
6, Exh. 7) 55
xxxxxxxxx

The donation, on the contrary, gave the general public equal right to it.
The Court cannot then say, accepting the veracity of the petitioners' facts"
enumerated above, that the Ayala Corporation may be held liable for specific
performance of a demandable obligation, let alone damages.
The Court adds that Ayala can hardly be held responsible for the alleged
deterioration of "living and environmental conditions" 56 of the Bel-Air area, as a
consequence of "Ayala's authorized demolition of the Jupiter perimeter wall in 1974-1975. "

57

We agree

with Ayala that until 1976, "there was peace and quiet" at Jupiter Street, as the petitioners' (Sangalang,
Gaston, and Briones) complaints admit. Hence, the degeneration of peace and order in Bel-Air cannot be
ascribed to the destruction of the wall in 1974 and 1975.

What Ayala submits as the real cause was the opening of Jupiter Street to
vehicular traffic in 1977., 58 But this was upon orders of the Mayor, and for which the homeowners'
association had precisely filed suit (Civil Case No. 34998)

59

to contest the act of the Mayor.

c.
This likewise disposes of the third question presented. The petitioners' reliance
on Ayala's alleged conduct (proving its alleged commitment), so we have ruled, is
not well-taken. Ayala's alleged acts do not, by themselves, reflect a commitment
to maintain the wall in dispute. It cannot be therefore said that the Court of
Appeals "arbitrarily ignore(d]" 60 the lower court's findings. Precisely, it is the duty of the appellate
court to review the findings of the trial judge, be they of fact or law. 61 It is not bound by the conclusions of
the judge, for which reason it makes its own findings and arrives at its own conclusions. Unless a grave
abuse of discretion may be imputed to it, it may accept or reject the lower tribunal's determinations and
rely solely on the records.

Accordingly, the Court affirms the Court of Appeals' holding that the Ayala
Corporation, in its dealings with the petitioners, the Bel-Air Village Association in
particular, had "acted with justice, gave the appellees [petitioners] their due and
observed honesty and good faith." 62 "Therefore, under both Articles 19 and 21 of the Civil
Code, the appellant [Ayala] cannot be held liable for damages."

63

2. G.R. Nos. 74376, 76394, 78182, & 82281

Our decision also resolves, quite anticlimactically, these companion cases. But
we do so for various other reasons. In the Sangalang case, we absolve the Ayala
Corporation primarily owing to our finding that it is not liable for the opening of
Jupiter Street to the general public. Insofar as these petitions are concerned, we
likewise exculpate the private respondents, not only because of the fact that
Jupiter Street is not covered by the restrictive easements based on the "deed
restrictions" but chiefly because the National Government itself, through the
Metro Manila Commission (MMC), had reclassified Jupiter Street into high
density commercial (C-3) zone, 64 pursuant to its Ordinance No. 81-01. Hence, the petitioners
have no cause of action on the strength alone of the said "deed restrictions.

In view thereof, we find no need in resolving the questions raised as to

procedure, since this disposition is sufficient to resolve these cases.
It is not that we are saying that restrictive easements, especially the easements
herein in question, are invalid or ineffective. As far as the Bel-Air subdivision itself
is concerned, certainly, they are valid and enforceable. But they are, like all

contracts, subject to the overriding demands, needs, and interests of the greater
number as the State may determine in the legitimate exercise of police power.
Our jurisdiction guarantees sanctity of contract and is said to be the "law between
the contracting parties, 65 but while it is so, it cannot contravene 'law, morals, good customs, public
order, or public policy. 66Above all, it cannot be raised as a deterrent to police power, designed precisely
to promote health, safety, peace, and enhance the common good, at the expense of contractual rights,
whenever necessary. In Ortigas & Co., Limited Partnership v. Feati Bank and Trust Co., 67 we are told:

xxxxxxxxx
2. With regard to the contention that said resolution cannot nullify the
contractual obligations assumed by the defendant-appellee referring
to the restrictions incorporated in the deeds of sale and later in the
corresponding Transfer Certificates of Title issued to defendantappellee it should be stressed, that while non-impairment of
contracts is constitutionally guaranteed, the rule is not absolute,
since it has to be reconciled with the legitimate exercise of police
power, i.e., "the power to prescribe regulations to promote the
health, morals, peace, education, good order or safety and general
welfare of the people.' Invariably described as "the most essential,
insistent, and illimitable of powers" and "in a sense, the greatest and
most powerful attribute of government," the exercise of the power
may be judicially inquired into and corrected only if it is capricious,
whimsical, unjust or unreasonable, there having been a denial of
due process or a violation of any other applicable constitutional
guarantee. As this Court held through Justice Jose P. Bengson in
Philippine Long Distance Company vs. City of Davao, et al. police
power 'is elastic and must be responsive to various social conditions;
it is not confined within narrow circumscriptions of precedents
resting on past conditions; it must follow the legal progress of a
democratic way of life.' We were even more emphatic in Vda. de
Genuino vs. The Court of agrarian Relations, et al., when We
declared: "We do not see why public welfare when clashing with the
individual right to property should not be made to prevail through the
state's exercise of its police power."
Resolution No. 27, 1960 declaring the western part of High way 54,
now E. de los Santos Avenue (EDSA, for short) from Shaw
Boulevard to the Pasig River as an industrial and commercial zone,
was obviously passed by the Municipal Council of Mandaluyong,
Rizal in the exercise of police power to safeguard or promote the
health, safety, peace, good order and general welfare of the people
in the locality. Judicial notice may be taken of the conditions
prevailing in the area, especially where Lots Nos. 5 and 6 are

located. The lots themselves not only front the highway; industrial
and commercial complexes have flourished about the place. EDSA,
a main traffic artery which runs through several cities and
municipalities in the Metro Manila area, supports an endless stream
of traffic and the resulting activity, noise and pollution are hardly
conducive to the health, safety or welfare of the residents in its
route. Having been expressly granted the power to adopt zoning and
subdivision ordinances or regulations, the municipality of
Mandaluyong, through its Municipal Council, was reasonably, if not
perfectly, justified under the circumstances, in passing the subject
resolution.68
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Undoubtedly, the MMC Ordinance represents a legitimate exercise of police
power. The petitioners have not shown why we should hold otherwise other than
for the supposed "non-impairment" guaranty of the Constitution, which, as we
have declared, is secondary to the more compelling interests of general welfare.
The Ordinance has not been shown to be capricious or arbitrary or unreasonable
to warrant the reversal of the judgments so appealed. In that connection, we find
no reversible error to have been committed by the Court of Appeals.
WHEREFORE, premises considered, these petitions are DENIED No
pronouncement as to costs.
IT IS SO ORDERED.
Fernan, (C.J.), Melencio-Herrera, Gutierrez, Jr., Cruz, Gancayco, Bidin, Cortes,
Grio-Aquino, Medialdea and Regalado, JJ., concur.
Narvasa, J., on leave.
Paras, J., Took no part;
Feliciano, J., Took no part;
Padilla, J., Took no part;