G.R. No.

111097 July 20, 1994

MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners,

vs.
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND GAMING
CORPORATION,respondents.

Aquilino G. Pimentel, Jr. and Associates for petitioners.

R.R. Torralba & Associates for private respondent.

CRUZ, J.:

There was instant opposition when PAGCOR announced the opening of a casino in Cagayan de Oro
City. Civic organizations angrily denounced the project. The religious elements echoed the objection
and so did the women's groups and the youth. Demonstrations were led by the mayor and the city
legislators. The media trumpeted the protest, describing the casino as an affront to the welfare of the
city.

The trouble arose when in 1992, flush with its tremendous success in several cities, PAGCOR
decided to expand its operations to Cagayan de Oro City. To this end, it leased a portion of a building
belonging to Pryce Properties Corporation, Inc., one of the herein private respondents, renovated
and equipped the same, and prepared to inaugurate its casino there during the Christmas season.

The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift and hostile. On
December 7, 1992, it enacted Ordinance No. 3353 reading as follows:

ORDINANCE NO. 3353

AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS PERMIT AND

CANCELLING EXISTING BUSINESS PERMIT TO ANY ESTABLISHMENT FOR
THE USING AND ALLOWING TO BE USED ITS PREMISES OR PORTION
THEREOF FOR THE OPERATION OF CASINO.

BE IT ORDAINED by the Sangguniang Panlungsod of the City of Cagayan de Oro, in

session assembled that:

Sec. 1. That pursuant to the policy of the city banning the operation of casino
within its territorial jurisdiction, no business permit shall be issued to any person,
partnership or corporation for the operation of casino within the city limits.

Sec. 2. That it shall be a violation of existing business permit by any persons,

partnership or corporation to use its business establishment or portion thereof, or
allow the use thereof by others for casino operation and other gambling activities.
 Sec. 3. PENALTIES. Any violation of such existing business permit as defined
in the preceding section shall suffer the following penalties, to wit:

a) Suspension of the business permit for sixty (60)

days for the first offense and a fine of P1,000.00/day

b) Suspension of the business permit for Six (6)

months for the second offense, and a fine of
P3,000.00/day

c) Permanent revocation of the business permit and

imprisonment of One (1) year, for the third and
subsequent offenses.

Sec. 4. This Ordinance shall take effect ten (10) days from publication thereof.

Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93 reading as follows:

ORDINANCE NO. 3375-93

AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND PROVIDING

PENALTY FOR VIOLATION THEREFOR.

WHEREAS, the City Council established a policy as early as 1990 against CASINO
under its Resolution No. 2295;

WHEREAS, on October 14, 1992, the City Council passed another Resolution No.
2673, reiterating its policy against the establishment of CASINO;

WHEREAS, subsequently, thereafter, it likewise passed Ordinance No. 3353,

prohibiting the issuance of Business Permit and to cancel existing Business Permit to
any establishment for the using and allowing to be used its premises or portion
thereof for the operation of CASINO;

WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of the Local
Government Code of 1991 (Rep. Act 7160) and under Art. 99, No. (4), Paragraph VI
of the implementing rules of the Local Government Code, the City Council as the
Legislative Body shall enact measure to suppress any activity inimical to public
morals and general welfare of the people and/or regulate or prohibit such activity
pertaining to amusement or entertainment in order to protect social and moral
welfare of the community;

NOW THEREFORE,

BE IT ORDAINED by the City Council in session duly assembled that:

 Sec. 1. The operation of gambling CASINO in the City of Cagayan de Oro is
hereby prohibited.

Sec. 2. Any violation of this Ordinance shall be subject to the following penalties:

a) Administrative fine of P5,000.00 shall be imposed against the proprietor,

partnership or corporation undertaking the operation, conduct, maintenance of
gambling CASINO in the City and closure thereof;

b) Imprisonment of not less than six (6) months nor more than one (1) year or a fine
in the amount of P5,000.00 or both at the discretion of the court against the manager,
supervisor, and/or any person responsible in the establishment, conduct and
maintenance of gambling CASINO.

Sec. 3. This Ordinance shall take effect ten (10) days after its publication in a local
newspaper of general circulation.

Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as
intervenor and supplemental petitioner. Their challenge succeeded. On March 31, 1993, the Court of
Appeals declared the ordinances invalid and issued the writ prayed for to prohibit their
enforcement. 1 Reconsideration of this decision was denied on July 13, 1993. 2

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

1. Under existing laws, the Sangguniang Panlungsod of the City of Cagayan de Oro
does not have the power and authority to prohibit the establishment and operation of
a PAGCOR gambling casino within the City's territorial limits.

2. The phrase "gambling and other prohibited games of chance" found in Sec. 458,
par. (a), sub-par. (1) (v) of R.A. 7160 could only mean "illegal gambling."

3. The questioned Ordinances in effect annul P.D. 1869 and are therefore invalid on
that point.

4. The questioned Ordinances are discriminatory to casino and partial to cockfighting

and are therefore invalid on that point.

5. The questioned Ordinances are not reasonable, not consonant with the general
powers and purposes of the instrumentality concerned and inconsistent with the laws
or policy of the State.

6. It had no option but to follow the ruling in the case of Basco, et al. v.
PAGCOR, G.R. No. 91649, May 14, 1991, 197 SCRA 53 in disposing of the issues
presented in this present case.
PAGCOR is a corporation created directly by P.D. 1869 to help centralize and regulate all games of
chance, including casinos on land and sea within the territorial jurisdiction of the Philippines.
In Basco v. Philippine Amusements and Gaming Corporation, 4 this Court sustained the
constitutionality of the decree and even cited the benefits of the entity to the national economy as the third
highest revenue-earner in the government, next only to the BIR and the Bureau of Customs.

Cagayan de Oro City, like other local political subdivisions, is empowered to enact ordinances for the
purposes indicated in the Local Government Code. It is expressly vested with the police power under
what is known as the General Welfare Clause now embodied in Section 16 as follows:

Sec. 16. General Welfare. Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and effective governance, and
those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support,
among other things, the preservation and enrichment of culture, promote health and
safety, enhance the right of the people to a balanced ecology, encourage and
support the development of appropriate and self-reliant scientific and technological
capabilities, improve public morals, enhance economic prosperity and social justice,
promote full employment among their residents, maintain peace and order, and
preserve the comfort and convenience of their inhabitants.

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

Sec. 458. Powers, Duties, Functions and Compensation. (a) The Sangguniang
Panlungsod, as the legislative body of the city, shall enact ordinances, approve
resolutions and appropriate funds for the general welfare of the city and its
inhabitants pursuant to Section 16 of this Code and in the proper exercise of the
corporate powers of the city as provided for under Section 22 of this Code, and shall:

(1) Approve ordinances and pass resolutions necessary for an efficient and effective
city government, and in this connection, shall:

xxx xxx xxx

(v) Enact ordinances intended to prevent, suppress

and impose appropriate penalties for habitual
drunkenness in public places, vagrancy, mendicancy,
prostitution, establishment and maintenance of
houses of ill repute, gambling and other prohibited
games of chance, fraudulent devices and ways to
obtain money or property, drug addiction,
maintenance of drug dens, drug pushing, juvenile
delinquency, the printing, distribution or exhibition of
obscene or pornographic materials or publications,
 and such other activities inimical to the welfare and
morals of the inhabitants of the city;

This section also authorizes the local government units to regulate properties and businesses within
their territorial limits in the interest of the general welfare. 5

The petitioners argue that by virtue of these provisions, the Sangguniang Panlungsod may prohibit
the operation of casinos because they involve games of chance, which are detrimental to the people.
Gambling is not allowed by general law and even by the Constitution itself. The legislative power
conferred upon local government units may be exercised over all kinds of gambling and not only
over "illegal gambling" as the respondents erroneously argue. Even if the operation of casinos may
have been permitted under P.D. 1869, the government of Cagayan de Oro City has the authority to
prohibit them within its territory pursuant to the authority entrusted to it by the Local Government
Code.

It is submitted that this interpretation is consonant with the policy of local autonomy as mandated in
Article II, Section 25, and Article X of the Constitution, as well as various other provisions therein
seeking to strengthen the character of the nation. In giving the local government units the power to
prevent or suppress gambling and other social problems, the Local Government Code has
recognized the competence of such communities to determine and adopt the measures best
expected to promote the general welfare of their inhabitants in line with the policies of the State.

The petitioners also stress that when the Code expressly authorized the local government units to
prevent and suppress gambling and other prohibited games of chance, like craps, baccarat,
blackjack and roulette, it meant allforms of gambling without distinction. Ubi lex non distinguit, nec
nos distinguere debemos. 6 Otherwise, it would have expressly excluded from the scope of their power
casinos and other forms of gambling authorized by special law, as it could have easily done. The fact that
it did not do so simply means that the local government units are permitted to prohibit all kinds of
gambling within their territories, including the operation of casinos.

The adoption of the Local Government Code, it is pointed out, had the effect of modifying the charter
of the PAGCOR. The Code is not only a later enactment than P.D. 1869 and so is deemed to prevail
in case of inconsistencies between them. More than this, the powers of the PAGCOR under the
decree are expressly discontinued by the Code insofar as they do not conform to its philosophy and
provisions, pursuant to Par. (f) of its repealing clause reading as follows:

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

It is also maintained that assuming there is doubt regarding the effect of the Local Government Code
on P.D. 1869, the doubt must be resolved in favor of the petitioners, in accordance with the direction
in the Code calling for its liberal interpretation in favor of the local government units. Section 5 of the
Code specifically provides:
 Sec. 5. Rules of Interpretation. In the interpretation of the provisions of this Code,
the following rules shall apply:

(a) Any provision on a power of a local government unit shall be liberally interpreted
in its favor, and in case of doubt, any question thereon shall be resolved in favor of
devolution of powers and of the lower local government unit. Any fair and reasonable
doubt as to the existence of the power shall be interpreted in favor of the local
government unit concerned;

xxx xxx xxx

(c) The general welfare provisions in this Code shall be liberally interpreted to give
more powers to local government units in accelerating economic development and
upgrading the quality of life for the people in the community; . . . (Emphasis
supplied.)

Finally, the petitioners also attack gambling as intrinsically harmful and cite various provisions of the
Constitution and several decisions of this Court expressive of the general and official disapprobation
of the vice. They invoke the State policies on the family and the proper upbringing of the youth and,
as might be expected, call attention to the old case of U.S. v. Salaveria, 7 which sustained a municipal
ordinance prohibiting the playing of panguingue. The petitioners decry the immorality of gambling. They
also impugn the wisdom of P.D. 1869 (which they describe as "a martial law instrument") in creating
PAGCOR and authorizing it to operate casinos "on land and sea within the territorial jurisdiction of the
Philippines."

This is the opportune time to stress an important point.

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

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

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

2) It must not be unfair or oppressive.

3) It must not be partial or discriminatory.

4) It must not prohibit but may regulate trade.

5) It must be general and consistent with public policy.

6) It must not be unreasonable.

We begin by observing that under Sec. 458 of the Local Government Code, local government units
are authorized to prevent or suppress, among others, "gambling and other prohibited games of
chance." Obviously, this provision excludes games of chance which are not prohibited but are in fact
permitted by law. The petitioners are less than accurate in claiming that the Code could have
excluded such games of chance but did not. In fact it does. The language of the section is clear and
unmistakable. Under the rule of noscitur a sociis, a word or phrase should be interpreted in relation
to, or given the same meaning of, words with which it is associated. Accordingly, we conclude that
since the word "gambling" is associated with "and other prohibited games of chance," the word
should be read as referring to only illegal gambling which, like the other prohibited games of chance,
must be prevented or suppressed.

We could stop here as this interpretation should settle the problem quite conclusively. But we will
not. The vigorous efforts of the petitioners on behalf of the inhabitants of Cagayan de Oro City, and
the earnestness of their advocacy, deserve more than short shrift from this Court.

The apparent flaw in the ordinances in question is that they contravene P.D. 1869 and the public
policy embodied therein insofar as they prevent PAGCOR from exercising the power conferred on it
to operate a casino in Cagayan de Oro City. The petitioners have an ingenious answer to this
misgiving. They deny that it is the ordinances that have changed P.D. 1869 for an ordinance
admittedly cannot prevail against a statute. Their theory is that the change has been made by the
Local Government Code itself, which was also enacted by the national lawmaking authority. In their
view, the decree has been, not really repealed by the Code, but merely "modified pro tanto" in the
sense that PAGCOR cannot now operate a casino over the objection of the local government unit
concerned. This modification of P.D. 1869 by the Local Government Code is permissible because
one law can change or repeal another law.

It seems to us that the petitioners are playing with words. While insisting that the decree has only
been "modifiedpro tanto," they are actually arguing that it is already dead, repealed and useless for
all intents and purposes because the Code has shorn PAGCOR of all power to centralize and
regulate casinos. Strictly speaking, its operations may now be not only prohibited by the local
government unit; in fact, the prohibition is not only discretionary but mandated by Section 458 of the
Code if the word "shall" as used therein is to be given its accepted meaning. Local government units
have now no choice but to prevent and suppress gambling, which in the petitioners' view includes
both legal and illegal gambling. Under this construction, PAGCOR will have no more games of
chance to regulate or centralize as they must all be prohibited by the local government units
pursuant to the mandatory duty imposed upon them by the Code. In this situation, PAGCOR cannot
continue to exist except only as a toothless tiger or a white elephant and will no longer be able to
exercise its powers as a prime source of government revenue through the operation of casinos.

It is noteworthy that the petitioners have cited only Par. (f) of the repealing clause, conveniently
discarding the rest of the provision which painstakingly mentions the specific laws or the parts
thereof which are repealed (or modified) by the Code. Significantly, P.D. 1869 is not one of them. A
reading of the entire repealing clause, which is reproduced below, will disclose the omission:

Sec. 534. Repealing Clause. (a) Batas Pambansa Blg. 337, otherwise known as
the "Local Government Code," Executive Order No. 112 (1987), and Executive Order
No. 319 (1988) are hereby repealed.

(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders,
instructions, memoranda and issuances related to or concerning the barangay are
hereby repealed.

(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital
fund; Section 3, a (3) and b (2) of Republic Act. No. 5447 regarding the Special
Education Fund; Presidential Decree No. 144 as amended by Presidential Decree
Nos. 559 and 1741; Presidential Decree No. 231 as amended; Presidential Decree
No. 436 as amended by Presidential Decree No. 558; and Presidential Decree Nos.
381, 436, 464, 477, 526, 632, 752, and 1136 are hereby repealed and rendered of no
force and effect.

(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-
funded projects.

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

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

Furthermore, it is a familiar rule that implied repeals are not lightly presumed in the absence of a
clear and unmistakable showing of such intention. In Lichauco & Co. v. Apostol, 10 this Court
explained:
 The cases relating to the subject of repeal by implication all proceed on the
assumption that if the act of later date clearly reveals an intention on the part of the
lawmaking power to abrogate the prior law, this intention must be given effect; but
there must always be a sufficient revelation of this intention, and it has become an
unbending rule of statutory construction that the intention to repeal a former law will
not be imputed to the Legislature when it appears that the two statutes, or provisions,
with reference to which the question arises bear to each other the relation of general
to special.

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

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

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

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

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

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

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

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

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

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

WHEREFORE, the petition is DENIED and the challenged decision of the respondent Court of
Appeals is AFFIRMED, with costs against the petitioners. It is so ordered.

Narvasa, C.J., Feliciano, Bidin, Regalado, Romero, Bellosillo, Melo, Quiason, Puno, Vitug,
Kapunan and Mendoza, JJ., concur.

Separate Opinions

PADILLA, J., concurring:

I concur with the majority holding that the city ordinances in question cannot modify much less
repeal PAGCOR's general authority to establish and maintain gambling casinos anywhere in the
Philippines under Presidential Decree No. 1869.

In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197 SCRA 52, I stated in a
separate opinion that:

. . . I agree with the decision insofar as it holds that the prohibition, control, and
regulation of the entire activity known as gambling properly pertain to "state policy". It
is, therefore, the political departments of government, namely, the legislative and the
executive that should decide on what government should do in the entire area of
gambling, and assume full responsibility to the people for such policy." (Emphasis
supplied)

However, despite the legality of the opening and operation of a casino in Cagayan de Oro City by
respondent PAGCOR, I wish to reiterate my view that gambling in any form runs counter to the
government's own efforts to re-establish and resurrect the Filipino moral character which is generally
perceived to be in a state of continuing erosion.

It is in the light of this alarming perspective that I call upon government to carefully weigh the
advantages and disadvantages of setting up more gambling facilities in the country.

That the PAGCOR contributes greatly to the coffers of the government is not enough reason for
setting up more gambling casinos because, undoubtedly, this will not help improve, but will cause a
further deterioration in the Filipino moral character.
It is worth remembering in this regard that, 1) what is legal is not always moral and 2) the ends do
not always justify the means.

As in Basco, I can easily visualize prostitution at par with gambling. And yet, legalization of the
former will not render it any less reprehensible even if substantial revenue for the government can
be realized from it. The same is true of gambling.

In the present case, it is my considered view that the national government (through PAGCOR)
should re-examine and re-evaluate its decision of imposing the gambling casino on the residents of
Cagayan de Oro City; for it is abundantly clear that public opinion in the city is very much against it,
and again the question must be seriously deliberated: will the prospects of revenue to be realized
from the casino outweigh the further destruction of the Filipino sense of values?

DAVIDE, JR., J., concurring:

While I concur in part with the majority, I wish, however, to express my views on certain aspects of
this case.

I.

It must at once be noted that private respondent Pryce Properties Corporation (PRYCE) directly filed
with the Court of Appeals its so-called petition for prohibition, thereby invoking the said court's
original jurisdiction to issue writs of prohibition under Section 9(1) of B.P. Blg. 129. As I see it,
however, the principal cause of action therein is one for declaratory relief: to declare null and
unconstitutional for, inter alia, having been enacted without or in excess of jurisdiction, for
impairing the obligation of contracts, and for being inconsistent with public policy the challenged
ordinances enacted by the Sangguniang Panglungsod of the City of Cagayan de Oro. The
intervention therein of public respondent Philippine Amusement and Gaming Corporation (PAGCOR)
further underscores the "declaratory relief" nature of the action. PAGCOR assails the ordinances for
being contrary to the non-impairment and equal protection clauses of the Constitution, violative of
the Local Government Code, and against the State's national policy declared in P.D. No. 1869.
Accordingly, the Court of Appeals does not have jurisdiction over the nature of the action. Even
assuming arguendo that the case is one for prohibition, then, under this Court's established policy
relative to the hierarchy of courts, the petition should have been filed with the Regional Trial Court of
Cagayan de Oro City. I find no special or compelling reason why it was not filed with the said court. I
do not wish to entertain the thought that PRYCE doubted a favorable verdict therefrom, in which
case the filing of the petition with the Court of Appeals may have been impelled by tactical
considerations. A dismissal of the petition by the Court of Appeals would have been in order
pursuant to our decisions in People vs. Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago
vs. Vasquez (217 SCRA 633 [1993]). In Cuaresma, this Court stated:

A last word. This court's original jurisdiction to issue writs of certiorari (as well as
prohibition, mandamus, quo warranto, habeas corpus and injunction) is not
exclusive. It is shared by this Court with Regional Trial Courts (formerly Courts of
 First Instance), which may issue the writ, enforceable in any part of their respective
regions. It is also shared by this court, and by the Regional Trial Court, with the Court
of Appeals (formerly, Intermediate Appellate Court), although prior to the effectivity
of Batas Pambansa Bilang 129 on August 14, 1981, the latter's competence to issue
the extraordinary writs was restricted by those "in aid of its appellate jurisdiction."
This concurrence of jurisdiction is not, however, to be taken as according to parties
seeking any of the writs an absolute, unrestrained freedom of choice of the court to
which application therefor will be directed. There is after all a hierarchy of courts.
That hierarchy is determinative of the revenue of appeals, and should also serve as a
general determinant of the appropriate forum for petitions for the extraordinary writs.
A becoming regard for that judicial hierarchy most certainly indicates that petitions for
the issuance of extraordinary writs against first level ("inferior") courts should be filed
with the Regional Trial Court, and those against the latter, with the Court of Appeals.
A direct invocation of the Supreme Court's original jurisdiction to issue these writs
should be allowed only when there are special and important reasons therefor,
clearly and specifically set out in the petition. This is established policy. It is a policy
that is necessary to prevent inordinate demands upon the Court's time and attention
which are better devoted to those matters within its exclusive jurisdiction, and to
prevent further over-crowding of the Court's docket. Indeed, the removal of the
restriction of the jurisdiction of the Court of Appeals in this regard, supra resulting
from the deletion of the qualifying phrase, "in aid of its appellate jurisdiction" was
evidently intended precisely to relieve this Court pro tanto of the burden of dealing
with applications for extraordinary writs which, but for the expansion of the Appellate
Court's corresponding jurisdiction, would have had to be filed with it. (citations
omitted)

And in Vasquez, this Court said:

One final observation. We discern in the proceedings in this case a propensity on the
part of petitioner, and, for that matter, the same may be said of a number of litigants
who initiate recourses before us, to disregard the hierarchy of courts in our judicial
system by seeking relief directly from this Court despite the fact that the same is
available in the lower courts in the exercise of their original or concurrent jurisdiction,
or is even mandated by law to be sought therein. This practice must be stopped, not
only because of the imposition upon the previous time of this Court but also because
of the inevitable and resultant delay, intended or otherwise, in the adjudication of the
case which often has to be remanded or referred to the lower court as the proper
forum under the rules of procedure, or as better equipped to resolve the issues since
this Court is not a trier of facts. We, therefore, reiterate the judicial policy that this
Court will not entertain direct resort to it unless the redress desired cannot be
obtained in the appropriate courts or where exceptional and compelling
circumstances justify availment of a remedy within and calling for the exercise of our
primary jurisdiction.

II.
The challenged ordinances are (a) Ordinance No. 3353 entitled, "An Ordinance Prohibiting the
Issuance of Business Permit and Canceling Existing Business Permit To Any Establishment for the
Using and Allowing to be Used Its Premises or Portion Thereof for the Operation of Casino," and (b)
Ordinance No. 3375-93 entitled, "An Ordinance Prohibiting the Operation of Casino and Providing
Penalty for Violation Therefor." They were enacted to implement Resolution No. 2295 entitled,
"Resolution Declaring As a Matter of Policy to Prohibit and/or Not to Allow the Establishment of the
Gambling Casino in the City of Cagayan de Oro," which was promulgated on 19 November 1990
nearly two years before PRYCE and PAGCOR entered into a contract of lease under which the latter
leased a portion of the former's Pryce Plaza Hotel for the operation of a gambling casino which
resolution was vigorously reiterated in Resolution No. 2673 of 19 October 1992.

The challenged ordinances were enacted pursuant to the Sangguniang Panglungsod's express
powers conferred by Section 458, paragraph (a), subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv), and
(vii), Local Government Code, and pursuant to its implied power under Section 16 thereof (the
general welfare clause) which reads:

Sec. 16. General Welfare. Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective governance, and those which
are essential to the promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among other things,
the preservation and enrichment of culture, promote health and safety, enhance the
right of the people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve public
morals, enhance economic prosperity and social justice, promote full employment
among their residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants.

The issue that necessarily arises is whether in granting local governments (such as the City of
Cagayan de Oro) the above powers and functions, the Local Government Code has, pro tanto,
repealed P.D. No. 1869 insofar as PAGCOR's general authority to establish and maintain gambling
casinos anywhere in the Philippines is concerned.

I join the majority in holding that the ordinances cannot repeal P.D. No. 1869.

III.

The nullification by the Court of Appeals of the challenged ordinances as unconstitutional primarily
because it is in contravention to P.D. No. 1869 is unwarranted. A contravention of a law is not
necessarily a contravention of the constitution. In any case, the ordinances can still stand even if
they be conceded as offending P.D. No. 1869. They can be reconciled, which is not impossible to do.
So reconciled, the ordinances should be construed as not applying to PAGCOR.

IV.
From the pleadings, it is obvious that the government and the people of Cagayan de Oro City are,
for obvious reasons, strongly against the opening of the gambling casino in their city. Gambling,
even if legalized, would be inimical to the general welfare of the inhabitants of the City, or of any
place for that matter. The PAGCOR, as a government-owned corporation, must consider the valid
concerns of the people of the City of Cagayan de Oro and should not impose its will upon them in an
arbitrary, if not despotic, manner.

G.R. No. 112497 August 4, 1994

HON. FRANKLIN M. DRILON, in his capacity as SECRETARY OF JUSTICE, petitioner,

vs.
MAYOR ALFREDO S. LIM, VICE-MAYOR JOSE L. ATIENZA, CITY TREASURER ANTHONY
ACEVEDO, SANGGUNIANG PANGLUNSOD AND THE CITY OF MANILA, respondents.

The City Legal Officer for petitioner.

Angara, Abello, Concepcion, Regala & Cruz for Caltex (Phils.).

Joseph Lopez for Sangguniang Panglunsod of Manila.

L.A. Maglaya for Petron Corporation.

CRUZ, J.:

The principal issue in this case is the constitutionality of Section 187 of the Local Government Code
reading as follows:

Procedure For Approval And Effectivity Of Tax Ordinances And Revenue Measures;
Mandatory Public Hearings. The procedure for approval of local tax ordinances
and revenue measures shall be in accordance with the provisions of this Code:
Provided, That public hearings shall be conducted for the purpose prior to the
enactment thereof; Provided, further, That any question on the constitutionality or
legality of tax ordinances or revenue measures may be raised on appeal within thirty
(30) days from the effectivity thereof to the Secretary of Justice who shall render a
decision within sixty (60) days from the date of receipt of the appeal: Provided,
however, That such appeal shall not have the effect of suspending the effectivity of
the ordinance and the accrual and payment of the tax, fee, or charge levied therein:
Provided, finally, That within thirty (30) days after receipt of the decision or the lapse
of the sixty-day period without the Secretary of Justice acting upon the appeal, the
aggrieved party may file appropriate proceedings with a court of competent
jurisdiction.
Pursuant thereto, the Secretary of Justice had, on appeal to him of four oil companies and a
taxpayer, declared Ordinance No. 7794, otherwise known as the Manila Revenue Code, null and
void for non-compliance with the prescribed procedure in the enactment of tax ordinances and for
containing certain provisions contrary to law and public policy. 1

In a petition for certiorari filed by the City of Manila, the Regional Trial Court of Manila revoked the
Secretary's resolution and sustained the ordinance, holding inter alia that the procedural
requirements had been observed. More importantly, it declared Section 187 of the Local
Government Code as unconstitutional because of its vesture in the Secretary of Justice of the power
of control over local governments in violation of the policy of local autonomy mandated in the
Constitution and of the specific provision therein conferring on the President of the Philippines only
the power of supervision over local governments. 2

The present petition would have us reverse that decision. The Secretary argues that the annulled
Section 187 is constitutional and that the procedural requirements for the enactment of tax
ordinances as specified in the Local Government Code had indeed not been observed.

Parenthetically, this petition was originally dismissed by the Court for non-compliance with Circular 1-
88, the Solicitor General having failed to submit a certified true copy of the challenged
decision. 3 However, on motion for reconsideration with the required certified true copy of the decision
attached, the petition was reinstated in view of the importance of the issues raised therein.

We stress at the outset that the lower court had jurisdiction to consider the constitutionality of
Section 187, this authority being embraced in the general definition of the judicial power to determine
what are the valid and binding laws by the criterion of their conformity to the fundamental law.
Specifically, BP 129 vests in the regional trial courts jurisdiction over all civil cases in which the
subject of the litigation is incapable of pecuniary estimation, 4 even as the accused in a criminal action
has the right to question in his defense the constitutionality of a law he is charged with violating and of the
proceedings taken against him, particularly as they contravene the Bill of Rights. Moreover, Article X,
Section 5(2), of the Constitution vests in the Supreme Court appellate jurisdiction over final judgments
and orders of lower courts in all cases in which the constitutionality or validity of any treaty, international
or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation
is in question.

In the exercise of this jurisdiction, lower courts are advised to act with the utmost circumspection,
bearing in mind the consequences of a declaration of unconstitutionality upon the stability of laws, no
less than on the doctrine of separation of powers. As the questioned act is usually the handiwork of
the legislative or the executive departments, or both, it will be prudent for such courts, if only out of a
becoming modesty, to defer to the higher judgment of this Court in the consideration of its validity,
which is better determined after a thorough deliberation by a collegiate body and with the
concurrence of the majority of those who participated in its discussion. 5

It is also emphasized that every court, including this Court, is charged with the duty of a purposeful
hesitation before declaring a law unconstitutional, on the theory that the measure was first carefully
studied by the executive and the legislative departments and determined by them to be in
accordance with the fundamental law before it was finally approved. To doubt is to sustain. The
presumption of constitutionality can be overcome only by the clearest showing that there was indeed
an infraction of the Constitution, and only when such a conclusion is reached by the required
majority may the Court pronounce, in the discharge of the duty it cannot escape, that the challenged
act must be struck down.

In the case before us, Judge Rodolfo C. Palattao declared Section 187 of the Local Government
Code unconstitutional insofar as it empowered the Secretary of Justice to review tax ordinances and,
inferentially, to annul them. He cited the familiar distinction between control and supervision, the first
being "the power of an officer to alter or modify or set aside what a subordinate officer had done in
the performance of his duties and to substitute the judgment of the former for the latter," while the
second is "the power of a superior officer to see to it that lower officers perform their functions in
accordance with law." 6 His conclusion was that the challenged section gave to the Secretary the power
of control and not of supervision only as vested by the Constitution in the President of the Philippines.
This was, in his view, a violation not only of Article X, specifically Section 4 thereof, 7 and of Section 5 on
the taxing powers of local governments, 8 and the policy of local autonomy in general.

We do not share that view. The lower court was rather hasty in invalidating the provision.

Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality of the
tax ordinance and, if warranted, to revoke it on either or both of these grounds. When he alters or
modifies or sets aside a tax ordinance, he is not also permitted to substitute his own judgment for the
judgment of the local government that enacted the measure. Secretary Drilon did set aside the
Manila Revenue Code, but he did not replace it with his own version of what the Code should be. He
did not pronounce the ordinance unwise or unreasonable as a basis for its annulment. He did not
say that in his judgment it was a bad law. What he found only was that it was illegal. All he did in
reviewing the said measure was determine if the petitioners were performing their functions in
accordance with law, that is, with the prescribed procedure for the enactment of tax ordinances and
the grant of powers to the city government under the Local Government Code. As we see it, that was
an act not of control but of mere supervision.

An officer in control lays down the rules in the doing of an act. If they are not followed, he may, in his
discretion, order the act undone or re-done by his subordinate or he may even decide to do it
himself. Supervision does not cover such authority. The supervisor or superintendent merely sees to
it that the rules are followed, but he himself does not lay down such rules, nor does he have the
discretion to modify or replace them. If the rules are not observed, he may order the work done or re-
done but only to conform to the prescribed rules. He may not prescribe his own manner for the doing
of the act. He has no judgment on this matter except to see to it that the rules are followed. In the
opinion of the Court, Secretary Drilon did precisely this, and no more nor less than this, and so
performed an act not of control but of mere supervision.

The case of Taule v. Santos 9 cited in the decision has no application here because the jurisdiction
claimed by the Secretary of Local Governments over election contests in the Katipunan ng Mga Barangay
was held to belong to the Commission on Elections by constitutional provision. The conflict was over
jurisdiction, not supervision or control.

Significantly, a rule similar to Section 187 appeared in the Local Autonomy Act, which provided in its
Section 2 as follows:
 A tax ordinance shall go into effect on the fifteenth day after its passage, unless the
ordinance shall provide otherwise: Provided, however, That the Secretary of Finance
shall have authority to suspend the effectivity of any ordinance within one hundred
and twenty days after receipt by him of a copy thereof, if, in his opinion, the tax or fee
therein levied or imposed is unjust, excessive, oppressive, or confiscatory, or when it
is contrary to declared national economy policy, and when the said Secretary
exercises this authority the effectivity of such ordinance shall be suspended, either in
part or as a whole, for a period of thirty days within which period the local legislative
body may either modify the tax ordinance to meet the objections thereto, or file an
appeal with a court of competent jurisdiction; otherwise, the tax ordinance or the part
or parts thereof declared suspended, shall be considered as revoked. Thereafter, the
local legislative body may not reimpose the same tax or fee until such time as the
grounds for the suspension thereof shall have ceased to exist.

That section allowed the Secretary of Finance to suspend the effectivity of a tax ordinance if, in his
opinion, the tax or fee levied was unjust, excessive, oppressive or confiscatory. Determination of
these flaws would involve the exercise of judgment or discretion and not merely an examination of
whether or not the requirements or limitations of the law had been observed; hence, it would smack
of control rather than mere supervision. That power was never questioned before this Court but, at
any rate, the Secretary of Justice is not given the same latitude under Section 187. All he is
permitted to do is ascertain the constitutionality or legality of the tax measure, without the right to
declare that, in his opinion, it is unjust, excessive, oppressive or confiscatory. He has no discretion
on this matter. In fact, Secretary Drilon set aside the Manila Revenue Code only on two grounds, to
with, the inclusion therein of certain ultra vires provisions and non-compliance with the prescribed
procedure in its enactment. These grounds affected the legality, not the wisdom or reasonableness,
of the tax measure.

The issue of non-compliance with the prescribed procedure in the enactment of the Manila Revenue
Code is another matter.

In his resolution, Secretary Drilon declared that there were no written notices of public hearings on
the proposed Manila Revenue Code that were sent to interested parties as required by Art. 276(b) of
the Implementing Rules of the Local Government Code nor were copies of the proposed ordinance
published in three successive issues of a newspaper of general circulation pursuant to Art. 276(a).
No minutes were submitted to show that the obligatory public hearings had been held. Neither were
copies of the measure as approved posted in prominent places in the city in accordance with Sec.
511(a) of the Local Government Code. Finally, the Manila Revenue Code was not translated into
Pilipino or Tagalog and disseminated among the people for their information and guidance,
conformably to Sec. 59(b) of the Code.

Judge Palattao found otherwise. He declared that all the procedural requirements had been
observed in the enactment of the Manila Revenue Code and that the City of Manila had not been
able to prove such compliance before the Secretary only because he had given it only five days
within which to gather and present to him all the evidence (consisting of 25 exhibits) later submitted
to the trial court.
To get to the bottom of this question, the Court acceded to the motion of the respondents and called
for the elevation to it of the said exhibits. We have carefully examined every one of these exhibits
and agree with the trial court that the procedural requirements have indeed been observed. Notices
of the public hearings were sent to interested parties as evidenced by Exhibits G-1 to 17. The
minutes of the hearings are found in Exhibits M, M-1, M-2, and M-3. Exhibits B and C show that the
proposed ordinances were published in the Balita and the Manila Standard on April 21 and 25, 1993,
respectively, and the approved ordinance was published in the July 3, 4, 5, 1993 issues of the
Manila Standard and in the July 6, 1993 issue of Balita, as shown by Exhibits Q, Q-1, Q-2, and Q-3.

The only exceptions are the posting of the ordinance as approved but this omission does not affect
its validity, considering that its publication in three successive issues of a newspaper of general
circulation will satisfy due process. It has also not been shown that the text of the ordinance has
been translated and disseminated, but this requirement applies to the approval of local development
plans and public investment programs of the local government unit and not to tax ordinances.

We make no ruling on the substantive provisions of the Manila Revenue Code as their validity has
not been raised in issue in the present petition.

WHEREFORE, the judgment is hereby rendered REVERSING the challenged decision of the
Regional Trial Court insofar as it declared Section 187 of the Local Government Code
unconstitutional but AFFIRMING its finding that the procedural requirements in the enactment of the
Manila Revenue Code have been observed. No pronouncement as to costs.

SO ORDERED.

G.R. No. 93252 August 5, 1991

RODOLFO T. GANZON, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and LUIS T. SANTOS, respondents.

G.R. No. 93746 August 5,1991

MARY ANN RIVERA ARTIEDA, petitioner,

vs.
HON. LUIS SANTOS, in his capacity as Secretary of the Department of Local Government,
NICANOR M. PATRICIO, in his capacity as Chief, Legal Service of the Department of Local
Government and SALVADOR CABALUNA JR., respondents.

G.R. No. 95245 August 5,1991

RODOLFO T. GANZON, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and LUIS T. SANTOS, in his capacity as the
Secretary of the Department of Local Government, respondents.
Nicolas P. Sonalan for petitioner in 93252.

Romeo A. Gerochi for petitioner in 93746.

Eugenio Original for petitioner in 95245.

SARMIENTO, J.:p

The petitioners take common issue on the power of the President (acting through the Secretary of
Local Government), to suspend and/or remove local officials.

The petitioners are the Mayor of Iloilo City (G.R. Nos. 93252 and 95245) and a member of the
Sangguniang Panglunsod thereof (G.R. No. 93746), respectively.

The petitions of Mayor Ganzon originated from a series of administrative complaints, ten in number,
filed against him by various city officials sometime in 1988, on various charges, among them, abuse
of authority, oppression, grave misconduct, disgraceful and immoral conduct, intimidation, culpable
violation of the Constitution, and arbitrary detention. 1 The personalities involved are Joceleehn
Cabaluna, a clerk at the city health office; Salvador Cabaluna, her husband; Dr. Felicidad Ortigoza,
Assistant City Health Officer; Mansueto Malabor, Vice-Mayor; Rolando Dabao, Dan Dalido, German
Gonzales, Larry Ong, and Eduardo Pefia Redondo members of the Sangguniang Panglunsod; and
Pancho Erbite, a barangay tanod. The complaints against the Mayor are set forth in the opinion of the
respondent Court of Appeals. 2 We quote:

xxx xxx xxx

In her verified complaint (Annex A), Mrs. Cabaluna, a clerk assigned to the City
Health, Office of Iloilo City charged that due to political reasons, having supported
the rival candidate, Mrs. Rosa 0. Caram, the petitioner City Mayor, using as an
excuse the exigency of the service and the interest of the public, pulled her out from
rightful office where her qualifications are best suited and assigned her to a work that
should be the function of a non-career service employee. To make matters worse, a
utility worker in the office of the Public Services, whose duties are alien to the
complainant's duties and functions, has been detailed to take her place. The
petitioner's act are pure harassments aimed at luring her away from her permanent
position or force her to resign.

In the case of Dra. Felicidad Ortigoza, she claims that the petitioner handpicked her
to perform task not befitting her position as Assistant City Health Officer of Iloilo City;
that her office was padlocked without any explanation or justification; that her salary
was withheld without cause since April 1, 1988; that when she filed her vacation
leave, she was given the run-around treatment in the approval of her leave in
connivance with Dr. Rodolfo Villegas and that she was the object of a well-
 engineered trumped-up charge in an administrative complaint filed by Dr. Rodolfo
Villegas (Annex B).

On the other hand, Mansuelo Malabor is the duly elected Vice-Mayor of Iloilo City
and complainants Rolando Dabao, Dan Dalido, German Gonzales, Larry Ong and
Eduardo Pefia Pedondo are members of the Sangguniang Panglunsod of the City of
Iloilo. Their complaint arose out from the case where Councilor Larry Ong, whose
key to his office was unceremoniously and without previous notice, taken by
petitioner. Without an office, Councilor Ong had to hold office at Plaza Libertad, The
Vice-Mayor and the other complainants sympathized with him and decided to do the
same. However, the petitioner, together with its fully-armed security men, forcefully
drove them away from Plaza Libertad. Councilor Ong denounced the petitioner's
actuations the following day in the radio station and decided to hold office at the
Freedom Grandstand at Iloilo City and there were so many people who gathered to
witness the incident. However, before the group could reach the area, the petitioner,
together with his security men, led the firemen using a firetruck in dozing water to the
people and the bystanders.

Another administrative case was filed by Pancho Erbite, a barangay tanod, appointed
by former mayor Rosa O. Caram. On March 13, 1988, without the benefit of charges
filed against him and no warrant of arrest was issued, Erbite was arrested and
detained at the City Jail of Iloilo City upon orders of petitioner. In jail, he was
allegedly mauled by other detainees thereby causing injuries He was released only
the following day. 3

The Mayor thereafter answered 4 and the cases were shortly set for hearing. The opinion of the Court of
Appeals also set forth the succeeding events:

xxx xxx xxx

The initial hearing in the Cabaluna and Ortigoza cases were set for hearing on June
20-21, 1988 at the Regional Office of the Department of Local Government in Iloilo
City. Notices, through telegrams, were sent to the parties (Annex L) and the parties
received them, including the petitioner. The petitioner asked for a postponement
before the scheduled date of hearing and was represented by counsel, Atty. Samuel
Castro. The hearing officers, Atty. Salvador Quebral and Atty. Marino Bermudez had
to come all the way from Manila for the two-day hearings but was actually held only
on June 20,1988 in view of the inability and unpreparedness of petitioner's counsel.

The next hearings were re-set to July 25, 26, 27,1988 in the same venue-Iloilo City.
Again, the petitioner attempted to delay the proceedings and moved for a
postponement under the excuse that he had just hired his counsel. Nonetheless, the
hearing officers denied the motion to postpone, in view of the fact that the parties
were notified by telegrams of the scheduled hearings (Annex M).
 In the said hearings, petitioner's counsel cross-examined the complainants and their
witnesses.

Finding probable grounds and reasons, the respondent issued a preventive

suspension order on August 11, 1988 to last until October 11,1988 for a period of
sixty (60) days.

Then the next investigation was set on September 21, 1988 and the petitioner again
asked for a postponement to September 26,1988. On September 26, 1988, the
complainants and petitioner were present, together with their respective counsel. The
petitioner sought for a postponement which was denied. In these hearings which
were held in Mala the petitioner testified in Adm. Case No. C-10298 and 10299.

The investigation was continued regarding the Malabor case and the complainants
testified including their witnesses.

On October 10, 1988, petitioner's counsel, Atty. Original moved for a postponement
of the October 24, 1988 hearing to November 7 to 11, 1988 which was granted.
However, the motion for change of venue as denied due to lack of funds. At the
hearing on November 7, 1988, the parties and counsel were present. Petitioner
reiterated his motion to change venue and moved for postponement anew. The
counsel discussed a proposal to take the deposition of witnesses in Iloilo City so the
hearing was indefinitely postponed. However, the parties failed to come to terms and
after the parties were notified of the hearing, the investigation was set to December
13 to 15, 1988.

The petitioner sought for another postponement on the ground that his witnesses
were sick or cannot attend the investigation due to lack of transportation. The motion
was denied and the petitioner was given up to December 14, 1988 to present his
evidence.

On December 14,1988, petitioner's counsel insisted on his motion for postponement

and the hearing officers gave petitioner up to December 15, 1988 to present his
evidence. On December 15, 1988, the petitioner failed to present evidence and the
cases were considered submitted for resolution.

In the meantime, a prima facie evidence was found to exist in the arbitrary detention
case filed by Pancho Erbite so the respondent ordered the petitioner's second
preventive suspension dated October 11, 1988 for another sixty (60) days. The
petitioner was able to obtain a restraining order and a writ of preliminary injunction in
the Regional Trial Court, Branch 33 of Iloilo City. The second preventive suspension
was not enforced. 5

Amidst the two successive suspensions, Mayor Ganzon instituted an action for prohibition against
the respondent Secretary of Local Government (now, Interior) in the Regional Trial Court, Iloilo City,
where he succeeded in obtaining a writ of preliminary injunction. Presently, he instituted CA-G.R. SP
No. 16417, an action for prohibition, in the respondent Court of Appeals.

Meanwhile, on May 3, 1990, the respondent Secretary issued another order, preventively
suspending Mayor Ganzon for another sixty days, the third time in twenty months, and designating
meantime Vice-Mayor Mansueto Malabor as acting mayor. Undaunted, Mayor Ganzon commenced
CA-G.R. SP No. 20736 of the Court of Appeals, a petition for prohibition, 6 (Malabor it is to be noted, is
one of the complainants, and hence, he is interested in seeing Mayor Ganzon ousted.)

On September 7, 1989, the Court of Appeals rendered judgment, dismissing CA-G.R. SP No. 16417.
On July 5, 1990, it likewise promulgated a decision, dismissing CA-G.R. SP No. 20736. In a
Resolution dated January 24, 1990, it issued a Resolution certifying the petition of Mary Ann Artieda,
who had been similary charged by the respondent Secretary, to this Court.

On June 26,1990, we issued a Temporary Restraining Order, barring the respondent Secretary from
implementing the suspension orders, and restraining the enforcement of the Court of Appeals' two
decisions.

In our Resolution of November 29, 1990, we consolidated all three cases. In our Resolutions of
January 15, 1991, we gave due course thereto.

Mayor Ganzon claims as a preliminary (GR No. 93252), that the Department of Local Government in
hearing the ten cases against him, had denied him due process of law and that the respondent
Secretary had been "biased, prejudicial and hostile" towards him 7 arising from his (Mayor Ganzon's)
alleged refusal to join the Laban ng Demokratikong Pilipino party 8 and the running political rivalry they
maintained in the last congressional and local elections; 9 and his alleged refusal to operate a lottery in
Iloilo City. 10 He also alleges that he requested the Secretary to lift his suspension since it had come ninety
days prior to an election (the barangay elections of November 14, 1988), 11notwithstanding which, the
latter proceeded with the hearing and meted out two more suspension orders of the aforementioned
cases. 12 He likewise contends that he sought to bring the cases to Iloilo City (they were held in Manila) in
order to reduce the costs of proceeding, but the Secretary rejected his request. 13 He states that he asked
for postponement on "valid and justifiable" 14 grounds, among them, that he was suffering from a heart
ailment which required confinement; that his "vital" 15 witness was also hospitalized 16 but that the latter
unduly denied his request. 17

Mayor Ganzon's primary argument (G.R. Nos. 93252 and 95245) is that the Secretary of Local
Government is devoid, in any event, of any authority to suspend and remove local officials, an
argument reiterated by the petitioner Mary Ann Rivera Artieda (G.R. No. 93746).

As to Mayor Ganzon's charges of denial of due process, the records do not show very clearly in what
manner the Mayor might have been deprived of his rights by the respondent Secretary. His claims
that he and Secretary Luis-Santos were (are) political rivals and that his "persecution" was politically
motivated are pure speculation and although the latter does not appear to have denied these
contentions (as he, Mayor Ganzon, claims), we can not take his word for it the way we would have
under less political circumstances, considering furthermore that "political feud" has often been a
good excuse in contesting complaints.
The Mayor has failed furthermore to substantiate his say-so's that Secretary Santos had attempted
to seduce him to join the administration party and to operate a lottery in Iloilo City. Again, although
the Secretary failed to rebut his allegations, we can not accept them, at face value, much more, as
judicial admissions as he would have us accept them 18 for the same reasons above-stated and
furthermore, because his say so's were never corroborated by independent testimonies. As a responsible
public official, Secretary Santos, in pursuing an official function, is presumed to be performing his duties
regularly and in the absence of contrary evidence, no ill motive can be ascribed to him.

As to Mayor Ganzon's contention that he had requested the respondent Secretary to defer the
hearing on account of the ninety-day ban prescribed by Section 62 of Batas Blg. 337, the Court finds
the question to be moot and academic since we have in fact restrained the Secretary from further
hearing the complaints against the petitioners. 19

As to his request, finally, for postponements, the Court is afraid that he has not given any compelling
reason why we should overturn the Court of Appeals, which found no convincing reason to overrule
Secretary Santos in denying his requests. Besides, postponements are a matter of discretion on the
part of the hearing officer, and based on Mayor Ganzon's above story, we are not convinced that the
Secretary has been guilty of a grave abuse of discretion.

The Court can not say, under these circumstances, that Secretary Santos' actuations deprived
Mayor Ganzon of due process of law.

We come to the core question: Whether or not the Secretary of Local Government, as the
President's alter ego, can suspend and/or remove local officials.

It is the petitioners' argument that the 1987 Constitution 20 no longer allows the President, as the 1935
and 1973 Constitutions did, to exercise the power of suspension and/or removal over local officials.
According to both petitioners, the Constitution is meant, first, to strengthen self-rule by local government
units and second, by deleting the phrase 21 as may be provided by law to strip the President of the power
of control over local governments. It is a view, so they contend, that finds support in the debates of the
Constitutional Commission. The provision in question reads as follows:

Sec. 4. The President of the Philippines shall exercise general supervision over local
governments. Provinces with respect to component cities and municipalities, and
cities and municipalities with respect to component barangays shall ensure that the
acts of their component units are within the scope of their prescribed powers and
functions. 22

It modifies a counterpart provision appearing in the 1935 Constitution, which we quote:

Sec. 10. The President shall have control of all the executive departments, bureaus,
or offices, exercise general supervision over all Local governments as may be
provided by law, and take care that the laws be faithfully executed. 23

The petitioners submit that the deletion (of "as may be provided by law") is significant, as their
argument goes, since: (1) the power of the President is "provided by law" and (2) hence, no law may
provide for it any longer.
It is to be noted that in meting out the suspensions under question, the Secretary of Local
Government acted in consonance with the specific legal provisions of Batas Blg. 337, the Local
Government Code, we quote:

Sec. 62. Notice of Hearing. Within seven days after the complaint is filed, the
Minister of local Government, or the sanggunian concerned, as the case may be,
shall require the respondent to submit his verified answer within seven days from
receipt of said complaint, and commence the hearing and investigation of the case
within ten days after receipt of such answer of the respondent. No investigation shall
be held within ninety days immediately prior to an election, and no preventive
suspension shall be imposed with the said period. If preventive suspension has been
imposed prior to the aforesaid period, the preventive suspension shall be lifted. 24

Sec. 63. Preventive Suspension. (1) Preventive suspension may be imposed by

the Minister of Local Government if the respondent is a provincial or city official, by
the provincial governor if the respondent is an elective municipal official, or by the
city or municipal mayor if the respondent is an elective barangay official.

(2) Preventive suspension may be imposed at any time after the issues are joined,
when there is reasonable ground to believe that the respondent has committed the
act or acts complained of, when the evidence of culpability is strong, when the gravity
of the offense so warrants, or when the continuance in office of the respondent could
influence the witnesses or pose a threat to the safety and integrity of the records and
other evidence. In all cases, preventive suspension shall not extend beyond sixty
days after the start of said suspension.

(3) At the expiration of sixty days, the suspended official shall be deemed reinstated
in office without prejudice to the continuation of the proceedings against him until its
termination. However ' if the delay in the proceedings of the case is due to his fault,
neglect or request, the time of the delay shall not be counted in computing the time of
suspension. 25

The issue, as the Court understands it, consists of three questions: (1) Did the 1987 Constitution, in
deleting the phrase "as may be provided by law" intend to divest the President of the power to
investigate, suspend, discipline, and/or remove local officials? (2) Has the Constitution repealed
Sections 62 and 63 of the Local Government Code? (3) What is the significance of the change in the
constitutional language?

It is the considered opinion of the Court that notwithstanding the change in the constitutional
language, the charter did not intend to divest the legislature of its right or the President of her
prerogative as conferred by existing legislation to provide administrative sanctions against local
officials. It is our opinion that the omission (of "as may be provided by law") signifies nothing more
than to underscore local governments' autonomy from congress and to break Congress' "control"
over local government affairs. The Constitution did not, however, intend, for the sake of local
autonomy, to deprive the legislature of all authority over municipal corporations, in particular,
concerning discipline.
Autonomy does not, after all, contemplate making mini-states out of local government units, as in the
federal governments of the United States of America (or Brazil or Germany), although Jefferson is
said to have compared municipal corporations euphemistically to "small republics." 26 Autonomy, in
the constitutional sense, is subject to the guiding star, though not control, of the legislature, albeit the
legislative responsibility under the Constitution and as the "supervision clause" itself suggest-is to wean
local government units from over-dependence on the central government.

It is noteworthy that under the Charter, "local autonomy" is not instantly self-executing, but subject
to, among other things, the passage of a local government code, 27 a local tax law, 28 income
distribution legislation, 29 and a national representation law, 30 and measures 31 designed to realize
autonomy at the local level. It is also noteworthy that in spite of autonomy, the Constitution places the
local government under the general supervision of the Executive. It is noteworthy finally, that the Charter
allows Congress to include in the local government code provisions for removal of local officials, which
suggest that Congress may exercise removal powers, and as the existing Local Government Code has
done, delegate its exercise to the President. Thus:

Sec. 3. The Congress shall enact a local government code which shall provide for a
more responsive and accountable local government structure instituted through a
system of decentralization with effective mechanisms of recall, initiative, and
referendum, allocate among the different local government units their powers,
responsibilities and resources, and provide for the qualifications, election,
appointment and removal, term, salaries, powers and functions and duties of local
officials, and all other matters relating to the organization and operation of the local
units. 32

As hereinabove indicated, the deletion of "as may be provided by law" was meant to stress, sub
silencio, the objective of the framers to strengthen local autonomy by severing congressional control
of its affairs, as observed by the Court of Appeals, like the power of local legislation. 33 The
Constitution did nothing more, however, and insofar as existing legislation authorizes the President
(through the Secretary of Local Government) to proceed against local officials administratively, the
Constitution contains no prohibition.

The petitioners are under the impression that the Constitution has left the President mere
supervisory powers, which supposedly excludes the power of investigation, and denied her control,
which allegedly embraces disciplinary authority. It is a mistaken impression because legally,
"supervision" is not incompatible with disciplinary authority as this Court has held, 34 thus:

xxx xxx xxx

It is true that in the case of Mondano vs. Silvosa, 51 Off. Gaz., No. 6 p. 2884, this
Court had occasion to discuss the scope and extent of the power of supervision by
the President over local government officials in contrast to the power of control given
to him over executive officials of our government wherein it was emphasized that the
two terms, control and supervision, are two different things which differ one from the
other in meaning and extent. Thus in that case the Court has made the following
digression: "In administration law supervision means overseeing or the power or
authority of an officer to see that subordinate officers perform their duties. If the latter
 fail or neglect to fulfill them the former may take such action or step as prescribed by
law to make them perform their duties. Control, on the other hand, means the power
of an officer to alter or modify or nullify of set aside what a subordinate officer had
done in the performance of his duties and to substitute the judgment of the former for
that of the latter." But from this pronouncement it cannot be reasonably inferred that
the power of supervision of the President over local government officials does not
include the power of investigation when in his opinion the good of the public service
so requires, as postulated in Section 64(c) of the Revised Administrative Code. ... 35

xxx xxx xxx

"Control" has been defined as "the power of an officer to alter or modify or nullify or set aside what a
subordinate officer had done in the performance of his duties and to substitute the judgment of the
former for test of the latter." 36 "Supervision" on the other hand means "overseeing or the power or
authority of an officer to see that subordinate officers perform their duties. 37 As we held, 38 however,
"investigating" is not inconsistent with "overseeing", although it is a lesser power than "altering". The
impression is apparently exacerbated by the Court's pronouncements in at least three cases, Lacson v.
Roque, 39 Hebron v. Reyes, 40 and Mondano v. Silvosa, 41 and possibly, a fourth one, Pelaez v. Auditor
General. 42 In Lacson, this Court said that the President enjoyed no control powers but only supervision
"as may be provided by law," 43 a rule we reiterated in Hebron, and Mondano. In Pelaez, we stated that
the President "may not . . . suspend an elective official of a regular municipality or take any disciplinary
action against him, except on appeal from a decision of the corresponding provincial board." 44 However,
neither Lacson nor Hebron nor Mondano categorically banned the Chief Executive from exercising acts of
disciplinary authority because she did not exercise control powers, but because no law allowed her to
exercise disciplinary authority. Thus, according to Lacson:

The contention that the President has inherent power to remove or suspend
municipal officers is without doubt not well taken. Removal and suspension of public
officers are always controlled by the particular law applicable and its proper
construction subject to constitutional limitations. 45

In Hebron we stated:

Accordingly, when the procedure for the suspension of an officer is specified by law,
the same must be deemed mandatory and adhered to strictly, in the absence of
express or clear provision to the contrary-which does not et with respect to municipal
officers ... 46

In Mondano, the Court held:

... The Congress has expressly and specifically lodged the provincial supervision
over municipal officials in the provincial governor who is authorized to "receive and
investigate complaints made under oath against municipal officers for neglect of duty,
oppression, corruption or other form of maladministration of office, and conviction by
final judgment of any crime involving moral turpitude." And if the charges are serious,
"he shall submit written charges touching the matter to the provincial board,
furnishing a copy of such charges to the accused either personally or by registered
 mail, and he may in such case suspend the officer (not being the municipal treasurer)
pending action by the board, if in his opinion the charge by one affecting the official
integrity of the officer in question." Section 86 of the Revised Administration Code
adds nothing to the power of supervision to be exercised by the Department Head
over the administration of ... municipalities ... . If it be construed that it does and such
additional power is the same authority as that vested in the Department Head by
section 79(c) of the Revised Administrative Code, then such additional power must
be deemed to have been abrogated by Section 110(l), Article VII of the
Constitution. 47

xxx xxx xxx

In Pelaez, we stated that the President can not impose disciplinary measures on local officials
except on appeal from the provincial board pursuant to the Administrative Code. 48

Thus, in those case that this Court denied the President the power (to suspend/remove) it was not
because we did not think that the President can not exercise it on account of his limited power, but
because the law lodged the power elsewhere. But in those cases ii which the law gave him the
power, the Court, as in Ganzon v. Kayanan, found little difficulty in sustaining him. 49

The Court does not believe that the petitioners can rightfully point to the debates of the
Constitutional Commission to defeat the President's powers. The Court believes that the
deliberations are by themselves inconclusive, because although Commissioner Jose Nolledo would
exclude the power of removal from the President, 50Commissioner Blas Ople would not. 51

The Court is consequently reluctant to say that the new Constitution has repealed the Local
Government Code, Batas Blg. 37. As we said, "supervision" and "removal" are not incompatible
terms and one may stand with the other notwithstanding the stronger expression of local autonomy
under the new Charter. We have indeed held that in spite of the approval of the Charter, Batas Blg.
337 is still in force and effect. 52

As the Constitution itself declares, local autonomy means "a more responsive and accountable local
government structure instituted through a system of decentralization." 53 The Constitution as we
observed, does nothing more than to break up the monopoly of the national government over the affairs
of local governments and as put by political adherents, to "liberate the local governments from the
imperialism of Manila." Autonomy, however, is not meant to end the relation of partnership and inter-
dependence between the central administration and local government units, or otherwise, to user in a
regime of federalism. The Charter has not taken such a radical step. Local governments, under the
Constitution, are subject to regulation, however limited, and for no other purpose than precisely, albeit
paradoxically, to enhance self- government.

As we observed in one case, 54 decentralization means devolution of national administration but not
power to the local levels. Thus:

Now, autonomy is either decentralization of administration or decentralization of

power. There is decentralization of administration when the central government
delegates administrative powers to political subdivisions in order to broaden the base
 of government power and in the process to make local governments "more
responsive and accountable," and "ensure their fullest development as self-reliant
communities and make them more effective partners in the pursuit of national
development and social progress." At the same time, it relieves the central
government of the burden of managing local affairs and enables it to concentrate on
national concerns. The President exercises "general supervision" over them, but only
to "ensure that local affairs are administered according to law." He has no control
over their acts in the sense that he can substitute their judgments with his own.

Decentralization of power, on the other hand, involves an abdication of political

power in the favor of local governments units declared to be autonomous, In that
case, the autonomous government is free to chart its own destiny and shape its
future with minimum intervention from central authorities. According to a
constitutional author, decentralization of power amounts to "self-immolation," since in
that event, the autonomous government becomes accountable not to the central
authorities but to its constituency. 55

The successive sixty-day suspensions imposed on Mayor Rodolfo Ganzon is albeit another matter.
What bothers the Court, and what indeed looms very large, is the fact that since the Mayor is facing
ten administrative charges, the Mayor is in fact facing the possibility of 600 days of suspension, in
the event that all ten cases yield prima facie findings. The Court is not of course tolerating
misfeasance in public office (assuming that Mayor Ganzon is guilty of misfeasance) but it is certainly
another question to make him serve 600 days of suspension, which is effectively, to suspend him out
of office. As we held: 56

2. Petitioner is a duly elected municipal mayor of Lianga, Surigao del Sur. His term of
office does not expire until 1986. Were it not for this information and the suspension
decreed by the Sandiganbayan according to the Anti-Graft and Corrupt Practices Act,
he would have been all this while in the full discharge of his functions as such
municipal mayor. He was elected precisely to do so. As of October 26, 1983, he has
been unable to. it is a basic assumption of the electoral process implicit in the right of
suffrage that the people are entitled to the services of elective officials of their choice.
For misfeasance or malfeasance, any of them could, of course, be proceeded
against administratively or, as in this instance, criminally. In either case, Ms
culpability must be established. Moreover, if there be a criminal action, he is entitled
to the constitutional presumption of innocence. A preventive suspension may be
justified. Its continuance, however, for an unreasonable length of time raises a due
process question. For even if thereafter he were acquitted, in the meanwhile his right
to hold office had been nullified. Clearly, there would be in such a case an injustice
suffered by him. Nor is he the only victim. There is injustice inflicted likewise on the
people of Lianga They were deprived of the services of the man they had elected to
serve as mayor. In that sense, to paraphrase Justice Cardozo, the protracted
continuance of this preventive suspension had outrun the bounds of reason and
resulted in sheer oppression. A denial of due process is thus quite manifest. It is to
avoid such an unconstitutional application that the order of suspension should be
lifted. 57
The plain truth is that this Court has been ill at ease with suspensions, for the above reasons, 58 and
so also, because it is out of the ordinary to have a vacancy in local government. The sole objective of a
suspension, as we have held, 59 is simply "to prevent the accused from hampering the normal cause of
the investigation with his influence and authority over possible witnesses" 60 or to keep him off "the
records and other evidence. 61

It is a means, and no more, to assist prosecutors in firming up a case, if any, against an erring local
official. Under the Local Government Code, it can not exceed sixty days, 62 which is to say that it need
not be exactly sixty days long if a shorter period is otherwise sufficient, and which is also to say that it
ought to be lifted if prosecutors have achieved their purpose in a shorter span.

Suspension is not a penalty and is not unlike preventive imprisonment in which the accused is held
to insure his presence at the trial. In both cases, the accused (the respondent) enjoys a presumption
of innocence unless and until found guilty.

Suspension finally is temporary and as the Local Government Code provides, it may be imposed for
no more than sixty days. As we held, 63 a longer suspension is unjust and unreasonable, and we might
add, nothing less than tyranny.

As we observed earlier, imposing 600 days of suspension which is not a remote possibility Mayor
Ganzon is to all intents and purposes, to make him spend the rest of his term in inactivity. It is also to
make, to all intents and purposes, his suspension permanent.

It is also, in fact, to mete out punishment in spite of the fact that the Mayor's guilt has not been
proven. Worse, any absolution will be for naught because needless to say, the length of his
suspension would have, by the time he is reinstated, wiped out his tenure considerably.

The Court is not to be mistaken for obstructing the efforts of the respondent Secretary to see that
justice is done in Iloilo City, yet it is hardly any argument to inflict on Mayor Ganzon successive
suspensions when apparently, the respondent Secretary has had sufficient time to gather the
necessary evidence to build a case against the Mayor without suspending him a day longer. What is
intriguing is that the respondent Secretary has been cracking down, so to speak, on the Mayor
piecemeal apparently, to pin him down ten times the pain, when he, the respondent Secretary, could
have pursued a consolidated effort.

We reiterate that we are not precluding the President, through the Secretary of Interior from
exercising a legal power, yet we are of the opinion that the Secretary of Interior is exercising that
power oppressively, and needless to say, with a grave abuse of discretion.

The Court is aware that only the third suspension is under questions, and that any talk of future
suspensions is in fact premature. The fact remains, however, that Mayor Ganzon has been made to
serve a total of 120 days of suspension and the possibility of sixty days more is arguably around the
corner (which amounts to a violation of the Local Government Code which brings to light a pattern of
suspensions intended to suspend the Mayor the rest of his natural tenure. The Court is simply
foreclosing what appears to us as a concerted effort of the State to perpetuate an arbitrary act.

As we said, we can not tolerate such a state of affairs.

We are therefore allowing Mayor Rodolfo Ganzon to suffer the duration of his third suspension and
lifting, for the purpose, the Temporary Restraining Order earlier issued. Insofar as the seven
remaining charges are concerned, we are urging the Department of Local Government, upon the
finality of this Decision, to undertake steps to expedite the same, subject to Mayor Ganzon's usual
remedies of appeal, judicial or administrative, or certiorari, if warranted, and meanwhile, we are
precluding the Secretary from meting out further suspensions based on those remaining complaints,
notwithstanding findings of prima facie evidence.

In resume the Court is laying down the following rules:

1. Local autonomy, under the Constitution, involves a mere decentralization of administration, not of
power, in which local officials remain accountable to the central government in the manner the law
may provide;

2. The new Constitution does not prescribe federalism;

3. The change in constitutional language (with respect to the supervision clause) was meant but to
deny legislative control over local governments; it did not exempt the latter from legislative
regulations provided regulation is consistent with the fundamental premise of autonomy;

4. Since local governments remain accountable to the national authority, the latter may, by law, and
in the manner set forth therein, impose disciplinary action against local officials;

5. "Supervision" and "investigation" are not inconsistent terms; "investigation" does not signify
"control" (which the President does not have);

6. The petitioner, Mayor Rodolfo Ganzon. may serve the suspension so far ordered, but may no
longer be suspended for the offenses he was charged originally; provided:

a) that delays in the investigation of those charges "due to his fault,

neglect or request, (the time of the delay) shall not be counted in
computing the time of suspension. [Supra, sec. 63(3)]

b) that if during, or after the expiration of, his preventive suspension,

the petitioner commits another or other crimes and abuses for which
proper charges are filed against him by the aggrieved party or
parties, his previous suspension shall not be a bar to his being
preventively suspended again, if warranted under subpar. (2), Section
63 of the Local Government Code.

WHEREFORE, premises considered, the petitions are DISMISSED. The Temporary Restraining
Order issued is LIFTED. The suspensions of the petitioners are AFFIRMED, provided that the
petitioner, Mayor Rodolfo Ganzon, may not be made to serve future suspensions on account of any
of the remaining administrative charges pending against him for acts committed prior to August 11,
1988. The Secretary of Interior is ORDERED to consolidate all such administrative cases pending
against Mayor Ganzon.
The sixty-day suspension against the petitioner, Mary Ann Rivera Artieda, is AFFIRMED. No costs.

SO ORDERED.

[G.R. No. 130775. September 27, 2004]

THE NATIONAL LIGA NG MGA BARANGAY, represented by ALEX L.

DAVID in his capacity as National President and for his own
Person, President ALEX L. DAVID, petitioners, vs. HON.
VICTORIA ISABEL A. PAREDES, Presiding Judge, Regional Trial
Court, Branch 124, Caloocan City, and THE DEPARTMENT OF
INTERIOR and LOCAL GOVERNMENT, represented the HON.
SECRETARY ROBERT Z. BARBERS and MANUEL A.
RAYOS, respondents.

[G.R. No. 131939. September 27, 2004]

LEANDRO YANGOT, BONIFACIO LACWASAN and BONY

TACIO, petitioners, vs. DILG Secretary ROBERT Z. BARBERS
and DILG Undersecretary MANUEL SANCHEZ, respondents.

DECISION
Tinga, J.:

At bottom, the present petition inquires into the essential nature of the Liga
ng mga Barangay and questions the extent of the power of Secretary of the
Department of Interior and Local Government (DILG), as alter ego of the
President. More immediately, the petition disputes the validity of the
appointment of the DILG as the interim caretaker of the Liga ng mga
Barangay.
On 11 June 1997, private respondent Manuel A. Rayos [as petitioner
therein], Punong Barangay of Barangay 52, District II, Zone 5, District II,
Caloocan City, filed a petition for prohibition and mandamus, with prayer for a
writ of preliminary injunction and/or temporary restraining order and damages
before the Regional Trial Court (RTC) of Caloocan, alleging that respondent
[1]
therein Alex L. David [now petitioner], Punong Barangay of Barangay 77,
Zone 7, Caloocan City and then president of the Liga Chapter of Caloocan
City and of the Liga ng mga Barangay National Chapter, committed certain
irregularities in the notice, venue and conduct of the proposed
synchronized Liga ng mga Barangay elections in 1997. According to the
petition, the irregularities consisted of the following: (1) the publication of the
notice in the Manila Bulletin but without notifying in writing the
individual punong barangays of Caloocan City; (2) the Notice of Meeting
[2]

dated 08 June 1997 for the Liga Chapter of Caloocan City did not specify
whether the meeting scheduled on 14 June 1997 was to be held at 8:00 a.m.
or 8:00 p.m., and worse, the meeting was to be held in Lingayen, Pangasinan;
and (3) the deadline for the filing of the Certificates of Candidacy having
[3]

been set at 5:00 p.m. of the third day prior to the above election day, or on 11
June 1997, Rayos failed to meet said deadline since he was not able to
[4]

obtain a certified true copy of the COMELEC Certificate of Canvas and

Proclamation of Winning Candidate, which were needed to be a delegate, to
vote and be voted for in the Liga election. On 13 June 1997, the Executive
Judge issued a temporary restraining order (TRO), effective for seventy-two
(72) hours, enjoining the holding of the general membership and election
meeting of Liga Chapter of Caloocan City on 14 June 1975. [5]

However, the TRO was allegedly not properly served on herein petitioner
David, and so the election for the officers of the Liga-Caloocan was held as
scheduled. Petitioner David was proclaimed President of the Liga-Caloocan,
[6]

and thereafter took his oath and assumed the position of ex-officio member of
the Sangguniang Panlungsod of Caloocan.
On 17 July 1997, respondent Rayos filed a second petition, this time
for quo warranto, mandamus and prohibition, with prayer for a writ of
preliminary injunction and/or temporary restraining order and damages,
against David, Nancy Quimpo, Presiding Officer of the Sangguniang
Panlungsod of Caloocan City, and Secretary Barbers. Rayos alleged that he
[7]

was elected President of the Liga Caloocan Chapter in the elections held on
14 June 1997 by the members of the Caloocan Chapter pursuant to their
Resolution/Petition No. 001-97. On 18 July 1997, the presiding judge granted
[8]

the TRO, enjoining therein respondents David, Quimpo and Secretary Barbers
from proceeding with the synchronized elections for the Provincial and
Metropolitan Chapters of the Liga scheduled on 19 July 1997, but only for the
purpose of maintaining the status quo and effective for a period not exceeding
seventy-two (72) hours. [9]
 Eventually, on 18 July 1997, at petitioner Davids instance, Special Civil
Action (SCA) No. C-512 pending before Branch 126 was consolidated with
SCA No. C-508 pending before Branch 124. [10]

Before the consolidation of the cases, on 25 July 1997, the DILG through
respondent Secretary Barbers, filed in SCA No. C-512 an Urgent Motion,
invoking the Presidents power of general supervision over all local
[11]

government units and seeking the following reliefs:

WHEREFORE, in the interest of the much-needed delivery of basic services to the

people, the maintenance of public order and to further protect the interests of the
forty-one thousand barangays all over the country, herein respondent respectfully
prays:

a) That the Department of the Interior and Local Government (DILG), pursuant to its
delegated power of general supervision, be appointed as the Interim Caretaker to
manage and administer the affairs of the Liga, until such time that the new set of
National Liga Officers shall have been duly elected and assumed office; ...[12]

The prayer for injunctive reliefs was anchored on the following grounds:
(1) the DILG Secretary exercises the power of general supervision over all
government units by virtue of Administrative Order No. 267 dated 18 February
1992; (2) the Liga ng mga Barangay is a government organization; (3) undue
interference by some local elective officials during the Municipal and City
Chapter elections of the Liga ng mga Barangay; (4) improper issuance of
confirmations of the elected Liga Chapter officers by petitioner David and the
National LigaBoard; (5) the need for the DILG to provide remedies measured
in view of the confusion and chaos sweeping the Liga ng mga Barangay and
the incapacity of the National Liga Board to address the problems properly.
On 31 July 1997, petitioner David opposed the DILGs Urgent Motion,
claiming that the DILG, being a respondent in the case, is not allowed to seek
any sanction against a co-respondent like David, such as by filing a cross-
claim, without first seeking leave of court. He also alleged that the DILGs
[13]

request to be appointed interim caretaker constitutes undue interference in the

internal affairs of the Liga, since the Liga is not subject to DILG control and
supervision. [14]

Three (3) days after filing its Urgent Motion, on 28 July 1997, and before it
was acted upon by the lower court, the DILG through then Undersecretary
Manuel Sanchez, issued Memorandum Circular No. 97-176. It cited the [15]

reported violations of the Liga ng mga Barangay Constitution and By-Laws by

David and widespread chaos and confusion among local government officials
as to who were the qualified ex-officio Liga members in their
respective sangunians. Pending the appointment of the DILG as the Interim
[16]

Caretaker of the Liga ng mga Barangay by the court and until the officers and
board members of the national Liga Chapter have been elected and have
assumed office, the Memorandum Circular directed all provincial governors,
vice governors, city mayors, city vice mayors, members of the sangguniang
panlalawigan and panlungsod, DILG regional directors and other concerned
officers, as follows:

1. All concerned are directed not to recognize and/or honor any Liga Presidents of the
Provincial and Metropolitan Chapters as ex-officio members of the sanggunian
concerned until further notice from the Courts or this Department;

2. All concerned are directed to disregard any pronouncement and/or directive issued
by Mr. Alex David on any issue or matter relating to the affairs of the Liga ng mga
Barangay until further notice from the Courts or this Department. [17]

On 04 August 1997, public respondent Judge Victoria Isabel A. Paredes

issued the assailed order, the pertinent portions of which read, thus:
[18]

The authority of the DILG to exercise general supervisory jurisdiction over local
government units, including the different leagues created under the Local Government
Code of 1991 (RA 7160) finds basis in Administrative Order No. 267 dated February
18, 1992. Specifically, Section 1 (a) of the said Administrative Order provides a broad
premise for the supervisory power of the DILG. Administratively, the DILGs
supervision has been tacitly recognized by the local barangays, municipalities, cities
and provinces as shown by the evidences presented by respondent David himself (See
Annexes A to C). The fact that the DILG has sought to refer the matters therein to the
National Liga Board/Directorate does not ipso facto mean that it has lost jurisdiction
to act directly therein. Jurisdiction is conferred by law and cannot be claimed or lost
through agreements or inaction by individuals. What respondent David may term as
interference should caretakership be allowed, this Court would rather view as a
necessary and desirable corollary to the exercise of supervision. [19]

Political motivations must not preclude, hamper, or obstruct the delivery of basic
services and the perquisites of public service. In this case, the fact of confusion arising
from conflicting appointments, non-action, and uninformed or wavering decisions of
the incumbent National Liga Board/Directorate, having been satisfactorily established,
cannot simply be brushed aside as being politically motivated or arising therefrom. It
is incumbent, therefore, that the DILG exercise a more active role in the supervision
of the affairs and operations of the National Liga Board/ Directorate at least until such
time that the regular National Liga Board/Directorate may have been elected,
qualified and assumed office. [20]
xxx

WHEREFORE, premises considered, the Urgent Motion of the DILG for appointment
as interim caretaker, until such time that the regularly elected National Liga Board of
Directors shall have qualified and assumed office, to manage and administer the
affairs of the National Liga Board, is hereby GRANTED. [21]

On 11 August 1997, petitioner David filed an urgent motion for the

reconsideration of the assailed order and to declare respondent Secretary
Barbers in contempt of Court. David claimed that the 04 August 1997 order
[22]

divested the duly elected members of the Board of Directors of

the Liga National Directorate of their positions without due process of law. He
also wanted Secretary Barbers declared in contempt for having issued,
through his Undersecretary, Memorandum Circular No. 97-176, even before
respondent judge issued the questioned order, in mockery of the justice
system. He implied that Secretary Barbers knew about respondent judges
questioned order even before it was promulgated. [23]

On 11 August 1997, the DILG issued Memorandum Circular No. 97-193,

providing supplemental guidelines for the 1997 synchronized elections of
[24]

the provincial and metropolitan chapters and for the election of the national
chapter of the Liga ng mga Barangay. The Memorandum Circular set the
synchronized elections for the provincial and metropolitan chapters on 23
August 1997 and for the national chapter on 06 September 1997.
On 12 August 1997, the DILG issued a Certificate of Appointment in favor [25]

of respondent Rayos as president of the Liga ng mga

Barangay of Caloocan City. The appointment purportedly served as Rayoss
legal basis for ex-officio membership in the Sangguniang
Panlungsod of Caloocan City and to qualify and participate in the forthcoming
National Chapter Election of the Liga ng mga Barangay. [26]

On 23 August 1997, the DILG conducted the synchronized elections of

Provincial and Metropolitan Liga Chapters. Thereafter, on 06 September
1997, the National Liga Chapter held its election of officers and board of
directors, wherein James Marty L. Lim was elected as President of the
National Liga. [27]

On 01 October 1997, public respondent judge denied Davids motion for

reconsideration, ruling that there was no factual or legal basis to reconsider
[28]

the appointment of the DILG as interim caretaker of the National Liga Board
and to cite Secretary Barbers in contempt of court. [29]
 On 10 October 1997, petitioners filed the instant Petition for
Certiorari under Rule 65 of the Rules of Court, seeking to annul public
[30]

respondent judges orders of 04 August 1997 and 01 October 1997. They

dispute the latters opinion on the power of supervision of the President under
the Constitution, through the DILG over local governments, which is the same
as that of the DILGs as shown by its application of the power on the Liga ng
mga Barangay. Specifically, they claim that the public respondent
judges designation of the DILG as interim caretaker and the acts which the
DILG sought to implement pursuant to its designation as such are beyond the
scope of the Chief Executives power of supervision.
To support the petition, petitioners argue that under Administrative Order
No. 267, Series of 1992, the power of general supervision of the President
over local government units does not apply to the Liga and its various
chapters precisely because the Liga is not a local government unit, contrary to
the stance of the respondents. [31]

Section 507 of the Local Government Code (Republic Act No. 7160)
provides that the Liga shall be governed by its own Constitution and By-
[32]

laws. Petitioners posit that the duly elected officers and directors of the
National Liga elected in 1994 had a vested right to their positions and could
only be removed therefrom for cause by affirmative vote of two-thirds (2/3) of
the entire membership pursuant to the Liga Constitution and By-Laws, and not
by mere issuances of the DILG, even if bolstered by the dubious authorization
of respondent judge. Thus, petitioners claim that the questioned order
[33]

divested the then incumbent officers and directors of the Liga of their right to
their respective offices without due process of law.
Assuming the Liga could be subsumed under the term local governments,
over which the President, through the DILG Secretary, has the power of
supervision, petitioners point out that still there is no legal or constitutional
[34]

basis for the appointment of the DILG as interim caretaker. They stress that
[35]

the actions contemplated by the DILG as interim caretaker go beyond

supervision, as what it had sought and obtained was authority to alter, modify,
nullify or set aside the actions of the Liga Board of Directors and even to
substitute its judgment over that of the latter which are all clearly one of
control. Petitioners question the appointment of Rayos as Liga-Caloocan
[36]

President since at that time petitioner David was occupying that position which
was still the subject of the quo warranto proceedings Rayos himself had
instituted. Petitioners likewise claim that DILG Memorandum Circular No. 97-
[37]

193, providing supplemental guidelines for the synchronized elections of

the Liga, replaced the implementing rules adopted by the Liga pursuant to its
Constitution and By-laws. In fact, even before its appointment as interim
[38]
caretaker, DILG specifically enjoined all heads of government units from
recognizing petitioner David and/or honoring any of his pronouncements
relating to the Liga. [39]

Petitioners rely on decision in Taule v. Santos, which, they claim, already

[40]

passed upon the extent of authority of the then Secretary of Local

Government over the katipunan ng mga barangay or the barangay councils,
as it specifically ruled that the Secretary [of Local Government] has no
authority to pass upon the validity or regularity of the election of officers of the
katipunan. [41]

For his part, respondent Rayos avers that since the Secretary of the DILG
supervises the acts of local officials by ensuring that they act within the scope
of their prescribed powers and functions and since members of the various
leagues, such as the Liga in this case, are themselves officials of local
government units, it follows that the Liga members are subject to the power of
supervision of the DILG. He adds that as the DILGs management and
[42]

administration of the Liga affairs was limited only to the conduct of the
elections, its actions were consistent with its rule-making power and power of
supervision under existing laws. He asserts that in assailing the appointment
[43]

of the DILG as interim caretaker, petitioners failed to cite any provision of

positive law in support of their stance. Thus, he adds, if a law is silent, obscure
or insufficient, a judge may apply a rule he sees fit to resolve the issue, as
long as the rule chosen is in harmony with general interest, order, morals and
public policy, in consonance with Article 9 of the Civil Code.
[44] [45]

On the other hand, it is quite significant that the Solicitor General has
shared petitioners position. He states that the DILGs act of managing and
administering the affairs of the National Liga Board are not merely acts of
supervision but plain manifestations of control and direct takeover of the
functions of the National Liga Board, going beyond the limits of the power of
[46]

general supervision of the President over local governments. Moreover, [47]

while the Liga may be deemed a government organization, it is not strictly a

local government unit over which the DILG has supervisory power. [48]

Meanwhile, on 24 September 1998, James Marty L. Lim, the newly

elected President of the National Liga, filed a Motion for Leave to File
Comment in Intervention, with his Comment in Intervention attached,
[49]

invoking the validity of the DILGs actions relative to the conduct of

[50]

the Liga elections. In addition, he sought the dismissal of the instant petition
[51]

on the following grounds: (1) the issue of validity or invalidity of the questioned
order has been rendered moot and academic by the election of Liga officers;
(2) the turn-over of the administration and management of Liga affairs to
the Liga officers; and (3) the recognition and acceptance by the members of
the Liga nationwide.[52]

In the interim, another petition, this time for Prohibition with Prayer for a
Temporary Restraining Order, was filed by several presidents
[53]

of Liga Chapters, praying that this Court declare the DILG Secretary and
Undersecretary are not vested with any constitutional or legal power to
exercise control or even supervision over the National Liga ng mga Barangay,
nor to take over the functions of its officers or suspend its constitution; and
declare void any and all acts committed by respondents therein in connection
with their caretakership of the Liga. The petition was consolidated with G.R.
[54]

No. 130775, but it was eventually dismissed because the petitioners failed to
submit an affidavit of service and proof of service of the petition.
[55]

Meanwhile, on 01 December 1998, petitioner David died and was

substituted by his legal representatives. [56]

Petitioners have raised a number of issues. Integrated and simplified,

[57]

these issues boil down to the question of whether or not respondent Judge
acted with grave abuse of discretion in appointing the DILG
as interim caretaker to administer and manage the affairs of the
National Liga Board, per its order dated 04 August 1997. In turn, the
[58]

resolution of the question of grave abuse of discretion entails a couple of

definitive issues, namely: (1) whether the Liga ng mga Barangay is a
government organization that is subject to the DILG Secretarys power of
supervision over local governments as the alter ego of the President, and (2)
whether the respondent Judges designation of the DILG as interim caretaker
of the Liga has invested the DILG with control over the Liga and whether DILG
Memorandum Circular No. 97-176, issued before it was designated as
such interim caretaker, and DILG Memorandum Circular No. 97-193 and other
acts which the DILG made in its capacity as interim caretaker of
the Liga, involve supervision or control of the Liga.
However, the Court should first address the question of mootness which
intervenor Lim raised because, according to him, during the pendency of the
present petition a general election was held; the new set of officers and
directors had assumed their positions; and that supervening events the DILG
had turned-over the management and administration of the Liga to
new Liga officers and directors. Respondent Rayos has joined him in this
[59]

regard. Forthwith, the Court declares that these supervening events have not
[60]

rendered the instant petition moot, nor removed it from the jurisdiction of this
Court.
 This case transcends the elections ordered and conducted by the DILG as
interim caretaker of the Liga and the Liga officers and directors who were
elected to replace petitioner David and the former officers. At the core of the
petition is the validity of the DILGs caretakership of the Liga and the official
acts of the DILG as such caretaker which exceeded the bounds of supervision
and were exercise of control. At stake in this case is the realization of the
constitutionally ensconced principle of local government autonomy; the [61]

statutory objective to enhance the capabilities of barangays and municipalities

by providing them opportunities to participate actively in the implementation of
national programs and projects; and the promotion of the avowed aim to
[62]

ensure the independence and non-partisanship of the Liga ng mga

Barangay. The mantle of local autonomy would be eviscerated and remain an
empty buzzword if unconstitutional, illegal and unwarranted intrusions in the
affairs of the local governments are tolerated and left unchecked.
Indeed, it is the declared policy of the State that its territorial and political
subdivisions should enjoy genuine meaningful local autonomy to enable them
to attain their fullest development as self-reliant communities and make them
more effective partners in the attainment of national goals. In the case of De
[63]

Leon v. Esguerra, the Court ruled that even barangays are meant to possess
[64]

genuine and meaningful local autonomy so that they may develop fully as self-
reliant communities. [65]

Furthermore, well-entrenched is the rule that courts will decide a question

otherwise moot and academic if it is capable of repetition, yet evading review.
For the question of whether the DILG may validly be appointed as interim
[66]

caretaker, or assume a similar position and perform acts pursuant thereto, is

likely to resurrect again, and yet the question may not be decided before the
actual assumption, or the termination of said assumption even.
So too, dismissing the petition on the ground of mootness could lead to
the wrong impression that the challenged order and issuances are valid.
Verily, that does not appear to be the correct conclusion to make since by
applying opposite precedents to the issues the outcome points to invalidating
the assailed order and memorandum circulars.
The resolution of the issues of whether the Liga ng mga Barangay is
subject to DILG supervision, and whether the questioned caretakership order
of the respondent judge and the challenged issuances and acts of the DILG
constitute control in derogation of the Constitution, necessitates a brief
overview of the barangay, as the lowest LGU, and the Liga, as a vehicle of
governance and coordination.
 As the basic political unit, the barangay serves as the primary planning
and implementing unit of government policies, plans, programs, projects and
activities in the community, and as a forum wherein the collective views of the
people may be expressed, crystallized and considered, and where disputes
may be amicably settled. [67]

On the other hand, the Liga ng mga Barangay is the organization of

[68]

all barangays, the primary purpose of which is the determination of the

representation of the Liga in the sanggunians, and the ventilation, articulation,
and crystallization of issues affecting barangay government administration
and securing solutions thereto, through proper and legal means. The Liga ng [69]

mga Barangay shall have chapters at the municipal, city and provincial and
metropolitan political subdivision levels. The municipal and city chapters of
[70]

the Liga are composed of the barangay representatives from the municipality
or city concerned. The presidents of the municipal and city chapters of
the Liga form the provincial or metropolitan political subdivision chapters of
the Liga. The presidents of the chapters of the Liga in highly urbanized cities,
provinces and the Metro Manila area and other metropolitan political
subdivisions constitute the National Liga ng mga Barangay. [71]

As conceptualized in the Local Government Code, the barangay is

positioned to influence and direct the development of the entire country. This
was heralded by the adoption of the bottom-to-top approach process of
development which requires the development plans of the barangay to be
considered in the development plans of the municipality, city or province,
whose plans in turn are to be taken into account by the central
[72]

government in its plans for the development of the entire country.

[73]

The Liga is the vehicle assigned to make this new development approach
[74]

materialize and produce results.

The presidents of the Liga at the municipal, city and provincial levels,
automatically become ex-officio members of the Sangguniang Bayan,
Sangguniang Panlungsod and Sangguniang Panlalawigan, respectively. They
shall serve as such only during their term of office as presidents of
the Liga chapters, which in no case shall be beyond the term of office of
the sanggunianconcerned. [75]

The Liga ng mga Barangay has one principal aim, namely: to promote the
development of barangays and secure the general welfare of their inhabitants.
In line with this, the Liga is granted the following functions and duties:
[76]

a) Give priority to programs designed for the total development of the barangays and in
consonance with the policies, programs and projects of the national government;
 b) Assist in the education of barangay residents for peoples participation in local
government administration in order to promote untied and concerted action to
achieve country-wide development goals;
c) Supplement the efforts of government in creating gainful employment within the
barangay;
d) Adopt measures to promote the welfare of barangay officials;
e) Serve as forum of the barangays in order to forge linkages with government and
non-governmental organizations and thereby promote the social, economic and
political well-being of the barangays; and
f) Exercise such other powers and perform such other duties and functions which will
bring about stronger ties between barangays and promote the welfare of the
barangay inhabitants.[77]

The Ligas are primarily governed by the provisions of the Local

Government Code. However, they are empowered to make their own
constitution and by-laws to govern their operations. Sec. 507 of the Code
provides:

Sec. 507. Constitution and By-Laws of the Liga and the Leagues. - All other matters
not herein otherwise provided for affecting the internal organization of the leagues of
local government units shall be governed by their respective constitution and by-laws
which are hereby made suppletory to the provision of this Chapter: Provided, That
said Constitution and By-laws shall always conform to the provision of the
Constitution and existing laws.

Pursuant to the Local Government Code, the Liga ng mga

Barangay adopted its own Constitution and By-Laws. It provides that the
corporate powers of the Liga, expressed or implied, shall be vested in the
board of directors of each level of the Liga which shall:

a) Have jurisdiction over all officers, directors and committees of the said Liga;
including the power of appointment, assignment and delegation;

b) Have general management of the business, property, and funds of said Liga;

c) Prepare and approve a budget showing anticipated receipts and expenditures for the
year, including the plans or schemes for funding purposes; and

d) Have the power to suspend or remove from office any officer or member of the said
board on grounds cited and in the manner provided in hereinunder provisions. [78]

The National Liga Board of Directors promulgated the rules for the conduct
of its Ligas general elections. And, as early as 28 April 1997,
[79]
the Liga National Chapter had already scheduled its general elections on 14
June 1997. [80]

The controlling provision on the issues at hand is Section 4, Article X of

the Constitution, which reads in part:

Sec. The President of the Philippines shall exercise general supervision over local
governments.

The 1935, 1973 and 1987 Constitutions uniformly differentiate the

Presidents power of supervision over local governments and his power of
control of the executive departments bureaus and offices. Similar to the [81]

counterpart provisions in the earlier Constitutions, the provision in the 1987

Constitution provision has been interpreted to exclude the power of control. [82]

In the early case of Mondano v. Silvosa, et al., this Court defined

[83]

supervision as overseeing, or the power or authority of an officer to see that

subordinate officers perform their duties, and to take such action as
prescribed by law to compel his subordinates to perform their duties. Control,
on the other hand, means the power of an officer to alter or modify or nullify or
set aside what a subordinate officer had done in the performance of his duties
and to substitute the judgment of the former for that of the latter. In Taule v. [84]

Santos, the Court held that the Constitution permits the President to wield no
[85]

more authority than that of checking whether a local government or its officers
perform their duties as provided by statutory enactments. Supervisory power,
[86]

when contrasted with control, is the power of mere oversight over an inferior
body; it does not include any restraining authority over such body. [87]

The case of Drilon v. Lim clearly defined the extent of supervisory power,
[88]

thus:

The supervisor or superintendent merely sees to it that the rules are followed, but he
himself does not lay down such rules, nor does he have the discretion to modify or
replace them. If the rules are not observed, he may order the work done or re-done but
only to conform to the prescribed rules. He may not prescribe his own manner for the
doing of the act. He has no judgment on this matter except to see that the rules are
followed [89]

In Section 4, Article X of the Constitution applicable to the Liga ng mga

Barangay? Otherwise put, is the Liga legally susceptible to DILG suspension?
This question was resolved in Bito-Onon v. Fernandez, where the Court
[90]

ruled that the Presidents power of the general supervision, as exercised

therein by the DILG Secretary as hisalter ego, extends to the Liga ng mga
Barangay.

Does the Presidents power of general supervision extend to the liga ng mga barangay,
which is not a local government unit?

We rule in the affirmative. In Opinion No. 41, Series of 1995, the Department of
Justice ruled that the liga ng mga barangay is a government organization, being an
association, federation, league or union created by law or by authority of law, whose
members are either appointed or elected government officials. The Local Government
Code defines the liga ng mga barangay as an organization of all barangays for the
primary purpose of determining the representation of the liga in the sanggunians, and
for ventilating, articulating and crystallizing issues affecting barangay government
administration and securing, through proper and legal means, solutions thereto.
[91]

The rationale for making the Liga subject to DILG supervision is quite
evident, whether from the perspectives of logic or of practicality. The Liga is
an aggroupment of barangays which are in turn represented therein by their
respective punong barangays. The representatives of the Liga sit in an ex
officio capacity at the municipal, city and provincial sanggunians. As such,
they enjoy all the powers and discharge all the functions of regular municipal
councilors, city councilors or provincial board members, as the case may
be. Thus, the Liga is the vehicle through which the barangay participates in
the enactment of ordinances and formulation of policies at all the legislative
local levels higher than the sangguniang barangay, at the same time serving
as the mechanism for the bottom-to-top approach of development.
In the case at bar, even before the respondent Judge designated the DILG
as interim caretaker of the Liga, on 28 July 1997, it issued Memorandum
Circular No. 97-176, directing local government officials not to recognize
David as the National Liga President and his pronouncements relating to the
affairs of the Liga. Not only was the action premature, it even smacked of
superciliousness and injudiciousness. The DILG is the topmost government
agency which maintains coordination with, and exercises supervision over
local government units and its multi-level leagues. As such, it should be
forthright, circumspect and supportive in its dealings with the Ligas especially
the Liga ng mga Barangay. The indispensable role played by the latter in the
development of the barangays and the promotion of the welfare of the
inhabitants thereof deserve no less than the full support and respect of
the other agencies of government. As the Court held in the case of San Juan
v. Civil Service Commission, our national officials should not only comply
[92]
with the constitutional provisions on local autonomy but should also
appreciate the spirit of liberty upon which these provisions are based.[93]

When the respondent judge eventually appointed the DILG as interim

caretaker to manage and administer the affairs of the Liga, she effectively
removed the management from the National Liga Board and vested control of
the Liga on the DILG. Even a cursory glance at the DILGs prayer for
appointment as interim caretaker of the Liga to manage and administer the
affairs of the Liga, until such time that the new set of National Liga officers
shall have been duly elected and assumed office reveals that what the DILG
wanted was to take control over the Liga. Even if said caretakership was
contemplated to last for a limited time, or only until a new set of officers
assume office, the fact remains that it was a conferment of control in
derogation of the Constitution.
With his Department already appointed as interim caretaker of the Liga,
Secretary Barbers nullified the results of the Liga elections and promulgated
DILG Memorandum Circular No. 97-193 dated 11 August 1997, where he laid
down the supplemental guidelines for the 1997 synchronized elections of the
provincial and metropolitan chapters and for the election of the national
chapter of the Liga ng mga Barangay; scheduled dates for the new provincial,
metropolitan and national chapter elections; and appointed respondent Rayos
as president of Liga-Caloocan Chapter.
These acts of the DILG went beyond the sphere of general supervision
and constituted direct interference with the political affairs, not only of
the Liga, but more importantly, of the barangay as an institution. The election
of Liga officers is part of the Ligas internal organization, for which the latter
has already provided guidelines. In succession, the DILG assumed
stewardship and jurisdiction over the Liga affairs, issued supplemental
guidelines for the election, and nullified the effects of the Liga-conducted
elections. Clearly, what the DILG wielded was the power of control which even
the President does not have.
Furthermore, the DILG assumed control when it appointed respondent
Rayos as president of the Liga-Caloocan Chapter prior to the newly scheduled
general Liga elections, although petitioner Davids term had not yet
expired. The DILG substituted its choice, who was Rayos, over the choice of
majority of the punong barangay of Caloocan, who was the incumbent
President, petitioner David. The latter was elected and had in fact been sitting
as an ex-officio member of the sangguniang panlungsod in accordance with
the Liga Constitution and By-Laws. Yet, the DILG extended the appointment to
respondent Rayos although it was aware that the position was the subject of
a quo warranto proceeding instituted by Rayos himself, thereby preempting
the outcome of that case. It was bad enough that the DILG assumed the
power of control, it was worse when it made use of the power with evident
bias and partiality.
As the entity exercising supervision over the Liga ng mga Barangay, the
DILGs authority over the Liga is limited to seeing to it that the rules are
followed, but it cannot lay down such rules itself, nor does it have the
discretion to modify or replace them. In this particular case, the most that the
DILG could do was review the acts of the incumbent officers of the Liga in the
conduct of the elections to determine if they committed any violation of
the Ligas Constitution and By-laws and its implementing rules. If the
National Liga Board and its officers had violated Liga rules, the DILG should
have ordered the Liga to conduct another election in accordance with
the Ligas own rules, but not in obeisance to DILG-dictated guidelines. Neither
had the DILG the authority to remove the incumbent officers of the Liga and
replace them, even temporarily, with unelected Liga officers.
Like the local government units, the Liga ng mga Barangay is not subject
to control by the Chief Executive or his alter ego.
In the Bito-Onon case, this Court held that DILG Memorandum Circular
[94]

No. 97-193, insofar as it authorized the filing of a petition for review of the
decision of the Board of Election Supervisors (BES) with the regular courts in
a post-proclamation electoral protest, involved the exercise of control as it in
effect amended the guidelines already promulgated by the Liga.The decision
reads in part:

xxx. Officers in control, lay down the rules in the doing of an act. If they are not
followed, it is discretionary on his part to order the act undone or redone by his
subordinate or he may even decide to do it himself. Supervision does not cover such
authority. Supervising officers merely see to it that the rules are followed, but he
himself does not lay down such rules, nor does he have the discretion to modify or
replace them. If the rules are not observed, he may order the work done or re-done to
conform for to the prescribed rules. He cannot prescribe his own manner the doing of
the act.

xxx

xxx. The amendment of the GUIDELINES is more than an exercise of the power of
supervision but is an exercise of the power of control, which the President does not
have over the LIGA. Although the DILG is given the power to prescribe rules,
regulations and other issuances, the Administrative Code limits its authority to merely
monitoring compliance by local government units of such issuances. To monitor
means to watch, observe or check and is compatible with the power of supervision of
the DILG Secretary over local governments, which is limited to checking whether the
local government unit concerned or the officers thereof perform their duties as per
statutory enactments. Besides, any doubt as to the power of the DILG Secretary to
interfere with local affairs should be resolved in favor of the greater autonomy of the
local government. [95]

In Taule, the Court ruled that the Secretary of Local Government had no
[96]

authority to pass upon the validity or regularity of the election of officers

of katipunan ng mga barangay or barangay councils. In that case, a protest
was lodged before the Secretary of Local Government regarding several
irregularities in, and seeking the nullification of, the election of officers of the
Federation of Associations of Barangay Councils (FABC) of Catanduanes.
Then Local Government Secretary Luis Santos issued a resolution nullifying
the election of officers and ordered a new one to be conducted. The Court
ruled:

Construing the constitutional limitation on the power of general supervision of the

President over local governments, We hold that respondent Secretary has no authority
to pass upon the validity or regularity of the officers of the katipunan. To allow
respondent Secretary to do so will give him more power than the law or the
Constitution grants. It will in effect give him control over local government officials
for it will permit him to interfere in a purely democratic and non-partisan activity
aimed at strengthening the barangay as the basic component of local governments so
that the ultimate goal of fullest autonomy may be achieved. In fact, his order that the
new elections to be conducted be presided by the Regional Director is a clear and
direct interference by the Department with the political affairs of the barangays which
is not permitted by the limitation of presidential power to general supervision over
local governments. [97]

All given, the Court is convinced that the assailed order was issued with
grave abuse of discretion while the acts of the respondent Secretary, including
DILG Memorandum Circulars No. 97-176 and No. 97-193, are unconstitutional
and ultra vires, as they all entailed the conferment or exercise of control a
power which is denied by the Constitution even to the President.
WHEREFORE, the Petition is GRANTED. The Order of the Regional Trial
Court dated 04 August 1997 is SET ASIDE for having been issued with grave
abuse of discretion amounting to lack or excess of jurisdiction. DILG
Memorandum Circulars No. 97-176 and No. 97-193, are declared VOID for
being unconstitutional and ultra vires.
 No pronouncements as to costs.
SO ORDERED.

[G.R. No. 131442. July 10, 2003]

BANGUS FRY FISHERFOLK DIWATA MAGBUHOS, ANGELITA BINAY,

ELMA GARCIA, VIRGILIO PANGUIO, ARSENIO CASTILLO, ARIEL
PANGUIO, ANTONIO PANGUIO, ANTONIO BUNQUIN,
GENEROSO BUNQUIN, CHARLIE DIMAYACYAC, RENATO
PANGUIO, ATILANO BUNQUIN, CARLOS CHAVEZ, JUAN
DIMAYACYAC, FILEMON BUNQUIN, MARIO MAGBUHOS,
MAURO MAGBUHOS, NORA MAGBUHOS, JEOVILYN, GENALYN
and JORVAN QUIMUEL, minors, represented by their parents
FELICIANA and SABINO QUIMUEL, MARICAR MAGBUHOS,
minor, represented by her parents CARMELITA and ANTONIO
MAGBUHOS, MARLO BINAY, minor, represented by his parents
EFRENITA and CHARLITO BINAY, and the BANGUS, BANGUS
FRY and other MARINE LIFE OF MINOLO COVE, petitioners,
vs. THE HONORABLE ENRICO LANZANAS as Judge of the
Regional Trial Court of Manila, Branch VII, THE DEPARTMENT
OF ENVIRONMENT AND NATURAL RESOURCES Region IV,
represented by its Regional Executive Director and its Regional
Director for Environment, THE NATIONAL POWER
CORPORATION, ORIENTAL MINDORO ELECTRIC
COOPERATIVE, PROVINCIAL GOVERNMENT OF ORIENTAL
MINDORO, herein represented by GOVERNOR RODOLFO
VALENCIA, PUERTO GALERA MAYOR GREGORIO DELGADO,
VICE MAYOR ARISTEO ATIENZA, and MEMBERS OF THE
SANGGUNIANG BAYAN OF PUERTO GALERA, JUAN ASCAN,
JR., RAFAEL ROMEY, CENON SALCEDO, JERRY DALISAY,
SIMON BALITAAN, RENATO CATAQUIS, MARCELINO BANAAG,
DANIEL ENRIQUEZ, AMELYN MARCO, GABRIEL ILAGAN,
MUNICIPAL ENGINEER RODEL RUBIO, and MUNICIPAL
PLANNING and DEVELOPMENT COORDINATOR WILHELMINA
LINESES, respondents.
 DECISION

CARPIO, J.:

The Case

This is a petition for review[1] of the Order[2] dated 7 November 1997 of the
Regional Trial Court of Manila, Branch 7 (Manila RTC), dismissing petitioners
complaint for lack of cause of action and lack of jurisdiction.

The Facts

On 30 June 1997, Regional Executive Director Antonio G. Principe (RED

Principe) of Region IV, Department of Environment and Natural Resources
(DENR), issued an Environmental Clearance Certificate (ECC) in favor of
respondent National Power Corporation (NAPOCOR). The ECC authorized
NAPOCOR to construct a temporary mooring facility in Minolo Cove, Sitio
Minolo, Barangay San Isidro, Puerto Galera, Oriental Mindoro. The
Sangguniang Bayan of Puerto Galera has declared Minolo Cove, a mangrove
area and breeding ground for bangus fry, an eco-tourist zone.[3]

The mooring facility would serve as the temporary docking site of

NAPOCORs power barge, which, due to turbulent waters at its former
mooring site in Calapan, Oriental Mindoro, required relocation to a safer site
like Minolo Cove. The 14.4 megawatts power barge would provide the main
source of power for the entire province of Oriental Mindoro pending the
construction of a land-based power plant in Calapan, Oriental Mindoro. The
ECC for the mooring facility was valid for two years counted from its date of
issuance or until 30 June 1999.[4]

Petitioners, claiming to be fisherfolks from Minolo, San Isidro, Puerto

Galera,[5] sought reconsideration of the ECC issuance. RED Principe,
however, denied petitioners plea on 15 July 1997. On 21 July 1997,
petitioners filed a complaint with the Regional Trial Court of Manila, Branch 7,
for the cancellation of the ECC and for the issuance of a writ of injunction to
stop the construction of the mooring facility. Impleaded as defendants were
the following: (1) NAPOCOR, (2) RED Principe, (3) DENR Region IV
Technical Director for Environment Oscar Dominguez, (4) Oriental Mindoro
Electric Cooperative (ORMECO), which is engaged in the distribution of
electricity in Oriental Mindoro, and (5) certain officials of Puerto Galera.
[6]
Petitioners subsequently amended their complaint to include as additional
defendants the elective officials of Oriental Mindoro represented by then
Governor Rodolfo G. Valencia.Petitioners further prayed for the demolition of
mooring structures that respondents had already built.

On 28 July 1997, prior to the filing of the amended complaint, the trial
court issued a 20-day temporary restraining order enjoining the construction of
the mooring facility. However, the trial court lifted the same on 6 August 1997
on NAPOCORs manifestation that the provincial government of Oriental
Mindoro was the one undertaking the construction of the mooring facility.[7]

On 28 August 1997, before filing their answers, respondents ORMECO

and the provincial officials of Oriental Mindoro moved to dismiss the
complaint. These respondents claimed that petitioners failed to exhaust
administrative remedies, rendering the complaint without cause of
action. They also asserted that the Manila RTC has no jurisdiction to enjoin
the construction of the mooring facility in Oriental Mindoro, which lies outside
the Manila RTCs territorial jurisdiction.

Petitioners opposed the motion on the ground that there was no need to
exhaust administrative remedies. They argued that the issuance of the ECC
was in patent violation of Presidential Decree No. 1605,[8] Sections 26 and 27
of Republic Act No. 7160,[9] and the provisions of DENR Department
Administrative Order No. 96-37 (DAO 96-37) on the documentation of ECC
applications. Petitioners also claimed that the implementation of the ECC was
in patent violation of its terms.

In its order of 7 November 1997, the trial court granted the motion and
dismissed petitioners complaint.

Hence, this petition.

The Ruling of the Trial Court

The trial courts order dismissing the complaint reads in part:

After careful evaluation and analysis, this Court finds the Motion to Dismiss tenable
and meritorious.

Petitioners have clearly failed to exhaust all administrative remedies before taking this
legal action in Court x x x.

It is x x x worth mentioning that the decision of the Regional Director may still be x x
x elevated to the Office of the Secretary of the DENR to fully comply with the process
of exhaustion of administrative remedies. And well settled is the rule in our
jurisdiction that before bringing an action in or resorting to the Courts of Justice, all
remedies of administrative character affecting or determinative of the controversy at
that level should first be exhausted by the aggrieved party (Pestanas vs. Dyogi, L-
25786, February 27, 1978). And petitioners failure to exhaust administrative remedies
renders his [sic] petition dismissible (Chia vs. Acting Collector of Customs, 177
SCRA 755). And a dismissal on the ground of failure to exhaust administrative
remedies is tantamount to a dismissal based on lack of cause of action (Baguiro vs.
Basa, Jr., 214 SCRA 437; Pineda vs. CFI of Davao, 111 Phil. 643; Sarabia vs.
Secretary of Agriculture & Natural Resources, L-16002, May 23, 1961; Gone, et al.
vs. District Engineer, et. al., L-22782, August 29, 1975; Abe-Abe, et al. vs. Manta, et.
al., L-4827, May 31, 1979) although it does not affect the jurisdiction of the court over
the subject matter (Mun. of La Trinidad, et al. vs. CFI of Baguio-Benguet, et al., L-
33889, June 28, 1983).

Moreover, this Court finds the Opposition of the Petitioners highly untenable and
bereft of merits that the controverted act in question is patently illegal and there was
an immediate need for judicial intervention.

The ECC in question was issued by the Regional Office of the DENR which has
jurisdiction and authority over the same x x x. And corollary to this, the issue as to
whether or not the Minolo Cove is within the enclosed coves and waters embraced by
Puerto Galera bay and protected by Medio island is a clear question of fact which the
DENR may appropriately resolve before resorting to [the] Court[s].

This Court is likewise aware and cognizant of its territorial jurisdiction in the
enforcement of Writ of Injunction. That truly, [a] writ of injunction can only be
enforced within [the] territorial jurisdiction of this Court but not for acts which are
being or about to be committed outside its territorial jurisdiction. Thus, in Philippine
National Bank vs. Pineda, 197 SCRA 1, the Honorable Supreme Court
ruled: Regional Trial Courts can only enforce their writs of injunction within their
respective designated territories. Furthermore, we find the issuance of the preliminary
injunction directed against the Provincial Sheriff of Negros Occidental a jurisdictional
paux [sic] pas (from Black Dictionary means jurisdictional falsity) as the Courts of
First Instance now Regional Trial Court[s], can only enforce their writs of injunction
within their respective designated territories.

And finally, this Court is not unmindful of the relevant and square application in the
case at bar of Presidential Decree No. 1818, Executive Order No. 380 dated
November 27, 1989, and Circular No. 2-91 of the Supreme Court that the National
Power Corporation (NPC) is a public utility, created under special legislation, engaged
in the generation and distribution of electric power and energy. The mooring site of
NPC in Puerto Galera, Oriental Mindoro is one of its infrastructure projects falling
within the mantle of Executive Order No. 380, November 27, 1989 x x x.

And as held by the Supreme Court in the case of National Power Corporation vs.
Honorable Abraham P. Vera, et al., 170 SCRA 721, courts are without jurisdiction to
issue injunctive writs against [the] National Power Corporation. The latter enjoys the
protective mantle of P.D. 1818, (Circular No. 2-91).

xxx

Injunction in this case is not a mere ancillary [sic] writ but the main action itself
together with the Annulment of the Environmental Clearance Certificate (ECC). Even
assuming arguendo that the court [can] annul the ECC how can the latter enforce the
same against the Provincial Government of Oriental Mindoro which was impleaded
by the petitioners as a necessary party together with the Oriental Mindoro Electric
Cooperative and the government officials of Puerto Galera, Oriental Mindoro, whose
acts and functions are being performed outside the territorial jurisdiction of this
court? x x x Indisputably, the injunction and annulment of ECC as prayed for in the
petition are inseparable x x x.

The conclusion, therefore, is inescapable that petitioners have failed to exhaust all the
available administrative remedies and this Court has no jurisdiction to issue the
injunctive writ prayed for in the Amended [Complaint]. [10]
 The Issue

The issue is whether the trial court erred in dismissing petitioners

complaint for lack of cause of action and lack of jurisdiction.

The Ruling of the Court

The petition has no merit.

Jurisdiction of the Manila RTC over the Case

Jurisdiction over the subject matter of a case is conferred by law. Such

jurisdiction is determined by the allegations in the complaint, irrespective of
whether the plaintiff is entitled to all or some of the reliefs sought.[11]

A perusal of the allegations in the complaint shows that petitioners

principal cause of action is the alleged illegality of the issuance of the
ECC. The violation of laws on environmental protection and on local
government participation in the implementation of environmentally critical
projects is an issue that involves the validity of NAPOCORs ECC. If the ECC
is void, then as a necessary consequence, NAPOCOR or the provincial
government of Oriental Mindoro could not construct the mooring facility. The
subsidiary issue of non-compliance with pertinent local ordinances in the
construction of the mooring facility becomes immaterial for purposes of
granting petitioners main prayer, which is the annulment of the ECC. Thus, if
the court has jurisdiction to determine the validity of the issuance of the ECC,
then it has jurisdiction to hear and decide petitioners complaint.

Petitioners complaint is one that is not capable of pecuniary estimation. It

falls within the exclusive and original jurisdiction of the Regional Trial Courts
under Section 19(1) of Batas Pambansa Blg. 129, as amended by Republic
Act No. 7691. The question of whether petitioners should file their complaint in
the Regional Trial Court of Manila or Oriental Mindoro then becomes a matter
of venue, to be determined by the residence of the parties.[12]

Petitioners main prayer is the annulment of the ECC. The principal

respondent, DENR Region IV, has its main office at the L & S Building, Roxas
Boulevard, Manila. Regional Executive Director Principe of the DENR Region
IV, who issued the ECC, holds office there. Plainly, the principal respondent
resides in Manila, which is within the territorial jurisdiction of the Manila
RTC. Thus, petitioners filed their complaint in the proper venue.

On the other hand, the jurisdiction of Regional Trial Courts to issue

injunctive writs is limited to acts committed or about to be committed within
their judicial region.[13] Moreover, Presidential Decree No. 1818 (PD No. 1818)
prohibited[14] courts from issuing injunctive writs against government
infrastructure projects like the mooring facility in the present case.Republic Act
No. 8975 (RA No. 8975), which took effect on 26 November 2000, superseded
PD No. 1818 and delineates more clearly the coverage of the prohibition,
reserves the power to issue such writs exclusively with this Court, and
provides penalties for its violation.[15] Obviously, neither the Manila RTC nor
the Oriental Mindoro RTC can issue an injunctive writ to stop the construction
of the mooring facility. Only this Court can do so under PD No. 1818 and later
under RA No. 8975. Thus, the question of whether the Manila RTC has
jurisdiction over the complaint considering that its injunctive writ is not
enforceable in Oriental Mindoro is academic.

Clearly, the Manila RTC has jurisdiction to determine the validity of the
issuance of the ECC, although it could not issue an injunctive writ against the
DENR or NAPOCOR. However, since the construction of the mooring facility
could not proceed without a valid ECC, the validity of the ECC remains the
determinative issue in resolving petitioners complaint.

Exhaustion of Administrative Remedies

The settled rule is before a party may seek the intervention of the courts,
he should first avail of all the means afforded by administrative
processes. Hence, if a remedy within the administrative machinery is still
available, with a procedure prescribed pursuant to law for an administrative
officer to decide the controversy, a party should first exhaust such remedy
before resorting to the courts. The premature invocation of a courts
intervention renders the complaint without cause of action and dismissible on
such ground.[16]
 RED Principe of the DENR Region IV Office issued the ECC based on (1)
Presidential Decree No. 1586 (PD No. 1586) and its implementing rules
establishing the Environmental Impact Statement System, (2) DAO 96-
37[17] and (3) the Procedural Manual of DAO 96-37. Section 4[18] of PD No.
1586 requires a proponent of an environmentally critical project, or a project
located within an environmentally critical area as declared by the President, to
secure an ECC prior to the projects operation. [19] NAPOCOR thus secured the
ECC because the mooring facility in Minolo Cove, while not an
environmentally critical project, is located within an environmentally critical
area under Presidential Proclamation No. 2146, issued on 14 December
1981.[20]

The rules on administrative appeals from rulings of the DENR Regional

Directors on the implementation of PD No. 1586 are found in Article VI of DAO
96-37, which provides:

SECTION 1.0. Appeal to the Office of the Secretary. Any party aggrieved by the final
decision of the RED may, within 15 days from receipt of such decision, file an appeal
with the Office of the Secretary.The decision of the Secretary shall be immediately
executory.

SECTION 2.0. Grounds for Appeal. The grounds for appeal shall be limited to grave
abuse of discretion and serious errors in the findings of fact which would cause grave
or irreparable injury to the aggrieved party. Frivolous appeals shall not be
countenanced.

SECTION 3.0. Who May Appeal. The proponent or any stakeholder, including but not
limited to, the LGUs concerned and affected communities, may file an appeal.

The DENR Procedural Manual for DAO 96-37 explains these provisions
thus:

Final decisions of the RED may be appealed. These decisions include those relating to
the issuance or non-issuance of an ECC, and the imposition of fines and penalties. By
inference, the decision of the Secretary on the issuance or non-issuance of the ECC
may also be appealed based on this provision. Resort to courts prior to availing of this
remedy would make the appellants action dismissible on the ground of non-
exhaustion of administrative remedies.

The right to appeal must be exercised within 15 days from receipt by the aggrieved
party of such decision. Failure to file such appeal within the requisite period will
result in the finality of the REDs or Secretarys decision(s), which can no longer be
disturbed.

An appeal shall not stay the effectivity of the REDs decision, unless the Secretary
directs otherwise.

The right to appeal does not prevent the aggrieved party from first resorting to the
filing of a motion for reconsideration with the RED, to give the RED an opportunity
to re-evaluate his decision. (Emphasis added)

Instead of following the foregoing procedure, petitioners bypassed the

DENR Secretary and immediately filed their complaint with the Manila RTC,
depriving the DENR Secretary the opportunity to review the decision of his
subordinate, RED Principe. Under the Procedural Manual for DAO 96-37 and
applicable jurisprudence, petitioners omission renders their complaint
dismissible for lack of cause of action. [21] Consequently, the Manila RTC did
not err in dismissing petitioners complaint for lack of cause of action.

On the Alleged Patent Illegality of the ECC

Petitioners nevertheless contend that they are exempt from filing an

appeal with the DENR Secretary because the issuance of the ECC was in
patent violation of existing laws and regulations. These are (1) Section 1 of
Presidential Decree No. 1605, as amended, (2) Sections 26 and 27 of
Republic Act No. 7160 (Local Government Code of 1991), and (3) the
provisions of DAO 96-37 on the documentary requirements for the zoning
permit and social acceptability of the mooring facility.

Petitioners contention is without merit. While the patent illegality of an act

exempts a party from complying with the rule on exhaustion of administrative
remedies,[22] this does not apply in the present case.

Presidential Decree No. 1605

 Presidential Decree No. 1605 (PD No. 1605),[23] as amended by
Presidential Decrees Nos. 1605-A and 1805, declares as ecologically
threatened zone the coves and waters embraced by Puerto Galera Bay as
protected by Medio Island. This decree provides in part:

Section 1. Any provision of law to the contrary notwithstanding, the construction of

marinas, hotels, restaurants, other commercial structures; commercial or semi-
commercial wharfs [sic]; commercial docking within the enclosed coves of Puerto
Galera; the destruction of its mangrove stands; the devastation of its corals and
coastline by large barges, motorboats, tugboat propellers, and any form of destruction
by other human activities are hereby prohibited.

Section 2. x x x

No permit for the construction of any wharf, marina, hotel, restaurants and other
commercial structures in Puerto Galera shall be issued without prior approval of the
Office of the President upon the recommendation of the Philippine Tourism Authority.
(Emphasis supplied)

NAPOCOR claims that since Minolo Cove lies outside of Puerto Galera
Bay as protected by Medio Island,[24] PD No. 1605 does not apply to this
case. However, petitioners assert that Minolo Cove is one of the enclosed
coves of Puerto Galera[25] and thus protected under PD No. 1605. This is a
question of fact that the DENR Secretary should have first resolved. In any
event, there is no dispute that NAPOCOR will use the mooring facility for its
power barge that will supply 14.4 megawatts of electricity to the entire
province of Oriental Mindoro, including Puerto Galera. The mooring facility is
obviously a government-owned public infrastructure intended to serve a basic
need of the people of Oriental Mindoro. The mooring facility is not a
commercial structure; commercial or semi-commercial wharf or commercial
docking as contemplated in Section 1 of PD No. 1605. Therefore, the
issuance of the ECC does not violate PD No. 1605 which applies only to
commercial structures like wharves, marinas, hotels and restaurants.

Sections 26 and 27 of RA No. 7160

 Congress introduced Sections 26 and 27 in the Local Government Code to
emphasize the legislative concern for the maintenance of a sound ecology
and clean environment.[26] These provisions require every national government
agency or government-owned and controlled corporation to hold prior
consultations with the local government unit concerned and to secure the prior
approval of its sanggunian before implementing any project or program that
may cause pollution, climatic change, depletion of non-renewable resources,
loss of cropland, rangeland, or forest cover and extinction of animal or plant
species. Sections 26 and 27 respectively provide:

Section 26. Duty of National Government Agencies in the Maintenance of

Ecological Balance. - It shall be the duty of every national agency or government-
owned or controlled corporation authorized or involved in the planning and
implementation of any project or program that may cause pollution, climatic change,
depletion of non-renewable resources, loss of crop land, rangeland, or forest cover and
extinction of animal or plant species, to consult with the local government units, non-
governmental organizations, and other sectors concerned and explain the goals and
objectives of the project or program, its impact upon the people and the community in
terms of environmental or ecological balance, and the measures that will be
undertaken to prevent or minimize the adverse effects thereof.

Section 27. Prior Consultations Required. - No project or program shall be

implemented by government authorities unless the consultations mentioned in Section
x x x 26 hereof are complied with, and prior approval of the sanggunian concerned is
obtained: Provided, That occupants in areas where such projects are to be
implemented shall not be evicted unless appropriate relocation sites have been
provided, in accordance with the provisions of the Constitution.

In Lina, Jr. v. Pao,[27] the Court interpreted these provisions in this

manner:

Section 27 of the Code should be read in conjunction with Section 26 thereof x x x.

Thus, the projects and programs mentioned in Section 27 should be interpreted to

mean projects and programs whose effects are among those enumerated in Sections 26
and 27, to wit, those that: (1) may cause pollution; (2) may bring about climatic
change; (3) may cause the depletion of non-renewable resources; (4) may result in
loss of crop land, rangeland, or forest cover; (5) may eradicate certain animal or plant
species; and (6) other projects or programs that may call for the eviction of a
particular group of people residing in the locality where these will be implemented.

Again, Sections 26 and 27 do not apply to this case because as petitioners

admit,[28] the mooring facility itself is not environmentally critical and hence
does not belong to any of the six types of projects mentioned in the law. There
is no statutory requirement for the concerned sanggunian to approve the
construction of the mooring facility. It is another matter if the operation of the
power barge is at issue. As an environmentally critical project that causes
pollution, the operation of the power barge needs the prior approval of the
concerned sanggunian. However, what is before this Court is only the
construction of the mooring facility, not the operation of the power
barge. Thus, the issuance of the ECC does not violate Sections 26 and 27 of
RA No. 7160.

Documentary Requirements for

ECC Applications

Under DAO 96-37, an ECC applicant for a project located within an

environmentally critical area is required to submit an Initial Environment
Examination, which must contain a brief description of the environmental
setting and a documentation of the consultative process undertaken, when
appropriate.[29] As part of the description of the environmental setting, the ECC
applicant must submit a certificate of locational clearance or zoning certificate.

Petitioners further contend that NAPOCOR, in applying for the ECC, did
not submit to the DENR Region IV Office the documents proving the holding
of consultations and the issuance of a locational clearance or zoning
certificate. Petitioners assert that this omission renders the issuance of the
ECC patently illegal.

The contention is also without merit. While such documents are part of the
submissions required from a project proponent, their mere absence does not
render the issuance of the ECC patently illegal. To justify non-exhaustion of
administrative remedies due to the patent illegality of the ECC, the public
officer must have issued the ECC [without any] semblance of compliance, or
even an attempt to comply, with the pertinent laws; when manifestly, the
officer has acted without jurisdiction or has exceeded his jurisdiction, or has
committed a grave abuse of discretion; or when his act is clearly and
obviously devoid of any color of authority.[30]

RED Principe, as chief of DENR Region IV, is the officer duly authorized
under DAO 96-37[31] to issue ECCs for projects located within environmentally
critical areas. RED Principe issued the ECC on the recommendation of Amelia
Supetran, the Director of the Environmental Management Bureau. Thus, RED
Principe acted with full authority pursuant to DENR regulations. Moreover, the
legal presumption is that he acted with the requisite authority.[32] This clothes
RED Principes acts with presumptive validity and negates any claim that his
actions are patently illegal or that he gravely abused his discretion. While
petitioners may present proof to the contrary, they must do so before the
proper administrative forum before resorting to judicial remedies.

On the Alleged Non-Compliance with the Terms of the ECC

Lastly, petitioners claim that they are justified in immediately seeking

judicial recourse because NAPOCOR is guilty of violating the conditions of the
ECC, which requires it to secure a separate ECC for the operation of the
power barge. The ECC also mandates NAPOCOR to secure the usual local
government permits, like zoning and building permits, from the municipal
government of Puerto Galera.

The contention is similarly without merit. The fact that NAPOCORs ECC is
subject to cancellation for non-compliance with its conditions does not justify
petitioners conduct in ignoring the procedure prescribed in DAO 96-37 on
appeals from the decision of the DENR Executive Director. Petitioners
vigorously insist that NAPOCOR should comply with the requirements of
consultation and locational clearance prescribed in DAO 96-37. Ironically,
petitioners themselves refuse to abide with the procedure for filing complaints
and appealing decisions laid down in DAO 96-37.

DAO 96-37 provides for a separate administrative proceeding to address

complaints for the cancellation of an ECC. Under Article IX of DAO 96-37,
complaints to nullify an ECC must undergo an administrative investigation,
after which the hearing officer will submit his report to the EMB Director or the
Regional Executive Director, who will then render his decision. The aggrieved
party may file an appeal to the DENR Secretary, who has authority to issue
cease and desist orders. Article IX also classifies the types of violations
covered under DAO 96-37, including projects operating without an ECC or
violating the conditions of the ECC. This is the applicable procedure to
address petitioners complaint on NAPOCORs alleged violations and not the
filing of the instant case in court.

A Final Word

The Court commends petitioners for their courageous efforts to safeguard

and maintain the ecological balance of Minolo Cove. This Court recognizes
the utmost importance of protecting the environment. [33] Indeed, we have
called for the vigorous prosecution of violators of environmental laws.[34] Legal
actions to achieve this end, however, must be done in accordance with
established rules of procedure that were intended, in the first place, to achieve
orderly and efficient administration of justice.

WHEREFORE, we DENY the petition for lack of merit.

SO ORDERED.

EN BANC
PROVINCE OF RIZAL, G.R. No. 129546
MUNICIPALITY OF SAN MATEO,
PINTONG BOCAUE
MULTIPURPOSE COOPERATIVE, Present:
CONCERNED CITIZENS OF RIZAL,
INC., ROLANDO E. VILLACORTE, DAVIDE, JR., C. J.,
BERNARDO HIDALGO, ANANIAS PUNO,
EBUENGA, VILMA T. MONTAJES, PANGANIBAN,
FEDERICO MUNAR, JR., ROLANDO QUISUMBING,
BEAS, SR., ET AL., and YNARES-SANTIAGO,
KILOSBAYAN, INC., SANDOVAL-GUTIERREZ,
P e t i t i o n e r s, CARPIO,
MARTINEZ,
CORONA,
 - versus - CARPIO MORALES,
CALLEJO, SR.,
AZCUNA,
EXECUTIVE SECRETARY, TINGA,
SECRETARY OF ENVIRONMENT & CHICO-NAZARIO, and
NATURAL RESOURCES, LAGUNA GARCIA, JJ.
LAKE DEVELOPMENT
AUTHORITY, SECRETARY OF
PUBLIC WORKS & HIGHWAYS,
SECRETARY OF BUDGET &
MANAGEMENT, METRO MANILA
DEVELOPMENT AUTHORITY and Promulgated:
THE HONORABLE COURT OF
APPEALS,
R e s p o n d e n t s. December 13, 2005
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

The earth belongs in usufruct to the living.[1]

At the height of the garbage crisis plaguing Metro Manila and its environs,
parts of the Marikina Watershed Reservation were set aside by the Office of the
President, through Proclamation No. 635 dated 28 August 1995, for use as a
sanitary landfill and similar waste disposal applications. In fact, this site, extending
to more or less 18 hectares, had already been in operation since 19 February
1990[2] for the solid wastes of Quezon City, Marikina, San Juan, Mandaluyong,
Pateros, Pasig, and Taguig.[3]
This is a petition filed by the Province of Rizal, the municipality of San Mateo, and
various concerned citizens for review on certiorari of the Decision of the Court of
Appeals in CA-G.R. SP No. 41330, denying, for lack of cause of action, the
petition for certiorari, prohibition and mandamus with application for a temporary
restraining order/writ of preliminary injunction assailing the legality and
constitutionality of Proclamation No. 635.

The facts are documented in painstaking detail.

On 17 November 1988, the respondent Secretaries of the Department of

Public Works and Highways (DPWH) and the Department of Environment and
Natural Resources (DENR) and the Governor of the Metropolitan Manila
Commission (MMC) entered into a Memorandum of Agreement (MOA), [4] which
provides in part:
1. The DENR agrees to immediately allow the utilization
by the Metropolitan Manila Commission of its land property located
at Pintong Bocaue in San Mateo, Rizal as a sanitary landfill site,
subject to whatever restrictions that the government impact
assessment might require.

2. Upon signing of this Agreement, the DPWH shall

commence the construction/development of said dumpsite.

3. The MMC shall: a) take charge of the relocation of the

families within and around the site; b) oversee the development of
the areas as a sanitary landfill; c) coordinate/monitor the
construction of infrastructure facilities by the DPWH in the said site;
and d) ensure that the necessary civil works are properly undertaken
to safeguard against any negative environmental impact in the area.
 On 7, 8 and 10 February 1989, the Sangguniang Bayan of San Mateo wrote
Gov. Elfren Cruz of the MMC, Sec. Fiorello Estuar of the DPWH, the Presidential
Task Force on Solid Waste Management, Executive Secretary Catalino Macaraig,
and Sec. Fulgencio Factoran, Jr., pointing out that it had recently passed a
Resolution banning the creation of dumpsites for Metro Manila garbage within its
jurisdiction, asking that their side be heard, and that the addressees suspend and
temporarily hold in abeyance all and any part of your operations with respect to the
San Mateo Landfill Dumpsite. No action was taken on these letters.

It turns out that the land subject of the MOA of 17 November 1988 and
owned by the DENR was part of the Marikina Watershed Reservation Area. Thus,
on 31 May 1989, forest officers of the Forest Engineering and Infrastructure Unit
of the Community Environment and Natural Resource Office, (CENRO) DENR-
IV, Rizal Province, submitted a Memorandum[5] on the On-going Dumping Site
Operation of the MMC inside (the) Upper Portion of Marikina Watershed
Reservation, located at Barangay Pintong Bocaue, San Mateo, Rizal, and nearby
localities. Said Memorandum reads in part:
Observations:

3.1 The subject area is arable and agricultural in nature;

3.2 Soil type and its topography are favorable for agricultural
and forestry productions;
...

3.5 Said Dumping Site is observed to be confined within the said

Watershed Reservation, bearing in the northeastern part of
Lungsod Silangan Townsite Reservation. Such illegal
Dumping Site operation inside (the) Watershed
Reservation is in violation of P.D. 705, otherwise known as
the Revised Forestry Code, as amended. . .

Recommendations:
 5.1 The MMC Dumping Site Inside Marikina Watershed
Reservation, particularly at Brgy. Pintong Bocaue, San
Mateo, Rizal and at Bo. Pinugay, Baras/Antipolo, Rizal which
are the present garbage zones must totally be stopped and
discouraged without any political intervention and delay
in order to save our healthy ecosystems found therein, to
avoid much destruction, useless efforts and lost (sic) of
millions of public funds over the land in question;
(Emphasis ours)

On 19 June 1989, the CENRO submitted another Investigation Report [6] to

the Regional Executive Director which states in part that:
1. About two (2) hectares had been excavated by bulldozers and garbage
dumping operations are going on.

2. The dumping site is without the concurrence of the Provincial Governor,

Rizal Province and without any permit from DENR who has
functional jurisdiction over the Watershed Reservation; and

3. About 1,192 families residing and cultivating areas covered by four (4)
Barangays surrounding the dumping site will adversely be affected
by the dumping operations of MMC including their sources of
domestic water supply. x x x x

On 22 January 1990, the CENRO submitted still another Investigation

Report[7] to the Regional Executive Director which states that:
Findings show that the areas used as Dumping Site of the MMC are
found to be within the Marikina Watershed which are part of the Integrated
Social Forestry Project (ISF) as per recorded inventory of Forest
Occupancy of this office.

It also appears that as per record, there was no permit issued to the
MMC to utilize these portions of land for dumping purposes.

It is further observed that the use of the areas as dumping site greatly
affects the ecological balance and environmental factors in this community.
 On 19 February 1990, the DENR Environmental Management Bureau,
through Undersecretary for Environment and Research Celso R. Roque, granted
the Metro Manila Authority (MMA [formerly MMC]) an Environmental
Compliance Certificate (ECC) for the operation of a two-and-a-half-hectare
garbage dumpsite.

The ECC was sought and granted to comply with the requirement of
Presidential Decree No. 1586 Establishing an Environmental Impact Statement
System, Section 4 of which states in part that, No persons, partnership or
corporation shall undertake or operate any such declared environmentally critical
project or area without first securing an Environmental Compliance Certificate.
Proclamation No. 2146, passed on 14 December 1981, designates all areas
declared by law as national parks, watershed reserves, wildlife preserves, and
sanctuaries as Environmentally Critical Areas.

On 09 March 1990, respondent Laguna Lake Development Authority

(LLDA), through its Acting General Manager, sent a letter[8] to the MMA, which
reads in part:
Through this letter we would like to convey our reservation on the
choice of the sites for solid waste disposal inside the watershed of Laguna
Lake. As you may already know, the Metropolitan Waterworks and
Sewerage System (MWSS) has scheduled the abstraction of water from
the lake to serve the needs of about 1.2 million residents of Muntinlupa,
Paranaque, Las Pinas and Bacoor, Cavite by 1992. Accordingly, the
Laguna Lake Development Authority (LLDA) is accelerating
its environmental management program to upgrade the water quality
of the lake in order to make it suitable as a source of domestic water
supply the whole year round. The said program regards dumpsites as
incompatible within the watershed because of the heavy pollution,
 including the risk of diseases, generated by such activities which would
negate the governments efforts to upgrade the water quality of the
lake. Consequently, please consider our objection to the proposed location
of the dumpsites within the watershed. (Emphasis supplied by petitioners)

On 31 July 1990, less than six months after the issuance of the ECC,
Undersecretary Roque suspended the ECC in a letter [9] addressed to the respondent
Secretary of DPWH, stating in part that:
Upon site investigation conducted by Environmental Management
Bureau staff on development activities at the San Mateo Landfill Site, it
was ascertained that ground slumping and erosion have resulted from
improper development of the site. We believe that this will adversely
affect the environmental quality in the area if the proper remedial measures
are not instituted in the design of the landfill site. This is therefore
contradictory to statements made in the Environmental Impact Statement
(EIS) submitted that above occurrences will be properly mitigated.

In view of this, we are forced to suspend the Environmental

Compliance Certificate (ECC) issued until appropriate modified plans are
submitted and approved by this Office for implementation. (Emphasis ours)

On 21 June 1993, the Acting Mayor of San Mateo, Enrique Rodriguez, Jr.,
Barangay Captain Dominador Vergara, and petitioner Rolando E. Villacorte,
Chairman of the Pintong Bocaue Multipurpose Cooperative (PBMC) wrote [10] then
President Fidel V. Ramos expressing their objections to the continued operation of
the MMA dumpsite for causing unabated pollution and degradation of the Marikina
Watershed Reservation.

On 14 July 1993, another Investigation Report[11] submitted by the Regional

Technical Director to the DENR Undersecretary for Environment and Research
contained the following findings and recommendations:
Remarks and Findings:
 ....

5. Interview with Mr. Dayrit, whose lot is now being endangered

because soil erosion have (sic) caused severe siltation and sedimentation of
the Dayrit Creek which water is greatly polluted by the dumping of soil
bulldozed to the creek;

6. Also interview with Mrs. Vilma Montajes, the multi-grade teacher

of Pintong Bocaue Primary School which is located only about 100 meters
from the landfill site. She disclosed that bad odor have (sic) greatly affected
the pupils who are sometimes sick with respiratory illnesses. These odors
show that MMA have (sic) not instituted/sprayed any disinfectant chemicals
to prevent air pollution in the area. Besides large flies (Bangaw) are
swarming all over the playground of the school. The teacher also informed
the undersigned that plastic debris are being blown whenever the wind
blows in their direction.

7. As per investigation report there are now 15 hectares being used

as landfill disposal sites by the MMA. The MMA is intending to expand its
operation within the 50 hectares.

8. Lots occupied within 50 hectares are fully planted with fruit

bearing trees like Mangoes, Santol, Jackfruit, Kasoy, Guyabano, Kalamansi
and Citrus which are now bearing fruits and being harvested and marketed
to nearby San Mateo Market and Masinag Market in Antipolo.

....

Recommendations:

1. As previously recommended, the undersigned also strongly

recommend(s) that the MMA be made to relocate the landfill site because
the area is within the Marikina Watershed Reservation and Lungsod
Silangan. The leachate treatment plant ha(s) been eroded twice already and
contaminated the nearby creeks which is the source of potable water of the
residents. The contaminated water also flows to Wawa Dam and Boso-boso
River which also flows to Laguna de Bay.

2. The proposed Integrated Social Forestry Project be pushed

through or be approved. ISF project will not only uplift the socio-economic
conditions of the participants but will enhance the rehabilitation of the
Watershed considering that fruit bearing trees are vigorously growing in the
 area. Some timber producing species are also planted like Mahogany and
Gmelina Arboiea. There are also portions where dipterocarp residuals
abound in the area.

3. The sanitary landfill should be relocated to some other area, in

order to avoid any conflict with the local government of San Mateo and the
nearby affected residents who have been in the area for almost 10-20 years.

On 16 November 1993, DENR Secretary Angel C. Alcala sent MMA

Chairman Ismael A. Mathay, Jr. a letter [12] stating that after a series of
investigations by field officials of the DENR, the agency realized that the MOA
entered into on 17 November 1988 is a very costly error because the area agreed to
be a garbage dumpsite is inside the Marikina Watershed Reservation. He then
strongly recommended that all facilities and infrastructure in the garbage dumpsite
in Pintong Bocaue be dismantled, and the garbage disposal operations be
transferred to another area outside the Marikina Watershed Reservation to protect
the health and general welfare of the residents of San Mateo in particular and the
residents of Metro Manila in general.

On 06 June 1995, petitioner Villacorte, Chairman of the PBMC,

wrote[13] President Ramos, through the Executive Secretary, informing the
President of the issues involved, that the dumpsite is located near three public
elementary schools, the closest of which is only fifty meters away, and that its
location violates the municipal zoning ordinance of San Mateo and, in truth, the
Housing and Land Use Regulatory Board had denied the then MMA chairmans
application for a locational clearance on this ground.
 On 21 August 1995, the Sangguniang Bayan of San Mateo issued a
Resolution[14] expressing a strong objection to the planned expansion of the landfill
operation in Pintong Bocaue and requesting President Ramos to disapprove the
draft Presidential Proclamation segregating 71.6 Hectares from Marikina
Watershed Reservation for the landfill site in Pintong Bocaue, San Mateo, Rizal.

Despite the various objections and recommendations raised by the

government agencies aforementioned, the Office of the President, through
Executive Secretary Ruben Torres, signed and issued Proclamation No. 635 on 28
August 1995, Excluding from the Marikina Watershed Reservation Certain Parcels
of Land Embraced Therein for Use as Sanitary Landfill Sites and Similar Waste
Disposal Under the Administration of the Metropolitan Manila Development
Authority. The pertinent portions thereof state:
WHEREAS, to cope with the requirements of the growing
population in Metro Manila and the adjoining provinces and municipalities,
certain developed and open portions of the Marikina Watershed
Reservation, upon the recommendation of the Secretary of the Department
of Environment and Natural Resources should now be excluded form the
scope of the reservation;

WHEREAS, while the areas delineated as part of the Watershed

Reservations are intended primarily for use in projects and/or activities
designed to contain and preserve the underground water supply, other
peripheral areas had been included within the scope of the reservation to
provide for such space as may be needed for the construction of the
necessary structures, other related facilities, as well as other priority
projects of government as may be eventually determined;

WHEREAS, there is now an urgent need to provide for, and develop,

the necessary facilities for the disposal of the waste generated by the
population of Metro Manila and the adjoining provinces and municipalities,
to ensure their sanitary and /or hygienic disposal;

WHEREAS, to cope with the requirements for the development of

the waste disposal facilities that may be used, portions of the peripheral
areas of the Marikina Watershed Reservation, after due consideration and
study, have now been identified as suitable sites that may be used for the
purpose;

WHEREAS, the Secretary of the Department of Environment and

Natural Resources has recommended the exclusion of these areas that have
been so identified from the Marikina Watershed Reservation so that they
may then be developed for the purpose;

NOW, THEREFORE, for and in consideration of the aforecited

premises, I, Fidel V. Ramos, President of the Philippines, by virtue of the
powers vested in me by law, do hereby ordain:

Section 1. General That certain parcels of land, embraced by the

Marikina Watershed Reservation, were found needed for use in the solid
waste disposal program of the government in Metropolitan Manila, are
hereby excluded from that which is held in reserve and are now made
available for use as sanitary landfill and such other related waste disposal
applications.

Section 2. Purpose The areas being excluded from the Marikina

Watershed Reservation are hereby placed under the administration of the
Metropolitan Manila Development Authority, for development as Sanitary
Landfill, and/or for use in the development of such other related waste
disposal facilities that may be used by the cities and municipalities of Metro
Manila and the adjoining province of Rizal and its municipalities.

Section 3. Technical Description Specifically, the areas being hereby

excluded from the Marikina Watershed Reservation consist of two (2)
parcels, with an aggregate area of approximately ONE MILLION SIXTY
THOUSAND FIVE HUNDRED TWENTY NINE (1,060,529) square
meters more or less, as follows: x x x x

Section 4. Reservations The development, construction, use and/or

operation of any facility that may be established within the parcel of land
herein excluded from the Marikina Watershed Reservation shall be
governed by existing laws, rules and regulations pertaining to
environmental control and management. When no longer needed for
sanitary landfill purposes or the related waste disposal activities, the parcels
of land subject of this proclamation shall revert back as part of the Marikina
Watershed Reservation, unless otherwise authorized.
 On 06 September 1995, Director Wilfrido S. Pollisco of the Protected Areas
and Wildlife Bureau wrote the DENR Secretary to express the bureaus stand
against the dumpsite at Pintong Bocaue, and that it is our view . . . that the mere
presence of a garbage dumpsite inside a watershed reservation is definitely not
compatible with the very purpose and objectives for which the reservation was
established.

On 24 November 1995, the petitioners Municipality of San Mateo and the

residents of Pintong Bocaue, represented by former Senator Jovito Salonga, sent a
letter to President Ramos requesting him to reconsider Proclamation No. 635.
Receiving no reply, they sent another letter on 02 January 1996 reiterating their
previous request.

On 04 March 1996, then chairman of the Metro Manila Development

Authority (MMDA [formerly MMA]) Prospero I. Oreta addressed a letter to
Senator Salonga, stating in part that:
.

2. Considering the circumstances under which we are pursuing the

project, we are certain you will agree that, unless we are prepared with
a better alternative, the project simply has to be pursued in the best
interest of the greater majority of the population, particularly their
health and welfare.

2.1 The San Mateo Sanitary Landfill services, at least, 38% of the
waste disposal site requirements of Metro Manila where an
estimated 9 million population reside.

2.2 Metro Manila is presently estimated to be generating, at least,

15,700 cubic meters of household or municipal waste, a 1.57
hectare of land area will be filled in a months time with a pile 31
 meters high of garbage, or in a year, the accumulated volume will
require 18.2 hectares.

....

4. The sanitary landfill projects are now on their fifth year of

implementation. The amount of effort and money already invested in
the project by the government cannot easily be disregarded, much
more set aside in favor of the few settlers/squatters who chose to
ignore the earlier notice given to them that the area would be used
precisely for the development of waste disposal sites, and are now
attempting to arouse opposition to the project.

4.2 There is no place within the jurisdiction of Metro Manila, with an

area big enough to accommodate at least 3 to 5 years of waste
disposal requirements. x x x x

4.21 The present site at San Mateo was selected because, at the time
consideration was being made, and up to the present, it is found to
have the attributes that positively respond to the criteria established:

4.21.1 The site was a government property and would not require
any outlay for it to be acquired.

4.21.2 It is far from any sizeable community/settlements that could

be affected by the development that would be introduced and
yet, was within economic hauling distance from the areas
they are designed to serve.

4.21.21 At the time it was originally decided to locate the

landfills at the present site, there were not more that
fifteen (15) settlers in the area and they had hardly
established themselves. The community settlements
were located far from the site.

4.21.22 The area was hardly accessible, especially to any

public transport. The area was being served by a
public utility jeep that usually made only two (2)
trips daily. During the rainy season, it could only be
reached by equipping the vehicle with tire chains to
traverse the slippery muddy trail roads.
 4.21.3 There was, at least, seventy-three (73) hectares available at
the site.

4.3 While the site was within the Marikina Watershed Reservation under the
administration of the DENR, the site was located at the lower periphery of
the buffer zone; was evaluated to be least likely to affect the underground
water supply; and could, in fact, be excluded from the reservation.

4.31 It was determined to be far from the main water containment area for
it to pose any immediate danger of contaminating the underground
water, in case of a failure in any of the mitigating measures that
would be installed.

4.32 It was likewise too far from the nearest body of water, the Laguna
Lake, and the distance, plus the increasing accumulation of water
from other tributaries toward the lake, would serve to dilute and
mitigate any contamination it may emit, in case one happened.

4.33 To resolve the recurring issue regarding its being located within the
Marikina Watershed Reservation, the site had been recommended by
the DENR, and approved by the President, to already be excluded
from the Marikina Watershed reservation and placed under the
administration of MMDA, since the site was deemed to form part of
the land resource reserve then commonly referred to as buffer zone.

5. Contrary to the impression that you had been given, relocating the site at this
point and time would not be easy, if not impracticable, because aside from
the investments that had been made in locating the present site, further
investments have been incurred in:

5.1 The conduct of the technical studies for the development being
implemented. Through a grant-in-aid from the World Bank, US$600,000
was initially spent for the conduct of the necessary studies on the area and
the design of the landfill. This was augmented by, at least, another P1.5
million from the government for the studies to be completed, or a total
cost at the time (1990) of approximately P20 million.

5.2. Additionally, the government has spent approximately P33 million in

improving on the roadway to make the site accessible from the main
road/highway.

5.3 To achieve the necessary economies in the development of the site, the
utilities had been planned so that their use could be maximized. These
 include the access roads, the drainage system, the leacheate collection
system, the gas collection system, and the waste water treatment system.
Their construction are designed so that instead of having to construct
independent units for each area, the use of existing facilities can be
maximized through a system of interconnection. On the average, the
government is spending P14.8 million to develop a hectare of sanitary
landfill area.

6. Despite the preparations and the investments that are now being made on the
project, it is estimated that the total available area, at an accelerated rate of
disposal, assuming that all open dump sites were to be closed, will only last
for 39 months.

6.1 We are still hard pressed to achieve advanced development on the sites to
assure against any possible crisis in garbage from again being experienced
in Metro Manila, aside from having to look for the additional sites that
may be used after the capacities shall have been exhausted.

6.2 Faced with the prospects of having the 15,700 cubic meters of garbage
generated daily strewn all over Metro Manila, we are certain you will
agree that it would be futile to even as much as consider a suspension of
the waste disposal operations at the sanitary landfills.

On 22 July 1996, the petitioners filed before the Court of Appeals a civil
action for certiorari, prohibition and mandamus with application for a temporary
restraining order/writ of preliminary injunction. The hearing on the prayer for
preliminary injunction was held on 14 August 1996.

On 13 June 1997, the court a quo rendered a Decision,[15] the dispositive part
of which reads:
WHEREFORE, the petition for certiorari, prohibition and
mandamus with application for a temporary restraining order/writ of
preliminary injunction for lack of cause of action, is hereby DENIED. [16]
 Hence, this petition for review on certiorari of the above decision on the
following grounds:

THE COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION

IN DELIBERATELY IGNORING THE SIGNIFICANT FACT THAT
PRESIDENTIAL PROCLAMATION NO. 635 WAS BASED ON A
BRAZEN FORGERY IT WAS SUPPOSEDLY ISSUED, AS STATED IN
THE PROCLAMATION ITSELF AND REPEATEDLY ASSERTED BY
RESPONDENTS IN THEIR COMMENT, ON THE BASIS OF THE
ALLEGED RECOMMENDATION OF THE DENR SECRETARY
DATED JUNE 26, 1995 BUT WHICH ASSERTION WAS DENOUNCED
BY THE THEN SECRETARY ANGEL C. ALCALA HIMSELF IN A
SWORN STATEMENT DATED SEPTEMBER 18, 1996 AND AGAIN
DURING THE SPECIAL HEARING OF THE CASE IN THE COURT OF
APPEALS ON NOVEMBER 13, 1996 AS A FORGERY SINCE HIS
SIGNATURE ON THE ALLEGED RECOMMENDATION HAD BEEN
FALSIFIED, AS NOW ADMITTED BY RESPONDENTS THEMSELVES
IN THEIR COMMENT FILED WITH THE COURT OF APPEALS,
THROUGH THE OFFICE OF THE SOLICITOR GENERAL.

II

THE COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION

IN COMPLETELY IGNORING THE SIGNIFICANT FACT THAT THE
RESPONDENTS ARE OPERATING THE LANDFILL BASED ON A
SPURIOUS ENVIRONMENTAL COMPLIANCE CERTIFICATE.

III

THE COURT OF APPEALS ERRED IN RULING THAT THE

RESPONDENTS DID NOT VIOLATE R.A. 7586 WHEN THEY ISSUED
AND IMPLEMENTED PROCLAMATION NO. 635 CONSIDERING
THAT THE WITHDRAWAL OR DISESTABLISHMENT OF A
PROTECTED AREA OR THE MODIFICATION OF THE MARIKINA
WATERSHED CAN ONLY BE DONE BY AN ACT OF CONGRESS.

IV

THE COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION

WHEN IT DELIBERATELY AND WILLFULLY BRUSHED ASIDE THE
 UNANIMOUS FINDINGS AND ADVERSE RECOMMENDATIONS OF
RESPONSIBLE GOVERNMENT AGENCIES AND NON-PARTISAN
OFFICIALS CONCERNED WITH ENVIRONMENTAL PROTECTION
IN FAVOR OF THE SELF-SERVING, GRATUITOUS ASSERTIONS
FOUND IN THE UNSOLICITED, PARTISAN LETTER OF FORMER
MALABON MAYOR, NOW CHAIRMAN PROSPERO ORETA OF THE
MMDA WHO IS AN INTERESTED PARTY IN THIS CASE.

THE COURT OF APPEALS ERRED WHEN IT READILY

SWALLOWED RESPONDENTS ASSERTION THAT THE SAN MATEO
DUMPSITE IS LOCATED IN THE BUFFER ZONE OF THE
RESERVATION AND IS THEREFORE OUTSIDE OF ITS
BOUNDARIES, AND EVEN DECLARED IN ITS DECISION THAT IT
TOOK SERIOUS NOTE OF THIS PARTICULAR ARGUMENT.

VI

THE COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION

WHEN IT ENCROACHED ON THE FUNCTION OF CONGRESS BY
EXPRESSING ITS UNJUSTIFIED FEAR OF MINI-SMOKEY
MOUNTAINS PROLIFERATING IN METRO MANILA AND
JUSTIFYING ITS DECISION IN FAVOR OF AN INTEGRATED
SYSTEM OF SOLID WASTE MANAGEMENT LIKE THE SAN MATEO
LANDFILL.

On 05 January 1998, while the appeal was pending, the petitioners filed a
Motion for Temporary Restraining Order,[17] pointing out that the effects of the El
Niophenomenon would be aggravated by the relentless destruction of the Marikina
Watershed Reservation. They noted that respondent MMDA had, in the meantime,
continued to expand the area of the dumpsite inside the Marikina Watershed
Reservation, cutting down thousands of mature fruit trees and forest trees, and
leveling hills and mountains to clear the dumping area. Garbage disposal
operations were also being conducted on a 24-hour basis, with hundreds of metric
tons of wastes being dumped daily, including toxic and infectious hospital wastes,
intensifying the air, ground and water pollution.[18]

The petitioners reiterated their prayer that respondent MMDA be temporarily

enjoined from further dumping waste into the site and from encroaching into the
area beyond its existing perimeter fence so as not to render the case moot and
academic.

On 28 January 1999, the petitioners filed a Motion for Early Resolution,

[19]
calling attention to the continued expansion of the dumpsite by the MMDA that
caused the people of Antipolo to stage a rally and barricade the Marcos Highway to
stop the dump trucks from reaching the site for five successive days from 16
January 1999. On the second day of the barricade, all the municipal mayors of the
province of Rizal openly declared their full support for the rally, and notified the
MMDA that they would oppose any further attempt to dump garbage in their
province.[20]

As a result, MMDA officials, headed by then Chairman Jejomar Binay,

agreed to abandon the dumpsite after six months. Thus, the municipal mayors of
Rizal, particularly the mayors of Antipolo and San Mateo, agreed to the use of the
dumpsite until that period, which would end on 20 July 1999.[21]

On 13 July 1999, the petitioners filed an Urgent Second Motion for Early
Resolution[22] in anticipation of violence between the conflicting parties as the date
of the scheduled closure of the dumpsite neared.
 On 19 July 1999, then President Joseph E. Estrada, taking cognizance of the
gravity of the problems in the affected areas and the likelihood that violence would
erupt among the parties involved, issued a Memorandum ordering the closure of
the dumpsite on 31 December 2000.[23] Accordingly, on 20 July 1999, the
Presidential Committee on Flagship Programs and Projects and the MMDA entered
into a MOA with the Provincial Government of Rizal, the Municipality of San
Mateo, and the City of Antipolo, wherein the latter agreed to further extend the use
of the dumpsite until its permanent closure on 31 December 2000.[24]

On 11 January 2001, President Estrada directed Department of Interior and

Local Government Secretary Alfredo Lim and MMDA Chairman Binay to reopen
the San Mateo dumpsite in view of the emergency situation of uncollected garbage
in Metro Manila, resulting in a critical and imminent health and sanitation
epidemic.[25]

Claiming the above events constituted a clear and present danger of violence
erupting in the affected areas, the petitioners filed an Urgent Petition for
Restraining Order[26] on 19 January 2001.

On 24 January 2001, this Court issued the Temporary Restraining Order

prayed for, effective immediately and until further orders.[27]
Meanwhile, on 26 January 2001, Republic Act No. 9003, otherwise known
as The Ecological Solid Waste Management Act of 2000, was signed into law by
President Estrada.

Thus, the petitioners raised only two issues in their Memorandum[28] of 08

February 2005: 1) whether or not respondent MMDA agreed to the permanent
closure of the San Mateo Landfill as of December 2000, and 2) whether or not the
permanent closure of the San Mateo landfill is mandated by Rep. Act No. 9003.

We hold that the San Mateo Landfill will remain permanently closed.

Although the petitioners may be deemed to have waived or abandoned the

issues raised in their previous pleadings but not included in the memorandum,
[29]
certain events we shall relate below have inclined us to address some of the
more pertinent issues raised in the petition for the guidance of the herein
respondents, and pursuant to our symbolic function to educate the bench and bar.[30]

The law and the facts indicate that a mere MOA does not guarantee the
dumpsites permanent closure.

The rally and barricade staged by the people of Antipolo on 28 January

1999, with the full support of all the mayors of Rizal Province caused the MMDA
to agree that it would abandon the dumpsite after six months. In return, the
municipal mayors allowed the use of the dumpsite until 20 July 1999.

On 20 July 1999, with much fanfare and rhetoric, the Presidential

Committee on Flagship Programs and Projects and the MMDA entered into a
MOA with the Provincial Government of Rizal, the Municipality of San Mateo,
and the City of Antipolo, whereby the latter agreed to an extension for the use of
the dumpsite until 31 December 2000, at which time it would be permanently
closed.
 Despite this agreement, President Estrada directed Department of Interior
and Local Government Secretary Alfredo Lim and MMDA Chairman Binay
to reopen the San Mateo dumpsite on 11 January 2001, in view of the emergency
situation of uncollected garbage in Metro Manila, resulting in a critical and
imminent health and sanitation epidemic; our issuance of a TRO on 24 January
2001 prevented the dumpsites reopening.

Were it not for the TRO, then President Estradas instructions would have
been lawfully carried out, for as we observed in Oposa v. Factoran, the freedom of
contract is not absolute. Thus:

.. In Abe vs. Foster Wheeler Corp., this Court stated: "The freedom of
contract, under our system of government, is not meant to be
absolute. The same is understood to be subject to reasonable legislative
regulation aimed at the promotion of public health, moral, safety and
welfare. In other words, the constitutional guaranty of non-impairment of
obligations of contract is limited by the exercise of the police power of the
State, in the interest of public health, safety, moral and general
welfare." The reason for this is emphatically set forth in Nebia vs. New
York, quoted in Philippine American Life Insurance Co. vs. Auditor
General, to wit: "'Under our form of government the use of property and the
making of contracts are normally matters of private and not of public
concern. The general rule is that both shall be free of governmental
interference. But neither property rights nor contract rights are absolute;
for government cannot exist if the citizen may at will use his property to the
detriment of his fellows, or exercise his freedom of contract to work them
harm. Equally fundamental with the private right is that of the public to
regulate it in the common interest.'" In short, the non-impairment clause
must yield to the police power of the state. (Citations omitted, emphasis
supplied)

We thus feel there is also the added need to reassure the residents of the
Province of Rizal that this is indeed a final resolution of this controversy, for a
brief review of the records of this case indicates two self-evident facts. First, the
San Mateo site has adversely affected its environs, and second, sources of
water should always be protected.

As to the first point, the adverse effects of the site were reported as early as
19 June 1989, when the Investigation Report of the Community Environment and
Natural Resources Officer of DENR-IV-1 stated that the sources of domestic water
supply of over one thousand families would be adversely affected by the dumping
operations.[31] The succeeding report included the observation that the use of the
areas as dumping site greatly affected the ecological balance and environmental
factors of the community.[32]Respondent LLDA in fact informed the MMA that the
heavy pollution and risk of disease generated by dumpsites rendered the location of
a dumpsite within the Marikina Watershed Reservation incompatible with its
program of upgrading the water quality of the Laguna Lake. [33]

The DENR suspended the sites ECC after investigations revealed ground
slumping and erosion had resulted from improper development of the site.
[34]
Another Investigation Report[35] submitted by the Regional Technical Director to
the DENR reported respiratory illnesses among pupils of a primary school located
approximately 100 meters from the site, as well as the constant presence of large
flies and windblown debris all over the schools playground. It further reiterated
reports that the leachate treatment plant had been eroded twice already,
contaminating the nearby creeks that were sources of potable water for the
residents. The contaminated water was also found to flow to the Wawa Dam and
Boso-boso River, which in turn empties into Laguna de Bay.

This brings us to the second self-evident point. Water is life, and must be
saved at all costs. In Collado v. Court of Appeals,[36] we had occasion to reaffirm
our previous discussion in Sta. Rosa Realty Development Corporation v. Court of
Appeals,[37] on the primordial importance of watershed areas, thus: The most
important product of a watershed is water, which is one of the most important
human necessities. The protection of watersheds ensures an adequate supply of
water for future generations and the control of flashfloods that not only damage
property but also cause loss of lives. Protection of watersheds is an
intergenerational responsibility that needs to be answered now.[38]

Three short months before Proclamation No. 635 was passed to avert the
garbage crisis, Congress had enacted the National Water Crisis Act [39] to adopt
urgent and effective measures to address the nationwide water crisis which
adversely affects the health and well-being of the population, food production, and
industrialization process. One of the issues the law sought to address was
the protection and conservation of watersheds.[40]

In other words, while respondents were blandly declaring that the reason for the

creation of the Marikina Watershed Reservation, i.e., to protect Marikina River as

the source of water supply of the City of Manila, no longer exists, the rest of the

country was gripped by a shortage of potable water so serious, it necessitated its

own legislation.

Respondents actions in the face of such grave environmental consequences

defy all logic. The petitioners rightly noted that instead of providing solutions, they

have, with unmitigated callousness, worsened the problem. It is this readiness to

wreak irrevocable damage on our natural heritage in pursuit of what is expedient

that has compelled us to rule at length on this issue. We ignore the unrelenting

depletion of our natural heritage at our peril.

I.

THE REORGANIZATION ACT OF THE DENR DEFINES AND

LIMITS ITS POWERS OVER THE COUNTRYS NATURAL RESOURCES

The respondents next point out that the Marikina Watershed Reservation,

and thus the San Mateo Site, is located in the public domain. They allege that as

such, neither the Province of Rizal nor the municipality of San Mateo has the

power to control or regulate its use since properties of this nature belong to the

national, and not to the local governments.

It is ironic that the respondents should pursue this line of reasoning.

In Cruz v. Secretary of Environment and Natural Resources,[41] we had

occasion to observe that (o)ne of the fixed and dominating objectives of the 1935

Constitutional Convention was the nationalization and conservation of the natural

resources of the country. There was an overwhelming sentiment in the convention

in favor of the principle of state ownership of natural resources and the adoption of

the Regalian doctrine. State ownership of natural resources was seen as a necessary

starting point to secure recognition of the states power to control their disposition,

exploitation, development, or utilization.[42]

 The Regalian doctrine was embodied in the 1935 Constitution, in Section 1

of Article XIII on Conservation and Utilization of Natural Resources. This was

reiterated in the 1973 Constitution under Article XIV on the National Economy and

the Patrimony of the Nation, and reaffirmed in the 1987 Constitution in Section 2

of Article XII on National Economy and Patrimony, to wit:

Sec. 2. All lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all forces
of potential energy, fisheries, forests or timber, wildlife, flora
and fauna, and other natural resources are owned by the
State. With the exception of agricultural lands, all other
natural resources shall not be alienated. The exploration,
development and utilization of natural resources shall be
under the full control and supervision of the State. The State
may directly undertake such activities or it may enter into
co-production, joint venture, or production-sharing
agreements with Filipino citizens, or corporations or
associations at least sixty per centum of whose capital is
owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not
more than twenty-five years, and under such terms and
conditions as may be provided by law. In cases of water
rights for irrigation, water supply, fisheries, or industrial
uses other than the development of water power, beneficial
use may be the measure and limit of the grant.[43]

Clearly, the state is, and always has been, zealous in preserving as much of

our natural and national heritage as it can, enshrining as it did the obligation to

preserve and protect the same within the text of our fundamental law.
 It was with this objective in mind that the respondent DENR was mandated

by then President Corazon C. Aquino, under Section 4 of Executive Order No.

192, [44]otherwise known as The Reorganization Act of the Department of

Environment and Natural Resources, to be the primary government agency

responsible for the conservation, management, development and proper use of

the countrys environment and natural resources, specifically forest and grazing

lands, mineral resources, including those in reservation and watershed areas, and

lands of the public domain. It is also responsible for the licensing and regulation of

all natural resources as may be provided for by law in order to ensure equitable

sharing of the benefits derived therefrom for the welfare of the present and

future generations of Filipinos.

We expounded on this matter in the landmark case of Oposa v. Factoran,

[45]
where we held that the right to a balanced and healthful ecology is a

fundamental legal right that carries with it the correlative duty to refrain from

impairing the environment. This right implies, among other things, the judicious

management and conservation of the countrys resources, which duty is reposed in

the DENR under the aforequoted Section 4 of Executive Order No. 192. Moreover:
Section 3 (of E. O. No. 192) makes the following statement of
policy:

SEC. 3. Declaration of Policy. - It is hereby declared

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

This policy declaration is substantially re-stated in Title XIV, Book

IV of the Administrative Code of 1987, specifically in Section 1 thereof
which reads:

SEC. 1. Declaration of Policy. - (1) The State shall

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

(2) The State shall likewise recognize and apply a true

value system that takes into account social and environmental
cost implications relative to the utilization, development and
conservation of our natural resources.

The above provision stresses the necessity of maintaining a sound

ecological balance and protecting and enhancing the quality of the
environment.[46] (Emphasis ours.)

In sum, the Administrative Code of 1987 and Executive Order No. 192

entrust the DENR with the guardianship and safekeeping of the Marikina

Watershed Reservation and our other natural treasures. However, although the
DENR, an agency of the government, owns the Marikina Reserve and has

jurisdiction over the same, this power is not absolute, but is defined by the

declared policies of the state, and is subject to the law and higher

authority. Section 2, Title XIV, Book IV of the Administrative Code of 1987, while

specifically referring to the mandate of the DENR, makes particular reference to

the agencys being subject to law and higher authority, thus:

SEC. 2. Mandate. - (1) The Department of Environment and Natural

Resources shall be primarily responsible for the implementation of the
foregoing policy.

(2) It shall, subject to law and higher authority, be in charge of

carrying out the State's constitutional mandate to control and supervise the
exploration, development, utilization, and conservation of the country's
natural resources.

With great power comes great responsibility. It is the height of irony that the
public respondents have vigorously arrogated to themselves the power to control
the San Mateo site, but have deftly ignored their corresponding responsibility as
guardians and protectors of this tormented piece of land.

II.

THE LOCAL GOVERNMENT CODE GIVES TO LOCAL GOVERNMENT UNITS ALL

THE NECESSARY POWERS TO PROMOTE THE GENERAL WELFARE OF THEIR
INHABITANTS

The circumstances under which Proclamation No. 635 was passed also

violates Rep. Act No. 7160, or the Local Government Code.

 Contrary to the averment of the respondents, Proclamation No. 635, which

was passed on 28 August 1995, is subject to the provisions of the Local

Government Code, which was approved four years earlier, on 10 October 1991.

Section 2(c) of the said law declares that it is the policy of the state to require all

national agencies and offices to conduct periodic consultations with appropriate local government units, non-

governmental and people's organizations, and other concerned sectors of the community before any project or

program is implemented in their respective jurisdictions. Likewise, Section 27 requires prior consultations before a

program shall be implemented by government authorities and the prior approval of the sanggunian is obtained.

During the oral arguments at the hearing for the temporary restraining order, Director Uranza of the

MMDA Solid Waste Management Task Force declared before the Court of Appeals that they had conducted the

required consultations. However, he added that (t)his is the problem, sir, the officials we may have been talking with

at the time this was established may no longer be incumbent and this is our difficulty now. That is what we are

[47]
trying to do now, a continuing dialogue.

The ambivalent reply of Director Uranza was brought to the fore when, at the height of the protest rally and

barricade along Marcos Highway to stop dump trucks from reaching the site, all the municipal mayors of the

province of Rizal openly declared their full support for the rally and notified the MMDA that they would oppose any

[48]
further attempt to dump garbage in their province.
 The municipal mayors acted within the scope of their powers, and were in
fact fulfilling their mandate, when they did this. Section 16 allows every local
government unit to 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, which involve, among other things, promot(ing) health and
safety, enhance(ing) the right of the people to a balanced ecology, and
preserv(ing) the comfort and convenience of their inhabitants.

In Lina , Jr. v. Pao,[49] we held that Section 2 (c), requiring consultations

with the appropriate local government units, should apply to national government
projects affecting the environmental or ecological balance of the particular
community implementing the project. Rejecting the petitioners contention that
Sections 2(c) and 27 of the Local Government Code applied mandatorily in the
setting up of lotto outlets around the country, we held that:
From a careful reading of said provisions, we find that these apply
only to national programs and/or projects which are to be implemented in a
particular local community. Lotto is neither a program nor a project of the
national government, but of a charitable institution, the PCSO. Though
sanctioned by the national government, it is far fetched to say that lotto falls
within the contemplation of Sections 2 (c) and 27 of the Local Government
Code.

Section 27 of the Code should be read in conjunction with Section 26

thereof. Section 26 reads:

SECTION 26. Duty of National Government Agencies in the

Maintenance of Ecological Balance. It shall be the duty of every
national agency or government-owned or controlled corporation
authorizing or involved in the planning and implementation of any
project or program that may cause pollution, climatic change,
depletion of non-renewable resources, loss of crop land, range-
land, or forest cover, and extinction of animal or plant species, to
 consult with the local government units, nongovernmental
organizations, and other sectors concerned and explain the goals
and objectives of the project or program, its impact upon the
people and the community in terms of environmental or
ecological balance, and the measures that will be undertaken to
prevent or minimize the adverse effects thereof.

Thus, the projects and programs mentioned in Section 27 should be

interpreted to mean projects and programs whose effects are among
those enumerated in Section 26 and 27, to wit, those that: (1) may cause
pollution; (2) may bring about climatic change; (3) may cause the
depletion of non-renewable resources; (4) may result in loss of crop
land, range-land, or forest cover; (5) may eradicate certain animal or
plant species from the face of the planet; and (6) other projects or
programs that may call for the eviction of a particular group of people
residing in the locality where these will be implemented. Obviously,
none of these effects will be produced by the introduction of lotto in the
province of Laguna. (emphasis supplied)

We reiterated this doctrine in the recent case of Bangus Fry Fisherfolk v.

Lanzanas,[50] where we held that there was no statutory requirement for
the sangguniang bayanof Puerto Galera to approve the construction of a mooring
facility, as Sections 26 and 27 are inapplicable to projects which are not
environmentally critical.

Moreover, Section 447, which enumerates the powers, duties and functions
of the municipality, grants the sangguniang bayan the power to, among other
things, enact ordinances, approve resolutions and appropriate funds for the general
welfare of the municipality and its inhabitants pursuant to Section 16 of th(e)
Code. These include:
(1) Approving ordinances and passing resolutions to protect the
environment and impose appropriate penalties for acts which
endanger the environment, such as dynamite fishing and other
forms of destructive fishing, illegal logging and smuggling of logs,
smuggling of natural resources products and of endangered species
 of flora and fauna, slash and burn farming, and such other activities
which result in pollution, acceleration of eutrophication of rivers
and lakes, or of ecological imbalance; [Section 447 (1)(vi)]
(2) Prescribing reasonable limits and restraints on the use of property
within the jurisdiction of the municipality, adopting a
comprehensive land use plan for the municipality, reclassifying land
within the jurisdiction of the city, subject to the pertinent provisions
of this Code, enacting integrated zoning ordinances in consonance
with the approved comprehensive land use plan, subject to existing
laws, rules and regulations; establishing fire limits or zones,
particularly in populous centers; and regulating the construction,
repair or modification of buildings within said fire limits or zones in
accordance with the provisions of this Code; [Section 447 (2)(vi-ix)]

(3) Approving ordinances which shall ensure the efficient and effective
delivery of the basic services and facilities as provided for under
Section 17 of this Code, and in addition to said services and
facilities, providing for the establishment, maintenance,
protection, and conservation of communal forests and
watersheds, tree parks, greenbelts, mangroves, and other similar
forest development projects .and, subject to existing laws,
establishing and providing for the maintenance, repair and operation
of an efficient waterworks system to supply water for the inhabitants
and purifying the source of the water supply; regulating the
construction, maintenance, repair and use of hydrants, pumps,
cisterns and reservoirs; protecting the purity and quantity of the
water supply of the municipality and, for this purpose, extending
the coverage of appropriate ordinances over all territory within
the drainage area of said water supply and within one hundred
(100) meters of the reservoir, conduit, canal, aqueduct, pumping
station, or watershed used in connection with the water
service; and regulating the consumption, use or wastage of water.
[Section 447 (5)(i) & (vii)]

Under the Local Government Code, therefore, two requisites must be met

before a national project that affects the environmental and ecological balance of

local communities can be implemented: prior consultation with the affected local
communities, and prior approval of the project by the appropriate sanggunian.

Absent either of these mandatory requirements, the projects implementation is

illegal.
III.

WASTE DISPOSAL IS REGULATED BY THE ECOLOGICAL

SOLID WASTE MANAGEMENT ACT OF 2000

The respondents would have us overlook all the abovecited laws because the

San Mateo site is a very expensive - and necessary - fait accompli. The respondents

cite the millions of pesos and hundreds of thousands of dollars the government has

already expended in its development and construction, and the lack of any viable

alternative sites.

The Court of Appeals agreed, thus:

During the hearing on the injunction, questions were also asked.
What will happen if the San Mateo Sanitary Landfill is closed? Where will
the daily collections of garbage be disposed of and dumped? Atty.
Mendoza, one of the lawyers of the petitioners, answered that each
city/municipality must take care of its own. Reflecting on that answer, we
are troubled: will not the proliferation of separate open dumpsites be a more
serious health hazard (which ha(s) to be addressed) to the residents of the
community? What with the galloping population growth and the
constricting available land area in Metro Manila? There could be a mini-
Smokey Mountain in each of the ten citiescomprising Metro Manila,
placing in danger the health and safety of more people. Damage to the
environment could be aggravated by the increase in number of open
dumpsites. An integrated system of solid waste management, like the San
Mateo Sanitary Landfill, appears advisable to a populous metropolis like
the Greater Metro Manila Area absent access to better technology.[51]
 We acknowledge that these are valid concerns. Nevertheless, the lower court

should have been mindful of the legal truism that it is the legislature, by its very

nature, which is the primary judge of the necessity, adequacy, wisdom,

reasonableness and expediency of any law.[52]

Moreover, these concerns are addressed by Rep. Act No. 9003. Approved on

26 January 2001, The Ecological Solid Waste Management Act of 2000 was

enacted pursuant to the declared policy of the state to adopt a systematic,

comprehensive and ecological solid waste management system which shall ensure

the protection of public health and environment, and utilize environmentally sound

methods that maximize the utilization of valuable resources and encourage

resource conservation and recovery.[53] It requires the adherence to a Local

Government Solid Waste Management Plan with regard to the collection and

transfer, processing, source reduction, recycling, composting and final disposal of

solid wastes, the handling and disposal of special wastes, education and public

information, and the funding of solid waste management projects.

The said law mandates the formulation of a National Solid Waste

Management Framework, which should include, among other things, the method

and procedure for the phaseout and the eventual closure within eighteen months

from effectivity of the Act in case of existing open dumps and/or sanitary landfills

located within an aquifer, groundwater reservoir or watershed area.[54] Any

landfills subsequently developed must comply with the minimum requirements laid
down in Section 40, specifically that the site selected must be consistent with the

overall land use plan of the local government unit, and that the site must be

located in an area where the landfills operation will not detrimentally affect

environmentally sensitive resources such as aquifers, groundwater reservoirs or

watershed areas.[55]

This writes finis to any remaining aspirations respondents may have of

reopening the San Mateo Site. Having declared Proclamation No. 635 illegal, we

see no compelling need to tackle the remaining issues raised in the petition and the

parties respective memoranda.

A final word. Laws pertaining to the protection of the environment were not
drafted in a vacuum. Congress passed these laws fully aware of the perilous state
of both our economic and natural wealth. It was precisely to minimize the adverse
impact humanitys actions on all aspects of the natural world, at the same time
maintaining and ensuring an environment under which man and nature can thrive
in productive and enjoyable harmony with each other, that these legal safeguards
were put in place. They should thus not be so lightly cast aside in the face of what
is easy and expedient.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals

in CA-G.R. SP No. 41330, dated 13 June 1997, is REVERSED and SET ASIDE.
The temporary restraining order issued by the Court on 24 January 2001 is
hereby made permanent.
SO ORDERED.

[G. R. No. 126661. December 3, 1999]

JOSE S. ANDAYA and EDGARDO L. INCIONG, petitioners, vs. REGIONAL

TRIAL COURT, Cebu City, Branch 20, and THE CITY OF
CEBU, respondents.

DECISION

PARDO, J.:

The case is an appeal via certiorari from a decision[1] of the Regional Trial Court,
Cebu City, Branch 20, commanding petitioner Jose S. Andaya as Regional Director,
Regional Police Command No. 7, to include P/Chief Inspector Andres Sarmiento in
the list of five (5) recommendees to be submitted to the mayor from which list the
mayor shall select the City Director, Cebu City Police Command (chief of police).

On January 3, 1996, the position of City Director, Cebu City Police

Command (chief of police) became vacant after P/Supt. Antonio Enteria was relieved
of command.

Sometime in January 1996, petitioner Andaya submitted to the City Mayor, Cebu
City a list of five (5) eligibles for the mayor to choose one to be appointed as the chief
of police of Cebu City. The mayor did not choose anyone from the list of five (5)
recommendees because the name of P/Chief Inspector Andres Sarmiento was not
included therein.

However, petitioner Andaya refused to agree to Mayor Alvin B. Garcias request to

include the name of Major Andres Sarmiento in the list of police officers for
appointment by the mayor to the position of City Director (chief of police), Cebu City
Police Command. Petitioner Andaya's refusal was based on his contention that Major
Andres Sarmiento was not qualified for the position of City Director (chief of police),
Cebu City Police Command, under NAPOLCOM Memorandum Circular No. 95-04
dated January 12, 1995, particularly Item No. 8, paragraph D thereof, which provides
that the minimum qualification standards for Directors of Provincial/City Police
Commands, include completion of the Officers Senior Executive Course (OSEC) and
the rank of Police Superintendent.
 Due to the impasse, on March 22, 1996, the City of Cebu filed with the Regional
Trial Court, Branch 20, Cebu City, a complaint for declaratory relief with preliminary
prohibitory and mandatory injunction and temporary restraining order against P/Chief
Supt. Jose S. Andaya and Edgardo L. Inciong, Regional Director, National Police
Commission.[2]

On April 10, 1996, petitioners filed with the trial court their respective answer to
the complaint. Petitioners stated that the power to designate the chief of police of
Cebu City (City Director, Cebu City Police Command) is vested with the Regional
Director, Regional Police Command No. 7. However, the mayor is authorized to
choose the chief of police from a list of five (5) eligibles submitted by the Regional
Director. In case of conflict between the Regional Director and the mayor, the issue
shall be elevated to the Regional Director, National Police Commission, who shall
resolve the issue within five (5) working days from receipt and whose decision on the
choice of the chief of police shall be final and executory. Thus, petitioners prayed for
dismissal of the complaint for lack of legal basis and failure to exhaust administrative
remedies.[3]

On April 18, 1996, the trial court issued a writ of preliminary injunction against
petitioner Jose S. Andaya enjoining him from replacing C/Insp. Andres Sarmiento as
OIC Director or Chief of Police of the Cebu City Police Command by designating
another as OIC Chief of Police or appointing a regular replacement for said officer,
and, from submitting to the mayor a list of five (5) eligibles which did not include the
name of Major Andres Sarmiento.[4]

On July 12, 1996, the trial court rendered decision in favor of respondent City of
Cebu, the dispositive portion of which reads as follows:

WHEREFORE, in view of all the foregoing premises, judgment is hereby rendered in

favor of plaintiff as against defendants, declaring that P/CInsp. Andres Sarmiento is
qualified under RA 6975 to be appointed as Chief Director or Chief of Police of the
Cebu City Police Command and whose name must be included in the list of five (5)
eligibles recommended as regular replacement to the position of the Chief of Police of
said Cebu City Police Command.

The writ of preliminary prohibitory injunction issued in this case against defendants
and their agents, or, representatives or any other persons acting for and in their behalf
enjoining and preventing them from replacing P/CInsp. Andres Sarmiento as OIC
Chief of Police of Cebu City Police Command by designating anyone from the
eligibles recommended in the two (2) lists thereof submitted to Mayor Garcia or from
any other list of said eligible recommendees for said position is hereby made
permanent.

Let a permanent writ of preliminary mandatory injunction be issued against defendant

Jose S. Andaya or his successor ordering the latter to include Major Andres Sarmiento
in the list of five (5) eligible persons recommended for the replacement to the position
of Chief of Police of Cebu City Police Command.

SO ORDERED.

Cebu City, July 12, 1996.

(s/t) FERDINAND J. MARCOS

Judge[5]

In due time, petitioners filed with the trial court their joint motion for
reconsideration[6] on the ground that the decision is contrary to Section 51 of Republic
Act 6975 which only empowers the mayor to choose one (1) from the five (5)
eligibles recommended by the Regional Police Director to be named chief of police.
The mayor cannot superimpose his will on the recommending authority by insisting
that his protg be included in the list of five eligibles from which the chief of police is
to be chosen.

On September 11, 1996, the trial court denied petitioners motion for
reconsideration ruling that no new matters had been raised therein. [7]

Hence, this petition[8] for review on certiorari on pure question of law.[9]

On June 11, 1997, we gave due course to the petition. [10]

At issue is whether or not the Mayor of Cebu City may require the Regional
Director, Regional Police Command No. 7, to include the mayors protg in the list of
five (5) eligibles to be recommended by the Regional Police Director to the mayor
from which the mayor shall choose the City Director, City Police Command (chief of
police) City of Cebu.

We resolve the issue against the position of the city mayor.

Republic Act No. 6975, Section 51, gives authority to the mayor of Cebu City [11] to
choose the chief of police from a list of five (5) eligibles recommended by the
Regional Director, Regional Police Command No. 7.

The National Police Commission has issued Memorandum Circular No. 95-04,
dated January 12, 1995, for the implementation of Republic Act No. 6975. It provides
that among the qualifications for chief of police of highly urbanized cities are (1)
completion of the Officers Senior Executive Course (OSEC) and (2) holding the rank
of Police Superintendent.

The mayor of Cebu City submits that Memorandum Circular No. 95-04 of the
National Police Commission prescribing such additional qualifications is not valid as
it contravenes the law.

We do not agree. Under Republic Act No. 6975, Section 51, the mayor of Cebu
City shall be deputized as representative of the Commission (National Police
Commission) in his territorial jurisdiction and as such the mayor shall have authority
to choose the chief of police from a list of five (5) eligibles recommended by the
Police Regional Director. The City Police Station of Cebu City is under the direct
command and control of the PNP Regional Director, Regional Police Command No.
7, and is equivalent to a provincial office. [12] Then, the Regional Director, Regional
Police Command No. 7 appoints the officer selected by the mayor as the City
Director, City Police Command (chief of police) Cebu City. It is the prerogative of the
Regional Police Director to name the five (5) eligibles from a pool of eligible officers
screened by the Senior Officers Promotion and Selection Board, Headquarters,
Philippine National Police, Camp Crame, Quezon City, without interference from
local executives. In case of disagreement between the Regional Police Director and
the Mayor, the question shall be elevated to the Regional Director, National Police
Commission, who shall resolve the issue within five (5) working days from receipt
and whose decision on the choice of the Chief of Police shall be final and executory.
[13]
As deputy of the Commission, the authority of the mayor is very limited. In reality,
he has no power of appointment; he has only the limited power of selecting one from
among the list of five eligibles to be named the chief of police. Actually, the power to
appoint the chief of police of Cebu City is vested in the Regional Director, Regional
Police Command No. 7. Much less may the mayor require the Regional Director,
Regional Police Command, to include the name of any officer, no matter how
qualified, in the list of five to be submitted to the mayor. The purpose is to enhance
police professionalism and to isolate the police service from political domination.

Consequently, we find that the trial court erred in granting preliminary injunction
that effectively restrained the Regional Director, Regional Police Command, Region
7, from performing his statutory function. The writ of preliminary injunction issued on
April 18, 1996, is contrary to law and thus void. Similarly, the lower courts decision
sustaining the City Mayors position suffers from the same legal infirmity.

WHEREFORE, the Court GRANTS the petition and SETS ASIDE the decision
of the Regional Trial Court, Branch 20, Cebu City, dated July 12, 1996, in Civil Case
No. CEB-18545. In lieu thereof, the Court renders judgment upholding the sole
discretion of the Regional Director, Regional Police Command No. 7, to submit to the
mayor of Cebu City a list of five (5) eligibles from which the mayor shall choose the
chief of police. In case of the mayors refusal to make his choice within a given period
due to disagreement as to the eligible nominees, the issue shall be submitted to the
Regional Director, National Police Commission, whose decision shall be final.

No costs.

SO ORDERED.

G.R. No. 91649 May 14, 1991

ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN AND

LORENZO SANCHEZ,petitioners,
vs.
PHILIPPINE AMUSEMENTS AND GAMING CORPORATION (PAGCOR), respondent.

H.B. Basco & Associates for petitioners.

Valmonte Law Offices collaborating counsel for petitioners.
Aguirre, Laborte and Capule for respondent PAGCOR.

PARAS, J.:
A TV ad proudly announces:

"The new PAGCOR responding through responsible gaming."

But the petitioners think otherwise, that is why, they filed the instant petition seeking to annul the
Philippine Amusement and Gaming Corporation (PAGCOR) Charter PD 1869, because it is
allegedly contrary to morals, public policy and order, and because

A. It constitutes a waiver of a right prejudicial to a third person with a right recognized by law.
It waived the Manila City government's right to impose taxes and license fees, which is
recognized by law;

B. For the same reason stated in the immediately preceding paragraph, the law has intruded
into the local government's right to impose local taxes and license fees. This, in
contravention of the constitutionally enshrined principle of local autonomy;

C. It violates the equal protection clause of the constitution in that it legalizes PAGCOR
conducted gambling, while most other forms of gambling are outlawed, together with
prostitution, drug trafficking and other vices;

D. It violates the avowed trend of the Cory government away from monopolistic and crony
economy, and toward free enterprise and privatization. (p. 2, Amended Petition; p. 7, Rollo)

In their Second Amended Petition, petitioners also claim that PD 1869 is contrary to the declared
national policy of the "new restored democracy" and the people's will as expressed in the 1987
Constitution. The decree is said to have a "gambling objective" and therefore is contrary to Sections
11, 12 and 13 of Article II, Sec. 1 of Article VIII and Section 3 (2) of Article XIV, of the present
Constitution (p. 3, Second Amended Petition; p. 21, Rollo).

The procedural issue is whether petitioners, as taxpayers and practicing lawyers (petitioner Basco
being also the Chairman of the Committee on Laws of the City Council of Manila), can question and
seek the annulment of PD 1869 on the alleged grounds mentioned above.

The Philippine Amusements and Gaming Corporation (PAGCOR) was created by virtue of P.D.
1067-A dated January 1, 1977 and was granted a franchise under P.D. 1067-B also dated January 1,
1977 "to establish, operate and maintain gambling casinos on land or water within the territorial
jurisdiction of the Philippines." Its operation was originally conducted in the well known floating
casino "Philippine Tourist." The operation was considered a success for it proved to be a potential
source of revenue to fund infrastructure and socio-economic projects, thus, P.D. 1399 was passed
on June 2, 1978 for PAGCOR to fully attain this objective.

Subsequently, on July 11, 1983, PAGCOR was created under P.D. 1869 to enable the Government
to regulate and centralize all games of chance authorized by existing franchise or permitted by law,
under the following declared policy

Sec. 1. Declaration of Policy. It is hereby declared to be the policy of the State to

centralize and integrate all games of chance not heretofore authorized by existing franchises
or permitted by law in order to attain the following objectives:
 (a) To centralize and integrate the right and authority to operate and conduct games of
chance into one corporate entity to be controlled, administered and supervised by the
Government.

(b) To establish and operate clubs and casinos, for amusement and recreation, including
sports gaming pools, (basketball, football, lotteries, etc.) and such other forms of amusement
and recreation including games of chance, which may be allowed by law within the territorial
jurisdiction of the Philippines and which will: (1) generate sources of additional revenue to
fund infrastructure and socio-civic projects, such as flood control programs, beautification,
sewerage and sewage projects, Tulungan ng Bayan Centers, Nutritional Programs,
Population Control and such other essential public services; (2) create recreation and
integrated facilities which will expand and improve the country's existing tourist attractions;
and (3) minimize, if not totally eradicate, all the evils, malpractices and corruptions that are
normally prevalent on the conduct and operation of gambling clubs and casinos without
direct government involvement. (Section 1, P.D. 1869)

To attain these objectives PAGCOR is given territorial jurisdiction all over the Philippines. Under its
Charter's repealing clause, all laws, decrees, executive orders, rules and regulations, inconsistent
therewith, are accordingly repealed, amended or modified.

It is reported that PAGCOR is the third largest source of government revenue, next to the Bureau of
Internal Revenue and the Bureau of Customs. In 1989 alone, PAGCOR earned P3.43 Billion, and
directly remitted to the National Government a total of P2.5 Billion in form of franchise tax,
government's income share, the President's Social Fund and Host Cities' share. In addition,
PAGCOR sponsored other socio-cultural and charitable projects on its own or in cooperation with
various governmental agencies, and other private associations and organizations. In its 3 1/2 years
of operation under the present administration, PAGCOR remitted to the government a total of P6.2
Billion. As of December 31, 1989, PAGCOR was employing 4,494 employees in its nine (9) casinos
nationwide, directly supporting the livelihood of Four Thousand Four Hundred Ninety-Four (4,494)
families.

But the petitioners, are questioning the validity of P.D. No. 1869. They allege that the same is "null
and void" for being "contrary to morals, public policy and public order," monopolistic and tends
toward "crony economy", and is violative of the equal protection clause and local autonomy as well
as for running counter to the state policies enunciated in Sections 11 (Personal Dignity and Human
Rights), 12 (Family) and 13 (Role of Youth) of Article II, Section 1 (Social Justice) of Article XIII and
Section 2 (Educational Values) of Article XIV of the 1987 Constitution.

This challenge to P.D. No. 1869 deserves a searching and thorough scrutiny and the most deliberate
consideration by the Court, involving as it does the exercise of what has been described as "the
highest and most delicate function which belongs to the judicial department of the government."
(State v. Manuel, 20 N.C. 144; Lozano v. Martinez, 146 SCRA 323).

As We enter upon the task of passing on the validity of an act of a co-equal and coordinate branch of
the government We need not be reminded of the time-honored principle, deeply ingrained in our
jurisprudence, that a statute is presumed to be valid. Every presumption must be indulged in favor of
its constitutionality. This is not to say that We approach Our task with diffidence or timidity. Where it
is clear that the legislature or the executive for that matter, has over-stepped the limits of its authority
under the constitution, We should not hesitate to wield the axe and let it fall heavily, as fall it must, on
the offending statute (Lozano v. Martinez, supra).
In Victoriano v. Elizalde Rope Workers' Union, et al, 59 SCRA 54, the Court thru Mr. Justice Zaldivar
underscored the

. . . thoroughly established principle which must be followed in all cases where questions of
constitutionality as obtain in the instant cases are involved. All presumptions are indulged in
favor of constitutionality; one who attacks a statute alleging unconstitutionality must prove its
invalidity beyond a reasonable doubt; that a law may work hardship does not render it
unconstitutional; that if any reasonable basis may be conceived which supports the statute, it
will be upheld and the challenger must negate all possible basis; that the courts are not
concerned with the wisdom, justice, policy or expediency of a statute and that a liberal
interpretation of the constitution in favor of the constitutionality of legislation should be
adopted. (Danner v. Hass, 194 N.W. 2nd 534, 539; Spurbeck v. Statton, 106 N.W. 2nd 660,
663; 59 SCRA 66; see also e.g. Salas v. Jarencio, 46 SCRA 734, 739 [1970]; Peralta v.
Commission on Elections, 82 SCRA 30, 55 [1978]; and Heirs of Ordona v. Reyes, 125 SCRA
220, 241-242 [1983] cited in Citizens Alliance for Consumer Protection v. Energy Regulatory
Board, 162 SCRA 521, 540)

Of course, there is first, the procedural issue. The respondents are questioning the legal personality
of petitioners to file the instant petition.

Considering however the importance to the public of the case at bar, and in keeping with the Court's
duty, under the 1987 Constitution, to determine whether or not the other branches of government
have kept themselves within the limits of the Constitution and the laws and that they have not
abused the discretion given to them, the Court has brushed aside technicalities of procedure and
has taken cognizance of this petition. (Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas
Inc. v. Tan, 163 SCRA 371)

With particular regard to the requirement of proper party as applied in the cases before us,
We hold that the same is satisfied by the petitioners and intervenors because each of them
has sustained or is in danger of sustaining an immediate injury as a result of the acts or
measures complained of. And even if, strictly speaking they are not covered by the definition,
it is still within the wide discretion of the Court to waive the requirement and so remove the
impediment to its addressing and resolving the serious constitutional questions raised.

In the first Emergency Powers Cases, ordinary citizens and taxpayers were allowed to
question the constitutionality of several executive orders issued by President Quirino
although they were involving only an indirect and general interest shared in common with the
public. The Court dismissed the objection that they were not proper parties and ruled that
"the transcendental importance to the public of these cases demands that they be settled
promptly and definitely, brushing aside, if we must technicalities of procedure." We have
since then applied the exception in many other cases. (Association of Small Landowners in
the Philippines, Inc. v. Sec. of Agrarian Reform, 175 SCRA 343).

Having disposed of the procedural issue, We will now discuss the substantive issues raised.

Gambling in all its forms, unless allowed by law, is generally prohibited. But the prohibition of
gambling does not mean that the Government cannot regulate it in the exercise of its police power.

The concept of police power is well-established in this jurisdiction. It has been defined as the "state
authority to enact legislation that may interfere with personal liberty or property in order to promote
the general welfare." (Edu v. Ericta, 35 SCRA 481, 487) As defined, it consists of (1) an imposition or
restraint upon liberty or property, (2) in order to foster the common good. It is not capable of an exact
definition but has been, purposely, veiled in general terms to underscore its all-comprehensive
embrace. (Philippine Association of Service Exporters, Inc. v. Drilon, 163 SCRA 386).

Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it
could be done, provides enough room for an efficient and flexible response to conditions and
circumstances thus assuming the greatest benefits. (Edu v. Ericta, supra)

It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the
charter. Along with the taxing power and eminent domain, it is inborn in the very fact of statehood
and sovereignty. It is a fundamental attribute of government that has enabled it to perform the most
vital functions of governance. Marshall, to whom the expression has been credited, refers to it
succinctly as the plenary power of the state "to govern its citizens". (Tribe, American Constitutional
Law, 323, 1978). The police power of the State is a power co-extensive with self-protection and is
most aptly termed the "law of overwhelming necessity." (Rubi v. Provincial Board of Mindoro, 39 Phil.
660, 708) It is "the most essential, insistent, and illimitable of powers." (Smith Bell & Co. v. National,
40 Phil. 136) It is a dynamic force that enables the state to meet the agencies of the winds of
change.

What was the reason behind the enactment of P.D. 1869?

P.D. 1869 was enacted pursuant to the policy of the government to "regulate and centralize thru an
appropriate institution all games of chance authorized by existing franchise or permitted by law" (1st
whereas clause, PD 1869). As was subsequently proved, regulating and centralizing gambling
operations in one corporate entity the PAGCOR, was beneficial not just to the Government but to
society in general. It is a reliable source of much needed revenue for the cash strapped
Government. It provided funds for social impact projects and subjected gambling to "close scrutiny,
regulation, supervision and control of the Government" (4th Whereas Clause, PD 1869). With the
creation of PAGCOR and the direct intervention of the Government, the evil practices and
corruptions that go with gambling will be minimized if not totally eradicated. Public welfare, then, lies
at the bottom of the enactment of PD 1896.

Petitioners contend that P.D. 1869 constitutes a waiver of the right of the City of Manila to impose
taxes and legal fees; that the exemption clause in P.D. 1869 is violative of the principle of local
autonomy. They must be referring to Section 13 par. (2) of P.D. 1869 which exempts PAGCOR, as
the franchise holder from paying any "tax of any kind or form, income or otherwise, as well as fees,
charges or levies of whatever nature, whether National or Local."

(2) Income and other taxes. a) Franchise Holder: No tax of any kind or form, income or
otherwise as well as fees, charges or levies of whatever nature, whether National or Local,
shall be assessed and collected under this franchise from the Corporation; nor shall any form
or tax or charge attach in any way to the earnings of the Corporation, except a franchise tax
of five (5%) percent of the gross revenues or earnings derived by the Corporation from its
operations under this franchise. Such tax shall be due and payable quarterly to the National
Government and shall be in lieu of all kinds of taxes, levies, fees or assessments of any kind,
nature or description, levied, established or collected by any municipal, provincial or national
government authority (Section 13 [2]).

Their contention stated hereinabove is without merit for the following reasons:

(a) The City of Manila, being a mere Municipal corporation has no inherent right to impose taxes
(Icard v. City of Baguio, 83 Phil. 870; City of Iloilo v. Villanueva, 105 Phil. 337; Santos v. Municipality
of Caloocan, 7 SCRA 643). Thus, "the Charter or statute must plainly show an intent to confer that
power or the municipality cannot assume it" (Medina v. City of Baguio, 12 SCRA 62). Its "power to
tax" therefore must always yield to a legislative act which is superior having been passed upon by
the state itself which has the "inherent power to tax" (Bernas, the Revised [1973] Philippine
Constitution, Vol. 1, 1983 ed. p. 445).

(b) The Charter of the City of Manila is subject to control by Congress. It should be stressed that
"municipal corporations are mere creatures of Congress" (Unson v. Lacson, G.R. No. 7909, January
18, 1957) which has the power to "create and abolish municipal corporations" due to its "general
legislative powers" (Asuncion v. Yriantes, 28 Phil. 67; Merdanillo v. Orandia, 5 SCRA 541).
Congress, therefore, has the power of control over Local governments (Hebron v. Reyes, G.R. No.
9124, July 2, 1950). And if Congress can grant the City of Manila the power to tax certain matters, it
can also provide for exemptions or even take back the power.

(c) The City of Manila's power to impose license fees on gambling, has long been revoked. As early
as 1975, the power of local governments to regulate gambling thru the grant of "franchise, licenses
or permits" was withdrawn by P.D. No. 771 and was vested exclusively on the National Government,
thus:

Sec. 1. Any provision of law to the contrary notwithstanding, the authority of chartered cities
and other local governments to issue license, permit or other form of franchise to operate,
maintain and establish horse and dog race tracks, jai-alai and other forms of gambling is
hereby revoked.

Sec. 2. Hereafter, all permits or franchises to operate, maintain and establish, horse and dog
race tracks, jai-alai and other forms of gambling shall be issued by the national government
upon proper application and verification of the qualification of the applicant . . .

Therefore, only the National Government has the power to issue "licenses or permits" for the
operation of gambling. Necessarily, the power to demand or collect license fees which is a
consequence of the issuance of "licenses or permits" is no longer vested in the City of Manila.

(d) Local governments have no power to tax instrumentalities of the National Government. PAGCOR
is a government owned or controlled corporation with an original charter, PD 1869. All of its shares of
stocks are owned by the National Government. In addition to its corporate powers (Sec. 3, Title II,
PD 1869) it also exercises regulatory powers thus:

Sec. 9. Regulatory Power. The Corporation shall maintain a Registry of the affiliated
entities, and shall exercise all the powers, authority and the responsibilities vested in the
Securities and Exchange Commission over such affiliating entities mentioned under the
preceding section, including, but not limited to amendments of Articles of Incorporation and
By-Laws, changes in corporate term, structure, capitalization and other matters concerning
the operation of the affiliated entities, the provisions of the Corporation Code of the
Philippines to the contrary notwithstanding, except only with respect to original incorporation.

PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role is
governmental, which places it in the category of an agency or instrumentality of the Government.
Being an instrumentality of the Government, PAGCOR should be and actually is exempt from local
taxes. Otherwise, its operation might be burdened, impeded or subjected to control by a mere Local
government.

The states have no power by taxation or otherwise, to retard, impede, burden or in any
manner control the operation of constitutional laws enacted by Congress to carry into
 execution the powers vested in the federal government. (MC Culloch v. Marland, 4 Wheat
316, 4 L Ed. 579)

This doctrine emanates from the "supremacy" of the National Government over local governments.

Justice Holmes, speaking for the Supreme Court, made reference to the entire absence of
power on the part of the States to touch, in that way (taxation) at least, the instrumentalities
of the United States (Johnson v. Maryland, 254 US 51) and it can be agreed that no state or
political subdivision can regulate a federal instrumentality in such a way as to prevent it from
consummating its federal responsibilities, or even to seriously burden it in the
accomplishment of them. (Antieau, Modern Constitutional Law, Vol. 2, p. 140, emphasis
supplied)

Otherwise, mere creatures of the State can defeat National policies thru extermination of what local
authorities may perceive to be undesirable activities or enterprise using the power to tax as "a tool
for regulation" (U.S. v. Sanchez, 340 US 42).

The power to tax which was called by Justice Marshall as the "power to destroy" (Mc Culloch v.
Maryland, supra) cannot be allowed to defeat an instrumentality or creation of the very entity which
has the inherent power to wield it.

(e) Petitioners also argue that the Local Autonomy Clause of the Constitution will be violated by P.D.
1869. This is a pointless argument. Article X of the 1987 Constitution (on Local Autonomy) provides:

Sec. 5. Each local government unit shall have the power to create its own source of revenue
and to levy taxes, fees, and other charges subject to such guidelines and limitation as the
congress may provide, consistent with the basic policy on local autonomy. Such taxes, fees
and charges shall accrue exclusively to the local government. (emphasis supplied)

The power of local government to "impose taxes and fees" is always subject to "limitations" which
Congress may provide by law. Since PD 1869 remains an "operative" law until "amended, repealed
or revoked" (Sec. 3, Art. XVIII, 1987 Constitution), its "exemption clause" remains as an exception to
the exercise of the power of local governments to impose taxes and fees. It cannot therefore be
violative but rather is consistent with the principle of local autonomy.

Besides, the principle of local autonomy under the 1987 Constitution simply means
"decentralization" (III Records of the 1987 Constitutional Commission, pp. 435-436, as cited in
Bernas, The Constitution of the Republic of the Philippines, Vol. II, First Ed., 1988, p. 374). It does
not make local governments sovereign within the state or an "imperium in imperio."

Local Government has been described as a political subdivision of a nation or state which is
constituted by law and has substantial control of local affairs. In a unitary system of
government, such as the government under the Philippine Constitution, local governments
can only be an intra sovereign subdivision of one sovereign nation, it cannot be
an imperium in imperio. Local government in such a system can only mean a measure of
decentralization of the function of government. (emphasis supplied)

As to what state powers should be "decentralized" and what may be delegated to local government
units remains a matter of policy, which concerns wisdom. It is therefore a political question. (Citizens
Alliance for Consumer Protection v. Energy Regulatory Board, 162 SCRA 539).
What is settled is that the matter of regulating, taxing or otherwise dealing with gambling is a State
concern and hence, it is the sole prerogative of the State to retain it or delegate it to local
governments.

As gambling is usually an offense against the State, legislative grant or express charter
power is generally necessary to empower the local corporation to deal with the subject. . . .
In the absence of express grant of power to enact, ordinance provisions on this subject
which are inconsistent with the state laws are void. (Ligan v. Gadsden, Ala App. 107 So. 733
Ex-Parte Solomon, 9, Cals. 440, 27 PAC 757 following in re Ah You, 88 Cal. 99, 25 PAC 974,
22 Am St. Rep. 280, 11 LRA 480, as cited in Mc Quinllan Vol. 3 Ibid, p. 548, emphasis
supplied)

Petitioners next contend that P.D. 1869 violates the equal protection clause of the Constitution,
because "it legalized PAGCOR conducted gambling, while most gambling are outlawed together
with prostitution, drug trafficking and other vices" (p. 82, Rollo).

We, likewise, find no valid ground to sustain this contention. The petitioners' posture ignores the
well-accepted meaning of the clause "equal protection of the laws." The clause does not preclude
classification of individuals who may be accorded different treatment under the law as long as the
classification is not unreasonable or arbitrary (Itchong v. Hernandez, 101 Phil. 1155). A law does not
have to operate in equal force on all persons or things to be conformable to Article III, Section 1 of
the Constitution (DECS v. San Diego, G.R. No. 89572, December 21, 1989).

The "equal protection clause" does not prohibit the Legislature from establishing classes of
individuals or objects upon which different rules shall operate (Laurel v. Misa, 43 O.G. 2847). The
Constitution does not require situations which are different in fact or opinion to be treated in law as
though they were the same (Gomez v. Palomar, 25 SCRA 827).

Just how P.D. 1869 in legalizing gambling conducted by PAGCOR is violative of the equal protection
is not clearly explained in the petition. The mere fact that some gambling activities like cockfighting
(P.D 449) horse racing (R.A. 306 as amended by RA 983), sweepstakes, lotteries and races (RA
1169 as amended by B.P. 42) are legalized under certain conditions, while others are prohibited,
does not render the applicable laws, P.D. 1869 for one, unconstitutional.

If the law presumably hits the evil where it is most felt, it is not to be overthrown because
there are other instances to which it might have been applied. (Gomez v. Palomar, 25 SCRA
827)

The equal protection clause of the 14th Amendment does not mean that all occupations
called by the same name must be treated the same way; the state may do what it can to
prevent which is deemed as evil and stop short of those cases in which harm to the few
concerned is not less than the harm to the public that would insure if the rule laid down were
made mathematically exact. (Dominican Hotel v. Arizona, 249 US 2651).

Anent petitioners' claim that PD 1869 is contrary to the "avowed trend of the Cory Government away
from monopolies and crony economy and toward free enterprise and privatization" suffice it to state
that this is not a ground for this Court to nullify P.D. 1869. If, indeed, PD 1869 runs counter to the
government's policies then it is for the Executive Department to recommend to Congress its repeal
or amendment.

The judiciary does not settle policy issues. The Court can only declare what the law is and
not what the law should be. Under our system of government, policy issues are within the
1wphi1
 domain of the political branches of government and of the people themselves as the
repository of all state power. (Valmonte v. Belmonte, Jr., 170 SCRA 256).

On the issue of "monopoly," however, the Constitution provides that:

Sec. 19. The State shall regulate or prohibit monopolies when public interest so requires. No
combinations in restraint of trade or unfair competition shall be allowed. (Art. XII, National
Economy and Patrimony)

It should be noted that, as the provision is worded, monopolies are not necessarily prohibited by the
Constitution. The state must still decide whether public interest demands that monopolies be
regulated or prohibited. Again, this is a matter of policy for the Legislature to decide.

On petitioners' allegation that P.D. 1869 violates Sections 11 (Personality Dignity) 12 (Family) and 13
(Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII and Section 2 (Educational
Values) of Article XIV of the 1987 Constitution, suffice it to state also that these are merely
statements of principles and, policies. As such, they are basically not self-executing, meaning a law
should be passed by Congress to clearly define and effectuate such principles.

In general, therefore, the 1935 provisions were not intended to be self-executing principles
ready for enforcement through the courts. They were rather directives addressed to the
executive and the legislature. If the executive and the legislature failed to heed the directives
of the articles the available remedy was not judicial or political. The electorate could express
their displeasure with the failure of the executive and the legislature through the language of
the ballot. (Bernas, Vol. II, p. 2)

Every law has in its favor the presumption of constitutionality (Yu Cong Eng v. Trinidad, 47 Phil. 387;
Salas v. Jarencio, 48 SCRA 734; Peralta v. Comelec, 82 SCRA 30; Abbas v. Comelec, 179 SCRA
287). Therefore, for PD 1869 to be nullified, it must be shown that there is a clear and unequivocal
breach of the Constitution, not merely a doubtful and equivocal one. In other words, the grounds for
nullity must be clear and beyond reasonable doubt. (Peralta v. Comelec, supra) Those who petition
this Court to declare a law, or parts thereof, unconstitutional must clearly establish the basis for such
a declaration. Otherwise, their petition must fail. Based on the grounds raised by petitioners to
challenge the constitutionality of P.D. 1869, the Court finds that petitioners have failed to overcome
the presumption. The dismissal of this petition is therefore, inevitable. But as to whether P.D. 1869
remains a wise legislation considering the issues of "morality, monopoly, trend to free enterprise,
privatization as well as the state principles on social justice, role of youth and educational values"
being raised, is up for Congress to determine.

As this Court held in Citizens' Alliance for Consumer Protection v. Energy Regulatory Board, 162
SCRA 521

Presidential Decree No. 1956, as amended by Executive Order No. 137 has, in any case, in
its favor the presumption of validity and constitutionality which petitioners Valmonte and the
KMU have not overturned. Petitioners have not undertaken to identify the provisions in the
Constitution which they claim to have been violated by that statute. This Court, however, is
not compelled to speculate and to imagine how the assailed legislation may possibly offend
some provision of the Constitution. The Court notes, further, in this respect that petitioners
have in the main put in question the wisdom, justice and expediency of the establishment of
the OPSF, issues which are not properly addressed to this Court and which this Court may
not constitutionally pass upon. Those issues should be addressed rather to the political
departments of government: the President and the Congress.
Parenthetically, We wish to state that gambling is generally immoral, and this is precisely so when
the gambling resorted to is excessive. This excessiveness necessarily depends not only on the
financial resources of the gambler and his family but also on his mental, social, and spiritual outlook
on life. However, the mere fact that some persons may have lost their material fortunes, mental
control, physical health, or even their lives does not necessarily mean that the same are directly
attributable to gambling. Gambling may have been the antecedent, but certainly not necessarily the
cause. For the same consequences could have been preceded by an overdose of food, drink,
exercise, work, and even sex.

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.

Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Feliciano, Gancayco, Bidin, Sarmiento, Grio-Aquino,
Medialdea, Regalado and Davide, Jr., JJ., concur.

Separate Opinions

PADILLA, J., concurring:

I concur in the result of the learned decision penned by my brother Mr. Justice Paras. This means
that I agree with the decision insofar as it holds that the prohibition, control, and regulation of the
entire activity known as gambling properly pertain to "state policy." It is, therefore, the political
departments of government, namely, the legislative and the executive that should decide on what
government should do in the entire area of gambling, and assume full responsibility to the people for
such policy.

The courts, as the decision states, cannot inquire into the wisdom, morality or expediency of policies
adopted by the political departments of government in areas which fall within their authority, except
only when such policies pose a clear and present danger to the life, liberty or property of the
individual. This case does not involve such a factual situation.

However, I hasten to make of record that I do not subscribe to gambling in any form. It demeans the
human personality, destroys self-confidence and eviscerates one's self-respect, which in the long run
will corrode whatever is left of the Filipino moral character. Gambling has wrecked and will continue
to wreck families and homes; it is an antithesis to individual reliance and reliability as well as
personal industry which are the touchstones of real economic progress and national development.

Gambling is reprehensible whether maintained by government or privatized. The revenues realized

by the government out of "legalized" gambling will, in the long run, be more than offset and negated
by the irreparable damage to the people's moral values.

Also, the moral standing of the government in its repeated avowals against "illegal gambling" is
fatally flawed and becomes untenable when it itself engages in the very activity it seeks to eradicate.

One can go through the Court's decision today and mentally replace the activity referred to therein
as gambling, which is legal only because it is authorized by law and run by the government, with the
activity known as prostitution. Would prostitution be any less reprehensible were it to be authorized
by law, franchised, and "regulated" by the government, in return for the substantial revenues it would
yield the government to carry out its laudable projects, such as infrastructure and social
amelioration? The question, I believe, answers itself. I submit that the sooner the legislative
department outlaws all forms of gambling, as a fundamental state policy, and the sooner the
executive implements such policy, the better it will be for the nation.

G.R. No. 120082 September 11, 1996

MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY, petitioner,

vs.
HON. FERDINAND J. MARCOS, in his capacity as the Presiding Judge of the Regional Trial
Court, Branch 20, Cebu City, THE CITY OF CEBU, represented by its Mayor HON. TOMAS R.
OSMEA, and EUSTAQUIO B. CESA, respondents.

DAVIDE, JR., J.:

For review under Rule 45 of the Rules of Court on a pure question of law are the decision of
22 March 1995 1 of the Regional Trial Court (RTC) of Cebu City, Branch 20, dismissing the
petition for declaratory relief in Civil Case No. CEB-16900 entitled "Mactan Cebu International
Airport Authority vs. City of Cebu", and its order of 4, May 1995 2 denying the motion to reconsider
the decision.

We resolved to give due course to this petition for its raises issues dwelling on the scope of
the taxing power of local government-owned and controlled corporations.

The uncontradicted factual antecedents are summarized in the instant petition as follows:

Petitioner Mactan Cebu International Airport Authority (MCIAA) was created by virtue
of Republic Act No. 6958, mandated to "principally undertake the economical,
efficient and effective control, management and supervision of the Mactan
International Airport in the Province of Cebu and the Lahug Airport in Cebu City, . . .
and such other Airports as may be established in the Province of Cebu . . . (Sec. 3,
RA 6958). It is also mandated to:

a) encourage, promote and develop international and

domestic air traffic in the Central Visayas and
Mindanao regions as a means of making the regions
centers of international trade and tourism, and
accelerating the development of the means of
transportation and communication in the country; and

b) upgrade the services and facilities of the airports

and to formulate internationally acceptable standards
of airport accommodation and service.
Since the time of its creation, petitioner MCIAA enjoyed the privilege of exemption
from payment of realty taxes in accordance with Section 14 of its Charter.

Sec. 14. Tax Exemptions. The authority shall be exempt from

realty taxes imposed by the National Government or any of its
political subdivisions, agencies and instrumentalities . . .

On October 11, 1994, however, Mr. Eustaquio B. Cesa, Officer-in-Charge, Office of

the Treasurer of the City of Cebu, demanded payment for realty taxes on several
parcels of land belonging to the petitioner (Lot Nos. 913-G, 743, 88 SWO, 948-A,
989-A, 474, 109(931), I-M, 918, 919, 913-F, 941, 942, 947, 77 Psd., 746 and 991-A),
located at Barrio Apas and Barrio Kasambagan, Lahug, Cebu City, in the total
amount of P2,229,078.79.

Petitioner objected to such demand for payment as baseless and unjustified,

claiming in its favor the aforecited Section 14 of RA 6958 which exempt it from
payment of realty taxes. It was also asserted that it is an instrumentality of the
government performing governmental functions, citing section 133 of the Local
Government Code of 1991 which puts limitations on the taxing powers of local
government units:

Sec. 133. Common Limitations on the Taxing Powers of Local

Government Units. Unless otherwise provided herein, the exercise
of the taxing powers of provinces, cities, municipalities, and barangay
shall not extend to the levy of the following:

a) . . .

xxx xxx xxx

o) Taxes, fees or charges of any kind on the National

Government, its agencies and instrumentalities, and
local government units. (Emphasis supplied)

Respondent City refused to cancel and set aside petitioner's realty tax account,
insisting that the MCIAA is a government-controlled corporation whose tax exemption
privilege has been withdrawn by virtue of Sections 193 and 234 of the Local
Governmental Code that took effect on January 1, 1992:

Sec. 193. Withdrawal of Tax Exemption Privilege. Unless otherwise provided in

this Code, tax exemptions or incentives granted to, or presently enjoyed by all
persons whether natural or juridical, including government-owned or controlled
corporations, except local water districts, cooperatives duly registered under RA No.
6938, non-stock, and non-profit hospitals and educational institutions, are hereby
withdrawn upon the effectivity of this Code. (Emphasis supplied)
 xxx xxx xxx

Sec. 234. Exemptions from Real Property taxes. . . .

(a) . . .

xxx xxx xxx

(c) . . .

Except as provided herein, any exemption from payment of real

property tax previously granted to, or presently enjoyed by all
persons, whether natural or juridical, including government-owned or
controlled corporations are hereby withdrawn upon the effectivity of
this Code.

As the City of Cebu was about to issue a warrant of levy against the properties of
petitioner, the latter was compelled to pay its tax account "under protest" and
thereafter filed a Petition for Declaratory Relief with the Regional Trial Court of Cebu,
Branch 20, on December 29, 1994. MCIAA basically contended that the taxing
powers of local government units do not extend to the levy of taxes or fees of any
kind on an instrumentality of the national government. Petitioner insisted that while it
is indeed a government-owned corporation, it nonetheless stands on the same
footing as an agency or instrumentality of the national government. Petitioner insisted
that while it is indeed a government-owned corporation, it nonetheless stands on the
same footing as an agency or instrumentality of the national government by the very
nature of its powers and functions.

Respondent City, however, asserted that MACIAA is not an instrumentality of the

government but merely a government-owned corporation performing proprietary
functions As such, all exemptions previously granted to it were deemed withdrawn by
operation of law, as provided under Sections 193 and 234 of the Local Government
Code when it took effect on January 1, 1992. 3

The petition for declaratory relief was docketed as Civil Case No. CEB-16900.

In its decision of 22 March 1995, 4 the trial court dismissed the petition in light of its findings, to
wit:

A close reading of the New Local Government Code of 1991 or RA 7160 provides the
express cancellation and withdrawal of exemption of taxes by government owned
and controlled corporation per Sections after the effectivity of said Code on January
1, 1992, to wit: [proceeds to quote Sections 193 and 234]
 Petitioners claimed that its real properties assessed by respondent City Government
of Cebu are exempted from paying realty taxes in view of the exemption granted
under RA 6958 to pay the same (citing Section 14 of RA 6958).

However, RA 7160 expressly provides that "All general and special laws, acts, city
charters, decress [sic], 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." ([f], Section 534, RA
7160).

With that repealing clause in RA 7160, it is safe to infer and state that the tax
exemption provided for in RA 6958 creating petitioner had been expressly repealed
by the provisions of the New Local Government Code of 1991.

So that petitioner in this case has to pay the assessed realty tax of its properties
effective after January 1, 1992 until the present.

This Court's ruling finds expression to give impetus and meaning to the overall
objectives of the New Local Government Code of 1991, RA 7160. "It is hereby
declared the policy of the State that the territorial and political subdivisions of the
State shall enjoy genuine and meaningful local autonomy to enable them to attain
their fullest development as self-reliant communities and make them more effective
partners in the attainment of national goals. Towards this end, the State shall provide
for a more responsive and accountable local government structure instituted through
a system of decentralization whereby local government units shall be given more
powers, authority, responsibilities, and resources. The process of decentralization
shall proceed from the national government to the local government units. . . . 5

Its motion for reconsideration having been denied by the trial court in its 4 May 1995 order,
the petitioner filed the instant petition based on the following assignment of errors:

I RESPONDENT JUDGE ERRED IN FAILING TO RULE THAT THE

PETITIONER IS VESTED WITH GOVERNMENT POWERS AND
FUNCTIONS WHICH PLACE IT IN THE SAME CATEGORY AS AN
INSTRUMENTALITY OR AGENCY OF THE GOVERNMENT.

II RESPONDENT JUDGE ERRED IN RULING THAT PETITIONER IS

LIABLE TO PAY REAL PROPERTY TAXES TO THE CITY OF CEBU.

Anent the first assigned error, the petitioner asserts that although it is a government-owned
or controlled corporation it is mandated to perform functions in the same category as an
instrumentality of Government. An instrumentality of Government is one created to perform
governmental functions primarily to promote certain aspects of the economic life of the
people. 6 Considering its task "not merely to efficiently operate and manage the Mactan-Cebu
International Airport, but more importantly, to carry out the Government policies of promoting and
developing the Central Visayas and Mindanao regions as centers of international trade and
tourism, and accelerating the development of the means of transportation and communication in
the country," 7 and that it is an attached agency of the Department of Transportation and
Communication (DOTC), 8 the petitioner "may stand in [sic] the same footing as an agency or
instrumentality of the national government." Hence, its tax exemption privilege under Section 14
of its Charter "cannot be considered withdrawn with the passage of the Local Government Code
of 1991 (hereinafter LGC) because Section 133 thereof specifically states that the taxing powers
of local government units shall not extend to the levy of taxes of fees or charges of any kind on
the national government its agencies and instrumentalities."

As to the second assigned error, the petitioner contends that being an instrumentality of the
National Government, respondent City of Cebu has no power nor authority to impose realty
taxes upon it in accordance with the aforesaid Section 133 of the LGC, as explained
in Basco vs. Philippine Amusement and Gaming Corporation; 9

Local governments have no power to tax instrumentalities of the National Government.

PAGCOR is a government owned or controlled corporation with an original character, PD
1869. All its shares of stock are owned by the National Government. . . .

PAGCOR has a dual role, to operate and regulate gambling casinos. The latter joke
is governmental, which places it in the category of an agency or instrumentality of the
Government. Being an instrumentality of the Government, PAGCOR should be and
actually is exempt from local taxes. Otherwise, its operation might be burdened,
impeded or subjected to control by a mere Local government.

The states have no power by taxation or otherwise, to retard, impede, burden or in

any manner control the operation of constitutional laws enacted by Congress to carry
into execution the powers vested in the federal government. (McCulloch v. Maryland,
4 Wheat 316, 4 L Ed. 579).

This doctrine emanates from the "supremacy" of the National Government over local
government.

Justice Holmes, speaking for the Supreme Court, make references to the entire
absence of power on the part of the States to touch, in that way (taxation) at least,
the instrumentalities of the United States (Johnson v. Maryland, 254 US 51) and it
can be agreed that no state or political subdivision can regulate a federal
instrumentality in such a way as to prevent it from consummating its federal
responsibilities, or even to seriously burden it in the accomplishment of them.
(Antieau Modern Constitutional Law, Vol. 2, p. 140)

Otherwise mere creature of the State can defeat National policies thru extermination
of what local authorities may perceive to be undesirable activities or enterprise using
the power to tax as "a toll for regulation" (U.S. v. Sanchez, 340 US 42). The power to
tax which was called by Justice Marshall as the "power to destroy" (McCulloch v.
Maryland, supra) cannot be allowed to defeat an instrumentality or creation of the
very entity which has the inherent power to wield it. (Emphasis supplied)
It then concludes that the respondent Judge "cannot therefore correctly say that the
questioned provisions of the Code do not contain any distinction between a governmental
function as against one performing merely proprietary ones such that the exemption privilege
withdrawn under the said Code would apply to allgovernment corporations." For it is clear
from Section 133, in relation to Section 234, of the LGC that the legislature meant to
exclude instrumentalities of the national government from the taxing power of the local
government units.

In its comment respondent City of Cebu alleges that as local a government unit and a
political subdivision, it has the power to impose, levy, assess, and collect taxes within its
jurisdiction. Such power is guaranteed by the Constitution 10 and enhanced further by the LGC.
While it may be true that under its Charter the petitioner was exempt from the payment of realty
taxes, 11 this exemption was withdrawn by Section 234 of the LGC. In response to the petitioner's
claim that such exemption was not repealed because being an instrumentality of the National
Government, Section 133 of the LGC prohibits local government units from imposing taxes, fees,
or charges of any kind on it, respondent City of Cebu points out that the petitioner is likewise a
government-owned corporation, and Section 234 thereof does not distinguish between
government-owned corporation, and Section 234 thereof does not distinguish between
government-owned corporation, and Section 234 thereof does not distinguish between
government-owned or controlled corporations performing governmental and purely proprietary
functions. Respondent city of Cebu urges this the Manila International Airport Authority is a
governmental-owned corporation, 12 and to reject the application of Basco because it was
"promulgated . . . before the enactment and the singing into law of R.A. No. 7160," and was not,
therefore, decided "in the light of the spirit and intention of the framers of the said law.

As a general rule, the power to tax is an incident of sovereignty and is unlimited in its range,
acknowledging in its very nature no limits, so that security against its abuse is to be found
only in the responsibility of the legislature which imposes the tax on the constituency who are
to pay it. Nevertheless, effective limitations thereon may be imposed by the people through
their Constitutions. 13 Our Constitution, for instance, provides that the rule of taxation shall be
uniform and equitable and Congress shall evolve a progressive system of taxation. 14 So potent
indeed is the power that it was once opined that "the power to tax involves the power to
destroy." 15Verily, taxation is a destructive power which interferes with the personal and property
for the support of the government. Accordingly, tax statutes must be construed strictly against the
government and liberally in favor of the taxpayer. 16 But since taxes are what we pay for civilized
society, 17 or are the lifeblood of the nation, the law frowns against exemptions from taxation and
statutes granting tax exemptions are thus construed strictissimi juris against the taxpayers and
liberally in favor of the taxing authority. 18 A claim of exemption from tax payment must be clearly
shown and based on language in the law too plain to be mistaken. 19 Elsewise stated, taxation is
the rule, exemption therefrom is the exception. 20 However, if the grantee of the exemption is a
political subdivision or instrumentality, the rigid rule of construction does not apply because the
practical effect of the exemption is merely to reduce the amount of money that has to be handled
by the government in the course of its operations. 21

The power to tax is primarily vested in the Congress; however, in our jurisdiction, it may be
exercised by local legislative bodies, no longer merely by virtue of a valid delegation as
before, but pursuant to direct authority conferred by Section 5, Article X of the
Constitution. 22 Under the latter, the exercise of the power may be subject to such guidelines and
limitations as the Congress may provide which, however, must be consistent with the basic policy
of local autonomy.

There can be no question that under Section 14 of R.A. No. 6958 the petitioner is exempt
from the payment of realty taxes imposed by the National Government or any of its political
subdivisions, agencies, and instrumentalities. Nevertheless, since taxation is the rule and
exemption therefrom the exception, the exemption may thus be withdrawn at the pleasure of
the taxing authority. The only exception to this rule is where the exemption was granted to
private parties based on material consideration of a mutual nature, which then becomes
contractual and is thus covered by the non-impairment clause of the Constitution. 23

The LGC, enacted pursuant to Section 3, Article X of the constitution provides for the
exercise by local government units of their power to tax, the scope thereof or its limitations,
and the exemption from taxation.

Section 133 of the LGC prescribes the common limitations on the taxing powers of local
government units as follows:

Sec. 133. Common Limitations on the Taxing Power of Local Government Units.
Unless otherwise provided herein, the exercise of the taxing powers of provinces,
cities, municipalities, and barangays shall not extend to the levy of the following:

(a) Income tax, except when levied on banks and other financial
institutions;

(b) Documentary stamp tax;

(c) Taxes on estates, "inheritance, gifts, legacies and other

acquisitions mortis causa, except as otherwise provided herein

(d) Customs duties, registration fees of vessels and wharfage on

wharves, tonnage dues, and all other kinds of customs fees charges
and dues except wharfage on wharves constructed and maintained
by the local government unit concerned:

(e) Taxes, fees and charges and other imposition upon goods carried
into or out of, or passing through, the territorial jurisdictions of local
government units in the guise or charges for wharfages, tolls for
bridges or otherwise, or other taxes, fees or charges in any form
whatsoever upon such goods or merchandise;

(f) Taxes fees or charges on agricultural and aquatic products when

sold by marginal farmers or fishermen;
 (g) Taxes on business enterprise certified to be the Board of
Investment as pioneer or non-pioneer for a period of six (6) and four
(4) years, respectively from the date of registration;

(h) Excise taxes on articles enumerated under the National Internal

Revenue Code, as amended, and taxes, fees or charges on
petroleum products;

(i) Percentage or value added tax (VAT) on sales, barters or

exchanges or similar transactions on goods or services except as
otherwise provided herein;

(j) Taxes on the gross receipts of transportation contractor and person

engage in the transportation of passengers of freight by hire and
common carriers by air, land, or water, except as provided in this
code;

(k) Taxes on premiums paid by ways reinsurance or retrocession;

(l) Taxes, fees, or charges for the registration of motor vehicles and
for the issuance of all kinds of licenses or permits for the driving of
thereof, except, tricycles;

(m) Taxes, fees, or other charges on Philippine product actually

exported, except as otherwise provided herein;

(n) Taxes, fees, or charges, on Countryside and Barangay Business

Enterprise and Cooperatives duly registered under R.A. No. 6810
and Republic Act Numbered Sixty nine hundred thirty-eight (R.A. No.
6938) otherwise known as the "Cooperative Code of the Philippines;
and

(o) TAXES, FEES, OR CHARGES OF ANY KIND ON THE

NATIONAL GOVERNMENT, ITS AGENCIES AND
INSTRUMENTALITIES, AND LOCAL GOVERNMENT UNITS.
(emphasis supplied)

Needless to say the last item (item o) is pertinent in this case. The "taxes, fees or charges"
referred to are "of any kind", hence they include all of these, unless otherwise provided by
the LGC. The term "taxes" is well understood so as to need no further elaboration, especially
in the light of the above enumeration. The term "fees" means charges fixed by law or
Ordinance for the regulation or inspection of business activity, 24while "charges" are pecuniary
liabilities such as rents or fees against person or property. 25

Among the "taxes" enumerated in the LGC is real property tax, which is governed by Section
232. It reads as follows:
 Sec. 232. Power to Levy Real Property Tax. A province or city or a municipality
within the Metropolitan Manila Area may levy on an annual ad valorem tax on real
property such as land, building, machinery and other improvements not hereafter
specifically exempted.

Section 234 of LGC provides for the exemptions from payment of real property taxes and
withdraws previous exemptions therefrom granted to natural and juridical persons, including
government owned and controlled corporations, except as provided therein. It provides:

Sec. 234. Exemptions from Real Property Tax. The following are exempted from
payment of the real property tax:

(a) Real property owned by the Republic of the Philippines or any of

its political subdivisions except when the beneficial use thereof had
been granted, for reconsideration or otherwise, to a taxable person;

(b) Charitable institutions, churches, parsonages or convents

appurtenants thereto, mosques nonprofits or religious cemeteries and
all lands, building and improvements actually, directly, and exclusively
used for religious charitable or educational purposes;

(c) All machineries and equipment that are actually, directly and
exclusively used by local water districts and government-owned or
controlled corporations engaged in the supply and distribution of
water and/or generation and transmission of electric power;

(d) All real property owned by duly registered cooperatives as

provided for under R.A. No. 6938; and;

(e) Machinery and equipment used for pollution control and

environmental protection.

Except as provided herein, any exemptions from payment of real

property tax previously granted to or presently enjoyed by, all persons
whether natural or juridical, including all government owned or
controlled corporations are hereby withdrawn upon the effectivity of
his Code.

These exemptions are based on the ownership, character, and use of the property. Thus;

(a) Ownership Exemptions. Exemptions from real property taxes on

the basis of ownership are real properties owned by: (i) the Republic,
(ii) a province, (iii) a city, (iv) a municipality, (v) a barangay, and (vi)
registered cooperatives.
 (b) Character Exemptions. Exempted from real property taxes on the
basis of their character are: (i) charitable institutions, (ii) houses and
temples of prayer like churches, parsonages or convents appurtenant
thereto, mosques, and (iii) non profit or religious cemeteries.

(c) Usage exemptions. Exempted from real property taxes on the

basis of the actual, direct and exclusive use to which they are
devoted are: (i) all lands buildings and improvements which are
actually, directed and exclusively used for religious, charitable or
educational purpose; (ii) all machineries and equipment actually,
directly and exclusively used or by local water districts or by
government-owned or controlled corporations engaged in the supply
and distribution of water and/or generation and transmission of
electric power; and (iii) all machinery and equipment used for
pollution control and environmental protection.

To help provide a healthy environment in the midst of the modernization of the

country, all machinery and equipment for pollution control and environmental
protection may not be taxed by local governments.

2. Other Exemptions Withdrawn. All other exemptions previously

granted to natural or juridical persons including government-owned or
controlled corporations are withdrawn upon the effectivity of the
Code. 26

Section 193 of the LGC is the general provision on withdrawal of tax exemption privileges. It
provides:

Sec. 193. Withdrawal of Tax Exemption Privileges. Unless otherwise provided in

this code, tax exemptions or incentives granted to or presently enjoyed by all
persons, whether natural or juridical, including government-owned, or controlled
corporations, except local water districts, cooperatives duly registered under R.A.
6938, non stock and non profit hospitals and educational constitutions, are hereby
withdrawn upon the effectivity of this Code.

On the other hand, the LGC authorizes local government units to grant tax exemption
privileges. Thus, Section 192 thereof provides:

Sec. 192. Authority to Grant Tax Exemption Privileges. Local government units
may, through ordinances duly approved, grant tax exemptions, incentives or reliefs
under such terms and conditions as they may deem necessary.

The foregoing sections of the LGC speaks of: (a) the limitations on the taxing powers of local
government units and the exceptions to such limitations; and (b) the rule on tax exemptions
and the exceptions thereto. The use of exceptions of provisos in these section, as shown by
the following clauses:
 (1) "unless otherwise provided herein" in the opening paragraph of
Section 133;

(2) "Unless otherwise provided in this Code" in section 193;

(3) "not hereafter specifically exempted" in Section 232; and

(4) "Except as provided herein" in the last paragraph of Section 234

initially hampers a ready understanding of the sections. Note, too, that the aforementioned
clause in section 133 seems to be inaccurately worded. Instead of the clause "unless
otherwise provided herein," with the "herein" to mean, of course, the section, it should have
used the clause "unless otherwise provided in this Code." The former results in absurdity
since the section itself enumerates what are beyond the taxing powers of local government
units and, where exceptions were intended, the exceptions were explicitly indicated in the
text. For instance, in item (a) which excepts the income taxes "when livied on banks and
other financial institutions", item (d) which excepts "wharfage on wharves constructed and
maintained by the local government until concerned"; and item (1) which excepts taxes, fees,
and charges for the registration and issuance of license or permits for the driving of
"tricycles". It may also be observed that within the body itself of the section, there are
exceptions which can be found only in other parts of the LGC, but the section
interchangeably uses therein the clause "except as otherwise provided herein" as in items (c)
and (i), or the clause "except as otherwise provided herein" as in items (c) and (i), or the
clause "excepts as provided in this Code" in item (j). These clauses would be obviously
unnecessary or mere surplus-ages if the opening clause of the section were" "Unless
otherwise provided in this Code" instead of "Unless otherwise provided herein". In any event,
even if the latter is used, since under Section 232 local government units have the power to
levy real property tax, except those exempted therefrom under Section 234, then Section
232 must be deemed to qualify Section 133.

Thus, reading together Section 133, 232 and 234 of the LGC, we conclude that as a general
rule, as laid down in Section 133 the taxing powers of local government units cannot extend
to the levy of inter alia, "taxes, fees, and charges of any kind of the National Government, its
agencies and instrumentalties, and local government units"; however, pursuant to Section
232, provinces, cities, municipalities in the Metropolitan Manila Area may impose the real
property tax except on, inter alia, "real property owned by the Republic of the Philippines or
any of its political subdivisions except when the beneficial used thereof has been granted, for
consideration or otherwise, to a taxable person", as provided in item (a) of the first paragraph
of Section 234.

As to tax exemptions or incentives granted to or presently enjoyed by natural or juridical

persons, including government-owned and controlled corporations, Section 193 of the LGC
prescribes the general rule, viz., they are withdrawn upon the effectivity of the LGC, except
upon the effectivity of the LGC, except those granted to local water districts, cooperatives
duly registered under R.A. No. 6938, non stock and non-profit hospitals and educational
institutions, and unless otherwise provided in the LGC. The latter proviso could refer to
Section 234, which enumerates the properties exempt from real property tax. But the last
paragraph of Section 234 further qualifies the retention of the exemption in so far as the real
property taxes are concerned by limiting the retention only to those enumerated there-in; all
others not included in the enumeration lost the privilege upon the effectivity of the LGC.
Moreover, even as the real property is owned by the Republic of the Philippines, or any of its
political subdivisions covered by item (a) of the first paragraph of Section 234, the exemption
is withdrawn if the beneficial use of such property has been granted to taxable person for
consideration or otherwise.

Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the
LGC, exemptions from real property taxes granted to natural or juridical persons, including
government-owned or controlled corporations, except as provided in the said section, and
the petitioner is, undoubtedly, a government-owned corporation, it necessarily follows that its
exemption from such tax granted it in Section 14 of its charter, R.A. No. 6958, has been
withdrawn. Any claim to the contrary can only be justified if the petitioner can seek refuge
under any of the exceptions provided in Section 234, but not under Section 133, as it now
asserts, since, as shown above, the said section is qualified by Section 232 and 234.

In short, the petitioner can no longer invoke the general rule in Section 133 that the taxing
powers of the local government units cannot extend to the levy of:

(o) taxes, fees, or charges of any kind on the National Government,

its agencies, or instrumentalities, and local government units.

I must show that the parcels of land in question, which are real property, are any one of
those enumerated in Section 234, either by virtue of ownership, character, or use of the
property. Most likely, it could only be the first, but not under any explicit provision of the said
section, for one exists. In light of the petitioner's theory that it is an "instrumentality of the
Government", it could only be within be first item of the first paragraph of the section by
expanding the scope of the terms Republic of the Philippines" to
embrace . . . . . . "instrumentalities" and "agencies" or expediency we quote:

(a) real property owned by the Republic of the Philippines, or any of

the Philippines, or any of its political subdivisions except when the
beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person.

This view does not persuade us. In the first place, the petitioner's claim that it is an
instrumentality of the Government is based on Section 133(o), which expressly mentions the
word "instrumentalities"; and in the second place it fails to consider the fact that the
legislature used the phrase "National Government, its agencies and instrumentalities" "in
Section 133(o),but only the phrase "Republic of the Philippines or any of its political
subdivision "in Section 234(a).

The terms "Republic of the Philippines" and "National Government" are not interchangeable.
The former is boarder and synonymous with "Government of the Republic of the Philippines"
which the Administrative Code of the 1987 defines as the "corporate governmental entity
though which the functions of the government are exercised through at the Philippines,
including, saves as the contrary appears from the context, the various arms through which
political authority is made effective in the Philippines, whether pertaining to the autonomous
reason, the provincial, city, municipal or barangay subdivision or other forms of local
government." 27 These autonomous regions, provincial, city, municipal or barangay subdivisions"
are the political subdivision. 28

On the other hand, "National Government" refers "to the entire machinery of the central
government, as distinguished from the different forms of local Governments." 29 The National
Government then is composed of the three great departments the executive, the legislative and
the judicial. 30

An "agency" of the Government refers to "any of the various units of the Government,
including a department, bureau, office instrumentality, or government-owned or controlled
corporation, or a local government or a distinct unit therein;" 31 while an "instrumentality" refers
to "any agency of the National Government, not integrated within the department framework,
vested with special functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds, and enjoying operational autonomy; usually through a
charter. This term includes regulatory agencies, chartered institutions and government-owned
and controlled corporations". 32

If Section 234(a) intended to extend the exception therein to the withdrawal of the exemption
from payment of real property taxes under the last sentence of the said section to the
agencies and instrumentalities of the National Government mentioned in Section 133(o),
then it should have restated the wording of the latter. Yet, it did not Moreover, that Congress
did not wish to expand the scope of the exemption in Section 234(a) to include real property
owned by other instrumentalities or agencies of the government including government-
owned and controlled corporations is further borne out by the fact that the source of this
exemption is Section 40(a) of P.D. No. 646, otherwise known as the Real Property Tax Code,
which reads:

Sec 40. Exemption from Real Property Tax. The exemption shall be as follows:

(a) Real property owned by the Republic of the

Philippines or any of its political subdivisions and any
government-owned or controlled corporations so
exempt by is charter: Provided, however, that this
exemption shall not apply to real property of the
above mentioned entities the beneficial use of which
has been granted, for consideration or otherwise, to a
taxable person.

Note that as a reproduced in Section 234(a), the phrase "and any government-owned or
controlled corporation so exempt by its charter" was excluded. The justification for this
restricted exemption in Section 234(a) seems obvious: to limit further tax exemption
privileges, specially in light of the general provision on withdrawal of exemption from
payment of real property taxes in the last paragraph of property taxes in the last paragraph
of Section 234. These policy considerations are consistent with the State policy to ensure
autonomy to local governments 33 and the objective of the LGC that they enjoy genuine and
meaningful local autonomy to enable them to attain their fullest development as self-reliant
communities and make them effective partners in the attainment of national goals. 34 The power to
tax is the most effective instrument to raise needed revenues to finance and support myriad
activities of local government units for the delivery of basic services essential to the promotion of
the general welfare and the enhancement of peace, progress, and prosperity of the people. It
may also be relevant to recall that the original reasons for the withdrawal of tax exemption
privileges granted to government-owned and controlled corporations and all other units of
government were that such privilege resulted in serious tax base erosion and distortions in the tax
treatment of similarly situated enterprises, and there was a need for this entities to share in the
requirements of the development, fiscal or otherwise, by paying the taxes and other charges due
from them. 35

The crucial issues then to be addressed are: (a) whether the parcels of land in question
belong to the Republic of the Philippines whose beneficial use has been granted to the
petitioner, and (b) whether the petitioner is a "taxable person".

Section 15 of the petitioner's Charter provides:

Sec. 15. Transfer of Existing Facilities and Intangible Assets. All existing public
airport facilities, runways, lands, buildings and other properties, movable or
immovable, belonging to or presently administered by the airports, and all assets,
powers, rights, interests and privileges relating on airport works, or air operations,
including all equipment which are necessary for the operations of air navigation,
acrodrome control towers, crash, fire, and rescue facilities are hereby transferred to
the Authority: Provided however, that the operations control of all equipment
necessary for the operation of radio aids to air navigation, airways communication,
the approach control office, and the area control center shall be retained by the Air
Transportation Office. No equipment, however, shall be removed by the Air
Transportation Office from Mactan without the concurrence of the authority. The
authority may assist in the maintenance of the Air Transportation Office equipment.

The "airports" referred to are the "Lahug Air Port" in Cebu City and the "Mactan International
AirPort in the Province of Cebu", 36 which belonged to the Republic of the Philippines, then
under the Air Transportation Office (ATO). 37

It may be reasonable to assume that the term "lands" refer to "lands" in Cebu City then
administered by the Lahug Air Port and includes the parcels of land the respondent City of
Cebu seeks to levy on for real property taxes. This section involves a "transfer" of the "lands"
among other things, to the petitioner and not just the transfer of the beneficial use thereof,
with the ownership being retained by the Republic of the Philippines.

This "transfer" is actually an absolute conveyance of the ownership thereof because the
petitioner's authorized capital stock consists of, inter alia "the value of such real estate
 owned and/or administered by the airports." 38 Hence, the petitioner is now the owner of the
land in question and the exception in Section 234(c) of the LGC is inapplicable.

Moreover, the petitioner cannot claim that it was never a "taxable person" under its Charter. It
was only exempted from the payment of real property taxes. The grant of the privilege only in
respect of this tax is conclusive proof of the legislative intent to make it a taxable person
subject to all taxes, except real property tax.

Finally, even if the petitioner was originally not a taxable person for purposes of real property
tax, in light of the forgoing disquisitions, it had already become even if it be conceded to be
an "agency" or "instrumentality" of the Government, a taxable person for such purpose in
view of the withdrawal in the last paragraph of Section 234 of exemptions from the payment
of real property taxes, which, as earlier adverted to, applies to the petitioner.

Accordingly, the position taken by the petitioner is untenable. Reliance on Basco

vs. Philippine Amusement and Gaming Corporation 39 is unavailing since it was decided before
the effectivity of the LGC. Besides, nothing can prevent Congress from decreeing that even
instrumentalities or agencies of the government performing governmental functions may be
subject to tax. Where it is done precisely to fulfill a constitutional mandate and national policy, no
one can doubt its wisdom.

WHEREFORE, the instant petition is DENIED. The challenged decision and order of the
Regional Trial Court of Cebu, Branch 20, in Civil Case No. CEB-16900 are AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 115044 January 27, 1995

HON. ALFREDO S. LIM, in his capacity as Mayor of Manila, and the City of Manila, petitioners,
vs.
HON. FELIPE G. PACQUING, as Judge, branch 40, Regional Trial Court of Manila and
ASSOCIATED CORPORATION, respondents.

G.R. No. 117263 January 27, 1995

TEOFISTO GUINGONA, JR. and DOMINADOR R. CEPEDA, petitioners,

vs.
HON. VETINO REYES and ASSOCIATED DEVELOPMENT CORPORATION, respondents.

PADILLA, J.:
These two (2) cases which are inter-related actually involve simple issues. if these issues have
apparently become complicated, it is not by reason of their nature because of the events
and dramatis personae involved.

The petition in G.R. No. 115044 was dismissed by the First Division of this Court on 01 September
1994 based on a finding that there was "no abuse of discretion, much less lack of or excess of
jurisdiction, on the part of respondent judge [Pacquing]", in issuing the questioned orders. Judge
Pacquing had earlier issued in Civil Case No. 88-45660, RTC of Manila, Branch 40, the following
orders which were assailed by the Mayor of the City of Manila, Hon. Alfredo S. Lim, in said G.R. No.
115044:

a. order dated 28 March 1994 directing Manila mayor Alfredo S. Lim to issue
the permit/license to operate the jai-alai in favor of Associated Development
Corporation (ADC).

b. order dated 11 April 1994 directing mayor Lim to explain why he should not be
cited for contempt for non-compliance with the order dated 28 March 1994.

c. order dated 20 April 1994 reiterating the previous order directing Mayor Lim to
immediately issue the permit/license to Associated Development Corporation (ADC).

The order dated 28 march 1994 was in turn issued upon motion by ADC for execution of a final
judgment rendered on 9 September 1988 which ordered the Manila Mayor to immediately issue to
ADC the permit/licenseto operate the jai-alai in Manila, under Manila Ordinance No. 7065.

On 13 September 1994, petitioner Guingona (as executive secretary) issued a directive to then
chairman of the Games and Amusements Board (GAB) Francisco R. Sumulong, jr. to hold in
abeyance the grant of authority, or if any had been issued, to withdraw such grant of authority, to
Associated Development Corporation to operate the jai-alai in the City of Manila, until the following
legal questions are properly resolved:

1. Whether P.D. 771 which revoked all existing Jai-Alai franchisers issued by local
governments as of 20 August 1975 is unconstitutional.

2. Assuming that the City of Manila had the power on 7 September 1971 to issue a
Jai-Alai franchise to Associated Development Corporation, whether the franchise
granted is valied considering that the franchise has no duration, and appears to be
granted in perpetuity.

3. Whether the City of Manila had the power to issue a Jai-Alai franchise to
Associated Development Corporation on 7 September 1971 in view of executive
Order No. 392 dated 1 January 1951 which transferred from local governments to the
Games and Amusements Board the power to regulate Jai-Alai. 1

On 15 September 1994, respondent Associated Development Corporation (ADC) filed a petition for
prohibition, mandamus, injunction and damages with prayer for temporary restraining order and/or
writ of preliminary injunction in the Regional Trial Court of Manila against petitioner Guingona and
then GAB chairman Sumulong, docketed as Civil Case No. 94-71656, seeking to prevent GAB from
withdrawing the provisional authority that had earlier been granted to ADC. On the same day, the
RTC of Manila, Branch 4, through presiding Judge Vetino Reyes, issued a temporary restraining
order enjoining the GAB from withdrawing ADC's provisional authority. This temporary restraining
order was converted into a writ of preliminary injunction upon ADC's posting of a bond in the amount
of P2,000,000.00. 2

Subsequently, also in G.R. No. 115044, the Republic of the Philippines, through the Games and
Amusements Board, filed a "Motion for Intervention; for Leave to File a Motion for reconsideration in
Intervention; and to Refer the case to the Court En Banc" and later a "Motion for Leave to File
Supplemental Motion for Reconsideration-in-Intervention and to Admit Attached Supplemental
Motion for Reconsideration-in-Intervention".

In an En Banc Resolution dated 20 September 1994, this Court referred G.R. No. 115044 to the
Court En Bancand required the respondents therein to comment on the aforementioned motions.

Meanwhile, Judge Reyes on 19 October 1994 issued another order, this time, granting ADC a writ of
preliminary mandatory injunction against Guingona and GAB to compel them to issue in favor of
ADC the authority to operate jai-alai.

Guingona, as executive secretary, and Dominador Cepeda, Jr. as the new GAB chairman, then filed
the petition in G.R. No. 117263 assailing the abovementioned orders of respondent Judge Vetino
Reyes.

On 25 October 1994, in G.R. No. 117263, this Court granted petitioner's motion for leave to file
supplemental petition and to admit attached supplemental petition with urgent prayer for restraining
order. The Court further required respondents to file their comment on the petition and supplemental
petition with urgent prayer for restraining order. The Court likewise set the case and all incidents
thereof for hearing on 10 November 1994.

At the hearing on 10 November 1994, the issues to be resolved were formulated by the Court as
follows:

1. whether or not intervention by the Republic of the Philippines at this stage of the
proceedings is proper;

2. assuming such intervention is proper, whether or not the Associated Development

Corporation has a valid and subsisting franchise to maintain and operate the jai-alai;

3. whether or not there was grave abuse of discretion committed by respondent

Judge Reyes in issuing the aforementioned temporary restraining order (later writ of
preliminary injunction); and

4. whether or not there was grave abuse of discretion committed by respondent

Judge Reyes in issuing the aforementioned writ of preliminary mandatory injunction.
On the issue of the propriety of the intervention by the Republic of the Philippines, a question was
raised during the hearing on 10 November 1994 as to whether intervention in G.R. No. 115044 was
the proper remedy for the national government to take in questioning the existence of a valid ADC
franchise to operate the jai-alai or whether a separate action for quo warranto under Section 2, Rule
66 of the Rules of Court was the proper remedy.

We need not belabor this issue since counsel for respondent ADC agreed to the suggestion that this
Court once and for all settle all substantive issues raised by the parties in these cases. Moreover,
this Court can consider the petition filed in G.R. No. 117263 as one for quo warranto which is within
the original jurisdiction of the Court under section 5(1), Article VIII of the Constitution. 3

On the propriety of intervention by the Republic, however, it will be recalled that this Court in Director
of Lands v. Court of Appeals (93 SCRA 238) allowed intervention even beyond the period prescribed
in Section 2 Rule 12 of the Rules of Court. The Court ruled in said case that a denial of the motions
for intervention would "lead the Court to commit an act of injustice to the movants, to their
successor-in-interest and to all purchasers for value and in good faith and thereby open the door to
fraud, falsehood and misrepresentation, should intervenors' claim be proven to be true."

In the present case, the resulting injustice and injury, should the national government's allegations
be proven correct, are manifest, since the latter has squarely questioned the very existence of a
valid franchise to maintain and operate the jai-alai (which is a gambling operation) in favor of ADC.
As will be more extensively discussed later, the national government contends that Manila
Ordinance No. 7065 which purported to grant to ADC a franchise to conduct jai-alai operations is
void and ultra vires since Republic Act No. 954, approved on 20 June 1953, or very much earlier
than said Ordinance No. 7065, the latter approved 7 September 1971, in Section 4 thereof, requires
a legislative franchise, not a municipal franchise, for the operation of jai-alai. Additionally, the
national government argues that even assuming, arguendo, that the abovementioned ordinance is
valid, ADC's franchise was nonetheless effectively revoked by Presidential decree No. 771, issued
on 20 August 1975, Sec. 3 of which expressly revoked all existing franchises and permits to operate
all forms of gambling facilities (including the jai-alai) issued by local governments.

On the other hand, ADC's position is that Ordinance No. 7065 was validly enacted by the City of
Manila pursuant to its delegated powers under it charter, Republic Act No. 409. ADC also squarely
assails the constitutionality of PD No. 771 as violative of the equal protection and non-impairment
clauses of the Constitution. In this connection, counsel for ADC contends that this Court should
really rule on the validity of PD No. 771 to be able to determine whether ADC continues to possess a
valid franchise.

It will undoubtedly be a grave injustice to both parties in this case if this Court were to shirk from
ruling on the issue of constitutionality of PD No. 771. Such issue has, in our view, become the
very lis mota in resolving the present controversy, in view of ADC's insistence that it was granted a
valid and legal franchise by Ordinance No. 7065 to operate the jai-alai.

The time-honored doctrine is that all laws (PD No. 771 included) are presumed valid and
constitutional until or unless otherwise ruled by this Court. Not only this; Article XVIII Section 3 of the
Constitution states:
 Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of
instructions and other executive issuances not inconsistent with this Constitution
shall remain operative until amended, repealed or revoked.

There is nothing on record to show or even suggest that PD No. 771 has been repealed, altered or
amended by any subsequent law or presidential issuance (when the executive still exercised
legislative powers).

Neither can it be tenably stated that the issue of the continued existence of ADC's franchise by
reason of the unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for the decision of
the Court's First Division in said case, aside from not being final, cannot have the effect of nullifying
PD No. 771 as unconstitutional, since only the Court En Banc has that power under Article VIII,
Section 4(2) of the Constitution. 4

And on the question of whether or not the government is estopped from contesting ADC's
possession of a valid franchise, the well-settled rule is that the State cannot be put in estoppel by the
mistakes or errors, if any, of its officials or agents (Republic v. Intermediate Appellate Court, 209
SCRA 90)

Consequently, in the light of the foregoing expostulation, we conclude that the republic (in contra
distinction to the City of Manila) may be allowed to intervene in G.R. No. 115044. The Republic is
intervening in G.R. No. 115044 in the exercise, not of its business or proprietary functions, but in the
exercise of its governmental functions to protect public morals and promote the general welfare.

II

Anent the question of whether ADC has a valid franchise to operate the Jai-Alai de Manila, a
statement of the pertinent laws is in order.

1. The Charter of the City of Manila was enacted by Congress on 18 June 1949. Section 18 thereof
provides:

Sec. 18. Legislative Powers. The Municipal Board shall have the following
legislative powers:

xxx xxx xxx

(jj) To tax, license, permit and regulate wagers or betting by the public on boxing,
sipa, bowling, billiards, pools, horse and dog races, cockpits, jai-alai, roller or ice-
skating on any sporting or athletic contests, as well as grant exclusive rights to
establishments for this purpose, notwithstanding any existing law to the contrary.

2. On 1 January 1951, Executive Order No. 392 was issued transferring the authority to regulate jai-
alais from local government to the Games and Amusements Board (GAB).
3. On 20 June 1953, Congress enacted Republic Act No. 954, entitled "An Act to Prohibit With Horse
Races and Basque Pelota Games (Jai-Alai), And To Prescribe Penalties For Its Violation". The
provisions of Republic Act No. 954 relating to jai-alai are as follows:

Sec. 4. No person, or group of persons other than the operator or maintainer of a

fronton with legislative franchise to conduct basque pelota games (Jai-alai), shall
offer, to take or arrange bets on any basque pelota game or event, or maintain or use
a totalizator or other device, method or system to bet or gamble on any basque
pelota game or event. (emphasis supplied).

Sec. 5. No person, operator or maintainer of a fronton with legislative franchise to

conduct basque pelota games shall offer, take, or arrange bets on any basque pelota
game or event, or maintain or use a totalizator or other device, method or system to
bet or gamble on any basque pelota game or event outside the place, enclosure, or
fronton where the basque pelota game is held. (emphasis supplied).

4. On 07 September 1971, however, the Municipal Board of Manila nonetheless passed Ordinance
No. 7065 entitled "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."

5. On 20 August 1975, Presidential Decree No. 771 was issued by then President Marcos. The
decree, entitled "Revoking All Powers and Authority of Local Government(s) To Grant Franchise,
License or Permit And Regulate Wagers Or Betting By The Public On Horse And Dog Races, Jai-
Alai Or Basque Pelota, And Other Forms Of Gambling", in Section 3 thereof, expressly revoked all
existing franchises and permits issued by local governments.

6. On 16 October 1975, Presidential Decree No. 810, entitled "An Act granting The Philippine Jai-
Alai And Amusement Corporation A Franchise To Operate, Construct And Maintain A Fronton For
Basque Pelota And Similar Games of Skill In THE Greater Manila Area," was promulgated.

7 On 08 May 1987, then President Aquino, by virtue of Article XVIII, Section 6, of the Constitution,
which allowed the incumbent legislative powers until the first Congress was convened, issued
Executive Order No. 169 expressly repealing PD 810 and revoking and cancelling the franchise
granted to the Philippine Jai-Alai and Amusement Corporation.

Petitioners in G.R. No. 117263 argue that Republic Act No. 954 effectively removed the power of the
Municipal Board of Manila to grant franchises for gambling operations. It is argued that the term
"legislative franchise" in Rep. Act No. 954 is used to refer to franchises issued by Congress.

On the other hand, ADC contends that Republic Act N. 409 (Manila Chapter) gives legislative powers
to the Municipal Board to grant franchises, and since Republic Act No. 954 does not specifically
qualify the word "legislative" as referring exclusively to Congress, then Rep. Act No. 954 did not
remove the power of the Municipal Board under Section 18(jj) of Republic Act No. 409 and
consequently it was within the power of the City of Manila to allow ADC to operate the jai-alai in the
City of Manila.
On this point, the government counter-argues that the term "legislative powers" is used in Rep. Act
No. 409 merely to distinguish the powers under Section 18 of the law from the other powers of the
Municipal Board, but that the term "legislative franchise" in Rep. Act No. 954 refers to a franchise
granted solely by Congress.

Further, the government argues that Executive Order No. 392 dated 01 January 1951 transferred
even the power to regulate Jai-Alai from the local governments to the Games and Amusements
Board (GAB), a national government agency.

It is worthy of note that neither of the authorities relied upon by ADC to support its alleged
possession of a valid franchise, namely the Charter of the City of Manila (Rep. Act No. 409) and
Manila Ordinance No. 7065 uses the word "franchise". Rep. Act No. 409 empowers the Municipal
Board of Manila to "tax, license, permit and regulatewagers or betting" and to "grant
exclusive rights to establishments", while Ordinance No. 7065 authorized the Manila City Mayor to
"allow and permit" ADC to operate jai-alai facilities in the City of Manila.

It is clear from the foregoing that Congress did not delegate to the City of Manila the power "to
franchise" wagers or betting, including the jai-alai, but retained for itself such power "to franchise".
What Congress delegated to the City of Manila in Rep. Act No. 409, with respect to wagers or
betting, was the power to "license, permit, or regulate" which therefore means that a license or
permit issued by the City of Manila to operate a wager or betting activity, such as the jai-alai where
bets are accepted, would not amount to something meaningful UNLESS the holder of the permit or
license was also FRANCHISED by the national government to so operate. Moreover, even this
power to license, permit, or regulate wagers or betting on jai-alai was removed from local
governments, including the City of Manila, and transferred to the GAB on 1 January 1951 by
Executive Order No. 392. The net result is that the authority to grant franchises for the operation of
jai-alai frontons is in Congress, while the regulatory function is vested in the GAB.

In relation, therefore, to the facts of this case, since ADC has no franchise from Congress to operate
the jai-alai, it may not so operate even if its has a license or permit from the City Mayor to operate
the jai-alai in the City of Manila.

It cannot be overlooked, in this connection, that the Revised Penal Code punishes gambling and
betting under Articles 195 to 199 thereof. Gambling is thus generally prohibited by law, unless
another law is enacted by Congress expressly exempting or excluding certain forms of gambling
from the reach of criminal law. Among these form the reach of criminal law. Among these forms of
gambling allowed by special law are the horse races authorized by Republic Acts Nos. 309 and 983
and gambling casinos authorized under Presidential Decree No. 1869.

While jai-alai as a sport is not illegal per se, the accepting of bets or wagers on the results of jai-alai
games is undoubtedly gambling and, therefore, a criminal offense punishable under Articles 195-199
of the Revised Penal Code, unless it is shown that a later or special law had been passed allowing it.
ADC has not shown any such special law.

Republic Act No. 409 (the Revised Charter of the City of Manila) which was enacted by Congress on
18 June 1949 gave the Municipal Board certain delegated legislative powers under Section 18. A
perusal of the powers enumerated under Section 18 shows that these powers are basically
regulatory in nature. 5 The regulatory nature of these powers finds support not only in the plain words of
the enumerations under Section 28 but also in this Court's ruling in People v. Vera (65 Phil. 56).

In Vera, this Court declared that a law which gives the Provincial Board the discretion to determine
whether or not a law of general application (such as, the Probation law-Act No. 4221) would or would
not be operative within the province, is unconstitutional for being an undue delegation of legislative
power.

From the ruling in Vera, it would be logical to conclude that, if ADC's arguments were to prevail, this
Court would likewise declare Section 18(jj) of the Revised Charter of Manila unconstitutional for the
power it would delegate to the Municipal Board of Manila would give the latter the absolute and
unlimited discretion to render the penal code provisions on gambling inapplicable or inoperative to
persons or entities issued permits to operate gambling establishments in the City of Manila.

We need not go to this extent, however, since the rule is that laws must be presumed valid,
constitutional and in harmony with other laws. Thus, the relevant provisions of Rep. Acts Nos. 409
and 954 and Ordinance No. 7065 should be taken together and it should then be clear that the
legislative powers of the Municipal Board should be understood to be regulatory in nature and that
Republic Act No. 954 should be understood to refer to congressional franchises, as a necessity for
the operation of jai-alai.

We need not, however, again belabor this issue further since the task at hand which will ultimately,
and with finality, decide the issues in this case is to determine whether PD No. 771 validly revoked
ADC's franchise to operate the jai-alai, assuming (without conceding) that it indeed possessed such
franchise under Ordinance No. 7065.

ADC argues that PD No. 771 is unconstitutional for being violative of the equal protection and non-
impairment provisions of the Constitution. On the other hand, the government contends that PD No.
771 is a valid exercise of the inherent police power of the State.

The police power has been described as the least limitable of the inherent powers of the State. It is
based on the ancient doctrine salus populi est suprema lex (the welfare of the people is the
supreme law.) In the early case of Rubi v. Provincial Board of Mindoro (39 Phil. 660), this Court
through Mr. Justice George A. Malcolm stated thus:

The police power of the State . . . is a power co-extensive with self-protection, and is
not inaptly termed the "law of overruling necessity." It may be said to be that inherent
and plenary power in the State which enables it to prohibit all things hurtful to the
comfort, safety and welfare of society. Carried onward by the current of legislation,
the judiciary rarely attempts to dam the onrushing power of legislative discretion,
provided the purposes of the law do not go beyond the great principles that mean
security for the public welfare or do not arbitrarily interfere with the right of the
individual.
In the matter of PD No. 771, the purpose of the law is clearly stated in the "whereas clause" as
follows:

WHEREAS, it has been reported that in spite of the current drive of our law
enforcement agencies against vices and illegal gambling, these social ills are still
prevalent in many areas of the country;

WHEREAS, there is need to consolidate all the efforts of the government to eradicate
and minimize vices and other forms of social ills in pursuance of the social and
economic development program under the new society;

WHEREAS, in order to effectively control and regulate wagers or betting by the

public on horse and dog races, jai-alai and other forms of gambling there is a
necessity to transfer the issuance of permit and/or franchise from local government
to the National Government.

It cannot be argued that the control and regulation of gambling do not promote public morals and
welfare. Gambling is essentially antagonistic and self-reliance. It breeds indolence and erodes the
value of good, honest and hard work. It is, as very aptly stated by PD No. 771, a vice and a social ill
which government must minimize (if not eradicate) in pursuit of social and economic development.

In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R. No. 111097), this Court stated thru
Mr. Justice Isagani A. Cruz:

In the exercise of its own discretion, the legislative power 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. That is the prerogative of the
political departments. It is settled that questions regarding wisdom, morality and
practicability of statutes are not addressed to the judiciary but may be resolved only
by the executive and legislative departments, to which the function belongs in our
scheme of government. (Emphasis supplied)

Talks regarding the supposed vanishing line between right and privilege in American constitutional
law has no relevance in the context of these cases since the reference there is to economic
regulations. On the other hand, jai-alai is not a mere economic activity which the law seeks to
regulate. It is essentially gambling and whether it should be permitted and, if so, under what
conditions are questions primarily for the lawmaking authority to determine, talking into account
national and local interests. Here, it is the police power of the State that is paramount.

ADC questions the motive for the issuance of PD Nos. 771. Clearly, however, this Court cannot look
into allegations that PD No. 771 was enacted to benefit a select group which was later given
authority to operate the jai-alai under PD No. 810. The examination of legislative motivation is
generally prohibited. (Palmer v. Thompson, 403 U.S. 217, 29 L. Ed. 2d 438 [1971] per
Black, J.) There is, the first place, absolute lack of evidence to support ADC's allegation of improper
motivation in the issuance of PD No. 771. In the second place, as already averred, this Court cannot
go behind the expressed and proclaimed purposes of PD No. 771, which are reasonable and even
laudable.

It should also be remembered that PD No. 771 provides that the national government can
subsequently grant franchises "upon proper application and verification of the qualifications of the
applicant." ADC has not alleged that it filed an application for a franchise with the national
government subsequent to the enactment of PD No. 771; thus, the allegations abovementioned (of
preference to a select group) are based on conjectures, speculations and imagined biases which do
not warrant the consideration of this Court.

On the other hand, it is noteworthy that while then president Aquino issued Executive Order No. 169
revoking PD No. 810 (which granted a franchise to a Marcos-crony to operate the jai-alai), she did
not scrap or repeal PD No. 771 which had revoked all franchises to operate jai-alais issued by local
governments, thereby re-affirming the government policy that franchises to operate jai-alais are for
the national government (not local governments) to consider and approve.

On the alleged violation of the non-impairment and equal protection clauses of the Constitution, it
should be remembered that a franchise is not in the strict sense a simple contract but rather it is
more importantly, a mere privilege specially in matters which are within the government's power to
regulate and even prohibit through the exercise of the police power. Thus, a gambling franchise is
always subject to the exercise of police power for the public welfare.

In RCPI v. NTC (150 SCRA 450), we held that:

A franchise started out as a "royal privilege or (a) branch of the King's prerogative,
subsisting in the hands of a subject." This definition was given by Finch, adopted by
Blackstone, and accepted by every authority since . . . Today, a franchise being
merely a privilege emanating from the sovereign power of the state and owing its
existence to a grant, is subject to regulation by the state itself by virtue of its police
power through its administrative agencies.

There is a stronger reason for holding ADC's permit to be a mere privilege because jai-alai, when
played for bets, is pure and simple gambling. To analogize a gambling franchise for the operation of
a public utility, such as public transportation company, is to trivialize the great historic origin of this
branch of royal privilege.

As earlier noted, ADC has not alleged ever applying for a franchise under the provisions of PD No.
771. and yet, the purpose of PD No. 771 is quite clear from its provisions, i.e., to give to the national
government the exclusive power to grant gambling franchises. Thus, all franchises then existing
were revoked but were made subject to reissuance by the national government upon compliance by
the applicant with government-set qualifications and requirements.
There was no violation by PD No. 771 of the equal protection clause since the decree
revoked all franchises issued by local governments without qualification or exception. ADC cannot
allege violation of the equal protection clause simply because it was the only one affected by the
decree, for as correctly pointed out by the government, ADC was not singled out when all jai-alai
franchises were revoked. Besides, it is too late in the day for ADC to seek redress for alleged
violation of its constitutional rights for it could have raised these issues as early as 1975, almost
twenty 920) years ago.

Finally, we do not agree that Section 3 of PD No. 771 and the requirement of a legislative franchise
in Republic Act No. 954 are "riders" to the two 92) laws and are violative of the rule that laws should
embrace one subject which shall be expressed in the title, as argued by ADC. In Cordero v.
Cabatuando (6 SCRA 418), this Court ruled that the requirement under the constitution that all laws
should embrace only one subject which shall be expressed in the title is sufficiently met if the title is
comprehensive enough reasonably to include the general object which the statute seeks to effect,
without expressing each and every end and means necessary or convenient for the accomplishing of
the objective.

III

On the issue of whether or not there was grave abuse of discretion committed by respondent Judge
Reyes in issuing the temporary restraining order (later converted to a writ of preliminary injunction)
and the writ of preliminary mandatory injunction, we hold and rule there was.

Section 3, Rule 58 of the rules of Court provides for the grounds for the issuance of a preliminary
injunction. While ADC could allege these grounds, respondent judge should have taken judicial
notice of Republic Act No. 954 and PD 771, under Section 1 rule 129 of the Rules of court. These
laws negate the existence of any legal right on the part of ADC to the reliefs it sought so as to justify
the issuance of a writ of preliminary injunction. since PD No. 771 and Republic Act No. 954 are
presumed valid and constitutional until ruled otherwise by the Supreme Court after due hearing, ADC
was not entitled to the writs issued and consequently there was grave abuse of discretion in issuing
them.

WHEREFORE, for the foregoing reasons, judgment is hereby rendered:

1. allowing the Republic of the Philippines to intervene in G.R. No. 115044.

2. declaring Presidential Decree No. 771 valid and constitutional.

3. declaring that respondent Associated Development corporation (ADC) does not

possess the required congressional franchise to operate and conduct the jai-alai
under Republic Act No. 954 and Presidential Decree No. 771.

4. setting aside the writs of preliminary injunction and preliminary mandatory

injunction issued by respondent Judge Vetino Reyes in civil Case No. 94-71656.

SO ORDERED.
G.R. No. L-38429 June 30, 1988

CARLOS BALACUIT, LAMBERTO TAN and SERGIO YU CARCEL, petitioners-appellants,

vs.
COURT OF FIRST INSTANCE OF AGUSAN DEL NORTE AND BUTUAN CITY, Branch 11, and
the CITY OF BUTUAN, respondents-appellees.

Romeo B. Sanchez, Eduardo Deza Mercado and Wilfred D. Asis for petitioners.

The City Legal Officer for respondents-appeliees.

GANCAYCO, J.:

At issue in the petition for review before Us is the validity and constitutionality of Ordinance No. 640
passed by the Municipal Board of the City of Butuan on April 21, 1969, the title and text of which are
reproduced below:

ORDINANCE--640

ORDINANCE PENALIZING ANY PERSON, GROUP OF PERSONS, ENTITY OR

CORPORATION ENGAGED IN THE BUSINESS OF SELLING ADMISSION
TICKETS TO ANY MOVIE OR OTHER PUBLIC EXHIBITIONS, GAMES,
CONTESTS OR OTHER PERFORMANCES TO REQUIRE CHILDREN BETWEEN
SEVEN (7) AND TWELVE (12) YEARS OF AGE TO PAY FULL PAYMENT FOR
TICKETS INTENDED FOR ADULTS BUT SHOULD CHARGE ONLY ONE-HALF OF
THE SAID TICKET

xxx xxx xxx

Be it ordained by the Municipal Board of the City of Butuan in session assembled,

that:

SECTION 1It shall be unlawful for any person, group of persons, entity, or
corporation engaged in the business of selling admission tickets to any movie or
other public exhibitions, games, contests, or other performances to require children
between seven (7) and twelve (12) years of age to pay full payment for admission
tickets intended for adults but should charge only one-half of the value of the said
tickets.

SECTION 2Any person violating the provisions of this Ordinance shall upon
conviction be punished by a fine of not less than TWO HUNDRED PESOS (P200.00)
but not more than SIX HUNDRED PESOS (P600.00) or an imprisonment of not less
than TWO (2) MONTHS or not more than SIX (6) MONTHS or both such firm and
imprisonment in the discretion of the Court.
 If the violator be a firm or corporation the penalty shall be imposed upon the
Manager, Agent or Representative of such firm or corporation.

SECTION 3This ordinance shall take effect upon its approval.

Petitioners are Carlos Balacuit Lamberto Tan, and Sergio Yu Carcel managers of the Maya and
Dalisay Theaters, the Crown Theater, and the Diamond Theater, respectively. Aggrieved by the effect
of Ordinance No. 640, they filed a complaint before the Court of First Instance of Agusan del Norte
and Butuan City docketed as Special Civil Case No. 237 on June 30, 1969 praying, inter alia, that
the subject ordinance be declared unconstitutional and, therefore, void and unenforceable. 1

Upon motion of the petitioners, 2 a temporary restraining order was issued on July 14, 1969 by the court
a quo enjoining the respondent City of Butuan and its officials from enforcing Ordinance No. 640. 3 On
July 29, 1969, respondents filed their answer sustaining the validity of the ordinance. 4

On January 30, 1973, the litigants filed their stipulation of facts. 5 On June 4, 1973, the respondent
court rendered its decision, 6 the dispositive part of which reads:

IN THE LIGHT OF ALL THE FOREGOING, the Court hereby adjudges in favor of the
respondents and against the petitioners, as follows:

1. Declaring Ordinance No. 640 of the City of Butuan constitutional and valid:
Provided, however, that the fine for a single offense shall not exceed TWO
HUNDRED PESOS, as prescribed in the aforequoted Section 15 (nn) of Rep. Act No.
523;

2. Dissolving the restraining order issued by this Court; and;

3. Dismissing the complaint, with costs against the petitioners.

4. SO ORDERED. 7

Petitioners filed their motion for reconsideration 8 of the decision of the court a quo which was denied in
a resolution of the said court dated November 10, 1973. 9

Hence, this petition.

Petitioners attack the validity and constitutionality of Ordinance No. 640 on the grounds that it is ultra
vires and an invalid exercise of police power.

Petitioners contend that Ordinance No. 640 is not within the power of' the Municipal Board to enact
as provided for in Section 15(n) of Republic Act No. 523, the Charter of the City of Butuan, which
states:
 Sec. 15. General powers and duties of the Board Except as otherwise provided
by law, and subject to the conditions and limitations thereof, the Municipal Board
shall have the following legislative powers:

xxx xxx xxx

(n) To regulate and fix the amount of the license fees for the following; . . . theaters,
theatrical performances, cinematographs, public exhibitions and all other
performances and places of amusements ...

xxx xxx xxx

Respondent City of Butuan, on the other hand, attempts to justify the enactment of the ordinance by
invoking the general welfare clause embodied in Section 15 (nn) of the cited law, which provides:

(nn) To enact all ordinances it may deem necessary and proper for the sanitation and
safety, the furtherance of the prosperity, and the promotion of the morality, peace,
good order, comfort, convenience, and general welfare of the city and its inhabitants,
and such others as may be necessary to carry into effect and discharge the powers
and duties conferred by this Act, and to fix the penalties for the violation of the
ordinances, which shall not exceed a two hundred peso fine or six months
imprisonment, or both such fine and imprisonment, for a single offense.

We can see from the aforecited Section 15(n) that the power to regulate and fix the amount of
license fees for theaters, theatrical performances, cinematographs, public exhibitions and other
places of amusement has been expressly granted to the City of Butuan under its charter. But the
question which needs to be resolved is this: does this power to regulate include the authority to
interfere in the fixing of prices of admission to these places of exhibition and amusement whether
under its general grant of power or under the general welfare clause as invoked by the City?

This is the first time this Court is confronted with the question of direct interference by the local
government with the operation of theaters, cinematographs and the like to the extent of fixing the
prices of admission to these places. Previous decisions of this Court involved the power to impose
license fees upon businesses of this nature as a corollary to the power of the local government to
regulate them. Ordinances which required moviehouses or theaters to increase the price of their
admission tickets supposedly to cover the license fees have been held to be invalid for these
impositions were considered as not merely license fees but taxes for purposes of revenue and not
regulation which the cities have no power to exact, 10 unless expressly granted by its charter. 11

Applying the ruling in Kwong Sing v. City of Manila, 12 where the word "regulate" was interpreted to
include the power to control, to govern and to restrain, it would seem that under its power to regulate
places of exhibitions and amusement, the Municipal Board of the City of Butuan could make proper police
regulations as to the mode in which the business shall be exercised.

While in a New York case, 13 an ordinance which regulates the business of selling admission tickets to
public exhibitions or performances by virtue of the power of cities under the General City Law "to maintain
order, enforce the laws, protect property and preserve and care for the safety, health, comfort and general
welfare of the inhabitants of the city and visitors thereto; and for any of said purposes, to regulate and
license occupations" was considered not to be within the scope of any duty or power implied in the
charter. It was held therein that the power of regulation of public exhibitions and places of amusement
within the city granted by the charter does not carry with it any authority to interfere with the price of
admission to such places or the resale of tickets or tokens of admission.

In this jurisdiction, it is already settled that the operation of theaters, cinematographs and other
places of public exhibition are subject to regulation by the municipal council in the exercise of
delegated police power by the local government. 14 Thus, in People v. Chan, 15 an ordinance of the City
of Manila prohibiting first run cinematographs from selling tickets beyond their seating capacity was
upheld as constitutional for being a valid exercise of police power. Still in another case, 16 the validity of an
ordinance of the City of Bacolod prohibiting admission of two or more persons in moviehouses and other
amusement places with the use of only one ticket was sustained as a valid regulatory police measure not
only in the interest of preventing fraud in so far as municipal taxes are concerned but also in accordance
with public health, public safety, and the general welfare.

The City of Butuan, apparently realizing that it has no authority to enact the ordinance in question
under its power to regulate embodied in Section 15(n), now invokes the police power as delegated to
it under the general welfare clause to justify the enactment of said ordinance.

To invoke the exercise of police power, not only must it appear that the interest of the public
generally requires an interference with private rights, but the means adopted must be reasonably
necessary for the accomplishment of the purpose and not unduly oppressive upon individuals. 17 The
legislature may not, under the guise of protecting the public interest, arbitrarily interfere with private
business, or impose unusual and unnecessary restrictions upon lawful occupations. In other words, the
determination as to what is a proper exercise of its police power is not final or conclusive, but is subject to
the supervision of the courts. 18

Petitioners maintain that Ordinance No. 640 violates the due process clause of the Constitution for
being oppressive, unfair, unjust, confiscatory, and an undue restraint of trade, and violative of the
right of persons to enter into contracts, considering that the theater owners are bound under a
contract with the film owners for just admission prices for general admission, balcony and lodge.

In Homeowners' Association of the Philippines, Inc. v. Municipal Board of the City of Manila, 19 this
Court held:

The authority of municipal corporations to regulate is essentially police power,

Inasmuch as the same generally entails a curtailment of the liberty, the rights and/or
the property of persons, which are protected and even guaranteed by the
Constitution, the exercise of police power is necessarily subject to a qualification,
limitation or restriction demanded by the regard, the respect and the obedience due
to the prescriptions of the fundamental law, particularly those forming part of the
Constitution of Liberty, otherwise known as the Bill of Rights the police power
measure must be reasonable. In other words, individual rights may be adversely
affected by the exercise of police power to the extent only and only to the extent--
 that may be fairly required by the legitimate demands of public interest or public
welfare.

What is the reason behind the enactment of Ordinance No. 640?

A reading of the minutes of the regular session of the Municipal Board when the ordinance in
question was passed shows that a certain Councilor Calo, the proponent of the measure, had taken
into account the complaints of parents that for them to pay the full price of admission for their
children is too financially burdensome.

The trial court advances the view that "even if the subject ordinance does not spell out its raison
d'etre in all probability the respondents were impelled by the awareness that children are entitled to
share in the joys of their elders, but that considering that, apart from size, children between the ages
of seven and twelve cannot fully grasp the nuance of movies or other public exhibitions, games,
contests or other performances, the admission prices with respect to them ought to be reduced. 19a

We must bear in mind that there must be public necessity which demands the adoption of proper
measures to secure the ends sought to be attained by the enactment of the ordinance, and the large
discretion is necessarily vested in the legislative authority to determine not only what the interests of
the public require, but what measures are necessary for the protection of such interests. 20 The
methods or means used to protect the public health, morals, safety or welfare, must have some relation to
the end in view, for under the guise of the police power, personal rights and those pertaining to private
property will not be permitted to be arbitralily invaded by the legislative department. 21

We agree with petitioners that the ordinance is not justified by any necessity for the public interest.
The police power legislation must be firmly grounded on public interest and welfare, and a
reasonable relation must exist between purposes and means. 22 The evident purpose of the ordinance
is to help ease the burden of cost on the part of parents who have to shell out the same amount of money
for the admission of their children, as they would for themselves, A reduction in the price of admission
would mean corresponding savings for the parents; however, the petitioners are the ones made to bear
the cost of these savings. The ordinance does not only make the petitioners suffer the loss of earnings
but it likewise penalizes them for failure to comply with it. Furthermore, as petitioners point out, there will
be difficulty in its implementation because as already experienced by petitioners since the effectivity of the
ordinance, children over 12 years of age tried to pass off their age as below 12 years in order to avail of
the benefit of the ordinance. The ordinance does not provide a safeguard against this undesirable
practice and as such, the respondent City of Butuan now suggests that birth certificates be exhibited by
movie house patrons to prove the age of children. This is, however, not at all practicable. We can see that
the ordinance is clearly unreasonable if not unduly oppressive upon the business of petitioners. Moreover,
there is no discernible relation between the ordinance and the promotion of public health, safety, morals
and the general welfare.

Respondent City of Butuan claims that it was impelled to protect the youth from the pernicious
practice of movie operators and other public exhibitions promoters or the like of demanding equal
price for their admission tickets along with the adults. This practice is allegedly repugnant and
unconscionable to the interest of the City in the furtherance of the prosperity, peace, good order,
comfort, convenience and the general well-being of its inhabitants.
There is nothing pernicious in demanding equal price for both children and adults. The petitioners
are merely conducting their legitimate businesses. The object of every business entrepreneur is to
make a profit out of his venture. There is nothing immoral or injurious in charging the same price for
both children and adults. In fact, no person is under compulsion to purchase a ticket. It is a totally
voluntary act on the part of the purchaser if he buys a ticket to such performances.

Respondent City of Butuan claims that Ordinance No. 640 is reasonable and necessary to lessen
the economic burden of parents whose minor children are lured by the attractive nuisance being
maintained by the petitioners. Respondent further alleges that by charging the full price, the children
are being exploited by movie house operators. We fail to see how the children are exploited if they
pay the full price of admission. They are treated with the same quality of entertainment as the adults.
The supposition of the trial court that because of their age children cannot fully grasp the nuances of
such entertainment as adults do fails to convince Us that the reduction in admission ticket price is
justifiable. In fact, by the very claim of respondent that movies and the like are attractive nuisances,
it is difficult to comprehend why the municipal board passed the subject ordinance. How can the
municipal authorities consider the movies an attractive nuisance and yet encourage parents and
children to patronize them by lowering the price of admission for children? Perhaps, there is some
,truth to the argument of petitioners that Ordinance No. 640 is detrimental to the public good and the
general welfare of society for it encourages children of tender age to frequent the movies, rather
than attend to their studies in school or be in their homes.

Moreover, as a logical consequence of the ordinance, movie house and theater operators will be
discouraged from exhibiting wholesome movies for general patronage, much less children's pictures
if only to avoid compliance with the ordinance and still earn profits for themselves. For after all, these
movie house and theater operators cannot be compelled to exhibit any particular kind of film except
those films which may be dictated by public demand and those which are restricted by censorship
laws. So instead of children being able to share in the joys of their elders as envisioned by the trial
court, there will be a dearth of wholesome and educational movies for them to enjoy.

There are a number of cases decided by the Supreme Court and the various state courts of the
United States which upheld the right of the proprietor of a theater to fix the price of an admission
ticket as against the right of the state to interfere in this regard and which We consider applicable to
the case at bar.

A theater ticket has been described to be either a mere license, revocable at the will of the proprietor
of the theater or it may be evidence of a contract whereby, for a valuable consideration, the
purchaser has acquired the right to enter the theater and observe the performance on condition that
he behaves properly. 23 Such ticket, therefore, represents a right, Positive or conditional, as the case may
be, according to the terms of the original contract of sale. This right is clearly a right of property. The ticket
which represents that right is also, necessarily, a species of property. As such, the owner thereof, in the
absence of any condition to the contrary in the contract by which he obtained it, has the clear right to
dispose of it, to sell it to whom he pleases and at such price as he can obtain. 24 So that an act prohibiting
the sale of tickets to theaters or other places of amusement at more than the regular price was held
invalid as conflicting with the state constitution securing the right of property. 25

In Collister vs. Hayman, 26 it was held:

 The defendants were conducting a private business, which, even if clothed with a
public interest, was without a franchise to accommodate the public, and they had the
right to control it, the same as the proprietors of any other business, subject to such
obligations as were placed upon them by statute. Unlike a carrier of passengers, for
instance, with a franchise from the state, and hence under obligation to transport
anyone who applies and to continue the business year in and year out, the
proprietors of a theater can open and close their place at will, and no one can make
a lawful complaint. They can charge what they choose for admission to their theater.
They can limit the number admitted. They can refuse to sell tickets and collect the
price of admission at the door. They can preserve order and enforce quiet while the
performance is going on. They can make it a part of the contract and condition of
admission, by giving due notice and printing the condition in the ticket that no one
shall be admitted under 21 years of age, or that men only or women only shall be
admitted, or that a woman cannot enter unless she is accompanied by a male escort,
and the like. The proprietors, in the control of their business, may regulate the terms
of admission in any reasonable way. If those terms are not satisfactory, no one is
obliged to buy a ticket or make the contract. If the terms are satisfactory, and the
contract is made, the minds of the parties meet upon the condition, and the
purchaser impliedly promises to perform it.

In Tyson and Bro. United Theater Ticket Officers, Inc. vs. Banton, 27 the United States Supreme
Court held:

... And certainly a place of entertainment is in no legal sense a public utility; and quite
as certainly, its activities are not such that their enjoyment can be regarded under
any conditions from the point of view of an emergency.

The interest of the public in theaters and other places of entertainment may be more
nearly, and with better reason, assimilated to the like interest in provision stores and
markets and in the rental of houses and apartments for residence purposes; although
in importance it fails below such an interest in the proportion that food and shelter are
of more moment than amusement or instruction. As we have shown there is no
legislative power to fix the prices of provisions or clothing, or the rental charges for
houses and apartments, in the absence of some controlling emergency; and we are
unable to perceive any dissimilarities of such quality or degree as to justify a different
rule in respect of amusements and entertainment ...

We are in consonance with the foregoing observations and conclusions of American courts. In this
jurisdiction, legislation had been passed controlling the prices of goods commodities and drugs
during periods of emergency, 28 limiting the net profits of public utility 29 as well as regulating rentals of
residential apartments for a limited period, 30 as a matter of national policy in the interest of public health
and safety, economic security and the general welfare of the people. And these laws cannot be impugned
as unconstitutional for being violative of the due process clause.

However, the same could not be said of theaters, cinematographs and other exhibitions. In no sense
could these businesses be considered public utilities. The State has not found it appropriate as a
national policy to interfere with the admission prices to these performances. This does not mean
however, that theaters and exhibitions are not affected with public interest even to a certain degree.
Motion pictures have been considered important both as a medium for the communication of Ideas
and expression of the artistic impulse. Their effects on the perceptions by our people of issues and
public officials or public figures as well as the prevailing cultural traits are considerable. 31 People of
all ages flock to movie houses, games and other public exhibitions for recreation and relaxation. The
government realizing their importance has seen it fit to enact censorship laws to regulate the movie
industry. 32 Their aesthetic entertainment and even educational values cannot be underestimated. Even
police measures regulating the operation of these businesses have been upheld in order to safeguard
public health and safety.

Nonetheless, as to the question of the subject ordinance being a valid exercise of police power, the
same must be resolved in the negative. While it is true that a business may be regulated, it is equally
true that such regulation must be within the bounds of reason, that is, the regulatory ordinance must
be reasonable, and its provisions cannot be oppressive amounting to an arbitrary interference with
the business or calling subject of regulation. A lawful business or calling may not, under the guise of
regulation, be unreasonably interfered with even by the exercise of police power. 33 A police measure
for the regulation of the conduct, control and operation of a business should not encroach upon the
legitimate and lawful exercise by the citizens of their property rights. 34 The right of the owner to fix a price
at which his property shall be sold or used is an inherent attribute of the property itself and, as such,
within the protection of the due process clause."" Hence, the proprietors of a theater have a right to
manage their property in their own way, to fix what prices of admission they think most for their own
advantage, and that any person who did not approve could stay away. 36

Respondent City of Butuan argues that the presumption is always in favor of the validity of the
ordinance. This maybe the rule but it has already been held that although the presumption is always
in favor of the validity or reasonableness of the ordinance, such presumption must nevertheless be
set aside when the invalidity or unreasonableness appears on the face of the ordinance itself or is
established by proper evidence. 37 The exercise of police power by the local government is valid unless it
contravenes the fundamental law of the land, or an act of the legislature, or unless it is against public
policy or is unreasonable, oppressive, partial, discriminating or in derogation of a common right. 38

Ordinance No. 640 clearly invades the personal and property rights of petitioners for even if We
could assume that, on its face, the interference was reasonable, from the foregoing considerations, it
has been fully shown that it is an unwarranted and unlawful curtailment of the property and personal
rights of citizens. For being unreasonable and an undue restraint of trade, it cannot, under the guise
of exercising police power, be upheld as valid.

WHEREFORE, the decision of the trial court in Special Civil Case No. 237 is hereby REVERSED
and SET ASIDE and a new judgment is hereby rendered declaring Ordinance No. 640
unconstitutional and, therefore, null and void. This decision is immediately executory.

SO ORDERED.

Yap, C.J., Narvasa, Cruz, Paras, Padilla, Bidin,

WHITE LIGHT CORPORATION, G.R. No. 122846

TITANIUM CORPORATION and
STA. MESA TOURIST & DEVE- Present:
LOPMENT CORPORATION,
Petitioners, PUNO, C.J.
QUISUMBING,
YNARES SANTIAGO,
CARPIO,
AUSTRIA-MARTINEZ,
- versus - CORONA,
CARPIO MORALES,
AZCUNA,
TINGA,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA,
CITY OF MANILA, represented by DE CASTRO,
MAYOR ALFREDO S. LIM, BRION, and
Respondent. PERALTA, JJ.
Promulgated:
January 20, 2009

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

DECISION

TINGA, J.:

With another city ordinance of Manila also principally involving the tourist district
as subject, the Court is confronted anew with the incessant clash between
government power and individual liberty in tandem with the archetypal tension
between law and morality.

In City of Manila v. Laguio, Jr.,[1] the Court affirmed the nullification of a city
ordinance barring the operation of motels and inns, among other establishments,
within the Ermita-Malate area. The petition at bar assails a similarly-motivated city
ordinance that prohibits those same establishments from offering short-time
admission, as well as pro-rated or wash up rates for such abbreviated stays. Our
earlier decision tested the city ordinance against our sacred constitutional rights to
liberty, due process and equal protection of law. The same parameters apply to the
present petition.
This Petition[2] under Rule 45 of the Revised Rules on Civil Procedure, which
seeks the reversal of the Decision[3] in C.A.-G.R. S.P. No. 33316 of the Court of
Appeals, challenges the validity of Manila City Ordinance No. 7774 entitled, An
Ordinance Prohibiting Short-Time Admission, Short-Time Admission Rates, and
Wash-Up Rate Schemes in Hotels, Motels, Inns, Lodging Houses, Pension Houses,
and Similar Establishments in the City of Manila (the Ordinance).

I.

The facts are as follows:

On December 3, 1992, City Mayor Alfredo S. Lim (Mayor Lim) signed into law
the Ordinance.[4] The Ordinance is reproduced in full, hereunder:

SECTION 1. Declaration of Policy. It is hereby the declared

policy of the City Government to protect the best interest, health and
welfare, and the morality of its constituents in general and the youth
in particular.

SEC. 2. Title. This ordinance shall be known as An Ordinance

prohibiting short time admission in hotels, motels, lodging houses,
pension houses and similar establishments in the City of Manila.

SEC. 3. Pursuant to the above policy, short-time admission and rate

[sic], wash-up rate or other similarly concocted terms, are hereby
prohibited in hotels, motels, inns, lodging houses, pension houses and
similar establishments in the City of Manila.

SEC. 4. Definition of Term[s]. Short-time admission shall mean

admittance and charging of room rate for less than twelve (12) hours
at any given time or the renting out of rooms more than twice a day
 or any other term that may be concocted by owners or managers of
said establishments but would mean the same or would bear the same
meaning.

SEC. 5. Penalty Clause. Any person or corporation who shall violate

any provision of this ordinance shall upon conviction thereof be
punished by a fine of Five Thousand (P5,000.00) Pesos or
imprisonment for a period of not exceeding one (1) year or both such
fine and imprisonment at the discretion of the court; Provided, That
in case of [a] juridical person, the president, the manager, or the
persons in charge of the operation thereof shall be liable: Provided,
further, That in case of subsequent conviction for the same offense,
the business license of the guilty party shall automatically be
cancelled.

SEC. 6. Repealing Clause. Any or all provisions of City ordinances

not consistent with or contrary to this measure or any portion hereof
are hereby deemed repealed.

SEC. 7. Effectivity. This ordinance shall take effect immediately

upon approval.

Enacted by the city Council of Manila at its regular session

today, November 10, 1992.

Approved by His Honor, the Mayor on December 3, 1992.

On December 15, 1992, the Malate Tourist and Development Corporation

(MTDC) filed a complaint for declaratory relief with prayer for a writ of
preliminary injunction and/or temporary restraining order ( TRO)[5] with the
Regional Trial Court (RTC) of Manila, Branch 9 impleading as defendant, herein
respondent City of Manila (the City) represented by Mayor Lim. [6] MTDC prayed
that the Ordinance, insofar as it includes motels and inns as among its prohibited
establishments, be declared invalid and unconstitutional. MTDC claimed that as
owner and operator of the Victoria Court in Malate, Manila it was authorized by
Presidential Decree (P.D.) No. 259 to admit customers on a short time basis as well
as to charge customers wash up rates for stays of only three hours.
 On December 21, 1992, petitioners White Light Corporation (WLC),
Titanium Corporation (TC) and Sta. Mesa Tourist and Development Corporation
(STDC) filed a motion to intervene and to admit attached complaint-in-
intervention[7] on the ground that the Ordinance directly affects their business
interests as operators of drive-in-hotels and motels in Manila.[8] The three
companies are components of the Anito Group of Companies which owns and
operates several hotels and motels in Metro Manila.[9]

On December 23, 1992, the RTC granted the motion to intervene. [10] The
RTC also notified the Solicitor General of the proceedings pursuant to then Rule
64, Section 4 of the Rules of Court. On the same date, MTDC moved to withdraw
as plaintiff.[11]

On December 28, 1992, the RTC granted MTDC's motion to withdraw.[12] The RTC
issued a TRO on January 14, 1993, directing the City to cease and desist from
enforcing the Ordinance.[13] The City filed an Answer dated January 22,
1993 alleging that the Ordinance is a legitimate exercise of police power.[14]

On February 8, 1993, the RTC issued a writ of preliminary injunction ordering the
city to desist from the enforcement of the Ordinance. [15] A month later, on March 8,
1993, the Solicitor General filed his Comment arguing that the Ordinance is
constitutional.

During the pre-trial conference, the WLC, TC and STDC agreed to submit the case
for decision without trial as the case involved a purely legal question.
[16]
On October 20, 1993, the RTC rendered a decision declaring the Ordinance null
and void. The dispositive portion of the decision reads:

WHEREFORE, in view of all the foregoing, [O]rdinance No. 7774 of

the City of Manila is hereby declared null and void.

Accordingly, the preliminary injunction heretofor issued is hereby

made permanent.
 SO ORDERED.[17]

The RTC noted that the ordinance strikes at the personal liberty of the
individual guaranteed and jealously guarded by the Constitution.[18] Reference was
made to the provisions of the Constitution encouraging private enterprises and the
incentive to needed investment, as well as the right to operate economic
enterprises. Finally, from the observation that the illicit relationships the Ordinance
sought to dissuade could nonetheless be consummated by simply paying for a 12-
hour stay, the RTC likened the law to the ordinance annulled in Ynot v.
Intermediate Appellate Court,[19] where the legitimate purpose of preventing
indiscriminate slaughter of carabaos was sought to be effected through an inter-
province ban on the transport of carabaos and carabeef.

The City later filed a petition for review on certiorari with the Supreme
[20]
Court. The petition was docketed as G.R. No. 112471. However in a resolution
dated January 26, 1994, the Court treated the petition as a petition
for certiorari and referred the petition to the Court of Appeals.[21]

Before the Court of Appeals, the City asserted that the Ordinance is a valid
exercise of police power pursuant to Section 458 (4)(iv) of the Local Government
Code which confers on cities, among other local government units, the power:

[To] regulate the establishment, operation and maintenance of

cafes, restaurants, beerhouses, hotels, motels, inns, pension houses,
lodging houses and other similar establishments, including tourist
guides and transports.[22]

The Ordinance, it is argued, is also a valid exercise of the power of the City
under Article III, Section 18(kk) of the Revised Manila Charter, thus:

to enact all ordinances it may deem necessary and proper for

the sanitation and safety, the furtherance of the prosperity and the
promotion of the morality, peace, good order, comfort, convenience
and general welfare of the city and its inhabitants, and such others as
 be necessary to carry into effect and discharge the powers and duties
conferred by this Chapter; and to fix penalties for the violation of
ordinances which shall not exceed two hundred pesos fine or six
months imprisonment, or both such fine and imprisonment for a
single offense.[23]

Petitioners argued that the Ordinance is unconstitutional and void since it

violates the right to privacy and the freedom of movement; it is an invalid exercise
of police power; and it is an unreasonable and oppressive interference in their
business.

The Court of Appeals reversed the decision of the RTC and affirmed the
constitutionality of the Ordinance.[24] First, it held that the Ordinance did not
violate the right to privacy or the freedom of movement, as it only penalizes the
owners or operators of establishments that admit individuals for short time
stays. Second, the virtually limitless reach of police power is only constrained by
having a lawful object obtained through a lawful method. The lawful objective of
the Ordinance is satisfied since it aims to curb immoral activities. There is a lawful
method since the establishments are still allowed to operate. Third, the adverse
effect on the establishments is justified by the well-being of its constituents in
general. Finally, as held in Ermita-Malate Motel Operators Association v. City
Mayor of Manila, liberty is regulated by law.

TC, WLC and STDC come to this Court via petition for review on certiorari.[25] In
their petition and Memorandum, petitioners in essence repeat the assertions they
made before the Court of Appeals. They contend that the assailed Ordinance is an
invalid exercise of police power.

II.

We must address the threshold issue of petitioners standing. Petitioners allege that
as owners of establishments offering wash-up rates, their business is being
unlawfully interfered with by the Ordinance. However, petitioners also allege that
the equal protection rights of their clients are also being interfered with. Thus, the
crux of the matter is whether or not these establishments have the requisite
standing to plead for protection of their patrons' equal protection rights.
 Standing or locus standi is the ability of a party to demonstrate to the court
sufficient connection to and harm from the law or action challenged to support that
party's participation in the case. More importantly, the doctrine of standing is built
on the principle of separation of powers, [26] sparing as it does unnecessary
interference or invalidation by the judicial branch of the actions rendered by its co-
equal branches of government.

The requirement of standing is a core component of the judicial system

derived directly from the Constitution.[27] The constitutional component of standing
doctrine incorporates concepts which concededly are not susceptible of precise
definition.[28] In this jurisdiction, the extancy of a direct and personal interest
presents the most obvious cause, as well as the standard test for a petitioner's
standing.[29] In a similar vein, the United States Supreme Court reviewed and
elaborated on the meaning of the three constitutional standing requirements of
injury, causation, and redressability in Allen v. Wright.[30]
Nonetheless, the general rules on standing admit of several exceptions such as the
overbreadth doctrine, taxpayer suits, third party standing and, especially in
the Philippines, the doctrine of transcendental importance.[31]

For this particular set of facts, the concept of third party standing as an exception
and the overbreadth doctrine are appropriate. In Powers v. Ohio,[32] the United
States Supreme Court wrote that: We have recognized the right of litigants to bring
actions on behalf of third parties, provided three important criteria are satisfied: the
litigant must have suffered an injury-in-fact, thus giving him or her a "sufficiently
concrete interest" in the outcome of the issue in dispute; the litigant must have a
close relation to the third party; and there must exist some hindrance to the third
party's ability to protect his or her own interests."[33] Herein, it is clear that the
business interests of the petitioners are likewise injured by the Ordinance. They
rely on the patronage of their customers for their continued viability which appears
to be threatened by the enforcement of the Ordinance. The relative silence in
constitutional litigation of such special interest groups in our nation such as the
American Civil Liberties Union in the United States may also be construed as a
hindrance for customers to bring suit.[34]

American jurisprudence is replete with examples where parties-in-interest were

allowed standing to advocate or invoke the fundamental due process or equal
protection claims of other persons or classes of persons injured by state action.
In Griswold v. Connecticut,[35] the United States Supreme Court held that
physicians had standing to challenge a reproductive health statute that would
penalize them as accessories as well as to plead the constitutional protections
available to their patients. The Court held that:

The rights of husband and wife, pressed here, are likely to be diluted
or adversely affected unless those rights are considered in a suit
involving those who have this kind of confidential relation to
them."[36]

An even more analogous example may be found in Craig v. Boren,[37] wherein the
United States Supreme Court held that a licensed beverage vendor has standing to
raise the equal protection claim of a male customer challenging a statutory scheme
prohibiting the sale of beer to males under the age of 21 and to females under the
age of 18. The United States High Court explained that the vendors had standing
"by acting as advocates of the rights of third parties who seek access to their
market or function."[38]

Assuming arguendo that petitioners do not have a relationship with their patrons
for the former to assert the rights of the latter, the overbreadth doctrine comes into
play. In overbreadth analysis, challengers to government action are in effect
permitted to raise the rights of third parties. Generally applied to statutes infringing
on the freedom of speech, the overbreadth doctrine applies when a statute
needlessly restrains even constitutionally guaranteed rights. [39] In this case, the
petitioners claim that the Ordinance makes a sweeping intrusion into the right to
liberty of their clients. We can see that based on the allegations in the petition, the
Ordinance suffers from overbreadth.

We thus recognize that the petitioners have a right to assert the constitutional rights
of their clients to patronize their establishments for a wash-rate time frame.
 III.

To students of jurisprudence, the facts of this case will recall to mind not only the
recent City of Manila ruling, but our 1967 decision in Ermita-Malate Hotel and
Motel Operations Association, Inc., v. Hon. City Mayor of Manila.[40] Ermita-
Malate concerned the City ordinance requiring patrons to fill up a prescribed form
stating personal information such as name, gender, nationality, age, address and
occupation before they could be admitted to a motel, hotel or lodging house. This
earlier ordinance was precisely enacted to minimize certain practices deemed
harmful to public morals. A purpose similar to the annulled ordinance in City
of Manila which sought a blanket ban on motels, inns and similar establishments in
the Ermita-Malate area. However, the constitutionality of the ordinance in Ermita-
Malate was sustained by the Court.

The common thread that runs through those decisions and the case at bar goes
beyond the singularity of the localities covered under the respective ordinances. All
three ordinances were enacted with a view of regulating public morals including
particular illicit activity in transient lodging establishments. This could be
described as the middle case, wherein there is no wholesale ban on motels and
hotels but the services offered by these establishments have been severely
restricted. At its core, this is another case about the extent to which the State can
intrude into and regulate the lives of its citizens.

The test of a valid ordinance is well established. A long line of decisions

including City of Manila has held that for an ordinance to be valid, it must not only
be within the corporate powers of the local government unit to enact and pass
according to the procedure prescribed by law, it must also conform to the following
substantive requirements: (1) must not contravene the Constitution or any statute;
(2) must not be unfair or oppressive; (3) must not be partial or discriminatory; (4)
must not prohibit but may regulate trade; (5) must be general and consistent with
public policy; and (6) must not be unreasonable.[41]

The Ordinance prohibits two specific and distinct business practices, namely
wash rate admissions and renting out a room more than twice a day. The ban is
evidently sought to be rooted in the police power as conferred on local government
units by the Local Government Code through such implements as the general
welfare clause.
A.

Police power, while incapable of an exact definition, has been purposely

veiled in general terms to underscore its comprehensiveness to meet all exigencies
and provide enough room for an efficient and flexible response as the conditions
warrant.[42] Police power is based upon the concept of necessity of the State and its
corresponding right to protect itself and its people.[43] Police power has been used
as justification for numerous and varied actions by the State. These range from the
regulation of dance halls,[44]movie theaters,[45] gas stations[46] and cockpits.[47] The
awesome scope of police power is best demonstrated by the fact that in its hundred
or so years of presence in our nations legal system, its use has rarely been denied.
The apparent goal of the Ordinance is to minimize if not eliminate the use of
the covered establishments for illicit sex, prostitution, drug use and alike. These
goals, by themselves, are unimpeachable and certainly fall within the ambit of the
police power of the State. Yet the desirability of these ends do not sanctify any and
all means for their achievement. Those means must align with the Constitution, and
our emerging sophisticated analysis of its guarantees to the people. The Bill of
Rights stands as a rebuke to the seductive theory of Macchiavelli, and, sometimes
even, the political majorities animated by his cynicism.

Even as we design the precedents that establish the framework for analysis of due
process or equal protection questions, the courts are naturally inhibited by a due
deference to the co-equal branches of government as they exercise their political
functions. But when we are compelled to nullify executive or legislative actions,
yet another form of caution emerges. If the Court were animated by the same
passing fancies or turbulent emotions that motivate many political decisions,
judicial integrity is compromised by any perception that the judiciary is merely the
third political branch of government. We derive our respect and good standing in
the annals of history by acting as judicious and neutral arbiters of the rule of law,
and there is no surer way to that end than through the development of rigorous and
sophisticated legal standards through which the courts analyze the most
fundamental and far-reaching constitutional questions of the day.

B.
 The primary constitutional question that confronts us is one of due process,
as guaranteed under Section 1, Article III of the Constitution. Due process evades a
precise definition.[48] The purpose of the guaranty is to prevent arbitrary
governmental encroachment against the life, liberty and property of individuals.
The due process guaranty serves as a protection against arbitrary regulation or
seizure. Even corporations and partnerships are protected by the guaranty insofar
as their property is concerned.

The due process guaranty has traditionally been interpreted as imposing two
related but distinct restrictions on government, "procedural due process" and
"substantive due process." Procedural due process refers to the procedures that the
government must follow before it deprives a person of life, liberty, or property.
[49]
Procedural due process concerns itself with government action adhering to the
established process when it makes an intrusion into the private sphere. Examples
range from the form of notice given to the level of formality of a hearing.

If due process were confined solely to its procedural aspects, there would arise
absurd situation of arbitrary government action, provided the proper formalities are
followed. Substantive due process completes the protection envisioned by the due
process clause. It inquires whether the government has sufficient justification for
depriving a person of life, liberty, or property.[50]

The question of substantive due process, moreso than most other fields of
law, has reflected dynamism in progressive legal thought tied with the expanded
acceptance of fundamental freedoms. Police power, traditionally awesome as it
may be, is now confronted with a more rigorous level of analysis before it can be
upheld. The vitality though of constitutional due process has not been predicated
on the frequency with which it has been utilized to achieve a liberal result for, after
all, the libertarian ends should sometimes yield to the prerogatives of the State.
Instead, the due process clause has acquired potency because of the sophisticated
methodology that has emerged to determine the proper metes and bounds for its
application.
 C.

The general test of the validity of an ordinance on substantive due process

grounds is best tested when assessed with the evolved footnote 4 test laid down by
the U.S. Supreme Court in U.S. v. Carolene Products.[51] Footnote 4 of
the Carolene Products case acknowledged that the judiciary would defer to the
legislature unless there is a discrimination against a discrete and insular minority or
infringement of a fundamental right.[52] Consequently, two standards of judicial
review were established: strict scrutiny for laws dealing with freedom of the mind
or restricting the political process, and the rational basis standard of review for
economic legislation.

A third standard, denominated as heightened or immediate scrutiny, was

later adopted by the U.S. Supreme Court for evaluating classifications based on
gender[53] and legitimacy.[54] Immediate scrutiny was adopted by the U.S. Supreme
Court in Craig,[55] after the Court declined to do so in Reed v. Reed.[56] While the
test may have first been articulated in equal protection analysis, it has in the United
States since been applied in all substantive due process cases as well.

We ourselves have often applied the rational basis test mainly in analysis of
equal protection challenges.[57] Using the rational basis examination, laws or
ordinances are upheld if they rationally further a legitimate governmental interest.
[58]
Under intermediate review, governmental interest is extensively examined and
the availability of less restrictive measures is considered. [59] Applying strict
scrutiny, the focus is on the presence of compelling, rather than substantial,
governmental interest and on the absence of less restrictive means for achieving
that interest.

In terms of judicial review of statutes or ordinances, strict scrutiny refers to

the standard for determining the quality and the amount of governmental interest
brought to justify the regulation of fundamental freedoms. [60] Strict scrutiny is used
today to test the validity of laws dealing with the regulation of speech, gender, or
race as well as other fundamental rights as expansion from its earlier applications
to equal protection.[61] The United States Supreme Court has expanded the scope of
strict scrutiny to protect fundamental rights such as suffrage, [62] judicial
access[63] and interstate travel.[64]

If we were to take the myopic view that an Ordinance should be analyzed

strictly as to its effect only on the petitioners at bar, then it would seem that the
only restraint imposed by the law which we are capacitated to act upon is the injury
to property sustained by the petitioners, an injury that would warrant the
application of the most deferential standard the rational basis test. Yet as earlier
stated, we recognize the capacity of the petitioners to invoke as well the
constitutional rights of their patrons those persons who would be deprived of
availing short time access or wash-up rates to the lodging establishments in
question.

Viewed cynically, one might say that the infringed rights of these customers
were are trivial since they seem shorn of political consequence. Concededly, these
are not the sort of cherished rights that, when proscribed, would impel the people
to tear up their cedulas. Still, the Bill of Rights does not shelter gravitas alone.
Indeed, it is those trivial yet fundamental freedoms which the people reflexively
exercise any day without the impairing awareness of their constitutional
consequence that accurately reflect the degree of liberty enjoyed by the people.
Liberty, as integrally incorporated as a fundamental right in the Constitution, is not
a Ten Commandments-style enumeration of what may or what may not be done;
but rather an atmosphere of freedom where the people do not feel labored under a
Big Brother presence as they interact with each other, their society and nature, in a
manner innately understood by them as inherent, without doing harm or injury to
others.

D.

The rights at stake herein fall within the same fundamental rights to liberty
which we upheld in City of Manila v. Hon. Laguio, Jr. We expounded on that most
primordial of rights, thus:

Liberty as guaranteed by the Constitution was defined by Justice

Malcolm to include "the right to exist and the right to be free from
 arbitrary restraint or servitude. The term cannot be dwarfed into mere
freedom from physical restraint of the person of the citizen, but is
deemed to embrace the right of man to enjoy the facilities with which he
has been endowed by his Creator, subject only to such restraint as are
necessary for the common welfare."[ [65]] In accordance with this case, the
rights of the citizen to be free to use his faculties in all lawful ways; to
live and work where he will; to earn his livelihood by any lawful calling;
and to pursue any avocation are all deemed embraced in the concept of
liberty.[[66]]

The U.S. Supreme Court in the case of Roth v. Board of Regents,

sought to clarify the meaning of "liberty." It said:

While the Court has not attempted to define with

exactness the liberty . . . guaranteed [by the Fifth and
Fourteenth Amendments], the term denotes not merely
freedom from bodily restraint but also the right of the
individual to contract, to engage in any of the common
occupations of life, to acquire useful knowledge, to marry,
establish a home and bring up children, to worship God
according to the dictates of his own conscience, and
generally to enjoy those privileges long recognized . . . as
essential to the orderly pursuit of happiness by free men. In
a Constitution for a free people, there can be no doubt that
the meaning of "liberty" must be broad indeed. [67] [Citations
omitted]

It cannot be denied that the primary animus behind the ordinance is the
curtailment of sexual behavior. The City asserts before this Court that the subject
establishments have gained notoriety as venue of prostitution, adultery and
fornications in Manila since they provide the necessary atmosphere for clandestine
entry, presence and exit and thus became the ideal haven for prostitutes and thrill-
seekers.[68] Whether or not this depiction of a mise-en-scene of vice is accurate, it
cannot be denied that legitimate sexual behavior among willing married or
consenting single adults which is constitutionally protected[69] will be curtailed as
well, as it was in the City of Manila case. Our holding therein retains significance
for our purposes:
 The concept of liberty compels respect for the individual whose
claim to privacy and interference demands respect. As the case of Morfe
v. Mutuc, borrowing the words of Laski, so very aptly stated:

Man is one among many, obstinately refusing

reduction to unity. His separateness, his isolation, are
indefeasible; indeed, they are so fundamental that they are
the basis on which his civic obligations are built. He cannot
abandon the consequences of his isolation, which are,
broadly speaking, that his experience is private, and the will
built out of that experience personal to himself. If he
surrenders his will to others, he surrenders himself. If his
will is set by the will of others, he ceases to be a master of
himself. I cannot believe that a man no longer a master of
himself is in any real sense free.

Indeed, the right to privacy as a constitutional right was recognized

in Morfe, the invasion of which should be justified by a compelling state
interest. Morfe accorded recognition to the right to privacy independently
of its identification with liberty; in itself it is fully deserving of
constitutional protection. Governmental powers should stop short of
certain intrusions into the personal life of the citizen. [70]

We cannot discount other legitimate activities which the Ordinance would

proscribe or impair. There are very legitimate uses for a wash rate or renting the
room out for more than twice a day. Entire families are known to choose pass the
time in a motel or hotel whilst the power is momentarily out in their homes. In
transit passengers who wish to wash up and rest between trips have a legitimate
purpose for abbreviated stays in motels or hotels. Indeed any person or groups of
persons in need of comfortable private spaces for a span of a few hours with
purposes other than having sex or using illegal drugs can legitimately look to
staying in a motel or hotel as a convenient alternative.

E.

That the Ordinance prevents the lawful uses of a wash rate depriving patrons
of a product and the petitioners of lucrative business ties in with another
constitutional requisite for the legitimacy of the Ordinance as a police power
measure. It must appear that the interests of the public generally, as distinguished
from those of a particular class, require an interference with private rights and the
means must be reasonably necessary for the accomplishment of the purpose and
not unduly oppressive of private rights. [71] It must also be evident that no other
alternative for the accomplishment of the purpose less intrusive of private rights
can work. More importantly, a reasonable relation must exist between the purposes
of the measure and the means employed for its accomplishment, for even under the
guise of protecting the public interest, personal rights and those pertaining to
private property will not be permitted to be arbitrarily invaded.[72]

Lacking a concurrence of these requisites, the police measure shall be struck

down as an arbitrary intrusion into private rights. As held in Morfe v. Mutuc, the
exercise of police power is subject to judicial review when life, liberty or property
is affected.[73] However, this is not in any way meant to take it away from the
vastness of State police power whose exercise enjoys the presumption of validity.
[74]

Similar to the Comelec resolution requiring newspapers to donate

advertising space to candidates, this Ordinance is a blunt and heavy instrument.
[75]
The Ordinance makes no distinction between places frequented by patrons
engaged in illicit activities and patrons engaged in legitimate actions. Thus it
prevents legitimate use of places where illicit activities are rare or even unheard of.
A plain reading of section 3 of the Ordinance shows it makes no classification
of places of lodging, thus deems them all susceptible to illicit patronage and
subject them without exception to the unjustified prohibition.

The Court has professed its deep sentiment and tenderness of the Ermita-
Malate area, its longtime home,[76] and it is skeptical of those who wish to depict
our capital city the Pearl of the Orient as a modern-day Sodom or Gomorrah for
the Third World set. Those still steeped in Nick Joaquin-dreams of the grandeur of
Old Manila will have to accept that Manila like all evolving big cities, will have its
problems. Urban decay is a fact of mega cities such as Manila, and vice is a
common problem confronted by the modern metropolis wherever in the world. The
solution to such perceived decay is not to prevent legitimate businesses from
offering a legitimate product. Rather, cities revive themselves by offering
incentives for new businesses to sprout up thus attracting the dynamism of
individuals that would bring a new grandeur to Manila.

The behavior which the Ordinance seeks to curtail is in fact already

prohibited and could in fact be diminished simply by applying existing laws. Less
intrusive measures such as curbing the proliferation of prostitutes and drug dealers
through active police work would be more effective in easing the situation. So
would the strict enforcement of existing laws and regulations penalizing
prostitution and drug use. These measures would have minimal intrusion on the
businesses of the petitioners and other legitimate merchants. Further, it is apparent
that the Ordinance can easily be circumvented by merely paying the whole day rate
without any hindrance to those engaged in illicit activities. Moreover, drug dealers
and prostitutes can in fact collect wash rates from their clientele by charging their
customers a portion of the rent for motel rooms and even apartments.

IV.
We reiterate that individual rights may be adversely affected only to the
extent that may fairly be required by the legitimate demands of public interest or
public welfare.The State is a leviathan that must be restrained from needlessly
intruding into the lives of its citizens. However well-intentioned the Ordinance
may be, it is in effect an arbitrary and whimsical intrusion into the rights of the
establishments as well as their patrons. The Ordinance needlessly restrains the
operation of the businesses of the petitioners as well as restricting the rights of
their patrons without sufficient justification. The Ordinance rashly equates wash
rates and renting out a room more than twice a day with immorality without
accommodating innocuous intentions.

The promotion of public welfare and a sense of morality among citizens deserves
the full endorsement of the judiciary provided that such measures do not trample
rights this Court is sworn to protect. [77] The notion that the promotion of public
morality is a function of the State is as old as Aristotle. [78] The advancement of
moral relativism as a school of philosophy does not de-legitimize the role of
morality in law, even if it may foster wider debate on which particular behavior to
penalize. It is conceivable that a society with relatively little shared morality
among its citizens could be functional so long as the pursuit of sharply variant
moral perspectives yields an adequate accommodation of different interests.[79]

To be candid about it, the oft-quoted American maxim that you

cannot legislate morality is ultimately illegitimate as a matter of law, since as
explained by Calabresi, that phrase is more accurately interpreted as meaning that
efforts to legislate morality will fail if they are widely at variance with public
attitudes about right and wrong.[80] Our penal laws, for one, are founded on age-old
moral traditions, and as long as there are widely accepted distinctions between
right and wrong, they will remain so oriented.

Yet the continuing progression of the human story has seen not only the
acceptance of the right-wrong distinction, but also the advent of fundamental
liberties as the key to the enjoyment of life to the fullest. Our democracy is
distinguished from non-free societies not with any more extensive elaboration on
our part of what is moral and immoral, but from our recognition that the individual
liberty to make the choices in our lives is innate, and protected by the State.
Independent and fair-minded judges themselves are under a moral duty to uphold
the Constitution as the embodiment of the rule of law, by reason of their expression
of consent to do so when they take the oath of office, and because they are
entrusted by the people to uphold the law.[81]

Even as the implementation of moral norms remains an indispensable

complement to governance, that prerogative is hardly absolute, especially in the
face of the norms of due process of liberty. And while the tension may often be left
to the courts to relieve, it is possible for the government to avoid the constitutional
conflict by employing more judicious, less drastic means to promote morality.

WHEREFORE, the Petition is GRANTED. The Decision of the Court of

Appeals is REVERSED, and the Decision of the Regional Trial Court of Manila,
Branch 9, is REINSTATED. Ordinance No. 7774 is hereby declared
UNCONSTITUTIONAL. No pronouncement as to costs.

SO ORDERED.
 [G.R. No. 118127. April 12, 2005]

CITY OF MANILA, HON. ALFREDO S. LIM as the Mayor of the City of

Manila, HON. JOSELITO L. ATIENZA, in his capacity as Vice-
Mayor of the City of Manila and Presiding Officer of the City
Council of Manila, HON. ERNESTO A. NIEVA, HON. GONZALO P.
GONZALES, HON. AVELINO S. CAILIAN, HON. ROBERTO C.
OCAMPO, HON. ALBERTO DOMINGO, HON. HONORIO U.
LOPEZ, HON. FRANCISCO G. VARONA, JR., HON. ROMUALDO
S. MARANAN, HON. NESTOR C. PONCE, JR., HON. HUMBERTO
B. BASCO, HON. FLAVIANO F. CONCEPCION, JR., HON. ROMEO
G. RIVERA, HON. MANUEL M. ZARCAL, HON. PEDRO S. DE
JESUS, HON. BERNARDITO C. ANG, HON. MANUEL L. QUIN,
HON. JHOSEP Y. LOPEZ, HON. CHIKA G. GO, HON. VICTORIANO
A. MELENDEZ, HON. ERNESTO V.P. MACEDA, JR., HON.
ROLANDO P. NIETO, HON. DANILO V. ROLEDA, HON. GERINO A.
TOLENTINO, JR., HON. MA. PAZ E. HERRERA, HON. JOEY D.
HIZON, HON. FELIXBERTO D. ESPIRITU, HON. KARLO Q.
BUTIONG, HON. ROGELIO P. DELA PAZ, HON. BERNARDO D.
RAGAZA, HON. MA. CORAZON R. CABALLES, HON. CASIMIRO
C. SISON, HON. BIENVINIDO M. ABANTE, JR., HON. MA.
LOURDES M. ISIP, HON. ALEXANDER S. RICAFORT, HON.
ERNESTO F. RIVERA, HON. LEONARDO L. ANGAT, and HON.
JOCELYN B. DAWIS, in their capacity as councilors of the City of
Manila, petitioners, vs. HON. PERFECTO A.S. LAGUIO, JR., as
Presiding Judge, RTC, Manila and MALATE TOURIST
DEVELOPMENT CORPORATION, respondents.

DECISION
TINGA, J.:

I know only that what is moral is what you feel good after and what is immoral is
what you feel bad after.

Ernest Hermingway
Death in the Afternoon, Ch. 1
It is a moral and political axiom that any dishonorable act, if performed by oneself, is
less immoral than if performed by someone else, who would be well-intentioned in his
dishonesty.

J. Christopher Gerald
Bonaparte in Egypt, Ch. I

The Courts commitment to the protection of morals is secondary to its

fealty to the fundamental law of the land. It is foremost a guardian of the
Constitution but not the conscience of individuals. And if it need be, the Court
will not hesitate to make the hammer fall, and heavily in the words of Justice
Laurel, and uphold the constitutional guarantees when faced with laws that,
though not lacking in zeal to promote morality, nevertheless fail to pass the
test of constitutionality.
The pivotal issue in this Petition under Rule 45 (then Rule 42) of the
[1]

Revised Rules on Civil Procedure seeking the reversal of the Decision in Civil [2]

Case No. 93-66511 of the Regional Trial Court (RTC) of Manila, Branch 18
(lower court), is the validity of Ordinance No. 7783 (the Ordinance) of the City
[3]

of Manila. [4]

The antecedents are as follows:

Private respondent Malate Tourist Development Corporation (MTDC) is a
corporation engaged in the business of operating hotels, motels, hostels and
lodging houses. It built and opened Victoria Court in Malate which was
[5]

licensed as a motel although duly accredited with the Department of Tourism

as a hotel. On 28 June 1993, MTDC filed a Petition for Declaratory Relief
[6]

with Prayer for a Writ of Preliminary Injunction and/or Temporary Restraining

Order (RTC Petition) with the lower court impleading as defendants, herein
[7]

petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza,
and the members of the City Council of Manila (City Council). MTDC prayed
that the Ordinance, insofar as it includes motels and inns as among its
prohibited establishments, be declared invalid and unconstitutional. [8]

Enacted by the City Council on 9 March 1993 and approved by petitioner

[9]

City Mayor on 30 March 1993, the said Ordinance is entitled

AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF

BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT,
ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-MALATE
AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR
OTHER PURPOSES. [10]
 The Ordinance is reproduced in full, hereunder:

SECTION 1. Any provision of existing laws and ordinances to the contrary

notwithstanding, no person, partnership, corporation or entity shall, in the
Ermita-Malate area bounded by Teodoro M. Kalaw Sr. Street in the North, Taft
Avenue in the East, Vito Cruz Street in the South and Roxas Boulevard in the West,
pursuant to P.D. 499 be allowed or authorized to contract and engage in, any
business providing certain forms of amusement, entertainment, services and
facilities where women are used as tools in entertainment and which tend to
disturb the community, annoy the inhabitants, and adversely affect the social and
moral welfare of the community, such as but not limited to:

1. Sauna Parlors
2. Massage Parlors
3. Karaoke Bars
4. Beerhouses
5. Night Clubs
6. Day Clubs
7. Super Clubs
8. Discotheques
9. Cabarets
10. Dance Halls
11. Motels
12. Inns

SEC. 2 The City Mayor, the City Treasurer or any person acting in behalf of the
said officials are prohibited from issuing permits, temporary or otherwise, or
from granting licenses and accepting payments for the operation of business
enumerated in the preceding section.

SEC. 3. Owners and/or operator of establishments engaged in, or devoted to, the
businesses enumerated in Section 1 hereof are hereby given three (3) months from
the date of approval of this ordinance within which to wind up business
operations or to transfer to any place outside of the Ermita-Malate area or
convert said businesses to other kinds of business allowable within the area,such
as but not limited to:

1. Curio or antique shop

2. Souvenir Shops
3. Handicrafts display centers
4. Art galleries
5. Records and music shops
6. Restaurants
7. Coffee shops
8. Flower shops
 9. Music lounge and sing-along restaurants, with well-defined activities for
wholesome family entertainment that cater to both local and foreign clientele.
10. Theaters engaged in the exhibition, not only of motion pictures but
also of cultural shows, stage and theatrical plays, art exhibitions, concerts and the
like.
11. Businesses allowable within the law and medium intensity districts as
provided for in the zoning ordinances for Metropolitan Manila, except new
warehouse or open-storage depot, dock or yard, motor repair shop, gasoline service
station, light industry with any machinery, or funeral establishments.

SEC. 4. Any person violating any provisions of this ordinance, shall upon
conviction, be punished by imprisonment of one (1) year or fine of FIVE
THOUSAND (P5,000.00) PESOS, or both, at the discretion of the Court,
PROVIDED, that in case of juridical person, the President, the General Manager, or
person-in-charge of operation shall be liable thereof; PROVIDED FURTHER, that in
case of subsequent violation and conviction, the premises of the erring
establishment shall be closed and padlocked permanently.

SEC. 5. This ordinance shall take effect upon approval.

Enacted by the City Council of Manila at its regular session today, March 9, 1993.

Approved by His Honor, the Mayor on March 30, 1993. (Emphasis supplied)

In the RTC Petition, MTDC argued that the Ordinance erroneously and
improperly included in its enumeration of prohibited establishments, motels
and inns such as MTDCs Victoria Court considering that these were not
establishments for amusement or entertainment and they were not services or
facilities for entertainment, nor did they use women as tools for entertainment,
and neither did they disturb the community, annoy the inhabitants or adversely
affect the social and moral welfare of the community. [11]

MTDC further advanced that the Ordinance was invalid and

unconstitutional for the following reasons: (1) The City Council has no power
to prohibit the operation of motels as Section 458 (a) 4 (iv) of the Local [12]

Government Code of 1991 (the Code) grants to the City Council only the
power to regulate the establishment, operation and maintenance of hotels,
motels, inns, pension houses, lodging houses and other similar
establishments; (2) The Ordinance is void as it is violative of Presidential
Decree (P.D.) No. 499 which specifically declared portions of the Ermita-
[13]

Malate area as a commercial zone with certain restrictions; (3)

The Ordinance does not constitute a proper exercise of police power as the
compulsory closure of the motel business has no reasonable relation to the
legitimate municipal interests sought to be protected; (4)
The Ordinance constitutes an ex post facto law by punishing the operation of
Victoria Court which was a legitimate business prior to its enactment; (5)
The Ordinance violates MTDCs constitutional rights in that: (a) it is
confiscatory and constitutes an invasion of plaintiffs property rights; (b) the
City Council has no power to find as a fact that a particular thing is a
nuisance per se nor does it have the power to extrajudicially destroy it; and (6)
The Ordinance constitutes a denial of equal protection under the law as no
reasonable basis exists for prohibiting the operation of motels and inns, but
not pension houses, hotels, lodging houses or other similar establishments,
and for prohibiting said business in the Ermita-Malate area but not outside of
this area. [14]

In their Answer dated 23 July 1993, petitioners City of Manila and Lim
[15]

maintained that the City Council had the power to prohibit certain forms of
entertainment in order to protect the social and moral welfare of the
community as provided for in Section 458 (a) 4 (vii) of the Local Government
Code, which reads, thus:
[16]

Section 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:

....

(4) Regulate activities relative to the use of land, buildings and structures within the
city in order to promote the general welfare and for said purpose shall:

....

(vii) Regulate the establishment, operation, and maintenance of any

entertainment or amusement facilities, including theatrical performances,
circuses, billiard pools, public dancing schools, public dance halls, sauna
baths, massage parlors, and other places for entertainment or amusement;
regulate such other events or activities for amusement or entertainment,
particularly those which tend to disturb the community or annoy the
inhabitants, or require the suspension or suppression of the same; or, prohibit
certain forms of amusement or entertainment in order to protect the social and
moral welfare of the community.
 Citing Kwong Sing v. City of Manila, petitioners insisted that the power of
[17]

regulation spoken of in the above-quoted provision included the power to

control, to govern and to restrain places of exhibition and amusement. [18]

Petitioners likewise asserted that the Ordinance was enacted by the City
Council of Manila to protect the social and moral welfare of the community in
conjunction with its police power as found in Article III, Section 18(kk) of
Republic Act No. 409, otherwise known as the Revised Charter of the City of
[19]

Manila (Revised Charter of Manila) which reads, thus:

[20]

ARTICLE III
THE MUNICIPAL BOARD

...

Section 18. Legislative powers. The Municipal Board shall have the following
legislative powers:

...

(kk) To enact all ordinances it may deem necessary and proper for the
sanitation and safety, the furtherance of the prosperity, and the promotion of
the morality, peace, good order, comfort, convenience, and general welfare of
the city and its inhabitants, and such others as may be necessary to carry into
effect and discharge the powers and duties conferred by this chapter; and to
fix penalties for the violation of ordinances which shall not exceed two
hundred pesos fine or six months imprisonment, or both such fine and
imprisonment, for a single offense.

Further, the petitioners noted, the Ordinance had the presumption of

validity; hence, private respondent had the burden to prove its illegality or
unconstitutionality.
[21]

Petitioners also maintained that there was no inconsistency between P.D.

499 and the Ordinance as the latter simply disauthorized certain forms of
businesses and allowed the Ermita-Malate area to remain a commercial zone.
The Ordinance, the petitioners likewise claimed, cannot be assailed as ex
[22]

post facto as it was prospective in operation. The Ordinance also did not
[23]

infringe the equal protection clause and cannot be denounced as class

legislation as there existed substantial and real differences between the
Ermita-Malate area and other places in the City of Manila. [24]
 On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr. (Judge
Laguio) issued an ex-parte temporary restraining order against the
enforcement of the Ordinance. And on 16 July 1993, again in an intrepid
[25]

gesture, he granted the writ of preliminary injunction prayed for by MTDC. [26]

After trial, on 25 November 1994, Judge Laguio rendered the

assailed Decision, enjoining the petitioners from implementing the Ordinance.
The dispositive portion of said Decisionreads: [27]

WHEREFORE, judgment is hereby rendered declaring Ordinance No. 778[3], Series

of 1993, of the City of Manila null and void, and making permanent the writ of
preliminary injunction that had been issued by this Court against the defendant. No
costs.

SO ORDERED. [28]

Petitioners filed with the lower court a Notice of Appeal on 12 December [29]

1994, manifesting that they are elevating the case to this Court under then
Rule 42 on pure questions of law. [30]

On 11 January 1995, petitioners filed the present Petition, alleging that the
following errors were committed by the lower court in its ruling: (1) It erred in
concluding that the subject ordinance is ultra vires, or otherwise, unfair,
unreasonable and oppressive exercise of police power; (2) It erred in holding
that the questioned Ordinance contravenes P.D. 499 which allows operators
[31]

of all kinds of commercial establishments, except those specified therein; and

(3) It erred in declaring the Ordinance void and unconstitutional. [32]

In the Petition and in its Memorandum, petitioners in essence repeat the

[33]

assertions they made before the lower court. They contend that the
assailed Ordinance was enacted in the exercise of the inherent and plenary
power of the State and the general welfare clause exercised by local
government units provided for in Art. 3, Sec. 18 (kk) of the Revised Charter of
Manila and conjunctively, Section 458 (a) 4 (vii) of the Code. They allege that
[34]

the Ordinance is a valid exercise of police power; it does not contravene P.D.
499; and that it enjoys the presumption of validity. [35]

In its Memorandum dated 27 May 1996, private respondent maintains

[36]

that the Ordinance is ultra vires and that it is void for being repugnant to the
general law. It reiterates that the questioned Ordinance is not a valid exercise
of police power; that it is violative of due process, confiscatory and amounts to
an arbitrary interference with its lawful business; that it is violative of the equal
protection clause; and that it confers on petitioner City Mayor or any officer
unregulated discretion in the execution of the Ordinance absent rules to guide
and control his actions.
This is an opportune time to express the Courts deep sentiment and
tenderness for the Ermita-Malate area being its home for several decades. A
long-time resident, the Court witnessed the areas many turn of events. It
relished its glory days and endured its days of infamy. Much as the Court
harks back to the resplendent era of the Old Manila and yearns to restore its
lost grandeur, it believes that the Ordinance is not the fitting means to that
end. The Court is of the opinion, and so holds, that the lower court did not err
in declaring the Ordinance, as it did, ultra vires and therefore null and void.
The Ordinance is so replete with constitutional infirmities that almost every
sentence thereof violates a constitutional provision. The prohibitions and
sanctions therein transgress the cardinal rights of persons enshrined by the
Constitution. The Court is called upon to shelter these rights from attempts at
rendering them worthless.
The tests of a valid ordinance are well established. A long line of decisions
has held that for an ordinance to be valid, it must not only be within the
corporate powers of the local government unit to enact and must be passed
according to the procedure prescribed by law, it must also conform to the
following substantive requirements: (1) must not contravene the Constitution
or any statute; (2) must not be unfair or oppressive; (3) must not be partial or
discriminatory; (4) must not prohibit but may regulate trade; (5) must be
general and consistent with public policy; and (6) must not be unreasonable. [37]

Anent the first criterion, ordinances shall only be valid when they are not
contrary to the Constitution and to the laws. The Ordinance must satisfy two
[38]

requirements: it must pass muster under the test of constitutionality and the
test of consistency with the prevailing laws. That ordinances should be
constitutional uphold the principle of the supremacy of the Constitution. The
requirement that the enactment must not violate existing law gives stress to
the precept that local government units are able to legislate only by virtue of
their derivative legislative power, a delegation of legislative power from the
national legislature. The delegate cannot be superior to the principal or
exercise powers higher than those of the latter. [39]

This 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. The national
legislature is still the principal of the local government units, which cannot defy
its will or modify or violate it.
[40]
 The Ordinance was passed by the City Council in the exercise of its police
power, an enactment of the City Council acting as agent of Congress. Local
government units, as agencies of the State, are endowed with police power in
order to effectively accomplish and carry out the declared objects of their
creation. This delegated police power is found in Section 16 of the Code,
[41]

known as the general welfare clause, viz:

SECTION 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.

Local government units exercise police power through their respective

legislative bodies; in this case, the sangguniang panlungsod or the city
council. The Code empowers the legislative bodies to enact ordinances,
approve resolutions and appropriate funds for the general welfare of the
province/city/municipality 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. The inquiry in this Petition is
[42]

concerned with the validity of the exercise of such delegated power.

The Ordinance contravenes

the Constitution

The police power of the City Council, however broad and far-reaching, is
subordinate to the constitutional limitations thereon; and is subject to the
limitation that its exercise must be reasonable and for the public good. In the [43]

case at bar, the enactment of the Ordinance was an invalid exercise of

delegated power as it is unconstitutional and repugnant to general laws.
The relevant constitutional provisions are the following:

SEC. 5. The maintenance of peace and order, the protection of life, liberty, and
property, and the promotion of the general welfare are essential for the enjoyment by
all the people of the blessings of democracy. [44]
SEC. 14. The State recognizes the role of women in nation-building, and shall ensure
the fundamental equality before the law of women and men. [45]

SEC. 1. No person shall be deprived of life, liberty or property without due process of
law, nor shall any person be denied the equal protection of laws. [46]

Sec. 9. Private property shall not be taken for public use without just compensation. [47]

A. The Ordinance infringes

the Due Process Clause

The constitutional safeguard of due process is embodied in the fiat (N)o

person shall be deprived of life, liberty or property without due process of
law. . . .
[48]

There is no controlling and precise definition of due process. It furnishes

though a standard to which governmental action should conform in order that
deprivation of life, liberty or property, in each appropriate case, be valid. This
standard is aptly described as a responsiveness to the supremacy of reason,
obedience to the dictates of justice, and as such it is a limitation upon the
[49]

exercise of the police power. [50]

The purpose of the guaranty is to prevent governmental encroachment

against the life, liberty and property of individuals; to secure the individual
from the arbitrary exercise of the powers of the government, unrestrained by
the established principles of private rights and distributive justice; to protect
property from confiscation by legislative enactments, from seizure, forfeiture,
and destruction without a trial and conviction by the ordinary mode of judicial
procedure; and to secure to all persons equal and impartial justice and the
benefit of the general law. [51]

The guaranty serves as a protection against arbitrary regulation, and

private corporations and partnerships are persons within the scope of the
guaranty insofar as their property is concerned. [52]

This clause has been interpreted as imposing two separate limits on

government, usually called procedural due process and substantive due
process.
Procedural due process, as the phrase implies, refers to the procedures
that the government must follow before it deprives a person of life, liberty, or
property. Classic procedural due process issues are concerned with what kind
of notice and what form of hearing the government must provide when it takes
a particular action.[53]
 Substantive due process, as that phrase connotes, asks whether the
government has an adequate reason for taking away a persons life, liberty, or
property. In other words, substantive due process looks to whether there is a
sufficient justification for the governments action. Case law in the United
[54]

States (U.S.) tells us that whether there is such a justification depends very
much on the level of scrutiny used. For example, if a law is in an area where
[55]

only rational basis review is applied, substantive due process is met so long
as the law is rationally related to a legitimate government purpose. But if it is
an area where strict scrutiny is used, such as for protecting fundamental
rights, then the government will meet substantive due process only if it can
prove that the law is necessary to achieve a compelling government purpose.
[56]

The police power granted to local government units must always be

exercised with utmost observance of the rights of the people to due process
and equal protection of the law. Such power cannot be exercised whimsically,
arbitrarily or despotically as its exercise is subject to a qualification, limitation
[57]

or restriction demanded by the respect and regard due to the prescription of

the fundamental law, particularly those forming part of the Bill of Rights.
Individual rights, it bears emphasis, may be adversely affected only to the
extent that may fairly be required by the legitimate demands of public interest
or public welfare. Due process requires the intrinsic validity of the law in
[58]

interfering with the rights of the person to his life, liberty and property.
[59]

Requisites for the valid exercise

of Police Power are not met

To successfully invoke the exercise of police power as the rationale for the
enactment of the Ordinance, and to free it from the imputation of constitutional
infirmity, not only must it appear that the interests of the public generally, as
distinguished from those of a particular class, require an interference with
private rights, but the means adopted must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals.
It must be evident that no other alternative for the accomplishment of the
[60]

purpose less intrusive of private rights can work. A reasonable relation must
exist between the purposes of the police measure and the means employed
for its accomplishment, for even under the guise of protecting the public
interest, personal rights and those pertaining to private property will not be
permitted to be arbitrarily invaded. [61]

Lacking a concurrence of these two requisites, the police measure shall be

struck down as an arbitrary intrusion into private rights a violation of the due
[62]

process clause.
 The Ordinance was enacted to address and arrest the social ills
purportedly spawned by the establishments in the Ermita-Malate area which
are allegedly operated under the deceptive veneer of legitimate, licensed and
tax-paying nightclubs, bars, karaoke bars, girlie houses, cocktail lounges,
hotels and motels. Petitioners insist that even the Court in the case of Ermita-
Malate Hotel and Motel Operators Association, Inc. v. City Mayor of
Manila had already taken judicial notice of the alarming increase in the rate
[63]

of prostitution, adultery and fornication in Manila traceable in great part to

existence of motels, which provide a necessary atmosphere for clandestine
entry, presence and exit and thus become the ideal haven for prostitutes and
thrill-seekers. [64]

The object of the Ordinance was, accordingly, the promotion and

protection of the social and moral values of the community. Granting for the
sake of argument that the objectives of the Ordinance are within the scope of
the City Councils police powers, the means employed for the accomplishment
thereof were unreasonable and unduly oppressive.
It is undoubtedly one of the fundamental duties of the City of Manila to
make all reasonable regulations looking to the promotion of the moral and
social values of the community. However, the worthy aim of fostering public
morals and the eradication of the communitys social ills can be achieved
through means less restrictive of private rights; it can be attained by
reasonable restrictions rather than by an absolute prohibition. The closing
down and transfer of businesses or their conversion into businesses allowed
under the Ordinance have no reasonable relation to the accomplishment of its
purposes. Otherwise stated, the prohibition of the enumerated establishments
will not per se protect and promote the social and moral welfare of the
community; it will not in itself eradicate the alluded social ills of prostitution,
adultery, fornication nor will it arrest the spread of sexual disease in Manila.
Conceding for the nonce that the Ermita-Malate area teems with houses of
ill-repute and establishments of the like which the City Council may lawfully
prohibit, it is baseless and insupportable to bring within that classification
[65]

sauna parlors, massage parlors, karaoke bars, night clubs, day clubs, super
clubs, discotheques, cabarets, dance halls, motels and inns. This is not
warranted under the accepted definitions of these terms. The enumerated
establishments are lawful pursuits which are not per se offensive to the moral
welfare of the community.
That these are used as arenas to consummate illicit sexual affairs and as
venues to further the illegal prostitution is of no moment. We lay stress on the
acrid truth that sexual immorality, being a human frailty, may take place in the
most innocent of places that it may even take place in the substitute
establishments enumerated under Section 3 of the Ordinance. If the flawed
logic of the Ordinance were to be followed, in the remote instance that an
immoral sexual act transpires in a church cloister or a court chamber, we
would behold the spectacle of the City of Manila ordering the closure of the
church or court concerned. Every house, building, park, curb, street or even
vehicles for that matter will not be exempt from the prohibition. Simply
because there are no pure places where there are impure men. Indeed, even
the Scripture and the Tradition of Christians churches continually recall the
presence and universality of sin in mans history.[66]

The problem, it needs to be pointed out, is not the establishment, which by

its nature cannot be said to be injurious to the health or comfort of the
community and which in itself is amoral, but the deplorable human activity that
may occur within its premises. While a motel may be used as a venue for
immoral sexual activity, it cannot for that reason alone be punished. It cannot
be classified as a house of ill-repute or as a nuisance per se on a mere
likelihood or a naked assumption. If that were so and if that were allowed,
then the Ermita-Malate area would not only be purged of its supposed social
ills, it would be extinguished of its soul as well as every human activity,
reprehensible or not, in its every nook and cranny would be laid bare to the
estimation of the authorities.
The Ordinance seeks to legislate morality but fails to address the core
issues of morality. Try as the Ordinance may to shape morality, it should not
foster the illusion that it can make a moral man out of it because immorality is
not a thing, a building or establishment; it is in the hearts of men. The City
Council instead should regulate human conduct that occurs inside the
establishments, but not to the detriment of liberty and privacy which are
covenants, premiums and blessings of democracy.
While petitioners earnestness at curbing clearly objectionable social ills is
commendable, they unwittingly punish even the proprietors and operators of
wholesome, innocent establishments. In the instant case, there is a clear
invasion of personal or property rights, personal in the case of those
individuals desirous of owning, operating and patronizing those motels and
property in terms of the investments made and the salaries to be paid to those
therein employed. If the City of Manila so desires to put an end to prostitution,
fornication and other social ills, it can instead impose reasonable regulations
such as daily inspections of the establishments for any violation of the
conditions of their licenses or permits; it may exercise its authority to suspend
or revoke their licenses for these violations; and it may even impose
[67]
increased license fees. In other words, there are other means to reasonably
accomplish the desired end.

Means employed are

constitutionally infirm

The Ordinance disallows the operation of sauna parlors, massage parlors,

karaoke bars, beerhouses, night clubs, day clubs, super clubs, discotheques,
cabarets, dance halls, motels and inns in the Ermita-Malate area. In Section 3
thereof, owners and/or operators of the enumerated establishments are given
three (3) months from the date of approval of the Ordinancewithin which to
wind up business operations or to transfer to any place outside the Ermita-
Malate area or convert said businesses to other kinds of business allowable
within the area. Further, it states in Section 4 that in cases of subsequent
violations of the provisions of the Ordinance, the premises of the erring
establishment shall be closed and padlocked permanently.
It is readily apparent that the means employed by the Ordinance for the
achievement of its purposes, the governmental interference itself, infringes on
the constitutional guarantees of a persons fundamental right to liberty and
property.
Liberty as guaranteed by the Constitution was defined by Justice Malcolm
to include the right to exist and the right to be free from arbitrary restraint or
servitude. The term cannot be dwarfed into mere freedom from physical
restraint of the person of the citizen, but is deemed to embrace the right of
man to enjoy the facilities with which he has been endowed by his Creator,
subject only to such restraint as are necessary for the common welfare. In [68]

accordance with this case, the rights of the citizen to be free to use his
faculties in all lawful ways; to live and work where he will; to earn his livelihood
by any lawful calling; and to pursue any avocation are all deemed embraced
in the concept of liberty. [69]

The U.S. Supreme Court in the case of Roth v. Board of Regents, sought [70]

to clarify the meaning of liberty. It said:

While the Court has not attempted to define with exactness the liberty. . . guaranteed
[by the Fifth and Fourteenth Amendments], the term denotes not merely freedom from
bodily restraint but also the right of the individual to contract, to engage in any of the
common occupations of life, to acquire useful knowledge, to marry, establish a home
and bring up children, to worship God according to the dictates of his own conscience,
and generally to enjoy those privileges long recognizedas essential to the orderly
pursuit of happiness by free men. In a Constitution for a free people, there can be no
doubt that the meaning of liberty must be broad indeed.

In another case, it also confirmed that liberty protected by the due process
clause includes personal decisions relating to marriage, procreation,
contraception, family relationships, child rearing, and education. In explaining
the respect the Constitution demands for the autonomy of the person in
making these choices, the U.S. Supreme Court explained:

These matters, involving the most intimate and personal choices a person may make
in a lifetime, choices central to personal dignity and autonomy, are central to the
liberty protected by the Fourteenth Amendment. At the heart of liberty is the right to
define ones own concept of existence, of meaning, of universe, and of the mystery of
human life. Beliefs about these matters could not define the attributes of personhood
where they formed under compulsion of the State. [71]

Persons desirous to own, operate and patronize the enumerated

establishments under Section 1 of the Ordinance may seek autonomy for
these purposes.
Motel patrons who are single and unmarried may invoke this right to
autonomy to consummate their bonds in intimate sexual conduct within the
motels premisesbe it stressed that their consensual sexual behavior does not
contravene any fundamental state policy as contained in the Constitution.
Adults have a right to choose to forge such relationships with others in the
[72]

confines of their own private lives and still retain their dignity as free persons.
The liberty protected by the Constitution allows persons the right to make this
choice. Their right to liberty under the due process clause gives them the full
[73]

right to engage in their conduct without intervention of the government, as

long as they do not run afoul of the law. Liberty should be the rule and
restraint the exception.
Liberty in the constitutional sense not only means freedom from unlawful
government restraint; it must include privacy as well, if it is to be a repository
of freedom. The right to be let alone is the beginning of all freedomit is the
most comprehensive of rights and the right most valued by civilized men. [74]

The concept of liberty compels respect for the individual whose claim to
privacy and interference demands respect. As the case of Morfe v. Mutuc,
borrowing the words of Laski, so very aptly stated:
[75]

Man is one among many, obstinately refusing reduction to unity. His separateness, his
isolation, are indefeasible; indeed, they are so fundamental that they are the basis on
which his civic obligations are built. He cannot abandon the consequences of his
isolation, which are, broadly speaking, that his experience is private, and the will built
out of that experience personal to himself. If he surrenders his will to others, he
surrenders himself. If his will is set by the will of others, he ceases to be a master of
himself. I cannot believe that a man no longer a master of himself is in any real sense
free.

Indeed, the right to privacy as a constitutional right was recognized

in Morfe, the invasion of which should be justified by a compelling state
interest. Morfe accorded recognition to the right to privacy independently of its
identification with liberty; in itself it is fully deserving of constitutional
protection. Governmental powers should stop short of certain intrusions into
the personal life of the citizen. [76]

There is a great temptation to have an extended discussion on these civil

liberties but the Court chooses to exercise restraint and restrict itself to the
issues presented when it should. The previous pronouncements of the Court
are not to be interpreted as a license for adults to engage in criminal conduct.
The reprehensibility of such conduct is not diminished. The Court only
reaffirms and guarantees their right to make this choice. Should they be
prosecuted for their illegal conduct, they should suffer the consequences of
the choice they have made. That, ultimately, is their choice.

Modality employed is
unlawful taking

In addition, the Ordinance is unreasonable and oppressive as it

substantially divests the respondent of the beneficial use of its property.
The Ordinance in Section 1 thereof forbids the running of the enumerated
[77]

businesses in the Ermita-Malate area and in Section 3 instructs its

owners/operators to wind up business operations or to transfer outside the
area or convert said businesses into allowed businesses. An ordinance which
permanently restricts the use of property that it can not be used for any
reasonable purpose goes beyond regulation and must be recognized as a
taking of the property without just compensation. It is intrusive and violative
[78]

of the private property rights of individuals.

The Constitution expressly provides in Article III, Section 9, that private
property shall not be taken for public use without just compensation. The
provision is the most important protection of property rights in the Constitution.
This is a restriction on the general power of the government to take property.
The constitutional provision is about ensuring that the government does not
confiscate the property of some to give it to others. In part too, it is about loss
spreading. If the government takes away a persons property to benefit society,
then society should pay. The principal purpose of the guarantee is to bar the
Government from forcing some people alone to bear public burdens which, in
all fairness and justice, should be borne by the public as a whole. [79]

There are two different types of taking that can be identified. A possessory
taking occurs when the government confiscates or physically occupies
property. A regulatory taking occurs when the governments regulation leaves
no reasonable economically viable use of the property. [80]

In the landmark case of Pennsylvania Coal v. Mahon, it was held that a

[81]

taking also could be found if government regulation of the use of property

went too far. When regulation reaches a certain magnitude, in most if not in all
cases there must be an exercise of eminent domain and compensation to
support the act. While property may be regulated to a certain extent, if
regulation goes too far it will be recognized as a taking.[82]

No formula or rule can be devised to answer the questions of what is too

far and when regulation becomes a taking. In Mahon, Justice Holmes
recognized that it was a question of degree and therefore cannot be disposed
of by general propositions. On many other occasions as well, the U.S.
Supreme Court has said that the issue of when regulation constitutes a taking
is a matter of considering the facts in each case. The Court asks whether
justice and fairness require that the economic loss caused by public action
must be compensated by the government and thus borne by the public as a
whole, or whether the loss should remain concentrated on those few persons
subject to the public action.[83]

What is crucial in judicial consideration of regulatory takings is that

government regulation is a taking if it leaves no reasonable economically
viable use of property in a manner that interferes with reasonable
expectations for use. A regulation that permanently denies all economically
[84]

beneficial or productive use of land is, from the owners point of view,
equivalent to a taking unless principles of nuisance or property law that
existed when the owner acquired the land make the use prohibitable. When [85]

the owner of real property has been called upon to sacrifice all economically
beneficial uses in the name of the common good, that is, to leave his property
economically idle, he has suffered a taking. [86]

A regulation which denies all economically beneficial or productive use of

land will require compensation under the takings clause. Where a regulation
places limitations on land that fall short of eliminating all economically
beneficial use, a taking nonetheless may have occurred, depending on a
complex of factors including the regulations economic effect on the landowner,
the extent to which the regulation interferes with reasonable investment-
backed expectations and the character of government action. These inquiries
are informed by the purpose of the takings clause which is to prevent the
government from forcing some people alone to bear public burdens which, in
all fairness and justice, should be borne by the public as a whole.[87]

A restriction on use of property may also constitute a taking if not

reasonably necessary to the effectuation of a substantial public purpose or if it
has an unduly harsh impact on the distinct investment-backed expectations of
the owner.[88]

The Ordinance gives the owners and operators of the prohibited

establishments three (3) months from its approval within which to wind up
business operations or to transfer to any place outside of the Ermita-Malate
area or convert said businesses to other kinds of business allowable within
the area. The directive to wind up business operations amounts to a closure of
the establishment, a permanent deprivation of property, and is practically
confiscatory. Unless the owner converts his establishment to accommodate an
allowed business, the structure which housed the previous business will be
left empty and gathering dust. Suppose he transfers it to another area, he will
likewise leave the entire establishment idle. Consideration must be given to
the substantial amount of money invested to build the edifices which the
owner reasonably expects to be returned within a period of time. It is apparent
that the Ordinance leaves no reasonable economically viable use of property
in a manner that interferes with reasonable expectations for use.
The second and third options to transfer to any place outside of the
Ermita-Malate area or to convert into allowed businessesare confiscatory as
well. The penalty of permanent closure in cases of subsequent violations
found in Section 4 of the Ordinance is also equivalent to a taking of private
property.
The second option instructs the owners to abandon their property and
build another one outside the Ermita-Malate area. In every sense, it qualifies
as a taking without just compensation with an additional burden imposed on
the owner to build another establishment solely from his coffers. The proffered
solution does not put an end to the problem, it merely relocates it. Not only is
this impractical, it is unreasonable, onerous and oppressive. The conversion
into allowed enterprises is just as ridiculous. How may the respondent convert
a motel into a restaurant or a coffee shop, art gallery or music lounge without
essentially destroying its property? This is a taking of private property without
due process of law, nay, even without compensation.
 The penalty of closure likewise constitutes unlawful taking that should be
compensated by the government. The burden on the owner to convert or
transfer his business, otherwise it will be closed permanently after a
subsequent violation should be borne by the public as this end benefits them
as a whole.
Petitioners cannot take refuge in classifying the measure as a zoning
ordinance. A zoning ordinance, although a valid exercise of police power,
which limits a wholesome property to a use which can not reasonably be
made of it constitutes the taking of such property without just compensation.
Private property which is not noxious nor intended for noxious purposes may
not, by zoning, be destroyed without compensation. Such principle finds no
support in the principles of justice as we know them. The police powers of
local government units which have always received broad and liberal
interpretation cannot be stretched to cover this particular taking.
Distinction should be made between destruction from necessity and
eminent domain. It needs restating that the property taken in the exercise of
police power is destroyed because it is noxious or intended for a noxious
purpose while the property taken under the power of eminent domain is
intended for a public use or purpose and is therefore wholesome. If it be of
[89]

public benefit that a wholesome property remain unused or relegated to a

particular purpose, then certainly the public should bear the cost of
reasonable compensation for the condemnation of private property for public
use.[90]

Further, the Ordinance fails to set up any standard to guide or limit the
petitioners actions. It in no way controls or guides the discretion vested in
them. It provides no definition of the establishments covered by it and it fails to
set forth the conditions when the establishments come within its ambit of
prohibition. The Ordinance confers upon the mayor arbitrary and unrestricted
power to close down establishments. Ordinances such as this, which make
possible abuses in its execution, depending upon no conditions or
qualifications whatsoever other than the unregulated arbitrary will of the city
authorities as the touchstone by which its validity is to be tested, are
unreasonable and invalid. The Ordinance should have established a rule by
which its impartial enforcement could be secured. [91]

Ordinances placing restrictions upon the lawful use of property must, in

order to be valid and constitutional, specify the rules and conditions to be
observed and conduct to avoid; and must not admit of the exercise, or of an
opportunity for the exercise, of unbridled discretion by the law enforcers in
carrying out its provisions.
[92]
 Thus, in Coates v. City of Cincinnati, as cited in People v. Nazario, the
[93] [94]

U.S. Supreme Court struck down an ordinance that had made it illegal for
three or more persons to assemble on any sidewalk and there conduct
themselves in a manner annoying to persons passing by. The ordinance was
nullified as it imposed no standard at all because one may never know in
advance what annoys some people but does not annoy others.
Similarly, the Ordinance does not specify the standards to ascertain which
establishments tend to disturb the community, annoy the inhabitants, and
adversely affect the social and moral welfare of the community. The cited case
supports the nullification of the Ordinance for lack of comprehensible
standards to guide the law enforcers in carrying out its provisions.
Petitioners cannot therefore order the closure of the enumerated
establishments without infringing the due process clause. These lawful
establishments may be regulated, but not prevented from carrying on their
business. This is a sweeping exercise of police power that is a result of a lack
of imagination on the part of the City Council and which amounts to an
interference into personal and private rights which the Court will not
countenance. In this regard, we take a resolute stand to uphold the
constitutional guarantee of the right to liberty and property.
Worthy of note is an example derived from the U.S. of a reasonable
regulation which is a far cry from the ill-considered Ordinance enacted by the
City Council.
In FW/PBS, INC. v. Dallas, the city of Dallas adopted a comprehensive
[95]

ordinance regulating sexually oriented businesses, which are defined to

include adult arcades, bookstores, video stores, cabarets, motels, and
theaters as well as escort agencies, nude model studio and sexual encounter
centers. Among other things, the ordinance required that such businesses be
licensed. A group of motel owners were among the three groups of
businesses that filed separate suits challenging the ordinance. The motel
owners asserted that the city violated the due process clause by failing to
produce adequate support for its supposition that renting room for fewer than
ten (10) hours resulted in increased crime and other secondary effects. They
likewise argued than the ten (10)-hour limitation on the rental of motel rooms
placed an unconstitutional burden on the right to freedom of association.
Anent the first contention, the U.S. Supreme Court held that the
reasonableness of the legislative judgment combined with a study which the
city considered, was adequate to support the citys determination that motels
permitting room rentals for fewer than ten (10 ) hours should be included
within the licensing scheme. As regards the second point, the Court held that
limiting motel room rentals to ten (10) hours will have no discernible effect on
personal bonds as those bonds that are formed from the use of a motel room
for fewer than ten (10) hours are not those that have played a critical role in
the culture and traditions of the nation by cultivating and transmitting shared
ideals and beliefs.
The ordinance challenged in the above-cited case merely regulated the
targeted businesses. It imposed reasonable restrictions; hence, its validity
was upheld.
The case of Ermita Malate Hotel and Motel Operators Association, Inc. v.
City Mayor of Manila, it needs pointing out, is also different from this case in
[96]

that what was involved therein was a measure which regulated the mode in
which motels may conduct business in order to put an end to practices which
could encourage vice and immorality. Necessarily, there was no valid
objection on due process or equal protection grounds as the ordinance did not
prohibit motels. The Ordinance in this case however is not a regulatory
measure but is an exercise of an assumed power to prohibit. [97]

The foregoing premises show that the Ordinance is an unwarranted and

unlawful curtailment of property and personal rights of citizens. For being
unreasonable and an undue restraint of trade, it cannot, even under the guise
of exercising police power, be upheld as valid.
B. The Ordinance violates Equal
Protection Clause
Equal protection requires that all persons or things similarly situated
should be treated alike, both as to rights conferred and responsibilities
imposed. Similar subjects, in other words, should not be treated differently, so
as to give undue favor to some and unjustly discriminate against others. The [98]

guarantee means that no person or class of persons shall be denied the same
protection of laws which is enjoyed by other persons or other classes in like
circumstances. The equal protection of the laws is a pledge of the protection
[99]

of equal laws. It limits governmental discrimination. The equal protection

[100]

clause extends to artificial persons but only insofar as their property is

concerned. [101]

The Court has explained the scope of the equal protection clause in this
wise:

What does it signify? To quote from J.M. Tuason & Co. v. Land Tenure
Administration: The ideal situation is for the laws benefits to be available to all, that
none be placed outside the sphere of its coverage. Only thus could chance and favor
be excluded and the affairs of men governed by that serene and impartial uniformity,
which is of the very essence of the idea of law. There is recognition, however, in the
opinion that what in fact exists cannot approximate the ideal. Nor is the law
susceptible to the reproach that it does not take into account the realities of the
situation. The constitutional guarantee then is not to be given a meaning that
disregards what is, what does in fact exist. To assure that the general welfare be
promoted, which is the end of law, a regulatory measure may cut into the rights to
liberty and property. Those adversely affected may under such circumstances invoke
the equal protection clause only if they can show that the governmental act assailed,
far from being inspired by the attainment of the common weal was prompted by the
spirit of hostility, or at the very least, discrimination that finds no support in reason.
Classification is thus not ruled out, it being sufficient to quote from the Tuason
decision anew that the laws operate equally and uniformly on all persons under
similar circumstances or that all persons must be treated in the same manner, the
conditions not being different, both in the privileges conferred and the liabilities
imposed. Favoritism and undue preference cannot be allowed. For the principle is that
equal protection and security shall be given to every person under circumstances
which, if not identical, are analogous. If law be looked upon in terms of burden or
charges, those that fall within a class should be treated in the same fashion, whatever
restrictions cast on some in the group equally binding on the rest. [102]

Legislative bodies are allowed to classify the subjects of legislation. If the

classification is reasonable, the law may operate only on some and not all of
the people without violating the equal protection clause. The classification
[103]

must, as an indispensable requisite, not be arbitrary. To be valid, it must

conform to the following requirements:
1) It must be based on substantial distinctions.
2) It must be germane to the purposes of the law.
3) It must not be limited to existing conditions only.
4) It must apply equally to all members of the class.[104]

In the Courts view, there are no substantial distinctions between motels,

inns, pension houses, hotels, lodging houses or other similar establishments.
By definition, all are commercial establishments providing lodging and usually
meals and other services for the public. No reason exists for prohibiting
motels and inns but not pension houses, hotels, lodging houses or other
similar establishments. The classification in the instant case is invalid as
similar subjects are not similarly treated, both as to rights conferred and
obligations imposed. It is arbitrary as it does not rest on substantial
distinctions bearing a just and fair relation to the purpose of the Ordinance.
 The Court likewise cannot see the logic for prohibiting the business and
operation of motels in the Ermita-Malate area but not outside of this area. A
noxious establishment does not become any less noxious if located outside
the area.
The standard where women are used as tools for entertainment is also
discriminatory as prostitutionone of the hinted ills the Ordinance aims to
banishis not a profession exclusive to women. Both men and women have an
equal propensity to engage in prostitution. It is not any less grave a sin when
men engage in it. And why would the assumption that there is an ongoing
immoral activity apply only when women are employed and be inapposite
when men are in harness? This discrimination based on gender violates equal
protection as it is not substantially related to important government objectives.
Thus, the discrimination is invalid.
[105]

Failing the test of constitutionality, the Ordinance likewise failed to pass

the test of consistency with prevailing laws.

C. The Ordinance is repugnant

to general laws; it is ultra vires
The Ordinance is in contravention of the Code as the latter merely
empowers local government units to regulate, and not prohibit, the
establishments enumerated in Section 1 thereof.
The power of the City Council to regulate by ordinances the establishment,
operation, and maintenance of motels, hotels and other similar establishments
is found in Section 458 (a) 4 (iv), which provides that:

Section 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:

...

(4) Regulate activities relative to the use of land, buildings and structures within the
city in order to promote the general welfare and for said purpose shall:

...
(iv) Regulate the establishment, operation and maintenance of cafes, restaurants,
beerhouses, hotels, motels, inns, pension houses, lodging houses, and other similar
establishments, including tourist guides and transports . . . .

While its power to regulate the establishment, operation and maintenance

of any entertainment or amusement facilities, and to prohibit certain forms of
amusement or entertainment is provided under Section 458 (a) 4 (vii) of the
Code, which reads as follows:

Section 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:

...

(4) Regulate activities relative to the use of land, buildings and structures within the
city in order to promote the general welfare and for said purpose shall:

...

(vii) Regulate the establishment, operation, and maintenance of any entertainment or

amusement facilities, including theatrical performances, circuses, billiard pools,
public dancing schools, public dance halls, sauna baths, massage parlors, and other
places for entertainment or amusement; regulate such other events or activities for
amusement or entertainment, particularly those which tend to disturb the community
or annoy the inhabitants, or require the suspension or suppression of the same; or,
prohibit certain forms of amusement or entertainment in order to protect the social and
moral welfare of the community.

Clearly, with respect to cafes, restaurants, beerhouses, hotels, motels,

inns, pension houses, lodging houses, and other similar establishments, the
only power of the City Council to legislate relative thereto is to regulate them
to promote the general welfare. The Code still withholds from cities the power
to suppress and prohibit altogether the establishment, operation and
maintenance of such establishments. It is well to recall the rulings of the Court
in Kwong Sing v. City of Manila that:
[106]

The word regulate, as used in subsection (l), section 2444 of the Administrative Code,
means and includes the power to control, to govern, and to restrain; but regulate
should not be construed as synonymous with suppress or prohibit. Consequently,
under the power to regulate laundries, the municipal authorities could make proper
police regulations as to the mode in which the employment or business shall be
exercised.[107]

And in People v. Esguerra, wherein the Court nullified an ordinance of

[108]

the Municipality of Tacloban which prohibited the selling, giving and

dispensing of liquor ratiocinating that the municipality is empowered only to
regulate the same and not prohibit. The Court therein declared that:

(A)s a general rule when a municipal corporation is specifically given authority or

power to regulate or to license and regulate the liquor traffic, power to prohibit is
impliedly withheld. [109]

These doctrines still hold contrary to petitioners assertion that they were
[110]

modified by the Code vesting upon City Councils prohibitory powers.

Similarly, the City Council exercises regulatory powers over public dancing
schools, public dance halls, sauna baths, massage parlors, and other places
for entertainment or amusement as found in the first clause of Section 458 (a)
4 (vii). Its powers to regulate, suppress and suspend such other events or
activities for amusement or entertainment, particularly those which tend to
disturb the community or annoy the inhabitants and to prohibit certain forms of
amusement or entertainment in order to protect the social and moral welfare
of the community are stated in the second and third clauses, respectively of
the same Section. The several powers of the City Council as provided in
Section 458 (a) 4 (vii) of the Code, it is pertinent to emphasize, are separated
by semi-colons (;), the use of which indicates that the clauses in which these
powers are set forth are independent of each other albeit closely related to
justify being put together in a single enumeration or paragraph. These [111]

powers, therefore, should not be confused, commingled or consolidated as to

create a conglomerated and unified power of regulation, suppression and
prohibition. [112]

The Congress unequivocably specified the establishments and forms of

amusement or entertainment subject to regulation among which are
beerhouses, hotels, motels, inns, pension houses, lodging houses, and other
similar establishments (Section 458 (a) 4 (iv)), public dancing schools, public
dance halls, sauna baths, massage parlors, and other places for
entertainment or amusement (Section 458 (a) 4 (vii)). This enumeration
therefore cannot be included as among other events or activities for
amusement or entertainment, particularly those which tend to disturb the
community or annoy the inhabitants or certain forms of amusement or
entertainment which the City Council may suspend, suppress or prohibit.
 The rule is that the City Council has only such powers as are expressly
granted to it and those which are necessarily implied or incidental to the
exercise thereof. By reason of its limited powers and the nature thereof, said
powers are to be construed strictissimi juris and any doubt or ambiguity
arising out of the terms used in granting said powers must be construed
against the City Council. Moreover, it is a general rule in statutory
[113]

construction that the express mention of one person, thing, or consequence is

tantamount to an express exclusion of all others. Expressio unius est exclusio
alterium. This maxim is based upon the rules of logic and the natural workings
of human mind. It is particularly applicable in the construction of such statutes
as create new rights or remedies, impose penalties or punishments, or
otherwise come under the rule of strict construction. [114]

The argument that the City Council is empowered to enact

the Ordinance by virtue of the general welfare clause of the Code and of Art.
3, Sec. 18 (kk) of the Revised Charter of Manila is likewise without merit. On
the first point, the ruling of the Court in People v. Esguerra, is instructive. It
[115]

held that:

The powers conferred upon a municipal council in the general welfare clause, or
section 2238 of the Revised Administrative Code, refers to matters not covered by the
other provisions of the same Code, and therefore it can not be applied to intoxicating
liquors, for the power to regulate the selling, giving away and dispensing thereof is
granted specifically by section 2242 (g) to municipal councils. To hold that, under the
general power granted by section 2238, a municipal council may enact the ordinance
in question, notwithstanding the provision of section 2242 (g), would be to make the
latter superfluous and nugatory, because the power to prohibit, includes the power to
regulate, the selling, giving away and dispensing of intoxicating liquors.

On the second point, it suffices to say that the Code being a later
expression of the legislative will must necessarily prevail and override the
earlier law, the Revised Charter of Manila. Legis posteriores priores contrarias
abrogant, or later statute repeals prior ones which are repugnant thereto. As
between two laws on the same subject matter, which are irreconcilably
inconsistent, that which is passed later prevails, since it is the latest
expression of legislative will. If there is an inconsistency or repugnance
[116]

between two statutes, both relating to the same subject matter, which cannot
be removed by any fair and reasonable method of interpretation, it is the latest
expression of the legislative will which must prevail and override the earlier. [117]

Implied repeals are those which take place when a subsequently enacted
law contains provisions contrary to those of an existing law but no provisions
expressly repealing them. Such repeals have been divided into two general
classes: those which occur where an act is so inconsistent or irreconcilable
with an existing prior act that only one of the two can remain in force and
those which occur when an act covers the whole subject of an earlier act and
is intended to be a substitute therefor. The validity of such a repeal is
sustained on the ground that the latest expression of the legislative will should
prevail.[118]

In addition, Section 534(f) of the Code states that 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. Thus, submitting to petitioners interpretation that the Revised
Charter of Manila empowers the City Council to prohibit motels, that portion of
the Charter stating such must be considered repealed by the Code as it is at
variance with the latters provisions granting the City Council mere regulatory
powers.
It is well to point out that petitioners also cannot seek cover under the
general welfare clause authorizing the abatement of nuisances without judicial
proceedings. That tenet applies to a nuisance per se, or one which affects the
immediate safety of persons and property and may be summarily abated
under the undefined law of necessity. It can not be said that motels are
injurious to the rights of property, health or comfort of the community. It is a
legitimate business. If it be a nuisance per accidens it may be so proven in a
hearing conducted for that purpose. A motel is not per se a nuisance
warranting its summary abatement without judicial intervention. [119]

Notably, the City Council was conferred powers to prevent and prohibit
certain activities and establishments in another section of the Code which is
reproduced as follows:

Section 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:

...
(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;

...

If it were the intention of Congress to confer upon the City Council the
power to prohibit the establishments enumerated in Section 1 of
the Ordinance, it would have so declared in uncertain terms by adding them to
the list of the matters it may prohibit under the above-quoted Section.
The Ordinance now vainly attempts to lump these establishments with houses
of ill-repute and expand the City Councils powers in the second and third
clauses of Section 458 (a) 4 (vii) of the Code in an effort to overreach its
prohibitory powers. It is evident that these establishments may only be
regulated in their establishment, operation and maintenance.
It is important to distinguish the punishable activities from the
establishments themselves. That these establishments are recognized
legitimate enterprises can be gleaned from another Section of the Code.
Section 131 under the Title on Local Government Taxation expressly
mentioned proprietors or operators of massage clinics, sauna, Turkish and
Swedish baths, hotels, motels and lodging houses as among the contractors
defined in paragraph (h) thereof. The same Section also defined amusement
as a pleasurable diversion and entertainment, synonymous to relaxation,
avocation, pastime or fun; and amusement places to include theaters,
cinemas, concert halls, circuses and other places of amusement where one
seeks admission to entertain oneself by seeing or viewing the show or
performances. Thus, it can be inferred that the Code considers these
establishments as legitimate enterprises and activities. It is well to recall the
maxim reddendo singula singulis which means that words in different parts of
a statute must be referred to their appropriate connection, giving to each in its
place, its proper force and effect, and, if possible, rendering none of them
useless or superfluous, even if strict grammatical construction demands
otherwise. Likewise, where words under consideration appear in different
sections or are widely dispersed throughout an act the same principle applies.
[120]

Not only does the Ordinance contravene the Code, it likewise runs counter
to the provisions of P.D. 499. As correctly argued by MTDC, the statute had
already converted the residential Ermita-Malate area into a commercial area.
The decree allowed the establishment and operation of all kinds of
commercial establishments except warehouse or open storage depot, dump
or yard, motor repair shop, gasoline service station, light industry with any
machinery or funeral establishment. The rule is that for an ordinance to be
valid and to have force and effect, it must not only be within the powers of the
council to enact but the same must not be in conflict with or repugnant to the
general law. As succinctly illustrated in Solicitor General v. Metropolitan
[121]

Manila Authority: [122]

The requirement that the enactment must not violate existing law explains itself. Local
political subdivisions are able to legislate only by virtue of a valid delegation of
legislative power from the national legislature (except only that the power to create
their own sources of revenue and to levy taxes is conferred by the Constitution itself).
They are mere agents vested with what is called the power of subordinate legislation.
As delegates of the Congress, the local government units cannot contravene but must
obey at all times the will of their principal. In the case before us, the enactment in
question, which are merely local in origin cannot prevail against the decree, which has
the force and effect of a statute.[123]

Petitioners contend that the Ordinance enjoys the presumption of validity.

While this may be the rule, it has already been held that although the
presumption is always in favor of the validity or reasonableness of the
ordinance, such presumption must nevertheless be set aside when the
invalidity or unreasonableness appears on the face of the ordinance itself or is
established by proper evidence. The exercise of police power by the local
government is valid unless it contravenes the fundamental law of the land, or
an act of the legislature, or unless it is against public policy or is
unreasonable, oppressive, partial, discriminating or in derogation of a
common right. [124]

Conclusion

All considered, the Ordinance invades fundamental personal and property

rights and impairs personal privileges. It is constitutionally infirm.
The Ordinance contravenes statutes; it is discriminatory and unreasonable in
its operation; it is not sufficiently detailed and explicit that abuses may attend
the enforcement of its sanctions. And not to be forgotten, the City Council
under the Code had no power to enact the Ordinance and is therefore ultra
vires, null and void.
 Concededly, the challenged Ordinance was enacted with the best of
motives and shares the concern of the public for the cleansing of the Ermita-
Malate area of its social sins. Police power legislation of such character
deserves the full endorsement of the judiciary we reiterate our support for it.
But inspite of its virtuous aims, the enactment of the Ordinance has no
statutory or constitutional authority to stand on. Local legislative bodies, in this
case, the City Council, cannot prohibit the operation of the enumerated
establishments under Section 1 thereof or order their transfer or conversion
without infringing the constitutional guarantees of due process and equal
protection of laws not even under the guise of police power.
WHEREFORE, the Petition is hereby DENIED and the decision of the
Regional Trial Court declaring the Ordinance void is AFFIRMED. Costs
against petitioners.
SO ORDERED.

[G.R. No. 135535. February 14, 2005]

ZOOMZAT, INC., petitioner, vs. THE PEOPLE OF THE PHILIPPINES,

ROMULO S. RODRIGUEZ, JR., AVELINO C. CANOSA, ROLANDO
G. CHAVEZ, CEFERINO C. GARCIA, DEMOCRITO C. LAGO,
ANTONIO F. LUGOD, WAYNE T. MILITANTE, JOHNNY L.
MOTOOMULL, JR., FLORENTINO S. OCAMPO, EDUARDO L.
REMEGOSO, CLEOFAS B. SALUGSUGAN, RAFAEL T.
BERDELAO, and WINFREDO T. MILITANTE, JR., respondents.

DECISION

YNARES-SANTIAGO, J.:

Assailed in this petition for review on certiorari is the Resolution dated

[1]

June 17, 1998 of the Sandiganbayan in Crim. Case No. 22026 approving the
withdrawal of the Information charging herein respondents, all members of
the Sangguniang Panlungsod of Gingoog City, of violation of Section 3(e),
R.A. No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act,
and its Resolution dated September 9, 1998, denying petitioner Zoomzat,
[2]

Inc.s motion for reconsideration.

The factual antecedents are as follows:

 Petitioner Zoomzat, Inc. alleged that on December 20, 1991,
the Sangguniang Panlungsod of Gingoog City passed Resolution No.
261 which resolved to express the willingness of the City of Gingoog to allow
[3]

Zoomzat to install and operate a cable TV system. Thereupon, petitioner

applied for a mayors permit but the same was not acted upon by the mayors
office.

Subsequently, or on April 6, 1993, respondents enacted Ordinance No.

19 which granted a franchise to Gingoog Spacelink Cable TV, Inc. to operate
[4]

a cable television for a period of ten (10) years, subject to automatic renewal.

Hence, on July 30, 1993, petitioner filed a complaint with the Office of the
Ombudsman against herein respondents for violation of Section 3(e), R.A. No.
3019. The complaint alleged that in enacting Ordinance No. 19, the
respondents gave unwarranted benefits, advantage or preference to
Spacelink, to the prejudice of petitioner who was a prior grantee-applicant by
virtue of Resolution No. 261.

On December 20, 1994, Graft Investigation Officer I Virginia Tehano-Ang,

recommended the indictment of the respondents under Section 3(e), R.A. No.
3019, which recommendation was affirmed on review by Special Prosecution
[5]

Officer II Rolando Ines. [6]

Accordingly, a criminal information for violation of Section 3(e), R.A. No.

3019, was filed against the respondents before the Sandiganbayan. The case
was docketed as Crim. Case No. 22026.

However, upon directive by the Sandiganbayan to restudy the instant

case, Special Prosecution Officer II Antonio Manzano recommended the
dismissal of the case and the Information withdrawn for lack of probable
cause. On further investigation, Special Prosecution Officer III Victor Pascual
[7]

also recommended that the case be dismissed for insufficiency of evidence. [8]

Consequently, on June 17, 1998, the Sandiganbayan issued the now

assailed resolution approving the dismissal of the case and ordering the
withdrawal of the Information against the respondents. On September 9,
1998, the Sandiganbayan denied petitioners motion for reconsideration.
 Hence, the instant petition.

Petitioner assails the findings of Special Prosecutor Pascual that under

Executive Order No. 205, it is the National Telecommunications Commission
[9]

(NTC), and not the local government unit, that has the power and authority to
allow or disallow the operation of cable television. It argues that while the NTC
has the authority to grant the franchise to operate a cable television, this
power is not exclusive because under the Local Government Code, the city
council also has the power to grant permits, licenses and franchises in aid of
the local government units regulatory or revenue raising powers.

Petitioner also contends that the grant of exclusive franchise to Spacelink

for a period of ten (10) years subject to automatic renewal, contravenes
Section 2 of Executive Order No. 205, which provides that a certificate of
authority to operate a CATV by the Commission shall be on a non-exclusive
basis and for a period not to exceed 15 years. Thus, in awarding an exclusive
franchise, the petitioner asserts that respondents gave Spacelink undue or
unwarranted advantage and preference because it stifled business
competition. It claims that, even assuming the lack of actual damage or injury,
the fact remains that respondents extended undue favor and advantage to
Spacelink, which makes them liable under Section 3(e) of R.A. No. 3019.

The petition is bereft of merit.

Respondents were charged with violation of Section 3(e), R.A. No. 3019,
which states:

Section 3. Corrupt practices of public officers. In addition to acts or omissions of

public officers already penalized by existing law, the following shall constitute corrupt
practices of any public officer and are hereby declared to be unlawful:

(e) Causing any undue injury to any party, including the Government, or giving any
private party any unwarranted benefits, advantage or preference in the discharge of his
official, administrative or judicial functions through manifest partiality, evident bad
faith or gross inexcusable negligence. This provision shall apply to officers and
employees of offices or government corporations charged with the grant of licenses or
permits or other concessions. (Emphasis ours)
 Thus, for one to be held liable under Section 3(e), R.A. No. 3019, he must
be an officer or employee of offices or government corporations charged with
the grant of licenses or permits or other concessions.

Executive Order No. 205 clearly provides that only the NTC could grant
certificates of authority to cable television operators and issue the necessary
implementing rules and regulations. Likewise, Executive Order No. 436,
vests with the NTC the regulation and supervision of cable television
[10]

industry in the Philippines.

Our pronouncement in Batangas CATV, Inc. v. Court of Appeals, is [11]

pertinent:

There is no law specifically authorizing the LGUs to grant franchises to operate

CATV system. Whatever authority the LGUs had before, the same had been
withdrawn when President Marcos issued P.D. No. 1512 terminating all franchises,
permits or certificates for the operation of CATV system previously granted by local
governments. Today, pursuant to Section 3 of E.O. No. 436, only persons,
associations, partnerships, corporations or cooperatives granted a Provisional
Authority or Certificate of Authority by the NTC may install, operate and maintain a
cable television system or render cable television service within a service area.

It is clear that in the absence of constitutional or legislative authorization,

municipalities have no power to grant franchises. Consequently, the protection of the
constitutional provision as to impairment of the obligation of a contract does not
extend to privileges, franchises and grants given by a municipality in excess of its
powers, or ultra vires.

It is undisputed that respondents were not employees of NTC. Instead,

they were charged in their official capacity as members of the Sangguniang
Panlungsod of Gingoog City. As such, they cannot be charged with violation of
Section 3(e), R.A. No. 3019 for enacting Ordinance No. 19 which granted
Spacelink a franchise to operate a cable television.

Petitioner, however, insists that while the NTC is the licensing and
regulatory body, nonetheless, the actual operations of cable television entails
other activities, which may be regulated by the local government unit pursuant
to the general welfare clause or subject to its revenue generating powers.

Again, this issue has been discussed in Batangas CATV, Inc. v. Court of
Appeals, thus:
[12]

But, lest we be misunderstood, nothing herein should be interpreted as to strip LGUs

of their general power to prescribe regulations under the general welfare clause of the
Local Government Code. It must be emphasized that when E.O. No. 436 decrees that
the regulatory power shall be vested solely in the NTC, it pertains to the regulatory
power over those matters, which are peculiarly within the NTCs competence

There is no dispute that respondent Sangguniang Panlungsod, like other local

legislative bodies, has been empowered to enact ordinances and approve resolutions
under the general welfare clause of B.P. Blg. 337, the Local Government Code of
1983. That it continues to possess such power is clear under the new law, R.A. No.
7160 (the Local Government Code of 1991).

Indeed, under the general welfare clause of the Local Government Code,
the local government unit can regulate the operation of cable television but
only when it encroaches on public properties, such as the use of public
streets, rights of ways, the founding of structures, and the parceling of large
regions. Beyond these parameters, its acts, such as the grant of the
[13]

franchise to Spacelink, would be ultra vires.

Plainly, the Sangguniang Panlungsod of Gingoog City overstepped the

bounds of its authority when it usurped the powers of the NTC with the
enactment of Ordinance No. 19. Being a void legislative act, Ordinance No. 19
did not confer any right nor vest any privilege to Spacelink. As such, petitioner
could not claim to have been prejudiced or suffered injury thereby. Incidentally,
petitioners claim of undue injury becomes even more baseless with the finding
that Spacelink did not commence to operate despite the grant to it of a
franchise under Ordinance No. 19.

In addition, petitioner could not impute manifest partiality, evident bad faith
or gross inexcusable negligence on the part of the respondents when they
enacted Ordinance No. 19. A perfunctory reading of Resolution No. 261
shows that the Sangguniang Panlungsod did not grant a franchise to it but
merely expressed its willingness to allow the petitioner to install and operate a
cable television. Had respondents intended otherwise, they would have
couched the resolution in more concrete, specific and categorical terms. In
contrast, Ordinance No. 19 clearly and unequivocally granted a franchise to
Spacelink, specifically stating therein its terms and conditions. Not being a
bona fide franchise holder, petitioner could not claim prior right on the strength
of Resolution No. 261.

WHEREFORE, in view of the foregoing, the petition is DENIED. The

assailed Resolution of the Sandiganbayan dated June 17, 1998, approving
the withdrawal of the Information against the respondents and the dismissal of
Crim. Case No. 22026, for violation of Section 3(e), R.A. No. 3019, and the
Resolution dated September 9, 1998, denying reconsideration thereof, are
AFFIRMED.

SO ORDERED.

G.R. No. 198860 July 23, 2012

ABRAHAM RIMANDO, Petitioner,

vs.
NAGUILIAN EMISSION TESTING CENTER, INC., represented by its President, ROSEMARIE
LLARENAS and HON. COURT OF APPEALS, Respondents.

RESOLUTION

REYES, J.:

Before us is a petition for review on certiorari1 under Rule 45 of the Rules of Court seeking to annul
and set aside Decision2 dated March 30, 2011 of the Court of Appeals (CA) in CA-G.R. SP NO.
112152.

The Facts

The present controversy stemmed from a petition for mandamus and damages filed before Branch
67 of the Regional Trial Court (RTC) of Bauang, La Union, by Naguilian Emission Testing Center,
Inc., represented by its President, Rosemarie Llarenas (respondent) against Abraham P. Rimando
(petitioner), who, at the time material to the case, was the sitting mayor of the Municipality of
Naguilian, La Union.
The petition prayed for the issuance of a writ of mandamus to compel the petitioner to issue a
business permit in favor of the respondent.

In support of its plea, the respondent claimed that its business is being conducted on a parcel of land
which formerly belonged to the national government but later on certified by the Department of
Environment and Natural Resources (DENR) as an alienable and disposable land of the public
domain. The respondent had operated its business of emission testing on the land from 2005 to
2007. On January 18, 2008, the respondent filed an application for the renewal of its business permit
and paid the corresponding fees therefor.

The petitioner, however, refused to issue a business permit unless and until the respondent executes
a contract of lease with the Municipality of Naguilian. The respondent was amenable to signing such
contract subject to some proposed revisions, which, however, were not acceptable to the petitioner.
The parties did not reach a common ground hence, the petition for mandamus.

The Ruling of the RTC

On May 26, 2009, the RTC denied the petition3 for lack of merit based on the ratiocinations that: (a)
the Municipality of Naguilian is the declared owner of the subject parcel of land by virtue of Tax
Declaration No. 002-01197; (b) under Section 6A.01 of the Revenue Code of the Municipality of
Naguilian, the municipality has the right to require the petitioner to sign a contract of lease because
its business operation is being conducted on a real property owned by the municipality; and (c) a
mayors duty to issue business permits is discretionary in nature which may not be enforced by a
mandamus writ. The decretal portion of the decision reads:

WHEREFORE, premises considered, the petition is DENIED for lack of merit.

SO ORDERED.4

The Ruling of the CA

Unwaivering, the respondent appealed to the CA. In its Decision 5 dated March 30, 2011, the CA held
that the appeal was dismissible on the ground of mootness considering that the period for which the
business period was being sought had already lapsed. As such, any ruling on the matter would bring
no practical relief. Nonetheless, the CA proceeded to resolve the issues involved in the appeal for
academic purposes.

The CA disagreed with the RTC and found that the factual milieu of the case justifies the issuance of
a writ of mandamus. The CA reasoned that the tax declaration in the name of the municipality was
insufficient basis to require the execution of a contract of lease as a condition sine qua non for the
renewal of a business permit. The CA further observed that Sangguniang Bayan Resolution No.
2007-81, upon which the municipality anchored its imposition of rental fees, was void because it
failed to comply with the requirements of the Local Government Code and its Implementing Rules
and Regulations.
The CA held that the petitioner may not be held liable for damages since his action or inaction, for
that matter, was done in the performance of official duties that are legally protected by the
presumption of good faith. The CA likewise stressed that the civil action filed against the petitioner
had already become moot and academic upon the expiration of his term as the mayor of Naguilian,
La Union.

Despite its incessant declarations on the mootness of the case, the CA disposed of the appeal in this
wise:

WHEREFORE, the Decision dated 26 May 2009 of the Regional Trial Court, First Judicial Region,
Bauang, La Union, Branch 67, in Special Civil Action Case No. 72-BG, is hereby REVERSED and
SET ASIDE.

SO ORDERED.6

The petitioner moved for reconsideration7 questioning the pronouncement of the CA that
Sangguniang Bayan Resolution No. 2007-81 was void and arguing that a petition for mandamus is
not the proper vehicle to determine the issue on the ownership of the subject land. The motion was
denied in the CA Resolution8 dated September 30, 2011.

The petitioner is now before this Court reiterating the arguments raised in his motion for
reconsideration.

Our Ruling

We agree with the CA that the petition for mandamus has already become moot and academic
owing to the expiration of the period intended to be covered by the business permit.

An issue or a case becomes moot and academic when it ceases to present a justiciable controversy
so that a determination thereof would be without practical use and value 9 or in the nature of things,
cannot be enforced.10In such cases, there is no actual substantial relief to which the applicant would
be entitled to and which would be negated by the dismissal of the petition. 11 As a rule, courts decline
jurisdiction over such case, or dismiss it on ground of mootness. 12

The objective of the petition for mandamus to compel the petitioner to grant a business permit in
favor of respondent corporation for the period 2008 to 2009 has already been superseded by the
passage of time and the expiration of the petitioners term as mayor. Verily then, the issue as to
whether or not the petitioner, in his capacity as mayor, may be compelled by a writ of mandamus to
release the respondents business permit ceased to present a justiciable controversy such that any
ruling thereon would serve no practical value. Should the writ be issued, the petitioner can no longer
abide thereby; also, the effectivity date of the business permit no longer subsists.

While the CA is not precluded from proceeding to resolve the otherwise moot appeal of the
respondent, we find that the decretal portion of its decision was erroneously couched.
The CAs conclusions on the issue of ownership over the subject land and the invalidity of
Sangguniang Bayan Resolution No. 2007-81, aside from being unsubstantiated by convincing
evidence, can no longer be practically utilized in favor of the petitioner. Thus, the overriding and
decisive factor in the final disposition of the appeal was its mootness and the CA should have
dismissed the same along with the petition for mandamus that spawned it.

More importantly, a mayor cannot be compelled by mandamus to issue a business permit since the
exercise of the same is a delegated police power hence, discretionary in nature. This was the
pronouncement of this Court in Roble Arrastre, Inc. v. Hon. Villaflor13 where a determination was
made on the nature of the power of a mayor to grant business permits under the Local Government
Code,14 viz:

Central to the resolution of the case at bar is a reading of Section 444(b)(3)(iv) of the Local
Government Code of 1991, which provides, thus:

SEC. 444. The Chief Executive: Powers, Duties, Functions and Compensation.

(b) For efficient, effective and economical governance the purpose of which is the general
welfare of the municipality and its inhabitants pursuant to Section 16 of this Code, the
municipal mayor shall:

xxxx

3) Initiate and maximize the generation of resources and revenues, and apply the same to
the implementation of development plans, program objectives and priorities as provided for
under Section 18 of this Code, particularly those resources and revenues programmed for
agro-industrial development and country-wide growth and progress, and relative thereto,
shall:

xxxx

(iv) Issue licenses and permits and suspend or revoke the same for any violation of the
conditions upon which said licenses or permits had been issued, pursuant to law or
ordinance.

As Section 444(b)(3)(iv) so states, the power of the municipal mayor to issue licenses is pursuant to
Section 16 of the Local Government Code of 1991, which declares:

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.

Section 16, known as the general welfare clause, encapsulates the delegated police power to local
governments. Local government units exercise police power through their respective legislative
1wphi1

bodies. Evidently, the Local Government Code of 1991 is unequivocal that the municipal mayor has
the power to issue licenses and permits and suspend or revoke the same for any violation of the
conditions upon which said licenses or permits had been issued, pursuant to law or ordinance. x x x

xxxx

Section 444(b)(3)(iv) of the Local Government Code of 1991, whereby the power of the respondent
mayor to issue license and permits is circumscribed, is a manifestation of the delegated police power
of a municipal corporation. Necessarily, the exercise thereof cannot be deemed ministerial. As to the
question of whether the power is validly exercised, the matter is within the province of a writ of
certiorari, but certainly, not of mandamus.15 (Citations omitted)

Indeed, as correctly ruled by the RTC, the petition for mandamus filed by the respondent is
incompetent to compel the exercise of a mayors discretionary duty to issue business permits.

WHEREFORE, premises considered, the Decision dated March 30, 2011 of the Court of Appeals in
CA-G.R. SP No. 112152 is hereby SET ASIDE. The Decision dated May 26, 2009 of the Regional
Trial Court of Bauang, La Union is REINSTATED.

SO ORDERED.

MUNICIPALITY OF PARAAQUE, petitioner, vs. V.M. REALTY

CORPORATION, respondent.

DECISION

PANGANIBAN, J.:

A local government unit (LGU), like the Municipality of Paraaque, cannot

authorize an expropriation of private property through a mere resolution of its
lawmaking body. The Local Government Code expressly and clearly requires
an ordinance or a local law for the purpose. A resolution that merely
expresses the sentiment or opinion of the Municipal Council will not
suffice. On the other hand, the principle of res judicata does not bar
subsequent proceedings for the expropriation of the same property when all
the legal requirements for its valid exercise are complied with.

Statement of the Case

 These principles are applied by this Court in resolving this petition for
review on certiorari of the July 22, 1996 Decision of the Court of Appeals in
[1] [2]

CA GR CV No. 48048, which affirmed in toto the Regional Trial Courts August
[3]

9, 1994 Resolution. The trial court dismissed the expropriation suit as follows:
[4]

The right of the plaintiff to exercise the power of eminent domain is not
disputed. However, such right may be exercised only pursuant to an Ordinance (Sec.
19, R.A. No. 7160). In the instant case, there is no such ordinance passed by the
Municipal Council of Paraaque enabling the Municipality, thru its Chief Executive, to
exercise the power of eminent domain. The complaint, therefore, states no cause of
action.

Assuming that plaintiff has a cause of action, the same is barred by a prior
judgment. On September 29, 1987, the plaintiff filed a complaint for expropriation
involving the same parcels of land which was docketed as Civil Case No. 17939 of
this Court (page 26, record). Said case was dismissed with prejudice on May 18, 1988
(page 39, record). The order of dismissal was not appealed, hence, the same became
final. The plaintiff can not be allowed to pursue the present action without violating
the principle of [r]es [j]udicata. While defendant in Civil Case No. 17939 was
Limpan Investment Corporation, the doctrine of res judicata still applies because the
judgment in said case (C.C. No. 17939) is conclusive between the parties and their
successors-in-interest (Vda. de Buncio vs. Estate of the late Anita de Leon).The herein
defendant is the successor-in-interest of Limpan Investment Corporation as shown by
the Deed of Assignment Exchange executed on June 13, 1990.

WHEREFORE, defendants motion for reconsideration is hereby granted. The order

dated February 4, 1994 is vacated and set aside.

This case is hereby dismissed. No pronouncement as to costs.

SO ORDERED. [5]

Factual Antecedents

Pursuant to Sangguniang Bayan Resolution No. 93-95, Series of 1993,

the Municipality of Paraaque filed on September 20, 1993, a Complaint for
[6]

expropriation against Private Respondent V.M. Realty Corporation over two

[7]

parcels of land (Lots 2-A-2 and 2-B-1 of Subdivision Plan Psd-17917), with a
combined area of about 10,000 square meters, located at Wakas, San
Dionisio, Paraaque, Metro Manila, and covered by Torrens Certificate of Title
No. 48700. Allegedly, the complaint was filed for the purpose of alleviating the
living conditions ofthe underprivileged by providing homes for the homeless
through a socialized housing project. Parenthetically, it was also for this
[8]

stated purpose that petitioner, pursuant to its Sangguniang Bayan Resolution

No. 577, Series of 1991, previously made an offer to enter into a negotiated
[9]

sale of the property with private respondent, which the latter did not accept. [10]

Finding the Complaint sufficient in form and substance, the Regional Trial
Court of Makati, Branch 134, issued an Order dated January 10, 1994, giving [11]

it due course. Acting on petitioners motion, said court issued an Order dated
February 4, 1994, authorizing petitioner to take possession of the subject
[12]

property upon deposit with its clerk of court of an amount equivalent to 15

percent of its fair market value based on its current tax declaration.

On February 21, 1994, private respondent filed its Answer containing

affirmative defenses and a counterclaim, alleging in the main that (a) the
[13]

complaint failed to state a cause of action because it was filed pursuant to a

resolution and not to an ordinance as required by RA 7160 (the Local
Government Code); and (b) the cause of action, if any, was barred by a prior
judgment or res judicata. On private respondents motion, its Answer was
treated as a motion to dismiss. On March 24, 1994, petitioner filed its
[14] [15]

opposition, stressing that the trial courts Order dated February 4, 1994 was in
accord with Section 19 of RA 7160, and that the principle of res judicata was
not applicable.

Thereafter, the trial court issued its August 9, 1994 Resolution nullifying
[16]

its February 4, 1994 Order and dismissing the case. Petitioners motions for
reconsideration and transfer of venue were denied by the trial court in a
Resolution dated December 2, 1994. Petitioner then appealed to
[17]

Respondent Court, raising the following issues:

1. Whether or not the Resolution of the Paraaque Municipal Council No. 93-
95, Series of 1993 is a substantial compliance of the statutory
requirement of Section 19, R.A. 7180 [sic] in the exercise of the power
of eminent domain by the plaintiff-appellant.
 2. Whether or not the complaint in this case states no cause of action.

3. Whether or not the strict adherence to the literal observance to the rule of
procedure resulted in technicality standing in the way of substantial
justice.

4. Whether or not the principle of res judicata is applicable to the present case. [18]

As previously mentioned, the Court of Appeals affirmed in toto the trial

courts Decision. Respondent Court, in its assailed Resolution promulgated on
January 8, 1997, denied petitioners Motion for Reconsideration for lack of
[19]

merit.

Hence, this appeal. [20]

The Issues

Before this Court, petitioner posits two issues, viz.:

1. A resolution duly approved by the municipal council has the same force and effect
of an ordinance and will not deprive an expropriation case of a valid cause of action.

2. The principle of res judicata as a ground for dismissal of case is not applicable
when public interest is primarily involved. [21]

The Courts Ruling

The petition is not meritorious.

First Issue:

Resolution Different from an Ordinance

Petitioner contends that a resolution approved by the municipal council for

the purpose of initiating an expropriation case substantially complies with the
requirements of the law because the terms ordinance and resolution are
[22]

synonymous for the purpose of bestowing authority [on] the local government
unit through its chief executive to initiate the expropriation proceedings in
court in the exercise of the power of eminent domain. Petitioner seeks to
[23]
bolster this contention by citing Article 36, Rule VI of the Rules and
Regulations Implementing the Local Government Code, which provides: If the
LGU fails to acquire a private property for public use, purpose, or welfare
through purchase, the LGU may expropriate said property through
a resolution of the Sanggunian authorizing its chief executive to initiate
expropriation proceedings. (Italics supplied.)
[24]

The Court disagrees. The power of eminent domain is lodged in the

legislative branch of government, which may delegate the exercise thereof to
LGUs, other public entities and public utilities. An LGU may therefore
[25]

exercise the power to expropriate private property only when authorized by

Congress and subject to the latters control and restraints, imposed through
the law conferring the power or in other legislations. In this case, Section 19
[26]

of RA 7160, which delegates to LGUs the power of eminent domain, also lays
down the parameters for its exercise. It provides as follows:

Section 19. Eminent Domain. A local government unit may, through its chief
executive and acting pursuant to an ordinance, exercise the power of eminent domain
for public use, or purpose, or welfare for the benefit of the poor and the landless, upon
payment of just compensation, pursuant to the provisions of the Constitution and
pertinent laws: Provided, however, That the power of eminent domain may not be
exercised unless a valid and definite offer has been previously made to the owner, and
such offer was not accepted: Provided, further, That the local government unit may
immediately take possession of the property upon the filing of the expropriation
proceedings and upon making a deposit with the proper court of at least fifteen
percent (15%) of the fair market value of the property based on the current tax
declaration of the property to be expropriated: Provided, finally, That, the amount to
be paid for the expropriated property shall be determined by the proper court, based
on the fair market value at the time of the taking of the property. (Emphasis supplied)

Thus, the following essential requisites must concur before an LGU can
exercise the power of eminent domain:

1. An ordinance is enacted by the local legislative council authorizing the local chief
executive, in behalf of the LGU, to exercise the power of eminent domain or pursue
expropriation proceedings over a particular private property.
 2. The power of eminent domain is exercised for public use, purpose or welfare, or for
the benefit of the poor and the landless.

3. There is payment of just compensation, as required under Section 9, Article III of the
Constitution, and other pertinent laws.

4. A valid and definite offer has been previously made to the owner of the property
sought to be expropriated, but said offer was not accepted.[27]

In the case at bar, the local chief executive sought to exercise the power of
eminent domain pursuant to a resolution of the municipal council. Thus, there
was no compliance with the first requisite that the mayor be authorized
through an ordinance. Petitioner cites Camarines Sur vs. Court of Appeals to [28]

show that a resolution may suffice to support the exercise of eminent domain
by an LGU. This case, however, is not in point because the applicable law at
[29]

that time was BP 337, the previous Local Government Code, which had
[30]

provided that a mere resolution would enable an LGU to exercise eminent

domain. In contrast, RA 7160, the present Local Government Code which
[31]

was already in force when the Complaint for expropriation was filed, explicitly
required an ordinance for this purpose.

We are not convinced by petitioners insistence that the terms resolution

and ordinance are synonymous. A municipal ordinance is different from a
resolution. An ordinance is a law, but a resolution is merely a declaration of
the sentiment or opinion of a lawmaking body on a specific matter. An [32]

ordinance possesses a general and permanent character, but a resolution is

temporary in nature. Additionally, the two are enacted differently -- a third
reading is necessary for an ordinance, but not for a resolution, unless decided
otherwise by a majority of all the Sanggunian members. [33]

If Congress intended to allow LGUs to exercise eminent domain through a

mere resolution, it would have simply adopted the language of the previous
Local Government Code. But Congress did not. In a clear divergence from the
previous Local Government Code, Section 19 of RA 7160 categorically
requires that the local chief executive act pursuant to an ordinance.Indeed,
[l]egislative intent is determined principally from the language of a
statute. Where the language of a statute is clear and unambiguous, the law is
applied according to its express terms, and interpretation would be resorted to
only where a literal interpretation would be either impossible or absurd or
would lead to an injustice. In the instant case, there is no reason to depart
[34]

from this rule, since the law requiring an ordinance is not at all impossible,
absurd, or unjust.

Moreover, the power of eminent domain necessarily involves a derogation

of a fundamental or private right of the people. Accordingly, the manifest
[35]

change in the legislative language -- from resolution under BP 337 to

ordinance under RA 7160 -- demands a strict construction. No species of
property is held by individuals with greater tenacity, and is guarded by the
Constitution and laws more sedulously, than the right to the freehold of
inhabitants. When the legislature interferes with that right and, for greater
public purposes, appropriates the land of an individual without his consent, the
plain meaning of the law should not be enlarged by doubtful interpretation. [36]

Petitioner relies on Article 36, Rule VI of the Implementing Rules, which

requires only a resolution to authorize an LGU to exercise eminent
domain. This is clearly misplaced, because Section 19 of RA 7160, the law
itself, surely prevails over said rule which merely seeks to implement it. It is
[37]

axiomatic that the clear letter of the law is controlling and cannot be amended
by a mere administrative rule issued for its implementation. Besides, what the
discrepancy seems to indicate is a mere oversight in the wording of the
implementing rules, since Article 32, Rule VI thereof, also requires that, in
exercising the power of eminent domain, the chief executive of the LGU must
act pursuant to an ordinance.

In this ruling, the Court does not diminish the policy embodied in Section
2, Article X of the Constitution, which provides that territorial and political
subdivisions shall enjoy local autonomy. It merely upholds the law as worded
in RA 7160. We stress that an LGU is created by law and all its powers and
rights are sourced therefrom. It has therefore no power to amend or act
beyond the authority given and the limitations imposed on it by law. Strictly
speaking, the power of eminent domain delegated to an LGU is in reality not
eminent but inferior domain, since it must conform to the limits imposed by the
delegation, and thus partakes only of a share in eminent domain. Indeed, the
[38]

national legislature is still the principal of the local government units, which
cannot defy its will or modify or violate it.
[39]
Complaint Does Not State a Cause of Action

In its Brief filed before Respondent Court, petitioner argues that

its Sanguniang Bayan passed an ordinance on October 11, 1994 which
reiterated its Resolution No. 93-35, Series of 1993, and ratified all the acts of
its mayor regarding the subject expropriation. [40]

This argument is bereft of merit. In the first place, petitioner merely alleged
the existence of such an ordinance, but it did not present any certified true
copy thereof. In the second place,petitioner did not raise this point before this
Court. In fact, it was mentioned by private respondent, and only in passing.
In any event, this allegation does not cure the inherent defect of petitioners
[41]

Complaint for expropriation filed on September 23, 1993. It is hornbook

doctrine that:

x x x in a motion to dismiss based on the ground that the complaint fails to state a
cause of action, the question submitted before the court for determination is the
sufficiency of the allegations in the complaint itself. Whether those allegations are
true or not is beside the point, for their truth is hypothetically admitted by the
motion. The issue rather is: admitting them to be true, may the court render a valid
judgment in accordance with the prayer of the complaint? [42]

The fact that there is no cause of action is evident from the face of the
Complaint for expropriation which was based on a mere resolution. The
absence of an ordinance authorizing the same is equivalent to lack of cause
of action. Consequently, the Court of Appeals committed no reversible error in
affirming the trial courts Decision which dismissed the expropriation suit.

Second Issue:

Eminent Domain Not Barred by Res Judicata

As correctly found by the Court of Appeals and the trial court, all the
[43] [44]

requisites for the application of res judicata are present in this case. There is a
previous final judgment on the merits in a prior expropriation case involving
identical interests, subject matter and cause of action, which has been
rendered by a court having jurisdiction over it.
 Be that as it may, the Court holds that the principle of res judicata, which
finds application in generally all cases and proceedings, cannot bar
[45]

the right of the State or its agent to expropriate private property. The very
nature of eminent domain, as an inherent power of the State, dictates that
the right to exercise the power be absolute and unfettered even by a prior
judgment or res judicata. The scope of eminent domain is plenary and, like
police power, can reach every form of property which the State might need for
public use. All separate interests of individuals in property are held of the
[46]

government under this tacit agreement or implied reservation. Notwithstanding

the grant to individuals, the eminent domain, the highest and most exact idea
of property, remains in the government, or in the aggregate body of the people
in their sovereign capacity; and they have the right to resume the possession
of the property whenever the public interest requires it. Thus, the State or its
[47]

authorized agent cannot be forever barred from exercising said right by

reason alone of previous non-compliance with any legal requirement.

While the principle of res judicata does not denigrate the right of the State
to exercise eminent domain, it does apply to specific issues decided in a
previous case. For example, a final judgment dismissing an expropriation suit
on the ground that there was no prior offer precludes another suit raising the
same issue; it cannot, however, bar the State or its agent from thereafter
complying with this requirement, as prescribed by law, and subsequently
exercising its power of eminent domain over the same property. By the same
[48]

token, our ruling that petitioner cannot exercise its delegated power of
eminent domain through a mere resolution will not bar it from reinstituting
similar proceedings, once the said legal requirement and, for that
matter, all others are properly complied with. Parenthetically and by parity of
reasoning, the same is also true of the principle of law of the case. In Republic
vs De Knecht, the Court ruled that the power of the State or its agent to
[49]

exercise eminent domain is not diminished by the mere fact that a prior final
judgment over the property to be expropriated has become the law of the case
as to the parties. The State or its authorized agent may still subsequently
exercise its right to expropriate the same property, once all legal requirements
are complied with. To rule otherwise will not only improperly diminish the
power of eminent domain, but also clearly defeat social justice.
 WHEREFORE, the petition is hereby DENIED without prejudice to
petitioners proper exercise of its power of eminent domain over subject
property. Costs against petitioner.

SO ORDERED.

[G.R. No. 149743. February 18, 2005]

LEONARDO TAN, ROBERT UY and LAMBERTO TE, petitioners,

vs. SOCORRO Y. PEREA, respondent.

DECISION

TINGA, J.:

The resolution of the present petition effectively settles the question of how
many cockpits may be allowed to operate in a city or municipality.

There are two competing values of high order that come to fore in this
casethe traditional power of the national government to enact police power
measures, on one hand, and the vague principle of local autonomy now
enshrined in the Constitution on the other. The facts are simple, but may be
best appreciated taking into account the legal milieu which frames them.

In 1974, Presidential Decree (P.D.) No. 449, otherwise known as the

Cockfighting Law of 1974, was enacted. Section 5(b) of the Decree provided
for limits on the number of cockpits that may be established in cities and
municipalities in the following manner:

Section 5. Cockpits and Cockfighting in General.

(b) Establishment of Cockpits. Only one cockpit shall be allowed in each city or
municipality, except that in cities or municipalities with a population of over one
hundred thousand, two cockpits may be established, maintained and operated.

With the enactment of the Local Government Code of 1991, the municipal
[1]

sangguniang bayan were empowered, [a]ny law to the contrary

notwithstanding, to authorize and license the establishment, operation and
maintenance of cockpits, and regulate cockfighting and commercial breeding
of gamecocks. [2]

In 1993, the Sangguniang Bayan of the municipality of Daanbantayan,

Cebu Province, enacted Municipal Ordinance No. 6 (Ordinance No. 6),
[3]

Series of 1993, which served as the Revised Omnibus Ordinance prescribing

and promulgating the rules and regulations governing cockpit operations in
Daanbantayan. Section 5 thereof, relative to the number of cockpits allowed
[4]

in the municipality, stated:

Section 5. There shall be allowed to operate in the Municipality of Daanbantayan,

Province of Cebu, not more than its equal number of cockpits based upon the
population provided for in PD 449, provided however, that this specific section can be
amended for purposes of establishing additional cockpits, if the Municipal population
so warrants.[5]

Shortly thereafter, the Sangguniang Bayan passed an amendatory

ordinance, Municipal Ordinance No. 7 (Ordinance No. 7), Series of 1993,
which amended the aforequoted Section 5 to now read as follows:

Section 5. Establishment of Cockpit. There shall be allowed to operate in the

Municipality of Daanbantayan, Province of Cebu, not more than three (3) cockpits. [6]

On 8 November 1995, petitioner Leonardo Tan (Tan) applied with the

Municipal Gamefowl Commission for the issuance of a permit/license to
establish and operate a cockpit in Sitio Combado, Bagay, in Daanbantayan. At
the time of his application, there was already another cockpit in operation in
Daanbantayan, operated by respondent Socorro Y. Perea (Perea), who was
the duly franchised and licensed cockpit operator in the municipality since the
1970s. Pereas franchise, per records, was valid until 2002. [7]

The Municipal Gamefowl Commission favorably recommended to the

mayor of Daanbantayan, petitioner Lamberto Te (Te), that a permit be issued
to Tan. On 20 January 1996, Te issued a mayors permit allowing Tan to
establish/operate/conduct the business of a cockpit in Combado, Bagay,
Daanbantayan, Cebu for the period from 20 January 1996 to 31 December
1996. [8]
 This act of the mayor served as cause for Perea to file a Complaint for
damages with a prayer for injunction against Tan, Te, and Roberto Uy, the
latter allegedly an agent of Tan. Perea alleged that there was no lawful basis
[9]

for the establishment of a second cockpit. She claimed that Tan conducted his
cockpit fights not in Combado, but in Malingin, at a site less than five
kilometers away from her own cockpit. She insisted that the unlawful
operation of Tans cockpit has caused injury to her own legitimate business,
and demanded damages of at least Ten Thousand Pesos (P10,000.00) per
month as actual damages, One Hundred Fifty Thousand Pesos (P150,000.00)
as moral damages, and Fifty Thousand Pesos (P50,000.00) as exemplary
damages. Perea also prayed that the permit issued by Te in favor of Tan be
declared as null and void, and that a permanent writ of injunction be issued
against Te and Tan preventing Tan from conducting cockfights within the
municipality and Te from issuing any authority for Tan to pursue such activity. [10]

The case was heard by the Regional Trial Court (RTC), Branch 61 of
[11]

Bogo, Cebu, which initially granted a writ of preliminary injunction. During [12]

trial, herein petitioners asserted that under the Local Government Code of
1991, the sangguniang bayan of each municipality now had the power and
authority to grant franchises and enact ordinances authorizing the
establishment, licensing, operation and maintenance of cockpits. By virtue of
[13]

such authority, the Sangguniang Bayan of Daanbantayan promulgated

Ordinance Nos. 6 and 7. On the other hand, Perea claimed that the
amendment authorizing the operation of not more than three (3) cockpits in
Daanbantayan violated Section 5(b) of the Cockfighting Law of 1974, which
allowed for only one cockpit in a municipality with a population as
Daanbantayan. [14]

In a Decision dated 10 March 1997, the RTC dismissed the complaint. The
court observed that Section 5 of Ordinance No. 6, prior to its amendment, was
by specific provision, an implementation of the Cockfighting Law. Yet [15]

according to the RTC, questions could be raised as to the efficacy of the

subsequent amendment under Ordinance No. 7, since under the old Section
5, an amendment allowing additional cockpits could be had only if the
municipal population so warrants. While the RTC seemed to doubt whether
[16]

this condition had actually been fulfilled, it nonetheless declared that since the
case was only for damages, the [RTC] cannot grant more relief than that
prayed for. It ruled that there was no evidence, testimonial or documentary,
[17]

to show that plaintiff had actually suffered damages. Neither was there
evidence that Te, by issuing the permit to Tan, had acted in bad faith, since
such issuance was pursuant to municipal ordinances that nonetheless
remained in force. Finally, the RTC noted that the assailed permit had
[18]

expired on 31 December 1996, and there was no showing that it had been
renewed. [19]

Perea filed a Motion for Reconsideration which was denied in

an Order dated 24 February 1998. In this Order, the RTC categorically stated
that Ordinance Nos. 6 and 7 were valid and legal for all intents and
purpose[s]. The RTC also noted that the Sangguniang Bayan had also
[20]

promulgated Resolution No. 78-96, conferring on Tan a franchise to operate a

cockpit for a period of ten (10) years from February 1996 to 2006. This [21]

Resolution was likewise affirmed as valid by the RTC. The RTC noted that
while the ordinances seemed to be in conflict with the Cockfighting Law, any
doubt in interpretation should be resolved in favor of the grant of more power
to the local government unit, following the principles of devolution under the
Local Government Code. [22]

The Decision and Order of the RTC were assailed by Perea on an appeal
with the Court of Appeals which on 21 May 2001, rendered the Decision now
assailed. The perspective from which the Court of Appeals viewed the issue
[23]

was markedly different from that adopted by the RTC. Its analysis of the Local
Government Code, particularly Section 447(a)(3)(V), was that the provision
vesting unto the sangguniang bayan the power to authorize and license the
establishment of cockpits did not do away with the Cockfighting Law, as these
two laws are not necessarily inconsistent with each other. What the provision
of the Local Government Code did, according to the Court of Appeals, was to
transfer to the sangguniang bayan powers that were previously conferred on
the Municipal Gamefowl Commission. [24]

Given these premises, the appellate court declared as follows:

Ordinance No. 7 should [be] held invalid for allowing, in unconditional terms, the
operation of not more than three cockpits in Daan Bantayan (sic), clearly dispensing
with the standard set forth in PD 449. However, this issue appears to have been
mooted by the expiration of the Mayors Permit granted to the defendant which has not
been renewed. [25]

As to the question of damages, the Court of Appeals agreed with the

findings of the RTC that Perea was not entitled to damages. Thus, it affirmed
the previous ruling denying the claim for damages. However, the Court of
Appeals modified the RTCs Decision in that it now ordered that Tan be
enjoined from operating a cockpit and conducting any cockfights within
Daanbantayan. [26]

Thus, the present Petition for Review on Certiorari.

Petitioners present two legal questions for determination: whether the

Local Government Code has rendered inoperative the Cockfighting Law; and
whether the validity of a municipal ordinance may be determined in an action
for damages which does not even contain a prayer to declare the ordinance
invalid. As the denial of the prayer for damages by the lower court is not put
[27]

in issue before this Court, it shall not be passed upon on review.

The first question raised is particularly interesting, and any definitive

resolution on that point would have obvious ramifications not only to
Daanbantayan, but all other municipalities and cities. However, we must first
determine the proper scope of judicial inquiry that we could engage in, given
the nature of the initiatory complaint and the rulings rendered thereupon, the
exact point raised in the second question.

Petitioners claim that the Court of Appeals, in declaring Ordinance No. 7

as invalid, embarked on an unwarranted collateral attack on the validity of a
municipal ordinance. Pereas complaint, which was for damages with
[28]

preliminary injunction, did not pray for the nullity of Ordinance No. 7. The
Municipality of Daanbantayan as a local government unit was not made a
party to the case, nor did any legal counsel on its behalf enter any
appearance. Neither was the Office of the Solicitor General given any notice
of the case. [29]
 These concerns are not trivial. Yet, we must point out that the Court of
[30]

Appeals did not expressly nullify Ordinance No. 7, or any ordinance for that
matter. What the appellate court did was to say that Ordinance No. 7 should
therefore be held invalid for being in violation of the Cockfighting Law. In [31]

the next breath though, the Court of Appeals backtracked, saying that this
issue appears to have been mooted by the expiration of the Mayors Permit
granted to Tan. [32]

But our curiosity is aroused by the dispositive portion of the

assailed Decision, wherein the Court of Appeals enjoined Tan from operating
a cockpit and conducting any cockfights within Daanbantayan. Absent the
[33]

invalidity of Ordinance No. 7, there would be no basis for this injunction. After
all, any future operation of a cockpit by Tan in Daanbantayan, assuming all
other requisites are complied with, would be validly authorized should
Ordinance No. 7 subsist.

So it seems, for all intents and purposes, that the Court of Appeals did
deem Ordinance No. 7 a nullity. Through such resort, did the appellate court in
effect allow a collateral attack on the validity of an ordinance through an action
for damages, as the petitioners argue?

The initiatory Complaint filed by Perea deserves close scrutiny.

Immediately, it can be seen that it is not only an action for damages, but also
one for injunction. An action for injunction will require judicial determination
whether there exists a right in esse which is to be protected, and if there is an
act constituting a violation of such right against which injunction is sought. At
the same time, the mere fact of injury alone does not give rise to a right to
recover damages. To warrant the recovery of damages, there must be both a
right of action for a legal wrong inflicted by the defendant, and damage
resulting to the plaintiff therefrom. In other words, in order that the law will give
redress for an act causing damage, there must be damnum et injuriathat act
must be not only hurtful, but wrongful. [34]

Indubitably, the determination of whether injunction or damages avail in

this case requires the ascertainment of whether a second cockpit may be
legally allowed in Daanbantayan. If this is permissible, Perea would not be
entitled either to injunctive relief or damages.
 Moreover, an examination of the specific allegations in
the Complaint reveals that Perea therein puts into question the legal basis for
allowing Tan to operate another cockpit in Daanbantayan. She asserted that
there is no lawful basis for the establishment of a second cockpit considering
the small population of [Daanbantayan], a claim which alludes to Section
[35]

5(b) of the Cockfighting Law which prohibits the establishment of a second

cockpit in municipalities of less than ten thousand (10,000) in population.
Perea likewise assails the validity of the permit issued to Tan and prays for its
annulment, and also seeks that Te be enjoined from issuing any special permit
not only to Tan, but also to any other person outside of a duly licensed cockpit
in Daanbantayan, Cebu. [36]

It would have been preferable had Perea expressly sought the annulment
of Ordinance No. 7. Yet it is apparent from her Complaint that she sufficiently
alleges that there is no legal basis for the establishment of a second cockpit.
More importantly, the petitioners themselves raised the valid effect of
Ordinance No. 7 at the heart of their defense against the complaint, as
adverted to in their Answer. The averment in the Answer that Ordinance No.
[37]

7 is valid can be considered as an affirmative defense, as it is the allegation of

a new matter which, while hypothetically admitting the material allegations in
the complaint, would nevertheless bar recovery. Clearly then, the validity of
[38]

Ordinance No. 7 became a justiciable matter for the RTC, and indeed Perea
squarely raised the argument during trial that said ordinance violated the
Cockfighting Law. [39]

Moreover, the assailed rulings of the RTC, its Decision and

subsequent Order denying Pereas Motion for Reconsideration, both discuss
the validity of Ordinance No. 7. In the Decision, the RTC evaded making a
categorical ruling on the ordinances validity because the case was only for
damages, [thus the RTC could] not grant more relief than that prayed for. This
reasoning is unjustified, considering that Perea also prayed for an injunction,
as well as for the annulment of Tans permit. The resolution of these two
questions could very well hinge on the validity of Ordinance No. 7.

Still, in the Order denying Pereas Motion for Reconsideration, the RTC felt
less inhibited and promptly declared as valid not only Ordinance No. 7, but
also Resolution No. 78-96 of the Sangguniang Bayan dated 23 February
1996, which conferred on Tan a franchise to operate a cockpit from 1996 to
2006. In the Order, the RTC ruled that while Ordinance No. 7 was in
[40]

apparent conflict with the Cockfighting Law, the ordinance was justified under
Section 447(a)(3)(v) of the Local Government Code.

This express affirmation of the validity of Ordinance No. 7 by the RTC was
the first assigned error in Pereas appeal to the Court of Appeals. In [41]

their Appellees Brief before the appellate court, the petitioners likewise argued
that Ordinance No. 7 was valid and that the Cockfighting Law was repealed by
the Local Government Code. On the basis of these arguments, the Court of
[42]

Appeals rendered its assailed Decision, including its ruling that the Section
5(b) of the Cockfighting Law remains in effect notwithstanding the enactment
of the Local Government Code.

Indubitably, the question on the validity of Ordinance No. 7 in view of the

continuing efficacy of Section 5(b) of the Cockfighting Law is one that has
been fully litigated in the courts below. We are comfortable with reviewing that
question in the case at bar and make dispositions proceeding from that key
legal question. This is militated by the realization that in order to resolve the
question whether injunction should be imposed against the petitioners, there
must be first a determination whether Tan may be allowed to operate a second
cockpit in Daanbantayan. Thus, the conflict between Section 5(b) of the
Cockfighting Law and Ordinance No. 7 now ripens for adjudication.

In arguing that Section 5(b) of the Cockfighting Law has been repealed,
petitioners cite the following provisions of Section 447(a)(3)(v) of the Local
Government Code:

Section 447. Powers, Duties, Functions and Compensation. (a) The sangguniang
bayan, as the legislative body of the municipality, shall enact ordinances, approve
resolutions and appropriate funds for the general welfare of the municipality and its
inhabitants pursuant to Section 16 of this Code and in the proper exercise of the
corporate powers of the municipality as provided for under Section 22 of this Code,
and shall:

....
(3) Subject to the provisions of Book II of this Code, grant franchises, enact
ordinances authorizing the issuance of permits or licenses, or enact ordinances levying
taxes, fees and charges upon such conditions and for such purposes intended to
promote the general welfare of the inhabitants of the municipality, and pursuant to this
legislative authority shall:

....

(v) Any law to the contrary notwithstanding, authorize and license

the establishment, operation, and maintenance of cockpits, and
regulate cockfighting and commercial breeding of
gamecocks; Provided, that existing rights should not be prejudiced;

For the petitioners, Section 447(a)(3)(v) sufficiently repeals Section 5(b) of

the Cockfighting Law, vesting as it does on LGUs the power and authority to
issue franchises and regulate the operation and establishment of cockpits in
their respective municipalities, any law to the contrary notwithstanding.

However, while the Local Government Code expressly repealed several

laws, the Cockfighting Law was not among them. Section 534(f) of the Local
Government Code declares that all general and special laws or decrees
inconsistent with the Code are hereby repealed or modified accordingly, but
such clause is not an express repealing clause because it fails to identify or
designate the acts that are intended to be repealed. It is a cardinal rule in
[43]

statutory construction that implied repeals are disfavored and will not be so
declared unless the intent of the legislators is manifest. As laws are [44]

presumed to be passed with deliberation and with knowledge of all existing

ones on the subject, it is logical to conclude that in passing a statute it is not
intended to interfere with or abrogate a former law relating to the same subject
matter, unless the repugnancy between the two is not only irreconcilable but
also clear and convincing as a result of the language used, or unless the latter
Act fully embraces the subject matter of the earlier. [45]

Is the one-cockpit-per-municipality rule under the Cockfighting Law clearly

and convincingly irreconcilable with Section 447(a)(3)(v) of the Local
Government Code? The clear import of Section 447(a)(3)(v) is that it is the
sangguniang bayan which is empowered to authorize and license the
establishment, operation and maintenance of cockpits, and regulate
cockfighting and commercial breeding of gamecocks, notwithstanding any law
to the contrary. The necessity of the qualifying phrase any law to the contrary
notwithstanding can be discerned by examining the history of laws pertaining
to the authorization of cockpit operation in this country.

Cockfighting, or sabong in the local parlance, has a long and storied

tradition in our culture and was prevalent even during the Spanish occupation.
When the newly-arrived Americans proceeded to organize a governmental
structure in the Philippines, they recognized cockfighting as an activity that
needed to be regulated, and it was deemed that it was the local municipal
council that was best suited to oversee such regulation. Hence, under Section
40 of Act No. 82, the general act for the organization of municipal
governments promulgated in 1901, the municipal council was empowered to
license, tax or close cockpits. This power of the municipal council to authorize
or license cockpits was repeatedly recognized even after the establishment of
the present Republic in 1946. Such authority granted unto the municipal
[46]

councils to license the operation of cockpits was generally unqualified by

restrictions. The Revised Administrative Code did impose restrictions on
[47]

what days cockfights could be held. [48]

However, in the 1970s, the desire for stricter licensing requirements of

cockpits started to see legislative fruit. The Cockfighting Law of 1974 enacted
several of these restrictions. Apart from the one-cockpit-per-municipality rule,
other restrictions were imposed, such as the limitation of ownership of
cockpits to Filipino citizens. More importantly, under Section 6 of the
[49]

Cockfighting Law, it was the city or municipal mayor who was authorized to
issue licenses for the operation and maintenance of cockpits, subject to the
approval of the Chief of Constabulary or his authorized representatives.
Thus, the sole discretion to authorize the operation of cockpits was removed
[50]

from the local government unit since the approval of the Chief of Constabulary
was now required.

P.D. No. 1802 reestablished the Philippine Gamefowl Commission and [51]

imposed further structure in the regulation of cockfighting. Under Section 4

thereof, city and municipal mayors with the concurrence of their respective
sangguniang panglunsod or sangguniang bayan, were given the authority to
license and regulate cockfighting, under the supervision of the City Mayor or
the Provincial Governor. However, Section 4 of P.D. No. 1802 was
subsequently amended, removing the supervision exercised by the mayor or
governor and substituting in their stead the Philippine Gamefowl Commission.
The amended provision ordained:

Sec. 4. City and Municipal Mayors with the concurrence of their respective
Sanggunians shall have the authority to license and regulate regular cockfighting
pursuant to the rules and regulations promulgated by the Commission and subject to
its review and supervision.

The Court, on a few occasions prior to the enactment of the Local

Government Code in 1991, had opportunity to expound on Section 4 as
amended. A discussion of these cases will provide a better understanding of
the qualifier any law to the contrary notwithstanding provided in Section
447(a)(3)(v).

In Philippine Gamefowl Commission v. Intermediate Appellate Court, the [52]

Court, through Justice Cruz, asserted that the conferment of the power to
license and regulate municipal cockpits in municipal authorities is in line with
the policy of local autonomy embodied in the Constitution. The Court [53]

affirmed the annulment of a resolution of the Philippine Gamefowl

Commission which ordered the revocation of a permit issued by a municipal
mayor for the operation of a cockpit and the issuance of a new permit to a
different applicant. According to the Court, the Philippine Gamefowl
Commission did not possess the power to issue cockpit licenses, as this was
vested by Section 4 of P.D. No. 1802, as amended, to the municipal mayor
with the concurrence of the sanggunian. It emphasized that the Philippine
Gamefowl Commission only had review and supervision powers, as
distinguished from control, over ordinary cockpits. The Court also noted that
[54]

the regulation of cockpits was vested in municipal officials, subject only to the
guidelines laid down by the Philippine Gamefowl Commission. The Court [55]

conceded that [if] at all, the power to review includes the power to disapprove;
but it does not carry the authority to substitute ones own preferences for that
chosen by the subordinate in the exercise of its sound discretion.
 The twin pronouncements that it is the municipal authorities who are
empowered to issue cockpit licenses and that the powers of the Philippine
Gamefowl Commission were limited to review and supervision were affirmed
in Deang v. Intermediate Appellate Court, Municipality of Malolos v.
[56]

Libangang Malolos Inc. and Adlawan v. Intermediate Appellate Court. But

[57] [58]

notably in Cootauco v. Court of Appeals, the Court especially noted

[59]

that Philippine Gamefowl Commission did indicate that the Commissions

power of review includes the power to disapprove. Interestingly, Justice
[60]

Cruz, the writer of Philippine Gamefowl Commission, qualified his

concurrence in Cootauco subject to the reservations made in [Philippine
Gamefowl Commission] regarding the review powers of the PGC over cockpit
licenses issued by city and municipal mayors. [61]

These cases reiterate what has been the traditional prerogative of

municipal officials to control the issuances of licenses for the operation of
cockpits. Nevertheless, the newly-introduced role of the Philippine Gamefowl
Commission vis--vis the operation of cockpits had caused some degree of
controversy, as shown by the cases above cited.

Then, the Local Government Code of 1991 was enacted. There is no more
forceful authority on this landmark legislation than Senator Aquilino Pimentel,
Jr., its principal author. In his annotations to the Local Government Code, he
makes the following remarks relating to Section 447(a)(3)(v):

12. Licensing power. In connection with the power to grant licenses lodged with it,
the Sangguniang Bayan may now regulate not only businesses but also occupations,
professions or callings that do not require government examinations within its
jurisdiction. It may also authorize and license the establishment, operation and
maintenance of cockpits, regulate cockfighting, and the commercial breeding of
gamecocks. Existing rights however, may not be prejudiced. The power to license
cockpits and permits for cockfighting has been removed completely from the
Gamefowl Commission.

Thus, that part of the ruling of the Supreme Court in the case of Municipality of
Malolos v. Libangang Malolos, Inc. et al., which held that the regulation of
cockpits is vested in the municipal councils guidelines laid down by the
Philippine Gamefowl Commission is no longer controlling. Under [Section 447(a)
(3)(v)], the power of the Sanggunian concerned is no longer subject to the
supervision of the Gamefowl Commission. [62]

The above observations may be faulted somewhat in the sense that they
fail to acknowledge the Courts consistent position that the licensing power
over cockpits belongs exclusively to the municipal authorities and not the
Philippine Gamefowl Commission. Yet these views of Senator Pimentel evince
the apparent confusion regarding the role of the Philippine Gamefowl
Commission as indicated in the cases previously cited, and accordingly bring
the phrase Section 447(a)(3)(v) used in any law to the contrary
notwithstanding into its proper light. The qualifier serves notice, in case it was
still doubtful, that it is the sanggunian bayan concerned alone which has the
power to authorize and license the establishment, operation and maintenance
of cockpits, and regulate cockfighting and commercial breeding of gamecocks
within its territorial jurisdiction.

Given the historical perspective, it becomes evident why the legislature

found the need to use the phrase any law to the contrary notwithstanding in
Section 447(a)(3)(v). However, does the phrase similarly allow the
Sangguniang Bayan to authorize more cockpits than allowed under Section
5(d) of the Cockfighting Law? Certainly, applying the test of implied repeal,
these two provisions can stand together. While the sanggunian retains the
power to authorize and license the establishment, operation, and maintenance
of cockpits, its discretion is limited in that it cannot authorize more than one
cockpit per city or municipality, unless such cities or municipalities have a
population of over one hundred thousand, in which case two cockpits may be
established. Considering that Section 447(a)(3)(v) speaks essentially of the
identity of the wielder of the power of control and supervision over cockpit
operation, it is not inconsistent with previous enactments that impose
restrictions on how such power may be exercised. In short, there is no
dichotomy between affirming the power and subjecting it to limitations at the
same time.

Perhaps more essential than the fact that the two controverted provisions
are not inconsistent when put together, the Court recognizes that Section 5(d)
of the Cockfighting Law arises from a valid exercise of police power by the
national government. Of course, local governments are similarly empowered
under Section 16 of the Local Government Code. The national government
ought to be attuned to the sensitivities of devolution and strive to be sparing in
usurping the prerogatives of local governments to regulate the general welfare
of their constituents.

We do not doubt, however, the ability of the national government to

implement police power measures that affect the subjects of municipal
government, especially if the subject of regulation is a condition of universal
character irrespective of territorial jurisdictions. Cockfighting is one such
condition. It is a traditionally regulated activity, due to the attendant gambling
involved or maybe even the fact that it essentially consists of two birds killing
[63]

each other for public amusement. Laws have been enacted restricting the
days when cockfights could be held, and legislation has even been emphatic
[64]

that cockfights could not be held on holidays celebrating national honor such
as Independence Day and Rizal Day.
[65] [66]

The Whereas clauses of the Cockfighting Law emphasize that cockfighting

should neither be exploited as an object of commercialism or business
enterprise, nor made a tool of uncontrolled gambling, but more as a vehicle for
the preservation and perpetuation of native Filipino heritage and thereby
enhance our national identity. The obvious thrust of our laws designating
[67]

when cockfights could be held is to limit cockfighting and imposing the one-
cockpit-per-municipality rule is in line with that aim. Cockfighting is a valid
matter of police power regulation, as it is a form of gambling essentially
antagonistic to the aims of enhancing national productivity and self-reliance.
Limitation on the number of cockpits in a given municipality is a reasonably
[68]

necessary means for the accomplishment of the purpose of controlling

cockfighting, for clearly more cockpits equals more cockfights.

If we construe Section 447(a)(3)(v) as vesting an unlimited discretion to

the sanggunian to control all aspects of cockpits and cockfighting in their
respective jurisdiction, this could lead to the prospect of daily cockfights in
municipalities, a certain distraction in the daily routine of life in a municipality.
This certainly goes against the grain of the legislation earlier discussed. If the
arguments of the petitioners were adopted, the national government would be
effectively barred from imposing any future regulatory enactments pertaining
to cockpits and cockfighting unless it were to repeal Section 447(a)(3)(v).
 A municipal ordinance must not contravene the Constitution or any statute,
otherwise it is void. Ordinance No. 7 unmistakably contravenes the
[69]

Cockfighting Law in allowing three cockpits in Daanbantayan. Thus, no rights

can be asserted by the petitioners arising from the Ordinance. We find the
grant of injunction as ordered by the appellate court to be well-taken.

WHEREFORE, the petition is DENIED. Costs against petitioners.

SO ORDERED.