Republic of the Philippines

SUPREME COURT
Manila

EN BANC

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

WALTER LUTZ, as Judicial Administrator of the Intestate Estate of the deceased Antonio
Jayme Ledesma, Plaintiff-Appellant, vs. J. ANTONIO ARANETA, as the Collector of Internal
Revenue, Defendant-Appellee.

REYES, J.B L., J.:  chanrobles virtual law library

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

Promulgated in 1940, the law in question opens (section 1) with a declaration of emergency, due to
the threat to our industry by the imminent imposition of export taxes upon sugar as provided in the
Tydings-McDuffe Act, and the "eventual loss of its preferential position in the United States market";
wherefore, the national policy was expressed "to obtain a readjustment of the benefits derived from
the sugar industry by the component elements thereof" and "to stabilize the sugar industry so as to
prepare it for the eventuality of the loss of its preferential position in the United States market and the
imposition of the export taxes."  chanrobles virtual law library

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

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

According to section 6 of the law -

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

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

Second, to readjust the benefits derived from the sugar industry by all of the component
elements thereof - the mill, the landowner, the planter of the sugar cane, and the laborers in
the factory and in the field - so that all might continue profitably to engage therein;  chanrobles virtual law library

Third, to limit the production of sugar to areas more economically suited to the production
thereof; and  chanrobles virtual law library
 Fourth, to afford labor employed in the industry a living wage and to improve their living and
working conditions: Provided, That the President of the Philippines may, until the adjourment
of the next regular session of the National Assembly, make the necessary disbursements from
the fund herein created (1) for the establishment and operation of sugar experiment station or
stations and the undertaking of researchers (a) to increase the recoveries of the centrifugal
sugar factories with the view of reducing manufacturing costs, (b) to produce and propagate
higher yielding varieties of sugar cane more adaptable to different district conditions in the
Philippines, (c) to lower the costs of raising sugar cane, (d) to improve the buying quality of
denatured alcohol from molasses for motor fuel, (e) to determine the possibility of utilizing the
other by-products of the industry, (f) to determine what crop or crops are suitable for rotation
and for the utilization of excess cane lands, and (g) on other problems the solution of which
would help rehabilitate and stabilize the industry, and (2) for the improvement of living and
working conditions in sugar mills and sugar plantations, authorizing him to organize the
necessary agency or agencies to take charge of the expenditure and allocation of said funds to
carry out the purpose hereinbefore enumerated, and, likewise, authorizing the disbursement
from the fund herein created of the necessary amount or amounts needed for salaries, wages,
travelling expenses, equipment, and other sundry expenses of said agency or agencies.

Plaintiff, Walter Lutz, in his capacity as Judicial Administrator of the Intestate Estate of Antonio Jayme
Ledesma, seeks to recover from the Collector of Internal Revenue the sum of P14,666.40 paid by the
estate as taxes, under section 3 of the Act, for the crop years 1948-1949 and 1949-1950; alleging
that such tax is unconstitutional and void, being levied for the aid and support of the sugar industry
exclusively, which in plaintiff's opinion is not a public purpose for which a tax may be constitutioally
levied. The action having been dismissed by the Court of First Instance, the plaintifs appealed the case
directly to this Court (Judiciary Act, section 17). chanroblesvirtualawlibrary  chanrobles virtual law library

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

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

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

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

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

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

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

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

The decision appealed from is affirmed, with costs against appellant. So ordered. chanroblesvirtualawlibrary  chanrobles virtual law library

Paras, C. J., Bengzon, Padilla, Reyes, A., Jugo, Bautista Angelo, Labrador, and Concepcion, JJ.,
concur.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 99886 March 31, 1993

JOHN H. OSMEÑA, petitioner, 
vs.
OSCAR ORBOS, in his capacity as Executive Secretary; JESUS ESTANISLAO, in his capacity
as Secretary of Finance; WENCESLAO DELA PAZ, in his capacity as Head of the Office of
Energy Affairs; REX V. TANTIONGCO, and the ENERGY REGULATORY BOARD, respondents.

Nachura & Sarmiento for petitioner.

The Solicitor General for public respondents.

NARVASA, C.J.:

The petitioner seeks the corrective, 1 prohibitive and coercive remedies provided by Rule 65 of the
Rules of Court,2 upon the following posited grounds, viz.: 3

1) the invalidity of the "TRUST ACCOUNT" in the books of account of the Ministry of Energy (now,
the Office of Energy Affairs), created pursuant to § 8, paragraph 1, of P.D. No. 1956, as amended,
"said creation of a trust fund being contrary to Section 29 (3), Article VI of the . . Constitution;  4

2) the unconstitutionality of § 8, paragraph 1 (c) of P.D. No. 1956, as amended by Executive Order
No. 137, for "being an undue and invalid delegation of legislative power . .  to the Energy Regulatory
Board;" 5

3) the illegality of the reimbursements to oil companies, paid out of the Oil Price Stabilization
Fund, 6 because it contravenes § 8, paragraph 2 (2) of
P. D. 1956, as amended; and

4) the consequent nullity of the Order dated December 10, 1990 and the necessity of a rollback of
the pump prices and petroleum products to the levels prevailing prior to the said Order.

It will be recalled that on October 10, 1984, President Ferdinand Marcos issued P.D. 1956 creating a
Special Account in the General Fund, designated as the Oil Price Stabilization Fund (OPSF). The
OPSF was designed to reimburse oil companies for cost increases in crude oil and imported
petroleum products resulting from exchange rate adjustments and from increases in the world
market prices of crude oil.

Subsequently, the OPSF was reclassified into a "trust liability account," in virtue of E.O. 1024,  7 and
ordered released from the National Treasury to the Ministry of Energy. The same Executive Order
also authorized the investment of the fund in government securities, with the earnings from such
placements accruing to the fund.

President Corazon C. Aquino, amended P.D. 1956. She promulgated Executive Order No. 137 on
February 27, 1987, expanding the grounds for reimbursement to oil companies for possible cost
underrecovery incurred as a result of the reduction of domestic prices of petroleum products, the
amount of the underrecovery being left for determination by the Ministry of Finance.

Now, the petition alleges that the status of the OPSF as of March 31, 1991 showed a "Terminal Fund
Balance deficit" of some P12.877 billion;  8 that to abate the worsening deficit, "the Energy Regulatory
Board . . issued an Order on December 10, 1990, approving the increase in pump prices of
petroleum products," and at the rate of recoupment, the OPSF deficit should have been fully covered
in a span of six (6) months, but this notwithstanding, the respondents — Oscar Orbos, in his capacity
as Executive Secretary; Jesus Estanislao, in his capacity as Secretary of Finance; Wenceslao de la
Paz, in his capacity as Head of the Office of Energy Affairs; Chairman Rex V. Tantiongco and the
Energy Regulatory Board — "are poised to accept, process and pay claims not authorized under
P.D. 1956." 9

The petition further avers that the creation of the trust fund violates §
29(3), Article VI of the Constitution, reading as follows:

(3) All money collected on any tax levied for a special purpose shall be treated as a
special fund and paid out for such purposes only. If the purpose for which a special
fund was created has been fulfilled or abandoned, the balance, if any, shall be
transferred to the general funds of the Government.

The petitioner argues that "the monies collected pursuant to . . P.D. 1956, as amended, must be
treated as a 'SPECIAL FUND,' not as a 'trust account' or a 'trust fund,' and that "if a special tax is
collected for a specific purpose, the revenue generated therefrom shall 'be treated as a special fund'
to be used only for the purpose indicated, and not channeled to another government
objective." 10 Petitioner further points out that since "a 'special fund' consists of monies collected
through the taxing power of a State, such amounts belong to the State, although the use thereof is
limited to the special purpose/objective for which it was created." 11

He also contends that the "delegation of legislative authority" to the ERB violates § 28 (2). Article VI
of the Constitution, viz.:

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

and, inasmuch as the delegation relates to the exercise of the power of taxation, "the limits,
limitations and restrictions must be quantitative, that is, the law must not only specify how to
tax, who (shall) be taxed (and) what the tax is for, but also impose a specific limit on how
much to tax." 12

The petitioner does not suggest that a "trust account" is illegal per se, but maintains that the monies
collected, which form part of the OPSF, should be maintained in a special account of the general
fund for the reason that the Constitution so provides, and because they are, supposedly, taxes
levied for a special purpose. He assumes that the Fund is formed from a tax undoubtedly because a
portion thereof is taken from collections of ad valorem taxes and the increases thereon.
It thus appears that the challenge posed by the petitioner is premised primarily on the view that the
powers granted to the ERB under P.D. 1956, as amended, partake of the nature of the taxation
power of the State. The Solicitor General observes that the "argument rests on the assumption that
the OPSF is a form of revenue measure drawing from a special tax to be expended for a special
purpose." 13 The petitioner's perceptions are, in the Court's view, not quite correct.

To address this critical misgiving in the position of the petitioner on these issues, the Court recalls its
holding inValmonte v. Energy Regulatory Board, et al. 14 —

The foregoing arguments suggest the presence of misconceptions about the nature and
functions of the OPSF. The OPSF is a "Trust Account" which was established "for the
purpose of minimizing the frequent price changes brought about by exchange rate
adjustment and/or changes in world market prices of crude oil and imported petroleum
products." 15 Under P.D. No. 1956, as amended by Executive Order No. 137 dated 27
February 1987, this Trust Account may be funded from any of the following sources:

a) Any increase in the tax collection from ad valorem tax or customs

duty imposed on petroleum products subject to tax under this
Decree arising from exchange rate adjustment, as may be
determined by the Minister of Finance in consultation with the Board
of Energy;

b) Any increase in the tax collection as a result of the lifting of tax

exemptions of government corporations, as may be determined by
the Minister of Finance in consultation with the Board of Energy:

c) Any additional amount to be imposed on petroleum products to

augment the resources of the Fund through an appropriate Order that
may be issued by the Board of Energy requiring payment of persons
or companies engaged in the business of importing, manufacturing
and/or marketing petroleum products;

d) Any resulting peso cost differentials in case the actual peso costs
paid by oil companies in the importation of crude oil and petroleum
products is less than the peso costs computed using the reference
foreign exchange rate as fixed by the Board of Energy.

xxx xxx xxx

The fact that the world market prices of oil, measured by the spot market in
Rotterdam, vary from day to day is of judicial notice. Freight rates for hauling crude
oil and petroleum products from sources of supply to the Philippines may also vary
from time to time. The exchange rate of the peso vis-a-vis the U.S. dollar and other
convertible foreign currencies also changes from day to day. These fluctuations in
world market prices and in tanker rates and foreign exchange rates would in a
completely free market translate into corresponding adjustments in domestic prices
of oil and petroleum products with sympathetic frequency. But domestic prices which
vary from day to day or even only from week to week would result in a chaotic market
with unpredictable effects upon the country's economy in general. The OPSF was
established precisely to protect local consumers from the adverse consequences
that such frequent oil price adjustments may have upon the economy. Thus, the
OPSF serves as a pocket, as it were, into which a portion of the purchase price of oil
 and petroleum products paid by consumers as well as some tax revenues are
inputted and from which amounts are drawn from time to time to reimburse oil
companies, when appropriate situations arise, for increases in, as well as
underrecovery of, costs of crude importation. The OPSF is thus a buffer mechanism
through which the domestic consumer prices of oil and petroleum products are
stabilized, instead of fluctuating every so often, and oil companies are allowed to
recover those portions of their costs which they would not otherwise recover given
the level of domestic prices existing at any given time.To the extent that some tax
revenues are also put into it, the OPSF is in effect a device through which the
domestic prices of petroleum products are subsidized in part. It appears to the Court
that the establishment and maintenance of the OPSF is well within that pervasive
and non-waivable power and responsibility of the government to secure the physical
and economic survival and well-being of the community, that comprehensive
sovereign authority we designate as the police power of the State. The stabilization,
and subsidy of domestic prices of petroleum products and fuel oil — clearly critical in
importance considering, among other things, the continuing high level of dependence
of the country on imported crude oil — are appropriately regarded as public
purposes.

Also of relevance is this Court's ruling in relation to the sugar stabilization fund the nature of which is
not far different from the OPSF. In Gaston v. Republic Planters Bank, 16 this Court upheld the legality
of the sugar stabilization fees and explained their nature and character, viz.:

The stabilization fees collected are in the nature of a tax, which is within the power of
the State to impose for the promotion of the sugar industry (Lutz v. Araneta, 98 Phil.
148). . . . The tax collected is not in a pure exercise of the taxing power. It is levied
with a regulatory purpose, to provide a means for the stabilization of the sugar
industry. The levy is primarily in the exercise of the police power of the State (Lutz v.
Araneta, supra).

xxx xxx xxx

The stabilization fees in question are levied by the State upon sugar millers, planters and
producers for a special purpose — that of "financing the growth and development of the
sugar industry and all its components, stabilization of the domestic market including the
foreign market." The fact that the State has taken possession of moneys pursuant to law
is sufficient to constitute them state funds, even though they are held for a special
purpose (Lawrence v. American Surety Co. 263 Mich. 586, 249 ALR 535, cited in 42 Am
Jur Sec. 2, p. 718). Having been levied for a special purpose, the revenues collected are
to be treated as a special fund, to be, in the language of the statute, "administered in
trust" for the purpose intended. Once the purpose has been fulfilled or abandoned, the
balance if any, is to be transferred to the general funds of the Government. That is the
essence of the trust intended (SEE 1987 Constitution, Article VI, Sec. 29(3), lifted from
the 1935 Constitution, Article VI, Sec. 23(1). 17

The character of the Stabilization Fund as a special kind of fund is emphasized by

the fact that the funds are deposited in the Philippine National Bank and not in the
Philippine Treasury, moneys from which may be paid out only in pursuance of an
appropriation made by law (1987) Constitution, Article VI, Sec. 29 (3), lifted from the
1935 Constitution, Article VI, Sec. 23(1). (Emphasis supplied).

Hence, it seems clear that while the funds collected may be referred to as taxes, they are exacted in
the exercise of the police power of the State. Moreover, that the OPSF is a special fund is plain from
the special treatment given it by E.O. 137. It is segregated from the general fund; and while it is
placed in what the law refers to as a "trust liability account," the fund nonetheless remains subject to
the scrutiny and review of the COA. The Court is satisfied that these measures comply with the
constitutional description of a "special fund." Indeed, the practice is not without precedent.

With regard to the alleged undue delegation of legislative power, the Court finds that the provision
conferring the authority upon the ERB to impose additional amounts on petroleum products provides
a sufficient standard by which the authority must be exercised. In addition to the general policy of the
law to protect the local consumer by stabilizing and subsidizing domestic pump rates, § 8(c) of P.D.
1956 18 expressly authorizes the ERB to impose additional amounts to augment the resources of the
Fund.

What petitioner would wish is the fixing of some definite, quantitative restriction, or "a specific limit on
how much to tax." 19 The Court is cited to this requirement by the petitioner on the premise that what
is involved here is the power of taxation; but as already discussed, this is not the case. What is here
involved is not so much the power of taxation as police power. Although the provision authorizing the
ERB to impose additional amounts could be construed to refer to the power of taxation, it cannot be
overlooked that the overriding consideration is to enable the delegate to act with expediency in
carrying out the objectives of the law which are embraced by the police power of the State.

The interplay and constant fluctuation of the various factors involved in the determination of the price
of oil and petroleum products, and the frequently shifting need to either augment or exhaust the
Fund, do not conveniently permit the setting of fixed or rigid parameters in the law as proposed by
the petitioner. To do so would render the ERB unable to respond effectively so as to mitigate or
avoid the undesirable consequences of such fluidity. As such, the standard as it is expressed,
suffices to guide the delegate in the exercise of the delegated power, taking account of the
circumstances under which it is to be exercised.

For a valid delegation of power, it is essential that the law delegating the power must be (1)
complete in itself, that is it must set forth the policy to be executed by the delegate and (2) it must fix
a standard — limits of which
are sufficiently determinate or determinable — to which the delegate must conform. 20

. . . As pointed out in Edu v. Ericta: "To avoid the taint of unlawful delegation, there must
be a standard, which implies at the very least that the legislature itself determines matters
of principle and lays down fundamental policy. Otherwise, the charge of complete
abdication may be hard to repel. A standard thus defines legislative policy, marks its
limits, maps out its boundaries and specifies the public agency to apply it. It indicates the
circumstances under which the legislative command is to be effected. It is the criterion by
which the legislative purpose may be carried out. Thereafter, the executive or
administrative office designated may in pursuance of the above guidelines promulgate
supplemental rules and regulations. The standard may either be express or implied. If the
former, the non-delegation objection is easily met. The standard though does not have to
be spelled out specifically. It could be implied from the policy and purpose of the act
considered as a whole. 21

It would seem that from the above-quoted ruling, the petition for prohibition should fail.

The standard, as the Court has already stated, may even be implied. In that light, there can be no
ground upon which to sustain the petition, inasmuch as the challenged law sets forth a determinable
standard which guides the exercise of the power granted to the ERB. By the same token, the proper
exercise of the delegated power may be tested with ease. It seems obvious that what the law
intended was to permit the additional imposts for as long as there exists a need to protect the
general public and the petroleum industry from the adverse consequences of pump rate fluctuations.
"Where the standards set up for the guidance of an administrative officer and the action taken are in
fact recorded in the orders of such officer, so that Congress, the courts and the public are assured
that the orders in the judgment of such officer conform to the legislative standard, there is no failure
in the performance of the legislative functions." 22

This Court thus finds no serious impediment to sustaining the validity of the legislation; the express
purpose for which the imposts are permitted and the general objectives and purposes of the fund are
readily discernible, and they constitute a sufficient standard upon which the delegation of power may
be justified.

In relation to the third question — respecting the illegality of the reimbursements to oil companies,
paid out of the Oil Price Stabilization Fund, because allegedly in contravention of § 8, paragraph 2
(2) of P.D. 1956, amended 23— the Court finds for the petitioner.

The petition assails the payment of certain items or accounts in favor of the petroleum companies
(i.e., inventory losses, financing charges, fuel oil sales to the National Power Corporation, etc.)
because not authorized by law. Petitioner contends that "these claims are not embraced in the
enumeration in § 8 of P.D. 1956 . . since none of them was incurred 'as a result of the reduction of
domestic prices of petroleum products,'" 24 and since these items are reimbursements for which the
OPSF should not have responded, the amount of the P12.877 billion deficit "should be reduced by
P5,277.2 million." 25 It is argued "that under the principle of ejusdem generis . . . the term 'other
factors' (as used in § 8 of P.D. 1956) . . can only include such 'other factors' which necessarily result
in the reduction of domestic prices of petroleum products." 26

The Solicitor General, for his part, contends that "(t)o place said (term) within the restrictive confines
of the rule ofejusdem generis would reduce (E.O. 137) to a meaningless provision."

This Court, in Caltex Philippines, Inc. v. The Honorable Commissioner on Audit, et al., 27 passed
upon the application of ejusdem generis to paragraph 2 of § 8 of P.D. 1956, viz.:

The rule of ejusdem generis states that "[w]here words follow an enumeration of persons
or things, by words of a particular and specific meaning, such general words are not to be
construed in their widest extent, but are held to be as applying only to persons or things
of the same kind or class as those specifically mentioned." 28A reading of subparagraphs
(i) and (ii) easily discloses that they do not have a common characteristic. The first
relates to price reduction as directed by the Board of Energy while the second refers to
reduction in internal ad valorem taxes. Therefore, subparagraph (iii) cannot be limited by
the enumeration in these subparagraphs. What should be considered for purposes of
determining the "other factors" in subparagraph (iii) is the first sentence of paragraph (2)
of the Section which explicitly allows the cost underrecovery only if such were incurred as
a result of the reduction of domestic prices of petroleum products.

The Court thus holds, that the reimbursement of financing charges is not authorized by paragraph 2
of § 8 of P.D. 1956, for the reason that they were not incurred as a result of the reduction of
domestic prices of petroleum products. Under the same provision, however, the payment of
inventory losses is upheld as valid, being clearly a result of domestic price reduction, when oil
companies incur a cost underrecovery for yet unsold stocks of oil in inventory acquired at a higher
price.

Reimbursement for cost underrecovery from the sales of oil to the National Power Corporation is
equally permissible, not as coming within the provisions of P.D. 1956, but in virtue of other laws and
regulations as held inCaltex  29 and which have been pointed to by the Solicitor General. At any rate,
doubts about the propriety of such reimbursements have been dispelled by the enactment of R.A.
6952, establishing the Petroleum Price Standby Fund, § 2 of which specifically authorizes the
reimbursement of "cost underrecovery incurred as a result of fuel oil sales to the National Power
Corporation."

Anent the overpayment refunds mentioned by the petitioner, no substantive discussion has been
presented to show how this is prohibited by P.D. 1956. Nor has the Solicitor General taken any effort
to defend the propriety of this refund. In fine, neither of the parties, beyond the mere mention of
overpayment refunds, has at all bothered to discuss the arguments for or against the legality of the
so-called overpayment refunds. To be sure, the absence of any argument for or against the validity
of the refund cannot result in its disallowance by the Court. Unless the impropriety or illegality of the
overpayment refund has been clearly and specifically shown, there can be no basis upon which to
nullify the same.

Finally, the Court finds no necessity to rule on the remaining issue, the same having been rendered
moot and academic. As of date hereof, the pump rates of gasoline have been reduced to levels
below even those prayed for in the petition.

WHEREFORE, the petition is GRANTED insofar as it prays for the nullification of the reimbursement
of financing charges, paid pursuant to E.O. 137, and DISMISSED in all other respects.

SO ORDERED.

Cruz, Feliciano, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr., Romero, Nocon, Bellosillo,
Melo, Campos, Jr., and Quiason, JJ., concur.

Gutierrez, Jr., J., is on leave.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-59234 September 30, 1982

TAXICAB OPERATORS OF METRO MANILA, INC., FELICISIMO CABIGAO and ACE

TRANSPORTATION CORPORATION, petitioners, 
vs.
THE BOARD OF TRANSPORTATION and THE DIRECTOR OF THE BUREAU OF LAND
TRANSPORTATION,respondents.

MELENCIO-HERRERA, J.:

This Petition for "Certiorari, Prohibition and mandamus with Preliminary Injunction and Temporary
Restraining Order" filed by the Taxicab Operators of Metro Manila, Inc., Felicisimo Cabigao and Ace
Transportation, seeks to declare the nullity of Memorandum Circular No. 77-42, dated October 10,
1977, of the Board of Transportation, and Memorandum Circular No. 52, dated August 15, 1980, of
the Bureau of Land Transportation.

Petitioner Taxicab Operators of Metro Manila, Inc. (TOMMI) is a domestic corporation composed of
taxicab operators, who are grantees of Certificates of Public Convenience to operate taxicabs within
the City of Manila and to any other place in Luzon accessible to vehicular traffic. Petitioners Ace
Transportation Corporation and Felicisimo Cabigao are two of the members of TOMMI, each being
an operator and grantee of such certificate of public convenience.

On October 10, 1977, respondent Board of Transportation (BOT) issued Memorandum Circular No.
77-42 which reads:

SUBJECT: Phasing out and Replacement of

Old and Dilapidated Taxis

WHEREAS, it is the policy of the government to insure that only safe and
comfortable units are used as public conveyances;

WHEREAS, the riding public, particularly in Metro-Manila, has, time and again,
complained against, and condemned, the continued operation of old and dilapidated
taxis;

WHEREAS, in order that the commuting public may be assured of comfort,

convenience, and safety, a program of phasing out of old and dilapidated taxis
should be adopted;
 WHEREAS, after studies and inquiries made by the Board of Transportation, the
latter believes that in six years of operation, a taxi operator has not only covered the
cost of his taxis, but has made reasonable profit for his investments;

NOW, THEREFORE, pursuant to this policy, the Board hereby declares that no car
beyond six years shall be operated as taxi, and in implementation of the same
hereby promulgates the following rules and regulations:

1. As of December 31, 1977, all taxis of Model 1971 and earlier are ordered
withdrawn from public service and thereafter may no longer be registered and
operated as taxis. In the registration of cards for 1978, only taxis of Model 1972 and
later shall be accepted for registration and allowed for operation;

2. As of December 31, 1978, all taxis of Model 1972 are ordered withdrawn from
public service and thereafter may no longer be registered and operated as taxis. In
the registration of cars for 1979, only taxis of Model 1973 and later shall be accepted
for registration and allowed for operation; and every year thereafter, there shall be a
six-year lifetime of taxi, to wit:

1980 — Model 1974

1981 — Model 1975, etc.

All taxis of earlier models than those provided above are hereby ordered withdrawn
from public service as of the last day of registration of each particular year and their
respective plates shall be surrendered directly to the Board of Transportation for
subsequent turnover to the Land Transportation Commission.

For an orderly implementation of this Memorandum Circular, the rules herein shall
immediately be effective in Metro-Manila. Its implementation outside Metro- Manila shall
be carried out only after the project has been implemented in Metro-Manila and only after
the date has been determined by the Board. 1

Pursuant to the above BOT circular, respondent Director of the Bureau of Land Transportation (BLT)
issued Implementing Circular No. 52, dated August 15, 1980, instructing the Regional Director, the
MV Registrars and other personnel of BLT, all within the National Capitol Region, to implement said
Circular, and formulating a schedule of phase-out of vehicles to be allowed and accepted for
registration as public conveyances. To quote said Circular:

Pursuant to BOT Memo-Circular No. 77-42, taxi units with year models over six (6)
years old are now banned from operating as public utilities in Metro Manila. As such
the units involved should be considered as automatically dropped as public utilities
and, therefore, do not require any further dropping order from the BOT.

Henceforth, taxi units within the National Capitol Region having year models over 6
years old shall be refused registration. The following schedule of phase-out is
herewith prescribed for the guidance of all concerned:

Year Model Automatic

Phase-Out
Year
   1980

1974 1981

1975 1982

1976 1983

1977  

etc. etc.

Strict compliance here is desired. 2

In accordance therewith, cabs of model 1971 were phase-out in registration year 1978; those of
model 1972, in 1979; those of model 1973, in 1980; and those of model 1974, in 1981.

On January 27, 1981, petitioners filed a Petition with the BOT, docketed as Case No. 80-7553,
seeking to nullify MC No. 77-42 or to stop its implementation; to allow the registration and operation
in 1981 and subsequent years of taxicabs of model 1974, as well as those of earlier models which
were phased-out, provided that, at the time of registration, they are roadworthy and fit for operation.

On February 16, 1981, petitioners filed before the BOT a "Manifestation and Urgent Motion", praying
for an early hearing of their petition. The case was heard on February 20, 1981. Petitioners
presented testimonial and documentary evidence, offered the same, and manifested that they would
submit additional documentary proofs. Said proofs were submitted on March 27, 1981 attached to
petitioners' pleading entitled, "Manifestation, Presentation of Additional Evidence and Submission of
the Case for Resolution." 3

On November 28, 1981, petitioners filed before the same Board a "Manifestation and Urgent Motion
to Resolve or Decide Main Petition" praying that the case be resolved or decided not later than
December 10, 1981 to enable them, in case of denial, to avail of whatever remedy they may have
under the law for the protection of their interests before their 1975 model cabs are phased-out on
January 1, 1982.

Petitioners, through its President, allegedly made personal follow-ups of the case, but was later
informed that the records of the case could not be located.

On December 29, 1981, the present Petition was instituted wherein the following queries were posed
for consideration by this Court:

A. Did BOT and BLT promulgate the questioned memorandum circulars in accord
with the manner required by Presidential Decree No. 101, thereby safeguarding the
petitioners' constitutional right to procedural due process?

B. Granting, arguendo, that respondents did comply with the procedural

requirements imposed by Presidential Decree No. 101, would the implementation
and enforcement of the assailed memorandum circulars violate the petitioners'
constitutional rights to.

(1) Equal protection of the law;

 (2) Substantive due process; and

(3) Protection against arbitrary and unreasonable

classification and standard?

On Procedural and Substantive Due Process:

Presidential Decree No. 101 grants to the Board of Transportation the power

4. To fix just and reasonable standards, classification, regulations, practices,

measurements, or service to be furnished, imposed, observed, and followed by
operators of public utility motor vehicles.

Section 2 of said Decree provides procedural guidelines for said agency to follow in the exercise of
its powers:

Sec. 2. Exercise of powers. — In the exercise of the powers granted in the preceding
section, the Board shag proceed promptly along the method of legislative inquiry.

Apart from its own investigation and studies, the Board, in its discretion, may require
the cooperation and assistance of the Bureau of Transportation, the Philippine
Constabulary, particularly the Highway Patrol Group, the support agencies within the
Department of Public Works, Transportation and Communications, or any other
government office or agency that may be able to furnish useful information or data in
the formulation of the Board of any policy, plan or program in the implementation of
this Decree.

The Board may also can conferences, require the submission of position papers or
other documents, information, or data by operators or other persons that may be
affected by the implementation of this Decree, or employ any other suitable means of
inquiry.

In support of their submission that they were denied procedural due process, petitioners contend
that they were not caged upon to submit their position papers, nor were they ever summoned to
attend any conference prior to the issuance of the questioned BOT Circular.

It is clear from the provision aforequoted, however, that the leeway accorded the Board gives it a
wide range of choice in gathering necessary information or data in the formulation of any policy, plan
or program. It is not mandatory that it should first call a conference or require the submission of
position papers or other documents from operators or persons who may be affected, this being only
one of the options open to the Board, which is given wide discretionary authority. Petitioners cannot
justifiably claim, therefore, that they were deprived of procedural due process. Neither can they state
with certainty that public respondents had not availed of other sources of inquiry prior to issuing the
challenged Circulars. operators of public conveyances are not the only primary sources of the data
and information that may be desired by the BOT.

Dispensing with a public hearing prior to the issuance of the Circulars is neither violative of
procedural due process. As held in Central Bank vs. Hon. Cloribel and Banco Filipino, 44 SCRA 307
(1972):
 Pevious notice and hearing as elements of due process, are constitutionally required
for the protection of life or vested property rights, as well as of liberty, when its
limitation or loss takes place in consequence of a judicial or quasi-judicial
proceeding, generally dependent upon a past act or event which has to be
established or ascertained. It is not essential to the validity of general rules or
regulations promulgated to govern future conduct of a class or persons or
enterprises, unless the law provides otherwise. (Emphasis supplied)

Petitioners further take the position that fixing the ceiling at six (6) years is arbitrary and oppressive
because the roadworthiness of taxicabs depends upon their kind of maintenance and the use to
which they are subjected, and, therefore, their actual physical condition should be taken into
consideration at the time of registration. As public contend, however, it is impractical to subject every
taxicab to constant and recurring evaluation, not to speak of the fact that it can open the door to the
adoption of multiple standards, possible collusion, and even graft and corruption. A reasonable
standard must be adopted to apply to an vehicles affected uniformly, fairly, and justly. The span of
six years supplies that reasonable standard. The product of experience shows that by that time taxis
have fully depreciated, their cost recovered, and a fair return on investment obtained. They are also
generally dilapidated and no longer fit for safe and comfortable service to the public specially
considering that they are in continuous operation practically 24 hours everyday in three shifts of
eight hours per shift. With that standard of reasonableness and absence of arbitrariness, the
requirement of due process has been met.

On Equal Protection of the Law:

Petitioners alleged that the Circular in question violates their right to equal protection of the law
because the same is being enforced in Metro Manila only and is directed solely towards the taxi
industry. At the outset it should be pointed out that implementation outside Metro Manila is also
envisioned in Memorandum Circular No. 77-42. To repeat the pertinent portion:

For an orderly implementation of this Memorandum Circular, the rules herein shall
immediately be effective in Metro Manila. Its implementation outside Metro Manila shall
be carried out only after the project has been implemented in Metro Manila and only after
the date has been determined by the Board. 4

In fact, it is the understanding of the Court that implementation of the Circulars in Cebu City is
already being effected, with the BOT in the process of conducting studies regarding the operation of
taxicabs in other cities.

The Board's reason for enforcing the Circular initially in Metro Manila is that taxicabs in this city,
compared to those of other places, are subjected to heavier traffic pressure and more constant use.
This is of common knowledge. Considering that traffic conditions are not the same in every city, a
substantial distinction exists so that infringement of the equal protection clause can hardly be
successfully claimed.

As enunciated in the preambular clauses of the challenged BOT Circular, the overriding
consideration is the safety and comfort of the riding public from the dangers posed by old and
dilapidated taxis. The State, in the exercise, of its police power, can prescribe regulations to promote
the health, morals, peace, good order, safety and general welfare of the people. It can prohibit all
things hurtful to comfort, safety and welfare of society. 5 It may also regulate property rights. 6 In the
language of Chief Justice Enrique M. Fernando "the necessities imposed by public welfare may
justify the exercise of governmental authority to regulate even if thereby certain groups may
plausibly assert that their interests are disregarded". 7
In so far as the non-application of the assailed Circulars to other transportation services is
concerned, it need only be recalled that the equal protection clause does not imply that the same
treatment be accorded all and sundry. It applies to things or persons Identically or similarly situated.
It permits of classification of the object or subject of the law provided classification is reasonable or
based on substantial distinction, which make for real differences, and that it must apply equally to
each member of the class. 8 What is required under the equal protection clause is the uniform
operation by legal means so that all persons under Identical or similar circumstance would be
accorded the same treatment both in privilege conferred and the liabilities imposed. 9 The challenged
Circulars satisfy the foregoing criteria.

Evident then is the conclusion that the questioned Circulars do not suffer from any constitutional
infirmity. To declare a law unconstitutional, the infringement of constitutional right must be clear,
categorical and undeniable. 10

WHEREFORE, the Writs prayed for are denied and this Petition is hereby dismissed. No costs.

SO ORDERED.

Fernando, CJ., Barredo, Makasiar, Concepcion, Jr., Guerrero, Abad Santos, De Castro, Plana,
Escolin, Vasquez, Relova and Gutierrez, Jr., JJ., concur.

Teehankee and Aquino, JJ., concur in the result.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-24153 February 14, 1983

TOMAS VELASCO, LOURDES RAMIREZ, SY PIN, EDMUNDO UNSON, APOLONIA RAMIREZ

and LOURDES LOMIBAO, as component members of the STA. CRUZ BARBERSHOP
ASSOCIATION, in their own behalf and in representation of the other owners of barbershops
in the City of Manila, petitioners-appellants, 
vs.
HON. ANTONIO J. VILLEGAS, City Mayor of Manila, HON. HERMINIO A. ASTORGA, Vice-
Mayor and Presiding Officer of the Municipal Board in relation to Republic Act 4065, THE
MUNICIPAL BOARD OF THE CITY OF MANILA and EDUARDO QUINTOS SR., Chief of Police
of the City of Manila, respondents-appellees.

Leonardo L. Arguelles for respondent-appellant.

FERNANDO, C.J.:

This is an appeal from an order of the lower court dismissing a suit for declaratory relief challenging
the constitutionality based on Ordinance No. 4964 of the City of Manila, the contention being that it
amounts to a deprivation of property of petitioners-appellants of their means of livelihood without due
process of law. The assailed ordinance is worded thus: "It shall be prohibited for any operator of any
barber shop to conduct the business of massaging customers or other persons in any adjacent room
or rooms of said barber shop, or in any room or rooms within the same building where the barber
shop is located as long as the operator of the barber shop and the room where massaging is
conducted is the same person." 1 As noted in the appealed order, petitioners-appellants admitted
that criminal cases for the violation of this ordinance had been previously filed and decided. The
lower court, therefore, held that a petition for declaratory relief did not lie, its availability being
dependent on there being as yet no case involving such issue having been filed. 2

Even if such were not the case, the attack against the validity cannot succeed. As pointed out in the
brief of respondents-appellees, it is a police power measure. The objectives behind its enactment
are: "(1) To be able to impose payment of the license fee for engaging in the business of massage
clinic under Ordinance No. 3659 as amended by Ordinance 4767, an entirely different measure than
the ordinance regulating the business of barbershops and, (2) in order to forestall possible
immorality which might grow out of the construction of separate rooms for massage of
customers." 3 This Court has been most liberal in sustaining ordinances based on the general
welfare clause. As far back as U.S. v. Salaveria, 4 a 1918 decision, this Court through Justice
Malcolm made clear the significance and scope of such a clause, which "delegates in statutory form
the police power to a municipality. As above stated, this clause has been given wide application by
municipal authorities and has in its relation to the particular circumstances of the case been liberally
construed by the courts. Such, it is well to really is the progressive view of Philippine
jurisprudence." 5 As it was then, so it has continued to be. 6 There is no showing, therefore, of the
unconstitutionality of such ordinance.

WHEREFORE, the appealed order of the lower court is affirmed. No costs.

Makasiar, Concepcion, Jr., Guerrero, Abad Santos, De Castro, Melencio- Herrera, Plana, Escolin,
Vasquez, Relova and Gutierrez, Jr., JJ., concur.

Teehankee, J., reserves his vote.

Aquino J., took no part.

 
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-42571-72 July 25, 1983

VICENTE DE LA CRUZ, RENATO ALIPIO, JOSE TORRES III, LEONCIO CORPUZ, TERESITA
CALOT, ROSALIA FERNANDEZ, ELIZABETH VELASCO, NANETTE VILLANUEVA, HONORATO
BUENAVENTURA, RUBEN DE CASTRO, VICENTE ROXAS, RICARDO DAMIAN, DOMDINO
ROMDINA, ANGELINA OBLIGACION, CONRADO GREGORIO, TEODORO REYES, LYDIA
ATRACTIVO, NAPOLEON MENDOZA, PERFECTO GUMATAY, ANDRES SABANGAN, ROSITA
DURAN, SOCORRO BERNARDEZ, and PEDRO GABRIEL, petitioners, 
vs.
THE HONORABLE EDGARDO L. PARAS, MATIAS RAMIREZ as the Municipal Mayor, MARIO
MENDOZA as the Municipal Vice-Mayor, and THE MUNICIPAL COUNCIL OF BOCAUE,
BULACAN, respondents.

Federico N. Alday for petitioners.

Dakila F. Castro for respondents.

FERNANDO, C.J.:

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

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

On November 5, 1975, two cases for prohibition with preliminary injunction were filed with the Court
of First Instance of Bulacan. 5 The grounds alleged follow:

1. Ordinance No. 84 is null and void as a municipality has no authority to prohibit a lawful business,
occupation or calling.

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

In an exhaustive as well as scholarly opinion, the lower court dismissed the petitions. Its rationale is
set forth in the opening paragraph thus: "Those who lust cannot last. This in essence is why the
Municipality of Bocaue, Province of Bulacan, stigmatized as it has been by innuendos of sexual
titillation and fearful of what the awesome future holds for it, had no alternative except to order thru
its legislative machinery, and even at the risk of partial economic dislocation, the closure of its night
clubs and/or cabarets. This in essence is also why this Court, obedient to the mandates of good
government, and cognizant of the categorical imperatives of the current legal and social revolution,
hereby [upholds] in the name of police power the validity and constitutionality of Ordinance No. 84,
Series of 1975, of the Municipal Council of Bocaue, Bulacan. The restraining orders heretofore
issued in these two cases are therefore hereby rifted, effective the first day of February, 1976, the
purpose of the grace period being to enable the petitioners herein to apply to the proper appellate
tribunals for any contemplated redress." 9 This Court is, however, unable to agree with such a
conclusion and for reasons herein set forth, holds that reliance on the police power is insufficient to
justify the enactment of the assailed ordinance. It must be declared null and void.

1. Police power is granted to municipal corporations in general terms as follows: "General power of

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

2. The decision now under review refers to Republic Act No. 938 as amended. 17 It was originally
enacted on June 20, 1953. It is entitled: "AN ACT GRANTING MUNICIPAL OR CITY BOARDS AND
COUNCILS THE POWER TO REGULATE THE ESTABLISHMENT, MAINTENANCE AND
OPERATION OF CERTAIN PLACES OF AMUSEMENT WITHIN THEIR RESPECTIVE
TERRITORIAL JURISDICTIONS.' 18 Its first section insofar as pertinent reads: "The municipal or city
board or council of each chartered city shall have the power to regulate by ordinance the
establishment, maintenance and operation of night clubs, cabarets, dancing schools, pavilions,
cockpits, bars, saloons, bowling alleys, billiard pools, and other similar places of amusement within
its territorial jurisdiction: ... " 19Then on May 21, 1954, the first section was amended to include not
merely "the power to regulate, but likewise "Prohibit ... " 20 The title, however, remained the same. It
is worded exactly as Republic Act No. 938. It is to be admitted that as thus amended, if only the
above portion of the Act were considered, a municipal council may go as far as to prohibit the
operation of night clubs. If that were all, then the appealed decision is not devoid of support in law.
That is not all, however. The title was not in any way altered. It was not changed one whit. The exact
wording was followed. The power granted remains that of regulation, not prohibition. There is thus
support for the view advanced by petitioners that to construe Republic Act No. 938 as allowing the
prohibition of the operation of night clubs would give rise to a constitutional question. The
Constitution mandates: "Every bill shall embrace only one subject which shall be expressed in the
title thereof. " 21 Since there is no dispute as the title limits the power to regulating, not prohibiting, it
would result in the statute being invalid if, as was done by the Municipality of Bocaue, the operation
of a night club was prohibited. There is a wide gap between the exercise of a regulatory power "to
provide for the health and safety, promote the prosperity, improve the morals, 22 in the language of
the Administrative Code, such competence extending to all "the great public needs, 23 to quote from
Holmes, and to interdict any calling, occupation, or enterprise. In accordance with the well-settled
principle of constitutional construction that between two possible interpretations by one of which it
will be free from constitutional infirmity and by the other tainted by such grave defect, the former is to
be preferred. A construction that would save rather than one that would affix the seal of doom
certainly commends itself. We have done so before We do so again. 24

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

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

WHEREFORE, the writ of certiorari is granted and the decision of the lower court dated January 15,
1976 reversed, set aside, and nullied. Ordinance No. 84, Series of 1975 of the Municipality of
Bocaue is declared void and unconstitutional. The temporary restraining order issued by this Court is
hereby made permanent. No costs.

Teehankee, Aquino, Concepcion Jr., Guerrero, Abad Santos, Plana, Escolin Relova and Gutierrez,
Jr., JJ., concur.

Makasiar, J, reserves his right to file a dissent.

De Castro, Melencio-Herrera and Vasquez, JJ., are on leave.