Pub Corp Full Cases First Batch

PubCorp CasesAtty. Lapid

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 40243 March 11, 1992

CELESTINO TATEL, petitioner, vs.MUNICIPALITY OF VIRAC, SALVADOR A. SURTIDA, in his capacity as Mayor of Virac, Catanduanes; GAVINO V. GUERRERO, in his capacity as Vice-Mayor of Virac, Catanduanes; JOSE T. BUEBOS, in his capacity as Councilor of Virac, Catanduanes; ANGELES TABLIZO, in his capacity as Councilor of Virac, Catanduanes; ELPIDIO T. ZAFE, in his capacity as Councilor of Virac, Catanduanes; MARIANO ALBERTO, in his capacity as Councilor of Virac, Catanduanes; JULIA A. GARCIA, in her capacity as Councilor of Virac, Catanduanes; and PEDRO A. GUERRERO, in his capacity as Councilor of Virac, Catanduanes,respondents.

NOCON, J.:

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

It appears from the records that on the basis of complaints received from the residents of barrio Sta. Elena on March 18, 1966 against the disturbance caused by the operation of the abaca bailing machine inside the warehouse of petitioner which affected the peace and tranquility of the neighborhood due to the smoke, obnoxious odor and dust emitted by the machine, a committee was appointed by the municipal council of Virac to investigate the

matter. The committee noted the crowded nature of the neighborhood with narrow roads and the surrounding residential houses, so much so that an accidental fire within the warehouse of the petitioner occasioned by the continuance of the activity inside the warehouse and the storing of inflammable materials created a danger to the lives and properties of the people within the neighborhood.

Resultantly, Resolution No. 29 was passed by the Municipal Council of Virac on April 22, 1966 declaring the warehouse owned and operated by petitioner a public nuisance within the purview of Article 694 of the New Civil Code. 2

His motion for reconsideration having been denied by the Municipal Council of Virac, petitioner instituted the present petition for prohibition with preliminary injunction.

Respondent municipal officials contend that petitioner's warehouse was constructed in violation of Ordinance No. 13, series of 1952, prohibiting the construction of warehouses near a block of houses either in the poblacion or barrios without maintaining the necessary distance of 200 meters from said block of houses to avoid loss of lives and properties by accidental fire.

On the other hand, petitioner contends that said ordinance is unconstitutional, contrary to the due process and equal protection clause of the Constitution and null and void for not having been passed in accordance with law.

The issue then boils down on whether petitioner's warehouse is a nuisance within the meaning of Article 694 of the Civil Code and whether Ordinance No. 13, S. 1952 of the Municipality of Virac is unconstitutional and void.

In a decision dated September 18, 1969, the court a quo ruled as follows:

1. The warehouse in question was legally constructed under a valid permit issued by the municipality of Virac in accordance with existing regulations and may not be destroyed or removed from its present location;

2. Ordinance No. 13, series of 1952, is a legitimate and valid exercise of police power by the Municipal Council of Virac is not (sic) unconstitutional and void as claimed by the petitioner;


3. The storage by the petitioner of abaca and copra in the warehouse is not only in violation of the provisions of the ordinance but poses a grave danger to the safety of the lives and properties of the residents of the neighborhood due to accidental fire and constitutes a public nuisance under the provisions of Article 694 of the New Civil code of the Philippines and may be abated;

4. Accordingly, the petitioner is hereby directed to remove from the said warehouse all abaca and copra and other inflammable articles stored therein which are prohibited under the provisions of Ordinance No. 13, within a period of two (2) months from the time this decision becomes final and that henceforth, the petitioner is enjoined from storing such prohibited articles in the warehouse. With costs against petitioner.

Seeking appellate review, petitioner raised as errors of the court a quo:

1. In holding that Ordinance No. 13, series of 1952, of the Municipality of Virac, Catanduanes, is a legitimate and valid exercise of police power of the Municipal Council, and therefore, constitutional;

2. In giving the ordinance a meaning other than and different from what it provided by declaring that petitioner violated the same by using the warehouse for storage of abaca and copra when what is prohibited and penalized by the ordinance is the construction of warehouses.

3. In refusing to take judicial notice of the fact that in the municipality, there are numerous establishments similarly situated as appellants' warehouses but which are not prosecuted.

We find no merit in the Petition.

Ordinance No. 13, series of 1952, was passed by the Municipal Council of Virac in the exercise of its police power. It is a settled principle of law that municipal corporations are agencies of the State for the promotion and maintenance of local self-government and as such are endowed with the police powers in order to effectively accomplish and carry out the declared

objects of their creation. 3 Its authority emanates from the general welfare clause under the Administrative Code, which reads:

The municipal council shall enact such ordinances and make such regulations, not repugnant to law, as may be necessary to carry into effect and discharge the powers and duties conferred upon it by law and such as shall seem necessary and proper to provide for the health and safety, promote the prosperity, improve the morals, peace, good order, comfort and convenience of the municipality and the inhabitants thereof, and for the protection of property therein. 4

For an ordinance to be valid, it must not only be within the corporate powers of the municipality to enact but must also be passed according to the procedure prescribed by law, and must be in consonance with certain well established and basic principles of a substantive nature. These principles require that a municipal ordinance (1) must not contravene the Constitution or any statute (2) must not be unfair or oppressive (3) must not be partial or discriminatory (4) must not prohibit but may regulate trade (5) must be general and consistent with public policy, and (6) must not be unreasonable. 5 Ordinance No. 13, Series of 1952, meets these criteria.

As to the petitioner's second assignment of error, the trial court did not give the ordinance in question a meaning other than what it says. Ordinance No. 13 passed by the Municipal Council of Virac on December 29, 1952, 6reads:

AN ORDINANCE STRICTLY PROHIBITING THE CONSTRUCTION OF WAREHOUSE IN ANY FORM NEAR A BLOCK OF HOUSES EITHER IN POBLACION OR BARRIO WITH NECESSARY DISTANCE TO AVOID GREAT LOSSES OF PROPERTY AND LIVES BY FIRE ACCIDENT.

Section 1 provides:

It is strictly prohibited to construct warehouses in any form to any person, persons, entity, corporation or merchants, wherein to keep or store copra, hemp, gasoline, petroleum, alcohol, crude oil, oil of turpentine and the like products or materials if not within the distance of 200 meters from a block of houses either in the poblacion or


barrios to avoid great losses of properties inclusive lives by fire accident.

Section 2 provides: 7

Owners of warehouses in any form, are hereby given advice to remove their said warehouses this ordinance by the Municipal Council, provided however, that if those warehouses now in existence should no longer be utilized as such warehouse for the above-described products in Section 1 of this ordinance after a lapse of the time given for the removal of the said warehouses now in existence, same warehouses shall be exempted from the spirit of the provision of section 1 of this ordinance,provided further, that these warehouses now in existence, shall in the future be converted into non-inflammable products and materials warehouses.

In spite of its fractured syntax, basically, what is regulated by the ordinance is the construction of warehouses wherein inflammable materials are stored where such warehouses are located at a distance of 200 meters from a block of houses and not the construction per se of a warehouse. The purpose is to avoid the loss of life and property in case of fire which is one of the primordial obligation of the government.

This was also the observation of the trial court:

A casual glance of the ordinance at once reveals a manifest disregard of the elemental rules of syntax. Experience, however, will show that this is not uncommon in law making bodies in small towns where local authorities and in particular the persons charged with the drafting and preparation of municipal resolutions and ordinances lack sufficient education and training and are not well grounded even on the basic and fundamental elements of the English language commonly used throughout the country in such matters. Nevertheless, if one scrutinizes the terms of the ordinance, it is clear that what is prohibited is the construction of warehouses by any person, entity or corporation wherein copra, hemp, gasoline and other inflammable products mentioned in Section 1 may be stored unless at a distance of not less than 200 meters from a block of houses either in the

poblacion or barrios in order to avoid loss of property and life due to fire. Under Section 2, existing warehouses for the storage of the prohibited articles were given one year after the approval of the ordinance within which to remove them but were allowed to remain in operation if they had ceased to store such prohibited articles.

The ambiguity therefore is more apparent than real and springs from simple error in grammatical construction but otherwise, the meaning and intent is clear that what is prohibited is the construction or maintenance of warehouses for the storage of inflammable articles at a distance within 200 meters from a block of houses either in the poblacion or in the barrios. And the purpose of the ordinance is to avoid loss of life and property in case of accidental fire which is one of the primordial and basic obligation of any government. 8

Clearly, the lower court did NOT add meaning other than or differrent from what was provided in the ordinance in question. It merely stated the purpose of the ordinance and what it intends to prohibit to accomplish its purpose.

As to the third assignment of error, that warehouses similarly situated as that of the petitioner were not prosecuted, suffice it to say that the mere fact that the municipal authorities of Virac have not proceeded against other warehouses in the municipality allegedly violating Ordinance No. 13 is no reason to claim that the ordinance is discriminatory. A distinction must be made between the law itself and the manner in which said law is implemented by the agencies in charge with its administration and enforcement. There is no valid reason for the petitioner to complain, in the absence of proof that the other bodegas mentioned by him are operating in violation of the ordinance and that the complaints have been lodged against the bodegas concerned without the municipal authorities doing anything about it.

The objections interposed by the petitioner to the validity of the ordinance have not been substantiated. Its purpose is well within the objectives of sound government. No undue restraint is placed upon the petitioner or for anybody to engage in trade but merely a prohibition from storing inflammable products in the warehouse because of the danger of fire to the lives and properties of the people residing in the vicinity. As far as public policy is concerned, there can be no better policy than what has been conceived by the municipal government.


As to petitioner's contention of want of jurisdiction by the lower court we find no merit in the same. The case is a simple civil suit for abatement of a nuisance, the original jurisdiction of which falls under the then Court of First Instance.

WHEREFORE, for lack of merit, the petition is hereby DISMISSED. Costs against petitioner.

SO ORDERED.

Melencio-Herrera, Paras, Padilla and Regalado, JJ., concur.



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." 7There 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: ... " 19 Then on May 21, 1954, the first section was amended to include not merely "the power to regulate, but likewise "Prohibit ... " 20 The title, however, remained the same. It is worded exactly as Republic Act No. 938. It is to be admitted that as thus amended, if only the above portion of the Act were considered, a municipal council may go as far as to prohibit the operation of night clubs.

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

3. There is reinforcement to the conclusion reached by virtue of a specific provision of the recently-enacted Local Government Code. 25 The general welfare clause, a reiteration of the Administrative Code provision, is set forth in the first paragraph of Section 149 defining the powers and duties of the sangguniang bayan. It read as follows: "(a) Enact such ordinances and issue such regulations as may be necessary to carry out and discharge the responsibilities conferred upon it by law, and such as shall be necessary and proper to provide for the health, safety, comfort and convenience, maintain peace and order, improve public morals, promote the prosperity and general welfare of the municipality and the inhabitants thereof, and insure the protection of property therein; ..." 26 There are in addition provisions that may have a bearing on the question now before this Court. Thus the sangguniang bayan shall "(rr) Regulate cafes, restaurants, beer-houses, hotels, motels, inns, pension houses and lodging houses, except travel agencies, tourist guides, tourist transports, hotels, resorts, de luxe restaurants, and tourist inns of international standards which shall remain under the licensing and regulatory power of the Ministry of Tourism which shall exercise such authority without infringing on the taxing or regulatory powers of the municipality; (ss) Regulate public dancing schools, public dance halls, and sauna baths or massage parlors; (tt) Regulate the establishment and operation of billiard pools, theatrical performances, circuses and other forms of entertainment; ..." 27It 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.



Manila

EN BANC

G.R. No. 111097 July 20, 1994

MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners, vs.PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND GAMING CORPORATION,respondents.

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

R.R. Torralba & Associates for private respondent.

CRUZ, J.:

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

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

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

ORDINANCE NO. 3353

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

BE IT ORDAINED by the Sangguniang Panlungsod of the City of Cagayan de Oro, in session assembled that:

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

Sec. 2. — That it shall be a violation of existing business permit by any persons, partnership or corporation to use its business establishment or portion thereof, or allow the use thereof by others for casino operation and other gambling activities.

Sec. 3. — PENALTIES. — Any violation of such existing business permit as defined in the preceding section shall suffer the following penalties, to wit:

a) Suspension of the business permit for sixty (60) days for the first offense and a fine of P1,000.00/day

b) Suspension of the business permit for Six (6) months for the second offense, and a fine of P3,000.00/day

c) Permanent revocation of the


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

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

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

ORDINANCE NO. 3375-93

AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND PROVIDING PENALTY FOR VIOLATION THEREFOR.

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

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

WHEREAS, subsequently, thereafter, it likewise passed Ordinance No. 3353, prohibiting the issuance of Business Permit and to cancel existing Business Permit to any establishment for the using and allowing to be used its premises or portion thereof for the operation of CASINO;

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

NOW THEREFORE,

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

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

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

a) Administrative fine of P5,000.00 shall be imposed against the proprietor, partnership or corporation undertaking the operation, conduct, maintenance of gambling CASINO in the City and closure thereof;

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

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

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

# 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?


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 ofBatas 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.



Manila

EN BANC

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 preliminarymandatory 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 byCongress 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 inPeople 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 tocongressional 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.

Feliciano, Bidin, Regalado, Romero, Bellosillo and Mendoza, JJ., concur.

Narvasa, C.J. and Francisco, JJ., took no part.

Separate Opinions

KAPUNAN, J., concurring:

Government encroachments on private property however, valid, are always subject to limitations imposed by the due process and impairment of contracts clauses of the Constitution. The government challenge in the case at bench, ostensibly involving a franchise granted pursuant to legitimate local legislative authority, on the surface appears to be an easy one, clothed, as it were in the State's inherent and almost illimitable prerogative to promote the general welfare and the common good. As the challenge involves a facile conflict between good and evil, between a universally recognized vice and the State's virtuous posture, the instant case lends itself to easy adjudication.

Not necessarily. Economic realities have blurred distinctions. The State itself, though in virtuous garb, has at various times allowed a relaxation of existing rules proscribing gambling and devised a system of regulations, local and national, through which gambling and otherwise illicit gaming operations may be maintained by those licensed to do so. As the system has never been perfect, conflict, such as that which existed in the case at bench, occasionally arises.

The constitutionality of P.D. 771 was not in issue in Lim vs. Pacquing, promulgated by the court's first Division last September, 1994, where this court sustained an order by Judge Pacquing issued in Civil Case No. 88-45660 compelling Manila Mayor Alfredo S. Lim to issue a permit to operate a jail fronton in favor of the Associated Development Corporation (ADC) pursuant to Manila City Ordinance No. 7065.

After the City of Manila subsequently granted ADC a permit to operate the jai-alai fronton, Chairman Francisco Sumulong, Jr. of the Games and Amusements Board issued on September 9, 1994 a provisional authority to open the fronton subject to certain conditions imposed therein. In relation to this, the GAB likewise issued to the ADC, on 12 September 1994, License No. 94-008 upon payment of the corresponding fees.

On September 13, 1994, Executive Secretary Teofisto Guingona directed GAB Chairman Sumulong "to hold in abeyance the grant of authority or if any has been issued, to withdraw such grant of authority" 1 to the ADC. Consequently, on September 14, 1994, the GAB Chairman revoked the provisional authority issued by his office, until the legal issues raised in the September 13 directive of the Executive Secretary are resolved in the proper court. Said directive identified the legal issues as centering on 1) the constitutionality of P.D. 771; 2) the validity of the apparent grant in perpetuity of a municipal franchise to maintain jai-alai operations; and, 3) the power of the city of Manila to issue a jai-alai franchise in view of Executive Order 392 which transferred from local governments to the GAB the power to regulate jai-alai.

Reacting to the cancellation of its provisional authority to maintain jai-alai operations, ADC, on September 15, 1994 filed a petition for prohibition, mandamus, injunction and damages with prayer for temporary restraining order and writ of preliminary injunction in the Manila Regional Trial Court of against Executive Secretary Guingona and Chairman Sumulong. The Regional Trial court of manila, Branch 4, through Judge Vetino Reyes on the same day issued an order enjoining the Executive Secretary and the GAB Chairman from implementing their directive and memorandum, respectively.

On September 16, 1994 GAB, representing the Republic of the Philippines, filed a motion for intervention, for leave to file a motion for reconsideration-in-intervention and for reference of the case to the Court en banc in G.R. No. 115044. Acting on this motion, the First Division referred the case to the Court en banc, which, in a resolution dated 20 September 1994, accepted the same and required the respondents therein to comment.


On October 11, 1994 the Executive Secretary and the new GAB Chairman Domingo Cepeda, Jr. filed with this Court a petition for certiorari, prohibition and mandamus assailing Judge Vetino Reyes' earlier order.

On October 19. 1994, Judge Reyes issued another order granting the ADB's motion for a writ of preliminarymandatory injunction against the Executive Secretary and the GAB Chairman and to compel them to issue the necessary authority, licenses and working permits to the ADC, its personnel and players.

The government sought leave to file a supplemental petition (and to admit attached supplemental petition) with urgent prayer for a restraining order assailing the October 19, 1994 Order of Judge Reyes. We granted leave to file said supplemental petition and to admit supplemental petition and required respondents therein to file their comment on October 25, 1994.

The ADC maintains it original position that Ordinance No. 7065, enacted pursuant to the Charter of the City of Manila under Republic Act No. 409 granted a valid and subsisting municipal franchise for the operation of the Basque pelota game jai alai. In response to the government's vehement objections against ADC's operation of its gambling operations 2 the ADC for the first time challenged the constitutional validity of P.D. No. 771 insofar as it revoked the authority granted to it by Ordinance No. 7065 as violative of the non-impairment of contracts and equal protection clauses of the constitution. Ordinance 7065 reads:

Sec. 1. The Mayor is authorized, as he is hereby authorized to allow and permit the Associated Development Corporation to establish, maintain and operate a jai-alai in the City of Manila under the following terms and conditions and such other terms and conditions as he (the Mayor) may prescribe for good reasons of general interest:

a. That the construction, establishment, and maintenance of the jai-alai shall be at a place permissible under existing zoning ordinances of Manila;

b. That the games to be played daily shall commence not earlier than 5:00 o'clock (sic) in the afternoon;

c. That the City of Manila will receive a share of 21/2% of the annual gross receipts of all wagers or bets ½% of which will accrue to the Games and Amusements Board as now provided by law;

d. That the corporation will in addition pay to the city an annual license fee of P3,000.00 and a daily permit fee of P200.00;

e. That the corporation will to insure its faithful compliance of all the terms and conditions under this ordinance, put up a performance bond from a surety acceptable to the City, in the amount of at least P30,000.00.

xxx xxx xxx

Sec. 3 This ordinance shall take effect upon its approval.

The above-quoted ordinance is notable in two respects: 1) the absence of a period of expiration suggests that the grant of authority to operate the Basque pelota game jai-alai seems to have been granted in perpetuity and 2) while the grant of authority under the Ordinance was made pursuant to R.A. 409, the City Charter of Manila, the authority granted could best be viewed as a grant of license or permit, not a franchise. Nowhere is it pretended that Ordinance 7065 is a franchise enacted pursuant to the legislative powers of the Municipal Board of the City of Manila under Section 18 (jj) thereof.

The absence of authority of the Manila Municipal Board to issue a franchise, notwithstanding its legislative powers, is furthermore evident in the above-cited Charter provision regulating gambling and other gaming establishments which enumerates the following powers:

(jj) To tax, license, permit and regulate wagers of betting by the public on boxing . . . cockpits, jai-alai . . . as well as this purpose, notwithstanding any existing law to the contrary.

Clearly the, if Ordinance 7065 merely grants a permit or a license to operate the jai-alai fronton, I see no conflict with a national law, duly enacted pursuant to legitime franchise to operate certain gambling and gaming operations, generally viewed as deleterious to the public welfare and morals,


for the purpose of regulating the same and raising revenue. In other words, the national government may well validly require operators of such establishments to first secure a legislative franchise before starting their operations. After securing the proper legislative franchise, they may take then exercise whatever authority granted to them by local legislative bodies pursuant to the permits or licenses granted by these bodies. This is essentially the spirit ordained by at least two legislative issuances relating to jai-alai and other gambling operations passed before and after the Manila City Council issued the ADC's permit to operate.

In June of 1952, Congress enacted R.A. 392 which forbade the taking or arranging of bets on any basque pelota game by any person or entity other than one with a legislative franchise. 3 After the ADC was issued its permit by the City of Manila in 1971, President Marcos issued P.D. 771 pursuant to his legislative powers during martial Law, which revoked local authority to grant franchise to certain gambling operations including jai-alai. Section 3 thereof expressly revoked existing gambling franchise issued by the local governments. When President Corazon Aquino cancelled the franchise granted to the Philippine Jai-alai and Amusement Corporation in 1987, she kept P.D. 771, which revoked all authority by local governments to issue franchises for gambling and gaming establishments on one hand, and the municipal ordinance of the City of Manila, granting a permit or license to operate subject to compliance with the provisions found therein, on the other hand, a legislative franchise may be required by the government as a condition for certain gambling operations. After obtaining such franchise, the franchisee may establish operations in any city or municipality allowed under the terms of the legislative franchise, subject to local licensing requirements. While the City of Manila granted a permit to operate under Ordinance No. 7065, this permit or authority was at best only a local permit to operate and could be exercised by the ADC only after it shall have obtained a legislative franchise.

This skirts the constitutional issue. Both P.D. 771 and Ordinance 7065 can stand alongside each other if one looks at the authority granted by the charter of the City of Manila together with Ordinance No. 7065 merely as an authority to "allow" and "permit" the operation of jai-alai facilities within the City of Manila. While the constitutional issue was raised by the respondent corporation in the case at bench, I see no valid reason why we should jump into the fray of constitutional adjudication in this case, or on every other opportunity where a constitutional issue is raised by parties before us. It is a settled rule of avoidance, judiciously framed by the United States Supreme Court in Ashwander v. TVA 4 that where a controversy may be settled on a platform other than one involving constitutional adjudication, the court should exercise becoming modesty and avoid the constitutional question.

The State has every legitimate right, under the police power, to regulate gambling operations 5 by requiring legislative franchises for such operations. Gambling, in all its forms, unless specifically authorized by law and carefully regulated pursuant to such law, is generally proscribed as offensive to the public morals and the public good. In maintaining a "state policy" on various forms of gambling, the political branches of government are best equipped to regulate and control such activities and therefore assume full responsibility to the people for such policy. 6 Parenthetically, gambling in all its forms, is generally immoral.

The disturbing implications of a grant of a "franchise," in perpetuity, to the ADC militates against its posture that the government's insistence that the ADC first obtain a legislative franchise violates the equal protection and impairment of Contracts clauses of the Constitution. By their very nature, franchise are subject to amendment, alteration or revocation by the State whenever appropriate. Under the exercise of its police power, the State through its requirement for permits, licenses and franchises to operate, undertakes to regulate what would otherwise be an illegal activity punished by existing penal laws. The police power to establish all manner of regulation of otherwise illicit, immoral and illegal activities is full, virtually illimitable and plenary. 7

In Edu v Ericta 8 we defined the police power as "the state authority to enact legislation that may interfere with personal liberty or property in order to promote the general welfare." In its exercise, the State may impose appropriate impositions or restraints upon liberty or property in order to foster the common good. 9 Such imposition or restraint neither violates the impairment of contracts nor the equal protection clauses of the Constitution if the purpose is ultimately the public good. 10

Restraints on property are not examined with the same microscopic scrutiny as restrictions on liberty. 11 Such restraints, sometimes bordering on outright violations of the impairments of contract principle have been made by this Court for the general welfare of the people. Justice Holmes in Noble State Bank v. Haskel 12 once expansively described the police power as "extending to all public needs." Franchise and licensing regulations aimed at protecting the public from the pernicious effects of gambling are extensions of the police power addressed to a legitimate public need.

In Lim vs. Pacquing, I voted to sustain the ADC's position on issues almost purely procedural. A thorough analysis of the new issues raised this time, compels a different result since it is plainly obvious that the ADC, while possessing a permit to operate pursuant to Ordinance 7065 of the City of


Manila, still has to obtain a legislative franchise, P.D. 771 being valid and constitutional.

On the question of the propriety of the Republic of the Philippine's intervention late in the proceedings in G.R. No. 117263, the ADC counsel's agreeing to have all the issues raised by the parties in the case at bench paves the way for us to consider the petition filed in G.R. No. 117263 as one for quo warranto.

WHEREFORE, on the basis of the foregoing premises, judgment is hereby rendered:

1. Allowing the republic to intervene in G.R. No. 115044.

2. Declaring that P.D. 771 is a valid and subsisting law.

3. Declaring that the ADC does not possess the required legislative franchise to operate the jai-alai under R.A. 954 and P.D. 771.

4. Setting aside the writs of preliminary injunction and preliminary mandatory injunction issued by Judge Vetino Reyes.


The core issues submitted for the Court's resolution are: (1) in G.R. No. 115044, whether intervention by the republic of the Philippines is proper, and (2) in G.R. No. 117263, whether public respondent Judge Vetino Reyes acted with grave abuse of discretion in issuing the temporary restraining order and subsequently the writ of preliminary mandatory injunction in Civil case No. 94-71656.

I

As to the first issue, I submit that unless we either amend the rule on intervention or suspend it, the motion to intervene must be denied. Under Section 2, Rule 12 of the Rules of Court, such motion may be allowed onlybefore or during a trial. Said section reads:

Sec. 2. Intervention. — A person may, before or during a trial, be permitted by the court, in its discretion, to intervene in an action, if he has legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or when he is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof.

This provision was taken from Section 1, Rule 13 of the old Rules of Court with the modification that the phrase "at any period of a trial" in the latter was changed to "before or during a trial." 1

Section 1, Rule 13 of the old Rules of Court was based on Section 121 of the Code of Civil Procedure which, in turn, was taken from Section 387 of the Code of Civil procedure of California. 2

The phrase "at any period of a trial" in Section 1, Rule 13 of the old Rules of Court has been construed to mean the period for the representation of evidence by both parties. 3 And the phrase "before or during the trial" in Section 2, Rule 12 of the present Rules of Court "simply means anytime before the rendition of the final judgment." 4 Accordingly, intervention could not be allowed after the trial had been concluded 5 or after the trial and decision of the original case. 6

Fundamentally then, intervention is never an independent action but is ancillary and supplemental to an existing litigation. Its purpose is not to obstruct nor unnecessarily delay the placid operation of the machinery of trial, but merely to afford one not an original party, yet having a certain right or interest in the pending case, the opportunity to appear and be joined so he could assert or protect such right or interest. 7

The grant of an intervention is left to the discretion of the court. Paragraph (b), Section 2, Rule 12 of the Rules of Court provides:

(b) Discretion of court. — In allowing or disallowing a motion for intervention, the court, in the exercise of discretion, shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties and whether or not the intervenor's rights may be fully protected in a separate proceeding.


It is thus clear that, by its very nature, intervention presupposes an existing litigation or a pending case, 8 and by the opening paragraph of Section 2, Rule 12 of the Rules the Rules of Court, it may be properly filed only before or during the trial of the said case. Even if it is filed before or during the trial, it should be denied if it will unduly delay or prejudice the adjudication of the rights of the original parties and if the intervenor's rights may be fully protected in a separate proceeding.9

It is not disputed that the motion to intervene was filed only on 16 September 1994, or on the fifteenth (15th) day after the First Division had promulgated the decision, and after petitioner Mayor Alfredo Lim complied with or voluntarily satisfied the judgment. The latter act brought to a definite end or effectively terminated G.R. No. 115044. Consequently, intervention herein is impermissible under the rules. To grant it would be a capricious exercise of discretion. The decision of this Court in Director of Lands vs. Court of Appeals 10 cannot be used to sanction such capriciousness for such decision cannot be expanded further to justify a new doctrine on intervention. In the first place, the motions to intervene in the said case were filed before the rendition by this Court of its decision therein. In the second place, there were unusual and peculiar circumstances in the said case which this Court took into account. Of paramount importance was the fact that the prospective intervenors were indispensable parties, and so this Court stated therein:

But over and above these considerations and circumstances which We have pointed out, there is the basic and fundamental requirement under the Rules of Court, Section 7, Rule 3, that "Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiff or defendants." The joinder of indispensable parties is compulsory under any and all conditions, their presence being a sine qua non of the exercise of judicial power. [Borlasa vs. Polistico, 47 Phil. 345, 348].

The herein movants, Greenfield Development Corporation, Alabang Development Corporation, Ramon D. Bagatsing, and all buyers from them, at least those with ostensible proprietary interests as the MERALCO, Alabang Hills Subdivision, Cielito Homes Subdivision, Tahanan Village, the Ministry of Highways insofar as the South Super Highway is affected, are indispensable parties to these proceedings as it has been shown affirmatively that they have such an interest in the controversy or subject matter that a final adjudication cannot be made, in their absence,

without injuring or affecting such interest. The joinder must be ordered in order to prevent multiplicity of suits, so that the whole matter in dispute may be determined once and for all in one litigation.

And, squarely on the aspect of intervention, it found that the denial thereof

will lead the Court to commit an act of injustice to the movants, to their successors-in-interest and to all purchasers for value and in good faith and thereby open the door to fraud, falsehood and misrepresentation, should intervenors' claims be proven to be true. For it cannot be gainsaid that if the petition for reconstitution is finally granted, the chaos and confusion arising from a situation where the certificates of title of the movants covering large areas of land overlap or encroach on properties the title to which is being sought to be reconstituted by private respondent, who herself indicates in her Opposition that, according to the Director of Lands, the overlapping embraces some 87 hectares only, is certain and inevitable.

Then too, it may be stressed that said case originated from a proceeding to reconstitute a certificate of title filed by private respondent. After trial, the Court of First Instance issued an order denying the petition for insufficiency of evidence. After a motion for new trial was granted and a hearing to receive the newly discovered evidence was completed, the court issued an order again denying the reconstitution sought for as it still doubted the authenticity and genuineness of the Transfer of Certificate of Title sought to be reconstituted. The private respondent appealed the order to the Court of Appeals which thereafter promulgated a decision reversing the aforesaid orders of the trial court. The Director of Land, which was the remaining oppositor, filed a motion for a new period to file a motion for reconsideration of the decision alleging excusable negligence. Private respondent filed an opposition thereto. Without waiting for the resolution of the motion, the Director filed a motion to admit the motion for reconsideration attaching thereto said motion for reconsideration. The Court of Appeals issued a resolution denying both motions on the ground that the decision had already become final. This was the resolution which the Director assailed in his petition for review filed with this Court.

Considering then that the intervention in the case at bar was commenced only after the decision had been executed, a suspension of the Rules to


accommodate the motion for intervention and the intervention itself would be arbitrary. The Government is not without any other recourse to protect any right or interest which the decision might have impaired.

May the motion to intervene and intervention proper be, nevertheless, treated as a petition for quo warranto? The majority opinion answers it in the affirmative because all the essential requisites for a petition for quo warranto are present in said pleadings. I am almost tempted to agree with that opinion if not for the fact that there is pending before the Regional Trial Court of Manila Civil Case No. 94-71656 which is a petition for prohibition, mandamus, injunction, and damages filed by the Associated Development Corporation against Executive Secretary Guingona and then Games and Amusement Board (GAB) Chairman Sumulong. That is the more appropriate forum where the Government and petitioner Guingona may challenge the validity of ADC's franchise. Its filing was provoked by the withdrawal by the GAB of the provisional authority it granted to ADC in view of the 13 September 1994 directive of Executive Secretary Guingona informing the GAB of sufficient bases to hold in abeyance the operation of the jai-alai until the legal questions into the validity of the franchise issued to ADC. Consequently, it is to be logically presumed that for its affirmative defenses in Civil Case No. 94-71656 the Government would raise the same issues raised in the intervention in G.R. No. 117263.

Accordingly, I vote to deny the motion for intervention in G.R. No. 115044.

II

However, I vote to partially grant the petition in G.R. No. 117263 insofar as wagering or betting on the results order and the preliminary mandatory injunction issued by respondent Judge cannot legally and validly allow such wagering and betting. It was precisely for this reason that I earlier voted to grant a temporary restraining order in G.R. No. 115044 and G.R. No. 117263 to restrain wagering or betting. I wish to reiterate here what I stated in my supplemental concurring opinion in G.R. No. 115044:

Secondly, to make my position clear that the dismissal of the petition should not be construed as compelling the City of Manila to authorize gambling by allowing betting on the results of jai-alai. The decision merely dismissed the petition because the Court found " no abuse of discretion, much less lack of excess of jurisdiction, on the part of the respondent judge" in issuing the challenged order directing the petitioner to issue a permit or license in favor of the

private respondent pursuant to Ordinance No. 7065. That order was to enforce the final and executory decision of the Regional Trial Court of 9 September 1988 in Civil Case No. 88-45660, the appeal therefrom to the Court of Appeals by the City of Manila having been withdrawn by it on 9 February 1989. That decision ordered the City of Manila to immediately issue to the private respondent "the permit/license required under Ordinance No. 7065." The City of Manila did in fact issue the required permit or license to the private respondent for the operation of the jai-alai in Manila for the years 1988 to 1992. Nevertheless, when the jai-alai complex was almost completed, the City Mayor refused to renew the Mayor's Permit.

There is a clear distinction between the initial duty of the City Mayor under Ordinance No. 7065 to issue the necessary license or permit to establish the jai-alai fronton and to maintain and operate the jai-alai, and his subsequent discretion to impose other terms and conditions for the final contractrelative to such operation. The trial court specifically said so in its decision of 9 September 1989. Thus:

A suggestion has been made in the Answer that a writ of mandamus will not lie against respondents, particularly the Mayor, because "the availment of the franchise . . . is subject to the terms and conditions which the respondent Mayor may impose."

A careful reading however, of Ordinances 7065 will readily show that the discretion, if any, allowed respondent Mayor, under the ordinance, will be exercisable only after the permit, which he is mandated to issue, had been issued and the jai-alai fronton is already operational. The ordinance stipulates that the Mayor is authorized "to allow and permit petitioner to establish, maintain and operate a jai-alai in the City of Manila," under the five conditions enumerated in


subparagraphs "a" to "e" of Section 1 of the Ordinance. By a simple reading of these "terms and conditions" patently shows that subparagraphs "b" to "e" are clearly conditions that will only come into play after the jai-alai has been put up or established; while the condition under subparagraph "a" appears to have been complied with satisfactorily by the petitioner, since no objection at all has been made by respondents to the proposed site for jai-alai fronton, that is, the 25,000 sq. m. land area behind the present Harrison Plaza Complex located at Ermita, Manila.

Consequently, the Mayor's Permit sough to be renewed or the motion before the lower court to compel the Mayor to renew it, has reference only to subparagraph (a), Section 1 of Ordinance No. 7065. The renewal of the permit can by no stretch of the imagination be taken as a final contract between the private respondent and the City of Manila for otherwise it would remove the power and authority of the Mayor under the ordinance to impose "other terms and conditions as he may prescribe for good reasons of general interest."

It follows then that the Mayor's Permit ordered by the trial court to be issued to the private respondent is not a license or authority to allow betting or wagering on the results of the jai-alaigames. Jai-alai is a sport based on skill. Under Article 197 of the Revised Penal Code, before it was amended by P.D. No. 1602, betting upon the result of any boxing or other sports contests was penalized with arresto menor or a fine not exceeding P200.00, or both. Article 2019 of the Civil Code provides that "[b]etting on the results of sports, athletic competitions, or games of skill may be prohibited by local ordinances."

P.D. No. 483, enacted on 13 June 1974, penalizes betting, game fixing or point shaving and machinations in sports contests, including jai-alai. Section 2 thereof expressly provides:

Sec. 2. Betting, game fixing, point shaving or game machinations unlawful. — Game fixing, point shaving, machination, as defined in the preceding Section, in connection with the games of basketball, volleyball, softball, baseball; chess; boxing bouts, "jai-alai," "sipa," "pelota" and all other sports contests, games; as well as betting therein except as may be authorized by law, is hereby declared unlawful.

The succeeding Section 3 provides for the penalties.

On 11 June 1978, P.D. No. 1602 (75 O.G. No. 15, 3270), Prescribing Stiffer Penalties on Illegal Gambling, was enacted to increase the penalties provided in various "Philippine Gambling Laws such as Articles 195-199 of the Revised Penal Code (Forms of Gambling and Betting), R.A. No. 3063 (Horse Racing Bookies), P.D. No. 449 (Cockfighting), P.D. No. 483 (Game Fixing), P.D. No. 510 (Slot Machines) in relation to Opinion Nos. 33 and 97 of the Ministry of Justice, P.D. No. 1306 (Jai-alai Bookies), and other City and Municipal Ordinances on gambling all over the country." Section 1 thereof reads:

xxx xxx xxx

Both P.D. No. 483 and P.D. No. 1602 were promulgated in the exercise of the police power of the State.

Pursuant to Section 2 of P.D. No. 483, which was not repealed by P.D. No. 1602 since the former is not inconsistent with the latter in that respect, betting injai-alai is illegal unless allowed by law. There was such a law. P.D. No. 810, which authorized the Philippine Jai-Alai and Amusement Corporation as follows:

Sec. 2. The grantee or its duly authorized agent may offer, take or arrange bets within or outside the place, enclosure or court where the Basque pelota games are held:Provided, That


bets offered, taken or arranged outside the place, enclosure or court where the games are held, shall be offered, taken or arranged only in places duly licensed by the corporation, Provided, however, That the same shall be subject to the supervision of the Board. No person other than the grantee or its duly authorized agents shall take or arrange bets on any pelotari or on the game, or maintain or use a totalizator or other device, method or system to bet on any pelotari or on the game within or without the place, enclosure or court where the games are held by the grantee. Any violation of this section shall be punished by a fine of not more than two thousand pesos or by imprisonment of not more than six months, or both in the discretion of the Court. If the offender is a partnership, corporation or association, the criminal liability shall devolve upon its president, directors or any officials responsible for the violation.

However, as stated in the ponencia, P.D. No. 810 was repealed by E.O. No. 169 issued by then President Corazon C. Aquino. I am not aware of any other law which authorizes betting in jai-alai. It follows then that while the private respondent may operate the jai-alai fronton and conduct jai-alaigames, it can do so solely as a sports contest. Betting on the results thereof, whether within or off-fronton, is illegal and the City of Manila cannot, under the present state of the law, license such betting. The dismissal of the petition in this case sustaining the challenged orders of the trial court does not legalize betting, for this Court is not the legislature under our system of government.

Accordingly, I vote to grant the petition in G.R. No. 117263 and to set aside the questioned temporary restraining order and the writ of preliminary mandatory injunction but only to the extent that they allow wagering or betting on the results of jai-alai.

QUIASON, J., dissenting:

I vote: (1) to deny the motion to intervene and motion for reconsideration qua petition for quo warranto in G.R. No. 115044, and (2) to dismiss the petition for certiorari in G.R. No. 117263. I shall set forth the reason why.

I

Following the decision of the First Division of this Court on September 1, 1994 in G.R. No. 115044, the City of Manila issued on September 7, 1994 the Mayor's permit and Municipal license to Associate Development Corporation (ADC) upon the latter's payment of the required fees (G.R. No. 115044, Rollo, pp. 253-254, 301).

In his letter dated September 8, 1994 to President Fidel V. Ramos, Chairman Francisco Sumulong, Jr. of the Games and Amusement Board (GAB) said that he would not authorize the opening of ADC's jai-alai unless he was given a clearance from the President and until after ADC had complied with "all the requirements of the law, such as, the distribution of wager funds, [and] licensing of Pelotaris and other personnel" (Exh. F, Civil Case No. 94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, p. 304).

In the position paper annexed to the letter, the GAB Chairman recommended the reopening and operation of the jai-alai, stating in pertinent part:

There are several reasons to justify the operation of Jai-Alai, first and foremost of which is the generation of much needed revenues for the national and local governments. Other significant justifications are its tourism potential, the provision for employment, and the development of Basque pelota as an amateur and professional sport.

Specifically, the establishment, maintenance and operation of a Jai-Alai fronton in Metro-Manila shall be by virtue of the original and still legally existing franchise granted to the Associated Development Corporation (ADC) by the City Government of Manila in 1971 (G.R. No. 115044, Rollo, p. 350; Emphasis supplied).


On September 9, 1994, Chairman Sumulong granted ADC provisional authority to open, subject to the following conditions:

1. We prohibit you from offering to the public "Pick 6" and "winner Take All" betting events until such time as this Board shall have approved the rules and regulations prepared by management governing the mechanics of these events.

2. Licensing of officials and employees whose duties are connected directly or indirectly with the supervision and operation of jai-alai games, as mandated by Executive Order 141 dated February 25, 1965, shall be fully complied with by you within thirty 930) days from date hereof.

3. Any other deficiencies we may discover will be accordingly rectified by management as directed by the Board.

4. Failure to comply with any of the rules and regulations prescribed by existing laws and lawful orders of the Board, may justify withdrawal/revocation of this provisional authority without prejudice to such administrative sanctions that the Board may deem proper to impose under the circumstances.

5. By accepting this provisional authority, Associated Development Corporation (ADC) is deemed to have agreed to the conditions above provided (G.R. No. 117263, Rollo, pp. 8-9, 49, 238, 288).

On September 12, 1994, the GAB issued to ADC jai-alai License No. 94-008 upon payment of the corresponding permit fee. The license reads as follows:

Under and by virtue of the provisions of Section 7 of Executive Order No. 392, series of 1950, in conjunction with Executive order No. 824, series of 1982, this Board has this date granted ADC Represented by Gen. Alfredo B. Yson permit to hold or conduct a [sic] jai-alai contests/exhibition on September 12 to 14, 1994, at the

harrison Plaza Complex, located in Harrison Plaza, Malate, Manila.

This permit is issued subject to the condition that the promoter shall comply with the provisions of Executive order No. 824, S. 1982, the rules and regulations, orders and/or policies adopted or which may hereafter be adopted by the Board, and with the conditions set forth in the application for which this permit has been granted; and failure on the part of the promoter to comply with any of which shall be deemed sufficient cause for the revocation thereof (G.R. No. 117263, Rollo, pp. 50, 238, 289).

In compliance with GAB Rules and Regulations, ADC submitted its programs of jai-alai events for approval (Exhs. O, P and Q, civil Case No. 94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, pp. 290-292).

It appears that as early as may 23, 1994, Jai-Alai de Manila (the business name of ADC's fronton) had inquired from GAB about the laws and rules governing its jai-alai operation. In reply, chairman Sumulong furnished Jai-Alai de Manila with copies of E.O. Nos. 392 and 824 and the Revised rules and Regulations for basque pelota Games (Exhs. K and L, Civil Case No. 94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, pp. 301-302).

On September 13, 1994, Executive Secretary Teofisto Guingona, jr. issued the following Directive to GAB Chairman Sumulong:

In reply to your letter dated 9 September 1994 requesting for the President's approval to re-open the Jai-Alai in Manila, please be informed that after a review and study of existing laws, there is sufficient basis to hold in abeyance the operation of the Jai-Alai until the following legal questions are properly resolved:

1. Whether P.D. 771 which revoked all existing Jai-Alai franchises issued by local government 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 valid 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.

This Office has directed the solicitor General to bring before the proper court the foregoing issues for resolution. Pending such resolution, you are directed to hold in abeyance the grant of authority, or if any has been issued, to withdraw such grant of authority, to Associated Development corporation to operate he Jai-Alai in the city of Manila (G.R. No. 117263, Rollo, pp. 7-8, 48, 1939; Emphasis supplied).

On September 14, 1994, Chairman Sumulong issued a Memorandum to ADC that:

In view of the directive from the Office of the President dated 13 September 1994, Associated Development Corporation is hereby ordered to cease and desist issues raised in the said directive are resolved by the proper court. The provisional authority issued pending further scrutiny and evaluation to ADC on 9 September 1994 is hereby withdrawn (G.R. No. 117263, Rollo, pp. 51, 194; Emphasis supplied).

On September 15, 1994, ADC filed with the Regional Trial Court, Branch 4, Manila a petition for prohibition,mandamus, injunction and damages with prayer for temporary restraining order or writ of preliminary injunction (Case No. 94-71656) against Executive Secretary Guingona and Chairman Sumulong assailing the former's Directive and the latter's Memorandum (G.R. No. 117263, Rollo, pp. 3, 20-21, 53-75, 167-168).

On the same day, Judge Vetino Reyes issued a temporary restraining order enjoining Executive Secretary Guingona and Chairman Sumulong from implementing their respective Directive and memorandum (G.R. No. 117263, Rollo, pp. 2, 10, 44).

On September 16, 1994, Executive Secretary Guingona and Chairman Sumulong filed an urgent motion to recall the temporary restraining order, with opposition to the motion for issuance of a writ of preliminary injunction. The said motion was reiterated in the supplemental motion filed on September 20, 1994 (G.R. No. 117263, Rollo, pp. 66-75, 76-86).

Meanwhile, on September 16, 1994, the Republic of the Philippines, represented by GAB, filed in G.R. No. 115044 a motion for intervention; for leave to file a motion for reconsideration-in-intervention; to admit the attached motion for reconsideration-in-intervention; and to refer the case to the Court en banc (Rollo, pp. 219-249).

Subsequently, and on the different dates, the Republic filed in G.R. No. 115044 the following pleadings: "Motion for Leave to File Supplemental Motion for Reconsideration-In-Intervention" (Rollo, pp. 262-265); "Supplemental Motion for Reconsideration-In-Intervention" (Rollo, pp. 266-280); "Motion for Leave to File Second Supplemental Motion for Reconsideration-In-Intervention and to Admit attached Second Supplemental Motion For Reconsideration-In-intervention" (Rollo, pp. 380-382); and "Second Supplemental Motion for Reconsideration-In-Intervention" (Rollo, pp. 383-400).

Acting on the motion of the Republic dated September 16, 1994, the First Division referred, in its Resolution dated September 19, 1994, Case G.R. No. 115044 to the Court en banc, and the latter accepted the same in its Resolution dated September 20, 1994 (Rollo, p. 255).

In the meantime, Chairman Sumulong resigned and Dominador R. Cepeda, jr. was appointed as his successor.

On September 30, 1994, Judge Reyes issued a writ of preliminary injunction (G.R. No. 117263, Rollo, pp. 2, 47).

On October 11, 1994, Executive Secretary Guingona and GAB Chairman Cepeda, Jr. filed with this Court a petition for certiorari, prohibition and mandamus (G.R. No. 117263, Rollo, pp. 1-151) and on October 24, 1994, a supplemental petition (G.R. No. 117263, Rollo, pp. 161-165, 166-


306). Petitioners assailed the following issuances of Judge Reyes Civil Case No. 94-71656:

(1.) Temporary Restraining Order dated September 15, 1994 directing Executive Secretary Guingona and chairman Sumulong to desist from enforcing the Directive dated September 13, 1994 and the memorandum dated September 15, 1994 (Rollo, p. 44);

(2.) Order dated September 25, 1994 denying the Urgent Motion to Recall Temporary Restraining Order and the Urgent Supplemental Motion to Recall Temporary Restraining Order (Rollo, p. 46);

(3.) Order dated September 30, 1994 directing the issuance of a Writ of preliminary Injunction directed against the aforesaid Directive and Memorandum (Rollo, p. 47);

(4.) order dated October 19, 1994 granting ADC's Motion to Amend the petition to Conform to the Evidence and directing the issuance of a writ of preliminary mandatory injunction "directing (Executive Secretary and the GAB Chairman), their successors, representatives and any government office/agency acting for an in their behalf or in implementation of their orders earlier enjoined by a writ of preliminary injunction issued by this court on September 30, 1994, to issue the necessary authority, licenses and working permits to . . . Associated Development Corporation, and its personnel and players (Rollo, pp. 216-217).

They prayed that the trial court be enjoined from conducting further proceedings in Civil Case No. 94-71656 and that said case be dismissed. they also filed a motion for consolidation of G.R. No. 117263 with G.R. No. 115044 (G.R. No. 117263, Rollo, pp. 152-160). As prayed for, we considered the two cases together.

In their petition in G.R. No. 117263, Executive Secretary Guingona and Chairman Cepeda claimed that ADC had no clear right to the issuance of the preliminary mandatory injunction because:

(1) ADC had no legislative franchise;

(2) ADC admitted in G.R. No. 115044 that GAB had no authority to issue the license or permit subject of the order in question; and

(3) Mandamus was not available to compel the performance of a discretionary function (G.R. No. 117263, Rollo, pp. 182-189).

On November 2, 1994, ADC and Judge Reyes filed their consolidated Comment to the petition and supplemental petition (G.R. No. 117263, Rollo, pp. 230-305).

On November 25, 1994, the Republic, Executive Secretary Guingona and GAB Chairman Cepeda moved for the issuance of a restraining order enjoining Judge Pacquing and Judge Reyes from enforcing their questioned orders and ADC from operating the jai-alai fronton (G.R. No. 17263, Rollo, pp. 629-635). Action on the motion deferred.

II

G.R. No. 115044Motion for Intervention

The Republic of the Philippines (Republic) represented by GAB justifies its belated intervention in G.R. No. 115044 on the grounds that "it has an interest involved in this case and will be affected by the Decision dated September 1, 1994" (G.R. No. 115044, Rollo, p. 225).

The purpose of its intervention is to nullify the decision of Judge Augusto E. Villarin of the Regional Trial Court, Branch 40, Manila, dated September 1, 1994" (G.R. No. 115044, Rollo, p. 225).

The purpose of its intervention is to nullify the decision of Judge Augusto E. Villarin of the Regional Trial Court, Branch 40, Manila, dated September 9, 1989 in Civil Case No. 88-45660, which upheld the validity of Ordinance No. 7065 of the City of Manila granting ADC a franchise to operate a jai-alai fronton. Mayor Gemiliano Lopez appealed said decision to the Court of Appeals, but on February 9, 1989, he filed a Withdrawal of Appeal. The Court of Appeals approved the withdrawal in a resolution dated May 5, 1989.


An entry of judgment was made by the court of Appeals on May 26, 1989 and by the Regional Trial Court, branch 40, Manila, on October 27, 1992.

In 1991, the City of Manila filed an action to annul the franchise of ADC with the Regional Trial Court, Branch 23, Manila (Civil Case No. 91-58913). The complaint was dismissed on December 21, 1991. No appeal was taken from said dismissal of the case.

The City of Manila filed with this Court a petition for declaratory judgment to nullify the franchise of ADC (G.R. No. 101768). The petition was dismissed in a resolution dated October 3, 1991 "for lack of jurisdiction."

Three members of the Sangguniang Panglunsod of Manila also filed with the Regional Trial Court, Branch 37, Manila, a petition to compel Mayor Lopez to cancel the permit and license he issued in favor of ADC pursuant to ordinance No. 7065 (Civil Case No. 91-58930). The petition was dismissed on June 4, 1992. No appeal was taken from said dismissal of the case.

In the Motion for Reconsideration-In-Intervention, Supplemental Motion for Reconsideration-in-Intervention and Second Supplemental Motion for Reconsideration-in-Intervention, the Republic merely claimed that Ordinance No. 7065 had been repealed by P.D. No. 771 (Rollo, pp. 228-248), that the authority to issue permits and licenses for the operation of jai-alai had been transferred to GAB by E.O. No. 392 of President Quirino effective July 1, 1951 and that ADC was never issued a franchise by Congress (Rollo, pp. 383-390). Nowhere in its pleadings did the Republic point out where the first Division erred in resolving the two grounds of the petition for certiorari in G.R. No. 115044, which were:

(1) The decision of Judge Villarin dated September 9, 1988 in Civil Case No. 88-45660 is null and void for failure to rule that P.D. No. 771 had revoked Ordinance No. 7065; and

(2) The decision of Judge Villarin could not be executed by a mere motion filed on March 14, 1994, or more than five years and six months after its promulgation.

In resolving the first issue, the First Division of this court explained that there was no way to declare the Villarindecision null and void because the trial court had jurisdiction over the subject matter of the action and if it failed to

rule that ordinance No. 7065 was nullified by P.D. No. 771, that was only an error of judgment. The First Division noted the distinction between a void and an erroneous judgment and between jurisdiction and the exercise of jurisdiction.

In Tan v. Intermediate Appellate Court, 163 SCRA 752 (1988), the Court held:

It is settled jurisprudence that except in the case of judgments which are void ab initio or null and voidper se for lack of jurisdiction which can be questioned at any time — and the decision here is not of this character — once a decision becomes final, even the court which has rendered it can no longer alter or modify it, except to correct clerical errors or mistakes. otherwise, there would be no end to litigation, thus setting to naught the main role of courts of justice, which is, to assist in the enforcement of the rule of law and the maintenance of peace and order, by settling justifiable controversies with finality. (See also Fabular v. Court of Appeals, 119 SCRA 329 [1982]; Fariscal Vda. de Emnas v. Emnas, 95 SCRA 470 [1980]; Ocampo v. Caluag, 19 SCRA 917 [1967]).

As to the second issue, the First Division held that the five-year period for executing a judgment by simple motion under Section 6 of Rule 39 of the Revised Rules of Court should be counted from the finality of the judgment and not from the date of its promulgation as was done by Mayor Lim and the City of Manila. Inasmuch as the Villarindecision was appealed to the Court of Appeals and the authority to withdraw the appeal was approved by the Court of Appeals only on may 26, 1989, the five-year period should be counted, at the earliest, from May 26, 1989. Reckoning the five-year period from said date, the motion for execution of the Villarin decision was filed timely on March 14, 1994.

Intervention as contemplated by Section 9, Rule 12 of the Revised Rules of Court is a proceeding whereby a third person is permitted by the court "before or during a trial" to make himself a party by joining plaintiff or uniting with defendant or taking a position adverse to both of them Gutierrez v. Villegas, 5 SCRA 313 [1962]). the term "trial" is used in its restrictive sense and means the period for the introduction of evidence by both parties (Bool v. Mendoza, 92 Phil. 892 [1953]; Provincial Government of Sorsogon v. Stamatelaky, 65 Phil. 206 [1937]). The period of trial terminates when the


period of judgment begins (El Hogar Filipino v. Philippine National Bank, 64 Phil. 582 [1937]).

Intervention as an action is not compulsory. As deduced from the permissive word "may" in the rule, the availment of the remedy is discretionary on the courts (Garcia v. David, 67 Phil. 279 [1939]). an important factor taken into consideration by the courts in exercising their discretion is whether the intervenor's rights may be fully protected in a separate proceeding (Peyer v. Martines, 88 Phil. 72 [1951]).

The case of Director of Lands v. Court of Appeals, 93 SCRA 238 (1979), can not, serve as authority in support of the Republic's intervention at this late stage. while said case involved an intervention for the first time in the Supreme court, the motion to be allowed to intervene was filed before the appeal could be decided on the merits. The intervention allowed in Republic v. Sandiganbayan, G.R. No. 96073, Resolution, March 3, 1992, was also made before the decision on the merits by this Court. In contrast, the intervention of the Republic was sought after this Court had decided the petition in G.R. No. 115044 and petitioners had complied with and satisfied the judgment. While the intervention in Director of Lands was in a case that was timely appealed from the Regional Trial Court to the Court of Appeals and from the Court of Appeals to the Supreme Court, the intervention of the Republic was in a case that had become final and executory more than five years prior to the filing of the motion to intervene.

As of September 16, 1994, therefore, when the republic moved to intervene, there was no longer any pending litigation between the parties in G.R. no. 115044. Intervention is an auxiliary and supplemental remedy to an existing, not a settled litigation (cf. Clareza v. Rosales, 2 SCRA 455 [1961]). An intervention was disallowed in a case which has becomes final and executory (Trazo v. Manila Pencil Co., 77 SCRA 181 [1977])

The case of Suson v. Court of Appeals, 172 SCRA 70 (1989) invoked by the Republic (G.R. No. 117263, Rollo, pp. 517-518) is inappropriate because the intervention therein was before the trial court, not in this Court.

In its Reply, the Republic admitted that the First Division only ruled on the procedural issues raised in the petition and not on the constitutionality of P.D. No. 771. It even urged that GAB was not a party to the case and therefore was not bound by the Villarin decision because under Section 49 of Rule 39, a judgment is conclusive only "between the parties and their successor-in-interest by title subsequent to the commencement of the action

or special proceeding, litigating for the same thing and under the same title and in the same capacity" (Rollo, pp. 228-234, 431).

With more reason then that the Republic should have ventilated its claim against ADC in a separate proceeding.

Lastly, an intervenor should not be permitted to just sit idly and watch the passing scene as an uninterested overlooker before he wakes up to seek judicial relief (Pacursa v. Del Rosario, 24 SCRA 125 [1968]).

The Office of the President was aware of the plans of ADC to start operation as early as 1988. On May 5, 1988, ADC informed said Office of its intention to operate under Ordinance No. 7065. The said Office perfuntorily referred the letter of ADC to the Manila mayor, implying that the matter was not the concern of the National Government.

Motion qua Quo Warranto petition

Be that as it may, the Court may consider the motion to intervene, motion for reconsideration-in-intervention, supplemental motion for reconsideration-in-intervention and second supplemental motion-in-intervention as a petition for quo warranto under Rule 66 of the revised Rules of Court. In the liberal construction of the Rules in order to attain substantial justice, the Court has treated petitions filed under one Rule as petitions filed under the more appropriate Rule (Davao Fruits Corporation v. Associated Labor Union, 225 SCRA [1993]).

In quo warranto, the government can require a corporation to show cause by what right it exercises a privilege, which ordinarily can not legally be exercised except by virtue of a grant from the state. It is a proceeding to determine the right to the use of a franchise or exercise of an office and to oust the holder from its enjoyment if his claim is not well-founded (Castro v. Del Rosario, 19 SCRA 196 [1967]).

All the essential requisites for a petition for quo warranto are compresent. The motions were filed by the Solicitor General for the Republic of the Philippines, represented by GAB, to question the right of ADC to operate and maintain the jai-alai.

The motions qua petition for quo warranto assert that the authority of the City of Manila to issue to ADC a jai-alai franchise in 1971 had been withdrawn by E.O. No. 392 in 1951 and by R.A. No. 954 in 1954 and that


assuming the issuance of the franchise to ADC in 1971 under Ordinance No. 7065 was valid, such franchise, together with whatever authority of the City of Manila to grant the same, was voided by P.D. No. 771 in 1975.

In the case of Stone v. State of Mississippi, 101 U.S. 814, cited by the Republic, the State Attorney General resorted to a quo warranto proceeding to question the authority of petitioner therein to operate and maintain a gambling establishment.

The franchise of ADC granted by the City of Manila under Ordinance No. 7065 reads as follows:

AN ORDINANCE AUTHORIZING THE MAYOR TO ALLOW AND PERMIT THE ASSOCIATED DEVELOPMENT CORPORATION TO ESTABLISH, MAINTAIN AND OPERATE A JAI-ALAI IN THE CITY OF MANILA, UNDER CERTAIN TERMS AND CONDITIONS AND FOR OTHER PURPOSES.

Be it ordained by the Municipal Board of the City of Manila, that:

Sec. 1. The Mayor is authorized, as he is hereby authorized to allow and permit the Associated Development Corporation to establish, maintain and operate a jai-alai in the City of Manila, under the following terms and conditions and such other terms and conditions as he (the Mayor) may prescribe for good reasons of general interest:

a. That the construction, establishment and maintenance of the jai-alai shall be at a place permissible under existing zoning ordinances of Manila;


c. That the City of Manila will received a share of 2 ½% on the annual gross receipts on all wagers or bets, ½% of

which will accrue to the Games and Amusements Board as now provided by law;

d. That the corporation will, in addition, pay to the city an annual license fee of P3,000.00 and a daily permit fee of P200.00;

e. That the corporation will, to insure its faithful compliance of all the terms and conditions under this ordinance, put up a performance bond from a surety acceptable to the city, in the amount of at least P30,000.00.

Sec. 2. The Mayor and the City Treasurer of their duly authorized representatives are hereby empowered to inspect at all times during regular business hours the books, records and accounts of the establishment, as well as to prescribe the manner in which the books and financial statement of the entrepreneur shall be kept.

Sec. 3. This ordinance shall take effect upon its approval.

Enacted originally by the Municipal Board on September 7, 1971; vetoed by the Mayor on September 27, 1971; modified and amended by the Municipal Board at its regular session today, October 12, 1971.

Approved by His Honor, the Mayor on 13 November 1971.

The said Ordinance was enacted pursuant to Section 18 (jj), the Charter of the City of Manila (R.A. No. 409), which took effect in 1949. The charters of two other cities — Quezon City and Cebu City — contained a similar delegation of authority to grant jai-alai franchises.

Said Section 18(jj) provides:


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, billiards, pools, horse or dog races, cockpits, jai-alai, roller of ice-skating or any sporting or athletic contests, as well as grant exclusive rights to establishments for this purpose, notwithstanding any existing law to the contrary.

A. It is the posture of the Republic that the power of local governments to issue franchisers for the operation of jai-alai was "consolidated and transferred" to the GAB under E.O. No. 392. In its Supplemental Motion for reconsideration-In-Intervention filed on September 27, 1994, the Republic averred:

12. As early as 1951, the power of the local governments to issue licenses and permits for the operation of jai-alai was "consolidated and transferred" to the Games and Amusements Board under E.O. No. 392 issued by then President Elpidio Quirino (sic) took effect on January 1, 1951. Thus, in 1971, the City of Manila was without authority to enact an ordinance authorizing the City Mayor to issue a license/permit to private respondent for the operation of jai-alai in Manila (Rollo, pp. 271-272).

Furthermore, the republic alleged:

13. Such consolidation and transfer of power manifest the policy of the Government to centralize the regulation, through appropriate institutions, of all games of chance authorized by existing franchises of permitted by law. . . . (Rollo, p. 272).

There is no need to dwell upon this argument for suprisingly it was the Republic itself that repudiated it albeit after wrongfully attributing the argument to ADC.

In its Reply filed on November 9, 1994, the Republic stated that: "Contrary to respondent ADC's claim, it is not the position of the GAB that it is the body

which grants franchisers for the jai-alai either under E.O. No. 392 or under P.D. No. 771 . . ." (Rollo, pp. 420).

For certain, E.O. No. 392 merely reorganized the different departments, bureaus, offices and agencies of the government. There is absolutely nothing in the executive issuances which vests on GAB the power to grant, much less revoke, franchisers to operate jai-alais.

B. After its volte-face, the Republic next claims that R.A. No. 954 had repealed Section 18 (jj) and that after the effectivity of said law, only Congress could grant franchise to operate jai-alais.

Section 4 of R.A. No. 954 provides:

No person, or group of persons, other than the operator or maintainer of a fronton with legislative franchise to conduct basque pelota (jai-alai), shall offer, take or arrange bets on any basque pelota game or event, or maintain or use a totalizer or other device, method or system to bet or gamble or any basque pelota game or event.

Republic Act No. 954 did not expressly repeal Section 18 (jj). In such a case, if there is any repeal of the prior law by the latter law, it can only be by implication. Such kind of repeals is not favored. There is even a presumption against repeal by implication (The Philippine American Management Co. Inc. v. The Philippine American Management employees Association, 49 SCRA 194 [1973]).

In the same absence of an express repeal, a subsequent law cannot be construed as repealing a prior law unless an irreconcilable inconsistency and repugnancy exist in the terms of the new and old law (Iloilo Palay and Corn Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]).

But more importantly, the rule in legal hermeneutics is that a special law, like the Charter of the City of Manila, is not deemed repealed by a general law, like R.A. No. 954 (Commissioner of Internal Revenue v. Court of Appeals, 207 SCRA 487 [1992]).

In a way also, Ordinance No. 7065 can be considered a "legislative franchise" within the purview of R.A. No. 954, having been enacted by the Municipal Board of the City of Manila pursuant to the powers delegated to it by the legislature. A grant, under a delegated authority, binds the public and


is considered the act of the state. "The franchise [granted by the delegate] is a legislative grant, whether made directly by the legislature itself or by any one of its properly constituted instrumentalities" (36 Am Jur 2d. 734).

As held in Wright v. Nagle, 101 U.S. 921, the grant of a franchise by the legislature may be done in two ways:

It may exercise this authority by direct legislation, or through agencies duly established having power for that purpose. This grant when made binds the public, and is, directly or indirectly, the Act of the State. The easement is a legislative grant, whether made directly by the legislature itself, or by any one of its properly constituted instrumentalities (Justice of Pike Co. v. Plank road, 11 Ga. 246; Emphasis supplied).

If the intention of Congress in enacting R.A. No. 954 was to repeal Section 18 (jj), it could have used explicit language to that effect in order not to leave room for interpretation.

If R.A. No. 954 repealed Section 18 (jj), why did President Marcos still issue P.D. No. 771, expressly revoking the authority of the local governments to issue jai-alai franchises? It can never be presumed that the President deliberately performed useless acts.

C. The claim of the Republic that P.D. No. 771 had removed the power of local governments to grant franchises for the maintenance and operation of jai-alai is a non-issue. The issue raised by ADC is whether Section 3 of P.D. No. 771 validly cancelled Ordinance No. 7065, an issue entirely different from the claim of the Republic that P.D. No. 771 had revoked the power of the City of Manila to grant jai-alai franchisers.

Insofar as it is applied to Ordinance No. 7065, Section 3 of P.D. No. 771 suffers from constitutional infirmities and transgresses several constitutional provisions. Said Section 3 provides:

All existing franchisers and permits issued by local governments are hereby revoked and may be renewed only in accordance with third decree.

Section 3 violated the equal protection clause (Section 1 of Article IV) of the 1973 Constitution, which provided:

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 the laws.

Less than two months after the promulgation of P.D. no. 771, President Marcos issued P.D. No. 810, granting the Philippine Jai-Alai and Amusement Corporation (PJAC) a franchise to operate jai-alai within the Greater Manila Area. It is obvious that P.D. No. 771 was decreed to cancel the franchise of ADC so that the same could be given to another entity under P.D. No. 810.

A facially neutral statute (P.D. No. 771) may become discriminatory by the enactment of another statute (P.D. No. 810) which allocates to a favored individual benefits withdrawn under the first statute (Ordinance No. 7065), and when there is no valid basis for classification of the first and second grantees. The only basis for distinction we can think of is that the second grantee was Benjamin Romualdez, a brother-in-law of President Marcos.

Section 3 violated the due process clause of the Constitution, both in its procedural and substantive aspects. The right to due process is guaranteed by the same Section 1 of Article IV of the 1973 Constitution.

Ordinance No. 7065, like any franchise, is a valuable property by itself. The concept of "property" protected by the due process clause has been expanded to include economic interests and investments. The rudiments of fair play under the "procedural due process" doctrine require that ADC should at least have been given an opportunity to be heard in its behalf before its franchise was cancelled, more so when the same franchise was given to another company.

Under the "substantive due process" doctrine, a law may be voided when it does not relate to a legitimate end and when it unreasonably infringes on contractual and property rights. The doctrine as enunciated in Allgeyer v. Louisiana, 165 U.S. 578 (1897) can be easily stated, thus: the government has to employ means (legislation) which bear some reasonable relation to a legitimate end (Nowak, Rotunda and Young, Constitutional Law 436, 443 [2d ed]).

When President Marcos issued P.D. No. 771, he did not have public interest in mind; otherwise, he would have simply outlawed jai-alai as something pernicious to the public. Rather, all what he wanted to accomplish was to monopolize the grant of jai-alai franchisers.


The motivation behind its issuance notwithstanding, there can be no constitutional objection to P.D. No. 771 insofar as it removed the power to grant jai-alai franchisers from the local governments. We said so in Basco v. Pagcor, 197 SCRA 52 (1991). The constitutional objection arises, however, when P.D. No. 771 cancelled al the existing franchises. We search in vain to find any reasonable relation between Section 3 of P.D. No. 771 and any legitimate ends of government intended to be achieved by its issuances. Besides, the grant of a franchise to PJAC exposed P.D. No. 771 as an exercise of arbitrary power to divest ADC of its property rights.

Section 3 also violated Section 1 of Article VIII of the 1973 Constitution, which provided:

Every bill shall embrace only one subject which shall be expressed in the title thereof.

The title of P.D. No. 771 reads as follows:

REVOKING ALL POWERS AND AUTHORITY OF LOCAL GOVERNMENT 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 GAMING.

The title of P.D. No. 771 refers only to the revocation of the power of local governments to grant jai-alai franchises. It does not embrace nor even intimate the revocation of existing franchises.

Lastly, Section 3 impaired the obligation of contracts prohibited by Section 11 of Article IV of the 1973 Constitution.

As authorized by Section 18(jj), Ordinance No. 7065 grants ADC a permit "to establish, maintain and operate a jai-alai in the City of Manila, under the following terms and conditions and such other terms and conditions as he [the Mayor] may prescribe for good reasons of general interest." (Rollo, p. 24).

Section 11 of Article IV of the 1973 Constitution provided:

No law impairing the obligation of contracts shall be passed.

Any law which enlarges, abridges, or in any manner changes the intention of the parties, necessarily impairs the contract itself (U.S. v. Conde, 42 Phil. 766 [1922]; Clemens v. Nolting, 42 Phil. 702 [1922]). A franchise constitutes a contract between the grantor and the grantee. Once granted, it may not be invoked unless there are valid reasons for doing so. (Papa v. Santiago, 105 Phil. 253 [1959]). A franchise is not revocable at the will of the grantor after contractual or property rights thereunder have become vested in the grantee, in the absence of any provision therefor in the grant or in the general law (Grand Trunk Western R. Co. v. South Bend, 227 U.S. 544).

D. The Republic hypothesized that the said Constitutional guarantees presuppose the existence of a contract or property right in favor of ADC. It claims that Ordinance No. 7065 is not a franchise nor is it a contract but merely a privilege for the purpose of regulation.

Ordinance No. 7065 is not merely a personal privilege that can be withdrawn at any time. It is a franchise that is protected by the Constitution.

The distinction between the two is that a privilege is bestowed out of pure beneficence on the part of the government. There is no obligation or burden imposed on the grantee except maybe to pay the ordinary license and permit fees. In a franchise, there are certain obligations assumed by the grantee which make up the valuable consideration for the contract. That is why the grantee is first required to signify his acceptance of the terms and conditions of the grant. Once the grantee accepts the terms and conditions thereof, the grant becomes a binding contract between the grantor and the grantee.

Another test used to distinguish a franchise from a privilege is the big investment risked by the grantee. In Papa v. Santiago, supra, we held that this factor should be considered in favor of the grantee. A franchise in which money has been expended assumes the character of a vested right (Brazosport Savings and Loan Association v. American Savings and Loan Association, 161 Tex. 543, 342 S.W. 2d. 747).

The cases cited by the Republic to the effect that gambling permits or license issued by municipalities can be revoked when public interest so requires, have never addressed this issue, obviously because there were no significant financial investments involved in the operation of the permits or licenses.

But assuming that Ordinance No. 7065 is a mere privilege, still over the years, the concept of a privilege has changed. Under the traditional form a property ownership, recipients of privileges, benefits or largesse from the


government may be said to have no property rights because they have no traditionally recognized proprietary interest therein. The case of Vinco v. Municipality of Hinigaran, 41 Phil. 790 (1917) and Pedro v. Provincial Board of Rizal, 56 Phil 123 (1931), holding that a license to operate cockpits is a mere privilege, belong to this vintage. However, the right-privilege dichotomy has come to an end when the courts have realized that individuals should not be subjected to the unfettered whims of government officials to withhold privileges previously given them (Van Alstyne, The Demise of the Right — Privilege Distinction in Constitutional Law, 81 Harvard L. R. 1439 [1968]). To perpetuate such distinction would leave many individuals at the mercy of government officials and threaten the liberties protected by the Bill of Rights (Nowak, Rotunda and Young, Constitutional Law 546 [2nd ed]).

That a franchise is subject to regulation by the state by virtue of its police power is conceded. What is not acceptable is the Republic's proposition that the power to regulate and supervise includes the power to cancel the franchise altogether.

The stance of the Republic that the gambling franchises it issues are not covered by the constitutional mantle protecting property rights is ill-advised considering that it is planning to operate gambling establishments involving substantial foreign investments in putting up the facilities thereof.

The belabored arguments of the Republic on the evils of gambling fall to the ground upon a showing that ADC is operating under an existing and valid franchise (Rollo, pp. 422-423).

E. The Republic questioned the siting of the ADC's fronton as violative of E.O. No. 135 of President Quirino. Under said executive issuance, no pelota fronton can be maintained and operated "within a radius of 200 lineal meters from any city hall or municipal building, provincial capital building, national capital building, public plaza or park, public school, church, hospital, athletic stadium, or any institution of learning or charity."

According to the certificate issued by the National Mapping Information Authority, the ADC fronton is within the proscribed radius from the Central Bank of the Philippines, the Rizal Stadium, the Manila Zoo, the public park or plaza in front of the zoo, the Ospital ng Maynila, a police precinct and a church (G.R. No. 115044, Rollo, pp. 424-427).

On the other hand, a certificate issued by the Officer-in-charge of the Office of the City Engineer of the City of Manila attests to the fact that not one of the buildings or places mentioned in the certificate submitted by the Republic

is within the 200-meter radial distance, "center to center" from the ADC's jai-alai building (Rollo, p. 260). How this variance in measurement came about is a matter that should have been submitted before the trial court for determination.

However, the operative law on the siting of jai-alai establishments is no longer E.O. No. 135 of President Quirino but R.A. No. 938 as amended by R.A. No. 1224.

Under said law only night clubs, cabarets, pavillions, or other similar places are covered by the 200-lineal meter radius. In the case of all other places of amusements except cockpits, the proscribed radial distance has been reduced to 50 meters. With respect to cockpits, the determination of the radial distance is left to the discretion of the municipal council or city board (Sec. 1).

F. The Republic also questions the lack of the period of the grant under Ordinance No. 7065, thus making it indeterminate (G.R. No. 117263, Rollo, pp. 500-505). The ordinance leaves it to the Mayor of the City of Manila to lay down other terms and conditions of the grant in addition to those specified therein. It is up to the parties to agree on the life or term of the grant. In case the parties fail to reach an agreement on the term, the same can be fixed by the courts under Article 1197 of the Civil Code of the Philippines, which provides as follows:

If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a period was intended, the courts may fix the duration thereof.

The courts shall also fix the duration of the period when it depends upon the will of the debtor.

In every case, the courts shall determine such period as may under the circumstances have been probably contemplated by the parties. Once fixed by the courts, the period cannot be changed by them.

III

G.R. No. 117263


The petition in G.R. No. 117263 seeks to nullify the following orders of respondent Judge Reyes:

(1) the Temporary Restraining Order dated September 15, 1994;

(2) the Order dated September 25, 1994; and

(3) the Writ of Preliminary Injunction dated September 30, 1994 (Rollo, pp. 1-2).

The supplemental petition in said case seeks to nullify the Order dated October 19, 1994 (Rollo, pp. 166-225).

According to Executive Secretary Guingona and GAB Chairman Cepeda, respondent Judge Reyes acted without jurisdiction and with grave abuse of discretion in issuing said orders and writ of preliminary injunction because: (1) Civil Case No. 94-71656 was not properly assigned to him in accordance with Section 7, Rule 22 of the Revised Rules of Court; (2) the enforcement of the Directive and Memorandum sought to be enjoined had already been performed or were already fait accompli; and (3) respondent judge pre-empted this Court in resolving the basic issues raised in G.R. No. 115044 when he took cognizance of Civil Case No. 94-71656.

A. At the outset, it should be made clear that Section 7 of Rule 22 of the Revised Rules of Court does not require that the assignment of cases to the different branches of a trial court should always be by raffle. The Rule talks of assignment "whether by raffle or otherwise." What it requires is the giving of written notice to counsel or the parties "so that they may be present therein if they so desire."

Section 7 of Rule 22 provides:

Assignment of cases. In the assignment of cases to the different branches of a Court of First Instance, or their transfer from one branch to another whether by raffle or otherwise, the parties or their counsel shall be given written notice sufficiently in advance so that they may be present therein if they so desire.

However, there may be cases necessitating the issuance of a temporary restraining order to prevent irreparable injury on the petitioner.

To await the regular raffle before the court can act on the motion for temporary restraining order may render the case moot and academic. Hence, Administrative Circular No. 1 dated January 28, 1988 was issued by this Court allowing a special raffle. Said Circular provides:

8.3. Special raffles should not be permitted except on verified application of the interested party who seeks issuance of a provisional remedy and only upon a finding by the Executive Judge that unless a special raffle is conducted irreparable damage shall be suffered by the applicant. The special raffle shall be conducted by at least two judges in a multiple-sala station.

In a case where a verified application for special raffle is filed, the notice to the adverse parties may be dispensed with but the raffle has to "be conducted by at least two judges in a multiple-sala station."

The Republic does not claim that Administrative Circular No. 1 has been violated in the assignment of the case to respondent Judge. The presumption of regularity of official acts therefore prevails.

Going back to Section 7 of Rule 22, this Court has rules in Commissioner of Immigration v. Reyes, 12 SCRA 728 (12964) that the purpose of the notice is to afford the parties a chance to be heard in the assignment of their cases and this purpose is deemed accomplished if the parties were subsequently heard. In the instant case, Executive Secretary Guingona and GAB Chairman Cepeda were given a hearing on the matter of the lack of notice to them of the raffle when the court heard on September 23, 1994 their Motion to Recall Temporary Restraining Order, Urgent Supplemental Motion to Recall Temporary Restraining Order and Opposition to Issuance of a Writ of Preliminary Issuance of a Writ of Preliminary Injunction (G.R. No. 117263, Rollo p. 434).

Petitioners in G.R. No. 117263 failed to shown any irregularity attendant to the raffle or any prejudice which befell them as a result of the lack of notice of the raffle of Civil Case No. 94-71656.


On the other hand, petitioners never asked for a re-raffle of the case or for any affirmative relief from the trial court and proceeded with the presentation of evidence of ADC in connection with the motion for preliminary injunction.

B. The purpose of a temporary restraining order or preliminary injunction, whether preventive or mandatory, is merely to prevent a threatened wrong and to protect the property or rights involved from further injury, until the issues can be determined after the hearing on the merits (Ohio Oil Co. v. Conway, 279 U.S. 813, 73 L. Ed. 972, 49 S. Ct. 256; Gobbi v. Dilao, 58 Or. 14, 111 p. 49, 113, p. 57). What is intended to be preserved is the status quo ante litem motam or the last actual, peaceable, noncontested status (Annotation, 15 ALR 2d 237).

In the case at bench, the status quo which the questioned orders of Judge Reyes sought to maintain was that ADC was operating the jai-alai pursuant to Ordinance No. 7065 of the City of Manila, the various decisions of the different courts, including the Supreme Court, and the licenses, permits and provisional authority issued by GAB itself.

At times, it may be necessary for the courts to take some affirmative act essential to restore the status quo (Iowa Natural Resources Council v. Van See [Iowa] 158 N.W. 2d. 111).

The right to conduct a business or to pursue one's business or trade without wrongful interference by others is a property right which equity will, in proper cases, protect by injunction, provided of course, that such occupation or vocation is legal and not prohibited by law (Rance v. Sperry & Hutchinson Co., 410 P. 2d 859).

Had not the Directive to close the operation of ADC's jai-alai and the implementing Memorandum been issued, there would have been no need for the issuance of the orders of the Regional Trial Court. The need for said equitable reliefs becomes more evident if we consider that the Executive Secretary himself had entertained doubts as to the legality of his action because in the same Directive he instructed the Solicitor General to obtain a judicial ruling on the legal issues raised.

C. Respondent Judge Reyes did not pre-empt this Court in deciding the basic issues raised in G.R. No. 115044 when it assumed jurisdiction over Civil Case No. 94-71656 and issued the orders questioned in G.R. No. 117263.

The orders of Judge Reyes are provisional in nature and do not touch on the merits of the case. The issues raised in Civil Case No. 94-71656 are the validity of the Directive and Memorandum, which were issued after the decision of this Court in G.R. No. 115044. The respondent in the civil case before the trial court are not even parties in G.R. No. 115044.

PUNO, J., dissenting:

The petitions at bench involve great principles of law in tension. On balance at one end is the high prerogative of the State to promote the general welfare of the people thru the use of police power; on the opposite end is the right of an entity to have its property protected against unreasonable impairment by the State. courts accord the State wide latitude in the exercise of its police power to bring about the greatest good of the greatest number. But when its purpose is putrefied by private interest, the use of police power becomes a farce and must be struck down just as every arbitrary exercise of government power should be stamped out.

I will confine myself to the jugular issue of whether or not Associated Development Corporation (ADC) still possesses a valid franchise to operate jai-alai in manila. The issue is multi-dimensional considering its constitutional complexion.

First, the matrix of facts. On June 18, 1949, congress enacted Republic Act No. 409, otherwise known as the Charter of Manila. Section 18 (jj) gave to the Municipal Board (now City Council) the following power:

(jj) To tax, license, permit and regulate wagers or betting by the public on boxing, sipa, bowling, billiards, pools, horse or dog races, cockpits, jai-alai, roller or ice skating or any porting or athletic contest, as well as grant exclusive rights to establishments for this purpose, notwithstanding any existing law to the contrary.

On June 20, 1953, congress passed Republic Act No. 954 entitled "An Act to Prohibit Certain Activities in Connection with Horse Races and Basque pelota Games (Jai-Alai) and to Prescribe penalties for its Violation." Sections 4 and 5 of the law provide:

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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, take or arrange bets on any basque pelota game or event, or maintain or use a totalizer or other device, method or system to bet or gamble on any basque pelota game or event.

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 to her 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.

On September 7, 1971, the Municipal Board of Manila approved Ordinance No. 7065 "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."

On September 21, 1972, martial law was declared by then president Ferdinand E. Marcos. The 1971 Constitution, as amended, authorized the former President to exercise legislative powers. Among the laws he decreed is P.D. No. 771, "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." its Text states:

xxx xxx xxx

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

Sec. 2. Hereafter all permit or franchise 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 qualifications of the applicant: Provided, That local governments may, upon clearance from the chief of constabulary and during town fiestas and holidays, continue to issue permits for minor games which are usually enjoyed by the people during such celebrations.

Sec. 3. All existing franchises and permits issued by local government are hereby revoked and may be renewed only in accordance with this Decree.

P.D. No. 771 was enacted on August 20, 1975 and purportedly revoked the permit of ADC to operate. Before two (2) months could elapse or on October 16, 1975, then President Marcos issued P.D. No. 810 granting a franchise to Philippine Jai-Alai and Amusements corporation to conduct jai-alai games in Manila. it is not disputed that his brother-in-law, Mr. Alfredo "Berjo" Romualdez, held the controlling interest in Philippine Jai-alai and Amusements Corporation. apparently, the favored treatment given to Mr. Romualdez and company did not sit well with former President Corazon C. Aquino. On May 8, 1987, she issued Executive Order No. 169 repealing P.D. No. 810. Nevertheless, she allowed P.D. No. 771 to stay in our statutes book.

ADC thought it could resume its jai-alai operation. On May 5, 1988, it sought from then mayor Gemiliano C. Lopez, Jr., of Manila a permit to operate on the strength of Ordinance No. 7065. The request was refused and this Spawned suits 1 all won by ADC. In Civil Case No. 88-45660, filed in Br. 40, RTC, Manila, Judge Augusto E. Villarin ruled that Ordinance No. 7065 created a binding contract between the city of Manila and ADC, and hence, the City Mayor had no discretion to deny ADC's permit. The ruling was appealed to the Court of Appeals where it was docketed as CA-G.R. SP No. 16477. On February 9, 1989, however, Mayor Lopez withdrew the city's appeal. Still, the legal problems of ADC did not disappear. Manila Mayor Alfredo Lim who succeeded Mayor Lopez again refused to issue ADC's permit despite orders of Judge Felipe G. Pacquing. 2 Threatened with contempt, Mayor Lim filed with this Court G.R. No. 115044, a petition forcertiorari. He alleged that he could not be compelled to enforce the Decision in Civil Case No. 88-45660 as the same is null and void for want of jurisdiction of the court that rendered it. He likewise contended that Ordinance No. 7065 had been revoked by P.D. No. 771. On September 1, 1994, the First division of this court, speaking thru Mr. Justice Camilo Quiason, dismissed Mayor Lim's petition. It held:


xxx xxx xxx

Petitioners failed to appreciate the distinction between a void and an erroneous judgment and between jurisdiction and the exercise of jurisdiction.

Having jurisdiction over the civil case, whatever error may be attributed to the trial court, is simply one of judgment, not of jurisdiction. an error of judgment cannot be corrected by certiorari but by appeal (Robles v. House of Representatives Electoral Tribunal, 181 SCRA 780 [1990]; De Castro v. Delta Motor Sales Corporation, 57 SCRA 344 [1978]; Galang v. Endencia, 73 Phil. 391 [1941].

The issue on the cancellation of Ordinance No. 7065 by president Marcos could have been raised as a special defense in Civil Case No. 88-54660 but was not . . .

The City of Manila should have pursued in the appellate courts its appeal questioning the dismissal of Civil Case No. 91-58913, where the trial court ruled that Mayor Lopez and the city could no longer claim that Ordinance No. 7065 had been cancelled by president Marcos because they failed to raise this issue in Civil Case No. 88-54660.

At any rate, the unilateral cancellation of the franchise, which has the status of a contract, without notice, hearing and justifiable cause is intolerable in any system where the rule of Law prevails (Poses v. Toledo Transportation Co., 62 Phil. 297 [1935]; Manila electric Co., v. Public utility commissioners, 30 Phil. 387 [1915].

Upon its receipt, Mayor Lim manifested he would comply with the Decision. He did not file a motion for reconsideration. it was then that the Republic started its own legal battle against ADC. it intervened in G.R. No. 115044, raising several issues, especially ADC's lack of a valid legislative franchise to operate jai-alai. No less than Executive Secretary Teofisto Guingona directed the Games and Amusement Board, then headed by Mr. Francisco R. Sumulong, jr., to hold in abeyance the grant of authority, or if any had been issued, to withdraw such grant of authority in favor of ADC. The GAB dutifully ordered ADC to cease and desist from operating the Manila jai-alai. ADC again rushed to the RTC of Manila and filed Civil Case No. 94-71656 which was raffled to Br. 14, presided by respondent Judge Vetino Reyes.

Acting with dispatch, respondent judge temporarily restrained the GAB from withdrawing the provisional authority of ADC to operate. After hearing, the temporary restraining order was converted into writs of preliminary injunction and preliminary mandatory injunction upon posting by ADC of a P2 million bond. these writs are challenged in these consolidated petitions as having been issued in grave abuse of discretion amounting to lack of jurisdiction.

While the petitions at bench are checkered with significant substantive and procedural issues, I will only address the contention that ADC has no existing legislative franchise. The contention is anchored on two (2) submissions: first, ADC has no legislative franchise as required by R.A. No. 954, and second, even if the city of Manila licensed ADC to operate jai-alai, its authority was nevertheless revoked by section 3 of P.D. No. 771.

I find as completely baseless petitioners' submission that R.A. No. 954 requires a legislative franchise to operate a jai-alai, in effect, revoking the power of the City of Manila to issue permits for the same purpose as granted by its Charter. A 20-20 visual reading of R.A. No. 954 will not yield the suggested interpretation by petitioners. the titles of R.A. No. 954 will immediately reveal that the law was enacted to achieve a special purpose. It states: "An Act To Prohibit Certain Activities In Connection With Horse Races And Basque pelota Games (Jai-Alai), And To Prescribe Penalties For its Violation." The prohibited activities related to jai-alai games are specified in sections 4 to 6, viz:

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, 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.

Sec. 5. No person, operator, or maintainer of 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.


Sec. 6. No person or group of persons shall fix a basque pelota game for the purpose of insuring the winning of certain determined pelotari or pelotaris.

The Title of R.A. No. 954 does not show that it seeks to limit the operation of jai-alai only to entities with franchise given by Congress. what the title trumpets as the sole subject of the law is the criminalization of certain practices relating to jai-alai games. The title of a law is a valuable intrinsic aid in determining legislative intent. 3

The Explanatory Note 4 of House Bill 3204, the precursor of R.A. No. 954, also reveals that the intent of the law is only to criminalize the practice of illegal bookies and game-fixing in jai-alai. It states:

This bill seeks to prohibit certain anomalous practice of "bookies" in connection with the holding of horse races or "basque pelota" games. The term "bookie" as commonly understood refers to a person, who without any license therefor, operates outside the compounds of racing clubs and accepts bets from the public. They pay dividends to winners minus a commission, which is usually 10%. Prosecutions of said persons have been instituted under Act No. 4240 which was enacted in 1935. However, in a recent opinion released by the City Fiscal of Manila he maintains that Act No. 4240 has already been repealed, so that the present law regulating ordinary horse races permits "bookies" to ply their trade, but not on sweepstakes races and other races held for charitable purposes. With the operation of "booking" places in the City of Manila, the Government has been losing no less than P600,000.00 a year, which amount represents the tax that should have been collected from bets made in such places. for these reasons, the approval of the bill is earnestly recommended.

As said Explanatory Note is expressive of the purpose of the bill, it gives a reliable keyhole on the scope and coverage of R.A. No. 954. 5 Nothing from the Explanatory Note remotely suggests any intent of the law to revoke the power of the City of Manila to issue permits to operate jai-alai games within its territorial jurisdiction.

The Debates 6 in Congress likewise reject the reading of R.A. No. 954 by petitioners, thus:

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RESUMPTION OF SESSION

THE SPEAKER. The session is resumed

MR. CINCO. Mr. Speaker, I withdraw my motion for postponement.

MR. CALO. Mr. Speaker, will the gentleman may yield, if he so desires.

MR. ZOSA. Willingly.

MR. CALO. What is the national import of this bill?

MR. ZOSA. Mr. Speaker, this bill prohibits certain activities in connection with horse races and jai-Alai games which are licensed by the government. At present, there are many practices in connection with the holding of these games which deprive the government of income that should legally go into the government coffers as taxes.

MR. CALO. Is not this matter of national importance because Jai-Alai games and horse races are held only in Manila?

MR. ZOSA. Precisely, Mr. Speaker, they are played on a big scale, and there are many practices which deprive the government of income to which it is entitled. I think the gentleman from


Agusan is a member of the Committee on Appropriations. The governments will have more revenues, if we shall approve this bill.

Again, legislative debate is a good source to determine the intent of a law. 7

To top it all, the text of R.A. no. 954 itself does not intimate that it is repealing any existing law, especially section 18 (jj) of R.A. no. 409, otherwise known as the Charter of Manila. Indeed, R.A. No. 954 has no repealing provision. The reason is obvious — it simply prohibited certain practices in jai-alai then still unregulated by the laws of the land. It did not regulate aspects of jai-alai already regulated by existing laws, like the matter of whether it is the national government alone that should issue franchises to operate jai-alai games.

The subsequent enactment of P.D. No. 771 on August 20, 1975 further demolished the submission of petitioners. In clear and certain language, P.D. no. 771 recalled the owner of local governments to issue jai-alai franchises and permits. It also revoked existing franchises and permits issued by local governments. If R.A. no. 954 had already disauthorized local governments from granting franchisers and permits, there would be no need to enact P.D. no. 771. No rule of statutory construction will be considered any law a meaningless redundancy.

The passage of P.D. No. 771, also negates petitioners' insistence that for ADC to continue operating, it must show it has a franchise from Congress, not just a permit from the City of Manila. The suggested dichotomy between a legislative franchise and city permit does not impress. If the City of Manila is empowered to license the ADC it is because the power was delegated to it by Congress. The acts of the City of Manila in the exercise of its delegated power bind Congress as well. Stated otherwise, the permit given by the City to ADC is not any whit legally inferior to a regular franchise. Through the years, the permit given by the City endows the grantee complete right to operate. Not once, except in these cases, has the national government questioned the completeness of his right. For this reason, P.D. No. 771 has to take revoke all existing franchises and permits without making any distinction. It treated permits in the same class as franchises.

Petitioners' second line of argument urges that in any event, Section 3 of P.D. No. 771 expressly revoked allexisting franchises and permits to operate

jai-alai games granted by local governments, including the permit issued to ADC by the City of Manila through Ordinance No. 7065. For its resolution, petitioners' argument requires a re-statement of the requirements for the valid exercise of police power.

It was the legendary Chief Justice Marshall who first used the phrase police power in 1824. 8 Early attempts to fix the metes and bounds of police power were unsuccessful. 9 For of all the inherent powers of the State, police power is indubitably the most pervasive, 10 the most insistent and the least limitable. 11 Rooted on the latin maxims, salus populi suprema est lex (the welfare of the people if the supreme law) and sic utere tuo ut alienum non laedas (so use your property as not to injure the property of others), it was not without reason for Justice Holmes to stress that its reach extends "to all the great public needs." 12 A similar sentiment was echoed by our own Justice Laurel in Alalang v. Williams 13 who defined police power as the "state authority to enact legislation that may interfere with personal liberty or property in order to promote the general welfare." Over the years, courts recognized the power of legislature to enact police regulations on broad areas of state concern: (a) the preservation of the state itself and the unhindered execution of its legitimate functions; (b) the prevention and punishment of crime; (c) the preservation of the public peace and order; (d) the preservation of the public safety; (e) the purity and preservation of the public morals; (f) the protection and promotion of the public health (g) the regulation of business, trades, or professions the conduct of which may affect one or other of the objects just enumerated; (h) the regulation of property and rights of property so far as to prevent its being used in a manner dangerous or detrimental to others; (i) the prevention of fraud, extortion, and oppression; (j) roads and streets, and their preservation and repair; and (k) the preservation of game and fish. 14

But while the State is bestowed near boundless authority to promote public welfare, still the exercise of police power cannot be allowed to run riot in a republic ruled by reason. Thus, our courts have laid down the test to determine the validity of a police measure as follows: (1) the interest of the public generally, as distinguished from those of particular class, requires its exercise; and (2) the means employed are reasonably necessary for the accomplishment of the purpose and not unduly oppresive upon individuals. 15 Deeper relexion will reveal that the test reiterates the essence of our constitutional guarantees of substantive due process, equal protection, and non-impairment of property rights.

We now apply this lucidly-lined test to the petitions at bench. To reiterate, P.D. No. 771 utilized two methods to regulate jai-alai: First, it reverted the


power to issue franchise and permit to the national government, second, it revoked all existing franchise and permit issued by local governments.

I concede that the first method is invulnerable even to the strongest of constitutional attack. Part of the plenary power of Congress to make laws is the right ot grant franchise and permits allowing the exercise of certain privileges. Congress can delegate the exercise of this innate power to grant franchises as it did to the City of Manila when it granted its charter on June 18, 1949 thru R.A. no. 409. Congress can also revoke the delegated power and choose to wield the power itself as it did thru then President Marcos who exercised legislative powers by enacting P.D. No. 771. In the petitions at bench, Congress revoked the power of local government to issue franchises and permits which it had priorly delegated. In doing so and in deciding to wield the power itself to meet the perceived problems of the time, the legislature exercised its distinct judgment and the other branches of government, including this Court, cannot supplant this judgment without running afoul of the principle of separation powers. To be sure, this particular legislative method to regulate the problem of mushrooming applications for jai-alai franchise cannot be faulted as bereft of rationality. In the hearing of the petitions at bench, Executive Secretary Guingona established the fact that at the time of the enactment of P.D. No. 771, there were numerous applications to run jai-alai games in various cities and municipalities of the archipelago. To prevent the proliferation of these applications and minimize their ill effects, the law centralized their screening by the national government alone. The law excluded local governments in the process. The revocation of the delegated power to local governments does not impair any right. Applicants to franchises have no right to insist that their applications be acted upon by local governments. Their right to a franchise is only in purpose.

The second method adopted by Section 3 of P.D. No. 771 which revoked all existing franchises and permits is, however, constitutionally impermissible. On its face, section 3 purports to revoke all existing franchises and permits. During the oral argument of the petitions at bench, however, it was admitted that at the time P.D. No. 771 was enacted, only ADC is actually operating a jai-alai. 16 The purported revocation of allfranchises and permits when there was only one existing permit at that time is an unmistakeable attempt to mask the law with impartiality. No other permit was affected by said sec. 3 except ADC.

Truth, however, has its own time of sprouting out. The truth behind the revocation of ADC's franchise revealed itself when former President Marcos transferred ADC's franchise to the Philippine Jai-Alai and Amusements

Corporation then under the control of his brother-in-law, Mr. Alfredo "Bejo" Romualdez. The favored treatment was extended hardly two (2) months after the revocation of ADC's franchise and it left Philippine Jai-Alai and Amusements Corporation the sole jai-alai operator in the Philippines. The Court is not informed of any distinction of PJAC that will justify its different treatment. The evidence is thus clear and the conclusion is irresistable that section 3 of P.D. No. 771 was designed with a malignant eye against ADC.

In light of the established facts in field, section 3 of P.D. No. 771 must be struck down as constitutionally infirmed. despite its cosmetics, section 3 cannot be unblushingly foisted as a measure that will promote the public welfare. There is no way to treat the self-interest of a favored entity as identical with the general interest of a favored entity as identical with the general interest of the Filipino people. It will also be repulsive to reason to entertain the thesis that the revocation of the franchise of ADC is reasonably necessary to enable the State to grapple to the ground the evil of jai-alai as a form of gambling. Petitioners have not demonstrated that government lacks alternative options to succeed in its effort except to cancel the lone franchise of ADC. Well to stress, it is not the lofty aim of P.D. No. 771 to completely eradicate jai-alai games; it merely seeks to control its multiplication by restoring the monopoly of the national government in the dispensation of franchises.

Prescinding from these premises, I share the scholarly view of Mr. Justice Quiason that sec. 3 of P.D. No. 771 offends the Constitution which demands faithful compliance with the requirements of substantive due process, equal protection of the law, and non-impairment of contracts. capsulizing their essence, substantive due process exacts fairness; equal protection disallows distinction to the distinctless; and the guaranty of non-impairment of contract protects its integrity unless demanded otherwise by the public good. Constitutionalism eschews the exercise of unchecked power for history demonstrates that a meandering, aimless power ultimately tears apart the social fabric of society. Thus, the grant of police power to promote public welfare cannot carry with it the privilege to be oppressive. The Constitution ordained the State not just to achieve order or liberty but to attainordered liberty, however elusive the balance may be. Cognizant of the truism that in life the only constant is change, the Constitution did not design that the point that can strike the balance between order and liberty should be static for precisely, the process of adjusting the moving point of the balance gives government greater elasticity to meet the needs of the time.

It is also my respectful submission that the unconstitutionality of section 3 of P.D. No. 771 was not cured when former President Aquino used it in revoking P.D. No. 810 which granted Philippine Jai-Alai and Amusements


Corporation a franchise to operate jai-alai in Manila. The subsequent use of said section should not obfuscate the fact that the law was enacted in the wrongful exercise of the police power of the State. There is no sidestepping the truth that its enactment inflicted undue injury on the right s of ADC and there can be no reparation of these rights until and unless its permit to continue operating jai-alai in Manila is restored. Cancelling the franchise of Philippine Jai-Alai and Amusements Corporation is an act of Justice to ADC if its franchise would be left unrecognized. Since the unconstitutionality of section 3 is congenital, it is beyond redemption.

But while I wholeheartedly subscribe to the many impeccable theses of Mr. Justice Quiason, it is with regret that I cannot join his submittal that sec. 3 of P.D. No. 771 violates procedural due process. We are dealing with the plenary power of the legislature to make and amend laws. Congress has previously delegated to the City of Manila the power to grant permits to operate jai-alai within its territorial jurisdiction and ADC's permit could have been validly revoked by law if it were demonstrated that its revocation was called for by the public good and is not capricious. In ascertaining the public good for the purpose of enacting a remedial law, it is not indispensable, albeit sometimes desirable, to give notice and hearing to an affected party. The data the legislature seeks when engaged in lawmaking does not focus on the liability of a person or entity which would require fair hearing of the latter's side. In fine, the legislature while making laws is not involved in establishing evidence that will convict, but in unearthing neutral data that will direct its discretion in determining the general good.

The suggested notice and hearing before a franchise can be cancelled has another undesirable dimension. It does not only unduly cramp the legislature in its method of data-gathering, it also burdens the legislature with too much encumbrance in the exercise of its police power to regulate gambling. However heavily laden with property rights a franchise to operate jai-alai maybe, it is still a contract which under appropriate circumstances can be revoked to enhance public interest. Jai-alai may be a game of a thousand thrills but its true thrill comes from the gambling on its indeterminate result. Beyond debate, gambling is an evil even if its advocates bleach its nefariousness by upgrading it as a necessary evil. In a country where it is a policy to promote the youth's physical, moral, spiritual, intellectual, and social well-being, 17 there is no right to gamble, neither a right to promote gambling for gambling is contra bonos mores. To require the legislature to strictly observe procedural before it can revoke a gambling due process before it can revoke a gambling franchise is to put too much primacy on property rights. We then stand in danger of reviving the long lamented 1905 ruling in Lochner v. New York 18 which unwisely struck down government interference in contractual liberty. The spirit of liberalism which provides the

main driving force of social justice rebels against the resuscitation of the ruling Lochner from its sarcophagus. We should not be seduced by any judicial activism unduly favoring private economic interest 19 at the expense of the public good.

I also support the stance of Mr. Justice Quiason which resisted the stance that the Court should close its eyes to allegations that section 3 of P.D. No. 771 was conceived and effected to give naked preference to a favored entity due to pedigree. I reiterate the view that section 1, Article VIII of the Constitution expanding the jurisdiction of this Court to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or agency of government is not a pointless postulate. Without the grant of this new power, it would be difficult, if not impossible, to pierce through the pretentious purposes of P.D. No. 771. P.D. No. 771 has no right to a reverential treatment for it is not a real law as it is not the product of an authentic deliberative legislature. Rather, it is the dictate of a public official who then had a monopoly of executive and legislative powers. As it was not infrequently done at that time, the whereas clauses of laws used to camouflage a private purpose by the invocation of public welfare. The tragedy is that the bogus invocation of public welfare succeeded partly due to the indefensible deference given to official acts of government. The new Constitution now calls for a heightened judicial scrutiny of official acts. For this purpose, it has extirpated even the colonial roots of our impotence. It is time to respond to this call with neither a pause nor a half-pause.

I therefore vote to declare section 3 of P.D. No. 771 unconstitutional and to dismiss the petitions.

Separate Opinions

KAPUNAN, J., concurring:

Government encroachments on private property however, valid, are always subject to limitations imposed by the due process and impairment of contracts clauses of the Constitution. The government challenge in the case at bench, ostensibly involving a franchise granted pursuant to legitimate local legislative authority, on the surface appears to be an easy one, clothed, as it were in the State's inherent and almost illimitable prerogative to promote the general welfare and the common good. As the challenge involves a facile conflict between good and evil, between a universally


recognized vice and the State's virtuous posture, the instant case lends itself to easy adjudication.

Not necessarily. Economic realities have blurred distinctions. The State itself, though in virtuous garb, has at various times allowed a relaxation of existing rules proscribing gambling and devised a system of regulations, local and national, through which gambling and otherwise illicit gaming operations may be maintained by those licensed to do so. As the system has never been perfect, conflict, such as that which existed in the case at bench, occasionally arises.

The constitutionality of P.D. 771 was not in issue in Lim vs. Pacquing, promulgated by the court's first Division last September, 1994, where this court sustained an order by Judge Pacquing issued in Civil Case No. 88-45660 compelling Manila Mayor Alfredo S. Lim to issue a permit to operate a jail fronton in favor of the Associated Development Corporation (ADC) pursuant to Manila City Ordinance No. 7065.

After the City of Manila subsequently granted ADC a permit to operate the jai-alai fronton, Chairman Francisco Sumulong, Jr. of the Games and Amusements Board issued on September 9, 1994 a provisional authority to open the fronton subject to certain conditions imposed therein. In relation to this, the GAB likewise issued to the ADC, on 12 September 1994, License No. 94-008 upon payment of the corresponding fees.

On September 13, 1994, Executive Secretary Teofisto Guingona directed GAB Chairman Sumulong "to hold in abeyance the grant of authority or if any has been issued, to withdraw such grant of authority" 1 to the ADC. Consequently, on September 14, 1994, the GAB Chairman revoked the provisional authority issued by his office, until the legal issues raised in the September 13 directive of the Executive Secretary are resolved in the proper court. Said directive identified the legal issues as centering on 1) the constitutionality of P.D. 771; 2) the validity of the apparent grant in perpetuity of a municipal franchise to maintain jai-alai operations; and, 3) the power of the city of Manila to issue a jai-alai franchise in view of Executive Order 392 which transferred from local governments to the GAB the power to regulate jai-alai.

Reacting to the cancellation of its provisional authority to maintain jai-alai operations, ADC, on September 15, 1994 filed a petition for prohibition, mandamus, injunction and damages with prayer for temporary restraining order and writ of preliminary injunction in the Manila Regional Trial Court of against Executive Secretary Guingona and Chairman

Sumulong. The Regional Trial court of manila, Branch 4, through Judge Vetino Reyes on the same day issued an order enjoining the Executive Secretary and the GAB Chairman from implementing their directive and memorandum, respectively.

On September 16, 1994 GAB, representing the Republic of the Philippines, filed a motion for intervention, for leave to file a motion for reconsideration-in-intervention and for reference of the case to the Court en banc in G.R. No. 115044. Acting on this motion, the First Division referred the case to the Court en banc, which, in a resolution dated 20 September 1994, accepted the same and required the respondents therein to comment.

On October 11, 1994 the Executive Secretary and the new GAB Chairman Domingo Cepeda, Jr. filed with this Court a petition for certiorari, prohibition and mandamus assailing Judge Vetino Reyes' earlier order.

On October 19. 1994, Judge Reyes issued another order granting the ADB's motion for a writ of preliminarymandatory injunction against the Executive Secretary and the GAB Chairman and to compel them to issue the necessary authority, licenses and working permits to the ADC, its personnel and players.

The government sought leave to file a supplemental petition (and to admit attached supplemental petition) with urgent prayer for a restraining order assailing the October 19, 1994 Order of Judge Reyes. We granted leave to file said supplemental petition and to admit supplemental petition and required respondents therein to file their comment on October 25, 1994.

The ADC maintains it original position that Ordinance No. 7065, enacted pursuant to the Charter of the City of Manila under Republic Act No. 409 granted a valid and subsisting municipal franchise for the operation of the Basque pelota game jai alai. In response to the government's vehement objections against ADC's operation of its gambling operations 2 the ADC for the first time challenged the constitutional validity of P.D. No. 771 insofar as it revoked the authority granted to it by Ordinance No. 7065 as violative of the non-impairment of contracts and equal protection clauses of the constitution. Ordinance 7065 reads:

Sec. 1. The Mayor is authorized, as he is hereby authorized to allow and permit the Associated Development Corporation to establish, maintain and operate a jai-alai in the City of Manila under the following terms and conditions and such other terms and conditions


as he (the Mayor) may prescribe for good reasons of general interest:

a. That the construction, establishment, and maintenance of the jai-alai shall be at a place permissible under existing zoning ordinances of Manila;


c. That the City of Manila will receive a share of 21/2% of the annual gross receipts of all wagers or bets ½% of which will accrue to the Games and Amusements Board as now provided by law;

d. That the corporation will in addition pay to the city an annual license fee of P3,000.00 and a daily permit fee of P200.00;

e. That the corporation will to insure its faithful compliance of all the terms and conditions under this ordinance, put up a performance bond from a surety acceptable to the City, in the amount of at least P30,000.00.

xxx xxx xxx

Sec. 3 This ordinance shall take effect upon its approval.

The above-quoted ordinance is notable in two respects: 1) the absence of a period of expiration suggests that the grant of authority to operate the Basque pelota game jai-alai seems to have been granted in perpetuity and 2) while the grant of authority under the Ordinance was made pursuant to R.A. 409, the City Charter of Manila, the authority granted could best be viewed as a grant of license or permit, not a franchise. Nowhere is it pretended that Ordinance 7065 is a franchise enacted pursuant to the legislative powers of the Municipal Board of the City of Manila under Section 18 (jj) thereof.

The absence of authority of the Manila Municipal Board to issue a franchise, notwithstanding its legislative powers, is furthermore evident in the above-cited Charter provision regulating gambling and other gaming establishments which enumerates the following powers:

(jj) To tax, license, permit and regulate wagers of betting by the public on boxing . . . cockpits, jai-alai . . . as well as this purpose, notwithstanding any existing law to the contrary.

Clearly the, if Ordinance 7065 merely grants a permit or a license to operate the jai-alai fronton, I see no conflict with a national law, duly enacted pursuant to legitime franchise to operate certain gambling and gaming operations, generally viewed as deleterious to the public welfare and morals, for the purpose of regulating the same and raising revenue. In other words, the national government may well validly require operators of such establishments to first secure a legislative franchise before starting their operations. After securing the proper legislative franchise, they may take then exercise whatever authority granted to them by local legislative bodies pursuant to the permits or licenses granted by these bodies. This is essentially the spirit ordained by at least two legislative issuances relating to jai-alai and other gambling operations passed before and after the Manila City Council issued the ADC's permit to operate.

In June of 1952, Congress enacted R.A. 392 which forbade the taking or arranging of bets on any basque pelota game by any person or entity other than one with a legislative franchise. 3 After the ADC was issued its permit by the City of Manila in 1971, President Marcos issued P.D. 771 pursuant to his legislative powers during martial Law, which revoked local authority to grant franchise to certain gambling operations including jai-alai. Section 3 thereof expressly revoked existing gambling franchise issued by the local governments. When President Corazon Aquino cancelled the franchise granted to the Philippine Jai-alai and Amusement Corporation in 1987, she kept P.D. 771, which revoked all authority by local governments to issue franchises for gambling and gaming establishments on one hand, and the municipal ordinance of the City of Manila, granting a permit or license to operate subject to compliance with the provisions found therein, on the other hand, a legislative franchise may be required by the government as a condition for certain gambling operations. After obtaining such franchise, the franchisee may establish operations in any city or municipality allowed under the terms of the legislative franchise, subject to local licensing requirements. While the City of Manila granted a permit to operate under Ordinance No. 7065, this permit or authority was at best only a local permit to operate and could be exercised by the ADC only after it shall have obtained a legislative franchise.

This skirts the constitutional issue. Both P.D. 771 and Ordinance 7065 can stand alongside each other if one looks at the authority granted by the charter of the City of Manila together with Ordinance No. 7065 merely as an


authority to "allow" and "permit" the operation of jai-alai facilities within the City of Manila. While the constitutional issue was raised by the respondent corporation in the case at bench, I see no valid reason why we should jump into the fray of constitutional adjudication in this case, or on every other opportunity where a constitutional issue is raised by parties before us. It is a settled rule of avoidance, judiciously framed by the United States Supreme Court in Ashwander v. TVA 4 that where a controversy may be settled on a platform other than one involving constitutional adjudication, the court should exercise becoming modesty and avoid the constitutional question.

The State has every legitimate right, under the police power, to regulate gambling operations 5 by requiring legislative franchises for such operations. Gambling, in all its forms, unless specifically authorized by law and carefully regulated pursuant to such law, is generally proscribed as offensive to the public morals and the public good. In maintaining a "state policy" on various forms of gambling, the political branches of government are best equipped to regulate and control such activities and therefore assume full responsibility to the people for such policy. 6 Parenthetically, gambling in all its forms, is generally immoral.

The disturbing implications of a grant of a "franchise," in perpetuity, to the ADC militates against its posture that the government's insistence that the ADC first obtain a legislative franchise violates the equal protection and impairment of Contracts clauses of the Constitution. By their very nature, franchise are subject to amendment, alteration or revocation by the State whenever appropriate. Under the exercise of its police power, the State through its requirement for permits, licenses and franchises to operate, undertakes to regulate what would otherwise be an illegal activity punished by existing penal laws. The police power to establish all manner of regulation of otherwise illicit, immoral and illegal activities is full, virtually illimitable and plenary. 7

In Edu v Ericta 8 we defined the police power as "the state authority to enact legislation that may interfere with personal liberty or property in order to promote the general welfare." In its exercise, the State may impose appropriate impositions or restraints upon liberty or property in order to foster the common good. 9 Such imposition or restraint neither violates the impairment of contracts nor the equal protection clauses of the Constitution if the purpose is ultimately the public good. 10

Restraints on property are not examined with the same microscopic scrutiny as restrictions on liberty. 11 Such restraints, sometimes bordering on outright violations of the impairments of contract principle have been made by this

Court for the general welfare of the people. Justice Holmes in Noble State Bank v. Haskel 12 once expansively described the police power as "extending to all public needs." Franchise and licensing regulations aimed at protecting the public from the pernicious effects of gambling are extensions of the police power addressed to a legitimate public need.

In Lim vs. Pacquing, I voted to sustain the ADC's position on issues almost purely procedural. A thorough analysis of the new issues raised this time, compels a different result since it is plainly obvious that the ADC, while possessing a permit to operate pursuant to Ordinance 7065 of the City of Manila, still has to obtain a legislative franchise, P.D. 771 being valid and constitutional.

On the question of the propriety of the Republic of the Philippine's intervention late in the proceedings in G.R. No. 117263, the ADC counsel's agreeing to have all the issues raised by the parties in the case at bench paves the way for us to consider the petition filed in G.R. No. 117263 as one for quo warranto.

WHEREFORE, on the basis of the foregoing premises, judgment is hereby rendered:

1. Allowing the republic to intervene in G.R. No. 115044.

2. Declaring that P.D. 771 is a valid and subsisting law.

3. Declaring that the ADC does not possess the required legislative franchise to operate the jai-alai under R.A. 954 and P.D. 771.

4. Setting aside the writs of preliminary injunction and preliminary mandatory injunction issued by Judge Vetino Reyes.


The core issues submitted for the Court's resolution are: (1) in G.R. No. 115044, whether intervention by the republic of the Philippines is proper, and (2) in G.R. No. 117263, whether public respondent Judge Vetino Reyes acted with grave abuse of discretion in issuing the temporary restraining order and subsequently the writ of preliminary mandatory injunction in Civil case No. 94-71656.


I

As to the first issue, I submit that unless we either amend the rule on intervention or suspend it, the motion to intervene must be denied. Under Section 2, Rule 12 of the Rules of Court, such motion may be allowed onlybefore or during a trial. Said section reads:

Sec. 2. Intervention. — A person may, before or during a trial, be permitted by the court, in its discretion, to intervene in an action, if he has legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or when he is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof.

This provision was taken from Section 1, Rule 13 of the old Rules of Court with the modification that the phrase "at any period of a trial" in the latter was changed to "before or during a trial." 1

Section 1, Rule 13 of the old Rules of Court was based on Section 121 of the Code of Civil Procedure which, in turn, was taken from Section 387 of the Code of Civil procedure of California. 2

The phrase "at any period of a trial" in Section 1, Rule 13 of the old Rules of Court has been construed to mean the period for the representation of evidence by both parties. 3 And the phrase "before or during the trial" in Section 2, Rule 12 of the present Rules of Court "simply means anytime before the rendition of the final judgment." 4 Accordingly, intervention could not be allowed after the trial had been concluded 5 or after the trial and decision of the original case. 6

Fundamentally then, intervention is never an independent action but is ancillary and supplemental to an existing litigation. Its purpose is not to obstruct nor unnecessarily delay the placid operation of the machinery of trial, but merely to afford one not an original party, yet having a certain right or interest in the pending case, the opportunity to appear and be joined so he could assert or protect such right or interest. 7

The grant of an intervention is left to the discretion of the court. Paragraph (b), Section 2, Rule 12 of the Rules of Court provides:

(b) Discretion of court. — In allowing or disallowing a motion for intervention, the court, in the exercise of discretion, shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties and whether or not the intervenor's rights may be fully protected in a separate proceeding.

It is thus clear that, by its very nature, intervention presupposes an existing litigation or a pending case, 8 and by the opening paragraph of Section 2, Rule 12 of the Rules the Rules of Court, it may be properly filed only before or during the trial of the said case. Even if it is filed before or during the trial, it should be denied if it will unduly delay or prejudice the adjudication of the rights of the original parties and if the intervenor's rights may be fully protected in a separate proceeding.9

It is not disputed that the motion to intervene was filed only on 16 September 1994, or on the fifteenth (15th) day after the First Division had promulgated the decision, and after petitioner Mayor Alfredo Lim complied with or voluntarily satisfied the judgment. The latter act brought to a definite end or effectively terminated G.R. No. 115044. Consequently, intervention herein is impermissible under the rules. To grant it would be a capricious exercise of discretion. The decision of this Court in Director of Lands vs. Court of Appeals 10 cannot be used to sanction such capriciousness for such decision cannot be expanded further to justify a new doctrine on intervention. In the first place, the motions to intervene in the said case were filed before the rendition by this Court of its decision therein. In the second place, there were unusual and peculiar circumstances in the said case which this Court took into account. Of paramount importance was the fact that the prospective intervenors were indispensable parties, and so this Court stated therein:

But over and above these considerations and circumstances which We have pointed out, there is the basic and fundamental requirement under the Rules of Court, Section 7, Rule 3, that "Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiff or defendants." The joinder of indispensable parties is compulsory under any and all conditions, their presence being a sine qua non of the exercise of judicial power. [Borlasa vs. Polistico, 47 Phil. 345, 348].

The herein movants, Greenfield Development Corporation, Alabang Development Corporation, Ramon D. Bagatsing,


and all buyers from them, at least those with ostensible proprietary interests as the MERALCO, Alabang Hills Subdivision, Cielito Homes Subdivision, Tahanan Village, the Ministry of Highways insofar as the South Super Highway is affected, are indispensable parties to these proceedings as it has been shown affirmatively that they have such an interest in the controversy or subject matter that a final adjudication cannot be made, in their absence, without injuring or affecting such interest. The joinder must be ordered in order to prevent multiplicity of suits, so that the whole matter in dispute may be determined once and for all in one litigation.

And, squarely on the aspect of intervention, it found that the denial thereof

will lead the Court to commit an act of injustice to the movants, to their successors-in-interest and to all purchasers for value and in good faith and thereby open the door to fraud, falsehood and misrepresentation, should intervenors' claims be proven to be true. For it cannot be gainsaid that if the petition for reconstitution is finally granted, the chaos and confusion arising from a situation where the certificates of title of the movants covering large areas of land overlap or encroach on properties the title to which is being sought to be reconstituted by private respondent, who herself indicates in her Opposition that, according to the Director of Lands, the overlapping embraces some 87 hectares only, is certain and inevitable.

Then too, it may be stressed that said case originated from a proceeding to reconstitute a certificate of title filed by private respondent. After trial, the Court of First Instance issued an order denying the petition for insufficiency of evidence. After a motion for new trial was granted and a hearing to receive the newly discovered evidence was completed, the court issued an order again denying the reconstitution sought for as it still doubted the authenticity and genuineness of the Transfer of Certificate of Title sought to be reconstituted. The private respondent appealed the order to the Court of Appeals which thereafter promulgated a decision reversing the aforesaid orders of the trial court. The Director of Land, which was the remaining oppositor, filed a motion for a new period to file a motion for reconsideration of the decision alleging excusable negligence. Private respondent filed an opposition thereto. Without waiting for the resolution of the motion, the Director filed a motion to admit the motion for reconsideration attaching

thereto said motion for reconsideration. The Court of Appeals issued a resolution denying both motions on the ground that the decision had already become final. This was the resolution which the Director assailed in his petition for review filed with this Court.

Considering then that the intervention in the case at bar was commenced only after the decision had been executed, a suspension of the Rules to accommodate the motion for intervention and the intervention itself would be arbitrary. The Government is not without any other recourse to protect any right or interest which the decision might have impaired.

May the motion to intervene and intervention proper be, nevertheless, treated as a petition for quo warranto? The majority opinion answers it in the affirmative because all the essential requisites for a petition for quo warranto are present in said pleadings. I am almost tempted to agree with that opinion if not for the fact that there is pending before the Regional Trial Court of Manila Civil Case No. 94-71656 which is a petition for prohibition, mandamus, injunction, and damages filed by the Associated Development Corporation against Executive Secretary Guingona and then Games and Amusement Board (GAB) Chairman Sumulong. That is the more appropriate forum where the Government and petitioner Guingona may challenge the validity of ADC's franchise. Its filing was provoked by the withdrawal by the GAB of the provisional authority it granted to ADC in view of the 13 September 1994 directive of Executive Secretary Guingona informing the GAB of sufficient bases to hold in abeyance the operation of the jai-alai until the legal questions into the validity of the franchise issued to ADC. Consequently, it is to be logically presumed that for its affirmative defenses in Civil Case No. 94-71656 the Government would raise the same issues raised in the intervention in G.R. No. 117263.

Accordingly, I vote to deny the motion for intervention in G.R. No. 115044.

II

However, I vote to partially grant the petition in G.R. No. 117263 insofar as wagering or betting on the results order and the preliminary mandatory injunction issued by respondent Judge cannot legally and validly allow such wagering and betting. It was precisely for this reason that I earlier voted to grant a temporary restraining order in G.R. No. 115044 and G.R. No. 117263 to restrain wagering or betting. I wish to reiterate here what I stated in my supplemental concurring opinion in G.R. No. 115044:


Secondly, to make my position clear that the dismissal of the petition should not be construed as compelling the City of Manila to authorize gambling by allowing betting on the results of jai-alai. The decision merely dismissed the petition because the Court found " no abuse of discretion, much less lack of excess of jurisdiction, on the part of the respondent judge" in issuing the challenged order directing the petitioner to issue a permit or license in favor of the private respondent pursuant to Ordinance No. 7065. That order was to enforce the final and executory decision of the Regional Trial Court of 9 September 1988 in Civil Case No. 88-45660, the appeal therefrom to the Court of Appeals by the City of Manila having been withdrawn by it on 9 February 1989. That decision ordered the City of Manila to immediately issue to the private respondent "the permit/license required under Ordinance No. 7065." The City of Manila did in fact issue the required permit or license to the private respondent for the operation of the jai-alai in Manila for the years 1988 to 1992. Nevertheless, when the jai-alai complex was almost completed, the City Mayor refused to renew the Mayor's Permit.

There is a clear distinction between the initial duty of the City Mayor under Ordinance No. 7065 to issue the necessary license or permit to establish the jai-alai fronton and to maintain and operate the jai-alai, and his subsequent discretion to impose other terms and conditions for the final contractrelative to such operation. The trial court specifically said so in its decision of 9 September 1989. Thus:

A suggestion has been made in the Answer that a writ of mandamus will not lie against respondents, particularly the Mayor, because "the availment of the franchise . . . is subject to the terms and conditions which the respondent Mayor may impose."

A careful reading however, of Ordinances 7065 will readily show that the discretion, if any, allowed respondent Mayor, under the ordinance, will be exercisable only after the permit,

which he is mandated to issue, had been issued and the jai-alai fronton is already operational. The ordinance stipulates that the Mayor is authorized "to allow and permit petitioner to establish, maintain and operate a jai-alai in the City of Manila," under the five conditions enumerated in subparagraphs "a" to "e" of Section 1 of the Ordinance. By a simple reading of these "terms and conditions" patently shows that subparagraphs "b" to "e" are clearly conditions that will only come into play after the jai-alai has been put up or established; while the condition under subparagraph "a" appears to have been complied with satisfactorily by the petitioner, since no objection at all has been made by respondents to the proposed site for jai-alai fronton, that is, the 25,000 sq. m. land area behind the present Harrison Plaza Complex located at Ermita, Manila.

Consequently, the Mayor's Permit sough to be renewed or the motion before the lower court to compel the Mayor to renew it, has reference only to subparagraph (a), Section 1 of Ordinance No. 7065. The renewal of the permit can by no stretch of the imagination be taken as a final contract between the private respondent and the City of Manila for otherwise it would remove the power and authority of the Mayor under the ordinance to impose "other terms and conditions as he may prescribe for good reasons of general interest."

It follows then that the Mayor's Permit ordered by the trial court to be issued to the private respondent is not a license or authority to allow betting or wagering on the results of the jai-alaigames. Jai-alai is a sport based on skill. Under Article 197 of the Revised Penal Code, before it was amended by P.D. No. 1602, betting upon the result of any boxing or other sports contests was penalized with arresto menor or a fine not exceeding P200.00, or both. Article 2019 of the Civil Code provides that "[b]etting


on the results of sports, athletic competitions, or games of skill may be prohibited by local ordinances."

P.D. No. 483, enacted on 13 June 1974, penalizes betting, game fixing or point shaving and machinations in sports contests, including jai-alai. Section 2 thereof expressly provides:

Sec. 2. Betting, game fixing, point shaving or game machinations unlawful. — Game fixing, point shaving, machination, as defined in the preceding Section, in connection with the games of basketball, volleyball, softball, baseball; chess; boxing bouts, "jai-alai," "sipa," "pelota" and all other sports contests, games; as well as betting therein except as may be authorized by law, is hereby declared unlawful.

The succeeding Section 3 provides for the penalties.

On 11 June 1978, P.D. No. 1602 (75 O.G. No. 15, 3270), Prescribing Stiffer Penalties on Illegal Gambling, was enacted to increase the penalties provided in various "Philippine Gambling Laws such as Articles 195-199 of the Revised Penal Code (Forms of Gambling and Betting), R.A. No. 3063 (Horse Racing Bookies), P.D. No. 449 (Cockfighting), P.D. No. 483 (Game Fixing), P.D. No. 510 (Slot Machines) in relation to Opinion Nos. 33 and 97 of the Ministry of Justice, P.D. No. 1306 (Jai-alai Bookies), and other City and Municipal Ordinances on gambling all over the country." Section 1 thereof reads:

xxx xxx xxx

Both P.D. No. 483 and P.D. No. 1602 were promulgated in the exercise of the police power of the State.

Pursuant to Section 2 of P.D. No. 483, which was not repealed by P.D. No. 1602 since the former is not inconsistent with the latter in that respect, betting in

jai-alai is illegal unless allowed by law. There was such a law. P.D. No. 810, which authorized the Philippine Jai-Alai and Amusement Corporation as follows:

Sec. 2. The grantee or its duly authorized agent may offer, take or arrange bets within or outside the place, enclosure or court where the Basque pelota games are held:Provided, That bets offered, taken or arranged outside the place, enclosure or court where the games are held, shall be offered, taken or arranged only in places duly licensed by the corporation, Provided, however, That the same shall be subject to the supervision of the Board. No person other than the grantee or its duly authorized agents shall take or arrange bets on any pelotari or on the game, or maintain or use a totalizator or other device, method or system to bet on any pelotari or on the game within or without the place, enclosure or court where the games are held by the grantee. Any violation of this section shall be punished by a fine of not more than two thousand pesos or by imprisonment of not more than six months, or both in the discretion of the Court. If the offender is a partnership, corporation or association, the criminal liability shall devolve upon its president, directors or any officials responsible for the violation.

However, as stated in the ponencia, P.D. No. 810 was repealed by E.O. No. 169 issued by then President Corazon C. Aquino. I am not aware of any other law which authorizes betting in jai-alai. It follows then that while the private respondent may operate the jai-alai fronton and conduct jai-alaigames, it can do so solely as a sports contest. Betting on the results thereof, whether within or off-fronton, is illegal and the City of Manila cannot, under the present state of the law, license such betting. The dismissal of the petition in this case sustaining the


challenged orders of the trial court does not legalize betting, for this Court is not the legislature under our system of government.

Accordingly, I vote to grant the petition in G.R. No. 117263 and to set aside the questioned temporary restraining order and the writ of preliminary mandatory injunction but only to the extent that they allow wagering or betting on the results of jai-alai.

QUIASON, J., dissenting:

I vote: (1) to deny the motion to intervene and motion for reconsideration qua petition for quo warranto in G.R. No. 115044, and (2) to dismiss the petition for certiorari in G.R. No. 117263. I shall set forth the reason why.

I

Following the decision of the First Division of this Court on September 1, 1994 in G.R. No. 115044, the City of Manila issued on September 7, 1994 the Mayor's permit and Municipal license to Associate Development Corporation (ADC) upon the latter's payment of the required fees (G.R. No. 115044, Rollo, pp. 253-254, 301).

In his letter dated September 8, 1994 to President Fidel V. Ramos, Chairman Francisco Sumulong, Jr. of the Games and Amusement Board (GAB) said that he would not authorize the opening of ADC's jai-alai unless he was given a clearance from the President and until after ADC had complied with "all the requirements of the law, such as, the distribution of wager funds, [and] licensing of Pelotaris and other personnel" (Exh. F, Civil Case No. 94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, p. 304).

In the position paper annexed to the letter, the GAB Chairman recommended the reopening and operation of the jai-alai, stating in pertinent part:

There are several reasons to justify the operation of Jai-Alai, first and foremost of which is the generation of much needed revenues for the national and local governments. Other significant justifications are its tourism potential, the provision for employment, and the development of Basque pelota as an amateur and professional sport.

Specifically, the establishment, maintenance and operation of a Jai-Alai fronton in Metro-Manila shall be by virtue of the original and still legally existing franchise granted to the Associated Development Corporation (ADC) by the City Government of Manila in 1971 (G.R. No. 115044, Rollo, p. 350; Emphasis supplied).

On September 9, 1994, Chairman Sumulong granted ADC provisional authority to open, subject to the following conditions:

1. We prohibit you from offering to the public "Pick 6" and "winner Take All" betting events until such time as this Board shall have approved the rules and regulations prepared by management governing the mechanics of these events.

2. Licensing of officials and employees whose duties are connected directly or indirectly with the supervision and operation of jai-alai games, as mandated by Executive Order 141 dated February 25, 1965, shall be fully complied with by you within thirty 930) days from date hereof.

3. Any other deficiencies we may discover will be accordingly rectified by management as directed by the Board.

4. Failure to comply with any of the rules and regulations prescribed by existing laws and lawful orders of the Board, may justify withdrawal/revocation of this provisional authority without prejudice to such administrative sanctions that the Board may deem proper to impose under the circumstances.

5. By accepting this provisional authority, Associated Development Corporation (ADC) is deemed to have agreed to the conditions above provided (G.R. No. 117263, Rollo, pp. 8-9, 49, 238, 288).

On September 12, 1994, the GAB issued to ADC jai-alai License No. 94-008 upon payment of the corresponding permit fee. The license reads as follows:


Under and by virtue of the provisions of Section 7 of Executive Order No. 392, series of 1950, in conjunction with Executive order No. 824, series of 1982, this Board has this date granted ADC Represented by Gen. Alfredo B. Yson permit to hold or conduct a [sic] jai-alai contests/exhibition on September 12 to 14, 1994, at the harrison Plaza Complex, located in Harrison Plaza, Malate, Manila.

This permit is issued subject to the condition that the promoter shall comply with the provisions of Executive order No. 824, S. 1982, the rules and regulations, orders and/or policies adopted or which may hereafter be adopted by the Board, and with the conditions set forth in the application for which this permit has been granted; and failure on the part of the promoter to comply with any of which shall be deemed sufficient cause for the revocation thereof (G.R. No. 117263, Rollo, pp. 50, 238, 289).

In compliance with GAB Rules and Regulations, ADC submitted its programs of jai-alai events for approval (Exhs. O, P and Q, civil Case No. 94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, pp. 290-292).

It appears that as early as may 23, 1994, Jai-Alai de Manila (the business name of ADC's fronton) had inquired from GAB about the laws and rules governing its jai-alai operation. In reply, chairman Sumulong furnished Jai-Alai de Manila with copies of E.O. Nos. 392 and 824 and the Revised rules and Regulations for basque pelota Games (Exhs. K and L, Civil Case No. 94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, pp. 301-302).

On September 13, 1994, Executive Secretary Teofisto Guingona, jr. issued the following Directive to GAB Chairman Sumulong:

In reply to your letter dated 9 September 1994 requesting for the President's approval to re-open the Jai-Alai in Manila, please be informed that after a review and study of existing laws, there is sufficient basis to hold in abeyance the operation of the Jai-Alai until the following legal questions are properly resolved:

1. Whether P.D. 771 which revoked all existing Jai-Alai franchises issued by

local government 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 valid 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.

This Office has directed the solicitor General to bring before the proper court the foregoing issues for resolution. Pending such resolution, you are directed to hold in abeyance the grant of authority, or if any has been issued, to withdraw such grant of authority, to Associated Development corporation to operate he Jai-Alai in the city of Manila (G.R. No. 117263, Rollo, pp. 7-8, 48, 1939; Emphasis supplied).

On September 14, 1994, Chairman Sumulong issued a Memorandum to ADC that:

In view of the directive from the Office of the President dated 13 September 1994, Associated Development Corporation is hereby ordered to cease and desist issues raised in the said directive are resolved by the proper court. The provisional authority issued pending further scrutiny and evaluation to ADC on 9 September 1994 is hereby withdrawn (G.R. No. 117263, Rollo, pp. 51, 194; Emphasis supplied).


On September 15, 1994, ADC filed with the Regional Trial Court, Branch 4, Manila a petition for prohibition,mandamus, injunction and damages with prayer for temporary restraining order or writ of preliminary injunction (Case No. 94-71656) against Executive Secretary Guingona and Chairman Sumulong assailing the former's Directive and the latter's Memorandum (G.R. No. 117263, Rollo, pp. 3, 20-21, 53-75, 167-168).

On the same day, Judge Vetino Reyes issued a temporary restraining order enjoining Executive Secretary Guingona and Chairman Sumulong from implementing their respective Directive and memorandum (G.R. No. 117263, Rollo, pp. 2, 10, 44).

On September 16, 1994, Executive Secretary Guingona and Chairman Sumulong filed an urgent motion to recall the temporary restraining order, with opposition to the motion for issuance of a writ of preliminary injunction. The said motion was reiterated in the supplemental motion filed on September 20, 1994 (G.R. No. 117263, Rollo, pp. 66-75, 76-86).

Meanwhile, on September 16, 1994, the Republic of the Philippines, represented by GAB, filed in G.R. No. 115044 a motion for intervention; for leave to file a motion for reconsideration-in-intervention; to admit the attached motion for reconsideration-in-intervention; and to refer the case to the Court en banc (Rollo, pp. 219-249).

Subsequently, and on the different dates, the Republic filed in G.R. No. 115044 the following pleadings: "Motion for Leave to File Supplemental Motion for Reconsideration-In-Intervention" (Rollo, pp. 262-265); "Supplemental Motion for Reconsideration-In-Intervention" (Rollo, pp. 266-280); "Motion for Leave to File Second Supplemental Motion for Reconsideration-In-Intervention and to Admit attached Second Supplemental Motion For Reconsideration-In-intervention" (Rollo, pp. 380-382); and "Second Supplemental Motion for Reconsideration-In-Intervention" (Rollo, pp. 383-400).

Acting on the motion of the Republic dated September 16, 1994, the First Division referred, in its Resolution dated September 19, 1994, Case G.R. No. 115044 to the Court en banc, and the latter accepted the same in its Resolution dated September 20, 1994 (Rollo, p. 255).

In the meantime, Chairman Sumulong resigned and Dominador R. Cepeda, jr. was appointed as his successor.

On September 30, 1994, Judge Reyes issued a writ of preliminary injunction (G.R. No. 117263, Rollo, pp. 2, 47).

On October 11, 1994, Executive Secretary Guingona and GAB Chairman Cepeda, Jr. filed with this Court a petition for certiorari, prohibition and mandamus (G.R. No. 117263, Rollo, pp. 1-151) and on October 24, 1994, a supplemental petition (G.R. No. 117263, Rollo, pp. 161-165, 166-306). Petitioners assailed the following issuances of Judge Reyes Civil Case No. 94-71656:

(1.) Temporary Restraining Order dated September 15, 1994 directing Executive Secretary Guingona and chairman Sumulong to desist from enforcing the Directive dated September 13, 1994 and the memorandum dated September 15, 1994 (Rollo, p. 44);

(2.) Order dated September 25, 1994 denying the Urgent Motion to Recall Temporary Restraining Order and the Urgent Supplemental Motion to Recall Temporary Restraining Order (Rollo, p. 46);

(3.) Order dated September 30, 1994 directing the issuance of a Writ of preliminary Injunction directed against the aforesaid Directive and Memorandum (Rollo, p. 47);

(4.) order dated October 19, 1994 granting ADC's Motion to Amend the petition to Conform to the Evidence and directing the issuance of a writ of preliminary mandatory injunction "directing (Executive Secretary and the GAB Chairman), their successors, representatives and any government office/agency acting for an in their behalf or in implementation of their orders earlier enjoined by a writ of preliminary injunction issued by this court on September 30, 1994, to issue the necessary authority, licenses and working permits to . . . Associated Development Corporation, and its personnel and players (Rollo, pp. 216-217).

They prayed that the trial court be enjoined from conducting further proceedings in Civil Case No. 94-71656 and that said case be dismissed. they also filed a motion for consolidation of G.R. No. 117263 with G.R. No.


115044 (G.R. No. 117263, Rollo, pp. 152-160). As prayed for, we considered the two cases together.

In their petition in G.R. No. 117263, Executive Secretary Guingona and Chairman Cepeda claimed that ADC had no clear right to the issuance of the preliminary mandatory injunction because:

(1) ADC had no legislative franchise;

(2) ADC admitted in G.R. No. 115044 that GAB had no authority to issue the license or permit subject of the order in question; and

(3) Mandamus was not available to compel the performance of a discretionary function (G.R. No. 117263, Rollo, pp. 182-189).

On November 2, 1994, ADC and Judge Reyes filed their consolidated Comment to the petition and supplemental petition (G.R. No. 117263, Rollo, pp. 230-305).

On November 25, 1994, the Republic, Executive Secretary Guingona and GAB Chairman Cepeda moved for the issuance of a restraining order enjoining Judge Pacquing and Judge Reyes from enforcing their questioned orders and ADC from operating the jai-alai fronton (G.R. No. 17263, Rollo, pp. 629-635). Action on the motion deferred.

II

G.R. No. 115044Motion for Intervention

The Republic of the Philippines (Republic) represented by GAB justifies its belated intervention in G.R. No. 115044 on the grounds that "it has an interest involved in this case and will be affected by the Decision dated September 1, 1994" (G.R. No. 115044, Rollo, p. 225).

The purpose of its intervention is to nullify the decision of Judge Augusto E. Villarin of the Regional Trial Court, Branch 40, Manila, dated September 1, 1994" (G.R. No. 115044, Rollo, p. 225).

The purpose of its intervention is to nullify the decision of Judge Augusto E. Villarin of the Regional Trial Court, Branch 40, Manila, dated September 9, 1989 in Civil Case No. 88-45660, which upheld the validity of Ordinance No. 7065 of the City of Manila granting ADC a franchise to operate a jai-alai fronton. Mayor Gemiliano Lopez appealed said decision to the Court of Appeals, but on February 9, 1989, he filed a Withdrawal of Appeal. The Court of Appeals approved the withdrawal in a resolution dated May 5, 1989. An entry of judgment was made by the court of Appeals on May 26, 1989 and by the Regional Trial Court, branch 40, Manila, on October 27, 1992.

In 1991, the City of Manila filed an action to annul the franchise of ADC with the Regional Trial Court, Branch 23, Manila (Civil Case No. 91-58913). The complaint was dismissed on December 21, 1991. No appeal was taken from said dismissal of the case.

The City of Manila filed with this Court a petition for declaratory judgment to nullify the franchise of ADC (G.R. No. 101768). The petition was dismissed in a resolution dated October 3, 1991 "for lack of jurisdiction."

Three members of the Sangguniang Panglunsod of Manila also filed with the Regional Trial Court, Branch 37, Manila, a petition to compel Mayor Lopez to cancel the permit and license he issued in favor of ADC pursuant to ordinance No. 7065 (Civil Case No. 91-58930). The petition was dismissed on June 4, 1992. No appeal was taken from said dismissal of the case.

In the Motion for Reconsideration-In-Intervention, Supplemental Motion for Reconsideration-in-Intervention and Second Supplemental Motion for Reconsideration-in-Intervention, the Republic merely claimed that Ordinance No. 7065 had been repealed by P.D. No. 771 (Rollo, pp. 228-248), that the authority to issue permits and licenses for the operation of jai-alai had been transferred to GAB by E.O. No. 392 of President Quirino effective July 1, 1951 and that ADC was never issued a franchise by Congress (Rollo, pp. 383-390). Nowhere in its pleadings did the Republic point out where the first Division erred in resolving the two grounds of the petition for certiorari in G.R. No. 115044, which were:

(1) The decision of Judge Villarin dated September 9, 1988 in Civil Case No. 88-45660 is null and void for failure to rule that P.D. No. 771 had revoked Ordinance No. 7065; and


(2) The decision of Judge Villarin could not be executed by a mere motion filed on March 14, 1994, or more than five years and six months after its promulgation.

In resolving the first issue, the First Division of this court explained that there was no way to declare the Villarindecision null and void because the trial court had jurisdiction over the subject matter of the action and if it failed to rule that ordinance No. 7065 was nullified by P.D. No. 771, that was only an error of judgment. The First Division noted the distinction between a void and an erroneous judgment and between jurisdiction and the exercise of jurisdiction.

In Tan v. Intermediate Appellate Court, 163 SCRA 752 (1988), the Court held:

It is settled jurisprudence that except in the case of judgments which are void ab initio or null and voidper se for lack of jurisdiction which can be questioned at any time — and the decision here is not of this character — once a decision becomes final, even the court which has rendered it can no longer alter or modify it, except to correct clerical errors or mistakes. otherwise, there would be no end to litigation, thus setting to naught the main role of courts of justice, which is, to assist in the enforcement of the rule of law and the maintenance of peace and order, by settling justifiable controversies with finality. (See also Fabular v. Court of Appeals, 119 SCRA 329 [1982]; Fariscal Vda. de Emnas v. Emnas, 95 SCRA 470 [1980]; Ocampo v. Caluag, 19 SCRA 917 [1967]).

As to the second issue, the First Division held that the five-year period for executing a judgment by simple motion under Section 6 of Rule 39 of the Revised Rules of Court should be counted from the finality of the judgment and not from the date of its promulgation as was done by Mayor Lim and the City of Manila. Inasmuch as the Villarindecision was appealed to the Court of Appeals and the authority to withdraw the appeal was approved by the Court of Appeals only on may 26, 1989, the five-year period should be counted, at the earliest, from May 26, 1989. Reckoning the five-year period from said date, the motion for execution of the Villarin decision was filed timely on March 14, 1994.

Intervention as contemplated by Section 9, Rule 12 of the Revised Rules of Court is a proceeding whereby a third person is permitted by the court

"before or during a trial" to make himself a party by joining plaintiff or uniting with defendant or taking a position adverse to both of them Gutierrez v. Villegas, 5 SCRA 313 [1962]). the term "trial" is used in its restrictive sense and means the period for the introduction of evidence by both parties (Bool v. Mendoza, 92 Phil. 892 [1953]; Provincial Government of Sorsogon v. Stamatelaky, 65 Phil. 206 [1937]). The period of trial terminates when the period of judgment begins (El Hogar Filipino v. Philippine National Bank, 64 Phil. 582 [1937]).

Intervention as an action is not compulsory. As deduced from the permissive word "may" in the rule, the availment of the remedy is discretionary on the courts (Garcia v. David, 67 Phil. 279 [1939]). an important factor taken into consideration by the courts in exercising their discretion is whether the intervenor's rights may be fully protected in a separate proceeding (Peyer v. Martines, 88 Phil. 72 [1951]).

The case of Director of Lands v. Court of Appeals, 93 SCRA 238 (1979), can not, serve as authority in support of the Republic's intervention at this late stage. while said case involved an intervention for the first time in the Supreme court, the motion to be allowed to intervene was filed before the appeal could be decided on the merits. The intervention allowed in Republic v. Sandiganbayan, G.R. No. 96073, Resolution, March 3, 1992, was also made before the decision on the merits by this Court. In contrast, the intervention of the Republic was sought after this Court had decided the petition in G.R. No. 115044 and petitioners had complied with and satisfied the judgment. While the intervention in Director of Lands was in a case that was timely appealed from the Regional Trial Court to the Court of Appeals and from the Court of Appeals to the Supreme Court, the intervention of the Republic was in a case that had become final and executory more than five years prior to the filing of the motion to intervene.

As of September 16, 1994, therefore, when the republic moved to intervene, there was no longer any pending litigation between the parties in G.R. no. 115044. Intervention is an auxiliary and supplemental remedy to an existing, not a settled litigation (cf. Clareza v. Rosales, 2 SCRA 455 [1961]). An intervention was disallowed in a case which has becomes final and executory (Trazo v. Manila Pencil Co., 77 SCRA 181 [1977])

The case of Suson v. Court of Appeals, 172 SCRA 70 (1989) invoked by the Republic (G.R. No. 117263, Rollo, pp. 517-518) is inappropriate because the intervention therein was before the trial court, not in this Court.


In its Reply, the Republic admitted that the First Division only ruled on the procedural issues raised in the petition and not on the constitutionality of P.D. No. 771. It even urged that GAB was not a party to the case and therefore was not bound by the Villarin decision because under Section 49 of Rule 39, a judgment is conclusive only "between the parties and their successor-in-interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity" (Rollo, pp. 228-234, 431).

With more reason then that the Republic should have ventilated its claim against ADC in a separate proceeding.

Lastly, an intervenor should not be permitted to just sit idly and watch the passing scene as an uninterested overlooker before he wakes up to seek judicial relief (Pacursa v. Del Rosario, 24 SCRA 125 [1968]).

The Office of the President was aware of the plans of ADC to start operation as early as 1988. On May 5, 1988, ADC informed said Office of its intention to operate under Ordinance No. 7065. The said Office perfuntorily referred the letter of ADC to the Manila mayor, implying that the matter was not the concern of the National Government.

Motion qua Quo Warranto petition

Be that as it may, the Court may consider the motion to intervene, motion for reconsideration-in-intervention, supplemental motion for reconsideration-in-intervention and second supplemental motion-in-intervention as a petition for quo warranto under Rule 66 of the revised Rules of Court. In the liberal construction of the Rules in order to attain substantial justice, the Court has treated petitions filed under one Rule as petitions filed under the more appropriate Rule (Davao Fruits Corporation v. Associated Labor Union, 225 SCRA [1993]).

In quo warranto, the government can require a corporation to show cause by what right it exercises a privilege, which ordinarily can not legally be exercised except by virtue of a grant from the state. It is a proceeding to determine the right to the use of a franchise or exercise of an office and to oust the holder from its enjoyment if his claim is not well-founded (Castro v. Del Rosario, 19 SCRA 196 [1967]).

All the essential requisites for a petition for quo warranto are compresent. The motions were filed by the Solicitor General for the Republic of the Philippines, represented by GAB, to question the right of ADC to operate and maintain the jai-alai.

The motions qua petition for quo warranto assert that the authority of the City of Manila to issue to ADC a jai-alai franchise in 1971 had been withdrawn by E.O. No. 392 in 1951 and by R.A. No. 954 in 1954 and that assuming the issuance of the franchise to ADC in 1971 under Ordinance No. 7065 was valid, such franchise, together with whatever authority of the City of Manila to grant the same, was voided by P.D. No. 771 in 1975.

In the case of Stone v. State of Mississippi, 101 U.S. 814, cited by the Republic, the State Attorney General resorted to a quo warranto proceeding to question the authority of petitioner therein to operate and maintain a gambling establishment.

The franchise of ADC granted by the City of Manila under Ordinance No. 7065 reads as follows:

AN ORDINANCE AUTHORIZING THE MAYOR TO ALLOW AND PERMIT THE ASSOCIATED DEVELOPMENT CORPORATION TO ESTABLISH, MAINTAIN AND OPERATE A JAI-ALAI IN THE CITY OF MANILA, UNDER CERTAIN TERMS AND CONDITIONS AND FOR OTHER PURPOSES.

Be it ordained by the Municipal Board of the City of Manila, that:

Sec. 1. The Mayor is authorized, as he is hereby authorized to allow and permit the Associated Development Corporation to establish, maintain and operate a jai-alai in the City of Manila, under the following terms and conditions and such other terms and conditions as he (the Mayor) may prescribe for good reasons of general interest:

a. That the construction, establishment and maintenance of the jai-alai shall be at a place permissible under existing zoning ordinances of Manila;



c. That the City of Manila will received a share of 2 ½% on the annual gross receipts on all wagers or bets, ½% of which will accrue to the Games and Amusements Board as now provided by law;

d. That the corporation will, in addition, pay to the city an annual license fee of P3,000.00 and a daily permit fee of P200.00;

e. That the corporation will, to insure its faithful compliance of all the terms and conditions under this ordinance, put up a performance bond from a surety acceptable to the city, in the amount of at least P30,000.00.

Sec. 2. The Mayor and the City Treasurer of their duly authorized representatives are hereby empowered to inspect at all times during regular business hours the books, records and accounts of the establishment, as well as to prescribe the manner in which the books and financial statement of the entrepreneur shall be kept.

Sec. 3. This ordinance shall take effect upon its approval.

Enacted originally by the Municipal Board on September 7, 1971; vetoed by the Mayor on September 27, 1971; modified and amended by the Municipal Board at its regular session today, October 12, 1971.

Approved by His Honor, the Mayor on 13 November 1971.

The said Ordinance was enacted pursuant to Section 18 (jj), the Charter of the City of Manila (R.A. No. 409), which took effect in 1949. The charters of

two other cities — Quezon City and Cebu City — contained a similar delegation of authority to grant jai-alai franchises.

Said Section 18(jj) provides:

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, billiards, pools, horse or dog races, cockpits, jai-alai, roller of ice-skating or any sporting or athletic contests, as well as grant exclusive rights to establishments for this purpose, notwithstanding any existing law to the contrary.

A. It is the posture of the Republic that the power of local governments to issue franchisers for the operation of jai-alai was "consolidated and transferred" to the GAB under E.O. No. 392. In its Supplemental Motion for reconsideration-In-Intervention filed on September 27, 1994, the Republic averred:

12. As early as 1951, the power of the local governments to issue licenses and permits for the operation of jai-alai was "consolidated and transferred" to the Games and Amusements Board under E.O. No. 392 issued by then President Elpidio Quirino (sic) took effect on January 1, 1951. Thus, in 1971, the City of Manila was without authority to enact an ordinance authorizing the City Mayor to issue a license/permit to private respondent for the operation of jai-alai in Manila (Rollo, pp. 271-272).

Furthermore, the republic alleged:

13. Such consolidation and transfer of power manifest the policy of the Government to centralize the regulation, through appropriate institutions, of all games of chance authorized by existing franchises of permitted by law. . . . (Rollo, p. 272).


There is no need to dwell upon this argument for suprisingly it was the Republic itself that repudiated it albeit after wrongfully attributing the argument to ADC.

In its Reply filed on November 9, 1994, the Republic stated that: "Contrary to respondent ADC's claim, it is not the position of the GAB that it is the body which grants franchisers for the jai-alai either under E.O. No. 392 or under P.D. No. 771 . . ." (Rollo, pp. 420).

For certain, E.O. No. 392 merely reorganized the different departments, bureaus, offices and agencies of the government. There is absolutely nothing in the executive issuances which vests on GAB the power to grant, much less revoke, franchisers to operate jai-alais.

B. After its volte-face, the Republic next claims that R.A. No. 954 had repealed Section 18 (jj) and that after the effectivity of said law, only Congress could grant franchise to operate jai-alais.

Section 4 of R.A. No. 954 provides:

No person, or group of persons, other than the operator or maintainer of a fronton with legislative franchise to conduct basque pelota (jai-alai), shall offer, take or arrange bets on any basque pelota game or event, or maintain or use a totalizer or other device, method or system to bet or gamble or any basque pelota game or event.

Republic Act No. 954 did not expressly repeal Section 18 (jj). In such a case, if there is any repeal of the prior law by the latter law, it can only be by implication. Such kind of repeals is not favored. There is even a presumption against repeal by implication (The Philippine American Management Co. Inc. v. The Philippine American Management employees Association, 49 SCRA 194 [1973]).

In the same absence of an express repeal, a subsequent law cannot be construed as repealing a prior law unless an irreconcilable inconsistency and repugnancy exist in the terms of the new and old law (Iloilo Palay and Corn Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]).

But more importantly, the rule in legal hermeneutics is that a special law, like the Charter of the City of Manila, is not deemed repealed by a general law,

like R.A. No. 954 (Commissioner of Internal Revenue v. Court of Appeals, 207 SCRA 487 [1992]).

In a way also, Ordinance No. 7065 can be considered a "legislative franchise" within the purview of R.A. No. 954, having been enacted by the Municipal Board of the City of Manila pursuant to the powers delegated to it by the legislature. A grant, under a delegated authority, binds the public and is considered the act of the state. "The franchise [granted by the delegate] is a legislative grant, whether made directly by the legislature itself or by any one of its properly constituted instrumentalities" (36 Am Jur 2d. 734).

As held in Wright v. Nagle, 101 U.S. 921, the grant of a franchise by the legislature may be done in two ways:

It may exercise this authority by direct legislation, or through agencies duly established having power for that purpose. This grant when made binds the public, and is, directly or indirectly, the Act of the State. The easement is a legislative grant, whether made directly by the legislature itself, or by any one of its properly constituted instrumentalities (Justice of Pike Co. v. Plank road, 11 Ga. 246; Emphasis supplied).

If the intention of Congress in enacting R.A. No. 954 was to repeal Section 18 (jj), it could have used explicit language to that effect in order not to leave room for interpretation.

If R.A. No. 954 repealed Section 18 (jj), why did President Marcos still issue P.D. No. 771, expressly revoking the authority of the local governments to issue jai-alai franchises? It can never be presumed that the President deliberately performed useless acts.

C. The claim of the Republic that P.D. No. 771 had removed the power of local governments to grant franchises for the maintenance and operation of jai-alai is a non-issue. The issue raised by ADC is whether Section 3 of P.D. No. 771 validly cancelled Ordinance No. 7065, an issue entirely different from the claim of the Republic that P.D. No. 771 had revoked the power of the City of Manila to grant jai-alai franchisers.

Insofar as it is applied to Ordinance No. 7065, Section 3 of P.D. No. 771 suffers from constitutional infirmities and transgresses several constitutional provisions. Said Section 3 provides:


All existing franchisers and permits issued by local governments are hereby revoked and may be renewed only in accordance with third decree.

Section 3 violated the equal protection clause (Section 1 of Article IV) of the 1973 Constitution, which provided:

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 the laws.

Less than two months after the promulgation of P.D. no. 771, President Marcos issued P.D. No. 810, granting the Philippine Jai-Alai and Amusement Corporation (PJAC) a franchise to operate jai-alai within the Greater Manila Area. It is obvious that P.D. No. 771 was decreed to cancel the franchise of ADC so that the same could be given to another entity under P.D. No. 810.

A facially neutral statute (P.D. No. 771) may become discriminatory by the enactment of another statute (P.D. No. 810) which allocates to a favored individual benefits withdrawn under the first statute (Ordinance No. 7065), and when there is no valid basis for classification of the first and second grantees. The only basis for distinction we can think of is that the second grantee was Benjamin Romualdez, a brother-in-law of President Marcos.

Section 3 violated the due process clause of the Constitution, both in its procedural and substantive aspects. The right to due process is guaranteed by the same Section 1 of Article IV of the 1973 Constitution.

Ordinance No. 7065, like any franchise, is a valuable property by itself. The concept of "property" protected by the due process clause has been expanded to include economic interests and investments. The rudiments of fair play under the "procedural due process" doctrine require that ADC should at least have been given an opportunity to be heard in its behalf before its franchise was cancelled, more so when the same franchise was given to another company.

Under the "substantive due process" doctrine, a law may be voided when it does not relate to a legitimate end and when it unreasonably infringes on contractual and property rights. The doctrine as enunciated in Allgeyer v. Louisiana, 165 U.S. 578 (1897) can be easily stated, thus: the government has to employ means (legislation) which bear some reasonable relation to a

legitimate end (Nowak, Rotunda and Young, Constitutional Law 436, 443 [2d ed]).

When President Marcos issued P.D. No. 771, he did not have public interest in mind; otherwise, he would have simply outlawed jai-alai as something pernicious to the public. Rather, all what he wanted to accomplish was to monopolize the grant of jai-alai franchisers.

The motivation behind its issuance notwithstanding, there can be no constitutional objection to P.D. No. 771 insofar as it removed the power to grant jai-alai franchisers from the local governments. We said so in Basco v. Pagcor, 197 SCRA 52 (1991). The constitutional objection arises, however, when P.D. No. 771 cancelled al the existing franchises. We search in vain to find any reasonable relation between Section 3 of P.D. No. 771 and any legitimate ends of government intended to be achieved by its issuances. Besides, the grant of a franchise to PJAC exposed P.D. No. 771 as an exercise of arbitrary power to divest ADC of its property rights.

Section 3 also violated Section 1 of Article VIII of the 1973 Constitution, which provided:

Every bill shall embrace only one subject which shall be expressed in the title thereof.

The title of P.D. No. 771 reads as follows:

REVOKING ALL POWERS AND AUTHORITY OF LOCAL GOVERNMENT 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 GAMING.

The title of P.D. No. 771 refers only to the revocation of the power of local governments to grant jai-alai franchises. It does not embrace nor even intimate the revocation of existing franchises.

Lastly, Section 3 impaired the obligation of contracts prohibited by Section 11 of Article IV of the 1973 Constitution.

As authorized by Section 18(jj), Ordinance No. 7065 grants ADC a permit "to establish, maintain and operate a jai-alai in the City of Manila, under the


following terms and conditions and such other terms and conditions as he [the Mayor] may prescribe for good reasons of general interest." (Rollo, p. 24).

Section 11 of Article IV of the 1973 Constitution provided:

No law impairing the obligation of contracts shall be passed.

Any law which enlarges, abridges, or in any manner changes the intention of the parties, necessarily impairs the contract itself (U.S. v. Conde, 42 Phil. 766 [1922]; Clemens v. Nolting, 42 Phil. 702 [1922]). A franchise constitutes a contract between the grantor and the grantee. Once granted, it may not be invoked unless there are valid reasons for doing so. (Papa v. Santiago, 105 Phil. 253 [1959]). A franchise is not revocable at the will of the grantor after contractual or property rights thereunder have become vested in the grantee, in the absence of any provision therefor in the grant or in the general law (Grand Trunk Western R. Co. v. South Bend, 227 U.S. 544).

D. The Republic hypothesized that the said Constitutional guarantees presuppose the existence of a contract or property right in favor of ADC. It claims that Ordinance No. 7065 is not a franchise nor is it a contract but merely a privilege for the purpose of regulation.

Ordinance No. 7065 is not merely a personal privilege that can be withdrawn at any time. It is a franchise that is protected by the Constitution.

The distinction between the two is that a privilege is bestowed out of pure beneficence on the part of the government. There is no obligation or burden imposed on the grantee except maybe to pay the ordinary license and permit fees. In a franchise, there are certain obligations assumed by the grantee which make up the valuable consideration for the contract. That is why the grantee is first required to signify his acceptance of the terms and conditions of the grant. Once the grantee accepts the terms and conditions thereof, the grant becomes a binding contract between the grantor and the grantee.

Another test used to distinguish a franchise from a privilege is the big investment risked by the grantee. In Papa v. Santiago, supra, we held that this factor should be considered in favor of the grantee. A franchise in which money has been expended assumes the character of a vested right (Brazosport Savings and Loan Association v. American Savings and Loan Association, 161 Tex. 543, 342 S.W. 2d. 747).

The cases cited by the Republic to the effect that gambling permits or license issued by municipalities can be revoked when public interest so requires, have never addressed this issue, obviously because there were no significant financial investments involved in the operation of the permits or licenses.

But assuming that Ordinance No. 7065 is a mere privilege, still over the years, the concept of a privilege has changed. Under the traditional form a property ownership, recipients of privileges, benefits or largesse from the government may be said to have no property rights because they have no traditionally recognized proprietary interest therein. The case of Vinco v. Municipality of Hinigaran, 41 Phil. 790 (1917) and Pedro v. Provincial Board of Rizal, 56 Phil 123 (1931), holding that a license to operate cockpits is a mere privilege, belong to this vintage. However, the right-privilege dichotomy has come to an end when the courts have realized that individuals should not be subjected to the unfettered whims of government officials to withhold privileges previously given them (Van Alstyne, The Demise of the Right — Privilege Distinction in Constitutional Law, 81 Harvard L. R. 1439 [1968]). To perpetuate such distinction would leave many individuals at the mercy of government officials and threaten the liberties protected by the Bill of Rights (Nowak, Rotunda and Young, Constitutional Law 546 [2nd ed]).

That a franchise is subject to regulation by the state by virtue of its police power is conceded. What is not acceptable is the Republic's proposition that the power to regulate and supervise includes the power to cancel the franchise altogether.

The stance of the Republic that the gambling franchises it issues are not covered by the constitutional mantle protecting property rights is ill-advised considering that it is planning to operate gambling establishments involving substantial foreign investments in putting up the facilities thereof.

The belabored arguments of the Republic on the evils of gambling fall to the ground upon a showing that ADC is operating under an existing and valid franchise (Rollo, pp. 422-423).

E. The Republic questioned the siting of the ADC's fronton as violative of E.O. No. 135 of President Quirino. Under said executive issuance, no pelota fronton can be maintained and operated "within a radius of 200 lineal meters from any city hall or municipal building, provincial capital building, national capital building, public plaza or park, public school, church, hospital, athletic stadium, or any institution of learning or charity."


According to the certificate issued by the National Mapping Information Authority, the ADC fronton is within the proscribed radius from the Central Bank of the Philippines, the Rizal Stadium, the Manila Zoo, the public park or plaza in front of the zoo, the Ospital ng Maynila, a police precinct and a church (G.R. No. 115044, Rollo, pp. 424-427).

On the other hand, a certificate issued by the Officer-in-charge of the Office of the City Engineer of the City of Manila attests to the fact that not one of the buildings or places mentioned in the certificate submitted by the Republic is within the 200-meter radial distance, "center to center" from the ADC's jai-alai building (Rollo, p. 260). How this variance in measurement came about is a matter that should have been submitted before the trial court for determination.

However, the operative law on the siting of jai-alai establishments is no longer E.O. No. 135 of President Quirino but R.A. No. 938 as amended by R.A. No. 1224.

Under said law only night clubs, cabarets, pavillions, or other similar places are covered by the 200-lineal meter radius. In the case of all other places of amusements except cockpits, the proscribed radial distance has been reduced to 50 meters. With respect to cockpits, the determination of the radial distance is left to the discretion of the municipal council or city board (Sec. 1).

F. The Republic also questions the lack of the period of the grant under Ordinance No. 7065, thus making it indeterminate (G.R. No. 117263, Rollo, pp. 500-505). The ordinance leaves it to the Mayor of the City of Manila to lay down other terms and conditions of the grant in addition to those specified therein. It is up to the parties to agree on the life or term of the grant. In case the parties fail to reach an agreement on the term, the same can be fixed by the courts under Article 1197 of the Civil Code of the Philippines, which provides as follows:

If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a period was intended, the courts may fix the duration thereof.

The courts shall also fix the duration of the period when it depends upon the will of the debtor.

In every case, the courts shall determine such period as may under the circumstances have been probably contemplated by the parties. Once fixed by the courts, the period cannot be changed by them.

III

G.R. No. 117263

The petition in G.R. No. 117263 seeks to nullify the following orders of respondent Judge Reyes:

(1) the Temporary Restraining Order dated September 15, 1994;

(2) the Order dated September 25, 1994; and

(3) the Writ of Preliminary Injunction dated September 30, 1994 (Rollo, pp. 1-2).

The supplemental petition in said case seeks to nullify the Order dated October 19, 1994 (Rollo, pp. 166-225).

According to Executive Secretary Guingona and GAB Chairman Cepeda, respondent Judge Reyes acted without jurisdiction and with grave abuse of discretion in issuing said orders and writ of preliminary injunction because: (1) Civil Case No. 94-71656 was not properly assigned to him in accordance with Section 7, Rule 22 of the Revised Rules of Court; (2) the enforcement of the Directive and Memorandum sought to be enjoined had already been performed or were already fait accompli; and (3) respondent judge pre-empted this Court in resolving the basic issues raised in G.R. No. 115044 when he took cognizance of Civil Case No. 94-71656.

A. At the outset, it should be made clear that Section 7 of Rule 22 of the Revised Rules of Court does not require that the assignment of cases to the different branches of a trial court should always be by raffle. The Rule talks of assignment "whether by raffle or otherwise." What it requires is the giving of written notice to counsel or the parties "so that they may be present therein if they so desire."


Section 7 of Rule 22 provides:

Assignment of cases. In the assignment of cases to the different branches of a Court of First Instance, or their transfer from one branch to another whether by raffle or otherwise, the parties or their counsel shall be given written notice sufficiently in advance so that they may be present therein if they so desire.

However, there may be cases necessitating the issuance of a temporary restraining order to prevent irreparable injury on the petitioner.

To await the regular raffle before the court can act on the motion for temporary restraining order may render the case moot and academic. Hence, Administrative Circular No. 1 dated January 28, 1988 was issued by this Court allowing a special raffle. Said Circular provides:

8.3. Special raffles should not be permitted except on verified application of the interested party who seeks issuance of a provisional remedy and only upon a finding by the Executive Judge that unless a special raffle is conducted irreparable damage shall be suffered by the applicant. The special raffle shall be conducted by at least two judges in a multiple-sala station.

In a case where a verified application for special raffle is filed, the notice to the adverse parties may be dispensed with but the raffle has to "be conducted by at least two judges in a multiple-sala station."

The Republic does not claim that Administrative Circular No. 1 has been violated in the assignment of the case to respondent Judge. The presumption of regularity of official acts therefore prevails.

Going back to Section 7 of Rule 22, this Court has rules in Commissioner of Immigration v. Reyes, 12 SCRA 728 (12964) that the purpose of the notice is to afford the parties a chance to be heard in the assignment of their cases and this purpose is deemed accomplished if the parties were subsequently heard. In the instant case, Executive Secretary Guingona and GAB Chairman Cepeda were given a hearing on the matter of the lack of notice to them of the raffle when the court heard on September 23, 1994 their Motion to Recall Temporary Restraining Order, Urgent Supplemental Motion to Recall Temporary Restraining Order and Opposition to Issuance of a Writ of

Preliminary Issuance of a Writ of Preliminary Injunction (G.R. No. 117263, Rollo p. 434).

Petitioners in G.R. No. 117263 failed to shown any irregularity attendant to the raffle or any prejudice which befell them as a result of the lack of notice of the raffle of Civil Case No. 94-71656.

On the other hand, petitioners never asked for a re-raffle of the case or for any affirmative relief from the trial court and proceeded with the presentation of evidence of ADC in connection with the motion for preliminary injunction.

B. The purpose of a temporary restraining order or preliminary injunction, whether preventive or mandatory, is merely to prevent a threatened wrong and to protect the property or rights involved from further injury, until the issues can be determined after the hearing on the merits (Ohio Oil Co. v. Conway, 279 U.S. 813, 73 L. Ed. 972, 49 S. Ct. 256; Gobbi v. Dilao, 58 Or. 14, 111 p. 49, 113, p. 57). What is intended to be preserved is the status quo ante litem motam or the last actual, peaceable, noncontested status (Annotation, 15 ALR 2d 237).

In the case at bench, the status quo which the questioned orders of Judge Reyes sought to maintain was that ADC was operating the jai-alai pursuant to Ordinance No. 7065 of the City of Manila, the various decisions of the different courts, including the Supreme Court, and the licenses, permits and provisional authority issued by GAB itself.

At times, it may be necessary for the courts to take some affirmative act essential to restore the status quo (Iowa Natural Resources Council v. Van See [Iowa] 158 N.W. 2d. 111).

The right to conduct a business or to pursue one's business or trade without wrongful interference by others is a property right which equity will, in proper cases, protect by injunction, provided of course, that such occupation or vocation is legal and not prohibited by law (Rance v. Sperry & Hutchinson Co., 410 P. 2d 859).

Had not the Directive to close the operation of ADC's jai-alai and the implementing Memorandum been issued, there would have been no need for the issuance of the orders of the Regional Trial Court. The need for said equitable reliefs becomes more evident if we consider that the Executive Secretary himself had entertained doubts as to the legality of his action


because in the same Directive he instructed the Solicitor General to obtain a judicial ruling on the legal issues raised.

C. Respondent Judge Reyes did not pre-empt this Court in deciding the basic issues raised in G.R. No. 115044 when it assumed jurisdiction over Civil Case No. 94-71656 and issued the orders questioned in G.R. No. 117263.

The orders of Judge Reyes are provisional in nature and do not touch on the merits of the case. The issues raised in Civil Case No. 94-71656 are the validity of the Directive and Memorandum, which were issued after the decision of this Court in G.R. No. 115044. The respondent in the civil case before the trial court are not even parties in G.R. No. 115044.

PUNO, J., dissenting:

The petitions at bench involve great principles of law in tension. On balance at one end is the high prerogative of the State to promote the general welfare of the people thru the use of police power; on the opposite end is the right of an entity to have its property protected against unreasonable impairment by the State. courts accord the State wide latitude in the exercise of its police power to bring about the greatest good of the greatest number. But when its purpose is putrefied by private interest, the use of police power becomes a farce and must be struck down just as every arbitrary exercise of government power should be stamped out.

I will confine myself to the jugular issue of whether or not Associated Development Corporation (ADC) still possesses a valid franchise to operate jai-alai in manila. The issue is multi-dimensional considering its constitutional complexion.

First, the matrix of facts. On June 18, 1949, congress enacted Republic Act No. 409, otherwise known as the Charter of Manila. Section 18 (jj) gave to the Municipal Board (now City Council) the following power:

(jj) To tax, license, permit and regulate wagers or betting by the public on boxing, sipa, bowling, billiards, pools, horse or dog races, cockpits, jai-alai, roller or ice skating or any porting or athletic contest, as well as grant exclusive rights to establishments for this purpose, notwithstanding any existing law to the contrary.

On June 20, 1953, congress passed Republic Act No. 954 entitled "An Act to Prohibit Certain Activities in Connection with Horse Races and Basque pelota Games (Jai-Alai) and to Prescribe penalties for its Violation." Sections 4 and 5 of the law provide:

xxx xxx xxx

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, take or arrange bets on any basque pelota game or event, or maintain or use a totalizer or other device, method or system to bet or gamble on any basque pelota game or event.

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 to her 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.

On September 7, 1971, the Municipal Board of Manila approved Ordinance No. 7065 "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."

On September 21, 1972, martial law was declared by then president Ferdinand E. Marcos. The 1971 Constitution, as amended, authorized the former President to exercise legislative powers. Among the laws he decreed is P.D. No. 771, "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." its Text states:

xxx xxx xxx

Sec. 1. Any provision of law to the contrary notwithstanding, the authority of Chartered Cities and other local governments to issue license, permit or any


form of franchise to operate, maintain and establish horse and dog race tracks, jai-alai or other forms of gambling is hereby revoked.

Sec. 2. Hereafter all permit or franchise 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 qualifications of the applicant: Provided, That local governments may, upon clearance from the chief of constabulary and during town fiestas and holidays, continue to issue permits for minor games which are usually enjoyed by the people during such celebrations.

Sec. 3. All existing franchises and permits issued by local government are hereby revoked and may be renewed only in accordance with this Decree.

P.D. No. 771 was enacted on August 20, 1975 and purportedly revoked the permit of ADC to operate. Before two (2) months could elapse or on October 16, 1975, then President Marcos issued P.D. No. 810 granting a franchise to Philippine Jai-Alai and Amusements corporation to conduct jai-alai games in Manila. it is not disputed that his brother-in-law, Mr. Alfredo "Berjo" Romualdez, held the controlling interest in Philippine Jai-alai and Amusements Corporation. apparently, the favored treatment given to Mr. Romualdez and company did not sit well with former President Corazon C. Aquino. On May 8, 1987, she issued Executive Order No. 169 repealing P.D. No. 810. Nevertheless, she allowed P.D. No. 771 to stay in our statutes book.

ADC thought it could resume its jai-alai operation. On May 5, 1988, it sought from then mayor Gemiliano C. Lopez, Jr., of Manila a permit to operate on the strength of Ordinance No. 7065. The request was refused and this Spawned suits 1 all won by ADC. In Civil Case No. 88-45660, filed in Br. 40, RTC, Manila, Judge Augusto E. Villarin ruled that Ordinance No. 7065 created a binding contract between the city of Manila and ADC, and hence, the City Mayor had no discretion to deny ADC's permit. The ruling was appealed to the Court of Appeals where it was docketed as CA-G.R. SP No. 16477. On February 9, 1989, however, Mayor Lopez withdrew the city's appeal. Still, the legal problems of ADC did not disappear. Manila Mayor Alfredo Lim who succeeded Mayor Lopez again refused to issue ADC's permit despite orders of Judge Felipe G. Pacquing. 2 Threatened with

contempt, Mayor Lim filed with this Court G.R. No. 115044, a petition forcertiorari. He alleged that he could not be compelled to enforce the Decision in Civil Case No. 88-45660 as the same is null and void for want of jurisdiction of the court that rendered it. He likewise contended that Ordinance No. 7065 had been revoked by P.D. No. 771. On September 1, 1994, the First division of this court, speaking thru Mr. Justice Camilo Quiason, dismissed Mayor Lim's petition. It held:

xxx xxx xxx

Petitioners failed to appreciate the distinction between a void and an erroneous judgment and between jurisdiction and the exercise of jurisdiction.

Having jurisdiction over the civil case, whatever error may be attributed to the trial court, is simply one of judgment, not of jurisdiction. an error of judgment cannot be corrected by certiorari but by appeal (Robles v. House of Representatives Electoral Tribunal, 181 SCRA 780 [1990]; De Castro v. Delta Motor Sales Corporation, 57 SCRA 344 [1978]; Galang v. Endencia, 73 Phil. 391 [1941].

The issue on the cancellation of Ordinance No. 7065 by president Marcos could have been raised as a special defense in Civil Case No. 88-54660 but was not . . .

The City of Manila should have pursued in the appellate courts its appeal questioning the dismissal of Civil Case No. 91-58913, where the trial court ruled that Mayor Lopez and the city could no longer claim that Ordinance No. 7065 had been cancelled by president Marcos because they failed to raise this issue in Civil Case No. 88-54660.

At any rate, the unilateral cancellation of the franchise, which has the status of a contract, without notice, hearing and justifiable cause is intolerable in any system where the rule of Law prevails (Poses v. Toledo Transportation Co., 62 Phil. 297 [1935]; Manila electric Co., v. Public utility commissioners, 30 Phil. 387 [1915].

Upon its receipt, Mayor Lim manifested he would comply with the Decision. He did not file a motion for reconsideration. it was then that the Republic


started its own legal battle against ADC. it intervened in G.R. No. 115044, raising several issues, especially ADC's lack of a valid legislative franchise to operate jai-alai. No less than Executive Secretary Teofisto Guingona directed the Games and Amusement Board, then headed by Mr. Francisco R. Sumulong, jr., to hold in abeyance the grant of authority, or if any had been issued, to withdraw such grant of authority in favor of ADC. The GAB dutifully ordered ADC to cease and desist from operating the Manila jai-alai. ADC again rushed to the RTC of Manila and filed Civil Case No. 94-71656 which was raffled to Br. 14, presided by respondent Judge Vetino Reyes. Acting with dispatch, respondent judge temporarily restrained the GAB from withdrawing the provisional authority of ADC to operate. After hearing, the temporary restraining order was converted into writs of preliminary injunction and preliminary mandatory injunction upon posting by ADC of a P2 million bond. these writs are challenged in these consolidated petitions as having been issued in grave abuse of discretion amounting to lack of jurisdiction.

While the petitions at bench are checkered with significant substantive and procedural issues, I will only address the contention that ADC has no existing legislative franchise. The contention is anchored on two (2) submissions: first, ADC has no legislative franchise as required by R.A. No. 954, and second, even if the city of Manila licensed ADC to operate jai-alai, its authority was nevertheless revoked by section 3 of P.D. No. 771.

I find as completely baseless petitioners' submission that R.A. No. 954 requires a legislative franchise to operate a jai-alai, in effect, revoking the power of the City of Manila to issue permits for the same purpose as granted by its Charter. A 20-20 visual reading of R.A. No. 954 will not yield the suggested interpretation by petitioners. the titles of R.A. No. 954 will immediately reveal that the law was enacted to achieve a special purpose. It states: "An Act To Prohibit Certain Activities In Connection With Horse Races And Basque pelota Games (Jai-Alai), And To Prescribe Penalties For its Violation." The prohibited activities related to jai-alai games are specified in sections 4 to 6, viz:

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, 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.

Sec. 5. No person, operator, or maintainer of 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.

Sec. 6. No person or group of persons shall fix a basque pelota game for the purpose of insuring the winning of certain determined pelotari or pelotaris.

The Title of R.A. No. 954 does not show that it seeks to limit the operation of jai-alai only to entities with franchise given by Congress. what the title trumpets as the sole subject of the law is the criminalization of certain practices relating to jai-alai games. The title of a law is a valuable intrinsic aid in determining legislative intent. 3

The Explanatory Note 4 of House Bill 3204, the precursor of R.A. No. 954, also reveals that the intent of the law is only to criminalize the practice of illegal bookies and game-fixing in jai-alai. It states:

This bill seeks to prohibit certain anomalous practice of "bookies" in connection with the holding of horse races or "basque pelota" games. The term "bookie" as commonly understood refers to a person, who without any license therefor, operates outside the compounds of racing clubs and accepts bets from the public. They pay dividends to winners minus a commission, which is usually 10%. Prosecutions of said persons have been instituted under Act No. 4240 which was enacted in 1935. However, in a recent opinion released by the City Fiscal of Manila he maintains that Act No. 4240 has already been repealed, so that the present law regulating ordinary horse races permits "bookies" to ply their trade, but not on sweepstakes races and other races held for charitable purposes. With the operation of "booking" places in the City of Manila, the Government has been losing no less than P600,000.00 a year, which amount represents the tax that should have been collected from bets made in such places. for these reasons, the approval of the bill is earnestly recommended.


As said Explanatory Note is expressive of the purpose of the bill, it gives a reliable keyhole on the scope and coverage of R.A. No. 954. 5 Nothing from the Explanatory Note remotely suggests any intent of the law to revoke the power of the City of Manila to issue permits to operate jai-alai games within its territorial jurisdiction.

The Debates 6 in Congress likewise reject the reading of R.A. No. 954 by petitioners, thus:

xxx xxx xxx

RESUMPTION OF SESSION

THE SPEAKER. The session is resumed

MR. CINCO. Mr. Speaker, I withdraw my motion for postponement.

MR. CALO. Mr. Speaker, will the gentleman may yield, if he so desires.

MR. ZOSA. Willingly.

MR. CALO. What is the national import of this bill?

MR. ZOSA. Mr. Speaker, this bill prohibits certain activities in connection with horse races and jai-Alai games which are licensed by the government. At present, there are many practices in connection with the holding of these games which deprive the government of income that should legally go into the government coffers as taxes.

MR. CALO. Is not this matter of national importance because Jai-Alai games and horse races are held only in Manila?

MR. ZOSA. Precisely, Mr. Speaker, they are played on a big scale, and there are many practices which deprive the government of income to which it is entitled. I think the gentleman from Agusan is a member of the Committee on Appropriations. The governments will have more revenues, if we shall approve this bill.

Again, legislative debate is a good source to determine the intent of a law. 7

To top it all, the text of R.A. no. 954 itself does not intimate that it is repealing any existing law, especially section 18 (jj) of R.A. no. 409, otherwise known as the Charter of Manila. Indeed, R.A. No. 954 has no repealing provision. The reason is obvious — it simply prohibited certain practices in jai-alai then still unregulated by the laws of the land. It did not regulate aspects of jai-alai already regulated by existing laws, like the matter of whether it is the national government alone that should issue franchises to operate jai-alai games.

The subsequent enactment of P.D. No. 771 on August 20, 1975 further demolished the submission of petitioners. In clear and certain language, P.D. no. 771 recalled the owner of local governments to issue jai-alai franchises and permits. It also revoked existing franchises and permits issued by local governments. If R.A. no. 954 had already disauthorized local governments from granting franchisers and permits, there would be no need to enact P.D. no. 771. No rule of statutory construction will be considered any law a meaningless redundancy.

The passage of P.D. No. 771, also negates petitioners' insistence that for ADC to continue operating, it must show it has a franchise from Congress, not just a permit from the City of Manila. The suggested dichotomy between a legislative franchise and city permit does not impress. If the City of Manila is empowered to license the ADC it is because the power was delegated to it


by Congress. The acts of the City of Manila in the exercise of its delegated power bind Congress as well. Stated otherwise, the permit given by the City to ADC is not any whit legally inferior to a regular franchise. Through the years, the permit given by the City endows the grantee complete right to operate. Not once, except in these cases, has the national government questioned the completeness of his right. For this reason, P.D. No. 771 has to take revoke all existing franchises and permits without making any distinction. It treated permits in the same class as franchises.

Petitioners' second line of argument urges that in any event, Section 3 of P.D. No. 771 expressly revoked allexisting franchises and permits to operate jai-alai games granted by local governments, including the permit issued to ADC by the City of Manila through Ordinance No. 7065. For its resolution, petitioners' argument requires a re-statement of the requirements for the valid exercise of police power.

It was the legendary Chief Justice Marshall who first used the phrase police power in 1824. 8 Early attempts to fix the metes and bounds of police power were unsuccessful. 9 For of all the inherent powers of the State, police power is indubitably the most pervasive, 10 the most insistent and the least limitable. 11 Rooted on the latin maxims, salus populi suprema est lex (the welfare of the people if the supreme law) and sic utere tuo ut alienum non laedas (so use your property as not to injure the property of others), it was not without reason for Justice Holmes to stress that its reach extends "to all the great public needs." 12 A similar sentiment was echoed by our own Justice Laurel in Alalang v. Williams 13 who defined police power as the "state authority to enact legislation that may interfere with personal liberty or property in order to promote the general welfare." Over the years, courts recognized the power of legislature to enact police regulations on broad areas of state concern: (a) the preservation of the state itself and the unhindered execution of its legitimate functions; (b) the prevention and punishment of crime; (c) the preservation of the public peace and order; (d) the preservation of the public safety; (e) the purity and preservation of the public morals; (f) the protection and promotion of the public health (g) the regulation of business, trades, or professions the conduct of which may affect one or other of the objects just enumerated; (h) the regulation of property and rights of property so far as to prevent its being used in a manner dangerous or detrimental to others; (i) the prevention of fraud, extortion, and oppression; (j) roads and streets, and their preservation and repair; and (k) the preservation of game and fish. 14

But while the State is bestowed near boundless authority to promote public welfare, still the exercise of police power cannot be allowed to run riot in a republic ruled by reason. Thus, our courts have laid down the test to

determine the validity of a police measure as follows: (1) the interest of the public generally, as distinguished from those of particular class, requires its exercise; and (2) the means employed are reasonably necessary for the accomplishment of the purpose and not unduly oppresive upon individuals. 15 Deeper relexion will reveal that the test reiterates the essence of our constitutional guarantees of substantive due process, equal protection, and non-impairment of property rights.

We now apply this lucidly-lined test to the petitions at bench. To reiterate, P.D. No. 771 utilized two methods to regulate jai-alai: First, it reverted the power to issue franchise and permit to the national government, second, it revoked all existing franchise and permit issued by local governments.

I concede that the first method is invulnerable even to the strongest of constitutional attack. Part of the plenary power of Congress to make laws is the right ot grant franchise and permits allowing the exercise of certain privileges. Congress can delegate the exercise of this innate power to grant franchises as it did to the City of Manila when it granted its charter on June 18, 1949 thru R.A. no. 409. Congress can also revoke the delegated power and choose to wield the power itself as it did thru then President Marcos who exercised legislative powers by enacting P.D. No. 771. In the petitions at bench, Congress revoked the power of local government to issue franchises and permits which it had priorly delegated. In doing so and in deciding to wield the power itself to meet the perceived problems of the time, the legislature exercised its distinct judgment and the other branches of government, including this Court, cannot supplant this judgment without running afoul of the principle of separation powers. To be sure, this particular legislative method to regulate the problem of mushrooming applications for jai-alai franchise cannot be faulted as bereft of rationality. In the hearing of the petitions at bench, Executive Secretary Guingona established the fact that at the time of the enactment of P.D. No. 771, there were numerous applications to run jai-alai games in various cities and municipalities of the archipelago. To prevent the proliferation of these applications and minimize their ill effects, the law centralized their screening by the national government alone. The law excluded local governments in the process. The revocation of the delegated power to local governments does not impair any right. Applicants to franchises have no right to insist that their applications be acted upon by local governments. Their right to a franchise is only in purpose.

The second method adopted by Section 3 of P.D. No. 771 which revoked all existing franchises and permits is, however, constitutionally impermissible. On its face, section 3 purports to revoke all existing franchises and permits. During the oral argument of the petitions at bench,


however, it was admitted that at the time P.D. No. 771 was enacted, only ADC is actually operating a jai-alai. 16 The purported revocation of allfranchises and permits when there was only one existing permit at that time is an unmistakeable attempt to mask the law with impartiality. No other permit was affected by said sec. 3 except ADC.

Truth, however, has its own time of sprouting out. The truth behind the revocation of ADC's franchise revealed itself when former President Marcos transferred ADC's franchise to the Philippine Jai-Alai and Amusements Corporation then under the control of his brother-in-law, Mr. Alfredo "Bejo" Romualdez. The favored treatment was extended hardly two (2) months after the revocation of ADC's franchise and it left Philippine Jai-Alai and Amusements Corporation the sole jai-alai operator in the Philippines. The Court is not informed of any distinction of PJAC that will justify its different treatment. The evidence is thus clear and the conclusion is irresistable that section 3 of P.D. No. 771 was designed with a malignant eye against ADC.

In light of the established facts in field, section 3 of P.D. No. 771 must be struck down as constitutionally infirmed. despite its cosmetics, section 3 cannot be unblushingly foisted as a measure that will promote the public welfare. There is no way to treat the self-interest of a favored entity as identical with the general interest of a favored entity as identical with the general interest of the Filipino people. It will also be repulsive to reason to entertain the thesis that the revocation of the franchise of ADC is reasonably necessary to enable the State to grapple to the ground the evil of jai-alai as a form of gambling. Petitioners have not demonstrated that government lacks alternative options to succeed in its effort except to cancel the lone franchise of ADC. Well to stress, it is not the lofty aim of P.D. No. 771 to completely eradicate jai-alai games; it merely seeks to control its multiplication by restoring the monopoly of the national government in the dispensation of franchises.

Prescinding from these premises, I share the scholarly view of Mr. Justice Quiason that sec. 3 of P.D. No. 771 offends the Constitution which demands faithful compliance with the requirements of substantive due process, equal protection of the law, and non-impairment of contracts. capsulizing their essence, substantive due process exacts fairness; equal protection disallows distinction to the distinctless; and the guaranty of non-impairment of contract protects its integrity unless demanded otherwise by the public good. Constitutionalism eschews the exercise of unchecked power for history demonstrates that a meandering, aimless power ultimately tears apart the social fabric of society. Thus, the grant of police power to promote public welfare cannot carry with it the privilege to be oppressive. The

Constitution ordained the State not just to achieve order or liberty but to attainordered liberty, however elusive the balance may be. Cognizant of the truism that in life the only constant is change, the Constitution did not design that the point that can strike the balance between order and liberty should be static for precisely, the process of adjusting the moving point of the balance gives government greater elasticity to meet the needs of the time.

It is also my respectful submission that the unconstitutionality of section 3 of P.D. No. 771 was not cured when former President Aquino used it in revoking P.D. No. 810 which granted Philippine Jai-Alai and Amusements Corporation a franchise to operate jai-alai in Manila. The subsequent use of said section should not obfuscate the fact that the law was enacted in the wrongful exercise of the police power of the State. There is no sidestepping the truth that its enactment inflicted undue injury on the right s of ADC and there can be no reparation of these rights until and unless its permit to continue operating jai-alai in Manila is restored. Cancelling the franchise of Philippine Jai-Alai and Amusements Corporation is an act of Justice to ADC if its franchise would be left unrecognized. Since the unconstitutionality of section 3 is congenital, it is beyond redemption.

But while I wholeheartedly subscribe to the many impeccable theses of Mr. Justice Quiason, it is with regret that I cannot join his submittal that sec. 3 of P.D. No. 771 violates procedural due process. We are dealing with the plenary power of the legislature to make and amend laws. Congress has previously delegated to the City of Manila the power to grant permits to operate jai-alai within its territorial jurisdiction and ADC's permit could have been validly revoked by law if it were demonstrated that its revocation was called for by the public good and is not capricious. In ascertaining the public good for the purpose of enacting a remedial law, it is not indispensable, albeit sometimes desirable, to give notice and hearing to an affected party. The data the legislature seeks when engaged in lawmaking does not focus on the liability of a person or entity which would require fair hearing of the latter's side. In fine, the legislature while making laws is not involved in establishing evidence that will convict, but in unearthing neutral data that will direct its discretion in determining the general good.

The suggested notice and hearing before a franchise can be cancelled has another undesirable dimension. It does not only unduly cramp the legislature in its method of data-gathering, it also burdens the legislature with too much encumbrance in the exercise of its police power to regulate gambling. However heavily laden with property rights a franchise to operate jai-alai maybe, it is still a contract which under appropriate circumstances can be revoked to enhance public interest. Jai-alai may be a game of a thousand thrills but its true thrill comes from the gambling on its indeterminate result.


Beyond debate, gambling is an evil even if its advocates bleach its nefariousness by upgrading it as a necessary evil. In a country where it is a policy to promote the youth's physical, moral, spiritual, intellectual, and social well-being, 17 there is no right to gamble, neither a right to promote gambling for gambling is contra bonos mores. To require the legislature to strictly observe procedural before it can revoke a gambling due process before it can revoke a gambling franchise is to put too much primacy on property rights. We then stand in danger of reviving the long lamented 1905 ruling in Lochner v. New York 18 which unwisely struck down government interference in contractual liberty. The spirit of liberalism which provides the main driving force of social justice rebels against the resuscitation of the ruling Lochner from its sarcophagus. We should not be seduced by any judicial activism unduly favoring private economic interest 19 at the expense of the public good.

I also support the stance of Mr. Justice Quiason which resisted the stance that the Court should close its eyes to allegations that section 3 of P.D. No. 771 was conceived and effected to give naked preference to a favored entity due to pedigree. I reiterate the view that section 1, Article VIII of the Constitution expanding the jurisdiction of this Court to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or agency of government is not a pointless postulate. Without the grant of this new power, it would be difficult, if not impossible, to pierce through the pretentious purposes of P.D. No. 771. P.D. No. 771 has no right to a reverential treatment for it is not a real law as it is not the product of an authentic deliberative legislature. Rather, it is the dictate of a public official who then had a monopoly of executive and legislative powers. As it was not infrequently done at that time, the whereas clauses of laws used to camouflage a private purpose by the invocation of public welfare. The tragedy is that the bogus invocation of public welfare succeeded partly due to the indefensible deference given to official acts of government. The new Constitution now calls for a heightened judicial scrutiny of official acts. For this purpose, it has extirpated even the colonial roots of our impotence. It is time to respond to this call with neither a pause nor a half-pause.

I therefore vote to declare section 3 of P.D. No. 771 unconstitutional and to dismiss the petitions.



Manila

FIRST DIVISION

G.R. No. L-31249 August 19, 1986

SALVADOR VILLACORTA as City Engineer of Dagupan City, and JUAN S. CAGUIOA as Register of Deeds of Dagupan City, petitioners, vs.GREGORIO BERNARDO and HON. MACARIO OFILADA as Judge of the Court of First Instance of Pangasinan respondents.

Victor T. Llamas, Jr. for respondents.

CRUZ, J.:

This is a petition for certiorari against a decision of the Court of First Instance of Pangasinan annulling an ordinance adopted by the municipal board of Dagupan City.

The ordinance reads in full as follows:

ORDINANCE 22

AN ORDINANCE REGULATING SUBDIVISION PLANS OVER PARCELS OF LAND IN THE CITY OF DAGUPAN.

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

Section 1. Every proposed subdivision plan over any lot in the City of Dagupan, shalt before the same is submitted for approval and/or verification by the Bureau of Lands and/or the Land Registration Commission, be previously submitted to the City Engineer of the City who shall see to it that no encroachment is made on any portion of the

public domain, that the zoning ordinance and all other pertinent rules and regulations are observed.

Section 2. As service fee thereof, an amount equivalent to P0.30 per square meter of every lot resulting or win result from such subdivision shall be charged by the City Engineer's Office.

Section 3. It shall be unlawful for the Register of Deeds of Dagupan City to allow the registration of a subdivision plan unless there is prior written certification issued by the City Engineer that such plan has already been submitted to his office and that the same is in order.

Section 4. Any violation of this ordinance shall be punished by a fine not exceeding two hundred (P200.00) pesos or imprisonment not exceeding six (6) months or both in the discretion of the judge.

Section 5. This ordinance shall take effect immediately upon approval.

In declaring the said ordinance null and void, the court a quo declared:

From the above-recited requirements, there is no showing that would justify the enactment of the questioned ordinance. Section 1 of said ordinance clearly conflicts with Section 44 of Act 496, because the latter law does not require subdivision plans to be submitted to the City Engineer before the same is submitted for approval to and verification by the General Land Registration Office or by the Director of Lands as provided for in Section 58 of said Act. Section 2 of the same ordinance also contravenes the provisions of Section 44 of Act 496, the latter being silent on a service fee of PO.03 per square meter of every lot subject of such subdivision application; Section 3 of the ordinance in question also conflicts with Section 44 of Act 496, because the latter law does not mention of a certification to be made by the City Engineer before the Register of Deeds allows registration of the subdivision plan; and the last section of said ordinance imposes a penalty for its violation, which Section 44 of Act 496 does not impose. In other words, Ordinance 22 of the City of


Dagupan imposes upon a subdivision owner additional conditions.

xxx xxx xxx

The Court takes note of the laudable purpose of the ordinance in bringing to a halt the surreptitious registration of lands belonging to the government. But as already intimidated above, the powers of the board in enacting such a laudable ordinance cannot be held valid when it shall impede the exercise of rights granted in a general law and/or make a general law subordinated to a local ordinance.

We affirm.

To sustain the ordinance would be to open the floodgates to other ordinances amending and so violating national laws in the guise of implementing them. Thus, ordinances could be passed imposing additional requirements for the issuance of marriage licenses, to prevent bigamy; the registration of vehicles, to minimize carnaping; the execution of contracts, to forestall fraud; the validation of passports, to deter imposture; the exercise of freedom of speech, to reduce disorder; and so on. The list is endless, but the means, even if the end be valid, would beultra vires.

So many excesses are attempted in the name of the police power that it is time, we feel, for a brief admonition.

Regulation is a fact of life in any well-ordered community. As society becomes more and more complex, the police power becomes correspondingly ubiquitous. This has to be so for the individual must subordinate his interests to the common good, on the time honored justification of Salus populi est suprema lex.

In this prolix age, practically everything a person does and owns affects the public interest directly or at least vicariously, unavoidably drawing him within the embrace of the police power. Increasingly, he is hemmed in by all manner of statutory, administrative and municipal requirements and restrictions that he may find officious and even oppressive.

It is necessary to stress that unless the creeping interference of the government in essentially private matters is moderated, it is likely to destroy that prized and peculiar virtue of the free society: individualism.

Every member of society, while paying proper deference to the general welfare, must not be deprived of the right to be left alone or, in the Idiom of the day, "to do his thing." As long as he does not prejudice others, his freedom as an individual must not be unduly curtailed.

We therefore urge that proper care attend the exercise of the police power lest it deteriorate into an unreasonable intrusion into the purely private affairs of the individual. The so-called "general welfare" is too amorphous and convenient an excuse for official arbitrariness.

Let it always be remembered that in the truly democratic state, protecting the rights of the individual is as important as, if not more so than, protecting the rights of the public.

This advice is especially addressed to the local governments which exercise the police power only by virtue of a valid delegation from the national legislature under the general welfare clause. In the instant case, Ordinance No. 22 suffers from the additional defect of violating this authority for legislation in contravention of the national law by adding to its requirements.

WHEREFORE, the decision of the lower court annulling the challenged ordinance is AFFIRMED, without any pronouncement as to costs.

SO ORDERED.

Yap (Chairman), Narvasa, Melencio-Herrera and Paras, JJ., concur.



Manila

FIRST DIVISION

G.R. No. L-34915 June 24, 1983

CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF QUEZON CITY, petitioners, vs.HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First Instance of Rizal, Quezon City, Branch XVIII; HIMLAYANG PILIPINO, INC., respondents.

City Fiscal for petitioners.

Manuel Villaruel, Jr. and Feliciano Tumale for respondents.

GUTIERREZ, JR., J.:

This is a petition for review which seeks the reversal of the decision of the Court of First Instance of Rizal, Branch XVIII declaring Section 9 of Ordinance No. 6118, S-64, of the Quezon City Council null and void.

Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE REGULATING THE ESTABLISHMENT, MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL TYPE CEMETERY OR BURIAL GROUND WITHIN THE JURISDICTION OF QUEZON CITY AND PROVIDING PENALTIES FOR THE VIOLATION THEREOF" provides:

Sec. 9. At least six (6) percent of the total area of the memorial park cemetery shall be set aside for charity burial of deceased persons who are paupers and have been residents of Quezon City for at least 5 years prior to their death, to be determined by competent City Authorities. The area so designated shall immediately be developed and should be open for operation not later than six months from the date of approval of the application.

For several years, the aforequoted section of the Ordinance was not enforced by city authorities but seven years after the enactment of the ordinance, the Quezon City Council passed the following resolution:

RESOLVED by the council of Quezon assembled, to request, as it does hereby request the City Engineer, Quezon City, to stop any further selling and/or transaction of memorial park lots in Quezon City where the owners thereof have failed to donate the required 6% space intended for paupers burial.

Pursuant to this petition, the Quezon City Engineer notified respondent Himlayang Pilipino, Inc. in writing that Section 9 of Ordinance No. 6118, S-64 would be enforced

Respondent Himlayang Pilipino reacted by filing with the Court of First Instance of Rizal Branch XVIII at Quezon City, a petition for declaratory relief, prohibition and mandamus with preliminary injunction (Sp. Proc. No. Q-16002) seeking to annul Section 9 of the Ordinance in question The respondent alleged that the same is contrary to the Constitution, the Quezon City Charter, the Local Autonomy Act, and the Revised Administrative Code.

There being no issue of fact and the questions raised being purely legal both petitioners and respondent agreed to the rendition of a judgment on the pleadings. The respondent court, therefore, rendered the decision declaring Section 9 of Ordinance No. 6118, S-64 null and void.

A motion for reconsideration having been denied, the City Government and City Council filed the instant petition.

Petitioners argue that the taking of the respondent's property is a valid and reasonable exercise of police power and that the land is taken for a public use as it is intended for the burial ground of paupers. They further argue that the Quezon City Council is authorized under its charter, in the exercise of local police power, " to make such further ordinances and resolutions not repugnant to law as may be necessary to carry into effect and discharge the powers and duties conferred by this Act and such as it shall deem necessary and proper to provide for the health and safety, promote the prosperity, improve the morals, peace, good order, comfort and convenience of the city and the inhabitants thereof, and for the protection of property therein."


On the other hand, respondent Himlayang Pilipino, Inc. contends that the taking or confiscation of property is obvious because the questioned ordinance permanently restricts the use of the property such that it cannot be used for any reasonable purpose and deprives the owner of all beneficial use of his property.

The respondent also stresses that the general welfare clause is not available as a source of power for the taking of the property in this case because it refers to "the power of promoting the public welfare by restraining and regulating the use of liberty and property." The respondent points out that if an owner is deprived of his property outright under the State's police power, the property is generally not taken for public use but is urgently and summarily destroyed in order to promote the general welfare. The respondent cites the case of a nuisance per se or the destruction of a house to prevent the spread of a conflagration.

We find the stand of the private respondent as well as the decision of the respondent Judge to be well-founded. We quote with approval the lower court's ruling which declared null and void Section 9 of the questioned city ordinance:

The issue is: Is Section 9 of the ordinance in question a valid exercise of the police power?

An examination of the Charter of Quezon City (Rep. Act No. 537), does not reveal any provision that would justify the ordinance in question except the provision granting police power to the City. Section 9 cannot be justified under the power granted to Quezon City to tax, fix the license fee, and regulatesuch other business, trades, and occupation as may be established or practised in the City.' (Subsections 'C', Sec. 12, R.A. 537).

The power to regulate does not include the power to prohibit (People vs. Esguerra, 81 PhiL 33, Vega vs. Municipal Board of Iloilo, L-6765, May 12, 1954; 39 N.J. Law, 70, Mich. 396). A fortiori, the power to regulate does not include the power to confiscate. The ordinance in question not only confiscates but also prohibits the operation of a memorial park cemetery, because under Section 13 of said ordinance, 'Violation of the provision thereof is punishable with a fine and/or imprisonment and that upon conviction thereof the permit to operate and

maintain a private cemetery shall be revoked or cancelled.' The confiscatory clause and the penal provision in effect deter one from operating a memorial park cemetery. Neither can the ordinance in question be justified under subsection "t", Section 12 of Republic Act 537 which authorizes the City Council to-

'prohibit the burial of the dead within the center of population of the city and provide for their burial in such proper place and in such manner as the council may determine, subject to the provisions of the general law regulating burial grounds and cemeteries and governing funerals and disposal of the dead.' (Sub-sec. (t), Sec. 12, Rep. Act No. 537).

There is nothing in the above provision which authorizes confiscation or as euphemistically termed by the respondents, 'donation'

We now come to the question whether or not Section 9 of the ordinance in question is a valid exercise of police power. The police power of Quezon City is defined in sub-section 00, Sec. 12, Rep. Act 537 which reads as follows:

(00) To make such further ordinance and regulations not repugnant to law as may be necessary to carry into effect and discharge the powers and duties conferred by this act and such as it shall deem necessary and proper to provide for the health and safety, promote, the prosperity, improve the morals, peace, good order, comfort and convenience of the city and the inhabitants thereof, and for the protection of property therein; and enforce obedience thereto with such lawful fines or penalties as the City Council may prescribe under the provisions of subsection (jj) of this section.


We start the discussion with a restatement of certain basic principles. Occupying the forefront in the bill of rights is the provision which states that 'no person shall be deprived of life, liberty or property without due process of law' (Art. Ill, Section 1 subparagraph 1, Constitution).

On the other hand, there are three inherent powers of government by which the state interferes with the property rights, namely-. (1) police power, (2) eminent domain, (3) taxation. These are said to exist independently of the Constitution as necessary attributes of sovereignty.

Police power is defined by Freund as 'the power of promoting the public welfare by restraining and regulating the use of liberty and property' (Quoted in Political Law by Tanada and Carreon, V-11, p. 50). It is usually exerted in order to merely regulate the use and enjoyment of property of the owner. If he is deprived of his property outright, it is not taken for public use but rather to destroy in order to promote the general welfare. In police power, the owner does not recover from the government for injury sustained in consequence thereof (12 C.J. 623). It has been said that police power is the most essential of government powers, at times the most insistent, and always one of the least limitable of the powers of government (Ruby vs. Provincial Board, 39 PhiL 660; Ichong vs. Hernandez, 1,7995, May 31, 1957). This power embraces the whole system of public regulation (U.S. vs. Linsuya Fan, 10 PhiL 104). The Supreme Court has said that police power is so far-reaching in scope that it has almost become impossible to limit its sweep. As it derives its existence from the very existence of the state itself, it does not need to be expressed or defined in its scope. Being coextensive with self-preservation and survival itself, it is the most positive and active of all governmental processes, the most essential insistent and illimitable Especially it is so under the modern democratic framework where the demands of society and nations have multiplied to almost unimaginable proportions. The field and scope of police power have become almost boundless, just as the fields of public interest and public welfare have become almost all embracing and have transcended human foresight. Since the Courts cannot foresee the needs and demands of public interest and welfare, they cannot

delimit beforehand the extent or scope of the police power by which and through which the state seeks to attain or achieve public interest and welfare. (Ichong vs. Hernandez, L-7995, May 31, 1957).

The police power being the most active power of the government and the due process clause being the broadest station on governmental power, the conflict between this power of government and the due process clause of the Constitution is oftentimes inevitable.

It will be seen from the foregoing authorities that police power is usually exercised in the form of mere regulation or restriction in the use of liberty or property for the promotion of the general welfare. It does not involve the taking or confiscation of property with the exception of a few cases where there is a necessity to confiscate private property in order to destroy it for the purpose of protecting the peace and order and of promoting the general welfare as for instance, the confiscation of an illegally possessed article, such as opium and firearms.

It seems to the court that Section 9 of Ordinance No. 6118, Series of 1964 of Quezon City is not a mere police regulation but an outright confiscation. It deprives a person of his private property without due process of law, nay, even without compensation.

In sustaining the decision of the respondent court, we are not unmindful of the heavy burden shouldered by whoever challenges the validity of duly enacted legislation whether national or local As early as 1913, this Court ruled in Case v. Board of Health (24 PhiL 250) that the courts resolve every presumption in favor of validity and, more so, where the ma corporation asserts that the ordinance was enacted to promote the common good and general welfare.

In the leading case of Ermita-Malate Hotel and Motel Operators Association Inc. v. City Mayor of Manila (20 SCRA 849) the Court speaking through the then Associate Justice and now Chief Justice Enrique M. Fernando stated

Primarily what calls for a reversal of such a decision is the a of any evidence to offset the presumption of validity that attaches to a statute or ordinance. As was expressed


categorically by Justice Malcolm 'The presumption is all in favor of validity. ... The action of the elected representatives of the people cannot be lightly set aside. The councilors must, in the very nature of things, be familiar with the necessities of their particular ... municipality and with all the facts and lances which surround the subject and necessitate action. The local legislative body, by enacting the ordinance, has in effect given notice that the regulations are essential to the well-being of the people. ... The Judiciary should not lightly set aside legislative action when there is not a clear invasion of personal or property rights under the guise of police regulation. (U.S. v. Salaveria (1918], 39 Phil. 102, at p. 111. There was an affirmation of the presumption of validity of municipal ordinance as announced in the leading Salaveria decision in Ebona v. Daet, [1950]85 Phil. 369.)

We have likewise considered the principles earlier stated in Case v. Board of Health supra :

... Under the provisions of municipal charters which are known as the general welfare clauses, a city, by virtue of its police power, may adopt ordinances to the peace, safety, health, morals and the best and highest interests of the municipality. It is a well-settled principle, growing out of the nature of well-ordered and society, that every holder of property, however absolute and may be his title, holds it under the implied liability that his use of it shall not be injurious to the equal enjoyment of others having an equal right to the enjoyment of their property, nor injurious to the rights of the community. An property in the state is held subject to its general regulations, which are necessary to the common good and general welfare. Rights of property, like all other social and conventional rights, are subject to such reasonable limitations in their enjoyment as shall prevent them from being injurious, and to such reasonable restraints and regulations, established by law, as the legislature, under the governing and controlling power vested in them by the constitution, may think necessary and expedient. The state, under the police power, is possessed with plenary power to deal with all matters relating to the general health, morals, and safety of the people, so long as it does not contravene any positive

inhibition of the organic law and providing that such power is not exercised in such a manner as to justify the interference of the courts to prevent positive wrong and oppression.

but find them not applicable to the facts of this case.

There is no reasonable relation between the setting aside of at least six (6) percent of the total area of an private cemeteries for charity burial grounds of deceased paupers and the promotion of health, morals, good order, safety, or the general welfare of the people. The ordinance is actually a taking without compensation of a certain area from a private cemetery to benefit paupers who are charges of the municipal corporation. Instead of building or maintaining a public cemetery for this purpose, the city passes the burden to private cemeteries.

The expropriation without compensation of a portion of private cemeteries is not covered by Section 12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers the city council to prohibit the burial of the dead within the center of population of the city and to provide for their burial in a proper place subject to the provisions of general law regulating burial grounds and cemeteries. When the Local Government Code, Batas Pambansa Blg. 337 provides in Section 177 (q) that a Sangguniang panlungsod may "provide for the burial of the dead in such place and in such manner as prescribed by law or ordinance" it simply authorizes the city to provide its own city owned land or to buy or expropriate private properties to construct public cemeteries. This has been the law and practise in the past. It continues to the present. Expropriation, however, requires payment of just compensation. The questioned ordinance is different from laws and regulations requiring owners of subdivisions to set aside certain areas for streets, parks, playgrounds, and other public facilities from the land they sell to buyers of subdivision lots. The necessities of public safety, health, and convenience are very clear from said requirements which are intended to insure the development of communities with salubrious and wholesome environments. The beneficiaries of the regulation, in turn, are made to pay by the subdivision developer when individual lots are sold to home-owners.

As a matter of fact, the petitioners rely solely on the general welfare clause or on implied powers of the municipal corporation, not on any express provision of law as statutory basis of their exercise of power. The clause has always received broad and liberal interpretation but we cannot stretch it to cover this particular taking. Moreover, the questioned ordinance was passed after Himlayang Pilipino, Inc. had incorporated. received necessary licenses


and permits and commenced operating. The sequestration of six percent of the cemetery cannot even be considered as having been impliedly acknowledged by the private respondent when it accepted the permits to commence operations.

WHEREFORE, the petition for review is hereby DISMISSED. The decision of the respondent court is affirmed.

SO ORDERED.

Teehankee (Chairman), Melencio-Herrera, Plana, Vasquez and Relova, JJ., concur.



Manila

FIRST DIVISION

G.R. No. 135962 March 27, 2000

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner, vs.BEL-AIR VILLAGE ASSOCIATION, INC., respondent.

PUNO, J.:

Not infrequently, the government is tempted to take legal shortcuts solve urgent problems of the people. But even when government is armed with the best of intention, we cannot allow it to run roughshod over the rule of law. Again, we let the hammer fall and fall hard on the illegal attempt of the MMDA to open for public use a private road in a private subdivision. While we hold that the general welfare should be promoted, we stress that it should not be achieved at the expense of the rule of law.

Petitioner MMDA is a government agency tasked with the delivery of basic services in Metro Manila. Respondent Bel-Air Village Association, Inc. (BAVA) is a non-stock, non-profit corporation whose members are homeowners in Bel-Air Village, a private subdivision in Makati City. Respondent BAVA is the registered owner of Neptune Street, a road inside Bel-Air Village.

On December 30, 1995, respondent received from petitioner, through its Chairman, a notice dated December 22, 1995 requesting respondent to open Neptune Street to public vehicular traffic starting January 2, 1996. The notice reads:

SUBJECT: NOTICE of the Opening of Neptune Street to Traffic.

Dear President Lindo,

Please be informed that pursuant to the mandate of the MMDA law or Republic Act No. 7924 which requires the Authority to rationalize the use of roads and/or thoroughfares for the safe and convenient

movement of persons, Neptune Street shall be opened to vehicular traffic effective January 2, 1996.

In view whereof, the undersigned requests you to voluntarily open the points of entry and exit on said street.

Thank you for your cooperation and whatever assistance that may be extended by your association to the MMDA personnel who will be directing traffic in the area.

Finally, we are furnishing you with a copy of the handwritten instruction of the President on the matter.

Very truly yours,

PROSPERO I. ORETA

Chairman 1

On the same day, respondent was apprised that the perimeter wall separating the subdivision from the adjacent Kalayaan Avenue would be demolished.

On January 2, 1996, respondent instituted against petitioner before the Regional Trial Court, Branch 136, Makati City, Civil Case No. 96-001 for injunction. Respondent prayed for the issuance of a temporary restraining order and preliminary injunction enjoining the opening of Neptune Street and prohibiting the demolition of the perimeter wall. The trial court issued a temporary restraining order the following day.

On January 23, 1996, after due hearing, the trial court denied issuance of a preliminary injunction. 2 Respondent questioned the denial before the Court of Appeals in CA-G.R. SP No. 39549. The appellate court conducted an ocular inspection of Neptune Street 3 and on February 13, 1996, it issued a writ of preliminary injunction enjoining the implementation of the MMDA's proposed action. 4

On January 28, 1997, the appellate court rendered a Decision on the merits of the case finding that the MMDA has no authority to order the opening of Neptune Street, a private subdivision road and cause the demolition of its

http://www.lawphil.net/judjuris/juri2000/mar2000/gr_135962_2000.html#fnt4





perimeter walls. It held that the authority is lodged in the City Council of Makati by ordinance. The decision disposed of as follows:

WHEREFORE, the Petition is GRANTED; the challenged Order dated January 23, 1995, in Civil Case No. 96-001, is SET ASIDE and the Writ of Preliminary Injunction issued on February 13, 1996 is hereby made permanent.

For want of sustainable substantiation, the Motion to Cite Roberto L. del Rosario in contempt is denied. 5

No pronouncement as to costs.

SO ORDERED. 6

The Motion for Reconsideration of the decision was denied on September 28, 1998. Hence, this recourse.

Petitioner MMDA raises the following questions:

I

HAS THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY (MMDA) THE MANDATE TO OPEN NEPTUNE STREET TO PUBLIC TRAFFIC PURSUANT TO ITS REGULATORY AND POLICE POWERS?

II

IS THE PASSAGE OF AN ORDINANCE A CONDITION PRECEDENT BEFORE THE MMDA MAY ORDER THE OPENING OF SUBDIVISION ROADS TO PUBLIC TRAFFIC?

III

IS RESPONDENT BEL-AIR VILLAGE ASSOCIATION, INC. ESTOPPED FROM DENYING OR ASSAILING THE AUTHORITY OF THE MMDA TO OPEN THE SUBJECT STREET?

IV

WAS RESPONDENT DEPRIVED OF DUE PROCESS DESPITE THE SEVERAL MEETINGS HELD BETWEEN MMDA AND THE AFFECTED EEL-AIR RESIDENTS AND BAVA OFFICERS?

V

HAS RESPONDENT COME TO COURT WITH UNCLEAN HANDS?7

Neptune Street is owned by respondent BAVA. It is a private road inside Bel-Air Village, a private residential subdivision in the heart of the financial and commercial district of Makati City. It runs parallel to Kalayaan Avenue, a national road open to the general public. Dividing the two (2) streets is a concrete perimeter wall approximately fifteen (15) feet high. The western end of Neptune Street intersects Nicanor Garcia, formerly Reposo Street, a subdivision road open to public vehicular traffic, while its eastern end intersects Makati Avenue, a national road. Both ends of Neptune Street are guarded by iron gates.

Petitioner MMDA claims that it has the authority to open Neptune Street to public traffic because it is an agent of the state endowed with police power in the delivery of basic services in Metro Manila. One of these basic services is traffic management which involves the regulation of the use of thoroughfares to insure the safety, convenience and welfare of the general public. It is alleged that the police power of MMDA was affirmed by this Court in the consolidated cases of Sangalang v. Intermediate Appellate Court. 8 From the premise that it has police power, it is now urged that there is no need for the City of Makati to enact an ordinance opening Neptune street to the public. 9

Police power is an inherent attribute of sovereignty. It has been defined as the power vested by the Constitution in the legislature to make, ordain, and establish all manner of wholesome and reasonable laws, statutes and ordinances, either with penalties or without, not repugnant to the Constitution, as they shall judge to be for the good and welfare of the commonwealth, and for the subjects of the same. 10 The power is plenary and its scope is vast and pervasive, reaching and justifying measures for public health, public safety, public morals, and the general welfare. 11

It bears stressing that police power is lodged primarily in the National Legislature. 12 It cannot be exercised by any group or body of individuals not possessing legislative power. 13 The National Legislature, however, may delegate this power to the President and administrative boards as well as the lawmaking bodies of municipal corporations or local government











units. 14 Once delegated, the agents can exercise only such legislative powers as are conferred on them by the national lawmaking body. 15

A local government is a "political subdivision of a nation or state which is constituted by law and has substantial control of local affairs." 16The Local Government Code of 1991 defines a local government unit as a "body politic and corporate." 17 — one endowed with powers as a political subdivision of the National Government and as a corporate entity representing the inhabitants of its territory. 18 Local government units are the provinces, cities, municipalities and barangays. 19 They are also the territorial and political subdivisions of the state. 20

Our Congress delegated police power to the local government units in the Local Government Code of 1991. This delegation is found in Section 16 of the same Code, known as the general welfare clause, viz:

Sec. 16. General Welfare. — Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants. 21

Local government units exercise police power through their respective legislative bodies. The legislative body of the provincial government is the sangguniang panlalawigan, that of the city government is the sangguniang panlungsod, that of the municipal government is the sangguniang bayan, and that of the barangay is thesangguniang barangay. The Local Government Code of 1991 empowers the sangguniang panlalawigan,sangguniang panlungsod and sangguniang bayan to "enact ordinances, approve resolutions and appropriate funds for the general welfare of the [province, city or municipality, as the case may be], and its inhabitants pursuant to Section 16 of the Code and in the proper exercise of the corporate powers of the [province, city municipality] provided under the Code . . . " 22 The same Code gives the sangguniang barangay the power to

"enact ordinances as may be necessary to discharge the responsibilities conferred upon it by law or ordinance and to promote the general welfare of the inhabitants thereon." 23

Metropolitan or Metro Manila is a body composed of several local government units — i.e., twelve (12) cities and five (5) municipalities, namely, the cities of Caloocan, Manila, Mandaluyong, Makati, Pasay, Pasig, Quezon, Muntinlupa, Las Pinas, Marikina, Paranaque and Valenzuela, and the municipalities of Malabon, Navotas, Pateros, San Juan and Taguig. With the passage of Republic Act (R. A.) No. 7924 24 in 1995, Metropolitan Manila was declared as a "special development and administrative region" and the Administration of "metro-wide" basic services affecting the region placed under "a development authority" referred to as the MMDA. 25

"Metro-wide services" are those "services which have metro-wide impact and transcend local political boundaries or entail huge expenditures such that it would not be viable for said services to be provided by the individual local government units comprising Metro Manila." 26 There are seven (7) basic metro-wide services and the scope of these services cover the following: (1) development planning; (2) transport and traffic management; (3) solid waste disposal and management; (4) flood control and sewerage management; (5) urban renewal, zoning and land use planning, and shelter services; (6) health and sanitation, urban protection and pollution control; and (7) public safety. The basic service of transport and traffic management includes the following:

(b) Transport and traffic management which include the formulation, coordination, and monitoring of policies, standards, programs and projects to rationalize the existing transport operations, infrastructure requirements, the use of thoroughfares, and promotion of safe and convenient movement of persons and goods; provision for the mass transport system and the institution of a system to regulate road users;administration and implementation of all traffic enforcement operations, traffic engineering services and traffic education programs, including the institution of a single ticketing system in Metropolitan Manila;" 27

In the delivery of the seven (7) basic services, the MMDA has the following powers and functions:

Sec. 5. Functions and powers of the Metro Manila Development Authority. — The MMDA shall:
















(a) Formulate, coordinate and regulate the implementation of medium and long-term plans and programs for the delivery of metro-wide services, land use and physical development within Metropolitan Manila, consistent with national development objectives and priorities;

(b) Prepare, coordinate and regulate the implementation of medium-term investment programs for metro-wide services which shall indicate sources and uses of funds for priority programs and projects, and which shall include the packaging of projects and presentation to funding institutions;

(c) Undertake and manage on its own metro-wide programs and projects for the delivery of specific services under its jurisdiction, subject to the approval of the Council. For this purpose, MMDA can create appropriate project management offices;

(d) Coordinate and monitor the implementation of such plans, programs and projects in Metro Manila; identify bottlenecks and adopt solutions to problems of implementation;

(e) The MMDA shall set the policies concerning traffic in Metro Manila, and shall coordinate and regulate the implementation of all programs and projects concerning traffic management, specifically pertaining to enforcement, engineering and education. Upon request, it shall be extended assistance and cooperation,including but not limited to, assignment of personnel, by all other government agencies and offices concerned;

(f) Install and administer a single ticketing system, fix, impose and collect fines and penalties for all kinds of violations of traffic rules and regulations, whether moving or non-moving in nature, and confiscate and suspend or revoke drivers' licenses in the enforcement of such traffic laws and regulations, the provisions of RA 4136 and PD 1605 to the contrary notwithstanding. For this purpose, the Authority shall impose all traffic laws and regulations in Metro Manila, through its traffic operation center, and may deputize members of the PNP, traffic enforcers of local government units, duly licensed security guards, or members of non-governmental organizations to whom may be delegated certain authority, subject to such conditions and requirements as the Authority may impose; and

(g) Perform other related functions required to achieve the objectives of the MMDA, including the undertaking of delivery of basic services to the local government units, when deemed necessary subject to prior coordination with and consent of the local government unit concerned.

The implementation of the MMDA's plans, programs and projects is undertaken by the local government units, national government agencies, accredited people's organizations, non-governmental organizations, and the private sector as well as by the MMDA itself. For this purpose, the MMDA has the power to enter into contracts, memoranda of agreement and other arrangements with these bodies for the delivery of the required services Metro Manila. 28

The governing board of the MMDA is the Metro Manila Council. The Council is composed of the mayors of the component 12 cities and 5 municipalities, the president of the Metro Manila Vice-Mayors' League and the president of the Metro Manila Councilors' League. 29 The Council is headed by Chairman who is appointed by the President and vested with the rank of cabinet member. As the policy-making body of the MMDA, the Metro Manila Council approves metro-wide plans, programs and projects, and issues the necessary rules and regulations for the implementation of said plans; it approves the annual budget of the MMDA and promulgate the rules and regulations for the delivery of basic services, collection of service and regulatory fees, fines and penalties. These functions are particularly enumerated as follows:

Sec. 6. Functions of the Metro Manila Council. —

(a) The Council shall be the policy-making body of the MMDA;

(b) It shall approve metro-wide plans, programs and projects and issue rules and regulations deemed necessary by the MMDA to carry out the purposes of this Act;

(c) It may increase the rate of allowances and per diems of the members of the Council to be effective during the term of the succeeding Council. It shall fix the compensation of the officers and personnel of the MMDA, and approve the annual budget thereof for submission to the Department of Budget and Management (DBM);




(d) It shall promulgate rules and regulations and set policies and standards for metro-wide application governing the delivery of basic services, prescribe and collect service and regulatory fees, and impose and collect fines and penalties.

Clearly, the scope of the MMDA's function is limited to the delivery of the seven (7) basic services. One of these is transport and traffic management which includes the formulation and monitoring of policies, standards and projects to rationalize the existing transport operations, infrastructure requirements, the use of thoroughfares and promotion of the safe movement of persons and goods. It also covers the mass transport system and the institution of a system of road regulation, the administration of all traffic enforcement operations, traffic engineering services and traffic education programs, including the institution of a single ticketing system in Metro Manila for traffic violations. Under the service, the MMDA is expressly authorized "to set the policies concerning traffic" and "coordinate and regulate the implementation of all traffic management programs." In addition, the MMDA may "install and administer a single ticketing system," fix, impose and collect fines and penalties for all traffic violations.

It will be noted that the powers of the MMDA are limited to the following acts: formulation, coordination, regulation, implementation, preparation, management, monitoring, setting of policies, installation of a system and administration. There is no syllable in R.A. No. 7924 that grants the MMDA police power, let alone legislative power. Even the Metro Manila Council has not been delegated any legislative power. Unlike the legislative bodies of the local government units, there is no provision in R.A. No. 7924 that empowers the MMDA or its Council to "enact ordinances, approve resolutions appropriate funds for the general welfare" of the inhabitants of Metro Manila. The MMDA is, as termed in the charter itself, "development authority." 30 It is an agency created for the purpose of laying down policies and coordinating with the various national government agencies, people's organizations, non-governmental organizations and the private sector for the efficient and expeditious delivery of basic services in the vast metropolitan area. All its functions are administrative in nature and these are actually summed up in the charter itself, viz:

Sec. 2. Creation of the Metropolitan Manila Development Authority. — . . . .

The MMDA shall perform planning, monitoring and coordinative functions, and in the process exerciseregulatory and supervisory authority over the delivery of metro-wide services within Metro

Manila, without diminution of the autonomy of the local government units concerning purely local matters. 31

Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate Appellate Court 32 where we upheld a zoning ordinance issued by the Metro Manila Commission (MMC), the predecessor of the MMDA, as an exercise of police power. The first Sangalang decision was on the merits of the petition, 33 while the second decision denied reconsideration of the first case and in addition discussed the case of Yabut v. Court of Appeals. 34

Sangalang v. IAC involved five (5) consolidated petitions filed by respondent BAVA and three residents of Bel-Air Village against other residents of the Village and the Ayala Corporation, formerly the Makati Development Corporation, as the developer of the subdivision. The petitioners sought to enforce certain restrictive easements in the deeds of sale over their respective lots in the subdivision. These were the prohibition on the setting up of commercial and advertising signs on the lots, and the condition that the lots be used only for residential purposes. Petitioners alleged that respondents, who were residents along Jupiter Street of the subdivision, converted their residences into commercial establishments in violation of the "deed restrictions," and that respondent Ayala Corporation ushered in the full commercialization" of Jupiter Street by tearing down the perimeter wall that separated the commercial from the residential section of the village. 35

The petitions were dismissed based on Ordinance No. 81 of the Municipal Council of Makati and Ordinance No. 81-01 of the Metro Manila Commission (MMC). Municipal Ordinance No. 81 classified Bel-Air Village as a Class A Residential Zone, with its boundary in the south extending to the center line of Jupiter Street. The Municipal Ordinance was adopted by the MMC under the Comprehensive Zoning Ordinance for the National Capital Region and promulgated as MMC Ordinance No. 81-01. Bel-Air Village was indicated therein as bounded by Jupiter Street and the block adjacent thereto was classified as a High Intensity Commercial Zone. 36

We ruled that since both Ordinances recognized Jupiter Street as the boundary between Bel-Air Village and the commercial district, Jupiter Street was not for the exclusive benefit of Bel-Air residents. We also held that the perimeter wall on said street was constructed not to separate the residential from the commercial blocks but simply for security reasons, hence, in tearing down said wall, Ayala Corporation did not violate the "deed restrictions" in the deeds of sale.









We upheld the ordinances, specifically MMC Ordinance No. 81-01, as a legitimate exercise of police power. 37The power of the MMC and the Makati Municipal Council to enact zoning ordinances for the general welfare prevailed over the "deed restrictions".

In the second Sangalang/Yabut decision, we held that the opening of Jupiter Street was warranted by the demands of the common good in terms of "traffic decongestion and public convenience." Jupiter was opened by the Municipal Mayor to alleviate traffic congestion along the public streets adjacent to the Village. 38 The same reason was given for the opening to public vehicular traffic of Orbit Street, a road inside the same village. The destruction of the gate in Orbit Street was also made under the police power of the municipal government. The gate, like the perimeter wall along Jupiter, was a public nuisance because it hindered and impaired the use of property, hence, its summary abatement by the mayor was proper and legal. 39

Contrary to petitioner's claim, the two Sangalang cases do not apply to the case at bar. Firstly, both involved zoning ordinances passed by the municipal council of Makati and the MMC. In the instant case, the basis for the proposed opening of Neptune Street is contained in the notice of December 22, 1995 sent by petitioner to respondent BAVA, through its president. The notice does not cite any ordinance or law, either by the Sangguniang Panlungsod of Makati City or by the MMDA, as the legal basis for the proposed opening of Neptune Street. Petitioner MMDA simply relied on its authority under its charter "to rationalize the use of roads and/or thoroughfares for the safe and convenient movement of persons." Rationalizing the use of roads and thoroughfares is one of the acts that fall within the scope of transport and traffic management. By no stretch of the imagination, however, can this be interpreted as an express or implied grant of ordinance-making power, much less police power.

Secondly, the MMDA is not the same entity as the MMC in Sangalang. Although the MMC is the forerunner of the present MMDA, an examination of Presidential Decree (P. D.) No. 824, the charter of the MMC, shows that the latter possessed greater powers which were not bestowed on the present MMDA.

Metropolitan Manila was first created in 1975 by Presidential Decree (P.D.) No. 824. It comprised the Greater Manila Area composed of the contiguous four (4) cities of Manila, Quezon, Pasay and Caloocan, and the thirteen (13) municipalities of Makati, Mandaluyong, San Juan, Las Pinas, Malabon, Navotas, Pasig, Pateros, Paranaque, Marikina, Muntinlupa and Taguig in the province of Rizal, and Valenzuela in the province of Bulacan. 40Metropolitan

Manila was created as a response to the finding that the rapid growth of population and the increase of social and economic requirements in these areas demand a call for simultaneous and unified development; that the public services rendered by the respective local governments could be administered more efficiently and economically if integrated under a system of central planning; and this coordination, "especially in the maintenance of peace and order and the eradication of social and economic ills that fanned the flames of rebellion and discontent [were] part of reform measures under Martial Law essential to the safety and security of the State." 41

Metropolitan Manila was established as a "public corporation" with the following powers:

Sec. 1. Creation of the Metropolitan Manila. — There is hereby created a public corporation, to be known as the Metropolitan Manila, vested with powers and attributes of a corporation including the power to make contracts, sue and be sued, acquire, purchase, expropriate, hold, transfer and dispose of property and such other powers as are necessary to carry out its purposes. The Corporation shall be administered by a Commission created under this Decree. 42

The administration of Metropolitan Manila was placed under the Metro Manila Commission (MMC) vested with the following powers:

Sec. 4. Powers and Functions of the Commission. — The Commission shall have the following powers and functions:

1. To act as a central government to establish and administer programs and provide services common to the area;

2. To levy and collect taxes and special assessments, borrow and expend money and issue bonds, revenue certificates, and other obligations of indebtedness. Existing tax measures should, however, continue to be operative until otherwise modified or repealed by the Commission;

3. To charge and collect fees for the use of public service facilities;

4. To appropriate money for the operation of the metropolitan government and review appropriations for the city and municipal units within its jurisdiction with authority to disapprove the same if








found to be not in accordance with the established policies of the Commission, without prejudice to any contractual obligation of the local government units involved existing at the time of approval of this Decree;

5. To review, amend, revise or repeal all ordinances, resolutions and acts of cities and municipalities within Metropolitan Manila;

6. To enact or approve ordinances, resolutions and to fix penalties for any violation thereof which shall not exceed a fine of P10,000.00 or imprisonment of six years or both such fine and imprisonment for a single offense;

7. To perform general administrative, executive and policy-making functions;

8. To establish a fire control operation center, which shall direct the fire services of the city and municipal governments in the metropolitan area;

9. To establish a garbage disposal operation center, which shall direct garbage collection and disposal in the metropolitan area;

10. To establish and operate a transport and traffic center, which shall direct traffic activities;

11. To coordinate and monitor governmental and private activities pertaining to essential services such as transportation, flood control and drainage, water supply and sewerage, social, health and environmental services, housing, park development, and others;

12. To insure and monitor the undertaking of a comprehensive social, economic and physical planning and development of the area;

13. To study the feasibility of increasing barangay participation in the affairs of their respective local governments and to propose to the President of the Philippines definite programs and policies for implementation;

14. To submit within thirty (30) days after the close of each fiscal year an annual report to the President of the Philippines and to submit a periodic report whenever deemed necessary; and

15. To perform such other tasks as may be assigned or directed by the President of the Philippines.

The MMC was the "central government" of Metro Manila for the purpose of establishing and administering programs providing services common to the area. As a "central government" it had the power to levy and collect taxes and special assessments, the power to charge and collect fees; the power to appropriate money for its operation, and at the same time, review appropriations for the city and municipal units within its jurisdiction. It was bestowed the power to enact or approve ordinances, resolutions and fix penalties for violation of such ordinances and resolutions. It also had the power to review, amend, revise or repeal all ordinances, resolutions and acts of any of the four (4) cities and thirteen (13) municipalities comprising Metro Manila.

P.D. No. 824 further provided:

Sec. 9. Until otherwise provided, the governments of the four cities and thirteen municipalities in the Metropolitan Manila shall continue to exist in their present form except as may be inconsistent with this Decree. The members of the existing city and municipal councils in Metropolitan Manila shall, upon promulgation of this Decree, and until December 31, 1975, become members of the Sangguniang Bayan which is hereby created for every city and municipality of Metropolitan Manila.

In addition, the Sangguniang Bayan shall be composed of as many barangay captains as may be determined and chosen by the Commission, and such number of representatives from other sectors of the society as may be appointed by the President upon recommendation of the Commission.

x x x x x x x x x

The Sangguniang Bayan may recommend to the Commission ordinances, resolutions or such measures as it may adopt; Provided, that no such ordinance, resolution or measure shall become effective, until after its approval by the Commission; and


Provided further, that the power to impose taxes and other levies, the power to appropriate money and the power to pass ordinances or resolutions with penal sanctions shall be vested exclusively in the Commission.

The creation of the MMC also carried with it the creation of the Sangguniang Bayan. This was composed of the members of the component city and municipal councils, barangay captains chosen by the MMC and sectoral representatives appointed by the President. The Sangguniang Bayan had the power to recommend to the MMC the adoption of ordinances, resolutions or measures. It was the MMC itself, however, that possessed legislative powers. All ordinances, resolutions and measures recommended by the Sangguniang Bayan were subject to the MMC's approval. Moreover, the power to impose taxes and other levies, the power to appropriate money, and the power to pass ordinances or resolutions with penal sanctions were vested exclusively in the MMC.

Thus, Metropolitan Manila had a "central government," i.e., the MMC which fully possessed legislative police powers. Whatever legislative powers the component cities and municipalities had were all subject to review and approval by the MMC.

After President Corazon Aquino assumed power, there was a clamor to restore the autonomy of the local government units in Metro Manila. Hence, Sections 1 and 2 of Article X of the 1987 Constitution provided:

Sec. 1. The territorial and political subdivisions of the Republic of the Philippines are the provinces, cities, municipalities and barangays. There shall be autonomous regions in Muslim Mindanao and the Cordilleras as herein provided.

Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.

The Constitution, however, recognized the necessity of creating metropolitan regions not only in the existing National Capital Region but also in potential equivalents in the Visayas and Mindanao. 43 Section 11 of the same Article X thus provided:

Sec. 11. The Congress may, by law, create special metropolitan political subdivisions, subject to a plebiscite as set forth in Section 10 hereof. The component cities and municipalities shall retain their

basic autonomy and shall be entitled to their own local executives and legislative assemblies. The jurisdiction of the metropolitan authority that will thereby be created shall be limited to basic services requiring coordination.

Constitution itself expressly provides that Congress may, by law, create "special metropolitan political subdivisions" which shall be subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected; the jurisdiction of this subdivision shall be limited to basic services requiring coordination; and the cities and municipalities comprising this subdivision shall retain their basic services requiring coordination; and the cities and municipalities comprising this subdivision shall retain their basic autonomy and their own local executive and legislative assemblies. 44 Pending enactment of this law, the Transitory Provisions of the Constitution gave the President of the Philippines the power to constitute the Metropolitan Authority, viz:

Sec. 8. Until otherwise provided by Congress, the President may constitute the Metropolitan Authority to be composed of the heads of all local government units comprising the Metropolitan Manila area. 45

In 1990, President Aquino issued Executive Order (E. O.) No. 392 and constituted the Metropolitan Manila Authority (MMA). The powers and functions of the MMC were devolved to the MMA. 46 It ought to be stressed, however, that not all powers and functions of the MMC were passed to the MMA. The MMA's power was limited to the "delivery of basic urban services requiring coordination in Metropolitan Manila." 47 The MMA's governing body, the Metropolitan Manila Council, although composed of the mayors of the component cities and municipalities, was merely given power of: (1) formulation of policies on the delivery of basic services requiring coordination and consolidation; and (2) promulgation resolutions and other issuances, approval of a code of basic services and the exercise of its rule-making power. 48

Under the 1987 Constitution, the local government units became primarily responsible for the governance of their respective political subdivisions. The MMA's jurisdiction was limited to addressing common problems involving basic services that transcended local boundaries. It did not have legislative power. Its power was merely to provide the local government units technical assistance in the preparation of local development plans. Any semblance of legislative power it had was confined to a "review [of] legislation proposed by the local legislative assemblies to ensure








consistency among local governments and with the comprehensive development plan of Metro Manila," and to "advise the local governments accordingly." 49

When R.A. No. 7924 took effect, Metropolitan Manila became a "special development and administrative region" and the MMDA a "special development authority" whose functions were "without prejudice to the autonomy of the affected local government units." The character of the MMDA was clearly defined in the legislative debates enacting its charter.

R.A. No. 7924 originated as House Bill No. 14170/11116 and was introduced by several legislators led by Dante Tinga, Roilo Golez and Feliciano Belmonte. It was presented to the House of Representatives by the Committee on Local Governments chaired by Congressman Ciriaco R. Alfelor. The bill was a product of Committee consultations with the local government units in the National Capital Region (NCR), with former Chairmen of the MMC and MMA, 50 and career officials of said agencies. When the bill was first taken up by the Committee on Local Governments, the following debate took place:

THE CHAIRMAN [Hon. Ciriaco Alfelor]: Okay, Let me explain. This has been debated a long time ago, you know. It's a special . . . we can create a special metropolitan political subdivision.

Actually, there are only six (6) political subdivisions provided for in the Constitution: barangay, municipality, city, province, and we have the Autonomous Region of Mindanao and we have the Cordillera. So we have 6. Now. . . . .

HON. [Elias] LOPEZ: May I interrupt, Mr. Chairman. In the case of the Autonomous Region, that is also specifically mandated by the Constitution.

THE CHAIRMAN: That's correct. But it is considered to be a political subdivision. What is the meaning of a political subdivision? Meaning to say, that it has its own government, it has its own political personality, it has the power to tax, and all governmental powers: police power and everything. All right. Authority is different; because it does not have its own government. It is only a council, it is an organization of political subdivision, powers, "no, which is not imbued with any political power.

If you go over Section 6, where the powers and functions of the Metro Manila Development Authority, it is purely coordinative. And it provides here that the council is policy-making. All right.

Under the Constitution is a Metropolitan Authority with coordinative power. Meaning to say, it coordinates all of the different basic services which have to be delivered to the constituency. All right.

There is now a problem. Each local government unit is given its respective . . . as a political subdivision. Kalookan has its powers, as provided for and protected and guaranteed by the Constitution. All right, the exercise. However, in the exercise of that power, it might be deleterious and disadvantageous to other local government units. So, we are forming an authority where all of these will be members and then set up a policy in order that the basic services can be effectively coordinated. All right.

Of course, we cannot deny that the MMDA has to survive. We have to provide some funds, resources. But it does not possess any political power. We do not elect the Governor. We do not have the power to tax. As a matter of fact, I was trying to intimate to the author that it must have the power to sue and be sued because it coordinates. All right. It coordinates practically all these basic services so that the flow and the distribution of the basic services will be continuous. Like traffic, we cannot deny that. It's before our eyes. Sewerage, flood control, water system, peace and order, we cannot deny these. It's right on our face. We have to look for a solution. What would be the right solution? All right, we envision that there should be a coordinating agency and it is called an authority. All right, if you do not want to call it an authority, it's alright. We may call it a council or maybe a management agency.

x x x x x x x x x 51

Clearly, the MMDA is not a political unit of government. The power delegated to the MMDA is that given to the Metro Manila Council to promulgate administrative rules and regulations in the implementation of the MMDA's functions. There is no grant of authority to enact ordinances and regulations for the general welfare of the inhabitants of the metropolis. This was explicitly stated in the last Committee deliberations prior to the bill's presentation to Congress. Thus:





THE CHAIRMAN: Yeah, but we have to go over the suggested revision. I think this was already approved before, but it was reconsidered in view of the proposals, set-up, to make the MMDA stronger. Okay, so if there is no objection to paragraph "f". . . And then next is paragraph "b," under Section 6. "It shall approve metro-wide plans, programs and projects and issue ordinances or resolutions deemed necessary by the MMDA to carry out the purposes of this Act." Do you have the powers? Does the MMDA... because that takes the form of a local government unit, a political subdivision.

HON. [Feliciano] BELMONTE: Yes, I believe so, your Honor. When we say that it has the policies, it's very clear that those policies must be followed. Otherwise, what's the use of empowering it to come out with policies. Now, the policies may be in the form of a resolution or it may be in the form of a ordinance. The term "ordinance" in this case really gives it more teeth, your honor. Otherwise, we are going to see a situation where you have the power to adopt the policy but you cannot really make it stick as in the case now, and I think here is Chairman Bunye. I think he will agree that that is the case now. You've got the power to set a policy, the body wants to follow your policy, then we say let's call it an ordinance and see if they will not follow it.

THE CHAIRMAN: That's very nice. I like that. However, there is a constitutional impediment.1âwphi1 You are making this MMDA a political subdivision. The creation of the MMDA would be subject to a plebiscite. That is what I'm trying to avoid. I've been trying to avoid this kind of predicament. Under the Constitution it states: if it is a political subdivision, once it is created it has to be subject to a plebiscite. I'm trying to make this as administrative. That's why we place the Chairman as a cabinet rank.

HON. BELMONTE: All right, Mr. Chairman, okay, what you are saying there is . . . . .

THE CHAIRMAN: In setting up ordinances, it is a political exercise, Believe me.

HON. [Elias] LOPEZ: Mr. Chairman, it can be changed into issuances of rules and regulations. That would be . . . it shall also be enforced.

HON. BELMONTE: Okay, I will . . . .

HON. LOPEZ: And you can also say that violation of such rule, you impose a sanction. But you know, ordinance has a different legal connotation.

HON. BELMONTE: All right, I defer to that opinion, your Honor.

THE CHAIRMAN: So instead of ordinances, say rules and regulations.

HON. BELMONTE: Or resolutions. Actually, they are actually considering resolutions now.

THE CHAIRMAN: Rules and resolutions.

HON. BELMONTE: Rules, regulations and resolutions. 52

The draft of H. B. No. 14170/11116 was presented by the Committee to the House of Representatives. The explanatory note to the bill stated that the proposed MMDA is a "development authority" which is a "national agency, not a political government unit." 53 The explanatory note was adopted as the sponsorship speech of the Committee on Local Governments. No interpellations or debates were made on the floor and no amendments introduced. The bill was approved on second reading on the same day it was presented. 54

When the bill was forwarded to the Senate, several amendments were made.1âwphi1 These amendments, however, did not affect the nature of the MMDA as originally conceived in the House of Representatives. 55

It is thus beyond doubt that the MMDA is not a local government unit or a public corporation endowed with legislative power. It is not even a "special metropolitan political subdivision" as contemplated in Section 11, Article X of the Constitution. The creation of a "special metropolitan political subdivision" requires the approval by a majority of the votes cast in a plebiscite in the political units directly affected." 56 R. A. No. 7924 was not submitted to the inhabitants of Metro Manila in a plebiscite. The Chairman of the MMDA is not an official elected by the people, but appointed by the President with the rank and privileges of a cabinet member. In fact, part of his function is to perform such other duties as may be assigned to him by the President, 57 whereas in local government units, the President merely








exercises supervisory authority. This emphasizes the administrative character of the MMDA.

Clearly then, the MMC under P.D. No. 824 is not the same entity as the MMDA under R.A. No. 7924. Unlike the MMC, the MMDA has no power to enact ordinances for the welfare of the community. It is the local government units, acting through their respective legislative councils, that possess legislative power and police power. In the case at bar, the Sangguniang Panlungsod of Makati City did not pass any ordinance or resolution ordering the opening of Neptune Street, hence, its proposed opening by petitioner MMDA is illegal and the respondent Court of Appeals did not err in so ruling. We desist from ruling on the other issues as they are unnecessary.

We stress that this decision does not make light of the MMDA's noble efforts to solve the chaotic traffic condition in Metro Manila. Everyday, traffic jams and traffic bottlenecks plague the metropolis. Even our once sprawling boulevards and avenues are now crammed with cars while city streets are clogged with motorists and pedestrians. Traffic has become a social malaise affecting our people's productivity and the efficient delivery of goods and services in the country. The MMDA was created to put some order in the metropolitan transportation system but unfortunately the powers granted by its charter are limited. Its good intentions cannot justify the opening for public use of a private street in a private subdivision without any legal warrant. The promotion of the general welfare is not antithetical to the preservation of the rule of law.1âwphi1.nêt

IN VIEW WHEREOF, the petition is denied. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 39549 are affirmed.

SO ORDERED.

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



Manila

EN BANC

G.R. No. L-24670 December 14, 1979

ORTIGAS & CO., LIMITED PARTNERSHIP, plaintiff-appellant, vs.FEATI BANK AND TRUST CO., defendant-appellee.

Ramirez & Ortigas for appellant.

Tañada, Teehankee & Carreon for appellee.

SANTOS, J.:

An appeal interposed on June 23, 1965 by plaintiff-appellant, Ortigas & Co., Limited Partnership, from the decision of the Court of First Instance of Rizal, Branch VI, at Pasig, Hon. Andres Reyes presiding, which dismissed its complaint in Civil Case No. 7706, entitled, "Ortigas & Company, Limited Partnership, plaintiff, v. Feati Bank and Trust Company, defendant," for lack of merit.

The following facts — a reproduction of the lower court's findings, which, in turn, are based on a stipulation of facts entered into by the parties are not disputed. Plaintiff (formerly known as "Ortigas, Madrigal y Cia") is a limited partnership and defendant Feati Bank and Trust Co., is a corporation duly organized and existing in accordance with the laws of the Philippines. Plaintiff is engaged in real estate business, developing and selling lots to the public, particularly the Highway Hills Subdivision along Epifanio de los Santos Avenue, Mandaluyong, Rizal.1

On March 4, 1952, plaintiff, as vendor, and Augusto Padilla y Angeles and Natividad Angeles, as vendees, entered into separate agreements of sale on installments over two parcels of land, known as Lots Nos. 5 and 6, Block 31, of the Highway Hills Subdivision, situated at Mandaluyong, Rizal. On July 19, 1962, the said vendees transferred their rights and interests over the

aforesaid lots in favor of one Emma Chavez. Upon completion of payment of the purchase price, the plaintiff executed the corresponding deeds of sale in favor of Emma Chavez. Both the agreements (of sale on installment) and the deeds of sale contained the stipulations or restrictions that:

1. The parcel of land subject of this deed of sale shall be used the Buyer exclusively for residential purposes, and she shall not be entitled to take or remove soil, stones or gravel from it or any other lots belonging to the Seller.

2. All buildings and other improvements (except the fence) which may be constructed at any time in said lot must be, (a) of strong materials and properly painted, (b) provided with modern sanitary installations connected either to the public sewer or to an approved septic tank, and (c) shall not be at a distance of less than two (2) meters from its boundary lines. 2

The above restrictions were later annotated in TCT Nos. 101509 and 101511 of the Register of Deeds of Rizal, covering the said lots and issued in the name of Emma Chavez. 3

Eventually, defendant-appellee acquired Lots Nos. 5 and 6, with TCT Nos. 101613 and 106092 issued in its name, respectively and the building restrictions were also annotated therein. 4 Defendant-appellee bought Lot No. 5 directly from Emma Chavez, "free from all liens and encumbrances as stated in Annex 'D', 5 while Lot No. 6 was acquired from Republic Flour Mills through a "Deed of Exchange," Annex "E". 6 TCT No. 101719 in the name of Republic Flour Mills likewise contained the same restrictions, although defendant-appellee claims that Republic Flour Mills purchased the said Lot No. 6 "in good faith. free from all liens and encumbrances," as stated in the Deed of Sale, Annex "F" 7 between it and Emma Chavez.

Plaintiff-appellant claims that the restrictions annotated on TCT Nos. 101509, 101511, 101719, 101613, and 106092 were imposed as part of its general building scheme designed for the beautification and development of the Highway Hills Subdivision which forms part of the big landed estate of plaintiff-appellant where commercial and industrial sites are also designated or established. 8

Defendant-appellee, upon the other hand, maintains that the area along the western part of Epifanio de los Santos Avenue (EDSA) from Shaw Boulevard to Pasig River, has been declared a commercial and industrial


zone, per Resolution No. 27, dated February 4, 1960 of the Municipal Council of Mandaluyong, Rizal. 9 It alleges that plaintiff-appellant 'completely sold and transferred to third persons all lots in said subdivision facing Epifanio de los Santos Avenue" 10 and the subject lots thereunder were acquired by it "only on July 23, 1962 or more than two (2) years after the area ... had been declared a commercial and industrial zone ... 11

On or about May 5, 1963, defendant-appellee began laying the foundation and commenced the construction of a building on Lots Nos. 5 and 6, to be devoted to banking purposes, but which defendant-appellee claims could also be devoted to, and used exclusively for, residential purposes. The following day, plaintiff-appellant demanded in writing that defendant-appellee stop the construction of the commerical building on the said lots. The latter refused to comply with the demand, contending that the building was being constructed in accordance with the zoning regulations, defendant-appellee having filed building and planning permit applications with the Municipality of Mandaluyong, and it had accordingly obtained building and planning permits to proceed with the construction.12

On the basis of the foregoing facts, Civil Case No. 7706, supra, was submitted in the lower court for decision. The complaint sought, among other things, the issuance of "a writ of preliminary injunction ... restraining and enjoining defendant, its agents, assigns, and those acting on its or their behalf from continuing or completing the construction of a commercial bank building in the premises ... involved, with the view to commanding the defendant to observe and comply with the building restrictions annotated in the defendant's transfer certificate of title."

In deciding the said case, the trial court considered, as the fundamental issue, whether or not the resolution of the Municipal Council of Mandaluyong declaring Lots Nos. 5 and 6, among others, as part of the commercial and industrial zone of the municipality, prevailed over the building restrictions imposed by plaintiff-appellant on the lots in question. 13 The records do not show that a writ of preliminary injunction was issued.

The trial court upheld the defendant-appellee and dismissed the complaint, holding that the subject restrictions were subordinate to Municipal Resolution No. 27, supra. It predicated its conclusion on the exercise of police power of the said municipality, and stressed that private interest should "bow down to general interest and welfare. " In short, it upheld the classification by the Municipal Council of the area along Epifanio de los Santos Avenue as a commercial and industrial zone, and held that the same rendered "ineffective and unenforceable" the restrictions in question as against defendant-

appellee. 14 The trial court decision further emphasized that it "assumes said resolution to be valid, considering that there is no issue raised by either of the parties as to whether the same is null and void. 15

On March 2, 1965, plaintiff-appellant filed a motion for reconsideration of the above decision, 16 which motion was opposed by defendant-appellee on March 17, 1965. 17 It averred, among others, in the motion for reconsideration that defendant- appellee "was duty bound to comply with the conditions of the contract of sale in its favor, which conditions were duly annotated in the Transfer Certificates of Title issued in her (Emma Chavez) favor." It also invited the trial court's attention to its claim that the Municipal Council had (no) power to nullify the contractual obligations assumed by the defendant corporation." 18

The trial court denied the motion for reconsideration in its order of March 26, 1965. 19

On April 2, 1965 plaintiff-appellant filed its notice of appeal from the decision dismissing the complaint and from the order of March 26, 1965 denying the motion for reconsideration, its record on appeal, and a cash appeal bond." 20 On April 14, the appeal was given due course 21 and the records of the case were elevated directly to this Court, since only questions of law are raised. 22

Plaintiff-appellant alleges in its brief that the trial court erred —

I. When it sustained the view that Resolution No. 27, series of 1960 of the Municipal Council of Mandaluyong, Rizal declaring Lots Nos. 5 and 6, among others, as part of the commercial and industrial zone, is valid because it did so in the exercise of its police power; and

II. When it failed to consider whether or not the Municipal Council had the power to nullify the contractual obligations assumed by defendant-appellee and when it did not make a finding that the building was erected along the property line, when it should have been erected two meters away from said property line. 23

The defendant-appellee submitted its counter-assignment of errors. In this connection, We already had occasion to hold in Relativo v. Castro 24 that "(I)t


is not incumbent on the appellee, who occupies a purely defensive position, and is seeking no affirmative relief, to make assignments of error, "

The only issues to be resolved, therefore, are: (1) whether Resolution No. 27 s-1960 is a valid exercise of police power; and (2) whether the said Resolution can nullify or supersede the contractual obligations assumed by defendant-appellee.

1. The contention that the trial court erred in sustaining the validity of Resolution No. 27 as an exercise of police power is without merit. In the first place, the validity of the said resolution was never questioned before it. The rule is that the question of law or of fact which may be included in the appellant's assignment of errors must be those which have been raised in the court below, and are within the issues framed by the parties. 25 The object of requiring the parties to present all questions and issues to the lower court before they can be presented to the appellate court is to enable the lower court to pass thereon, so that the appellate court upon appeal may determine whether or not such ruling was erroneous. The requirement is in furtherance of justice in that the other party may not be taken by surprise.26 The rule against the practice of blowing "hot and cold" by assuming one position in the trial court and another on appeal will, in the words of Elliot, prevent deception. 27 For it is well-settled that issues or defenses not raised 28 or properly litigated 29 or pleaded 30 in the Court below cannot be raised or entertained on appeal.

In this particular case, the validity of the resolution was admitted at least impliedly, in the stipulation of facts below. when plaintiff-appellant did not dispute the same. The only controversy then as stated by the trial court was whether or not the resolution of the Municipal Council of Mandaluyong ... which declared lots Nos. 4 and 5 among others, as a part of the commercial and industrial zone of the municipality, prevails over the restrictions constituting as encumbrances on the lots in question. 31 Having admitted the validity of the subject resolution below, even if impliedly, plaintiff-appellant cannot now change its position on appeal.

But, assuming arguendo that it is not yet too late in the day for plaintiff-appellant to raise the issue of the invalidity of the municipal resolution in question, We are of the opinion that its posture is unsustainable. Section 3 of R.A. No. 2264, otherwise known as the Local Autonomy Act," 32 empowers a Municipal Council "to adopt zoning and subdivision ordinances or regulations"; 33 for the municipality. Clearly, the law does not restrict the exercise of the power through an ordinance. Therefore, granting that Resolution No. 27 is not an ordinance, it certainly is a regulatory measure

within the intendment or ambit of the word "regulation" under the provision. As a matter of fact the same section declares that the power exists "(A)ny provision of law to the contrary notwithstanding ... "

An examination of Section 12 of the same law 34 which prescribes the rules for its interpretation likewise reveals that the implied power of a municipality should be "liberally construed in its favor" and that "(A)ny fair and reasonable doubt as to the existence of the power should be interpreted in favor of the local government and it shall be presumed to exist." The same section further mandates that the general welfare clause be liberally interpreted in case of doubt, so as to give more power to local governments in promoting the economic conditions, social welfare and material progress of the people in the community. The only exceptions under Section 12 are existing vested rights arising out of a contract between "a province, city or municipality on one hand and a third party on the other," in which case the original terms and provisions of the contract should govern. The exceptions, clearly, do not apply in the case at bar.

2. With regard to the contention that said resolution cannot nullify the contractual obligations assumed by the defendant-appellee – referring to the restrictions incorporated in the deeds of sale and later in the corresponding Transfer Certificates of Title issued to defendant-appellee – it should be stressed, that while non-impairment of contracts is constitutionally guaranteed, the rule is not absolute, since it has to be reconciled with the legitimate exercise of police power, i.e., "the power to prescribe regulations to promote the health, morals, peace, education, good order or safety and general welfare of the people. 35 Invariably described as "the most essential, insistent, and illimitable of powers" 36 and "in a sense, the greatest and most powerful attribute of government, 37 the exercise of the power may be judicially inquired into and corrected only if it is capricious, 'whimsical, unjust or unreasonable, there having been a denial of due process or a violation of any other applicable constitutional guarantee. 38 As this Court held through Justice Jose P. Bengzon in Philippine Long Distance Company vs. City of Davao, et al. 39 police power "is elastic and must be responsive to various social conditions; it is not, confined within narrow circumscriptions of precedents resting on past conditions; it must follow the legal progress of a democratic way of life." We were even more emphatic inVda. de Genuino vs. The Court of Agrarian Relations, et al., 40 when We declared: "We do not see why public welfare when clashing with the individual right to property should not be made to prevail through the state's exercise of its police power.

Resolution No. 27, s-1960 declaring the western part of highway 54, now E. de los Santos Avenue (EDSA, for short) from Shaw Boulevard to the Pasig River as an industrial and commercial zone, was obviously passed by the


Municipal Council of Mandaluyong, Rizal in the exercise of police power to safeguard or promote the health, safety, peace, good order and general welfare of the people in the locality, Judicial notice may be taken of the conditions prevailing in the area, especially where lots Nos. 5 and 6 are located. The lots themselves not only front the highway; industrial and commercial complexes have flourished about the place. EDSA, a main traffic artery which runs through several cities and municipalities in the Metro Manila area, supports an endless stream of traffic and the resulting activity, noise and pollution are hardly conducive to the health, safety or welfare of the residents in its route. Having been expressly granted the power to adopt zoning and subdivision ordinances or regulations, the municipality of Mandaluyong, through its Municipal 'council, was reasonably, if not perfectly, justified under the circumstances, in passing the subject resolution.

The scope of police power keeps expanding as civilization advances, stressed this Court, speaking thru Justice Laurel in the leading case of Calalang v. Williams et al., 41 Thus-

As was said in the case of Dobbins v. Los Angeles (195 US 223, 238 49 L. ed. 169), 'the right to exercise the police power is a continuing one, and a business lawful today may in the future, because of changed situation, the growth of population or other causes, become a menace to the public health and welfare, and be required to yield to the public good.' And in People v. Pomar (46 Phil. 440), it was observed that 'advancing civilization is bringing within the scope of police power of the state today things which were not thought of as being with in such power yesterday. The development of civilization), the rapidly increasing population, the growth of public opinion, with an increasing desire on the part of the masses and of the government to look after and care for the interests of the individuals of the state, have brought within the police power many questions for regulation which formerly were not so considered. 42 (Emphasis, supplied.)

Thus, the state, in order to promote the general welfare, may interfere with personal liberty, with property, and with business and occupations. Persons may be subjected to all kinds of restraints and burdens, in order to secure the general comfort health and prosperity of the state 43 and to this fundamental aim of our Government, the rights of the individual are subordinated. 44

The need for reconciling the non-impairment clause of the Constitution and the valid exercise of police power may also be gleaned from Helvering v. Davis 45 wherein Mr. Justice Cardozo, speaking for the Court, resolved the conflict "between one welfare and another, between particular and general, thus —

Nor is the concept of the general welfare static. Needs that were narrow or parochial a century ago may be interwoven in our day with the well-being of the nation What is critical or urgent changes with the times. 46

The motives behind the passage of the questioned resolution being reasonable, and it being a " legitimate response to a felt public need," 47 not whimsical or oppressive, the non-impairment of contracts clause of the Constitution will not bar the municipality's proper exercise of the power. Now Chief Justice Fernando puts it aptly when he declared: "Police power legislation then is not likely to succumb to the challenge that thereby contractual rights are rendered nugatory." 48

Furthermore, We restated in Philippine American Life Ins. Co. v. Auditor General 49 that laws and reservation of essential attributes of sovereign power are read into contracts agreed upon by the parties. Thus —

Not only are existing laws read into contracts in order to fix obligations as between the parties, butthe reservation of essential attributes of sovereign power is also read into contracts as a postulate of the legal order. The policy of protecting contracts against impairments presupposes the maintenance of a government by virtue of which contractual relations are worthwhile – a government which retains adequate authority to secure the peace and good order of society.

Again, We held in Liberation Steamship Co., Inc. v. Court of Industrial Relations, 50 through Justice J.B.L. Reyes, that ... the law forms part of, and is read into, every contract, unless clearly excluded therefrom in those cases where such exclusion is allowed." The decision in Maritime Company of the Philippines v. Reparations Commission, 51 written for the Court by Justice Fernando, now Chief Justice, restates the rule.

One last observation. Appellant has placed unqualified reliance on American jurisprudence and authorities 52 to bolster its theory that the municipal resolution in question cannot nullify or supersede the agreement of the


parties embodied in the sales contract, as that, it claims, would impair the obligation of contracts in violation of the Constitution. Such reliance is misplaced.

In the first place, the views set forth in American decisions and authorities are not per se controlling in the Philippines, the laws of which must necessarily be construed in accordance with the intention of its own lawmakers and such intent may be deduced from the language of each law and the context of other local legislation related thereto. 53 and Burgess, et al v. Magarian, et al., 55 two Of the cases cited by plaintiff-appellant, lend support to the conclusion reached by the trial court, i.e. that the municipal resolution supersedes/supervenes over the contractual undertaking between the parties. Dolan v. Brown, states that "Equity will not, as a rule, enforce a restriction upon the use of property by injunction where the property has so changed in character and environment as to make it unfit or unprofitable for use should the restriction be enforced, but will, in such a case, leave the complainant to whatever remedy he may have at law. 56 (Emphasis supplied.) Hence, the remedy of injunction in Dolan vs. Brown was denied on the specific holding that "A grantor may lawfully insert in his deed conditions or restrictions which are not against public policy and do not materially impair the beneficial enjoyment of the estate. 57 Applying the principle just stated to the present controversy, We can say that since it is now unprofitable, nay a hazard to the health and comfort, to use Lots Nos. 5 and 6 for strictly residential purposes, defendants- appellees should be permitted, on the strength of the resolution promulgated under the police power of the municipality, to use the same for commercial purposes. In Burgess v. Magarian et al. it was, held that "restrictive covenants running with the land are binding on all subsequent purchasers ... " However, Section 23 of the zoning ordinance involved therein contained a proviso expressly declaring that the ordinance was not intended "to interfere with or abrogate or annul any easements, covenants or other agreement between parties." 58 In the case at bar, no such proviso is found in the subject resolution.

It is, therefore, clear that even if the subject building restrictions were assumed by the defendant-appellee as vendee of Lots Nos. 5 and 6, in the corresponding deeds of sale, and later, in Transfer Certificates of Title Nos. 101613 and 106092, the contractual obligations so assumed cannot prevail over Resolution No. 27, of the Municipality of Mandaluyong, which has validly exercised its police power through the said resolution. Accordingly, the building restrictions, which declare Lots Nos. 5 and 6 as residential, cannot be enforced.

IN VIEW OF THE FOREGOING, the decision appealed from, dismissing the complaint, is hereby AFFIRMED. "without pronouncement as to costs.

SO ORDERED.

Makasiar, Antonio, Concepcion, Jr., Fernandez, Guerrero, De Castro and Melencio-Herrera, JJ., concur.

Teehankee * and Aquino,JJ., took no part.

Separate Opinions

BARREDO, J., concurring:

I hold it is a matter of public knowledge that the place in question is commercial. It would be worse if the same were to be left as residential and all around are already commercial.

FERNANDO, C.J., concurring:

The exhaustive and lucid opinion of the Court penned by Justice Guillermo S. Santos commends itself for approval. I feel no hesitancy, therefore, in yielding concurrence, The observation, however, in the dissent of Justice Vicente Abad Santos relative to restrictive covenants calls, to my mind, for further reflection as to the respect to which they are entitled whenever police power legislation, whether on the national or local level, is assailed. Before doing so, however, it may not be amiss to consider further the effect of such all-embracing attribute on existing contracts.

1. Reference was made in the opinion of the Court to Philippine American Life Insurance Company v. Auditor General. 1 The ponente in that case was Justice Sanchez. A concurrence came from me. It contained this qualification: "It cannot be said, without rendering nugatory the constitutional guarantee of non-impairment, and for that matter both the equal protection and due process clauses which equally serve to protect property rights, that at the mere invocation of the police power, the objection on non-impairment grounds automatically loses force. Here, as in other cases where


governmental authority may trench upon property rights, the process of balancing, adjustment or harmonization is called for. 2 After referring to three leading United States Supreme Court decisions, Home Building and Loan Association v. Blaisdell, 3Nebbia v. New York, 4 and Norman v. Baltimore and Ohio Railroad Co., 5 I stated: "All of the above decisions reflect the view that an enactment of a police power measure does not per se call for the overruling of objections based on either due process or non-impairment based on either due process or non-impairment grounds. There must be that balancing, or adjustment, or harmonization of the conflicting claims posed by an exercise of state regulatory power on the one hand and assertion of rights to property, whether of natural or of juridical persons, on the other. 'That is the only way by which the constitutional guarantees may serve the high ends that call for their inclusion in the Constitution and thus effectively preclude ally abusive exercise of governmental authority." 6 Nor did my concurrence stop there: "In the opinion of the Blaisdell case, penned by the then Chief Justice Hughes, there was this understandable stress on balancing or harmonizing, which is called for in litigations of this character: 'The policy of protecting contracts against impairment presupposes the maintenance of a government by virtue of which contractual relations are worthwhile a government which retains adequate authority to secure the peace and good order of society. This principle of harmonizing the constitutional prohibition with the necessary residuum of state power has had progressive recognition in the decisions of this Court.' Also to the same effect: 'Undoubtedly, whatever is reserved of state power must be consistent with the fair intent of the constitutional limitation of that power. The reserve power cannot be construed so as to destroy the limitation, nor is the limitation to be construed to destroy the reserved power in its essential aspects. 'They must be construed in harmony with each other. This principle precludes a construction which would permit the State to adopt as its policy the repudiation of debts or the destruction of contracts or the denial of means to enforce them. But it does not follow that conditions may not arise in which a temporary restraint of enforcement may be consistent with the spirit and purpose of the constitutional provision and thus be found to be within the range of the reserved power of the State to protect the vital interests of the community.' Further on, Chief Justice Hughes likewise stated: 'It is manifest from this review of our decisions that there has been a growing appreciation of public needs and of the necessity of finding ground for a rational compromise between individual rights and public welfare. " 7 This is the concluding paragraph of my concurrence in the Philippine American Life Insurance Co. case: "If emphasis be therefore laid, as this concurring opinion does, on the pressing and inescapable need for such an approach whenever a possible collision between state authority and an assertion of constitutional right to property may exist, it is not to depart from what sound constitutional orthodoxy dictates. It is rather to abide by what is compels. In litigations of this character then, perhaps much more so than in

other disputes, where there is a reliance on a constitutional provision, the judiciary cannot escape what Holmes fitly referred to as the sovereign prerogative of choice, the exercise of which might possibly be impugned if there be no attempt, however slight, at such an effort of adjusting or reconciling the respective claims of state regulatory power and constitutionally protected rights." 8

I adhere to such a view. This is not to say that there is a departure therefrom in the able and scholarly opinion of Justice Santos. It is merely to stress what to my mind is a fundamental postulate of our Constitution. The only point I would wish to add is that in the process of such balancing and adjustment, the present Constitution, the Philippine American Life Insurance Co. decision having been promulgated under the 1935 Charter, leaves no doubt that the claim to property rights based on the non-impairment clause has a lesser weight. For as explicitly provided by our present fundamental law: "The State shall promote social Justice to ensure the dignity, welfare, and security of all the people. Towards this end, the

State shall regulate the acquisition, ownership, use, enjoyment, and disposition of private property, and equitably diffuse property ownership and profits. 9

2. Now as to restrictive convenants, accurately included by Hart and Sacks under the category of "private directive arrangements. " 10 Through them people are enable to agree on how to order their affairs. They could be utilized to govern their affairs. They could be utilized to govern their future conduct. It is a well-known fact that the common law relies to a great extent on such private directive arrangements to attain a desirable social condition. More specifically, such covenants are an important means of ordering one aspect of property relationships. Through them, there could be delimitation of land use rights. It is quite understandable why the law should ordinarily accord them deference, It does so, it has been said, both on grounds of morality and utility. Nonetheless, there are limits to the literal enforcement of their terms. To the extent that they ignore technological or economic progress, they are not automatically entitled to judicial protection. Clearly, they must "speak from one point of time to another." 11 The parties, like all mortal, do not have the power of predicting the future with unfailing certainty. In cases therefore where societal welfare calls for police power legislation, the parties adversely affected should realize that arrangements dealing with property rights are not impressed with sanctity. That approach, in my view, was the guiding principle of the opinion of the Court. f fence my full and entire concurrence.


ABAD SANTOS, J:, dissenting:

Although Resolution No. 27, series of 1960, of the Municipal Council of Mandaluyong, Rizal, is valid until otherwise declared, I do not believe that its enactment was by virtue of the police power of that municipality. I do not here dispute the concept of police power as stated in Primicias vs. Fugoso, 80 Phil. 77 (1948) for as a matter of fact I accept it. And I agree also that it is elastic and must be responsive to various social conditions, etc. as ruled in PLDT vs. City of Davao, L-23080, Oct. 26, 1965, 15 SCRA 244. But Resolution No. 27, cannot be described as promotive of the health, morals, peace, education, good order or safety and general welfare of the people of Mandaluyong. On the contrary, its effect is the opposite. For the serenity, peace and quite of a residential section would by the resolution be replaced by the chaos, turmoil and frenzy of commerce and industry. Where there would be no industrial and noise pollution these bane of so-called progress would now pervade and suffocate the environment to the detriment of the ecology. To characterize the ordinance as an exercise of police power would be retrogressive. It will set back all the efforts of the Ministry of Human Settlements to improve the quality of life especially in Metro Manila. It will make Metro Manila, not the city of man as envisioned by its Governor but a city of commerce and industry.

Considering, therefore, that Resolution No, 2-1 was not enacted in the legitimate exercise of police power, it cannot impair the restrictive covenants which go with the lands that were sold by the plaintiff-appellant. I vote for the reversal of the appealed decision.

# Separate Opinions

BARREDO, J., concurring:

I hold it is a matter of public knowledge that the place in question is commercial. It would be worse if the same were to be left as residential and all around are already commercial.

FERNANDO, C.J., concurring:

The exhaustive and lucid opinion of the Court penned by Justice Guillermo S. Santos commends itself for approval. I feel no hesitancy, therefore, in yielding concurrence, The observation, however, in the dissent of Justice

Vicente Abad Santos relative to restrictive covenants calls, to my mind, for further reflection as to the respect to which they are entitled whenever police power legislation, whether on the national or local level, is assailed. Before doing so, however, it may not be amiss to consider further the effect of such all-embracing attribute on existing contracts.

1. Reference was made in the opinion of the Court to Philippine American Life Insurance Company v. Auditor General. 1 The ponente in that case was Justice Sanchez. A concurrence came from me. It contained this qualification: "It cannot be said, without rendering nugatory the constitutional guarantee of non-impairment, and for that matter both the equal protection and due process clauses which equally serve to protect property rights, that at the mere invocation of the police power, the objection on non-impairment grounds automatically loses force. Here, as in other cases where governmental authority may trench upon property rights, the process of balancing, adjustment or harmonization is called for. 2 After referring to three leading United States Supreme Court decisions, Home Building and Loan Association v. Blaisdell, 3Nebbia v. New York, 4 and Norman v. Baltimore and Ohio Railroad Co., 5 I stated: "All of the above decisions reflect the view that an enactment of a police power measure does not per se call for the overruling of objections based on either due process or non-impairment based on either due process or non-impairment grounds. There must be that balancing, or adjustment, or harmonization of the conflicting claims posed by an exercise of state regulatory power on the one hand and assertion of rights to property, whether of natural or of juridical persons, on the other. 'That is the only way by which the constitutional guarantees may serve the high ends that call for their inclusion in the Constitution and thus effectively preclude ally abusive exercise of governmental authority." 6 Nor did my concurrence stop there: "In the opinion of the Blaisdell case, penned by the then Chief Justice Hughes, there was this understandable stress on balancing or harmonizing, which is called for in litigations of this character: 'The policy of protecting contracts against impairment presupposes the maintenance of a government by virtue of which contractual relations are worthwhile a government which retains adequate authority to secure the peace and good order of society. This principle of harmonizing the constitutional prohibition with the necessary residuum of state power has had progressive recognition in the decisions of this Court.' Also to the same effect: 'Undoubtedly, whatever is reserved of state power must be consistent with the fair intent of the constitutional limitation of that power. The reserve power cannot be construed so as to destroy the limitation, nor is the limitation to be construed to destroy the reserved power in its essential aspects. 'They must be construed in harmony with each other. This principle precludes a construction which would permit the State to adopt as its policy the repudiation of debts or the destruction of contracts or the denial of


means to enforce them. But it does not follow that conditions may not arise in which a temporary restraint of enforcement may be consistent with the spirit and purpose of the constitutional provision and thus be found to be within the range of the reserved power of the State to protect the vital interests of the community.' Further on, Chief Justice Hughes likewise stated: 'It is manifest from this review of our decisions that there has been a growing appreciation of public needs and of the necessity of finding ground for a rational compromise between individual rights and public welfare. " 7 This is the concluding paragraph of my concurrence in the Philippine American Life Insurance Co. case: "If emphasis be therefore laid, as this concurring opinion does, on the pressing and inescapable need for such an approach whenever a possible collision between state authority and an assertion of constitutional right to property may exist, it is not to depart from what sound constitutional orthodoxy dictates. It is rather to abide by what is compels. In litigations of this character then, perhaps much more so than in other disputes, where there is a reliance on a constitutional provision, the judiciary cannot escape what Holmes fitly referred to as the sovereign prerogative of choice, the exercise of which might possibly be impugned if there be no attempt, however slight, at such an effort of adjusting or reconciling the respective claims of state regulatory power and constitutionally protected rights." 8

I adhere to such a view. This is not to say that there is a departure therefrom in the able and scholarly opinion of Justice Santos. It is merely to stress what to my mind is a fundamental postulate of our Constitution. The only point I would wish to add is that in the process of such balancing and adjustment, the present Constitution, the Philippine American Life Insurance Co. decision having been promulgated under the 1935 Charter, leaves no doubt that the claim to property rights based on the non-impairment clause has a lesser weight. For as explicitly provided by our present fundamental law: "The State shall promote social Justice to ensure the dignity, welfare, and security of all the people. Towards this end, the

State shall regulate the acquisition, ownership, use, enjoyment, and disposition of private property, and equitably diffuse property ownership and profits. 9

2. Now as to restrictive convenants, accurately included by Hart and Sacks under the category of "private directive arrangements. " 10 Through them people are enable to agree on how to order their affairs. They could be utilized to govern their affairs. They could be utilized to govern their future conduct. It is a well-known fact that the common law relies to a great extent on such private directive arrangements to attain a desirable social condition. More specifically, such covenants are an important means of ordering one

aspect of property relationships. Through them, there could be delimitation of land use rights. It is quite understandable why the law should ordinarily accord them deference, It does so, it has been said, both on grounds of morality and utility. Nonetheless, there are limits to the literal enforcement of their terms. To the extent that they ignore technological or economic progress, they are not automatically entitled to judicial protection. Clearly, they must "speak from one point of time to another." 11 The parties, like all mortal, do not have the power of predicting the future with unfailing certainty. In cases therefore where societal welfare calls for police power legislation, the parties adversely affected should realize that arrangements dealing with property rights are not impressed with sanctity. That approach, in my view, was the guiding principle of the opinion of the Court. f fence my full and entire concurrence.

ABAD SANTOS, J:, dissenting:

Although Resolution No. 27, series of 1960, of the Municipal Council of Mandaluyong, Rizal, is valid until otherwise declared, I do not believe that its enactment was by virtue of the police power of that municipality. I do not here dispute the concept of police power as stated in Primicias vs. Fugoso, 80 Phil. 77 (1948) for as a matter of fact I accept it. And I agree also that it is elastic and must be responsive to various social conditions, etc. as ruled in PLDT vs. City of Davao, L-23080, Oct. 26, 1965, 15 SCRA 244. But Resolution No. 27, cannot be described as promotive of the health, morals, peace, education, good order or safety and general welfare of the people of Mandaluyong. On the contrary, its effect is the opposite. For the serenity, peace and quite of a residential section would by the resolution be replaced by the chaos, turmoil and frenzy of commerce and industry. Where there would be no industrial and noise pollution these bane of so-called progress would now pervade and suffocate the environment to the detriment of the ecology. To characterize the ordinance as an exercise of police power would be retrogressive. It will set back all the efforts of the Ministry of Human Settlements to improve the quality of life especially in Metro Manila. It will make Metro Manila, not the city of man as envisioned by its Governor but a city of commerce and industry.

Considering, therefore, that Resolution No, 2-1 was not enacted in the legitimate exercise of police power, it cannot impair the restrictive covenants which go with the lands that were sold by the plaintiff-appellant. I vote for the reversal of the appealed decision.



Manila

EN BANC

G.R. No. L-38429 June 30, 1988

CARLOS BALACUIT, LAMBERTO TAN and SERGIO YU CARCEL, petitioners-appellants, vs.COURT OF FIRST INSTANCE OF AGUSAN DEL NORTE AND BUTUAN CITY, Branch 11, and the CITY OF BUTUAN, respondents-appellees.

Romeo B. Sanchez, Eduardo Deza Mercado and Wilfred D. Asis for petitioners.

The City Legal Officer for respondents-appeliees.

GANCAYCO, J.:

At issue in the petition for review before Us is the validity and constitutionality of Ordinance No. 640 passed by the Municipal Board of the City of Butuan on April 21, 1969, the title and text of which are reproduced below:

ORDINANCE--640

ORDINANCE PENALIZING ANY PERSON, GROUP OF PERSONS, ENTITY OR CORPORATION ENGAGED IN THE BUSINESS OF SELLING ADMISSION TICKETS TO ANY MOVIE OR OTHER PUBLIC EXHIBITIONS, GAMES, CONTESTS OR OTHER PERFORMANCES TO REQUIRE CHILDREN BETWEEN SEVEN (7) AND TWELVE (12) YEARS OF AGE TO PAY FULL PAYMENT FOR TICKETS INTENDED FOR ADULTS BUT SHOULD CHARGE ONLY ONE-HALF OF THE SAID TICKET

xxx xxx xxx

Be it ordained by the Municipal Board of the City of Butuan in session assembled, that:

SECTION 1—It shall be unlawful for any person, group of persons, entity, or corporation engaged in the business of selling admission tickets to any movie or other public exhibitions, games, contests, or other performances to require children between seven (7) and twelve (12) years of age to pay full payment for admission tickets intended for adults but should charge only one-half of the value of the said tickets.

SECTION 2—Any person violating the provisions of this Ordinance shall upon conviction be punished by a fine of not less than TWO HUNDRED PESOS (P200.00) but not more than SIX HUNDRED PESOS (P600.00) or an imprisonment of not less than TWO (2) MONTHS or not more than SIX (6) MONTHS or both such firm and imprisonment in the discretion of the Court.

If the violator be a firm or corporation the penalty shall be imposed upon the Manager, Agent or Representative of such firm or corporation.

SECTION 3—This ordinance shall take effect upon its approval.

Petitioners are Carlos Balacuit Lamberto Tan, and Sergio Yu Carcel managers of the Maya and Dalisay Theaters, the Crown Theater, and the Diamond Theater, respectively. Aggrieved by the effect of Ordinance No. 640, they filed a complaint before the Court of First Instance of Agusan del Norte and Butuan City docketed as Special Civil Case No. 237 on June 30, 1969 praying, inter alia, that the subject ordinance be declared unconstitutional and, therefore, void and unenforceable. 1

Upon motion of the petitioners, 2 a temporary restraining order was issued on July 14, 1969 by the court a quo enjoining the respondent City of Butuan and its officials from enforcing Ordinance No. 640. 3 On July 29, 1969, respondents filed their answer sustaining the validity of the ordinance. 4


On January 30, 1973, the litigants filed their stipulation of facts. 5 On June 4, 1973, the respondent court rendered its decision, 6 the dispositive part of which reads:

IN THE LIGHT OF ALL THE FOREGOING, the Court hereby adjudges in favor of the respondents and against the petitioners, as follows:

1. Declaring Ordinance No. 640 of the City of Butuan constitutional and valid: Provided, however, that the fine for a single offense shall not exceed TWO HUNDRED PESOS, as prescribed in the aforequoted Section 15 (nn) of Rep. Act No. 523;

2. Dissolving the restraining order issued by this Court; and;

3. Dismissing the complaint, with costs against the petitioners.

4. SO ORDERED. 7

Petitioners filed their motion for reconsideration 8 of the decision of the court a quo which was denied in a resolution of the said court dated November 10, 1973. 9

Hence, this petition.

Petitioners attack the validity and constitutionality of Ordinance No. 640 on the grounds that it is ultra vires and an invalid exercise of police power.

Petitioners contend that Ordinance No. 640 is not within the power of' the Municipal Board to enact as provided for in Section 15(n) of Republic Act No. 523, the Charter of the City of Butuan, which states:

Sec. 15. General powers and duties of the Board — Except as otherwise provided by law, and subject to the conditions and limitations thereof, the Municipal Board shall have the following legislative powers:

xxx xxx xxx

(n) To regulate and fix the amount of the license fees for the following; . . . theaters, theatrical performances, cinematographs, public exhibitions and all other performances and places of amusements ...

xxx xxx xxx

Respondent City of Butuan, on the other hand, attempts to justify the enactment of the ordinance by invoking the general welfare clause embodied in Section 15 (nn) of the cited law, which provides:

(nn) To enact all ordinances it may deem necessary and proper for the sanitation and safety, the furtherance of the prosperity, and the promotion of the morality, peace, good order, comfort, convenience, and general welfare of the city and its inhabitants, and such others as may be necessary to carry into effect and discharge the powers and duties conferred by this Act, and to fix the penalties for the violation of the ordinances, which shall not exceed a two hundred peso fine or six months imprisonment, or both such fine and imprisonment, for a single offense.

We can see from the aforecited Section 15(n) that the power to regulate and fix the amount of license fees for theaters, theatrical performances, cinematographs, public exhibitions and other places of amusement has been expressly granted to the City of Butuan under its charter. But the question which needs to be resolved is this: does this power to regulate include the authority to interfere in the fixing of prices of admission to these places of exhibition and amusement whether under its general grant of power or under the general welfare clause as invoked by the City?

This is the first time this Court is confronted with the question of direct interference by the local government with the operation of theaters, cinematographs and the like to the extent of fixing the prices of admission to these places. Previous decisions of this Court involved the power to impose license fees upon businesses of this nature as a corollary to the power of the local government to regulate them. Ordinances which required moviehouses or theaters to increase the price of their admission tickets supposedly to cover the license fees have been held to be invalid for these impositions were considered as not merely license fees but taxes for purposes of revenue and not regulation which the cities have no power to exact, 10 unless expressly granted by its charter. 11


Applying the ruling in Kwong Sing v. City of Manila, 12 where the word "regulate" was interpreted to include the power to control, to govern and to restrain, it would seem that under its power to regulate places of exhibitions and amusement, the Municipal Board of the City of Butuan could make proper police regulations as to the mode in which the business shall be exercised.

While in a New York case, 13 an ordinance which regulates the business of selling admission tickets to public exhibitions or performances by virtue of the power of cities under the General City Law "to maintain order, enforce the laws, protect property and preserve and care for the safety, health, comfort and general welfare of the inhabitants of the city and visitors thereto; and for any of said purposes, to regulate and license occupations" was considered not to be within the scope of any duty or power implied in the charter. It was held therein that the power of regulation of public exhibitions and places of amusement within the city granted by the charter does not carry with it any authority to interfere with the price of admission to such places or the resale of tickets or tokens of admission.

In this jurisdiction, it is already settled that the operation of theaters, cinematographs and other places of public exhibition are subject to regulation by the municipal council in the exercise of delegated police power by the local government. 14 Thus, in People v. Chan, 15 an ordinance of the City of Manila prohibiting first run cinematographs from selling tickets beyond their seating capacity was upheld as constitutional for being a valid exercise of police power. Still in another case, 16 the validity of an ordinance of the City of Bacolod prohibiting admission of two or more persons in moviehouses and other amusement places with the use of only one ticket was sustained as a valid regulatory police measure not only in the interest of preventing fraud in so far as municipal taxes are concerned but also in accordance with public health, public safety, and the general welfare.

The City of Butuan, apparently realizing that it has no authority to enact the ordinance in question under its power to regulate embodied in Section 15(n), now invokes the police power as delegated to it under the general welfare clause to justify the enactment of said ordinance.

To invoke the exercise of police power, not only must it appear that the interest of the public generally requires an interference with private rights, but the means adopted must be reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals. 17 The legislature may not, under the guise of protecting the public interest, arbitrarily interfere with private business, or impose unusual

and unnecessary restrictions upon lawful occupations. In other words, the determination as to what is a proper exercise of its police power is not final or conclusive, but is subject to the supervision of the courts. 18

Petitioners maintain that Ordinance No. 640 violates the due process clause of the Constitution for being oppressive, unfair, unjust, confiscatory, and an undue restraint of trade, and violative of the right of persons to enter into contracts, considering that the theater owners are bound under a contract with the film owners for just admission prices for general admission, balcony and lodge.

In Homeowners' Association of the Philippines, Inc. v. Municipal Board of the City of Manila, 19 this Court held:

The authority of municipal corporations to regulate is essentially police power, Inasmuch as the same generally entails a curtailment of the liberty, the rights and/or the property of persons, which are protected and even guaranteed by the Constitution, the exercise of police power is necessarily subject to a qualification, limitation or restriction demanded by the regard, the respect and the obedience due to the prescriptions of the fundamental law, particularly those forming part of the Constitution of Liberty, otherwise known as the Bill of Rights — the police power measure must be reasonable. In other words, individual rights may be adversely affected by the exercise of police power to the extent only — and only to the extent--that may be fairly required by the legitimate demands of public interest or public welfare.

What is the reason behind the enactment of Ordinance No. 640?

A reading of the minutes of the regular session of the Municipal Board when the ordinance in question was passed shows that a certain Councilor Calo, the proponent of the measure, had taken into account the complaints of parents that for them to pay the full price of admission for their children is too financially burdensome.

The trial court advances the view that "even if the subject ordinance does not spell out its raison d'etre in all probability the respondents were impelled by the awareness that children are entitled to share in the joys of their elders, but that considering that, apart from size, children between the ages of seven and twelve cannot fully grasp the nuance of movies or other public


exhibitions, games, contests or other performances, the admission prices with respect to them ought to be reduced. 19a

We must bear in mind that there must be public necessity which demands the adoption of proper measures to secure the ends sought to be attained by the enactment of the ordinance, and the large discretion is necessarily vested in the legislative authority to determine not only what the interests of the public require, but what measures are necessary for the protection of such interests. 20 The methods or means used to protect the public health, morals, safety or welfare, must have some relation to the end in view, for under the guise of the police power, personal rights and those pertaining to private property will not be permitted to be arbitralily invaded by the legislative department. 21

We agree with petitioners that the ordinance is not justified by any necessity for the public interest. The police power legislation must be firmly grounded on public interest and welfare, and a reasonable relation must exist between purposes and means. 22 The evident purpose of the ordinance is to help ease the burden of cost on the part of parents who have to shell out the same amount of money for the admission of their children, as they would for themselves, A reduction in the price of admission would mean corresponding savings for the parents; however, the petitioners are the ones made to bear the cost of these savings. The ordinance does not only make the petitioners suffer the loss of earnings but it likewise penalizes them for failure to comply with it. Furthermore, as petitioners point out, there will be difficulty in its implementation because as already experienced by petitioners since the effectivity of the ordinance, children over 12 years of age tried to pass off their age as below 12 years in order to avail of the benefit of the ordinance. The ordinance does not provide a safeguard against this undesirable practice and as such, the respondent City of Butuan now suggests that birth certificates be exhibited by movie house patrons to prove the age of children. This is, however, not at all practicable. We can see that the ordinance is clearly unreasonable if not unduly oppressive upon the business of petitioners. Moreover, there is no discernible relation between the ordinance and the promotion of public health, safety, morals and the general welfare.

Respondent City of Butuan claims that it was impelled to protect the youth from the pernicious practice of movie operators and other public exhibitions promoters or the like of demanding equal price for their admission tickets along with the adults. This practice is allegedly repugnant and unconscionable to the interest of the City in the furtherance of the prosperity, peace, good order, comfort, convenience and the general well-being of its inhabitants.

There is nothing pernicious in demanding equal price for both children and adults. The petitioners are merely conducting their legitimate businesses. The object of every business entrepreneur is to make a profit out of his venture. There is nothing immoral or injurious in charging the same price for both children and adults. In fact, no person is under compulsion to purchase a ticket. It is a totally voluntary act on the part of the purchaser if he buys a ticket to such performances.

Respondent City of Butuan claims that Ordinance No. 640 is reasonable and necessary to lessen the economic burden of parents whose minor children are lured by the attractive nuisance being maintained by the petitioners. Respondent further alleges that by charging the full price, the children are being exploited by movie house operators. We fail to see how the children are exploited if they pay the full price of admission. They are treated with the same quality of entertainment as the adults. The supposition of the trial court that because of their age children cannot fully grasp the nuances of such entertainment as adults do fails to convince Us that the reduction in admission ticket price is justifiable. In fact, by the very claim of respondent that movies and the like are attractive nuisances, it is difficult to comprehend why the municipal board passed the subject ordinance. How can the municipal authorities consider the movies an attractive nuisance and yet encourage parents and children to patronize them by lowering the price of admission for children? Perhaps, there is some ,truth to the argument of petitioners that Ordinance No. 640 is detrimental to the public good and the general welfare of society for it encourages children of tender age to frequent the movies, rather than attend to their studies in school or be in their homes.

Moreover, as a logical consequence of the ordinance, movie house and theater operators will be discouraged from exhibiting wholesome movies for general patronage, much less children's pictures if only to avoid compliance with the ordinance and still earn profits for themselves. For after all, these movie house and theater operators cannot be compelled to exhibit any particular kind of film except those films which may be dictated by public demand and those which are restricted by censorship laws. So instead of children being able to share in the joys of their elders as envisioned by the trial court, there will be a dearth of wholesome and educational movies for them to enjoy.

There are a number of cases decided by the Supreme Court and the various state courts of the United States which upheld the right of the proprietor of a theater to fix the price of an admission ticket as against the right of the state to interfere in this regard and which We consider applicable to the case at bar.


A theater ticket has been described to be either a mere license, revocable at the will of the proprietor of the theater or it may be evidence of a contract whereby, for a valuable consideration, the purchaser has acquired the right to enter the theater and observe the performance on condition that he behaves properly. 23 Such ticket, therefore, represents a right, Positive or conditional, as the case may be, according to the terms of the original contract of sale. This right is clearly a right of property. The ticket which represents that right is also, necessarily, a species of property. As such, the owner thereof, in the absence of any condition to the contrary in the contract by which he obtained it, has the clear right to dispose of it, to sell it to whom he pleases and at such price as he can obtain. 24 So that an act prohibiting the sale of tickets to theaters or other places of amusement at more than the regular price was held invalid as conflicting with the state constitution securing the right of property. 25

In Collister vs. Hayman, 26 it was held:

The defendants were conducting a private business, which, even if clothed with a public interest, was without a franchise to accommodate the public, and they had the right to control it, the same as the proprietors of any other business, subject to such obligations as were placed upon them by statute. Unlike a carrier of passengers, for instance, with a franchise from the state, and hence under obligation to transport anyone who applies and to continue the business year in and year out, the proprietors of a theater can open and close their place at will, and no one can make a lawful complaint. They can charge what they choose for admission to their theater. They can limit the number admitted. They can refuse to sell tickets and collect the price of admission at the door. They can preserve order and enforce quiet while the performance is going on. They can make it a part of the contract and condition of admission, by giving due notice and printing the condition in the ticket that no one shall be admitted under 21 years of age, or that men only or women only shall be admitted, or that a woman cannot enter unless she is accompanied by a male escort, and the like. The proprietors, in the control of their business, may regulate the terms of admission in any reasonable way. If those terms are not satisfactory, no one is obliged to buy a ticket or make the contract. If the terms are satisfactory, and the contract is made, the minds of the parties meet upon the

condition, and the purchaser impliedly promises to perform it.

In Tyson and Bro. — United Theater Ticket Officers, Inc. vs. Banton, 27 the United States Supreme Court held:

... And certainly a place of entertainment is in no legal sense a public utility; and quite as certainly, its activities are not such that their enjoyment can be regarded under any conditions from the point of view of an emergency.

The interest of the public in theaters and other places of entertainment may be more nearly, and with better reason, assimilated to the like interest in provision stores and markets and in the rental of houses and apartments for residence purposes; although in importance it fails below such an interest in the proportion that food and shelter are of more moment than amusement or instruction. As we have shown there is no legislative power to fix the prices of provisions or clothing, or the rental charges for houses and apartments, in the absence of some controlling emergency; and we are unable to perceive any dissimilarities of such quality or degree as to justify a different rule in respect of amusements and entertainment ...

We are in consonance with the foregoing observations and conclusions of American courts. In this jurisdiction, legislation had been passed controlling the prices of goods commodities and drugs during periods of emergency,28 limiting the net profits of public utility 29 as well as regulating rentals of residential apartments for a limited period, 30 as a matter of national policy in the interest of public health and safety, economic security and the general welfare of the people. And these laws cannot be impugned as unconstitutional for being violative of the due process clause.

However, the same could not be said of theaters, cinematographs and other exhibitions. In no sense could these businesses be considered public utilities. The State has not found it appropriate as a national policy to interfere with the admission prices to these performances. This does not mean however, that theaters and exhibitions are not affected with public interest even to a certain degree. Motion pictures have been considered important both as a medium for the communication of Ideas and expression of the artistic impulse. Their effects on the perceptions by our people of


issues and public officials or public figures as well as the prevailing cultural traits are considerable. 31 People of all ages flock to movie houses, games and other public exhibitions for recreation and relaxation. The government realizing their importance has seen it fit to enact censorship laws to regulate the movie industry.32 Their aesthetic entertainment and even educational values cannot be underestimated. Even police measures regulating the operation of these businesses have been upheld in order to safeguard public health and safety.

Nonetheless, as to the question of the subject ordinance being a valid exercise of police power, the same must be resolved in the negative. While it is true that a business may be regulated, it is equally true that such regulation must be within the bounds of reason, that is, the regulatory ordinance must be reasonable, and its provisions cannot be oppressive amounting to an arbitrary interference with the business or calling subject of regulation. A lawful business or calling may not, under the guise of regulation, be unreasonably interfered with even by the exercise of police power. 33 A police measure for the regulation of the conduct, control and operation of a business should not encroach upon the legitimate and lawful exercise by the citizens of their property rights. 34 The right of the owner to fix a price at which his property shall be sold or used is an inherent attribute of the property itself and, as such, within the protection of the due process clause."" Hence, the proprietors of a theater have a right to manage their property in their own way, to fix what prices of admission they think most for their own advantage, and that any person who did not approve could stay away. 36

Respondent City of Butuan argues that the presumption is always in favor of the validity of the ordinance. This maybe the rule but it has already been held that although the presumption is always in favor of the validity or reasonableness of the ordinance, such presumption must nevertheless be set aside when the invalidity or unreasonableness appears on the face of the ordinance itself or is established by proper evidence. 37 The exercise of police power by the local government is valid unless it contravenes the fundamental law of the land, or an act of the legislature, or unless it is against public policy or is unreasonable, oppressive, partial, discriminating or in derogation of a common right. 38

Ordinance No. 640 clearly invades the personal and property rights of petitioners for even if We could assume that, on its face, the interference was reasonable, from the foregoing considerations, it has been fully shown that it is an unwarranted and unlawful curtailment of the property and personal rights of citizens. For being unreasonable and an undue restraint of

trade, it cannot, under the guise of exercising police power, be upheld as valid.

WHEREFORE, the decision of the trial court in Special Civil Case No. 237 is hereby REVERSED and SET ASIDE and a new judgment is hereby rendered declaring Ordinance No. 640 unconstitutional and, therefore, null and void. This decision is immediately executory.

SO ORDERED.

Yap, C.J., Narvasa, Cruz, Paras, Padilla, Bidin, Sarmiento and Griño-Aquino, JJ., concur.

Separate Opinions

GUTIERREZ, JR., J., Separate opinion

The issue before the Court is a simple one. Does Butuan City have the power to compel theatre owners to charge only half fares for children below twelve even as they charge all other moviegoers full prices for admission into moviehouses?

Instead of nullifying the municipal ordinance through a broad and sweeping justification of property rights, I believe, however, that we should do so on a more limited ground directly bearing on the issue.

I find no rational basis for classifying children as a distinct group insofar as paying for admission into a moviehouse is concerned. There is absolutely no pretense that the municipal ordinance is intended to protect children, enhance their morals, promote their health, safeguard their safety, improve their education, or otherwise promote the general welfare. In fact, the effect of the ordinance may be the opposite.


With the price of movie tickets suddenly within the reach of many children, they may neglect their studies or use money intended for food or school supplies to enter moviehouses. Movie owners who are compelled to accept half prices for a newly increased group of young patrons will be tempted to allow them to enter moviehouses indiscriminately, including those where scenes of violence, crime, or even sex are portrayed. Addiction of the young to movie going is definitely injurious to their health.

The avowed purpose of the ordinance--to ease the burden of costs for parents who have to shell out the same amount of money for the admission of their children as they would for themselves — is not covered by police power. If the city cannot compel refreshment parlors to charge half-prices for hamburgers, soft drinks, pizzas, or cakes consumed by children by what authority can it impose the obligation of similarly easing parents' burdens upon the owners of moviehouses?

As discussed by the minority opinion, 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. The imposition enacted by the municipal board of Butuan City has not been justified by its proponents as a restriction necessary for public health or public welfare. No reasonable relationship has been shown between a valid purpose and the proper means to accomplish it.

I hesitate, however, to make a brief for owners of theatres and expound a laissez faire approach insofar as their businesses are concerned. Movie houses may not be public utilities but as places of entertainment affected with a certain degree of public interest, they are subject to reasonable regulation. That regulation is stronger and more restrictive than that of regular or ordinary businesses.

The following citation for instance, is pure obiter insofar as half-prices for minors are concerned:

... [T]he proprietors of a theater can open and close their place at will, and no one can make 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 a 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. (Collister v. Hayman, 76 N.E. 20,183 N.Y. 250, 253, 1 L.R.A. [N.S.] 1188, 11 Am. St. Rep. 740, An Cas. 344).

I see no reason at this time why we should pass upon situations that are not before us or warn municipal governments beforehand to avoid enacting certain regulations when nobody knows exactly what circumstances may call for those regulations.

For instance,

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 (Law of the State.

Screen and Radio by Marchetti, 1939, ec., page 268). 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 y 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 Ibids, citing Ex-parte Quarg, 84 Pac., 766,149 Cal. 79, 80, 5 L.R.A. [N.S], 183, 117 Am. St. Rep. 11 5, 9 Ann. Ca. 747; Also People v. Steele, 231, III. 340, 344, 14 R.A. [N.S.] 361, 121 Am. St. Rep. 321, 83 N.E. 236). ....

xxx xxx xxx


.... A lawful business or calling may not, under the guise of regulation, be unreasonably interfered with even by the exercise of police power. (Ogden City v. Leo, 54 Utah 556, 182 P. 530) 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 (Pampanga Bus Co., Inc. v. Municipality of Tarlac, 3 SCRA 816). 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 (Tyson and Bro.--United Theater Ticket Officers, Inc. v. Banton, supra). 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 ally person who did not approve could stay away (Ibid, citing v. Clifford v. Brandon, 2 Campb. 358, 368.).

may be interpreted as carte blanche for movie owners to practically ignore municipal regulation and do as they please.

More appropriate to my maid is to state that while tile Butuan City ordinance is invalid, it does not necessarily follow that all forms of regulation are proscribed.

We have ruled in People v. Chan (65 Phil. 612):

In the first place, it must be noted that there can be no doubt that the City of Manila exercises police power, by delegation and that in the exercise of that power it is authorized to enact ordinances for, the regulation of the operation of theatres and cinematographs (sec. 2444(m) and (ee) of the Revised Administrative Code: U.S. v. Gomez Jesus, 31 Phil. 218; U.S. v. Pompeya, 31 Phil. 245).

On April 17, 1935, Ordinance No. 2347 was approved. In section 1 it provides that all first run theatres or cinematographs should register their seating capacity with the City Treasurer, and in section 1 it prohibits the sale of tickets in said theatres or cinematographs in excess of their registered seating capacity.

Before the approval of Ordinance No. 2347, Ordinance No. 2188, approved on July 22, 1933, was in force, section 1 of which divides cinematographs into three different classes: first, second and third. The first class includes those located on certain and specified streets like Rosario, Escolta, etc., which exhibit films for the first time; those belonging to the second class are those which, not being located on said streets, also exhibit films for the first time, and those which, being located on said streets, regularly show films for the second time or which have the exclusive right to show secondhand films; and the third class comprehends all those which are not included in the first and second classes.

xxx xxx xxx

To the foregoing must be added, and this is of common knowledge, that the films which are shown for the first time attract a large attendance, and the theatre or cinematograph, whether it is first or second class, presenting shows for the first time, would be suffocatingly overcrowded if the number of tickets were not limited. This is the reason for the prohibition of the sale of tickets in excess of the seating capacity. The prohibition applies with equal force wherever the same reason exists, that is, to first and second class theatres which show films for the first time. (at pp. 612- 613)

There being a rational basis for the restriction of sales of tickets beyond seating capacity, the ordinance is perfectly valid.

The same is true for the situation found in Samson v. Mayor of Bacolod City (60 SCRA 274):

When it is further remembered that insofar as movie houses and other places of amusement are concerned. (According to Section 17[1] of the City Charter of Bacolod, Commonwealth Act No. 326 119381: 'To regulate and fix the amount of the fees for the following: ... theatres, theatrical performances, cinematographs, public exhibitions, circuses and all other performances and places of amusements ....") the least doubt cannot be entertained as to the validity of a measure prohibiting a


proprietor, lessee or operator of an amusement place to admit two or more persons with only one admission ticket, not only in the interest of preventing fraud insofar as municipal taxes are concerned but also in accordance with public health, public safety and the general welfare. (Cf. People v. Chan, 65 Phil. 611 [1938]). An American Supreme Court decision, Western Turf Association v. Greenberg, (204 US 359 [1907] the opinion being penned by Justice Harlan is equally illuminating: 'The statute is only a regulation of places of public entertainment and amusement upon terms of equal and exact justice to everyone holding a ticket of admission, and who is not, at the time, under the influence of liquor, or boisterous in conduct, or of lewd and immoral character. .... Such a regulation, in itself just, is likewise promotive of peace and good order among those who attend places of public entertainment and amusement. It is neither an arbitrary exertion of the state's inherent or governmental power, nor a violation of any right secured by the constitution of the United States. (at pp. 363-364).

The City of Butuan tries to justify the challenged ordinance by invoking police power. The invocation is improper. The definitions of police power, including its exercise based on the general welfare clause, are emphasized to show that the respondents' arguments have no merit —

Police power is inherent in the State but not in municipal corporations. For a municipal corporation to exercise police power, there must be a legislative grant which necessarily also sets the limits for the exercise of the power.

In the Philippines, the grant of authority to the municipality to exercise police power is embodied in Section 2238 of the Revised Administrative Code, otherwise known as the General Welfare Clause. Chartered cities are granted similar authority in their respective charters

The general welfare clause has two branches. The first authorizes the municipal council to 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 the municipal council by law.

The second branch authorizes the municipality to enact such ordinances as may be necessary and proper for the health and safety, promote the prosperity, improve the morals, peace, good order, comfort, and convenience of the municipality and inhabitants thereof, and for the protection of property therein. (U.S. v. Salaveria 39 Phil. 103).

This Court has generally been liberal in sustaining municipal action based on the general welfare clause. In the case before us, however, there appears to be no basis for sustaining the ordinance even on a generous interpretation of the general welfare clause.

Separate Opinions

GUTIERREZ, JR., J., Separate opinion

The issue before the Court is a simple one. Does Butuan City have the power to compel theatre owners to charge only half fares for children below twelve even as they charge all other moviegoers full prices for admission into moviehouses?

Instead of nullifying the municipal ordinance through a broad and sweeping justification of property rights, I believe, however, that we should do so on a more limited ground directly bearing on the issue.

I find no rational basis for classifying children as a distinct group insofar as paying for admission into a moviehouse is concerned. There is absolutely no pretense that the municipal ordinance is intended to protect children, enhance their morals, promote their health, safeguard their safety, improve their education, or otherwise promote the general welfare. In fact, the effect of the ordinance may be the opposite.

With the price of movie tickets suddenly within the reach of many children, they may neglect their studies or use money intended for food or school supplies to enter moviehouses. Movie owners who are compelled to accept half prices for a newly increased group of young patrons will be tempted to allow them to enter moviehouses indiscriminately, including those where


scenes of violence, crime, or even sex are portrayed. Addiction of the young to movie going is definitely injurious to their health.

The avowed purpose of the ordinance--to ease the burden of costs for parents who have to shell out the same amount of money for the admission of their children as they would for themselves — is not covered by police power. If the city cannot compel refreshment parlors to charge half-prices for hamburgers, soft drinks, pizzas, or cakes consumed by children by what authority can it impose the obligation of similarly easing parents' burdens upon the owners of moviehouses?

As discussed by the minority opinion, 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. The imposition enacted by the municipal board of Butuan City has not been justified by its proponents as a restriction necessary for public health or public welfare. No reasonable relationship has been shown between a valid purpose and the proper means to accomplish it.

I hesitate, however, to make a brief for owners of theatres and expound a laissez faire approach insofar as their businesses are concerned. Movie houses may not be public utilities but as places of entertainment affected with a certain degree of public interest, they are subject to reasonable regulation. That regulation is stronger and more restrictive than that of regular or ordinary businesses.

The following citation for instance, is pure obiter insofar as half-prices for minors are concerned:

... [T]he proprietors of a theater can open and close their place at will, and no one can make 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 a 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. (Collister v. Hayman, 76 N.E. 20,183 N.Y. 250, 253, 1 L.R.A. [N.S.] 1188, 11 Am. St. Rep. 740, An Cas. 344).

I see no reason at this time why we should pass upon situations that are not before us or warn municipal governments beforehand to avoid enacting certain regulations when nobody knows exactly what circumstances may call for those regulations.

For instance,

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 (Law of the State.

Screen and Radio by Marchetti, 1939, ec., page 268). 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 y 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 Ibids, citing Ex-parte Quarg, 84 Pac., 766,149 Cal. 79, 80, 5 L.R.A. [N.S], 183, 117 Am. St. Rep. 11 5, 9 Ann. Ca. 747; Also People v. Steele, 231, III. 340, 344, 14 R.A. [N.S.] 361, 121 Am. St. Rep. 321, 83 N.E. 236). ....

xxx xxx xxx

.... A lawful business or calling may not, under the guise of regulation, be unreasonably interfered with even by the exercise of police power. (Ogden City v. Leo, 54 Utah 556, 182 P. 530) 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 (Pampanga Bus Co., Inc. v. Municipality of Tarlac, 3 SCRA 816). 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 (Tyson and Bro.--United Theater Ticket Officers, Inc. v. Banton, supra). 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 ally person who did not approve could stay away (Ibid, citing v. Clifford v. Brandon, 2 Campb. 358, 368.).

may be interpreted as carte blanche for movie owners to practically ignore municipal regulation and do as they please.

More appropriate to my maid is to state that while tile Butuan City ordinance is invalid, it does not necessarily follow that all forms of regulation are proscribed.

We have ruled in People v. Chan (65 Phil. 612):

In the first place, it must be noted that there can be no doubt that the City of Manila exercises police power, by delegation and that in the exercise of that power it is authorized to enact ordinances for, the regulation of the operation of theatres and cinematographs (sec. 2444(m) and (ee) of the Revised Administrative Code: U.S. v. Gomez Jesus, 31 Phil. 218; U.S. v. Pompeya, 31 Phil. 245).

On April 17, 1935, Ordinance No. 2347 was approved. In section 1 it provides that all first run theatres or cinematographs should register their seating capacity with the City Treasurer, and in section 1 it prohibits the sale of tickets in said theatres or cinematographs in excess of their registered seating capacity.

Before the approval of Ordinance No. 2347, Ordinance No. 2188, approved on July 22, 1933, was in force, section 1 of which divides cinematographs into three

different classes: first, second and third. The first class includes those located on certain and specified streets like Rosario, Escolta, etc., which exhibit films for the first time; those belonging to the second class are those which, not being located on said streets, also exhibit films for the first time, and those which, being located on said streets, regularly show films for the second time or which have the exclusive right to show secondhand films; and the third class comprehends all those which are not included in the first and second classes.

xxx xxx xxx

To the foregoing must be added, and this is of common knowledge, that the films which are shown for the first time attract a large attendance, and the theatre or cinematograph, whether it is first or second class, presenting shows for the first time, would be suffocatingly overcrowded if the number of tickets were not limited. This is the reason for the prohibition of the sale of tickets in excess of the seating capacity. The prohibition applies with equal force wherever the same reason exists, that is, to first and second class theatres which show films for the first time. (at pp. 612- 613)

There being a rational basis for the restriction of sales of tickets beyond seating capacity, the ordinance is perfectly valid.

The same is true for the situation found in Samson v. Mayor of Bacolod City (60 SCRA 274):

When it is further remembered that insofar as movie houses and other places of amusement are concerned. (According to Section 17[1] of the City Charter of Bacolod, Commonwealth Act No. 326 119381: 'To regulate and fix the amount of the fees for the following: ... theatres, theatrical performances, cinematographs, public exhibitions, circuses and all other performances and places of amusements ....") the least doubt cannot be entertained as to the validity of a measure prohibiting a proprietor, lessee or operator of an amusement place to admit two or more persons with only one admission ticket, not only in the interest of preventing fraud insofar as


municipal taxes are concerned but also in accordance with public health, public safety and the general welfare. (Cf. People v. Chan, 65 Phil. 611 [1938]). An American Supreme Court decision, Western Turf Association v. Greenberg, (204 US 359 [1907] the opinion being penned by Justice Harlan is equally illuminating: 'The statute is only a regulation of places of public entertainment and amusement upon terms of equal and exact justice to everyone holding a ticket of admission, and who is not, at the time, under the influence of liquor, or boisterous in conduct, or of lewd and immoral character. .... Such a regulation, in itself just, is likewise promotive of peace and good order among those who attend places of public entertainment and amusement. It is neither an arbitrary exertion of the state's inherent or governmental power, nor a violation of any right secured by the constitution of the United States. (at pp. 363-364).

The City of Butuan tries to justify the challenged ordinance by invoking police power. The invocation is improper. The definitions of police power, including its exercise based on the general welfare clause, are emphasized to show that the respondents' arguments have no merit —

Police power is inherent in the State but not in municipal corporations. For a municipal corporation to exercise police power, there must be a legislative grant which necessarily also sets the limits for the exercise of the power.

In the Philippines, the grant of authority to the municipality to exercise police power is embodied in Section 2238 of the Revised Administrative Code, otherwise known as the General Welfare Clause. Chartered cities are granted similar authority in their respective charters

The general welfare clause has two branches. The first authorizes the municipal council to 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 the municipal council by law. The second branch authorizes the municipality to enact such ordinances as may be necessary and proper for the health and safety, promote the prosperity, improve the

morals, peace, good order, comfort, and convenience of the municipality and inhabitants thereof, and for the protection of property therein. (U.S. v. Salaveria 39 Phil. 103).

This Court has generally been liberal in sustaining municipal action based on the general welfare clause. In the case before us, however, there appears to be no basis for sustaining the ordinance even on a generous interpretation of the general welfare clause.



Manila

EN BANC

G.R. No. 71169 December 22, 1988

JOSE D. SANGALANG and LUTGARDA D. SANGALANG, petitioners, FELIX C. GASTON and DOLORES R. GASTON, JOSE V. BRIONES and ALICIA R. BRIONES, and BEL-AIR VILLAGE ASSOCIATION, INC.,intervenors-petitioners, vs.INTERMEDIATE APPELLATE COURT, and AYALA CORPORATION, respondents.

G.R. No. 74376 December 22, 1988

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner, vs.THE INTERMEDIATE APPELLATE COURT, ROSARIO DE JESUS TENORIO, and CECILIA GONZALVEZ,respondents.

G.R. No. 76394 December 22,1988

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner, vs.THE COURT OF APPEALS, and EDUARDO and BUENA ROMUALDEZ respondents.

G.R. No. 78182 December 22, 1988

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner, vs.COURT OF APPEALS, DOLORES FILLEY, and J. ROMERO & ASSOCIATES, respondents.

G.R. No. 82281 December 22, 1988

BEL-AIR VILLAGE ASSOCIATION, INC, petitioner, vs.

COURT OF APPEALS, VIOLETA MONCAL, and MAJAL DEVELOPMENT CORPORATION, respondents.

Sangco, Anastacio, Castaneda & Duran Law Office for petitioners & private intervenors- petitioners.

Raul S. Sison Law Offices for intervenor-petitioner Bel-Air Village Association, Inc. Renato L. Dela Fuente for respondent Ayala Corporation.

G.R. No. L-74376:

Raul S. Sison Law Offices for petitioner.

Sergio L. Guadiz for private respondents.

G.R. No. L-76394:

Raul S. Sison Law Offices for petitioner.

Gruba, Tanlimco Lamso and Apuhin Law Offices for respondents.

G.R. No. L-78182:

Funk & Associates for petitioners.

Tee Tomas & Associates for respondents.

G.R. No. L-82281:

Funk & Associates for petitioner.

Castillo, Laman, Tan & Associates for private respondents.

SARMIENTO, J.:

Before the Court are five consolidated petitions, 1 docketed as G.R. Nos. 71169, 74376, 76394, 78182, and 82281 hereof, in the nature of appeals (by


certiorari under Rule 45 of the Rules of Court) from five decisions of the Court of Appeals, denying specific performance and damages.

The proceedings were commenced at the first instance by Jose Sangalang, joined by his wife Lutgarda Sangalang, both residents of No. 110 Jupiter Street, Makati, Metro Manila (G.R. No. 71169) to enforce by specific performance restrictive easement upon property, specifically the Bel- Air Village subdivision in Makati, Metro Manila, pursuant to stipulations embodied in the deeds of sale covering the subdivision, and for damages. Later, the Sangalangs were joined by Felix Gaston, a resident of No. 64 Jupiter Street of the same municipality, and by Mr. and Mrs. Jose and Alicia Briones, both of No. 66 Jupiter Street. Pending further proceedings, the Bel-Air Village Association, Inc. (BAVA), an incorporated homeowners' association, entered its appearance as plaintiff-in-intervention.

BAVA itself had brought its own complaints, four in number, likewise for specific performance and damages to enforce the same 'deed restrictions.' (See G.R. Nos. 74376, 76394, 78182, and 82281.)

ANTECEDENTS FACTS

I. G.R. No. 71169

The facts are stated in the decision appealed from. We quote:

x x x x x x x x x

(1) Bel-Air Village is located north of Buendia Avenue extension (now Sen. Gil J. Puyat Ave.) across a stretch of commercial block from Reposo Street in the west up to Zodiac Street in the east, When Bel-Air Village was planned, this block between Reposo and Zodiac Streets adjoining Buendia Avenue in front of the village was designated as a commercial block. (Copuyoc TSN, p. 10, Feb. 12, 1982).

(2) Bel-Air Village was owned and developed into a residential subdivision in the 1950s by Makati Development Corporation (hereinafter referred to as MDC), which in 1968 was merged with appellant Ayala Corporation.

(3) Appellees-spouses Sangalang reside at No. 11O Jupiter Street between Makati Avenue and Reposo Street; appellees-spouses Gaston reside at No. 64 Jupiter Street between Makati Avenue and Zodiac Street; appellees-spouses Briones reside at No. 66 Jupiter Street also between Makati Avenue and Zodiac Street; while appellee Bel-Air Village Association, Inc. (hereinafter referred to as BAVA) is the homeowners' association in Bel-Air Village which takes care of the sanitation, security, traffic regulations and general welfare of the village.

(4) The lots which were acquired by appellees Sangalang and spouse Gaston and spouse and Briones and spouse in 1960, 1957 and 1958, respectively, were all sold by MDC subject to certain conditions and easements contained in Deed Restrictions which formed a part of each deed of sale. The pertinent provisions in said Deed Restrictions, which are common to all lot owners in Bel-Air Village, are as follows:

I-BEL-AIR ASSOCIATION

The owner of this lot/s or his successors in interest is required to be and is automatically a member of the Bel-Air Association and must abide by such rules and regulations laid down by the Association in the interest of the sanitation, security and the general welfare of the community.

The association will also provide for and collect assessments, which will constitute as a lien on the property junior only to liens of the government for taxes and to voluntary mortgages for sufficient consideration entered into in good faith.

II-USE OF LOTS

Subject to such amendments and additional restrictions, reservations, servitudes, etc., as the Bel- Air Association may from time to time adopt and prescribe, this lot is subject to the following restrictions:


a. This lot/s shall not be subdivided. However, three or more lots may be consolidated and subdivided into a lesser number of lots provided that none of the resulting lots be smaller in area than the smallest lot before the consolidation and that the consolidation and subdivision plan be duly approved by the governing body of the Bel-Air Association.

b. This lot/s shall only be used for residential purposes.

c. Only one single family house may be constructed on a single lot, although separate servants' quarters or garage may be built.

d. Commercial or advertising signs shall not be placed, constructed, or erected on this lot. Name plates and professional signs of homeowners are permitted so long as they do not exceed 80 x 40 centimeters in size.

e. No cattle, pigs, sheep, goats, ducks, geese, roosters or rabbits shall be maintained in the lot, except that pets may be maintained but must be controlled in accordance with the rulings of the Association. The term "pets' includes chickens not in commercial quantities.

f. The property is subject to an easement of two (2) meters within the lot and adjacent to the rear and sides thereof not fronting a street for the purpose of drainage, sewage, water and other public facilities as may be necessary and desirable; and the owner, lessee or his representative shall permit access thereto by authorized representatives of the Bel-Air Association or public utility entities for the purposes for which the easement is created.

g. This lot shall not be used for any immoral or illegal trade or activity.

h. The owner and/or lessee of this lot/s shall at all times keep the grass cut and trimmed to reduce the fire hazard of the property.

xxx xxx xxx

VI-TERM OF RESTRICTIONS

The foregoing restrictions shall remain in force for fifty years from January 15, 1957, unless sooner cancelled in its entirety by two thirds vote of members in good standing of the Bel-Air Association. However, the Association may, from time to time, add new ones, amend or abolish particular restrictions or parts thereof by majority rule.

VII--ENFORCEMENT OF RESTRICTIONS

The foregoing restrictions may be enjoined and/or enforced by court action by the Bel-Air Association, or by the Makati Development Corporation or its assigns, or by any registered owner of land within the boundaries of the Bel-Air Subdivision (Sub-division plan PSD-49226 and Lot 7-B, Psd-47848) or by any member in good standing of the Bel-Air association." (Exh. 1 -b; Exh. 22, Annex "B"). (Appellant's Brief, pp. 4- 6)

(5) When MDC sold the above-mentioned lots to appellees' predecessors-in-interest, the whole stretch of the commercial block between Buendia Avenue and Jupiter Street, from Reposo Street in the west to Zodiac Street in the east, was still undeveloped. Access, therefore, to Bel-Air Village was opened to all kinds of people and even animals. So in 1966, although it was not part of the original plan, MDC constructed a fence or wall on the commercial block along Jupiter Street. In 1970, the fence or wall was partly destroyed by typhoon "Yoling." The destroyed portions were subsequently rebuilt by the appellant. (Copuyoc TSN, pp. 31-34, Feb. 12, 1982). When Jupiter Street was widened in 1972 by 3.5 meters, the fence or wall had to be destroyed. Upon request of BAVA, the wall was rebuilt inside the boundary of the commercial block. (Copuyoc TSN, pp. 4447, Feb. 12,1982).

(6) When the appellant finally decided to subdivide and sell the lots in the commercial block between Buendia and Jupiter, BAVA wrote the appellant on May 9, 1972, requesting for confirmation on the use of the commercial lots. The appellant replied on May 16, 1972, informing


BAVA of the restrictions intended to be imposed in the sale and use of the lots. Among these restrictions are: that the building shall have a set back of 19 meters; and that with respect to vehicular traffic along Buendia Avenue, entrance only will be allowed, and along Jupiter Street and side streets, both entrance and exit will be allowed.

(7) On June 30, 1972, appellant informed BAVA that in a few months it shall subdivide and sell the commercial lots bordering the north side of Buendia Avenue Extension from Reposo Street up to Zodiac Street. Appellant also informed BAVA that it had taken all precautions and will impose upon the commercial lot owners deed restrictions which will harmonize and blend with the development and welfare of Bel-Air Village. Appellant further applied for special membership in BAVA of the commercial lot owners. A copy of the deed restrictions for the commercial lots was also enclosed. The proposed deed restrictions shall include the 19 meter set back of buildings from Jupiter Street, the requirement for parking space within the lot of one (1) parking slot for every seventy five (75) meters of office space in the building and the limitation of vehicular traffic along Buendia to entrance only, but allowing both vehicular entrance and vehicular exit through Jupiter Street and any side street.

In its letter of July 10, 1972, BAVA acknowledged the above letter of appellant and informed the latter that the application for special membership of the commercial lot owners in BAVA would be submitted to BAVA's board of governors for decision.

(8) On September 25, 1972, appellant notified BAVA that, after a careful study, it was finally decided that the height limitation of buildings on the commercial lots shall be increased from 12.5 meters to 15 meters. Appellant further informed BAVA that Jupiter Street shall be widened by 3.5 meters to improve traffic flow in said street. BAVA did not reply to said letter, but on January 22, 1973, BAVA wrote a letter to the appellant informing the latter that the Association had assessed the appellant, as special member of the association, the amount of P40,795.00 (based on 81,590 square meters at P.50 per square meter) representing the membership dues to the

commercial lot owners for the year 1973, and requested the appellant to remit the amount which its board of governors had already included in its current budget. In reply, appellant on January 31, 1973 informed BAVA that due to the widening of Jupiter Street, the area of the lots which were accepted by the Association as members was reduced to 76,726 square meters. Thus, the corresponding dues at P.50 per square meter should be reduced to P38,363.00. This amount, therefore, was remitted by the appellant to BAVA. Since then, the latter has been collecting membership dues from the owners of the commercial lots as special members of the Association. As a matter of fact, the dues were increased several times. In 1980, the commercial lot owners were already being charged dues at the rate of P3.00 per square meter. (Domingo, TSN, p. 36, March 19, 1980). At this rate, the total membership dues of the commercial lot owners amount to P230,178. 00 annually based on the total area of 76,726 square meters of the commercial lots.

(9) Meantime, on April 4, 1975, the municipal council of Makati enacted its ordinance No. 81, providing for the zonification of Makati (Exh. 18). Under this Ordinance, Bel-Air Village was classified as a Class A Residential Zone, with its boundary in the south extending to the center line of Jupiter Street (Exh. 18-A).

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

F. Bel-Air Village area, as bounded on the N by Polaris and Mercedes streets and on the NE by Estrella Street; on the SE by Epifanio de los Santos Avenue and on the SW by the center line of Jupiter Street. Then bounded on the N by the abandoned MRR Pasig Line; on the E by Makati Avenue; on the S by the center line of Jupiter Street and on the W by the center line of Reposo Street." (Exh. 18-A)

Similarly, the Buendia Avenue Extension area was classified as Administrative Office Zone with its boundary in the North-North East Extending also up to the center line of Jupiter Street (Exh. 18b).


Thus, Chapter III, Article I, Section 3.05, par. C. of the Ordinance provides:

C. The Buendia Avenue Extension areas, as bounded on the N-NE by the center line of Jupiter Street, on the SE by Epifanio de los Santos Avenue; on the SW by Buendia Avenue and on the NW by the center line of Reposo Street, then on the NE by Malugay Street; on the SE by Buendia Avenue and on the W by Ayala Avenue Extension." (Exh. 18-B)

The Residential Zone and the Administrative Office Zone, therefore, have a common boundary along the center line of Jupiter Street.

The above zoning under Ordinance No. 81 of Makati was later followed under the Comprehensive Zoning Ordinance for the National Capital Region adopted by the Metro Manila Commission as Ordinance 81 -01 on March 14, 1981 (Exh. 19). However, under this ordinance, Bel-Air Village is simply bounded in the South-Southeast by Jupiter Street-not anymore up to the center line of Jupiter Street (Exh. B). Likewise, the blockdeep strip along the northwest side of Buendia Avenue Extension from Reposo to EDSA was classified as a High Intensity Commercial Zone (Exh. 19-c).

Thus, the Zoning District Boundaries -Makati, in Annex B of the Ordinance provides:

R-I-Low Intensity Residential

x x x x x x x x x

4. Bel-Air 1, 3, 4

Bounded on the North -- J.P. Rizal and Amapola St.

South - Rockwell

Northwest - P. Burgos

Southeast - Jupiter

Southwest - Epifanio de los Santos Ave. (EDSA)

5. Bel-Air 2

Bounded on the Northwest - J.P. Rizal

Southwest - Makati Avenue

South --- Jupiter

Southeast -- Pasig Line

East - South Avenue" (Exh. 19-b)

x x x x x x x x x

C-3-High Intensity Commercial Zone

2. A block deep strip along the northwest side of Buendia Ave. Ext. from Reposo to EDSA." (Exh, 19-c)

Under the above zoning classifications, Jupiter Street, therefore, is a common boundary of Bel-Air Village and the commercial zone.

(10) Meanwhile, in 1972, BAVA had installed gates at strategic locations across Jupiter Street which were manned and operated by its own security guards who were employed to maintain, supervise and enforce traffic regulations in the roads and streets of the village. (Villavicencio, TSN, pp, 22-25, Oct. 30, 1980; BAVA Petition, par. 11, Exh. 17).

Then, on January 17, 1977, the Office of the Mayor of Makati wrote BAVA directing that, in the interest of public welfare and for the purpose of easing traffic congestion, the following streets in Bel-Air Village should be opened for public use:


Amapola Street - from Estrella Street to Mercedes Street

Amapola Street -junction of Palma Street gate going to J. Villena Street

Mercedes Street -- from EDSA to Imelda Avenue and Amapola junction

Zodiac Street - from Mercedes Street to Buendia Avenue

Jupiter Street -- from Zodiac Street to Reposo Street connecting Metropolitan Avenue to Pasong Tamo and V. Cruz Extension intersection

Neptune Street - from Makati Avenue to Reposo Street Orbit Street - from F. Zobel-Candelaria intersection to Jupiter Street

Paseo de Roxas - from Mercedes Street to Buendia Avenue (Exh. 17, Annex A, BAVA Petition)

On February 10, 1977, BAVA wrote the Mayor of Makati, expressing the concern of the residents about the opening of the streets to the general public, and requesting specifically the indefinite postponement of the plan to open Jupiter Street to public vehicles. (Exh. 17, Annex B, BAVA Petition).

However, BAVA voluntarily opened to the public Amapola, Mercedes, Zodiac, Neptune and Paseo de Roxas streets. (Exh. 17-A, Answer of Makati par. 3-7).

Later, on June 17,1977, the Barangay Captain of Bel-Air Village was advised by the Office of the Mayor that, in accordance with the agreement entered into during the meeting on January 28, 1 977, the Municipal Engineer and the Station Commander of the Makati Police were ordered to open for public use Jupiter Street from Makati Avenue to Reposo Street. Accordingly, he was requested to advise the village residents of the necessity of the opening of the street in the interest of public welfare. (Exh. 17, Annex E, BAVA Petition).

Then, on June 10, 1977, the Municipal Engineer of Makati in a letter addressed to BAVA advised the latter to open for vehicular and pedestrian traffic the entire portion of Jupiter Street from Makati Avenue to Reposo Street (Exh. 17, BAVA Petition, par. 14).

Finally, on August 12, 1977, the municipal officials of Makati concerned allegedly opened, destroyed and removed the gates constructed/located at the corner of Reposo Street and Jupiter Street as well as the gates/fences located/constructed at Jupiter Street and Makati Avenue forcibly, and then opened the entire length of Jupiter Street to public traffic. (Exh. 17, BAVA Petition, pars. 16 and 17).

(11) Before the gates were-removed, there was no parking problem or traffic problem in Jupiter Street, because Jupiter Street was not allowed to be used by the general public (Villavicencio, TSN, pp. 24-25, Oct. 30, 1980). However, with the opening of Zodiac Street from Estrella Street to Jupiter Street and also the opening to the public of the entire length of Jupiter Street, there was a tremendous increase in the volume of traffic passing along Jupiter Street coming from EDSA to Estrella Street, then to Zodiac Street to Jupiter Street, and along the entire length of Jupiter Street to its other end at Reposo Street. (Villavicencio, TSN, pp. 30-32, Oct. 30, 1980).

In the meantime, the purchasers of the commercial lots between Jupiter Street and Buendia Avenue extension had started constructing their respective buildings in 1974-1975. They demolished the portions of the fence or wall standing within the boundary of their lots. Many of the owners constructed their own fences or walls in lieu of the wall and they employed their own security guards. (TSN, p. 83, Feb. 20,1981; TSN, pp. 53-54; 72-74, March 20,1981; TSN, pp. 54-55, July 23, 1981).

(12) Then, on January 27, 1978, appellant donated the entire Jupiter Street from Metropolitan Avenue to Zodiac Street to BAVA (Exh. 7)- However, even before 1978, the Makati Police and the security force of BAVA were already the ones regulating the traffic along Jupiter Street after the


gates were opened in 1977. Sancianco TSN, pp. 26-30, Oct. 2,1981).

In October, 1979, the fence at the corner of Orbit and Neptune Streets was opened and removed (BAVA Petition, par. 22, Exh. 17). The opening of the whole stretch of Orbit Street from J.P. Rizal Avenue up to Imelda Avenue and later to Jupiter Street was agreed to at the conference attended by the President of BAVA in the office of the Station Commander of Makati, subject to certain conditions, to wit:

That, maintenance of Orbit St. up to Jupiter St. shall be shouldered by the Municipality of Makati.

That, street lights will be installed and maintenance of the same along Orbit St. from J.P. Rizal Ave. up to Jupiter St. shall be undertaken by the Municipality.

That for the security of the residents of San Miguel Village and Bel-Air Village, as a result of the opening of Orbit Street, police outposts shall be constructed by the Municipality of Makati to be headed by personnel of Station No. 4, in close coordination with the Security Guards of San Miguel Village and Bel-Air Village." (CF. Exh. 3 to Counter-Affidavit, of Station Commander, Ruperto Acle p. 253, records)" (Order, Civil Case No. 34948, Exh. 17-c).

(13) Thus, with the opening of the entire length of Jupiter Street to public traffic, the different residential lots located in the northern side of Jupiter Street ceased to be used for purely residential purposes. They became, for all purposes, commercial in character.

(14) Subsequently, on October 29, 1979, the plaintiffs-appellees Jose D. Sangalang and Lutgarda D. Sangalang brought the present action for damages against the defendant-appellant Ayala Corporation predicated on both breach of contract and on tort or quasi-delict A supplemental complaint was later filed by said appellees seeking to augment the reliefs prayed for in the original complaint because of alleged supervening events which

occurred during the trial of the case. Claiming to be similarly situated as the plaintiffs-appellees, the spouses Felix C. Gaston and Dolores R. Gaston, Jose V. Briones and Alicia R. Briones, and the homeowners' association (BAVA) intervened in the case.

(15) After trial on the merits, the then Court of First Instance of Rizal, Pasig, Metro Manila, rendered a decision in favor of the appellees the dispositive portion of which is as follows:

WHEREFORE, judgment is hereby accordingly rendered as follows:

ON PLAINTIFFS' COMPLAINT:

Defendant is ordered to pay to the plaintiffs-spouses Sangalang the following damages:

1. The sum of P500,000.00 as actual and consequential damages;

2. The sum of P2,000,000.00 as moral damages;

3. The sum of P500,000.00 as exemplary damages;

4. The sum of P100,000.00 as attorney's fees; and

5. The costs of suit.

ON INTERVENORS FELIX and DOLORES GASTON'S COMPLAINT:

Defendant is ordered to pay to the spouses Felix and Dolores Gaston, the following damages:

1 . The sum of P400,000.00 as consequential damages;

2 The sum of P500,000.00 as moral damages;


3 The sum of P500,000.00 as exemplary damages:

4 The sum of P50,000.00 as attorney's fees; and

5 The costs of suit.

ON INTERVENORS JOSE and ALICIA BRIONES' COMPLAINT:

Defendant is ordered to pay to the spouses Jose and Alicia Briones, the following damages:

1 . The sum of P400,000.00 as consequential damages;

2 The sum of P500,000.00 as moral damages;

3 The sum of P500,000.00 as exemplary damages;

4 The sum of P50,000.00 as attorney's fees; and

5 The costs of suit.

ON INTERVENOR BAVA'S COMPLAINT:

Defendant is ordered to pay intervenor BAVA, the following damages:

1. The sum of P400,000.00 as consequential damages;

2. The sum of P500,000.00 as exemplary damages;

3. The sum of P50,000.00 as attorney's fees; and

4. The costs of suit.

The above damages awarded to the plaintiffs and intervenors shall bear legal interest from the filing of the complaint.

Defendant is further ordered to restore/reconstruct the perimeter wall at its original position in 1966 from Reposo Street in the west to Zodiac Street in the east, at its own expense, within SIX (6) MONTHS from finality of judgment.

SO ORDERED.

(Record on Appeal, pp. 400-401) 2

x x x x x x x x x

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

ACCORDINGLY, finding the decision appealed from as not supported by the facts and the law on the matter, the same is hereby SET ASIDE and another one entered dismissing the case for lack of a cause of action. Without pronouncement as to costs.

SO ORDERED. 4

II. G.R. No. 74376

This petition was similarly brought by BAVA to enforce the aforesaid restrictions stipulated in the deeds of sale executed by the Ayala Corporation. The petitioner originally brought the complaint in the Regional Trial Court of Makati, 5 principally for specific performance, plaintiff [now, petitioner] alleging that the defendant [now, private respondent] Tenorio allowed defendant [Tenorio's co-private respondent] Gonzalves to occupy and convert the house at 50 Jupiter Street, Bel-Air Village, Makati, Metro Manila, into a restaurant, without its knowledge and consent, and in violation of the deed restrictions which provide that the lot and building thereon must be used only for residential purposes upon which the prayed for main relief was for 'the defendants to permanently refrain from using the premises as commercial and to comply with the terms of the Deed Restrictions." 6 The trial court dismissed the complaint on a procedural ground, i.e., pendency of an Identical action, Civil Case No. 32346, entitled "Bel-Air Village Association, Inc. v. Jesus Tenorio." The Court of Appeals7 affirmed, and held, in addition, that Jupiter Street "is classified as High density commercial (C-3) zone as per Comprehensive Zoning Ordinance No. 81-01 for National


Capital Region," 8 following its own ruling in AC-G.R. No. 66649, entitled "Bel-Air Village Association, Inc. vs. Hy-Land Realty & Development Corporation, et al."

III. G.R. No. 76394

x x x x x x x x x

Defendants-spouses Eduardo V. Romualdez, Jr. and Buena Tioseco are the owners of a house and lot located at 108 Jupiter St., Makati, Metro Manila as evidenced by Transfer Certificate of Title No. 332394 of the Registry of Deeds of Rizal. The fact is undisputed that at the time the defendants acquired the subject house and lot, several restrictions were already annotated on the reverse side of their title; however, for purposes of this appeal we shall quote hereunder only the pertinent ones, to wit:

(b,) This lot/shall be used only for residential purposes.

x x x x x x x x x

IV. Term of Restriction

The foregoing restriction(s) shall remain in force for fifty years from January 15, 1957, unless sooner cancelled in its entirety by two-thirds vote of the members in good standing of the Bel-Air Association. However, the Association may from time to time, add new ones, amend or abolish particular restrictions or parts thereof by majority rule.

During the early part of 1979, plaintiff noted that certain renovations and constructions were being made by the defendants on the subject premises, for which reason the defendants were advised to inform the plaintiff of the kind of construction that was going on. Because the defendants failed to comply with the request of the plaintiff, the latter's chief security officer visited the subject premises on March 23, 1979 and found out that the defendants were putting up a bake and coffee shop, which fact was confirmed by defendant Mrs. Romualdez herself. Thereafter, the plaintiff

reminded defendants that they were violating the deed restriction. Despite said reminder, the defendants proceeded with the construction of the bake shop. Consequently, plaintiff sent defendants a letter dated April 30, 1979 warning them that if they will not desist from using the premises in question for commercial purposes, they will be sued for violations of the deed restrictions.

Despite the warning, the defendants proceeded with the construction of their bake shop. 9

x x x x x x x x x

The trial court 10 adjudged in favor of BAVA. On appeal, the Court of Appeals 11 reversed, on the strength of its holding in AC-G.R. No. 66649 earlier referred to.

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

IV. G.R. No. 78182.

x x x x x x x x x

The case stemmed from the leasing by defendant Dolores Filley of her building and lot situated at No. 205 Reposo Street, Bel-Air Village Makati, Metro Manila to her co-defendant, the advertising firm J. Romero and Associates, in alleged violation of deed restrictions which stipulated that Filley's lot could only be used for residential purposes. Plaintiff sought judgment from the lower court ordering the


defendants to "permanently refrain" from using the premises in question "as commercial" and to comply with the terms of the deed restrictions.

After the proper proceedings, the court granted the plaintiff the sought for relief with the additional imposition of exemplary damages of P50,000.00 and attorney's fees of P10,000.00. The trial court gave emphasis to the restrictive clauses contained in Filley's deed of sale from the plaintiff, which made the conversion of the building into a commercial one a violation.

Defendants now seek review and reversal on three (3) assignments of errors, namely:

I.

THE TRIAL COURT ERRED IN NOT FINDING THAT THE REGULATIONS PROMULGATED BY THE MUNICIPAL AUTHORITIES IN MAKATI AND THE MINISTRY OF HUMAN SETTLEMENT'S CHANGING THE CHARACTER OF THE AREAS IN QUESTION HAD RENDERED THE RESTRICTIVE EASEMENT ON THE TITLE OF THE APPELLANTS VACATED.

II.

THE COURT ERRED IN NOT RULING THAT BECAUSE THE APPELLEE(S) HAD ALLOWED THE USE OF THE PROPERTY WITHIN THE VILLAGE FOR NON- RESIDENTIAL PURPOSES, IT IS NOW ESTOPPED FROM ENFORCING THE RESTRICTIVE PROHIBITIONS SUBJECT MATTER OF THIS CASE.

III.

THE COURT ERRED IN NOT FINDING THAT THERE EXISTED A BILATERAL CONTRACT BETWEEN THE PARTIES AND THAT SINCE APPELLEE HAD NOT PERFORMED ITS OBLIGATIONS UNDER THIS ARRANGEMENT THE APPELLANT IN TURN WAS UNDER NO OBLIGATION TO ANNOTATE THE

RESTRICTIVE PROHIBITIONS ON THE BACK OF THE TITLE.

Appellants anchor their appeal on the proposition that the Bel-Air Village area, contrary to plaintiff- appellee's pretension of being a strictly residential zone, is in fact commercial and characterize the restrictions contained in appellant Filley's deed of sale from the appellee as completely outmoded, which have lost all relevance to the present-day realities in Makati, now the premier business hub of the nation, where there is a proliferation of numerous commercial enterprises established through the years, in fact even within the heart of so-called "residential" villages. Thus, it may be said that appellants base their position on the inexorable march of progress which has rendered at naught the continued efficacy of the restrictions. Appellant on the other hand, relies on a rigid interpretation of the contractual stipulations agreed upon with appellant Filley, in effect arguing that the restrictions are valid ad infinitum.

The lower court quite properly found that other commercial establishments exist in the same area (in fact, on the same street) but ignored it just the same and said-

The fact that defendants were able to prove the existence of several commercial establishments inside the village does not exempt them from liability for violating some of the restrictions evidently choosing to accord primacy to contractual stipulation. 17

x x x x x x x x x

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

V. G.R. No. 82281

The facts of this case have been based on stipulation. We quote:


COMES NOW, the Parties, assisted by their respective counsel and to this Honorable Court, respectfully enter into the following stipulations of facts, to wit:

1. The parties admit the personal circumstances of each other as well as their capacities to sue and be sued.

2. The parties admit that plaintiff BAVA for short) is the legally constituted homeowners' association in Bel-Air Subdivision, Makati, Metro Manila.

3. The parties admit that defendant Violets Moncal is the registered owner of a parcel of land with a residential house constructed thereon situated at No. 104 Jupiter Street, Bel-Air Village, Makati, Metro Manila; that as such lot owner, she is a member of the plaintiff association.

4. The parties admit that defendant Majal Development Corporation (Majal for short) is the lessee of defendant Moncal's house and lot located at No. 104 Jupiter Street.

5. The parties admit that a deed restrictions is annotated on the title of defendant Moncal, which provides, among others, that the lot in question must be used only for residential purposes;' that at time Moncal purchased her aforesaid lot in 1959 said deed restrictions was already annotated in the said title.

6. The parties admit that when Moncal leased her subject property to Majal, she did not secure the consent of BAVA to lease the said house and lot to the present lessee.

7. The parties admit that along Jupiter Street and on the same side where Moncal's property is located, there are restaurants, clinics placement or employment agencies and other commercial or business establishments. These establishments, however, were sued by BAVA in the proper court.

8. The parties admit that at the time Moncal purchased the subject property from the Makati Development Corporation, there was a perimeter wall, running along

Jupiter Street, which wall was constructed by the subdivision owner; that at that time the gates of the entrances to Jupiter Street were closed to public traffic. In short, the entire length of Jupiter which was inside the perimeter wall was not then open to public traffic

9. The parties admit that subsequent thereto, Ayala tore down the perimeter wall to give way to the commercial building fronting Buendia Avenue (now Gil J. Puyat Avenue).

10. The parties admit that on August 12, 1977, the Mayor of Makati forcibly opened and removed the street gates constructed on Jupiter Street and Reposo Street, thereby opening said streets to the public.

11. The parties admit plaintiffs letters of October 10, 23 and 31, 1984; as well as defendants' letters-reply dated October 17 and 29, 1984. 20

x x x x x x x x x

The trial court 21 dismissed the petitioner's complaint, a dismissal affirmed on appeal, 22 According to the appellate court, the opening of Jupiter Street to human and vehicular traffic, and the commercialization of the Municipality of Makati in general, were circumstances that had made compliance by Moncal with the aforesaid "deed restrictions" "extremely difficult and unreasonable," 23 a development that had excused compliance altogether under Article 1267 of the Civil Code.

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

In brief, G.R. Nos. 74376, 76394, 78182, and 82281 are efforts to enforce the "deed restrictions" in question against specific residents (private respondents in the petitions) of Jupiter Street and with respect to G.R. No. 78182, Reposo Street. The private respondents are alleged to have converted their residences into commercial establishments (a restaurant in G.R. No. 74376, a bakery and coffee shop in G.R. No. 76394, an advertising firm in G.R. No. 78182; and a construction company, apparently, in G.R. No. 82281) in violation of the said restrictions. 24


Their mother case, G. R. No. 71169 is, on the other hand, a petition to hold the vendor itself, Ayala Corporation (formerly Makati Development Corporation), liable for tearing down the perimeter wall along Jupiter Street that had therefore closed its commercial section from the residences of Bel-Air Village and ushering in, as a consequence, the full "commercialization" of Jupiter Street, in violation of the very restrictions it had authored.

As We indicated, the Court of Appeals dismissed all five appeals on the basis primarily of its ruling in AC-G.R. No. 66649, "Bel-Air Village, Inc. v. Hy-Land Realty Development Corporation, et al.," in which the appellate court explicitly rejected claims under the same 'deed restrictions" as a result of Ordinance No. 81 enacted by the Government of the Municipality of Makati, as well as Comprehensive Zoning Ordinance No. 8101 promulgated by the Metropolitan Manila Commission, which two ordinances allegedly allowed the use of Jupiter Street both for residential and commercial purposes. It was likewise held that these twin measures were valid as a legitimate exercise of police power.

The Court of Appeals' reliance on Ordinance Nos. 81. and 8101 is now assailed in these petitions, particularly the Sangalang, et al. petition.

Aside from this fundamental issue, the petitioners likewise raise procedural questions. G.R. No. 71169, the mother case, begins with one.

1. G.R. No. 71169

In this petition, the following questions are specifically put to the Court:

May the Honorable Intermediate Appellate Court reverse the decision of the trial court on issues which were neither raised by AYALA in its Answers either to the Complaint or Supplemental Complaint nor specifically assigned as one of the alleged errors on appeal? 25

May the Honorable Intermediate Appellate Court arbitrarily ignore the decisive findings of fact of the trial court, even if uncontradicted and/or documented, and premised mainly on its own unsupported conclusions totally reverse the trial court's decision? 26

May the Honorable Intermediate Appellate Court disregard the trial court's documented findings that respondent Ayala

for its own self-interest and commercial purposes contrived in bad faith to do away with the Jupiter Street perimeter wall it put up three times which wall was really intended to separate the residential from the commercial areas and thereby insure the privacy and security of Bel Air Village pursuant to respondent Ayala's express continuing representation and/or covenant to do so?27

a.

The first question represents an attack on the appellate court's reliance on Ordinances Nos. 81 and 81-01, a matter not supposedly taken up at the trial or assigned as an error on appeal. As a rule, the Court of Appeals (then the Intermediate Appellate Court) may determine only such questions as have been properly raised to it, yet, this is not an inflexible rule of procedure. In Hernandez v. Andal, 28 it was stated that "an unassigned error closely related to an error properly assigned, or upon which the determination of the question raised by the error properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error." 29

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

Among other things, there is a recognition under both Ordinances Nos. 81 and 8 1-01 that Jupiter Street lies as the boundary between Bel-Air Village and Ayala Corporation's commercial section. And since 1957, it had been


considered as a boundary not as a part of either the residential or commercial zones of Ayala Corporation's real estate development projects. Thus, the Bel-Air Village Association's articles of incorporation state that Bel-Air Village is 'bounded on the NE., from Amapola St., to de los Santos Ave., by Estrella St., on the SE from Extrella St., to Pedestrian Lane by E. De los Santos Ave., on the SW., from Pedestrian Lane to Reposo St., by Jupiter Street

. . . . 40 Hence, it cannot be said to have been "for the exclusive benefit" of Bel-Air Village residents.

We come to the perimeter wall then standing on the commercial side of Jupiter Street the destruction of which opened the street to the public. The petitioners contend that the opening of the thoroughfare had opened, in turn, the floodgates to the commercialization of Bel-Air Village. The wall, so they allege, was designed precisely to protect the peace and privacy of Bel-Air Village residents from the din and uproar of mercantile pursuits, and that the Ayala Corporation had committed itself to maintain it. It was the opinion of the Court of Appeals, as we said, that Ayala's liability therefor, if one existed, had been overtaken by the passage of Ordinances Nos. 81 and 82-01, opening Jupiter Street to commerce.

It is our ruling, we reiterate, that Jupiter Street lies as a mere boundary, a fact acknowledged by the authorities of Makati and the National Government and, as a scrutiny of the records themselves reveals, by the petitioners themselves, as the articles of incorporation of Bel-Air Village Association itself would confirm. As a consequence, Jupiter Street was intended for the use by both -the commercial and residential blocks. It was not originally constructed, therefore, for the exclusive use of either block, least of all the residents of Bel-Air Village, but, we repeat, in favor of both, as distinguished from the general public.

When the wall was erected in 1966 and rebuilt twice, in 1970 and 1972, it was not for the purpose of physically separating the two blocks. According to Ayala Corporation, it was put up to enable the Bel-Air Village Association "better control of the security in the area, 41 and as the Ayala Corporation's "show of goodwill " 42 a view we find acceptable in the premises. For it cannot be denied that at that time, the commercial area was vacant, "open for [sic] animals and people to have access to Bel-Air Village." 43 There was hence a necessity for a wall.

In any case, we find the petitioners' theory, that maintaining the wall was a matter of a contractual obligation on the part of Ayala, to be pure conjecture.

The records do not establish the existence of such a purported commitment. For one, the subdivision plans submitted did not mention anything about it. For another, there is nothing in the "deed restrictions" that would point to any covenant regarding the construction of a wall. There is no representation or promise whatsoever therein to that effect.

With the construction of the commercial buildings in 1974, the reason for which the wall was built- to secure Bel-Air Village from interlopers had naturally ceased to exist. The buildings themselves had provided formidable curtains of security for the residents. It should be noted that the commercial lot buyers themselves were forced to demolish parts of the wall to gain access to Jupiter Street, which they had after all equal right to use.

In fine, we cannot hold the Ayala Corporation liable for damages for a commitment it did not make, much less for alleged resort to machinations in evading it. The records, on the contrary, will show that the Bel-Air Village Association had been informed, at the very outset, about the impending use of Jupiter Street by commercial lot buyers. We quote:

x x x x x x x x x

1. Exh. I of appellee, the memorandum of Mr. Carmelo Caluag, President of BAVA, dated May 10, 1972, informing the BAVA Board of Governors and Barrio Council members about the future use of Jupiter Street by the lot owners fronting Buendia Avenue. The use of Jupiter Street by the owners of the commercial lots would necessarily require the demolition of the wall along the commercial block adjoining Jupiter Street.

2. Exh. J of appellee, the minutes of the joint meeting of BAVA Board of Governors and the Bel-Air Barrio Council where the matter that "Buendia lot owners will have equal rights to use Jupiter Street," and that Ayala's "plans about the sale of lots and use of Jupiter Street" were precisely taken up. This confirms that from the start BAVA was informed that the commercial lot owners will use Jupiter Street and that necessarily the wall along Jupiter Street would be demolished.

3. Exh. 10, the letter of Mr. Demetrio Copuyoc to the President of BAVA, dated May 16, 1972, expressly stating


that vehicular entrance and exit to the commercial lots would be allowed along Jupiter and side streets.

4. Exhs. 27, 27-A, 27-B, the letter of Atty. Salvador J. Lorayes dated June 30, 1972, with enclosed copy of proposed restriction for the commercial lots to BAVA. He proposed restriction again expressly stated that "Vehicular entrances and exits are allowed thru Jupiter and any side streets."

5. Exh. L of appellee, the minutes of the meeting of the members of BAVA, dated August 26, 1972, where it is stated "Recently, Ayala Corporation informed the Board that the lots fronting Buendia Avenue will soon be offered for sale, and that future lot owners will be given equal rights to use Jupiter Street as well as members of the Association."

6. Exh. 25, the letter of Atty. Lorayes dated September 25, 1972, informing BAVA of the widening of Jupiter Street by 3.5 meters to improve traffic flow in said street to benefit both the residents of Bel-Air and the future owners of the commercial lots. 44

The petitioners cannot successfully rely on the alleged promise by Demetrio Copuyoc, Ayala's manager, to build a "[f]ence along Jupiter with gate for entrance and/or exit 45 as evidence of Ayala's alleged continuing obligation to maintain a wall between the residential and commercial sections. It should be observed that the fence referred to included a "gate for entrance and or exit" which would have defeated the purpose of a wall, in the sense the petitioners would put in one, that is to say, an impenetrable barrier. But as Ayala would point out subsequently, the proposed fence was not constructed because it had become unnecessary when the commercial lot owners commenced constructions thereon.

Be that as it may, the Court cannot visualize any purported obligation by Ayala Corporation to keep the wall on the strength of this supposed promise alone. If truly Ayala promised anything assuming that Capuyoc was authorized to bind the corporation with a promise it would have been with respect to the fence. It would not have established the pre-existing obligation alleged with respect to the wall.

Obligations arise, among other things, from contract. 46 If Ayala, then, were bound by an obligation, it would have been pursuant to a contract. A contract, however, is characterized by a "meeting of minds between two persons . 47 As a consensual relation, it must be shown to exist as a fact, clearly and convincingly. But it cannot be inferred from a mishmash of circumstances alone disclosing some kind of an "understanding," when especially, those disparate circumstances are not themselves incompatible with contentions that no accord had existed or had been reached. 48

The petitioners cannot simply assume that the wall was there for the purpose with which they now give it, by the bare coincidence that it had divided the residential block from the commercial section of Bel-Air. The burden of proof rests with them to show that it had indeed been built precisely for that objective, a proof that must satisfy the requirements of our rules of evidence. It cannot be made to stand on the strength of plain inferences.

b.

This likewise answers the petitioners' second query, whether or not the Court of Appeals had "arbitrarily ignore(d) the decisive findings of the trial court." 49 i.e., findings pointing to alleged acts performed by the Ayala Corporation proving its commitment to maintain the wall abovesaid. Specifically, the petitioners refer to, among other things: (1) Ayala's alleged announcement to Bel- Air Village Association members that "[the perimeter wall along Jupiter Street will not be demolished," 50 (2) Ayala's alleged commitment "during the pendency of the case in the trial court" to restore the wall; (3) alleged assurances by Copuyoc that the wall will not be removed; (4) alleged contrivances by the corporation to make the association admit as members the commercial lot buyers which provided them equal access to Jupiter Street; and (5) Ayala's donation to the association of Jupiter Street for "private use" of Bel-Air residents. 51

682 (1903), where it was held that "whether the plaintiffs services were solicited or whether they were offered to the defendant for his assistance, inasmuch as these services were accepted and made use of by the latter, we must consider that there was a tacit and mutual consent as to the rendition of services." (At 686.) In that case, the defendant had enormously benefitted from the services that entitled the plaintiff to compensation on the theory that no one may unjustly enrich himself at the expense of another (Solutio indebiti) The facts of this case differ.


As we stated, the Ayala Corporation's alleged conduct prior to or during the proceedings below are not necessarily at war with claims that no commitment had been in fact made.

With respect to Ayala's alleged announcement before the association, the Court does not agree that Ayala had categorically assumed as an obligation to maintain the wall "perpetually," i.e., until the year 2007 (the expiration date under the "deed restrictions.") There is nothing in its statement that would bare any commitment. In connection with the conference between the parties "during the pendency" of the trial, it is to be noted that the Ayala Corporation denies having warranted the restoration of the said wall therein. What, on the other hand, appears in the records is the fact that Ayala did make that promise, but provided that the Mayor allowed it. It turned out, however, that the Mayor balked at the Idea. 52 But assuming that Ayala did promise to rebuild the wall (in that conference), it does not seem to us that it did consequently promise to maintain it in perpetuity.

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

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

Moreover, Ayala's overtures with the association concerning the membership of commercial lot buyers therein have been shown to be neither perfidious nor unethical nor devious (paraphrasing the lower court). We quote anew:

x x x x x x x x x

(7) On June 30, 1972, appellant informed BAVA that in a few months it shall subdivide and sell the commercial lots bordering the north side of Buendia Avenue Extension

from Reposo Street up to Zodiac Street. Appellant also informed BAVA that it had taken all precautions and will impose upon the commercial lot owners deed restrictions which will harmonize and blend with the development and welfare of Bel-Air Village. Appellant further applied for special membership in BAVA of the commercial lot owners. A copy of the deed restrictions for the commercial lots was also enclosed. The proposed deed restrictions shall include the 19 meter set back of buildings from Jupiter Street, the requirement for parking space within the lot of one (1) parking slot for every seventy five (75) meters of office space in the building and the limitation of vehicular traffic along Buendia to entrance only, but allowing both vehicular entrance and vehicular exit through Jupiter Street and any side street.

In its letter of July 10, 1972, BAVA acknowledged the above letter of appellant and informed the latter that the application for special membership of the commercial lot owners in BAVA would be submitted to BAVA's board of governors for decision.

(8) On September 25,1972, appellant notified BAVA that, after a careful study, it was finally decided that the height limitation of buildings on the commercial lots shall be increased from 12.5 meters to 15 meters. Appellant further informed BAVA that Jupiter Street shall be widened by 3.5 meters to improve traffic flow in said street. BAVA did not reply to said letter, but on January 22, 1973, BAVA wrote a letter to the appellant informing the latter that the Association had assessed the appellant, as special member of the association, the amount of P40,795.00 (based on 81,590 square meters at P.50 per square meter) representing the membership dues of the commercial lot owners for the year 1973, and requested the appellant to remit the amount which its board of governors had already included in its current budget. In reply, appellant on January 31, 1973 informed BAVA that due to the widening of Jupiter Street, the area of the lots which were accepted by the Association as members was reduced to 76,726 square meters. Thus, the corresponding due at P.50 per square meter should be reduced to P38,363.00. This amount, therefore, was remitted by the appellant to BAVA. Since then, the latter has been collecting membership dues from the owners of


the commercial lots as special members of the Association. As a matter of fact, the dues were increased several times. In 1980, the commercial lot owners were already being charged dues at the rate of P3.00 per square meter. (Domingo, TSN, p. 36, March 19, 1980). At this rate, the total membership dues of the commercial lot owners amount to P230,178.00 annually based on the total area of 76,726 square meters of the commercial lots. 54

x x x x x x x x x

The alleged undertaking, finally, by Ayala in the deed of donation (over Jupiter Street) to leave Jupiter Street for the private use of Bel-Air residents is belied by the very provisions of the deed. We quote:

x x x x x x x x x

IV. That the offer made by the DONOR had been accepted by the DONEE subject to the condition that the property will be used as a street for the use of the members of the DONEE, their families, personnel, guests, domestic help and, under certain reasonable conditions and restrictions, by the general public, and in the event that said lots or parts thereof cease to be used as such, ownership thereof shall automatically revert to the DONOR. The DONEE shall always have Reposo Street, Makati Avenue, and Paseo de Roxas open for the use of the general public. It is also understood that the DONOR shall continue the maintenance of the street at its expense for a period of three years from date hereof." (Deed of Donation, p. 6, Exh. 7) 55

x x x x x x x x x

The donation, on the contrary, gave the general public equal right to it.

The Court cannot then say, accepting the veracity of the petitioners' facts" enumerated above, that the Ayala Corporation may be held liable for specific performance of a demandable obligation, let alone damages.

The Court adds that Ayala can hardly be held responsible for the alleged deterioration of "living and environmental conditions" 56 of the Bel-Air area, as a consequence of "Ayala's authorized demolition of the Jupiter perimeter wall in 1974-1975. " 57 We agree with Ayala that until 1976, "there was peace and quiet" at Jupiter Street, as the petitioners' (Sangalang, Gaston, and Briones) complaints admit. Hence, the degeneration of peace and order in Bel-Air cannot be ascribed to the destruction of the wall in 1974 and 1975.

What Ayala submits as the real cause was the opening of Jupiter Street to vehicular traffic in 1977., 58 But this was upon orders of the Mayor, and for which the homeowners' association had precisely filed suit (Civil Case No. 34998) 59 to contest the act of the Mayor.

c.

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

Accordingly, the Court affirms the Court of Appeals' holding that the Ayala Corporation, in its dealings with the petitioners, the Bel-Air Village Association in particular, had "acted with justice, gave the appellees [petitioners] their due and observed honesty and good faith." 62 "Therefore, under both Articles 19 and 21 of the Civil Code, the appellant [Ayala] cannot be held liable for damages." 63

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

Our decision also resolves, quite anticlimactically, these companion cases. But we do so for various other reasons. In the Sangalang case, we absolve the Ayala Corporation primarily owing to our finding that it is not liable for the opening of Jupiter Street to the general public. Insofar as these petitions are concerned, we likewise exculpate the private respondents, not only because of the fact that Jupiter Street is not covered by the restrictive easements based on the "deed restrictions" but chiefly because the National


Government itself, through the Metro Manila Commission (MMC), had reclassified Jupiter Street into high density commercial (C-3) zone, 64 pursuant to its Ordinance No. 81-01. Hence, the petitioners have no cause of action on the strength alone of the said "deed restrictions.

In view thereof, we find no need in resolving the questions raised as to procedure, since this disposition is sufficient to resolve these cases.

It is not that we are saying that restrictive easements, especially the easements herein in question, are invalid or ineffective. As far as the Bel-Air subdivision itself is concerned, certainly, they are valid and enforceable. But they are, like all contracts, subject to the overriding demands, needs, and interests of the greater number as the State may determine in the legitimate exercise of police power. Our jurisdiction guarantees sanctity of contract and is said to be the "law between the contracting parties, 65 but while it is so, it cannot contravene 'law, morals, good customs, public order, or public policy. 66 Above all, it cannot be raised as a deterrent to police power, designed precisely to promote health, safety, peace, and enhance the common good, at the expense of contractual rights, whenever necessary. In Ortigas & Co., Limited Partnership v. Feati Bank and Trust Co., 67 we are told:

x x x x x x x x x

2. With regard to the contention that said resolution cannot nullify the contractual obligations assumed by the defendant-appellee referring to the restrictions incorporated in the deeds of sale and later in the corresponding Transfer Certificates of Title issued to defendant-appellee it should be stressed, that while non-impairment of contracts is constitutionally guaranteed, the rule is not absolute, since it has to be reconciled with the legitimate exercise of police power, i.e., "the power to prescribe regulations to promote the health, morals, peace, education, good order or safety and general welfare of the people.' Invariably described as "the most essential, insistent, and illimitable of powers" and "in a sense, the greatest and most powerful attribute of government," the exercise of the power may be judicially inquired into and corrected only if it is capricious, whimsical, unjust or unreasonable, there having been a denial of due process or a violation of any other applicable constitutional guarantee. As this Court held through

Justice Jose P. Bengson in Philippine Long Distance Company vs. City of Davao, et al. police power 'is elastic and must be responsive to various social conditions; it is not confined within narrow circumscriptions of precedents resting on past conditions; it must follow the legal progress of a democratic way of life.' We were even more emphatic in Vda. de Genuino vs. The Court of agrarian Relations, et al., when We declared: "We do not see why public welfare when clashing with the individual right to property should not be made to prevail through the state's exercise of its police power."

Resolution No. 27, 1960 declaring the western part of High way 54, now E. de los Santos Avenue (EDSA, for short) from Shaw Boulevard to the Pasig River as an industrial and commercial zone, was obviously passed by the Municipal Council of Mandaluyong, Rizal in the exercise of police power to safeguard or promote the health, safety, peace, good order and general welfare of the people in the locality. Judicial notice may be taken of the conditions prevailing in the area, especially where Lots Nos. 5 and 6 are located. The lots themselves not only front the highway; industrial and commercial complexes have flourished about the place. EDSA, a main traffic artery which runs through several cities and municipalities in the Metro Manila area, supports an endless stream of traffic and the resulting activity, noise and pollution are hardly conducive to the health, safety or welfare of the residents in its route. Having been expressly granted the power to adopt zoning and subdivision ordinances or regulations, the municipality of Mandaluyong, through its Municipal Council, was reasonably, if not perfectly, justified under the circumstances, in passing the subject resolution. 68

x x x x x x x x x

Undoubtedly, the MMC Ordinance represents a legitimate exercise of police power. The petitioners have not shown why we should hold otherwise other than for the supposed "non-impairment" guaranty of the Constitution, which, as we have declared, is secondary to the more compelling interests of general welfare. The Ordinance has not been shown to be capricious or arbitrary or unreasonable to warrant the reversal of the judgments so appealed. In that connection, we find no reversible error to have been committed by the Court of Appeals.


WHEREFORE, premises considered, these petitions are DENIED No pronouncement as to costs.

IT IS SO ORDERED.

Fernan, (C.J.), Melencio-Herrera, Gutierrez, Jr., Cruz, Gancayco, Bidin, Cortes, Griño-Aquino, Medialdea and Regalado, JJ., concur.

Narvasa, J., on leave.

Paras, J., Took no part;

Feliciano, J., Took no part;

Padilla, J., Took no part;

G.R. No. 97619 November 26, 1992


SPOUSES SOCRATES PILAPIL and ROSARIO PILAPIL, petitioners, vs.THE COURT OF APPEALS, REGIONAL TRIAL COURT OF CEBU, BRANCH 17, and SPOUSES GORGONIO COLOMIDA and GLORIA COLOMIDA, respondents.

DAVIDE, JR., J:

From the denial of 13 February 1991 of their motion for the reconsideration of the 26 October 1990 decision of the Court of Appeals, in CA-G.R. CV No. 17235, 1 which affirmed the 8 February 1988 decision of Branch 17 of the Regional Trial Court (RTC) of Cebu, petitioners filed this petition for review under Rule 45 of the Rules of Court.

The kernel issue in this case is whether or not there exists in sitio Bahak, barangay Poblacion, Municipality of Liloan, Province of Cebu a camino vecinal; 2 and if so, whether the same traverses the property belonging to the petitioners.

The pleadings disclose the antecedents of this controversy.

The petitioners-spouses (hereinafter, Pilapils) own a 6,598 square meter 3 parcel of land situated in Bahak, Poblacion, Liloan, Cebu and covered by Tax Declaration No. 15067. 4 The said parcel corresponds to Lot No. 320 and Lot 323 5 and that portion covered by Plan Psu-07-005007, 6 duly approved by the Regional Director of Region VII of the Bureau of Lands. The land formerly belonged to Marcelo Pilapil, the grandfather of petitioner Socrates Pilapil.

Private respondents (hereinafter, Colomidas), who are residents of Mandaue City, purchased on 4 June 1981 from Esteria vda. de Ceniza and the heirs of Leoncio Ceniza a parcel of land, also located at Bahak, Poblacion, Liloan, Cebu, covered by Tax Declaration No. 19764 and described as follows:

. . . Boundaries: N-Gregorio Longakit; S-Gregorio Longakit; E-Manglar; W-Gregorio Longkit; Area: 10,910 sq. meters; Kind of land: Pasture cocal and wood; Improvements: 20 cocos prod.; Assessed Value: P1,360.00; Present Possessors: The herein petitioners. 7

This parcel of land, per Plan Psu-07-002763, 8 was found to contain only 6,448 square meters. It is now covered by Free Patent No. (VII-1)-15448, issued on 23 March 1982, and Original Certificate of Title No. P-20588 9 of the Register of Deeds of the Province of Cebu issued in the name of the Colomidas and is located around 70 meters from the National Road. The Colomidas claim that they had acquired from Sesenando Longkit a road right of way which leads towards the National Road; this road right of way, however, ends at that portion of the property of the Pilapils where a camino vecinal exists all the way to the said National Road. 10

In the early part of July of 1981, the Colomidas "tried to improve the road of "camino vecinal", for the convenience of the public," but the Pilapils harassed and threatened them with "bodily harm from making said improvement." The Pilapils also threatened to fence off the camino vecinal. 11

Thus, on 16 July 1981, the Colomidas filed against the Pilapils a petition 12 for injunction and damages with a prayer for a writ of preliminary mandatory and/or prohibitory injunction with the Regional Trial Court of Cebu. Docketed as Civil Case No. R-20732, the petition was raffled off to Branch 17 thereof. The Colomidas specifically allege in paragraph IV of the petition that:

. . . Granting arguendo, even in the very remote possibility that the "camino vecinal" cannot be proved, the petitioners are entitled to the use of the same under Articles 649 to 651 of the Civil Code, it being their only access to public (sic) highway. 13

and pray that upon the filing of the petition, a restraining order be issued directing the Pilapils or anyone acting in their behalf to cease and desist from preventing or harassing them (Colomidas) from using the camino vecinaland/or fencing off the same, and after hearing, a writ of preliminary injunction be issued commanding the Pilapils to cease and desist from proceeding with the acts complained of. They also asked that the injunction be made permanent and that the Pilapils be ordered to pay, jointly and severally, the sum of P100,000.00 as moral damages, P50,000.00 as exemplary damages, 10,000.00 as attorney's fees and other litigation expenses as may be duly proved. Consistent with the aforequoted allegation of paragraph IV of the petition, the Colomidas additionally pray that:

6. In the remote possibility that the "camino vecinal" cannot be proved, to consider the same as a right of way


for the petitioners and to fix compensation for the sum (sic) at TEN PESOS (P10.00) per square meter. 14

On the other hand, on 29 July 1981, the Pilapils filed against the Colomidas an action for damages in the Municipal Circuit Trial Court (MCTC) of Liloan-Compostela, Cebu which was docketed as Civil Case No. 93-R. 15

On 18 August 1981, the Pilapils filed their Answer 16 in Civil Case No. R-20732. They specifically deny therein the existence of a "camino vecinal" on their property and allege, inter alia, that the enclosing of their property and allege, inter alia, that the enclosing of their property by a fence was done in the valid exercise of their right of ownership and that if the Colomidas were prejudiced thereby, they only have themselves to blame for buying said property without verifying its condition and existing easements. As affirmative and special defenses, the Pilapils aver that the petition does not state facts sufficient to constitute a valid cause of action; the Colomidas were the ones who employed threats and intimidation; and, to add insult to injury, the latter caused a heavy bulldozer to enter their (Pilapils) property and cause great damage to the plants and crops in the process. The Pilapils also set up a counterclaim for attorney's fees, reimbursement for the damages caused to their land and moral and exemplary damages as may be determined by the court.

During trial on the merits in Civil Case No. R-20732, the Colomidas presented the following witnesses: Gorgonio Colomida, Jr. himself, Sesenado Longakit and Florentino Pepito. They also offered in evidence documentary exhibits. the more relevant and material of which are (1) Resolution No. 106 of the Municipal Council of Liloan passed on 18 August 1973 and entitled "Authorizing the Residents of Bahak, Poblacion, Liloan to Repair and Improve a Camino Vecinal in their Sitio" 17 and (2) a sketch 18 prepared by witness Sesenando Longakit purportedly showing that the camino vecinal traverses the property of the Pilapils. Both Longakit and Pepito testified on the said camino vecinal, insisting that it traverses the property of the Pilapils.

Upon the other hand, the Pilapils presented the following as their witnesses: Roman Sungahid, Engineer Epifanio Jordan (the Municipal Planning and Development Coordinator of the Municipality of Liloan) and petitioner Socrates Pilapil. Engineer Jordan testified on Liloan's Urban Land Use Plan 19 or zoning map which he prepared upon the instruction of then Municipal Mayor Cesar Butai and which was approved by the Sangguniang

Bayan of Liloan. Per the said plan, the camino vecinal in sitio Bahak does not traverse, but runs along the side 20 of the Pilapil property. 21

On 8 February 1988, the trial court rendered its decision 22 in favor of the Colomidas the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of petitioners, and, accordingly, respondents are permanently enjoined from preventing or harassing petitioners from using the "camino vecinal" across respondents' land at Bahak, Poblacion, Liloan, or from fencing the same or in any manner preventing its use by other people; and respondents are ordered to pay petitioners jointly and severally the sum of P4,500.00 as actual damages, the sum of P5,000.00 as attorney's fees, and the sum of P2,000.00 as litigation expenses. Costs against respondents.

SO ORDERED. 23

This disposition is based on the following findings of fact and conclusions:

Resolution No. 106 of the Municipal Council of Liloan, passed on August 18, 1973 and entitled "Authorizing the Residents of Bahak, Poblacion, Liloan to Repair and Improve a Camino Vecina (sic) in Their Sitio" (Exh. "A") shows that there is a "camino vecinal" at Bahak. It is true, as claimed by respondents, that Resolution No. 106 does not state that the "camino vecinal" referred to therein traverses respondents' land; however, the following facts of record support petitioners' theory that the said "camino vecinal" runs across respondents' land:

1 Resolution No. 106 (Exh. "A") states that upon inspection of the "camino vecinal" by one of the councilors, it was established that the said "camino vecinal" needed "some improvements to make it usable," but the Municipal Council did not have the necessary funds for the purpose, and that "the residents of Bahak, headed by Mr. Sesenando Longakit, have signified to (sic) repair the camino vecinal on voluntary (sic) basis," hence (sic) it was resolved "to authorize the residents of Bahak to repair aforesaid road" provided the labor would be on a


purely voluntary basis, the municipal government would not be liable for any expense, and there would be no discrimination in the use of the road.

The "Mr. Sesenando Longkit" alluded to in Resolution No. 106 as heading the residents of Bahak who had asked for authority to repair the "camino vecinal" at Bahak took the witness stand. His testimony has established that he has been residing at Bahak since birth on July 16, 1933, that he is the occupant of a lot (Exh. "B-5") not far from petitioners' lot, and that he and other residents in that area have been using the "camino vecinal" as their access to the National Road.

It appears from the sketch (Exh. "B") drawn by Mr. Longakit that the "camino vecinal" traverses the land of respondents (Exhs. "B-6 & "B-7"). Obviously, the "camino vecinal" subject matter of Resolution No. 106 is the "camino vecinal" running across respondents' land, somewhere at the back of which is the land occupied by Mr. Longakit, who for the reason that he and other residents were using that "camino vecinal" offered to the municipal government their services to improve it.

2. As testified to by Mr. Longakit, who has been living at Sitio Bahak since 1933, and whose testimony the Court finds credible, both sides of the "camino vecinal" formerly belonged to the grandfather of respondent Socrates Pilapil, it was that "camino vecinal" in connection with which he secured Resolution No. 106, and that before it was partly fenced by respondents, and when he was a child, everybody could use that "camino vecinal" and carabao carts could pass through it, and, later, 4-wheeled motor vehicles could pass through it.

3. Mr. Florentino Pepito, 79 years of age when he took the witness stand in 1982, and who was a councilor in Liloan from 1955 to 1967, and was chairman of the Committee on Roads & Bridges, testified that the former owner of the lots now owned by respondents at Bahak was Marcelo Pilapil, grandfather of respondent Socrates Pilapil and close (sic) friend of his (witness Pepito) that the subject "camino vecinal"' is located between those lots, and fact

he has a parcel of land in that area covered by Tax Declaration No. 36168 (Exh. "E:"), which shows that on the North it is bounded by a "camino vecinal" (Exh. "E-1"), which passes between the two lots of respondents, proceeds to his (witness Pepito's) land, crosses the National Road up to Sitio Looc between Km. 19 and Km. 20, up to Martires Street, facing Camotes; and that when he was a child, he and his father used to pass through that "camino vecinal" in a carabao cart. The Court finds no reason to disbelieve Mr. Pepito's testimony. 24

It discredited the version of the Pilapils in this wise:

4. Respondent Socrates Pilapil insisted on direct examination that there is no "camino vecinal" traversing his lots. However, on cross-examination he declared that his two lots at Bahak, numbered 320 and 323, were formerly covered by two separate tax declarations, but later he had (sic) fused into one, namely Tax Declaration No. 15067 (Exh. "4"), which begins with the year 1985 (long after the present case was filed). Respondent Socrates Pilapil admitted that before the fusion of the two tax declarations covering Lots 320 and 323 owned by him, those tax declarations showed that there was a "camino vecinal" at the South boundary of Lot 320 and at the North Boundary of Lot 323, but after the fusion of the two tax declarations into one, the "camino vecinal" no longer appears in the new tax declaration (Exh. "4").

In the face of the foregoing established facts, it would appear that the common testimony of respondent Socrates Pilapil and Ramon Sungahid to the effect that there is no "camino vecinal" across respondents' lots is nothing more than an unsupported conclusion. Mr. Sungahid adamantly insisted that there was no such "camino vecinal" despite the fact that he was confronted on cross-examination with tax declarations stating that there was a "camino vecinal" across respondents' lot. Ironically, when respondent Socrates Pilapil later took the witness stand, as already stated, he himself admitted that the tax declarations previously covering his two lots showed that there was a "camino vecinal" between the lots.


Respondents' other witness, Engr. Epifanio Jordan, Municipal Planning & Development Coordinator of Liloan, prepared a zoning map (Exh. "1") of Poblacion, Liloan. The map contains a portion (Exh. "1-F") which shows "camino vecinal" passing through the land of respondents at Bahak, but he declared that the "camino vecinal" on the map is merely a proposal by his office to the Sangguniang Bayan of Liloan. The Court notes that in the map (Exh. "I") (sic) some streets and projects are labelled "proposed," but the "camino vecinal" (Exh. "I-F") (sic) which Engr. Jordan admits to be passing through respondents' land is not so labelled. Besides, it is not clear whether or not he was authorized him. On direct examination he declared that the Sangguniang Bayan instructed him to prepare the map; but on cross-examination he stated, when asked whether the Sangguniang Bayan authorized him to prepare the map, that it was the Mayor who directed him to do so. 25

The Pilapils appealed from the above decision to the public respondent Court of Appeals which docketed the case as CA-G.R. CV No. 17235. In support of their plea for the reversal of the decision, the Pilapils sought to convince the public respondent that the trial court erred in:

I . . . HOLDING THAT A CAMINO VECINAL EXISTED ACROSS THE LOT OF THE DEFENDANTS . . .

II . . . NOT APPRECIATING THE EVIDENCE PRESENTED BY THE DEFENDANTS . . .

III . . . CONDEMNING THE DEFENDANT . . . TO PAY PLAINTIFFS . . . JOINTLY AND SEVERALLY THE SUM OF P4,500.00 AS ACTUAL DAMAGES, THE SUM OF P5,000.00 AS ATTORNEY'S FEES, THE SUM OF P2,000.00 AS LITIGATION EXPENSES AND TO PAY THE COSTS.

IV . . . NOT AWARDING TO DEFENDANTS . . . DAMAGES TO COMPENSATE FOR THE DAMAGED CONCRETE SLABS, COCONUTS, BANANAS AND OTHER FRUIT TREES THAT WAS (sic) CAUSED BY THE BULLDOZER HIRED BY THE PLAINTIFFS . . .

ATTORNEY'S FEES, LITIGATION EXPENSES AND COSTS. 26

In its decision affirming in toto the 8 February 1988 ruling of the trial court, the public respondent opined that the arguments adduced in support of the assigned errors boil down to the question of credibility of the witnesses and the weight assigned by the lower court to their testimonies and the documentary exhibits. It then concluded that (a) there exists no exception to the deeply rooted rule that findings of fact of trial courts are entitled to great weight and respect and will not be disturbed on appeal; (b) while the 18 August 1973 Resolution of the Municipal Council of Liloan (Exhibit "A") does not state that the camino vecinal traverses the property of the Pilapils, the testimony of Sesenando Longakit, the person named therein who has knowledge of the surrounding facts and circumstances, and who was present during the deliberations, passage and signing thereof, confirmed the existence of the camino vecinal on the property of the Pilapils; (c) as to the claimed damages to the fruit trees and other plants belonging to the Pilapils, the same had been separately litigated on, at the latter's instance, before the Municipal Circuit Trial Court and had already been resolved against the Pilapils; besides, there is insufficient proof to indicate that damage was done to such plants or that the Pilapils planted trees and other plants on thecamino vecinal; and (d) there is no merit in the claim that witnesses Longakit and Pepito, being private individuals, are incompetent to testify on the existence and location of the camino vecinal; both possess all the qualifications and none of the disqualification's for witnesses under Section 20, Rule 130 of the Rules of Court. As regards Exhibit "1" which the Pilapils relied upon in support of their theory that the camino vecinal does not traverse their property, the public respondent made the following disquisition:

Respondents-appellants' Exhibit "1" is a zoning map for the Poblacion of the Municipality of Liloan (TSN, Epifanio Jordan, February 12 1986, p. 6), prepared and testified to by Engineer Epifanio Jordan, Municipal Planning and Development Coordinator of Liloan. By this Exhibit, respondents-appellants attempted to show that no "camino vecinal" existed across their land, and that although there is a "camino vecinal" illustrated therein, it is a proposed one and does not traverse, but only passes through the side of their land (TSN, Epifanio Jordan, November 5, 1985, p. 10; Exhibit "1-F").

After a thorough perusal of Exhibit "1" and a careful review of the transcript of stenographic notes taken on November


5, 1985 and February 12, 1986, We find that the "camino vecinal" illustrated in Exhibit "1" and claimed by witness Engineer Epifanio Jordan as a proposed "camino vecinal" (TSN, Epifanio Jordan, November 5, 1985, p. 10), is indeed not so labelled as the other proposed streets or passageways are. And more importantly, witness Engineer Epifanio Jordan did in fact admit and establish the existence of the "camino vecinal" traversing respondents-appellants land.

Respondents-appellants' witness, Engineer Epifanio Jordan produced before the lower court an old map of the Poblacion which was drawn and traced by a certain Atty. Sotero Auman, and from which said witnesses (sic) based his Exhibit "1". In Exhibit "1" witness Engineer Epifanio Jordan identified respondents-appellants' land as that encompassed in the circle, Exhibit "1-C" also Exhibit "G-1". On cross-examination, when confronted and asked to compare his zoning map (Exhibit "1") with the old map, it was shown that said Exhibit "1-A" also Exhibit "G-1", encompasses the figures "320" and "323" Lot numbers appearing in the old map, and (sic) consequently, was (sic) identified by said witness and marked as Exhibits "G-1-b" and "G-1-c" respectively, in Exhibit "1"; and that furthermore, the "camino vecinal," Exhibit "G-1-a", passess (sic) between Lot Nos. 320 and 323 which lots (sic) belong to respondents-appellants (TSN, Epifanio Jordan, February 12, 1986, pp. 1-13).

It is noted that on direct examination, witness Engineer Epifanio Jordan testified that the Sangguniang Bayan of Liloan, Cebu, instructed him to prepare the zoning map (Exhibit "1") (TSN, Epifanio Jordan, November 5, 1985, p. 9) but on cross-examination, stated (sic) that he did so upon oral orders of the mayor (TSN, Epifanio Jordan, February 12, 1986, pp. 6-7). Also on cross-examination, said witness testified that the zoning map (Exhibit "1") prepared by him was based on an old map drawn and traced by Atty. Sotero Auman, a casual worker in the Municipality of Liloan (Ibid., pp. 8 and 14) yet on redirect examination testified (sic) that he did not know who authorized said Atty. Sotero Auman to draw the map which served as his basis for Exhibit "1", or if it was

approved by the Sangguniang Bayan of Liloan (Ibid., pp. 14-15). 27

Their motion for the reconsideration of the above decision having been denied by the public respondent Court of Appeals in its Resolution of 13 February 1991, 28 the Pilapils filed by mail on 8 April 1991 the instant petition. They interpose the following ground for the allowance thereof:

4. The respondent Court, in affirming the Decision of the respondent RTC and in denying petitioners' motion for reconsideration, acted in a manner so patently and grossly contrary to law and jurisprudence, resulting in a miscarriage of justice to the prejudice and detriment of petitioners, by:

4.1. disregarding the official act of the Sangguniang Bayan of the Municipality of Lilo-an, Cebu;

4.2. quoting merely a portion of the testimony of a witness and not the totality of his testimony;

4.3. considering documentary exhibits not formally offered in evidence;

4.4. affirming the award of damages to the private respondent, and

4.5. affirming the denial of the award of damages to the petitioners. 29

In a Manifestation 30 posted on 17 May 1991, the Colomidas pray for the dismissal of the petition on the basis of the rule on conclusiveness of findings of fact of the Court of Appeals; they further aver that the petition is but another attempt on the part of the Pilapils to unjustly delay the final resolution of the case.

Petitioners moved to expunge 31 the Manifestation on the ground that it was filed without prior leave of the Court and that it is not one of the pleadings allowed by the Rules of Court or required by this Court. We denied this motion, considered the Manifestation as the Colomidas' Comment to the


petition and required the Pilapils to file a reply thereto, 32 which they subsequently complied with 33

We then gave due course to the petition and required the parties to submit their respective Memoranda. 34

The core issue in this case, as already stated, is whether or not the Municipality of Liloan has a camino vecinal in sitio Bahak of barangay Poblacion, and if it does, whether such road traverses the property of the Pilapils of only passes along its side. While both parties agree that a camino vecinal actually exists, the Colomidas assert that the same traverses the property of the Pilapils. The latter, on the other hand, vigorously maintain that it does not. By any standard, the issue is quite simple and could have been easily resolved without much procedural fanfare if the trial court either took full advantage of the rule on pre-trial, 35 or conducted an ocular inspection of the premises. Such inspection would have been a wise course of action 36 to take in view of the divergent versions of the parties as to the location of the camino vecinal. Even the Colomidas, as petitioners below, could have expedited the resolution of the controversy by moving for the appointment of a commissioner who could determine the exact location of the camimo vecinal and submit a vicinity map or plan indicating the same; and, if the parties cannot agree on its location, the latter could indicate its relative locations on the basis of the parties' respective versions. The trial court's decision does not even make any reference to a pre-trial conference being held. Neither does it appear that the appointment of a commissioner, allowed by the Rules of Court, 37 was sought. As a consequence thereof, it took the trial court more than six (6) long years to decide the case. And even then, it had to contend with conflicting testimonial evidence and draw conclusions from a sketch prepared by witness Sesenando Longakit, the zoning map prepared by Engineer Jordan and various tax declarations.

The above issue has been further obscured by the unnecessary quibbling on whether or not the testimonies of Sesenando Longakit and Florentino Pepito should be accorded full faith and credit. To this Court's mind, the issue of their credibility has been rendered moot by the unrebutted evidence which shows that the Municipality of Liloan, through its Sangguniang Bayan, had approved a zoning plan, otherwise called an Urban Land Use Plan.38 This plan indicates the relative location of the camino vecinal in sitio Bahak, 39 Poblacion, Liloan, Cebu.

It is beyond dispute that the establishment, closure or abandonment of the camino vecinal is the sole prerogative of the Municipality of Liloan. No private party can interfere with such a right. Thus, even if We are to agree

with both the trial court and public respondent that Longakit and Pepito were telling the truth, the decision of the Municipality of Liloan with respect to the said camino vecinal in sitio Bahak must prevail. It is thus pointless to concentrate on the testimonies of both witnesses since the same have, for all intents and purposes, become irrelevant.

The property of provinces, cities and municipalities is divided into property for public use and patrimonial property.40 The first consists of the provincial roads, city streets, municipal streets, squares, fountains, public waters, promenades, and public works for public service paid for by the said provinces, cities or municipalities. 41 They are governed by the same principles as property of public dominion of the same character. 42 Under the applicable law in this case, Batas Pambansa Blg. 337 (The Local Government Code), the Sangguniang Bayan, the legislative body of the municipality, 43 had the power to adopt zoning and subdivision ordinances or regulations subject to the provisions of existing laws, and to provide for the construction, improvement, repair and maintenance of municipal streets, avenues, alleys, sidewalks, bridges, parks and other public places, regulate the use thereof and prohibit the construction or placing of obstacles or encroachments on them 44 Section 10, Chapter 2, Title One, Book I of said Code provided: 45

Sec. 10. Closure of roads. — A local government unit may likewise, through its head acting pursuant to a resolution of its Sangguniang and in accordance with existing law and the provisions of this Code, close any barangay, municipal, city or provincial road, street, alley, park or square. No such way or place or any part thereof shall be closed without indemnifying any person prejudiced thereby. A property thus withdrawn from public use may be used or conveyed for any purpose for which other real property belonging to the local unit concerned might be lawfully used or conveyed.

A camino vecinal is a municipal road. It is also property for public use. Pursuant, therefore, to the above powers of a local government unit, the Municipality of Liloan had the unassailable authority to (a) prepare and adopt a land use map, (b) promulgate a zoning ordinance which may consider, among other things, the municipal roads to be constructed, maintained, improved or repaired and (c) close any municipal road.

In the instant case, the Municipality of Liloan, through the Sangguniang Bayan, approved the Urban Land Use Plan; this plan was duly signed by the


Municipal Mayor (Exhibit "1"). By doing so, the said legislative body determined, among others, the location of the camino vecinal in sitio Bahak. The following unrebutted testimony of Engineer Epifanio Jordan shows that the same was approved by the Sangguniang Bayan:

ATTY. CAÑETE:

xxx xxx xxx

Q After you prepared this map, what did you do with this?

A I submitted the map to the Sangguniang Bayan of Liloan, Cebu for approval and action.

Q What action was taken by the Sangguniang Bayan of Liloan, Cebu in (sic) this map that you prepared and submitted?

A It approved the map.

Q Why do you know that this map was approved by the Sangguniang Bayan of Liloan, Cebu?

A I was present during the session.

COURT:

Q You mean there was a resolution passed by the Sangguniang Bayan of Liloan, Cebu?

A Yes, sir. 46

The reluctance of the trial court and public respondent to give due weight to the testimony of Engineer Jordan stemmed from a doubt as to his authority to prepare the plan. There is also some confusion regarding the party who

directed him to do so. Both courts observed that while on direct examination, he testified that the Sangguniang Bayan instructed him to prepare the zoning map, 47 during cross-examination, he stated that he prepared it upon the Mayor's oral order. 48 Such inconsistency is quite trivial and hence, did not affect the preparation and subsequent approval of the zoning map. In the first place, under the applicable law, the mayor was both a member and the presiding officer of the Sangguniang Bayan. 49 Secondly, what invested the zoning map with legal effect was neither the authority of the person who ordered its preparation nor the authority of the person who actually prepared it, but its approval by the Sangguniang Bayan. Furthermore, with or without the order of the Mayor or Sangguniang Bayan, Engineer Jordan, as the then Municipal Planning and Development Coordinator, had the authority to prepare the plan and admit it to the Sangguniang Bayan for approval. Among his functions under the governing law at the time was to formulate an integrated economic, social, physical and other development objectives and policies for the consideration and approval of thesangguniang bayan and the municipal mayor, and prepare municipal comprehensive plans and other development planning document. 50 Thus, even if he had not been instructed by anyone to prepare the map, he could nevertheless, on his own initiative and by virtue of his functions, make one. The trial court and public respondent then failed to appreciate the role and function of a Municipal Planning and Development Coordinator.

As further declared by Engineer Jordan, this camino vecinal in sitio Bahak "passes the side of the land of Socrates Pilapil. This is the proposed road leading to the national highway." 51 The Colomidas presented no rebuttal witness to show that by the approval of the zoning map by the Sangguniang Bayan, they were effectively deprived of access to the national highway from their property. Of course, they may argue that the zoning map was prepared for and approved by the Sangguniang Bayan after the filing of their petition in Civil Case No. R-20732. Be that as it may, this preparation and approval, clearly a supervening event, was relied upon, introduced in evidence without objection on the part of the Colomidas and evaluated by the trial court. In short, the latter allowed the issue raised by the supervening event to be tried. There was nothing procedurally objectionable to this; on the contrary, Section 5, Rule 10 of the Rules of Court allows it. Said section reads:

Sec. 5. Amendment to conform to or authorize presentation of evidence. — When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made


upon motion of any party at any time, even after judgment, but failure to amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleading, to be amended and shall do so freely when the presentation on the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice him in maintaining his action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence.

Such supervening fact, duly proved to be an official act of the Municipality of Liloan, binds not only the Pilapils and the Colomidas, but also the general public. The solemn declarations of old people like Sesenando Longakit and Florentino Pepito cannot overturn the decision of the Municipality of Liloan.

The foregoing exposition renders unnecessary further discussion on the other issues raised by the petitioners.

WHEREFORE, the instant Petition is GRANTED. The challenged Decision of 26 October 1990 and Resolution of 13 February 1991 of public respondent Court of Appeals in CA-G.R. CV No. 17235, as well as the Decision of 8 February 1988 of Branch 17 of the Regional Trial Court of Cebu in Civil Case No. R-20732 are hereby SET ASIDE. Said Civil Case No. R-20732 is hereby DISMISSED with costs against the private respondents.

SO ORDERED.


Republic of the PhilippinesSUPREME COURTManila

FIRST DIVISION

G.R. No. L-29993 October 23, 1978

LAUDENCIO TORIO, GUILLERMO EVANGELISTA, MANUEL DE GUZMAN, ALFONSO R. MAGSANOC, JESUS MACARANAS, MAXIMO MANANGAN, FIDEL MONTEMAYOR, MELCHOR VIRAY, RAMON TULAGAN, all Members of the Municipal Council of Malasiqui in 1959, Malasiqui, Pangasinan, petitioners, vs.ROSALINA, ANGELINA, LEONARDO, EDUARDO, ARTEMIO, ANGELITA, ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS and ROBERTO, all surnamed FONTANILLA, and THE HONORABLE COURT OF APPEALS, respondents.

G.R. No. L-30183 October 23, 1978

MUNICIPALITY OF MALASIQUI, petitioner, vs.ROSALINA, ANGELINA, LEONARDO, EDUARDO, ARTEMIO, ANGELITA, ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS and ROBERTO, all surnamed FONTANILLA, and the Honorable COURT OF APPEALS, respondents.

Julian M. Armas, Assistant Provincial Fiscal for petitioners.

Isidro L. Padilla for respondents.

MUÑOZ PALMA, J.:

These Petitions for review present the issue of whether or not the celebration of a town fiesta authorized by a municipal council under Sec. 2282 of the Municipal Law as embodied in the Revised Administrative Code is a governmental or a corporate or proprietary function of the municipality.

A resolution of that issue will lead to another, viz the civil liability for damages of the Municipality of Malasiqui, and the members of the Municipal Council of Malasiqui, province of Pangasinan, for a death which occurred during the celebration of the town fiesta on January 22, 1959, and which was attributed to the negligence of the municipality and its council members.

The following facts are not in dispute:

On October 21, 1958, the Municipal Council of Malasiqui, Pangasinan, passed Resolution No. 159 whereby "it resolved to manage the 1959 Malasiqui town fiesta celebration on January 21, 22, and 23, 1959." Resolution No. 182 was also passed creating the "1959 Malasiqui 'Town Fiesta Executive Committee" which in turn organized a sub-committee on entertainment and stage, with Jose Macaraeg as Chairman. the council appropriated the amount of P100.00 for the construction of 2 stages, one for the "zarzuela" and another for the cancionan Jose Macaraeg supervised the construction of the stage and as constructed the stage for the "zarzuela" was "5-½ meters by 8 meters in size, had a wooden floor high at the rear and was supported by 24 bamboo posts — 4 in a row in front, 4 in the rear and 5 on each side — with bamboo braces." 1

The "zarzuela" entitled "Midas Extravaganza" was donated by an association of Malasiqui employees of the Manila Railroad Company in Caloocan, Rizal. The troupe arrived in the evening of January 22 for the performance and one of the members of the group was Vicente Fontanilla. The program started at about 10:15 o'clock that evening with some speeches, and many persons went up the stage. The "zarzuela" then began but before the dramatic part of the play was reached, the stage collapsed and Vicente Fontanilla who was at the rear of the stage was pinned underneath. Fontanilia was taken to tile San Carlos General Hospital where he died in the afternoon of the following day.

The heirs of Vicente Fontanilia filed a complaint with the Court of First Instance of Manila on September 11, 1959 to recover damages. Named party-defendants were the Municipality of Malasiqui, the Municipal Council of Malasiqui and all the individual members of the Municipal Council in 1959.

Answering the complaint defendant municipality invoked inter alia the principal defense that as a legally and duly organized public corporation it performs sovereign functions and the holding of a town fiesta was an exercise of its governmental functions from which no liability can arise to answer for the negligence of any of its agents.


The defendant councilors inturn maintained that they merely acted as agents of the municipality in carrying out the municipal ordinance providing for the management of the town fiesta celebration and as such they are likewise not liable for damages as the undertaking was not one for profit; furthermore, they had exercised due care and diligence in implementing the municipal ordinance. 2

After trial, the Presiding Judge, Hon. Gregorio T. Lantin narrowed the issue to whether or not the defendants exercised due diligence 'm the construction of the stage. From his findings he arrived at the conclusion that the Executive Committee appointed by the municipal council had exercised due diligence and care like a good father of the family in selecting a competent man to construct a stage strong enough for the occasion and that if it collapsed that was due to forces beyond the control of the committee on entertainment, consequently, the defendants were not liable for damages for the death of Vicente Fontanilla. The complaint was accordingly dismissed in a decision dated July 10, 1962. 3

The Fontanillas appealed to the Court of Appeals. In a decision Promulgated on October 31, 1968, the Court of Appeals through its Fourth Division composed at the time of Justices Salvador V. Esguerra, Nicasio A. Yatco and Eulogio S. Serrano reversed the trial court's decision and ordered all the defendants-appellees to pay jointly and severally the heirs of Vicente Fontanilla the sums of P12,000.00 by way of moral and actual damages: P1200.00 its attorney's fees; and the costs. 4

The case is now before Us on various assignments of errors all of which center on the proposition stated at the sentence of this Opinion and which We repeat:

Is the celebration of a town fiesta an undertaking in the excercise of a municipality's governmental or public function or is it or a private or proprietary character?

1. Under Philippine laws municipalities are political bodies corporate and as such ag endowed with the faculties of municipal corporations to be exercised by and through their respective municipal governments in conformity with law, and in their proper corporate name, they may inter alia sue and be sued, and contract and be contracted with. 5

The powers of a municipality are twofold in character public, governmental or political on the one hand, and corporate, private, or proprietary on the other. Governmental powers are those exercised by the corporation in

administering the powers of the state and promoting the public welfare and they include the legislative, judicial public, and political Municipal powers on the other hand are exercised for the special benefit and advantage of the community and include those which are ministerial private and corporate. 6

As to when a certain activity is governmental and when proprietary or private, that is generally a difficult matter to determine. The evolution of the municipal law in American Jurisprudence, for instance, has shown that; none of the tests which have evolved and are stated in textbooks have set down a conclusive principle or rule, so that each case will have to be determined on the basis of attending circumstances.

In McQuillin on Municipal Corporations, the rule is stated thus: "A municipal corporation proper has ... a public character as regards the state at large insofar as it is its agent in government, and private (so-called) insofar as it is to promote local necessities and conveniences for its own community. 7

Another statement of the test is given in City of Kokomo v. Loy, decided by the Supreme Court of Indiana in 1916, thus:

Municipal corporations exist in a dual capacity, and their functions are two fold. In one they exercise the right springing from sovereignty, and while in the performance of the duties pertaining thereto, their acts are political and governmental Their officers and agents in such capacity, though elected or appointed by the are nevertheless public functionaries performing a public service, and as such they are officers, agents, and servants of the state. In the other capacity the municipalities exercise a private. proprietary or corporate right, arising from their existence as legal persons and not as public agencies. Their officers and agents in the performance of such functions act in behalf of the municipalities in their corporate or in. individual capacity, and not for the state or sovereign power. (112 N. E 994-995)

In the early Philippine case of Mendoza v. de Leon 1916, the Supreme Court, through Justice Grant T. Trent, relying mainly on American Jurisprudence classified certain activities of the municipality as governmental, e.g.: regulations against fire, disease, preservation of public peace, maintenance of municipal prisons, establishment of schools, post-offices, etc. while the following are corporate or proprietary in character, viz: municipal waterwork, slaughter houses, markets, stables, bathing


establishments, wharves, ferries, and fisheries. 8 Maintenance of parks, golf courses, cemeteries and airports among others, are also recognized as municipal or city activities of a proprietary character. 9

2. This distinction of powers becomes important for purposes of determining the liability of the municipality for the acts of its agents which result in an injury to third persons.

If the injury is caused in the course of the performance of a governmental function or duty no recovery, as a rule, can be. had from the municipality unless there is an existing statute on the matter, 10 nor from its officers, so long as they performed their duties honestly and in good faith or that they did not act wantonly and maliciously. 11 In Palafox, et al., v. Province of Ilocos Norte, et al., 1958, a truck driver employed by the provincial government of Ilocos Norte ran over Proceto Palafox in the course of his work at the construction of a road. The Supreme Court in affirming the trial court's dismissal of the complaint for damages held that the province could not be made liable because its employee was in the performance of a governmental function — the construction and maintenance of roads — and however tragic and deplorable it may be, the death of Palafox imposed on the province no duty to pay monetary consideration. 12

With respect to proprietary functions, the settled rule is that a municipal corporation can be held liable to third persons ex contract 13 or ex delicto. 14

Municipal corporations are subject to be sued upon contracts and in tort. ...

xxx xxx xxx

The rule of law is a general one, that the superior or employer must answer civilly for the negligence or want of skill of its agent or servant in the course or fine of his employment, by which another, who is free from contributory fault, is injured. Municipal corporations under the conditions herein stated, fall within the operation of this rule of law, and are liable, accordingly, to civil actions for damages when the requisite elements of liability co-exist. ... (Dillon on Municipal Corporations, 5th ed. Sec. 1610,1647, cited in Mendoza v. de Leon, supra. 514)

3. Coming to the cam before Us, and applying the general tests given above, We hold that the ho of the town fiesta in 1959 by the municipality of Malsiqui Pangasinan was an exercise of a private or proprietary function of the municipality.

Section 2282 of the Chatter on Municipal Law of the Revised Administrative Code provides:

Section 2282. Celebration of fiesta. — fiesta may be held in each municipality not oftener than once a year upon a date fixed by the municipal council A fiesta s not be held upon any other date than that lawfully fixed therefor, except when, for weighty reasons, such as typhoons, foundations, earthquakes, epidemics, or other public ties, the fiesta cannot be hold in the date fixed in which case it may be held at a later date in the same year, by resolution of the council.

This provision simply gives authority to the municipality to accelebrate a yearly fiesta but it does not impose upon it a duty to observe one. Holding a fiesta even if the purpose is to commemorate a religious or historical event of the town is in essence an act for the special benefit of the community and not for the general welfare of the public performed in pursuance of a policy of the state. The mere fact that the celebration, as claimed was not to secure profit or gain but merely to provide entertainment to the town inhabitants is not a conclusive test. For instance, the maintenance of parks is not a source of income for the nonetheless it is private undertaking as distinguished from the maintenance of public schools, jails, and the like which are for public service.

As stated earlier, there can be no hard and fast rule for purposes of determining the true nature of an undertaking or function of a municipality; the surrounding circumstances of a particular case are to be considered and will be decisive. The basic element, however beneficial to the public the undertaking may be, is that it is governmental in essence, otherwise. the function becomes private or proprietary in character. Easily, no overnmental or public policy of the state is involved in the celebration of a town fiesta. 15

4. It follows that under the doctrine of respondent superior, petitioner-municipality is to be held liable for damages for the death of Vicente Fontanilia if that was at- tributable to the negligence of the municipality's officers, employees, or agents.


Art. 2176, Civil Code: Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. . .

Art. 2180, Civil Code: The obligation imposed by article 2176 is demandable not only for one's own acts or omission, but also for those of persons for whom one is responsible. . .

On this point, the Court of Appeals found and held that there was negligence.

The trial court gave credence to the testimony of Angel Novado, a witness of the defendants (now petitioners), that a member of the "extravaganza troupe removed two principal braces located on the front portion of the stage and u them to hang the screen or "telon", and that when many people went up the stage the latter collapsed. This testimony was not believed however by respondent appellate court, and rightly so. According to said defendants, those two braces were "mother" or "principal" braces located semi-diagonally from the front ends of the stage to the front posts of the ticket booth located at the rear of the stage and were fastened with a bamboo twine. 16 That being the case, it becomes incredible that any person in his right mind would remove those principal braces and leave the front portion of the stage practically unsuported Moreover, if that did happen, there was indeed negligence as there was lack of suspension over the use of the stage to prevent such an occurrence.

At any rate, the guitarist who was pointed to by Novado as the person who removed the two bamboo braces denied having done go. The Court of Appeals said "Amor by himself alone could not have removed the two braces which must be about ten meters long and fastened them on top of the stags for the curtain. The stage was only five and a half meters wide. Surely, it, would be impractical and unwieldy to use a ten meter bamboo pole, much more two poles for the stage curtain. 17

The appellate court also found that the stage was not strong enough considering that only P100.00 was appropriate for the construction of two stages and while the floor of the "zarzuela" stage was of wooden planks, the Post and braces used were of bamboo material We likewise observe that although the stage was described by the Petitioners as being supported by "24" posts, nevertheless there were only 4 in front, 4 at the rear, and 5 on each side. Where were the rest?

The Court of Appeals thus concluded

The court a quo itself attributed the collapse of the stage to the great number of onlookers who mounted the stage. The municipality and/or its agents had the necessary means within its command to prevent such an occurrence. Having filed to take the necessary steps to maintain the safety of the stage for the use of the participants in the stage presentation prepared in connection with the celebration of the town fiesta, particularly, in preventing non participants or spectators from mounting and accumulating on the stage which was not constructed to meet the additional weight- the defendant-appellees were negligent and are liable for the death of Vicente Fontanilla . (pp. 30-31, rollo, L-29993)

The findings of the respondent appellate court that the facts as presented to it establish negligence as a matter of law and that the Municipality failed to exercise the due diligence of a good father of the family, will not disturbed by Us in the absence of a clear showing of an abuse of discretion or a gross misapprehension of facts." 18

Liability rests on negligence which is "the want of such care as a person of ordinary prudence would exercise under the circumstances of the case." 19

Thus, private respondents argue that the "Midas Extravaganza" which was to be performed during the town fiesta was a "donation" offered by an association of Malasiqui employees of the Manila Railroad Co. in Caloocan, and that when the Municipality of Malasiqui accepted the donation of services and constructed precisely a "zarzuela stage" for the purpose, the participants in the stage show had the right to expect that the Municipality through its "Committee on entertainment and stage" would build or put up a stage or platform strong enough to sustain the weight or burden of the performance and take the necessary measures to insure the personal safety of the participants. 20 We agree.

Quite relevant to that argument is the American case of Sanders v. City of Long Beach, 1942, which was an action against the city for injuries sustained from a fall when plaintiff was descending the steps of the city auditorium. The city was conducting a "Know your City Week" and one of the features was the showing of a motion picture in the city auditorium to which the general public was invited and plaintiff Sanders was one of those who attended. In sustaining the award for Damages in favor of plaintiff, the


District Court of Appeal, Second district, California, held inter alia that the "Know your City Week" was a "proprietary activity" and not a "governmental one" of the city, that defendant owed to plaintiff, an invitee the duty of exercising ordinary care for her safety, and plaintiff was entitled to assume that she would not be exposed to a danger (which in this case consisted of lack of sufficient illumination of the premises) that would come to her through a violation of defendant duty. 21

We can say that the deceased Vicente Fontanilla was similarly situated as Sander The Municipality of Malasiqui resolved to celebrate the town fiesta in January of 1959; it created a committee in charge of the entertainment and stage; an association of Malasiqui residents responded to the call for the festivities and volunteered to present a stage show; Vicente Fontanilla was one of the participants who like Sanders had the right to expect that he would be exposed to danger on that occasion.

Lastly, petitioner or appellant Municipality cannot evade ability and/or liability under the c that it was Jose Macaraeg who constructed the stage. The municipality acting through its municipal council appointed Macaraeg as chairman of the sub-committee on entertainment and in charge of the construction of the "zarzuela" stage. Macaraeg acted merely as an agent of the Municipality. Under the doctrine of respondent superior mentioned earlier, petitioner is responsible or liable for the negligence of its agent acting within his assigned tasks. 22

... when it is sought to render a municipal corporation liable for the act of servants or agents, a cardinal inquiry is, whether they are the servants or agents of the corporation. If the corporation appoints or elects them, can control them in the discharge of their duties, can continue or remove the can hold them responsible for the manner in which they discharge their trust, and if those duties relate to the exercise of corporate powers, and are for the benefit of the corporation in its local or special interest, they may justly be regarded as its agents or servants, and the maxim of respondent superior applies." ... (Dillon on Municipal Corporations, 5th Ed., Vol IV, p. 2879)

5. The remaining question to be resolved centers on the liability of the municipal councilors who enacted the ordinance and created the fiesta committee.

The Court of Appeals held the councilors jointly and solidarity liable with the municipality for damages under Article 27 of the Civil Code which provides that d any person suffering ing material or moral loss because a public

servant or employee refuses or neglects, without just cause to perform his official duty may file an action for damages and other relief at the latter. 23

In their Petition for review the municipal councilors allege that the Court of Appeals erred in ruling that the holding of a town fiesta is not a governmental function and that there was negligence on their part for not maintaining and supervising the safe use of the stage, in applying Article 27 of the Civil Code against them and in not holding Jose Macaraeg liable for the collapse of the stage and the consequent death of Vicente Fontanilla. 24

We agree with petitioners that the Court of Appeals erred in applying Article 27 of the Civil Code against the for this particular article covers a case of nonfeasance or non-performance by a public officer of his official duty; it does not apply to a case of negligence or misfeasance in carrying out an official duty.

If We are led to set aside the decision of the Court of Appeals insofar as these petitioners are concerned, it is because of a plain error committed by respondent court which however is not invoked in petitioners' brief.

In Miguel v. The Court of appeal. et al., the Court, through Justice, now Chief Justice, Fred Ruiz Castro, held that the Supreme Court is vested with ample authority to review matters not assigned as errors in an appeal if it finds that their consideration and resolution are indispensable or necessary in arriving at a just decision in a given case, and that tills is author under Sec. 7, Rule 51 of the Rules of Court. 25 We believe that this pronouncement can well be applied in the instant case.

The Court of Appeals in its decision now under review held that the celebration of a town fiesta by the Municipality of Malasiqui was not a governmental function. We upheld that ruling. The legal consequence thereof is that the Municipality stands on the same footing as an ordinary private corporation with the municipal council acting as its board of directors. It is an elementary principle that a corporation has a personality, separate and distinct from its officers, directors, or persons composing it 26 and the latter are not as a rule co-responsible in an action for damages for tort or negligence culpa aquilla committed by the corporation's employees or agents unless there is a showing of bad faith or gross or wanton negligence on their part. 27

xxx xxx xxx


The ordinary doctrine is that a director, merely by reason of his office, is not personally Stable for the torts of his corporation; he Must be shown to have personally voted for or otherwise participated in them ... Fletcher Encyclopedia Corporations, Vol 3A Chapt 11, p. 207)

Officers of a corporation 'are not held liable for the negligence of the corporation merely because of their official relation to it, but because of some wrongful or negligent act by such officer amounting to a breach of duty which resulted in an injury ... To make an officer of a corporation liable for the negligence of the corporation there must have been upon his part such a breach of duty as contributed to, or helped to bring about, the injury; that is to say, he must be a participant in the wrongful act. ... (pp. 207-208, Ibid.)

xxx xxx xxx

Directors who merely employ one to give a fireworks Ambition on the corporate are not personally liable for the negligent acts of the exhibitor. (p. 211, Ibid.)

On these people We absolve Use municipal councilors from any liability for the death of Vicente Fontanilla. The records do not show that said petitioners directly participated in the defective construction of the "zarzuela" stage or that they personally permitted spectators to go up the platform.

6. One last point We have to resolve is on the award of attorney's fees by respondent court. Petitioner-municipality assails the award.

Under paragraph 11, Art. 2208 of the Civil Code attorney's fees and expenses of litigation may be granted when the court deems it just and equitable. In this case of Vicente Fontanilla, although respondent appellate court failed to state the grounds for awarding attorney's fees, the records show however that attempts were made by plaintiffs, now private respondents, to secure an extrajudicial compensation from the municipality: that the latter gave prorases and assurances of assistance but failed to comply; and it was only eight month after the incident that the bereaved family of Vicente Fontanilla was compelled to seek relief from the courts to ventilate what was believed to be a just cause. 28

We hold, therefore, that there is no error committed in the grant of attorney's fees which after all is a matter of judicial discretion. The amount of P1,200.00 is fair and reasonable.

PREMISES CONSIDERED, We AFFIRM in toto the decision of the Court of Appeals insofar as the Municipality of Malasiqui is concerned (L-30183), and We absolve the municipal councilors from liability and SET ASIDE the judgment against them (L-9993).

Without pronouncement as to costs.

SO ORDERED,

Teehankee (Chairman), Makasiar, Fernandez, and Guerrero, JJ., concur.



Manila

EN BANC

G.R. No. 97764 August 10, 1992

LEVY D. MACASIANO, Brigadier General/PNP Superintendent, Metropolitan Traffic Command, petitioner, vs.HONORABLE ROBERTO C. DIOKNO, Presiding Judge, Branch 62, Regional Trial Court of Makati, Metro Manila, MUNICIPALITY OF PARAÑAQUE, METRO MANILA, PALANYAG KILUSANG BAYAN FOR SERVICE,respondents.

Ceferino, Padua Law Office for Palanyag Kilusang Bayan for service.

Manuel de Guia for Municipality of Parañaque.

MEDIALDEA, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court seeking the annulment of the decision of the Regional Trial Court of Makati, Branch 62, which granted the writ of preliminary injunction applied for by respondents Municipality of Parañaque and Palanyag Kilusang Bayan for Service (Palanyag for brevity) against petitioner herein.

The antecedent facts are as follows:

On June 13, 1990, the respondent municipality passed Ordinance No. 86, Series of 1990 which authorized the closure of J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena Streets located at Baclaran, Parañaque, Metro Manila and the establishment of a flea market thereon. The said ordinance was approved by the municipal council pursuant to MMC Ordinance No. 2, Series of 1979, authorizing and regulating the use of certain city and/or municipal streets, roads and open spaces within

Metropolitan Manila as sites for flea market and/or vending areas, under certain terms and conditions.

On July 20, 1990, the Metropolitan Manila Authority approved Ordinance No. 86, s. 1990 of the municipal council of respondent municipality subject to the following conditions:

1. That the aforenamed streets are not used for vehicular traffic, and that the majority of the residents do not oppose the establishment of the flea market/vending areas thereon;

2. That the 2-meter middle road to be used as flea market/vending area shall be marked distinctly, and that the 2 meters on both sides of the road shall be used by pedestrians;

3. That the time during which the vending area is to be used shall be clearly designated;

4. That the use of the vending areas shall be temporary and shall be closed once the reclaimed areas are developed and donated by the Public Estate Authority.

On June 20, 1990, the municipal council of Parañaque issued a resolution authorizing Parañaque Mayor Walfrido N. Ferrer to enter into contract with any service cooperative for the establishment, operation, maintenance and management of flea markets and/or vending areas.

On August 8, 1990, respondent municipality and respondent Palanyag, a service cooperative, entered into an agreement whereby the latter shall operate, maintain and manage the flea market in the aforementioned streets with the obligation to remit dues to the treasury of the municipal government of Parañaque. Consequently, market stalls were put up by respondent Palanyag on the said streets.

On September 13, 1990, petitioner Brig. Gen. Macasiano, PNP Superintendent of the Metropolitan Traffic Command, ordered the destruction and confiscation of stalls along G.G. Cruz and J. Gabriel St. in Baclaran. These stalls were later returned to respondent Palanyag.


On October 16, 1990, petitioner Brig. General Macasiano wrote a letter to respondent Palanyag giving the latter ten (10) days to discontinue the flea market; otherwise, the market stalls shall be dismantled.

Hence, on October 23, 1990, respondents municipality and Palanyag filed with the trial court a joint petition for prohibition and mandamus with damages and prayer for preliminary injunction, to which the petitioner filed his memorandum/opposition to the issuance of the writ of preliminary injunction.

On October 24, 1990, the trial court issued a temporary restraining order to enjoin petitioner from enforcing his letter-order of October 16, 1990 pending the hearing on the motion for writ of preliminary injunction.

On December 17, 1990, the trial court issued an order upholding the validity of Ordinance No. 86 s. 1990 of the Municipality' of Parañaque and enjoining petitioner Brig. Gen. Macasiano from enforcing his letter-order against respondent Palanyag.

Hence, this petition was filed by the petitioner thru the Office of the Solicitor General alleging grave abuse of discretion tantamount to lack or excess of jurisdiction on the part of the trial judge in issuing the assailed order.

The sole issue to be resolved in this case is whether or not an ordinance or resolution issued by the municipal council of Parañaque authorizing the lease and use of public streets or thoroughfares as sites for flea markets is valid.

The Solicitor General, in behalf of petitioner, contends that municipal roads are used for public service and are therefore public properties; that as such, they cannot be subject to private appropriation or private contract by any person, even by the respondent Municipality of Parañaque. Petitioner submits that a property already dedicated to public use cannot be used for another public purpose and that absent a clear showing that the Municipality of Parañaque has been granted by the legislature specific authority to convert a property already in public use to another public use, respondent municipality is, therefore, bereft of any authority to close municipal roads for the establishment of a flea market. Petitioner also submits that assuming that the respondent municipality is authorized to close streets, it failed to comply with the conditions set forth by the Metropolitan Manila Authority for the approval of the ordinance providing for the establishment of flea markets on public streets. Lastly, petitioner contends that by allowing the municipal streets to be used by market vendors the municipal council of respondent

municipality violated its duty under the Local Government Code to promote the general welfare of the residents of the municipality.

In upholding the legality of the disputed ordinance, the trial court ruled:

. . . that Chanter II Section 10 of the Local Government Code is a statutory grant of power given to local government units, the Municipality of Parañaque as such, is empowered under that law to close its roads, streets or alley subject to limitations stated therein (i.e., that it is in accordance with existing laws and the provisions of this code).

xxx xxx xxx

The actuation of the respondent Brig. Gen. Levi Macasiano, though apparently within its power is in fact an encroachment of power legally vested to the municipality, precisely because when the municipality enacted the ordinance in question — the authority of the respondent as Police Superintendent ceases to be operative on the ground that the streets covered by the ordinance ceases to be a public thoroughfare. (pp. 33-34, Rollo)

We find the petition meritorious. In resolving the question of whether the disputed municipal ordinance authorizing the flea market on the public streets is valid, it is necessary to examine the laws in force during the time the said ordinance was enacted, namely, Batas Pambansa Blg. 337, otherwise known as Local Government Code, in connection with established principles embodied in the Civil Code an property and settled jurisprudence on the matter.

The property of provinces, cities and municipalities is divided into property for public use and patrimonial property (Art. 423, Civil Code). As to what consists of property for public use, Article 424 of Civil Code states:

Art. 424. Property for public use, in the provinces, cities and municipalities, consists of the provincial roads, city streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said provinces, cities or municipalities.


All other property possessed by any of them is patrimonial and shall be governed by this Code, without prejudice to the provisions of special laws.

Based on the foregoing, J. Gabriel G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets are local roads used for public service and are therefore considered public properties of respondent municipality. Properties of the local government which are devoted to public service are deemed public and are under the absolute control of Congress (Province of Zamboanga del Norte v. City of Zamboanga, L-24440, March 28, 1968, 22 SCRA 1334). Hence, local governments have no authority whatsoever to control or regulate the use of public properties unless specific authority is vested upon them by Congress. One such example of this authority given by Congress to the local governments is the power to close roads as provided in Section 10, Chapter II of the Local Government Code, which states:

Sec. 10. Closure of roads. — A local government unit may likewise, through its head acting pursuant to a resolution of its sangguniang and in accordance with existing law and the provisions of this Code, close any barangay, municipal, city or provincial road, street, alley, park or square. No such way or place or any part of thereof shall be close without indemnifying any person prejudiced thereby. A property thus withdrawn from public use may be used or conveyed for any purpose for which other real property belonging to the local unit concerned might be lawfully used or conveyed. (Emphasis ours).

However, the aforestated legal provision which gives authority to local government units to close roads and other similar public places should be read and interpreted in accordance with basic principles already established by law. These basic principles have the effect of limiting such authority of the province, city or municipality to close a public street or thoroughfare. Article 424 of the Civil Code lays down the basic principle that properties of public dominion devoted to public use and made available to the public in general are outside the commerce of man and cannot be disposed of or leased by the local government unit to private persons. Aside from the requirement of due process which should be complied with before closing a road, street or park, the closure should be for the sole purpose of withdrawing the road or other public property from public use when circumstances show that such property is no longer intended or necessary for public use or public service. When it is already withdrawn from public use, the property then becomes patrimonial property of the local government unit concerned (Article 422, Civil Code; Cebu Oxygen, etc. et al. v. Bercilles, et al., G.R. No. L-40474,

August 29, 1975, 66 SCRA 481). It is only then that the respondent municipality can "use or convey them for any purpose for which other real property belonging to the local unit concerned might be lawfully used or conveyed" in accordance with the last sentence of Section 10, Chapter II of Blg. 337, known as Local Government Code. In one case, the City Council of Cebu, through a resolution, declared the terminal road of M. Borces Street, Mabolo, Cebu City as an abandoned road, the same not being included in the City Development Plan. Thereafter, the City Council passes another resolution authorizing the sale of the said abandoned road through public bidding. We held therein that the City of Cebu is empowered to close a city street and to vacate or withdraw the same from public use. Such withdrawn portion becomes patrimonial property which can be the object of an ordinary contract (Cebu Oxygen and Acetylene Co., Inc. v. Bercilles, et al., G.R. No.L-40474, August 29, 1975, 66 SCRA 481). However, those roads and streets which are available to the public in general and ordinarily used for vehicular traffic are still considered public property devoted to public use. In such case, the local government has no power to use it for another purpose or to dispose of or lease it to private persons. This limitation on the authority of the local government over public properties has been discussed and settled by this Court en banc in "Francisco V. Dacanay, petitioner v. Mayor Macaria Asistio, Jr., et al., respondents, G.R. No. 93654, May 6, 1992." This Court ruled:

There is no doubt that the disputed areas from which the private respondents' market stalls are sought to be evicted are public streets, as found by the trial court in Civil Case No. C-12921. A public street is property for public use hence outside the commerce of man (Arts. 420, 424, Civil Code). Being outside the commerce of man, it may not be the subject of lease or others contract (Villanueva, et al. v. Castañeda and Macalino, 15 SCRA 142 citing the Municipality of Cavite v. Rojas, 30 SCRA 602; Espiritu v. Municipal Council of Pozorrubio, 102 Phil. 869; And Muyot v. De la Fuente, 48 O.G. 4860).

As the stallholders pay fees to the City Government for the right to occupy portions of the public street, the City Government, contrary to law, has been leasing portions of the streets to them. Such leases or licenses are null and void for being contrary to law. The right of the public to use the city streets may not be bargained away through contract. The interests of a few should not prevail over the good of the greater number in the community whose health, peace, safety, good order and general welfare, the


respondent city officials are under legal obligation to protect.

The Executive Order issued by acting Mayor Robles authorizing the use of Heroes del '96 Street as a vending area for stallholders who were granted licenses by the city government contravenes the general law that reserves city streets and roads for public use. Mayor Robles' Executive Order may not infringe upon the vested right of the public to use city streets for the purpose they were intended to serve: i.e., as arteries of travel for vehicles and pedestrians.

Even assuming, in gratia argumenti, that respondent municipality has the authority to pass the disputed ordinance, the same cannot be validly implemented because it cannot be considered approved by the Metropolitan Manila Authority due to non-compliance by respondent municipality of the conditions imposed by the former for the approval of the ordinance, to wit:

1. That the aforenamed streets are not used for vehicular traffic, and that the majority of the residents do(es) not oppose the establishment of the flea market/vending areas thereon;

2. That the 2-meter middle road to be used as flea market/vending area shall be marked distinctly, and that the 2 meters on both sides of the road shall be used by pedestrians;

3. That the time during which the vending area is to be used shall be clearly designated;

4. That the use of the vending areas shall be temporary and shall be closed once the reclaimed areas are developed and donated by the Public Estate Authority. (p. 38, Rollo)

Respondent municipality has not shown any iota of proof that it has complied with the foregoing conditions precedent to the approval of the ordinance. The allegations of respondent municipality that the closed streets were not used for vehicular traffic and that the majority of the residents do not oppose the establishment of a flea market on said streets are unsupported by any

evidence that will show that this first condition has been met. Likewise, the designation by respondents of a time schedule during which the flea market shall operate is absent.

Further, it is of public notice that the streets along Baclaran area are congested with people, houses and traffic brought about by the proliferation of vendors occupying the streets. To license and allow the establishment of a flea market along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets in Baclaran would not help in solving the problem of congestion. We take note of the other observations of the Solicitor General when he said:

. . . There have been many instances of emergencies and fires where ambulances and fire engines, instead of using the roads for a more direct access to the fire area, have to maneuver and look for other streets which are not occupied by stalls and vendors thereby losing valuable time which could, otherwise, have been spent in saving properties and lives.

Along G.G. Cruz Street is a hospital, the St. Rita Hospital. However, its ambulances and the people rushing their patients to the hospital cannot pass through G.G. Cruz because of the stalls and the vendors. One can only imagine the tragedy of losing a life just because of a few seconds delay brought about by the inaccessibility of the streets leading to the hospital.

The children, too, suffer. In view of the occupancy of the roads by stalls and vendors, normal transportation flow is disrupted and school children have to get off at a distance still far from their schools and walk, rain or shine.

Indeed one can only imagine the garbage and litter left by vendors on the streets at the end of the day. Needless to say, these cause further pollution, sickness and deterioration of health of the residents therein. (pp. 21-22, Rollo)

Respondents do not refute the truth of the foregoing findings and observations of petitioners. Instead, respondents want this Court to focus its attention solely on the argument that the use of public spaces for the


establishment of a flea market is well within the powers granted by law to a local government which should not be interfered with by the courts.

Verily, the powers of a local government unit are not absolute. They are subject to limitations laid down by toe Constitution and the laws such as our Civil Code. Moreover, the exercise of such powers should be subservient to paramount considerations of health and well-being of the members of the community. Every local government unit has the sworn obligation to enact measures that will enhance the public health, safety and convenience, maintain peace and order, and promote the general prosperity of the inhabitants of the local units. Based on this objective, the local government should refrain from acting towards that which might prejudice or adversely affect the general welfare.

As what we have said in the Dacanay case, the general public have a legal right to demand the demolition of the illegally constructed stalls in public roads and streets and the officials of respondent municipality have the corresponding duty arising from public office to clear the city streets and restore them to their specific public purpose.

The instant case as well as the Dacanay case, involves an ordinance which is void and illegal for lack of basis and authority in laws applicable during its time. However, at this point, We find it worthy to note that Batas Pambansa Blg. 337, known as Local Government Lode, has already been repealed by Republic Act No. 7160 known as Local Government Code of 1991 which took effect on January 1, 1992. Section 5(d) of the new Code provides that rights and obligations existing on the date of effectivity of the new Code and arising out of contracts or any other source of prestation involving a local government unit shall be governed by the original terms and conditions of the said contracts or the law in force at the time such rights were vested.

ACCORDINGLY, the petition is GRANTED and the decision of the respondent Regional Trial Court dated December 17, 1990 which granted the writ of preliminary injunction enjoining petitioner as PNP Superintendent, Metropolitan Traffic Command from enforcing the demolition of market stalls along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets is hereby RESERVED and SET ASIDE.

SO ORDERED.

Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Griño-Aquino, Regalado, Davide, Jr., Romero, Nocon and Bellosillo, JJ., concur.



Manila

EN BANC

G.R. Nos. L-60549, 60553 to 60555 October 26, 1983

HEIRS OF JUANCHO ARDONA (represented by Gloria Ardona) ANASTACIO C. CABILAO, HEIRS OF CIPRIANO CABILAO (represented by Jose Cabilao) MODESTA CABILAO, HEIRS OF ROMAN CABUENAS (represented by Alberto Cabuenas), AGRIPINO GABISAY and PRUDENCIA MABINI, ANTONIO LABRADOR and LUCIA GABISAY, GERONIMO MABINI and MARCELINA SABAL, INOCENCIO MABINI and ARSENIA REYES, PATRICIO MABINI and GREGORIA BORRES, ANICETO GADAPAN and MAXIMA GABISAY, BARTOLOME MAGNO and CALINECA E. MAGNO, ALBERTO CABUENAS, NARCISO CABUENAS and VICTORIA CABUENAS, EUTIQUIOSENO, HEIRS OF ESPERIDION CABUENAS (represented by Alberto Cabuenas), MAXIMINA NAVARO, SULPICIO NAVARO, EDUARDO NAVARO, MARTINIANO ROMA (in representation of Arcadio Mabini, deceased), MARTIN SENO, FAUSTO ARDA, MAXIMA CABILAO, ESTRELLA SENO, EDUVEGIS S. CABILAO, ROSARIO CABILAO, MINORS DANILO, SOCORRO, JOSEFINA and MARITES, all surnamed Cabilao, JUAN BORRES (represented by Francisca Borres), RAMON JABADAN, JESUS ALIPAR and LEONILA KABAHAR, ANTONIO LABRADOR, HEIRS OF NICASIO GABISAY (represented by Arsenio Gabisay), PACIFICO LABRADOR, DEMETRIO LABRADOR and FRUCTOSA TABURA, VENANCIO DEL MAR, MARINO DEL MAR, HEIRS OF TEODORA ARCILLO (represented by Brigida Arcillo) DIONISIA GABUNADA, HEIRS OF BUENAVENTURA FRANCISCO (represented by Felicidad Sadaya Francisco), HEIRS OF VICTORIA C. CABUENAS (represented by Alberto Cabuenas) HEIRS OF CIPRIANO GABUNADA (represented by Claudio Gabunada), petitioners, vs.HON. JUAN Y. REYES, Executive Judge and Presiding Judge of Branch I, COURT OF FIRST instance OF CEBU, and the PHILIPPINE TOURISM AUTHORITY, respondents.

George M. Baladjay, Mario G. dela Victoria, Olegario Sarmiento, Jr., and Democrito Barcenas for petitioners.

The Solicitor General for respondent Judge.

F.A. Sugue & Elino B. Lingas for Philippine Tourism Authoirity

GUTIERREZ, JR., J.:

This is a petition for certiorari with preliminary injunction challenging the constitutionality of Presidential Decree No. 564, the Revised Charter of the Philippine Tourism Authority, and Proclamation No. 2052 declaring the barangays of Sibugay, Malubog, Babag and Sirao including the proposed Lusaran Dam in the City of Cebu and in the municipalities of Argao and Dalaguete in the province of Cebu as tourist zones. The petitioners ask that we restrain respondent Court of First Instance of Cebu and the Philippine Tourism Authority (PTA) from enforcing and implementing the writs of possession issued in four (4) expropriation cases filed by PTA against the petitioners: Civil Cases Nos. R-19562, R-19684, R-20701, and R-21608 of the Court of First Instance of Cebu (Branch 1).

The Philippine Tourism Authority filed four (4) Complaints with the Court of First Instance of Cebu City for the expropriation of some 282 hectares of rolling land situated in barangays Malubog and Babag, Cebu City, under PTA's express authority "to acquire by purchase, by negotiation or by condemnation proceedings any private land within and without the tourist zones" for the purposes indicated in Section 5, paragraph B(2), of its Revised Charter (PD 564), more specifically, for the development into integrated resort complexes of selected and well-defined geographic areas with potential tourism value. As uniformly alleged in the complaints, the purposes of the expropriation are:

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V

Plaintiff, in line with the policy of the government to promote tourism and development of tourism projects will construct in Barangays Malubog, Busay and Babag, all of Cebu City, a sports complex (basketball courts, tennis courts, volleyball courts, track and field, baseball and softball diamonds, and swimming pools), clubhouse, gold course, children's playground and a nature area for picnics and horseback riding for the use of the public.


The development plan, covering approximately 1,000 hectares, includes the establishment of an electric power grid in the area by the National Power Corporation, thus assuring the supply of electricity therein for the benefit of the whole community. Deep wells will also be constructed to generate water supply within the area. Likewise, a complex sewerage and drainage system will be devised and constructed to protect the tourists and nearby residents from the dangers of pollution.

Complimentary and support facilities for the project will be constructed, including public rest houses, lockers, dressing rooms, coffee shops, shopping malls, etc. Said facilities will create and offer employment opportunities to residents of the community and further generate income for the whole of Cebu City.

Plaintiff needs the property above described which is directly covered by the proposed golf court.

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The defendants in Civil Cases Nos. R-20701 and R-21608 filed their respective Opposition with Motion to Dismiss and/or Reconsideration. The defendants in Civil Case No. R-19562 filed a manifestation adopting the answer of defendants in Civil Case No. R-19864. The defendants, now petitioners, had a common allegation in that the taking is allegedly not impressed with public use under the Constitution.

In their motions to dismiss, the petitioners alleged, in addition to the issue of public use, that there is no specific constitutional provision authorizing the taking of private property for tourism purposes; that assuming that PTA has such power, the intended use cannot be paramount to the determination of the land as a land reform area; that limiting the amount of compensation by Legislative fiat is constitutionally repugnant; and that since the land is under the land reform program, it is the Court of Agrarian Relations and not the Court of First Instance that has jurisdiction over the expropriation cases.

The Philippine Tourism Authority having deposited with The Philippine National Bank, Cebu City Branch, an amount equivalent to 10% of the value of the properties pursuant to Presidential Decree No. 1533. the lower court issued separate orders authorizing PTA to take immediate possession of the premises and directing the issuance of writs of possession.

On May 25, 1982, petitioners filed this petition questioning the orders of the respondent Judge, The respondents have correctly restated the grounds in the petition as follows:

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A. The complaints for expropriation lack basis because the Constitution does not provide for the expropriation of private property for tourism or other related purposes;

B. The writs of possession or orders authorizing PTA to take immediate possession is premature because the "public use" character of the taking has not been previously demonstrated;

C. The taking is not for public use in contemplation of eminent domain law;

D. The properties in question have been previously declared a land reform area; consequently, the implementation of the social justice pro- ,vision of the Constitution on agrarian reform is paramount to the right of the State to expropriate for the purposes intended;

E. Proclamation No. 2052 declaring certain barangays in Cebu City, which include the lands subject of expropriation as within a tourist zone, is unconstitutional for it impairs the obligation of contracts; "F. Since the properties are within a land reform area, it is the Court of Agrarian Relations, not the lower court, that has jurisdiction pursuant to Pres. Decree No. 946;

F. The forcible ejectment of defendants from the premises constitutes a criminal act under Pres. Decree No. 583;

In their memorandum, the petitioners have summarized the issues as follows:

I. Enforcement of the Writ of Possession is Premature:


II. Presidential Decree 564 Amending Presidential Decree l89 is Constitutionally Repugnant:

III. The Condemnation is not for Public Use, Therefore, Unconstitutional:

IV. The Expropriation for Tourism Purposes of Lands Covered by the Land Reform Program Violates the Constitution:

V. Presidential Proclamation 2052 is Unconstitutional:

VI. Presidential Decree No 1533 is Unconstitutional:

VII. The Court of First Instance has no Jurisdiction:

VIII. The Filing of the Present Petition is not Premature.

The issues raised by the petitioners revolve around the proposition that the actions to expropriate their properties are constitutionally infirm because nowhere in the Constitution can a provision be found which allows the taking of private property for the promotion of tourism.

The petitioners' arguments in their pleadings in support of the above proposition are subsumed under the following headings:

1. Non-compliance with the "public use" requirement under the eminent domain provision of the Bill of Rights.

2. Disregard of the land reform nature of the property being expropriated.

3. Impairment of the obligation of contracts.

There are three provisions of the Constitution which directly provide for the exercise of the power of eminent domain. Section 2, Article IV states that private property shall not be taken for public use without just compensation. Section 6, Article XIV allows the State, in the interest of national welfare or defense and upon payment of just compensation to transfer to public ownership, utilities and other private enterprises to be operated by the

government. Section 13, Article XIV states that the Batasang Pambansa may authorize upon payment of just compensation the expropriation of private lands to be subdivided into small lots and conveyed at cost to deserving citizens.

While not directly mentioning the expropriation of private properties upon payment of just compensation, the provisions on social justice and agrarian reforms which allow the exercise of police power together with the power of eminent domain in the implementation of constitutional objectives are even more far-reaching insofar as taking of private property is concerned.

Section 6, Article II provides:

Sec. 6. The State shall promote social justice to ensure the dignity, welfare, and security of all the people. Towards its end, the State shall regulate the acquisition, ownership, use, enjoyment, and disposition of private property, and equitably diffuse property ownership and profits.

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Section 12, Article XIV provides:

See. 12. The State shall formulate and implement an agrarian reform program aimed at emancipating the tenant from the bondage of the soil and achieving the goals enunciated in this Constitution.

The equitable diffusion of property ownership in the promotion of social justice implies the exercise, whenever necessary, of the power to expropriate private property. Likewise there can be no meaningful agrarian reform program unless the power to expropriate is utilized.

We cite all the above provisions on the power to expropriate because of the petitioners' insistence on a restrictive view of the eminent domain provision. The thrust of all constitutional provisions on expropriation is in the opposite direction.

As early as 1919, this Court in Visayan Refining Co. v. Samus (40 Phil. 550) categorized the restrictive view as wholly erroneous and based on a misconception of fundamentals.


The petitioners look for the word "tourism" in the Constitution. Understandably the search would be in vain. The policy objectives of the framers can be expressed only in general terms such as social justice, local autonomy, conservation and development of the national patrimony, public interest, and general welfare, among others. The programs to achieve these objectives vary from time to time and according to place, To freeze specific programs like Tourism into express constitutional provisions would make the Constitution more prolix than a bulky code and require of the framers a prescience beyond Delphic proportions. The particular mention in the Constitution of agrarian reform and the transfer of utilities and other private enterprises to public ownership merely underscores the magnitude of the problems sought to be remedied by these programs. They do not preclude nor limit the exercise of the power of eminent domain for such purposes like tourism and other development programs.

In the leading case of Visayan Refining Co. v. Camus (supra), this Court emphasized that the power of eminent domain is inseparable from sovereignty being essential to the existence of the State and inherent in government even in its most primitive forms. The only purpose of the provision in the Bill of Rights is to provide some form of restraint on the sovereign power. It is not a grant of authority -

The power of eminent domain does not depend for its existence on a specific grant in the constitution. It is inherent in sovereignty and exists in a sovereign state without any recognition of it in the constitution. The provision found in most of the state constitutions relating to the taking of property for the public use do not by implication grant the power to the government of the state, but limit a power which would otherwise be without limit.

The constitutional restraints are public use and just compensation.

Do the purposes of the taking in this case constitute "public use"?

The petitioners ask us to adopt a strict construction and declare that "public use" means literally use by the public and that "public use" is not synonymous with "public interest", "public benefit", or "public welfare" and much less "public convenience. "

The petitioners face two major obstacles. First, their contention which is rather sweeping in its call for a retreat from the public welfare orientation is unduly restrictive and outmoded. Second, no less than the lawmaker has

made a policy determination that the power of eminent domain may be exercised in the promotion and development of Philippine tourism.

The restrictive view of public use may be appropriate for a nation which circumscribes the scope of government activities and public concerns and which possesses big and correctly located public lands that obviate the need to take private property for public purposes. Neither circumstance applies to the Philippines. We have never been a laissez faire State, And the necessities which impel the exertion of sovereign power are all too often found in areas of scarce public land or limited government resources.

Certain aspects of parliamentary government were introduced by the 1973 amendments to the Constitution with further modifications in the 1976 and 1981 amendments. Insofar as the executive and legislative departments are concerned, the traditional concept of checks and balances in a presidential form was considerably modified to remove some roadblocks in the expeditious implementation of national policies. There was no such change for the judiciary. We remain as a checking and balancing department even as all strive to maintain respect for constitutional boundaries. At the same time, the philosophy of coordination in the pursuit of developmental goals implicit in the amendments also constrains in the judiciary to defer to legislative discretion iii the judicial review of programs for economic development and social progress unless a clear case of constitutional infirmity is established. We cannot stop the legitimate exercise of power on an invocation of grounds better left interred in a bygone age and time.* As we review the efforts of the political departments to bring about self-sufficiency, if not eventual abundance, we continue to maintain the liberal approach because the primary responsibility and the discretion belong to them.

There can be no doubt that expropriation for such traditions' purposes as the construction of roads, bridges, ports, waterworks, schools, electric and telecommunications systems, hydroelectric power plants, markets and slaughterhouses, parks, hospitals, government office buildings, and flood control or irrigation systems is valid. However, the concept of public use is not limited to traditional purposes. Here as elsewhere the Idea that "public use" is strictly limited to clear cases of "use by the public" has been discarded.

In the United States, the rule was enunciated in Berman v. Parker (348 U.S. 25; 99 L. ed. 27) as follows:


We do not sit to determine whether a particular housing project is or is not desirable. The concept of the public welfare is broad and inclusive. See DayBrite Lighting, Inc. v. Missouri, 342 US 421, 424, 96 L ed 469, 472, 72 S Ct 405. The values it represents are spiritual as well as physical, aesthetic as well as monetary. It is within the power of the legislature to determine that the community should be beautiful as well as healthy, spacious as well as clean, well-balanced as well as carefully patrolled. In the present case, the Congress and its authorized agencies have made determinations that take into account a wide variety of values. It is not for us to reappraise them. If those who govern the District of Columbia decide that the Nation's Capital should be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands in the way.

Once the object is within the authority of Congress, the right to realize it through the exercise of eminent domain is clear. For the power of eminent domain is merely the means to the end. See Luxton v. North River Bridge Co. 153 US 525, 529, 530, 38 L ed 808, 810, 14 S Ct 891; United States v. Gettysburg Electric R. Co. 160 US 668, 679, 40 L ed 576, 580, 16 S Ct 427.

In an earlier American case, where a village was isolated from the rest of North Carolina because of the flooding of the reservoir of a dam thus making the provision of police, school, and health services unjustifiably expensive, the government decided to expropriate the private properties in the village and the entire area was made part of an adjoining national park. The district court and the appellate court ruled against the expropriation or excess condemnation. The Court of Appeals applied the "use by the public" test and stated that the only land needed for public use was the area directly flooded by the reservoir. The village may have been cut off by the dam but to also condemn it was excess condemnation not valid under the "Public use" requirement. The U.S. Supreme Court inUnited States ex rel TVA v. Welch (327 U.S, 546; 90 L. ed 843) unanimously reversed the lower courts. It stated:

The Circuit Court of Appeals, without expressly relying on a compelling rule of construction that would give the restrictive scope to the T.V.A. Act given it by the district court, also interpreted the statute narrowly. It first analyzed the facts by segregating the total problem into distinct

parts, and thus came to the conclusion that T.V.A.'s purpose in condemning the land in question was only one to reduce its liability arising from the destruction of the highway. The Court held that use of the lands for that purpose is a "private" and not a "public use" or, at best, a "public use" not authorized by the statute. we are unable to agree with the reasoning and conclusion of the Circuit Court of Appeals.

We think that it is the function of Congress to decide what type of taking is for a public use and that the agency authorized to do the taking may do so to the still extent of its statutory authority, United States v. Gettysburg Electric R. Co. 160 US 668, 679, 40 L ed 576, 580, 16 S Ct 427. ...

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... But whatever may be the scope of the judicial power to determine what is a "public use" in Fourteenth Amendment controversies, this Court has said that when Congress has spoken on this subject "Its decision is entitled to deference until it is shown to involve an impossibility." Old Dominion Land Co. v. United States, 269, US 55, 66, 70 L ed 162, 46 S Ct 39. Any departure from this judicial restraint would result in courts deciding on what is and is not a governmental function and in their invalidating legislation on the basis of their view on that question at the moment of decision, a practice which has proved impracticable in other fields. See Case v. Bowles decided February 4, 1946, 437 US 92, 101, ante, 552, 559, 66 S Ct 438. New York v. United States, 326 US 572 ante 326, 66 S Ct 310). We hold that the T.V.A. took the tracts here involved for a public purpose, if, as we think is the case, Congress authorized the Authority to acquire, hold, and use the lands to carry out the purposes of the T.V.A. Act.

In the Philippines, Chief Justice Enrique M. Fernando has aptly summarized the statutory and judicial trend as follows:

The taking to be valid must be for public use. There was a time when it was felt that a literal meaning should be attached to such a requirement. Whatever project is


undertaken must be for the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable. It is not any more. As long as the purpose of the taking is public, then the power of eminent domain comes into play. As just noted, the constitution in at least two cases, to remove any doubt, determines what is public use. One is the expropriation of lands to be subdivided into small lots for resale at cost to individuals. The other is in the transfer, through the exercise of this power, of utilities and other private enterprise to the government. It is accurate to state then that at present whatever may be beneficially employed for the general welfare satisfies the requirement of public use. (Fernando, The Constitution of the Philippines, 2nd ed., pp. 523-524)

The petitioners' contention that the promotion of tourism is not "public use" because private concessioners would be allowed to maintain various facilities such as restaurants, hotels, stores, etc. inside the tourist complex is impressed with even less merit. Private bus firms, taxicab fleets, roadside restaurants, and other private businesses using public streets end highways do not diminish in the least bit the public character of expropriations for roads and streets. The lease of store spaces in underpasses of streets built on expropriated land does not make the taking for a private purpose. Airports and piers catering exclusively to private airlines and shipping companies are still for public use. The expropriation of private land for slum clearance and urban development is for a public purpose even if the developed area is later sold to private homeowners, commercial firms, entertainment and service companies, and other private concerns.

The petitioners have also failed to overcome the deference that is appropriately accorded to formulations of national policy expressed in legislation. The rule in Berman u. Parker (supra) of deference to legislative policy even if such policy might mean taking from one private person and conferring on another private person applies as well as in the Philippines.

... Once the object is within the authority of Congress, the means by which it will be attained is also for Congress to determine. Here one of the means chosen is the use of private enterprise for redevelopment of the area. Appellants argue that this makes the project a taking from one businessman for the benefit of another businessman. But the means of executing the project are for Congress and Congress alone to determine, once the public purpose has been established. Selb Luxton v. North River Bridge

Co. (US) supra; cf. Highland v. Russel Car & Snow Plow Co. 279 US 253, 73 L ed 688, 49 S Ct 314. The public end may be as well or better served through an agency of private enterprise than through a department of government-or so the Congress might conclude. We cannot say that public ownership is the sole method of promoting the public purposes of community redevelopment projects. What we have said also disposes of any contention concerning the fact that certain property owners in the area may be permitted to repurchase their properties for redevelopment in harmony with the over-all plan. That, too, is a legitimate means which Congress and its agencies may adopt, if they choose. (Berman v. Parker, 99 L ed 38, 348 US 33, 34)

An examination of the language in the 1919 cases of City of Manila v. Chinese Community of Manila (40 Phil, 349) and Visayan Refining Co. vs. Camus, earlier cited, shows that from the very start of constitutional government in our country judicial deference to legislative policy has been clear and manifest in eminent domain proceedings.

The expressions of national policy are found in the revised charter of the Philippine Tourism Authority, Presidential Decree No. 564:

WHEREAS, it is the avowed aim of the government to promote Philippine tourism and work for its accelerated and balanced growth as well as for economy and expediency in the development of the tourism plant of the country;

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SECTION 1. Declaration of Policy. - It is hereby declared to be the policy of the State to promote, encourage, and develop Philippine tourism as an instrument in accelerating the development of the country, of strengthening the country's foreign exchange reserve position, and of protecting Philippine culture, history, traditions and natural beauty, internationally as well as domestically.

The power of eminent domain is expressly provided for under Section 5 B(2) as follows:


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2. Acquisition of Private Lands, Power of Eminent Domain. — To acquire by purchase, by negotiation or by condemnation proceedings any private land within and without the tourist zones for any of the following reasons: (a) consolidation of lands for tourist zone development purposes, (b) prevention of land speculation in areas declared as tourist zones, (c) acquisition of right of way to the zones, (d) protection of water shed areas and natural assets with tourism value, and (e) for any other purpose expressly authorized under this Decree and accordingly, to exercise the power of eminent domain under its own name, which shall proceed in the manner prescribed by law and/or the Rules of Court on condemnation proceedings. The Authority may use any mode of payment which it may deem expedient and acceptable to the land owners: Provided, That in case bonds are used as payment, the conditions and restrictions set forth in Chapter III, Section 8 to 13 inclusively, of this Decree shall apply.

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The petitioners rely on the Land Reform Program of the government in raising their second argument. According to them, assuming that PTA has the right to expropriate, the properties subject of expropriation may not be taken for the purposes intended since they are within the coverage of "operation land transfer" under the land reform program. Petitioners claim that certificates of land transfer (CLT'S) and emancipation patents have already been issued to them thereby making the lands expropriated within the coverage of the land reform area under Presidential Decree No. 2; that the agrarian reform program occupies a higher level in the order of priorities than other State policies like those relating to the health and physical well- being of the people; and that property already taken for public use may not be taken for another public use.

We have considered the above arguments with scrupulous and thorough circumspection. For indeed any claim of rights under the social justice and land reform provisions of the Constitution deserves the most serious consideration. The Petitioners, however, have failed to show that the area being developed is indeed a land reform area and that the affected persons have emancipation patents and certificates of land transfer.

The records show that the area being developed into a tourism complex consists of more than 808 hectares, almost all of which is not affected by the land reform program. The portion being expropriated is 282 hectares of hilly and unproductive land where even subsistence farming of crops other than rice and corn can hardly survive. And of the 282 disputed hectares, only 8,970 square meters-less than one hectare-is affected by Operation Land Transfer. Of the 40 defendants, only two have emancipation patents for the less than one hectare of land affected. And this 8,970 square meters parcel of land is not even within the sports complex proper but forms part of the 32 hectares resettlement area where the petitioners and others similarly situated would be provided with proper housing, subsidiary employment, community centers, schools, and essential services like water and electricity-which are non-existent in the expropriated lands. We see no need under the facts of this petition to rule on whether one public purpose is superior or inferior to another purpose or engage in a balancing of competing public interests. The petitioners have also failed to overcome the showing that the taking of the 8,970 square meters covered by Operation Land Transfer forms a necessary part of an inseparable transaction involving the development of the 808 hectares tourism complex. And certainly, the human settlement needs of the many beneficiaries of the 32 hectares resettlement area should prevail over the property rights of two of their compatriots.

The invocation of the contracts clause has no merit. The non-impairment clause has never been a barrier to the exercise of police power and likewise eminent domain. As stated in Manigault v. Springs (199 U.S. 473) "parties by entering into contracts may not stop the legislature from enacting laws intended for the public good."

The applicable doctrine is expressed in Arce v. Genato (69 SCRA 544) which involved the expropriation of land for a public plaza. The Court stated:

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... What is claimed is that there must be a showing of necessity for such condemnation and that it was not done in this case in support of such a view, reliance is placed on City of Manila v. Arenano Law Colleges. (85 Phil. 663 [1950]) That doctrine itself is based on the earlier case of City of Manila v. Chinese Community of Manila, (50 Phil. 349) also, like Camus, a 1919 decision. As could be discerned, however, in the Arellano Law Colleges decision. it was the antiquarian view of Blackstone with its sanctification of the right to one's estate on which such an


observation was based. As did appear in his Commentaries: "So great is the regard of the law for private property that it will not, authorize the least violation of it, even for the public good, unless there exists a very great necessity thereof." Even the most , cursory glance at such well-nigh absolutist concept of property would show its obsolete character at least for Philippine constitutional law. It cannot survive the test of the 1935 Constitution with its mandates on social justice and protection to labor. (Article II, Section 5 of the 1935 Constitution reads: "The promotion of social justice to unsure the well-being and economic security of all the people should be the concern of the State." Article XI, Section 6 of the same Constitution provides: "The State shall afford protection to labor, especially to working women and minors, and shall regulate the relation between landowner and tenant, and between labor and capital in industry and in agriculture. The State may provide for compulsory arbitration.") What is more, the present Constitution pays even less heed to the claims of property and rightly so. After stating that the State shall promote social justice, it continues: "Towards this end, the State shall regulate the acquisition, ownership, use, enjoyment, and disposition of private property, and equitably diffuse property ownership and profits." (That is the second sentence of Article II, Section 6 of the Constitution) If there is any need for explicit confirmation of what was set forth in Presidential Decree No. 42, the above provision supplies it. Moreover, that is merely to accord to what of late has been the consistent course of decisions of this Court whenever property rights are pressed unduly. (Cf. Alalayan v. National Power Corporation, L-24396, July 29, 1968, 24 SCRA 172; Agricultural Credit and Cooperative Financing Administration v. Confederation of Unions, L-21484, Nov. 29, 1969, 30 SCRA 649; Edu v. Ericta, L-32096, Oct. 24, 1970, 35 SCRA 481; Phil. Virginia Tobacco Administration v. Court of Industrial Relations, L-32052, July 25, 1975, 65 SCRA 416) The statement therefore, that there could be discerned a constitutional objection to a lower court applying a Presidential Decree, when it leaves no doubt that a grantee of the power of eminent domain need not prove the necessity for the expropriation, carries its own refutation.

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The issue of prematurity is also raised by the petitioners. They claim that since the necessity for the taking has not been previously established, the issuance of the orders authorizing the PTA to take immediate possession of the premises, as well as the corresponding writs of possession was premature.

Under Presidential Decree No. 42, as amended by Presidential Decree No. 1533, the government, its agency or instrumentality, as plaintiff in an expropriation proceedings is authorized to take immediate possession, control and disposition of the property and the improvements, with power of demolition, notwithstanding the pendency of the issues before the court, upon deposit with the Philippine National Bank of an amount equivalent to 10% of the value of the property expropriated. The issue of immediate possession has been settled in Arce v. Genato(supra). In answer to the issue:

... whether the order of respondent Judge in an expropriation case allowing the other respondent, ... to take immediate possession of the parcel of land sought to be condemned for the beautification of its public plaza, without a prior hearing to determine the necessity for the exercise of the power of eminent domain, is vitiated by jurisdictional defect, ...

this Court held that:

... It is not disputed that in issuing such order, respondent Judge relied on Presidential Decree No. 42 issued on the 9th of November, 1972. (Presidential Decree No. 42 is entitled "Authorizing the Plaintiff in Eminent Domain Proceedings to Take Possession of the Property involved Upon Depositing the Assessed Value for Purposes of Taxation.") The question as thus posed does not occasion any difficulty as to the answer to be given. This petition for certiorari must fail, there being no showing that compliance with the Presidential Decree, which under the Transitory Provisions is deemed a part of the law of the land, (According to Article XVII, Section 3 par. (2) of the Constitution: "All proclamations, orders, decrees, instructions and acts promulgated, issued, or done by the incumbent President shall be part of the law of the land,


and shall remain valid, legal, binding, and effective even after lifting of martial law or the ratification of this Constitution, unless modified, revoked, or superseded by subsequent proclamations. orders, decrees instructions, or other acts of the incumbent President, or unless expressly and explicitly modified or repealed by the regular National Assembly") would be characterized as either an act in excess of jurisdiction or a grave abuse of discretion. So we rule.

Likewise in Ramos v. Philippine Tourism Authority (G.R. Nos. 52449-50, June 9, 1980), this Court held:

... condemnation or expropriation proceedings is in the nature of one that is quasi-in-rem wherein the fact that the owner of the property is made a party is not essentially indispensable insofar was least as it conncerns is the immediate taking of possession of the property and the preliminary determination of its value, including the amount to be deposited.

In their last argument, the petitioners claim that a consequence of the expropriation proceedings would be their forcible ejectment. They contend that such forcible ejectment is a criminal act under Presidential Decree No. 583. This contention is not valid. Presidential Decree No. 583 prohibits the taking cognizance or implementation of orders designed to obstruct the land reform program. It refers to the harassment of tenant- farmers who try to enforce emancipation rights. It has nothing to do with the expropriation by the State of lands needed for public purposes. As a matter of fact, the expropriated area does not appear in the master lists of the Ministry of Agrarian Reforms as a teranted area. The petitioners' bare allegations have not been supported with particulars pointing to specific parcels which are subject of tenancy contracts. The petitioners may be owner-tillers or may have some form of possessory or ownership rights but there has been no showing of their being tenants on the disputed lands.

The petitioners have failed to overcome the burden of anyone trying to strike down a statute or decree whose avowed purpose is the legislative perception is the public good. A statute has in its favor the presumption of validity. All reasonable doubts should be resolved in favor of the constitutionality of a law. The courts will not set aside a law as violative of the Constitution except in a clear case (People v. Vera, 65 Phil. 56). And in the absence of factual findings or evidence to rebut the presumption of

validity, the presumption prevails (Ermita-Malate Hotel, etc. v. Mayor of Manila, 20 SCRA 849; Morfe v. Mutuc, 22 SCRA 424).

The public respondents have stressed that the development of the 808 hectares includes plans that would give the petitioners and other displaced persons productive employment, higher incomes, decent housing, water and electric facilities, and better living standards. Our dismissing this petition is, in part, predicated on those assurances. The right of the PTA to proceed with the expropriation of the 282 hectares already Identified as fit for the establishment of a resort complex to promote tourism is, therefore, sustained.

WHEREFORE, the instant petition for certiorari is hereby DISMISSE D for lack of merit.

SO ORDERED.

Fernando, C.J, Concepcion, Jr., Guerrero, Melencio-Herrera, Plana, Escolin and Relova, JJ., concur.

Aquino, J, concurs in the result.

De Castro, J, is on leave.

Separate Opinions

MAKASIAR, J, concurring and dissenting:

It appearing that the petitioners are not tenants of the parcels of land in question and therefore do not fall within the purview of the Land Reform Code, the petition should be dismissed on that score alone.

There is no need to decide whether the power of the Philippine Tourism Authority to expropriate the land in question predicated on the police power


of the State shall take precedence over the social justice guarantee in favor of tenants and the landless. The welfare of the landless and small land owners should prevail over the right of the PTA to expropriate the lands just to develop tourism industry, which benefit the wealthy only. Such a position would increase the disenchanted citizens and drive them to dissidence. The government is instituted primarily for the welfare of the governed and there are more poor people in this country than the rich The tourism industry is not essential to the existence of the government, but the citizens are, and their right to live in dignity should take precedence over the development of the tourism industry.

Teehankee and Abad Santos, JJ., dissent.

Separate Opinions

MAKASIAR, J, concurring and dissenting:

It appearing that the petitioners are not tenants of the parcels of land in question and therefore do not fall within the purview of the Land Reform Code, the petition should be dismissed on that score alone.

There is no need to decide whether the power of the Philippine Tourism Authority to expropriate the land in question predicated on the police power of the State shall take precedence over the social justice guarantee in favor of tenants and the landless. The welfare of the landless and small land owners should prevail over the right of the PTA to expropriate the lands just to develop tourism industry, which benefit the wealthy only. Such a position would increase the disenchanted citizens and drive them to dissidence. The government is instituted primarily for the welfare of the governed and there are more poor people in this country than the rich The tourism industry is not essential to the existence of the government, but the citizens are, and their right to live in dignity should take precedence over the development of the tourism industry.

Teehankee and Abad Santos, JJ., dissent.


THIRD DIVISION

[G.R. No. L-44178. August 21, 1987.]

RICARDO CRUZ, Petitioner, v. HON. COURT OF APPEALS, LOPE S. OCAMPO, FEDERICO TUAZON, LEON SANTOS, ANGELINA LABRADOR, CIRIACA STO. TOMAS, VICTORIA ANONOY, CIPRIANA GONGON, CALOS GERONIMO, LEONARDO CHAVEZ, PABLO FLORES, NATALIA PAMINTUAN, GINI CARO, ROMAN SANTOS, TEOTIMO GARCIA, ANACLETO BUENO, ESPERANZA AGRAS, FIDEL ESTO, NATIVIDAD LLANES, and others, Respondents.

SYLLABUS

1. ADMINISTRATIVE LAW; MUNICIPAL CORPORATION; ESTABLISHMENT AND MAINTENANCE OF A PUBLIC MARKET IS AN EXERCISE OF LEGISLATIVE POWER; MAYOR OF MANILA BY HIMSELF CANNOT PROVIDE FOR THE OPENING, OPERATIONS OR CLOSURE OF PUBLIC MARKET, JOINT ACTION OF THE BOARD AND THE MAYOR IS NECESSARY. — We agree with the Court of Appeals that the Mayor had no legal authority to, by himself, allow the petitioner to withdraw the major portion of Padre Rada Market from its use as a public market, thereby also withdrawing it from the city’s constant supervision. The establishment and maintenance of public markets is by law among the legislative powers of the City of Manila. Since the operation of Padre Rada Market was authorized by a municipal board resolution and approved by the City Mayor, as provided by law, it follows that a withdrawal of the whole or any portion from use as a public market must be subject to the same joint action of the Board and the Mayor. The Mayor of Manila, by himself, cannot provide for the opening, operations, and closure of a public market.

2. ID.; ID.; A MARKET IS CONSIDERED AS A PUBLIC MARKET IF IT IS LICENSED BY THE GOVERNMENT AND FOR GENERAL PUBLIC WHETHER IT BE OWNED BY THE GOVERNMENT OR ANY INSTRUMENTALITY THEREOF OR BY ANY PRIVATE INDIVIDUAL. — A market is a "public market" when it is dedicated to the service of the general public and is operated under government control and supervision as a public utility, whether it be owned by the government or any instrumentality thereof or by any private individual. It is a settled doctrine that a "public market may be the object of individual ownership or lease, subject to municipal supervision and control." (43 C.J. 394). Thus, if a market has been permitted to operate under government license for service to the general public, it is a

"public market" whether the building that houses it or the land upon which it is built is of private or public ownership. (Vda. de Salgado v. De la Fuente, 87 Phil. 343). The Padre Rada Market is, therefore, a public market which happens to be privately-owned and privately operated.

3. ID.; ID.; DISSOLUTION OF MUNICIPAL BOARD DOES NOT VEST LEGISLATIVE POWER IN THE MAYOR; METROPOLITAN MANILA COMMISSION TOOK OVER THE LEGISLATIVE FUNCTIONS OF THE MUNICIPAL BOARD OF MANILA. — The dissolution of the Municipal Board was among the measures which followed the promulgation of martial law. It did not follow, however, that the City Mayor automatically became both executive and legislature of the local government. He was never vested with legislative power. Presidential Decree No. 824 enacted on November 7, 1975 created the Metropolitan Manila Commission which took over the legislative functions of the Municipal Board of Manila. Therefore, the Metropolitan Manila Commission took over the legislative functions of the Municipal Board of Manila.

D E C I S I O N

GUTIERREZ, JR., J.:

This is a petition for review on certiorari of the decision of the Court of Appeals declaring that the Padre Rada Market remains a public market under government supervision and control and that the private respondent-vendors be maintained in the premises.

The private respondents instituted a class suit before the then Court of First Instance of Manila, Branch VIII in behalf of the vendors and regular stall holders in Padre Rada Market for annulment with preliminary injunction against the then Manila Mayor Antonio J. Villegas, petitioner Cruz, and other persons whose names were unknown to them.

The complaint prayed, among others, that the defendant City Mayor’s decision to withdraw Padre Rada Market as a public market be declared null and void.

Petitioner Ricardo Cruz states that he and his business associates Elpidio Talastas, Feliciana Alcantara and others have been the owners and operators of the Padre Rada Market at Tondo, Manila for more than twenty-five (25) years.


The market was authorized to be operated as a public market of the City of Manila by virtue of Resolution No. 230, as amended by Resolution No. 406, both series of 1949.

On May 26, 1970, the management of said market represented by petitioner Cruz wrote Mayor Villegas that the management was withdrawing three-fourths of the area of the market "from the direct supervision and control of the City Treasurer’s Office effective on June 15, 1970, and from said date the withdrawn portion shall cease to function and operate as a public market." The respondent-vendors, who were likewise notified of such withdrawal, protested such move.chanrobles lawlibrary : rednad

After several exchanges of referrals, indorsements, and communications, Mayor Villegas allowed the withdrawal in the light of the Court of Appeals’ decision in CA-C.R. Nos. 39999-R, and 40000-R upholding the right of the operators of the Elcano Market to withdraw their property from its use as a public market stating, among others, that approval for the withdrawal by the City of Manila is not even necessary. Motions for reconsiderations were denied. Hence, herein private respondents instituted Civil Case No. 80773.

The lower court rendered a decision, the dispositive portion of which reads:jgc:chanrobles.com.ph

"IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered as follows:jgc:chanrobles.com.ph

"(a) declaring as valid the decision of defendant City Mayor A. Villegas withdrawing Padre Rada Market as a public market;

"(b) declaring legal and valid defendant Operator’s Notice of Withdrawal of said market as public market;

"(c) vacating and setting aside the writ of preliminary injunction issued by this Court on November 6, 1970;

"(d) dismissing plaintiff’s complaint;

"(e) as to defendants’ counterclaim, plaintiffs and the Manila Underwriters Insurance Co., Inc. of Manila, are hereby ordered to pay, jointly and severally, defendant Ricardo Cruz and his associates named in paragraph 3 of the partial stipulation of facts, the additional amount of P210.00 daily by way of actual damages for the period from November, 1970 until the 840 stalls are returned to defendants;

"(f) ordering plaintiffs to pay defendant Cruz and his associates the sum of P5,000.00 as attorney’s fees, plus the costs.

"And in this connection, the liability of the Surety, Manila Underwriters Insurance Co., Inc. of Manila, shall not exceed P10,000.00, and plaintiffs are ordered to reimburse the Surety whatever the latter may pay to defendants." (Rollo, pp. 72-73)

Acting on the private respondents’ motion for reconsideration, the trial court later amended its decision as follows:chanrobles virtual lawlibrary

"IN VIEW OF ALL THE FOREGOING, only number (e) of the dispositive portion of the decision is hereby modified, to read as follows:jgc:chanrobles.com.ph

"(e) as to defendants’ counterclaim, plaintiffs and the Manila Underwriters Insurance Co., Inc. of Manila, are hereby ordered to pay, jointly and severally, defendant Ricardo Cruz and his associates named in paragraph 3 of the partial stipulation of facts, the additional amount of P50.00 daily by way of actual damages for the period from November, 1970 until the 840 stalls are returned to defendants.’

The other portions of the dispositive part of the decision remain in full force and effect." (Rollo, pp. 76-77)

On appeal, the respondent Court of Appeals reversed and set aside the lower court’s decision and instead denied the withdrawal by the Manila City Mayor of government-control and supervision "until legal conditions and equitable justification for the withdrawal by private parties obtain." A subsequent motion for reconsideration was denied.

Hence, this present petition.

The questions raised by the petitioners are:jgc:chanrobles.com.ph

"First.— Is a resolution of the then Municipal Board of Manila necessary and indispensable for the purpose of effecting the withdrawal of the Padre Rada Market as a public market or temporary ‘talipapa’? And, if such a resolution is necessary, as held by the Court of Appeals, how has such ruling been affected by the dissolution of the Municipal Board of Manila?

"Second. — Will the withdrawal of the Padre Rada Market from further use as a public market or a temporary talipapa violate Republic Act No. 6039?

Third.— Can the Court of Appeals simply ignore the earlier decision it


promulgated on May 16, 1970 in CA-G.R. Nos. 39999-R and 40000-R (Pacita Sta. Rosa, Et Al., v. M. Cudiamat, etc., Et Al., and Jose San Jose, Et Al., v. M. Cudiamat, etc., Et Al., respectively), when the legality and correctness of the doctrine laid down in said decision (penned by then Associate Justice Carmelino G. Alvendia and concurred in by then Associate Justices Cecilia Muñoz Palma and Andres Reyes) have been virtually sustained by this Honorable Court when it denied due course to the petition for review by certiorarifiled by the losing appellants in G.R. Nos. L-32187-88 (Pacita Sta. Rosa, Et. Al. v. M. Cudiamat, etc., Et. Al.), per resolution dated August 12, 1970? (Rec. on App., pp. 142-156).

"Fourth. — Does the Court of Appeals have the power to compel petitioner to continue operating the Padre Rada Market as a public market or temporary ‘talipapa’ notwithstanding the fact that petitioner and his business associates have been incurring substantial losses as a consequence of such operation under present conditions and circumstances? (Rollo, 16-17)

The main issue centers on whether or not the City Mayor may validly withdraw Padre Rada Market as a public market.

The answer is in the negative.

The Municipal Board of Manila with the approval of then Mayor Manuel de la Fuente authorized the disputed premises to be operated as a public market under its direct control and supervision as embodied in Resolution No. 230, amended by Resolution No. 406, both series of 1949.

The Municipal Board acted pursuant to its legislative powers vested by Republic Act No. 409 (Revised Charter of the City of Manila), particularly Sec. 18 (cc) which provides:chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

"Legislative powers.— The Municipal Board shall have the following legislative powers:chanrob1es virtual 1aw library

(cc) Subject to the provisions of ordinances issued by the Department of Health in accordance with law, to provide for the establishment and maintenance and fix the fees for the use of, and regulate public stables, laundries, and baths, and public markets and slaughterhouses, and prohibit or permit the establishment or operation within the city limits of public markets and slaughterhouses by any person, entity, association, or corporation other than the city." (45 O.G. 4265)

The respondent Court of Appeals held that Mayor Villegas had no authority to allow such withdrawal as "it is axiomatic that only the power that created it

can withdraw it."cralaw virtua1aw library

On the other hand, the petitioner contends that the Padre Rada Market was not created but merely authorized to operate as a public market by the Municipal Board. Accordingly, there is nothing in the said resolutions which obligates or compels petitioner Cruz and his business associates to continue operating the said market for as long as the Municipal Board desires it.

The records show that the petitioner wants to convert the major portion of the Padre Rada Market into a private market to enable him to raise the rentals for the stalls. It is obvious that he wants to remove the market from the control and supervision of city authorities. The private respondents also contend that to remove three fourths of the market from its status as a public market would practically result in the total withdrawal of the entire market. The remaining one fourth is no longer being used by the owner for its avowed purpose.

By the very nature of a market, * its location, opening, operations, and closure must be regulated by government. It is not a question of the petitioner’s right to run his market as he pleases but what agency or office should supervise its operations.

We agree with the Court of Appeals that the Mayor had no legal authority to, by himself, allow the petitioner to withdraw the major portion of Padre Rada Market from its use as a public market, thereby also withdrawing it from the city’s constant supervision.

The establishment and maintenance of public markets is by law among the legislative powers of the City of Manila. Since the operation of Padre Rada Market was authorized by a municipal board resolution and approved by the City Mayor, as provided by law, it follows that a withdrawal of the whole or any portion from use as a public market must be subject to the same joint action of the Board and the Mayor. The Mayor of Manila, by himself, cannot provide for the opening, operations, and closure of a public market.

The withdrawal from the market’s public status was in fact objected to by the Manila City Treasurer and the Market Administrator in their memorandums and indorsements to the Mayor. The market administrator opposed the withdrawal as it involved the displacement of numerous vendors (Record on Appeal, p. 35). At least 840 market stalls are involved. The city treasurer pointed out that the withdrawal would result in a diminution of city revenues.chanrobles virtual lawlibrary

Moreover, the city treasurer brought to the Mayor’s attention Sec. 1, III (2) of


Republic Act No. 6039, amending the Revised Charter of the City of Manila, which provides:chanrob1es virtual 1aw library

x x x

"2) City-owned and operated public markets shall not e disposed of, closed, destroyed, sold or transferred until all vendors therein shall have been relocated or transferred by the city government at its expense to another temporary or new public market: Provided, however, That notice of the city’s such intention or plans shall be made to all concerned vendors at least one hundred twenty days before the actual transfer or relocation to another market site: Provided, further, that all such temporarily relocated vendors shall be given preference and priority to occupy stalls in the new site as provided for under paragraph II (5) and III (1)." (66 O.G. 3694)

The Court of Appeals held that the withdrawal violated the above-mentioned provision.

It stated:jgc:chanrobles.com.ph

"The lower court held that the following provision of Republic 6039:jgc:chanrobles.com.ph

"‘City-owned and operated public markets shall not be disposed of, closed . . . or transferred until all vendors therein shall have been relocated or transferred by the city government at its expenses to another temporary or new public market.’"

was not violated because —

"‘. . . That provision applies solely to city-owned and operated public market, but the Padre Rada Market was not city-owned.

"Such construction of the law is too technical. The conjunction ‘and’ is not used in a restricted sense. It means ‘additional.’ The City of Manila has two public markets: city owned and city operated. It would be unthinkable that the law would restrict the coverage of its application for protection of public market vendors to only those public markets owned and operated by the City and not those in city-owned but not city-operated or city-operated but not city-owned public markets." (Rollo, pp. 53-54)

The petitioner alleges otherwise, stating that said provision is not applicable to the Padre Rada Market, it being a privately-owned and privately-operated public market under the control and supervision of the City of Manila. The

fact that all privately-owned public markets are under government supervision and control do not make them city-operated public markets.

There is no question that the Padre Rada Market is a public market as it was authorized to operate and it operates as such.

A market is a "public market" when it is dedicated to the service of the general public and is operated under government control and supervision as a public utility, whether it be owned by the government or any instrumentality thereof or by any private individual. It is a settled doctrine that a "public market may be the object of individual ownership or lease, subject to municipal supervision and control." (43 C.J. 394). Thus, if a market has been permitted to operate under government license for service to the general public, it is a "public market" whether the building that houses it or the land upon which it is built is of private or public ownership. (Vda. de Salgado v. De la Fuente, 87 Phil. 343).chanrobles virtual lawlibrary

The Padre Rada Market is, therefore, a public market which happens to be privately-owned and privately operated.

The petitioner contends that even assuming arguendo that another resolution was necessary for the withdrawal from use as a public market, the same could not be passed due to the dissolution of the Municipal Board of Manila.

The dissolution of the Municipal Board was among the measures which followed the promulgation of martial law. It did not follow, however, that the City Mayor automatically became both executive and legislature of the local government. He was never vested with legislative power. The answer to the petitioner’s arguments is found in Presidential Decree No. 824 enacted on November 7, 1975 creating the Metropolitan Manila Commission.

Section 4 (5) of said decree provides:jgc:chanrobles.com.ph

"The Commission shall have the following powers and functions:chanrob1es virtual 1aw library

x x x

"(5) To review, amend, revise or repeal all ordinances, resolutions and acts of cities and municipalities within Metropolitan Manila." (Emphasis supplied). (Vital Legal Documents, Vol. 29, pp. 26-27).

Therefore, the Metropolitan Manila Commission took over the legislative


functions of the Municipal Board of Manila.

It was not within the mayor’s authority to allow the questioned withdrawal.

As earlier stated, the intention of the operators of the Padre Rada Market is very clear. The withdrawal from its status as a public market is to operate the market without government control and supervision but not to discontinue operating as a market.

This can be gleaned from the notice sent to the respondent vendors.

It states:jgc:chanrobles.com.ph

"PATALASTAS

"Sa Mga Manininda Ng Pamilihang Padre Rada:jgc:chanrobles.com.ph

"Mapitagan naming ipinaaalam sa inyo na mula sa Hunyo 15, 1970, ang Padre Rada Market ay hindi na aandar o magpapatuloy bilang isang pamilihang bayan o public market. Nagpadala na po kami ng kaukulang kalatas sa mabunying Gatpuno ng Lunsod, Kgg. Antonio J. Villegas.

"Dahilan sa hindi na po maniningil sa loob ng palengke ang mga kolektor (ng gobyerno) o kinatawan ng Ingat-Yaman ng Lunsod, ang lahat po ng maninindang may puesto sa loob ay dapat kumuha ng permiso (Mayor’s Permit) at lisensya upang makapangalakal kayo nang naaayon sa batas. May nakalaan pong ‘porma’ sa aming upisina para sa inyong kaluwagan at kami po’y nakahanda tumulong sa pagsasaayos ng inyong pangangailangan tungkol dito.

"Kaya, kung hangad po ninyong magpatuloy sa pagtitinda at pangangalakal sa loob ng pamilihang Padre Rada nang walang balakid ay mangyari lang na kumuha ng kinakailangang permiso at lisensiya bago sumapit ang Hunyo 15, 1970.

"Sumasainyo,

"(SGD.) RICARDO CRUZ"

(Emphasis supplied; pp. 30-31, Record on Appeal).

The Padre Rada Market is a public market and as such should be subject to the local government’s supervision and control. Its conversion into a private market or its closure must follow the procedures laid down by law.

WHEREFORE, the petition is hereby DISMISSED for lack of merit. The questioned decision of the Court of Appeals is AFFIRMED.

Fernan (Chairman), Feliciano, Bidin and Cortes, JJ., concur.


LEAGUE OF CITIES CASE

R E S O L U T I O N CARPIO, J.:

For resolution are (1) the ad cautelam motion for reconsideration and (2) motion to annul the Decision of 21 December 2009 filed by petitioners League of Cities of the Philippines, et al. and (3) the ad cautelam motion for reconsideration filed by petitioners-in-intervention Batangas City, Santiago City, Legazpi City, Iriga City, Cadiz City, and Oroquieta City.

On 18 November 2008, the Supreme Court En Banc, by a majority vote, struck down the subject 16 Cityhood Laws for violating Section 10, Article X of the 1987 Constitution and the equal protection clause. On 31 March 2009, the Supreme Court En Banc, again by a majority vote, denied the respondents first motion for reconsideration. On 28 April 2009, the Supreme Court En Banc, by a split vote, denied the respondents second motion for reconsideration. Accordingly, the 18 November 2008 Decision became final and executory and was recorded, in due course, in the Book of Entries of Judgments on 21 May 2009.

However, after the finality of the 18 November 2008 Decision and without any exceptional and compelling reason, the Court En Banc unprecedentedly reversed the 18 November 2008 Decision by upholding the constitutionality of the Cityhood Laws in the Decision of 21 December 2009. Upon reexamination, the Court finds the motions for reconsideration meritorious and accordingly reinstates the 18 November 2008 Decision declaring the 16 Cityhood Laws unconstitutional.

A. Violation of Section 10, Article X of the Constitution

Section 10, Article X of the 1987 Constitution provides:

No province, city, municipality, or barangay shall be created, divided, merged, abolished or its boundary substantially altered, except in accordance with the criteria established in the local government code and subject to approval by a majority of the votes cast in a

plebiscite in the political units directly affected. (Emphasis supplied)

The Constitution is clear. The creation of local government units must follow the criteria established in the Local Government Code and not in any other law. There is only one Local Government Code.[1] The Constitution requires Congress to stipulate in the Local Government Code all the criteria necessary for the creation of a city, including the conversion of a municipality into a city. Congress cannot write such criteria in any other law, like the Cityhood Laws. The clear intent of the Constitution is to insure that the creation of cities and other political units must follow the same uniform, non-discriminatory criteria found solely in the Local Government Code. Any derogation or deviation from the criteria prescribed in the Local Government Code violates Section 10, Article X of the Constitution. RA 9009 amended Section 450 of the Local Government Code to increase the income requirement from P20 million to P100 million for the creation of a city. This took effect on 30 June 2001. Hence, from that moment the Local Government Code required that any municipality desiring to become a city must satisfy the P100 million income requirement. Section 450 of the Local Government Code, as amended by RA 9009, does not contain any exemption from this income requirement. In enacting RA 9009, Congress did not grant any exemption to respondent municipalities, even though their cityhood bills were pending in Congress when Congress passed RA 9009. The Cityhood Laws, all enacted after the effectivity of RA 9009, explicitly exempt respondent municipalities from the increased income requirement in Section 450 of the Local Government Code, as amended by RA 9009. Such exemption clearly violates Section 10, Article X of the Constitution and is thus patently unconstitutional. To be valid, such exemption must be written in the Local Government Code and not in any other law, including the Cityhood Laws. RA 9009 is not a law different from the Local Government Code. Section 1 of RA 9009 pertinently provides: Section 450 of Republic Act No. 7160, otherwise known as the Local Government Code of 1991, is hereby amended to read as follows: x x x. RA 9009 amended Section 450 of the Local Government Code. RA 9009, by amending Section 450 of the Local Government Code, embodies the new and prevailing Section 450 of the Local Government Code. Considering the Legislatures primary intent to curtail the mad rush of municipalities wanting to be converted into cities, RA


9009 increased the income requirement for the creation of cities. To repeat, RA 9009 is not a law different from the Local Government Code, as it expressly amended Section 450 of the Local Government Code. The language of RA 9009 is plain, simple, and clear. Nothing is unintelligible or ambiguous; not a single word or phrase admits of two or more meanings. RA 9009 amended Section 450 of the Local Government Code of 1991 by increasing the income requirement for the creation of cities. There are no exemptions from this income requirement. Since the law is clear, plain and unambiguous that any municipality desiring to convert into a city must meet the increased income requirement, there is no reason to go beyond the letter of the law. Moreover, where the law does not make an exemption, the Court should not create one.[2]

B. Operative Fact Doctrine

Under the operative fact doctrine, the law is recognized as unconstitutional but the effects of the unconstitutional law, prior to its declaration of nullity, may be left undisturbed as a matter of equity and fair play. In fact, the invocation of the operative fact doctrine is an admission that the law is unconstitutional. However, the minoritys novel theory, invoking the operative fact doctrine, is that the enactment of the Cityhood Laws and the functioning of the 16 municipalities as new cities with new sets of officials and employees operate to contitutionalize the unconstitutional Cityhood Laws. This novel theory misapplies the operative fact doctrine and sets a gravely dangerous precedent. Under the minoritys novel theory, an unconstitutional law, if already implemented prior to its declaration of unconstitutionality by the Court, can no longer be revoked and its implementation must be continued despite being unconstitutional. This view will open the floodgates to the wanton enactment of unconstitutional laws and a mad rush for their immediate implementation before the Court can declare them unconstitutional. This view is an open invitation to serially violate the Constitution, and be quick about it, lest the violation be stopped by the Court. The operative fact doctrine is a rule of equity. As such, it must be applied as an exception to the general rule that an unconstitutional law produces no effects. It can never be invoked to validate as constitutional an unconstitutional act. In Planters Products, Inc. v. Fertiphil Corporation,[3] the Court stated:

The general rule is that an unconstitutional law is void. It produces no rights, imposes no duties and affords no protection. It has no legal effect. It is, in legal contemplation, inoperative as if it has not been passed. Being void, Fertiphil is not required to pay the levy. All levies paid should be refunded in accordance with the general civil code principle against unjust enrichment. The general rule is supported by Article 7 of the Civil Code, which provides:

ART. 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse or custom or practice to the contrary.

When the courts declare a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern.

The doctrine of operative fact, as an exception to the general rule, only applies as a matter of equity and fair play. It nullifies the effects of an unconstitutional law by recognizing that the existence of a statute prior to a determination of unconstitutionality is an operative fact and may have consequences which cannot always be ignored. The past cannot always be erased by a new judicial declaration.

The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on those who have relied on the invalid law. Thus, it was applied to a criminal case when a declaration of unconstitutionality would put the accused in double jeopardy or would put in limbo the acts done by a municipality in reliance upon a law creating it. (Emphasis supplied)

The operative fact doctrine never validates or constitutionalizes an unconstitutional law. Under the operative fact doctrine, the unconstitutional law remains unconstitutional, but the effects of the unconstitutional law, prior to its judicial declaration of nullity, may be left undisturbed as a matter


of equity and fair play. In short, the operative fact doctrine affects or modifies only the effects of the unconstitutional law, not the unconstitutional law itself. Thus, applying the operative fact doctrine to the present case, the Cityhood Laws remain unconstitutional because they violate Section 10, Article X of the Constitution. However, the effects of the implementation of the Cityhood Laws prior to the declaration of their nullity, such as the payment of salaries and supplies by the new cities or their issuance of licenses or execution of contracts, may be recognized as valid and effective. This does not mean that the Cityhood Laws are valid for they remain void. Only the effects of the implementation of these unconstitutional laws are left undisturbed as a matter of equity and fair play to innocent people who may have relied on the presumed validity of the Cityhood Laws prior to the Courts declaration of their unconstitutionality.

C. Equal Protection Clause As the Court held in the 18 November 2008 Decision, there is no substantial distinction between municipalities with pending cityhood bills in the 11th Congress and municipalities that did not have pending bills. The mere pendency of a cityhood bill in the 11th Congress is not a material difference to distinguish one municipality from another for the purpose of the income requirement. The pendency of a cityhood bill in the 11 th Congress does not affect or determine the level of income of a municipality.Municipalities with pending cityhood bills in the 11th Congress might even have lower annual income than municipalities that did not have pending cityhood bills. In short, the classification criterion − mere pendency of a cityhood bill in the 11th Congress − is not rationally related to the purpose of the law which is to prevent fiscally non-viable municipalities from converting into cities. Moreover, the fact of pendency of a cityhood bill in the 11 th Congress limits the exemption to a specific condition existing at the time of passage of RA 9009. That specific condition will never happen again. This violates the requirement that a valid classification must not be limited to existing conditions only. In fact, the minority concedes that the conditions (pendency of the cityhood bills) adverted to can no longer be repeated. Further, the exemption provision in the Cityhood Laws gives the 16 municipalities a unique advantage based on an arbitrary date − the filing of their cityhood bills before the end of the 11th Congress as against all other municipalities that want to convert into cities after the effectivity of RA 9009. In addition, limiting the exemption only to the 16 municipalities violates the requirement that the classification must apply to all similarly situated.

Municipalities with the same income as the 16 respondent municipalities cannot convert into cities, while the 16 respondent municipalities can. Clearly, as worded, the exemption provision found in the Cityhood Laws, even if it were written in Section 450 of the Local Government Code, would still be unconstitutional for violation of the equal protection clause.

D. Tie-Vote on a Motion for ReconsiderationSection 7, Rule 56 of the Rules of Court provides:

SEC. 7. Procedure if opinion is equally divided. Where the court en banc is equally divided in opinion, or the necessary majority cannot be had, the case shall again be deliberated on, and if after such deliberation no decision is reached, the original action commenced in the court shall be dismissed; in appealed cases, the judgment or order appealed from shall stand affirmed; andon all incidental matters, the petition or motion shall be denied. (Emphasis supplied)

The En Banc Resolution of 26 January 1999 in A.M. No. 99-1-09-SC, reads:

A MOTION FOR THE CONSIDERATION OF A DECISION OR RESOLUTION OF THE COURT EN BANC OR OF A DIVISION MAY BE GRANTED UPON A VOTE OF A MAJORITY OF THE MEMBERS OF THE EN BANC OR OF A DIVISION, AS THE CASE MAY BE, WHO ACTUALLY TOOK PART IN THE DELIBERATION OF THE MOTION. IF THE VOTING RESULTS IN A TIE, THE MOTION FOR RECONSIDERATION IS DEEMED DENIED. (Emphasis supplied)

The clear and simple language of the clarificatory en banc Resolution requires no further explanation. If the voting of the Court en banc results in a tie, the motion for reconsideration is deemed denied. The Courts prior majority action on the main decision stands affirmed.[4] This clarificatory Resolution applies to all cases heard by the Court en banc, which includes not only cases involving the constitutionality of a law, but also, as expressly stated in Section 4(2), Article VIII of the Constitution, all other cases which under the Rules of Court are required to be heard en banc. The 6-6 tie-vote by the Court en banc on the second motion for reconsideration necessarily resulted in the denial of the second motion for


reconsideration. Since the Court was evenly divided, there could be no reversal of the 18 November 2008 Decision, for a tie-vote cannot result in any court order or directive.[5] The judgment stands in full force.[6]Undeniably, the 6-6 tie-vote did not overrule the prior majority en banc Decision of 18 November 2008, as well as the prior majority en banc Resolution of 31 March 2009 denying reconsideration. The tie-vote on the second motion for reconsideration is not the same as a tie-vote on the main decision where there is no prior decision. Here, the tie-vote plainly signifies that there is no majority to overturn the prior 18 November 2008 Decision and 31 March 2009 Resolution, and thus the second motion for reconsideration must be denied. Further, the tie-vote on the second motion for reconsideration did not mean that the present cases were left undecided because there remain the Decision of 18 November 2008 and the Resolution of 31 March 2009 where a majority of the Court en banc concurred in declaring the unconstitutionality of the sixteen Cityhood Laws. In short, the 18 November 2008 Decision and the 31 March 2009 Resolution, which were both reached with the concurrence of a majority of the Court en banc, are not reconsidered but stand affirmed.[7] These prior majority actions of the Court en banc can only be overruled by a new majority vote, not a tie-vote because a tie-vote cannot overrule a prior affirmative action. The denial, by a split vote, of the second motion for reconsideration inevitably rendered the 18 November 2008 Decision final. In fact, in its Resolution of 28 April 2009, denying the second motion for reconsideration, the Court en banc reiterated that no further pleadings shall be entertained and stated that entry of judgment be made in due course. The dissenting opinion stated that a deadlocked vote of six is not a majority and a non-majority does not constitute a rule with precedential value.[8]

Indeed, a tie-vote is a non-majority a non-majority which cannot overrule a prior affirmative action, that is the 18 November 2008 Decision striking down the Cityhood Laws. In short, the 18 November 2008 Decision stands affirmed. And assuming a non-majority lacks any precedential value, the 18 November 2008 Decision, which was unreversed as a result of the tie-vote on the respondents second motion for reconsideration, nevertheless remains binding on the parties.[9]

Conclusion

Section 10, Article X of the Constitution expressly provides that no x x x city shall be created x x x except in accordance with the criteria established in the local government code. This provision can only be interpreted in one way, that is, all the criteria for the creation of cities must be embodied exclusively in the Local Government Code. In this case, the Cityhood Laws, which are unmistakably laws other than the Local Government Code, provided an exemption from the increased income requirement for the creation of cities under Section 450 of the Local Government Code, as amended by RA 9009. Clearly, the Cityhood Laws contravene the letter and intent of Section 10, Article X of the Constitution. Adhering to the explicit prohibition in Section 10, Article X of the Constitution does not cripple Congress power to make laws. In fact, Congress is not prohibited from amending the Local Government Code itself, as what Congress did by enacting RA 9009. Indisputably, the act of amending laws comprises an integral part of the Legislatures law-making power. The unconstitutionality of the Cityhood Laws lies in the fact that Congress provided an exemption contrary to the express language of the Constitution that [n]o x x x city x x x shall be created except in accordance with the criteria established in the local government code. In other words, Congress exceeded and abused its law-making power, rendering the challenged Cityhood Laws void for being violative of the Constitution. WHEREFORE, we GRANT the motions for reconsideration of the 21 December 2009 Decision and REINSTATE the 18 November 2008 Decision declaringUNCONSTITUTIONAL the Cityhood Laws, namely: Republic Act Nos. 9389, 9390, 9391, 9392, 9393, 9394, 9398, 9404, 9405, 9407, 9408, 9409, 9434, 9435, 9436, and 9491. We NOTE petitioners motion to annul the Decision of 21 December 2009. SO ORDERED.


[G.R. No. 73155. July 11, 1986.]

PATRICIO TAN, FELIX FERRER, JUAN M. HAGAD, SERGIO HILADO, VIRGILIO GASTON, CONCHITA MINAYA, TERESITA ESTACIO,

DESIDERIO DEFERIA, ROMEO GAMBOA, ALBERTO LACSON, FE HOFILENA, EMILY JISON, NIEVES LOPEZ AND CECILIA

MAGSAYSAY, Petitioners, v. THE COMMISSION ON ELECTIONS and THE PROVINCIAL TREASURER OF NEGROS

OCCIDENTAL, Respondents.

Gamboa & Hofileña Law Office for petitioners.

D E C I S I O N

ALAMPAY, J.:

Prompted by the enactment of Batas Pambansa Blg. 885 — An Act Creating a New Province in the Island of Negros to be known as the Province of Negros del Norte, which took effect on December 3, 1985, Petitioners herein, who are residents of the Province of Negros Occidental, in the various cities and municipalities therein, on December 23, 1985, filed with this Court a case for Prohibition for the purpose of stopping respondents Commission on Elections from conducting the plebiscite which, pursuant to and in implementation of the aforesaid law, was scheduled for January 3, 1986.chanrobles law library

Said law provides:jgc:chanrobles.com.ph

"SECTION 1. The Cities of Silay, Cadiz, and San Carlos and the municipalities of Calatrava, Taboso, Escalante, Sagay, Manapla, Victorias, E.R. Magalona; and Salvador Benedicto, all in the northern portion of the Island of Negros, are hereby separated from the province to be known as the Province of Negros del Norte.

"SEC. 2. The boundaries of the new province shall be the southern limits of the City of Silay, the Municipality of Salvador Benedicto and the City of San Carlos on the south and the territorial limits of the northern portion to the Island of Negros on the west, north and east, comprising a territory of 4,019.95 square kilometers more or less.

"SEC. 3. The seat of government of the new province shall be the City of

Cadiz.

"SEC. 4. A plebiscite shall be conducted in the proposed new province which are the areas affected within a period of one hundred and twenty days from the approval of this Act. After the ratification of the creation of the Province of Negros del Norte by a majority of the votes cast in such plebiscite, the President of the Philippines shall appoint the first officials of the province.

"SEC. 5. The Commission on Elections shall conduct and supervise the plebiscite herein provided, the expenses for which shall be charged to local funds.

"SEC. 6. This Act shall take effect upon its approval." (Rollo, pp. 23-24)

Petitioners contend that Batas Pambansa Blg. 885 is unconstitutional and it is not in complete accord with the Local Government Code as in Article XI, Section 3 of our Constitution, it is expressly mandated that —

"Sec. 3. No province, city, municipality or barrio may be created, divided, merged, abolished, or its boundary substantially altered, except in accordance with the criteria established in the local government code, and subject to the approval by a majority of the votes in a plebiscite in the unit or units affected."cralaw virtua1aw library

Section 197 of the Local Government Code enumerates the conditions which must exist to provide the legal basis for the creation of a provincial unit and these requisites are:jgc:chanrobles.com.ph

"SEC. 197. Requisites for Creation. — A province may be created if it has a territory of at least three thousand five hundred square kilometers, a population of at least five hundred thousand persons, an average estimated annual income, as certified by the Ministry of Finance, of not less than ten million pesos for the last three consecutive years, and its creation shall not reduce the population and income of the mother province or provinces at the time of said creation to less than the minimum requirements under this section. The territory need not be contiguous if it comprises two or more islands.

‘The average estimated annual income shall include the income alloted for both the general and infrastructural funds, exclusive of trust funds, transfers and nonrecurring income. (Rollo, p. 6)

Due to the constraints brought about by the supervening Christmas holidays during which the Court was in recess and unable to timely consider the petition, a supplemental pleading was filed by petitioners on January 4,


1986, averring therein that the plebiscite sought to be restrained by them was held on January 3, 1986 as scheduled but that there are still serious issues raised in the instant case affecting the legality, constitutionality and validity of such exercise which should properly be passed upon and resolved by this Court.

The plebiscite was confined only to the inhabitants of the territory of Negros del Norte, namely: the Cities of Silay, Cadiz, and San Carlos, and the municipalities of Calatrava, Taboso, Escalante, Sagay, Manapla, Victorias, E.B. Magalona and Don Salvador Benedicto. Because of the exclusions of the voters from the rest of the province of Negros Occidental, petitioners found need to change the prayer of their petition "to the end that the constitutional issues which they have raised in the action will be ventilated and given final resolution." At the same time, they asked that the effects of the plebiscite which they sought to stop be suspended until the Supreme Court shall have rendered its decision on the very fundamental and far-reaching questions that petitioners have brought out.

Acknowledging in their supplemental petition that supervening events rendered moot the prayer in their initial petition that the plebiscite scheduled for January 3, 1986, be enjoined, petitioners plead, nevertheless, that —

". . . a writ of Prohibition be issued directed to Respondent Commission on Elections to desist from issuing official proclamation of the results of the plebiscite held on January 3, 1986.

"Finding that the exclusion and non-participation of the voters of the Province of Negros Occidental other than those living within the territory of the new province of Negros del Norte to be not in accordance with the Constitution, that a writ of Mandamus be issued, directed to the respondent Commission on Elections, to schedule the holding of another plebiscite at which all the qualified voters of the entire Province of Negros Occidental as now existing shall participate, at the same time making pronouncement that the plebiscite held on January 3, 1986 has no legal effect, being a patent legal nullity;

"And that a similar writ of Prohibition be issued, directed to the respondent Provincial Treasurer, to desist from ordering the release of any local funds to answer for expenses incurred in the holding of such plebiscite until ordered by the Court." (Rollo, pp. 19-10).

Petitioners further prayed that the respondent COMELEC hold in abeyance the issuance of any official proclamation of the results of the aforestated plebiscite.chanroblesvirtual|awlibrary

During the pendency of this case, a motion that he be allowed to appear as amicus curiae in this case (dated December 27, 1985 and filed with the Court on January 2, 1986) was submitted by former Senator Ambrosio Padilla. Said motion was granted in Our resolution of January 2, 1986.

Acting on the petition, as well as on the supplemental petition for prohibition with preliminary injunction with prayer for restraining order, the Court, on January 7, 1986 resolved, without giving due course to the same, to require respondents to comment, not to file a motion to dismiss. Complying with said resolution, public respondents, represented by the Office of the Solicitor General, on January 14, 1986, filed their Comment, arguing therein that the challenged statute — Batas Pambansa 885, should be accorded the presumption of legality. They submit that the said law is not void on its face and that the petition does not show a clear, categorical and undeniable demonstration of the supposed infringement of the Constitution. Respondents state that the powers of the Batasang Pambansa to enact the assailed law is beyond question. They claim that Batas Pambansa Blg. 885 does not infringe the Constitution because the requisites of the Local Government Code have been complied with. Furthermore, they submit that this case has now become moot and academic with the proclamation of the new Province of Negros del Norte.

Respondents argue that the remaining cities and municipalities of the Province of Negros Occidental not included in the area of the new Province of Negros del Norte, do not fall within the meaning and scope of the term "unit or units affected", as referred to in Section 3 of Art. XI of our Constitution. On this reasoning, respondents maintain that Batas Pambansa Blg. 885 does not violate the Constitution, invoking and citing the case of Governor Zosimo Paredes versus the Honorable Executive Secretary to the President, Et. Al. (G.R. No. 55628, March 2, 1984 (128 SCRA 61), particularly the pronouncements therein, hereunder quoted:jgc:chanrobles.com.ph

"1. Admittedly, this is one of those cases where the discretion of the Court is allowed considerable leeway. There is indeed an element of ambiguity in the use of the expression ‘unit or units affected’. It is plausible to assert as petitioners do that when certain Barangays are separated from a parent municipality to form a new one, all the voters therein are affected. It is much more persuasive, however, to contend as respondents do that the acceptable construction is for those voters, who are not from the barangays to be separated, should be excluded in the plebiscite.

"2. For one thing, it is in accordance with the settled doctrine that between two possible constructions, one avoiding a finding of unconstitutionality and the other yielding such a result, the former is to be preferred. That which will


save, not that which will destroy, commends itself for acceptance. After all, the basic presumption all these years is one of validity. . . .

"3. . . . Adherence to such philosophy compels the conclusion that when there are indications that the inhabitants of several barangays are inclined to separate from a parent municipality they should be allowed to do so. What is more logical than to ascertain their will in a plebiscite called for that purpose. It is they, and they alone, who shall constitute the new unit. New responsibilities will be assumed. New burdens will be imposed. A new municipal corporation will come into existence. Its birth will be a matter of choice — their choice. They should be left alone then to decide for themselves. To allow other voters to participate will not yield a true expression of their will. They may even frustrate it. That certainly will be so if they vote against it for selfish reasons, and they constitute the majority. That is not to abide by the fundamental principle of the Constitution to promote local autonomy, the preference being for smaller units. To rule as this Tribunal does is to follow an accepted principle of constitutional construction, that in ascertaining the meaning of a particular provision that may give rise to doubts, the intent of the framers and of the people may be gleaned from provisions in pari materia."cralaw virtua1aw library

Respondents submit that said ruling in the aforecited case applies equally with force in the case at bar. Respondents also maintain that the requisites under the Local Government Code (P.D. 337) for the creation of the new province of Negros del Norte have all been duly complied with. Respondents discredit petitioners’ allegations that the requisite area of 3,500 square kilometers as so prescribed in the Local Government Code for a new province to be created has not been satisfied. Petitioners insist that the area which would comprise the new province of Negros del Norte, would only be about 2,856.56 square kilometers and which evidently would be lesser than the minimum area prescribed by the governing statute. Respondents, in this regard, point out and stress that Section 2 of Batas Pambansa Blg. 885 creating said new province plainly declares that the territorial boundaries of Negros del Norte comprise an area of 4,019.95 square kilometers, more or less.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

As a final argument, respondents insist that instant petition has been rendered moot and academic considering that a plebiscite has been already conducted on January 3, 1986; that as a result thereof, the corresponding certificate of canvass indicated that out of 195,134 total votes cast in said plebiscite, 164,734 were in favor of the creation of Negros del Norte and 30,400 were against it; and because "the affirmative votes cast represented a majority of the total votes cast in said plebiscite, the Chairman of the Board of Canvassers proclaimed the new province which shall be known as "Negros del Norte." Thus, respondents stress the fact that following the

proclamation of Negros del Norte province, the appointments of the officials of said province created were announced. On these considerations, respondents urge that this case should be dismissed for having been rendered moot and academic as the creation of the new province is now a" fait accompli."cralaw virtua1aw library

In resolving this case, it will be useful to note and emphasize the facts which appear to be agreed to by the parties herein or stand unchallenged.

Firstly, there is no disagreement that the Provincial Treasurer of the Province of Negros Occidental has not disbursed, nor was required to disburse any public funds in connection with the plebiscite held on January 3, 1986 as so disclosed in the Comment to the Petition filed by the respondent Provincial Treasurer of Negros Occidental dated January 20, 1986 (Rollo, pp. 36-37). Thus, the prayer of the petitioners that said Provincial Treasurer be directed by this Court to desist from ordering the release of any public funds on account of such plebiscite should not longer deserve further consideration.

Secondly, in Parliamentary Bill No. 3644 which led to the enactment of Batas Pambansa Blg. 885 and the creation of the new Province of Negros del Norte, it expressly declared in Sec. 2 of the aforementioned Parliamentary Bill, the following:jgc:chanrobles.com.ph

"SEC. 2. The boundaries of the new province shall be the southern limits of the City of Silay, the Municipality of Salvador Benedicto and the City of San Carlos on the South and the natural boundaries of the northern portion of the Island of Negros on the West, North and East, containing an area of 285,656 hectares more or less." (Emphasis supplied).

However, when said Parliamentary Bill No. 3644 was very quickly enacted into Batas Pambansa Blg. 885, the boundaries of the new Province of Negros del Norte were defined therein and its boundaries then stated to be as follows:jgc:chanrobles.com.ph

"SEC 1. The Cities of Silay, Cadiz, and San Carlos and the municipalities of Calatrava, Toboso, Escalante. Sagay, Manapla, Victorias, E.R. Magalona; and Salvador Benedicto, all in the northern portion of the Island of Negros, are hereby separated from the Province of Negros Occidental and constituted into a new province to be known as the Province of Negros del Norte.

"SEC. 1. The boundaries of the new province shall be the southern limits of the City of Silay, the Municipality of Salvador Benedicto and the City of San Carlos on the south and the territorial limits of the northern portion of the


Island of Negros on the West, North and East, comprising a territory of 4,019.95 square kilometers more or less."cralaw virtua1aw library

Equally accepted by the parties is the fact that under the certification issued by Provincial Treasurer Julian L. Ramirez of the Province of Negros Occidental, dated July 16, 1985, it was therein certified as follows:jgc:chanrobles.com.ph

"x x x

"This is to certify that the following cities and municipalities of Negros Occidental have the land area as indicated hereunder based on the Special Report No. 3, Philippines 1980, Population, Land Area and Density: 1970, 1975 and 1980 by the National Census and Statistics Office, Manila.

Land Area

(Sq. Km.)

"1. Silay City 214.8

2. E.B. Magalona 113.3

3. Victorias 133.9

4. Manapla 112.9

5. Cadiz City 516.5

6. Sagay 389.6

7. Escalante 124.0

8. Toboso 123.4

9. Calatrava 504.5

10. San Carlos City 451.3

11. Don Salvador Benedicto (not available)

"This certification is issued upon the request of Dr. Patricio Y. Tan for whatever purpose it may serve him.

"(SGD.) JULIAN L. RAMIREZ

Provincial Treasurer" (Exh. "C" of Petition, Rollo, p. 90).

Although in the above certification it is stated that the land area of the relatively new municipality of Don Salvador Benedicto is not available, it is an uncontradicted fact that the area comprising Don Salvador municipality, one of the component units of the new province, was derived from the City of San Carlos and from the Municipality of Calatrava, Negros Occidental, and added thereto was a portion of about one-fourth the land area of the town of Murcia, Negros Occidental. It is significant to note the uncontroverted submission of petitioners that the total land area of the entire municipality of Murcia, Negros Occidental is only 322.9 square kilometers (Exh. "D", Rollo, p. 91). One-fourth of this total land area of Murcia that was added to the portions derived from the land area of Calatrava, Negros Occidental and San Carlos City (Negros Occidental) would constitute, therefore, only 80.2 square kilometers. This area of 80.2 square kilometers if then added to 2,685.2 square kilometers, representing the total land area of the Cities of Silay, San Carlos and Cadiz and the Municipalities of E.R. Magalona, Victorias, Manapla, Sagay, Escalante, Taboso and Calatrava, will result in approximately an area of only 2,765.4 square kilometers using as basis the Special Report, Philippines 1980, Population, Land Area and Density: 1970, 1975 and 1980 of the National Census and Statistics Office, Manila (see Exhibit "C", Rollo, p. 90).

No controversion has been made by respondent with respect to the allegations of petitioners that the original provision in the draft legislation, Parliamentary Bill No. 3644, reads:jgc:chanrobles.com.ph

"SEC. 4. A plebiscite shall be conducted in the areas affected within a period of one hundred and twenty days from the approval of this Act. After the ratification of the creation of the Province of Negros del Norte by a majority of the votes cast in such plebiscite, the President shall appoint the first officials of the new province." chanroblesvirtual|awlibrary

However, when Batas Pambansa Blg. 885 was enacted, there was a significant change in the above provision. The statute, as modified, provides that the requisite plebiscite "shall be conducted in the proposed new province which are the areas affected."cralaw virtua1aw library

It is this legislative determination limiting the plebiscite exclusively to the cities and towns which would comprise the new province that is assailed by the petitioners as violative of the provisions of our Constitution. Petitioners submit that Sec. 3, ART XI thereof, contemplates a plebiscite that would be held in the unit or units affected by the creation of the new province as a result of the consequent division of and substantial alteration of the


boundaries of the existing province. In this instance, the voters in the remaining areas of the province of Negros Occidental should have been allowed to participate in the questioned plebiscite.

Considering that the legality of the plebiscite itself is challenged for non-compliance with constitutional requisites, the fact that such plebiscite had been held and a new province proclaimed and its officials appointed, the case before Us cannot truly be viewed as already moot and academic. Continuation of the existence of this newly proclaimed province which petitioners strongly profess to have been illegally born, deserves to be inquired into by this Tribunal so that, if indeed, illegality attaches to its creation, the commission of that error should not provide the very excuse for perpetuation of such wrong. For this Court to yield to the respondents’ urging that, as there has been fait accompli, then this Court should passively accept and accede to the prevailing situation is an unacceptable suggestion. Dismissal of the instant petition, as respondents so propose is a proposition fraught with mischief. Respondents’ submission will create a dangerous precedent. Should this Court decline now to perform its duty of interpreting and indicating what the law is and should be, this might tempt again those who strut about in the corridors of power to recklessly and with ulterior motives, create, merge, divide and/or alter the boundaries of political subdivisions, either brazenly or stealthily, confident that this Court will abstain from entertaining future challenges to their acts if they manage to bring about a fait accompli.

In the light of the facts and circumstances alluded to by petitioners as attending to the unusually rapid creation of the instant province of Negros del Norte after a swiftly scheduled plebiscite, this Tribunal has the duty to repudiate and discourage the commission of acts which run counter to the mandate of our fundamental law, done by whatever branch of our government. This Court gives notice that it will not look with favor upon those who may be hereafter inclined to ram through all sorts of legislative measures and then implement the same with indecent haste, even if such acts would violate the Constitution and the prevailing statutes of our land. It is illogical to ask that this Tribunal be blind and deaf to protests on the ground that what is already done is done. To such untenable argument the reply would be that, be this so, the Court, nevertheless, still has the duty and right to correct and rectify the wrong brought to its attention.

On the merits of the case.

Aside from the simpler factual issue relative to the land area of the new province of Negros del Norte, the more significant and pivotal issue in the present case revolves around in the interpretation and application in the case at bar of Article XI, Section 3 of the Constitution, which being brief and

for convenience, We again quote:jgc:chanrobles.com.ph

"SEC. 3. No province, city, municipality or barrio may be created, divided, merged, abolished, or its boundary substantially altered, except in accordance with the criteria established in the local government code, and subject to the approval by a majority of the votes in a plebiscite in the unit or units affected."cralaw virtua1aw library

It can be plainly seen that the aforecited constitutional provision makes it imperative that there be first obtained "the approval of a majority of votes in the plebiscite in the unit or units affected" whenever a province is created, divided or merged and there is substantial alteration of the boundaries. It is thus inescapable to conclude that the boundaries of the existing province of Negros Occidental would necessarily be substantially altered by the division of its existing boundaries in order that there can be created the proposed new province of Negros del Norte. Plain and simple logic will demonstrate than that two political units would be affected. The first would be the parent province of Negros Occidental because its boundaries would be substantially altered. The other affected entity would be composed of those in the area subtracted from the mother province to constitute the proposed province of Negros del Norte.

We find no way to reconcile the holding of a plebiscite that should conform to said constitutional requirement but eliminates the participation of either of these two component political units. No amount of rhetorical flourishes can justify exclusion of the parent province in the plebiscite because of an alleged intent on the part of the authors and implementors of the challenged statute to carry out what is claimed to be a mandate to guarantee and promote autonomy of local government units. The alleged good intentions cannot prevail and overrule the cardinal precept that what our Constitution categorically directs to be done or imposes as a requirement must first be observed, respected and complied with. No one should be allowed to pay homage to a supposed fundamental policy intended to guarantee and promote autonomy of local government units but at the same time transgress, ignore and disregard what the Constitution commands in Article XI Section 3 thereof. Respondents would be no different from one who hurries to pray at the temple but then spits at the idol therein.

We find no merit in the submission of the respondents that the petition should be dismissed because the motive and wisdom in enacting the law may not be challenged by petitioners. The principal point raised by the petitioners is not the wisdom and motive in enacting the law but the infringement of the Constitution which is a proper subject of judicial inquiry.

Petitioners’ discussion regarding the motives behind the enactment of B.P.


Blg. 885 to say the least, are most enlightening and provoking but are factual issues the Court cannot properly pass upon in this case. Mention by petitioners of the unexplained changes or differences in the proposed Parliamentary Bill No. 3644 and the enacted Batas Pambansa Blg. 885; the swift and surreptitious manner of passage and approval of said law; the abrupt scheduling of the plebiscite; the reference to news articles regarding the questionable conduct of the said plebiscite held on January 3, 1986; all serve as interesting reading but are not the decisive matters which should be reckoned in the resolution of this case.

What the Court considers the only significant submissions lending a little support to respondents’ case is their reliance on the rulings and pronouncements made by this Court in the case of Governor Zosimo Paredes versus The Honorable Executive Secretary to the President, Et Al., G.R. No. 55628, March 2, 1984 (128 SCRA 6). In said case relating to a plebiscite held to ratify the creation of a new municipality from existing barangays, this Court upheld the legality of the plebiscite which was participated in exclusively by the people of the barangay that would constitute the new municipality.chanroblesvirtuallawlibrary:red

This Court is not unmindful of this solitary case alluded to by respondents. What is, however, highly significant are the prefatory statements therein stating that said case is "one of those cases where the discretion of the Court is allowed considerable leeway" and that "there is indeed an element of ambiguity in the use of the expression "unit or units affected." The ruling rendered in said case was based on a claimed prerogative of the Court then to exercise its discretion on the matter. It did not resolve the question of how the pertinent provision of the Constitution should be correctly interpreted.

The ruling in the aforestated case of Paredes v. The Honorable Executive Secretary, Et. Al. (supra) should not be taken as a doctrinal or compelling precedent when it is acknowledged therein that "it is plausible to assert, as petitioners do, that when certain Barangays are separated from a parent municipality to form a new one, all the voters therein are affected."cralaw virtua1aw library

It is relevant and most proper to mention that in the aforecited case of Paredes v. Executive Secretary, invoked by respondents, We find very lucidly expressed the strong dissenting view of Justice Vicente Abad Santos, a distinguished member of this Court, as he therein voiced his opinion, which We hereunder quote:jgc:chanrobles.com.ph

"2. . . . when the Constitution speaks of "the unit or units affected" it means all of the people of the municipality if the municipality is to be divided such as in the case at bar or all of the people of two or more municipalities if there be

a merger. I see no ambiguity in the Constitutional provision."cralaw virtua1aw library

This dissenting opinion of Justice Vicente Abad Santos is the forerunner of the ruling which We now consider applicable to the case at bar. In the analogous case of Emilio C. Lopez, Jr., versus the Honorable Commission on Elections, L-56022, May 31, 1985, 136 SCRA 633, this dissent was reiterated by Justice Abad Santos as he therein assailed as suffering from a constitutional infirmity a referendum which did not include all the people of Bulacan and Rizal, when such referendum was intended to ascertain if the people of said provinces were willing to give up some of their towns to Metropolitan Manila. His dissenting opinion served as a useful guideline in the instant case.

Opportunity to re-examine the views formerly held in said cases is now afforded the present Court. The reasons in the mentioned cases invoked by respondents herein were formerly considered acceptable because of the views then taken that local autonomy would be better promoted. However, even this consideration no longer retains persuasive value.

The environmental facts in the case before Us readily disclose that the subject matter under consideration is of greater magnitude with concomitant multifarious complicated problems. In the earlier case, what was involved was a division of a barangay which is the smallest political unit in the Local Government Code. Understandably, few and lesser problems are involved. In the case at bar, creation of a new province relates to the largest political unit contemplated in Section 3, Art. XI of the Constitution. To form the new province of Negros del Norte no less than three cities and eight municipalities will be subtracted from the parent province of Negros Occidental. This will result in the removal of approximately 2,768.4 square kilometers from the land area of an existing province whose boundaries will be consequently substantially altered. It becomes easy to realize that the consequent effects of the division of the parent province necessarily will affect all the people living in the separate areas of Negros Occidental and the proposed province of Negros del Norte. The economy of the parent province as well as that of the new province will be inevitably affected, either for the better or for the worse. Whatever be the case, either or both of these political groups will be affected and they are, therefore, the unit or units referred to in Section 3 of Article XI of the Constitution which must be included in the plebiscite contemplated therein.

It is a well accepted rule that "in ascertaining the meaning of a particular provision that may give rise to doubts, the intent of the framers and of the people, may be gleaned from the provisions in pari materia." Parliamentary Bill No. 3644 which proposed the creation of the new province of Negros del


Norte recites in Sec. 4 thereof that "the plebiscite shall be conducted in the areas affected within a period of one hundred and twenty days from the approval of this Act." As this draft legislation speaks of "areas," what was contemplated evidently are plurality of areas to participate in the plebiscite. Logically, those to be included in such plebiscite would be the people living in the area of the proposed new province and those living in the parent province. This assumption will be consistent with the requirements set forth in the Constitution.

We fail to find any legal basis for the unexplained change made when Parliamentary Bill No. 3644 was enacted into Batas Pambansa Blg. 885 so that it is now provided in said enabling law that the plebiscite "shall be conducted in the proposed new province which are the areas affected." We are not disposed to agree that by mere legislative fiat the unit or units affected referred in the fundamental law can be diminished or restricted by the Batasang Pambansa to cities and municipalities comprising the new province, thereby ignoring the evident reality that there are other people necessarily affected.

In the mind of the Court, the change made by those responsible for the enactment of Batas Pambansa Blg. 885 betrays their own misgivings. They must have entertained apprehensions that by holding the plebiscite only in the areas of the new proposed province, this tactic will be tainted with illegality. In anticipation of a possible strong challenge to the legality of such a plebiscite there was, therefore, deliberately added in the enacted statute a self-serving phrase that the new province constitutes the area affected. Such additional statement serves no useful purpose for the same is misleading, erroneous and far from truth. The remaining portion of the parent province is as much an area affected. The substantial alteration of the boundaries of the parent province, not to mention the other adverse economic effects it might suffer, eloquently argue the points raised by the petitioners.chanrobles law library : red

Petitioners have averred without contradiction that after the creation of Negros del Norte, the province of Negros Occidental would be deprived of the long established Cities of Silay, Cadiz, and San Carlos, as well as the municipality of Victorias. No controversion has been made regarding petitioners’ assertion that the areas of the Province of Negros Occidental will be diminished by about 285,656 hectares and it will lose seven of the fifteen sugar mills which contribute to the economy of the whole province. In the language of petitioners, "to create Negros del Norte, the existing territory and political subdivision known as Negros Occidental has to be partitioned and dismembered. What was involved was no ‘birth’ but "amputation." We agree with the petitioners that in the case of Negros what was involved was a division, a separation; and consequently, as Sec. 3 of Article XI of the

Constitution anticipates, a substantial alteration of boundary.

As contended by petitioners, —

"Indeed, the terms ‘created’, ‘divided’, ‘merged’, ‘abolished’ as used in the constitutional provision do not contemplate distinct situation isolated from the mutually exclusive to each other. A province maybe created where an existing province is divided or two provinces merged. Such cases necessarily will involve existing unit or units abolished and definitely the boundary being substantially altered.

"It would thus be inaccurate to state that where an existing political unit is divided or its boundary substantially altered, as the Constitution provides, only some and not all the voters in the whole unit which suffers dismemberment or substantial alteration of its boundary are affected. Rather, the contrary is true."cralaw virtua1aw library

It is also Our considered view that even hypothetically assuming that the merits of this case can depend on the mere discretion that this Court may exercise, nevertheless, it is the petitioners’ case that deserve to be favored.

It is now time for this Court to set aside the equivocations and the indecisive pronouncements in the adverted case of Paredes v. the Honorable Executive Secretary, Et. Al. (supra). For the reasons already here expressed, We now state that the ruling in the two mentioned cases sanctioning the exclusion of the voters belonging to an existing political unit from which the new political unit will be derived, from participating in the plebiscite conducted for the purpose of determining the formation of another new political unit, is hereby abandoned.

In their supplemental petition, dated January 4, 1986, it is prayed for by petitioners that a writ of mandamus be issued, directing the respondent Commission on Elections, to schedule the holding of another plebiscite at which all the qualified voters of the entire province of Negros Occidental as now existing shall participate and that this Court make a pronouncement that the plebiscite held on January 3, 1986 has no legal effect for being a patent nullity.

The Court is prepared to declare the said plebiscite held on January 3, 1986 as null and void and violative of the provisions of Sec. 3, Article XI of the Constitution. The Court is not, however, disposed to direct the conduct of a new plebiscite, because We find no legal basis to do so. With constitutional infirmity attaching to the subject Batas Pambansa Blg. 885 and also because the creation of the new province of Negros del Norte is not in accordance with the criteria established in the Local Government Code, the factual and


legal basis for the creation of such new province which should justify the holding of another plebiscite does not exist.

Whatever claim it has to validity and whatever recognition has been gained by the new province of Negros del Norte because of the appointment of the officials thereof, must now be erased. That Negros del Norte is but a legal fiction should be announced. Its existence should be put to an end as quickly as possible, if only to settle the complications currently attending to its creation. As has been manifested, the parent province of Negros del Norte has been impleaded as the defendant in a suit filed by the new Province of Negros del Norte, before the Regional Trial Court of Negros (del Norte), docketed as Civil Case No. 169-C, for the immediate allocation, distribution and transfer of funds by the parent province to the new province, in an amount claimed to be at least P10,000,000.00.

The final nail that puts to rest whatever pretension there is to the legality of the province of Negros del Norte is the significant fact that this created province does not even satisfy the area requirement prescribed in Section 197 of the Local Government Code, as earlier discussed.chanrobles.com.ph : virtual law library

It is of course claimed by the respondents in their Comment to the exhibits submitted by the petitioners (Exhs. C and D, Rollo, pp. 19 and 91), that the new province has a territory of 4,019.95 square kilometers, more or less. This assertion is made to negate the proofs submitted, disclosing that the land area of the new province cannot be more than 3,500 square kilometers because its land area would, at most, be only about 2,856 square kilometers, taking into account government statistics relative to the total area of the cities and municipalities constituting Negros del Norte. Respondents insist that when Section 197 of the Local Government Code speaks of the territory of the province to be created and requires that such territory be at least 3,500 square kilometers, what is contemplated is not only the land area but also the land and water over which the said province has jurisdiction and control. It is even the submission of the respondents that in this regard the marginal sea within the three mile limit should be considered in determining the extent of the territory of the new province. Such an interpretation is strained, incorrect, and fallacious.

The last sentence of the first paragraph of Section 197 is most revealing. As so stated therein the "territory need not be contiguous if it comprises two or more islands." The use of the word territory in this particular provision of the Local Government Code and in the very last sentence thereof, clearly, reflects that "territory" as therein used, has reference only to the mass of land area and excludes the waters over which the political unit exercises control.

Said sentence states that the "territory need not be contiguous." Contiguous means (a) in physical contact; (b) touching along all or most of one side; (c) near, text, or adjacent (Webster’s New World Dictionary, 1972 Ed., p. 307). "Contiguous", when employed as an adjective, as in the above sentence, is only used when it describes physical contact, or a touching of sides of two solid masses of matter. The meaning of particular terms in a statute may be ascertained by reference to words associated with or related to them in the statute (Animal Rescue League v. Assessors, 138 A.L.R., p. 110). Therefore, in the context of the sentence above, what need not be "contiguous" is the "territory" — the physical mass of land area. There would arise no need for the legislators to use the word contiguous if they had intended that the term "territory" embrace not only land area but also territorial waters, It can be safely concluded that the word territory in the first paragraph of Section 197 is meant to be synonymous with "land area" only. The words and phrases used in a statute should be given the meaning intended by the legislature (82 C.J.S., p. 636). The sense in which the words are used furnished the rule of construction (In re Winton Lumber Co., 63 p. 2d., p. 664).

The distinction between "territory" and "land area" which respondents make is an artificial or strained construction of the disputed provision whereby the words of the statute are arrested from their plain and obvious meaning and made to bear an entirely different meaning to justify an absurd or unjust result. The plain meaning in the language in a statute is the safest guide to follow in construing the statute. A construction based on a forced or artificial meaning of its words and out of harmony of the statutory scheme is not to be favored (Helvering v. Hutchings, 85 L. Ed., p. 909).

It would be rather preposterous to maintain that a province with a small land area but which has a long, narrow, extended coast line, (such as La Union province) can be said to have a larger territory than a land-locked province (such as Ifugao or Benguet) whose land area manifestly exceeds the province first mentioned.

Allegations have been made that the enactment of the questioned state was marred by "dirty tricks", in the introduction and passing of Parliamentary Bill No. 3644 "in secret haste" pursuant to sinister designs to achieve "pure and simple gerrymandering" ; "that recent happenings more than amply demonstrate that far from guaranteeing its autonomy it (Negros del Norte) has become the fiefdom of a local strongman" (Rollo, p. 43; parenthesis supplied).

It is not for this Court to affirm or reject such matters not only because the merits of this case can be resolved without need of ascertaining the real


motives and wisdom in the making of the questioned law. No proper challenge on those grounds can also be made by petitioners in this proceeding. Neither may this Court venture to guess the motives or wisdom in the exercise of legislative powers. Repudiation of improper or unwise actions taken by tools of a political machinery rests ultimately, as recent events have shown, on the electorate and the power of a vigilant people.chanrobles virtual lawlibrary

Petitioners herein deserve and should receive the gratitude of the people of the Province of Negros Occidental and even by our Nation. Commendable is the patriotism displayed by them in daring to institute this case in order to preserve the continued existence of their historic province. They were inspired undoubtedly by their faithful commitment to our Constitution which they wish to be respected and obeyed. Despite the setbacks and the hardships which petitioners aver confronted them, they valiantly and unfalteringly pursued a worthy cause. A happy destiny for our Nation is assured as long as among our people there would be exemplary citizens such as the petitioners herein.

WHEREFORE, Batas Pambansa Blg. 885 is hereby declared unconstitutional. The proclamation of the new province of Negros del Norte, as well as the appointment of the officials thereof are also declared null and void.

SO ORDERED.

Abad Santos, Feria, Yap, Fernan, Narvasa, Gutierrez, Jr., Cruz and Paras, JJ., concur.

Teehankee, C.J., files a separate opinion congratulating his brethren for the Court’s unanimous decision striking down a manifestly unconstitutional Act and illegal plebiscite and restoring the territorial integrity of the once premier province of Negros Occidental.

Melencio-Herrera, J., in the result.

Separate Opinions

TEEHANKEE, C.J., concurring:chanrob1es virtual 1aw library

I congratulate my brethren for the unanimous decision we issue today striking down an Act approved in "deep secrecy and inordinate haste" apparently on the last day of session of the Batasang Pambansa on December 3, 1985 and signed on the same day by the then President of the

authoritarian regime. The Act provided for the partitioning of the province of Negros Occidental and would substantially alter its boundaries by lopping off the progressive cities of Silay, Cadiz and San Carlos and municipality of Victorias with seven other municipalities to constitute the proposed new province of Negros del Norte. Negros Occidental would thereby lose 4,019.95 square kilometers in area and seven of fifteen sugar mills which contribute to the economic progress and welfare of the whole province.chanrobles virtual lawlibrary

The discredited Commission on Elections of the time played its customary subservient role by setting the plebiscite with equal "indecent haste" for January 3, 1986, notwithstanding that the Act itself provided for an ample period of 120 days from its approval within which to inform the people of the proposed dismemberment and allow them to freely express and discuss the momentous issue and cast their vote intelligently. This was learned by petitioners through an item in the printed media one day before they filed the present rush petition on December 23, 1985 to seek a restraining order to atop the plebiscite, even as no printed copies of the Act as finally enacted and approved were available to them and the Act had not been published, as required by law, for its effectivity. As petitioners ruefully state: "it was in vain hope" for everything had apparently been timed for the Christmas holidays; the Court was in Christmas recess and "there was no chance to have their plea for a restraining order acted upon speedily enough." In fact, it was only on January 7, 1986 that the Court took cognizance of the petition and required respondents’ comment.

The scenario, as petitioners urgently asserted, was "to have the creation of the new Province a fait accompli by the time elections are held on February 7, 1986. The transparent purpose is unmistakably so that the new Governor and other officials shall by then have been installed in office, ready to function for purposes of the election for President and Vice-President." Thus, the petitioners reported after the event: "With indecent haste, the plebiscite was held; Negros del Norte was set up and proclaimed by President Marcos as in existence; a new set of government officials headed by Governor Armando Gustilo was appointed; and, by the time the elections were held on February 7, 1986, the political machinery was in place to deliver the ‘solid North’ to ex-President Marcos. The rest is history. What happened in Negros del Norte during the elections — the unashamed use of naked power and resources — contributed in no small way to arousing ‘people’s power’ and steel the ordinary citizen to perform deeds of courage and patriotism that makes one proud to be a Filipino today." (Record, pp. 9, 41).

The challenged Act is manifestly void and unconstitutional. Consequently, all the implementing acts complained of, viz. the plebiscite, the proclamation of a new province of Negros del Norte and the appointment of its officials are


equally void. The limited holding of the plebiscite only in the areas of the proposed new province (as provided by Section 4 of the Act) to the exclusion of the voters of the remaining areas of the integral province of Negros Occidental (namely, the three cities of Bacolod, Bago and La Carlota and the Municipalities of La Castellana, Isabela, Moises Padilla, Pontevedra, Hinigaran, Himamaylan, Kabankalan, Murcia, Valladolid, San Enrique, Ilog, Cauayan, Hinoba-an and Sipalay and Candoni), grossly contravenes and disregards the mandate of Article XI, section 3 of the then prevailing 1973 Constitution that no province may be created or divided or its boundary substantially altered without "the approval of a majority of the votes in a plebiscite in the unit or units affected." It is plain that all the cities and municipalities of the province of Negros Occidental, not merely those of the proposed new province, comprise the units affected. It follows that the voters of the whole and entire province of Negros Occidental have to participate and give their approval in the plebiscite, because the whole province is affected by its proposed division and substantial alteration of its boundary. To limit the plebiscite to only the voters of the areas to be partitioned and seceded from the province is as absurd and illogical as allowing only the secessionists to vote for the secession that they demanded against the wishes of the majority and to nullify the basic principle of majority rule.

The argument of fait accompli viz. that the railroaded plebiscite of January 3, 1986 was held and can no longer be enjoined and that the new province of Negros del Norte has been constituted, begs the issue of invalidity of the challenged Act. This Court has always held that it "does not look with favor upon parties ‘racing to beat an injunction or restraining order’ which they have reason to believe might be forthcoming from the Court by virtue of the filing and pendency of the appropriate petition therefor. Where the restraining order or preliminary injunction are found to have been properly issued, as in the case at bar, mandatory writs shall be issued by the Court to restore matters to the status quo ante." (Banzon v. Cruz, 45 SCRA 475, 506 [1972]). Where, as in this case, there was somehow a failure to properly issue the restraining order stopping the holding of the illegal plebiscite, the Court will issue the mandatory writ or judgment to restore matters to the status quo ante and restore the territorial integrity of the province of Negros Occidental by declaring the unconstitutionality of the challenged Act and nullifying the invalid proclamation of the proposed new province of Negros del Norte and the equally invalid appointment of its officials.chanroblesvirtuallawlibrary

Batas Pambansa Blg. 885 declared unconstitutional.


FIRST DIVISION

[G.R. No. 120865-71. December 7, 1995.]

LAGUNA LAKE DEVELOPMENT AUTHORITY, Petitioner, v. COURT OF APPEALS; HON. JUDGE HERCULANO TECH, PRESIDING JUDGE, BRANCH 70, REGIONAL TRIAL COURT OF BINANGONAN RIZAL;

FLEET DEVELOPMENT, INC. and CARLITO ARROYO; THE MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B.

PACIS, Respondents.

[G.R. No. 120866. December 7, 1995.]

LAGUNA LAKE DEVELOPMENT AUTHORITY, Petitioner, v. COURT OF APPEALS; HON. JUDGE AURELIO C. TRAMPE, PRESIDING JUDGE,

BRANCH 163, REGIONAL TRIAL COURT OF PASIG; MANILA MARINE LIFE BUSINESS RESOURCES, INC. represented by, MR. TOBIAS

REYNALD M. TIANGCO; MUNICIPALITY OF TAGUIG, METRO MANILA and/or MAYOR RICARDO D. PAPA, JR.,Respondents.

[G.R. No. 120867. December 7, 1995.]

LAGUNA LAKE DEVELOPMENT AUTHORITY, Petitioner, v. COURT OF APPEALS; HON. JUDGE ALEJANDRO A. MARQUEZ, PRESIDING

JUDGE, BRANCH 79, REGIONAL TRIAL COURT OF MORONG, RIZAL; GREENFIELD VENTURES INDUSTRIAL DEVELOPMENT

CORPORATION and R. J. ORION DEVELOPMENT CORPORATION; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA

VEGA, Respondents.

[G.R. No. 120868. December 7, 1995.]

LAGUNA LAKE DEVELOPMENT AUTHORITY, Petitioner, v. COURT OF APPEALS; HON. JUDGE MANUEL S. PADOLINA, PRESIDING JUDGE, BRANCH 162, REGIONAL TRIAL COURT OF PASIG, METRO MANILA;

IRMA FISHING & TRADING CORP.; ARTM FISHING CORP.; BDR CORPORATION, MIRT CORPORATION and TRIM CORPORATION;

MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, Respondents.

[G.R. No. 120869. December 7, 1995.]

LAGUNA LAKE DEVELOPMENT AUTHORITY, Petitioner, v. COURT OF

APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL TRIAL COURT OF MORONG, RIZAL; BLUE LAGOON FISHlNG CORP. and ALCRIS CHICKEN GROWERS, INC.;

MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, Respondents.

[G.R. No. 120870. December 7, 1995.]

LAGUNA LAKE DEVELOPMENT AUTHORITY, Petitioner, v. COURT OF APPEALS; HON. JUDGE ARTURO A. MARAVE, PRESIDING JUDGE, BRANCH 78, REGIONAL TRIAL COURT OF MORONG, RIZAL; AGP FISH VENTURES, INC., represented by its PRESIDENT ALFONSO

PUYAT; MUNICIPALITY OF JALA-JALA and/or MAYOR WALFREDO M. DE LA VEGA, Respondents.

[G.R. No. 120871. December 7, 1995.]

LAGUNA LAKE DEVELOPMENT AUTHORITY, Petitioner, v. COURT OF APPEALS; HON. JUDGE EUGENIO S. LABITORIA, PRESIDING JUDGE, BRANCH 161, REGIONAL TRIAL COURT OF PASIG, METRO MANILA; SEA MAR TRADING CO. INC.; EASTERN LAGOON FISHING CORP.;

MINAMAR FISHING CORP.; MUNICIPALITY OF BINANGONAN and/or MAYOR ISIDRO B. PACIS, Respondents.

D E C I S I O N

HERMOSISIMA, JR., J.:

It is difficult for a man, scavenging on the garbage dump created by affluence and profligate consumption and extravagance of the rich or fishing in the murky waters of the Pasig River and the Laguna Lake or making a clearing in the forest so that he can produce food for his family, to understand why protecting birds, fish, and trees is more important than protecting him and keeping his family alive.chanroblesvirtual|awlibrary

How do we strike a balance between environmental protection, on the one hand, and the individual personal interests of people, on the other?

Towards environmental protection and ecology, navigational safety, and sustainable development, Republic Act No. 4850 created the "Laguna Lake Development Authority." This Government Agency is supposed to carry out


and effectuate the aforesaid declared policy, so as to accelerate the development and balanced growth of the Laguna Lake area and the surrounding provinces, cities and towns, in the act clearly named, within the context of the national and regional plans and policies for social and economic development.

Presidential Decree No. 813 of former President Ferdinand E. Marcos amended certain sections of Republic Act No. 4850 because of the concern for the rapid expansion of Metropolitan Manila, the suburbs and the lakeshore towns of Laguna de Bay, combined with current and prospective uses of the lake for municipal-industrial water supply, irrigation, fisheries, and the like. Concern on the part of the Government and the general public over: — the environment impact of development on the water quality and ecology of the lake and its related river Systems; the inflow of polluted water from the Pasig River, industrial, domestic and agricultural wastes from developed areas around the lake; the increasing urbanization which induced the deterioration of the lake, since water quality studies have shown that the lake will deteriorate further if steps are not taken to check the same; and the floods in Metropolitan Manila area and the lakeshore towns which will influence the hydraulic system of Laguna de Bay, since any scheme of controlling the floods will necessarily involve the lake and its river systems, — likewise gave impetus to the creation of the Authority.

Section 1 of Republic Act No. 4850 was amended to read as follows:jgc:chanrobles.com.ph

"SECTION 1. Declaration of Policy. — It is hereby declared to be the national policy to promote, and accelerate the development and balanced growth of the Laguna Lake area and the surrounding provinces, cities and towns hereinafter referred to as the region, within the context of the national and regional plans and policies for social and economic development and to carry out the development of the Laguna Lake region with due regard and adequate provisions for environmental management and control, preservation of the quality of human life and ecological systems, and the prevention of undue ecological disturbances, deterioration and pollution." 1

Special powers of the Authority, pertinent to the issues in this case, include:jgc:chanrobles.com.ph

"SEC. 3. Section 4 of the same Act is hereby further amended by adding thereto seven new paragraphs to be known as paragraphs (j), (k), (1), (m), (n), (o), and (p) which shall read as follows:chanrob1es virtual 1aw library

x x x

‘(j) The provisions of existing laws to the contrary notwithstanding, to engage in fish production and other aqua-culture projects in Laguna de Bay and other bodies of water within its jurisdiction and in pursuance thereof to conduct studies and make experiments, whenever necessary, with the collaboration and assistance of the Bureau of Fisheries and Aquatic Resources, with the end in view of improving present techniques and practices. Provided, that until modified, altered or amended by the procedure provided in the following sub-paragraph, the present laws, rules and permits or authorizations remain in force;

(k) For the purpose of effectively regulating and monitoring activities in Laguna de Bay, the Authority shall have exclusive jurisdiction to issue new permit for the use of the lake waters for any projects or activities in or affecting the said lake including navigation. construction, and operation of fishpens, fish enclosures, fish corrals and the like, and to impose necessary safeguards for lake quality control and management and to collect necessary fees for said activities and projects: Provided, That the fees collected for fisheries may be shared between the Authority and other government agencies and political sub-divisions in such proportion as may be determined by the President of the Philippines upon recommendation of the Authority’s Board: Provided, further, That the Authority’s Board may determine new areas of fishery development or activities which it may place under the supervision of the Bureau of Fisheries and Aquatic Resources taking into account the overall development plans and programs for Laguna de Bay and related bodies of water: Provided, finally, That the Authority shall subject to the approval of the President of the Philippines promulgate such rules and regulations which shall govern fisheries development activities in Laguna de Bay which shall take into consideration among others the following: socio-economic amelioration of bonafide resident fishermen whether individually or collectively in the form of cooperatives, lakeshore town development, a master plan for fishpen construction and operation, communal fishing ground for lake shore town residents, and preference to lake shore town residents in hiring laborers for fishery projects;

(l) To require the cities and municipalities embraced within the region to pass appropriate zoning ordinances and other regulatory measures necessary to carry out the objectives of the Authority and enforce the same with the assistance of the Authority;

(m) The provisions of existing laws to the contrary notwithstanding, to exercise water rights over public waters within the Laguna de Bay region whenever necessary to carry out the Authority’s projects;


(n) To act in coordination with existing governmental agencies in establishing water quality standards for industrial, agricultural and municipal waste discharges into the lake and to cooperate with said existing agencies of the government of the Philippines in enforcing such standards, or to separately pursue enforcement and penalty actions as provided for in Section 4 (d) and Section 39-A of this Act: Provided, That in case of conflict on the appropriate water quality standard to be enforced such conflict shall be resolved thru the NEDA Board;’" 2

To more effectively perform the role of the Authority under Republic Act No. 4850, as though Presidential Decree No. 813 were not thought to be completely effective, the Chief Executive, feeling that the land and waters of the Laguna Lake Region are limited natural resources requiring judicious management to their optimal utilization to insure renewability and to preserve the ecological balance, the competing options for the use of such resources and conflicting jurisdictions over such uses having created undue constraints on the institutional capabilities of the Authority in the light of the limited powers vested in it by its charter, Order No. 927 further defined and enlarged the functions and powers of the Authority and named and enumerated the towns, cities and provinces encompassed by the term "Laguna de Bay Region" .

Also, pertinent to the issues in this case are the following provisions of Executive Order No. 927 which include in particular the sharing of fees:jgc:chanrobles.com.ph

"SEC 2. Water Rights Over Laguna de Bay and Other Bodies of Water within the Lake Region: To effectively regulate and monitor activities in the Laguna de Bay region, the Authority shall have exclusive jurisdiction to issue permit for the use of all surface water for any projects or activities in or affecting the said region including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like.

For the purpose of this Executive Order, the term ‘Laguna de Bay Region’ shall refer to the Provinces of Rizal and Laguna; the Cities of San Pablo, Pasay, Caloocan, Quezon, Manila and Tagaytay; the towns of Tanauan, Sto. Tomas and Malvar in Batangas Province; the towns of Silang and Carmona in Cavite Province; the town of Lucban in Quezon Province; and the towns of Marikina, Pasig, Taguig, Muntinlupa, and Pateros in Metro Manila.

SEC. 3. Collection of Fees. — The Authority is hereby empowered to collect fees for the use of the lake water and its tributaries for all beneficial purposes including but not limited to fisheries, recreation, municipal, industrial, agricultural, navigation, irrigation, and waste disposal purpose; Provided, that the rates of the fees to be collected, and the sharing with

other government agencies and political subdivisions, if necessary, shall be subject to the approval of the President of the Philippines upon recommendation of the Authority’s Board, except fishpen fee, which will be shared in the following manner: 20 percent of the fee shall go to the lakeshore local governments, 5 percent shall go to the Project Development Fund which shall be administered by a Council and the remaining 75 percent shall constitute the share of LLDA. However, after the implementation within the three-year period of the Laguna Lake Fishery Zoning and Management Plan the sharing will be modified as follows: 35 percent of the fishpen fee goes to the lakeshore local governments, 5 percent goes to the Project Development Fund and the remaining 60 percent shall be retained by LLDA; Provided, however, that the share of LLDA shall form part of its corporate funds and shall not be remitted to the National Treasury as an exception to the provisions of Presidential Decree No. 1234." (Emphasis supplied)

It is important to note that Section 29 the term "Laguna Lake" in this manner:jgc:chanrobles.com.ph

"SECTION 41. Definition of Terms.

(11) Laguna Lake or Lake. Whenever Laguna Lake or lake is used in this Act Laguna de Bay which is that a water when it is at the average level of elevation 12.50 meters, 10.00 meters below mean lower low Lands located at and below such elevation are public lands which form part of the bed of said lake."cralaw virtua1aw library

Then came Republic Act No. 7160, the Local Government Code of 1991. The municipalities in the Laguna Lake Region interpreted the provisions of this law to mean that the newly passed law gave municipal governments the exclusive jurisdiction to issue fishing privileges within their municipal waters because R.A. 7160 provides:jgc:chanrobles.com.ph

"Sec. 149. Fishery Rentals; Fees and Charges. (a) Municipalities shall have the exclusive authority to grant fishery privileges in the municipal waters and impose rental fees or charges therefor in accordance with the provisions of this Section.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

(b) The Sangguniang Bayan may:chanrob1es virtual 1aw library

(1) Grant fishing privileges to erect fish corrals oyster, mussel or other aquatic beds or bangus fry areas within a definite zone of the municipal waters, as determined by it; . . .

(2) Grant privilege to gather, take or catch bangus fry, prawn fry or kawag-kawag or fry of other species and fish from the municipal waters by nets,


traps or other fishing gears to marginal fishermen free from any rental fee, charges or any other imposition whatsoever.

x x x

Sec. 447. Power, Duties, Functions and Compensation. . . .,

(1) . . .

(2) . . .

(XI) Subject to the provisions of Book II of this Code, grant exclusive privileges of constructing fish corrals or fishpens, or the taking or catching of bangus fry, prawn fry or kawag-kawag or fry of any species or fish within the municipal waters.

x x x"

Municipal governments thereupon assumed the authority to issue fishing privileges and fishpen permits. Big fishpen operators took advantage of the occasion to establish fishpens and fishcages to the consternation of the Authority. Unregulated fishpens and fishcages, as of July, 1995, occupied almost one-third the entire lake water surface area, increasing the occupation drastically from 7,000 hectares in 1990 to almost 21,000 hectares in 1995. The Mayor’s permit to construct fishpens and fishcages were all undertaken in violation of the policies adopted by the Authority on fishpen zoning and the Laguna Lake carrying capacity.

To be sure, the implementation by the lakeshore municipalities of separate independent policies in the operation of fishpens and fishcages within their claimed territorial municipal waters in the lake and their indiscriminate grant of fishpens permits have already saturated the lake area with fishpens, thereby aggravating the current environmental problems and ecological stress of Laguna Lake.

In view of the foregoing circumstances, the Authority served notice to the general public that:jgc:chanrobles.com.ph

"In compliance with the instructions of His Excellency PRESIDENT FIDEL V. RAMOS given on June 23, 1993 at Pila, Laguna, pursuant to Republic Act 4850 as amended by Presidential Decree 813 and Executive Order 927 series of 1983 and in line with the policies and programs of the Presidential Task Force on Illegal Fishpens and Illegal Fishing, the general public is hereby notified that:chanrob1es virtual 1aw library

1. All fishpens, fishcages and other aqua-culture structures in the Laguna de Bay Region, which were not registered or to which no application for registration and/or permit has been filed with Laguna Lake Development Authority as of March 31, 1993 are hereby declared outrightly as illegal.

2. All fishpens; fishcages and other aqua-culture structures so declared as illegal shall be subject to demolition which shall be undertaken by the Presidential Task Force for illegal Fishpen and Illegal Fishing.

3. Owners of fishpens, fishcages and other aqua-culture structures declared as illegal shall, without prejudice to demolition of their structures be criminally charged in accordance with Section 39-A of Republic Act 4850 as amended by P.D. 813 for violation of the same laws. Violations of these laws carries a penalty of imprisonment of not exceeding 3 years or a fine not exceeding Five Thousand Pesos or both at the discretion of the court.

All operators of fishpens, fishcages and other aqua-culture structures declared as illegal in accordance with the foregoing Notice shall have one (1) month on or before 27 October 1993 to show cause before the LLDA why their said fishpens, fishcages and other aqua-culture structures should not be demolished/dismantled." chanrobles virtual lawlibrary

One month, thereafter, the Authority sent notices to the concerned owners of the illegally constructed fishpens, fishcages and other aqua-culture structures advising them to dismantle their respective structures within 10 days from receipt thereof, otherwise, demolition shall be effected.

Reacting thereto, the affected fishpen owners filed injunction cases against the Authority before various regional trial courts, to wit: (a) Civil Case No. 759-B, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 70, Binangonan, Rizal, filed by Fleet Development, Inc. and Carlito Arroyo; (b) Civil Case No. 64049, for Injunction, Regional Trial Court, Branch 162, Pasig, filed by IRMA Fishing and Trading Corp., ARTM Fishing Corp., BDR Corp., MIRT Corp. and TRIM Corp.; (c) Civil Case No. 566, for Declaratory Relief and Injunction, Regional Trial Court, Branch 163, Pasig, filed by Manila Marine Life Business Resources, Inc. and Tobias Reynaldo M. Tianco; (d) Civil Case No. 556-M, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 78, Morong, Rizal, filed by AGP Fishing Ventures, Inc.; (e) Civil Case No. 522-M, for Prohibition, Injunction and Damages, Regional Trial Court, Branch 78, Morong, Rizal, filed by Blue Lagoon and Alcris Chicken Growers, Inc.; (f) Civil Case No. 554-, for Certiorari and Prohibition, Regional Trial Court, Branch 79, Morong, Rizal, filed by Greenfields Ventures Industrial Corp. and R.J. Orion Development Corp.; and (g) Civil Case No. 64124, for Injunction, Regional


Trial Court, Branch 15, Pasig, filed by SEA-MAR Trading Co., Inc. and Eastern Lagoon Fishing Corp. and Minamar Fishing Corporation.

The Authority filed motions to dismiss the cases against it on jurisdictional grounds. The motions to dismiss were invariably denied. Meanwhile, temporary restraining order/writs of preliminary mandatory injunction were issued in Civil Cases Nos. 64124, 759 and 566 enjoining the Authority from demolishing the fishpens and similar structures in question.

Hence, the herein petition for certiorari, prohibition and injunction, G.R Nos. 120865-71, were filed by the Authority with this court. Impleaded as parties-respondents are concerned regional trial courts and respective private parties, and the municipalities and/or respective Mayors of Binangonan, Taguig and Jala-jala, who issued permits for the construction and operation of fishpens in Laguna de Bay. The Authority sought the following reliefs, viz.:jgc:chanrobles.com.ph

"(A) Nullification of the temporary restraining order/writs of preliminary injunction issued in civil Cases Nos. 64125, 759 and 566;

(B) Permanent prohibition against the regional trial courts from exercising jurisdiction over cases involving the Authority which is a co-equal body;

(C) Judicial pronouncement that R.A. 7610 (Local Government Code of 1991) did not repeal, after or modify the provisions of R.A. 4850, as amended, empowering the Authority to issue permits for fishpens, fishcages and other aqua-culture structures in Laguna de Bay and that, the Authority the government agency vested with exclusive authority to issue said permits."cralaw virtua1aw library

By this Court’s resolution of May 2, 1994, the Authority’s consolidated petitions were referred to the Court of Appeals.

In a Decision, dated June 29, 1995, the Court of Appeals dismissed the Authority’s consolidated petitions, the Court of Appeals holding that: (A) LLDA is not among those quasi-judicial agencies of government appealable only to the Court of Appeals; (B) the LLDA charter does vest LLDA with quasi-judicial functions insofar as fishpens are concerned; (C) the provisions of the LLDA charter insofar as fishing privileges in Laguna de Bay are concerned had been repealed by the Local Government Code of 1991; (D) in view of the aforesaid repeal, the power to grant permits devolved to respective local government units concerned.

Not satisfied with the Court of Appeals decision to this Court charging the following errors:jgc:chanrobles.com.ph

"1. THE HONORABLE COURT OF APPEALS PROBABLY COMMITTED AN ERROR WHEN IT RULED THAT THE LAGUNA LAKE DEVELOPMENT AUTHORITY IS NOT A QUASI-JUDICIAL AGENCY.

2. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT R.A. 4850 AS AMENDED BY P.D. 813 AND E.O. 927 SERIES OF 1983 HAS BEEN REPEALED BY REPUBLIC ACT 7160. THE SAID RULING IS CONTRARY TO ESTABLISHED PRINCIPLES AND JURISPRUDENCE OF STATUTORY CONSTRUCTION.

3. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT RULED THAT THE POWER TO ISSUE FISHPEN PERMITS IN LAGUNA DE BAY HAS BEEN DEVOLVED TO CONCERNED (LAKESHORE) LOCAL GOVERNMENT UNITS."cralaw virtua1aw library

We take a simplistic view of the controversy. Actually, the main and only use posed is: Which agency of the Government - the Laguna Lake Development Authority or the towns and municipalities comprising the region — should exercise jurisdiction over the Laguna Lake and its environs insofar as the issuance of permits for fishery privileges is concerned?

Section 4 (k) of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, the provisions of Presidential Decree No. 813, and Section 2 of Executive Order No. 927, cited above, specifically provide that the Laguna Lake Development Authority shall have exclusive jurisdiction to issue permits for the use or all surface water for any projects or activities in or affecting the said region, including navigation, construction, and operation of fishpens, fish enclosures, fish corrals and the like. On the other hand, Republic Act No. 7160, the Local Government Code of 1991, has granted to the municipalities the exclusive authority to grant fishery privileges in municipal waters. The Sangguniang Bayan may grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic beds or bangus fry area within a definite zone of the municipal waters.chanroblesvirtualawlibrary

We hold that the provisions of Republic Act No. 7160 do not necessarily repeal the aforementioned laws creating the Laguna Lake Development Authority and granting the latter water rights authority over Laguna de Bay and the lake region.

The Local Government Code of 1991 does not contain any express provision which categorically expressly repeal the charter of the Authority. It has to be conceded that there was no intent on the part of the legislature to repeal Republic Act No. 4850 and its amendments. The repeal of laws should be made clear and expressed.


It has to be conceded that the charter of the Laguna Lake Development Authority constitutes a special law. Republic Act No. 7160, the Local Government Code of 1991, is a general law. It is basic is basic in statutory construction that the enactment of a later legislation which is a general law cannot be construed to have repealed a special law. It is a well-settled rule in this jurisdiction that "a special statute, provided for a particular case or class of cases, is not repealed by a subsequent statute, general in its terms, provisions and application, unless the intent to repeal or alter is manifest, although the terms of the general law are broad enough to include the cases embraced in the special law." 3

Where there is a conflict between a general law and a special statute, the special statute should prevail since it evinces the legislative intent more clearly that the general statute. The special law is to be taken as an exception to the general law in the absence of special circumstances forcing a contrary conclusion. This is because implied repeals are not favored and as much as possible, given to all enactments of the legislature. A special law cannot be repealed, amended or altered by a subsequent general law by mere implication. 4

Thus, it has to be concluded that the charter of the Authority should prevail over the Local Government Code of 1991.

Considering the reasons behind the establishment of the Authority, which are environmental protection, navigational safety, and sustainable development, there is every indication that the legislative intent is for the Authority to proceed with its mission.

We are on all fours with the manifestation of petitioner Laguna Lake Development Authority that "Laguna de Bay, like any other single body of water has its own unique natural ecosystem. The 900 km2 lake surface water, the eight (8) major river tributaries and several other smaller rivers that drain into the lake, the 2,920 km2 basin or watershed transcending the boundaries of Laguna and Rizal provinces, constitute one integrated delicate natural ecosystem that needs to be protected with uniform set of policies; if we are to be serious in our aims of attaining sustainable development. This is an exhaustible natural resource — a very limited one — which requires judicious management and optimal utilization to ensure renewability and preserve its ecological integrity and balance."cralaw virtua1aw library

"Managing the lake resources would mean the implementation of a national policy geared towards the protection, conservation, balanced growth and sustainable development of the region with due regard to the inter-generational use of its resources by the inhabitants in this part of the earth.

The authors of Republic Act 4850 have foreseen this need when they passed this LLDA law — the special law designed to govern the management of our Laguna de Bay lake resources."cralaw virtua1aw library

"Laguna de Bay therefore cannot be subjected to fragmented concepts of management policies where lakeshore local government units exercise exclusive dominion over specific portions of the lake water. The garbage thrown or sewage discharged into the lake, abstraction of water therefrom or construction of fishpens by enclosing its certain area, affect not only that specific portion but the entire 900 km2 of lake water. The implementation of a cohesive and integrated lake water resource management policy, therefore, is necessary to conserve, protect and sustainably develop Laguna de Bay." 5

The power of the local government units to issue fishing privileges was clearly granted for revenue purposes. This is evident from the fact that Section 149 of the New Local Government Code empowering local governments to issue fishing permits is embodied in Chapter 2, Book II, of Republic Act No. 7160 under the heading, "Specific Provisions On The Taxing And Other Revenue Raising Power of Local Government Units."cralaw virtua1aw library

On the other hand, the power of the Authority to grant permits for fishpens, fishcages and other aqua-culture structures is for the purpose of effectively regulating and monitoring activities in the Laguna de Bay region (Section 2, Executive Order No. 927) and for lake quality control and management. 6 It does partake of the nature of police power which is the most pervasive, the least limitable and the most demanding of all State powers including the power of taxation. Accordingly, the charter of the Authority which embodies a valid exercise of police power should prevail over the Local Government Code of 1991 on matters affecting Laguna de Bay.

There should be no quarrel over permit fees for fishpens, fishcages and other aqua-culture structures in the Laguna de Bay area. Section 3 of Executive Order No. 927 provides for the proper sharing of fees collected.

In respect to the question as to whether the Authority is a quasi-judicial agency or not, it is our holding that, considering the provisions of Section 4 of Republic Act No. 4850 and Section 4 of Executive Order No. 927, series of 1983, and the ruling of this Court in Laguna Lake Development Authority v. Court of Appeals, 231 SCRA 304, 306, which we quote:chanrob1es virtual 1aw library

x x x


As a general rule, the adjudication of pollution cases generally pertains to the Pollution Adjudication Board (PAR), except in cases where the special law provides for another forum It must be recognized in this regard that the LLDA, as a specialized administrative agency, is specifically mandated under Republic Act No. 4850 and its amendatory laws to carry out and make effective the declared national policy of promoting and accelerating the development and balanced growth of the Laguna Lake area and the surrounding provinces of Rizal and Laguna and the cities of San Pablo, Manila, Pasay, Quezon and Caloocan with due regard and adequate provisions for environmental management and control, preservation of the quality of human life and ecological systems, and the prevention of undue ecological disturbances, deterioration and pollution. Under such a broad grant of power and authority, the LLDA, by virtue of its special charter, obviously has the responsibility to protect the inhabitants of the Laguna Lake region from the deleterious effects of pollutants emanating from the discharge of wastes from the surrounding areas. In carrying out the aforementioned declared policy, the LLDA is mandated, among others, to pass upon and approve or disapprove all plans, programs, and projects proposed by local government offices/agencies within the region, public corporations, and private persons or enterprises where such plans, programs and/or projects are related to those of the LLDA for the development of the region.

x x x

. . . While it is a fundamental rule that an administrative agency has only such powers as are expressly granted to it by law, it is likewise a settled rule that an administrative agency has also such powers as are necessarily implied in the exercise of its express powers. In the exercise, therefore, of its express powers under its charter, as a regulatory and quasi-judicial body with respect to pollution cases in the Laguna Lake region, the authority of the LLDA to issue a ‘cease and desist order’ is, perforce, implied Otherwise, it may well be reduced to a ‘toothless’ paper agency." chanroblesvirtuallawlibrary:red

there is no question that the Authority has express powers as a regulatory a quasi-judicial body in respect to pollution cases with authority to issue a "cease a desist order" and on matters affecting the construction of illegal fishpens, fishcages and other aqua-culture structures in Laguna de Bay. The Authority’s pretense, however, that it is co-equal to the Regional Trial Courts such that all actions against it may only be instituted before the Court of Appeals cannot be sustained. On actions necessitating the resolution of

legal questions affecting the powers of the Authority as provided for in its charter, the Regional Trial Courts have jurisdiction.

In view of the foregoing, this Court holds that Section 149 of Republic Act No. 7160, otherwise known as the Local Government Code of 1991, has not repealed the provisions of the charter of the Laguna Lake Development Authority, Republic Act No. 4850, as amended. Thus, the Authority has the exclusive jurisdiction to issue permits for the enjoyment of fishery privileges in Laguna de Bay to the exclusion of municipalities situated therein and the authority to exercise such powers as are by its charter vested on it.

Removal from the Authority of the aforesaid licensing authority will render nugatory its avowed purpose of protecting and developing the Laguna Lake Region. Otherwise stated, the abrogation of this power would render useless its reason for being and will in effect denigrate, if not abolish, the Laguna Lake Development Authority. This, the Local Government Code of 1991 had never intended to do.

WHEREFORE, the petitions for prohibition, certiorari and injunction are hereby granted, insofar as they relate to the authority of the Laguna Lake Development Authority to grant fishing privileges within the Laguna Lake Region.

The restraining orders and/or writs of injunction issued by Judge Arturo Marave, RTC, Branch 78, Morong, Rizal; Judge Herculano Tech, RTC, Branch 70, Binangonan, Rizal; and Judge Aurelio Trampe, RTC, Branch 163, Pasig, Metro Manila, are hereby declared null and void and ordered set aside for having been issued with grave abuse of discretion.

The Municipal Mayors of the Laguna Lake Region are hereby prohibited from issuing permits to construct and operate fishpens, fishcages and other aqua-culture structures within the Laguna Lake Region, their previous issuances being declared null and void. Thus, the fishing permits issued by Mayors Isidro B. Pacis, Municipality of Binangonan; Ricardo D. Papa, Municipality of Taguig; and Walfredo M. de Ia Vega, Municipality of Jala-jala, specifically, are likewise declared null and void and ordered cancelled.

The fishpens, fishcages and other aqua-culture structures put up by operators by virtue of permits issued by Municipal Mayors within the Laguna Lake Region, specifically, permits issued to Fleet Development, Inc. and Carlito Arroyo; Manila Marine Life Business Resources, Inc., represented by, Mr. Tobias Reynald M. Tiangco; Greenfield Ventures Industrial Development Corporation and R.J. Orion Development Corporation; IRMA Fishing And Trading Corporation, ARTM Fishing Corporation, BDR Corporation, Mirt Corporation and Trim Corporation; Blue Lagoon Fishing Corporation and


ALCRIS Chicken Growers, Inc.; AGP Fish Ventures, Inc., represented by its President Alfonso Puyat; SEA MAR Trading Co., Inc., Eastern Lagoon Fishing Corporation, and MINAMAR Fishing Corporation, are hereby declared illegal structures subject to demolition by the Laguna Lake Development Authority.

SO ORDERED.

Davide, Jr., Bellosillo and Kapunan, JJ., concur.

Separate Opinions

PADILLA, J., concurring:chanrob1es virtual 1aw library

I fully concur with the decision written by Mr. Justice R. Hermosisima, Jr.. I would only like to stress what the decision already states, i.e., that the local government units in the Laguna Lake area are not precluded from imposing permits on fishery operations for revenue raising purposes of such local government units. In other words, while the exclusive jurisdiction to determine whether or not projects or activities in the lake area should be allowed, as well as their regulation, is with the Laguna Lake Development Authority, once the Authority grants a permit, the permittee may still be subjected to an additional local permit or license for revenue purposes of the local government units concerned. This approach would clearly harmonize the special law, Rep. Act No. 4850, as amended, with Rep. Act No. 7160, the Local Government Code. It will also enable small towns and municipalities in the lake area, like Jala-Jala, to rise to some level of economic viability.chanrobles la

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