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DELA CRUZ VS PARAS 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
The crucial question posed by this certiorari proceeding is whether or not a municipal null and void as a municipality has no authority to prohibit a lawful business, occupation or
corporation, Bocaue, Bulacan, represented by respondents, 1 can, prohibit the exercise of a calling. 2. Ordinance No. 84 is violative of the petitioners' right to due process and the equal
lawful trade, the operation of night clubs, and the pursuit of a lawful occupation, such clubs protection of the law, as the license previously given to petitioners was in effect withdrawn
employing hostesses. It is contended that the ordinance assailed as invalid is tainted with without judicial hearing. 3. That under Presidential Decree No. 189, as amended,
nullity, the municipality being devoid of power to prohibit a lawful business, occupation or by Presidential Decree No. 259, the power to license and regulate tourist-oriented businesses
calling, petitioners at the same time alleging that their rights to due process and equal including night clubs, has been transferred to the Department of Tourism." 6 The cases were
protection of the laws were violated as the licenses previously given to them was in effect assigned to respondent Judge, now Associate Justice Paras of the Intermediate Appellate Court,
withdrawn without judicial hearing. 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
The assailed ordinance 3 is worded as follows: "Section 1.— Title of Ordinance. — This prohibit the establishment, maintenance and operation of night clubs invoking Section 2243 of
Ordinance shall be known and may be cited as the [Prohibition and Closure Ordinance] of the RAC, CA 601, Republic Acts Nos. 938, 978 and 1224. 2. The Ordinance No. 84 is not
Bocaue, Bulacan. Section 2.— Definitions of Terms — (a) 'Night Club' shall include any place violative of petitioners' right to due process and the equal protection of the law, since property
or establishment selling to the public food or drinks where customers are allowed to dance. (b) rights are subordinate to public interests. 3. That Presidential Decree No. 189, as amended, did
'Cabaret' or 'Dance Hall' shall include any place or establishment where dancing is permitted to not deprive Municipal Councils of their jurisdiction to regulate or prohibit night clubs." 7 There
the public and where professional hostesses or hospitality girls and professional dancers are was the admission of the following facts as having been established: "1. That petitioners
employed. (c) 'Professional hostesses' or 'hospitality girls' shall include any woman employed Vicente de la Cruz, et al. in Civil Case No. 4755-M had been previously issued licenses by the
by any of the establishments herein defined to entertain guests and customers at their table or to Municipal Mayor of Bocaue — petitioner Jose Torres III, since 1958; petitioner Vicente de la
dance with them. (d) 'Professional dancer' shall include any woman who dances at any of the Cruz, since 1960; petitioner Renato Alipio, since 1961 and petitioner Leoncio Corpuz, since
establishments herein defined for a fee or remuneration paid directly or indirectly by the 1972; 2. That petitioners had invested large sums of money in their businesses; 3. That the
operator or by the persons she dances with. (e) 'Operator' shall include the owner, manager, night clubs are well-lighted and have no partitions, the tables being near each other; 4. That the
administrator or any person who operates and is responsible for the operation of any night club, petitioners owners/operators of these clubs do not allow the hospitality girls therein to engage
cabaret or dance hall. Section 3.— Prohibition in the Issuance and Renewal of Licenses, in immoral acts and to go out with customers; 5. That these hospitality girls are made to go
Permits. — Being the principal cause in the decadence of morality and because of their other through periodic medical check-ups and not one of them is suffering from any venereal disease
adverse effects on this community as explained above, no operator of night clubs, cabarets or and that those who fail to submit to a medical check-up or those who are found to be infected
dance halls shall henceforth be issued permits/licenses to operate within the jurisdiction of the with venereal disease are not allowed to work; 6. That the crime rate there is better than in
municipality and no license/permit shall be issued to any professional hostess, hospitality girls other parts of Bocaue or in other towns of Bulacan." 8 Then came on January 15, 1976 the
and professional dancer for employment in any of the aforementioned establishments. The decision upholding the constitutionality and validity of Ordinance No. 84 and dismissing the
prohibition in the issuance of licenses/permits to said persons and operators of said cases. Hence this petition for certiorari by way of appeal. llcd
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 In an exhaustive as well as scholarly opinion, the lower court dismissed the petitions. Its
or dance halls which are now in operation including permits issued to professional hostesses, rationale is set forth in the opening paragraph thus: "Those who lust cannot last. This in
hospitality girls and professional dancers are hereby revoked upon the expiration of the thirty- essence is why the Municipality of Bocaue, Province of Bulacan, stigmatized as it has been by
day period given them as provided in Section 8 hereof and thenceforth, the operation of these innuendos of sexual titillation, and fearful of what the awesome future holds for it, had no
establishments within the jurisdiction of the municipality shall be illegal. Section 5. — Penalty alternative except to order thru its legislative machinery, and even at the risk of partial
in case of violation.— Violation of any of the provisions of this Ordinance shall be punishable economic dislocation, the closure of its night clubs and/or cabarets. This in essence is also why
by imprisonment not exceeding three (3) months or a fine not exceeding P200.00 or both at the this Court, obedient to the mandates of good government, and cognizant of the categorical
discretion of the Court. If the offense is committed by a juridical entity, the person charged imperatives of the current legal and social revolution, hereby [upholds] in the name of police
with the management and/or operation thereof shall be liable for the penalty provided herein. power the validity and constitutionality of Ordinance No. 84, Series of 1975, of the Municipal
Section 6. —Separability Clause.— If, for any reason, any section or provision of this Council of Bocaue, Bulacan. The restraining orders heretofore issued in these two cases are
Ordinance is held unconstitutional or invalid, no other section or provision hereof shall be therefore hereby lifted, effective the first day of February, 1976, the purpose of the grace
affected thereby. Section 7.— Repealing Clause.— All ordinance, resolutions, circulars, period being to enable the petitioners herein to apply to the proper appellate tribunals for any
memoranda or parts thereof that are inconsistent with the provisions of this Ordinance are contemplated redress." 9 This Court is, however, unable to agree with such a conclusion and
hereby repealed. Section 8.— Effectivity. — This Ordinance shall take effect immediately upon for reasons herein set forth, holds that reliance on the police power is insufficient to justify the
its approval; provided, however, that operators of night clubs, cabarets and dance halls now in enactment of the assailed ordinance. It must be declared null and void.
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 1. Police power is granted to municipal corporations in general terms as follows: "General
comply with the provisions of this Ordinance." 4 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, the title thereof." Since there is no dispute as the title limits the power to regulating, not
improve the morals, peace, good order, comfort, and convenience of the municipality and the prohibiting, it would result in the statute being invalid if, as was done by the Municipality of
inhabitants thereof, and for the protection of property therein." 10 It is practically a Bocaue, the operation of a night club was prohibited. There is a wide gap between the exercise
reproduction of the former Section 39 of Municipal Code. In another leading case, United of a regulatory power "to provide for the health and safety, promote the prosperity, improve the
States v. Salaveria, the ponente this time being Justice Malcolm, where the present morals," in the language of the Administrative Code, such competence extending to all "the
Administrative Code provision was applied, it was stated by this Court: "The general welfare great public needs," to quote from Holmes, and to interdict any calling, occupation, or
clause has two branches: One branch attaches itself to the main trunk of municipal authority, enterprise. In accordance with the well-settled principle of constitutional construction that
and relates to such ordinances and regulations as may be necessary to carry into effect and between two possible interpretations by one of which it will be free from constitutional
discharge the powers and duties conferred upon the municipal council by law. With this class infirmity and by the other tainted by such grave defect, the former is to be preferred. A
we are not here directly concerned. The second branch of the clause is much more independent construction that would save rather than one that would affix the seal of doom certainly
of the specific functions of the council which are enumerated by law. It authorizes such commends itself. We have done so before We do so again.
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 3. There is reinforcement to the conclusion reached by virtue of a specific provision of the
municipality and the inhabitants thereof, and for the protection of property therein.' It is a recently-enacted Local Government Code. 25 The general welfare clause, a reiteration of the
general rule that ordinances passed by virtue of the implied power found in the general welfare Administrative Code provision, is set forth in the first paragraph of Section 149 defining the
clause must be reasonable, consonant with the general powers and purposes of the corporation, powers and duties of the sangguniang bayan. It read as follows: "(a) Enact such ordinances and
and not inconsistent with the laws or policy of the State." 15 If night clubs were merely then issue such regulations as may be necessary to carry out and discharge the responsibilities
regulated and not prohibited, certainly the assailed ordinance would pass the test of validity. In conferred upon it by law, and such as shall be necessary and proper to provide for the health,
the two leading cases above set forth, this Court had stressed reasonableness, consonant with safety, comfort and convenience, maintain peace and order, improve public morals, promote
the general powers and purposes of municipal corporations, as well as consistency with the the prosperity and general welfare of the municipality and the inhabitants thereof, and insure
laws or policy of the State. It cannot be said that such a sweeping exercise of a lawmaking the protection of property therein; . . . ." 2 There are in addition provisions that may have a
power by Bocaue could qualify under the term reasonable. The objective of fostering public bearing on the question now before this Court. Thus the sangguniang bayan shall "(rr)
morals, a worthy and desirable end can be attained by a measure that does not encompass too Regulate cafes, restaurants, beer-houses, hotels, motels, inns, pension houses and lodging
wide a field. Certainly the ordinance on its face is characterized by overbreadth. The purpose houses, except travel agencies, tourist guides, tourist transports, hotels, resorts, de luxe
sought to be achieved could have been attained by reasonable restrictions rather than by an restaurants, and tourist inns of international standards which shall remain under the licensing
absolute prohibition. The admonition in Salaveria should be heeded: "The Judiciary should not and regulatory power of the Ministry of Tourism which shall exercise such authority without
lightly set aside legislative action when there is not a clear invasion of personal or property infringing on the taxing or regulatory powers of the municipality; (ss) Regulate public dancing
rights under the guise of police regulation." 16 It is clear that in the guise of a police regulation, schools, public dance halls, and sauna baths or massage parlors; (tt) Regulate the establishment
there was in this instance a clear invasion of personal or property rights, personal in the case of and operation of billiard pools, theatrical performances, circuses and other forms of
those individuals desirous of patronizing those night clubs and property in terms of the entertainment; . . . ." It is clear that municipal corporations cannot prohibit the operation of
investments made and salaries to be earned by those therein employed. might 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
2. The decision now under review refers to Republic Act No. 938 as amended. It was originally petitioners would have to do is to apply once more for licenses to operate night clubs. A refusal
enacted on June 20, 1953. It is entitled: "AN ACT GRANTING MUNICIPAL OR CITY to grant licenses, because no such businesses could legally open, would be subject to judicial
BOARDS AND COUNCILS THE POWER TO REGULATE THE ESTABLISHMENT, correction. That is to comply with the legislative will to allow the operation and continued
MAINTENANCE AND OPERATION OF CERTAIN PLACES OF AMUSEMENT WITHIN existence of night clubs subject to appropriate regulations. In the meanwhile, to compel
THEIR RESPECTIVE TERRITORIAL JURISDICTIONS." Its first section insofar as petitioners to close their establishments, the necessary result of an affirmance, would amount to
pertinent reads: "The municipal or city board or council of each chartered city shall have the no more than a temporary termination of their business. During such time, their employees
power to regulate by ordinance the establishment, maintenance and operation of night clubs, would undergo a period of deprivation. Certainly, if such an undesirable outcome can be
cabarets, dancing schools, pavilions, cockpits, bars, saloons, bowling alleys, billiard pools, and avoided, it should be. The law should not be susceptible to the reproach that it displays less
other similar places of amusement within its territorial jurisdiction: . . . Then on May 21, 1954, than sympathetic concern for the plight of those who, under a mistaken appreciation of a
the first section was amended to include not merely "the power to regulate, but likewise municipal power, were thus left without employment. Such a deplorable consequence is to be
"prohibit . . ." The title, however, remained the same. It is worded exactly as Republic Act No, avoided. If it were not thus, then the element of arbitrariness enters the picture. That is to pay
938. It is to be admitted that as thus amended, if only the above portion of the Act were less, very much less, than full deference to the due process clause with its mandate of fairness
considered, a municipal council may go as far as to prohibit the operation of night clubs. If that and reasonableness.
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 4. The conclusion reached by this Court is not to be interpreted as a retreat from its resolute
followed. The power granted remains that of regulation, not prohibition. There is thus support stand sustaining police power legislation to promote public morals. The commitment to such an
for the view advanced by petitioners that to construe Republic Act No. 938 as allowing the ideal forbids such a backward step. Legislation of that character is deserving of the fullest
prohibition of the operation of night clubs would give rise to a constitutional question. The sympathy from the judiciary. Accordingly, the judiciary has not been hesitant to lend the
Constitution mandates: "Every bill shall embrace only one subject which shall be expressed in 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 Two letters for reconsideration (Annexes "E" and "F", Rollo, pp. 45 and 48, respectively) filed
Association, Inc. v. City Mayor of Manila. 28 There is a misapprehension as to what was by petitioners Mayor Jejomar Binay, were denied by respondent in its Decision No. 1159, in
decided by this Court. That was a regulatory measure. Necessarily, there was no valid the following manner:
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 "Your request for reconsideration is predicated on the following
practices which could encourage vice and immorality, This is an entirely different case. What grounds, to wit:
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 '1. Subject Resolution No. 60, s. 1988, of the
Hotel and Motel Operators Association, Inc. decision that there must be a factual foundation of Municipal Council of Makati and the intended
invalidity, it was likewise made clear that there is no need to satisfy such a requirement if a disbursements fall within the twin principles of 'police
statute were void on its face. That it certainly is if the power to enact such ordinance is at the power' and 'parens patriae'; and
most dubious and under the present Local Government Code non-existent.
'2. The Metropolitan Manila Commission
WHEREFORE, the writ of certiorari is granted and the decision of the lower court dated (MMC), under a Certification, dated June 5, 1989, has
January 15, 1976 reversed, set aside, and nullied. Ordinance No. 84, Series of 1975 of the already appropriated the amount of P400,000.00 to
Municipality of Bocaue is declared void and unconstitutional. The temporary restraining order implement the said resolution, and the only function of
issued by this Court is hereby made permanent. No costs. COA on the matter is to allow the financial assistance in
question.'
BINAY VS DOMINGO
The first contention is believed untenable. Suffice it to state that:
The only pivotal issue before Us is whether or not Resolution No. 60, re-enacted under
'a statute or ordinance must have a real
Resolution No. 243, of the Municipality of Makati is a valid exercise of police power under the
substantial, or rational relation to the public safety, health,
general welfare clause.
morals, or general welfare to be sustained as a legitimate
The pertinent facts are: exercise of the police power. The mere assertion by the
legislature that a statute relates to the public health,
On September 27, 1988, petitioner Municipality, through its Council, approved Resolution No. safety, or welfare does not in itself bring the statute within
60 which reads: the police power of a state for there must always be on
obvious and real connection between the actual provisions
"A RESOLUTION TO CONFIRM AND/OR RATIFY THE of a police regulations and its avowed purpose, and the
ONGOING BURIAL ASSISTANCE PROGRAM INITIATED BY regulation adopted must be reasonably adapted to
THE OFFICE OF THE MAYOR, OF EXTENDING FINANCIAL accomplish the end sought to be attained.' 16 Am. Jur 2d,
ASSISTANCE OF FIVE HUNDRED PESOS (P500.00) TO A pp. 542-543; emphasis supplied).
BEREAVED FAMILY, FUNDS TO BE TAKEN OUT OF
UNAPPROPRIATED AVAILABLE FUNDS EXISTING IN THE Here, we see no perceptible connection or relation between the
MUNICIPAL TREASURY." (Rollo, Annex "A", p. 39). objective sought to be attained under Resolution No. 60, s.
1988, supra, and the alleged public safety, general welfare, etc. of the
Qualified beneficiaries, under the Burial Assistance Program, are bereaved families of Makati inhabitants of Makati.
whose gross family income does not exceed two thousand pesos (P2,000.00) a month. The
beneficiaries, upon fulfillment of other requirements, would receive the amount of five hundred "Anent the second contention, let it be stressed that Resolution No. 60
pesos (P500.00) cash relief from the Municipality of Makati. (Rollo, Annex "B", p. 41). is still subject to the limitation that the expenditure covered thereby
should be for a public purpose, i.e., that the disbursement of the
Metro Manila Commission approved Resolution No. 60. Thereafter, the municipal secretary amount of P500.00 as burial assistance to a bereaved family of the
certified a disbursement fund of four hundred thousand pesos (P400,000.10) for the Municipality of Makati or a total of P400,000.00 appropriated under
implementation of the Burial Assistance Program. (Rollo, Annex "C", p. 43). the Resolution, should be for the benefit of the whole, if not the
majority, of the inhabitants of the Municipality and not for the benefit
Resolution No. 60 was referred to respondent Commission on Audit (COA) for its expected of only a few individuals as in the present case. On this point,
allowance in audit. Based on its preliminary findings, respondent COA disapproved Resolution 'government funds or property shall be spent or used solely for public
No. 60 and disallowed in audit the disbursement of funds for the implementation thereof. purposes.' " (Cf. Section 4[2], P.D. 1445). (pp. 50-51, Rollo)
(Rollo, Annex "D", p. 44).
Bent on pursuing the Burial Assistance Program the Municipality of Makati, through its
Council, passed Resolution No. 243, reaffirming Resolution No. 60 (Rollo, Annex "H", p. 52).
However, the Burial Assistance Program has been stayed by COA Decision No. 1159. In the case at bar, COA is of the position that there is "no perceptible connection or relation
Petitioner, through its Mayor, was constrained to file this special civil action of certiorari between the objective sought to be attained under Resolution No. 60, s. 1988, supra, and the
praying that COA Decision No. 1159 be set aside as null and void. alleged public safety, general welfare etc. of the inhabitants of Makati." (Rollo, Annex "G", p.
51).
The police power is a governmental function, an inherent attribute of sovereignty, which was
born with civilized government. It is founded largely on the maxims, "Sic utere tuo et alienum Apparently, COA tries to redefine the scope of police power by circumscribing its exercise to
non laedas" and "Salus populi est suprema lex." Its fundamental purpose is securing the general "public safety, general welfare, etc. of the inhabitants of Makati."
welfare, comfort and convenience of the people.
In the case of Sangalang vs. IAC, supra, We ruled that police power is not capable of an exact
Police power is inherent in the state but not in municipal corporations (Balacuit v. CFI of definition but has been, purposely, veiled in general terms to underscore its all-
Agusan del Norte, 163 SCRA 182). Before a municipal corporation may exercise such power, comprehensiveness. Its scope, over-expanding to meet the exigencies of the times, even to
there must be a valid delegation of such power by the legislature which is the repository of the anticipate the future where it could be done, provides enough room for an efficient and flexible
inherent powers of the State. A valid delegation of police power may arise from express response to conditions and circumstances thus assuring the greatest benefits.
delegation, or be inferred from the mere fact of the creation of the municipal corporation; and
as a general rule, municipal corporations may exercise police powers within the fair intent and The police power of a municipal corporation is broad, and has been said to be commensurate
purpose of their creation which are reasonably proper to give effect to the powers expressly with, but not to exceed, the duty to provide for the real needs of the people in their health,
granted, and statutes conferring powers on public corporations have been construed as safety, comfort, and convenience as consistently as may be with private rights. It extends to all
empowering them to do the things essential to the enjoyment of life and desirable for the safety the great public needs, and, in a broad sense includes all legislation and almost every function
of the people. (62 C.J.S., p. 277). The so-called inferred police powers of such corporations are of the municipal government. It covers a wide scope of subjects, and, while it is especially
as much delegated powers as are those conferred in express terms, the inference of their occupied with whatever affects the peace, security, health, morals, and general welfare of the
delegation growing out of the fact of the creation of the municipal corporation and the community, it is not limited thereto, but is broadened to deal with conditions which exists so as
additional fact that the corporation can only fully accomplish the objects of its creation by to bring out of them the greatest welfare of the people by promoting public convenience or
exercising such powers. (Crawfordsville vs. Braden, 28 N.E. 849). Furthermore, municipal general prosperity, and to everything worthwhile for the preservation of comfort of the
corporations, as governmental agencies, must have such measures of the power as are inhabitants of the corporation (62 C.J.S. Sec. 128). Thus, it is deemed inadvisable to attempt to
necessary to enable them to perform their governmental functions. The power is a continuing frame any definition which shall absolutely indicate the limits of police power.
one, founded on public necessity. (62 C.J.S., p. 273) Thus, not only does the State effectuate its
purposes through the exercise of the police power but the municipality does also. (U.S. v. COA's additional objection is based on its contention that "Resolution No. 60 is still subject to
Salaveria, 39 Phil. 102). the limitation that the expenditure covered thereby should be for a public purpose, should be
for the benefit of the whole, if not the majority, of the inhabitants of the Municipality and not
Municipal governments exercise this power under the general welfare clause: pursuant thereto for the benefit of only a few individuals as in the present case." (Rollo, Annex "G", p. 51).
they are clothed with authority to "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 COA is not attuned to the changing of the times. Public purpose is not unconstitutional merely
shall be necessary and proper to provide for the health, safety, comfort and convenience, because it incidentally benefits a limited number of persons. As correctly pointed out by the
maintain peace and order, improve public morals, promote the prosperity and general welfare Office of the Solicitor General, "the drift is towards social welfare legislation geared towards
of the municipality and the inhabitants thereof, and insure the protection of property therein." state policies to provide adequate social services (Section 9, Art. II, Constitution), the
(Sections 91, 149, 177 and 208, BP 337). And under Section 7 of BP 337, "every local promotion of the general welfare (Section 5, ibid) social justice (Section 10, ibid) as well as
government unit shall exercise the powers expressly granted, those necessarily implied human dignity and respect for human rights. (Section 11, ibid." (Comment, p. 12).
therefrom, as well as powers necessary and proper for governance such as to promote health
The care for the poor is generally recognized as a public duty. The support for the poor has
and safety, enhance prosperity, improve morals, and maintain peace and order in the local
long been an accepted exercise of police power in the promotion of the common good. cdrep
government unit, and preserve the comfort and convenience of the inhabitants therein." prLL
There is no violation of the equal protection clause in classifying paupers as subject of
Police power is the power to prescribe regulations to promote the health, morals, peace,
legislation. Paupers may be reasonably classified. Different groups may receive varying
education, good order or safety and general welfare of the people. It is the most essential,
treatment. Precious to the hearts of our legislators, down to our local councilors, is the welfare
insistent, and illimitable of powers. In a sense it is the greatest and most powerful attribute of
of the paupers. Thus, statutes have been passed giving rights and benefits to the disabled,
the government. It is elastic and must be responsive to various social conditions. (Sangalang, et
emancipating the tenant-farmer from the bondage of the soil, housing the urban poor, etc.
al. vs. IAC, 176 SCRA 719). On it depends the security of social order, the life and health of
the citizen, the comfort of an existence in a thickly populated community, the enjoyment of Resolution No. 60, re-enacted under Resolution No. 243, of the Municipality of Makati is a
private and social life, and the beneficial use of property, and it has been said to be the very paragon of the continuing program of our government towards social justice. The Burial
foundation on which our social system rests. (16 C.J.S., p. 896) However, it is not confined Assistance Program is a relief of pauperism, though not complete. The loss of a member of a
within narrow circumstances of precedents resting on past conditions; it must follow the legal family is a painful experience, and it is more painful for the poor to be financially burdened by
progress of a democratic way of life. (Sangalang, et al. vs. IAC, supra). such death. Resolution No. 60 vivifies the very words of the late President Ramon Magsaysay
"those who have less in life, should have more in law." This decision, however must not be B. CATFISH — A kind of fish under the family of
taken as a precedent, or as an official go-signal for municipal governments to embark on a Plotosidae, better known as HITO-HITO;
philanthropic orgy of inordinate dole-outs for motives political or otherwise.
C. MUDFISH — A kind of fish under the family of
PREMISES CONSIDERED, and with the afore-mentioned caveat, this petition is hereby Orphicaphalisae better known as DALAG;
GRANTED and the Commission on Audit's Decision No. 1159 is hereby SET ASIDE.
D. ALL LIVE FISH — All alive, breathing not necessarily
||| moving of all specie[s] use[d] for food and for aquarium
purposes.
TANO VS SOCRATES
E. LIVE LOBSTER — Several relatively, large marine
Petitioners caption their petition as one for "Certiorari,Injunction With Preliminary and crusteceans [sic] of the genus Homarus that are alive and
Mandatory Injunction, with Prayer for Temporary Restraining Order" and pray that this Court: breathing not necessarily moving.
(1) declare as unconstitutional: (a) Ordinance No. 15-92, dated 15 December 1992, of
the Sangguniang Panlungsod of Puerto Princesa; (b) Office Order No. 23, Series of 1993, Section 4. It shall unlawful [for] any person or any business enterprise
dated 22 January 1993, issued by Acting City Mayor Amado L. Lucero of Puerto Princesa or company to ship out from Puerto Princesa City to any point of
City; and (c) Resolution No. 33, Ordinance No. 2, Series of 1993, dated 19 February 1993, of destination either via aircraft or seacraft of any live fish and lobster
the Sangguniang Panlalawigan of Palawan; (2) enjoin the enforcement thereof; and (3) except SEA BASS, CATFISH, MUDFISH, AND MILKFISH FRIES.
restrain respondents Provincial and City Prosecutors of Palawan and Puerto Princesa City and
Section 5. Penalty Clause.— Any person/s and or business entity
Judges of the Regional Trial Courts, Metropolitan Trial Courts and Municipal Circuit Trial
violating this Ordinance shall be penalized with a fine of not more than
Courts in Palawan from assuming jurisdiction over and hearing cases concerning the violation
P5,000.00 or imprisonment of not more than twelve (12) months,
of the Ordinances and of the Office Order.
cancellation of their permit to do business in the City of Puerto Princesa
More appropriately, the petition is, and shall be treated as, a special civil action or all of the herein stated penalties, upon the discretion of the court.
for certiorari and prohibition.
Section 6. If the owner and/or operator of the establishment found
The following is petitioners' summary of the factual antecedents giving rise to the petition: violating the provisions of this ordinance is a corporation or a
partnership, the penalty prescribed in Section 5 hereof shall be imposed
1. On December 15, 1992, the Sangguniang Panlungsod ng Puerto Princesa City upon its president and/or General Manager or Managing Partner and/or
enacted Ordinance No. 15-92 which took effect on January 1, 1993 entitled "AN Manager, as the case maybe [sic].
ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER
OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, Section 7. Any existing ordinance or any provision of any ordinance
1998 AND PROVIDING EXEMPTIONS; PENALTIES AND FOR OTHER PURPOSES inconsistent to [sic] this ordinance is deemed repealed.
THEREOF",the full text of which reads as follows:
Section 8. This Ordinance shall take effect on January 1, 1993.
Section 1. Title of the Ordinance.— This Ordinance is entitled: AN
ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH SO ORDAINED."
AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM
JANUARY 1, 1993 TO JANUARY 1, 1998 AND PROVIDING xxx xxx xxx
EXEMPTIONS, PENALTIES AND FOR OTHER PURPOSES
THEREOF 2. To implement said city ordinance, then Acting City Mayor Amado L. Lucero
issued Office Order No. 23, Series of 1993 dated January 22, 1993 which reads as follows:
Section 2. Purpose, Scope and Coverage.— To effectively free our
City Sea Waters from Cyanide and other Obnoxious substance[s],and "In the interest of public service and for purposes of City Ordinance
shall cover all persons and/or entities operating within and outside the No. PD426-14-74, otherwise known as 'AN ORDINANCE
City of Puerto Princesa who is are (sic) directly or indirectly in the REQUIRING ANY PERSON ENGAGED OR INTENDING TO
business or shipment of live fish and lobster outside the City. ENGAGE IN ANY BUSINESS, TRADE, OCCUPATION, CALLING
OR PROFESSION OR HAVING IN HIS POSSESSION ANY OF
Section 3. Definition of terms.— For purpose of this Ordinance the THE ARTICLES FOR WHICH A PERMIT IS REQUIRED TO BE
following are hereby defined: HAD, TO OBTAIN FIRST A MAYOR'S PERMIT' and City
Ordinance No. 15-92, AN ORDINANCE BANNING THE
A. SEA BASS — A kind of fish under the family of SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE
Centropomidae, better known as APAHAP; PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO
JANUARY 1, 1998, you are hereby authorized and directed to check devastated ones to reinvigorate and regenerate themselves into vitality
or conduct necessary inspections on cargoes containing live fish and within the span of five (5) years; cdpr
lobster being shipped out from the Puerto Princesa Airport, Puerto
Princesa Wharf or at any port within the jurisdiction of the City to any WHEREAS, Sec. 468, Par. 1, Sub-Par. VI of the [sic] R.A.
point of destinations [sic] either via aircraft or seacraft. 7160 otherwise known as the Local Government Code of
1991 empowers the Sangguniang Panlalawigan to protect the
The purpose of the inspection is to ascertain whether the shipper environment and impose appropriate penalties [upon] acts which
possessed the required Mayor's Permit issued by this Office and the endanger the environment such as dynamite fishing and other forms of
shipment is covered by invoice or clearance issued by the local office destructive fishing, among others.
of the Bureau of Fisheries and Aquatic Resources and as to compliance
with all other existing rules and regulations on the matter. NOW, THEREFORE, on motion by Kagawad Nelson P. Peneyra and
upon unanimous decision of all the members present;
Any cargo containing live fish and lobster without the required
documents as stated herein must be held for proper disposition. Be it resolved as it is hereby resolved, to approve Resolution No. 33,
Series of 1993 of the Sangguniang Panlalawigan and to enact
In the pursuit of this Order, you are hereby authorized to coordinate Ordinance No. 2 for the purpose, to wit:
with the PAL Manager, the PPA Manager, the local PNP Station and
other offices concerned for the needed support and cooperation. ORDINANCE NO. 2
Further, that the usual courtesy and diplomacy must be observed at all
times in the conduct of the inspection. Series of 1993

Please be guided accordingly." BE IT ORDAINED BY THE SANGGUNIANG PANLALAWIGAN


IN SESSION ASSEMBLED:
xxx xxx xxx
Section I. TITLE.— This Ordinance shall be known as an "Ordinance
3. On February 19, 1993, the Sangguniang Panlalawigan, Provincial Prohibiting the catching, gathering, possessing, buying, selling and
Government of Palawan enacted Resolution No. 33 entitled: "A RESOLUTION shipment of live marine coral dwelling, aquatic organisms, to wit: 1.
PROHIBITING THE CATCHING, GATHERING, POSSESSING, BUYING, SELLING Family: Scaridae (Mameng),2. Ephinephelus Fasciatus (Suno),3.
AND SHIPMENT OF LIVE MARINE CORAL DWELLING AQUATIC ORGANISMS, Cromileptes altivelis (Panther or Señorita),lobster below 200 grams
TO WIT: FAMILY: SCARIDAE (MAMENG),EPINE PHELUS and spawning),4. Tridacna Gigas (Taklobo),5. Pinctada Margaretefera
FASCIATUS(SUNO),CROMILEPTES ALTIVELIS (PANTHER OR (Mother Pearl, Oysters, Giant Clams and other species),6. Penaeus
SEÑORITA),LOBSTER BELOW 200 GRAMS AND SPAWNING, TRIDACNA Monodon (Tiger Prawn-breeder size or mother),7. Epinephelus Suillus
GIGAS (TAKLOBO),PINCTADA MARGARITEFERA (MOTHER PEARL, OYSTERS, (Loba or Green Grouper) and 8. Family: Balistidae (T[r]opical
GIANT CLAMS AND OTHER SPECIES),PENAEUS MONODON (TIGER PRAWN- Aquarium Fishes) for a period of five (5) years in and coming from
BREEDER SIZE OR MOTHER),EPINEPHELUS SUILLUS (LOBA OR GREEN Palawan Waters.
GROUPER) AND FAMILY:BALISTIDAE (TROPICAL AQUARIUM FISHES) FOR A
PERIOD FIVE (5) YEARS IN AND COMING FROM PALAWAN WATERS",the full Section II. PRELIMINARY CONSIDERATIONS .—
text of which reads as follows:
1. Sec. 2-A (Rep. Act 7160). It is hereby declared, the policy of the
"WHEREAS, scientific and factual researches [sic],and studies state that the territorial and political subdivisions of the State shall
disclose that only five (5) percent of the corals of our province remain enjoy genuine and meaningful local autonomy to enable them to attain
to be in excellent condition as [a] habitat of marine coral dwelling their fullest development as self-reliant communities and make them
aquatic organisms; more effective partners in the attainment of national goals. Toward this
end, the State shall provide for [a] more responsive and accountable
WHEREAS, it cannot be gainsaid that the destruction and devastation local government structure instituted through a system of
of the corals of our province were principally due to illegal fishing decentralization whereby local government units shall be given more
activities like dynamite fishing, sodium cyanide fishing, use of other powers, authority, responsibilities and resources.
obnoxious substances and other related activities;
2. Sec. 5-A (R.A. 7160). Any provision on a power of [a] local
WHEREAS, there is an imperative and urgent need to protect and Government Unit shall be liberally interpreted in its favor, and in case
preserve the existence of the remaining excellent corals and allow the of doubt, any question thereon shall be resolved in favor of devolution
of powers and of the lower government units. "Any fair and reasonable
doubts as to the existence of the power shall be interpreted in favor of 5. Petitioners Alfredo Tano, Baldomero Tano, Teocenes Midello, Angel de
all the Local Government Unit concerned." Mesa, Eulogio Tremocha, and Felipe Ongonion, Jr. were even charged criminally under
criminal case no. 93-05-C in the 1st Municipal Circuit Trial Court of Cuyo-Agutaya-
3. Sec. 5-C (R.A. 7160). The general welfare provisions in this Code Magsaysay, an original carbon copy of the criminal complaint dated April 12, 1993 is
shall be liberally interpreted to give more powers to local government hereto attached as Annex "D";while xerox copies are attached as Annex "D" to the copies
units in accelerating economic development and upgrading the quality of the petition;
of life for the people in the community.
6. Petitioners Robert Lim and Virginia Lim, on the other hand, were charged by
4. Sec. 16 (R.A. 7160). General Welfare.— Every local government the respondent PNP with the respondent City Prosecutor of Puerto Princesa City, a xerox
unit shall exercise the powers expressly granted, those necessarily copy of the complaint is hereto attached as Annex "E";
implied therefrom, as well as powers necessary, appropriate, or
incidental for its efficient and effective governance; and those which Without seeking redress from the concerned local government units,
are essential to the promotion of the general welfare. prosecutor's office and courts, petitioners directly invoked our original jurisdiction by filing
this petition on 4 June 1993. In sum, petitioners contend that:
Section III. DECLARATION OF POLICY .— It is hereby declared to
First, the Ordinances deprived them of due process of law, their livelihood, and
be the policy of the Province of Palawan to protect and conserve the
unduly restricted them from the practice of their trade, in violation of Section 2, Article XII
marine resources of Palawan not only for the greatest good of the
and Sections 2 and 7 of Article XIII of the 1987 Constitution.
majority of the present generation but with [the] proper perspective and
consideration of [sic] their prosperity, and to attain this end, the Second, Office Order No. 23 contained no regulation nor condition under which
Sangguniang Panlalawigan henceforth declares that is (sic) shall be the Mayor's permit could be granted or denied; in other words, the Mayor had the absolute
unlawful for any person or any business entity to engage in catching, authority to determine whether or not to issue the permit.
gathering, possessing, buying, selling and shipment of live marine coral
dwelling aquatic organisms as enumerated in Section 1 hereof in and Third, as Ordinance No. 2 of the Province of Palawan "altogether prohibited the
coming out of Palawan Waters for a period of five (5) years; catching, gathering, possession, buying, selling and shipping of live marine coral dwelling
organisms, without any distinction whether it was caught or gathered through lawful
Section IV. PENALTY CLAUSE.— Any person and/or business entity fishing method," the Ordinance took away the right of petitioners-fishermen to earn their
violating this Ordinance shall be penalized with a fine of not more than livelihood in lawful ways; and insofar as petitioners-members of Airline Shippers
Five Thousand Pesos (P5,000.00),Philippine Currency, and/or Association are concerned, they were unduly prevented from pursuing their vocation and
imprisonment of six (6) months to twelve (12) months and confiscation entering "into contracts which are proper, necessary, and essential to carry out their
and forfeiture of paraphernalias [sic] and equipment in favor of the business endeavors to a successful conclusion."
government at the discretion of the Court;
Finally, as Ordinance No. 2 of the Sangguniang Panlalawigan is null and void,
Section V. SEPARABILITY CLAUSE.— If for any reason, a Section or the criminal cases based thereon against petitioners Tano and the others have to be
provision of this Ordinance shall be held as unconditional [sic] or dismissed.
invalid, it shall not affect the other provisions hereof.
In the Resolution of 15 June 1993 we required respondents to comment on the
Section VI. REPEALING CLAUSE.— Any existing Ordinance or a petition, and furnished the Office of the Solicitor General with a copy thereof.
provision of any ordinance inconsistent herewith is deemed modified, In their comment filed on 13 August 1993, public respondents Governor
amended or repealed. Socrates and Members of the Sangguniang Panlalawigan of Palawan defended the validity
of Ordinance No. 2, Series of 1993, as a valid exercise of the Provincial Government's
Section VII. EFFECTIVITY .— This Ordinance shall take effect ten
power under the general welfare clause (Section 16 of the Local Government Code of 1991
(10) days after its publication.
[hereafter, LGC]), and its specific power to protect the environment and impose
SO ORDAINED." appropriate penalties for acts which endanger the environment, such as dynamite fishing
and other forms of destructive fishing under Section 447(a)(1)(vi), Section 458(a)(1)(vi),
xxx xxx xxx and Section 468(a)(1)(vi), of the LGC.They claimed that in the exercise of such powers,
the Province of Palawan had "the right and responsibility . . . to insure that the remaining
4. The respondents implemented the said ordinances, Annexes "A" and "C" coral reefs, where fish dwells [sic], within its territory remain healthy for the future
hereof thereby depriving all the fishermen of the whole province of Palawan and the City generation." The Ordinance, they further asserted, covered only live marine coral dwelling
of Puerto Princesa of their only means of livelihood and the petitioners Airline Shippers aquatic organisms which were enumerated in the ordinance and excluded other kinds of
Association of Palawan and other marine merchants from performing their lawful live marine aquatic organisms not dwelling in coral reefs; besides the prohibition was for
occupation and trade;
only five (5) years to protect and preserve the pristine coral and allow those damaged to are likewise the accused in Criminal Case No. 11223 for the violation of Ordinance No. 2
regenerate. of the Sangguniang Panlalawigan of Palawan, pending before Branch 50 of the Regional
Trial Court of Palawan.
Aforementioned respondents likewise maintained that there was no violation of
the due process and equal protection clauses of the Constitution. As to the former, public The second set of petitioners is composed of the rest of the petitioners
hearings were conducted before the enactment of the Ordinance which, undoubtedly, had numbering seventy-seven (77),all of whom, except the Airline Shippers Association of
a lawful purpose and employed reasonable means, while as to the latter, a substantial Palawan — an alleged private association of several marine merchants — are natural
distinction existed "between a fisherman who catches live fish with the intention of selling persons who claim to be fishermen.
it live, and a fisherman who catches live fish with no intention at all of selling it
live," i.e.,"the former uses sodium cyanide while the latter does not." Further, the The primary interest of the first set of petitioners is, of course, to prevent the
Ordinance applied equally to all those belonging to one class. prosecution, trial and determination of the criminal cases until the constitutionality or
legality of the Ordinances they allegedly violated shall have been resolved. The second set
On 25 October 1993 petitioners filed an Urgent Plea for the Immediate Issuance of petitioners merely claim that being fishermen or marine merchants, they would be
of a Temporary Restraining Order, claiming that despite the pendency of this case, Branch adversely affected by the ordinances.
50 of the Regional Trial Court of Palawan was bent on proceeding with Criminal Case No.
11223 against petitioners Danilo Tano, Alfredo Tano, Eulogio Tremocha, Romualdo Tano, As to the first set of petitioners, this special civil for certiorari must fail on the
Baldomero Tano, Andres Linijan and Angel de Mesa for violation of Ordinance No. 2 of ground of prematurity amounting to a lack of cause of action. There is no showing that said
the Sangguniang Panlalawigan of Palawan. Acting on said plea, we issued on 11 petitioners, as the accused in the criminal cases, have filed motions to quash the
November 1993 a temporary restraining order directing Judge Angel Miclat of said court informations therein and that the same were denied. The ground available for such motions
to cease and desist from proceeding with the arraignment and pre-trial of Criminal Case is that the facts charged therein do not constitute an offense because the ordinances in
No. 11223. question are unconstitutional. It cannot then be said that the lower courts acted without or
in excess of jurisdiction or with grave abuse of discretion to justify recourse to the
On 12 July 1994, we excused the Office of the Solicitor General from filing a extraordinary remedy of certiorari or prohibition. It must further be stressed that even if
comment, considering that as claimed by said office in its Manifestation of 28 June 1994, petitioners did file motions to quash, the denial thereof would not forthwith give rise to a
respondents were already represented by counsel. cause of action under Rule 65 of the Rules of Court. The general rule is that where a motion
to quash is denied, the remedy therefrom is not certiorari, but for the party aggrieved
The rest of the respondents did not file any comment on the petition. thereby to go to trial prejudice to reiterating special defenses involved in said motion, and
In the resolution of 15 September 1994, we resolved to consider the comment if, after trial on the merits an adverse decision is rendered, to appeal therefrom in the
on the petition as the Answer, gave due course to the petition and required the parties to manner authorized by law. And, even where in an exceptional circumstance such denial
submit their respective memoranda. may be the subject of a special civil action forcertiorari, a motion for reconsideration must
have to be filed to allow the court concerned an opportunity to correct its errors, unless
On 22 April 1997 we ordered impleaded as party respondents the Department such motion may be dispensed with because of existing exceptional
of Agriculture and the Bureau of Fisheries and Aquatic Resources and required the Office circumstances. Finally, even if a motion for reconsideration has been filed and denied, the
of the Solicitor General to comment on their behalf. But in light of the latter's motion of 9 remedy under Rule 65 is still unavailable absent any showing of the grounds provided for
July 1997 for an extension of time to file the comment which would only result in further in Section 1 thereof. For obvious reasons, the petition at bar does not, and could not have,
delay, we dispensed with said comment. alleged any of such grounds.
After due deliberation on the pleadings filed, we resolved to dismiss this As to the second set of petitioners, the instant petition is obviously one for
petition for want of merit, and on 22 July 1997, assigned it to the ponente to write the DECLARATORY RELIEF, i.e., for a declaration that the Ordinances in question are a
opinion of the Court. "nullity . . . for being unconstitutional." As such, their petition must likewise fail, as this
Court is not possessed of original jurisdiction over petitions for declaratory relief even if
I only questions of law are involved, it being settled that the Court merely exercises
There are actually two sets of petitioners in this case. The first is composed of appellate jurisdiction over such petitions.
Alfredo Tano, Baldomero Tano, Danilo Tano, Romualdo Tano, Teocenes Midello, Angel II
de Mesa, Eulogio Tremocha, Felipe Ongonion, Jr.,Andres Linijan, and Felimon de Mesa,
who were criminally charged with violating Sangguniang Panlalawigan Resolution No. 33 Even granting arguendo that the first set of petitioners have a cause of action
and Ordinance No. 2, Series of 1993, of the Province of Palawan, in Criminal Case No. 93- ripe for the extraordinary writ of certiorari,there is here a clear disregard of the hierarchy
05-C of the 1st Municipal Circuit Trial Court (MCTC) of Palawan; 3 and Robert Lim and of courts, and no special and important reason or exceptional and compelling circumstance
Virginia Lim who were charged with violating City Ordinance No. 15-92 of Puerto has been adduced why direct recourse to us should be allowed. While we have concurrent
Princesa City and Ordinance No. 2, Series of 1993, of the Province of Palawan before the jurisdiction with Regional Trial Courts and with the Court of Appeals to issue writs
Office of the City Prosecutor of Puerto Princesa.4 All of them, with the exception of of certiorari,prohibition, mandamus, quo warranto, habeas corpus and injunction, such
Teocenes Midello, Felipe Ongonion, Jr.,Felimon de Mesa, Robert Lim and Virginia Lim,
concurrence gives petitioners no unrestricted freedom of choice of court forum, so we held presumption, there must be a clear and unequivocal breach of the Constitution, not merely
in People v. Cuaresma: 13 a doubtful or argumentative contradiction. In short, the conflict with the Constitution must
be shown beyond reasonable doubt. Where doubt exists, even if well-founded, there can
This concurrence of jurisdiction is not ...to be taken as according to be no finding of unconstitutionality. To doubt is to sustain.
parties seeking any of the writs an absolute unrestrained freedom of
choice of the court to which application therefor will be directed. There After a scrutiny of the challenged Ordinances and the provisions of
is after all hierarchy of courts. That hierarchy is determinative of the the Constitution petitioners claim to have been violated, we find petitioners' contentions
venue of appeals, and should also serve as a general determinant of the baseless and so hold that the former do not suffer from any infirmity, both under
appropriate forum for petitions for the extraordinary writs. A becoming the Constitution and applicable laws.
regard for that judicial hierarchy most certainly indicates that petitions
for the issuance of extraordinary writs against first level ("inferior") Petitioners specifically point to Section 2, Article XII and Sections 2 and 7,
courts should be filed with the Regional Trial Court, and those against Article XIII of the Constitution as having been transgressed by the Ordinances.
the latter, with the Court of Appeals. A direct invocation of the The pertinent portion of Section 2 of Article XII reads:
Supreme Court's original jurisdiction to issue these writs should be
allowed only when there are special and important reasons therefor, SEC. 2. ...
clearly and specifically set out in the petition. This is established
policy. It is a policy necessary to prevent inordinate demands upon the The State shall protect the nation's marine wealth in its archipelagic
Court's time and attention which are better devoted to those matters waters, territorial sea, and exclusive economic zone, and reserve its use
within its exclusive jurisdiction, and to prevent further over-crowding and enjoyment exclusively to Filipino citizens.
of the Court's docket. ...cdti
The Congress may, by law, allow small-scale utilization of natural
The Court feels the need to reaffirm that policy at this time, and to resources by Filipino citizens, as well as cooperative fish farming, with
enjoin strict adherence thereto in the light of what it perceives to be a priority to subsistence fishermen and fishworkers in rivers, lakes, bays,
growing tendency on the part of litigants and lawyers to have their and lagoons.
applications for the so-called extraordinary writs, and sometimes even
their appeals, passed upon and adjudicated directly and immediately by Sections 2 and 7 of Article XIII provide:
the highest tribunal of the land .... SEC. 2. The promotion of social justice shall include the commitment
to create economic opportunities based on freedom of initiative and
In Santiago v. Vasquez, 14 this Court forcefully expressed that the propensity self-reliance.
of litigants and lawyers to disregard the hierarchy of courts must be put to a halt, not only
because of the imposition upon the precious time of this Court, but also because of the xxx xxx xxx
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, the proper forum under the rules SEC. 7. The State shall protect the rights of subsistence fishermen,
of procedure, or as better equipped to resolve the issues since this Court is not a trier of especially of local communities, to the preferential use of the
facts. We reiterated "the judicial policy that this Court will not entertain direct resort to it communal marine and fishing resources, both inland and offshore. It
unless the redress desired cannot be obtained in the appropriate courts or where exceptional shall provide support to such fishermen through appropriate technology
and compelling circumstances justify availment of a remedy within and calling for the and research, adequate financial, production, and marketing assistance,
exercise of [its] primary jurisdiction." and other services. The State shall also protect, develop, and conserve
such resources. The protection shall extend to offshore fishing grounds
III of subsistence fishermen against foreign intrusion. Fisherworkers shall
Notwithstanding the foregoing procedural obstacles against the first set of receive a just share from their labor in the utilization of marine and
petitioners, we opt to resolve this case on its merits considering that the life-time of the fishing resources.
challenged Ordinances is about to end. Ordinance No. 15-92 of the City of Puerto Princesa
There is absolutely no showing that any of the petitioners qualifies as a
is effective only up to 1 January 1998, while Ordinance No. 2 of the Province of Palawan,
enacted on 19 February 1993, is effective for only five (5) years. Besides, these Ordinances subsistence or marginal fisherman. In their petition, petitioner Airline Shippers Association
were undoubtedly enacted in the exercise of powers under the new LGC relative to the of Palawan is self-described as "a private association composed of Marine Merchants;"
petitioners Robert Lim and Virginia Lim, as "merchants;" while the rest of the petitioners
protection and preservation of the environment and are thus novel and of paramount
importance. No further delay then may be allowed in the resolution of the issues raised. claim to be "fishermen," without any qualification, however, as to their status.

It is of course settled that laws (including ordinances enacted by local Since the Constitution does not specifically provide a definition of the terms
"subsistence" or "marginal" fishermen, 18 they should be construed in their general and
government units) enjoy the presumption of constitutionality. 15 To overthrow this
ordinary sense.A marginal fisherman is an individual engaged in fishing whose margin of
return or reward in his harvest of fish as measured by existing price levels is barely MR. RODRIGO:
sufficient to yield a profit or cover the cost of gathering the fish, 19 while a subsistence
fisherman is one whose catch yields but the irreducible minimum for his Let us discuss the implementation of this because I would
livelihood. 20 Section 131(p) of the LGC (R.A. No. 7160) defines a marginal farmer or not raise the hopes of our people, and afterwards fail in the
fisherman as "an individual engaged in subsistence farming or fishing which shall be implementation. How will this be implemented? Will there
limited to the sale, barter or exchange of agricultural or marine products produced by be a licensing or giving of permits so that government
himself and his immediate family." It bears repeating that nothing in the record supports a officials will know that one is really a marginal fisherman?
finding that any petitioner falls within these definitions. Or if policeman say that a person is not a marginal
fisherman, he can show his permit, to prove that indeed he
Besides, Section 2 of Article XII aims primarily not to bestow any right to is one.
subsistence fishermen, but to lay stress on the duty of the State to protect the nation's marine
wealth. What the provision merely recognizes is that the State may allow, by law, MR. BENGZON:
cooperative fish farming, with priority to subsistence fishermen and fishworkers in rivers,
lakes, bays and lagoons. Our survey of the statute books reveals that the only provision of Certainly, there will be some mode of licensing insofar as
law which speaks of a preferential right of marginal fishermen is Section 149 of this is concerned and this particular question could be
the LGC,which pertinently provides: tackled when we discuss the Article on Local Governments
— whether we will leave to the local governments or to
SEC. 149. Fishery Rentals, Fees and Charges.— ... Congress on how these things will be implemented. But
certainly, I think our congressmen and our local officials
(b) The sangguniang bayan may: will not be bereft of ideas on how to implement this
mandate.
(1) Grant fishery privileges to erect fish corrals, oyster,
mussels or other aquatic beds or bangus fry xxx xxx xxx
areas, within a definite zone of the municipal
waters, as determined by MR. RODRIGO:
it:Provided, however,That duly registered
organizations and cooperatives of marginal So, once one is licensed as a marginal fisherman, he can
fishermen shall have the preferential right to go anywhere in the Philippines and fish in any fishing
such fishery privileges ... grounds.

In a Joint Administrative Order No. 3 dated 25 April 1996, the Secretary of the MR. BENGZON:
Department of Agriculture and the Secretary of the Department of Interior and Local
Government prescribed guidelines concerning the preferential treatment of small fisherfolk Subject to whatever rules and regulations and local laws
relative to the fishery right mentioned in Section 149. This case, however, does not involve that may be passed, may be existing or will be
such fishery right. passed. 21 (emphasis supplied)

Anent Section 7 of Article XIII, it speaks not only of the use of communal marine and What must likewise be borne in mind is the state policy enshrined in
fishing resources, but of their protection, development and conservation. As hereafter the Constitution regarding the duty of the State to protect and advance the right of the
shown, the ordinances in question are meant precisely to protect and conserve our marine people to a balanced and healthful ecology in accord with the rhythm and harmony of
resources to the end that their enjoyment may be guaranteed not only for the present nature. 22 On this score, in Oposa v. Factoran, 23 this Court declared:
generation, but also for the generations to come.
While the right to a balanced and healthful ecology is to be found under
The so-called "preferential right" of subsistence or marginal fishermen to the the Declaration of Principles the State Policies and not under the Bill
use of marine resources is not at all absolute. In accordance with the Regalian Doctrine, of Rights, it does not follow that it is less important than any of the civil
marine resources belong to the State, and, pursuant to the first paragraph of Section 2, and political rights enumerated in the latter. Such a right belongs to a
Article XII of the Constitution, their "exploration, development and utilization . . . shall be different category of rights altogether for it concerns nothing less than
under the full control and supervision of the State." Moreover, their mandated protection, self-preservation and self-perpetuation — aptly and fittingly stressed
development and conservation as necessarily recognized by the framers of the Constitution, by the petitioners — the advancement of which may even be said to
imply certain restrictions on whatever right of enjoyment there may be in favor of anyone. prodate all governments and constitutions. As a matter of fact, these
Thus, as to the curtailment of the preferential treatment of marginal fishermen, the basic rights need not even be written in the Constitution for they
following exchange between Commissioner Francisco Rodrigo and Commissioner Jose assumed to exist from the inception of humankind. If they are now
F.S. Bengzon, Jr., took place as the plenary session of the Constitutional Commission: prll explicitly mentioned in the fundamental charter, it is because of the
well-founded fear of its framers that unless the rights to a balanced and thereon shall be resolved in favor of devolution of powers and of the lower local
healthful ecology and to health are mandated as state policies by government unit. Any fair and reasonable doubt as to the existence of the power shall be
the Constitution itself, thereby highlighting their continuing interpreted in favor of the local government unit concerned." 28 Devolution refers to the
importance and imposing upon the state a solemn obligation to preserve act by which the National Government confers power and authority upon the various local
the first and protect and advance the second, the day would not be too government units to perform specific functions and responsibilities. 29
far when all else would be lost not only for the present generation, but
also for those to come — generations which stand to inherit nothing One of the devolved powers enumerated in the section of the LGC on
but parched earth incapable of sustaining life. devolution is the enforcement of fishery laws in municipal waters including the
conservation of mangroves. 30This necessarily includes the enactment of ordinances to
The right to a balanced and healthful ecology carries with it a effectively carry out such fishery laws within the municipal waters.
correlative duty to refrain from impairing the environment ...
The term "municipal waters," in turn, includes not only streams, lakes, and tidal
The LGC provisions invoked by private respondents merely seek to give flesh waters within the municipality, not being the subject of private ownership and not
and blood to the right of the people to a balanced and healthful ecology. In fact, the General comprised within the national parks, public forest, timber lands, forest reserves, or fishery
Welfare Clause, expressly mentions this right: reserves, but also marine waters included between two lines drawn perpendicularly to the
general coastline from points where the boundary lines of the municipality or city touch
SEC. 16. General Welfare.— Every local government unit shall the sea at low tide and a third line parallel with the general coastline and fifteen kilometers
exercise the powers expressly granted, those necessarily implied from it. 31 Under P.D. No. 704, the marine waters included in municipal waters is limited
therefrom, as well as powers necessary, appropriate, or incidental for to three nautical miles from the general coastline using the above perpendicular lines and
its efficient and effective governance, and those which are essential to a third parallel line.
the promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among These "fishery laws" which local government units may enforce under Section
other things, the preservation and enrichment of culture, promote 17(b) (2) (i) in municipal waters include: (1) P.D. No. 704; (2) P.D. No. 1015 which, inter
health and safety, enhance the right of the people to a balanced alia, authorizes the establishment of a "closed season" in any Philippine water if necessary
ecology,encourage and support the development of appropriate and for conservation or ecological purposes; (3) P.D. No. 1219 which provides for the
self-reliant scientific and technological capabilities, improve public exploration, exploitation, utilization and conservation of coral resources; (4) R.A. No.
morals, enhance economic prosperity and social justice, promote full 5474, as amended by B.P. Blg. 58, which makes it unlawful for any person, association or
employment among their residents, maintain peace and order, and corporation to catch or cause to be caught, sell, offer to sell, purchase, or have in possession
preserve the comfort and convenience of their inhabitants. (emphasis any of the fish specie called gobiidae or "ipon" during closed season; and (5) R.A. No.
supplied). 6451 which prohibits and punishes electrofishing, as well as various issuances of the
BFAR.
Moreover, Section 5(c) of the LGC explicitly mandates that the general welfare provisions
To those specifically devolved insofar as the control and regulation of fishing
of the LGC "shall be liberally interpreted to give more powers to the local government
in municipal waters and the protection of its marine environment are concerned, must be
units in accelerating economic development and upgrading the quality of life for the people
added the following:
of the community."
1. Issuance of permits to construct fish cages within municipal waters;
The LGC vests municipalities with the power to grant fishery privileges in
municipal waters and impose rentals, fees or charges therefor; to penalize, by appropriate 2. Issuance of permits to gather aquarium fishes within municipal
ordinances, the use of explosives, noxious or poisonous substances, electricity, muro- waters;
ami,and other deleterious methods of fishing; and to prosecute any violation of the
provisions of applicable fishery laws. 24 Further, the sangguniang bayan,the sangguniang 3. Issuance of permits to gather kapis shells within municipal waters;
panlungsod and the sangguniang panlalawigan are directed to enact ordinances for the
general welfare of the municipality and its inhabitants, which shall include, inter 4. Issuance of permits to gather/culture shelled mollusks within
alia,ordinances that "[p]rotect the environment and impose appropriate penalties for acts municipal waters;
which endanger the environment such as dynamite fishing and other forms of destructive
fishing ...and such other activities which result in pollution, acceleration of eutrophication 5. Issuance of licenses to establish seaweed farms within municipal
of rivers and lakes, or of ecological imbalance." 25 waters;

Finally, the centerpiece of LGC is the system of decentralization 26 as 6. Issuance of licenses to establish culture pearls within municipal
expressly mandated by the Constitution. 27 Indispensable to decentralization waters;
is devolution and the LGCexpressly provides that "[a]ny provision on a power of a local
government unit shall be liberally interpreted in its favor, and in case of doubt, any question
7. Issuance of auxiliary invoice to transport fish and fishery products; catch them by "diving in shallow water with corraline habitats and squirting sodium cyanide
and poison at passing fish directly or onto coral crevices; once affected the fish are immobilized
[merely stunned] and then scooped by hand." The diver then surfaces and dumps his catch
8. Establishment of "closed season" in municipal waters. into a submerged net attached to the skiff. Twenty minutes later, the fish can swim normally.
Back on shore, they are placed in holding pens, and within a few weeks, they expel the cyanide
These functions are covered in the Memorandum of Agreement of 5 April 1994 between from their system and are ready to be hauled. They are then placed in saltwater tanks or
the Department of Agriculture and the Department of Interior and Local Government. packaged in plastic bags filled with seawater for shipment by air freight to major markets for
In light then of the principles of decentralization and devolution enshrined in the LGC and live food fish. While the fish are meant to survive, the opposite holds true for their former
the powers granted therein to local government units under Section 16 (the General Welfare home as "[a]fter the fisherman squirts the cyanide, the first thing to perish is the reef algae, on
Clause), and under Sections 149, 447(a) (1) (vi), 458(a)(1)(vi) and 468(a)(1)(vi), which which fish feed. Days later, the living coral starts to expire. Soon the reef loses its function as
unquestionably involve the exercise of police power, the validity of the questioned Ordinances habitat for the fish, which eat both the algae and invertebrates that cling to the coral. The reef
cannot be doubted. becomes an underwater graveyard, its skeletal remains brittle, bleached of all color and
vulnerable to erosion from the pounding of the waves." It has been found that cyanide fishing
Parenthetically, we wish to add that these Ordinances find full support under R.A. No. kills most hard and soft corals within three months of repeated application.
7611, otherwise known as the Strategic Environmental Plan (SEP) for Palawan Act, approved
on 19 June 1992. This statute adopts a "comprehensive framework for the sustainable The nexus then between the activities barred by Ordinance No. 15-92 of the City of Puerto
development of Palawan compatible with protecting and enhancing the natural resources and Princesa and the prohibited acts provided in Ordinance No. 2, Series of 1993 of the Province
endangered environment of the province," which "shall serve to guide the local government of Palawan, on one hand, and the use of sodium cyanide, on the other, is painfully obvious.
of Palawan and the government agencies concerned in the formulation and implementation of In sum, the public purpose and reasonableness of the Ordinances may not then be
plans, programs and projects affecting said province." controverted.

At this time then, it would be appropriate to determine the relation between the assailed As to Office Order No. 23, Series of 1993, issued by Acting City Mayor Amado L. Lucero
Ordinances and the aforesaid powers of the Sangguniang Panlungsod of the City of Puerto of the City of Puerto Princesa, we find nothing therein violative of any constitutional or
Princesa and the Sangguniang Panlalawigan of the Province of Palawan to protect the statutory provision. The Order refers to the implementation of the challenged ordinance and
environment. To begin, we ascertain the purpose of the Ordinances as set forth in the statement is not the Mayor's Permit.
of purposes or declaration of policies quoted earlier. The dissenting opinion of Mr. Justice Josue N. Bellosillo relies upon the lack of authority
It is clear to the Court that both Ordinances have two principal objectives or purposes: (1) on the part of the Sangguniang Panlungsod of Puerto Princesa to enact Ordinance No. 15,
to establish a "closed season" for the species of fish or aquatic animals covered therein for a Series of 1992, on the theory that the subject thereof is within the jurisdiction and
period of five years; and (2) to protect the coral in the marine waters of the City of Puerto responsibility of the Bureau of Fisheries and Aquatic Resources (BFAR) under P.D. No. 704,
Princesa and the Province of Palawan from further destruction due to illegal fishing activities. otherwise known as the Fisheries Decree of 1975; and that, in any event, the Ordinance is
unenforceable for lack of approval by the Secretary of the Department of Natural Resources
The accomplishment of the first objective is well within the devolved power to enforce (DNR), likewise in accordance with P.D. No. 704.
fishery laws in municipal waters, such as P.D. No. 1015, which allows the establishment of
"closed seasons." The devolution of such power has been expressly confirmed in the The majority is unable to accommodate this view. The jurisdiction and responsibility of the
Memorandum of Agreement of 5 April 1994 between the Department of Agriculture and the BFAR under P.D. No. 704, over the management, conservation, development, protection,
Department of Interior and Local Government. utilization and disposition of all fishery and aquatic resources of the country is not all
encompassing. First, Section 4 thereof excludes from such jurisdiction and responsibility
The realization of the second objective clearly falls within both the general welfare clause municipal waters, which shall be under the municipal or city government concerned, except
of the LGC and the express mandate thereunder to cities and provinces to protect the insofar as fishpens and seaweed culture in municipal centers are concerned. This section
environment and impose appropriate penalties for acts which endanger the environment. provides, however, that all municipal or city ordinances and resolutions affecting fishing and
fisheries and any disposition thereunder shall be submitted to the Secretary of the Department
The destruction of coral reefs results in serious, if not irreparable, ecological imbalance, of Natural Resources for appropriate action and shall have full force and effect only upon his
for coral reefs are among nature's life-support systems. They collect, retain and recycle approval.
nutrients for adjacent nearshore areas such as mangroves, seagrass beds, and reef flats; provide
food for marine plants and animals; and serve as a protective shelter for aquatic organisms. It Second, it must at once be pointed out that the BFAR is no longer under the Department of
is said that "[e]cologically, the reefs are to the oceans what forests are to continents: they are Natural Resources (now Department of Environment and Natural Resources). Executive
shelter and breeding grounds for fish and plant species that will disappear without them. Order No. 967 of 30 June 1984 transferred the BFAR from the control and supervision of the
Minister (formerly Secretary) of Natural Resources to the Ministry of Agriculture and Food
The prohibition against catching live fish stems, in part, from the modern phenomenon of (MAF) and converted it into a mere staff agency thereof, integrating its functions with the
live-fish trade which entails the catching of so-called exotic species of tropical fish, not only regional offices of the MAF.
for aquarium use in the West, but also for "the market for live banquet fish [which] is virtually
insatiable in ever more affluent Asia. These exotic species are coral-dwellers, and fishermen
In Executive Order No. 116 of 30 January 1987, which reorganized the MAF, the BFAR This Petition under Rule 45 of the Revised Rules on Civil Procedure, which seeks the
was retained as an attached agency of the MAF. And under the Administrative Code of reversal of the Decision in C.A.-G.R. S.P. No. 33316 of the Court of Appeals, challenges the
1987, the BFAR is placed under the Title concerning the Department of Agriculture. validity of Manila City Ordinance No. 7774 entitled, "An Ordinance Prohibiting Short-Time
Admission, Short-Time Admission Rates, and Wash-Up Rate Schemes in Hotels, Motels,
Therefore, it is incorrect to say that the challenged Ordinance of the City of Puerto Princesa Inns, Lodging Houses, Pension Houses, and Similar Establishments in the City of Manila"
is invalid or unenforceable because it was not approved by the Secretary of the DENR. If at (the Ordinance).
all, the approval that should be sought would be that of the Secretary of the Department of
Agriculture. However, the requirement of approval by the Secretary of the Department of I. The facts are as follows:
Agriculture (not DENR) of municipal ordinances affecting fishing and fisheries in municipal
waters has been dispensed with in view of the following reasons: On December 3, 1992, City Mayor Alfredo S. Lim (Mayor Lim) signed into law the
Ordinance. The Ordinance is reproduced in full, hereunder:
1) Section 534 (Repealing Clause) of the LGC expressly repeals or amends Section 16 and
29 of P.D. No. 704 45 45a insofar as they are inconsistent with the provisions of theLGC. SEC. 1. Declaration of Policy. — It is hereby the declared policy of the
City Government to protect the best interest, health and welfare, and
(2) As discussed earlier, under the general welfare clause of the LGC,local government the morality of its constituents in general and the youth in particular.
units have the power, inter alia,to enact ordinances to enhance the right of the people to a
balanced ecology. It likewise specifically vests municipalities with the power to grant SEC. 2. Title. — This ordinance shall be known as "An Ordinance"
fishery privileges in municipal waters, and impose rentals, fees or charges therefor; the prohibiting short time admission in hotels, motels, lodging houses,
penalize, by appropriate ordinances, the use of explosives, noxious or poisonous pension houses and similar establishments in the City of Manila.
substances, electricity, muro-ami,and other deleterious methods of fishing; and to
prosecute any violation of the provisions of applicable fishery laws. Finally, it imposes SEC. 3. Pursuant to the above policy, short-time admission and
upon the sangguniang bayan,the sangguniang panlungsod,and the sangguniang rate [sic], wash-up rate or other similarly concocted terms, are hereby
panlalawigan the duty to enact ordinances to "[p]rotect the environment and impose prohibited in hotels, motels, inns, lodging houses, pension houses and
appropriate penalties for acts which endanger the environment such as dynamite fishing similar establishments in the City of Manila. aDECHI
and other forms of destructive fishing ...and such other activities which result in pollution,
SEC. 4. Definition of Term[s]. — Short-time admission shall mean
acceleration of eutrophication of rivers and lakes or of ecological imbalance."
admittance and charging of room rate for less than twelve (12) hours at
In closing, we commend the Sangguniang Panlungsod of the City of Puerto Princesa any given time or the renting out of rooms more than twice a day or
and Sangguniang Panlalawigan of the Province of Palawan for exercising the requisite any other term that may be concocted by owners or managers of said
political will to enact urgently needed legislation to protect and enhance the marine establishments but would mean the same or would bear the same
environment, thereby sharing in the herculean task of arresting the tide of ecological meaning.
destruction. We hope that other local government units shall now be roused from their
lethargy and adopt a more vigilant stand in the battle against the decimation of our legacy SEC. 5. Penalty Clause. — Any person or corporation who shall
to future generations. At this time, the repercussions of any further delay in their response violate any provision of this ordinance shall upon conviction thereof be
may prove disastrous, if not, irreversible. c punished by a fine of Five Thousand (P5,000.00) Pesos or
imprisonment for a period of not exceeding one (1) year or both such
WHEREFORE, the instant petition is DISMISSED for lack of merit and the temporary fine and imprisonment at the discretion of the court; Provided, That in
restraining order issued on 11 November 1993 is LIFTED. case of [a] juridical person, the president, the manager, or the persons
in charge of the operation thereof shall be liable: Provided, further,
WHITE LIGHT CORP. VS CITY OF MANILA That in case of subsequent conviction for the same offense, the business
license of the guilty party shall automatically be cancelled.
With another city ordinance of Manila also principally involving the tourist district as
subject, the Court is confronted anew with the incessant clash between government power and SEC. 6. Repealing Clause. — Any or all provisions of City ordinances
individual liberty in tandem with the archetypal tension between law and morality. not consistent with or contrary to this measure or any portion hereof
are hereby deemed repealed.
In City of Manila v. Laguio, Jr., the Court affirmed the nullification of a city ordinance
barring the operation of motels and inns, among other establishments, within the Ermita- SEC. 7. Effectivity. — This ordinance shall take effect immediately
Malate area. The petition at bar assails a similarly-motivated city ordinance that prohibits upon approval.
those same establishments from offering short-time admission, as well as pro-rated or "wash
up" rates for such abbreviated stays. Our earlier decision tested the city ordinance against our Enacted by the city Council of Manila at its regular session today,
sacred constitutional rights to liberty, due process and equal protection of law. The same November 10, 1992.
parameters apply to the present petition.
Approved by His Honor, the Mayor on December 3, 1992.
On December 15, 1992, the Malate Tourist and Development Corporation (MTDC) filed a the Court treated the petition as a petition for certiorari and referred the petition to the Court
complaint for declaratory relief with prayer for a writ of preliminary injunction and/or of Appeals.
temporary restraining order (TRO) with the Regional Trial Court (RTC) of Manila, Branch 9
impleading as defendant, herein respondent City of Manila (the City) represented by Mayor Before the Court of Appeals, the City asserted that the Ordinance is a valid
Lim. 6 MTDC prayed that the Ordinance, insofar as it includes motels and inns as among its exercise of police power pursuant to Section 458 (4) (iv) of the Local Government Code
prohibited establishments, be declared invalid and unconstitutional. MTDC claimed that as which confers on cities, among other local government units, the power:
owner and operator of the Victoria Court in Malate, Manila it was authorized by Presidential [To] regulate the establishment, operation and maintenance of cafes,
Decree (P.D.) No. 259 to admit customers on a short time basis as well as to charge customers restaurants, beerhouses, hotels, motels, inns, pension houses, lodging
wash up rates for stays of only three hours. houses and other similar establishments, including tourist guides and
On December 21, 1992, petitioners White Light Corporation (WLC), Titanium Corporation transports.
(TC) and Sta. Mesa Tourist and Development Corporation (STDC) filed a motion to intervene
The Ordinance, it is argued, is also a valid exercise of the power of the City
and to admit attached complaint-in-intervention on the ground that the Ordinance directly
under Article III, Section 18 (kk) of the Revised Manila Charter, thus:
affects their business interests as operators of drive-in hotels and motels in Manila. The three
companies are components of the Anito Group of Companies which owns and operates several "to enact all ordinances it may deem necessary and proper for the
hotels and motels in Metro Manila. sanitation and safety, the furtherance of the prosperity and the
promotion of the morality, peace, good order, comfort, convenience
On December 23, 1992, the RTC granted the motion to intervene. The RTC also notified
and general welfare of the city and its inhabitants, and such others as
the Solicitor General of the proceedings pursuant to then Rule 64, Section 4 of the Rules of
be necessary to carry into effect and discharge the powers and duties
Court. On the same date, MTDC moved to withdraw as plaintiff.
conferred by this Chapter; and to fix penalties for the violation of
On December 28, 1992, the RTC granted MTDC's motion to withdraw. The RTC issued ordinances which shall not exceed two hundred pesos fine or six
a TRO on January 14, 1993, directing the City to cease and desist from enforcing the months imprisonment, or both such fine and imprisonment for a single
Ordinance. The City filed an Answer dated January 22, 1993 alleging that the Ordinance is a offense.
legitimate exercise of police power.
Petitioners argued that the Ordinance is unconstitutional and void since it violates the right to
On February 8, 1993, the RTC issued a writ of preliminary injunction ordering the city to privacy and the freedom of movement; it is an invalid exercise of police power; and it is an
desist from the enforcement of the Ordinance. A month later, on March 8, 1993, the Solicitor unreasonable and oppressive interference in their business. acIHDA
General filed his Comment arguing that the Ordinance is constitutional.
The Court of Appeals reversed the decision of the RTC and affirmed the constitutionality of
During the pre-trial conference, the WLC, TC and STDC agreed to submit the case the Ordinance. First, it held that the Ordinance did not violate the right to privacy or the
for decision without trial as the case involved a purely legal question. 16 On October 20, freedom of movement, as it only penalizes the owners or operators of establishments that
1993, the RTC rendered a decision declaring the Ordinance null and void. The dispositive admit individuals for short time stays. Second, the virtually limitless reach of police power is
portion of the decision reads: only constrained by having a lawful object obtained through a lawful method. The lawful
objective of the Ordinance is satisfied since it aims to curb immoral activities. There is a
WHEREFORE, in view of all the foregoing, [O]rdinance No. 7774 of lawful method since the establishments are still allowed to operate. Third, the adverse effect
the City of Manila is hereby declared null and void. on the establishments is justified by the well-being of its constituents in general. Finally, as
held inErmita-Malate Motel Operators Association v. City Mayor of Manila, liberty is
Accordingly, the preliminary injunction heretofor issued is hereby
regulated by law.
made permanent. SO ORDERED.
TC, WLC and STDC come to this Court via petition for review on certiorari. In their petition
The RTC noted that the ordinance "strikes at the personal liberty of the individual and Memorandum, petitioners in essence repeat the assertions they made before the Court of
guaranteed and jealously guarded by the Constitution." Reference was made to the provisions Appeals. They contend that the assailed Ordinance is an invalid exercise of police power.
of the Constitution encouraging private enterprises and the incentive to needed investment, as
well as the right to operate economic enterprises. Finally, from the observation that the illicit II.
relationships the Ordinance sought to dissuade could nonetheless be consummated by simply
paying for a 12-hour stay, the RTC likened the law to the ordinance annulled in Ynot v. We must address the threshold issue of petitioners' standing. Petitioners allege
Intermediate Appellate Court, where the legitimate purpose of preventing indiscriminate that as owners of establishments offering "wash-up" rates, their business is being
slaughter of carabaos was sought to be effected through an inter-province ban on the transport unlawfully interfered with by the Ordinance. However, petitioners also allege that the equal
of carabaos and carabeef. ITSCED protection rights of their clients are also being interfered with. Thus, the crux of the matter
is whether or not these establishments have the requisite standing to plead for protection of
The City later filed a petition for review on certiorari with the Supreme Court. The their patrons' equal protection rights. aTcSID
petition was docketed as G.R. No. 112471. However in a resolution dated January 26, 1994,
Standing or locus standi is the ability of a party to demonstrate to the court sufficient overbreadth doctrine applies when a statute needlessly restrains even constitutionally
connection to and harm from the law or action challenged to support that party's participation guaranteed rights. In this case, the petitioners claim that the Ordinance makes a sweeping
in the case. More importantly, the doctrine of standing is built on the principle of separation intrusion into the right to liberty of their clients. We can see that based on the allegations in
of powers, sparing as it does unnecessary interference or invalidation by the judicial branch the petition, the Ordinance suffers from overbreadth.
of the actions rendered by its co-equal branches of government.
1We thus recognize that the petitioners have a right to assert the constitutional rights of their
The requirement of standing is a core component of the judicial system derived directly from clients to patronize their establishments for a "wash-rate" time frame.
the Constitution. The constitutional component of standing doctrine incorporates concepts
which concededly are not susceptible of precise definition. In this jurisdiction, the extancy of III.
"a direct and personal interest" presents the most obvious cause, as well as the standard test To students of jurisprudence, the facts of this case will recall to mind not only the recent City
for a petitioner's standing. In a similar vein, the United States Supreme Court reviewed and of Manila ruling, but our 1967 decision in Ermita-Malate Hotel and Motel Operations
elaborated on the meaning of the three constitutional standing requirements of injury, Association, Inc. v. Hon. City Mayor of Manila. Ermita-Malate concerned the City ordinance
causation, and redressability in Allen v. Wright. requiring patrons to fill up a prescribed form stating personal information such as name,
Nonetheless, the general rules on standing admit of several exceptions such as the overbreadth gender, nationality, age, address and occupation before they could be admitted to a motel,
doctrine, taxpayer suits, third party standing and, especially in the Philippines, the doctrine of hotel or lodging house. This earlier ordinance was precisely enacted to minimize certain
transcendental importance. practices deemed harmful to public morals. A purpose similar to the annulled ordinance
in City of Manila which sought a blanket ban on motels, inns and similar establishments in
For this particular set of facts, the concept of third party standing as an exception and the the Ermita-Malate area. However, the constitutionality of the ordinance in Ermita-Malate was
overbreadth doctrine are appropriate. In Powers v. Ohio, the United States Supreme Court sustained by the Court.
wrote that: "We have recognized the right of litigants to bring actions on behalf of third parties,
provided three important criteria are satisfied: the litigant must have suffered an 'injury-in- The common thread that runs through those decisions and the case at bar goes beyond the
fact', thus giving him or her a "sufficiently concrete interest" in the outcome of the issue in singularity of the localities covered under the respective ordinances. All three ordinances were
dispute; the litigant must have a close relation to the third party; and there must exist some enacted with a view of regulating public morals including particular illicit activity in transient
hindrance to the third party's ability to protect his or her own interests". Herein, it is clear that lodging establishments. This could be described as the middle case, wherein there is no
the business interests of the petitioners are likewise injured by the Ordinance. They rely on wholesale ban on motels and hotels but the services offered by these establishments have been
the patronage of their customers for their continued viability which appears to be threatened severely restricted. At its core, this is another case about the extent to which the State can
by the enforcement of the Ordinance. The relative silence in constitutional litigation of such intrude into and regulate the lives of its citizens.
special interest groups in our nation such as the American Civil Liberties Union in the United The test of a valid ordinance is well established. A long line of decisions including City of
States may also be construed as a hindrance for customers to bring suit. Manila has held that for an ordinance to be valid, it must not only be within the corporate
American jurisprudence is replete with examples where parties-in-interest were allowed powers of the local government unit to enact and pass according to the procedure prescribed
standing to advocate or invoke the fundamental due process or equal protection claims of by law, it must also conform to the following substantive requirements: (1) must not
other persons or classes of persons injured by state action. In Griswold v. Connecticut, the contravene the Constitution or any statute; (2) must not be unfair or oppressive; (3) must not
United States Supreme Court held that physicians had standing to challenge a reproductive be partial or discriminatory; (4) must not prohibit but may regulate trade; (5) must be general
health statute that would penalize them as accessories as well as to plead the constitutional and consistent with public policy; and (6) must not be unreasonable.
protections available to their patients. The Court held that: The Ordinance prohibits two specific and distinct business practices, namely wash rate
"The rights of husband and wife, pressed here, are likely to be diluted admissions and renting out a room more than twice a day. The ban is evidently sought to be
or adversely affected unless those rights are considered in a suit rooted in the police power as conferred on local government units by the Local Government
involving those who have this kind of confidential relation to them." Code through such implements as the general welfare clause.
A.
An even more analogous example may be found in Craig v. Boren, wherein the United States
Supreme Court held that a licensed beverage vendor has standing to raise the equal protection Police power, while incapable of an exact definition, has been purposely veiled in general
claim of a male customer challenging a statutory scheme prohibiting the sale of beer to males terms to underscore its comprehensiveness to meet all exigencies and provide enough room
under the age of 21 and to females under the age of 18. The United States High Court for an efficient and flexible response as the conditions warrant. Police power is based upon
explained that the vendors had standing "by acting as advocates of the rights of third parties the concept of necessity of the State and its corresponding right to protect itself and its
who seek access to their market or function". people. Police power has been used as justification for numerous and varied actions by the
State. These range from the regulation of dance halls, movie theaters, gas stations and
Assuming arguendo that petitioners do not have a relationship with their patrons for the
cockpits. The awesome scope of police power is best demonstrated by the fact that in its
former to assert the rights of the latter, the overbreadth doctrine comes into play. In
hundred or so years of presence in our nation's legal system, its use has rarely been denied.
overbreadth analysis, challengers to government action are in effect permitted to raise the
rights of third parties. Generally applied to statutes infringing on the freedom of speech, the
The apparent goal of the Ordinance is to minimize if not eliminate the use of the covered The general test of the validity of an ordinance on substantive due process grounds is best
establishments for illicit sex, prostitution, drug use and alike. These goals, by themselves, are tested when assessed with the evolved footnote 4 test laid down by the U.S. Supreme Court
unimpeachable and certainly fall within the ambit of the police power of the State. Yet the in U.S. v. Carolene Products. Footnote 4 of the Carolene Products case acknowledged that
desirability of these ends do not sanctify any and all means for their achievement. Those the judiciary would defer to the legislature unless there is a discrimination against a "discrete
means must align with the Constitution, and our emerging sophisticated analysis of its and insular" minority or infringement of a "fundamental right". Consequently, two standards
guarantees to the people. The Bill of Rights stands as a rebuke to the seductive theory of of judicial review were established: strict scrutiny for laws dealing with freedom of the mind
Macchiavelli, and, sometimes even, the political majorities animated by his cynicism. or restricting the political process, and the rational basis standard of review for economic
legislation.
Even as we design the precedents that establish the framework for analysis of due process or
equal protection questions, the courts are naturally inhibited by a due deference to the co- A third standard, denominated as heightened or immediate scrutiny, was later adopted by the
equal branches of government as they exercise their political functions. But when we are U.S. Supreme Court for evaluating classifications based on gender and
compelled to nullify executive or legislative actions, yet another form of caution emerges. If legitimacy. Immediate scrutiny was adopted by the U.S. Supreme Court in Craig, after the
the Court were animated by the same passing fancies or turbulent emotions that motivate Court declined to do so in Reed v. Reed. While the test may have first been articulated in
many political decisions, judicial integrity is compromised by any perception that the judiciary equal protection analysis, it has in the United States since been applied in all substantive due
is merely the third political branch of government. We derive our respect and good standing process cases as well.
in the annals of history by acting as judicious and neutral arbiters of the rule of law, and there
is no surer way to that end than through the development of rigorous and sophisticated legal We ourselves have often applied the rational basis test mainly in analysis of equal protection
standards through which the courts analyze the most fundamental and far-reaching challenges. Using the rational basis examination, laws or ordinances are upheld if they
constitutional questions of the day. rationally further a legitimate governmental interest. Under intermediate review,
governmental interest is extensively examined and the availability of less restrictive measures
B. is considered. Applying strict scrutiny, the focus is on the presence of compelling, rather than
substantial, governmental interest and on the absence of less restrictive means for achieving
The primary constitutional question that confronts us is one of due process, as guaranteed that interest.
under Section 1, Article III of the Constitution. Due process evades a precise definition. The
purpose of the guaranty is to prevent arbitrary governmental encroachment against the life, In terms of judicial review of statutes or ordinances, strict scrutiny refers to the standard for
liberty and property of individuals. The due process guaranty serves as a protection against determining the quality and the amount of governmental interest brought to justify the
arbitrary regulation or seizure. Even corporations and partnerships are protected by the regulation of fundamental freedoms. Strict scrutiny is used today to test the validity of laws
guaranty insofar as their property is concerned. dealing with the regulation of speech, gender, or race as well as other fundamental rights as
expansion from its earlier applications to equal protection. The United States Supreme Court
The due process guaranty has traditionally been interpreted as imposing two related but distinct has expanded the scope of strict scrutiny to protect fundamental rights such as
restrictions on government, "procedural due process" and "substantive due process". Procedural suffrage, judicial access and interstate travel.
due process refers to the procedures that the government must follow before it deprives a person
of life, liberty, or property. Procedural due process concerns itself with government action If we were to take the myopic view that an Ordinance should be analyzed strictly as to its
adhering to the established process when it makes an intrusion into the private sphere. Examples effect only on the petitioners at bar, then it would seem that the only restraint imposed by the
range from the form of notice given to the level of formality of a hearing. law which we are capacitated to act upon is the injury to property sustained by the petitioners,
an injury that would warrant the application of the most deferential standard — the rational
If due process were confined solely to its procedural aspects, there would arise absurd basis test. Yet as earlier stated, we recognize the capacity of the petitioners to invoke as well
situation of arbitrary government action, provided the proper formalities are followed. the constitutional rights of their patrons — those persons who would be deprived of availing
Substantive due process completes the protection envisioned by the due process clause. It short time access or wash-up rates to the lodging establishments in question.
inquires whether the government has sufficient justification for depriving a person of life,
liberty, or property. Viewed cynically, one might say that the infringed rights of these customers are trivial since
they seem shorn of political consequence. Concededly, these are not the sort of cherished
The question of substantive due process, moreso than most other fields of law, has reflected rights that, when proscribed, would impel the people to tear up their cedulas. Still, the Bill of
dynamism in progressive legal thought tied with the expanded acceptance of fundamental Rights does not shelter gravitas alone. Indeed, it is those "trivial" yet fundamental freedoms
freedoms. Police power, traditionally awesome as it may be, is now confronted with a more — which the people reflexively exercise any day without the impairing awareness of their
rigorous level of analysis before it can be upheld. The vitality though of constitutional due constitutional consequence — that accurately reflect the degree of liberty enjoyed by the
process has not been predicated on the frequency with which it has been utilized to achieve a people. Liberty, as integrally incorporated as a fundamental right in the Constitution, is not a
liberal result for, after all, the libertarian ends should sometimes yield to the prerogatives of Ten Commandments-style enumeration of what may or what may not be done; but rather an
the State. Instead, the due process clause has acquired potency because of the sophisticated atmosphere of freedom where the people do not feel labored under a Big Brother presence as
methodology that has emerged to determine the proper metes and bounds for its application. they interact with each other, their society and nature, in a manner innately understood by
them as inherent, without doing harm or injury to others.
C.
D. experience personal to himself. If he surrenders his will to
others, he surrenders himself. If his will is set by the will of
The rights at stake herein fall within the same fundamental rights to liberty which we upheld others, he ceases to be a master of himself. I cannot believe
in City of Manila v. Hon. Laguio, Jr. We expounded on that most primordial of rights, thus: that a man no longer a master of himself is in any real sense
Liberty as guaranteed by the Constitution was defined by Justice free.
Malcolm to include "the right to exist and the right to be free from
Indeed, the right to privacy as a constitutional right was recognized
arbitrary restraint or servitude. The term cannot be dwarfed into mere
in Morfe, the invasion of which should be justified by a compelling
freedom from physical restraint of the person of the citizen, but is
state interest. Morfe accorded recognition to the right to privacy
deemed to embrace the right of man to enjoy the faculties with which
independently of its identification with liberty; in itself it is fully
he has been endowed by his Creator, subject only to such restraint as
deserving of constitutional protection. Governmental powers should
are necessary for the common welfare." [ 65 ] In accordance with this
stop short of certain intrusions into the personal life of the citizen.
case, the rights of the citizen to be free to use his faculties in all lawful
ways; to live and work where he will; to earn his livelihood by any We cannot discount other legitimate activities which the Ordinance would proscribe or impair.
lawful calling; and to pursue any avocation are all deemed embraced in There are very legitimate uses for a wash rate or renting the room out for more than twice a
the concept of liberty. [ 66 ] day. Entire families are known to choose to pass the time in a motel or hotel whilst the power
is momentarily out in their homes. In transit passengers who wish to wash up and rest between
The U.S. Supreme Court in the case of Roth v. Board of
trips have a legitimate purpose for abbreviated stays in motels or hotels. Indeed any person or
Regents, sought to clarify the meaning of "liberty". It said:
groups of persons in need of comfortable private spaces for a span of a few hours with
While the Court has not attempted to define with exactness purposes other than having sex or using illegal drugs can legitimately look to staying in a
the liberty . . . guaranteed [by the Fifth and Fourteenth motel or hotel as a convenient alternative.
Amendments], the term denotes not merely freedom from E.
bodily restraint but also the right of the individual to
contract, to engage in any of the common occupations of That the Ordinance prevents the lawful uses of a wash rate depriving patrons of a product and
life, to acquire useful knowledge, to marry, establish a home the petitioners of lucrative business ties in with another constitutional requisite for the
and bring up children, to worship God according to the legitimacy of the Ordinance as a police power measure. It must appear that the interests of the
dictates of his own conscience, and generally to enjoy those public generally, as distinguished from those of a particular class, require an interference with
privileges long recognized . . . as essential to the orderly private rights and the means must be reasonably necessary for the accomplishment of the
pursuit of happiness by free men. In a Constitution for a free purpose and not unduly oppressive of private rights. It must also be evident that no other
people, there can be no doubt that the meaning of "liberty" alternative for the accomplishment of the purpose less intrusive of private rights can work.
must be broad indeed. More importantly, a reasonable relation must exist between the purposes of the measure and
the means employed for its accomplishment, for even under the guise of protecting the public
It cannot be denied that the primary animus behind the ordinance is the curtailment of sexual interest, personal rights and those pertaining to private property will not be permitted to be
behavior. The City asserts before this Court that the subject establishments "have gained arbitrarily invaded.
notoriety as venue of 'prostitution, adultery and fornications' in Manila since they provide the
necessary atmosphere for clandestine entry, presence and exit and thus became the 'ideal Lacking a concurrence of these requisites, the police measure shall be struck down as an
haven for prostitutes and thrill-seekers'". Whether or not this depiction of a mise-en-scene of arbitrary intrusion into private rights. As held in Morfe v. Mutuc, the exercise of police power
vice is accurate, it cannot be denied that legitimate sexual behavior among consenting married is subject to judicial review when life, liberty or property is affected. However, this is not in
or consenting single adults which is constitutionally protected will be curtailed as well, as it any way meant to take it away from the vastness of State police power whose exercise enjoys
was in the City of Manila case. Our holding therein retains significance for our purposes: the presumption of validity.

The concept of liberty compels respect for the individual Similar to the Comelec resolution requiring newspapers to donate advertising space to
whose claim to privacy and interference demands respect. As the case candidates, this Ordinance is a blunt and heavy instrument. The Ordinance makes no
of Morfe v. Mutuc, borrowing the words of Laski, so very aptly stated: distinction between places frequented by patrons engaged in illicit activities and patrons
engaged in legitimate actions. Thus it prevents legitimate use of places where illicit activities
Man is one among many, obstinately refusing reduction to are rare or even unheard of. A plain reading of section 3 of the Ordinance shows it makes no
unity. His separateness, his isolation, are indefeasible; classification of places of lodging, thus deems them all susceptible to illicit patronage and
indeed, they are so fundamental that they are the basis on subjects them without exception to the unjustified prohibition.
which his civic obligations are built. He cannot abandon the
consequences of his isolation, which are, broadly speaking, The Court has professed its deep sentiment and tenderness of the Ermita-Malate area, its
that his experience is private, and the will built out of that longtime home, and it is skeptical of those who wish to depict our capital city — the Pearl of
the Orient — as a modern-day Sodom or Gomorrah for the Third World set. Those still steeped recognition that the individual liberty to make the choices in our lives is innate, and protected
in Nick Joaquin-dreams of the grandeur of Old Manila will have to accept that Manila like all by the State. Independent and fair-minded judges themselves are under a moral duty to uphold
evolving big cities, will have its problems. Urban decay is a fact of mega cities such as Manila, the Constitution as the embodiment of the rule of law, by reason of their expression of consent
and vice is a common problem confronted by the modern metropolis wherever in the world. to do so when they take the oath of office, and because they are entrusted by the people to
The solution to such perceived decay is not to prevent legitimate businesses from offering a uphold the law.
legitimate product. Rather, cities revive themselves by offering incentives for new businesses
to sprout up thus attracting the dynamism of individuals that would bring a new grandeur to Even as the implementation of moral norms remains an indispensable complement to
Manila. governance, that prerogative is hardly absolute, especially in the face of the norms of due
process of liberty. And while the tension may often be left to the courts to relieve, it is possible
The behavior which the Ordinance seeks to curtail is in fact already prohibited and could in for the government to avoid the constitutional conflict by employing more judicious, less
fact be diminished simply by applying existing laws. Less intrusive measures such as curbing drastic means to promote morality.
the proliferation of prostitutes and drug dealers through active police work would be more
effective in easing the situation. So would the strict enforcement of existing laws and WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals is
regulations penalizing prostitution and drug use. These measures would have minimal REVERSED, and the Decision of the Regional Trial Court of Manila, Branch 9, is
intrusion on the businesses of the petitioners and other legitimate merchants. Further, it is REINSTATED. Ordinance No. 7774 is hereby declared UNCONSTITUTIONAL. No
apparent that the Ordinance can easily be circumvented by merely paying the whole day rate pronouncement as to costs.
without any hindrance to those engaged in illicit activities. Moreover, drug dealers and SOCIAL JUSTICE SOCIETY VS ATIENZA
prostitutes can in fact collect "wash rates" from their clientele by charging their customers a
portion of the rent for motel rooms and even apartments. After we promulgated our decision in this case on March 7, 2007, Chevron Philippines, Inc.
IV. (Chevron),Petron Corporation (Petron) and Pilipinas Shell Petroleum Corporation (Shell)
(collectively, the oil companies) and the Republic of the Philippines, represented by the
We reiterate that individual rights may be adversely affected only to the extent that may fairly Department of Energy (DOE),filed their respective motions for leave to intervene and for
be required by the legitimate demands of public interest or public welfare. The State is a reconsideration of the decision.
leviathan that must be restrained from needlessly intruding into the lives of its citizens.
Chevron is engaged in the business of importing, distributing and marketing of petroleum
However wellintentioned the Ordinance may be, it is in effect an arbitrary and whimsical
products in the Philippines while Shell and Petron are engaged in the business of
intrusion into the rights of the establishments as well as their patrons. The Ordinance
manufacturing, refining and likewise importing, distributing and marketing of petroleum
needlessly restrains the operation of the businesses of the petitioners as well as restricting the
products in the Philippines. The DOE is a governmental agency created under Republic Act
rights of their patrons without sufficient justification. The Ordinance rashly equates wash rates
(RA) No. 7638 and tasked to prepare, integrate, coordinate, supervise and control all plans,
and renting out a room more than twice a day with immorality without accommodating
programs, projects and activities of the government relative to energy exploration,
innocuous intentions.
development, utilization, distribution and conservation.
The promotion of public welfare and a sense of morality among citizens deserves the full The facts are restated briefly as follows:
endorsement of the judiciary provided that such measures do not trample rights this Court is
sworn to protect. The notion that the promotion of public morality is a function of the State Petitioners Social Justice Society, Vladimir Alarique T. Cabigao and Bonifacio S.
is as old as Aristotle. The advancement of moral relativism as a school of philosophy does Tumbokon, in an original petition for mandamus under Rule 65 of the Rules of Court,
not de-legitimize the role of morality in law, even if it may foster wider debate on which sought to compel respondent Hon. Jose L. Atienza, Jr.,then mayor of the City of Manila, to
particular behavior to penalize. It is conceivable that a society with relatively little shared enforce Ordinance No. 8027. This ordinance was enacted by the Sangguniang
morality among its citizens could be functional so long as the pursuit of sharply variant moral Panlungsod of Manila on November 20, 2001, approved by respondent Mayor on
perspectives yields an adequate accommodation of different interests. November 28, 2001, and became effective on December 28, 2001 after
publication. Sections 1 and 3 thereof state:
To be candid about it, the oft-quoted American maxim that "you cannot legislate morality" is
ultimately illegitimate as a matter of law, since as explained by Calabresi, that phrase is more SECTION 1. For the purpose of promoting sound urban planning and
accurately interpreted as meaning that efforts to legislate morality will fail if they are widely ensuring health, public safety, and general welfare of the residents of
at variance with public attitudes about right and wrong. Our penal laws, for one, are founded Pandacan and Sta. Ana as well as its adjoining areas, the land use of
on age-old moral traditions, and as long as there are widely accepted distinctions between [those] portions of land bounded by the Pasig River in the north, PNR
right and wrong, they will remain so oriented. Railroad Track in the east, Beata St. in the south, Palumpong St. in
the southwest, and Estero de Pandacan in the west[,] PNR Railroad in
Yet the continuing progression of the human story has seen not only the acceptance of the the northwest area, Estero de Pandacan in the [n]ortheast, Pasig River
right-wrong distinction, but also the advent of fundamental liberties as the key to the in the southeast and Dr. M.L. Carreon in the southwest. The area of
enjoyment of life to the fullest. Our democracy is distinguished from non-free societies not Punta, Sta. Ana bounded by the Pasig River, Marcelino Obrero
with any more extensive elaboration on our part of what is moral and immoral, but from our
St.,Mayo 28 St.,and F. Manalo Street, are hereby reclassified from WHEREFORE, upon the filing of a total bond of TWO MILLION
Industrial II to Commercial I. ICcDaA (Php2,000,000.00) PESOS, let a Writ of Preliminary Prohibitory
Injunction be issued ordering [respondent] and the City of Manila,
xxx xxx xxx their officers, agents, representatives, successors, and any other
persons assisting or acting in their behalf, during the pendency of the
SEC. 3. Owners or operators of industries and other businesses, the case, to REFRAIN from taking steps to enforce Ordinance No. 8027,
operation of which are no longer permitted under Section 1 hereof, and let a Writ of Preliminary Mandatory Injunction be issued ordering
are hereby given a period of six (6) months from the date of [respondent] to issue [Chevron and Shell] the necessary Business
effectivity of this Ordinance within which to cease and desist from the Permits to operate at the Pandacan Terminal.
operation of businesses which are hereby in consequence, disallowed.
Petron likewise filed its own petition in the RTC of Manila, Branch 42, also attacking the
Ordinance No. 8027 reclassified the area described therein from industrial to commercial validity of Ordinance No. 8027 with prayer for the issuance of a writ of preliminary
and directed the owners and operators of businesses disallowed under the reclassification to injunction and/or temporary restraining order (TRO).This was docketed as civil case no. 03-
cease and desist from operating their businesses within six months from the date of 106379. In an order dated August 4, 2004, the RTC enjoined the parties to maintain
effectivity of the ordinance. Among the businesses situated in the area are the so-called the status quo.
"Pandacan Terminals" of the oil companies.
Thereafter, in 2006, the city council of Manila enacted Ordinance No. 8119, also known as
On June 26, 2002, the City of Manila and the Department of Energy (DOE) entered into a the Manila Comprehensive Land Use Plan and Zoning Ordinance of 2006. This was
memorandum of understanding (MOU) with the oil companies. They agreed that "the approved by respondent on June 16, 2006.
scaling down of the Pandacan Terminals [was] the most viable and practicable option."
The Sangguniang Panlungsod ratified the MOU in Resolution No. 97. In the same Aggrieved anew, Chevron and Shell filed a complaint in the RTC of Manila, Branch 20,
resolution, theSanggunian declared that the MOU was effective only for a period of six asking for the nullification of Ordinance No. 8119. This was docketed as civil case no. 06-
months starting July 25, 2002. Thereafter, on January 30, 2003, the Sanggunian adopted 115334. Petron filed its own complaint on the same causes of action in the RTC of Manila,
Resolution No. 13 extending the validity of Resolution No. 97 to April 30, 2003 and Branch 41. This was docketed as civil case no. 07-116700. The court issued a TRO in
authorizing the mayor of Manila to issue special business permits to the oil companies. favor of Petron, enjoining the City of Manila and respondent from enforcing Ordinance No.
8119.
This was the factual backdrop presented to the Court which became the basis of our March
7, 2007 decision. We ruled that respondent had the ministerial duty under the Local Meanwhile, in civil case no. 03-106379, the parties filed a joint motion to withdraw
Government Code (LGC) to "enforce all laws and ordinances relative to the governance of complaint and counterclaim on February 20, 2007. In an order dated April 23, 2007, the
the city", including Ordinance No. 8027. We also held that we need not resolve the issue of joint motion was granted and all the claims and counterclaims of the parties were
whether the MOU entered into by respondent with the oil companies and the subsequent withdrawn.
resolutions passed by the Sanggunian could amend or repeal Ordinance No. 8027 since the
Given these additional pieces of information, the following were submitted as issues for our
resolutions which ratified the MOU and made it binding on the City of Manila expressly
resolution:
gave it full force and effect only until April 30, 2003. We concluded that there was nothing
that legally hindered respondent from enforcing Ordinance No. 8027. 1. whether movants-intervenors should be allowed to intervene in this
case; 2. whether the following are impediments to the execution of our March 7,
After we rendered our decision on March 7, 2007, the oil companies and DOE sought to
2007 decision:
intervene and filed motions for reconsideration in intervention on March 12, 2007 and
March 21, 2007 respectively. On April 11, 2007, we conducted the oral arguments in Baguio (a) Ordinance No. 8119, the enactment and existence of which were not previously
City to hear petitioners, respondent and movants-intervenors oil companies and DOE. brought by the parties to the attention of the Court and
The oil companies called our attention to the fact that on April 25, 2003, Chevron had filed a
(b) writs of preliminary prohibitory injunction and preliminary mandatory
complaint against respondent and the City of Manila in the Regional Trial Court (RTC) of
injunction and status quo order issued by the RTC of Manila, Branches 39 and 42
Manila, Branch 39, for the annulment of Ordinance No. 8027 with application for writs of
and
preliminary prohibitory injunction and preliminary mandatory injunction. The case was
docketed as civil case no. 03-106377. On the same day, Shell filed a petition for prohibition 3. whether the implementation of Ordinance No. 8027 will unduly encroach upon
and mandamus likewise assailing the validity of Ordinance No. 8027 and with application the DOE's powers and functions involving energy resources.
for writs of preliminary prohibitory injunction and preliminary mandatory injunction. This
was docketed as civil case no. 03-106380. Later on, these two cases were consolidated and During the oral arguments, the parties submitted to this Court's power to rule on the
the RTC of Manila, Branch 39 issued an order dated May 19, 2003 granting the applications constitutionality and validity of Ordinance No. 8027 despite the pendency of consolidated
for writs of preliminary prohibitory injunction and preliminary mandatory injunction: T cases involving this issue in the RTC. 27 The importance of settling this controversy as fully
and as expeditiously as possible was emphasized, considering its impact on public interest.
Thus, we will also dispose of this issue here. The parties were after all given ample
opportunity to present and argue their respective positions. By so doing, we will do away The 36-hectare Pandacan Terminals house the oil companies' distribution terminals and
with the delays concomitant with litigation and completely adjudicate an issue which will depot facilities. The refineries of Chevron and Shell in Tabangao and Bauan, both in
most likely reach us anyway as the final arbiter of all legal disputes. Batangas, respectively, are connected to the Pandacan Terminals through a 114-
kilometer underground pipeline system. Petron's refinery in Limay, Bataan, on the other
Before we resolve these issues, a brief review of the history of the Pandacan Terminals is
hand, also services the depot. The terminals store fuel and other petroleum products and
called for to put our discussion in the proper context.
supply 95% of the fuel requirements of Metro Manila, 50% of Luzon's consumption and
HISTORY OF THE PANDACAN OIL TERMINALS 35% nationwide. Fuel can also be transported through barges along the Pasig river or tank
trucks via the South Luzon Expressway.
Pandacan (one of the districts of the City of Manila) is situated along the banks of the Pasig
river. At the turn of the twentieth century, Pandacan was unofficially designated as the We now discuss the first issue: whether movants-intervenors should be allowed to intervene
industrial center of Manila. The area, then largely uninhabited, was ideal for various in this case.
emerging industries as the nearby river facilitated the transportation of goods and products.
INTERVENTION OF THE OIL COMPANIES AND THE DOE SHOULD BE
In the 1920s, it was classified as an industrial zone. Among its early industrial settlers were
ALLOWED IN THE INTEREST OF JUSTICE
the oil companies. Shell established its installation there on January 30, 1914. Caltex (now
Chevron) followed suit in 1917 when the company began marketing its products in the Intervention is a remedy by which a third party, not originally impleaded in the proceedings,
country. In 1922, it built a warehouse depot which was later converted into a key becomes a litigant therein to enable him, her or it to protect or preserve a right or interest
distribution terminal. The corporate presence in the Philippines of Esso (Petron's which may be affected by such proceedings. The pertinent rules are Sections 1 and 2, Rule
predecessor) became more keenly felt when it won a concession to build and operate a 19 of the Rules of Court:
refinery in Bataan in 1957. It then went on to operate a state-of-the-art lube oil blending
SEC. 1. Who may intervene. — A person who has a legal interest in
plant in the Pandacan Terminals where it manufactures lubes and greases.
the matter in litigation, or in the success of either of the parties, or an
On December 8, 1941, the Second World War reached the shores of the Philippine Islands. interest against both, or is so situated as to be adversely affected by a
Although Manila was declared an open city, the Americans had no interest in welcoming the distribution or other disposition of property in the custody of the court
Japanese. In fact, in their zealous attempt to fend off the Japanese Imperial Army, the United or of an officer thereof may, with leave of court, be allowed to
States Army took control of the Pandacan Terminals and hastily made plans to destroy the intervene in the action. The court shall consider whether or not the
storage facilities to deprive the advancing Japanese Army of a valuable logistics intervention will unduly delay or prejudice the adjudication of the
weapon. The U.S. Army burned unused petroleum, causing a frightening conflagration. rights of the original parties, and whether or not the intervenor's rights
Historian Nick Joaquin recounted the events as follows: may be fully protected in a separate proceeding.
After the USAFFE evacuated the City late in December 1941, all SEC. 2. Time to intervene. — The motion to intervene may be filed at
army fuel storage dumps were set on fire. The flames spread, any time before rendition of judgment by the trial court. A copy of the
enveloping the City in smoke, setting even the rivers ablaze, pleading-in-intervention shall be attached to the motion and served on
endangering bridges and all riverside buildings. ...For one week the original parties.
longer, the "open city" blazed — a cloud of smoke by day, a pillar of
fire by night. Thus, the following are the requisites for intervention of a non-party:
The fire consequently destroyed the Pandacan Terminals and rendered its network (1) Legal interest
of depots and service stations inoperative.
(a) in the matter in controversy; or
After the war, the oil depots were reconstructed. Pandacan changed as Manila rebuilt itself.
The three major oil companies resumed the operation of their depots. But the district was no (b) in the success of either of the parties; or
longer a sparsely populated industrial zone; it had evolved into a bustling, hodgepodge
(c) against both parties; or
community. Today, Pandacan has become a densely populated area inhabited by about
84,000 people, majority of whom are urban poor who call it home. Aside from numerous (d) person is so situated as to be adversely affected by a
industrial installations, there are also small businesses, churches, restaurants, schools, distribution or other disposition of property in
daycare centers and residences situated there. Malacañang Palace, the official residence of the custody of the court or of an officer thereof;
the President of the Philippines and the seat of governmental power, is just two kilometers
away. There is a private school near the Petron depot. Along the walls of the Shell facility (2) Intervention will not unduly delay or prejudice the adjudication of
are shanties of informal settlers. More than 15,000 students are enrolled in elementary and rights of original parties;
high schools situated near these facilities. A university with a student population of about
25,000 is located directly across the depot on the banks of the Pasig river. (3) Intervenor's rights may not be fully protected in a separate
proceeding 51 and
(4) The motion to intervene may be filed at any time before rendition members of the public who stand to suffer if the Pandacan Terminals' operations are
of judgment by the trial court. discontinued. We will tackle the issue of the alleged encroachment into DOE's domain later
on. Suffice it to say at this point that, for the purpose of hearing all sides and considering the
For both the oil companies and DOE, the last requirement is definitely absent. As a rule, transcendental importance of this case, we will also allow DOE's intervention.
intervention is allowed "before rendition of judgment" as Section 2, Rule 19 expressly
provides. Both filed their separate motions after our decision was promulgated. In Republic THE INJUNCTIVE WRITS ARE NOT IMPEDIMENTS TO THE
of the Philippines v. Gingoyon, a recently decided case which was also an original action ENFORCEMENT OF ORDINANCE NO. 8027
filed in this Court, we declared that the appropriate time to file the motions-in-intervention Under Rule 65, Section 3 of the Rules of Court, a petition for mandamus may be filed when
was before and not after resolution of the case. any tribunal, corporation, board, officer or person unlawfully neglects the performance of an
The Court, however, has recognized exceptions to Section 2, Rule 19 in the interest of act which the law specifically enjoins as a duty resulting from an office, trust or station.
substantial justice: According to the oil companies, respondent did not unlawfully fail or neglect to enforce
Ordinance No. 8027 because he was lawfully prevented from doing so by virtue of the
The rule on intervention, like all other rules of procedure, is intended injunctive writs and status quo order issued by the RTC of Manila, Branches 39 and 42.
to make the powers of the Court fully and completely available for
justice. It is aimed to facilitate a comprehensive adjudication of rival First, we note that while Chevron and Shell still have in their favor the writs of preliminary
claims overriding technicalities on the timeliness of the filing thereof. injunction and preliminary mandatory injunction, the status quo order in favor of Petron is
no longer in effect since the court granted the joint motion of the parties to withdraw the
The oil companies assert that they have a legal interest in this case because the complaint and counterclaim.
implementation of Ordinance No. 8027 will directly affect their business and property
Second, the original parties failed to inform the Court about these injunctive writs.
rights.
Respondent (who was also impleaded as a party in the RTC cases) defends himself by
[T]he interest which entitles a person to intervene in a suit between saying that he informed the court of the pendency of the civil cases and that a TRO was
other parties must be in the matter in litigation and of such direct and issued by the RTC in the consolidated cases filed by Chevron and Shell. It is true that had
immediate character that the intervenor will either gain or lose by the oil companies only intervened much earlier, the Court would not have been left in the
direct legal operation and effect of the judgment. Otherwise, if dark about these facts. Nevertheless, respondent should have updated the Court, by way of
persons not parties to the action were allowed to intervene, manifestation, on such a relevant matter.
proceedings would become unnecessarily complicated, expensive and
In his memorandum, respondent mentioned the issuance of a TRO. Under Section 5 of Rule
interminable. And this would be against the policy of the law. The
58 of the Rules of Court, a TRO issued by the RTC is effective only for a period of 20 days.
words "an interest in the subject" means a direct interest in the cause
This is why, in our March 7, 2007 decision, we presumed with certainty that this had already
of action as pleaded, one that would put the intervenor in a legal
lapsed. Respondent also mentioned the grant of injunctive writs in his rejoinder which the
position to litigate a fact alleged in the complaint without the
Court, however, expunged for being a prohibited pleading. The parties and their counsels
establishment of which plaintiff could not recover.
were clearly remiss in their duties to this Court.
We agree that the oil companies have a direct and immediate interest in the implementation In resolving controversies, courts can only consider facts and issues pleaded by the
of Ordinance No. 8027. Their claim is that they will need to spend billions of pesos if they parties. Courts, as well as magistrates presiding over them are not omniscient. They can
are compelled to relocate their oil depots out of Manila. Considering that they admitted only act on the facts and issues presented before them in appropriate pleadings. They may
knowing about this case from the time of its filing on December 4, 2002, they should have not even substitute their own personal knowledge for evidence. Nor may they take notice of
intervened long before our March 7, 2007 decision to protect their interests. But they did matters except those expressly provided as subjects of mandatory judicial notice.
not. Neither did they offer any worthy explanation to justify their late intervention.
We now proceed to the issue of whether the injunctive writs are legal impediments to the
Be that as it may, although their motion for intervention was not filed on time, we will allow enforcement of Ordinance No. 8027.
it because they raised and presented novel issues and arguments that were not considered by
the Court in its March 7, 2007 decision. After all, the allowance or disallowance of a motion Section 3, Rule 58 of the Rules of Court enumerates the grounds for the issuance of a writ
to intervene is addressed to the sound discretion of the court before which the case is of preliminary injunction:
pending. Considering the compelling reasons favoring intervention, we do not think that SEC. 3. Grounds for issuance of preliminary injunction. — A preliminary
this will unduly delay or prejudice the adjudication of rights of the original parties. In fact, it injunction may be granted when it is established:
will be expedited since their intervention will enable us to rule on the constitutionality of
Ordinance No. 8027 instead of waiting for the RTC's decision. (a) That the applicant is entitled to the relief demanded, and the whole or part of
such relief consists in restraining the commission or continuance of the act or acts
The DOE, on the other hand, alleges that its interest in this case is also direct and immediate
complained of, or in requiring the performance of an act or acts, either for a limited
as Ordinance No. 8027 encroaches upon its exclusive and national authority over matters
period or perpetually;
affecting the oil industry. It seeks to intervene in order to represent the interests of the
(b) That the commission, continuance or nonperformance of the act or the plaintiff/petitioners to cease and desist from the operation of their
acts complained of during the litigation would probably business has certainly violated the rights of the plaintiff/petitioners to
work injustice to the applicant; or continue their legitimate business in the Pandacan Terminal and
deprived them of their huge investments they put up therein. Thus,
(c) That a party, court, agency or a person is doing, threatening, or is before the Court, therefore, determines whether the Ordinance in
attempting to do, or is procuring or suffering to be done, question is valid or not, a Writ of Preliminary Injunction and a Writ of
some act or acts probably in violation of the rights of the Mandatory Injunction be issued to prevent serious and irreparable
applicant respecting the subject of the action or damage to plaintiff/petitioners.
proceeding, and tending to render the judgment
ineffectual. Nowhere in the judge's discussion can we see that, in addition to a showing of a clear
legal right of Chevron and Shell to the remedy sought, he was convinced that they had
There are two requisites for the issuance of a preliminary injunction: (1) the right to be made out a case of unconstitutionality or invalidity strong enough to overcome the
protected exists prima facie and (2) the acts sought to be enjoined are violative of that right. presumption of validity of the ordinance. Statutes and ordinances are presumed valid
It must be proven that the violation sought to be prevented will cause an irreparable unless and until the courts declare the contrary in clear and unequivocal terms. The mere
injustice. fact that the ordinance is alleged to be unconstitutional or invalid will not entitle a party to
The act sought to be restrained here was the enforcement of Ordinance No. 8027. It is a have its enforcement enjoined. The presumption is all in favor of validity. The reason for
settled rule that an ordinance enjoys the presumption of validity and, as such, cannot be this is obvious:
restrained by injunction. Nevertheless, when the validity of the ordinance is assailed, the The action of the elected representatives of the people cannot be
courts are not precluded from issuing an injunctive writ against its enforcement. However, lightly set aside. The councilors must, in the very nature of things, be
we have declared that the issuance of said writ is proper only when: familiar with the necessities of their particular municipality and with
...the petitioner assailing the ordinance has made out a case of all the facts and circumstances which surround the subject and
unconstitutionality strong enough to overcome, in the mind of the necessitate action. The local legislative body, by enacting the
judge, the presumption of validity,in addition to a showing of a ordinance, has in effect given notice that the regulations are essential
clear legal right to the remedy sought. ... 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
Judge Reynaldo G. Ros, in his order dated May 19, 2003, stated his basis for issuing the or property rights under the guise of police regulation.
injunctive writs:
xxx xxx xxx
The Court, in resolving whether or not a Writ of Preliminary
Injunction or Preliminary Mandatory Injunction should be issued, is . . . [Courts] accord the presumption of constitutionality to legislative
guided by the following requirements: (1) a clear legal right of the enactments, not only because the legislature is presumed to abide by
complainant; (2) a violation of that right; and (3) a permanent and the Constitution but also because the judiciary[,] in the determination
urgent necessity for the Writ to prevent serious damage. The Court of actual cases and controversies[,] must reflect the wisdom and
believes that these requisites are present in these cases. justice of the people as expressed through their representatives in the
executive and legislative departments of the government.
There is no doubt that the plaintiff/petitioners have been legitimately
operating their business in the Pandacan Terminal for many years and The oil companies argue that this presumption must be set aside when the invalidity or
they have made substantial capital investment therein. Every year unreasonableness appears on the face of the ordinance itself. We see no reason to set aside
they were issued Business Permits by the City of Manila. Its the presumption. The ordinance, on its face, does not at all appear to be unconstitutional. It
operations have not been declared illegal or contrary to law or morals. reclassified the subject area from industrial to commercial. Prima facie,this power is within
In fact, because of its vital importance to the national economy, it was the power of municipal corporations:
included in the Investment Priorities Plan as mandated under the
The power of municipal corporations to divide their territory into
"Downstream Oil Industry Deregulation Act of 1988 (R.A. 8479). As
industrial, commercial and residential zones is recognized in almost
a lawful business, the plaintiff/petitioners have a right, therefore, to
all jurisdictions inasmuch as it is derived from the police power itself
continue their operation in the Pandacan Terminal and the right to
and is exercised for the protection and benefit of their inhabitants.
protect their investments. This is a clear and unmistakable right of the
plaintiff/petitioners. xxx xxx xxx
The enactment, therefore, of City Ordinance No. 8027 passed by the There can be no doubt that the City of Manila has the power to divide
City Council of Manila reclassifying the area where the Pandacan its territory into residential and industrial zones, and to prescribe that
Terminal is located from Industrial II to Commercial I and requiring
offensive and unwholesome trades and occupations are to be In its defense, respondent claimed that he did not inform the Court about the enactment of
established exclusively in the latter zone. Ordinance No. 8119 because he believed that it was different from Ordinance No. 8027 and
that the two were not inconsistent with each other.
xxx xxx xxx
In the same way that we deem the intervenors' late intervention in this case unjustified, we
Likewise, it cannot be denied that the City of Manila has the find the failure of respondent, who was an original party here, inexcusable.
authority, derived from the police power, of forbidding the appellant
THE RULE ON JUDICIAL ADMISSIONS IS NOT APPLICABLE
to continue the manufacture of toyo in the zone where it is now
AGAINST RESPONDENT
situated, which has been declared residential. ...
The oil companies assert that respondent judicially admitted that Ordinance No. 8027 was
Courts will not invalidate an ordinance unless it clearly appears that it is unconstitutional. repealed by Ordinance No. 8119 in civil case no. 03-106379 (where Petron assailed the
There is no such showing here. Therefore, the injunctive writs issued in the Manila RTC's constitutionality of Ordinance No. 8027) when the parties in their joint motion to withdraw
May 19, 2003 order had no leg to stand on. complaint and counterclaim stated that "the issue . . . has been rendered moot and academic
We are aware that the issuance of these injunctive writs is not being assailed as tainted with by virtue of the passage of [Ordinance No. 8119]." They contend that such admission
grave abuse of discretion. However, we are confronted with the question of whether these worked as an estoppel against the respondent.
writs issued by a lower court are impediments to the enforcement of Ordinance No. 8027 Respondent countered that this stipulation simply meant that Petron was recognizing the
(which is the subject of the mandamus petition).As already discussed, we rule in the validity and legality of Ordinance No. 8027 and that it had conceded the issue of said
negative. ordinance's constitutionality, opting instead to question the validity of Ordinance No.
ORDINANCE NO. 8027 WAS NOT SUPERSEDED BY ORDINANCE NO. 8119 8119. The oil companies deny this and further argue that respondent, in his answer in civil
case no. 06-115334 (where Chevron and Shell are asking for the nullification of Ordinance
The March 7, 2007 decision did not take into consideration the passage of Ordinance No. No. 8119), expressly stated that Ordinance No. 8119 replaced Ordinance No. 8027:
8119 entitled "An Ordinance Adopting the Manila Comprehensive Land Use Plan and
Zoning Regulations of 2006 and Providing for the Administration, Enforcement and ...Under Ordinance No. 8027, businesses whose uses are not in accord
Amendment thereto" which was approved by respondent on June 16, 2006. The simple with the reclassification were given six months to cease [their]
reason was that the Court was never informed about this ordinance. operation. Ordinance No. 8119, which in effect, replaced
Ordinance [No.] 8027,merely took note of the time frame provided
While courts are required to take judicial notice of the laws enacted by Congress, the rule for in Ordinance No. 8119. ...Ordinance No. 8119 thus provided for
with respect to local ordinances is different. Ordinances are not included in the enumeration an even longer term, that is[,] seven years; (Emphasis supplied)
of matters covered by mandatory judicial notice under Section 1, Rule 129 of the Rules of
Court. Rule 129, Section 4 of the Rules of Court provides:
Although, Section 50 of RA 409 74 provides that: Section 4.Judicial admissions. — An admission, verbal or written,
made by a party in the course of the proceedings in the same
SEC. 50. Judicial notice of ordinances. — All courts sitting in the city case,does not require proof. The admission may be contradicted only
shall take judicial notice of the ordinances passed by by showing that it was made through palpable mistake or that no such
the [Sangguniang Panglungsod]. admission was made. (Emphasis supplied)
this cannot be taken to mean that this Court, since it has its seat in the City of Manila, should While it is true that a party making a judicial admission cannot subsequently take a position
have taken steps to procure a copy of the ordinance on its own, relieving the party of any contrary to or inconsistent with what was pleaded, the aforestated rule is not applicable
duty to inform the Court about it. here. Respondent made the statements regarding the ordinances in civil case nos. 03-106379
Even where there is a statute that requires a court to take judicial notice of municipal and 06-115334 which are not "the same" as this case before us. 84 To constitute a judicial
ordinances, a court is not required to take judicial notice of ordinances that are not before it admission, the admission must be made in the same case in which it is offered.
and to which it does not have access. The party asking the court to take judicial notice is Hence, respondent is not estopped from claiming that Ordinance No. 8119 did
obligated to supply the court with the full text of the rules the party desires it to have notice not supersede Ordinance No. 8027. On the contrary, it is the oil companies which should
of. Counsel should take the initiative in requesting that a trial court take judicial notice of an be considered estopped. They rely on the argument that Ordinance No. 8119 superseded
ordinance even where a statute requires courts to take judicial notice of local ordinances. Ordinance No. 8027 but, at the same time, also impugn its (8119's) validity. We frown on
The intent of a statute requiring a court to take judicial notice of a local ordinance is to the adoption of inconsistent positions and distrust any attempt at clever positioning under
remove any discretion a court might have in determining whether or not to take notice of an one or the other on the basis of what appears advantageous at the moment. Parties cannot
ordinance. Such a statute does not direct the court to act on its own in obtaining evidence for take vacillating or contrary positions regarding the validity of a statute 85 or ordinance.
the record and a party must make the ordinance available to the court for it to take notice. Nonetheless, we will look into the merits of the argument of implied repeal.
ORDINANCE NO. 8119 DID NOT IMPLIEDLY REPEAL ORDINANCE SEC. 23. Use Regulations in Planned Unit Development/Overlay
NO. 8027 Zone (O-PUD).— O-PUD Zones are identified specific sites in the
City of Manila wherein the project site is comprehensively planned as
Both the oil companies and DOE argue that Ordinance No. 8119 repealed Ordinance No.
an entity via unitary site plan which permits flexibility in
8027. They assert that although there was no express repeal of Ordinance No. 8027,
planning/design, building siting, complementarity of building types
Ordinance No. 8119 impliedly repealed it.
and land uses, usable open spaces and the preservation of significant
According to the oil companies, Ordinance No. 8119 reclassified the area covering the natural land features, pursuant to regulations specified for each
Pandacan Terminals to "High Density Residential/Mixed Use Zone (R-3/MXD)" whereas particular PUD. Enumerated below are identified PUD:
Ordinance No. 8027 reclassified the same area from Industrial II to Commercial I:
xxx xxx xxx
SECTION 1. For the purpose of promoting sound urban planning and
ensuring health, public safety, and general welfare of the residents of 6. Pandacan Oil Depot Area
Pandacan and Sta. Ana as well as its adjoining areas, the land use of
[those] portions of land bounded by the Pasig River in the north, PNR xxx xxx xxx
Railroad Track in the east, Beata St. in the south, Palumpong St. in
the southwest, and Estero de Pandacan in the west[,] PNR Railroad in Enumerated below are the allowable uses:
the northwest area, Estero de Pandacan in the [n]ortheast, Pasig River
1. all uses allowed in all zones where it is located
in the southeast and Dr. M.L. Carreon in the southwest. The area of
Punta, Sta. Ana bounded by the Pasig River, Marcelino Obrero 2. the [Land Use Intensity Control (LUIC)] under which zones are
St.,Mayo 28 St.,and F. Manalo Street, are hereby reclassified from located shall, in all instances be complied with
Industrial II to Commercial I.(Emphasis supplied)
3. the validity of the prescribed LUIC shall only be [superseded] by
Moreover, Ordinance No. 8119 provides for a phase-out of seven years: the development controls and regulations specified for
each PUD as provided for each PUD as provided for by
SEC. 72. Existing Non-Conforming Uses and Buildings. — The
the masterplan of respective PUDs.
lawful use of any building, structure or land at the time of the
adoption of this Ordinance may be continued, although such use does Respondent claims that in passing Ordinance No. 8119, the Sanggunian did not intend to
not conform with the provision of the Ordinance, provided: repeal Ordinance No. 8027 but meant instead to carry over 8027's provisions to 8119 for the
purpose of making Ordinance No. 8027 applicable to the oil companies even after the
xxx xxx xxx
passage of Ordinance No. 8119. He quotes an excerpt from the minutes of the July 27, 2004
(2) In case the non-conforming use is an industrial use: session of the Sanggunian during the first reading of Ordinance No. 8119:
Member GARCIA: Your Honor, iyong patungkol po roon sa oil depot
xxx xxx xxx doon sa amin sa Sixth District sa Pandacan, wala pong nakalagay dito
sa ordinansa rito na taliwas o kakaiba roon sa ordinansang ipinasa
d. The land use classified as non-conforming shall program the
noong nakaraang Konseho, iyong Ordinance No. 8027. So kung ano
phase-out and relocation of the non-conforming use within seven (7) years
po ang nandirito sa ordinansa na ipinasa ninyo last time, iyon lang po
from the date of effectivity of this Ordinance. (Emphasis supplied)
ang ni-lift namin at inilagay dito. At dito po sa ordinansang ...iyong
This is opposed to Ordinance No. 8027 which compels affected entities to vacate the area naipasa ng huling Konseho, niri-classify [ninyo] from Industrial II to
within six months from the effectivity of the ordinance: Commercial C-1 ang area ng Pandacan kung nasaan ang oil depot. So
ini-lift lang po [namin] iyong definition, density, at saka po yon pong
SEC. 3. Owners or operators of industries and other businesses, the ...ng ...noong ordinansa ninyo na siya na po naming inilagay dito,
operation of which are no longer permitted under Section 1 hereof, iniba lang po naming iyong title. So wala po kaming binago na
are hereby given a period of six (6) months from the date of taliwas o nailagay na taliwas doon sa ordinansang ipinasa ninyo,
effectivity of this Ordinance within which to cease and desist from the ni-lift lang po [namin] from Ordinance No. 8027."
operation of businesses which are hereby in consequence,
disallowed. We agree with respondent.

Ordinance No. 8119 also designated the Pandacan oil depot area as a "Planned Unit Repeal by implication proceeds on the premise that where a statute of later date clearly
Development/Overlay Zone (O-PUD)": reveals the intention of the legislature to abrogate a prior act on the subject, that intention
must be given effect.
There are two kinds of implied repeal. The first is: where the provisions in the two acts on application. The special law must be taken as intended to constitute an exception to, or a
the same subject matter are irreconcilably contradictory, the latter act, to the extent of the qualification of, the general act or provision.
conflict, constitutes an implied repeal of the earlier one. The second is: if the later act
The reason for this is that the legislature, in passing a law of special
covers the whole subject of the earlier one and is clearly intended as a substitute, it will
character, considers and makes special provisions for the particular
operate to repeal the earlier law. The oil companies argue that the situation here falls under
circumstances dealt with by the special law. This being so, the
the first category.
legislature, by adopting a general law containing provisions repugnant
Implied repeals are not favored and will not be so declared unless the intent of the legislators to those of the special law and without making any mention of its
is manifest. As statutes and ordinances are presumed to be passed only after careful intention to amend or modify such special law, cannot be deemed to
deliberation and with knowledge of all existing ones on the subject, it follows that, in have intended an amendment, repeal or modification of the latter.
passing a law, the legislature did not intend to interfere with or abrogate a former law
relating to the same subject matter. If the intent to repeal is not clear, the later act should be Ordinance No. 8027 is a special law since it deals specifically with a certain area described
construed as a continuation of, and not a substitute for, the earlier act. therein (the Pandacan oil depot area) whereas Ordinance No. 8119 can be considered a
general law as it covers the entire city of Manila. ECISAD
These standards are deeply enshrined in our jurisprudence. We disagree that, in enacting
Ordinance No. 8119, there was any indication of the legislative purpose to repeal Ordinance The oil companies assert that even if Ordinance No. 8027 is a special law, the existence of
No. 8027. 97 The excerpt quoted above is proof that there was never such an intent. While it an all-encompassing repealing clause in Ordinance No. 8119 evinces an intent on the part of
is true that both ordinances relate to the same subject matter, i.e., classification of the land the Sanggunian to repeal the earlier ordinance:
use of the area where Pandacan oil depot is located, if there is no intent to repeal the earlier Sec. 84. Repealing Clause. — All ordinances, rules, regulations in
enactment, every effort at reasonable construction must be made to reconcile the ordinances conflict with the provisions of this Ordinance are hereby
so that both can be given effect: repealed; PROVIDED,That the rights that are vested upon the
The fact that a later enactment may relate to the same subject matter effectivity of this Ordinance shall not be impaired.
as that of an earlier statute is not of itself sufficient to cause an
implied repeal of the prior act, since the new statute may merely be They cited Hospicio de San Jose de Barili, Cebu City v. Department of Agrarian Reform:
cumulative or a continuation of the old one. What is necessary is a The presence of such general repealing clause in a later statute clearly
manifest indication of legislative purpose to repeal. indicates the legislative intent to repeal all prior inconsistent laws on
the subject matter, whether the prior law is a general law or a special
For the first kind of implied repeal, there must be an irreconcilable conflict between the two law. ..Without such a clause, a later general law will ordinarily not
ordinances. There is no conflict between the two ordinances. Ordinance No. 8027 repeal a prior special law on the same subject. But with such clause
reclassified the Pandacan area from Industrial II to Commercial I. Ordinance No. 8119, in contained in the subsequent general law, the prior special law will be
Section 23, designated it as a "Planned Unit Development/Overlay Zone (O-PUD)." In its deemed repealed, as the clause is a clear legislative intent to bring
Annex C which defined the zone boundaries, the Pandacan area was shown to be within the about that result.
"High Density Residential/Mixed Use Zone (R-3/MXD)." These zone classifications in
Ordinance No. 8119 are not inconsistent with the reclassification of the Pandacan area from This ruling in not applicable here. The repealing clause of Ordinance No. 8119 cannot be
Industrial to Commercial in Ordinance No. 8027. The "O-PUD" classification merely made taken to indicate the legislative intent to repeal all prior inconsistent laws on the subject
Pandacan a "project site . . . comprehensively planned as an entity via unitary site plan matter, including Ordinance No. 8027, a special enactment, since the aforequoted minutes
which permits flexibility in planning/design, building siting, complementarity of building (an official record of the discussions in the Sanggunian) actually indicated the clear intent to
types and land uses, usable open spaces and the preservation of significant natural land preserve the provisions of Ordinance No. 8027.
features. . . ." Its classification as "R-3/MXD" means that it should "be used primarily for
high-rise housing/dwelling purposes and limited complementary/supplementary trade, To summarize, the conflict between the two ordinances is more apparent than real. The two
services and business activities." There is no conflict since both ordinances actually have a ordinances can be reconciled. Ordinance No. 8027 is applicable to the area particularly
common objective, i.e.,to shift the zoning classification from industrial to commercial described therein whereas Ordinance No. 8119 is applicable to the entire City of Manila.
(Ordinance No. 8027) or mixed residential/commercial (Ordinance No. 8119). MANDAMUS LIES TO COMPEL RESPONDENT MAYOR TO ENFORCE
Moreover, it is a well-settled rule in statutory construction that a subsequent general law ORDINANCE NO. 8027
does not repeal a prior special law on the same subject unless it clearly appears that the The oil companies insist that mandamus does not lie against respondent in consideration of
legislature has intended by the latter general act to modify or repeal the earlier special the separation of powers of the executive and judiciary. This argument is misplaced.
law. Generalia specialibus non derogant (a general law does not nullify a specific or special Indeed,
law). This is so even if the provisions of the general law are sufficiently comprehensive to
include what was set forth in the special act. The special act and the general law must stand [the] Courts will not interfere by mandamus proceedings with the
together, one as the law of the particular subject and the other as the law of general legislative [or executive departments] of the government in the
legitimate exercise of its powers, except to enforce mere ministerial peace and order, and preserve the comfort and convenience of their
acts required by law to be performed by some officer thereof. inhabitants.

since this is the function of a writ of mandamus, which is the power to compel "the LGUs like the City of Manila exercise police power through their respective legislative
performance of an act which the law specifically enjoins as a duty resulting from office, bodies, in this case, the Sangguniang Panlungsod or the city council. Specifically,
trust or station." the Sanggunian can enact ordinances for the general welfare of the city:
They also argue that petitioners had a plain, speedy and adequate remedy to compel Section 458. Powers, Duties, Functions and Compensation.— (a)
respondent to enforce Ordinance No. 8027 which was to seek relief from the President of the The sangguniang panglungsod, as the legislative branch of the city,
Philippines through the Secretary of the Department of Interior and Local Government shall enact ordinances, approve resolutions and appropriate funds for
(DILG) by virtue of the President's power of supervision over local government units. the general welfare of the city and its inhabitants pursuant to Section
Again, we disagree. A party need not go first to the DILG in order to compel the 16 of this Code .... TICaEc
enforcement of an ordinance. This suggested process would be unreasonably long, tedious
and consequently injurious to the interests of the local government unit (LGU) and its
constituents whose welfare is sought to be protected. Besides, petitioners' resort to an
original action for mandamusbefore this Court is undeniably allowed by the Constitution. This police power was also provided for in RA 409 or the Revised Charter of the City of
Manila:
ORDINANCE NO. 8027 IS CONSTITUTIONAL AND VALID
Section 18. Legislative powers. — The [City Council] shall have the
Having ruled that there is no impediment to the enforcement of Ordinance No. 8027, we following legislative powers:
now proceed to make a definitive ruling on its constitutionality and validity.
xxx xxx xxx
The tests of a valid ordinance are well established. For an ordinance to be valid, it must not
only be within the corporate powers of the LGU to enact and be passed according to the (kk) To enact all ordinances it may deem necessary and proper for the
procedure prescribed by law, it must also conform to the following substantive sanitation and safety, the furtherance of the prosperity, and the
requirements: (1) must not contravene the Constitution or any statute; (2) must not be unfair promotion of the morality, peace, good order, comfort, convenience,
or oppressive; (3) must not be partial or discriminatory; (4) must not prohibit but may and general welfare of the city and its inhabitants, and such others as
regulate trade; (5) must be general and consistent with public policy and (6) must not be may be necessary to carry into effect and discharge the powers and
unreasonable. duties conferred by this chapter..
THE CITY OF MANILA HAS THE POWER TO ENACT ORDINANCE Specifically, the Sanggunian has the power to "reclassify land within the jurisdiction of the
NO. 8027
city."
Ordinance No. 8027 was passed by the Sangguniang Panlungsod of Manila in the exercise
THE ENACTMENT OF ORDINANCE NO. 8027 IS A LEGITIMATE
of its police power. Police power is the plenary power vested in the legislature to make
EXERCISE OF POLICE POWER
statutes and ordinances to promote the health, morals, peace, education, good order or safety
and general welfare of the people. This power flows from the recognition that salus populi As with the State, local governments may be considered as having properly exercised their
est suprema lex (the welfare of the people is the supreme law). While police power rests police power only if the following requisites are met: (1) the interests of the public
primarily with the national legislature, such power may be delegated. Section 16 of the generally, as distinguished from those of a particular class, require its exercise and (2) the
LGC, known as the general welfare clause, encapsulates the delegated police power to local means employed are reasonably necessary for the accomplishment of the purpose and not
governments: unduly oppressive upon individuals. In short, there must be a concurrence of a lawful
subject and a lawful method.
Section 16.General Welfare. — Every local government unit shall
exercise the powers expressly granted, those necessarily implied Ordinance No. 8027 was enacted "for the purpose of promoting sound urban planning,
therefrom, as well as powers necessary, appropriate, or incidental for ensuring health, public safety and general welfare" of the residents of Manila.
its efficient and effective governance, and those which are essential to TheSanggunian was impelled to take measures to protect the residents of Manila from
the promotion of the general welfare. Within their respective catastrophic devastation in case of a terrorist attack on the Pandacan Terminals. Towards
territorial jurisdictions, local government units shall ensure and this objective, the Sanggunian reclassified the area defined in the ordinance from industrial
support, among other things, the preservation and enrichment of to commercial.
culture, promote health and safety, enhance the right of the people to
The following facts were found by the Committee on Housing, Resettlement and Urban
a balanced ecology, encourage and support the development of
Development of the City of Manila which recommended the approval of the ordinance:
appropriate and self-reliant scientific and technological capabilities,
improve public morals, enhance economic prosperity and social (1) the depot facilities contained 313.5 million liters of highly
justice, promote full employment among their residents, maintain flammable and highly volatile products which include
petroleum gas, liquefied petroleum gas, aviation fuel, There can be no doubt that the City of Manila has the power to divide
diesel, gasoline, kerosene and fuel oil among others; its territory into residential and industrial zones, and to prescribe that
offensive and unwholesome trades and occupations are to be
(2) the depot is open to attack through land, water or air; established exclusively in the latter zone.
(3) it is situated in a densely populated place and near Malacañang "The benefits to be derived by cities adopting such regulations
Palace and (zoning) may be summarized as follows: They attract a desirable and
assure a permanent citizenship; they foster pride in and attachment to
(4) in case of an explosion or conflagration in the depot, the fire could the city; they promote happiness and contentment; they stabilize the
spread to the neighboring communities. use and value of property and promote the peace, [tranquility],and
good order of the city. We do not hesitate to say that the attainment of
The ordinance was intended to safeguard the rights to life, security and safety of all the
these objects affords a legitimate field for the exercise of the police
inhabitants of Manila and not just of a particular class. The depot is perceived, rightly or
power. He who owns property in such a district is not deprived of its
wrongly, as a representation of western interests which means that it is a terrorist target. As
use by such regulations. He may use it for the purposes to which the
long as it there is such a target in their midst, the residents of Manila are not safe. It
section in which it is located is dedicated. That he shall not be
therefore became necessary to remove these terminals to dissipate the threat. According to
permitted to use it to the desecration of the community constitutes no
respondent:
unreasonable or permanent hardship and results in no unjust
Such a public need became apparent after the 9/11 incident which burden." ACTaDH
showed that what was perceived to be impossible to happen, to the
most powerful country in the world at that, is actually possible. The xxx xxx xxx
destruction of property and the loss of thousands of lives on that
fateful day became the impetus for a public need. In the aftermath of "The 14th Amendment protects the citizen in his right to engage in
the 9/11 tragedy, the threats of terrorism continued [such] that it any lawful business, but it does not prevent legislation intended to
became imperative for governments to take measures to combat their regulate useful occupations which, because of their nature or location,
effects. may prove injurious or offensive to the public."

Wide discretion is vested on the legislative authority to determine not only what the We entertain no doubt that Ordinance No. 8027 is a valid police power measure because
interests of the public require but also what measures are necessary for the there is a concurrence of lawful subject and lawful method.
protection of such interests. Clearly, the Sanggunian was in the best position to ORDINANCE NO. 8027 IS NOT UNFAIR, OPPRESSIVE OR CONFISCATORY
determine the needs of its constituents. WHICH AMOUNTS TO TAKING WITHOUT COMPENSATION
In the exercise of police power, property rights of individuals may be subjected to restraints According to the oil companies, Ordinance No. 8027 is unfair and oppressive as it does not
and burdens in order to fulfill the objectives of the government. Otherwise stated, the only regulate but also absolutely prohibits them from conducting operations in the City of
government may enact legislation that may interfere with personal liberty, property, lawful Manila. Respondent counters that this is not accurate since the ordinance merely prohibits
businesses and occupations to promote the general welfare. However, the interference must the oil companies from operating their businesses in the Pandacan area.
be reasonable and not arbitrary. And to forestall arbitrariness, the methods or means used to
Indeed, the ordinance expressly delineated in its title and in Section 1 what it pertained to.
protect public health, morals, safety or welfare must have a reasonable relation to the end in
Therefore, the oil companies' contention is not supported by the text of the ordinance.
view.
Respondent succinctly stated that:
The means adopted by the Sanggunian was the enactment of a zoning ordinance which
The oil companies are not forbidden to do business in the City of
reclassified the area where the depot is situated from industrial to commercial. A zoning
Manila. They may still very well do so, except that their oil storage
ordinance is defined as a local city or municipal legislation which logically arranges,
facilities are no longer allowed in the Pandacan area. Certainly, there
prescribes, defines and apportions a given political subdivision into specific land uses as
are other places in the City of Manila where they can conduct this
present and future projection of needs. As a result of the zoning, the continued operation of
specific kind of business. Ordinance No. 8027 did not render the oil
the businesses of the oil companies in their present location will no longer be permitted. The
companies illegal. The assailed ordinance affects the oil companies
power to establish zones for industrial, commercial and residential uses is derived from the
business only in so far as the Pandacan area is concerned.
police power itself and is exercised for the protection and benefit of the residents of a
locality. Consequently, the enactment of Ordinance No. 8027 is within the power of The oil companies are not prohibited from doing business in other appropriate zones
the Sangguniang Panlungsod of the City of Manila and any resulting burden on those in Manila. The City of Manila merely exercised its power to regulate the businesses
affected cannot be said to be unjust: and industries in the zones it established:
As to the contention that the power to regulate does not include the This issue should not detain us for long. An ordinance based on reasonable classification
power to prohibit, it will be seen that the ordinance copied above does does not violate the constitutional guaranty of the equal protection of the law. The
not prohibit the installation of motor engines within the municipality requirements for a valid and reasonable classification are: (1) it must rest on substantial
of Cabanatuan but only within the zone therein fixed. If the municipal distinctions; (2) it must be germane to the purpose of the law; (3) it must not be limited to
council of Cabanatuan is authorized to establish said zone, it is also existing conditions only and (4) it must apply equally to all members of the same class.
authorized to provide what kind of engines may be installed therein.
The law may treat and regulate one class differently from another class provided there are
In banning the installation in said zone of all engines not excepted in
real and substantial differences to distinguish one class from another. Here, there is a
the ordinance, the municipal council of Cabanatuan did no more than
reasonable classification. We reiterate that what the ordinance seeks to prevent is a
regulate their installation by means of zonification.
catastrophic devastation that will result from a terrorist attack. Unlike the depot, the
The oil companies aver that the ordinance is unfair and oppressive because they have surrounding community is not a high-value terrorist target. Any damage caused by fire or
invested billions of pesos in the depot. Its forced closure will result in huge losses in income explosion occurring in those areas would be nothing compared to the damage caused by a
and tremendous costs in constructing new facilities. fire or explosion in the depot itself. Accordingly, there is a substantial distinction. The
enactment of the ordinance which provides for the cessation of the operations of these
Their contention has no merit. In the exercise of police power, there is a limitation on or terminals removes the threat they pose. Therefore it is germane to the purpose of the
restriction of property interests to promote public welfare which involves no compensable ordinance. The classification is not limited to the conditions existing when the ordinance
taking. Compensation is necessary only when the state's power of eminent domain is was enacted but to future conditions as well. Finally, the ordinance is applicable to all
exercised. In eminent domain, property is appropriated and applied to some public purpose. businesses and industries in the area it delineated.
Property condemned under the exercise of police power, on the other hand, is noxious or
intended for a noxious or forbidden purpose and, consequently, is not compensable. The ORDINANCE NO. 8027 IS NOT INCONSISTENT WITH RA 7638
restriction imposed to protect lives, public health and safety from danger is not a taking. It is AND RA 8479
merely the prohibition or abatement of a noxious use which interferes with paramount rights The oil companies and the DOE assert that Ordinance No. 8027 is unconstitutional because
of the public. it contravenes RA 7638 (DOE Act of 1992) and RA 8479 (Downstream Oil Industry
Property has not only an individual function, insofar as it has to provide for the needs of the Deregulation Law of 1998). They argue that through RA 7638, the national legislature
owner, but also a social function insofar as it has to provide for the needs of the other declared it a policy of the state "to ensure a continuous, adequate, and economic supply of
members of society. The principle is this: energy" and created the DOE to implement this policy. Thus, under Section 5 (c), DOE is
empowered to "establish and administer programs for the exploration, transportation,
Police power proceeds from the principle that every holder of marketing, distribution, utilization, conservation, stockpiling, and storage of energy
property, however absolute and unqualified may be his title, holds it resources". Considering that the petroleum products contained in the Pandacan Terminals
under the implied liability that his use of it shall not be injurious to are major and critical energy resources, they conclude that their administration, storage,
the equal enjoyment of others having an equal right to the enjoyment distribution and transport are of national interest and fall under DOE's primary and exclusive
of their property, nor injurious to the right of the community. Rights jurisdiction.
of property, like all other social and conventional rights, are subject to
reasonable limitations in their enjoyment as shall prevent them from They further assert that the terminals are necessary for the delivery of immediate and
being injurious, and to such reasonable restraints and regulations adequate supply of oil to its recipients in the most economical way. Local legislation such
established by law as the legislature, under the governing and as Ordinance No. 8027 (which effectively calls for the removal of these terminals) allegedly
controlling power vested in them by the constitution, may think frustrates the state policy of ensuring a continuous, adequate, and economic supply of
necessary and expedient. energy expressed in RA 7638, a national law. Likewise, the ordinance thwarts the
determination of the DOE that the terminals' operations should be merely scaled down and
In the regulation of the use of the property, nobody else acquires the use or interest therein, not discontinued. They insist that this should not be allowed considering that it has a
hence there is no compensable taking. In this case, the properties of the oil companies and nationwide economic impact and affects public interest transcending the territorial
other businesses situated in the affected area remain theirs. Only their use is restricted jurisdiction of the City of Manila.
although they can be applied to other profitable uses permitted in the commercial zone.
According to them, the DOE's supervision over the oil industry under RA 7638 was
ORDINANCE NO. 8027 IS NOT PARTIAL AND DISCRIMINATORY subsequently underscored by RA 8479, particularly in Section 7 thereof:
The oil companies take the position that the ordinance has discriminated against and singled SECTION 7. Promotion of Fair Trade Practices. — The Department
out the Pandacan Terminals despite the fact that the Pandacan area is congested with of Trade and Industry (DTI) and DOE shall take all measures to
buildings and residences that do not comply with the National Building Code, Fire Code and promote fair trade and prevent cartelization, monopolies,
Health and Sanitation Code. combinations in restraint of trade, and any unfair competition in the
Industry as defined in Article 186 of the Revised Penal Code, and
Articles 168 and 169 of Republic Act No. 8293, otherwise known as
the "Intellectual Property Rights Law". The DOE shall continue The question now is whether Ordinance No. 8027 contravenes RA 7638 and RA 8479. It
to encourage certain practices in the Industry which serve the does not.
public interest and are intended to achieve efficiency and cost
Under Section 5 (c) of RA 7638, DOE was given the power to "establish and administer
reduction, ensure continuous supply of petroleum products,and
programs for the exploration, transportation, marketing, distribution, utilization,
enhance environmental protection. These practices may include
conservation, stockpiling, and storage of energy resources". On the other hand, under
borrow-and-loan agreements, rationalized depot and manufacturing
Section 7 of RA 8749, the DOE "shall continue to encourage certain practices in the
operations, hospitality agreements, joint tanker and pipeline
Industry which serve the public interest and are intended to achieve efficiency and cost
utilization, and joint actions on oil spill control and fire prevention.
reduction, ensure continuous supply of petroleum products." Nothing in these statutes
Respondent counters that DOE's regulatory power does not preclude LGUs from exercising prohibits the City of Manila from enacting ordinances in the exercise of its police
their police power. power. IDESTH

Indeed, ordinances should not contravene existing statutes enacted by Congress. The The principle of local autonomy is enshrined in and zealously protected under
rationale for this was clearly explained in Magtajas vs. Pryce Properties Corp., Inc.: the Constitution. In Article II, Section 25 thereof, the people expressly adopted the
following policy:
The rationale of the requirement that the ordinances should not
contravene a statute is obvious. Municipal governments are only Section 25. The State shall ensure the autonomy of local
agents of the national government. Local councils exercise only governments.
delegated legislative powers conferred on them by Congress as the
An entire article (Article X) of the Constitution has been devoted to guaranteeing and
national lawmaking body. The delegate cannot be superior to the
promoting the autonomy of LGUs. The LGC was specially promulgated by Congress to
principal or exercise powers higher than those of the latter. It is a
ensure the autonomy of local governments as mandated by the Constitution:
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, Sec. 2. Declaration of Policy. — (a) It is hereby declared the policy
and negate by mere ordinance the mandate of the statute. of the State that the territorial and political subdivisions of the
State shall enjoy genuine and meaningful local autonomy to
"Municipal corporations owe their origin to, and derive their powers enable them to attain their fullest development as self-reliant
and rights wholly from the legislature. It breathes into them the breath communities and make them more effective partners in the
of life, without which they cannot exist. As it creates, so it may attainment of national goals.Toward this end, the State shall provide
destroy. As it may destroy, it may abridge and control. Unless there is for a more responsive and accountable local government structure
some constitutional limitation on the right, the legislature might, by a instituted through a system of decentralization whereby local
single act, and if we can suppose it capable of so great a folly and so government units shall be given more powers, authority,
great a wrong, sweep from existence all of the municipal corporations responsibilities, and resources. The process of decentralization shall
in the State, and the corporation could not prevent it. We know of no proceed from the National Government to the local government
limitation on the right so far as to the corporation themselves are units.
concerned. They are, so to phrase it, the mere tenants at will of the
legislature." We do not see how the laws relied upon by the oil companies and DOE stripped the City of
Manila of its power to enact ordinances in the exercise of its police power and to reclassify
This basic relationship between the national legislature and the local the land uses within its jurisdiction. To guide us, we shall make a brief survey of our
government units has not been enfeebled by the new provisions in decisions where the police power measure of the LGU clashed with national laws.
the Constitution strengthening the policy of local autonomy. Without
meaning to detract from that policy, we here confirm that Congress In Tan v. Pereña, the Court ruled that Ordinance No. 7 enacted by the municipality of
retains control of the local government units although in significantly Daanbantayan, Cebu allowing the operation of three cockpits was invalid for violating PD
reduced degree now than under our previous Constitutions. The 449 (or the Cockfighting Law of 1974) which permitted only one cockpit per municipality.
power to create still includes the power to destroy. The power to grant In Batangas CATV, Inc. v. Court of Appeals, the Sangguniang Panlungsod of Batangas City
still includes the power to withhold or recall. True, there are certain enacted Resolution No. 210 granting Batangas CATV, Inc. a permit to operate a cable
notable innovations in the Constitution, like the direct conferment on television (CATV) system in Batangas City. The Court held that the LGU did not have the
the local government units of the power to tax, which cannot now be authority to grant franchises to operate a CATV system because it was the National
withdrawn by mere statute. By and large, however, the national Telecommunications Commission (NTC) that had the power under EO Nos. 205 and 436 to
legislature is still the principal of the local government units, which regulate CATV operations. EO 205 mandated the NTC to grant certificates of authority to
cannot defy its will or modify or violate it. 155 CATV operators while EO 436 vested on the NTC the power to regulate and supervise the
CATV industry. aEHADT
In Lina, Jr. v. Paño, we held that Kapasiyahan Bilang 508, Taon 1995 of the Sangguniang THE DOE CANNOT EXERCISE THE POWER OF CONTROL OVER LGUs
Panlalawigan of Laguna could not be used as justification to prohibit lotto in the
Another reason that militates against the DOE's assertions is that Section 4 of
municipality of San Pedro, Laguna because lotto was duly authorized by RA 1169, as
Article X of the Constitution confines the President's power over LGUs to one of general
amended by BP 42. This law granted a franchise to the Philippine Charity Sweepstakes
supervision:
Office and allowed it to operate lotteries.
SECTION 4. The President of the Philippines shall exercise general
In Magtajas v. Pryce Properties Corp., Inc., the Sangguniang Panlungsod of Cagayan de
supervision over local governments. ....
Oro City passed Ordinance Nos. 3353 and 3375-93 prohibiting the operation of casinos in
the city. We ruled that these ordinances were void for contravening PD 1869 or the charter Consequently, the Chief Executive or his or her alter egos, cannot exercise the power of
of the Philippine Amusements and Gaming Corporation which had the power to operate control over them. 162 Control and supervision are distinguished as follows:
casinos.
[Supervision] means overseeing or the power or authority of an
The common dominator of all of these cases is that the national laws were clearly and officer to see that subordinate officers perform their duties. If the
expressly in conflict with the ordinances/resolutions of the LGUs. The inconsistencies were latter fail or neglect to fulfill them, the former may take such action or
so patent that there was no room for doubt. This is not the case here. step as prescribed by law to make them perform their duties. Control,
The laws cited merely gave DOE general powers to "establish and administer programs for on the other hand, means the power of an officer to alter or modify or
the exploration, transportation, marketing, distribution, utilization, conservation, stockpiling, nullify or set aside what a subordinate officer ha[s] done in the
and storage of energy resources" and "to encourage certain practices in the [oil] industry performance of his duties and to substitute the judgment of the former
which serve the public interest and are intended to achieve efficiency and cost reduction, for that of the latter. 163
ensure continuous supply of petroleum products".These powers can be exercised without
emasculating the LGUs of the powers granted them. When these ambiguous powers are Supervisory power, when contrasted with control, is the power of mere
pitted against the unequivocal power of the LGU to enact police power and zoning oversight over an inferior body; it does not include any restraining authority over such
ordinances for the general welfare of its constituents, it is not difficult to rule in favor of the body. 164 It does not allow the supervisor to annul the acts of the subordinate. 165 Here,
latter. Considering that the powers of the DOE regarding the Pandacan Terminals are not what the DOE seeks to do is to set aside an ordinance enacted by local officials, a power
categorical, the doubt must be resolved in favor of the City of Manila: that not even its principal, the President, has. This is because:

SECTION 5. Rules of Interpretation. — In the interpretation of the Under our present system of government, executive power is vested
provisions of this Code, the following rules shall apply: in the President. The members of the Cabinet and other executive
officials are merely alter egos. As such, they are subject to the power
(a) Any provision on a power of a local government unit of control of the President, at whose will and behest they can be
shall be liberally interpreted in its favor, and in case of removed from office; or their actions and decisions changed,
doubt, any question thereon shall be resolved in favor of suspended or reversed. In contrast, the heads of political subdivisions
devolution of powers and of the lower local government are elected by the people. Their sovereign powers emanate from the
unit. Any fair and reasonable doubt as to the existence of electorate, to whom they are directly accountable. By constitutional
the power shall be interpreted in favor of the local fiat, they are subject to the President's supervision only, not control,
government unit concerned; so long as their acts are exercised within the sphere of their legitimate
powers. By the same token, the President may not withhold or alter
xxx xxx xxx any authority or power given them by the Constitution and the law.

(c) The general welfare provisions in this Code shall be Thus, the President and his or her alter egos, the department heads, cannot interfere with the
liberally interpreted to give more powers to local activities of local governments, so long as they act within the scope of their authority.
government units in accelerating economic development Accordingly, the DOE cannot substitute its own discretion for the discretion exercised by
and upgrading the quality of life for the people in the the sanggunian of the City of Manila. In local affairs, the wisdom of local officials must
community .... prevail as long as they are acting within the parameters of the Constitution and the law.

The least we can do to ensure genuine and meaningful local autonomy is not to force an ORDINANCE NO. 8027 IS NOT INVALID FOR FAILURE TO COMPLY
interpretation that negates powers explicitly granted to local governments. To rule against WITH RA 7924 AND EO 72
the power of LGUs to reclassify areas within their jurisdiction will subvert the principle of The oil companies argue that zoning ordinances of LGUs are required to be submitted to the
local autonomy guaranteed by the Constitution. As we have noted in earlier decisions, our Metropolitan Manila Development Authority (MMDA) for review and if found to be in
national officials should not only comply with the constitutional provisions on local compliance with its metropolitan physical framework plan and regulations, it shall endorse
autonomy but should also appreciate the spirit and liberty upon which these provisions are the same to the Housing and Land Use Regulatory Board (HLURB). Their basis is Section 3
based. (e) ofRA 7924:
SECTION 3. Scope of MMDA Services. — Metro-wide services of the national government which are concerned with land use and
under the jurisdiction of the MMDA are those services which have zoning, urban renewal and shelter services. (Emphasis supplied)
metro-wide impact and transcend local political boundaries or entail
huge expenditures such that it would not be viable for said services to They also claim that EO 72 provides that zoning ordinances of cities and
be provided by the individual [LGUs] comprising Metropolitan municipalities of Metro Manila are subject to review by the HLURB to ensure
Manila. These services shall include: compliance with national standards and guidelines. They cite Section 1, paragraphs (c),
(e), (f) and (g):
xxx xxx xxx
SECTION 1. Plan formulation or updating. —
(e) Urban renewal, zoning, and land use planning,and shelter
xxx xxx xxx
services which include the formulation, adoption and implementation
of policies, standards, rules and regulations, programs and projects to (c) Cities and municipalities of Metropolitan Manila shall continue to
rationalize and optimize urban land use and provide direction to urban formulate or update their respective comprehensive land use plans,
growth and expansion, the rehabilitation and development of slum in accordance with the land use planning and zoning standards and
and blighted areas, the development of shelter and housing facilities guidelines prescribed by the HLURB pursuant to EO 392, S. of 1990,
and the provision of necessary social services thereof. (Emphasis and other pertinent national policies.
supplied)
xxx xxx xxx
Reference was also made to Section 15 of its implementing rules:
Section 15. Linkages with HUDCC, HLURB, NHA, LGUs and Other (e) Pursuant to LOI 729, S. of 1978, EO 648, S. of 1981, and RA
National Government Agencies Concerned on Urban Renewal, 7279, the comprehensive land use plans of provinces, highly
Zoning and Land Use Planning and Shelter Services. Within the urbanized cities and independent component cities shall be reviewed
context of the National Housing and Urban Development Framework, and ratified by the HLURB to ensure compliance with national
and pursuant to the national standards, guidelines and regulations standards and guidelines.
formulated by the Housing and Land Use Regulatory Board
(f) Pursuant to EO 392, S. of 1999, the comprehensive land use
[HLURB] on land use planning and zoning, the [MMDA] shall
plans of cities and municipalities of Metropolitan Manila shall be
prepare a metropolitan physical framework plan and regulations
reviewed by the HLURB to ensure compliance with national
which shall complement and translate the socio-economic
standards and guidelines.
development plan for Metro Manila into physical or spatial terms, and
provide the basis for the preparation, review, integration and (g) Said review shall be completed within three (3) months upon
implementation of local land use plans and zoning, ordinance of cities receipt thereof otherwise, the same shall be deemed consistent with
and municipalities in the area. law, and, therefore, valid. (Emphasis supplied)
Said framework plan and regulations shall contain, among others, They argue that because Ordinance No. 8027 did not go through this review process, it is
planning and zoning policies and procedures that shall be observed by invalid.
local government units in the preparation of their own plans and
ordinances pursuant to Section 447 and 458 of RA 7160, as well as The argument is flawed.
the identification of sites and projects that are considered to be of RA 7942 does not give MMDA the authority to review land use plans and zoning
national or metropolitan significance. aADSIc ordinances of cities and municipalities. This was only found in its implementing rules which
made a reference to EO 72. EO 72 expressly refers to comprehensive land use plans
Cities and municipalities shall prepare their respective land use
(CLUPs) only. Ordinance No. 8027 is admittedly not a CLUP nor intended to be one.
plans and zoning ordinances and submit the same for review and
Instead, it is a very specific ordinance which reclassified the land use of a defined area in
integration by the [MMDA] and indorsement to HLURB in
order to prevent the massive effects of a possible terrorist attack. It is Ordinance No. 8119
accordance with Executive Order No. 72 and other pertinent
which was explicitly formulated as the "Manila [CLUP] and Zoning Ordinance of 2006."
laws.
CLUPs are the ordinances which should be submitted to the MMDA for integration in its
In the preparation of a Metropolitan Manila physical framework plan metropolitan physical framework plan and approved by the HLURB to ensure that they
and regulations, the [MMDA] shall coordinate with the Housing and conform with national guidelines and policies.
Urban Development Coordinating Council, HLURB, the National Moreover, even assuming that the MMDA review and HLURB ratification are necessary,
Housing Authority, Intramuros Administration, and all other agencies the oil companies did not present any evidence to show that these were not complied with.
In accordance with the presumption of validity in favor of an ordinance, its constitutionality
or legality should be upheld in the absence of proof showing that the procedure prescribed the scope and timing of the feasible location of the Pandacan oil
by law was not observed. The burden of proof is on the oil companies which already had terminals and all associated facilities and infrastructure including
notice that this Court was inclined to dispose of all the issues in this case. Yet aside from government support essential for the relocation such as the necessary
their bare assertion, they did not present any certification from the MMDA or the HLURB transportation infrastructure, land and right of way acquisition,
nor did they append these to their pleadings. Clearly, they failed to rebut the presumption of resettlement of displaced residents and environmental and social
validity of Ordinance No. 8027. acceptability which shall be based on mutual benefit of the Parties
and the public.
CONCLUSION
Essentially, the oil companies are fighting for their right to property. They allege that they Now that they are being compelled to discontinue their operations in the Pandacan
stand to lose billions of pesos if forced to relocate. However, based on the hierarchy of Terminals, they cannot feign unreadiness considering that they had years to prepare for this
constitutionally protected rights, the right to life enjoys precedence over the right to eventuality.
property. The reason is obvious: life is irreplaceable, property is not. When the state or Just the same, this Court is not about to provoke a crisis by ordering the immediate
LGU's exercise of police power clashes with a few individuals' right to property, the former relocation of the Pandacan Terminals out of its present site. The enforcement of a decision
should prevail. of this Court, specially one with far-reaching consequences, should always be within the
Both law and jurisprudence support the constitutionality and validity of Ordinance No. bounds of reason, in accordance with a comprehensive and well-coordinated plan, and
8027. Without a doubt, there are no impediments to its enforcement and implementation. within a time-frame that complies with the letter and spirit of our resolution. To this end, the
Any delay is unfair to the inhabitants of the City of Manila and its leaders who have oil companies have no choice but to obey the law.
categorically expressed their desire for the relocation of the terminals. Their power to chart A WARNING TO PETITIONERS' COUNSEL
and control their own destiny and preserve their lives and safety should not be curtailed by
the intervenors' warnings of doomsday scenarios and threats of economic disorder if the We draw the attention of the parties to a matter of grave concern to the legal profession.
ordinance is enforced. Petitioners and their counsel, Atty. Samson Alcantara, submitted a four-page memorandum
Secondary to the legal reasons supporting the immediate implementation of Ordinance No. that clearly contained neither substance nor research. It is absolutely insulting to this Court.
8027 are the policy considerations which drove Manila's government to come up with such a We have always tended towards judicial leniency, temperance and compassion to those who
measure: suffer from a wrong perception of what the majesty of the law means. But for a member of
...[The] oil companies still were not able to allay the apprehensions of the bar, an officer of the court, to file in this Court a memorandum of such unacceptable
the city regarding the security threat in the area in general. No quality is an entirely different matter.
specific action plan or security measures were presented that would It is indicative less of a personal shortcoming or contempt of this Court and more of a
prevent a possible large-scale terrorist or malicious attack especially lawyer's sorry descent from a high sense of duty and responsibility. As a member of the bar
an attack aimed at Malacañang. The measures that were installed and as an officer of the court, a lawyer ought to be keenly aware that the chief safeguard of
were more directed towards their internal security and did not include the body politic is respect for the law and its magistrates.
the prevention of an external attack even on a bilateral level of
cooperation between these companies and the police and military. There is nothing more effective than the written word by which counsel can persuade this
Court of the righteousness of his cause. For if truth were self-evident, a memorandum would
xxx xxx xxx be completely unnecessary and superfluous.
It is not enough for the city government to be told by these oil The inability of counsel to prepare a memorandum worthy of this Court's consideration is
companies that they have the most sophisticated fire-fighting an ejemplo malo to the legal profession as it betrays no genuine interest in the cause he
equipments and have invested millions of pesos for these equipments. claims to espouse. Or did counsel think he can earn his moment of glory without the hard
The city government wants to be assured that its residents are safe at work and dedication called for by his petition?
any time from these installations, and in the three public hearings and A FINAL WORD
in their position papers, not one statement has been said that indeed
the absolute safety of the residents from the hazards posed by these On Wednesday, January 23, 2008, a defective tanker containing 2,000 liters of gasoline and
installations is assured. 173 14,000 liters of diesel exploded in the middle of the street a short distance from the exit gate
of the Pandacan Terminals, causing death, extensive damage and a frightening conflagration
We are also putting an end to the oil companies' determination to prolong their in the vicinity of the incident. Need we say anything about what will happen if it is the
stay in Pandacan despite the objections of Manila's residents. As early as October 2001, estimated 162 to 211 million liters of petroleum products in the terminal complex which
the oil companies signed a MOA with the DOE obliging themselves to: blow up?
...undertake a comprehensive and comparative study ...[which] shall WHEREFORE, the motions for leave to intervene of Chevron Philippines, Inc.,Petron
include the preparation of a Master Plan, whose aim is to determine Corporation and Pilipinas Shell Petroleum Corporation, and the Republic of the Philippines,
represented by the Department of Energy, are hereby GRANTED. Their respective motions E-016-01374 1992-2001 111,689,424.90 68,149,479.59 179,838,904.49
for reconsideration are hereby DENIED. The Regional Trial Court, Manila, Branch 39 is
ORDERED to DISMISS the consolidated cases of Civil Case No. 03-106377 and Civil Case E-016-01375 1992-2001 20,276,058.00 12,371,832.00 32,647,890.00
No. 03-106380.
E-016-01376 1992-2001 58,144,028.00 35,477,712.00 93,621,740.00
We reiterate our order to respondent Mayor of the City of Manila to enforce Ordinance No.
8027. In coordination with the appropriate agencies and other parties involved, respondent E-016-01377 1992-2001 18,134,614.65 11,065,188.59 29,199,803.24
Mayor is hereby ordered to oversee the relocation and transfer of the Pandacan Terminals
out of its present site. E-016-01378 1992-2001 111,107,950.40 67,794,681.59 178,902,631.99

To ensure the orderly transfer, movement and relocation of assets and personnel, the E-016-01379 1992-2001 4,322,340.00 2,637,360.00 6,959,700.00
intervenors Chevron Philippines, Inc.,Petron Corporation and Pilipinas Shell Petroleum
Corporation shall, within a non-extendible period of ninety (90) days, submit to the E-016-01380 1992-2001 7,776,436.00 4,744,944.00 12,521,380.00
Regional Trial Court of Manila, Branch 39, the comprehensive plan and relocation schedule
which have allegedly been prepared. The presiding judge of Manila RTC, Branch 39 will *E-016-013-85 1998-2001 6,444,810.00 2,900,164.50 9,344,974.50
monitor the strict enforcement of this resolution. *E-016-01387 1998-2001 34,876,800.00 5,694,560.00 50,571,360.00
Atty. Samson Alcantara is hereby ordered to explain within five (5) days from notice why he
should not be disciplined for his refusal, or inability, to file a memorandum worthy of the *E-016-01396 1998-2001 75,240.00 33,858.00 109,098.00
consideration of this Court.Treble costs against petitioners' counsel, Atty. Samson
GRAND TOTAL P392,435,861.95 P232,070,863.47 P624,506,725.42
Alcantara.
TAXING POWER 1992-1997 RPT was paid on Dec. 24, 1997 as per O.R. #9476102 for P4,207,028.75
#9476101 for P28,676,480.00
MANILA INTL AIRPORT AUTHORITY VS CA #9476103 for P49,115.00
On 17 July 2001, the City of Parañaque, through its City Treasurer, issued notices of levy and
The Antecedents warrants of levy on the Airport Lands and Buildings. The Mayor of the City of Parañaque
Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino threatened to sell at public auction the Airport Lands and Buildings should MIAA fail to pay
International Airport (NAIA) Complex in Parañaque City under Executive Order No. 903, the real estate tax delinquency. MIAA thus sought a clarification of OGCC Opinion No. 061.
otherwise known as the Revised Charter of the Manila International Airport Authority ("MIAA
Charter"). Executive Order No. 903 was issued on 21 July 1983 by then President Ferdinand E. On 9 August 2001, the OGCC issued Opinion No. 147 clarifying OGCC Opinion No. 061. The
Marcos. Subsequently, Executive Order Nos. 909 1 and 298 2 amended the MIAA Charter. OGCC pointed out that Section 206 of the Local Government Code requires persons exempt
from real estate tax to show proof of exemption. The OGCC opined that Section 21 of the
As operator of the international airport, MIAA administers the land, improvements and MIAA Charter is the proof that MIAA is exempt from real estate tax.
equipment within the NAIA Complex. The MIAA Charter transferred to MIAA approximately
600 hectares of land, 3 including the runways and buildings ("Airport Lands and Buildings") On 1 October 2001, MIAA filed with the Court of Appeals an original petition for prohibition
then under the Bureau of Air Transportation. 4 The MIAA Charter further provides that no and injunction, with prayer for preliminary injunction or temporary restraining order. The
portion of the land transferred to MIAA shall be disposed of through sale or any other mode petition sought to restrain the City of Parañaque from imposing real estate tax on, levying
unless specifically approved by the President of the Philippines. 5 against, and auctioning for public sale the Airport Lands and Buildings. The petition was
docketed as CA-G.R. SP No. 66878.
On 21 March 1997, the Office of the Government Corporate Counsel (OGCC) issued Opinion
No. 061. The OGCC opined that the Local Government Code of 1991 withdrew the exemption On 5 October 2001, the Court of Appeals dismissed the petition because MIAA filed it beyond
from real estate tax granted to MIAA under Section 21 of the MIAA Charter. Thus, MIAA the 60-day reglementary period. The Court of Appeals also denied on 27 September 2002
negotiated with respondent City of Parañaque to pay the real estate tax imposed by the City. MIAA's motion for reconsideration and supplemental motion for reconsideration. Hence,
MIAA then paid some of the real estate tax already due. MIAA filed on 5 December 2002 the present petition for review. 7

On 28 June 2001, MIAA received Final Notices of Real Estate Tax Delinquency from the City Meanwhile, in January 2003, the City of Parañaque posted notices of auction sale at the
of Parañaque for the taxable years 1992 to 2001. MIAA's real estate tax delinquency is broken Barangay Halls of Barangays Vitalez, Sto. Niño, and Tambo, Parañaque City; in the public
down as follows: market of Barangay La Huerta; and in the main lobby of the Parañaque City Hall. The City of
Parañaque published the notices in the 3 and 10 January 2003 issues of the Philippine Daily
TAX DECLARATION TAXABLE YEAR TAX DUE PENALTY TOTAL Inquirer, a newspaper of general circulation in the Philippines. The notices announced the
public auction sale of the Airport Lands and Buildings to the highest bidder on 7 February
E-016-01370 1992-2001 19,558,160.00 11,201,083.20 30,789,243.20 2003, 10:00 a.m., at the Legislative Session Hall Building of Parañaque City.
A day before the public auction, or on 6 February 2003, at 5:10 p.m., MIAA filed before this This petition raises the threshold issue of whether the Airport Lands and Buildings of MIAA
Court an Urgent Ex-Parte and Reiteratory Motion for the Issuance of a Temporary Restraining are exempt from real estate tax under existing laws. If so exempt, then the real estate tax
Order. The motion sought to restrain respondents — the City of Parañaque, City Mayor of assessments issued by the City of Parañaque, and all proceedings taken pursuant to such
Parañaque, Sangguniang Panglungsod ng Parañaque, City Treasurer of Parañaque, and the assessments, are void. In such event, the other issues raised in this petition become moot.
City Assessor of Parañaque ("respondents") — from auctioning the Airport Lands and
Buildings. The Court's Ruling
We rule that MIAA's Airport Lands and Buildings are exempt from real estate tax imposed by
On 7 February 2003, this Court issued a temporary restraining order (TRO) effective
local governments.
immediately. The Court ordered respondents to cease and desist from selling at public auction
the Airport Lands and Buildings. Respondents received the TRO on the same day that the First, MIAA is not a government-owned or controlled corporation but an instrumentality of
Court issued it. However, respondents received the TRO only at 1:25 p.m. or three hours after the National Government and thus exempt from local taxation. Second, the real properties of
the conclusion of the public auction. DTSaIc MIAA are owned by the Republic of the Philippines and thus exempt from real estate tax.
On 10 February 2003, this Court issued a Resolution confirming nunc pro tunc the TRO. 1. MIAA is Not a Government-Owned or Controlled Corporation
On 29 March 2005, the Court heard the parties in oral arguments. In compliance with the Respondents argue that MIAA, being a government-owned or controlled corporation, is not
directive issued during the hearing, MIAA, respondent City of Parañaque, and the Solicitor exempt from real estate tax. Respondents claim that the deletion of the phrase "any
General subsequently submitted their respective Memoranda. government-owned or controlled so exempt by its charter" in Section 234(e) of the Local
Government Code withdrew the real estate tax exemption of government-owned or controlled
MIAA admits that the MIAA Charter has placed the title to the Airport Lands and Buildings in corporations. The deleted phrase appeared in Section 40(a) of the 1974 Real Property Tax
the name of MIAA. However, MIAA points out that it cannot claim ownership over these Code enumerating the entities exempt from real estate tax.
properties since the real owner of the Airport Lands and Buildings is the Republic of the
Philippines. The MIAA Charter mandates MIAA to devote the Airport Lands and Buildings for There is no dispute that a government-owned or controlled corporation is not exempt from real
the benefit of the general public. Since the Airport Lands and Buildings are devoted to public estate tax. However, MIAA is not a government-owned or controlled corporation. Section
use and public service, the ownership of these properties remains with the State. The Airport 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines a government-
Lands and Buildings are thus inalienable and are not subject to real estate tax by local owned or controlled corporation as follows:
governments.

MIAA also points out that Section 21 of the MIAA Charter specifically exempts MIAA from
the payment of real estate tax. MIAA insists that it is also exempt from real estate tax under SEC. 2. General Terms Defined. — . . .
Section 234 of the Local Government Code because the Airport Lands and Buildings are
owned by the Republic. To justify the exemption, MIAA invokes the principle that the (13) Government-owned or controlled corporation refers to any
government cannot tax itself. MIAA points out that the reason for tax exemption of public agency organized as a stock or non-stock corporation, vested with
property is that its taxation would not inure to any public advantage, since in such a case the functions relating to public needs whether governmental or
tax debtor is also the tax creditor. proprietary in nature, and owned by the Government directly or
through its instrumentalities either wholly, or, where applicable as in
Respondents invoke Section 193 of the Local Government Code, which expressly the case of stock corporations, to the extent of at least fifty-one (51)
withdrew the tax exemption privileges of "government-owned and-controlled corporations" percent of its capital stock: . . . . (Emphasis supplied)
upon the effectivity of the Local Government Code. Respondents also argue that a basic rule of
statutory construction is that the express mention of one person, thing, or act excludes all A government-owned or controlled corporation must be "organized as a stock or non-stock
others. An international airport is not among the exceptions mentioned in Section 193 of the corporation." MIAA is not organized as a stock or non-stock corporation. MIAA is not a stock
Local Government Code. Thus, respondents assert that MIAA cannot claim that the Airport corporation because it has no capital stock divided into shares. MIAA has no stockholders or
Lands and Buildings are exempt from real estate tax. voting shares. Section 10 of the MIAA Charter 9 provides:

Respondents also cite the ruling of this Court in Mactan International Airport v. SECTION 10. Capital. — The capital of the Authority to be
Marcos 8 where we held that the Local Government Code has withdrawn the exemption from contributed by the National Government shall be increased from Two
real estate tax granted to international airports. Respondents further argue that since MIAA has and One-half Billion (P2,500,000,000.00) Pesos to Ten Billion
already paid some of the real estate tax assessments, it is now estopped from claiming that the (P10,000,000,000.00) Pesos to consist of:
Airport Lands and Buildings are exempt from real estate tax.
(a) The value of fixed assets including airport facilities, runways and
The Issue equipment and such other properties, movable and immovable[,]
which may be contributed by the National Government or transferred
by it from any of its agencies, the valuation of which shall be functions or jurisdiction by law, endowed with some if not all
determined jointly with the Department of Budget and Management corporate powers, administering special funds, and enjoying
and the Commission on Audit on the date of such contribution or operational autonomy, usually through a charter. . . . (Emphasis
transfer after making due allowances for depreciation and other supplied)
deductions taking into account the loans and other liabilities of the
Authority at the time of the takeover of the assets and other When the law vests in a government instrumentality corporate powers, the instrumentality does
properties; not become a corporation. Unless the government instrumentality is organized as a stock or
non-stock corporation, it remains a government instrumentality exercising not only
(b) That the amount of P605 million as of December 31, 1986 governmental but also corporate powers. Thus, MIAA exercises the governmental powers of
representing about seventy percentum (70%) of the unremitted share eminent domain, 12 police authority 13 and the levying of fees and charges. 14 At the same
of the National Government from 1983 to 1986 to be remitted to the time, MIAA exercises "all the powers of a corporation under the Corporation Law, insofar as
National Treasury as provided for in Section 11 of E.O. No. 903 as these powers are not inconsistent with the provisions of this Executive Order." 15
amended, shall be converted into the equity of the National
Government in the Authority. Thereafter, the Government Likewise, when the law makes a government instrumentality operationally autonomous, the
contribution to the capital of the Authority shall be provided in the instrumentality remains part of the National Government machinery although not integrated
General Appropriations Act. with the department framework. The MIAA Charter expressly states that transforming MIAA
into a "separate and autonomous body" 16 will make its operation more "financially viable." 17
Clearly, under its Charter, MIAA does not have capital stock that is divided into shares.
Many government instrumentalities are vested with corporate powers but they do not become
Section 3 of the Corporation Code 10 defines a stock corporation as one whose "capital stock stock or non-stock corporations, which is a necessary condition before an agency or
is divided into shares and . . . authorized to distribute to the holders of such shares instrumentality is deemed a government-owned or controlled corporation. Examples are the
dividends . . . ." MIAA has capital but it is not divided into shares of stock. MIAA has no Mactan International Airport Authority, the Philippine Ports Authority, the University of the
stockholders or voting shares. Hence, MIAA is not a stock corporation. Philippines and Bangko Sentral ng Pilipinas. All these government instrumentalities exercise
corporate powers but they are not organized as stock or non-stock corporations as required by
MIAA is also not a non-stock corporation because it has no members. Section 87 of the
Section 2(13) of the Introductory Provisions of the Administrative Code. These government
Corporation Code defines a non-stock corporation as "one where no part of its income is
instrumentalities are sometimes loosely called government corporate entities. However, they
distributable as dividends to its members, trustees or officers." A non-stock corporation must
are not government-owned or controlled corporations in the strict sense as understood under
have members. Even if we assume that the Government is considered as the sole member of
the Administrative Code, which is the governing law defining the legal relationship and status
MIAA, this will not make MIAA a non-stock corporation. Non-stock corporations cannot
of government entities.
distribute any part of their income to their members. Section 11 of the MIAA Charter mandates
MIAA to remit 20% of its annual gross operating income to the National Treasury. 11 This A government instrumentality like MIAA falls under Section 133(o) of the Local Government
prevents MIAA from qualifying as a non-stock corporation. Code, which states:
Section 88 of the Corporation Code provides that non-stock corporations are "organized for SEC. 133. Common Limitations on the Taxing Powers of Local
charitable, religious, educational, professional, cultural, recreational, fraternal, literary, Government Units. — Unless otherwise provided herein, the
scientific, social, civil service, or similar purposes, like trade, industry, agriculture and like exercise of the taxing powers of provinces, cities, municipalities,
chambers." MIAA is not organized for any of these purposes. MIAA, a public utility, is and barangays shall not extend to the levy of the following:
organized to operate an international and domestic airport for public use.
xxx xxx xxx
Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a
government-owned or controlled corporation. What then is the legal status of MIAA within the (o) Taxes, fees or charges of any kind on the National
National Government? Government, its agencies and instrumentalities and local
government units. (Emphasis and underscoring supplied)
MIAA is a government instrumentality vested with corporate powers to perform efficiently
its governmental functions. MIAA is like any other government instrumentality, the only Section 133(o) recognizes the basic principle that local governments cannot tax the
difference is that MIAA is vested with corporate powers. Section 2(10) of the Introductory national government, which historically merely delegated to local governments the power
Provisions of the Administrative Code defines a government "instrumentality" as follows: to tax. Whilethe 1987 Constitution now includes taxation as one of the powers of local
governments, local governments may only exercise such power "subject to such
SEC. 2. General Terms Defined. –– . . . guidelines and limitations as the Congress may provide." 18
(10) Instrumentality refers to any agency of the National Government, When local governments invoke the power to tax on national government instrumentalities,
not integrated within the department framework, vested with special such power is construed strictly against local governments. The rule is that a tax is never
presumed and there must be clear language in the law imposing the tax. Any doubt whether a the accomplishment of them." (Antieau, Modern
person, article or activity is taxable is resolved against taxation. This rule applies with greater Constitutional Law, Vol. 2, p. 140, emphasis supplied)
force when local governments seek to tax national government instrumentalities.
Otherwise, mere creatures of the State can defeat National policies
Another rule is that a tax exemption is strictly construed against the taxpayer claiming the thru extermination of what local authorities may perceive to be
exemption. However, when Congress grants an exemption to a national government undesirable activities or enterprise using the power to tax as "a tool
instrumentality from local taxation, such exemption is construed liberally in favor of the for regulation" (U.S. v. Sanchez, 340 US 42). TAScID
national government instrumentality. As this Court declared in Maceda v. Macaraig, Jr.:
The power to tax which was called by Justice Marshall as the "power
The reason for the rule does not apply in the case of exemptions to destroy" (Mc Culloch v. Maryland, supra) cannot be allowed to
running to the benefit of the government itself or its agencies. In such defeat an instrumentality or creation of the very entity which has the
case the practical effect of an exemption is merely to reduce the inherent power to wield it. 20
amount of money that has to be handled by government in the course
of its operations. For these reasons, provisions granting exemptions to 2. Airport Lands and Buildings of MIAA are Owned by the Republic
government agencies may be construed liberally, in favor of non tax- a. Airport Lands and Buildings are of Public Dominion
liability of such agencies. 19
The Airport Lands and Buildings of MIAA are property of public dominion and therefore
There is, moreover, no point in national and local governments taxing each other, unless a owned by the State or the Republic of the Philippines. The Civil Code provides:
sound and compelling policy requires such transfer of public funds from one government
pocket to another. ARTICLE 419. Property is either of public dominion or of private
ownership.
There is also no reason for local governments to tax national government instrumentalities for
rendering essential public services to inhabitants of local governments. The only exception is ARTICLE 420. The following things are property of public
when the legislature clearly intended to tax government instrumentalities for the delivery dominion:
of essential public services for sound and compelling policy considerations. There must be
express language in the law empowering local governments to tax national government (1) Those intended for public use, such as roads, canals, rivers,
instrumentalities. Any doubt whether such power exists is resolved against local governments. torrents, ports and bridges constructed by the State, banks, shores,
roadsteads, and others of similar character;
Thus, Section 133 of the Local Government Code states that "unless otherwise provided" in
the Code, local governments cannot tax national government instrumentalities. As this Court (2) Those which belong to the State, without being for public use, and
held in Basco v. Philippine Amusements and Gaming Corporation: are intended for some public service or for the development of the
national wealth. (Emphasis supplied)
The states have no power by taxation or otherwise, to
retard, impede, burden or in any manner control the ARTICLE 421. All other property of the State, which is not of the
operation of constitutional laws enacted by Congress to character stated in the preceding article, is patrimonial property.
carry into execution the powers vested in the federal
government. (MC Culloch v. Maryland, 4 Wheat 316, 4 L ARTICLE 422. Property of public dominion, when no longer
Ed. 579) intended for public use or for public service, shall form part of the
patrimonial property of the State.

No one can dispute that properties of public dominion mentioned in Article 420 of the Civil
This doctrine emanates from the "supremacy" of the National Code, like "roads, canals, rivers, torrents, ports and bridges constructed by the State," are
Government over local governments. owned by the State. The term "ports" includes seaports and airports. The MIAA Airport
Lands and Buildings constitute a "port" constructed by the State. Under Article 420 of the
"Justice Holmes, speaking for the Supreme Court, made Civil Code, the MIAA Airport Lands and Buildings are properties of public dominion and thus
reference to the entire absence of power on the part of the owned by the State or the Republic of the Philippines.
States to touch, in that way (taxation) at least, the
instrumentalities of the United States (Johnson v. The Airport Lands and Buildings are devoted to public use because they are used by the
Maryland, 254 US 51) and it can be agreed that no state or public for international and domestic travel and transportation. The fact that the MIAA
political subdivision can regulate a federal instrumentality collects terminal fees and other charges from the public does not remove the character of the
in such a way as to prevent it from consummating its Airport Lands and Buildings as properties for public use. The operation by the government of a
federal responsibilities, or even to seriously burden it in tollway does not change the character of the road as one for public use. Someone must pay for
the maintenance of the road, either the public indirectly through the taxes they pay the plazas and streets are outside of this commerce, as was decided by
government, or only those among the public who actually use the road through the toll fees the supreme court of Spain in its decision of February 12, 1895,
they pay upon using the road. The tollway system is even a more efficient and equitable which says: "Communal things that cannot be sold because they
manner of taxing the public for the maintenance of public roads. are by their very nature outside of commerce are those for public
use, such as the plazas, streets, common lands, rivers, fountains,
The charging of fees to the public does not determine the character of the property whether it is etc." (Emphasis supplied) 23
of public dominion or not. Article 420 of the Civil Code defines property of public dominion as
one "intended for public use." Even if the government collects toll fees, the road is still Again in Espiritu v. Municipal Council, the Court declared that properties of public dominion
"intended for public use" if anyone can use the road under the same terms and conditions as the are outside the commerce of man:
rest of the public. The charging of fees, the limitation on the kind of vehicles that can use the
road, the speed restrictions and other conditions for the use of the road do not affect the public . . . Town plazas are properties of public dominion, to be devoted to
character of the road. public use and to be made available to the public in general. They
are outside the commerce of man and cannot be disposed of or even
The terminal fees MIAA charges to passengers, as well as the landing fees MIAA charges to leased by the municipality to private parties. While in case of war or
airlines, constitute the bulk of the income that maintains the operations of MIAA. The during an emergency, town plazas may be occupied temporarily by
collection of such fees does not change the character of MIAA as an airport for public use. private individuals, as was done and as was tolerated by the
Such fees are often termed user's tax. This means taxing those among the public who actually Municipality of Pozorrubio, when the emergency has ceased, said
use a public facility instead of taxing all the public including those who never use the particular temporary occupation or use must also cease, and the town officials
public facility. A user's tax is more equitable — a principle of taxation mandated in the 1987 should see to it that the town plazas should ever be kept open to the
Constitution.21 public and free from encumbrances or illegal private
constructions. 24 (Emphasis supplied)
The Airport Lands and Buildings of MIAA, which its Charter calls the "principal airport of the
Philippines for both international and domestic air traffic," 22 are properties of public The Court has also ruled that property of public dominion, being outside the commerce of
dominion because they are intended for public use. As properties of public dominion, they man, cannot be the subject of an auction sale. 25
indisputably belong to the State or the Republic of the Philippines.
Properties of public dominion, being for public use, are not subject to levy, encumbrance or
b. Airport Lands and Buildings are Outside the Commerce of Man disposition through public or private sale. Any encumbrance, levy on execution or auction sale
of any property of public dominion is void for being contrary to public policy. Essential public
The Airport Lands and Buildings of MIAA are devoted to public use and thus are properties of services will stop if properties of public dominion are subject to encumbrances, foreclosures
public dominion. As properties of public dominion, the Airport Lands and Buildings are and auction sale. This will happen if the City of Parañaque can foreclose and compel the
outside the commerce of man. The Court has ruled repeatedly that properties of public auction sale of the 600-hectare runway of the MIAA for non-payment of real estate tax.
dominion are outside the commerce of man. As early as 1915, this Court already ruled
inMunicipality of Cavite v. Rojas that properties devoted to public use are outside the Before MIAA can encumber 26 the Airport Lands and Buildings, the President must
commerce of man, thus: first withdraw from public use the Airport Lands and Buildings. Sections 83 and 88 of
the Public Land Law or Commonwealth Act No. 141, which "remains to this day the existing
According to article 344 of the Civil Code: "Property for public use in general law governing the classification and disposition of lands of the public domain other
provinces and in towns comprises the provincial and town roads, the than timber and mineral lands," 27 provide:
squares, streets, fountains, and public waters, the promenades, and
public works of general service supported by said towns or SECTION 83. Upon the recommendation of the Secretary of
provinces." Agriculture and Natural Resources, the President may designate by
proclamation any tract or tracts of land of the public domain as
The said Plaza Soledad being a promenade for public use, the reservations for the use of the Republic of the Philippines or of any of
municipal council of Cavite could not in 1907 withdraw or exclude its branches, or of the inhabitants thereof, in accordance with
from public use a portion thereof in order to lease it for the sole regulations prescribed for this purposes, or for quasi-public uses or
benefit of the defendant Hilaria Rojas. In leasing a portion of said purposes when the public interest requires it, including reservations
plaza or public place to the defendant for private use the plaintiff for highways, rights of way for railroads, hydraulic power sites,
municipality exceeded its authority in the exercise of its powers by irrigation systems, communal pastures or lequas communales, public
executing a contract over a thing of which it could not dispose, nor is parks, public quarries, public fishponds, working men's village and
it empowered so to do. other improvements for the public benefit.
The Civil Code, article 1271, prescribes that everything which is not SECTION 88. The tract or tracts of land reserved under the
outside the commerce of man may be the object of a contract, and provisions of Section eighty-three shall be non-alienable and shall
not be subject to occupation, entry, sale, lease, or other In MIAA's case, its status as a mere trustee of the Airport Lands and Buildings is clearer
disposition until again declared alienable under the provisions of because even its executive head cannot sign the deed of conveyance on behalf of the Republic.
this Act or by proclamation of the President. (Emphasis and Only the President of the Republic can sign such deed of conveyance. 28
underscoring supplied)
d. Transfer to MIAA was Meant to Implement a Reorganization
Thus, unless the President issues a proclamation withdrawing the Airport Lands and Buildings
The MIAA Charter, which is a law, transferred to MIAA the title to the Airport Lands and
from public use, these properties remain properties of public dominion and are inalienable.
Buildings from the Bureau of Air Transportation of the Department of Transportation and
Since the Airport Lands and Buildings are inalienable in their present status as properties of
Communications. The MIAA Charter provides:
public dominion, they are not subject to levy on execution or foreclosure sale. As long as the
Airport Lands and Buildings are reserved for public use, their ownership remains with the State SECTION 3. Creation of the Manila International Airport Authority.
or the Republic of the Philippines. —...

The land where the Airport is presently located as well as the


surrounding land area of approximately six hundred hectares,
The authority of the President to reserve lands of the public domain for public use, and to
are hereby transferred, conveyed and assigned to the ownership
withdraw such public use, is reiterated in Section 14, Chapter 4, Title I, Book III of the
and administration of the Authority, subject to existing rights, if
Administrative Code of 1987, which states:
any. The Bureau of Lands and other appropriate government agencies
SEC. 14. Power to Reserve Lands of the Public and Private Domain shall undertake an actual survey of the area transferred within one
of the Government. — (1) The President shall have the power to year from the promulgation of this Executive Order and the
reserve for settlement or public use, and for specific public corresponding title to be issued in the name of the Authority. Any
purposes, any of the lands of the public domain, the use of which portion thereof shall not be disposed through sale or through any
is not otherwise directed by law. The reserved land shall other mode unless specifically approved by the President of the
thereafter remain subject to the specific public purpose indicated Philippines. (Emphasis supplied)
until otherwise provided by law or proclamation;
SECTION 22. Transfer of Existing Facilities and Intangible Assets.
xxx xxx xxx. (Emphasis supplied) — All existing public airport facilities, runways, lands, buildings
and other property, movable or immovable, belonging to the
There is no question, therefore, that unless the Airport Lands and Buildings are Airport, and all assets, powers, rights, interests and
withdrawn by law or presidential proclamation from public use, they are properties of privileges belonging to the Bureau of Air Transportation relating
public dominion, owned by the Republic and outside the commerce of man. DSAICa to airport works or air operations, including all equipment which are
necessary for the operation of crash fire and rescue facilities, are
c. MIAA is a Mere Trustee of the Republic hereby transferred to the Authority. (Emphasis supplied)
MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic.
Section 48, Chapter 12, Book I of the Administrative Code allows instrumentalities like SECTION 25. Abolition of the Manila International Airport as a
MIAA to hold title to real properties owned by the Republic, thus: Division in the Bureau of Air Transportation and Transitory
Provisions. — The Manila International Airport including the Manila
SEC. 48. Official Authorized to Convey Real Property. — Whenever Domestic Airport as a division under the Bureau of Air
real property of the Government is authorized by law to be conveyed, Transportation is hereby abolished.
the deed of conveyance shall be executed in behalf of the government
by the following: xxx xxx xxx.

(1) For property belonging to and titled in the name of the Republic of The MIAA Charter transferred the Airport Lands and Buildings to MIAA without the
the Philippines, by the President, unless the authority therefor is Republic receiving cash, promissory notes or even stock since MIAA is not a stock
expressly vested by law in another officer. corporation.
The whereas clauses of the MIAA Charter explain the rationale for the transfer of the Airport
(2) For property belonging to the Republic of the Philippines but Lands and Buildings to MIAA, thus:
titled in the name of any political subdivision or of any corporate
agency or instrumentality, by the executive head of the agency or WHEREAS, the Manila International Airport as the principal airport
instrumentality. (Emphasis supplied) of the Philippines for both international and domestic air traffic, is
required to provide standards of airport accommodation and service
comparable with the best airports in the world;
WHEREAS, domestic and other terminals, general aviation and other the Republic are titled either in the name of the Republic itself or in the name of agencies or
facilities, have to be upgraded to meet the current and future air traffic instrumentalities of the National Government. The Administrative Code allows real property
and other demands of aviation in Metro Manila; owned by the Republic to be titled in the name of agencies or instrumentalities of the national
government. Such real properties remain owned by the Republic and continue to be exempt
WHEREAS, a management and organization study has indicated from real estate tax.
that the objectives of providing high standards of accommodation
and service within the context of a financially viable operation, The Republic may grant the beneficial use of its real property to an agency or instrumentality
will best be achieved by a separate and autonomous body; and of the national government. This happens when title of the real property is transferred to an
agency or instrumentality even as the Republic remains the owner of the real property. Such
WHEREAS, under Presidential Decree No. 1416, as amended arrangement does not result in the loss of the tax exemption. Section 234(a) of the Local
by Presidential Decree No. 1772, the President of the Philippines is Government Code states that real property owned by the Republic loses its tax exemption only
given continuing authority to reorganize the National Government, if the "beneficial use thereof has been granted, for consideration or otherwise, to a taxable
which authority includes the creation of new entities, agencies person." MIAA, as a government instrumentality, is not a taxable person under Section 133(o)
and instrumentalities of the Government[.] (Emphasis supplied) of the Local Government Code. Thus, even if we assume that the Republic has granted to
MIAA the beneficial use of the Airport Lands and Buildings, such fact does not make these
The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to real properties subject to real estate tax.
MIAA was not meant to transfer beneficial ownership of these assets from the Republic to
MIAA. The purpose was merely to reorganize a division in the Bureau of Air However, portions of the Airport Lands and Buildings that MIAA leases to private entities are
Transportation into a separate and autonomous body. The Republic remains the beneficial not exempt from real estate tax. For example, the land area occupied by hangars that MIAA
owner of the Airport Lands and Buildings. MIAA itself is owned solely by the Republic. No leases to private corporations is subject to real estate tax. In such a case, MIAA has granted the
party claims any ownership rights over MIAA's assets adverse to the Republic. beneficial use of such land area for a consideration to a taxable person and therefore such land
area is subject to real estate tax. In Lung Center of the Philippines v. Quezon City, the Court
The MIAA Charter expressly provides that the Airport Lands and Buildings "shall not be ruled:
disposed through sale or through any other mode unless specifically approved by the
President of the Philippines." This only means that the Republic retained the beneficial Accordingly, we hold that the portions of the land leased to private
ownership of the Airport Lands and Buildings because under Article 428 of the Civil Code, entities as well as those parts of the hospital leased to private
only the "owner has the right to . . . dispose of a thing." Since MIAA cannot dispose of the individuals are not exempt from such taxes. On the other hand, the
Airport Lands and Buildings, MIAA does not own the Airport Lands and Buildings. portions of the land occupied by the hospital and portions of the
hospital used for its patients, whether paying or non-paying, are
At any time, the President can transfer back to the Republic title to the Airport Lands and exempt from real property taxes. 29
Buildings without the Republic paying MIAA any consideration. Under Section 3 of the MIAA
Charter, the President is the only one who can authorize the sale or disposition of the Airport 3. Refutation of Arguments of Minority
Lands and Buildings. This only confirms that the Airport Lands and Buildings belong to the
Republic. The minority asserts that the MIAA is not exempt from real estate tax because Section 193 of
the Local Government Code of 1991 withdrew the tax exemption of "all persons, whether
e. Real Property Owned by the Republic is Not Taxable natural or juridical" upon the effectivity of the Code. Section 193 provides:
Section 234(a) of the Local Government Code exempts from real estate tax any "[r]eal property
owned by the Republic of the Philippines." Section 234(a) provides:
SEC. 193. Withdrawal of Tax Exemption Privileges — Unless
SEC. 234. Exemptions from Real Property Tax. — The following are otherwise provided in this Code, tax exemptions or incentives
exempted from payment of the real property tax: granted to, or presently enjoyed by all persons, whether natural or
juridical, including government-owned or controlled corporations,
(a) Real property owned by the Republic of the Philippines or any except local water districts, cooperatives duly registered under R.A.
of its political subdivisions except when the beneficial use thereof No. 6938, non-stock and non-profit hospitals and educational
has been granted, for consideration or otherwise, to a taxable institutions are hereby withdrawn upon effectivity of this Code.
person; (Emphasis supplied) ESacHC
xxx xxx xxx. (Emphasis supplied) The minority states that MIAA is indisputably a juridical person. The minority argues that
since the Local Government Code withdrew the tax exemption of all juridical persons, then
This exemption should be read in relation with Section 133(o) of the same Code, which
MIAA is not exempt from real estate tax. Thus, the minority declares:
prohibits local governments from imposing "[t]axes, fees or charges of any kind on the
National Government, its agencies and instrumentalities . . . ." The real properties owned by
It is evident from the quoted provisions of the Local Government institutions. It would be belaboring the obvious why the MIAA does
Code that the withdrawn exemptions from realty tax cover not not fall within any of the exempt entities under Section 193.
just GOCCs, but all persons. To repeat, the provisions lay down the (Emphasis supplied)
explicit proposition that the withdrawal of realty tax exemption
applies to all persons. The reference to or the inclusion of GOCCs is The minority's theory directly contradicts and completely negates Section 133(o) of the Local
only clarificatory or illustrative of the explicit provision. Government Code. This theory will result in gross absurdities. It will make the national
government, which itself is a juridical person, subject to tax by local governments since the
The term "All persons" encompasses the two classes of persons national government is not included in the enumeration of exempt entities in Section 193.
recognized under our laws, natural and juridical persons. Under this theory, local governments can impose any kind of local tax, and not only real
Obviously, MIAA is not a natural person. Thus, the estate tax, on the national government.
determinative test is not just whether MIAA is a GOCC, but
whether MIAA is a juridical person at all. (Emphasis and Under the minority's theory, many national government instrumentalities with juridical
underscoring in the original) personalities will also be subject to any kind of local tax, and not only real estate tax. Some
of the national government instrumentalities vested by law with juridical
The minority posits that the "determinative test" whether MIAA is exempt from local taxation personalities are: Bangko Sentral ng Pilipinas, 30 Philippine Rice Research
is its status — whether MIAA is a juridical person or not. The minority also insists that Institute, 31 Laguna Lake Development Authority, 32 Fisheries Development
"Sections 193 and 234 may be examined in isolation from Section 133(o) to ascertain Authority, 33 Bases Conversion Development Authority, 34 Philippine Ports
MIAA's claim of exemption." Authority, 35 Cagayan de Oro Port Authority, 36 San Fernando Port Authority, 37Cebu Port
Authority, 38 and Philippine National Railways. 39
The argument of the minority is fatally flawed. Section 193 of the Local Government Code
expressly withdrew the tax exemption of all juridical persons "[u]nless otherwise provided in The minority's theory violates Section 133(o) of the Local Government Code which expressly
this Code." Now, Section 133(o) of the Local Government Code expressly provides prohibits local governments from imposing any kind of tax on national government
otherwise, specifically prohibiting local governments from imposing any kind of tax on instrumentalities. Section 133(o) does not distinguish between national government
national government instrumentalities. Section 133(o) states: instrumentalities with or without juridical personalities. Where the law does not
distinguish, courts should not distinguish. Thus, Section 133(o) applies to all national
SEC. 133. Common Limitations on the Taxing Powers of Local government instrumentalities, with or without juridical personalities. The determinative
Government Units. — Unless otherwise provided herein, the test whether MIAA is exempt from local taxation is not whether MIAA is a juridical person,
exercise of the taxing powers of provinces, cities, municipalities, but whether it is a national government instrumentality under Section 133(o) of the Local
and barangays shall not extend to the levy of the following: Government Code. Section 133(o) is the specific provision of law prohibiting local
governments from imposing any kind of tax on the national government, its agencies and
xxx xxx xxx instrumentalities.
(o) Taxes, fees or charges of any kinds on the National Section 133 of the Local Government Code starts with the saving clause "[u]nless otherwise
Government, its agencies and instrumentalities, and local provided in this Code." This means that unless the Local Government Code grants an express
government units. (Emphasis and underscoring supplied) authorization, local governments have no power to tax the national government, its agencies
and instrumentalities. Clearly, the rule is local governments have no power to tax the national
By express mandate of the Local Government Code, local governments cannot impose any
government, its agencies and instrumentalities. As an exception to this rule, local governments
kind of tax on national government instrumentalities like the MIAA. Local governments are
may tax the national government, its agencies and instrumentalities only if the Local
devoid of power to tax the national government, its agencies and instrumentalities. The
Government Code expressly so provides.
taxing powers of local governments do not extend to the national government, its agencies and
instrumentalities, "[u]nless otherwise provided in this Code" as stated in the saving clause of The saving clause in Section 133 refers to the exception to the exemption in Section 234(a) of
Section 133. The saving clause refers to Section 234(a) on the exception to the exemption from the Code, which makes the national government subject to real estate tax when it gives the
real estate tax of real property owned by the Republic. beneficial use of its real properties to a taxable entity. Section 234(a) of the Local
Government Code provides:
The minority, however, theorizes that unless exempted in Section 193 itself, all juridical
persons are subject to tax by local governments. The minority insists that the juridical SEC. 234. Exemptions from Real Property Tax — The following are
persons exempt from local taxation are limited to the three classes of entities specifically exempted from payment of the real property tax:
enumerated as exempt in Section 193. Thus, the minority states:
(a) Real property owned by the Republic of the Philippines or any
. . . Under Section 193, the exemption is limited to (a) local water of its political subdivisions except when the beneficial use thereof
districts; (b) cooperatives duly registered under Republic Act No. has been granted, for consideration or otherwise, to a taxable
6938; and (c) non-stock and non-profit hospitals and educational person.
xxx xxx xxx. (Emphasis supplied) local governments in Section 193 prevails over the limitations on such taxing power in Section
133, then local governments can impose any kind of tax on the national government, its
Under Section 234(a), real property owned by the Republic is exempt from real estate agencies and instrumentalities — a gross absurdity.
tax. The exception to this exemption is when the government gives the beneficial use of
the real property to a taxable entity. Local governments have no power to tax the national government, its agencies and
instrumentalities, except as otherwise provided in the Local Government Code pursuant to the
The exception to the exemption in Section 234(a) is the only instance when the national
saving clause in Section 133 stating "[u]nless otherwise provided in this Code." This exception
government, its agencies and instrumentalities are subject to any kind of tax by local
— which is an exception to the exemption of the Republic from real estate tax imposed by
governments. The exception to the exemption applies only to real estate tax and not to any
local governments — refers to Section 234(a) of the Code. The exception to the exemption in
other tax. The justification for the exception to the exemption is that the real property, although
Section 234(a) subjects real property owned by the Republic, whether titled in the name of the
owned by the Republic, is not devoted to public use or public service but devoted to the private
national government, its agencies or instrumentalities, to real estate tax if the beneficial use of
gain of a taxable person.
such property is given to a taxable entity.
The minority also argues that since Section 133 precedes Section 193 and 234 of the Local
The minority also claims that the definition in the Administrative Code of the phrase
Government Code, the later provisions prevail over Section 133. Thus, the minority asserts:
"government-owned or controlled corporation" is not controlling. The minority points out that
. . . Moreover, sequentially Section 133 antecedes Section 193 and Section 2 of the Introductory Provisions of the Administrative Code admits that its definitions
234. Following an accepted rule of construction, in case of conflict are not controlling when it provides:
the subsequent provisions should prevail. Therefore, MIAA, as a
SEC. 2. General Terms Defined. — Unless the specific words of the
juridical person, is subject to real property taxes, the general
text, or the context as a whole, or a particular statute, shall require a
exemptions attaching to instrumentalities under Section 133(o) of the
different meaning:
Local Government Code being qualified by Sections 193 and 234 of
the same law. (Emphasis supplied) xxx xxx xxx
The minority assumesthat there is an irreconcilable conflict between Section 133 on one hand, The minority then concludes that reliance on the Administrative Code definition is
and Sections 193 and 234 on the other. No one has urged that there is such a conflict, much "flawed."
less has any one presented a persuasive argument that there is such a conflict. The minority's
assumption of an irreconcilable conflict in the statutory provisions is an egregious error for two The minority's argument is a non sequitur. True, Section 2 of the Administrative Code
reasons. recognizes that a statute may require a different meaning than that defined in the
Administrative Code. However, this does not automatically mean that the definition in the
First, there is no conflict whatsoever between Sections 133 and 193 because Section 193 Administrative Code does not apply to the Local Government Code. Section 2 of the
expressly admits its subordination to other provisions of the Code when Section 193 states Administrative Code clearly states that "unless the specific words . . . of a particular statute
"[u]nless otherwise provided in this Code." By its own words, Section 193 admits shall require a different meaning," the definition in Section 2 of the Administrative Code
the superiority of other provisions of the Local Government Code that limit the exercise of the shall apply. Thus, unless there is specific language in the Local Government Code defining the
taxing power in Section 193. When a provision of law grants a power but withholds such phrase "government-owned or controlled corporation" differently from the definition in the
power on certain matters, there is no conflict between the grant of power and the withholding Administrative Code, the definition in the Administrative Code prevails. EcSCHD
of power. The grantee of the power simply cannot exercise the power on matters withheld from
its power. The minority does not point to any provision in the Local Government Code defining the
phrase "government-owned or controlled corporation" differently from the definition in the
Second, Section 133 is entitled "Common Limitations on the Taxing Powers of Local Administrative Code. Indeed, there is none. The Local Government Code is silent on the
Government Units." Section 133 limits the grant to local governments of the power to tax, and definition of the phrase "government-owned or controlled corporation." The
not merely the exercise of a delegated power to tax. Section 133 states that the taxing powers Administrative Code, however, expressly defines the phrase "government-owned or controlled
of local governments "shall not extend to the levy" of any kind of tax on the national corporation." The inescapable conclusion is that the Administrative Code definition of the
government, its agencies and instrumentalities. There is no clearer limitation on the taxing phrase "government-owned or controlled corporation" applies to the Local Government Code.
power than this.
The third whereas clause of the Administrative Code states that the Code "incorporates in a
unified document the major structural, functional and procedural principles and rules of
governance." Thus, the Administrative Code is the governing law defining the status and
Since Section 133 prescribes the "common limitations" on the taxing powers of local relationship of government departments, bureaus, offices, agencies and instrumentalities.
governments, Section 133 logically prevails over Section 193 which grants local governments Unless a statute expressly provides for a different status and relationship for a specific
such taxing powers. By their very meaning and purpose, the "common limitations" on the government unit or entity, the provisions of the Administrative Code prevail.
taxing power prevail over the grant or exercise of the taxing power. If the taxing power of
The minority also contends that the phrase "government-owned or controlled corporation" Bank remaining after the transfer of assets and liabilities as provided
should apply only to corporations organized under the Corporation Code, the general in Section 30 hereof. (Emphasis supplied)
incorporation law, and not to corporations created by special charters. The minority sees no
reason why government corporations with special charters should have a capital stock. Thus, Other government-owned corporations organized as stock corporations under their special
the minority declares: charters are the Philippine Crop Insurance Corporation, 42 Philippine International Trading
Corporation, 43 and the Philippine National Bank 44 before it was reorganized as a stock
I submit that the definition of "government-owned or controlled corporation under the Corporation Code. All these government-owned corporations organized
corporations" under the Administrative Code refer to those under special charters as stock corporations are subject to real estate tax on real properties
corporations owned by the government or its instrumentalities which owned by them. To rule that they are not government-owned or controlled corporations
are created not by legislative enactment, but formed and organized because they are not registered with the Securities and Exchange Commission would remove
under the Corporation Code through registration with the Securities them from the reach of Section 234 of the Local Government Code, thus exempting them from
and Exchange Commission. In short, these are GOCCs without real estate tax.
original charters.
Third, the government-owned or controlled corporations created through special charters are
xxx xxx xxx those that meet the two conditions prescribed in Section 16, Article XII of the Constitution.
The first condition is that the government-owned or controlled corporation must be established
It might as well be worth pointing out that there is no point in for the common good. The second condition is that the government-owned or controlled
requiring a capital structure for GOCCs whose full ownership is corporation must meet the test of economic viability. Section 16, Article XII of the 1987
limited by its charter to the State or Republic. Such GOCCs are not Constitution provides:
empowered to declare dividends or alienate their capital shares.
SEC. 16. The Congress shall not, except by general law, provide for
The contention of the minority is seriously flawed. It is not in accord with the formation, organization, or regulation of private
the Constitution and existing legislations. It will also result in gross absurdities. corporations. Government-owned or controlled corporations may
First, the Administrative Code definition of the phrase "government-owned or controlled be created or established by special charters in the interest of the
corporation" does not distinguish between one incorporated under the Corporation Code or common good and subject to the test of economic viability.
under a special charter. Where the law does not distinguish, courts should not distinguish. (Emphasis and underscoring supplied)

Second, Congress has created through special charters several government-owned The Constitution expressly authorizes the legislature to create "government-owned or
corporations organized as stock corporations. Prime examples are the Land Bank of the controlled corporations" through special charters only if these entities are required to meet the
Philippines and the Development Bank of the Philippines. The special charter 40 of the Land twin conditions of common good and economic viability. In other words, Congress has no
Bank of the Philippines provides: power to create government-owned or controlled corporations with special charters
unless they are made to comply with the two conditions of common good and economic
SECTION 81. Capital. — The authorized capital stock of the Bank viability. The test of economic viability applies only to government-owned or controlled
shall be nine billion pesos, divided into seven hundred and eighty corporations that perform economic or commercial activities and need to compete in the
million common shares with a par value of ten pesos each, which market place. Being essentially economic vehicles of the State for the common good —
shall be fully subscribed by the Government, and one hundred and meaning for economic development purposes — these government-owned or controlled
twenty million preferred shares with a par value of ten pesos each, corporations with special charters are usually organized as stock corporations just like ordinary
which shall be issued in accordance with the provisions of Sections private corporations.
seventy-seven and eighty-three of this Code. (Emphasis supplied)
In contrast, government instrumentalities vested with corporate powers and performing
Likewise, the special charter 41 of the Development Bank of the Philippines provides: governmental or public functions need not meet the test of economic viability. These
instrumentalities perform essential public services for the common good, services that every
SECTION 7. Authorized Capital Stock — Par value. — The capital modern State must provide its citizens. These instrumentalities need not be economically
stock of the Bank shall be Five Billion Pesos to be divided into viable since the government may even subsidize their entire operations. These instrumentalities
Fifty Million common shares with par value of P100 per share. are not the "government-owned or controlled corporations" referred to in Section 16, Article
These shares are available for subscription by the National XII ofthe 1987 Constitution.
Government. Upon the effectivity of this Charter, the National
Government shall subscribe to Twenty-Five Million common shares Thus, the Constitution imposes no limitation when the legislature creates government
of stock worth Two Billion Five Hundred Million which shall be instrumentalities vested with corporate powers but performing essential governmental or public
deemed paid for by the Government with the net asset values of the functions. Congress has plenary authority to create government instrumentalities vested
with corporate powers provided these instrumentalities perform essential government
functions or public services. However, when the legislature creates through special charters includes capability to make profit and generate benefits not
corporations that perform economic or commercial activities, such entities — known as quantifiable in financial terms. 46(Emphasis supplied) DAEcIS
"government-owned or controlled corporations" — must meet the test of economic viability
because they compete in the market place. Clearly, the test of economic viability does not apply to government entities vested with
corporate powers and performing essential public services. The State is obligated to render
essential public services regardless of the economic viability of providing such service. The
non-economic viability of rendering such essential public service does not excuse the State
This is the situation of the Land Bank of the Philippines and the Development Bank of the from withholding such essential services from the public.
Philippines and similar government-owned or controlled corporations, which derive their
income to meet operating expenses solely from commercial transactions in competition with However, government-owned or controlled corporations with special charters, organized
the private sector. The intent of the Constitution is to prevent the creation of government- essentially for economic or commercial objectives, must meet the test of economic viability.
owned or controlled corporations that cannot survive on their own in the market place and thus These are the government-owned or controlled corporations that are usually organized under
merely drain the public coffers. their special charters as stock corporations, like the Land Bank of the Philippines and the
Development Bank of the Philippines. These are the government-owned or controlled
Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the corporations, along with government-owned or controlled corporations organized under the
Constitutional Commission the purpose of this test, as follows: Corporation Code, that fall under the definition of "government-owned or controlled
corporations" in Section 2(10) of the Administrative Code.
MR. OPLE: Madam President, the reason for this concern is really
that when the government creates a corporation, there is a sense in The MIAA need not meet the test of economic viability because the legislature did not create
which this corporation becomes exempt from the test of economic MIAA to compete in the market place. MIAA does not compete in the market place because
performance. We know what happened in the past. If a government there is no competing international airport operated by the private sector. MIAA performs an
corporation loses, then it makes its claim upon the taxpayers' money essential public service as the primary domestic and international airport of the Philippines.
through new equity infusions from the government and what is The operation of an international airport requires the presence of personnel from the following
always invoked is the common good. That is the reason why this year, government agencies:
out of a budget of P115 billion for the entire government, about P28
billion of this will go into equity infusions to support a few 1. The Bureau of Immigration and Deportation, to document the
government financial institutions. And this is all taxpayers' money arrival and departure of passengers, screening out those
which could have been relocated to agrarian reform, to social services without visas or travel documents, or those with hold
like health and education, to augment the salaries of grossly departure orders;
underpaid public employees. And yet this is all going down the drain.
2. The Bureau of Customs, to collect import duties or enforce the ban
Therefore, when we insert the phrase "ECONOMIC VIABILITY" on prohibited importations;
together with the "common good," this becomes a restraint on future
enthusiasts for state capitalism to excuse themselves from the 3. The quarantine office of the Department of Health, to enforce
responsibility of meeting the market test so that they become viable. health measures against the spread of infectious diseases
And so, Madam President, I reiterate, for the committee's into the country;
consideration and I am glad that I am joined in this proposal by
Commissioner Foz, the insertion of the standard of "ECONOMIC 4. The Department of Agriculture, to enforce measures against the
VIABILITY OR THE ECONOMIC TEST," together with the spread of plant and animal diseases into the country;
common good. 45
5. The Aviation Security Command of the Philippine National Police,
Father Joaquin G. Bernas, a leading member of the Constitutional Commission, explains in his to prevent the entry of terrorists and the escape of
textbook The 1987 Constitution of the Republic of the Philippines: A Commentary: criminals, as well as to secure the airport premises from
terrorist attack or seizure;
The second sentence was added by the 1986 Constitutional
Commission. The significant addition, however, is the phrase "in the 6. The Air Traffic Office of the Department of Transportation and
interest of the common good and subject to the test of economic Communications, to authorize aircraft to enter or leave
viability." The addition includes the ideas that they must show Philippine airspace, as well as to land on, or take off from,
capacity to function efficiently in business and that they should the airport; and
not go into activities which the private sector can do better.
Moreover, economic viability is more than financial viability but also
7. The MIAA, to provide the proper premises — such as runway and Finally, the Airport Lands and Buildings of MIAA are properties devoted to public use and
buildings — for the government personnel, passengers, thus are properties of public dominion. Properties of public dominion are owned by the
and airlines, and to manage the airport operations. State or the Republic. Article 420 of the Civil Code provides:

All these agencies of government perform government functions essential to the Art. 420. The following things are property of public dominion:
operation of an international airport.
(1) Those intended for public use, such as roads, canals, rivers,
MIAA performs an essential public service that every modern State must provide its citizens. torrents, ports and bridges constructed by the State, banks, shores,
MIAA derives its revenues principally from the mandatory fees and charges MIAA imposes on roadsteads, and others of similar character;
passengers and airlines. The terminal fees that MIAA charges every passenger are regulatory or
administrative fees 47 and not income from commercial transactions. (2) Those which belong to the State, without being for public use, and
are intended for some public service or for the development of the
MIAA falls under the definition of a government instrumentality under Section 2(10) of the national wealth. (Emphasis supplied)
Introductory Provisions of the Administrative Code, which provides:
The term "ports . . . constructed by the State" includes airports and seaports. The Airport
SEC. 2. General Terms Defined. — . . . Lands and Buildings of MIAA are intended for public use, and at the very least intended for
public service. Whether intended for public use or public service, the Airport Lands and
(10) Instrumentality refers to any agency of the National Government,
Buildings are properties of public dominion. As properties of public dominion, the Airport
not integrated within the department framework, vested with special
Lands and Buildings are owned by the Republic and thus exempt from real estate tax under
functions or jurisdiction by law, endowed with some if not all
Section 234(a) of the Local Government Code.
corporate powers, administering special funds, and enjoying
operational autonomy, usually through a charter. . . . (Emphasis 4. Conclusion
supplied)
Under Section 2(10) and (13) of the Introductory Provisions of the Administrative Code, which
The fact alone that MIAA is endowed with corporate powers does not make MIAA a governs the legal relation and status of government units, agencies and offices within the entire
government-owned or controlled corporation. Without a change in its capital structure, government machinery, MIAA is a government instrumentality and not a government-owned
MIAA remains a government instrumentality under Section 2(10) of the Introductory or controlled corporation. Under Section 133(o) of the Local Government Code, MIAA as a
Provisions of the Administrative Code. More importantly, as long as MIAA renders government instrumentality is not a taxable person because it is not subject to "[t]axes, fees or
essential public services, it need not comply with the test of economic viability. Thus, charges of any kind" by local governments. The only exception is when MIAA leases its real
MIAA is outside the scope of the phrase "government-owned or controlled corporations" property to a "taxable person" as provided in Section 234(a) of the Local Government Code, in
under Section 16, Article XII of the 1987 Constitution. which case the specific real property leased becomes subject to real estate tax. Thus, only
portions of the Airport Lands and Buildings leased to taxable persons like private parties are
The minority belittles the use in the Local Government Code of the phrase "government-owned
subject to real estate tax by the City of Parañaque.
or controlled corporation" as merely "clarificatory or illustrative." This is fatal. The 1987
Constitution prescribes explicit conditions for the creation of "government-owned or controlled
corporations." The Administrative Code defines what constitutes a "government-owned or
controlled corporation." To belittle this phrase as "clarificatory or illustrative" is grave error. Under Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA, being devoted
to public use, are properties of public dominion and thus owned by the State or the Republic
To summarize, MIAA is not a government-owned or controlled corporation under Section of the Philippines. Article 420 specifically mentions "ports . . . constructed by the State,"
2(13) of the Introductory Provisions of the Administrative Code because it is not organized as a which includes public airports and seaports, as properties of public dominion and owned by the
stock or non-stock corporation. Neither is MIAA a government-owned or controlled Republic. As properties of public dominion owned by the Republic, there is no doubt
corporation under Section 16, Article XII of the 1987 Constitution because MIAA is not whatsoever that the Airport Lands and Buildings are expressly exempt from real estate tax
required to meet the test of economic viability. MIAA is a government instrumentality vested under Section 234(a) of the Local Government Code. This Court has also repeatedly ruled that
with corporate powers and performing essential public services pursuant to Section 2(10) of the properties of public dominion are not subject to execution or foreclosure sale.
Introductory Provisions of the Administrative Code. As a government instrumentality, MIAA
is not subject to any kind of tax by local governments under Section 133(o) of the Local WHEREFORE, we GRANT the petition. We SET ASIDE the assailed Resolutions of the
Government Code. The exception to the exemption in Section 234(a) does not apply to MIAA Court of Appeals of 5 October 2001 and 27 September 2002 in CA-G.R. SP No. 66878. We
because MIAA is not a taxable entity under the Local Government Code. Such exception DECLARE the Airport Lands and Buildings of the Manila International Airport Authority
applies only if the beneficial use of real property owned by the Republic is given to a taxable EXEMPT from the real estate tax imposed by the City of Parañaque. We declare VOID all the
entity. real estate tax assessments, including the final notices of real estate tax delinquencies, issued
by the City of Parañaque on the Airport Lands and Buildings of the Manila International
Airport Authority, except for the portions that the Manila International Airport Authority has
leased to private parties. We also declare VOID the assailed auction sale, and all its effects, of of realty taxes. It was also asserted that it is an instrumentality of the government
the Airport Lands and Buildings of the Manila International Airport Authority. performing governmental functions, citing Section 133 of the Local Government Code of
1991 which puts limitations on the taxing powers of local government units:
Section 133. Common Limitations on the Taxing Powers of Local
MACTAN CEBU INTL AIRPORT AUTHORITY VS MARCOS Government Units. — Unless otherwise provided herein, the exercise
of the taxing powers of provinces, cities, municipalities, and barangays
For review under Rule 45 of the Rules of Court on a pure question of law are shall not extend to the levy of the following:
the decision of 22 March 1995 1 of the Regional Trial Court (RTC) of Cebu City, Branch
20, dismissing the petition for declaratory relief in Civil Case No. CEB-16900, entitled a) . . .
"Mactan Cebu International Airport Authority vs. City of Cebu," and its order of 4 May
1995 2 denying the motion to reconsider the decision. xxx xxx xxx

We resolved to give due course to this petition for it raises issues dwelling on o) Taxes, fees or charges of any kind on the National Government, its
the scope of the taxing power of local government units and the limits of tax exemption agencies and instrumentalities, and local government units. (italics
privileges of government-owned and controlled corporations. supplied)

The uncontradicted factual antecedents are summarized in the instant petition Respondent City refused to cancel and set aside petitioner's realty tax account,
as follows: insisting that the MCIAA is a government-controlled corporation whose tax exemption
privilege has been withdrawn by virtue of Sections 193 and 234 of the Local Government
Petitioner Mactan Cebu International Airport Authority (MCIAA) was created Code that took effect on January 1, 1992:
by virtue of Republic Act No. 6958, mandated to "principally undertake the economical,
efficient and effective control, management and supervision of the Mactan International Section 193. Withdrawal of Tax Exemption Privilege. — Unless
Airport in the Province of Cebu and the Lahug Airport in Cebu City, . . . and such other otherwise provided in this Code, tax exemptions or incentives granted
airports as may be established in the Province of Cebu . . ." (Sec. 3, RA 6958). It is also to, or presently enjoyed by all persons whether natural or
mandated to: juridical, including government-owned or controlled corporations,
except local water districts, cooperatives duly registered under RA No.
a) encourage, promote and develop international and domestic air 6938, non-stock and non-profit hospitals and educational
traffic in the Central Visayas and Mindanao regions as a institutions, are hereby withdrawn upon the effectivity of this Code.
means of making the regions centers of international trade (italics supplied)
and tourism, and accelerating the development of the means
of transportation and communication in the country; and, xxx xxx xxx

b) upgrade the services and facilities of the airports and to formulate Section 234. Exemptions from Real Property Taxes. — . . .
internationally acceptable standards of airport
accommodation and service. (a) . . .

Since the time of its creation, petitioner MCIAA enjoyed the privilege of xxx xxx xxx
exemption from payment of realty taxes in accordance with Section 14 of its Charter:
(e) . . .
Sec. 14. Tax Exemptions. — The Authority shall be exempt from realty
taxes imposed by the National Government or any of its political Except as provided herein, any exemption from
subdivisions, agencies and instrumentalities . . .. payment of real property tax previously granted to, or
presently enjoyed by all persons, whether natural or
On October 11, 1994, however, Mr. Eustaquio B. Cesa, Officer-in-Charge, juridical, including government-owned or controlled
Office of the Treasurer of the City of Cebu, demanded payment for realty taxes on several corporations are hereby withdrawn upon the effectivity of
parcels of land belonging to the petitioner (Lot Nos. 913-G, 743, 88 SWO, 948-A, 989-A, this Code.
474, 109(931), I-M, 918, 919, 913-F, 941, 942, 947, 77 Psd., 746 and 991-A), located at
Barrio Apas and Barrio Kasambagan, Lahug, Cebu City, in the total amount of As the City of Cebu was about to issue a warrant of levy against the
P2,229,078.79. properties of petitioner, the latter was compelled to pay its tax account
"under protest" and thereafter filed a Petition for Declaratory Relief
Petitioner objected to such demand for payment as baseless and unjustified, with the Regional Trial Court of Cebu, Branch 20, on December 29,
claiming in its favor the aforecited Section 14 of RA 6958 which exempts it from payment 1994. MCIAA basically contended that the taxing powers of local
government units do not extend to the levy of taxes or fees of any kind government units shall be given more powers, authority,
on an instrumentality of the national government. Petitioner insisted responsibilities, and resources. The process of decentralization shall
that while it is indeed a government-owned corporation, it nonetheless proceed from the national government to the local government units. .
stands on the same footing as an agency or instrumentality of the . ." 5
national government by the very nature of its powers and functions.
Its motion for reconsideration having been denied by the trial court in its 4 May
Respondent City, however, asserted that MCIAA is not an 1995 order, the petitioner filed the instant petition based on the following assignment of
instrumentality of the government but merely a government-owned errors:
corporation performing proprietary functions. As such, all exemptions
previously granted to it were deemed withdrawn by operation of law, I. RESPONDENT JUDGE ERRED IN FAILING TO RULE THAT
as provided under Sections 193 and 234 of the Local Government THE PETITIONER IS VESTED WITH GOVERNMENT
Code when it took effect on January 1, 1992. 3 POWERS AND FUNCTIONS WHICH PLACE IT IN THE
SAME CATEGORY AS AN INSTRUMENTALITY OR
The petition for declaratory relief was docketed as Civil Case No. CEB-16900. AGENCY OF THE GOVERNMENT.

In its decision of 22 March 1995, 4 the trial court dismissed the petition in light II. RESPONDENT JUDGE ERRED IN RULING THAT
of its findings, to wit: PETITIONER IS LIABLE TO PAY REAL PROPERTY
TAXES TO THE CITY OF CEBU.
A close reading of the New Local Government Code of 1991 or RA
7160 provides the express cancellation and withdrawal of exemption Anent the first assigned error, the petitioner asserts that although it is a
of taxes by government-owned and controlled corporation per Sections government-owned or controlled corporation, it is mandated to perform functions in the
after the effectivity of said Code on January 1, 1992, to wit: [proceeds same category as an instrumentality of Government. An instrumentality of Government is
to quote Sections 193 and 234] one created to perform governmental functions primarily to promote certain aspects of the
economic life of the people. 6 Considering its task "not merely to efficiently operate and
Petitioners claimed that its real properties assessed by respondent City manage the Mactan-Cebu International Airport, but more importantly, to carry out the
Government of Cebu are exempted from paying realty taxes in view of Government policies of promoting and developing the Central Visayas and Mindanao
the exemption granted under RA 6958 to pay the same (citing Section regions as centers of international trade and tourism, and accelerating the development of
14 of RA 6958). the means of transportation and communication in the country," 7 and that it is an attached
agency of the Department of Transportation and Communication (DOTC), 8 the petitioner
However, RA 7160 expressly provides that "All general and special
"may stand in [sic] the same footing as an agency or instrumentality of the national
laws, acts, city charters, decrees [sic], executive orders, proclamations
government." Hence, its tax exemption privilege under Section 14 of its Charter "cannot
and administrative regulations, or part or parts thereof which are
be considered withdrawn with the passage of theLocal Government Code of
inconsistent with any of the provisions of this Code are hereby repealed
1991 (hereinafter LGC) because Section 133 thereof specifically states that the 'taxing
or modified accordingly." (/f/, Section 534, RA 7160).
powers of local government units shall not extend to the levy of taxes or fees or charges of
With that repealing clause in RA 7160, it is safe to infer and state that any kind on the national government, its agencies and instrumentalities.'"
the tax exemption provided for in RA 6958 creating petitioner had been As to the second assigned error, the petitioner contends that being an
expressly repealed by the provisions of the NewLocal Government instrumentality of the National Government, respondent City of Cebu has no power nor
Code of 1991. authority to impose realty taxes upon it in accordance with the aforesaid Section 133 of
the LGC, as explained in Basco vs. Philippine Amusement and Gaming Corporation: 9
So that petitioner in this case has to pay the assessed realty tax of its
properties effective after January 1, 1992 until the present. Local governments have no power to tax instrumentalities of the
National Government. PAGCOR is a government owned or controlled
This Court's ruling finds expression to give impetus and meaning to the corporation with an original charter, PD 1869. All of its shares of stock
overall objectives of the New Local Government Code of 1991, RA are owned by the National Government. . . .
7160. "It is hereby declared the policy of the State that the territorial
and political subdivisions of the State shall enjoy genuine and PAGCOR has a dual role, to operate and regulate gambling casinos.
meaningful local autonomy to enable them to attain their fullest The latter role is governmental, which places it in the category of an
development as self-reliant communities and make them more effective agency or instrumentality of the Government. Being an instrumentality
partners in the attainment of national goals. Toward this end, the State of the Government, PAGCOR should be and actually is exempt from
shall provide for a more responsive and accountable local government local taxes. Otherwise, its operation might be burdened, impeded or
structure instituted through a system of decentralization whereby local subjected to control by a mere Local government. cdtai
The states have no power by taxation or otherwise, to retard, impede, As a general rule, the power to tax is an incident of sovereignty and is unlimited
burden or in any manner control the operation of constitutional laws in its range, acknowledging in its very nature no limits, so that security against its abuse is
enacted by Congress to carry into execution the powers vested in the to be found only in the responsibility of the legislature which imposes the tax on the
federal government (McCulloch v. Maryland, 4 Wheat 316, 4 L Ed. constituency who are to pay it. Nevertheless, effective limitations thereon may be imposed
579) by the people through their Constitutions. 13 Our Constitution,for instance, provides that
the rule of taxation shall be uniform and equitable and Congress shall evolve a progressive
This doctrine emanates from the "supremacy" of the National system of taxation.14 So potent indeed is the power that it was once opined that "the power
Government over local governments. to tax involves the power to destroy." 15 Verily, taxation is a destructive power which
interferes with the personal and property rights of the people and takes from them a portion
"Justice Holmes, speaking for the Supreme Court, made reference to of their property for the support of the government. Accordingly, tax statutes must be
the entire absence of power on the part of the States to touch, in that construed strictly against the government and liberally in favor of the taxpayer. 16 But
way (taxation) at least, the instrumentalities of the United States since taxes are what we pay for civilized society, 17 or are the lifeblood of the nation, the
(Johnson v. Maryland, 254 USA 51) and it can be agreed that no state law frowns against exemptions from taxation and statutes granting tax exemptions are thus
or political subdivision can regulate a federal instrumentality in such a construed strictissimi juris against the taxpayer and liberally in favor of the taxing
way as to prevent it from consummating its federal responsibilities, or authority. 18 A claim of exemption from tax payments must be clearly shown and based
even to seriously burden it in the accomplishment of them." (Antieau, on language in the law too plain to be mistaken. 19 Elsewise stated, taxation is the rule,
Modern Constitutional Law, Vol. 2, p. 140) exemption therefrom is the exception. 20 However, if the grantee of the exemption is a
political subdivision or instrumentality, the rigid rule of construction does not apply
Otherwise, mere creatures of the State can defeat National policies thru
because the practical effect of the exemption is merely to reduce the amount of money that
extermination of what local authorities may perceive to be undesirable
has to be handled by the government in the course of its operations. 21
activities or enterprise using the power to tax as "a tool for regulation"
(U.S. v. Sanchez, 340 US 42). The power to tax which was called by The power to tax is primarily vested in the Congress; however, in our
Justice Marshall as the "power to destroy" (Mc Culloch v. Maryland, jurisdiction, it may be exercised by local legislative bodies, no longer merely by virtue of
supra) cannot be allowed to defeat an instrumentality or creation of a valid delegation as before, but pursuant to direct authority conferred by Section 5, Article
the very entity which has the inherent power to wield it. (italics X of the Constitution. 22 Under the latter, the exercise of the power may be subject to such
supplied) guidelines and limitations as the Congress may provide which, however, must be consistent
with the basic policy of local autonomy.
It then concludes that the respondent Judge "cannot therefore correctly say that
the questioned provisions of the Code do not contain any distinction between a government There can be no question that under Section 14 of R.A. No. 6958 the petitioner
corporation performing governmental functions as against one performing merely is exempt from the payment of realty taxes imposed by the National Government or any of
proprietary ones such that the exemption privilege withdrawn under the said Code would its political subdivisions, agencies, and instrumentalities. Nevertheless, since taxation is
apply to allgovernment corporations." For it is clear from Section 133, in relation to Section the rule and exemption therefrom the exception, the exemption may thus be withdrawn at
234, of the LGC that the legislature meant to exclude instrumentalities of the national the pleasure of the taxing authority. The only exception to this rule is where the exemption
government from the taxing powers of the local government units. cdasia was granted to private parties based on material consideration of a mutual nature, which
then becomes contractual and is thus covered by the non-impairment clause of
In its comment, respondent City of Cebu alleges that as a local government unit the Constitution. 23
and a political subdivision, it has the power to impose, levy, assess, and collect taxes within
its jurisdiction. Such power is guaranteed by the Constitution 10 and enhanced further by The LGC, enacted pursuant to Section 3, Article X of the Constitution, provides
the LGC. While it may be true that under its Charter the petitioner was exempt from the for the exercise by local government units of their power to tax, the scope thereof or its
payment of realty taxes, 11 this exemption was withdrawn by Section 234 of the LGC. In limitations, and the exemptions from taxation.
response to the petitioner's claim that such exemption was not repealed because being an
instrumentality of the National Government, Section 133 of the LGC prohibits local Section 133 of the LGC prescribes the common limitations on the taxing
government units from imposing taxes, fees, or charges of any kind on it, respondent City powers of local government units as follows:
of Cebu points out that the petitioner is likewise a government-owned corporation, and SEC. 133. Common Limitations on the Taxing Power of Local
Section 234 thereof does not distinguish between government-owned or controlled Government Units. — Unless otherwise provided herein, the exercise
corporations performing governmental and purely proprietary functions. Respondent City of the taxing powers of provinces, cities, municipalities, and barangays
of Cebu urges this Court to apply by analogy its ruling that the Manila International Airport shall not extend to the levy of the following:
Authority is a government-owned corporation, 12 and to reject the application
of Basco because it was "promulgated . . . before the enactment and the signing into law (a) Income tax, except when levied on banks and other
of R.A. No. 7160," and was not, therefore, decided "in the light of the spirit and intention financial institutions;
of the framers of" the said law.
(b) Documentary stamp tax; (m) Taxes, fees, or other charges on Philippine products
actually exported, except as otherwise provided
(c) Taxes on estates, inheritance, gifts, legacies and other herein;
acquisitions mortis causa, except as otherwise
provided herein; (n) Taxes, fees, or charges, on Countryside and Barangay
Business Enterprises and cooperatives duly
(d) Customs duties, registration fees of vessel and wharfage registered under R.A. No. 6810 and Republic
on wharves, tonnage dues, and all other kinds of Act Numbered Sixty-nine hundred thirty-eight
customs fees, charges and dues except wharfage (R.A. No. 6938) otherwise known as the
on wharves constructed and maintained by the "Cooperatives Code of the 'Philippines'
local government unit concerned; respectively; and
(e) Taxes, fees and charges and other impositions upon (o) TAXES, FEES OR CHARGES OF ANY KIND ON THE
goods carried into or out of, or passing through, NATIONAL GOVERNMENT, ITS AGENCIES
the territorial jurisdictions of local government AND INSTRUMENTALITIES, AND LOCAL
units in the guise of charges for wharfage, tolls GOVERNMENT UNITS. (italics supplied)
for bridges or otherwise, or other taxes, fees or
charges in any form whatsoever upon such Needless to say, the last item (item o) is pertinent to this case. The "taxes, fees or
goods or merchandise; charges" referred to are "of any kind"; hence, they include all of these, unless otherwise
provided by theLGC. The term "taxes" is well understood so as to need no further
(f) Taxes, fees or charges on agricultural and aquatic elaboration, especially in light of the above enumeration. The term "fees" means charges
products when sold by marginal farmers or fixed by law or ordinance for the regulation or inspection of business or
fishermen; activity, 24 while "charges" are pecuniary liabilities such as rents or fees against persons
or property. 25
(g) Taxes on business enterprises certified to by the Board
of Investments as pioneer or non-pioneer for a
period of six (6) and four (4) years, respectively Among the "taxes" enumerated in the LGC is real property tax, which is
from the date of registration; governed by Section 232. It reads as follows:
SEC. 232. Power to Levy Real Property Tax. — A province or city or
(h) Excise taxes on articles enumerated under the National
a municipality within the Metropolitan Manila Area may levy an
Internal Revenue Code, as amended, and taxes,
annual ad valorem tax on real property such as land, building,
fees or charges on petroleum products;
machinery, and other improvements not hereafter specifically
(i) Percentage or value-added tax (VAT) on sales, barters or exempted.
exchanges or similar transactions on goods or
Section 234 of the LGC provides for the exemptions from payment of real
services except as otherwise provided herein;
property taxes and withdraws previous exemptions therefrom granted to natural and
(j) Taxes on the gross receipts of transportation contractors juridical persons, including government-owned and controlled corporations, except as
and persons engaged in the transportation of provided therein. It provides:
passengers or freight by hire and common SEC. 234. Exemptions from Real Property Tax. — The following are
carriers by air, land or water, except as provided exempted from payment of the real property tax:
in this Code;
(a) Real property owned by the Republic of the Philippines
(k) Taxes on premiums paid by way of reinsurance or or any of its political subdivisions except when
retrocession; the beneficial use thereof had been granted, for
consideration or otherwise, to a taxable person;
(l) Taxes, fees or charges for the registration of motor
vehicles and for the issuance of all kinds of (b) Charitable institutions, churches, parsonages or
licenses or permits for the driving thereof, convents appurtenant thereto, mosques, non-
except, tricycles; profit or religious cemeteries and all lands,
buildings and improvements actually, directly,
and exclusively used for religious, charitable or 2. Other Exemptions Withdrawn. All other exemptions previously
educational purposes; granted to natural or juridical persons including
government-owned or controlled corporations are
(c) All machineries and equipment that are actually, directly withdrawn upon the effectivity of the Code. 26
and exclusively used by local water districts and
government-owned or controlled corporations Section 193 of the LGC is the general provision on withdrawal of tax exemption
engaged in the supply and distribution of water privileges. It provides:
and/or generation and transmission of electric
power; SEC. 193. Withdrawal of Tax Exemption Privileges. — Unless
otherwise provided in this Code, tax exemptions or incentives granted
(d) All real property owned by duly registered cooperatives to, or presently enjoyed by all persons, whether natural or juridical,
as provided for under R.A. No. 6938; and including government-owned or controlled corporations, except local
water districts, cooperatives duly registered under R.A. 6938, non-
(e) Machinery and equipment used for pollution control and stock and non-profit hospitals and educational institutions, are hereby
environmental protection. withdrawn upon the effectivity of this Code.

Except as provided herein, any exemption from payment of real On the other hand, the LGC authorizes local government units to grant tax
property tax previously granted to, or presently enjoyed by, all persons, exemption privileges. Thus, Section 192 thereof provides:
whether natural or juridical, including all government-owned or
controlled corporations are hereby withdrawn upon the effectivity of SEC. 192. Authority to Grant Tax Exemption Privileges. — Local
this Code. government units may, through ordinances duly approved, grant tax
exemptions, incentives or reliefs under such terms and conditions as
These exemptions are based on the ownership, character, and use of the they may deem necessary.
property. Thus:
The foregoing sections of the LGC speak of: (a) the limitations on the taxing
(a) Ownership Exemptions. Exemptions from real property taxes on the powers of local government units and the exceptions to such limitations; and (b) the rule
basis of ownership are real properties owned by: (i) the on tax exemptions and the exceptions thereto. The use of exceptions or provisos in these
Republic, (ii) a province, (iii) a city, (iv) a municipality, (v) sections, as shown by the following clauses:
a barangay, and (vi) registered cooperatives.
(1) "unless otherwise provided herein" in the opening paragraph of
(b) Character Exemptions. Exempted from real property taxes on the Section 133;
basis of their character are: (i) charitable institutions, (ii)
houses and temples of prayer like churches, parsonages or (2) "Unless otherwise provided in this Code" in Section 193;
convents appurtenant thereto, mosques, and (iii) non-profit
(3) "not hereafter specifically exempted" in Section 232; and
or religious cemeteries.
(4) "Except as provided herein" in the last paragraph of Section 234
(c) Usage exemptions. Exempted from real property taxes on the basis
of the actual, direct and exclusive use to which they are initially hampers a ready understanding of the sections. Note, too, that the aforementioned
devoted are: (i) all lands, buildings and improvements clause in Section 133 seems to be inaccurately worded. Instead of the clause "unless
which are actually directly and exclusively used for otherwise provided herein," with the "herein" to mean, of course, the section, it should
religious, charitable or educational purposes; (ii) all have used the clause "unless otherwise provided in this Code." The former results in
machineries and equipment actually, directly and absurdity since the section itself enumerates what are beyond the taxing powers of local
exclusively used by local water districts or by government- government units and, where exceptions were intended, the exceptions are explicitly
owned or controlled corporations engaged in the supply and indicated in the next. For instance, in item (a) which excepts income taxes "when levied on
distribution of water and/or generation and transmission of banks and other financial institutions"; item (d) which excepts "wharfage on wharves
electric power; and (iii) all machinery and equipment used constructed and maintained by the local government unit concerned"; and item (1) which
for pollution control and environmental protection. excepts taxes, fees and charges for the registration and issuance of licenses or permits for
the driving of "tricycles." It may also be observed that within the body itself of the section,
To help provide a healthy environment in the midst of the
there are exceptions which can be found only in other parts of the LGC, but the section
modernization of the country, all machinery and equipment for
interchangeably uses therein the clause, "except as otherwise provided herein" as in items
pollution control and environmental protection may not be taxed by
(c) and (i), or the clause "except as provided in this Code" in item (j). These clauses would
local governments.
be obviously unnecessary or mere surplusages if the opening clause of the section were
"Unless otherwise provided in this Code" instead of "Unless otherwise provided herein." paragraph of the section by expanding the scope of the term "Republic of the Philippines"
In any event, even if the latter is used, since under Section 232 local government units have to embrace its "instrumentalities" and "agencies." For expediency, we quote:
the power to levy real property tax, except those exempted therefrom under Section 234,
then Section 232 must be deemed to qualify Section 133. (a) real property owned by the Republic of the Philippines, or any of
its political subdivisions except when the beneficial use
Thus, reading together Sections 133, 232, and 234 of the LGC, we conclude thereof has been granted, for consideration or otherwise, to
that as a general rule, as laid down in Section 133, the taxing powers of local government a taxable person.
units cannot extend to the levy of, inter alia, "taxes, fees and charges of any kind on the
National Government, its agencies and instrumentalities, and local government units"; This view does not persuade us. In the first place, the petitioner's claim that it
however, pursuant to Section 232, provinces, cities, and municipalities in the Metropolitan is an instrumentality of the Government is based on Section 133(o), which expressly
Manila Area may impose the real property tax except on, inter alia, "real property owned mentions the word "instrumentalities"; and, in the second place, it fails to consider the fact
by the Republic of the Philippines or any of its political subdivisions except when the that the legislature used the phrase "National Government, its agencies and
beneficial use thereof has been granted, for consideration or otherwise, to a taxable person," instrumentalities" in Section 133(o), but only the phrase "Republic of the Philippines or
as provided in item (a) of the first paragraph of Section 234. any of its political subdivisions" in Section 234(a).

As to tax exemptions or incentives granted to or presently enjoyed by natural or The terms "Republic of the Philippines" and "National Government" are not
judicial persons, including government-owned and controlled corporations, Section 193 of interchangeable. The former is broader and synonymous with "Government of the Republic
the LGCprescribes the general rule, viz., they are withdrawn upon the effectivity of of the Philippines" which the Administrative Code of 1987 defines as the "corporate
the LGC, except those granted to local water districts, cooperatives duly registered governmental entity through which the functions of government are exercised throughout
under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, and the Philippines, including, save as the contrary appears from the context, the various arms
unless otherwise provided in the LGC. The latter proviso could refer to Section 234 which through which political authority is made effective in the Philippines, whether pertaining
enumerates the properties exempt from real property tax. But the last paragraph of Section to the autonomous regions, the provincial, city, municipal or barangay subdivisions or other
234 further qualifies the retention of the exemption insofar as real property taxes are forms of local government." 27 These "autonomous regions, provincial, city, municipal or
concerned by limiting the retention only to those enumerated therein; all others not barangay subdivisions" are the political subdivisions. 28
included in the enumeration lost the privilege upon the effectivity of the LGC. Moreover,
On the other hand, "National Government" refers "to the entire machinery of
even as to real property owned by the Republic of the Philippines or any of its political
the central government, as distinguished from the different forms of local
subdivisions covered by item (a) of the first paragraph of Section 234, the exemption is
governments." 29 The National Government then is composed of the three great
withdrawn if the beneficial use of such property has been granted to a taxable person for
departments: the executive, the legislative and the judicial. 30
consideration or otherwise.
An "agency" of the Government refers to "any of the various units of the
Since the last paragraph of Section 234 unequivocally withdrew, upon the
Government, including a department, bureau, office, instrumentality, or government-
effectivity of the LGC, exemptions from payment of real property taxes granted to natural
owned or controlled corporation, or a local government or a distinct unit
or juridical persons, including government-owned or controlled corporations, except as
therein;" 31 while an "instrumentality" refers to "any agency of the National Government,
provided in the said section, and the petitioner is, undoubtedly, a government-owned
not integrated within the department framework, vested with special functions or
corporation, it necessarily follows that its exemption from such tax granted it in Section 14
jurisdiction by law, endowed with some if not all corporate powers, administering special
of its Charter, R.A. No. 6958, has been withdrawn. Any claim to the contrary can only be
funds, and enjoying operational autonomy, usually through a charter. This term includes
justified if the petitioner can seek refuge under any of the exceptions provided in Section
regulatory agencies, chartered institutions and government-owned and controlled
234, but not under Section 133, as it now asserts, since, as shown above, the said section is
corporations." 32
qualified by Sections 232 and 234. LLphil
If Section 234(a) intended to extend the exception therein to the withdrawal of
In short, the petitioner can no longer invoke the general rule in Section 133 that
the exemption from payment of real property taxes under the last sentence of the said
the taxing powers of the local government units cannot extend to the levy of:
section to the agencies and instrumentalities of the National Government mentioned in
(o) taxes, fees or charges of any kind on the National Government, its Section 133(o), then it should have restated the wording of the latter. Yet, it did not.
agencies or instrumentalities, and local government units. Moreover, that Congress did not wish to expand the scope of the exemption in Section
234(a) to include real property owned by other instrumentalities or agencies of the
It must show that the parcels of land in question, which are real property, are government including government-owned and controlled corporations is further borne out
any one of those enumerated in Section 234, either by virtue of ownership, character, or by the fact that the source of this exemption is Section 40(a) of P.D. No. 464, otherwise
use of the property. Most likely, it could only be the first, but not under any explicit known as The Real Property Tax Code, which reads:
provision of the said section, for none exists. In light of the petitioner's theory that it is an
"instrumentality of the Government," it could only be within the first item of the first SEC. 40. Exemptions from Real Property Tax. — The exemption shall
be as follows:
(a) Real property owned by the Republic of the Philippines or any of The "airports" referred to are the "Lahug Air Port" in Cebu City and the "Mactan
its political subdivisions and any government-owned or International Airport in the Province of Cebu," 36 which belonged to the Republic of the
controlled corporation so exempt by its charter: Provided, Philippines, then under the Air Transportation Office (ATO). 37
however, That this exemption shall not apply to real
property of the above-mentioned entities the beneficial use It may be reasonable to assume that the term "lands" refer to "lands" in Cebu
of which has been granted, for consideration or otherwise, City then administered by the Lahug Air Port and included the parcels of land the
to a taxable person. respondent City of Cebu seeks to levy on for real property taxes. This section involves a
"transfer" of the "lands," among other things, to the petitioner and not just the transfer of
Note that as reproduced in Section 234(a), the phrase "and any government-owned or the beneficial use thereof, with the ownership being retained by the Republic of the
controlled corporation so exempt by its charter" was excluded. The justification for this Philippines.
restricted exemption in Section 234(a) seems obvious: to limit further tax exemption
This "transfer" is actually an absolute conveyance of the ownership thereof
privileges, especially in light of the general provision on withdrawal of tax exemption
because the petitioner's authorized capital stock consists of, inter alia, "the value of such
privileges in Section 193 and the special provision on withdrawal of exemption from
real estate owned and/or administered by the airports." 38 Hence, the petitioner is now the
payment of real property taxes in the last paragraph of Section 234. These policy
owner of the land in question and the exception in Section 234(c) of the LGC is
considerations are consistent with the State policy to ensure autonomy to local
inapplicable.
governments 33 and the objective of the LGC that they enjoy genuine and meaningful
local autonomy to enable them to attain their fullest development as self-reliant Moreover, the petitioner cannot claim that it was never a "taxable person" under
communities and make them effective partners in the attainment of national goals. 34 The its Charter. It was only exempted from the payment of real property taxes. The grant of the
power to tax is the most effective instrument to raise needed revenues to finance and privilege only in respect of this tax is conclusive proof of the legislative intent to make it a
support myriad activities of local government units for the delivery of basic services taxable person subject to all taxes, except real property tax.
essential to the promotion of the general welfare and the enhancement of peace, progress,
and prosperity of the people. It may also be relevant to recall that the original reasons for Finally, even if the petitioner was originally not a taxable person for purposes
the withdrawal of tax exemption privileges granted to government-owned and controlled of real property tax, in light of the foregoing disquisitions, it had already become, even if
corporations and all other units of government were that such privilege resulted in serious it be conceded to be an "agency" or "instrumentality" of the Government, a taxable person
tax base erosion and distortions in the tax treatment of similarly situated enterprises, and for such purpose in view of the withdrawal in the last paragraph of Section 234 of
there was a need for these entities to share in the requirements of development, fiscal or exemptions from the payment of real property taxes, which, as earlier adverted to, applies
otherwise, by paying the taxes and other charges due from them. 35 to the petitioner.

The crucial issues then to be addressed are: (a) whether the parcels of land in Accordingly, the position taken by the petitioner is untenable. Reliance
question belong to the Republic of the Philippines whose beneficial use has been granted on Basco vs. Philippine Amusement and Gaming Corporation 39 is unavailing since it was
to the petitioner, and (b) whether the petitioner is a "taxable person." decided before the effectivity of the LGC. Besides, nothing can prevent Congress from
decreeing that even instrumentalities or agencies of the Government performing
Section 15 of the petitioner's Charter provides: governmental functions may be subject to tax. Where it is done precisely to fulfill a
constitutional mandate and national policy, no one can doubt its wisdom.
Sec. 15. Transfer of Existing Facilities and Intangible
Assets. — All existing public airport facilities, runways, lands, WHEREFORE, the instant petition is DENIED. The challenged decision and
buildings and other properties, movable or immovable, belonging to order of the Regional Trial Court of Cebu, Branch 20, in Civil Case No. CEB-16900 are
or presently administered by the airports, and all assets, powers, AFFIRMED.
rights, interests and privileges relating on airport works or air
operations, including all equipment which are necessary for the |||
operations of air navigation, aerodrome control towers, crash, fire,
and rescue facilities are hereby transferred to the Authority: CITY GOVT OF QC VS BAYAN TELECOM
Provided, however, that the operations control of all equipment
necessary for the operation of radio aids to air navigation, airways Before the Court, on pure questions of law, is this petition for review on certiorari under Rule
communication, the approach control office, and the area control 45 of the Rules of Court to nullify and set aside the following issuances of the Regional Trial
center shall be retained by the Air Transportation Office. No Court (RTC) of Quezon City, Branch 227, in its Civil Case No. Q-02-47292, to wit:
equipment, however, shall be removed by the Air Transportation
1) Decision 1 dated June 6, 2003, declaring respondent Bayan
Office from Mactan without the concurrence of the Authority. The
Telecommunications, Inc. exempt from real estate taxation
Authority may assist in the maintenance of the Air Transportation
on its real properties located in Quezon City; and
Office equipment.
2) Order 2 dated December 30, 2003, denying petitioners' motion are now or hereafter may be required by law to pay. In addition
for reconsideration. thereto, the grantee, its successors or assigns shall pay a franchise tax
equivalent to three percent (3%) of all gross receipts of the telephone
The facts: or other telecommunications businesses transacted under this
franchise by the grantee, its successors or assigns and the said
Respondent Bayan Telecommunications, Inc. 3 (Bayantel) is a legislative franchise holder percentage shall be in lieu of all taxes on this franchise or earnings
under Republic Act (Rep. Act) No. 3259 4 to establish and operate radio stations for domestic thereof. Provided, That the grantee, its successors or assigns shall
telecommunications, radiophone, broadcasting and telecasting. continue to be liable for income taxes payable under Title II of the
National Internal Revenue Code . . . . [Emphasis supplied]
Of relevance to this controversy is the tax provision of Rep. Act No. 3259, embodied in
Section 14 thereof, which reads: It is undisputed that within the territorial boundary of Quezon City, Bayantel owned several
real properties on which it maintained various telecommunications facilities. These real
SECTION 14. (a) The grantee shall be liable to pay the same taxes on
properties, as hereunder described, are covered by the following tax declarations:
its real estate, buildings and personal property, exclusive of the
franchise, as other persons or corporations are now or hereafter may (a) Tax Declaration Nos. D-096-04071, D-096-04074, D-096-04072
be required by law to pay. (b) The grantee shall further pay to the and D-096-04073 pertaining to Bayantel's Head Office and
Treasurer of the Philippines each year, within ten days after the audit Operations Center in Roosevelt St., San Francisco del
and approval of the accounts as prescribed in this Act, one and one- Monte, Quezon City allegedly the nerve center of
half per centum of all gross receipts from the business transacted petitioner's telecommunications franchise operations, said
under this franchise by the said grantee (Emphasis supplied). Operation Center housing mainly petitioner's Network
Operations Group and switching, transmission and related
On January 1, 1992, Rep. Act No. 7160, otherwise known as the "Local Government Code of
equipment;
1991" (LGC), took effect. Section 232 of the Code grants local government units within the
Metro Manila Area the power to levy tax on real properties, thus: (b) Tax Declaration Nos. D-124-01013, D-124-00939, D-124-00920
and D-124-00941 covering Bayantel's land, building and
SEC. 232. — Power to Levy Real Property Tax. — A province or city
equipment in Maginhawa St., Barangay East Teacher's
or a municipality within the Metropolitan Manila Area may levy an
Village, Quezon City which houses telecommunications
annual ad valorem tax on real property such as land, building,
facilities; and
machinery and other improvements not hereinafter specifically
exempted. caIDSH (c) Tax Declaration Nos. D-011-10809, D-011-10810, D-011-10811,
and D-011-11540 referring to Bayantel's Exchange Center
Complementing the aforequoted provision is the second paragraph of Section 234 of the same
located in Proj. 8, Brgy. Bahay Toro, Tandang Sora,
Code which withdrew any exemption from realty tax heretofore granted to or enjoyed by all
Quezon City which houses the Network Operations Group
persons, natural or juridical, to wit:
and cover switching, transmission and other related
SEC. 234 Exemptions from Real Property Tax. — The following are equipment.
exempted from payment of the real property tax:
In 1993, the government of Quezon City, pursuant to the taxing power vested on local
xxx xxx xxx government units by Section 5, Article X of the 1987 Constitution, infra, in relation to Section
232 of the LGC, supra, enacted City Ordinance No. SP-91, S-93, otherwise known as
Except as provided herein, any exemption from payment of real the Quezon City Revenue Code (QCRC), 5 imposing, under Section 5 thereof, a real property
property tax previously granted to, or enjoyed by, all persons, whether tax on all real properties in Quezon City, and, reiterating in its Section 6, the withdrawal of
natural or juridical, including government-owned-or-controlled exemption from real property tax under Section 234 of the LGC, supra. Furthermore, much
corporations is hereby withdrawn upon effectivity of this like the LGC, the QCRC, under its Section 230, withdrew tax exemption privileges in general,
Code (Emphasis supplied). as follows:

On July 20, 1992, barely few months after the LGC took effect, Congress enacted Rep. Act No. SEC. 230. Withdrawal of Tax Exemption Privileges. — Unless
7633, amending Bayantel's original franchise. The amendatory law (Rep. Act No. 7633) otherwise provided in this Code, tax exemptions or
contained the following tax provision: incentives granted to, or presently enjoyed by all persons, whether
natural or juridical, including government owned or controlled
SEC. 11. The grantee, its successors or assigns shall be liable to pay corporations, except local water districts, cooperatives duly registered
the same taxes on their real estate, buildings and personal under RA 6938, non-stock and non-profit hospitals and educational
property, exclusive of this franchise, as other persons or corporations
institutions, business enterprises certified by the Board of Investments (1) Tax Declaration No. D-096-04071 —
(BOI) as pioneer or non-pioneer for a period of six (6) and four (4)
years, respectively, . . . are hereby withdrawn effective upon (2) Tax Declaration No. D-096-04074 —
approval of this Code (Emphasis supplied). cSATDC
(3) Tax Declaration No. D-124-01013 —
Conformably with the City's Revenue Code, new tax declarations for Bayantel's real properties
in Quezon City were issued by the City Assessor and were received by Bayantel on August 13, (4) Tax Declaration No. D-011-10810 —
1998, except one (Tax Declaration No. 124-01013) which was received on July 14, 1999.
(5) Tax Declaration No. D-011-10811 —
Meanwhile, on March 16, 1995, Rep. Act No. 7925, 6 otherwise known as the "Public
(6) Tax Declaration No. D-011-10809 —
Telecommunications Policy Act of the Philippines," envisaged to level the playing field among
telecommunications companies, took effect. Section 23 of the Act provides: (7) Tax Declaration No. D-124-00941 —
SEC. 23. Equality of Treatment in the Telecommunications Industry. (8) Tax Declaration No. D-124-00940 —
— Any advantage, favor, privilege, exemption, or immunity granted
under existing franchises, or may hereafter be granted, shall ipso (9) Tax Declaration No. D-124-00939 —
facto become part of previously granted telecommunications
franchises and shall be accorded immediately and unconditionally to (10) Tax Declaration No. D-096-04072 —
the grantees of such franchises:Provided, however, That the foregoing
shall neither apply to nor affect provisions of telecommunications (11) Tax Declaration No. D-096-04073 —
franchises concerning territory covered by the franchise, the life span
(12) Tax Declaration No. D-011-11540 —
of the franchise, or the type of service authorized by the franchise.
The preliminary prohibitory injunction issued in the August 20, 2002
On January 7, 1999, Bayantel wrote the office of the City Assessor seeking the exclusion of its
Order of this Court is hereby made permanent. Since this is a
real properties in the city from the roll of taxable real properties. With its request having been
resolution of a purely legal issue, there is no pronouncement as to
denied, Bayantel interposed an appeal with the Local Board of Assessment Appeals (LBAA).
costs. CTcSAE
And, evidently on its firm belief of its exempt status, Bayantel did not pay the real property
taxes assessed against it by the Quezon City government.

On account thereof, the Quezon City Treasurer sent out notices of delinquency for the total SO ORDERED.
amount of P43,878,208.18, followed by the issuance of several warrants of levy against
Bayantel's properties preparatory to their sale at a public auction set on July 30, 2002. Their motion for reconsideration having been denied by the court in its Order dated December
30, 2003, petitioners elevated the case directly to this Court on pure questions of law, ascribing
Threatened with the imminent loss of its properties, Bayantel immediately withdrew its appeal to the lower court the following errors:
with the LBAA and instead filed with the RTC of Quezon City a petition for prohibition with
an urgent application for a temporary restraining order (TRO) and/or writ of preliminary I. [I]n declaring the real properties of respondent exempt from real
injunction, thereat docketed as Civil Case No. Q-02-47292, which was raffled to Branch 227 of property taxes notwithstanding the fact that the tax
the court. exemption granted to Bayantel in its original franchise had
been withdrawn by the [LGC] and that the said exemption
On July 29, 2002, or in the eve of the public auction scheduled the following day, the lower was not restored by the enactment of RA 7633.
court issued a TRO, followed, after due hearing, by a writ of preliminary injunction via its
order of August 20, 2002. II. [In] declaring the real properties of respondent exempt from real
property taxes notwithstanding the enactment of the
And, having heard the parties on the merits, the same court came out with its challenged [QCRC] which withdrew the tax exemption which may
Decision of June 6, 2003, the dispositive portion of which reads: have been granted by RA 7633.
WHEREFORE, premises considered, pursuant to the enabling III. [In] declaring the real properties of respondent exempt from real
franchise under Section 11 of Republic Act No. 7633, the real estate property taxes notwithstanding the vague and ambiguous
properties and buildings of petitioner [now, respondent Bayantel] grant of tax exemption provided under Section 11 of RA
which have been admitted to be used in the operation of petitioner's 7633.
franchise described in the following tax declarations are hereby
DECLARED exempt from real estate taxation:
IV. [In] declaring the real properties of respondent exempt from real Lest it be overlooked, an appeal to the LBAA, to be properly considered, required prior
property taxes notwithstanding the fact that [it] had failed payment under protest of the amount of P43,878,208.18, a figure which, in the light of the then
to exhaust administrative remedies in its claim for real prevailing Asian financial crisis, may have been difficult to raise up. Given this reality, an
property tax exemption. (Words in bracket added. appeal to the LBAA may not be considered as a plain, speedy and adequate remedy. It is thus
understandable why Bayantel opted to withdraw its earlier appeal with the LBAA and, instead,
As we see it, the errors assigned may ultimately be reduced to two (2) basic issues, namely: filed its petition for prohibition with urgent application for injunctive relief in Civil Case No.
Q-02-47292. The remedy availed of by Bayantel under Section 2, Rule 65 of the Rules of
1. Whether or not Bayantel's real properties in Quezon City are Court must be upheld.
exempt from real property taxes under its legislative
franchise; and This brings the Court to the more weighty question of whether or not Bayantel's real properties
in Quezon City are, under its franchise, exempt from real property tax.
2. Whether or not Bayantel is required to exhaust administrative
remedies before seeking judicial relief with the trial court. The lower court resolved the issue in the affirmative, basically owing to the phrase "exclusive
of this franchise" found in Section 11 of Bayantel's amended franchise, Rep. Act No. 7633. To
We shall first address the second issue, the same being procedural in nature. petitioners, however, the language of Section 11 of Rep. Act No. 7633 is neither clear nor
unequivocal. The elaborate and extensive discussion devoted by the trial court on the meaning
Petitioners argue that Bayantel had failed to avail itself of the administrative remedies provided
and import of said phrase, they add, suggests as much. It is petitioners' thesis that Bayantel was
for under the LGC, adding that the trial court erred in giving due course to Bayantel's petition
in no time given any express exemption from the payment of real property tax under its
for prohibition. To petitioners, the appeal mechanics under the LGC constitute Bayantel's plain
amendatory franchise.
and speedy remedy in this case.
There seems to be no issue as to Bayantel's exemption from real estate taxes by virtue of the
The Court does not agree.
term "exclusive of the franchise" qualifying the phrase "same taxes on its real estate, buildings
Petitions for prohibition are governed by the following provision of Rule 65 of the Rules of and personal property," found in Section 14, supra, of its franchise, Rep. Act No. 3259, as
Court: originally granted.

SEC. 2. Petition for prohibition. — When the proceedings of any The legislative intent expressed in the phrase "exclusive of this franchise" cannot be construed
tribunal, . . . are without or in excess of its or his jurisdiction, or with other than distinguishing between two (2) sets of properties, be they real or personal, owned by
grave abuse of discretion amounting to lack or excess of jurisdiction, the franchisee, namely, (a) those actually, directly and exclusively used in its radio or
and there is no appeal or any other plain, speedy, and adequate telecommunications business, and (b) those properties which are not so used. It is worthy to
remedy in the ordinary course of law, a person aggrieved thereby may note that the properties subject of the present controversy are only those which are admittedly
file a verified petition in the proper court, alleging the facts with falling under the first category.
certainty and praying that judgment be rendered commanding the
To the mind of the Court, Section 14 of Rep. Act No. 3259 effectively works to grant or
respondent to desist from further proceedings in the action or matter
delegate to local governments of Congress' inherent power to tax the franchisee's properties
specified therein, or otherwise, granting such incidental reliefs as law
belonging to the second group of properties indicated above, that is, all properties which,
and justice may require.
"exclusive of this franchise," are not actually and directly used in the pursuit of its franchise.
With the reality that Bayantel's real properties were already levied upon on account of its As may be recalled, the taxing power of local governments under both the 1935 and the 1973
nonpayment of real estate taxes thereon, the Court agrees with Bayantel that an appeal to the Constitutions solely depended upon an enabling law. Absent such enabling law, local
LBAA is not a speedy and adequate remedy within the context of the aforequoted Section 2 of government units were without authority to impose and collect taxes on real properties within
Rule 65. This is not to mention of the auction sale of said properties already scheduled on July their respective territorial jurisdictions. While Section 14 of Rep. Act No. 3259 may be validly
30, 2002. aIAHcE viewed as an implied delegation of power to tax, the delegation under that provision, as
couched, is limited to impositions over properties of the franchisee which are not actually,
Moreover, one of the recognized exceptions to the exhaustion-of-administrative remedies rule directly and exclusively used in the pursuit of its franchise. Necessarily, other properties of
is when, as here, only legal issues are to be resolved. In fact, the Court, cognizant of the nature Bayantel directly used in the pursuit of its business are beyond the pale of the delegated taxing
of the questions presently involved, gave due course to the instant petition. As the Court has power of local governments. In a very real sense, therefore, real properties of Bayantel, save
said in Ty vs. Trampe: 7 those exclusive of its franchise, are subject to realty taxes. Ultimately, therefore, the inevitable
result was that all realties which are actually, directly and exclusively used in the operation of
. . . . Although as a rule, administrative remedies must first be its franchise are "exempted" from any property tax. ISEHTa
exhausted before resort to judicial action can prosper, there is a well-
settled exception in cases where the controversy does not involve
questions of fact but only of law. . . . .
Bayantel's franchise being national in character, the "exemption" thus granted under Section 14 local taxation remains essentially the same. For as the Court stressed in Mactan, "the power to
of Rep. Act No. 3259 applies to all its real or personal properties found anywhere within the tax is [still] primarily vested in the Congress."
Philippine archipelago.
This new perspective is best articulated by Fr. Joaquin G. Bernas, S.J., himself a Commissioner
However, with the LGC's taking effect on January 1, 1992, Bayantel's "exemption" from real of the 1986 Constitutional Commission which crafted the 1987 Constitution, thus:
estate taxes for properties of whatever kind located within the Metro Manila area was, by force
of Section 234 of the Code, supra, expressly withdrawn. But, not long thereafter, however, or What is the effect of Section 5 on the fiscal position of municipal
on July 20, 1992, Congress passed Rep. Act No. 7633 amending Bayantel's original franchise. corporations? Section 5 does not change the doctrine that
Worthy of note is that Section 11 of Rep. Act No. 7633 is a virtual reenacment of the tax municipal corporations do not possess inherent powers of
provision, i.e., Section 14, supra, of Bayantel's original franchise under Rep. Act No. 3259. taxation. What it does is to confer municipal corporations a
Stated otherwise, Section 14 of Rep. Act No. 3259 which was deemed impliedly repealed by general power to levy taxes and otherwise create sources of
Section 234 of the LGC was expressly revived under Section 14 of Rep. Act No. 7633. In revenue. They no longer have to wait for a statutory grant of these
concrete terms, the realty tax exemption heretofore enjoyed by Bayantel under its original powers. The power of the legislative authority relative to the fiscal
franchise, but subsequently withdrawn by force of Section 234 of the LGC, has been restored powers of local governments has been reduced to the authority to
by Section 14 of Rep. Act No. 7633. impose limitations on municipal powers. Moreover, these limitations
must be "consistent with the basic policy of local autonomy." The
The Court has taken stock of the fact that by virtue of Section 5, Article X of the 1987 important legal effect of Section 5 is thus to reverse the principle
Constitution, 8 local governments are empowered to levy taxes. And pursuant to this that doubts are resolved against municipal corporations.
constitutional empowerment, juxtaposed with Section 232 9 of the LGC, the Quezon City Henceforth, in interpreting statutory provisions on municipal fiscal
government enacted in 1993 its local Revenue Code, imposing real property tax on all real powers, doubts will be resolved in favor of municipal corporations. It
properties found within its territorial jurisdiction. And as earlier stated, the City's Revenue is understood, however, that taxes imposed by local government must
Code, just like the LGC, expressly withdrew, under Section 230 thereof, supra, all tax be for a public purpose, uniform within a locality, must not be
exemption privileges in general. confiscatory, and must be within the jurisdiction of the local unit to
pass. 11 (Emphasis supplied).
This thus raises the question of whether or not the City's Revenue Code pursuant to which the
city treasurer of Quezon City levied real property taxes against Bayantel's real properties In net effect, the controversy presently before the Court involves, at bottom, a clash between
located within the City effectively withdrew the tax exemption enjoyed by Bayantel under its the inherent taxing power of the legislature, which necessarily includes the power to exempt,
franchise, as amended. and the local government's delegated power to tax under the aegis of the 1987
Constitution. DEHaTC
Bayantel answers the poser in the negative arguing that once again it is only "liable to pay the
same taxes, as any other persons or corporations on all its real or personal Now to go back to the Quezon City Revenue Code which imposed real estate taxes on all real
properties,exclusive of its franchise." properties within the city's territory and removed exemptions theretofore "previously granted
to, or presently enjoyed by all persons, whether natural or juridical . . . .," 12 there can really be
Bayantel's posture is well-taken. While the system of local government taxation has changed no dispute that the power of the Quezon City Government to tax is limited by Section 232 of
with the onset of the 1987 Constitution, the power of local government units to tax is still the LGC which expressly provides that "a province or city or municipality within the
limited. As we explained in Mactan Cebu International Airport Authority: 10 Metropolitan Manila Area may levy an annual ad valorem tax on real property such as land,
building, machinery, and other improvement not hereinafter specifically exempted." Under
The power to tax is primarily vested in the Congress; however, in our this law, the Legislature highlighted its power to thereafter exempt certain realties from the
jurisdiction, it may be exercised by local legislative bodies, no taxing power of local government units. An interpretation denying Congress such power to
longer merely be virtue of a valid delegation as before, but exempt would reduce the phrase "not hereinafter specifically exempted" as a pure jargon,
pursuant to direct authority conferred by Section 5, Article X without meaning whatsoever. Needless to state, such absurd situation is unacceptable.
of the Constitution. Under the latter, the exercise of the power may
be subject to such guidelines and limitations as the Congress may For sure, in Philippine Long Distance Telephone Company, Inc. (PLDT) vs. City of
provide which, however, must be consistent with the basic policy of Davao, 13 this Court has upheld the power of Congress to grant exemptions over the power of
local autonomy. (at p. 680; Emphasis supplied.) local government units to impose taxes. There, the Court wrote:

Indeed, the grant of taxing powers to local government units


under the Constitution and the LGC does not affect the power of
Clearly then, while a new slant on the subject of local taxation now prevails in the sense that Congress to grant exemptions to certain persons, pursuant to a
the former doctrine of local government units' delegated power to tax had been effectively declared national policy. The legal effect of the constitutional grant to
modified with Article X, Section 5 of the 1987 Constitution now in place, the basic doctrine on local governments simply means that in interpreting statutory
provisions on municipal taxing powers, doubts must be resolved in In a petition for certiorari filed by the City of Manila, the Regional Trial Court of Manila
favor of municipal corporations. (Emphasis supplied.) revoked the Secretary's resolution and sustained the ordinance, holding inter alia that the
procedural requirements had been observed. More importantly, it declared Section 187 of the
As we see it, then, the issue in this case no longer dwells on whether Congress has the power to Local Government Code as unconstitutional because of its vesture in the Secretary of Justice of
exempt Bayantel's properties from realty taxes by its enactment of Rep. Act No. 7633 which the power of control over local governments in violation of the policy of local autonomy
amended Bayantel's original franchise. The more decisive question turns on whether mandated in the Constitution and of the specific provision therein conferring on the President
Congress actually did exempt Bayantel's properties at all by virtue of Section 11 of Rep. of the Philippines only the power of supervision over local governments. 2
Act No. 7633.
The present petition would have us reverse that decision. The Secretary argues that the
Admittedly, Rep. Act No. 7633 was enacted subsequent to the LGC. Perfectly aware that the annulled Section 187 is constitutional and that the procedural requirements for the enactment
LGC has already withdrawn Bayantel's former exemption from realty taxes, Congress opted to of tax ordinances as specified in the Local Government Code has indeed not been
pass Rep. Act No. 7633 using, under Section 11 thereof, exactly the same defining phrase observed. cdtai
"exclusive of this franchise" which was the basis for Bayantel's exemption from realty taxes
prior to the LGC. In plain language, Section 11 of Rep. Act No. 7633 states that "the grantee, Parenthetically, this petition was originally dismissed by the Court for non-compliance with
its successors or assigns shall be liable to pay the same taxes on their real estate, buildings and Circular 1-88, the Solicitor General having failed to submit a certified true copy of the
personal property, exclusive of this franchise, as other persons or corporations are now or challenged decision. 3 However, on motion for reconsideration with the required certified true
hereafter may be required by law to pay." The Court views this subsequent piece of legislation copy of the decision attached, the petition was reinstated in view of the importance of the
as an express and real intention on the part of Congress to once again remove from the issues raised therein.
LGC's delegated taxing power, all of the franchisee's (Bayantel's) properties that are actually,
directly and exclusively used in the pursuit of its franchise. ACTEHI We stress at the outset that the lower court had jurisdiction to consider the constitutionality of
Section 187, this authority being embraced in the general definition of the judicial power to
WHEREFORE, the petition is DENIED. determine what are the valid and binding laws by the criterion of their conformity to the
fundamental law. Specifically, BP 129 vests in the regional trial courts jurisdiction over all
civil cases in which the subject of the litigation is incapable of pecuniary estimation, 4 even as
the accused in a criminal action has the right to question in his defense the co institutionality of
DRILON VS LIM a law he is charged with violating and of the proceedings taken against him, particularly as
they contravene the Bill of Rights. Moreover, Article X, Section 5(2), of the Constitution vests
The principal issue in this case is the constitutionality of Section 187 of the in the Supreme Court appellate jurisdiction over final judgments and orders of lower courts in
Local Government Code reading as follows: all cases in which the constitutionality or validity of any treaty, international or executive
Procedure For Approval And Effectivity Of Tax Ordinances And agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation
Revenue Measures; Mandatory Public Hearings. — The procedure is in question. LibLex
for approval of local tax ordinances and revenue measures shall be in
In the exercise of this jurisdiction, lower courts are advised to act with the utmost
accordance with the provisions of this Code: Provided, That public
circumspection, bearing in mind the consequences of a declaration of unconstitutionality upon
hearings shall be conducted for the purpose prior to the enactment
the stability of laws, no less than on the doctrine of separation of powers. As the questioned act
thereof; Provided, further, That any question on the constitutionality
is usually the handiwork of the legislative or the executive departments, or both, it will be
or legality of tax ordinances or revenue measures may be raised on
prudent for such courts, if only out of a becoming modesty, to defer to the higher judgment of
appeal within thirty (30) days from the effectivity thereof to the
this Court in the consideration of its validity, which is better determined after a thorough
Secretary of Justice who shall render a decision within sixty (60) days
deliberation by a collegiate body and with the concurrence of the majority of those who
from the date of receipt of the appeal: Provided, however, That such
participated in its discussion. 5
appeal shall not have the effect of suspending the effectivity of the
ordinance and the accrual and payment of the tax, fee, or charge It is also emphasized that every court, including this Court, is charged with the duty of a
levied therein: Provided, finally, That within thirty (30) days after purposeful hesitation before declaring a law unconstitutional, on the theory that the measure
receipt of the decision or the lapse of the sixty-day period without the was first carefully studied by the executive and the legislative departments and determined by
Secretary of Justice acting upon the appeal, the aggrieved party may them to be in accordance with the fundamental law before it was finally approved. To doubt is
file appropriate proceedings with a court of competent to sustain. The presumption of constitutionality can be overcome only by the clearest showing
jurisdiction. llcd that there was indeed an infraction of the Constitution, and only when such a conclusion is
reached by the requipped majority may the Court pronounce, in the discharge of the duty it
Pursuant thereto, the Secretary of Justice had, on appeal to him of four oil companies and a
cannot escape, that the challenged act must be struck down. prcd
taxpayer, declared Ordinance No. 7794, otherwise known as the Manila Revenue Code, null
and void for non-compliance with the prescribed procedure in the enactment of tax ordinances
and for containing certain provisions contrary to law and public policy. 1
In the case before us, Judge Rodolfo C. Palattao declared Section 187 of the Local Government the tax or fee therein levied or imposed is unjust, excessive,
Code unconstitutional insofar as it empowered the Secretary of Justice to review tax ordinances oppressive, or confiscatory, or when it is contrary to declared national
and, inferentially, to annul them. He cited the familiar distinction between control and economy policy, and when the said Secretary exercises this authority
supervision, the first being "the power of an officer to alter or modify or set aside what a the effectivity of such ordinance shall suspended, either in part or as a
subordinate officer had done in the performance of his duties and to substitute the judgment of whole, for a period of thirty days within which period the local
the former for the latter," while the second is "the power of a superior officer to see to it that legislative body may either modify the tax ordinance to meet the
lower officers perform their functions is accordance with law." 6 His conclusion was that the objections thereto, or file an appeal with a court of competent
challenged section gave to the Secretary the power of control and not of supervision only as jurisdiction; otherwise, the tax ordinance or the part or parts thereof
vested by the Constitution in the President of the Philippines. This was, in his view, a violation declared suspended, shall be considered as revoked. Thereafter, the
not only of Article X, specifically Section 4 thereof, 7 and of Section 5 on the taxing powers of local legislative body may not reimposed the same tax or fee until
local governments, 8 and the policy of local autonomy in general. cda such time as the grounds for the suspension thereof shall have ceased
to exist.
We do not share that view. The lower court was rather hasty in invalidating the provision.

Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality
of the tax ordinance and, if warranted, to revoke it on either or both of these grounds. When he That section allowed the Secretary of Finance to suspend the effectivity of a tax ordinance if, in
alters or modifies or sets aside a tax ordinance, he is not also permitted to substitute his own his opinion, the tax or fee levied was unjust, excessive, oppressive or confiscatory.
judgment for the judgment of the local government that enacted the measure. Secretary Drilon Determination of these flaws would involve the exercise of judgment or discretion and not
did set aside the Manila Revenue Code, but he did not replace it with his own version of what merely an examination of whether or not the requirements or limitations of the law had been
the Code should be. He did not pronounce the ordinance unwise or unreasonable as a basis for observed; hence, it would smack of control rather than mere supervision. That power was never
its annulment. He did not say that in his judgment it was a bad law. What he found only was questioned before this Court but, at any rate, the Secretary of Justice is not given the same
that it was illegal. All he did in reviewing the said measure was determine if the petitioners latitude under Section 187. All he is permitted to do is ascertain the constitutionality or legality
were performing their functions is accordance with law, that is, with the prescribed procedure of the tax measure, without the right to declare that, in his opinion, it is unjust, excessive,
for the enactment of tax ordinances and the grant of powers to the city government under the oppressive or confiscatory. He has no discretion on this matter. In fact, Secretary Drilon set
Local Government Code. As we see it, that was an act not of control but of mere aside the Manila Revenue Code only on two grounds, to wit, the inclusion therein of
supervision. llcd certain ultra vires provisions and non-compliance with the prescribed procedure in its
enactment. These grounds affected the legality, not the wisdom or reasonableness of the tax
An officer in control lays down the rules in the doing of an act. It they are not followed, he measure. LLpr
may, in his discretion, order the act undone or re-done by his subordinate or he may even
decide to do it himself. Supervision does not cover such authority. The supervisor or The issue of non-compliance with the prescribed procedure in the enactment of the Manila
superintendent merely sees to it that the rules are followed, but he himself does not lay down Revenue Code is another matter.
such rules, nor does he have the discretion to modify or replace them. If the rules are not
observed, he may order the work done or re-done but only to conform to the prescribed rules. In his resolution, Secretary Drilon declared that there were no written notices of public
He may not prescribe his own manner for the doing of the act. He has no judgment on this hearings on the proposed Manila Revenue Code that were sent to interested parties as required
matter except to see to it that the rules are followed. In the opinion of the Court, Secretary byArt. 276(b) of the Implementing Rules of the Local Government Code nor were copies of the
Drilon did precisely this, and no more nor less than this, and so performed an act not of control proposed ordinance published in three successive issues of a newspaper of general circulation
but of mere supervision. pursuant to Art. 276(a). No minutes were submitted to show that the obligatory public hearings
had been held. Neither were copies of the measure as approved posted in prominent places in
The case of Taule v. Santos 9 cited in the decision has no application here because the the city in accordance with Sec. 511(a) of the Local Government Code. Finally, the Manila
jurisdiction claimed by the Secretary of Local Governments over election contests in the Revenue Code was not translated into Pilipino or Tagalog and disseminated among the people
Katipunan ng Mga Barangay was held to belong to the Commission on Elections by for their information and guidance, conformably to Sec. 59(b) of the Code. prLL
constitutional provision. The conflict was over jurisdiction, not supervision or control. cdrep
Judge Palattao found otherwise. He declared that all the procedural requirements had been
Significantly, a rule similar to Section 187 appeared in the Local Autonomy Act, which observed in the enactment of the Manila Revenue Code and that the City of Manila had not
provided in its Section 2 as follows: been able to prove such compliance before the Secretary only because he had given it only five
days within which to gather and present to him all the evidence (consisting of 25 exhibits) later
A tax ordinance shall go into effect on the fifteenth day after its submitted to the trial court.
passage, unless the ordinance shall provide otherwise: Provided,
however, That the Secretary of Finance shall have authority to To get to the bottom of his question, the Court acceded to the motion of the respondents and
suspend the effectivity of any ordinance within one hundred and called for the elevation to it of the said exhibits. We have carefully examined every one of
twenty days after receipt by him of a copy thereof, if, in his opinion, these exhibits and agree with the trial court that the procedural requirements have indeed been
observed. Notices of the public hearings were sent to interested parties as evidenced by In response, respondent filed a protest on April 17, 2002 contending among
Exhibits G-1 to 17. The minutes of the hearings are found in Exhibits M, M-1, M-2, and M-3. others that it is not liable for the payment of the local business tax either as a manufacturer
Exhibits B and C show that the proposed ordinances were published in the Balita and the or distributor of petroleum products. It further argued that the Mayor's Permit Fees are
Manila Standard on April 21 and 25, 1993, respectively, and the approved ordinance was exorbitant, confiscatory, arbitrary, unreasonable and not commensurable with the cost of
published in the July 3, 4, 5 1993 issues of the Manila Standard and in the July 6, 1993 issue issuing a license.
of Balita, as shown by Exhibits Q, Q-1, Q-2, and Q-3. prLL
On May 13, 2002, petitioners denied respondent's protest and declared that
The only exceptions are the posting of the ordinance as approved but this omission does not under Section 14 of the Batangas City Tax Code of 2002, they are empowered to withhold
affect its validity, considering that its publication in three successive issues of a newspaper of the issuance of the Mayor's Permit for failure of respondent to pay the business taxes on its
general circulation will satisfy due process. It has also not been shown that the text of the manufacture and distribution of petroleum products.
ordinance has been translated and disseminated, but this requirement applies to the approval of
On June 17, 2002, respondent filed a Petition for Review pursuant to Section
local development plans and public investment programs of the local government unit and not
195 of the LGC of 1991 before the Regional Trial Court (RTC) of Batangas City.
to tax ordinances.
In its petition, respondent maintained that petitioners have no authority to
We make no ruling on the substantive provisions of the Manila Revenue Code as their validity impose the said taxes and fees, and argued that the levy of local business taxes on the
has not been raised in issue in the present petition. business of manufacturing and distributing gasoline and other petroleum products is
contrary to law and against national policy. It further contended that the Mayor's Permit
WHEREFORE, the judgment is hereby rendered REVERSING the challenged decision of the
Fee levied by petitioners were unreasonable and confiscatory.
Regional Trial Court insofar as it declared Section 187 of the Local Government Code
unconstitutional but AFFIRMING its finding that the procedural requirements in the enactment In its Answer, petitioners contended that the City of Batangas can legally
of the Manila Revenue Code have been observed. No pronouncement as to costs. impose taxes on the business of manufacturing and distribution of petroleum products,
including the Mayor's Permit Fees upon respondent.
||
Trial thereafter ensued.
BATANGAS CITY VS PILIPINAS SHELL
In the interim, respondent paid under protest the Mayor's Permit Fees for the
Before this Court is a Petition for Review on Certiorari under Rule 45 of year 2003 amounting to P774,840.50 as manufacturer and P3,525,010.50 as distributor.
the Rules of Court assailing the Decision 1 dated January 22, 2009 and Resolution 2 dated When respondent applied for the issuance of the Mayor's Permit in 2004, it offered the
April 13, 2009 of the Court of Tax Appeals (CTA) En Banc in CTA EB No. 350 amount of P150,000.00 as compromise Mayor's Permit Fee without prejudice to the
which affirmed in toto the Amended Decision 3 dated July 31, 2007 and outcome of the case then pending, which was rejected by petitioners.
Resolution 4 dated November 21, 2007 of the CTA Second Division in CTA AC Case No. On October 29, 2004, the RTC of Batangas City rendered a
10. Decision 5 sustaining the imposition of business taxes by petitioners upon the manufacture
The facts follow. and distribution of petroleum products by respondent. However, the RTC withheld the
imposition of Mayor's Permit Fee in deference to the provisions of Section 147 of the LGC,
Petitioner Batangas City is a local government unit (LGU) with the capacity to in relation to Section 143 (h) of the same Code, which imposed a limit to the power of
sue and be sued under its Charter and Section 22 (a) (2) of the Local Government petitioners to collect the said business taxes. The fallo of said decision reads:
Code (LGC) of 1991. Petitioners Teodulfo A. Deguito and Benjamin E. Pargas are the City
Legal Officer and City Treasurer, respectively, of Batangas City. WHEREFORE, in view of the foregoing premises, this
Court hereby renders judgment as follows:
Respondent Pilipinas Shell Petroleum Corporation operates an oil refinery and
depot in Tabagao, Batangas City, which manufactures and produces petroleum products 1. The taxes on the privilege of engaging in the business of
that are distributed nationwide. manufacturing, distribution or dealing in
petroleum products in the amount of
In 2002, respondent was only paying the amount of P98,964.71 for fees and P92,373,750.50 and P312,656,253.04,
other charges which include the amount of P1,180.34 as Mayor's Permit. However, on respectively, imposed by Batangas City on
February 20, 2001, petitioner Batangas City, through its City Legal Officer, sent a notice Pilipinas Shell, is VALID.
of assessment to respondent demanding the payment of P92,373,720.50 and
P312,656,253.04 as business taxes for its manufacture and distribution of petroleum 2. Declaring the Mayor's Permit Fee in the amount of
products. In addition, respondent was also required and assessed to pay the amount of P4,299,851.00 based on gross receipts/sales as
P4,299,851.00 as Mayor's Permit Fee based on the gross sales of its Tabagao Refinery. The grossly excessive and unreasonable considering
assessment was allegedly pursuant of Section 134 of the LGC of 1991 and Section 23 of the aforesaid business taxes.
its Batangas City Tax Code of 2002.
ACCORDINGLY, THE PETITIONER, PILIPINAS Since [petitioners] failed to
SHELL PETROLEUM CORPORATION (PSPC),IS HEREBY modify the computation of the mayor's permit
ORDERED TO PAY THE AMOUNT OF PHP405,030,003.54 AS fee and based on justice and equity,
TAX ON ITS BUSINESS OF ENGAGING IN THE [respondent] should be refunded with the
MANUFACTURE AND DISTRIBUTION OF PETROLEUM mayor's permit fees ordered revoked by the
PRODUCTS, WHILE THE ASSESSMENT OF PHP4,299,851.00 court a quo.
AS MAYOR'S PERMIT FEE IS HEREBY ORDERED REVOKED
WITHOUT PREJUDICE TO ITS MODIFICATION BY THE The details of the additional
RESPONDENTS, BATANGAS CITY, ET AL. amount of P4,299,851.00 mayor's permit fees
are as follows:
SO ORDERED. 6
Manufacturer Distributor
Unsatisfied, respondent filed a "Motion for Partial Reconsideration."
In an Order 7 dated February 28, 2005, the RTC denied respondent's motion for Mayor's Permit Fee P704,305.00 P3,166,555.00
lack of merit. License Fee 70,535.50
Hence, respondent filed a Petition for Review with Extremely Urgent Prot. Fee Res/Bus 25,000.00
Application for a Temporary Restraining Order and/or a Writ of Preliminary Injunction Fire Insp. Fee 1,000.00
with the CTA Second Division on April 27, 2005. SDHTEC
Occ./Prof. Tax
Considering the urgency of the resolution of respondent's Application for the San Permit & San Insp. Fee 12,000.00
Issuance of a Writ of Preliminary Injunction, the CTA Second Division granted the said
application and ordered petitioners to hold in abeyance the collection of the questioned Fire Code Fee 320,455.00
manufacturer and distributor's taxes, conditioned upon the filing of respondent of a surety ––––––––––– ––––––––––––
bond in the amount of P500,000,000.00. Total Amount P774,840.50 P3,525,010.50
In a Decision dated June 21, 2007, the CTA Second Division granted
respondent's petition. It held that respondent is not subject to the business taxes on the ========== ===========
manufacture and distribution of petroleum products because of the express limitation
provided under Section 133 (h) of the LGC.The dispositive portion of said Decision reads:
WHEREFORE, premises considered, the The amount to be refunded is not
judgment/order of the RTC Branch II of Batangas City is hereby the full amount of P4,299,851.00 but the
MODIFIED. As to the business taxes on the manufacture and excessive mayor's permit for manufacturing
distribution of petroleum products, We find the [respondent] not and distributing in the amount of
liable for the same. As to the Mayor's permit, We find that it is P704,305.00 and P3,166,555.00,
excessive. Accordingly, the [petitioner] is hereby (a) declared respectively, or in the total amount of
legally proscribed from imposing business taxes on the manufacture P3,870,860.00.
and distribution of petroleum products and (b) to refund in the form
of tax credit the excessive mayor's permit in the amount of THREE To conform to this aforequoted pronouncement, the
MILLION FIVE HUNDRED TWENTY FIVE THOUSAND TEN dispositive portion of the assailed decision should be amended so
PESOS and FIFTY CENTAVOS (P3,525,010.50) that the exact amount of the Mayor's Permit Fees to be refunded be
changed from P3,525,010.50 to P3,870,860.00.
SO ORDERED.
Section 2, Rule 36 of the Rules of Court reads as follows:
On July 13, 2007, respondent filed a "Motion for Clarification" on the exact
amount to be refunded by petitioners as regards the Mayor's Permit Fees. After a perusal SEC. 2. Entry of Judgments and
of the "Motion for Clarification," the CTA Second Division found the motion partly final orders.— If no appeal or motion for new
meritorious. Thus: trial or reconsideration is filed within the time
provided in these Rules, the judgment or final
Indeed, there is a discrepancy in the amount to be order shall forthwith be entered by the clerk
refunded and to clarify, the amount should be P3,870,860.00 as in the book of entries of judgments. The date
written in the body of the decisions as follows:
of finality of the judgment or final order shall WHEREFORE, the instant Petition for Review is hereby
be deemed to be the date of its entry. DENIED DUE COURSE and DISMISSED for lack of merit.
Accordingly, the July 31, 2007 Amended Decision and November
In this case, PSPC received the Decision on June 28, 21, 2007 Resolution of the CTA Second Division in CTA AC Case
2007 and it filed its motion for clarification (treated as a motion for No. 10 entitled, "PILIPINAS SHELL PETROLEUM
reconsideration) on July 13, 2007 which is within the period allowed CORPORATION, petitioner vs. BATANGAS CITY, BENJAMIN
by law. In effect, our Decision has not yet become final and E. PARGAS in his capacity as CITY TREASURER and
executory. Hence, our Decision may be amended. TEODULFO A. DEGUITO in his capacity as CITY LEGAL
Moreover, pursuant to Section 5(g), Rule 135 of OFFICER OF BATANGAS CITY, [petitioners]," are hereby
the Revised Rules of Court that every court shall have the power to AFFIRMED in toto.
amend or control its process and orders so as to make them SO ORDERED. 10 AScHCD
conformable to law and justice, the Second Division of this Court
resolves to amend its Decision dated June 21, 2007 by making the Unfazed, petitioners filed a motion for reconsideration.
necessary corrections.
In a Resolution dated April 13, 2009, the CTA En Banc denied petitioners'
WHEREFORE, in view of the foregoing, [respondent]'s motion for reconsideration for lack of merit.
Motion for Clarification is partly GRANTED. Accordingly, the
dispositive portion of this Court's Decision dated June 21, 2007 is Hence, this petition.
hereby AMENDED as follows: Petitioner raises the following assignment of errors:
WHEREFORE, premises 1. THE COURT OF TAX APPEALS EN BANC ERRED IN NOT
considered, the judgment/order of the RTC RULING THAT THE POWER OF LOCAL
Branch II of Batangas City is hereby GOVERNMENT UNITS TO TAX BUSINESS IS
MODIFIED. As to the business taxes on the SOLELY GOVERNED BY SEC. 143 AND 143(h) OF
manufacture and distribution of petroleum THE LOCAL GOVERNMENT CODE OF 1991.
products, We find the [respondent] not liable
for the same. As to the mayor's permit, We 2. THE COURT OF TAX APPEALS EN BANC ERRED IN NOT
find that it is excessive. Accordingly, the RULING THAT THE WORD "TAXES" IN SEC. 133(h)
[petitioner] is hereby (a) declared legally DOES NOT INCLUDE BUSINESS TAXES.
proscribed from imposing business taxes on 3. THE COURT OF TAX APPEALS EN BANC ERRED IN
the manufacture and distribution of DISREGARDING THE DISTINCTION BETWEEN
petroleum products and (b) to refund in the TAXES ON ARTICLES AND TAXES ON BUSINESS.
form of tax credit the excessive mayor's
permit in the amount of THREE MILLION 4. THE COURT OF TAX APPEALS EN BANC INCORRECTLY
EIGHT HUNDRED SEVENTY CONSTRUED A CLEAR PROVISION OF LAW,
THOUSAND EIGHT HUNDRED SIXTY SPECIFICALLY SECTION 133(h) OF THE LOCAL
PESOS (P3,870,860.00). GOVERNMENT CODE OF 1991, AS AN EXPRESS
LIMITATION ON THE POWER OF LOCAL
SO ORDERED. GOVERNMENT UNITS TO IMPOSE TAXES ON THE
SO ORDERED. 9 BUSINESS OF MANUFACTURE AND DISTRIBUTION
OF PETROLEUM PRODUCTS.
Petitioners filed a motion for reconsideration against said decision but the same
was denied by the CTA Second Division in a Resolution dated November 21, 2007. In essence, the issue is whether a LGU is empowered under the LGC to impose
business taxes on persons or entities engaged in the business of manufacturing and
Not satisfied, petitioners filed a Petition for Review praying for the reversal of distribution of petroleum products.
the Amended Decision and Resolution of the CTA Second Division.
It its petition, petitioners assert that any activity that involves the production or
On January 22, 2009, the CTA En Banc promulgated a Decision affirming in manufacture and the distribution or selling of any kind or nature as a means of livelihood
toto the Amended Decision of the CTA Second Division. The CTA En Banc found no or with a view to profit can be taxed by the LGUs. They posit that the authority granted to
cogent reason to disturb the findings and conclusions of the CTA Second Division. The them by Section 143 (h) of the LGC is so broad that it practically covers any business that
dispositive portion of said Decision reads: the sanggunianconcerned may deem proper to tax, even including businesses which are
already subject to excise, value-added or percentage tax under the National Internal
Revenue Code (NIRC)provided that the same shall not exceed two percent of the gross to confer that power or the municipality,
sales or receipts of the preceding calendar year. cannot assume it. And the power when
granted is to be construed in strictissimi
We do not agree. juris.Any doubt or ambiguity arising out of
At the outset, it must be emphasized that although the power to tax is inherent the term used in granting that power must be
in the State, the same is not true for LGUs because although the mandate to impose taxes resolved against the municipality. Inferences,
granted to LGUs is categorical and long established in the 1987 Philippine Constitution, implication, deductions — all these — have
the same is not all encompassing as it is subject to limitations as explicitly stated in Section no place in the interpretation of the taxing
5, Article X ofthe 1987 Constitution, viz.: power of a municipal corporation.

SECTION 5. Each local government unit shall have the Therefore, the power of a province to tax is limited to the
power to create its own sources of revenues and to levy taxes, fees, extent that such power is delegated to it either by the Constitution or
and charges subject to such guidelines and limitations as the by statute. Section 5, Article X of the 1987 Constitutionis clear on
Congress may provide, consistent with the basic policy of local this point:
autonomy. Such taxes, fees, and charges shall accrue exclusively to xxx xxx xxx
the local governments.
Per Section 5, Article X of the 1987 Constitution, "the
In the consolidated cases of City of Manila, et al. v. Hon. Colet and Malaysian power to tax is no longer vested exclusively on Congress; local
Airline System; Maersk-Filipinas, Inc.,et al. v. City of Manila, et al.;Eastern Shipping legislative bodies are now given direct authority to levy taxes, fees
Lines, Inc. v. City Council of Manila, et al.; William Lines, Inc.,et al. v. Regional Trial and other charges." Nevertheless, such authority is "subject to such
Court of Manila, et al.; PNOC Shipping and Transport Corporation v. Hon. Nabong, et guidelines and limitations as the Congress may provide."
al.; Maersk-Filipinas, Inc., et al. v. City of Manila, et al., and with Intervenors William
Lines, Inc., et al.; Cosco Container Lines and HEUNG-A Shipping Co., Ltd., et al. v. City In conformity with Section 3, Article X of the 1987
of Manila; Sulpicio Lines, Inc. v. Regional Trial Court of Manila, et al.;Association of Constitution, Congress enacted Republic Act No. 7160, otherwise
International Shipping Lines, Inc. v. City of Manila, et al.; Dongnama Shipping Co., Ltd., known as the Local Government Code of 1991.Book II of the LGC
et al. v. Court of Appeals, et al.12 this Court expounded that the LGUs' power to tax is governs local taxation and fiscal matters.
subject to the limitations set forth under Section 133 of the LGC.Thus:
Relevant provisions of Book II of the LGC establish the
It is already well-settled that although the power to tax is parameters of the taxing powers of LGUs found below.
inherent in the State, the same is not true for the LGUs to whom the
power must be delegated by Congress and must be exercised within First, Section 130 provides for the following
the guidelines and limitations that Congress may provide. The Court fundamental principles governing the taxing powers of LGUs:
expounded in Pelizloy Realty Corporation v. The Province of 1. Taxation shall be uniform in each LGU.
Benguet that:
2. Taxes, fees, charges and other impositions shall:
The power to tax "is an attribute
of sovereignty," and as such, inheres in the a. be equitable and based as far as practicable on
State. Such, however, is not true for the taxpayer's ability to pay;
provinces, cities, municipalities b. be levied and collected only for public
and barangays as they are not the sovereign; purposes;
rather, there are mere "territorial and political
subdivisions of the Republic of the c. not be unjust, excessive, oppressive or
Philippines." confiscatory;

The rule governing the taxing power of provinces, cities, d. not be contrary to law, public policy, national
municipalities and barangays is summarized in Icard v. City economic policy, or in the restraint
Council of Baguio: of trade.

It is settled that a municipal 3. The collection of local taxes, fees, charges and other
corporation unlike a sovereign state is clothed impositions shall in no case be left to any private
with no inherent power of taxation. The person.
charter or statute must plainly show an intent
4. The revenue collected pursuant to the provisions of the First, Section 133 of the LGC is a specific provision that explicitly withhold
LGC shall inure solely to the benefit of, and be from LGUs the power to impose taxes, fees and charges on petroleum products.
subject to the disposition by, the LGU levying
the tax, fee, charge or other imposition unless Strictly speaking, as long as the subject matter of the taxing powers of the LGUs
otherwise specifically provided by the LGC. is the petroleum products per se or even the activity or privilege related to the petroleum
products, such as manufacturing and distribution of said products, it is covered by the said
5. Each LGU shall, as far as practicable, evolve a limitation and thus, no levy can be imposed.
progressive system of taxation.
On the contrary, Section 143 of the LGC defines the general power of LGUs to
Second, Section 133 provides for the common tax businesses within its jurisdiction. Thus, the omnibus grant of power to LGUs under
limitations on the taxing powers of LGUs. Section 143 (h) of the LGC cannot overcome the specific exception or exemption in Section
133 (h) of the same Code. This is in accord with the rule on statutory construction that
Among the common limitations on the taxing powers of LGUs under Section
specific provisions must prevail over general ones. A special and specific provision
133 of the LGC is paragraph (h) which states:
prevails over a general provision irrespective of their relative positions in the
SECTION 133. Common Limitations on the Taxing statute. Generalia specialibus non derogant.Where there is in the same statute a particular
Powers of Local Government Units.— Unless otherwise provided enactment and also a general one which in its most comprehensive sense would include
herein, the exercise of taxing powers of provinces, cities, what is embraced in the former, the particular enactment must be operative, and the general
municipalities, and barangays shall not extend to the levy of the enactment must be taken to affect only such cases within its general language as are not
following: within the provisions of the particular enactment.

xxx xxx xxx Second, Article 232 (h) of the Implementing Rules and Regulations (IRR) of
the LGC of 1991 states:
(h) Excise taxes on articles enumerated under
the National Internal Revenue Code, as ARTICLE 232. Tax on Business.— The Municipality
amended, and taxes, fees or charges on may impose taxes on the following businesses:
petroleum products.;
xxx xxx xxx
From the foregoing, Section 133 (h) clearly specifies the two kinds of taxes
(h) On any business not otherwise specified in the
which cannot be imposed by LGUs: (1) excise taxes on articles enumerated under
preceding paragraphs which
the NIRC,as amended; and (2) taxes, fees or charges on petroleum products.
the sanggunian concerned may deem proper to
Indisputably, the power of LGUs to impose business taxes derives from Section tax provided that that on any business subject to
143 14 of the LGC.However, the same is subject to the explicit statutory impediment the excise tax, VAT or percentage tax under
provided for under Section 133 (h) of the same Code which prohibits LGUs from imposing the NIRC,as amended, the rate of tax shall not
"taxes, fees or charges on petroleum products." It can, therefore, be deduced that although exceed two percent (2%) of gross sales or
petroleum products are subject to excise tax, the same is specifically excluded from the receipts of the preceding calendar year
broad power granted to LGUs under Section 143 (h) of the LGC to impose business taxes. andprovided further, that in line with existing
national policy, any business engaged in the
Additionally, Section 133 (h) of the LGC makes plain that the prohibition with production, manufacture, refining,
respect to petroleum products extends not only to excise taxes thereon, but all "taxes, fees distribution or sale of oil, gasoline, and other
or charges." The earlier reference in paragraph 143 (h) to excise taxes comprehends a wider petroleum products shall not be subject to
range of subject of taxation: all articles already covered by excise taxation under any local tax imposed in this Article.18
the NIRC,such as alcohol products, tobacco products, mineral products, automobiles, and
such non-essential goods as jewelry, goods made of precious metals, perfumes, and yachts Article 232 defines with more particularity the capacity of a municipality to
and other vessels intended for pleasure or sports. In contrast, the later reference to "taxes, impose taxes on businesses. However, it admits of certain exceptions, specifically, that
fees and charges" pertains only to one class of articles of the many subjects of excise taxes, businesses engaged in the production, manufacture, refining, distribution or sale of oil,
specifically, "petroleum products." While LGUs are authorized to burden all such other gasoline, and other petroleum products, shall not be subject to any local tax imposed by
class of goods with "taxes, fees and charges," excepting excise taxes, a specific prohibition Article 232.
is imposed barring the levying of any other type of taxes with respect to petroleum
WHEREFORE,in view of the foregoing, the Court hereby resolves
products.
to DENY present petition. The Decision dated January 22, 2009 and Resolution dated
It is likewise irrefutable that the specific exemption provided under Section 133 April 13, 2009 of the Court of Tax Appeals En Banc in CTA EB No. 350 are AFFIRMED.
of the LGC prevails over Section 143 of the same Code.
|||
CITY GOVT OF QC VS ERICTA On the other hand, respondent Himlayang Pilipino, Inc. contends that the taking or confiscation
This is a petition for review which seeks the reversal of the decision of the Court of First Instance of property is obvious because the questioned ordinance permanently restricts the use of the
of Rizal, Branch XVIII declaring Section 9 of Ordinance No. 6118, S-64, of the Quezon City property such that it cannot be used for any reasonable purpose and deprives the owner of all
Council null and void. beneficial use of his property.

Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE REGULATING THE The respondent also stresses that the general welfare clause is not available as a source of power
ESTABLISHMENT, MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL for the taking of the property in this case because it refers to "the power of promoting the public
TYPE CEMETERY OR BURIAL GROUND WITHIN THE JURISDICTION OF QUEZON welfare by restraining and regulating the use of liberty and property." The respondent points out
CITY AND PROVIDING PENALTIES FOR THE VIOLATION THEREOF" provides: 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
"Sec. 9. At least six (6) percent of the total area of the memorial park the general welfare. The respondent cites the case of a nuisance per se or the destruction of a
cemetery shall be set aside for charity burial of deceased persons who house to prevent the spread of a conflagration.
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. We find the stand of the private respondent as well as the decision of the respondent Judge to be
The area so designated shall immediately be developed and should be well-founded. We quote with approval the lower court's ruling which declared null and void
open for operation not later than six months from the date of approval Section 9 of the questioned city ordinance:
of the application."
"The issue is: Is Section 9 of the ordinance in question a valid exercise
For several years, the aforequoted section of the Ordinance was not enforced by city authorities of the police power?
but seven years after the enactment of the ordinance, the Quezon City Council passed the
following resolution: LexLib "An examination of the Charter of Quezon City (Rep. Act No. 5371),
does not reveal any provision that would justify the ordinance in
"RESOLVED by the council of Quezon assembled, to request, as it does question except the provision granting police power to the City. Section
hereby request the City Engineer, Quezon City, to stop any further 9 cannot be justified under the power granted to Quezon City to tax, fix
selling and/or transaction of memorial park lots in Quezon City where the license fee, and regulate such other business, trades, and
the owners thereof have failed to donate the required 6% space intended occupation as may be established or practiced in the City.' (Sub-
for paupers burial." sections 'C', Sec. 12, R.A. 537).

Pursuant to this petition, the Quezon City Engineer notified respondent Himlayang "The power to regulate does not include the power to prohibit (People
Pilipino, Inc. in writing that Section 9 of Ordinance No. 6118, S-64 would be enforced. 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
Respondent Himlayang Pilipino reacted by filing with the Court of First Instance of Rizal,
regulate does not include the power to confiscate. The ordinance in
Branch XVIII at Quezon City, a petition for declaratory relief, prohibition and mandamus with
question not only confiscates but also prohibits the operation of a
preliminary injunction (Sp. Proc. No. Q-16002) seeking to annul Section 9 of the Ordinance in
memorial park cemetery, because under Section 13 of said ordinance,
question. The respondent alleged that the same is contrary to the Constitution, the Quezon City
'Violation of the provision thereof is punishable with a fine and/or
Charter, the Local Autonomy Act, and the Revised Administrative Code.
imprisonment and that upon conviction thereof the permit to operate
There being no issue of fact and the questions raised being purely legal, both petitioners and and maintain a private cemetery shall be revoked or cancelled.' The
respondent agreed to the rendition of a judgment on the pleadings. The respondent court, confiscatory clause and the penal provision in effect deter one from
therefore, rendered the decision declaring Section 9 of Ordinance No. 6118, S-64 null and void. operating a memorial park cemetery. Neither can the ordinance in
question be justified under sub-section 't', Section 12 of Republic Act
A motion for reconsideration having been denied, the City Government and City Council filed 537 which authorizes the City Council to —
the instant petition. cdlex
"'prohibit the burial of the dead within the center
Petitioners argue that the taking of the respondent's property is a valid and reasonable exercise of population of the city and provide for their burial in such
of police power and that the land is taken for a public use as it is intended for the burial ground proper place and in such manner as the council may
of paupers. They further argue that the Quezon City Council is authorized under its charter, in determine, subject to the provisions of the general law
the exercise of local police power, "to make such further ordinances and resolutions not regulating burial grounds and cemeteries and governing
repugnant to law as may be necessary to carry into effect and discharge the powers and duties funerals and disposal of the dead.'(Sub-sec. (t), Sec.
conferred by this Act and such as it shall deem necessary and proper to provide for the health 12, Rep. Act No. 537).
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."
There is nothing in the above provision which authorizes illimitable. Especially it is so under the modern democratic framework
confiscation or as euphemistically termed by the respondents, where the demands of society and nations have multiplied to almost
'donation.' unimaginable proportions. The field and scope of police power have
become almost boundless, just as the fields of public interest and public
We now come to the question whether or not Section 9 of the ordinance
welfare have become almost all embracing and have transcended
in question is a valid exercise of police power. The police power of
human foresight. Since the Courts cannot foresee the needs and
Quezon City is defined in sub-section 00, Sec. 12,Rep. Act 537 which
demands of public interest and welfare, they cannot delimit beforehand
reads as follows:
the extent or scope of the police power by which and through which
"(00) To make such further ordinance and the state seeks to attain or achieve public interest and welfare. (Ichong
regulations not repugnant to law as may be necessary to vs. Hernandez, L-7995, May 31, 1957).
carry into effect and discharge the powers and duties
"The police power being the most active power of the government and
conferred by this act and such as it shall deem necessary and
the due process clause being the broadest limitation on governmental
proper to provide for the health and safety, promote, the
power, the conflict between this power of government and the due
prosperity, improve the morals, peace, good order, comfort
process clause of the Constitution is oftentimes inevitable.
and convenience of the city and the inhabitants thereof, and
for the protection of property therein; and enforce "It will be seen from the foregoing authorities that police power is
obedience thereto with such lawful fines or penalties as the usually exercised in the form of mere regulation or restriction in the use
City Council may prescribe under the provisions of of liberty or property for the promotion of the general welfare. It does
subsection (jj) of this section.' 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
"We start the discussion with a restatement of certain basic principles.
order to destroy it for the purpose of protecting the peace and order and
Occupying the forefront in the bill of rights is the provision which
of promoting the general welfare as for instance, the confiscation of an
states that 'no person shall be deprived of life, liberty or property
illegally possessed article, such as opium and firearms.
without due process of law' (Art. III, Section 1 subparagraph 1,
Constitution). "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
"On the other hand, there are three inherent powers of government by
confiscation. It deprives a person of his private property without due
which the state interferes with the property rights, namely (1) police
process of law, nay, even without compensation."
power, (2) eminent domain, (3) taxation. These are said to exist
independently of the Constitution as necessary attributes of In sustaining the decision of the respondent court, we are not unmindful of the heavy burden
sovereignty. 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
"Police power is defined by Freund as 'the power of promoting the
resolve every presumption in favor of validity and, more 90, where the municipal corporation
public welfare by restraining and regulating the use of liberty and
asserts that the ordinance was enacted to promote the common good and general welfare. LLpr
property' (Quoted in Political Law by Tañada and Carreon, V-II, p. 50).
It is usually exerted in order to merely regulate the use and enjoyment In the leading case of Ermita-Malate Hotel and Motel Operators Association Inc. v. City Mayor
of property of the owner. If he is deprived of his property outright, it is of Manila (20 SCRA 849) the Court speaking through the then Associate Justice and now Chief
not taken for public use but rather to destroy in order to promote the Justice Enrique M. Fernando stated:
general welfare. In police power, the owner does not recover from the
government for injury sustained in consequence thereof. (12 C.J. 623). "Primarily what calls for a reversal of such a decision is the absence of
It has been said that police power is the most essential of government any evidence to offset the presumption of validity that attaches to a
powers, at times the most insistent, and always one of the least limitable challenged statute or ordinance. As was expressed categorically by
of the powers of government (Ruby vs. Provincial Board, 39 Phil. 660; Justice Malcolm: 'The presumption is all in favor of validity. . . . The
Ichong vs. Hernandez, L-7995, May 31, 1957). This power embraces action of the elected representatives of the people cannot be lightly set
the whole system of public regulation (U.S. vs. Linsuya Fan, 10 Phil. aside. The councilors must, in the very nature of things, be familiar
104). The Supreme Court has said that police power is so far-reaching with the necessities of their particular municipality and with all the
in scope that it has almost become impossible to limit its sweep. As it facts and circumstances which surround the subject and necessitate
derives its existence from the very existence of the state itself, it does action. The local legislative body, by enacting the ordinance, has in
not need to be expressed or defined in its scope. Being coextensive with effect given notice that the regulations are essential to the well-being
self-preservation and survival itself, it is the most positive and active of the people. . . . The Judiciary should not lightly set aside legislative
of all governmental processes, the most essential, insistent and
action when there is not a clear invasion of personal or property rights subdivision lots. The necessities of public safety, health, and convenience are very clear from
under the guise of police regulation.' (U.S. v. Salaveria [1918], 39 Phil. said requirements which are intended to insure the development of communities with salubrious
102, at p. 111. There was an affirmation of the presumption of validity and wholesome environments. The beneficiaries of the regulation, in turn, are made to pay by
of municipal ordinance as announced in the leading Salaveria decision the subdivision developer when individual lots are sold to homeowners.
in Eboña v. Daet, [1950] 85 Phil. 369.).
As a matter of fact, the petitioners rely solely on the general welfare clause or on implied powers
We have likewise considered the principles earlier stated in Case v. Board of Health supra: 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
". . . Under the provisions of municipal charters which are known as stretch it to cover this particular taking. Moreover, the questioned ordinance was passed after
the general welfare clauses, a city, by virtue of its police power, may Himlayang Pilipino, Inc. had incorporated, received necessary licenses and permits, and
adopt ordinances to secure the peace, safety, health, morals and the best commenced operating. The sequestration of six percent of the cemetery cannot even be
and highest interests of the municipality. It is a well-settled principle, considered as having been impliedly acknowledged by the private respondent when it accepted
growing out of the nature of well-ordered and civilized society, that the permits to commence operations.
every holder of property, however absolute and unqualified may be his
title, holds it under the implied liability that his use of it shall not be WHEREFORE, the petition for review is hereby DISMISSED. The decision of the respondent
injurious to the equal enjoyment of others having an equal right to the court is affirmed.
enjoyment of their property, nor injurious to the rights of the
community. All 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 CITY OF CEBU VS SPS APOLONIO
rights, are subject to such reasonable limitations in their enjoyment as
shall prevent them from being injurious, and to such reasonable In its petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure,
restraints and regulations, established by law, as the legislature, under petitioner City of Cebu assails the decision of 11 October 1999 of the Court of Appeals in CA-
the governing and controlling power vested in them by the constitution, G.R. CV No. 59204 1 affirming the judgment of 7 May 1996 of the Regional Trial Court,
may think necessary and expedient. The state, under the police power, Branch 13, Cebu City, in Civil Case No. CEB-14632, a case for eminent domain, which fixed
is possessed with plenary power to deal with all matters relating to the the valuation of the land subject thereof on the basis of the recommendation of the
general health, morals, and safety of the people, so long as it does not commissioners appointed by it.
contravene any positive inhibition of the organic law and providing that
The material operative facts are not disputed.
such power is not exercised in such a manner as to justify the
interference of the courts to prevent positive wrong and oppression." On 17 September 1993, petitioner City of Cebu filed in Civil Case No. CEB-14632 a complaint
for eminent domain against respondents spouses Apolonio and Blasa Dedamo. The petitioner
but find them not applicable to the facts of this case.
alleged therein that it needed the following parcels of land of respondents, to wit:
There is no reasonable relation between the setting aside of at least six (6) percent of the total
area of all private cemeteries for charity burial grounds of deceased paupers and the promotion Lot No. 1527
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 Area 1,146 square meters
paupers who are charges of the municipal corporation. Instead of building or maintaining a public Tax Declaration 03472
cemetery for this purpose, the city passes the burden to private cemeteries. LLphil
Title No. 31833
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 Market value P240,660.00
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 Assessed Value P72,200.00
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 Lot No. 1528
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 Area 793 square meters
cemeteries. This has been the law and practice in the past. It continues to the present.
Area sought to be 478 square meters
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 expropriated
for streets, parks, playgrounds, and other public facilities from the land they sell to buyers of
Tax Declaration 03450 (1,786,400.00) as provisional payment for the subject
parcels of land, without prejudice to the final valuation as
Title No. 31832 may be determined by the court;
Market value for the whole lot P1,666,530.00 4. That the FIRST PARTY in the light of the issuance of the Writ of
Possession Order dated September 21, 1994 issued by the
Market value of the Honorable Court, agreed to take possession over that
portion of the lot sought to be expropriated where the
Area to be expropriated P100,380.00
house of the SECOND PARTY was located only after
Assessed Value P49,960.00 fifteen (15) days upon the receipt of the SECOND PARTY
of the amount of P1,786,400.00;
for a public purpose, i.e., for the construction of a public road which shall serve as an
access/relief road of Gorordo Avenue to extend to the General Maxilum Avenue and the 5. That the SECOND PARTY upon receipt of the aforesaid
back of Magellan International Hotel Roads in Cebu City. The lots are the most suitable provisional amount, shall turn over to the FIRST PARTY
site for the purpose. The total area sought to be expropriated is 1,624 square meters with the title of the lot and within the lapse of the fifteen (15)
an assessed value of P1,786,400. Petitioner deposited with the Philippine National Bank days grace period will voluntarily demolish their house
the amount of P51,156 representing 15% of the fair market value of the property to and the other structure that may be located thereon at their
enable the petitioner to take immediate possession of the property pursuant to Section 19 own expense;
of R.A. No. 7160. 2
Respondents, filed a motion to dismiss the complaint because the purpose for which their
property was to be expropriated was not for a public purpose but for benefit of a single private 6. That the FIRST PARTY and the SECOND PARTY jointly petition
entity, the Cebu Holdings, Inc. Petitioner could simply buy directly from them the property at the Honorable Court to render judgment in said Civil Case
its fair market value if it wanted to, just like what it did with the neighboring lots. Besides, the No. CEB-14632 in accordance with this AGREEMENT;
price offered was very low in light of the consideration of P20,000 per square meter, more or
less, which petitioner paid to the neighboring lots. Finally, respondents alleged that they have 7. That the judgment sought to be rendered under this agreement shall
no other land in Cebu City. be followed by a supplemental judgment fixing the just
compensation for the property of the SECOND PARTY
A pre-trial was thereafter had. after the Commissioners appointed by this Honorable
Court to determine the same shall have rendered their
On 23 August 1994, petitioner filed a motion for the issuance of a writ of possession pursuant report and approved by the court.
to Section 19 of R.A. No. 7160. The motion was granted by the trial court on 21 September
1994. 3 Pursuant to said agreement, the trial court appointed three commissioners to determine the just
compensation of the lots sought to be expropriated. The commissioners were Palermo M.
On 14 December 1994, the parties executed and submitted to the trial court an Lugo, who was nominated by petitioner and who was designated as Chairman; Alfredo
Agreement 4 wherein they declared that they have partially settled the case and in Cisneros, who was nominated by respondents; and Herbert E. Buot, who was designated by the
consideration thereof they agreed: trial court. The parties agreed to their appointment.
1. That the SECOND PARTY hereby conforms to the intention to Thereafter, the commissioners submitted their report, which contained their respective
[sic] the FIRST PARTY in expropriating their parcels of assessments of and recommendation as to the valuation of the property.
land in the above-cited case as for public purpose and for
the benefit of the general public; On the basis of the commissioners' report and after due deliberation thereon, the trial court
rendered its decision on 7 May 1996, the decretal portion of which reads:
2. That the SECOND PARTY agrees to part with the ownership of
the subject parcels of land in favor of the FIRST PARTY WHEREFORE, in view of the foregoing, judgment is hereby
provided the latter will pay just compensation for the same rendered in accordance with the report of the commissioners.
in the amount determined by the court after due notice and
hearing; Plaintiff is directed to pay Spouses Apolonio S. Dedamo and Blasa
Dedamo the sum of pesos: TWENTY FOUR MILLION EIGHT
3. That in the meantime the SECOND PARTY agrees to receive the HUNDRED SIXTY-FIVE THOUSAND AND NINE HUNDRED
amount of ONE MILLION SEVEN HUNDRED EIGHTY THIRTY (P24,865,930.00) representing the compensation mentioned
SIX THOUSAND FOUR HUNDRED PESOS in the Complaint.
Plaintiff and defendants are directed to pay the following In the case at bar, the applicable law as to the point of reckoning for the determination of just
commissioner's fee; compensation is Section 19 of R.A. No. 7160, which expressly provides that just compensation
shall be determined as of the time of actual taking. The Section reads as follows:
1. To Palermo Lugo - P21,000.00
SECTION 19. Eminent Domain. — A local government unit may,
2. To Herbert Buot - P19,000.00 through its chief executive and acting pursuant to an ordinance,
exercise the power of eminent domain for public use, or purpose or
3. To Alfredo Cisneros - P19,000.00 welfare for the benefit of the poor and the landless, upon payment of
just compensation, pursuant to the provisions of the Constitution and
Without pronouncement as to cost.
pertinent laws: Provided, however, That the power of eminent domain
SO ORDERED. may not be exercised unless a valid and definite offer has been
previously made to the owner, and such offer was not
Petitioner filed a motion for reconsideration on the ground that the commissioners' report was accepted: Provided, further, That the local government unit may
inaccurate since it included an area which was not subject to expropriation. More specifically, immediately take possession of the property upon the filing of the
it contended that Lot No. 1528 contains 793 square meters but the actual area to be expropriation proceedings and upon making a deposit with the proper
expropriated is only 478 square meters. The remaining 315 square meters is the subject of a court of at least fifteen percent (15%) of the fair market value of the
separate expropriation proceeding in Civil Case No. CEB-8348, then pending before Branch 9 property based on the current tax declaration of the property to be
of the Regional Trial Court of Cebu City. expropriated: Provided finally, That, the amount to be paid for the
expropriated property shall be determined by the proper court, based
On 16 August 1996, the commissioners submitted an amended assessment for the 478 square on the fair market value at the time of the taking of the property.
meters of Lot No. 1528 and fixed it at P12,824.10 per square meter, or in the amount of
P20,826,339.50. The assessment was approved as the just compensation thereof by the trial The petitioner has misread our ruling in The National Power Corp. vs. Court of
court in its Order of 27 December 1996. 6 Accordingly, the dispositive portion of the decision Appeals. 10 We did not categorically rule in that case that just compensation should be
was amended to reflect the new valuation. determined as of the filing of the complaint. We explicitly stated therein that although the
general rule in determining just compensation in eminent domain is the value of the property as
Petitioner elevated the case to the Court of Appeals, which docketed the case as CA-G.R. CV of the date of the filing of the complaint, the rule "admits of an exception: where this Court
No. 59204. Petitioner alleged that the lower court erred in fixing the amount of just fixed the value of the property as of the date it was taken and not at the date of the
compensation at P20,826,339.50. The just compensation should be based on the prevailing commencement of the expropriation proceedings."
market price of the property at the commencement of the expropriation proceedings.
Also, the trial court followed the then governing procedural law on the matter, which was
The petitioner did not convince the Court of Appeals. In its decision of 11 October 1999, 7 the Section 5 of Rule 67 of the Rules of Court, which provided as follows:
Court of Appeals affirmed in toto the decision of the trial court.
SEC. 5. Ascertainment of compensation. — Upon the entry of the
Still unsatisfied, petitioner filed with us the petition for review in the case at bar. It raises the order of condemnation, the court shall appoint not more than three (3)
sole issue of whether just compensation should be determined as of the date of the filing of the competent and disinterested persons as commissioners to ascertain
complaint. It asserts that it should be, which in this case should be 17 September 1993 and not and report to the court the just compensation for the property sought
at the time the property was actually taken in 1994, pursuant to the decision in "National to be taken. The order of appointment shall designate the time and
Power Corporation vs. Court of Appeals." place of the first session of the hearing to be held by the
commissioners and specify the time within which their report is to be
In their Comment, respondents maintain that the Court of Appeals did not err in affirming the filed with the court.
decision of the trial court because (1) the trial court decided the case on the basis of the
agreement of the parties that just compensation shall be fixed by commissioners appointed by More than anything else, the parties, by a solemn document freely and voluntarily agreed upon
the court; (2) petitioner did not interpose any serious objection to the commissioners' report of by them, agreed to be bound by the report of the commission and approved by the trial court.
12 August 1996 fixing the just compensation of the 1,624-square meter lot at P20,826,339.50; The agreement is a contract between the parties. It has the force of law between them and
hence, it was estopped from attacking the report on which the decision was based; and (3) the should be complied with in good faith. Article 1159 and 1315 of the Civil Code explicitly
determined just compensation fixed is even lower than the actual value of the property at the provides:
time of the actual taking in 1994.
Art. 1159. Obligations arising from contracts have the force of law
Eminent domain is a fundamental State power that is inseparable from sovereignty. It is the between the contracting parties and should be complied with in good
Government's right to appropriate, in the nature of a compulsory sale to the State, private faith.
property for public use or purpose. However, the Government must pay the owner thereof just
compensation as consideration therefor.
Art. 1315. Contracts are perfected by mere consent, and from that "Ordering the plaintiff to pay the defendants the just compensation for
moment the parties are bound not only to the fulfillment of what has said property which is the fair market value of the land condemned,
been expressly stipulated but also to all the consequences which, computed at the rate of six pesos (P6.00) per square meter, with legal
according to their nature, may be in keeping with good faith, usage rate of interest from September 19, 1969, until fully paid; and
and law.
"Ordering the plaintiff to pay the costs of suit, which includes the
Furthermore, during the hearing on 22 November 1996, petitioner did not interpose a serious aforesaid fees of commissioners, Atty. Victorino P. Evangelista and
objection. 11 It is therefore too late for petitioner to question the valuation now without Mr. Pablo Domingo."
violating the principle of equitable estoppel. Estoppel in pais arises when one, by his acts,
representations or admissions, or by his own silence when he ought to speak out, intentionally The bone of contention in the instant controversy is the 76,589-square meter property
or through culpable negligence, induces another to believe certain facts to exist and such other previously owned by Luis Santos, predecessor-in-interest of herein respondents, which forms
rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted part of the expropriated area.
to deny the existence of such facts. Records show that petitioner consented to conform with the
valuation recommended by the commissioners. It cannot detract from its agreement now and It would appear that the national government failed to pay to herein respondents the
assail correctness of the commissioner's assessment. compensation pursuant to the foregoing decision, such that a little over five years later, or on
09 May 1984, respondents filed a manifestation with a motion seeking payment for the
Finally, while Section 4, Rule 67 of the Rules of Court provides that just compensation shall be expropriated property. On 07 June 1984, the Bulacan RTC, after ascertaining that the heirs
determined at the time of the filing of the complaint for expropriation, such law cannot prevail remained unpaid in the sum of P1,058,655.05, issued a writ of execution served on the
over R.A. 7160, which is a substantive law. plaintiff, through the Office of the Solicitor General, for the implementation thereof. When the
order was not complied with, respondents again filed a motion urging the trial court to direct
WHEREFORE, finding no reversible error in the assailed judgment of the Court of Appeals in the provincial treasurer of Bulacan to release to them the amount of P72,683.55, a portion of
CA-G.R. CV No. 59204, the petition in this case is hereby DENIED. the sum deposited by petitioner at the inception of the expropriation proceedings in 1969,
corresponding to their share of the deposit. The trial court, in its order of 10 July 1984, granted
the motion.

REPUBLIC VS CA In the meantime, President Joseph Ejercito Estrada issued Proclamation No. 22, 2 transferring
20 hectares of the expropriated property to the Bulacan State University for the expansion of its
facilities and another 5 hectares to be used exclusively for the propagation of the Philippine
Petitioner instituted expropriation proceedings on 19 September 1969 before the Regional Trial carabao. The remaining portion was retained by the PIA. This fact notwithstanding, and despite
Court ("RTC") of Bulacan, docketed as Civil Cases No. 3839-M, No. 3840-M, No. 3841-M the 1984 court order, the Santos heirs remained unpaid, and no action was taken on their case
and No. 3842-M, covering a total of 544,980 square meters of contiguous land situated along until 16 September 1999 when petitioner filed its manifestation and motion to permit the
MacArthur Highway, Malolos, Bulacan, to be utilized for the continued broadcast operation deposit in court of the amount of P4,664,000.00 by way of just compensation for the
and use of radio transmitter facilities for the "Voice of the Philippines" project. Petitioner, expropriated property of the late Luis Santos subject to such final computation as might be
through the Philippine Information Agency ("PIA"), took over the premises after the previous approved by the court. This time, the Santos heirs, opposing the manifestation and motion,
lessee, the "Voice of America," had ceased its operations thereat. Petitioner made a deposit of submitted a counter-motion to adjust the compensation from P6.00 per square meter previously
P517,558.80, the sum provisionally fixed as being the reasonable value of the property. On 26 fixed in the 1979 decision to its current zonal valuation pegged at P5,000.00 per square meter
February 1979, or more than nine years after the institution of the expropriation proceedings, or, in the alternative, to cause the return to them of the expropriated property. On 01 March
the trial court issued this order — DAHaTc 2000, the Bulacan RTC ruled in favor of respondents and issued the assailed order, vacating its
decision of 26 February 1979 and declaring it to be unenforceable on the ground of
WHEREFORE, premises considered, judgment is hereby prescription —
rendered: IDASHa
"WHEREFORE, premises considered, the court hereby:
"Condemning the properties of the defendants in Civil Cases Nos.
3839-M to 3842-M located at KM 43, MacArthur Highway, Malolos, "1) declares the decision rendered by this Court on February 26, 1979
Bulacan and covered by several transfer certificates of title appearing no longer enforceable, execution of the same by either a motion or an
in the Commissioners' Appraisal Report consisting of the total area of independent action having already prescribed in accordance with
544,980 square meters, as indicated in plan, Exhibit A, for plaintiff, Section 6, Rule 39 of both the 1964 Revised Rules of Court and the
also marked as Exhibit I for the defendants, and as Appendix 'A' 1997 Rules of Civil Procedure;
attached to the Commissioners' Appraisal Report, for the purpose
stated by the plaintiff in its complaint; "2) denies the plaintiff's Manifestation and Motion to Permit Plaintiff
to Deposit in Court Payment for Expropriated Properties dated
September 16, 1999 for the reason stated in the next preceding "Curative statutes are enacted to cure defects in a prior law or to
paragraph hereof; and validate legal proceedings which would otherwise be void for want of
conformity with certain legal requirements. (Erectors, Inc. vs.
"3) orders the return of the expropriated property of the late defendant National Labor Relations Commission, 256 SCRA 629 [1996].) They
Luis Santos to his heirs conformably with the ruling of the Supreme are intended to supply defects, abridge superfluities and curb certain
Court in Government of Sorsogon vs. Vda. De Villaroya, 153 SCRA evils. They are intended to enable persons to carry into effect that
291, without prejudice to any case which the parties may deem which they have designed or intended, but has failed of expected legal
appropriate to institute in relation with the amount already paid to consequence by reason of some statutory disability or irregularity in
herein oppositors and the purported transfer of a portion of the said their own action. They make valid that which, before the enactment of
realty to the Bulacan State University pursuant to Proclamation No. the statute was invalid. Their purpose is to give validity to acts done
22 issued by President Joseph Ejercito." that would have been invalid under existing laws, as if existing laws
have been complied with. (Batong Buhay Gold Mines, Inc. vs. Dela
Petitioner brought the matter up to the Court of Appeals but the petition was outrightly denied. Serna, 312 SCRA 22 [1999].) Curative statutes, therefore, by their
It would appear that the denial was based on Section 4, Rule 65, of the 1997 Rules of Civil very essence, are retroactive. (Municipality of San Narciso, Quezon
Procedure which provided that the filing of a motion for reconsideration in due time after filing vs. Mendez, Sr., 239 SCRA 11 [1994].)"
of the judgment, order or resolution interrupted the running of the sixty-day period within
which to file a petition for certiorari; and that if a motion for reconsideration was denied, the At all events, petitioner has a valid point in emphasizing the "public nature" of the expropriated
aggrieved party could file the petition only within the remaining period, but which should not property. The petition being imbued with public interest, the Court has resolved to give it due
be less than five days in any event, reckoned from the notice of such denial. The reglementary course and to decide the case on its merits.
period, however, was later modified by A.M. No. 00-2-03 S.C., now reading thusly:
Assailing the finding of prescription by the trial court, petitioner here posited that a motion
"Sec. 4. When and where petition filed. — The petition shall be filed which respondents had filed on 17 February 1984, followed up by other motions subsequent
not later than sixty (60) days from notice of the judgment, order or thereto, was made within the reglementary period that thereby interrupted the 5-year
resolution. In case a motion for reconsideration or new trial is timely prescriptive period within which to enforce the 1979 judgment. Furthermore, petitioner
filed, whether such motion is required or not, the sixty (60) day period claimed, the receipt by respondents of partial compensation in the sum of P72,683.55 on 23
shall be counted from notice of the denial of said motion." July 1984 constituted partial compliance on the part of petitioners and effectively estopped
respondents from invoking prescription expressed in Section 6, Rule 39, of the Rules of
The amendatory provision, being curative in nature, should be made applicable to all Court. 6
cases still pending with the courts at the time of its effectivity.
In Narzoles vs. NLRC, the Court has said:

The Court has observed that Circular No. 39-98 has generated In opposing the petition, respondents advanced the view that pursuant to Section 6, Rule 39, of
tremendous confusion resulting in the dismissal of numerous cases for the Rules of Court, the failure of petitioner to execute the judgment, dated 26 February 1979,
late filing. This may have been because, historically, i.e., even before within five years after it had become final and executory, rendered it unenforceable by mere
the 1997 revision to the Rules of Civil Procedure, a party had a fresh motion. The motion for payment, dated 09 May 1984, as well as the subsequent disbursement
period from receipt of the order denying the motion for to them of the sum of P72,683.55 by the provincial treasurer of Bulacan, could not be
reconsideration to file a petition for certiorari. Were it not for the considered as having interrupted the five-year period, since a motion, to be considered
amendments brought about by Circular No. 39-98, the cases so otherwise, should instead be made by the prevailing party, in this case by petitioner.
dismissed would have been resolved on the merits. Hence, the Court Respondents maintained that the P72,683.55 paid to them by the provincial treasurer of
deemed it wise to revert to the old rule allowing a party a fresh 60-day Bulacan pursuant to the 1984 order of the trial court was part of the initial deposit made by
period from notice of the denial of the motion for reconsideration to petitioner when it first entered possession of the property in 1969 and should not be so
file a petition for certiorari. . . . regarded as a partial payment. Respondents further questioned the right of PIA to transfer
ownership of a portion of the property to the Bulacan State University even while the just
"The latest amendments took effect on September 1, 2000, following compensation due the heirs had yet to be finally settled.
its publication in the Manila Bulletin on August 4, 2000 and in the
Philippine Daily Inquirer on August 7, 2000, two newspapers of The right of eminent domain is usually understood to be an ultimate right of the sovereign
general circulation. power to appropriate any property within its territorial sovereignty for a public
purpose. 7Fundamental to the independent existence of a State, it requires no recognition by
"In view of its purpose, the Resolution further amending Section 4, the Constitution, whose provisions are taken as being merely confirmatory of its presence and
Rule 65, can only be described as curative in nature, and the as being regulatory, at most, in the due exercise of the power. In the hands of the legislature,
principles governing curative statutes are applicable. the power is inherent, its scope matching that of taxation, even that of police power itself, in
many respects. It reaches to every form of property the State needs for public use and, as an old expropriation proceedings. By final and executory judgment in said
case so puts it, all separate interests of individuals in property are held under a tacit agreement proceedings, they were condemned for public use, as part of an
or implied reservation vesting upon the sovereign the right to resume the possession of the airport, and ordered sold to the government. . . . It follows that both
property whenever the public interest so requires it. by virtue of the judgment, long final, in the expropriation suit, as well
as the annotations upon their title certificates, plaintiffs are not
The ubiquitous character of eminent domain is manifest in the nature of the expropriation entitled to recover possession of their expropriated lots — which are
proceedings. Expropriation proceedings are not adversarial in the conventional sense, for the still devoted to the public use for which they were expropriated — but
condemning authority is not required to assert any conflicting interest in the property. Thus, by only to demand the fair market value of the same.
filing the action, the condemnor in effect merely serves notice that it is taking title and
possession of the property, and the defendant asserts title or interest in the property, not to "Said relief may be granted under plaintiffs' prayer for: 'such other
prove a right to possession, but to prove a right to compensation for the taking. remedies, which may be deemed just and equitable under the
premises.'"
Obviously, however, the power is not without its limits: first, the taking must be for public use,
and second, that just compensation must be given to the private owner of the property. These The Court proceeded to reiterate its pronouncement in Alfonso vs. Pasay City where the
twin proscriptions have their origin in the recognition of the necessity for achieving balance recovery of possession of property taken for public use prayed for by the unpaid
between the State interests, on the one hand, and private rights, upon the other hand, by landowner was denied even while no requisite expropriation proceedings were first
effectively restraining the former and affording protection to the latter. In determining "public instituted. The landowner was merely given the relief of recovering compensation for his
use," two approaches are utilized — the first is public employment or the actual use by the property computed at its market value at the time it was taken and appropriated by the
public, and the second is public advantage or benefit. It is also useful to view the matter as State.
being subject to constant growth, which is to say that as society advances, its demands upon the
The judgment rendered by the Bulacan RTC in 1979 on the expropriation proceedings provides
individual so increases, and each demand is a new use to which the resources of the individual
not only for the payment of just compensation to herein respondents but likewise adjudges the
may be devoted.
property condemned in favor of petitioner over which parties, as well as their privies, are
The expropriated property has been shown to be for the continued utilization by the PIA, a bound. 20 Petitioner has occupied, utilized and, for all intents and purposes, exercised
significant portion thereof being ceded for the expansion of the facilities of the Bulacan State dominion over the property pursuant to the judgment. The exercise of such rights vested to it as
University and for the propagation of the Philippine carabao, themselves in line with the the condemnee indeed has amounted to at least a partial compliance or satisfaction of the 1979
requirements of public purpose. Respondents question the public nature of the utilization by judgment, thereby preempting any claim of bar by prescription on grounds of non-execution. In
petitioner of the condemned property, pointing out that its present use differs from the purpose arguing for the return of their property on the basis of non-payment, respondents ignore the fact
originally contemplated in the 1969 expropriation proceedings. The argument is of no moment. that the right of the expropriatory authority is far from that of an unpaid seller in ordinary sales,
The property has assumed a public character upon its expropriation. Surely, petitioner, as the to which the remedy of rescission might perhaps apply. An in rem proceeding, condemnation
condemnor and as the owner of the property, is well within its rights to alter and decide the use acts upon the property. After condemnation, the paramount title is in the public under a new
of that property, the only limitation being that it be for public use, which, decidedly, it is. and independent title; thus, by giving notice to all claimants to a disputed title, condemnation
proceedings provide a judicial process for securing better title against all the world than may be
In insisting on the return of the expropriated property, respondents would exhort on the obtained by voluntary conveyance.
pronouncement in Provincial Government of Sorsogon vs. Vda. de Villaroya 14 where the
unpaid landowners were allowed the alternative remedy of recovery of the property there in Respondents, in arguing laches against petitioner did not take into account that the same
question. It might be borne in mind that the case involved the municipal government of argument could likewise apply against them. Respondents first instituted proceedings for
Sorsogon, to which the power of eminent domain is not inherent, but merely delegated and of payment against petitioner on 09 May 1984, or five years after the 1979 judgment had become
limited application. The grant of the power of eminent domain to local governments final. The unusually long delay in bringing the action to compel payment against herein
under Republic Act No. 7160 15 cannot be understood as being the pervasive and all- petitioner would militate against them. Consistently with the rule that one should take good
encompassing power vested in the legislative branch of government. For local governments to care of his own concern, respondents should have commenced the proper action upon the
be able to wield the power, it must, by enabling law, be delegated to it by the national finality of the judgment which, indeed, resulted in a permanent deprivation of their ownership
legislature, but even then, this delegated power of eminent domain is not, strictly speaking, a and possession of the property.
power of eminent, but only of inferior, domain or only as broad or confined as the real
The constitutional limitation of "just compensation" is considered to be the sum equivalent to
authority would want it to be.
the market value of the property, broadly described to be the price fixed by the seller in open
Thus, in Valdehueza vs. Republic where the private landowners had remained unpaid ten years market in the usual and ordinary course of legal action and competition or the fair value of the
after the termination of the expropriation proceedings, this Court ruled — property as between one who receives, and one who desires to sell, it fixed at the time of the
actual taking by the government. Thus, if property is taken for public use before compensation
"The points in dispute are whether such payment can still be made is deposited with the court having jurisdiction over the case, the final compensation must
and, if so, in what amount. Said lots have been the subject of include interests on its just value to be computed from the time the property is taken to the time
when compensation is actually paid or deposited with the court. In fine, between the taking of
the property and the actual payment, legal interests accrue in order to place the owner in a
position as good as (but not better than) the position he was in before the taking occurred.

The Bulacan trial court, in its 1979 decision, was correct in imposing interests on the zonal
value of the property to be computed from the time petitioner instituted condemnation
proceedings and "took" the property in September 1969. This allowance of interest on the
amount found to be the value of the property as of the time of the taking computed, being an
effective forbearance, at 12% per annum should help eliminate the issue of the constant
fluctuation and inflation of the value of the currency over time. Article 1250 of the Civil Code,
providing that, in case of extraordinary inflation or deflation, the value of the currency at the
time of the establishment of the obligation shall be the basis for the payment when no
agreement to the contrary is stipulated, has strict application only to contractual obligations. In
other words, a contractual agreement is needed for the effects of extraordinary inflation to be
taken into account to alter the value of the currency.

All given, the trial court of Bulacan in issuing its order, dated 01 March 2000, vacating its
decision of 26 February 1979 has acted beyond its lawful cognizance, the only authority left to
it being to order its execution. Verily, private respondents, although not entitled to the return of
the expropriated property, deserve to be paid promptly on the yet unpaid award of just
compensation already fixed by final judgment of the Bulacan RTC on 26 February 1979 at
P6.00 per square meter, with legal interest thereon at 12% per annum computed from the date
of "taking" of the property, i.e., 19 September 1969, until the due amount shall have been fully
paid.

WHEREFORE, the petition is GRANTED. The resolution, dated 31 July 2000, of the Court of
Appeals dismissing the petition for certiorari, as well as its resolution of 04 January 2001
denying the motion for reconsideration, and the decision of the Regional Trial Court of
Bulacan, dated 01 March 2000, are SET ASIDE. Let the case be forthwith remanded to the
Regional Trial Court of Bulacan for the proper execution of its decision promulgated on 26
February 1979 which is hereby REINSTATED. No costs.