SEC. 134. Video Tapes.
— There shall be collected on each
EN BANC
June 18, 1987
G.R. No. L-75697
VALENTIN TIO doing business under the name and style of OMI
ENTERPRISES, petitioner,
vs.
VIDEOGRAM REGULATORY BOARD, MINISTER OF FINANCE, METRO
MANILA COMMISSION, CITY MAYOR and CITY TREASURER OF
MANILA, respondents.
Nelson Y. Ng for petitioner.
The City Legal Officer for respondents City Mayor and City Treasurer.
MELENCIO-HERRERA, J.:
This petition was filed on September 1, 1986 by petitioner on his own behalf
and purportedly on behalf of other videogram operators adversely affected. It
assails the constitutionality of Presidential Decree No. 1987 entitled "An Act
Creating the Videogram Regulatory Board" with broad powers to regulate
and supervise the videogram industry (hereinafter briefly referred to as the
BOARD). The Decree was promulgated on October 5, 1985 and took effect
on April 10, 1986, fifteen (15) days after completion of its publication in the
Official Gazette.
On November 5, 1985, a month after the promulgation of the
abovementioned decree, Presidential Decree No. 1994 amended the
National Internal Revenue Code providing, inter alia:
processed video-tape cassette, ready for playback, regardless of
length, an annual tax of five pesos; Provided, That locally
manufactured or imported blank video tapes shall be subject to sales
tax.
On October 23, 1986, the Greater Manila Theaters Association, Integrated
Movie Producers, Importers and Distributors Association of the Philippines,
and Philippine Motion Pictures Producers Association, hereinafter collectively
referred to as the Intervenors, were permitted by the Court to intervene in the
case, over petitioner's opposition, upon the allegations that intervention was
necessary for the complete protection of their rights and that their "survival
and very existence is threatened by the unregulated proliferation of film
piracy." The Intervenors were thereafter allowed to file their Comment in
Intervention.
The rationale behind the enactment of the DECREE, is set out in its
preambular clauses as follows:
1. WHEREAS, the proliferation and unregulated circulation of
videograms including, among others, videotapes, discs, cassettes or
any technical improvement or variation thereof, have greatly
prejudiced the operations of moviehouses and theaters, and have
caused a sharp decline in theatrical attendance by at least forty
percent (40%) and a tremendous drop in the collection of sales,
contractor's specific, amusement and other taxes, thereby resulting
in substantial losses estimated at P450 Million annually in
government revenues;
2. WHEREAS, videogram(s) establishments collectively earn around
P600 Million per annum from rentals, sales and disposition of
videograms, and such earnings have not been subjected to tax,
thereby depriving the Government of approximately P180 Million in
taxes each year;
3. WHEREAS, the unregulated activities of videogram
establishments have also affected the viability of the movie industry,
particularly the more than 1,200 movie houses and theaters
throughout the country, and occasioned industry-wide displacement
and unemployment due to the shutdown of numerous moviehouses
and theaters;
4. "WHEREAS, in order to ensure national economic recovery, it is
imperative for the Government to create an environment conducive
to growth and development of all business industries, including the
 movie industry which has an accumulated investment of about P3
Billion;
5. WHEREAS, proper taxation of the activities of videogram
establishments will not only alleviate the dire financial condition of
the movie industry upon which more than 75,000 families and
500,000 workers depend for their livelihood, but also provide an
additional source of revenue for the Government, and at the same
time rationalize the heretofore uncontrolled distribution of
videograms;
6. WHEREAS, the rampant and unregulated showing of obscene
videogram features constitutes a clear and present danger to the
moral and spiritual well-being of the youth, and impairs the mandate
of the Constitution for the State to support the rearing of the youth for
civic efficiency and the development of moral character and promote
their physical, intellectual, and social well-being;
7. WHEREAS, civic-minded citizens and groups have called for
remedial measures to curb these blatant malpractices which have
flaunted our censorship and copyright laws;
8. WHEREAS, in the face of these grave emergencies corroding the
moral values of the people and betraying the national economic
recovery program, bold emergency measures must be adopted with
dispatch; ... (Numbering of paragraphs supplied).
Petitioner's attack on the constitutionality of the DECREE rests on the
following grounds:
1. Section 10 thereof, which imposes a tax of 30% on the gross
receipts payable to the local government is a RIDER and the same is
not germane to the subject matter thereof;
2. The tax imposed is harsh, confiscatory, oppressive and/or in
unlawful restraint of trade in violation of the due process clause of
the Constitution;
3. There is no factual nor legal basis for the exercise by the
President of the vast powers conferred upon him by Amendment No.
6;
4. There is undue delegation of power and authority;
5. The Decree is an ex-post facto law; and
6. There is over regulation of the video industry as if it were a
nuisance, which it is not.
We shall consider the foregoing objections in seriatim.
1. The Constitutional requirement that "every bill shall embrace only one
subject which shall be expressed in the title thereof" 1 is sufficiently complied
with if the title be comprehensive enough to include the general purpose
which a statute seeks to achieve. It is not necessary that the title express
each and every end that the statute wishes to accomplish. The requirement
is satisfied if all the parts of the statute are related, and are germane to the
subject matter expressed in the title, or as long as they are not inconsistent
with or foreign to the general subject and title. 2An act having a single general
subject, indicated in the title, may contain any number of provisions, no
matter how diverse they may be, so long as they are not inconsistent with or
foreign to the general subject, and may be considered in furtherance of such
subject by providing for the method and means of carrying out the general
object." 3 The rule also is that the constitutional requirement as to the title of
a bill should not be so narrowly construed as to cripple or impede the power
of legislation. 4 It should be given practical rather than technical
construction. 5
Tested by the foregoing criteria, petitioner's contention that the tax provision
of the DECREE is a rider is without merit. That section reads, inter alia:
Section 10. Tax on Sale, Lease or Disposition of Videograms. —
Notwithstanding any provision of law to the contrary, the province
shall collect a tax of thirty percent (30%) of the purchase price or
rental rate, as the case may be, for every sale, lease or disposition of
a videogram containing a reproduction of any motion picture or
audiovisual program. Fifty percent (50%) of the proceeds of the tax
collected shall accrue to the province, and the other fifty percent
(50%) shall acrrue to the municipality where the tax is collected;
PROVIDED, That in Metropolitan Manila, the tax shall be shared
equally by the City/Municipality and the Metropolitan Manila
Commission.
xxx xxx xxx
The foregoing provision is allied and germane to, and is reasonably
necessary for the accomplishment of, the general object of the DECREE,
which is the regulation of the video industry through the Videogram
Regulatory Board as expressed in its title. The tax provision is not
inconsistent with, nor foreign to that general subject and title. As a tool for
regulation 6 it is simply one of the regulatory and control mechanisms
scattered throughout the DECREE. The express purpose of the DECREE to
include taxation of the video industry in order to regulate and rationalize the
heretofore uncontrolled distribution of videograms is evident from Preambles
2 and 5, supra. Those preambles explain the motives of the lawmaker in
presenting the measure. The title of the DECREE, which is the creation of
the Videogram Regulatory Board, is comprehensive enough to include the
purposes expressed in its Preamble and reasonably covers all its provisions.
It is unnecessary to express all those objectives in the title or that the latter
be an index to the body of the DECREE. 7
2. Petitioner also submits that the thirty percent (30%) tax imposed is harsh
and oppressive, confiscatory, and in restraint of trade. However, it is beyond
serious question that a tax does not cease to be valid merely because it
regulates, discourages, or even definitely deters the activities taxed. 8 The
power to impose taxes is one so unlimited in force and so searching in
extent, that the courts scarcely venture to declare that it is subject to any
restrictions whatever, except such as rest in the discretion of the authority
which exercises it. 9 In imposing a tax, the legislature acts upon its
constituents. This is, in general, a sufficient security against erroneous and
oppressive taxation. 10
The tax imposed by the DECREE is not only a regulatory but also a revenue
measure prompted by the realization that earnings of videogram
establishments of around P600 million per annum have not been subjected
to tax, thereby depriving the Government of an additional source of revenue.
It is an end-user tax, imposed on retailers for every videogram they make
available for public viewing. It is similar to the 30% amusement tax imposed
or borne by the movie industry which the theater-owners pay to the
government, but which is passed on to the entire cost of the admission ticket,
thus shifting the tax burden on the buying or the viewing public. It is a tax that
is imposed uniformly on all videogram operators.
The levy of the 30% tax is for a public purpose. It was imposed primarily to
answer the need for regulating the video industry, particularly because of the
rampant film piracy, the flagrant violation of intellectual property rights, and
the proliferation of pornographic video tapes. And while it was also an
objective of the DECREE to protect the movie industry, the tax remains a
valid imposition.
The public purpose of a tax may legally exist even if the motive which
impelled the legislature to impose the tax was to favor one industry
over another. 11
It is inherent in the power to tax that a state be free to select the
subjects of taxation, and it has been repeatedly held that "inequities
which result from a singling out of one particular class for taxation or
exemption infringe no constitutional limitation". 12 Taxation has been
made the implement of the state's police power.13
At bottom, the rate of tax is a matter better addressed to the taxing
legislature.
3. Petitioner argues that there was no legal nor factual basis for the
promulgation of the DECREE by the former President under Amendment No.
6 of the 1973 Constitution providing that "whenever in the judgment of the
President ... , there exists a grave emergency or a threat or imminence
thereof, or whenever the interim Batasang Pambansa or the regular National
Assembly fails or is unable to act adequately on any matter for any reason
that in his judgment requires immediate action, he may, in order to meet the
exigency, issue the necessary decrees, orders, or letters of instructions,
which shall form part of the law of the land."
In refutation, the Intervenors and the Solicitor General's Office aver that the
8th "whereas" clause sufficiently summarizes the justification in that grave
emergencies corroding the moral values of the people and betraying the
national economic recovery program necessitated bold emergency measures
to be adopted with dispatch. Whatever the reasons "in the judgment" of the
then President, considering that the issue of the validity of the exercise of
legislative power under the said Amendment still pends resolution in several
other cases, we reserve resolution of the question raised at the proper time.
4. Neither can it be successfully argued that the DECREE contains an undue
delegation of legislative power. The grant in Section 11 of the DECREE of
authority to the BOARD to "solicit the direct assistance of other agencies and
units of the government and deputize, for a fixed and limited period, the
heads or personnel of such agencies and units to perform enforcement
functions for the Board" is not a delegation of the power to legislate but
merely a conferment of authority or discretion as to its execution,
enforcement, and implementation. "The true distinction is between the
delegation of power to make the law, which necessarily involves a discretion
as to what it shall be, and conferring authority or discretion as to its execution
to be exercised under and in pursuance of the law. The first cannot be done;
to the latter, no valid objection can be made." 14 Besides, in the very
language of the decree, the authority of the BOARD to solicit such assistance
is for a "fixed and limited period" with the deputized agencies concerned
being "subject to the direction and control of the BOARD." That the grant of
such authority might be the source of graft and corruption would not
stigmatize the DECREE as unconstitutional. Should the eventuality occur,
the aggrieved parties will not be without adequate remedy in law.
5. The DECREE is not violative of the ex post facto principle. An ex post
facto law is, among other categories, one which "alters the legal rules of
evidence, and authorizes conviction upon less or different testimony than the
law required at the time of the commission of the offense." It is petitioner's
position that Section 15 of the DECREE in providing that:
All videogram establishments in the Philippines are hereby given a
period of forty-five (45) days after the effectivity of this Decree within
which to register with and secure a permit from the BOARD to
engage in the videogram business and to register with the BOARD
all their inventories of videograms, including videotapes, discs,
cassettes or other technical improvements or variations thereof,
before they could be sold, leased, or otherwise disposed of.
Thereafter any videogram found in the possession of any person
engaged in the videogram business without the required proof of
registration by the BOARD, shall be prima facie evidence of violation
of the Decree, whether the possession of such videogram be for
private showing and/or public exhibition.
raises immediately a prima facie evidence of violation of the DECREE when
the required proof of registration of any videogram cannot be presented and
thus partakes of the nature of an ex post facto law.
The argument is untenable. As this Court held in the recent case of Vallarta
vs. Court of Appeals, et al. 15
... it is now well settled that "there is no constitutional objection to the
passage of a law providing that the presumption of innocence may
be overcome by a contrary presumption founded upon the
experience of human conduct, and enacting what evidence shall be
sufficient to overcome such presumption of innocence" (People vs.
Mingoa 92 Phil. 856 [1953] at 858-59, citing 1 COOLEY, A
TREATISE ON THE CONSTITUTIONAL LIMITATIONS, 639-641).
And the "legislature may enact that when certain facts have been
proved that they shall be prima facie evidence of the existence of the
guilt of the accused and shift the burden of proof provided there be a
rational connection between the facts proved and the ultimate facts
presumed so that the inference of the one from proof of the others is
not unreasonable and arbitrary because of lack of connection
between the two in common experience". 16
Applied to the challenged provision, there is no question that there is a
rational connection between the fact proved, which is non-registration, and
the ultimate fact presumed which is violation of the DECREE, besides the
fact that the prima facie presumption of violation of the DECREE attaches
only after a forty-five-day period counted from its effectivity and is, therefore,
neither retrospective in character.
6. We do not share petitioner's fears that the video industry is being over-
regulated and being eased out of existence as if it were a nuisance. Being a
relatively new industry, the need for its regulation was apparent. While the
underlying objective of the DECREE is to protect the moribund movie
industry, there is no question that public welfare is at bottom of its enactment,
considering "the unfair competition posed by rampant film piracy; the erosion
of the moral fiber of the viewing public brought about by the availability of
unclassified and unreviewed video tapes containing pornographic films and
films with brutally violent sequences; and losses in government revenues due
to the drop in theatrical attendance, not to mention the fact that the activities
of video establishments are virtually untaxed since mere payment of Mayor's
permit and municipal license fees are required to engage in business. 17
The enactment of the Decree since April 10, 1986 has not brought about the
"demise" of the video industry. On the contrary, video establishments are
seen to have proliferated in many places notwithstanding the 30% tax
imposed.
In the last analysis, what petitioner basically questions is the necessity,
wisdom and expediency of the DECREE. These considerations, however,
are primarily and exclusively a matter of legislative concern.
Only congressional power or competence, not the wisdom of the
action taken, may be the basis for declaring a statute invalid. This is
as it ought to be. The principle of separation of powers has in the
main wisely allocated the respective authority of each department
and confined its jurisdiction to such a sphere. There would then be
intrusion not allowable under the Constitution if on a matter left to the
discretion of a coordinate branch, the judiciary would substitute its
own. If there be adherence to the rule of law, as there ought to be,
the last offender should be courts of justice, to which rightly litigants
submit their controversy precisely to maintain unimpaired the
supremacy of legal norms and prescriptions. The attack on the
validity of the challenged provision likewise insofar as there may be
objections, even if valid and cogent on its wisdom cannot be
sustained. 18
In fine, petitioner has not overcome the presumption of validity which
attaches to a challenged statute. We find no clear violation of the Constitution
which would justify us in pronouncing Presidential Decree No. 1987 as
unconstitutional and void.
WHEREFORE, the instant Petition is hereby dismissed.
No costs.
SO ORDERED.
SECOND DIVISION
[G.R. No. 144681. June 21, 2004]
PROFESSIONAL REGULATION COMMISSION (PRC), CHAIRMAN
HERMOGENES P. POBRE, ASSOCIATE COMMISSIONER
ARMANDO PASCUAL, BOARD OF MEDICINE, CHAIRMAN
RODOLFO P. DE GUZMAN, JOSE S. RAMIREZ, JUANITO B.
BILLOTE, RUBEN R. POLICARPIO, EDGARDO T. FERNANDO
and RICARDO D. FULGENCIO II, petitioners, vs. ARLENE V. DE
GUZMAN, VIOLETA V. MENESES, CELERINA S. NAVARRO,
JOSE RAMONCITO P. NAVARRO, ARNEL V. HERRERA and
GERALDINE ELIZABETH M. PAGILAGAN, ELNORA R.
RAQUENO, MARISSA A. REGODON, LAURA M. SANTOS,
KARANGALAN D. SERRANO, DANILO A. VILLAVER, MARIA
ROSARIO L. LEONOR, ALICIA S. LIZANO, MARITEL M.
ECHIVERRI, BERNADETTE T. MENDOZA, FERNANDO F.
MANDAPAT, ALELI A. GOLLAYAN, ELCIN C. ARRIOLA,
HERMINIGILDA E. CONEJOS, SALLY B. BUNAGAN, ROGELIO
B. ANCHETA, OSCAR H. PADUA, JR., EVELYN D. GRAJO,
EVELYN S. ACOSTA, MARGARITA BELINDA L. VICENCIO,
VALENTINO P. ARBOLEDA, EVELYN O. RAMOS, ACHILLES J.
PERALTA, CORAZON M. CRUZ, LEUVINA P. CHICO, JOSEPH A.
JAO, MA. LUISA S. GUTIERREZ, LYDIA C. CHAN, OPHELIA C.
HIDALGO, FERNANDO T. CRUZ, MELVIN M. USITA, RAFAEL I.
TOLENTINO, GRACE E. UY, CHERYL R. TRIGUERO, MICHAEL L.
SERRANO, FEDERICO L. CASTILLO, MELITA J. CAEDO,
SAMUEL B. BANGOY, BERNARDITA B. SY, GLORIA T.
JULARBAL, FREDERICK D. FRANCISCO, CARLOS M.
BERNARDO, JR., HUBERT S. NAZARENO, CLARISSA B.
BACLIG, DAYMINDA G. BONTUYAN, BERNADETTE H.
CABUHAT, NANCY J. CHAVEZ, MARIO D. CUARESMA,
ERNESTO L. CUE, EVELYN C. CUNDANGAN, RHONEIL R.
DEVERATURDA, DERILEEN D. DORADO, SAIBZUR N. EDDING,
VIOLETA C. FELIPE, HERMINIO V. FERNANDEZ, JR., MARIA
VICTORIA M. LACSAMANA, NORMA G. LAFAVILLA, RUBY B.
LANTIN, MA. ELOISA Q. MALLARI, CLARISA SJ. NICOLAS,
PERCIVAL H. PANGILINAN, ARNULFO A. SALVADOR, ROBERT
B. SANCHEZ, MERLY D. STA. ANA and YOLANDA P.
UNICA, respondents.
DECISION
TINGA, J.:
This petition for review under Rule 45 of the 1997 Rules of Civil
Procedure seeks to nullify the Decision,[1] dated May 16, 2000, of the Court
of Appeals in CA-G.R. SP No. 37283. The appellate court affirmed the
judgment[2] dated December 19, 1994, of the Regional Trial Court (RTC)
of Manila, Branch 52, in Civil Case No. 93-66530. The trial court allowed the
respondents to take their physicians oath and to register as duly licensed
physicians. Equally challenged is the Resolution[3] promulgated on August
25, 2000 of the Court of Appeals, denying petitioners Motion for
Reconsideration.
The facts of this case are as follows:
The respondents are all graduates of the Fatima College of
Medicine, Valenzuela City, Metro Manila. They passed the Physician
Licensure Examination conducted in February 1993 by the Board of Medicine
(Board). Petitioner Professional Regulation Commission (PRC) then released
their names as successful examinees in the medical licensure examination.
Shortly thereafter, the Board observed that the grades of the seventy-
nine successful examinees from Fatima College in the two most difficult
subjects in the medical licensure exam, Biochemistry (Bio-Chem) and
Obstetrics and Gynecology (OB-Gyne), were unusually and exceptionally
high. Eleven Fatima examinees scored 100% in Bio-Chem and ten got 100%
in OB-Gyne, another eleven got 99% in Bio-Chem, and twenty-one scored
99% in OB-Gyne. The Board also observed that many of those who passed
from Fatima got marks of 95% or better in both subjects, and no one got a
mark lower than 90%. A comparison of the performances of the candidates
from other schools was made. The Board observed that strangely, the
unusually high ratings were true only for FatimaCollege examinees. It was a
record-breaking phenomenon in the history of the Physician Licensure
Examination.
On June 7, 1993, the Board issued Resolution No. 19, withholding the
registration as physicians of all the examinees from the Fatima College of
Medicine.[4] The PRC asked the National Bureau of Investigation (NBI) to
investigate whether any anomaly or irregularity marred the February 1993
Physician Licensure Examination.
 Prior to the NBI investigation, the Board requested Fr. Bienvenido F.
Nebres, S.J., an expert mathematician and authority in statistics, and later
president of the Ateneo de Manila University, to conduct a statistical analysis
of the results in Bio-Chem and Ob-Gyne of the said examination.
On June 10, 1993, Fr. Nebres submitted his report. He reported that a
comparison of the scores in Bio-Chem and Ob-Gyne, of
the Fatima College examinees with those of examinees from De La Salle
University and Perpetual Help College of Medicine showed that the scores
of Fatima College examinees were not only incredibly high but unusually
clustered close to each other. He concluded that there must be some
unusual reason creating the clustering of scores in the two subjects. It must
be a cause strong enough to eliminate the normal variations that one should
expect from the examinees [of FatimaCollege] in terms of talent, effort,
energy, etc.[5]
For its part, the NBI found that the questionable passing rate
of Fatima examinees in the [1993] Physician Examination leads to the
conclusion that the Fatima examinees gained early access to the test
questions.[6]
On July 5, 1993, respondents Arlene V. De Guzman, Violeta V.
Meneses, Celerina S. Navarro, Jose Ramoncito P. Navarro, Arnel V.
Herrera, and Geraldine Elizabeth M. Pagilagan (Arlene V. De Guzman et al.,
for brevity) filed a special civil action for mandamus, with prayer for
preliminary mandatory injunction docketed as Civil Case No. 93-66530 with
the Regional Trial Court (RTC) of Manila, Branch 52. Their petition was
adopted by the other respondents as intervenors.
Meanwhile, the Board issued Resolution No. 26, dated July 21, 1993,
charging respondents with immorality, dishonest conduct, fraud, and deceit in
connection with the Bio-Chem and Ob-Gyne examinations. It recommended
that the test results of the Fatimaexaminees be nullified. The case was
docketed as Adm. Case No. 1687 by the PRC.
On July 28, 1993, the RTC issued an Order in Civil Case No. 93-66530
granting the preliminary mandatory injunction sought by the respondents. It
ordered the petitioners to administer the physicians oath to Arlene V. De
Guzman et al., and enter their names in the rolls of the PRC.
The petitioners then filed a special civil action for certiorari with the
Court of Appeals to set aside the mandatory injunctive writ, docketed as CA-
G.R. SP No. 31701.
On October 21, 1993, the appellate court decided CA-G.R. SP No.
31701, with the dispositive portion of the Decision ordaining as follows:
WHEREFORE, this petition is GRANTED. Accordingly, the writ of preliminary
mandatory injunction issued by the lower court against petitioners is hereby
nullified and set aside.
SO ORDERED.[7]
Arlene V. de Guzman, et al., then elevated the foregoing Decision to this
Court in G.R. No. 112315. In our Resolution dated May 23, 1994, we denied
the petition for failure to show reversible error on the part of the appellate
court.
Meanwhile, on November 22, 1993, during the pendency of the instant
petition, the pre-trial conference in Civil Case No. 93-66530 was held. Then,
the parties, agreed to reduce the testimonies of their respective witnesses to
sworn questions-and-answers. This was without prejudice to cross-
examination by the opposing counsel.
On December 13, 1993, petitioners counsel failed to appear at the trial
in the mistaken belief that the trial was set for December 15. The trial court
then ruled that petitioners waived their right to cross-examine the witnesses.
On January 27, 1994, counsel for petitioners filed a Manifestation and
Motion stating the reasons for her non-appearance and praying that the
cross-examination of the witnesses for the opposing parties be reset. The
trial court denied the motion for lack of notice to adverse counsel. It also
denied the Motion for Reconsideration that followed on the ground that
adverse counsel was notified less than three (3) days prior to the hearing.
Meanwhile, to prevent the PRC and the Board from proceeding with
Adm. Case No. 1687, the respondents herein moved for the issuance of a
restraining order, which the lower court granted in its Order dated April 4,
1994.
The petitioners then filed with this Court a petition for certiorari docketed
as G.R. No. 115704, to annul the Orders of the trial court dated November
13, 1993, February 28, 1994, and April 4, 1994. We referred the petition to
the Court of Appeals where it was docketed as CA-G.R. SP No. 34506.
On August 31, 1994, the appellate court decided CA-G.R. SP No. 34506
as follows:
WHEREFORE, the present petition for certiorari with prayer for temporary
restraining order/preliminary injunction is GRANTED and the Orders of
December 13, 1993, February 7, 1994, February 28, 1994, and April 4, 1994
of the RTC-Manila, Branch 52, and all further proceedings taken by it in
Special Civil Action No. 93-66530 are hereby DECLARED NULL and VOID.
The said RTC-Manila is ordered to allow petitioners counsel to cross-
examine the respondents witnesses, to allow petitioners to present their
evidence in due course of trial, and thereafter to decide the case on the
merits on the basis of the evidence of the parties. Costs against respondents.
IT IS SO ORDERED.[8]
The trial was then set and notices were sent to the parties.
A day before the first hearing, on September 22, 1994, the petitioners
filed an Urgent Ex-Parte Manifestation and Motion praying for the partial
reconsideration of the appellate courts decision in CA-G.R. SP No. 34506,
and for the outright dismissal of Civil Case No. 93-66530. The petitioners
asked for the suspension of the proceedings.
In its Order dated September 23, 1994, the trial court granted the
aforesaid motion, cancelled the scheduled hearing dates, and reset the
proceedings to October 21 and 28, 1994.
Meanwhile, on October 25, 1994, the Court of Appeals denied the
partial motion for reconsideration in CA-G.R. SP No. 34506. Thus, petitioners
filed with the Supreme Court a petition for review docketed as G.R. No.
117817, entitled Professional Regulation Commission, et al. v. Court of
Appeals, et al.
On November 11, 1994, counsel for the petitioners failed to appear at
the trial of Civil Case No. 93-66530. Upon motion of the respondents herein,
the trial court ruled that herein petitioners waived their right to cross-examine
the herein respondents. Trial was reset to November 28, 1994.
On November 25, 1994, petitioners counsel moved for the inhibition of
the trial court judge for alleged partiality. On November 28, 1994, the day
the Motion to Inhibit was to be heard, petitioners failed to appear. Thus, the
trial court denied the Motion to Inhibit and declared Civil Case No. 93-66530
deemed submitted for decision.
On December 19, 1994, the trial court handed down its judgment in Civil
Case No. 93-66530, the fallo of which reads:
WHEREFORE, judgment is rendered ordering the respondents to allow the
petitioners and intervenors (except those with asterisks and footnotes in
pages 1 & 2 of this decision) [sic],[9] to take the physicians oath and to
register them as physicians.
It should be made clear that this decision is without prejudice to any
administrative disciplinary action which may be taken against any of the
petitioners for such causes and in the manner provided by law and consistent
with the requirements of the Constitution as any other professionals.
No costs.
SO ORDERED.[10]
As a result of these developments, petitioners filed with this Court a
petition for review on certiorari docketed as G.R. No. 118437,
entitled Professional Regulation Commission v. Hon. David G. Nitafan,
praying inter alia, that (1) G.R. No. 118437 be consolidated with G.R. No.
117817; (2) the decision of the Court of Appeals dated August 31, 1994 in
CA-G.R. SP No. 34506 be nullified for its failure to decree the dismissal of
Civil Case No. 93-66530, and in the alternative, to set aside the decision of
the trial court in Civil Case No. 93-66530, order the trial court judge to inhibit
himself, and Civil Case No. 93-66530 be re-raffled to another branch.
On December 26, 1994, the petitioners herein filed their Notice of
Appeal[11] in Civil Case No. 93-66530, thereby elevating the case to the Court
of Appeals, where it was docketed as CA-G.R. SP No. 37283.
In our Resolution of June 7, 1995, G.R. No. 118437 was consolidated
with G.R. No. 117817.
On July 9, 1998, we disposed of G.R. Nos. 117817 and 118437 in this
wise:
WHEREFORE, the petition in G.R. No. 117817 is DISMISSED for being
moot. The petition in G.R. No. 118437 is likewise DISMISSED on the ground
that there is a pending appeal before the Court of Appeals. Assistant Solicitor
General Amparo M. Cabotaje-Tang is advised to be more circumspect in her
dealings with the courts as a repetition of the same or similar acts will be
dealt with accordingly.
SO ORDERED.[12]
While CA-G.R. SP No. 37283 was awaiting disposition by the appellate
court, Arnel V. Herrera, one of the original petitioners in Civil Case No. 93-
66530, joined by twenty-seven intervenors, to wit: Fernando F. Mandapat,
Ophelia C. Hidalgo, Bernadette T. Mendoza, Ruby B. Lantin-Tan, Fernando
T. Cruz, Marissa A. Regodon, Ma. Eloisa Q. Mallari-Largoza, Cheryl R.
Triguero, Joseph A. Jao, Bernadette H. Cabuhat, Evelyn S. Acosta-Cabanes,
Laura M. Santos, Maritel M. Echiverri, Bernadette C. Escusa, Carlosito C.
Domingo, Alicia S. Lizano, Elnora R. Raqueno-Rabaino, Saibzur N. Edding,
Derileen D. Dorado-Edding, Robert B. Sanchez, Maria Rosario L. Leonor-
Lacandula, Geraldine Elizabeth M. Pagilagan-Palma, Margarita Belinda L.
Vicencio-Gamilla, Herminigilda E. Conejos, Leuvina P. Chico-Paguio, Elcin
C. Arriola-Ocampo, and Jose Ramoncito P. Navarro, manifested that they
were no longer interested in proceeding with the case and moved for its
dismissal. A similar manifestation and motion was later filed by intervenors
Mary Jean I. Yeban-Merlan, Michael L. Serrano, Norma G. Lafavilla, Arnulfo
A. Salvador, Belinda C. Rabara, Yolanda P. Unica, Dayminda G. Bontuyan,
Clarissa B. Baclig, Ma. Luisa S. Gutierrez, Rhoneil R. Deveraturda, Aleli A.
Gollayan, Evelyn C. Cundangan, Frederick D. Francisco, Violeta V.
Meneses, Melita J. Caedo, Clarisa SJ. Nicolas, Federico L. Castillo,
Karangalan D. Serrano, Danilo A. Villaver, Grace E. Uy, Lydia C. Chan, and
Melvin M. Usita. The Court of Appeals ruled that its decision in CA-G.R. SP
No. 37283 would not apply to them.
On May 16, 2000, the Court of Appeals decided CA-G.R. SP No. 37283,
with the following fallo, to wit:
WHEREFORE, finding no reversible error in the decision appealed from, We
hereby AFFIRM the same and DISMISS the instant appeal.
No pronouncement as to costs.
SO ORDERED.[13]
In sustaining the trial courts decision, the appellate court ratiocinated
that the respondents complied with all the statutory requirements for
admission into the licensure examination for physicians in February 1993.
They all passed the said examination. Having fulfilled the requirements of
Republic Act No. 2382,[14] they should be allowed to take their oaths as
physicians and be registered in the rolls of the PRC.
Hence, this petition raising the following issues:
I petitioners had the obligation to administer their oaths as physicians and
WHETHER OR NOT RESPONDENTS HAVE A VALID CAUSE OF ACTION
FOR MANDAMUS AGAINST PETITIONERS IN THE LIGHT OF THE
RESOLUTION OF THIS HONORABLE COURT IN G.R. NO. 112315
AFFIRMING THE COURT OF APPEALS DECISION DECLARING THAT IF
EVER THERE IS SOME DOUBT AS TO THE MORAL FITNESS OF
EXAMINEES, THE ISSUANCE OF LICENSE TO PRACTICE MEDICINE IS
NOT AUTOMATICALLY GRANTED TO THE SUCCESSFUL EXAMINEES.
II
WHETHER OR NOT THE PETITION FOR MANDAMUS COULD PROCEED
DESPITE THE PENDENCY OF ADMINISTRATIVE CASE NO. 1687, WHICH
WAS PRECISELY LODGED TO DETERMINE THE MORAL FITNESS OF
RESPONDENTS TO BECOME DOCTORS.[15]
To our mind, the only issue is: Did the Court of Appeals commit a
reversible error of law in sustaining the judgment of the trial court that
respondents are entitled to a writ of mandamus?
The petitioners submit that a writ of mandamus will not lie in this case.
They point out that for a writ of mandamus to issue, the applicant must have
a well-defined, clear and certain legal right to the thing demanded and it is
the duty of the respondent to perform the act required. Thus, mandamus may
be availed of only when the duty sought to be performed is a ministerial and
not a discretionary one. The petitioners argue that the appellate courts
decision in CA-G.R. SP No. 37283 upholding the decision of the trial court in
Civil Case No. 93-66530 overlooked its own pronouncement in CA-G.R. SP
No. 31701. The Court of Appeals held in CA-G.R. SP No. 31701 that the
issuance of a license to engage in the practice of medicine becomes
discretionary on the PRC if there exists some doubt that the successful
examinee has not fully met the requirements of the law. The petitioners
stress that this Courts Resolution dated May 24, 1994 in G.R. No. 112315
held that there was no showing that the Court of Appeals had committed any
reversible error in rendering the questioned judgment in CA-G.R. SP No.
31701. The petitioners point out that our Resolution in G.R. No. 112315 has
long become final and executory.
Respondents counter that having passed the 1993 licensure
examinations for physicians, the petitioners have the obligation to administer
to them the oath as physicians and to issue their certificates of registration as
physicians pursuant to Section 20[16] of Rep. Act No. 2382. The Court of
Appeals in CA-G.R. SP No. 37283, found that respondents complied with all
the requirements of Rep. Act No. 2382. Furthermore, respondents were
admitted by the Medical Board to the licensure examinations and had passed
the same. Hence, pursuant to Section 20 of Rep. Act No. 2382, the
register them.
Mandamus is a command issuing from a court of competent jurisdiction,
in the name of the state or the sovereign, directed to some inferior court,
tribunal, or board, or to some corporation or person requiring the
performance of a particular duty therein specified, which duty results from the
official station of the party to whom the writ is directed, or from operation of
law.[17] Section 3 of Rule 65[18] of the 1997 Rules of Civil Procedure outlines
two situations when a writ of mandamus may issue, when any tribunal,
corporation, board, officer or person unlawfully (1) neglects the performance
of an act which the law specifically enjoins as a duty resulting from an office,
trust, or station; or (2) excludes another from the use and enjoyment of a
right or office to which the other is entitled.
We shall discuss the issues successively.
1. On The Existence of a Duty of the Board of Medicine To Issue
Certificates of Registration as Physicians under Rep. Act No. 2382.
For mandamus to prosper, there must be a showing that the officer,
board, or official concerned, has a clear legal duty, not involving
discretion.[19] Moreover, there must be statutory authority for the performance
of the act,[20] and the performance of the duty has been refused.[21] Thus, it
must be pertinently asked now: Did petitioners have the duty to administer
the Hippocratic Oath and register respondents as physicians under the
Medical Act of 1959?
As found by the Court of Appeals, on which we agree on the basis of the
records:
It bears emphasizing herein that petitioner-appellees and intervenor-
appellees have fully complied with all the statutory requirements for
admission into the licensure examinations for physicians conducted and
administered by the respondent-appellants on February 12, 14, 20 and 21,
1993. Stress, too, must be made of the fact that all of them successfully
passed the same examinations.[22]
The crucial query now is whether the Court of Appeals erred in concluding
that petitioners should allow the respondents to take their oaths as
physicians and register them, steps which would enable respondents to
practice the medical profession[23] pursuant to Section 20 of the Medical Act
of 1959?
The appellate court relied on a single provision, Section 20 of Rep. Act
No. 2382, in concluding that the petitioners had the ministerial obligation to
administer the Hippocratic Oath to respondents and register them as
physicians. But it is a basic rule in statutory construction that each part of a
statute should be construed in connection with every other part to produce a
harmonious whole, not confining construction to only one section.[24] The
intent or meaning of the statute should be ascertained from the statute taken
as a whole, not from an isolated part of the provision. Accordingly, Section 20
of Rep. Act No. 2382, as amended should be read in conjunction with the
other provisions of the Act. Thus, to determine whether the petitioners had
the ministerial obligation to administer the Hippocratic Oath to respondents
and register them as physicians, recourse must be had to the entirety of the
Medical Act of 1959.
A careful reading of Section 20 of the Medical Act of 1959 discloses that
the law uses the word shall with respect to the issuance of certificates of
registration. Thus, the petitioners shall sign and issue certificates of
registration to those who have satisfactorily complied with the requirements
of the Board. In statutory construction the term shall is a word of command. It
is given imperative meaning. Thus, when an examinee satisfies the
requirements for the grant of his physicians license, the Board is obliged to
administer to him his oath and register him as a physician, pursuant to
Section 20 and par. (1) of Section 22[25] of the Medical Act of 1959.
However, the surrounding circumstances in this case call for serious
inquiry concerning the satisfactory compliance with the Board requirements
by the respondents.The unusually high scores in the two most difficult
subjects was phenomenal, according to Fr. Nebres, the consultant of PRC on
the matter, and raised grave doubts about the integrity, if not validity, of the
tests. These doubts have to be appropriately resolved.
Under the second paragraph of Section 22, the Board is vested with the
power to conduct administrative investigations and disapprove applications
for examination or registration, pursuant to the objectives of Rep. Act No.
2382 as outlined in Section 1[26]thereof. In this case, after the investigation,
the Board filed before the PRC, Adm. Case No. 1687 against the
respondents to ascertain their moral and mental fitness to practice medicine,
as required by Section 9[27] of Rep. Act No. 2382. In its Decision dated July 1,
1997, the Board ruled:
WHEREFORE, the BOARD hereby CANCELS the respondents[]
examination papers in the Physician Licensure Examinations given in
February 1993 and further DEBARS them from taking any licensure
examination for a period of ONE (1) YEAR from the date of the promulgation
of this DECISION. They may, if they so desire, apply for the scheduled
examinations for physicians after the lapse of the period imposed by the
BOARD.
SO ORDERED.[28]
Until the moral and mental fitness of the respondents could be
ascertained, according to petitioners, the Board has discretion to hold in
abeyance the administration of the Hippocratic Oath and the issuance of the
certificates to them. The writ of mandamus does not lie to compel
performance of an act which is not duly authorized.
The respondents nevertheless argue that under Section 20, the Board
shall not issue a certificate of registration only in the following instances: (1)
to any candidate who has been convicted by a court of competent jurisdiction
of any criminal offense involving moral turpitude; (2) or has been found guilty
of immoral or dishonorable conduct after the investigation by the Board; or
(3) has been declared to be of unsound mind. They aver that none of these
circumstances are present in their case.
Petitioners reject respondents argument. We are informed that in Board
Resolution No. 26,[29] dated July 21, 1993, the Board resolved to file charges
against the examinees from Fatima College of Medicine for immorality,
dishonesty, fraud, and deceit in the Obstetrics-Gynecology and Biochemistry
examinations. It likewise sought to cancel the examination results obtained
by the examinees from the Fatima College.
Section 8[30] of Rep. Act No. 2382 prescribes, among others, that a
person who aspires to practice medicine in the Philippines, must have
satisfactorily passed the corresponding Board Examination. Section 22, in
turn, provides that the oath may only be administered to physicians who
qualified in the examinations. The operative word here is satisfactorily,
defined as sufficient to meet a condition or obligation or capable of dispelling
doubt or ignorance.[31] Gleaned from Board Resolution No. 26, the licensing
authority apparently did not find that the respondents satisfactorily passed
the licensure examinations. The Board instead sought to nullify the
examination results obtained by the respondents.
2. On the Right Of The Respondents To Be Registered As Physicians
The function of mandamus is not to establish a right but to enforce one
that has been established by law. If no legal right has been violated, there
can be no application of a legal remedy, and the writ of mandamus is a legal
remedy for a legal right.[32] There must be a well-defined, clear and certain
legal right to the thing demanded.[33] It is long established rule that a license
to practice medicine is a privilege or franchise granted by the government. [34]
It is true that this Court has upheld the constitutional right [35] of every
citizen to select a profession or course of study subject to a fair, reasonable,
and equitable admission and academic requirements.[36] But like all rights
and freedoms guaranteed by the Charter, their exercise may be so regulated
pursuant to the police power of the State to safeguard health, morals, peace,
education, order, safety, and general welfare of the people. [37] Thus, persons
who desire to engage in the learned professions requiring scientific or
technical knowledge may be required to take an examination as a
prerequisite to engaging in their chosen careers. This regulation takes
particular pertinence in the field of medicine, to protect the public from the
potentially deadly effects of incompetence and ignorance among those who
would practice medicine. In a previous case, it may be recalled, this Court
has ordered the Board of Medical Examiners to annul both its resolution and
certificate authorizing a Spanish subject, with the degree of Licentiate in
Medicine and Surgery from the University of Barcelona, Spain, to practice
medicine in the Philippines, without first passing the examination required by
the Philippine Medical Act.[38] In another case worth noting, we upheld the
power of the State to upgrade the selection of applicants into medical
schools through admission tests.[39]
It must be stressed, nevertheless, that the power to regulate the
exercise of a profession or pursuit of an occupation cannot be exercised by
the State or its agents in an arbitrary, despotic, or oppressive manner. A
political body that regulates the exercise of a particular privilege has the
authority to both forbid and grant such privilege in accordance with certain
conditions. Such conditions may not, however, require giving up ones
constitutional rights as a condition to acquiring the license. [40] Under the view
that the legislature cannot validly bestow an arbitrary power to grant or refuse
a license on a public agency or officer, courts will generally strike down
license legislation that vests in public officials discretion to grant or refuse a
license to carry on some ordinarily lawful business, profession, or activity
without prescribing definite rules and conditions for the guidance of said
officials in the exercise of their power.[41]
In the present case, the aforementioned guidelines are provided for in
Rep. Act No. 2382, as amended, which prescribes the requirements for
admission to the practice of medicine, the qualifications of candidates for the
board examinations, the scope and conduct of the examinations, the grounds
for denying the issuance of a physicians license, or revoking a license that
has been issued. Verily, to be granted the privilege to practice medicine, the
applicant must show that he possesses all the qualifications and none of the
disqualifications. Furthermore, it must appear that he has fully complied with
all the conditions and requirements imposed by the law and the licensing
authority. Should doubt taint or mar the compliance as being less than
satisfactory, then the privilege will not issue. For said privilege is
distinguishable from a matter of right, which may be demanded if denied.
Thus, without a definite showing that the aforesaid requirements and
conditions have been satisfactorily met, the courts may not grant the writ of
mandamus to secure said privilege without thwarting the legislative will.
3. On the Ripeness of the Petition for Mandamus
Lastly, the petitioners herein contend that the Court of Appeals should
have dismissed the petition for mandamus below for being premature. They
argue that the administrative remedies had not been exhausted. The records
show that this is not the first time that petitioners have sought the dismissal
of Civil Case No. 93-66530. This issue was raised in G.R. No. 115704, which
petition we referred to the Court of Appeals, where it was docketed as CA-
G.R. SP No. 34506. On motion for reconsideration in CA-G.R. SP No. 34506,
the appellate court denied the motion to dismiss on the ground that the
prayers for the nullification of the order of the trial court and the dismissal of
Civil Case No. 93-66530 were inconsistent reliefs. In G.R. No. 118437, the
petitioners sought to nullify the decision of the Court of Appeals in CA-G.R.
SP No. 34506 insofar as it did not order the dismissal of Civil Case No. 93-
66530. In our consolidated decision, dated July 9, 1998, in G.R. Nos. 117817
& 118437, this Court speaking through Justice Bellosillo opined that:
Indeed, the issue as to whether the Court of Appeals erred in not ordering
the dismissal of Civil Case No. 93-66530 sought to be resolved in the instant
petition has been rendered meaningless by an event taking place prior to the
filing of this petition and denial thereof should follow as a logical
consequence.[42] There is no longer any justiciable controversy so that any
declaration thereon would be of no practical use or value.[43] It should be
recalled that in its decision of 19 December 1994 the trial court granted the
writ of mandamus prayed for by private respondents, which decision was
received by petitioners on 20 December 1994. Three (3) days after, or on 23
December 1994, petitioners filed the instant petition. By then, the remedy
available to them was to appeal the decision to the Court of Appeals, which
they in fact did, by filing a notice of appeal on 26 December 1994.[44]
The petitioners have shown no cogent reason for us to reverse the
aforecited ruling. Nor will their reliance upon the doctrine of the exhaustion of
administrative remedies in the instant case advance their cause any.
As to Achilles J. Peralta, Evelyn O. Ramos, Sally B. Bunagan, Rogelio
B. Ancheta, Oscar H. Padua, Jr., Evelyn D. Grajo, Valentino P. Arboleda,
Carlos M. Bernardo, Jr., Mario D. Cuaresma, Violeta C. Felipe, Percival H.
Pangilinan, Corazon M. Cruz and Samuel B. Bangoy, herein decision shall
not apply pursuant to the Orders of the trial court in Civil Case No. 93-66530,
dropping their names from the suit.

Section 26[45] of the Medical Act of 1959 provides for the administrative Consequently, this Decision is binding only on the remaining
and judicial remedies that respondents herein can avail to question respondents, namely: Arlene V. de Guzman, Celerina S. Navarro, Rafael I.
Resolution No. 26 of the Board of Medicine, namely: (a) appeal the Tolentino, Bernardita B. Sy, Gloria T. Jularbal, Hubert S. Nazareno, Nancy J.
unfavorable judgment to the PRC; (b) should the PRC ruling still be Chavez, Ernesto L. Cue, Herminio V. Fernandez, Jr., Maria Victoria M.
unfavorable, to elevate the matter on appeal to the Office of the President; Lacsamana and Merly D. Sta. Ana, as well as the petitioners.
and (c) should they still be unsatisfied, to ask for a review of the case or to WHEREFORE, the instant petition is GRANTED. Accordingly, (1) the
bring the case to court via a special civil action of certiorari. Thus, as a rule, assailed decision dated May 16, 2000, of the Court of Appeals, in CA-G.R.
mandamus will not lie when administrative remedies are still SP No. 37283, which affirmed the judgment dated December 19, 1994, of the
available.[46] However, the doctrine of exhaustion of administrative remedies Regional Trial Court of Manila, Branch 52, in Civil Case No. 93-66530,
does not apply where, as in this case, a pure question of law is raised. [47] On ordering petitioners to administer the physicians oath to herein respondents
this issue, no reversible error may, thus, be laid at the door of the appellate as well as the resolution dated August 25, 2000, of the appellate court,
court in CA-G.R. SP No. 37283, when it refused to dismiss Civil Case No. denying the petitioners motion for reconsideration, are REVERSED and SET
93-66530. ASIDE; and (2) the writ of mandamus, issued in Civil Case No. 93-66530,
As we earlier pointed out, herein respondents Arnel V. Herrera, and affirmed by the appellate court in CA-G.R. SP No. 37283 is NULLIFIED
Fernando F. Mandapat, Ophelia C. Hidalgo, Bernadette T. Mendoza, Ruby AND SET ASIDE.
B. Lantin-Tan, Fernando T. Cruz, Marissa A. Regodon, Ma. Eloisa Q. Mallari- SO ORDERED.
Largoza, Cheryl R. Triguero, Joseph A. Jao, Bernadette H. Cabuhat, Evelyn
S. Acosta-Cabanes, Laura M. Santos, Maritel M. Echiverri, Bernadette C.
EN BANC
Escusa, Carlosito C. Domingo, Alicia S. Lizano, Elnora R. Raqueno-Rabaino,
Saibzur N. Edding, Derileen D. Dorado-Edding, Robert B. Sanchez, Maria WHITE LIGHT CORPORATION, G.R. No. 122846
Rosario Leonor-Lacandula, Geraldine Elizabeth M. Pagilagan-Palma, TITANIUM CORPORATION and
Margarita Belinda L. Vicencio-Gamilla, Herminigilda E. Conejos, Leuvina P. STA. MESA TOURIST & DEVE- Present:
Chico-Paguio, Elcin C. Arriola-Ocampo, and Jose Ramoncito P. Navarro LOPMENT CORPORATION,
manifested to the Court of Appeals during the pendency of CA-G.R. SP No. Petitioners, PUNO, C.J.
37283, that they were no longer interested in proceeding with the case and QUISUMBING,
moved for its dismissal insofar as they were concerned. A similar YNARES SANTIAGO,
manifestation and motion were later filed by intervenors Mary Jean I. Yeban- CARPIO,
Merlan, Michael L. Serrano, Norma G. Lafavilla, Arnulfo A. Salvador, Belinda AUSTRIA-MARTINEZ,
C. Rabarra, Yolanda P. Unica, Dayminda G. Bontuyan, Clarissa B. Baclig, - versus - CORONA,
Ma. Luisa S. Gutierrez, Rhoneil R. Deveraturda, Aleli A. Gollayan, Evelyn C. CARPIO MORALES,
Cundangan, Frederick D. Francisco, Violeta V. Meneses, Melita J. Caedo, AZCUNA,
Clarisa SJ. Nicolas, Federico L. Castillo, Karangalan D. Serrano, Danilo A. TINGA,
Villaver, Grace E. Uy, Lydia C. Chan, and Melvin M. Usita. Following these CHICO-NAZARIO,
manifestations and motions, the appellate court in CA-G.R. SP No. 37283 VELASCO, JR.,
decreed that its ruling would not apply to them. Thus, inasmuch as the NACHURA,
instant case is a petition for review of the appellate courts ruling in CA-G.R. CITY OF MANILA, represented by DE CASTRO,
SP No. 37283, a decision which is inapplicable to the aforementioned MAYOR ALFREDO S. LIM, BRION, and
respondents will similarly not apply to them. Respondent. PERALTA, JJ.
Promulgated:
 January 20, 2009
x---------------------------------------------------------------------------x
DECISION
TINGA, J.:
With another city ordinance of Manila also principally involving the tourist
district as subject, the Court is confronted anew with the incessant clash
between government power and individual liberty in tandem with the
archetypal tension between law and morality.
In City of Manila v. Laguio, Jr.,[1] the Court affirmed the nullification of a city
ordinance barring the operation of motels and inns, among other
establishments, within the Ermita-Malate area. The petition at bar assails a
similarly-motivated city ordinance that prohibits those same establishments
from offering short-time admission, as well as pro-rated or wash up rates for
such abbreviated stays. Our earlier decision tested the city ordinance against
our sacred constitutional rights to liberty, due process and equal protection of
law. The same parameters apply to the present petition.
This Petition[2] under Rule 45 of the Revised Rules on Civil Procedure, which
seeks the reversal of the Decision[3] in C.A.-G.R. S.P. No. 33316 of the Court
of Appeals, challenges the validity of Manila City Ordinance No. 7774
entitled, An Ordinance Prohibiting Short-Time Admission, Short-Time
Admission Rates, and Wash-Up Rate Schemes in Hotels, Motels, Inns,
Lodging Houses, Pension Houses, and Similar Establishments in the City of
Manila (the Ordinance).
I.
The facts are as follows:
On December 3, 1992, City Mayor Alfredo S. Lim (Mayor Lim) signed into
law the Ordinance.[4] The Ordinance is reproduced in full, hereunder:
SECTION 1. Declaration of Policy. It is hereby
the declared policy of the City Government to protect the
best interest, health and welfare, and the morality of its
constituents in general and the youth in particular.
SEC. 2. Title. This ordinance shall be known as
An Ordinance prohibiting short time admission in hotels,
motels, lodging houses, pension houses and similar
establishments in the City of Manila.
SEC. 3. Pursuant to the above policy, short-time
admission and rate [sic], wash-up rate or other similarly
concocted terms, are hereby prohibited in hotels, motels,
inns, lodging houses, pension houses and similar
establishments in the City of Manila.
SEC. 4. Definition of Term[s]. Short-time admission shall
mean admittance and charging of room rate for less than
twelve (12) hours at any given time or the renting out of
rooms more than twice a day or any other term that may
be concocted by owners or managers of said
establishments but would mean the same or would bear
the same meaning.
SEC. 5. Penalty Clause. Any person or corporation who
shall violate any provision of this ordinance shall upon
conviction thereof be punished by a fine of Five
Thousand (P5,000.00) Pesos or imprisonment for a
period of not exceeding one (1) year or both such fine
and imprisonment at the discretion of the court;Provided,
That in case of [a] juridical person, the president, the
manager, or the persons in charge of the operation
thereof shall be liable: Provided, further, That in case of
subsequent conviction for the same offense, the
business license of the guilty party shall automatically be
cancelled.
SEC. 6. Repealing Clause. Any or all provisions of City
ordinances not consistent with or contrary to this
measure or any portion hereof are hereby deemed
repealed.
SEC. 7. Effectivity. This ordinance shall take effect
immediately upon approval.
Enacted by the city Council of Manila at its regular
session today, November 10, 1992.
Approved by His Honor, the Mayor on December 3,
1992.
 On December 15, 1992, the Malate Tourist and Development
Corporation (MTDC) filed a complaint for declaratory relief with prayer for a
writ of preliminary injunction and/or temporary restraining order ( TRO)[5] with
the Regional Trial Court (RTC) of Manila, Branch 9 impleading as defendant,
herein respondent City of Manila (the City) represented by Mayor
Lim.[6] MTDC prayed that the Ordinance, insofar as it includes motels and
inns as among its prohibited establishments, be declared invalid and
unconstitutional. MTDC claimed that as owner and operator of the Victoria
Court in Malate, Manila it was authorized by Presidential Decree (P.D.) No.
259 to admit customers on a short time basis as well as to charge customers
wash up rates for stays of only three hours.
On December 21, 1992, petitioners White Light Corporation (WLC),
Titanium Corporation (TC) and Sta. Mesa Tourist and Development
Corporation (STDC) filed a motion to intervene and to admit attached
complaint-in-intervention[7] on the ground that the Ordinance directly affects
their business interests as operators of drive-in-hotels and motels
in Manila.[8] The three companies are components of the Anito Group of
Companies which owns and operates several hotels and motels in Metro
Manila.[9]
On December 23, 1992, the RTC granted the motion to
intervene.[10] The RTC also notified the Solicitor General of the proceedings
pursuant to then Rule 64, Section 4 of the Rules of Court. On the same date,
MTDC moved to withdraw as plaintiff.[11]
On December 28, 1992, the RTC granted MTDC's motion to withdraw.[12] The
RTC issued a TRO on January 14, 1993, directing the City to cease and
desist from enforcing the Ordinance.[13] The City filed an Answer
dated January 22, 1993alleging that the Ordinance is a legitimate exercise of
police power.[14]
On February 8, 1993, the RTC issued a writ of preliminary injunction ordering
the city to desist from the enforcement of the Ordinance.[15] A month later,
on March 8, 1993, the Solicitor General filed his Comment arguing that the
Ordinance is constitutional.
During the pre-trial conference, the WLC, TC and STDC agreed to submit the
case for decision without trial as the case involved a purely legal
question.[16] On October 20, 1993, the RTC rendered a decision declaring the
Ordinance null and void. The dispositive portion of the decision reads:
WHEREFORE, in view of all the foregoing, [O]rdinance
No. 7774 of the City of Manila is hereby declared null and
void.
Accordingly, the preliminary injunction heretofor issued is
hereby made permanent.
SO ORDERED.[17]
The RTC noted that the ordinance strikes at the personal liberty of
the individual guaranteed and jealously guarded by the
Constitution.[18] Reference was made to the provisions of the Constitution
encouraging private enterprises and the incentive to needed investment, as
well as the right to operate economic enterprises. Finally, from the
observation that the illicit relationships the Ordinance sought to dissuade
could nonetheless be consummated by simply paying for a 12-hour stay, the
RTC likened the law to the ordinance annulled in Ynot v. Intermediate
Appellate Court,[19] where the legitimate purpose of preventing indiscriminate
slaughter of carabaos was sought to be effected through an inter-province
ban on the transport of carabaos and carabeef.
The City later filed a petition for review on certiorari with the Supreme
Court.[20] The petition was docketed as G.R. No. 112471. However in a
resolution dated January 26, 1994, the Court treated the petition as a petition
for certiorari and referred the petition to the Court of Appeals.[21]
Before the Court of Appeals, the City asserted that the Ordinance is
a valid exercise of police power pursuant to Section 458 (4)(iv) of the Local
Government Code which confers on cities, among other local government
units, the power:
[To] regulate the establishment, operation and
maintenance of cafes, restaurants, beerhouses, hotels,
motels, inns, pension houses, lodging houses and other
similar establishments, including tourist guides and
transports.[22]
The Ordinance, it is argued, is also a valid exercise of the power of
the City under Article III, Section 18(kk) of the Revised Manila Charter, thus:
to enact all ordinances it may deem necessary
and proper for the sanitation and safety, the furtherance
of the prosperity and the promotion of the morality,
 peace, good order, comfort, convenience and general
welfare of the city and its inhabitants, and such others as
be necessary to carry into effect and discharge the
powers and duties conferred by this Chapter; and to fix
penalties for the violation of ordinances which shall not
exceed two hundred pesos fine or six months
imprisonment, or both such fine and imprisonment for a
single offense.[23]
Petitioners argued that the Ordinance is unconstitutional and void
since it violates the right to privacy and the freedom of movement; it is an
invalid exercise of police power; and it is an unreasonable and oppressive
interference in their business.
The Court of Appeals reversed the decision of the RTC and affirmed the
constitutionality of the Ordinance.[24] First, it held that the Ordinance did not
violate the right to privacy or the freedom of movement, as it only penalizes
the owners or operators of establishments that admit individuals for short
time stays. Second, the virtually limitless reach of police power is only
constrained by having a lawful object obtained through a lawful method. The
lawful objective of the Ordinance is satisfied since it aims to curb immoral
activities. There is a lawful method since the establishments are still allowed
to operate. Third, the adverse effect on the establishments is justified by the
well-being of its constituents in general. Finally, as held in Ermita-Malate
Motel Operators Association v. City Mayor of Manila, liberty is regulated by
law.
TC, WLC and STDC come to this Court via petition for review
on certiorari.[25] In their petition and Memorandum, petitioners in essence
repeat the assertions they made before the Court of Appeals. They contend
that the assailed Ordinance is an invalid exercise of police power.
II.
We must address the threshold issue of petitioners standing. Petitioners
allege that as owners of establishments offering wash-up rates, their
business is being unlawfully interfered with by the Ordinance. However,
petitioners also allege that the equal protection rights of their clients are also
being interfered with. Thus, the crux of the matter is whether or not these
establishments have the requisite standing to plead for protection of their
patrons' equal protection rights.
Standing or locus standi is the ability of a party to demonstrate to the
court sufficient connection to and harm from the law or action challenged to
support that party's participation in the case. More importantly, the doctrine of
standing is built on the principle of separation of powers,[26] sparing as it does
unnecessary interference or invalidation by the judicial branch of the actions
rendered by its co-equal branches of government.
The requirement of standing is a core component of the judicial
system derived directly from the Constitution. [27] The constitutional
component of standing doctrine incorporates concepts which concededly are
not susceptible of precise definition.[28]In this jurisdiction, the extancy of a
direct and personal interest presents the most obvious cause, as well as the
standard test for a petitioner's standing.[29] In a similar vein, the United States
Supreme Court reviewed and elaborated on the meaning of the three
constitutional standing requirements of injury, causation, and redressability
in Allen v. Wright.[30]
Nonetheless, the general rules on standing admit of several exceptions such
as the overbreadth doctrine, taxpayer suits, third party standing and,
especially in the Philippines, the doctrine of transcendental importance.[31]
For this particular set of facts, the concept of third party standing as an
exception and the overbreadth doctrine are appropriate. In Powers
v. Ohio,[32] the United States Supreme Court wrote that: We have recognized
the right of litigants to bring actions on behalf of third parties, provided three
important criteria are satisfied: the litigant must have suffered an injury-in-
fact, thus giving him or her a "sufficiently concrete interest" in the outcome of
the issue in dispute; the litigant must have a close relation to the third party;
and there must exist some hindrance to the third party's ability to protect his
or her own interests."[33] Herein, it is clear that the business interests of the
petitioners are likewise injured by the Ordinance. They rely on the patronage
of their customers for their continued viability which appears to be threatened
by the enforcement of the Ordinance. The relative silence in constitutional
litigation of such special interest groups in our nation such as the American
Civil Liberties Union in the United States may also be construed as a
hindrance for customers to bring suit.[34]
American jurisprudence is replete with examples where parties-in-interest
were allowed standing to advocate or invoke the fundamental due process or
equal protection claims of other persons or classes of persons injured by
state action. In Griswold v. Connecticut,[35] the United States Supreme Court
held that physicians had standing to challenge a reproductive health statute
that would penalize them as accessories as well as to plead the
constitutional protections available to their patients. The Court held that:
The rights of husband and wife, pressed here, are likely
to be diluted or adversely affected unless those rights
 are considered in a suit involving those who have this
kind of confidential relation to them."[36]
An even more analogous example may be found in Craig v.
Boren,[37] wherein the United States Supreme Court held that a licensed
beverage vendor has standing to raise the equal protection claim of a male
customer challenging a statutory scheme prohibiting the sale of beer to
males under the age of 21 and to females under the age of 18. The United
States High Court explained that the vendors had standing "by acting as
advocates of the rights of third parties who seek access to their market or
function."[38]
Assuming arguendo that petitioners do not have a relationship with their
patrons for the former to assert the rights of the latter, the overbreadth
doctrine comes into play. In overbreadth analysis, challengers to government
action are in effect permitted to raise the rights of third parties. Generally
applied to statutes infringing on the freedom of speech, the overbreadth
doctrine applies when a statute needlessly restrains even constitutionally
guaranteed rights.[39] In this case, the petitioners claim that the Ordinance
makes a sweeping intrusion into the right to liberty of their clients. We can
see that based on the allegations in the petition, the Ordinance suffers from
overbreadth.
We thus recognize that the petitioners have a right to assert the
constitutional rights of their clients to patronize their establishments for a
wash-rate time frame.
III.
To students of jurisprudence, the facts of this case will recall to mind not only
the recent City of Manila ruling, but our 1967 decision in Ermita-Malate Hotel
and Motel Operations Association, Inc., v. Hon. City Mayor
of Manila.[40] Ermita-Malateconcerned the City ordinance requiring patrons to
fill up a prescribed form stating personal information such as name, gender,
nationality, age, address and occupation before they could be admitted to a
motel, hotel or lodging house. This earlier ordinance was precisely enacted
to minimize certain practices deemed harmful to public morals. A purpose
similar to the annulled ordinance in City of Manila which sought a blanket ban
on motels, inns and similar establishments in the Ermita-Malate area.
However, the constitutionality of the ordinance in Ermita-Malate was
sustained by the Court.
The common thread that runs through those decisions and the case at bar
goes beyond the singularity of the localities covered under the respective
ordinances. All three ordinances were enacted with a view of regulating
public morals including particular illicit activity in transient lodging
establishments. This could be described as the middle case, wherein there is
no wholesale ban on motels and hotels but the services offered by these
establishments have been severely restricted. At its core, this is another case
about the extent to which the State can intrude into and regulate the lives of
its citizens.
The test of a valid ordinance is well established. A long line of decisions
including City of Manila has held that for an ordinance to be valid, it must not
only be within the corporate powers of the local government unit to enact and
pass according to the procedure prescribed by law, it must also conform to
the following substantive requirements: (1) must not contravene the
Constitution or any statute; (2) must not be unfair or oppressive; (3) must not
be partial or discriminatory; (4) must not prohibit but may regulate trade; (5)
must be general and consistent with public policy; and (6) must not be
unreasonable.[41]
The Ordinance prohibits two specific and distinct business practices,
namely wash rate admissions and renting out a room more than twice a day.
The ban is evidently sought to be rooted in the police power as conferred on
local government units by the Local Government Code through such
implements as the general welfare clause.
A.
Police power, while incapable of an exact definition, has been
purposely veiled in general terms to underscore its comprehensiveness to
meet all exigencies and provide enough room for an efficient and flexible
response as the conditions warrant.[42] Police power is based upon the
concept of necessity of the State and its corresponding right to protect itself
and its people.[43] Police power has been used as justification for numerous
and varied actions by the State. These range from the regulation of dance
halls,[44] movie theaters,[45] gas stations[46] and cockpits.[47]The awesome
scope of police power is best demonstrated by the fact that in its hundred or
so years of presence in our nations legal system, its use has rarely been
denied.
The apparent goal of the Ordinance is to minimize if not eliminate the
use of the covered establishments for illicit sex, prostitution, drug use and
alike. These goals, by themselves, are unimpeachable and certainly fall
within the ambit of the police power of the State. Yet the desirability of these
ends do not sanctify any and all means for their achievement. Those means
must align with the Constitution, and our emerging sophisticated analysis of
its guarantees to the people. The Bill of Rights stands as a rebuke to the
seductive theory of Macchiavelli, and, sometimes even, the political
majorities animated by his cynicism.
Even as we design the precedents that establish the framework for analysis
of due process or equal protection questions, the courts are naturally
inhibited by a due deference to the co-equal branches of government as they
exercise their political functions. But when we are compelled to nullify
executive or legislative actions, yet another form of caution emerges. If the
Court were animated by the same passing fancies or turbulent emotions that
motivate many political decisions, judicial integrity is compromised by any
perception that the judiciary is merely the third political branch of
government. We derive our respect and good standing in the annals of
history by acting as judicious and neutral arbiters of the rule of law, and there
is no surer way to that end than through the development of rigorous and
sophisticated legal standards through which the courts analyze the most
fundamental and far-reaching constitutional questions of the day.
B.
The primary constitutional question that confronts us is one of due
process, as guaranteed under Section 1, Article III of the Constitution. Due
process evades a precise definition.[48] The purpose of the guaranty is to
prevent arbitrary governmental encroachment against the life, liberty and
property of individuals. The due process guaranty serves as a protection
against arbitrary regulation or seizure. Even corporations and partnerships
are protected by the guaranty insofar as their property is concerned.
The due process guaranty has traditionally been interpreted as imposing two
related but distinct restrictions on government, "procedural due process" and
"substantive due process." Procedural due process refers to the procedures
that the government must follow before it deprives a person of life, liberty, or
property.[49] Procedural due process concerns itself with government action
adhering to the established process when it makes an intrusion into the
private sphere. Examples range from the form of notice given to the level of
formality of a hearing.
If due process were confined solely to its procedural aspects, there would
arise absurd situation of arbitrary government action, provided the proper
formalities are followed. Substantive due process completes the protection
envisioned by the due process clause. It inquires whether the government
has sufficient justification for depriving a person of life, liberty, or property.[50]
The question of substantive due process, moreso than most other
fields of law, has reflected dynamism in progressive legal thought tied with
the expanded acceptance of fundamental freedoms. Police power,
traditionally awesome as it may be, is now confronted with a more rigorous
level of analysis before it can be upheld. The vitality though of constitutional
due process has not been predicated on the frequency with which it has
been utilized to achieve a liberal result for, after all, the libertarian ends
should sometimes yield to the prerogatives of the State. Instead, the due
process clause has acquired potency because of the sophisticated
methodology that has emerged to determine the proper metes and bounds
for its application.
C.
The general test of the validity of an ordinance on substantive due
process grounds is best tested when assessed with the evolved footnote 4
test laid down by the U.S. Supreme Court in U.S. v. Carolene
Products.[51] Footnote 4 of the Carolene Products case acknowledged that
the judiciary would defer to the legislature unless there is a discrimination
against a discrete and insular minority or infringement of a fundamental
right.[52] Consequently, two standards of judicial review were established:
strict scrutiny for laws dealing with freedom of the mind or restricting the
political process, and the rational basis standard of review for economic
legislation.
A third standard, denominated as heightened or immediate scrutiny,
was later adopted by the U.S. Supreme Court for evaluating classifications
based on gender[53] and legitimacy.[54] Immediate scrutiny was adopted by
the U.S. Supreme Court in Craig,[55] after the Court declined to do so in Reed
v. Reed.[56] While the test may have first been articulated in equal protection
analysis, it has in the United States since been applied in all substantive due
process cases as well.
We ourselves have often applied the rational basis test mainly in
analysis of equal protection challenges.[57] Using the rational basis
examination, laws or ordinances are upheld if they rationally further a
legitimate governmental interest.[58] Under intermediate review, governmental
interest is extensively examined and the availability of less restrictive
measures is considered.[59] Applying strict scrutiny, the focus is on the
presence of compelling, rather than substantial, governmental interest and
on the absence of less restrictive means for achieving that interest.
In terms of judicial review of statutes or ordinances, strict scrutiny
refers to the standard for determining the quality and the amount of
governmental interest brought to justify the regulation of fundamental
freedoms.[60] Strict scrutiny is used today to test the validity of laws dealing
with the regulation of speech, gender, or race as well as other fundamental
rights as expansion from its earlier applications to equal protection. [61] The
United States Supreme Court has expanded the scope of strict scrutiny to
protect fundamental rights such as suffrage,[62] judicial access[63] and
interstate travel.[64]
If we were to take the myopic view that an Ordinance should be
analyzed strictly as to its effect only on the petitioners at bar, then it would
seem that the only restraint imposed by the law which we are capacitated to
act upon is the injury to property sustained by the petitioners, an injury that
would warrant the application of the most deferential standard the rational
basis test. Yet as earlier stated, we recognize the capacity of the petitioners
to invoke as well the constitutional rights of their patrons those persons who
would be deprived of availing short time access or wash-up rates to the
lodging establishments in question.
Viewed cynically, one might say that the infringed rights of these
customers were are trivial since they seem shorn of political consequence.
Concededly, these are not the sort of cherished rights that, when proscribed,
would impel the people to tear up their cedulas. Still, the Bill of Rights does
not shelter gravitas alone. Indeed, it is those trivial yet fundamental freedoms
which the people reflexively exercise any day without the impairing
awareness of their constitutional consequence that accurately reflect the
degree of liberty enjoyed by the people. Liberty, as integrally incorporated as
a fundamental right in the Constitution, is not a Ten Commandments-style
enumeration of what may or what may not be done; but rather an
atmosphere of freedom where the people do not feel labored under a Big
Brother presence as they interact with each other, their society and nature, in
a manner innately understood by them as inherent, without doing harm or
injury to others.
D.
The rights at stake herein fall within the same fundamental rights to
liberty which we upheld in City of Manila v. Hon. Laguio, Jr. We expounded
on that most primordial of rights, thus:
Liberty as guaranteed by the Constitution was
defined by Justice Malcolm to include "the right to exist and
the right to be free from arbitrary restraint or servitude. The
term cannot be dwarfed into mere freedom from physical
restraint of the person of the citizen, but is deemed to
embrace the right of man to enjoy the facilities with which he
has been endowed by his Creator, subject only to such
restraint as are necessary for the common welfare."[[65]] In
accordance with this case, the rights of the citizen to be free
to use his faculties in all lawful ways; to live and work where
he will; to earn his livelihood by any lawful calling; and to
pursue any avocation are all deemed embraced in the
concept of liberty.[[66]]
The U.S. Supreme Court in the case of Roth v.
Board of Regents, sought to clarify the meaning of "liberty." It
said:
While the Court has not attempted
to define with exactness the liberty . . .
guaranteed [by the Fifth and Fourteenth
Amendments], the term denotes not merely
freedom from bodily restraint but also the
right of the individual to contract, to engage
in any of the common occupations of life, to
acquire useful knowledge, to marry,
establish a home and bring up children, to
worship God according to the dictates of his
own conscience, and generally to enjoy
those privileges long recognized . . . as
essential to the orderly pursuit of happiness
by free men. In a Constitution for a free
people, there can be no doubt that the
meaning of "liberty" must be broad
indeed.[67] [Citations omitted]
It cannot be denied that the primary animus behind the ordinance is
the curtailment of sexual behavior. The City asserts before this Court that the
subject establishments have gained notoriety as venue of prostitution,
adultery and fornications in Manila since they provide the necessary
atmosphere for clandestine entry, presence and exit and thus became the
ideal haven for prostitutes and thrill-seekers.[68] Whether or not this depiction
of a mise-en-scene of vice is accurate, it cannot be denied that legitimate
sexual behavior among willing married or consenting single adults which is
constitutionally protected[69] will be curtailed as well, as it was in the City of
Manila case. Our holding therein retains significance for our purposes:
The concept of liberty compels respect for the
individual whose claim to privacy and interference demands
respect. As the case of Morfe v. Mutuc, borrowing the words
of Laski, so very aptly stated:
Man is one among many, obstinately
refusing reduction to unity. His separateness,
his isolation, are indefeasible; indeed, they
are so fundamental that they are the basis on
 which his civic obligations are built. He
cannot abandon the consequences of his
isolation, which are, broadly speaking, that
his experience is private, and the will built out
of that experience personal to himself. If he
surrenders his will to others, he surrenders
himself. If his will is set by the will of others,
he ceases to be a master of himself. I cannot
believe that a man no longer a master of
himself is in any real sense free.
Indeed, the right to privacy as a constitutional right
was recognized in Morfe, the invasion of which should be
justified by a compelling state interest. Morfeaccorded
recognition to the right to privacy independently of its
identification with liberty; in itself it is fully deserving of
constitutional protection. Governmental powers should stop
short of certain intrusions into the personal life of the
citizen.[70]
We cannot discount other legitimate activities which the Ordinance
would proscribe or impair. There are very legitimate uses for a wash rate or
renting the room out for more than twice a day. Entire families are known to
choose pass the time in a motel or hotel whilst the power is momentarily out
in their homes. In transit passengers who wish to wash up and rest between
trips have a legitimate purpose for abbreviated stays in motels or hotels.
Indeed any person or groups of persons in need of comfortable private
spaces for a span of a few hours with purposes other than having sex or
using illegal drugs can legitimately look to staying in a motel or hotel as a
convenient alternative.
E.
That the Ordinance prevents the lawful uses of a wash rate depriving
patrons of a product and the petitioners of lucrative business ties in with
another constitutional requisite for the legitimacy of the Ordinance as a police
power measure. It must appear that the interests of the public generally, as
distinguished from those of a particular class, require an interference with
private rights and the means must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive of private
rights.[71] It must also be evident that no other alternative for the
accomplishment of the purpose less intrusive of private rights can work. More
importantly, a reasonable relation must exist between the purposes of the
measure and the means employed for its accomplishment, for even under
the guise of protecting the public interest, personal rights and those
pertaining to private property will not be permitted to be arbitrarily invaded.[72]
Lacking a concurrence of these requisites, the police measure shall
be struck down as an arbitrary intrusion into private rights. As held in Morfe v.
Mutuc, the exercise of police power is subject to judicial review when life,
liberty or property is affected.[73] However, this is not in any way meant to
take it away from the vastness of State police power whose exercise enjoys
the presumption of validity.[74]
Similar to the Comelec resolution requiring newspapers to donate
advertising space to candidates, this Ordinance is a blunt and heavy
instrument.[75] The Ordinance makes no distinction between places
frequented by patrons engaged in illicit activities and patrons engaged in
legitimate actions. Thus it prevents legitimate use of places where illicit
activities are rare or even unheard of. A plain reading of section 3 of the
Ordinance shows it makes no classification of places of lodging, thus deems
them all susceptible to illicit patronage and subject them without exception to
the unjustified prohibition.
The Court has professed its deep sentiment and tenderness of the
Ermita-Malate area, its longtime home,[76] and it is skeptical of those who
wish to depict our capital city the Pearl of the Orient as a modern-
day Sodom or Gomorrah for the Third World set. Those still steeped in Nick
Joaquin-dreams of the grandeur of Old Manila will have to accept
that Manila like all evolving big cities, will have its problems. Urban decay is a
fact of mega cities such as Manila, and vice is a common problem confronted
by the modern metropolis wherever in the world. The solution to such
perceived decay is not to prevent legitimate businesses from offering a
legitimate product. Rather, cities revive themselves by offering incentives for
new businesses to sprout up thus attracting the dynamism of individuals that
would bring a new grandeur to Manila.
The behavior which the Ordinance seeks to curtail is in fact already
prohibited and could in fact be diminished simply by applying existing laws.
Less intrusive measures such as curbing the proliferation of prostitutes and
drug dealers through active police work would be more effective in easing the
situation. So would the strict enforcement of existing laws and regulations
penalizing prostitution and drug use.These measures would have minimal
intrusion on the businesses of the petitioners and other legitimate merchants.
Further, it is apparent that the Ordinance can easily be circumvented by
merely paying the whole day rate without any hindrance to those engaged in
illicit activities. Moreover, drug dealers and prostitutes can in fact collect
wash rates from their clientele by charging their customers a portion of the
rent for motel rooms and even apartments.
IV.
We reiterate that individual rights may be adversely affected only to
the extent that may fairly be required by the legitimate demands of public
interest or public welfare. The State is a leviathan that must be restrained
from needlessly intruding into the lives of its citizens. However well-
intentioned the Ordinance may be, it is in effect an arbitrary and whimsical
intrusion into the rights of the establishments as well as their patrons. The
Ordinance needlessly restrains the operation of the businesses of the
petitioners as well as restricting the rights of their patrons without sufficient
justification. The Ordinance rashly equates wash rates and renting out a
room more than twice a day with immorality without accommodating
innocuous intentions.
The promotion of public welfare and a sense of morality among citizens
deserves the full endorsement of the judiciary provided that such measures
do not trample rights this Court is sworn to protect.[77] The notion that the
promotion of public morality is a function of the State is as old as
Aristotle.[78] The advancement of moral relativism as a school of philosophy
does not de-legitimize the role of morality in law, even if it may foster wider
debate on which particular behavior to penalize. It is conceivable that a
society with relatively little shared morality among its citizens could be
functional so long as the pursuit of sharply variant moral perspectives yields
an adequate accommodation of different interests.[79]
To be candid about it, the oft-quoted American maxim that you
cannot legislate morality is ultimately illegitimate as a matter of law, since as
explained by Calabresi, that phrase is more accurately interpreted as
meaning that efforts to legislate morality will fail if they are widely at variance
with public attitudes about right and wrong.[80] Our penal laws, for one, are
founded on age-old moral traditions, and as long as there are widely
accepted distinctions between right and wrong, they will remain so oriented.
Yet the continuing progression of the human story has seen not only
the acceptance of the right-wrong distinction, but also the advent of
fundamental liberties as the key to the enjoyment of life to the fullest. Our
democracy is distinguished from non-free societies not with any more
extensive elaboration on our part of what is moral and immoral, but from our
recognition that the individual liberty to make the choices in our lives is
innate, and protected by the State. Independent and fair-minded judges
themselves are under a moral duty to uphold the Constitution as the
embodiment of the rule of law, by reason of their expression of consent to do
so when they take the oath of office, and because they are entrusted by the
people to uphold the law.[81]
Even as the implementation of moral norms remains an
indispensable complement to governance, that prerogative is hardly
absolute, especially in the face of the norms of due process of liberty. And
while the tension may often be left to the courts to relieve, it is possible for
the government to avoid the constitutional conflict by employing more
judicious, less drastic means to promote morality.
WHEREFORE, the Petition is GRANTED. The Decision of the Court
of Appeals is REVERSED, and the Decision of the Regional Trial Court of
Manila, Branch 9, is REINSTATED. Ordinance No. 7774 is hereby declared
UNCONSTITUTIONAL. No pronouncement as to costs.
SO ORDERED.
EN BANC
[G.R. No. 118127. April 12, 2005]
CITY OF MANILA, HON. ALFREDO S. LIM as the Mayor of the City of
Manila, HON. JOSELITO L. ATIENZA, in his capacity as Vice-
Mayor of the City of Manila and Presiding Officer of the City
Council of Manila, HON. ERNESTO A. NIEVA, HON. GONZALO P.
GONZALES, HON. AVELINO S. CAILIAN, HON. ROBERTO C.
OCAMPO, HON. ALBERTO DOMINGO, HON. HONORIO U.
LOPEZ, HON. FRANCISCO G. VARONA, JR., HON. ROMUALDO
S. MARANAN, HON. NESTOR C. PONCE, JR., HON. HUMBERTO
B. BASCO, HON. FLAVIANO F. CONCEPCION, JR., HON.
ROMEO G. RIVERA, HON. MANUEL M. ZARCAL, HON. PEDRO
S. DE JESUS, HON. BERNARDITO C. ANG, HON. MANUEL L.
QUIN, HON. JHOSEP Y. LOPEZ, HON. CHIKA G. GO, HON.
VICTORIANO A. MELENDEZ, HON. ERNESTO V.P. MACEDA,
JR., HON. ROLANDO P. NIETO, HON. DANILO V. ROLEDA, HON.
GERINO A. TOLENTINO, JR., HON. MA. PAZ E. HERRERA, HON.
JOEY D. HIZON, HON. FELIXBERTO D. ESPIRITU, HON. KARLO
Q. BUTIONG, HON. ROGELIO P. DELA PAZ, HON. BERNARDO
D. RAGAZA, HON. MA. CORAZON R. CABALLES, HON.
CASIMIRO C. SISON, HON. BIENVINIDO M. ABANTE, JR., HON.
MA. LOURDES M. ISIP, HON. ALEXANDER S. RICAFORT, HON.
ERNESTO F. RIVERA, HON. LEONARDO L. ANGAT, and HON.
JOCELYN B. DAWIS, in their capacity as councilors of the City
of Manila, petitioners, vs. HON. PERFECTO A.S. LAGUIO, JR., as
 Presiding Judge, RTC, Manila and MALATE TOURIST
DEVELOPMENT CORPORATION, respondents.
DECISION
TINGA, J.:
I know only that what is moral is what you feel good after and what is
immoral is what you feel bad after.
Ernest Hermingway
Death in the Afternoon, Ch. 1
It is a moral and political axiom that any dishonorable act, if performed by
oneself, is less immoral than if performed by someone else, who would be
well-intentioned in his dishonesty.
J. Christopher Gerald
Bonaparte in Egypt, Ch. I
The Courts commitment to the protection of morals is secondary to its
fealty to the fundamental law of the land. It is foremost a guardian of the
Constitution but not the conscience of individuals. And if it need be, the Court
will not hesitate to make the hammer fall, and heavily in the words of Justice
Laurel, and uphold the constitutional guarantees when faced with laws that,
though not lacking in zeal to promote morality, nevertheless fail to pass the
test of constitutionality.
The pivotal issue in this Petition[1] under Rule 45 (then Rule 42) of the
Revised Rules on Civil Procedure seeking the reversal of the Decision[2] in
Civil Case No. 93-66511 of the Regional Trial Court (RTC) of Manila, Branch
18 (lower court),[3] is the validity of Ordinance No. 7783 (the Ordinance) of
the City of Manila.[4]
The antecedents are as follows:
Private respondent Malate Tourist Development Corporation (MTDC) is
a corporation engaged in the business of operating hotels, motels, hostels
and lodging houses.[5] It built and opened Victoria Court in Malate which was
licensed as a motel although duly accredited with the Department of Tourism
as a hotel.[6] On 28 June 1993, MTDC filed a Petition for Declaratory Relief
with Prayer for a Writ of Preliminary Injunction and/or Temporary Restraining
Order[7] (RTC Petition) with the lower court impleading as defendants, herein
petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza,
and the members of the City Council of Manila (City Council). MTDC prayed
that the Ordinance, insofar as it includes motels and inns as among its
prohibited establishments, be declared invalid and unconstitutional.[8]
Enacted by the City Council[9] on 9 March 1993 and approved by
petitioner City Mayor on 30 March 1993, the said Ordinance is entitled
AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION
OF BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT,
ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-MALATE
AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR
OTHER PURPOSES.[10]
The Ordinance is reproduced in full, hereunder:
SECTION 1. Any provision of existing laws and ordinances to the contrary
notwithstanding, no person, partnership, corporation or entity shall, in
the Ermita-Malate area bounded by Teodoro M. Kalaw Sr. Street in the
North, Taft Avenue in the East, Vito Cruz Street in the South and Roxas
Boulevard in the West, pursuant to P.D. 499 be allowed or authorized to
contract and engage in, any business providing certain forms of
amusement, entertainment, services and facilities where women are
used as tools in entertainment and which tend to disturb the
community, annoy the inhabitants, and adversely affect the social and
moral welfare of the community, such as but not limited to:
1. Sauna Parlors
2. Massage Parlors
3. Karaoke Bars
4. Beerhouses
5. Night Clubs
6. Day Clubs
7. Super Clubs
8. Discotheques
9. Cabarets
10. Dance Halls
11. Motels
12. Inns
SEC. 2 The City Mayor, the City Treasurer or any person acting in behalf
of the said officials are prohibited from issuing permits, temporary or
otherwise, or from granting licenses and accepting payments for the
operation of business enumerated in the preceding section.
SEC. 3. Owners and/or operator of establishments engaged in, or
devoted to, the businesses enumerated in Section 1 hereof are hereby given
three (3) months from the date of approval of this ordinance within
which to wind up business operations or to transfer to any place
outside of the Ermita-Malate area or convert said businesses to other
kinds of business allowable within the area, such as but not limited to:
1. Curio or antique shop
2. Souvenir Shops
3. Handicrafts display centers
4. Art galleries
5. Records and music shops
6. Restaurants
7. Coffee shops
8. Flower shops
9. Music lounge and sing-along restaurants, with
well-defined activities for wholesome family entertainment that
cater to both local and foreign clientele.
10. Theaters engaged in the exhibition, not only of
motion pictures but also of cultural shows, stage and theatrical
plays, art exhibitions, concerts and the like.
11. Businesses allowable within the law and medium
intensity districts as provided for in the zoning ordinances for
Metropolitan Manila, except new warehouse or open-storage
depot, dock or yard, motor repair shop, gasoline service station,
light industry with any machinery, or funeral establishments.
SEC. 4. Any person violating any provisions of this ordinance, shall
upon conviction, be punished by imprisonment of one (1) year or fine of
FIVE THOUSAND (P5,000.00) PESOS, or both, at the discretion of the
Court, PROVIDED, that in case of juridical person, the President, the
General Manager, or person-in-charge of operation shall be liable thereof;
PROVIDED FURTHER, that in case of subsequent violation and
conviction, the premises of the erring establishment shall be closed
and padlocked permanently.
SEC. 5. This ordinance shall take effect upon approval.
Enacted by the City Council of Manila at its regular session today, March 9,
1993.
Approved by His Honor, the Mayor on March 30, 1993. (Emphasis supplied)
In the RTC Petition, MTDC argued that the Ordinance erroneously and
improperly included in its enumeration of prohibited establishments, motels
and inns such as MTDCs Victoria Court considering that these were not
establishments for amusement or entertainment and they were not services
or facilities for entertainment, nor did they use women as tools for
entertainment, and neither did they disturb the community, annoy the
inhabitants or adversely affect the social and moral welfare of the
community.[11]
MTDC further advanced that the Ordinance was invalid and
unconstitutional for the following reasons: (1) The City Council has no power
to prohibit the operation of motels as Section 458 (a) 4 (iv) [12] of the Local
Government Code of 1991 (the Code) grants to the City Council only the
power to regulate the establishment, operation and maintenance of hotels,
motels, inns, pension houses, lodging houses and other similar
establishments; (2) The Ordinance is void as it is violative of Presidential
Decree (P.D.) No. 499[13] which specifically declared portions of the Ermita-
Malate area as a commercial zone with certain restrictions; (3)
The Ordinance does not constitute a proper exercise of police power as the
compulsory closure of the motel business has no reasonable relation to the
legitimate municipal interests sought to be protected; (4)
The Ordinance constitutes an ex post factolaw by punishing the operation of
Victoria Court which was a legitimate business prior to its enactment; (5)
The Ordinance violates MTDCs constitutional rights in that: (a) it is
confiscatory and constitutes an invasion of plaintiffs property rights; (b) the
City Council has no power to find as a fact that a particular thing is a
nuisance per se nor does it have the power to extrajudicially destroy it; and
(6) The Ordinance constitutes a denial of equal protection under the law as
no reasonable basis exists for prohibiting the operation of motels and inns,
but not pension houses, hotels, lodging houses or other similar
establishments, and for prohibiting said business in the Ermita-Malate area
but not outside of this area.[14]
In their Answer[15] dated 23 July 1993, petitioners City of Manila and Lim
maintained that the City Council had the power to prohibit certain forms of
entertainment in order to protect the social and moral welfare of the
community as provided for in Section 458 (a) 4 (vii) of the Local Government
Code,[16] which reads, thus:
Section 458. Powers, Duties, Functions and Compensation. (a) The
sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section 16 of this Code and
in the proper exercise of the corporate powers of the city as provided for
under Section 22 of this Code, and shall:
....
(4) Regulate activities relative to the use of land, buildings and structures
within the city in order to promote the general welfare and for said purpose
shall:
....
(vii) Regulate the establishment, operation, and maintenance of
any entertainment or amusement facilities, including theatrical
performances, circuses, billiard pools, public dancing schools,
public dance halls, sauna baths, massage parlors, and other places
for entertainment or amusement; regulate such other events or
activities for amusement or entertainment, particularly those which
tend to disturb the community or annoy the inhabitants, or require
the suspension or suppression of the same; or, prohibit certain
forms of amusement or entertainment in order to protect the social
and moral welfare of the community.
Citing Kwong Sing v. City of Manila,[17] petitioners insisted that the
power of regulation spoken of in the above-quoted provision included the
power to control, to govern and to restrain places of exhibition and
amusement.[18]
Petitioners likewise asserted that the Ordinance was enacted by the City
Council of Manila to protect the social and moral welfare of the community in
conjunction with its police power as found in Article III, Section 18(kk) of
Republic Act No. 409,[19] otherwise known as the Revised Charter of the City
of Manila (Revised Charter of Manila)[20] which reads, thus:
ARTICLE III
THE MUNICIPAL BOARD
...
Section 18. Legislative powers. The Municipal Board shall have the
following legislative powers:
...
(kk) To enact all ordinances it may deem necessary and proper for
the sanitation and safety, the furtherance of the prosperity, and the
promotion of the morality, peace, good order, comfort,
convenience, and general welfare of the city and its inhabitants,
and such others as may be necessary to carry into effect and
discharge the powers and duties conferred by this chapter; and to
fix penalties for the violation of ordinances which shall not exceed
two hundred pesos fine or six months imprisonment, or both such
fine and imprisonment, for a single offense.
Further, the petitioners noted, the Ordinance had the presumption of
validity; hence, private respondent had the burden to prove its illegality or
unconstitutionality.[21]
Petitioners also maintained that there was no inconsistency between
P.D. 499 and the Ordinance as the latter simply disauthorized certain forms
of businesses and allowed the Ermita-Malate area to remain a commercial
zone.[22] The Ordinance, the petitioners likewise claimed, cannot be assailed
as ex post facto as it was prospective in operation.[23]The Ordinance also did
not infringe the equal protection clause and cannot be denounced as class
legislation as there existed substantial and real differences between the
Ermita-Malate area and other places in the City of Manila.[24]
On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr. (Judge
Laguio) issued an ex-parte temporary restraining order against the
enforcement of the Ordinance.[25] And on 16 July 1993, again in an intrepid
gesture, he granted the writ of preliminary injunction prayed for by MTDC. [26]
After trial, on 25 November 1994, Judge Laguio rendered the
assailed Decision, enjoining the petitioners from implementing
the Ordinance. The dispositive portion of said Decision reads:[27]
WHEREFORE, judgment is hereby rendered declaring Ordinance No. 778[3],
Series of 1993, of the City of Manila null and void, and making permanent the
writ of preliminary injunction that had been issued by this Court against the
defendant. No costs.
SO ORDERED.[28]
Petitioners filed with the lower court a Notice of Appeal[29] on 12
December 1994, manifesting that they are elevating the case to this Court
under then Rule 42 on pure questions of law.[30]
On 11 January 1995, petitioners filed the present Petition, alleging that
the following errors were committed by the lower court in its ruling: (1) It
erred in concluding that the subject ordinance is ultra vires, or otherwise,
unfair, unreasonable and oppressive exercise of police power; (2) It erred in
holding that the questioned Ordinance contravenes P.D. 499[31] which allows
operators of all kinds of commercial establishments, except those specified
therein; and (3) It erred in declaring the Ordinance void and
unconstitutional.[32]
In the Petition and in its Memorandum,[33] petitioners in essence repeat
the assertions they made before the lower court. They contend that the
assailed Ordinance was enacted in the exercise of the inherent and plenary
power of the State and the general welfare clause exercised by local
government units provided for in Art. 3, Sec. 18 (kk) of the Revised Charter
of Manila and conjunctively, Section 458 (a) 4 (vii) of the Code.[34] They
allege that the Ordinance is a valid exercise of police power; it does not
contravene P.D. 499; and that it enjoys the presumption of validity.[35]
In its Memorandum[36] dated 27 May 1996, private respondent maintains
that the Ordinance is ultra vires and that it is void for being repugnant to the
general law. It reiterates that the questioned Ordinance is not a valid exercise
of police power; that it is violative of due process, confiscatory and amounts
to an arbitrary interference with its lawful business; that it is violative of the
equal protection clause; and that it confers on petitioner City Mayor or any
officer unregulated discretion in the execution of the Ordinance absent rules
to guide and control his actions.
This is an opportune time to express the Courts deep sentiment and
tenderness for the Ermita-Malate area being its home for several decades. A
long-time resident, the Court witnessed the areas many turn of events. It
relished its glory days and endured its days of infamy. Much as the Court
harks back to the resplendent era of the Old Manila and yearns to restore its
lost grandeur, it believes that the Ordinance is not the fitting means to that
end. The Court is of the opinion, and so holds, that the lower court did not err
in declaring the Ordinance, as it did, ultra vires and therefore null and void.
The Ordinance is so replete with constitutional infirmities that almost
every sentence thereof violates a constitutional provision. The prohibitions
and sanctions therein transgress the cardinal rights of persons enshrined by
the Constitution. The Court is called upon to shelter these rights from
attempts at rendering them worthless.
The tests of a valid ordinance are well established. A long line of
decisions has held that for an ordinance to be valid, it must not only be within
the corporate powers of the local government unit to enact and must be
passed according to the procedure prescribed by law, it must also conform to
the following substantive requirements: (1) must not contravene the
Constitution or any statute; (2) must not be unfair or oppressive; (3) must not
be partial or discriminatory; (4) must not prohibit but may regulate trade; (5)
must be general and consistent with public policy; and (6) must not be
unreasonable.[37]
Anent the first criterion, ordinances shall only be valid when they are not
contrary to the Constitution and to the laws.[38] The Ordinance must satisfy
two requirements: it must pass muster under the test of constitutionality and
the test of consistency with the prevailing laws. That ordinances should be
constitutional uphold the principle of the supremacy of the Constitution. The
requirement that the enactment must not violate existing law gives stress to
the precept that local government units are able to legislate only by virtue of
their derivative legislative power, a delegation of legislative power from the
national legislature. The delegate cannot be superior to the principal or
exercise powers higher than those of the latter.[39]
This relationship between the national legislature and the local
government units has not been enfeebled by the new provisions in the
Constitution strengthening the policy of local autonomy. The national
legislature is still the principal of the local government units, which cannot
defy its will or modify or violate it.[40]
The Ordinance was passed by the City Council in the exercise of its
police power, an enactment of the City Council acting as agent of Congress.
Local government units, as agencies of the State, are endowed with police
power in order to effectively accomplish and carry out the declared objects of
their creation.[41] This delegated police power is found in Section 16 of the
Code, known as the general welfare clause, viz:
SECTION 16. General Welfare.Every local government unit shall exercise
the powers expressly granted, those necessarily implied therefrom, as well
as powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units
shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants.
Local government units exercise police power through their respective
legislative bodies; in this case, the sangguniang panlungsod or the city
council. The Code empowers the legislative bodies to enact ordinances,
approve resolutions and appropriate funds for the general welfare of the
province/city/municipality and its inhabitants pursuant to Section 16 of the
Code and in the proper exercise of the corporate powers of the province/city/
municipality provided under the Code.[42] The inquiry in this Petition is
concerned with the validity of the exercise of such delegated power.
The Ordinance contravenes
the Constitution
The police power of the City Council, however broad and far-reaching, is
subordinate to the constitutional limitations thereon; and is subject to the
limitation that its exercise must be reasonable and for the public good. [43] In
the case at bar, the enactment of the Ordinance was an invalid exercise of
delegated power as it is unconstitutional and repugnant to general laws.
The relevant constitutional provisions are the following:
SEC. 5. The maintenance of peace and order, the protection of life, liberty,
and property, and the promotion of the general welfare are essential for the
enjoyment by all the people of the blessings of democracy.[44]
SEC. 14. The State recognizes the role of women in nation-building, and
shall ensure the fundamental equality before the law of women and men.[45]
SEC. 1. No person shall be deprived of life, liberty or property without due
process of law, nor shall any person be denied the equal protection of
laws.[46]
Sec. 9. Private property shall not be taken for public use without just
compensation.[47]
A. The Ordinance infringes
the Due Process Clause
The constitutional safeguard of due process is embodied in the fiat (N)o
person shall be deprived of life, liberty or property without due process of
law. . . .[48]
There is no controlling and precise definition of due process. It furnishes
though a standard to which governmental action should conform in order that
deprivation of life, liberty or property, in each appropriate case, be valid. This
standard is aptly described as a responsiveness to the supremacy of reason,
obedience to the dictates of justice,[49] and as such it is a limitation upon the
exercise of the police power.[50]
The purpose of the guaranty is to prevent governmental encroachment
against the life, liberty and property of individuals; to secure the individual
from the arbitrary exercise of the powers of the government, unrestrained by
the established principles of private rights and distributive justice; to protect
property from confiscation by legislative enactments, from seizure, forfeiture,
and destruction without a trial and conviction by the ordinary mode of judicial
procedure; and to secure to all persons equal and impartial justice and the
benefit of the general law.[51]
The guaranty serves as a protection against arbitrary regulation, and
private corporations and partnerships are persons within the scope of the
guaranty insofar as their property is concerned.[52]
This clause has been interpreted as imposing two separate limits on
government, usually called procedural due process and substantive due
process.
Procedural due process, as the phrase implies, refers to the procedures
that the government must follow before it deprives a person of life, liberty, or
property. Classic procedural due process issues are concerned with what
kind of notice and what form of hearing the government must provide when it
takes a particular action.[53]
Substantive due process, as that phrase connotes, asks whether the
government has an adequate reason for taking away a persons life, liberty,
or property. In other words, substantive due process looks to whether there is
a sufficient justification for the governments action.[54] Case law in the United
States (U.S.) tells us that whether there is such a justification depends very
much on the level of scrutiny used.[55] For example, if a law is in an area
where only rational basis review is applied, substantive due process is met
so long as the law is rationally related to a legitimate government purpose.
But if it is an area where strict scrutiny is used, such as for protecting
fundamental rights, then the government will meet substantive due process
only if it can prove that the law is necessary to achieve a compelling
government purpose.[56]
The police power granted to local government units must always be
exercised with utmost observance of the rights of the people to due process
and equal protection of the law. Such power cannot be exercised
whimsically, arbitrarily or despotically[57] as its exercise is subject to a
qualification, limitation or restriction demanded by the respect and regard due
to the prescription of the fundamental law, particularly those forming part of
the Bill of Rights. Individual rights, it bears emphasis, may be adversely
affected only to the extent that may fairly be required by the legitimate
demands of public interest or public welfare.[58] Due process requires the
intrinsic validity of the law in interfering with the rights of the person to his life,
liberty and property.[59]
Requisites for the valid exercise
of Police Power are not met
To successfully invoke the exercise of police power as the rationale for
the enactment of the Ordinance, and to free it from the imputation of
constitutional infirmity, not only must it appear that the interests of the public
generally, as distinguished from those of a particular class, require an
interference with private rights, but the means adopted must be reasonably
necessary for the accomplishment of the purpose and not unduly oppressive
upon individuals.[60] It must be evident that no other alternative for the
accomplishment of the purpose less intrusive of private rights can work. A
reasonable relation must exist between the purposes of the police measure
and the means employed for its accomplishment, for even under the guise of
protecting the public interest, personal rights and those pertaining to private
property will not be permitted to be arbitrarily invaded.[61]
 Lacking a concurrence of these two requisites, the police measure shall
be struck down as an arbitrary intrusion into private rights[62] a violation of the
due process clause.
The Ordinance was enacted to address and arrest the social ills
purportedly spawned by the establishments in the Ermita-Malate area which
are allegedly operated under the deceptive veneer of legitimate, licensed and
tax-paying nightclubs, bars, karaoke bars, girlie houses, cocktail lounges,
hotels and motels. Petitioners insist that even the Court in the case of Ermita-
Malate Hotel and Motel Operators Association, Inc. v. City Mayor of
Manila[63] had already taken judicial notice of the alarming increase in the rate
of prostitution, adultery and fornication in Manila traceable in great part to
existence of motels, which provide a necessary atmosphere for clandestine
entry, presence and exit and thus become the ideal haven for prostitutes and
thrill-seekers.[64]
The object of the Ordinance was, accordingly, the promotion and
protection of the social and moral values of the community. Granting for the
sake of argument that the objectives of the Ordinance are within the scope of
the City Councils police powers, the means employed for the
accomplishment thereof were unreasonable and unduly oppressive.
It is undoubtedly one of the fundamental duties of the City of Manila to
make all reasonable regulations looking to the promotion of the moral and
social values of the community. However, the worthy aim of fostering public
morals and the eradication of the communitys social ills can be achieved
through means less restrictive of private rights; it can be attained by
reasonable restrictions rather than by an absolute prohibition. The closing
down and transfer of businesses or their conversion into businesses allowed
under the Ordinance have no reasonable relation to the accomplishment of
its purposes. Otherwise stated, the prohibition of the enumerated
establishments will not per se protect and promote the social and moral
welfare of the community; it will not in itself eradicate the alluded social ills of
prostitution, adultery, fornication nor will it arrest the spread of sexual disease
in Manila.
Conceding for the nonce that the Ermita-Malate area teems with houses
of ill-repute and establishments of the like which the City Council may
lawfully prohibit,[65] it is baseless and insupportable to bring within that
classification sauna parlors, massage parlors, karaoke bars, night clubs, day
clubs, super clubs, discotheques, cabarets, dance halls, motels and inns.
This is not warranted under the accepted definitions of these terms. The
enumerated establishments are lawful pursuits which are not per se offensive
to the moral welfare of the community.
That these are used as arenas to consummate illicit sexual affairs and
as venues to further the illegal prostitution is of no moment. We lay stress on
the acrid truth that sexual immorality, being a human frailty, may take place
in the most innocent of places that it may even take place in the substitute
establishments enumerated under Section 3 of the Ordinance. If the flawed
logic of the Ordinance were to be followed, in the remote instance that an
immoral sexual act transpires in a church cloister or a court chamber, we
would behold the spectacle of the City of Manila ordering the closure of the
church or court concerned. Every house, building, park, curb, street or even
vehicles for that matter will not be exempt from the prohibition. Simply
because there are no pure places where there are impure men. Indeed, even
the Scripture and the Tradition of Christians churches continually recall the
presence and universality of sin in mans history.[66]
The problem, it needs to be pointed out, is not the establishment, which
by its nature cannot be said to be injurious to the health or comfort of the
community and which in itself is amoral, but the deplorable human activity
that may occur within its premises. While a motel may be used as a venue
for immoral sexual activity, it cannot for that reason alone be punished. It
cannot be classified as a house of ill-repute or as a nuisance per se on a
mere likelihood or a naked assumption. If that were so and if that were
allowed, then the Ermita-Malate area would not only be purged of its
supposed social ills, it would be extinguished of its soul as well as every
human activity, reprehensible or not, in its every nook and cranny would be
laid bare to the estimation of the authorities.
The Ordinance seeks to legislate morality but fails to address the core
issues of morality. Try as the Ordinance may to shape morality, it should not
foster the illusion that it can make a moral man out of it because immorality is
not a thing, a building or establishment; it is in the hearts of men. The City
Council instead should regulate human conduct that occurs inside the
establishments, but not to the detriment of liberty and privacy which are
covenants, premiums and blessings of democracy.
While petitioners earnestness at curbing clearly objectionable social ills
is commendable, they unwittingly punish even the proprietors and operators
of wholesome, innocent establishments. In the instant case, there is a clear
invasion of personal or property rights, personal in the case of those
individuals desirous of owning, operating and patronizing those motels and
property in terms of the investments made and the salaries to be paid to
those therein employed. If the City of Manila so desires to put an end to
prostitution, fornication and other social ills, it can instead impose reasonable
regulations such as daily inspections of the establishments for any violation
of the conditions of their licenses or permits; it may exercise its authority to
suspend or revoke their licenses for these violations; [67] and it may even
impose increased license fees. In other words, there are other means to
reasonably accomplish the desired end.
Means employed are
constitutionally infirm
 The Ordinance disallows the operation of sauna parlors, massage
parlors, karaoke bars, beerhouses, night clubs, day clubs, super clubs,
discotheques, cabarets, dance halls, motels and inns in the Ermita-Malate
area. In Section 3 thereof, owners and/or operators of the enumerated
establishments are given three (3) months from the date of approval of
the Ordinance within which to wind up business operations or to transfer to
any place outside the Ermita-Malate area or convert said businesses to other
kinds of business allowable within the area. Further, it states in Section 4 that
in cases of subsequent violations of the provisions of the Ordinance, the
premises of the erring establishment shall be closed and padlocked
permanently.
It is readily apparent that the means employed by the Ordinance for the
achievement of its purposes, the governmental interference itself, infringes
on the constitutional guarantees of a persons fundamental right to liberty and
property.
Liberty as guaranteed by the Constitution was defined by Justice
Malcolm to include the right to exist and the right to be free from arbitrary
restraint or servitude. The term cannot be dwarfed into mere freedom from
physical restraint of the person of the citizen, but is deemed to embrace the
right of man to enjoy the facilities with which he has been endowed by his
Creator, subject only to such restraint as are necessary for the common
welfare.[68] In accordance with this case, the rights of the citizen to be free to
use his faculties in all lawful ways; to live and work where he will; to earn his
livelihood by any lawful calling; and to pursue any avocation are all deemed
embraced in the concept of liberty.[69]
The U.S. Supreme Court in the case of Roth v. Board of
Regents,[70] sought to clarify the meaning of liberty. It said:
While the Court has not attempted to define with exactness the liberty. . .
guaranteed [by the Fifth and Fourteenth Amendments], the term denotes not
merely freedom from bodily restraint but also the right of the individual to
contract, to engage in any of the common occupations of life, to acquire
useful knowledge, to marry, establish a home and bring up children, to
worship God according to the dictates of his own conscience, and generally
to enjoy those privileges long recognizedas essential to the orderly pursuit of
happiness by free men. In a Constitution for a free people, there can be no
doubt that the meaning of liberty must be broad indeed.
In another case, it also confirmed that liberty protected by the due
process clause includes personal decisions relating to marriage, procreation,
contraception, family relationships, child rearing, and education. In explaining
the respect the Constitution demands for the autonomy of the person in
making these choices, the U.S. Supreme Court explained:
These matters, involving the most intimate and personal choices a person
may make in a lifetime, choices central to personal dignity and autonomy, are
central to the liberty protected by the Fourteenth Amendment. At the heart of
liberty is the right to define ones own concept of existence, of meaning, of
universe, and of the mystery of human life. Beliefs about these matters could
not define the attributes of personhood where they formed under compulsion
of the State.[71]
Persons desirous to own, operate and patronize the enumerated
establishments under Section 1 of the Ordinance may seek autonomy for
these purposes.
Motel patrons who are single and unmarried may invoke this right to
autonomy to consummate their bonds in intimate sexual conduct within the
motels premisesbe it stressed that their consensual sexual behavior does not
contravene any fundamental state policy as contained in the
Constitution.[72] Adults have a right to choose to forge such relationships with
others in the confines of their own private lives and still retain their dignity as
free persons. The liberty protected by the Constitution allows persons the
right to make this choice.[73] Their right to liberty under the due process
clause gives them the full right to engage in their conduct without intervention
of the government, as long as they do not run afoul of the law. Liberty should
be the rule and restraint the exception.
Liberty in the constitutional sense not only means freedom from unlawful
government restraint; it must include privacy as well, if it is to be a repository
of freedom. The right to be let alone is the beginning of all freedomit is the
most comprehensive of rights and the right most valued by civilized men. [74]
The concept of liberty compels respect for the individual whose claim to
privacy and interference demands respect. As the case of Morfe v.
Mutuc,[75] borrowing the words of Laski, so very aptly stated:
Man is one among many, obstinately refusing reduction to unity. His
separateness, his isolation, are indefeasible; indeed, they are so
fundamental that they are the basis on which his civic obligations are built.
He cannot abandon the consequences of his isolation, which are, broadly
speaking, that his experience is private, and the will built out of that
experience personal to himself. If he surrenders his will to others, he
surrenders himself. If his will is set by the will of others, he ceases to be a
master of himself. I cannot believe that a man no longer a master of himself
is in any real sense free.
Indeed, the right to privacy as a constitutional right was recognized
in Morfe, the invasion of which should be justified by a compelling state
interest. Morfe accorded recognition to the right to privacy independently of
its identification with liberty; in itself it is fully deserving of constitutional
protection. Governmental powers should stop short of certain intrusions into
the personal life of the citizen.[76]
There is a great temptation to have an extended discussion on these
civil liberties but the Court chooses to exercise restraint and restrict itself to
the issues presented when it should. The previous pronouncements of the
Court are not to be interpreted as a license for adults to engage in criminal
conduct. The reprehensibility of such conduct is not diminished. The Court
only reaffirms and guarantees their right to make this choice. Should they be
prosecuted for their illegal conduct, they should suffer the consequences of
the choice they have made. That, ultimately, is their choice.
Modality employed is
unlawful taking
In addition, the Ordinance is unreasonable and oppressive as it
substantially divests the respondent of the beneficial use of its
property.[77] The Ordinance in Section 1 thereof forbids the running of the
enumerated businesses in the Ermita-Malate area and in Section 3 instructs
its owners/operators to wind up business operations or to transfer outside the
area or convert said businesses into allowed businesses. An ordinance
which permanently restricts the use of property that it can not be used for any
reasonable purpose goes beyond regulation and must be recognized as a
taking of the property without just compensation.[78] It is intrusive and violative
of the private property rights of individuals.
The Constitution expressly provides in Article III, Section 9, that private
property shall not be taken for public use without just compensation. The
provision is the most important protection of property rights in the
Constitution. This is a restriction on the general power of the government to
take property. The constitutional provision is about ensuring that the
government does not confiscate the property of some to give it to others. In
part too, it is about loss spreading. If the government takes away a persons
property to benefit society, then society should pay. The principal purpose of
the guarantee is to bar the Government from forcing some people alone to
bear public burdens which, in all fairness and justice, should be borne by the
public as a whole.[79]
There are two different types of taking that can be identified. A
possessory taking occurs when the government confiscates or physically
occupies property. A regulatory taking occurs when the governments
regulation leaves no reasonable economically viable use of the property. [80]
In the landmark case of Pennsylvania Coal v. Mahon,[81] it was held that
a taking also could be found if government regulation of the use of property
went too far. When regulation reaches a certain magnitude, in most if not in
all cases there must be an exercise of eminent domain and compensation to
support the act. While property may be regulated to a certain extent, if
regulation goes too far it will be recognized as a taking. [82]
No formula or rule can be devised to answer the questions of what is too
far and when regulation becomes a taking. In Mahon, Justice Holmes
recognized that it was a question of degree and therefore cannot be
disposed of by general propositions. On many other occasions as well, the
U.S. Supreme Court has said that the issue of when regulation constitutes a
taking is a matter of considering the facts in each case. The Court asks
whether justice and fairness require that the economic loss caused by public
action must be compensated by the government and thus borne by the public
as a whole, or whether the loss should remain concentrated on those few
persons subject to the public action.[83]
What is crucial in judicial consideration of regulatory takings is that
government regulation is a taking if it leaves no reasonable economically
viable use of property in a manner that interferes with reasonable
expectations for use.[84] A regulation that permanently denies all economically
beneficial or productive use of land is, from the owners point of view,
equivalent to a taking unless principles of nuisance or property law that
existed when the owner acquired the land make the use
prohibitable.[85] When the owner of real property has been called upon to
sacrifice all economically beneficial uses in the name of the common good,
that is, to leave his property economically idle, he has suffered a taking.[86]
A regulation which denies all economically beneficial or productive use
of land will require compensation under the takings clause. Where a
regulation places limitations on land that fall short of eliminating all
economically beneficial use, a taking nonetheless may have occurred,
depending on a complex of factors including the regulations economic effect
on the landowner, the extent to which the regulation interferes with
reasonable investment-backed expectations and the character of
government action. These inquiries are informed by the purpose of the
takings clause which is to prevent the government from forcing some people
alone to bear public burdens which, in all fairness and justice, should be
borne by the public as a whole.[87]
A restriction on use of property may also constitute a taking if not
reasonably necessary to the effectuation of a substantial public purpose or if
it has an unduly harsh impact on the distinct investment-backed expectations
of the owner.[88]
The Ordinance gives the owners and operators of the prohibited
establishments three (3) months from its approval within which to wind up
business operations or to transfer to any place outside of the Ermita-Malate
area or convert said businesses to other kinds of business allowable within
the area. The directive to wind up business operations amounts to a closure
of the establishment, a permanent deprivation of property, and is practically
confiscatory. Unless the owner converts his establishment to accommodate
an allowed business, the structure which housed the previous business will
be left empty and gathering dust. Suppose he transfers it to another area, he
will likewise leave the entire establishment idle. Consideration must be given
to the substantial amount of money invested to build the edifices which the
owner reasonably expects to be returned within a period of time. It is
apparent that the Ordinance leaves no reasonable economically viable use of
property in a manner that interferes with reasonable expectations for use.
The second and third options to transfer to any place outside of the
Ermita-Malate area or to convert into allowed businessesare confiscatory as
well. The penalty of permanent closure in cases of subsequent violations
found in Section 4 of the Ordinanceis also equivalent to a taking of private
property.
The second option instructs the owners to abandon their property and
build another one outside the Ermita-Malate area. In every sense, it qualifies
as a taking without just compensation with an additional burden imposed on
the owner to build another establishment solely from his coffers. The
proffered solution does not put an end to the problem, it merely relocates it.
Not only is this impractical, it is unreasonable, onerous and oppressive. The
conversion into allowed enterprises is just as ridiculous. How may the
respondent convert a motel into a restaurant or a coffee shop, art gallery or
music lounge without essentially destroying its property? This is a taking of
private property without due process of law, nay, even without compensation.
The penalty of closure likewise constitutes unlawful taking that should
be compensated by the government. The burden on the owner to convert or
transfer his business, otherwise it will be closed permanently after a
subsequent violation should be borne by the public as this end benefits them
as a whole.
Petitioners cannot take refuge in classifying the measure as a zoning
ordinance. A zoning ordinance, although a valid exercise of police power,
which limits a wholesome property to a use which can not reasonably be
made of it constitutes the taking of such property without just compensation.
Private property which is not noxious nor intended for noxious purposes may
not, by zoning, be destroyed without compensation. Such principle finds no
support in the principles of justice as we know them. The police powers of
local government units which have always received broad and liberal
interpretation cannot be stretched to cover this particular taking.
Distinction should be made between destruction from necessity and
eminent domain. It needs restating that the property taken in the exercise of
police power is destroyed because it is noxious or intended for a noxious
purpose while the property taken under the power of eminent domain is
intended for a public use or purpose and is therefore wholesome. [89] If it be of
public benefit that a wholesome property remain unused or relegated to a
particular purpose, then certainly the public should bear the cost of
reasonable compensation for the condemnation of private property for public
use.[90]
Further, the Ordinance fails to set up any standard to guide or limit the
petitioners actions. It in no way controls or guides the discretion vested in
them. It provides no definition of the establishments covered by it and it fails
to set forth the conditions when the establishments come within its ambit of
prohibition. The Ordinance confers upon the mayor arbitrary and unrestricted
power to close down establishments. Ordinances such as this, which make
possible abuses in its execution, depending upon no conditions or
qualifications whatsoever other than the unregulated arbitrary will of the city
authorities as the touchstone by which its validity is to be tested, are
unreasonable and invalid. The Ordinance should have established a rule by
which its impartial enforcement could be secured.[91]
Ordinances placing restrictions upon the lawful use of property must, in
order to be valid and constitutional, specify the rules and conditions to be
observed and conduct to avoid; and must not admit of the exercise, or of an
opportunity for the exercise, of unbridled discretion by the law enforcers in
carrying out its provisions.[92]
Thus, in Coates v. City of Cincinnati,[93] as cited in People v.
Nazario,[94] the U.S. Supreme Court struck down an ordinance that had made
it illegal for three or more persons to assemble on any sidewalk and there
conduct themselves in a manner annoying to persons passing by. The
ordinance was nullified as it imposed no standard at all because one may
never know in advance what annoys some people but does not annoy
others.
Similarly, the Ordinance does not specify the standards to ascertain
which establishments tend to disturb the community, annoy the inhabitants,
and adversely affect the social and moral welfare of the community. The
cited case supports the nullification of the Ordinance for lack of
comprehensible standards to guide the law enforcers in carrying out its
provisions.
Petitioners cannot therefore order the closure of the enumerated
establishments without infringing the due process clause. These lawful
establishments may be regulated, but not prevented from carrying on their
business. This is a sweeping exercise of police power that is a result of a
lack of imagination on the part of the City Council and which amounts to an
interference into personal and private rights which the Court will not
countenance. In this regard, we take a resolute stand to uphold the
constitutional guarantee of the right to liberty and property.
Worthy of note is an example derived from the U.S. of a reasonable
regulation which is a far cry from the ill-considered Ordinance enacted by the
City Council.
 In FW/PBS, INC. v. Dallas,[95] the city of Dallas adopted a
comprehensive ordinance regulating sexually oriented businesses, which are
defined to include adult arcades, bookstores, video stores, cabarets, motels,
and theaters as well as escort agencies, nude model studio and sexual
encounter centers. Among other things, the ordinance required that such
businesses be licensed. A group of motel owners were among the three
groups of businesses that filed separate suits challenging the ordinance. The
motel owners asserted that the city violated the due process clause by failing
to produce adequate support for its supposition that renting room for fewer
than ten (10) hours resulted in increased crime and other secondary effects.
They likewise argued than the ten (10)-hour limitation on the rental of motel
rooms placed an unconstitutional burden on the right to freedom of
association. Anent the first contention, the U.S. Supreme Court held that the
reasonableness of the legislative judgment combined with a study which the
city considered, was adequate to support the citys determination that motels
permitting room rentals for fewer than ten (10 ) hours should be included
within the licensing scheme. As regards the second point, the Court held that
limiting motel room rentals to ten (10) hours will have no discernible effect on
personal bonds as those bonds that are formed from the use of a motel room
for fewer than ten (10) hours are not those that have played a critical role in
the culture and traditions of the nation by cultivating and transmitting shared
ideals and beliefs.
The ordinance challenged in the above-cited case merely regulated the
targeted businesses. It imposed reasonable restrictions; hence, its validity
was upheld.
The case of Ermita Malate Hotel and Motel Operators Association, Inc.
v. City Mayor of Manila,[96] it needs pointing out, is also different from this
case in that what was involved therein was a measure which regulated the
mode in which motels may conduct business in order to put an end to
practices which could encourage vice and immorality. Necessarily, there was
no valid objection on due process or equal protection grounds as the
ordinance did not prohibit motels. The Ordinance in this case however is not
a regulatory measure but is an exercise of an assumed power to prohibit.[97]
The foregoing premises show that the Ordinance is an unwarranted and
unlawful curtailment of property and personal rights of citizens. For being
unreasonable and an undue restraint of trade, it cannot, even under the
guise of exercising police power, be upheld as valid.
B. The Ordinance violates Equal
Protection Clause
Equal protection requires that all persons or things similarly situated
should be treated alike, both as to rights conferred and responsibilities
imposed. Similar subjects, in other words, should not be treated differently,
so as to give undue favor to some and unjustly discriminate against
others.[98] The guarantee means that no person or class of persons shall be
denied the same protection of laws which is enjoyed by other persons or
other classes in like circumstances.[99] The equal protection of the laws is a
pledge of the protection of equal laws.[100] It limits governmental
discrimination. The equal protection clause extends to artificial persons but
only insofar as their property is concerned.[101]
The Court has explained the scope of the equal protection clause in this
wise:
What does it signify? To quote from J.M. Tuason & Co. v. Land Tenure
Administration: The ideal situation is for the laws benefits to be available to
all, that none be placed outside the sphere of its coverage. Only thus could
chance and favor be excluded and the affairs of men governed by that
serene and impartial uniformity, which is of the very essence of the idea of
law. There is recognition, however, in the opinion that what in fact exists
cannot approximate the ideal. Nor is the law susceptible to the reproach that
it does not take into account the realities of the situation. The constitutional
guarantee then is not to be given a meaning that disregards what is, what
does in fact exist. To assure that the general welfare be promoted, which is
the end of law, a regulatory measure may cut into the rights to liberty and
property. Those adversely affected may under such circumstances invoke
the equal protection clause only if they can show that the governmental act
assailed, far from being inspired by the attainment of the common weal was
prompted by the spirit of hostility, or at the very least, discrimination that finds
no support in reason. Classification is thus not ruled out, it being sufficient to
quote from the Tuason decision anew that the laws operate equally and
uniformly on all persons under similar circumstances or that all persons must
be treated in the same manner, the conditions not being different, both in the
privileges conferred and the liabilities imposed. Favoritism and undue
preference cannot be allowed. For the principle is that equal protection and
security shall be given to every person under circumstances which, if not
identical, are analogous. If law be looked upon in terms of burden or charges,
those that fall within a class should be treated in the same fashion, whatever
restrictions cast on some in the group equally binding on the rest.[102]
Legislative bodies are allowed to classify the subjects of legislation. If
the classification is reasonable, the law may operate only on some and not
all of the people without violating the equal protection clause. [103] The
classification must, as an indispensable requisite, not be arbitrary. To be
valid, it must conform to the following requirements:
1) It must be based on substantial distinctions.
2) It must be germane to the purposes of the law.
3) It must not be limited to existing conditions only.
 4) It must apply equally to all members of the class.[104]
In the Courts view, there are no substantial distinctions between motels,
inns, pension houses, hotels, lodging houses or other similar establishments.
By definition, all are commercial establishments providing lodging and
usually meals and other services for the public. No reason exists for
prohibiting motels and inns but not pension houses, hotels, lodging houses or
other similar establishments. The classification in the instant case is invalid
as similar subjects are not similarly treated, both as to rights conferred and
obligations imposed. It is arbitrary as it does not rest on substantial
distinctions bearing a just and fair relation to the purpose of the Ordinance.
The Court likewise cannot see the logic for prohibiting the business and
operation of motels in the Ermita-Malate area but not outside of this area. A
noxious establishment does not become any less noxious if located outside
the area.
The standard where women are used as tools for entertainment is also
discriminatory as prostitutionone of the hinted ills the Ordinance aims to
banishis not a profession exclusive to women. Both men and women have an
equal propensity to engage in prostitution. It is not any less grave a sin when
men engage in it. And why would the assumption that there is an ongoing
immoral activity apply only when women are employed and be inapposite
when men are in harness? This discrimination based on gender violates
equal protection as it is not substantially related to important government
objectives.[105] Thus, the discrimination is invalid.
Failing the test of constitutionality, the Ordinance likewise failed to pass
the test of consistency with prevailing laws.
C. The Ordinance is repugnant
to general laws; it is ultra vires
The Ordinance is in contravention of the Code as the latter merely
empowers local government units to regulate, and not prohibit, the
establishments enumerated in Section 1 thereof.
The power of the City Council to regulate by ordinances the
establishment, operation, and maintenance of motels, hotels and other
similar establishments is found in Section 458 (a) 4 (iv), which provides that:
Section 458. Powers, Duties, Functions and Compensation. (a) The
sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section 16 of this Code and
in the proper exercise of the corporate powers of the city as provided for
under Section 22 of this Code, and shall:
...
(4) Regulate activities relative to the use of land, buildings and structures
within the city in order to promote the general welfare and for said purpose
shall:
...
(iv) Regulate the establishment, operation and maintenance of cafes,
restaurants, beerhouses, hotels, motels, inns, pension houses, lodging
houses, and other similar establishments, including tourist guides and
transports . . . .
While its power to regulate the establishment, operation and
maintenance of any entertainment or amusement facilities, and to prohibit
certain forms of amusement or entertainment is provided under Section 458
(a) 4 (vii) of the Code, which reads as follows:
Section 458. Powers, Duties, Functions and Compensation. (a) The
sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section 16 of this Code and
in the proper exercise of the corporate powers of the city as provided for
under Section 22 of this Code, and shall:
...
(4) Regulate activities relative to the use of land, buildings and structures
within the city in order to promote the general welfare and for said purpose
shall:
...
(vii) Regulate the establishment, operation, and maintenance of any
entertainment or amusement facilities, including theatrical performances,
circuses, billiard pools, public dancing schools, public dance halls, sauna
baths, massage parlors, and other places for entertainment or amusement;
regulate such other events or activities for amusement or entertainment,
particularly those which tend to disturb the community or annoy the
inhabitants, or require the suspension or suppression of the same; or,
prohibit certain forms of amusement or entertainment in order to protect the
social and moral welfare of the community.
 Clearly, with respect to cafes, restaurants, beerhouses, hotels, motels,
inns, pension houses, lodging houses, and other similar establishments, the
only power of the City Council to legislate relative thereto is to regulate them
to promote the general welfare. The Code still withholds from cities the power
to suppress and prohibit altogether the establishment, operation and
maintenance of such establishments. It is well to recall the rulings of the
Court in Kwong Sing v. City of Manila[106] that:
The word regulate, as used in subsection (l), section 2444 of the
Administrative Code, means and includes the power to control, to govern,
and to restrain; but regulate should not be construed as synonymous with
suppress or prohibit. Consequently, under the power to regulate laundries,
the municipal authorities could make proper police regulations as to the
mode in which the employment or business shall be exercised.[107]
And in People v. Esguerra,[108] wherein the Court nullified an ordinance
of the Municipality of Tacloban which prohibited the selling, giving and
dispensing of liquor ratiocinating that the municipality is empowered only to
regulate the same and not prohibit. The Court therein declared that:
(A)s a general rule when a municipal corporation is specifically given
authority or power to regulate or to license and regulate the liquor traffic,
power to prohibit is impliedly withheld.[109]
These doctrines still hold contrary to petitioners assertion [110] that they
were modified by the Code vesting upon City Councils prohibitory powers.
Similarly, the City Council exercises regulatory powers over public
dancing schools, public dance halls, sauna baths, massage parlors, and
other places for entertainment or amusement as found in the first clause of
Section 458 (a) 4 (vii). Its powers to regulate, suppress and suspend such
other events or activities for amusement or entertainment, particularly those
which tend to disturb the community or annoy the inhabitants and to prohibit
certain forms of amusement or entertainment in order to protect the social
and moral welfare of the community are stated in the second and third
clauses, respectively of the same Section. The several powers of the City
Council as provided in Section 458 (a) 4 (vii) of the Code, it is pertinent to
emphasize, are separated by semi-colons (;), the use of which indicates that
the clauses in which these powers are set forth are independent of each
other albeit closely related to justify being put together in a single
enumeration or paragraph.[111] These powers, therefore, should not be
confused, commingled or consolidated as to create a conglomerated and
unified power of regulation, suppression and prohibition.[112]
The Congress unequivocably specified the establishments and forms of
amusement or entertainment subject to regulation among which are
beerhouses, hotels, motels, inns, pension houses, lodging houses, and other
similar establishments (Section 458 (a) 4 (iv)), public dancing schools, public
dance halls, sauna baths, massage parlors, and other places for
entertainment or amusement (Section 458 (a) 4 (vii)). This enumeration
therefore cannot be included as among other events or activities for
amusement or entertainment, particularly those which tend to disturb the
community or annoy the inhabitants or certain forms of amusement or
entertainment which the City Council may suspend, suppress or prohibit.
The rule is that the City Council has only such powers as are expressly
granted to it and those which are necessarily implied or incidental to the
exercise thereof. By reason of its limited powers and the nature thereof, said
powers are to be construed strictissimi jurisand any doubt or ambiguity
arising out of the terms used in granting said powers must be construed
against the City Council.[113] Moreover, it is a general rule in statutory
construction that the express mention of one person, thing, or consequence
is tantamount to an express exclusion of all others. Expressio unius est
exclusio alterium. This maxim is based upon the rules of logic and the natural
workings of human mind. It is particularly applicable in the construction of
such statutes as create new rights or remedies, impose penalties or
punishments, or otherwise come under the rule of strict construction.[114]
The argument that the City Council is empowered to enact
the Ordinance by virtue of the general welfare clause of the Code and of Art.
3, Sec. 18 (kk) of the Revised Charter of Manila is likewise without merit. On
the first point, the ruling of the Court in People v. Esguerra,[115] is instructive.
It held that:
The powers conferred upon a municipal council in the general welfare
clause, or section 2238 of the Revised Administrative Code, refers to matters
not covered by the other provisions of the same Code, and therefore it can
not be applied to intoxicating liquors, for the power to regulate the selling,
giving away and dispensing thereof is granted specifically by section 2242 (g)
to municipal councils. To hold that, under the general power granted by
section 2238, a municipal council may enact the ordinance in question,
notwithstanding the provision of section 2242 (g), would be to make the latter
superfluous and nugatory, because the power to prohibit, includes the power
to regulate, the selling, giving away and dispensing of intoxicating liquors.
On the second point, it suffices to say that the Code being a later
expression of the legislative will must necessarily prevail and override the
earlier law, the Revised Charter of Manila. Legis posteriores priores
contrarias abrogant, or later statute repeals prior ones which are repugnant
thereto. As between two laws on the same subject matter, which are
irreconcilably inconsistent, that which is passed later prevails, since it is the
latest expression of legislative will.[116] If there is an inconsistency or
repugnance between two statutes, both relating to the same subject matter,
which cannot be removed by any fair and reasonable method of
interpretation, it is the latest expression of the legislative will which must
prevail and override the earlier.[117]
Implied repeals are those which take place when a subsequently
enacted law contains provisions contrary to those of an existing law but no
provisions expressly repealing them. Such repeals have been divided into
two general classes: those which occur where an act is so inconsistent or
irreconcilable with an existing prior act that only one of the two can remain in
force and those which occur when an act covers the whole subject of an
earlier act and is intended to be a substitute therefor. The validity of such a
repeal is sustained on the ground that the latest expression of the legislative
will should prevail.[118]
In addition, Section 534(f) of the Code states that All general and
special laws, acts, city charters, decrees, executive orders, proclamations
and administrative regulations, or part or parts thereof which are inconsistent
with any of the provisions of this Code are hereby repealed or modified
accordingly. Thus, submitting to petitioners interpretation that the Revised
Charter of Manila empowers the City Council to prohibit motels, that portion
of the Charter stating such must be considered repealed by the Code as it is
at variance with the latters provisions granting the City Council mere
regulatory powers.
It is well to point out that petitioners also cannot seek cover under the
general welfare clause authorizing the abatement of nuisances without
judicial proceedings. That tenet applies to a nuisance per se, or one which
affects the immediate safety of persons and property and may be summarily
abated under the undefined law of necessity. It can not be said that motels
are injurious to the rights of property, health or comfort of the community. It is
a legitimate business. If it be a nuisance per accidens it may be so proven in
a hearing conducted for that purpose. A motel is not per se a nuisance
warranting its summary abatement without judicial intervention.[119]
Notably, the City Council was conferred powers to prevent and prohibit
certain activities and establishments in another section of the Code which is
reproduced as follows:
Section 458. Powers, Duties, Functions and Compensation. (a) The
sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section 16 of this Code and
in the proper exercise of the corporate powers of the city as provided for
under Section 22 of this Code, and shall:
(1) Approve ordinances and pass resolutions necessary for an efficient and
effective city government, and in this connection, shall:
...
(v) Enact ordinances intended to prevent, suppress and impose appropriate
penalties for habitual drunkenness in public places, vagrancy, mendicancy,
prostitution, establishment and maintenance of houses of ill repute, gambling
and other prohibited games of chance, fraudulent devices and ways to obtain
money or property, drug addiction, maintenance of drug dens, drug pushing,
juvenile delinquency, the printing, distribution or exhibition of obscene or
pornographic materials or publications, and such other activities inimical to
the welfare and morals of the inhabitants of the city;
...
If it were the intention of Congress to confer upon the City Council the
power to prohibit the establishments enumerated in Section 1 of
the Ordinance, it would have so declared in uncertain terms by adding them
to the list of the matters it may prohibit under the above-quoted Section.
The Ordinance now vainly attempts to lump these establishments with
houses of ill-repute and expand the City Councils powers in the second and
third clauses of Section 458 (a) 4 (vii) of the Code in an effort to overreach its
prohibitory powers. It is evident that these establishments may only be
regulated in their establishment, operation and maintenance.
It is important to distinguish the punishable activities from the
establishments themselves. That these establishments are recognized
legitimate enterprises can be gleaned from another Section of the Code.
Section 131 under the Title on Local Government Taxation expressly
mentioned proprietors or operators of massage clinics, sauna, Turkish and
Swedish baths, hotels, motels and lodging houses as among the contractors
defined in paragraph (h) thereof. The same Section also defined amusement
as a pleasurable diversion and entertainment, synonymous to relaxation,
avocation, pastime or fun; and amusement places to include theaters,
cinemas, concert halls, circuses and other places of amusement where one
seeks admission to entertain oneself by seeing or viewing the show or
performances. Thus, it can be inferred that the Code considers these
establishments as legitimate enterprises and activities. It is well to recall the
maxim reddendo singula singulis which means that words in different parts of
a statute must be referred to their appropriate connection, giving to each in
its place, its proper force and effect, and, if possible, rendering none of them
useless or superfluous, even if strict grammatical construction demands
otherwise. Likewise, where words under consideration appear in different
sections or are widely dispersed throughout an act the same principle
applies.[120]
Not only does the Ordinance contravene the Code, it likewise runs
counter to the provisions of P.D. 499. As correctly argued by MTDC, the
statute had already converted the residential Ermita-Malate area into a
commercial area. The decree allowed the establishment and operation of all statutory or constitutional authority to stand on. Local legislative bodies, in
kinds of commercial establishments except warehouse or open storage this case, the City Council, cannot prohibit the operation of the enumerated
depot, dump or yard, motor repair shop, gasoline service station, light establishments under Section 1 thereof or order their transfer or conversion
industry with any machinery or funeral establishment. The rule is that for an without infringing the constitutional guarantees of due process and equal
ordinance to be valid and to have force and effect, it must not only be within protection of laws not even under the guise of police power.
the powers of the council to enact but the same must not be in conflict with or
repugnant to the general law.[121] As succinctly illustrated in Solicitor General WHEREFORE, the Petition is hereby DENIED and the decision of the
v. Metropolitan Manila Authority:[122] Regional Trial Court declaring the Ordinance void is AFFIRMED. Costs
against petitioners.
The requirement that the enactment must not violate existing law explains SO ORDERED.
itself. Local political subdivisions are able to legislate only by virtue of a valid
delegation of legislative power from the national legislature (except only that Republic of the Philippines
the power to create their own sources of revenue and to levy taxes is Supreme Court
conferred by the Constitution itself). They are mere agents vested with what Manila
is called the power of subordinate legislation. As delegates of the Congress,
the local government units cannot contravene but must obey at all times the THIRD DIVISION
will of their principal. In the case before us, the enactment in question, which
are merely local in origin cannot prevail against the decree, which has the
force and effect of a statute.[123] PLANTERS PRODUCTS, INC., G.R. No. 166006
Petitioner,
Present:
Petitioners contend that the Ordinance enjoys the presumption of
YNARES-SANTIAGO, J.,
validity. While this may be the rule, it has already been held that although the
Ch
presumption is always in favor of the validity or reasonableness of the airperson,
ordinance, such presumption must nevertheless be set aside when the
AUSTRIA-MARTINEZ,
invalidity or unreasonableness appears on the face of the ordinance itself or
- versus - CHICO-NAZARIO,
is established by proper evidence. The exercise of police power by the local
NACHURA, and
government is valid unless it contravenes the fundamental law of the land, or
REYES, JJ.
an act of the legislature, or unless it is against public policy or is
unreasonable, oppressive, partial, discriminating or in derogation of a
common right.[124]
Promulgated:
FERTIPHIL CORPORATION,
Conclusion Respondent. March 14, 2008

All considered, the Ordinance invades fundamental personal and x--------------------------------------------------x

property rights and impairs personal privileges. It is constitutionally infirm.
The Ordinance contravenes statutes; it is discriminatory and unreasonable in DECISION
its operation; it is not sufficiently detailed and explicit that abuses may attend
the enforcement of its sanctions. And not to be forgotten, the City Council
under the Code had no power to enact the Ordinance and is therefore ultra REYES, R.T., J.:
vires, null and void.
Concededly, the challenged Ordinance was enacted with the best of THE Regional Trial Courts (RTC) have the authority and jurisdiction to
motives and shares the concern of the public for the cleansing of the Ermita- consider the constitutionality of statutes, executive orders, presidential
Malate area of its social sins. Police power legislation of such character decrees and other issuances. The Constitution vests that power not only in
deserves the full endorsement of the judiciary we reiterate our support for it. the Supreme Court but in all Regional Trial Courts.
But inspite of its virtuous aims, the enactment of the Ordinance has no
 The principle is relevant in this petition for review on certiorari of the
Decision[1] of the Court of Appeals (CA) affirming with modification that of
the RTC in Makati City,[2] finding petitioner Planters Products, Inc. (PPI) liable
to private respondent Fertiphil Corporation (Fertiphil) for the levies it paid
under Letter of Instruction (LOI) No. 1465.
The Facts
Petitioner PPI and private respondent Fertiphil are private
corporations incorporated under Philippine laws.[3] They are both engaged in
the importation and distribution of fertilizers, pesticides and agricultural
chemicals.
On June 3, 1985, then President Ferdinand Marcos, exercising his
legislative powers, issued LOI No. 1465 which provided, among others, for
the imposition of a capital recovery component (CRC) on the domestic sale
of all grades of fertilizers in the Philippines.[4] The LOI provides:
3. The Administrator of the Fertilizer Pesticide Authority to
include in its fertilizer pricing formula a capital
contribution component of not less than P10 per
bag. This capital contribution shall be collected until
adequate capital is raised to make PPI viable. Such
capital contribution shall be applied by FPA to all
domestic sales of fertilizers in
the Philippines.[5] (Underscoring supplied)
Pursuant to the LOI, Fertiphil paid P10 for every bag of fertilizer it
sold in the domestic market to the Fertilizer and Pesticide Authority
(FPA). FPA then remitted the amount collected to the Far East Bank and
Trust Company, the depositary bank of PPI. Fertiphil paid P6,689,144 to FPA
from July 8, 1985 to January 24, 1986.[6]
After the 1986 Edsa Revolution, FPA voluntarily stopped the
imposition of the P10 levy. With the return of democracy, Fertiphil demanded
from PPI a refund of the amounts it paid under LOI No. 1465, but PPI refused
to accede to the demand.[7]
Fertiphil filed a complaint for collection and damages[8] against FPA
and PPI with the RTC in Makati. It questioned the constitutionality of LOI No.
1465 for being unjust, unreasonable, oppressive, invalid and an unlawful
imposition that amounted to a denial of due process of law. [9] Fertiphil alleged
that the LOI solely favored PPI, a privately owned corporation, which used
the proceeds to maintain its monopoly of the fertilizer industry.
In its Answer,[10] FPA, through the Solicitor General, countered that
the issuance of LOI No. 1465 was a valid exercise of the police power of the
State in ensuring the stability of the fertilizer industry in the country. It also
averred that Fertiphil did not sustain any damage from the LOI because the
burden imposed by the levy fell on the ultimate consumer, not the seller.
RTC Disposition
On November 20, 1991, the RTC rendered judgment in favor of Fertiphil,
disposing as follows:
WHEREFORE, in view of the foregoing, the Court
hereby renders judgment in favor of the plaintiff and against
the defendant Planters Product, Inc., ordering the latter to
pay the former:
1) the sum of P6,698,144.00 with interest at
12% from the time of judicial demand;
2) the sum of P100,000 as attorneys fees;
3) the cost of suit.
SO ORDERED.[11]
Ruling that the imposition of the P10 CRC was an exercise of the States
inherent power of taxation, the RTC invalidated the levy for violating the
basic principle that taxes can only be levied for public purpose, viz.:
It is apparent that the imposition of P10 per fertilizer
bag sold in the country by LOI 1465 is purportedly in the
exercise of the power of taxation. It is a settled principle that
the power of taxation by the state is plenary. Comprehensive
and supreme, the principal check upon its abuse resting in
the responsibility of the members of the legislature to their
constituents. However, there are two kinds of limitations on
the power of taxation: the inherent limitations and the
constitutional limitations.
One of the inherent limitations is that a tax may be levied
only for public purposes:
The power to tax can be resorted to only for
a constitutionally valid public purpose. By
the same token, taxes may not be levied for
 purely private purposes, for building up of
private fortunes, or for the redress of private
wrongs. They cannot be levied for the
improvement of private property, or for the
benefit, and promotion of private
enterprises, except where the aid is incident
to the public benefit. It is well-settled
principle of constitutional law that no general
tax can be levied except for the purpose of
raising money which is to be expended for
public use. Funds cannot be exacted under
the guise of taxation to promote a purpose
that is not of public interest. Without such
limitation, the power to tax could be
exercised or employed as an authority to
destroy the economy of the people. A tax,
however, is not held void on the ground of
want of public interest unless the want of
such interest is clear. (71 Am. Jur. pp. 371-
372)
In the case at bar, the plaintiff paid the amount
of P6,698,144.00 to the Fertilizer and Pesticide Authority
pursuant to the P10 per bag of fertilizer sold imposition under
LOI 1465 which, in turn, remitted the amount to the
defendant Planters Products, Inc. thru the latters depository
bank, Far East Bank and Trust Co. Thus, by virtue of LOI
1465 the plaintiff, Fertiphil Corporation, which is a private
domestic corporation, became poorer by the amount
of P6,698,144.00 and the defendant, Planters Product, Inc.,
another private domestic corporation, became richer by the
amount of P6,698,144.00.
Tested by the standards of constitutionality as set forth in the
afore-quoted jurisprudence, it is quite evident that LOI 1465
insofar as it imposes the amount of P10 per fertilizer bag
sold in the country and orders that the said amount should
go to the defendant Planters Product, Inc. is unlawful
because it violates the mandate that a tax can be levied only
for a public purpose and not to benefit, aid and promote a
private enterprise such as Planters Product, Inc.[12]
PPI moved for reconsideration but its motion was denied. [13] PPI then filed a
notice of appeal with the RTC but it failed to pay the requisite appeal docket
fee. In a separate but related proceeding, this Court[14] allowed the appeal of
PPI and remanded the case to the CA for proper disposition.
CA Decision
On November 28, 2003, the CA handed down its decision affirming with
modification that of the RTC, with the following fallo:
IN VIEW OF ALL THE FOREGOING, the decision
appealed from is hereby AFFIRMED, subject to
the MODIFICATION that the award of attorneys fees is
hereby DELETED.[15]
In affirming the RTC decision, the CA ruled that the lis mota of the complaint
for collection was the constitutionality of LOI No. 1465, thus:
The question then is whether it was proper for the trial court
to exercise its power to judicially determine the
constitutionality of the subject statute in the instant case.
As a rule, where the controversy can be settled on other
grounds, the courts will not resolve the constitutionality of a
law (Lim v. Pacquing, 240 SCRA 649 [1995]). The policy of
the courts is to avoid ruling on constitutional questions and to
presume that the acts of political departments are valid,
absent a clear and unmistakable showing to the contrary.
However, the courts are not precluded from exercising such
power when the following requisites are obtaining in a
controversy before it: First, there must be before the court an
actual case calling for the exercise of judicial
review. Second, the question must be ripe for
adjudication. Third, the person challenging the validity of the
act must have standing to challenge. Fourth, the question of
constitutionality must have been raised at the earliest
opportunity; and lastly, the issue of constitutionality must be
the very lis mota of the case (Integrated Bar of the
Philippines v. Zamora, 338 SCRA 81 [2000]).
Indisputably, the present case was primarily instituted for
collection and damages.However, a perusal of the complaint
also reveals
that the instant action is founded on the claim that the levy
imposed was an unlawful and unconstitutional special
assessment. Consequently, the requisite that the
constitutionality of the law in question be the very lis mota of
the case is present, making it proper for the trial court to rule
on the constitutionality of LOI 1465.[16]

The CA held that even on the assumption that LOI No. 1465 was issued
under the police power of the state, it is still unconstitutional because it did
not promote public welfare. The CA explained:
In declaring LOI 1465 unconstitutional, the trial court
held that the levy imposed under the said law was an invalid
exercise of the States power of taxation inasmuch as it
violated the inherent and constitutional prescription that
taxes be levied only for public purposes. It reasoned out that
the amount collected under the levy was remitted to the
depository bank of PPI, which the latter used to advance its
private interest.
On the other hand, appellant submits that the subject
statutes passage was a valid exercise of police power. In
addition, it disputes the court a quos findings arguing that the
collections under LOI 1465 was for the benefit of Planters
Foundation, Incorporated (PFI), a foundation created by law
to hold in trust for millions of farmers, the stock ownership of
PPI.
Of the three fundamental powers of the State, the exercise of
police power has been characterized as the most essential,
insistent and the least limitable of powers, extending as it
does to all the great public needs. It may be exercised as
long as the activity or the property sought to be regulated
has some relevance to public welfare (Constitutional Law, by
Isagani A. Cruz, p. 38, 1995 Edition).
Vast as the power is, however, it must be exercised within
the limits set by the Constitution, which requires the
concurrence of a lawful subject and a lawful method. Thus,
our courts have laid down the test to determine the validity of
a police measure as follows: (1) the interests of the public
generally, as distinguished from those of a particular class,
requires its exercise; and (2) the means employed are
reasonably necessary for the accomplishment of the purpose
and not unduly oppressive upon individuals (National
Development Company v. Philippine Veterans Bank, 192
SCRA 257 [1990]).
It is upon applying this established tests that We sustain the
trial courts holding LOI 1465 unconstitutional. To be sure,
ensuring the continued supply and distribution of fertilizer in
the country is an undertaking imbued with public
interest. However, the method by which LOI 1465 sought to
achieve this is by no means a measure that will promote the
public welfare. The governments commitment to support the
successful rehabilitation and continued viability of PPI, a
private corporation, is an unmistakable attempt to mask the
subject statutes impartiality. There is no way to treat the self-
interest of a favored entity,
like PPI, as identical with the general interest of the countrys
farmers or even the Filipino people in general. Well to stress,
substantive due process exacts fairness and equal
protection disallows distinction where none is needed. When
a statutes public purpose is spoiled by private interest, the
use of police power becomes a travesty which must be
struck down for being an arbitrary exercise of government
power. To rule in favor of appellant would contravene the
general principle that revenues derived from taxes cannot be
used for purely private purposes or for the exclusive benefit
of private individuals.[17]
The CA did not accept PPIs claim that the levy imposed under LOI No. 1465
was for the benefit of Planters Foundation, Inc., a foundation created to hold
in trust the stock ownership of PPI. The CA stated:
Appellant next claims that the collections under LOI 1465
was for the benefit of Planters Foundation, Incorporated
(PFI), a foundation created by law to hold in trust for millions
of farmers, the stock ownership of PFI on the strength of
Letter of Undertaking (LOU) issued by then Prime Minister
Cesar Virata on April 18, 1985and affirmed by the Secretary
of Justice in an Opinion dated October 12, 1987, to wit:
2. Upon the effective date of this Letter of
Undertaking, the Republic shall cause FPA
to include in its fertilizer pricing formula a
capital recovery component, the proceeds of
which will be used initially for the purpose of
funding the unpaid portion of the outstanding
capital stock of Planters presently held in
trust by Planters Foundation, Inc. (Planters
Foundation), which unpaid capital is
estimated at approximately P206 million
(subject to validation by Planters and
Planters Foundation) (such unpaid portion of
the outstanding capital stock of Planters
being hereafter referred to as the Unpaid
Capital), and subsequently for such capital
 increases as may be required for the
continuing viability of Planters.
The capital recovery component shall be in
the minimum amount of P10 per bag, which
will be added to the price of all domestic
sales of fertilizer in the Philippines by any
importer and/or fertilizer mother company. In
this connection, the Republic hereby
acknowledges that the advances by Planters
to Planters Foundation which were applied
to the payment of the Planters shares now
held in trust by Planters Foundation, have
been assigned to, among others, the
Creditors.Accordingly, the Republic, through
FPA, hereby agrees to deposit the proceeds
of the capital recovery component in the
special trust account designated in the
notice dated April 2, 1985, addressed by
counsel for the Creditors to Planters
Foundation. Such proceeds shall be
deposited by FPA on or before the 15th day
of each month.
The capital recovery component shall
continue to be charged and collected until
payment in full of (a) the Unpaid Capital
and/or (b) any shortfall in the payment of the
Subsidy Receivables, (c) any carrying cost
accruing from the date hereof on the
amounts which may be outstanding from
time to time of the Unpaid Capital and/or the
Subsidy Receivables and (d) the capital
increases contemplated in paragraph 2
hereof. For the purpose of the foregoing
clause (c), the carrying cost shall be at such
rate as will represent the full and reasonable
cost to Planters of servicing its debts, taking
into account both its peso and foreign
currency-denominated obligations.
(Records, pp. 42-43)
Appellants proposition is open to question, to say the
least. The LOU issued by then Prime Minister Virata taken
together with the Justice Secretarys Opinion does not
preponderantly demonstrate that the collections made were
held in trust in favor of millions of farmers. Unfortunately for
appellant, in the absence of sufficient evidence to establish
its claims, this Court is constrained to rely on what is
explicitly provided in LOI 1465 that one of the primary aims
in imposing the levy is to support the successful
rehabilitation and continued viability of PPI.[18]
PPI moved for reconsideration but its motion was denied.[19] It then
filed the present petition with this Court.
Issues
Petitioner PPI raises four issues for Our consideration, viz.:
I
THE CONSTITUTIONALITY OF LOI 1465 CANNOT BE
COLLATERALLY ATTACKED AND BE DECREED VIA A
DEFAULT JUDGMENT IN A CASE FILED FOR
COLLECTION AND DAMAGES WHERE THE ISSUE OF
CONSTITUTIONALITY IS NOT THE VERY LIS MOTA OF
THE CASE. NEITHER CAN LOI 1465 BE CHALLENGED BY
ANY PERSON OR ENTITY WHICH HAS NO STANDING
TO DO SO.
II
LOI 1465, BEING A LAW IMPLEMENTED FOR THE
PURPOSE OF ASSURING THE FERTILIZER
SUPPLY AND DISTRIBUTION IN THE
COUNTRY, ANDFOR BENEFITING A FOUNDATION
CREATED BY LAW TO HOLD IN TRUST FOR MILLIONS
OF FARMERS THEIR STOCK OWNERSHIP IN
PPI CONSTITUTES A VALID LEGISLATION PURSUANT
TO THE EXERCISE OF TAXATION AND POLICE POWER
FOR PUBLIC PURPOSES.
III
THE AMOUNT COLLECTED UNDER THE CAPITAL
RECOVERY COMPONENT WAS REMITTED TO THE
GOVERNMENT, AND BECAME GOVERNMENT FUNDS
PURSUANT TO AN EFFECTIVE AND VALIDLY ENACTED
LAW WHICH IMPOSED DUTIES AND CONFERRED
RIGHTS BY VIRTUE OF THE PRINCIPLE OF
OPERATIVE FACT PRIOR TO ANY DECLARATION OF
UNCONSTITUTIONALITY OF LOI 1465.

IV
THE PRINCIPLE OF UNJUST VEXATION (SHOULD BE
ENRICHMENT) FINDS NO APPLICATION IN THE
INSTANT CASE.[20] (Underscoring supplied)
Our Ruling
We shall first tackle the procedural issues of locus standi and the jurisdiction
of the RTC to resolve constitutional issues.
Fertiphil has locus standi
because it suffered direct
injury; doctrine of
standing is a mere
procedural technicality
which may be waived.
PPI argues that Fertiphil has no locus standi to question the
constitutionality of LOI No. 1465 because it does not have a personal and
substantial interest in the case or will sustain direct injury as a result of its
enforcement.[21] It asserts that Fertiphil did not suffer any damage from
the CRC imposition because incidence of the levy fell on the ultimate
consumer or the farmers themselves, not on the seller fertilizer company.[22]
We cannot agree. The doctrine of locus standi or the right of
appearance in a court of justice has been adequately discussed by this Court
in a catena of cases. Succinctly put, the doctrine requires a litigant to have a
material interest in the outcome of a case. In private suits, locus
standi requires a litigant to be a real party in interest, which is defined as the
party who stands to be benefited or injured by the judgment in the suit or the
party entitled to the avails of the suit.[23]
In public suits, this Court recognizes the difficulty of applying the
doctrine especially when plaintiff asserts a public right on behalf of the
general public because of conflicting public policy issues. [24] On one end,
there is the right of the ordinary citizen to petition the courts to be freed from
unlawful government intrusion and illegal official action. At the other end,
there is the public policy precluding excessive judicial interference in official
acts, which may unnecessarily hinder the delivery of basic public services.
In this jurisdiction, We have adopted the direct injury test to
determine locus standi in public suits. In People v. Vera,[25] it was held that
a person who impugns the validity of a statute must have a personal and
substantial interest in the case such that he has sustained, or will sustain
direct injury as a result. The direct injury test in public suits is similar to the
real party in interest rule for private suits under Section 2, Rule 3 of the 1997
Rules of Civil Procedure.[26]
Recognizing that a strict application of the direct injury test may
hamper public interest, this Court relaxed the requirement in cases of
transcendental importance or with far reaching implications. Being a mere
procedural technicality, it has also been held that locus standi may be waived
in the public interest.[27]
Whether or not the complaint for collection is characterized as a
private or public suit, Fertiphil has locus standi to file it. Fertiphil suffered a
direct injury from the enforcement of LOI No. 1465. It was required, and it did
pay, the P10 levy imposed for every bag of fertilizer sold on the domestic
market. It may be true that Fertiphil has passed some or all of the levy to the
ultimate consumer, but that does not disqualify it from attacking the
constitutionality of the LOI or from seeking a refund. As seller, it bore the
ultimate burden of paying the levy. It faced the possibility of severe sanctions
for failure to pay the levy. The fact of payment is sufficient injury to Fertiphil.
Moreover, Fertiphil suffered harm from the enforcement of the LOI
because it was compelled to factor in its product the levy. The levy certainly
rendered the fertilizer products of Fertiphil and other domestic sellers much
more expensive. The harm to their business consists not only in fewer clients
because of the increased price, but also in adopting alternative corporate
strategies to meet the demands of LOI No. 1465. Fertiphil and other fertilizer
sellers may have shouldered all or part of the levy just to be competitive in
the market. The harm occasioned on the business of Fertiphil is sufficient
injury for purposes of locus standi.
Even assuming arguendo that there is no direct injury, We find that
the liberal policy consistently adopted by this Court on locus standi must
apply. The issues raised by Fertiphil are of paramount public importance. It
involves not only the constitutionality of a tax law but, more importantly, the
use of taxes for public purpose. Former President Marcos issued LOI No.
1465 with the intention of rehabilitating an ailing private company. This is
clear from the text of the LOI. PPI is expressly named in the LOI as the direct
beneficiary of the levy. Worse, the levy was made dependent and conditional
upon PPI becoming financially viable. The LOI provided that the capital
contribution shall be collected until adequate capital is raised to make PPI
viable.
The constitutionality of the levy is already in doubt on a plain reading of the
statute. It is Our constitutional duty to squarely resolve the issue as the final
arbiter of all justiciable controversies. The doctrine of standing, being a mere
procedural technicality, should be waived, if at all, to adequately thresh out
an important constitutional issue.
RTC may resolve
constitutional issues; the
constitutional issue was
adequately raised in the
complaint; it is the lis
mota of the case.
PPI insists that the RTC and the CA erred in ruling on the
constitutionality of the LOI. It asserts that the constitutionality of the LOI
cannot be collaterally attacked in a complaint for collection. [28] Alternatively,
the resolution of the constitutional issue is not necessary for a determination
of the complaint for collection.[29]
Fertiphil counters that the constitutionality of the LOI was adequately
pleaded in its complaint. It claims that the constitutionality of LOI No. 1465 is
the very lis mota of the case because the trial court cannot determine its
claim without resolving the issue.[30]
It is settled that the RTC has jurisdiction to resolve the
constitutionality of a statute, presidential decree or an executive order. This is
clear from Section 5, Article VIII of the 1987 Constitution, which provides:
SECTION 5. The Supreme Court shall have the
following powers:
xxxx
(2) Review, revise, reverse, modify, or affirm on
appeal or certiorari, as the law or the Rules of Court may
provide, final judgments and orders of lower courtsin:
(a) All cases in which
the constitutionality or validity of anytreaty,
international or executive agreement, law,
presidential decree, proclamation, order,
instruction, ordinance, or regulation is in
question. (Underscoring supplied)
In Mirasol v. Court of Appeals,[31] this Court recognized the power of
the RTC to resolve constitutional issues, thus:
On the first issue. It is settled that Regional Trial
Courts have the authority and jurisdiction to consider the
constitutionality of a statute, presidential decree, or executive
order. The Constitution vests the power of judicial review or
the power to declare a law, treaty, international or executive
agreement, presidential decree, order, instruction, ordinance,
or regulation not only in this Court, but in all Regional Trial
Courts.[32]
In the recent case of Equi-Asia Placement, Inc. v. Department of
Foreign Affairs,[33] this Court reiterated:
There is no denying that regular courts have
jurisdiction over cases involving the validity or
constitutionality of a rule or regulation issued by
administrative agencies. Such jurisdiction, however, is not
limited to the Court of Appeals or to this Court alone for even
the regional trial courts can take cognizance of actions
assailing a specific rule or set of rules promulgated by
administrative bodies. Indeed, the Constitution vests the
power of judicial review or the power to declare a law, treaty,
international or executive agreement, presidential decree,
order, instruction, ordinance, or regulation in the courts,
including the regional trial courts.[34]
Judicial review of official acts on the ground of unconstitutionality
may be sought or availed of through any of the actions cognizable by courts
of justice, not necessarily in a suit for declaratory relief. Such review may be
had in criminal actions, as in People v. Ferrer[35] involving the constitutionality
of the now defunct Anti-Subversion law, or in ordinary actions, as in Krivenko
v. Register of Deeds[36]involving the constitutionality of laws prohibiting aliens
from acquiring public lands. The constitutional issue, however, (a) must be
properly raised and presented in the case, and (b) its resolution is necessary
to a determination of the case, i.e., the issue of constitutionality must be the
very lis mota presented.[37]
Contrary to PPIs claim, the constitutionality of LOI No. 1465 was
properly and adequately raised in the complaint for collection filed with
the RTC. The pertinent portions of the complaint allege:
6. The CRC of P10 per bag levied under LOI 1465
on domestic sales of all grades of fertilizer in the Philippines,
 is unlawful, unjust, uncalled for, unreasonable, inequitable
and oppressive because:
xxxx
(c) It favors only one private
domestic corporation, i.e., defendant PPPI,
and imposed at the expense and
disadvantage of the other fertilizer
importers/distributors who were themselves
in tight business situation and were then
exerting all efforts and maximizing
management and marketing skills to remain
viable;
xxxx
(e) It was a glaring example of crony
capitalism, a forced program through which
the PPI, having been presumptuously
masqueraded as the fertilizer industry itself,
was the sole and anointed beneficiary;
7. The CRC was an unlawful; and unconstitutional
special assessment and its imposition is tantamount to illegal
exaction amounting to a denial of due process since the
persons of entities which had to bear the burden of paying
the CRC derived no benefit therefrom; that on the contrary it
was used by PPI in trying to regain its former despicable
monopoly of the fertilizer industry to the detriment of other
distributors and importers.[38] (Underscoring supplied)
The constitutionality of LOI No. 1465 is also the very lis mota of the
complaint for collection. Fertiphil filed the complaint to compel PPI to refund
the levies paid under the statute on the ground that the law imposing the levy
is unconstitutional. The thesis is that an unconstitutional law is void. It has no
legal effect. Being void, Fertiphil had no legal obligation to pay the
levy. Necessarily, all levies duly paid pursuant to an unconstitutional law
should be refunded under the civil code principle against unjust
enrichment. The refund is a mere consequence of the law being declared
unconstitutional. The RTC surely cannot order PPI to refund Fertiphil if it
does not declare the LOI unconstitutional. It is the unconstitutionality of the
LOI which triggers the refund. The issue of constitutionality is the very lis
mota of the complaint with the RTC.
The P10 levy under LOI
No. 1465 is an exercise of
the power of taxation.
At any rate, the Court holds that the RTC and the CA did not err in ruling
against the constitutionality of the LOI.
PPI insists that LOI No. 1465 is a valid exercise either of the police
power or the power of taxation. It claims that the LOI was implemented for
the purpose of assuring the fertilizer supply and distribution in the country
and for benefiting a foundation created by law to hold in trust for millions of
farmers their stock ownership in PPI.
Fertiphil counters that the LOI is unconstitutional because it was
enacted to give benefit to a private company. The levy was imposed to pay
the corporate debt of PPI. Fertiphil also argues that, even if the LOI is
enacted under the police power, it is still unconstitutional because it did not
promote the general welfare of the people or public interest.
Police power and the power of taxation are inherent powers of the
State. These powers are distinct and have different tests for validity. Police
power is the power of the State to enact legislation that may interfere with
personal liberty or property in order to promote the general welfare,[39] while
the power of taxation is the power to levy taxes to be used for public
purpose. The main purpose of police power is the regulation of a behavior or
conduct, while taxation is revenue generation. The lawful subjects and lawful
means tests are used to determine the validity of a law enacted under the
police power.[40] The power of taxation, on the other hand, is circumscribed
by inherent and constitutional limitations.
We agree with the RTC that the imposition of the levy was an
exercise by the State of its taxation power. While it is true that the power of
taxation can be used as an implement of police power,[41] the primary
purpose of the levy is revenue generation. If the purpose is primarily
revenue, or if revenue is, at least, one of the real and substantial purposes,
then the exaction is properly called a tax.[42]
In Philippine Airlines, Inc. v. Edu,[43] it was held that the imposition of
a vehicle registration fee is not an exercise by the State of its police power,
but of its taxation power, thus:
It is clear from the provisions of Section 73 of
Commonwealth Act 123 and Section 61 of the Land
Transportation and Traffic Code that the legislative intent
and purpose behind the law requiring owners of vehicles to
pay for their registration is mainly to raise funds for the
 construction and maintenance of highways and to a much
lesser degree, pay for the operating expenses of the
administering agency. x x x Fees may be properly regarded
as taxes even though they also serve as an instrument of
regulation.
Taxation may be made the implement of the state's
police power (Lutz v. Araneta, 98 Phil. 148). If the purpose is
primarily revenue, or if revenue is, at least, one of the real
and substantial purposes, then the exaction is properly
called a tax. Such is the case of motor vehicle registration
fees. The same provision appears as Section 59(b) in the
Land Transportation Code. It is patent therefrom that the
legislators had in mind a regulatory tax as the law refers to
the imposition on the registration, operation or ownership of
a motor vehicle as a tax or fee. x x x Simply put, if the
exaction under Rep. Act 4136 were merely a regulatory fee,
the imposition in Rep. Act 5448 need not be an additional
tax. Rep. Act 4136 also speaks of other fees such as the
special permit fees for certain types of motor vehicles (Sec.
10) and additional fees for change of registration (Sec.
11). These are not to be understood as taxes because such
fees are very minimal to be revenue-raising. Thus, they are
not mentioned by Sec. 59(b) of the Code as taxes like the
motor vehicle registration fee and chauffeurs license
fee. Such fees are to go into the expenditures of the Land
Transportation Commission as provided for in the last
proviso of Sec. 61.[44](Underscoring supplied)
The P10 levy under LOI No. 1465 is too excessive to serve a mere
regulatory purpose. The levy, no doubt, was a big burden on the seller or the
ultimate consumer. It increased the price of a bag of fertilizer by as much as
five percent.[45] A plain reading of the LOI also supports the conclusion that
the levy was for revenue generation. The LOI expressly provided that the
levy was imposed until adequate capital is raised to make PPI viable.
Taxes are exacted only for
a public purpose. The P10
levy is unconstitutional
because it was not for a
public purpose. The levy
was imposed to give
undue benefit to PPI.
An inherent limitation on the power of taxation is public
purpose. Taxes are exacted only for a public purpose. They cannot be used
for purely private purposes or for the exclusive benefit of private
persons.[46] The reason for this is simple. The power to tax exists for the
general welfare; hence, implicit in its power is the limitation that it should be
used only for a public purpose. It would be a robbery for the State to tax its
citizens and use the funds generated for a private purpose. As an old United
States case bluntly put it: To lay with one hand, the power of the government
on the property of the citizen, and with the other to bestow it upon favored
individuals to aid private enterprises and build up private fortunes, is
nonetheless a robbery because it is done under the forms of law and is
called taxation.[47]
The term public purpose is not defined. It is an elastic concept that
can be hammered to fit modern standards. Jurisprudence states that public
purpose should be given a broad interpretation. It does not only pertain to
those purposes which are traditionally viewed as essentially government
functions, such as building roads and delivery of basic services, but also
includes those purposes designed to promote social justice. Thus, public
money may now be used for the relocation of illegal settlers, low-cost
housing and urban or agrarian reform.
While the categories of what may constitute a public purpose are
continually expanding in light of the expansion of government functions, the
inherent requirement that taxes can only be exacted for a public purpose still
stands. Public purpose is the heart of a tax law. When a tax law is only a
mask to exact funds from the public when its true intent is to give undue
benefit and advantage to a private enterprise, that law will not satisfy the
requirement of public purpose.
The purpose of a law is evident from its text or inferable from other
secondary sources. Here, We agree with the RTC and that CA that the levy
imposed under LOI No. 1465 was not for a public purpose.
First, the LOI expressly provided that the levy be imposed to benefit
PPI, a private company. The purpose is explicit from Clause 3 of the law,
thus:
3. The Administrator of the Fertilizer Pesticide Authority to
include in its fertilizer pricing formula a capital
contribution component of not less than P10 per
bag. This capital contribution shall be collected until
adequate capital is raised to make PPI viable. Such
capital contribution shall be applied by FPA to all
domestic sales of fertilizers in
the Philippines.[48] (Underscoring supplied)
 It is a basic rule of statutory construction that the text of a statute
should be given a literal meaning. In this case, the text of the LOI is plain that
the levy was imposed in order to raise capital for PPI. The framers of the LOI
did not even hide the insidious purpose of the law. They were cavalier
enough to name PPI as the ultimate beneficiary of the taxes levied under the
LOI. We find it utterly repulsive that a tax law would expressly name a private
company as the ultimate beneficiary of the taxes to be levied from the
public. This is a clear case of crony capitalism.
Second, the LOI provides that the imposition of the P10 levy was
conditional and dependent upon PPI becoming financially viable. This
suggests that the levy was actually imposed to benefit PPI. The LOI notably
does not fix a maximum amount when PPI is deemed financially
viable. Worse, the liability of Fertiphil and other domestic sellers of fertilizer to
pay the levy is made indefinite. They are required to continuously pay the
levy until adequate capital is raised for PPI.
Third, the RTC and the CA held that the levies paid under the LOI
were directly remitted and deposited by FPA to Far East Bank and Trust
Company, the depositary bank of PPI.[49] This proves that PPI benefited from
the LOI. It is also proves that the main purpose of the law was to give undue
benefit and advantage to PPI.
Fourth, the levy was used to pay the corporate debts of PPI. A
reading of the Letter of Understanding[50] dated May 18, 1985 signed by then
Prime Minister Cesar Virata reveals that PPI was in deep financial problem
because of its huge corporate debts. There were pending petitions for
rehabilitation against PPI before the Securities and Exchange
Commission. The government guaranteed payment of PPIs debts to its
foreign creditors. To fund the payment, President Marcos issued LOI No.
1465. The pertinent portions of the letter of understanding read:
Republic of the Philippines
Office of the Prime Minister
Manila
LETTER OF UNDERTAKING
Ma
y 18, 1985
TO: THE BANKING AND FINANCIAL INSTITUTIONS
LISTED IN ANNEX A HERETO WHICH ARE
CREDITORS (COLLECTIVELY, THE CREDITORS)
OF PLANTERS PRODUCTS, INC. (PLANTERS)
Gentlemen:
This has reference to Planters which is the principal importer
and distributor of fertilizer, pesticides and agricultural
chemicals in the Philippines. As regards Planters, the
Philippine Government confirms its awareness of the
following: (1) that Planters has outstanding obligations in
foreign currency and/or pesos, to the Creditors, (2)
that Planters is currently experiencing financial difficulties,
and (3) that there are presently pending with the Securities
and Exchange Commission of the Philippines a petition filed
at Planters own behest for the suspension of payment of all
its obligations, and a separate petition filed by Manufacturers
Hanover Trust Company, Manila Offshore Branch for the
appointment of a rehabilitation receiver for Planters.
In connection with the foregoing, the Republic of the
Philippines (the Republic) confirms that it considers and
continues to consider Planters as a major fertilizer
distributor. Accordingly, for and in consideration of your
expressed willingness to consider and participate in the effort
to rehabilitate Planters, the Republic hereby manifests its full
and unqualified support of the successful rehabilitation and
continuing viability of Planters, and to that end, hereby binds
and obligates itself to the creditors and Planters, as follows:
xxxx
2. Upon the effective date of this Letter of
Undertaking, the Republic shall cause FPA to include in its
fertilizer pricing formula a capital recovery component, the
proceeds of which will be used initially for the purpose of
funding the unpaid portion of the outstanding capital stock of
Planters presently held in trust by Planters Foundation, Inc.
(Planters Foundation), which unpaid capital is estimated at
approximately P206 million (subject to validation by Planters
and Planters Foundation) such unpaid portion of the
outstanding capital stock of Planters being hereafter referred
to as the Unpaid Capital), and subsequently for such capital
increases as may be required for the continuing viability of
Planters.
xxxx
 The capital recovery component shall continue to be
charged and collected until payment in full of (a) the Unpaid
Capital and/or (b) any shortfall in the payment of the Subsidy
Receivables, (c) any carrying cost accruing from the date
hereof on the amounts which may be outstanding from time
to time of the Unpaid Capital and/or the Subsidy
Receivables, and (d) the capital increases contemplated in
paragraph 2 hereof. For the purpose of the foregoing clause
(c), the carrying cost shall be at such rate as will represent
the full and reasonable cost to Planters of servicing its debts,
taking into account both its peso and foreign currency-
denominated obligations.
REPUBLIC OF THE
PHILIPPINES
By:
(signed)
CESAR E. A. VIRATA
Prime Minister and Minister of Finance[51]
It is clear from the Letter of Understanding that the levy was imposed
precisely to pay the corporate debts of PPI. We cannot agree with PPI that
the levy was imposed to ensure the stability of the fertilizer industry in the
country. The letter of understanding and the plain text of the LOI clearly
indicate that the levy was exacted for the benefit of a private corporation.
All told, the RTC and the CA did not err in holding that the levy
imposed under LOI No. 1465 was not for a public purpose. LOI No. 1465
failed to comply with the public purpose requirement for tax laws.
The LOI is still
unconstitutional even if
enacted under the police
power; it did not promote
public interest.
Even if We consider LOI No. 1695 enacted under the police power of the
State, it would still be invalid for failing to comply with the test of lawful
subjects and lawful means. Jurisprudence states the test as follows: (1) the
interest of the public generally, as distinguished from those of particular
class, requires its exercise; and (2) the means employed are reasonably
necessary for the accomplishment of the purpose and not unduly oppressive
upon individuals.[52]
For the same reasons as discussed, LOI No. 1695 is invalid because it did
not promote public interest. The law was enacted to give undue advantage to
a private corporation. We quote with approval the CA ratiocination on this
point, thus:
It is upon applying this established tests that We
sustain the trial courts holding LOI 1465 unconstitutional. To
be sure, ensuring the continued supply and distribution of
fertilizer in the country is an undertaking imbued with public
interest.However, the method by which LOI 1465 sought to
achieve this is by no means a measure that will promote the
public welfare. The governments commitment to support the
successful rehabilitation and continued viability of PPI, a
private corporation, is an unmistakable attempt to mask the
subject statutes impartiality.There is no way to treat the self-
interest of a favored entity, like PPI, as identical with the
general interest of the countrys farmers or even the Filipino
people in general. Well to stress, substantive due process
exacts fairness and equal protection disallows distinction
where none is needed. When a statutes public purpose is
spoiled by private interest, the use of police power becomes
a travesty which must be struck down for being an arbitrary
exercise of government power. To rule in favor of appellant
would contravene the general principle that revenues derived
from taxes cannot be used for purely private purposes or for
the exclusive benefit of private individuals. (Underscoring
supplied)
The general rule is that an
unconstitutional law is
void; the doctrine of
operative fact is
inapplicable.
PPI also argues that Fertiphil cannot seek a refund even if LOI No.
1465 is declared unconstitutional. It banks on the doctrine of operative fact,
which provides that an unconstitutional law has an effect before being
declared unconstitutional. PPI wants to retain the levies paid under LOI No.
1465 even if it is subsequently declared to be unconstitutional.
We cannot agree. It is settled that no question, issue or argument will
be entertained on appeal, unless it has been raised in the court a quo.[53] PPI
did not raise the applicability of the doctrine of operative fact with
the RTC and the CA. It cannot belatedly raise the issue with Us in order to
extricate itself from the dire effects of an unconstitutional law.
At any rate, We find the doctrine inapplicable. The general rule is that
an unconstitutional law is void. It produces no rights, imposes no duties and
affords no protection. It has no legal effect. It is, in legal contemplation,
inoperative as if it has not been passed.[54] Being void, Fertiphil is not
required to pay the levy. All levies paid should be refunded in accordance
with the general civil code principle against unjust enrichment. The general
rule is supported by Article 7 of the Civil Code, which provides:
ART. 7. Laws are repealed only by subsequent
ones, and their violation or non-observance shall not be
excused by disuse or custom or practice to the contrary.
When the courts declare a law to be inconsistent
with the Constitution, the former shall be void and the latter
shall govern.
The doctrine of operative fact, as an exception to the general rule,
only appliesas a matter of equity and fair play.[55] It nullifies the effects of an
unconstitutional law by recognizing that the existence of a statute prior to a
determination of unconstitutionality is an operative fact and may have
consequences which cannot always be ignored. The past cannot always be
erased by a new judicial declaration.[56]
The doctrine is applicable when a declaration of unconstitutionality
will impose an undue burden on those who have relied on the invalid
law. Thus, it was applied to a criminal case when a declaration of
unconstitutionality would put the accused in double jeopardy[57] or would put
in limbo the acts done by a municipality in reliance upon a law creating it.[58]
Here, We do not find anything iniquitous in ordering PPI to refund the
amounts paid by Fertiphil under LOI No. 1465. It unduly benefited from the
levy. It was proven during the trial that the levies paid were remitted and
deposited to its bank account. Quite the reverse, it would be inequitable and
unjust not to order a refund. To do so would unjustly enrich PPI at the
expense of Fertiphil. Article 22 of the Civil Code explicitly provides that every
person who, through an act of performance by another comes into
possession of something at the expense of the latter without just or legal
ground shall return the same to him. We cannot allow PPI to profit from an
unconstitutional law. Justice and equity dictate that PPI must refund the
amounts paid by Fertiphil.
WHEREFORE, the petition is DENIED. The Court of Appeals Decision
dated November 28, 2003 is AFFIRMED.
SO ORDERED.
EN BANC
April 25, 2017
G.R. No. 199669
SOUTHERN LUZON DRUG CORPORATION, Petitioner,
vs.
THE DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT, THE
NATIONAL COUNCIL FOR THE WELFARE OF DISABLED PERSONS,
THE DEPARTMENT OF FINANCE, and THE BUREAU OF INTERNAL
REVENUE, Respondents
DECISION
REYES, J.:
Before the Court is a Petition for Review on Certiorari1under Rule 45 of the
Rules of Court, assailing the Decision2dated June 17, 2011, and
Resolution3 dated November 25, 2011 of the Court of Appeals (CA) in CA-
G.R. SP No. 102486, which dismissed the petition for prohibition filed by
Southern Luzon Drug Corporation (petitioner) against the Department of1
Social Welfare and Development (DSWD), the National Council for the
Welfare of Disabled Persons (NCWDP) (now National Council on Disability
Affairs or NCDA), the Department of Finance (DOF) and the Bureau of:
Internal Revenue (collectively, the respondents), which sought to prohibit the
implementation of Section 4(a) of Republic Act (R.A.) No. 9257, otherwise
known as the "Expanded Senior Citizens Act of 2003" and Section 32 of R.A.
No. 9442, which amends the "Magna Carta for Disabled
Persons," particularly the granting of 20% discount on the purchase of
medicines by senior citizens and persons with disability (PWD),: respectively,
and treating them as tax deduction.
The petitioner is a domestic corporation engaged in the business of:
drugstore operation in the Philippines while the respondents are government'
agencies, office and bureau tasked to monitor compliance with R.A. Nos.
9257 and 9442, promulgate implementing rules and regulations for their
effective implementation, as well as prosecute and revoke licenses of erring1
establishments.
Factual Antecedents
On April 23, 1992, R.A. No. 7432, entitled "An Act to Maximize the
Contribution of Senior Citizens to Nation-Building, Grant Benefits and Special
Privileges and For Other Purposes," was enacted. Under the said law, a
senior citizen, who must be at least 60 years old and has an annual income
of not more than P60,000.00,4 may avail of the privileges provided in Section
4 thereof, one of which is 20% discount on the purchase of medicines. The
said provision states:
Sec. 4. Privileges for the Senior Citizen. - x x x:
a) the grant of twenty percent (20%) discount from all establishments relative
to utilization of transportation services, hotels and similar lodging
establishment, restaurants and recreation centers and purchase of medicine
anywhere in the country: Provided, That private establishments may claim
the cost as tax credit[.]
x x x x (Emphasis ours)
To recoup the amount given as discount to qualified senior citizens, covered
establishments can claim an equal amount as tax credit which can be applied
against the income tax due from them.
On February 26, 2004, then President Gloria Macapagal-Arroyo signed R.A.
No. 9257, amending some provisions of R.A. No. 7432. The new law
retained the 20% discount on the purchase of medicines but removed the
annual income ceiling thereby qualifying all senior citizens to the privileges
under the law. Further, R.A. No. 9257 modified the tax treatment of the
discount granted to senior citizens, from tax credit to tax deduction from
gross income, computed based on the net cost of goods sold or services
rendered. The pertinent provision, as amended by R.A. No. 9257, reads as
follows:
SEC. 4. Privileges for the Senior Citizens. - The senior citizens shall be
entitled to the following:
(a) the grant of twenty percent (20%) discount from all establishments
relative to the utilization of services in hotels and similar lodging
establishments, restaurants and recreation centers, and purchase of
medicines in all establishments for the exclusive use or enjoyment of senior
citizens, including funeral and burial services for the death of senior citizens;
xxxx
The establishment may claim the discounts granted under (a), (f), (g)
and (h) as tax deduction based on the net cost of the goods sold or
services rendered: Provided, That the cost of the discount shall be
allowed as deduction from gross income for the same taxable year that
the discount is granted. Provided, further, That the total amount of the
claimed tax deduction net of value-added tax if applicable, shall be included
in their gross sales receipts for tax purposes and shall be subject to proper
documentation and to the provisions of the National Internal Revenue Code,
as amended. (Emphasis ours)
On May 28, 2004, the DSWD issued the Implementing Rules and
Regulations (IRR) of R.A. No. 9257. Article 8 of Rule VI of the said IRR
provides:
Article 8. Tax Deduction of Establishments. - The establishment may claim
the discounts granted under Rule V, Section 4 - Discounts for
Establishments; Section 9, Medical and Dental Services in Private Facilities
and Sections 10 and 11 -Air, Sea and Land Transportation as tax deduction
based on the net cost of the goods sold or services rendered. Provided,
That the cost of the discount shall be allowed as deduction from gross
income for the same taxable year that the discount is granted; Provided,
further, That the total amount of the claimed tax deduction net of value-added
tax if applicable, shall be included in their gross sales receipts for tax
purposes and shall be subject to proper documentation and to the provisions
of the National Internal Revenue Code, as amended; Provided, finally, that
the implementation of the tax deduction shall be subject to the Revenue
Regulations to be issued by the Bureau of Internal Revenue (BIR) and
approved by the Department of Finance (DOF). (Emphasis ours)
The change in the tax treatment of the discount given to senior citizens did
not sit well with some drug store owners and corporations, claiming it
affected the profitability of their business. Thus, on January 13, 2005, I
Carlos Superdrug Corporation (Carlos Superdrug), together with other.
corporation and proprietors operating drugstores in the Philippines, filed a
Petition for Prohibition with Prayer for Temporary Restraining Order (TRO) I
and/or Preliminary Injunction before this Court, entitled Carlos
Superdrug I Corporation v. DSWD,5docketed as G.R. No. 166494, assailing
the constitutionality of Section 4(a) of R.A. No. 9257 primarily on the ground
that it amounts to taking of private property without payment of just
compensation. In a Decision dated June 29, 2007, the Court upheld the
constitutionality of the assailed provision, holding that the same is a
legitimate exercise of police power. The relevant portions of the decision
read, thus:
The law is a legitimate exercise of police power which, similar to the power of
eminent domain, has general welfare for its object. Police power is not
capable of an exact definition, but has been purposely veiled in general
terms to underscore its comprehensiveness to meet all exigencies and
provide enough room for an efficient and flexible response to conditions and
circumstances, thus assuring the greatest benefits. Accordingly, it has been
described as "the most essential, insistent and the least limitable of powers,
extending as it does to all the great public needs." It is "[t]he power vested in
the legislature by the constitution to make, ordain, and establish all manner
of wholesome and reasonable laws, statutes, and ordinances, either with
penalties or without, not repugnant to the constitution, as they shall judge to
be for the good and welfare of the commonwealth, and of the subjects of the
same."
For this reason, when the conditions so demand as determined by the
legislature, property rights must bow to the primacy of police power because
property rights, though sheltered by due process, must yield to general
welfare.
xxxx
Moreover, the right to property has a social dimension. While Article XIII of
the Constitution provides the precept for the protection of property, various
laws and jurisprudence, particularly on agrarian reform and the regulation of
contracts and public utilities, continuously serve as a reminder that the right
to property can be relinquished upon the command of the State for the
promotion of public good. Undeniably, the success of the senior citizens
program rests largely on the support imparted by petitioners and the other
private establishments concerned. This being the case, the means employed
in invoking the active participation of the private sector, in order to achieve
the purpose or objective of the law, is reasonably and directly related.
Without sufficient proof that Section 4(a) of RA. No. 9257 is arbitrary, and
that the continued implementation of the same would be unconscionably
detrimental to petitioners, the Court will refrain from quashing a legislative
act.
WHEREFORE, the petition is DISMISSED for lack of merit.6 (Citations
omitted)
On August 1, 2007, Carlos Superdrug filed a motion for reconsideration of
the foregoing decision. Subsequently, the Court issued Resolution dated
August 21, 2007, denying the said motion with finality. 7
Meanwhile, on March 24, 1992, R.A. No. 7277 pertaining to the "Magna
Carta for Disabled Persons" was enacted, codifying the rights and privileges
of PWDs. Thereafter, on April 30, 2007, R.A. No. 9442 was enacted,
amending R.A. No. 7277. One of the salient amendments in the law is the
insertion of Chapter 8 in Title 2 thereof, which enumerates the other
privileges and incentives of PWDs, including the grant of 20% discount on
the purchase of medicines. Similar to R.A. No. 9257, covered establishments
shall claim the discounts given to PWDs as tax deductions from the gross
income, based on the net cost of goods sold or services rendered. Section
32 ofR.A. No. 9442 reads:
CHAPTER 8. Other Privileges and Incentives
SEC. 32. Persons with disability shall be entitled to the following:
xxxx
(c) At least twenty percent (20%) discount for the purchase of medicines in
all drugstores for the exclusive use or enjoyment of persons with disability;
xxxx
The establishments may claim the discounts granted in subsections
(a), (b), (c), (e), (t) and (g) as taxdeductions based on the net cost of the
goods sold or services rendered: Provided, however, That the cost of the
discount shall be allowed as deduction from gross income for the same
taxable year that the discount is granted: Provided, further, That the total
amount of the claimed tax deduction net of value-added tax if applicable,
shall be included in their gross sales receipts for tax purposes and shall be
subject to proper documentation and to the provisions of the National Internal
Revenue Code (NIRC), as amended. (Emphasis ours)
Pursuant to the foregoing, the IRR of R.A. No. 9442 was promulgated by the
DSWD, Department of Education, DOF, Department of Tourism and the
Department of Transportation and Communications.8Sections 5 .1 and 6.1.d
thereof provide:
Sec. 5. Definition of Terms. For purposes of these Rules and Regulations,
these terms are defined as follows:
5.1. Persons with Disability are those individuals defined
under Section 4 of RA 7277, "An Act Providing for the
Rehabilitation, Self-Development and Self-Reliance of
Persons with Disability as amended and their integration into
the Mainstream of Society and for Other Purposes." This is
defined as a person suffering from restriction or different
abilities, as a result of a mental, physical or sensory
impairment, to perform an activity in a manner or within the
range considered normal for human being. Disability shall
mean: (1) a physical or mental impairment that substantially
limits one or more psychological, physiological or anatomical
function of an individual or activities of such individual; (2) a
record of such an impairment; or (3) being regarded as
having such an impairment.
xxxx
 6.1.d Purchase of Medicine - At least twenty percent (20%)
discount on the purchase of medicine for the exclusive use
and enjoyment of persons with disability. All drug stores,
hospital, pharmacies, clinics and other similar
establishments selling medicines are required to provide at
least twenty percent (20%) discount subject to the guidelines
issued by DOH and PHILHEALTH.
On February 26, 2008, the petitioner filed a Petition for Prohibition with
Application for TRO and/or Writ of Preliminary Injunction9 with the CA,
seeking to declare as unconstitutional (a) Section 4(a) of R.A. No.
9257, and (b) Section 32 of R.A. No. 9442 and Section 5.1 of its IRR, insofar
as these provisions only allow tax deduction on the gross income based on
the net cost of goods sold or services rendered as compensation to private
establishments for the 20% discount that they are required to grant to senior
citizens and PWDs. Further, the petitioner prayed that the respondents be
permanently enjoined from implementing the assailed provisions.
Ruling of the CA
On June 17, 2011, the CA dismissed the petition, reiterating the ruling of the
Court in Carlos Superdrug10particularly that Section 4(a) of R.A. No. 9257
was a valid exercise of police power. Moreover, the CA held that considering
that the same question had been raised by parties similarly situated and was
resolved in Carlos Superdrug, the rule of stare decisis stood as a hindrance
to any further attempt to relitigate the same issue. It further noted that
jurisdictional considerations also compel the dismissal of the action. It
particularly emphasized that it has no original or appellate jurisdiction to pass
upon the constitutionality of the assailed laws, 11 the same pertaining to the
Regional Trial Court (RTC). Even assuming that it had concurrent jurisdiction
with the RTC, the principle of hierarchy of courts mandates that the case be
commenced and heard by the lower court. 12 The CA further ruled that the
petitioner resorted to the wrong remedy as a petition for prohibition will not lie
to restrain the actions of the respondents for the simple reason that they do
not exercise judicial, quasi-judicial or ministerial duties relative to the
issuance or implementation of the questioned provisions. Also, the petition
was wanting of the allegations of the specific acts committed by the
respondents that demonstrate the exercise of these powers which may be
properly challenged in a petition for prohibition.13
The petitioner filed its Motion for Reconsideration 14 of the Decision dated
June 17, 2011 of the CA, but the same was denied in a Resolution 15 dated
November 25, 2011.
Unyielding, the petitioner filed the instant petition, raising the following
assignment of errors, to wit:
I
THE CA SERIOUSLY ERRED WHEN IT RULED THAT A PETITION FOR
PROHIBITION FILED WITH THE CA IS AN IMPROPER REMEDY TO
ASSAIL THE CONSTITUTIONALITY OF THE 20%, SALES DISCOUNT
FOR SENIOR CITIZENS AND PWDs;
II
THE CA SERIOUSLY ERRED WHEN IT HELD THAT THE SUPREME
COURT'S RULING IN CARLOS SUPERDRUG CONSTITUTES STARE
DECISIS;
III
THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN
IT RULED THAT THE 20%, SALES DISCOUNT FOR SENIOR CITIZENS
AND PWDs IS A VALID EXERCISE OF POLICE POWER. ON THE
CONTRARY, IT IS AN INVALID EXERCISE OF THE POWER OF EMINENT
DOMAIN BECAUSE IT FAILS TO PROVIDE JUST COMPENSATION TO
THE PETITIONER AND OTHER SIMILARLY SITUATED DRUGSTORES;
IV
THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN
IT RULED THAT THE 20°/o SALES DISCOUNT FOR SENIOR CITIZENS
AND PWDs DOES NOT VIOLATE THE PETITIONER'S RIGHT TO EQUAL
PROTECTION OF THE LAW; and
V
THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN
IT RULED THAT THE DEFINITIONS OF DISABILITIES AND PWDs ARE
NOT VAGUE AND DO NOT VIOLATE THE PETITIONER'S RIGHT TO DUE
PROCESS OF LAW.16
Ruling of the Court
Prohibition may be filed to question
the constitutionality of a law
In the assailed decision, the CA noted that the action, although denominated
as one for prohibition, seeks the declaration of the unconstitutionality of
Section 4(a) of R.A. No. 9257 and Section 32 of R.A. No.9442. It held that in
such a case, the proper remedy is not a special civil 1 action but a petition for
declaratory relief, which falls under the exclusive original jurisdiction of the
RTC, in the first instance, and of the Supreme Court, on appeal. 17
The Court clarifies.
Generally, the office of prohibition is to prevent the unlawful and oppressive
exercise of authority and is directed against proceedings that are done
without or in excess of jurisdiction, or with grave abuse of discretion, there
being no appeal or other plain, speedy, and adequate remedy in the ordinary
course of law. It is the remedy to prevent inferior courts, corporations,
boards, or persons from usurping or exercising a jurisdiction or power with
which they have not been vested by law. 18 This is, however, not the lone
office of an action for prohibition. In Diaz, et al. v. The Secretary of Finance,
et al., 19 prohibition was also recognized as a proper remedy to prohibit or
nullify acts of executive officials that amount to usurpation of legislative
authority. 20 And, in a number of jurisprudence, prohibition was allowed as a
proper action to assail the constitutionality of a law or prohibit its
implementation.
In Social Weather Stations, Inc. v. Commission on Elections,21therein
petitioner filed a petition for prohibition to assail the constitutionality of
Section 5.4 of R.A. No. 9006, or the "Fair Elections Act," which prohibited the
publication of surveys within 15 days before an election for national
candidates, and seven days for local candidates. Included in the petition is a
prayer to prohibit the Commission on Elections from enforcing the said
provision. The Court granted the Petition and struck down the assailed
provision for being unconstitutional. 22
In Social Justice Society (SJS) v. Dangerous Drugs Board, et al.,23 therein
petitioner assailed the constitutionality of paragraphs (c ), (d), (f) and (g) of
Section 36 of R.A. No. 9165, otherwise known as the "Comprehensive
Dangerous Drugs Act of 2002," on the ground that they constitute undue
delegation of legislative power for granting unbridled discretion to schools
and private employers in determining the manner of drug 'testing of their
employees, and that the law constitutes a violation of the right against
unreasonable searches and seizures. It also sought to enjoin the Dangerous
Drugs Board and the Philippine Drug Enforcement Agency from enforcing the
challenged provision.24The Court partially granted the petition by declaring
Section 36(f) and (g) of R.A. No. 9165 unconstitutional, and permanently
enjoined the concerned agencies from implementing them. 25
In another instance, consolidated petitions for prohibitions26 questioning the
constitutionality of the Priority Development Assistance Fund were
deliberated upon by this Court which ultimately granted the same.
Clearly, prohibition has been found an appropriate remedy to challenge the
constitutionality of various laws, rules, and regulations.
There is also no question regarding the jurisdiction of the CA to hear and
decide a petition for prohibition. By express provision of the law, particularly
Section 9(1) of Batas Pambansa Bilang 129,27 the CA was granted "original
jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas
corpus, and quo warranto, and auxiliary writs or I processes, whether or not
in aid of its appellate jurisdiction." This authority· the CA enjoys concurrently
with RTCs and this Court.
In the same manner, the supposed violation of the principle of the ·.
hierarchy of courts does not pose any hindrance to the full deliberation of the
issues at hand. It is well to remember that "the judicial hierarchy of courts is
not an iron-clad rule. It generally applies to cases involving warring factual
allegations. For this reason, litigants are required to [refer] to the trial courts
at the first instance to determine the truth or falsity of these contending
allegations on the basis of the evidence of the parties. Cases which depend
on disputed facts for decision cannot be brought immediately before
appellate courts as they are not triers of facts. Therefore, a strict application
of the rule of hierarchy of courts is not necessary when the cases brought
before the appellate courts do not involve factual but legal questions."28
Moreover, the principle of hierarchy of courts may be set aside for special
and important reasons, such as when dictated by public welfare and ' the
advancement of public policy, or demanded by the broader interest of
justice.29Thus, when based on the good judgment of the court, the urgency
and significance of the issues presented calls for its intervention, it should not
hesitate to exercise its duty to resolve.
The instant petition presents an exception to the principle as it basically
raises a legal question on the constitutionality of the mandatory discount and
the breadth of its rightful beneficiaries. More importantly, the resolution of the
issues will redound to the benefit of the public as it will put to rest the
questions on the propriety of the granting of discounts to senior citizens and
PWDs amid the fervent insistence of affected establishments that the
measure transgresses their property rights. The Court, therefore, finds it to
the best interest of justice that the instant petition be resolved.
The instant case is not barred by
stare decisis
The petitioner contends that the CA erred in holding that the ruling in Carlos
Superdrug constitutes as stare decisis or law of the case which bars the
relitigation of the issues that had been resolved therein and had been raised
anew in the instant petition. It argues that there are substantial differences
between Carlos Superdrug and the circumstances in the instant case which
take it out from the operation of the doctrine of stare decisis. It cites that
in Carlos Superdrug, the Court denied the petition because the petitioner
therein failed to prove the confiscatory effect of the tax deduction scheme as
no proof of actual loss was submitted. It believes that its submission of
financial statements for the years 2006 and 2007 to prove the confiscatory
effect of the law is a material fact that distinguishes the instant case from that
of Carlos Superdrug. 30
The Court agrees that the ruling in Carlos Superdrug does not
constitute stare decisis to the instant case, not because of the petitioner's
submission of financial statements which were wanting in the first case, but
because it had the good sense of including questions that had not been
raised or deliberated in the former case of Carlos Superdrug, i.e., validity of
the 20% discount granted to PWDs, the supposed vagueness of the
provisions of R.A. No. 9442 and violation of the equal protection clause.
Nonetheless, the Court finds nothing in the instant case that merits a reversal
of the earlier ruling of the Court in Carlos Superdrug. Contrary to the
petitioner's claim, there is a very slim difference between the issues in Carlos
Superdrug and the instant case with respect to the nature of the senior
citizen discount. A perfunctory reading of the circumstances of the two cases
easily discloses marked similarities in the issues and the arguments raised
by the petitioners in both cases that semantics nor careful play of words can
hardly obscure.
In both cases, it is apparent that what the petitioners are ultimately
questioning is not the grant of the senior citizen discount per se, but the
manner by which they were allowed to recoup the said discount. In particular,
they are protesting the change in the tax treatment of the senior citizen
discount from tax credit to being merely a deduction from gross income
which they claimed to have significantly reduced their profits.
This question had been settled in Carlos Superdrug, where the Court ruled
that the change in the tax treatment of the discount was a valid exercise of
police power, thus:
Theoretically, the treatment of the discount as a deduction reduces the net
income of the private establishments concerned. The discounts given would
have entered the coffers and formed part of the gross sales of the private
establishments, were it not for R.A. No. 9257.
xxxx
A tax deduction does not offer full reimbursement of the senior citizen
discount. As such, it would not meet the definition of just compensation.
Having said that, this raises the question of whether the State, in promoting
the health and welfare of a special group of citizens, can impose upon private
establishments the burden of partly subsidizing a government program.
The Court believes so.
The Senior Citizens Act was enacted primarily to maximize the contribution
of senior citizens to nation-building, and to grant benefits and privileges to
them for their improvement and well-being as the State considers them an
integral part of our society.
The priority given to senior citizens finds its basis in the Constitution as set
forth in the law itself. Thus, the Act provides:
SEC. 2. [R.A.] No. 7432 is hereby amended to read as follows:
SEC. 1. Declaration of Policies and Objectives.- Pursuant to Article XV,
Section 4 of the Constitution, it is the duty of the family to take care of its
elderly members while the State may design programs of social security for
them. In addition to this, Section 10 in the Declaration of Principles and State
Policies provides: "The State shall provide social justice in all phases of
national development." Further, Article XIII, Section 11, provides: "The State
shall adopt an integrated and comprehensive approach to health
development which shall endeavor to make essential goods, health and other
social services available to all the people at affordable cost. There shall be
priority for the needs of the underprivileged sick, elderly, disabled, women
and children." Consonant with these constitutional principles the following are
the declared policies of this Act:
xxxx
(f) To recognize the important role of the private sector in the
improvement of the welfare of senior citizens and to actively seek their
partnership.
To implement the above policy, the law grants a twenty percent discount to
senior citizens for medical and dental services, and diagnostic and laboratory
fees; admission fees charged by theaters, concert halls, circuses, carnivals,
and other similar places of culture, leisure and amusement; fares for
domestic land, air and sea travel; utilization of services in hotels and similar
lodging establishments, restaurants and recreation centers; and purchases of
medicines for the exclusive use or enjoyment of senior citizens. As a form of
reimbursement, the law provides that business establishments extending the
twenty percent discount to senior citizens may claim the discount as a tax
deduction.
The law is a legitimate exercise of police power which, similar to the power of
eminent domain, has general welfare for its object. Police power is not
capable of an exact definition, but has been purposely veiled in general
terms to underscore its comprehensiveness to meet all exigencies and
provide enough room for an efficient and flexible response to conditions and
circumstances, thus assuring the greatest benefits. Accordingly, it has been
described as "the most essential, insistent and the least limitable of powers,
extending as it does to all the great public needs." It is "[t]he power vested in
the legislature by the constitution to make, ordain, and establish all manner
of wholesome and reasonable laws, statutes, and ordinances, either with
penalties or without, not repugnant to the constitution, as they shall judge to
be for the good and welfare of the commonwealth, and of the subjects of the
same."
For this reason, when the conditions so demand as determined by the
legislature, property rights must bow to the primacy of police power because
proper rights, though sheltered by due process, must yield to general
welfare. 31 (Citations omitted and emphasis in the original)
Verily, it is the bounden duty of the State to care for the elderly as they reach
the point in their lives when the vigor of their youth has diminished and
resources have become scarce. Not much because of choice, they become
needing of support from the society for whom they presumably spent their
productive days and for whose betterment they' exhausted their energy,
know-how and experience to make our days better to live.
In the same way, providing aid for the disabled persons is an equally
important State responsibility. Thus, the State is obliged to give full support to
the improvement of the total well-being of disabled persons and their
integration into the mainstream of society. 32This entails the creation of
opportunities for them and according them privileges if only to balance the
playing field which had been unduly tilted against them because of their
limitations.
The duty to care for the elderly and the disabled lies not only upon the State,
but also on the community and even private entities. As to the State, the duty
emanates from its role as parens patriae which holds it under obligation to
provide protection and look after the welfare of its people especially those
who cannot tend to themselves. Parens patriae means parent of his or her
country, and refers to the State in its role as "sovereign", or the State in its
capacity as a provider of protection to those unable to care for
themselves. 33 In fulfilling this duty, the State may resort to the exercise of its
inherent powers: police power, eminent domain and power of taxation.
In Gerochi v. Department of Energy,34the Court passed upon one of the
inherent powers of the state, the police power, where it emphasized, thus:
[P]olice power is the power of the state to promote public welfare by
restraining and regulating the use of liberty and property. It is the most
pervasive, the least limitable, and the most demanding of the three
fundamental powers of the State. The justification is found in the Latin
maxim salus populi est suprema lex (the welfare of the people is the
supreme law) and sic utere tuo ut alienum non laedas (so use your property
as not to injure the property of others). As an inherent attribute of sovereignty
which virtually extends to all public needs, police power grants a wide
panoply of instruments through which the State, as parens patriae, gives
effect to a host of its regulatory powers. We have held that the power to
"regulate" means the power to protect, foster, promote, preserve, and control,
with due regard for the interests, first and foremost, of the public, then of the
utility and of its patrons. 35 (Citations omitted)
It is in the exercise of its police power that the Congress enacted R.A. Nos.
9257 and 9442, the laws mandating a 20% discount on purchases of
medicines made by senior citizens and PWDs. It is also in further exercise of
this power that the legislature opted that the said discount be claimed as tax
deduction, rather than tax credit, by covered establishments.
The petitioner, however, claims that the change in the tax treatment of the
discount is illegal as it constitutes taking without just compensation. It even
submitted financial statements for the years 2006 and 2007 to support its
claim of declining profits when the change in the policy was implemented.
The Court is not swayed.
To begin with, the issue of just compensation finds no relevance in the
instant case as it had already been made clear in Carlos Superdrug that the
power being exercised by the State in the imposition of senior citizen
discount was its police power. Unlike in the exercise of the power of eminent
domain, just compensation is not required in wielding police power. This is
precisely because there is no taking involved, but only an imposition of
burden.
In Manila Memorial Park, Inc., et al. v. Secretary of the DSWD, et al., 36 the
Court ruled that by examining the nature and the effects of R.A. No. 9257, it
becomes apparent that the challenged governmental act was an exercise of
police power. It was held, thus:
[W]e now look at the nature and effects of the 20% discount to determine if it
constitutes an exercise of police power or eminent domain.
The 20% discount is intended to improve the welfare of senior citizens who,
at their age, are less likely to be gainfully employed, more prone to illnesses
and other disabilities, and, thus, in need of subsidy in purchasing basic
commodities. It may not be amiss to mention also that the discount serves to
honor senior citizens who presumably spent the productive years of their
lives on contributing to the development and progress of the nation. This
distinct cultural Filipino practice of honoring the elderly is an integral part of
this law.
As to its nature and effects, the 20% discount is a regulation affecting the
ability of private establishments to price their products and services relative
to a special class of individuals, senior citizens, for which the Constitution
affords preferential concern. In turn, this affects the amount of profits or
income/gross sales that a private establishment can derive from senior
citizens. In other words, the subject regulation affects the pricing, and, hence,
the profitability of a private establishment. However, it does not purport to
appropriate or burden specific properties, used in the operation or conduct of
the business of private establishments, for the use or benefit of the public, or
senior citizens for that matter, but merely regulates the pricing of goods and
services relative to, and the amount of profits or income/gross sales that
such private establishments may derive from, senior citizens.
The subject regulation may be said to be similar to, but with substantial
distinctions from, price control or rate of 'return on investment control laws
which are traditionally regarded as police power measures. x x x. 37 (Citations
omitted)
In the exercise of police power, "property rights of private individuals are
subjected to restraints and burdens in order to secure the general comfort,
health, and prosperity of the State."38 Even then, the State's claim of police
power cannot be arbitrary or unreasonable. After all, the overriding purpose
of the exercise of the power is to promote general welfare, public health and
safety, among others. It is a measure, which by sheer necessity, the State
exercises, even to the point of interfering with personal liberties or property
rights in order to advance common good. To warrant such interference, two
requisites must concur: (a) the interests of the public generally, as
distinguished from those of a particular class, require the interference of the!
State; and (b) the means employed are reasonably necessary to the:
attainment of the object sought to be accomplished and not unduly
oppressive upon individuals. In other words, the proper exercise of the police
power requires the concurrence of a lawful subject and a lawful method.39
The subjects of R.A. Nos. 9257 and 9442, i.e., senior citizens and PWDs, are
individuals whose well-being is a recognized public duty. As a public duty,
the responsibility for their care devolves upon the concerted efforts of the
State, the family and the community. In Article XIII, Section 1 of the
Constitution, the State is mandated to give highest priority to the enactment
of measures that protect and enhance the right of all the people to human
dignity, reduce social, economic, and political inequalities, and remove
cultural inequities by equitably diffusing wealth and political power1 for the
common good. The more apparent manifestation of these social inequities is
the unequal distribution or access to healthcare services. To: abet in
alleviating this concern, the State is committed to adopt an integrated! and
comprehensive approach to health development which shall endeavor to
make essential goods, health and other social services available to all the
people at affordable cost, with priority for the needs of the underprivileged
sick, elderly, disabled, women, and children.40
In the same manner, the family and the community have equally significant
duties to perform in reducing social inequality. The family as the basic social
institution has the foremost duty to care for its elderly members.41 On the
other hand, the community, which include the private sector, is recognized as
an active partner of the State in pursuing greater causes. The private sector,
being recipients of the privilege to engage business in our land, utilize our
goods as well as the services of our people for proprietary purposes, it is only
fitting to expect their support in measures that contribute to common good.
Moreover, their right to own, establish and operate economic enterprises is
always subject to the duty of the State to promote distributive justice and to
intervene when the common good so demands.42
The Court also entertains no doubt on the legality of the method taken by the
legislature to implement the declared policies of the subject laws, that is, to
impose discounts on the medical services and purchases of senior citizens
and PWDs and to treat the said discounts as tax deduction rather than tax
credit. The measure is fair and reasonable and no credible proof was
presented to prove the claim that it was confiscatory. To be considered
confiscatory, there must be taking of property without just compensation.
Illuminating on this point is the discussion of the Court on the concept
of taking in City of Manila v. Hon. Laguio, Jr.,43viz.:
There are two different types of taking that can be identified. A "possessory"
taking occurs when the government confiscates or physically occupies
property. A "regulatory" taking occurs when the government's regulation
leaves no reasonable economically viable use of the property.
xxxx
No formula or rule can be devised to answer the questions of what is too far
and when regulation becomes a taking. In Mahon, Justice Holmes
recognized that it was "a question of degree and therefore cannot be
disposed of by general propositions." On many other occasions as well, the
U.S. Supreme Court has said that the issue of when regulation constitutes a
taking is a matter of considering the facts in each case. x x x.
What is crucial in judicial consideration of regulatory takings is that
government regulation is a taking if it leaves no reasonable economically
viable use of property in a manner that interferes with reasonable
expectations for use. A regulation that permanently denies all economically
beneficial or productive use of land is, from the owner's point of view,
equivalent to a "taking" unless principles of nuisance or property law that
existed when the owner acquired the land make the use prohibitable. When
the owner of real property has been called upon to sacrifice all economically
beneficial uses in the name of the common good, that is, to leave his
property economically idle, he has suffered a taking.
xxxx
A restriction on use of property may also constitute a "taking" if not
reasonably necessary to the effectuation of a substantial public purpose or if
it has an unduly harsh impact on the distinct investment-backed expectations
of the owner.44 (Citations omitted)
The petitioner herein attempts to prove its claim that the pertinent provisions
of R.A. Nos. 9257 and 9442 amount to taking by presenting financial
statements purportedly showing financial losses incurred by them due to the
adoption of the tax deduction scheme.
For the petitioner's clarification, the presentation of the financial statement is
not of compelling significance in justifying its claim for just compensation.
What is imperative is for it to establish that there was taking in the
constitutional sense or that, in the imposition of the mandatory discount, the
power exercised by the state was eminent domain.
According to Republic of the Philippines v. Vda. de Castellvi,45five
circumstances must be present in order to qualify "taking" as an exercise of
eminent domain. First, the expropriator must enter a private
property. Second, the entrance into private property must be for more than a
momentary period. Third, the entry into the property should be under warrant
or color of legal authority. Fourth, the property must be devoted to a public
use or otherwise informally appropriated or injuriously affected. Fifth, the
utilization of the property for public use must be in such a way as to oust the
owner and deprive him of all beneficial enjoyment of the property. 46
The first requirement speaks of entry into a private property which clearly
does not obtain in this case. There is no private property that is; invaded or
appropriated by the State. As it is, the petitioner precipitately deemed future
profits as private property and then proceeded to argue that the State took it
away without full compensation. This seemed preposterous considering that
the subject of what the petitioner supposed as taking was not even earned
profits but merely an expectation of profits, which may not even occur. For
obvious reasons, there cannot be taking of a contingency or of a mere
possibility because it lacks physical existence that is necessary before there
could be any taking. Further, it is impossible to quantify the compensation for
the loss of supposed profits before it is earned.
The supposed taking also lacked the characteristics of permanence 47 and
consistency.1âwphi1 The presence of these characteristics is significant
because they can establish that the effect of the questioned provisions is the
same on all establishments and those losses are indeed its unavoidable
consequence. But apparently these indications are wanting in this case. The
reason is that the impact on the establishments varies depending on their
response to the changes brought about by the subject provisions. To be
clear, establishments, are not prevented from adjusting their prices to
accommodate the effects of the granting of the discount and retain their
profitability while being fully compliant to the laws. It follows that losses are
not inevitable because establishments are free to take business measures to
accommodate the contingency. Lacking in permanence and consistency,
there can be no taking in the constitutional sense. There cannot be taking in
one establishment and none in another, such that the former can claim
compensation but the other may not. Simply told, there is no taking to justify
compensation; there is only poor business decision to blame.
There is also no ousting of the owner or deprivation of ownership.
Establishments are neither divested of ownership of any of their properties
nor is anything forcibly taken from them. They remain the owner of their
goods and their profit or loss still depends on the performance of their sales.
Apart from the foregoing, covered establishments are also provided with a
mechanism to recoup the amount of discounts they grant the senior citizens
and PWDs. It is provided in Section 4(a) of R.A. No. 9257 and Section 32 of
R.A. No. 9442 that establishments may claim the discounts as "tax deduction
based on the net cost of the goods sold or services rendered." Basically,
Drug A
whatever amount was given as discount, covered establishments may claim
an equal amount as an expense or tax deduction. The trouble is that the Acquisition cost ₱8.00
petitioner, in protesting the change in the tax treatment of the discounts, Selling price ;₱10.00
apparently seeks tax incentive and not merely a return of the amount given
as discounts. It premised its interpretation of financial losses in terms of the Number of patrons 100
effect of the change in the tax treatment of the discount on its tax liability; Senior Citizens/PWD 50
hence, the claim that the measure was confiscatory. However, as mentioned
earlier in the discussion, loss of profits is not the inevitable result of the Sales
change in tax treatment of the discounts; it is more appropriately a
consequence of poor business decision. 100 x ₱10.00 = ₱1,000.00

Deduction: ₱100.00
It bears emphasizing that the law does not place a cap on the amount of
mark up that covered establishments may impose on their items. This rests Profit: ₱100.00
on the discretion of the establishment which, of course, is expected to put in
the price of the overhead costs, expectation of profits and other
considerations into the selling price of an item. In a simple illustration, here On the other hand, Establishment 2, mindful that the new law will affect the
is Drug A, with acquisition cost of ₱8.00, and selling price of ₱10.00. Then profitability of the business, made a calculated decision by increasing the
comes a law that imposes 20% on senior citizens and PWDs, which affected mark up of Drug A to ₱3.20, instead of only ₱2.00. This brought a positive
Establishments 1, 2 and 3. Let us suppose that the approximate number of result to the earnings of the company.
patrons who purchases Drug A is 100, half of which are senior citizens and
PWDs. Before the passage of the law, all of the establishments are earning Establishment 2
the same amount from profit from the sale of Drug A, viz.:
Drug A
Before the passage of the law:
Acquisition cost ;₱8.00
Selling price ₱11.20
Drug A
Number of patron 100
Acquisition cost ₱8.00 Senior Citizens/PWDs 50
Selling price ₱10.00
Sales
Number of patrons 100
100 x ₱10.00 = ₱1,000.00
Sales:
Deduction: ₱112.00
100 x ₱10.00 = ₱1,000.00
Profit: ₱208.00
Profit: ₱200

For its part, Establishment 3 raised the mark up on Drug A to only ₱3.00 just
After the passage of the law, the three establishments reacted differently. to even out the effect of the law. This measure left a negligible effect on its
Establishment 1 was passive and maintained the price of Drug A at ₱8.00 profit, but Establishment 3 took it as a social duty: to share in the cause
which understandably resulted in diminution of profits. being promoted by the government while still maintaining profitability.

Establishment 1 Establishment 3

Drug A
Acquisition cost ₱8.00
Selling price ₱11.20
Number of patrons 100
Senior Citizens/PWD 50
Sales
100 x ₱10.00 = ₱1,000.00
Deduction: ₱110.00
Profit: ₱190.00
The foregoing demonstrates that it is not the law per se which occasioned
the losses in the covered establishments but bad business I judgment. One
of the main considerations in making business decisions is the law because
its effect is widespread and inevitable. Literally, anything can be a subject of
legislation. It is therefore incumbent upon business managers to cover this
contingency and consider it in making business strategies. As shown in the
illustration, the better responses were exemplified by Establishments 2 and 3
which promptly put in the additional costs brought about by the law into the
price of Drug A. In doing so, they were able to maintain the profitability of the
business, even earning some more, while at the same time being fully
compliant with the law. This is not to mention that the illustration is even too
simplistic and not' the most ideal since it dealt only with a single drug being
purchased by both regular patrons and senior citizens and PWDs. It did not
consider the accumulated profits from the other medical and non-medical
products being sold by the establishments which are expected to further curb
the effect of the granting of the discounts in the business.
It is therefore unthinkable how the petitioner could have suffered losses due
to the mandated discounts in R.A. Nos. 9257 and 9442, when a fractional
increase in the prices of items could bring the business standing at a balance
even with the introduction of the subject laws. A level adjustment in the
pricing of items is a reasonable business measure to take in order to adapt to
the contingency. This could even make establishments earn more, as shown
in the illustration, since every fractional increase in the price of covered items
translates to a wider cushion to taper off the effect of the granting of
discounts and ultimately results to additional profits gained from the
purchases of the same items by regular patrons who are not entitled to the
discount. Clearly, the effect of the subject laws in the financial standing of
covered companies depends largely on how they respond and forge a
balance between profitability and their sense of social responsibility. The
adaptation is entirely up to them and they are not powerless to make
adjustments to accommodate the subject legislations.
Still, the petitioner argues that the law is confiscatory in the sense that the
State takes away a portion of its supposed profits which could have gone into
its coffers and utilizes it for public purpose. The petitioner claims that the
action of the State amounts to taking for which it should be compensated.
To reiterate, the subject provisions only affect the petitioner's right to profit,
and not earned profits. Unfortunately for the petitioner, the right to profit is not
a vested right or an entitlement that has accrued on the person or entity such
that its invasion or deprivation warrants compensation. Vested rights are
"fixed, unalterable, or irrevocable."48 More extensively, they are depicted as
follows:
Rights which have so completely and definitely accrued to or settled in a
person that they are not subject to be defeated or cancelled by the act of any
other private person, and which it is right and equitable that the government
should recognize and protect, as being lawful in themselves, and settled
according to the then current rules of law, and of which the individual could
not be deprived arbitrarily without injustice, or of which he could not justly be
deprived otherwise than by the established methods of procedure and for the
public welfare. x x x A right is not 'vested' unless it is more than a mere
expectation based on the anticipated continuance of present laws; it must be
an established interest in property, not open to doubt. x x x To be vested in
its accurate legal sense, a right must be complete and consummated, and
one of which the person to whom it belongs cannot be divested without his
consent.x x x.49 (Emphasis ours)
Right to profits does not give the petitioner the cause of action to ask for just
compensation, it being only an inchoate right or one that has not fully
developed50 and therefore cannot be claimed as one's own. An inchoate right
is a mere expectation, which may or may not come into existence. It is
contingent as it only comes "into existence on an event or condition which
may not happen or be performed until some other event may prevent their
vesting."51Certainly, the petitioner cannot claim confiscation or taking of
something that has yet to exist. It cannot claim deprivation of profit before the
consummation of a sale and the purchase by a senior citizen or PWD.
Right to profit is not an accrued right; it is not fixed, absolute nor indefeasible.
It does not come into being until the occurrence or realization of a condition
precedent. It is a mere "contingency that might never eventuate into a right. It
stands for a mere possibility of profit but nothing might ever be payable under
it."52
The inchoate nature of the right to profit precludes the possibility of
compensation because it lacks the quality or characteristic which is
necessary before any act of taking or expropriation can be effected.
Moreover, there is no yardstick fitting to quantify a contingency or to
determine compensation for a mere possibility. Certainly, "taking"
presupposes the existence of a subject that has a quantifiable or
determinable value, characteristics which a mere contingency does not
possess.
Anent the question regarding the shift from tax credit to tax deduction, suffice
it is to say that it is within the province of Congress to do so in the exercise of
its legislative power. It has the authority to choose the subject of legislation,
outline the effective measures to achieve its declared policies and even
impose penalties in case of non-compliance. It has the sole discretion to
decide which policies to pursue and devise means to achieve them, and
courts often do not interfere in this exercise for as long as it does not
transcend constitutional limitations. "In performing this duty, the legislature
has no guide but its judgment and discretion and the wisdom of
experience."53 In Carter v. Carter Coal Co.,54legislative discretion has been
described as follows:
Legislative congressional discretion begins with the choice of means, and
ends with the adoption of methods and details to carry the delegated powers
into effect. x x x [W]hile the powers are rigidly limited to the enumerations of
the Constitution, the means which may be employed to carry the powers into
effect are not restricted, save that they must be appropriate, plainly adapted
to the end, and not prohibited by, but consistent with, the letter and spirit of
the Constitution. x x x. 55 (Emphasis ours)
Corollary, whether to treat the discount as a tax deduction or tax credit is a
matter addressed to the wisdom of the legislature. After all, it is within its
prerogative to enact laws which it deems sufficient to address a specific
public concern. And, in the process of legislation, a bill goes through rigorous
tests of validity, necessity and sufficiency in both houses of Congress before
enrolment. It undergoes close scrutiny of the members of Congress and
necessarily had to surpass the arguments hurled against its passage. Thus,
the presumption of validity that goes with every law as a form of deference to
the process it had gone through and also to the legislature's exercise of
discretion. Thus, in lchong, etc., et al. v. Hernandez) etc., and
Sarmiento,56the Court emphasized, thus:
It must not be overlooked, in the first place, that the legislature, which is the
constitutional repository of police power and exercises the prerogative of
determining the policy of the State, is by force of circumstances primarily the
judge of necessity, adequacy or reasonableness and wisdom, of any
law promulgated in the exercise of the police power, or of the measures
adopted to implement the public policy or to achieve public interest.x x
x.57 (Emphasis ours)
The legislature may also grant rights and impose additional burdens: It may
also regulate industries, in the exercise of police power, for the protection of
the public. R.A. Nos. 9257 and 9442 are akin to regulatory laws, the issuance
of which is within the ambit of police power. The minimum wage law, zoning
ordinances, price control laws, laws regulating the operation of motels and
hotels, laws limiting the working hours to eight, and the like fall under this
category. 58
Indeed, regulatory laws are within the category of police power measures
from which affected persons or entities cannot claim exclusion or
compensation. For instance, private establishments cannot protest that the
imposition of the minimum wage is confiscatory since it eats up a
considerable chunk of its profits or that the mandated remuneration is not
commensurate for the work done. The compulsory nature of the provision for
minimum wages underlies the effort of the State; as R.A. No.
672759 expresses it, to promote productivity-improvement and gain-sharing
measures to ensure a decent standard of living for the workers and their
families; to guarantee the rights of labor to its just share in the fruits of
production; to enhance employment generation in the countryside through
industry dispersal; and to allow business and industry reasonable returns on
investment, expansion and growth, and as the Constitution expresses it, to
affirm labor as a primary social economic force. 60
Similarly, the imposition of price control on staple goods in R.A. No. 758161 is
likewise a valid exercise of police power and affected establishments cannot
argue that the law was depriving them of supposed gains. The law seeks to
ensure the availability of basic necessities and prime commodities at
reasonable prices at all times without denying legitimate business a fair
return on investment. It likewise aims to provide effective and sufficient
protection to consumers against hoarding, profiteering and cartels with
respect to the supply, distribution, marketing and pricing of said goods,
especially during periods of calamity, emergency, widespread illegal price
manipulation and other similar situations.62
More relevantly, in Manila Memorial Park, Inc.,63it was ruled that it is within
the bounds of the police power of the state to impose burden on private
entities, even if it may affect their profits, such as in the imposition of price
control measures. There is no compensable taking but only a recognition of
the fact that they are subject to the regulation of the State and that all
personal or private interests must bow down to the more paramount interest
of the State.
This notwithstanding, the regulatory power of the State does not authorize
the destruction of the business. While a business may be regulated, such
regulation must be within the bounds of reason, i.e., the regulatory ordinance
must be reasonable, and its provision cannot be oppressive amounting to an
arbitrary interference with the business or calling subject of regulation. A
lawful business or calling may not, under the guise of regulation, be
unreasonably interfered with even by the exercise of police power. 64 After
all, regulation only signifies control or restraint, it does not mean suppression
or absolute prohibition. Thus, in Philippine Communications Satellite
Corporation v. Alcuaz, 65the Court emphasized:
The power to regulate is not the power to destroy useful and harmless
enterprises, but is the power to protect, foster, promote, preserve, and
control with due regard for the interest, first and foremost, of the public, then
of the utility and of its patrons. Any regulation, therefore, which operates as
an effective confiscation of private property or constitutes an arbitrary or
unreasonable infringement of property rights is void, because it is repugnant
to the constitutional guaranties of due process and equal protection of the
laws. 66 (Citation omitted)
Here, the petitioner failed to show that R.A. Nos. 9257 and 9442, under the
guise of regulation, allow undue interference in an otherwise legitimate
business.1avvphi1 On the contrary, it was shown that the questioned laws do
not meddle in the business or take anything from it but only regulate its
realization of profits.
The subject laws do not violate the
equal protection clause
The petitioner argues that R.A. Nos. 9257 and 9442 are violative of the equal
protection clause in that it failed to distinguish between those who have the
capacity to pay and those who do not, in granting the 20% discount. R.A. No.
9257, in particular, removed the income qualification in R.A. No. 7432
of'₱60,000.00 per annum before a senior citizen may be entitled to the 20o/o
discount.
The contention lacks merit.
The petitioner's argument is dismissive of the reasonable qualification on
which the subject laws were based. In City of Manila v. Hon. Laguio,
Jr., 67 the Court emphasized:
Equal protection requires that all persons or things similarly situated should
be treated alike, both as to rights conferred and responsibilities imposed.
Similar subjects, in other words, should not be treated differently, so as to
give undue favor to some and unjustly discriminate against others. The
guarantee means that no person or class of persons shall be denied the
same protection of laws which is enjoyed by other persons or other classes
in like circumstances.68 (Citations omitted)
"The equal protection clause is not infringed by legislation which applies only
to those persons falling within a specified class. If the groupings are
characterized by substantial distinctions that make real differences, one class
may be treated and regulated differently from another."69 For a classification
to be valid, (1) it must be based upon substantial distinctions, (2) it must be
germane to the purposes of the law, (3) it must not be limited to existing
conditions only, and (4) it must apply equally to all members of the same
class. 70
To recognize all senior citizens as a group, without distinction as to income,
is a valid classification. The Constitution itself considered the elderly as a
class of their own and deemed it a priority to address their needs. When the
Constitution declared its intention to prioritize the predicament of the
underprivileged sick, elderly, disabled, women, and children,71 it did not make
any reservation as to income, race, religion or any other personal
circumstances. It was a blanket privilege afforded the group of citizens in the
enumeration in view of the vulnerability of their class.
R.A. No. 9257 is an implementation of the avowed policy of the Constitution
to enact measures that protect and enhance the right of all the people to
human dignity, reduce social, economic, and political inequalities. 72
Specifically, it caters to the welfare of all senior citizens. The classification is
based on age and therefore qualifies all who have attained the age of 60.
Senior citizens are a class of their own, who are in need and should be
entitled to government support, and the fact that they may still be earning for
their own sustenance should not disqualify them from the privilege.
It is well to consider that our senior citizens have already reached the age
when work opportunities have dwindled concurrently as their physical
health.1âwphi1 They are no longer expected to work, but there are still those
who continue to work and contribute what they can to the country. Thus, to
single them out and take them out of the privileges of the law for continuing
to strive and earn income to fend for themselves is inimical to a welfare state
that the Constitution envisions. It is tantamount to penalizing them for their
persistence. It is commending indolence rather than rewarding diligence. It
encourages them to become wards of the State rather than productive
partners.
Our senior citizens were the laborers, professionals and overseas contract
workers of the past. While some may be well to do or may have the capacity
to support their sustenance, the discretion to avail of the privileges of the law
is up to them. But to instantly tag them. as undeserving of the privilege would
be the height of ingratitude; it is an outright discrimination.
The same ratiocination may be said of the recognition of PWDs as a class in
R.A. No. 9442 and in granting them discounts.1âwphi1 It needs no further
explanation that PWDs have special needs which, for most,' last their entire
lifetime. They constitute a class of their own, equally deserving of
government support as our elderlies. While some of them maybe willing to
work and earn income for themselves, their disability deters them from living
their full potential. Thus, the need for assistance from the government to
augment the reduced income or productivity brought about by their physical
or intellectual limitations.
There is also no question that the grant of mandatory discount is germane to
the purpose of R.A. Nos. 9257 and 9442, that is, to adopt an integrated and
comprehensive approach to health development and make essential goods
and other social services available to all the people at affordable cost, with
special priority given to the elderlies and the disabled, among others. The
privileges granted by the laws ease their concerns and allow them to live
more comfortably.
The subject laws also address a continuing concern of the government for
the welfare of the senior citizens and PWDs. It is not some random
predicament but an actual, continuing and pressing concern that requires
preferential attention. Also, the laws apply to all senior citizens and PWDs,
respectively, without further distinction or reservation. Without a doubt, all the
elements for a valid classification were met.
The definitions of "disabilities" and
"PWDs" are clear and unequivocal
Undeterred, the petitioner claims that R.A. No. 9442 is ambiguous
particularly in defining the terms "disability" and "PWDs," such that it lack
comprehensible standards that men of common intelligence must guess at its
meaning. It likewise bewails the futility of the given safeguards to prevent
abuse since government officials who are neither experts nor practitioners of
medicine are given the authority to issue identification cards that authorizes
the granting of the privileges under the law.
The Court disagrees.
Section 4(a) of R.A. No. 7277, the precursor of R.A. No. 94421 defines
"disabled persons" as follows:
(a) Disabled persons are those suffering from restriction or different
abilities, as a result of a mental, physical or sensory impairment, to perform
an activity in the manner or within the range considered normal for a human
being[.]
On the other hand, the term "PWDs" is defined in Section 5.1 of the IRR of
R.A. No. 9442 as follows:
5.1. PersonswithDisability are those individuals defined under Section 4 of
[R.A. No.] 7277 [or] An Act Providing for the Rehabilitation, Self-Development
and Self-Reliance of Persons with Disability as amended and their integration
into the Mainstream of Society and for Other Purposes. This is defined as a
person suffering from restriction or different abilities, as a result of a mental,
physical or sensory impairment, to perform an activity in a manner or within
the range considered normal for human being. Disability shall mean (1) a
physical 1or mental impairment that substantially limits one or more
psychological, physiological or anatomical function of an individual or
activities of such individual; (2) a record of such an impairment; or (3) being
regarded as having such an impairment.
The foregoing definitions have a striking conformity with the definition of
"PWDs" in Article 1 of the United Nations Convention on the Rights of
Persons with Disabilities which reads:
Persons with disabilities include those who have long-term physical,
mental, intellectual or sensory impairments which in interaction with various
barriers may hinder their full and effective participation in society on an equal
basis with others. (Emphasis and italics ours)
The seemingly broad definition of the terms was not without good reasons. It
recognizes that "disability is an evolving concept" 73 and appreciates the
"diversity of PWDs."74 The terms were given comprehensive definitions so as
to accommodate the various forms of disabilities, and not confine it to a
particular case as this would effectively exclude other forms of physical,
intellectual or psychological impairments.
Moreover, in Estrada v. Sandiganbayan, 75 it was declared, thus:
A statute is not rendered uncertain and void merely because general terms
are used therein, or because of the employment of terms without defining
them; much less do we have to define every word we use. Besides, there is
no positive constitutional or statutory command requiring the legislature to
define each and every word in an enactment. Congress is not restricted in
the form of expression of its will, and its inability to so define the words
employed in a statute will not necessarily result in the vagueness or
ambiguity of the law so long as the legislative will is clear, or at least, can be 2. One (1) Valid ID
gathered from the whole act x x x.76 (Citation omitted)
3. Document to confirm the medical or disability condition 78
At any rate, the Court gathers no ambiguity in the provisions of R.A. No.
9442. As regards the petitioner's claim that the law lacked reasonable To confirm his disability, the person must obtain a medical certificate or
standards in determining the persons entitled to the discount, Section 32 assessment, as the case maybe, issued by a licensed private or government
thereof is on point as it identifies who may avail of the privilege and the physician, licensed teacher or head of a business establishment attesting to
manner of its availment. It states: his impairment. The issuing entity depends on whether the disability is
apparent or non-apparent. NCDAA.O. No. 001 further provides:79
Sec. 32. x x x
DISABILITY DOCUMENT ISSUING ENTITY
The abovementioned privileges are available only to persons with disability
who are Filipino citizens upon submission of any of the following as proof of Apparent Medical Licensed Private or
his/her entitlement thereto: Disability Certificate Government Physician

(I) An identification card issued by the city or municipal School Licensed Teacher duly
mayor or the barangay captain of the place where the Assessment signed by the School
persons with disability resides; Principal

(II) The passport of the persons with disability concerned; or Certificate of  Head of the Business
Disability
(III) Transportation discount fare Identification Card (ID)
issued by the National Council for the Welfare of Disabled Establishment
Persons (NCWDP).
 Head of Non-
It is, however, the petitioner's contention that the foregoing authorizes Government
government officials who had no medical background to exercise discretion Organization
in issuing identification cards to those claiming to be PWDs. It argues that the
provision lends to the indiscriminate availment of the privileges even by those
who are not qualified. Non-Apparent Medical Licensed Private or
Disability Certificate Government Physician
The petitioner's apprehension demonstrates a superficial understanding of
the law and its implementing rules. To be clear, the issuance of identification
cards to PWDs does not depend on the authority of the city or municipal To provide further safeguard, the Department of Health issued A.O. No.
mayor, the DSWD or officials of the NCDA (formerly NCWDP). It is well to 2009-0011, providing guidelines for the availment of the 20% discount on the
remember that what entitles a person to the privileges of the law is purchase of medicines by PWDs. In making a purchase, the individual must
his disability, the fact of which he must prove to qualify. Thus, in NCDA present the documents enumerated in Section VI(4)(b ), to wit:
Administrative Order (A.O.) No. 001, series of 2008, 77 it is required that the
person claiming disability must submit the following requirements before he i. PWD identification card x x x
shall be issued a PWD Identification Card:
ii. Doctor's prescription stating the name of the PWD, age, sex,
1. Two "1 x l" recent ID pictures with the names, and signatures or thumb address, date, generic name of the medicine, dosage form, dosage
marks at the back of the picture. strength, quantity, signature over printed name of physician,
physician's address, contact number of physician or dentist,
professional license number, professional tax receipt number and
narcotic license number, if applicable. To safeguard the health of
PWDs and to prevent abuse of [R.A. No.] 9257, a doctor's
prescription is required in the purchase of over-the-counter
medicines. x x x.
iii. Purchase booklet issued by the local social/health office to PWDs
for free containing the following basic information:
a) PWD ID number
b) Booklet control number
c) Name of PWD
The PWD identification card also has a validity period of only three years
which facilitate in the monitoring of those who may need continued support
and who have been relieved of their disability, and therefore may be taken
out of the coverage of the law.
At any rate, the law has penal provisions which give concerned
establishments the option to file a case against those abusing the privilege
Section 46(b) of R.A. No. 9442 provides that "[a]ny person who abuses the
privileges granted herein shall be punished with imprisonment of not less
than six months or a fine of not less than Five Thousand pesos (₱5,000.00),
but not more than Fifty Thousand pesos (₱50,000.00), or both, at the
discretion of the court." Thus, concerned establishments, together with the
proper government agencies, must actively participate in monitoring
compliance with the law so that only the intended beneficiaries of the law can
avail of the privileges.

d) Sex Indubitably, the law is clear and unequivocal, and the petitioner claim of
vagueness to cast uncertainty in the validity of the law does not stand.
e) Address
WHEREFORE, in view of the foregoing disquisition, Section 4(a) of Republic
f) Date of Birth Act No. 9257 and Section 32 of Republic Act No. 9442 are hereby
declared CONSTITUTIONAL.
g) Picture
<<page>>
h) Signature of PWD
SO ORDERED.
i) Information of medicine purchased:
Republic of the Philippines
i.1 Name of medicine SUPREME COURT
Manila
i.2 Quantity
EN BANC
i.3 Attending Physician
G.R. No. 81958 June 30, 1988
i.4 License Number
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,
i.5 Servicing drug store name vs.
HON. FRANKLIN M. DRILON as Secretary of Labor and Employment,
and TOMAS D. ACHACOSO, as Administrator of the Philippine
i.6 Name of dispensing pharmacist
Overseas Employment Administration, respondents.

j) Authorization letter of the PWD x x x in case the

Gutierrez & Alo Law Offices for petitioner.
medicine is bought by the representative or
caregiver of the PWD.
SARMIENTO, J.:
The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for
short), a firm "engaged principally in the recruitment of Filipino workers, male
and female, for overseas placement," 1 challenges the Constitutional validity
of Department Order No. 1, Series of 1988, of the Department of Labor and
Employment, in the character of "GUIDELINES GOVERNING THE
TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC
AND HOUSEHOLD WORKERS," in this petition for certiorari and prohibition.
Specifically, the measure is assailed for "discrimination against males or
females;" 2 that it "does not apply to all Filipino workers but only to domestic
helpers and females with similar skills;" 3 and that it is violative of the right to
travel. It is held likewise to be an invalid exercise of the lawmaking power,
police power being legislative, and not executive, in character.
In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of
the Constitution, providing for worker participation "in policy and decision-
making processes affecting their rights and benefits as may be provided by
law." 4 Department Order No. 1, it is contended, was passed in the absence
of prior consultations. It is claimed, finally, to be in violation of the Charter's
non-impairment clause, in addition to the "great and irreparable injury" that
PASEI members face should the Order be further enforced.
On May 25, 1988, the Solicitor General, on behalf of the respondents
Secretary of Labor and Administrator of the Philippine Overseas Employment
Administration, filed a Comment informing the Court that on March 8, 1988,
the respondent Labor Secretary lifted the deployment ban in the states of
Iraq, Jordan, Qatar, Canada, Hongkong, United States, Italy, Norway,
Austria, and Switzerland. * In submitting the validity of the challenged
"guidelines," the Solicitor General invokes the police power of the Philippine
State.
It is admitted that Department Order No. 1 is in the nature of a police power
measure. The only question is whether or not it is valid under the
Constitution.
The concept of police power is well-established in this jurisdiction. It has
been defined as the "state authority to enact legislation that may interfere
with personal liberty or property in order to promote the general welfare." 5 As
defined, it consists of (1) an imposition of restraint upon liberty or property,
(2) in order to foster the common good. It is not capable of an exact definition
but has been, purposely, veiled in general terms to underscore its all-
comprehensive embrace.
"Its scope, ever-expanding to meet the exigencies of the times, even to
anticipate the future where it could be done, provides enough room for an
efficient and flexible response to conditions and circumstances thus assuring
the greatest benefits." 6
It finds no specific Constitutional grant for the plain reason that it does not
owe its origin to the Charter. Along with the taxing power and eminent
domain, it is inborn in the very fact of statehood and sovereignty. It is a
fundamental attribute of government that has enabled it to perform the most
vital functions of governance. Marshall, to whom the expression has been
credited, 7 refers to it succinctly as the plenary power of the State "to govern
its citizens." 8
"The police power of the State ... is a power coextensive with self- protection,
and it is not inaptly termed the "law of overwhelming necessity." It may be
said to be that inherent and plenary power in the State which enables it to
prohibit all things hurtful to the comfort, safety, and welfare of society." 9
It constitutes an implied limitation on the Bill of Rights. According to
Fernando, it is "rooted in the conception that men in organizing the state and
imposing upon its government limitations to safeguard constitutional rights
did not intend thereby to enable an individual citizen or a group of citizens to
obstruct unreasonably the enactment of such salutary measures calculated
to ensure communal peace, safety, good order, and welfare." 10 Significantly,
the Bill of Rights itself does not purport to be an absolute guaranty of
individual rights and liberties "Even liberty itself, the greatest of all rights, is
not unrestricted license to act according to one's will." 11 It is subject to the far
more overriding demands and requirements of the greater number.
Notwithstanding its extensive sweep, police power is not without its own
limitations. For all its awesome consequences, it may not be exercised
arbitrarily or unreasonably. Otherwise, and in that event, it defeats the
purpose for which it is exercised, that is, to advance the public good. Thus,
when the power is used to further private interests at the expense of the
citizenry, there is a clear misuse of the power. 12
In the light of the foregoing, the petition must be dismissed.
As a general rule, official acts enjoy a presumed vahdity. 13 In the absence of
clear and convincing evidence to the contrary, the presumption logically
stands.
The petitioner has shown no satisfactory reason why the contested measure
should be nullified. There is no question that Department Order No. 1 applies
only to "female contract workers," 14 but it does not thereby make an undue
discrimination between the sexes. It is well-settled that "equality before the
law" under the Constitution 15does not import a perfect Identity of rights
among all men and women. It admits of classifications, provided that (1) such
classifications rest on substantial distinctions; (2) they are germane to the
purposes of the law; (3) they are not confined to existing conditions; and (4)
they apply equally to all members of the same class. 16
The Court is satisfied that the classification made-the preference for female
workers — rests on substantial distinctions.
As a matter of judicial notice, the Court is well aware of the unhappy plight
that has befallen our female labor force abroad, especially domestic
servants, amid exploitative working conditions marked by, in not a few cases,
physical and personal abuse. The sordid tales of maltreatment suffered by
migrant Filipina workers, even rape and various forms of torture, confirmed
by testimonies of returning workers, are compelling motives for urgent
Government action. As precisely the caretaker of Constitutional rights, the
Court is called upon to protect victims of exploitation. In fulfilling that duty, the
Court sustains the Government's efforts.
The same, however, cannot be said of our male workers. In the first place,
there is no evidence that, except perhaps for isolated instances, our men
abroad have been afflicted with an Identical predicament. The petitioner has
proffered no argument that the Government should act similarly with respect
to male workers. The Court, of course, is not impressing some male
chauvinistic notion that men are superior to women. What the Court is saying
is that it was largely a matter of evidence (that women domestic workers are
being ill-treated abroad in massive instances) and not upon some fanciful or
arbitrary yardstick that the Government acted in this case. It is evidence
capable indeed of unquestionable demonstration and evidence this Court
accepts. The Court cannot, however, say the same thing as far as men are
concerned. There is simply no evidence to justify such an inference. Suffice it
to state, then, that insofar as classifications are concerned, this Court is
content that distinctions are borne by the evidence. Discrimination in this
case is justified.
As we have furthermore indicated, executive determinations are generally
final on the Court. Under a republican regime, it is the executive branch that
enforces policy. For their part, the courts decide, in the proper cases,
whether that policy, or the manner by which it is implemented, agrees with
the Constitution or the laws, but it is not for them to question its wisdom. As a
co-equal body, the judiciary has great respect for determinations of the Chief
Executive or his subalterns, especially when the legislature itself has
specifically given them enough room on how the law should be effectively
enforced. In the case at bar, there is no gainsaying the fact, and the Court
will deal with this at greater length shortly, that Department Order No. 1
implements the rule-making powers granted by the Labor Code. But what
should be noted is the fact that in spite of such a fiction of finality, the Court is
on its own persuaded that prevailing conditions indeed call for a deployment
ban.
There is likewise no doubt that such a classification is germane to the
purpose behind the measure. Unquestionably, it is the avowed objective of
Department Order No. 1 to "enhance the protection for Filipino female
overseas workers" 17 this Court has no quarrel that in the midst of the terrible
mistreatment Filipina workers have suffered abroad, a ban on deployment
will be for their own good and welfare.
The Order does not narrowly apply to existing conditions. Rather, it is
intended to apply indefinitely so long as those conditions exist. This is clear
from the Order itself ("Pending review of the administrative and legal
measures, in the Philippines and in the host countries . . ."18), meaning to say
that should the authorities arrive at a means impressed with a greater degree
of permanency, the ban shall be lifted. As a stop-gap measure, it is
possessed of a necessary malleability, depending on the circumstances of
each case. Accordingly, it provides:
9. LIFTING OF SUSPENSION. — The Secretary of Labor
and Employment (DOLE) may, upon recommendation of the
Philippine Overseas Employment Administration (POEA), lift
the suspension in countries where there are:
1. Bilateral agreements or understanding with the
Philippines, and/or,
2. Existing mechanisms providing for sufficient safeguards to
ensure the welfare and protection of Filipino workers. 19
The Court finds, finally, the impugned guidelines to be applicable to all
female domestic overseas workers. That it does not apply to "all Filipina
workers" 20 is not an argument for unconstitutionality. Had the ban been
given universal applicability, then it would have been unreasonable and
arbitrary. For obvious reasons, not all of them are similarly circumstanced.
What the Constitution prohibits is the singling out of a select person or group
of persons within an existing class, to the prejudice of such a person or group
or resulting in an unfair advantage to another person or group of persons. To
apply the ban, say exclusively to workers deployed by A, but not to those
recruited by B, would obviously clash with the equal protection clause of the
Charter. It would be a classic case of what Chase refers to as a law that
"takes property from A and gives it to B." 21 It would be an unlawful invasion
of property rights and freedom of contract and needless to state, an invalid
act. 22 (Fernando says: "Where the classification is based on such
distinctions that make a real difference as infancy, sex, and stage of
civilization of minority groups, the better rule, it would seem, is to recognize
its validity only if the young, the women, and the cultural minorities are
singled out for favorable treatment. There would be an element of
unreasonableness if on the contrary their status that calls for the law
ministering to their needs is made the basis of discriminatory legislation
against them. If such be the case, it would be difficult to refute the assertion
of denial of equal protection." 23 In the case at bar, the assailed Order clearly
accords protection to certain women workers, and not the contrary.)
It is incorrect to say that Department Order No. 1 prescribes a total ban on
overseas deployment. From scattered provisions of the Order, it is evident
that such a total ban has hot been contemplated. We quote:
5. AUTHORIZED DEPLOYMENT-The deployment of
domestic helpers and workers of similar skills defined herein
to the following [sic] are authorized under these guidelines
and are exempted from the suspension.
5.1 Hirings by immediate members of the
family of Heads of State and Government;
5.2 Hirings by Minister, Deputy Minister and
the other senior government officials; and
5.3 Hirings by senior officials of the
diplomatic corps and duly accredited
international organizations.
5.4 Hirings by employers in countries with
whom the Philippines have [sic] bilateral
labor agreements or understanding.
xxx xxx xxx
7. VACATIONING DOMESTIC HELPERS AND WORKERS
OF SIMILAR SKILLS--Vacationing domestic helpers and/or
workers of similar skills shall be allowed to process with the
POEA and leave for worksite only if they are returning to the
same employer to finish an existing or partially served
employment contract. Those workers returning to worksite to
serve a new employer shall be covered by the suspension
and the provision of these guidelines.
xxx xxx xxx
9. LIFTING OF SUSPENSION-The Secretary of Labor and
Employment (DOLE) may, upon recommendation of the
Philippine Overseas Employment Administration (POEA), lift
the suspension in countries where there are:
1. Bilateral agreements or understanding
with the Philippines, and/or,
2. Existing mechanisms providing for
sufficient safeguards to ensure the welfare
and protection of Filipino workers. 24
xxx xxx xxx
The consequence the deployment ban has on the right to travel does not
impair the right. The right to travel is subject, among other things, to the
requirements of "public safety," "as may be provided by law." 25 Department
Order No. 1 is a valid implementation of the Labor Code, in particular, its
basic policy to "afford protection to labor," 26 pursuant to the respondent
Department of Labor's rule-making authority vested in it by the Labor
Code. 27 The petitioner assumes that it is unreasonable simply because of its
impact on the right to travel, but as we have stated, the right itself is not
absolute. The disputed Order is a valid qualification thereto.
Neither is there merit in the contention that Department Order No. 1
constitutes an invalid exercise of legislative power. It is true that police power
is the domain of the legislature, but it does not mean that such an authority
may not be lawfully delegated. As we have mentioned, the Labor Code itself
vests the Department of Labor and Employment with rulemaking powers in
the enforcement whereof. 28
The petitioners's reliance on the Constitutional guaranty of worker
participation "in policy and decision-making processes affecting their rights
and benefits" 29 is not well-taken. The right granted by this provision, again,
must submit to the demands and necessities of the State's power of
regulation.
The Constitution declares that:
Sec. 3. The State shall afford full protection to labor, local
and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for
all. 30
"Protection to labor" does not signify the promotion of employment alone.
What concerns the Constitution more paramountly is that such an
employment be above all, decent, just, and humane. It is bad enough that the
country has to send its sons and daughters to strange lands because it
cannot satisfy their employment needs at home. Under these circumstances,
the Government is duty-bound to insure that our toiling expatriates have
adequate protection, personally and economically, while away from home. In
this case, the Government has evidence, an evidence the petitioner cannot
seriously dispute, of the lack or inadequacy of such protection, and as part of
its duty, it has precisely ordered an indefinite ban on deployment.
The Court finds furthermore that the Government has not indiscriminately
made use of its authority. It is not contested that it has in fact removed the
prohibition with respect to certain countries as manifested by the Solicitor
General.
The non-impairment clause of the Constitution, invoked by the petitioner,
must yield to the loftier purposes targetted by the Government. 31 Freedom of
contract and enterprise, like all other freedoms, is not free from restrictions,
more so in this jurisdiction, where laissez faire has never been fully accepted
as a controlling economic way of life.
This Court understands the grave implications the questioned Order has on
the business of recruitment. The concern of the Government, however, is not
necessarily to maintain profits of business firms. In the ordinary sequence of
events, it is profits that suffer as a result of Government regulation. The
interest of the State is to provide a decent living to its citizens. The
Government has convinced the Court in this case that this is its intent. We do
not find the impugned Order to be tainted with a grave abuse of discretion to
warrant the extraordinary relief prayed for.
WHEREFORE, the petition is DISMISSED. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-7995 May 31, 1957
LAO H. ICHONG, in his own behalf and in behalf of other alien
residents, corporations and partnerships adversely affected. by
Republic Act No. 1180, petitioner,
vs.
JAIME HERNANDEZ, Secretary of Finance, and MARCELINO
SARMIENTO, City Treasurer of Manila,respondents.
Ozaeta, Lichauco and Picazo and Sycip, Quisumbing, Salazar and
Associates for petitioner.
Office of the Solicitor General Ambrosio Padilla and Solicitor Pacifico P. de
Castro for respondent Secretary of Finance.
City Fiscal Eugenio Angeles and Assistant City Fiscal Eulogio S. Serrano for
respondent City Treasurer.
Dionisio Reyes as Amicus Curiae.
Marcial G. Mendiola as Amicus Curiae.
Emiliano R. Navarro as Amicus Curiae.
LABRADOR, J.:
I. The case and issue, in general
This Court has before it the delicate task of passing upon the validity and
constitutionality of a legislative enactment, fundamental and far-reaching in
significance. The enactment poses questions of due process, police power
and equal protection of the laws. It also poses an important issue of fact, that
is whether the conditions which the disputed law purports to remedy really or
actually exist. Admittedly springing from a deep, militant, and positive
nationalistic impulse, the law purports to protect citizen and country from the
alien retailer. Through it, and within the field of economy it regulates,
Congress attempts to translate national aspirations for economic
independence and national security, rooted in the drive and urge for national
survival and welfare, into a concrete and tangible measures designed to free
the national retailer from the competing dominance of the alien, so that the
country and the nation may be free from a supposed economic dependence
and bondage. Do the facts and circumstances justify the enactment?
II. Pertinent provisions of Republic Act No. 1180
Republic Act No. 1180 is entitled "An Act to Regulate the Retail Business." In
effect it nationalizes the retail trade business. The main provisions of the Act
are: (1) a prohibition against persons, not citizens of the Philippines, and
against associations, partnerships, or corporations the capital of which are
not wholly owned by citizens of the Philippines, from engaging directly or
indirectly in the retail trade; (2) an exception from the above prohibition in
favor of aliens actually engaged in said business on May 15, 1954, who are
allowed to continue to engaged therein, unless their licenses are forfeited in
accordance with the law, until their death or voluntary retirement in case of
natural persons, and for ten years after the approval of the Act or until the
expiration of term in case of juridical persons; (3) an exception therefrom in
favor of citizens and juridical entities of the United States; (4) a provision for
the forfeiture of licenses (to engage in the retail business) for violation of the
laws on nationalization, control weights and measures and labor and other
laws relating to trade, commerce and industry; (5) a prohibition against the
establishment or opening by aliens actually engaged in the retail business of
additional stores or branches of retail business, (6) a provision requiring
aliens actually engaged in the retail business to present for registration with
the proper authorities a verified statement concerning their businesses,
giving, among other matters, the nature of the business, their assets and
liabilities and their offices and principal offices of judicial entities; and (7) a
provision allowing the heirs of aliens now engaged in the retail business who
die, to continue such business for a period of six months for purposes of
liquidation.
III. Grounds upon which petition is based-Answer thereto
Petitioner, for and in his own behalf and on behalf of other alien residents
corporations and partnerships adversely affected by the provisions of
Republic Act. No. 1180, brought this action to obtain a judicial declaration
that said Act is unconstitutional, and to enjoin the Secretary of Finance and
all other persons acting under him, particularly city and municipal treasurers,
from enforcing its provisions. Petitioner attacks the constitutionality of the
Act, contending that: (1) it denies to alien residents the equal protection of
the laws and deprives of their liberty and property without due process of law
; (2) the subject of the Act is not expressed or comprehended in the title
thereof; (3) the Act violates international and treaty obligations of the
Republic of the Philippines; (4) the provisions of the Act against the
transmission by aliens of their retail business thru hereditary succession, and
those requiring 100% Filipino capitalization for a corporation or entity to
entitle it to engage in the retail business, violate the spirit of Sections 1 and 5,
Article XIII and Section 8 of Article XIV of the Constitution.
In answer, the Solicitor-General and the Fiscal of the City of Manila contend
that: (1) the Act was passed in the valid exercise of the police power of the
State, which exercise is authorized in the Constitution in the interest of
national economic survival; (2) the Act has only one subject embraced in the
title; (3) no treaty or international obligations are infringed; (4) as regards
hereditary succession, only the form is affected but the value of the property
is not impaired, and the institution of inheritance is only of statutory origin.
IV. Preliminary consideration of legal principles involved
a. The police power. —
There is no question that the Act was approved in the exercise of the police
power, but petitioner claims that its exercise in this instance is attended by a
violation of the constitutional requirements of due process and equal
protection of the laws. But before proceeding to the consideration and
resolution of the ultimate issue involved, it would be well to bear in mind
certain basic and fundamental, albeit preliminary, considerations in the
determination of the ever recurrent conflict between police power and the
guarantees of due process and equal protection of the laws. What is the
scope of police power, and how are the due process and equal protection
clauses related to it? What is the province and power of the legislature, and
what is the function and duty of the courts? These consideration must be
clearly and correctly understood that their application to the facts of the case
may be brought forth with clarity and the issue accordingly resolved.
It has been said the police power is so far - reaching in scope, that it has
become almost impossible to limit its sweep. As it derives its existence from
the very existence of the State itself, it does not need to be expressed or
defined in its scope; it is said to be co-extensive with self-protection and
survival, and as such it is the most positive and active of all governmental
processes, the most essential, insistent and illimitable. Especially is it so
under a modern democratic framework where the demands of society and of
nations have multiplied to almost unimaginable proportions; the field and
scope of police power has become almost boundless, just as the fields of
public interest and public welfare have become almost all-embracing and
have transcended human foresight. Otherwise stated, as we cannot foresee
the needs and demands of public interest and welfare in this constantly
changing and progressive world, so we cannot delimit beforehand the extent
or scope of police power by which and through which the State seeks to
attain or achieve interest or welfare. So it is that Constitutions do not define
the scope or extent of the police power of the State; what they do is to set
forth the limitations thereof. The most important of these are the due process
clause and the equal protection clause.
b. Limitations on police power. —
The basic limitations of due process and equal protection are found in the
following provisions of our Constitution:
SECTION 1.(1) No person shall be deprived of life, liberty or property
without due process of law, nor any person be denied the equal
protection of the laws. (Article III, Phil. Constitution)
These constitutional guarantees which embody the essence of individual
liberty and freedom in democracies, are not limited to citizens alone but are
admittedly universal in their application, without regard to any differences of
race, of color, or of nationality. (Yick Wo vs. Hopkins, 30, L. ed. 220, 226.)
c. The, equal protection clause. —
The equal protection of the law clause is against undue favor and individual
or class privilege, as well as hostile discrimination or the oppression of
inequality. It is not intended to prohibit legislation, which is limited either in
the object to which it is directed or by territory within which is to operate. It
does not demand absolute equality among residents; it merely requires that
all persons shall be treated alike, under like circumstances and
conditions both as to privileges conferred and liabilities enforced. The equal
protection clause is not infringed by legislation which applies only to those
persons falling within a specified class, if it applies alike to all persons within
such class, and reasonable grounds exists for making a distinction between
those who fall within such class and those who do not. (2 Cooley,
Constitutional Limitations, 824-825.)
d. The due process clause. —
The due process clause has to do with the reasonableness of legislation
enacted in pursuance of the police power. Is there public interest, a public
purpose; is public welfare involved? Is the Act reasonably necessary for the
accomplishment of the legislature's purpose; is it not unreasonable, arbitrary
or oppressive? Is there sufficient foundation or reason in connection with the
matter involved; or has there not been a capricious use of the legislative
power? Can the aims conceived be achieved by the means used, or is it not
merely an unjustified interference with private interest? These are the
questions that we ask when the due process test is applied.
The conflict, therefore, between police power and the guarantees of due
process and equal protection of the laws is more apparent than real. Properly
related, the power and the guarantees are supposed to coexist. The
balancing is the essence or, shall it be said, the indispensable means for the
attainment of legitimate aspirations of any democratic society. There can be
no absolute power, whoever exercise it, for that would be tyranny. Yet there
can neither be absolute liberty, for that would mean license and anarchy. So
the State can deprive persons of life, liberty and property, provided there is
due process of law; and persons may be classified into classes and groups,
provided everyone is given the equal protection of the law. The test or
standard, as always, is reason. The police power legislation must be firmly
grounded on public interest and welfare, and a reasonable relation must exist
between purposes and means. And if distinction and classification has been
made, there must be a reasonable basis for said distinction.
e. Legislative discretion not subject to judicial review. —
Now, in this matter of equitable balancing, what is the proper place and role
of the courts? It must not be overlooked, in the first place, that the legislature,
which is the constitutional repository of police power and exercises the
prerogative of determining the policy of the State, is by force of
circumstances primarily the judge of necessity, adequacy or reasonableness
and wisdom, of any law promulgated in the exercise of the police power, or of
the measures adopted to implement the public policy or to achieve public
interest. On the other hand, courts, although zealous guardians of individual
liberty and right, have nevertheless evinced a reluctance to interfere with the
exercise of the legislative prerogative. They have done so early where there
has been a clear, patent or palpable arbitrary and unreasonable abuse of the
legislative prerogative. Moreover, courts are not supposed to override
legitimate policy, and courts never inquire into the wisdom of the law.
V. Economic problems sought to be remedied
With the above considerations in mind, we will now proceed to delve directly
into the issue involved. If the disputed legislation were merely a regulation,
as its title indicates, there would be no question that it falls within the
legitimate scope of legislative power. But it goes further and prohibits a group
of residents, the aliens, from engaging therein. The problem becomes more
complex because its subject is a common, trade or occupation, as old as
society itself, which from the immemorial has always been open to residents,
irrespective of race, color or citizenship.
a. Importance of retail trade in the economy of the nation. —
In a primitive economy where families produce all that they consume and
consume all that they produce, the dealer, of course, is unknown. But as
group life develops and families begin to live in communities producing more
than what they consume and needing an infinite number of things they do not
produce, the dealer comes into existence. As villages develop into big
communities and specialization in production begins, the dealer's importance
is enhanced. Under modern conditions and standards of living, in which
man's needs have multiplied and diversified to unlimited extents and
proportions, the retailer comes as essential as the producer, because thru
him the infinite variety of articles, goods and needed for daily life are placed
within the easy reach of consumers. Retail dealers perform the functions of
capillaries in the human body, thru which all the needed food and supplies
are ministered to members of the communities comprising the nation.
There cannot be any question about the importance of the retailer in the life
of the community. He ministers to the resident's daily needs, food in all its
increasing forms, and the various little gadgets and things needed for home issue of fact merits serious consideration. The others are matters of opinion
and daily life. He provides his customers around his store with the rice or within the exclusive competence of the legislature and beyond our
corn, the fish, the salt, the vinegar, the spices needed for the daily cooking. prerogative to pass upon and decide.
He has cloths to sell, even the needle and the thread to sew them or darn the
clothes that wear out. The retailer, therefore, from the lowly peddler, the The best evidence are the statistics on the retail trade, which put down the
owner of a small sari-sari store, to the operator of a department store or, a figures in black and white. Between the constitutional convention year
supermarket is so much a part of day-to-day existence. (1935), when the fear of alien domination and control of the retail trade
already filled the minds of our leaders with fears and misgivings, and the year
b. The alien retailer's trait. — of the enactment of the nationalization of the retail trade act (1954), official
statistics unmistakably point out to the ever-increasing dominance and
The alien retailer must have started plying his trades in this country in the control by the alien of the retail trade, as witness the following tables:
bigger centers of population (Time there was when he was unknown in
provincial towns and villages). Slowly but gradually be invaded towns and Assets Gross S
villages; now he predominates in the cities and big centers of population. He
even pioneers, in far away nooks where the beginnings of community life Year and Retailers No.- Per cent
Pesos Pesos
appear, ministering to the daily needs of the residents and purchasing their Nationality Establishments Distribution D
agricultural produce for sale in the towns. It is an undeniable fact that in 1941:
many communities the alien has replaced the native retailer. He has shown Filipino 106,671 200,323,138 55.82 174,181,924
in this trade, industry without limit, and the patience and forbearance of a ..........
slave.
Chinese 15,356 118,348,692 32.98 148,813,239
...........
Derogatory epithets are hurled at him, but he laughs these off without
murmur; insults of ill-bred and insolent neighbors and customers are made in Others 1,646 40,187,090 11.20 13,630,239
his face, but he heeds them not, and he forgets and forgives. The community ............
takes note of him, as he appears to be harmless and extremely useful. 1947:
Filipino 111,107 208,658,946 65.05 279,583,333
c. Alleged alien control and dominance. —
..........
There is a general feeling on the part of the public, which appears to be true Chinese 13,774 106,156,218 33.56 205,701,134
to fact, about the controlling and dominant position that the alien retailer ...........
holds in the nation's economy. Food and other essentials, clothing, almost all Others 354 8,761,260 .49 4,927,168
articles of daily life reach the residents mostly through him. In big cities and ...........
centers of population he has acquired not only predominance, but apparent
1948: (Census)
control over distribution of almost all kinds of goods, such as lumber,
hardware, textiles, groceries, drugs, sugar, flour, garlic, and scores of other Filipino 113,631 213,342,264 67.30 467,161,667
goods and articles. And were it not for some national corporations like the ..........
Naric, the Namarco, the Facomas and the Acefa, his control over principal Chinese 12,087 93,155,459 29.38 294,894,227
foods and products would easily become full and complete. ..........
Others 422 10,514,675 3.32 9,995,402
Petitioner denies that there is alien predominance and control in the retail ..........
trade. In one breath it is said that the fear is unfounded and the threat is
imagined; in another, it is charged that the law is merely the result of 1949:
radicalism and pure and unabashed nationalism. Alienage, it is said, is not an Filipino 113,659 213,451,602 60.89 462,532,901
element of control; also so many unmanageable factors in the retail business ..........
make control virtually impossible. The first argument which brings up an
 Chinese 16,248 125,223,336 35.72 392,414,875 45.36
1949:
..........
Others 486 12,056,365 3.39 10,078,364 1.17 Filipino ............................................. 1,878 4,069
..........
Chinese .............................................. 7,707 24,152
1951:
Filipino 119,352 224,053,620 61.09 466,058,052 53.07 Others .............................................. 24,807 20,737
.........
1951:
Chinese 17,429 134,325,303 36.60 404,481,384 46.06
.......... Filipino ............................................. 1,877 3,905
Others 347 8,614,025 2.31 7,645,327 87
.......... Chinese ............................................. 7,707 33,207

Others ............................................... 24,824 22,033

(Estimated Assets and Gross Sales of Retail Establishments, By

AVERAGE Year and Nationality of Owners, Benchmark: 1948 Census, issued
ASSETS AND GROSS SALES PER ESTABLISHMENT by the Bureau of Census and Statistics, Department of Commerce
and Industry; pp. 18-19 of Answer.)
Item Gross
Year and Retailer's
Assets Sales
Nationality The above statistics do not include corporations and partnerships, while the
(Pesos) (Pesos)
figures on Filipino establishments already include mere market vendors,
1941: whose capital is necessarily small..

Filipino .............................................
Chinese ..............................................
Others ...............................................
1947:
Filipino .............................................
Chinese ...........................................
Others ..............................................
1,878 1,633 The above figures reveal that in percentage distribution of assests and gross
sales, alien participation has steadily increased during the years. It is true, of
7,707 9,691 course, that Filipinos have the edge in the number of retailers, but aliens
more than make up for the numerical gap through their assests and gross
24,415 8,281 sales which average between six and seven times those of the very many
Filipino retailers. Numbers in retailers, here, do not imply superiority; the
alien invests more capital, buys and sells six to seven times more, and gains
much more. The same official report, pointing out to the known
1,878 2,516 predominance of foreign elements in the retail trade, remarks that the Filipino
retailers were largely engaged in minor retailer enterprises. As observed by
7,707 14,934 respondents, the native investment is thinly spread, and the Filipino retailer is
practically helpless in matters of capital, credit, price and supply.
24,749 13,919

1948: (Census) d. Alien control and threat, subject of apprehension in Constitutional

convention. —
Filipino ............................................. 1,878 4,111
It is this domination and control, which we believe has been sufficiently
Chinese ............................................. 7,707 24,398 shown to exist, that is the legislature's target in the enactment of the disputed
nationalization would never have been adopted. The framers of our
Others .............................................. 24,916 23,686 Constitution also believed in the existence of this alien dominance and
control when they approved a resolution categorically declaring among other
things, that "it is the sense of the Convention that the public interest requires
the nationalization of the retail trade; . . . ." (II Aruego, The Framing of the
Philippine Constitution, 662-663, quoted on page 67 of Petitioner.) That was
twenty-two years ago; and the events since then have not been either
pleasant or comforting. Dean Sinco of the University of the Philippines
College of Law, commenting on the patrimony clause of the Preamble opines
that the fathers of our Constitution were merely translating the general
preoccupation of Filipinos "of the dangers from alien interests that had
already brought under their control the commercial and other economic
activities of the country" (Sinco, Phil. Political Law, 10th ed., p. 114); and
analyzing the concern of the members of the constitutional convention for the
economic life of the citizens, in connection with the nationalistic provisions of
the Constitution, he says:
But there has been a general feeling that alien dominance over the
economic life of the country is not desirable and that if such a
situation should remain, political independence alone is no
guarantee to national stability and strength. Filipino private capital is
not big enough to wrest from alien hands the control of the national
economy. Moreover, it is but of recent formation and hence, largely
inexperienced, timid and hesitant. Under such conditions, the
government as the instrumentality of the national will, has to step in
and assume the initiative, if not the leadership, in the struggle for the
economic freedom of the nation in somewhat the same way that it
did in the crusade for political freedom. Thus . . . it (the Constitution)
envisages an organized movement for the protection of the nation
not only against the possibilities of armed invasion but also against
its economic subjugation by alien interests in the economic field.
(Phil. Political Law by Sinco, 10th ed., p. 476.)
Belief in the existence of alien control and predominance is felt in other
quarters. Filipino businessmen, manufacturers and producers believe so;
they fear the dangers coming from alien control, and they express sentiments
of economic independence. Witness thereto is Resolution No. 1, approved
on July 18, 1953, of the Fifth National convention of Filipino Businessmen,
and a similar resolution, approved on March 20, 1954, of the Second
National Convention of Manufacturers and Producers. The man in the street
also believes, and fears, alien predominance and control; so our
newspapers, which have editorially pointed out not only to control but to alien
stranglehold. We, therefore, find alien domination and control to be a fact, a
reality proved by official statistics, and felt by all the sections and groups that
compose the Filipino community.
e. Dangers of alien control and dominance in retail. —
But the dangers arising from alien participation in the retail trade does not
seem to lie in the predominance alone; there is a prevailing feeling that such
predominance may truly endanger the national interest. With ample capital,
unity of purpose and action and thorough organization, alien retailers and
merchants can act in such complete unison and concert on such vital matters
as the fixing of prices, the determination of the amount of goods or articles to
be made available in the market, and even the choice of the goods or articles
they would or would not patronize or distribute, that fears of dislocation of the
national economy and of the complete subservience of national economy
and of the consuming public are not entirely unfounded. Nationals, producers
and consumers alike can be placed completely at their mercy. This is easily
illustrated. Suppose an article of daily use is desired to be prescribed by the
aliens, because the producer or importer does not offer them sufficient
profits, or because a new competing article offers bigger profits for its
introduction. All that aliens would do is to agree to refuse to sell the first
article, eliminating it from their stocks, offering the new one as a substitute.
Hence, the producers or importers of the prescribed article, or its consumers,
find the article suddenly out of the prescribed article, or its consumers, find
the article suddenly out of circulation. Freedom of trade is thus curtailed and
free enterprise correspondingly suppressed.
We can even go farther than theoretical illustrations to show the pernicious
influences of alien domination. Grave abuses have characterized the
exercise of the retail trade by aliens. It is a fact within judicial notice, which
courts of justice may not properly overlook or ignore in the interests of truth
and justice, that there exists a general feeling on the part of the public that
alien participation in the retail trade has been attended by a pernicious and
intolerable practices, the mention of a few of which would suffice for our
purposes; that at some time or other they have cornered the market of
essential commodities, like corn and rice, creating artificial scarcities to justify
and enhance profits to unreasonable proportions; that they have hoarded
essential foods to the inconvenience and prejudice of the consuming public,
so much so that the Government has had to establish the National Rice and
Corn Corporation to save the public from their continuous hoarding practices
and tendencies; that they have violated price control laws, especially on
foods and essential commodities, such that the legislature had to enact a law
(Sec. 9, Republic Act No. 1168), authorizing their immediate and automatic
deportation for price control convictions; that they have secret combinations
among themselves to control prices, cheating the operation of the law of
supply and demand; that they have connived to boycott honest merchants
and traders who would not cater or yield to their demands, in unlawful
restraint of freedom of trade and enterprise. They are believed by the public
to have evaded tax laws, smuggled goods and money into and out of the
land, violated import and export prohibitions, control laws and the like, in
derision and contempt of lawful authority. It is also believed that they have
engaged in corrupting public officials with fabulous bribes, indirectly causing
the prevalence of graft and corruption in the Government. As a matter of fact
appeals to unscrupulous aliens have been made both by the Government
and by their own lawful diplomatic representatives, action which impliedly
admits a prevailing feeling about the existence of many of the above
practices.
The circumstances above set forth create well founded fears that worse
things may come in the future. The present dominance of the alien retailer,
especially in the big centers of population, therefore, becomes a potential
source of danger on occasions of war or other calamity. We do not have here
in this country isolated groups of harmless aliens retailing goods among
nationals; what we have are well organized and powerful groups that
dominate the distribution of goods and commodities in the communities and
big centers of population. They owe no allegiance or loyalty to the State, and
the State cannot rely upon them in times of crisis or emergency. While the
national holds his life, his person and his property subject to the needs of his
country, the alien may even become the potential enemy of the State.
f. Law enacted in interest of national economic survival and security. —
We are fully satisfied upon a consideration of all the facts and circumstances
that the disputed law is not the product of racial hostility, prejudice or
discrimination, but the expression of the legitimate desire and determination
of the people, thru their authorized representatives, to free the nation from
the economic situation that has unfortunately been saddled upon it rightly or
wrongly, to its disadvantage. The law is clearly in the interest of the public,
nay of the national security itself, and indisputably falls within the scope of
police power, thru which and by which the State insures its existence and
security and the supreme welfare of its citizens.
VI. The Equal Protection Limitation
a. Objections to alien participation in retail trade. — The next question that
now poses solution is, Does the law deny the equal protection of the laws?
As pointed out above, the mere fact of alienage is the root and cause of the
distinction between the alien and the national as a trader. The alien resident
owes allegiance to the country of his birth or his adopted country; his stay
here is for personal convenience; he is attracted by the lure of gain and
profit. His aim or purpose of stay, we admit, is neither illegitimate nor
immoral, but he is naturally lacking in that spirit of loyalty and enthusiasm for
this country where he temporarily stays and makes his living, or of that spirit
of regard, sympathy and consideration for his Filipino customers as would
prevent him from taking advantage of their weakness and exploiting them.
The faster he makes his pile, the earlier can the alien go back to his beloved
country and his beloved kin and countrymen. The experience of the country
is that the alien retailer has shown such utter disregard for his customers and
the people on whom he makes his profit, that it has been found necessary to
adopt the legislation, radical as it may seem.
Another objection to the alien retailer in this country is that he never really
makes a genuine contribution to national income and wealth. He undoubtedly
contributes to general distribution, but the gains and profits he makes are not
invested in industries that would help the country's economy and increase
national wealth. The alien's interest in this country being merely transient and
temporary, it would indeed be ill-advised to continue entrusting the very
important function of retail distribution to his hands.
The practices resorted to by aliens in the control of distribution, as already
pointed out above, their secret manipulations of stocks of commodities and
prices, their utter disregard of the welfare of their customers and of the
ultimate happiness of the people of the nation of which they are mere guests,
which practices, manipulations and disregard do not attend the exercise of
the trade by the nationals, show the existence of real and actual, positive and
fundamental differences between an alien and a national which fully justify
the legislative classification adopted in the retail trade measure. These
differences are certainly a valid reason for the State to prefer the national
over the alien in the retail trade. We would be doing violence to fact and
reality were we to hold that no reason or ground for a legitimate distinction
can be found between one and the other.
b. Difference in alien aims and purposes sufficient basis for distinction. —
The above objectionable characteristics of the exercise of the retail trade by
the aliens, which are actual and real, furnish sufficient grounds for legislative
classification of retail traders into nationals and aliens. Some may disagree
with the wisdom of the legislature's classification. To this we answer, that this
is the prerogative of the law-making power. Since the Court finds that the
classification is actual, real and reasonable, and all persons of one class are
treated alike, and as it cannot be said that the classification is patently
unreasonable and unfounded, it is in duty bound to declare that the
legislature acted within its legitimate prerogative and it can not declare that
the act transcends the limit of equal protection established by the
Constitution.
Broadly speaking, the power of the legislature to make distinctions and
classifications among persons is not curtailed or denied by the equal
protection of the laws clause. The legislative power admits of a wide scope of
discretion, and a law can be violative of the constitutional limitation only when
the classification is without reasonable basis. In addition to the authorities we
have earlier cited, we can also refer to the case of Linsey vs. Natural
Carbonic Fas Co. (1911), 55 L. ed., 369, which clearly and succinctly defined
the application of equal protection clause to a law sought to be voided as
contrary thereto:
. . . . "1. The equal protection clause of the Fourteenth Amendment
does not take from the state the power to classify in the adoption of
police laws, but admits of the exercise of the wide scope of discretion
in that regard, and avoids what is done only when it is without any
reasonable basis, and therefore is purely arbitrary. 2. A classification
having some reasonable basis does not offend against that clause
merely because it is not made with mathematical nicety, or because
in practice it results in some inequality. 3. When the classification in
such a law is called in question, if any state of facts reasonably can
be conceived that would sustain it, the existence of that state of facts
at the time the law was enacted must be assumed. 4. One who
assails the classification in such a law must carry the burden of
showing that it does not rest upon any reasonable basis but is
essentially arbitrary."
c. Authorities recognizing citizenship as basis for classification. —
The question as to whether or not citizenship is a legal and valid ground for
classification has already been affirmatively decided in this jurisdiction as
well as in various courts in the United States. In the case of Smith Bell & Co.
vs. Natividad, 40 Phil. 136, where the validity of Act No. 2761 of the
Philippine Legislature was in issue, because of a condition therein limiting the
ownership of vessels engaged in coastwise trade to corporations formed by
citizens of the Philippine Islands or the United States, thus denying the right
to aliens, it was held that the Philippine Legislature did not violate the equal
protection clause of the Philippine Bill of Rights. The legislature in enacting
the law had as ultimate purpose the encouragement of Philippine
shipbuilding and the safety for these Islands from foreign interlopers. We
held that this was a valid exercise of the police power, and all presumptions
are in favor of its constitutionality. In substance, we held that the limitation of
domestic ownership of vessels engaged in coastwise trade to citizens of the
Philippines does not violate the equal protection of the law and due process
or law clauses of the Philippine Bill of Rights. In rendering said decision we
quoted with approval the concurring opinion of Justice Johnson in the case
of Gibbons vs. Ogden, 9 Wheat., I, as follows:
"Licensing acts, in fact, in legislation, are universally restraining acts;
as, for example, acts licensing gaming houses, retailers of spirituous
liquors, etc. The act, in this instance, is distinctly of that character,
and forms part of an extensive system, the object of which is to
encourage American shipping, and place them on an equal footing
with the shipping of other nations. Almost every commercial nation
reserves to its own subjects a monopoly of its coasting trade; and a
countervailing privilege in favor of American shipping is
contemplated, in the whole legislation of the United States on this
subject. It is not to give the vessel an American character, that the
license is granted; that effect has been correctly attributed to the act
of her enrollment. But it is to confer on her American privileges, as
contra distinguished from foreign; and to preserve the Government
from fraud by foreigners; in surreptitiously intruding themselves into
the American commercial marine, as well as frauds upon the
revenue in the trade coastwise, that this whole system is projected."
The rule in general is as follows:
Aliens are under no special constitutional protection which forbids a
classification otherwise justified simply because the limitation of the
class falls along the lines of nationality. That would be requiring a
higher degree of protection for aliens as a class than for similar
classes than for similar classes of American citizens. Broadly
speaking, the difference in status between citizens and aliens
constitutes a basis for reasonable classification in the exercise of
police power. (2 Am., Jur. 468-469.)
In Commonwealth vs. Hana, 81 N. E. 149 (Massachusetts, 1907), a statute
on the licensing of hawkers and peddlers, which provided that no one can
obtain a license unless he is, or has declared his intention, to become a
citizen of the United States, was held valid, for the following reason: It may
seem wise to the legislature to limit the business of those who are supposed
to have regard for the welfare, good order and happiness of the community,
and the court cannot question this judgment and conclusion. In Bloomfield
vs. State, 99 N. E. 309 (Ohio, 1912), a statute which prevented certain
persons, among them aliens, from engaging in the traffic of liquors, was
found not to be the result of race hatred, or in hospitality, or a deliberate
purpose to discriminate, but was based on the belief that an alien cannot be
sufficiently acquainted with "our institutions and our life as to enable him to
appreciate the relation of this particular business to our entire social fabric",
and was not, therefore, invalid. In Ohio ex rel. Clarke vs. Deckebach, 274 U.
S. 392, 71 L. ed. 115 (1926), the U.S. Supreme Court had under
consideration an ordinance of the city of Cincinnati prohibiting the issuance
of licenses (pools and billiard rooms) to aliens. It held that plainly irrational
discrimination against aliens is prohibited, but it does not follow that alien
race and allegiance may not bear in some instances such a relation to a
legitimate object of legislation as to be made the basis of permitted
classification, and that it could not state that the legislation is clearly wrong;
and that latitude must be allowed for the legislative appraisement of local
conditions and for the legislative choice of methods for controlling an
apprehended evil. The case of State vs. Carrol, 124 N. E. 129 (Ohio, 1919) is
a parallel case to the one at bar. In Asakura vs. City of Seattle, 210 P. 30
(Washington, 1922), the business of pawn brooking was considered as
having tendencies injuring public interest, and limiting it to citizens is within
the scope of police power. A similar statute denying aliens the right to
engage in auctioneering was also sustained in Wright vs. May, L.R.A., 1915
P. 151 (Minnesota, 1914). So also in Anton vs. Van Winkle, 297 F. 340
(Oregon, 1924), the court said that aliens are judicially known to have
different interests, knowledge, attitude, psychology and loyalty, hence the
prohibitions of issuance of licenses to them for the business of pawnbroker,
pool, billiard, card room, dance hall, is not an infringement of constitutional
rights. In Templar vs. Michigan State Board of Examiners, 90 N.W. 1058
(Michigan, 1902), a law prohibiting the licensing of aliens as barbers was
held void, but the reason for the decision was the court's findings that the
exercise of the business by the aliens does not in any way affect the morals,
the health, or even the convenience of the community. In Takahashi vs. Fish
and Game Commission, 92 L. ed. 1479 (1947), a California statute banning
the issuance of commercial fishing licenses to person ineligible to citizenship
was held void, because the law conflicts with Federal power over
immigration, and because there is no public interest in the mere claim of
ownership of the waters and the fish in them, so there was no adequate
justification for the discrimination. It further added that the law was the
outgrowth of antagonism toward the persons of Japanese ancestry.
However, two Justices dissented on the theory that fishing rights have been
treated traditionally as natural resources. In Fraser vs. McConway & Tarley
Co., 82 Fed. 257 (Pennsylvania, 1897), a state law which imposed a tax on
every employer of foreign-born unnaturalized male persons over 21 years of
age, was declared void because the court found that there was no reason for
the classification and the tax was an arbitrary deduction from the daily wage
of an employee.
d. Authorities contra explained. —
It is true that some decisions of the Federal court and of the State courts in
the United States hold that the distinction between aliens and citizens is not a
valid ground for classification. But in this decision the laws declared invalid
were found to be either arbitrary, unreasonable or capricious, or were the
result or product of racial antagonism and hostility, and there was no
question of public interest involved or pursued. In Yu Cong Eng vs. Trinidad,
70 L. ed. 1059 (1925), the United States Supreme Court declared invalid a
Philippine law making unlawful the keeping of books of account in any
language other than English, Spanish or any other local dialect, but the main
reasons for the decisions are: (1) that if Chinese were driven out of business
there would be no other system of distribution, and (2) that the Chinese
would fall prey to all kinds of fraud, because they would be deprived of their
right to be advised of their business and to direct its conduct. The real reason
for the decision, therefore, is the court's belief that no public benefit would be
derived from the operations of the law and on the other hand it would deprive
Chinese of something indispensable for carrying on their business. In Yick
Wo vs. Hopkins, 30 L. ed 220 (1885) an ordinance conferring powers on
officials to withhold consent in the operation of laundries both as to persons
and place, was declared invalid, but the court said that the power granted
was arbitrary, that there was no reason for the discrimination which attended
the administration and implementation of the law, and that the motive thereof
was mere racial hostility. In State vs. Montgomery, 47 A. 165 (Maine, 1900),
a law prohibiting aliens to engage as hawkers and peddlers was declared
void, because the discrimination bore no reasonable and just relation to the
act in respect to which the classification was proposed.
The case at bar is radically different, and the facts make them so. As we
already have said, aliens do not naturally possess the sympathetic
consideration and regard for the customers with whom they come in daily
contact, nor the patriotic desire to help bolster the nation's economy, except
in so far as it enhances their profit, nor the loyalty and allegiance which the
national owes to the land. These limitations on the qualifications of the aliens
have been shown on many occasions and instances, especially in times of
crisis and emergency. We can do no better than borrow the language
of Anton vs. Van Winkle, 297 F. 340, 342, to drive home the reality and
significance of the distinction between the alien and the national, thus:
. . . . It may be judicially known, however, that alien coming into this
country are without the intimate knowledge of our laws, customs, and
usages that our own people have. So it is likewise known that certain
classes of aliens are of different psychology from our fellow
countrymen. Furthermore, it is natural and reasonable to suppose
that the foreign born, whose allegiance is first to their own country,
and whose ideals of governmental environment and control have
been engendered and formed under entirely different regimes and
political systems, have not the same inspiration for the public weal,
nor are they as well disposed toward the United States, as those who
by citizenship, are a part of the government itself. Further
enlargement, is unnecessary. I have said enough so that obviously it
cannot be affirmed with absolute confidence that the Legislature was
without plausible reason for making the classification, and therefore
appropriate discriminations against aliens as it relates to the subject
of legislation. . . . .
VII. The Due Process of Law Limitation.
a. Reasonability, the test of the limitation; determination by legislature
decisive. —
We now come to due process as a limitation on the exercise of the police
power. It has been stated by the highest authority in the United States that:
. . . . And the guaranty of due process, as has often been held,
demands only that the law shall not be unreasonable, arbitrary or
capricious, and that the means selected shall have a real and
substantial relation to the subject sought to be attained. . . . .
xxx xxx xxx
So far as the requirement of due process is concerned and in the
absence of other constitutional restriction a state is free to adopt
whatever economic policy may reasonably be deemed to promote
public welfare, and to enforce that policy by legislation adapted to its
purpose. The courts are without authority either to declare such
policy, or, when it is declared by the legislature, to override it. If the
laws passed are seen to have a reasonable relation to a proper
legislative purpose, and are neither arbitrary nor discriminatory, the
requirements of due process are satisfied, and judicial determination
to that effect renders a court functus officio. . . . (Nebbia vs. New
York, 78 L. ed. 940, 950, 957.)
Another authority states the principle thus:
. . . . Too much significance cannot be given to the word
"reasonable" in considering the scope of the police power in a
constitutional sense, for the test used to determine the
constitutionality of the means employed by the legislature is to
inquire whether the restriction it imposes on rights secured to
individuals by the Bill of Rights are unreasonable, and not whether it
imposes any restrictions on such rights. . . .
xxx xxx xxx
. . . . A statute to be within this power must also be reasonable in its
operation upon the persons whom it affects, must not be for the
annoyance of a particular class, and must not be unduly oppressive.
(11 Am. Jur. Sec. 302., 1:1)- 1074-1075.)
In the case of Lawton vs. Steele, 38 L. ed. 385, 388. it was also held:
. . . . To justify the state in thus interposing its authority in behalf of
the public, it must appear, first, that the interests of the public
generally, as distinguished from those of a particular class, require
such interference; and second, that the means are reasonably
necessary for the accomplishment of the purpose, and not unduly
oppressive upon individuals. . . .
Prata Undertaking Co. vs. State Board of Embalming, 104 ALR, 389, 395,
fixes this test of constitutionality:
In determining whether a given act of the Legislature, passed in the
exercise of the police power to regulate the operation of a business,
is or is not constitutional, one of the first questions to be considered
by the court is whether the power as exercised has a sufficient
foundation in reason in connection with the matter involved, or is an
arbitrary, oppressive, and capricious use of that power, without
substantial relation to the health, safety, morals, comfort, and general
welfare of the public.
b. Petitioner's argument considered. —
Petitioner's main argument is that retail is a common, ordinary occupation,
one of those privileges long ago recognized as essential to the orderly
pursuant of happiness by free men; that it is a gainful and honest occupation
and therefore beyond the power of the legislature to prohibit and penalized.
This arguments overlooks fact and reality and rests on an incorrect
assumption and premise, i.e., that in this country where the occupation is
engaged in by petitioner, it has been so engaged by him, by the alien in an
honest creditable and unimpeachable manner, without harm or injury to the
citizens and without ultimate danger to their economic peace, tranquility and
welfare. But the Legislature has found, as we have also found and indicated,
that the privilege has been so grossly abused by the alien, thru the
illegitimate use of pernicious designs and practices, that he now enjoys a
monopolistic control of the occupation and threatens a deadly stranglehold
on the nation's economy endangering the national security in times of crisis
and emergency.
The real question at issue, therefore, is not that posed by petitioner, which
overlooks and ignores the facts and circumstances, but this, Is the exclusion
in the future of aliens from the retail trade unreasonable. Arbitrary capricious,
taking into account the illegitimate and pernicious form and manner in which
the aliens have heretofore engaged therein? As thus correctly stated the
answer is clear. The law in question is deemed absolutely necessary to bring
about the desired legislative objective, i.e., to free national economy from
alien control and dominance. It is not necessarily unreasonable because it
affects private rights and privileges (11 Am. Jur. pp. 1080-1081.) The test of
reasonableness of a law is the appropriateness or adequacy under all
circumstances of the means adopted to carry out its purpose into effect (Id.)
Judged by this test, disputed legislation, which is not merely reasonable but
actually necessary, must be considered not to have infringed the
constitutional limitation of reasonableness.
The necessity of the law in question is explained in the explanatory note that
accompanied the bill, which later was enacted into law:
This bill proposes to regulate the retail business. Its purpose is to
prevent persons who are not citizens of the Philippines from having a
strangle hold upon our economic life. If the persons who control this
vital artery of our economic life are the ones who owe no allegiance
to this Republic, who have no profound devotion to our free
institutions, and who have no permanent stake in our people's
welfare, we are not really the masters of our destiny. All aspects of
our life, even our national security, will be at the mercy of other
people.
In seeking to accomplish the foregoing purpose, we do not propose
to deprive persons who are not citizens of the Philippines of their
means of livelihood. While this bill seeks to take away from the
hands of persons who are not citizens of the Philippines a power that
can be wielded to paralyze all aspects of our national life and
endanger our national security it respects existing rights.
The approval of this bill is necessary for our national survival.
If political independence is a legitimate aspiration of a people, then economic
independence is none the less legitimate. Freedom and liberty are not real
and positive if the people are subject to the economic control and domination
of others, especially if not of their own race or country. The removal and
eradication of the shackles of foreign economic control and domination, is
one of the noblest motives that a national legislature may pursue. It is
impossible to conceive that legislation that seeks to bring it about can infringe
the constitutional limitation of due process. The attainment of a legitimate
aspiration of a people can never be beyond the limits of legislative authority.
c. Law expressly held by Constitutional Convention to be within the sphere of
legislative action. —
The framers of the Constitution could not have intended to impose the
constitutional restrictions of due process on the attainment of such a noble
motive as freedom from economic control and domination, thru the exercise
of the police power. The fathers of the Constitution must have given to the
legislature full authority and power to enact legislation that would promote the
supreme happiness of the people, their freedom and liberty. On the precise
issue now before us, they expressly made their voice clear; they adopted a
resolution expressing their belief that the legislation in question is within the
scope of the legislative power. Thus they declared the their Resolution:
That it is the sense of the Convention that the public interest requires
the nationalization of retail trade; but it abstain from approving the
amendment introduced by the Delegate for Manila, Mr. Araneta, and
others on this matter because it is convinced that the National
Assembly is authorized to promulgate a law which limits to Filipino
and American citizens the privilege to engage in the retail trade. (11
Aruego, The Framing of the Philippine Constitution, quoted on pages
66 and 67 of the Memorandum for the Petitioner.)
It would do well to refer to the nationalistic tendency manifested in various
provisions of the Constitution. Thus in the preamble, a principle objective is
the conservation of the patrimony of the nation and as corollary the provision
limiting to citizens of the Philippines the exploitation, development and
utilization of its natural resources. And in Section 8 of Article XIV, it is
provided that "no franchise, certificate, or any other form of authorization for
the operation of the public utility shall be granted except to citizens of the
Philippines." The nationalization of the retail trade is only a continuance of
the nationalistic protective policy laid down as a primary objective of the
Constitution. Can it be said that a law imbued with the same purpose and
spirit underlying many of the provisions of the Constitution is unreasonable,
invalid and unconstitutional?
The seriousness of the Legislature's concern for the plight of the nationals as
manifested in the approval of the radical measures is, therefore, fully
justified. It would have been recreant to its duties towards the country and its
people would it view the sorry plight of the nationals with the complacency
and refuse or neglect to adopt a remedy commensurate with the demands of
public interest and national survival. As the repository of the sovereign power
of legislation, the Legislature was in duty bound to face the problem and
meet, through adequate measures, the danger and threat that alien
domination of retail trade poses to national economy.
d. Provisions of law not unreasonable. —
A cursory study of the provisions of the law immediately reveals how tolerant,
how reasonable the Legislature has been. The law is made prospective and
recognizes the right and privilege of those already engaged in the occupation
to continue therein during the rest of their lives; and similar recognition of the
right to continue is accorded associations of aliens. The right or privilege is
denied to those only upon conviction of certain offenses. In the deliberations
of the Court on this case, attention was called to the fact that the privilege
should not have been denied to children and heirs of aliens now engaged in
the retail trade. Such provision would defeat the law itself, its aims and
purposes. Beside, the exercise of legislative discretion is not subject to
judicial review. It is well settled that the Court will not inquire into the motives
of the Legislature, nor pass upon general matters of legislative judgment.
The Legislature is primarily the judge of the necessity of an enactment or of
any of its provisions, and every presumption is in favor of its validity, and
though the Court may hold views inconsistent with the wisdom of the law, it
may not annul the legislation if not palpably in excess of the legislative
power. Furthermore, the test of the validity of a law attacked as a violation of
due process, is not its reasonableness, but its unreasonableness, and we
find the provisions are not unreasonable. These principles also answer
various other arguments raised against the law, some of which are: that the
law does not promote general welfare; that thousands of aliens would be
thrown out of employment; that prices will increase because of the
elimination of competition; that there is no need for the legislation; that
adequate replacement is problematical; that there may be general
breakdown; that there would be repercussions from foreigners; etc. Many of
these arguments are directed against the supposed wisdom of the law which
lies solely within the legislative prerogative; they do not import invalidity.
VIII. Alleged defect in the title of the law
A subordinate ground or reason for the alleged invalidity of the law is the
claim that the title thereof is misleading or deceptive, as it conceals the real
purpose of the bill which is to nationalize the retail business and prohibit
aliens from engaging therein. The constitutional provision which is claimed to
be violated in Section 21 (1) of Article VI, which reads:
No bill which may be enacted in the law shall embrace more than
one subject which shall be expressed in the title of the bill.
What the above provision prohibits is duplicity, that is, if its title completely
fails to appraise the legislators or the public of the nature, scope and
consequences of the law or its operation (I Sutherland, Statutory
Construction, Sec. 1707, p. 297.) A cursory consideration of the title and the
provisions of the bill fails to show the presence of duplicity. It is true that the
term "regulate" does not and may not readily and at first glance convey the
idea of "nationalization" and "prohibition", which terms express the two main
purposes and objectives of the law. But "regulate" is a broader term than
either prohibition or nationalization. Both of these have always been included
within the term regulation.
Under the title of an act to "regulate", the sale of intoxicating liquors,
the Legislature may prohibit the sale of intoxicating liquors. (Sweet
vs. City of Wabash, 41 Ind., 7; quoted in page 41 of Answer.)
Within the meaning of the Constitution requiring that the subject of
every act of the Legislature shall be stated in the tale, the title to
regulate the sale of intoxicating liquors, etc." sufficiently expresses
the subject of an actprohibiting the sale of such liquors to minors and
to persons in the habit of getting intoxicated; such matters being
properly included within the subject of regulating the sale. (Williams
vs. State, 48 Ind. 306, 308, quoted in p. 42 of Answer.)
The word "regulate" is of broad import, and necessarily implies some
degree of restraint and prohibition of acts usually done in connection
with the thing to be regulated. While word regulate does not
ordinarily convey meaning of prohibit, there is no absolute reason
why it should not have such meaning when used in delegating police
power in connection with a thing the best or only efficacious
regulation of which involves suppression. (State vs. Morton, 162 So.
718, 182 La. 887, quoted in p. 42 of Answer.)
The general rule is for the use of general terms in the title of a bill; it has also
been said that the title need not be an index to the entire contents of the law
(I Sutherland, Statutory Construction, See. 4803, p. 345.) The above rule
was followed the title of the Act in question adopted the more general term
"regulate" instead of "nationalize" or "prohibit". Furthermore, the law also
contains other rules for the regulation of the retail trade which may not be
included in the terms "nationalization" or "prohibition"; so were the title
changed from "regulate" to "nationalize" or "prohibit", there would have been
many provisions not falling within the scope of the title which would have
made the Act invalid. The use of the term "regulate", therefore, is in accord
with the principle governing the drafting of statutes, under which a simple or
general term should be adopted in the title, which would include all other
provisions found in the body of the Act.
One purpose of the constitutional directive that the subject of a bill should be
embraced in its title is to apprise the legislators of the purposes, the nature
and scope of its provisions, and prevent the enactment into law of matters
which have received the notice, action and study of the legislators or of the
public. In the case at bar it cannot be claimed that the legislators have been
appraised of the nature of the law, especially the nationalization and the
prohibition provisions. The legislators took active interest in the discussion of
the law, and a great many of the persons affected by the prohibitions in the
law conducted a campaign against its approval. It cannot be claimed,
therefore, that the reasons for declaring the law invalid ever existed. The
objection must therefore, be overruled.
IX. Alleged violation of international treaties and obligations
Another subordinate argument against the validity of the law is the supposed
violation thereby of the Charter of the United Nations and of the Declaration
of the Human Rights adopted by the United Nations General Assembly. We
find no merit in the Nations Charter imposes no strict or legal obligations
regarding the rights and freedom of their subjects (Hans Kelsen, The Law of
the United Nations, 1951 ed. pp. 29-32), and the Declaration of Human
Rights contains nothing more than a mere recommendation or a common
standard of achievement for all peoples and all nations (Id. p. 39.) That such
is the import of the United Nations Charter aid of the Declaration of Human
Rights can be inferred the fact that members of the United Nations
Organizations, such as Norway and Denmark, prohibit foreigners from
engaging in retail trade, and in most nations of the world laws against
foreigners engaged in domestic trade are adopted.
The Treaty of Amity between the Republic of the Philippines and the
Republic of China of April 18, 1947 is also claimed to be violated by the law
in question. All that the treaty guarantees is equality of treatment to the
Chinese nationals "upon the same terms as the nationals of any other
country." But the nationals of China are not discriminating against because
nationals of all other countries, except those of the United States, who are
granted special rights by the Constitution, are all prohibited from engaging in
the retail trade. But even supposing that the law infringes upon the said
treaty, the treaty is always subject to qualification or amendment by a
subsequent law (U. S. vs. Thompson, 258, Fed. 257, 260), and the same
may never curtail or restrict the scope of the police power of the State
(plaston vs. Pennsylvania, 58 L. ed. 539.)
X. Conclusion
Resuming what we have set forth above we hold that the disputed law was
enacted to remedy a real actual threat and danger to national economy
posed by alien dominance and control of the retail business and free citizens
and country from dominance and control; that the enactment clearly falls
within the scope of the police power of the State, thru which and by which it
protects its own personality and insures its security and future; that the law
does not violate the equal protection clause of the Constitution because
sufficient grounds exist for the distinction between alien and citizen in the
exercise of the occupation regulated, nor the due process of law clause,
because the law is prospective in operation and recognizes the privilege of
aliens already engaged in the occupation and reasonably protects their
privilege; that the wisdom and efficacy of the law to carry out its objectives
appear to us to be plainly evident — as a matter of fact it seems not only
appropriate but actually necessary — and that in any case such matter falls
within the prerogative of the Legislature, with whose power and discretion the
Judicial department of the Government may not interfere; that the provisions
of the law are clearly embraced in the title, and this suffers from no duplicity
and has not misled the legislators or the segment of the population affected;
and that it cannot be said to be void for supposed conflict with treaty
obligations because no treaty has actually been entered into on the subject
and the police power may not be curtailed or surrendered by any treaty or
any other conventional agreement.
Some members of the Court are of the opinion that the radical effects of the
law could have been made less harsh in its impact on the aliens. Thus it is
stated that the more time should have been given in the law for the
liquidation of existing businesses when the time comes for them to close. Our
legal duty, however, is merely to determine if the law falls within the scope of
legislative authority and does not transcend the limitations of due process
and equal protection guaranteed in the Constitution. Remedies against the
harshness of the law should be addressed to the Legislature; they are
beyond our power and jurisdiction.
The petition is hereby denied, with costs against petitioner.
Paras, C.J., Bengzon, Reyes, A., Bautista Angelo, Concepcion, Reyes,
J.B.L., Endencia and Felix, JJ., concur.
Separate Opinions
PADILLA, J., concurring and dissenting:
I agree to the proposition, principle or rule that courts may not inquire into the
wisdom of an the Act passed by the Congress and duly approved by the
President of the Republic. But the rule does not preclude courts from
inquiring and determining whether the Act offends against a provision or
provisions of the Constitution. I am satisfied that the Act assailed as violative
of the due process of law and the equal protection of the laws clauses of the
Constitution does not infringe upon them, insofar as it affects associations,
partnership or corporations, the capital of which is not wholly owned by the
citizens of the Philippines, and aliens, who are not and have not been
engaged in the retail business. I am, however, unable to persuade myself
that it does not violate said clauses insofar as the Act applies to associations
and partnerships referred to in the Act and to aliens, who are and have
heretofore been engaged in said business. When they did engage in the
retail business there was no prohibition on or against them to engage in it.
They assumed and believed in good faith they were entitled to engaged in
the business. The Act allows aliens to continue in business until their death
or voluntary retirement from the business or forfeiture of their license; and
corporations, associations or partnership, the capital of which is not wholly
owned by the citizens of the Philippines to continue in the business for a
period of ten years from the date of the approval of the Act (19 June 1954) or
until the expiry of term of the existence of the association or partnership or
corporation, whichever event comes first. The prohibition on corporations, the
capital of which is not wholly owned by citizens of the Philippines, to engage
in the retail business for a period of more than ten years from the date of the
approval of the Act or beyond the term of their corporate existence,
whichever event comes first, is valid and lawful, because the continuance of
the existence of such corporations is subject to whatever the Congress may
impose reasonably upon them by subsequent legislation.1 But the prohibition
to engage in the retail business by associations and partnerships, the capital
of which is not wholly owned by citizen of the Philippines, after ten years from
the date of the approval of the Act, even before the end of the term of their
existence as agreed upon by the associates and partners, and by alien heirs
to whom the retail business is transmitted by the death of an alien engaged
in the business, or by his executor or administrator, amounts to a deprivation
of their property without due process of law. To my mind, the ten-year period
from the date of the approval of the Act or until the expiration of the term of
the existence of the association and partnership, whichever event comes
first, and the six-month period granted to alien heirs of a deceased alien, his
executor or administrator, to liquidate the business, do not cure the defect of
the law, because the effect of the prohibition is to compel them to sell or
dispose of their business. The price obtainable at such forced sale of the
business would be inadequate to reimburse and compensate the associates
or partners of the associations or partnership, and the alien heirs of a
deceased alien, engaged in the retail business for the capital invested in it.
The stock of merchandise bought and sold at retail does not alone constitute
the business. The goodwill that the association, partnership and the alien had
built up during a long period of effort, patience and perseverance forms part
of such business. The constitutional provisions that no person shall be
deprived of his property without due process of law2 and that no person shall
be denied the equal protection of the laws3 would have no meaning as
applied to associations or partnership and alien heirs of an alien engaged in
the retail business if they were to be compelled to sell or dispose of their
business within ten years from the date of the approval of the Act and before
the end of the term of the existence of the associations and partnership as
agreed upon by the associations and partners and within six months after the
death of their predecessor-in-interest.
The authors of the Constitution were vigilant, careful and zealous in the
safeguard of the ownership of private agricultural lands which together with
the lands of the public domain constitute the priceless patrimony and
mainstay of the nation; yet, they did not deem it wise and prudent to deprive
aliens and their heirs of such lands.4
For these reasons, I am of the opinion that section 1 of the Act, insofar as it
compels associations and partnership referred to therein to wind up their
retail business within ten years from the date of the approval of the Act even
before the expiry of the term of their existence as agreed upon by the
associates and partners and section 3 of the Act, insofar as it compels the
aliens engaged in the retail business in his lifetime his executor or
administrator, to liquidate the business, are invalid, for they violate the due
process of law and the equal protection of the laws clauses of the
Constitution.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 78742 July 14, 1989
ASSOCIATION OF SMALL LANDOWNERS IN THE PHILIPPINES, INC.,
JUANITO D. GOMEZ, GERARDO B. ALARCIO, FELIPE A. GUICO, JR.,
BERNARDO M. ALMONTE, CANUTO RAMIR B. CABRITO, ISIDRO T.
GUICO, FELISA I. LLAMIDO, FAUSTO J. SALVA, REYNALDO G.
ESTRADA, FELISA C. BAUTISTA, ESMENIA J. CABE, TEODORO B.
MADRIAGA, AUREA J. PRESTOSA, EMERENCIANA J. ISLA,
FELICISIMA C. ARRESTO, CONSUELO M. MORALES, BENJAMIN R.
SEGISMUNDO, CIRILA A. JOSE & NAPOLEON S. FERRER, petitioners,
vs.
HONORABLE SECRETARY OF AGRARIAN REFORM, respondent.
G.R. No. 79310 July 14, 1989
ARSENIO AL. ACUNA, NEWTON JISON, VICTORINO FERRARIS,
DENNIS JEREZA, HERMINIGILDO GUSTILO, PAULINO D. TOLENTINO
and PLANTERS' COMMITTEE, INC., Victorias Mill District, Victorias,
Negros Occidental, petitioners,
vs.
JOKER ARROYO, PHILIP E. JUICO and PRESIDENTIAL AGRARIAN
REFORM COUNCIL, respondents.
G.R. No. 79744 July 14, 1989
INOCENTES PABICO, petitioner,
vs.
HON. PHILIP E. JUICO, SECRETARY OF THE DEPARTMENT OF
AGRARIAN REFORM, HON. JOKER ARROYO, EXECUTIVE SECRETARY
OF THE OFFICE OF THE PRESIDENT, and Messrs. SALVADOR
TALENTO, JAIME ABOGADO, CONRADO AVANCENA and ROBERTO
TAAY, respondents.
G.R. No. 79777 July 14, 1989
NICOLAS S. MANAAY and AGUSTIN HERMANO, JR., petitioners,
vs.
HON. PHILIP ELLA JUICO, as Secretary of Agrarian Reform, and LAND
BANK OF THE PHILIPPINES, respondents.
CRUZ, J.:
In ancient mythology, Antaeus was a terrible giant who blocked and
challenged Hercules for his life on his way to Mycenae after performing his
eleventh labor. The two wrestled mightily and Hercules flung his adversary to
the ground thinking him dead, but Antaeus rose even stronger to resume
their struggle. This happened several times to Hercules' increasing
amazement. Finally, as they continued grappling, it dawned on Hercules that
Antaeus was the son of Gaea and could never die as long as any part of his
body was touching his Mother Earth. Thus forewarned, Hercules then held
Antaeus up in the air, beyond the reach of the sustaining soil, and crushed
him to death.
Mother Earth. The sustaining soil. The giver of life, without whose
invigorating touch even the powerful Antaeus weakened and died.
The cases before us are not as fanciful as the foregoing tale. But they also
tell of the elemental forces of life and death, of men and women who, like
Antaeus need the sustaining strength of the precious earth to stay alive.
"Land for the Landless" is a slogan that underscores the acute imbalance in
the distribution of this precious resource among our people. But it is more
than a slogan. Through the brooding centuries, it has become a battle-cry
dramatizing the increasingly urgent demand of the dispossessed among us
for a plot of earth as their place in the sun.
Recognizing this need, the Constitution in 1935 mandated the policy of social
justice to "insure the well-being and economic security of all the
people," 1 especially the less privileged. In 1973, the new Constitution
affirmed this goal adding specifically that "the State shall regulate the
acquisition, ownership, use, enjoyment and disposition of private property
and equitably diffuse property ownership and profits." 2 Significantly, there
was also the specific injunction to "formulate and implement an agrarian
reform program aimed at emancipating the tenant from the bondage of the
soil." 3
The Constitution of 1987 was not to be outdone. Besides echoing these
sentiments, it also adopted one whole and separate Article XIII on Social
Justice and Human Rights, containing grandiose but undoubtedly sincere
provisions for the uplift of the common people. These include a call in the
following words for the adoption by the State of an agrarian reform program:
SEC. 4. The State shall, by law, undertake an agrarian
reform program founded on the right of farmers and regular
farmworkers, who are landless, to own directly or collectively
the lands they till or, in the case of other farmworkers, to
receive a just share of the fruits thereof. To this end, the
State shall encourage and undertake the just distribution of
all agricultural lands, subject to such priorities and
reasonable retention limits as the Congress may prescribe,
taking into account ecological, developmental, or equity
considerations and subject to the payment of just
compensation. In determining retention limits, the State shall
respect the right of small landowners. The State shall further
provide incentives for voluntary land-sharing.
Earlier, in fact, R.A. No. 3844, otherwise known as the Agricultural Land
Reform Code, had already been enacted by the Congress of the Philippines
on August 8, 1963, in line with the above-stated principles. This was
substantially superseded almost a decade later by P.D. No. 27, which was
promulgated on October 21, 1972, along with martial law, to provide for the
compulsory acquisition of private lands for distribution among tenant-farmers
and to specify maximum retention limits for landowners.
The people power revolution of 1986 did not change and indeed even
energized the thrust for agrarian reform. Thus, on July 17, 1987, President
Corazon C. Aquino issued E.O. No. 228, declaring full land ownership in
favor of the beneficiaries of P.D. No. 27 and providing for the valuation of still
unvalued lands covered by the decree as well as the manner of their
payment. This was followed on July 22, 1987 by Presidential Proclamation
No. 131, instituting a comprehensive agrarian reform program (CARP), and
E.O. No. 229, providing the mechanics for its implementation.
Subsequently, with its formal organization, the revived Congress of the
Philippines took over legislative power from the President and started its own
deliberations, including extensive public hearings, on the improvement of the
interests of farmers. The result, after almost a year of spirited debate, was
the enactment of R.A. No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988, which President Aquino signed on June 10,
1988. This law, while considerably changing the earlier mentioned
enactments, nevertheless gives them suppletory effect insofar as they are
not inconsistent with its provisions. 4
The above-captioned cases have been consolidated because they involve
common legal questions, including serious challenges to the constitutionality
of the several measures mentioned above. They will be the subject of one
common discussion and resolution, The different antecedents of each case
will require separate treatment, however, and will first be explained
hereunder.
G.R. No. 79777
Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O.
Nos. 228 and 229, and R.A. No. 6657.
The subjects of this petition are a 9-hectare riceland worked by four tenants
and owned by petitioner Nicolas Manaay and his wife and a 5-hectare
riceland worked by four tenants and owned by petitioner Augustin Hermano,
Jr. The tenants were declared full owners of these lands by E.O. No. 228 as
qualified farmers under P.D. No. 27.
The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on
grounds inter alia of separation of powers, due process, equal protection and
the constitutional limitation that no private property shall be taken for public
use without just compensation.
They contend that President Aquino usurped legislative power when she
promulgated E.O. No. 228. The said measure is invalid also for violation of
Article XIII, Section 4, of the Constitution, for failure to provide for retention
limits for small landowners. Moreover, it does not conform to Article VI,
Section 25(4) and the other requisites of a valid appropriation.
In connection with the determination of just compensation, the petitioners
argue that the same may be made only by a court of justice and not by the
President of the Philippines. They invoke the recent cases of EPZA v.
Dulay 5 andManotok v. National Food Authority. 6 Moreover, the just
compensation contemplated by the Bill of Rights is payable in money or in
cash and not in the form of bonds or other things of value.
In considering the rentals as advance payment on the land, the executive
order also deprives the petitioners of their property rights as protected by due
process. The equal protection clause is also violated because the order
places the burden of solving the agrarian problems on the owners only of
agricultural lands. No similar obligation is imposed on the owners of other
properties.
The petitioners also maintain that in declaring the beneficiaries under P.D.
No. 27 to be the owners of the lands occupied by them, E.O. No. 228 ignored
judicial prerogatives and so violated due process. Worse, the measure would
not solve the agrarian problem because even the small farmers are deprived
of their lands and the retention rights guaranteed by the Constitution.
In his Comment, the Solicitor General stresses that P.D. No. 27 has already
been upheld in the earlier cases ofChavez v. Zobel, 7 Gonzales v.
Estrella, 8 and Association of Rice and Corn Producers of the Philippines,
Inc. v. The National Land Reform Council. 9 The determination of just
compensation by the executive authorities conformably to the formula
prescribed under the questioned order is at best initial or preliminary only. It
does not foreclose judicial intervention whenever sought or warranted. At any
rate, the challenge to the order is premature because no valuation of their
property has as yet been made by the Department of Agrarian Reform. The
petitioners are also not proper parties because the lands owned by them do
not exceed the maximum retention limit of 7 hectares.
Replying, the petitioners insist they are proper parties because P.D. No. 27
does not provide for retention limits on tenanted lands and that in any event
their petition is a class suit brought in behalf of landowners with landholdings
below 24 hectares. They maintain that the determination of just
compensation by the administrative authorities is a final ascertainment. As
for the cases invoked by the public respondent, the constitutionality of P.D.
No. 27 was merely assumed in Chavez, while what was decided
in Gonzales was the validity of the imposition of martial law.
In the amended petition dated November 22, 1588, it is contended that P.D.
No. 27, E.O. Nos. 228 and 229 (except Sections 20 and 21) have been
impliedly repealed by R.A. No. 6657. Nevertheless, this statute should itself
also be declared unconstitutional because it suffers from substantially the
same infirmities as the earlier measures.
A petition for intervention was filed with leave of court on June 1, 1988 by
Vicente Cruz, owner of a 1. 83- hectare land, who complained that the DAR
was insisting on the implementation of P.D. No. 27 and E.O. No. 228 despite
a compromise agreement he had reached with his tenant on the payment of
rentals. In a subsequent motion dated April 10, 1989, he adopted the
allegations in the basic amended petition that the above- mentioned
enactments have been impliedly repealed by R.A. No. 6657.
G.R. No. 79310
The petitioners herein are landowners and sugar planters in the Victorias Mill
District, Victorias, Negros Occidental. Co-petitioner Planters' Committee, Inc.
is an organization composed of 1,400 planter-members. This petition seeks
to prohibit the implementation of Proc. No. 131 and E.O. No. 229.
The petitioners claim that the power to provide for a Comprehensive Agrarian
Reform Program as decreed by the Constitution belongs to Congress and
not the President. Although they agree that the President could exercise
legislative power until the Congress was convened, she could do so only to
enact emergency measures during the transition period. At that, even
assuming that the interim legislative power of the President was properly
exercised, Proc. No. 131 and E.O. No. 229 would still have to be annulled for
violating the constitutional provisions on just compensation, due process, and
equal protection.
They also argue that under Section 2 of Proc. No. 131 which provides:
Agrarian Reform Fund.-There is hereby created a special fund, to be known
as the Agrarian Reform Fund, an initial amount of FIFTY BILLION PESOS
(P50,000,000,000.00) to cover the estimated cost of the Comprehensive
Agrarian Reform Program from 1987 to 1992 which shall be sourced from the
receipts of the sale of the assets of the Asset Privatization Trust and
Receipts of sale of ill-gotten wealth received through the Presidential
Commission on Good Government and such other sources as government
may deem appropriate. The amounts collected and accruing to this special
fund shall be considered automatically appropriated for the purpose
authorized in this Proclamation the amount appropriated is in futuro, not in
esse. The money needed to cover the cost of the contemplated expropriation
has yet to be raised and cannot be appropriated at this time.
Furthermore, they contend that taking must be simultaneous with payment of
just compensation as it is traditionally understood, i.e., with money and in full,
but no such payment is contemplated in Section 5 of the E.O. No. 229. On
the contrary, Section 6, thereof provides that the Land Bank of the
Philippines "shall compensate the landowner in an amount to be established
by the government, which shall be based on the owner's declaration of
current fair market value as provided in Section 4 hereof, but subject to
certain controls to be defined and promulgated by the Presidential Agrarian
Reform Council." This compensation may not be paid fully in money but in
any of several modes that may consist of part cash and part bond, with
interest, maturing periodically, or direct payment in cash or bond as may be
mutually agreed upon by the beneficiary and the landowner or as may be
prescribed or approved by the PARC.
The petitioners also argue that in the issuance of the two measures, no effort
was made to make a careful study of the sugar planters' situation. There is
no tenancy problem in the sugar areas that can justify the application of the
CARP to them. To the extent that the sugar planters have been lumped in
the same legislation with other farmers, although they are a separate group
with problems exclusively their own, their right to equal protection has been
violated.
A motion for intervention was filed on August 27,1987 by the National
Federation of Sugarcane Planters (NASP) which claims a membership of at
least 20,000 individual sugar planters all over the country. On September 10,
1987, another motion for intervention was filed, this time by Manuel
Barcelona, et al., representing coconut and riceland owners. Both motions
were granted by the Court.
NASP alleges that President Aquino had no authority to fund the Agrarian
Reform Program and that, in any event, the appropriation is invalid because
of uncertainty in the amount appropriated. Section 2 of Proc. No. 131 and
Sections 20 and 21 of E.O. No. 229 provide for an initial appropriation of fifty
billion pesos and thus specifies the minimum rather than the maximum
authorized amount. This is not allowed. Furthermore, the stated initial
amount has not been certified to by the National Treasurer as actually
available.
Two additional arguments are made by Barcelona, to wit, the failure to
establish by clear and convincing evidence the necessity for the exercise of
the powers of eminent domain, and the violation of the fundamental right to
own property.
The petitioners also decry the penalty for non-registration of the lands, which
is the expropriation of the said land for an amount equal to the government
assessor's valuation of the land for tax purposes. On the other hand, if the
landowner declares his own valuation he is unjustly required to immediately
pay the corresponding taxes on the land, in violation of the uniformity rule.
In his consolidated Comment, the Solicitor General first invokes the
presumption of constitutionality in favor of Proc. No. 131 and E.O. No. 229.
He also justifies the necessity for the expropriation as explained in the
"whereas" clauses of the Proclamation and submits that, contrary to the
petitioner's contention, a pilot project to determine the feasibility of CARP and
a general survey on the people's opinion thereon are not indispensable
prerequisites to its promulgation.
On the alleged violation of the equal protection clause, the sugar planters
have failed to show that they belong to a different class and should be
differently treated. The Comment also suggests the possibility of Congress
first distributing public agricultural lands and scheduling the expropriation of
private agricultural lands later. From this viewpoint, the petition for prohibition
would be premature.
The public respondent also points out that the constitutional prohibition is
against the payment of public money without the corresponding
appropriation. There is no rule that only money already in existence can be
the subject of an appropriation law. Finally, the earmarking of fifty billion
pesos as Agrarian Reform Fund, although denominated as an initial amount,
is actually the maximum sum appropriated. The word "initial" simply means
that additional amounts may be appropriated later when necessary.
On April 11, 1988, Prudencio Serrano, a coconut planter, filed a petition on
his own behalf, assailing the constitutionality of E.O. No. 229. In addition to
the arguments already raised, Serrano contends that the measure is
unconstitutional because:
(1) Only public lands should be included in the CARP;
(2) E.O. No. 229 embraces more than one subject which is
not expressed in the title;
(3) The power of the President to legislate was terminated on
July 2, 1987; and
(4) The appropriation of a P50 billion special fund from the
National Treasury did not originate from the House of
Representatives.
G.R. No. 79744
The petitioner alleges that the then Secretary of Department of Agrarian
Reform, in violation of due process and the requirement for just
compensation, placed his landholding under the coverage of Operation Land
Transfer. Certificates of Land Transfer were subsequently issued to the
private respondents, who then refused payment of lease rentals to him.
On September 3, 1986, the petitioner protested the erroneous inclusion of his
small landholding under Operation Land transfer and asked for the recall and
cancellation of the Certificates of Land Transfer in the name of the private
respondents. He claims that on December 24, 1986, his petition was denied
without hearing. On February 17, 1987, he filed a motion for reconsideration,
which had not been acted upon when E.O. Nos. 228 and 229 were issued.
These orders rendered his motion moot and academic because they directly
effected the transfer of his land to the private respondents.
The petitioner now argues that:
(1) E.O. Nos. 228 and 229 were invalidly issued by the
President of the Philippines.
(2) The said executive orders are violative of the
constitutional provision that no private property shall be
taken without due process or just compensation.
(3) The petitioner is denied the right of maximum retention
provided for under the 1987 Constitution.
The petitioner contends that the issuance of E.0. Nos. 228 and 229 shortly
before Congress convened is anomalous and arbitrary, besides violating the
doctrine of separation of powers. The legislative power granted to the
President under the Transitory Provisions refers only to emergency
measures that may be promulgated in the proper exercise of the police
power.
The petitioner also invokes his rights not to be deprived of his property
without due process of law and to the retention of his small parcels of
riceholding as guaranteed under Article XIII, Section 4 of the Constitution. He
likewise argues that, besides denying him just compensation for his land, the
provisions of E.O. No. 228 declaring that:
Lease rentals paid to the landowner by the farmer-
beneficiary after October 21, 1972 shall be considered as
advance payment for the land.
is an unconstitutional taking of a vested property right. It is also his
contention that the inclusion of even small landowners in the program along
with other landowners with lands consisting of seven hectares or more is
undemocratic.
In his Comment, the Solicitor General submits that the petition is premature
because the motion for reconsideration filed with the Minister of Agrarian
Reform is still unresolved. As for the validity of the issuance of E.O. Nos. 228
and 229, he argues that they were enacted pursuant to Section 6, Article
XVIII of the Transitory Provisions of the 1987 Constitution which reads:
The incumbent president shall continue to exercise legislative powers until
the first Congress is convened.
On the issue of just compensation, his position is that when P.D. No. 27 was
promulgated on October 21. 1972, the tenant-farmer of agricultural land was
deemed the owner of the land he was tilling. The leasehold rentals paid after
that date should therefore be considered amortization payments.
In his Reply to the public respondents, the petitioner maintains that the
motion he filed was resolved on December 14, 1987. An appeal to the Office
of the President would be useless with the promulgation of E.O. Nos. 228
and 229, which in effect sanctioned the validity of the public respondent's
acts.
G.R. No. 78742
The petitioners in this case invoke the right of retention granted by P.D. No.
27 to owners of rice and corn lands not exceeding seven hectares as long as
they are cultivating or intend to cultivate the same. Their respective lands do
not exceed the statutory limit but are occupied by tenants who are actually
cultivating such lands.
According to P.D. No. 316, which was promulgated in implementation of P.D.
No. 27:
No tenant-farmer in agricultural lands primarily devoted to
rice and corn shall be ejected or removed from his
farmholding until such time as the respective rights of the
tenant- farmers and the landowner shall have been
determined in accordance with the rules and regulations
implementing P.D. No. 27.
The petitioners claim they cannot eject their tenants and so are unable to
enjoy their right of retention because the Department of Agrarian Reform has
so far not issued the implementing rules required under the above-quoted
decree. They therefore ask the Court for a writ of mandamus to compel the
respondent to issue the said rules.
In his Comment, the public respondent argues that P.D. No. 27 has been
amended by LOI 474 removing any right of retention from persons who own
other agricultural lands of more than 7 hectares in aggregate area or lands
used for residential, commercial, industrial or other purposes from which they
derive adequate income for their family. And even assuming that the
petitioners do not fall under its terms, the regulations implementing P.D. No.
27 have already been issued, to wit, the Memorandum dated July 10, 1975
(Interim Guidelines on Retention by Small Landowners, with an
accompanying Retention Guide Table), Memorandum Circular No. 11 dated
April 21, 1978, (Implementation Guidelines of LOI No. 474), Memorandum
Circular No. 18-81 dated December 29,1981 (Clarificatory Guidelines on
Coverage of P.D. No. 27 and Retention by Small Landowners), and DAR
Administrative Order No. 1, series of 1985 (Providing for a Cut-off Date for
Landowners to Apply for Retention and/or to Protest the Coverage of their
Landholdings under Operation Land Transfer pursuant to P.D. No. 27). For
failure to file the corresponding applications for retention under these
measures, the petitioners are now barred from invoking this right.
The public respondent also stresses that the petitioners have prematurely
initiated this case notwithstanding the pendency of their appeal to the
President of the Philippines. Moreover, the issuance of the implementing
rules, assuming this has not yet been done, involves the exercise of
discretion which cannot be controlled through the writ of mandamus. This is
especially true if this function is entrusted, as in this case, to a separate
department of the government.
In their Reply, the petitioners insist that the above-cited measures are not
applicable to them because they do not own more than seven hectares of
agricultural land. Moreover, assuming arguendo that the rules were intended
to cover them also, the said measures are nevertheless not in force because
they have not been published as required by law and the ruling of this Court
in Tanada v. Tuvera.10 As for LOI 474, the same is ineffective for the
additional reason that a mere letter of instruction could not have repealed the
presidential decree.
I
Although holding neither purse nor sword and so regarded as the weakest of
the three departments of the government, the judiciary is nonetheless vested
with the power to annul the acts of either the legislative or the executive or of
both when not conformable to the fundamental law. This is the reason for
what some quarters call the doctrine of judicial supremacy. Even so, this
power is not lightly assumed or readily exercised. The doctrine of separation
of powers imposes upon the courts a proper restraint, born of the nature of
their functions and of their respect for the other departments, in striking down
the acts of the legislative and the executive as unconstitutional. The policy,
indeed, is a blend of courtesy and caution. To doubt is to sustain. The theory
is that before the act was done or the law was enacted, earnest studies were
made by Congress or the President, or both, to insure that the Constitution
would not be breached.
In addition, the Constitution itself lays down stringent conditions for a
declaration of unconstitutionality, requiring therefor the concurrence of a
majority of the members of the Supreme Court who took part in the
deliberations and voted on the issue during their session en banc.11 And as
established by judge made doctrine, the Court will assume jurisdiction over a
constitutional question only if it is shown that the essential requisites of a
judicial inquiry into such a question are first satisfied. Thus, there must be an
actual case or controversy involving a conflict of legal rights susceptible of
judicial determination, the constitutional question must have been
opportunely raised by the proper party, and the resolution of the question is
unavoidably necessary to the decision of the case itself. 12
With particular regard to the requirement of proper party as applied in the
cases before us, we hold that the same is satisfied by the petitioners and
intervenors because each of them has sustained or is in danger of sustaining
an immediate injury as a result of the acts or measures complained of. 13 And
even if, strictly speaking, they are not covered by the definition, it is still within
the wide discretion of the Court to waive the requirement and so remove the
impediment to its addressing and resolving the serious constitutional
questions raised.
In the first Emergency Powers Cases, 14 ordinary citizens and taxpayers
were allowed to question the constitutionality of several executive orders
issued by President Quirino although they were invoking only an indirect and
general interest shared in common with the public. The Court dismissed the
objection that they were not proper parties and ruled that "the transcendental
importance to the public of these cases demands that they be settled
promptly and definitely, brushing aside, if we must, technicalities of
procedure." We have since then applied this exception in many other
cases. 15
The other above-mentioned requisites have also been met in the present
petitions.
In must be stressed that despite the inhibitions pressing upon the Court when
confronted with constitutional issues like the ones now before it, it will not
hesitate to declare a law or act invalid when it is convinced that this must be
done. In arriving at this conclusion, its only criterion will be the Constitution
as God and its conscience give it the light to probe its meaning and discover
its purpose. Personal motives and political considerations are irrelevancies
that cannot influence its decision. Blandishment is as ineffectual as
intimidation.
For all the awesome power of the Congress and the Executive, the Court will
not hesitate to "make the hammer fall, and heavily," to use Justice Laurel's
pithy language, where the acts of these departments, or of any public official,
betray the people's will as expressed in the Constitution.
It need only be added, to borrow again the words of Justice Laurel, that —
... when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the other
departments; it does not in reality nullify or invalidate an act
of the Legislature, but only asserts the solemn and sacred
obligation assigned to it by the Constitution to determine
conflicting claims of authority under the Constitution and to
establish for the parties in an actual controversy the rights
which that instrument secures and guarantees to them. This
is in truth all that is involved in what is termed "judicial
supremacy" which properly is the power of judicial review
under the Constitution. 16
The cases before us categorically raise constitutional questions that this
Court must categorically resolve. And so we shall.
II
We proceed first to the examination of the preliminary issues before resolving
the more serious challenges to the constitutionality of the several measures
involved in these petitions.
The promulgation of P.D. No. 27 by President Marcos in the exercise of his
powers under martial law has already been sustained in Gonzales v.
Estrella and we find no reason to modify or reverse it on that issue. As for the
power of President Aquino to promulgate Proc. No. 131 and E.O. Nos. 228
and 229, the same was authorized under Section 6 of the Transitory
Provisions of the 1987 Constitution, quoted above.
The said measures were issued by President Aquino before July 27, 1987,
when the Congress of the Philippines was formally convened and took over
legislative power from her. They are not "midnight" enactments intended to
pre-empt the legislature because E.O. No. 228 was issued on July 17, 1987,
and the other measures, i.e., Proc. No. 131 and E.O. No. 229, were both
issued on July 22, 1987. Neither is it correct to say that these measures
ceased to be valid when she lost her legislative power for, like any statute,
they continue to be in force unless modified or repealed by subsequent law
or declared invalid by the courts. A statute does not ipso facto become
inoperative simply because of the dissolution of the legislature that enacted
it. By the same token, President Aquino's loss of legislative power did not
have the effect of invalidating all the measures enacted by her when and as
long as she possessed it.
Significantly, the Congress she is alleged to have undercut has not rejected
but in fact substantially affirmed the challenged measures and has
specifically provided that they shall be suppletory to R.A. No. 6657 whenever
not inconsistent with its provisions. 17 Indeed, some portions of the said
measures, like the creation of the P50 billion fund in Section 2 of Proc. No.
131, and Sections 20 and 21 of E.O. No. 229, have been incorporated by
reference in the CARP Law. 18
That fund, as earlier noted, is itself being questioned on the ground that it
does not conform to the requirements of a valid appropriation as specified in
the Constitution. Clearly, however, Proc. No. 131 is not an appropriation
measure even if it does provide for the creation of said fund, for that is not its
principal purpose. An appropriation law is one the primary and specific
purpose of which is to authorize the release of public funds from the
treasury. 19 The creation of the fund is only incidental to the main objective of
the proclamation, which is agrarian reform.
It should follow that the specific constitutional provisions invoked, to wit,
Section 24 and Section 25(4) of Article VI, are not applicable. With particular
reference to Section 24, this obviously could not have been complied with for
the simple reason that the House of Representatives, which now has the
exclusive power to initiate appropriation measures, had not yet been
convened when the proclamation was issued. The legislative power was then
solely vested in the President of the Philippines, who embodied, as it were,
both houses of Congress.
The argument of some of the petitioners that Proc. No. 131 and E.O. No. 229
should be invalidated because they do not provide for retention limits as
required by Article XIII, Section 4 of the Constitution is no longer tenable.
R.A. No. 6657 does provide for such limits now in Section 6 of the law, which
in fact is one of its most controversial provisions. This section declares:
Retention Limits. — Except as otherwise provided in this Act,
no person may own or retain, directly or indirectly, any public
or private agricultural land, the size of which shall vary
according to factors governing a viable family-sized farm,
such as commodity produced, terrain, infrastructure, and soil
fertility as determined by the Presidential Agrarian Reform
Council (PARC) created hereunder, but in no case shall
retention by the landowner exceed five (5) hectares. Three
(3) hectares may be awarded to each child of the landowner,
subject to the following qualifications: (1) that he is at least
fifteen (15) years of age; and (2) that he is actually tilling the
land or directly managing the farm; Provided, That
landowners whose lands have been covered by Presidential
Decree No. 27 shall be allowed to keep the area originally
retained by them thereunder, further, That original
homestead grantees or direct compulsory heirs who still own
the original homestead at the time of the approval of this Act
shall retain the same areas as long as they continue to
cultivate said homestead.
The argument that E.O. No. 229 violates the constitutional requirement that a
bill shall have only one subject, to be expressed in its title, deserves only
short attention. It is settled that the title of the bill does not have to be a
catalogue of its contents and will suffice if the matters embodied in the text
are relevant to each other and may be inferred from the title. 20
The Court wryly observes that during the past dictatorship, every presidential
issuance, by whatever name it was called, had the force and effect of law
because it came from President Marcos. Such are the ways of despots.
Hence, it is futile to argue, as the petitioners do in G.R. No. 79744, that LOI
474 could not have repealed P.D. No. 27 because the former was only a
letter of instruction. The important thing is that it was issued by President
Marcos, whose word was law during that time.
But for all their peremptoriness, these issuances from the President Marcos
still had to comply with the requirement for publication as this Court held
in Tanada v. Tuvera. 21 Hence, unless published in the Official Gazette in
accordance with Article 2 of the Civil Code, they could not have any force
and effect if they were among those enactments successfully challenged in
that case. LOI 474 was published, though, in the Official Gazette dated
November 29,1976.)
Finally, there is the contention of the public respondent in G.R. No. 78742
that the writ of mandamus cannot issue to compel the performance of a
discretionary act, especially by a specific department of the government.
That is true as a general proposition but is subject to one important
qualification. Correctly and categorically stated, the rule is that mandamus
will lie to compel the discharge of the discretionary duty itself but not to
control the discretion to be exercised. In other words, mandamus can issue
to require action only but not specific action.
Whenever a duty is imposed upon a public official and an
unnecessary and unreasonable delay in the exercise of such
duty occurs, if it is a clear duty imposed by law, the courts
will intervene by the extraordinary legal remedy of
 mandamus to compel action. If the duty is purely ministerial,
the courts will require specific action. If the duty is purely
discretionary, the courts by mandamus will require action
only. For example, if an inferior court, public official, or board
should, for an unreasonable length of time, fail to decide a
particular question to the great detriment of all parties
concerned, or a court should refuse to take jurisdiction of a
cause when the law clearly gave it jurisdiction mandamus
will issue, in the first case to require a decision, and in the
second to require that jurisdiction be taken of the cause. 22
And while it is true that as a rule the writ will not be proper as long as there is
still a plain, speedy and adequate remedy available from the administrative
authorities, resort to the courts may still be permitted if the issue raised is a
question of law. 23
III
There are traditional distinctions between the police power and the power of
eminent domain that logically preclude the application of both powers at the
same time on the same subject. In the case of City of Baguio v.
NAWASA, 24for example, where a law required the transfer of all municipal
waterworks systems to the NAWASA in exchange for its assets of equivalent
value, the Court held that the power being exercised was eminent domain
because the property involved was wholesome and intended for a public use.
Property condemned under the police power is noxious or intended for a
noxious purpose, such as a building on the verge of collapse, which should
be demolished for the public safety, or obscene materials, which should be
destroyed in the interest of public morals. The confiscation of such property
is not compensable, unlike the taking of property under the power of
expropriation, which requires the payment of just compensation to the owner.
In the case of Pennsylvania Coal Co. v. Mahon, 25 Justice Holmes laid down
the limits of the police power in a famous aphorism: "The general rule at least
is that while property may be regulated to a certain extent, if regulation goes
too far it will be recognized as a taking." The regulation that went "too far"
was a law prohibiting mining which might cause the subsidence of structures
for human habitation constructed on the land surface. This was resisted by a
coal company which had earlier granted a deed to the land over its mine but
reserved all mining rights thereunder, with the grantee assuming all risks and
waiving any damage claim. The Court held the law could not be sustained
without compensating the grantor. Justice Brandeis filed a lone dissent in
which he argued that there was a valid exercise of the police power. He said:
Every restriction upon the use of property imposed in the
exercise of the police power deprives the owner of some
right theretofore enjoyed, and is, in that sense, an
abridgment by the State of rights in property without making
compensation. But restriction imposed to protect the public
health, safety or morals from dangers threatened is not a
taking. The restriction here in question is merely the
prohibition of a noxious use. The property so restricted
remains in the possession of its owner. The state does not
appropriate it or make any use of it. The state merely
prevents the owner from making a use which interferes with
paramount rights of the public. Whenever the use prohibited
ceases to be noxious — as it may because of further
changes in local or social conditions — the restriction will
have to be removed and the owner will again be free to enjoy
his property as heretofore.
Recent trends, however, would indicate not a polarization but a mingling of
the police power and the power of eminent domain, with the latter being used
as an implement of the former like the power of taxation. The employment of
the taxing power to achieve a police purpose has long been accepted. 26 As
for the power of expropriation, Prof. John J. Costonis of the University of
Illinois College of Law (referring to the earlier case of Euclid v. Ambler Realty
Co., 272 US 365, which sustained a zoning law under the police power)
makes the following significant remarks:
Euclid, moreover, was decided in an era when judges
located the Police and eminent domain powers on different
planets. Generally speaking, they viewed eminent domain as
encompassing public acquisition of private property for
improvements that would be available for public use," literally
construed. To the police power, on the other hand, they
assigned the less intrusive task of preventing harmful
externalities a point reflected in the Euclid opinion's reliance
on an analogy to nuisance law to bolster its support of
zoning. So long as suppression of a privately authored harm
bore a plausible relation to some legitimate "public purpose,"
the pertinent measure need have afforded no compensation
whatever. With the progressive growth of government's
involvement in land use, the distance between the two
powers has contracted considerably. Today government
often employs eminent domain interchangeably with or as a
useful complement to the police power-- a trend expressly
approved in the Supreme Court's 1954 decision in Berman v.
Parker, which broadened the reach of eminent domain's
 "public use" test to match that of the police power's standard
of "public purpose." 27
The Berman case sustained a redevelopment project and the improvement
of blighted areas in the District of Columbia as a proper exercise of the police
power. On the role of eminent domain in the attainment of this purpose,
Justice Douglas declared:
If those who govern the District of Columbia decide that the
Nation's Capital should be beautiful as well as sanitary, there
is nothing in the Fifth Amendment that stands in the way.
Once the object is within the authority of Congress, the right
to realize it through the exercise of eminent domain is clear.
For the power of eminent domain is merely the means to the
end. 28
In Penn Central Transportation Co. v. New York City, 29 decided by a 6-3
vote in 1978, the U.S Supreme Court sustained the respondent's Landmarks
Preservation Law under which the owners of the Grand Central Terminal had
not been allowed to construct a multi-story office building over the Terminal,
which had been designated a historic landmark. Preservation of the landmark
was held to be a valid objective of the police power. The problem, however,
was that the owners of the Terminal would be deprived of the right to use the
airspace above it although other landowners in the area could do so over
their respective properties. While insisting that there was here no taking, the
Court nonetheless recognized certain compensatory rights accruing to Grand
Central Terminal which it said would "undoubtedly mitigate" the loss caused
by the regulation. This "fair compensation," as he called it, was explained by
Prof. Costonis in this wise:
In return for retaining the Terminal site in its pristine landmark status, Penn
Central was authorized to transfer to neighboring properties the authorized
but unused rights accruing to the site prior to the Terminal's designation as a
landmark — the rights which would have been exhausted by the 59-story
building that the city refused to countenance atop the Terminal. Prevailing
bulk restrictions on neighboring sites were proportionately relaxed,
theoretically enabling Penn Central to recoup its losses at the Terminal site
by constructing or selling to others the right to construct larger, hence more
profitable buildings on the transferee sites. 30
The cases before us present no knotty complication insofar as the question
of compensable taking is concerned. To the extent that the measures under
challenge merely prescribe retention limits for landowners, there is an
exercise of the police power for the regulation of private property in
accordance with the Constitution. But where, to carry out such regulation, it
becomes necessary to deprive such owners of whatever lands they may own
in excess of the maximum area allowed, there is definitely a taking under the
power of eminent domain for which payment of just compensation is
imperative. The taking contemplated is not a mere limitation of the use of the
land. What is required is the surrender of the title to and the physical
possession of the said excess and all beneficial rights accruing to the owner
in favor of the farmer-beneficiary. This is definitely an exercise not of the
police power but of the power of eminent domain.
Whether as an exercise of the police power or of the power of eminent
domain, the several measures before us are challenged as violative of the
due process and equal protection clauses.
The challenge to Proc. No. 131 and E.O. Nos. 228 and 299 on the ground
that no retention limits are prescribed has already been discussed and
dismissed. It is noted that although they excited many bitter exchanges
during the deliberation of the CARP Law in Congress, the retention limits
finally agreed upon are, curiously enough, not being questioned in these
petitions. We therefore do not discuss them here. The Court will come to the
other claimed violations of due process in connection with our examination of
the adequacy of just compensation as required under the power of
expropriation.
The argument of the small farmers that they have been denied equal
protection because of the absence of retention limits has also become
academic under Section 6 of R.A. No. 6657. Significantly, they too have not
questioned the area of such limits. There is also the complaint that they
should not be made to share the burden of agrarian reform, an objection also
made by the sugar planters on the ground that they belong to a particular
class with particular interests of their own. However, no evidence has been
submitted to the Court that the requisites of a valid classification have been
violated.
Classification has been defined as the grouping of persons or things similar
to each other in certain particulars and different from each other in these
same particulars. 31 To be valid, it must conform to the following
requirements: (1) it must be based on substantial distinctions; (2) it must be
germane to the purposes of the law; (3) it must not be limited to existing
conditions only; and (4) it must apply equally to all the members of the
class. 32 The Court finds that all these requisites have been met by the
measures here challenged as arbitrary and discriminatory.
Equal protection simply means that all persons or things similarly situated
must be treated alike both as to the rights conferred and the liabilities
imposed. 33 The petitioners have not shown that they belong to a different
class and entitled to a different treatment. The argument that not only
landowners but also owners of other properties must be made to share the
burden of implementing land reform must be rejected. There is a substantial
distinction between these two classes of owners that is clearly visible except
to those who will not see. There is no need to elaborate on this matter. In any
event, the Congress is allowed a wide leeway in providing for a valid
classification. Its decision is accorded recognition and respect by the courts
of justice except only where its discretion is abused to the detriment of the
Bill of Rights.
It is worth remarking at this juncture that a statute may be sustained under
the police power only if there is a concurrence of the lawful subject and the
lawful method. Put otherwise, the interests of the public generally as
distinguished from those of a particular class require the interference of the
State and, no less important, the means employed are reasonably necessary
for the attainment of the purpose sought to be achieved and not unduly
oppressive upon individuals. 34 As the subject and purpose of agrarian reform
have been laid down by the Constitution itself, we may say that the first
requirement has been satisfied. What remains to be examined is the validity
of the method employed to achieve the constitutional goal.
One of the basic principles of the democratic system is that where the rights
of the individual are concerned, the end does not justify the means. It is not
enough that there be a valid objective; it is also necessary that the means
employed to pursue it be in keeping with the Constitution. Mere expediency
will not excuse constitutional shortcuts. There is no question that not even
the strongest moral conviction or the most urgent public need, subject only to
a few notable exceptions, will excuse the bypassing of an individual's rights.
It is no exaggeration to say that a, person invoking a right guaranteed under
Article III of the Constitution is a majority of one even as against the rest of
the nation who would deny him that right.
That right covers the person's life, his liberty and his property under Section 1
of Article III of the Constitution. With regard to his property, the owner enjoys
the added protection of Section 9, which reaffirms the familiar rule that
private property shall not be taken for public use without just compensation.
This brings us now to the power of eminent domain.
IV
Eminent domain is an inherent power of the State that
enables it to forcibly acquire private lands intended for public
use upon payment of just compensation to the owner.
Obviously, there is no need to expropriate where the owner
is willing to sell under terms also acceptable to the
purchaser, in which case an ordinary deed of sale may be
agreed upon by the parties. 35 It is only where the owner is
unwilling to sell, or cannot accept the price or other
conditions offered by the vendee, that the power of eminent
domain will come into play to assert the paramount authority
of the State over the interests of the property owner. Private
rights must then yield to the irresistible demands of the
public interest on the time-honored justification, as in the
case of the police power, that the welfare of the people is the
supreme law.
But for all its primacy and urgency, the power of expropriation is by no means
absolute (as indeed no power is absolute). The limitation is found in the
constitutional injunction that "private property shall not be taken for public use
without just compensation" and in the abundant jurisprudence that has
evolved from the interpretation of this principle. Basically, the requirements
for a proper exercise of the power are: (1) public use and (2) just
compensation.
Let us dispose first of the argument raised by the petitioners in G.R. No.
79310 that the State should first distribute public agricultural lands in the
pursuit of agrarian reform instead of immediately disturbing property rights by
forcibly acquiring private agricultural lands. Parenthetically, it is not correct to
say that only public agricultural lands may be covered by the CARP as the
Constitution calls for "the just distribution of all agricultural lands." In any
event, the decision to redistribute private agricultural lands in the manner
prescribed by the CARP was made by the legislative and executive
departments in the exercise of their discretion. We are not justified in
reviewing that discretion in the absence of a clear showing that it has been
abused.
A becoming courtesy admonishes us to respect the decisions of the political
departments when they decide what is known as the political question. As
explained by Chief Justice Concepcion in the case of Tañada v. Cuenco: 36
The term "political question" connotes what it means in
ordinary parlance, namely, a question of policy. It refers to
"those questions which, under the Constitution, are to be
decided by the people in their sovereign capacity; or in
regard to which full discretionary authority has been
delegated to the legislative or executive branch of the
 government." It is concerned with issues dependent upon
the wisdom, not legality, of a particular measure.
It is true that the concept of the political question has been constricted with
the enlargement of judicial power, which now includes the authority of the
courts "to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government." 37 Even so, this should not be
construed as a license for us to reverse the other departments simply
because their views may not coincide with ours.
The legislature and the executive have been seen fit, in their wisdom, to
include in the CARP the redistribution of private landholdings (even as the
distribution of public agricultural lands is first provided for, while also
continuing apace under the Public Land Act and other cognate laws). The
Court sees no justification to interpose its authority, which we may assert
only if we believe that the political decision is not unwise, but illegal. We do
not find it to be so.
In U.S. v. Chandler-Dunbar Water Power Company,38 it was held:
Congress having determined, as it did by the Act of March
3,1909 that the entire St. Mary's river between the American
bank and the international line, as well as all of the upland
north of the present ship canal, throughout its entire length,
was "necessary for the purpose of navigation of said waters,
and the waters connected therewith," that determination is
conclusive in condemnation proceedings instituted by the
United States under that Act, and there is no room for judicial
review of the judgment of Congress ... .
As earlier observed, the requirement for public use has already been settled
for us by the Constitution itself No less than the 1987 Charter calls for
agrarian reform, which is the reason why private agricultural lands are to be
taken from their owners, subject to the prescribed maximum retention limits.
The purposes specified in P.D. No. 27, Proc. No. 131 and R.A. No. 6657 are
only an elaboration of the constitutional injunction that the State adopt the
necessary measures "to encourage and undertake the just distribution of all
agricultural lands to enable farmers who are landless to own directly or
collectively the lands they till." That public use, as pronounced by the
fundamental law itself, must be binding on us.
The second requirement, i.e., the payment of just compensation, needs a
longer and more thoughtful examination.
Just compensation is defined as the full and fair equivalent of the property
taken from its owner by the expropriator. 39 It has been repeatedly stressed
by this Court that the measure is not the taker's gain but the owner's
loss. 40 The word "just" is used to intensify the meaning of the word
"compensation" to convey the idea that the equivalent to be rendered for the
property to be taken shall be real, substantial, full, ample. 41
It bears repeating that the measures challenged in these petitions
contemplate more than a mere regulation of the use of private lands under
the police power. We deal here with an actual taking of private agricultural
lands that has dispossessed the owners of their property and deprived them
of all its beneficial use and enjoyment, to entitle them to the just
compensation mandated by the Constitution.
As held in Republic of the Philippines v. Castellvi, 42 there is compensable
taking when the following conditions concur: (1) the expropriator must enter a
private property; (2) the entry must be for more than a momentary period; (3)
the entry must be under warrant or color of legal authority; (4) the property
must be devoted to public use or otherwise informally appropriated or
injuriously affected; and (5) the utilization of the property for public use must
be in such a way as to oust the owner and deprive him of beneficial
enjoyment of the property. All these requisites are envisioned in the
measures before us.
Where the State itself is the expropriator, it is not necessary for it to make a
deposit upon its taking possession of the condemned property, as "the
compensation is a public charge, the good faith of the public is pledged for its
payment, and all the resources of taxation may be employed in raising the
amount." 43 Nevertheless, Section 16(e) of the CARP Law provides that:
Upon receipt by the landowner of the corresponding
payment or, in case of rejection or no response from the
landowner, upon the deposit with an accessible bank
designated by the DAR of the compensation in cash or in
LBP bonds in accordance with this Act, the DAR shall take
immediate possession of the land and shall request the
proper Register of Deeds to issue a Transfer Certificate of
Title (TCT) in the name of the Republic of the Philippines.
The DAR shall thereafter proceed with the redistribution of
the land to the qualified beneficiaries.
Objection is raised, however, to the manner of fixing the just compensation,
which it is claimed is entrusted to the administrative authorities in violation of
judicial prerogatives. Specific reference is made to Section 16(d), which
provides that in case of the rejection or disregard by the owner of the offer of
the government to buy his land-
... the DAR shall conduct summary administrative
proceedings to determine the compensation for the land by
requiring the landowner, the LBP and other interested parties
to submit evidence as to the just compensation for the land,
within fifteen (15) days from the receipt of the notice. After
the expiration of the above period, the matter is deemed
submitted for decision. The DAR shall decide the case within
thirty (30) days after it is submitted for decision.
To be sure, the determination of just compensation is a function addressed to
the courts of justice and may not be usurped by any other branch or official of
the government. EPZA v. Dulay 44 resolved a challenge to several decrees
promulgated by President Marcos providing that the just compensation for
property under expropriation should be either the assessment of the property
by the government or the sworn valuation thereof by the owner, whichever
was lower. In declaring these decrees unconstitutional, the Court held
through Mr. Justice Hugo E. Gutierrez, Jr.:
The method of ascertaining just compensation under the
aforecited decrees constitutes impermissible encroachment
on judicial prerogatives. It tends to render this Court inutile in
a matter which under this Constitution is reserved to it for
final determination.
Thus, although in an expropriation proceeding the court
technically would still have the power to determine the just
compensation for the property, following the applicable
decrees, its task would be relegated to simply stating the
lower value of the property as declared either by the owner
or the assessor. As a necessary consequence, it would be
useless for the court to appoint commissioners under Rule
67 of the Rules of Court. Moreover, the need to satisfy the
due process clause in the taking of private property is
seemingly fulfilled since it cannot be said that a judicial
proceeding was not had before the actual taking. However,
the strict application of the decrees during the proceedings
would be nothing short of a mere formality or charade as the
court has only to choose between the valuation of the owner
and that of the assessor, and its choice is always limited to
the lower of the two. The court cannot exercise its discretion
or independence in determining what is just or fair. Even a
grade school pupil could substitute for the judge insofar as
the determination of constitutional just compensation is
concerned.
xxx
In the present petition, we are once again confronted with
the same question of whether the courts under P.D. No.
1533, which contains the same provision on just
compensation as its predecessor decrees, still have the
power and authority to determine just compensation,
independent of what is stated by the decree and to this
effect, to appoint commissioners for such purpose.
This time, we answer in the affirmative.
xxx
It is violative of due process to deny the owner the
opportunity to prove that the valuation in the tax documents
is unfair or wrong. And it is repulsive to the basic concepts of
justice and fairness to allow the haphazard work of a minor
bureaucrat or clerk to absolutely prevail over the judgment of
a court promulgated only after expert commissioners have
actually viewed the property, after evidence and arguments
pro and con have been presented, and after all factors and
considerations essential to a fair and just determination have
been judiciously evaluated.
A reading of the aforecited Section 16(d) will readily show that it does not
suffer from the arbitrariness that rendered the challenged decrees
constitutionally objectionable. Although the proceedings are described as
summary, the landowner and other interested parties are nevertheless
allowed an opportunity to submit evidence on the real value of the property.
But more importantly, the determination of the just compensation by the DAR
is not by any means final and conclusive upon the landowner or any other
interested party, for Section 16(f) clearly provides:
Any party who disagrees with the decision may bring the
matter to the court of proper jurisdiction for final
determination of just compensation.
The determination made by the DAR is only preliminary unless accepted by
all parties concerned. Otherwise, the courts of justice will still have the right
to review with finality the said determination in the exercise of what is
admittedly a judicial function.
The second and more serious objection to the provisions on just
compensation is not as easily resolved.
This refers to Section 18 of the CARP Law providing in full as follows:
SEC. 18. Valuation and Mode of Compensation. — The LBP
shall compensate the landowner in such amount as may be
agreed upon by the landowner and the DAR and the LBP, in
accordance with the criteria provided for in Sections 16 and
17, and other pertinent provisions hereof, or as may be
finally determined by the court, as the just compensation for
the land.
The compensation shall be paid in one of the following
modes, at the option of the landowner:
(1) Cash payment, under the following terms and conditions:
(a) For lands above fifty (50)
hectares, insofar as the
excess hectarage is
concerned — Twenty-five
percent (25%) cash, the
balance to be paid in
government financial
instruments negotiable at
any time.
(b) For lands above twenty-
four (24) hectares and up to
fifty (50) hectares — Thirty
percent (30%) cash, the
balance to be paid in
government financial
instruments negotiable at
any time.
(c) For lands twenty-four
(24) hectares and below —
Thirty-five percent (35%)
cash, the balance to be paid
in government financial
instruments negotiable at
any time.
(2) Shares of stock in government-owned or controlled
corporations, LBP preferred shares, physical assets or other
qualified investments in accordance with guidelines set by
the PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:
(a) Market interest rates
aligned with 91-day treasury
bill rates. Ten percent (10%)
of the face value of the
bonds shall mature every
year from the date of
issuance until the tenth
(10th) year: Provided, That
should the landowner
choose to forego the cash
portion, whether in full or in
part, he shall be paid
correspondingly in LBP
bonds;
(b) Transferability and
negotiability. Such LBP
bonds may be used by the
landowner, his successors-
in- interest or his assigns,
up to the amount of their
face value, for any of the
following:
(i) Acquisition of land or
other real properties of the
government, including
assets under the Asset
Privatization Program and
other assets foreclosed by
government financial
institutions in the same
province or region where
the lands for which the
bonds were paid are
situated;
(ii) Acquisition of shares of
stock of government-owned
or controlled corporations or
shares of stock owned by
the government in private
corporations;
(iii) Substitution for surety or
bail bonds for the
provisional release of
accused persons, or for
performance bonds;
(iv) Security for loans with
any government financial
institution, provided the
proceeds of the loans shall
be invested in an economic
enterprise, preferably in a
small and medium- scale
industry, in the same
province or region as the
land for which the bonds are
paid;
(v) Payment for various
taxes and fees to
government: Provided, That
the use of these bonds for
these purposes will be
limited to a certain
percentage of the
outstanding balance of the
financial instruments;
Provided, further, That the
PARC shall determine the
percentages mentioned
above;
(vi) Payment for tuition fees
of the immediate family of
the original bondholder in
government universities,
colleges, trade schools, and
other institutions;
(vii) Payment for fees of the
immediate family of the
original bondholder in
government hospitals; and
(viii) Such other uses as the
PARC may from time to
time allow.
The contention of the petitioners in G.R. No. 79777 is that the above
provision is unconstitutional insofar as it requires the owners of the
expropriated properties to accept just compensation therefor in less than
money, which is the only medium of payment allowed. In support of this
contention, they cite jurisprudence holding that:
The fundamental rule in expropriation matters is that the
owner of the property expropriated is entitled to a just
compensation, which should be neither more nor less,
whenever it is possible to make the assessment, than the
money equivalent of said property. Just compensation has
always been understood to be the just and complete
equivalent of the loss which the owner of the thing
expropriated has to suffer by reason of the expropriation
. 45 (Emphasis supplied.)
In J.M. Tuazon Co. v. Land Tenure Administration, 46 this Court held:
It is well-settled that just compensation means the equivalent
for the value of the property at the time of its taking. Anything
beyond that is more, and anything short of that is less, than
just compensation. It means a fair and full equivalent for the
loss sustained, which is the measure of the indemnity, not
whatever gain would accrue to the expropriating entity. The
market value of the land taken is the just compensation to
which the owner of condemned property is entitled, the
market value being that sum of money which a person
desirous, but not compelled to buy, and an owner, willing,
but not compelled to sell, would agree on as a price to be
given and received for such property. (Emphasis supplied.)
In the United States, where much of our jurisprudence on the subject has
been derived, the weight of authority is also to the effect that just
compensation for property expropriated is payable only in money and not
otherwise. Thus —
 The medium of payment of compensation is ready money or
cash. The condemnor cannot compel the owner to accept
anything but money, nor can the owner compel or require the
condemnor to pay him on any other basis than the value of
the property in money at the time and in the manner
prescribed by the Constitution and the statutes. When the
power of eminent domain is resorted to, there must be a
standard medium of payment, binding upon both parties, and
the law has fixed that standard as money in
cash. 47 (Emphasis supplied.)
Part cash and deferred payments are not and cannot, in the
nature of things, be regarded as a reliable and constant
standard of compensation. 48
"Just compensation" for property taken by condemnation
means a fair equivalent in money, which must be paid at
least within a reasonable time after the taking, and it is not
within the power of the Legislature to substitute for such
payment future obligations, bonds, or other valuable
advantage. 49(Emphasis supplied.)
It cannot be denied from these cases that the traditional medium for the
payment of just compensation is money and no other. And so, conformably,
has just compensation been paid in the past solely in that medium. However,
we do not deal here with the traditional excercise of the power of eminent
domain. This is not an ordinary expropriation where only a specific property
of relatively limited area is sought to be taken by the State from its owner for
a specific and perhaps local purpose.
What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands whenever
found and of whatever kind as long as they are in excess of the maximum
retention limits allowed their owners. This kind of expropriation is intended for
the benefit not only of a particular community or of a small segment of the
population but of the entire Filipino nation, from all levels of our society, from
the impoverished farmer to the land-glutted owner. Its purpose does not
cover only the whole territory of this country but goes beyond in time to the
foreseeable future, which it hopes to secure and edify with the vision and the
sacrifice of the present generation of Filipinos. Generations yet to come are
as involved in this program as we are today, although hopefully only as
beneficiaries of a richer and more fulfilling life we will guarantee to them
tomorrow through our thoughtfulness today. And, finally, let it not be forgotten
that it is no less than the Constitution itself that has ordained this revolution in
the farms, calling for "a just distribution" among the farmers of lands that
have heretofore been the prison of their dreams but can now become the key
at least to their deliverance.
Such a program will involve not mere millions of pesos. The cost will be
tremendous. Considering the vast areas of land subject to expropriation
under the laws before us, we estimate that hundreds of billions of pesos will
be needed, far more indeed than the amount of P50 billion initially
appropriated, which is already staggering as it is by our present standards.
Such amount is in fact not even fully available at this time.
We assume that the framers of the Constitution were aware of this difficulty
when they called for agrarian reform as a top priority project of the
government. It is a part of this assumption that when they envisioned the
expropriation that would be needed, they also intended that the just
compensation would have to be paid not in the orthodox way but a less
conventional if more practical method. There can be no doubt that they were
aware of the financial limitations of the government and had no illusions that
there would be enough money to pay in cash and in full for the lands they
wanted to be distributed among the farmers. We may therefore assume that
their intention was to allow such manner of payment as is now provided for
by the CARP Law, particularly the payment of the balance (if the owner
cannot be paid fully with money), or indeed of the entire amount of the just
compensation, with other things of value. We may also suppose that what
they had in mind was a similar scheme of payment as that prescribed in P.D.
No. 27, which was the law in force at the time they deliberated on the new
Charter and with which they presumably agreed in principle.
The Court has not found in the records of the Constitutional Commission any
categorical agreement among the members regarding the meaning to be
given the concept of just compensation as applied to the comprehensive
agrarian reform program being contemplated. There was the suggestion to
"fine tune" the requirement to suit the demands of the project even as it was
also felt that they should "leave it to Congress" to determine how payment
should be made to the landowner and reimbursement required from the
farmer-beneficiaries. Such innovations as "progressive compensation" and
"State-subsidized compensation" were also proposed. In the end, however,
no special definition of the just compensation for the lands to be expropriated
was reached by the Commission. 50
On the other hand, there is nothing in the records either that militates against
the assumptions we are making of the general sentiments and intention of
the members on the content and manner of the payment to be made to the
landowner in the light of the magnitude of the expenditure and the limitations
of the expropriator.
With these assumptions, the Court hereby declares that the content and
manner of the just compensation provided for in the afore- quoted Section 18
of the CARP Law is not violative of the Constitution. We do not mind
admitting that a certain degree of pragmatism has influenced our decision on
this issue, but after all this Court is not a cloistered institution removed from
the realities and demands of society or oblivious to the need for its
enhancement. The Court is as acutely anxious as the rest of our people to
see the goal of agrarian reform achieved at last after the frustrations and
deprivations of our peasant masses during all these disappointing decades.
We are aware that invalidation of the said section will result in the nullification
of the entire program, killing the farmer's hopes even as they approach
realization and resurrecting the spectre of discontent and dissent in the
restless countryside. That is not in our view the intention of the Constitution,
and that is not what we shall decree today.
Accepting the theory that payment of the just compensation is not always
required to be made fully in money, we find further that the proportion of cash
payment to the other things of value constituting the total payment, as
determined on the basis of the areas of the lands expropriated, is not unduly
oppressive upon the landowner. It is noted that the smaller the land, the
bigger the payment in money, primarily because the small landowner will be
needing it more than the big landowners, who can afford a bigger balance in
bonds and other things of value. No less importantly, the government
financial instruments making up the balance of the payment are "negotiable
at any time." The other modes, which are likewise available to the landowner
at his option, are also not unreasonable because payment is made in shares
of stock, LBP bonds, other properties or assets, tax credits, and other things
of value equivalent to the amount of just compensation.
Admittedly, the compensation contemplated in the law will cause the
landowners, big and small, not a little inconvenience. As already remarked,
this cannot be avoided. Nevertheless, it is devoutly hoped that these
countrymen of ours, conscious as we know they are of the need for their
forebearance and even sacrifice, will not begrudge us their indispensable
share in the attainment of the ideal of agrarian reform. Otherwise, our pursuit
of this elusive goal will be like the quest for the Holy Grail.
The complaint against the effects of non-registration of the land under E.O.
No. 229 does not seem to be viable any more as it appears that Section 4 of
the said Order has been superseded by Section 14 of the CARP Law. This
repeats the requisites of registration as embodied in the earlier measure but
does not provide, as the latter did, that in case of failure or refusal to register
the land, the valuation thereof shall be that given by the provincial or city
assessor for tax purposes. On the contrary, the CARP Law says that the just
compensation shall be ascertained on the basis of the factors mentioned in
its Section 17 and in the manner provided for in Section 16.
The last major challenge to CARP is that the landowner is divested of his
property even before actual payment to him in full of just compensation, in
contravention of a well- accepted principle of eminent domain.
The recognized rule, indeed, is that title to the property expropriated shall
pass from the owner to the expropriator only upon full payment of the just
compensation. Jurisprudence on this settled principle is consistent both here
and in other democratic jurisdictions. Thus:
Title to property which is the subject of condemnation proceedings does not
vest the condemnor until the judgment fixing just compensation is entered
and paid, but the condemnor's title relates back to the date on which the
petition under the Eminent Domain Act, or the commissioner's report under
the Local Improvement Act, is filed. 51
... although the right to appropriate and use land taken for a canal is
complete at the time of entry, title to the property taken remains in the owner
until payment is actually made. 52 (Emphasis supplied.)
In Kennedy v. Indianapolis, 53 the US Supreme Court cited several cases
holding that title to property does not pass to the condemnor until just
compensation had actually been made. In fact, the decisions appear to be
uniformly to this effect. As early as 1838, in Rubottom v. McLure, 54 it was
held that "actual payment to the owner of the condemned property was a
condition precedent to the investment of the title to the property in the State"
albeit "not to the appropriation of it to public use." In Rexford v. Knight, 55 the
Court of Appeals of New York said that the construction upon the statutes
was that the fee did not vest in the State until the payment of the
compensation although the authority to enter upon and appropriate the land
was complete prior to the payment. Kennedy further said that "both on
principle and authority the rule is ... that the right to enter on and use the
property is complete, as soon as the property is actually appropriated under
the authority of law for a public use, but that the title does not pass from the
owner without his consent, until just compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and
Paredes, 56 that:
If the laws which we have exhibited or cited in the preceding
discussion are attentively examined it will be apparent that
the method of expropriation adopted in this jurisdiction is
such as to afford absolute reassurance that no piece of land
can be finally and irrevocably taken from an unwilling owner
until compensation is paid ... . (Emphasis supplied.)
It is true that P.D. No. 27 expressly ordered the emancipation of tenant-
farmer as October 21, 1972 and declared that he shall "be deemed the
owner" of a portion of land consisting of a family-sized farm except that "no
title to the land owned by him was to be actually issued to him unless and
until he had become a full-fledged member of a duly recognized farmers'
cooperative." It was understood, however, that full payment of the just
compensation also had to be made first, conformably to the constitutional
requirement.
When E.O. No. 228, categorically stated in its Section 1 that:
All qualified farmer-beneficiaries are now deemed full owners
as of October 21, 1972 of the land they acquired by virtue of
Presidential Decree No. 27. (Emphasis supplied.)
it was obviously referring to lands already validly acquired under the said
decree, after proof of full-fledged membership in the farmers' cooperatives
and full payment of just compensation. Hence, it was also perfectly proper for
the Order to also provide in its Section 2 that the "lease rentals paid to the
landowner by the farmer- beneficiary after October 21, 1972 (pending
transfer of ownership after full payment of just compensation), shall be
considered as advance payment for the land."
The CARP Law, for its part, conditions the transfer of possession and
ownership of the land to the government on receipt by the landowner of the
corresponding payment or the deposit by the DAR of the compensation in
cash or LBP bonds with an accessible bank. Until then, title also remains with
the landowner. 57 No outright change of ownership is contemplated either.
Hence, the argument that the assailed measures violate due process by
arbitrarily transferring title before the land is fully paid for must also be
rejected.
It is worth stressing at this point that all rights acquired by the tenant-farmer
under P.D. No. 27, as recognized under E.O. No. 228, are retained by him
even now under R.A. No. 6657. This should counter-balance the express
provision in Section 6 of the said law that "the landowners whose lands have
been covered by Presidential Decree No. 27 shall be allowed to keep the
area originally retained by them thereunder, further, That original homestead
grantees or direct compulsory heirs who still own the original homestead at
the time of the approval of this Act shall retain the same areas as long as
they continue to cultivate said homestead."
In connection with these retained rights, it does not appear in G.R. No. 78742
that the appeal filed by the petitioners with the Office of the President has
already been resolved. Although we have said that the doctrine of exhaustion
of administrative remedies need not preclude immediate resort to judicial
action, there are factual issues that have yet to be examined on the
administrative level, especially the claim that the petitioners are not covered
by LOI 474 because they do not own other agricultural lands than the
subjects of their petition.
Obviously, the Court cannot resolve these issues. In any event, assuming
that the petitioners have not yet exercised their retention rights, if any, under
P.D. No. 27, the Court holds that they are entitled to the new retention rights
provided for by R.A. No. 6657, which in fact are on the whole more liberal
than those granted by the decree.
V
The CARP Law and the other enactments also involved in these cases have
been the subject of bitter attack from those who point to the shortcomings of
these measures and ask that they be scrapped entirely. To be sure, these
enactments are less than perfect; indeed, they should be continuously re-
examined and rehoned, that they may be sharper instruments for the better
protection of the farmer's rights. But we have to start somewhere. In the
pursuit of agrarian reform, we do not tread on familiar ground but grope on
terrain fraught with pitfalls and expected difficulties. This is inevitable. The
CARP Law is not a tried and tested project. On the contrary, to use Justice
Holmes's words, "it is an experiment, as all life is an experiment," and so we
learn as we venture forward, and, if necessary, by our own mistakes. We
cannot expect perfection although we should strive for it by all means.
Meantime, we struggle as best we can in freeing the farmer from the iron
shackles that have unconscionably, and for so long, fettered his soul to the
soil.
By the decision we reach today, all major legal obstacles to the
comprehensive agrarian reform program are removed, to clear the way for
the true freedom of the farmer. We may now glimpse the day he will be
released not only from want but also from the exploitation and disdain of the
past and from his own feelings of inadequacy and helplessness. At last his
servitude will be ended forever. At last the farm on which he toils will be his
farm. It will be his portion of the Mother Earth that will give him not only the
staff of life but also the joy of living. And where once it bred for him only deep
despair, now can he see in it the fruition of his hopes for a more fulfilling
future. Now at last can he banish from his small plot of earth his insecurities
and dark resentments and "rebuild in it the music and the dream."
WHEREFORE, the Court holds as follows:
 1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos.
228 and 229 are SUSTAINED against all the constitutional
objections raised in the herein petitions.
2. Title to all expropriated properties shall be transferred to
the State only upon full payment of compensation to their
respective owners.
3. All rights previously acquired by the tenant- farmers under
P.D. No. 27 are retained and recognized.
4. Landowners who were unable to exercise their rights of
retention under P.D. No. 27 shall enjoy the retention rights
granted by R.A. No. 6657 under the conditions therein
prescribed.
5. Subject to the above-mentioned rulings all the petitions
are DISMISSED, without pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 74457 March 20, 1987
RESTITUTO YNOT, petitioner,
vs.
INTERMEDIATE APPELLATE COURT, THE STATION COMMANDER,
INTEGRATED NATIONAL POLICE, BAROTAC NUEVO, ILOILO and THE
REGIONAL DIRECTOR, BUREAU OF ANIMAL INDUSTRY, REGION IV,
ILOILO CITY, respondents.
Ramon A. Gonzales for petitioner.
CRUZ, J.:
The essence of due process is distilled in the immortal cry of Themistocles to
Alcibiades "Strike — but hear me first!" It is this cry that the petitioner in effect
repeats here as he challenges the constitutionality of Executive Order No.
626-A.
The said executive order reads in full as follows:
WHEREAS, the President has given orders prohibiting the
interprovincial movement of carabaos and the slaughtering
of carabaos not complying with the requirements of
Executive Order No. 626 particularly with respect to age;
WHEREAS, it has been observed that despite such orders
the violators still manage to circumvent the prohibition
against inter-provincial movement of carabaos by
transporting carabeef instead; and
WHEREAS, in order to achieve the purposes and objectives
of Executive Order No. 626 and the prohibition against
interprovincial movement of carabaos, it is necessary to
strengthen the said Executive Order and provide for the
disposition of the carabaos and carabeef subject of the
violation;
NOW, THEREFORE, I, FERDINAND E. MARCOS,
President of the Philippines, by virtue of the powers vested in
me by the Constitution, do hereby promulgate the following:
SECTION 1. Executive Order No. 626 is hereby amended
such that henceforth, no carabao regardless of age, sex,
physical condition or purpose and no carabeef shall be
transported from one province to another. The carabao or
carabeef transported in violation of this Executive Order as
amended shall be subject to confiscation and forfeiture by
the government, to be distributed to charitable institutions
and other similar institutions as the Chairman of the National
Meat Inspection Commission may ay see fit, in the case of
carabeef, and to deserving farmers through dispersal as the
Director of Animal Industry may see fit, in the case of
carabaos.
SECTION 2. This Executive Order shall take effect
immediately.
Done in the City of Manila, this 25th day of October, in the
year of Our Lord, nineteen hundred and eighty.
( o
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F P
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R i
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.
The petitioner had transported six carabaos in a pump boat from Masbate to
M Iloilo on January 13, 1984, when they were confiscated by the police station
A commander of Barotac Nuevo, Iloilo, for violation of the above
R measure. 1 The petitioner sued for recovery, and the Regional Trial Court of
C Iloilo City issued a writ of replevin upon his filing of a supersedeas bond of
O P12,000.00. After considering the merits of the case, the court sustained the
S confiscation of the carabaos and, since they could no longer be produced,
ordered the confiscation of the bond. The court also declined to rule on the
constitutionality
P of the executive order, as raise by the petitioner, for lack of
authority andr also for its presumed validity. 2
e
The petitioner s appealed the decision to the Intermediate Appellate
Court,* 3 whichi upheld the trial court, ** and he has now come before us in
d review on certiorari.
this petition for
e
n
The thrust of his petition is that the executive order is unconstitutional insofar
t outright confiscation of the carabao or carabeef being
as it authorizes
transported across provincial boundaries. His claim is that the penalty is
R invalid because it is imposed without according the owner a right to be heard
e before a competent and impartial court as guaranteed by due process. He
p complains that the measure should not have been presumed, and so
u sustained, as constitutional. There is also a challenge to the improper
b exercise of the legislative power by the former President under Amendment
l No. 6 of the 1973 Constitution. 4
i
c While also involving the same executive order, the case of Pesigan v.
Angeles 5 is not applicable here. The question raised there was the necessity
of the previous publication of the measure in the Official Gazette before it
could be considered enforceable. We imposed the requirement then on the
basis of due process of law. In doing so, however, this Court did not, as
contended by the Solicitor General, impliedly affirm the constitutionality of
Executive Order No. 626-A. That is an entirely different matter.
This Court has declared that while lower courts should observe a becoming
modesty in examining constitutional questions, they are nonetheless not
prevented from resolving the same whenever warranted, subject only to
review by the highest tribunal. 6 We have jurisdiction under the Constitution
to "review, revise, reverse, modify or affirm on appeal or certiorari, as the law
or rules of court may provide," final judgments and orders of lower courts in,
among others, all cases involving the constitutionality of certain
measures. 7 This simply means that the resolution of such cases may be
made in the first instance by these lower courts.
And while it is true that laws are presumed to be constitutional, that
presumption is not by any means conclusive and in fact may be rebutted.
Indeed, if there be a clear showing of their invalidity, and of the need to
declare them so, then "will be the time to make the hammer fall, and
heavily," 8 to recall Justice Laurel's trenchant warning. Stated otherwise,
courts should not follow the path of least resistance by simply presuming the
constitutionality of a law when it is questioned. On the contrary, they should
probe the issue more deeply, to relieve the abscess, paraphrasing another
distinguished jurist, 9 and so heal the wound or excise the affliction.
Judicial power authorizes this; and when the exercise is demanded, there
should be no shirking of the task for fear of retaliation, or loss of favor, or
popular censure, or any other similar inhibition unworthy of the bench,
especially this Court.
The challenged measure is denominated an executive order but it is really
presidential decree, promulgating a new rule instead of merely implementing
an existing law. It was issued by President Marcos not for the purpose of
taking care that the laws were faithfully executed but in the exercise of his
legislative authority under Amendment No. 6. It was provided thereunder that
whenever in his judgment there existed a grave emergency or a threat or
imminence thereof or whenever the legislature failed or was unable to act
adequately on any matter that in his judgment required immediate action, he
could, in order to meet the exigency, issue decrees, orders or letters of
instruction that were to have the force and effect of law. As there is no
showing of any exigency to justify the exercise of that extraordinary power
then, the petitioner has reason, indeed, to question the validity of the
executive order. Nevertheless, since the determination of the grounds was
supposed to have been made by the President "in his judgment, " a phrase
that will lead to protracted discussion not really necessary at this time, we
reserve resolution of this matter until a more appropriate occasion. For the
nonce, we confine ourselves to the more fundamental question of due
process.
It is part of the art of constitution-making that the provisions of the charter be
cast in precise and unmistakable language to avoid controversies that might
arise on their correct interpretation. That is the Ideal. In the case of the due
process clause, however, this rule was deliberately not followed and the
wording was purposely kept ambiguous. In fact, a proposal to delineate it
more clearly was submitted in the Constitutional Convention of 1934, but it
was rejected by Delegate Jose P. Laurel, Chairman of the Committee on the
Bill of Rights, who forcefully argued against it. He was sustained by the
body. 10
The due process clause was kept intentionally vague so it would remain also
conveniently resilient. This was felt necessary because due process is not,
like some provisions of the fundamental law, an "iron rule" laying down an
implacable and immutable command for all seasons and all persons.
Flexibility must be the best virtue of the guaranty. The very elasticity of the
due process clause was meant to make it adapt easily to every situation,
enlarging or constricting its protection as the changing times and
circumstances may require.
Aware of this, the courts have also hesitated to adopt their own specific
description of due process lest they confine themselves in a legal straitjacket
that will deprive them of the elbow room they may need to vary the meaning
of the clause whenever indicated. Instead, they have preferred to leave the
import of the protection open-ended, as it were, to be "gradually ascertained
by the process of inclusion and exclusion in the course of the decision of
cases as they arise." 11 Thus, Justice Felix Frankfurter of the U.S. Supreme
Court, for example, would go no farther than to define due process — and in
so doing sums it all up — as nothing more and nothing less than "the
embodiment of the sporting Idea of fair play." 12
When the barons of England extracted from their sovereign liege the
reluctant promise that that Crown would thenceforth not proceed against the
life liberty or property of any of its subjects except by the lawful judgment of
his peers or the law of the land, they thereby won for themselves and their
progeny that splendid guaranty of fairness that is now the hallmark of the free
society. The solemn vow that King John made at Runnymede in 1215 has
since then resounded through the ages, as a ringing reminder to all rulers,
benevolent or base, that every person, when confronted by the stern visage
of the law, is entitled to have his say in a fair and open hearing of his cause.
The closed mind has no place in the open society. It is part of the sporting
Idea of fair play to hear "the other side" before an opinion is formed or a
decision is made by those who sit in judgment. Obviously, one side is only
one-half of the question; the other half must also be considered if an impartial
verdict is to be reached based on an informed appreciation of the issues in
contention. It is indispensable that the two sides complement each other, as
unto the bow the arrow, in leading to the correct ruling after examination of
the problem not from one or the other perspective only but in its totality. A
judgment based on less that this full appraisal, on the pretext that a hearing
is unnecessary or useless, is tainted with the vice of bias or intolerance or
ignorance, or worst of all, in repressive regimes, the insolence of power.
The minimum requirements of due process are notice and hearing 13 which,
generally speaking, may not be dispensed with because they are intended as
a safeguard against official arbitrariness. It is a gratifying commentary on our
judicial system that the jurisprudence of this country is rich with applications
of this guaranty as proof of our fealty to the rule of law and the ancient
rudiments of fair play. We have consistently declared that every person,
faced by the awesome power of the State, is entitled to "the law of the land,"
which Daniel Webster described almost two hundred years ago in the
famous Dartmouth College Case, 14 as "the law which hears before it
condemns, which proceeds upon inquiry and renders judgment only after
trial." It has to be so if the rights of every person are to be secured beyond
the reach of officials who, out of mistaken zeal or plain arrogance, would
degrade the due process clause into a worn and empty catchword.
This is not to say that notice and hearing are imperative in every case for, to
be sure, there are a number of admitted exceptions. The conclusive
presumption, for example, bars the admission of contrary evidence as long
as such presumption is based on human experience or there is a rational
connection between the fact proved and the fact ultimately presumed
therefrom. 15 There are instances when the need for expeditions action will
justify omission of these requisites, as in the summary abatement of a
nuisance per se, like a mad dog on the loose, which may be killed on sight
because of the immediate danger it poses to the safety and lives of the
people. Pornographic materials, contaminated meat and narcotic drugs are
inherently pernicious and may be summarily destroyed. The passport of a
person sought for a criminal offense may be cancelled without hearing, to
compel his return to the country he has fled. 16 Filthy restaurants may be
summarily padlocked in the interest of the public health and bawdy houses to
protect the public morals. 17 In such instances, previous judicial hearing may
be omitted without violation of due process in view of the nature of the
property involved or the urgency of the need to protect the general welfare
from a clear and present danger.
The protection of the general welfare is the particular function of the police
power which both restraints and is restrained by due process. The police
power is simply defined as the power inherent in the State to regulate liberty
and property for the promotion of the general welfare. 18 By reason of its
function, it extends to all the great public needs and is described as the most
pervasive, the least limitable and the most demanding of the three inherent
powers of the State, far outpacing taxation and eminent domain. The
individual, as a member of society, is hemmed in by the police power, which
affects him even before he is born and follows him still after he is dead —
from the womb to beyond the tomb — in practically everything he does or
owns. Its reach is virtually limitless. It is a ubiquitous and often unwelcome
intrusion. Even so, as long as the activity or the property has some relevance
to the public welfare, its regulation under the police power is not only proper
but necessary. And the justification is found in the venerable Latin
maxims, Salus populi est suprema lex and Sic utere tuo ut alienum non
laedas, which call for the subordination of individual interests to the benefit of
the greater number.
It is this power that is now invoked by the government to justify Executive
Order No. 626-A, amending the basic rule in Executive Order No. 626,
prohibiting the slaughter of carabaos except under certain conditions. The
original measure was issued for the reason, as expressed in one of its
Whereases, that "present conditions demand that the carabaos and the
buffaloes be conserved for the benefit of the small farmers who rely on them
for energy needs." We affirm at the outset the need for such a measure. In
the face of the worsening energy crisis and the increased dependence of our
farms on these traditional beasts of burden, the government would have
been remiss, indeed, if it had not taken steps to protect and preserve them.
A similar prohibition was challenged in United States v. Toribio, 19 where a
law regulating the registration, branding and slaughter of large cattle was
claimed to be a deprivation of property without due process of law. The
defendant had been convicted thereunder for having slaughtered his own
carabao without the required permit, and he appealed to the Supreme Court.
The conviction was affirmed. The law was sustained as a valid police
measure to prevent the indiscriminate killing of carabaos, which were then
badly needed by farmers. An epidemic had stricken many of these animals
and the reduction of their number had resulted in an acute decline in
agricultural output, which in turn had caused an incipient famine.
Furthermore, because of the scarcity of the animals and the consequent
increase in their price, cattle-rustling had spread alarmingly, necessitating
more effective measures for the registration and branding of these animals.
The Court held that the questioned statute was a valid exercise of the police
power and declared in part as follows:
 To justify the State in thus interposing its authority in behalf
of the public, it must appear, first, that the interests of the
public generally, as distinguished from those of a particular
class, require such interference; and second, that the means
are reasonably necessary for the accomplishment of the
purpose, and not unduly oppressive upon individuals. ...
From what has been said, we think it is clear that the
enactment of the provisions of the statute under
consideration was required by "the interests of the public
generally, as distinguished from those of a particular class"
and that the prohibition of the slaughter of carabaos for
human consumption, so long as these animals are fit for
agricultural work or draft purposes was a "reasonably
necessary" limitation on private ownership, to protect the
community from the loss of the services of such animals by
their slaughter by improvident owners, tempted either by
greed of momentary gain, or by a desire to enjoy the luxury
of animal food, even when by so doing the productive power
of the community may be measurably and dangerously
affected.
In the light of the tests mentioned above, we hold with the Toribio Case that
the carabao, as the poor man's tractor, so to speak, has a direct relevance to
the public welfare and so is a lawful subject of Executive Order No. 626. The
method chosen in the basic measure is also reasonably necessary for the
purpose sought to be achieved and not unduly oppressive upon individuals,
again following the above-cited doctrine. There is no doubt that by banning
the slaughter of these animals except where they are at least seven years
old if male and eleven years old if female upon issuance of the necessary
permit, the executive order will be conserving those still fit for farm work or
breeding and preventing their improvident depletion.
But while conceding that the amendatory measure has the same lawful
subject as the original executive order, we cannot say with equal certainty
that it complies with the second requirement, viz., that there be a lawful
method. We note that to strengthen the original measure, Executive Order
No. 626-A imposes an absolute ban not on the slaughter of the carabaos but
on their movement, providing that "no carabao regardless of age, sex,
physical condition or purpose (sic) and no carabeef shall be transported from
one province to another." The object of the prohibition escapes us. The
reasonable connection between the means employed and the purpose
sought to be achieved by the questioned measure is missing
We do not see how the prohibition of the inter-provincial transport of
carabaos can prevent their indiscriminate slaughter, considering that they
can be killed anywhere, with no less difficulty in one province than in another.
Obviously, retaining the carabaos in one province will not prevent their
slaughter there, any more than moving them to another province will make it
easier to kill them there. As for the carabeef, the prohibition is made to apply
to it as otherwise, so says executive order, it could be easily circumvented by
simply killing the animal. Perhaps so. However, if the movement of the live
animals for the purpose of preventing their slaughter cannot be prohibited, it
should follow that there is no reason either to prohibit their transfer as, not to
be flippant dead meat.
Even if a reasonable relation between the means and the end were to be
assumed, we would still have to reckon with the sanction that the measure
applies for violation of the prohibition. The penalty is outright confiscation of
the carabao or carabeef being transported, to be meted out by the executive
authorities, usually the police only. In the Toribio Case, the statute was
sustained because the penalty prescribed was fine and imprisonment, to be
imposed by the court after trial and conviction of the accused. Under the
challenged measure, significantly, no such trial is prescribed, and the
property being transported is immediately impounded by the police and
declared, by the measure itself, as forfeited to the government.
In the instant case, the carabaos were arbitrarily confiscated by the police
station commander, were returned to the petitioner only after he had filed a
complaint for recovery and given a supersedeas bond of P12,000.00, which
was ordered confiscated upon his failure to produce the carabaos when
ordered by the trial court. The executive order defined the prohibition,
convicted the petitioner and immediately imposed punishment, which was
carried out forthright. The measure struck at once and pounced upon the
petitioner without giving him a chance to be heard, thus denying him the
centuries-old guaranty of elementary fair play.
It has already been remarked that there are occasions when notice and
hearing may be validly dispensed with notwithstanding the usual requirement
for these minimum guarantees of due process. It is also conceded that
summary action may be validly taken in administrative proceedings as
procedural due process is not necessarily judicial only. 20 In the exceptional
cases accepted, however. there is a justification for the omission of the right
to a previous hearing, to wit, the immediacy of the problem sought to be
corrected and the urgency of the need to correct it.
In the case before us, there was no such pressure of time or action calling for
the petitioner's peremptory treatment. The properties involved were not even
inimical per se as to require their instant destruction. There certainly was no
reason why the offense prohibited by the executive order should not have
been proved first in a court of justice, with the accused being accorded all the
rights safeguarded to him under the Constitution. Considering that, as we
held in Pesigan v. Angeles, 21 Executive Order No. 626-A is penal in nature,
the violation thereof should have been pronounced not by the police only but
by a court of justice, which alone would have had the authority to impose the
prescribed penalty, and only after trial and conviction of the accused.
We also mark, on top of all this, the questionable manner of the disposition of
the confiscated property as prescribed in the questioned executive order. It is
there authorized that the seized property shall "be distributed to charitable
institutions and other similar institutions as the Chairman of the National
Meat Inspection Commission may see fit, in the case of carabeef, and to
deserving farmers through dispersal as the Director of Animal Industry may
see fit, in the case of carabaos." (Emphasis supplied.) The phrase "may see
fit" is an extremely generous and dangerous condition, if condition it is. It is
laden with perilous opportunities for partiality and abuse, and even
corruption. One searches in vain for the usual standard and the reasonable
guidelines, or better still, the limitations that the said officers must observe
when they make their distribution. There is none. Their options are
apparently boundless. Who shall be the fortunate beneficiaries of their
generosity and by what criteria shall they be chosen? Only the officers
named can supply the answer, they and they alone may choose the grantee
as they see fit, and in their own exclusive discretion. Definitely, there is here
a "roving commission," a wide and sweeping authority that is not "canalized
within banks that keep it from overflowing," in short, a clearly profligate and
therefore invalid delegation of legislative powers.
To sum up then, we find that the challenged measure is an invalid exercise of
the police power because the method employed to conserve the carabaos is
not reasonably necessary to the purpose of the law and, worse, is unduly
oppressive. Due process is violated because the owner of the property
confiscated is denied the right to be heard in his defense and is immediately
condemned and punished. The conferment on the administrative authorities
of the power to adjudge the guilt of the supposed offender is a clear
encroachment on judicial functions and militates against the doctrine of
separation of powers. There is, finally, also an invalid delegation of legislative
powers to the officers mentioned therein who are granted unlimited discretion
in the distribution of the properties arbitrarily taken. For these reasons, we
hereby declare Executive Order No. 626-A unconstitutional.
We agree with the respondent court, however, that the police station
commander who confiscated the petitioner's carabaos is not liable in
damages for enforcing the executive order in accordance with its mandate.
The law was at that time presumptively valid, and it was his obligation, as a
member of the police, to enforce it. It would have been impertinent of him,
being a mere subordinate of the President, to declare the executive order
unconstitutional and, on his own responsibility alone, refuse to execute it.
Even the trial court, in fact, and the Court of Appeals itself did not feel they
had the competence, for all their superior authority, to question the order we
now annul.
The Court notes that if the petitioner had not seen fit to assert and protect his
rights as he saw them, this case would never have reached us and the taking
of his property under the challenged measure would have become
a faitaccompli despite its invalidity. We commend him for his spirit. Without
the present challenge, the matter would have ended in that pump boat in
Masbate and another violation of the Constitution, for all its obviousness,
would have been perpetrated, allowed without protest, and soon forgotten in
the limbo of relinquished rights.
The strength of democracy lies not in the rights it guarantees but in the
courage of the people to invoke them whenever they are ignored or violated.
Rights are but weapons on the wall if, like expensive tapestry, all they do is
embellish and impress. Rights, as weapons, must be a promise of protection.
They become truly meaningful, and fulfill the role assigned to them in the free
society, if they are kept bright and sharp with use by those who are not afraid
to assert them.
WHEREFORE, Executive Order No. 626-A is hereby declared
unconstitutional. Except as affirmed above, the decision of the Court of
Appeals is reversed. The supersedeas bond is cancelled and the amount
thereof is ordered restored to the petitioner. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-34915 June 24, 1983
CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF QUEZON
CITY, petitioners,
vs.
HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First
Instance of Rizal, Quezon City, Branch XVIII; HIMLAYANG PILIPINO,
INC., respondents.
City Fiscal for petitioners.
Manuel Villaruel, Jr. and Feliciano Tumale for respondents.
GUTIERREZ, JR., J.:
This is a petition for review which seeks the reversal of the decision of the
Court of First Instance of Rizal, Branch XVIII declaring Section 9 of
Ordinance No. 6118, S-64, of the Quezon City Council null and void.
Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE
REGULATING THE ESTABLISHMENT, MAINTENANCE AND OPERATION
OF PRIVATE MEMORIAL TYPE CEMETERY OR BURIAL GROUND
WITHIN THE JURISDICTION OF QUEZON CITY AND PROVIDING
PENALTIES FOR THE VIOLATION THEREOF" provides:
Sec. 9. At least six (6) percent of the total area of the
memorial park cemetery shall be set aside for charity burial
of deceased persons who are paupers and have been
residents of Quezon City for at least 5 years prior to their
death, to be determined by competent City Authorities. The
area so designated shall immediately be developed and
should be open for operation not later than six months from
the date of approval of the application.
For several years, the aforequoted section of the Ordinance was not
enforced by city authorities but seven years after the enactment of the
ordinance, the Quezon City Council passed the following resolution:
RESOLVED by the council of Quezon assembled, to
request, as it does hereby request the City Engineer,
Quezon City, to stop any further selling and/or transaction of
memorial park lots in Quezon City where the owners thereof
have failed to donate the required 6% space intended for
paupers burial.
Pursuant to this petition, the Quezon City Engineer notified respondent
Himlayang Pilipino, Inc. in writing that Section 9 of Ordinance No. 6118, S-64
would be enforced
Respondent Himlayang Pilipino reacted by filing with the Court of First
Instance of Rizal Branch XVIII at Quezon City, a petition for declaratory relief,
prohibition and mandamus with preliminary injunction (Sp. Proc. No. Q-
16002) seeking to annul Section 9 of the Ordinance in question The
respondent alleged that the same is contrary to the Constitution, the Quezon
City Charter, the Local Autonomy Act, and the Revised Administrative Code.
There being no issue of fact and the questions raised being purely legal both
petitioners and respondent agreed to the rendition of a judgment on the
pleadings. The respondent court, therefore, rendered the decision declaring
Section 9 of Ordinance No. 6118, S-64 null and void.
A motion for reconsideration having been denied, the City Government and
City Council filed the instant petition.
Petitioners argue that the taking of the respondent's property is a valid and
reasonable exercise of police power and that the land is taken for a public
use as it is intended for the burial ground of paupers. They further argue that
the Quezon City Council is authorized under its charter, in the exercise of
local police power, " to make such further ordinances and resolutions not
repugnant to law as may be necessary to carry into effect and discharge the
powers and duties conferred by this Act and such as it shall deem necessary
and proper to provide for the health and safety, promote the prosperity,
improve the morals, peace, good order, comfort and convenience of the city
and the inhabitants thereof, and for the protection of property therein."
On the other hand, respondent Himlayang Pilipino, Inc. contends that the
taking or confiscation of property is obvious because the questioned
ordinance permanently restricts the use of the property such that it cannot be
used for any reasonable purpose and deprives the owner of all beneficial use
of his property.
The respondent also stresses that the general welfare clause is not available
as a source of power for the taking of the property in this case because it
refers to "the power of promoting the public welfare by restraining and
regulating the use of liberty and property." The respondent points out that if
an owner is deprived of his property outright under the State's police power,
the property is generally not taken for public use but is urgently and
summarily destroyed in order to promote the general welfare. The
respondent cites the case of a nuisance per se or the destruction of a house
to prevent the spread of a conflagration.
We find the stand of the private respondent as well as the decision of the
respondent Judge to be well-founded. We quote with approval the lower
court's ruling which declared null and void Section 9 of the questioned city
ordinance:
The issue is: Is Section 9 of the ordinance in question a valid
exercise of the police power?
An examination of the Charter of Quezon City (Rep. Act No.
537), does not reveal any provision that would justify the
ordinance in question except the provision granting police
power to the City. Section 9 cannot be justified under the
power granted to Quezon City to tax, fix the license fee,
and regulate such other business, trades, and occupation as
may be established or practised in the City.' (Subsections 'C',
Sec. 12, R.A. 537).
The power to regulate does not include the power to prohibit
(People vs. Esguerra, 81 PhiL 33, Vega vs. Municipal Board
of Iloilo, L-6765, May 12, 1954; 39 N.J. Law, 70, Mich. 396).
A fortiori, the power to regulate does not include the power to
confiscate. The ordinance in question not only confiscates
but also prohibits the operation of a memorial park cemetery,
because under Section 13 of said ordinance, 'Violation of the
provision thereof is punishable with a fine and/or
imprisonment and that upon conviction thereof the permit to
operate and maintain a private cemetery shall be revoked or
cancelled.' The confiscatory clause and the penal provision
in effect deter one from operating a memorial park cemetery.
Neither can the ordinance in question be justified under sub-
section "t", Section 12 of Republic Act 537 which authorizes
the City Council to-
'prohibit the burial of the dead within the
center of population of the city and provide
for their burial in such proper place and in
such manner as the council may determine,
subject to the provisions of the general law
regulating burial grounds and cemeteries
and governing funerals and disposal of the
dead.' (Sub-sec. (t), Sec. 12, Rep. Act No.
537).
There is nothing in the above provision which authorizes
confiscation or as euphemistically termed by the
respondents, 'donation'
We now come to the question whether or not Section 9 of
the ordinance in question is a valid exercise of police power.
The police power of Quezon City is defined in sub-section
00, Sec. 12, Rep. Act 537 which reads as follows:
(00) To make such further ordinance and
regulations not repugnant to law as may be
necessary to carry into effect and discharge
the powers and duties conferred by this act
and such as it shall deem necessary and
proper to provide for the health and safety,
promote, the prosperity, improve the morals,
peace, good order, comfort and
convenience of the city and the inhabitants
thereof, and for the protection of property
therein; and enforce obedience thereto with
such lawful fines or penalties as the City
Council may prescribe under the provisions
of subsection (jj) of this section.
We start the discussion with a restatement of certain basic
principles. Occupying the forefront in the bill of rights is the
provision which states that 'no person shall be deprived of
life, liberty or property without due process of law' (Art. Ill,
Section 1 subparagraph 1, Constitution).
On the other hand, there are three inherent powers of
government by which the state interferes with the property
rights, namely-. (1) police power, (2) eminent domain, (3)
taxation. These are said to exist independently of the
Constitution as necessary attributes of sovereignty.
Police power is defined by Freund as 'the power of
promoting the public welfare by restraining and regulating
the use of liberty and property' (Quoted in Political Law by
Tanada and Carreon, V-11, p. 50). It is usually exerted in
order to merely regulate the use and enjoyment of property
of the owner. If he is deprived of his property outright, it is
not taken for public use but rather to destroy in order to
promote the general welfare. In police power, the owner
does not recover from the government for injury sustained in
consequence thereof (12 C.J. 623). It has been said that
police power is the most essential of government powers, at
times the most insistent, and always one of the least
limitable of the powers of government (Ruby vs. Provincial
Board, 39 PhiL 660; Ichong vs. Hernandez, 1,7995, May 31,
1957). This power embraces the whole system of public
regulation (U.S. vs. Linsuya Fan, 10 PhiL 104). The
Supreme Court has said that police power is so far-reaching
in scope that it has almost become impossible to limit its
sweep. As it derives its existence from the very existence of
 the state itself, it does not need to be expressed or defined in
its scope. Being coextensive with self-preservation and
survival itself, it is the most positive and active of all
governmental processes, the most essential insistent and
illimitable Especially it is so under the modern democratic
framework where the demands of society and nations have
multiplied to almost unimaginable proportions. The field and
scope of police power have become almost boundless, just
as the fields of public interest and public welfare have
become almost all embracing and have transcended human
foresight. Since the Courts cannot foresee the needs and
demands of public interest and welfare, they cannot delimit
beforehand the extent or scope of the police power by which
and through which the state seeks to attain or achieve public
interest and welfare. (Ichong vs. Hernandez, L-7995, May
31, 1957).
The police power being the most active power of the
government and the due process clause being the broadest
station on governmental power, the conflict between this
power of government and the due process clause of the
Constitution is oftentimes inevitable.
It will be seen from the foregoing authorities that police
power is usually exercised in the form of mere regulation or
restriction in the use of liberty or property for the promotion
of the general welfare. It does not involve the taking or
confiscation of property with the exception of a few cases
where there is a necessity to confiscate private property in
order to destroy it for the purpose of protecting the peace
and order and of promoting the general welfare as for
instance, the confiscation of an illegally possessed article,
such as opium and firearms.
It seems to the court that Section 9 of Ordinance No. 6118,
Series of 1964 of Quezon City is not a mere police regulation
but an outright confiscation. It deprives a person of his
private property without due process of law, nay, even
without compensation.
In sustaining the decision of the respondent court, we are not unmindful of
the heavy burden shouldered by whoever challenges the validity of duly
enacted legislation whether national or local As early as 1913, this Court
ruled in Case v. Board of Health (24 PhiL 250) that the courts resolve every
presumption in favor of validity and, more so, where the ma corporation
asserts that the ordinance was enacted to promote the common good and
general welfare.
In the leading case of Ermita-Malate Hotel and Motel Operators Association
Inc. v. City Mayor of Manila (20 SCRA 849) the Court speaking through the
then Associate Justice and now Chief Justice Enrique M. Fernando stated
Primarily what calls for a reversal of such a decision is the a
of any evidence to offset the presumption of validity that
attaches to a statute or ordinance. As was expressed
categorically by Justice Malcolm 'The presumption is all in
favor of validity. ... The action of the elected representatives
of the people cannot be lightly set aside. The councilors
must, in the very nature of things, be familiar with the
necessities of their particular ... municipality and with all the
facts and lances which surround the subject and necessitate
action. The local legislative body, by enacting the ordinance,
has in effect given notice that the regulations are essential to
the well-being of the people. ... The Judiciary should not
lightly set aside legislative action when there is not a clear
invasion of personal or property rights under the guise of
police regulation. (U.S. v. Salaveria (1918], 39 Phil. 102, at
p. 111. There was an affirmation of the presumption of
validity of municipal ordinance as announced in the leading
Salaveria decision in Ebona v. Daet, [1950]85 Phil. 369.)
We have likewise considered the principles earlier stated in
Case v. Board of Health supra :
... Under the provisions of municipal charters which are
known as the general welfare clauses, a city, by virtue of its
police power, may adopt ordinances to the peace, safety,
health, morals and the best and highest interests of the
municipality. It is a well-settled principle, growing out of the
nature of well-ordered and society, that every holder of
property, however absolute and may be his title, holds it
under the implied liability that his use of it shall not be
injurious to the equal enjoyment of others having an equal
right to the enjoyment of their property, nor injurious to the
rights of the community. An property in the state is held
subject to its general regulations, which are necessary to the
common good and general welfare. Rights of property, like
all other social and conventional rights, are subject to such
reasonable limitations in their enjoyment as shall prevent
them from being injurious, and to such reasonable restraints
and regulations, established by law, as the legislature, under
 the governing and controlling power vested in them by the
constitution, may think necessary and expedient. The state,
under the police power, is possessed with plenary power to
deal with all matters relating to the general health, morals,
and safety of the people, so long as it does not contravene
any positive inhibition of the organic law and providing that
such power is not exercised in such a manner as to justify
the interference of the courts to prevent positive wrong and
oppression.
particular taking. Moreover, the questioned ordinance was passed after
Himlayang Pilipino, Inc. had incorporated. received necessary licenses and
permits and commenced operating. The sequestration of six percent of the
cemetery cannot even be considered as having been impliedly
acknowledged by the private respondent when it accepted the permits to
commence operations.
WHEREFORE, the petition for review is hereby DISMISSED. The decision of
the respondent court is affirmed.

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

There is no reasonable relation between the setting aside of at least six (6) EN BANC
percent of the total area of an private cemeteries for charity burial grounds of
deceased paupers and the promotion of health, morals, good order, safety, CARLOS SUPERDRUG CORP., G.R. No. 166494
or the general welfare of the people. The ordinance is actually a taking doing business under the name
without compensation of a certain area from a private cemetery to benefit and style Carlos Superdrug, Present:
paupers who are charges of the municipal corporation. Instead of building or ELSIE M. CANO, doing business
maintaining a public cemetery for this purpose, the city passes the burden to under the name and style Advance PUNO, C.J.,
private cemeteries. Drug, Dr. SIMPLICIO L. YAP, JR., QUISUMBING,*
doing business under the name and YNARES-SANTIAGO,
The expropriation without compensation of a portion of private cemeteries is style City Pharmacy, MELVIN S. SANDOVAL-GUTIERREZ,**
not covered by Section 12(t) of Republic Act 537, the Revised Charter of DELA SERNA, doing business under CARPIO,
Quezon City which empowers the city council to prohibit the burial of the the name and style Botica dela Serna, AUSTRIA-MARTINEZ,
dead within the center of population of the city and to provide for their burial and LEYTE SERV-WELL CORP., CORONA,
in a proper place subject to the provisions of general law regulating burial doing business under the name and CARPIO MORALES,
grounds and cemeteries. When the Local Government Code, Batas style Leyte Serv-Well Drugstore, AZCUNA,
Pambansa Blg. 337 provides in Section 177 (q) that a Sangguniang Petitioners, TINGA,
panlungsod may "provide for the burial of the dead in such place and in such CHICO-NAZARIO,
manner as prescribed by law or ordinance" it simply authorizes the city to - versus - GARCIA,
provide its own city owned land or to buy or expropriate private properties to VELASCO, JR., and
construct public cemeteries. This has been the law and practise in the past. It DEPARTMENT OF SOCIAL NACHURA, JJ.
continues to the present. Expropriation, however, requires payment of just WELFARE and DEVELOPMENT
compensation. The questioned ordinance is different from laws and (DSWD), DEPARTMENT OF Promulgated:
regulations requiring owners of subdivisions to set aside certain areas for HEALTH (DOH), DEPARTMENT
streets, parks, playgrounds, and other public facilities from the land they sell OF FINANCE (DOF), DEPARTMENT June 29, 2007
to buyers of subdivision lots. The necessities of public safety, health, and OF JUSTICE (DOJ), and
convenience are very clear from said requirements which are intended to DEPARTMENT OF INTERIOR and
insure the development of communities with salubrious and wholesome LOCAL GOVERNMENT (DILG),
environments. The beneficiaries of the regulation, in turn, are made to pay by Respondents.
the subdivision developer when individual lots are sold to home-owners. x ---------------------------------------------------------------------------------------- x

As a matter of fact, the petitioners rely solely on the general welfare clause or DECISION
on implied powers of the municipal corporation, not on any express provision
of law as statutory basis of their exercise of power. The clause has always
received broad and liberal interpretation but we cannot stretch it to cover this AZCUNA, J.:
 This is a petition[1] for Prohibition with Prayer for Preliminary
Injunction assailing the constitutionality of Section 4(a) of Republic Act (R.A.)
No. 9257,[2]otherwise known as the Expanded Senior Citizens Act of 2003.
Petitioners are domestic corporations and proprietors operating
drugstores in the Philippines.
Public respondents, on the other hand, include the Department of Social
Welfare and Development (DSWD), the Department of Health (DOH), the
Department of Finance (DOF), the Department of Justice (DOJ), and the
Department of Interior and Local Government (DILG) which have been
specifically tasked to monitor the drugstores compliance with the law;
promulgate the implementing rules and regulations for the effective
implementation of the law; and prosecute and revoke the licenses of erring
drugstore establishments.
The antecedents are as follows:
On February 26, 2004, R.A. No. 9257, amending R.A. No.
7432,[3] was signed into law by President Gloria Macapagal-Arroyo and it
became effective on March 21, 2004. Section 4(a) of the Act states:
SEC. 4. Privileges for the Senior Citizens. The senior
citizens shall be entitled to the following:
(a) the grant of twenty percent (20%) discount from
all establishments relative to the utilization of services in
hotels and similar lodging establishments, restaurants and
recreation centers, and purchase of medicines in all
establishments for the exclusive use or enjoyment of senior
citizens, including funeral and burial services for the death of
senior citizens;
...
The establishment may claim the discounts granted
under (a), (f), (g) and (h) as tax deduction based on the net
cost of the goods sold or services rendered: Provided, That
the cost of the discount shall be allowed as deduction from
gross income for the same taxable year that the discount is
granted. Provided, further, That the total amount of the
claimed tax deduction net of value added tax if applicable,
shall be included in their gross sales receipts for tax
purposes and shall be subject to proper documentation and
to the provisions of the National Internal Revenue Code, as
amended.[4]
On May 28, 2004, the DSWD approved and adopted the
Implementing Rules and Regulations of R.A. No. 9257, Rule VI, Article 8 of
which states:
Article 8. Tax Deduction of Establishments. The
establishment may claim the discounts granted under Rule
V, Section 4 Discounts for Establishments;[5] Section 9,
Medical and Dental Services in Private Facilities[,] [6] and
Sections 10[7] and 11[8] Air, Sea and Land Transportation as
tax deduction based on the net cost of the goods sold or
services rendered. Provided, That the cost of the discount
shall be allowed as deduction from gross income for the
same taxable year that the discount is granted; Provided,
further, That the total amount of the claimed tax deduction
net of value added tax if applicable, shall be included in their
gross sales receipts for tax purposes and shall be subject to
proper documentation and to the provisions of the National
Internal Revenue Code, as amended; Provided, finally, that
the implementation of the tax deduction shall be subject to
the Revenue Regulations to be issued by the Bureau of
Internal Revenue (BIR) and approved by the Department of
Finance (DOF).[9]
On July 10, 2004, in reference to the query of the Drug Stores
Association of the Philippines (DSAP) concerning the meaning of a tax
deduction under the Expanded Senior Citizens Act, the DOF, through
Director IV Ma. Lourdes B. Recente, clarified as follows:
1) The difference between the Tax Credit (under the
Old Senior Citizens Act) and Tax Deduction (under the
Expanded Senior Citizens Act).
1.1. The provision of Section 4 of R.A. No.
7432 (the old Senior Citizens Act) grants twenty
percent (20%) discount from all establishments
relative to the utilization of transportation services,
hotels and similar lodging establishment, restaurants
and recreation centers and purchase of medicines
anywhere in the country, the costs of which may be
claimed by the private establishments concerned
as tax credit.
Effectively, a tax credit is a peso-for-peso
deduction from a taxpayers tax liability due to the
government of the amount of discounts such
establishment has granted to a senior citizen. The
establishment recovers the full amount of discount
given to a senior citizen and hence, the government
shoulders 100% of the discounts granted.
It must be noted, however, that
conceptually, a tax credit scheme under the
Philippine tax system, necessitates that prior
payments of taxes have been made and the
taxpayer is attempting to recover this tax payment
from his/her income tax due. The tax credit scheme
under R.A. No. 7432 is, therefore, inapplicable since
no tax payments have previously occurred.
1.2. The provision under R.A. No.
9257, on the other hand, provides that the
establishment concerned may claim the discounts
under Section 4(a), (f), (g) and (h) as tax
deduction from gross income, based on the net cost
of goods sold or services rendered.
Under this scheme, the establishment
concerned is allowed to deduct from gross income,
in computing for its tax liability, the amount of
discounts granted to senior citizens. Effectively, the
government loses in terms of foregone revenues an
amount equivalent to the marginal tax rate the said
establishment is liable to pay the government. This
will be an amount equivalent to 32% of the twenty
percent (20%) discounts so granted. The
establishment shoulders the remaining portion of the
granted discounts.
It may be necessary to note that while the
burden on [the] government is slightly diminished in
terms of its percentage share on the discounts
granted to senior citizens, the number of potential
establishments that may claim tax deductions, have
however, been broadened. Aside from the
establishments that may claim tax credits under the
old law, more establishments were added under the
new law such as: establishments providing medical
and dental services, diagnostic and laboratory
services, including professional fees of attending
doctors in all private hospitals and medical facilities,
operators of domestic air and sea transport services,
public railways and skyways and bus transport
services.
A simple illustration might help amplify the
points discussed above, as follows:
Tax Deduction Tax
Credit
Gross Sales x x x x x x x x x x x x
Less : Cost of goods sold x x x x x x x x x x
Net Sales x x x x x x x x x x x x
Less: Operating Expenses:
Tax Deduction on Discounts x x x x --
Other deductions: x x x x x x x x
Net Taxable Income x x x x x x x x x x
Tax Due x x x x x x
Less: Tax Credit -- ______x x
Net Tax Due -- x x
As shown above, under a tax deduction scheme,
the tax deduction on discounts was subtracted from Net
Sales together with other deductions which are considered
as operating expenses before the Tax Due was computed
based on the Net Taxable Income. On the other hand, under
a tax credit scheme, the amount of discounts which is
the tax credit item, was deducted directly from the tax due
amount.[10]
Meanwhile, on October 1, 2004, Administrative Order (A.O.) No. 171
or the Policies and Guidelines to Implement the Relevant Provisions of
Republic Act 9257, otherwise known as the Expanded Senior Citizens Act of
2003[11] was issued by the DOH, providing the grant of twenty percent (20%)
discount in the purchase of unbranded generic medicines from all
establishments dispensing medicines for the exclusive use of the senior
citizens.
On November 12, 2004, the DOH issued Administrative Order No
177[12] amending A.O. No. 171. Under A.O. No. 177, the twenty percent
discount shall not be limited to the purchase of unbranded generic medicines
only, but shall extend to both prescription and non-prescription medicines
whether branded or generic. Thus, it stated that [t]he grant of twenty percent
(20%) discount shall be provided in the purchase of medicines from all
establishments dispensing medicines for the exclusive use of the senior
citizens.
Petitioners assail the constitutionality of Section 4(a) of the Expanded Senior
Citizens Act based on the following grounds:[13]
1) The law is confiscatory because it infringes Art.
III, Sec. 9 of the Constitution which provides that
private property shall not be taken for public use
without just compensation;
2) It violates the equal protection clause (Art. III,
Sec. 1) enshrined in our Constitution which states
that no person shall be deprived of life, liberty or
property without due process of law, nor shall any
person be denied of the equal protection of the laws;
and
3) The 20% discount on medicines violates the
constitutional guarantee in Article XIII, Section 11
that makes essential goods, health and other social
services available to all people at affordable cost.[14]
Petitioners assert that Section 4(a) of the law is unconstitutional because it
constitutes deprivation of private property. Compelling drugstore owners and
establishments to grant the discount will result in a loss of profit
and capital because 1) drugstores impose a mark-up of only 5% to 10% on
branded medicines; and 2) the law failed to provide a scheme whereby
drugstores will be justly compensated for the discount.
Examining petitioners arguments, it is apparent that what petitioners
are ultimately questioning is the validity of the tax deduction scheme as a
reimbursement mechanism for the twenty percent (20%) discount that they
extend to senior citizens.
Based on the afore-stated DOF Opinion, the tax deduction scheme
does not fully reimburse petitioners for the discount privilege accorded to
senior citizens. This is because the discount is treated as a deduction, a tax-
deductible expense that is subtracted from the gross income and results in a
lower taxable income. Stated otherwise, it is an amount that is allowed by
law[15] to reduce the income prior to the application of the tax rate to compute
the amount of tax which is due.[16] Being a tax deduction, the discount does
not reduce taxes owed on a peso for peso basis but merely offers a fractional
reduction in taxes owed.
Theoretically, the treatment of the discount as a deduction reduces
the net income of the private establishments concerned. The discounts given
would have entered the coffers and formed part of the gross sales of the
private establishments, were it not for R.A. No. 9257.
The permanent reduction in their total revenues is a forced subsidy
corresponding to the taking of private property for public use or
benefit.[17] This constitutes compensable taking for which petitioners would
ordinarily become entitled to a just compensation.
Just compensation is defined as the full and fair equivalent of the
property taken from its owner by the expropriator. The measure is not the
takers gain but the owners loss. The word just is used to intensify the
meaning of the word compensation, and to convey the idea that the
equivalent to be rendered for the property to be taken shall be real,
substantial, full and ample.[18]
A tax deduction does not offer full reimbursement of the senior
citizen discount. As such, it would not meet the definition of just
compensation.[19]
Having said that, this raises the question of whether the State, in
promoting the health and welfare of a special group of citizens, can impose
upon private establishments the burden of partly subsidizing a government
program.
The Court believes so.
The Senior Citizens Act was enacted primarily to maximize the
contribution of senior citizens to nation-building, and to grant benefits and
privileges to them for their improvement and well-being as the State
considers them an integral part of our society. [20]
The priority given to senior citizens finds its basis in the Constitution
as set forth in the law itself. Thus, the Act provides:
SEC. 2. Republic Act No. 7432 is hereby amended
to read as follows:
SECTION 1. Declaration of Policies and
Objectives. Pursuant to Article XV, Section 4 of the
Constitution, it is the duty of the family to take care of its
elderly members while the State may design programs of
social security for them. In addition to this, Section 10 in the
Declaration of Principles and State Policies provides: The
State shall provide social justice in all phases of national
development. Further, Article XIII, Section 11, provides: The
State shall adopt an integrated and comprehensive approach
to health development which shall endeavor to make
 essential goods, health and other social services available to
all the people at affordable cost. There shall be priority for
the needs of the underprivileged sick, elderly, disabled,
women and children. Consonant with these constitutional
principles the following are the declared policies of this Act:
...
(f) To recognize the important role of the private
sector in the improvement of the welfare of senior
citizens and to actively seek their partnership.[21]
To implement the above policy, the law grants a twenty percent discount to
senior citizens for medical and dental services, and diagnostic and laboratory
fees; admission fees charged by theaters, concert halls, circuses, carnivals,
and other similar places of culture, leisure and amusement; fares for
domestic land, air and sea travel; utilization of services in hotels and similar
lodging establishments, restaurants and recreation centers; and purchases of
medicines for the exclusive use or enjoyment of senior citizens. As a form of
reimbursement, the law provides that business establishments extending the
twenty percent discount to senior citizens may claim the discount as a tax
deduction.
The law is a legitimate exercise of police power which, similar to the power of
eminent domain, has general welfare for its object. Police power is not
capable of an exact definition, but has been purposely veiled in general
terms to underscore its comprehensiveness to meet all exigencies and
provide enough room for an efficient and flexible response to conditions and
circumstances, thus assuring the greatest benefits. [22] Accordingly, it has
been described as the most essential, insistent and the least limitable of
powers, extending as it does to all the great public needs. [23] It is [t]he power
vested in the legislature by the constitution to make, ordain, and establish all
manner of wholesome and reasonable laws, statutes, and ordinances, either
with penalties or without, not repugnant to the constitution, as they shall
judge to be for the good and welfare of the commonwealth, and of the
subjects of the same.[24]
For this reason, when the conditions so demand as determined by
the legislature, property rights must bow to the primacy of police power
because property rights, though sheltered by due process, must yield to
general welfare.[25]
Police power as an attribute to promote the common good would be
diluted considerably if on the mere plea of petitioners that they will suffer loss
of earnings and capital, the questioned provision is invalidated. Moreover, in
the absence of evidence demonstrating the alleged confiscatory effect of the
provision in question, there is no basis for its nullification in view of the
presumption of validity which every law has in its favor.[26]
Given these, it is incorrect for petitioners to insist that the grant of the
senior citizen discount is unduly oppressive to their business, because
petitioners have not taken time to calculate correctly and come up with a
financial report, so that they have not been able to show properly whether or
not the tax deduction scheme really works greatly to their disadvantage. [27]
In treating the discount as a tax deduction, petitioners insist that they
will incur losses because, referring to the DOF Opinion, for every P1.00
senior citizen discount that petitioners would give, P0.68 will be shouldered
by them as only P0.32 will be refunded by the government by way of a tax
deduction.
To illustrate this point, petitioner Carlos Super Drug cited the anti-
hypertensive maintenance drug Norvasc as an example. According to the
latter, it acquires Norvascfrom the distributors at P37.57 per tablet, and
retails it at P39.60 (or at a margin of 5%). If it grants a 20% discount to senior
citizens or an amount equivalent to P7.92, then it would have to
sell Norvasc at P31.68 which translates to a loss from capital of P5.89 per
tablet. Even if the government will allow a tax deduction, only P2.53 per
tablet will be refunded and not the full amount of the discount which is P7.92.
In short, only 32% of the 20% discount will be reimbursed to the
drugstores.[28]
Petitioners computation is flawed. For purposes of reimbursement,
the law states that the cost of the discount shall be deducted from gross
income,[29] the amount of income derived from all sources before deducting
allowable expenses, which will result in net income. Here, petitioners tried to
show a loss on a per transaction basis, which should not be the case. An
income statement, showing an accounting of petitioners sales, expenses,
and net profit (or loss) for a given period could have accurately reflected the
effect of the discount on their income. Absent any financial statement,
petitioners cannot substantiate their claim that they will be operating at a loss
should they give the discount. In addition, the computation was erroneously
based on the assumption that their customers consisted wholly of senior
citizens. Lastly, the 32% tax rate is to be imposed on income, not on the
amount of the discount.
Furthermore, it is unfair for petitioners to criticize the law because
they cannot raise the prices of their medicines given the cutthroat nature of
the players in the industry. It is a business decision on the part of petitioners
to peg the mark-up at 5%. Selling the medicines below acquisition cost, as
alleged by petitioners, is merely a result of this decision. Inasmuch as pricing
is a property right, petitioners cannot reproach the law for being oppressive,
simply because they cannot afford to raise their prices for fear of losing their
customers to competition.
The Court is not oblivious of the retail side of the pharmaceutical
industry and the competitive pricing component of the business. While the
Constitution protects property rights, petitioners must accept the realities of
business and the State, in the exercise of police power, can intervene in the
operations of a business which may result in an impairment of property rights
in the process.
Moreover, the right to property has a social dimension. While Article
XIII of the Constitution provides the precept for the protection of property,
various laws and jurisprudence, particularly on agrarian reform and the
regulation of contracts and public utilities, continuously serve as a reminder
that the right to property can be relinquished upon the command of the State
for the promotion of public good.[30]
Undeniably, the success of the senior citizens program rests largely
on the support imparted by petitioners and the other private establishments
concerned. This being the case, the means employed in invoking the active
participation of the private sector, in order to achieve the purpose or objective
of the law, is reasonably and directly related. Without sufficient proof that
Section 4(a) of R.A. No. 9257 is arbitrary, and that the continued
implementation of the same would be unconscionably detrimental to
petitioners, the Court will refrain from quashing a legislative act.[31]
WHEREFORE, the petition is DISMISSED for lack of merit.
No costs.
SO ORDERED.
SECOND DIVISION
G.R. No. 130230 April 15, 2005
METROPOLITAN MANILA DEVELOPMENT AUTHORITY, Petitioner,
vs.
DANTE O. GARIN, respondent.
DECISION
CHICO-NAZARIO, J.:
At issue in this case is the validity of Section 5(f) of Republic Act No. 7924
creating the Metropolitan Manila Development Authority (MMDA), which
authorizes it to confiscate and suspend or revoke driver's licenses in the
enforcement of traffic laws and regulations.
The issue arose from an incident involving the respondent Dante O. Garin, a
lawyer, who was issued a traffic violation receipt (TVR) and his driver's
license confiscated for parking illegally along Gandara Street, Binondo,
Manila, on 05 August 1995. The following statements were printed on the
TVR:
You are hereby directed to report to the MMDA Traffic Operations Center
Port Area Manila after 48 hours from date of apprehension for
disposition/appropriate action thereon. Criminal case shall be filed for failure
to redeem license after 30 days.
Valid as temporary DRIVER'S license for seven days from date of
apprehension.1
Shortly before the expiration of the TVR's validity, the respondent addressed
a letter2 to then MMDA Chairman Prospero Oreta requesting the return of his
driver's license, and expressing his preference for his case to be filed in
court.
Receiving no immediate reply, Garin filed the original complaint3 with
application for preliminary injunction in Branch 260 of the Regional Trial
Court (RTC) of Parañaque, on 12 September 1995, contending that, in the
absence of any implementing rules and regulations, Sec. 5(f) of Rep. Act No.
7924 grants the MMDA unbridled discretion to deprive erring motorists of
their licenses, pre-empting a judicial determination of the validity of the
deprivation, thereby violating the due process clause of the Constitution. The
respondent further contended that the provision violates the constitutional
prohibition against undue delegation of legislative authority, allowing as it
does the MMDA to fix and impose unspecified – and therefore unlimited -
fines and other penalties on erring motorists.
In support of his application for a writ of preliminary injunction, Garin alleged
that he suffered and continues to suffer great and irreparable damage
because of the deprivation of his license and that, absent any implementing
rules from the Metro Manila Council, the TVR and the confiscation of his
license have no legal basis.
For its part, the MMDA, represented by the Office of the Solicitor General,
pointed out that the powers granted to it by Sec. 5(f) of Rep. Act No. 7924
are limited to the fixing, collection and imposition of fines and penalties for
traffic violations, which powers are legislative and executive in nature; the
judiciary retains the right to determine the validity of the penalty imposed. It
further argued that the doctrine of separation of powers does not preclude
"admixture" of the three powers of government in administrative agencies. 4
The MMDA also refuted Garin's allegation that the Metro Manila Council, the
governing board and policy making body of the petitioner, has as yet to
formulate the implementing rules for Sec. 5(f) of Rep. Act No. 7924 and
directed the court's attention to MMDA Memorandum Circular No. TT-95-001
dated 15 April 1995. Respondent Garin, however, questioned the validity of
MMDA Memorandum Circular No. TT-95-001, as he claims that it was
passed by the Metro Manila Council in the absence of a quorum.
Judge Helen Bautista-Ricafort issued a temporary restraining order on 26
September 1995, extending the validity of the TVR as a temporary driver's
license for twenty more days. A preliminary mandatory injunction was
granted on 23 October 1995, and the MMDA was directed to return the
respondent's driver's license.
On 14 August 1997, the trial court rendered the assailed decision5 in favor of
the herein respondent and held that:
a. There was indeed no quorum in that First Regular Meeting of the
MMDA Council held on March 23, 1995, hence MMDA Memorandum
Circular No. TT-95-001, authorizing confiscation of driver's licenses upon
issuance of a TVR, is void ab initio.
b. The summary confiscation of a driver's license without first giving the
driver an opportunity to be heard; depriving him of a property right (driver's
license) without DUE PROCESS; not filling (sic) in Court the complaint of
supposed traffic infraction, cannot be justified by any legislation (and is)
hence unconstitutional.
WHEREFORE, the temporary writ of preliminary injunction is hereby made
permanent; th(e) MMDA is directed to return to plaintiff his driver's license;
th(e) MMDA is likewise ordered to desist from confiscating driver's license
without first giving the driver the opportunity to be heard in an appropriate
proceeding.
In filing this petition,6 the MMDA reiterates and reinforces its argument in the
court below and contends that a license to operate a motor vehicle is neither
a contract nor a property right, but is a privilege subject to reasonable
regulation under the police power in the interest of the public safety and
welfare. The petitioner further argues that revocation or suspension of this
privilege does not constitute a taking without due process as long as the
licensee is given the right to appeal the revocation.
To buttress its argument that a licensee may indeed appeal the taking and
the judiciary retains the power to determine the validity of the confiscation,
suspension or revocation of the license, the petitioner points out that under
the terms of the confiscation, the licensee has three options:
1. To voluntarily pay the imposable fine,
2. To protest the apprehension by filing a protest with the MMDA
Adjudication Committee, or
3. To request the referral of the TVR to the Public Prosecutor's
Office.
The MMDA likewise argues that Memorandum Circular No. TT-95-001 was
validly passed in the presence of a quorum, and that the lower court's finding
that it had not was based on a "misapprehension of facts," which the
petitioner would have us review. Moreover, it asserts that though the circular
is the basis for the issuance of TVRs, the basis for the summary confiscation
of licenses is Sec. 5(f) of Rep. Act No. 7924 itself, and that such power is
self-executory and does not require the issuance of any implementing
regulation or circular.
Meanwhile, on 12 August 2004, the MMDA, through its Chairman Bayani
Fernando, implemented Memorandum Circular No. 04, Series of 2004,
outlining the procedures for the use of the Metropolitan Traffic Ticket (MTT)
scheme. Under the circular, erring motorists are issued an MTT, which can
be paid at any Metrobank branch. Traffic enforcers may no longer confiscate
drivers' licenses as a matter of course in cases of traffic violations. All
motorists with unredeemed TVRs were given seven days from the date of
implementation of the new system to pay their fines and redeem their license
or vehicle plates.7
It would seem, therefore, that insofar as the absence of a prima facie case to
enjoin the petitioner from confiscating drivers' licenses is concerned, recent
events have overtaken the Court's need to decide this case, which has been
rendered moot and academic by the implementation of Memorandum
Circular No. 04, Series of 2004.
The petitioner, however, is not precluded from re-implementing
Memorandum Circular No. TT-95-001, or any other scheme, for that matter,
that would entail confiscating drivers' licenses. For the proper
implementation, therefore, of the petitioner's future programs, this Court
deems it appropriate to make the following observations:
1. A license to operate a motor vehicle is a privilege that the state
may withhold in the exercise of its police power.
The petitioner correctly points out that a license to operate a motor vehicle is
not a property right, but a privilege granted by the state, which may be
suspended or revoked by the state in the exercise of its police power, in the
interest of the public safety and welfare, subject to the procedural due
process requirements. This is consistent with our rulings in Pedro v.
Provincial Board of Rizal8 on the license to operate a cockpit, Tan v. Director
of Forestry9 and Oposa v. Factoran10 on timber licensing agreements,
and Surigao Electric Co., Inc. v. Municipality of Surigao 11 on a legislative
franchise to operate an electric plant.
Petitioner cites a long list of American cases to prove this point, such
as State ex. Rel. Sullivan,12 which states in part that, "the legislative power to
regulate travel over the highways and thoroughfares of the state for the
general welfare is extensive. It may be exercised in any reasonable manner
to conserve the safety of travelers and pedestrians. Since motor vehicles are
instruments of potential danger, their registration and the licensing of their
operators have been required almost from their first appearance. The right to
operate them in public places is not a natural and unrestrained right, but a
privilege subject to reasonable regulation, under the police power, in the
interest of the public safety and welfare. The power to license imports further
power to withhold or to revoke such license upon noncompliance with
prescribed conditions."
Likewise, the petitioner quotes the Pennsylvania Supreme Court
in Commonwealth v. Funk,13 to the effect that: "Automobiles are vehicles of
great speed and power. The use of them constitutes an element of danger to
persons and property upon the highways. Carefully operated, an automobile
is still a dangerous instrumentality, but, when operated by careless or
incompetent persons, it becomes an engine of destruction. The Legislature,
in the exercise of the police power of the commonwealth, not only may, but
must, prescribe how and by whom motor vehicles shall be operated on the
highways. One of the primary purposes of a system of general regulation of
the subject matter, as here by the Vehicle Code, is to insure the competency
of the operator of motor vehicles. Such a general law is manifestly directed
to the promotion of public safety and is well within the police power."
The common thread running through the cited cases is that it is the
legislature, in the exercise of police power, which has the power and
responsibility to regulate how and by whom motor vehicles may be operated
on the state highways.
2. The MMDA is not vested with police power.
In Metro Manila Development Authority v. Bel-Air Village Association,
Inc.,14 we categorically stated that Rep. Act No. 7924 does not grant the
MMDA with police power, let alone legislative power, and that all its functions
are administrative in nature.
The said case also involved the herein petitioner MMDA which claimed that it
had the authority to open a subdivision street owned by the Bel-Air Village
Association, Inc. to public traffic because it is an agent of the state endowed
with police power in the delivery of basic services in Metro Manila. From this
premise, the MMDA argued that there was no need for the City of Makati to
enact an ordinance opening Neptune Street to the public.
Tracing the legislative history of Rep. Act No. 7924 creating the MMDA, we
concluded that the MMDA is not a local government unit or a public
corporation endowed with legislative power, and, unlike its predecessor, the
Metro Manila Commission, it has no power to enact ordinances for the
welfare of the community. Thus, in the absence of an ordinance from the
City of Makati, its own order to open the street was invalid.
We restate here the doctrine in the said decision as it applies to the case at
bar: police power, as an inherent attribute of sovereignty, is the power vested
by the Constitution in the legislature to make, ordain, and establish all
manner of wholesome and reasonable laws, statutes and ordinances, either
with penalties or without, not repugnant to the Constitution, as they shall
judge to be for the good and welfare of the commonwealth, and for the
subjects of the same.
Having been lodged primarily in the National Legislature, it cannot be
exercised by any group or body of individuals not possessing legislative
power. The National Legislature, however, may delegate this power to the
president and administrative boards as well as the lawmaking bodies of
municipal corporations or local government units (LGUs). Once delegated,
the agents can exercise only such legislative powers as are conferred on
them by the national lawmaking body.
Our Congress delegated police power to the LGUs in the Local Government
Code of 1991.15 A local government is a "political subdivision of a nation or
state which is constituted by law and has substantial control of local
affairs."16Local government units are the provinces, cities, municipalities
and barangays, which exercise police power through their respective
legislative bodies.
Metropolitan or Metro Manila is a body composed of several local
government units. With the passage of Rep. Act No. 7924 in 1995,
Metropolitan Manila was declared as a "special development and
administrative region" and the administration of "metro-wide" basic services
affecting the region placed under "a development authority" referred to as the
MMDA. Thus:
. . . [T]he powers of the MMDA are limited to the following acts: formulation,
coordination, regulation, implementation, preparation, management,
monitoring, setting of policies, installation of a system and
administration. There is no syllable in R. A. No. 7924 that grants the
MMDA police power, let alone legislative power. Even the Metro Manila
Council has not been delegated any legislative power. Unlike the
legislative bodies of the local government units, there is no provision in R.
A. No. 7924 that empowers the MMDA or its Council to "enact
ordinances, approve resolutions and appropriate funds for the general
welfare" of the inhabitants of Metro Manila. The MMDA is, as termed in
the charter itself, a "development authority." It is an agency created for the
purpose of laying down policies and coordinating with the various
national government agencies, people's organizations, non-
governmental organizations and the private sector for the efficient and
expeditious delivery of basic services in the vast metropolitan area. All
its functions are administrative in nature and these are actually summed
up in the charter itself, viz:
"Sec. 2. Creation of the Metropolitan Manila Development Authority. -
- -x x x.
The MMDA shall perform planning, monitoring and
coordinative functions, and in the process exercise
regulatory and supervisory authority over the delivery of
metro-wide services within Metro Manila, without diminution
of the autonomy of the local government units concerning
purely local matters."
….
Clearly, the MMDA is not a political unit of government. The power
delegated to the MMDA is that given to the Metro Manila Council to
promulgate administrative rules and regulations in the implementation of the
MMDA's functions. There is no grant of authority to enact ordinances
and regulations for the general welfare of the inhabitants of the
metropolis. 17 (footnotes omitted, emphasis supplied)
Therefore, insofar as Sec. 5(f) of Rep. Act No. 7924 is understood by the
lower court and by the petitioner to grant the MMDA the power to confiscate
and suspend or revoke drivers' licenses without need of any other legislative
enactment, such is an unauthorized exercise of police power.
3. Sec. 5(f) grants the MMDA with the duty to enforce existing
traffic rules and regulations.
Section 5 of Rep. Act No. 7924 enumerates the "Functions and Powers of
the Metro Manila Development Authority." The contested clause in Sec. 5(f)
states that the petitioner shall "install and administer a single ticketing
system, fix, impose and collect fines and penalties for all kinds of violations of
traffic rules and regulations, whether moving or nonmoving in nature, and
confiscate and suspend or revoke drivers' licenses in the enforcement of
such traffic laws and regulations, the provisions of Rep. Act No. 413618 and
P.D. No. 160519 to the contrary notwithstanding," and that "(f)or this purpose,
the Authority shall enforce all traffic laws and regulations in Metro Manila,
through its traffic operation center, and may deputize members of the PNP,
traffic enforcers of local government units, duly licensed security guards, or
members of non-governmental organizations to whom may be delegated
certain authority, subject to such conditions and requirements as the
Authority may impose."
Thus, where there is a traffic law or regulation validly enacted by the
legislature or those agencies to whom legislative powers have been
delegated (the City of Manila in this case), the petitioner is not precluded –
and in fact is duty-bound – to confiscate and suspend or revoke drivers'
licenses in the exercise of its mandate of transport and traffic management,
as well as the administration and implementation of all traffic enforcement
operations, traffic engineering services and traffic education programs.20
This is consistent with our ruling in Bel-Air that the MMDA is a development
authority created for the purpose of laying down policies and coordinating
with the various national government agencies, people's organizations, non-
governmental organizations and the private sector, which may enforce, but
not enact, ordinances.
This is also consistent with the fundamental rule of statutory construction that
a statute is to be read in a manner that would breathe life into it, rather than
defeat it,21 and is supported by the criteria in cases of this nature that all
reasonable doubts should be resolved in favor of the constitutionality of a
statute.22
A last word. The MMDA was intended to coordinate services with metro-
wide impact that transcend local political boundaries or would entail huge
expenditures if provided by the individual LGUs, especially with regard to
transport and traffic management,23 and we are aware of the valiant efforts of
the petitioner to untangle the increasingly traffic-snarled roads of Metro
Manila. But these laudable intentions are limited by the MMDA's enabling
law, which we can but interpret, and petitioner must be reminded that its
efforts in this respect must be authorized by a valid law, or ordinance, or
regulation arising from a legitimate source.

WHEREFORE, the petition is dismissed.

SO ORDERED.