PubCorp Cases

Atty. Lapid

G.R. No. 40243 March 11, 1992

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

NOCON, J.:
This is a Petition for Prohibition with Preliminary Injunction with the Court of
First Instance of Catanduanes filed by appellant, Celestino Tatel, a
businessman engaged in the import and export of abaca and other products
against the Municipal Council of Virac, Catanduanes and its municipal
officials enjoining them from enforcing Resolution No 29 1 of the Council,
declaring the warehouse of petitioner in barrio Sta. Elena of the said
municipality a public nuisance within the purview of Article 694 of the Civil
Code of the Philippines and directing the petitioner to remove and transfer
said warehouse to a more suitable place within two (2) months from receipt
of the said resolution.
It appears from the records that on the basis of complaints received from the
residents of barrio Sta. Elena on March 18, 1966 against the disturbance
caused by the operation of the abaca bailing machine inside the warehouse
of petitioner which affected the peace and tranquility of the neighborhood
due to the smoke, obnoxious odor and dust emitted by the machine, a
committee was appointed by the municipal council of Virac to investigate the

Resultantly, Resolution No. 29 was passed by the Municipal Council of Virac

on April 22, 1966 declaring the warehouse owned and operated by petitioner
a public nuisance within the purview of Article 694 of the New Civil Code. 2
His motion for reconsideration having been denied by the Municipal Council
of Virac, petitioner instituted the present petition for prohibition with
preliminary injunction.
Respondent municipal officials contend that petitioner's warehouse was
constructed in violation of Ordinance No. 13, series of 1952, prohibiting the
construction of warehouses near a block of houses either in the poblacion or
barrios without maintaining the necessary distance of 200 meters from said
block of houses to avoid loss of lives and properties by accidental fire.
On the other hand, petitioner contends that said ordinance is
unconstitutional, contrary to the due process and equal protection clause of
the Constitution and null and void for not having been passed in accordance
with law.
The issue then boils down on whether petitioner's warehouse is a nuisance
within the meaning of Article 694 of the Civil Code and whether Ordinance
No. 13, S. 1952 of the Municipality of Virac is unconstitutional and void.
In a decision dated September 18, 1969, the court a quo ruled as follows:
1. The warehouse in question was legally constructed
under a valid permit issued by the municipality of Virac in
accordance with existing regulations and may not be
destroyed or removed from its present location;
2. Ordinance No. 13, series of 1952, is a legitimate and
valid exercise of police power by the Municipal Council of
Virac is not (sic) unconstitutional and void as claimed by
the petitioner;

SECOND DIVISION

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

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Republic of the Philippines

SUPREME COURT
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3. The storage by the petitioner of abaca and copra in the
warehouse is not only in violation of the provisions of the
ordinance but poses a grave danger to the safety of the
lives and properties of the residents of the neighborhood
due to accidental fire and constitutes a public nuisance
under the provisions of Article 694 of the New Civil code of
the Philippines and may be abated;
4. Accordingly, the petitioner is hereby directed to remove
from the said warehouse all abaca and copra and other
inflammable articles stored therein which are prohibited
under the provisions of Ordinance No. 13, within a period
of two (2) months from the time this decision becomes
final and that henceforth, the petitioner is enjoined from
storing such prohibited articles in the warehouse. With
costs against petitioner.
Seeking appellate review, petitioner raised as errors of the court a quo:
1. In holding that Ordinance No. 13, series of 1952, of the
Municipality of Virac, Catanduanes, is a legitimate and
valid exercise of police power of the Municipal Council,
and therefore, constitutional;
2. In giving the ordinance a meaning other than and
different from what it provided by declaring that petitioner
violated the same by using the warehouse for storage of
abaca and copra when what is prohibited and penalized
by the ordinance is the construction of warehouses.
3. In refusing to take judicial notice of the fact that in the
municipality, there are numerous establishments similarly
situated as appellants' warehouses but which are not
prosecuted.

objects of their creation. 3 Its authority emanates from the general welfare
clause under the Administrative Code, which reads:
The municipal council shall enact such ordinances and
make such regulations, not repugnant to law, as may be
necessary to carry into effect and discharge the powers
and duties conferred upon it by law and such as shall
seem necessary and proper to provide for the health and
safety, promote the prosperity, improve the morals, peace,
good order, comfort and convenience of the municipality
and the inhabitants thereof, and for the protection of
property therein. 4
For an ordinance to be valid, it must not only be within the corporate powers
of the municipality to enact but must also be passed according to the
procedure prescribed by law, and must be in consonance with certain well
established and basic principles of a substantive nature. These principles
require that a municipal ordinance (1) must not contravene the Constitution
or any statute (2) must not be unfair or oppressive (3) must not be partial or
discriminatory (4) must not prohibit but may regulate trade (5) must be
general and consistent with public policy, and (6) must not be
unreasonable. 5 Ordinance No. 13, Series of 1952, meets these criteria.
As to the petitioner's second assignment of error, the trial court did not give
the ordinance in question a meaning other than what it says. Ordinance No.
13 passed by the Municipal Council of Virac on December 29, 1952, 6reads:
AN ORDINANCE STRICTLY PROHIBITING THE
CONSTRUCTION OF WAREHOUSE IN ANY FORM
NEAR A BLOCK OF HOUSES EITHER IN POBLACION
OR BARRIO WITH NECESSARY DISTANCE TO AVOID
GREAT LOSSES OF PROPERTY AND LIVES BY FIRE
ACCIDENT.
Section 1 provides:

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

It is strictly prohibited to construct warehouses in any form

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

We find no merit in the Petition.

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Owners of warehouses in any form, are hereby given

advice to remove their said warehouses this ordinance by
the Municipal Council, provided however, that if those
warehouses now in existence should no longer be utilized
as such warehouse for the above-described products in
Section 1 of this ordinance after a lapse of the time given
for the removal of the said warehouses now in existence,
same warehouses shall be exempted from the spirit of the
provision of section 1 of this ordinance,provided further,
that these warehouses now in existence, shall in the future
be converted into non-inflammable products and materials
warehouses.
In spite of its fractured syntax, basically, what is regulated by the ordinance
is the construction of warehouses wherein inflammable materials are stored
where such warehouses are located at a distance of 200 meters from a
block of houses and not the construction per se of a warehouse. The
purpose is to avoid the loss of life and property in case of fire which is one of
the primordial obligation of the government.
This was also the observation of the trial court:
A casual glance of the ordinance at once reveals a
manifest disregard of the elemental rules of syntax.
Experience, however, will show that this is not uncommon
in law making bodies in small towns where local
authorities and in particular the persons charged with the
drafting and preparation of municipal resolutions and
ordinances lack sufficient education and training and are
not well grounded even on the basic and fundamental
elements of the English language commonly used
throughout the country in such matters. Nevertheless, if
one scrutinizes the terms of the ordinance, it is clear that
what is prohibited is the construction of warehouses by
any person, entity or corporation wherein copra, hemp,
gasoline and other inflammable products mentioned in
Section 1 may be stored unless at a distance of not less
than 200 meters from a block of houses either in the

The ambiguity therefore is more apparent than real and

springs from simple error in grammatical construction but
otherwise, the meaning and intent is clear that what is
prohibited is the construction or maintenance of
warehouses for the storage of inflammable articles at a
distance within 200 meters from a block of houses either
in the poblacion or in the barrios. And the purpose of the
ordinance is to avoid loss of life and property in case of
accidental fire which is one of the primordial and basic
obligation of any government. 8
Clearly, the lower court did NOT add meaning other than or differrent from
what was provided in the ordinance in question. It merely stated the purpose
of the ordinance and what it intends to prohibit to accomplish its purpose.
As to the third assignment of error, that warehouses similarly situated as that
of the petitioner were not prosecuted, suffice it to say that the mere fact that
the municipal authorities of Virac have not proceeded against other
warehouses in the municipality allegedly violating Ordinance No. 13 is no
reason to claim that the ordinance is discriminatory. A distinction must be
made between the law itself and the manner in which said law is
implemented by the agencies in charge with its administration and
enforcement. There is no valid reason for the petitioner to complain, in the
absence of proof that the other bodegas mentioned by him are operating in
violation of the ordinance and that the complaints have been lodged against
the bodegas concerned without the municipal authorities doing anything
about it.
The objections interposed by the petitioner to the validity of the ordinance
have not been substantiated. Its purpose is well within the objectives of
sound government. No undue restraint is placed upon the petitioner or for
anybody to engage in trade but merely a prohibition from storing
inflammable products in the warehouse because of the danger of fire to the
lives and properties of the people residing in the vicinity. As far as public
policy is concerned, there can be no better policy than what has been
conceived by the municipal government.

Section 2 provides: 7

poblacion or barrios in order to avoid loss of property and

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

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barrios to avoid great losses of properties inclusive lives

by fire accident.

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

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

EN BANC
G.R. No. L-42571-72 July 25, 1983
VICENTE DE LA CRUZ, RENATO ALIPIO, JOSE TORRES III, LEONCIO
CORPUZ, TERESITA CALOT, ROSALIA FERNANDEZ, ELIZABETH
VELASCO, NANETTE VILLANUEVA, HONORATO BUENAVENTURA,
RUBEN DE CASTRO, VICENTE ROXAS, RICARDO DAMIAN, DOMDINO
ROMDINA, ANGELINA OBLIGACION, CONRADO GREGORIO,
TEODORO REYES, LYDIA ATRACTIVO, NAPOLEON MENDOZA,
PERFECTO GUMATAY, ANDRES SABANGAN, ROSITA DURAN,
SOCORRO BERNARDEZ, and PEDRO GABRIEL,petitioners,
vs.
THE HONORABLE EDGARDO L. PARAS, MATIAS RAMIREZ as the
Municipal Mayor, MARIO MENDOZA as the Municipal Vice-Mayor, and
THE MUNICIPAL COUNCIL OF BOCAUE, BULACAN, respondents.
Federico N. Alday for petitioners.
Dakila F. Castro for respondents.

FERNANDO, C.J.:
The crucial question posed by this certiorari proceeding is whether or not a
municipal corporation, Bocaue, Bulacan, represented by respondents, 1 can,
prohibit the exercise of a lawful trade, the operation of night clubs, and the
pursuit of a lawful occupation, such clubs employing hostesses. It is
contended that the ordinance assailed as invalid is tainted with nullity, the
municipality being devoid of power to prohibit a lawful business, occupation
or calling, petitioners at the same time alleging that their rights to due
process and equal protection of the laws were violated as the licenses
previously given to them was in effect withdrawn without judicial hearing. 2
The assailed ordinance 3 is worded as follows: "Section 1. Title of
Ordinance. This Ordinance shall be known and may be cited as the
[Prohibition and Closure Ordinance] of Bocaue, Bulacan. Section 2.

Definitions of Terms (a) 'Night Club' shall include any place or

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

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Republic of the Philippines

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2. Ordinance No. 84 is violative of the petitioners' right to due process and

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

1. Police power is granted to municipal corporations in general terms as

follows: "General power of council to enact ordinances and make
regulations. - The municipal council shall enact such ordinances and make
such regulations, not repugnant to law, as may be necessary to carry into
effect and discharge the powers and duties conferred upon it by law and
such as shall seem necessary and proper to provide for the health and
safety, promote the prosperity, improve the morals, peace, good order,
comfort, and convenience of the municipality and the inhabitants thereof,
and for the protection of property therein." 10 It is practically a reproduction of
the former Section 39 of Municipal Code. 11 An ordinance enacted by virtue
thereof, according to Justice Moreland, speaking for the Court in the leading
case of United States v. Abendan 12 "is valid, unless it contravenes the
fundamental law of the Philippine Islands, or an Act of the Philippine
Legislature, or unless it is against public policy, or is unreasonable,
oppressive, partial, discriminating, or in derogation of common right. Where
the power to legislate upon a given subject, and the mode of its exercise and
the details of such legislation are not prescribed, the ordinance passed
pursuant thereto must be a reasonable exercise of the power, or it will be
pronounced invalid." 13 In another leading case, United States v.
Salaveria, 14 the ponente this time being Justice Malcolm, where the present
Administrative Code provision was applied, it was stated by this Court: "The
general welfare clause has two branches: One branch attaches itself to the
main trunk of municipal authority, and relates to such ordinances and
regulations as may be necessary to carry into effect and discharge the
powers and duties conferred upon the municipal council by law. With this
class we are not here directly concerned. The second branch of the clause is

1. Ordinance No. 84 is null and void as a municipality has no authority to

prohibit a lawful business, occupation or calling.

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

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On November 5, 1975, two cases for prohibition with preliminary injunction

were filed with the Court of First Instance of Bulacan. 5 The grounds alleged
follow:

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3. There is reinforcement to the conclusion reached by virtue of a specific

provision of the recently-enacted Local Government Code. 25 The general
welfare clause, a reiteration of the Administrative Code provision, is set forth
in the first paragraph of Section 149 defining the powers and duties of
the sangguniang bayan. It read as follows: "(a) Enact such ordinances and
issue such regulations as may be necessary to carry out and discharge the
responsibilities conferred upon it by law, and such as shall be necessary and
proper to provide for the health, safety, comfort and convenience, maintain
peace and order, improve public morals, promote the prosperity and general
welfare of the municipality and the inhabitants thereof, and insure the
protection of property therein; ..." 26 There are in addition provisions that may
have a bearing on the question now before this Court. Thus the sangguniang
bayan shall "(rr) Regulate cafes, restaurants, beer-houses, hotels, motels,
inns, pension houses and lodging houses, except travel agencies, tourist
guides, tourist transports, hotels, resorts, de luxe restaurants, and tourist
inns of international standards which shall remain under the licensing and
regulatory power of the Ministry of Tourism which shall exercise such
authority without infringing on the taxing or regulatory powers of the
municipality; (ss) Regulate public dancing schools, public dance halls, and
sauna baths or massage parlors; (tt) Regulate the establishment and
operation of billiard pools, theatrical performances, circuses and other forms
of entertainment; ..." 27It is clear that municipal corporations cannot prohibit

2. The decision now under review refers to Republic Act No. 938 as
amended. 17 It was originally enacted on June 20, 1953. It is entitled: "AN
ACT GRANTING MUNICIPAL OR CITY BOARDS AND COUNCILS THE
POWER TO REGULATE THE ESTABLISHMENT, MAINTENANCE AND
OPERATION OF CERTAIN PLACES OF AMUSEMENT WITHIN THEIR
RESPECTIVE TERRITORIAL JURISDICTIONS.' 18 Its first section insofar as
pertinent reads: "The municipal or city board or council of each chartered city
shall have the power to regulate by ordinance the establishment,
maintenance and operation of night clubs, cabarets, dancing schools,
pavilions, cockpits, bars, saloons, bowling alleys, billiard pools, and other
similar places of amusement within its territorial jurisdiction: ... " 19 Then on
May 21, 1954, the first section was amended to include not merely "the
power to regulate, but likewise "Prohibit ... " 20 The title, however, remained
the same. It is worded exactly as Republic Act No. 938. It is to be admitted
that as thus amended, if only the above portion of the Act were considered,
a municipal council may go as far as to prohibit the operation of night clubs.

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

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much more independent of the specific functions of the council which are
enumerated by law. It authorizes such ordinances as shall seem necessary
and proper to provide for the health and safety, promote the prosperity,
improve the morals, peace, good order, comfort, and convenience of the
municipality and the inhabitants thereof, and for the protection of property
therein.' It is a general rule that ordinances passed by virtue of the implied
power found in the general welfare clause must be reasonable, consonant
with the general powersand purposes of the corporation, and not
inconsistent with the laws or policy of the State." 15 If night clubs were merely
then regulated and not prohibited, certainly the assailed ordinance would
pass the test of validity. In the two leading cases above set forth, this Court
had stressed reasonableness, consonant with the general powers and
purposes of municipal corporations, as well as consistency with the laws or
policy of the State. It cannot be said that such a sweeping exercise of a
lawmaking power by Bocaue could qualify under the term reasonable. The
objective of fostering public morals, a worthy and desirable end can be
attained by a measure that does not encompass too wide a field. Certainly
the ordinance on its face is characterized by overbreadth. The purpose
sought to be achieved could have been attained by reasonable restrictions
rather than by an absolute prohibition. The admonition in Salaveria should
be heeded: "The Judiciary should not lightly set aside legislative action when
there is not a clear invasion of personal or property rights under the guise of
police regulation." 16 It is clear that in the guise of a police regulation, there
was in this instance a clear invasion of personal or property rights, personal
in the case of those individuals desirous of patronizing those night clubs and
property in terms of the investments made and salaries to be earned by
those therein employed.

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the operation of night clubs. They may be regulated, but not prevented from
carrying on their business. It would be, therefore, an exercise in futility if the
decision under review were sustained. All that petitioners would have to do
is to apply once more for licenses to operate night clubs. A refusal to grant
licenses, because no such businesses could legally open, would be subject
to judicial correction. That is to comply with the legislative will to allow the
operation and continued existence of night clubs subject to appropriate
regulations. In the meanwhile, to compel petitioners to close their
establishments, the necessary result of an affirmance, would amount to no
more than a temporary termination of their business. During such time, their
employees would undergo a period of deprivation. Certainly, if such an
undesirable outcome can be avoided, it should be. The law should not be
susceptible to the reproach that it displays less than sympathetic concern for
the plight of those who, under a mistaken appreciation of a municipal power,
were thus left without employment. Such a deplorable consequence is to be
avoided. If it were not thus, then the element of arbitrariness enters the
picture. That is to pay less, very much less, than full deference to the due
process clause with its mandate of fairness and reasonableness.

unconstitutional. The temporary restraining order issued by this Court is

hereby made permanent. No costs.
Teehankee, Aquino, Concepcion Jr., Guerrero, Abad Santos, Plana, Escolin
Relova and Gutierrez, Jr., JJ., concur.
Makasiar, J, reserves his right to file a dissent.
De Castro, Melencio-Herrera and Vasquez, JJ., are on leave.

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WHEREFORE, the writ of certiorari is granted and the decision of the lower
court dated January 15, 1976 reversed, set aside, and nullied. Ordinance
No. 84, Series of 1975 of the Municipality of Bocaue is declared void and

4. The conclusion reached by this Court is not to be interpreted as a retreat

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

PubCorp Cases
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Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 111097 July 20, 1994

MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE
ORO, petitioners,
vs.
PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE
AMUSEMENT AND GAMING CORPORATION,respondents.
Aquilino G. Pimentel, Jr. and Associates for petitioners.
R.R. Torralba & Associates for private respondent.

ORDINANCE NO. 3353

AN ORDINANCE PROHIBITING THE ISSUANCE OF
BUSINESS PERMIT AND CANCELLING EXISTING
BUSINESS PERMIT TO ANY ESTABLISHMENT FOR
THE USING AND ALLOWING TO BE USED ITS
PREMISES OR PORTION THEREOF FOR THE
OPERATION OF CASINO.
BE IT ORDAINED by the Sangguniang Panlungsod of the
City of Cagayan de Oro, in session assembled that:
Sec. 1. That pursuant to the policy of the city banning
the operation of casino within its territorial jurisdiction, no
business permit shall be issued to any person, partnership
or corporation for the operation of casino within the city
limits.
Sec. 2. That it shall be a violation of existing business
permit by any persons, partnership or corporation to use
its business establishment or portion thereof, or allow the
use thereof by others for casino operation and other
gambling activities.

CRUZ, J.:

The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was

swift and hostile. On December 7, 1992, it enacted Ordinance No. 3353
reading as follows:

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

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

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

c) Permanent
revocation of the

Page

There was instant opposition when PAGCOR announced the opening of a

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

Sec. 3. PENALTIES. Any violation of such existing

business permit as defined in the preceding section shall
suffer the following penalties, to wit:

PubCorp Cases
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Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No.
3375-93 reading as follows:
ORDINANCE NO. 3375-93
AN ORDINANCE PROHIBITING THE OPERATION OF
CASINO AND PROVIDING PENALTY FOR VIOLATION
THEREFOR.
WHEREAS, the City Council established a policy as early
as 1990 against CASINO under its Resolution No. 2295;
WHEREAS, on October 14, 1992, the City Council passed
another Resolution No. 2673, reiterating its policy against
the establishment of CASINO;
WHEREAS, subsequently, thereafter, it likewise passed
Ordinance No. 3353, prohibiting the issuance of Business
Permit and to cancel existing Business Permit to any
establishment for the using and allowing to be used its
premises or portion thereof for the operation of CASINO;
WHEREAS, under Art. 3, section 458, No. (4), sub
paragraph VI of the Local Government Code of 1991
(Rep. Act 7160) and under Art. 99, No. (4), Paragraph VI
of the implementing rules of the Local Government Code,
the City Council as the Legislative Body shall enact
measure to suppress any activity inimical to public morals
and general welfare of the people and/or regulate or
prohibit such activity pertaining to amusement or
entertainment in order to protect social and moral welfare
of the community;

BE IT ORDAINED by the City Council in session duly

assembled that:
Sec. 1. The operation of gambling CASINO in the City
of Cagayan de Oro is hereby prohibited.
Sec. 2. Any violation of this Ordinance shall be subject
to the following penalties:
a) Administrative fine of P5,000.00 shall be imposed
against the proprietor, partnership or corporation
undertaking the operation, conduct, maintenance of
gambling CASINO in the City and closure thereof;
b) Imprisonment of not less than six (6) months nor more
than one (1) year or a fine in the amount of P5,000.00 or
both at the discretion of the court against the manager,
supervisor, and/or any person responsible in the
establishment, conduct and maintenance of gambling
CASINO.
Sec. 3. This Ordinance shall take effect ten (10) days
after its publication in a local newspaper of general
circulation.
Pryce assailed the ordinances before the Court of Appeals, where it was
joined by PAGCOR as intervenor and supplemental petitioner. Their
challenge succeeded. On March 31, 1993, the Court of Appeals declared the
ordinances invalid and issued the writ prayed for to prohibit their
enforcement. 1 Reconsideration of this decision was denied on July 13,
1993. 2
Cagayan de Oro City and its mayor are now before us in this petition for
review under Rule 45 of the Rules of Court. 3 They aver that the respondent
Court of Appeals erred in holding that:
1. Under existing laws, the Sangguniang Panlungsod of
the City of Cagayan de Oro does not have the power and
authority to prohibit the establishment and operation of a

10

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

from publication thereof.

NOW THEREFORE,

Page

business permit and

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

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3. The questioned Ordinances in effect annul P.D. 1869

and are therefore invalid on that point.
4. The questioned Ordinances are discriminatory to casino
and partial to cockfighting and are therefore invalid on that
point.
5. The questioned Ordinances are not reasonable, not
consonant with the general powers and purposes of the
instrumentality concerned and inconsistent with the laws
or policy of the State.
6. It had no option but to follow the ruling in the case
of Basco, et al. v. PAGCOR, G.R. No. 91649, May 14,
1991, 197 SCRA 53 in disposing of the issues presented
in this present case.
PAGCOR is a corporation created directly by P.D. 1869 to help centralize
and regulate all games of chance, including casinos on land and sea within
the territorial jurisdiction of the Philippines. In Basco v. Philippine
Amusements and Gaming Corporation, 4 this Court sustained the
constitutionality of the decree and even cited the benefits of the entity to the
national economy as the third highest revenue-earner in the government,
next only to the BIR and the Bureau of Customs.
Cagayan de Oro City, like other local political subdivisions, is empowered to
enact ordinances for the purposes indicated in the Local Government Code.
It is expressly vested with the police power under what is known as the
General Welfare Clause now embodied in Section 16 as follows:
Sec. 16. General Welfare. Every local government
unit shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and
effective governance, and those which are essential to the

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

Sec. 458. Powers, Duties, Functions and
Compensation. (a) The Sangguniang Panlungsod, as
the legislative body of the city, shall enact ordinances,
approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section
16 of this Code and in the proper exercise of the corporate
powers of the city as provided for under Section 22 of this
Code, and shall:
(1) Approve ordinances and pass resolutions necessary
for an efficient and effective city government, and in this
connection, shall:
xxx xxx xxx
(v) Enact ordinances
intended to prevent,
suppress and impose
appropriate penalties
for habitual
drunkenness in public
places, vagrancy,
mendicancy,
prostitution,
establishment and
maintenance of
houses of ill
repute,gambling and
other prohibited

11

2. The phrase "gambling and other prohibited games of

chance" found in Sec. 458, par. (a), sub-par. (1) (v) of
R.A. 7160 could only mean "illegal gambling."

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 selfreliant 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.

Page

PAGCOR gambling casino within the City's territorial

limits.

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The petitioners argue that by virtue of these provisions, the Sangguniang

Panlungsod may prohibit the operation of casinos because they involve
games of chance, which are detrimental to the people. Gambling is not
allowed by general law and even by the Constitution itself. The legislative
power conferred upon local government units may be exercised over all
kinds of gambling and not only over "illegal gambling" as the respondents
erroneously argue. Even if the operation of casinos may have been
permitted under P.D. 1869, the government of Cagayan de Oro City has the
authority to prohibit them within its territory pursuant to the authority
entrusted to it by the Local Government Code.
It is submitted that this interpretation is consonant with the policy of local
autonomy as mandated in Article II, Section 25, and Article X of the
Constitution, as well as various other provisions therein seeking to
strengthen the character of the nation. In giving the local government units
the power to prevent or suppress gambling and other social problems, the
Local Government Code has recognized the competence of such
communities to determine and adopt the measures best expected to
promote the general welfare of their inhabitants in line with the policies of the
State.

The adoption of the Local Government Code, it is pointed out, had the effect
of modifying the charter of the PAGCOR. The Code is not only a later
enactment than P.D. 1869 and so is deemed to prevail in case of
inconsistencies between them. More than this, the powers of the PAGCOR
under the decree are expressly discontinued by the Code insofar as they do
not conform to its philosophy and provisions, pursuant to Par. (f) of its
repealing clause reading as follows:
(f) All general and special laws, acts, city charters,
decrees, executive orders, proclamations and
administrative regulations, or part or parts thereof which
are inconsistent with any of the provisions of this Code are
hereby repealed or modified accordingly.
It is also maintained that assuming there is doubt regarding the effect of the
Local Government Code on P.D. 1869, the doubt must be resolved in favor
of the petitioners, in accordance with the direction in the Code calling for its
liberal interpretation in favor of the local government units. Section 5 of the
Code specifically provides:
Sec. 5. Rules of Interpretation. In the interpretation of
the provisions of this Code, the following rules shall apply:
(a) Any provision on a power of a local government unit
shall be liberally interpreted in its favor, and in case of
doubt, any question thereon shall be resolved in favor of
devolution of powers and of the lower local government
unit. Any fair and reasonable doubt as to the existence of
the power shall be interpreted in favor of the local
government unit concerned;
xxx xxx xxx

12

This section also authorizes the local government units to regulate

properties and businesses within their territorial limits in the interest of the
general welfare. 5

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

Page

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;

PubCorp Cases
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This is the opportune time to stress an important point.

The morality of gambling is not a justiciable issue. Gambling is not illegal per
se. While it is generally considered inimical to the interests of the people,
there is nothing in the Constitution categorically proscribing or penalizing
gambling or, for that matter, even mentioning it at all. It is left to Congress to
deal with the activity as it sees fit. In the exercise of its own discretion, the
legislature may prohibit gambling altogether or allow it without limitation or it
may prohibit some forms of gambling and allow others for whatever reasons
it may consider sufficient. Thus, it has prohibited jueteng and monte but
permits lotteries, cockfighting and horse-racing. In making such choices,
Congress has consulted its own wisdom, which this Court has no authority to
review, much less reverse. Well has it been said that courts do not sit to
resolve the merits of conflicting theories. 8 That is the prerogative of the
political departments. It is settled that questions regarding the wisdom,
morality, or practicibility of statutes are not addressed to the judiciary but
may be resolved only by the legislative and executive departments, to which
the function belongs in our scheme of government. That function is
exclusive. Whichever way these branches decide, they are answerable only
to their own conscience and the constituents who will ultimately judge their
acts, and not to the courts of justice.
The only question we can and shall resolve in this petition is the validity of
Ordinance No. 3355 and Ordinance No. 3375-93 as enacted by the
Sangguniang Panlungsod of Cagayan de Oro City. And we shall do so only

The tests of a valid ordinance are well established. A long line of

decisions 9 has held that to be valid, an ordinance must conform to the
following substantive requirements:
1) It must not contravene the constitution or any statute.
2) It must not be unfair or oppressive.
3) It must not be partial or discriminatory.
4) It must not prohibit but may regulate trade.
5) It must be general and consistent with public policy.
6) It must not be unreasonable.
We begin by observing that under Sec. 458 of the Local Government Code,
local government units are authorized to prevent or suppress, among others,
"gambling and other prohibited games of chance." Obviously, this provision
excludes games of chance which are not prohibited but are in fact permitted
by law. The petitioners are less than accurate in claiming that the Code
could have excluded such games of chance but did not. In fact it does. The
language of the section is clear and unmistakable. Under the rule of noscitur
a sociis, a word or phrase should be interpreted in relation to, or given the
same meaning of, words with which it is associated. Accordingly, we
conclude that since the word "gambling" is associated with
"and other prohibited games of chance," the word should be read as
referring to only illegal gambling which, like the other prohibited games of
chance, must be prevented or suppressed.
We could stop here as this interpretation should settle the problem quite
conclusively. But we will not. The vigorous efforts of the petitioners on behalf
of the inhabitants of Cagayan de Oro City, and the earnestness of their
advocacy, deserve more than short shrift from this Court.
The apparent flaw in the ordinances in question is that they contravene P.D.
1869 and the public policy embodied therein insofar as they prevent
PAGCOR from exercising the power conferred on it to operate a casino in

13

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

by the criteria laid down by law and not by our own convictions on the
propriety of gambling.

Page

(c) The general welfare provisions in this Code shall be

liberally interpreted to give more powers to local
government units in accelerating economic development
and upgrading the quality of life for the people in the
community; . . . (Emphasis supplied.)

PubCorp Cases
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It is noteworthy that the petitioners have cited only Par. (f) of the repealing
clause, conveniently discarding the rest of the provision which painstakingly
mentions the specific laws or the parts thereof which are repealed (or
modified) by the Code. Significantly, P.D. 1869 is not one of them. A reading
of the entire repealing clause, which is reproduced below, will disclose the
omission:
Sec. 534. Repealing Clause. (a) Batas Pambansa Blg.
337, otherwise known as the "Local Government Code,"
Executive Order No. 112 (1987), and Executive Order No.
319 (1988) are hereby repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such
other decrees, orders, instructions, memoranda and

(c) The provisions of Sections 2, 3, and 4 of Republic Act

No. 1939 regarding hospital fund; Section 3, a (3) and b
(2) of Republic Act. No. 5447 regarding the Special
Education Fund; Presidential Decree No. 144 as amended
by Presidential Decree Nos. 559 and 1741; Presidential
Decree No. 231 as amended; Presidential Decree No. 436
as amended by Presidential Decree No. 558; and
Presidential Decree Nos. 381, 436, 464, 477, 526, 632,
752, and 1136 are hereby repealed and rendered of no
force and effect.
(d) Presidential Decree No. 1594 is hereby repealed
insofar as it governs locally-funded projects.
(e) The following provisions are hereby repealed or
amended insofar as they are inconsistent with the
provisions of this Code: Sections 2, 16, and 29 of
Presidential Decree No. 704; Sections 12 of Presidential
Decree No. 87, as amended; Sections 52, 53, 66, 67, 68,
69, 70, 71, 72, 73, and 74 of Presidential Decree No. 463,
as amended; and Section 16 of Presidential Decree No.
972, as amended, and
(f) All general and special laws, acts, city charters,
decrees, executive orders, proclamations and
administrative regulations, or part or parts thereof which
are inconsistent with any of the provisions of this Code are
hereby repealed or modified accordingly.
Furthermore, it is a familiar rule that implied repeals are not lightly presumed
in the absence of a clear and unmistakable showing of such intention.
In Lichauco & Co. v. Apostol, 10 this Court explained:
The cases relating to the subject of repeal by implication
all proceed on the assumption that if the act of later date
clearly reveals an intention on the part of the lawmaking
power to abrogate the prior law, this intention must be
given effect; but there must always be a sufficient
revelation of this intention, and it has become an
unbending rule of statutory construction that the intention

14

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

issuances related to or concerning the barangay are

hereby repealed.

Page

Cagayan de Oro City. The petitioners have an ingenious answer to this

misgiving. They deny that it is the ordinances that have changed P.D. 1869
for an ordinance admittedly cannot prevail against a statute. Their theory is
that the change has been made by the Local Government Code itself, which
was also enacted by the national lawmaking authority. In their view, the
decree has been, not really repealed by the Code, but merely "modified pro
tanto" in the sense that PAGCOR cannot now operate a casino over the
objection of the local government unit concerned. This modification of P.D.
1869 by the Local Government Code is permissible because one law can
change or repeal another law.

PubCorp Cases
Atty. Lapid

It is a canon of legal hermeneutics that instead of pitting one statute against

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

The rationale of the requirement that the ordinances should not contravene a
statute is obvious. Municipal governments are only agents of the national
government. Local councils exercise only delegated legislative powers
conferred on them by Congress as the national lawmaking body. The
delegate cannot be superior to the principal or exercise powers higher than
those of the latter. It is a heresy to suggest that the local government units
can undo the acts of Congress, from which they have derived their power in
the first place, and negate by mere ordinance the mandate of the statute.
Municipal corporations owe their origin to, and derive their
powers and rights wholly from the legislature. It breathes
into them the breath of life, without which they cannot
exist. As it creates, so it may destroy. As it may destroy, it
may abridge and control. Unless there is some
constitutional limitation on the right, the legislature might,
by a single act, and if we can suppose it capable of so
great a folly and so great a wrong, sweep from existence
all of the municipal corporations in the State, and the
corporation could not prevent it. We know of no limitation
on the right so far as to the corporation themselves are
concerned. They are, so to phrase it, the mere tenants at
will of the legislature. 11

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

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

In light of all the above considerations, we see no way of arriving at the

conclusion urged on us by the petitioners that the ordinances in question are

The Court understands and admires the concern of the petitioners for the
welfare of their constituents and their apprehensions that the welfare of

15

There is no sufficient indication of an implied repeal of P.D. 1869. On the

contrary, as the private respondent points out, PAGCOR is mentioned as the
source of funding in two later enactments of Congress, to wit, R.A. 7309,
creating a Board of Claims under the Department of Justice for the benefit of
victims of unjust punishment or detention or of violent crimes, and R.A.
7648, providing for measures for the solution of the power crisis. PAGCOR
revenues are tapped by these two statutes. This would show that the
PAGCOR charter has not been repealed by the Local Government Code but
has in fact been improved as it were to make the entity more responsive to
the fiscal problems of the government.

valid. On the contrary, we find that the ordinances violate P.D. 1869, which
has the character and force of a statute, as well as the public policy
expressed in the decree allowing the playing of certain games of chance
despite the prohibition of gambling in general.

Page

to repeal a former law will not be imputed to the

Legislature when it appears that the two statutes, or
provisions, with reference to which the question arises
bear to each other the relation of general to special.

PubCorp Cases
Atty. Lapid

I concur with the majority holding that the city ordinances in question cannot
modify much less repeal PAGCOR's general authority to establish and
maintain gambling casinos anywhere in the Philippines under Presidential
Decree No. 1869.
In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197
SCRA 52, I stated in a separate opinion that:
. . . I agree with the decision insofar as it holds that the
prohibition, control, and regulation of the entire activity
known as gambling properly pertain to "state policy". It is,
therefore, the political departments of government,
namely, the legislative and the executive that should
decide on what government should do in the entire area of
gambling, and assume full responsibility to the people for
such policy." (Emphasis supplied)

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

However, despite the legality of the opening and operation of a casino in

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

WHEREFORE, the petition is DENIED and the challenged decision of the

respondent Court of Appeals is AFFIRMED, with costs against the
petitioners. It is so ordered.

It is in the light of this alarming perspective that I call upon government to

carefully weigh the advantages and disadvantages of setting up more
gambling facilities in the country.

Narvasa, C.J., Feliciano, Bidin, Regalado, Romero, Bellosillo, Melo,

Quiason, Puno, Vitug, Kapunan and Mendoza, JJ., concur.

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

Separate Opinions

As in Basco, I can easily visualize prostitution at par with gambling. And yet,
legalization of the former will not render it any less reprehensible even if

16

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

PADILLA, J., concurring:

Page

Cagayan de Oro City will be endangered by the opening of the casino. We

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

PubCorp Cases
Atty. Lapid

DAVIDE, JR., J., concurring:

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

A last word. This court's original jurisdiction to issue writs

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

17

In the present case, it is my considered view that the national government

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

would have been in order pursuant to our decisions in People vs.

Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago vs.
Vasquez (217 SCRA 633 [1993]). In Cuaresma, this Court stated:

Page

substantial revenue for the government can be realized from it. The same is
true of gambling.

PubCorp Cases
Atty. Lapid

One final observation. We discern in the proceedings in

this case a propensity on the part of petitioner, and, for
that matter, the same may be said of a number of litigants
who initiate recourses before us, to disregard the
hierarchy of courts in our judicial system by seeking relief
directly from this Court despite the fact that the same is
available in the lower courts in the exercise of their original
or concurrent jurisdiction, or is even mandated by law to
be sought therein. This practice must be stopped, not only
because of the imposition upon the previous time of this
Court but also because of the inevitable and resultant
delay, intended or otherwise, in the adjudication of the
case which often has to be remanded or referred to the
lower court as the proper forum under the rules of
procedure, or as better equipped to resolve the issues
since this Court is not a trier of facts. We, therefore,
reiterate the judicial policy that this Court will not entertain
direct resort to it unless the redress desired cannot be
obtained in the appropriate courts or where exceptional
and compelling circumstances justify availment of a
remedy within and calling for the exercise of our primary
jurisdiction.
II.
The challenged ordinances are (a) Ordinance No. 3353 entitled, "An
Ordinance Prohibiting the Issuance of Business Permit and Canceling
Existing Business Permit To Any Establishment for the Using and Allowing
to be Used Its Premises or Portion Thereof for the Operation of Casino," and
(b) Ordinance No. 3375-93 entitled, "An Ordinance Prohibiting the Operation
of Casino and Providing Penalty for Violation Therefor." They were enacted
to implement Resolution No. 2295 entitled, "Resolution Declaring As a
Matter of Policy to Prohibit and/or Not to Allow the Establishment of the
Gambling Casino in the City of Cagayan de Oro," which was promulgated on
19 November 1990 nearly two years before PRYCE and PAGCOR
entered into a contract of lease under which the latter leased a portion of the
former's Pryce Plaza Hotel for the operation of a gambling casino which

The challenged ordinances were enacted pursuant to the Sangguniang

Panglungsod's express powers conferred by Section 458, paragraph (a),
subparagraphs (1)-(v), (3)-(ii), and (4)-(i), (iv), and (vii), Local Government
Code, and pursuant to its implied power under Section 16 thereof (the
general welfare clause) which reads:
Sec. 16. General Welfare. Every local government unit
shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and
effective governance, and those which are essential to the
promotion of the general welfare. Within their respective
territorial jurisdictions, local government units shall ensure
and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance
the right of the people to a balanced ecology, encourage
and support the development of appropriate and selfreliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social
justice, promote full employment among their residents,
maintain peace and order, and preserve the comfort and
convenience of their inhabitants.
The issue that necessarily arises is whether in granting local governments
(such as the City of Cagayan de Oro) the above powers and functions, the
Local Government Code has, pro tanto, repealed P.D. No. 1869 insofar as
PAGCOR's general authority to establish and maintain gambling casinos
anywhere in the Philippines is concerned.
I join the majority in holding that the ordinances cannot repeal P.D. No.
1869.
III.
The nullification by the Court of Appeals of the challenged ordinances
as unconstitutional primarily because it is in contravention to P.D. No. 1869
is unwarranted. A contravention of a law is not necessarily a contravention of
the constitution. In any case, the ordinances can still stand even if they be
conceded as offending P.D. No. 1869. They can be reconciled, which is not

18

And in Vasquez, this Court said:

resolution was vigorously reiterated in Resolution No. 2673 of 19 October

1992.

Page

jurisdiction, would have had to be filed with it. (citations

omitted)

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

establish and resurrect the Filipino moral character which is generally

perceived to be in a state of continuing erosion.
It is in the light of this alarming perspective that I call upon government to
carefully weigh the advantages and disadvantages of setting up more
gambling facilities in the country.
That the PAGCOR contributes greatly to the coffers of the government is not
enough reason for setting up more gambling casinos because, undoubtedly,
this will not help improve, but will cause a further deterioration in the Filipino
moral character.
It is worth remembering in this regard that, 1) what is legal is not always
moral and 2) the ends do not always justify the means.
As in Basco, I can easily visualize prostitution at par with gambling. And yet,
legalization of the former will not render it any less reprehensible even if
substantial revenue for the government can be realized from it. The same is
true of gambling.

I concur with the majority holding that the city ordinances in question cannot
modify much less repeal PAGCOR's general authority to establish and
maintain gambling casinos anywhere in the Philippines under Presidential
Decree No. 1869.
In Basco v. Philippine Amusement and Gaming Corporation (PAGCOR), 197
SCRA 52, I stated in a separate opinion that:
. . . I agree with the decision insofar as it holds that the
prohibition, control, and regulation of the entire activity
known as gambling properly pertain to "state policy". It is,
therefore, the political departments of government,
namely, the legislative and the executive that should
decide on what government should do in the entire area of
gambling, and assume full responsibility to the people for
such policy. (emphasis supplied)
However, despite the legality of the opening and operation of a casino in
Cagayan de Oro City by respondent PAGCOR, I wish to reiterate my view
that gambling in any form runs counter to the government's own efforts to re-

In the present case, it is my considered view that the national government

(through PAGCOR) should re-examine and re-evaluate its decision
of imposing the gambling casino on the residents of Cagayan de Oro City;
for it is abundantly clear that public opinion in the city is very much against it,
and again the question must be seriously deliberated: will the prospects of
revenue to be realized from the casino outweigh the further destruction of
the Filipino sense of values?
DAVIDE, JR., J., concurring:
While I concur in part with the majority, I wish, however, to express my views
on certain aspects of this case.
I.
It must at once be noted that private respondent Pryce Properties
Corporation (PRYCE) directly filed with the Court of Appeals its so-called
petition for prohibition, thereby invoking the said court's original jurisdiction to
issue writs of prohibition under Section 9(1) of B.P. Blg. 129. As I see it,
however, the principal cause of action therein is one for declaratory relief: to
declare null and unconstitutional for, inter alia, having been enacted
without or in excess of jurisdiction, for impairing the obligation of contracts,

19

PADILLA, J., concurring:

Page

# Separate Opinions

PubCorp Cases
Atty. Lapid

And in Vasquez, this Court said:

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

20

A last word. This court's original jurisdiction to issue writs

of certiorari (as well as prohibition,mandamus, quo
warranto, habeas corpus and injunction) is not exclusive. It
is shared by this Court with Regional Trial Courts (formerly
Courts of First Instance), which may issue the writ,
enforceable in any part of their respective regions. It is
also shared by this court, and by the Regional Trial Court,
with the Court of Appeals (formerly, Intermediate Appellate
Court), although prior to the effectivity ofBatas Pambansa
Bilang 129 on August 14, 1981, the latter's competence to
issue the extraordinary writs was restricted by those "in aid
of its appellate jurisdiction." This concurrence of
jurisdiction is not, however, to be taken as according to
parties seeking any of the writs an absolute, unrestrained
freedom of choice of the court to which application therefor
will be directed. There is after all a hierarchy of courts.
That hierarchy is determinative of the revenue of appeals,
and should also serve as a general determinant of the
appropriate forum for petitions for the extraordinary writs.
A becoming regard for that judicial hierarchy most
certainly indicates that petitions for the issuance of
extraordinary writs against first level ("inferior") courts
should be filed with the Regional Trial Court, and those
against the latter, with the Court of Appeals. A direct

invocation of the Supreme Court's original jurisdiction to

issue these writs should be allowed only when there are
special and important reasons therefor, clearly and
specifically set out in the petition. This is established
policy. It is a policy that is necessary to prevent inordinate
demands upon the Court's time and attention which are
better devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding of the
Court's docket. Indeed, the removal of the restriction of the
jurisdiction of the Court of Appeals in this regard, supra
resulting from the deletion of the qualifying phrase, "in aid
of its appellate jurisdiction" was evidently intended
precisely to relieve this Court pro tanto of the burden of
dealing with applications for extraordinary writs which, but
for the expansion of the Appellate Court's corresponding
jurisdiction, would have had to be filed with it. (citations
omitted)

Page

and for being inconsistent with public policy the challenged ordinances
enacted by the Sangguniang Panglungsod of the City of Cagayan de Oro.
The intervention therein of public respondent Philippine Amusement and
Gaming Corporation (PAGCOR) further underscores the "declaratory relief"
nature of the action. PAGCOR assails the ordinances for being contrary to
the non-impairment and equal protection clauses of the Constitution,
violative of the Local Government Code, and against the State's national
policy declared in P.D. No. 1869. Accordingly, the Court of Appeals does not
have jurisdiction over the nature of the action. Even assuming arguendo that
the case is one for prohibition, then, under this Court's established policy
relative to the hierarchy of courts, the petition should have been filed with the
Regional Trial Court of Cagayan de Oro City. I find no special or compelling
reason why it was not filed with the said court. I do not wish to entertain the
thought that PRYCE doubted a favorable verdict therefrom, in which case
the filing of the petition with the Court of Appeals may have been impelled by
tactical considerations. A dismissal of the petition by the Court of Appeals
would have been in order pursuant to our decisions in People vs.
Cuaresma (172 SCRA 415, [1989]) and Defensor-Santiago vs.
Vasquez (217 SCRA 633 [1993]). In Cuaresma, this Court stated:

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

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

The issue that necessarily arises is whether in granting local governments

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

21

Sec. 16. General Welfare. Every local government unit

shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and
effective governance, and those which are essential to the
promotion of the general welfare. Within their respective
territorial jurisdictions, local government units shall ensure
and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance
the right of the people to a balanced ecology, encourage
and support the development of appropriate and selfreliant 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.

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

Page

The challenged ordinances were enacted pursuant to the Sangguniang

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

PubCorp Cases
Atty. Lapid
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 115044 January 27, 1995

HON. ALFREDO S. LIM, in his capacity as Mayor of Manila, and the City
of Manila, petitioners,
vs.
HON. FELIPE G. PACQUING, as Judge, branch 40, Regional Trial Court
of Manila and ASSOCIATED CORPORATION, respondents.
G.R. No. 117263 January 27, 1995
TEOFISTO GUINGONA, JR. and DOMINADOR R. CEPEDA, petitioners,
vs.
HON. VETINO REYES and ASSOCIATED DEVELOPMENT
CORPORATION, respondents.

jai-alai in favor of Associated Development Corporation

(ADC).
b. order dated 11 April 1994 directing mayor Lim to explain
why he should not be cited for contempt for noncompliance with the order dated 28 March 1994.
c. order dated 20 April 1994 reiterating the previous order
directing Mayor Lim to immediately issue
the permit/license to Associated Development Corporation
(ADC).
The order dated 28 march 1994 was in turn issued upon motion by ADC for
execution of a final judgment rendered on 9 September 1988 which ordered
the Manila Mayor to immediately issue to ADC the permit/licenseto operate
the jai-alai in Manila, under Manila Ordinance No. 7065.
On 13 September 1994, petitioner Guingona (as executive secretary) issued
a directive to then chairman of the Games and Amusements Board (GAB)
Francisco R. Sumulong, jr. to hold in abeyance the grant of authority, or if
any had been issued, to withdraw such grant of authority, to Associated
Development Corporation to operate the jai-alai in the City of Manila, until
the following legal questions are properly resolved:
1. Whether P.D. 771 which revoked all existing Jai-Alai
franchisers issued by local governments as of 20 August
1975 is unconstitutional.

The petition in G.R. No. 115044 was dismissed by the First Division of this
Court on 01 September 1994 based on a finding that there was "no abuse of
discretion, much less lack of or excess of jurisdiction, on the part of
respondent judge [Pacquing]", in issuing the questioned orders. Judge
Pacquing had earlier issued in Civil Case No. 88-45660, RTC of Manila,
Branch 40, the following orders which were assailed by the Mayor of the City
of Manila, Hon. Alfredo S. Lim, in said G.R. No. 115044:
a. order dated 28 March 1994 directing Manila mayor
Alfredo S. Lim to issue the permit/license to operate the

2. Assuming that the City of Manila had the power on 7

September 1971 to issue a Jai-Alai franchise to
Associated Development Corporation, whether the
franchise granted is valied considering that the franchise
has no duration, and appears to be granted in perpetuity.
3. Whether the City of Manila had the power to issue a JaiAlai franchise to Associated Development Corporation on
7 September 1971 in view of executive Order No. 392
dated 1 January 1951 which transferred from local
governments to the Games and Amusements Board the
power to regulate Jai-Alai. 1

22

These two (2) cases which are inter-related actually involve simple issues. if
these issues have apparently become complicated, it is not by reason of
their nature because of the events and dramatis personae involved.

Page

PADILLA, J.:

PubCorp Cases
Atty. Lapid

In an En Banc Resolution dated 20 September 1994, this Court referred

G.R. No. 115044 to the Court En Bancand required the respondents therein
to comment on the aforementioned motions.
Meanwhile, Judge Reyes on 19 October 1994 issued another order, this
time, granting ADC a writ of preliminarymandatory injunction against
Guingona and GAB to compel them to issue in favor of ADC the authority to
operate jai-alai.
Guingona, as executive secretary, and Dominador Cepeda, Jr. as the new
GAB chairman, then filed the petition in G.R. No. 117263 assailing the
abovementioned orders of respondent Judge Vetino Reyes.

2. assuming such intervention is proper, whether or not

the Associated Development Corporation has a valid and
subsisting franchise to maintain and operate the jai-alai;
3. whether or not there was grave abuse of discretion
committed by respondent Judge Reyes in issuing the
aforementioned temporary restraining order (later writ of
preliminary injunction); and
4. whether or not there was grave abuse of discretion
committed by respondent Judge Reyes in issuing the
aforementioned writ of preliminary mandatory injunction.
On the issue of the propriety of the intervention by the Republic of the
Philippines, a question was raised during the hearing on 10 November 1994
as to whether intervention in G.R. No. 115044 was the proper remedy for the
national government to take in questioning the existence of a valid ADC
franchise to operate the jai-alai or whether a separate action for quo
warranto under Section 2, Rule 66 of the Rules of Court was the proper
remedy.
We need not belabor this issue since counsel for respondent ADC agreed to
the suggestion that this Court once and for all settle all substantive issues
raised by the parties in these cases. Moreover, this Court can consider the
petition filed in G.R. No. 117263 as one for quo warranto which is within the
original jurisdiction of the Court under section 5(1), Article VIII of the
Constitution. 3

On 25 October 1994, in G.R. No. 117263, this Court granted petitioner's

motion for leave to file supplemental petition and to admit attached
supplemental petition with urgent prayer for restraining order. The Court
further required respondents to file their comment on the petition and
supplemental petition with urgent prayer for restraining order. The Court
likewise set the case and all incidents thereof for hearing on 10 November
1994.

On the propriety of intervention by the Republic, however, it will be recalled

that this Court in Director of Lands v. Court of Appeals (93 SCRA 238)
allowed intervention even beyond the period prescribed in Section 2 Rule 12
of the Rules of Court. The Court ruled in said case that a denial of the
motions for intervention would "lead the Court to commit an act of injustice to
the movants, to their successor-in-interest and to all purchasers for value
and in good faith and thereby open the door to fraud, falsehood and
misrepresentation, should intervenors' claim be proven to be true."

At the hearing on 10 November 1994, the issues to be resolved were

formulated by the Court as follows:

In the present case, the resulting injustice and injury, should the national
government's allegations be proven correct, are manifest, since the latter

23

Subsequently, also in G.R. No. 115044, the Republic of the Philippines,

through the Games and Amusements Board, filed a "Motion for Intervention;
for Leave to File a Motion for reconsideration in Intervention; and to Refer
the case to the Court En Banc" and later a "Motion for Leave to File
Supplemental Motion for Reconsideration-in-Intervention and to Admit
Attached Supplemental Motion for Reconsideration-in-Intervention".

1. whether or not intervention by the Republic of the

Philippines at this stage of the proceedings is proper;

Page

On 15 September 1994, respondent Associated Development Corporation

(ADC) filed a petition for prohibition,mandamus, injunction and damages with
prayer for temporary restraining order and/or writ of preliminary injunction in
the Regional Trial Court of Manila against petitioner Guingona and then GAB
chairman Sumulong, docketed as Civil Case No. 94-71656, seeking to
prevent GAB from withdrawing the provisional authority that had earlier been
granted to ADC. On the same day, the RTC of Manila, Branch 4, through
presiding Judge Vetino Reyes, issued a temporary restraining order
enjoining the GAB from withdrawing ADC's provisional authority. This
temporary restraining order was converted into a writ of preliminary
injunction upon ADC's posting of a bond in the amount of P2,000,000.00. 2

PubCorp Cases
Atty. Lapid

It will undoubtedly be a grave injustice to both parties in this case if this

Court were to shirk from ruling on the issue of constitutionality of PD No.
771. Such issue has, in our view, become the very lis mota in resolving the
present controversy, in view of ADC's insistence that it was granted a valid
and legal franchise by Ordinance No. 7065 to operate the jai-alai.
The time-honored doctrine is that all laws (PD No. 771 included) are
presumed valid and constitutional until or unless otherwise ruled by this
Court. Not only this; Article XVIII Section 3 of the Constitution states:
Sec. 3. All existing laws, decrees, executive orders,
proclamations, letters of instructions and other executive
issuances not inconsistent with this Constitution shall
remain operative until amended, repealed or revoked.
There is nothing on record to show or even suggest that PD No. 771 has
been repealed, altered or amended by any subsequent law or presidential
issuance (when the executive still exercised legislative powers).

And on the question of whether or not the government is estopped from

contesting ADC's possession of a valid franchise, the well-settled rule is that
the State cannot be put in estoppel by the mistakes or errors, if any, of its
officials or agents (Republic v. Intermediate Appellate Court, 209 SCRA 90)
Consequently, in the light of the foregoing expostulation, we conclude that
the republic (in contra distinction to the City of Manila) may be allowed to
intervene in G.R. No. 115044. The Republic is intervening in G.R. No.
115044 in the exercise, not of its business or proprietary functions, but in the
exercise of its governmental functions to protect public morals and promote
the general welfare.
II
Anent the question of whether ADC has a valid franchise to operate the JaiAlai de Manila, a statement of the pertinent laws is in order.
1. The Charter of the City of Manila was enacted by Congress on 18 June
1949. Section 18 thereof provides:
Sec. 18. Legislative Powers. The Municipal Board shall
have the following legislative powers:
xxx xxx xxx
(jj) To tax, license, permit and regulate wagers or betting
by the public on boxing, sipa, bowling, billiards, pools,
horse and dog races, cockpits, jai-alai, roller or ice-skating
on any sporting or athletic contests, as well as grant
exclusive rights to establishments for this purpose,
notwithstanding any existing law to the contrary.
2. On 1 January 1951, Executive Order No. 392 was issued transferring the
authority to regulate jai-alais from local government to the Games and
Amusements Board (GAB).

24

On the other hand, ADC's position is that Ordinance No. 7065 was validly
enacted by the City of Manila pursuant to its delegated powers under it
charter, Republic Act No. 409. ADC also squarely assails the
constitutionality of PD No. 771 as violative of the equal protection and nonimpairment clauses of the Constitution. In this connection, counsel for ADC
contends that this Court should really rule on the validity of PD No. 771 to be
able to determine whether ADC continues to possess a valid franchise.

Neither can it be tenably stated that the issue of the continued existence of
ADC's franchise by reason of the unconstitutionality of PD No. 771 was
settled in G.R. No. 115044, for the decision of the Court's First Division in
said case, aside from not being final, cannot have the effect of nullifying PD
No. 771 as unconstitutional, since only the Court En Banc has that power
under Article VIII, Section 4(2) of the Constitution. 4

Page

has squarely questioned the very existence of a valid franchise to maintain

and operate the jai-alai (which is a gambling operation) in favor of ADC. As
will be more extensively discussed later, the national government contends
that Manila Ordinance No. 7065 which purported to grant to ADC a franchise
to conduct jai-alai operations is void and ultra vires since Republic Act No.
954, approved on 20 June 1953, or very much earlier than said Ordinance
No. 7065, the latter approved 7 September 1971, in Section 4 thereof,
requires a legislative franchise, not a municipal franchise, for the operation
of jai-alai. Additionally, the national government argues that even
assuming, arguendo, that the abovementioned ordinance is valid, ADC's
franchise was nonetheless effectively revoked by Presidential decree No.
771, issued on 20 August 1975, Sec. 3 of which expressly
revoked all existing franchises and permits to operate all forms of gambling
facilities (including the jai-alai) issued by local governments.

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Sec. 5. No person, operator or maintainer of a fronton with

legislative franchise to conduct basque pelota games shall
offer, take, or arrange bets on any basque pelota game or
event, or maintain or use a totalizator or other device,
method or system to bet or gamble on any basque pelota
game or event outside the place, enclosure, or fronton
where the basque pelota game is held. (emphasis
supplied).
4. On 07 September 1971, however, the Municipal Board of Manila
nonetheless passed Ordinance No. 7065 entitled "An Ordinance Authorizing
the Mayor To Allow And Permit The Associated Development Corporation
To Establish, Maintain And Operate A Jai-Alai In The City Of Manila, Under
Certain Terms And Conditions And For Other Purposes."
5. On 20 August 1975, Presidential Decree No. 771 was issued by then
President Marcos. The decree, entitled "Revoking All Powers and Authority
of Local Government(s) To Grant Franchise, License or Permit And
Regulate Wagers Or Betting By The Public On Horse And Dog Races, JaiAlai Or Basque Pelota, And Other Forms Of Gambling", in Section 3 thereof,
expressly revoked all existing franchises and permits issued by local
governments.
6. On 16 October 1975, Presidential Decree No. 810, entitled "An Act
granting The Philippine Jai-Alai And Amusement Corporation A Franchise
To Operate, Construct And Maintain A Fronton For Basque Pelota And
Similar Games of Skill In THE Greater Manila Area," was promulgated.
7 On 08 May 1987, then President Aquino, by virtue of Article XVIII, Section
6, of the Constitution, which allowed the incumbent legislative powers until

Petitioners in G.R. No. 117263 argue that Republic Act No. 954 effectively
removed the power of the Municipal Board of Manila to grant franchises for
gambling operations. It is argued that the term "legislative franchise" in Rep.
Act No. 954 is used to refer to franchises issued by Congress.
On the other hand, ADC contends that Republic Act N. 409 (Manila Chapter)
gives legislative powers to the Municipal Board to grant franchises, and
since Republic Act No. 954 does not specifically qualify the word "legislative"
as referring exclusively to Congress, then Rep. Act No. 954 did not remove
the power of the Municipal Board under Section 18(jj) of Republic Act No.
409 and consequently it was within the power of the City of Manila to allow
ADC to operate the jai-alai in the City of Manila.
On this point, the government counter-argues that the term "legislative
powers" is used in Rep. Act No. 409 merely to distinguish the powers under
Section 18 of the law from the other powers of the Municipal Board, but that
the term "legislative franchise" in Rep. Act No. 954 refers to a franchise
granted solely by Congress.
Further, the government argues that Executive Order No. 392 dated 01
January 1951 transferred even the power to regulate Jai-Alai from the local
governments to the Games and Amusements Board (GAB), a national
government agency.
It is worthy of note that neither of the authorities relied upon by ADC to
support its alleged possession of a valid franchise, namely the Charter of the
City of Manila (Rep. Act No. 409) and Manila Ordinance No. 7065 uses the
word "franchise". Rep. Act No. 409 empowers the Municipal Board of Manila
to "tax, license, permit and regulatewagers or betting" and to "grant
exclusive rights to establishments", while Ordinance No. 7065 authorized the
Manila City Mayor to "allow and permit" ADC to operate jai-alai facilities in
the City of Manila.
It is clear from the foregoing that Congress did not delegate to the City of
Manila the power "to franchise" wagers or betting, including the jai-alai, but
retained for itself such power "to franchise". What Congress delegated to the
City of Manila in Rep. Act No. 409, with respect to wagers or betting, was the
power to "license, permit, or regulate" which therefore means that a license
or permit issued by the City of Manila to operate a wager or betting activity,

25

Sec. 4. No person, or group of persons other than the

operator or maintainer of a fronton with legislative
franchise to conduct basque pelota games (Jai-alai), shall
offer, to take or arrange bets on any basque pelota game
or event, or maintain or use a totalizator or other device,
method or system to bet or gamble on any basque pelota
game or event. (emphasis supplied).

the first Congress was convened, issued Executive Order No. 169 expressly
repealing PD 810 and revoking and cancelling the franchise granted to the
Philippine Jai-Alai and Amusement Corporation.

Page

3. On 20 June 1953, Congress enacted Republic Act No. 954, entitled "An
Act to Prohibit With Horse Races and Basque Pelota Games (Jai-Alai), And
To Prescribe Penalties For Its Violation". The provisions of Republic Act No.
954 relating to jai-alai are as follows:

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It cannot be overlooked, in this connection, that the Revised Penal Code

punishes gambling and betting under Articles 195 to 199 thereof. Gambling
is thus generally prohibited by law, unless another law is enacted
byCongress expressly exempting or excluding certain forms of gambling
from the reach of criminal law. Among these form the reach of criminal law.
Among these forms of gambling allowed by special law are the horse races
authorized by Republic Acts Nos. 309 and 983 and gambling casinos
authorized under Presidential Decree No. 1869.
While jai-alai as a sport is not illegal per se, the accepting of bets or wagers
on the results of jai-alai games is undoubtedly gambling and, therefore, a
criminal offense punishable under Articles 195-199 of the Revised Penal
Code, unless it is shown that a later or special law had been passed allowing
it. ADC has not shown any such special law.
Republic Act No. 409 (the Revised Charter of the City of Manila) which was
enacted by Congress on 18 June 1949 gave the Municipal Board
certain delegated legislative powers under Section 18. A perusal of the
powers enumerated under Section 18 shows that these powers are basically
regulatory in nature. 5 The regulatory nature of these powers finds support
not only in the plain words of the enumerations under Section 28 but also in
this Court's ruling inPeople v. Vera (65 Phil. 56).
In Vera, this Court declared that a law which gives the Provincial Board the
discretion to determine whether or not a law of general application (such as,
the Probation law-Act No. 4221) would or would not be operative within the
province, is unconstitutional for being an undue delegation of legislative
power.

We need not go to this extent, however, since the rule is that laws must be
presumed valid, constitutional and in harmony with other laws. Thus, the
relevant provisions of Rep. Acts Nos. 409 and 954 and Ordinance No. 7065
should be taken together and it should then be clear that the legislative
powers of the Municipal Board should be understood to be regulatory in
nature and that Republic Act No. 954 should be understood to refer
tocongressional franchises, as a necessity for the operation of jai-alai.
We need not, however, again belabor this issue further since the task at
hand which will ultimately, and with finality, decide the issues in this case is
to determine whether PD No. 771 validly revoked ADC's franchise to operate
the jai-alai, assuming (without conceding) that it indeed possessed such
franchise under Ordinance No. 7065.
ADC argues that PD No. 771 is unconstitutional for being violative of the
equal protection and non-impairment provisions of the Constitution. On the
other hand, the government contends that PD No. 771 is a valid exercise of
the inherent police power of the State.
The police power has been described as the least limitable of the inherent
powers of the State. It is based on the ancient doctrine salus populi est
suprema lex (the welfare of the people is the supreme law.) In the early case
of Rubi v. Provincial Board of Mindoro (39 Phil. 660), this Court through Mr.
Justice George A. Malcolm stated thus:
The police power of the State . . . is a power co-extensive
with self-protection, and is not inaptly termed the "law of
overruling necessity." It may be said to be that inherent
and plenary power in the State which enables it to prohibit
all things hurtful to the comfort, safety and welfare of
society. Carried onward by the current of legislation, the
judiciary rarely attempts to dam the onrushing power of
legislative discretion, provided the purposes of the law do
not go beyond the great principles that mean security for

26

In relation, therefore, to the facts of this case, since ADC has no franchise
from Congress to operate the jai-alai, it may not so operate even if its has a
license or permit from the City Mayor to operate the jai-alai in the City of
Manila.

From the ruling in Vera, it would be logical to conclude that, if ADC's

arguments were to prevail, this Court would likewise declare Section 18(jj) of
the Revised Charter of Manila unconstitutional for the power it would
delegate to the Municipal Board of Manila would give the latter the absolute
and unlimited discretion to render the penal code provisions on gambling
inapplicable or inoperative to persons or entities issued permits to operate
gambling establishments in the City of Manila.

Page

such as the jai-alai where bets are accepted, would not amount to something
meaningful UNLESS the holder of the permit or license was also
FRANCHISED by the national government to so operate. Moreover, even
this power to license, permit, or regulate wagers or betting on jai-alai was
removed from local governments, including the City of Manila, and
transferred to the GAB on 1 January 1951 by Executive Order No. 392. The
net result is that the authority to grant franchises for the operation of jai-alai
frontons is in Congress, while the regulatory function is vested in the GAB.

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WHEREAS, it has been reported that in spite of the

current drive of our law enforcement agencies against
vices and illegal gambling, these social ills are still
prevalent in many areas of the country;
WHEREAS, there is need to consolidate all the efforts of
the government to eradicate and minimize vices and other
forms of social ills in pursuance of the social and
economic development program under the new society;
WHEREAS, in order to effectively control and regulate
wagers or betting by the public on horse and dog races,
jai-alai and other forms of gambling there is a necessity to
transfer the issuance of permit and/or franchise from local
government to the National Government.
It cannot be argued that the control and regulation of gambling do not
promote public morals and welfare. Gambling is essentially antagonistic and
self-reliance. It breeds indolence and erodes the value of good, honest and
hard work. It is, as very aptly stated by PD No. 771, a vice and a social ill
which government must minimize (if not eradicate) in pursuit of social and
economic development.
In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R. No.
111097), this Court stated thru Mr. Justice Isagani A. Cruz:
In the exercise of its own discretion, the legislative power
may prohibit gambling altogether or allow it without
limitation or it may prohibit some forms of gambling and
allow others for whatever reasons it may consider
sufficient. Thus, it has prohibited jueteng and monte but
permits lotteries, cockfighting and horse-racing. In making
such choices, Congress has consulted its own wisdom,
which this Court has no authority to review, much less
reverse. Well has it been said that courts do not sit to
resolve the merits of conflicting theories. That is the

Talks regarding the supposed vanishing line between right and privilege in
American constitutional law has no relevance in the context of these cases
since the reference there is to economic regulations. On the other hand, jaialai is not a mere economic activity which the law seeks to regulate. It is
essentially gambling and whether it should be permitted and, if so, under
what conditions are questions primarily for the lawmaking authority to
determine, talking into account national and local interests. Here, it is the
police power of the State that is paramount.
ADC questions the motive for the issuance of PD Nos. 771. Clearly,
however, this Court cannot look into allegations that PD No. 771 was
enacted to benefit a select group which was later given authority to operate
the jai-alai under PD No. 810. The examination of legislative motivation is
generally prohibited. (Palmer v. Thompson, 403 U.S. 217, 29 L. Ed. 2d 438
[1971] per Black, J.) There is, the first place, absolute lack of evidence to
support ADC's allegation of improper motivation in the issuance of PD No.
771. In the second place, as already averred, this Court cannot go behind
the expressed and proclaimed purposes of PD No. 771, which are
reasonable and even laudable.
It should also be remembered that PD No. 771 provides that the national
government can subsequently grant franchises "upon proper application and
verification of the qualifications of the applicant." ADC has not alleged that it
filed an application for a franchise with the national government subsequent
to the enactment of PD No. 771; thus, the allegations abovementioned (of
preference to a select group) are based on conjectures, speculations and
imagined biases which do not warrant the consideration of this Court.
On the other hand, it is noteworthy that while then president Aquino issued
Executive Order No. 169 revoking PD No. 810 (which granted a franchise to
a Marcos-crony to operate the jai-alai), she did not scrap or repeal PD No.
771 which had revoked all franchises to operate jai-alais issued by local
governments, thereby re-affirming the government policy that franchises to
operate jai-alais are for the national government (not local governments) to
consider and approve.

27

In the matter of PD No. 771, the purpose of the law is clearly stated in the
"whereas clause" as follows:

prerogative of the political departments. It is settled that

questions regarding wisdom, morality and practicability of
statutes are not addressed to the judiciary but may be
resolved only by the executive and legislative
departments, to which the function belongs in our scheme
of government. (Emphasis supplied)

Page

the public welfare or do not arbitrarily interfere with the

right of the individual.

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A franchise started out as a "royal privilege or (a) branch

of the King's prerogative, subsisting in the hands of a
subject." This definition was given by Finch, adopted by
Blackstone, and accepted by every authority since . . .
Today, a franchise being merely a privilege emanating
from the sovereign power of the state and owing its
existence to a grant, is subject to regulation by the state
itself by virtue of its police power through its administrative
agencies.
There is a stronger reason for holding ADC's permit to be a mere privilege
because jai-alai, when played for bets, is pure and simple gambling. To
analogize a gambling franchise for the operation of a public utility, such as
public transportation company, is to trivialize the great historic origin of this
branch of royal privilege.
As earlier noted, ADC has not alleged ever applying for a franchise under
the provisions of PD No. 771. and yet, the purpose of PD No. 771 is quite
clear from its provisions, i.e., to give to the national government the
exclusive power to grant gambling franchises. Thus, all franchises then
existing were revoked but were made subject to reissuance by the national
government upon compliance by the applicant with government-set
qualifications and requirements.
There was no violation by PD No. 771 of the equal protection clause since
the decree revoked all franchises issued by local governments without
qualification or exception. ADC cannot allege violation of the equal
protection clause simply because it was the only one affected by the decree,
for as correctly pointed out by the government, ADC was not singled out
when all jai-alai franchises were revoked. Besides, it is too late in the day for
ADC to seek redress for alleged violation of its constitutional rights for it
could have raised these issues as early as 1975, almost twenty 920) years
ago.

III
On the issue of whether or not there was grave abuse of discretion
committed by respondent Judge Reyes in issuing the temporary restraining
order (later converted to a writ of preliminary injunction) and the writ of
preliminary mandatory injunction, we hold and rule there was.
Section 3, Rule 58 of the rules of Court provides for the grounds for the
issuance of a preliminary injunction. While ADC could allege these grounds,
respondent judge should have taken judicial notice of Republic Act No. 954
and PD 771, under Section 1 rule 129 of the Rules of court. These laws
negate the existence of any legal right on the part of ADC to the reliefs it
sought so as to justify the issuance of a writ of preliminary injunction. since
PD No. 771 and Republic Act No. 954 are presumed valid and constitutional
until ruled otherwise by the Supreme Court after due hearing, ADC was not
entitled to the writs issued and consequently there was grave abuse of
discretion in issuing them.
WHEREFORE, for the foregoing reasons, judgment is hereby rendered:
1. allowing the Republic of the Philippines to intervene in
G.R. No. 115044.
2. declaring Presidential Decree No. 771 valid and
constitutional.
3. declaring that respondent Associated Development
corporation (ADC) does not possess the required
congressional franchise to operate and conduct the jai-alai
under Republic Act No. 954 and Presidential Decree No.
771.

28

In RCPI v. NTC (150 SCRA 450), we held that:

Finally, we do not agree that Section 3 of PD No. 771 and the requirement of
a legislative franchise in Republic Act No. 954 are "riders" to the two 92)
laws and are violative of the rule that laws should embrace one subject
which shall be expressed in the title, as argued by ADC. In Cordero v.
Cabatuando (6 SCRA 418), this Court ruled that the requirement under the
constitution that all laws should embrace only one subject which shall be
expressed in the title is sufficiently met if the title is comprehensive enough
reasonably to include the general object which the statute seeks to effect,
without expressing each and every end and means necessary or convenient
for the accomplishing of the objective.

Page

On the alleged violation of the non-impairment and equal protection clauses

of the Constitution, it should be remembered that a franchise is not in the
strict sense a simple contract but rather it is more importantly, a mere
privilege specially in matters which are within the government's power to
regulate and even prohibit through the exercise of the police power. Thus, a
gambling franchise is always subject to the exercise of police power for the
public welfare.

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

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

Separate Opinions

KAPUNAN, J., concurring:

Government encroachments on private property however, valid, are always
subject to limitations imposed by the due process and impairment of
contracts clauses of the Constitution. The government challenge in the case
at bench, ostensibly involving a franchise granted pursuant to legitimate
local legislative authority, on the surface appears to be an easy one, clothed,
as it were in the State's inherent and almost illimitable prerogative to
promote the general welfare and the common good. As the challenge
involves a facile conflict between good and evil, between a universally
recognized vice and the State's virtuous posture, the instant case lends itself
to easy adjudication.
Not necessarily. Economic realities have blurred distinctions. The State
itself, though in virtuous garb, has at various times allowed a relaxation of
existing rules proscribing gambling and devised a system of regulations,
local and national, through which gambling and otherwise illicit gaming
operations may be maintained by those licensed to do so. As the system has
never been perfect, conflict, such as that which existed in the case at bench,
occasionally arises.

After the City of Manila subsequently granted ADC a permit to operate the
jai-alai fronton, Chairman Francisco Sumulong, Jr. of the Games and
Amusements Board issued on September 9, 1994 a provisional authority to
open the fronton subject to certain conditions imposed therein. In relation to
this, the GAB likewise issued to the ADC, on 12 September 1994, License
No. 94-008 upon payment of the corresponding fees.
On September 13, 1994, Executive Secretary Teofisto Guingona directed
GAB Chairman Sumulong "to hold in abeyance the grant of authority or if
any has been issued, to withdraw such grant of authority" 1 to the ADC.
Consequently, on September 14, 1994, the GAB Chairman revoked the
provisional authority issued by his office, until the legal issues raised in the
September 13 directive of the Executive Secretary are resolved in the proper
court. Said directive identified the legal issues as centering on 1) the
constitutionality of P.D. 771; 2) the validity of the apparent grant in perpetuity
of a municipal franchise to maintain jai-alai operations; and, 3) the power of
the city of Manila to issue a jai-alai franchise in view of Executive Order 392
which transferred from local governments to the GAB the power to regulate
jai-alai.
Reacting to the cancellation of its provisional authority to maintain jai-alai
operations, ADC, on September 15, 1994 filed a petition for
prohibition, mandamus, injunction and damages with prayer for temporary
restraining order and writ of preliminary injunction in the Manila Regional
Trial Court of against Executive Secretary Guingona and Chairman
Sumulong. The Regional Trial court of manila, Branch 4, through Judge
Vetino Reyes on the same day issued an order enjoining the Executive
Secretary and the GAB Chairman from implementing their directive and
memorandum, respectively.
On September 16, 1994 GAB, representing the Republic of the Philippines,
filed a motion for intervention, for leave to file a motion for reconsiderationin-intervention and for reference of the case to the Court en banc in G.R. No.
115044. Acting on this motion, the First Division referred the case to the
Court en banc, which, in a resolution dated 20 September 1994, accepted
the same and required the respondents therein to comment.

29

SO ORDERED.

The constitutionality of P.D. 771 was not in issue in Lim vs. Pacquing,
promulgated by the court's first Division last September, 1994, where this
court sustained an order by Judge Pacquing issued in Civil Case No. 8845660 compelling Manila Mayor Alfredo S. Lim to issue a permit to operate a
jail fronton in favor of the Associated Development Corporation (ADC)
pursuant to Manila City Ordinance No. 7065.

Page

4. setting aside the writs of preliminary injunction and

preliminary mandatory injunction issued by respondent
Judge Vetino Reyes in civil Case No. 94-71656.

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The government sought leave to file a supplemental petition (and to admit

attached supplemental petition) with urgent prayer for a restraining order
assailing the October 19, 1994 Order of Judge Reyes. We granted leave to
file said supplemental petition and to admit supplemental petition and
required respondents therein to file their comment on October 25, 1994.
The ADC maintains it original position that Ordinance No. 7065, enacted
pursuant to the Charter of the City of Manila under Republic Act No. 409
granted a valid and subsisting municipal franchise for the operation of the
Basque pelota game jai alai. In response to the government's vehement
objections against ADC's operation of its gambling operations 2 the ADC for
the first time challenged the constitutional validity of P.D. No. 771 insofar as
it revoked the authority granted to it by Ordinance No. 7065 as violative of
the non-impairment of contracts and equal protection clauses of the
constitution. Ordinance 7065 reads:
Sec. 1. The Mayor is authorized, as he is hereby
authorized to allow and permit the Associated
Development Corporation to establish, maintain and
operate a jai-alai in the City of Manila under the following
terms and conditions and such other terms and conditions
as he (the Mayor) may prescribe for good reasons of
general interest:
a. That the construction, establishment, and maintenance
of the jai-alai shall be at a place permissible under existing
zoning ordinances of Manila;
b. That the games to be played daily shall commence not
earlier than 5:00 o'clock (sic) in the afternoon;

d. That the corporation will in addition pay to the city an

annual license fee of P3,000.00 and a daily permit fee of
P200.00;
e. That the corporation will to insure its faithful compliance
of all the terms and conditions under this ordinance, put up
a performance bond from a surety acceptable to the City,
in the amount of at least P30,000.00.
xxx xxx xxx
Sec. 3 This ordinance shall take effect upon its approval.
The above-quoted ordinance is notable in two respects: 1) the absence of a
period of expiration suggests that the grant of authority to operate the
Basque pelota game jai-alai seems to have been granted in perpetuity and
2) while the grant of authority under the Ordinance was made pursuant to
R.A. 409, the City Charter of Manila, the authority granted could best be
viewed as a grant of license or permit, not a franchise. Nowhere is it
pretended that Ordinance 7065 is a franchise enacted pursuant to the
legislative powers of the Municipal Board of the City of Manila under Section
18 (jj) thereof.
The absence of authority of the Manila Municipal Board to issue a franchise,
notwithstanding its legislative powers, is furthermore evident in the abovecited Charter provision regulating gambling and other gaming
establishments which enumerates the following powers:
(jj) To tax, license, permit and regulate wagers of betting
by the public on boxing . . . cockpits, jai-alai . . . as well as
this purpose, notwithstanding any existing law to the
contrary.
Clearly the, if Ordinance 7065 merely grants a permit or a license to operate
the jai-alai fronton, I see no conflict with a national law, duly enacted
pursuant to legitime franchise to operate certain gambling and gaming
operations, generally viewed as deleterious to the public welfare and morals,

30

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

c. That the City of Manila will receive a share of 21/2% of

the annual gross receipts of all wagers or bets % of
which will accrue to the Games and Amusements Board
as now provided by law;

Page

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

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

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

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

The disturbing implications of a grant of a "franchise," in perpetuity, to the

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

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

31

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

Page

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

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

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

rendered:
1. Allowing the republic to intervene in G.R. No. 115044.
2. Declaring that P.D. 771 is a valid and subsisting law.
3. Declaring that the ADC does not possess the required
legislative franchise to operate the jai-alai under R.A. 954
and P.D. 771.
4. Setting aside the writs of preliminary injunction and
preliminary mandatory injunction issued by Judge Vetino
Reyes.
DAVIDE, JR., J., concurring:
The core issues submitted for the Court's resolution are: (1) in G.R. No.
115044, whether intervention by the republic of the Philippines is proper, and
(2) in G.R. No. 117263, whether public respondent Judge Vetino Reyes
acted with grave abuse of discretion in issuing the temporary restraining
order and subsequently the writ of preliminary mandatory injunction in Civil
case No. 94-71656.
I
As to the first issue, I submit that unless we either amend the rule on
intervention or suspend it, the motion to intervene must be denied. Under
Section 2, Rule 12 of the Rules of Court, such motion may be allowed
onlybefore or during a trial. Said section reads:

This provision was taken from Section 1, Rule 13 of the old Rules of Court
with the modification that the phrase "at any period of a trial" in the latter was
changed to "before or during a trial." 1
Section 1, Rule 13 of the old Rules of Court was based on Section 121 of
the Code of Civil Procedure which, in turn, was taken from Section 387 of
the Code of Civil procedure of California. 2
The phrase "at any period of a trial" in Section 1, Rule 13 of the old Rules of
Court has been construed to mean the period for the representation of
evidence by both parties. 3 And the phrase "before or during the trial" in
Section 2, Rule 12 of the present Rules of Court "simply means anytime
before the rendition of the final judgment." 4 Accordingly, intervention could
not be allowed after the trial had been concluded 5 or after the trial and
decision of the original case. 6
Fundamentally then, intervention is never an independent action but is
ancillary and supplemental to an existing litigation. Its purpose is not to
obstruct nor unnecessarily delay the placid operation of the machinery of
trial, but merely to afford one not an original party, yet having a certain right
or interest in the pending case, the opportunity to appear and be joined so
he could assert or protect such right or interest. 7
The grant of an intervention is left to the discretion of the court. Paragraph
(b), Section 2, Rule 12 of the Rules of Court provides:
(b) Discretion of court. In allowing or disallowing a
motion for intervention, the court, in the exercise of
discretion, shall consider whether or not the intervention
will unduly delay or prejudice the adjudication of the rights
of the original parties and whether or not the intervenor's
rights may be fully protected in a separate proceeding.

32

On the question of the propriety of the Republic of the Philippine's

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

Sec. 2. Intervention. A person may, before or during a

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

Page

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

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But over and above these considerations and

circumstances which We have pointed out, there is the
basic and fundamental requirement under the Rules of
Court, Section 7, Rule 3, that "Parties in interest without
whom no final determination can be had of an action shall
be joined either as plaintiff or defendants." The joinder of
indispensable parties is compulsory under any and all
conditions, their presence being a sine qua non of the
exercise of judicial power. [Borlasa vs. Polistico, 47 Phil.
345, 348].
The herein movants, Greenfield Development Corporation,
Alabang Development Corporation, Ramon D. Bagatsing,
and all buyers from them, at least those with ostensible
proprietary interests as the MERALCO, Alabang Hills
Subdivision, Cielito Homes Subdivision, Tahanan Village,
the Ministry of Highways insofar as the South Super
Highway is affected, are indispensable parties to these
proceedings as it has been shown affirmatively that they
have such an interest in the controversy or subject matter
that a final adjudication cannot be made, in their absence,

And, squarely on the aspect of intervention, it found that the denial thereof
will lead the Court to commit an act of injustice to the
movants, to their successors-in-interest and to all
purchasers for value and in good faith and thereby open
the door to fraud, falsehood and misrepresentation, should
intervenors' claims be proven to be true. For it cannot be
gainsaid that if the petition for reconstitution is finally
granted, the chaos and confusion arising from a situation
where the certificates of title of the movants covering large
areas of land overlap or encroach on properties the title to
which is being sought to be reconstituted by private
respondent, who herself indicates in her Opposition that,
according to the Director of Lands, the overlapping
embraces some 87 hectares only, is certain and
inevitable.
Then too, it may be stressed that said case originated from a proceeding to
reconstitute a certificate of title filed by private respondent. After trial, the
Court of First Instance issued an order denying the petition for insufficiency
of evidence. After a motion for new trial was granted and a hearing to
receive the newly discovered evidence was completed, the court issued an
order again denying the reconstitution sought for as it still doubted the
authenticity and genuineness of the Transfer of Certificate of Title sought to
be reconstituted. The private respondent appealed the order to the Court of
Appeals which thereafter promulgated a decision reversing the aforesaid
orders of the trial court. The Director of Land, which was the remaining
oppositor, filed a motion for a new period to file a motion for reconsideration
of the decision alleging excusable negligence. Private respondent filed an
opposition thereto. Without waiting for the resolution of the motion, the
Director filed a motion to admit the motion for reconsideration attaching
thereto said motion for reconsideration. The Court of Appeals issued a
resolution denying both motions on the ground that the decision had already
become final. This was the resolution which the Director assailed in his
petition for review filed with this Court.
Considering then that the intervention in the case at bar was commenced
only after the decision had been executed, a suspension of the Rules to

33

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

without injuring or affecting such interest. The joinder must

be ordered in order to prevent multiplicity of suits, so that
the whole matter in dispute may be determined once and
for all in one litigation.

Page

It is thus clear that, by its very nature, intervention presupposes an existing

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

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Accordingly, I vote to deny the motion for intervention in G.R. No. 115044.
II
However, I vote to partially grant the petition in G.R. No. 117263 insofar as
wagering or betting on the results order and the preliminary mandatory
injunction issued by respondent Judge cannot legally and validly allow such
wagering and betting. It was precisely for this reason that I earlier voted to
grant a temporary restraining order in G.R. No. 115044 and G.R. No.
117263 to restrain wagering or betting. I wish to reiterate here what I stated
in my supplemental concurring opinion in G.R. No. 115044:
Secondly, to make my position clear that the dismissal of
the petition should not be construed as compelling the City
of Manila to authorize gambling by allowing betting on the
results of jai-alai. The decision merely dismissed the
petition because the Court found " no abuse of discretion,
much less lack of excess of jurisdiction, on the part of the
respondent judge" in issuing the challenged order directing
the petitioner to issue a permit or license in favor of the

There is a clear distinction between the initial duty of the

City Mayor under Ordinance No. 7065 to issue the
necessary license or permit to establish the jai-alai fronton
and to maintain and operate the jai-alai, and his
subsequent discretion to impose other terms and
conditions for the final contractrelative to such operation.
The trial court specifically said so in its decision of 9
September 1989. Thus:
A suggestion has been made in the
Answer that a writ of mandamus will not
lie against respondents, particularly the
Mayor, because "the availment of the
franchise . . . is subject to the terms and
conditions which the respondent Mayor
may impose."
A careful reading however, of
Ordinances 7065 will readily show that
the discretion, if any, allowed
respondent Mayor, under the ordinance,
will be exercisable only after the permit,
which he is mandated to issue, had
been issued and the jai-alai fronton is
already operational. The ordinance
stipulates that the Mayor is authorized
"to allow and permit petitioner to
establish, maintain and operate a jai-alai
in the City of Manila," under the five
conditions enumerated in

34

May the motion to intervene and intervention proper be, nevertheless,

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

private respondent pursuant to Ordinance No. 7065. That

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

Page

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

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It follows then that the Mayor's Permit ordered by the trial

court to be issued to the private respondent is not a
license or authority to allow betting or wagering on the
results of the jai-alaigames. Jai-alai is a sport based on
skill. Under Article 197 of the Revised Penal Code, before
it was amended by P.D. No. 1602, betting upon the result
of any boxing or other sports contests was penalized
with arresto menor or a fine not exceeding P200.00, or
both. Article 2019 of the Civil Code provides that "[b]etting
on the results of sports, athletic competitions, or games of
skill may be prohibited by local ordinances."
P.D. No. 483, enacted on 13 June 1974, penalizes betting,
game fixing or point shaving and machinations in sports
contests, including jai-alai. Section 2 thereof expressly
provides:

The succeeding Section 3 provides for the penalties.

On 11 June 1978, P.D. No. 1602 (75 O.G. No. 15,
3270), Prescribing Stiffer Penalties on Illegal Gambling,
was enacted to increase the penalties provided in various
"Philippine Gambling Laws such as Articles 195-199 of the
Revised Penal Code (Forms of Gambling and Betting),
R.A. No. 3063 (Horse Racing Bookies), P.D. No. 449
(Cockfighting), P.D. No. 483 (Game Fixing), P.D. No. 510
(Slot Machines) in relation to Opinion Nos. 33 and 97 of
the Ministry of Justice, P.D. No. 1306 (Jai-alai Bookies),
and other City and Municipal Ordinances on gambling all
over the country." Section 1 thereof reads:
xxx xxx xxx
Both P.D. No. 483 and P.D. No. 1602 were promulgated in
the exercise of the police power of the State.
Pursuant to Section 2 of P.D. No. 483, which was not
repealed by P.D. No. 1602 since the former is not
inconsistent with the latter in that respect, betting in
jai-alai is illegal unless allowed by law. There was such a
law. P.D. No. 810, which authorized the Philippine JaiAlai and Amusement Corporation as follows:
Sec. 2. The grantee or its duly
authorized agent may offer, take or
arrange bets within or outside the place,
enclosure or court where the Basque
pelota games are held:Provided, That

35

Consequently, the Mayor's Permit sough to be renewed or

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

Sec. 2. Betting, game fixing, point

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

Page

subparagraphs "a" to "e" of Section 1 of

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

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

I vote: (1) to deny the motion to intervene and motion for

reconsideration qua petition for quo warranto in G.R. No. 115044, and (2) to
dismiss the petition for certiorari in G.R. No. 117263. I shall set forth the
reason why.
I
Following the decision of the First Division of this Court on September 1,
1994 in G.R. No. 115044, the City of Manila issued on September 7, 1994
the Mayor's permit and Municipal license to Associate Development
Corporation (ADC) upon the latter's payment of the required fees (G.R. No.
115044, Rollo, pp. 253-254, 301).
In his letter dated September 8, 1994 to President Fidel V. Ramos,
Chairman Francisco Sumulong, Jr. of the Games and Amusement Board
(GAB) said that he would not authorize the opening of ADC's jai-alai unless
he was given a clearance from the President and until after ADC had
complied with "all the requirements of the law, such as, the distribution of
wager funds, [and] licensing of Pelotaris and other personnel" (Exh. F, Civil
Case No. 94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, p. 304).
In the position paper annexed to the letter, the GAB Chairman
recommended the reopening and operation of the jai-alai, stating in pertinent
part:
There are several reasons to justify the operation of JaiAlai, first and foremost of which is the generation of much
needed revenues for the national and local governments.
Other significant justifications are its tourism potential, the
provision for employment, and the development of Basque
pelota as an amateur and professional sport.
Specifically, the establishment, maintenance and
operation of a Jai-Alai fronton in Metro-Manila shall be
by virtue of the original and still legally existing franchise
granted to the Associated Development
Corporation (ADC) by the City Government of Manila in
1971 (G.R. No. 115044, Rollo, p. 350; Emphasis
supplied).

36

However, as stated in the ponencia, P.D. No. 810 was

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

QUIASON, J., dissenting:

Page

bets offered, taken or arranged outside

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

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2. Licensing of officials and employees whose duties are

connected directly or indirectly with the supervision and
operation of jai-alai games, as mandated by Executive
Order 141 dated February 25, 1965, shall be fully
complied with by you within thirty 930) days from date
hereof.
3. Any other deficiencies we may discover will be
accordingly rectified by management as directed by the
Board.
4. Failure to comply with any of the rules and regulations
prescribed by existing laws and lawful orders of the Board,
may justify withdrawal/revocation of this provisional
authority without prejudice to such administrative
sanctions that the Board may deem proper to impose
under the circumstances.
5. By accepting this provisional authority, Associated
Development Corporation (ADC) is deemed to have
agreed to the conditions above provided (G.R. No.
117263, Rollo, pp. 8-9, 49, 238, 288).
On September 12, 1994, the GAB issued to ADC jai-alai License No. 94-008
upon payment of the corresponding permit fee. The license reads as follows:
Under and by virtue of the provisions of Section 7 of
Executive Order No. 392, series of 1950, in conjunction
with Executive order No. 824, series of 1982, this Board
has this date granted ADC Represented by Gen. Alfredo
B. Yson permit to hold or conduct a [sic] jai-alai
contests/exhibition on September 12 to 14, 1994, at the

This permit is issued subject to the condition that the

promoter shall comply with the provisions of Executive
order No. 824, S. 1982, the rules and regulations, orders
and/or policies adopted or which may hereafter be
adopted by the Board, and with the conditions set forth in
the application for which this permit has been granted; and
failure on the part of the promoter to comply with any of
which shall be deemed sufficient cause for the revocation
thereof (G.R. No. 117263, Rollo, pp. 50, 238, 289).
In compliance with GAB Rules and Regulations, ADC submitted its
programs of jai-alai events for approval (Exhs. O, P and Q, civil Case No.
94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, pp. 290-292).
It appears that as early as may 23, 1994, Jai-Alai de Manila (the business
name of ADC's fronton) had inquired from GAB about the laws and rules
governing its jai-alai operation. In reply, chairman Sumulong furnished JaiAlai de Manila with copies of E.O. Nos. 392 and 824 and the Revised rules
and Regulations for basque pelota Games (Exhs. K and L, Civil Case No.
94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, pp. 301-302).
On September 13, 1994, Executive Secretary Teofisto Guingona, jr. issued
the following Directive to GAB Chairman Sumulong:
In reply to your letter dated 9 September 1994 requesting
for the President's approval to re-open the Jai-Alai in
Manila, please be informed that after a review and study of
existing laws, there is sufficient basis to hold in abeyance
the operation of the Jai-Alai until the following legal
questions are properly resolved:
1. Whether P.D. 771 which revoked all
existing Jai-Alai franchises issued by
local government as of 20 August 1975
is unconstitutional.
2. Assuming that the City of Manila had
the power on 7 September 1971 to
issue a Jai-Alai franchise to Associated

37

1. We prohibit you from offering to the public "Pick 6" and

"winner Take All" betting events until such time as this
Board shall have approved the rules and regulations
prepared by management governing the mechanics of
these events.

harrison Plaza Complex, located in Harrison Plaza,

Malate, Manila.

Page

On September 9, 1994, Chairman Sumulong granted ADC provisional

authority to open, subject to the following conditions:

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Development Corporation, whether the
franchise granted is valid considering
that the franchise has no duration, and
appears to be granted in perpetuity.

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

3. Whether the City of Manila had the

power to issue a Jai-Alai franchise to
Associated Development Corporation on
7 September 1971 in view of Executive
order No. 392 dated 1 January 1951
which transferred from local
governments to the Games and
Amusements Board the power to
regulate Jai-Alai.

On September 16, 1994, Executive Secretary Guingona and Chairman

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

In view of the directive from the Office of the President

dated 13 September 1994, Associated Development
Corporation is hereby ordered to cease and desist issues
raised in the said directive are resolved by the proper
court. The provisional authority issued pending further
scrutiny and evaluation to ADC on 9 September 1994 is
hereby withdrawn (G.R. No. 117263, Rollo, pp. 51, 194;
Emphasis supplied).
On September 15, 1994, ADC filed with the Regional Trial Court, Branch 4,
Manila a petition for prohibition,mandamus, injunction and damages with
prayer for temporary restraining order or writ of preliminary injunction (Case
No. 94-71656) against Executive Secretary Guingona and Chairman
Sumulong assailing the former's Directive and the latter's Memorandum
(G.R. No. 117263, Rollo, pp. 3, 20-21, 53-75, 167-168).

Acting on the motion of the Republic dated September 16, 1994, the First
Division referred, in its Resolution dated September 19, 1994, Case G.R.
No. 115044 to the Court en banc, and the latter accepted the same in its
Resolution dated September 20, 1994 (Rollo, p. 255).
In the meantime, Chairman Sumulong resigned and Dominador R. Cepeda,
jr. was appointed as his successor.
On September 30, 1994, Judge Reyes issued a writ of preliminary injunction
(G.R. No. 117263, Rollo, pp. 2, 47).
On October 11, 1994, Executive Secretary Guingona and GAB Chairman
Cepeda, Jr. filed with this Court a petition for certiorari, prohibition
and mandamus (G.R. No. 117263, Rollo, pp. 1-151) and on October 24,
1994, a supplemental petition (G.R. No. 117263, Rollo, pp. 161-165, 166-

38

On September 14, 1994, Chairman Sumulong issued a Memorandum to

ADC that:

Subsequently, and on the different dates, the Republic filed in G.R. No.
115044 the following pleadings: "Motion for Leave to File Supplemental
Motion for Reconsideration-In-Intervention" (Rollo, pp. 262-265);
"Supplemental Motion for Reconsideration-In-Intervention" (Rollo, pp. 266280); "Motion for Leave to File Second Supplemental Motion for
Reconsideration-In-Intervention and to Admit attached Second
Supplemental Motion For Reconsideration-In-intervention" (Rollo, pp. 380382); and "Second Supplemental Motion for Reconsideration-In-Intervention"
(Rollo, pp. 383-400).

Page

This Office has directed the solicitor General to bring

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

Meanwhile, on September 16, 1994, the Republic of the Philippines,

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

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(1) ADC had no legislative franchise;

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

(2) ADC admitted in G.R. No. 115044 that GAB had no

authority to issue the license or permit subject of the order
in question; and

(1.) Temporary Restraining Order dated September 15,

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

(4.) order dated October 19, 1994 granting ADC's Motion

to Amend the petition to Conform to the Evidence and
directing the issuance of a writ of preliminary mandatory
injunction "directing (Executive Secretary and the GAB
Chairman), their successors, representatives and any
government office/agency acting for an in their behalf or in
implementation of their orders earlier enjoined by a writ of
preliminary injunction issued by this court on September
30, 1994, to issue the necessary authority, licenses and
working permits to . . . Associated Development
Corporation, and its personnel and players (Rollo, pp. 216217).
They prayed that the trial court be enjoined from conducting further
proceedings in Civil Case No. 94-71656 and that said case be dismissed.
they also filed a motion for consolidation of G.R. No. 117263 with G.R. No.
115044 (G.R. No. 117263, Rollo, pp. 152-160). As prayed for, we
considered the two cases together.
In their petition in G.R. No. 117263, Executive Secretary Guingona and
Chairman Cepeda claimed that ADC had no clear right to the issuance of the
preliminary mandatory injunction because:

On November 25, 1994, the Republic, Executive Secretary Guingona and

GAB Chairman Cepeda moved for the issuance of a restraining order
enjoining Judge Pacquing and Judge Reyes from enforcing their questioned
orders and ADC from operating the jai-alai fronton (G.R. No. 17263, Rollo,
pp. 629-635). Action on the motion deferred.
II
G.R. No. 115044
Motion for Intervention
The Republic of the Philippines (Republic) represented by GAB justifies its
belated intervention in G.R. No. 115044 on the grounds that "it has an
interest involved in this case and will be affected by the Decision dated
September 1, 1994" (G.R. No. 115044, Rollo, p. 225).
The purpose of its intervention is to nullify the decision of Judge Augusto E.
Villarin of the Regional Trial Court, Branch 40, Manila, dated September 1,
1994" (G.R. No. 115044, Rollo, p. 225).
The purpose of its intervention is to nullify the decision of Judge Augusto E.
Villarin of the Regional Trial Court, Branch 40, Manila, dated September 9,
1989 in Civil Case No. 88-45660, which upheld the validity of Ordinance No.
7065 of the City of Manila granting ADC a franchise to operate a jai-alai
fronton. Mayor Gemiliano Lopez appealed said decision to the Court of
Appeals, but on February 9, 1989, he filed a Withdrawal of Appeal. The
Court of Appeals approved the withdrawal in a resolution dated May 5, 1989.

39

(3.) Order dated September 30, 1994 directing the

issuance of a Writ of preliminary Injunction directed
against the aforesaid Directive and Memorandum (Rollo,
p. 47);

On November 2, 1994, ADC and Judge Reyes filed their consolidated

Comment to the petition and supplemental petition (G.R. No. 117263, Rollo,
pp. 230-305).

Page

(2.) Order dated September 25, 1994 denying the Urgent

Motion to Recall Temporary Restraining Order and the
Urgent Supplemental Motion to Recall Temporary
Restraining Order (Rollo, p. 46);

(3) Mandamus was not available to compel the

performance of a discretionary function (G.R. No.
117263, Rollo, pp. 182-189).

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The City of Manila filed with this Court a petition for declaratory judgment to
nullify the franchise of ADC (G.R. No. 101768). The petition was dismissed
in a resolution dated October 3, 1991 "for lack of jurisdiction."
Three members of the Sangguniang Panglunsod of Manila also filed with the
Regional Trial Court, Branch 37, Manila, a petition to compel Mayor Lopez to
cancel the permit and license he issued in favor of ADC pursuant to
ordinance No. 7065 (Civil Case No. 91-58930). The petition was dismissed
on June 4, 1992. No appeal was taken from said dismissal of the case.
In the Motion for Reconsideration-In-Intervention, Supplemental Motion for
Reconsideration-in-Intervention and Second Supplemental Motion for
Reconsideration-in-Intervention, the Republic merely claimed that Ordinance
No. 7065 had been repealed by P.D. No. 771 (Rollo, pp. 228-248), that the
authority to issue permits and licenses for the operation of jai-alai had been
transferred to GAB by E.O. No. 392 of President Quirino effective July 1,
1951 and that ADC was never issued a franchise by Congress (Rollo, pp.
383-390). Nowhere in its pleadings did the Republic point out where the first
Division erred in resolving the two grounds of the petition for certiorari in
G.R. No. 115044,
which were:
(1) The decision of Judge Villarin dated September 9,
1988 in Civil Case No. 88-45660 is null and void for failure
to rule that P.D. No. 771 had revoked Ordinance No.
7065; and
(2) The decision of Judge Villarin could not be executed by
a mere motion filed on March 14, 1994, or more than five
years and six months after its promulgation.
In resolving the first issue, the First Division of this court explained that there
was no way to declare the Villarindecision null and void because the trial
court had jurisdiction over the subject matter of the action and if it failed to

In Tan v. Intermediate Appellate Court, 163 SCRA 752 (1988), the Court
held:
It is settled jurisprudence that except in the case of
judgments which are void ab initio or null and voidper
se for lack of jurisdiction which can be questioned at any
time and the decision here is not of this character
once a decision becomes final, even the court which has
rendered it can no longer alter or modify it, except to
correct clerical errors or mistakes. otherwise, there would
be no end to litigation, thus setting to naught the main role
of courts of justice, which is, to assist in the enforcement
of the rule of law and the maintenance of peace and order,
by settling justifiable controversies with finality. (See also
Fabular v. Court of Appeals, 119 SCRA 329 [1982];
Fariscal Vda. de Emnas v. Emnas, 95 SCRA 470 [1980];
Ocampo v. Caluag, 19 SCRA 917 [1967]).
As to the second issue, the First Division held that the five-year period for
executing a judgment by simple motion under Section 6 of Rule 39 of the
Revised Rules of Court should be counted from the finality of the judgment
and not from the date of its promulgation as was done by Mayor Lim and the
City of Manila. Inasmuch as the Villarindecision was appealed to the Court of
Appeals and the authority to withdraw the appeal was approved by the Court
of Appeals only on may 26, 1989, the five-year period should be counted, at
the earliest, from May 26, 1989. Reckoning the five-year period from said
date, the motion for execution of the Villarin decision was filed timely on
March 14, 1994.
Intervention as contemplated by Section 9, Rule 12 of the Revised Rules of
Court is a proceeding whereby a third person is permitted by the court
"before or during a trial" to make himself a party by joining plaintiff or uniting
with defendant or taking a position adverse to both of them Gutierrez v.
Villegas, 5 SCRA 313 [1962]). the term "trial" is used in its restrictive sense
and means the period for the introduction of evidence by both parties (Bool
v. Mendoza, 92 Phil. 892 [1953]; Provincial Government of Sorsogon v.
Stamatelaky, 65 Phil. 206 [1937]). The period of trial terminates when the

40

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

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

Page

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

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

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

Intervention as an action is not compulsory. As deduced from the permissive

word "may" in the rule, the availment of the remedy is discretionary on the
courts (Garcia v. David, 67 Phil. 279 [1939]). an important factor taken into
consideration by the courts in exercising their discretion is whether the
intervenor's rights may be fully protected in a separate proceeding (Peyer v.
Martines, 88 Phil. 72 [1951]).

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

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

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

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

Be that as it may, the Court may consider the motion to intervene, motion for
reconsideration-in-intervention, supplemental motion for reconsideration-inintervention and second supplemental motion-in-intervention as a petition
for quo warranto under Rule 66 of the revised Rules of Court. In the liberal
construction of the Rules in order to attain substantial justice, the Court has
treated petitions filed under one Rule as petitions filed under the more
appropriate Rule (Davao Fruits Corporation v. Associated Labor Union, 225
SCRA [1993]).
In quo warranto, the government can require a corporation to show cause by
what right it exercises a privilege, which ordinarily can not legally be
exercised except by virtue of a grant from the state. It is a proceeding to
determine the right to the use of a franchise or exercise of an office and to
oust the holder from its enjoyment if his claim is not well-founded (Castro v.
Del Rosario, 19 SCRA 196 [1967]).
All the essential requisites for a petition for quo warranto are compresent.
The motions were filed by the Solicitor General for the Republic of the
Philippines, represented by GAB, to question the right of ADC to operate
and maintain the jai-alai.
The motions qua petition for quo warranto assert that the authority of the
City of Manila to issue to ADC a jai-alai franchise in 1971 had been
withdrawn by E.O. No. 392 in 1951 and by R.A. No. 954 in 1954 and that

41

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

Motion qua Quo Warranto petition

Page

As of September 16, 1994, therefore, when the republic moved to intervene,

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

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

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

which will accrue to the Games and

Amusements Board as now provided by
law;

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

d. That the corporation will, in addition,

pay to the city an annual license fee of
P3,000.00 and a daily permit fee of
P200.00;

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

e. That the corporation will, to insure its

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

AN ORDINANCE AUTHORIZING THE MAYOR TO

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

Sec. 2. The Mayor and the City

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

Be it ordained by the Municipal Board of the City of

Manila, that:

b. That the games to be played daily

shall commence not earlier than 5:00
o'clock (sic) in the afternoon;
c. That the City of Manila will received a
share of 2 % on the annual gross
receipts on all wagers or bets, % of

Enacted originally by the Municipal Board on September

7, 1971; vetoed by the Mayor on September 27, 1971;
modified and amended by the Municipal Board at its
regular session today, October 12, 1971.
Approved by His Honor, the Mayor on 13 November 1971.
The said Ordinance was enacted pursuant to Section 18 (jj), the Charter of
the City of Manila (R.A. No. 409), which took effect in 1949. The charters of
two other cities Quezon City and Cebu City contained a similar
delegation of authority to grant jai-alai franchises.
Said Section 18(jj) provides:

42

a. That the construction, establishment

and maintenance of the jai-alai shall be
at a place permissible under existing
zoning ordinances of Manila;

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

Page

Sec. 1. The Mayor is authorized, as he is hereby

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

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Legislative powers. The Municipal Board shall have the
following legislative powers:

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

xxx xxx xxx

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

12. As early as 1951, the power of the local governments

to issue licenses and permits for the operation of jai-alai
was "consolidated and transferred" to the Games and
Amusements Board under E.O. No. 392 issued by then
President Elpidio Quirino (sic) took effect on January 1,
1951. Thus, in 1971, the City of Manila was without
authority to enact an ordinance authorizing the City Mayor
to issue a license/permit to private respondent for the
operation of jai-alai in Manila (Rollo, pp. 271-272).
Furthermore, the republic alleged:
13. Such consolidation and transfer of power manifest the
policy of the Government to centralize the regulation,
through appropriate institutions, of all games of chance
authorized by existing franchises of permitted by law. . . .
(Rollo, p. 272).
There is no need to dwell upon this argument for suprisingly it was the
Republic itself that repudiated it albeit after wrongfully attributing the
argument to ADC.
In its Reply filed on November 9, 1994, the Republic stated that: "Contrary to
respondent ADC's claim, it is not the position of the GAB that it is the body

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

No person, or group of persons, other than the operator or
maintainer of a fronton with legislative franchise to conduct
basque pelota (jai-alai), shall offer, take or arrange bets on
any basque pelota game or event, or maintain or use a
totalizer or other device, method or system to bet or
gamble or any basque pelota game or event.
Republic Act No. 954 did not expressly repeal Section 18 (jj). In such a case,
if there is any repeal of the prior law by the latter law, it can only be by
implication. Such kind of repeals is not favored. There is even a presumption
against repeal by implication (The Philippine American Management Co. Inc.
v. The Philippine American Management employees Association, 49 SCRA
194 [1973]).
In the same absence of an express repeal, a subsequent law cannot be
construed as repealing a prior law unless an irreconcilable inconsistency and
repugnancy exist in the terms of the new and old law (Iloilo Palay and Corn
Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]).
But more importantly, the rule in legal hermeneutics is that a special law, like
the Charter of the City of Manila, is not deemed repealed by a general law,
like R.A. No. 954 (Commissioner of Internal Revenue v. Court of Appeals,
207 SCRA 487 [1992]).
In a way also, Ordinance No. 7065 can be considered a "legislative
franchise" within the purview of R.A. No. 954, having been enacted by the
Municipal Board of the City of Manila pursuant to the powers delegated to it
by the legislature. A grant, under a delegated authority, binds the public and

43

A. It is the posture of the Republic that the power of local governments to

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

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

Page

(jj) To tax, license, permit and regulate wagers or betting

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

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It may exercise this authority by direct legislation, or

through agencies duly established having power for that
purpose. This grant when made binds the public, and is,
directly or indirectly, the Act of the State. The easement is
a legislative grant, whether made directly by the legislature
itself, or by any one of its properly constituted
instrumentalities (Justice of Pike Co. v. Plank road, 11 Ga.
246; Emphasis supplied).
If the intention of Congress in enacting R.A. No. 954 was to repeal Section
18 (jj), it could have used explicit language to that effect in order not to leave
room for interpretation.
If R.A. No. 954 repealed Section 18 (jj), why did President Marcos still issue
P.D. No. 771, expressly revoking the authority of the local governments to
issue jai-alai franchises? It can never be presumed that the President
deliberately performed useless acts.
C. The claim of the Republic that P.D. No. 771 had removed the power of
local governments to grant franchises for the maintenance and operation of
jai-alai is a non-issue. The issue raised by ADC is whether Section 3 of P.D.
No. 771 validly cancelled Ordinance No. 7065, an issue entirely different
from the claim of the Republic that P.D. No. 771 had revoked the power of
the City of Manila to grant jai-alai franchisers.
Insofar as it is applied to Ordinance No. 7065, Section 3 of P.D. No. 771
suffers from constitutional infirmities and transgresses several constitutional
provisions. Said Section 3 provides:
All existing franchisers and permits issued by local
governments are hereby revoked and may be renewed
only in accordance with third decree.
Section 3 violated the equal protection clause (Section 1 of Article IV) of the
1973 Constitution, which provided:

Less than two months after the promulgation of P.D. no. 771, President
Marcos issued P.D. No. 810, granting the Philippine Jai-Alai and
Amusement Corporation (PJAC) a franchise to operate jai-alai within the
Greater Manila Area. It is obvious that P.D. No. 771 was decreed to cancel
the franchise of ADC so that the same could be given to another entity under
P.D. No. 810.
A facially neutral statute (P.D. No. 771) may become discriminatory by the
enactment of another statute (P.D. No. 810) which allocates to a favored
individual benefits withdrawn under the first statute (Ordinance No. 7065),
and when there is no valid basis for classification of the first and second
grantees. The only basis for distinction we can think of is that the second
grantee was Benjamin Romualdez, a brother-in-law of President Marcos.
Section 3 violated the due process clause of the Constitution, both in its
procedural and substantive aspects. The right to due process is guaranteed
by the same Section 1 of Article IV of the 1973 Constitution.
Ordinance No. 7065, like any franchise, is a valuable property by itself. The
concept of "property" protected by the due process clause has been
expanded to include economic interests and investments. The rudiments of
fair play under the "procedural due process" doctrine require that ADC
should at least have been given an opportunity to be heard in its behalf
before its franchise was cancelled, more so when the same franchise was
given to another company.
Under the "substantive due process" doctrine, a law may be voided when it
does not relate to a legitimate end and when it unreasonably infringes on
contractual and property rights. The doctrine as enunciated in Allgeyer v.
Louisiana, 165 U.S. 578 (1897) can be easily stated, thus: the government
has to employ means (legislation) which bear some reasonable relation to a
legitimate end (Nowak, Rotunda and Young, Constitutional Law 436, 443 [2d
ed]).
When President Marcos issued P.D. No. 771, he did not have public interest
in mind; otherwise, he would have simply outlawed jai-alai as something
pernicious to the public. Rather, all what he wanted to accomplish was to
monopolize the grant of jai-alai franchisers.

44

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

No person shall be deprived of life, liberty, or property

without due process of law, nor shall any person be
denied the equal protection of the laws.

Page

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

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

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

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

which provided:

D. The Republic hypothesized that the said Constitutional guarantees

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

REVOKING ALL POWERS AND AUTHORITY OF LOCAL

GOVERNMENT TO GRANT FRANCHISE, LICENSE OR
PERMIT AND REGULATE WAGERS OR BETTING BY
THE PUBLIC ON HORSE AND DOG RACES, JAI-ALAI
OR BASQUE PELOTA, AND OTHER FORMS OF
GAMING.
The title of P.D. No. 771 refers only to the revocation of the power of local
governments to grant jai-alai franchises. It does not embrace nor even
intimate the revocation of existing franchises.
Lastly, Section 3 impaired the obligation of contracts prohibited by Section
11 of Article IV of the 1973 Constitution.
As authorized by Section 18(jj), Ordinance No. 7065 grants ADC a permit "to
establish, maintain and operate a jai-alai in the City of Manila, under the
following terms and conditions and such other terms and conditions as he
[the Mayor] may prescribe for good reasons of general interest." (Rollo, p.
24).

The distinction between the two is that a privilege is bestowed out of pure
beneficence on the part of the government. There is no obligation or burden
imposed on the grantee except maybe to pay the ordinary license and permit
fees. In a franchise, there are certain obligations assumed by the grantee
which make up the valuable consideration for the contract. That is why the
grantee is first required to signify his acceptance of the terms and conditions
of the grant. Once the grantee accepts the terms and conditions thereof, the
grant becomes a binding contract between the grantor and the grantee.
Another test used to distinguish a franchise from a privilege is the big
investment risked by the grantee. In Papa v. Santiago, supra, we held that
this factor should be considered in favor of the grantee. A franchise in which
money has been expended assumes the character of a vested right
(Brazosport Savings and Loan Association v. American Savings and Loan
Association, 161 Tex. 543, 342 S.W. 2d. 747).
The cases cited by the Republic to the effect that gambling permits or
license issued by municipalities can be revoked when public interest so
requires, have never addressed this issue, obviously because there were no
significant financial investments involved in the operation of the permits or
licenses.

Section 11 of Article IV of the 1973 Constitution provided:

No law impairing the obligation of contracts shall be
passed.

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

45

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

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

Page

Every bill shall embrace only one subject which shall be

expressed in the title thereof.

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The stance of the Republic that the gambling franchises it issues are not
covered by the constitutional mantle protecting property rights is ill-advised
considering that it is planning to operate gambling establishments involving
substantial foreign investments in putting up the facilities thereof.
The belabored arguments of the Republic on the evils of gambling fall to the
ground upon a showing that ADC is operating under an existing and valid
franchise (Rollo, pp. 422-423).

However, the operative law on the siting of jai-alai establishments is no

longer E.O. No. 135 of President Quirino but R.A. No. 938 as amended by
R.A. No. 1224.
Under said law only night clubs, cabarets, pavillions, or other similar places
are covered by the 200-lineal meter radius. In the case of all other places of
amusements except cockpits, the proscribed radial distance has been
reduced to 50 meters. With respect to cockpits, the determination of the
radial distance is left to the discretion of the municipal council or city board
(Sec. 1).
F. The Republic also questions the lack of the period of the grant under
Ordinance No. 7065, thus making it indeterminate (G.R. No. 117263, Rollo,
pp. 500-505). The ordinance leaves it to the Mayor of the City of Manila to
lay down other terms and conditions of the grant in addition to those
specified therein. It is up to the parties to agree on the life or term of the
grant. In case the parties fail to reach an agreement on the term, the same
can be fixed by the courts under Article 1197 of the Civil Code of the
Philippines, which provides as follows:
If the obligation does not fix a period, but from its nature
and the circumstances it can be inferred that a period was
intended, the courts may fix the duration thereof.

E. The Republic questioned the siting of the ADC's fronton as violative of

E.O. No. 135 of President Quirino. Under said executive issuance, no pelota
fronton can be maintained and operated "within a radius of 200 lineal meters
from any city hall or municipal building, provincial capital building, national
capital building, public plaza or park, public school, church, hospital, athletic
stadium, or any institution of learning or charity."
According to the certificate issued by the National Mapping Information
Authority, the ADC fronton is within the proscribed radius from the Central
Bank of the Philippines, the Rizal Stadium, the Manila Zoo, the public park or
plaza in front of the zoo, the Ospital ng Maynila, a police precinct and a
church (G.R. No. 115044, Rollo, pp. 424-427).
On the other hand, a certificate issued by the Officer-in-charge of the Office
of the City Engineer of the City of Manila attests to the fact that not one of
the buildings or places mentioned in the certificate submitted by the Republic

The courts shall also fix the duration of the period when it
depends upon the will of the debtor.
In every case, the courts shall determine such period as
may under the circumstances have been probably
contemplated by the parties. Once fixed by the courts, the
period cannot be changed by them.
III
G.R. No. 117263

46

That a franchise is subject to regulation by the state by virtue of its police

power is conceded. What is not acceptable is the Republic's proposition that
the power to regulate and supervise includes the power to cancel the
franchise altogether.

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

Page

government may be said to have no property rights because they have no

traditionally recognized proprietary interest therein. The case of Vinco v.
Municipality of Hinigaran, 41 Phil. 790 (1917) and Pedro v. Provincial Board
of Rizal, 56 Phil 123 (1931), holding that a license to operate cockpits is a
mere privilege, belong to this vintage. However, the right-privilege dichotomy
has come to an end when the courts have realized that individuals should
not be subjected to the unfettered whims of government officials to withhold
privileges previously given them (Van Alstyne, The Demise of the Right
Privilege Distinction in Constitutional Law, 81 Harvard L. R. 1439 [1968]). To
perpetuate such distinction would leave many individuals at the mercy of
government officials and threaten the liberties protected by the Bill of Rights
(Nowak, Rotunda and Young, Constitutional Law 546 [2nd ed]).

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

(3) the Writ of Preliminary Injunction dated September 30,
1994 (Rollo, pp. 1-2).
The supplemental petition in said case seeks to nullify the Order dated
October 19, 1994 (Rollo, pp. 166-225).
According to Executive Secretary Guingona and GAB Chairman Cepeda,
respondent Judge Reyes acted without jurisdiction and with grave abuse of
discretion in issuing said orders and writ of preliminary injunction because:
(1) Civil Case No.
94-71656 was not properly assigned to him in accordance with Section 7,
Rule 22 of the Revised Rules of Court; (2) the enforcement of the Directive
and Memorandum sought to be enjoined had already been performed or
were already fait accompli; and (3) respondent judge pre-empted this Court
in resolving the basic issues raised in G.R. No. 115044 when he took
cognizance of Civil Case No. 94-71656.
A. At the outset, it should be made clear that Section 7 of Rule 22 of the
Revised Rules of Court does not require that the assignment of cases to the
different branches of a trial court should always be by raffle. The Rule talks
of assignment "whether by raffle or otherwise." What it requires is the giving
of written notice to counsel or the parties "so that they may be present
therein if they so desire."
Section 7 of Rule 22 provides:
Assignment of cases. In the assignment of cases to the
different branches of a Court of First Instance, or their
transfer from one branch to another whether by raffle or
otherwise, the parties or their counsel shall be given
written notice sufficiently in advance so that they may be
present therein if they so desire.

To await the regular raffle before the court can act on the motion for
temporary restraining order may render the case moot and academic.
Hence, Administrative Circular No. 1 dated January 28, 1988 was issued by
this Court allowing a special raffle. Said Circular provides:
8.3. Special raffles should not be permitted except on
verified application of the interested party who seeks
issuance of a provisional remedy and only upon a finding
by the Executive Judge that unless a special raffle is
conducted irreparable damage shall be suffered by the
applicant. The special raffle shall be conducted by at least
two judges in a multiple-sala station.
In a case where a verified application for special raffle is filed, the notice to
the adverse parties may be dispensed with but the raffle has to "be
conducted by at least two judges in a multiple-sala station."
The Republic does not claim that Administrative Circular No. 1 has been
violated in the assignment of the case to respondent Judge. The
presumption of regularity of official acts therefore prevails.
Going back to Section 7 of Rule 22, this Court has rules in Commissioner of
Immigration v. Reyes, 12 SCRA 728 (12964) that the purpose of the notice
is to afford the parties a chance to be heard in the assignment of their cases
and this purpose is deemed accomplished if the parties were subsequently
heard. In the instant case, Executive Secretary Guingona and GAB
Chairman Cepeda were given a hearing on the matter of the lack of notice to
them of the raffle when the court heard on September 23, 1994 their Motion
to Recall Temporary Restraining Order, Urgent Supplemental Motion to
Recall Temporary Restraining Order and Opposition to Issuance of a Writ of
Preliminary Issuance of a Writ of Preliminary Injunction (G.R. No.
117263, Rollo p. 434).
Petitioners in G.R. No. 117263 failed to shown any irregularity attendant to
the raffle or any prejudice which befell them as a result of the lack of notice
of the raffle of Civil Case No. 94-71656.

47

(1) the Temporary Restraining Order dated September 15,

1994;

However, there may be cases necessitating the issuance of a temporary

restraining order to prevent irreparable injury on the petitioner.

Page

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

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In the case at bench, the status quo which the questioned orders of Judge
Reyes sought to maintain was that ADC was operating the jai-alai pursuant
to Ordinance No. 7065 of the City of Manila, the various decisions of the
different courts, including the Supreme Court, and the licenses, permits and
provisional authority issued by GAB itself.
At times, it may be necessary for the courts to take some affirmative act
essential to restore the status quo (Iowa Natural Resources Council v. Van
See [Iowa] 158 N.W. 2d. 111).
The right to conduct a business or to pursue one's business or trade without
wrongful interference by others is a property right which equity will, in proper
cases, protect by injunction, provided of course, that such occupation or
vocation is legal and not prohibited by law (Rance v. Sperry & Hutchinson
Co., 410 P. 2d 859).
Had not the Directive to close the operation of ADC's jai-alai and the
implementing Memorandum been issued, there would have been no need
for the issuance of the orders of the Regional Trial Court. The need for said
equitable reliefs becomes more evident if we consider that the Executive
Secretary himself had entertained doubts as to the legality of his action
because in the same Directive he instructed the Solicitor General to obtain a
judicial ruling on the legal issues raised.
C. Respondent Judge Reyes did not pre-empt this Court in deciding the
basic issues raised in G.R. No. 115044 when it assumed jurisdiction over
Civil Case No. 94-71656 and issued the orders questioned in G.R. No.
117263.

PUNO, J., dissenting:

The petitions at bench involve great principles of law in tension. On balance
at one end is the high prerogative of the State to promote the general
welfare of the people thru the use of police power; on the opposite end is the
right of an entity to have its property protected against unreasonable
impairment by the State. courts accord the State wide latitude in the exercise
of its police power to bring about the greatest good of the greatest number.
But when its purpose is putrefied by private interest, the use of police power
becomes a farce and must be struck down just as every arbitrary exercise of
government power should be stamped out.
I will confine myself to the jugular issue of whether or not Associated
Development Corporation (ADC) still possesses a valid franchise to operate
jai-alai in manila. The issue is multi-dimensional considering its constitutional
complexion.
First, the matrix of facts. On June 18, 1949, congress enacted Republic Act
No. 409, otherwise known as the Charter of Manila. Section 18 (jj) gave to
the Municipal Board (now City Council) the following power:
(jj) To tax, license, permit and regulate wagers or betting
by the public on boxing, sipa, bowling, billiards, pools,
horse or dog races, cockpits, jai-alai, roller or ice skating
or any porting or athletic contest, as well as grant
exclusive rights to establishments for this purpose,
notwithstanding any existing law to the contrary.
On June 20, 1953, congress passed Republic Act No. 954 entitled "An Act to
Prohibit Certain Activities in Connection with Horse Races and Basque
pelota Games (Jai-Alai) and to Prescribe penalties for its Violation." Sections
4 and 5 of the law provide:
xxx xxx xxx

48

B. The purpose of a temporary restraining order or preliminary injunction,

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

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

Page

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

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On September 7, 1971, the Municipal Board of Manila approved Ordinance

No. 7065 "authorizing the Mayor to Allow and Permit the Associated
Development Corporation to Establish, Maintain and Operate a Jai-Alai in
the city of Manila, Under Certain Terms and Conditions And For Other
Purposes."
On September 21, 1972, martial law was declared by then president
Ferdinand E. Marcos. The 1971 Constitution, as amended, authorized the
former President to exercise legislative powers. Among the laws he decreed
is P.D. No. 771, "Revoking All Powers And Authority Of Local
Government(s) to Grant Franchise, License Or Permit And Regulate Wagers
Or Betting By The Public On Horse And Dog Races, Jai-Alai, Or Basque
pelota And Other Forms of Gambling." its Text states:
xxx xxx xxx
Sec. 1. Any provision of law to the contrary
notwithstanding, the authority of Chartered Cities and
other local governments to issue license, permit or any
form of franchise to operate, maintain and establish horse
and dog race tracks, jai-alai or other forms of gambling is
hereby revoked.
Sec. 2. Hereafter all permit or franchise to operate,
maintain and establish horse and dog race tracks, jai-alai
and other forms of gambling shall be issued by the
national government upon proper application and

Sec. 3. All existing franchises and permits issued by local

government are hereby revoked and may be renewed only
in accordance with this Decree.
P.D. No. 771 was enacted on August 20, 1975 and purportedly revoked the
permit of ADC to operate. Before two (2) months could elapse or on October
16, 1975, then President Marcos issued P.D. No. 810 granting a franchise to
Philippine Jai-Alai and Amusements corporation to conduct jai-alai games in
Manila. it is not disputed that his brother-in-law, Mr. Alfredo "Berjo"
Romualdez, held the controlling interest in Philippine Jai-alai and
Amusements Corporation. apparently, the favored treatment given to Mr.
Romualdez and company did not sit well with former President Corazon C.
Aquino. On May 8, 1987, she issued Executive Order No. 169 repealing P.D.
No. 810. Nevertheless, she allowed P.D. No. 771 to stay in our statutes
book.
ADC thought it could resume its jai-alai operation. On May 5, 1988, it sought
from then mayor Gemiliano C. Lopez, Jr., of Manila a permit to operate on
the strength of Ordinance No. 7065. The request was refused and this
Spawned suits 1 all won by ADC. In Civil Case No. 88-45660, filed in Br. 40,
RTC, Manila, Judge Augusto E. Villarin ruled that Ordinance No. 7065
created a binding contract between the city of Manila and ADC, and hence,
the City Mayor had no discretion to deny ADC's permit. The ruling was
appealed to the Court of Appeals where it was docketed as CA-G.R. SP No.
16477. On February 9, 1989, however, Mayor Lopez withdrew the city's
appeal. Still, the legal problems of ADC did not disappear. Manila Mayor
Alfredo Lim who succeeded Mayor Lopez again refused to issue ADC's
permit despite orders of Judge Felipe G. Pacquing. 2 Threatened with
contempt, Mayor Lim filed with this Court G.R. No. 115044, a petition
forcertiorari. He alleged that he could not be compelled to enforce the
Decision in Civil Case No. 88-45660 as the same is null and void for want of
jurisdiction of the court that rendered it. He likewise contended that
Ordinance No. 7065 had been revoked by P.D. No. 771. On September 1,
1994, the First division of this court, speaking thru Mr. Justice Camilo
Quiason, dismissed Mayor Lim's petition. It held:

49

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

with legislative franchise to conduct basque pelota games
shall offer, take, or arrange bets on any basque pelota
game or event, or maintain or use a totalizator or to her
device, method or system to bet or gamble on any basque
pelota game or event outside the place, enclosure, or
fronton where the basque pelota game is held.

verification of the qualifications of the

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

Page

Sec. 4. No person, or group of persons, other than the

operator or maintainer of a fronton with legislative
franchise to conduct basque pelota games (Jai-Alai), shall
offer, take or arrange bets on any basque pelota game or
event, or maintain or use a totalizer or other device,
method or system to bet or gamble on any basque pelota
game or event.

PubCorp Cases
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Having jurisdiction over the civil case, whatever error may

be attributed to the trial court, is simply one of judgment,
not of jurisdiction. an error of judgment cannot be
corrected by certiorari but by appeal (Robles v. House of
Representatives Electoral Tribunal, 181 SCRA 780 [1990];
De Castro v. Delta Motor Sales Corporation, 57 SCRA 344
[1978]; Galang v. Endencia, 73 Phil. 391 [1941].
The issue on the cancellation of Ordinance No. 7065 by
president Marcos could have been raised as a special
defense in Civil Case No. 88-54660 but was not . . .
The City of Manila should have pursued in the appellate
courts its appeal questioning the dismissal of Civil Case
No. 91-58913, where the trial court ruled that Mayor Lopez
and the city could no longer claim that Ordinance No.
7065 had been cancelled by president Marcos because
they failed to raise this issue in Civil Case No. 88-54660.
At any rate, the unilateral cancellation of the franchise,
which has the status of a contract, without notice, hearing
and justifiable cause is intolerable in any system where
the rule of Law prevails (Poses v. Toledo Transportation
Co., 62 Phil. 297 [1935]; Manila electric Co., v. Public
utility commissioners, 30 Phil. 387 [1915].
Upon its receipt, Mayor Lim manifested he would comply with the Decision.
He did not file a motion for reconsideration. it was then that the Republic
started its own legal battle against ADC. it intervened in G.R. No. 115044,
raising several issues, especially ADC's lack of a valid legislative franchise
to operate jai-alai. No less than Executive Secretary Teofisto Guingona
directed the Games and Amusement Board, then headed by Mr. Francisco
R. Sumulong, jr., to hold in abeyance the grant of authority, or if any had
been issued, to withdraw such grant of authority in favor of ADC. The GAB
dutifully ordered ADC to cease and desist from operating the Manila jai-alai.
ADC again rushed to the RTC of Manila and filed Civil Case No. 94-71656
which was raffled to Br. 14, presided by respondent Judge Vetino Reyes.

While the petitions at bench are checkered with significant substantive and
procedural issues, I will only address the contention that ADC has no
existing legislative franchise. The contention is anchored on two (2)
submissions: first, ADC has no legislative franchise as required by R.A. No.
954, and second, even if the city of Manila licensed ADC to operate jai-alai,
its authority was nevertheless revoked by section 3 of P.D. No. 771.
I find as completely baseless petitioners' submission that R.A. No. 954
requires a legislative franchise to operate a jai-alai, in effect, revoking the
power of the City of Manila to issue permits for the same purpose as granted
by its Charter. A 20-20 visual reading of R.A. No. 954 will not yield the
suggested interpretation by petitioners. the titles of R.A. No. 954 will
immediately reveal that the law was enacted to achieve a special purpose. It
states: "An Act To Prohibit Certain Activities In Connection With Horse
Races And Basque pelota Games (Jai-Alai), And To Prescribe Penalties For
its Violation." The prohibited activities related to jai-alai games are specified
in sections 4 to 6, viz:
Sec. 4. No person, or group of persons, other than the
operator or maintainer of a fronton with legislative
franchise to conduct basque pelota games (Jai-Alai), shall
offer, take or arrange bets on any basque pelota game or
event, or maintain or use a totalizator or other device,
method or system to bet or gamble on any basque
pelota game or event.
Sec. 5. No person, operator, or maintainer of fronton with
legislative franchise to conduct basque pelota games shall
offer, take or arrange bets on any basque pelota game or
event, or maintain or use a totalizator or other device,
method or system to bet or gamble on any basque
pelota game or event outside the place, enclosure,
or fronton where the basque pelota game is held.

50

Petitioners failed to appreciate the distinction between a

void and an erroneous judgment and between jurisdiction
and the exercise of jurisdiction.

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

Page

xxx xxx xxx

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The Explanatory Note 4 of House Bill 3204, the precursor of R.A. No. 954,
also reveals that the intent of the law is only to criminalize the practice of
illegal bookies and game-fixing in jai-alai. It states:
This bill seeks to prohibit certain anomalous practice of
"bookies" in connection with the holding of horse races or
"basque pelota" games. The term "bookie" as commonly
understood refers to a person, who without any license
therefor, operates outside the compounds of racing clubs
and accepts bets from the public. They pay dividends to
winners minus a commission, which is usually 10%.
Prosecutions of said persons have been instituted under
Act No. 4240 which was enacted in 1935. However, in a
recent opinion released by the City Fiscal of Manila he
maintains that Act No. 4240 has already been repealed,
so that the present law regulating ordinary horse races
permits "bookies" to ply their trade, but not on
sweepstakes races and other races held for charitable
purposes. With the operation of "booking" places in the
City of Manila, the Government has been losing no less
than P600,000.00 a year, which amount represents the tax
that should have been collected from bets made in such
places. for these reasons, the approval of the bill is
earnestly recommended.
As said Explanatory Note is expressive of the purpose of the bill, it gives a
reliable keyhole on the scope and coverage of R.A. No. 954. 5 Nothing from
the Explanatory Note remotely suggests any intent of the law to revoke the
power of the City of Manila to issue permits to operate jai-alai games within
its territorial jurisdiction.
The Debates 6 in Congress likewise reject the reading of R.A. No. 954 by
petitioners, thus:

RESUMPTION OF SESSION
THE SPEAKER. The session is
resumed
MR. CINCO. Mr. Speaker, I withdraw
my motion for postponement.
MR. CALO. Mr. Speaker, will the
gentleman may yield, if he so desires.
MR. ZOSA. Willingly.
MR. CALO. What is the national import
of this bill?
MR. ZOSA. Mr. Speaker, this bill
prohibits certain activities in connection
with horse races and jai-Alai games
which are
licensed by the government. At present,
there are many
practices in connection with the holding
of these games
which deprive the government of income
that should
legally go into the government coffers as
taxes.
MR. CALO. Is not this matter of national
importance because Jai-Alai
games and horse races are held only in
Manila?
MR. ZOSA. Precisely, Mr. Speaker, they
are played on a big scale, and
there are many practices which deprive
the government of
income to which it is entitled. I think the
gentleman from

51

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

xxx xxx xxx

Page

Sec. 6. No person or group of persons shall fix a basque

pelota game for the purpose of insuring the winning of
certain determined pelotari or pelotaris.

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To top it all, the text of R.A. no. 954 itself does not intimate that it is
repealing any existing law, especially section 18 (jj) of R.A. no. 409,
otherwise known as the Charter of Manila. Indeed, R.A. No. 954 has no
repealing provision. The reason is obvious it simply prohibited certain
practices in jai-alai then still unregulated by the laws of the land. It did not
regulate aspects of jai-alai already regulated by existing laws, like the matter
of whether it is the national government alone that should issue franchises to
operate jai-alai games.
The subsequent enactment of P.D. No. 771 on August 20, 1975 further
demolished the submission of petitioners. In clear and certain language,
P.D. no. 771 recalled the owner of local governments to issue jai-alai
franchises and permits. It also revoked existing franchises and permits
issued by local governments. If R.A. no. 954 had already disauthorized local
governments from granting franchisers and permits, there would be no need
to enact P.D. no. 771. No rule of statutory construction will be considered
any law a meaningless redundancy.
The passage of P.D. No. 771, also negates petitioners' insistence that for
ADC to continue operating, it must show it has a franchise from Congress,
not just a permit from the City of Manila. The suggested dichotomy between
a legislative franchise and city permit does not impress. If the City of Manila
is empowered to license the ADC it is because the power was delegated to it
by Congress. The acts of the City of Manila in the exercise of its delegated
power bind Congress as well. Stated otherwise, the permit given by the City
to ADC is not any whit legally inferior to a regular franchise. Through the
years, the permit given by the City endows the grantee complete right to
operate. Not once, except in these cases, has the national government
questioned the completeness of his right. For this reason, P.D. No. 771 has
to take revoke all existing franchises and permits without making any
distinction. It treated permits in the same class as franchises.
Petitioners' second line of argument urges that in any event, Section 3 of
P.D. No. 771 expressly revoked allexisting franchises and permits to operate

It was the legendary Chief Justice Marshall who first used the phrase police
power in 1824. 8 Early attempts to fix the metes and bounds of police power
were unsuccessful. 9 For of all the inherent powers of the State, police power
is indubitably the most pervasive, 10 the most insistent and the least
limitable. 11 Rooted on the latin maxims, salus populi suprema est lex (the
welfare of the people if the supreme law) and sic utere tuo ut alienum non
laedas (so use your property as not to injure the property of others), it was
not without reason for Justice Holmes to stress that its reach extends "to all
the great public needs." 12 A similar sentiment was echoed by our own
Justice Laurel in Alalang v. Williams 13 who defined police power as the
"state authority to enact legislation that may interfere with personal liberty or
property in order to promote the general welfare." Over the years, courts
recognized the power of legislature to enact police regulations on broad
areas of state concern: (a) the preservation of the state itself and the
unhindered execution of its legitimate functions; (b) the prevention and
punishment of crime; (c) the preservation of the public peace and order; (d)
the preservation of the public safety; (e) the purity and preservation of the
public morals; (f) the protection and promotion of the public health (g) the
regulation of business, trades, or professions the conduct of which may
affect one or other of the objects just enumerated; (h) the regulation of
property and rights of property so far as to prevent its being used in a
manner dangerous or detrimental to others; (i) the prevention of fraud,
extortion, and oppression; (j) roads and streets, and their preservation and
repair; and (k) the preservation of game and fish. 14
But while the State is bestowed near boundless authority to promote public
welfare, still the exercise of police power cannot be allowed to run riot in a
republic ruled by reason. Thus, our courts have laid down the test to
determine the validity of a police measure as follows: (1) the interest of the
public generally, as distinguished from those of particular class, requires its
exercise; and (2) the means employed are reasonably necessary for the
accomplishment of the purpose and not unduly oppresive upon
individuals. 15 Deeper relexion will reveal that the test reiterates the essence
of our constitutional guarantees of substantive due process, equal
protection, and non-impairment of property rights.
We now apply this lucidly-lined test to the petitions at bench. To reiterate,
P.D. No. 771 utilized two methods to regulate jai-alai: First, it reverted the

52

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

law. 7

jai-alai games granted by local governments, including the permit issued to

ADC by the City of Manila through Ordinance No. 7065. For its resolution,
petitioners' argument requires a re-statement of the requirements for the
valid exercise of police power.

Page

Agusan is a member of the Committee

on Appropriations.
The governments will have more
revenues, if we shall
approve this bill.

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

The second method adopted by Section 3 of P.D. No. 771 which

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

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

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

It is also my respectful submission that the unconstitutionality of section 3 of

P.D. No. 771 was not cured when former President Aquino used it in
revoking P.D. No. 810 which granted Philippine Jai-Alai and Amusements

53

I concede that the first method is invulnerable even to the strongest of

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

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

Page

power to issue franchise and permit to the national government, second, it

revoked all existing franchise and permit issued by local governments.

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

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

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

54

But while I wholeheartedly subscribe to the many impeccable theses of Mr.

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

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

Page

Corporation a franchise to operate jai-alai in Manila. The subsequent use of

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

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The constitutionality of P.D. 771 was not in issue in Lim vs. Pacquing,
promulgated by the court's first Division last September, 1994, where this
court sustained an order by Judge Pacquing issued in Civil Case No. 8845660 compelling Manila Mayor Alfredo S. Lim to issue a permit to operate a
jail fronton in favor of the Associated Development Corporation (ADC)
pursuant to Manila City Ordinance No. 7065.
After the City of Manila subsequently granted ADC a permit to operate the
jai-alai fronton, Chairman Francisco Sumulong, Jr. of the Games and
Amusements Board issued on September 9, 1994 a provisional authority to
open the fronton subject to certain conditions imposed therein. In relation to
this, the GAB likewise issued to the ADC, on 12 September 1994, License
No. 94-008 upon payment of the corresponding fees.
On September 13, 1994, Executive Secretary Teofisto Guingona directed
GAB Chairman Sumulong "to hold in abeyance the grant of authority or if
any has been issued, to withdraw such grant of authority" 1 to the ADC.
Consequently, on September 14, 1994, the GAB Chairman revoked the
provisional authority issued by his office, until the legal issues raised in the
September 13 directive of the Executive Secretary are resolved in the proper
court. Said directive identified the legal issues as centering on 1) the
constitutionality of P.D. 771; 2) the validity of the apparent grant in perpetuity
of a municipal franchise to maintain jai-alai operations; and, 3) the power of
the city of Manila to issue a jai-alai franchise in view of Executive Order 392
which transferred from local governments to the GAB the power to regulate
jai-alai.
Reacting to the cancellation of its provisional authority to maintain jai-alai
operations, ADC, on September 15, 1994 filed a petition for
prohibition, mandamus, injunction and damages with prayer for temporary
restraining order and writ of preliminary injunction in the Manila Regional
Trial Court of against Executive Secretary Guingona and Chairman

On September 16, 1994 GAB, representing the Republic of the Philippines,

filed a motion for intervention, for leave to file a motion for reconsiderationin-intervention and for reference of the case to the Court en banc in G.R. No.
115044. Acting on this motion, the First Division referred the case to the
Court en banc, which, in a resolution dated 20 September 1994, accepted
the same and required the respondents therein to comment.
On October 11, 1994 the Executive Secretary and the new GAB Chairman
Domingo Cepeda, Jr. filed with this Court a petition for certiorari, prohibition
and mandamus assailing Judge Vetino Reyes' earlier order.
On October 19. 1994, Judge Reyes issued another order granting the ADB's
motion for a writ of preliminarymandatory injunction against the Executive
Secretary and the GAB Chairman and to compel them to issue the
necessary authority, licenses and working permits to the ADC, its personnel
and players.
The government sought leave to file a supplemental petition (and to admit
attached supplemental petition) with urgent prayer for a restraining order
assailing the October 19, 1994 Order of Judge Reyes. We granted leave to
file said supplemental petition and to admit supplemental petition and
required respondents therein to file their comment on October 25, 1994.
The ADC maintains it original position that Ordinance No. 7065, enacted
pursuant to the Charter of the City of Manila under Republic Act No. 409
granted a valid and subsisting municipal franchise for the operation of the
Basque pelota game jai alai. In response to the government's vehement
objections against ADC's operation of its gambling operations 2 the ADC for
the first time challenged the constitutional validity of P.D. No. 771 insofar as
it revoked the authority granted to it by Ordinance No. 7065 as violative of
the non-impairment of contracts and equal protection clauses of the
constitution. Ordinance 7065 reads:
Sec. 1. The Mayor is authorized, as he is hereby
authorized to allow and permit the Associated
Development Corporation to establish, maintain and
operate a jai-alai in the City of Manila under the following
terms and conditions and such other terms and conditions

55

Not necessarily. Economic realities have blurred distinctions. The State

itself, though in virtuous garb, has at various times allowed a relaxation of
existing rules proscribing gambling and devised a system of regulations,
local and national, through which gambling and otherwise illicit gaming
operations may be maintained by those licensed to do so. As the system has
never been perfect, conflict, such as that which existed in the case at bench,
occasionally arises.

Sumulong. The Regional Trial court of manila, Branch 4, through Judge

Vetino Reyes on the same day issued an order enjoining the Executive
Secretary and the GAB Chairman from implementing their directive and
memorandum, respectively.

Page

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

PubCorp Cases
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b. That the games to be played daily shall commence not

earlier than 5:00 o'clock (sic) in the afternoon;
c. That the City of Manila will receive a share of 21/2% of
the annual gross receipts of all wagers or bets % of
which will accrue to the Games and Amusements Board
as now provided by law;
d. That the corporation will in addition pay to the city an
annual license fee of P3,000.00 and a daily permit fee of
P200.00;
e. That the corporation will to insure its faithful compliance
of all the terms and conditions under this ordinance, put up
a performance bond from a surety acceptable to the City,
in the amount of at least P30,000.00.
xxx xxx xxx
Sec. 3 This ordinance shall take effect upon its approval.
The above-quoted ordinance is notable in two respects: 1) the absence of a
period of expiration suggests that the grant of authority to operate the
Basque pelota game jai-alai seems to have been granted in perpetuity and
2) while the grant of authority under the Ordinance was made pursuant to
R.A. 409, the City Charter of Manila, the authority granted could best be
viewed as a grant of license or permit, not a franchise. Nowhere is it
pretended that Ordinance 7065 is a franchise enacted pursuant to the
legislative powers of the Municipal Board of the City of Manila under Section
18 (jj) thereof.
The absence of authority of the Manila Municipal Board to issue a franchise,
notwithstanding its legislative powers, is furthermore evident in the abovecited Charter provision regulating gambling and other gaming
establishments which enumerates the following powers:

Clearly the, if Ordinance 7065 merely grants a permit or a license to operate

the jai-alai fronton, I see no conflict with a national law, duly enacted
pursuant to legitime franchise to operate certain gambling and gaming
operations, generally viewed as deleterious to the public welfare and morals,
for the purpose of regulating the same and raising revenue. In other words,
the national government may well validly require operators of such
establishments to first secure a legislative franchise before starting their
operations. After securing the proper legislative franchise, they may take
then exercise whatever authority granted to them by local legislative bodies
pursuant to the permits or licenses granted by these bodies. This is
essentially the spirit ordained by at least two legislative issuances relating to
jai-alai and other gambling operations passed before and after the Manila
City Council issued the ADC's permit to operate.
In June of 1952, Congress enacted R.A. 392 which forbade the taking or
arranging of bets on any basque pelota game by any person or entity other
than one with a legislative franchise. 3 After the ADC was issued its permit by
the City of Manila in 1971, President Marcos issued P.D. 771 pursuant to his
legislative powers during martial Law, which revoked local authority to grant
franchise to certain gambling operations including jai-alai. Section 3 thereof
expressly revoked existing gambling franchise issued by the local
governments. When President Corazon Aquino cancelled the franchise
granted to the Philippine Jai-alai and Amusement Corporation in 1987, she
kept P.D. 771, which revoked all authority by local governments to
issue franchises for gambling and gaming establishments on one hand, and
the municipal ordinance of the City of Manila, granting a permit or license to
operate subject to compliance with the provisions found therein, on the other
hand, a legislative franchise may be required by the government as a
condition for certain gambling operations. After obtaining such franchise, the
franchisee may establish operations in any city or municipality allowed under
the terms of the legislative franchise, subject to local licensing requirements.
While the City of Manila granted a permit to operate under Ordinance No.
7065, this permit or authority was at best only a local permit to operate and
could be exercised by the ADC only after it shall have obtained a legislative
franchise.
This skirts the constitutional issue. Both P.D. 771 and Ordinance 7065 can
stand alongside each other if one looks at the authority granted by the
charter of the City of Manila together with Ordinance No. 7065 merely as an

56

a. That the construction, establishment, and maintenance

of the jai-alai shall be at a place permissible under existing
zoning ordinances of Manila;

(jj) To tax, license, permit and regulate wagers of betting

by the public on boxing . . . cockpits, jai-alai . . . as well as
this purpose, notwithstanding any existing law to the
contrary.

Page

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

general interest:

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The disturbing implications of a grant of a "franchise," in perpetuity, to the

ADC militates against its posture that the government's insistence that the
ADC first obtain a legislative franchise violates the equal protection and
impairment of Contracts clauses of the Constitution. By their very nature,
franchise are subject to amendment, alteration or revocation by the State
whenever appropriate. Under the exercise of its police power, the State
through its requirement for permits, licenses and franchises to operate,
undertakes to regulate what would otherwise be an illegal activity punished
by existing penal laws. The police power to establish all manner of regulation
of otherwise illicit, immoral and illegal activities is full, virtually illimitable and
plenary. 7
In Edu v Ericta 8 we defined the police power as "the state authority to enact
legislation that may interfere with personal liberty or property in order to
promote the general welfare." In its exercise, the State may impose
appropriate impositions or restraints upon liberty or property in order to
foster the common good. 9 Such imposition or restraint neither violates the
impairment of contracts nor the equal protection clauses of the Constitution if
the purpose is ultimately the public good. 10
Restraints on property are not examined with the same microscopic scrutiny
as restrictions on liberty. 11 Such restraints, sometimes bordering on outright
violations of the impairments of contract principle have been made by this

In Lim vs. Pacquing, I voted to sustain the ADC's position on issues almost
purely procedural. A thorough analysis of the new issues raised this time,
compels a different result since it is plainly obvious that the ADC, while
possessing a permit to operate pursuant to Ordinance 7065 of the City of
Manila, still has to obtain a legislative franchise, P.D. 771 being valid and
constitutional.
On the question of the propriety of the Republic of the Philippine's
intervention late in the proceedings in G.R. No. 117263, the ADC counsel's
agreeing to have all the issues raised by the parties in the case at bench
paves the way for us to consider the petition filed in G.R. No. 117263 as one
for quo warranto.
WHEREFORE, on the basis of the foregoing premises, judgment is hereby
rendered:
1. Allowing the republic to intervene in G.R. No. 115044.
2. Declaring that P.D. 771 is a valid and subsisting law.
3. Declaring that the ADC does not possess the required
legislative franchise to operate the jai-alai under R.A. 954
and P.D. 771.
4. Setting aside the writs of preliminary injunction and
preliminary mandatory injunction issued by Judge Vetino
Reyes.
DAVIDE, JR., J., concurring:
The core issues submitted for the Court's resolution are: (1) in G.R. No.
115044, whether intervention by the republic of the Philippines is proper, and
(2) in G.R. No. 117263, whether public respondent Judge Vetino Reyes
acted with grave abuse of discretion in issuing the temporary restraining
order and subsequently the writ of preliminary mandatory injunction in Civil
case No. 94-71656.

57

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

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

Page

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

PubCorp Cases
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Sec. 2. Intervention. A person may, before or during a

trial, be permitted by the court, in its discretion, to
intervene in an action, if he has legal interest in the matter
in litigation, or in the success of either of the parties, or an
interest against both, or when he is so situated as to be
adversely affected by a distribution or other disposition of
property in the custody of the court or of an officer thereof.
This provision was taken from Section 1, Rule 13 of the old Rules of Court
with the modification that the phrase "at any period of a trial" in the latter was
changed to "before or during a trial." 1
Section 1, Rule 13 of the old Rules of Court was based on Section 121 of
the Code of Civil Procedure which, in turn, was taken from Section 387 of
the Code of Civil procedure of California. 2
The phrase "at any period of a trial" in Section 1, Rule 13 of the old Rules of
Court has been construed to mean the period for the representation of
evidence by both parties. 3 And the phrase "before or during the trial" in
Section 2, Rule 12 of the present Rules of Court "simply means anytime
before the rendition of the final judgment." 4 Accordingly, intervention could
not be allowed after the trial had been concluded 5 or after the trial and
decision of the original case. 6
Fundamentally then, intervention is never an independent action but is
ancillary and supplemental to an existing litigation. Its purpose is not to
obstruct nor unnecessarily delay the placid operation of the machinery of
trial, but merely to afford one not an original party, yet having a certain right
or interest in the pending case, the opportunity to appear and be joined so
he could assert or protect such right or interest. 7
The grant of an intervention is left to the discretion of the court. Paragraph
(b), Section 2, Rule 12 of the Rules of Court provides:

It is thus clear that, by its very nature, intervention presupposes an existing

litigation or a pending case, 8 and by the opening paragraph of Section 2,
Rule 12 of the Rules the Rules of Court, it may be properly filed only before
or during the trial of the said case. Even if it is filed before or during the trial,
it should be denied if it will unduly delay or prejudice the adjudication of the
rights of the original parties and if the intervenor's rights may be fully
protected in a separate proceeding.9
It is not disputed that the motion to intervene was filed only on 16 September
1994, or on the fifteenth (15th) day after the First Division had promulgated
the decision, and after petitioner Mayor Alfredo Lim complied with or
voluntarily satisfied the judgment. The latter act brought to a definite end or
effectively terminated G.R. No. 115044. Consequently, intervention herein is
impermissible under the rules. To grant it would be a capricious exercise of
discretion. The decision of this Court in Director of Lands vs. Court of
Appeals 10 cannot be used to sanction such capriciousness for such decision
cannot be expanded further to justify a new doctrine on intervention. In the
first place, the motions to intervene in the said case were filed before the
rendition by this Court of its decision therein. In the second place, there were
unusual and peculiar circumstances in the said case which this Court took
into account. Of paramount importance was the fact that the prospective
intervenors were indispensable parties, and so this Court stated therein:
But over and above these considerations and
circumstances which We have pointed out, there is the
basic and fundamental requirement under the Rules of
Court, Section 7, Rule 3, that "Parties in interest without
whom no final determination can be had of an action shall
be joined either as plaintiff or defendants." The joinder of
indispensable parties is compulsory under any and all
conditions, their presence being a sine qua non of the
exercise of judicial power. [Borlasa vs. Polistico, 47 Phil.
345, 348].
The herein movants, Greenfield Development Corporation,
Alabang Development Corporation, Ramon D. Bagatsing,

58

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

(b) Discretion of court. In allowing or disallowing a

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

Page

PubCorp Cases
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will lead the Court to commit an act of injustice to the

movants, to their successors-in-interest and to all
purchasers for value and in good faith and thereby open
the door to fraud, falsehood and misrepresentation, should
intervenors' claims be proven to be true. For it cannot be
gainsaid that if the petition for reconstitution is finally
granted, the chaos and confusion arising from a situation
where the certificates of title of the movants covering large
areas of land overlap or encroach on properties the title to
which is being sought to be reconstituted by private
respondent, who herself indicates in her Opposition that,
according to the Director of Lands, the overlapping
embraces some 87 hectares only, is certain and
inevitable.
Then too, it may be stressed that said case originated from a proceeding to
reconstitute a certificate of title filed by private respondent. After trial, the
Court of First Instance issued an order denying the petition for insufficiency
of evidence. After a motion for new trial was granted and a hearing to
receive the newly discovered evidence was completed, the court issued an
order again denying the reconstitution sought for as it still doubted the
authenticity and genuineness of the Transfer of Certificate of Title sought to
be reconstituted. The private respondent appealed the order to the Court of
Appeals which thereafter promulgated a decision reversing the aforesaid
orders of the trial court. The Director of Land, which was the remaining
oppositor, filed a motion for a new period to file a motion for reconsideration
of the decision alleging excusable negligence. Private respondent filed an
opposition thereto. Without waiting for the resolution of the motion, the
Director filed a motion to admit the motion for reconsideration attaching

Considering then that the intervention in the case at bar was commenced
only after the decision had been executed, a suspension of the Rules to
accommodate the motion for intervention and the intervention itself would be
arbitrary. The Government is not without any other recourse to protect any
right or interest which the decision might have impaired.
May the motion to intervene and intervention proper be, nevertheless,
treated as a petition for quo warranto? The majority opinion answers it in the
affirmative because all the essential requisites for a petition for quo
warranto are present in said pleadings. I am almost tempted to agree with
that opinion if not for the fact that there is pending before the Regional Trial
Court of Manila Civil Case No. 94-71656 which is a petition for
prohibition, mandamus, injunction, and damages filed by the Associated
Development Corporation against Executive Secretary Guingona and then
Games and Amusement Board (GAB) Chairman Sumulong. That is the more
appropriate forum where the Government and petitioner Guingona may
challenge the validity of ADC's franchise. Its filing was provoked by the
withdrawal by the GAB of the provisional authority it granted to ADC in view
of the 13 September 1994 directive of Executive Secretary Guingona
informing the GAB of sufficient bases to hold in abeyance the operation of
the jai-alai until the legal questions into the validity of the franchise issued to
ADC. Consequently, it is to be logically presumed that for its affirmative
defenses in Civil Case No. 94-71656 the Government would raise the same
issues raised in the intervention in G.R. No. 117263.
Accordingly, I vote to deny the motion for intervention in G.R. No. 115044.
II
However, I vote to partially grant the petition in G.R. No. 117263 insofar as
wagering or betting on the results order and the preliminary mandatory
injunction issued by respondent Judge cannot legally and validly allow such
wagering and betting. It was precisely for this reason that I earlier voted to
grant a temporary restraining order in G.R. No. 115044 and G.R. No.
117263 to restrain wagering or betting. I wish to reiterate here what I stated
in my supplemental concurring opinion in G.R. No. 115044:

59

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

thereto said motion for reconsideration. The Court of Appeals issued a

resolution denying both motions on the ground that the decision had already
become final. This was the resolution which the Director assailed in his
petition for review filed with this Court.

Page

and all buyers from them, at least those with ostensible

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

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A suggestion has been made in the

Answer that a writ of mandamus will not
lie against respondents, particularly the
Mayor, because "the availment of the
franchise . . . is subject to the terms and
conditions which the respondent Mayor
may impose."
A careful reading however, of
Ordinances 7065 will readily show that
the discretion, if any, allowed
respondent Mayor, under the ordinance,
will be exercisable only after the permit,

Consequently, the Mayor's Permit sough to be renewed or

the motion before the lower court to compel the Mayor to
renew it, has reference only to subparagraph (a), Section
1 of Ordinance No. 7065. The renewal of the permit can
by no stretch of the imagination be taken as a final
contract between the private respondent and the City of
Manila for otherwise it would remove the power and
authority of the Mayor under the ordinance to impose
"other terms and conditions as he may prescribe for good
reasons of general interest."
It follows then that the Mayor's Permit ordered by the trial
court to be issued to the private respondent is not a
license or authority to allow betting or wagering on the
results of the jai-alaigames. Jai-alai is a sport based on
skill. Under Article 197 of the Revised Penal Code, before
it was amended by P.D. No. 1602, betting upon the result
of any boxing or other sports contests was penalized
with arresto menor or a fine not exceeding P200.00, or
both. Article 2019 of the Civil Code provides that "[b]etting

60

There is a clear distinction between the initial duty of the

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

which he is mandated to issue, had

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

Page

Secondly, to make my position clear that the dismissal of

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

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Sec. 2. Betting, game fixing, point

shaving or game machinations unlawful.
Game fixing, point shaving,
machination, as defined in the preceding
Section, in connection with the games of
basketball, volleyball, softball, baseball;
chess; boxing bouts, "jai-alai," "sipa,"
"pelota" and all other sports contests,
games; as well as betting therein except
as may be authorized by law, is hereby
declared unlawful.
The succeeding Section 3 provides for the penalties.
On 11 June 1978, P.D. No. 1602 (75 O.G. No. 15,
3270), Prescribing Stiffer Penalties on Illegal Gambling,
was enacted to increase the penalties provided in various
"Philippine Gambling Laws such as Articles 195-199 of the
Revised Penal Code (Forms of Gambling and Betting),
R.A. No. 3063 (Horse Racing Bookies), P.D. No. 449
(Cockfighting), P.D. No. 483 (Game Fixing), P.D. No. 510
(Slot Machines) in relation to Opinion Nos. 33 and 97 of
the Ministry of Justice, P.D. No. 1306 (Jai-alai Bookies),
and other City and Municipal Ordinances on gambling all
over the country." Section 1 thereof reads:
xxx xxx xxx
Both P.D. No. 483 and P.D. No. 1602 were promulgated in
the exercise of the police power of the State.
Pursuant to Section 2 of P.D. No. 483, which was not
repealed by P.D. No. 1602 since the former is not
inconsistent with the latter in that respect, betting in

Sec. 2. The grantee or its duly

authorized agent may offer, take or
arrange bets within or outside the place,
enclosure or court where the Basque
pelota games are held:Provided, That
bets offered, taken or arranged outside
the place, enclosure or court where the
games are held, shall be offered, taken
or arranged only in places duly licensed
by the corporation, Provided, however,
That the same shall be subject to the
supervision of the Board. No person
other than the grantee or its duly
authorized agents shall take or arrange
bets on any pelotari or on the game, or
maintain or use a totalizator or other
device, method or system to bet on any
pelotari or on the game within or without
the place, enclosure or court where the
games are held by the grantee. Any
violation of this section shall be
punished by a fine of not more than two
thousand pesos or by imprisonment of
not more than six months, or both in the
discretion of the Court. If the offender is
a partnership, corporation or
association, the criminal liability shall
devolve upon its president, directors or
any officials responsible for the violation.
However, as stated in the ponencia, P.D. No. 810 was
repealed by E.O. No. 169 issued by then President
Corazon C. Aquino. I am not aware of any other law which
authorizes betting in jai-alai. It follows then that while the
private respondent may operate the jai-alai fronton and
conduct jai-alaigames, it can do so solely as a sports
contest. Betting on the results thereof, whether within or
off-fronton, is illegal and the City of Manila cannot, under
the present state of the law, license such betting. The
dismissal of the petition in this case sustaining the

61

P.D. No. 483, enacted on 13 June 1974, penalizes betting,

game fixing or point shaving and machinations in sports
contests, including jai-alai. Section 2 thereof expressly
provides:

jai-alai is illegal unless allowed by law. There was such a

law. P.D. No. 810, which authorized the Philippine JaiAlai and Amusement Corporation as follows:

Page

on the results of sports, athletic competitions, or games of

skill may be prohibited by local ordinances."

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QUIASON, J., dissenting:

I vote: (1) to deny the motion to intervene and motion for
reconsideration qua petition for quo warranto in G.R. No. 115044, and (2) to
dismiss the petition for certiorari in G.R. No. 117263. I shall set forth the
reason why.
I
Following the decision of the First Division of this Court on September 1,
1994 in G.R. No. 115044, the City of Manila issued on September 7, 1994
the Mayor's permit and Municipal license to Associate Development
Corporation (ADC) upon the latter's payment of the required fees (G.R. No.
115044, Rollo, pp. 253-254, 301).
In his letter dated September 8, 1994 to President Fidel V. Ramos,
Chairman Francisco Sumulong, Jr. of the Games and Amusement Board
(GAB) said that he would not authorize the opening of ADC's jai-alai unless
he was given a clearance from the President and until after ADC had
complied with "all the requirements of the law, such as, the distribution of
wager funds, [and] licensing of Pelotaris and other personnel" (Exh. F, Civil
Case No. 94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, p. 304).
In the position paper annexed to the letter, the GAB Chairman
recommended the reopening and operation of the jai-alai, stating in pertinent
part:
There are several reasons to justify the operation of JaiAlai, first and foremost of which is the generation of much
needed revenues for the national and local governments.
Other significant justifications are its tourism potential, the
provision for employment, and the development of Basque
pelota as an amateur and professional sport.

On September 9, 1994, Chairman Sumulong granted ADC provisional

authority to open, subject to the following conditions:
1. We prohibit you from offering to the public "Pick 6" and
"winner Take All" betting events until such time as this
Board shall have approved the rules and regulations
prepared by management governing the mechanics of
these events.
2. Licensing of officials and employees whose duties are
connected directly or indirectly with the supervision and
operation of jai-alai games, as mandated by Executive
Order 141 dated February 25, 1965, shall be fully
complied with by you within thirty 930) days from date
hereof.
3. Any other deficiencies we may discover will be
accordingly rectified by management as directed by the
Board.
4. Failure to comply with any of the rules and regulations
prescribed by existing laws and lawful orders of the Board,
may justify withdrawal/revocation of this provisional
authority without prejudice to such administrative
sanctions that the Board may deem proper to impose
under the circumstances.
5. By accepting this provisional authority, Associated
Development Corporation (ADC) is deemed to have
agreed to the conditions above provided (G.R. No.
117263, Rollo, pp. 8-9, 49, 238, 288).
On September 12, 1994, the GAB issued to ADC jai-alai License No. 94-008
upon payment of the corresponding permit fee. The license reads as follows:

62

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

Specifically, the establishment, maintenance and

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

Page

challenged orders of the trial court does not legalize

betting, for this Court is not the legislature under our
system of government.

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In compliance with GAB Rules and Regulations, ADC submitted its

programs of jai-alai events for approval (Exhs. O, P and Q, civil Case No.
94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, pp. 290-292).
It appears that as early as may 23, 1994, Jai-Alai de Manila (the business
name of ADC's fronton) had inquired from GAB about the laws and rules
governing its jai-alai operation. In reply, chairman Sumulong furnished JaiAlai de Manila with copies of E.O. Nos. 392 and 824 and the Revised rules
and Regulations for basque pelota Games (Exhs. K and L, Civil Case No.
94-71656, RTC, Br. 4, Manila; G.R. No. 117263, Rollo, pp. 301-302).
On September 13, 1994, Executive Secretary Teofisto Guingona, jr. issued
the following Directive to GAB Chairman Sumulong:
In reply to your letter dated 9 September 1994 requesting
for the President's approval to re-open the Jai-Alai in
Manila, please be informed that after a review and study of
existing laws, there is sufficient basis to hold in abeyance
the operation of the Jai-Alai until the following legal
questions are properly resolved:
1. Whether P.D. 771 which revoked all
existing Jai-Alai franchises issued by

2. Assuming that the City of Manila had

the power on 7 September 1971 to
issue a Jai-Alai franchise to Associated
Development Corporation, whether the
franchise granted is valid considering
that the franchise has no duration, and
appears to be granted in perpetuity.
3. Whether the City of Manila had the
power to issue a Jai-Alai franchise to
Associated Development Corporation on
7 September 1971 in view of Executive
order No. 392 dated 1 January 1951
which transferred from local
governments to the Games and
Amusements Board the power to
regulate Jai-Alai.
This Office has directed the solicitor General to bring
before the proper court the foregoing issues for resolution.
Pending such resolution, you are directed to hold in
abeyance the grant of authority, or if any has been issued,
to withdraw such grant of authority, to Associated
Development corporation to operate he Jai-Alai in the city
of Manila (G.R. No. 117263, Rollo, pp. 7-8, 48,
1939; Emphasis supplied).
On September 14, 1994, Chairman Sumulong issued a Memorandum to
ADC that:
In view of the directive from the Office of the President
dated 13 September 1994, Associated Development
Corporation is hereby ordered to cease and desist issues
raised in the said directive are resolved by the proper
court. The provisional authority issued pending further
scrutiny and evaluation to ADC on 9 September 1994 is
hereby withdrawn (G.R. No. 117263, Rollo, pp. 51, 194;
Emphasis supplied).

63

This permit is issued subject to the condition that the

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

local government as of 20 August 1975

is unconstitutional.

Page

Under and by virtue of the provisions of Section 7 of

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

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On September 16, 1994, Executive Secretary Guingona and Chairman

Sumulong filed an urgent motion to recall the temporary restraining order,
with opposition to the motion for issuance of a writ of preliminary injunction.
The said motion was reiterated in the supplemental motion filed on
September 20, 1994 (G.R. No. 117263, Rollo, pp. 66-75, 76-86).
Meanwhile, on September 16, 1994, the Republic of the Philippines,
represented by GAB, filed in G.R. No. 115044 a motion for intervention; for
leave to file a motion for reconsideration-in-intervention; to admit the
attached motion for reconsideration-in-intervention; and to refer the case to
the Court en banc (Rollo, pp. 219-249).
Subsequently, and on the different dates, the Republic filed in G.R. No.
115044 the following pleadings: "Motion for Leave to File Supplemental
Motion for Reconsideration-In-Intervention" (Rollo, pp. 262-265);
"Supplemental Motion for Reconsideration-In-Intervention" (Rollo, pp. 266280); "Motion for Leave to File Second Supplemental Motion for
Reconsideration-In-Intervention and to Admit attached Second
Supplemental Motion For Reconsideration-In-intervention" (Rollo, pp. 380382); and "Second Supplemental Motion for Reconsideration-In-Intervention"
(Rollo, pp. 383-400).
Acting on the motion of the Republic dated September 16, 1994, the First
Division referred, in its Resolution dated September 19, 1994, Case G.R.
No. 115044 to the Court en banc, and the latter accepted the same in its
Resolution dated September 20, 1994 (Rollo, p. 255).
In the meantime, Chairman Sumulong resigned and Dominador R. Cepeda,
jr. was appointed as his successor.

On October 11, 1994, Executive Secretary Guingona and GAB Chairman

Cepeda, Jr. filed with this Court a petition for certiorari, prohibition
and mandamus (G.R. No. 117263, Rollo, pp. 1-151) and on October 24,
1994, a supplemental petition (G.R. No. 117263, Rollo, pp. 161-165, 166306). Petitioners assailed the following issuances of Judge Reyes Civil Case
No. 94-71656:
(1.) Temporary Restraining Order dated September 15,
1994 directing Executive Secretary Guingona and
chairman Sumulong to desist from enforcing the Directive
dated September 13, 1994 and the memorandum dated
September 15, 1994 (Rollo, p. 44);
(2.) Order dated September 25, 1994 denying the Urgent
Motion to Recall Temporary Restraining Order and the
Urgent Supplemental Motion to Recall Temporary
Restraining Order (Rollo, p. 46);
(3.) Order dated September 30, 1994 directing the
issuance of a Writ of preliminary Injunction directed
against the aforesaid Directive and Memorandum (Rollo,
p. 47);
(4.) order dated October 19, 1994 granting ADC's Motion
to Amend the petition to Conform to the Evidence and
directing the issuance of a writ of preliminary mandatory
injunction "directing (Executive Secretary and the GAB
Chairman), their successors, representatives and any
government office/agency acting for an in their behalf or in
implementation of their orders earlier enjoined by a writ of
preliminary injunction issued by this court on September
30, 1994, to issue the necessary authority, licenses and
working permits to . . . Associated Development
Corporation, and its personnel and players (Rollo, pp. 216217).
They prayed that the trial court be enjoined from conducting further
proceedings in Civil Case No. 94-71656 and that said case be dismissed.
they also filed a motion for consolidation of G.R. No. 117263 with G.R. No.

64

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

On September 30, 1994, Judge Reyes issued a writ of preliminary injunction

(G.R. No. 117263, Rollo, pp. 2, 47).

Page

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

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(1) ADC had no legislative franchise;

(2) ADC admitted in G.R. No. 115044 that GAB had no
authority to issue the license or permit subject of the order
in question; and
(3) Mandamus was not available to compel the
performance of a discretionary function (G.R. No.
117263, Rollo, pp. 182-189).
On November 2, 1994, ADC and Judge Reyes filed their consolidated
Comment to the petition and supplemental petition (G.R. No. 117263, Rollo,
pp. 230-305).
On November 25, 1994, the Republic, Executive Secretary Guingona and
GAB Chairman Cepeda moved for the issuance of a restraining order
enjoining Judge Pacquing and Judge Reyes from enforcing their questioned
orders and ADC from operating the jai-alai fronton (G.R. No. 17263, Rollo,
pp. 629-635). Action on the motion deferred.
II
G.R. No. 115044
Motion for Intervention
The Republic of the Philippines (Republic) represented by GAB justifies its
belated intervention in G.R. No. 115044 on the grounds that "it has an
interest involved in this case and will be affected by the Decision dated
September 1, 1994" (G.R. No. 115044, Rollo, p. 225).
The purpose of its intervention is to nullify the decision of Judge Augusto E.
Villarin of the Regional Trial Court, Branch 40, Manila, dated September 1,
1994" (G.R. No. 115044, Rollo, p. 225).

In 1991, the City of Manila filed an action to annul the franchise of ADC with
the Regional Trial Court, Branch 23, Manila (Civil Case No. 91-58913). The
complaint was dismissed on December 21, 1991. No appeal was taken from
said dismissal of the case.
The City of Manila filed with this Court a petition for declaratory judgment to
nullify the franchise of ADC (G.R. No. 101768). The petition was dismissed
in a resolution dated October 3, 1991 "for lack of jurisdiction."
Three members of the Sangguniang Panglunsod of Manila also filed with the
Regional Trial Court, Branch 37, Manila, a petition to compel Mayor Lopez to
cancel the permit and license he issued in favor of ADC pursuant to
ordinance No. 7065 (Civil Case No. 91-58930). The petition was dismissed
on June 4, 1992. No appeal was taken from said dismissal of the case.
In the Motion for Reconsideration-In-Intervention, Supplemental Motion for
Reconsideration-in-Intervention and Second Supplemental Motion for
Reconsideration-in-Intervention, the Republic merely claimed that Ordinance
No. 7065 had been repealed by P.D. No. 771 (Rollo, pp. 228-248), that the
authority to issue permits and licenses for the operation of jai-alai had been
transferred to GAB by E.O. No. 392 of President Quirino effective July 1,
1951 and that ADC was never issued a franchise by Congress (Rollo, pp.
383-390). Nowhere in its pleadings did the Republic point out where the first
Division erred in resolving the two grounds of the petition for certiorari in
G.R. No. 115044,
which were:
(1) The decision of Judge Villarin dated September 9,
1988 in Civil Case No. 88-45660 is null and void for failure
to rule that P.D. No. 771 had revoked Ordinance No.
7065; and

65

In their petition in G.R. No. 117263, Executive Secretary Guingona and

Chairman Cepeda claimed that ADC had no clear right to the issuance of the
preliminary mandatory injunction because:

The purpose of its intervention is to nullify the decision of Judge Augusto E.

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

Page

115044 (G.R. No. 117263, Rollo, pp. 152-160). As prayed for, we

considered the two cases together.

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In Tan v. Intermediate Appellate Court, 163 SCRA 752 (1988), the Court
held:
It is settled jurisprudence that except in the case of
judgments which are void ab initio or null and voidper
se for lack of jurisdiction which can be questioned at any
time and the decision here is not of this character
once a decision becomes final, even the court which has
rendered it can no longer alter or modify it, except to
correct clerical errors or mistakes. otherwise, there would
be no end to litigation, thus setting to naught the main role
of courts of justice, which is, to assist in the enforcement
of the rule of law and the maintenance of peace and order,
by settling justifiable controversies with finality. (See also
Fabular v. Court of Appeals, 119 SCRA 329 [1982];
Fariscal Vda. de Emnas v. Emnas, 95 SCRA 470 [1980];
Ocampo v. Caluag, 19 SCRA 917 [1967]).
As to the second issue, the First Division held that the five-year period for
executing a judgment by simple motion under Section 6 of Rule 39 of the
Revised Rules of Court should be counted from the finality of the judgment
and not from the date of its promulgation as was done by Mayor Lim and the
City of Manila. Inasmuch as the Villarindecision was appealed to the Court of
Appeals and the authority to withdraw the appeal was approved by the Court
of Appeals only on may 26, 1989, the five-year period should be counted, at
the earliest, from May 26, 1989. Reckoning the five-year period from said
date, the motion for execution of the Villarin decision was filed timely on
March 14, 1994.
Intervention as contemplated by Section 9, Rule 12 of the Revised Rules of
Court is a proceeding whereby a third person is permitted by the court

Intervention as an action is not compulsory. As deduced from the permissive

word "may" in the rule, the availment of the remedy is discretionary on the
courts (Garcia v. David, 67 Phil. 279 [1939]). an important factor taken into
consideration by the courts in exercising their discretion is whether the
intervenor's rights may be fully protected in a separate proceeding (Peyer v.
Martines, 88 Phil. 72 [1951]).
The case of Director of Lands v. Court of Appeals, 93 SCRA 238 (1979), can
not, serve as authority in support of the Republic's intervention at this late
stage. while said case involved an intervention for the first time in the
Supreme court, the motion to be allowed to intervene was filed before the
appeal could be decided on the merits. The intervention allowed in Republic
v. Sandiganbayan, G.R. No. 96073, Resolution, March 3, 1992, was also
made before the decision on the merits by this Court. In contrast, the
intervention of the Republic was sought after this Court had decided the
petition in G.R. No. 115044 and petitioners had complied with and satisfied
the judgment. While the intervention in Director of Lands was in a case that
was timely appealed from the Regional Trial Court to the Court of Appeals
and from the Court of Appeals to the Supreme Court, the intervention of the
Republic was in a case that had become final and executory more than five
years prior to the filing of the motion to intervene.
As of September 16, 1994, therefore, when the republic moved to intervene,
there was no longer any pending litigation between the parties in G.R. no.
115044. Intervention is an auxiliary and supplemental remedy to an existing,
not a settled litigation (cf. Clareza v. Rosales, 2 SCRA 455 [1961]). An
intervention was disallowed in a case which has becomes final and
executory (Trazo v. Manila Pencil Co., 77 SCRA 181 [1977])
The case of Suson v. Court of Appeals, 172 SCRA 70 (1989) invoked by the
Republic (G.R. No. 117263, Rollo, pp. 517-518) is inappropriate because the
intervention therein was before the trial court, not in this Court.

66

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

"before or during a trial" to make himself a party by joining plaintiff or uniting

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

Page

(2) The decision of Judge Villarin could not be executed by

a mere motion filed on March 14, 1994, or more than five
years and six months after its promulgation.

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Lastly, an intervenor should not be permitted to just sit idly and watch the
passing scene as an uninterested overlooker before he wakes up to seek
judicial relief (Pacursa v. Del Rosario, 24 SCRA 125 [1968]).
The Office of the President was aware of the plans of ADC to start operation
as early as 1988. On May 5, 1988, ADC informed said Office of its intention
to operate under Ordinance No. 7065. The said Office perfuntorily referred
the letter of ADC to the Manila mayor, implying that the matter was not the
concern of the National Government.
Motion qua
Quo Warranto petition
Be that as it may, the Court may consider the motion to intervene, motion for
reconsideration-in-intervention, supplemental motion for reconsideration-inintervention and second supplemental motion-in-intervention as a petition
for quo warranto under Rule 66 of the revised Rules of Court. In the liberal
construction of the Rules in order to attain substantial justice, the Court has
treated petitions filed under one Rule as petitions filed under the more
appropriate Rule (Davao Fruits Corporation v. Associated Labor Union, 225
SCRA [1993]).
In quo warranto, the government can require a corporation to show cause by
what right it exercises a privilege, which ordinarily can not legally be
exercised except by virtue of a grant from the state. It is a proceeding to
determine the right to the use of a franchise or exercise of an office and to
oust the holder from its enjoyment if his claim is not well-founded (Castro v.
Del Rosario, 19 SCRA 196 [1967]).

The motions qua petition for quo warranto assert that the authority of the
City of Manila to issue to ADC a jai-alai franchise in 1971 had been
withdrawn by E.O. No. 392 in 1951 and by R.A. No. 954 in 1954 and that
assuming the issuance of the franchise to ADC in 1971 under Ordinance No.
7065 was valid, such franchise, together with whatever authority of the City
of Manila to grant the same, was voided by P.D. No. 771 in 1975.
In the case of Stone v. State of Mississippi, 101 U.S. 814, cited by the
Republic, the State Attorney General resorted to a quo warranto proceeding
to question the authority of petitioner therein to operate and maintain a
gambling establishment.
The franchise of ADC granted by the City of Manila under Ordinance No.
7065 reads as follows:
AN ORDINANCE AUTHORIZING THE MAYOR TO
ALLOW AND PERMIT THE ASSOCIATED
DEVELOPMENT CORPORATION TO ESTABLISH,
MAINTAIN AND OPERATE A JAI-ALAI IN THE CITY OF
MANILA, UNDER CERTAIN TERMS AND CONDITIONS
AND FOR OTHER PURPOSES.
Be it ordained by the Municipal Board of the City of
Manila, that:
Sec. 1. The Mayor is authorized, as he is hereby
authorized to allow and permit the Associated
Development Corporation to establish, maintain and
operate a jai-alai in the City of Manila, under the following
terms and conditions and such other terms and conditions
as he (the Mayor) may prescribe for good reasons of
general interest:
a. That the construction, establishment
and maintenance of the jai-alai shall be
at a place permissible under existing
zoning ordinances of Manila;

67

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

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

Page

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

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

two other cities Quezon City and Cebu City contained a similar
delegation of authority to grant jai-alai franchises.
Said Section 18(jj) provides:

e. That the corporation will, to insure its

faithful compliance of all the terms and
conditions under this ordinance, put up
a performance bond from a surety
acceptable to the city, in the amount of
at least P30,000.00.
Sec. 2. The Mayor and the City Treasurer of their duly
authorized representatives are hereby empowered to
inspect at all times during regular business hours the
books, records and accounts of the establishment, as well
as to prescribe the manner in which the books and
financial statement of the entrepreneur shall be kept.
Sec. 3. This ordinance shall take effect upon its approval.
Enacted originally by the Municipal Board on September
7, 1971; vetoed by the Mayor on September 27, 1971;
modified and amended by the Municipal Board at its
regular session today, October 12, 1971.
Approved by His Honor, the Mayor on 13 November 1971.
The said Ordinance was enacted pursuant to Section 18 (jj), the Charter of
the City of Manila (R.A. No. 409), which took effect in 1949. The charters of

xxx xxx xxx

(jj) To tax, license, permit and regulate wagers or betting
by the public on boxing, billiards, pools, horse or dog
races, cockpits, jai-alai, roller of ice-skating or any sporting
or athletic contests, as well as grant exclusive rights to
establishments for this purpose, notwithstanding any
existing law to the contrary.
A. It is the posture of the Republic that the power of local governments to
issue franchisers for the operation of jai-alai was "consolidated and
transferred" to the GAB under E.O. No. 392. In its Supplemental Motion for
reconsideration-In-Intervention filed on September 27, 1994, the Republic
averred:
12. As early as 1951, the power of the local governments
to issue licenses and permits for the operation of jai-alai
was "consolidated and transferred" to the Games and
Amusements Board under E.O. No. 392 issued by then
President Elpidio Quirino (sic) took effect on January 1,
1951. Thus, in 1971, the City of Manila was without
authority to enact an ordinance authorizing the City Mayor
to issue a license/permit to private respondent for the
operation of jai-alai in Manila (Rollo, pp. 271-272).
Furthermore, the republic alleged:
13. Such consolidation and transfer of power manifest the
policy of the Government to centralize the regulation,
through appropriate institutions, of all games of chance
authorized by existing franchises of permitted by law. . . .
(Rollo, p. 272).

68

d. That the corporation will, in addition,

pay to the city an annual license fee of
P3,000.00 and a daily permit fee of
P200.00;

Legislative powers. The Municipal Board shall have the

following legislative powers:

Page

c. That the City of Manila will received a

share of 2 % on the annual gross
receipts on all wagers or bets, % of
which will accrue to the Games and
Amusements Board as now provided by
law;

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For certain, E.O. No. 392 merely reorganized the different departments,
bureaus, offices and agencies of the government. There is absolutely
nothing in the executive issuances which vests on GAB the power to grant,
much less revoke, franchisers to operate jai-alais.
B. After its volte-face, the Republic next claims that R.A. No. 954 had
repealed Section 18 (jj) and that after the effectivity of said law, only
Congress could grant franchise to operate jai-alais.
Section 4 of R.A. No. 954 provides:
No person, or group of persons, other than the operator or
maintainer of a fronton with legislative franchise to conduct
basque pelota (jai-alai), shall offer, take or arrange bets on
any basque pelota game or event, or maintain or use a
totalizer or other device, method or system to bet or
gamble or any basque pelota game or event.
Republic Act No. 954 did not expressly repeal Section 18 (jj). In such a case,
if there is any repeal of the prior law by the latter law, it can only be by
implication. Such kind of repeals is not favored. There is even a presumption
against repeal by implication (The Philippine American Management Co. Inc.
v. The Philippine American Management employees Association, 49 SCRA
194 [1973]).
In the same absence of an express repeal, a subsequent law cannot be
construed as repealing a prior law unless an irreconcilable inconsistency and
repugnancy exist in the terms of the new and old law (Iloilo Palay and Corn
Planters Association, Inc. v. Feliciano, 13 SCRA 377 [1965]).
But more importantly, the rule in legal hermeneutics is that a special law, like
the Charter of the City of Manila, is not deemed repealed by a general law,

In a way also, Ordinance No. 7065 can be considered a "legislative

franchise" within the purview of R.A. No. 954, having been enacted by the
Municipal Board of the City of Manila pursuant to the powers delegated to it
by the legislature. A grant, under a delegated authority, binds the public and
is considered the act of the state. "The franchise [granted by the delegate] is
a legislative grant, whether made directly by the legislature itself or by any
one of its properly constituted instrumentalities" (36 Am Jur 2d. 734).
As held in Wright v. Nagle, 101 U.S. 921, the grant of a franchise by the
legislature may be done in two ways:
It may exercise this authority by direct legislation, or
through agencies duly established having power for that
purpose. This grant when made binds the public, and is,
directly or indirectly, the Act of the State. The easement is
a legislative grant, whether made directly by the legislature
itself, or by any one of its properly constituted
instrumentalities (Justice of Pike Co. v. Plank road, 11 Ga.
246; Emphasis supplied).
If the intention of Congress in enacting R.A. No. 954 was to repeal Section
18 (jj), it could have used explicit language to that effect in order not to leave
room for interpretation.
If R.A. No. 954 repealed Section 18 (jj), why did President Marcos still issue
P.D. No. 771, expressly revoking the authority of the local governments to
issue jai-alai franchises? It can never be presumed that the President
deliberately performed useless acts.
C. The claim of the Republic that P.D. No. 771 had removed the power of
local governments to grant franchises for the maintenance and operation of
jai-alai is a non-issue. The issue raised by ADC is whether Section 3 of P.D.
No. 771 validly cancelled Ordinance No. 7065, an issue entirely different
from the claim of the Republic that P.D. No. 771 had revoked the power of
the City of Manila to grant jai-alai franchisers.
Insofar as it is applied to Ordinance No. 7065, Section 3 of P.D. No. 771
suffers from constitutional infirmities and transgresses several constitutional
provisions. Said Section 3 provides:

69

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

like R.A. No. 954 (Commissioner of Internal Revenue v. Court of Appeals,

207 SCRA 487 [1992]).

Page

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

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All existing franchisers and permits issued by local
governments are hereby revoked and may be renewed
only in accordance with third decree.
Section 3 violated the equal protection clause (Section 1 of Article IV) of the
1973 Constitution, which provided:
No person shall be deprived of life, liberty, or property
without due process of law, nor shall any person be
denied the equal protection of the laws.
Less than two months after the promulgation of P.D. no. 771, President
Marcos issued P.D. No. 810, granting the Philippine Jai-Alai and
Amusement Corporation (PJAC) a franchise to operate jai-alai within the
Greater Manila Area. It is obvious that P.D. No. 771 was decreed to cancel
the franchise of ADC so that the same could be given to another entity under
P.D. No. 810.
A facially neutral statute (P.D. No. 771) may become discriminatory by the
enactment of another statute (P.D. No. 810) which allocates to a favored
individual benefits withdrawn under the first statute (Ordinance No. 7065),
and when there is no valid basis for classification of the first and second
grantees. The only basis for distinction we can think of is that the second
grantee was Benjamin Romualdez, a brother-in-law of President Marcos.

legitimate end (Nowak, Rotunda and Young, Constitutional Law 436, 443 [2d
ed]).
When President Marcos issued P.D. No. 771, he did not have public interest
in mind; otherwise, he would have simply outlawed jai-alai as something
pernicious to the public. Rather, all what he wanted to accomplish was to
monopolize the grant of jai-alai franchisers.
The motivation behind its issuance notwithstanding, there can be no
constitutional objection to P.D. No. 771 insofar as it removed the power to
grant jai-alai franchisers from the local governments. We said so in Basco v.
Pagcor, 197 SCRA 52 (1991). The constitutional objection arises, however,
when P.D. No. 771 cancelled al the existing franchises. We search in vain to
find any reasonable relation between Section 3 of P.D. No. 771 and any
legitimate ends of government intended to be achieved by its issuances.
Besides, the grant of a franchise to PJAC exposed P.D. No. 771 as an
exercise of arbitrary power to divest ADC of its property rights.
Section 3 also violated Section 1 of Article VIII of the 1973 Constitution,
which provided:
Every bill shall embrace only one subject which shall be
expressed in the title thereof.
The title of P.D. No. 771 reads as follows:

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

The title of P.D. No. 771 refers only to the revocation of the power of local
governments to grant jai-alai franchises. It does not embrace nor even
intimate the revocation of existing franchises.
Lastly, Section 3 impaired the obligation of contracts prohibited by Section
11 of Article IV of the 1973 Constitution.
As authorized by Section 18(jj), Ordinance No. 7065 grants ADC a permit "to
establish, maintain and operate a jai-alai in the City of Manila, under the

70

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

REVOKING ALL POWERS AND AUTHORITY OF LOCAL

GOVERNMENT TO GRANT FRANCHISE, LICENSE OR
PERMIT AND REGULATE WAGERS OR BETTING BY
THE PUBLIC ON HORSE AND DOG RACES, JAI-ALAI
OR BASQUE PELOTA, AND OTHER FORMS OF
GAMING.

Page

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

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No law impairing the obligation of contracts shall be

passed.
Any law which enlarges, abridges, or in any manner changes the intention of
the parties, necessarily impairs the contract itself (U.S. v. Conde, 42 Phil.
766 [1922]; Clemens v. Nolting, 42 Phil. 702 [1922]). A franchise constitutes
a contract between the grantor and the grantee. Once granted, it may not be
invoked unless there are valid reasons for doing so. (Papa v. Santiago, 105
Phil. 253 [1959]). A franchise is not revocable at the will of the grantor after
contractual or property rights thereunder have become vested in the
grantee, in the absence of any provision therefor in the grant or in the
general law (Grand Trunk Western R. Co. v. South Bend, 227 U.S. 544).
D. The Republic hypothesized that the said Constitutional guarantees
presuppose the existence of a contract or property right in favor of ADC. It
claims that Ordinance No. 7065 is not a franchise nor is it a contract but
merely a privilege for the purpose of regulation.
Ordinance No. 7065 is not merely a personal privilege that can be withdrawn
at any time. It is a franchise that is protected by the Constitution.
The distinction between the two is that a privilege is bestowed out of pure
beneficence on the part of the government. There is no obligation or burden
imposed on the grantee except maybe to pay the ordinary license and permit
fees. In a franchise, there are certain obligations assumed by the grantee
which make up the valuable consideration for the contract. That is why the
grantee is first required to signify his acceptance of the terms and conditions
of the grant. Once the grantee accepts the terms and conditions thereof, the
grant becomes a binding contract between the grantor and the grantee.
Another test used to distinguish a franchise from a privilege is the big
investment risked by the grantee. In Papa v. Santiago, supra, we held that
this factor should be considered in favor of the grantee. A franchise in which
money has been expended assumes the character of a vested right
(Brazosport Savings and Loan Association v. American Savings and Loan
Association, 161 Tex. 543, 342 S.W. 2d. 747).

But assuming that Ordinance No. 7065 is a mere privilege, still over the
years, the concept of a privilege has changed. Under the traditional form a
property ownership, recipients of privileges, benefits or largesse from the
government may be said to have no property rights because they have no
traditionally recognized proprietary interest therein. The case of Vinco v.
Municipality of Hinigaran, 41 Phil. 790 (1917) and Pedro v. Provincial Board
of Rizal, 56 Phil 123 (1931), holding that a license to operate cockpits is a
mere privilege, belong to this vintage. However, the right-privilege dichotomy
has come to an end when the courts have realized that individuals should
not be subjected to the unfettered whims of government officials to withhold
privileges previously given them (Van Alstyne, The Demise of the Right
Privilege Distinction in Constitutional Law, 81 Harvard L. R. 1439 [1968]). To
perpetuate such distinction would leave many individuals at the mercy of
government officials and threaten the liberties protected by the Bill of Rights
(Nowak, Rotunda and Young, Constitutional Law 546 [2nd ed]).
That a franchise is subject to regulation by the state by virtue of its police
power is conceded. What is not acceptable is the Republic's proposition that
the power to regulate and supervise includes the power to cancel the
franchise altogether.
The stance of the Republic that the gambling franchises it issues are not
covered by the constitutional mantle protecting property rights is ill-advised
considering that it is planning to operate gambling establishments involving
substantial foreign investments in putting up the facilities thereof.
The belabored arguments of the Republic on the evils of gambling fall to the
ground upon a showing that ADC is operating under an existing and valid
franchise (Rollo, pp. 422-423).
E. The Republic questioned the siting of the ADC's fronton as violative of
E.O. No. 135 of President Quirino. Under said executive issuance, no pelota
fronton can be maintained and operated "within a radius of 200 lineal meters
from any city hall or municipal building, provincial capital building, national
capital building, public plaza or park, public school, church, hospital, athletic
stadium, or any institution of learning or charity."

71

Section 11 of Article IV of the 1973 Constitution provided:

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

Page

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

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

In every case, the courts shall determine such period as

may under the circumstances have been probably
contemplated by the parties. Once fixed by the courts, the
period cannot be changed by them.
III

Under said law only night clubs, cabarets, pavillions, or other similar places
are covered by the 200-lineal meter radius. In the case of all other places of
amusements except cockpits, the proscribed radial distance has been
reduced to 50 meters. With respect to cockpits, the determination of the
radial distance is left to the discretion of the municipal council or city board
(Sec. 1).
F. The Republic also questions the lack of the period of the grant under
Ordinance No. 7065, thus making it indeterminate (G.R. No. 117263, Rollo,
pp. 500-505). The ordinance leaves it to the Mayor of the City of Manila to
lay down other terms and conditions of the grant in addition to those
specified therein. It is up to the parties to agree on the life or term of the
grant. In case the parties fail to reach an agreement on the term, the same
can be fixed by the courts under Article 1197 of the Civil Code of the
Philippines, which provides as follows:
If the obligation does not fix a period, but from its nature
and the circumstances it can be inferred that a period was
intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it
depends upon the will of the debtor.

The petition in G.R. No. 117263 seeks to nullify the following orders of
respondent Judge Reyes:
(1) the Temporary Restraining Order dated September 15,
1994;
(2) the Order dated September 25, 1994; and
(3) the Writ of Preliminary Injunction dated September 30,
1994 (Rollo, pp. 1-2).
The supplemental petition in said case seeks to nullify the Order dated
October 19, 1994 (Rollo, pp. 166-225).
According to Executive Secretary Guingona and GAB Chairman Cepeda,
respondent Judge Reyes acted without jurisdiction and with grave abuse of
discretion in issuing said orders and writ of preliminary injunction because:
(1) Civil Case No.
94-71656 was not properly assigned to him in accordance with Section 7,
Rule 22 of the Revised Rules of Court; (2) the enforcement of the Directive
and Memorandum sought to be enjoined had already been performed or
were already fait accompli; and (3) respondent judge pre-empted this Court
in resolving the basic issues raised in G.R. No. 115044 when he took
cognizance of Civil Case No. 94-71656.
A. At the outset, it should be made clear that Section 7 of Rule 22 of the
Revised Rules of Court does not require that the assignment of cases to the
different branches of a trial court should always be by raffle. The Rule talks
of assignment "whether by raffle or otherwise." What it requires is the giving
of written notice to counsel or the parties "so that they may be present
therein if they so desire."

72

However, the operative law on the siting of jai-alai establishments is no

longer E.O. No. 135 of President Quirino but R.A. No. 938 as amended by
R.A. No. 1224.

G.R. No. 117263

Page

On the other hand, a certificate issued by the Officer-in-charge of the Office

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

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However, there may be cases necessitating the issuance of a temporary

restraining order to prevent irreparable injury on the petitioner.
To await the regular raffle before the court can act on the motion for
temporary restraining order may render the case moot and academic.
Hence, Administrative Circular No. 1 dated January 28, 1988 was issued by
this Court allowing a special raffle. Said Circular provides:
8.3. Special raffles should not be permitted except on
verified application of the interested party who seeks
issuance of a provisional remedy and only upon a finding
by the Executive Judge that unless a special raffle is
conducted irreparable damage shall be suffered by the
applicant. The special raffle shall be conducted by at least
two judges in a multiple-sala station.
In a case where a verified application for special raffle is filed, the notice to
the adverse parties may be dispensed with but the raffle has to "be
conducted by at least two judges in a multiple-sala station."
The Republic does not claim that Administrative Circular No. 1 has been
violated in the assignment of the case to respondent Judge. The
presumption of regularity of official acts therefore prevails.
Going back to Section 7 of Rule 22, this Court has rules in Commissioner of
Immigration v. Reyes, 12 SCRA 728 (12964) that the purpose of the notice
is to afford the parties a chance to be heard in the assignment of their cases
and this purpose is deemed accomplished if the parties were subsequently
heard. In the instant case, Executive Secretary Guingona and GAB
Chairman Cepeda were given a hearing on the matter of the lack of notice to
them of the raffle when the court heard on September 23, 1994 their Motion
to Recall Temporary Restraining Order, Urgent Supplemental Motion to
Recall Temporary Restraining Order and Opposition to Issuance of a Writ of

Petitioners in G.R. No. 117263 failed to shown any irregularity attendant to

the raffle or any prejudice which befell them as a result of the lack of notice
of the raffle of Civil Case No. 94-71656.
On the other hand, petitioners never asked for a re-raffle of the case or for
any affirmative relief from the trial court and proceeded with the presentation
of evidence of ADC in connection with the motion for preliminary injunction.
B. The purpose of a temporary restraining order or preliminary injunction,
whether preventive or mandatory, is merely to prevent a threatened wrong
and to protect the property or rights involved from further injury, until the
issues can be determined after the hearing on the merits (Ohio Oil Co. v.
Conway, 279 U.S. 813, 73 L. Ed. 972, 49 S. Ct. 256; Gobbi v. Dilao, 58 Or.
14, 111 p. 49, 113, p. 57). What is intended to be preserved is the status quo
ante litem motam or the last actual, peaceable, noncontested status
(Annotation, 15 ALR 2d 237).
In the case at bench, the status quo which the questioned orders of Judge
Reyes sought to maintain was that ADC was operating the jai-alai pursuant
to Ordinance No. 7065 of the City of Manila, the various decisions of the
different courts, including the Supreme Court, and the licenses, permits and
provisional authority issued by GAB itself.
At times, it may be necessary for the courts to take some affirmative act
essential to restore the status quo (Iowa Natural Resources Council v. Van
See [Iowa] 158 N.W. 2d. 111).
The right to conduct a business or to pursue one's business or trade without
wrongful interference by others is a property right which equity will, in proper
cases, protect by injunction, provided of course, that such occupation or
vocation is legal and not prohibited by law (Rance v. Sperry & Hutchinson
Co., 410 P. 2d 859).
Had not the Directive to close the operation of ADC's jai-alai and the
implementing Memorandum been issued, there would have been no need
for the issuance of the orders of the Regional Trial Court. The need for said
equitable reliefs becomes more evident if we consider that the Executive
Secretary himself had entertained doubts as to the legality of his action

73

Assignment of cases. In the assignment of cases to the

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

Preliminary Issuance of a Writ of Preliminary Injunction (G.R. No.

117263, Rollo p. 434).

Page

Section 7 of Rule 22 provides:

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because in the same Directive he instructed the Solicitor General to obtain a
judicial ruling on the legal issues raised.
C. Respondent Judge Reyes did not pre-empt this Court in deciding the
basic issues raised in G.R. No. 115044 when it assumed jurisdiction over
Civil Case No. 94-71656 and issued the orders questioned in G.R. No.
117263.
The orders of Judge Reyes are provisional in nature and do not touch on the
merits of the case. The issues raised in Civil Case No. 94-71656 are the
validity of the Directive and Memorandum, which were issued after the
decision of this Court in G.R. No. 115044. The respondent in the civil case
before the trial court are not even parties in G.R. No. 115044.

On June 20, 1953, congress passed Republic Act No. 954 entitled "An Act to
Prohibit Certain Activities in Connection with Horse Races and Basque
pelota Games (Jai-Alai) and to Prescribe penalties for its Violation." Sections
4 and 5 of the law provide:
xxx xxx xxx
Sec. 4. No person, or group of persons, other than the
operator or maintainer of a fronton with legislative
franchise to conduct basque pelota games (Jai-Alai), shall
offer, take or arrange bets on any basque pelota game or
event, or maintain or use a totalizer or other device,
method or system to bet or gamble on any basque pelota
game or event.

PUNO, J., dissenting:

First, the matrix of facts. On June 18, 1949, congress enacted Republic Act
No. 409, otherwise known as the Charter of Manila. Section 18 (jj) gave to
the Municipal Board (now City Council) the following power:
(jj) To tax, license, permit and regulate wagers or betting
by the public on boxing, sipa, bowling, billiards, pools,
horse or dog races, cockpits, jai-alai, roller or ice skating
or any porting or athletic contest, as well as grant
exclusive rights to establishments for this purpose,
notwithstanding any existing law to the contrary.

On September 21, 1972, martial law was declared by then president

Ferdinand E. Marcos. The 1971 Constitution, as amended, authorized the
former President to exercise legislative powers. Among the laws he decreed
is P.D. No. 771, "Revoking All Powers And Authority Of Local
Government(s) to Grant Franchise, License Or Permit And Regulate Wagers
Or Betting By The Public On Horse And Dog Races, Jai-Alai, Or Basque
pelota And Other Forms of Gambling." its Text states:
xxx xxx xxx
Sec. 1. Any provision of law to the contrary
notwithstanding, the authority of Chartered Cities and
other local governments to issue license, permit or any

74

I will confine myself to the jugular issue of whether or not Associated

Development Corporation (ADC) still possesses a valid franchise to operate
jai-alai in manila. The issue is multi-dimensional considering its constitutional
complexion.

On September 7, 1971, the Municipal Board of Manila approved Ordinance

No. 7065 "authorizing the Mayor to Allow and Permit the Associated
Development Corporation to Establish, Maintain and Operate a Jai-Alai in
the city of Manila, Under Certain Terms and Conditions And For Other
Purposes."

Page

The petitions at bench involve great principles of law in tension. On balance

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

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

with legislative franchise to conduct basque pelota games
shall offer, take, or arrange bets on any basque pelota
game or event, or maintain or use a totalizator or to her
device, method or system to bet or gamble on any basque
pelota game or event outside the place, enclosure, or
fronton where the basque pelota game is held.

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Sec. 3. All existing franchises and permits issued by local

government are hereby revoked and may be renewed only
in accordance with this Decree.
P.D. No. 771 was enacted on August 20, 1975 and purportedly revoked the
permit of ADC to operate. Before two (2) months could elapse or on October
16, 1975, then President Marcos issued P.D. No. 810 granting a franchise to
Philippine Jai-Alai and Amusements corporation to conduct jai-alai games in
Manila. it is not disputed that his brother-in-law, Mr. Alfredo "Berjo"
Romualdez, held the controlling interest in Philippine Jai-alai and
Amusements Corporation. apparently, the favored treatment given to Mr.
Romualdez and company did not sit well with former President Corazon C.
Aquino. On May 8, 1987, she issued Executive Order No. 169 repealing P.D.
No. 810. Nevertheless, she allowed P.D. No. 771 to stay in our statutes
book.
ADC thought it could resume its jai-alai operation. On May 5, 1988, it sought
from then mayor Gemiliano C. Lopez, Jr., of Manila a permit to operate on
the strength of Ordinance No. 7065. The request was refused and this
Spawned suits 1 all won by ADC. In Civil Case No. 88-45660, filed in Br. 40,
RTC, Manila, Judge Augusto E. Villarin ruled that Ordinance No. 7065
created a binding contract between the city of Manila and ADC, and hence,
the City Mayor had no discretion to deny ADC's permit. The ruling was
appealed to the Court of Appeals where it was docketed as CA-G.R. SP No.
16477. On February 9, 1989, however, Mayor Lopez withdrew the city's
appeal. Still, the legal problems of ADC did not disappear. Manila Mayor
Alfredo Lim who succeeded Mayor Lopez again refused to issue ADC's
permit despite orders of Judge Felipe G. Pacquing. 2 Threatened with

xxx xxx xxx

Petitioners failed to appreciate the distinction between a
void and an erroneous judgment and between jurisdiction
and the exercise of jurisdiction.
Having jurisdiction over the civil case, whatever error may
be attributed to the trial court, is simply one of judgment,
not of jurisdiction. an error of judgment cannot be
corrected by certiorari but by appeal (Robles v. House of
Representatives Electoral Tribunal, 181 SCRA 780 [1990];
De Castro v. Delta Motor Sales Corporation, 57 SCRA 344
[1978]; Galang v. Endencia, 73 Phil. 391 [1941].
The issue on the cancellation of Ordinance No. 7065 by
president Marcos could have been raised as a special
defense in Civil Case No. 88-54660 but was not . . .
The City of Manila should have pursued in the appellate
courts its appeal questioning the dismissal of Civil Case
No. 91-58913, where the trial court ruled that Mayor Lopez
and the city could no longer claim that Ordinance No.
7065 had been cancelled by president Marcos because
they failed to raise this issue in Civil Case No. 88-54660.
At any rate, the unilateral cancellation of the franchise,
which has the status of a contract, without notice, hearing
and justifiable cause is intolerable in any system where
the rule of Law prevails (Poses v. Toledo Transportation
Co., 62 Phil. 297 [1935]; Manila electric Co., v. Public
utility commissioners, 30 Phil. 387 [1915].
Upon its receipt, Mayor Lim manifested he would comply with the Decision.
He did not file a motion for reconsideration. it was then that the Republic

75

Sec. 2. Hereafter all permit or franchise to operate,

maintain and establish horse and dog race tracks, jai-alai
and other forms of gambling shall be issued by the
national government upon proper application and
verification of the qualifications of the
applicant: Provided, That local governments may, upon
clearance from the chief of constabulary and during town
fiestas and holidays, continue to issue permits for minor
games which are usually enjoyed by the people during
such celebrations.

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

Page

form of franchise to operate, maintain and establish horse

and dog race tracks, jai-alai or other forms of gambling is
hereby revoked.

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I find as completely baseless petitioners' submission that R.A. No. 954

requires a legislative franchise to operate a jai-alai, in effect, revoking the
power of the City of Manila to issue permits for the same purpose as granted
by its Charter. A 20-20 visual reading of R.A. No. 954 will not yield the
suggested interpretation by petitioners. the titles of R.A. No. 954 will
immediately reveal that the law was enacted to achieve a special purpose. It
states: "An Act To Prohibit Certain Activities In Connection With Horse
Races And Basque pelota Games (Jai-Alai), And To Prescribe Penalties For
its Violation." The prohibited activities related to jai-alai games are specified
in sections 4 to 6, viz:
Sec. 4. No person, or group of persons, other than the
operator or maintainer of a fronton with legislative
franchise to conduct basque pelota games (Jai-Alai), shall
offer, take or arrange bets on any basque pelota game or
event, or maintain or use a totalizator or other device,
method or system to bet or gamble on any basque
pelota game or event.

Sec. 6. No person or group of persons shall fix a basque

pelota game for the purpose of insuring the winning of
certain determined pelotari or pelotaris.
The Title of R.A. No. 954 does not show that it seeks to limit the operation of
jai-alai only to entities with franchise given by Congress. what the title
trumpets as the sole subject of the law is the criminalization of certain
practices relating to jai-alai games. The title of a law is a valuable intrinsic
aid in determining legislative intent. 3
The Explanatory Note 4 of House Bill 3204, the precursor of R.A. No. 954,
also reveals that the intent of the law is only to criminalize the practice of
illegal bookies and game-fixing in jai-alai. It states:
This bill seeks to prohibit certain anomalous practice of
"bookies" in connection with the holding of horse races or
"basque pelota" games. The term "bookie" as commonly
understood refers to a person, who without any license
therefor, operates outside the compounds of racing clubs
and accepts bets from the public. They pay dividends to
winners minus a commission, which is usually 10%.
Prosecutions of said persons have been instituted under
Act No. 4240 which was enacted in 1935. However, in a
recent opinion released by the City Fiscal of Manila he
maintains that Act No. 4240 has already been repealed,
so that the present law regulating ordinary horse races
permits "bookies" to ply their trade, but not on
sweepstakes races and other races held for charitable
purposes. With the operation of "booking" places in the
City of Manila, the Government has been losing no less
than P600,000.00 a year, which amount represents the tax
that should have been collected from bets made in such
places. for these reasons, the approval of the bill is
earnestly recommended.

76

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

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

legislative franchise to conduct basque pelota games shall
offer, take or arrange bets on any basque pelota game or
event, or maintain or use a totalizator or other device,
method or system to bet or gamble on any basque
pelota game or event outside the place, enclosure,
or fronton where the basque pelota game is held.

Page

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

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xxx xxx xxx

RESUMPTION OF SESSION
THE SPEAKER. The session is
resumed

MR. ZOSA. Precisely, Mr. Speaker, they

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

MR. CINCO. Mr. Speaker, I withdraw

my motion for postponement.

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

law. 7

MR. CALO. Mr. Speaker, will the

gentleman may yield, if he so desires.

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

MR. ZOSA. Willingly.

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

The subsequent enactment of P.D. No. 771 on August 20, 1975 further
demolished the submission of petitioners. In clear and certain language,
P.D. no. 771 recalled the owner of local governments to issue jai-alai
franchises and permits. It also revoked existing franchises and permits
issued by local governments. If R.A. no. 954 had already disauthorized local
governments from granting franchisers and permits, there would be no need
to enact P.D. no. 771. No rule of statutory construction will be considered
any law a meaningless redundancy.
The passage of P.D. No. 771, also negates petitioners' insistence that for
ADC to continue operating, it must show it has a franchise from Congress,
not just a permit from the City of Manila. The suggested dichotomy between
a legislative franchise and city permit does not impress. If the City of Manila
is empowered to license the ADC it is because the power was delegated to it

77

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

MR. CALO. Is not this matter of national

importance because Jai-Alai
games and horse races are held only in
Manila?

Page

As said Explanatory Note is expressive of the purpose of the bill, it gives a

reliable keyhole on the scope and coverage of R.A. No. 954. 5 Nothing from
the Explanatory Note remotely suggests any intent of the law to revoke the
power of the City of Manila to issue permits to operate jai-alai games within
its territorial jurisdiction.

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

We now apply this lucidly-lined test to the petitions at bench. To reiterate,

P.D. No. 771 utilized two methods to regulate jai-alai: First, it reverted the
power to issue franchise and permit to the national government, second, it
revoked all existing franchise and permit issued by local governments.
I concede that the first method is invulnerable even to the strongest of
constitutional attack. Part of the plenary power of Congress to make laws is
the right ot grant franchise and permits allowing the exercise of certain
privileges. Congress can delegate the exercise of this innate power to grant
franchises as it did to the City of Manila when it granted its charter on June
18, 1949 thru R.A. no. 409. Congress can also revoke the delegated power
and choose to wield the power itself as it did thru then President Marcos who
exercised legislative powers by enacting P.D. No. 771. In the petitions at
bench, Congress revoked the power of local government to issue franchises
and permits which it had priorly delegated. In doing so and in deciding to
wield the power itself to meet the perceived problems of the time, the
legislature exercised its distinct judgment and the other branches of
government, including this Court, cannot supplant this judgment without
running afoul of the principle of separation powers. To be sure, this particular
legislative method to regulate the problem of mushrooming applications for
jai-alai franchise cannot be faulted as bereft of rationality. In the hearing of
the petitions at bench, Executive Secretary Guingona established the fact
that at the time of the enactment of P.D. No. 771, there were numerous
applications to run jai-alai games in various cities and municipalities of the
archipelago. To prevent the proliferation of these applications and minimize
their ill effects, the law centralized their screening by the national
government alone. The law excluded local governments in the process. The
revocation of the delegated power to local governments does not impair any
right. Applicants to franchises have no right to insist that their applications be
acted upon by local governments. Their right to a franchise is only in
purpose.
The second method adopted by Section 3 of P.D. No. 771 which
revoked all existing franchises and permits is, however, constitutionally
impermissible. On its face, section 3 purports to revoke all existing
franchises and permits. During the oral argument of the petitions at bench,

78

Petitioners' second line of argument urges that in any event, Section 3 of

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

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

Page

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

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

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

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

It is also my respectful submission that the unconstitutionality of section 3 of

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

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

79

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

But while I wholeheartedly subscribe to the many impeccable theses of Mr.

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

Page

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

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Beyond debate, gambling is an evil even if its advocates bleach its
nefariousness by upgrading it as a necessary evil. In a country where it is a
policy to promote the youth's physical, moral, spiritual, intellectual, and social
well-being, 17 there is no right to gamble, neither a right to promote gambling
for gambling is contra bonos mores. To require the legislature to strictly
observe procedural before it can revoke a gambling due process before it
can revoke a gambling franchise is to put too much primacy on property
rights. We then stand in danger of reviving the long lamented 1905 ruling
in Lochner v. New York 18 which unwisely struck down government
interference in contractual liberty. The spirit of liberalism which provides the
main driving force of social justice rebels against the resuscitation of the
ruling Lochner from its sarcophagus. We should not be seduced by any
judicial activism unduly favoring private economic interest 19 at the expense
of the public good.
I also support the stance of Mr. Justice Quiason which resisted the stance
that the Court should close its eyes to allegations that section 3 of P.D. No.
771 was conceived and effected to give naked preference to a favored entity
due to pedigree. I reiterate the view that section 1, Article VIII of the
Constitution expanding the jurisdiction of this Court to determine whether or
not there has been a grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of any branch or agency of government is not a
pointless postulate. Without the grant of this new power, it would be difficult,
if not impossible, to pierce through the pretentious purposes of P.D. No. 771.
P.D. No. 771 has no right to a reverential treatment for it is not a real law as
it is not the product of an authentic deliberative legislature. Rather, it is the
dictate of a public official who then had a monopoly of executive and
legislative powers. As it was not infrequently done at that time, the whereas
clauses of laws used to camouflage a private purpose by the invocation of
public welfare. The tragedy is that the bogus invocation of public welfare
succeeded partly due to the indefensible deference given to official acts of
government. The new Constitution now calls for a heightened judicial
scrutiny of official acts. For this purpose, it has extirpated even the colonial
roots of our impotence. It is time to respond to this call with neither a pause
nor a half-pause.

Page

80

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

dismiss the petitions.

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

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

Section 2. As service fee thereof, an amount equivalent to

P0.30 per square meter of every lot resulting or win result
from such subdivision shall be charged by the City
Engineer's Office.

SALVADOR VILLACORTA as City Engineer of Dagupan City, and JUAN

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

Section 3. It shall be unlawful for the Register of Deeds of

Dagupan City to allow the registration of a subdivision plan
unless there is prior written certification issued by the City
Engineer that such plan has already been submitted to his
office and that the same is in order.

Victor T. Llamas, Jr. for respondents.

Section 4. Any violation of this ordinance shall be

punished by a fine not exceeding two hundred (P200.00)
pesos or imprisonment not exceeding six (6) months or
both in the discretion of the judge.

CRUZ, J.:

Section 5. This ordinance shall take effect immediately

upon approval.

This is a petition for certiorari against a decision of the Court of First

Instance of Pangasinan annulling an ordinance adopted by the municipal
board of Dagupan City.
The ordinance reads in full as follows:
ORDINANCE 22
AN ORDINANCE REGULATING SUBDIVISION PLANS
OVER PARCELS OF LAND IN THE CITY OF DAGUPAN.
Be it ordained by the Municipal Board of Dagupan City in
session assembled:
Section 1. Every proposed subdivision plan over any lot in
the City of Dagupan, shalt before the same is submitted
for approval and/or verification by the Bureau of Lands
and/or the Land Registration Commission, be previously
submitted to the City Engineer of the City who shall see to
it that no encroachment is made on any portion of the

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

81

FIRST DIVISION

Page

Republic of the Philippines

SUPREME COURT
Manila

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Atty. Lapid
Dagupan imposes upon a subdivision owner additional
conditions.

It is necessary to stress that unless the creeping interference of the

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

xxx xxx xxx

The Court takes note of the laudable purpose of the
ordinance in bringing to a halt the surreptitious registration
of lands belonging to the government. But as already
intimidated above, the powers of the board in enacting
such a laudable ordinance cannot be held valid when it
shall impede the exercise of rights granted in a general
law and/or make a general law subordinated to a local
ordinance.
We affirm.
To sustain the ordinance would be to open the floodgates to other
ordinances amending and so violating national laws in the guise of
implementing them. Thus, ordinances could be passed imposing additional
requirements for the issuance of marriage licenses, to prevent bigamy; the
registration of vehicles, to minimize carnaping; the execution of contracts, to
forestall fraud; the validation of passports, to deter imposture; the exercise of
freedom of speech, to reduce disorder; and so on. The list is endless, but the
means, even if the end be valid, would beultra vires.
So many excesses are attempted in the name of the police power that it is
time, we feel, for a brief admonition.

Every member of society, while paying proper deference to the general

welfare, must not be deprived of the right to be left alone or, in the Idiom of
the day, "to do his thing." As long as he does not prejudice others, his
freedom as an individual must not be unduly curtailed.
We therefore urge that proper care attend the exercise of the police power
lest it deteriorate into an unreasonable intrusion into the purely private affairs
of the individual. The so-called "general welfare" is too amorphous and
convenient an excuse for official arbitrariness.
Let it always be remembered that in the truly democratic state, protecting the
rights of the individual is as important as, if not more so than, protecting the
rights of the public.
This advice is especially addressed to the local governments which exercise
the police power only by virtue of a valid delegation from the national
legislature under the general welfare clause. In the instant case, Ordinance
No. 22 suffers from the additional defect of violating this authority for
legislation in contravention of the national law by adding to its requirements.
WHEREFORE, the decision of the lower court annulling the challenged
ordinance is AFFIRMED, without any pronouncement as to costs.
SO ORDERED.

82

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

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

Page

Regulation is a fact of life in any well-ordered community. As society

becomes more and more complex, the police power becomes
correspondingly ubiquitous. This has to be so for the individual must
subordinate his interests to the common good, on the time honored
justification of Salus populi est suprema lex.

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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.

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, S64 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."

83

FIRST DIVISION

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:

Page

Republic of the Philippines

SUPREME COURT
Manila

PubCorp Cases
Atty. Lapid

We find the stand of the private respondent as well as the decision of the
respondent Judge to be well-founded. We quote with approval the lower
court's ruling which declared null and void Section 9 of the questioned city
ordinance:
The issue is: Is Section 9 of the ordinance in question a
valid exercise of the police power?
An examination of the Charter of Quezon City (Rep. Act
No. 537), does not reveal any provision that would justify
the ordinance in question except the provision granting
police power to the City. Section 9 cannot be justified
under the power granted to Quezon City to tax, fix the
license fee, and regulatesuch other business, trades, and
occupation as may be established or practised in the City.'
(Subsections 'C', Sec. 12, R.A. 537).
The power to regulate does not include the power to
prohibit (People vs. Esguerra, 81 PhiL 33, Vega vs.
Municipal Board of Iloilo, L-6765, May 12, 1954; 39 N.J.
Law, 70, Mich. 396). A fortiori, the power to regulate does
not include the power to confiscate. The ordinance in
question not only confiscates but also prohibits the
operation of a memorial park cemetery, because under
Section 13 of said ordinance, 'Violation of the provision
thereof is punishable with a fine and/or imprisonment and
that upon conviction thereof the permit to operate and

'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.' (Subsec. (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 subsection 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.

84

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.

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-

Page

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.

PubCorp Cases
Atty. Lapid

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

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

85

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.

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).

Page

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).

PubCorp Cases
Atty. Lapid

... 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

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

There is no reasonable relation between the setting aside of at least six (6)
percent of the total area of an private cemeteries for charity burial grounds of
deceased paupers and the promotion of health, morals, good order, safety,
or the general welfare of the people. The ordinance is actually a taking
without compensation of a certain area from a private cemetery to benefit
paupers who are charges of the municipal corporation. Instead of building or
maintaining a public cemetery for this purpose, the city passes the burden to
private cemeteries.
The expropriation without compensation of a portion of private cemeteries is
not covered by Section 12(t) of Republic Act 537, the Revised Charter of
Quezon City which empowers the city council to prohibit the burial of the
dead within the center of population of the city and to provide for their burial
in a proper place subject to the provisions of general law regulating burial
grounds and cemeteries. When the Local Government Code, Batas
Pambansa Blg. 337 provides in Section 177 (q) that a Sangguniang
panlungsod may "provide for the burial of the dead in such place and in such
manner as prescribed by law or ordinance" it simply authorizes the city to
provide its own city owned land or to buy or expropriate private properties to
construct public cemeteries. This has been the law and practise in the past.
It continues to the present. Expropriation, however, requires payment of just
compensation. The questioned ordinance is different from laws and
regulations requiring owners of subdivisions to set aside certain areas for
streets, parks, playgrounds, and other public facilities from the land they sell
to buyers of subdivision lots. The necessities of public safety, health, and
convenience are very clear from said requirements which are intended to
insure the development of communities with salubrious and wholesome
environments. The beneficiaries of the regulation, in turn, are made to pay
by the subdivision developer when individual lots are sold to home-owners.
As a matter of fact, the petitioners rely solely on the general welfare clause
or on implied powers of the municipal corporation, not on any express
provision of law as statutory basis of their exercise of power. The clause has
always received broad and liberal interpretation but we cannot stretch it to
cover this particular taking. Moreover, the questioned ordinance was passed
after Himlayang Pilipino, Inc. had incorporated. received necessary licenses

86

We have likewise considered the principles earlier stated

in Case v. Board of Health supra :

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.

Page

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 wellbeing 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.)

PubCorp Cases
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and permits and commenced operating. The sequestration of six percent of
the cemetery cannot even be considered as having been impliedly
acknowledged by the private respondent when it accepted the permits to
commence operations.
WHEREFORE, the petition for review is hereby DISMISSED. The decision
of the respondent court is affirmed.
SO ORDERED.

Page

87

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

concur.

PubCorp Cases
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Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 135962

March 27, 2000

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner,

vs.
BEL-AIR VILLAGE ASSOCIATION, INC., respondent.

movement of persons, Neptune Street shall be opened to vehicular

traffic effective January 2, 1996.
In view whereof, the undersigned requests you to voluntarily open
the points of entry and exit on said street.
Thank you for your cooperation and whatever assistance that may
be extended by your association to the MMDA personnel who will
be directing traffic in the area.
Finally, we are furnishing you with a copy of the handwritten
instruction of the President on the matter.

PUNO, J.:
Very truly yours,
Not infrequently, the government is tempted to take legal shortcuts solve
urgent problems of the people. But even when government is armed with the
best of intention, we cannot allow it to run roughshod over the rule of law.
Again, we let the hammer fall and fall hard on the illegal attempt of the
MMDA to open for public use a private road in a private subdivision. While
we hold that the general welfare should be promoted, we stress that it
should not be achieved at the expense of the rule of law.
Petitioner MMDA is a government agency tasked with the delivery of basic
services in Metro Manila. Respondent Bel-Air Village Association, Inc.
(BAVA) is a non-stock, non-profit corporation whose members are
homeowners in Bel-Air Village, a private subdivision in Makati City.
Respondent BAVA is the registered owner of Neptune Street, a road inside
Bel-Air Village.
On December 30, 1995, respondent received from petitioner, through its
Chairman, a notice dated December 22, 1995 requesting respondent to
open Neptune Street to public vehicular traffic starting January 2, 1996. The
notice reads:
SUBJECT: NOTICE of the Opening of Neptune Street to Traffic.

PROSPERO I. ORETA
Chairman 1
On the same day, respondent was apprised that the perimeter wall
separating the subdivision from the adjacent Kalayaan Avenue
would be demolished.
On January 2, 1996, respondent instituted against petitioner before the
Regional Trial Court, Branch 136, Makati City, Civil Case No. 96-001 for
injunction. Respondent prayed for the issuance of a temporary restraining
order and preliminary injunction enjoining the opening of Neptune Street and
prohibiting the demolition of the perimeter wall. The trial court issued a
temporary restraining order the following day.
On January 23, 1996, after due hearing, the trial court denied issuance of a
preliminary injunction. 2 Respondent questioned the denial before the Court
of Appeals in CA-G.R. SP No. 39549. The appellate court conducted an
ocular inspection of Neptune Street 3 and on February 13, 1996, it issued a
writ of preliminary injunction enjoining the implementation of the MMDA's
proposed action. 4
On January 28, 1997, the appellate court rendered a Decision on the merits
of the case finding that the MMDA has no authority to order the opening of
Neptune Street, a private subdivision road and cause the demolition of its

Page

Please be informed that pursuant to the mandate of the MMDA law

or Republic Act No. 7924 which requires the Authority to rationalize
the use of roads and/or thoroughfares for the safe and convenient

88

Dear President Lindo,

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For want of sustainable substantiation, the Motion to Cite Roberto

L. del Rosario in contempt is denied. 5
No pronouncement as to costs.
SO ORDERED. 6
The Motion for Reconsideration of the decision was denied on September
28, 1998. Hence, this recourse.
Petitioner MMDA raises the following questions:
I
HAS THE METROPOLITAN MANILA DEVELOPMENT
AUTHORITY (MMDA) THE MANDATE TO OPEN NEPTUNE
STREET TO PUBLIC TRAFFIC PURSUANT TO ITS
REGULATORY AND POLICE POWERS?
II
IS THE PASSAGE OF AN ORDINANCE A CONDITION
PRECEDENT BEFORE THE MMDA MAY ORDER THE OPENING
OF SUBDIVISION ROADS TO PUBLIC TRAFFIC?
III
IS RESPONDENT BEL-AIR VILLAGE ASSOCIATION, INC.
ESTOPPED FROM DENYING OR ASSAILING THE AUTHORITY
OF THE MMDA TO OPEN THE SUBJECT STREET?
IV

V
HAS RESPONDENT COME TO COURT WITH UNCLEAN
HANDS?7
Neptune Street is owned by respondent BAVA. It is a private road inside BelAir Village, a private residential subdivision in the heart of the financial and
commercial district of Makati City. It runs parallel to Kalayaan Avenue, a
national road open to the general public. Dividing the two (2) streets is a
concrete perimeter wall approximately fifteen (15) feet high. The western
end of Neptune Street intersects Nicanor Garcia, formerly Reposo Street, a
subdivision road open to public vehicular traffic, while its eastern end
intersects Makati Avenue, a national road. Both ends of Neptune Street are
guarded by iron gates.
Petitioner MMDA claims that it has the authority to open Neptune Street to
public traffic because it is an agent of the state endowed with police power in
the delivery of basic services in Metro Manila. One of these basic services is
traffic management which involves the regulation of the use of thoroughfares
to insure the safety, convenience and welfare of the general public. It is
alleged that the police power of MMDA was affirmed by this Court in the
consolidated cases of Sangalang v. Intermediate Appellate Court. 8 From the
premise that it has police power, it is now urged that there is no need for the
City of Makati to enact an ordinance opening Neptune street to the public. 9
Police power is an inherent attribute of sovereignty. It has been defined as
the power vested by the Constitution in the legislature to make, ordain, and
establish all manner of wholesome and reasonable laws, statutes and
ordinances, either with penalties or without, not repugnant to the
Constitution, as they shall judge to be for the good and welfare of the
commonwealth, and for the subjects of the same. 10 The power is plenary
and its scope is vast and pervasive, reaching and justifying measures for
public health, public safety, public morals, and the general welfare. 11
It bears stressing that police power is lodged primarily in the National
Legislature. 12 It cannot be exercised by any group or body of individuals not
possessing legislative power. 13 The National Legislature, however, may
delegate this power to the President and administrative boards as well as
the lawmaking bodies of municipal corporations or local government

89

WHEREFORE, the Petition is GRANTED; the challenged Order

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

WAS RESPONDENT DEPRIVED OF DUE PROCESS DESPITE

THE SEVERAL MEETINGS HELD BETWEEN MMDA AND THE
AFFECTED EEL-AIR RESIDENTS AND BAVA OFFICERS?

Page

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

PubCorp Cases
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Our Congress delegated police power to the local government units in the
Local Government Code of 1991. This delegation is found in Section 16 of
the same Code, known as the general welfare clause, viz:
Sec. 16. General Welfare. Every local government unit shall
exercise the powers expressly granted, those necessarily implied
therefrom, as well as powers necessary, appropriate, or incidental
for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall
ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right
of the people to a balanced ecology, encourage and support the
development of appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance
economic prosperity and social justice, promote full employment
among their residents, maintain peace and order, and preserve the
comfort and convenience of their inhabitants. 21
Local government units exercise police power through their respective
legislative bodies. The legislative body of the provincial government is
the sangguniang panlalawigan, that of the city government is
the sangguniang panlungsod, that of the municipal government is
the sangguniang bayan, and that of the barangay is thesangguniang
barangay. The Local Government Code of 1991 empowers the sangguniang
panlalawigan,sangguniang panlungsod and sangguniang bayan to "enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the [province, city or municipality, as the case may be], and its
inhabitants pursuant to Section 16 of the Code and in the proper exercise of
the corporate powers of the [province, city municipality] provided under the
Code . . . " 22 The same Code gives the sangguniang barangay the power to

Metropolitan or Metro Manila is a body composed of several local

government units i.e., twelve (12) cities and five (5) municipalities,
namely, the cities of Caloocan, Manila, Mandaluyong, Makati, Pasay, Pasig,
Quezon, Muntinlupa, Las Pinas, Marikina, Paranaque and Valenzuela, and
the municipalities of Malabon, Navotas, Pateros, San Juan and Taguig. With
the passage of Republic Act (R. A.) No. 7924 24 in 1995, Metropolitan Manila
was declared as a "special development and administrative region" and the
Administration of "metro-wide" basic services affecting the region placed
under "a development authority" referred to as the MMDA. 25
"Metro-wide services" are those "services which have metro-wide impact
and transcend local political boundaries or entail huge expenditures such
that it would not be viable for said services to be provided by the individual
local government units comprising Metro Manila." 26 There are seven (7)
basic metro-wide services and the scope of these services cover the
following: (1) development planning; (2) transport and traffic management;
(3) solid waste disposal and management; (4) flood control and sewerage
management; (5) urban renewal, zoning and land use planning, and shelter
services; (6) health and sanitation, urban protection and pollution control;
and (7) public safety. The basic service of transport and traffic management
includes the following:
(b) Transport and traffic management which include the
formulation, coordination, and monitoring of
policies, standards, programs and projects to rationalize the
existing transport operations, infrastructure requirements, the use
of thoroughfares, and promotion of safe and convenient movement
of persons and goods; provision for the mass transport system and
the institution of a system to regulate road users;administration and
implementation of all traffic enforcement operations, traffic
engineering services and traffic education programs, including the
institution of a single ticketing system in Metropolitan Manila;" 27
In the delivery of the seven (7) basic services, the MMDA has the following
powers and functions:
Sec. 5. Functions and powers of the Metro Manila Development
Authority. The MMDA shall:

90

A local government is a "political subdivision of a nation or state which is

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

"enact ordinances as may be necessary to discharge the responsibilities

conferred upon it by law or ordinance and to promote the general welfare of
the inhabitants thereon." 23

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

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(c) Undertake and manage on its own metro-wide programs and

projects for the delivery of specific services under its jurisdiction,
subject to the approval of the Council. For this purpose, MMDA can
create appropriate project management offices;
(d) Coordinate and monitor the implementation of such plans,
programs and projects in Metro Manila; identify bottlenecks and
adopt solutions to problems of implementation;
(e) The MMDA shall set the policies concerning traffic in Metro
Manila, and shall coordinate and regulate the implementation of all
programs and projects concerning traffic management, specifically
pertaining to enforcement, engineering and education. Upon
request, it shall be extended assistance and cooperation,including
but not limited to, assignment of personnel, by all other government
agencies and offices concerned;
(f) Install and administer a single ticketing system, fix, impose and
collect fines and penalties for all kinds of violations of traffic rules
and regulations, whether moving or non-moving in nature, and
confiscate and suspend or revoke drivers' licenses in the
enforcement of such traffic laws and regulations, the provisions of
RA 4136 and PD 1605 to the contrary notwithstanding. For this
purpose, the Authority shall impose all traffic laws and regulations
in Metro Manila, through its traffic operation center, and may
deputize members of the PNP, traffic enforcers of local government
units, duly licensed security guards, or members of nongovernmental organizations to whom may be delegated certain
authority, subject to such conditions and requirements as the
Authority may impose; and

The implementation of the MMDA's plans, programs and projects is

undertaken by the local government units, national government agencies,
accredited people's organizations, non-governmental organizations, and the
private sector as well as by the MMDA itself. For this purpose, the MMDA
has the power to enter into contracts, memoranda of agreement and other
arrangements with these bodies for the delivery of the required services
Metro Manila. 28
The governing board of the MMDA is the Metro Manila Council. The Council
is composed of the mayors of the component 12 cities and 5 municipalities,
the president of the Metro Manila Vice-Mayors' League and the president of
the Metro Manila Councilors' League. 29 The Council is headed by Chairman
who is appointed by the President and vested with the rank of cabinet
member. As the policy-making body of the MMDA, the Metro Manila Council
approves metro-wide plans, programs and projects, and issues the
necessary rules and regulations for the implementation of said plans; it
approves the annual budget of the MMDA and promulgate the rules and
regulations for the delivery of basic services, collection of service and
regulatory fees, fines and penalties. These functions are particularly
enumerated as follows:
Sec. 6. Functions of the Metro Manila Council.
(a) The Council shall be the policy-making body of the MMDA;
(b) It shall approve metro-wide plans, programs and projects and
issue rules and regulations deemed necessary by the MMDA to
carry out the purposes of this Act;
(c) It may increase the rate of allowances and per diems of the
members of the Council to be effective during the term of the
succeeding Council. It shall fix the compensation of the officers and
personnel of the MMDA, and approve the annual budget thereof for
submission to the Department of Budget and Management (DBM);

91

(b) Prepare, coordinate and regulate the implementation of

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

(g) Perform other related functions required to achieve the

objectives of the MMDA, including the undertaking of delivery of
basic services to the local government units, when deemed
necessary subject to prior coordination with and consent of the
local government unit concerned.

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(a) Formulate, coordinate and regulate the implementation of

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

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It will be noted that the powers of the MMDA are limited to the following acts:
formulation, coordination, regulation, implementation, preparation,
management, monitoring, setting of policies, installation of a system and
administration. There is no syllable in R.A. No. 7924 that grants the MMDA
police power, let alone legislative power. Even the Metro Manila Council has
not been delegated any legislative power. Unlike the legislative bodies of the
local government units, there is no provision in R.A. No. 7924 that empowers
the MMDA or its Council to "enact ordinances, approve resolutions
appropriate funds for the general welfare" of the inhabitants of Metro Manila.
The MMDA is, as termed in the charter itself, "development authority." 30 It is
an agency created for the purpose of laying down policies and coordinating
with the various national government agencies, people's organizations, nongovernmental organizations and the private sector for the efficient and
expeditious delivery of basic services in the vast metropolitan area. All its
functions are administrative in nature and these are actually summed up in
the charter itself, viz:
Sec. 2. Creation of the Metropolitan Manila Development Authority.
....
The MMDA shall perform planning, monitoring and coordinative
functions, and in the process exerciseregulatory and supervisory
authority over the delivery of metro-wide services within Metro

Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate

Appellate Court 32 where we upheld a zoning ordinance issued by the Metro
Manila Commission (MMC), the predecessor of the MMDA, as an exercise
of police power. The first Sangalang decision was on the merits of the
petition, 33 while the second decision denied reconsideration of the first case
and in addition discussed the case of Yabut v. Court of Appeals. 34
Sangalang v. IAC involved five (5) consolidated petitions filed by respondent
BAVA and three residents of Bel-Air Village against other residents of the
Village and the Ayala Corporation, formerly the Makati Development
Corporation, as the developer of the subdivision. The petitioners sought to
enforce certain restrictive easements in the deeds of sale over their
respective lots in the subdivision. These were the prohibition on the setting
up of commercial and advertising signs on the lots, and the condition that the
lots be used only for residential purposes. Petitioners alleged that
respondents, who were residents along Jupiter Street of the subdivision,
converted their residences into commercial establishments in violation of the
"deed restrictions," and that respondent Ayala Corporation ushered in the full
commercialization" of Jupiter Street by tearing down the perimeter wall that
separated the commercial from the residential section of the village. 35
The petitions were dismissed based on Ordinance No. 81 of the Municipal
Council of Makati and Ordinance No. 81-01 of the Metro Manila Commission
(MMC). Municipal Ordinance No. 81 classified Bel-Air Village as a Class A
Residential Zone, with its boundary in the south extending to the center line
of Jupiter Street. The Municipal Ordinance was adopted by the MMC under
the Comprehensive Zoning Ordinance for the National Capital Region and
promulgated as MMC Ordinance No. 81-01. Bel-Air Village was indicated
therein as bounded by Jupiter Street and the block adjacent thereto was
classified as a High Intensity Commercial Zone. 36
We ruled that since both Ordinances recognized Jupiter Street as the
boundary between Bel-Air Village and the commercial district, Jupiter Street
was not for the exclusive benefit of Bel-Air residents. We also held that the
perimeter wall on said street was constructed not to separate the residential
from the commercial blocks but simply for security reasons, hence, in tearing
down said wall, Ayala Corporation did not violate the "deed restrictions" in
the deeds of sale.

92

Clearly, the scope of the MMDA's function is limited to the delivery of the
seven (7) basic services. One of these is transport and traffic management
which includes the formulation and monitoring of policies, standards and
projects to rationalize the existing transport operations, infrastructure
requirements, the use of thoroughfares and promotion of the safe movement
of persons and goods. It also covers the mass transport system and the
institution of a system of road regulation, the administration of all traffic
enforcement operations, traffic engineering services and traffic education
programs, including the institution of a single ticketing system in Metro
Manila for traffic violations. Under the service, the MMDA is expressly
authorized "to set the policies concerning traffic" and "coordinate and
regulate the implementation of all traffic management programs." In addition,
the MMDA may "install and administer a single ticketing system," fix, impose
and collect fines and penalties for all traffic violations.

Manila, without diminution of the autonomy of the local government

units concerning purely local matters. 31

Page

(d) It shall promulgate rules and regulations and set policies and
standards for metro-wide application governing the delivery of basic
services, prescribe and collect service and regulatory fees, and
impose and collect fines and penalties.

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Contrary to petitioner's claim, the two Sangalang cases do not apply to the
case at bar. Firstly, both involved zoning ordinances passed by the
municipal council of Makati and the MMC. In the instant case, the basis for
the proposed opening of Neptune Street is contained in the notice of
December 22, 1995 sent by petitioner to respondent BAVA, through its
president. The notice does not cite any ordinance or law, either by the
Sangguniang Panlungsod of Makati City or by the MMDA, as the legal basis
for the proposed opening of Neptune Street. Petitioner MMDA simply relied
on its authority under its charter "to rationalize the use of roads and/or
thoroughfares for the safe and convenient movement of persons."
Rationalizing the use of roads and thoroughfares is one of the acts that fall
within the scope of transport and traffic management. By no stretch of the
imagination, however, can this be interpreted as an express or implied grant
of ordinance-making power, much less police power.
Secondly, the MMDA is not the same entity as the MMC in Sangalang.
Although the MMC is the forerunner of the present MMDA, an examination
of Presidential Decree (P. D.) No. 824, the charter of the MMC, shows that
the latter possessed greater powers which were not bestowed on the
present MMDA.
Metropolitan Manila was first created in 1975 by Presidential Decree (P.D.)
No. 824. It comprised the Greater Manila Area composed of the contiguous
four (4) cities of Manila, Quezon, Pasay and Caloocan, and the thirteen (13)
municipalities of Makati, Mandaluyong, San Juan, Las Pinas, Malabon,
Navotas, Pasig, Pateros, Paranaque, Marikina, Muntinlupa and Taguig in the
province of Rizal, and Valenzuela in the province of Bulacan. 40Metropolitan

Metropolitan Manila was established as a "public corporation" with the

following powers:
Sec. 1. Creation of the Metropolitan Manila. There is hereby
created a public corporation, to be known as the Metropolitan
Manila, vested with powers and attributes of a corporation including
the power to make contracts, sue and be
sued, acquire, purchase, expropriate, hold, transfer and dispose of
property and such other powers as are necessary to carry out its
purposes. The Corporation shall be administered by a Commission
created under this Decree. 42
The administration of Metropolitan Manila was placed under the Metro
Manila Commission (MMC) vested with the following powers:
Sec. 4. Powers and Functions of the Commission. The Commission shall
have the following powers and functions:
1. To act as a central government to establish and administer
programs and provide services common to the area;
2. To levy and collect taxes and special assessments, borrow and
expend money and issue bonds, revenue certificates, and other
obligations of indebtedness. Existing tax measures should,
however, continue to be operative until otherwise modified or
repealed by the Commission;
3. To charge and collect fees for the use of public service facilities;
4. To appropriate money for the operation of the metropolitan
government and review appropriations for the city and municipal
units within its jurisdiction with authority to disapprove the same if

93

In the second Sangalang/Yabut decision, we held that the opening of Jupiter

Street was warranted by the demands of the common good in terms of
"traffic decongestion and public convenience." Jupiter was opened by the
Municipal Mayor to alleviate traffic congestion along the public streets
adjacent to the Village. 38 The same reason was given for the opening to
public vehicular traffic of Orbit Street, a road inside the same village. The
destruction of the gate in Orbit Street was also made under the police power
of the municipal government. The gate, like the perimeter wall along Jupiter,
was a public nuisance because it hindered and impaired the use of property,
hence, its summary abatement by the mayor was proper and legal. 39

Manila was created as a response to the finding that the rapid growth of
population and the increase of social and economic requirements in these
areas demand a call for simultaneous and unified development; that the
public services rendered by the respective local governments could be
administered more efficiently and economically if integrated under a system
of central planning; and this coordination, "especially in the maintenance of
peace and order and the eradication of social and economic ills that fanned
the flames of rebellion and discontent [were] part of reform measures under
Martial Law essential to the safety and security of the State." 41

Page

We upheld the ordinances, specifically MMC Ordinance No. 81-01, as a

legitimate exercise of police power. 37The power of the MMC and the Makati
Municipal Council to enact zoning ordinances for the general welfare
prevailed over the "deed restrictions".

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6. To enact or approve ordinances, resolutions and to fix penalties

for any violation thereof which shall not exceed a fine of P10,000.00
or imprisonment of six years or both such fine and imprisonment for
a single offense;
7. To perform general administrative, executive and policy-making
functions;
8. To establish a fire control operation center, which shall direct the
fire services of the city and municipal governments in the
metropolitan area;
9. To establish a garbage disposal operation center, which shall
direct garbage collection and disposal in the metropolitan area;
10. To establish and operate a transport and traffic center, which
shall direct traffic activities;
11. To coordinate and monitor governmental and private activities
pertaining to essential services such as transportation, flood control
and drainage, water supply and sewerage, social, health and
environmental services, housing, park development, and others;
12. To insure and monitor the undertaking of a comprehensive
social, economic and physical planning and development of the
area;
13. To study the feasibility of increasing barangay participation in
the affairs of their respective local governments and to propose to
the President of the Philippines definite programs and policies for
implementation;

15. To perform such other tasks as may be assigned or directed by

the President of the Philippines.
The MMC was the "central government" of Metro Manila for the purpose of
establishing and administering programs providing services common to the
area. As a "central government" it had the power to levy and collect taxes
and special assessments, the power to charge and collect fees; the power to
appropriate money for its operation, and at the same time, review
appropriations for the city and municipal units within its jurisdiction. It was
bestowed the power to enact or approve ordinances, resolutions and fix
penalties for violation of such ordinances and resolutions. It also had the
power to review, amend, revise or repeal all ordinances, resolutions and acts
of any of the four (4) cities and thirteen (13) municipalities comprising Metro
Manila.
P.D. No. 824 further provided:
Sec. 9. Until otherwise provided, the governments of the four cities
and thirteen municipalities in the Metropolitan Manila shall continue
to exist in their present form except as may be inconsistent with this
Decree. The members of the existing city and municipal councils in
Metropolitan Manila shall, upon promulgation of this Decree, and
until December 31, 1975, become members of the Sangguniang
Bayan which is hereby created for every city and municipality of
Metropolitan Manila.
In addition, the Sangguniang Bayan shall be composed of as many
barangay captains as may be determined and chosen by the
Commission, and such number of representatives from other
sectors of the society as may be appointed by the President upon
recommendation of the Commission.
xxx

xxx

xxx

The Sangguniang Bayan may recommend to the Commission

ordinances, resolutions or such measures as it may adopt;
Provided, that no such ordinance, resolution or measure shall
become effective, until after its approval by the Commission; and

94

5. To review, amend, revise or repeal all ordinances, resolutions

and acts of cities and municipalities within Metropolitan Manila;

14. To submit within thirty (30) days after the close of each fiscal
year an annual report to the President of the Philippines and to
submit a periodic report whenever deemed necessary; and

Page

found to be not in accordance with the established policies of the

Commission, without prejudice to any contractual obligation of the
local government units involved existing at the time of approval of
this Decree;

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Thus, Metropolitan Manila had a "central government," i.e., the MMC which
fully possessed legislative police powers. Whatever legislative powers the
component cities and municipalities had were all subject to review and
approval by the MMC.
After President Corazon Aquino assumed power, there was a clamor to
restore the autonomy of the local government units in Metro Manila. Hence,
Sections 1 and 2 of Article X of the 1987 Constitution provided:
Sec. 1. The territorial and political subdivisions of the Republic of
the Philippines are the provinces, cities, municipalities and
barangays. There shall be autonomous regions in Muslim
Mindanao and the Cordilleras as herein provided.
Sec. 2. The territorial and political subdivisions shall enjoy local
autonomy.
The Constitution, however, recognized the necessity of creating metropolitan
regions not only in the existing National Capital Region but also in potential
equivalents in the Visayas and Mindanao. 43 Section 11 of the same Article X
thus provided:
Sec. 11. The Congress may, by law, create special metropolitan
political subdivisions, subject to a plebiscite as set forth in Section
10 hereof. The component cities and municipalities shall retain their

Constitution itself expressly provides that Congress may, by law, create

"special metropolitan political subdivisions" which shall be subject to
approval by a majority of the votes cast in a plebiscite in the political units
directly affected; the jurisdiction of this subdivision shall be limited to basic
services requiring coordination; and the cities and municipalities comprising
this subdivision shall retain their basic services requiring coordination; and
the cities and municipalities comprising this subdivision shall retain their
basic autonomy and their own local executive and legislative
assemblies. 44 Pending enactment of this law, the Transitory Provisions of
the Constitution gave the President of the Philippines the power to constitute
the Metropolitan Authority, viz:
Sec. 8. Until otherwise provided by Congress, the President may
constitute the Metropolitan Authority to be composed of the heads
of all local government units comprising the Metropolitan Manila
area. 45
In 1990, President Aquino issued Executive Order (E. O.) No. 392 and
constituted the Metropolitan Manila Authority (MMA). The powers and
functions of the MMC were devolved to the MMA. 46 It ought to be stressed,
however, that not all powers and functions of the MMC were passed to the
MMA. The MMA's power was limited to the "delivery of basic urban services
requiring coordination in Metropolitan Manila." 47 The MMA's governing
body, the Metropolitan Manila Council, although composed of the mayors of
the component cities and municipalities, was merely given power of: (1)
formulation of policies on the delivery of basic services requiring
coordination and consolidation; and (2) promulgation resolutions and other
issuances, approval of a code of basic services and the exercise of its rulemaking power. 48
Under the 1987 Constitution, the local government units became primarily
responsible for the governance of their respective political subdivisions.
The MMA's jurisdiction was limited to addressing common problems
involving basic services that transcended local boundaries. It did not have
legislative power. Its power was merely to provide the local government units
technical assistance in the preparation of local development plans. Any
semblance of legislative power it had was confined to a "review [of]
legislation proposed by the local legislative assemblies to ensure

95

The creation of the MMC also carried with it the creation of the Sangguniang
Bayan. This was composed of the members of the component city and
municipal councils, barangay captains chosen by the MMC and sectoral
representatives appointed by the President. The Sangguniang Bayan had
the power to recommend to the MMC the adoption of ordinances, resolutions
or measures. It was the MMC itself, however, that possessed legislative
powers. All ordinances, resolutions and measures recommended by
the Sangguniang Bayan were subject to the MMC's approval. Moreover, the
power to impose taxes and other levies, the power to appropriate money,
and the power to pass ordinances or resolutions with penal sanctions were
vested exclusively in the MMC.

basic autonomy and shall be entitled to their own local executives

and legislative assemblies. The jurisdiction of the metropolitan
authority that will thereby be created shall be limited to basic
services requiring coordination.

Page

Provided further, that the power to impose taxes and other levies,
the power to appropriate money and the power to pass ordinances
or resolutions with penal sanctions shall be vested exclusively in
the Commission.

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consistency among local governments and with the comprehensive
development plan of Metro Manila," and to "advise the local governments
accordingly." 49

If you go over Section 6, where the powers and functions of the

Metro Manila Development Authority, it is purely coordinative. And
it provides here that the council is policy-making. All right.

When R.A. No. 7924 took effect, Metropolitan Manila became a "special
development and administrative region" and the MMDA a "special
development authority" whose functions were "without prejudice to the
autonomy of the affected local government units." The character of the
MMDA was clearly defined in the legislative debates enacting its charter.

Under the Constitution is a Metropolitan Authority with coordinative

power. Meaning to say, it coordinates all of the different basic
services which have to be delivered to the constituency. All right.

Actually, there are only six (6) political subdivisions provided for in
the Constitution: barangay, municipality, city, province, and we
have the Autonomous Region of Mindanao and we have the
Cordillera. So we have 6. Now. . . . .
HON. [Elias] LOPEZ: May I interrupt, Mr. Chairman. In the case of
the Autonomous Region, that is also specifically mandated by the
Constitution.
THE CHAIRMAN: That's correct. But it is considered to be a
political subdivision. What is the meaning of a political subdivision?
Meaning to say, that it has its own government, it has its own
political personality, it has the power to tax, and all governmental
powers: police power and everything. All right. Authority is different;
because it does not have its own government. It is only a council, it
is an organization of political subdivision, powers, "no, which is not
imbued with any political power.

xxx

xxx

x x x 51

Clearly, the MMDA is not a political unit of government. The power

delegated to the MMDA is that given to the Metro Manila Council to
promulgate administrative rules and regulations in the implementation of the
MMDA's functions. There is no grant of authority to enact ordinances and
regulations for the general welfare of the inhabitants of the metropolis. This
was explicitly stated in the last Committee deliberations prior to the bill's
presentation to Congress. Thus:

96

THE CHAIRMAN [Hon. Ciriaco Alfelor]: Okay, Let me explain. This

has been debated a long time ago, you know. It's a special . . . we
can create a special metropolitan political subdivision.

Of course, we cannot deny that the MMDA has to survive. We have

to provide some funds, resources. But it does not possess any
political power. We do not elect the Governor. We do not have the
power to tax. As a matter of fact, I was trying to intimate to the
author that it must have the power to sue and be sued because it
coordinates. All right. It coordinates practically all these basic
services so that the flow and the distribution of the basic services
will be continuous. Like traffic, we cannot deny that. It's before our
eyes. Sewerage, flood control, water system, peace and order, we
cannot deny these. It's right on our face. We have to look for a
solution. What would be the right solution? All right, we envision
that there should be a coordinating agency and it is called an
authority. All right, if you do not want to call it an authority, it's
alright. We may call it a council or maybe a management agency.

Page

R.A. No. 7924 originated as House Bill No. 14170/11116 and was introduced
by several legislators led by Dante Tinga, Roilo Golez and Feliciano
Belmonte. It was presented to the House of Representatives by the
Committee on Local Governments chaired by Congressman Ciriaco R.
Alfelor. The bill was a product of Committee consultations with the local
government units in the National Capital Region (NCR), with former
Chairmen of the MMC and MMA, 50 and career officials of said agencies.
When the bill was first taken up by the Committee on Local Governments,
the following debate took place:

There is now a problem. Each local government unit is given its

respective . . . as a political subdivision. Kalookan has its powers,
as provided for and protected and guaranteed by the Constitution.
All right, the exercise. However, in the exercise of that power, it
might be deleterious and disadvantageous to other local
government units. So, we are forming an authority where all of
these will be members and then set up a policy in order that the
basic services can be effectively coordinated. All right.

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THE CHAIRMAN: That's very nice. I like that. However, there is a

constitutional impediment.1wphi1 You are making this MMDA a
political subdivision. The creation of the MMDA would be subject to
a plebiscite. That is what I'm trying to avoid. I've been trying to
avoid this kind of predicament. Under the Constitution it states: if it
is a political subdivision, once it is created it has to be subject to a
plebiscite. I'm trying to make this as administrative. That's why we
place the Chairman as a cabinet rank.
HON. BELMONTE: All right, Mr. Chairman, okay, what you are
saying there is . . . . .
THE CHAIRMAN: In setting up ordinances, it is a political exercise,
Believe me.
HON. [Elias] LOPEZ: Mr. Chairman, it can be changed into
issuances of rules and regulations. That would be . . . it shall also
be enforced.

HON. LOPEZ: And you can also say that violation of such rule, you
impose a sanction. But you know, ordinance has a different legal
connotation.
HON. BELMONTE: All right, I defer to that opinion, your Honor.
THE CHAIRMAN: So instead of ordinances, say rules and
regulations.
HON. BELMONTE: Or resolutions. Actually, they are actually
considering resolutions now.
THE CHAIRMAN: Rules and resolutions.
HON. BELMONTE: Rules, regulations and resolutions.

52

The draft of H. B. No. 14170/11116 was presented by the Committee to the

House of Representatives. The explanatory note to the bill stated that the
proposed MMDA is a "development authority" which is a "national agency,
not a political government unit." 53 The explanatory note was adopted as the
sponsorship speech of the Committee on Local Governments. No
interpellations or debates were made on the floor and no amendments
introduced. The bill was approved on second reading on the same day it was
presented. 54
When the bill was forwarded to the Senate, several amendments were
made.1wphi1 These amendments, however, did not affect the nature of the
MMDA as originally conceived in the House of Representatives. 55
It is thus beyond doubt that the MMDA is not a local government unit or a
public corporation endowed with legislative power. It is not even a "special
metropolitan political subdivision" as contemplated in Section 11, Article X of
the Constitution. The creation of a "special metropolitan political subdivision"
requires the approval by a majority of the votes cast in a plebiscite in the
political units directly affected." 56 R. A. No. 7924 was not submitted to the
inhabitants of Metro Manila in a plebiscite. The Chairman of the MMDA is
not an official elected by the people, but appointed by the President with the
rank and privileges of a cabinet member. In fact, part of his function is to
perform such other duties as may be assigned to him by the
President, 57 whereas in local government units, the President merely

97

HON. [Feliciano] BELMONTE: Yes, I believe so, your Honor. When

we say that it has the policies, it's very clear that those policies
must be followed. Otherwise, what's the use of empowering it to
come out with policies. Now, the policies may be in the form of a
resolution or it may be in the form of a ordinance. The term
"ordinance" in this case really gives it more teeth, your honor.
Otherwise, we are going to see a situation where you have the
power to adopt the policy but you cannot really make it stick as in
the case now, and I think here is Chairman Bunye. I think he will
agree that that is the case now. You've got the power to set a
policy, the body wants to follow your policy, then we say let's call it
an ordinance and see if they will not follow it.

HON. BELMONTE: Okay, I will . . . .

Page

THE CHAIRMAN: Yeah, but we have to go over the suggested

revision. I think this was already approved before, but it was
reconsidered in view of the proposals, set-up, to make the MMDA
stronger. Okay, so if there is no objection to paragraph "f". . . And
then next is paragraph "b," under Section 6. "It shall approve metrowide plans, programs and projects and issue ordinances or
resolutions deemed necessary by the MMDA to carry out the
purposes of this Act." Do you have the powers? Does the
MMDA... because that takes the form of a local government unit, a
political subdivision.

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exercises supervisory authority. This emphasizes the administrative
character of the MMDA.
Clearly then, the MMC under P.D. No. 824 is not the same entity as the
MMDA under R.A. No. 7924. Unlike the MMC, the MMDA has no power to
enact ordinances for the welfare of the community. It is the local government
units, acting through their respective legislative councils, that possess
legislative power and police power. In the case at bar, the Sangguniang
Panlungsod of Makati City did not pass any ordinance or resolution ordering
the opening of Neptune Street, hence, its proposed opening by petitioner
MMDA is illegal and the respondent Court of Appeals did not err in so ruling.
We desist from ruling on the other issues as they are unnecessary.
We stress that this decision does not make light of the MMDA's noble efforts
to solve the chaotic traffic condition in Metro Manila. Everyday, traffic jams
and traffic bottlenecks plague the metropolis. Even our once sprawling
boulevards and avenues are now crammed with cars while city streets are
clogged with motorists and pedestrians. Traffic has become a social malaise
affecting our people's productivity and the efficient delivery of goods and
services in the country. The MMDA was created to put some order in the
metropolitan transportation system but unfortunately the powers granted by
its charter are limited. Its good intentions cannot justify the opening for public
use of a private street in a private subdivision without any legal warrant. The
promotion of the general welfare is not antithetical to the preservation of the
rule of law.1wphi1.nt
IN VIEW WHEREOF, the petition is denied. The Decision and Resolution of
the Court of Appeals in CA-G.R. SP No. 39549 are affirmed.
SO ORDERED.

Page

98

Davide, Jr., C.J., Kapunan, Pardo and Ynares-Santiago, JJ., concur.

PubCorp Cases
Atty. Lapid
Republic of the Philippines
SUPREME COURT
Manila

aforesaid lots in favor of one Emma Chavez. Upon completion of payment of

the purchase price, the plaintiff executed the corresponding deeds of sale in
favor of Emma Chavez. Both the agreements (of sale on installment) and the
deeds of sale contained the stipulations or restrictions that:

EN BANC

Ramirez & Ortigas for appellant.

Taada, Teehankee & Carreon for appellee.

SANTOS, J.:
An appeal interposed on June 23, 1965 by plaintiff-appellant, Ortigas & Co.,
Limited Partnership, from the decision of the Court of First Instance of Rizal,
Branch VI, at Pasig, Hon. Andres Reyes presiding, which dismissed its
complaint in Civil Case No. 7706, entitled, "Ortigas & Company, Limited
Partnership, plaintiff, v. Feati Bank and Trust Company, defendant," for lack
of merit.
The following facts a reproduction of the lower court's findings, which, in
turn, are based on a stipulation of facts entered into by the parties are not
disputed. Plaintiff (formerly known as "Ortigas, Madrigal y Cia") is a limited
partnership and defendant Feati Bank and Trust Co., is a corporation duly
organized and existing in accordance with the laws of the Philippines.
Plaintiff is engaged in real estate business, developing and selling lots to the
public, particularly the Highway Hills Subdivision along Epifanio de los
Santos Avenue, Mandaluyong, Rizal.1
On March 4, 1952, plaintiff, as vendor, and Augusto Padilla y Angeles and
Natividad Angeles, as vendees, entered into separate agreements of sale on
installments over two parcels of land, known as Lots Nos. 5 and 6, Block 31,
of the Highway Hills Subdivision, situated at Mandaluyong, Rizal. On July
19, 1962, the said vendees transferred their rights and interests over the

2. All buildings and other improvements (except the fence)

which may be constructed at any time in said lot must be,
(a) of strong materials and properly painted, (b) provided
with modern sanitary installations connected either to the
public sewer or to an approved septic tank, and (c) shall
not be at a distance of less than two (2) meters from its
boundary lines. 2
The above restrictions were later annotated in TCT Nos. 101509 and
101511 of the Register of Deeds of Rizal, covering the said lots and issued
in the name of Emma Chavez. 3
Eventually, defendant-appellee acquired Lots Nos. 5 and 6, with TCT Nos.
101613 and 106092 issued in its name, respectively and the building
restrictions were also annotated therein. 4 Defendant-appellee bought Lot
No. 5 directly from Emma Chavez, "free from all liens and encumbrances as
stated in Annex 'D', 5 while Lot No. 6 was acquired from Republic Flour Mills
through a "Deed of Exchange," Annex "E". 6 TCT No. 101719 in the name of
Republic Flour Mills likewise contained the same restrictions, although
defendant-appellee claims that Republic Flour Mills purchased the said Lot
No. 6 "in good faith. free from all liens and encumbrances," as stated in the
Deed of Sale, Annex "F" 7 between it and Emma Chavez.
Plaintiff-appellant claims that the restrictions annotated on TCT Nos.
101509, 101511, 101719, 101613, and 106092 were imposed as part of its
general building scheme designed for the beautification and development of
the Highway Hills Subdivision which forms part of the big landed estate of
plaintiff-appellant where commercial and industrial sites are also designated
or established. 8
Defendant-appellee, upon the other hand, maintains that the area along the
western part of Epifanio de los Santos Avenue (EDSA) from Shaw
Boulevard to Pasig River, has been declared a commercial and industrial

99

ORTIGAS & CO., LIMITED PARTNERSHIP, plaintiff-appellant,

vs.
FEATI BANK AND TRUST CO., defendant-appellee.

Page

G.R. No. L-24670 December 14, 1979

1. The parcel of land subject of this deed of sale shall be

used the Buyer exclusively for residential purposes, and
she shall not be entitled to take or remove soil, stones or
gravel from it or any other lots belonging to the Seller.

PubCorp Cases
Atty. Lapid

On the basis of the foregoing facts, Civil Case No. 7706, supra, was
submitted in the lower court for decision. The complaint sought, among other
things, the issuance of "a writ of preliminary injunction ... restraining and
enjoining defendant, its agents, assigns, and those acting on its or their
behalf from continuing or completing the construction of a commercial bank
building in the premises ... involved, with the view to commanding the
defendant to observe and comply with the building restrictions annotated in
the defendant's transfer certificate of title."
In deciding the said case, the trial court considered, as the fundamental
issue, whether or not the resolution of the Municipal Council of Mandaluyong
declaring Lots Nos. 5 and 6, among others, as part of the commercial and
industrial zone of the municipality, prevailed over the building restrictions
imposed by plaintiff-appellant on the lots in question. 13 The records do not
show that a writ of preliminary injunction was issued.
The trial court upheld the defendant-appellee and dismissed the complaint,
holding that the subject restrictions were subordinate to Municipal Resolution
No. 27, supra. It predicated its conclusion on the exercise of police power of
the said municipality, and stressed that private interest should "bow down to
general interest and welfare. " In short, it upheld the classification by the
Municipal Council of the area along Epifanio de los Santos Avenue as a
commercial and industrial zone, and held that the same rendered "ineffective
and unenforceable" the restrictions in question as against defendant-

On March 2, 1965, plaintiff-appellant filed a motion for reconsideration of the

above decision, 16 which motion was opposed by defendant-appellee on
March 17, 1965. 17 It averred, among others, in the motion for
reconsideration that defendant- appellee "was duty bound to comply with the
conditions of the contract of sale in its favor, which conditions were duly
annotated in the Transfer Certificates of Title issued in her (Emma Chavez)
favor." It also invited the trial court's attention to its claim that the Municipal
Council had (no) power to nullify the contractual obligations assumed by the
defendant corporation." 18
The trial court denied the motion for reconsideration in its order of March 26,
1965. 19
On April 2, 1965 plaintiff-appellant filed its notice of appeal from the decision
dismissing the complaint and from the order of March 26, 1965 denying the
motion for reconsideration, its record on appeal, and a cash appeal
bond." 20 On April 14, the appeal was given due course 21 and the records of
the case were elevated directly to this Court, since only questions of law are
raised. 22
Plaintiff-appellant alleges in its brief that the trial court erred
I. When it sustained the view that Resolution No. 27,
series of 1960 of the Municipal Council of Mandaluyong,
Rizal declaring Lots Nos. 5 and 6, among others, as part
of the commercial and industrial zone, is valid because it
did so in the exercise of its police power; and
II. When it failed to consider whether or not the Municipal
Council had the power to nullify the contractual obligations
assumed by defendant-appellee and when it did not make
a finding that the building was erected along the property
line, when it should have been erected two meters away
from said property line. 23
The defendant-appellee submitted its counter-assignment of errors. In this
connection, We already had occasion to hold in Relativo v. Castro 24 that "(I)t

100

On or about May 5, 1963, defendant-appellee began laying the foundation

and commenced the construction of a building on Lots Nos. 5 and 6, to be
devoted to banking purposes, but which defendant-appellee claims could
also be devoted to, and used exclusively for, residential purposes. The
following day, plaintiff-appellant demanded in writing that defendant-appellee
stop the construction of the commerical building on the said lots. The latter
refused to comply with the demand, contending that the building was being
constructed in accordance with the zoning regulations, defendant-appellee
having filed building and planning permit applications with the Municipality of
Mandaluyong, and it had accordingly obtained building and planning permits
to proceed with the construction.12

appellee. 14 The trial court decision further emphasized that it "assumes said
resolution to be valid, considering that there is no issue raised by either of
the parties as to whether the same is null and void. 15

Page

zone, per Resolution No. 27, dated February 4, 1960 of the Municipal
Council of Mandaluyong, Rizal. 9 It alleges that plaintiff-appellant 'completely
sold and transferred to third persons all lots in said subdivision facing
Epifanio de los Santos Avenue" 10 and the subject lots thereunder were
acquired by it "only on July 23, 1962 or more than two (2) years after the
area ... had been declared a commercial and industrial zone ... 11

PubCorp Cases
Atty. Lapid

1. The contention that the trial court erred in sustaining the validity of
Resolution No. 27 as an exercise of police power is without merit. In the first
place, the validity of the said resolution was never questioned before it. The
rule is that the question of law or of fact which may be included in the
appellant's assignment of errors must be those which have been raised in
the court below, and are within the issues framed by the parties. 25 The
object of requiring the parties to present all questions and issues to the lower
court before they can be presented to the appellate court is to enable the
lower court to pass thereon, so that the appellate court upon appeal may
determine whether or not such ruling was erroneous. The requirement is in
furtherance of justice in that the other party may not be taken by
surprise.26 The rule against the practice of blowing "hot and cold" by
assuming one position in the trial court and another on appeal will, in the
words of Elliot, prevent deception. 27 For it is well-settled that issues or
defenses not raised 28 or properly litigated 29 or pleaded 30 in the Court below
cannot be raised or entertained on appeal.
In this particular case, the validity of the resolution was admitted at least
impliedly, in the stipulation of facts below. when plaintiff-appellant did not
dispute the same. The only controversy then as stated by the trial court was
whether or not the resolution of the Municipal Council of Mandaluyong ...
which declared lots Nos. 4 and 5 among others, as a part of the commercial
and industrial zone of the municipality, prevails over the restrictions
constituting as encumbrances on the lots in question. 31 Having admitted the
validity of the subject resolution below, even if impliedly, plaintiff-appellant
cannot now change its position on appeal.
But, assuming arguendo that it is not yet too late in the day for plaintiffappellant to raise the issue of the invalidity of the municipal resolution in
question, We are of the opinion that its posture is unsustainable. Section 3 of
R.A. No. 2264, otherwise known as the Local Autonomy Act," 32 empowers a
Municipal Council "to adopt zoning and subdivision ordinances
or regulations"; 33 for the municipality. Clearly, the law does not restrict the
exercise of the power through an ordinance. Therefore, granting that
Resolution No. 27 is not an ordinance, it certainly is a regulatory measure

An examination of Section 12 of the same law 34 which prescribes the rules

for its interpretation likewise reveals that the implied power of a municipality
should be "liberally construed in its favor" and that "(A)ny fair and reasonable
doubt as to the existence of the power should be interpreted in favor of the
local government and it shall be presumed to exist." The same section
further mandates that the general welfare clause be liberally interpreted in
case of doubt, so as to give more power to local governments in promoting
the economic conditions, social welfare and material progress of the people
in the community. The only exceptions under Section 12 are existing vested
rights arising out of a contract between "a province, city or municipality on
one hand and a third party on the other," in which case the original terms
and provisions of the contract should govern. The exceptions, clearly, do not
apply in the case at bar.
2. With regard to the contention that said resolution cannot nullify the
contractual obligations assumed by the defendant-appellee referring to the
restrictions incorporated in the deeds of sale and later in the corresponding
Transfer Certificates of Title issued to defendant-appellee it should be
stressed, that while non-impairment of contracts is constitutionally
guaranteed, the rule is not absolute, since it has to be reconciled with the
legitimate exercise of police power, i.e., "the power to prescribe regulations
to promote the health, morals, peace, education, good order or safety and
general welfare of the people. 35 Invariably described as "the most essential,
insistent, and illimitable of powers" 36 and "in a sense, the greatest and most
powerful attribute of government, 37 the exercise of the power may be
judicially inquired into and corrected only if it is capricious, 'whimsical, unjust
or unreasonable, there having been a denial of due process or a violation of
any other applicable constitutional guarantee. 38 As this Court held through
Justice Jose P. Bengzon in Philippine Long Distance Company vs. City of
Davao, et al. 39 police power "is elastic and must be responsive to various
social conditions; it is not, confined within narrow circumscriptions of
precedents resting on past conditions; it must follow the legal progress of a
democratic way of life." We were even more emphatic inVda. de Genuino vs.
The Court of Agrarian Relations, et al., 40 when We declared: "We do not
see why public welfare when clashing with the individual right to property
should not be made to prevail through the state's exercise of its police
power.
Resolution No. 27, s-1960 declaring the western part of highway 54, now E.
de los Santos Avenue (EDSA, for short) from Shaw Boulevard to the Pasig

101

The only issues to be resolved, therefore, are: (1) whether Resolution No. 27
s-1960 is a valid exercise of police power; and (2) whether the said
Resolution can nullify or supersede the contractual obligations assumed by
defendant-appellee.

within the intendment or ambit of the word "regulation" under the provision.
As a matter of fact the same section declares that the power exists "(A)ny
provision of law to the contrary notwithstanding ... "

Page

is not incumbent on the appellee, who occupies a purely defensive position,

and is seeking no affirmative relief, to make assignments of error, "

PubCorp Cases
Atty. Lapid

As was said in the case of Dobbins v. Los Angeles (195

US 223, 238 49 L. ed. 169), 'the right to exercise the
police power is a continuing one, and a business lawful
today may in the future, because of changed situation, the
growth of population or other causes, become a menace
to the public health and welfare, and be required to yield to
the public good.' And in People v. Pomar (46 Phil. 440), it
was observed that 'advancing civilization is bringing within
the scope of police power of the state today things which
were not thought of as being with in such power
yesterday. The development of civilization), the rapidly
increasing population, the growth of public opinion, with an
increasing desire on the part of the masses and of the
government to look after and care for the interests of the
individuals of the state, have brought within the police
power many questions for regulation which formerly were
not so considered. 42 (Emphasis, supplied.)
Thus, the state, in order to promote the general welfare, may interfere with
personal liberty, with property, and with business and occupations. Persons
may be subjected to all kinds of restraints and burdens, in order to secure
the general comfort health and prosperity of the state 43 and to this
fundamental aim of our Government, the rights of the individual are
subordinated. 44

Nor is the concept of the general welfare static. Needs that

were narrow or parochial a century ago may be
interwoven in our day with the well-being of the
nation What is critical or urgent changes with the times. 46
The motives behind the passage of the questioned resolution being
reasonable, and it being a " legitimate response to a felt public need," 47 not
whimsical or oppressive, the non-impairment of contracts clause of the
Constitution will not bar the municipality's proper exercise of the power. Now
Chief Justice Fernando puts it aptly when he declared: "Police power
legislation then is not likely to succumb to the challenge that thereby
contractual rights are rendered nugatory." 48
Furthermore, We restated in Philippine American Life Ins. Co. v. Auditor
General 49 that laws and reservation of essential attributes of sovereign
power are read into contracts agreed upon by the parties. Thus
Not only are existing laws read into contracts in order to fix
obligations as between the parties, butthe reservation of
essential attributes of sovereign power is also read into
contracts as a postulate of the legal order. The policy of
protecting contracts against impairments presupposes the
maintenance of a government by virtue of which
contractual relations are worthwhile a government which
retains adequate authority to secure the peace and good
order of society.
Again, We held in Liberation Steamship Co., Inc. v. Court of Industrial
Relations, 50 through Justice J.B.L. Reyes, that ... the law forms part of, and
is read into, every contract, unless clearly excluded therefrom in those cases
where such exclusion is allowed." The decision in Maritime Company of the
Philippines v. Reparations Commission, 51 written for the Court by Justice
Fernando, now Chief Justice, restates the rule.
One last observation. Appellant has placed unqualified reliance on American
jurisprudence and authorities 52 to bolster its theory that the municipal
resolution in question cannot nullify or supersede the agreement of the

102

The scope of police power keeps expanding as civilization advances,

stressed this Court, speaking thru Justice Laurel in the leading case
of Calalang v. Williams et al., 41 Thus-

The need for reconciling the non-impairment clause of the Constitution and
the valid exercise of police power may also be gleaned from Helvering v.
Davis 45 wherein Mr. Justice Cardozo, speaking for the Court, resolved the
conflict "between one welfare and another, between particular and general,
thus

Page

River as an industrial and commercial zone, was obviously passed by the

Municipal Council of Mandaluyong, Rizal in the exercise of police power to
safeguard or promote the health, safety, peace, good order and general
welfare of the people in the locality, Judicial notice may be taken of the
conditions prevailing in the area, especially where lots Nos. 5 and 6 are
located. The lots themselves not only front the highway; industrial and
commercial complexes have flourished about the place. EDSA, a main traffic
artery which runs through several cities and municipalities in the Metro
Manila area, supports an endless stream of traffic and the resulting activity,
noise and pollution are hardly conducive to the health, safety or welfare of
the residents in its route. Having been expressly granted the power to adopt
zoning and subdivision ordinances or regulations, the municipality of
Mandaluyong, through its Municipal 'council, was reasonably, if not perfectly,
justified under the circumstances, in passing the subject resolution.

PubCorp Cases
Atty. Lapid
parties embodied in the sales contract, as that, it claims, would impair the
obligation of contracts in violation of the Constitution. Such reliance is
misplaced.

IN VIEW OF THE FOREGOING, the decision appealed from, dismissing the

complaint, is hereby AFFIRMED. "without pronouncement as to costs.
SO ORDERED.

Teehankee * and Aquino,JJ., took no part.

Separate Opinions

BARREDO, J., concurring:

I hold it is a matter of public knowledge that the place in question is
commercial. It would be worse if the same were to be left as residential and
all around are already commercial.
FERNANDO, C.J., concurring:
The exhaustive and lucid opinion of the Court penned by Justice Guillermo
S. Santos commends itself for approval. I feel no hesitancy, therefore, in
yielding concurrence, The observation, however, in the dissent of Justice
Vicente Abad Santos relative to restrictive covenants calls, to my mind, for
further reflection as to the respect to which they are entitled whenever police
power legislation, whether on the national or local level, is assailed. Before
doing so, however, it may not be amiss to consider further the effect of such
all-embracing attribute on existing contracts.
1. Reference was made in the opinion of the Court to Philippine American
Life Insurance Company v. Auditor General. 1 The ponente in that case was
Justice Sanchez. A concurrence came from me. It contained this
qualification: "It cannot be said, without rendering nugatory the constitutional
guarantee of non-impairment, and for that matter both the equal protection
and due process clauses which equally serve to protect property rights, that
at the mere invocation of the police power, the objection on non-impairment
grounds automatically loses force. Here, as in other cases where

103

It is, therefore, clear that even if the subject building restrictions were
assumed by the defendant-appellee as vendee of Lots Nos. 5 and 6, in the
corresponding deeds of sale, and later, in Transfer Certificates of Title Nos.
101613 and 106092, the contractual obligations so assumed cannot prevail
over Resolution No. 27, of the Municipality of Mandaluyong, which has
validly exercised its police power through the said resolution. Accordingly,
the building restrictions, which declare Lots Nos. 5 and 6 as residential,
cannot be enforced.

Makasiar, Antonio, Concepcion, Jr., Fernandez, Guerrero, De Castro and

Melencio-Herrera, JJ., concur.

Page

In the first place, the views set forth in American decisions and authorities
are not per se controlling in the Philippines, the laws of which must
necessarily be construed in accordance with the intention of its own
lawmakers and such intent may be deduced from the language of each law
and the context of other local legislation related thereto. 53 and Burgess, et al
v. Magarian, et al., 55 two Of the cases cited by plaintiff-appellant, lend
support to the conclusion reached by the trial court, i.e. that the municipal
resolution supersedes/supervenes over the contractual undertaking between
the parties. Dolan v. Brown, states that "Equity will not, as a rule, enforce a
restriction upon the use of property by injunction where the property has so
changed in character and environment as to make it unfit or unprofitable for
use should the restriction be enforced, but will, in such a case, leave the
complainant to whatever remedy he may have at law. 56 (Emphasis
supplied.) Hence, the remedy of injunction in Dolan vs. Brown was denied
on the specific holding that "A grantor may lawfully insert in his deed
conditions or restrictions which are not against public policy and do not
materially impair the beneficial enjoyment of the estate. 57 Applying the
principle just stated to the present controversy, We can say that since it is
now unprofitable, nay a hazard to the health and comfort, to use Lots Nos. 5
and 6 for strictly residential purposes, defendants- appellees should be
permitted, on the strength of the resolution promulgated under the police
power of the municipality, to use the same for commercial purposes.
In Burgess v. Magarian et al. it was, held that "restrictive covenants running
with the land are binding on all subsequent purchasers ... " However,
Section 23 of the zoning ordinance involved therein contained
a proviso expressly declaring that the ordinance was not intended "to
interfere with or abrogate or annul any easements, covenants or other
agreement between parties." 58 In the case at bar, no such proviso is found
in the subject resolution.

PubCorp Cases
Atty. Lapid
other disputes, where there is a reliance on a constitutional provision, the
judiciary cannot escape what Holmes fitly referred to as the sovereign
prerogative of choice, the exercise of which might possibly be impugned if
there be no attempt, however slight, at such an effort of adjusting or
reconciling the respective claims of state regulatory power and
constitutionally protected rights." 8
I adhere to such a view. This is not to say that there is a departure therefrom
in the able and scholarly opinion of Justice Santos. It is merely to stress
what to my mind is a fundamental postulate of our Constitution. The only
point I would wish to add is that in the process of such balancing and
adjustment, the present Constitution, the Philippine American Life Insurance
Co. decision having been promulgated under the 1935 Charter, leaves no
doubt that the claim to property rights based on the non-impairment clause
has a lesser weight. For as explicitly provided by our present fundamental
law: "The State shall promote social Justice to ensure the dignity, welfare,
and security of all the people. Towards this end, the

2. Now as to restrictive convenants, accurately included by Hart and Sacks

under the category of "private directive arrangements. " 10 Through them
people are enable to agree on how to order their affairs. They could be
utilized to govern their affairs. They could be utilized to govern their future
conduct. It is a well-known fact that the common law relies to a great extent
on such private directive arrangements to attain a desirable social condition.
More specifically, such covenants are an important means of ordering one
aspect of property relationships. Through them, there could be delimitation
of land use rights. It is quite understandable why the law should ordinarily
accord them deference, It does so, it has been said, both on grounds of
morality and utility. Nonetheless, there are limits to the literal enforcement of
their terms. To the extent that they ignore technological or economic
progress, they are not automatically entitled to judicial protection. Clearly,
they must "speak from one point of time to another." 11 The parties, like all
mortal, do not have the power of predicting the future with unfailing certainty.
In cases therefore where societal welfare calls for police power legislation,
the parties adversely affected should realize that arrangements dealing with
property rights are not impressed with sanctity. That approach, in my view,
was the guiding principle of the opinion of the Court. f fence my full and
entire concurrence.

104

State shall regulate the acquisition, ownership, use, enjoyment, and

disposition of private property, and equitably diffuse property ownership and
profits. 9

Page

governmental authority may trench upon property rights, the process of

balancing, adjustment or harmonization is called for. 2 After referring to three
leading United States Supreme Court decisions, Home Building and Loan
Association v. Blaisdell, 3Nebbia v. New York, 4 and Norman v. Baltimore
and Ohio Railroad Co., 5 I stated: "All of the above decisions reflect the view
that an enactment of a police power measure does not per se call for the
overruling of objections based on either due process or non-impairment
based on either due process or non-impairment grounds. There must be that
balancing, or adjustment, or harmonization of the conflicting claims posed by
an exercise of state regulatory power on the one hand and assertion of
rights to property, whether of natural or of juridical persons, on the other.
'That is the only way by which the constitutional guarantees may serve the
high ends that call for their inclusion in the Constitution and thus effectively
preclude ally abusive exercise of governmental authority." 6 Nor did my
concurrence stop there: "In the opinion of the Blaisdell case, penned by the
then Chief Justice Hughes, there was this understandable stress on
balancing or harmonizing, which is called for in litigations of this character:
'The policy of protecting contracts against impairment presupposes the
maintenance of a government by virtue of which contractual relations are
worthwhile a government which retains adequate authority to secure the
peace and good order of society. This principle of harmonizing the
constitutional prohibition with the necessary residuum of state power has
had progressive recognition in the decisions of this Court.' Also to the same
effect: 'Undoubtedly, whatever is reserved of state power must be consistent
with the fair intent of the constitutional limitation of that power. The reserve
power cannot be construed so as to destroy the limitation, nor is the
limitation to be construed to destroy the reserved power in its essential
aspects. 'They must be construed in harmony with each other. This principle
precludes a construction which would permit the State to adopt as its policy
the repudiation of debts or the destruction of contracts or the denial of
means to enforce them. But it does not follow that conditions may not arise
in which a temporary restraint of enforcement may be consistent with the
spirit and purpose of the constitutional provision and thus be found to be
within the range of the reserved power of the State to protect the vital
interests of the community.' Further on, Chief Justice Hughes likewise
stated: 'It is manifest from this review of our decisions that there has been a
growing appreciation of public needs and of the necessity of finding ground
for a rational compromise between individual rights and public welfare.
" 7 This is the concluding paragraph of my concurrence in the Philippine
American Life Insurance Co. case: "If emphasis be therefore laid, as this
concurring opinion does, on the pressing and inescapable need for such an
approach whenever a possible collision between state authority and an
assertion of constitutional right to property may exist, it is not to depart from
what sound constitutional orthodoxy dictates. It is rather to abide by what is
compels. In litigations of this character then, perhaps much more so than in

PubCorp Cases
Atty. Lapid

Considering, therefore, that Resolution No, 2-1 was not enacted in the
legitimate exercise of police power, it cannot impair the restrictive covenants
which go with the lands that were sold by the plaintiff-appellant. I vote for the
reversal of the appealed decision.

# Separate Opinions
BARREDO, J., concurring:
I hold it is a matter of public knowledge that the place in question is
commercial. It would be worse if the same were to be left as residential and
all around are already commercial.
FERNANDO, C.J., concurring:
The exhaustive and lucid opinion of the Court penned by Justice Guillermo
S. Santos commends itself for approval. I feel no hesitancy, therefore, in
yielding concurrence, The observation, however, in the dissent of Justice

1. Reference was made in the opinion of the Court to Philippine American

Life Insurance Company v. Auditor General. 1 The ponente in that case was
Justice Sanchez. A concurrence came from me. It contained this
qualification: "It cannot be said, without rendering nugatory the constitutional
guarantee of non-impairment, and for that matter both the equal protection
and due process clauses which equally serve to protect property rights, that
at the mere invocation of the police power, the objection on non-impairment
grounds automatically loses force. Here, as in other cases where
governmental authority may trench upon property rights, the process of
balancing, adjustment or harmonization is called for. 2 After referring to three
leading United States Supreme Court decisions, Home Building and Loan
Association v. Blaisdell, 3Nebbia v. New York, 4 and Norman v. Baltimore
and Ohio Railroad Co., 5 I stated: "All of the above decisions reflect the view
that an enactment of a police power measure does not per se call for the
overruling of objections based on either due process or non-impairment
based on either due process or non-impairment grounds. There must be that
balancing, or adjustment, or harmonization of the conflicting claims posed by
an exercise of state regulatory power on the one hand and assertion of
rights to property, whether of natural or of juridical persons, on the other.
'That is the only way by which the constitutional guarantees may serve the
high ends that call for their inclusion in the Constitution and thus effectively
preclude ally abusive exercise of governmental authority." 6 Nor did my
concurrence stop there: "In the opinion of the Blaisdell case, penned by the
then Chief Justice Hughes, there was this understandable stress on
balancing or harmonizing, which is called for in litigations of this character:
'The policy of protecting contracts against impairment presupposes the
maintenance of a government by virtue of which contractual relations are
worthwhile a government which retains adequate authority to secure the
peace and good order of society. This principle of harmonizing the
constitutional prohibition with the necessary residuum of state power has
had progressive recognition in the decisions of this Court.' Also to the same
effect: 'Undoubtedly, whatever is reserved of state power must be consistent
with the fair intent of the constitutional limitation of that power. The reserve
power cannot be construed so as to destroy the limitation, nor is the
limitation to be construed to destroy the reserved power in its essential
aspects. 'They must be construed in harmony with each other. This principle
precludes a construction which would permit the State to adopt as its policy
the repudiation of debts or the destruction of contracts or the denial of

105

Although Resolution No. 27, series of 1960, of the Municipal Council of

Mandaluyong, Rizal, is valid until otherwise declared, I do not believe that its
enactment was by virtue of the police power of that municipality. I do not
here dispute the concept of police power as stated in Primicias vs. Fugoso,
80 Phil. 77 (1948) for as a matter of fact I accept it. And I agree also that it is
elastic and must be responsive to various social conditions, etc. as ruled
in PLDT vs. City of Davao, L-23080, Oct. 26, 1965, 15 SCRA 244. But
Resolution No. 27, cannot be described as promotive of the health, morals,
peace, education, good order or safety and general welfare of the people of
Mandaluyong. On the contrary, its effect is the opposite. For the serenity,
peace and quite of a residential section would by the resolution be replaced
by the chaos, turmoil and frenzy of commerce and industry. Where there
would be no industrial and noise pollution these bane of so-called progress
would now pervade and suffocate the environment to the detriment of the
ecology. To characterize the ordinance as an exercise of police power would
be retrogressive. It will set back all the efforts of the Ministry of Human
Settlements to improve the quality of life especially in Metro Manila. It will
make Metro Manila, not the city of man as envisioned by its Governor but a
city of commerce and industry.

Vicente Abad Santos relative to restrictive covenants calls, to my mind, for

further reflection as to the respect to which they are entitled whenever police
power legislation, whether on the national or local level, is assailed. Before
doing so, however, it may not be amiss to consider further the effect of such
all-embracing attribute on existing contracts.

Page

ABAD SANTOS, J:, dissenting:

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State shall regulate the acquisition, ownership, use, enjoyment, and

disposition of private property, and equitably diffuse property ownership and
profits. 9
2. Now as to restrictive convenants, accurately included by Hart and Sacks
under the category of "private directive arrangements. " 10 Through them
people are enable to agree on how to order their affairs. They could be
utilized to govern their affairs. They could be utilized to govern their future
conduct. It is a well-known fact that the common law relies to a great extent
on such private directive arrangements to attain a desirable social condition.
More specifically, such covenants are an important means of ordering one

ABAD SANTOS, J:, dissenting:

Although Resolution No. 27, series of 1960, of the Municipal Council of
Mandaluyong, Rizal, is valid until otherwise declared, I do not believe that its
enactment was by virtue of the police power of that municipality. I do not
here dispute the concept of police power as stated in Primicias vs. Fugoso,
80 Phil. 77 (1948) for as a matter of fact I accept it. And I agree also that it is
elastic and must be responsive to various social conditions, etc. as ruled
in PLDT vs. City of Davao, L-23080, Oct. 26, 1965, 15 SCRA 244. But
Resolution No. 27, cannot be described as promotive of the health, morals,
peace, education, good order or safety and general welfare of the people of
Mandaluyong. On the contrary, its effect is the opposite. For the serenity,
peace and quite of a residential section would by the resolution be replaced
by the chaos, turmoil and frenzy of commerce and industry. Where there
would be no industrial and noise pollution these bane of so-called progress
would now pervade and suffocate the environment to the detriment of the
ecology. To characterize the ordinance as an exercise of police power would
be retrogressive. It will set back all the efforts of the Ministry of Human
Settlements to improve the quality of life especially in Metro Manila. It will
make Metro Manila, not the city of man as envisioned by its Governor but a
city of commerce and industry.
Considering, therefore, that Resolution No, 2-1 was not enacted in the
legitimate exercise of police power, it cannot impair the restrictive covenants
which go with the lands that were sold by the plaintiff-appellant. I vote for the
reversal of the appealed decision.

106

I adhere to such a view. This is not to say that there is a departure therefrom
in the able and scholarly opinion of Justice Santos. It is merely to stress
what to my mind is a fundamental postulate of our Constitution. The only
point I would wish to add is that in the process of such balancing and
adjustment, the present Constitution, the Philippine American Life Insurance
Co. decision having been promulgated under the 1935 Charter, leaves no
doubt that the claim to property rights based on the non-impairment clause
has a lesser weight. For as explicitly provided by our present fundamental
law: "The State shall promote social Justice to ensure the dignity, welfare,
and security of all the people. Towards this end, the

aspect of property relationships. Through them, there could be delimitation

of land use rights. It is quite understandable why the law should ordinarily
accord them deference, It does so, it has been said, both on grounds of
morality and utility. Nonetheless, there are limits to the literal enforcement of
their terms. To the extent that they ignore technological or economic
progress, they are not automatically entitled to judicial protection. Clearly,
they must "speak from one point of time to another." 11 The parties, like all
mortal, do not have the power of predicting the future with unfailing certainty.
In cases therefore where societal welfare calls for police power legislation,
the parties adversely affected should realize that arrangements dealing with
property rights are not impressed with sanctity. That approach, in my view,
was the guiding principle of the opinion of the Court. f fence my full and
entire concurrence.

Page

means to enforce them. But it does not follow that conditions may not arise
in which a temporary restraint of enforcement may be consistent with the
spirit and purpose of the constitutional provision and thus be found to be
within the range of the reserved power of the State to protect the vital
interests of the community.' Further on, Chief Justice Hughes likewise
stated: 'It is manifest from this review of our decisions that there has been a
growing appreciation of public needs and of the necessity of finding ground
for a rational compromise between individual rights and public welfare.
" 7 This is the concluding paragraph of my concurrence in the Philippine
American Life Insurance Co. case: "If emphasis be therefore laid, as this
concurring opinion does, on the pressing and inescapable need for such an
approach whenever a possible collision between state authority and an
assertion of constitutional right to property may exist, it is not to depart from
what sound constitutional orthodoxy dictates. It is rather to abide by what is
compels. In litigations of this character then, perhaps much more so than in
other disputes, where there is a reliance on a constitutional provision, the
judiciary cannot escape what Holmes fitly referred to as the sovereign
prerogative of choice, the exercise of which might possibly be impugned if
there be no attempt, however slight, at such an effort of adjusting or
reconciling the respective claims of state regulatory power and
constitutionally protected rights." 8

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G.R. No. L-38429 June 30, 1988

CARLOS BALACUIT, LAMBERTO TAN and SERGIO YU
CARCEL, petitioners-appellants,
vs.
COURT OF FIRST INSTANCE OF AGUSAN DEL NORTE AND BUTUAN
CITY, Branch 11, and the CITY OF BUTUAN, respondents-appellees.

SECTION 1It shall be unlawful for any person, group of

persons, entity, or corporation engaged in the business of
selling admission tickets to any movie or other public
exhibitions, games, contests, or other performances to
require children between seven (7) and twelve (12) years
of age to pay full payment for admission tickets intended
for adults but should charge only one-half of the value of
the said tickets.

The City Legal Officer for respondents-appeliees.

SECTION 2Any person violating the provisions of this

Ordinance shall upon conviction be punished by a fine of
not less than TWO HUNDRED PESOS (P200.00) but not
more than SIX HUNDRED PESOS (P600.00) or an
imprisonment of not less than TWO (2) MONTHS or not
more than SIX (6) MONTHS or both such firm and
imprisonment in the discretion of the Court.

GANCAYCO, J.:

If the violator be a firm or corporation the penalty shall be

imposed upon the Manager, Agent or Representative of
such firm or corporation.

Romeo B. Sanchez, Eduardo Deza Mercado and Wilfred D. Asis for

petitioners.

At issue in the petition for review before Us is the validity and

constitutionality of Ordinance No. 640 passed by the Municipal Board of the
City of Butuan on April 21, 1969, the title and text of which are reproduced
below:
ORDINANCE--640
ORDINANCE PENALIZING ANY PERSON, GROUP OF
PERSONS, ENTITY OR CORPORATION ENGAGED IN
THE BUSINESS OF SELLING ADMISSION TICKETS TO
ANY MOVIE OR OTHER PUBLIC EXHIBITIONS,
GAMES, CONTESTS OR OTHER PERFORMANCES TO
REQUIRE CHILDREN BETWEEN SEVEN (7) AND
TWELVE (12) YEARS OF AGE TO PAY FULL PAYMENT
FOR TICKETS INTENDED FOR ADULTS BUT SHOULD
CHARGE ONLY ONE-HALF OF THE SAID TICKET
xxx xxx xxx

SECTION 3This ordinance shall take effect upon its

approval.
Petitioners are Carlos Balacuit Lamberto Tan, and Sergio Yu Carcel
managers of the Maya and Dalisay Theaters, the Crown Theater, and the
Diamond Theater, respectively. Aggrieved by the effect of Ordinance No.
640, they filed a complaint before the Court of First Instance of Agusan del
Norte and Butuan City docketed as Special Civil Case No. 237 on June 30,
1969 praying, inter alia, that the subject ordinance be declared
unconstitutional and, therefore, void and unenforceable. 1
Upon motion of the petitioners, 2 a temporary restraining order was issued
on July 14, 1969 by the court a quo enjoining the respondent City of Butuan
and its officials from enforcing Ordinance No. 640. 3 On July 29, 1969,
respondents filed their answer sustaining the validity of the ordinance. 4

107

EN BANC

Be it ordained by the Municipal Board of the City of Butuan

in session assembled, that:

Page

Republic of the Philippines

SUPREME COURT
Manila

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1. Declaring Ordinance No. 640 of the City of Butuan

constitutional and valid: Provided, however, that the fine
for a single offense shall not exceed TWO HUNDRED
PESOS, as prescribed in the aforequoted Section 15 (nn)
of Rep. Act No. 523;
2. Dissolving the restraining order issued by this Court;
and;
3. Dismissing the complaint, with costs against the
petitioners.
4. SO ORDERED. 7
Petitioners filed their motion for reconsideration 8 of the decision of the court
a quo which was denied in a resolution of the said court dated November 10,
1973. 9
Hence, this petition.
Petitioners attack the validity and constitutionality of Ordinance No. 640 on
the grounds that it is ultra vires and an invalid exercise of police power.
Petitioners contend that Ordinance No. 640 is not within the power of' the
Municipal Board to enact as provided for in Section 15(n) of Republic Act
No. 523, the Charter of the City of Butuan, which states:
Sec. 15. General powers and duties of the Board
Except as otherwise provided by law, and subject to the
conditions and limitations thereof, the Municipal Board
shall have the following legislative powers:
xxx xxx xxx

xxx xxx xxx

Respondent City of Butuan, on the other hand, attempts to justify the
enactment of the ordinance by invoking the general welfare clause
embodied in Section 15 (nn) of the cited law, which provides:
(nn) To enact all ordinances it may deem necessary and
proper for the sanitation and safety, the furtherance of the
prosperity, and the promotion of the morality, peace, good
order, comfort, convenience, and general welfare of the
city and its inhabitants, and such others as may be
necessary to carry into effect and discharge the powers
and duties conferred by this Act, and to fix the penalties
for the violation of the ordinances, which shall not exceed
a two hundred peso fine or six months imprisonment, or
both such fine and imprisonment, for a single offense.
We can see from the aforecited Section 15(n) that the power to regulate and
fix the amount of license fees for theaters, theatrical performances,
cinematographs, public exhibitions and other places of amusement has been
expressly granted to the City of Butuan under its charter. But the question
which needs to be resolved is this: does this power to regulate include the
authority to interfere in the fixing of prices of admission to these places of
exhibition and amusement whether under its general grant of power or under
the general welfare clause as invoked by the City?
This is the first time this Court is confronted with the question of direct
interference by the local government with the operation of theaters,
cinematographs and the like to the extent of fixing the prices of admission to
these places. Previous decisions of this Court involved the power to impose
license fees upon businesses of this nature as a corollary to the power of the
local government to regulate them. Ordinances which required moviehouses
or theaters to increase the price of their admission tickets supposedly to
cover the license fees have been held to be invalid for these impositions
were considered as not merely license fees but taxes for purposes of
revenue and not regulation which the cities have no power to
exact, 10 unless expressly granted by its charter. 11

108

IN THE LIGHT OF ALL THE FOREGOING, the Court

hereby adjudges in favor of the respondents and against
the petitioners, as follows:

(n) To regulate and fix the amount of the license fees for
the following; . . . theaters, theatrical performances,
cinematographs, public exhibitions and all other
performances and places of amusements ...

Page

On January 30, 1973, the litigants filed their stipulation of facts. 5 On June 4,
1973, the respondent court rendered its decision, 6 the dispositive part of
which reads:

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In this jurisdiction, it is already settled that the operation of theaters,

cinematographs and other places of public exhibition are subject to
regulation by the municipal council in the exercise of delegated police power
by the local government. 14 Thus, in People v. Chan, 15 an ordinance of the
City of Manila prohibiting first run cinematographs from selling tickets
beyond their seating capacity was upheld as constitutional for being a valid
exercise of police power. Still in another case, 16 the validity of an ordinance
of the City of Bacolod prohibiting admission of two or more persons in
moviehouses and other amusement places with the use of only one ticket
was sustained as a valid regulatory police measure not only in the interest of
preventing fraud in so far as municipal taxes are concerned but also in
accordance with public health, public safety, and the general welfare.
The City of Butuan, apparently realizing that it has no authority to enact the
ordinance in question under its power to regulate embodied in Section 15(n),
now invokes the police power as delegated to it under the general welfare
clause to justify the enactment of said ordinance.
To invoke the exercise of police power, not only must it appear that the
interest of the public generally requires an interference with private rights,
but the means adopted must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon
individuals. 17 The legislature may not, under the guise of protecting the
public interest, arbitrarily interfere with private business, or impose unusual

Petitioners maintain that Ordinance No. 640 violates the due process clause
of the Constitution for being oppressive, unfair, unjust, confiscatory, and an
undue restraint of trade, and violative of the right of persons to enter into
contracts, considering that the theater owners are bound under a contract
with the film owners for just admission prices for general admission, balcony
and lodge.
In Homeowners' Association of the Philippines, Inc. v. Municipal Board of the
City of Manila, 19 this Court held:
The authority of municipal corporations to regulate is
essentially police power, Inasmuch as the same generally
entails a curtailment of the liberty, the rights and/or the
property of persons, which are protected and even
guaranteed by the Constitution, the exercise of police
power is necessarily subject to a qualification, limitation or
restriction demanded by the regard, the respect and the
obedience due to the prescriptions of the fundamental law,
particularly those forming part of the Constitution of
Liberty, otherwise known as the Bill of Rights the police
power measure must be reasonable. In other words,
individual rights may be adversely affected by the exercise
of police power to the extent only and only to the
extent--that may be fairly required by the legitimate
demands of public interest or public welfare.
What is the reason behind the enactment of Ordinance No. 640?
A reading of the minutes of the regular session of the Municipal Board when
the ordinance in question was passed shows that a certain Councilor Calo,
the proponent of the measure, had taken into account the complaints of
parents that for them to pay the full price of admission for their children is too
financially burdensome.
The trial court advances the view that "even if the subject ordinance does
not spell out its raison d'etre in all probability the respondents were impelled
by the awareness that children are entitled to share in the joys of their
elders, but that considering that, apart from size, children between the ages
of seven and twelve cannot fully grasp the nuance of movies or other public

109

While in a New York case, 13 an ordinance which regulates the business of

selling admission tickets to public exhibitions or performances by virtue of
the power of cities under the General City Law "to maintain order, enforce
the laws, protect property and preserve and care for the safety, health,
comfort and general welfare of the inhabitants of the city and visitors thereto;
and for any of said purposes, to regulate and license occupations" was
considered not to be within the scope of any duty or power implied in the
charter. It was held therein that the power of regulation of public exhibitions
and places of amusement within the city granted by the charter does not
carry with it any authority to interfere with the price of admission to such
places or the resale of tickets or tokens of admission.

and unnecessary restrictions upon lawful occupations. In other words, the

determination as to what is a proper exercise of its police power is not final
or conclusive, but is subject to the supervision of the courts. 18

Page

Applying the ruling in Kwong Sing v. City of Manila, 12 where the word
"regulate" was interpreted to include the power to control, to govern and to
restrain, it would seem that under its power to regulate places of exhibitions
and amusement, the Municipal Board of the City of Butuan could make
proper police regulations as to the mode in which the business shall be
exercised.

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We agree with petitioners that the ordinance is not justified by any necessity
for the public interest. The police power legislation must be firmly grounded
on public interest and welfare, and a reasonable relation must exist between
purposes and means. 22 The evident purpose of the ordinance is to help
ease the burden of cost on the part of parents who have to shell out the
same amount of money for the admission of their children, as they would for
themselves, A reduction in the price of admission would mean
corresponding savings for the parents; however, the petitioners are the ones
made to bear the cost of these savings. The ordinance does not only make
the petitioners suffer the loss of earnings but it likewise penalizes them for
failure to comply with it. Furthermore, as petitioners point out, there will be
difficulty in its implementation because as already experienced by petitioners
since the effectivity of the ordinance, children over 12 years of age tried to
pass off their age as below 12 years in order to avail of the benefit of the
ordinance. The ordinance does not provide a safeguard against this
undesirable practice and as such, the respondent City of Butuan now
suggests that birth certificates be exhibited by movie house patrons to prove
the age of children. This is, however, not at all practicable. We can see that
the ordinance is clearly unreasonable if not unduly oppressive upon the
business of petitioners. Moreover, there is no discernible relation between
the ordinance and the promotion of public health, safety, morals and the
general welfare.
Respondent City of Butuan claims that it was impelled to protect the youth
from the pernicious practice of movie operators and other public exhibitions
promoters or the like of demanding equal price for their admission tickets
along with the adults. This practice is allegedly repugnant and
unconscionable to the interest of the City in the furtherance of the prosperity,
peace, good order, comfort, convenience and the general well-being of its
inhabitants.

Respondent City of Butuan claims that Ordinance No. 640 is reasonable and
necessary to lessen the economic burden of parents whose minor children
are lured by the attractive nuisance being maintained by the petitioners.
Respondent further alleges that by charging the full price, the children are
being exploited by movie house operators. We fail to see how the children
are exploited if they pay the full price of admission. They are treated with the
same quality of entertainment as the adults. The supposition of the trial court
that because of their age children cannot fully grasp the nuances of such
entertainment as adults do fails to convince Us that the reduction in
admission ticket price is justifiable. In fact, by the very claim of respondent
that movies and the like are attractive nuisances, it is difficult to comprehend
why the municipal board passed the subject ordinance. How can the
municipal authorities consider the movies an attractive nuisance and yet
encourage parents and children to patronize them by lowering the price of
admission for children? Perhaps, there is some ,truth to the argument of
petitioners that Ordinance No. 640 is detrimental to the public good and the
general welfare of society for it encourages children of tender age to
frequent the movies, rather than attend to their studies in school or be in
their homes.
Moreover, as a logical consequence of the ordinance, movie house and
theater operators will be discouraged from exhibiting wholesome movies for
general patronage, much less children's pictures if only to avoid compliance
with the ordinance and still earn profits for themselves. For after all, these
movie house and theater operators cannot be compelled to exhibit any
particular kind of film except those films which may be dictated by public
demand and those which are restricted by censorship laws. So instead of
children being able to share in the joys of their elders as envisioned by the
trial court, there will be a dearth of wholesome and educational movies for
them to enjoy.
There are a number of cases decided by the Supreme Court and the various
state courts of the United States which upheld the right of the proprietor of a
theater to fix the price of an admission ticket as against the right of the state
to interfere in this regard and which We consider applicable to the case at
bar.

110

We must bear in mind that there must be public necessity which demands
the adoption of proper measures to secure the ends sought to be attained by
the enactment of the ordinance, and the large discretion is necessarily
vested in the legislative authority to determine not only what the interests of
the public require, but what measures are necessary for the protection of
such interests. 20 The methods or means used to protect the public health,
morals, safety or welfare, must have some relation to the end in view, for
under the guise of the police power, personal rights and those pertaining to
private property will not be permitted to be arbitralily invaded by the
legislative department. 21

There is nothing pernicious in demanding equal price for both children and
adults. The petitioners are merely conducting their legitimate businesses.
The object of every business entrepreneur is to make a profit out of his
venture. There is nothing immoral or injurious in charging the same price for
both children and adults. In fact, no person is under compulsion to purchase
a ticket. It is a totally voluntary act on the part of the purchaser if he buys a
ticket to such performances.

Page

exhibitions, games, contests or other performances, the admission prices

with respect to them ought to be reduced. 19a

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The defendants were conducting a private business,

which, even if clothed with a public interest, was without a
franchise to accommodate the public, and they had the
right to control it, the same as the proprietors of any other
business, subject to such obligations as were placed upon
them by statute. Unlike a carrier of passengers, for
instance, with a franchise from the state, and hence under
obligation to transport anyone who applies and to continue
the business year in and year out, the proprietors of a
theater can open and close their place at will, and no one
can make a lawful complaint. They can charge what they
choose for admission to their theater. They can limit the
number admitted. They can refuse to sell tickets and
collect the price of admission at the door. They can
preserve order and enforce quiet while the performance is
going on. They can make it a part of the contract and
condition of admission, by giving due notice and printing
the condition in the ticket that no one shall be admitted
under 21 years of age, or that men only or women only
shall be admitted, or that a woman cannot enter unless
she is accompanied by a male escort, and the like. The
proprietors, in the control of their business, may regulate
the terms of admission in any reasonable way. If those
terms are not satisfactory, no one is obliged to buy a ticket
or make the contract. If the terms are satisfactory, and the
contract is made, the minds of the parties meet upon the

In Tyson and Bro. United Theater Ticket Officers, Inc. vs. Banton, 27 the
United States Supreme Court held:
... And certainly a place of entertainment is in no legal
sense a public utility; and quite as certainly, its activities
are not such that their enjoyment can be regarded under
any conditions from the point of view of an emergency.
The interest of the public in theaters and other places of
entertainment may be more nearly, and with better reason,
assimilated to the like interest in provision stores and
markets and in the rental of houses and apartments for
residence purposes; although in importance it fails below
such an interest in the proportion that food and shelter are
of more moment than amusement or instruction. As we
have shown there is no legislative power to fix the prices
of provisions or clothing, or the rental charges for houses
and apartments, in the absence of some controlling
emergency; and we are unable to perceive any
dissimilarities of such quality or degree as to justify a
different rule in respect of amusements and entertainment
...
We are in consonance with the foregoing observations and conclusions of
American courts. In this jurisdiction, legislation had been passed controlling
the prices of goods commodities and drugs during periods of
emergency,28 limiting the net profits of public utility 29 as well as regulating
rentals of residential apartments for a limited period, 30 as a matter of
national policy in the interest of public health and safety, economic security
and the general welfare of the people. And these laws cannot be impugned
as unconstitutional for being violative of the due process clause.
However, the same could not be said of theaters, cinematographs and other
exhibitions. In no sense could these businesses be considered public
utilities. The State has not found it appropriate as a national policy to
interfere with the admission prices to these performances. This does not
mean however, that theaters and exhibitions are not affected with public
interest even to a certain degree. Motion pictures have been considered
important both as a medium for the communication of Ideas and expression
of the artistic impulse. Their effects on the perceptions by our people of

111

In Collister vs. Hayman, 26 it was held:

condition, and the purchaser impliedly promises to perform

it.

Page

A theater ticket has been described to be either a mere license, revocable at

the will of the proprietor of the theater or it may be evidence of a contract
whereby, for a valuable consideration, the purchaser has acquired the right
to enter the theater and observe the performance on condition that he
behaves properly. 23 Such ticket, therefore, represents a right, Positive or
conditional, as the case may be, according to the terms of the original
contract of sale. This right is clearly a right of property. The ticket which
represents that right is also, necessarily, a species of property. As such, the
owner thereof, in the absence of any condition to the contrary in the contract
by which he obtained it, has the clear right to dispose of it, to sell it to whom
he pleases and at such price as he can obtain. 24 So that an act prohibiting
the sale of tickets to theaters or other places of amusement at more than the
regular price was held invalid as conflicting with the state constitution
securing the right of property. 25

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Respondent City of Butuan argues that the presumption is always in favor of

the validity of the ordinance. This maybe the rule but it has already been
held that although the presumption is always in favor of the validity or
reasonableness of the ordinance, such presumption must nevertheless be
set aside when the invalidity or unreasonableness appears on the face of the
ordinance itself or is established by proper evidence. 37 The exercise of
police power by the local government is valid unless it contravenes the
fundamental law of the land, or an act of the legislature, or unless it is
against public policy or is unreasonable, oppressive, partial, discriminating or
in derogation of a common right. 38
Ordinance No. 640 clearly invades the personal and property rights of
petitioners for even if We could assume that, on its face, the interference
was reasonable, from the foregoing considerations, it has been fully shown
that it is an unwarranted and unlawful curtailment of the property and
personal rights of citizens. For being unreasonable and an undue restraint of

WHEREFORE, the decision of the trial court in Special Civil Case No. 237 is
hereby REVERSED and SET ASIDE and a new judgment is hereby
rendered declaring Ordinance No. 640 unconstitutional and, therefore, null
and void. This decision is immediately executory.
SO ORDERED.
Yap, C.J., Narvasa, Cruz, Paras, Padilla, Bidin, Sarmiento and GrioAquino, JJ., concur.

Separate Opinions

GUTIERREZ, JR., J., Separate opinion

The issue before the Court is a simple one. Does Butuan City have the
power to compel theatre owners to charge only half fares for children below
twelve even as they charge all other moviegoers full prices for admission
into moviehouses?
Instead of nullifying the municipal ordinance through a broad and sweeping
justification of property rights, I believe, however, that we should do so on
a more limited ground directly bearing on the issue.
I find no rational basis for classifying children as a distinct group insofar as
paying for admission into a moviehouse is concerned. There is absolutely no
pretense that the municipal ordinance is intended to protect children,
enhance their morals, promote their health, safeguard their safety, improve
their education, or otherwise promote the general welfare. In fact, the effect
of the ordinance may be the opposite.

112

Nonetheless, as to the question of the subject ordinance being a valid

exercise of police power, the same must be resolved in the negative. While it
is true that a business may be regulated, it is equally true that such
regulation must be within the bounds of reason, that is, the regulatory
ordinance must be reasonable, and its provisions cannot be oppressive
amounting to an arbitrary interference with the business or calling subject of
regulation. A lawful business or calling may not, under the guise of
regulation, be unreasonably interfered with even by the exercise of police
power. 33 A police measure for the regulation of the conduct, control and
operation of a business should not encroach upon the legitimate and lawful
exercise by the citizens of their property rights. 34 The right of the owner to fix
a price at which his property shall be sold or used is an inherent attribute of
the property itself and, as such, within the protection of the due process
clause."" Hence, the proprietors of a theater have a right to manage their
property in their own way, to fix what prices of admission they think most for
their own advantage, and that any person who did not approve could stay
away. 36

trade, it cannot, under the guise of exercising police power, be upheld as

valid.

Page

issues and public officials or public figures as well as the prevailing cultural
traits are considerable. 31 People of all ages flock to movie houses, games
and other public exhibitions for recreation and relaxation. The government
realizing their importance has seen it fit to enact censorship laws to regulate
the movie industry.32 Their aesthetic entertainment and even educational
values cannot be underestimated. Even police measures regulating the
operation of these businesses have been upheld in order to safeguard public
health and safety.

PubCorp Cases
Atty. Lapid
With the price of movie tickets suddenly within the reach of many children,
they may neglect their studies or use money intended for food or school
supplies to enter moviehouses. Movie owners who are compelled to accept
half prices for a newly increased group of young patrons will be tempted to
allow them to enter moviehouses indiscriminately, including those where
scenes of violence, crime, or even sex are portrayed. Addiction of the young
to movie going is definitely injurious to their health.

I hesitate, however, to make a brief for owners of theatres and expound

a laissez faire approach insofar as their businesses are concerned. Movie
houses may not be public utilities but as places of entertainment affected
with a certain degree of public interest, they are subject to reasonable
regulation. That regulation is stronger and more restrictive than that of
regular or ordinary businesses.
The following citation for instance, is pure obiter insofar as half-prices for
minors are concerned:
... [T]he proprietors of a theater can open and close their
place at will, and no one can make lawful complaint. They
can charge what they choose for admission to their
theater. They can limit the number admitted. They can
refuse to sell tickets and collect the price of admission at
the door. They can preserve order and enforce quiet while
the performance is going on. They can make it a part of
the contract and a condition of admission, by giving due
notice and printing the condition in the ticket that no one

For instance,
A theater ticket has been described to be either a mere
license, revocable at the will of the proprietor of the theater
or it may be evidence of a contract whereby, for a valuable
consideration, the purchaser has acquired the right to
enter the theater and observe the performance on
condition that he behaves properly (Law of the State.
Screen and Radio by Marchetti, 1939, ec., page 268).
Such ticket, therefore, represents a right, positive or
conditional, as the case may be, according to the terms of
the original contract of sale. This right is clearly a right of
property. The ticket which represents that right is also,
necessarily, a species of property. As such, the owner
thereof, in the absence of any condition to the contrary y in
the contract by which he obtained it, has the clear right to
dispose of it, to sell it to whom he pleases and at such
price as he can obtain Ibids, citing Ex-parte Quarg, 84
Pac., 766,149 Cal. 79, 80, 5 L.R.A. [N.S], 183, 117 Am. St.
Rep. 11 5, 9 Ann. Ca. 747; Also People v. Steele, 231, III.
340, 344, 14 R.A. [N.S.] 361, 121 Am. St. Rep. 321, 83
N.E. 236). ....
xxx xxx xxx

113

As discussed by the minority opinion, the legislature may not., under the
guise of protecting the public interest, arbitrarily interfere with private
business, or impose unusual and unnecessary restrictions upon lawful
occupations. The imposition enacted by the municipal board of Butuan City
has not been justified by its proponents as a restriction necessary for public
health or public welfare. No reasonable relationship has been shown
between a valid purpose and the proper means to accomplish it.

I see no reason at this time why we should pass upon situations that are not
before us or warn municipal governments beforehand to avoid enacting
certain regulations when nobody knows exactly what circumstances may call
for those regulations.

Page

The avowed purpose of the ordinance--to ease the burden of costs for
parents who have to shell out the same amount of money for the admission
of their children as they would for themselves is not covered by police
power. If the city cannot compel refreshment parlors to charge half-prices for
hamburgers, soft drinks, pizzas, or cakes consumed by children by what
authority can it impose the obligation of similarly easing parents' burdens
upon the owners of moviehouses?

shall be admitted under 21 years of age, or that men only

or women only shall be admitted, or that a woman cannot
enter unless she is accompanied by a male escort, and
the like. The proprietors, in the control of their business,
may regulate the terms of admission in any reasonable
way. If those terms are not satisfactory, no one is obliged
to buy a ticket or make the contract. If the terms are
satisfactory, and the contract is made, the minds of the
parties meet upon the condition, and the purchaser
impliedly promises to perform it. (Collister v. Hayman, 76
N.E. 20,183 N.Y. 250, 253, 1 L.R.A. [N.S.] 1188, 11 Am.
St. Rep. 740, An Cas. 344).

PubCorp Cases
Atty. Lapid

More appropriate to my maid is to state that while tile Butuan City ordinance
is invalid, it does not necessarily follow that all forms of regulation are
proscribed.
We have ruled in People v. Chan (65 Phil. 612):
In the first place, it must be noted that there can be no
doubt that the City of Manila exercises police power, by
delegation and that in the exercise of that power it is
authorized to enact ordinances for, the regulation of the
operation of theatres and cinematographs (sec. 2444(m)
and (ee) of the Revised Administrative Code: U.S. v.
Gomez Jesus, 31 Phil. 218; U.S. v. Pompeya, 31 Phil.
245).
On April 17, 1935, Ordinance No. 2347 was approved. In
section 1 it provides that all first run theatres or
cinematographs should register their seating capacity with
the City Treasurer, and in section 1 it prohibits the sale of
tickets in said theatres or cinematographs in excess of
their registered seating capacity.

xxx xxx xxx

To the foregoing must be added, and this is of common
knowledge, that the films which are shown for the first time
attract a large attendance, and the theatre or
cinematograph, whether it is first or second class,
presenting shows for the first time, would be suffocatingly
overcrowded if the number of tickets were not limited. This
is the reason for the prohibition of the sale of tickets in
excess of the seating capacity. The prohibition applies
with equal force wherever the same reason exists, that is,
to first and second class theatres which show films for the
first time. (at pp. 612- 613)
There being a rational basis for the restriction of sales of tickets beyond
seating capacity, the ordinance is perfectly valid.
The same is true for the situation found in Samson v. Mayor of Bacolod
City (60 SCRA 274):
When it is further remembered that insofar as movie
houses and other places of amusement are concerned.
(According to Section 17[1] of the City Charter of Bacolod,
Commonwealth Act No. 326 119381: 'To regulate and fix
the amount of the fees for the following: ... theatres,
theatrical performances, cinematographs, public
exhibitions, circuses and all other performances and
places of amusements ....") the least doubt cannot be
entertained as to the validity of a measure prohibiting a

114

may be interpreted as carte blanche for movie owners to practically ignore

municipal regulation and do as they please.

Before the approval of Ordinance No. 2347, Ordinance

No. 2188, approved on July 22, 1933, was in force,
section 1 of which divides cinematographs into three
different classes: first, second and third. The first class
includes those located on certain and specified streets like
Rosario, Escolta, etc., which exhibit films for the first time;
those belonging to the second class are those which, not
being located on said streets, also exhibit films for the first
time, and those which, being located on said streets,
regularly show films for the second time or which have the
exclusive right to show secondhand films; and the third
class comprehends all those which are not included in the
first and second classes.

Page

.... A lawful business or calling may not, under the guise of

regulation, be unreasonably interfered with even by the
exercise of police power. (Ogden City v. Leo, 54 Utah 556,
182 P. 530) A police measure for the regulation of the
conduct, control and operation of a business should not
encroach upon the legitimate and lawful exercise by the
citizens of their property rights (Pampanga Bus Co., Inc. v.
Municipality of Tarlac, 3 SCRA 816). The right of the
owner to fix a price at which his property shall be sold or
used is an inherent attribute of the property itself and, as
such, within the protection of the due process clause
(Tyson and Bro.--United Theater Ticket Officers, Inc. v.
Banton, supra). Hence the proprietors of a theater have a
right to manage their property in their own way, to fix what
prices of admission they think most for their own
advantage, and that ally person who did not approve could
stay away (Ibid, citing v. Clifford v. Brandon, 2 Campb.
358, 368.).

PubCorp Cases
Atty. Lapid

Police power is inherent in the State but not in municipal

corporations. For a municipal corporation to exercise
police power, there must be a legislative grant which
necessarily also sets the limits for the exercise of the
power.
In the Philippines, the grant of authority to the municipality
to exercise police power is embodied in Section 2238 of
the Revised Administrative Code, otherwise known as the
General Welfare Clause. Chartered cities are granted
similar authority in their respective charters
The general welfare clause has two branches. The first
authorizes the municipal council to enact such ordinances
and make such regulations not repugnant to law, as may
be necessary to carry into effect and discharge the powers
and duties conferred upon the municipal council by law.

This Court has generally been liberal in sustaining municipal action based on
the general welfare clause. In the case before us, however, there appears to
be no basis for sustaining the ordinance even on a generous interpretation
of the general welfare clause.

Separate Opinions
GUTIERREZ, JR., J., Separate opinion
The issue before the Court is a simple one. Does Butuan City have the
power to compel theatre owners to charge only half fares for children below
twelve even as they charge all other moviegoers full prices for admission
into moviehouses?
Instead of nullifying the municipal ordinance through a broad and sweeping
justification of property rights, I believe, however, that we should do so on
a more limited ground directly bearing on the issue.
I find no rational basis for classifying children as a distinct group insofar as
paying for admission into a moviehouse is concerned. There is absolutely no
pretense that the municipal ordinance is intended to protect children,
enhance their morals, promote their health, safeguard their safety, improve
their education, or otherwise promote the general welfare. In fact, the effect
of the ordinance may be the opposite.
With the price of movie tickets suddenly within the reach of many children,
they may neglect their studies or use money intended for food or school
supplies to enter moviehouses. Movie owners who are compelled to accept
half prices for a newly increased group of young patrons will be tempted to
allow them to enter moviehouses indiscriminately, including those where

115

The City of Butuan tries to justify the challenged ordinance by invoking

police power. The invocation is improper. The definitions of police power,
including its exercise based on the general welfare clause, are emphasized
to show that the respondents' arguments have no merit

The second branch authorizes the municipality to enact

such ordinances as may be necessary and proper for the
health and safety, promote the prosperity, improve the
morals, peace, good order, comfort, and convenience of
the municipality and inhabitants thereof, and for the
protection of property therein. (U.S. v. Salaveria 39 Phil.
103).

Page

proprietor, lessee or operator of an amusement place to

admit two or more persons with only one admission ticket,
not only in the interest of preventing fraud insofar as
municipal taxes are concerned but also in accordance with
public health, public safety and the general welfare. (Cf.
People v. Chan, 65 Phil. 611 [1938]). An American
Supreme Court decision, Western Turf Association v.
Greenberg, (204 US 359 [1907] the opinion being penned
by Justice Harlan is equally illuminating: 'The statute is
only a regulation of places of public entertainment and
amusement upon terms of equal and exact justice to
everyone holding a ticket of admission, and who is not, at
the time, under the influence of liquor, or boisterous in
conduct, or of lewd and immoral character. .... Such a
regulation, in itself just, is likewise promotive of peace and
good order among those who attend places of public
entertainment and amusement. It is neither an arbitrary
exertion of the state's inherent or governmental power, nor
a violation of any right secured by the constitution of the
United States. (at pp. 363-364).

PubCorp Cases
Atty. Lapid
scenes of violence, crime, or even sex are portrayed. Addiction of the young
to movie going is definitely injurious to their health.

I hesitate, however, to make a brief for owners of theatres and expound

a laissez faire approach insofar as their businesses are concerned. Movie
houses may not be public utilities but as places of entertainment affected
with a certain degree of public interest, they are subject to reasonable
regulation. That regulation is stronger and more restrictive than that of
regular or ordinary businesses.
The following citation for instance, is pure obiter insofar as half-prices for
minors are concerned:
... [T]he proprietors of a theater can open and close their
place at will, and no one can make lawful complaint. They
can charge what they choose for admission to their
theater. They can limit the number admitted. They can
refuse to sell tickets and collect the price of admission at
the door. They can preserve order and enforce quiet while
the performance is going on. They can make it a part of
the contract and a condition of admission, by giving due
notice and printing the condition in the ticket that no one
shall be admitted under 21 years of age, or that men only
or women only shall be admitted, or that a woman cannot
enter unless she is accompanied by a male escort, and
the like. The proprietors, in the control of their business,
may regulate the terms of admission in any reasonable

For instance,
A theater ticket has been described to be either a mere
license, revocable at the will of the proprietor of the theater
or it may be evidence of a contract whereby, for a valuable
consideration, the purchaser has acquired the right to
enter the theater and observe the performance on
condition that he behaves properly (Law of the State.
Screen and Radio by Marchetti, 1939, ec., page 268).
Such ticket, therefore, represents a right, positive or
conditional, as the case may be, according to the terms of
the original contract of sale. This right is clearly a right of
property. The ticket which represents that right is also,
necessarily, a species of property. As such, the owner
thereof, in the absence of any condition to the contrary y in
the contract by which he obtained it, has the clear right to
dispose of it, to sell it to whom he pleases and at such
price as he can obtain Ibids, citing Ex-parte Quarg, 84
Pac., 766,149 Cal. 79, 80, 5 L.R.A. [N.S], 183, 117 Am. St.
Rep. 11 5, 9 Ann. Ca. 747; Also People v. Steele, 231, III.
340, 344, 14 R.A. [N.S.] 361, 121 Am. St. Rep. 321, 83
N.E. 236). ....
xxx xxx xxx
.... A lawful business or calling may not, under the guise of
regulation, be unreasonably interfered with even by the
exercise of police power. (Ogden City v. Leo, 54 Utah 556,
182 P. 530) A police measure for the regulation of the

116

As discussed by the minority opinion, the legislature may not., under the
guise of protecting the public interest, arbitrarily interfere with private
business, or impose unusual and unnecessary restrictions upon lawful
occupations. The imposition enacted by the municipal board of Butuan City
has not been justified by its proponents as a restriction necessary for public
health or public welfare. No reasonable relationship has been shown
between a valid purpose and the proper means to accomplish it.

I see no reason at this time why we should pass upon situations that are not
before us or warn municipal governments beforehand to avoid enacting
certain regulations when nobody knows exactly what circumstances may call
for those regulations.

Page

The avowed purpose of the ordinance--to ease the burden of costs for
parents who have to shell out the same amount of money for the admission
of their children as they would for themselves is not covered by police
power. If the city cannot compel refreshment parlors to charge half-prices for
hamburgers, soft drinks, pizzas, or cakes consumed by children by what
authority can it impose the obligation of similarly easing parents' burdens
upon the owners of moviehouses?

way. If those terms are not satisfactory, no one is obliged

to buy a ticket or make the contract. If the terms are
satisfactory, and the contract is made, the minds of the
parties meet upon the condition, and the purchaser
impliedly promises to perform it. (Collister v. Hayman, 76
N.E. 20,183 N.Y. 250, 253, 1 L.R.A. [N.S.] 1188, 11 Am.
St. Rep. 740, An Cas. 344).

PubCorp Cases
Atty. Lapid

More appropriate to my maid is to state that while tile Butuan City ordinance
is invalid, it does not necessarily follow that all forms of regulation are
proscribed.
We have ruled in People v. Chan (65 Phil. 612):
In the first place, it must be noted that there can be no
doubt that the City of Manila exercises police power, by
delegation and that in the exercise of that power it is
authorized to enact ordinances for, the regulation of the
operation of theatres and cinematographs (sec. 2444(m)
and (ee) of the Revised Administrative Code: U.S. v.
Gomez Jesus, 31 Phil. 218; U.S. v. Pompeya, 31 Phil.
245).
On April 17, 1935, Ordinance No. 2347 was approved. In
section 1 it provides that all first run theatres or
cinematographs should register their seating capacity with
the City Treasurer, and in section 1 it prohibits the sale of
tickets in said theatres or cinematographs in excess of
their registered seating capacity.
Before the approval of Ordinance No. 2347, Ordinance
No. 2188, approved on July 22, 1933, was in force,
section 1 of which divides cinematographs into three

xxx xxx xxx

To the foregoing must be added, and this is of common
knowledge, that the films which are shown for the first time
attract a large attendance, and the theatre or
cinematograph, whether it is first or second class,
presenting shows for the first time, would be suffocatingly
overcrowded if the number of tickets were not limited. This
is the reason for the prohibition of the sale of tickets in
excess of the seating capacity. The prohibition applies
with equal force wherever the same reason exists, that is,
to first and second class theatres which show films for the
first time. (at pp. 612- 613)
There being a rational basis for the restriction of sales of tickets beyond
seating capacity, the ordinance is perfectly valid.
The same is true for the situation found in Samson v. Mayor of Bacolod
City (60 SCRA 274):
When it is further remembered that insofar as movie
houses and other places of amusement are concerned.
(According to Section 17[1] of the City Charter of Bacolod,
Commonwealth Act No. 326 119381: 'To regulate and fix
the amount of the fees for the following: ... theatres,
theatrical performances, cinematographs, public
exhibitions, circuses and all other performances and
places of amusements ....") the least doubt cannot be
entertained as to the validity of a measure prohibiting a
proprietor, lessee or operator of an amusement place to
admit two or more persons with only one admission ticket,
not only in the interest of preventing fraud insofar as

117

may be interpreted as carte blanche for movie owners to practically ignore

municipal regulation and do as they please.

different classes: first, second and third. The first class

includes those located on certain and specified streets like
Rosario, Escolta, etc., which exhibit films for the first time;
those belonging to the second class are those which, not
being located on said streets, also exhibit films for the first
time, and those which, being located on said streets,
regularly show films for the second time or which have the
exclusive right to show secondhand films; and the third
class comprehends all those which are not included in the
first and second classes.

Page

conduct, control and operation of a business should not

encroach upon the legitimate and lawful exercise by the
citizens of their property rights (Pampanga Bus Co., Inc. v.
Municipality of Tarlac, 3 SCRA 816). The right of the
owner to fix a price at which his property shall be sold or
used is an inherent attribute of the property itself and, as
such, within the protection of the due process clause
(Tyson and Bro.--United Theater Ticket Officers, Inc. v.
Banton, supra). Hence the proprietors of a theater have a
right to manage their property in their own way, to fix what
prices of admission they think most for their own
advantage, and that ally person who did not approve could
stay away (Ibid, citing v. Clifford v. Brandon, 2 Campb.
358, 368.).

PubCorp Cases
Atty. Lapid
municipal taxes are concerned but also in accordance with
public health, public safety and the general welfare. (Cf.
People v. Chan, 65 Phil. 611 [1938]). An American
Supreme Court decision, Western Turf Association v.
Greenberg, (204 US 359 [1907] the opinion being penned
by Justice Harlan is equally illuminating: 'The statute is
only a regulation of places of public entertainment and
amusement upon terms of equal and exact justice to
everyone holding a ticket of admission, and who is not, at
the time, under the influence of liquor, or boisterous in
conduct, or of lewd and immoral character. .... Such a
regulation, in itself just, is likewise promotive of peace and
good order among those who attend places of public
entertainment and amusement. It is neither an arbitrary
exertion of the state's inherent or governmental power, nor
a violation of any right secured by the constitution of the
United States. (at pp. 363-364).

morals, peace, good order, comfort, and convenience of

the municipality and inhabitants thereof, and for the
protection of property therein. (U.S. v. Salaveria 39 Phil.
103).
This Court has generally been liberal in sustaining municipal action based on
the general welfare clause. In the case before us, however, there appears to
be no basis for sustaining the ordinance even on a generous interpretation
of the general welfare clause.

The City of Butuan tries to justify the challenged ordinance by invoking

police power. The invocation is improper. The definitions of police power,
including its exercise based on the general welfare clause, are emphasized
to show that the respondents' arguments have no merit
Police power is inherent in the State but not in municipal
corporations. For a municipal corporation to exercise
police power, there must be a legislative grant which
necessarily also sets the limits for the exercise of the
power.

Page

The general welfare clause has two branches. The first

authorizes the municipal council to enact such ordinances
and make such regulations not repugnant to law, as may
be necessary to carry into effect and discharge the powers
and duties conferred upon the municipal council by law.
The second branch authorizes the municipality to enact
such ordinances as may be necessary and proper for the
health and safety, promote the prosperity, improve the

118

In the Philippines, the grant of authority to the municipality

to exercise police power is embodied in Section 2238 of
the Revised Administrative Code, otherwise known as the
General Welfare Clause. Chartered cities are granted
similar authority in their respective charters

PubCorp Cases
Atty. Lapid
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 71169 December 22, 1988
JOSE D. SANGALANG and LUTGARDA D. SANGALANG, petitioners,
FELIX C. GASTON and DOLORES R. GASTON, JOSE V. BRIONES and
ALICIA R. BRIONES, and BEL-AIR VILLAGE ASSOCIATION,
INC.,intervenors-petitioners,
vs.
INTERMEDIATE APPELLATE COURT, and AYALA
CORPORATION, respondents.

COURT OF APPEALS, VIOLETA MONCAL, and MAJAL DEVELOPMENT

CORPORATION, respondents.
Sangco, Anastacio, Castaneda & Duran Law Office for petitioners & private
intervenors- petitioners.
Raul S. Sison Law Offices for intervenor-petitioner Bel-Air Village
Association, Inc. Renato L. Dela Fuente for respondent Ayala Corporation.
G.R. No. L-74376:
Raul S. Sison Law Offices for petitioner.
Sergio L. Guadiz for private respondents.

G.R. No. 74376 December 22, 1988

G.R. No. L-76394:

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,

vs.
THE INTERMEDIATE APPELLATE COURT, ROSARIO DE JESUS
TENORIO, and CECILIA GONZALVEZ,respondents.

Raul S. Sison Law Offices for petitioner.

Gruba, Tanlimco Lamso and Apuhin Law Offices for respondents.
G.R. No. L-78182:

G.R. No. 76394 December 22,1988

Funk & Associates for petitioners.

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,

vs.
COURT OF APPEALS, DOLORES FILLEY, and J. ROMERO &
ASSOCIATES, respondents.

G.R. No. L-82281:

Funk & Associates for petitioner.
Castillo, Laman, Tan & Associates for private respondents.

G.R. No. 82281 December 22, 1988

SARMIENTO, J.:

BEL-AIR VILLAGE ASSOCIATION, INC, petitioner,

vs.

Before the Court are five consolidated petitions, 1 docketed as G.R. Nos.
71169, 74376, 76394, 78182, and 82281 hereof, in the nature of appeals (by

119

G.R. No. 78182 December 22, 1988

Tee Tomas & Associates for respondents.

Page

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner,

vs.
THE COURT OF APPEALS, and EDUARDO and BUENA
ROMUALDEZ respondents.

PubCorp Cases
Atty. Lapid

BAVA itself had brought its own complaints, four in number, likewise for
specific performance and damages to enforce the same 'deed restrictions.'
(See G.R. Nos. 74376, 76394, 78182, and 82281.)
ANTECEDENTS FACTS
I. G.R. No. 71169
The facts are stated in the decision appealed from. We quote:
xxxxxxxxx
(1) Bel-Air Village is located north of Buendia Avenue
extension (now Sen. Gil J. Puyat Ave.) across a stretch of
commercial block from Reposo Street in the west up to
Zodiac Street in the east, When Bel-Air Village was
planned, this block between Reposo and Zodiac Streets
adjoining Buendia Avenue in front of the village was
designated as a commercial block. (Copuyoc TSN, p. 10,
Feb. 12, 1982).
(2) Bel-Air Village was owned and developed into a
residential subdivision in the 1950s by Makati
Development Corporation (hereinafter referred to as
MDC), which in 1968 was merged with appellant Ayala
Corporation.

(4) The lots which were acquired by appellees Sangalang

and spouse Gaston and spouse and Briones and spouse
in 1960, 1957 and 1958, respectively, were all sold by
MDC subject to certain conditions and easements
contained in Deed Restrictions which formed a part of
each deed of sale. The pertinent provisions in said Deed
Restrictions, which are common to all lot owners in Bel-Air
Village, are as follows:
I-BEL-AIR ASSOCIATION
The owner of this lot/s or his successors in interest is
required to be and is automatically a member of the BelAir Association and must abide by such rules and
regulations laid down by the Association in the interest of
the sanitation, security and the general welfare of the
community.
The association will also provide for and collect
assessments, which will constitute as a lien on the
property junior only to liens of the government for taxes
and to voluntary mortgages for sufficient consideration
entered into in good faith.
II-USE OF LOTS
Subject to such amendments and additional restrictions,
reservations, servitudes, etc., as the Bel- Air Association
may from time to time adopt and prescribe, this lot is
subject to the following restrictions:

120

The proceedings were commenced at the first instance by Jose Sangalang,

joined by his wife Lutgarda Sangalang, both residents of No. 110 Jupiter
Street, Makati, Metro Manila (G.R. No. 71169) to enforce by specific
performance restrictive easement upon property, specifically the Bel- Air
Village subdivision in Makati, Metro Manila, pursuant to stipulations
embodied in the deeds of sale covering the subdivision, and for damages.
Later, the Sangalangs were joined by Felix Gaston, a resident of No. 64
Jupiter Street of the same municipality, and by Mr. and Mrs. Jose and Alicia
Briones, both of No. 66 Jupiter Street. Pending further proceedings, the BelAir Village Association, Inc. (BAVA), an incorporated homeowners'
association, entered its appearance as plaintiff-in-intervention.

(3) Appellees-spouses Sangalang reside at No. 11O

Jupiter Street between Makati Avenue and Reposo Street;
appellees-spouses Gaston reside at No. 64 Jupiter Street
between Makati Avenue and Zodiac Street; appelleesspouses Briones reside at No. 66 Jupiter Street also
between Makati Avenue and Zodiac Street; while appellee
Bel-Air Village Association, Inc. (hereinafter referred to as
BAVA) is the homeowners' association in Bel-Air Village
which takes care of the sanitation, security, traffic
regulations and general welfare of the village.

Page

certiorari under Rule 45 of the Rules of Court) from five decisions of the
Court of Appeals, denying specific performance and damages.

PubCorp Cases
Atty. Lapid
a. This lot/s shall not be subdivided. However, three or
more lots may be consolidated and subdivided into a
lesser number of lots provided that none of the resulting
lots be smaller in area than the smallest lot before the
consolidation and that the consolidation and subdivision
plan be duly approved by the governing body of the BelAir Association.

VI-TERM OF RESTRICTIONS
The foregoing restrictions shall remain in force for fifty
years from January 15, 1957, unless sooner cancelled in
its entirety by two thirds vote of members in good standing
of the Bel-Air Association. However, the Association may,
from time to time, add new ones, amend or abolish
particular restrictions or parts thereof by majority rule.

b. This lot/s shall only be used for residential purposes.

VII--ENFORCEMENT OF RESTRICTIONS

e. No cattle, pigs, sheep, goats, ducks, geese, roosters or

rabbits shall be maintained in the lot, except that pets may
be maintained but must be controlled in accordance with
the rulings of the Association. The term "pets' includes
chickens not in commercial quantities.
f. The property is subject to an easement of two (2) meters
within the lot and adjacent to the rear and sides thereof
not fronting a street for the purpose of drainage, sewage,
water and other public facilities as may be necessary and
desirable; and the owner, lessee or his representative
shall permit access thereto by authorized representatives
of the Bel-Air Association or public utility entities for the
purposes for which the easement is created.
g. This lot shall not be used for any immoral or illegal trade
or activity.
h. The owner and/or lessee of this lot/s shall at all times
keep the grass cut and trimmed to reduce the fire hazard
of the property.
xxx xxx xxx

(5) When MDC sold the above-mentioned lots to

appellees' predecessors-in-interest, the whole stretch of
the commercial block between Buendia Avenue and
Jupiter Street, from Reposo Street in the west to Zodiac
Street in the east, was still undeveloped. Access,
therefore, to Bel-Air Village was opened to all kinds of
people and even animals. So in 1966, although it was not
part of the original plan, MDC constructed a fence or wall
on the commercial block along Jupiter Street. In 1970, the
fence or wall was partly destroyed by typhoon "Yoling."
The destroyed portions were subsequently rebuilt by the
appellant. (Copuyoc TSN, pp. 31-34, Feb. 12, 1982).
When Jupiter Street was widened in 1972 by 3.5 meters,
the fence or wall had to be destroyed. Upon request of
BAVA, the wall was rebuilt inside the boundary of the
commercial block. (Copuyoc TSN, pp. 4447, Feb.
12,1982).
(6) When the appellant finally decided to subdivide and
sell the lots in the commercial block between Buendia and
Jupiter, BAVA wrote the appellant on May 9, 1972,
requesting for confirmation on the use of the commercial
lots. The appellant replied on May 16, 1972, informing

121

d. Commercial or advertising signs shall not be placed,

constructed, or erected on this lot. Name plates and
professional signs of homeowners are permitted so long
as they do not exceed 80 x 40 centimeters in size.

The foregoing restrictions may be enjoined and/or

enforced by court action by the Bel-Air Association, or by
the Makati Development Corporation or its assigns, or by
any registered owner of land within the boundaries of the
Bel-Air Subdivision (Sub-division plan PSD-49226 and Lot
7-B, Psd-47848) or by any member in good standing of
the Bel-Air association." (Exh. 1 -b; Exh. 22, Annex "B").
(Appellant's Brief, pp. 4- 6)

Page

c. Only one single family house may be constructed on a

single lot, although separate servants' quarters or garage
may be built.

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In its letter of July 10, 1972, BAVA acknowledged the

above letter of appellant and informed the latter that the
application for special membership of the commercial lot
owners in BAVA would be submitted to BAVA's board of
governors for decision.
(8) On September 25, 1972, appellant notified BAVA that,
after a careful study, it was finally decided that the height
limitation of buildings on the commercial lots shall be
increased from 12.5 meters to 15 meters. Appellant further
informed BAVA that Jupiter Street shall be widened by 3.5
meters to improve traffic flow in said street. BAVA did not
reply to said letter, but on January 22, 1973, BAVA wrote
a letter to the appellant informing the latter that the
Association had assessed the appellant, as special
member of the association, the amount of P40,795.00
(based on 81,590 square meters at P.50 per square
meter) representing the membership dues to the

(9) Meantime, on April 4, 1975, the municipal council of

Makati enacted its ordinance No. 81, providing for the
zonification of Makati (Exh. 18). Under this Ordinance,
Bel-Air Village was classified as a Class A Residential
Zone, with its boundary in the south extending to the
center line of Jupiter Street (Exh. 18-A).
Thus, Chapter III, Article 1, Section 3.03, par. F. of the
Ordinance provides:
F. Bel-Air Village area, as bounded on the N by Polaris
and Mercedes streets and on the NE by Estrella Street; on
the SE by Epifanio de los Santos Avenue and on the SW
by the center line of Jupiter Street. Then bounded on the
N by the abandoned MRR Pasig Line; on the E by Makati
Avenue; on the S by the center line of Jupiter Street and
on the W by the center line of Reposo Street." (Exh. 18-A)
Similarly, the Buendia Avenue Extension area was
classified as Administrative Office Zone with its boundary
in the North-North East Extending also up to the center
line of Jupiter Street (Exh. 18b).

122

(7) On June 30, 1972, appellant informed BAVA that in a

few months it shall subdivide and sell the commercial lots
bordering the north side of Buendia Avenue Extension
from Reposo Street up to Zodiac Street. Appellant also
informed BAVA that it had taken all precautions and will
impose upon the commercial lot owners deed restrictions
which will harmonize and blend with the development and
welfare of Bel-Air Village. Appellant further applied for
special membership in BAVA of the commercial lot
owners. A copy of the deed restrictions for the commercial
lots was also enclosed. The proposed deed restrictions
shall include the 19 meter set back of buildings from
Jupiter Street, the requirement for parking space within the
lot of one (1) parking slot for every seventy five (75)
meters of office space in the building and the limitation of
vehicular traffic along Buendia to entrance only, but
allowing both vehicular entrance and vehicular exit
through Jupiter Street and any side street.

commercial lot owners for the year 1973, and requested

the appellant to remit the amount which its board of
governors had already included in its current budget. In
reply, appellant on January 31, 1973 informed BAVA that
due to the widening of Jupiter Street, the area of the lots
which were accepted by the Association as members was
reduced to 76,726 square meters. Thus, the
corresponding dues at P.50 per square meter should be
reduced to P38,363.00. This amount, therefore, was
remitted by the appellant to BAVA. Since then, the latter
has been collecting membership dues from the owners of
the commercial lots as special members of the
Association. As a matter of fact, the dues were increased
several times. In 1980, the commercial lot owners were
already being charged dues at the rate of P3.00 per
square meter. (Domingo, TSN, p. 36, March 19, 1980). At
this rate, the total membership dues of the commercial lot
owners amount to P230,178. 00 annually based on the
total area of 76,726 square meters of the commercial lots.

Page

BAVA of the restrictions intended to be imposed in the

sale and use of the lots. Among these restrictions are: that
the building shall have a set back of 19 meters; and that
with respect to vehicular traffic along Buendia Avenue,
entrance only will be allowed, and along Jupiter Street and
side streets, both entrance and exit will be allowed.

PubCorp Cases
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Thus, Chapter III, Article I, Section 3.05, par. C. of the Ordinance provides:
C. The Buendia Avenue Extension areas, as bounded on
the N-NE by the center line of Jupiter Street, on the SE by
Epifanio de los Santos Avenue; on the SW by Buendia
Avenue and on the NW by the center line of Reposo
Street, then on the NE by Malugay Street; on the SE by
Buendia Avenue and on the W by Ayala Avenue
Extension." (Exh. 18-B)

Southeast - Jupiter
Southwest - Epifanio de los Santos Ave. (EDSA)
5. Bel-Air 2
Bounded on the Northwest - J.P. Rizal
Southwest - Makati Avenue

The Residential Zone and the Administrative Office Zone,

therefore, have a common boundary along the center line
of Jupiter Street.

South --- Jupiter

Southeast -- Pasig Line

R-I-Low Intensity Residential

xxxxxxxxx
4. Bel-Air 1, 3, 4
Bounded on the North -- J.P. Rizal and Amapola St.
South - Rockwell
Northwest - P. Burgos

xxxxxxxxx
C-3-High Intensity Commercial Zone
2. A block deep strip along the northwest side of Buendia
Ave. Ext. from Reposo to EDSA." (Exh, 19-c)
Under the above zoning classifications, Jupiter Street,
therefore, is a common boundary of Bel-Air Village and the
commercial zone.
(10) Meanwhile, in 1972, BAVA had installed gates at
strategic locations across Jupiter Street which were
manned and operated by its own security guards who
were employed to maintain, supervise and enforce traffic
regulations in the roads and streets of the village.
(Villavicencio, TSN, pp, 22-25, Oct. 30, 1980; BAVA
Petition, par. 11, Exh. 17).
Then, on January 17, 1977, the Office of the Mayor of
Makati wrote BAVA directing that, in the interest of public
welfare and for the purpose of easing traffic congestion,
the following streets in Bel-Air Village should be opened
for public use:

123

Thus, the Zoning District Boundaries -Makati, in Annex B of the Ordinance

provides:

East - South Avenue" (Exh. 19-b)

Page

The above zoning under Ordinance No. 81 of Makati was

later followed under the Comprehensive Zoning Ordinance
for the National Capital Region adopted by the Metro
Manila Commission as Ordinance 81 -01 on March 14,
1981 (Exh. 19). However, under this ordinance, Bel-Air
Village is simply bounded in the South-Southeast by
Jupiter Street-not anymore up to the center line of Jupiter
Street (Exh. B). Likewise, the blockdeep strip along the
northwest side of Buendia Avenue Extension from Reposo
to EDSA was classified as a High Intensity Commercial
Zone (Exh. 19-c).

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Mercedes Street -- from EDSA to Imelda Avenue and

Amapola junction
Zodiac Street - from Mercedes Street to Buendia Avenue
Jupiter Street -- from Zodiac Street to Reposo Street
connecting Metropolitan Avenue to Pasong Tamo and V.
Cruz Extension intersection
Neptune Street - from Makati Avenue to Reposo Street
Orbit Street - from F. Zobel-Candelaria intersection to
Jupiter Street
Paseo de Roxas - from Mercedes Street to Buendia
Avenue (Exh. 17, Annex A, BAVA Petition)
On February 10, 1977, BAVA wrote the Mayor of Makati,
expressing the concern of the residents about the opening
of the streets to the general public, and requesting
specifically the indefinite postponement of the plan to open
Jupiter Street to public vehicles. (Exh. 17, Annex B, BAVA
Petition).
However, BAVA voluntarily opened to the public Amapola,
Mercedes, Zodiac, Neptune and Paseo de Roxas streets.
(Exh. 17-A, Answer of Makati par. 3-7).
Later, on June 17,1977, the Barangay Captain of Bel-Air
Village was advised by the Office of the Mayor that, in
accordance with the agreement entered into during the
meeting on January 28, 1 977, the Municipal Engineer and
the Station Commander of the Makati Police were ordered
to open for public use Jupiter Street from Makati Avenue
to Reposo Street. Accordingly, he was requested to advise
the village residents of the necessity of the opening of the
street in the interest of public welfare. (Exh. 17, Annex E,
BAVA Petition).

Finally, on August 12, 1977, the municipal officials of

Makati concerned allegedly opened, destroyed and
removed the gates constructed/located at the corner of
Reposo Street and Jupiter Street as well as the
gates/fences located/constructed at Jupiter Street and
Makati Avenue forcibly, and then opened the entire length
of Jupiter Street to public traffic. (Exh. 17, BAVA Petition,
pars. 16 and 17).
(11) Before the gates were-removed, there was no parking
problem or traffic problem in Jupiter Street, because
Jupiter Street was not allowed to be used by the general
public (Villavicencio, TSN, pp. 24-25, Oct. 30, 1980).
However, with the opening of Zodiac Street from Estrella
Street to Jupiter Street and also the opening to the public
of the entire length of Jupiter Street, there was a
tremendous increase in the volume of traffic passing along
Jupiter Street coming from EDSA to Estrella Street, then
to Zodiac Street to Jupiter Street, and along the entire
length of Jupiter Street to its other end at Reposo Street.
(Villavicencio, TSN, pp. 30-32, Oct. 30, 1980).
In the meantime, the purchasers of the commercial lots
between Jupiter Street and Buendia Avenue extension
had started constructing their respective buildings in 19741975. They demolished the portions of the fence or wall
standing within the boundary of their lots. Many of the
owners constructed their own fences or walls in lieu of the
wall and they employed their own security guards. (TSN,
p. 83, Feb. 20,1981; TSN, pp. 53-54; 72-74, March
20,1981; TSN, pp. 54-55, July 23, 1981).
(12) Then, on January 27, 1978, appellant donated the
entire Jupiter Street from Metropolitan Avenue to Zodiac
Street to BAVA (Exh. 7)- However, even before 1978, the
Makati Police and the security force of BAVA were already
the ones regulating the traffic along Jupiter Street after the

124

Amapola Street -junction of Palma Street gate going to J.

Villena Street

Then, on June 10, 1977, the Municipal Engineer of Makati

in a letter addressed to BAVA advised the latter to open
for vehicular and pedestrian traffic the entire portion of
Jupiter Street from Makati Avenue to Reposo Street (Exh.
17, BAVA Petition, par. 14).

Page

Amapola Street - from Estrella Street to Mercedes Street

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gates were opened in 1977. Sancianco TSN, pp. 26-30,
Oct. 2,1981).
In October, 1979, the fence at the corner of Orbit and
Neptune Streets was opened and removed (BAVA
Petition, par. 22, Exh. 17). The opening of the whole
stretch of Orbit Street from J.P. Rizal Avenue up to Imelda
Avenue and later to Jupiter Street was agreed to at the
conference attended by the President of BAVA in the
office of the Station Commander of Makati, subject to
certain conditions, to wit:
That, maintenance of Orbit St. up to Jupiter St. shall be
shouldered by the Municipality of Makati.

occurred during the trial of the case. Claiming to be

similarly situated as the plaintiffs-appellees, the spouses
Felix C. Gaston and Dolores R. Gaston, Jose V. Briones
and Alicia R. Briones, and the homeowners' association
(BAVA) intervened in the case.
(15) After trial on the merits, the then Court of First
Instance of Rizal, Pasig, Metro Manila, rendered a
decision in favor of the appellees the dispositive portion of
which is as follows:
WHEREFORE, judgment is hereby accordingly rendered
as follows:
ON PLAINTIFFS' COMPLAINT:
Defendant is ordered to pay to the plaintiffs-spouses
Sangalang the following damages:

That for the security of the residents of San Miguel Village

and Bel-Air Village, as a result of the opening of Orbit
Street, police outposts shall be constructed by the
Municipality of Makati to be headed by personnel of
Station No. 4, in close coordination with the Security
Guards of San Miguel Village and Bel-Air Village." (CF.
Exh. 3 to Counter-Affidavit, of Station Commander,
Ruperto Acle p. 253, records)" (Order, Civil Case No.
34948, Exh. 17-c).

1. The sum of P500,000.00 as actual and consequential

damages;

(13) Thus, with the opening of the entire length of Jupiter

Street to public traffic, the different residential lots located
in the northern side of Jupiter Street ceased to be used for
purely residential purposes. They became, for all
purposes, commercial in character.

5. The costs of suit.

(14) Subsequently, on October 29, 1979, the plaintiffsappellees Jose D. Sangalang and Lutgarda D. Sangalang
brought the present action for damages against the
defendant-appellant Ayala Corporation predicated on both
breach of contract and on tort or quasi-delict A
supplemental complaint was later filed by said appellees
seeking to augment the reliefs prayed for in the original
complaint because of alleged supervening events which

Defendant is ordered to pay to the spouses Felix and

Dolores Gaston, the following damages:

2. The sum of P2,000,000.00 as moral damages;

3. The sum of P500,000.00 as exemplary damages;
4. The sum of P100,000.00 as attorney's fees; and

1 . The sum of P400,000.00 as consequential damages;

2 The sum of P500,000.00 as moral damages;

125

ON INTERVENORS FELIX and DOLORES GASTON'S

COMPLAINT:

Page

That, street lights will be installed and maintenance of the

same along Orbit St. from J.P. Rizal Ave. up to Jupiter St.
shall be undertaken by the Municipality.

PubCorp Cases
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5 The costs of suit.

ON INTERVENORS JOSE and ALICIA BRIONES'
COMPLAINT:

SO ORDERED.
(Record on Appeal, pp. 400-401) 2

Defendant is ordered to pay to the spouses Jose and

Alicia Briones, the following damages:

xxxxxxxxx

1 . The sum of P400,000.00 as consequential damages;

On appeal, the Court of Appeals 3 rendered a reversal,

and disposed as follows:

2 The sum of P500,000.00 as moral damages;

4 The sum of P50,000.00 as attorney's fees; and

ACCORDINGLY, finding the decision appealed from as

not supported by the facts and the law on the matter, the
same is hereby SET ASIDE and another one entered
dismissing the case for lack of a cause of action. Without
pronouncement as to costs.

5 The costs of suit.

SO ORDERED. 4

ON INTERVENOR BAVA'S COMPLAINT:

II. G.R. No. 74376

3 The sum of P500,000.00 as exemplary damages;

Defendant is ordered to pay intervenor BAVA, the

following damages:
1. The sum of P400,000.00 as consequential damages;
2. The sum of P500,000.00 as exemplary damages;
3. The sum of P50,000.00 as attorney's fees; and
4. The costs of suit.
The above damages awarded to the plaintiffs and
intervenors shall bear legal interest from the filing of the
complaint.

This petition was similarly brought by BAVA to enforce the aforesaid

restrictions stipulated in the deeds of sale executed by the Ayala
Corporation. The petitioner originally brought the complaint in the Regional
Trial Court of Makati, 5 principally for specific performance, plaintiff [now,
petitioner] alleging that the defendant [now, private respondent] Tenorio
allowed defendant [Tenorio's co-private respondent] Gonzalves to occupy
and convert the house at 50 Jupiter Street, Bel-Air Village, Makati, Metro
Manila, into a restaurant, without its knowledge and consent, and in violation
of the deed restrictions which provide that the lot and building thereon must
be used only for residential purposes upon which the prayed for main relief
was for 'the defendants to permanently refrain from using the premises as
commercial and to comply with the terms of the Deed Restrictions." 6 The
trial court dismissed the complaint on a procedural ground, i.e., pendency of
an Identical action, Civil Case No. 32346, entitled "Bel-Air Village
Association, Inc. v. Jesus Tenorio." The Court of Appeals 7 affirmed, and
held, in addition, that Jupiter Street "is classified as High density commercial
(C-3) zone as per Comprehensive Zoning Ordinance No. 81-01 for National

126

4 The sum of P50,000.00 as attorney's fees; and

Defendant is further ordered to restore/reconstruct the

perimeter wall at its original position in 1966 from Reposo
Street in the west to Zodiac Street in the east, at its own
expense, within SIX (6) MONTHS from finality of
judgment.

Page

3 The sum of P500,000.00 as exemplary damages:

PubCorp Cases
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Capital Region," 8 following its own ruling in AC-G.R. No. 66649, entitled
"Bel-Air Village Association, Inc. vs. Hy-Land Realty & Development
Corporation, et al."

reminded defendants that they were violating the deed

restriction. Despite said reminder, the defendants
proceeded with the construction of the bake shop.
Consequently, plaintiff sent defendants a letter dated April
30, 1979 warning them that if they will not desist from
using the premises in question for commercial purposes,
they will be sued for violations of the deed restrictions.

III. G.R. No. 76394

xxxxxxxxx

xxxxxxxxx
IV. Term of Restriction
The foregoing restriction(s) shall remain in force for fifty
years from January 15, 1957, unless sooner cancelled in
its entirety by two-thirds vote of the members in good
standing of the Bel-Air Association. However, the
Association may from time to time, add new ones, amend
or abolish particular restrictions or parts thereof by
majority rule.
During the early part of 1979, plaintiff noted that certain
renovations and constructions were being made by the
defendants on the subject premises, for which reason the
defendants were advised to inform the plaintiff of the kind
of construction that was going on. Because the defendants
failed to comply with the request of the plaintiff, the latter's
chief security officer visited the subject premises on March
23, 1979 and found out that the defendants were putting
up a bake and coffee shop, which fact was confirmed by
defendant Mrs. Romualdez herself. Thereafter, the plaintiff

xxxxxxxxx
The trial court 10 adjudged in favor of BAVA. On appeal, the Court of
Appeals 11 reversed, on the strength of its holding in AC-G.R. No. 66649
earlier referred to.
BAVA then elevated the matter to the Court by a petition for review on
certiorari. The Court 12 initially denied the petition "for lack of merit, it
appearing that the conclusions of the respondent Court of Appeals that
private respondents' bake and coffee shop lies within a commercial zone
and that said private respondents are released from their obligations to
maintain the lot known as 108 Jupiter Street for residential purposes by
virtue of Ordinance No. 81 of the Municipality of Makati and Comprehensive
Zoning Ordinance No. 81-01 of the Metropolitan Manila Commission, are in
accord with law and jurisprudence," 13 for which BAVA sought a
reconsideration. Pending resolution, the case was referred to the Second
Division of this Court, 14 and thereafter, to the Court En Banc en
consulta. 15 Per our Resolution, dated April 29, 1988, we consolidated this
case with G.R. Nos. 74376 and 82281. 16
IV. G.R. No. 78182.
xxxxxxxxx
The case stemmed from the leasing by defendant Dolores
Filley of her building and lot situated at No. 205 Reposo
Street, Bel-Air Village Makati, Metro Manila to her codefendant, the advertising firm J. Romero and Associates,
in alleged violation of deed restrictions which stipulated
that Filley's lot could only be used for residential purposes.
Plaintiff sought judgment from the lower court ordering the

127

(b,) This lot/shall be used only for residential purposes.

Despite the warning, the defendants proceeded with the

construction of their bake shop. 9

Page

Defendants-spouses Eduardo V. Romualdez, Jr. and

Buena Tioseco are the owners of a house and lot located
at 108 Jupiter St., Makati, Metro Manila as evidenced by
Transfer Certificate of Title No. 332394 of the Registry of
Deeds of Rizal. The fact is undisputed that at the time the
defendants acquired the subject house and lot, several
restrictions were already annotated on the reverse side of
their title; however, for purposes of this appeal we shall
quote hereunder only the pertinent ones, to wit:

PubCorp Cases
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Defendants now seek review and reversal on three (3) assignments of

errors, namely:
I.
THE TRIAL COURT ERRED IN NOT FINDING THAT THE
REGULATIONS PROMULGATED BY THE MUNICIPAL
AUTHORITIES IN MAKATI AND THE MINISTRY OF
HUMAN SETTLEMENT'S CHANGING THE CHARACTER
OF THE AREAS IN QUESTION HAD RENDERED THE
RESTRICTIVE EASEMENT ON THE TITLE OF THE
APPELLANTS VACATED.
II.
THE COURT ERRED IN NOT RULING THAT BECAUSE
THE APPELLEE(S) HAD ALLOWED THE USE OF THE
PROPERTY WITHIN THE VILLAGE FOR NONRESIDENTIAL PURPOSES, IT IS NOW ESTOPPED
FROM ENFORCING THE RESTRICTIVE PROHIBITIONS
SUBJECT MATTER OF THIS CASE.
III.
THE COURT ERRED IN NOT FINDING THAT THERE
EXISTED A BILATERAL CONTRACT BETWEEN THE
PARTIES AND THAT SINCE APPELLEE HAD NOT
PERFORMED ITS OBLIGATIONS UNDER THIS
ARRANGEMENT THE APPELLANT IN TURN WAS
UNDER NO OBLIGATION TO ANNOTATE THE

Appellants anchor their appeal on the proposition that the

Bel-Air Village area, contrary to plaintiff- appellee's
pretension of being a strictly residential zone, is in fact
commercial and characterize the restrictions contained in
appellant Filley's deed of sale from the appellee as
completely outmoded, which have lost all relevance to the
present-day realities in Makati, now the premier business
hub of the nation, where there is a proliferation of
numerous commercial enterprises established through the
years, in fact even within the heart of so-called
"residential" villages. Thus, it may be said that appellants
base their position on the inexorable march of progress
which has rendered at naught the continued efficacy of the
restrictions. Appellant on the other hand, relies on a rigid
interpretation of the contractual stipulations agreed upon
with appellant Filley, in effect arguing that the restrictions
are valid ad infinitum.
The lower court quite properly found that other commercial
establishments exist in the same area (in fact, on the
same street) but ignored it just the same and saidThe fact that defendants were able to prove the existence
of several commercial establishments inside the village
does not exempt them from liability for violating some of
the restrictions evidently choosing to accord primacy to
contractual stipulation. 17
xxxxxxxxx
The Court of Appeals 18 overturned the lower court, 19 likewise based on ACG.R. No. 66649. The respondent Court observed also that J. Romero &
Associates had been given authority to open a commercial office by the
Human Settlements Regulatory Commission.
V. G.R. No. 82281
The facts of this case have been based on stipulation. We quote:

128

After the proper proceedings, the court granted the plaintiff

the sought for relief with the additional imposition of
exemplary damages of P50,000.00 and attorney's fees of
P10,000.00. The trial court gave emphasis to the
restrictive clauses contained in Filley's deed of sale from
the plaintiff, which made the conversion of the building into
a commercial one a violation.

RESTRICTIVE PROHIBITIONS ON THE BACK OF THE

TITLE.

Page

defendants to "permanently refrain" from using the

premises in question "as commercial" and to comply with
the terms of the deed restrictions.

PubCorp Cases
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COMES NOW, the Parties, assisted by their respective
counsel and to this Honorable Court, respectfully enter
into the following stipulations of facts, to wit:
1. The parties admit the personal circumstances of each
other as well as their capacities to sue and be sued.
2. The parties admit that plaintiff BAVA for short) is the
legally constituted homeowners' association in Bel-Air
Subdivision, Makati, Metro Manila.
3. The parties admit that defendant Violets Moncal is the
registered owner of a parcel of land with a residential
house constructed thereon situated at No. 104 Jupiter
Street, Bel-Air Village, Makati, Metro Manila; that as such
lot owner, she is a member of the plaintiff association.
4. The parties admit that defendant Majal Development
Corporation (Majal for short) is the lessee of defendant
Moncal's house and lot located at No. 104 Jupiter Street.

Jupiter Street, which wall was constructed by the

subdivision owner; that at that time the gates of the
entrances to Jupiter Street were closed to public traffic. In
short, the entire length of Jupiter which was inside the
perimeter wall was not then open to public traffic
9. The parties admit that subsequent thereto, Ayala tore
down the perimeter wall to give way to the commercial
building fronting Buendia Avenue (now Gil J. Puyat
Avenue).
10. The parties admit that on August 12, 1977, the Mayor
of Makati forcibly opened and removed the street gates
constructed on Jupiter Street and Reposo Street, thereby
opening said streets to the public.
11. The parties admit plaintiffs letters of October 10, 23
and 31, 1984; as well as defendants' letters-reply dated
October 17 and 29, 1984. 20
xxxxxxxxx

7. The parties admit that along Jupiter Street and on the

same side where Moncal's property is located, there are
restaurants, clinics placement or employment agencies
and other commercial or business establishments. These
establishments, however, were sued by BAVA in the
proper court.
8. The parties admit that at the time Moncal purchased the
subject property from the Makati Development
Corporation, there was a perimeter wall, running along

VI. The cases before the Court; the Court's decision.

In brief, G.R. Nos. 74376, 76394, 78182, and 82281 are efforts to enforce
the "deed restrictions" in question against specific residents (private
respondents in the petitions) of Jupiter Street and with respect to G.R. No.
78182, Reposo Street. The private respondents are alleged to have
converted their residences into commercial establishments (a restaurant in
G.R. No. 74376, a bakery and coffee shop in G.R. No. 76394, an advertising
firm in G.R. No. 78182; and a construction company, apparently, in G.R. No.
82281) in violation of the said restrictions. 24

129

6. The parties admit that when Moncal leased her subject

property to Majal, she did not secure the consent of BAVA
to lease the said house and lot to the present lessee.

The trial court 21 dismissed the petitioner's complaint, a dismissal affirmed on

appeal, 22 According to the appellate court, the opening of Jupiter Street to
human and vehicular traffic, and the commercialization of the Municipality of
Makati in general, were circumstances that had made compliance by Moncal
with the aforesaid "deed restrictions" "extremely difficult and
unreasonable," 23 a development that had excused compliance altogether
under Article 1267 of the Civil Code.

Page

5. The parties admit that a deed restrictions is annotated

on the title of defendant Moncal, which provides, among
others, that the lot in question must be used only for
residential purposes;' that at time Moncal purchased her
aforesaid lot in 1959 said deed restrictions was already
annotated in the said title.

PubCorp Cases
Atty. Lapid
Their mother case, G. R. No. 71169 is, on the other hand, a petition to hold
the vendor itself, Ayala Corporation (formerly Makati Development
Corporation), liable for tearing down the perimeter wall along Jupiter Street
that had therefore closed its commercial section from the residences of BelAir Village and ushering in, as a consequence, the full "commercialization" of
Jupiter Street, in violation of the very restrictions it had authored.

Aside from this fundamental issue, the petitioners likewise raise procedural
questions. G.R. No. 71169, the mother case, begins with one.
1. G.R. No. 71169
In this petition, the following questions are specifically put to the Court:
May the Honorable Intermediate Appellate Court reverse
the decision of the trial court on issues which were neither
raised by AYALA in its Answers either to the Complaint or
Supplemental Complaint nor specifically assigned as one
of the alleged errors on appeal? 25
May the Honorable Intermediate Appellate Court arbitrarily
ignore the decisive findings of fact of the trial court, even if
uncontradicted and/or documented, and premised mainly
on its own unsupported conclusions totally reverse the trial
court's decision? 26
May the Honorable Intermediate Appellate Court disregard
the trial court's documented findings that respondent Ayala

The first question represents an attack on the appellate court's reliance on

Ordinances Nos. 81 and 81-01, a matter not supposedly taken up at the trial
or assigned as an error on appeal. As a rule, the Court of Appeals (then the
Intermediate Appellate Court) may determine only such questions as have
been properly raised to it, yet, this is not an inflexible rule of procedure. In
Hernandez v. Andal, 28 it was stated that "an unassigned error closely
related to an error properly assigned, or upon which the determination of the
question raised by the error properly assigned is dependent, will be
considered by the appellate court notwithstanding the failure to assign it as
error." 29
In Baquiran v. Court of Appeals, 30 we referred to the " modern trend of
procedure . . . according] the courts broad discretionary power" 31 and in
which we allowed consideration of matters "having some bearing on the
issue submitted which the parties failed to raise or the lower court
ignore[d]. 32 And in Vda. de Javellana v. Court of Appeals, 33 we permitted
the consideration of a 'patent error' of the trial court by the Court of Appeals
under Section 7, of Rule 51, of the Rules of Court, 34 although such an error
had not been raised in the brief. But what we note is the fact that the Ayala
Corporation did raise the zoning measures as affirmative defenses, first in its
answers 35 and second, in its brief, 36 and submitted at the trial as
exhibits. 37 There is accordingly no cause for complaint on the part of the
petitioners for Ayala's violation of the Rules. But while there was reason for
the consideration, on appeal, of the said zoning ordinances in question, this
Court nevertheless finds as inaccurate the Court of Appeals' holding that
such measures, had "in effect, [made] Jupiter Street ... a street which could
be used not only for residential purposes," 38 and that "[It lost its character as
a street for the exclusive benefit of those residing in Bel-Air Village
completely." 39
Among other things, there is a recognition under both Ordinances Nos. 81
and 8 1-01 that Jupiter Street lies as the boundary between Bel-Air Village
and Ayala Corporation's commercial section. And since 1957, it had been

130

The Court of Appeals' reliance on Ordinance Nos. 81. and 8101 is now
assailed in these petitions, particularly the Sangalang, et al. petition.

a.

Page

As We indicated, the Court of Appeals dismissed all five appeals on the

basis primarily of its ruling in AC-G.R. No. 66649, "Bel-Air Village, Inc. v. HyLand Realty Development Corporation, et al.," in which the appellate court
explicitly rejected claims under the same 'deed restrictions" as a result of
Ordinance No. 81 enacted by the Government of the Municipality of Makati,
as well as Comprehensive Zoning Ordinance No. 8101 promulgated by the
Metropolitan Manila Commission, which two ordinances allegedly allowed
the use of Jupiter Street both for residential and commercial purposes. It
was likewise held that these twin measures were valid as a legitimate
exercise of police power.

for its own self-interest and commercial purposes

contrived in bad faith to do away with the Jupiter Street
perimeter wall it put up three times which wall was really
intended to separate the residential from the commercial
areas and thereby insure the privacy and security of Bel
Air Village pursuant to respondent Ayala's express
continuing representation and/or covenant to do so? 27

PubCorp Cases
Atty. Lapid

We come to the perimeter wall then standing on the commercial side of

Jupiter Street the destruction of which opened the street to the public. The
petitioners contend that the opening of the thoroughfare had opened, in turn,
the floodgates to the commercialization of Bel-Air Village. The wall, so they
allege, was designed precisely to protect the peace and privacy of Bel-Air
Village residents from the din and uproar of mercantile pursuits, and that the
Ayala Corporation had committed itself to maintain it. It was the opinion of
the Court of Appeals, as we said, that Ayala's liability therefor, if one existed,
had been overtaken by the passage of Ordinances Nos. 81 and 82-01,
opening Jupiter Street to commerce.
It is our ruling, we reiterate, that Jupiter Street lies as a mere boundary, a
fact acknowledged by the authorities of Makati and the National Government
and, as a scrutiny of the records themselves reveals, by the petitioners
themselves, as the articles of incorporation of Bel-Air Village Association
itself would confirm. As a consequence, Jupiter Street was intended for the
use by both -the commercial and residential blocks. It was not originally
constructed, therefore, for the exclusive use of either block, least of all the
residents of Bel-Air Village, but, we repeat, in favor of both, as distinguished
from the general public.
When the wall was erected in 1966 and rebuilt twice, in 1970 and 1972, it
was not for the purpose of physically separating the two blocks. According to
Ayala Corporation, it was put up to enable the Bel-Air Village Association
"better control of the security in the area, 41 and as the Ayala Corporation's
"show of goodwill " 42 a view we find acceptable in the premises. For it
cannot be denied that at that time, the commercial area was vacant, "open
for [sic] animals and people to have access to Bel-Air Village." 43 There was
hence a necessity for a wall.
In any case, we find the petitioners' theory, that maintaining the wall was a
matter of a contractual obligation on the part of Ayala, to be pure conjecture.

With the construction of the commercial buildings in 1974, the reason for
which the wall was built- to secure Bel-Air Village from interlopers had
naturally ceased to exist. The buildings themselves had provided formidable
curtains of security for the residents. It should be noted that the commercial
lot buyers themselves were forced to demolish parts of the wall to gain
access to Jupiter Street, which they had after all equal right to use.
In fine, we cannot hold the Ayala Corporation liable for damages for a
commitment it did not make, much less for alleged resort to machinations in
evading it. The records, on the contrary, will show that the Bel-Air Village
Association had been informed, at the very outset, about the impending use
of Jupiter Street by commercial lot buyers. We quote:
xxxxxxxxx
1. Exh. I of appellee, the memorandum of Mr. Carmelo
Caluag, President of BAVA, dated May 10, 1972,
informing the BAVA Board of Governors and Barrio
Council members about the future use of Jupiter Street by
the lot owners fronting Buendia Avenue. The use of
Jupiter Street by the owners of the commercial lots would
necessarily require the demolition of the wall along the
commercial block adjoining Jupiter Street.
2. Exh. J of appellee, the minutes of the joint meeting of
BAVA Board of Governors and the Bel-Air Barrio Council
where the matter that "Buendia lot owners will have equal
rights to use Jupiter Street," and that Ayala's "plans about
the sale of lots and use of Jupiter Street" were precisely
taken up. This confirms that from the start BAVA was
informed that the commercial lot owners will use Jupiter
Street and that necessarily the wall along Jupiter Street
would be demolished.
3. Exh. 10, the letter of Mr. Demetrio Copuyoc to the
President of BAVA, dated May 16, 1972, expressly stating

131

. . . . 40 Hence, it cannot be said to have been "for the exclusive benefit" of

Bel-Air Village residents.

The records do not establish the existence of such a purported commitment.

For one, the subdivision plans submitted did not mention anything about it.
For another, there is nothing in the "deed restrictions" that would point to any
covenant regarding the construction of a wall. There is no representation or
promise whatsoever therein to that effect.

Page

considered as a boundary not as a part of either the residential or

commercial zones of Ayala Corporation's real estate development projects.
Thus, the Bel-Air Village Association's articles of incorporation state that BelAir Village is 'bounded on the NE., from Amapola St., to de los Santos Ave.,
by Estrella St., on the SE from Extrella St., to Pedestrian Lane by E. De los
Santos Ave., on the SW., from Pedestrian Lane to Reposo St., by Jupiter
Street

PubCorp Cases
Atty. Lapid
that vehicular entrance and exit to the commercial lots
would be allowed along Jupiter and side streets.
4. Exhs. 27, 27-A, 27-B, the letter of Atty. Salvador J.
Lorayes dated June 30, 1972, with enclosed copy of
proposed restriction for the commercial lots to BAVA. He
proposed restriction again expressly stated that "Vehicular
entrances and exits are allowed thru Jupiter and any side
streets."
5. Exh. L of appellee, the minutes of the meeting of the
members of BAVA, dated August 26, 1972, where it is
stated "Recently, Ayala Corporation informed the Board
that the lots fronting Buendia Avenue will soon be offered
for sale, and that future lot owners will be given equal
rights to use Jupiter Street as well as members of the
Association."

Obligations arise, among other things, from contract. 46 If Ayala, then, were
bound by an obligation, it would have been pursuant to a contract. A
contract, however, is characterized by a "meeting of minds between two
persons . 47 As a consensual relation, it must be shown to exist as a fact,
clearly and convincingly. But it cannot be inferred from a mishmash of
circumstances alone disclosing some kind of an "understanding," when
especially, those disparate circumstances are not themselves incompatible
with contentions that no accord had existed or had been reached. 48
The petitioners cannot simply assume that the wall was there for the
purpose with which they now give it, by the bare coincidence that it had
divided the residential block from the commercial section of Bel-Air. The
burden of proof rests with them to show that it had indeed been built
precisely for that objective, a proof that must satisfy the requirements of our
rules of evidence. It cannot be made to stand on the strength of plain
inferences.
b.

Be that as it may, the Court cannot visualize any purported obligation by

Ayala Corporation to keep the wall on the strength of this supposed promise
alone. If truly Ayala promised anything assuming that Capuyoc was
authorized to bind the corporation with a promise it would have been with
respect to the fence. It would not have established the pre-existing obligation
alleged with respect to the wall.

682 (1903), where it was held that "whether the plaintiffs services were
solicited or whether they were offered to the defendant for his assistance,
inasmuch as these services were accepted and made use of by the latter,
we must consider that there was a tacit and mutual consent as to the
rendition of services." (At 686.) In that case, the defendant had enormously
benefitted from the services that entitled the plaintiff to compensation on the
theory that no one may unjustly enrich himself at the expense of another
(Solutio indebiti) The facts of this case differ.

132

The petitioners cannot successfully rely on the alleged promise by Demetrio

Copuyoc, Ayala's manager, to build a "[f]ence along Jupiter with gate for
entrance and/or exit 45 as evidence of Ayala's alleged continuing obligation
to maintain a wall between the residential and commercial sections. It should
be observed that the fence referred to included a "gate for entrance and or
exit" which would have defeated the purpose of a wall, in the sense the
petitioners would put in one, that is to say, an impenetrable barrier. But as
Ayala would point out subsequently, the proposed fence was not constructed
because it had become unnecessary when the commercial lot owners
commenced constructions thereon.

This likewise answers the petitioners' second query, whether or not the
Court of Appeals had "arbitrarily ignore(d) the decisive findings of the trial
court." 49 i.e., findings pointing to alleged acts performed by the Ayala
Corporation proving its commitment to maintain the wall abovesaid.
Specifically, the petitioners refer to, among other things: (1) Ayala's alleged
announcement to Bel- Air Village Association members that "[the perimeter
wall along Jupiter Street will not be demolished," 50 (2) Ayala's alleged
commitment "during the pendency of the case in the trial court" to restore the
wall; (3) alleged assurances by Copuyoc that the wall will not be removed;
(4) alleged contrivances by the corporation to make the association admit as
members the commercial lot buyers which provided them equal access to
Jupiter Street; and (5) Ayala's donation to the association of Jupiter Street
for "private use" of Bel-Air residents. 51

Page

6. Exh. 25, the letter of Atty. Lorayes dated September 25,

1972, informing BAVA of the widening of Jupiter Street by
3.5 meters to improve traffic flow in said street to benefit
both the residents of Bel-Air and the future owners of the
commercial lots. 44

PubCorp Cases
Atty. Lapid

It is unfair to say, as the trial court did, that the Ayala had "contrived to make
future commercial lot owners special members of BAVA and thereby acquire
equal right with the regular members thereof to use Jupiter Street 53since, as
we stated, the commercial lot buyers have the right, in any event, to make
use of Jupiter Street, whether or not they are members of the association. It
is not their memberships that give them the right to use it. They share that
right with Bel-Air residents from the outset.
The objective of making the commercial lot owners special members of the
Bel-Air Village Association was not to accord them equal access to Jupiter
Street and inferentially, to give them the right to knock down the perimeter
wall. It was, rather, to regulate the use of the street owing precisely to the
"planned" nature of Ayala's development project, and real estate
development in general, and this could best be done by placing the
commercial lot owners under the association's jurisdiction.
Moreover, Ayala's overtures with the association concerning the
membership of commercial lot buyers therein have been shown to be neither
perfidious nor unethical nor devious (paraphrasing the lower court). We
quote anew:
xxxxxxxxx
(7) On June 30, 1972, appellant informed BAVA that in a
few months it shall subdivide and sell the commercial lots
bordering the north side of Buendia Avenue Extension

In its letter of July 10, 1972, BAVA acknowledged the above letter of
appellant and informed the latter that the application for special membership
of the commercial lot owners in BAVA would be submitted to BAVA's board
of governors for decision.
(8) On September 25,1972, appellant notified BAVA that,
after a careful study, it was finally decided that the height
limitation of buildings on the commercial lots shall be
increased from 12.5 meters to 15 meters. Appellant further
informed BAVA that Jupiter Street shall be widened by 3.5
meters to improve traffic flow in said street. BAVA did not
reply to said letter, but on January 22, 1973, BAVA wrote
a letter to the appellant informing the latter that the
Association had assessed the appellant, as special
member of the association, the amount of P40,795.00
(based on 81,590 square meters at P.50 per square
meter) representing the membership dues of the
commercial lot owners for the year 1973, and requested
the appellant to remit the amount which its board of
governors had already included in its current budget. In
reply, appellant on January 31, 1973 informed BAVA that
due to the widening of Jupiter Street, the area of the lots
which were accepted by the Association as members was
reduced to 76,726 square meters. Thus, the
corresponding due at P.50 per square meter should be
reduced to P38,363.00. This amount, therefore, was
remitted by the appellant to BAVA. Since then, the latter
has been collecting membership dues from the owners of

133

With respect to Ayala's alleged announcement before the association, the

Court does not agree that Ayala had categorically assumed as an obligation
to maintain the wall "perpetually," i.e., until the year 2007 (the expiration date
under the "deed restrictions.") There is nothing in its statement that would
bare any commitment. In connection with the conference between the
parties "during the pendency" of the trial, it is to be noted that the Ayala
Corporation denies having warranted the restoration of the said wall therein.
What, on the other hand, appears in the records is the fact that Ayala did
make that promise, but provided that the Mayor allowed it. It turned out,
however, that the Mayor balked at the Idea. 52 But assuming that Ayala did
promise to rebuild the wall (in that conference), it does not seem to us that it
did consequently promise to maintain it in perpetuity.

from Reposo Street up to Zodiac Street. Appellant also

informed BAVA that it had taken all precautions and will
impose upon the commercial lot owners deed restrictions
which will harmonize and blend with the development and
welfare of Bel-Air Village. Appellant further applied for
special membership in BAVA of the commercial lot
owners. A copy of the deed restrictions for the commercial
lots was also enclosed. The proposed deed restrictions
shall include the 19 meter set back of buildings from
Jupiter Street, the requirement for parking space within the
lot of one (1) parking slot for every seventy five (75)
meters of office space in the building and the limitation of
vehicular traffic along Buendia to entrance only, but
allowing both vehicular entrance and vehicular exit
through Jupiter Street and any side street.

Page

As we stated, the Ayala Corporation's alleged conduct prior to or during the

proceedings below are not necessarily at war with claims that no
commitment had been in fact made.

PubCorp Cases
Atty. Lapid
the commercial lots as special members of the
Association. As a matter of fact, the dues were increased
several times. In 1980, the commercial lot owners were
already being charged dues at the rate of P3.00 per
square meter. (Domingo, TSN, p. 36, March 19, 1980). At
this rate, the total membership dues of the commercial lot
owners amount to P230,178.00 annually based on the
total area of 76,726 square meters of the commercial
lots. 54
xxxxxxxxx
The alleged undertaking, finally, by Ayala in the deed of donation (over
Jupiter Street) to leave Jupiter Street for the private use of Bel-Air residents
is belied by the very provisions of the deed. We quote:
xxxxxxxxx
IV. That the offer made by the DONOR had been
accepted by the DONEE subject to the condition that the
property will be used as a street for the use of the
members of the DONEE, their families, personnel, guests,
domestic help and, under certain reasonable conditions
and restrictions, by the general public, and in the event
that said lots or parts thereof cease to be used as such,
ownership thereof shall automatically revert to the
DONOR. The DONEE shall always have Reposo Street,
Makati Avenue, and Paseo de Roxas open for the use of
the general public. It is also understood that the DONOR
shall continue the maintenance of the street at its expense
for a period of three years from date hereof." (Deed of
Donation, p. 6, Exh. 7) 55

The Court adds that Ayala can hardly be held responsible for the alleged
deterioration of "living and environmental conditions" 56 of the Bel-Air area,
as a consequence of "Ayala's authorized demolition of the Jupiter perimeter
wall in 1974-1975. " 57 We agree with Ayala that until 1976, "there was
peace and quiet" at Jupiter Street, as the petitioners' (Sangalang, Gaston,
and Briones) complaints admit. Hence, the degeneration of peace and order
in Bel-Air cannot be ascribed to the destruction of the wall in 1974 and 1975.
What Ayala submits as the real cause was the opening of Jupiter Street to
vehicular traffic in 1977., 58 But this was upon orders of the Mayor, and for
which the homeowners' association had precisely filed suit (Civil Case No.
34998) 59 to contest the act of the Mayor.
c.
This likewise disposes of the third question presented. The petitioners'
reliance on Ayala's alleged conduct (proving its alleged commitment), so we
have ruled, is not well-taken. Ayala's alleged acts do not, by themselves,
reflect a commitment to maintain the wall in dispute. It cannot be therefore
said that the Court of Appeals "arbitrarily ignore(d]" 60 the lower court's
findings. Precisely, it is the duty of the appellate court to review the findings
of the trial judge, be they of fact or law. 61 It is not bound by the conclusions
of the judge, for which reason it makes its own findings and arrives at its own
conclusions. Unless a grave abuse of discretion may be imputed to it, it may
accept or reject the lower tribunal's determinations and rely solely on the
records.
Accordingly, the Court affirms the Court of Appeals' holding that the Ayala
Corporation, in its dealings with the petitioners, the Bel-Air Village
Association in particular, had "acted with justice, gave the appellees
[petitioners] their due and observed honesty and good faith." 62 "Therefore,
under both Articles 19 and 21 of the Civil Code, the appellant [Ayala] cannot
be held liable for damages." 63

xxxxxxxxx
2. G.R. Nos. 74376, 76394, 78182, & 82281

Page

The Court cannot then say, accepting the veracity of the petitioners' facts"
enumerated above, that the Ayala Corporation may be held liable for specific
performance of a demandable obligation, let alone damages.

Our decision also resolves, quite anticlimactically, these companion cases.

But we do so for various other reasons. In the Sangalang case, we absolve
the Ayala Corporation primarily owing to our finding that it is not liable for the
opening of Jupiter Street to the general public. Insofar as these petitions are
concerned, we likewise exculpate the private respondents, not only because
of the fact that Jupiter Street is not covered by the restrictive easements
based on the "deed restrictions" but chiefly because the National

134

The donation, on the contrary, gave the general public equal right to it.

PubCorp Cases
Atty. Lapid

It is not that we are saying that restrictive easements, especially the

easements herein in question, are invalid or ineffective. As far as the Bel-Air
subdivision itself is concerned, certainly, they are valid and enforceable. But
they are, like all contracts, subject to the overriding demands, needs, and
interests of the greater number as the State may determine in the legitimate
exercise of police power. Our jurisdiction guarantees sanctity of contract and
is said to be the "law between the contracting parties, 65 but while it is so, it
cannot contravene 'law, morals, good customs, public order, or public
policy. 66 Above all, it cannot be raised as a deterrent to police power,
designed precisely to promote health, safety, peace, and enhance the
common good, at the expense of contractual rights, whenever necessary. In
Ortigas & Co., Limited Partnership v. Feati Bank and Trust Co., 67 we are
told:
xxxxxxxxx
2. With regard to the contention that said resolution cannot
nullify the contractual obligations assumed by the
defendant-appellee referring to the restrictions
incorporated in the deeds of sale and later in the
corresponding Transfer Certificates of Title issued to
defendant-appellee it should be stressed, that while nonimpairment of contracts is constitutionally guaranteed, the
rule is not absolute, since it has to be reconciled with the
legitimate exercise of police power, i.e., "the power to
prescribe regulations to promote the health, morals,
peace, education, good order or safety and general
welfare of the people.' Invariably described as "the most
essential, insistent, and illimitable of powers" and "in a
sense, the greatest and most powerful attribute of
government," the exercise of the power may be judicially
inquired into and corrected only if it is capricious,
whimsical, unjust or unreasonable, there having been a
denial of due process or a violation of any other applicable
constitutional guarantee. As this Court held through

Resolution No. 27, 1960 declaring the western part of High

way 54, now E. de los Santos Avenue (EDSA, for short)
from Shaw Boulevard to the Pasig River as an industrial
and commercial zone, was obviously passed by the
Municipal Council of Mandaluyong, Rizal in the exercise of
police power to safeguard or promote the health, safety,
peace, good order and general welfare of the people in the
locality. Judicial notice may be taken of the conditions
prevailing in the area, especially where Lots Nos. 5 and 6
are located. The lots themselves not only front the
highway; industrial and commercial complexes have
flourished about the place. EDSA, a main traffic artery
which runs through several cities and municipalities in the
Metro Manila area, supports an endless stream of traffic
and the resulting activity, noise and pollution are hardly
conducive to the health, safety or welfare of the residents
in its route. Having been expressly granted the power to
adopt zoning and subdivision ordinances or regulations,
the municipality of Mandaluyong, through its Municipal
Council, was reasonably, if not perfectly, justified under
the circumstances, in passing the subject resolution. 68
xxxxxxxxx
Undoubtedly, the MMC Ordinance represents a legitimate exercise of police
power. The petitioners have not shown why we should hold otherwise other
than for the supposed "non-impairment" guaranty of the Constitution, which,
as we have declared, is secondary to the more compelling interests of
general welfare. The Ordinance has not been shown to be capricious or
arbitrary or unreasonable to warrant the reversal of the judgments so
appealed. In that connection, we find no reversible error to have been
committed by the Court of Appeals.

135

In view thereof, we find no need in resolving the questions raised as to

procedure, since this disposition is sufficient to resolve these cases.

Justice Jose P. Bengson in Philippine Long Distance

Company vs. City of Davao, et al. police power 'is elastic
and must be responsive to various social conditions; it is
not confined within narrow circumscriptions of precedents
resting on past conditions; it must follow the legal progress
of a democratic way of life.' We were even more emphatic
in Vda. de Genuino vs. The Court of agrarian Relations, et
al., when We declared: "We do not see why public welfare
when clashing with the individual right to property should
not be made to prevail through the state's exercise of its
police power."

Page

Government itself, through the Metro Manila Commission (MMC), had

reclassified Jupiter Street into high density commercial (C-3)
zone, 64 pursuant to its Ordinance No. 81-01. Hence, the petitioners have no
cause of action on the strength alone of the said "deed restrictions.

PubCorp Cases
Atty. Lapid
WHEREFORE, premises considered, these petitions are DENIED No
pronouncement as to costs.
IT IS SO ORDERED.
Fernan, (C.J.), Melencio-Herrera, Gutierrez, Jr., Cruz, Gancayco, Bidin,
Cortes, Grio-Aquino, Medialdea and Regalado, JJ., concur.
Narvasa, J., on leave.
Paras, J., Took no part;
Feliciano, J., Took no part;

Page

G.R. No. 97619 November 26, 1992

136

Padilla, J., Took no part;

PubCorp Cases
Atty. Lapid
SPOUSES SOCRATES PILAPIL and ROSARIO PILAPIL, petitioners,
vs.
THE COURT OF APPEALS, REGIONAL TRIAL COURT OF CEBU,
BRANCH 17, and SPOUSES GORGONIO COLOMIDA and GLORIA
COLOMIDA, respondents.

DAVIDE, JR., J:
From the denial of 13 February 1991 of their motion for the reconsideration
of the 26 October 1990 decision of the Court of Appeals, in CA-G.R. CV No.
17235, 1 which affirmed the 8 February 1988 decision of Branch 17 of the
Regional Trial Court (RTC) of Cebu, petitioners filed this petition for review
under Rule 45 of the Rules of Court.
The kernel issue in this case is whether or not there exists in sitio Bahak,
barangay Poblacion, Municipality of Liloan, Province of Cebu a camino
vecinal; 2 and if so, whether the same traverses the property belonging to
the petitioners.

This parcel of land, per Plan Psu-07-002763, 8 was found to contain only
6,448 square meters. It is now covered by Free Patent No. (VII-1)-15448,
issued on 23 March 1982, and Original Certificate of Title No. P-20588 9 of
the Register of Deeds of the Province of Cebu issued in the name of the
Colomidas and is located around 70 meters from the National Road. The
Colomidas claim that they had acquired from Sesenando Longkit a road right
of way which leads towards the National Road; this road right of way,
however, ends at that portion of the property of the Pilapils where a camino
vecinal exists all the way to the said National Road. 10
In the early part of July of 1981, the Colomidas "tried to improve the road
of "camino vecinal", for the convenience of the public," but the Pilapils
harassed and threatened them with "bodily harm from making said
improvement." The Pilapils also threatened to fence off the camino
vecinal. 11
Thus, on 16 July 1981, the Colomidas filed against the Pilapils a
petition 12 for injunction and damages with a prayer for a writ of preliminary
mandatory and/or prohibitory injunction with the Regional Trial Court of Cebu.
Docketed as Civil Case No. R-20732, the petition was raffled off to Branch
17 thereof. The Colomidas specifically allege in paragraph IV of the petition
that:

The pleadings disclose the antecedents of this controversy.

. . . Boundaries: N-Gregorio Longakit; S-Gregorio

Longakit; E-Manglar; W-Gregorio Longkit; Area: 10,910 sq.
meters; Kind of land: Pasture cocal and wood;
Improvements: 20 cocos prod.; Assessed Value:
P1,360.00; Present Possessors: The herein petitioners. 7

and pray that upon the filing of the petition, a restraining order be issued
directing the Pilapils or anyone acting in their behalf to cease and desist
from preventing or harassing them (Colomidas) from using the camino
vecinaland/or fencing off the same, and after hearing, a writ of preliminary
injunction be issued commanding the Pilapils to cease and desist from
proceeding with the acts complained of. They also asked that the injunction
be made permanent and that the Pilapils be ordered to pay, jointly and
severally, the sum of P100,000.00 as moral damages, P50,000.00 as
exemplary damages, 10,000.00 as attorney's fees and other litigation
expenses as may be duly proved. Consistent with the aforequoted allegation
of paragraph IV of the petition, the Colomidas additionally pray that:
6. In the remote possibility that the "camino vecinal"
cannot be proved, to consider the same as a right of way

137

Private respondents (hereinafter, Colomidas), who are residents of Mandaue

City, purchased on 4 June 1981 from Esteria vda. de Ceniza and the heirs of
Leoncio Ceniza a parcel of land, also located at Bahak, Poblacion, Liloan,
Cebu, covered by Tax Declaration No. 19764 and described as follows:

. . . Granting arguendo, even in the very remote possibility

that the "camino vecinal" cannot be proved, the petitioners
are entitled to the use of the same under Articles 649 to
651 of the Civil Code, it being their only access to public
(sic) highway. 13

Page

The petitioners-spouses (hereinafter, Pilapils) own a 6,598 square

meter 3 parcel of land situated in Bahak, Poblacion, Liloan, Cebu and
covered by Tax Declaration No. 15067. 4 The said parcel corresponds to Lot
No. 320 and Lot 323 5 and that portion covered by Plan Psu-07005007, 6 duly approved by the Regional Director of Region VII of the
Bureau of Lands. The land formerly belonged to Marcelo Pilapil, the
grandfather of petitioner Socrates Pilapil.

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On 18 August 1981, the Pilapils filed their Answer 16 in Civil Case No. R20732. They specifically deny therein the existence of a "camino vecinal" on
their property and allege, inter alia, that the enclosing of their property and
allege, inter alia, that the enclosing of their property by a fence was done in
the valid exercise of their right of ownership and that if the Colomidas were
prejudiced thereby, they only have themselves to blame for buying said
property without verifying its condition and existing easements. As
affirmative and special defenses, the Pilapils aver that the petition does not
state facts sufficient to constitute a valid cause of action; the Colomidas
were the ones who employed threats and intimidation; and, to add insult to
injury, the latter caused a heavy bulldozer to enter their (Pilapils) property
and cause great damage to the plants and crops in the process. The Pilapils
also set up a counterclaim for attorney's fees, reimbursement for the
damages caused to their land and moral and exemplary damages as may be
determined by the court.
During trial on the merits in Civil Case No. R-20732, the Colomidas
presented the following witnesses: Gorgonio Colomida, Jr. himself,
Sesenado Longakit and Florentino Pepito. They also offered in evidence
documentary exhibits. the more relevant and material of which are (1)
Resolution No. 106 of the Municipal Council of Liloan passed on 18 August
1973 and entitled "Authorizing the Residents of Bahak, Poblacion, Liloan to
Repair and Improve a Camino Vecinal in their Sitio" 17 and (2) a
sketch 18 prepared by witness Sesenando Longakit purportedly showing that
the camino vecinal traverses the property of the Pilapils. Both Longakit and
Pepito testified on the said camino vecinal, insisting that it traverses the
property of the Pilapils.
Upon the other hand, the Pilapils presented the following as their witnesses:
Roman Sungahid, Engineer Epifanio Jordan (the Municipal Planning and
Development Coordinator of the Municipality of Liloan) and petitioner
Socrates Pilapil. Engineer Jordan testified on Liloan's Urban Land Use
Plan 19 or zoning map which he prepared upon the instruction of then
Municipal Mayor Cesar Butai and which was approved by the Sangguniang

On 8 February 1988, the trial court rendered its decision 22 in favor of the
Colomidas the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of
petitioners, and, accordingly, respondents are
permanently enjoined from preventing or harassing
petitioners from using the "camino vecinal" across
respondents' land at Bahak, Poblacion, Liloan, or from
fencing the same or in any manner preventing its use by
other people; and respondents are ordered to pay
petitioners jointly and severally the sum of P4,500.00 as
actual damages, the sum of P5,000.00 as attorney's fees,
and the sum of P2,000.00 as litigation expenses. Costs
against respondents.
SO ORDERED. 23
This disposition is based on the following findings of fact and conclusions:
Resolution No. 106 of the Municipal Council of Liloan,
passed on August 18, 1973 and entitled "Authorizing the
Residents of Bahak, Poblacion, Liloan to Repair and
Improve a Camino Vecina (sic) in Their Sitio" (Exh. "A")
shows that there is a "camino vecinal" at Bahak. It is true,
as claimed by respondents, that Resolution No. 106 does
not state that the "camino vecinal" referred to therein
traverses respondents' land; however, the following facts
of record support petitioners' theory that the said "camino
vecinal" runs across respondents' land:
1 Resolution No. 106 (Exh. "A") states that upon
inspection of the "camino vecinal" by one of the councilors,
it was established that the said "camino vecinal" needed
"some improvements to make it usable," but the Municipal
Council did not have the necessary funds for the purpose,
and that "the residents of Bahak, headed by Mr.
Sesenando Longakit, have signified to (sic) repair the
camino vecinal on voluntary (sic) basis," hence (sic) it was
resolved "to authorize the residents of Bahak to repair
aforesaid road" provided the labor would be on a purely

138

On the other hand, on 29 July 1981, the Pilapils filed against the Colomidas
an action for damages in the Municipal Circuit Trial Court (MCTC) of LiloanCompostela, Cebu which was docketed as Civil Case No. 93-R. 15

Bayan of Liloan. Per the said plan, the camino vecinal in sitio Bahak does
not traverse, but runs along the side 20 of the Pilapil property. 21

Page

for the petitioners and to fix compensation for the sum

(sic) at TEN PESOS (P10.00) per square
meter. 14

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Atty. Lapid

It appears from the sketch (Exh. "B") drawn by Mr.

Longakit that the "camino vecinal" traverses the land of
respondents (Exhs. "B-6 & "B-7"). Obviously, the "camino
vecinal" subject matter of Resolution No. 106 is the
"camino vecinal" running across respondents' land,
somewhere at the back of which is the land occupied by
Mr. Longakit, who for the reason that he and other
residents were using that "camino vecinal" offered to the
municipal government their services to improve it.
2. As testified to by Mr. Longakit, who has been living at
Sitio Bahak since 1933, and whose testimony the Court
finds credible, both sides of the "camino vecinal" formerly
belonged to the grandfather of respondent Socrates Pilapil,
it was that "camino vecinal" in connection with which he
secured Resolution No. 106, and that before it was partly
fenced by respondents, and when he was a child,
everybody could use that "camino vecinal" and carabao
carts could pass through it, and, later, 4-wheeled motor
vehicles could pass through it.
3. Mr. Florentino Pepito, 79 years of age when he took the
witness stand in 1982, and who was a councilor in Liloan
from 1955 to 1967, and was chairman of the Committee
on Roads & Bridges, testified that the former owner of the
lots now owned by respondents at Bahak was Marcelo
Pilapil, grandfather of respondent Socrates Pilapil and
close (sic) friend of his (witness Pepito) that the subject
"camino vecinal"' is located between those lots, and fact

It discredited the version of the Pilapils in this wise:

4. Respondent Socrates Pilapil insisted on direct
examination that there is no "camino vecinal" traversing
his lots. However, on cross-examination he declared that
his two lots at Bahak, numbered 320 and 323, were
formerly covered by two separate tax declarations, but
later he had (sic) fused into one, namely Tax Declaration
No. 15067 (Exh. "4"), which begins with the year 1985
(long after the present case was filed). Respondent
Socrates Pilapil admitted that before the fusion of the two
tax declarations covering Lots 320 and 323 owned by him,
those tax declarations showed that there was a "camino
vecinal" at the South boundary of Lot 320 and at the North
Boundary of Lot 323, but after the fusion of the two tax
declarations into one, the "camino vecinal" no longer
appears in the new tax declaration (Exh. "4").
In the face of the foregoing established facts, it would
appear that the common testimony of respondent
Socrates Pilapil and Ramon Sungahid to the effect that
there is no "camino vecinal" across respondents' lots is
nothing more than an unsupported conclusion. Mr.
Sungahid adamantly insisted that there was no such
"camino vecinal" despite the fact that he was confronted
on cross-examination with tax declarations stating that
there was a "camino vecinal" across respondents' lot.
Ironically, when respondent Socrates Pilapil later took the
witness stand, as already stated, he himself admitted that
the tax declarations previously covering his two lots
showed that there was a "camino vecinal" between the
lots.

139

The "Mr. Sesenando Longkit" alluded to in Resolution No.

106 as heading the residents of Bahak who had asked for
authority to repair the "camino vecinal" at Bahak took the
witness stand. His testimony has established that he has
been residing at Bahak since birth on July 16, 1933, that
he is the occupant of a lot (Exh. "B-5") not far from
petitioners' lot, and that he and other residents in that area
have been using the "camino vecinal" as their access to
the National Road.

he has a parcel of land in that area covered by Tax

Declaration No. 36168 (Exh. "E:"), which shows that on
the North it is bounded by a "camino vecinal" (Exh. "E-1"),
which passes between the two lots of respondents,
proceeds to his (witness Pepito's) land, crosses the
National Road up to Sitio Looc between Km. 19 and Km.
20, up to Martires Street, facing Camotes; and that when
he was a child, he and his father used to pass through that
"camino vecinal" in a carabao cart. The Court finds no
reason to disbelieve Mr. Pepito's testimony. 24

Page

voluntary basis, the municipal government would not be

liable for any expense, and there would be no
discrimination in the use of the road.

PubCorp Cases
Atty. Lapid

I . . . HOLDING THAT A CAMINO VECINAL EXISTED

ACROSS THE LOT OF THE DEFENDANTS . . .
II . . . NOT APPRECIATING THE EVIDENCE
PRESENTED BY THE DEFENDANTS . . .
III . . . CONDEMNING THE DEFENDANT . . . TO PAY
PLAINTIFFS . . . JOINTLY AND SEVERALLY THE SUM
OF P4,500.00 AS ACTUAL DAMAGES, THE SUM OF
P5,000.00 AS ATTORNEY'S FEES, THE SUM OF
P2,000.00 AS LITIGATION EXPENSES AND TO PAY
THE COSTS.
IV . . . NOT AWARDING TO DEFENDANTS . . .
DAMAGES TO COMPENSATE FOR THE DAMAGED
CONCRETE SLABS, COCONUTS, BANANAS AND
OTHER FRUIT TREES THAT WAS (sic) CAUSED BY
THE BULLDOZER HIRED BY THE PLAINTIFFS . . .

In its decision affirming in toto the 8 February 1988 ruling of the trial court,
the public respondent opined that the arguments adduced in support of the
assigned errors boil down to the question of credibility of the witnesses and
the weight assigned by the lower court to their testimonies and the
documentary exhibits. It then concluded that (a) there exists no exception to
the deeply rooted rule that findings of fact of trial courts are entitled to great
weight and respect and will not be disturbed on appeal; (b) while the 18
August 1973 Resolution of the Municipal Council of Liloan (Exhibit "A") does
not state that the camino vecinal traverses the property of the Pilapils, the
testimony of Sesenando Longakit, the person named therein who has
knowledge of the surrounding facts and circumstances, and who was
present during the deliberations, passage and signing thereof, confirmed the
existence of the camino vecinal on the property of the Pilapils; (c) as to the
claimed damages to the fruit trees and other plants belonging to the Pilapils,
the same had been separately litigated on, at the latter's instance, before the
Municipal Circuit Trial Court and had already been resolved against the
Pilapils; besides, there is insufficient proof to indicate that damage was done
to such plants or that the Pilapils planted trees and other plants on
thecamino vecinal; and (d) there is no merit in the claim that witnesses
Longakit and Pepito, being private individuals, are incompetent to testify on
the existence and location of the camino vecinal; both possess all the
qualifications and none of the disqualification's for witnesses under Section
20, Rule 130 of the Rules of Court. As regards Exhibit "1" which the Pilapils
relied upon in support of their theory that the camino vecinal does not
traverse their property, the public respondent made the following
disquisition:
Respondents-appellants' Exhibit "1" is a zoning map for
the Poblacion of the Municipality of Liloan (TSN, Epifanio
Jordan, February 12 1986, p. 6), prepared and testified to
by Engineer Epifanio Jordan, Municipal Planning and
Development Coordinator of Liloan. By this Exhibit,
respondents-appellants attempted to show that no
"camino vecinal" existed across their land, and that
although there is a "camino vecinal" illustrated therein, it is
a proposed one and does not traverse, but only passes
through the side of their land (TSN, Epifanio Jordan,
November 5, 1985, p. 10; Exhibit "1-F").
After a thorough perusal of Exhibit "1" and a careful review
of the transcript of stenographic notes taken on November

140

The Pilapils appealed from the above decision to the public respondent
Court of Appeals which docketed the case as CA-G.R. CV No. 17235. In
support of their plea for the reversal of the decision, the Pilapils sought to
convince the public respondent that the trial court erred in:

ATTORNEY'S FEES, LITIGATION EXPENSES AND

COSTS. 26

Page

Respondents' other witness, Engr. Epifanio Jordan,

Municipal Planning & Development Coordinator of Liloan,
prepared a zoning map (Exh. "1") of Poblacion, Liloan.
The map contains a portion (Exh. "1-F") which shows
"camino vecinal" passing through the land of respondents
at Bahak, but he declared that the "camino vecinal" on the
map is merely a proposal by his office to the Sangguniang
Bayan of Liloan. The Court notes that in the map (Exh. "I")
(sic) some streets and projects are labelled "proposed,"
but the "camino vecinal" (Exh. "I-F") (sic) which Engr.
Jordan admits to be passing through respondents' land is
not so labelled. Besides, it is not clear whether or not he
was authorized him. On direct examination he declared
that the Sangguniang Bayan instructed him to prepare the
map; but on cross-examination he stated, when asked
whether the Sangguniang Bayan authorized him to
prepare the map, that it was the Mayor who directed him
to do so. 25

PubCorp Cases
Atty. Lapid

It is noted that on direct examination, witness Engineer

Epifanio Jordan testified that the Sangguniang Bayan of
Liloan, Cebu, instructed him to prepare the zoning map
(Exhibit "1") (TSN, Epifanio Jordan, November 5, 1985, p.
9) but on cross-examination, stated (sic) that he did so
upon oral orders of the mayor (TSN, Epifanio Jordan,
February 12, 1986, pp. 6-7). Also on cross-examination,
said witness testified that the zoning map (Exhibit "1")
prepared by him was based on an old map drawn and
traced by Atty. Sotero Auman, a casual worker in the
Municipality of Liloan (Ibid., pp. 8 and 14) yet on redirect
examination testified (sic) that he did not know who
authorized said Atty. Sotero Auman to draw the map
which served as his basis for Exhibit "1", or if it was

Their motion for the reconsideration of the above decision having been
denied by the public respondent Court of Appeals in its Resolution of 13
February 1991, 28 the Pilapils filed by mail on 8 April 1991 the instant petition.
They interpose the following ground for the allowance thereof:
4. The respondent Court, in affirming the Decision of the
respondent RTC and in denying petitioners' motion for
reconsideration, acted in a manner so patently and grossly
contrary to law and jurisprudence, resulting in a
miscarriage of justice to the prejudice and detriment of
petitioners, by:
4.1. disregarding the official act of
the Sangguniang Bayan of the
Municipality of Lilo-an, Cebu;
4.2. quoting merely a portion of the
testimony of a witness and not the
totality of his testimony;
4.3. considering documentary exhibits
not formally offered in evidence;
4.4. affirming the award of damages to
the private respondent, and
4.5. affirming the denial of the award of
damages to the petitioners. 29
In a Manifestation 30 posted on 17 May 1991, the Colomidas pray for the
dismissal of the petition on the basis of the rule on conclusiveness of
findings of fact of the Court of Appeals; they further aver that the petition is
but another attempt on the part of the Pilapils to unjustly delay the final
resolution of the case.
Petitioners moved to expunge 31 the Manifestation on the ground that it was
filed without prior leave of the Court and that it is not one of the pleadings
allowed by the Rules of Court or required by this Court. We denied this
motion, considered the Manifestation as the Colomidas' Comment to the

141

Respondents-appellants' witness, Engineer Epifanio

Jordan produced before the lower court an old map of the
Poblacion which was drawn and traced by a certain Atty.
Sotero Auman, and from which said witnesses (sic) based
his Exhibit "1". In Exhibit "1" witness Engineer Epifanio
Jordan identified respondents-appellants' land as that
encompassed in the circle, Exhibit "1-C" also Exhibit "G-1".
On cross-examination, when confronted and asked to
compare his zoning map (Exhibit "1") with the old map, it
was shown that said Exhibit "1-A" also Exhibit "G-1",
encompasses the figures "320" and "323" Lot numbers
appearing in the old map, and (sic) consequently, was
(sic) identified by said witness and marked as Exhibits "G1-b" and "G-1-c" respectively, in Exhibit "1"; and that
furthermore, the "camino vecinal," Exhibit "G-1-a",
passess (sic) between Lot Nos. 320 and 323 which lots
(sic) belong to respondents-appellants (TSN, Epifanio
Jordan, February 12, 1986, pp. 1-13).

approved by the Sangguniang Bayan of Liloan (Ibid., pp.

14-15). 27

Page

5, 1985 and February 12, 1986, We find that the "camino

vecinal" illustrated in Exhibit "1" and claimed by witness
Engineer Epifanio Jordan as a proposed "camino vecinal"
(TSN, Epifanio Jordan, November 5, 1985, p. 10), is
indeed not so labelled as the other proposed streets or
passageways are. And more importantly, witness
Engineer Epifanio Jordan did in fact admit and establish
the existence of the "camino vecinal" traversing
respondents-appellants land.

PubCorp Cases
Atty. Lapid
which they

We then gave due course to the petition and required the parties to submit
their respective Memoranda. 34
The core issue in this case, as already stated, is whether or not the
Municipality of Liloan has a camino vecinal in sitio Bahak of barangay
Poblacion, and if it does, whether such road traverses the property of the
Pilapils of only passes along its side. While both parties agree that a camino
vecinal actually exists, the Colomidas assert that the same traverses the
property of the Pilapils. The latter, on the other hand, vigorously maintain
that it does not. By any standard, the issue is quite simple and could have
been easily resolved without much procedural fanfare if the trial court either
took full advantage of the rule on pre-trial, 35 or conducted an ocular
inspection of the premises. Such inspection would have been a wise course
of action 36 to take in view of the divergent versions of the parties as to the
location of the camino vecinal. Even the Colomidas, as petitioners below,
could have expedited the resolution of the controversy by moving for the
appointment of a commissioner who could determine the exact location of
the camimo vecinal and submit a vicinity map or plan indicating the same;
and, if the parties cannot agree on its location, the latter could indicate its
relative locations on the basis of the parties' respective versions. The trial
court's decision does not even make any reference to a pre-trial conference
being held. Neither does it appear that the appointment of a commissioner,
allowed by the Rules of Court, 37 was sought. As a consequence thereof, it
took the trial court more than six (6) long years to decide the case. And even
then, it had to contend with conflicting testimonial evidence and draw
conclusions from a sketch prepared by witness Sesenando Longakit, the
zoning map prepared by Engineer Jordan and various tax declarations.
The above issue has been further obscured by the unnecessary quibbling on
whether or not the testimonies of Sesenando Longakit and Florentino Pepito
should be accorded full faith and credit. To this Court's mind, the issue of
their credibility has been rendered moot by the unrebutted evidence which
shows that the Municipality of Liloan, through its Sangguniang Bayan, had
approved a zoning plan, otherwise called an Urban Land Use Plan.38 This
plan indicates the relative location of the camino vecinal in sitio
Bahak, 39 Poblacion, Liloan, Cebu.
It is beyond dispute that the establishment, closure or abandonment of
the camino vecinal is the sole prerogative of the Municipality of Liloan. No
private party can interfere with such a right. Thus, even if We are to agree

with both the trial court and public respondent that Longakit and Pepito were
telling the truth, the decision of the Municipality of Liloan with respect to the
said camino vecinal in sitio Bahak must prevail. It is thus pointless to
concentrate on the testimonies of both witnesses since the same have, for
all intents and purposes, become irrelevant.
The property of provinces, cities and municipalities is divided into property
for public use and patrimonial property.40 The first consists of the provincial
roads, city streets, municipal streets, squares, fountains, public waters,
promenades, and public works for public service paid for by the said
provinces, cities or municipalities. 41 They are governed by the same
principles as property of public dominion of the same character. 42 Under the
applicable law in this case, Batas Pambansa Blg. 337 (The Local
Government Code), the Sangguniang Bayan, the legislative body of the
municipality, 43 had the power to adopt zoning and subdivision ordinances or
regulations subject to the provisions of existing laws, and to provide for the
construction, improvement, repair and maintenance of municipal streets,
avenues, alleys, sidewalks, bridges, parks and other public places, regulate
the use thereof and prohibit the construction or placing of obstacles or
encroachments on them 44 Section 10, Chapter 2, Title One, Book I of said
Code provided: 45
Sec. 10. Closure of roads. A local government unit may
likewise, through its head acting pursuant to a resolution
of its Sangguniang and in accordance with existing law
and the provisions of this Code, close any barangay,
municipal, city or provincial road, street, alley, park or
square. No such way or place or any part thereof shall be
closed without indemnifying any person prejudiced thereby.
A property thus withdrawn from public use may be used or
conveyed for any purpose for which other real property
belonging to the local unit concerned might be lawfully
used or conveyed.
A camino vecinal is a municipal road. It is also property for public use.
Pursuant, therefore, to the above powers of a local government unit, the
Municipality of Liloan had the unassailable authority to (a) prepare and adopt
a land use map, (b) promulgate a zoning ordinance which may consider,
among other things, the municipal roads to be constructed, maintained,
improved or repaired and (c) close any municipal road.
In the instant case, the Municipality of Liloan, through the Sangguniang
Bayan, approved the Urban Land Use Plan; this plan was duly signed by the

142

32

Page

petition and required the Pilapils to file a reply thereto,

subsequently complied with 33

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xxx xxx xxx

Q After you prepared this map, what did
you do with this?
A I submitted the map to the
Sangguniang Bayan of Liloan, Cebu for
approval and action.
Q What action was taken by the
Sangguniang Bayan of Liloan, Cebu in
(sic) this map that you prepared and
submitted?
A It approved the map.
Q Why do you know that this map was
approved by the Sangguniang Bayan of
Liloan, Cebu?
A I was present during the session.
COURT:
Q You mean there was a resolution
passed by the Sangguniang Bayan of
Liloan, Cebu?
A Yes, sir. 46
The reluctance of the trial court and public respondent to give due weight to
the testimony of Engineer Jordan stemmed from a doubt as to his authority
to prepare the plan. There is also some confusion regarding the party who

As further declared by Engineer Jordan, this camino vecinal in sitio Bahak

"passes the side of the land of Socrates Pilapil. This is the proposed road
leading to the national highway." 51 The Colomidas presented no rebuttal
witness to show that by the approval of the zoning map by the Sangguniang
Bayan, they were effectively deprived of access to the national highway from
their property. Of course, they may argue that the zoning map was prepared
for and approved by the Sangguniang Bayan after the filing of their petition
in Civil Case No. R-20732. Be that as it may, this preparation and approval,
clearly a supervening event, was relied upon, introduced in evidence without
objection on the part of the Colomidas and evaluated by the trial court. In
short, the latter allowed the issue raised by the supervening event to be tried.
There was nothing procedurally objectionable to this; on the contrary,
Section 5, Rule 10 of the Rules of Court allows it. Said section reads:
Sec. 5. Amendment to conform to or authorize
presentation of evidence. When issues not raised by
the pleadings are tried by express or implied consent of
the parties, they shall be treated in all respects, as if they
had been raised in the pleadings. Such amendment of the
pleadings as may be necessary to cause them to conform
to the evidence and to raise these issues may be made

143

ATTY. CAETE:

directed him to do so. Both courts observed that while on direct examination,
he testified that the Sangguniang Bayan instructed him to prepare the zoning
map, 47 during cross-examination, he stated that he prepared it upon the
Mayor's oral order. 48 Such inconsistency is quite trivial and hence, did not
affect the preparation and subsequent approval of the zoning map. In the
first place, under the applicable law, the mayor was both a member and the
presiding officer of the Sangguniang Bayan. 49 Secondly, what invested the
zoning map with legal effect was neither the authority of the person who
ordered its preparation nor the authority of the person who actually prepared
it, but its approval by the Sangguniang Bayan. Furthermore, with or without
the order of the Mayor or Sangguniang Bayan, Engineer Jordan, as the then
Municipal Planning and Development Coordinator, had the authority to
prepare the plan and admit it to the Sangguniang Bayan for approval.
Among his functions under the governing law at the time was to formulate an
integrated economic, social, physical and other development objectives and
policies for the consideration and approval of thesangguniang bayan and the
municipal mayor, and prepare municipal comprehensive plans and other
development planning document. 50 Thus, even if he had not been instructed
by anyone to prepare the map, he could nevertheless, on his own initiative
and by virtue of his functions, make one. The trial court and public
respondent then failed to appreciate the role and function of a Municipal
Planning and Development Coordinator.

Page

Municipal Mayor (Exhibit "1"). By doing so, the said legislative body
determined, among others, the location of the camino vecinal in sitio Bahak.
The following unrebutted testimony of Engineer Epifanio Jordan shows that
the same was approved by the Sangguniang Bayan:

PubCorp Cases
Atty. Lapid
upon motion of any party at any time, even after judgment,
but failure to amend does not affect the result of the trial of
these issues. If evidence is objected to at the trial on the
ground that it is not within the issues made by the
pleadings, the court may allow the pleading, to be
amended and shall do so freely when the presentation on
the merits of the action will be subserved thereby and the
objecting party fails to satisfy the court that the admission
of such evidence would prejudice him in maintaining his
action or defense upon the merits. The court may grant a
continuance to enable the objecting party to meet such
evidence.
Such supervening fact, duly proved to be an official act of the Municipality of
Liloan, binds not only the Pilapils and the Colomidas, but also the general
public. The solemn declarations of old people like Sesenando Longakit and
Florentino Pepito cannot overturn the decision of the Municipality of Liloan.
The foregoing exposition renders unnecessary further discussion on the
other issues raised by the petitioners.
WHEREFORE, the instant Petition is GRANTED. The challenged Decision
of 26 October 1990 and Resolution of 13 February 1991 of public
respondent Court of Appeals in CA-G.R. CV No. 17235, as well as the
Decision of 8 February 1988 of Branch 17 of the Regional Trial Court of
Cebu in Civil Case No. R-20732 are hereby SET ASIDE. Said Civil Case No.
R-20732 is hereby DISMISSED with costs against the private respondents.

Page

144

SO ORDERED.

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Atty. Lapid
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

A resolution of that issue will lead to another, viz the civil liability for
damages of the Municipality of Malasiqui, and the members of the Municipal
Council of Malasiqui, province of Pangasinan, for a death which occurred
during the celebration of the town fiesta on January 22, 1959, and which was
attributed to the negligence of the municipality and its council members.

G.R. No. L-29993 October 23, 1978

The following facts are not in dispute:

LAUDENCIO TORIO, GUILLERMO EVANGELISTA, MANUEL DE

GUZMAN, ALFONSO R. MAGSANOC, JESUS MACARANAS, MAXIMO
MANANGAN, FIDEL MONTEMAYOR, MELCHOR VIRAY, RAMON
TULAGAN, all Members of the Municipal Council of Malasiqui in 1959,
Malasiqui, Pangasinan, petitioners,
vs.
ROSALINA, ANGELINA, LEONARDO, EDUARDO, ARTEMIO, ANGELITA,
ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS and ROBERTO, all
surnamed FONTANILLA, and THE HONORABLE COURT OF
APPEALS, respondents.

On October 21, 1958, the Municipal Council of Malasiqui, Pangasinan,

passed Resolution No. 159 whereby "it resolved to manage the 1959
Malasiqui town fiesta celebration on January 21, 22, and 23, 1959."
Resolution No. 182 was also passed creating the "1959 Malasiqui 'Town
Fiesta Executive Committee" which in turn organized a sub-committee on
entertainment and stage, with Jose Macaraeg as Chairman. the council
appropriated the amount of P100.00 for the construction of 2 stages, one for
the "zarzuela" and another for the cancionan Jose Macaraeg supervised the
construction of the stage and as constructed the stage for the "zarzuela" was
"5- meters by 8 meters in size, had a wooden floor high at the rear and
was supported by 24 bamboo posts 4 in a row in front, 4 in the rear and 5
on each side with bamboo braces." 1

G.R. No. L-30183 October 23, 1978

MUNICIPALITY OF MALASIQUI, petitioner,
vs.
ROSALINA, ANGELINA, LEONARDO, EDUARDO, ARTEMIO, ANGELITA,
ANITA, ERNESTO, NORMA, VIRGINIA, REMEDIOS and ROBERTO, all
surnamed FONTANILLA, and the Honorable COURT OF
APPEALS, respondents.
Julian M. Armas, Assistant Provincial Fiscal for petitioners.

The "zarzuela" entitled "Midas Extravaganza" was donated by an association

of Malasiqui employees of the Manila Railroad Company in Caloocan, Rizal.
The troupe arrived in the evening of January 22 for the performance and one
of the members of the group was Vicente Fontanilla. The program started at
about 10:15 o'clock that evening with some speeches, and many persons
went up the stage. The "zarzuela" then began but before the dramatic part of
the play was reached, the stage collapsed and Vicente Fontanilla who was
at the rear of the stage was pinned underneath. Fontanilia was taken to tile
San Carlos General Hospital where he died in the afternoon of the following
day.

Isidro L. Padilla for respondents.

Answering the complaint defendant municipality invoked inter alia the

principal defense that as a legally and duly organized public corporation it
performs sovereign functions and the holding of a town fiesta was an
exercise of its governmental functions from which no liability can arise to
answer for the negligence of any of its agents.

145

These Petitions for review present the issue of whether or not the
celebration of a town fiesta authorized by a municipal council under Sec.
2282 of the Municipal Law as embodied in the Revised Administrative Code
is a governmental or a corporate or proprietary function of the municipality.

Page

MUOZ PALMA, J.:

The heirs of Vicente Fontanilia filed a complaint with the Court of First
Instance of Manila on September 11, 1959 to recover damages. Named
party-defendants were the Municipality of Malasiqui, the Municipal Council of
Malasiqui and all the individual members of the Municipal Council in 1959.

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The Fontanillas appealed to the Court of Appeals. In a decision Promulgated

on October 31, 1968, the Court of Appeals through its Fourth Division
composed at the time of Justices Salvador V. Esguerra, Nicasio A. Yatco
and Eulogio S. Serrano reversed the trial court's decision and ordered all the
defendants-appellees to pay jointly and severally the heirs of Vicente
Fontanilla the sums of P12,000.00 by way of moral and actual damages:
P1200.00 its attorney's fees; and the costs. 4
The case is now before Us on various assignments of errors all of which
center on the proposition stated at the sentence of this Opinion and which
We repeat:
Is the celebration of a town fiesta an undertaking in the excercise of a
municipality's governmental or public function or is it or a private or
proprietary character?
1. Under Philippine laws municipalities are political bodies corporate and as
such ag endowed with the faculties of municipal corporations to be exercised
by and through their respective municipal governments in conformity with
law, and in their proper corporate name, they may inter alia sue and be
sued, and contract and be contracted with. 5
The powers of a municipality are twofold in character public, governmental
or political on the one hand, and corporate, private, or proprietary on the
other. Governmental powers are those exercised by the corporation in

As to when a certain activity is governmental and when proprietary or

private, that is generally a difficult matter to determine. The evolution of the
municipal law in American Jurisprudence, for instance, has shown that; none
of the tests which have evolved and are stated in textbooks have set down a
conclusive principle or rule, so that each case will have to be determined on
the basis of attending circumstances.
In McQuillin on Municipal Corporations, the rule is stated thus: "A municipal
corporation proper has ... a public character as regards the state at large
insofar as it is its agent in government, and private (so-called) insofar as it is
to promote local necessities and conveniences for its own community. 7
Another statement of the test is given in City of Kokomo v. Loy, decided by
the Supreme Court of Indiana in 1916, thus:
Municipal corporations exist in a dual capacity, and their
functions are two fold. In one they exercise the right
springing from sovereignty, and while in the performance
of the duties pertaining thereto, their acts are political and
governmental Their officers and agents in such capacity,
though elected or appointed by the are nevertheless public
functionaries performing a public service, and as such
they are officers, agents, and servants of the state. In the
other capacity the municipalities exercise a private.
proprietary or corporate right, arising from their existence
as legal persons and not as public agencies. Their officers
and agents in the performance of such functions act in
behalf of the municipalities in their corporate or in.
individual capacity, and not for the state or sovereign
power. (112 N. E 994-995)
In the early Philippine case of Mendoza v. de Leon 1916, the Supreme
Court, through Justice Grant T. Trent, relying mainly on American
Jurisprudence classified certain activities of the municipality as
governmental, e.g.: regulations against fire, disease, preservation of public
peace, maintenance of municipal prisons, establishment of schools, postoffices, etc. while the following are corporate or proprietary in character, viz:
municipal waterwork, slaughter houses, markets, stables, bathing

146

After trial, the Presiding Judge, Hon. Gregorio T. Lantin narrowed the issue
to whether or not the defendants exercised due diligence 'm the construction
of the stage. From his findings he arrived at the conclusion that the
Executive Committee appointed by the municipal council had exercised due
diligence and care like a good father of the family in selecting a competent
man to construct a stage strong enough for the occasion and that if it
collapsed that was due to forces beyond the control of the committee on
entertainment, consequently, the defendants were not liable for damages for
the death of Vicente Fontanilla. The complaint was accordingly dismissed in
a decision dated July 10, 1962. 3

administering the powers of the state and promoting the public welfare and
they include the legislative, judicial public, and political Municipal powers on
the other hand are exercised for the special benefit and advantage of the
community and include those which are ministerial private and corporate. 6

Page

The defendant councilors inturn maintained that they merely acted as agents
of the municipality in carrying out the municipal ordinance providing for the
management of the town fiesta celebration and as such they are likewise not
liable for damages as the undertaking was not one for profit; furthermore,
they had exercised due care and diligence in implementing the municipal
ordinance. 2

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If the injury is caused in the course of the performance of a governmental

function or duty no recovery, as a rule, can be. had from the municipality
unless there is an existing statute on the matter, 10 nor from its officers, so
long as they performed their duties honestly and in good faith or that they did
not act wantonly and maliciously. 11 In Palafox, et al., v. Province of Ilocos
Norte, et al., 1958, a truck driver employed by the provincial government of
Ilocos Norte ran over Proceto Palafox in the course of his work at the
construction of a road. The Supreme Court in affirming the trial court's
dismissal of the complaint for damages held that the province could not be
made liable because its employee was in the performance of a
governmental function the construction and maintenance of roads and
however tragic and deplorable it may be, the death of Palafox imposed on
the province no duty to pay monetary consideration. 12
With respect to proprietary functions, the settled rule is that a municipal
corporation can be held liable to third persons ex contract 13 or ex delicto. 14
Municipal corporations are subject to be sued upon
contracts and in tort. ...
xxx xxx xxx
The rule of law is a general one, that the superior or
employer must answer civilly for the negligence or want of
skill of its agent or servant in the course or fine of his
employment, by which another, who is free from
contributory fault, is injured. Municipal corporations under
the conditions herein stated, fall within the operation of this
rule of law, and are liable, accordingly, to civil actions for
damages when the requisite elements of liability co-exist.
... (Dillon on Municipal Corporations, 5th ed. Sec.
1610,1647, cited in Mendoza v. de Leon, supra. 514)

Section 2282 of the Chatter on Municipal Law of the Revised Administrative

Code provides:
Section 2282. Celebration of fiesta. fiesta may be held
in each municipality not oftener than once a year upon a
date fixed by the municipal council A fiesta s not be held
upon any other date than that lawfully fixed therefor,
except when, for weighty reasons, such as typhoons,
foundations, earthquakes, epidemics, or other public ties,
the fiesta cannot be hold in the date fixed in which case it
may be held at a later date in the same year, by resolution
of the council.
This provision simply gives authority to the municipality to accelebrate a
yearly fiesta but it does not impose upon it a duty to observe one. Holding a
fiesta even if the purpose is to commemorate a religious or historical event
of the town is in essence an act for the special benefit of the community and
not for the general welfare of the public performed in pursuance of a policy
of the state. The mere fact that the celebration, as claimed was not to secure
profit or gain but merely to provide entertainment to the town inhabitants is
not a conclusive test. For instance, the maintenance of parks is not a source
of income for the nonetheless it is private undertaking as distinguished from
the maintenance of public schools, jails, and the like which are for public
service.
As stated earlier, there can be no hard and fast rule for purposes of
determining the true nature of an undertaking or function of a municipality;
the surrounding circumstances of a particular case are to be considered and
will be decisive. The basic element, however beneficial to the public the
undertaking may be, is that it is governmental in essence, otherwise. the
function becomes private or proprietary in character. Easily, no overnmental
or public policy of the state is involved in the celebration of a town fiesta. 15
4. It follows that under the doctrine of respondent superior, petitionermunicipality is to be held liable for damages for the death of Vicente
Fontanilia if that was at- tributable to the negligence of the municipality's
officers, employees, or agents.

147

2. This distinction of powers becomes important for purposes of determining

the liability of the municipality for the acts of its agents which result in an
injury to third persons.

3. Coming to the cam before Us, and applying the general tests given above,
We hold that the ho of the town fiesta in 1959 by the municipality of Malsiqui
Pangasinan was an exercise of a private or proprietary function of the
municipality.

Page

establishments, wharves, ferries, and fisheries. 8 Maintenance of parks, golf

courses, cemeteries and airports among others, are also recognized as
municipal or city activities of a proprietary character. 9

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On this point, the Court of Appeals found and held that there was
negligence.
The trial court gave credence to the testimony of Angel Novado, a witness of
the defendants (now petitioners), that a member of the "extravaganza troupe
removed two principal braces located on the front portion of the stage and u
them to hang the screen or "telon", and that when many people went up the
stage the latter collapsed. This testimony was not believed however by
respondent appellate court, and rightly so. According to said defendants,
those two braces were "mother" or "principal" braces located semi-diagonally
from the front ends of the stage to the front posts of the ticket booth located
at the rear of the stage and were fastened with a bamboo twine. 16 That
being the case, it becomes incredible that any person in his right mind would
remove those principal braces and leave the front portion of the stage
practically unsuported Moreover, if that did happen, there was indeed
negligence as there was lack of suspension over the use of the stage to
prevent such an occurrence.
At any rate, the guitarist who was pointed to by Novado as the person who
removed the two bamboo braces denied having done go. The Court of
Appeals said "Amor by himself alone could not have removed the two braces
which must be about ten meters long and fastened them on top of the stags
for the curtain. The stage was only five and a half meters wide. Surely, it,
would be impractical and unwieldy to use a ten meter bamboo pole, much
more two poles for the stage curtain. 17
The appellate court also found that the stage was not strong enough
considering that only P100.00 was appropriate for the construction of two
stages and while the floor of the "zarzuela" stage was of wooden planks, the
Post and braces used were of bamboo material We likewise observe that
although the stage was described by the Petitioners as being supported by
"24" posts, nevertheless there were only 4 in front, 4 at the rear, and 5 on
each side. Where were the rest?

The court a quo itself attributed the collapse of the stage

to the great number of onlookers who mounted the stage.
The municipality and/or its agents had the necessary
means within its command to prevent such an occurrence.
Having filed to take the necessary steps to maintain the
safety of the stage for the use of the participants in the
stage presentation prepared in connection with the
celebration of the town fiesta, particularly, in preventing
non participants or spectators from mounting and
accumulating on the stage which was not constructed to
meet the additional weight- the defendant-appellees were
negligent and are liable for the death of Vicente Fontanilla
. (pp. 30-31, rollo, L-29993)
The findings of the respondent appellate court that the facts as presented to
it establish negligence as a matter of law and that the Municipality failed to
exercise the due diligence of a good father of the family, will not disturbed by
Us in the absence of a clear showing of an abuse of discretion or a gross
misapprehension of facts." 18
Liability rests on negligence which is "the want of such care as a person of
ordinary prudence would exercise under the circumstances of the case." 19
Thus, private respondents argue that the "Midas Extravaganza" which was
to be performed during the town fiesta was a "donation" offered by an
association of Malasiqui employees of the Manila Railroad Co. in Caloocan,
and that when the Municipality of Malasiqui accepted the donation of
services and constructed precisely a "zarzuela stage" for the purpose, the
participants in the stage show had the right to expect that the Municipality
through its "Committee on entertainment and stage" would build or put up a
stage or platform strong enough to sustain the weight or burden of the
performance and take the necessary measures to insure the personal safety
of the participants. 20 We agree.
Quite relevant to that argument is the American case of Sanders v. City of
Long Beach, 1942, which was an action against the city for injuries
sustained from a fall when plaintiff was descending the steps of the city
auditorium. The city was conducting a "Know your City Week" and one of the
features was the showing of a motion picture in the city auditorium to which
the general public was invited and plaintiff Sanders was one of those who
attended. In sustaining the award for Damages in favor of plaintiff, the

148

Art. 2180, Civil Code: The obligation imposed by article

2176 is demandable not only for one's own acts or
omission, but also for those of persons for whom one is
responsible. . .

The Court of Appeals thus concluded

Page

Art. 2176, Civil Code: Whoever by act or omission causes

damage to another, there being fault or negligence, is
obliged to pay for the damage done. . .

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Lastly, petitioner or appellant Municipality cannot evade ability and/or liability

under the c that it was Jose Macaraeg who constructed the stage. The
municipality acting through its municipal council appointed Macaraeg as
chairman of the sub-committee on entertainment and in charge of the
construction of the "zarzuela" stage. Macaraeg acted merely as an agent of
the Municipality. Under the doctrine of respondent superior mentioned
earlier, petitioner is responsible or liable for the negligence of its agent acting
within his assigned tasks. 22
... when it is sought to render a municipal corporation liable for the act of
servants or agents, a cardinal inquiry is, whether they are the servants or
agents of the corporation. If the corporation appoints or elects them, can
control them in the discharge of their duties, can continue or remove the can
hold them responsible for the manner in which they discharge their trust, and
if those duties relate to the exercise of corporate powers, and are for the
benefit of the corporation in its local or special interest, they may justly be
regarded as its agents or servants, and the maxim of respondent superior
applies." ... (Dillon on Municipal Corporations, 5th Ed., Vol IV, p. 2879)
5. The remaining question to be resolved centers on the liability of the
municipal councilors who enacted the ordinance and created the fiesta
committee.
The Court of Appeals held the councilors jointly and solidarity liable with the
municipality for damages under Article 27 of the Civil Code which provides
that d any person suffering ing material or moral loss because a public

In their Petition for review the municipal councilors allege that the Court of
Appeals erred in ruling that the holding of a town fiesta is not a governmental
function and that there was negligence on their part for not maintaining and
supervising the safe use of the stage, in applying Article 27 of the Civil Code
against them and in not holding Jose Macaraeg liable for the collapse of the
stage and the consequent death of Vicente Fontanilla. 24
We agree with petitioners that the Court of Appeals erred in applying Article
27 of the Civil Code against the for this particular article covers a case of
nonfeasance or non-performance by a public officer of his official duty; it
does not apply to a case of negligence or misfeasance in carrying out an
official duty.
If We are led to set aside the decision of the Court of Appeals insofar as
these petitioners are concerned, it is because of a plain error committed by
respondent court which however is not invoked in petitioners' brief.
In Miguel v. The Court of appeal. et al., the Court, through Justice, now Chief
Justice, Fred Ruiz Castro, held that the Supreme Court is vested with ample
authority to review matters not assigned as errors in an appeal if it finds that
their consideration and resolution are indispensable or necessary in arriving
at a just decision in a given case, and that tills is author under Sec. 7, Rule
51 of the Rules of Court. 25 We believe that this pronouncement can well be
applied in the instant case.
The Court of Appeals in its decision now under review held that the
celebration of a town fiesta by the Municipality of Malasiqui was not a
governmental function. We upheld that ruling. The legal consequence
thereof is that the Municipality stands on the same footing as an ordinary
private corporation with the municipal council acting as its board of directors.
It is an elementary principle that a corporation has a personality, separate
and distinct from its officers, directors, or persons composing it 26 and the
latter are not as a rule co-responsible in an action for damages for tort or
negligence culpa aquilla committed by the corporation's employees or
agents unless there is a showing of bad faith or gross or wanton negligence
on their part. 27
xxx xxx xxx

149

We can say that the deceased Vicente Fontanilla was similarly situated as
Sander The Municipality of Malasiqui resolved to celebrate the town fiesta in
January of 1959; it created a committee in charge of the entertainment and
stage; an association of Malasiqui residents responded to the call for the
festivities and volunteered to present a stage show; Vicente Fontanilla was
one of the participants who like Sanders had the right to expect that he
would be exposed to danger on that occasion.

servant or employee refuses or neglects, without just cause to perform his

official duty may file an action for damages and other relief at the latter. 23

Page

District Court of Appeal, Second district, California, held inter alia that the
"Know your City Week" was a "proprietary activity" and not a "governmental
one" of the city, that defendant owed to plaintiff, an invitee the duty of
exercising ordinary care for her safety, and plaintiff was entitled to assume
that she would not be exposed to a danger (which in this case consisted of
lack of sufficient illumination of the premises) that would come to her through
a violation of defendant duty. 21

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The ordinary doctrine is that a director, merely by reason
of his office, is not personally Stable for the torts of his
corporation; he Must be shown to have personally voted
for or otherwise participated in them ... Fletcher
Encyclopedia Corporations, Vol 3A Chapt 11, p. 207)
Officers of a corporation 'are not held liable for the
negligence of the corporation merely because of their
official relation to it, but because of some wrongful or
negligent act by such officer amounting to a breach of duty
which resulted in an injury ... To make an officer of a
corporation liable for the negligence of the corporation
there must have been upon his part such a breach of duty
as contributed to, or helped to bring about, the injury; that
is to say, he must be a participant in the wrongful act. ...
(pp. 207-208, Ibid.)

We hold, therefore, that there is no error committed in the grant of attorney's

fees which after all is a matter of judicial discretion. The amount of
P1,200.00 is fair and reasonable.
PREMISES CONSIDERED, We AFFIRM in toto the decision of the Court of
Appeals insofar as the Municipality of Malasiqui is concerned (L-30183), and
We absolve the municipal councilors from liability and SET ASIDE the
judgment against them (L-9993).
Without pronouncement as to costs.
SO ORDERED,
Teehankee (Chairman), Makasiar, Fernandez, and Guerrero, JJ., concur.

xxx xxx xxx

Directors who merely employ one to give a fireworks
Ambition on the corporate are not personally liable for the
negligent acts of the exhibitor. (p. 211, Ibid.)
On these people We absolve Use municipal councilors from any liability for
the death of Vicente Fontanilla. The records do not show that said
petitioners directly participated in the defective construction of the "zarzuela"
stage or that they personally permitted spectators to go up the platform.

Page

Under paragraph 11, Art. 2208 of the Civil Code attorney's fees and
expenses of litigation may be granted when the court deems it just and
equitable. In this case of Vicente Fontanilla, although respondent appellate
court failed to state the grounds for awarding attorney's fees, the records
show however that attempts were made by plaintiffs, now private
respondents, to secure an extrajudicial compensation from the municipality:
that the latter gave prorases and assurances of assistance but failed to
comply; and it was only eight month after the incident that the bereaved
family of Vicente Fontanilla was compelled to seek relief from the courts to
ventilate what was believed to be a just cause. 28

150

6. One last point We have to resolve is on the award of attorney's fees by

respondent court. Petitioner-municipality assails the award.

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G.R. No. 97764 August 10, 1992

LEVY D. MACASIANO, Brigadier General/PNP Superintendent,
Metropolitan Traffic Command, petitioner,
vs.
HONORABLE ROBERTO C. DIOKNO, Presiding Judge, Branch 62,
Regional Trial Court of Makati, Metro Manila, MUNICIPALITY OF
PARAAQUE, METRO MANILA, PALANYAG KILUSANG BAYAN FOR
SERVICE,respondents.
Ceferino, Padua Law Office for Palanyag Kilusang Bayan for service.
Manuel de Guia for Municipality of Paraaque.

MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court seeking
the annulment of the decision of the Regional Trial Court of Makati, Branch
62, which granted the writ of preliminary injunction applied for by
respondents Municipality of Paraaque and Palanyag Kilusang Bayan for
Service (Palanyag for brevity) against petitioner herein.
The antecedent facts are as follows:
On June 13, 1990, the respondent municipality passed Ordinance No. 86,
Series of 1990 which authorized the closure of J. Gabriel, G.G. Cruz,
Bayanihan, Lt. Garcia Extension and Opena Streets located at Baclaran,
Paraaque, Metro Manila and the establishment of a flea market thereon.
The said ordinance was approved by the municipal council pursuant to MMC
Ordinance No. 2, Series of 1979, authorizing and regulating the use of
certain city and/or municipal streets, roads and open spaces within

On July 20, 1990, the Metropolitan Manila Authority approved Ordinance No.
86, s. 1990 of the municipal council of respondent municipality subject to the
following conditions:
1. That the aforenamed streets are not used for vehicular
traffic, and that the majority of the residents do not oppose
the establishment of the flea market/vending areas
thereon;
2. That the 2-meter middle road to be used as flea
market/vending area shall be marked distinctly, and that
the 2 meters on both sides of the road shall be used by
pedestrians;
3. That the time during which the vending area is to be
used shall be clearly designated;
4. That the use of the vending areas shall be temporary
and shall be closed once the reclaimed areas are
developed and donated by the Public Estate Authority.
On June 20, 1990, the municipal council of Paraaque issued a resolution
authorizing Paraaque Mayor Walfrido N. Ferrer to enter into contract with
any service cooperative for the establishment, operation, maintenance and
management of flea markets and/or vending areas.
On August 8, 1990, respondent municipality and respondent Palanyag, a
service cooperative, entered into an agreement whereby the latter shall
operate, maintain and manage the flea market in the aforementioned streets
with the obligation to remit dues to the treasury of the municipal government
of Paraaque. Consequently, market stalls were put up by respondent
Palanyag on the said streets.
On September 13, 1990, petitioner Brig. Gen. Macasiano, PNP
Superintendent of the Metropolitan Traffic Command, ordered the
destruction and confiscation of stalls along G.G. Cruz and J. Gabriel St. in
Baclaran. These stalls were later returned to respondent Palanyag.

151

EN BANC

Metropolitan Manila as sites for flea market and/or vending areas, under
certain terms and conditions.

Page

Republic of the Philippines

SUPREME COURT
Manila

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On October 16, 1990, petitioner Brig. General Macasiano wrote a letter to
respondent Palanyag giving the latter ten (10) days to discontinue the flea
market; otherwise, the market stalls shall be dismantled.

municipality violated its duty under the Local Government Code to promote
the general welfare of the residents of the municipality.
In upholding the legality of the disputed ordinance, the trial court ruled:

Hence, on October 23, 1990, respondents municipality and Palanyag filed

with the trial court a joint petition for prohibition and mandamus with
damages and prayer for preliminary injunction, to which the petitioner filed
his memorandum/opposition to the issuance of the writ of preliminary
injunction.
On October 24, 1990, the trial court issued a temporary restraining order to
enjoin petitioner from enforcing his letter-order of October 16, 1990 pending
the hearing on the motion for writ of preliminary injunction.

. . . that Chanter II Section 10 of the Local Government

Code is a statutory grant of power given to local
government units, the Municipality of Paraaque as such,
is empowered under that law to close its roads, streets or
alley subject to limitations stated therein (i.e., that it is in
accordance with existing laws and the provisions of this
code).
xxx xxx xxx

The sole issue to be resolved in this case is whether or not an ordinance or

resolution issued by the municipal council of Paraaque authorizing the
lease and use of public streets or thoroughfares as sites for flea markets is
valid.
The Solicitor General, in behalf of petitioner, contends that municipal roads
are used for public service and are therefore public properties; that as such,
they cannot be subject to private appropriation or private contract by any
person, even by the respondent Municipality of Paraaque. Petitioner
submits that a property already dedicated to public use cannot be used for
another public purpose and that absent a clear showing that the Municipality
of Paraaque has been granted by the legislature specific authority to
convert a property already in public use to another public use, respondent
municipality is, therefore, bereft of any authority to close municipal roads for
the establishment of a flea market. Petitioner also submits that assuming
that the respondent municipality is authorized to close streets, it failed to
comply with the conditions set forth by the Metropolitan Manila Authority for
the approval of the ordinance providing for the establishment of flea markets
on public streets. Lastly, petitioner contends that by allowing the municipal
streets to be used by market vendors the municipal council of respondent

We find the petition meritorious. In resolving the question of whether the

disputed municipal ordinance authorizing the flea market on the public
streets is valid, it is necessary to examine the laws in force during the time
the said ordinance was enacted, namely, Batas Pambansa Blg. 337,
otherwise known as Local Government Code, in connection with established
principles embodied in the Civil Code an property and settled jurisprudence
on the matter.
The property of provinces, cities and municipalities is divided into property
for public use and patrimonial property (Art. 423, Civil Code). As to what
consists of property for public use, Article 424 of Civil Code states:
Art. 424. Property for public use, in the provinces, cities
and municipalities, consists of the provincial roads, city
streets, the squares, fountains, public waters,
promenades, and public works for public service paid for
by said provinces, cities or municipalities.

152

Hence, this petition was filed by the petitioner thru the Office of the Solicitor
General alleging grave abuse of discretion tantamount to lack or excess of
jurisdiction on the part of the trial judge in issuing the assailed order.

The actuation of the respondent Brig. Gen. Levi

Macasiano, though apparently within its power is in fact an
encroachment of power legally vested to the municipality,
precisely because when the municipality enacted the
ordinance in question the authority of the respondent as
Police Superintendent ceases to be operative on the
ground that the streets covered by the ordinance ceases
to be a public thoroughfare. (pp. 33-34, Rollo)

Page

On December 17, 1990, the trial court issued an order upholding the validity
of Ordinance No. 86 s. 1990 of the Municipality' of Paraaque and enjoining
petitioner Brig. Gen. Macasiano from enforcing his letter-order against
respondent Palanyag.

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Sec. 10. Closure of roads. A local government unit may

likewise, through its head acting pursuant to a resolution
of its sangguniang and in accordance with existing law
and the provisions of this Code, close any barangay,
municipal, city or provincial road, street, alley, park or
square. No such way or place or any part of thereof shall
be close without indemnifying any person prejudiced
thereby. A property thus withdrawn from public use may
be used or conveyed for any purpose for which other real
property belonging to the local unit concerned might be
lawfully used or conveyed. (Emphasis ours).
However, the aforestated legal provision which gives authority to local
government units to close roads and other similar public places should be
read and interpreted in accordance with basic principles already established
by law. These basic principles have the effect of limiting such authority of the
province, city or municipality to close a public street or thoroughfare. Article
424 of the Civil Code lays down the basic principle that properties of public
dominion devoted to public use and made available to the public in general
are outside the commerce of man and cannot be disposed of or leased by
the local government unit to private persons. Aside from the requirement of
due process which should be complied with before closing a road, street or
park, the closure should be for the sole purpose of withdrawing the road or
other public property from public use when circumstances show that such
property is no longer intended or necessary for public use or public service.
When it is already withdrawn from public use, the property then becomes
patrimonial property of the local government unit concerned (Article 422,
Civil Code; Cebu Oxygen, etc. et al. v. Bercilles, et al., G.R. No. L-40474,

There is no doubt that the disputed areas from which the

private respondents' market stalls are sought to be evicted
are public streets, as found by the trial court in Civil Case
No. C-12921. A public street is property for public use
hence outside the commerce of man (Arts. 420, 424, Civil
Code). Being outside the commerce of man, it may not be
the subject of lease or others contract (Villanueva, et al. v.
Castaeda and Macalino, 15 SCRA 142 citing the
Municipality of Cavite v. Rojas, 30 SCRA 602; Espiritu v.
Municipal Council of Pozorrubio, 102 Phil. 869; And Muyot
v. De la Fuente, 48 O.G. 4860).
As the stallholders pay fees to the City Government for the
right to occupy portions of the public street, the City
Government, contrary to law, has been leasing portions of
the streets to them. Such leases or licenses are null and
void for being contrary to law. The right of the public to use
the city streets may not be bargained away through
contract. The interests of a few should not prevail over the
good of the greater number in the community whose
health, peace, safety, good order and general welfare, the

153

Based on the foregoing, J. Gabriel G.G. Cruz, Bayanihan, Lt. Garcia

Extension and Opena streets are local roads used for public service and are
therefore considered public properties of respondent municipality. Properties
of the local government which are devoted to public service are deemed
public and are under the absolute control of Congress (Province of
Zamboanga del Norte v. City of Zamboanga, L-24440, March 28, 1968, 22
SCRA 1334). Hence, local governments have no authority whatsoever to
control or regulate the use of public properties unless specific authority is
vested upon them by Congress. One such example of this authority given by
Congress to the local governments is the power to close roads as provided
in Section 10, Chapter II of the Local Government Code, which states:

August 29, 1975, 66 SCRA 481). It is only then that the respondent
municipality can "use or convey them for any purpose for which other real
property belonging to the local unit concerned might be lawfully used or
conveyed" in accordance with the last sentence of Section 10, Chapter II of
Blg. 337, known as Local Government Code. In one case, the City Council of
Cebu, through a resolution, declared the terminal road of M. Borces Street,
Mabolo, Cebu City as an abandoned road, the same not being included in
the City Development Plan. Thereafter, the City Council passes another
resolution authorizing the sale of the said abandoned road through public
bidding. We held therein that the City of Cebu is empowered to close a city
street and to vacate or withdraw the same from public use. Such withdrawn
portion becomes patrimonial property which can be the object of an ordinary
contract (Cebu Oxygen and Acetylene Co., Inc. v. Bercilles, et al., G.R. No.
L-40474, August 29, 1975, 66 SCRA 481). However, those roads and
streets which are available to the public in general and ordinarily used for
vehicular traffic are still considered public property devoted to public use. In
such case, the local government has no power to use it for another purpose
or to dispose of or lease it to private persons. This limitation on the authority
of the local government over public properties has been discussed and
settled by this Court en banc in "Francisco V. Dacanay, petitioner v. Mayor
Macaria Asistio, Jr., et al., respondents, G.R. No. 93654, May 6, 1992." This
Court ruled:

Page

All other property possessed by any of them is patrimonial

and shall be governed by this Code, without prejudice to
the provisions of special laws.

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Even assuming, in gratia argumenti, that respondent municipality has the

authority to pass the disputed ordinance, the same cannot be validly
implemented because it cannot be considered approved by the Metropolitan
Manila Authority due to non-compliance by respondent municipality of the
conditions imposed by the former for the approval of the ordinance, to wit:
1. That the aforenamed streets are not used for vehicular
traffic, and that the majority of the residents do(es) not
oppose the establishment of the flea market/vending areas
thereon;
2. That the 2-meter middle road to be used as flea
market/vending area shall be marked distinctly, and that
the 2 meters on both sides of the road shall be used by
pedestrians;
3. That the time during which the vending area is to be
used shall be clearly designated;
4. That the use of the vending areas shall be temporary
and shall be closed once the reclaimed areas are
developed and donated by the Public Estate Authority. (p.
38, Rollo)
Respondent municipality has not shown any iota of proof that it has complied
with the foregoing conditions precedent to the approval of the ordinance.
The allegations of respondent municipality that the closed streets were not
used for vehicular traffic and that the majority of the residents do not oppose
the establishment of a flea market on said streets are unsupported by any

Further, it is of public notice that the streets along Baclaran area are
congested with people, houses and traffic brought about by the proliferation
of vendors occupying the streets. To license and allow the establishment of
a flea market along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension
and Opena streets in Baclaran would not help in solving the problem of
congestion. We take note of the other observations of the Solicitor General
when he said:
. . . There have been many instances of emergencies and
fires where ambulances and fire engines, instead of using
the roads for a more direct access to the fire area, have to
maneuver and look for other streets which are not
occupied by stalls and vendors thereby losing valuable
time which could, otherwise, have been spent in saving
properties and lives.
Along G.G. Cruz Street is a hospital, the St. Rita Hospital.
However, its ambulances and the people rushing their
patients to the hospital cannot pass through G.G. Cruz
because of the stalls and the vendors. One can only
imagine the tragedy of losing a life just because of a few
seconds delay brought about by the inaccessibility of the
streets leading to the hospital.
The children, too, suffer. In view of the occupancy of the
roads by stalls and vendors, normal transportation flow is
disrupted and school children have to get off at a distance
still far from their schools and walk, rain or shine.
Indeed one can only imagine the garbage and litter left by
vendors on the streets at the end of the day. Needless to
say, these cause further pollution, sickness and
deterioration of health of the residents therein. (pp. 2122, Rollo)
Respondents do not refute the truth of the foregoing findings and
observations of petitioners. Instead, respondents want this Court to focus its
attention solely on the argument that the use of public spaces for the

154

The Executive Order issued by acting Mayor Robles

authorizing the use of Heroes del '96 Street as a vending
area for stallholders who were granted licenses by the city
government contravenes the general law that reserves city
streets and roads for public use. Mayor Robles' Executive
Order may not infringe upon the vested right of the public
to use city streets for the purpose they were intended to
serve: i.e., as arteries of travel for vehicles and
pedestrians.

evidence that will show that this first condition has been met. Likewise, the
designation by respondents of a time schedule during which the flea market
shall operate is absent.

Page

respondent city officials are under legal obligation to

protect.

PubCorp Cases
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establishment of a flea market is well within the powers granted by law to a
local government which should not be interfered with by the courts.
Verily, the powers of a local government unit are not absolute. They are
subject to limitations laid down by toe Constitution and the laws such as our
Civil Code. Moreover, the exercise of such powers should be subservient to
paramount considerations of health and well-being of the members of the
community. Every local government unit has the sworn obligation to enact
measures that will enhance the public health, safety and convenience,
maintain peace and order, and promote the general prosperity of the
inhabitants of the local units. Based on this objective, the local government
should refrain from acting towards that which might prejudice or adversely
affect the general welfare.
As what we have said in the Dacanay case, the general public have a legal
right to demand the demolition of the illegally constructed stalls in public
roads and streets and the officials of respondent municipality have the
corresponding duty arising from public office to clear the city streets and
restore them to their specific public purpose.
The instant case as well as the Dacanay case, involves an ordinance which
is void and illegal for lack of basis and authority in laws applicable during its
time. However, at this point, We find it worthy to note that Batas Pambansa
Blg. 337, known as Local Government Lode, has already been repealed by
Republic Act No. 7160 known as Local Government Code of 1991 which
took effect on January 1, 1992. Section 5(d) of the new Code provides that
rights and obligations existing on the date of effectivity of the new Code and
arising out of contracts or any other source of prestation involving a local
government unit shall be governed by the original terms and conditions of
the said contracts or the law in force at the time such rights were vested.

Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino,

Regalado, Davide, Jr., Romero, Nocon and Bellosillo, JJ., concur.

Page

SO ORDERED.

155

ACCORDINGLY, the petition is GRANTED and the decision of the

respondent Regional Trial Court dated December 17, 1990 which granted
the writ of preliminary injunction enjoining petitioner as PNP Superintendent,
Metropolitan Traffic Command from enforcing the demolition of market stalls
along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena
streets is hereby RESERVED and SET ASIDE.

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G.R. Nos. L-60549, 60553 to 60555 October 26, 1983

HEIRS OF JUANCHO ARDONA (represented by Gloria Ardona)
ANASTACIO C. CABILAO, HEIRS OF CIPRIANO CABILAO (represented
by Jose Cabilao) MODESTA CABILAO, HEIRS OF ROMAN CABUENAS
(represented by Alberto Cabuenas), AGRIPINO GABISAY and
PRUDENCIA MABINI, ANTONIO LABRADOR and LUCIA GABISAY,
GERONIMO MABINI and MARCELINA SABAL, INOCENCIO MABINI and
ARSENIA REYES, PATRICIO MABINI and GREGORIA BORRES,
ANICETO GADAPAN and MAXIMA GABISAY, BARTOLOME MAGNO
and CALINECA E. MAGNO, ALBERTO CABUENAS, NARCISO
CABUENAS and VICTORIA CABUENAS, EUTIQUIOSENO, HEIRS OF
ESPERIDION CABUENAS (represented by Alberto Cabuenas),
MAXIMINA NAVARO, SULPICIO NAVARO, EDUARDO NAVARO,
MARTINIANO ROMA (in representation of Arcadio Mabini, deceased),
MARTIN SENO, FAUSTO ARDA, MAXIMA CABILAO, ESTRELLA SENO,
EDUVEGIS S. CABILAO, ROSARIO CABILAO, MINORS DANILO,
SOCORRO, JOSEFINA and MARITES, all surnamed Cabilao, JUAN
BORRES (represented by Francisca Borres), RAMON JABADAN,
JESUS ALIPAR and LEONILA KABAHAR, ANTONIO LABRADOR,
HEIRS OF NICASIO GABISAY (represented by Arsenio Gabisay),
PACIFICO LABRADOR, DEMETRIO LABRADOR and FRUCTOSA
TABURA, VENANCIO DEL MAR, MARINO DEL MAR, HEIRS OF
TEODORA ARCILLO (represented by Brigida Arcillo) DIONISIA
GABUNADA, HEIRS OF BUENAVENTURA FRANCISCO (represented by
Felicidad Sadaya Francisco), HEIRS OF VICTORIA C. CABUENAS
(represented by Alberto Cabuenas) HEIRS OF CIPRIANO GABUNADA
(represented by Claudio Gabunada), petitioners,
vs.
HON. JUAN Y. REYES, Executive Judge and Presiding Judge of Branch
I, COURT OF FIRST instance OF CEBU, and the PHILIPPINE TOURISM
AUTHORITY, respondents.
George M. Baladjay, Mario G. dela Victoria, Olegario Sarmiento, Jr., and
Democrito Barcenas for petitioners.
The Solicitor General for respondent Judge.

GUTIERREZ, JR., J.:

This is a petition for certiorari with preliminary injunction challenging the
constitutionality of Presidential Decree No. 564, the Revised Charter of the
Philippine Tourism Authority, and Proclamation No. 2052 declaring the
barangays of Sibugay, Malubog, Babag and Sirao including the proposed
Lusaran Dam in the City of Cebu and in the municipalities of Argao and
Dalaguete in the province of Cebu as tourist zones. The petitioners ask that
we restrain respondent Court of First Instance of Cebu and the Philippine
Tourism Authority (PTA) from enforcing and implementing the writs of
possession issued in four (4) expropriation cases filed by PTA against the
petitioners: Civil Cases Nos. R-19562, R-19684, R-20701, and R-21608 of
the Court of First Instance of Cebu (Branch 1).
The Philippine Tourism Authority filed four (4) Complaints with the Court of
First Instance of Cebu City for the expropriation of some 282 hectares of
rolling land situated in barangays Malubog and Babag, Cebu City, under
PTA's express authority "to acquire by purchase, by negotiation or by
condemnation proceedings any private land within and without the tourist
zones" for the purposes indicated in Section 5, paragraph B(2), of its
Revised Charter (PD 564), more specifically, for the development into
integrated resort complexes of selected and well-defined geographic areas
with potential tourism value. As uniformly alleged in the complaints, the
purposes of the expropriation are:
xxx xxx xxx
V
Plaintiff, in line with the policy of the government to
promote tourism and development of tourism projects will
construct in Barangays Malubog, Busay and Babag, all of
Cebu City, a sports complex (basketball courts, tennis
courts, volleyball courts, track and field, baseball and
softball diamonds, and swimming pools), clubhouse, gold
course, children's playground and a nature area for picnics
and horseback riding for the use of the public.

156

EN BANC

F.A. Sugue & Elino B. Lingas for Philippine Tourism Authoirity

Page

Republic of the Philippines

SUPREME COURT
Manila

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Plaintiff needs the property above described which is

directly covered by the proposed golf court.
xxx xxx xxx
The defendants in Civil Cases Nos. R-20701 and R-21608 filed their
respective Opposition with Motion to Dismiss and/or Reconsideration. The
defendants in Civil Case No. R-19562 filed a manifestation adopting the
answer of defendants in Civil Case No. R-19864. The defendants, now
petitioners, had a common allegation in that the taking is allegedly not
impressed with public use under the Constitution.
In their motions to dismiss, the petitioners alleged, in addition to the issue of
public use, that there is no specific constitutional provision authorizing the
taking of private property for tourism purposes; that assuming that PTA has
such power, the intended use cannot be paramount to the determination of
the land as a land reform area; that limiting the amount of compensation by
Legislative fiat is constitutionally repugnant; and that since the land is under
the land reform program, it is the Court of Agrarian Relations and not the
Court of First Instance that has jurisdiction over the expropriation cases.
The Philippine Tourism Authority having deposited with The Philippine
National Bank, Cebu City Branch, an amount equivalent to 10% of the value
of the properties pursuant to Presidential Decree No. 1533. the lower court
issued separate orders authorizing PTA to take immediate possession of the
premises and directing the issuance of writs of possession.

xxx xxx xxx

A. The complaints for expropriation lack basis because the
Constitution does not provide for the expropriation of
private property for tourism or other related purposes;
B. The writs of possession or orders authorizing PTA to
take immediate possession is premature because the
"public use" character of the taking has not been
previously demonstrated;
C. The taking is not for public use in contemplation of
eminent domain law;
D. The properties in question have been previously
declared a land reform area; consequently, the
implementation of the social justice pro- ,vision of the
Constitution on agrarian reform is paramount to the right of
the State to expropriate for the purposes intended;
E. Proclamation No. 2052 declaring certain barangays in
Cebu City, which include the lands subject of expropriation
as within a tourist zone, is unconstitutional for it impairs
the obligation of contracts; "F. Since the properties are
within a land reform area, it is the Court of Agrarian
Relations, not the lower court, that has jurisdiction
pursuant to Pres. Decree No. 946;
F. The forcible ejectment of defendants from the premises
constitutes a criminal act under Pres. Decree No. 583;
In their memorandum, the petitioners have summarized the issues as
follows:
I. Enforcement of the Writ of Possession is Premature:

157

Complimentary and support facilities for the project will be

constructed, including public rest houses, lockers,
dressing rooms, coffee shops, shopping malls, etc. Said
facilities will create and offer employment opportunities to
residents of the community and further generate income
for the whole of Cebu City.

On May 25, 1982, petitioners filed this petition questioning the orders of the
respondent Judge, The respondents have correctly restated the grounds in
the petition as follows:

Page

The development plan, covering approximately 1,000

hectares, includes the establishment of an electric power
grid in the area by the National Power Corporation, thus
assuring the supply of electricity therein for the benefit of
the whole community. Deep wells will also be constructed
to generate water supply within the area. Likewise, a
complex sewerage and drainage system will be devised
and constructed to protect the tourists and nearby
residents from the dangers of pollution.

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II. Presidential Decree 564 Amending Presidential Decree
l89 is Constitutionally Repugnant:
III. The Condemnation is not for Public Use, Therefore,
Unconstitutional:
IV. The Expropriation for Tourism Purposes of Lands
Covered by the Land Reform Program Violates the
Constitution:
V. Presidential Proclamation 2052 is Unconstitutional:
VI. Presidential Decree No 1533 is Unconstitutional:
VII. The Court of First Instance has no Jurisdiction:
VIII. The Filing of the Present Petition is not Premature.
The issues raised by the petitioners revolve around the proposition that the
actions to expropriate their properties are constitutionally infirm because
nowhere in the Constitution can a provision be found which allows the taking
of private property for the promotion of tourism.
The petitioners' arguments in their pleadings in support of the above
proposition are subsumed under the following headings:
1. Non-compliance with the "public use" requirement
under the eminent domain provision of the Bill of Rights.
2. Disregard of the land reform nature of the property
being expropriated.

government. Section 13, Article XIV states that the Batasang Pambansa
may authorize upon payment of just compensation the expropriation of
private lands to be subdivided into small lots and conveyed at cost to
deserving citizens.
While not directly mentioning the expropriation of private properties upon
payment of just compensation, the provisions on social justice and agrarian
reforms which allow the exercise of police power together with the power of
eminent domain in the implementation of constitutional objectives are even
more far-reaching insofar as taking of private property is concerned.
Section 6, Article II provides:
Sec. 6. The State shall promote social justice to ensure
the dignity, welfare, and security of all the people.
Towards its end, the State shall regulate the acquisition,
ownership, use, enjoyment, and disposition of private
property, and equitably diffuse property ownership and
profits.
xxx xxx xxx
Section 12, Article XIV provides:
See. 12. The State shall formulate and implement an
agrarian reform program aimed at emancipating the tenant
from the bondage of the soil and achieving the goals
enunciated in this Constitution.
The equitable diffusion of property ownership in the promotion of social
justice implies the exercise, whenever necessary, of the power to
expropriate private property. Likewise there can be no meaningful agrarian
reform program unless the power to expropriate is utilized.

As early as 1919, this Court in Visayan Refining Co. v. Samus (40 Phil. 550)
categorized the restrictive view as wholly erroneous and based on a
misconception of fundamentals.

Page

There are three provisions of the Constitution which directly provide for the
exercise of the power of eminent domain. Section 2, Article IV states that
private property shall not be taken for public use without just compensation.
Section 6, Article XIV allows the State, in the interest of national welfare or
defense and upon payment of just compensation to transfer to public
ownership, utilities and other private enterprises to be operated by the

We cite all the above provisions on the power to expropriate because of the
petitioners' insistence on a restrictive view of the eminent domain provision.
The thrust of all constitutional provisions on expropriation is in the opposite
direction.

158

3. Impairment of the obligation of contracts.

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The power of eminent domain does not depend for its

existence on a specific grant in the constitution. It is
inherent in sovereignty and exists in a sovereign state
without any recognition of it in the constitution. The
provision found in most of the state constitutions relating
to the taking of property for the public use do not by
implication grant the power to the government of the state,
but limit a power which would otherwise be without limit.
The constitutional restraints are public use and just compensation.
Do the purposes of the taking in this case constitute "public use"?
The petitioners ask us to adopt a strict construction and declare that "public
use" means literally use by the public and that "public use" is not
synonymous with "public interest", "public benefit", or "public welfare" and
much less "public convenience. "
The petitioners face two major obstacles. First, their contention which is
rather sweeping in its call for a retreat from the public welfare orientation is
unduly restrictive and outmoded. Second, no less than the lawmaker has

The restrictive view of public use may be appropriate for a nation which
circumscribes the scope of government activities and public concerns and
which possesses big and correctly located public lands that obviate the need
to take private property for public purposes. Neither circumstance applies to
the Philippines. We have never been a laissez faire State, And the
necessities which impel the exertion of sovereign power are all too often
found in areas of scarce public land or limited government resources.
Certain aspects of parliamentary government were introduced by the 1973
amendments to the Constitution with further modifications in the 1976 and
1981 amendments. Insofar as the executive and legislative departments are
concerned, the traditional concept of checks and balances in a presidential
form was considerably modified to remove some roadblocks in the
expeditious implementation of national policies. There was no such change
for the judiciary. We remain as a checking and balancing department even
as all strive to maintain respect for constitutional boundaries. At the same
time, the philosophy of coordination in the pursuit of developmental goals
implicit in the amendments also constrains in the judiciary to defer to
legislative discretion iii the judicial review of programs for economic
development and social progress unless a clear case of constitutional
infirmity is established. We cannot stop the legitimate exercise of power on
an invocation of grounds better left interred in a bygone age and time.* As
we review the efforts of the political departments to bring about selfsufficiency, if not eventual abundance, we continue to maintain the liberal
approach because the primary responsibility and the discretion belong to
them.
There can be no doubt that expropriation for such traditions' purposes as the
construction of roads, bridges, ports, waterworks, schools, electric and
telecommunications systems, hydroelectric power plants, markets and
slaughterhouses, parks, hospitals, government office buildings, and flood
control or irrigation systems is valid. However, the concept of public use is
not limited to traditional purposes. Here as elsewhere the Idea that "public
use" is strictly limited to clear cases of "use by the public" has been
discarded.
In the United States, the rule was enunciated in Berman v. Parker (348 U.S.
25; 99 L. ed. 27) as follows:

159

In the leading case of Visayan Refining Co. v. Camus (supra), this Court
emphasized that the power of eminent domain is inseparable from
sovereignty being essential to the existence of the State and inherent in
government even in its most primitive forms. The only purpose of the
provision in the Bill of Rights is to provide some form of restraint on the
sovereign power. It is not a grant of authority -

made a policy determination that the power of eminent domain may be

exercised in the promotion and development of Philippine tourism.

Page

The petitioners look for the word "tourism" in the Constitution.

Understandably the search would be in vain. The policy objectives of the
framers can be expressed only in general terms such as social justice, local
autonomy, conservation and development of the national patrimony, public
interest, and general welfare, among others. The programs to achieve these
objectives vary from time to time and according to place, To freeze specific
programs like Tourism into express constitutional provisions would make the
Constitution more prolix than a bulky code and require of the framers a
prescience beyond Delphic proportions. The particular mention in the
Constitution of agrarian reform and the transfer of utilities and other private
enterprises to public ownership merely underscores the magnitude of the
problems sought to be remedied by these programs. They do not preclude
nor limit the exercise of the power of eminent domain for such purposes like
tourism and other development programs.

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In an earlier American case, where a village was isolated from the rest of
North Carolina because of the flooding of the reservoir of a dam thus making
the provision of police, school, and health services unjustifiably expensive,
the government decided to expropriate the private properties in the village
and the entire area was made part of an adjoining national park. The district
court and the appellate court ruled against the expropriation or excess
condemnation. The Court of Appeals applied the "use by the public" test and
stated that the only land needed for public use was the area directly flooded
by the reservoir. The village may have been cut off by the dam but to also
condemn it was excess condemnation not valid under the "Public use"
requirement. The U.S. Supreme Court inUnited States ex rel TVA v.
Welch (327 U.S, 546; 90 L. ed 843) unanimously reversed the lower courts.
It stated:
The Circuit Court of Appeals, without expressly relying on
a compelling rule of construction that would give the
restrictive scope to the T.V.A. Act given it by the district
court, also interpreted the statute narrowly. It first analyzed
the facts by segregating the total problem into distinct

We think that it is the function of Congress to decide what

type of taking is for a public use and that the agency
authorized to do the taking may do so to the still extent of
its statutory authority, United States v. Gettysburg Electric
R. Co. 160 US 668, 679, 40 L ed 576, 580, 16 S Ct 427. ...
xxx xxx xxx
... But whatever may be the scope of the judicial power to
determine what is a "public use" in Fourteenth
Amendment controversies, this Court has said that when
Congress has spoken on this subject "Its decision is
entitled to deference until it is shown to involve an
impossibility." Old Dominion Land Co. v. United States,
269, US 55, 66, 70 L ed 162, 46 S Ct 39. Any departure
from this judicial restraint would result in courts deciding
on what is and is not a governmental function and in their
invalidating legislation on the basis of their view on that
question at the moment of decision, a practice which has
proved impracticable in other fields. See Case v. Bowles
decided February 4, 1946, 437 US 92, 101, ante, 552,
559, 66 S Ct 438. New York v. United States, 326 US 572
ante 326, 66 S Ct 310). We hold that the T.V.A. took the
tracts here involved for a public purpose, if, as we think is
the case, Congress authorized the Authority to acquire,
hold, and use the lands to carry out the purposes of the
T.V.A. Act.
In the Philippines, Chief Justice Enrique M. Fernando has aptly summarized
the statutory and judicial trend as follows:
The taking to be valid must be for public use. There was a
time when it was felt that a literal meaning should be
attached to such a requirement. Whatever project is

160

Once the object is within the authority of Congress, the

right to realize it through the exercise of eminent domain is
clear. For the power of eminent domain is merely the
means to the end. See Luxton v. North River Bridge Co.
153 US 525, 529, 530, 38 L ed 808, 810, 14 S Ct 891;
United States v. Gettysburg Electric R. Co. 160 US 668,
679, 40 L ed 576, 580, 16 S Ct 427.

parts, and thus came to the conclusion that T.V.A.'s

purpose in condemning the land in question was only one
to reduce its liability arising from the destruction of the
highway. The Court held that use of the lands for that
purpose is a "private" and not a "public use" or, at best, a
"public use" not authorized by the statute. we are unable
to agree with the reasoning and conclusion of the Circuit
Court of Appeals.

Page

We do not sit to determine whether a particular housing

project is or is not desirable. The concept of the public
welfare is broad and inclusive. See DayBrite Lighting, Inc.
v. Missouri, 342 US 421, 424, 96 L ed 469, 472, 72 S Ct
405. The values it represents are spiritual as well as
physical, aesthetic as well as monetary. It is within the
power of the legislature to determine that the community
should be beautiful as well as healthy, spacious as well as
clean, well-balanced as well as carefully patrolled. In the
present case, the Congress and its authorized agencies
have made determinations that take into account a wide
variety of values. It is not for us to reappraise them. If
those who govern the District of Columbia decide that the
Nation's Capital should be beautiful as well as sanitary,
there is nothing in the Fifth Amendment that stands in the
way.

PubCorp Cases
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The petitioners have also failed to overcome the deference that is

appropriately accorded to formulations of national policy expressed in
legislation. The rule in Berman u. Parker (supra) of deference to legislative
policy even if such policy might mean taking from one private person and
conferring on another private person applies as well as in the Philippines.
... Once the object is within the authority of Congress, the
means by which it will be attained is also for Congress to
determine. Here one of the means chosen is the use of
private enterprise for redevelopment of the area.
Appellants argue that this makes the project a taking from
one businessman for the benefit of another businessman.
But the means of executing the project are for Congress
and Congress alone to determine, once the public purpose
has been established. Selb Luxton v. North River Bridge

An examination of the language in the 1919 cases of City of Manila v.

Chinese Community of Manila (40 Phil, 349) and Visayan Refining Co. vs.
Camus, earlier cited, shows that from the very start of constitutional
government in our country judicial deference to legislative policy has been
clear and manifest in eminent domain proceedings.
The expressions of national policy are found in the revised charter of the
Philippine Tourism Authority, Presidential Decree No. 564:
WHEREAS, it is the avowed aim of the government to
promote Philippine tourism and work for its accelerated
and balanced growth as well as for economy and
expediency in the development of the tourism plant of the
country;
xxx xxx xxx
SECTION 1. Declaration of Policy. - It is hereby declared
to be the policy of the State to promote, encourage, and
develop Philippine tourism as an instrument in
accelerating the development of the country, of
strengthening the country's foreign exchange reserve
position, and of protecting Philippine culture, history,
traditions and natural beauty, internationally as well as
domestically.
The power of eminent domain is expressly provided for under Section 5 B(2)
as follows:

161

The petitioners' contention that the promotion of tourism is not "public use"
because private concessioners would be allowed to maintain various
facilities such as restaurants, hotels, stores, etc. inside the tourist complex is
impressed with even less merit. Private bus firms, taxicab fleets, roadside
restaurants, and other private businesses using public streets end highways
do not diminish in the least bit the public character of expropriations for
roads and streets. The lease of store spaces in underpasses of streets built
on expropriated land does not make the taking for a private purpose.
Airports and piers catering exclusively to private airlines and shipping
companies are still for public use. The expropriation of private land for slum
clearance and urban development is for a public purpose even if the
developed area is later sold to private homeowners, commercial firms,
entertainment and service companies, and other private concerns.

Co. (US) supra; cf. Highland v. Russel Car & Snow Plow
Co. 279 US 253, 73 L ed 688, 49 S Ct 314. The public end
may be as well or better served through an agency of
private enterprise than through a department of
government-or so the Congress might conclude. We
cannot say that public ownership is the sole method of
promoting the public purposes of community
redevelopment projects. What we have said also disposes
of any contention concerning the fact that certain property
owners in the area may be permitted to repurchase their
properties for redevelopment in harmony with the over-all
plan. That, too, is a legitimate means which Congress and
its agencies may adopt, if they choose. (Berman v. Parker,
99 L ed 38, 348 US 33, 34)

Page

undertaken must be for the public to enjoy, as in the case

of streets or parks. Otherwise, expropriation is not
allowable. It is not any more. As long as the purpose of the
taking is public, then the power of eminent domain comes
into play. As just noted, the constitution in at least two
cases, to remove any doubt, determines what is public
use. One is the expropriation of lands to be subdivided
into small lots for resale at cost to individuals. The other is
in the transfer, through the exercise of this power, of
utilities and other private enterprise to the government. It
is accurate to state then that at present whatever may be
beneficially employed for the general welfare satisfies the
requirement of public use. (Fernando, The Constitution of
the Philippines, 2nd ed., pp. 523-524)

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xxx xxx xxx

The petitioners rely on the Land Reform Program of the government in
raising their second argument. According to them, assuming that PTA has
the right to expropriate, the properties subject of expropriation may not be
taken for the purposes intended since they are within the coverage of
"operation land transfer" under the land reform program. Petitioners claim
that certificates of land transfer (CLT'S) and emancipation patents have
already been issued to them thereby making the lands expropriated within
the coverage of the land reform area under Presidential Decree No. 2; that
the agrarian reform program occupies a higher level in the order of priorities
than other State policies like those relating to the health and physical wellbeing of the people; and that property already taken for public use may not
be taken for another public use.
We have considered the above arguments with scrupulous and thorough
circumspection. For indeed any claim of rights under the social justice and
land reform provisions of the Constitution deserves the most serious
consideration. The Petitioners, however, have failed to show that the area
being developed is indeed a land reform area and that the affected persons
have emancipation patents and certificates of land transfer.

The invocation of the contracts clause has no merit. The non-impairment

clause has never been a barrier to the exercise of police power and likewise
eminent domain. As stated in Manigault v. Springs (199 U.S. 473) "parties by
entering into contracts may not stop the legislature from enacting laws
intended for the public good."
The applicable doctrine is expressed in Arce v. Genato (69 SCRA 544)
which involved the expropriation of land for a public plaza. The Court stated:
xxx xxx xxx
... What is claimed is that there must be a showing of
necessity for such condemnation and that it was not done
in this case in support of such a view, reliance is placed on
City of Manila v. Arenano Law Colleges. (85 Phil. 663
[1950]) That doctrine itself is based on the earlier case of
City of Manila v. Chinese Community of Manila, (50 Phil.
349) also, like Camus, a 1919 decision. As could be
discerned, however, in the Arellano Law Colleges
decision. it was the antiquarian view of Blackstone with its
sanctification of the right to one's estate on which such an

162

2. Acquisition of Private Lands, Power of Eminent Domain.

To acquire by purchase, by negotiation or by
condemnation proceedings any private land within and
without the tourist zones for any of the following reasons:
(a) consolidation of lands for tourist zone development
purposes, (b) prevention of land speculation in areas
declared as tourist zones, (c) acquisition of right of way to
the zones, (d) protection of water shed areas and natural
assets with tourism value, and (e) for any other purpose
expressly authorized under this Decree and accordingly,
to exercise the power of eminent domain under its own
name, which shall proceed in the manner prescribed by
law and/or the Rules of Court on condemnation
proceedings. The Authority may use any mode of payment
which it may deem expedient and acceptable to the land
owners: Provided, That in case bonds are used as
payment, the conditions and restrictions set forth in
Chapter III, Section 8 to 13 inclusively, of this Decree shall
apply.

The records show that the area being developed into a tourism complex
consists of more than 808 hectares, almost all of which is not affected by the
land reform program. The portion being expropriated is 282 hectares of hilly
and unproductive land where even subsistence farming of crops other than
rice and corn can hardly survive. And of the 282 disputed hectares, only
8,970 square meters-less than one hectare-is affected by Operation Land
Transfer. Of the 40 defendants, only two have emancipation patents for the
less than one hectare of land affected. And this 8,970 square meters parcel
of land is not even within the sports complex proper but forms part of the 32
hectares resettlement area where the petitioners and others similarly
situated would be provided with proper housing, subsidiary employment,
community centers, schools, and essential services like water and electricitywhich are non-existent in the expropriated lands. We see no need under the
facts of this petition to rule on whether one public purpose is superior or
inferior to another purpose or engage in a balancing of competing public
interests. The petitioners have also failed to overcome the showing that the
taking of the 8,970 square meters covered by Operation Land Transfer
forms a necessary part of an inseparable transaction involving the
development of the 808 hectares tourism complex. And certainly, the human
settlement needs of the many beneficiaries of the 32 hectares resettlement
area should prevail over the property rights of two of their compatriots.

Page

xxx xxx xxx

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xxx xxx xxx
The issue of prematurity is also raised by the petitioners. They claim that
since the necessity for the taking has not been previously established, the
issuance of the orders authorizing the PTA to take immediate possession of
the premises, as well as the corresponding writs of possession was
premature.
Under Presidential Decree No. 42, as amended by Presidential Decree No.
1533, the government, its agency or instrumentality, as plaintiff in an
expropriation proceedings is authorized to take immediate possession,
control and disposition of the property and the improvements, with power of
demolition, notwithstanding the pendency of the issues before the court,
upon deposit with the Philippine National Bank of an amount equivalent to
10% of the value of the property expropriated. The issue of immediate
possession has been settled in Arce v. Genato(supra). In answer to the
issue:
... whether the order of respondent Judge in an
expropriation case allowing the other respondent, ... to
take immediate possession of the parcel of land sought to
be condemned for the beautification of its public plaza,
without a prior hearing to determine the necessity for the
exercise of the power of eminent domain, is vitiated by
jurisdictional defect, ...

... It is not disputed that in issuing such order, respondent

Judge relied on Presidential Decree No. 42 issued on the
9th of November, 1972. (Presidential Decree No. 42 is
entitled "Authorizing the Plaintiff in Eminent Domain
Proceedings to Take Possession of the Property involved
Upon Depositing the Assessed Value for Purposes of
Taxation.") The question as thus posed does not occasion
any difficulty as to the answer to be given. This petition for
certiorari must fail, there being no showing that
compliance with the Presidential Decree, which under the
Transitory Provisions is deemed a part of the law of the
land, (According to Article XVII, Section 3 par. (2) of the
Constitution: "All proclamations, orders, decrees,
instructions and acts promulgated, issued, or done by the
incumbent President shall be part of the law of the land,

163

this Court held that:

Page

observation was based. As did appear in his

Commentaries: "So great is the regard of the law for
private property that it will not, authorize the least violation
of it, even for the public good, unless there exists a very
great necessity thereof." Even the most , cursory glance at
such well-nigh absolutist concept of property would show
its obsolete character at least for Philippine constitutional
law. It cannot survive the test of the 1935 Constitution with
its mandates on social justice and protection to labor.
(Article II, Section 5 of the 1935 Constitution reads: "The
promotion of social justice to unsure the well-being and
economic security of all the people should be the concern
of the State." Article XI, Section 6 of the same Constitution
provides: "The State shall afford protection to labor,
especially to working women and minors, and shall
regulate the relation between landowner and tenant, and
between labor and capital in industry and in agriculture.
The State may provide for compulsory arbitration.") What
is more, the present Constitution pays even less heed to
the claims of property and rightly so. After stating that the
State shall promote social justice, it continues: "Towards
this end, the State shall regulate the acquisition,
ownership, use, enjoyment, and disposition of private
property, and equitably diffuse property ownership and
profits." (That is the second sentence of Article II, Section
6 of the Constitution) If there is any need for explicit
confirmation of what was set forth in Presidential Decree
No. 42, the above provision supplies it. Moreover, that is
merely to accord to what of late has been the consistent
course of decisions of this Court whenever property rights
are pressed unduly. (Cf. Alalayan v. National Power
Corporation, L-24396, July 29, 1968, 24 SCRA 172;
Agricultural Credit and Cooperative Financing
Administration v. Confederation of Unions, L-21484, Nov.
29, 1969, 30 SCRA 649; Edu v. Ericta, L-32096, Oct. 24,
1970, 35 SCRA 481; Phil. Virginia Tobacco Administration
v. Court of Industrial Relations, L-32052, July 25, 1975, 65
SCRA 416) The statement therefore, that there could be
discerned a constitutional objection to a lower court
applying a Presidential Decree, when it leaves no doubt
that a grantee of the power of eminent domain need not
prove the necessity for the expropriation, carries its own
refutation.

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... condemnation or expropriation proceedings is in the

nature of one that is quasi-in-rem wherein the fact that the
owner of the property is made a party is not essentially
indispensable insofar was least as it conncerns is the
immediate taking of possession of the property and the
preliminary determination of its value, including the
amount to be deposited.
In their last argument, the petitioners claim that a consequence of the
expropriation proceedings would be their forcible ejectment. They contend
that such forcible ejectment is a criminal act under Presidential Decree No.
583. This contention is not valid. Presidential Decree No. 583 prohibits the
taking cognizance or implementation of orders designed to obstruct the land
reform program. It refers to the harassment of tenant- farmers who try to
enforce emancipation rights. It has nothing to do with the expropriation by
the State of lands needed for public purposes. As a matter of fact, the
expropriated area does not appear in the master lists of the Ministry of
Agrarian Reforms as a teranted area. The petitioners' bare allegations have
not been supported with particulars pointing to specific parcels which are
subject of tenancy contracts. The petitioners may be owner-tillers or may
have some form of possessory or ownership rights but there has been no
showing of their being tenants on the disputed lands.
The petitioners have failed to overcome the burden of anyone trying to strike
down a statute or decree whose avowed purpose is the legislative
perception is the public good. A statute has in its favor the presumption of
validity. All reasonable doubts should be resolved in favor of the
constitutionality of a law. The courts will not set aside a law as violative of
the Constitution except in a clear case (People v. Vera, 65 Phil. 56). And in
the absence of factual findings or evidence to rebut the presumption of

The public respondents have stressed that the development of the 808
hectares includes plans that would give the petitioners and other displaced
persons productive employment, higher incomes, decent housing, water and
electric facilities, and better living standards. Our dismissing this petition is,
in part, predicated on those assurances. The right of the PTA to proceed
with the expropriation of the 282 hectares already Identified as fit for the
establishment of a resort complex to promote tourism is, therefore,
sustained.
WHEREFORE, the instant petition for certiorari is hereby DISMISSE D for
lack of merit.
SO ORDERED.
Fernando, C.J, Concepcion, Jr., Guerrero, Melencio-Herrera, Plana, Escolin
and Relova, JJ., concur.
Aquino, J, concurs in the result.
De Castro, J, is on leave.

Separate Opinions

MAKASIAR, J, concurring and dissenting:

It appearing that the petitioners are not tenants of the parcels of land in
question and therefore do not fall within the purview of the Land Reform
Code, the petition should be dismissed on that score alone.
There is no need to decide whether the power of the Philippine Tourism
Authority to expropriate the land in question predicated on the police power

164

Likewise in Ramos v. Philippine Tourism Authority (G.R. Nos. 52449-50,

June 9, 1980), this Court held:

validity, the presumption prevails (Ermita-Malate Hotel, etc. v. Mayor of

Manila, 20 SCRA 849; Morfe v. Mutuc, 22 SCRA 424).

Page

and shall remain valid, legal, binding, and effective even

after lifting of martial law or the ratification of this
Constitution, unless modified, revoked, or superseded by
subsequent proclamations. orders, decrees instructions, or
other acts of the incumbent President, or unless expressly
and explicitly modified or repealed by the regular National
Assembly") would be characterized as either an act in
excess of jurisdiction or a grave abuse of discretion. So
we rule.

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of the State shall take precedence over the social justice guarantee in favor
of tenants and the landless. The welfare of the landless and small land
owners should prevail over the right of the PTA to expropriate the lands just
to develop tourism industry, which benefit the wealthy only. Such a position
would increase the disenchanted citizens and drive them to dissidence. The
government is instituted primarily for the welfare of the governed and there
are more poor people in this country than the rich The tourism industry is not
essential to the existence of the government, but the citizens are, and their
right to live in dignity should take precedence over the development of the
tourism industry.
Teehankee and Abad Santos, JJ., dissent.

Separate Opinions
MAKASIAR, J, concurring and dissenting:

Teehankee and Abad Santos, JJ., dissent.

Page

There is no need to decide whether the power of the Philippine Tourism

Authority to expropriate the land in question predicated on the police power
of the State shall take precedence over the social justice guarantee in favor
of tenants and the landless. The welfare of the landless and small land
owners should prevail over the right of the PTA to expropriate the lands just
to develop tourism industry, which benefit the wealthy only. Such a position
would increase the disenchanted citizens and drive them to dissidence. The
government is instituted primarily for the welfare of the governed and there
are more poor people in this country than the rich The tourism industry is not
essential to the existence of the government, but the citizens are, and their
right to live in dignity should take precedence over the development of the
tourism industry.

165

It appearing that the petitioners are not tenants of the parcels of land in
question and therefore do not fall within the purview of the Land Reform
Code, the petition should be dismissed on that score alone.

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RICARDO CRUZ, Petitioner, v. HON. COURT OF APPEALS, LOPE S.

OCAMPO, FEDERICO TUAZON, LEON SANTOS, ANGELINA
LABRADOR, CIRIACA STO. TOMAS, VICTORIA ANONOY, CIPRIANA
GONGON, CALOS GERONIMO, LEONARDO CHAVEZ, PABLO FLORES,
NATALIA PAMINTUAN, GINI CARO, ROMAN SANTOS, TEOTIMO
GARCIA, ANACLETO BUENO, ESPERANZA AGRAS, FIDEL ESTO,
NATIVIDAD LLANES, and others, Respondents.

SYLLABUS

1. ADMINISTRATIVE LAW; MUNICIPAL CORPORATION;

ESTABLISHMENT AND MAINTENANCE OF A PUBLIC MARKET IS AN
EXERCISE OF LEGISLATIVE POWER; MAYOR OF MANILA BY HIMSELF
CANNOT PROVIDE FOR THE OPENING, OPERATIONS OR CLOSURE
OF PUBLIC MARKET, JOINT ACTION OF THE BOARD AND THE MAYOR
IS NECESSARY. We agree with the Court of Appeals that the Mayor had
no legal authority to, by himself, allow the petitioner to withdraw the major
portion of Padre Rada Market from its use as a public market, thereby also
withdrawing it from the citys constant supervision. The establishment and
maintenance of public markets is by law among the legislative powers of the
City of Manila. Since the operation of Padre Rada Market was authorized by
a municipal board resolution and approved by the City Mayor, as provided
by law, it follows that a withdrawal of the whole or any portion from use as a
public market must be subject to the same joint action of the Board and the
Mayor. The Mayor of Manila, by himself, cannot provide for the opening,
operations, and closure of a public market.
2. ID.; ID.; A MARKET IS CONSIDERED AS A PUBLIC MARKET IF IT IS
LICENSED BY THE GOVERNMENT AND FOR GENERAL PUBLIC
WHETHER IT BE OWNED BY THE GOVERNMENT OR ANY
INSTRUMENTALITY THEREOF OR BY ANY PRIVATE INDIVIDUAL. A
market is a "public market" when it is dedicated to the service of the general
public and is operated under government control and supervision as a public
utility, whether it be owned by the government or any instrumentality thereof
or by any private individual. It is a settled doctrine that a "public market may
be the object of individual ownership or lease, subject to municipal
supervision and control." (43 C.J. 394). Thus, if a market has been permitted
to operate under government license for service to the general public, it is a
"public market" whether the building that houses it or the land upon which it

3. ID.; ID.; DISSOLUTION OF MUNICIPAL BOARD DOES NOT VEST

LEGISLATIVE POWER IN THE MAYOR; METROPOLITAN MANILA
COMMISSION TOOK OVER THE LEGISLATIVE FUNCTIONS OF THE
MUNICIPAL BOARD OF MANILA. The dissolution of the Municipal Board
was among the measures which followed the promulgation of martial law. It
did not follow, however, that the City Mayor automatically became both
executive and legislature of the local government. He was never vested with
legislative power. Presidential Decree No. 824 enacted on November 7,
1975 created the Metropolitan Manila Commission which took over the
legislative functions of the Municipal Board of Manila. Therefore, the
Metropolitan Manila Commission took over the legislative functions of the
Municipal Board of Manila.
DECISION

GUTIERREZ, JR., J.:

This is a petition for review on certiorari of the decision of the Court of

Appeals declaring that the Padre Rada Market remains a public market
under government supervision and control and that the private respondentvendors be maintained in the premises.
The private respondents instituted a class suit before the then Court of First
Instance of Manila, Branch VIII in behalf of the vendors and regular stall
holders in Padre Rada Market for annulment with preliminary injunction
against the then Manila Mayor Antonio J. Villegas, petitioner Cruz, and other
persons whose names were unknown to them.
The complaint prayed, among others, that the defendant City Mayors
decision to withdraw Padre Rada Market as a public market be declared null
and void.
Petitioner Ricardo Cruz states that he and his business associates Elpidio
Talastas, Feliciana Alcantara and others have been the owners and
operators of the Padre Rada Market at Tondo, Manila for more than twentyfive (25) years.
The market was authorized to be operated as a public market of the City of

166

[G.R. No. L-44178. August 21, 1987.]

is built is of private or public ownership. (Vda. de Salgado v. De la Fuente,

87 Phil. 343). The Padre Rada Market is, therefore, a public market which
happens to be privately-owned and privately operated.

Page

THIRD DIVISION

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After several exchanges of referrals, indorsements, and communications,

Mayor Villegas allowed the withdrawal in the light of the Court of Appeals
decision in CA-C.R. Nos. 39999-R, and 40000-R upholding the right of the
operators of the Elcano Market to withdraw their property from its use as a
public market stating, among others, that approval for the withdrawal by the
City of Manila is not even necessary. Motions for reconsiderations were
denied. Hence, herein private respondents instituted Civil Case No. 80773.
The lower court rendered a decision, the dispositive portion of which
reads:jgc:chanrobles.com.ph
"IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered as
follows:jgc:chanrobles.com.ph
"(a) declaring as valid the decision of defendant City Mayor A. Villegas
withdrawing Padre Rada Market as a public market;
"(b) declaring legal and valid defendant Operators Notice of Withdrawal of
said market as public market;
"(c) vacating and setting aside the writ of preliminary injunction issued by this
Court on November 6, 1970;
"(d) dismissing plaintiffs complaint;
"(e) as to defendants counterclaim, plaintiffs and the Manila Underwriters
Insurance Co., Inc. of Manila, are hereby ordered to pay, jointly and
severally, defendant Ricardo Cruz and his associates named in paragraph 3
of the partial stipulation of facts, the additional amount of P210.00 daily by
way of actual damages for the period from November, 1970 until the 840
stalls are returned to defendants;
"(f) ordering plaintiffs to pay defendant Cruz and his associates the sum of
P5,000.00 as attorneys fees, plus the costs.

Acting on the private respondents motion for reconsideration, the trial court
later amended its decision as follows:chanrobles virtual lawlibrary
"IN VIEW OF ALL THE FOREGOING, only number (e) of the dispositive
portion of the decision is hereby modified, to read as
follows:jgc:chanrobles.com.ph
"(e) as to defendants counterclaim, plaintiffs and the Manila Underwriters
Insurance Co., Inc. of Manila, are hereby ordered to pay, jointly and
severally, defendant Ricardo Cruz and his associates named in paragraph 3
of the partial stipulation of facts, the additional amount of P50.00 daily by
way of actual damages for the period from November, 1970 until the 840
stalls are returned to defendants.
The other portions of the dispositive part of the decision remain in full force
and effect." (Rollo, pp. 76-77)
On appeal, the respondent Court of Appeals reversed and set aside the
lower courts decision and instead denied the withdrawal by the Manila City
Mayor of government-control and supervision "until legal conditions and
equitable justification for the withdrawal by private parties obtain." A
subsequent motion for reconsideration was denied.
Hence, this present petition.
The questions raised by the petitioners are:jgc:chanrobles.com.ph
"First. Is a resolution of the then Municipal Board of Manila necessary and
indispensable for the purpose of effecting the withdrawal of the Padre Rada
Market as a public market or temporary talipapa? And, if such a resolution
is necessary, as held by the Court of Appeals, how has such ruling been
affected by the dissolution of the Municipal Board of Manila?
"Second. Will the withdrawal of the Padre Rada Market from further use
as a public market or a temporary talipapa violate Republic Act No. 6039?
Third. Can the Court of Appeals simply ignore the earlier decision it
promulgated on May 16, 1970 in CA-G.R. Nos. 39999-R and 40000-R
(Pacita Sta. Rosa, Et Al., v. M. Cudiamat, etc., Et Al., and Jose San Jose, Et

167

On May 26, 1970, the management of said market represented by petitioner

Cruz wrote Mayor Villegas that the management was withdrawing threefourths of the area of the market "from the direct supervision and control of
the City Treasurers Office effective on June 15, 1970, and from said date
the withdrawn portion shall cease to function and operate as a public
market." The respondent-vendors, who were likewise notified of such
withdrawal, protested such move.chanrobles lawlibrary : rednad

"And in this connection, the liability of the Surety, Manila Underwriters

Insurance Co., Inc. of Manila, shall not exceed P10,000.00, and plaintiffs are
ordered to reimburse the Surety whatever the latter may pay to defendants."
(Rollo, pp. 72-73)

Page

Manila by virtue of Resolution No. 230, as amended by Resolution No. 406,

both series of 1949.

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The main issue centers on whether or not the City Mayor may validly
withdraw Padre Rada Market as a public market.

The records show that the petitioner wants to convert the major portion of
the Padre Rada Market into a private market to enable him to raise the
rentals for the stalls. It is obvious that he wants to remove the market from
the control and supervision of city authorities. The private respondents also
contend that to remove three fourths of the market from its status as a public
market would practically result in the total withdrawal of the entire market.
The remaining one fourth is no longer being used by the owner for its
avowed purpose.

The answer is in the negative.

By the very nature of a market, * its location, opening, operations, and

closure must be regulated by government. It is not a question of the
petitioners right to run his market as he pleases but what agency or office
should supervise its operations.

The Municipal Board of Manila with the approval of then Mayor Manuel de la
Fuente authorized the disputed premises to be operated as a public market
under its direct control and supervision as embodied in Resolution No. 230,
amended by Resolution No. 406, both series of 1949.

We agree with the Court of Appeals that the Mayor had no legal authority to,
by himself, allow the petitioner to withdraw the major portion of Padre Rada
Market from its use as a public market, thereby also withdrawing it from the
citys constant supervision.

The Municipal Board acted pursuant to its legislative powers vested by

Republic Act No. 409 (Revised Charter of the City of Manila), particularly
Sec. 18 (cc) which provides:chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
"Legislative powers. The Municipal Board shall have the following
legislative powers:chanrob1es virtual 1aw library

The establishment and maintenance of public markets is by law among the

legislative powers of the City of Manila. Since the operation of Padre Rada
Market was authorized by a municipal board resolution and approved by the
City Mayor, as provided by law, it follows that a withdrawal of the whole or
any portion from use as a public market must be subject to the same joint
action of the Board and the Mayor. The Mayor of Manila, by himself, cannot
provide for the opening, operations, and closure of a public market.

(cc) Subject to the provisions of ordinances issued by the Department of

Health in accordance with law, to provide for the establishment and
maintenance and fix the fees for the use of, and regulate public stables,
laundries, and baths, and public markets and slaughterhouses, and prohibit
or permit the establishment or operation within the city limits of public
markets and slaughterhouses by any person, entity, association, or
corporation other than the city." (45 O.G. 4265)

The withdrawal from the markets public status was in fact objected to by the
Manila City Treasurer and the Market Administrator in their memorandums
and indorsements to the Mayor. The market administrator opposed the
withdrawal as it involved the displacement of numerous vendors (Record on
Appeal, p. 35). At least 840 market stalls are involved. The city treasurer
pointed out that the withdrawal would result in a diminution of city
revenues.chanrobles virtual lawlibrary

The respondent Court of Appeals held that Mayor Villegas had no authority
to allow such withdrawal as "it is axiomatic that only the power that created it
can withdraw it."cralaw virtua1aw library

Moreover, the city treasurer brought to the Mayors attention Sec. 1, III (2) of
Republic Act No. 6039, amending the Revised Charter of the City of Manila,
which provides:chanrob1es virtual 1aw library

168

"Fourth. Does the Court of Appeals have the power to compel petitioner
to continue operating the Padre Rada Market as a public market or
temporary talipapa notwithstanding the fact that petitioner and his business
associates have been incurring substantial losses as a consequence of such
operation under present conditions and circumstances? (Rollo, 16-17)

On the other hand, the petitioner contends that the Padre Rada Market was
not created but merely authorized to operate as a public market by the
Municipal Board. Accordingly, there is nothing in the said resolutions which
obligates or compels petitioner Cruz and his business associates to continue
operating the said market for as long as the Municipal Board desires it.

Page

Al., v. M. Cudiamat, etc., Et Al., respectively), when the legality and

correctness of the doctrine laid down in said decision (penned by then
Associate Justice Carmelino G. Alvendia and concurred in by then Associate
Justices Cecilia Muoz Palma and Andres Reyes) have been virtually
sustained by this Honorable Court when it denied due course to the petition
for review by certiorarifiled by the losing appellants in G.R. Nos. L-32187-88
(Pacita Sta. Rosa, Et. Al. v. M. Cudiamat, etc., Et. Al.), per resolution dated
August 12, 1970? (Rec. on App., pp. 142-156).

PubCorp Cases
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x

"2) City-owned and operated public markets shall not e disposed of, closed,
destroyed, sold or transferred until all vendors therein shall have been
relocated or transferred by the city government at its expense to another
temporary or new public market: Provided, however, That notice of the citys
such intention or plans shall be made to all concerned vendors at least one
hundred twenty days before the actual transfer or relocation to another
market site: Provided, further, that all such temporarily relocated vendors
shall be given preference and priority to occupy stalls in the new site as
provided for under paragraph II (5) and III (1)." (66 O.G. 3694)
The Court of Appeals held that the withdrawal violated the above-mentioned
provision.

There is no question that the Padre Rada Market is a public market as it was
authorized to operate and it operates as such.
A market is a "public market" when it is dedicated to the service of the
general public and is operated under government control and supervision as
a public utility, whether it be owned by the government or any instrumentality
thereof or by any private individual. It is a settled doctrine that a "public
market may be the object of individual ownership or lease, subject to
municipal supervision and control." (43 C.J. 394). Thus, if a market has been
permitted to operate under government license for service to the general
public, it is a "public market" whether the building that houses it or the land
upon which it is built is of private or public ownership. (Vda. de Salgado v.
De la Fuente, 87 Phil. 343).chanrobles virtual lawlibrary
The Padre Rada Market is, therefore, a public market which happens to be
privately-owned and privately operated.

It stated:jgc:chanrobles.com.ph

was not violated because

". . . That provision applies solely to city-owned and operated public market,
but the Padre Rada Market was not city-owned.
"Such construction of the law is too technical. The conjunction and is not
used in a restricted sense. It means additional. The City of Manila has two
public markets: city owned and city operated. It would be unthinkable that
the law would restrict the coverage of its application for protection of public
market vendors to only those public markets owned and operated by the City
and not those in city-owned but not city-operated or city-operated but not
city-owned public markets." (Rollo, pp. 53-54)
The petitioner alleges otherwise, stating that said provision is not applicable
to the Padre Rada Market, it being a privately-owned and privately-operated
public market under the control and supervision of the City of Manila. The
fact that all privately-owned public markets are under government
supervision and control do not make them city-operated public markets.

The dissolution of the Municipal Board was among the measures which
followed the promulgation of martial law. It did not follow, however, that the
City Mayor automatically became both executive and legislature of the local
government. He was never vested with legislative power. The answer to the
petitioners arguments is found in Presidential Decree No. 824 enacted on
November 7, 1975 creating the Metropolitan Manila Commission.
Section 4 (5) of said decree provides:jgc:chanrobles.com.ph
"The Commission shall have the following powers and functions:chanrob1es
virtual 1aw library
x

"(5) To review, amend, revise or repeal all ordinances, resolutions and acts
of cities and municipalities within Metropolitan Manila." (Emphasis supplied).
(Vital Legal Documents, Vol. 29, pp. 26-27).
Therefore, the Metropolitan Manila Commission took over the legislative
functions of the Municipal Board of Manila.
It was not within the mayors authority to allow the questioned withdrawal.

169

"City-owned and operated public markets shall not be disposed of, closed . .
. or transferred until all vendors therein shall have been relocated or
transferred by the city government at its expenses to another temporary or
new public market."

The petitioner contends that even assuming arguendo that another

resolution was necessary for the withdrawal from use as a public market, the
same could not be passed due to the dissolution of the Municipal Board of
Manila.

Page

"The lower court held that the following provision of Republic

6039:jgc:chanrobles.com.ph

PubCorp Cases
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As earlier stated, the intention of the operators of the Padre Rada Market is
very clear. The withdrawal from its status as a public market is to operate the
market without government control and supervision but not to discontinue
operating as a market.

Fernan (Chairman), Feliciano, Bidin and Cortes, JJ., concur.

This can be gleaned from the notice sent to the respondent vendors.
It states:jgc:chanrobles.com.ph
"PATALASTAS
"Sa Mga Manininda Ng Pamilihang Padre Rada:jgc:chanrobles.com.ph
"Mapitagan naming ipinaaalam sa inyo na mula sa Hunyo 15, 1970, ang
Padre Rada Market ay hindi na aandar o magpapatuloy bilang isang
pamilihang bayan o public market. Nagpadala na po kami ng kaukulang
kalatas sa mabunying Gatpuno ng Lunsod, Kgg. Antonio J. Villegas.
"Dahilan sa hindi na po maniningil sa loob ng palengke ang mga kolektor (ng
gobyerno) o kinatawan ng Ingat-Yaman ng Lunsod, ang lahat po ng
maninindang may puesto sa loob ay dapat kumuha ng permiso (Mayors
Permit) at lisensya upang makapangalakal kayo nang naaayon sa batas.
May nakalaan pong porma sa aming upisina para sa inyong kaluwagan at
kami poy nakahanda tumulong sa pagsasaayos ng inyong pangangailangan
tungkol dito.
"Kaya, kung hangad po ninyong magpatuloy sa pagtitinda at pangangalakal
sa loob ng pamilihang Padre Rada nang walang balakid ay mangyari lang
na kumuha ng kinakailangang permiso at lisensiya bago sumapit ang Hunyo
15, 1970.
"Sumasainyo,
"(SGD.) RICARDO CRUZ"

WHEREFORE, the petition is hereby DISMISSED for lack of merit. The

questioned decision of the Court of Appeals is AFFIRMED.

Page

The Padre Rada Market is a public market and as such should be subject to
the local governments supervision and control. Its conversion into a private
market or its closure must follow the procedures laid down by law.

170

(Emphasis supplied; pp. 30-31, Record on Appeal).

PubCorp Cases
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LEAGUE OF CITIES CASE

plebiscite in the political units directly affected. (Emphasis

supplied)

RESOLUTION

On 18 November 2008, the Supreme Court En Banc, by a majority vote,

struck down the subject 16 Cityhood Laws for violating Section 10, Article X
of the 1987 Constitution and the equal protection clause. On 31 March 2009,
the Supreme Court En Banc, again by a majority vote, denied the
respondents first motion for reconsideration. On 28 April 2009, the Supreme
Court En Banc, by a split vote, denied the respondents second motion for
reconsideration. Accordingly, the 18 November 2008 Decision became final
and executory and was recorded, in due course, in the Book of Entries of
Judgments on 21 May 2009.

However, after the finality of the 18 November 2008 Decision and without
any exceptional and compelling reason, the Court En Banc unprecedentedly
reversed the 18 November 2008 Decision by upholding the constitutionality
of the Cityhood Laws in the Decision of 21 December 2009.
Upon reexamination, the Court finds the motions for reconsideration
meritorious and accordingly reinstates the 18 November 2008 Decision
declaring the 16 Cityhood Laws unconstitutional.
A. Violation of Section 10, Article X of the Constitution
Section 10, Article X of the 1987 Constitution provides:
No province, city, municipality, or barangay
created, divided, merged, abolished or its
substantially altered, except in accordance
criteria established in the local government
subject to approval by a majority of the votes

shall be
boundary
with the
code and
cast in a

The clear intent of the Constitution is to insure that the creation of cities and
other political units must follow the same uniform, non-discriminatory
criteria found solely in the Local Government Code. Any derogation or
deviation from the criteria prescribed in the Local Government Code violates
Section 10, Article X of the Constitution.
RA 9009 amended Section 450 of the Local Government Code to increase
the income requirement from P20 million to P100 million for the creation of a
city. This took effect on 30 June 2001. Hence, from that moment
the Local Government Code required that any municipality desiring to
become
a
city
must
satisfy
the P100
million
income
requirement. Section 450 of the Local Government Code, as amended by
RA 9009, does not contain any exemption from this income requirement.
In enacting RA 9009, Congress did not grant any exemption to respondent
municipalities, even though their cityhood bills were pending in Congress
when Congress passed RA 9009. The Cityhood Laws, all enacted after the
effectivity of RA 9009, explicitly exempt respondent municipalities from the
increased income requirement in Section 450 of the Local Government
Code, as amended by RA 9009. Such exemption clearly violates Section
10, Article X of the Constitution and is thus patently
unconstitutional. To be valid, such exemption must be written in the
Local Government Code and not in any other law, including the
Cityhood Laws.
RA 9009 is not a law different from the Local Government Code. Section 1 of
RA 9009 pertinently provides: Section 450 of Republic Act No. 7160,
otherwise known as the Local Government Code of 1991, is hereby
amended to read as follows: x x x. RA 9009 amended Section 450 of the
Local Government Code. RA 9009, by amending Section 450 of the Local
Government Code, embodies the new and prevailing Section 450 of the
Local Government Code. Considering the Legislatures primary intent to
curtail the mad rush of municipalities wanting to be converted into cities, RA

171

For resolution are (1) the ad cautelam motion for reconsideration and (2)
motion to annul the Decision of 21 December 2009 filed by petitioners
League of Cities of the Philippines, et al. and (3) the ad cautelam motion for
reconsideration filed by petitioners-in-intervention Batangas City, Santiago
City, Legazpi City, Iriga City, Cadiz City, and Oroquieta City.

The Constitution is clear. The creation of local government units must follow
the criteria established in the Local Government Code and not in any
other law. There is only one Local Government Code.[1] The Constitution
requires Congress to stipulate in the Local Government Code all the criteria
necessary for the creation of a city, including the conversion of a municipality
into a city. Congress cannot write such criteria in any other law, like the
Cityhood Laws.

Page

CARPIO, J.:

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B. Operative Fact Doctrine

Under the operative fact doctrine, the law is recognized as unconstitutional
but the effects of the unconstitutional law, prior to its declaration of nullity,
may be left undisturbed as a matter of equity and fair play. In fact, the
invocation of the operative fact doctrine is an admission that the law is
unconstitutional.
However, the minoritys novel theory, invoking the operative fact doctrine, is
that the enactment of the Cityhood Laws and the functioning of the 16
municipalities as new cities with new sets of officials and employees operate
to contitutionalize the unconstitutional Cityhood Laws. This novel theory
misapplies the operative fact doctrine and sets a gravely dangerous
precedent.
Under the minoritys novel theory, an unconstitutional law, if already
implemented prior to its declaration of unconstitutionality by the Court, can
no longer be revoked and its implementation must be continued despite
being unconstitutional. This view will open the floodgates to the wanton
enactment of unconstitutional laws and a mad rush for their immediate
implementation before the Court can declare them unconstitutional. This
view is an open invitation to serially violate the Constitution, and be quick
about it, lest the violation be stopped by the Court.
The operative fact doctrine is a rule of equity. As such, it must be applied
as an exception to the general rule that an unconstitutional law
produces no effects. It can never be invoked to validate as constitutional
an
unconstitutional
act. In Planters
Products,
Inc.
v.
Fertiphil
Corporation,[3] the Court stated:

ART. 7. Laws are repealed only by subsequent

ones, and their violation or non-observance
shall not be excused by disuse or custom or
practice to the contrary.
When the courts declare a law to be
inconsistent with the Constitution, the former
shall be void and the latter shall govern.
The doctrine of operative fact, as an exception to the
general rule, only applies as a matter of equity and fair
play. It nullifies the effects of an unconstitutional law
by recognizing that the existence of a statute prior to a
determination of unconstitutionality is an operative
fact and may have consequences which cannot always
be ignored. The past cannot always be erased by a
new judicial declaration.
The doctrine is applicable when a declaration of
unconstitutionality will impose an undue burden on those
who have relied on the invalid law. Thus, it was applied to
a criminal case when a declaration of unconstitutionality
would put the accused in double jeopardy or would put in
limbo the acts done by a municipality in reliance upon a
law creating it. (Emphasis supplied)

The operative fact doctrine never validates or constitutionalizes an

unconstitutional law. Under the operative fact doctrine, the unconstitutional
law remains unconstitutional, but the effects of the unconstitutional law,
prior to its judicial declaration of nullity, may be left undisturbed as a matter

172

The language of RA 9009 is plain, simple, and clear. Nothing is unintelligible

or ambiguous; not a single word or phrase admits of two or more
meanings. RA 9009 amended Section 450 of the Local Government Code of
1991 by increasing the income requirement for the creation of cities. There
are no exemptions from this income requirement. Since the law is clear,
plain and unambiguous that any municipality desiring to convert into a city
must meet the increased income requirement, there is no reason to go
beyond the letter of the law. Moreover, where the law does not make an
exemption, the Court should not create one.[2]

The general rule is that an unconstitutional law is

void. It produces no rights, imposes no duties and
affords no protection. It has no legal effect. It is, in legal
contemplation, inoperative as if it has not been passed.
Being void, Fertiphil is not required to pay the levy. All
levies paid should be refunded in accordance with the
general civil code principle against unjust enrichment. The
general rule is supported by Article 7 of the Civil Code,
which provides:

Page

9009 increased the income requirement for the creation of cities. To repeat,
RA 9009 is not a law different from the Local Government Code, as it
expressly amended Section 450 of the Local Government Code.

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C. Equal Protection Clause

As the Court held in the 18 November 2008 Decision, there is no substantial
distinction between municipalities with pending cityhood bills in the
11th Congress and municipalities that did not have pending bills. The mere
pendency of a cityhood bill in the 11th Congress is not a material difference
to distinguish one municipality from another for the purpose of the income
requirement. The pendency of a cityhood bill in the 11th Congress does
not
affect
or
determine
the
level
of
income
of
a
municipality.Municipalities with pending cityhood bills in the 11 th Congress
might even have lower annual income than municipalities that did not have
pending cityhood bills. In short, the classification criterion mere
pendency of a cityhood bill in the 11th Congress is not rationally
related to the purpose of the law which is to prevent fiscally non-viable
municipalities from converting into cities.
Moreover, the fact of pendency of a cityhood bill in the 11th Congress limits
the exemption to a specific condition existing at the time of passage of RA
9009. That specific condition will never happen again. This violates the
requirement that a valid classification must not be limited to existing
conditions only. In fact, the minority concedes that the conditions
(pendency of the cityhood bills) adverted to can no longer be repeated.

D. Tie-Vote on a Motion for Reconsideration

Section 7, Rule 56 of the Rules of Court provides:
SEC. 7. Procedure if opinion is equally divided. Where the
court en banc is equally divided in opinion, or the
necessary majority cannot be had, the case shall again be
deliberated on, and if after such deliberation no decision is
reached, the original action commenced in the court shall
be dismissed; in appealed cases, the judgment or order
appealed from shall stand affirmed; andon all incidental
matters,
the
petition
or
motion
shall
be
denied. (Emphasis supplied)
The En Banc Resolution of 26 January 1999 in A.M. No. 99-1-09-SC, reads:
A MOTION FOR THE CONSIDERATION OF A DECISION
OR RESOLUTION OF THE COURT EN BANC OR OF A
DIVISION MAY BE GRANTED UPON A VOTE OF A
MAJORITY OF THE MEMBERS OF THE EN BANC OR
OF A DIVISION, AS THE CASE MAY BE, WHO
ACTUALLY TOOK PART IN THE DELIBERATION OF
THE MOTION.
IF THE VOTING RESULTS IN A TIE, THE MOTION FOR
RECONSIDERATION IS DEEMED DENIED. (Emphasis
supplied)

Further, the exemption provision in the Cityhood Laws gives the 16

municipalities a unique advantage based on an arbitrary date the filing of
their cityhood bills before the end of the 11 th Congress as against all other
municipalities that want to convert into cities after the effectivity of RA 9009.

The clear and simple language of the clarificatory en banc Resolution

requires no further explanation. If the voting of the Court en banc results in a
tie, the motion for reconsideration is deemed denied. The Courts prior
majority action on the main decision stands affirmed. [4] This clarificatory
Resolution applies to all cases heard by the Court en banc, which
includes not only cases involving the constitutionality of a law, but also, as
expressly stated in Section 4(2), Article VIII of the Constitution, all other
cases which under the Rules of Court are required to be heard en banc.

In addition, limiting the exemption only to the 16 municipalities violates the

requirement that the classification must apply to all similarly situated.

The 6-6 tie-vote by the Court en banc on the second motion for
reconsideration necessarily resulted in the denial of the second motion for

173

Thus, applying the operative fact doctrine to the present case, the Cityhood
Laws remain unconstitutional because they violate Section 10, Article X of
the Constitution. However, the effects of the implementation of the Cityhood
Laws prior to the declaration of their nullity, such as the payment of
salaries and supplies by the new cities or their issuance of licenses or
execution of contracts, may be recognized as valid and effective. This does
not mean that the Cityhood Laws are valid for they remain void. Only the
effects of the implementation of these unconstitutional laws are left
undisturbed as a matter of equity and fair play to innocent people who may
have relied on the presumed validity of the Cityhood Laws prior to the Courts
declaration of their unconstitutionality.

Municipalities with the same income as the 16 respondent municipalities

cannot convert into cities, while the 16 respondent municipalities can.
Clearly, as worded, the exemption provision found in the Cityhood Laws,
even if it were written in Section 450 of the Local Government Code, would
still be unconstitutional for violation of the equal protection clause.

Page

of equity and fair play. In short, the operative fact doctrine affects or modifies
only the effects of the unconstitutional law, not the unconstitutional law itself.

PubCorp Cases
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reconsideration. Since the Court was evenly divided, there could be no
reversal of the 18 November 2008 Decision, for a tie-vote cannot result in
any court order or directive.[5] The judgment stands in full
force.[6]Undeniably, the 6-6 tie-vote did not overrule the prior
majority en banc Decision of 18 November 2008, as well as the prior
majority en
banc Resolution
of
31
March
2009
denying
reconsideration. The tie-vote on the second motion for reconsideration is
not the same as a tie-vote on the main decision where there is no prior
decision. Here, the tie-vote plainly signifies that there is no majority to
overturn the prior 18 November 2008 Decision and 31 March 2009
Resolution, and thus the second motion for reconsideration must be denied.

Section 10, Article X of the Constitution expressly provides that no x x x city

shall be created x x x except in accordance with the criteria established
in the local government code. This provision can only be interpreted in
one way, that is, all the criteria for the creation of cities must be embodied
exclusively in the Local Government Code. In this case, the Cityhood Laws,
which are unmistakably laws other than the Local Government Code,
provided an exemption from the increased income requirement for the
creation of cities under Section 450 of the Local Government Code, as
amended by RA 9009. Clearly, the Cityhood Laws contravene the letter and
intent of Section 10, Article X of the Constitution.

Further, the tie-vote on the second motion for reconsideration did not mean
that the present cases were left undecided because there remain the
Decision of 18 November 2008 and the Resolution of 31 March 2009 where
a majority of the Court en banc concurred in declaring the unconstitutionality
of the sixteen Cityhood Laws. In short, the 18 November 2008 Decision
and the 31 March 2009 Resolution, which were both reached with the
concurrence of a majority of the Court en banc, are not reconsidered
but stand affirmed.[7] These prior majority actions of the Court en
banc can only be overruled by a new majority vote, not a tie-vote
because a tie-vote cannot overrule a prior affirmative action.

Adhering to the explicit prohibition in Section 10, Article X of the Constitution

does not cripple Congress power to make laws. In fact, Congress is not
prohibited from amending the Local Government Code itself, as what
Congress did by enacting RA 9009. Indisputably, the act of amending laws
comprises an integral part of the Legislatures law-making power. The
unconstitutionality of the Cityhood Laws lies in the fact that Congress
provided an exemption contrary to the express language of the Constitution
that [n]o x x x city x x x shall be created except in accordance with the
criteria established in the local government code. In other words, Congress
exceeded and abused its law-making power, rendering the challenged
Cityhood Laws void for being violative of the Constitution.

The denial, by a split vote, of the second motion for

reconsideration inevitably rendered the 18 November 2008 Decision final. In
fact, in its Resolution of 28 April 2009, denying the second motion for
reconsideration, the Court en banc reiterated that no further pleadings shall
be entertained and stated that entry of judgment be made in due course.

WHEREFORE, we GRANT the motions for reconsideration of the 21

December 2009 Decision and REINSTATE the 18 November 2008 Decision
declaringUNCONSTITUTIONAL the Cityhood Laws, namely: Republic Act
Nos. 9389, 9390, 9391, 9392, 9393, 9394, 9398, 9404, 9405, 9407, 9408,
9409, 9434, 9435, 9436, and 9491.

The dissenting opinion stated that a deadlocked vote of six is not a majority
and a non-majority does not constitute a rule with precedential value. [8]

We NOTE petitioners motion to annul the Decision of 21 December 2009.

SO ORDERED.

Page

Conclusion

174

Indeed, a tie-vote is a non-majority a non-majority which cannot overrule a

prior affirmative action, that is the 18 November 2008 Decision striking down
the Cityhood Laws. In short, the 18 November 2008 Decision stands
affirmed. And assuming a non-majority lacks any precedential value, the 18
November 2008 Decision, which was unreversed as a result of the tie-vote
on the respondents second motion for reconsideration, nevertheless remains
binding on the parties.[9]

PubCorp Cases
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[G.R. No. 73155. July 11, 1986.]
PATRICIO TAN, FELIX FERRER, JUAN M. HAGAD, SERGIO HILADO,
VIRGILIO GASTON, CONCHITA MINAYA, TERESITA ESTACIO,
DESIDERIO DEFERIA, ROMEO GAMBOA, ALBERTO LACSON, FE
HOFILENA, EMILY JISON, NIEVES LOPEZ AND CECILIA
MAGSAYSAY, Petitioners, v. THE COMMISSION ON ELECTIONS and
THE PROVINCIAL TREASURER OF NEGROS
OCCIDENTAL, Respondents.

"SEC. 4. A plebiscite shall be conducted in the proposed new province which

are the areas affected within a period of one hundred and twenty days from
the approval of this Act. After the ratification of the creation of the Province
of Negros del Norte by a majority of the votes cast in such plebiscite, the
President of the Philippines shall appoint the first officials of the province.
"SEC. 5. The Commission on Elections shall conduct and supervise the
plebiscite herein provided, the expenses for which shall be charged to local
funds.

Gamboa & Hofilea Law Office for petitioners.

"SEC. 6. This Act shall take effect upon its approval." (Rollo, pp. 23-24)
DECISION

Petitioners contend that Batas Pambansa Blg. 885 is unconstitutional and it

is not in complete accord with the Local Government Code as in Article XI,
Section 3 of our Constitution, it is expressly mandated that
ALAMPAY, J.:

"SECTION 1. The Cities of Silay, Cadiz, and San Carlos and the
municipalities of Calatrava, Taboso, Escalante, Sagay, Manapla, Victorias,
E.R. Magalona; and Salvador Benedicto, all in the northern portion of the
Island of Negros, are hereby separated from the province to be known as
the Province of Negros del Norte.
"SEC. 2. The boundaries of the new province shall be the southern limits of
the City of Silay, the Municipality of Salvador Benedicto and the City of San
Carlos on the south and the territorial limits of the northern portion to the
Island of Negros on the west, north and east, comprising a territory of
4,019.95 square kilometers more or less.
"SEC. 3. The seat of government of the new province shall be the City of
Cadiz.

"SEC. 197. Requisites for Creation. A province may be created if it has a

territory of at least three thousand five hundred square kilometers, a
population of at least five hundred thousand persons, an average estimated
annual income, as certified by the Ministry of Finance, of not less than ten
million pesos for the last three consecutive years, and its creation shall not
reduce the population and income of the mother province or provinces at the
time of said creation to less than the minimum requirements under this
section. The territory need not be contiguous if it comprises two or more
islands.
The average estimated annual income shall include the income alloted for
both the general and infrastructural funds, exclusive of trust funds, transfers
and nonrecurring income. (Rollo, p. 6)
Due to the constraints brought about by the supervening Christmas holidays
during which the Court was in recess and unable to timely consider the
petition, a supplemental pleading was filed by petitioners on January 4,
1986, averring therein that the plebiscite sought to be restrained by them

175

Said law provides:jgc:chanrobles.com.ph

Section 197 of the Local Government Code enumerates the conditions

which must exist to provide the legal basis for the creation of a provincial unit
and these requisites are:jgc:chanrobles.com.ph

Page

Prompted by the enactment of Batas Pambansa Blg. 885 An Act Creating

a New Province in the Island of Negros to be known as the Province of
Negros del Norte, which took effect on December 3, 1985, Petitioners
herein, who are residents of the Province of Negros Occidental, in the
various cities and municipalities therein, on December 23, 1985, filed with
this Court a case for Prohibition for the purpose of stopping respondents
Commission on Elections from conducting the plebiscite which, pursuant to
and in implementation of the aforesaid law, was scheduled for January 3,
1986.chanrobles law library

"Sec. 3. No province, city, municipality or barrio may be created, divided,

merged, abolished, or its boundary substantially altered, except in
accordance with the criteria established in the local government code, and
subject to the approval by a majority of the votes in a plebiscite in the unit or
units affected."cralaw virtua1aw library

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Acknowledging in their supplemental petition that supervening events

rendered moot the prayer in their initial petition that the plebiscite scheduled
for January 3, 1986, be enjoined, petitioners plead, nevertheless, that
". . . a writ of Prohibition be issued directed to Respondent Commission on
Elections to desist from issuing official proclamation of the results of the
plebiscite held on January 3, 1986.
"Finding that the exclusion and non-participation of the voters of the
Province of Negros Occidental other than those living within the territory of
the new province of Negros del Norte to be not in accordance with the
Constitution, that a writ of Mandamus be issued, directed to the respondent
Commission on Elections, to schedule the holding of another plebiscite at
which all the qualified voters of the entire Province of Negros Occidental as
now existing shall participate, at the same time making pronouncement that
the plebiscite held on January 3, 1986 has no legal effect, being a patent
legal nullity;
"And that a similar writ of Prohibition be issued, directed to the respondent
Provincial Treasurer, to desist from ordering the release of any local funds to
answer for expenses incurred in the holding of such plebiscite until ordered
by the Court." (Rollo, pp. 19-10).
Petitioners further prayed that the respondent COMELEC hold in abeyance
the issuance of any official proclamation of the results of the aforestated
plebiscite.chanroblesvirtual|awlibrary
During the pendency of this case, a motion that he be allowed to appear as

Acting on the petition, as well as on the supplemental petition for prohibition

with preliminary injunction with prayer for restraining order, the Court, on
January 7, 1986 resolved, without giving due course to the same, to require
respondents to comment, not to file a motion to dismiss. Complying with said
resolution, public respondents, represented by the Office of the Solicitor
General, on January 14, 1986, filed their Comment, arguing therein that the
challenged statute Batas Pambansa 885, should be accorded the
presumption of legality. They submit that the said law is not void on its face
and that the petition does not show a clear, categorical and undeniable
demonstration of the supposed infringement of the Constitution.
Respondents state that the powers of the Batasang Pambansa to enact the
assailed law is beyond question. They claim that Batas Pambansa Blg. 885
does not infringe the Constitution because the requisites of the Local
Government Code have been complied with. Furthermore, they submit that
this case has now become moot and academic with the proclamation of the
new Province of Negros del Norte.
Respondents argue that the remaining cities and municipalities of the
Province of Negros Occidental not included in the area of the new Province
of Negros del Norte, do not fall within the meaning and scope of the term
"unit or units affected", as referred to in Section 3 of Art. XI of our
Constitution. On this reasoning, respondents maintain that Batas Pambansa
Blg. 885 does not violate the Constitution, invoking and citing the case of
Governor Zosimo Paredes versus the Honorable Executive Secretary to the
President, Et. Al. (G.R. No. 55628, March 2, 1984 (128 SCRA 61),
particularly the pronouncements therein, hereunder
quoted:jgc:chanrobles.com.ph
"1. Admittedly, this is one of those cases where the discretion of the Court is
allowed considerable leeway. There is indeed an element of ambiguity in the
use of the expression unit or units affected. It is plausible to assert as
petitioners do that when certain Barangays are separated from a parent
municipality to form a new one, all the voters therein are affected. It is much
more persuasive, however, to contend as respondents do that the
acceptable construction is for those voters, who are not from the barangays
to be separated, should be excluded in the plebiscite.
"2. For one thing, it is in accordance with the settled doctrine that between
two possible constructions, one avoiding a finding of unconstitutionality and
the other yielding such a result, the former is to be preferred. That which will
save, not that which will destroy, commends itself for acceptance. After all,

176

The plebiscite was confined only to the inhabitants of the territory of Negros
del Norte, namely: the Cities of Silay, Cadiz, and San Carlos, and the
municipalities of Calatrava, Taboso, Escalante, Sagay, Manapla, Victorias,
E.B. Magalona and Don Salvador Benedicto. Because of the exclusions of
the voters from the rest of the province of Negros Occidental, petitioners
found need to change the prayer of their petition "to the end that the
constitutional issues which they have raised in the action will be ventilated
and given final resolution." At the same time, they asked that the effects of
the plebiscite which they sought to stop be suspended until the Supreme
Court shall have rendered its decision on the very fundamental and farreaching questions that petitioners have brought out.

amicus curiae in this case (dated December 27, 1985 and filed with the
Court on January 2, 1986) was submitted by former Senator Ambrosio
Padilla. Said motion was granted in Our resolution of January 2, 1986.

Page

was held on January 3, 1986 as scheduled but that there are still serious
issues raised in the instant case affecting the legality, constitutionality and
validity of such exercise which should properly be passed upon and resolved
by this Court.

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Respondents submit that said ruling in the aforecited case applies equally
with force in the case at bar. Respondents also maintain that the requisites
under the Local Government Code (P.D. 337) for the creation of the new
province of Negros del Norte have all been duly complied with. Respondents
discredit petitioners allegations that the requisite area of 3,500 square
kilometers as so prescribed in the Local Government Code for a new
province to be created has not been satisfied. Petitioners insist that the area
which would comprise the new province of Negros del Norte, would only be
about 2,856.56 square kilometers and which evidently would be lesser than
the minimum area prescribed by the governing statute. Respondents, in this
regard, point out and stress that Section 2 of Batas Pambansa Blg. 885
creating said new province plainly declares that the territorial boundaries of
Negros del Norte comprise an area of 4,019.95 square kilometers, more or
less.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph
As a final argument, respondents insist that instant petition has been
rendered moot and academic considering that a plebiscite has been already
conducted on January 3, 1986; that as a result thereof, the corresponding
certificate of canvass indicated that out of 195,134 total votes cast in said
plebiscite, 164,734 were in favor of the creation of Negros del Norte and
30,400 were against it; and because "the affirmative votes cast represented
a majority of the total votes cast in said plebiscite, the Chairman of the Board
of Canvassers proclaimed the new province which shall be known as
"Negros del Norte." Thus, respondents stress the fact that following the
proclamation of Negros del Norte province, the appointments of the officials

In resolving this case, it will be useful to note and emphasize the facts which
appear to be agreed to by the parties herein or stand unchallenged.
Firstly, there is no disagreement that the Provincial Treasurer of the
Province of Negros Occidental has not disbursed, nor was required to
disburse any public funds in connection with the plebiscite held on January
3, 1986 as so disclosed in the Comment to the Petition filed by the
respondent Provincial Treasurer of Negros Occidental dated January 20,
1986 (Rollo, pp. 36-37). Thus, the prayer of the petitioners that said
Provincial Treasurer be directed by this Court to desist from ordering the
release of any public funds on account of such plebiscite should not longer
deserve further consideration.
Secondly, in Parliamentary Bill No. 3644 which led to the enactment of Batas
Pambansa Blg. 885 and the creation of the new Province of Negros del
Norte, it expressly declared in Sec. 2 of the aforementioned Parliamentary
Bill, the following:jgc:chanrobles.com.ph
"SEC. 2. The boundaries of the new province shall be the southern limits of
the City of Silay, the Municipality of Salvador Benedicto and the City of San
Carlos on the South and the natural boundaries of the northern portion of the
Island of Negros on the West, North and East, containing an area of 285,656
hectares more or less." (Emphasis supplied).
However, when said Parliamentary Bill No. 3644 was very quickly enacted
into Batas Pambansa Blg. 885, the boundaries of the new Province of
Negros del Norte were defined therein and its boundaries then stated to be
as follows:jgc:chanrobles.com.ph
"SEC 1. The Cities of Silay, Cadiz, and San Carlos and the municipalities of
Calatrava, Toboso, Escalante. Sagay, Manapla, Victorias, E.R. Magalona;
and Salvador Benedicto, all in the northern portion of the Island of Negros,
are hereby separated from the Province of Negros Occidental and
constituted into a new province to be known as the Province of Negros del
Norte.
"SEC. 1. The boundaries of the new province shall be the southern limits of
the City of Silay, the Municipality of Salvador Benedicto and the City of San
Carlos on the south and the territorial limits of the northern portion of the
Island of Negros on the West, North and East, comprising a territory of

177

"3. . . . Adherence to such philosophy compels the conclusion that when

there are indications that the inhabitants of several barangays are inclined to
separate from a parent municipality they should be allowed to do so. What is
more logical than to ascertain their will in a plebiscite called for that purpose.
It is they, and they alone, who shall constitute the new unit. New
responsibilities will be assumed. New burdens will be imposed. A new
municipal corporation will come into existence. Its birth will be a matter of
choice their choice. They should be left alone then to decide for
themselves. To allow other voters to participate will not yield a true
expression of their will. They may even frustrate it. That certainly will be so if
they vote against it for selfish reasons, and they constitute the majority. That
is not to abide by the fundamental principle of the Constitution to promote
local autonomy, the preference being for smaller units. To rule as this
Tribunal does is to follow an accepted principle of constitutional construction,
that in ascertaining the meaning of a particular provision that may give rise
to doubts, the intent of the framers and of the people may be gleaned from
provisions in pari materia."cralaw virtua1aw library

of said province created were announced. On these considerations,

respondents urge that this case should be dismissed for having been
rendered moot and academic as the creation of the new province is now a"
fait accompli."cralaw virtua1aw library

Page

the basic presumption all these years is one of validity. . . .

PubCorp Cases
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4,019.95 square kilometers more or less."cralaw virtua1aw library

Provincial Treasurer" (Exh. "C" of Petition, Rollo, p. 90).

Equally accepted by the parties is the fact that under the certification issued
by Provincial Treasurer Julian L. Ramirez of the Province of Negros
Occidental, dated July 16, 1985, it was therein certified as
follows:jgc:chanrobles.com.ph

Although in the above certification it is stated that the land area of the
relatively new municipality of Don Salvador Benedicto is not available, it is
an uncontradicted fact that the area comprising Don Salvador municipality,
one of the component units of the new province, was derived from the City of
San Carlos and from the Municipality of Calatrava, Negros Occidental, and
added thereto was a portion of about one-fourth the land area of the town of
Murcia, Negros Occidental. It is significant to note the uncontroverted
submission of petitioners that the total land area of the entire municipality of
Murcia, Negros Occidental is only 322.9 square kilometers (Exh. "D", Rollo,
p. 91). One-fourth of this total land area of Murcia that was added to the
portions derived from the land area of Calatrava, Negros Occidental and San
Carlos City (Negros Occidental) would constitute, therefore, only 80.2
square kilometers. This area of 80.2 square kilometers if then added to
2,685.2 square kilometers, representing the total land area of the Cities of
Silay, San Carlos and Cadiz and the Municipalities of E.R. Magalona,
Victorias, Manapla, Sagay, Escalante, Taboso and Calatrava, will result in
approximately an area of only 2,765.4 square kilometers using as basis the
Special Report, Philippines 1980, Population, Land Area and Density: 1970,
1975 and 1980 of the National Census and Statistics Office, Manila (see
Exhibit "C", Rollo, p. 90).

"x

"This is to certify that the following cities and municipalities of Negros

Occidental have the land area as indicated hereunder based on the Special
Report No. 3, Philippines 1980, Population, Land Area and Density: 1970,
1975 and 1980 by the National Census and Statistics Office, Manila.
Land Area
(Sq. Km.)
"1. Silay City 214.8
2. E.B. Magalona 113.3
3. Victorias 133.9
4. Manapla 112.9

No controversion has been made by respondent with respect to the

allegations of petitioners that the original provision in the draft legislation,
Parliamentary Bill No. 3644, reads:jgc:chanrobles.com.ph

5. Cadiz City 516.5

6. Sagay 389.6
7. Escalante 124.0

"SEC. 4. A plebiscite shall be conducted in the areas affected within a period

of one hundred and twenty days from the approval of this Act. After the
ratification of the creation of the Province of Negros del Norte by a majority
of the votes cast in such plebiscite, the President shall appoint the first
officials of the new province." chanroblesvirtual|awlibrary

8. Toboso 123.4

11. Don Salvador Benedicto (not available)

"This certification is issued upon the request of Dr. Patricio Y. Tan for
whatever purpose it may serve him.
"(SGD.) JULIAN L. RAMIREZ

It is this legislative determination limiting the plebiscite exclusively to the

cities and towns which would comprise the new province that is assailed by
the petitioners as violative of the provisions of our Constitution. Petitioners
submit that Sec. 3, ART XI thereof, contemplates a plebiscite that would be
held in the unit or units affected by the creation of the new province as a
result of the consequent division of and substantial alteration of the
boundaries of the existing province. In this instance, the voters in the

178

10. San Carlos City 451.3

However, when Batas Pambansa Blg. 885 was enacted, there was a
significant change in the above provision. The statute, as modified, provides
that the requisite plebiscite "shall be conducted in the proposed new
province which are the areas affected."cralaw virtua1aw library

Page

9. Calatrava 504.5

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In the light of the facts and circumstances alluded to by petitioners as

attending to the unusually rapid creation of the instant province of Negros
del Norte after a swiftly scheduled plebiscite, this Tribunal has the duty to
repudiate and discourage the commission of acts which run counter to the
mandate of our fundamental law, done by whatever branch of our
government. This Court gives notice that it will not look with favor upon those
who may be hereafter inclined to ram through all sorts of legislative
measures and then implement the same with indecent haste, even if such
acts would violate the Constitution and the prevailing statutes of our land. It
is illogical to ask that this Tribunal be blind and deaf to protests on the
ground that what is already done is done. To such untenable argument the
reply would be that, be this so, the Court, nevertheless, still has the duty and
right to correct and rectify the wrong brought to its attention.
On the merits of the case.
Aside from the simpler factual issue relative to the land area of the new
province of Negros del Norte, the more significant and pivotal issue in the
present case revolves around in the interpretation and application in the
case at bar of Article XI, Section 3 of the Constitution, which being brief and
for convenience, We again quote:jgc:chanrobles.com.ph

It can be plainly seen that the aforecited constitutional provision makes it

imperative that there be first obtained "the approval of a majority of votes in
the plebiscite in the unit or units affected" whenever a province is created,
divided or merged and there is substantial alteration of the boundaries. It is
thus inescapable to conclude that the boundaries of the existing province of
Negros Occidental would necessarily be substantially altered by the division
of its existing boundaries in order that there can be created the proposed
new province of Negros del Norte. Plain and simple logic will demonstrate
than that two political units would be affected. The first would be the parent
province of Negros Occidental because its boundaries would be
substantially altered. The other affected entity would be composed of those
in the area subtracted from the mother province to constitute the proposed
province of Negros del Norte.
We find no way to reconcile the holding of a plebiscite that should conform to
said constitutional requirement but eliminates the participation of either of
these two component political units. No amount of rhetorical flourishes can
justify exclusion of the parent province in the plebiscite because of an
alleged intent on the part of the authors and implementors of the challenged
statute to carry out what is claimed to be a mandate to guarantee and
promote autonomy of local government units. The alleged good intentions
cannot prevail and overrule the cardinal precept that what our Constitution
categorically directs to be done or imposes as a requirement must first be
observed, respected and complied with. No one should be allowed to pay
homage to a supposed fundamental policy intended to guarantee and
promote autonomy of local government units but at the same time
transgress, ignore and disregard what the Constitution commands in Article
XI Section 3 thereof. Respondents would be no different from one who
hurries to pray at the temple but then spits at the idol therein.
We find no merit in the submission of the respondents that the petition
should be dismissed because the motive and wisdom in enacting the law
may not be challenged by petitioners. The principal point raised by the
petitioners is not the wisdom and motive in enacting the law but the
infringement of the Constitution which is a proper subject of judicial inquiry.
Petitioners discussion regarding the motives behind the enactment of B.P.
Blg. 885 to say the least, are most enlightening and provoking but are factual

179

Considering that the legality of the plebiscite itself is challenged for noncompliance with constitutional requisites, the fact that such plebiscite had
been held and a new province proclaimed and its officials appointed, the
case before Us cannot truly be viewed as already moot and academic.
Continuation of the existence of this newly proclaimed province which
petitioners strongly profess to have been illegally born, deserves to be
inquired into by this Tribunal so that, if indeed, illegality attaches to its
creation, the commission of that error should not provide the very excuse for
perpetuation of such wrong. For this Court to yield to the respondents urging
that, as there has been fait accompli, then this Court should passively accept
and accede to the prevailing situation is an unacceptable suggestion.
Dismissal of the instant petition, as respondents so propose is a proposition
fraught with mischief. Respondents submission will create a dangerous
precedent. Should this Court decline now to perform its duty of interpreting
and indicating what the law is and should be, this might tempt again those
who strut about in the corridors of power to recklessly and with ulterior
motives, create, merge, divide and/or alter the boundaries of political
subdivisions, either brazenly or stealthily, confident that this Court will
abstain from entertaining future challenges to their acts if they manage to
bring about a fait accompli.

"SEC. 3. No province, city, municipality or barrio may be created, divided,

merged, abolished, or its boundary substantially altered, except in
accordance with the criteria established in the local government code, and
subject to the approval by a majority of the votes in a plebiscite in the unit or
units affected."cralaw virtua1aw library

Page

remaining areas of the province of Negros Occidental should have been

allowed to participate in the questioned plebiscite.

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This Court is not unmindful of this solitary case alluded to by respondents.

What is, however, highly significant are the prefatory statements therein
stating that said case is "one of those cases where the discretion of the
Court is allowed considerable leeway" and that "there is indeed an element
of ambiguity in the use of the expression "unit or units affected." The ruling
rendered in said case was based on a claimed prerogative of the Court then
to exercise its discretion on the matter. It did not resolve the question of how
the pertinent provision of the Constitution should be correctly interpreted.
The ruling in the aforestated case of Paredes v. The Honorable Executive
Secretary, Et. Al. (supra) should not be taken as a doctrinal or compelling
precedent when it is acknowledged therein that "it is plausible to assert, as
petitioners do, that when certain Barangays are separated from a parent
municipality to form a new one, all the voters therein are affected."cralaw
virtua1aw library
It is relevant and most proper to mention that in the aforecited case of
Paredes v. Executive Secretary, invoked by respondents, We find very
lucidly expressed the strong dissenting view of Justice Vicente Abad Santos,
a distinguished member of this Court, as he therein voiced his opinion, which
We hereunder quote:jgc:chanrobles.com.ph
"2. . . . when the Constitution speaks of "the unit or units affected" it means
all of the people of the municipality if the municipality is to be divided such as
in the case at bar or all of the people of two or more municipalities if there be
a merger. I see no ambiguity in the Constitutional provision."cralaw

This dissenting opinion of Justice Vicente Abad Santos is the forerunner of

the ruling which We now consider applicable to the case at bar. In the
analogous case of Emilio C. Lopez, Jr., versus the Honorable Commission
on Elections, L-56022, May 31, 1985, 136 SCRA 633, this dissent was
reiterated by Justice Abad Santos as he therein assailed as suffering from a
constitutional infirmity a referendum which did not include all the people of
Bulacan and Rizal, when such referendum was intended to ascertain if the
people of said provinces were willing to give up some of their towns to
Metropolitan Manila. His dissenting opinion served as a useful guideline in
the instant case.
Opportunity to re-examine the views formerly held in said cases is now
afforded the present Court. The reasons in the mentioned cases invoked by
respondents herein were formerly considered acceptable because of the
views then taken that local autonomy would be better promoted. However,
even this consideration no longer retains persuasive value.
The environmental facts in the case before Us readily disclose that the
subject matter under consideration is of greater magnitude with concomitant
multifarious complicated problems. In the earlier case, what was involved
was a division of a barangay which is the smallest political unit in the Local
Government Code. Understandably, few and lesser problems are involved.
In the case at bar, creation of a new province relates to the largest political
unit contemplated in Section 3, Art. XI of the Constitution. To form the new
province of Negros del Norte no less than three cities and eight
municipalities will be subtracted from the parent province of Negros
Occidental. This will result in the removal of approximately 2,768.4 square
kilometers from the land area of an existing province whose boundaries will
be consequently substantially altered. It becomes easy to realize that the
consequent effects of the division of the parent province necessarily will
affect all the people living in the separate areas of Negros Occidental and
the proposed province of Negros del Norte. The economy of the parent
province as well as that of the new province will be inevitably affected, either
for the better or for the worse. Whatever be the case, either or both of these
political groups will be affected and they are, therefore, the unit or units
referred to in Section 3 of Article XI of the Constitution which must be
included in the plebiscite contemplated therein.
It is a well accepted rule that "in ascertaining the meaning of a particular
provision that may give rise to doubts, the intent of the framers and of the
people, may be gleaned from the provisions in pari materia." Parliamentary
Bill No. 3644 which proposed the creation of the new province of Negros del
Norte recites in Sec. 4 thereof that "the plebiscite shall be conducted in the

180

What the Court considers the only significant submissions lending a little
support to respondents case is their reliance on the rulings and
pronouncements made by this Court in the case of Governor Zosimo
Paredes versus The Honorable Executive Secretary to the President, Et Al.,
G.R. No. 55628, March 2, 1984 (128 SCRA 6). In said case relating to a
plebiscite held to ratify the creation of a new municipality from existing
barangays, this Court upheld the legality of the plebiscite which was
participated in exclusively by the people of the barangay that would
constitute the new municipality.chanroblesvirtuallawlibrary:red

virtua1aw library

Page

issues the Court cannot properly pass upon in this case. Mention by
petitioners of the unexplained changes or differences in the proposed
Parliamentary Bill No. 3644 and the enacted Batas Pambansa Blg. 885; the
swift and surreptitious manner of passage and approval of said law; the
abrupt scheduling of the plebiscite; the reference to news articles regarding
the questionable conduct of the said plebiscite held on January 3, 1986; all
serve as interesting reading but are not the decisive matters which should be
reckoned in the resolution of this case.

PubCorp Cases
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In the mind of the Court, the change made by those responsible for the
enactment of Batas Pambansa Blg. 885 betrays their own misgivings. They
must have entertained apprehensions that by holding the plebiscite only in
the areas of the new proposed province, this tactic will be tainted with
illegality. In anticipation of a possible strong challenge to the legality of such
a plebiscite there was, therefore, deliberately added in the enacted statute a
self-serving phrase that the new province constitutes the area affected. Such
additional statement serves no useful purpose for the same is misleading,
erroneous and far from truth. The remaining portion of the parent province is
as much an area affected. The substantial alteration of the boundaries of the
parent province, not to mention the other adverse economic effects it might
suffer, eloquently argue the points raised by the petitioners.chanrobles law
library : red
Petitioners have averred without contradiction that after the creation of
Negros del Norte, the province of Negros Occidental would be deprived of
the long established Cities of Silay, Cadiz, and San Carlos, as well as the
municipality of Victorias. No controversion has been made regarding
petitioners assertion that the areas of the Province of Negros Occidental will
be diminished by about 285,656 hectares and it will lose seven of the fifteen
sugar mills which contribute to the economy of the whole province. In the
language of petitioners, "to create Negros del Norte, the existing territory and
political subdivision known as Negros Occidental has to be partitioned and
dismembered. What was involved was no birth but "amputation." We agree
with the petitioners that in the case of Negros what was involved was a
division, a separation; and consequently, as Sec. 3 of Article XI of the
Constitution anticipates, a substantial alteration of boundary.

"Indeed, the terms created, divided, merged, abolished as used in the

constitutional provision do not contemplate distinct situation isolated from the
mutually exclusive to each other. A province maybe created where an
existing province is divided or two provinces merged. Such cases
necessarily will involve existing unit or units abolished and definitely the
boundary being substantially altered.
"It would thus be inaccurate to state that where an existing political unit is
divided or its boundary substantially altered, as the Constitution provides,
only some and not all the voters in the whole unit which suffers
dismemberment or substantial alteration of its boundary are affected.
Rather, the contrary is true."cralaw virtua1aw library
It is also Our considered view that even hypothetically assuming that the
merits of this case can depend on the mere discretion that this Court may
exercise, nevertheless, it is the petitioners case that deserve to be favored.
It is now time for this Court to set aside the equivocations and the indecisive
pronouncements in the adverted case of Paredes v. the Honorable
Executive Secretary, Et. Al. (supra). For the reasons already here
expressed, We now state that the ruling in the two mentioned cases
sanctioning the exclusion of the voters belonging to an existing political unit
from which the new political unit will be derived, from participating in the
plebiscite conducted for the purpose of determining the formation of another
new political unit, is hereby abandoned.
In their supplemental petition, dated January 4, 1986, it is prayed for by
petitioners that a writ of mandamus be issued, directing the respondent
Commission on Elections, to schedule the holding of another plebiscite at
which all the qualified voters of the entire province of Negros Occidental as
now existing shall participate and that this Court make a pronouncement that
the plebiscite held on January 3, 1986 has no legal effect for being a patent
nullity.
The Court is prepared to declare the said plebiscite held on January 3, 1986
as null and void and violative of the provisions of Sec. 3, Article XI of the
Constitution. The Court is not, however, disposed to direct the conduct of a
new plebiscite, because We find no legal basis to do so. With constitutional
infirmity attaching to the subject Batas Pambansa Blg. 885 and also because
the creation of the new province of Negros del Norte is not in accordance
with the criteria established in the Local Government Code, the factual and
legal basis for the creation of such new province which should justify the

181

We fail to find any legal basis for the unexplained change made when
Parliamentary Bill No. 3644 was enacted into Batas Pambansa Blg. 885 so
that it is now provided in said enabling law that the plebiscite "shall be
conducted in the proposed new province which are the areas affected." We
are not disposed to agree that by mere legislative fiat the unit or units
affected referred in the fundamental law can be diminished or restricted by
the Batasang Pambansa to cities and municipalities comprising the new
province, thereby ignoring the evident reality that there are other people
necessarily affected.

As contended by petitioners,

Page

areas affected within a period of one hundred and twenty days from the
approval of this Act." As this draft legislation speaks of "areas," what was
contemplated evidently are plurality of areas to participate in the plebiscite.
Logically, those to be included in such plebiscite would be the people living
in the area of the proposed new province and those living in the parent
province. This assumption will be consistent with the requirements set forth
in the Constitution.

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The final nail that puts to rest whatever pretension there is to the legality of
the province of Negros del Norte is the significant fact that this created
province does not even satisfy the area requirement prescribed in Section
197 of the Local Government Code, as earlier discussed.chanrobles.com.ph
: virtual law library
It is of course claimed by the respondents in their Comment to the exhibits
submitted by the petitioners (Exhs. C and D, Rollo, pp. 19 and 91), that the
new province has a territory of 4,019.95 square kilometers, more or less.
This assertion is made to negate the proofs submitted, disclosing that the
land area of the new province cannot be more than 3,500 square kilometers
because its land area would, at most, be only about 2,856 square
kilometers, taking into account government statistics relative to the total area
of the cities and municipalities constituting Negros del Norte. Respondents
insist that when Section 197 of the Local Government Code speaks of the
territory of the province to be created and requires that such territory be at
least 3,500 square kilometers, what is contemplated is not only the land area
but also the land and water over which the said province has jurisdiction and
control. It is even the submission of the respondents that in this regard the
marginal sea within the three mile limit should be considered in determining
the extent of the territory of the new province. Such an interpretation is
strained, incorrect, and fallacious.
The last sentence of the first paragraph of Section 197 is most revealing. As
so stated therein the "territory need not be contiguous if it comprises two or
more islands." The use of the word territory in this particular provision of the
Local Government Code and in the very last sentence thereof, clearly,
reflects that "territory" as therein used, has reference only to the mass of
land area and excludes the waters over which the political unit exercises
control.

The distinction between "territory" and "land area" which respondents make
is an artificial or strained construction of the disputed provision whereby the
words of the statute are arrested from their plain and obvious meaning and
made to bear an entirely different meaning to justify an absurd or unjust
result. The plain meaning in the language in a statute is the safest guide to
follow in construing the statute. A construction based on a forced or artificial
meaning of its words and out of harmony of the statutory scheme is not to be
favored (Helvering v. Hutchings, 85 L. Ed., p. 909).
It would be rather preposterous to maintain that a province with a small land
area but which has a long, narrow, extended coast line, (such as La Union
province) can be said to have a larger territory than a land-locked province
(such as Ifugao or Benguet) whose land area manifestly exceeds the
province first mentioned.
Allegations have been made that the enactment of the questioned state was
marred by "dirty tricks", in the introduction and passing of Parliamentary Bill
No. 3644 "in secret haste" pursuant to sinister designs to achieve "pure and
simple gerrymandering" ; "that recent happenings more than amply
demonstrate that far from guaranteeing its autonomy it (Negros del Norte)
has become the fiefdom of a local strongman" (Rollo, p. 43; parenthesis
supplied).
It is not for this Court to affirm or reject such matters not only because the
merits of this case can be resolved without need of ascertaining the real
motives and wisdom in the making of the questioned law. No proper

182

Whatever claim it has to validity and whatever recognition has been gained
by the new province of Negros del Norte because of the appointment of the
officials thereof, must now be erased. That Negros del Norte is but a legal
fiction should be announced. Its existence should be put to an end as quickly
as possible, if only to settle the complications currently attending to its
creation. As has been manifested, the parent province of Negros del Norte
has been impleaded as the defendant in a suit filed by the new Province of
Negros del Norte, before the Regional Trial Court of Negros (del Norte),
docketed as Civil Case No. 169-C, for the immediate allocation, distribution
and transfer of funds by the parent province to the new province, in an
amount claimed to be at least P10,000,000.00.

Said sentence states that the "territory need not be contiguous." Contiguous
means (a) in physical contact; (b) touching along all or most of one side; (c)
near, text, or adjacent (Websters New World Dictionary, 1972 Ed., p. 307).
"Contiguous", when employed as an adjective, as in the above sentence, is
only used when it describes physical contact, or a touching of sides of two
solid masses of matter. The meaning of particular terms in a statute may be
ascertained by reference to words associated with or related to them in the
statute (Animal Rescue League v. Assessors, 138 A.L.R., p. 110).
Therefore, in the context of the sentence above, what need not be
"contiguous" is the "territory" the physical mass of land area. There would
arise no need for the legislators to use the word contiguous if they had
intended that the term "territory" embrace not only land area but also
territorial waters, It can be safely concluded that the word territory in the first
paragraph of Section 197 is meant to be synonymous with "land area" only.
The words and phrases used in a statute should be given the meaning
intended by the legislature (82 C.J.S., p. 636). The sense in which the words
are used furnished the rule of construction (In re Winton Lumber Co., 63 p.
2d., p. 664).

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holding of another plebiscite does not exist.

PubCorp Cases
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WHEREFORE, Batas Pambansa Blg. 885 is hereby declared

unconstitutional. The proclamation of the new province of Negros del Norte,
as well as the appointment of the officials thereof are also declared null and
void.
SO ORDERED.
Abad Santos, Feria, Yap, Fernan, Narvasa, Gutierrez, Jr., Cruz and
Paras, JJ., concur.
Teehankee, C.J., files a separate opinion congratulating his brethren for the
Courts unanimous decision striking down a manifestly unconstitutional Act
and illegal plebiscite and restoring the territorial integrity of the once premier
province of Negros Occidental.
Melencio-Herrera, J., in the result.
Separate Opinions

TEEHANKEE, C.J., concurring:chanrob1es virtual 1aw library

I congratulate my brethren for the unanimous decision we issue today
striking down an Act approved in "deep secrecy and inordinate haste"
apparently on the last day of session of the Batasang Pambansa on
December 3, 1985 and signed on the same day by the then President of the
authoritarian regime. The Act provided for the partitioning of the province of

The discredited Commission on Elections of the time played its customary

subservient role by setting the plebiscite with equal "indecent haste" for
January 3, 1986, notwithstanding that the Act itself provided for an ample
period of 120 days from its approval within which to inform the people of the
proposed dismemberment and allow them to freely express and discuss the
momentous issue and cast their vote intelligently. This was learned by
petitioners through an item in the printed media one day before they filed the
present rush petition on December 23, 1985 to seek a restraining order to
atop the plebiscite, even as no printed copies of the Act as finally enacted
and approved were available to them and the Act had not been published,
as required by law, for its effectivity. As petitioners ruefully state: "it was in
vain hope" for everything had apparently been timed for the Christmas
holidays; the Court was in Christmas recess and "there was no chance to
have their plea for a restraining order acted upon speedily enough." In fact, it
was only on January 7, 1986 that the Court took cognizance of the petition
and required respondents comment.
The scenario, as petitioners urgently asserted, was "to have the creation of
the new Province a fait accompli by the time elections are held on February
7, 1986. The transparent purpose is unmistakably so that the new Governor
and other officials shall by then have been installed in office, ready to
function for purposes of the election for President and Vice-President." Thus,
the petitioners reported after the event: "With indecent haste, the plebiscite
was held; Negros del Norte was set up and proclaimed by President Marcos
as in existence; a new set of government officials headed by Governor
Armando Gustilo was appointed; and, by the time the elections were held on
February 7, 1986, the political machinery was in place to deliver the solid
North to ex-President Marcos. The rest is history. What happened in Negros
del Norte during the elections the unashamed use of naked power and
resources contributed in no small way to arousing peoples power and
steel the ordinary citizen to perform deeds of courage and patriotism that
makes one proud to be a Filipino today." (Record, pp. 9, 41).
The challenged Act is manifestly void and unconstitutional. Consequently, all
the implementing acts complained of, viz. the plebiscite, the proclamation of
a new province of Negros del Norte and the appointment of its officials are
equally void. The limited holding of the plebiscite only in the areas of the

183

Petitioners herein deserve and should receive the gratitude of the people of
the Province of Negros Occidental and even by our Nation. Commendable is
the patriotism displayed by them in daring to institute this case in order to
preserve the continued existence of their historic province. They were
inspired undoubtedly by their faithful commitment to our Constitution which
they wish to be respected and obeyed. Despite the setbacks and the
hardships which petitioners aver confronted them, they valiantly and
unfalteringly pursued a worthy cause. A happy destiny for our Nation is
assured as long as among our people there would be exemplary citizens
such as the petitioners herein.

Negros Occidental and would substantially alter its boundaries by lopping off
the progressive cities of Silay, Cadiz and San Carlos and municipality of
Victorias with seven other municipalities to constitute the proposed new
province of Negros del Norte. Negros Occidental would thereby lose
4,019.95 square kilometers in area and seven of fifteen sugar mills which
contribute to the economic progress and welfare of the whole
province.chanrobles virtual lawlibrary

Page

challenge on those grounds can also be made by petitioners in this

proceeding. Neither may this Court venture to guess the motives or wisdom
in the exercise of legislative powers. Repudiation of improper or unwise
actions taken by tools of a political machinery rests ultimately, as recent
events have shown, on the electorate and the power of a vigilant
people.chanrobles virtual lawlibrary

PubCorp Cases
Atty. Lapid
proposed new province (as provided by Section 4 of the Act) to the exclusion
of the voters of the remaining areas of the integral province of Negros
Occidental (namely, the three cities of Bacolod, Bago and La Carlota and the
Municipalities of La Castellana, Isabela, Moises Padilla, Pontevedra,
Hinigaran, Himamaylan, Kabankalan, Murcia, Valladolid, San Enrique, Ilog,
Cauayan, Hinoba-an and Sipalay and Candoni), grossly contravenes and
disregards the mandate of Article XI, section 3 of the then prevailing 1973
Constitution that no province may be created or divided or its boundary
substantially altered without "the approval of a majority of the votes in a
plebiscite in the unit or units affected." It is plain that all the cities and
municipalities of the province of Negros Occidental, not merely those of the
proposed new province, comprise the units affected. It follows that the voters
of the whole and entire province of Negros Occidental have to participate
and give their approval in the plebiscite, because the whole province is
affected by its proposed division and substantial alteration of its boundary.
To limit the plebiscite to only the voters of the areas to be partitioned and
seceded from the province is as absurd and illogical as allowing only the
secessionists to vote for the secession that they demanded against the
wishes of the majority and to nullify the basic principle of majority rule.

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Batas Pambansa Blg. 885 declared unconstitutional.

184

The argument of fait accompli viz. that the railroaded plebiscite of January 3,
1986 was held and can no longer be enjoined and that the new province of
Negros del Norte has been constituted, begs the issue of invalidity of the
challenged Act. This Court has always held that it "does not look with favor
upon parties racing to beat an injunction or restraining order which they
have reason to believe might be forthcoming from the Court by virtue of the
filing and pendency of the appropriate petition therefor. Where the
restraining order or preliminary injunction are found to have been properly
issued, as in the case at bar, mandatory writs shall be issued by the Court to
restore matters to the status quo ante." (Banzon v. Cruz, 45 SCRA 475, 506
[1972]). Where, as in this case, there was somehow a failure to properly
issue the restraining order stopping the holding of the illegal plebiscite, the
Court will issue the mandatory writ or judgment to restore matters to the
status quo ante and restore the territorial integrity of the province of Negros
Occidental by declaring the unconstitutionality of the challenged Act and
nullifying the invalid proclamation of the proposed new province of Negros
del Norte and the equally invalid appointment of its
officials.chanroblesvirtuallawlibrary