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EN BANC

G.R. No. 164527 August 15, 2007


FRANCISCO I. CHAVEZ, Petitioner,
vs.
NATIONAL HOUSING AUTHORITY, R-II BUILDERS, INC., R-II HOLDINGS, INC., HARBOUR CENTRE PORT
TERMINAL, INC., and MR. REGHIS ROMERO II, Respondents.
D E C I S I O N
VELASCO, JR., J .:
In this Petition for Prohibition and Mandamus with Prayer for Temporary Restraining Order and/or Writ of
Preliminary Injunction under Rule 65, petitioner, in his capacity as taxpayer, seeks:
to declare NULL AND VOID the Joint Venture Agreement (JVA) dated March 9, 1993 between the National Housing
Authority and R-II Builders, Inc. and the Smokey Mountain Development and Reclamation Project embodied therein;
the subsequent amendments to the said JVA; and all other agreements signed and executed in relation thereto
including, but not limited to the Smokey Mountain Asset Pool Agreement dated 26 September 1994 and the
separate agreements for Phase I and Phase II of the Projectas well as all other transactions which emanated
therefrom, for being UNCONSTITUTIONAL and INVALID;
to enjoin respondentsparticularly respondent NHAfrom further implementing and/or enforcing the said project
and other agreements related thereto, and from further deriving and/or enjoying any rights, privileges and interest
therefrom x x x; and
to compel respondents to disclose all documents and information relating to the projectincluding, but not limited
to, any subsequent agreements with respect to the different phases of the project, the revisions over the original
plan, the additional works incurred thereon, the current financial condition of respondent R-II Builders, Inc., and the
transactions made respecting the project.
1

The Facts
On March 1, 1988, then President Corazon C. Aquino issued Memorandum Order No. (MO) 161
2
approving and
directing the implementation of the Comprehensive and Integrated Metropolitan Manila Waste Management Plan
(the Plan). The Metro Manila Commission, in coordination with various government agencies, was tasked as the
lead agency to implement the Plan as formulated by the Presidential Task Force on Waste Management created by
Memorandum Circular No. 39. A day after, on March 2, 1988, MO 161-A
3
was issued, containing the guidelines
which prescribed the functions and responsibilities of fifteen (15) various government departments and offices
tasked to implement the Plan, namely: Department of Public Works and Highway (DPWH), Department of Health
(DOH), Department of Environment and Natural Resources (DENR), Department of Transportation and
Communication, Department of Budget and Management, National Economic and Development Authority (NEDA),
Philippine Constabulary Integrated National Police, Philippine Information Agency and the Local Government Unit
(referring to the City of Manila), Department of Social Welfare and Development, Presidential Commission for Urban
Poor, National Housing Authority (NHA), Department of Labor and Employment, Department of Education, Culture
and Sports (now Department of Education), and Presidential Management Staff.
Specifically, respondent NHA was ordered to "conduct feasibility studies and develop low-cost housing projects at
the dumpsite and absorb scavengers in NHA resettlement/low-cost housing projects."
4
On the other hand, the
DENR was tasked to "review and evaluate proposed projects under the Plan with regard to their environmental
impact, conduct regular monitoring of activities of the Plan to ensure compliance with environmental standards and
assist DOH in the conduct of the study on hospital waste management."
5

At the time MO 161-A was issued by President Aquino, Smokey Mountain was a wasteland in Balut, Tondo, Manila,
where numerous Filipinos resided in subhuman conditions, collecting items that may have some monetary value
from the garbage. The Smokey Mountain dumpsite is bounded on the north by the Estero Marala, on the south by
the property of the National Government, on the east by the property of B and I Realty Co., and on the west by
Radial Road 10 (R-10).
Pursuant to MO 161-A, NHA prepared the feasibility studies of the Smokey Mountain low-cost housing project which
resulted in the formulation of the "Smokey Mountain Development Plan and Reclamation of the Area Across R-10"
or the Smokey Mountain Development and Reclamation Project (SMDRP; the Project). The Project aimed to convert
the Smokey Mountain dumpsite into a habitable housing project, inclusive of the reclamation of the area across R-
10, adjacent to the Smokey Mountain as the enabling component of the project.
6
Once finalized, the Plan was
submitted to President Aquino for her approval.
On July 9, 1990, the Build-Operate-and-Transfer (BOT) Law (Republic Act No. [RA] 6957) was enacted.
7
Its
declared policy under Section 1 is "[t]o recognize the indispensable role of the private sector as the main engine for
national growth and development and provide the most appropriate favorable incentives to mobilize private
resources for the purpose." Sec. 3 authorized and empowered "[a]ll government infrastructure agencies, including
government-owned and controlled corporations and local government units x x x to enter into contract with any duly
pre-qualified private contractor for the financing, construction, operation and maintenance of any financially viable
infrastructure facilities through the build-operate-transfer or build and transfer scheme."
RA 6957 defined "build-and-transfer" scheme as "[a] contractual arrangement whereby the contractor undertakes
the construction, including financing, of a given infrastructure facility, and its turnover after the completion to the
government agency or local government unit concerned which shall pay the contractor its total investment expended
on the project, plus reasonable rate of return thereon." The last paragraph of Sec. 6 of the BOT Law provides that
the repayment scheme in the case of "land reclamation or the building of industrial estates" may consist of "[t]he
grant of a portion or percentage of the reclaimed land or industrial estate built, subject to the constitutional
requirements with respect to the ownership of lands."
On February 10, 1992, Joint Resolution No. 03
8
was passed by both houses of Congress. Sec. 1 of this resolution
provided, among other things, that:
Section 1. There is hereby approved the following national infrastructure projects for implementation under the
provisions of Republic Act No. 6957 and its implementing rules and regulations:
x x x x
(d) Port infrastructure like piers, wharves, quays, storage handling, ferry service and related facilities;
x x x x
(k) Land reclamation, dredging and other related development facilities;
(l) Industrial estates, regional industrial centers and export processing zones including steel mills, iron-making and
petrochemical complexes and related infrastructure and utilities;
x x x x
(p) Environmental and solid waste management-related facilities such as collection equipment, composting plants,
incinerators, landfill and tidal barriers, among others; and
(q) Development of new townsites and communities and related facilities.
This resolution complied with and conformed to Sec. 4 of the BOT Law requiring the approval of all national
infrastructure projects by the Congress.
On January 17, 1992, President Aquino proclaimed MO 415
9
approving and directing the implementation of the
SMDRP. Secs. 3 and 4 of the Memorandum Order stated:
Section 3. The National Housing Authority is hereby directed to implement the Smokey Mountain Development Plan
and Reclamation of the Area Across R-10 through a private sector joint venture scheme at the least cost to the
government.
Section 4. The land area covered by the Smokey Mountain dumpsite is hereby conveyed to the National Housing
Authority as well as the area to be reclaimed across R-10. (Emphasis supplied.)
In addition, the Public Estates Authority (PEA) was directed to assist in the evaluation of proposals regarding the
technical feasibility of reclamation, while the DENR was directed to (1) facilitate titling of Smokey Mountain and of
the area to be reclaimed and (2) assist in the technical evaluation of proposals regarding environmental impact
statements.
10

In the same MO 415, President Aquino created an Executive Committee (EXECOM) to oversee the implementation
of the Plan, chaired by the National Capital Region-Cabinet Officer for Regional Development (NCR-CORD) with the
heads of the NHA, City of Manila, DPWH, PEA, Philippine Ports Authority (PPA), DENR, and Development Bank of
the Philippines (DBP) as members.
11
The NEDA subsequently became a member of the EXECOM. Notably, in a
September 2, 1994 Letter,
12
PEA General Manager Amado Lagdameo approved the plans for the reclamation
project prepared by the NHA.
In conformity with Sec. 5 of MO 415, an inter-agency technical committee (TECHCOM) was created composed of
the technical representatives of the EXECOM "[t]o assist the NHA in the evaluation of the project proposals, assist
in the resolution of all issues and problems in the project to ensure that all aspects of the development from squatter
relocation, waste management, reclamation, environmental protection, land and house construction meet governing
regulation of the region and to facilitate the completion of the project."
13

Subsequently, the TECHCOM put out the Public Notice and Notice to Pre-Qualify and Bid for the right to become
NHAs joint venture partner in the implementation of the SMDRP. The notices were published in newspapers of
general circulation on January 23 and 26 and February 1, 14, 16, and 23, 1992, respectively. Out of the thirteen (13)
contractors who responded, only five (5) contractors fully complied with the required pre-qualification documents.
Based on the evaluation of the pre-qualification documents, the EXECOM declared the New San Jose Builders, Inc.
and R-II Builders, Inc. (RBI) as the top two contractors.
14

Thereafter, the TECHCOM evaluated the bids (which include the Pre-feasibility Study and Financing Plan) of the top
two (2) contractors in this manner:
(1) The DBP, as financial advisor to the Project, evaluated their Financial Proposals;
(2) The DPWH, PPA, PEA and NHA evaluated the Technical Proposals for the Housing Construction and
Reclamation;
(3) The DENR evaluated Technical Proposals on Waste Management and Disposal by conducting the
Environmental Impact Analysis; and
(4) The NHA and the City of Manila evaluated the socio-economic benefits presented by the proposals.
On June 30, 1992, Fidel V. Ramos assumed the Office of the President (OP) of the Philippines.
On August 31, 1992, the TECHCOM submitted its recommendation to the EXECOM to approve the R-II Builders,
Inc. (RBI) proposal which garnered the highest score of 88.475%.
Subsequently, the EXECOM made a Project briefing to President Ramos. As a result, President Ramos issued
Proclamation No. 39
15
on September 9, 1992, which reads:
WHEREAS, the National Housing Authority has presented a viable conceptual plan to convert the Smokey Mountain
dumpsite into a habitable housing project, inclusive of the reclamation of the area across Road Radial 10 (R-10)
adjacent to the Smokey Mountain as the enabling component of the project;
x x x x
These parcels of land of public domain are hereby placed under the administration and disposition of the National
Housing Authority to develop, subdivide and dispose to qualified beneficiaries, as well as its development for mix
land use (commercial/industrial) to provide employment opportunities to on-site families and additional areas for
port-related activities.
In order to facilitate the early development of the area for disposition, the Department of Environment and Natural
Resources, through the Lands and Management Bureau, is hereby directed to approve the boundary and
subdivision survey and to issue a special patent and title in the name of the National Housing Authority, subject to
final survey and private rights, if any there be. (Emphasis supplied.)
On October 7, 1992, President Ramos authorized NHA to enter into a Joint Venture Agreement with RBI "[s]ubject
to final review and approval of the Joint Venture Agreement by the Office of the President."
16

On March 19, 1993, the NHA and RBI entered into a Joint Venture Agreement
17
(JVA) for the development of the
Smokey Mountain dumpsite and the reclamation of the area across R-10 based on Presidential Decree No. (PD)
757
18
which mandated NHA "[t]o undertake the physical and socio-economic upgrading and development of lands of
the public domain identified for housing," MO 161-A which required NHA to conduct the feasibility studies and
develop a low-cost housing project at the Smokey Mountain, and MO 415 as amended by MO 415-A which
approved the Conceptual Plan for Smokey Mountain and creation of the EXECOM and TECHCOM. Under the JVA,
the Project "involves the clearing of Smokey Mountain for eventual development into a low cost medium rise
housing complex and industrial/commercial site with the reclamation of the area directly across [R-10] to act as the
enabling component of the Project."
19
The JVA covered a lot in Tondo, Manila with an area of two hundred twelve
thousand two hundred thirty-four (212,234) square meters and another lot to be reclaimed also in Tondo with an
area of four hundred thousand (400,000) square meters.
The Scope of Work of RBI under Article II of the JVA is as follows:
a) To fully finance all aspects of development of Smokey Mountain and reclamation of no more than 40
hectares of Manila Bay area across Radial Road 10.
b) To immediately commence on the preparation of feasibility report and detailed engineering with emphasis
to the expedient acquisition of the Environmental Clearance Certificate (ECC) from the DENR.
c) The construction activities will only commence after the acquisition of the ECC, and
d) Final details of the contract, including construction, duration and delivery timetables, shall be based on
the approved feasibility report and detailed engineering.
Other obligations of RBI are as follows:
2.02 The [RBI] shall develop the PROJECT based on the Final Report and Detailed Engineering as
approved by the Office of the President. All costs and expenses for hiring technical personnel, date
gathering, permits, licenses, appraisals, clearances, testing and similar undertaking shall be for the account
of the [RBI].
2.03 The [RBI] shall undertake the construction of 3,500 temporary housing units complete with basic
amenities such as plumbing, electrical and sewerage facilities within the temporary housing project as
staging area to temporarily house the squatter families from the Smokey Mountain while development is
being undertaken. These temporary housing units shall be turned over to the [NHA] for disposition.
2.04 The [RBI] shall construct 3,500 medium rise low cost permanent housing units on the leveled Smokey
Mountain complete with basic utilities and amenities, in accordance with the plans and specifications set
forth in the Final Report approved by the [NHA]. Completed units ready for mortgage take out shall be
turned over by the [RBI] to NHA on agreed schedule.
2.05 The [RBI] shall reclaim forty (40) hectares of Manila Bay area directly across [R-10] as contained in
Proclamation No. 39 as the enabling component of the project and payment to the [RBI] as its asset share.
2.06 The [RBI] shall likewise furnish all labor materials and equipment necessary to complete all herein
development works to be undertaken on a phase to phase basis in accordance with the work program
stipulated therein.
The profit sharing shall be based on the approved pre-feasibility report submitted to the EXECOM, viz:
For the developer (RBI):
1. To own the forty (40) hectares of reclaimed land.
2. To own the commercial area at the Smokey Mountain area composed of 1.3 hectares, and
3. To own all the constructed units of medium rise low cost permanent housing units beyond the 3,500 units
share of the [NHA].
For the NHA:
1. To own the temporary housing consisting of 3,500 units.
2. To own the cleared and fenced incinerator site consisting of 5 hectares situated at the Smokey Mountain
area.
3. To own the 3,500 units of permanent housing to be constructed by [RBI] at the Smokey Mountain area to
be awarded to qualified on site residents.
4. To own the Industrial Area site consisting of 3.2 hectares, and
5. To own the open spaces, roads and facilities within the Smokey Mountain area.
In the event of "extraordinary increase in labor, materials, fuel and non-recoverability of total project expenses,"
20
the
OP, upon recommendation of the NHA, may approve a corresponding adjustment in the enabling component.
The functions and responsibilities of RBI and NHA are as follows:
For RBI:
4.01 Immediately commence on the preparation of the FINAL REPORT with emphasis to the expedient acquisition,
with the assistance of the [NHA] of Environmental Compliance Certificate (ECC) from the Environmental
Management Bureau (EMB) of the [DENR]. Construction shall only commence after the acquisition of the ECC. The
Environment Compliance Certificate (ECC) shall form part of the FINAL REPORT.
The FINAL REPORT shall provide the necessary subdivision and housing plans, detailed engineering and
architectural drawings, technical specifications and other related and required documents relative to the Smokey
Mountain area.
With respect to the 40-hectare reclamation area, the [RBI] shall have the discretion to develop the same in a manner
that it deems necessary to recover the [RBIs] investment, subject to environmental and zoning rules.
4.02 Finance the total project cost for land development, housing construction and reclamation of the PROJECT.
4.03 Warrant that all developments shall be in compliance with the requirements of the FINAL REPORT.
4.04 Provide all administrative resources for the submission of project accomplishment reports to the [NHA] for
proper evaluation and supervision on the actual implementation.
4.05 Negotiate and secure, with the assistance of the [NHA] the grant of rights of way to the PROJECT, from the
owners of the adjacent lots for access road, water, electrical power connections and drainage facilities.
4.06 Provide temporary field office and transportation vehicles (2 units), one (1) complete set of computer and one
(1) unit electric typewriter for the [NHAs] field personnel to be charged to the PROJECT.
For the NHA:
4.07 The [NHA] shall be responsible for the removal and relocation of all squatters within Smokey Mountain to the
Temporary Housing Complex or to other areas prepared as relocation areas with the assistance of the [RBI]. The
[RBI] shall be responsible in releasing the funds allocated and committed for relocation as detailed in the FINAL
REPORT.
4.08 Assist the [RBI] and shall endorse granting of exemption fees in the acquisition of all necessary permits,
licenses, appraisals, clearances and accreditations for the PROJECT subject to existing laws, rules and regulations.
4.09 The [NHA] shall inspect, evaluate and monitor all works at the Smokey Mountain and Reclamation Area while
the land development and construction of housing units are in progress to determine whether the development and
construction works are undertaken in accordance with the FINAL REPORT. If in its judgment, the PROJECT is not
pursued in accordance with the FINAL REPORT, the [NHA] shall require the [RBI] to undertake necessary remedial
works. All expenses, charges and penalties incurred for such remedial, if any, shall be for the account of the [RBI].
4.10 The [NHA] shall assist the [RBI] in the complete electrification of the PROJECT. x x x
4.11 Handle the processing and documentation of all sales transactions related to its assets shares from the venture
such as the 3,500 units of permanent housing and the allotted industrial area of 3.2 hectares.
4.12 All advances outside of project costs made by the [RBI] to the [NHA] shall be deducted from the proceeds due
to the [NHA].
4.13 The [NHA] shall be responsible for the acquisition of the Mother Title for the Smokey Mountain and
Reclamation Area within 90 days upon submission of Survey returns to the Land Management Sector. The land
titles to the 40-hectare reclaimed land, the 1.3 hectare commercial area at the Smokey Mountain area and the
constructed units of medium-rise permanent housing units beyond the 3,500 units share of the [NHA] shall be
issued in the name of the [RBI] upon completion of the project. However, the [RBI] shall have the authority to pre-
sell its share as indicated in this agreement.
The final details of the JVA, which will include the construction duration, costs, extent of reclamation, and delivery
timetables, shall be based on the FINAL REPORT which will be contained in a Supplemental Agreement to be
executed later by the parties.
The JVA may be modified or revised by written agreement between the NHA and RBI specifying the clauses to be
revised or modified and the corresponding amendments.
If the Project is revoked or terminated by the Government through no fault of RBI or by mutual agreement, the
Government shall compensate RBI for its actual expenses incurred in the Project plus a reasonable rate of return
not exceeding that stated in the feasibility study and in the contract as of the date of such revocation, cancellation,
or termination on a schedule to be agreed upon by both parties.
As a preliminary step in the project implementation, consultations and dialogues were conducted with the settlers of
the Smokey Mountain Dumpsite Area. At the same time, DENR started processing the application for the
Environmental Clearance Certificate (ECC) of the SMDRP. As a result however of the consultative dialogues, public
hearings, the report on the on-site field conditions, the Environmental Impact Statement (EIS) published on April 29
and May 12, 1993 as required by the Environmental Management Bureau of DENR, the evaluation of the DENR,
and the recommendations from other government agencies, it was discovered that design changes and additional
work have to be undertaken to successfully implement the Project.
21

Thus, on February 21, 1994, the parties entered into another agreement denominated as the Amended and
Restated Joint Venture Agreement
22
(ARJVA) which delineated the different phases of the Project. Phase I of the
Project involves the construction of temporary housing units for the current residents of the Smokey Mountain
dumpsite, the clearing and leveling-off of the dumpsite, and the construction of medium-rise low-cost housing units
at the cleared and leveled dumpsite.
23
Phase II of the Project involves the construction of an incineration area for the
on-site disposal of the garbage at the dumpsite.
24
The enabling component or consideration for Phase I of the
Project was increased from 40 hectares of reclaimed lands across R-10 to 79 hectares.
25
The revision also provided
for the enabling component for Phase II of 119 hectares of reclaimed lands contiguous to the 79 hectares of
reclaimed lands for Phase I.
26
Furthermore, the amended contract delineated the scope of works and the terms and
conditions of Phases I and II, thus:
The PROJECT shall consist of Phase I and Phase II.
Phase I shall involve the following:
a. the construction of 2,992 units of temporary housing for the affected residents while clearing and
development of Smokey Mountain [are] being undertaken
b. the clearing of Smokey Mountain and the subsequent construction of 3,520 units of medium rise housing
and the development of the industrial/commercial site within the Smokey Mountain area
c. the reclamation and development of a 79 hectare area directly across Radial Road 10 to serve as the
enabling component of Phase I
Phase II shall involve the following:
a. the construction and operation of an incinerator plant that will conform to the emission standards of the
DENR
b. the reclamation and development of 119-hectare area contiguous to that to be reclaimed under Phase I to
serve as the enabling component of Phase II.
Under the ARJVA, RBI shall construct 2,992 temporary housing units, a reduction from 3,500 units under the
JVA.
27
However, it was required to construct 3,520 medium-rise low-cost permanent housing units instead of 3,500
units under the JVA. There was a substantial change in the design of the permanent housing units such that a "loft
shall be incorporated in each unit so as to increase the living space from 20 to 32 square meters. The additions and
changes in the Original Project Component are as follows:
ORIGINAL CHANGES/REVISIONS
1. TEMPORARY HOUSING
Wood/Plywood, ga. 31 G.I. Concrete/Steel Frame Structure Sheet usable life of 3 years, gauge 26
G.I. roofing sheets future 12 SM floor area. use as permanent structures for factory and warehouses
mixed 17 sm & 12 sm floor area.
2. MEDIUM RISE MASS
HOUSING
Box type precast Shelter Conventional and precast component 20 square meter concrete structures,
32 square floor area with 2.4 meter meter floor area with loft floor height; bare type, 160 units/
(sleeping quarter) 3.6 m. floor building. height, painted and improved
architectural faade, 80 units/building.
3. MITIGATING MEASURES
3.1 For reclamation work Use of clean dredgefill material below the MLLW and SM material mixed
with dredgefill above MLLW.
a. 100% use of Smokey Mountain material as dredgefill Use of Steel Sheet Piles needed for
longer depth of embedment.
b. Concrete Sheet Piles short depth of embedment
c. Silt removal approximately Need to remove more than 3.0
1.0 meter only meters of silt after sub-soil investigation.
28

These material and substantial modifications served as justifications for the increase in the share of RBI
from 40 hectares to 79 hectares of reclaimed land.
Under the JVA, the specific costs of the Project were not stipulated but under the ARJVA, the stipulated cost
for Phase I was pegged at six billion six hundred ninety-three million three hundred eighty-seven thousand
three hundred sixty-four pesos (PhP 6,693,387,364).
In his February 10, 1994 Memorandum, the Chairperson of the SMDRP EXECOM submitted the ARJVA for
approval by the OP. After review of said agreement, the OP directed that certain terms and conditions of the
ARJVA be further clarified or amended preparatory to its approval. Pursuant to the Presidents directive, the
parties reached an agreement on the clarifications and amendments required to be made on the ARJVA.
On August 11, 1994, the NHA and RBI executed an Amendment To the Amended and Restated Joint
Venture Agreement (AARJVA)
29
clarifying certain terms and condition of the ARJVA, which was submitted to
President Ramos for approval, to wit:
Phase II shall involve the following:
a. the construction and operation of an incinerator plant that will conform to the emission standards
of the DENR
b. the reclamation and development of 119-hectare area contiguous to that to be reclaimed under
Phase I to serve as the enabling component of Phase II, the exact size and configuration of which
shall be approved by the SMDRP Committee
30

Other substantial amendments are the following:
4. Paragraph 2.05 of Article II of the ARJVA is hereby amended to read as follows:
2.05. The DEVELOPER shall reclaim seventy nine (79) hectares of the Manila Bay area directly across
Radial Road 10 (R-10) to serve as payment to the DEVELOPER as its asset share for Phase I and to
develop such land into commercial area with port facilities; provided, that the port plan shall be integrated
with the Philippine Port Authoritys North Harbor plan for the Manila Bay area and provided further, that the
final reclamation and port plan for said reclaimed area shall be submitted for approval by the Public Estates
Authority and the Philippine Ports Authority, respectively: provided finally, that subject to par. 2.02 above,
actual reclamation work may commence upon approval of the final reclamation plan by the Public Estates
Authority.
x x x x
9. A new paragraph to be numbered 5.05 shall be added to Article V of the ARJVA, and shall read as
follows:
5.05. In the event this Agreement is revoked, cancelled or terminated by the AUTHORITY through no fault of the
DEVELOPER, the AUTHORITY shall compensate the DEVELOPER for the value of the completed portions of, and
actual expenditures on the PROJECT plus a reasonable rate of return thereon, not exceeding that stated in the Cost
Estimates of Items of Work previously approved by the SMDRP Executive Committee and the AUTHORITY and
stated in this Agreement, as of the date of such revocation, cancellation, or termination, on a schedule to be agreed
upon by the parties, provided that said completed portions of Phase I are in accordance with the approved FINAL
REPORT.
Afterwards, President Ramos issued Proclamation No. 465 dated August 31, 1994
31
increasing the proposed area
for reclamation across R-10 from 40 hectares to 79 hectares,
32
to wit:
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by virtue of the powers
vested in me by the law, and as recommended by the SMDRP Executive Committee, do hereby authorize the
increase of the area of foreshore or submerged lands of Manila Bay to be reclaimed, as previously authorized under
Proclamation No. 39 (s. 1992) and Memorandum Order No. 415 (s. 1992), from Four Hundred Thousand (400,000)
square meters, more or less, to Seven Hundred Ninety Thousand (790,000) square meters, more or less.
On September 1, 1994, pursuant to Proclamation No. 39, the DENR issued Special Patent No. 3591 conveying in
favor of NHA an area of 211,975 square meters covering the Smokey Mountain Dumpsite.
In its September 7, 1994 letter to the EXECOM, the OP through then Executive Secretary Teofisto T. Guingona, Jr.,
approved the ARJVA as amended by the AARJVA.
On September 8, 1994, the DENR issued Special Patent 3592 pursuant to Proclamation No. 39, conveying in favor
of NHA a 401,485-square meter area.
On September 26, 1994, the NHA, RBI, Home Insurance and Guaranty Corporation (HIGC), now known as the
Home Guaranty Corporation, and the Philippine National Bank (PNB)
33
executed the Smokey Mountain Asset Pool
Formation Trust Agreement (Asset Pool Agreement).
34
Thereafter, a Guaranty Contract was entered into by NHA,
RBI, and HIGC.
On June 23, 1994, the Legislature passed the Clean Air Act.
35
The Act made the establishment of an incinerator
illegal and effectively barred the implementation of the planned incinerator project under Phase II. Thus, the off-site
disposal of the garbage at the Smokey Mountain became necessary.
36

The land reclamation was completed in August 1996.
37

Sometime later in 1996, pursuant likewise to Proclamation No. 39, the DENR issued Special Patent No. 3598
conveying in favor of NHA an additional 390,000 square meter area.
During the actual construction and implementation of Phase I of the SMDRP, the Inter-Agency Technical Committee
found and recommended to the EXECOM on December 17, 1997 that additional works were necessary for the
completion and viability of the Project. The EXECOM approved the recommendation and so, NHA instructed RBI to
implement the change orders or necessary works.
38

Such necessary works comprised more than 25% of the original contract price and as a result, the Asset Pool
incurred direct and indirect costs. Based on C1 12 A of the Implementing Rules and Regulations of PD 1594, a
supplemental agreement is required for "all change orders and extra work orders, the total aggregate cost of which
being more than twenty-five (25%) of the escalated original contract price."
The EXECOM requested an opinion from the Department of Justice (DOJ) to determine whether a bidding was
required for the change orders and/or necessary works. The DOJ, through DOJ Opinion Nos. 119 and 155 dated
August 26, 1993 and November 12, 1993, opined that "a rebidding, pursuant to the aforequoted provisions of the
implementing rules (referring to PD 1594) would not be necessary where the change orders inseparable from the
original scope of the project, in which case, a negotiation with the incumbent contractor may be allowed."
Thus, on February 19, 1998, the EXECOM issued a resolution directing NHA to enter into a supplemental
agreement covering said necessary works.
On March 20, 1998, the NHA and RBI entered into a Supplemental Agreement covering the aforementioned
necessary works and submitted it to the President on March 24, 1998 for approval.
Outgoing President Ramos decided to endorse the consideration of the Supplemental Agreement to incoming
President Joseph E. Estrada. On June 30, 1998, Estrada became the 13th Philippine President.
However, the approval of the Supplemental Agreement was unacted upon for five months. As a result, the utilities
and the road networks were constructed to cover only the 79-hectare original enabling component granted under the
ARJVA. The 220-hectare extension of the 79-hectare area was no longer technically feasible. Moreover, the
financial crises and unreliable real estate situation made it difficult to sell the remaining reclaimed lots. The
devaluation of the peso and the increase in interest cost led to the substantial increase in the cost of reclamation.
On August 1, 1998, the NHA granted RBIs request to suspend work on the SMDRP due to "the delay in the
approval of the Supplemental Agreement, the consequent absence of an enabling component to cover the cost of
the necessary works for the project, and the resulting inability to replenish the Asset Pool funds partially used for the
completion of the necessary works."
39

As of August 1, 1998 when the project was suspended, RBI had "already accomplished a portion of the necessary
works and change orders which resulted in [RBI] and the Asset Pool incurring advances for direct and indirect cost
which amount can no longer be covered by the 79-hectare enabling component under the ARJVA."
40

Repeated demands were made by RBI in its own capacity and on behalf of the asset pool on NHA for payment for
the advances for direct and indirect costs subject to NHA validation.
In November 1998, President Estrada issued Memorandum Order No. 33 reconstituting the SMDRP EXECOM and
further directed it to review the Supplemental Agreement and submit its recommendation on the completion of the
SMDRP.
The reconstituted EXECOM conducted a review of the project and recommended the amendment of the March 20,
1998 Supplemental Agreement "to make it more feasible and to identify and provide new sources of funds for the
project and provide for a new enabling component to cover the payment for the necessary works that cannot be
covered by the 79-hectare enabling component under the ARJVA."
41

The EXECOM passed Resolution Nos. 99-16-01 and 99-16-02
42
which approved the modification of the
Supplemental Agreement, to wit:
a) Approval of 150 hectares additional reclamation in order to make the reclamation feasible as part of the
enabling component.
b) The conveyance of the 15-hectare NHA Vitas property (actually 17 hectares based on surveys) to the
SMDRP Asset Pool.
c) The inclusion in the total development cost of other additional, necessary and indispensable infrastructure
works and the revision of the original cost stated in the Supplemental Agreement dated March 20, 1998 from
PhP 2,953,984,941.40 to PhP 2,969,134,053.13.
d) Revision in the sharing agreement between the parties.
In the March 23, 2000 OP Memorandum, the EXECOM was authorized to proceed and complete the SMDRP
subject to certain guidelines and directives.
After the parties in the case at bar had complied with the March 23, 2000 Memorandum, the NHA November 9,
2000 Resolution No. 4323 approved "the conveyance of the 17-hectare Vitas property in favor of the existing or a
newly created Asset Pool of the project to be developed into a mixed commercial-industrial area, subject to certain
conditions."
On January 20, 2001, then President Estrada was considered resigned. On the same day, President Gloria M.
Arroyo took her oath as the 14th President of the Philippines.
As of February 28, 2001, "the estimated total project cost of the SMDRP has reached P8.65 billion comprising of
P4.78 billion in direct cost and P3.87 billion in indirect cost,"
43
subject to validation by the NHA.
On August 28, 2001, NHA issued Resolution No. 4436 to pay for "the various necessary works/change orders to
SMDRP, to effect the corresponding enabling component consisting of the conveyance of the NHAs Vitas Property
and an additional 150-hectare reclamation area" and to authorize the release by NHA of PhP 480 million "as
advance to the project to make the Permanent Housing habitable, subject to reimbursement from the proceeds of
the expanded enabling component."
44

On November 19, 2001, the Amended Supplemental Agreement (ASA) was signed by the parties, and on February
28, 2002, the Housing and Urban Development Coordinating Council (HUDCC) submitted the agreement to the OP
for approval.
In the July 20, 2002 Cabinet Meeting, HUDCC was directed "to submit the works covered by the PhP 480 million
[advance to the Project] and the ASA to public bidding."
45
On August 28, 2002, the HUDCC informed RBI of the
decision of the Cabinet.
In its September 2, 2002 letter to the HUDCC Chairman, RBI lamented the decision of the government "to bid out
the remaining works under the ASA thereby unilaterally terminating the Project with RBI and all the agreements
related thereto." RBI demanded the payment of just compensation "for all accomplishments and costs incurred in
developing the SMDRP plus a reasonable rate of return thereon pursuant to Section 5.05 of the ARJVA and Section
6.2 of the ASA."
46

Consequently, the parties negotiated the terms of the termination of the JVA and other subsequent agreements.
On August 27, 2003, the NHA and RBI executed a Memorandum of Agreement (MOA) whereby both parties agreed
to terminate the JVA and other subsequent agreements, thus:
1. TERMINATION
1.1 In compliance with the Cabinet directive dated 30 July 2002 to submit the works covered by the
P480 Million and the ASA to public bidding, the following agreements executed by and between the
NHA and the DEVELOPER are hereby terminated, to wit:
a. Joint Venture Agreement (JVA) dated 19 March 1993
b. Amended and Restated Joint Venture Agreement (ARJVA) dated 21 February 1994
c. Amendment and Restated Joint Venture Agreement dated 11 August 1994
d. Supplemental Agreement dated 24 March 1998
e. Amended Supplemental Agreement (ASA) dated 19 November 2001.
x x x x
5. SETTLEMENT OF CLAIMS
5.1 Subject to the validation of the DEVELOPERs claims, the NHA hereby agrees to initially compensate
the Developer for the abovementioned costs as follows:
a. Direct payment to DEVELOPER of the amounts herein listed in the following manner:
a.1 P250 Million in cash from the escrow account in accordance with Section 2 herewith;
a.2 Conveyance of a 3 hectare portion of the Vitas Industrial area immediately after joint
determination of the appraised value of the said property in accordance with the procedure
herein set forth in the last paragraph of Section 5.3. For purposes of all payments to be
made through conveyance of real properties, the parties shall secure from the NHA Board of
Directors all documents necessary and sufficient to effect the transfer of title over the
properties to be conveyed to RBI, which documents shall be issued within a reasonable
period.
5.2 Any unpaid balance of the DEVELOPERS claims determined after the validation process referred to in
Section 4 hereof, may be paid in cash, bonds or through the conveyance of properties or any combination
thereof. The manner, terms and conditions of payment of the balance shall be specified and agreed upon
later within a period of three months from the time a substantial amount representing the unpaid balance has
been validated pursuant hereto including, but not limited to the programming of quarterly cash payments to
be sourced by the NHA from its budget for debt servicing, from its income or from any other sources.
5.3 In any case the unpaid balance is agreed to be paid, either partially or totally through conveyance of
properties, the parties shall agree on which properties shall be subject to conveyance. The NHA and
DEVELOPER hereby agree to determine the valuation of the properties to be conveyed by getting the
average of the appraisals to be made by two (2) mutually acceptable independent appraisers.
Meanwhile, respondent Harbour Centre Port Terminal, Inc. (HCPTI) entered into an agreement with the asset pool
for the development and operations of a port in the Smokey Mountain Area which is a major component of SMDRP
to provide a source of livelihood and employment for Smokey Mountain residents and spur economic growth. A
Subscription Agreement was executed between the Asset Pool and HCPTI whereby the asset pool subscribed to
607 million common shares and 1,143 million preferred shares of HCPTI. The HCPTI preferred shares had a
premium and penalty interest of 7.5% per annum and a mandatory redemption feature. The asset pool paid the
subscription by conveying to HCPTI a 10-hectare land which it acquired from the NHA being a portion of the
reclaimed land of the SMDRP. Corresponding certificates of titles were issued to HCPTI, namely: TCT Nos. 251355,
251356, 251357, and 251358.
Due to HCPTIs failure to obtain a license to handle foreign containerized cargo from PPA, it suffered a net income
loss of PhP 132,621,548 in 2002 and a net loss of PhP 15,540,063 in 2003. The Project Governing Board of the
Asset Pool later conveyed by way of dacion en pago a number of HCPTI shares to RBI in lieu of cash payment for
the latters work in SMDRP.
On August 5, 2004, former Solicitor General Francisco I. Chavez, filed the instant petition which impleaded as
respondents the NHA, RBI, R-II Holdings, Inc. (RHI), HCPTI, and Mr. Reghis Romero II, raising constitutional
issues.
The NHA reported that thirty-four (34) temporary housing structures and twenty-one (21) permanent housing
structures had been turned over by respondent RBI. It claimed that 2,510 beneficiary-families belonging to the
poorest of the poor had been transferred to their permanent homes and benefited from the Project.
The Issues
The grounds presented in the instant petition are:
I
Neither respondent NHA nor respondent R-II builders may validly reclaim foreshore and submerged land because:
1. Respondent NHA and R-II builders were never granted any power and authority to reclaim lands of the
public domain as this power is vested exclusively with the PEA.
2. Even assuming that respondents NHA and R-II builders were given the power and authority to reclaim
foreshore and submerged land, they were never given the authority by the denr to do so.
II
Respondent R-II builders cannot acquire the reclaimed foreshore and submerged land areas because:
1. The reclaimed foreshore and submerged parcels of land are inalienable public lands which are beyond
the commerce of man.
2. Assuming arguendo that the subject reclaimed foreshore and submerged parcels of land were already
declared alienable lands of the public domain, respondent R-II builders still could not acquire the same
because there was never any declaration that the said lands were no longer needed for public use.
3. Even assuming that the subject reclaimed lands are alienable and no longer needed for public use,
respondent R-II builders still cannot acquire the same because there was never any law authorizing the sale
thereof.
4. There was never any public bidding awarding ownership of the subject land to respondent R-II builders.
5. Assuming that all the requirements for a valid transfer of alienable public had been performed, respondent
R-II Builders, being private corporation is nonetheless expresslyprohibited by the Philippine Constitution to
acquire lands of the public domain.
III
Respondent harbour, being a private corporation whose majority stocks are owned and controlled by respondent
Romeros Corporations R-II builders and R-II Holdings is disqualified from being a transferee of public land.
IV
Respondents must be compelled to disclose all information related to the smokey mountain development and
reclamation project.
The Courts Ruling
Before we delve into the substantive issues raised in this petition, we will first deal with several procedural matters
raised by respondents.
Whether petitioner has the requisite locus standi to file this case
Respondents argue that petitioner Chavez has no legal standing to file the petition.
Only a person who stands to be benefited or injured by the judgment in the suit or entitled to the avails of the suit
can file a complaint or petition.
47
Respondents claim that petitioner is not a proper party-in-interest as he was unable
to show that "he has sustained or is in immediate or imminent danger of sustaining some direct and personal injury
as a result of the execution and enforcement of the assailed contracts or agreements."
48
Moreover, they assert that
not all government contracts can justify a taxpayers suit especially when no public funds were utilized in
contravention of the Constitution or a law.
We explicated in Chavez v. PCGG
49
that in cases where issues of transcendental public importance are presented,
there is no necessity to show that petitioner has experienced or is in actual danger of suffering direct and personal
injury as the requisite injury is assumed. We find our ruling in Chavez v. PEA
50
as conclusive authority on locus
standi in the case at bar since the issues raised in this petition are averred to be in breach of the fair diffusion of the
countrys natural resources and the constitutional right of a citizen to information which have been declared to be
matters of transcendental public importance. Moreover, the pleadings especially those of respondents readily reveal
that public funds have been indirectly utilized in the Project by means of Smokey Mountain Project Participation
Certificates (SMPPCs) bought by some government agencies.
Hence, petitioner, as a taxpayer, is a proper party to the instant petition before the court.
Whether petitioners direct recourse to this Court was proper
Respondents are one in asserting that petitioner circumvents the principle of hierarchy of courts in his petition.
Judicial hierarchy was made clear in the case of People v. Cuaresma, thus:
There is after all a hierarchy of courts. That hierarchy is determinative of the venue 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 Courts 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 Courts time and attention
which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the
Courts docket.
51
x x x
The OSG claims that the jurisdiction over petitions for prohibition and mandamus is concurrent with other lower
courts like the Regional Trial Courts and the Court of Appeals. Respondent NHA argues that the instant petition is
misfiled because it does not introduce special and important reasons or exceptional and compelling circumstances
to warrant direct recourse to this Court and that the lower courts are more equipped for factual issues since this
Court is not a trier of facts. Respondents RBI and RHI question the filing of the petition as this Court should not be
unduly burdened with "repetitions, invocation of jurisdiction over constitutional questions it had previously resolved
and settled."
In the light of existing jurisprudence, we find paucity of merit in respondents postulation.
While direct recourse to this Court is generally frowned upon and discouraged, we have however ruled in Santiago
v. Vasquez that such resort to us may be allowed in certain situations, wherein this Court ruled that petitions for
certiorari, prohibition, or mandamus, though cognizable by other courts, may directly be filed with us if "the redress
desired cannot be obtained in the appropriate courts or where exceptional compelling circumstances justify
availment of a remedy within and calling for the exercise of [this Courts] primary jurisdiction."
52
1avvphi 1
The instant petition challenges the constitutionality and legality of the SMDRP involving several hectares of
government land and hundreds of millions of funds of several government agencies. Moreover, serious
constitutional challenges are made on the different aspects of the Project which allegedly affect the right of Filipinos
to the distribution of natural resources in the country and the right to information of a citizenmatters which have
been considered to be of extraordinary significance and grave consequence to the public in general. These
concerns in the instant action compel us to turn a blind eye to the judicial structure meant to provide an orderly
dispensation of justice and consider the instant petition as a justified deviation from an established precept.
Core factual matters undisputed
Respondents next challenge the projected review by this Court of the alleged factual issues intertwined in the issues
propounded by petitioner. They listed a copious number of questions seemingly factual in nature which would make
this Court a trier of facts.
53

We find the position of respondents bereft of merit.
For one, we already gave due course to the instant petition in our January 18, 2005 Resolution.
54
In said issuance,
the parties were required to make clear and concise statements of established facts upon which our decision will be
based.
Secondly, we agree with petitioner that there is no necessity for us to make any factual findings since the facts
needed to decide the instant petition are well established from the admissions of the parties in their pleadings
55
and
those derived from the documents appended to said submissions. Indeed, the core facts which are the subject
matter of the numerous issues raised in this petition are undisputed.
Now we will tackle the issues that prop up the instant petition.
Since petitioner has cited our decision in PEA as basis for his postulations in a number of issues, we first resolve the
queryis PEA applicable to the case at bar?
A juxtaposition of the facts in the two cases constrains the Court to rule in the negative.
The Court finds that PEA is not a binding precedent to the instant petition because the facts in said case are
substantially different from the facts and circumstances in the case at bar, thus:
(1) The reclamation project in PEA was undertaken through a JVA entered into between PEA and AMARI.
The reclamation project in the instant NHA case was undertaken by the NHA, a national government agency
in consultation with PEA and with the approval of two Philippine Presidents;
(2) In PEA, AMARI and PEA executed a JVA to develop the Freedom Islands and reclaim submerged areas
without public bidding on April 25, 1995. In the instant NHA case, the NHA and RBI executed a JVA after
RBI was declared the winning bidder on August 31, 1992 as the JVA partner of the NHA in the SMDRP after
compliance with the requisite public bidding.
(3) In PEA, there was no law or presidential proclamation classifying the lands to be reclaimed as alienable
and disposal lands of public domain. In this RBI case, MO 415 of former President Aquino and Proclamation
No. 39 of then President Ramos, coupled with Special Patents Nos. 3591, 3592, and 3598, classified the
reclaimed lands as alienable and disposable;
(4) In PEA, the Chavez petition was filed before the amended JVA was executed by PEA and AMARI.1avvphi 1 In
this NHA case, the JVA and subsequent amendments were already substantially implemented.
Subsequently, the Project was terminated through a MOA signed on August 27, 2003. Almost one year later
on August 5, 2004, the Chavez petition was filed;
(5) In PEA, AMARI was considered to be in bad faith as it signed the amended JVA after the Chavez petition
was filed with the Court and after Senate Committee Report No. 560 was issued finding that the subject
lands are inalienable lands of public domain. In the instant petition, RBI and other respondents are
considered to have signed the agreements in good faith as the Project was terminated even before the
Chavez petition was filed;
(6) The PEA-AMARI JVA was executed as a result of direct negotiation between the parties and not in
accordance with the BOT Law. The NHA-RBI JVA and subsequent amendments constitute a BOT contract
governed by the BOT Law; and
(7) In PEA, the lands to be reclaimed or already reclaimed were transferred to PEA, a government entity
tasked to dispose of public lands under Executive Order No. (EO) 525.
56
In the NHA case, the reclaimed
lands were transferred to NHA, a government entity NOT tasked to dispose of public land and therefore said
alienable lands were converted to patrimonial lands upon their transfer to NHA.
57

Thus the PEA Decision
58
cannot be considered an authority or precedent to the instant case. The principle of stare
decisis
59
has no application to the different factual setting of the instant case.
We will now dwell on the substantive issues raised by petitioner. After a perusal of the grounds raised in this
petition, we find that most of these issues are moored on our PEA Decision which, as earlier discussed, has no
application to the instant petition. For this reason alone, the petition can already be rejected. Nevertheless, on the
premise of the applicability of said decision to the case at bar, we will proceed to resolve said issues.
First Issue: Whether respondents NHA and RBI have been granted
the power and authority to reclaim lands of the public domain as
this power is vested exclusively in PEA as claimed by petitioner
Petitioner contends that neither respondent NHA nor respondent RBI may validly reclaim foreshore and submerged
land because they were not given any power and authority to reclaim lands of the public domain as this power was
delegated by law to PEA.
Asserting that existing laws did not empower the NHA and RBI to reclaim lands of public domain, the Public Estates
Authority (PEA), petitioner claims, is "the primary authority for the reclamation of all foreshore and submerged lands
of public domain," and relies on PEA where this Court held:
Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be primarily responsible for integrating,
directing, and coordinating all reclamation projects for and on behalf of the National Government." The same section
also states that "[A]ll reclamation projects shall be approved by the President upon recommendation of the PEA,
and shall be undertaken by the PEA or through a proper contract executed by it with any person or entity; x x x."
Thus, under EO No. 525, in relation to PD No. 3-A and PD No. 1084, PEA became the primary implementing
agency of the National Government to reclaim foreshore and submerged lands of the public domain. EO No. 525
recognized PEA as the government entity "to undertake the reclamation of lands and ensure their maximum
utilization in promoting public welfare and interests." Since large portions of these reclaimed lands would obviously
be needed for public service, there must be a formal declaration segregating reclaimed lands no longer needed for
public service from those still needed for public service.
60

In the Smokey Mountain Project, petitioner clarifies that the reclamation was not done by PEA or through a contract
executed by PEA with another person or entity but by the NHA through an agreement with respondent RBI.
Therefore, he concludes that the reclamation is null and void.
Petitioners contention has no merit.
EO 525 reads:
Section 1. The Public Estates Authority (PEA) shall be primarily responsible for integrating, directing, and
coordinating all reclamation projects for and on behalf of the National Government. All reclamation projects shall be
approved by the President upon recommendation of the PEA, and shall be undertaken by the PEA or through a
proper contract executed by it with any person or entity; Provided, that, reclamation projects of any national
government agency or entity authorized under its charter shall be undertaken in consultation with the PEA upon
approval of the President. (Emphasis supplied.)
The aforequoted provision points to three (3) requisites for a legal and valid reclamation project, viz:
(1) approval by the President;
(2) favorable recommendation of PEA; and
(3) undertaken by any of the following:
a. by PEA
b. by any person or entity pursuant to a contract it executed with PEA
c. by the National Government agency or entity authorized under its charter to reclaim lands subject
to consultation with PEA
Without doubt, PEA under EO 525 was designated as the agency primarily responsible for integrating, directing, and
coordinating all reclamation projects. Primarily means "mainly, principally, mostly, generally." Thus, not all
reclamation projects fall under PEAs authority of supervision, integration, and coordination. The very charter of
PEA, PD 1084,
61
does not mention that PEA has the exclusive and sole power and authority to reclaim lands of
public domain. EO 525 even reveals the exceptionreclamation projects by a national government agency or entity
authorized by its charter to reclaim land. One example is EO 405 which authorized the Philippine Ports Authority
(PPA) to reclaim and develop submerged areas for port related purposes. Under its charter, PD 857, PPA has the
power "to reclaim, excavate, enclose or raise any of the lands" vested in it.
Thus, while PEA under PD 1084 has the power to reclaim land and under EO 525 is primarily responsible for
integrating, directing and coordinating reclamation projects, such authority is NOT exclusive and such power to
reclaim may be granted or delegated to another government agency or entity or may even be undertaken by the
National Government itself, PEA being only an agency and a part of the National Government.
Let us apply the legal parameters of Sec. 1, EO 525 to the reclamation phase of SMDRP. After a scrutiny of the
facts culled from the records, we find that the project met all the three (3) requirements, thus:
1. There was ample approval by the President of the Philippines; as a matter of fact, two Philippine Presidents
approved the same, namely: Presidents Aquino and Ramos. President Aquino sanctioned the reclamation of both
the SMDRP housing and commercial-industrial sites through MO 415 (s. 1992) which approved the SMDRP under
Sec. 1 and directed NHA "x x x to implement the Smokey Mountain Development Plan and Reclamation of the Area
across R-10 through a private sector joint venture scheme at the least cost to government" under Section 3.
For his part, then President Ramos issued Proclamation No. 39 (s. 1992) which expressly reserved the Smokey
Mountain Area and the Reclamation Area for a housing project and related commercial/industrial development.
Moreover, President Ramos issued Proclamation No. 465 (s. 1994) which authorized the increase of the
Reclamation Area from 40 hectares of foreshore and submerged land of the Manila Bay to 79 hectares. It speaks of
the reclamation of 400,000 square meters, more or less, of the foreshore and submerged lands of Manila Bay
adjoining R-10 as an enabling component of the SMDRP.
As a result of Proclamations Nos. 39 and 465, Special Patent No. 3591 covering 211,975 square meters of Smokey
Mountain, Special Patent No. 3592 covering 401,485 square meters of reclaimed land, and Special Patent No. 3598
covering another 390,000 square meters of reclaimed land were issued by the DENR.
Thus, the first requirement of presidential imprimatur on the SMDRP has been satisfied.
2. The requisite favorable endorsement of the reclamation phase was impliedly granted by PEA. President Aquino
saw to it that there was coordination of the project with PEA by designating its general manager as member of the
EXECOM tasked to supervise the project implementation. The assignment was made in Sec. 2 of MO 415 which
provides:
Section 2. An Executive Committee is hereby created to oversee the implementation of the Plan, chaired by the
NCR-CORD, with the heads of the following agencies as members: The National Housing Authority, the City of
Manila, the Department of Public Works and Highways, the Public Estates Authority, the Philippine Ports Authority,
the Department of Environment and Natural Resources and the Development Bank of the Philippines. (Emphasis
supplied.)
The favorable recommendation by PEA of the JVA and subsequent amendments were incorporated as part of the
recommendations of the EXECOM created under MO 415. While there was no specific recommendation on the
SMDRP emanating solely from PEA, we find that the approbation of the Project and the land reclamation as an
essential component by the EXECOM of which PEA is a member, and its submission of the SMDRP and the
agreements on the Project to the President for approval amply met the second requirement of EO 525.
3. The third element was also presentthe reclamation was undertaken either by PEA or any person or entity under
contract with PEA or by the National Government agency or entity authorized under its charter to reclaim lands
subject to consultation with PEA. It cannot be disputed that the reclamation phase was not done by PEA or any
person or entity under contract with PEA. However, the reclamation was implemented by the NHA, a national
government agency whose authority to reclaim lands under consultation with PEA is derived from its charterPD
727 and other pertinent lawsRA 7279
62
and RA 6957 as amended by RA 7718.
While the authority of NHA to reclaim lands is challenged by petitioner, we find that the NHA had more than enough
authority to do so under existing laws. While PD 757, the charter of NHA, does not explicitly mention "reclamation"
in any of the listed powers of the agency, we rule that the NHA has an implied power to reclaim land as this is vital
or incidental to effectively, logically, and successfully implement an urban land reform and housing program
enunciated in Sec. 9 of Article XIII of the 1987 Constitution.
Basic in administrative law is the doctrine that a government agency or office has express and implied powers
based on its charter and other pertinent statutes. Express powers are those powers granted, allocated, and
delegated to a government agency or office by express provisions of law. On the other hand, implied powers are
those that can be inferred or are implicit in the wordings of the law
63
or conferred by necessary or fair implication in
the enabling act.
64
In Angara v. Electoral Commission, the Court clarified and stressed that when a general grant of
power is conferred or duty enjoined, every particular power necessary for the exercise of the one or the performance
of the other is also conferred by necessary implication.
65
It was also explicated that when the statute does not
specify the particular method to be followed or used by a government agency in the exercise of the power vested in
it by law, said agency has the authority to adopt any reasonable method to carry out its functions.
66

The power to reclaim on the part of the NHA is implicit from PD 757, RA 7279, MO 415, RA 6957, and PD 3-A,
67
viz:
1. NHAs power to reclaim derived from PD 757 provisions:
a. Sec. 3 of PD 757 implies that reclamation may be resorted to in order to attain the goals of NHA:
Section 3. Progress and Objectives. The Authority shall have the following purposes and objectives:
x x x x
b) To undertake housing, development, resettlement or other activities as would enhance the provision of
housing to every Filipino;
c) To harness and promote private participation in housing ventures in terms of capital expenditures, land,
expertise, financing and other facilities for the sustained growth of the housing industry. (Emphasis
supplied.)
Land reclamation is an integral part of the development of resources for some of the housing requirements of the
NHA. Private participation in housing projects may also take the form of land reclamation.
b. Sec. 5 of PD 757 serves as proof that the NHA, as successor of the Tondo Foreshore Development Authority
(TFDA), has the power to reclaim, thus:
Section 5. Dissolution of Existing Housing Agencies. The People's Homesite and Housing Corporation (PHHC), the
Presidential Assistant on Housing Resettlement Agency (PAHRA), the Tondo Foreshore Development Authority
(TFDA), the Central Institute for the Training and Relocation of Urban Squatters (CITRUS), the Presidential
Committee for Housing and Urban Resettlement (PRECHUR), Sapang Palay Development Committee, Inter-
Agency Task Force to Undertake the Relocation of Families in Barrio Nabacaan, Villanueva, Misamis Oriental and
all other existing government housing and resettlement agencies, task forces and ad-hoc committees, are hereby
dissolved. Their powers and functions, balance of appropriations, records, assets, rights, and choses in action, are
transferred to, vested in, and assumed by the Authority. x x x (Emphasis supplied.)
PD 570 dated October 30, 1974 created the TFDA, which defined its objectives, powers, and functions. Sec. 2
provides:
Section 2. Objectives and Purposes. The Authority shall have the following purposes and objectives:
a) To undertake all manner of activity, business or development projects for the establishment of
harmonious, comprehensive, integrated and healthy living community in the Tondo Foreshoreland and its
resettlement site;
b) To undertake and promote the physical and socio-economic amelioration of the Tondo Foreshore
residents in particular and the nation in general (Emphasis supplied.)
The powers and functions are contained in Sec. 3, to wit:
a) To develop and implement comprehensive and integrated urban renewal programs for the Tondo
Foreshore and Dagat-dagatan lagoon and/or any other additional/alternative resettlement site and to
formulate and enforce general and specific policies for its development which shall ensure reasonable
degree of compliance with environmental standards.
b) To prescribe guidelines and standards for the reservation, conservation and utilization of public lands
covering the Tondo Foreshore land and its resettlement sites;
c) To construct, acquire, own, lease, operate and maintain infrastructure facilities, housing complex, sites
and services;
d) To determine, regulate and supervise the establishment and operation of housing, sites, services and
commercial and industrial complexes and any other enterprises to be constructed or established within the
Tondo Foreshore and its resettlement sites;
e) To undertake and develop, by itself or through joint ventures with other public or private entities, all or any
of the different phases of development of the Tondo Foreshore land and its resettlement sites;
f) To acquire and own property, property-rights and interests, and encumber or otherwise dispose of the
same as it may deem appropriate (Emphasis supplied.)
From the foregoing provisions, it is readily apparent that the TFDA has the explicit power to develop public lands
covering the Tondo foreshore land and any other additional and alternative resettlement sites under letter b, Sec. 3
of PD 570. Since the additional and/or alternative sites adjacent to Tondo foreshore land cover foreshore and
submerged areas, the reclamation of said areas is necessary in order to convert them into a comprehensive and
integrated resettlement housing project for the slum dwellers and squatters of Tondo. Since the powers of TFDA
were assumed by the NHA, then the NHA has the power to reclaim lands in the Tondo foreshore area which covers
the 79-hectare land subject of Proclamations Nos. 39 and 465 and Special Patents Nos. 3592 and 3598.
c. Sec. 6 of PD 757 delineates the functions and powers of the NHA which embrace the authority to reclaim land,
thus:
Sec. 6. Powers and functions of the Authority.The Authority shall have the following powers and functions to be
exercised by the Board in accordance with its established national human settlements plan prepared by the Human
Settlements Commission:
(a) Develop and implement the comprehensive and integrated housing program provided for in Section hereof;
x x x x
(c) Prescribe guidelines and standards for the reservation, conservation and utilization of public lands identified for
housing and resettlement;
x x x x
(e) Develop and undertake housing development and/or resettlement projects through joint ventures or other
arrangements with public and private entities;
x x x x
(k) Enter into contracts whenever necessary under such terms and conditions as it may deem proper and
reasonable;
(l) Acquire property rights and interests and encumber or otherwise dispose the same as it may deem appropriate;
x x x x
(s) Perform such other acts not inconsistent with this Decree, as may be necessary to effect the policies and
objectives herein declared. (Emphasis supplied.)
The NHAs authority to reclaim land can be inferred from the aforequoted provisions. It can make use of public lands
under letter (c) of Sec. 6 which includes reclaimed land as site for its comprehensive and integrated housing
projects under letter (a) which can be undertaken through joint ventures with private entities under letter (e). Taken
together with letter (s) which authorizes NHA to perform such other activities "necessary to effect the policies and
objectives" of PD 757, it is safe to conclude that the NHAs power to reclaim lands is a power that is implied from the
exercise of its explicit powers under Sec. 6 in order to effectively accomplish its policies and objectives under Sec. 3
of its charter. Thus, the reclamation of land is an indispensable component for the development and construction of
the SMDRP housing facilities.
2. NHAs implied power to reclaim land is enhanced by RA 7279.
PD 757 identifies NHAs mandate to "[d]evelop and undertake housing development and/or resettlement projects
through joint ventures or other arrangements with public and private entities."
The power of the NHA to undertake reclamation of land can be inferred from Secs. 12 and 29 of RA 7279, which
provide:
Section 12. Disposition of Lands for Socialized Housing.The National Housing Authority, with respect to lands
belonging to the National Government, and the local government units with respect to other lands within their
respective localities, shall coordinate with each other to formulate and make available various alternative schemes
for the disposition of lands to the beneficiaries of the Program. These schemes shall not be limited to those involving
transfer of ownership in fee simple but shall include lease, with option to purchase, usufruct or such other variations
as the local government units or the National Housing Authority may deem most expedient in carrying out the
purposes of this Act.
x x x x
Section 29. Resettlement.With two (2) years from the effectivity of this Act, the local government units, in
coordination with the National Housing Authority, shall implement the relocation and resettlement of persons living in
danger areas such as esteros, railroad tracks, garbage dumps, riverbanks, shorelines, waterways, and in other
public places as sidewalks, roads, parks, and playgrounds. The local government unit, in coordination with the
National Housing Authority, shall provide relocation or resettlement sites with basic services and facilities and
access to employment and livelihood opportunities sufficient to meet the basic needs of the affected families.
(Emphasis supplied.)
Lands belonging to the National Government include foreshore and submerged lands which can be reclaimed to
undertake housing development and resettlement projects.
3. MO 415 explains the undertaking of the NHA in SMDRP:
WHEREAS, Memorandum Order No. 161-A mandated the National Housing Authority to conduct feasibility studies
and develop low-cost housing projects at the dumpsites of Metro Manila;
WHEREAS, the National Housing Authority has presented a viable Conceptual Plan to convert the Smokey
Mountain dumpsite into a habitable housing project inclusive of the reclamation area across R-10 as enabling
component of the Project;
WHEREAS, the said Plan requires the coordinated and synchronized efforts of the City of Manila and other
government agencies and instrumentalities to ensure effective and efficient implementation;
WHEREAS, the government encourages private sector initiative in the implementation of its projects. (Emphasis
supplied.)
Proceeding from these "whereas" clauses, it is unequivocal that reclamation of land in the Smokey Mountain area is
an essential and vital power of the NHA to effectively implement its avowed goal of developing low-cost housing
units at the Smokey Mountain dumpsites. The interpretation made by no less than the President of the Philippines
as Chief of the Executive Branch, of which the NHA is a part, must necessarily command respect and much weight
and credit.
4. RA 6957 as amended by RA 7718the BOT Lawserves as an exception to PD 1084 and EO 525.
Based on the provisions of the BOT Law and Implementing Rules and Regulations, it is unequivocal that all
government infrastructure agencies like the NHA can undertake infrastructure or development projects using the
contractual arrangements prescribed by the law, and land reclamation is one of the projects that can be resorted to
in the BOT project implementation under the February 10, 1992 Joint Resolution No. 3 of the 8th Congress.
From the foregoing considerations, we find that the NHA has ample implied authority to undertake reclamation
projects.
Even without an implied power to reclaim lands under NHAs charter, we rule that the authority granted to NHA, a
national government agency, by the President under PD 3-A reinforced by EO 525 is more than sufficient statutory
basis for the reclamation of lands under the SMDRP.
PD 3-A is a law issued by then President Ferdinand E. Marcos under his martial law powers on September 23,
1972. It provided that "[t]he provisions of any law to the contrary notwithstanding, the reclamation of areas,
underwater, whether foreshore or inland, shall be limited to the National Government or any person authorized by it
under the proper contract." It repealed, in effect, RA 1899 which previously delegated the right to reclaim lands to
municipalities and chartered cities and revested it to the National Government.
68
Under PD 3-A, "national
government" can only mean the Executive Branch headed by the President. It cannot refer to Congress as it was
dissolved and abolished at the time of the issuance of PD 3-A on September 23, 1972. Moreover, the Executive
Branch is the only implementing arm in the government with the equipment, manpower, expertise, and capability by
the very nature of its assigned powers and functions to undertake reclamation projects. Thus, under PD 3-A, the
Executive Branch through the President can implement reclamation of lands through any of its departments,
agencies, or offices.
Subsequently, on February 4, 1977, President Marcos issued PD 1084 creating the PEA, which was granted,
among others, the power "to reclaim land, including foreshore and submerged areas by dredging, filling or other
means or to acquire reclaimed lands." The PEAs power to reclaim is not however exclusive as can be gleaned from
its charter, as the President retained his power under PD 3-A to designate another agency to reclaim lands.
On February 14, 1979, EO 525 was issued. It granted PEA primary responsibility for integrating, directing, and
coordinating reclamation projects for and on behalf of the National Government although other national government
agencies can be designated by the President to reclaim lands in coordination with the PEA. Despite the issuance of
EO 525, PD 3-A remained valid and subsisting. Thus, the National Government through the President still retained
the power and control over all reclamation projects in the country.
The power of the National Government through the President over reclamation of areas, that is, underwater whether
foreshore or inland, was made clear in EO 543
69
which took effect on June 24, 2006. Under EO 543, PEA was
renamed the Philippine Reclamation Authority (PRA) and was granted the authority to approve reclamation projects,
a power previously reposed in the President under EO 525. EO 543 reads:
Section 1. The power of the President to approve reclamation projects is hereby delegated to the Philippine
Reclamation Authority [formerly PEA], through its governing board, subject to compliance with existing laws and
rules and subject to the condition that reclamation contracts to be executed with any person or entity go through
public bidding.
Section 2. Nothing in the Order shall be construed as diminishing the Presidents authority to modify, amend or
nullify PRAs action.
Section 3. All executive issuances inconsistent with this Executive Order are hereby repealed or amended
accordingly. (Emphasis supplied.)
Sec. 2 of EO 543 strengthened the power of control and supervision of the President over reclamation of lands as
s/he can modify, amend, or nullify the action of PEA (now PRA).
From the foregoing issuances, we conclude that the Presidents delegation to NHA, a national government agency,
to reclaim lands under the SMDRP, is legal and valid, firmly anchored on PD 3-A buttressed by EO 525
notwithstanding the absence of any specific grant of power under its charter, PD 757.
Second Issue: Whether respondents NHA and RBI were given the
power and authority by DENR to reclaim foreshore and submerged
lands
Petitioner Chavez puts forth the view that even if the NHA and RBI were granted the authority to reclaim, they were
not authorized to do so by the DENR.
Again, reliance is made on our ruling in PEA where it was held that the DENRs authority is necessary in order for
the government to validly reclaim foreshore and submerged lands. In PEA, we expounded in this manner:
As manager, conservator and overseer of the natural resources of the State, DENR exercises "supervision and
control over alienable and disposable public lands." DENR also exercises "exclusive jurisdiction on the management
and disposition of all lands of the public domain." Thus, DENR decides whether areas under water, like foreshore or
submerged areas of Manila Bay, should be reclaimed or not. This means that PEA needs authorization from DENR
before PEA can undertake reclamation projects in Manila Bay, or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain. Hence, DENR
decides whether reclaimed lands of PEA should be classified as alienable under Sections 6 and 7 of CA No. 141.
Once DENR decides that the reclaimed lands should be so classified, it then recommends to the President the
issuance of a proclamation classifying the lands as alienable or disposable lands of the public domain open to
disposition. We note that then DENR Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in
compliance with the Revised Administrative Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation of areas under water, while PEA is vested with
the power to undertake the physical reclamation of areas under water, whether directly or through private
contractors. DENR is also empowered to classify lands of the public domain into alienable or disposable lands
subject to the approval of the President. On the other hand, PEA is tasked to develop, sell or lease the reclaimed
alienable lands of the public domain.
70

Despite our finding that PEA is not a precedent to the case at bar, we find after all that under existing laws, the NHA
is still required to procure DENRs authorization before a reclamation project in Manila Bay or in any part of the
Philippines can be undertaken. The requirement applies to PEA, NHA, or any other government agency or office
granted with such power under the law.
Notwithstanding the need for DENR permission, we nevertheless find petitioners position bereft of merit.
The DENR is deemed to have granted the authority to reclaim in the Smokey Mountain Project for the following
reasons:
1. Sec. 17, Art. VII of the Constitution provides that "the President shall have control of all executive departments,
bureaus and offices." The President is assigned the task of seeing to it that all laws are faithfully executed. "Control,"
in administrative law, means "the power of an officer to alter, modify, nullify or set aside what a subordinate officer
has done in the performance of his duties and to substitute the judgment of the former for that of the latter."
71

As such, the President can exercise executive power motu proprio and can supplant the act or decision of a
subordinate with the Presidents own. The DENR is a department in the executive branch under the President, and it
is only an alter ego of the latter. Ordinarily the proposed action and the staff work are initially done by a department
like the DENR and then submitted to the President for approval. However, there is nothing infirm or unconstitutional
if the President decides on the implementation of a certain project or activity and requires said department to
implement it. Such is a presidential prerogative as long as it involves the department or office authorized by law to
supervise or execute the Project. Thus, as in this case, when the President approved and ordered the development
of a housing project with the corresponding reclamation work, making DENR a member of the committee tasked to
implement the project, the required authorization from the DENR to reclaim land can be deemed satisfied. It cannot
be disputed that the ultimate power over alienable and disposable public lands is reposed in the President of the
Philippines and not the DENR Secretary. To still require a DENR authorization on the Smokey Mountain when the
President has already authorized and ordered the implementation of the Project would be a derogation of the
powers of the President as the head of the executive branch. Otherwise, any department head can defy or oppose
the implementation of a project approved by the head of the executive branch, which is patently illegal and
unconstitutional.
In Chavez v. Romulo, we stated that when a statute imposes a specific duty on the executive department, the
President may act directly or order the said department to undertake an activity, thus:
[A]t the apex of the entire executive officialdom is the President. Section 17, Article VII of the Constitution specifies
[her] power as Chief executive departments, bureaus and offices. [She] shall ensure that the laws be faithfully
executed. As Chief Executive, President Arroyo holds the steering wheel that controls the course of her government.
She lays down policies in the execution of her plans and programs. Whatever policy she chooses, she has her
subordinates to implement them. In short, she has the power of control. Whenever a specific function is entrusted by
law or regulation to her subordinate, she may act directly or merely direct the performance of a duty x x x. Such act
is well within the prerogative of her office (emphasis supplied).
72

Moreover, the power to order the reclamation of lands of public domain is reposed first in the Philippine President.
The Revised Administrative Code of 1987 grants authority to the President to reserve lands of public domain for
settlement for any specific purpose, thus:
Section 14. Power to Reserve Lands of the Public and Private Domain of the Government.(1) The President shall
have the power to reserve for settlement or public use, and for specific public purposes, any of the lands of the
public domain, the use of which is not otherwise directed by law. The reserved land shall thereafter remain subject
to the specific public purpose indicated until otherwise provided by law or proclamation. (Emphasis supplied.)
President Aquino reserved the area of the Smokey Mountain dumpsite for settlement and issued MO 415
authorizing the implementation of the Smokey Mountain Development Project plus the reclamation of the area
across R-10. Then President Ramos issued Proclamation No. 39 covering the 21-hectare dumpsite and the 40-
hectare commercial/industrial area, and Proclamation No. 465 and MO 415 increasing the area of foreshore and
submerged lands of Manila Bay to be reclaimed from 40 to 79 hectares. Having supervision and control over the
DENR, both Presidents directly assumed and exercised the power granted by the Revised Administrative Code to
the DENR Secretary to authorize the NHA to reclaim said lands. What can be done indirectly by the DENR can be
done directly by the President. It would be absurd if the power of the President cannot be exercised simply because
the head of a department in the executive branch has not acted favorably on a project already approved by the
President. If such arrangement is allowed then the department head will become more powerful than the President.
2. Under Sec. 2 of MO 415, the DENR is one of the members of the EXECOM chaired by the NCR-CORD to
oversee the implementation of the Project. The EXECOM was the one which recommended approval of the project
plan and the joint venture agreements. Clearly, the DENR retained its power of supervision and control over the
laws affected by the Project since it was tasked to "facilitate the titling of the Smokey Mountain and of the area to be
reclaimed," which shows that it had tacitly given its authority to the NHA to undertake the reclamation.
3. Former DENR Secretary Angel C. Alcala issued Special Patents Nos. 3591 and 3592 while then Secretary Victor
O. Ramos issued Special Patent No. 3598 that embraced the areas covered by the reclamation. These patents
conveyed the lands to be reclaimed to the NHA and granted to said agency the administration and disposition of
said lands for subdivision and disposition to qualified beneficiaries and for development for mix land use
(commercial/industrial) "to provide employment opportunities to on-site families and additional areas for port related
activities." Such grant of authority to administer and dispose of lands of public domain under the SMDRP is of
course subject to the powers of the EXECOM of SMDRP, of which the DENR is a member.
4. The issuance of ECCs by the DENR for SMDRP is but an exercise of its power of supervision and control over
the lands of public domain covered by the Project.
Based on these reasons, it is clear that the DENR, through its acts and issuances, has ratified and confirmed the
reclamation of the subject lands for the purposes laid down in Proclamations Nos. 39 and 465.
Third Issue: Whether respondent RBI can acquire reclaimed
foreshore and submerged lands considered as inalienable and
outside the commerce of man
Petitioner postulates that respondent RBI cannot acquire the reclaimed foreshore and submerged areas as these
are inalienable public lands beyond the commerce of man based on Art. 1409 of the Civil Code which provides:
Article 1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;
x x x x
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.
Secs. 2 and 3, Art. XII of the Constitution declare that all natural resources are owned by the State and they cannot
be alienated except for alienable agricultural lands of the public domain. One of the States natural resources are
lands of public domain which include reclaimed lands.
Petitioner contends that for these reclaimed lands to be alienable, there must be a law or presidential proclamation
officially classifying these reclaimed lands as alienable and disposable and open to disposition or concession.
Absent such law or proclamation, the reclaimed lands cannot be the enabling component or consideration to be paid
to RBI as these are beyond the commerce of man.
We are not convinced of petitioners postulation.
The reclaimed lands across R-10 were classified alienable and disposable lands of public domain of the State for
the following reasons, viz:
First, there were three (3) presidential proclamations classifying the reclaimed lands across R-10 as alienable or
disposable hence open to disposition or concession, to wit:
(1) MO 415 issued by President Aquino, of which Sec. 4 states that "[t]he land covered by the Smokey
Mountain Dumpsite is hereby conveyed to the National Housing Authority as well as the area to be
reclaimed across R-10."
The directive to transfer the lands once reclaimed to the NHA implicitly carries with it the declaration that
said lands are alienable and disposable. Otherwise, the NHA cannot effectively use them in its housing and
resettlement project.
(2) Proclamation No. 39 issued by then President Ramos by which the reclaimed lands were conveyed to
NHA for subdivision and disposition to qualified beneficiaries and for development into a mixed land use
(commercial/industrial) to provide employment opportunities to on-site families and additional areas for port-
related activities. Said directive carries with it the pronouncement that said lands have been transformed to
alienable and disposable lands. Otherwise, there is no legal way to convey it to the beneficiaries.
(3) Proclamation No. 465 likewise issued by President Ramos enlarged the reclaimed area to 79 hectares to
be developed and disposed of in the implementation of the SMDRP. The authority put into the hands of the
NHA to dispose of the reclaimed lands tacitly sustains the conversion to alienable and disposable lands.
Secondly, Special Patents Nos. 3591, 3592, and 3598 issued by the DENR anchored on Proclamations Nos. 39 and
465 issued by President Ramos, without doubt, classified the reclaimed areas as alienable and disposable.
Admittedly, it cannot be said that MO 415, Proclamations Nos. 39 and 465 are explicit declarations that the lands to
be reclaimed are classified as alienable and disposable. We find however that such conclusion is derived and
implicit from the authority given to the NHA to transfer the reclaimed lands to qualified beneficiaries.
The query is, when did the declaration take effect? It did so only after the special patents covering the reclaimed
areas were issued. It is only on such date that the reclaimed lands became alienable and disposable lands of the
public domain. This is in line with the ruling in PEA where said issue was clarified and stressed:
PD No. 1085, coupled with President Aquinos actual issuance of a special patent covering the Freedom Islands, is
equivalent to an official proclamation classifying the Freedom Islands as alienable or disposable lands of the public
domain. PD No. 1085 and President Aquinos issuance of a land patent also constitute a declaration that the
Freedom Islands are no longer needed for public service. The Freedom Islands are thus alienable or disposable
lands of the public domain, open to disposition or concession to qualified parties.
73
(Emphasis supplied.)
Thus, MO 415 and Proclamations Nos. 39 and 465 cumulatively and jointly taken together with Special Patent Nos.
3591, 3592, and 3598 more than satisfy the requirement in PEA that "[t]here must be a law or presidential
proclamation officially classifying these reclaimed lands as alienable or disposable and open to disposition or
concession (emphasis supplied)."
74

Apropos the requisite law categorizing reclaimed land as alienable or disposable, we find that RA 6957 as amended
by RA 7718 provides ample authority for the classification of reclaimed land in the SMDRP for the repayment
scheme of the BOT project as alienable and disposable lands of public domain. Sec. 6 of RA 6957 as amended by
RA 7718 provides:
For the financing, construction, operation and maintenance of any infrastructure projects undertaken through the
build-operate-and transfer arrangement or any of its variations pursuant to the provisions of this Act, the project
proponent x x x may likewise be repaid in the form of a share in the revenue of the project or other non-monetary
payments, such as, but not limited to, the grant of a portion or percentage of the reclaimed land, subject to the
constitutional requirements with respect to the ownership of the land. (Emphasis supplied.)
While RA 6957 as modified by RA 7718 does not expressly declare that the reclaimed lands that shall serve as
payment to the project proponent have become alienable and disposable lands and opened for disposition;
nonetheless, this conclusion is necessarily implied, for how else can the land be used as the enabling component
for the Project if such classification is not deemed made?
It may be argued that the grant of authority to sell public lands, pursuant to PEA, does not convert alienable lands of
public domain into private or patrimonial lands. We ruled in PEA that "alienable lands of public domain must be
transferred to qualified private parties, or to government entities not tasked to dispose of public lands, before these
lands can become private or patrimonial lands (emphasis supplied)."
75
To lands reclaimed by PEA or through a
contract with a private person or entity, such reclaimed lands still remain alienable lands of public domain which can
be transferred only to Filipino citizens but not to a private corporation. This is because PEA under PD 1084 and EO
525 is tasked to hold and dispose of alienable lands of public domain and it is only when it is transferred to Filipino
citizens that it becomes patrimonial property. On the other hand, the NHA is a government agency not tasked to
dispose of public lands under its charterThe Revised Administrative Code of 1987. The NHA is an "end-user
agency" authorized by law to administer and dispose of reclaimed lands. The moment titles over reclaimed lands
based on the special patents are transferred to the NHA by the Register of Deeds, they are automatically converted
to patrimonial properties of the State which can be sold to Filipino citizens and private corporations, 60% of which
are owned by Filipinos. The reason is obvious: if the reclaimed land is not converted to patrimonial land once
transferred to NHA, then it would be useless to transfer it to the NHA since it cannot legally transfer or alienate lands
of public domain. More importantly, it cannot attain its avowed purposes and goals since it can only transfer
patrimonial lands to qualified beneficiaries and prospective buyers to raise funds for the SMDRP.
From the foregoing considerations, we find that the 79-hectare reclaimed land has been declared alienable and
disposable land of the public domain; and in the hands of NHA, it has been reclassified as patrimonial property.
Petitioner, however, contends that the reclaimed lands were inexistent prior to the three (3) Presidential Acts (MO
415 and Proclamations Nos. 39 and 465) and hence, the declaration that such areas are alienable and disposable
land of the public domain, citing PEA, has no legal basis.
Petitioners contention is not well-taken.
Petitioners sole reliance on Proclamations Nos. 39 and 465 without taking into consideration the special patents
issued by the DENR demonstrates the inherent weakness of his proposition. As was ruled in PEA cited by petitioner
himself, "PD No. 1085, coupled with President Aquinos actual issuance of a special patent covering the Freedom
Islands is equivalent to an official proclamation classifying the Freedom islands as alienable or disposable lands of
public domain." In a similar vein, the combined and collective effect of Proclamations Nos. 39 and 465 with Special
Patents Nos. 3592 and 3598 is tantamount to and can be considered to be an official declaration that the reclaimed
lots are alienable or disposable lands of the public domain.
The reclaimed lands covered by Special Patents Nos. 3591, 3592, and 3598, which evidence transfer of ownership
of reclaimed lands to the NHA, are official acts of the DENR Secretary in the exercise of his power of supervision
and control over alienable and disposable public lands and his exclusive jurisdiction over the management and
disposition of all lands of public domain under the Revised Administrative Code of 1987. Special Patent No. 3592
speaks of the transfer of Lots 1 and 2, and RI-003901-000012-D with an area of 401,485 square meters based on
the survey and technical description approved by the Bureau of Lands. Lastly, Special Patent No. 3598 was issued
in favor of the NHA transferring to said agency a tract of land described in Plan RL-00-000013 with an area of
390,000 square meters based on the survey and technical descriptions approved by the Bureau of Lands.
The conduct of the survey, the preparation of the survey plan, the computation of the technical description, and the
processing and preparation of the special patent are matters within the technical area of expertise of administrative
agencies like the DENR and the Land Management Bureau and are generally accorded not only respect but at
times even finality.
76
Preparation of special patents calls for technical examination and a specialized review of
calculations and specific details which the courts are ill-equipped to undertake; hence, the latter defer to the
administrative agency which is trained and knowledgeable on such matters.
77

Subsequently, the special patents in the name of the NHA were submitted to the Register of Deeds of the City of
Manila for registration, and corresponding certificates of titles over the reclaimed lots were issued based on said
special patents. The issuance of certificates of titles in NHAs name automatically converts the reclaimed lands to
patrimonial properties of the NHA. Otherwise, the lots would not be of use to the NHAs housing projects or as
payment to the BOT contractor as the enabling component of the BOT contract. The laws of the land have to be
applied and interpreted depending on the changing conditions and times. Tempora mutantur et legis mutantur in illis
(time changes and laws change with it). One such law that should be treated differently is the BOT Law (RA 6957)
which brought about a novel way of implementing government contracts by allowing reclaimed land as part or full
payment to the contractor of a government project to satisfy the huge financial requirements of the undertaking. The
NHA holds the lands covered by Special Patents Nos. 3592 and 3598 solely for the purpose of the SMDRP
undertaken by authority of the BOT Law and for disposition in accordance with said special law. The lands become
alienable and disposable lands of public domain upon issuance of the special patents and become patrimonial
properties of the Government from the time the titles are issued to the NHA.
As early as 1999, this Court in Baguio v. Republic laid down the jurisprudence that:
It is true that, once a patent is registered and the corresponding certificate of title is issued, the land covered by
them ceases to be part of the public domain and becomes private property, and the Torrens Title issued pursuant to
the patent becomes indefeasible upon the expiration of one year from the date of issuance of such patent.
78

The doctrine was reiterated in Republic v. Heirs of Felipe Alijaga, Sr.,
79
Heirs of Carlos Alcaraz v. Republic,
80
and the
more recent case of Doris Chiongbian-Oliva v. Republic of the Philippines.
81
Thus, the 79-hectare reclaimed land
became patrimonial property after the issuance of certificates of titles to the NHA based on Special Patents Nos.
3592 and 3598.
One last point. The ruling in PEA cannot even be applied retroactively to the lots covered by Special Patents Nos.
3592 (40 hectare reclaimed land) and 3598 (39-hectare reclaimed land). The reclamation of the land under SMDRP
was completed in August 1996 while the PEA decision was rendered on July 9, 2002. In the meantime, subdivided
lots forming parts of the reclaimed land were already sold to private corporations for value and separate titles issued
to the buyers. The Project was terminated through a Memorandum of Agreement signed on August 27, 2003. The
PEA decision became final through the November 11, 2003 Resolution. It is a settled precept that decisions of the
Supreme Court can only be applied prospectively as they may prejudice vested rights if applied retroactively.
In Benzonan v. Court of Appeals, the Court trenchantly elucidated the prospective application of its decisions based
on considerations of equity and fair play, thus:
At that time, the prevailing jurisprudence interpreting section 119 of R.A. 141 as amended was that enunciated in
Monge and Tupas cited above. The petitioners Benzonan and respondent Pe and the DBP are bound by these
decisions for pursuant to Article 8 of the Civil Code "judicial decisions applying or interpreting the laws of the
Constitution shall form a part of the legal system of the Philippines." But while our decisions form part of the law of
the land, they are also subject to Article 4 of the Civil Code which provides that "laws shall have no retroactive effect
unless the contrary is provided." This is expressed in the familiar legal maxim lex prospicit, non respicit, the law
looks forward not backward. The rationale against retroactivity is easy to perceive. The retroactive application of a
law usually divests rights that have already become vested or impairs the obligations of contract and hence, is
unconstitutional.
The same consideration underlies our rulings giving only prospective effect to decisions enunciating new doctrines.
Thus, we emphasized in People v. Jabinal, 55 SCRA 607 [1974] "x x x when a doctrine of this Court is overruled
and a different view is adopted, the new doctrine should be applied prospectively and should not apply to parties
who had relied on the old doctrine and acted on the faith thereof.
82

Fourth Issue: Whether respondent RBI can acquire reclaimed
lands when there was no declaration that said lands are no
longer needed for public use
Petitioner Chavez avers that despite the declaration that the reclaimed areas are alienable lands of the public
domain, still, the reclamation is flawed for there was never any declaration that said lands are no longer needed for
public use.
We are not moved by petitioners submission.
Even if it is conceded that there was no explicit declaration that the lands are no longer needed for public use or
public service, there was however an implicit executive declaration that the reclaimed areas R-10 are not necessary
anymore for public use or public service when President Aquino through MO 415 conveyed the same to the NHA
partly for housing project and related commercial/industrial development intended for disposition to and enjoyment
of certain beneficiaries and not the public in general and partly as enabling component to finance the project.
President Ramos, in issuing Proclamation No. 39, declared, though indirectly, that the reclaimed lands of the
Smokey Mountain project are no longer required for public use or service, thus:
These parcels of land of public domain are hereby placed under the administration and disposition of the National
Housing Authority to develop, subdivide and dispose to qualified beneficiaries, as well as its development for mix
land use (commercial/industrial) to provide employment opportunities to on-site families and additional areas for port
related activities. (Emphasis supplied.)
While numerical count of the persons to be benefited is not the determinant whether the property is to be devoted to
public use, the declaration in Proclamation No. 39 undeniably identifies only particular individuals as beneficiaries to
whom the reclaimed lands can be sold, namelythe Smokey Mountain dwellers. The rest of the Filipinos are not
qualified; hence, said lands are no longer essential for the use of the public in general.
In addition, President Ramos issued on August 31, 1994 Proclamation No. 465 increasing the area to be reclaimed
from forty (40) hectares to seventy-nine (79) hectares, elucidating that said lands are undoubtedly set aside for the
beneficiaries of SMDRP and not the publicdeclaring the power of NHA to dispose of land to be reclaimed, thus:
"The authority to administer, develop, or dispose lands identified and reserved by this Proclamation and
Proclamation No. 39 (s.1992), in accordance with the SMDRP, as enhance, is vested with the NHA, subject to the
provisions of existing laws." (Emphasis supplied.)
MO 415 and Proclamations Nos. 39 and 465 are declarations that proclaimed the non-use of the reclaimed areas for
public use or service as the Project cannot be successfully implemented without the withdrawal of said lands from
public use or service. Certainly, the devotion of the reclaimed land to public use or service conflicts with the intended
use of the Smokey Mountain areas for housing and employment of the Smokey Mountain scavengers and for
financing the Project because the latter cannot be accomplished without abandoning the public use of the subject
land. Without doubt, the presidential proclamations on SMDRP together with the issuance of the special patents had
effectively removed the reclaimed lands from public use.
More decisive and not in so many words is the ruling in PEA which we earlier cited, that "PD No. 1085 and
President Aquinos issuance of a land patent also constitute a declaration that the Freedom Islands are no longer
needed for public service." Consequently, we ruled in that case that the reclaimed lands are "open to disposition or
concession to qualified parties."
83

In a similar vein, presidential Proclamations Nos. 39 and 465 jointly with the special patents have classified the
reclaimed lands as alienable and disposable and open to disposition or concession as they would be devoted to
units for Smokey Mountain beneficiaries. Hence, said lands are no longer intended for public use or service and
shall form part of the patrimonial properties of the State under Art. 422 of the Civil Code.
84
As discussed a priori, the
lands were classified as patrimonial properties of the NHA ready for disposition when the titles were registered in its
name by the Register of Deeds.
Moreover, reclaimed lands that are made the enabling components of a BOT infrastructure project are necessarily
reclassified as alienable and disposable lands under the BOT Law; otherwise, absurd and illogical consequences
would naturally result. Undoubtedly, the BOT contract will not be accepted by the BOT contractor since there will be
no consideration for its contractual obligations. Since reclaimed land will be conveyed to the contractor pursuant to
the BOT Law, then there is an implied declaration that such land is no longer intended for public use or public
service and, hence, considered patrimonial property of the State.
Fifth Issue: Whether there is a law authorizing sale of
reclaimed lands
Petitioner next claims that RBI cannot acquire the reclaimed lands because there was no law authorizing their sale.
He argues that unlike PEA, no legislative authority was granted to the NHA to sell reclaimed land.
This position is misplaced.
Petitioner relies on Sec. 60 of Commonwealth Act (CA) 141 to support his view that the NHA is not empowered by
any law to sell reclaimed land, thus:
Section 60. Any tract of land comprised under this title may be leased or sold, as the case may be, to any person,
corporation or association authorized to purchase or lease public lands for agricultural purposes. The area of the
land so leased or sold shall be such as shall, in the judgment of the Secretary of Agriculture and Natural Resources,
be reasonably necessary for the purposes for which such sale or lease if requested and shall in no case exceed one
hundred and forty-four hectares: Provided, however, That this limitation shall not apply to grants, donations,
transfers, made to a province, municipality or branch or subdivision of the Government for the purposes deemed by
said entities conducive to the public interest; but the land so granted donated or transferred to a province,
municipality, or branch or subdivision of the Government shall not be alienated, encumbered, or otherwise disposed
of in a manner affecting its title, except when authorized by Congress; Provided, further, That any person,
corporation, association or partnership disqualified from purchasing public land for agricultural purposes under the
provisions of this Act, may lease land included under this title suitable for industrial or residential purposes, but the
lease granted shall only be valid while such land is used for the purposes referred to. (Emphasis supplied.)
Reliance on said provision is incorrect as the same applies only to "a province, municipality or branch or subdivision
of the Government." The NHA is not a government unit but a government corporation performing governmental and
proprietary functions.
In addition, PD 757 is clear that the NHA is empowered by law to transfer properties acquired by it under the law to
other parties, thus:
Section 6. Powers and functions of the Authority. The Authority shall have the following powers and functions to be
exercised by the Boards in accordance with the established national human settlements plan prepared by the
Human Settlements Commission:
x x x x
(k) Enter into contracts whenever necessary under such terms and conditions as it may deem proper and
reasonable;
(l) Acquire property rights and interests, and encumber or otherwise dispose the same as it may deem appropriate
(Emphasis supplied.)
Letter (l) is emphatic that the NHA can acquire property rights and interests and encumber or otherwise dispose of
them as it may deem appropriate. The transfer of the reclaimed lands by the National Government to the NHA for
housing, commercial, and industrial purposes transformed them into patrimonial lands which are of course owned by
the State in its private or proprietary capacity. Perforce, the NHA can sell the reclaimed lands to any Filipino citizen
or qualified corporation.
Sixth Issue: Whether the transfer of reclaimed lands to RBI
was done by public bidding
Petitioner also contends that there was no public bidding but an awarding of ownership of said reclaimed lands to
RBI. Public bidding, he says, is required under Secs. 63 and 67 of CA 141 which read:
Section 63. Whenever it is decided that lands covered by this chapter are not needed for public purposes, the
Director of Lands shall ask the Secretary of Agriculture and Commerce for authority to dispose of the same. Upon
receipt of such authority, the Director of Lands shall give notice by public advertisement in the same manner as in
the case of leases or sales of agricultural public land, that the Government will lease or sell, as the case may be, the
lots or blocks specified in the advertisement, for the purpose stated in the notice and subject to the conditions
specified in this chapter.
x x x x
Section 67. The lease or sale shall be made through oral bidding; and adjudication shall be made to the highest
bidder. However, where an applicant has made improvements on the land by virtue of a permit issued to him by
competent authority, the sale or lease shall be made by sealed bidding as prescribed in section twenty-six of this
Act, the provisions of which shall be applied whenever applicable. If all or part of the lots remain unleased or unsold,
the Director of Lands shall from time to time announce in the Official Gazette or in any other newspapers of general
circulation, the lease of sale of those lots, if necessary.
He finds that the NHA and RBI violated Secs. 63 and 67 of CA 141, as the reclaimed lands were conveyed to RBI
by negotiated contract and not by public bidding as required by law.
This stand is devoid of merit.
There is no doubt that respondent NHA conducted a public bidding of the right to become its joint venture partner in
the Smokey Mountain Project. Notices or Invitations to Bid were published in the national dailies on January 23 and
26, 1992 and February 1, 14, 16, and 23, 1992. The bidding proper was done by the Bids and Awards Committee
(BAC) on May 18, 1992. On August 31, 1992, the Inter-Agency Techcom made up of the NHA, PEA, DPWH, PPA,
DBP, and DENR opened the bids and evaluated them, resulting in the award of the contract to respondent RBI on
October 7, 1992.
On March 19, 1993, respondents NHA and RBI signed the JVA. On February 23, 1994, said JVA was amended and
restated into the ARJVA. On August 11, 1994, the ARJVA was again amended. On September 7, 1994, the OP
approved the ARJVA and the amendments to the ARJVA. From these factual settings, it cannot be gainsaid that
there was full compliance with the laws and regulations governing public biddings involving a right, concession, or
property of the government.
Petitioner concedes that he does not question the public bidding on the right to be a joint venture partner of the
NHA, but the absence of bidding in the sale of alienable and disposable lands of public domain pursuant to CA 141
as amended.
Petitioners theory is incorrect.
Secs. 63 and 67 of CA 141, as amended, are in point as they refer to government sale by the Director of Lands of
alienable and disposable lands of public domain. This is not present in the case at bar. The lands reclaimed by and
conveyed to the NHA are no longer lands of public domain. These lands became proprietary lands or patrimonial
properties of the State upon transfer of the titles over the reclaimed lands to the NHA and hence outside the ambit of
CA 141. The NHA can therefore legally transfer patrimonial land to RBI or to any other interested qualified buyer
without any bidding conducted by the Director of Lands because the NHA, unlike PEA, is a government agency not
tasked to sell lands of public domain. Hence, it can only hold patrimonial lands and can dispose of such lands by
sale without need of public bidding.
Petitioner likewise relies on Sec. 79 of PD 1445 which requires public bidding "when government property has
become unserviceable for any cause or is no longer needed." It appears from the Handbook on Property and Supply
Management System, Chapter 6, that reclaimed lands which have become patrimonial properties of the State,
whose titles are conveyed to government agencies like the NHA, which it will use for its projects or programs, are
not within the ambit of Sec. 79. We quote the determining factors in the Disposal of Unserviceable Property, thus:
Determining Factors in the Disposal of Unserviceable Property
Property, which can no longer be repaired or reconditioned;
Property whose maintenance costs of repair more than outweigh the benefits and services that will be
derived from its continued use;
Property that has become obsolete or outmoded because of changes in technology;
Serviceable property that has been rendered unnecessary due to change in the agencys function or
mandate;
Unused supplies, materials and spare parts that were procured in excess of requirements; and
Unused supplies and materials that [have] become dangerous to use because of long storage or use of
which is determined to be hazardous.
85

Reclaimed lands cannot be considered unserviceable properties. The reclaimed lands in question are very much
needed by the NHA for the Smokey Mountain Project because without it, then the projects will not be successfully
implemented. Since the reclaimed lands are not unserviceable properties and are very much needed by NHA, then
Sec. 79 of PD 1445 does not apply.
More importantly, Sec. 79 of PD 1445 cannot be applied to patrimonial properties like reclaimed lands transferred to
a government agency like the NHA which has entered into a BOT contract with a private firm. The reason is
obvious. If the patrimonial property will be subject to public bidding as the only way of disposing of said property,
then Sec. 6 of RA 6957 on the repayment scheme is almost impossible or extremely difficult to implement
considering the uncertainty of a winning bid during public auction. Moreover, the repayment scheme of a BOT
contract may be in the form of non-monetary payment like the grant of a portion or percentage of reclaimed land.
Even if the BOT partner participates in the public bidding, there is no assurance that he will win the bid and therefore
the payment in kind as agreed to by the parties cannot be performed or the winning bid prize might be below the
estimated valuation of the land. The only way to harmonize Sec. 79 of PD 1445 with Sec. 6 of RA 6957 is to
consider Sec. 79 of PD 1445 as inapplicable to BOT contracts involving patrimonial lands. The law does not intend
anything impossible (lex non intendit aliquid impossibile).
Seventh Issue: Whether RBI, being a private corporation,
is barred by the Constitution to acquire lands of public domain
Petitioner maintains that RBI, being a private corporation, is expressly prohibited by the 1987 Constitution from
acquiring lands of public domain.
Petitioners proposition has no legal mooring for the following reasons:
1. RA 6957 as amended by RA 7718 explicitly states that a contractor can be paid "a portion as percentage
of the reclaimed land" subject to the constitutional requirement that only Filipino citizens or corporations with
at least 60% Filipino equity can acquire the same. It cannot be denied that RBI is a private corporation,
where Filipino citizens own at least 60% of the stocks. Thus, the transfer to RBI is valid and constitutional.
2. When Proclamations Nos. 39 and 465 were issued, inalienable lands covered by said proclamations were
converted to alienable and disposable lands of public domain. When the titles to the reclaimed lands were
transferred to the NHA, said alienable and disposable lands of public domain were automatically classified
as lands of the private domain or patrimonial properties of the State because the NHA is an agency NOT
tasked to dispose of alienable or disposable lands of public domain. The only way it can transfer the
reclaimed land in conjunction with its projects and to attain its goals is when it is automatically converted to
patrimonial properties of the State. Being patrimonial or private properties of the State, then it has the power
to sell the same to any qualified personunder the Constitution, Filipino citizens as private corporations,
60% of which is owned by Filipino citizens like RBI.
3. The NHA is an end-user entity such that when alienable lands of public domain are transferred to said
agency, they are automatically classified as patrimonial properties. The NHA is similarly situated as BCDA
which was granted the authority to dispose of patrimonial lands of the government under RA 7227. The
nature of the property holdings conveyed to BCDA is elucidated and stressed in the May 6, 2003 Resolution
in Chavez v. PEA, thus:
BCDA is an entirely different government entity. BCDA is authorized by law to sell specific government lands that
have long been declared by presidential proclamations as military reservations for use by the different services of
the armed forces under the Department of National Defense. BCDAs mandate is specific and limited in area, while
PEAs mandate is general and national. BCDA holds government lands that have been granted to end-user
government entitiesthe military services of the armed forces. In contrast, under Executive Order No. 525, PEA
holds the reclaimed public lands, not as an end-user entity, but as the government agency "primarily responsible for
integrating, directing, and coordinating all reclamation projects for and on behalf of the National Government."
x x x Well-settled is the doctrine that public land granted to an end-user government agency for a specific public use
may subsequently be withdrawn by Congress from public use and declared patrimonial property to be sold to private
parties. R.A. No. 7227 creating the BCDA is a law that declares specific military reservations no longer needed for
defense or military purposes and reclassifies such lands as patrimonial property for sale to private parties.
Government owned lands, as long as they are patrimonial property, can be sold to private parties, whether Filipino
citizens or qualified private corporations. Thus, the so-called Friar Lands acquired by the government under Act No.
1120 are patrimonial property which even private corporations can acquire by purchase. Likewise, reclaimed
alienable lands of the public domain if sold or transferred to a public or municipal corporation for a monetary
consideration become patrimonial property in the hands of the public or municipal corporation. Once converted to
patrimonial property, the land may be sold by the public or municipal corporation to private parties, whether Filipino
citizens or qualified private corporations.
86
(Emphasis supplied.)
The foregoing Resolution makes it clear that the SMDRP was a program adopted by the Government under
Republic Act No. 6957 (An Act Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure
Projects by the Private Sector, and For Other Purposes), as amended by RA 7718, which is a special law similar to
RA 7227. Moreover, since the implementation was assigned to the NHA, an end-user agency under PD 757 and RA
7279, the reclaimed lands registered under the NHA are automatically classified as patrimonial lands ready for
disposition to qualified beneficiaries.
The foregoing reasons likewise apply to the contention of petitioner that HCPTI, being a private corporation, is
disqualified from being a transferee of public land. What was transferred to HCPTI is a 10-hectare lot which is
already classified as patrimonial property in the hands of the NHA. HCPTI, being a qualified corporation under the
1987 Constitution, the transfer of the subject lot to it is valid and constitutional.
Eighth Issue: Whether respondents can be compelled to disclose
all information related to the SMDRP
Petitioner asserts his right to information on all documents such as contracts, reports, memoranda, and the like
relative to SMDRP.
Petitioner asserts that matters relative to the SMDRP have not been disclosed to the public like the current stage of
the Project, the present financial capacity of RBI, the complete list of investors in the asset pool, the exact amount of
investments in the asset pool and other similar important information regarding the Project.
He prays that respondents be compelled to disclose all information regarding the SMDRP and furnish him with
originals or at least certified true copies of all relevant documents relating to the said project including, but not
limited to, the original JVA, ARJVA, AARJVA, and the Asset Pool Agreement.
This relief must be granted.
The right of the Filipino people to information on matters of public concern is enshrined in the 1987 Constitution,
thus:
ARTICLE II
x x x x
SEC. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public
disclosure of all its transactions involving public interest.
ARTICLE III
SEC. 7. The right of the people to information on matters of public concern shall be recognized. Access to official
records, and to documents, and papers pertaining to official acts, transactions, or decisions, as well as to
government research data used as basis for policy development, shall be afforded the citizen, subject to such
limitations as may be provided by law.
In Valmonte v. Belmonte, Jr., this Court explicated this way:
[A]n essential element of these freedoms is to keep open a continuing dialogue or process of communication
between the government and the people. It is in the interest of the State that the channels for free political
discussion be maintained to the end that the government may perceive and be responsive to the peoples will. Yet,
this open dialogue can be effective only to the extent that the citizenry is informed and thus able to formulate its will
intelligently. Only when the participants in the discussion are aware of the issues and have access to information
relating thereto can such bear fruit.
87

In PEA, this Court elucidated the rationale behind the right to information:
These twin provisions of the Constitution seek to promote transparency in policy-making and in the operations of the
government, as well as provide the people sufficient information to exercise effectively other constitutional rights.
These twin provisions are essential to the exercise of freedom of expression. If the government does not disclose its
official acts, transactions and decisions to citizens, whatever citizens say, even if expressed without any restraint,
will be speculative and amount to nothing. These twin provisions are also essential to hold public officials "at all
times x x x accountable to the people," for unless citizens have the proper information, they cannot hold public
officials accountable for anything. Armed with the right information, citizens can participate in public discussions
leading to the formulation of government policies and their effective implementation. An informed citizenry is
essential to the existence and proper functioning of any democracy.
88

Sec. 28, Art. II compels the State and its agencies to fully disclose "all of its transactions involving public interest."
Thus, the government agencies, without need of demand from anyone, must bring into public view all the steps and
negotiations leading to the consummation of the transaction and the contents of the perfected contract.
89
Such
information must pertain to "definite propositions of the government," meaning official recommendations or final
positions reached on the different matters subject of negotiation. The government agency, however, need not
disclose "intra-agency or inter-agency recommendations or communications during the stage when common
assertions are still in the process of being formulated or are in the exploratory stage." The limitation also covers
privileged communication like information on military and diplomatic secrets; information affecting national security;
information on investigations of crimes by law enforcement agencies before the prosecution of the accused;
information on foreign relations, intelligence, and other classified information.
It is unfortunate, however, that after almost twenty (20) years from birth of the 1987 Constitution, there is still no
enabling law that provides the mechanics for the compulsory duty of government agencies to disclose information
on government transactions. Hopefully, the desired enabling law will finally see the light of day if and when
Congress decides to approve the proposed "Freedom of Access to Information Act." In the meantime, it would
suffice that government agencies post on their bulletin boards the documents incorporating the information on the
steps and negotiations that produced the agreements and the agreements themselves, and if finances permit, to
upload said information on their respective websites for easy access by interested parties. Without any law or
regulation governing the right to disclose information, the NHA or any of the respondents cannot be faulted if they
were not able to disclose information relative to the SMDRP to the public in general.
The other aspect of the peoples right to know apart from the duty to disclose is the duty to allow access to
information on matters of public concern under Sec. 7, Art. III of the Constitution. The gateway to information opens
to the public the following: (1) official records; (2) documents and papers pertaining to official acts, transactions, or
decisions; and (3) government research data used as a basis for policy development.
Thus, the duty to disclose information should be differentiated from the duty to permit access to information. There is
no need to demand from the government agency disclosure of information as this is mandatory under the
Constitution; failing that, legal remedies are available. On the other hand, the interested party must first request or
even demand that he be allowed access to documents and papers in the particular agency. A request or demand is
required; otherwise, the government office or agency will not know of the desire of the interested party to gain
access to such papers and what papers are needed. The duty to disclose covers only transactions involving public
interest, while the duty to allow access has a broader scope of information which embraces not only transactions
involving public interest, but any matter contained in official communications and public documents of the
government agency.
We find that although petitioner did not make any demand on the NHA to allow access to information, we treat the
petition as a written request or demand. We order the NHA to allow petitioner access to its official records,
documents, and papers relating to official acts, transactions, and decisions that are relevant to the said JVA and
subsequent agreements relative to the SMDRP.
Ninth Issue: Whether the operative fact doctrine applies to the instant petition
Petitioner postulates that the "operative fact" doctrine is inapplicable to the present case because it is an equitable
doctrine which could not be used to countenance an inequitable result that is contrary to its proper office.
On the other hand, the petitioner Solicitor General argues that the existence of the various agreements
implementing the SMDRP is an operative fact that can no longer be disturbed or simply ignored, citing Rieta v.
People of the Philippines.
90

The argument of the Solicitor General is meritorious.
The "operative fact" doctrine is embodied in De Agbayani v. Court of Appeals, wherein it is stated that a legislative
or executive act, prior to its being declared as unconstitutional by the courts, is valid and must be complied with,
thus:
As the new Civil Code puts it: "When the courts declare a law to be inconsistent with the Constitution, the former
shall be void and the latter shall govern. Administrative or executive acts, orders and regulations shall be valid only
when they are not contrary to the laws of the Constitution." It is understandable why it should be so, the Constitution
being supreme and paramount. Any legislative or executive act contrary to its terms cannot survive.
Such a view has support in logic and possesses the merit of simplicity. It may not however be sufficiently realistic. It
does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must have
been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case, declares its
invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have changed their
positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done while
such legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted as a
doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to reflect
awareness that precisely because the judiciary is the governmental organ which has the final say on whether or not
a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of
judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and
justice then, if there be no recognition of what had transpired prior to such adjudication.
In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a
determination [of unconstitutionality], is an operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects, with respect to particular relations, individual and corporate,
and particular conduct, private and official." This language has been quoted with approval in a resolution in Araneta
v. Hill and the decision in Manila Motor Co., Inc. v. Flores. An even more recent instance is the opinion of Justice
Zaldivar speaking for the Court in Fernandez v. Cuerva and Co.
91
(Emphasis supplied.)
This doctrine was reiterated in the more recent case of City of Makati v. Civil Service Commission, wherein we ruled
that:
Moreover, we certainly cannot nullify the City Governments order of suspension, as we have no reason to do so,
much less retroactively apply such nullification to deprive private respondent of a compelling and valid reason for not
filing the leave application. For as we have held, a void act though in law a mere scrap of paper nonetheless confers
legitimacy upon past acts or omissions done in reliance thereof. Consequently, the existence of a statute or
executive order prior to its being adjudged void is an operative fact to which legal consequences are attached. It
would indeed be ghastly unfair to prevent private respondent from relying upon the order of suspension in lieu of a
formal leave application.
92
(Emphasis supplied.)
The principle was further explicated in the case of Rieta v. People of the Philippines, thus:
In similar situations in the past this Court had taken the pragmatic and realistic course set forth in Chicot County
Drainage District vs. Baxter Bank to wit:
The courts below have proceeded on the theory that the Act of Congress, having been found to be unconstitutional,
was not a law; that it was inoperative, conferring no rights and imposing no duties, and hence affording no basis for
the challenged decree. x x x It is quite clear, however, that such broad statements as to the effect of a determination
of unconstitutionality must be taken with qualifications. The actual existence of a statute, prior to [the determination
of its invalidity], is an operative fact and may have consequences which cannot justly be ignored. The past cannot
always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be
considered in various aspects with respect to particular conduct, private and official. Questions of rights claimed to
have become vested, of status, of prior determinations deemed to have finality and acted upon accordingly, of public
policy in the light of the nature both of the statute and of its previous application, demand examination. These
questions are among the most difficult of those which have engaged the attention of courts, state and federal, and it
is manifest from numerous decisions that an all-inclusive statement of a principle of absolute retroactive invalidity
cannot be justified.
In the May 6, 2003 Resolution in Chavez v. PEA,
93
we ruled that De Agbayani
94
is not applicable to the case
considering that the prevailing law did not authorize private corporations from owning land. The prevailing law at the
time was the 1935 Constitution as no statute dealt with the same issue.
In the instant case, RA 6957 was the prevailing law at the time that the joint venture agreement was signed. RA
6957, entitled "An Act Authorizing The Financing, Construction, Operation And Maintenance Of Infrastructure
Projects By The Private Sector And For Other Purposes," which was passed by Congress on July 24, 1989, allows
repayment to the private contractor of reclaimed lands.
95
Such law was relied upon by respondents, along with the
above-mentioned executive issuances in pushing through with the Project. The existence of such law and issuances
is an "operative fact" to which legal consequences have attached. This Court is constrained to give legal effect to
the acts done in consonance with such executive and legislative acts; to do otherwise would work patent injustice on
respondents.
Further, in the May 6, 2003 Resolution in Chavez v. PEA, we ruled that in certain cases, the transfer of land,
although illegal or unconstitutional, will not be invalidated on considerations of equity and social justice. However, in
that case, we did not apply the same considering that PEA, respondent in said case, was not entitled to equity
principles there being bad faith on its part, thus:
There are, moreover, special circumstances that disqualify Amari from invoking equity principles. Amari cannot
claim good faith because even before Amari signed the Amended JVA on March 30, 1999, petitioner had already
filed the instant case on April 27, 1998 questioning precisely the qualification of Amari to acquire the Freedom
Islands. Even before the filing of this petition, two Senate Committees had already approved on September 16, 1997
Senate Committee Report No. 560. This Report concluded, after a well-publicized investigation into PEAs sale of
the Freedom Islands to Amari, that the Freedom Islands are inalienable lands of the public domain. Thus, Amari
signed the Amended JVA knowing and assuming all the attendant risks, including the annulment of the Amended
JVA.
96

Such indicia of bad faith are not present in the instant case. When the ruling in PEA was rendered by this Court on
July 9, 2002, the JVAs were all executed. Furthermore, when petitioner filed the instant case against respondents
on August 5, 2004, the JVAs were already terminated by virtue of the MOA between the NHA and RBI. The
respondents had no reason to think that their agreements were unconstitutional or even questionable, as in fact, the
concurrent acts of the executive department lent validity to the implementation of the Project. The SMDRP
agreements have produced vested rights in favor of the slum dwellers, the buyers of reclaimed land who were
issued titles over said land, and the agencies and investors who made investments in the project or who bought
SMPPCs. These properties and rights cannot be disturbed or questioned after the passage of around ten (10) years
from the start of the SMDRP implementation. Evidently, the "operative fact" principle has set in. The titles to the
lands in the hands of the buyers can no longer be invalidated.
The Courts Dispositions
Based on the issues raised in this petition, we find that the March 19, 1993 JVA between NHA and RBI and the
SMDRP embodied in the JVA, the subsequent amendments to the JVA and all other agreements signed and
executed in relation to it, including, but not limited to, the September 26, 1994 Smokey Mountain Asset Pool
Agreement and the agreement on Phase I of the Project as well as all other transactions which emanated from the
Project, have been shown to be valid, legal, and constitutional. Phase II has been struck down by the Clean Air Act.
With regard to the prayer for prohibition, enjoining respondents particularly respondent NHA from further
implementing and/or enforcing the said Project and other agreements related to it, and from further deriving and/or
enjoying any rights, privileges and interest from the Project, we find the same prayer meritless.
Sec. 2 of Rule 65 of the 1997 Rules of Civil Procedure provides:
Sec. 2. Petition for prohibition.When the proceedings of any tribunal, corporation, board, officer or person,
whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of its or his jurisdiction, or
with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any other plain,
speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition
in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the
respondent to desist from further proceedings in the action or matter specified therein, or otherwise granting such
incidental reliefs as law and justice may require.
It has not been shown that the NHA exercised judicial or quasi-judicial functions in relation to the SMDRP and the
agreements relative to it. Likewise, it has not been shown what ministerial functions the NHA has with regard to the
SMDRP.
A ministerial duty is one which is so clear and specific as to leave no room for the exercise of discretion in its
performance. It is a duty which an officer performs in a given state of facts in a prescribed manner in obedience to
the mandate of legal authority, without regard to the exercise of his/her own judgment upon the propriety of the act
done.
97

Whatever is left to be done in relation to the August 27, 2003 MOA, terminating the JVA and other related
agreements, certainly does not involve ministerial functions of the NHA but instead requires exercise of judgment. In
fact, Item No. 4 of the MOA terminating the JVAs provides for validation of the developers (RBIs) claims arising
from the termination of the SMDRP through the various government agencies.
98
Such validation requires the
exercise of discretion.
In addition, prohibition does not lie against the NHA in view of petitioners failure to avail and exhaust all
administrative remedies. Clear is the rule that prohibition is only available when there is no adequate remedy in the
ordinary course of law.
More importantly, prohibition does not lie to restrain an act which is already a fait accompli. The "operative fact"
doctrine protecting vested rights bars the grant of the writ of prohibition to the case at bar. It should be remembered
that petitioner was the Solicitor General at the time SMDRP was formulated and implemented. He had the
opportunity to question the SMDRP and the agreements on it, but he did not. The moment to challenge the Project
had passed.
On the prayer for a writ of mandamus, petitioner asks the Court to compel respondents to disclose all documents
and information relating to the project, including, but not limited to, any subsequent agreements with respect to the
different phases of the Project, the revisions of the original plan, the additional works incurred on the Project, the
current financial condition of respondent RBI, and the transactions made with respect to the project. We earlier ruled
that petitioner will be allowed access to official records relative to the SMDRP. That would be adequate relief to
satisfy petitioners right to the information gateway.
WHEREFORE, the petition is partially granted.
The prayer for a writ of prohibition is DENIED for lack of merit.
The prayer for a writ of mandamus is GRANTED. Respondent NHA is ordered to allow access to petitioner to all
public documents and official records relative to the SMDRPincluding, but not limited to, the March 19, 1993 JVA
between the NHA and RBI and subsequent agreements related to the JVA, the revisions over the original plan, and
the additional works incurred on and the transactions made with respect to the Project.
No costs.
SO ORDERED.
THIRD DIVISION
G.R. No. 163663 June 30, 2006
GREATER METROPOLITAN MANILA SOLID WASTE MANAGEMENT COMMITTEE and the METROPOLITAN
MANILA DEVELOPMENT AUTHORITY, Petitioners,
vs.
JANCOM ENVIRONMENTAL CORPORATION and JANCOM INTERNATIONAL DEVELOPMENT PROJECTS
PTY. LIMITED OF AUSTRALIA, Respondents.
D E C I S I O N
CARPIO MORALES, J .:
The present petition for review on certiorari challenges the Decision
1
dated December 19, 2003 and
Resolution
2
dated May 11, 2004 of the Court of Appeals (CA)
3
in CA-G.R. SP No. 78752 which denied the petition for
certiorari filed by herein petitioners Greater Metropolitan Manila Solid Waste Management Committee (GMMSWMC)
and the Metropolitan Manila Development Authority (MMDA) and their Motion for Reconsideration, respectively.
In 1994, Presidential Memorandum Order No. 202 was issued by then President Fidel V. Ramos creating an
Executive Committee to oversee and develop waste-to-energy projects for the waste disposal sites in San Mateo,
Rizal and Carmona, Cavite under the Build-Operate-Transfer (BOT) scheme.
Respondent Jancom International Development Projects Pty. Limited of Australia (Jancom International) was one of
the bidders for the San Mateo Waste Disposal Site. It subsequently entered into a partnership with Asea Brown
Boveri under the firm name JANCOM Environmental Corporation (JANCOM), its co-respondent.
On February 12, 1997, the above-said Executive Committee approved the recommendation of the Pre-qualification,
Bids and Awards Committee to declare JANCOM as the sole complying bidder for the San Mateo Waste Disposal
Site.
On December 19, 1997, a Contract for the BOT Implementation of the Solid Waste Management Project for the San
Mateo, Rizal Waste Disposal Site
4
(the contract) was entered into by the Republic of the Philippines, represented by
the Presidential Task Force on Solid Waste Management through then Department of Environment and Natural
Resources Secretary Victor Ramos, then Cabinet Office for Regional Development-National Capital Region
Chairman Dionisio dela Serna, and then MMDA Chairman Prospero Oreta on one hand, and JANCOM represented
by its Chief Executive Officer Jorge Mora Aisa and its Chairman Jay Alparslan, on the other.
On March 5, 1998, the contract was submitted for approval to President Ramos who subsequently endorsed it to
then incoming President Joseph E. Estrada.
Owing to the clamor of the residents of Rizal, the Estrada administration ordered the closure of the San Mateo
landfill. Petitioner GMMSWMC thereupon adopted a Resolution not to pursue the contract with JANCOM, citing as
reasons therefor the passage of Republic Act 8749, otherwise known as the Clean Air Act of 1999, the non-
availability of the San Mateo site, and costly tipping fees.
5

The Board of Directors of Jancom International thereafter adopted on January 4, 2000 a Resolution
6
authorizing
Atty. Manuel Molina to act as legal counsel for respondents and "determine and file such legal action as deemed
necessary before the Philippine courts in any manner he may deem appropriate" against petitioners.
The Board of Directors of JANCOM also adopted a Resolution
7
on February 7, 2000 granting Atty. Molina similar
authorization to file legal action as may be necessary to protect its interest with respect to the contract.
On March 14, 2000, respondents filed a petition for certiorari
8
with the Regional Trial Court (RTC) of Pasig City
where it was docketed as Special Civil Action No. 1955, to declare the GMMSWMC Resolution and the acts of the
MMDA calling for bids for and authorizing the forging of a new contract for the Metro Manila waste management as
illegal, unconstitutional and void and to enjoin petitioners from implementing the Resolution and making another
award in lieu thereof.
By Decision
9
of May 29, 2000, Branch 68 of the Pasig City RTC found in favor of respondents.
10

Petitioners thereupon assailed the RTC Decision via petition for certiorari
11
with prayer for a temporary restraining
order with the CA, docketed as CA-G.R. SP No. 59021.
By Decision
12
of November 13, 2000, the CA denied the petition for lack of merit and affirmed in toto the May 29,
2000 RTC Decision. Petitioners Motion for Reconsideration was denied, prompting them to file a petition for review
before this Court, docketed as G.R. No. 147465.
By Decision
13
of January 30, 2002 and Resolution
14
of April 10, 2002, this Court affirmed the November 13, 2001 CA
Decision and declared the contract valid and perfected, albeit ineffective and unimplementable pending approval by
the President.
JANCOM and the MMDA later purportedly entered into negotiations to modify certain provisions of the contract
which were embodied in a draft Amended Agreement
15
dated June 2002. The draft Amended Agreement bore no
signature of the parties.
Respondents, through Atty. Molina, subsequently filed before Branch 68 of the Pasig City RTC an Omnibus
Motion
16
dated July 29, 2002 praying that: (1) an alias writ of execution be issued prohibiting and enjoining
petitioners and their representatives from calling for, accepting, evaluating, approving, awarding, negotiating or
implementing all bids, awards and contracts involving other Metro Manila waste management projects intended to
be pursued or which are already being pursued; (2) the MMDA, through its Chairman Bayani F. Fernando, be
directed to immediately forward and recommend the approval of the Amended Agreement to President Gloria
Macapagal Arroyo; (3) Chairman Fernando be ordered to personally appear before the court and explain his acts
and public pronouncements which are in direct violation and gross defiance of the final and executory May 29, 2000
RTC Decision; (4) the Executive Secretary and the Cabinet Secretaries of the departments-members of the National
Solid Waste Management Commission be directed "to submit the contract within 30 days from notice to the
President for signature and approval and if the latter chooses not to sign or approve the contract, the Executive
Secretary be made to show cause therefor;" and (5) petitioners be directed to comply with and submit their written
compliance with their obligations specifically directed under the provisions of Article 18, paragraphs 18.1, 18.1.1 (a),
(b), (c) and (d) of the contract within 30 days from notice.
17

To the Omnibus Motion petitioners filed their Opposition
18
which merited JANCOMs Reply
19
filed on August 19,
2002.
On August 21, 2002, Atty. Simeon M. Magdamit, on behalf of Jancom International, filed before the RTC an Entry of
Special Appearance and Manifestation with Motion to Reject the Pending Omnibus Motion
20
alleging that: (1) the
Omnibus Motion was never approved by Jancom International; (2) the Omnibus Motion was initiated by lawyers
whose services had already been terminated, hence, were unauthorized to represent it; and (3) the agreed judicial
venue for dispute resolution relative to the implementation of the contract is the International Court of Arbitration in
the United Kingdom pursuant to Article 16.1
21
of said contract.
In the meantime, on November 3, 2002, the MMDA forwarded the contract to the Office of the President for
appropriate action,
22
together with MMDA Resolution No. 02-18
23
dated June 26, 2002, "Recommending to her
Excellency the President of the Republic of the Philippines to Disapprove the Contract Entered Into by the Executive
Committee of the Presidential Task Force on Waste Management with Jancom Environmental Corporation and for
Other Purposes."
By Order
24
of November 18, 2002, the RTC noted the above-stated Entry of Special Appearance of Atty. Magdamit
for Jancom International and denied the Motion to Reject Pending Omnibus Motion for lack of merit. Jancom
International filed on December 9, 2002 a Motion for Reconsideration
25
which was denied for lack of merit by
Order
26
of January 8, 2003.
Petitioners and respondents then filed their Memoranda
27
on May 23, 2003 and May 26, 2003, respectively.
By Order
28
of June 11, 2003, the RTC granted respondents Omnibus Motion in part. The dispositive portion of the
Order reads, quoted verbatim:
WHEREFORE, in view of the foregoing, let an Alias Writ of Execution immediately issue and the Clerk of Court and
Ex-Oficio Sheriff or any o[f] her Deputies is directed to implement the same within sixty (60) days from receipt
thereof.
Thus, any and all such bids or contracts entered into by respondent MMDA with third parties covering the waste
disposal and management within the Metro Manila after August 14, 2000 are hereby declared NULL and VOID.
Respondents are henceforth enjoined and prohibited, with a stern warning, from entering into any such contract with
any third party whether directly or indirectly, in violation of the contractual rights of petitioner JANCOM under the
BOT Contract Award, consistent with the Supreme Courts Decision of January 30, 2002.
Respondent MMDA is hereby directed to SUBMIT the Amended Agreement concluded by petitioners with the
previous MMDA officials, or in its discretion if it finds [it] more advantageous to the government, to require
petitioners to make adjustments in the Contract in accordance with existing environmental laws and other relevant
concerns, and thereafter forward the Amended Agreement for signature and approval by the President of the
Philippines. The concerned respondents are hereby further directed to comply fully and in good faith with its
institutional obligations or undertakings as provided in Article 18 of the BOT Contract.
Let a copy of this Order be furnished the Office of the Clerk of Court and the Commission on Audit for its information
and guidance.
SO ORDERED.
29
(Emphasis in the original)
On June 23, 2003 the RTC issued an Alias Writ of Execution
30
reading:
WHEREAS, on May 29, 2000, a Decision was rendered by this Court in the above-entitled case, the pertinent
portions of which is [sic] hereunder quoted as follows:
WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of petitioners JANCOM
ENVIRONMENTAL CORP and JANCOM INTERNATIONAL DEVELOPMENT PROJECTS PTY., LIMITED OF
AUSTRALIAS [sic], and against respondents GREATER METROPOLITAN MANILA SOLID WASTE
MANAGEMENT COMM., and HON. ROBERTO N. AVENTAJADO, in his capacity as Chairman of the said
Committee, METRO MANILA DEVELOPMENT AUTHORITY and HON. JEJOMAR C. BINAY, in his capacity as
Chairman of said Authority, declaring the Resolution of respondent Greater Metropolitan Manila Solid Waste
Management Committee disregarding petitioners BOT Award Contract and calling for bids for and authorizing a
new contract for the Metro Manila waste management ILLEGAL an[d] VOID.
Moreover, respondents and their agents are hereby PROHIBITED and ENJOINED from implementing the aforesaid
Resolution and disregarding petitioners BOT Award Contract and from making another award in its place.
Let it be emphasized that this Court is not preventing or stopping the government from implementing infrastructure
projects as it is aware of the proscription under PD 1818. On the contrary, the Court is paving the way for the
necessary and modern solution to the perennial garbage problem that has been the major headache of the
government and in the process would serve to attract more investors in the country.
SO ORDERED.
WHEREAS, on August 7, 2000, petitioners through counsel filed a "Motion for Execution" which the Court
GRANTED in its Order dated August 14, 2000;
WHEREAS, as a consequence thereof, a Writ of Execution was issued on August 14, 2000 and was duly served
upon respondents as per Sheriffs Return dated August 27, 2000;
WHEREAS, ON July 29, 2002, petitioners through counsel filed an "Omnibus Motion," praying, among others, for
the issuance of an Alias Writ of Execution which the Court GRANTED in its Order dated June 11, 2003, the
dispositive portion of which reads as follows:
WHEREFORE, in view of the foregoing, let an Alias Writ of Execution immediately issue and the Clerk of Court and
Ex-Oficio Sheriff or any of her Deputies is directed to implement the same within sixty (60) days from receipt thereof.
Thus, any and all such bids or contracts entered into by respondent MMDA [with] third parties covering the waste
disposal and management within the Metro Manila after August 14, 2000 are hereby declared NULL and VOID.
Respondents are henceforth enjoined and prohibited, with a stern warning, from entering into any such contract with
any third party whether directly or indirectly, in violation of the contractual rights of petitioner Jancom under the BOT
Contract Award, consistent with the Supreme Courts Decision of January 30, 2002.
Respondent MMDA is hereby directed to SUBMIT the Amended Agreement concluded by petitioners with the
previous MMDA officials, or in its discretion if it finds [it] more advantageous to the government, to require
petitioners to make adjustments in the Contract in accordance with existing environmental laws and other relevant
concerns, and thereafter forward the Amended Agreement for signature and approval by the President of the
Philippines. The concerned respondents are hereby further directed to comply fully and in good faith with its
institutional obligations or undertakings as provided in Article 18 of the BOT Contract.
Let a copy of this Order be furnished the Office of the Clerk of Court and the Commission on Audit for its information
and guidance.
SO ORDERED.
x x x x (Emphasis in the original)
By letter
31
of August 15, 2003, Chairman Fernando advised Sheriff Alejandro Q. Loquinario of the Office of the Clerk
of Court and Ex-Oficio Sheriff, Pasig City RTC that:
1. MMDA has not entered into a new contract for solid waste management in lieu of JANCOMs Contract.
2. JANCOMs Contract has been referred to the Office of the President for appropriate action.
3. Without the Presidents approval, JANCOMs Contract cannot be implemented.
32

Petitioners later challenged the RTC June 11, 2003 Order via petition for certiorari
33
with prayer for the issuance of a
temporary restraining order and/or writ of preliminary injunction before the CA. They subsequently filed an Amended
Petition
34
on September 26, 2003.
To the Amended Petition JANCOM filed on October 8, 2003 its Comment
35
after which petitioners filed their
Reply
36
on November 24, 2003.
By the challenged Decision of December 19, 2003, the CA denied the petition and affirmed the June 11, 2003 RTC
Order in this wise:
The Supreme Court ruled that the Jancom contract has the force of law and the parties must abide in good faith by
their respective contractual commitments. It is precisely this pronouncement that the alias writ of execution issued
by respondent judge seeks to enforce. x x x
x x x x
The fact that the Jancom contract has been declared unimplementable without the Presidents signature, would not
excuse petitioners failure to comply with their undertakings under Article 18 of the contract. x x x
x x x x
Petitioners complain that respondent judge focused only on requiring them to perform their supposed obligations
under Article 18 of the contract when private respondents are also required thereunder to post a Performance
Security acceptable to the Republic in the amount allowed in the BOT Law. Petitioners complaint is not justified. x x
x
x x x x
It cannot x x x be said that respondent judge had been unfair or one-sided in directing only petitioners to fulfill their
own obligations under Article 18 of the Jancom contract. Compliance with private respondents obligations under the
contract had not yet become due.
x x x x
There is no debate that the trial courts Decision has attained finality. Once a judgment becomes final and
executory, the prevailing party can have it executed as a matter of right and the granting of execution becomes a
mandatory or ministerial duty of the court. After a judgment has become final and executory, vested rights are
acquired by the winning party. Just as the losing party has the right to file an appeal within the prescribed period, so
also the winning party has the correlative right to enjoy the finality of the resolution of the case.
It is true that the ministerial duty of the court to order the execution of a final and executory judgment admits of
exceptions as (a) where it becomes imperative in the higher interest of justice to direct the suspension of its
execution; or (b) whenever it is necessary to accomplish the aims of justice; or (c) when certain facts and
circumstances transpired after the judgment became final which could render the execution of the judgment unjust.
Petitioners have not shown that any of these exceptions exists to prevent the mandatory execution of the trial
courts Decision.
37
(Italics in the original)
Petitioners Motion for Reconsideration
38
having been denied by the CA by Resolution of May 11, 2004, the present
petition for review
39
was filed on July 12, 2004 positing that:
THE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE LOWER COURT AND IN DISREGARDING
THE FOLLOWING PROPOSITIONS:
I
THE SUBJECT CONTRACT IS INEFFECTIVE AND UNIMPLEMENTABLE UNTIL AND UNLESS IT IS APPROVED
BY THE PRESIDENT.
II
THE SUBJECT CONTRACT ONLY COVERS THE DISPOSITION OF 3,000 TONS OF SOLID WASTE A DAY.
III
THE ALLEGED AMENDED AGREEMENT IS ONLY A DRAFT OR PROPOSAL SUBMITTED BY RESPONDENTS.
IV
RESPONDENTS MUST ALSO BE MADE TO COMPLY WITH THEIR CONTRACTUAL
COMMITMENTS.
40
(Underscoring supplied)
JANCOM filed on September 20, 2004 its Comment
41
on the petition to which petitioners filed their Reply
42
on
January 28, 2005.
On May 4, 2005, Jancom International filed its Comment,
43
reiterating its position that it did not authorize the filing
before the RTC by Atty. Molina of the July 29, 2002 Omnibus Motion that impleaded it as party-movant.
On July 7, 2005, petitioners filed their Reply
44
to Jancom Internationals Comment.
Petitioners argue that since the contract remains unsigned by the President, it cannot yet be executed. Ergo, they
conclude, the proceedings which resulted in the issuance of an alias writ of execution "ran afoul of the [January 30,
2002] decision of [the Supreme] Court in G.R. No. 147465."
45

Petitioners go on to argue that since the contract covers only 3,000 tons of garbage per day while Metro Manila
generates at least 6,000 tons of solid waste a day, MMDA may properly bid out the other 3,000 tons of solid waste
to other interested groups or entities.
Petitioners moreover argue that the alleged Amended Agreement concluded supposedly between JANCOM and
former MMDA Chairman Benjamin Abalos is a mere scrap of paper, a mere draft or proposal submitted by JANCOM
to the MMDA, no agreement on which was reached by the parties; and at all events, express authority ought to have
first been accorded the MMDA to conclude such an amended agreement with JANCOM, the original contract having
been concluded between the Republic of the Philippines and JANCOM.
Finally, petitioners argue that respondents should also be required to perform their commitments pursuant to Article
18
46
of the contract.
The petition is impressed with merit in light of the following considerations.
Section 1, Rule 39 of the Rules of Court provides:
SECTION 1. Execution upon judgments or final orders. Execution shall issue as a matter of right, on motion, upon
a judgment or order that disposes of the action or proceeding upon the expiration of the period to appeal therefrom if
no appeal has been duly perfected.
If the appeal has been duly perfected and finally resolved, the execution may forthwith be applied for in the court of
origin, on motion of the judgment obligee, submitting therewith certified true copies of the judgment or judgments or
final order or orders sought to be enforced and of the entry thereof, with notice to the adverse party.
The appellate court may, on motion in the same case, when the interest of justice so requires, direct the court of
origin to issue the writ of execution.
Once a judgment becomes final, it is basic that the prevailing party is entitled as a matter of right to a writ of
execution the issuance of which is the trial courts ministerial duty, compellable by mandamus.
47

There are instances, however, when an error may be committed in the course of execution proceedings prejudicial
to the rights of a party. These instances call for correction by a superior court, as where:
1) the writ of execution varies the judgment;
2) there has been a change in the situation of the parties making execution inequitable or unjust;
3) execution is sought to be enforced against property exempt from execution;
4) it appears that the controversy has never been submitted to the judgment of the court;
5) the terms of the judgment are not clear enough and there remains room for interpretation thereof; or
6) it appears that the writ of execution has been improvidently issued, or that it is defective in substance,
or is issued against the wrong party, or that the judgment debt has been paid or otherwise satisfied, or the
writ was issued without authority.
48
(Emphasis and Underscoring supplied)
That a writ of execution must conform to the judgment which is to be executed, substantially to every essential
particular thereof,
49
it is settled. It may not thus vary the terms of the judgment it seeks to enforce,
50
nor go beyond
its terms. Where the execution is not in harmony with the judgment which gives it life and exceeds it, it has no
validity.
51

This Courts January 30, 2002 Decision in G.R. No. 147465 held:
We, therefore, hold that the Court of Appeals did not err when it declared the existence of a valid and perfected
contract between the Republic of the Philippines and JANCOM. There being a perfected contract, MMDA cannot
revoke or renounce the same without the consent of the other. From the moment of perfection, the parties are
bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage, and law (Article 1315, Civil Code). The contract
has the force of law between the parties and they are expected to abide in good faith by their respective contractual
commitments, not weasel out of them. Just as nobody can be forced to enter into a contract, in the same manner,
once a contract is entered into, no party can renounce it unilaterally or without the consent of the other. It is a
general principle of law that no one may be permitted to change his mind or disavow and go back upon his own
acts, or to proceed contrary thereto, to the prejudice of the other party. Nonetheless, it has to be repeated
that although the contract is a perfected one, it is still ineffective or unimplementable until and unless it is
approved by the President.
52
(Emphasis and Underscoring supplied)
This Courts April 10, 2002 Resolution also in G.R. No. 147465 moreover held:
x x x The only question before the Court is whether or not there is a valid and perfected contract between the
parties. As to the necessity, expediency, and wisdom of the contract, these are outside the realm of judicial
adjudication. These considerations are primarily and exclusively a matter for the President to decide. While the
Court recognizes that the garbage problem is a matter of grave public concern, it can only declare that the contract
in question is a valid and perfected one between the parties, but the same is still ineffective or unimplementable
until and unless it is approved by the President, the contract itself providing that such approval by the
President is necessary for its effectivity.
53
(Emphasis and Underscoring supplied)
Article 19 of the contract provides:
Article 19. Effectivity. This Contract shall become effective upon approval by the President of the Republic of [the]
Philippines pursuant to existing Laws subject to condition precedent in Article 18. This Contract shall remain in full
force and effect for twenty five (25) years subject to renewal for another twenty five (25) years from the date of
Effectivity. Such renewal will be subject to mutual agreement of the parties and approval by the [P]resident of the
Republic of [the] Philippines. (Emphasis and underscoring supplied)
In issuing the alias writ of execution, the trial court in effect ordered the enforcement of the contract despite this
Courts unequivocal pronouncement that albeit valid and perfected, the contract shall become effective only upon
approval by the President.
Indubitably, the alias writ of execution varied the tenor of this Courts judgment, went against essential portions and
exceeded the terms thereof.
x x x a lower court is without supervisory jurisdiction to interpret or to reverse the judgment of the higher court x x x.
A judge of a lower court cannot enforce different decrees than those rendered by the superior court. x x x
The inferior court is bound by the decree as the law of the case, and must carry it into execution according to the
mandate. They cannot vary it, or examine it for any other purpose than execution, or give any other or further relief,
or review it upon any matter decided on appeal for error apparent, or intermeddle with it, further than to settle so
much as has been remanded. x x x
54

The execution directed by the trial court being out of harmony with the judgment, legal implications cannot save it
from being found to be fatally defective.
55

Notably, while the trial court ratiocinated that it issued on June 23, 2003 the alias writ "to set into motion the legal
mechanism for Presidential approval and signature,"
56
it failed to take due consideration of the fact that during the
pendency of the Omnibus Motion, the contract had earlier been forwarded for appropriate action on November 3,
2002 by Chairman Fernando to the Office of the President, with recommendation for its disapproval, which fact the
trial court had been duly informed of through pleadings and open court manifestations.
57

Additionally, it bears noting that the June 11, 2003 Order of the trial court is likewise indisputably defective in
substance for having directed the submission of the draft Amended Agreement to the President.
The appellate court, in affirming the June 11, 2003 Order of the trial court, overlooked the fact that the Amended
Agreement was unsigned by the parties and it instead speculated and rationalized that the submission thereof to the
President would at all events solve the mounting garbage problem in Metro Manila:
We find that the submission of the Amended Agreement to the President will break the impasse now existing
between the parties which has effectively halted the governments efforts to address Metro Manilas mounting
garbage problem. x x x
As long as petitioners refuse to deal with private respondents, the Metro Manila garbage problem will only continue
to worsen. x x x
That the Amended Agreement could have well been negotiated, if not concluded between private respondents and
the former MMDA administration, is not far-fetched. Petitioners do not dispute that the President had referred the
Jancom contract to then MMDA Chairman Benjamin Abalos for recommendation. Petitioners also do not dispute
that private respondents negotiated with the MMDA for the amendment of the contract.
Besides, the Amended Agreement does not veer away from the original Jancom contract. x x x
58
lawphil.net
The Amended Agreement was, as petitioners correctly allege, merely a draft document containing the proposals of
JANCOM, subject to the approval of the MMDA. As earlier stated, it was not signed by the parties.
59

The original contract itself provides in Article 17.6 that it "may not be amended except by a written [c]ontractsigned
by the parties."
60

It is elementary that, being consensual, a contract is perfected by mere consent.
61
The essence of consent is the
conformity of the parties to the terms of the contract, the acceptance by one of the offer made by the other;
62
it is the
concurrence of the minds of the parties on the object and the cause which shall constitute the contract.
63
Where
there is merely an offer by one party without acceptance by the other, there is no consent and the contract does not
come into existence.
64

As distinguished from the original contract in which this Court held in G.R. No. 147465:
x x x the signing and execution of the contract by the parties clearly show that, as between the parties, there was
concurrence of offer and acceptance with respect to the material details of the contract, thereby giving rise to the
perfection of the contract. The execution and signing of the contract is not disputed by the parties x x x,
65

the parties did not, with respect to the Amended Agreement, get past the negotiation stage. No meeting of minds
was established. While there was an initial offer made, there was no acceptance.
Even JANCOM President Alfonso G. Tuzon conceded, by letter
66
of June 17, 2002 to Chairman Fernando, that the
Amended Agreement was a mere proposal:
Apropos to all these, we are seeking an urgent EXECUTIVE SESSION on your best time and venue. We can thresh
up major points to establish a common perspective based on data and merit.
We are optimistic you shall then consider with confidence the proposed Amended Contract which incorporates the
adjustments we committed to as stated and earlier submitted to your Office during the incumbency of your
predecessor, for evaluation and appropriate action by NEDA in compliance with the BOT Law and Article 18.1.1 of
our contract.
67

While respondents aver that an acceptance was made, they have not proffered any proof. While indeed the MMDA,
by a letter
68
issued by then MMDA General Manager Jaime Paz, requested then Secretary of Justice Hernando B.
Perez for his legal opinion on the draft Amended Agreement, nowhere in the letter is there any statement indicating
that the MMDA, or the Republic of the Philippines for that matter, had approved respondents proposals embodied in
the said draft agreement.
The pertinent portions of the letter read:
Attention: HON. HERNANDO B. PEREZ
Secretary
Subject: Request for Opinion Regarding the Compromise Offer of Jancom Environmental Corporation for the
Municipal Solid Waste Management of Metro Manila
Dear Secretary Perez:
This is to respectfully request for an opinion from your Honorable Office regarding the Compromise Proposal offered
by JANCOM Environmental Corporation ("JANCOM") in relation to its Contract for the BOT Implementation of the
Waste Management Project for the San Mateo, Rizal Waste Disposal Site dated 19 December 1997 (hereinafter
referred to as the BOT Contract for brevity) with the Republic of the Philippines.
x x x x
x x x this representation is requesting your Honorable Office to render a legal opinion on the following:
Does the offer of JANCOM to temporarily set aside the waste-to-energy plant and implement only the other two
major components of the BOT Contract amount to a novation of the BOT Contract, and therefore necessitating a re-
bidding? If the same does not amount to a novation, by what authority may Jancom set aside temporarily a major
component of the BOT Contract?
x x x x
69

Only an absolute or unqualified acceptance of a definite offer manifests the consent necessary to perfect a
contract.
70
If at all, the MMDA letter only shows that the parties had not gone beyond the preparation stage, which is
the period from the start of the negotiations until the moment just before the agreement of the parties.
71
Obviously,
other material considerations still remained before the Amended Agreement could be perfected. At any time prior to
the perfection of a contract, unaccepted offers and proposals remain as such and cannot be considered as binding
commitments.
72

Respecting petitioners argument that respondents should be directed to comply with their commitments under
Article 18 of the contract, this Court is not convinced.
Article 18.2.1 of the contract provides:
18.2.1 The BOT COMPANY hereby undertakes to provide the following within 2 months from execution of this
Contract as an effective document:
a) sufficient proof of the actual equity contributions from the proposed shareholders of the BOT COMPANY
in a total amount not less than PHP 500,000,000 in accordance with the BOT Law and the implementing
rules and regulations;1avvphil.net
b) sufficient proof of financial commitment from a lending institution sufficient to cover total project cost in
accordance with the BOT Law and the implementing rules and regulations;
c) to support its obligation under this Contract, the BOT COMPANY shall submit a security bond to the
CLIENT in accordance with the form and amount required under the BOT Law. (Underscoring supplied)
As this Court held in G.R. No. 147465:
As clearly stated in Article 18, JANCOM undertook to comply with the stated conditions within 2 months from
execution of the Contract as an effective document. Since the President of the Philippines has not yet affixed his
signature on the contract, the same has not yet become an effective document. Thus, the two-month period within
which JANCOM should comply with the conditions has not yet started to run. x x x
73
(Underscoring supplied)
A final point. The argument raised against the authority of Atty. Molina to file respondents Omnibus Motion before
the RTC does not lie.
Representation continues until the court dispenses with the services of counsel in accordance with Section 26, Rule
138 of the Rules of Court.
74
No substitution of counsel of record is allowed unless the following essential requisites
concur: (1) there must be a written request for substitution; (2) it must be filed with the written consent of the client;
(3) it must be with the written consent of the attorney to be substituted; and (4) in case the consent of the attorney to
be substituted cannot be obtained, there must be at least a proof of notice that the motion for substitution was
served on him in the manner prescribed by the Rules of Court.
75

In the case at bar, there is no showing that there was a valid substitution of counsel at the time Atty. Molina filed the
Omnibus Motion on July 29, 2002 before the RTC, nor that he had priorly filed a Withdrawal of Appearance. He thus
continued to enjoy the presumption of authority granted to him by respondents.
While clients undoubtedly have the right to terminate their relations with their counsel and effect a substitution or
change at any stage of the proceedings, the exercise of such right is subject to compliance with the prescribed
requirements. Otherwise, no substitution can be effective and the counsel who last appeared in the case before the
substitution became effective shall still be responsible for the conduct of the case.
76
The rule is intended to ensure
the orderly disposition of cases.
77

In the absence then of compliance with the essential requirements for valid substitution of the counsel of record,
Atty. Molina enjoys the presumption of authority granted to him by respondents.
In light of the foregoing disquisition, a discussion of the other matters raised by petitioners has been rendered
unnecessary.
WHEREFORE, the petition is GRANTED. The Decision dated December 19, 2003 and Resolution dated May 11,
2004 of the Court of Appeals in CA-G.R. SP No. 78752 are REVERSED and SET ASIDE. The June 11, 2003 Order
of the Regional Trial Court of Pasig, Branch 68 in SCA No. 1955 is declared NULL and VOID.
SO ORDERED.
THIRD DIVISION
G.R. No. 158290 October 23, 2006
HILARION M. HENARES, JR., VICTOR C. AGUSTIN, ALFREDO L. HENARES, DANIEL L. HENARES, ENRIQUE
BELO HENARES, and CRISTINA BELO HENARES, petitioners,
vs.
LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD and DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS, respondents.
R E S O L U T I O N
QUISUMBING, J .:
Petitioners challenge this Court to issue a writ of mandamus commanding respondents Land Transportation
Franchising and Regulatory Board (LTFRB) and the Department of Transportation and Communications (DOTC) to
require public utility vehicles (PUVs) to use compressed natural gas (CNG) as alternative fuel.
Citing statistics from the Metro Manila Transportation and Traffic Situation Study of 1996,
1
the Environmental
Management Bureau (EMB) of the National Capital Region,
2
a study of the Asian Development Bank,
3
the Manila
Observatory
4
and the Department of Environment and Natural Resources
5
(DENR) on the high growth and low
turnover in vehicle ownership in the Philippines, including diesel-powered vehicles, two-stroke engine powered
motorcycles and their concomitant emission of air pollutants, petitioners attempt to present a compelling case for
judicial action against the bane of air pollution and related environmental hazards.
Petitioners allege that the particulate matters (PM) complex mixtures of dust, dirt, smoke, and liquid droplets,
varying in sizes and compositions emitted into the air from various engine combustions have caused detrimental
effects on health, productivity, infrastructure and the overall quality of life. Petitioners particularly cite the effects of
certain fuel emissions from engine combustion when these react to other pollutants. For instance, petitioners aver,
with hydrocarbons, oxide of nitrogen (NO
x
) creates smog; with sulfur dioxide, it creates acid rain; and with ammonia,
moisture and other compounds, it reacts to form nitric acid and harmful nitrates. Fuel emissions also cause
retardation and leaf bleaching in plants. According to petitioner, another emission, carbon monoxide (CO), when not
completely burned but emitted into the atmosphere and then inhaled can disrupt the necessary oxygen in blood.
With prolonged exposure, CO affects the nervous system and can be lethal to people with weak hearts.
6

Petitioners add that although much of the new power generated in the country will use natural gas while a number of
oil and coal-fired fuel stations are being phased-out, still with the projected doubling of power generation over the
next 10 years, and with the continuing high demand for motor vehicles, the energy and transport sectors are likely to
remain the major sources of harmful emissions. Petitioners refer us to the study of the Philippine Environment
Monitor 2002
7
, stating that in four of the country's major cities, Metro Manila, Davao, Cebu and Baguio, the exposure
to PM
10
,

a finer PM which can penetrate deep into the lungs causing serious health problems, is estimated at over
US$430 million.
8
The study also reports that the emissions of PMs have caused the following:
Over 2,000 people die prematurely. This loss is valued at about US$140 million.
Over 9,000 people suffer from chronic bronchitis, which is valued at about US$120 million.
Nearly 51 million cases of respiratory symptom days in Metro Manila (averaging twice a year in Davao and
Cebu, and five to six times in Metro Manila and Baguio), costs about US$170 million. This is a 70 percent
increase, over a decade, when compared with the findings of a similar study done in 1992 for Metro Manila,
which reported 33 million cases.
9

Petitioners likewise cite the University of the Philippines' studies in 1990-91 and 1994 showing that vehicular
emissions in Metro Manila have resulted to the prevalence of chronic obstructive pulmonary diseases (COPD); that
pulmonary tuberculosis is highest among jeepney drivers; and there is a 4.8 to 27.5 percent prevalence of
respiratory symptoms among school children and 15.8 to 40.6 percent among child vendors. The studies also
revealed that the children in Metro Manila showed more compromised pulmonary function than their rural
counterparts. Petitioners infer that these are mostly due to the emissions of PUVs.
To counter the aforementioned detrimental effects of emissions from PUVs, petitioners propose the use of CNG.
According to petitioners, CNG is a natural gas comprised mostly of methane which although containing small
amounts of propane and butane,
10
is colorless and odorless and considered the cleanest fossil fuel because it
produces much less pollutants than coal and petroleum; produces up to 90 percent less CO compared to gasoline
and diesel fuel; reduces NO
x
emissions by 50 percent and cuts hydrocarbon emissions by half; emits 60 percent
less PMs; and releases virtually no sulfur dioxide. Although, according to petitioners, the only drawback of CNG is
that it produces more methane, one of the gases blamed for global warming.
11

Asserting their right to clean air, petitioners contend that the bases for their petition for a writ of mandamus to order
the LTFRB to require PUVs to use CNG as an alternative fuel, lie in Section 16,
12
Article II of the 1987 Constitution,
our ruling in Oposa v. Factoran, Jr.,
13
and Section 4
14
of Republic Act No. 8749 otherwise known as the "Philippine
Clean Air Act of 1999."
Meantime, following a subsequent motion, the Court granted petitioners' motion to implead the Department of
Transportation and Communications (DOTC) as additional respondent.
In his Comment for respondents LTFRB and DOTC, the Solicitor General, cites Section 3, Rule 65 of the Revised
Rules of Court and explains that the writ of mandamus is not the correct remedy since the writ may be issued only to
command a tribunal, corporation, board or person to do an act that is required to be done, when he or it unlawfully
neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust or
station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled,
there being no other plain, speedy and adequate remedy in the ordinary course of law.
15
Further citing existing
jurisprudence, the Solicitor General explains that in contrast to a discretionary act, a ministerial act, which a
mandamus is, is one in which an officer or tribunal performs in a given state of facts, in a prescribed manner, in
obedience to a mandate of legal authority, without regard to or the exercise of his own judgment upon the propriety
or impropriety of an act done.
The Solicitor General also notes that nothing in Rep. Act No. 8749 that petitioners invoke, prohibits the use of
gasoline and diesel by owners of motor vehicles. Sadly too, according to the Solicitor General, Rep. Act No. 8749
does not even mention the existence of CNG as alternative fuel and avers that unless this law is amended to
provide CNG as alternative fuel for PUVs, the respondents cannot propose that PUVs use CNG as alternative fuel.
The Solicitor General also adds that it is the DENR that is tasked to implement Rep. Act No. 8749 and not the
LTFRB nor the DOTC. Moreover, he says, it is the Department of Energy (DOE), under Section 26
16
of Rep. Act No.
8749, that is required to set the specifications for all types of fuel and fuel-related products to improve fuel
compositions for improved efficiency and reduced emissions. He adds that under Section 21
17
of the cited Republic
Act, the DOTC is limited to implementing the emission standards for motor vehicles, and the herein respondents
cannot alter, change or modify the emission standards. The Solicitor General opines that the Court should declare
the instant petition for mandamus without merit.
Petitioners, in their Reply, insist that the respondents possess the administrative and regulatory powers to
implement measures in accordance with the policies and principles mandated by Rep. Act No. 8749, specifically
Section 2
18
and Section 21.
19
Petitioners state that under these laws and with all the available information provided
by the DOE on the benefits of CNG, respondents cannot ignore the existence of CNG, and their failure to recognize
CNG and compel its use by PUVs as alternative fuel while air pollution brought about by the emissions of gasoline
and diesel endanger the environment and the people, is tantamount to neglect in the performance of a duty which
the law enjoins.
Lastly, petitioners aver that other than the writ applied for, they have no other plain, speedy and adequate remedy in
the ordinary course of law. Petitioners insist that the writ in fact should be issued pursuant to the very same Section
3, Rule 65 of the Revised Rules of Court that the Solicitor General invokes.
In their Memorandum, petitioners phrase the issues before us as follows:
I. WHETHER OR NOT THE PETITIONERS HAVE THE PERSONALITY TO BRING THE PRESENT
ACTION
II. WHETHER OR NOT THE PRESENT ACTION IS SUPPORTED BY LAW
III. WHETHER OR NOT THE RESPONDENT IS THE AGENCY RESPONSIBLE TO IMPLEMENT THE
SUGGESTED ALTERNATIVE OF REQUIRING PUBLIC UTILITY VEHICLES TO USE COMPRESSED
NATURAL GAS (CNG)
IV. WHETHER OR NOT THE RESPONDENT CAN BE COMPELLED TO REQUIRE PUBLIC UTILITY
VEHICLES TO USE COMPRESSED NATURAL GAS THROUGH A WRIT OF MANDAMUS
20

Briefly put, the issues are two-fold. First, Do petitioners have legal personality to bring this petition before us?
Second, Should mandamus issue against respondents to compel PUVs to use CNG as alternative fuel?
According to petitioners, Section 16,
21
Article II of the 1987 Constitution is the policy statement that bestows on the
people the right to breathe clean air in a healthy environment. This policy is enunciated in Oposa.
22
The
implementation of this policy is articulated in Rep. Act No. 8749. These, according to petitioners, are the bases for
their standing to file the instant petition. They aver that when there is an omission by the government to safeguard a
right, in this case their right to clean air, then, the citizens can resort to and exhaust all remedies to challenge this
omission by the government. This, they say, is embodied in Section 4
23
of Rep. Act No. 8749.
Petitioners insist that since it is the LTFRB and the DOTC that are the government agencies clothed with power to
regulate and control motor vehicles, particularly PUVs, and with the same agencies' awareness and knowledge that
the PUVs emit dangerous levels of air pollutants, then, the responsibility to see that these are curbed falls under
respondents' functions and a writ of mandamus should issue against them.
The Solicitor General, for his part, reiterates his position that the respondent government agencies, the DOTC and
the LTFRB, are not in a position to compel the PUVs to use CNG as alternative fuel. The Solicitor General explains
that the function of the DOTC is limited to implementing the emission standards set forth in Rep. Act No. 8749 and
the said law only goes as far as setting the maximum limit for the emission of vehicles, but it does not recognize
CNG as alternative engine fuel. The Solicitor General avers that the petition should be addressed to Congress for it
to come up with a policy that would compel the use of CNG as alternative fuel.
Patently, this Court is being asked to resolve issues that are not only procedural. Petitioners challenge this Court to
decide if what petitioners propose could be done through a less circuitous, speedy and unchartered course in an
issue that Chief Justice Hilario G. Davide, Jr. in his ponencia in the Oposa case,
24
describes as "inter-generational
responsibility" and "inter-generational justice."
Now, as to petitioners' standing. There is no dispute that petitioners have standing to bring their case before this
Court. Even respondents do not question their standing. This petition focuses on one fundamental legal right of
petitioners, their right to clean air. Moreover, as held previously, a party's standing before this Court is a procedural
technicality which may, in the exercise of the Court's discretion, be set aside in view of the importance of the issue
raised. We brush aside this issue of technicality under the principle of the transcendental importance to the public,
especially so if these cases demand that they be settled promptly.
Undeniably, the right to clean air not only is an issue of paramount importance to petitioners for it concerns the air
they breathe, but it is also impressed with public interest. The consequences of the counter-productive and
retrogressive effects of a neglected environment due to emissions of motor vehicles immeasurably affect the well-
being of petitioners. On these considerations, the legal standing of the petitioners deserves recognition.
Our next concern is whether the writ of mandamus is the proper remedy, and if the writ could issue against
respondents.
Under Section 3, Rule 65 of the Rules of Court, mandamus lies under any of the following cases: (1) against any
tribunal which unlawfully neglects the performance of an act which the law specifically enjoins as a duty; (2) in case
any corporation, board or person unlawfully neglects the performance of an act which the law enjoins as a duty
resulting from an office, trust, or station; and (3) in case any tribunal, corporation, board or person unlawfully
excludes another from the use and enjoyment of a right or office to which such other is legally entitled; and there is
no other plain, speedy, and adequate remedy in the ordinary course of law.
In University of San Agustin, Inc. v. Court of Appeals,
25
we said,
It is settled that mandamus is employed to compel the performance, when refused, of a ministerial
duty, this being its main objective. It does not lie to require anyone to fulfill contractual obligations or
to compel a course of conduct, nor to control or review the exercise of discretion. On the part of the
petitioner, it is essential to the issuance of a writ of mandamus that he should have a clear legal
rightto the thing demanded and it must be the imperative duty of the respondent to perform the act
required. It never issues in doubtful cases. While it may not be necessary that the duty be absolutely
expressed, it must however, be clear. The writ will not issue to compel an official to do anything
which is not his duty to do or which is his duty not to do, or give to the applicant anything to which he
is not entitled by law. The writ neither confers powers nor imposes duties. It is simply a command to
exercise a power already possessed and to perform a duty already imposed. (Emphasis supplied.)
In this petition the legal right which is sought to be recognized and enforced hinges on a constitutional and a
statutory policy already articulated in operational terms, e.g. in Rep. Act No. 8749, the Philippine Clean Air Act of
1999. Paragraph (a), Section 21 of the Act specifically provides that when PUVs are concerned, the responsibility of
implementing the policy falls on respondent DOTC. It provides as follows:
SEC 21. Pollution from Motor Vehicles. - a) The DOTC shall implement the emission standards for motor
vehicles set pursuant to and as provided in this Act. To further improve the emission standards, the
Department [DENR] shall review, revise and publish the standards every two (2) years, or as the need
arises. It shall consider the maximum limits for all major pollutants to ensure substantial improvement in air
quality for the health, safety and welfare of the general public.
Paragraph (b) states:
b) The Department [DENR] in collaboration with the DOTC, DTI and LGUs, shall develop an action plan
for the control and management of air pollution from motor vehicles consistent with the Integrated Air
Quality Framework . . . . (Emphasis supplied.)
There is no dispute that under the Clean Air Act it is the DENR that is tasked to set the emission standards for fuel
use and the task of developing an action plan. As far as motor vehicles are concerned, it devolves upon the DOTC
and the line agency whose mandate is to oversee that motor vehicles prepare an action plan and implement the
emission standards for motor vehicles, namely the LTFRB.
In Oposa
26
we said, the right to a balanced and healthful ecology carries with it the correlative duty to refrain from
impairing the environment. We also said, it is clearly the duty of the responsible government agencies to advance
the said right.
Petitioners invoke the provisions of the Constitution and the Clean Air Act in their prayer for issuance of a writ of
mandamus commanding the respondents to require PUVs to use CNG as an alternative fuel. Although both are
general mandates that do not specifically enjoin the use of any kind of fuel, particularly the use of CNG, there is an
executive order implementing a program on the use of CNG by public vehicles. Executive Order No. 290,
entitledImplementing the Natural Gas Vehicle Program for Public Transport (NGVPPT), took effect on February 24,
2004. The program recognized, among others, natural gas as a clean burning alternative fuel for vehicle which has
the potential to produce substantially lower pollutants; and the Malampaya Gas-to-Power Project as representing
the beginning of the natural gas industry of the Philippines. Paragraph 1.2, Section 1 of E.O. No. 290 cites as one of
its objectives, the use of CNG as a clean alternative fuel for transport. Furthermore, one of the components of the
program is the development of CNG refueling stations and all related facilities in strategic locations in the country to
serve the needs of CNG-powered PUVs. Section 3 of E.O. No. 290, consistent with E.O. No. 66, series of 2002,
designated the DOE as the lead agency (a) in developing the natural gas industry of the country with the DENR,
through the EMB and (b) in formulating emission standards for CNG. Most significantly, par. 4.5, Section 4 tasks the
DOTC, working with the DOE, to develop an implementation plan for "a gradual shift to CNG fuel utilization in PUVs
and promote NGVs [natural gas vehicles] in Metro Manila and Luzon through the issuance of directives/orders
providing preferential franchises in present day major routes and exclusive franchises to NGVs in newly opened
routes" A thorough reading of the executive order assures us that implementation for a cleaner environment is
being addressed. To a certain extent, the instant petition had been mooted by the issuance of E.O. No. 290.
Regrettably, however, the plain, speedy and adequate remedy herein sought by petitioners, i.e., a writ of mandamus
commanding the respondents to require PUVs to use CNG, is unavailing. Mandamus is available only to compel the
doing of an act specifically enjoined by law as a duty. Here, there is no law that mandates the respondents LTFRB
and the DOTC to order owners of motor vehicles to use CNG. At most the LTFRB has been tasked by E.O. No. 290
in par. 4.5 (ii), Section 4 "to grant preferential and exclusive Certificates of Public Convenience (CPC) or franchises
to operators of NGVs based on the results of the DOTC surveys."
Further, mandamus will not generally lie from one branch of government to a coordinate branch, for the obvious
reason that neither is inferior to the other.
27
The need for future changes in both legislation and its implementation
cannot be preempted by orders from this Court, especially when what is prayed for is procedurally infirm. Besides,
comity with and courtesy to a coequal branch dictate that we give sufficient time and leeway for the coequal
branches to address by themselves the environmental problems raised in this petition.
In the same manner that we have associated the fundamental right to a balanced and healthful ecology with the twin
concepts of "inter-generational responsibility" and "inter-generational justice" in Oposa,
28
where we upheld the right
of future Filipinos to prevent the destruction of the rainforests, so do we recognize, in this petition, the right of
petitioners and the future generation to clean air. In Oposa we said that if the right to a balanced and healthful
ecology is now explicitly found in the Constitution even if the right is "assumed to exist from the inception of
humankind, it is because of the well-founded fear of its framers [of the Constitution] that unless the rights to a
balanced and healthful ecology and to health are mandated as state policies by the Constitution itself, thereby
highlighting their continuing importance and imposing upon the state a solemn obligation to preserve the first and
protect and advance the second, the day would not be too far when all else would be lost not only for the present
generation, but also for those to come. . ."
29

It is the firm belief of this Court that in this case, it is timely to reaffirm the premium we have placed on the protection
of the environment in the landmark case of Oposa. Yet, as serious as the statistics are on air pollution, with the
present fuels deemed toxic as they are to the environment, as fatal as these pollutants are to the health of the
citizens, and urgently requiring resort to drastic measures to reduce air pollutants emitted by motor vehicles, we
must admit in particular that petitioners are unable to pinpoint the law that imposes an indubitable legal duty on
respondents that will justify a grant of the writ of mandamus compelling the use of CNG for public utility vehicles. It
appears to us that more properly, the legislature should provide first the specific statutory remedy to the complex
environmental problems bared by herein petitioners before any judicial recourse by mandamus is taken.
WHEREFORE, the petition for the issuance of a writ of mandamus is DISMISSED for lack of merit.
SO ORDERED.
Carpio, Morales, Tinga, and Velasco, Jr., JJ., concur.


Footnotes
1
Rollo, p. 4.
2
Id. at 6.
3
Id.
4
Id.
5
Id. at 7.
6
Id. at 5, 7-8.
7
Id. at 9.
8
Id. at 10.
9
Id. at 9-10.
10
Id. at 11, citing Alternative Fuels: A Key to Reducing Air Pollution. The Environmental Education and
Information Division Environmental Management Bureau-DENR.
11
Id. at 11-12, citing Bacallan, J.J. Alternative Fuels for Vehicles. Business and Environment. First Quarter
2003. Volume 8, No. 1, page 12.
12
Section 16. The State shall protect and advance the right of the people to a balanced and healthful
ecology in accord with the rhythm and harmony of nature.
13
G.R. No. 101083, July 30, 1993, 224 SCRA 792.
14
SEC. 4. Recognition of Rights. Pursuant to the above-declared principles, the following rights of citizens
are hereby sought to be recognized and the State shall seek to guarantee their enjoyment:
a) The right to breathe clean air;
b) The right to utilize and enjoy all natural resources according to the principle of sustainable
development;
c) The right to participate in the formulation, planning, implementation and monitoring of
environmental policies and programs and in the decision-making process;
d) The right to participate in the decision-making process concerning development policies, plans
and programs, projects or activities that may have adverse impact on the environment and public
health;
e) The right to be informed of the nature and extent of the potential hazard of any activity,
undertaking or project and to be served timely notice of any significant rise in the level of pollution
and the accidental or deliberate release into the atmosphere of harmful or hazardous substances;
f) The right of access to public records which a citizen may need to exercise his or her rights
effectively under this Act;
g) The right to bring action in court or quasi-judicial bodies to enjoin all activities in violation of
environmental laws and regulations, to compel the rehabilitation and cleanup of affected area, and to
seek the imposition of penal sanctions against violators of environmental laws; and
h) The right to bring action in court for compensation of personal damages resulting from the
adverse environmental and public health impact of a project or activity.
15
Rollo, p. 64.
16
SEC. 26. Fuels and Additives.- Pursuant to the Air Quality Framework to be established under Section 7 of
this Act, the Department of Energy (DOE), co-chaired by the Department of Environment and Natural
Resources (DENR), in consultation with the Bureau of Product Standards (BPS) of the DTI, the DOST, the
representatives of the fuel and automotive industries, academe and the consumers shall set the
specifications for all types of fuel and fuel-related products, to improve fuel composition for increased
efficiency and reduced emissions: . . .
17
SEC. 21. Pollution from Motor Vehicles. - a) The DOTC shall implement the emission standards for motor
vehicles set pursuant to and as provided in this Act. To further improve the emission standards, the
Department [DENR] shall review, revise and publish the standards every two (2) years, or as the need
arises. It shall consider the maximum limits for all major pollutants to ensure substantial improvement in air
quality for the health, safety and welfare of the general public.
. . .
18
SEC. 2. Declaration of Principles. - . . .
. . .
Finally, the State recognizes that a clean and healthy environment is for the good of all and should therefore
be the concern of all.
19
SEC. 21. Pollution from Motor Vehicles. - a) The DOTC shall implement the emission standards for motor
vehicles set pursuant to and as provided in this Act.
20
Rollo, pp. 93-94.
21
Supra note 12.
22
Oposa v. Factoran, Jr., supra note 13.
23
Supra note 14.
24
Oposa v. Factoran, Jr., supra note 13.
25
G.R. No. 100588, March 7, 1994, 230 SCRA 761, 771-772.
26
Oposa v. Factoran, Jr., supra note 13 at 805, 808.
27
Dwikarna v. Domingo, G.R. No. 153454, July 7, 2004, 433 SCRA 748, 754.
28
Oposa v. Factoran, Jr., supra note 13 at 803.
29
Id. at 805.

FIRST DIVISION
G.R. No. 146360 May 20, 2004
AZUCENA O. SALALIMA, petitioner,
vs.
EMPLOYEES COMPENSATION COMMISSION and SOCIAL SECURITY SYSTEM, respondents.
D E C I S I O N
YNARES-SANTIAGO, J .:
Before us is a petition for review on certiorari of the Decision
1
of the Court of Appeals dated April 12, 2000 as well as
its Resolution dated December 6, 2000, which affirmed the Employees Compensation Commissions denial of
petitioners claim for compensation benefits resulting from the death of her husband, Juancho Salalima, under
Presidential Decree No. 626, as amended.
Petitioners husband, Juancho S. Salalima, was employed for twenty-nine years as a route helper and subsequently
as route salesman for the Meycauayan Plant of Coca-Cola Bottlers Phils., Incorporated. In 1989, during an annual
company medical examination, Juancho was diagnosed with minimal pulmonary tuberculosis.
2
His illness remained
stationary until October 1994 when Juancho was confined at the Manila Doctors Hospital to undergo section biopsy.
His biopsy revealed that he had "Adenocarcinoma, poorly differentiated, metastatic".
3
Consequently, he underwent
chemotherapy at the Makati Medical Center. On February 1, 1995, he was found to be suffering from
pneumonia.
4
On February 14, 1995, he was confined at the Makati Medical Center. He died two days later on
February 16, 1995 due to "Adenocarcinoma of the Lungs with widespread metastasis to Neck, Brain, Peritoneal
Cavity, Paracaval Lymph Nodes, Abscen; Acute Renal Failure; Septicemia; Upper Gastrointestinal Bleeding".
5

A claim for compensation benefits under P.D. 626 as amended was filed by his surviving wife, Azucena, petitioner
herein, with the Social Security System (SSS). In a report dated November 12, 1998, SSS Branch Manager Elnora
Montenegro and Senior Physicians Corazon Bondoc and Annabelle Bonifacio recommended the denial of
petitioners claim on the ground that Adenocarcinoma of the Lungs (Cancer of the Lungs) had no causal relationship
with Juanchos job as a route salesman.
6
Petitioners motion for reconsideration was denied. Hence, petitioner
brought the case to the Employees Compensation Commission (ECC), which affirmed the decision of the SSS. In
its Decision
7
dated October 7, 1999, the ECC relied upon the Quality Assurance Medical Report prepared by Dr.
Ma. Victoria M. Abesamis for the SSS stating that Juanchos exposure to smog and dust is not associated with the
development of lung cancer.
8

Petitioner elevated the case to the Court of Appeals arguing that Juanchos route as a salesman exposed him to all
kinds of pollutants, not to mention the daily hazards and fatigue that came with his tasks. She pointed out that the
SSS and the ECC disregarded Juanchos medical history and the fact that the risk of contracting Juanchos ailment
was increased by the nature of his work.
9
In its Comment, ECC averred that the presumption of compensability and
the theory of aggravation prevalent under the Workmens Compensation Act have been abandoned. Under the
implementing rules of P.D. 626, as amended, for the sickness and the resulting disability or death to be
compensable, the sickness must be the result of an occupational disease listed under Annex A of the Rules with the
conditions set therein satisfied, otherwise, proof must be shown that the risk of contracting the disease is increased
by the working conditions. The ECC argued that neither condition is present in Juanchos case since lung cancer is
not an occupational disease nor is the risk of contracting lung cancer increased by Juanchos working
conditions.
10
The SSS joined the arguments of the ECC and added that petitioner was not able to present
substantial evidence to overcome the conclusion reached by the SSS that Juanchos cause of death was not work-
connected.
11

In her Reply, petitioner cited the raison dtre for the passage of Republic Act No. 8749, otherwise known as the
Clean Air Act. Petitioner stated that the Act provides for a comprehensive pollution control policy that mainly
concentrates on the prohibition of leaded gasoline due to its scientifically proven deleterious effect on the health of
individuals.
12
Petitioner likewise attached a clipping from the newspaper Manila Standard
13
containing a report
stating that if the present level of diesel exhaust continues, the pollution could be expected to cause more than
125,000 cases of lung cancer in 70 years.
On April 12, 2000, the Court of Appeals affirmed the decision of the ECC, stating that the factual findings of quasi-
judicial agencies, such as the ECC, if supported by substantial evidence, are entitled to great respect in view of their
expertise in their respective fields.
14
Petitioners Motion for Reconsideration
15
was denied for lack of merit.
16

Hence, this petition for review on certiorari, raising the lone issue:
WHETHER OR NOT THE DECISION OF THE HONORABLE COURT OF APPEALS DENYING PETITIONERS
CLAIM UNDER P.D. 626, AS AMENDED, IS IN ACCORDANCE WITH THE RULES ON EMPLOYEES
COMPENSATION AND EXISTING JURISPRUDENCE.
Petitioner claims that the judgment of the Court of Appeals was premised upon a misapprehension of the relevant
facts of the case at bar. She anchors her petition on the fact that while the cause of her husband Juanchos death
was Adenocarcinoma of the lungs, he nonetheless suffered from two listed occupational diseases, namely
pulmonary tuberculosis and pneumonia, prior to his untimely demise, which she insists justifies her claim for death
benefits.
We find merit in the petition.
P.D. No. 626
17
amended Title II of Book IV on the ECC and State Insurance Fund of the Labor Code. Under the
provisions of the law as amended, for the sickness and resulting disability or death to be compensable, the claimant
must prove that: (a) the sickness must be the result of an occupational disease listed under Annex "A" of the Rules
on Employees Compensation, or (b) the risk of contracting the disease was increased by the claimants working
conditions.
18
This means that if the illness or disease that caused the death of the member is not included in the said
Annex "A," then his heirs are entitled to compensation only if it can be proven that the risk of contracting the illness
or disease was increased by the members working conditions.
Under the present law, Adenocarcinoma of the lungs (cancer of the lungs) which was the immediate cause of
Juanchos death as stated in his death certificate, while listed as an occupational disease, is compensable only
among vinyl chloride workers and plastic workers.
19
This, however, would not automatically bar petitioners claim for
as long as she could prove that Juanchos risk of contracting the disease was increased by the latters working
conditions.
20

In the case at bar, there are two conflicting medical reports on the correlation between Juanchos work as a route
salesman and the illness he suffered which was the immediate cause of his demise. Dr. Pablo S. Santos, Coca-
Colas Head of Medical Services, stated in his report that while Juanchos job does not expose him to any chemical
material used within the plant, consideration must be given to smog and dust as factors in the development of his
lung cancer.
21
On the other hand, Dr. Ma. Victoria M. Abesamis of the Social Security System declared in her report
that Juanchos exposure to smog and dust is not associated with the development of lung cancer.
22

According to medical experts, Adenocarcinoma of the lungs is one of the four major histologic varieties of
bronchogenic carcinoma, the characterization being based upon the cell types that compose the carcinoma.
Bronchogenic carcinoma, more commonly known as lung cancer, is the term used to designate nearly all types of
malignant lung tumors. Medical books list the etiology of lung cancers as follows: cigarette smoking, occupational
exposure, air pollution, and other factors such as preexisting lung damage and genetic influences.
23

We agree with petitioner that the respondent government agencies failed to take into consideration Juanchos
medical history in their assessment of the claim for benefits filed by petitioner. For a considerable stretch of
Juanchos stay at Coca-Cola, he was found to be suffering from pulmonary tuberculosis. Several months before his
demise, he was diagnosed with Adenocarcinoma of the lungs. A little over two weeks before his death, Juancho was
afflicted with pneumonia. The obvious deduction is that Juancho, from the time he acquired pulmonary tuberculosis
until his passing away, was predisposed to varied lung diseases.
It is worth noting that tuberculosis is most commonly confused with carcinoma of the lung because the highest
incidence of both diseases is in the upper lobe of the lungs and in older men. The symptoms of both diseases
include loss of weight, chronic cough, blood-streaked sputum and mild fever.
24
Likewise, numerous studies indicate
that scars within the lungs and diffuse pulmonary fibrosis are associated with a slightly increased incidence of lung
cancer.
25
Tuberculosis is a disease characterized by lesions in the lungs as well as tuberculous scars.
26
Thus, in
light of Juanchos continued exposure to detrimental work environment and constant fatigue, the possibility that
Juanchos Adenocarcinoma of the lungs developed from the worsening of his pulmonary tuberculosis is not remote.
The degree of proof required under P.D. No. 626 is merely substantial evidence, which means, "such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion." What the law requires is a
reasonable work-connection and not a direct causal relation. It is enough that the hypothesis on which the
workmen's claim is based is probable. Medical opinion to the contrary can be disregarded especially where there is
some basis in the facts for inferring a work-connection. Probability, not certainty, is the touchstone.
27
In Juanchos
case, we believe that this probability exists. Juanchos job required long hours on the streets as well as his carrying
of cases of soft drinks during sales calls. The combination of fatigue and the pollutants that abound in his work
environment verily contributed to the worsening of his already weak respiratory system. His continuous exposure to
these factors may have led to the development of his cancer of the lungs.
It escapes reason as well as ones sense of equity that Juanchos heirs should now be denied compensation (death)
benefits for the sole reason that his illness immediately before he died was not compensable in his line of work. The
picture becomes more absurd when we consider that had Juancho died a few years earlier, when the diagnosis on
him revealed only pulmonary tuberculosis, his heirs would not perhaps be going through this arduous path to claim
their benefits. Denying petitioners claim is tantamount to punishing them for Juanchos death of a graver illness.
P.D. 626, as amended, is said to have abandoned the presumption of compensability and the theory of aggravation
prevalent under the Workmens Compensation Act. Despite such abandonment, however, the present law has not
ceased to be an employees compensation law or a social legislation; hence, the liberality of the law in favor of the
working man and woman still prevails, and the official agency charged by law to implement the constitutional
guarantee of social justice should adopt a liberal attitude in favor of the employee in deciding claims for
compensability, especially in light of the compassionate policy towards labor which the 1987 Constitution vivifies and
enhances.
28

WHEREFORE, in view of the foregoing, the petition for review on certiorari is GRANTED. The Decision of the Court
of Appeals in CA-G.R. SP No. 56174 dated April 12, 2000 is REVERSED and SET ASIDE. The Social Security
System is ordered to pay petitioner Azucena Salalimas claim for death benefits under the Employees
Compensation Act.
SO ORDERED.
Panganiban, (Acting Chairman), Carpio, and Azcuna, JJ., concur.
Davide, Jr., C.J., (Chairman), on official leave.


Footnotes
1
Penned by Associate Justice Romeo J. Callejo, Sr. as concurred in by Associate Justices Cancio C. Garcia
and Martin S. Villarama, Jr.
2
Roentgenological Report dated 16 December 1989, Court of Appeals Rollo, p. 12.
3
SSS Physicians Medical Report dated 12 November 1998, Rollo, p. 58.
4
Roentgenological Report dated 1 February 1995, Rollo p. 47.
5
Supra, note 3.
6
Id.
7
Rollo, p. 60.
8
Court of Appeals Rollo, p. 40.
9
Petition for Review filed with the Court of Appeals, Rollo, pp. 24-32.
10
Comment of the ECC, Rollo, pp. 66-71.
11
Comment of the SSS, Rollo, pp. 72-79.
12
Reply, Rollo, pp. 80-84.
13
Rollo, p. 85.
14
Court of Appeals Decision, Rollo, pp. 87-93.
15
Rollo, p. 94.
16
Rollo, p. 122.
17
Promulgated on 27 December 1974.
18
Amended Rules on Employees Compensation, Rule III, Section 1(b).
19
Amended Rules on Employees Compensation Annex A (17).
20
Limbo v. Employees Compensation Commission and Social Security System, G.R. No. 146891, 30 July
2002, 385 SCRA 466.
21
Court of Appeals Rollo, p. 39.
22
Supra, note 5.
23
Allen R. Myers, Medicine, 1986, pp. 77-78.
24
Harrisons Principles of Internal Medicine, 1970, 6th ed., p. 872.
25
Supra, note 23.
26
Supra, note 24, pp. 870-871.
27
Salmone v. Employees' Compensation Commission and Social Security System, G.R. No. 142392, 26
September 2000, 341 SCRA 150.
28
Employees Compensation Commission and Government Service Insurance System v. Court of Appeals,
G.R. No. 121545, 14 November 1996, 264 SCRA 248.

FIRST DIVISION
G.R. No. 156052 February 13, 2008
SOCIAL JUSTICE SOCIETY (SJS), VLADIMIR ALARIQUE T. CABIGAO and BONIFACIO S.
TUMBOKON,petitioners,
vs.
HON. JOSE L. ATIENZA, JR., in his capacity as Mayor of the City of Manila, respondent.
x - - - - - - - - - - - - - - - - - - - - - - x
CHEVRON PHILIPPINES INC., PETRON CORPORATION and PILIPINAS SHELL PETROLEUM
CORPORATION,movants-intervenors.
x - - - - - - - - - - - - - - - - - - - - - - x
DEPARTMENT OF ENERGY, movant-intervenor.
R E S O L U T I O N
CORONA, J .:
After we promulgated our decision in this case on March 7, 2007, Chevron Philippines Inc. (Chevron), Petron
Corporation (Petron) and Pilipinas Shell Petroleum Corporation (Shell) (collectively, the oil companies) and the
Republic of the Philippines, represented by the Department of Energy (DOE), filed their respective motions for leave
to intervene and for reconsideration of the decision.
Chevron
1
is engaged in the business of importing, distributing and marketing of petroleum products in the
Philippines while Shell and Petron are engaged in the business of manufacturing, refining and likewise importing,
distributing and marketing of petroleum products in the Philippines.
2
The DOE is a governmental agency created
under Republic Act (RA) No. 7638
3
and tasked to prepare, integrate, coordinate, supervise and control all plans,
programs, projects and activities of the government relative to energy exploration, development, utilization,
distribution and conservation.
4

The facts are restated briefly as follows:
Petitioners Social Justice Society, Vladimir Alarique T. Cabigao and Bonifacio S. Tumbokon, in an original petition
for mandamus under Rule 65 of the Rules of Court, sought to compel respondent Hon. Jose L. Atienza, Jr., then
mayor of the City of Manila, to enforce Ordinance No. 8027. This ordinance was enacted by the Sangguniang
Panlungsod of Manila on November 20, 2001,
5
approved by respondent Mayor on November 28, 2001,
6
and
became effective on December 28, 2001 after publication.
7
Sections 1 and 3 thereof state:
SECTION 1. For the purpose of promoting sound urban planning and ensuring health, public safety, and
general welfare of the residents of Pandacan and Sta. Ana as well as its adjoining areas, the land use of
[those] portions of land bounded by the Pasig River in the north, PNR Railroad Track in the east, Beata St.
in the south, Palumpong St. in the southwest, and Estero de Pandacan in the west[,] PNR Railroad in the
northwest area, Estero de Pandacan in the [n]ortheast, Pasig River in the southeast and Dr. M.L. Carreon in
the southwest. The area of Punta, Sta. Ana bounded by the Pasig River, Marcelino Obrero St., Mayo 28 St.,
and F. Manalo Street, are hereby reclassified from Industrial II to Commercial I.
xxx xxx xxx
SEC. 3. Owners or operators of industries and other businesses, the operation of which are no longer
permitted under Section 1 hereof, are hereby given a period of six (6) months from the date of effectivity of
this Ordinance within which to cease and desist from the operation of businesses which are hereby in
consequence, disallowed.
Ordinance No. 8027 reclassified the area described therein from industrial to commercial and directed the owners
and operators of businesses disallowed under the reclassification to cease and desist from operating their
businesses within six months from the date of effectivity of the ordinance. Among the businesses situated in the
area are the so-called "Pandacan Terminals" of the oil companies.
On June 26, 2002, the City of Manila and the Department of Energy (DOE) entered into a memorandum of
understanding (MOU)
8
with the oil companies. They agreed that "the scaling down of the Pandacan Terminals [was]
the most viable and practicable option." The Sangguniang Panlungsod ratified the MOU in Resolution No. 97.
9
In the
same resolution, the Sanggunian declared that the MOU was effective only for a period of six months starting July
25, 2002.
10
Thereafter, on January 30, 2003, the Sanggunian adopted Resolution No. 13
11
extending the validity of
Resolution No. 97 to April 30, 2003 and authorizing the mayor of Manila to issue special business permits to the oil
companies.
12

This was the factual backdrop presented to the Court which became the basis of our March 7, 2007 decision. We
ruled that respondent had the ministerial duty under the Local Government Code (LGC) to "enforce all laws and
ordinances relative to the governance of the city,"
13
including Ordinance No. 8027. We also held that we need not
resolve the issue of whether the MOU entered into by respondent with the oil companies and the subsequent
resolutions passed by the Sanggunian could amend or repeal Ordinance No. 8027 since the resolutions which
ratified the MOU and made it binding on the City of Manila expressly gave it full force and effect only until April 30,
2003. We concluded that there was nothing that legally hindered respondent from enforcing Ordinance No. 8027.
After we rendered our decision on March 7, 2007, the oil companies and DOE sought to intervene and filed motions
for reconsideration in intervention on March 12, 2007 and March 21, 2007 respectively. On April 11, 2007, we
conducted the oral arguments in Baguio City to hear petitioners, respondent and movants-intervenors oil companies
and DOE.
The oil companies called our attention to the fact that on April 25, 2003, Chevron had filed a complaint against
respondent and the City of Manila in the Regional Trial Court (RTC) of Manila, Branch 39, for the annulment of
Ordinance No. 8027 with application for writs of preliminary prohibitory injunction and preliminary mandatory
injunction.
14
The case was docketed as civil case no. 03-106377. On the same day, Shell filed a petition for
prohibition and mandamus likewise assailing the validity of Ordinance No. 8027 and with application for writs of
preliminary prohibitory injunction and preliminary mandatory injunction.
15
This was docketed as civil case no. 03-
106380. Later on, these two cases were consolidated and the RTC of Manila, Branch 39 issued an order dated May
19, 2003 granting the applications for writs of preliminary prohibitory injunction and preliminary mandatory injunction:
WHEREFORE, upon the filing of a total bond of TWO MILLION (Php 2,000,000.00) PESOS, let a Writ of
Preliminary Prohibitory Injunction be issued ordering [respondent] and the City of Manila, their officers,
agents, representatives, successors, and any other persons assisting or acting in their behalf, during the
pendency of the case, to REFRAIN from taking steps to enforce Ordinance No. 8027, and let a Writ of
Preliminary Mandatory Injunction be issued ordering [respondent] to issue [Chevron and Shell] the
necessary Business Permits to operate at the Pandacan Terminal.
16

Petron likewise filed its own petition in the RTC of Manila, Branch 42, also attacking the validity of Ordinance No.
8027 with prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order (TRO). This
was docketed as civil case no. 03-106379. In an order dated August 4, 2004, the RTC enjoined the parties to
maintain the status quo.
17

Thereafter, in 2006, the city council of Manila enacted Ordinance No. 8119, also known as the Manila
Comprehensive Land Use Plan and Zoning Ordinance of 2006.
18
This was approved by respondent on June 16,
2006.
19

Aggrieved anew, Chevron and Shell filed a complaint in the RTC of Manila, Branch 20, asking for the nullification of
Ordinance No. 8119.
20
This was docketed as civil case no. 06-115334. Petron filed its own complaint on the same
causes of action in the RTC of Manila, Branch 41.
21
This was docketed as civil case no. 07-116700.
22
The court
issued a TRO in favor of Petron, enjoining the City of Manila and respondent from enforcing Ordinance No. 8119.
23

Meanwhile, in civil case no. 03-106379, the parties filed a joint motion to withdraw complaint and counterclaim on
February 20, 2007.
24
In an order dated April 23, 2007, the joint motion was granted and all the claims and
counterclaims of the parties were withdrawn.
25

Given these additional pieces of information, the following were submitted as issues for our resolution:
1. whether movants-intervenors should be allowed to intervene in this case;
26

2. whether the following are impediments to the execution of our March 7, 2007 decision:
(a) Ordinance No. 8119, the enactment and existence of which were not previously brought by the
parties to the attention of the Court and
(b) writs of preliminary prohibitory injunction and preliminary mandatory injunction and status quo
order issued by the RTC of Manila, Branches 39 and 42 and
3. whether the implementation of Ordinance No. 8027 will unduly encroach upon the DOEs powers and
functions involving energy resources.
During the oral arguments, the parties submitted to this Courts power to rule on the constitutionality and validity of
Ordinance No. 8027 despite the pendency of consolidated cases involving this issue in the RTC.
27
The importance
of settling this controversy as fully and as expeditiously as possible was emphasized, considering its impact on
public interest. Thus, we will also dispose of this issue here. The parties were after all given ample opportunity to
present and argue their respective positions. By so doing, we will do away with the delays concomitant with litigation
and completely adjudicate an issue which will most likely reach us anyway as the final arbiter of all legal disputes.
Before we resolve these issues, a brief review of the history of the Pandacan Terminals is called for to put our
discussion in the proper context.
History Of The Pandacan Oil Terminals
Pandacan (one of the districts of the City of Manila) is situated along the banks of the Pasig river. At the turn of the
twentieth century, Pandacan was unofficially designated as the industrial center of Manila. The area, then largely
uninhabited, was ideal for various emerging industries as the nearby river facilitated the transportation of goods and
products. In the 1920s, it was classified as an industrial zone.
28
Among its early industrial settlers were the oil
companies. Shell established its installation there on January 30, 1914.
29
Caltex (now Chevron) followed suit in 1917
when the company began marketing its products in the country.
30
In 1922, it built a warehouse depot which was later
converted into a key distribution terminal.
31
The corporate presence in the Philippines of Esso (Petrons
predecessor) became more keenly felt when it won a concession to build and operate a refinery in Bataan in
1957.
32
It then went on to operate a state-of-the-art lube oil blending plant in the Pandacan Terminals where it
manufactures lubes and greases.
33

On December 8, 1941, the Second World War reached the shores of the Philippine Islands. Although Manila was
declared an open city, the Americans had no interest in welcoming the Japanese. In fact, in their zealous attempt to
fend off the Japanese Imperial Army, the United States Army took control of the Pandacan Terminals and hastily
made plans to destroy the storage facilities to deprive the advancing Japanese Army of a valuable logistics
weapon.
34
The U.S. Army burned unused petroleum, causing a frightening conflagration. Historian Nick Joaquin
recounted the events as follows:
After the USAFFE evacuated the City late in December 1941, all army fuel storage dumps were set on fire.
The flames spread, enveloping the City in smoke, setting even the rivers ablaze, endangering bridges and
all riverside buildings. For one week longer, the "open city" blazeda cloud of smoke by day, a pillar of
fire by night.
35

The fire consequently destroyed the Pandacan Terminals and rendered its network of depots and service stations
inoperative.
36

After the war, the oil depots were reconstructed. Pandacan changed as Manila rebuilt itself. The three major oil
companies resumed the operation of their depots.
37
But the district was no longer a sparsely populated industrial
zone; it had evolved into a bustling, hodgepodge community. Today, Pandacan has become a densely populated
area inhabited by about 84,000 people, majority of whom are urban poor who call it home.
38
Aside from numerous
industrial installations, there are also small businesses, churches, restaurants, schools, daycare centers and
residences situated there.
39
Malacaang Palace, the official residence of the President of the Philippines and the
seat of governmental power, is just two kilometers away.
40
There is a private school near the Petron depot. Along
the walls of the Shell facility are shanties of informal settlers.
41
More than 15,000 students are enrolled in elementary
and high schools situated near these facilities.
42
A university with a student population of about 25,000 is located
directly across the depot on the banks of the Pasig river.
43

The 36-hectare Pandacan Terminals house the oil companies distribution terminals and depot facilities.
44
The
refineries of Chevron and Shell in Tabangao and Bauan, both in Batangas, respectively, are connected to the
Pandacan Terminals through a 114-kilometer
45
underground pipeline system.
46
Petrons refinery in Limay, Bataan,
on the other hand, also services the depot.
47
The terminals store fuel and other petroleum products and supply 95%
of the fuel requirements of Metro Manila,
48
50% of Luzons consumption and 35% nationwide.
49
Fuel can also be
transported through barges along the Pasig river or tank trucks via the South Luzon Expressway.
We now discuss the first issue: whether movants-intervenors should be allowed to intervene in this case.
Intervention Of The Oil Companies And The DOE Should Be Allowed In The Interest of Justice
Intervention is a remedy by which a third party, not originally impleaded in the proceedings, becomes a litigant
therein to enable him, her or it to protect or preserve a right or interest which may be affected by such
proceedings.
50
The pertinent rules are Sections 1 and 2, Rule 19 of the Rules of Court:
SEC. 1. Who may intervene. A person who has a legal interest in the matter in litigation, or in the success
of either of the parties, or an interest against both, or 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 may, with leave
of court, be allowed to intervene in the action. The court 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
intervenors rights may be fully protected in a separate proceeding.
SEC. 2. Time to intervene. The motion to intervene may be filed at any time before rendition of judgment
by the trial court. A copy of the pleading-in-intervention shall be attached to the motion and served on the
original parties.
Thus, the following are the requisites for intervention of a non-party:
(1) Legal interest
(a) in the matter in controversy; or
(b) in the success of either of the parties; or
I against both parties; or
(d) person 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;
(2) Intervention will not unduly delay or prejudice the adjudication of rights of original parties;
(3) Intervenors rights may not be fully protected in a separate proceeding
51
and
(g)The motion to intervene may be filed at any time before rendition of judgment by the trial court.
For both the oil companies and DOE, the last requirement is definitely absent. As a rule, intervention is allowed
"before rendition of judgment" as Section 2, Rule 19 expressly provides. Both filed their separate motions after our
decision was promulgated. In Republic of the Philippines v. Gingoyon,
52
a recently decided case which was also an
original action filed in this Court, we declared that the appropriate time to file the motions-in-intervention was before
and not after resolution of the case.
53

The Court, however, has recognized exceptions to Section 2, Rule 19 in the interest of substantial justice:
The rule on intervention, like all other rules of procedure, is intended to make the powers of the Court fully
and completely available for justice. It is aimed to facilitate a comprehensive adjudication of rival claims
overriding technicalities on the timeliness of the filing thereof.
54

The oil companies assert that they have a legal interest in this case because the implementation of Ordinance No.
8027 will directly affect their business and property rights.
55

[T]he interest which entitles a person to intervene in a suit between other parties must be in the matter in
litigation and of such direct and immediate character that the intervenor will either gain or lose by direct legal
operation and effect of the judgment. Otherwise, if persons not parties to the action were allowed to
intervene, proceedings would become unnecessarily complicated, expensive and interminable. And this
would be against the policy of the law. The words "an interest in the subject" means a direct interest in the
cause of action as pleaded, one that would put the intervenor in a legal position to litigate a fact alleged in
the complaint without the establishment of which plaintiff could not recover.
56

We agree that the oil companies have a direct and immediate interest in the implementation of Ordinance No. 8027.
Their claim is that they will need to spend billions of pesos if they are compelled to relocate their oil depots out of
Manila. Considering that they admitted knowing about this case from the time of its filing on December 4, 2002, they
should have intervened long before our March 7, 2007 decision to protect their interests. But they did not.
57
Neither
did they offer any worthy explanation to justify their late intervention.
Be that as it may, although their motion for intervention was not filed on time, we will allow it because they raised
and presented novel issues and arguments that were not considered by the Court in its March 7, 2007 decision.
After all, the allowance or disallowance of a motion to intervene is addressed to the sound discretion of the court
before which the case is pending.
58
Considering the compelling reasons favoring intervention, we do not think that
this will unduly delay or prejudice the adjudication of rights of the original parties. In fact, it will be expedited since
their intervention will enable us to rule on the constitutionality of Ordinance No. 8027 instead of waiting for the RTCs
decision.
The DOE, on the other hand, alleges that its interest in this case is also direct and immediate as Ordinance No.
8027 encroaches upon its exclusive and national authority over matters affecting the oil industry. It seeks to
intervene in order to represent the interests of the members of the public who stand to suffer if the Pandacan
Terminals operations are discontinued. We will tackle the issue of the alleged encroachment into DOEs domain
later on. Suffice it to say at this point that, for the purpose of hearing all sides and considering the transcendental
importance of this case, we will also allow DOEs intervention.
The Injunctive Writs Are Not Impediments To The Enforcement Of Ordinance No. 8027
Under Rule 65, Section 3
59
of the Rules of Court, a petition for mandamus may be filed when any tribunal,
corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically enjoins
as a duty resulting from an office, trust or station. According to the oil companies, respondent did not unlawfully fail
or neglect to enforce Ordinance No. 8027 because he was lawfully prevented from doing so by virtue of the
injunctive writs and status quo order issued by the RTC of Manila, Branches 39 and 42.
First, we note that while Chevron and Shell still have in their favor the writs of preliminary injunction and preliminary
mandatory injunction, the status quo order in favor of Petron is no longer in effect since the court granted the joint
motion of the parties to withdraw the complaint and counterclaim.
60

Second, the original parties failed to inform the Court about these injunctive writs. Respondent (who was also
impleaded as a party in the RTC cases) defends himself by saying that he informed the court of the pendency of the
civil cases and that a TRO was issued by the RTC in the consolidated cases filed by Chevron and Shell. It is true
that had the oil companies only intervened much earlier, the Court would not have been left in the dark about these
facts. Nevertheless, respondent should have updated the Court, by way of manifestation, on such a relevant matter.
In his memorandum, respondent mentioned the issuance of a TRO. Under Section 5 of Rule 58 of the Rules of
Court, a TRO issued by the RTC is effective only for a period of 20 days. This is why, in our March 7, 2007 decision,
we presumed with certainty that this had already lapsed.
61
Respondent also mentioned the grant of injunctive writs
in his rejoinder which the Court, however, expunged for being a prohibited pleading. The parties and their counsels
were clearly remiss in their duties to this Court.
In resolving controversies, courts can only consider facts and issues pleaded by the parties.
62
Courts, as well as
magistrates presiding over them are not omniscient. They can only act on the facts and issues presented before
them in appropriate pleadings. They may not even substitute their own personal knowledge for evidence. Nor may
they take notice of matters except those expressly provided as subjects of mandatory judicial notice.
We now proceed to the issue of whether the injunctive writs are legal impediments to the enforcement of Ordinance
No. 8027.
Section 3, Rule 58 of the Rules of Court enumerates the grounds for the issuance of a writ of preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. A preliminary injunction may be granted when it is
established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in
restraining the commission or continuance of the act or acts complained of, or in requiring the performance
of an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance or nonperformance of the act or acts complained of during the
litigation would probably work injustice to the applicant; or
(g) IThat a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or
suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the
subject of the action or proceeding, and tending to render the judgment ineffectual.
There are two requisites for the issuance of a preliminary injunction: (1) the right to be protected exists prima
facieand (2) the acts sought to be enjoined are violative of that right. It must be proven that the violation sought to be
prevented will cause an irreparable injustice.
The act sought to be restrained here was the enforcement of Ordinance No. 8027. It is a settled rule that an
ordinance enjoys the presumption of validity and, as such, cannot be restrained by injunction.
63
Nevertheless, when
the validity of the ordinance is assailed, the courts are not precluded from issuing an injunctive writ against its
enforcement. However, we have declared that the issuance of said writ is proper only when:
... the petitioner assailing the ordinance has made out a case of unconstitutionality strong enough to
overcome, in the mind of the judge, the presumption of validity, in addition to a showing of a clear legal
right to the remedy sought....
64
(Emphasis supplied)
Judge Reynaldo G. Ros, in his order dated May 19, 2003, stated his basis for issuing the injunctive writs:
The Court, in resolving whether or not a Writ of Preliminary Injunction or Preliminary Mandatory Injunction
should be issued, is guided by the following requirements: (1) a clear legal right of the complainant; (2) a
violation of that right; and (3) a permanent and urgent necessity for the Writ to prevent serious damage. The
Court believes that these requisites are present in these cases.
There is no doubt that the plaintiff/petitioners have been legitimately operating their business in the
Pandacan Terminal for many years and they have made substantial capital investment therein. Every year
they were issued Business Permits by the City of Manila. Its operations have not been declared illegal or
contrary to law or morals. In fact, because of its vital importance to the national economy, it was included in
the Investment Priorities Plan as mandated under the "Downstream Oil Industry Deregulation Act of 1988
(R.A. 8479). As a lawful business, the plaintiff/petitioners have a right, therefore, to continue their operation
in the Pandacan Terminal and the right to protect their investments. This is a clear and unmistakable right of
the plaintiff/petitioners.
The enactment, therefore, of City Ordinance No. 8027 passed by the City Council of Manila reclassifying the
area where the Pandacan Terminal is located from Industrial II to Commercial I and requiring the
plaintiff/petitioners to cease and desist from the operation of their business has certainly violated the rights
of the plaintiff/petitioners to continue their legitimate business in the Pandacan Terminal and deprived them
of their huge investments they put up therein. Thus, before the Court, therefore, determines whether the
Ordinance in question is valid or not, a Writ of Preliminary Injunction and a Writ of Mandatory Injunction be
issued to prevent serious and irreparable damage to plaintiff/petitioners.
65

Nowhere in the judges discussion can we see that, in addition to a showing of a clear legal right of Chevron
and Shell to the remedy sought, he was convinced that they had made out a case of unconstitutionality or
invalidity strong enough to overcome the presumption of validity of the ordinance. Statutes and ordinances
are presumed valid unless and until the courts declare the contrary in clear and unequivocal terms.
66
The mere fact
that the ordinance is alleged to be unconstitutional or invalid will not entitle a party to have its enforcement
enjoined.
67
The presumption is all in favor of validity. The reason for this is obvious:
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 circumstances which surround the subject and necessitate action. The local legislative body, by
enacting the ordinance, has in effect given notice that the regulations are essential to the well being of the
people . . . The Judiciary should not lightly set aside legislative action when there is not a clear invasion of
personal or property rights under the guise of police regulation.
68

X x x
...[Courts] accord the presumption of constitutionality to legislative enactments, not only because the
legislature is presumed to abide by the Constitution but also because the judiciary[,] in the determination of
actual cases and controversies[,] must reflect the wisdom and justice of the people as expressed through
their representatives in the executive and legislative departments of the government.
69

The oil companies argue that this presumption must be set aside when the invalidity or unreasonableness appears
on the face of the ordinance itself.
70
We see no reason to set aside the presumption. The ordinance, on its face,
does not at all appear to be unconstitutional. It reclassified the subject area from industrial to commercial. Prima
facie, this power is within the power of municipal corporations:
The power of municipal corporations to divide their territory into industrial, commercial and residential zones
is recognized in almost all jurisdictions inasmuch as it is derived from the police power itself and is exercised
for the protection and benefit of their inhabitants.
71

X x x
There can be no doubt that the City of Manila has the power to divide its territory into residential and
industrial zones, and to prescribe that offensive and unwholesome trades and occupations are to be
established exclusively in the latter zone.
xxx xxx xxx
Likewise, it cannot be denied that the City of Manila has the authority, derived from the police power, of
forbidding the appellant to continue the manufacture of toyo in the zone where it is now situated, which has
been declared residential....
72

Courts will not invalidate an ordinance unless it clearly appears that it is unconstitutional. There is no such showing
here. Therefore, the injunctive writs issued in the Manila RTCs May 19, 2003 order had no leg to stand on.
We are aware that the issuance of these injunctive writs is not being assailed as tainted with grave abuse of
discretion. However, we are confronted with the question of whether these writs issued by a lower court are
impediments to the enforcement of Ordinance No. 8027 (which is the subject of the mandamus petition). As already
discussed, we rule in the negative.
Ordinance No. 8027 Was Not Superseded By Ordinance No. 8119
The March 7, 2007 decision did not take into consideration the passage of Ordinance No. 8119 entitled "An
Ordinance Adopting the Manila Comprehensive Land Use Plan and Zoning Regulations of 2006 and Providing for
the Administration, Enforcement and Amendment thereto" which was approved by respondent on June 16, 2006.
The simple reason was that the Court was never informed about this ordinance.
While courts are required to take judicial notice of the laws enacted by Congress, the rule with respect to local
ordinances is different. Ordinances are not included in the enumeration of matters covered by mandatory judicial
notice under Section 1, Rule 129 of the Rules of Court.
73

Although, Section 50 of RA 409
74
provides that:
SEC. 50 Judicial notice of ordinances. - All courts sitting in the city shall take judicial notice of the ordinances
passed by the [Sangguniang Panglungsod].
This cannot be taken to mean that this Court, since it has its seat in the City of Manila, should have taken steps to
procure a copy of the ordinance on its own, relieving the party of any duty to inform the Court about it.
Even where there is a statute that requires a court to take judicial notice of municipal ordinances, a court is not
required to take judicial notice of ordinances that are not before it and to which it does not have access. The party
asking the court to take judicial notice is obligated to supply the court with the full text of the rules the party desires it
to have notice of.
75
Counsel should take the initiative in requesting that a trial court take judicial notice of an
ordinance even where a statute requires courts to take judicial notice of local ordinances.
76

The intent of a statute requiring a court to take judicial notice of a local ordinance is to remove any discretion a court
might have in determining whether or not to take notice of an ordinance. Such a statute does not direct the court to
act on its own in obtaining evidence for the record and a party must make the ordinance available to the court for it
to take notice.
77

In its defense, respondent claimed that he did not inform the Court about the enactment of Ordinance No. 8119
because he believed that it was different from Ordinance No. 8027 and that the two were not inconsistent with each
other.
78

In the same way that we deem the intervenors late intervention in this case unjustified, we find the failure of
respondent, who was an original party here, inexcusable.
The Rule On Judicial Admissions Is Not Applicable Against Respondent
The oil companies assert that respondent judicially admitted that Ordinance No. 8027 was repealed by Ordinance
No. 8119 in civil case no. 03-106379 (where Petron assailed the constitutionality of Ordinance No. 8027) when the
parties in their joint motion to withdraw complaint and counterclaim stated that "the issue ...has been rendered moot
and academic by virtue of the passage of [Ordinance No. 8119]."
79
They contend that such admission worked as an
estoppel against the respondent.
Respondent countered that this stipulation simply meant that Petron was recognizing the validity and legality of
Ordinance No. 8027 and that it had conceded the issue of said ordinances constitutionality, opting instead to
question the validity of Ordinance No. 8119.
80
The oil companies deny this and further argue that respondent, in his
answer in civil case no. 06-115334 (where Chevron and Shell are asking for the nullification of Ordinance No. 8119),
expressly stated that Ordinance No. 8119 replaced Ordinance No. 8027:
81

... Under Ordinance No. 8027, businesses whose uses are not in accord with the reclassification were given
six months to cease [their] operation. Ordinance No. 8119, which in effect, replaced Ordinance [No.]
8027, merely took note of the time frame provided for in Ordinance No. 8119.... Ordinance No. 8119 thus
provided for an even longer term, that is[,] seven years;
82
(Emphasis supplied)
Rule 129, Section 4 of the Rules of Court provides:
Section 4. Judicial admissions. An admission, verbal or written, made by a party in the course of the
proceedings in the same case, does not require proof. The admission may be contradicted only by showing
that it was made through palpable mistake or that no such admission was made. (Emphasis supplied)
While it is true that a party making a judicial admission cannot subsequently take a position contrary to or
inconsistent with what was pleaded,
83
the aforestated rule is not applicable here. Respondent made the statements
regarding the ordinances in civil case nos. 03-106379 and 06-115334 which are not "the same" as this case before
us.
84
To constitute a judicial admission, the admission must be made in the same case in which it is offered.
Hence, respondent is not estopped from claiming that Ordinance No. 8119 did not supersede Ordinance No. 8027.
On the contrary, it is the oil companies which should be considered estopped. They rely on the argument that
Ordinance No. 8119 superseded Ordinance No. 8027 but, at the same time, also impugn its (8119s) validity. We
frown on the adoption of inconsistent positions and distrust any attempt at clever positioning under one or the other
on the basis of what appears advantageous at the moment. Parties cannot take vacillating or contrary positions
regarding the validity of a statute
85
or ordinance. Nonetheless, we will look into the merits of the argument of implied
repeal.
Ordinance No. 8119 Did Not Impliedly Repeal Ordinance No. 8027
Both the oil companies and DOE argue that Ordinance No. 8119 repealed Ordinance No. 8027. They assert that
although there was no express repeal
86
of Ordinance No. 8027, Ordinance No. 8119 impliedly repealed it.
According to the oil companies, Ordinance No. 8119 reclassified the area covering the Pandacan Terminals to "High
Density Residential/Mixed Use Zone (R-3/MXD)"
87
whereas Ordinance No. 8027 reclassified the same area from
Industrial II to Commercial I:
SECTION 1. For the purpose of promoting sound urban planning and ensuring health, public safety, and general
welfare of the residents of Pandacan and Sta. Ana as well as its adjoining areas, the land use of [those] portions of
land bounded by the Pasig River in the north, PNR Railroad Track in the east, Beata St. in the south, Palumpong St.
in the southwest, and Estero de Pancacan in the west[,] PNR Railroad in the northwest area, Estero de Pandacan in
the [n]ortheast, Pasig River in the southeast and Dr. M.L. Carreon in the southwest. The area of Punta, Sta. Ana
bounded by the Pasig River, Marcelino Obrero St., Mayo 28 St., and F. Manalo Street, are herebyreclassified from
Industrial II to Commercial I. (Emphasis supplied)
Moreover, Ordinance No. 8119 provides for a phase-out of seven years:
SEC. 72. Existing Non-Conforming Uses and Buildings. - The lawful use of any building, structure or land at
the time of the adoption of this Ordinance may be continued, although such use does not conform with the
provision of the Ordinance, provided:
xxx xxx xxx
(g) In case the non-conforming use is an industrial use:
xxx xxx xxx
d. The land use classified as non-conforming shall program the phase-out and relocation of
the non-conforming use within seven (7) years from the date of effectivity of this Ordinance.
(Emphasis supplied)
This is opposed to Ordinance No. 8027 which compels affected entities to vacate the area within six months from
the effectivity of the ordinance:
SEC. 3. Owners or operators of industries and other businesses, the operation of which are no longer
permitted under Section 1 hereof, are hereby given a period of six (6) months from the date of effectivity of
this Ordinance within which to cease and desist from the operation of businesses which are hereby in
consequence, disallowed.
Ordinance No. 8119 also designated the Pandacan oil depot area as a "Planned Unit Development/Overlay Zone
(O-PUD)":
SEC. 23. Use Regulations in Planned Unit Development/Overlay Zone (O-PUD). O-PUD Zones are
identified specific sites in the City of Manila wherein the project site is comprehensively planned as an entity
via unitary site plan which permits flexibility in planning/ design, building siting, complementarily of building
types and land uses, usable open spaces and the preservation of significant natural land features, pursuant
to regulations specified for each particular PUD. Enumerated below are identified PUD:
xxx xxx xxx
6. Pandacan Oil Depot Area
xxx xxx xxx
Enumerated below are the allowable uses:
1. all uses allowed in all zones where it is located
2. the [Land Use Intensity Control (LUIC)] under which zones are located shall, in all instances be complied
with
3. the validity of the prescribed LUIC shall only be [superseded] by the development controls and regulations
specified for each PUD as provided for each PUD as provided for by the masterplan of respective
PUDs.
88
(Emphasis supplied)
Respondent claims that in passing Ordinance No. 8119, the Sanggunian did not intend to repeal Ordinance No.
8027 but meant instead to carry over 8027s provisions to 8119 for the purpose of making Ordinance No. 8027
applicable to the oil companies even after the passage of Ordinance No. 8119.
89
He quotes an excerpt from the
minutes of the July 27, 2004 session of the Sanggunian during the first reading of Ordinance No. 8119:
Member GARCIA: Your Honor, iyong patungkol po roon sa oil depot doon sa amin sa Sixth District sa
Pandacan, wala pong nakalagay eith sa ordinansa rito na taliwas o kakaiba roon sa ordinansang ipinasa
noong nakaraang Konseho, iyong Ordinance No. 8027. So kung ano po ang nandirito sa ordinansa na
ipinasa ninyo last time, iyon lang po ang ni-lift eithe at inilagay eith. At eith eith ordinansang iyong naipasa
ng huling Konseho, niri-classify [ninyo] from Industrial II to Commercial C-1 ang area ng Pandacan kung
nasaan ang oil depot. So ini-lift lang po [eithe] iyong definition, density, at saka po yon pong ng noong
ordinansa ninyo na siya eith naming inilagay eith, iniba lang po naming iyong title. So wala po kaming
binago na taliwas o nailagay na taliwas doon sa ordinansang ipinasa ninyo, ni-lift lang po [eithe]
from Ordinance No. 8027."
90
(Emphasis supplied)
We agree with respondent.
Repeal by implication proceeds on the premise that where a statute of later date clearly reveals the intention of the
legislature to abrogate a prior act on the subject, that intention must be given effect.
91

There are two kinds of implied repeal. The first is: where the provisions in the two acts on the same subject matter
are irreconcilably contradictory, the latter act, to the extent of the conflict, constitutes an implied repeal of the earlier
one.
92
The second is: if the later act covers the whole subject of the earlier one and is clearly intended as a
substitute, it will operate to repeal the earlier law.
93
The oil companies argue that the situation here falls under the
first category.
Implied repeals are not favored and will not be so declared unless the intent of the legislators is manifest.
94
As
statutes and ordinances are presumed to be passed only after careful deliberation and with knowledge of all existing
ones on the subject, it follows that, in passing a law, the legislature did not intend to interfere with or abrogate a
former law relating to the same subject matter.
95
If the intent to repeal is not clear, the later act should be construed
as a continuation of, and not a substitute for, the earlier act.
96

These standards are deeply enshrined in our jurisprudence. We disagree that, in enacting Ordinance No. 8119,
there was any indication of the legislative purpose to repeal Ordinance No. 8027.
97
The excerpt quoted above is
proof that there was never such an intent. While it is true that both ordinances relate to the same subject
matter,i.e. classification of the land use of the area where Pandacan oil depot is located, if there is no intent to
repeal the earlier enactment, every effort at reasonable construction must be made to reconcile the ordinances so
that both can be given effect:
The fact that a later enactment may relate to the same subject matter as that of an earlier statute is not of
itself sufficient to cause an implied repeal of the prior act, since the new statute may merely be cumulative or
a continuation of the old one. What is necessary is a manifest indication of legislative purpose to repeal.
98

For the first kind of implied repeal, there must be an irreconcilable conflict between the two ordinances. There is no
conflict between the two ordinances. Ordinance No. 8027 reclassified the Pandacan area from Industrial II to
Commercial I. Ordinance No. 8119, in Section 23, designated it as a "Planned Unit Development/Overlay Zone (O-
PUD)." In its Annex C which defined the zone boundaries,
99
the Pandacan area was shown to be within the "High
Density Residential/Mixed Use Zone (R-3/MXD)." These zone classifications in Ordinance No. 8119 are not
inconsistent with the reclassification of the Pandacan area from Industrial to Commercial in Ordinance No. 8027.
The "O-PUD" classification merely made Pandacan a "project site ... comprehensively planned as an entity via
unitary site plan which permits flexibility in planning/design, building siting, complementarity of building types and
land uses, usable open spaces and the preservation of significant natural land features...."
100
Its classification as "R-
3/MXD" means that it should "be used primarily for high-rise housing/dwelling purposes and limited
complementary/supplementary trade, services and business activities."
101
There is no conflict since both ordinances
actually have a common objective, i.e., to shift the zoning classification from industrial to commercial (Ordinance No.
8027) or mixed residential/commercial (Ordinance No. 8119).
Moreover, it is a well-settled rule in statutory construction that a subsequent general law does not repeal a prior
special law on the same subject unless it clearly appears that the legislature has intended by the latter general act to
modify or repeal the earlier special law. Generalia specialibus non derogant (a general law does not nullify a specific
or special law).
102
This is so even if the provisions of the general law are sufficiently comprehensive to include what
was set forth in the special act.
103
The special act and the general law must stand together, one as the law of the
particular subject and the other as the law of general application.
104
The special law must be taken as intended to
constitute an exception to, or a qualification of, the general act or provision.
105

The reason for this is that the legislature, in passing a law of special character, considers and makes special
provisions for the particular circumstances dealt with by the special law. This being so, the legislature, by
adopting a general law containing provisions repugnant to those of the special law and without making any
mention of its intention to amend or modify such special law, cannot be deemed to have intended an
amendment, repeal or modification of the latter.
106

Ordinance No. 8027 is a special law
107
since it deals specifically with a certain area described therein (the Pandacan
oil depot area) whereas Ordinance No. 8119 can be considered a general law
108
as it covers the entire city of
Manila.
The oil companies assert that even if Ordinance No. 8027 is a special law, the existence of an all-encompassing
repealing clause in Ordinance No. 8119 evinces an intent on the part of the Sanggunian to repeal the earlier
ordinance:
Sec. 84. Repealing Clause. All ordinances, rules, regulations in conflict with the provisions of this
Ordinance are hereby repealed; PROVIDED, That the rights that are vested upon the effectivity of this
Ordinance shall not be impaired.
They cited Hospicio de San Jose de Barili, Cebu City v. Department of Agrarian Reform:
109

The presence of such general repealing clause in a later statute clearly indicates the legislative intent to
repeal all prior inconsistent laws on the subject matter, whether the prior law is a general law or a special
law... Without such a clause, a later general law will ordinarily not repeal a prior special law on the same
subject. But with such clause contained in the subsequent general law, the prior special law will be deemed
repealed, as the clause is a clear legislative intent to bring about that result.
110

This ruling in not applicable here. The repealing clause of Ordinance No. 8119 cannot be taken to indicate the
legislative intent to repeal all prior inconsistent laws on the subject matter, including Ordinance No. 8027, a special
enactment, since the aforequoted minutes (an official record of the discussions in the Sanggunian) actually indicated
the clear intent to preserve the provisions of Ordinance No. 8027.
To summarize, the conflict between the two ordinances is more apparent than real. The two ordinances can be
reconciled. Ordinance No. 8027 is applicable to the area particularly described therein whereas Ordinance No. 8119
is applicable to the entire City of Manila.
Mandamus Lies To Compel Respondent Mayor To Enforce Ordinance No. 8027
The oil companies insist that mandamus does not lie against respondent in consideration of the separation of
powers of the executive and judiciary.
111
This argument is misplaced. Indeed,
[the] Courts will not interfere by mandamus proceedings with the legislative [or executive departments] of the
government in the legitimate exercise of its powers, except to enforce mere ministerial acts required by
law to be performed by some officer thereof.
112
(Emphasis Supplied)
since this is the function of a writ of mandamus, which is the power to compel "the performance of an act which the
law specifically enjoins as a duty resulting from office, trust or station."
113

They also argue that petitioners had a plain, speedy and adequate remedy to compel respondent to enforce
Ordinance No. 8027 which was to seek relief from the President of the Philippines through the Secretary of the
Department of Interior and Local Government (DILG) by virtue of the Presidents power of supervision over local
government units. Again, we disagree. A party need not go first to the DILG in order to compel the enforcement of
an ordinance. This suggested process would be unreasonably long, tedious and consequently injurious to the
interests of the local government unit (LGU) and its constituents whose welfare is sought to be protected. Besides,
petitioners resort to an original action for mandamus before this Court is undeniably allowed by the Constitution.
114

Ordinance No. 8027 Is Constitutional And Valid
Having ruled that there is no impediment to the enforcement of Ordinance No. 8027, we now proceed to make a
definitive ruling on its constitutionality and validity.
The tests of a valid ordinance are well established. For an ordinance to be valid, it must not only be within the
corporate powers of the LGU to enact and be passed according to the procedure prescribed by law, it must also
conform to the following substantive requirements: (1) must not contravene the Constitution or any statute; (2) must
not be unfair or oppressive; (3) must not be partial or discriminatory; (4) must not prohibit but may regulate trade; (5)
must be general and consistent with public policy and (6) must not be unreasonable.
115

The City of Manila Has The Power To Enact Ordinance No. 8027
Ordinance No. 8027 was passed by the Sangguniang Panlungsod of Manila in the exercise of its police power.
Police power is the plenary power vested in the legislature to make statutes and ordinances to promote the health,
morals, peace, education, good order or safety and general welfare of the people.
116
This power flows from the
recognition that salus populi est suprema lex (the welfare of the people is the supreme law).
117
While police power
rests primarily with the national legislature, such power may be delegated.
118
Section 16 of the LGC, known as the
general welfare clause, encapsulates the delegated police power to local governments:
119

Section 16. General Welfare. Every local government unit shall exercise the powers expressly granted,
those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient
and effective governance, and those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support, among other things, the
preservation and enrichment of culture, promote health and safety, enhance the right of the people to a
balanced ecology, encourage and support the development of appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance economic prosperity and social justice, promote
full employment among their residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants.
LGUs like the City of Manila exercise police power through their respective legislative bodies, in this case,
theSangguniang Panlungsod or the city council. Specifically, the Sanggunian can enact ordinances for the general
welfare of the city:
Section. 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panglungsod, as the
legislative branch 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 xxxx
This police power was also provided for in RA 409 or the Revised Charter of the City of Manila:
Section 18. Legislative powers. The [City Council] shall have the following legislative powers:
xxx xxx xxx
(g) To enact all ordinances it may deem necessary and proper for the sanitation and safety, the furtherance
of the prosperity, and the promotion of the morality, peace, good order, comfort, convenience, and general
welfare of the city and its inhabitants, and such others as may be necessary to carry into effect and
discharge the powers and duties conferred by this chapter xxxx
120

Specifically, the Sanggunian has the power to "reclassify land within the jurisdiction of the city."
121

The Enactment Of Ordinance No. 8027 Is A Legitimate Exercise Of Police Power
As with the State, local governments may be considered as having properly exercised their police power only if the
following requisites are met: (1) the interests of the public generally, as distinguished from those of a particular
class, require its exercise and (2) the means employed are reasonably necessary for the accomplishment of the
purpose and not unduly oppressive upon individuals. In short, there must be a concurrence of a lawful subject and a
lawful method.
122

Ordinance No. 8027 was enacted "for the purpose of promoting sound urban planning, ensuring health, public
safety and general welfare"
123
of the residents of Manila. The Sanggunian was impelled to take measures to protect
the residents of Manila from catastrophic devastation in case of a terrorist attack on the Pandacan Terminals.
Towards this objective, the Sanggunian reclassified the area defined in the ordinance from industrial to commercial.
The following facts were found by the Committee on Housing, Resettlement and Urban Development of the City of
Manila which recommended the approval of the ordinance:
(1) the depot facilities contained 313.5 million liters of highly flammable and highly volatile products which include
petroleum gas, liquefied petroleum gas, aviation fuel, diesel, gasoline, kerosene and fuel oil among others;
(2) the depot is open to attack through land, water or air;
(3) it is situated in a densely populated place and near Malacaang Palace and
(4) in case of an explosion or conflagration in the depot, the fire could spread to the neighboring communities.
124

The ordinance was intended to safeguard the rights to life, security and safety of all the inhabitants of Manila and
not just of a particular class.
125
The depot is perceived, rightly or wrongly, as a representation of western interests
which means that it is a terrorist target. As long as it there is such a target in their midst, the residents of Manila are
not safe. It therefore became necessary to remove these terminals to dissipate the threat. According to respondent:
Such a public need became apparent after the 9/11 incident which showed that what was perceived to be
impossible to happen, to the most powerful country in the world at that, is actually possible. The destruction
of property and the loss of thousands of lives on that fateful day became the impetus for a public need. In
the aftermath of the 9/11 tragedy, the threats of terrorism continued [such] that it became imperative for
governments to take measures to combat their effects.
126

Wide discretion is vested on the legislative authority to determine not only what the interests of the public require but
also what measures are necessary for the protection of such interests.
127
Clearly, the Sanggunian was in the best
position to determine the needs of its constituents.
In the exercise of police power, property rights of individuals may be subjected to restraints and burdens in order to
fulfill the objectives of the government.
128
Otherwise stated, the government may enact legislation that may interfere
with personal liberty, property, lawful businesses and occupations to promote the general welfare.
129
However, the
interference must be reasonable and not arbitrary. And to forestall arbitrariness, the methods or means used to
protect public health, morals, safety or welfare must have a reasonable relation to the end in view.
130

The means adopted by the Sanggunian was the enactment of a zoning ordinance which reclassified the area where
the depot is situated from industrial to commercial. A zoning ordinance is defined as a local city or municipal
legislation which logically arranges, prescribes, defines and apportions a given political subdivision into specific land
uses as present and future projection of needs.
131
As a result of the zoning, the continued operation of the
businesses of the oil companies in their present location will no longer be permitted. The power to establish zones
for industrial, commercial and residential uses is derived from the police power itself and is exercised for the
protection and benefit of the residents of a locality.
132
Consequently, the enactment of Ordinance No. 8027 is within
the power of the Sangguniang Panlungsod of the City of Manila and any resulting burden on those affected cannot
be said to be unjust:
There can be no doubt that the City of Manila has the power to divide its territory into residential and
industrial zones, and to prescribe that offensive and unwholesome trades and occupations are to be
established exclusively in the latter zone.
"The benefits to be derived by cities adopting such regulations (zoning) may be summarized as follows:
They attract a desirable and assure a permanent citizenship; they foster pride in and attachment to the city;
they promote happiness and contentment; they stabilize the use and value of property and promote the
peace, [tranquility], and good order of the city. We do not hesitate to say that the attainment of these objects
affords a legitimate field for the exercise of the police power. He who owns property in such a district is not
deprived of its use by such regulations. He may use it for the purposes to which the section in which it is
located is dedicated. That he shall not be permitted to use it to the desecration of the community constitutes
no unreasonable or permanent hardship and results in no unjust burden."
xxx xxx xxx
"The 14
th
Amendment protects the citizen in his right to engage in any lawful business, but it does not
prevent legislation intended to regulate useful occupations which, because of their nature or location, may
prove injurious or offensive to the public."
133

We entertain no doubt that Ordinance No. 8027 is a valid police power measure because there is a concurrence of
lawful subject and lawful method.
Ordinance No. 8027 Is Not Unfair, Oppressive Or Confiscatory Which Amounts To Taking Without
Compensation
According to the oil companies, Ordinance No. 8027 is unfair and oppressive as it does not only regulate but also
absolutely prohibits them from conducting operations in the City of Manila. Respondent counters that this is not
accurate since the ordinance merely prohibits the oil companies from operating their businesses in the Pandacan
area.
Indeed, the ordinance expressly delineated in its title and in Section 1 what it pertained to. Therefore, the oil
companies contention is not supported by the text of the ordinance. Respondent succinctly stated that:
The oil companies are not forbidden to do business in the City of Manila. They may still very well do so,
except that their oil storage facilities are no longer allowed in the Pandacan area. Certainly, there are other
places in the City of Manila where they can conduct this specific kind of business. Ordinance No. 8027 did
not render the oil companies illegal. The assailed ordinance affects the oil companies business only in so far
as the Pandacan area is concerned.
134

The oil companies are not prohibited from doing business in other appropriate zones in Manila. The City of Manila
merely exercised its power to regulate the businesses and industries in the zones it established:
As to the contention that the power to regulate does not include the power to prohibit, it will be seen that the
ordinance copied above does not prohibit the installation of motor engines within the municipality of
Cabanatuan but only within the zone therein fixed. If the municipal council of Cabanatuan is authorized to
establish said zone, it is also authorized to provide what kind of engines may be installed therein. In banning
the installation in said zone of all engines not excepted in the ordinance, the municipal council of
Cabanatuan did no more than regulate their installation by means of zonification.
135

The oil companies aver that the ordinance is unfair and oppressive because they have invested billions of pesos in
the depot.
136
Its forced closure will result in huge losses in income and tremendous costs in constructing new
facilities.
Their contention has no merit. In the exercise of police power, there is a limitation on or restriction of property
interests to promote public welfare which involves no compensable taking. Compensation is necessary only when
the states power of eminent domain is exercised. In eminent domain, property is appropriated and applied to some
public purpose. Property condemned under the exercise of police power, on the other hand, is noxious or intended
for a noxious or forbidden purpose and, consequently, is not compensable.
137
The restriction imposed to protect
lives, public health and safety from danger is not a taking. It is merely the prohibition or abatement of a noxious use
which interferes with paramount rights of the public.
Property has not only an individual function, insofar as it has to provide for the needs of the owner, but also a social
function insofar as it has to provide for the needs of the other members of society.
138
The principle is this:
Police power proceeds from the principle that every holder of property, however absolute and unqualified
may be his title, holds it under the implied liability that his use of it shall not be injurious to the equal
enjoyment of others having an equal right to the enjoyment of their property, nor injurious to the right of the
community. Rights of property, like all other social and conventional rights, are subject to 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.
139

In the regulation of the use of the property, nobody else acquires the use or interest therein, hence there is no
compensable taking.
140
In this case, the properties of the oil companies and other businesses situated in the affected
area remain theirs. Only their use is restricted although they can be applied to other profitable uses permitted in the
commercial zone.
Ordinance No. 8027 Is Not Partial And Discriminatory
The oil companies take the position that the ordinance has discriminated against and singled out the Pandacan
Terminals despite the fact that the Pandacan area is congested with buildings and residences that do not comply
with the National Building Code, Fire Code and Health and Sanitation Code.
141

This issue should not detain us for long. An ordinance based on reasonable classification does not violate the
constitutional guaranty of the equal protection of the law.
142
The requirements for a valid and reasonable
classification are: (1) it must rest on substantial distinctions; (2) it must be germane to the purpose of the law; (3) it
must not be limited to existing conditions only and (4) it must apply equally to all members of the same class.
143

The law may treat and regulate one class differently from another class provided there are real and substantial
differences to distinguish one class from another.
144
Here, there is a reasonable classification. We reiterate that what
the ordinance seeks to prevent is a catastrophic devastation that will result from a terrorist attack. Unlike the depot,
the surrounding community is not a high-value terrorist target. Any damage caused by fire or explosion occurring in
those areas would be nothing compared to the damage caused by a fire or explosion in the depot itself. Accordingly,
there is a substantial distinction. The enactment of the ordinance which provides for the cessation of the operations
of these terminals removes the threat they pose. Therefore it is germane to the purpose of the ordinance. The
classification is not limited to the conditions existing when the ordinance was enacted but to future conditions as
well. Finally, the ordinance is applicable to all businesses and industries in the area it delineated.
Ordinance No. 8027 is Not Inconsistent With RA 7638 And RA 8479
The oil companies and the DOE assert that Ordinance No. 8027 is unconstitutional because it contravenes RA 7638
(DOE Act of 1992)
145
and RA 8479 (Downstream Oil Industry Deregulation Law of 1998).
146
They argue that through
RA 7638, the national legislature declared it a policy of the state "to ensure a continuous, adequate, and economic
supply of energy"
147
and created the DOE to implement this policy. Thus, under Section 5 I, DOE is empowered to
"establish and administer programs for the exploration, transportation, marketing, distribution, utilization,
conservation, stockpiling, and storage of energy resources." Considering that the petroleum products contained in
the Pandacan Terminals are major and critical energy resources, they conclude that their administration, storage,
distribution and transport are of national interest and fall under DOEs primary and exclusive jurisdiction.
148

They further assert that the terminals are necessary for the delivery of immediate and adequate supply of oil to its
recipients in the most economical way.
149
Local legislation such as Ordinance No. 8027 (which effectively calls for
the removal of these terminals) allegedly frustrates the state policy of ensuring a continuous, adequate, and
economic supply of energy expressed in RA 7638, a national law.
150
Likewise, the ordinance thwarts the
determination of the DOE that the terminals operations should be merely scaled down and not discontinued.
151
They
insist that this should not be allowed considering that it has a nationwide economic impact and affects public interest
transcending the territorial jurisdiction of the City of Manila.
152

According to them, the DOEs supervision over the oil industry under RA 7638 was subsequently underscored by
RA 8479, particularly in Section 7 thereof:
SECTION 7. Promotion of Fair Trade Practices. The Department of Trade and Industry (DTI) and DOE
shall take all measures to promote fair trade and prevent cartelization, monopolies, combinations in restraint
of trade, and any unfair competition in the Industry as defined in Article 186 of the Revised Penal Code, and
Articles 168 and 169 of Republic Act No. 8293, otherwise known as the "Intellectual Property Rights
Law".The DOE shall continue to encourage certain practices in the Industry which serve the public
interest and are intended to achieve efficiency and cost reduction, ensure continuous supply of
petroleum products, and enhance environmental protection. These practices may include borrow-and-loan
agreements, rationalized depot and manufacturing operations, hospitality agreements, joint tanker and
pipeline utilization, and joint actions on oil spill control and fire prevention. (Emphasis supplied)
Respondent counters that DOEs regulatory power does not preclude LGUs from exercising their police power.
153

Indeed, ordinances should not contravene existing statutes enacted by Congress. The rationale for this was clearly
explained in Magtajas vs. Pryce Properties Corp., Inc.:
154

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."
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, which 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.
155

The question now is whether Ordinance No. 8027 contravenes RA 7638 and RA 8479. It does not.
Under Section 5 I of RA 7638, DOE was given the power to "establish and administer programs for the exploration,
transportation, marketing, distribution, utilization, conservation, stockpiling, and storage of energy resources." On
the other hand, under Section 7 of RA 8749, the DOE "shall continue to encourage certain practices in the Industry
which serve the public interest and are intended to achieve efficiency and cost reduction, ensure continuous supply
of petroleum products." Nothing in these statutes prohibits the City of Manila from enacting ordinances in the
exercise of its police power.
The principle of local autonomy is enshrined in and zealously protected under the Constitution. In Article II, Section
25 thereof, the people expressly adopted the following policy:
Section 25. The State shall ensure the autonomy of local governments.
An entire article (Article X) of the Constitution has been devoted to guaranteeing and promoting the autonomy of
LGUs. The LGC was specially promulgated by Congress to ensure the autonomy of local governments as mandated
by the Constitution:
Sec. 2. Declaration of Policy. (a) It is hereby declared the policy of the State that the territorial and
political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable
them to attain their fullest development as self-reliant communities and make them more effective
partners in the attainment of national goals. Toward this end, the State shall provide for a more
responsive and accountable local government structure instituted through a system of decentralization
whereby local government units shall be given more powers, authority, responsibilities, and resources. The
process of decentralization shall proceed from the National Government to the local government units.
(Emphasis supplied)
We do not see how the laws relied upon by the oil companies and DOE stripped the City of Manila of its power to
enact ordinances in the exercise of its police power and to reclassify the land uses within its jurisdiction. To guide
us, we shall make a brief survey of our decisions where the police power measure of the LGU clashed with national
laws.
In Tan v. Perea,
156
the Court ruled that Ordinance No. 7 enacted by the municipality of Daanbantayan, Cebu
allowing the operation of three cockpits was invalid for violating PD 449 (or the Cockfighting Law of 1974) which
permitted only one cockpit per municipality.
In Batangas CATV, Inc. v. Court of Appeals,
157
the Sangguniang Panlungsod of Batangas City enacted Resolution
No. 210 granting Batangas CATV, Inc. a permit to operate a cable television (CATV) system in Batangas City. The
Court held that the LGU did not have the authority to grant franchises to operate a CATV system because it was the
National Telecommunications Commission (NTC) that had the power under EO Nos. 205 and 436 to regulate CATV
operations. EO 205 mandated the NTC to grant certificates of authority to CATV operators while EO 436 vested on
the NTC the power to regulate and supervise the CATV industry.
In Lina, Jr. v. Pao,
158
we held that Kapasiyahan Bilang 508, Taon 1995 of the Sangguniang Panlalawigan of
Laguna could not be used as justification to prohibit lotto in the municipality of San Pedro, Laguna because lotto was
duly authorized by RA 1169, as amended by BP 42. This law granted a franchise to the Philippine Charity
Sweepstakes Office and allowed it to operate lotteries.
In Magtajas v. Pryce Properties Corp., Inc.,
159
the Sangguniang Panlungsod of Cagayan de Oro City passed
Ordinance Nos. 3353 and 3375-93 prohibiting the operation of casinos in the city. We ruled that these ordinances
were void for contravening PD 1869 or the charter of the Philippine Amusements and Gaming Corporation which
had the power to operate casinos.
The common dominator of all of these cases is that the national laws were clearly and expressly in conflict with the
ordinances/resolutions of the LGUs. The inconsistencies were so patent that there was no room for doubt. This is
not the case here.
The laws cited merely gave DOE general powers to "establish and administer programs for the exploration,
transportation, marketing, distribution, utilization, conservation, stockpiling, and storage of energy resources" and "to
encourage certain practices in the [oil] industry which serve the public interest and are intended to achieve efficiency
and cost reduction, ensure continuous supply of petroleum products." These powers can be exercised without
emasculating the LGUs of the powers granted them. When these ambiguous powers are pitted against the
unequivocal power of the LGU to enact police power and zoning ordinances for the general welfare of its
constituents, it is not difficult to rule in favor of the latter. Considering that the powers of the DOE regarding the
Pandacan Terminals are not categorical, the doubt must be resolved in favor of the City of Manila:
SECTION 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
(g) IThe 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 xxxx
The least we can do to ensure genuine and meaningful local autonomy is not to force an interpretation that
negates powers explicitly granted to local governments. To rule against the power of LGUs to reclassify
areas within their jurisdiction will subvert the principle of local autonomy guaranteed by the Constitution.
160
As
we have noted in earlier decisions, our national officials should not only comply with the constitutional
provisions on local autonomy but should also appreciate the spirit and liberty upon which these provisions
are based.
161

The DOE Cannot Exercise The Power Of Control Over LGUs
Another reason that militates against the DOEs assertions is that Section 4 of Article X of the Constitution confines
the Presidents power over LGUs to one of general supervision:
SECTION 4. The President of the Philippines shall exercise general supervision over local governments. Xxxx
Consequently, the Chief Executive or his or her alter egos, cannot exercise the power of control over them.
162
Control
and supervision are distinguished as follows:
[Supervision] means overseeing or the power or authority of an officer to see that subordinate officers
perform their duties. If the latter fail or neglect to fulfill them, the former may take such action or step as
prescribed by law to make them perform their duties. Control, on the other hand, means the power of an
officer to alter or modify or nullify or set aside what a subordinate officer ha[s] done in the performance of his
duties and to substitute the judgment of the former for that of the latter.
163

Supervisory power, when contrasted with control, is the power of mere oversight over an inferior body; it does not
include any restraining authority over such body.
164
It does not allow the supervisor to annul the acts of the
subordinate.
165
Here, what the DOE seeks to do is to set aside an ordinance enacted by local officials, a power that
not even its principal, the President, has. This is because:
Under our present system of government, executive power is vested in the President. The members of the
Cabinet and other executive officials are merely alter egos. As such, they are subject to the power of control
of the President, at whose will and behest they can be removed from office; or their actions and decisions
changed, suspended or reversed. In contrast, the heads of political subdivisions are elected by the people.
Their sovereign powers emanate from the electorate, to whom they are directly accountable. By
constitutional fiat, they are subject to the Presidents supervision only, not control, so long as their acts are
exercised within the sphere of their legitimate powers. By the same token, the President may not withhold or
alter any authority or power given them by the Constitution and the law.
166

Thus, the President and his or her alter egos, the department heads, cannot interfere with the activities of local
governments, so long as they act within the scope of their authority. Accordingly, the DOE cannot substitute its own
discretion for the discretion exercised by the sanggunian of the City of Manila. In local affairs, the wisdom of local
officials must prevail as long as they are acting within the parameters of the Constitution and the law.
167

Ordinance No. 8027 Is Not Invalid For Failure To Comply With RA 7924 And EO 72
The oil companies argue that zoning ordinances of LGUs are required to be submitted to the Metropolitan Manila
Development Authority (MMDA) for review and if found to be in compliance with its metropolitan physical framework
plan and regulations, it shall endorse the same to the Housing and Land Use Regulatory Board (HLURB). Their
basis is Section 3 (e) of RA 7924:
168

SECTION 3. Scope of MMDA Services. Metro-wide services under the jurisdiction of the MMDAare
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 [LGUs]
comprising Metropolitan Manila. These services shall include:
xxx xxx xxx
(g) Urban renewal, zoning, and land use planning, and shelter services which include the formulation,
adoption and implementation of policies, standards, rules and regulations, programs and projects to
rationalize and optimize urban land use and provide direction to urban growth and expansion, the
rehabilitation and development of slum and blighted areas, the development of shelter and housing facilities
and the provision of necessary social services thereof. (Emphasis supplied)
Reference was also made to Section 15 of its implementing rules:
Section 15. Linkages with HUDCC, HLURB, NHA, LGUs and Other National Government Agencies
Concerned on Urban Renewal, Zoning and Land Use Planning and Shelter Services. Within the context of
the National Housing and Urban Development Framework, and pursuant to the national standards,
guidelines and regulations formulated by the Housing and Land Use Regulatory Board [HLURB] on land use
planning and zoning, the [MMDA] shall prepare a metropolitan physical framework plan and regulations
which shall complement and translate the socio-economic development plan for Metro Manila into physical
or spatial terms, and provide the basis for the preparation, review, integration and implementation of local
land use plans and zoning, ordinance of cities and municipalities in the area.
Said framework plan and regulations shall contain, among others, planning and zoning policies and
procedures that shall be observed by local government units in the preparation of their own plans and
ordinances pursuant to Section 447 and 458 of RA 7160, as well as the identification of sites and projects
that are considered to be of national or metropolitan significance.
Cities and municipalities shall prepare their respective land use plans and zoning ordinances and
submit the same for review and integration by the [MMDA] and indorsement to HLURB in
accordance with Executive Order No. 72 and other pertinent laws.
In the preparation of a Metropolitan Manila physical framework plan and regulations, the [MMDA] shall
coordinate with the Housing and Urban Development Coordinating Council, HLURB, the National Housing
Authority, Intramuros Administration, and all other agencies of the national government which are concerned
with land use and zoning, urban renewal and shelter services. (Emphasis supplied)
They also claim that EO 72
169
provides that zoning ordinances of cities and municipalities of Metro Manila are
subject to review by the HLURB to ensure compliance with national standards and guidelines. They cite Section 1,
paragraphs I, (e), (f) and (g):
SECTION 1. Plan formulation or updating.
xxx xxx xxx
(g) Cities and municipalities of Metropolitan Manila shall continue to formulate or update their
respective comprehensive land use plans, in accordance with the land use planning and zoning
standards and guidelines prescribed by the HLURB pursuant to EO 392, S. of 1990, and other
pertinent national policies.
xxx xxx xxx
(e) Pursuant to LOI 729, S. of 1978, EO 648, S. of 1981, and RA 7279, the comprehensive land use
plans of provinces, highly urbanized cities and independent component cities shall be reviewed and ratified
by the HLURB to ensure compliance with national standards and guidelines.
(f) Pursuant to EO 392, S. of 1999, the comprehensive land use plans of cities and municipalities of
Metropolitan Manila shall be reviewed by the HLURB to ensure compliance with national standards and
guidelines.
(g) Said review shall be completed within three (3) months upon receipt thereof otherwise, the same shall be
deemed consistent with law, and, therefore, valid. (Emphasis supplied)
They argue that because Ordinance No. 8027 did not go through this review process, it is invalid.
The argument is flawed.
RA 7942 does not give MMDA the authority to review land use plans and zoning ordinances of cities and
municipalities. This was only found in its implementing rules which made a reference to EO 72. EO 72 expressly
refers to comprehensive land use plans (CLUPs) only. Ordinance No. 8027 is admittedly not a CLUP nor intended to
be one. Instead, it is a very specific ordinance which reclassified the land use of a defined area in order to prevent
the massive effects of a possible terrorist attack. It is Ordinance No. 8119 which was explicitly formulated as the
"Manila [CLUP] and Zoning Ordinance of 2006." CLUPs are the ordinances which should be submitted to the MMDA
for integration in its metropolitan physical framework plan and approved by the HLURB to ensure that they conform
with national guidelines and policies.
Moreover, even assuming that the MMDA review and HLURB ratification are necessary, the oil companies did not
present any evidence to show that these were not complied with. In accordance with the presumption of validity in
favor of an ordinance, its constitutionality or legality should be upheld in the absence of proof showing that the
procedure prescribed by law was not observed. The burden of proof is on the oil companies which already had
notice that this Court was inclined to dispose of all the issues in this case. Yet aside from their bare assertion, they
did not present any certification from the MMDA or the HLURB nor did they append these to their pleadings. Clearly,
they failed to rebut the presumption of validity of Ordinance No. 8027.
170

Conclusion
Essentially, the oil companies are fighting for their right to property. They allege that they stand to lose billions of
pesos if forced to relocate. However, based on the hierarchy of constitutionally protected rights, the right to life
enjoys precedence over the right to property.
171
The reason is obvious: life is irreplaceable, property is not. When the
state or LGUs exercise of police power clashes with a few individuals right to property, the former should prevail.
172

Both law and jurisprudence support the constitutionality and validity of Ordinance No. 8027. Without a doubt, there
are no impediments to its enforcement and implementation. Any delay is unfair to the inhabitants of the City of
Manila and its leaders who have categorically expressed their desire for the relocation of the terminals. Their power
to chart and control their own destiny and preserve their lives and safety should not be curtailed by the intervenors
warnings of doomsday scenarios and threats of economic disorder if the ordinance is enforced.
Secondary to the legal reasons supporting the immediate implementation of Ordinance No. 8027 are the policy
considerations which drove Manilas government to come up with such a measure:
... [The] oil companies still were not able to allay the apprehensions of the city regarding the security threat
in the area in general. No specific action plan or security measures were presented that would prevent a
possible large-scale terrorist or malicious attack especially an attack aimed at Malacaang. The measures
that were installed were more directed towards their internal security and did not include the prevention of an
external attack even on a bilateral level of cooperation between these companies and the police and military.
xxx xxx xxx
It is not enough for the city government to be told by these oil companies that they have the most
sophisticated fire-fighting equipments and have invested millions of pesos for these equipments. The city
government wants to be assured that its residents are safe at any time from these installations, and in the
three public hearings and in their position papers, not one statement has been said that indeed the absolute
safety of the residents from the hazards posed by these installations is assured.
173

We are also putting an end to the oil companies determination to prolong their stay in Pandacan despite the
objections of Manilas residents. As early as October 2001, the oil companies signed a MOA with the DOE obliging
themselves to:
... undertake a comprehensive and comparative study ... [which] shall include the preparation of a Master
Plan, whose aim is to determine the scope and timing of the feasible location of the Pandacan oil terminals
and all associated facilities and infrastructure including government support essential for the relocation such
as the necessary transportation infrastructure, land and right of way acquisition, resettlement of displaced
residents and environmental and social acceptability which shall be based on mutual benefit of the Parties
and the public.
174

Now that they are being compelled to discontinue their operations in the Pandacan Terminals, they cannot feign
unreadiness considering that they had years to prepare for this eventuality.
Just the same, this Court is not about to provoke a crisis by ordering the immediate relocation of the Pandacan
Terminals out of its present site. The enforcement of a decision of this Court, specially one with far-reaching
consequences, should always be within the bounds of reason, in accordance with a comprehensive and well-
coordinated plan, and within a time-frame that complies with the letter and spirit of our resolution. To this end, the oil
companies have no choice but to obey the law.
A Warning To Petitioners Counsel
We draw the attention of the parties to a matter of grave concern to the legal profession.
Petitioners and their counsel, Atty. Samson Alcantara, submitted a four-page memorandum that clearly contained
either substance nor research. It is absolutely insulting to this Court.
We have always tended towards judicial leniency, temperance and compassion to those who suffer from a wrong
perception of what the majesty of the law means. But for a member of the bar, an officer of the court, to file in this
Court a memorandum of such unacceptable quality is an entirely different matter.
It is indicative less of a personal shortcoming or contempt of this Court and more of a lawyers sorry descent from a
high sense of duty and responsibility. As a member of the bar and as an officer of the court, a lawyer ought to be
keenly aware that the chief safeguard of the body politic is respect for the law and its magistrates.
There is nothing more effective than the written word by which counsel can persuade this Court of the righteousness
of his cause. For if truth were self-evident, a memorandum would be completely unnecessary and superfluous.
The inability of counsel to prepare a memorandum worthy of this Courts consideration is an ejemplo malo to the
legal profession as it betrays no genuine interest in the cause he claims to espouse. Or did counsel think he can
earn his moment of glory without the hard work and dedication called for by his petition?
A Final Word
On Wednesday, January 23, 2008, a defective tanker containing 2,000 liters of gasoline and 14,000 liters of diesel
exploded in the middle of the street a short distance from the exit gate of the Pandacan Terminals, causing death,
extensive damage and a frightening conflagration in the vicinity of the incident. Need we say anthing about what will
happen if it is the estimated 162 to 211 million liters
175
of petroleum products in the terminal complex which blow up?
WHEREFORE, the motions for leave to intervene of Chevron Philippines Inc., Petron Corporation and Pilipinas
Shell Petroleum Corporation, and the Republic of the Philippines, represented by the Department of Energy, are
hereby GRANTED. Their respective motions for reconsideration are hereby DENIED. The Regional Trial Court,
Manila, Branch 39 is ORDERED to DISMISS the consolidated cases of Civil Case No. 03-106377 and Civil Case
No. 03-106380.
We reiterate our order to respondent Mayor of the City of Manila to enforce Ordinance No. 8027. In coordination
with the appropriate agencies and other parties involved, respondent Mayor is hereby ordered to oversee the
relocation and transfer of the Pandacan Terminals out of its present site.
To ensure the orderly transfer, movement and relocation of assets and personnel, the intervenors Chevron
Philippines Inc., Petron Corporation and Pilipinas Shell Petroleum Corporation shall, within a non-extendible period
of ninety (90) days, submit to the Regional Trial Court of Manila, Branch 39, the comprehensive plan and relocation
schedule which have allegedly been prepared. The presiding judge of Manila RTC, Branch 39 will monitor the strict
enforcement of this resolution.
Atty. Samson Alcantara is hereby ordered to explain within five (5) days from notice why he should not be
disciplined for his refusal, or inability, to file a memorandum worthy of the consideration of this Court.
Treble costs against petitioners counsel, Atty. Samson Alcantara.
SO ORDERED.