CITY OF MANILA, HON. ALFREDO S. LIM as the Mayor of the City of Manila, HON.

JOSELITO L. ATIENZA, in his capacity as Vice-Mayor of the City of Manila and

Presiding Officer of the City Council of Manila, et.al vs. HON. PERFECTO A.S.
LAGUIO, JR., as Presiding Judge, RTC, Manila and MALATE TOURIST DEVELOPMENT
CORPORATION
G.R. No. 118127, April 12, 2005
FACTS:
Private respondent Malate Tourist Development Corporation (MTDC) is a corporation
engaged in the business of operating hotels, motels, hostels and lodging houses. It built and
opened Victoria Court in Malate which was licensed as a motel although duly accredited with
the DOT as a hotel. On 28 June 1993, MTDC filed a Petition for Declaratory Relief with
Prayer for a Writ of Preliminary Injunction and/or Temporary Restraining Order7 with the
lower court impleading as defendants, herein petitioners City of Manila, Hon. Alfredo S. Lim
(Lim), Hon. Joselito L. Atienza, and the members of the City Council of Manila (City Council).
MTDC prayed that the Ordinance, insofar as it includes motels and inns as among its
prohibited establishments, be declared invalid and unconstitutional.
Enacted by the City Council and approved by petitioner City Mayor, the said Ordinance is
entitled
AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF BUSINESSES
PROVIDING CERTAIN FORMS OF AMUSEMENT, ENTERTAINMENT, SERVICES AND FACILITIES
IN THE ERMITA-MALATE AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND
FOR
OTHER
PURPOSES.
Judge Laguio rendered the assailed Decision (in favor of respondent).
On 11 January 1995, petitioners filed the present Petition, alleging that the following errors
were committed by the lower court in its ruling:
(1) It erred in concluding that the subject ordinance is ultra vires, or otherwise, unfair,
unreasonable
and
oppressive
exercise
of
police
power;
(2) It erred in holding that the questioned Ordinance contravenes P.D. 499 which allows
operators of all kinds of commercial establishments, except those specified therein; and
(3) It erred in declaring the Ordinance void and unconstitutional.
ISSUE: WON the ordinance is unconstitutional.
HELD:
The Court is of the opinion, and so holds, that the lower court did not err in declaring the
Ordinance, as it did, ultra vires and therefore null and void.
The tests of a valid ordinance are well established. A long line of decisions has held that for
an ordinance to be valid, it must not only be within the corporate powers of the local
government unit to enact and must be passed according to the procedure prescribed by law,

it

must
(1)

also

conform

to

the

following

substantive

requirements:

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.

The Ordinance was passed by the City Council in the exercise of its police power, an
enactment of the City Council acting as agent of Congress. This delegated police power is
found in Section 16 of the LGC, known as the general welfare clause.
The inquiry in this Petition is concerned with the validity of the exercise of such delegated
power.
A. The Ordinance contravenes the Constitution
The enactment of the Ordinance was an invalid exercise of delegated power as it is
unconstitutional
and
repugnant
to
general
laws.
The police power granted to LGUs must always be exercised with utmost observance of the
rights of the people to due process and equal protection of the law. Due process requires
the intrinsic validity of the law in interfering with the rights of the person to his life, liberty
and property.
Requisites for the valid exercise of Police Power are not met.
To successfully invoke the exercise of police power as the rationale for the enactment of the
Ordinance, and to free it from the imputation of constitutional infirmity, not only must it
appear that the interests of the public generally, as distinguished from those of a particular
class, require an interference with private rights, but the means adopted must be
reasonably necessary for the accomplishment of the purpose and not unduly oppressive
upon individuals.60 It must be evident that no other alternative for the accomplishment of
the purpose less intrusive of private rights can work. A reasonable relation must exist
between the purposes of the police measure and the means employed for its
accomplishment, for even under the guise of protecting the public interest, personal rights
and those pertaining to private property will not be permitted to be arbitrarily invaded.
Lacking a concurrence of these two requisites, the police measure shall be struck down as
an arbitrary intrusion into private rights a violation of the due process clause.
The object of the Ordinance was, accordingly, the promotion and protection of the social and
moral values of the community. Granting for the sake of argument that the objectives of the
Ordinance are within the scope of the City Councils police powers, the means employed for
the accomplishment thereof were unreasonable and unduly oppressive.
The worthy aim of fostering public morals and the eradication of the communitys social ills
can be achieved through means less restrictive of private rights; it can be attained by
reasonable restrictions rather than by an absolute prohibition. The closing down and transfer
of businesses or their conversion into businesses allowed under the Ordinance have no
reasonable relation to the accomplishment of its purposes. Otherwise stated, the prohibition
of the enumerated establishments will not per se protect and promote the social and moral

welfare of the community; it will not in itself eradicate the alluded social ills of prostitution,
adultery, fornication nor will it arrest the spread of sexual disease in Manila.
The enumerated establishments are lawful pursuits which are not per se offensive to the
moral welfare of the community. While a motel may be used as a venue for immoral sexual
activity, it cannot for that reason alone be punished. It cannot be classified as a house of illrepute or as a nuisance per se on a mere likelihood or a naked assumption.
If the City of Manila so desires to put an end to prostitution, fornication and other social ills,
it can instead impose reasonable regulations such as daily inspections of the establishments
for any violation of the conditions of their licenses or permits; it may exercise its authority
to suspend or revoke their licenses for these violations; and it may even impose increased
license fees. In other words, there are other means to reasonably accomplish the desired
end.
It is readily apparent that the means employed by the Ordinance for the achievement of its
purposes, the governmental interference itself, infringes on the constitutional guarantees of
a persons fundamental right to liberty and property.
Modality employed is unlawful taking
It is an ordinance which permanently restricts the use of property that it can not be used for
any reasonable purpose goes beyond regulation and must be recognized as a taking of the
property without just compensation.78 It is intrusive and violative of the private property
rights of individuals.
There are two different types of taking that can be identified. A possessory taking occurs
when the government confiscates or physically occupies property. A regulatory taking
occurs when the governments regulation leaves no reasonable economically viable use of
the property.
What is crucial in judicial consideration of regulatory takings is that government regulation
is a taking if it leaves no reasonable economically viable use of property in a manner that
interferes with reasonable expectations for use. When the owner of real property has been
called upon to sacrifice all economically beneficial uses in the name of the common good,
that is, to leave his property economically idle, he has suffered a taking.
The Ordinance gives the owners and operators of the prohibited establishments three (3)
months from its approval within which to wind up business operations or to transfer to any
place outside of the Ermita-Malate area or convert said businesses to other kinds of
business allowable within the area. The directive to wind up business operations amounts
to a closure of the establishment, a permanent deprivation of property, and is practically
confiscatory. Unless the owner converts his establishment to accommodate an allowed
business, the structure which housed the previous business will be left empty and gathering
dust. It is apparent that the Ordinance leaves no reasonable economically viable use of
property in a manner that interferes with reasonable expectations for use.
The second and third options to transfer to any place outside of the Ermita-Malate area or
to convert into allowed businesses are confiscatory as well. The penalty of permanent
closure in cases of subsequent violations found in Section 4 of the Ordinance is also
equivalent to a taking of private property.

Petitioners cannot take refuge in classifying the measure as a zoning ordinance. A zoning
ordinance, although a valid exercise of police power, which limits a wholesome property to
a use which can not reasonably be made of it constitutes the taking of such property
without just compensation. Private property which is not noxious nor intended for noxious
purposes may not, by zoning, be destroyed without compensation. Such principle finds no
support in the principles of justice as we know them. The police powers of local government
units which have always received broad and liberal interpretation cannot be stretched to
cover this particular taking.
Further, The Ordinance confers upon the mayor arbitrary and unrestricted power to close
down establishments. Ordinances such as this, which make possible abuses in its execution,
depending upon no conditions or qualifications whatsoever other than the unregulated
arbitrary will of the city authorities as the touchstone by which its validity is to be tested,
are unreasonable and invalid. The Ordinance should have established a rule by which its
impartial enforcement could be secured. Similarly, the Ordinance does not specify the
standards to ascertain which establishments tend to disturb the community, annoy the
inhabitants, and adversely affect the social and moral welfare of the community.
The cited case supports the nullification of the Ordinance for lack of comprehensible
standards to guide the law enforcers in carrying out its provisions.
Petitioners cannot therefore order the closure of the enumerated establishments without
infringing the due process clause. These lawful establishments may be regulated, but not
prevented from carrying on their business.
B. The Ordinance violates Equal Protection Clause
In the Courts view, there are no substantial distinctions between motels, inns, pension
houses, hotels, lodging houses or other similar establishments.
By definition, all are commercial establishments providing lodging and usually meals and
other services for the public. No reason exists for prohibiting motels and inns but not
pension houses, hotels, lodging houses or other similar establishments. The classification in
the instant case is invalid as similar subjects are not similarly treated, both as to rights
conferred and obligations imposed. It is arbitrary as it does not rest on substantial
distinctions bearing a just and fair relation to the purpose of the Ordinance.
The Court likewise cannot see the logic for prohibiting the business and operation of motels
in the Ermita-Malate area but not outside of this area. A noxious establishment does not
become any less noxious if located outside the area.
The standard where women are used as tools for entertainment is also discriminatory as
prostitution one of the hinted ills the Ordinance aims to banish is not a profession
exclusive to women. Both men and women have an equal propensity to engage in
prostitution. Thus, the discrimination is invalid.
C. The Ordinance is repugnant to general laws; it is ultra vires
The Ordinance is in contravention of the Code (Sec 458) as the latter merely empowers
local government units to regulate, and not prohibit, the establishments enumerated in
Section 1 thereof.

With respect to cafes, restaurants, beerhouses, hotels, motels, inns, pension houses,
lodging houses, and other similar establishments, the only power of the City Council to
legislate relative thereto is to regulate them to promote the general welfare. The Code still
withholds from cities the power to suppress and prohibit altogether the establishment,
operation and maintenance of such establishments.
It is well to point out that petitioners also cannot seek cover under the general welfare
clause authorizing the abatement of nuisances without judicial proceedings. That tenet
applies to a nuisance per se, or one which affects the immediate safety of persons and
property and may be summarily abated under the undefined law of necessity. It can not be
said that motels are injurious to the rights of property, health or comfort of the community.
It is a legitimate business. If it be a nuisance per accidens it may be so proven in a hearing
conducted for that purpose. A motel is not per se a nuisance warranting its summary
abatement without judicial intervention.
Not only does the Ordinance contravene the Code, it likewise runs counter to the provisions
of P.D. 499. As correctly argued by MTDC, the statute had already converted the residential
Ermita-Malate area into a commercial area. The decree allowed the establishment and
operation of all kinds of commercial establishments except warehouse or open storage
depot, dump or yard, motor repair shop, gasoline service station, light industry with any
machinery or funeral establishment. The rule is that for an ordinance to be valid and to have
force and effect, it must not only be within the powers of the council to enact but the same
must not be in conflict with or repugnant to the general law.
Conclusion
All considered, the Ordinance invades fundamental personal and property rights and impairs
personal privileges. It is constitutionally infirm. The Ordinance contravenes statutes; it is
discriminatory and unreasonable in its operation; it is not sufficiently detailed and explicit
that abuses may attend the enforcement of its sanctions. And not to be forgotten, the City
Council under the Code had no power to enact the Ordinance and is therefore ultra vires,
null and void.
Petition Denied.

People vs Nazario
Facts:
Eusebio Nazario was charged in violation of refusal and failure to pay his municipal taxes
amounting to Php 362.62 because of his fishpond operation provided under Ordinance 4,
Series of 1955, as amended. He is a resident of Sta. Mesa Manila and just leases a fishpond
located at Pagbilao, Quezon with the Philippine Fisheries Commission. The years in question
of failure to pay was for 1964, 1965, and 1966. Nazario did not pay because he was not
sure if he was covered under the ordinance. He was found guilty thus this petition.
Issues:
1. Whether or not Ordinance 4, Series of 1955, as amended null and void for being
ambiguous
and
uncertain
2. Whether or not the ordinance was unconstitutional for being ex post facto
Held:
1. No, the coverage of the ordinance covers him as the actual operator of the fishpond thus
he comes with the term Manager. He was the one who spent money in developing and
maintaining it, so despite only leasing it from the national government, the latter does not
get any profit as it goes only to Nazario. The dates of payment are also clearly stated
Beginning and taking effect from 1964 if the fishpond started operating in 1964.
2. No, it is not ex post facto. Ordinance 4 was enacted in 1955 so it cant be that the
amendment under Ordinance 12 is being made to apply retroactively. Also, the act of nonpayment has been made punishable since 1955 so it means Ordinance 12 is not imposing a
retroactive
penalty
The appeal is DISMISSED with cost against the appellant.

British American Tobacco Corporation

Commissioner Parayno (2009)

v.

Finance

Secretary

Camacho,

BIR

Doctrine:
A levy of tax is not unconstitutional because it is not intrinsically equal and uniform in its
operation. The uniformity rule does not prohibit classification for purposes of taxation
Facts:
British American Tobacco filed a Motion for Reconsideration for the Courts decision
in 2008
Petitioner interposes that the assailed provisions:
(1) violate the equal protection and uniformity of taxation clauses of the Constitution,
(2) contravene Section 19,[1] Article XII of the Constitution on unfair competition, and
(3) infringe the constitutional provisions on regressive and inequitable taxation.
Petitioner further argues that assuming the assailed provisions are constitutional, it is
entitled to a downward reclassification of Lucky Strike from the premium-priced to the highpriced tax bracket.
Lucky Strike reiterates in its MR that the classification freeze provision violates the equal
protection and uniformity of taxation clauses because older brands are taxed based on their
1996 net retail prices while new brands are taxed based on their present day net retail
prices.
HELD: Petition is denied
Without merit and a rehash of petitioners previous arguments before this Court
The rational basis test was properly applied to gauge the constitutionality of the assailed law
in the face of an equal protection challenge.
The classification is considered valid and reasonable provided that:
(1) it rests on substantial distinctions;
(2) it is germane to the purpose of the law;
(3) it applies, all things being equal, to both present and future conditions; and

(4) it applies equally to all those belonging to the same class.

The classification freeze provision was inserted in the law for reasons of practicality and
expediency.

since a new brand was not yet in existence at the time of the passage of RA8240,
then Congress needed a uniform mechanism to fix the tax bracket of anew brand.

The current net retail price, similar to what was used to classify the brands under
Annex D as of October 1, 1996, was thus the logical and practical choice

The classification freeze provision was in the main the result of Congresss earnest efforts to
improve the efficiency and effectivity of the tax administration over sin products while trying
to balance the same with other State interests.