27. G.R. No.

L-59791 February 13, 1992

MANILA ELECTRIC COMPANY, petitioner,

vs.
THE HONORABLE GREGORIO G. PINEDA, Presiding Judge, Court of First
Instance of Rizal, Branch XXI, Pasig, Metro Manila, TEOFILO ARAYON, SR.,
GIL DE GUZMAN, LUCITO SANTIAGO and TERESA BAUTISTA, respondents.

Quiason, Makalintal & Barot for petitioner.

Gil P. De Guzman Law Offices for private respondents.

MEDIALDEA, J.:

This is a petition for review on certiorari on pure question of law seeking the
nullification of the orders issued by the respondent Judge Gregorio G. Pineda, in
his capacity as the presiding Judge of the Court of First Instance (now Regional
Trial Court) of Rizal, Branch 21, Pasig, Metro Manila in Civil Case No. 20269,
entitled "Manila Electric Company v. Teofilo Arayon, et al." The aforesaid orders
are as follows: (1) the order dated December 4, 1981 granting the motion for
payment of private respondents; (2) the order dated December 21, 1981 granting
the private respondents' omnibus motion; and (3) the order dated February 9,
1982 adjudging in favor of private respondents the fair market value of their
property at forty pesos (P40.00) per square meter for a total of P369,720.00 and
denying the motions for contempt for being moot and academic and the motion
for reconsideration of the orders dated December 4, 1981 and December 21,
1981 for lack of merit.

The antecedent facts giving rise to the controversy at bar are as follows:

Petitioner Manila Electric Company (MERALCO) is a domestic corporation duly

organized and existing under the laws of Philippines. Respondent Honorable
Judge Gregorio G. Pineda is impleaded in his official capacity as the presiding
judge of the Court of First Instance (now Regional Trial Court) of Rizal, Branch
XXI, Pasig, Metro Manila. While private respondents Teofilo Arayon, Sr., Gil de
Guzman, Lucito Santiago and Teresa Bautista are owners in fee simple of the
expropriated property situated at Malaya, Pililla, Rizal.
On October 29, 1974, a complaint for eminent domain was filed by petitioner
MERALCO against forty-two (42) defendants with the Court of First Instance
(now Regional Trial Court) of Rizal, Branch XXII, Pasig, Metro Manila.

The complaint alleges that for the purpose of constructing a 230 KV

Transmission line from Barrio Malaya to Tower No. 220 at Pililla, Rizal, petitioner
needs portions of the land of the private respondents consisting of an aggregate
area of 237,321 square meters. Despite petitioner's offers to pay compensation
and attempts to negotiate with the respondents', the parties failed to reach an
agreement.

Private respondents question in their motion to dismiss dated December 27,

1974 the petitioner's legal existence and the area sought to be expropriated as
too excessive.

On January 7, 1975, respondents Gil de Guzman and Teresa Bautista filed a

motion for contempt of court alleging, among other things that petitioner's
corporate existence had expired in 1969 and therefore it no longer exists under
Philippine Laws.

But despite the opposition of the private respondents, the court issued an Order
dated January 13, 1975 authorizing the petitioner to take or enter upon the
possession of the property sought to be expropriated.

On July 13, 1976, private respondents filed a motion for withdrawal of deposit
claiming that they are entitled to be paid at forty pesos (P40.00) per square meter
or an approximate sum of P272,000.00 and prayed that they be allowed to
withdraw the sum of P71,771.50 from petitioner's deposit-account with the
Philippine National Bank, Pasig Branch. However, respondents motion was
denied in an order dated September 3, 1976.

In the intervening period, Branch XXII became vacant when the presiding Judge
Nelly Valdellon-Solis retired, so respondent Judge Pineda acted on the motions
filed with Branch XXII.

Pursuant to a government policy, the petitioners on October 30, 1979 sold to the
National Power Corporation (Napocor) the power plants and transmission lines,
including the transmission lines traversing private respondents' property.
On February 11, 1980, respondent court issued an Order appointing the
members of the Board of Commissioners to make an appraisal of the properties.

On June 5, 1980, petitioner filed a motion to dismiss the complaint on the ground
that it has lost all its interests over the transmission lines and properties under
expropriation because of their sale to the Napocor. In view of this motion, the
work of the Commissioners was suspended.

On June 9, 1981, private respondents filed another motion for payment. But
despite the opposition of the petitioner, the respondent court issued the first of
the questioned Orders dated December 4, 1981 granting the motion for payment
of private respondents, to wit:

As prayed for by defendants Teofilo Arayon, Lucito Santiago, Teresa

Bautista and Gil de Guzman, thru counsel Gil de Guzman, in their
Motion for Payment, for reasons therein stated, this Court hereby
orders the plaintiff to pay the movants the amount of P20,400.00 for
the expropriated area of 6,800 square meters, at P3.00 per square
meter without prejudice to the just compensation that may be proved
in the final adjudication of this case.

The aforesaid sum of P20,400.00 having been deposited by plaintiff

in the Philippine National Bank (Pasig Branch) under Savings
Account No. 9204, let the Deputy Sheriff of this Branch Mr. Sofronio
Villarin withdraw said amount in the names of Teofilo Arayon, Lucito
Santiago, Teresa Bautista and Gil de Guzman, the said amount to be
delivered to the defendant's counsel Atty. Gil de Guzman who shall
sign for the receipt thereof.

SO ORDERED. (Rollo, p. 108)

On December 15, 1981, private respondents filed an Omnibus Motion praying

that they be allowed to withdraw an additional sum of P90,125.50 from
petitioner's deposit-account with the Philippine National Bank.

By order dated December 21, 1981, the respondent court granted the Omnibus
Motion hereunder quoted as follows:
 Acting on the Omnibus Motion dated December 15, 1981 filed by
Atty. Gil de Guzman, counsel for Teofilo Arayon, Sr., Lucito Santiago,
Teresita Bautista and for himself, and it appearing that there is
deposited in the bank in trust for them the amount of P90,125.50 to
guarantee just compensation of P272,000.00, thereby leaving a
balance of P161,475.00 still payable to them, the same is hereby
GRANTED.

Mr. Nazario Nuevo and Marianita Burog, respectively the Manager

and Cashier, Philippine National Bank, Pasig Branch, Pasig, Metro
Manila are hereby ordered to allow Sheriff Sofronio Villarin to
withdraw and collect from the bank the amount of P90,125.50 under
Savings Account No. 9204 and to deliver the same to Atty. Gil de
Guzman upon proper receipt, pending final determination of just
compensation.

SO ORDERED. (Rollo, p. 120)

Private respondents filed another motion dated January 8, 1982 praying that
petitioner be ordered to pay the sum of P169, 200.00.

On January 12, 1982 petitioner filed a motion for reconsideration of the Orders
dated December 4, 1981 and December 21, 1981 and to declare private
respondents in contempt of court for forging or causing to be forged the receiving
stamp of petitioner's counsel and falsifying or causing to be falsified the signature
of its receiving clerk in their Omnibus Motion.

In response to private respondents' motion for payment dated January 8, 1982,

petitioner filed an opposition alleging that private respondents are not entitled to
payment of just compensation at this stage of the proceeding because there is
still no appraisal and valuation of the property.

On February 9, 1982 the respondent court denied the petitioner's motion for
reconsideration and motion for contempt, the dispositive portion of which is
hereunder quoted as follows:

Viewed in the light of the foregoing, this Court hereby adjudges in

favor of defendants Teofilo Arayon, Sr., Lucito Santiago, Teresita
Bautista and Atty. Gil de Guzman the fair market value of their
 property taken by MERALCO at P40.00 per square meter for a total
of P369,720.00, this amount to bear legal interest from February 24,
1975 until fully paid plus consequential damages in terms of
attorney's fees in the sum of P10,000.00, all these sums to be paid
by MERALCO to said defendants with costs of suit, minus the
amount of P102,800.00 already withdrawn by defendants.

For being moot and academic, the motions for contempt are
DENIED; for lack of merit, the motion for reconsideration of the
orders of December 4, 1981 and December 21, 1981 is also
DENIED.

SO ORDERED. (Rollo, p. 211-212)

Furthermore, the respondent court stressed in said order that "at this stage, the
Court starts to appoint commissioners to determine just compensation or
dispenses with them and adopts the testimony of a credible real estate broker, or
the judge himself would exercise his right to formulate an opinion of his own as to
the value of the land in question. Nevertheless, if he formulates such an opinion,
he must base it upon competent evidence." (Rollo, p. 211)

Hence, this petition.

Subsequently, the respondent court issued an Order dated March 22, 1982
granting the private respondents' motion for execution pending appeal, thus
requiring petitioner to deposit P52,600.00 representing the consideration paid by
Napocor for the property it bought from petitioner which includes the subject
matter of this case, computed at P200.55 per square meter and to render an
accounting.

On March 26, 1982, petitioner filed a petition for preliminary injunction with this
Court seeking to enjoin respondent judge and all persons acting under him from
enforcing the Order dated March 22, 1982.

This Court issued a temporary restraining order addressed to respondent judge.

A motion to lift the restraining order was filed by the respondents. Despite a
series of oppositions and motions to lift the said order, this Court reiterated its
stand and noted that the restraining order is still effective.
The petitioner strongly maintains that the respondent court's act of determining
and ordering the payment of just compensation to private respondents without
formal presentation of evidence by the parties on the reasonable value of the
property constitutes a flagrant violation of petitioner's constitutional right to due
process. It stressed that respondent court ignored the procedure laid down by the
law in determining just compensation because it formulated an opinion of its own
as to the value of the land in question without allowing the Board of
Commissioners to hold hearings for the reception of evidence.

On the other hand, private respondents controvert the position of the petitioner
and contend that the petitioner was not deprived of due process. They agreed
with respondent court's ruling dispensing the need for the appointment of a
Board of Commissioners to determine just compensation, thus concluding that
the respondent court did not err in determining just compensation.

Furthermore, petitioner argues that the respondent judge gravely abused his
discretion in granting the motion for execution pending appeal and consequently
denying the petitioner's motion to dismiss. Respondent judge should have
ordered that Napocor be impleaded in substitution of petitioner or could have at
least impleaded both the Napocor and the petitioner as party plaintiffs.

The controversy boils down to the main issue of whether or not the respondent
court can dispense with the assistance of a Board of Commissioners in an
expropriation proceeding and determine for itself the just compensation.

The applicable laws in the case at bar are Sections 5 and 8 of Rule 67 of the
Revised Rules of Court. The said sections particularly deal with the
ascertainment of compensation and the court's action upon commissioners'
report, to wit:

Sec. 5. Upon the entry of the order of condemnation, the court shall
appoint not more than three (3) competent and disinterested
persons as commissioners to ascertain and report to the court the
just compensation for the property sought to be taken. The order of
appointment shall designate the time and place of the first session of
the hearing to be held by the commissioners and specify the time
within which their report is to be filed with the court.

xxx xxx xxx

 Sec. 8. Upon the expiration of the period of ten (10) days referred to
in the preceding section, or even before the expiration of such period
but after all the interested parties have filed their objections to the
report or their statement of agreement therewith, the court may, after
hearing, accept the report and render judgment in accordance
therewith; or, for cause shown, it may recommit the same to the
commissioners for further report of facts; or it may set aside the
report and appoint new commissioners, or it may accept the report in
part and reject it in part; and it may make such order or render such
judgment as shall secure to the plaintiff the property essential to the
exercise of his right of condemnation, and to the defendant just
compensation for the property so taken.

We already emphasized in the case of Municipality of Bian v. Hon. Jose Mar

Garcia (G.R. No. 69260, December 22, 1989, 180 SCRA 576, 583-584) the
procedure for eminent domain, to wit:

There are two (2) stages in every action of expropriation. The first is
concerned with the determination of the authority of the plaintiff to
exercise the power of eminent domain and the propriety of its
exercise in the context of the facts involved in the suit. It ends with
an order, if not of dismissal of the action, "of condemnation declaring
that the plaintiff has a lawful right to take the property sought to be
condemned, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined
as of the date of the filing of the complaint". An order of dismissal, if
this be ordained, would be a final one, of course, since it finally
disposes of the action and leaves nothing more to be done by the
Court on the merits. So, too, would an order of condemnation be a
final one, for thereafter, as the Rules expressly state, in the
proceedings before the Trial Court, "no objection to the exercise of
the right of condemnation (or the propriety thereof) shall be filed or
heard."

The second phase of the eminent domain action is concerned with

the determination by the Court of "the just compensation for the
property sought to be taken." This is done by the Court with the
assistance of not more than three (3) commissioners. The order
 fixing the just compensation on the basis of the evidence before, and
findings of, the commissioners would be final, too. It would finally
dispose of the second stage of the suit, and leave nothing more to
be done by the Court regarding the issue. Obviously, one or another
of the parties may believe the order to be erroneous in its
appreciation of the evidence or findings of fact or otherwise.
Obviously, too, such a dissatisfied party may seek reversal of the
order by taking an appeal therefrom.

Respondent judge, in the case at bar, arrived at the valuation of P40.00 per
square meter on a property declared for real estate tax purposes at P2.50 per
hectare on the basis of a "Joint Venture Agreement on Subdivision and Housing
Projects" executed by A.B.A Homes and private respondents on June 1, 1972.
This agreement was merely attached to the motion to withdraw from petitioner's
deposit. Respondent judge arrived at the amount of just compensation on its
own, without the proper reception of evidence before the Board of
Commissioners. Private respondents as landowners have not proved by
competent evidence the value of their respective properties at a proper hearing.
Likewise, petitioner has not been given the opportunity to rebut any evidence that
would have been presented by private respondents. In an expropriation case
such as this one where the principal issue is the determination of just
compensation, a trial before the Commissioners is indispensable to allow the
parties to present evidence on the issue of just compensation. Contrary to the
submission of private respondents, the appointment of at least three (3)
competent persons as commissioners to ascertain just compensation for the
property sought to be taken is a mandatory requirement in expropriation cases.
While it is true that the findings of commissioners may be disregarded and the
court may substitute its own estimate of the value, the latter may only do so for
valid reasons, i.e., where the Commissioners have applied illegal principles to the
evidence submitted to them or where they have disregarded a clear
preponderance of evidence, or where the amount allowed is either grossly
inadequate or excessive (Manila Railroad Company v. Velasquez, 32 Phil. 286).
Thus, trial with the aid of the commissioners is a substantial right that may not be
done away with capriciously or for no reason at all. Moreover, in such instances,
where the report of the commissioners may be disregarded, the trial court may
make its own estimate of value from competent evidence that may be gathered
from the record. The aforesaid joint venture agreement relied upon by the
respondent judge, in the absence of any other proof of valuation of said
properties, is incompetent to determine just compensation.

Prior to the determination of just compensation, the property owners may

rightfully demand to withdraw from the deposit made by the condemnor in
eminent domain proceedings. Upon an award of a smaller amount by the court,
the property owners are subject to a judgment for the excess or upon the award
of a larger sum, they are entitled to a judgment for the amount awarded by the
court. Thus, when the respondent court granted in the Orders dated December 4,
1981 and December 21, 1981 the motions of private respondents for withdrawal
of certain sums from the deposit of petitioner, without prejudice to the just
compensation that may be proved in the final adjudication of the case, it
committed no error.

Records, specifically Meralco's deed of sale dated October 30, 1979, in favor of
Napocor show that the latter agreed to purchase the parcels of land already
acquired by Meralco, the rights, interests and easements over those parcels of
land which are the subject of the expropriation proceedings under Civil Case No.
20269, (Court of First Instance of Rizal, Branch XXII), as well as those parcels of
land occupied by Meralco by virtue of grant of easements of right-of-way (see
Rollo, pp. 341-342). Thus, Meralco had already ceded and in fact lost all its rights
and interests over the aforesaid parcels of land in favor of Napocor. In addition,
the same contract reveals that the Napocor was previously advised and actually
has knowledge of the pending litigation and proceedings against Meralco (see
Rollo, pp. 342-343). Hence, We find the contention of the petitioner tenable. It is
therefore proper for the lower court to either implead the Napocor in substitution
of the petitioner or at the very least implead the former as party plaintiff.

All premises considered, this Court is convinced that the respondent judge's act
of determining and ordering the payment of just compensation without the
assistance of a Board of Commissioners is a flagrant violation of petitioner's
constitutional right to due process and is a gross violation of the mandated rule
established by the Revised Rules of Court.

ACCORDINGLY, the petition is GRANTED and the order dated February 9, 1982
issued by the respondent judge insofar as it finally determined the amount of just
compensation is nullified. This case is hereby ordered remanded to the lower
court for trial with the assistance of a Board of Commissioners. Further, the
National Power Corporation is impleaded as party plaintiff therein.

SO ORDERED.

28. G.R. No. 157206 June 27, 2008

LAND BANK OF THE PHILIPPINES, petitioner,

vs.
SPOUSES PLACIDO ORILLA and CLARA DY ORILLA, respondents.

DECISION

NACHURA, J.:

"Without doubt, justice is the supreme need of man. Man can endure without
food for days, but if he is deprived even with the least injustice, he can be that
violent to give up his life for it. History will tell us that many great nations had
emerged in the past, yet they succumbed to downfall when their leaders had
gone so immorally low that they could not anymore render justice to their people.
In our times, we are witnesses to radical changes in our society rooted on
alleged injustice. The only hope is in the courts as the last bulwark of democracy
being the administrator of justice and the legitimate recourse of their
grievances."1

The Facts

This is an appeal via a petition2 for review on certiorari under Rule 45 of the
Rules of Court of the Decision3 of the Court of Appeals dated July 29, 2002 in
CA-G.R. SP No. 63691 entitled "Land Bank of the Philippines v. Hon. Venancio
J. Amila, in his capacity as Presiding Judge, Regional Trial Court, Branch 3,
Tagbilaran City, Spouses Placido Orilla and Clara Dy Orilla." Said Decision
affirmed the Order4 dated December 21, 2000 of the Regional Trial Court (RTC),
Branch 3, Tagbilaran City, sitting as a Special Agrarian Court (SAC) in Civil Case
No. 6085.
Spouses Placido and Clara Orilla (respondents) were the owners of Lot No. 1,
11-12706, situated in Bohol, containing an area of 23.3416 hectares and covered
by Transfer Certificate of Title No. 18401. In the latter part of November 1996, the
Department of Agrarian Reform Provincial Agrarian Reform Office (DAR-PARO)
of Bohol sent respondents a Notice of Land Valuation and Acquisition dated
November 15, 1996 informing them of the compulsory acquisition of 21.1289
hectares of their landholdings pursuant to the Comprehensive Agrarian Reform
Law (Republic Act [RA] 6657) for P371,154.99 as compensation based on the
valuation made by the Land Bank of the Philippines (petitioner).

Respondents rejected the said valuation. Consequently, the Provincial

Department of Agrarian Reform Adjudication Board (Provincial DARAB)
conducted a summary hearing on the amount of just compensation. Thereafter,
the Provincial DARAB affirmed the valuation made by the petitioner.

Unsatisfied, respondents filed an action for the determination of just

compensation before the Regional Trial Court (as a Special Agrarian Court
[SAC]) of Tagbilaran City. The case was docketed as Civil Case No. 6085 and
was raffled to Branch 3.

After trial on the merits, the SAC rendered a Decision5 dated November 20, 2000,
the dispositive portion of which reads

WHEREFORE, judgment is hereby rendered fixing the just compensation

of the land of petitioner subject matter of the instant action at P7.00 per
square meter, as only prayed for, which shall earn legal interest from the
filing of the complaint until the same shall have been fully paid.
Furthermore, respondents are hereby ordered to jointly and solidarily
indemnify the petitioners their expenses for attorneys fee and contract fee
in the conduct of the appraisal of the land by a duly licensed real estate
appraiser Angelo G. Fajardo of which petitioner shall submit a bill of costs
therefor for the approval of the Court.

SO ORDERED.6

On December 11, 2000, petitioner filed a Notice of Appeal.7 Subsequently, on

December 15, 2000, respondents filed a Motion for Execution Pending Appeal8
pursuant to Section 2, Rule 39 of the 1997 Rules of Civil Procedure and the
consolidated cases of "Landbank of the Philippines v. Court of Appeals, et al."9
and "Department of Agrarian Reform v. Court of Appeals, et al."10 Respondents
claimed that the total amount of P1,479,023.00 (equivalent to P7.00 per square
meter for 21.1289 hectares), adjudged by the SAC as just compensation, could
then be withdrawn under the authority of the aforementioned case.

Meanwhile, on December 18, 2000, the DAR filed its own Notice of Appeal11 from
the SAC Decision dated November 20, 2000. The DAR alleged in its Notice that
it received a copy of the SAC Decision only on December 6, 2000.

On December 21, 2000, the SAC issued an Order12 granting the Motion for
Execution Pending Appeal, the decretal portion of which reads

WHEREFORE, the herein motion is granted and the petitioners are hereby
ordered to post bond equivalent to one-half of the amount due them by
virtue of the decision in this case. The respondent Land Bank of the
Philippines, is therefore, ordered to immediately deposit with any
accessible bank, as may be designated by respondent DAR, in cash or in
any governmental financial instrument the total amount due the petitioner-
spouses as may be computed within the parameters of Sec. 18(1) of RA
6657. Furthermore, pursuant to the Supreme Court decisions in "Landbank
of the Philippines vs. Court of Appeals, et al." G.R. No. 118712,
promulgated on October 6, 1995 and "Department of Agrarian Reform vs.
Court of Appeals, et al.," G.R. No. 118745, promulgated on October 6,
1995, the petitioners may withdraw the same for their use and benefit
consequent to their right of ownership thereof.13

On December 25, 2000, respondents filed a Motion for Partial Reconsideration14

of the amount of the bond to be posted, which was later denied in an Order15
dated January 11, 2001.

Petitioner filed a Motion for Reconsideration16 on December 27, 2000, which was
likewise denied in an Order17 dated December 29, 2000.

On March 13, 2001, petitioner filed with the Court of Appeals a special civil
action18 for certiorari and prohibition under Rule 65 of the Rules of Court with
prayer for issuance of a temporary restraining order and/or preliminary injunction.
It questioned the propriety of the SAC Order granting the execution pending
appeal. Respondents and the presiding judge of the SAC, as nominal party, filed
their respective comments19 on the petition.
In its Decision dated July 29, 2002, the Court of Appeals dismissed the petition
on the ground that the assailed SAC Order dated December 21, 2000 granting
execution pending appeal was consistent with justice, fairness, and equity, as
respondents had been deprived of the use and possession of their property
pursuant to RA 6657 and are entitled to be immediately compensated with the
amount as determined by the SAC under the principle of "prompt payment" of
just compensation.

Petitioner filed a Motion for Reconsideration of the Court of Appeals Decision, but
the same was denied in a Resolution dated February 5, 2003. Hence, this
appeal.

Petitioner anchors its petition on the following grounds:

I. THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE

RESPONDENTS WERE ENTITLED TO EXECUTION PENDING APPEAL
OF THE COMPENSATION FIXED BY THE SAC BASED ON THE
PRINCIPLE OF PROMPT PAYMENT OF JUST COMPENSATION, EVEN
THOUGH THE PRINCIPLE OF PROMPT PAYMENT IS SATISFIED BY
THE PAYMENT AND IMMEDIATE RELEASE OF THE PROVISIONAL
COMPENSATION UNDER SECTION 16(E) OF RA 6657, UPON
SUBMISSION OF THE LEGAL REQUIREMENTS, IN ACCORDANCE
WITH THE RULING OF THIS HONORABLE COURT IN THE CASE OF
"LAND BANK OF THE PHILIPPINES V. COURT OF APPEALS, PEDRO L.
YAP, ET AL.," G.R. NO. 118712, OCTOBER 6, 1995 AND JULY 5, 1996,
AND NOT BY EXECUTION PENDING APPEAL OF THE
COMPENSATION FIXED BY THE SAC.

II. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN

UPHOLDING THE SAC ORDER FOR EXECUTION PENDING APPEAL
WHICH WAS ISSUED WITHOUT ANY GOOD REASON RECOGNIZED
UNDER EXISTING JURISPRUDENCE AND PROPER HEARING AND
RECEPTION OF EVIDENCE IN VIOLATION OF SECTION 2(A), RULE 39
OF THE RULES OF COURT.

For its first ground, petitioner asserts that, according to our ruling in Land Bank of
the Philippines v. Court of Appeals,20 the principle of "prompt payment" of just
compensation is already satisfied by the concurrence of two (2) conditions: (a)
the deposits made by petitioner in any accessible bank, equivalent to the
DAR/LBP valuation of the expropriated property as provisional compensation,
must be in cash and bonds as expressly provided for by Section 16(e) of RA
6657, not merely earmarked or reserved in trust; and (b) the deposits must be
immediately released to the landowner upon compliance with the legal
requirements under Section 1621 of RA 6657, even pending the final judicial
determination of just compensation.

Anent the second ground, petitioner argues that the good reasons cited by the
SAC, as affirmed by the Court of Appeals, namely: "(1) that execution pending
appeal would be in consonance with justice, fairness, and equity considering that
the land had long been taken by the DAR; (2) that suspending the payment of
compensation will prolong the agony that respondents have been suffering by
reason of the deprivation of their property; and (3) that it would be good and
helpful to the economy" are not valid reasons to justify the execution pending
appeal, especially because the execution was granted without a hearing.

This appeal should be denied.

As the issues raised are interrelated, they shall be discussed jointly.

Execution of a judgment pending appeal is governed by Section 2(a) of Rule 39

of the Rules of Court, to wit:

SEC. 2. Discretionary execution.

(a) Execution of a judgment or a final order pending appeal. -- On motion

of the prevailing party with notice to the adverse party filed in the trial court
while it has jurisdiction over the case and is in possession of either the
original record or the record on appeal, as the case may be, at the time of
the filing of such motion, said court may, in its discretion, order execution of
a judgment or final order even before the expiration of the period to appeal.

xxxx

Discretionary execution may only issue upon good reasons to be stated in

a special order after due hearing.
As provided above, execution of the judgment or final order pending appeal is
discretionary. As an exception to the rule that only a final judgment may be
executed, it must be strictly construed. Thus, execution pending appeal should
not be granted routinely but only in extraordinary circumstances.

The Rules of Court does not enumerate the circumstances which would justify
the execution of the judgment or decision pending appeal. However, we have
held that "good reasons" consist of compelling or superior circumstances
demanding urgency which will outweigh the injury or damages suffered should
the losing party secure a reversal of the judgment or final order. The existence of
good reasons is what confers discretionary power on a court to issue a writ of
execution pending appeal. These reasons must be stated in the order granting
the same. Unless they are divulged, it would be difficult to determine whether
judicial discretion has been properly exercised.22

In this case, do good reasons exist to justify the grant by the SAC of the motion
for execution pending appeal? The answer is a resounding YES.

The expropriation of private property under RA 6657 is a revolutionary kind of

expropriation,23 being a means to obtain social justice by distributing land to the
farmers, envisioning freedom from the bondage to the land they actually till. As
an exercise of police power, it puts the landowner, not the government, in a
situation where the odds are practically against him. He cannot resist it. His only
consolation is that he can negotiate for the amount of compensation to be paid
for the property taken by the government. As expected, the landowner will
exercise this right to the hilt, subject to the limitation that he can only be entitled
to "just compensation." Clearly therefore, by rejecting and disputing the valuation
of the DAR, the landowner is merely exercising his right to seek just
compensation.24

In this case, petitioner valued the property of respondents at P371,154.99 for the
compulsory acquisition of 21.1289 hectares of their landholdings. This amount
respondents rejected. However, the same amount was affirmed by the DAR after
the conduct of summary proceedings. Consequently, respondents brought the
matter to the SAC for the determination of just compensation. After presentation
of evidence from both parties, the SAC found the valuation of the LBP and the
DAR too low and pegged the "just compensation" due the respondents at P7.00
per square meter, or a total of P1,479,023.00 for the 21.1289 hectares. In
determining such value, the SAC noted the following circumstances:

1. the nearest point of the land is about 1.5 kilometers from Poblacion
Ubay;

2. the total area of the land based on the sketch-map presented by the
MARO is 23.3416 hectares.

3. the land is generally plain, sandy loam, without stones, rocks or

[pebbles];

4. the land is adjoining the National Highway of Ubay-Trinidad, Bohol;

5. 11.4928 hectares of the land is devoted to planting rice, which portion is

rain-fed and produces 60-80 cavans of rice per hectare with two (2)
harvest seasons a year;

6. four (4) hectares is planted with 210 fruit-bearing coconut trees, which
private respondents used to receive a share of P1,500.00 per harvest four
(4) times a year;

7. five (5) hectares is cogonal but now most area is planted with cassava;

8. the area is traversed with electricity providing electric power to some

occupants;

9. across the National Highway, about 200 meters away from the
landholding, is an irrigation canal of the National Irrigation Administration
(NIA);

10. the Ubay Airport is about two (2) kilometers from the landholding;

11. fruit trees like mangoes and jackfruits were also planted on the
property;

12. north of the landholding, about a kilometer away, is the seashore;

 13. the market value of the land per Tax Declaration No. 45-002-00084 is
P621,310.00 for the entire 23.2416 hectares but representing only 48% of
the actual value of the property;

14. that the real estate appraiser Angelo Z. Fajardo appraised the land at
P80,000.00 per hectare for the Riceland and P30,000.00 for all other
portions thereof;

15. testimony of the representative from petitioner that the factors

considered in the appraisal of land are the cost of acquisition of the land,
the current value, its nature, its actual use and income, the sworn valuation
of the owner, and the assessment by the government functionary
concerned;

16. petitioners contention that the main basis for the valuation it made was
the very low price that the petitioners had paid for the land when they
acquired it along with other parcels from the Development Bank of the
Philippines in a foreclosure sale;

17. the testimony of the Municipal Agrarian Reform Officer for DAR that it
was contemplated that the property be disposed to farmer-beneficiaries at
a relatively higher price; and

18. the fact that Ubay town is a fast-growing municipality being a

consistent recipient of government projects and facilities in view of its
natural resources and favorable geographical locationBohol
Circumferential Road Improvement Project Phase I, the Leyte-Bohol
Interconnection Project Phase I, the Ilaya Reservior Irrigation Project, the
Metro San Pascual Rural and Waterworks System, the 250-hectare
Central Visayas Coconut Seeds Production Center, the Philippine Carabao
Center at the Ubay Stock Farm, and several other public and private
business facilities.25

In light of these circumstances, the SAC found that the valuation made by
petitioner, and affirmed by the DAR, was unjustly way below the fair valuation of
the landholding at the time of its taking by the DAR. The SAC, mindful also of the
advanced age of respondents at the time of the presentation of evidence for the
determination of just compensation, deemed it proper to grant their motion for
execution pending appeal with the objective of ensuring "prompt payment" of just
compensation.

Contrary to the view of petitioner, "prompt payment" of just compensation is not

satisfied by the mere deposit with any accessible bank of the provisional
compensation determined by it or by the DAR, and its subsequent release to the
landowner after compliance with the legal requirements set by RA 6657.

Constitutionally, "just compensation" is the sum equivalent to the market value of

the property, broadly described as the price fixed by the seller in open market in
the usual and ordinary course of legal action and competition, or the fair value of
the property as between the one who receives and the one who desires to sell, it
being fixed at the time of the actual taking by the government.26 Just
compensation is defined as the full and fair equivalent of the property taken from
its owner by the expropriator. It has been repeatedly stressed by this Court that
the true measure is not the takers gain but the owners loss. The word "just" is
used to modify the meaning of the word "compensation" to convey the idea that
the equivalent to be given for the property to be taken shall be real, substantial,
full, and ample.27

The concept of just compensation embraces not only the correct determination of
the amount to be paid to the owners of the land, but also payment within a
reasonable time from its taking. Without prompt payment, compensation cannot
be considered "just" inasmuch as the property owner is made to suffer the
consequences of being immediately deprived of his land while being made to
wait for a decade or more before actually receiving the amount necessary to
cope with his loss.28

Put differently, while prompt payment of just compensation requires the

immediate deposit and release to the landowner of the provisional compensation
as determined by the DAR, it does not end there. Verily, it also encompasses the
payment in full of the just compensation to the landholders as finally determined
by the courts. Thus, it cannot be said that there is already prompt payment of just
compensation when there is only a partial payment thereof, as in this case.

While this decision does not finally resolve the propriety of the determination of
just compensation by the SAC in view of the separate appeal on the matter, we
find no grave abuse of discretion on the part of the SAC judge in allowing
execution pending appeal. The good reasons cited by the SACthat it would be
in consonance with justice, fairness, and equity, and that suspending payment
will prolong the agony of respondents suffered due to the deprivation of their land
are eloquently elucidated in the Comment filed by SAC Judge Venancio J.
Amila, as nominal party, on the petition for certiorari and prohibition of petitioner
before the Court of Appeals, viz.:

In addition to the Comment of private respondents, through counsel Hilario

C. Baril, which the undersigned has just received a copy today, it is well to
state here that respondent Placido Orilla is already an old man just as his
wife. The appealed Decision will show that Orilla was already 71 years old
at the time he testified in this case and the transcripts would further show
that the money that he used in buying the DBP foreclosed property herein
subject of compulsory acquisition by the DAR came from his retirement
benefits evidently thinking that his investment would afford him security
and contentment in his old age. But, luckily or unluckily, the land was taken
from him by the DAR at a price so low that he could not swallow, thus, he
brought the issue to court. Yet, all along, the land has been under the
enjoyment of farmer-beneficiaries without him yet being paid therefor. In
the mind of the Court, if payment for the land would be delayed further, it
would not be long that death would overtake him. What a misfortune to his
long years of service to acquire that hard-earned savings only to be
deprived therefrom at the time when he needed it most.29

The SAC, aware of the protracted proceedings of the appeal of its November 20,
2000 Decision, but without imputing any dilatory tactics on the part of petitioner,
thus deemed it proper, in its sound discretion, to grant the execution pending
appeal. Moreover, the execution of the judgment of the SAC was conditioned on
the posting of a bond by the respondents, despite pleas to reduce the same, in
the amount of one-half of the just compensation determined by the said court or
P739,511.50.

To reiterate, good reasons for execution pending appeal consist of compelling or

superior circumstances demanding urgency which will outweigh the injury or
damages suffered should the losing party secure a reversal of the judgment or
final order. In the case at bar, even with the procedural flaw in the SACs grant of
execution without a hearing, the injury that may be suffered by respondents if
execution pending appeal is denied indeed outweighs the damage that may be
suffered by petitioner in the grant thereof. As correctly pointed out by
respondents, the reversal of the November 20, 2000 SAC Decision, in the sense
that petitioner will pay nothing at all to respondents, is an impossibility,
considering the constitutional mandate that just compensation be paid for
expropriated property. The posting of the required bond, to our mind, adequately
insulates the petitioner against any injury it may suffer if the SAC determination
of just compensation is reduced.

Suffice it to say that, given the particular circumstances of this case, along with
the considerable bond posted by respondents, the assailed SAC Order of
December 21, 2000 and the Decision of the Court of Appeals dated July 29, 2002
are justified.

WHEREFORE, the Decision of the Court of Appeals dated July 29, 2002 is
AFFIRMED.

29. G.R. No. L-12032 August 31, 1959

CITY OF BAGUIO, plaintiff-appelle,

vs.
THE NATIONAL WATERWORKS AND SEWERAGE AUTHORITY, defendant-
appellant.

City Attorney Sixto A. Domondom for appellee.

Office of the Solicitor General Ambrosio Padilla, First Assistant Government
Corporate Counsel Simeon Gopengco and Solicitor Troadio T. Quinzon, Jr. for
appellant.

BAUTISTA ANGELO, J.:

Plaintiff, a municipal corporation, filed on April 25, 1956, in the Court of First
Instance of Baguio, a complaint for declaratory relief against defendant, a public
corporation created by Republic Act No. 1383, contending that said Act does not
include within its preview the Baguio Workshop System; that assuming that it
does, said Act is unconstitutional because it has the effect of depriving plaintiff of
the ownership, control and operation of said waterworks system without
compensation and without due process of law, and that it is oppressive,
unreasonable and unjust to plaintiff and other cities, municipalities and municipal
districts similarly situated.

On My 22, 1956, defendant filed a motion to dismiss on the ground that Republic
Act No. 1383 is a proper exercise of the police power of the State; that assuming
that said Act contemplates an act of expropriation, it is still a constitutional
exercise of the power of eliminate domain; that at any rate the Baguio
Waterworks System is not a private property but "public works of public service"
over which the Legislature has control; and that the provision of the said Act
being clear and unambiguous, there is no necessity for construction.

On June 21, 1956, the Court, acting on the motion to dismiss as well as on the
answer and rejoinder filed by both parties, denied the motion and ordered
defendant to file its answer to the complaint. On July 6, 1956, defendant filed its
answer reiterating and amplifying the ground already advanced in this motion to
dismiss, adding thereto that the action for the declaratory relief is improper for the
reason that the Baguio waterworks System has already been transferred to
defendant pursuant to Republic Act No. 1383 or, if such has not been done, there
has already been a breach of said Act.

On August 14, 1956, the parties submitted a written stipulation of the facts and
filed written memoranda. And after allowing plaintiff to file a suplementary
complaint, the Court on November 5, 1956, rendered decision the dispositive part
of which reads: "This Court, . . . holds that the workshop system of the City of
Baguio falls filed within the category of 'private property', as contemplated by our
constitution and may not expropriated without just compensation and that
section 8 of republic act No. 1383 provides for the exchange of the NAWASA
assets for the value of workshop system of Baguio is unconstitutional as this is
not 'just compensation,'" Defendant filed a motion for reconsideration, and upon
its denial. It took the present appeal.

The issues posed in this appeal are: (1) plaintiff's action for declatory relief is
improper because there has already been a breach by plaintiff of Republic Act
No. 1383 (2) Republic Act No. 1383 does not contemplates the exercise of the
power of eliminate domain but the exertion of the police power of the State; and
(3) assuming arguendo that Republic Act No. 1383 involves the exercise of the
power of eminent domain the same does not violate our Constitution.
Before we proceed with the discussion of this issues, there is need to state some
facts necessarily for their determination since the proper application of the
principles of law that may be pertinent would greatly depend upon them.

Plaintiff is a municipal corporation organized under its Charter with principal

place of business in the City of Baguio, while defendant is in the public
corporation created by Republic Act No. 1383 with provincial place of business in
the City of manila. Under section 2553 of its Charter, plaintiffs is maintaining the
Baguio Waterworks System under a certificates of public convenience, the same
being financed by its own funds, the Baguio general fund, and funds advanced
by the national Government. The assets of said system as of December 31, 1955
were reported to be P1,408.795.98. The system supplies only the City of Baguio,
its inhabitants, and transient visitors, and, as provided for in accordance, it grants
to the employees of the City one fifth (1/5) of cubic meter free from every one
peso of their total salary per annum as part of their compensation. The
employees of the national Government are not given this privilege but there is a
provision plaintiff Charter which says: "in consideration of the exemption from the
taxation to the extensive real state holdings of the national Government within
the limit of the City, of the expenses of the improvements which the Government
of the said City is required to make a reason for the location therein of the
offenses of the national Government, and of free services in connection of the
said offices, there is created a permanent and continuing appropriation from the
funds in the national Treasury not otherwise appropriated, equal to fifty per
centum of the expenses of the Government of the City exclusive of this accounts
which appear as expenses by reason of inter-department charges and charges
against the national Government for services and supplies."

The purposes for which defendants was created is expressed in section 1 of

republic Act No. 1383, which we quote:

Creation of the national Waterworks and Sewerage Authority;' its general

purposes; Zone and extends of the jurisdiction comprised by it; domicile
and place of business of the corporation. For purposes of consolidating
and centralizing all waterworks, sewerage and drainage systems in the
Philippines under one control, direction and general supervision, there is
hereby created a public corporation to be known as the National workshop
and Sewerage authority, which shall be organized within one month after
the approval of this Act.
 The National Waterworks and Sewerage authority shall own and/or have
jurisdiction, supervision and control over all territory now embraced by the
Metropolitan Water Districts as well as all areas now served by existing
government-owned waterworks in the boundaries of cities, municipalities
and municipality districts in the Philippines including those served by the
waterworks and wells and drills sections of the national Waterworks and
Sewerage authority, any from time to time extends its territory by the
admission of or the inclusion of any municipal or municipal districts in the
Philippines.

The jurisdiction of the national waterworks and Sewerage Authority shall

extend to the construction, maintenance, operation and control of non-
supporting and/or non-revenue producing water systems and sanitary
works, whether undertaken at the expense of the Authority or through
subsidy of the national Government as provided in Section 10 of this act.

And to accomplish the above purpose, the following was provided in section 8 of
the same act:

Dissolution of the Metropolitan Water District; transfer to the Authority of its

records, assets and liabilities; transfer to the Authority of entities,
waterworks and sewerage systems in the cities, municipalities, municipal
district and other government waterworks and sewerage systems. The
present Metropolitan Water District created Under Act Number Two
Thousand eight hundred thirty-two, as amended, is hereby dissolved, and
its records, assets and liabilities are transferred to the authority. All existing
government owned waterworks and sewerage systems are transferred to
the National waterworks and Sewerage Authority, and in turn to pledge
such assets as security for the payment of the waterworks and sewerage
bonded debt.

The net book value of the properties and assets of the Metropolitan Water
District and of government-owned waterworks and sewerage systems in
cities, municipalities, or municipal districts, and other government-owned
waterworks and sewerage systems shall be received by the Authority in
payment for an equal value of the assets of the National Waterworks and
sewerage Authority.
 The references made to the Metropolitan Water District or to any existing
government-owned waterworks and sewerage system in any city,
municipality or municipal district and other waterworks and sewerage
system under the Bureau of Public Works, in any Act or Executive Order or
Proclamation of the President of the Philippines or in any city or municipal
ordinance which is still in force, shall be deemed to be a reference to the
National Waterworks and Sewerage Authority created by this Act.

On September 19, 1955, the President of the Philippines issued Executive Order
No. 127 outlining the procedure for the transfer of government-owned
waterworks and sewerage systems in the provinces, cities and municipalities to
defendant and provided for a time limit for such transfer, which is "at the earliest
time possible but not exceeding 90 days from the date of said order."

And on March 15, 1956, defendant, implementing said Executive Order, issued
Office Memorandum No. 7 providing, among other things, the following:

(1) Pending the establishment of the Waterworks district offices of the

Authority, District and City Engineers, shall continue to be in charge of the
operation and maintenance of all existing waterworks systems, including
the repair and improvement thereof and the construction of new
waterworks projects in their respective districts in accordance with the
Memorandum of the Secretary of Public Works and Communications dated
October 25, 1955, quoted in the Memorandum of the Director of Public
Works dated October 27, 1955. Likewise, they shall continue approving
vouchers and payrolls for salaries and essential services chargeable
against waterworks funds heretofore, provided that said expenses do not
exceed the appropriations in the approved budget for the preceeding fiscal
year.

(2) Pending the establishment of the Waterworks district offices of the

Authority which shall ultimately include an auditing force, Provincial and
City auditors shall, as heretofore, audit the accounts of the different
waterworks systems in their respective jurisdictions in accordance with
Provincial Auditor's Memorandum No. 151 to Provincial and City Auditors
dated December 7, 1955.
 (3) Pending the establishment of the waterworks district offices of the
Authority, provincial, city and municipal treasurers shall continue to perform
the work of handling the collections and disbursements of funds of the
waterworks systems and artesian wells projects in their respective
jurisdictions in accordance with provincial circular of the Secretary of
Finance to all provincial and City Treasurers dated November 23, 1955.

(4) Provincial Waterworks Boards, provincial Boards, Municipal Boards, or

City councils of cities and municipal councils of Municipalities and
municipal districts ipso facto ceased to have control and supervision over
waterworks systems within their respective territorial jurisdictions upon the
formal organization of the National Waterworks and sewerage Authority in
accordance with the provisions of Republic Act No. 1383. All budgets and
plantillas of personnel of said waterworks personnel, including collectors
who were formerly directly under the Provincial, City or Municipal
Treasurers, whether permanent, temporary or emergency, shall be
effective only after their approval by the Board of directors of the Authority.

Let us now discussed the issues raised..

As regards the first issue, appellant contends that appellee's action for
declaratory relief is improper because there has already been a breach of the
Republic Act No. 1383, invoking section 2 of rule 66 which provides; "A contract
or statue may be construed before there has been a breach thereof."

This contention is untenable. To begin with, the answer filed by defendant

through its counsel the Solicitor General contains a express admission of the
avernment in appellee's complaint that "although Republic Act No. 1383 took
effect upon its approval on June 18, 1955, and notwithstanding Executive Order
No. 127 of the President, there has been no breach of said law because no
actual physical turn-over of the Baguio Waterworks System has so far been
made." Because of such admission, it has always been assumed in the trial court
that the present action is proper because there has not been such breach so
much so that appellant desisted from raising the point in the rest of the
proceedings in the trial court and in the long memorandum it has submitted, for
which reason the trial court made in its decision the following comment: In its
memorandum, however, the NAWASA has failed to argue this point. the omission
is significant and this Court takes that in any objection to the declaratory relief
proceedings are waived." That appellant would now take an inconsistent stand is
strange in any event, we find that such is the situation obtaining here. Republic
Act No. 1383 provides that government-owned waterworks system should be
transferred to appellant at the earliest time possible, and unless by administrative
action this provision is actually carried out, it cannot be said that the transfer has
been effected. The most that appellant did to carry out such provision is to issue
its Office memorandum No. 7 which prescribes the preparatory steps for such
transfer pending the establishment of the branch office of the NAWASA that
would take over the waterworks concerned, but before any definite step could be
taken to comply with said directive the present action was instituted. We agree
with the trial court that so far there has not been a breach of the law and that the
other requisites necessary for an action for declaratory relief are present.

The contention that the Republic Act No. 1383 constitutes a valid exercise of
police power rather than a directive to expropriate the waterworks of the appellee
by the exercise of the power of eminent domain cannot also be entertained. This
is far from the intent and purpose of the law. The act does not confiscate, nor
destroy, nor appropriate property belonging to the appellee. It merely directs that
all waterworks belonging to cities, municipalities, and municipal districts in the
Philippines be transferred to the NAWASA for the purpose of placing them under
the control and supervision of one agency with a view to promoting their efficient
management, but in so doing it does not confiscate them because it directs that
they be paid with an equal value of the assets of the NAWASA. This is clearly
inferred from the context of the law (section 8, Rep. Act No. 1383).

But appellant invites our attention to some authorities purporting to show the
Republic Act No. 1383 could at least be considered as a legitimate exercise of
police power such that Congress may in the exercise of such power enact a law
transferring Government property from one agency to another, and laying stress
one said authorities it contends that although Congress cannot deprive the
citizens of a municipal corporation of the use of property held in trust for their
benefit it may however change the trustee with or without its consent or
compensation provided the citizens are not deprived of its enjoyment. In other
words, appellant invokes the principle that the transfer of property and authority
by an act of Congress from one class of public officer to another where the
property continues devoted to its original purpose does not impair any vested
right of the city owning the property.
But the authorities cited are not in point. They in substance point out that the
transfer, if any, of the property of municipal corporation from one agency to
another is merely done for purposes of administration, its ownership and benefits
being retained by the corporation. Such is not the clear intent of Republic Act No.
1383. Here, as we have already shown, its purpose is to effect a real transfer of
the ownership of the waterworks to the new agency and does not merely
encompass a transfer of administration. At any rate, the authorities cited do not
bear out the proposition of appellant as clearly pointed out by counsel for
appellee in his brief.

But it is insisted that the waterworks system of Baguio City does not have the
character of patrimonial property but comes under the phrase "public works for
public service" mentioned in Article 424 of the New Civil Code and as such is
subjected to the control of Congress. This contention is also untenable. The
Baguio Waterworks System is not like any public road, park, street or any other
public property held in trust by a municipal corporation held for the benefit of the
public but it is rather a property owned by appellee in its proprietary character.
While the cases may differ as to the public or private character of waterworks,
the weight of authority as far as the legislature is concerned classes them as
private affairs. (sec. 239, Vol. I, Revised, McQuillin Municipal Corporation, p. 239;
Shrik vs. City of Lancaster, 313 Pa. 158, 169 Atl. 557). And in this jurisdiction, this
court has already expressed the view that the waterworks system is patrimonial
property of the city that has established it.(Mendoza vs. De Leon, 33 Phil. 509).
And being owned by the municipal corporation in a proprietary character,
waterworks cannot be taken away without observing the safeguards set by our
Constitution for the protection of private property.

While the judicial opinions on this subject are more or less uncertain in
expression, and court judgment apparently conflicting, perhaps it is correct
to affirm that a majority of decision recognize the private rights of the
municipal corporation, and hence support the view that all its property of a
distinctly private character is fully protected by the constitutional provisions
protecting private property of the individual or the private corporation.
Accordingly the right of state as to the private property of municipal
corporation is a right of regulation to be exercised in harmony with the
general policy of the state, and though broader than exists in the case of
individuals, or private corporations, is not a right of appropriation.
 xxx xxx xxx

The decision maintain that the property held by a municipal corporation

units private capacity is not subject to the unrestricted control of the
legislature, and the municipality cannot be deprived of such property
against its will, except by the exercise of eminent domain with payment of
full compensation. (McQuillin Municipal Corporation, 2nd Ed., Vol. I, pp.
670-681).

In its private capacity a municipal corporation is wholly different. The

people of a compact community usually require certain conveniences
which cannot be furnished without a franchise from the State and which
are either unnecessary in the rural districts, such as a system of sewers, or
parks and open spaces, or which on account of the expenses it would be
financially impossible to supply except where the population is reasonably
dense, such as water or gas. But in so far as the municipality is thus
authorized to exercise the functions of a private corporation, it is clothed
with the capacities of a private corporation and may claim its rights and
immunities, even as against the sovereign, and is subject to the liabilities
of such a corporation, even as against third parties. (19 R.C. L. p. 698)

The attempt of appellant in having waterworks considered as public property

subject to the control of Congress or one which can be regulated by the exercise
of police power having failed, that question that now arises is: Does Republic Act
No. 1383 provide for the automatic expropriation of the waterworks in question in
the light of our Constitution? In other words, does said law comply with the
requirements of section 6, Article XIII, in relation to section 1(2), Article III, of our
Constitution?

Section 6, Article XIII of our Constitution provides:

SEC. 6. The State may, in the interest of National Welfare and defense,
establish and operate industries and means of transportation and
communication, and, upon payment of just compensation, transfer to
public ownership utilities and other private enterprises to be operated by
the Government.

Section 1 (2), Article III, of our Constitution provides:

 (2) Private property shall not be taken for public use without just
compensation.

It is clear that the State may, in the interest of National welfare, transfer to public
ownership any private enterprise upon payment of just compensation. At the
same time, one has to bear in mind that no person can be deprived of his
property except for public use and upon payment of just compensation. There is
an attempt to observe this requirement in Republic Act No. 1383 when in
providing for the transfer of appellee's waterworks system to a national agency it
was directed that the transfer be made upon payment of an equivalent value of
the property. Has this been implemented? Has appellant actually transferred to
appellee any asset of the NAWASA that may be considered just compensation
for the property expropriated? There is nothing in the record to show that such
was done. Neither is there anything to this effect in Office Memorandum No. 7
issued by the NAWASA in implementation of the provision of the Republic Act
No. 1383. The law speaks of assets of the NAWASA by they are not specified.
While the Act empowers the NAWASA to contract indebtedness and issue bonds
subject to the approval of the Secretary of Finance when necessary for the
transaction of its business (sec. 2, par. (L), sec. 5, Act No. 1383), no such action
has been taken to comply with appellant's commitment in so far as payment of
compensation of appellee is concerned. As to when such action should be taken
no one knows. And unless this aspect of the law is clarified and appellee is given
its due compensation, appellee cannot be deprived of its property even if
appellant desires to take over its administration in line with the spirit of the law.
We are therefore persuaded to conclude that the law, insofar as it expropriates
the waterworks in question without providing for an effective payment of just
compensation, violates our Constitution. In this respect, the decision of the trial
court is correct.

Wherefore, the decision appealed from is affirmed, without pronouncement as to

costs.

30. G.R. No. 118127 April 12, 2005

CITY OF MANILA, HON. ALFREDO S. LIM as the Mayor of the City of Manila,
HON. JOSELITO L. ATIENZA, in his capacity as Vice-Mayor of the City of
Manila and Presiding Officer of the City Council of Manila, HON. ERNESTO
A. NIEVA, HON. GONZALO P. GONZALES, HON. AVELINO S. CAILIAN, HON.
ROBERTO C. OCAMPO, HON. ALBERTO DOMINGO, HON. HONORIO U.
LOPEZ, HON. FRANCISCO G. VARONA, JR., HON. ROMUALDO S.
MARANAN, HON. NESTOR C. PONCE, JR., HON. HUMBERTO B. BASCO,
HON. FLAVIANO F. CONCEPCION, JR., HON. ROMEO G. RIVERA, HON.
MANUEL M. ZARCAL, HON. PEDRO S. DE JESUS, HON. BERNARDITO C.
ANG, HON. MANUEL L. QUIN, HON. JHOSEP Y. LOPEZ, HON. CHIKA G. GO,
HON. VICTORIANO A. MELENDEZ, HON. ERNESTO V.P. MACEDA, JR., HON.
ROLANDO P. NIETO, HON. DANILO V. ROLEDA, HON. GERINO A.
TOLENTINO, JR., HON. MA. PAZ E. HERRERA, HON. JOEY D. HIZON, HON.
FELIXBERTO D. ESPIRITU, HON. KARLO Q. BUTIONG, HON. ROGELIO P.
DELA PAZ, HON. BERNARDO D. RAGAZA, HON. MA. CORAZON R.
CABALLES, HON. CASIMIRO C. SISON, HON. BIENVINIDO M. ABANTE, JR.,
HON. MA. LOURDES M. ISIP, HON. ALEXANDER S. RICAFORT, HON.
ERNESTO F. RIVERA, HON. LEONARDO L. ANGAT, and HON. JOCELYN B.
DAWIS, in their capacity as councilors of the City of Manila, Petitioner,
vs.
HON. PERFECTO A.S. LAGUIO, JR., as Presiding Judge, RTC, Manila and
MALATE TOURIST DEVELOPMENT CORPORATION, Respondents.

DECISION

TINGA, J.:

I know only that what is moral is what you feel good after and what is
immoral is what you feel bad after.

Ernest Hermingway
Death in the Afternoon, Ch. 1

It is a moral and political axiom that any dishonorable act, if performed by

oneself, is less immoral than if performed by someone else, who would be
well-intentioned in his dishonesty.

J. Christopher Gerald
Bonaparte in Egypt, Ch. I
The Court's commitment to the protection of morals is secondary to its fealty to
the fundamental law of the land. It is foremost a guardian of the Constitution but
not the conscience of individuals. And if it need be, the Court will not hesitate to
"make the hammer fall, and heavily" in the words of Justice Laurel, and uphold
the constitutional guarantees when faced with laws that, though not lacking in
zeal to promote morality, nevertheless fail to pass the test of constitutionality.

The pivotal issue in this Petition1 under Rule 45 (then Rule 42) of the Revised
Rules on Civil Procedure seeking the reversal of the Decision2 in Civil Case No.
93-66511 of the Regional Trial Court (RTC) of Manila, Branch 18 (lower court),3 is
the validity of Ordinance No. 7783 (the Ordinance) of the City of Manila.4

The antecedents are as follows:

Private respondent Malate Tourist Development Corporation (MTDC) is a

corporation engaged in the business of operating hotels, motels, hostels and
lodging houses.5 It built and opened Victoria Court in Malate which was licensed
as a motel although duly accredited with the Department of Tourism as a hotel.6
On 28 June 1993, MTDC filed a Petition for Declaratory Relief with Prayer for a
Writ of Preliminary Injunction and/or Temporary Restraining Order7 (RTC
Petition) with the lower court impleading as defendants, herein petitioners City of
Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza, and the members of
the City Council of Manila (City Council). MTDC prayed that the Ordinance,
insofar as it includes motels and inns as among its prohibited establishments, be
declared invalid and unconstitutional.8

Enacted by the City Council9 on 9 March 1993 and approved by petitioner City
Mayor on 30 March 1993, the said Ordinance is entitled

AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION

OF BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT,
ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-
MALATE AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF,
AND FOR OTHER PURPOSES.10

The Ordinance is reproduced in full, hereunder:

SECTION 1. Any provision of existing laws and ordinances to the contrary

notwithstanding, no person, partnership, corporation or entity shall, in
the Ermita-Malate area bounded by Teodoro M. Kalaw Sr. Street in the
North, Taft Avenue in the East, Vito Cruz Street in the South and Roxas
Boulevard in the West, pursuant to P.D. 499 be allowed or authorized to
contract and engage in, any business providing certain forms of
amusement, entertainment, services and facilities where women are
used as tools in entertainment and which tend to disturb the
community, annoy the inhabitants, and adversely affect the social
and moral welfare of the community, such as but not limited to:

1. Sauna Parlors

2. Massage Parlors

3. Karaoke Bars

4. Beerhouses

5. Night Clubs

6. Day Clubs

7. Super Clubs

8. Discotheques

9. Cabarets

10. Dance Halls

11. Motels

12. Inns

SEC. 2 The City Mayor, the City Treasurer or any person acting in behalf
of the said officials are prohibited from issuing permits, temporary or
otherwise, or from granting licenses and accepting payments for the
operation of business enumerated in the preceding section.

SEC. 3. Owners and/or operator of establishments engaged in, or

devoted to, the businesses enumerated in Section 1 hereof are hereby
given three (3) months from the date of approval of this ordinance
within which to wind up business operations or to transfer to any
place outside of the Ermita-Malate area or convert said businesses to
other kinds of business allowable within the area, such as but not
limited to:

1. Curio or antique shop

2. Souvenir Shops

3. Handicrafts display centers

4. Art galleries

5. Records and music shops

6. Restaurants

7. Coffee shops

8. Flower shops

9. Music lounge and sing-along restaurants, with well-defined

activities for wholesome family entertainment that cater to both local
and foreign clientele.

10. Theaters engaged in the exhibition, not only of motion pictures

but also of cultural shows, stage and theatrical plays, art exhibitions,
concerts and the like.

11. Businesses allowable within the law and medium intensity

districts as provided for in the zoning ordinances for Metropolitan
Manila, except new warehouse or open-storage depot, dock or yard,
motor repair shop, gasoline service station, light industry with any
machinery, or funeral establishments.

SEC. 4. Any person violating any provisions of this ordinance, shall

upon conviction, be punished by imprisonment of one (1) year or fine
of FIVE THOUSAND (P5,000.00) PESOS, or both, at the discretion of the
Court, PROVIDED, that in case of juridical person, the President, the
 General Manager, or person-in-charge of operation shall be liable thereof;
PROVIDED FURTHER, that in case of subsequent violation and
conviction, the premises of the erring establishment shall be closed
and padlocked permanently.

SEC. 5. This ordinance shall take effect upon approval.

Enacted by the City Council of Manila at its regular session today, March 9,
1993.

Approved by His Honor, the Mayor on March 30, 1993. (Emphasis

supplied)

In the RTC Petition, MTDC argued that the Ordinance erroneously and
improperly included in its enumeration of prohibited establishments, motels and
inns such as MTDC's Victoria Court considering that these were not
establishments for "amusement" or "entertainment" and they were not "services
or facilities for entertainment," nor did they use women as "tools for
entertainment," and neither did they "disturb the community," "annoy the
inhabitants" or "adversely affect the social and moral welfare of the community."11

MTDC further advanced that the Ordinance was invalid and unconstitutional for
the following reasons: (1) The City Council has no power to prohibit the operation
of motels as Section 458 (a) 4 (iv)12 of the Local Government Code of 1991 (the
Code) grants to the City Council only the power to regulate the establishment,
operation and maintenance of hotels, motels, inns, pension houses, lodging
houses and other similar establishments; (2) The Ordinance is void as it is
violative of Presidential Decree (P.D.) No. 49913 which specifically declared
portions of the Ermita-Malate area as a commercial zone with certain restrictions;
(3) The Ordinance does not constitute a proper exercise of police power as the
compulsory closure of the motel business has no reasonable relation to the
legitimate municipal interests sought to be protected; (4) The Ordinance
constitutes an ex post facto law by punishing the operation of Victoria Court
which was a legitimate business prior to its enactment; (5) The Ordinance
violates MTDC's constitutional rights in that: (a) it is confiscatory and constitutes
an invasion of plaintiff's property rights; (b) the City Council has no power to find
as a fact that a particular thing is a nuisance per se nor does it have the power to
extrajudicially destroy it; and (6) The Ordinance constitutes a denial of equal
protection under the law as no reasonable basis exists for prohibiting the
operation of motels and inns, but not pension houses, hotels, lodging houses or
other similar establishments, and for prohibiting said business in the Ermita-
Malate area but not outside of this area.14

In their Answer15 dated 23 July 1993, petitioners City of Manila and Lim
maintained that the City Council had the power to "prohibit certain forms of
entertainment in order to protect the social and moral welfare of the community"
as provided for in Section 458 (a) 4 (vii) of the Local Government Code,16 which
reads, thus:

Section 458. Powers, Duties, Functions and Compensation. (a) The

sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section 16 of this Code
and in the proper exercise of the corporate powers of the city as provided
for under Section 22 of this Code, and shall:

....

(4) Regulate activities relative to the use of land, buildings and structures
within the city in order to promote the general welfare and for said purpose
shall:

....

(vii) Regulate the establishment, operation, and maintenance of any

entertainment or amusement facilities, including theatrical
performances, circuses, billiard pools, public dancing schools, public
dance halls, sauna baths, massage parlors, and other places for
entertainment or amusement; regulate such other events or activities
for amusement or entertainment, particularly those which tend to
disturb the community or annoy the inhabitants, or require the
suspension or suppression of the same; or, prohibit certain forms of
amusement or entertainment in order to protect the social and moral
welfare of the community.
Citing Kwong Sing v. City of Manila,17 petitioners insisted that the power of
regulation spoken of in the above-quoted provision included the power to control,
to govern and to restrain places of exhibition and amusement.18

Petitioners likewise asserted that the Ordinance was enacted by the City Council
of Manila to protect the social and moral welfare of the community in conjunction
with its police power as found in Article III, Section 18(kk) of Republic Act No.
409,19 otherwise known as the Revised Charter of the City of Manila (Revised
Charter of Manila)20 which reads, thus:

ARTICLE III

THE MUNICIPAL BOARD

. . .

Section 18. Legislative powers. The Municipal Board shall have the
following legislative powers:

. . .

(kk) To enact all ordinances it may deem necessary and proper for the
sanitation and safety, the furtherance of the prosperity, and the promotion
of the morality, peace, good order, comfort, convenience, and general
welfare of the city and its inhabitants, and such others as may be
necessary to carry into effect and discharge the powers and duties
conferred by this chapter; and to fix penalties for the violation of
ordinances which shall not exceed two hundred pesos fine or six months'
imprisonment, or both such fine and imprisonment, for a single offense.

Further, the petitioners noted, the Ordinance had the presumption of validity;
hence, private respondent had the burden to prove its illegality or
unconstitutionality.21

Petitioners also maintained that there was no inconsistency between P.D. 499
and the Ordinance as the latter simply disauthorized certain forms of businesses
and allowed the Ermita-Malate area to remain a commercial zone.22 The
Ordinance, the petitioners likewise claimed, cannot be assailed as ex post facto
as it was prospective in operation.23 The Ordinance also did not infringe the equal
protection clause and cannot be denounced as class legislation as there existed
substantial and real differences between the Ermita-Malate area and other
places in the City of Manila.24

On 28 June 1993, respondent Judge Perfecto A.S. Laguio, Jr. (Judge Laguio)
issued an ex-parte temporary restraining order against the enforcement of the
Ordinance.25 And on 16 July 1993, again in an intrepid gesture, he granted the
writ of preliminary injunction prayed for by MTDC.26

After trial, on 25 November 1994, Judge Laguio rendered the assailed Decision,
enjoining the petitioners from implementing the Ordinance. The dispositive
portion of said Decision reads:27

WHEREFORE, judgment is hereby rendered declaring Ordinance No.

778[3], Series of 1993, of the City of Manila null and void, and making
permanent the writ of preliminary injunction that had been issued by this
Court against the defendant. No costs.

SO ORDERED.28

Petitioners filed with the lower court a Notice of Appeal29 on 12 December 1994,
manifesting that they are elevating the case to this Court under then Rule 42 on
pure questions of law.30

On 11 January 1995, petitioners filed the present Petition, alleging that the
following errors were committed by the lower court in its ruling: (1) It erred in
concluding that the subject ordinance is ultra vires, or otherwise, unfair,
unreasonable and oppressive exercise of police power; (2) It erred in holding that
the questioned Ordinance contravenes P.D. 49931 which allows operators of all
kinds of commercial establishments, except those specified therein; and (3) It
erred in declaring the Ordinance void and unconstitutional.32

In the Petition and in its Memorandum,33 petitioners in essence repeat the

assertions they made before the lower court. They contend that the assailed
Ordinance was enacted in the exercise of the inherent and plenary power of the
State and the general welfare clause exercised by local government units
provided for in Art. 3, Sec. 18 (kk) of the Revised Charter of Manila and
conjunctively, Section 458 (a) 4 (vii) of the Code.34 They allege that the
Ordinance is a valid exercise of police power; it does not contravene P.D. 499;
and that it enjoys the presumption of validity.35

In its Memorandum36 dated 27 May 1996, private respondent maintains that the
Ordinance is ultra vires and that it is void for being repugnant to the general law.
It reiterates that the questioned Ordinance is not a valid exercise of police power;
that it is violative of due process, confiscatory and amounts to an arbitrary
interference with its lawful business; that it is violative of the equal protection
clause; and that it confers on petitioner City Mayor or any officer unregulated
discretion in the execution of the Ordinance absent rules to guide and control his
actions.

This is an opportune time to express the Court's deep sentiment and tenderness
for the Ermita-Malate area being its home for several decades. A long-time
resident, the Court witnessed the area's many turn of events. It relished its glory
days and endured its days of infamy. Much as the Court harks back to the
resplendent era of the Old Manila and yearns to restore its lost grandeur, it
believes that the Ordinance is not the fitting means to that end. The Court is of
the opinion, and so holds, that the lower court did not err in declaring the
Ordinance, as it did, ultra vires and therefore null and void.

The Ordinance is so replete with constitutional infirmities that almost every

sentence thereof violates a constitutional provision. The prohibitions and
sanctions therein transgress the cardinal rights of persons enshrined by the
Constitution. The Court is called upon to shelter these rights from attempts at
rendering them worthless.

The tests of a valid ordinance are well established. A long line of decisions has
held that for an ordinance to be valid, it must not only be within the corporate
powers of the local government unit to enact and must be passed according to
the procedure prescribed by law, it must also conform to the following
substantive requirements: (1) must not contravene the Constitution or any
statute; (2) must not be unfair or oppressive; (3) must not be partial or
discriminatory; (4) must not prohibit but may regulate trade; (5) must be general
and consistent with public policy; and (6) must not be unreasonable.37

Anent the first criterion, ordinances shall only be valid when they are not contrary
to the Constitution and to the laws.38 The Ordinance must satisfy two
requirements: it must pass muster under the test of constitutionality and the test
of consistency with the prevailing laws. That ordinances should be constitutional
uphold the principle of the supremacy of the Constitution. The requirement that
the enactment must not violate existing law gives stress to the precept that local
government units are able to legislate only by virtue of their derivative legislative
power, a delegation of legislative power from the national legislature. The
delegate cannot be superior to the principal or exercise powers higher than those
of the latter.39

This relationship between the national legislature and the local government units
has not been enfeebled by the new provisions in the Constitution strengthening
the policy of local autonomy. The national legislature is still the principal of the
local government units, which cannot defy its will or modify or violate it.40

The Ordinance was passed by the City Council in the exercise of its police
power, an enactment of the City Council acting as agent of Congress. Local
government units, as agencies of the State, are endowed with police power in
order to effectively accomplish and carry out the declared objects of their
creation.41 This delegated police power is found in Section 16 of the Code, known
as the general welfare clause, viz:

SECTION 16. General Welfare. Every local government unit shall

exercise the powers expressly granted, those necessarily implied
therefrom, as well as powers necessary, appropriate, or incidental for its
efficient and effective governance, and those which are essential to the
promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among other
things, the preservation and enrichment of culture, promote health and
safety, enhance the right of the people to a balanced ecology, encourage
and support the development of appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance economic
prosperity and social justice, promote full employment among their
residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants.

Local government units exercise police power through their respective legislative
bodies; in this case, the sangguniang panlungsod or the city council. The Code
empowers the legislative bodies to "enact ordinances, approve resolutions and
appropriate funds for the general welfare of the province/city/municipality and its
inhabitants pursuant to Section 16 of the Code and in the proper exercise of the
corporate powers of the province/city/ municipality provided under the Code.42
The inquiry in this Petition is concerned with the validity of the exercise of such
delegated power.

The Ordinance contravenes

the Constitution

The police power of the City Council, however broad and far-reaching, is
subordinate to the constitutional limitations thereon; and is subject to the
limitation that its exercise must be reasonable and for the public good.43 In the
case at bar, the enactment of the Ordinance was an invalid exercise of delegated
power as it is unconstitutional and repugnant to general laws.

The relevant constitutional provisions are the following:

SEC. 5. The maintenance of peace and order, the protection of life, liberty,
and property, and the promotion of the general welfare are essential for the
enjoyment by all the people of the blessings of democracy.44

SEC. 14. The State recognizes the role of women in nation-building, and
shall ensure the fundamental equality before the law of women and men.45

SEC. 1. No person shall be deprived of life, liberty or property without due

process of law, nor shall any person be denied the equal protection of
laws.46

Sec. 9. Private property shall not be taken for public use without just
compensation.47

A. The Ordinance infringes

the Due Process Clause

The constitutional safeguard of due process is embodied in the fiat "(N)o person
shall be deprived of life, liberty or property without due process of law. . . ."48

There is no controlling and precise definition of due process. It furnishes though

a standard to which governmental action should conform in order that deprivation
of life, liberty or property, in each appropriate case, be valid. This standard is
aptly described as a responsiveness to the supremacy of reason, obedience to
the dictates of justice,49 and as such it is a limitation upon the exercise of the
police power.50

The purpose of the guaranty is to prevent governmental encroachment against

the life, liberty and property of individuals; to secure the individual from the
arbitrary exercise of the powers of the government, unrestrained by the
established principles of private rights and distributive justice; to protect property
from confiscation by legislative enactments, from seizure, forfeiture, and
destruction without a trial and conviction by the ordinary mode of judicial
procedure; and to secure to all persons equal and impartial justice and the
benefit of the general law.51

The guaranty serves as a protection against arbitrary regulation, and private

corporations and partnerships are "persons" within the scope of the guaranty
insofar as their property is concerned.52

This clause has been interpreted as imposing two separate limits on government,
usually called "procedural due process" and "substantive due process."

Procedural due process, as the phrase implies, refers to the procedures that the
government must follow before it deprives a person of life, liberty, or property.
Classic procedural due process issues are concerned with what kind of notice
and what form of hearing the government must provide when it takes a particular
action.53

Substantive due process, as that phrase connotes, asks whether the government
has an adequate reason for taking away a person's life, liberty, or property. In
other words, substantive due process looks to whether there is a sufficient
justification for the government's action.54 Case law in the United States (U.S.)
tells us that whether there is such a justification depends very much on the level
of scrutiny used.55 For example, if a law is in an area where only rational basis
review is applied, substantive due process is met so long as the law is rationally
related to a legitimate government purpose. But if it is an area where strict
scrutiny is used, such as for protecting fundamental rights, then the government
will meet substantive due process only if it can prove that the law is necessary to
achieve a compelling government purpose.56
The police power granted to local government units must always be exercised
with utmost observance of the rights of the people to due process and equal
protection of the law. Such power cannot be exercised whimsically, arbitrarily or
despotically57 as its exercise is subject to a qualification, limitation or restriction
demanded by the respect and regard due to the prescription of the fundamental
law, particularly those forming part of the Bill of Rights. Individual rights, it bears
emphasis, may be adversely affected only to the extent that may fairly be
required by the legitimate demands of public interest or public welfare.58 Due
process requires the intrinsic validity of the law in interfering with the rights of the
person to his life, liberty and property.59

Requisites for the valid exercise

of Police Power are not met

To successfully invoke the exercise of police power as the rationale for the
enactment of the Ordinance, and to free it from the imputation of constitutional
infirmity, not only must it appear that the interests of the public generally, as
distinguished from those of a particular class, require an interference with private
rights, but the means adopted must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals.60 It
must be evident that no other alternative for the accomplishment of the purpose
less intrusive of private rights can work. A reasonable relation must exist
between the purposes of the police measure and the means employed for its
accomplishment, for even under the guise of protecting the public interest,
personal rights and those pertaining to private property will not be permitted to be
arbitrarily invaded.61

Lacking a concurrence of these two requisites, the police measure shall be struck
down as an arbitrary intrusion into private rights62 a violation of the due process
clause.

The Ordinance was enacted to address and arrest the social ills purportedly
spawned by the establishments in the Ermita-Malate area which are allegedly
operated under the deceptive veneer of legitimate, licensed and tax-paying
nightclubs, bars, karaoke bars, girlie houses, cocktail lounges, hotels and
motels. Petitioners insist that even the Court in the case of Ermita-Malate Hotel
and Motel Operators Association, Inc. v. City Mayor of Manila63 had already taken
judicial notice of the "alarming increase in the rate of prostitution, adultery and
fornication in Manila traceable in great part to existence of motels, which provide
a necessary atmosphere for clandestine entry, presence and exit and thus
become the ideal haven for prostitutes and thrill-seekers."64

The object of the Ordinance was, accordingly, the promotion and protection of
the social and moral values of the community. Granting for the sake of argument
that the objectives of the Ordinance are within the scope of the City Council's
police powers, the means employed for the accomplishment thereof were
unreasonable and unduly oppressive.

It is undoubtedly one of the fundamental duties of the City of Manila to make all
reasonable regulations looking to the promotion of the moral and social values of
the community. However, the worthy aim of fostering public morals and the
eradication of the community's social ills can be achieved through means less
restrictive of private rights; it can be attained by reasonable restrictions rather
than by an absolute prohibition. The closing down and transfer of businesses or
their conversion into businesses "allowed" under the Ordinance have no
reasonable relation to the accomplishment of its purposes. Otherwise stated, the
prohibition of the enumerated establishments will not per se protect and promote
the social and moral welfare of the community; it will not in itself eradicate the
alluded social ills of prostitution, adultery, fornication nor will it arrest the spread
of sexual disease in Manila.

Conceding for the nonce that the Ermita-Malate area teems with houses of ill-
repute and establishments of the like which the City Council may lawfully
prohibit,65 it is baseless and insupportable to bring within that classification sauna
parlors, massage parlors, karaoke bars, night clubs, day clubs, super clubs,
discotheques, cabarets, dance halls, motels and inns. This is not warranted
under the accepted definitions of these terms. The enumerated establishments
are lawful pursuits which are not per se offensive to the moral welfare of the
community.

That these are used as arenas to consummate illicit sexual affairs and as venues
to further the illegal prostitution is of no moment. We lay stress on the acrid truth
that sexual immorality, being a human frailty, may take place in the most innocent
of places that it may even take place in the substitute establishments
enumerated under Section 3 of the Ordinance. If the flawed logic of the
Ordinance were to be followed, in the remote instance that an immoral sexual act
transpires in a church cloister or a court chamber, we would behold the spectacle
of the City of Manila ordering the closure of the church or court concerned.
Every house, building, park, curb, street or even vehicles for that matter will not
be exempt from the prohibition. Simply because there are no "pure" places where
there are impure men. Indeed, even the Scripture and the Tradition of Christians
churches continually recall the presence and universality of sin in man's history.66

The problem, it needs to be pointed out, is not the establishment, which by its
nature cannot be said to be injurious to the health or comfort of the community
and which in itself is amoral, but the deplorable human activity that may occur
within its premises. While a motel may be used as a venue for immoral sexual
activity, it cannot for that reason alone be punished. It cannot be classified as a
house of ill-repute or as a nuisance per se on a mere likelihood or a naked
assumption. If that were so and if that were allowed, then the Ermita-Malate area
would not only be purged of its supposed social ills, it would be extinguished of
its soul as well as every human activity, reprehensible or not, in its every nook
and cranny would be laid bare to the estimation of the authorities.

The Ordinance seeks to legislate morality but fails to address the core issues of
morality. Try as the Ordinance may to shape morality, it should not foster the
illusion that it can make a moral man out of it because immorality is not a thing, a
building or establishment; it is in the hearts of men. The City Council instead
should regulate human conduct that occurs inside the establishments, but not to
the detriment of liberty and privacy which are covenants, premiums and
blessings of democracy.

While petitioners' earnestness at curbing clearly objectionable social ills is

commendable, they unwittingly punish even the proprietors and operators of
"wholesome," "innocent" establishments. In the instant case, there is a clear
invasion of personal or property rights, personal in the case of those individuals
desirous of owning, operating and patronizing those motels and property in terms
of the investments made and the salaries to be paid to those therein employed. If
the City of Manila so desires to put an end to prostitution, fornication and other
social ills, it can instead impose reasonable regulations such as daily inspections
of the establishments for any violation of the conditions of their licenses or
permits; it may exercise its authority to suspend or revoke their licenses for these
violations;67 and it may even impose increased license fees. In other words, there
are other means to reasonably accomplish the desired end.
Means employed are
constitutionally infirm

The Ordinance disallows the operation of sauna parlors, massage parlors,

karaoke bars, beerhouses, night clubs, day clubs, super clubs, discotheques,
cabarets, dance halls, motels and inns in the Ermita-Malate area. In Section 3
thereof, owners and/or operators of the enumerated establishments are given
three (3) months from the date of approval of the Ordinance within which "to wind
up business operations or to transfer to any place outside the Ermita-Malate area
or convert said businesses to other kinds of business allowable within the area."
Further, it states in Section 4 that in cases of subsequent violations of the
provisions of the Ordinance, the "premises of the erring establishment shall be
closed and padlocked permanently."

It is readily apparent that the means employed by the Ordinance for the
achievement of its purposes, the governmental interference itself, infringes on
the constitutional guarantees of a person's fundamental right to liberty and
property.

Liberty as guaranteed by the Constitution was defined by Justice Malcolm to

include "the right to exist and the right to be free from arbitrary restraint or
servitude. The term cannot be dwarfed into mere freedom from physical restraint
of the person of the citizen, but is deemed to embrace the right of man to enjoy
the facilities with which he has been endowed by his Creator, subject only to
such restraint as are necessary for the common welfare."68 In accordance with
this case, the rights of the citizen to be free to use his faculties in all lawful ways;
to live and work where he will; to earn his livelihood by any lawful calling; and to
pursue any avocation are all deemed embraced in the concept of liberty.69

The U.S. Supreme Court in the case of Roth v. Board of Regents,70 sought to
clarify the meaning of "liberty." It said:

While the Court has not attempted to define with exactness the liberty. . .
guaranteed [by the Fifth and Fourteenth Amendments], the term denotes
not merely freedom from bodily restraint but also the right of the individual
to contract, to engage in any of the common occupations of life, to acquire
useful knowledge, to marry, establish a home and bring up children, to
worship God according to the dictates of his own conscience, and
 generally to enjoy those privileges long recognizedas essential to the
orderly pursuit of happiness by free men. In a Constitution for a free
people, there can be no doubt that the meaning of "liberty" must be broad
indeed.

In another case, it also confirmed that liberty protected by the due process clause
includes personal decisions relating to marriage, procreation, contraception,
family relationships, child rearing, and education. In explaining the respect the
Constitution demands for the autonomy of the person in making these choices,
the U.S. Supreme Court explained:

These matters, involving the most intimate and personal choices a person
may make in a lifetime, choices central to personal dignity and autonomy,
are central to the liberty protected by the Fourteenth Amendment. At the
heart of liberty is the right to define one's own concept of existence, of
meaning, of universe, and of the mystery of human life. Beliefs about these
matters could not define the attributes of personhood where they formed
under compulsion of the State.71

Persons desirous to own, operate and patronize the enumerated establishments

under Section 1 of the Ordinance may seek autonomy for these purposes.

Motel patrons who are single and unmarried may invoke this right to autonomy to
consummate their bonds in intimate sexual conduct within the motel's
premises be it stressed that their consensual sexual behavior does not
contravene any fundamental state policy as contained in the Constitution.72
Adults have a right to choose to forge such relationships with others in the
confines of their own private lives and still retain their dignity as free persons.
The liberty protected by the Constitution allows persons the right to make this
choice.73 Their right to liberty under the due process clause gives them the full
right to engage in their conduct without intervention of the government, as long
as they do not run afoul of the law. Liberty should be the rule and restraint the
exception.

Liberty in the constitutional sense not only means freedom from unlawful
government restraint; it must include privacy as well, if it is to be a repository of
freedom. The right to be let alone is the beginning of all freedom it is the most
comprehensive of rights and the right most valued by civilized men.74
The concept of liberty compels respect for the individual whose claim to privacy
and interference demands respect. As the case of Morfe v. Mutuc,75 borrowing
the words of Laski, so very aptly stated:

Man is one among many, obstinately refusing reduction to unity. His

separateness, his isolation, are indefeasible; indeed, they are so
fundamental that they are the basis on which his civic obligations are built.
He cannot abandon the consequences of his isolation, which are, broadly
speaking, that his experience is private, and the will built out of that
experience personal to himself. If he surrenders his will to others, he
surrenders himself. If his will is set by the will of others, he ceases to be a
master of himself. I cannot believe that a man no longer a master of
himself is in any real sense free.

Indeed, the right to privacy as a constitutional right was recognized in Morfe, the
invasion of which should be justified by a compelling state interest. Morfe
accorded recognition to the right to privacy independently of its identification with
liberty; in itself it is fully deserving of constitutional protection. Governmental
powers should stop short of certain intrusions into the personal life of the
citizen.76

There is a great temptation to have an extended discussion on these civil

liberties but the Court chooses to exercise restraint and restrict itself to the issues
presented when it should. The previous pronouncements of the Court are not to
be interpreted as a license for adults to engage in criminal conduct. The
reprehensibility of such conduct is not diminished. The Court only reaffirms and
guarantees their right to make this choice. Should they be prosecuted for their
illegal conduct, they should suffer the consequences of the choice they have
made. That, ultimately, is their choice.

Modality employed is
unlawful taking

In addition, the Ordinance is unreasonable and oppressive as it substantially

divests the respondent of the beneficial use of its property.77 The Ordinance in
Section 1 thereof forbids the running of the enumerated businesses in the
Ermita-Malate area and in Section 3 instructs its owners/operators to wind up
business operations or to transfer outside the area or convert said businesses
into allowed businesses. An ordinance which permanently restricts the use of
property that it can not be used for any reasonable purpose goes beyond
regulation and must be recognized as a taking of the property without just
compensation.78 It is intrusive and violative of the private property rights of
individuals.

The Constitution expressly provides in Article III, Section 9, that "private property
shall not be taken for public use without just compensation." The provision is the
most important protection of property rights in the Constitution. This is a
restriction on the general power of the government to take property. The
constitutional provision is about ensuring that the government does not
confiscate the property of some to give it to others. In part too, it is about loss
spreading. If the government takes away a person's property to benefit society,
then society should pay. The principal purpose of the guarantee is "to bar the
Government from forcing some people alone to bear public burdens which, in all
fairness and justice, should be borne by the public as a whole.79

There are two different types of taking that can be identified. A "possessory"
taking occurs when the government confiscates or physically occupies property.
A "regulatory" taking occurs when the government's regulation leaves no
reasonable economically viable use of the property.80

In the landmark case of Pennsylvania Coal v. Mahon,81 it was held that a taking
also could be found if government regulation of the use of property went "too
far." When regulation reaches a certain magnitude, in most if not in all cases
there must be an exercise of eminent domain and compensation to support the
act. While property may be regulated to a certain extent, if regulation goes too far
it will be recognized as a taking.82

No formula or rule can be devised to answer the questions of what is too far and
when regulation becomes a taking. In Mahon, Justice Holmes recognized that it
was "a question of degree and therefore cannot be disposed of by general
propositions." On many other occasions as well, the U.S. Supreme Court has
said that the issue of when regulation constitutes a taking is a matter of
considering the facts in each case. The Court asks whether justice and fairness
require that the economic loss caused by public action must be compensated by
the government and thus borne by the public as a whole, or whether the loss
should remain concentrated on those few persons subject to the public action.83
What is crucial in judicial consideration of regulatory takings is that government
regulation is a taking if it leaves no reasonable economically viable use of
property in a manner that interferes with reasonable expectations for use.84 A
regulation that permanently denies all economically beneficial or productive use
of land is, from the owner's point of view, equivalent to a "taking" unless
principles of nuisance or property law that existed when the owner acquired the
land make the use prohibitable.85 When the owner of real property has been
called upon to sacrifice all economically beneficial uses in the name of the
common good, that is, to leave his property economically idle, he has suffered a
taking.86

A regulation which denies all economically beneficial or productive use of land

will require compensation under the takings clause. Where a regulation places
limitations on land that fall short of eliminating all economically beneficial use, a
taking nonetheless may have occurred, depending on a complex of factors
including the regulation's economic effect on the landowner, the extent to which
the regulation interferes with reasonable investment-backed expectations and the
character of government action. These inquiries are informed by the purpose of
the takings clause which is to prevent the government from forcing some people
alone to bear public burdens which, in all fairness and justice, should be borne by
the public as a whole.87

A restriction on use of property may also constitute a "taking" if not reasonably

necessary to the effectuation of a substantial public purpose or if it has an unduly
harsh impact on the distinct investment-backed expectations of the owner.88

The Ordinance gives the owners and operators of the "prohibited" establishments
three (3) months from its approval within which to "wind up business operations
or to transfer to any place outside of the Ermita-Malate area or convert said
businesses to other kinds of business allowable within the area." The directive to
"wind up business operations" amounts to a closure of the establishment, a
permanent deprivation of property, and is practically confiscatory. Unless the
owner converts his establishment to accommodate an "allowed" business, the
structure which housed the previous business will be left empty and gathering
dust. Suppose he transfers it to another area, he will likewise leave the entire
establishment idle. Consideration must be given to the substantial amount of
money invested to build the edifices which the owner reasonably expects to be
returned within a period of time. It is apparent that the Ordinance leaves no
reasonable economically viable use of property in a manner that interferes with
reasonable expectations for use.

The second and third options to transfer to any place outside of the Ermita-
Malate area or to convert into allowed 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.

The second option instructs the owners to abandon their property and build
another one outside the Ermita-Malate area. In every sense, it qualifies as a
taking without just compensation with an additional burden imposed on the owner
to build another establishment solely from his coffers. The proffered solution does
not put an end to the "problem," it merely relocates it. Not only is this impractical,
it is unreasonable, onerous and oppressive. The conversion into allowed
enterprises is just as ridiculous. How may the respondent convert a motel into a
restaurant or a coffee shop, art gallery or music lounge without essentially
destroying its property? This is a taking of private property without due process of
law, nay, even without compensation.

The penalty of closure likewise constitutes unlawful taking that should be

compensated by the government. The burden on the owner to convert or transfer
his business, otherwise it will be closed permanently after a subsequent violation
should be borne by the public as this end benefits them as a whole.

Petitioners cannot take refuge in classifying the measure as a zoning ordinance.

A zoning ordinance, although a valid exercise of police power, which limits a
"wholesome" property to a use which can not reasonably be made of it
constitutes the taking of such property without just compensation. Private
property which is not noxious nor intended for noxious purposes may not, by
zoning, be destroyed without compensation. Such principle finds no support in
the principles of justice as we know them. The police powers of local
government units which have always received broad and liberal interpretation
cannot be stretched to cover this particular taking.

Distinction should be made between destruction from necessity and eminent

domain. It needs restating that the property taken in the exercise of police power
is destroyed because it is noxious or intended for a noxious purpose while the
property taken under the power of eminent domain is intended for a public use or
purpose and is therefore "wholesome."89 If it be of public benefit that a
"wholesome" property remain unused or relegated to a particular purpose, then
certainly the public should bear the cost of reasonable compensation for the
condemnation of private property for public use.90

Further, the Ordinance fails to set up any standard to guide or limit the
petitioners' actions. It in no way controls or guides the discretion vested in them.
It provides no definition of the establishments covered by it and it fails to set forth
the conditions when the establishments come within its ambit of prohibition. The
Ordinance confers upon the mayor arbitrary and unrestricted power to close
down establishments. Ordinances such as this, which make possible abuses in
its execution, depending upon no conditions or qualifications whatsoever other
than the unregulated arbitrary will of the city authorities as the touchstone by
which its validity is to be tested, are unreasonable and invalid. The Ordinance
should have established a rule by which its impartial enforcement could be
secured.91

Ordinances placing restrictions upon the lawful use of property must, in order to
be valid and constitutional, specify the rules and conditions to be observed and
conduct to avoid; and must not admit of the exercise, or of an opportunity for the
exercise, of unbridled discretion by the law enforcers in carrying out its
provisions.92

Thus, in Coates v. City of Cincinnati,93 as cited in People v. Nazario,94 the U.S.

Supreme Court struck down an ordinance that had made it illegal for "three or
more persons to assemble on any sidewalk and there conduct themselves in a
manner annoying to persons passing by." The ordinance was nullified as it
imposed no standard at all "because one may never know in advance what
'annoys some people but does not annoy others.' "

Similarly, the Ordinance does not specify the standards to ascertain which
establishments "tend to disturb the community," "annoy the inhabitants," and
"adversely affect the social and moral welfare of the community." The cited case
supports the nullification of the Ordinance for lack of comprehensible standards
to guide the law enforcers in carrying out its provisions.

Petitioners cannot therefore order the closure of the enumerated establishments

without infringing the due process clause. These lawful establishments may be
regulated, but not prevented from carrying on their business. This is a sweeping
exercise of police power that is a result of a lack of imagination on the part of the
City Council and which amounts to an interference into personal and private
rights which the Court will not countenance. In this regard, we take a resolute
stand to uphold the constitutional guarantee of the right to liberty and property.

Worthy of note is an example derived from the U.S. of a reasonable regulation

which is a far cry from the ill-considered Ordinance enacted by the City Council.

In FW/PBS, INC. v. Dallas,95 the city of Dallas adopted a comprehensive

ordinance regulating "sexually oriented businesses," which are defined to include
adult arcades, bookstores, video stores, cabarets, motels, and theaters as well
as escort agencies, nude model studio and sexual encounter centers. Among
other things, the ordinance required that such businesses be licensed. A group of
motel owners were among the three groups of businesses that filed separate
suits challenging the ordinance. The motel owners asserted that the city violated
the due process clause by failing to produce adequate support for its supposition
that renting room for fewer than ten (10) hours resulted in increased crime and
other secondary effects. They likewise argued than the ten (10)-hour limitation on
the rental of motel rooms placed an unconstitutional burden on the right to
freedom of association. Anent the first contention, the U.S. Supreme Court held
that the reasonableness of the legislative judgment combined with a study which
the city considered, was adequate to support the city's determination that motels
permitting room rentals for fewer than ten (10 ) hours should be included within
the licensing scheme. As regards the second point, the Court held that limiting
motel room rentals to ten (10) hours will have no discernible effect on personal
bonds as those bonds that are formed from the use of a motel room for fewer
than ten (10) hours are not those that have played a critical role in the culture
and traditions of the nation by cultivating and transmitting shared ideals and
beliefs.

The ordinance challenged in the above-cited case merely regulated the targeted
businesses. It imposed reasonable restrictions; hence, its validity was upheld.

The case of Ermita Malate Hotel and Motel Operators Association, Inc. v. City
Mayor of Manila,96 it needs pointing out, is also different from this case in that
what was involved therein was a measure which regulated the mode in which
motels may conduct business in order to put an end to practices which could
encourage vice and immorality. Necessarily, there was no valid objection on due
process or equal protection grounds as the ordinance did not prohibit motels. The
Ordinance in this case however is not a regulatory measure but is an exercise of
an assumed power to prohibit.97

The foregoing premises show that the Ordinance is an unwarranted and unlawful
curtailment of property and personal rights of citizens. For being unreasonable
and an undue restraint of trade, it cannot, even under the guise of exercising
police power, be upheld as valid.

B. The Ordinance violates Equal

Protection Clause

Equal protection requires that all persons or things similarly situated should be
treated alike, both as to rights conferred and responsibilities imposed. Similar
subjects, in other words, should not be treated differently, so as to give undue
favor to some and unjustly discriminate against others.98 The guarantee means
that no person or class of persons shall be denied the same protection of laws
which is enjoyed by other persons or other classes in like circumstances.99 The
"equal protection of the laws is a pledge of the protection of equal laws."100 It
limits governmental discrimination. The equal protection clause extends to
artificial persons but only insofar as their property is concerned.101

The Court has explained the scope of the equal protection clause in this wise:

What does it signify? To quote from J.M. Tuason & Co. v. Land Tenure
Administration: "The ideal situation is for the law's benefits to be available
to all, that none be placed outside the sphere of its coverage. Only thus
could chance and favor be excluded and the affairs of men governed by
that serene and impartial uniformity, which is of the very essence of the
idea of law." There is recognition, however, in the opinion that what in fact
exists "cannot approximate the ideal. Nor is the law susceptible to the
reproach that it does not take into account the realities of the situation. The
constitutional guarantee then is not to be given a meaning that disregards
what is, what does in fact exist. To assure that the general welfare be
promoted, which is the end of law, a regulatory measure may cut into the
rights to liberty and property. Those adversely affected may under such
circumstances invoke the equal protection clause only if they can show
 that the governmental act assailed, far from being inspired by the
attainment of the common weal was prompted by the spirit of hostility, or at
the very least, discrimination that finds no support in reason." Classification
is thus not ruled out, it being sufficient to quote from the Tuason decision
anew "that the laws operate equally and uniformly on all persons under
similar circumstances or that all persons must be treated in the same
manner, the conditions not being different, both in the privileges conferred
and the liabilities imposed. Favoritism and undue preference cannot be
allowed. For the principle is that equal protection and security shall be
given to every person under circumstances which, if not identical, are
analogous. If law be looked upon in terms of burden or charges, those that
fall within a class should be treated in the same fashion, whatever
restrictions cast on some in the group equally binding on the rest.102

Legislative bodies are allowed to classify the subjects of legislation. If the

classification is reasonable, the law may operate only on some and not all of the
people without violating the equal protection clause.103 The classification must, as
an indispensable requisite, not be arbitrary. To be valid, it must conform to the
following requirements:

1) It must be based on substantial distinctions.

2) It must be germane to the purposes of the law.

3) It must not be limited to existing conditions only.

4) It must apply equally to all members of the class.104

In the Court's 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. It is not any less grave a sin when
men engage in it. And why would the assumption that there is an ongoing
immoral activity apply only when women are employed and be inapposite when
men are in harness? This discrimination based on gender violates equal
protection as it is not substantially related to important government objectives.105
Thus, the discrimination is invalid.

Failing the test of constitutionality, the Ordinance likewise failed to pass the test
of consistency with prevailing laws.

C. The Ordinance is repugnant

to general laws; it is ultra vires

The Ordinance is in contravention of the Code as the latter merely empowers

local government units to regulate, and not prohibit, the establishments
enumerated in Section 1 thereof.

The power of the City Council to regulate by ordinances the establishment,

operation, and maintenance of motels, hotels and other similar establishments is
found in Section 458 (a) 4 (iv), which provides that:

Section 458. Powers, Duties, Functions and Compensation. (a) The

sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section 16 of this Code
and in the proper exercise of the corporate powers of the city as provided
for under Section 22 of this Code, and shall:

. . .
 (4) Regulate activities relative to the use of land, buildings and structures
within the city in order to promote the general welfare and for said purpose
shall:

. . .

(iv) Regulate the establishment, operation and maintenance of cafes,

restaurants, beerhouses, hotels, motels, inns, pension houses, lodging
houses, and other similar establishments, including tourist guides and
transports . . . .

While its power to regulate the establishment, operation and maintenance of any
entertainment or amusement facilities, and to prohibit certain forms of
amusement or entertainment is provided under Section 458 (a) 4 (vii) of the
Code, which reads as follows:

Section 458. Powers, Duties, Functions and Compensation. (a) The

sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section 16 of this Code
and in the proper exercise of the corporate powers of the city as provided
for under Section 22 of this Code, and shall:

. . .

(4) Regulate activities relative to the use of land, buildings and structures
within the city in order to promote the general welfare and for said purpose
shall:

. . .

(vii) Regulate the establishment, operation, and maintenance of any

entertainment or amusement facilities, including theatrical
performances, circuses, billiard pools, public dancing schools, public
dance halls, sauna baths, massage parlors, and other places for
entertainment or amusement; regulate such other events or activities
for amusement or entertainment, particularly those which tend to
disturb the community or annoy the inhabitants, or require the
suspension or suppression of the same; or, prohibit certain forms of
 amusement or entertainment in order to protect the social and moral
welfare of the community.

Clearly, with respect to cafes, restaurants, beerhouses, hotels, motels, inns,

pension houses, lodging houses, and other similar establishments, the only
power of the City Council to legislate relative thereto is to regulate them to
promote the general welfare. The Code still withholds from cities the power to
suppress and prohibit altogether the establishment, operation and maintenance
of such establishments. It is well to recall the rulings of the Court in Kwong Sing
v. City of Manila106 that:

The word "regulate," as used in subsection (l), section 2444 of the

Administrative Code, means and includes the power to control, to govern,
and to restrain; but "regulate" should not be construed as synonymous with
"suppress" or "prohibit." Consequently, under the power to regulate
laundries, the municipal authorities could make proper police regulations
as to the mode in which the employment or business shall be exercised.107

And in People v. Esguerra,108 wherein the Court nullified an ordinance of the

Municipality of Tacloban which prohibited the selling, giving and dispensing of
liquor ratiocinating that the municipality is empowered only to regulate the same
and not prohibit. The Court therein declared that:

(A)s a general rule when a municipal corporation is specifically given

authority or power to regulate or to license and regulate the liquor traffic,
power to prohibit is impliedly withheld.109

These doctrines still hold contrary to petitioners' assertion110 that they were
modified by the Code vesting upon City Councils prohibitory powers.

Similarly, the City Council exercises regulatory powers over public dancing
schools, public dance halls, sauna baths, massage parlors, and other places for
entertainment or amusement as found in the first clause of Section 458 (a) 4 (vii).
Its powers to regulate, suppress and suspend "such other events or activities for
amusement or entertainment, particularly those which tend to disturb the
community or annoy the inhabitants" and to "prohibit certain forms of amusement
or entertainment in order to protect the social and moral welfare of the
community" are stated in the second and third clauses, respectively of the same
Section. The several powers of the City Council as provided in Section 458 (a) 4
(vii) of the Code, it is pertinent to emphasize, are separated by semi-colons (;),
the use of which indicates that the clauses in which these powers are set forth
are independent of each other albeit closely related to justify being put together
in a single enumeration or paragraph.111 These powers, therefore, should not be
confused, commingled or consolidated as to create a conglomerated and unified
power of regulation, suppression and prohibition.112

The Congress unequivocably specified the establishments and forms of

amusement or entertainment subject to regulation among which are beerhouses,
hotels, motels, inns, pension houses, lodging houses, and other similar
establishments (Section 458 (a) 4 (iv)), public dancing schools, public dance
halls, sauna baths, massage parlors, and other places for entertainment or
amusement (Section 458 (a) 4 (vii)). This enumeration therefore cannot be
included as among "other events or activities for amusement or entertainment,
particularly those which tend to disturb the community or annoy the inhabitants"
or "certain forms of amusement or entertainment" which the City Council may
suspend, suppress or prohibit.

The rule is that the City Council has only such powers as are expressly granted
to it and those which are necessarily implied or incidental to the exercise thereof.
By reason of its limited powers and the nature thereof, said powers are to be
construed strictissimi juris and any doubt or ambiguity arising out of the terms
used in granting said powers must be construed against the City Council.113
Moreover, it is a general rule in statutory construction that the express mention of
one person, thing, or consequence is tantamount to an express exclusion of all
others. Expressio unius est exclusio alterium. This maxim is based upon the
rules of logic and the natural workings of human mind. It is particularly applicable
in the construction of such statutes as create new rights or remedies, impose
penalties or punishments, or otherwise come under the rule of strict
construction.114

The argument that the City Council is empowered to enact the Ordinance by
virtue of the general welfare clause of the Code and of Art. 3, Sec. 18 (kk) of the
Revised Charter of Manila is likewise without merit. On the first point, the ruling of
the Court in People v. Esguerra,115 is instructive. It held that:

The powers conferred upon a municipal council in the general welfare

clause, or section 2238 of the Revised Administrative Code, refers to
 matters not covered by the other provisions of the same Code, and
therefore it can not be applied to intoxicating liquors, for the power to
regulate the selling, giving away and dispensing thereof is granted
specifically by section 2242 (g) to municipal councils. To hold that, under
the general power granted by section 2238, a municipal council may enact
the ordinance in question, notwithstanding the provision of section 2242
(g), would be to make the latter superfluous and nugatory, because the
power to prohibit, includes the power to regulate, the selling, giving away
and dispensing of intoxicating liquors.

On the second point, it suffices to say that the Code being a later expression of
the legislative will must necessarily prevail and override the earlier law, the
Revised Charter of Manila. Legis posteriores priores contrarias abrogant, or later
statute repeals prior ones which are repugnant thereto. As between two laws on
the same subject matter, which are irreconcilably inconsistent, that which is
passed later prevails, since it is the latest expression of legislative will.116 If there
is an inconsistency or repugnance between two statutes, both relating to the
same subject matter, which cannot be removed by any fair and reasonable
method of interpretation, it is the latest expression of the legislative will which
must prevail and override the earlier.117

Implied repeals are those which take place when a subsequently enacted law
contains provisions contrary to those of an existing law but no provisions
expressly repealing them. Such repeals have been divided into two general
classes: those which occur where an act is so inconsistent or irreconcilable with
an existing prior act that only one of the two can remain in force and those which
occur when an act covers the whole subject of an earlier act and is intended to
be a substitute therefor. The validity of such a repeal is sustained on the ground
that the latest expression of the legislative will should prevail.118

In addition, Section 534(f) of the Code states that "All general and special laws,
acts, city charters, decrees, executive orders, proclamations and administrative
regulations, or part or parts thereof which are inconsistent with any of the
provisions of this Code are hereby repealed or modified accordingly." Thus,
submitting to petitioners' interpretation that the Revised Charter of Manila
empowers the City Council to prohibit motels, that portion of the Charter stating
such must be considered repealed by the Code as it is at variance with the
latter's provisions granting the City Council mere regulatory powers.
It is well to point out that petitioners also cannot seek cover under the general
welfare clause authorizing the abatement of nuisances without judicial
proceedings. That tenet applies to a nuisance per se, or one which affects the
immediate safety of persons and property and may be summarily abated under
the undefined law of necessity. It can not be said that motels are injurious to the
rights of property, health or comfort of the community. It is a legitimate business.
If it be a nuisance per accidens it may be so proven in a hearing conducted for
that purpose. A motel is not per se a nuisance warranting its summary abatement
without judicial intervention.119

Notably, the City Council was conferred powers to prevent and prohibit certain
activities and establishments in another section of the Code which is reproduced
as follows:

Section 458. Powers, Duties, Functions and Compensation. (a) The

sangguniang panlungsod, as the legislative body of the city, shall enact
ordinances, approve resolutions and appropriate funds for the general
welfare of the city and its inhabitants pursuant to Section 16 of this Code
and in the proper exercise of the corporate powers of the city as provided
for under Section 22 of this Code, and shall:

(1) Approve ordinances and pass resolutions necessary for an efficient and
effective city government, and in this connection, shall:

. . .

(v) Enact ordinances intended to prevent, suppress and impose

appropriate penalties for habitual drunkenness in public places, vagrancy,
mendicancy, prostitution, establishment and maintenance of houses of
ill repute, gambling and other prohibited games of chance, fraudulent
devices and ways to obtain money or property, drug addiction,
maintenance of drug dens, drug pushing, juvenile delinquency, the printing,
distribution or exhibition of obscene or pornographic materials or
publications, and such other activities inimical to the welfare and morals of
the inhabitants of the city;

. . .
If it were the intention of Congress to confer upon the City Council the power to
prohibit the establishments enumerated in Section 1 of the Ordinance, it would
have so declared in uncertain terms by adding them to the list of the matters it
may prohibit under the above-quoted Section. The Ordinance now vainly
attempts to lump these establishments with houses of ill-repute and expand the
City Council's powers in the second and third clauses of Section 458 (a) 4 (vii) of
the Code in an effort to overreach its prohibitory powers. It is evident that these
establishments may only be regulated in their establishment, operation and
maintenance.

It is important to distinguish the punishable activities from the establishments

themselves. That these establishments are recognized legitimate enterprises can
be gleaned from another Section of the Code. Section 131 under the Title on
Local Government Taxation expressly mentioned proprietors or operators of
massage clinics, sauna, Turkish and Swedish baths, hotels, motels and lodging
houses as among the "contractors" defined in paragraph (h) thereof. The same
Section also defined "amusement" as a "pleasurable diversion and
entertainment," "synonymous to relaxation, avocation, pastime or fun;" and
"amusement places" to include "theaters, cinemas, concert halls, circuses and
other places of amusement where one seeks admission to entertain oneself by
seeing or viewing the show or performances." Thus, it can be inferred that the
Code considers these establishments as legitimate enterprises and activities. It is
well to recall the maxim reddendo singula singulis which means that words in
different parts of a statute must be referred to their appropriate connection, giving
to each in its place, its proper force and effect, and, if possible, rendering none of
them useless or superfluous, even if strict grammatical construction demands
otherwise. Likewise, where words under consideration appear in different
sections or are widely dispersed throughout an act the same principle applies.120

Not only does the Ordinance contravene the Code, it likewise runs counter to the
provisions of P.D. 499. As correctly argued by MTDC, the statute had already
converted the residential Ermita-Malate area into a commercial area. The decree
allowed the establishment and operation of all 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.121 As succinctly
illustrated in Solicitor General v. Metropolitan Manila Authority:122

The requirement that the enactment must not violate existing law explains
itself. Local political subdivisions are able to legislate only by virtue of a
valid delegation of legislative power from the national legislature (except
only that the power to create their own sources of revenue and to levy
taxes is conferred by the Constitution itself). They are mere agents vested
with what is called the power of subordinate legislation. As delegates of the
Congress, the local government units cannot contravene but must obey at
all times the will of their principal. In the case before us, the enactment in
question, which are merely local in origin cannot prevail against the
decree, which has the force and effect of a statute.123

Petitioners contend that the Ordinance enjoys the presumption of validity. While
this may be the rule, it has already been held that although the presumption is
always in favor of the validity or reasonableness of the ordinance, such
presumption must nevertheless be set aside when the invalidity or
unreasonableness appears on the face of the ordinance itself or is established by
proper evidence. The exercise of police power by the local government is valid
unless it contravenes the fundamental law of the land, or an act of the legislature,
or unless it is against public policy or is unreasonable, oppressive, partial,
discriminating or in derogation of a common right.124

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.

Concededly, the challenged Ordinance was enacted with the best of motives and
shares the concern of the public for the cleansing of the Ermita-Malate area of its
social sins. Police power legislation of such character deserves the full
endorsement of the judiciary we reiterate our support for it. But inspite of its
virtuous aims, the enactment of the Ordinance has no statutory or constitutional
authority to stand on. Local legislative bodies, in this case, the City Council,
cannot prohibit the operation of the enumerated establishments under Section 1
thereof or order their transfer or conversion without infringing the constitutional
guarantees of due process and equal protection of laws not even under the
guise of police power.

WHEREFORE, the Petition is hereby DENIED and the decision of the Regional
Trial Court declaring the Ordinance void is AFFIRMED. Costs against
petitioners.

SO ORDERED.

31. G.R. No. L-51078 October 30, 1980

CRISTINA DE KNECHT, petitioner,

vs.
HON. PEDRO JL. BAUTISTA, as Judge presiding over Branch III of the
Court of First Instance (Pasay City) and the REPUBLIC OF THE
PHILIPPINES, respondents.

FERNANDEZ, J.:

This is a petition for certiorari and prohibition filed by Cristina de Knecht against
the Honorable Pedro JL. Bautista, as Judge presiding over Branch III of the Court
of First Instance of Rizal (Pasay City), and the Republic of the Philippines pines
seeking the following relief:

WHEREFORE, petitioner respectfully prays that judgment be

rendered annulling the order for immediate possession issued by
respondent court in the expropriation proceedings and commanding
respondents to desist from further proceedings in the expropriation
action or the order for immediate possession issued in said action,
with costs.
 Petitioner prays that a restraint order or writ of preliminary injunction
be issued ex-parte enjoining respondents, their representative
representative and agents from enforcing the here questioned order
for mediate posession petitioner offering to post a bond executed to
the parties enjoined in an amount to be fixed by the Court to the
effect that she will pay to such parties all damages which they may
sustain by reason of the injunction if the Court should finally decide
she is not entitled there

She prays for such other remedy as the Court may deem just and
equitable in the premises.

Quezon City for July 1979. 1

The petitioner alleges that than ten (10) years ago, the government through the
Department of Public Workmen's and Communication (now MPH) prepared a to
Epifanio de los Santos Avenue (EDSA) to Roxas Boulevard; that the proposed
extension, an adjunct of building program, the Manila Cavite Coastal Read
Project, would pass through Cuneta Avenue up to Roxas Boulevard that this
route would be a straight one taking into account the direction of EDSA; that
preparation to the implementation of the aforesaid plan, or on December 13,
1974, then Secretary Baltazar Aquino of the Department of Public Highways
directed the City Engineer of Pasay City not to issue temporary or permanent
permits for the construction and/or improvement of buildings and other structures
located within the proposed extension through Cuneta Avenue that shortly
thereafter the Department of Public Highways decided to make the proposed
extension go through Fernando Rein and Del Pan Streets which are lined with
old substantial houses; that upon learning of the changed the owners of the
residential houses that would be affected, the herein petitioner being one of
them, filed on April 15, 1977 a formal petition to President Ferdinand E. Marcos
asking him to order the Ministry of Public Highways to adoption, the original plan
of making the extension of EDSA through Araneta Avenue instead of the new
plan going through Fernando Rein and Del Pan Streets; that President Marcos
directed then Minister Baltazar Aquino to explain within twenty-four (24) hours
why the proposed project should not be suspended; that on April 21, 1977 then
Minister Aquino submitted his explanation defending the new proposed route;
that the President then referred the matter to the Human Settlements
Commission for investigation and recommendation; that after formal hearings to
which all the parties proponents and oppositors were given full opportunity to
ventilate their views and to present their evidence, the Settlements Commission
submitted a report recommending the reversion of the extension of EDSA to the
original plan passing through Cuneta Avenue; and that notwithstanding the said
report and recommendation, the Ministry of Public Highways insisted on
implementing the plan to make the extension of EDSA go through Fernando Rein
and Del Pan Streets. 2

In February 1979, the government filed in the Court of First Instance of Rizal,
Branch III, Pascual City presided by the respondent Judge, a complaint for
expropriation against the owners of the houses standing along Fernando Rein
and Del Pan Streets, among them the herein petitioner. The complaint was
docketed as Civil Case No. 7001-P and entitled "Republic of the Philippines vs.
Concepcion Cabarrus Vda. de Santos, etc."

The herein petitioner filed a motion to dismiss dated March 19, 1979 on the
following grounds:

(a) court had no jurisdiction over the subject matter of the action because the
complaint failed to allege that the instant project for expropriation bore the
approval of the Ministry of Human Settlements and the Metro Manila Government
nor pursuant to Presidential Decrees Nos. 824, 1396 and 1517;

(b) The choice of properties to be expropriated made by the Ministry of Public

Highways was arbitrary and erroneous;

(c) The complaint was premature as the plaintiff never really had gone through
serious negotiations with the defendant for the purchase of her property; and

(d) The complaint relied on an arbitrary and erroneous valuation of properties

and disregarded consequential damages.

An urgent motion dated March 28, 1979 for preliminary junction was also filed.

In June 1979 the Republic of the Philippines filed a motion for the issuance of a
writ of possession of the property sought to be expropriated on the ground that
said Republic had made the required deposit with the Philippine National Bank.
The respondent judge issued a writ of possession dated June 14, 1979
authorizing the Republic of the Philippines to take and enter upon the possession
of the properties sought be condemned. 3

The petitioner contends that "Respondent court lacked or exceeded its

jurisdiction or gravely abused its discretion in issuing the order to take over and
enter upon the possession of the properties sought to be expropriated-petitioner
having raised a constitutional question which respondent court must resolve
before it can issue an order to take or enter upon the possession of properties
sought to be expropriated." 4

The petitioner assails the choice of the Fernando Rein and Del Pan Streets route
on the following grounds:

The choice of property to be expropriated cannot be without rhyme

or reason. The condemnor may not choose any property it wants.
Where the legislature has delegated a power of eminent do-main,
the question of the necessity for taking a particular fine for the
intended improvement rests in the discretion of the grantee power
subject however to review by the courts in case of fraud, bad faith or
gross abuse of discretion. The choice of property must be examined
for bad faith, arbitrariness or capriciousness and due process
determination as to whether or not the proposed location was proper
in terms of the public interests. Even the claim of respondent's
Secretary Baltazar Aquino that there would be a saving of P2 million
under his new plan must be reviewed for it bears no relation to the
site of the proposed EDSA extension As envisioned by the
government, the EDSA extension would be linked to the Cavite
Expressway. Logically then, the proposed extension must point to
the south and not detour to the north.

Also, the equal protection of the law must be accorded, not on to the
motel owners along Cuneta (Fisher) Avenue, but also to the owners
of solid and substantial homes and quality residential lands occupied
for generations. 5

The respondents maintain that the respondent court did not act without
jurisdiction or exceed its jurisdiction or gravel abuse its discretion in issuing the
order dated June 14, 1979 authorizing the Republic of the Philippines to take
over and enter the possession of the properties sought to be appropriated
because the Republic has complied with all the statutory requirements which
entitled it to have immediate possession of the properties involved. 6

Defending the change of the EDSA extension to pass through Fernando Rein
Del Pan Streets, the respondents aver:

'There was no sudden change of plan in the selection of the site of

the EDSA Extension to Roxas Blvd. As a matter of fact, when the
Ministry of Public Highways decided to change the site of EDSA Ex-
tension to Roxas Boulevard from Cuneta Avenue to the Del Pan
Fernando Item Streets the residents of Del Pan and Fernando Rein
Streets who were to be adversely affected by the construction of ED
SA Extension to Roxas Boulevard along Del Pan - Fernando Rein
Streets were duly notified of such proposed project. Petitioner herein
was one of those notified Annex 1). It be conceded that the Cuneta
Avenue line goes southward and outward (from the city center while
the Del Pan Fernando Rein Streets line follows northward and
inward direction. It must be stated that both lines, Cuneta Avenue
and Del Pan Fernando Rein Streets lines, meet satisfactorily
planning and design criteria and therefore are both acceptable. In
selecting the Del Pan Fernando Rein Streets line the Government
did not do so because it wanted to save the motel located along
Cuneta Avenue but because it wanted to minimize the social impact
factor or problem involved. 7

There is no question as to the right of the Republic of the Philippines to take

private property for public use upon the payment of just compensation. Section 2,
Article IV of the Constitution of the Philippines provides: "Private property shall
not be taken for public use without just compensation."

It is recognized, was, that the government may not capriciously or arbitrarily'

choose what private property should be taken. In J. M. Tuazon & Co., Inc. vs.
Land Tenure administration 31 SCRA, 413, 433, the Supreme Court said:

For the purpose of obtaining a judicial declaration of nullity, it is

enough if the respondents or defendants named be the government
 officials who would give operation and effect to official action
allegedly tainted with unconstitutionality. Thus, where the statute
assailed was sought to be enforced by the Land Tenure
Administrative and the Solicitor General, the two officials may be
made respondents in the action without need of including the
Executive Secretary as a party in the action

The failure to meet tile exacting standard of due process would

likewise constitute a valid objection to the exercise of this
congressional power. That was so intimated in the above leading
Guido Case. There was an earlier pronouncement to that effect in a
decision rendered long before the adoption of the Constitution under
the previous organic law then in force, while the Philippines was still
an unincorporated territory of the United States.

It is obvious then that a landowner is covered by the mantle of

protection due process affords. It is a mandate of reason. It frowns
on arbitrariness, it is the antithesis of any governmental act that
smacks of whim or caprice. It negates state power to act in an
impressive manner. It is, as had been stressed so often, the
embodiment of the sporting Idea of fair play. In that sense, it stands
as a guaranty of justice. That is the standard that must be met by
any government talk agency in the exercise of whatever competence
is entrusted to it. As was so emphatically stressed by the present
Chief Justice, 'Acts of Congress, as well as those of the Executive,
can deny due process only under pain of nullity, ...

In the same case the Supreme Court concluded:

With due recognition then of the power of Congress to designate the

particular property to be taken and how much thereof may be
condemned in the exercise of the power of expropriation, it is still a
judicial question whether in the exercise of such competence, the
party adversely affected is the victim of partiality and prejudice. That
the equal protection clause will not allow. (p. 436)

In the instant case, it is a fact that the Department of Public Highways originally
establish the extension of EDSA along Cuneta Avenue. It is to be presumed that
the Department of Public Highways made studies before deciding on Cuneta
Avenue. It is indeed odd why suddenly the proposed extension of EDSA to
Roxas Boulevard was changed to go through Fernando Rein-Del Pan Streets
which the Solicitor General con- cedes "... the Del Pan Fernando Rein Streets
line follows northward and inward direction. While admit "that both lines, Cuneta
Avenue and Del Pan Fernando Rein Streets lines, meet satisfactorily planning
and design criteria and therefore are both acceptable ... the Solicitor General
justifies the change to Del Pan Fernando Rein Streets on the ground that the
government "wanted to the social impact factor or problem involved." 8

It is doubtful whether the extension of EDSA along Cuneta Avenue can be

objected to on the ground of social impact. The improvements and buildings
along Cuneta Avenue to be affected by the extension are mostly motels. Even
granting, arguendo, that more people be affected, the Human Setlements
Commission has suggested coordinative efforts of said Commission with the
National Housing Authority and other government agencies in the relocation and
resettlement of those adversely affected. 9

The Human Settlements Commission considered conditionality social impact and

cost. The pertinent portion of its report reads:

Comparison of Alignment 1 (Cuneta Fisher) and Alignment 2 (Del

Pan Fernando Rein) based on the criteria of functionality, social
impact and cost

A. Functionality

This issue has to do with the physical design of a highway, inclusive

of engineering factors and management consideration

From both engineering and traffic management viewpoints, it is

incontestable that the straighter and shorter alignment is preferable
to one which is not. Systematically and diagramatically, alignment 1
is straighter than alignment 2. In fact, Director Antonio Goco of the
Department of Public Highways admitted that alignment 2 is three
(3) meters longer than alignment 1. Furthermore, alignment 1 is
definitely the contour conforming alignment to EDSA whereas
alignment 2 affords a greater radius of unnatural curvature as it
hooks slightly northward before finally joining with Roxas Boulevard.
 Besides, whichever alignment is adopted, there will be a need for a
grade separator or interchange at the Roxas Boulevard junction.
From the of highway design, it is imperative to have interchanges as
far apart as possible to avoid traffic from slow down in negotiating
the slope on the interchanges. Up north would be the future Buendia
Avenue- Roxas Boulevard Interchange. Consequently, alignment 1
which is farther away from Buendia Avenue than alignment 2 is the
better alignment from the viewpoint of the construction of the grade
separator or interchange, a necessary corollary to the extension
project. Finally, the choice of alignment 2 which is longer by three (3)
meters than alignment 1 could have serious repercussions on our
energy conservation drive and from the larger perspective of the
national economy, considering that, by ad- statistical data, no less
than fifty thousand (50,000) vehicles a day will have to traverse an
extra three (3) meters.

B. Social Impact

The following factual data which have a direct bearing on the issue
of social impact were culled from the records of the case and the
evidence presented during the public hearings:

(1) Number of property owners:

Alignment 1 73

Alignment 2 49

(2) Incidence of non-resident

owner:

Alignment 1 25 (34.3%)

Alignment 2 31 (63.3%)

(3) Number of actually affected

residents:

Alignment 1 547

Alignment 2 290 (estimated)

(4) Average income of residents:

Alignment 2:

Below P350 P350 P500 P 500 P 800 P800 Pl000 Over P1000
16 (28%) 24 (42%) 0 (14%) 5 (9%) 4 (7%)

Alignment 2: Figures not available.

It is evident from the foregoing figures that social impact is greater

on the residents of alignment 1.

C. Cost

The resolution of the issue of right-of-way acquisition cost depends

to a large extend on the nature of the properties to be affected and
the relative value thereof. A comparison of alignment 1 and
alignment 2 on these two points has produced the following results:

(1) Nature and number of properties involved:

Line I Line 2

Lo
ts
Lot I Lot Im
s m s pr
pr ov
ov em
e ent
m s
e
 nt

R 41 4 38 34
e 6
si
d
e
n
ti
al

C 25 2 11 13
o 4
m
m
e
r
ci
al

I 5 3 1 1
n
d
u
st
ri
al

C 1 1 1 1
h
u
r
c
h
E _ _ _ _
d
u
c
a
ti
o
n
al

T 72 7 51 49
O 5
T
A
L

(2) Relative value of properties affected:

L
o
Im T
t pr o
s
ov t
e a
m l
en
ts

A P P P
l 9, 5 1
i 30 , 5
g 0, 9 ,
n 13 2 2
m 6 8 2
e , 8
n 6 ,
t 8 8
1
 1 0 6

A 8, 6 1
l 31 , 4
i 4, 6 ,
g 89 4 9
n 0 4 5
m , 9
e 1 ,
n 3 0
t 0 2
0
2

D P
i 2
f 6
f 9
e ,
r 7
e 9
n 6
c
e

It is obvious from the immediately table that the right- of-way

acquisition cost difference factor of the two alignment is only
P269,196 and not P2M as alleged by the Department of Public
Highways and P1.2M as claimed by the oppositors. Consequently,
the cost difference factor between the two alignments is so minimal
as to be practically nil in the consideration of the issues involved in
this case. 10

After considering all the issues and factors, the Human Setlements Commission
made the following recommendations:
Weighing in the balance the issues and factors of necessity,
functionality, impact, cost and property valuation as basis for scheme
of compensation to be adopted in the instant case, the Hearing
Board takes cognizance of the following points:

1. The EDSA extension to Roxas Boulevard is necessary and

desirable from the strictly technical viewpoint and the overall
perspective of the Metro Manila transport system.

2. The right-of-way acquisition cost difference factor is so minimal as

to influence in any way the choice of either alignment as the
extension of EDSA to Roxas Boulevard.

3. The negotiated sale approach to compensation as proposed

should apply to a whichever alignment is selected.

4. The factor of functionality states strongly against the selection of

alignment 2 while the factor of great social and economic impact
bears grieviously on the residents of alignment 1.

The course of the decision in this case consequently boils down to

the soul-searching and heart-rending choice between people on one
hand and progress and development on the other. In deciding in
favor of the latter, the Hearing Board is not unmindful that progress
and development are carried out by the State precisely and
ultimately for the benefit of its people and therefore, recommends
the reverend of the extension project to alignment 1. However,
before the Government, through its implementing agencies,
particularly the Department of Public Highways, undertakes the
actual step of appropriating properties on alignment I to pave the
way for the extension the hearing Board recommends the following
as absolute. binding and imperative preconditions:

1. The preparation, and ignore importantly, the execution of a

comprehensive and detailed plan for the relocation and resettlement
of the adversely and genuinely affected residents of alignment I
which will necessitate the coordinative efforts of such agencies as
the Human Settlements Commission, the National Housing Authority
and other such governmental agencies. To be concrete, a self
 sufficient community or human settlement complete with
infrastructure capture market, school, church and industries for
employment should be set up to enable the affected residents of
alignment 1 to maintain, their present social and economic standing.

2. The prompt payment of fair and just compensation through the

negotiated sale approach.

Finally, the Hearing Board recommends that the Department of

Public Highways conduct public hearings before undertaking on
future expropriations of private properties for public use.

Respectfully submitted to the Human Settlements Commission

Commissioners for consideration, final disposition and endorsement
thereof to His Excellency, the President of the Philippines.

Makati, Metro Manila, July 4, 1977. 11

... From all the foregoing, the facts of record and recommendations of the Human
Settlements Commission, it is clear that the choice of Fernando Rein Del Pan
Streets as the line through which the Epifanio de los Santos Avenue should be
extended to Roxas Boulevard is arbitrary and should not receive judicial
approval. The respondent judge committed a grave abuse of discretion in
allowing the Republic of the Philippines to take immediate possession of the
properties sought to be expropriated.

WHEREFORE, the petition for certiorari and prohibition is hereby granted. The
order of June 14, 1979 authorizing the Republic of the Philippines to take or enter
upon the possession of the properties sought to be condemned is set aside and
the respondent Judge is permanently enjoined from taking any further action on
Civil Case No. 7001-P, entitled "Republic of the Philippines vs. Concepcion
Cabarrus Vda. de Santos, etc." except to dismiss said case.

SO ORDERED.

32. G.R. No. 87335 February 12, 1990

REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
CRISTINA DE KNECHT AND THE COURT OF APPEALS, respondents.

Villanueva, Talamayan, Nieva, Elegado, and Ante Law Offices for respondent
Cristina de Knecht.

GANCAYCO, J.:

The issue posed in this case is whether an expropriation proceeding that was
determined by a final judgment of this Court may be the subject of a subsequent
legislation for expropriation.

On February 20, 1979 the Republic of the Philippines filed in the Court of First
Instance (CFI) of Rizal in Pasay City an expropriation proceedings against the
owners of the houses standing along Fernando Rein-Del Pan streets among
them Cristina De Knecht (de Knecht for short) together with Concepcion
Cabarrus, and some fifteen other defendants, docketed as Civil Case No. 7001-
P.

On March 19, 1979 de Knecht filed a motion to dismiss alleging lack of

jurisdiction, pendency of appeal with the President of the Philippines,
prematureness of complaint and arbitrary and erroneous valuation of the
properties. On March 29, 1979 de Knecht filed an ex parte urgent motion for the
issuance by the trial court of a restraining order to restrain the Republic from
proceeding with the taking of immediate possession and control of the property
sought to be condemned. In June, 1979 the Republic filed a motion for the
issuance of a writ of possession of the property to be expropriated on the ground
that it had made the required deposit with the Philippine National Bank (PNB) of
10% of the amount of compensation stated in the complaint. In an order dated
June 14, 1979 the lower court issued a writ of possession authorizing the
Republic to enter into and take possession of the properties sought to be
condemned, and created a Committee of three to determine the just
compensation for the lands involved in the proceedings.

On July 16, 1979 de Knecht filed with this Court a petition for certiorari and
prohibition docketed as G.R. No. L-51078 and directed against the order of the
lower court dated June 14, 1979 praying that the respondent be commanded to
desist from further proceeding in the expropriation action and from implementing
said order. On October 30, 1980 this Court rendered a decision, the dispositive
part of which reads as follows:

WHEREFORE, the petition for certiorari and prohibition is hereby

granted. The order of June 14, 1979 authorizing the Republic of the
Philippines to take c enter upon the possession of the properties
sought to be condemned is set aside and the respondent Judge is
permanently enjoined from taking any further action on Civil Case
No. 7001-P, entitled 'Republic of the Philippines vs. Concepcion
Cabarrus Vda. de Santos, et al.' except to dismiss said case. 1

On August 8, 1981 defendants Maria Del Carmen Roxas Vda. de Elizalde,

Francisco Elizalde and Antonio Roxas moved to dismiss the expropriation action
in compliance with the dispositive portion of the aforesaid decision of this Court
which had become final and in order to avoid further damage to same defendants
who were denied possession of their properties. The Republic filed a
manifestation on September 7, 1981 stating, among others, that it had no
objection to the said motion to dismiss as it was in accordance with the
aforestated decision.

On September 2, 1983, the Republic filed a motion to dismiss said case due to
the enactment of the Batas Pambansa Blg. 340 expropriating the same
properties and for the same purpose. The lower court in an order of September
2, 1983 dismissed the case by reason of the enactment of the said law. The
motion for reconsideration thereof was denied in the order of the lower court
dated December 18, 1986.

De Knecht appealed from said order to the Court of Appeals wherein in due
course a decision was rendered on December 28, 1988, 2 the dispositive part of which
reads as follows:

PREMISES CONSIDERED, the order appealed from is hereby SET

ASIDE. As prayed for in the appellant's brief another Order is hereby
issued dismissing the expropriation proceedings (Civil Case No.
51078) before the lower court on the ground that the choice of
Fernando Rein-Del Pan Streets as the line through which the
 Epifanio de los Santos Avenue should be extended is arbitrary and
should not receive judicial approval.

No pronouncement as to Costs. 3

Hence the Republic filed that herein petition for review of the A aforestated
decision whereby the following issues were raised:

WHETHER OR NOT THE ENACTMENT OF BATAS PAMBANSA

BLG. 340 IS THE PROPER GROUND FOR THE DISMISSAL OF
THE EXPROPRIATION CASE. (PROPERLY PUT, WHETHER OR
NOT THE LOWER COURT COMMITTED GRAVE ABUSE OF DIS
CRETION IN DISMISSING CIVIL CASE NO. 7001-P UPON
JUDICIAL NOTICE OF B.P. BLG. 340).

II

WHETHER OR NOT THE DPWH'S "CHOICE" OF LAND TO BE

EXPROPRIATED IS STILL AN ISSUE UNDER THE
CIRCUMSTANCES, SAID "CHOICE" HAVING BEEN SUPPLANTED
BY THE LEGISLATURE'S CHOICE.

III

WHETHER OR NOT THE LAW OF THE CASE THEORY SHOULD

BE APPLIED TO THE CASE AT BAR. 4

The petition is impressed with merit. There is no question that as early as 1977,
pursuant to the Revised Administrative Code, the national government, through
the Department of Public Works and Highways began work on what was to be
the westward extension of Epifanio de los Santos Avenue (EDSA) outfall (or
outlet) of the Manila and suburbs flood control and drainage project and the
Estero Tripa de Gallina. These projects were aimed at: (1) easing traffic
congestion in the Baclaran and outlying areas; (2) controlling flood by the
construction of the outlet for the Estero Tripa de Gallina (which drains the area of
Marikina, Pasay, Manila and Paranaque); and (3) thus completing the Manila
Flood and Control and Drainage Project.
So the petitioner acquired the needed properties through negotiated purchase
starting with the lands from Taft Avenue up to Roxas Boulevard including the
lands in Fernando Rein-Del Pan streets. It acquired through negotiated
purchases about 80 to 85 percent of the lands involved in the project whose
owners did not raise any objection as to arbitrariness on the choice of the project
and of the route. It is only with respect to the remaining 10 to 15 percent along
the route that the petitioner cannot negotiate through a sales agreement with a
few land owners, including de Knecht whose holding is hardly 5% of the whole
route area. Thus, as above related on February 20, 1979 the petitioner filed the
expropriation proceedings in the Court of First Instance.

There is no question that in the decision of this Court dated October 30, 1980 in
De Knecht vs. Bautista, G.R. No. L-51078, this Court held that the "choice of the
Fernando Rein-Del Pan streets as the line through which the EDSA should be
extended to Roxas Boulevard is arbitrary and should not receive judicial
approval." 5 It is based on the recommendation of the Human Settlements Commission that the choice
of Cuneta street as the line of the extension will minimize the social impact factor as the buildings and
improvement therein are mostly motels. 6

In view of the said finding, this Court set aside the order of the trial court dated
June 14, 1979 authorizing the Republic of the Philippines to take possession of
the properties sought to be condemned and enjoined the respondent judge from
taking any further action in the case except to dismiss the same.

Said decision having become final no action was taken by the lower court on the
said directive of this Court to dismiss the case. Subsequently B.P. Blg. 340 was
enacted by the Batasang Pambansa on February 17, 1983. On the basis of said
law petitioner filed a motion to dismiss the case before the trial court and this was
granted.

On appeal by de Knecht to the Court of Appeals the appellate court held that the
decision of the Supreme Court having become final, the petitioner's right as
determined therein should no longer be disturbed and that the same has become
the law of the case between the parties involved. Thus, the appellate court set
aside the questioned order of the trial court and issued another order dismissing
the expropriation proceedings before the lower court pursuant to the ruling in De
Knecht case.
While it is true that said final judgment of this Court on the subject becomes the
law of the case between the parties, it is equally true that the right of the
petitioner to take private properties for public use upon the payment of the just
compensation is so provided in the Constitution and our laws. 7 Such expropriation
proceedings may be undertaken by the petitioner not only by voluntary negotiation with the land owners
but also by taking appropriate court action or by legislation. 8

When on February 17, 1983 the Batasang Pambansa passed B.P. Blg. 340
expropriating the very properties subject of the present proceedings, and for the
same purpose, it appears that it was based on supervening events that occurred
after the decision of this Court was rendered in De Knecht in 1980 justifying the
expropriation through the Fernando Rein-Del Pan Streets.

The social impact factor which persuaded the Court to consider this extension to
be arbitrary had disappeared. All residents in the area have been relocated and
duly compensated. Eighty percent of the EDSA outfall and 30% of the EDSA
extension had been completed. Only private respondent remains as the solitary
obstacle to this project that will solve not only the drainage and flood control
problem but also minimize the traffic bottleneck in the area.

The Solicitor General summarizing the situation said

The construction and completion of the Metro Manila Flood Control

and Drainage Project and the EDSA extension are essential to
alleviate the worsening traffic problem in the Baclaran and Pasay
City areas and the perennial flood problems. Judicial notice may be
taken that these problems bedevil life and property not only in the
areas directly affected but also in areas much beyond. Batas
Pambansa Blg. 340 was enacted to hasten 'The Project' and thus
solve these problems, and its implementation has resulted so far in
an 80% completion of the EDSA outfall and a 30% completion of the
EDSA extension, all part of 'The Project'.

This instant case stands in the way of the final solution of the above-
mentioned problems, solely because the single piece of property I
occupied' by De Knecht, although already expropriated under B.P.
Blg. 340, is the only parcel of land where Government engineers
could not enter due to the 'armed' resistance offered by De Knecht,
guarded and surrounded as the lot is perennially by De Knecht's
 fierce private security guards. It may thus be said that De Knecht,
without any more legal interest in the land, single-handedly stands in
the way of the completion of 'The Project' essential to the progress
of Metro Manila and surrounding areas. Without the property she
persists in occupying and without any bloodletting, the EDSA outfall
construction on both sides of the said property cannot be joined
together, and the flood waters of Pasay, Paraaque and Marikina
which flow through the Estero Tripa de Gallina will continue to have
no way or outlet that could drain into Manila Bay. Without said
property, the EDSA extension, already 30% completed, can in no
way be finished, and traffic will continue to clog and jam the
intersections of EDSA and Taft Avenue in Baclaran and pile up along
the airport roads.

In sum, even in the face of BP340, De Knecht holds the Legislative

sovereign will and choice inutile. 9

The Court finds justification in proceeding with the said expropriation proceedings
through the Fernando Rein-Del Pan streets from ESDA to Roxas Boulevard due
to the aforestated supervening events after the rendition of the decision of this
Court in De Knecht.

B.P. Blg. 340 therefore effectively superseded the aforesaid final and executory
decision of this Court. And the trial court committed no grave abuse of discretion
in dismissing the case pending before it on the ground of the enactment of B.P.
Blg. 340.

Moreover, the said decision, is no obstacle to the legislative arm of the

Government in thereafter (over two years later in this case) making its own
independent assessment of the circumstances then prevailing as to the propriety
of undertaking the expropriation of the properties in question and thereafter by
enacting the corresponding legislation as it did in this case. The Court agrees in
the wisdom and necessity of enacting B.P. Blg. 340. Thus the anterior decision of
this Court must yield to this subsequent legislative flat.

WHEREFORE, the petition is hereby GRANTED and the questioned decision of

the Court of Appeals dated December 28, 1988 and its resolution dated March 9,
1989 are hereby REVERSED and SET ASIDE and the order of Branch III of the
then Court of First Instance of Rizal in Pasay City in Civil Case No. 7001-P dated
September 2, 1983 is hereby reinstated without pronouncement as to costs.

SO ORDERED.