o Police Power

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 170656 August 15, 2007

THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY and BAYANI FERNANDO as

Chairman of the Metropolitan Manila Development Authority, petitioners,
vs.
VIRON TRANSPORTATION CO., INC., respondent.

x --------------------------------------------- x

G.R. No. 170657 August 15, 2007

HON. ALBERTO G. ROMULO, Executive Secretary, the METROPOLITAN MANILA

DEVELOPMENT AUTHORITY and BAYANI FERNANDO as Chairman of the Metropolitan
Manila Development Authority,petitioners,
vs.
MENCORP TRANSPORTATION SYSTEM, INC., respondent.

DECISION

CARPIO MORALES, J.:

The following conditions in 1969, as observed by this Court:

Vehicles have increased in number. Traffic congestion has moved from bad to worse, from
tolerable to critical. The number of people who use the thoroughfares has multiplied x x x,1

have remained unchecked and have reverberated to this day. Traffic jams continue to clog the
streets of Metro Manila, bringing vehicles to a standstill at main road arteries during rush hour traffic
and sapping people’s energies and patience in the process.

The present petition for review on certiorari, rooted in the traffic congestion problem, questions the
authority of the Metropolitan Manila Development Authority (MMDA) to order the closure of provincial
bus terminals along Epifanio de los Santos Avenue (EDSA) and major thoroughfares of Metro
Manila.

Specifically challenged are two Orders issued by Judge Silvino T. Pampilo, Jr. of the Regional Trial
Court (RTC) of Manila, Branch 26 in Civil Case Nos. 03-105850 and 03-106224.

The first assailed Order of September 8, 2005,2 which resolved a motion for reconsideration filed by
herein respondents, declared Executive Order (E.O.) No. 179, hereafter referred to as the E.O.,
"unconstitutional as it constitutes an unreasonable exercise of police power." The second assailed
Order of November 23, 20053 denied petitioners’ motion for reconsideration.

The following facts are not disputed:

President Gloria Macapagal Arroyo issued the E.O. on February 10, 2003, "Providing for the
Establishment of Greater Manila Mass Transport System," the pertinent portions of which read:

WHEREAS, Metro Manila continues to be the center of employment opportunities,

trade and commerce of the Greater Metro Manila area;

WHEREAS, the traffic situation in Metro Manila has affected the adjacent provinces
of Bulacan, Cavite, Laguna, and Rizal, owing to the continued movement of residents
and industries to more affordable and economically viable locations in these
provinces;

WHEREAS, the Metropolitan Manila Development Authority (MMDA) is tasked to

undertake measures to ease traffic congestion in Metro Manila and ensure the
convenient and efficient travel of commuters within its jurisdiction;

WHEREAS, a primary cause of traffic congestion in Metro Manila has been the
numerous buses plying the streets that impedes [sic] the flow of vehicles and
commuters due to the inefficient connectivity of the different transport modes;

WHEREAS, the MMDA has recommended a plan to decongest traffic by eliminating

the bus terminals now located along major Metro Manila thoroughfares and providing
more convenient access to the mass transport system to the commuting
public through the provision of mass transport terminal facilities that would integrate
the existing transport modes, namely the buses, the rail-based systems of the LRT,
MRT and PNR and to facilitate and ensure efficient travel through the improved
connectivity of the different transport modes;

WHEREAS, the national government must provide the necessary funding

requirements to immediately implement and render operational these projects; and
extent to MMDA such other assistance as may be warranted to ensure their
expeditious prosecution.

NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the

Philippines, by virtue of the powers vested in me by law, do hereby order:

Section 1. THE PROJECT. – The project shall be identified as GREATER MANILA

TRANSPORT SYSTEM Project.

Section 2. PROJECT OBJECTIVES. – In accordance with the plan proposed by

MMDA, the project aims to develop four (4) interim intermodal mass transport
terminals to integrate the different transport modes, as well as those that shall
hereafter be developed, to serve the commuting public in the northwest, north, east,
south, and southwest of Metro Manila. Initially, the project shall concentrate on
immediately establishing the mass transport terminals for the north and south Metro
Manila commuters as hereinafter described.
 Section 3. PROJECT IMPLEMENTING AGENCY. – The Metropolitan Manila
Development Authority (MMDA), is hereby designated as the implementing Agency
for the project. For this purpose, MMDA is directed to undertake such infrastructure
development work as may be necessary and, thereafter, manage the project until it
may be turned-over to more appropriate agencies, if found suitable and convenient.
Specifically, MMDA shall have the following functions and responsibilities:

a) Cause the preparation of the Master Plan for the projects, including
the designs and costing;

b) Coordinate the use of the land and/or properties needed for the
project with the respective agencies and/or entities owning them;

c) Supervise and manage the construction of the necessary

structures and facilities;

d) Execute such contracts or agreements as may be necessary, with

the appropriate government agencies, entities, and/or private
persons, in accordance with existing laws and pertinent regulations,
to facilitate the implementation of the project;

e) Accept, manage and disburse such funds as may be necessary for

the construction and/or implementation of the projects, in accordance
with prevailing accounting and audit polices and practice in
government.

f) Enlist the assistance of any national government agency, office or

department, including local government units, government-owned or
controlled corporations, as may be necessary;

g) Assign or hire the necessary personnel for the above purposes;

and

h) Perform such other related functions as may be necessary to

enable it to accomplish the objectives and purposes of this Executive
Order.4 (Emphasis in the original; underscoring supplied)

As the above-quoted portions of the E.O. noted, the primary cause of traffic congestion in Metro
Manila has been the numerous buses plying the streets and the inefficient connectivity of the
different transport modes;5 and the MMDA had "recommended a plan to decongest traffic by
eliminating the bus terminals now located along major Metro Manila thoroughfares and providing
more and convenient access to the mass transport system to the commuting public through the
provision of mass transport terminal facilities"6 which plan is referred to under the E.O. as
the Greater Manila Mass Transport System Project (the Project).

The E.O. thus designated the MMDA as the implementing agency for the Project.

Pursuant to the E.O., the Metro Manila Council (MMC), the governing board and policymaking body
of the MMDA, issued Resolution No. 03-07 series of 20037 expressing full support of the Project.
Recognizing the imperative to integrate the different transport modes via the establishment of
common bus parking terminal areas, the MMC cited the need to remove the bus terminals located
along major thoroughfares of Metro Manila.8

On February 24, 2003, Viron Transport Co., Inc. (Viron), a domestic corporation engaged in the
business of public transportation with a provincial bus operation,9 filed a petition for declaratory
relief10 before the RTC11 of Manila.

In its petition which was docketed as Civil Case No. 03-105850, Viron alleged that the MMDA,
through Chairman Fernando, was "poised to issue a Circular, Memorandum or Order closing, or
tantamount to closing, all provincial bus terminals along EDSA and in the whole of the Metropolis
under the pretext of traffic regulation."12 This impending move, it stressed, would mean the closure of
its bus terminal in Sampaloc, Manila and two others in Quezon City.

Alleging that the MMDA’s authority does not include the power to direct provincial bus operators to
abandon their existing bus terminals to thus deprive them of the use of their property, Viron asked
the court to construe the scope, extent and limitation of the power of the MMDA to regulate traffic
under R.A. No. 7924, "An Act Creating the Metropolitan Manila Development Authority, Defining its
Powers and Functions, Providing Funds Therefor and For Other Purposes."

Viron also asked for a ruling on whether the planned closure of provincial bus terminals would
contravene the Public Service Act and related laws which mandate public utilities to provide and
maintain their own terminals as a requisite for the privilege of operating as common carriers.13

Mencorp Transportation System, Inc. (Mencorp), another provincial bus operator, later filed a similar
petition for declaratory relief14 against Executive Secretary Alberto G. Romulo and MMDA Chairman
Fernando.

Mencorp asked the court to declare the E.O. unconstitutional and illegal for transgressing the
possessory rights of owners and operators of public land transportation units over their respective
terminals.

Averring that MMDA Chairman Fernando had begun to implement a plan to close and eliminate all
provincial bus terminals along EDSA and in the whole of the metropolis and to transfer their
operations to common bus terminals,15 Mencorp prayed for the issuance of a temporary restraining
order (TRO) and/or writ of preliminary injunction to restrain the impending closure of its bus terminals
which it was leasing at the corner of EDSA and New York Street in Cubao and at the intersection of
Blumentritt, Laon Laan and Halcon Streets in Quezon City. The petition was docketed as Civil Case
No. 03-106224 and was raffled to Branch 47 of the RTC of Manila.

Mencorp’s petition was consolidated on June 19, 2003 with Viron’s petition which was raffled to
Branch 26 of the RTC, Manila.

Mencorp’s prayer for a TRO and/or writ of injunction was denied as was its application for the
issuance of a preliminary injunction.16

In the Pre-Trial Order17 issued by the trial court, the issues were narrowed down to whether 1) the
MMDA’s power to regulate traffic in Metro Manila included the power to direct provincial bus
operators to abandon and close their duly established and existing bus terminals in order to conduct
business in a common terminal; (2) the E.O. is consistent with the Public Service Act and the
Constitution; and (3) provincial bus operators would be deprived of their real properties without due
process of law should they be required to use the common bus terminals.
Upon the agreement of the parties, they filed their respective position papers in lieu of hearings.

By Decision18 of January 24, 2005, the trial court sustained the constitutionality and legality of the
E.O. pursuant to R.A. No. 7924, which empowered the MMDA to administer Metro Manila’s basic
services including those of transport and traffic management.

The trial court held that the E.O. was a valid exercise of the police power of the State as it satisfied
the two tests of lawful subject matter and lawful means, hence, Viron’s and Mencorp’s property
rights must yield to police power.

On the separate motions for reconsideration of Viron and Mencorp, the trial court, by Order of
September 8, 2005, reversed its Decision, this time holding that the E.O. was "an unreasonable
exercise of police power"; that the authority of the MMDA under Section (5)(e) of R.A. No. 7924 does
not include the power to order the closure of Viron’s and Mencorp’s existing bus terminals; and that
the E.O. is inconsistent with the provisions of the Public Service Act.

Petitioners’ motion for reconsideration was denied by Resolution of November 23, 2005.

Hence, this petition, which faults the trial court for failing to rule that: (1) the requisites of declaratory
relief are not present, there being no justiciable controversy in Civil Case Nos. 03-105850 and 03-
106224; and (2) the President has the authority to undertake or cause the implementation of the
Project.19

Petitioners contend that there is no justiciable controversy in the cases for declaratory relief as
nothing in the body of the E.O. mentions or orders the closure and elimination of bus terminals along
the major thoroughfares of Metro Manila. Viron and Mencorp, they argue, failed to produce any letter
or communication from the Executive Department apprising them of an immediate plan to close
down their bus terminals.

And petitioners maintain that the E.O. is only an administrative directive to government agencies to
coordinate with the MMDA and to make available for use government property along EDSA and
South Expressway corridors. They add that the only relation created by the E.O. is that between the
Chief Executive and the implementing officials, but not between third persons.

The petition fails.

It is true, as respondents have pointed out, that the alleged deficiency of the consolidated petitions to
meet the requirement of justiciability was not among the issues defined for resolution in the Pre-Trial
Order of January 12, 2004. It is equally true, however, that the question was repeatedly raised by
petitioners in their Answer to Viron’s petition,20 their Comment of April 29, 2003 opposing Mencorp’s
prayer for the issuance of a TRO,21 and their Position Paper of August 23, 2004.22

In bringing their petitions before the trial court, both respondents pleaded the existence of the
essential requisites for their respective petitions for declaratory relief,23 and refuted petitioners’
contention that a justiciable controversy was lacking.24 There can be no denying, therefore, that the
issue was raised and discussed by the parties before the trial court.

The following are the essential requisites for a declaratory relief petition: (a) there must be a
justiciable controversy; (b) the controversy must be between persons whose interests are adverse;
(c) the party seeking declaratory relief must have a legal interest in the controversy; and (d) the
issue invoked must be ripe for judicial determination.25
The requirement of the presence of a justiciable controversy is satisfied when an actual controversy
or the ripening seeds thereof exist between the parties, all of whom are sui juris and before the
court, and the declaration sought will help in ending the controversy.26 A question becomes
justiciable when it is translated into a claim of right which is actually contested.27

In the present cases, respondents’ resort to court was prompted by the issuance of the E.O. The 4th
Whereas clause of the E.O. sets out in clear strokes the MMDA’s plan to "decongest traffic
by eliminating the bus terminals now located along major Metro Manila thoroughfares and providing
more convenient access to the mass transport system to the commuting public through the provision
of mass transport terminal facilities x x x." (Emphasis supplied)

Section 2 of the E.O. thereafter lays down the immediate establishment of common bus terminals for
north- and south-bound commuters. For this purpose, Section 8 directs the Department of Budget
and Management to allocate funds of not more than one hundred million pesos (P100,000,000) to
cover the cost of the construction of the north and south terminals. And the E.O. was made effective
immediately.

The MMDA’s resolve to immediately implement the Project, its denials to the contrary
notwithstanding, is also evident from telltale circumstances, foremost of which was the passage by
the MMC of Resolution No. 03-07, Series of 2003 expressing its full support of the immediate
implementation of the Project.

Notable from the 5th Whereas clause of the MMC Resolution is the plan to "remove the bus
terminals located along major thoroughfares of Metro Manila and an urgent need to integrate the
different transport modes." The 7th Whereas clause proceeds to mention the establishment of the
North and South terminals.

As alleged in Viron’s petition, a diagram of the GMA-MTS North Bus/Rail Terminal had been drawn
up, and construction of the terminal is already in progress. The MMDA, in its Answer28 and Position
Paper,29 in fact affirmed that the government had begun to implement the Project.

It thus appears that the issue has already transcended the boundaries of what is merely conjectural
or anticipatory.
lawphil

Under the circumstances, for respondents to wait for the actual issuance by the MMDA of an order
for the closure of respondents’ bus terminals would be foolhardy for, by then, the proper action to
bring would no longer be for declaratory relief which, under Section 1, Rule 6330 of the Rules of
Court, must be brought before there is a breach or violation of rights.

As for petitioners’ contention that the E.O. is a mere administrative issuance which creates no
relation with third persons, it does not persuade. Suffice it to stress that to ensure the success of the
Project for which the concerned government agencies are directed to coordinate their activities and
resources, the existing bus terminals owned, operated or leased by third persons like respondents
would have to be eliminated; and respondents would be forced to operate from the common bus
terminals.

It cannot be gainsaid that the E.O. would have an adverse effect on respondents. The closure of
their bus terminals would mean, among other things, the loss of income from the operation and/or
rentals of stalls thereat. Precisely, respondents claim a deprivation of their constitutional right to
property without due process of law.
Respondents have thus amply demonstrated a "personal and substantial interest in the case such
that [they have] sustained, or will sustain, direct injury as a result of [the E.O.’s]
enforcement."31 Consequently, the established rule that the constitutionality of a law or administrative
issuance can be challenged by one who will sustain a direct injury as a result of its enforcement has
been satisfied by respondents.

On to the merits of the case.

Respondents posit that the MMDA is devoid of authority to order the elimination of their bus
terminals under the E.O. which, they argue, is unconstitutional because it violates both the
Constitution and the Public Service Act; and that neither is the MMDA clothed with such authority
under R.A. No. 7924.

Petitioners submit, however, that the real issue concerns the President’s authority to undertake or to
cause the implementation of the Project. They assert that the authority of the President is derived
from E.O. No. 125, "Reorganizing the Ministry of Transportation and Communications Defining its
Powers and Functions and for Other Purposes," her residual power and/or E.O. No. 292, otherwise
known as the Administrative Code of 1987. They add that the E.O. is also a valid exercise of the
police power.

E.O. No. 125,32 which former President Corazon Aquino issued in the exercise of legislative powers,
reorganized the then Ministry (now Department) of Transportation and Communications. Sections 4,
5, 6 and 22 of E.O. 125, as amended by E.O. 125-A,33 read:

SECTION 4. Mandate. — The Ministry shall be the primary policy, planning,

programming, coordinating, implementing, regulating and administrative entity of the
Executive Branch of the government in the promotion, development and regulation of
dependable and coordinated networks of transportationand communication systems as
well as in the fast, safe, efficient and reliable postal, transportation and communications
services.

To accomplish such mandate, the Ministry shall have the following objectives:

(a) Promote the development of dependable and coordinated networks of

transportation and communications systems;

(b) Guide government and private investment in the development of the

country’s intermodal transportation and communications systems in a
most practical, expeditious, and orderly fashion for maximum safety, service,
and cost effectiveness; (Emphasis and underscoring supplied)

xxxx

SECTION 5. Powers and Functions. — To accomplish its mandate, the Ministry shall have
the following powers and functions:

(a) Formulate and recommend national policies and guidelines for the
preparation and implementation of integrated and comprehensive
transportation and communications systems at the national, regional and
local levels;
 (b) Establish and administer comprehensive and integrated programs
for transportation and communications, and for this purpose, may call on
any agency, corporation, or organization, whether public or private, whose
development programs include transportation and communications as an
integral part thereof, to participate and assist in the preparation and
implementation of such program;

(c) Assess, review and provide direction to transportation and

communications research and development programs of the government in
coordination with other institutions concerned;

(d) Administer all laws, rules and regulations in the field of

transportation and communications; (Emphasis and underscoring
supplied)

xxxx

SECTION 6. Authority and Responsibility. — The authority and responsibility for the
exercise of the mandate of the Ministry and for the discharge of its powers and
functions shall be vested in the Minister of Transportation and Communications,
hereinafter referred to as the Minister, who shall have supervision and control over the
Ministry and shall be appointed by the President. (Emphasis and underscoring supplied)

SECTION 22. Implementing Authority of Minister. — The Minister shall issue such orders,
rules, regulations and other issuances as may be necessary to ensure the effective
implementation of the provisions of this Executive Order. (Emphasis and underscoring
supplied)

It is readily apparent from the abovequoted provisions of E.O. No. 125, as amended, that the
President, then possessed of and exercising legislative powers, mandated the DOTC to be the
primary policy, planning, programming, coordinating, implementing, regulating and administrative
entity to promote, develop and regulate networks of transportation and communications. The grant of
authority to the DOTC includes the power to establishand administer comprehensive and
integrated programs for transportation and communications.

As may be seen further, the Minister (now Secretary) of the DOTC is vested with the authority and
responsibility to exercise the mandate given to the department. Accordingly, the DOTC Secretary is
authorized to issue such orders, rules, regulations and other issuances as may be necessary to
ensure the effective implementation of the law.

Since, under the law, the DOTC is authorized to establish and administer programs and projects for
transportation, it follows that the President may exercise the same power and authority to order the
implementation of the Project, which admittedly is one for transportation.

Such authority springs from the President’s power of control over all executive departments as well
as the obligation for the faithful execution of the laws under Article VII, Section 17 of the Constitution
which provides:

SECTION 17. The President shall have control of all the executive departments, bureaus
and offices. He shall ensure that the laws be faithfully executed.
This constitutional provision is echoed in Section 1, Book III of the Administrative Code of 1987.
Notably, Section 38, Chapter 37, Book IV of the same Code defines the President’s power of
supervision and control over the executive departments, viz:

SECTION 38. Definition of Administrative Relationships. — Unless otherwise expressly

stated in the Code or in other laws defining the special relationships of particular agencies,
administrative relationships shall be categorized and defined as follows:

(1) Supervision and Control. — Supervision and control shall include authority to
act directly whenever a specific function is entrusted by law or regulation to a
subordinate; direct the performance of duty; restrain the commission of acts; review,
approve, reverse or modify acts and decisions of subordinate officials or units; determine
priorities in the execution of plans and programs. Unless a different meaning is explicitly
provided in the specific law governing the relationship of particular agencies the word
"control" shall encompass supervision and control as defined in this paragraph. x x x
(Emphasis and underscoring supplied)

Thus, whenever a specific function is entrusted by law or regulation to a subordinate, the President
may act directly or merely direct the performance of a duty.34

Respecting the President’s authority to order the implementation of the Project in the exercise of the
police power of the State, suffice it to stress that the powers vested in the DOTC Secretary to
establish and administer comprehensive and integrated programs for transportation and
communications and to issue orders, rules and regulations to implement such mandate (which, as
previously discussed, may also be exercised by the President) have been so delegated for the good
and welfare of the people. Hence, these powers partake of the nature of police power.

Police power is the plenary power vested in the legislature to make, ordain, and establish
wholesome and reasonable laws, statutes and ordinances, not repugnant to the Constitution, for the
good and welfare of the people.35 This power to prescribe regulations to promote the health, morals,
education, good order or safety, and general welfare of the people flows from the recognition
that salus populi est suprema lex ─ the welfare of the people is the supreme law.

While police power rests primarily with the legislature, such power may be delegated, as it is in fact
increasingly being delegated.36 By virtue of a valid delegation, the power may be exercised by the
President and administrative boards37 as well as by the lawmaking bodies of municipal corporations
or local governments under an express delegation by the Local Government Code of 1991.38

The authority of the President to order the implementation of the Project notwithstanding, the
designation of the MMDA as the implementing agency for the Project may not be sustained. It
is ultra vires, there being no legal basis therefor.

It bears stressing that under the provisions of E.O. No. 125, as amended, it is the DOTC, and not the
MMDA, which is authorized to establish and implement a project such as the one subject of the
cases at bar. Thus, the President, although authorized to establish or cause the implementation of
the Project, must exercise the authority through the instrumentality of the DOTC which, by law, is the
primary implementing and administrative entity in the promotion, development and regulation of
networks of transportation, and the one so authorized to establish and implement a project such as
the Project in question.

By designating the MMDA as the implementing agency of the Project, the President clearly
overstepped the limits of the authority conferred by law, rendering E.O. No. 179 ultra vires.
In another vein, the validity of the designation of MMDA flies in the absence of a specific grant of
authority to it under R.A. No. 7924.

To recall, R.A. No. 7924 declared the Metropolitan Manila area39 as a "special development and
administrative region" and placed the administration of "metro-wide" basic services affecting the
region under the MMDA.

Section 2 of R.A. No. 7924 specifically authorizes the MMDA to perform "planning, monitoring and
coordinative functions, and in the process exercise regulatory and supervisory authority over the
delivery of metro-wide services," including transport and traffic management.40 Section 5 of the same
law enumerates the powers and functions of the MMDA as follows:

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

(b) Prepare, coordinate and regulate the implementation of medium-term investment

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

(c) Undertake and manage on its own metro-wide programs and projects for the
delivery of specific services under its jurisdiction, subject to the approval of the
Council. For this purpose, MMDA can create appropriate project management
offices;

(d) Coordinate and monitor the implementation of such plans, programs and projects
in Metro Manila; identify bottlenecks and adopt solutions to problems of
implementation;

(e) The MMDA shall set the policies concerning traffic in Metro Manila, and
shall coordinate and regulate the implementation of all programs and projects
concerning traffic management, specifically pertaining to enforcement,
engineering and education. Upon request, it shall be extended assistance and
cooperation, including but not limited to, assignment of personnel, by all other
government agencies and offices concerned;

(f) Install and administer a single ticketing system, fix, impose and collect fines
and penalties for all kinds of violations of traffic rules and regulations, whether
moving or non-moving in nature, and confiscate and suspend or revoke drivers’
licenses in the enforcement of such traffic laws and regulations, the provisions of RA
4136 and PD 1605 to the contrary notwithstanding. For this purpose, the Authority
shall impose all traffic laws and regulations in Metro Manila, through its traffic
operation center, and may deputize members of the PNP, traffic enforcers of local
government units, duly licensed security guards, or members of non-governmental
organizations to whom may be delegated certain authority, subject to such conditions
and requirements as the Authority may impose; and

(g) Perform other related functions required to achieve the objectives of the MMDA,
including the undertaking of delivery of basic services to the local government units,
 when deemed necessary subject to prior coordination with and consent of the local
government unit concerned." (Emphasis and underscoring supplied)

The scope of the function of MMDA as an administrative, coordinating and policy-setting body has
been settled in Metropolitan Manila Development Authority (MMDA) v. Bel-Air Village Association,
Inc.41 In that case, the Court stressed:

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

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

‘SECTION 2. Creation of the Metropolitan Manila Development Authority. — . . .

The MMDA shall perform planning, monitoring and coordinative functions, and
in the process exercise regulatory and supervisory authority over the delivery
of metro-wide services within Metro Manila, without diminution of the autonomy of
the local government units concerning purely local matters.’42 (Emphasis and
underscoring supplied)

In light of the administrative nature of its powers and functions, the MMDA is devoid of authority to
implement the Project as envisioned by the E.O; hence, it could not have been validly designated by
the President to undertake the Project. It follows that the MMDA cannot validly order the elimination
of respondents’ terminals.

Even the MMDA’s claimed authority under the police power must necessarily fail in consonance with
the above-quoted ruling in MMDA v. Bel-Air Village Association, Inc. and this Court’s subsequent
ruling in Metropolitan Manila Development Authority v. Garin43 that the MMDA is not vested with
police power.
Even assuming arguendo that police power was delegated to the MMDA, its exercise of such power
does not satisfy the two tests of a valid police power measure, viz: (1) the interest of the public
generally, as distinguished from that of a particular class, requires its exercise; and (2) the means
employed are reasonably necessary for the accomplishment of the purpose and not unduly
oppressive upon individuals.44 Stated differently, the police power legislation must be firmly grounded
on public interest and welfare and a reasonable relation must exist between the purposes and the
means.

As early as Calalang v. Williams,45 this Court recognized that traffic congestion is a public, not
merely a private, concern. The Court therein held that public welfare underlies the contested statute
authorizing the Director of Public Works to promulgate rules and regulations to regulate and control
traffic on national roads.

Likewise, in Luque v. Villegas,46 this Court emphasized that public welfare lies at the bottom of any
regulatory measure designed "to relieve congestion of traffic, which is, to say the least, a menace to
public safety."47 As such, measures calculated to promote the safety and convenience of the people
using the thoroughfares by the regulation of vehicular traffic present a proper subject for the exercise
of police power.

Notably, the parties herein concede that traffic congestion is a public concern that needs to be
addressed immediately. Indeed, the E.O. was issued due to the felt need to address the worsening
traffic congestion in Metro Manila which, the MMDA so determined, is caused by the increasing
volume of buses plying the major thoroughfares and the inefficient connectivity of existing transport
systems. It is thus beyond cavil that the motivating force behind the issuance of the E.O. is the
interest of the public in general.

Are the means employed appropriate and reasonably necessary for the accomplishment of the
purpose. Are they not duly oppressive?

With the avowed objective of decongesting traffic in Metro Manila, the E.O. seeks to "eliminate[e] the
bus terminals now located along major Metro Manila thoroughfares and provid[e] more convenient
access to the mass transport system to the commuting public through the provision of mass
transport terminal facilities x x x."48 Common carriers with terminals along the major thoroughfares of
Metro Manila would thus be compelled to close down their existing bus terminals and use the
MMDA-designated common parking areas.

In Lucena Grand Central Terminal, Inc. v. JAC Liner, Inc.,49 two city ordinances were passed by
the Sangguniang Panlungsod of Lucena, directing public utility vehicles to unload and load
passengers at the Lucena Grand Central Terminal, which was given the exclusive franchise to
operate a single common terminal. Declaring that no other terminals shall be situated, constructed,
maintained or established inside or within the city of Lucena, the sanggunian declared as inoperable
all temporary terminals therein.

The ordinances were challenged before this Court for being unconstitutional on the ground that, inter
alia, the measures constituted an invalid exercise of police power, an undue taking of private
property, and a violation of the constitutional prohibition against monopolies.

Citing De la Cruz v. Paras50 and Lupangco v. Court of Appeals,51 this Court held that the assailed
ordinances were characterized by overbreadth, as they went beyond what was reasonably
necessary to solve the traffic problem in the city. And it found that the compulsory use of the Lucena
Grand Terminal was unduly oppressive because it would subject its users to fees, rentals and
charges.
 The true role of Constitutional Law is to effect an equilibrium between authority and liberty so
that rights are exercised within the framework of the law and the laws are enacted with due
deference to rights.

A due deference to the rights of the individual thus requires a more careful formulation of
solutions to societal problems.

From the memorandum filed before this Court by petitioner, it is gathered that the
Sangguniang Panlungsod had identified the cause of traffic congestion to be the
indiscriminate loading and unloading of passengers by buses on the streets of the city
proper, hence, the conclusion that the terminals contributed to the proliferation of buses
obstructing traffic on the city streets.

Bus terminals per se do not, however, impede or help impede the flow of
traffic. How the outright proscription against the existence of all terminals, apart from
that franchised to petitioner, can be considered as reasonably necessary to solve the
traffic problem, this Court has not been enlightened. If terminals lack adequate space
such that bus drivers are compelled to load and unload passengers on the streets instead of
inside the terminals, then reasonable specifications for the size of terminals could be
instituted, with permits to operate the same denied those which are unable to meet the
specifications.

In the subject ordinances, however, the scope of the proscription against the
maintenance of terminals is so broad that even entities which might be able to provide
facilities better than the franchised terminal are barred from operating at all. (Emphasis
and underscoring supplied)

As in Lucena, this Court fails to see how the prohibition against the existence of respondents’
terminals can be considered a reasonable necessity to ease traffic congestion in the metropolis. On
the contrary, the elimination of respondents’ bus terminals brings forth the distinct possibility and the
equally harrowing reality of traffic congestion in the common parking areas, a case of transference
from one site to another.

Less intrusive measures such as curbing the proliferation of "colorum" buses, vans and taxis
entering Metro Manila and using the streets for parking and passenger pick-up points, as
respondents suggest, might even be more effective in easing the traffic situation. So would the strict
enforcement of traffic rules and the removal of obstructions from major thoroughfares.

As to the alleged confiscatory character of the E.O., it need only to be stated that respondents’
certificates of public convenience confer no property right, and are mere licenses or privileges.52 As
such, these must yield to legislation safeguarding the interest of the people.

Even then, for reasons which bear reiteration, the MMDA cannot order the closure of respondents’
terminals not only because no authority to implement the Project has been granted nor legislative or
police power been delegated to it, but also because the elimination of the terminals does not satisfy
the standards of a valid police power measure.

Finally, an order for the closure of respondents’ terminals is not in line with the provisions of the
Public Service Act.

Paragraph (a), Section 13 of Chapter II of the Public Service Act (now Section 5 of Executive Order
No. 202, creating the Land Transportation Franchising and Regulatory Board or LFTRB) vested the
Public Service Commission (PSC, now the LTFRB) with "x x x jurisdiction, supervision and control
over all public services and their franchises, equipment and other properties x x x."

Consonant with such grant of authority, the PSC was empowered to "impose such conditions as
to construction, equipment, maintenance, service, or operation as the public interests and
convenience may reasonably require"53 in approving any franchise or privilege.

Further, Section 16 (g) and (h) of the Public Service Act54 provided that the Commission shall have
the power, upon proper notice and hearing in accordance with the rules and provisions of this Act,
subject to the limitations and exceptions mentioned and saving provisions to the contrary:

(g) To compel any public service to furnish safe, adequate, and proper service as regards
the manner of furnishing the same as well as the maintenance of the necessary material and
equipment.

(h) To require any public service to establish, construct, maintain, and operate any
reasonable extension of its existing facilities, where in the judgment of said Commission,
such extension is reasonable and practicable and will furnish sufficient business to justify the
construction and maintenance of the same and when the financial condition of the said public
service reasonably warrants the original expenditure required in making and operating such
extension.(Emphasis and underscoring supplied)

The establishment, as well as the maintenance of vehicle parking areas or passenger terminals, is
generally considered a necessary service to be provided by provincial bus operators like
respondents, hence, the investments they have poured into the acquisition or lease of suitable
terminal sites. Eliminating the terminals would thus run counter to the provisions of the Public
Service Act.

This Court commiserates with the MMDA for the roadblocks thrown in the way of its efforts at solving
the pestering problem of traffic congestion in Metro Manila. These efforts are commendable, to say
the least, in the face of the abominable traffic situation of our roads day in and day out. This Court
can only interpret, not change, the law, however. It needs only to be reiterated that it is the DOTC ─
as the primary policy, planning, programming, coordinating, implementing, regulating and
administrative entity to promote, develop and regulate networks of transportation and
communications ─ which has the power to establish and administer a transportation project
like the Project subject of the case at bar.

No matter how noble the intentions of the MMDA may be then, any plan, strategy or project which it
is not authorized to implement cannot pass muster.

WHEREFORE, the Petition is, in light of the foregoing disquisition, DENIED. E.O. No. 179 is
declared NULL and VOID for being ultra vires.

SO ORDERED.
Republic of the Philippines
Supreme Court
Manila
EN BANC
EMILIO GANCAYCO, G.R. No. 177807
Petitioner,
- versus -

CITY GOVERNMENT OF QUEZON

CITY AND
METRO MANILADEVELOPMENT
AUTHORITY,
Respondents.

x-----------------------------------------------x
METRO MANILA DEVELOPMENT G.R. No. 177933
AUTHORITY,
Petitioner, Present:

CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,
-versus- BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
JUSTICE EMILIO A. GANCAYCO MENDOZA,
(Retired), SERENO,
Respondent, REYES, and
PERLAS-BERNABE, JJ.
x-----------------------------------------x
Promulgated:

October 11, 2011

x - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

SERENO, J.:
Before us are consolidated Petitions for Review under Rule 45 of the Rules of
Court assailing the Decision[1] promulgated on 18 July 2006 and the
Resolution[2] dated 10 May 2007 of the Court of Appeals in CA-G.R. SP No. 84648.
The Facts

In the early 1950s, retired Justice Emilio A. Gancayco bought a parcel of land
located at 746 Epifanio delos Santos Avenue (EDSA),[3] Quezon City with an area
of 375 square meters and covered by Transfer Certificate of Title (TCT) No.
RT114558.

On 27 March 1956, the Quezon City Council issued Ordinance No. 2904,
entitled An Ordinance Requiring the Construction of Arcades, for Commercial
Buildings to be Constructed in Zones Designated as Business Zones in the Zoning
Plan of Quezon City, and Providing Penalties in Violation Thereof.[4]

An arcade is defined as any portion of a building above the first floor

projecting over the sidewalk beyond the first storey wall used as protection for
pedestrians against rain or sun.[5]

Ordinance No. 2904 required the relevant property owner to construct an

arcade with a width of 4.50 meters and height of 5.00 meters along EDSA, from the
north side of Santolan Road to one lot after Liberty Avenue, and from one lot
before Central Boulevard to the Botocan transmission line.

At the outset, it bears emphasis that at the time Ordinance No. 2904 was
passed by the city council, there was yet no building code passed by the national
legislature. Thus, the regulation of the construction of buildings was left to the
discretion of local government units. Under this particular ordinance, the city
council required that the arcade is to be created by constructing the wall of the
ground floor facing the sidewalk a few meters away from the property line. Thus,
the building owner is not allowed to construct his wall up to the edge of the property
line, thereby creating a space or shelter under the first floor. In effect, property
owners relinquish the use of the space for use as an arcade for pedestrians, instead
of using it for their own purposes.
 The ordinance was amended several times. On 8 August 1960, properties
located at the Quezon City-San Juan boundary were exempted by Ordinance No. 60-
4477 from the construction of arcades. This ordinance was further amended by
Ordinance No. 60-4513, extending the exemption to commercial buildings
from Balete Street to Seattle Street. Ordinance No. 6603 dated 1 March
1966meanwhile reduced the width of the arcades to three meters for buildings
along V. Luna Road, Central District, Quezon City.

The ordinance covered the property of Justice Gancayco. Subsequently,

sometime in 1965, Justice Gancayco sought the exemption of a two-storey building
being constructed on his property from the application of Ordinance No. 2904 that
he be exempted from constructing an arcade on his property.

On 2 February 1966, the City Council acted favorably on Justice Gancaycos

request and issued Resolution No. 7161, S-66, subject to the condition that upon
notice by the City Engineer, the owner shall, within reasonable time, demolish the
enclosure of said arcade at his own expense when public interest so demands.[6]

Decades after, in March 2003, the Metropolitan Manila Development

Authority (MMDA) conducted operations to clear obstructions along the sidewalk
of EDSA in Quezon City pursuant to Metro Manila Councils (MMC) Resolution No.
02-28, Series of 2002.[7] The resolution authorized the MMDA and local government
units to clear the sidewalks, streets, avenues, alleys, bridges, parks and other public
places in Metro Manila of all illegal structures and obstructions.[8]

On 28 April 2003, the MMDA sent a notice of demolition to Justice Gancayco

alleging that a portion of his building violated the National Building Code of
the Philippines (Building Code)[9] in relation to Ordinance No. 2904. The MMDA
gave Justice Gancayco fifteen (15) days to clear the portion of the building that was
supposed to be an arcade along EDSA.[10]

Justice Gancayco did not comply with the notice. Soon after the lapse of the
fifteen (15) days, the MMDA proceeded to demolish the party wall, or what was
referred to as the wing walls, of the ground floor structure. The records of the present
case are not entirely clear on the extent of the demolition; nevertheless, the fact of
demolition was not disputed. At the time of the demolition, the affected portion of
the building was being used as a restaurant.

On 29 May 2003, Justice Gancayco filed a Petition[11] with prayer for a

temporary restraining order and/or writ of preliminary injunction before the
Regional Trial Court (RTC) of Quezon City, docketed as Civil Case No. Q03-49693,
seeking to prohibit the MMDA and the City Government of Quezon City from
demolishing his property. In his Petition,[12] he alleged that the ordinance authorized
the taking of private property without due process of law and just compensation,
because the construction of an arcade will require 67.5 square meters from the 375
square meter property. In addition, he claimed that the ordinance was selective and
discriminatory in its scope and application when it allowed the owners of the
buildings located in the Quezon City-San Juan boundary to Cubao Rotonda, and
Balete to Seattle Streets to construct arcades at their option. He thus sought the
declaration of nullity of Ordinance No. 2904 and the payment of damages.
Alternately, he prayed for the payment of just compensation should the court hold
the ordinance valid.

The City Government of Quezon City claimed that the ordinance was a valid
exercise of police power, regulating the use of property in a business zone. In
addition, it pointed out that Justice Gancayco was already barred by estoppel, laches
and prescription.

Similarly, the MMDA alleged that Justice Gancayco could not seek the
nullification of an ordinance that he had already violated, and that the ordinance
enjoyed the presumption of constitutionality. It further stated that the questioned
property was a public nuisance impeding the safe passage of pedestrians. Finally,
the MMDA claimed that it was merely implementing the legal easement established
by Ordinance No. 2904.[13]

The RTC rendered its Decision on 30 September 2003 in favor of Justice

Gancayco.[14] It held that the questioned ordinance was unconstitutional, ruling that
it allowed the taking of private property for public use without just compensation.
The RTC said that because 67.5 square meters out of Justice Gancaycos 375 square
meters of property were being taken without compensation for the publics benefit,
the ordinance was confiscatory and oppressive. It likewise held that the ordinance
violated owners right to equal protection of laws. The dispositive portion thus states:
WHEREFORE, the petition is hereby granted and the Court hereby
declares Quezon City Ordinance No. 2094,[15] Series of 1956 to be unconstitutional,
invalid and void ab initio. The respondents are hereby permanently enjoined from
enforcing and implementing the said ordinance, and the respondent MMDA is
hereby directed to immediately restore the portion of the party wall or wing wall of
the building of the petitioner it destroyed to its original condition.

IT IS SO ORDERED.
 The MMDA thereafter appealed from the Decision of the trial court. On 18
July 2006, the Court of Appeals (CA) partly granted the appeal.[16] The CA upheld
the validity of Ordinance No. 2904 and lifted the injunction against the enforcement
and implementation of the ordinance. In so doing, it held that the ordinance was a
valid exercise of the right of the local government unit to promote the general
welfare of its constituents pursuant to its police powers. The CA also ruled that the
ordinance established a valid classification of property owners with regard to the
construction of arcades in their respective properties depending on the location. The
CA further stated that there was no taking of private property, since the owner still
enjoyed the beneficial ownership of the property, to wit:
Even with the requirement of the construction of arcaded sidewalks within
his commercial lot, appellee still retains the beneficial ownership of the said
property. Thus, there is no taking for public use which must be subject to just
compensation. While the arcaded sidewalks contribute to the public good, for
providing safety and comfort to passersby, the ultimate benefit from the same still
redounds to appellee, his commercial establishment being at the forefront of a busy
thoroughfare like EDSA. The arcaded sidewalks, by their nature, assure clients of
the commercial establishments thereat some kind of protection from accidents and
other hazards. Without doubt, this sense of protection can be a boon to the business
activity therein engaged. [17]

Nevertheless, the CA held that the MMDA went beyond its powers when it
demolished the subject property. It further found that Resolution No. 02-28 only
refers to sidewalks, streets, avenues, alleys, bridges, parks and other public places in
Metro Manila, thus excluding Justice Gancaycos private property. Lastly, the CA
stated that the MMDA is not clothed with the authority to declare, prevent or abate
nuisances. Thus, the dispositive portion stated:
WHEREFORE, the appeals are PARTLY GRANTED.
The Decision dated September 30, 2003 of the Regional Trial Court, Branch
224, Quezon City, is MODIFIED, as follows:
1) The validity and constitutionality of Ordinance No. 2094,[18] Series of 1956, issued
by the City Council of Quezon City, is UPHELD; and
2) The injunction against the enforcement and implementation of the said Ordinance
is LIFTED.
SO ORDERED.

This ruling prompted the MMDA and Justice Gancayco to file their respective
Motions for Partial Reconsideration.[19]
 On 10 May 2007, the CA denied the motions stating that the parties did not
present new issues nor offer grounds that would merit the reconsideration of the
Court.[20]

Dissatisfied with the ruling of the CA, Justice Gancayco and the MMDA filed
their respective Petitions for Review before this Court. The issues raised by the
parties are summarized as follows:
I. WHETHER OR NOT JUSTICE GANCAYCO WAS ESTOPPED FROM
ASSAILING THE VALIDITY OF ORDINANCE NO. 2904.
II. WHETHER OR NOT ORDINANCE NO. 2904 IS CONSTITUTIONAL.
III. WHETHER OR NOT THE WING WALL OF JUSTICE GANCAYCOS
BUILDING IS A PUBLIC NUISANCE.
IV. WHETHER OR NOT THE MMDA LEGALLY DEMOLISHED THE
PROPERTY OF JUSTICE GANCAYCO.

The Courts Ruling

Estoppel

The MMDA and the City Government of Quezon City both claim that Justice
Gancayco was estopped from challenging the ordinance, because, in 1965, he asked
for an exemption from the application of the ordinance. According to them, Justice
Gancayco thereby recognized the power of the city government to regulate the
construction of buildings.

To recall, Justice Gancayco questioned the constitutionality of the ordinance

on two grounds: (1) whether the ordinance takes private property without due
process of law and just compensation; and (2) whether the ordinance violates the
equal protection of rights because it allowed exemptions from its application.

On the first ground, we find that Justice Gancayco may still question the
constitutionality of the ordinance to determine whether or not the ordinance
constitutes a taking of private property without due process of law and just
compensation. It was only in 2003 when he was allegedly deprived of his property
when the MMDA demolished a portion of the building. Because he was granted an
exemption in 1966, there was no taking yet to speak of.

Moreover, in Acebedo Optical Company, Inc. v. Court of Appeals,[21] we held:

It is therefore decisively clear that estoppel cannot apply in this case. The
fact that petitioner acquiesced in the special conditions imposed by the City Mayor
 in subject business permit does not preclude it from challenging the said imposition,
which is ultra vires or beyond the ambit of authority of respondent City
Mayor. Ultra vires acts or acts which are clearly beyond the scope of one's
authority are null and void and cannot be given any effect. The doctrine of
estoppel cannot operate to give effect to an act which is otherwise null and void
or ultra vires. (Emphasis supplied.)

Recently, in British American Tobacco v. Camacho,[22] we likewise held:

We find that petitioner was not guilty of estoppel. When it made the
undertaking to comply with all issuances of the BIR, which at that time it
considered as valid, petitioner did not commit any false misrepresentation or
misleading act. Indeed, petitioner cannot be faulted for initially undertaking to
comply with, and subjecting itself to the operation of Section 145(C), and only later
on filing the subject case praying for the declaration of its unconstitutionality when
the circumstances change and the law results in what it perceives to be unlawful
discrimination. The mere fact that a law has been relied upon in the past and
all that time has not been attacked as unconstitutional is not a ground for
considering petitioner estopped from assailing its validity. For courts will pass
upon a constitutional question only when presented before it in bona fide cases
for determination, and the fact that the question has not been raised before is
not a valid reason for refusing to allow it to be raised later. (Emphasis supplied.)

Anent the second ground, we find that Justice Gancayco may not question the
ordinance on the ground of equal protection when he also benefited from the
exemption. It bears emphasis that Justice Gancayco himself requested for an
exemption from the application of the ordinance in 1965 and was eventually granted
one. Moreover, he was still enjoying the exemption at the time of the demolition as
there was yet no valid notice from the city engineer. Thus, while the ordinance may
be attacked with regard to its different treatment of properties that appears to be
similarly situated, Justice Gancayco is not the proper person to do so.

Zoning and the regulation of the

construction of buildings are valid
exercises of police power .

In MMDA v. Bel-Air Village Association,[23] we discussed the nature of police

powers exercised by local government units, to wit:
Police power is an inherent attribute of sovereignty. It has been defined as
the power vested by the Constitution in the legislature to make, ordain, and establish
all manner of wholesome and reasonable laws, statutes and ordinances, either with
penalties or without, not repugnant to the Constitution, as they shall judge to be for
 the good and welfare of the commonwealth, and for the subjects of the same. The
power is plenary and its scope is vast and pervasive, reaching and justifying
measures for public health, public safety, public morals, and the general welfare.

It bears stressing that police power is lodged primarily in the National

Legislature. It cannot be exercised by any group or body of individuals not
possessing legislative power. The National Legislature, however, may delegate this
power to the President and administrative boards as well as the lawmaking bodies
of municipal corporations or local government units. Once delegated, the agents
can exercise only such legislative powers as are conferred on them by the national
lawmaking body.

To resolve the issue on the constitutionality of the ordinance, we must first

determine whether there was a valid delegation of police power. Then we can
determine whether the City Government of Quezon City acted within the limits of
the delegation.

It is clear that Congress expressly granted the city government, through the
city council, police power by virtue of Section 12(oo) of Republic Act No. 537, or
the Revised Charter of Quezon City,[24] which states:
To make such further ordinances and regulations not repugnant to law as
may be necessary to carry into effect and discharge the powers and duties conferred
by this Act and such as it shall deem necessary and proper to provide for the health
and safety, promote the prosperity, improve the morals, peace, good order, comfort,
and convenience of the city and the inhabitants thereof, and for the protection of
property therein; and enforce obedience thereto with such lawful fines or penalties
as the City Council may prescribe under the provisions of subsection (jj) of this
section.

Specifically, on the powers of the city government to regulate the construction

of buildings, the Charter also expressly provided that the city government had the
power to regulate the kinds of buildings and structures that may be erected within
fire limits and the manner of constructing and repairing them.[25]

With regard meanwhile to the power of the local government units to issue
zoning ordinances, we apply Social Justice Society v. Atienza.[26] In that case,
the Sangguniang Panlungsod of ManilaCity enacted an ordinance on 28 November
2001 reclassifying certain areas of the city from industrial to commercial. As a result
of the zoning ordinance, the oil terminals located in those areas were no longer
allowed. Though the oil companies contended that they stood to lose billions of
pesos, this Court upheld the power of the city government to pass the assailed
ordinance, stating:
In the exercise of police power, property rights of individuals may be
subjected to restraints and burdens in order to fulfil the objectives of the
government. Otherwise stated, the government may enact legislation that may
interfere with personal liberty, property, lawful businesses and occupations to
promote the general welfare. However, the interference must be reasonable
and not arbitrary. And to forestall arbitrariness, the methods or means used
to protect public health, morals, safety or welfare must have a reasonable
relation to the end in view.
The means adopted by the Sanggunian was the enactment of a zoning
ordinance which reclassified the area where the depot is situated from industrial to
commercial. A zoning ordinance is defined as a local city or municipal
legislation which logically arranges, prescribes, defines and apportions a given
political subdivision into specific land uses as present and future projection of
needs. As a result of the zoning, the continued operation of the businesses of the
oil companies in their present location will no longer be permitted. The power to
establish zones for industrial, commercial and residential uses is derived from
the police power itself and is exercised for the protection and benefit of the
residents of a locality. Consequently, the enactment of Ordinance No. 8027 is
within the power of the Sangguniang Panlungsod of the City of Manila and any
resulting burden on those affected cannot be said to be unjust... (Emphasis supplied)

In Carlos Superdrug v. Department of Social Welfare and

Development,[27] we also held:
For this reason, when the conditions so demand as determined by the
legislature, property rights must bow to the primacy of police power because
property rights, though sheltered by due process, must yield to general
welfare.
Police power as an attribute to promote the common good would be
diluted considerably if on the mere plea of petitioners that they will suffer loss
of earnings and capital, the questioned provision is invalidated. Moreover, in
the absence of evidence demonstrating the alleged confiscatory effect of the
provision in question, there is no basis for its nullification in view of the
presumption of validity which every law has in its favor. (Emphasis supplied.)

In the case at bar, it is clear that the primary objectives of the city council of
Quezon City when it issued the questioned ordinance ordering the construction of
arcades were the health and safety of the city and its inhabitants; the promotion of
their prosperity; and the improvement of their morals, peace, good order, comfort,
and the convenience. These arcades provide safe and convenient passage along the
sidewalk for commuters and pedestrians, not just the residents of Quezon City. More
especially so because the contested portion of the building is located on a busy
segment of the city, in a business zone along EDSA.

Corollarily, the policy of the Building Code,[28] which was passed after the
Quezon City Ordinance, supports the purpose for the enactment of Ordinance No.
2904. The Building Code states:

Section 102. Declaration of Policy. It is hereby declared to be the policy of the State
to safeguard life, health, property, and public welfare, consistent with the principles
of sound environmental management and control; and to this end, make it the
purpose of this Code to provide for all buildings and structures, a framework of
minimum standards and requirements to regulate and control their location, site,
design quality of materials, construction, occupancy, and maintenance.

Section 1004 likewise requires the construction of arcades whenever existing

or zoning ordinances require it. Apparently, the law allows the local government
units to determine whether arcades are necessary within their respective
jurisdictions.

Justice Gancayco argues that there is a three-meter sidewalk in front of his

property line, and the arcade should be constructed above that sidewalk rather than
within his property line. We do not need to address this argument inasmuch as it
raises the issue of the wisdom of the city ordinance, a matter we will not and need
not delve into.

To reiterate, at the time that the ordinance was passed, there was no national
building code enforced to guide the city council; thus, there was no law of national
application that prohibited the city council from regulating the construction of
buildings, arcades and sidewalks in their jurisdiction.

The wing walls of the building are not

nuisances per se.

The MMDA claims that the portion of the building in question is a nuisance per se.

We disagree.

The fact that in 1966 the City Council gave Justice Gancayco an exemption
from constructing an arcade is an indication that the wing walls of the building are
not nuisances per se. The wing walls do not per se immediately and adversely affect
the safety of persons and property. The fact that an ordinance may declare a structure
illegal does not necessarily make that structure a nuisance.

Article 694 of the Civil Code defines nuisance as any act, omission,
establishment, business, condition or property, or anything else that (1) injures or
endangers the health or safety of others; (2) annoys or offends the senses; (3) shocks,
defies or disregards decency or morality; (4) obstructs or interferes with the free
passage of any public highway or street, or any body of water; or, (5) hinders or
impairs the use of property. A nuisance may be per se or per accidens. A
nuisance per se is that which affects the immediate safety of persons and property
and may summarily be abated under the undefined law of necessity.[29]

Clearly, when Justice Gancayco was given a permit to construct the building,
the city council or the city engineer did not consider the building, or its demolished
portion, to be a threat to the safety of persons and property. This fact alone should
have warned the MMDA against summarily demolishing the structure.

Neither does the MMDA have the power to declare a thing a nuisance. Only
courts of law have the power to determine whether a thing is a nuisance. In AC
Enterprises v. Frabelle Properties Corp.,[30] we held:
We agree with petitioner's contention that, under Section 447(a)(3)(i) of
R.A. No. 7160, otherwise known as the Local Government Code, the Sangguniang
Panglungsod is empowered to enact ordinances declaring, preventing or abating
noise and other forms of nuisance. It bears stressing, however, that the Sangguniang
Bayan cannot declare a particular thing as a nuisance per se and order its
condemnation. It does not have the power to find, as a fact, that a particular
thing is a nuisance when such thing is not a nuisance per se; nor can it
authorize the extrajudicial condemnation and destruction of that as a nuisance
which in its nature, situation or use is not such. Those things must be
determined and resolved in the ordinary courts of law. If a thing be in fact, a
nuisance due to the manner of its operation, that question cannot be determined by
a mere resolution of the Sangguniang Bayan. (Emphasis supplied.)

MMDA illegally demolished

the property of Justice Gancayco.
 MMDA alleges that by virtue of MMDA Resolution No. 02-28, Series of
2002, it is empowered to demolish Justice Gancaycos property. It insists that the
Metro Manila Council authorized the MMDA and the local government units to clear
the sidewalks, streets, avenues, alleys, bridges, parks and other public places in
Metro Manila of all illegal structures and obstructions. It further alleges that it
demolished the property pursuant to the Building Code in relation to Ordinance No.
2904 as amended.

However, the Building Code clearly provides the process by which a building
may be demolished. The authority to order the demolition of any structure lies with
the Building Official. The pertinent provisions of the Building Code provide:
SECTION 205. Building Officials. Except as otherwise provided herein, the
Building Official shall be responsible for carrying out the provisions of this Code
in the field as well as the enforcement of orders and decisions made pursuant
thereto.

Due to the exigencies of the service, the Secretary may designate incumbent Public
Works District Engineers, City Engineers and Municipal Engineers act as Building
Officials in their respective areas of jurisdiction.
The designation made by the Secretary under this Section shall continue until
regular positions of Building Official are provided or unless sooner terminated for
causes provided by law or decree.

xxx xxx xxx

SECTION 207. Duties of a Building Official. In his respective territorial

jurisdiction, the Building Official shall be primarily responsible for the
enforcement of the provisions of this Code as well as of the implementing rules and
regulations issued therefor. He is the official charged with the duties of issuing
building permits.

In the performance of his duties, a Building Official may enter any building or its
premises at all reasonable times to inspect and determine compliance with the
requirements of this Code, and the terms and conditions provided for in the building
permit as issued.

When any building work is found to be contrary to the provisions of this Code,
the Building Official may order the work stopped and prescribe the terms
and/or conditions when the work will be allowed to resume. Likewise, the
Building Official is authorized to order the discontinuance of the occupancy
or use of any building or structure or portion thereof found to be occupied or
used contrary to the provisions of this Code.

xxx xxx xxx

 SECTION 215. Abatement of Dangerous Buildings. When any building or
structure is found or declared to be dangerous or ruinous, the Building
Official shall order its repair, vacation or demolition depending upon the
degree of danger to life, health, or safety. This is without prejudice to further
action that may be taken under the provisions of Articles 482 and 694 to 707
of the Civil Code of the Philippines. (Emphasis supplied.)

MMDA v. Trackworks Rail Transit Advertising, Vending and Promotions,

[31]
Inc. is applicable to the case at bar. In that case, MMDA, invoking its charter and
the Building Code, summarily dismantled the advertising media installed on the
Metro Rail Transit (MRT) 3. This Court held:
It is futile for MMDA to simply invoke its legal mandate to justify the
dismantling of Trackworks' billboards, signages and other advertising media.
MMDA simply had no power on its own to dismantle, remove, or destroy the
billboards, signages and other advertising media installed on the MRT3 structure
by Trackworks. In Metropolitan Manila Development Authority v. Bel-Air Village
Association, Inc., Metropolitan Manila Development Authority v. Viron
Transportation Co., Inc., and Metropolitan Manila Development Authority v.
Garin, the Court had the occasion to rule that MMDA's powers were limited
to the formulation, coordination, regulation, implementation, preparation,
management, monitoring, setting of policies, installing a system, and
administration. Nothing in Republic Act No. 7924 granted MMDA police
power, let alone legislative power.

Clarifying the real nature of MMDA, the Court held:

...The MMDA is, as termed in the charter itself, a "development

authority". It is an agency created for the purpose of laying down policies and
coordinating with the various national government agencies, people's
organizations, non-governmental organizations and the private sector for the
efficient and expeditious delivery of basic services in the vast metropolitan
area. All its functions are administrative in nature and these are actually
summed up in the charter itself, viz:

Sec.2. Creation of the Metropolitan Manila Development Authority.- xxx.

The MMDA shall perform planning, monitoring and coordinative functions,
and in the process exercise regulatory and supervisory authority over the
delivery of metro-wide services within Metro Manila, without diminution
of the autonomy of local government units concerning purely local matters.

The Court also agrees with the CA's ruling that MMDA Regulation No. 96-
009 and MMC Memorandum Circular No. 88-09 did not apply to Trackworks'
billboards, signages and other advertising media. The prohibition against posting,
 installation and display of billboards, signages and other advertising media applied
only to public areas, but MRT3, being private property pursuant to the BLT
agreement between the Government and MRTC, was not one of the areas as
to which the prohibition applied. Moreover, MMC Memorandum Circular No.
88-09 did not apply to Trackworks' billboards, signages and other advertising media
in MRT3, because it did not specifically cover MRT3, and because it was issued a
year prior to the construction of MRT3 on the center island of EDSA. Clearly,
MMC Memorandum Circular No. 88-09 could not have included MRT3 in its
prohibition.

MMDA's insistence that it was only implementing Presidential Decree No.

1096 (Building Code) and its implementing rules and regulations is not
persuasive. The power to enforce the provisions of the Building Code was
lodged in the Department of Public Works and Highways (DPWH), not in
MMDA, considering the law's following provision, thus:

Sec. 201. Responsibility for Administration and Enforcement. -

The administration and enforcement of the provisions of this Code
including the imposition of penalties for administrative violations thereof is
hereby vested in the Secretary of Public Works, Transportation and
Communications, hereinafter referred to as the "Secretary."

There is also no evidence showing that MMDA had been delegated by

DPWH to implement the Building Code. (Emphasis supplied.)

Additionally, the penalty prescribed by Ordinance No. 2904 itself does not
include the demolition of illegally constructed buildings in case of violations.
Instead, it merely prescribes a punishment of a fine of not more than two hundred
pesos (P200.00) or by imprisonment of not more than thirty (30) days, or by both
such fine and imprisonment at the discretion of the Court, Provided, that if the
violation is committed by a corporation, partnership, or any juridical entity, the
Manager, managing partner, or any person charged with the management thereof
shall be held responsible therefor. The ordinance itself also clearly states that it is
the regular courts that will determine whether there was a violation of the ordinance.

As pointed out in Trackworks, the MMDA does not have the power to enact
ordinances. Thus, it cannot supplement the provisions of Quezon City Ordinance
No. 2904 merely through its Resolution No. 02-28.

Lastly, the MMDA claims that the City Government of Quezon City may be
considered to have approved the demolition of the structure, simply because
then Quezon City Mayor Feliciano R. Belmonte signed MMDA Resolution No. 02-
28. In effect, the city government delegated these powers to the MMDA. The powers
referred to are those that include the power to declare, prevent and abate a
nuisance[32] and to further impose the penalty of removal or demolition of the
building or structure by the owner or by the city at the expense of the owner.[33]

MMDAs argument does not hold water. There was no valid delegation of
powers to the MMDA. Contrary to the claim of the MMDA, the City Government
of Quezon City washed its hands off the acts of the former. In its Answer,[34] the city
government stated that the demolition was undertaken by the MMDA only, without
the participation and/or consent of Quezon City. Therefore, the MMDA acted on its
own and should be held solely liable for the destruction of the portion of Justice
Gancaycos building.

WHEREFORE, in view of the foregoing, the Decision of the Court of

Appeals in CA-G.R. SP No. 84648 is AFFIRMED.

SO ORDERED.

EN BANC

[G.R. No. 110249. August 21, 1997]

ALFREDO TANO, BALDOMERO TANO, DANILO TANO, ROMUALDO

TANO, TEOCENES MIDELLO, ANGEL DE MESA, EULOGIO
TREMOCHA, FELIPE ONGONION, JR., ANDRES LINIJAN,
ROBERT LIM, VIRGINIA LIM, FELIMON DE MESA, GENEROSO
ARAGON, TEODORICO ANDRE, ROMULO DEL ROSARIO,
CHOLITO ANDRE, ERICK MONTANO, ANDRES OLIVA, VITTORIO
SALVADOR, LEOPOLDO ARAGON, RAFAEL RIBA, ALEJANDRO
LEONILA, JOSE DAMACINTO, RAMIRO MANAEG, RUBEN
MARGATE, ROBERTO REYES, DANILO PANGARUTAN, NOE
GOLPAN,ESTANISLAO ROMERO, NICANOR DOMINGO, ROLDAN
TABANG, PANGANIBAN, ADRIANO TABANG, FREDDIE
SACAMAY, MIGUEL TRIMOCHA, PACENCIO LABABIT, PABLO H.
OMPAD, CELESTINO A. ABANO, ALLAN ALMODAL, BILLY D.
BARTOLAY, ALBINO D. LIQUE, MELCHOR J. LAYSON, MELANI
AMANTE, CLARO E. YATOC, MERGELDO B. BALDEO, EDGAR M.
 ALMASET A., JOSELITO MANAEG, LIBERATO ANDRADA, JR.,
ROBERTO BERRY, RONALD VILLANUEVA, EDUARDO
VALMORIA, WILDREDO MENDOZA, NAPOLEON BABANGA,
ROBERTO TADEPA, RUBEN ASINGUA, SILVERIO GABO, JERRY
ROMERO, DAVID PANGAGARUTAN, DANIEL PANGGARUTAN,
ROMEO AGAWIN, FERNANDO EQUIZ, DITO LEQUIZ, RONILO
ODERABLE, BENEDICTO TORRES, ROSITO A. VALDEZ,
CRESENCIO A. SAYANG, NICOMEDES S. ACOSTA, ERENEO A.
SEGARINO, JR., WILDREDO A. RAUTO, DIOSDADO A. ACOSTA,
BONIFACIO G. SISMO, TACIO ALUBA, DANIEL B. BATERZAL,
ELISEO YBAEZ, DIOSDADO E. HANCHIC, EDDIE ESCALICAS,
ELEAZAR B. BATERZAL, DOMINADOR HALICHIC, ROOSEVELT
RISMO-AN, ROBERT C. MERCADER, TIRSO ARESGADO, DANIEL
CHAVEZ, DANILO CHAVEZ, VICTOR VILLAROEL, ERNESTO C.
YABANEZ, ARMANDO T. SANTILLAN, RUDY S. SANTILLAN,
JODJEN ILUSTRISIMO, NESTOR SALANGRON, ALBERTO
SALANGRON, ROGER L. ROXAS, FRANCISCO T. ANTICANO,
PASTOR SALANGRON, BIENVENIDO SANTILLAN, GILBUENA
LADDY, FIDEL BENJAMIN JOVELITO BELGANO, HONEY
PARIOL, ANTONIO SALANGRON, NICASIO SALANGRON, &
AIRLINE SHIPPERS ASSOCIATION OF PALAWAN, petitioners,
vs. GOV. SALVADOR P. SOCRATES, MEMBERS OF
SANGGUNIAN PANLALAWIGAN OF PALAWAN, namely, VICE-
GOVERNOR JOEL T. REYES, JOSE D. ZABALA, ROSALINO R.
ACOSTA, JOSELITO A. CADLAON, ANDRES R. BAACO, NELSON
P. PENEYRA, CIPRIANO C. BARROMA, CLARO E. ORDINARIO,
ERNESTO A. LLACUN, RODOLFO C. FLORDELIZA, GILBERT S.
BAACO, WINSTON G. ARZAGA, NAPOLEON F. ORDONEZ and
GIL P. ACOSTA, CITY MAYOR EDWARD HAGEDORN, MEMBERS
OF SANGGUNIANG PANLUNGSOD NG PUERTO PRINCESA, ALL
MEMBERS OF BANTAY DAGAT, MEMBERS OF PHILIPPINE
NATIONAL POLICE OF PALAWAN, PROVINCIAL AND CITY
PROSECUTORS OF PALAWAN and PUERTO PRINCESA CITY,
and ALL JUDGES OF PALAWAN, REGIONAL, MUNICIPAL AND
METROPOLITAN, respondents.

DECISION
DAVIDE, JR., J.:
 Petitioners caption their petition as one for Certiorari, Injunction With
Preliminary Mandatory Injunction,with Prayer for Temporary Restraining Order
and pray that this Court: (1) declare as unconstitutional: (a) Ordinance No. 15-
92, dated 15 December 1992, of the Sangguniang Panlungsod of Puerto
Princesa; (b) Office Order No. 23, Series of 1993, dated 22 January 1993,
issued by Acting City Mayor Amado L. Lucero of Puerto Princesa City; and (c)
Resolution No. 33, Ordinance No. 2, Series of 1993, dated 19 February 1993,
of the Sangguniang Panlalawigan of Palawan; (2) enjoin the enforcement
thereof; and (3) restrain respondents Provincial and City Prosecutors of
Palawan and Puerto Princesa City and Judges of Regional Trial Courts,
Metropolitan Trial Courts and Municipal Circuit Trial Courts in Palawan from
[1]

assuming jurisdiction over and hearing cases concerning the violation of the
Ordinances and of the Office Order.
More appropriately, the petition is, and shall be treated as, a special civil
action for certiorari and prohibition.
The following is petitioners summary of the factual antecedents giving rise
to the petition:

1. On December 15, 1992, the Sangguniang Panlungsod ng Puerto Princesa City

enacted Ordinance No. 15-92 which took effect on January 1, 1993 entitled: AN
ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER
OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY
1, 1998 AND PROVIDING EXEMPTIONS, PENALTIES AND FOR OTHER
PURPOSES THEREOF, the full text of which reads as follows:

Section 1. Title of the Ordinance. - This Ordinance is entitled: AN ORDINANCE

BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE
PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998
AND PROVIDING EXEMPTIONS, PENALTIES AND FOR OTHER PURPOSES
THEREOF.

Section 2. Purpose, Scope and Coverage. - To effectively free our City Sea Waters
from Cyanide and other Obnoxious substance, and shall cover all persons and/or
entities operating within and outside the City of Puerto Princesa who is are [sic]
directly or indirectly in the business or shipment of live fish and lobster outside the
City.

Section 3. Definition of terms. - For purpose of this Ordinance the following are
hereby defined:
A. SEA BASS - A kind of fish under the family of Centropomidae, better known as
APAHAP;

B. CATFISH - A kind of fish under the family of Plotosidae, better known as HITO-
HITO;

C. MUDFISH - A kind of fish under the family of Orphicaphalisae better known as

DALAG

D. ALL LIVE FISH - All alive, breathing not necessarily moving of all specie[s] use
for food and for aquarium purposes.

E. LIVE LOBSTER - Several relatively, large marine crustaceans of the genus

Homarus that are alive and breathing not necessarily moving.

Section 4. It shall be unlawful [for] any person or any business enterprise or company
to ship out from Puerto Princesa City to any point of destination either via aircraft or
seacraft of any live fish and lobster except SEA BASS, CATFISH, MUDFISH, AND
MILKFISH FRIES.

Section 5. Penalty Clause. - Any person/s and or business entity violating this
Ordinance shall be penalized with a fine of not more than P5,000.00 or imprisonment
of not more than twelve (12) months, cancellation of their permit to do business in the
City of Puerto Princesa or all of the herein stated penalties, upon the discretion of the
court.

Section 6. If the owner and/or operator of the establishment found vilating the
provisions of this ordinance is a corporation or a partnership, the penalty prescribed in
Section 5 hereof shall be imposed upon its president and/or General Manager or
Managing Partner and/or Manager, as the case maybe [sic].

Section 7. Any existing ordinance or any provision of any ordinance inconsistent to

[sic] this ordinance is deemed repealed.

Section 8. This Ordinance shall take effect on January 1, 1993.

SO ORDAINED.

xxx

2. To implement said city ordinance, then Acting City Mayor Amado L. Lucero issued
Office Order No. 23, Series of 1993 dated January 22, 1993 which reads as follows:
In the interest of public service and for purposes of City Ordinance No. PD426-14-74,
otherwise known as AN ORDINANCE REQUIRING ANY PERSON ENGAGED
OR INTENDING TO ENGAGE IN ANY BUSINESS, TRADE, OCCUPATION,
CALLING OR PROFESSION OR HAVING IN HIS POSSESSION ANY OF THE
ARTICLES FOR WHICH A PERMIT IS REQUIRED TO BE HAD, TO OBTAIN
FIRST A MAYORS PERMIT and City Ordinance No. 15-92, AN ORDINANCE
BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE
PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998, you
are hereby authorized and directed to check or conduct necessary inspections on
cargoes containing live fish and lobster being shipped out from the Puerto Princesa
Airport, Puerto Princesa Wharf or at any port within the jurisdiction of the City to any
point of destinations [sic] either via aircraft or seacraft.

The purpose of the inspection is to ascertain whether the shipper possessed the
required Mayors Permit issued by this Office and the shipment is covered by invoice
or clearance issued by the local office of the Bureau of Fisheries and Aquatic
Resources and as to compliance with all other existing rules and regulations on the
matter.

Any cargo containing live fish and lobster without the required documents as stated
herein must be held for proper disposition.

In the pursuit of this Order, you are hereby authorized to coordinate with the PAL
Manager, the PPA Manager, the local PNP Station and other offices concerned for the
needed support and cooperation. Further, that the usual courtesy and diplomacy must
be observed at all times in the conduct of the inspection.

Please be guided accordingly.

xxx

3. On February 19, 1993, the Sangguniang Panlalawigan, Provincial Government of

Palawan enacted Resolution No. 33 entitled: A RESOLUTION PROHIBITING THE
CATCHING, GATHERING, POSSESSING, BUYING, SELLING AND SHIPMENT
OF LIVE MARINE CORAL DWELLING AQUATIC ORGANISMS, TO WIT:
FAMILY: SCARIDAE (MAMENG), EPINE PHELUS
FASCIATUS (SUNO). CROMILEPTES ALTIVELIS (PANTHER OR SENORITA),
LOBSTER BELOW 200 GRAMS AND SPAWNING, TRADACNA
GIGAS (TAKLOBO), PINCTADA MARGARITEFERA (MOTHER PEARL,
OYSTERS, GIANT CLAMS AND OTHER SPECIES), PENAEUS
MONODON (TIGER PRAWN-BREEDER SIZE OR MOTHER), EPINEPHELUS
SUILLUS (LOBA OR GREEN GROUPER) AND
FAMILY: BALISTIDAE (TROPICAL AQUARIUM FISHES) FOR A PERIOD
FIVE (5) YEARS IN AND COMING FROM PALAWAN WATERS, the full text of
which reads as follows:

WHEREAS, scientific and factual researches [sic] and studies disclose that only five
(5) percent of the corals of our province remain to be in excellent condition as [a]
habitat of marine coral dwelling aquatic organisms;

WHEREAS, it cannot be gainsaid that the destruction and devastation of the corals of
our province were principally due to illegal fishing activities like dynamite fishing,
sodium cyanide fishing, use of other obnoxious substances and other related activities;

WHEREAS, there is an imperative and urgent need to protect and preserve the
existence of the remaining excellent corals and allow the devastated ones to
reinvigorate and regenerate themselves into vitality within the span of five (5) years;

WHEREAS, Sec. 468, Par. 1, Sub-Par. VI of the [sic] R.A. 7160 otherwise known as
the Local Government Code of 1991 empowers the Sangguniang Panlalawigan to
protect the environment and impose appropriate penalties [upon] acts which endanger
the environment such as dynamite fishing and other forms of destructive fishing,
among others.

NOW, THEREFORE, on motion by Kagawad Nelson P. Peneyra and upon

unanimous decision of all the members present;

Be it resolved as it is hereby resolved, to approve Resolution No. 33, Series of 1993 of

the Sangguniang Panlalawigan and to enact Ordinance No. 2 for the purpose, to wit:

ORDINANCE NO. 2
Series of 1993

BE IT ORDAINED BY THE SANGGUNIANG PANLALAWIGAN IN SESSION

ASSEMBLED:

Section 1. TITLE - This Ordinance shall be known as an Ordinance Prohibiting the

catching, gathering, possessing, buying, selling and shipment of live marine coral
dwelling aquatic organisms, to wit: 1. Family: Scaridae (Mameng), 2. Epinephelus
Fasciatus (Suno), 3. Cromileptes altivelis (Panther or Senorita), lobster below 200
grams and spawning), 4. Tridacna Gigas (Taklobo), 5. Pinctada Margaretefera
(Mother Pearl, Oysters, Giant Clams and other species), 6. Penaeus Monodon (Tiger
Prawn-breeder size or mother), 7. Epinephelus Suillus (Loba or Green Grouper) and
8. Family: Balistidae (Topical Aquarium Fishes) for a period of five (5) years in and
coming from Palawan Waters.

Section II. PRELIMINARY CONSIDERATIONS

1. Sec. 2-A (Rep. Act 7160). It is hereby declared, the policy of the state that the
territorial and political subdivisions of the State shall enjoy genuine and meaningful
local autonomy to enable them to attain their fullest development as self reliant
communities and make them more effective partners in the attainment of national
goals. Toward this end, the State shall provide for [a] more responsive and
accountable local government structure instituted through a system of decentralization
whereby local government units shall be given more powers, authority,
responsibilities and resources.

2. Sec. 5-A (R.A. 7160). Any provision on a power of [a] local Government Unit shall
be liberaly interpreted in its favor, and in case of doubt, any question thereon shall be
resolved in favor of devolution of powers and of the lower government units. Any fair
and reasonable doubts as to the existence of the power shall be interpreted in favor of
the Local Government Unit concerned.

3. Sec. 5-C (R.A. 7160). The general welfare provisions in this Code shall be liberally
interpreted to give more powers to local government units in accelerating economic
development and upgrading the quality of life for the people in the community.

4. Sec. 16 (R.A. 7160). 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.

Section III. DECLARATION OF POLICY. - It is hereby declared to be the policy of

the Province of Palawan to protect and conserve the marine resources of Palawan not
only for the greatest good of the majority of the present generation but with [the]
proper perspective and consideration of [sic] their prosperity, and to attain this end,
the Sangguniang Panlalawigan henceforth declares that is [sic] shall be unlawful for
any person or any business entity to engage in catching, gathering, possessing, buying,
selling and shipment of live marine coral dwelling aquatic organisms as enumerated in
Section 1 hereof in and coming out of Palawan Waters for a period of five (5) years;

Section IV. PENALTY CLAUSE. - Any person and/or business entity violating this
Ordinance shall be penalized with a fine of not more than Five Thousand Pesos
(P5,000.00), Philippine Currency, and/or imprisonment of six (6) months to twelve
(12) months and confiscation and forfeiture of paraphernalias [sic] and equipment in
favor of the government at the discretion of the Court;

Section V. SEPARABILITY CLAUSE. - If for any reason, a Section or provision of

this Ordinance shall be held as unconditional [sic] or invalid, it shall not affect the
other provisions hereof.

Section VI. REPEALING CLAUSE. - Any existing Ordinance or a provision of any

ordinance inconsistent herewith is deemed modified, amended or repealed.

Section VII. EFFECTIVITY. - This Ordinance shall take effect ten (10) days after its
publication.

SO ORDAINED.

xxx

4. The respondents implemented the said ordinances, Annexes A and C hereof thereby
depriving all the fishermen of the whole province of Palawan and the City of Puerto
Princesa of their only means of livelihood and the petitioners Airline Shippers
Association of Palawan and other marine merchants from performing their lawful
occupation and trade;

5. Petitioners Alfredo Tano, Baldomero Tano, Teocenes Midello, Angel de Mesa,

Eulogio Tremocha, and Felipe Ongonion, Jr. were even charged criminally under
criminal case no. 93-05-C in the 1st Municipal Circuit Trial Court of Cuyo-Agutaya-
Magsaysay, an original carbon copy of the criminal complaint dated April 12, 1993 is
hereto attached as Annex D; while xerox copies are attached as Annex D to the copies
of the petition;

6. Petitioners Robert Lim and Virginia Lim, on the other hand, were charged by the
respondent PNP with the respondent City Prosecutor of Puerto Princesa City, a xerox
copy of the complaint is hereto attached as Annex E;

Without seeking redress from the concerned local government units,

prosecutors office and courts, petitioners directly invoked our original
jurisdiction by filing this petition on 4 June 1993. In sum, petitioners contend
that:
First, the Ordinances deprived them of due process of law, their livelihood,
and unduly restricted them from the practice of their trade, in violation of Section
2, Article XII and Sections 2 and 7 of Article XIII of the 1987 Constitution.
 Second, Office Order No. 23 contained no regulation nor condition under
which the Mayors permit could be granted or denied; in other words, the Mayor
had the absolute authority to determine whether or not to issue permit.
Third, as Ordinance No. 2 of the Province of Palawan altogether prohibited
the catching, gathering, possession, buying, selling and shipping of live marine
coral dwelling organisms, without any distinction whether it was caught or
gathered through lawful fishing method, the Ordinance took away the right of
petitioners-fishermen to earn their livelihood in lawful ways; and insofar as
petitioners-members of Airline Shippers Association are concerned, they were
unduly prevented from pursuing their vocation and entering into contracts which
are proper, necessary, and essential to carry out their business endeavors to a
successful conclusion.
Finally, as Ordinance No. 2 of the Sangguniang Panlalawigan is null and
void, the criminal cases based thereon against petitioners Tano and the others
have to be dismissed.
In the Resolution of 15 June 1993 we required respondents to comment on
the petition, and furnished the Office of the Solicitor General with a copy thereof.
In their comment filed on 13 August 1993, public respondents Governor
Socrates and Members of the Sangguniang Panlalawigan of Palawan defended
the validity of Ordinance No.2, Series of 1993, as a valid exercise of the
Provincial Governments power under the general welfare clause (Section 16 of
the Local Government Code of 1991 [hereafter, LGC]), and its specific power
to protect the environment and impose appropriate penalties for acts which
endanger the environment, such as dynamite fishing and other forms of
destructive fishing under Section 447 (a) (1) (vi), Section 458 (a) (1) (vi), and
Section 468 (a) (1) (vi), of the LGC. They claimed that in the exercise of such
powers, the Province of Palawan had the right and responsibilty to insure that
the remaining coral reefs, where fish dwells [sic], within its territory remain
healthy for the future generation. The Ordinance, they further asserted, covered
only live marine coral dwelling aquatic organisms which were enumerated in
the ordinance and excluded other kinds of live marine aquatic organisms not
dwelling in coral reefs; besides the prohibition was for only five (5) years to
protect and preserve the pristine coral and allow those damaged to regenerate.
Aforementioned respondents likewise maintained that there was no
violation of due process and equal protection clauses of the Constitution. As to
the former, public hearings were conducted before the enactment of the
Ordinance which, undoubtedly, had a lawful purpose and employed reasonable
means; while as to the latter, a substantial distinction existed between a
fisherman who catches live fish with the intention of selling it live, and a
fisherman who catches live fish with no intention at all of selling it live, i.e., the
former uses sodium cyanide while the latter does not. Further, the Ordinance
applied equally to all those belonging to one class.
On 25 October 1993 petitioners filed an Urgent Plea for the Immediate
Issuance of a Temporary Restraining Order claiming that despite the pendency
of this case, Branch 50 of the Regional Trial Court of Palawan was bent on
proceeding with Criminal Case No. 11223 against petitioners Danilo Tano,
Alfredo Tano, Eulogio Tremocha, Romualdo Tano, Baldomero Tano, Andres
Lemihan and Angel de Mesa for violation of Ordinance No. 2 of the
Sangguniang Panlalawigan of Palawan. Acting on said plea, we issued on 11
November 1993 a temporary restraining order directing Judge Angel Miclat of
said court to cease and desist from proceeding with the arraignment and pre-
trial of Criminal Case No. 11223.
On 12 July 1994, we excused the Office of the Solicitor General from filing
a comment, considering that as claimed by said office in its Manifestation of 28
June 1994, respondents were already represented by counsel.
The rest of the respondents did not file any comment on the petition.
In the resolution of 15 September 1994, we resolved to consider the
comment on the petition as the Answer, gave due course to the petition and
required the parties to submit their respective memoranda. [2]

On 22 April 1997 we ordered impleaded as party respondents the

Department of Agriculture and the Bureau of Fisheries and Aquatic Resources
and required the Office of the Solicitor General to comment on their behalf. But
in light of the latters motion of 9 July 1997 for an extension of time to file the
comment which would only result in further delay, we dispensed with said
comment.
After due deliberation on the pleadings filed, we resolved to dismiss this
petition for want of merit, on 22 July 1997, and assigned it to the ponente for
the writing of the opinion of the Court.
I

There are actually two sets of petitioners in this case. The first is composed
of Alfredo Tano, Baldomero Tano, Danilo Tano, Romualdo Tano, Teocenes
Midello, Angel de Mesa, Eulogio Tremocha, Felipe Ongonion, Jr., Andres
Linijan, and Felimon de Mesa, who were criminally charged with
violating Sangguniang Panlalawigan Resolution No. 33 and Ordinance No. 2,
Series of 1993, of the Province of Palawan, in Criminal Case No. 93-05-C of
the 1 Municipal Circuit Trial Court (MCTC) of Palawan; and Robert Lim and
st [3]

Virginia Lim who were charged with violating City Ordinance No. 15-92 of
Puerto Princesa City and Ordinance No. 2, Series of 1993, of the Province of
Palawan before the Office of the City Prosecutor of Puerto Princesa. All of [4]

them, with the exception of Teocenes Midello, Felipe Ongonion, Jr., Felimon de
Mesa, Robert Lim and Virginia Lim, are likewise the accused in Criminal Case
No. 11223 for the violation of Ordinance No. 2 of the Sangguniang
Panlalawigan of Palawan, pending before Branch 50 of the Regional Trial Court
of Palawan. [5]

The second set of petitioners is composed of the rest of the petitioners

numbering seventy-seven (77), all of whom, except the Airline Shippers
Association of Palawan -- an alleged private association of several marine
merchants -- are natural persons who claim to be fishermen.
The primary interest of the first set of petitioners is, of course, to prevent the
prosecution, trial and determination of the criminal cases until the
constitutionality or legality of the Ordinances they allegedly violated shall have
been resolved. The second set of petitioners merely claim that they being
fishermen or marine merchants, they would be adversely affected by the
ordinances.
As to the first set of petitioners, this special civil for certiorari must fail on the
ground of prematurity amounting to a lack of cause of action. There is no
showing that the said petitioners, as the accused in the criminal cases, have
filed motions to quash the informations therein and that the same were
denied. The ground available for such motions is that the facts charged therein
do not constitute an offense because the ordinances in question are
unconstitutional. It cannot then be said that the lower courts acted without or
[6]

in excess of jurisdiction or with grave abuse of discretion to justify recourse to

the extraordinary remedy of certiorari or prohibition. It must further be stressed
that even if the petitioners did file motions to quash, the denial thereof would
not forthwith give rise to a cause of action under Rule 65 of the Rules of
Court. The general rule is that where a motion to quash is denied, the remedy
therefrom is not certiorari, but for the party aggrieved thereby to go to trial
without prejudice to reiterating special defenses involved in said motion, and if,
after trial on the merits of adverse decision is rendered, to appeal therefrom in
the manner authorized by law. And , even where in an exceptional
[7]

circumstance such denial may be the subject of a special civil action

for certiorari, a motion for reconsideration must have to be filed to allow the
court concerned an opportunity to correct its errors, unless such motion may be
dispensed with because of existing exceptional circumstances. Finally, even if
[8]

a motion for reconsideration has been filed and denied, the remedy under Rule
65 is still unavailable absent any showing of the grounds provided for in Section
1 thereof. For obvious reasons, the petition at bar does not, and could not have
[9]

, alleged any of such grounds.

As to the second set of petitioners, the instant petition is obviously one for
DECLARATORY RELIEF, i.e., for a declaration that the Ordinances in question
are a nullity ... for being unconstitutional. As such, their petition must likewise
[10]

fail, as this Court is not possessed of original jurisdiction over petitions for
declaratory relief even if only questions of law are involved, it being settled
[11]

that the Court merely exercises appellate jurisdiction over such petitions. [12]

II

Even granting arguendo that the first set of petitioners have a cause of
action ripe for the extraordinary writ of certiorari, there is here a clear disregard
of the hierarchy of courts, and no special and important reason or exceptional
or compelling circumstance has been adduced why direct recourse to us should
be allowed. While we have concurrent jurisdiction with Regional Trial courts and
with the Court of Appeals to issue writs of certiorari, prohibition, mandamus,
quo warranto, habeas corpus and injunction, such concurrence gives
petitioners no unrestricted freedom of choice of court forum, so we held in
People v. Cuaresma: [13]

This concurrence of jurisdiction is not to be taken as according to parties seeking any

of the writs an absolute unrestrained freedom of choice of the court to which
application therefor will be directed. There is after all hierarchy of courts. That
hierarchy is determinative of the venue of appeals, and should also serve as a general
determinant of the appropriate forum for petitions for the extraordinary writs. A
becoming regard for that judicial hierarchy most certainly indicates that petitions for
the issuance of extraordinary writs against first level (inferior) courts should be filed
with the Regional Trial Court, and those against the latter, with the Court of Appeals.
A direct invocation of the Supreme Courts original jurisdiction to issue these writs
should be allowed only when there are special and important reasons therefor, clearly
and specifically set out in the petition. This is established policy. It is a policy
necessary to prevent inordinate demands upon the Courts time and attention which are
better devoted to those matters within its exclusive jurisdiction, and to prevent further
over-crowding of the Courts docket.

The Court feels the need to reaffirm that policy at this time, and to enjoin strict
adherence thereto in the light of what it perceives to be a growing tendency on the part
of litigants and lawyers to have their applications for the so-called extraordinary writs,
and sometimes even their appeals, passed upon and adjudicated directly and
immediately by the highest tribunal of the land.
 In Santiago v. Vasquez, this Court forcefully expressed that the propensity
[14]

of litigants and lawyers to disregard the hierarchy of courts must be put to a

halt, not only because of the imposition upon the precious time of this Court,
but also because of the inevitable and resultant delay, intended or otherwise, in
the adjudication of the case which often has to be remanded or referred to the
lower court, the proper forum under the rules of procedure, or as better
equipped to resolve the issues since this Court is not a trier of facts. We
reiterated the judicial policy that this Court will not entertain direct resort to it
unless the redress desired cannot be obtained in the appropriate courts or
where exceptional and compelling circumstances justify availment of a remedy
within and calling for the exercise of [its] primary jurisdiction.
III

Notwithstanding the foregoing procedural obstacles against the first set of

petitioners, we opt to resolve this case on its merits considering that the lifetime
of the challenged Ordinances is about to end. Ordinance No. 15-92 of the City
of Puerto Princesa is effective only up to 1 January 1998, while Ordinance No.
2 of the Province of Palawan, enacted on 19 February 1993, is effective for only
five (5) years. Besides, these Ordinances were undoubtedly enacted in the
exercise of powers under the new LGC relative to the protection and
preservation of the environment and are thus novel and of paramount
importance. No further delay then may be allowed in the resolution of the issues
raised.
It is of course settled that laws (including ordinances enacted by local
government units) enjoy the presumption of constitutionality. To overthrow this
[15]

presumption, there must be a clear and unequivocal breach of the Constitution,

not merely a doubtful or argumentative contradiction. In short, the conflict with
the Constitution must be shown beyond reasonable doubt. Where doubt [16]

exists, even if well founded, there can be no finding of unconstitutionality. To

doubt is to sustain.[17]

After a scrunity of the challenged Ordinances and the provisions of the

Constitution petitioners claim to have been violated, we find petitioners
contentions baseless and so hold that the former do not suffer from any
infirmity, both under the Constitution and applicable laws.
Petitioners specifically point to Section 2, Article XII and Sections 2 and 7,
Article XIII of the Constitution as having been transgressed by the Ordinances.
The pertinent portion of Section 2 of Article XII reads:

SEC. 2. x x x
The State shall protect the nation's marine wealth in its archipelagic waters, territorial
sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to
Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by

Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fishworkers in rivers, lakes, bays, and lagoons.

Sections 2 and 7 of Article XIII provide:

Sec. 2. The promotion of social justice shall include the commitment to create
economic opportunities based on freedom of initiative and self-reliance.

xxx

SEC. 7. The State shall protect the rights of subsistence fishermen, especially of local
communities, to the preferential use of the communal marine and fishing resources,
both inland and offshore. It shall provide support to such fishermen through
appropriate technology and research, adequate financial, production, and marketing
assistance, and other services. The State shall also protect, develop, and conserve such
resources. The protection shall extend to offshore fishing grounds of subsistence
fishermen against foreign intrusion. Fishworkers shall receive a just share from their
labor in the utilization of marine and fishing resources.

There is absolutely no showing that any of the petitioners qualifies as a

subsistence or marginal fisherman. In their petition, petitioner Airline Shippers
Association of Palawan is described as a private association composed of
Marine Merchants; petitioners Robert Lim and Virginia Lim, as merchants; while
the rest of the petitioners claim to be fishermen, without any qualification,
however, as to their status.
Since the Constitution does not specifically provide a definition of the terms
subsistence or marginal fishermen, they should be construed in their general
[18]

and ordinary sense. A marginal fisherman is an individual engaged in fishing

whose margin of return or reward in his harvest of fish as measured by existing
price levels is barely sufficient to yield a profit or cover the cost of gathering the
fish, while a subsistence fisherman is one whose catch yields but the
[19]

irreducible minimum for his livelihood. Section 131(p) of the LGC (R.A. No.
[20]

7160) defines a marginal farmer or fisherman as an individual engaged in

subsistence farming or fishing which shall be limited to the sale, barter or
exchange of agricultural or marine products produced by himself and his
immediate family. It bears repeating that nothing in the record supports a finding
that any petitioner falls within these definitions.
Besides, Section 2 of Article XII aims primarily not to bestow any right to
subsistence fishermen, but to lay stress on the duty of the State to protect the
nations marine wealth. What the provision merely recognizes is that the State
may allow, by law, cooperative fish farming, with priority to subsistence
fishermen and fishworkers in rivers, lakes, bays, and lagoons. Our survey of the
statute books reveals that the only provision of law which speaks of the
preferential right of marginal fishermen is Section 149 of the LGC of 1991 which
pertinently provides:

SEC. 149. Fishery Rentals, Fees and Charges. -- x x x

(b) The sangguniang bayan may:

(1) Grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic beds
or bangus fry areas, within a definite zone of the municipal waters, as determined by
it: Provided, however, That duly registered organizations and cooperatives of
marginal fishermen shall have preferential right to such fishery privileges ....

In a Joint Administrative Order No. 3, dated 25 April 1996, the Secretary of the
Department of Agriculture and the Secretary of the Department of Interior and
Local Government prescribed the guidelines on the preferential treatment of
small fisherfolk relative to the fishery right mentioned in Section 149. This case,
however, does not involve such fishery right.
Anent Section 7 of Article XIII, it speaks not only of the use of communal
marine and fishing resources, but of their protection, development, and
conservation. As hereafter shown, the ordinances in question are meant
precisely to protect and conserve our marine resources to the end that their
enjoyment by the people may be guaranteed not only for the present
generation, but also for the generations to come.
The so-called preferential right of subsistence or marginal fishermen to the
use of marine resources is not at all absolute. In accordance with the Regalian
Doctrine, marine resources belong to the State, and, pursuant to the first
paragraph of Section 2, Article XII of the Constitution, their exploration,
development and utilization ... shall be under the full control and supervision of
the State. Moreover, their mandated protection, development, and conservation
as necessarily recognized by the framers of the Constitution, imply certain
restrictions on whatever right of enjoyment there may be in favor of
anyone. Thus, as to the curtailment of the preferential treatment of marginal
fisherman, the following exchange between Commissioner Francisco Rodrigo
and Commissioner Jose F.S. Bengzon, Jr., took place at the plenary session of
the Constitutional Commission:

MR. RODRIGO:

Let us discuss the implementation of this because I would not raise the hopes
of our people, and afterwards fail in the implementation. How will this be
implemented? Will there be a licensing or giving of permits so that
government officials will know that one is really a marginal fisherman? Or if
policeman say that a person is not a marginal fisherman, he can show his
permit, to prove that indeed he is one.

MR. BENGZON:

Certainly, there will be some mode of licensing insofar as this is concerned

and this particular question could be tackled when we discuss the Article on
Local Governments -- whether we will leave to the local governments or to
Congress on how these things will be implemented. But certainly, I think our
Congressmen and our local officials will not be bereft of ideas on how to
implement this mandate.

xxx

MR. RODRIGO:

So, once one is licensed as a marginal fisherman, he can go anywhere in the

Philippines and fish in any fishing grounds.

MR. BENGZON:

Subject to whatever rules and regulations and local laws that may be
passed, may be existing or will be passed. (underscoring supplied for
[21]

emphasis).

What must likewise be borne in mind is the state policy enshrined in the
Constitution regarding the duty of the State to protect and advance the right of
the people to a balanced and healthful ecology in accord with the rhythm and
harmony of nature. On this score, in Oposa v. Factoran, this Court declared:
[22] [23]

While the right to balanced and healthful ecology is to be found under the Declaration
of Principles the State Policies and not under the Bill of Rights, it does not follow that
it is less important than any of the civil and political rights enumerated in the latter.
Such a right belongs to a different category of rights altogether for it concerns nothing
less than self-preservation and self-perpetuation - aptly and fittingly stressed by the
petitioners - the advancement of which may even be said to predate all governments
and constitutions. As a matter of fact, these basic rights need not even be written in
the Constitution for they are assumed to exist from the inception of humankind. If
they are now explicitly mentioned in the fundamental charter, it is because of the
well-founded fear of its framers that unless the rights to a balanced and healthful
ecology and to health are mandated as state policies by the Constitution itself, thereby
highlighting their continuing importance and imposing upon the state a solemn
obligation to preserve the first and protect and advance the second , the day would not
be too far when all else would be lost not only for the present generation, but also for
those to come - generations which stand to inherit nothing but parched earth incapable
of sustaining life.

The right to a balanced and healthful ecology carries with it a correlative duty to
refrain from impairing the environment ...

The LGC provisions invoked by private respondents merely seek to give

flesh and blood to the right of the people to a balanced and healthful ecology.
In fact, the General Welfare Clause, expressly mentions this right:

SEC. 16. General Welfare.-- Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective governance, and those which
are essential to the promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among other things, the
preservation and enrichment of culture, promote health and safety, enhance the right
of the people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve public
morals, enhance economic prosperity and social justice, promote full employment
among their residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants. (underscoring supplied).

Moreover, Section 5(c) of the LGC explicitly mandates that the general welfare
provisions of the LGC shall be liberally interpreted to give more powers to the
local government units in accelerating economic development and upgrading
the quality of life for the people of the community.
The LGC vests municipalities with the power to grant fishery privileges in
municipal waters and to impose rentals, fees or charges therefor; to penalize,
by appropriate ordinances, the use of explosives, noxious or poisonous
substances, electricity, muro-ami, and other deleterious methods of fishing; and
to prosecute any violation of the provisions of applicable fishery laws. Further,
[24]

the sangguniang bayan, thesangguniang panlungsod and the sangguniang

panlalawigan are directed to enact ordinances for the general welfare of the
municipality and its inhabitants, which shall include, inter alia, ordinances that
[p]rotect the environment and impose appropriate penalties for acts which
endanger the environment such as dynamite fishing and other forms of
destructive fishing ... and such other activities which result in pollution,
acceleration of eutrophication of rivers and lakes or of ecological imbalance. [25]

Finally, the centerpiece of LGC is the system of decentralization as [26]

expressly mandated by the Constitution. Indispensable

[27]
thereto
is devolution and the LGC expressly provides that [a]ny provision on a power
of a local government unit shall be liberally interpreted in its favor, and in case
of doubt, any question thereon shall be resolved in favor of devolution of powers
and of the lower local government unit. Any fair and reasonable doubt as to the
existence of the power shall be interpreted in favor of the local government unit
concerned, Devolution refers to the act by which the National Government
[28]

confers power and authority upon the various local government units to perform
specific functions and responsibilities.
[29]

One of the devolved powers enumerated in the section of the LGC on

devolution is the enforcement of fishery laws in municipal waters including the
conservation of mangroves. This necessarily includes enactment of
[30]

ordinances to effectively carry out such fishery laws within the municipal waters.
The term municipal waters, in turn, include not only streams, lakes, and tidal
waters within the municipality, not being the subject of private ownership and
not comprised within the national parks, public forest, timber lands, forest
reserves, or fishery reserves, but also marine waters included between two
lines drawn perpendicularly to the general coastline from points where the
boundary lines of the municipality or city touch the sea at low tide and a third
line parallel with the general coastline and fifteen kilometers from it. Under [31]

P.D. No. 704, the marine waters included in municipal waters is limited to three
nautical miles from the general coastline using the above perpendicular lines
and a third parallel line.
These fishery laws which local government units may enforce under Section
17(b), (2), (i) in municipal waters include: (1) P.D. No. 704; (2) P.D. No. 1015
which, inter alia, authorizes the establishment of a closed season in any
Philippine water if necessary for conservation or ecological purposes; (3) P.D.
No. 1219 which provides for the exploration, exploitation, utilization, and
conservation of coral resources; (4) R.A. No. 5474, as amended by B.P. Blg.
58, which makes it unlawful for any person, association, or corporation to catch
or cause to be caught, sell, offer to sell, purchase, or have in possession any of
the fish specie called gobiidae or ipon during closed season; and (5) R.A. No.
6451 which prohibits and punishes electrofishing, as well as various issuances
of the BFAR.
To those specifically devolved insofar as the control and regulation of fishing
in municipal waters and the protection of its marine environment are concerned,
must be added the following:
1. Issuance of permits to construct fish cages within municipal waters;
2. Issuance of permits to gather aquarium fishes within municipal waters;
3. Issuance of permits to gather kapis shells within municipal waters;
4. Issuance of permits to gather/culture shelled mollusks within municipal waters;
5. Issuance of licenses to establish seaweed farms within municipal waters;
6. Issuance of licenses to establish culture pearls within municipal waters;
7. Issuance of auxiliary invoice to transport fish and fishery products; and
8. Establishment of closed season in municipal waters.
These functions are covered in the Memorandum of Agreement of 5 April 1994
between the Department of Agriculture and the Department of Interior and Local
Government.
In light then of the principles of decentralization and devolution enshrined in
the LGC and the powers granted to local government units under Section 16
(the General Welfare Clause), and under Sections 149, 447 (a) (1) (vi), 458 (a)
(1) (vi) and 468 (a) (1) (vi), which unquestionably involve the exercise of police
power, the validity of the questioned Ordinances cannot be doubted.
Parenthetically, we wish to add that these Ordinances find full support under
R.A. No. 7611, otherwise known as the Strategic Environmental Plan (SEP) for
Palawan Act, approved on 19 July 1992. This statute adopts a comprehensive
framework for the sustainable development of Palawan compatible with
protecting and enhancing the natural resources and endangered environment
of the province, which shall serve to guide the local government of Palawan and
the government agencies concerned in the formulation and implementation of
plans, programs and projects affecting said province. [32]

At this time then, it would be appropriate to determine the relation between

the assailed Ordinances and the aforesaid powers of the Sangguniang
Panlungsod of the City of Puerto Princesa and the Sangguniang
Panlalawigan of the Province of Palawan to protect the environment. To begin,
we ascertain the purpose of the Ordinances as set forth in the statement of
purposes or declaration of policies quoted earlier.
 It is clear to the Court that both Ordinances have two principal objectives or
purposes: (1) to establish a closed season for the species of fish or aquatic
animals covered therein for a period of five years, and (2) to protect the corals
of the marine waters of the City of Puerto Princesa and the Province of Palawan
from further destruction due to illegal fishing activities.
The accomplishment of the first objective is well within the devolved power
to enforce fishery laws in municipal waters, such as P.D. No. 1015, which allows
the establishment of closed seasons. The devolution of such power has been
expressly confirmed in the Memorandum of Agreement of 5 April 1994 between
the Department of Agriculture and the Department of Interior and Local
Government.
The realization of the second objective falls within both the general welfare
clause of the LGC and the express mandate thereunder to cities and provinces
to protect the environment and impose appropriate penalties for acts which
endanger the environment. [33]

The destruction of the coral reefs results in serious, if not irreparable,

ecological imbalance, for coral reefs are among the natures life-support
systems. They collect, retain, and recycle nutrients for adjacent nearshore
[34]

areas such as mangroves, seagrass beds, and reef flats; provide food for
marine plants and animals; and serve as a protective shelter for aquatic
organisms. It is said that [e]cologically, the reefs are to the oceans what
[35]

forests are to continents: they are shelter and breeding grounds for fish and
plant species that will disappear without them. [36]

The prohibition against catching live fish stems, in part, from the modern
phenomenon of live-fish trade which entails the catching of so-called exotic
tropical species of fish not only for aquarium use in the West, but also for the
market for live banquet fish [which] is virtually insatiable in ever more affluent
Asia. These exotic species are coral-dwellers, and fishermen catch them by
[37]

diving in shallow water with corraline habitats and squirting sodium cyanide
poison at passing fish directly or onto coral crevices; once affected the fish are
immobilized [merely stunned] and then scooped by hand. The diver then
[38]

surfaces and dumps his catch into a submerged net attached to the skiff
. Twenty minutes later, the fish can swim normally. Back on shore, they are
placed in holding pens, and within a few weeks, they expel the cyanide from
their system and are ready to be hauled. Then they are placed in saltwater
tanks or packaged in plastic bags filled with seawater for shipment by air freight
to major markets for live food fish. While the fish are meant to survive, the
[39]

opposite holds true for their former home as [a]fter the fisherman squirts the
cyanide, the first thing to perish is the reef algae, on which fish feed. Days later,
the living coral starts to expire.Soon the reef loses its function as habitat for the
fish, which eat both the algae and invertebrates that cling to the coral. The reef
becomes an underwater graveyard, its skeletal remains brittle, bleached of all
color and vulnerable to erosion from the pounding of the waves. It has been
[40]

found that cyanide fishing kills most hard and soft corals within three months of
repeated application. [41]

The nexus then between the activities barred by Ordinance No. 15-92 of the
City of Puerto Princesa and the prohibited acts provided in Ordinance No. 2,
Series of 1993 of the Province of Palawan, on one hand, and the use of sodium
cyanide, on the other, is painfully obvious. In sum, the public purpose and
reasonableness of the Ordinances may not then be controverted.
As to Office Order No. 23, Series of 1993, issued by Acting City Mayor
Amado L. Lucero of the City of Puerto Princesa, we find nothing therein violative
of any constitutional or statutory provision. The Order refers to the
implementation of the challenged ordinance and is not the Mayors Permit.
The dissenting opinion of Mr. Justice Josue N. Bellosillo relies upon the lack
of authority on the part of the Sangguniang Panlungsod of Puerto Princesa to
enact Ordinance No. 15, Series of 1992, on the theory that the subject thereof
is within the jurisdiction and responsibility of the Bureau of Fisheries and
Aquatic Resources (BFAR) under P.D. No. 704, otherwise known as the
Fisheries Decree of 1975; and that, in any event, the Ordinance is
unenforceable for lack of approval by the Secretary of the Department of
Natural Resources (DNR), likewise in accordance with P.D. No. 704.
The majority is unable to accommodate this view. The jurisdiction and
responsibility of the BFAR under P. D. no. 704, over the management,
conservation, development, protection, utilization and disposition of all fishery
and aquatic resources of the country is not all-encompassing. First, Section 4
thereof excludes from such jurisdiction and responsibility municipal waters,
which shall be under the municipal or city government concerned, except
insofar as fishpens and seaweed culture in municipal in municipal centers are
concerned. This section provides, however, that all municipal or city ordinances
and resolutions affecting fishing and fisheries and any disposition thereunder
shall be submitted to the Secretary of the Department of Natural Resources for
appropriate action and shall have full force and effect only upon his approval. [42]

Second, it must at once be pointed out that the BFAR is no longer under the
Department of Natural Resources (now Department of Environment and
Natural Resources). Executive Order No. 967 of 30 June 1984 transferred the
BFAR from the control and supervision of the Minister (formerly Secretary) of
Natural Resources to the Ministry of Agriculture and Food (MAF) and converted
it into a mere staff agency thereof, integrating its functions with the regional
offices of the MAF.
In Executive Order No. 116 of 30 January 1987, which reorganized the
MAF, the BFAR was retained as an attached agency of the MAF. And under
the Administrative Code of 1987, the BFAR is placed under the Title
[43]

concerning the Department of Agriculture. [44]

Therefore, it is incorrect to say that the challenged Ordinance of the City of

Puerto Princesa is invalid or unenforceable because it was not approved by the
Secretary of the DENR. If at all, the approval that should be sought would be
that of the Secretary of the Department of Agriculture (not DENR) of municipal
ordinances affecting fishing and fisheries in municipal waters has been
dispensed with in view of the following reasons:
(1) Section 534 (Repealing Clause) of the LGC expressly repeals or
amends Section 16 and 29 of P.D. No. 704 insofar that they are inconsistent
[45]

with the provisions of the LGC.

(2) As discussed earlier, under the general welfare clause of the LGC, local
government units have the power, inter alia, to enact ordinances to enhance
the right of the people to a balanced ecology. It likewise specifically vests
municipalities with the power to grant fishery privileges in municipal waters, and
impose rentals, fees or charges therefor; to penalize, by appropriate
ordinances, the use of explosives, noxious or poisonous substances,
electricity, muro-ami, and other deleterious methods of fishing; and to
prosecute other methods of fishing; and to prosecute any violation of the
provisions of applicable fishing laws. Finally, it imposes upon the sangguniang
[46]

bayan, the sangguniang panlungsod, and the sangguniang panlalawigan the

duty to enact ordinances to [p]rotect the environment and impose appropriate
penalties for acts which endanger the environment such as dynamite fishing
and other forms of destructive fishing and such other activities which result in
pollution, acceleration of eutrophication of rivers and lakes or of ecological
imbalance. [47]

In closing, we commend the Sangguniang Panlungsod of the City of Puerto

Princesa and Sangguniang Panlalawigan of the Province of Palawan for
exercising the requisite political will to enact urgently needed legislation to
protect and enhance the marine environment, thereby sharing in the herculean
task of arresting the tide of ecological destruction. We hope that other local
government units shall now be roused from their lethargy and adopt a more
vigilant stand in the battle against the decimation of our legacy to future
generations. At this time, the repercussions of any further delay in their
response may prove disastrous, if not, irreversible.
 WHEREFORE, the instant petition is DISMISSED for lack of merit and the
temporary restraining order issued on 11 November 1993 is LIFTED.
No pronouncement as to costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 161107 March 12, 2013

HON. MA. LOURDES C. FERNANDO, in her capacity as City Mayor of Marikina City,
JOSEPHINE C. EVANGELIST A, in her capacity as Chief, Permit Division, Office of the City
Engineer, and ALFONSO ESPIRITU, in his capacity as City Engineer of Marikina
City, Petitioners,
vs.
ST. SCHOLASTICA'S COLLEGE and ST. SCHOLASTICA'S ACADEMY-MARIKINA,
INC., Respondents.

DECISION

MENDOZA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court, which
seeks to set aside the December 1, 2003 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No.
75691.

The Facts

Respondents St. Scholastica’s College (SSC) and St. Scholastica’s Academy-Marikina, Inc. (SSA-
Marikina) are educational institutions organized under the laws of the Republic of the Philippines,
with principal offices and business addresses at Leon Guinto Street, Malate, Manila, and at West
Drive, Marikina Heights, Marikina City, respectively.2

Respondent SSC is the owner of four (4) parcels of land measuring a total of 56,306.80 square
meters, located in Marikina Heights and covered by Transfer Certificate Title (TCT) No. 91537.
Located within the property are SSA-Marikina, the residence of the sisters of the Benedictine Order,
the formation house of the novices, and the retirement house for the elderly sisters. The property is
enclosed by a tall concrete perimeter fence built some thirty (30) years ago. Abutting the fence along
the West Drive are buildings, facilities, and other improvements.3

The petitioners are the officials of the City Government of Marikina. On September 30, 1994, the
Sangguniang Panlungsod of Marikina City enacted Ordinance No. 192,4 entitled "Regulating the
Construction of Fences and Walls in the Municipality of Marikina." In 1995 and 1998, Ordinance Nos.
2175 and 2006 were enacted to amend Sections 7 and 5, respectively. Ordinance No. 192, as
amended, is reproduced hereunder, as follows:

ORDINANCE No. 192

Series of 1994

ORDINANCE REGULATING THE CONSTRUCTION OF FENCES AND WALLS IN THE

MUNICIPALITY OF MARIKINA

WHEREAS, under Section 447.2 of Republic Act No. 7160 otherwise known as the Local
Government Code of 1991 empowers the Sangguniang Bayan as the local legislative body of the
municipality to "x x x Prescribe reasonable limits and restraints on the use of property within the
jurisdiction of the municipality, x x x";

WHEREAS the effort of the municipality to accelerate its economic and physical development,
coupled with urbanization and modernization, makes imperative the adoption of an ordinance which
shall embody up-to-date and modern technical design in the construction of fences of residential,
commercial and industrial buildings;

WHEREAS, Presidential Decree No. 1096, otherwise known as the National Building Code of the
Philippines, does not adequately provide technical guidelines for the construction of fences, in terms
of design, construction, and criteria;

WHEREAS, the adoption of such technical standards shall provide more efficient and effective
enforcement of laws on public safety and security;

WHEREAS, it has occurred in not just a few occasions that high fences or walls did not actually
discourage but, in fact, even protected burglars, robbers, and other lawless elements from the view
of outsiders once they have gained ingress into these walls, hence, fences not necessarily providing
security, but becomes itself a "security problem";

WHEREAS, to discourage, suppress or prevent the concealment of prohibited or unlawful acts

earlier enumerated, and as guardian of the people of Marikina, the municipal government seeks to
enact and implement rules and ordinances to protect and promote the health, safety and morals of
its constituents;

WHEREAS, consistent too, with the "Clean and Green Program" of the government, lowering of
fences and walls shall encourage people to plant more trees and ornamental plants in their yards,
and when visible, such trees and ornamental plants are expected to create an aura of a clean, green
and beautiful environment for Marikeños;

WHEREAS, high fences are unsightly that, in the past, people planted on sidewalks to "beautify" the
façade of their residences but, however, become hazards and obstructions to pedestrians;

WHEREAS, high and solid walls as fences are considered "un-neighborly" preventing community
members to easily communicate and socialize and deemed to create "boxed-in" mentality among the
populace;

WHEREAS, to gather as wide-range of opinions and comments on this proposal, and as a

requirement of the Local Government Code of 1991 (R.A. 7160), the Sangguniang Bayan of
Marikina invited presidents or officers of homeowners associations, and commercial and industrial
establishments in Marikina to two public hearings held on July 28, 1994 and August 25, 1994;

WHEREAS, the rationale and mechanics of the proposed ordinance were fully presented to the
attendees and no vehement objection was presented to the municipal government;

NOW, THEREFORE, BE IT ORDAINED BY THE SANGGUINANG BAYAN OF MARIKINA IN

SESSION DULY ASSEMBLED:

Section 1. Coverage: This Ordinance regulates the construction of all fences, walls and gates on lots
classified or used for residential, commercial, industrial, or special purposes.

Section 2. Definition of Terms:

a. Front Yard – refers to the area of the lot fronting a street, alley or public thoroughfare.

b. Back Yard – the part of the lot at the rear of the structure constructed therein.

c. Open fence – type of fence which allows a view of "thru-see" of the inner yard and the
improvements therein. (Examples: wrought iron, wooden lattice, cyclone wire)

d. Front gate – refers to the gate which serves as a passage of persons or vehicles fronting a
street, alley, or public thoroughfare.

Section 3. The standard height of fences or walls allowed under this ordinance are as follows:

(1) Fences on the front yard – shall be no more than one (1) meter in height. Fences in
excess of one (1) meter shall be of an open fence type, at least eighty percent (80%) see-
thru; and

(2) Fences on the side and back yard – shall be in accordance with the provisions of P.D.
1096 otherwise known as the National Building Code.

Section 4. No fence of any kind shall be allowed in areas specifically reserved or classified as parks.

Section 5. In no case shall walls and fences be built within the five (5) meter parking area allowance
located between the front monument line and the building line of commercial and industrial
establishments and educational and religious institutions.7

Section 6. Exemption.

(1) The Ordinance does not cover perimeter walls of residential subdivisions.

(2) When public safety or public welfare requires, the Sangguniang Bayan may allow the
construction and/or maintenance of walls higher than as prescribed herein and shall issue a
special permit or exemption.

Section 7. Transitory Provision. Real property owners whose existing fences and walls do not
conform to the specifications herein are allowed adequate period of time from the passage of this
Ordinance within which to conform, as follows:
 (1) Residential houses – eight (8) years

(2) Commercial establishments – five (5) years

(3) Industrial establishments – three (3) years

(4) Educational institutions – five (5) years8 (public and privately owned)

Section 8. Penalty. Walls found not conforming to the provisions of this Ordinance shall be
demolished by the municipal government at the expense of the owner of the lot or structure.

Section 9. The Municipal Engineering Office is tasked to strictly implement this ordinance, including
the issuance of the necessary implementing guidelines, issuance of building and fencing permits,
and demolition of non-conforming walls at the lapse of the grace period herein provided.

Section 10. Repealing Clause. All existing Ordinances and Resolutions, Rules and Regulations
inconsistent with the foregoing provisions are hereby repealed, amended or modified.

Section 11. Separability Clause. If for any reason or reasons, local executive orders, rules and
regulations or parts thereof in conflict with this Ordinance are hereby repealed and/or modified
accordingly.

Section 12. Effectivity. This ordinance takes effect after publication.

APPROVED: September 30, 1994

(Emphases supplied)

On April 2, 2000, the City Government of Marikina sent a letter to the respondents ordering them to
demolish and replace the fence of their Marikina property to make it 80% see-thru, and, at the same
time, to move it back about six (6) meters to provide parking space for vehicles to park.9 On April 26,
2000, the respondents requested for an extension of time to comply with the directive.10 In response,
the petitioners, through then City Mayor Bayani F. Fernando, insisted on the enforcement of the
subject ordinance.

Not in conformity, the respondents filed a petition for prohibition with an application for a writ of
preliminary injunction and temporary restraining order before the Regional Trial Court, Marikina,
Branch 273 (RTC), docketed as SCA Case No. 2000-381-MK.11

The respondents argued that the petitioners were acting in excess of jurisdiction in enforcing
Ordinance No. 192, asserting that such contravenes Section 1, Article III of the 1987 Constitution.
That demolishing their fence and constructing it six (6) meters back would result in the loss of at
least 1,808.34 square meters, worth about ₱9,041,700.00, along West Drive, and at least 1,954.02
square meters, worth roughly ₱9,770,100.00, along East Drive. It would also result in the destruction
of the garbage house, covered walk, electric house, storage house, comfort rooms, guards’ room,
guards’ post, waiting area for visitors, waiting area for students, Blessed Virgin Shrine, P.E. area,
and the multi-purpose hall, resulting in the permanent loss of their beneficial use. The respondents,
thus, asserted that the implementation of the ordinance on their property would be tantamount to an
appropriation of property without due process of law; and that the petitioners could only appropriate
a portion of their property through eminent domain. They also pointed out that the goal of the
provisions to deter lawless elements and criminality did not exist as the solid concrete walls of the
school had served as sufficient protection for many years.12

The petitioners, on the other hand, countered that the ordinance was a valid exercise of police
power, by virtue of which, they could restrain property rights for the protection of public safety,
health, morals, or the promotion of public convenience and general prosperity.13

On June 30, 2000, the RTC issued a writ of preliminary injunction, enjoining the petitioners from
implementing the demolition of the fence at SSC’s Marikina property.14

Ruling of the RTC

On the merits, the RTC rendered a Decision,15 dated October 2, 2002, granting the petition and
ordering the issuance of a writ of prohibition commanding the petitioners to permanently desist from
enforcing or implementing Ordinance No. 192 on the respondents’ property.

The RTC agreed with the respondents that the order of the petitioners to demolish the fence at the
SSC property in Marikina and to move it back six (6) meters would amount to an appropriation of
property which could only be done through the exercise of eminent domain. It held that the
petitioners could not take the respondents’ property under the guise of police power to evade the
payment of just compensation.

It did not give weight to the petitioners’ contention that the parking space was for the benefit of the
students and patrons of SSA-Marikina, considering that the respondents were already providing for
sufficient parking in compliance with the standards under Rule XIX of the National Building Code.

It further found that the 80% see-thru fence requirement could run counter to the respondents’ right
to privacy, considering that the property also served as a residence of the Benedictine sisters, who
were entitled to some sense of privacy in their affairs. It also found that the respondents were able to
prove that the danger to security had no basis in their case. Moreover, it held that the purpose of
beautification could not be used to justify the exercise of police power.

It also observed that Section 7 of Ordinance No. 192, as amended, provided for retroactive
application. It held, however, that such retroactive effect should not impair the respondents’ vested
substantive rights over the perimeter walls, the six-meter strips of land along the walls, and the
building, structures, facilities, and improvements, which would be destroyed by the demolition of the
walls and the seizure of the strips of land.

The RTC also found untenable the petitioners’ argument that Ordinance No. 192 was a remedial or
curative statute intended to correct the defects of buildings and structures, which were brought about
by the absence or insufficiency of laws. It ruled that the assailed ordinance was neither remedial nor
curative in nature, considering that at the time the respondents’ perimeter wall was built, the same
was valid and legal, and the ordinance did not refer to any previous legislation that it sought to
correct.

The RTC noted that the petitioners could still take action to expropriate the subject property through
eminent domain.

The RTC, thus, disposed:

WHEREFORE, the petition is GRANTED. The writ of prohibition is hereby issued commanding the
respondents to permanently desist from enforcing or implementing Ordinance No. 192, Series of
1994, as amended, on petitioners’ property in question located at Marikina Heights, Marikina, Metro
Manila.

No pronouncement as to costs.

SO ORDERED.16

Ruling of the CA

In its December 1, 2003 Decision, the CA dismissed the petitioners’ appeal and affirmed the RTC
decision.

The CA reasoned out that the objectives stated in Ordinance No. 192 did not justify the exercise of
police power, as it did not only seek to regulate, but also involved the taking of the respondents’
property without due process of law. The respondents were bound to lose an unquantifiable sense of
security, the beneficial use of their structures, and a total of 3,762.36 square meters of property. It,
thus, ruled that the assailed ordinance could not be upheld as valid as it clearly invaded the personal
and property rights of the respondents and "[f]or being unreasonable, and undue restraint of trade."17

It noted that although the petitioners complied with procedural due process in enacting Ordinance
No. 192, they failed to comply with substantive due process. Hence, the failure of the respondents to
attend the public hearings in order to raise objections did not amount to a waiver of their right to
question the validity of the ordinance.

The CA also shot down the argument that the five-meter setback provision for parking was a legal
easement, the use and ownership of which would remain with, and inure to, the benefit of the
respondents for whom the easement was primarily intended. It found that the real intent of the
setback provision was to make the parking space free for use by the public, considering that such
would cease to be for the exclusive use of the school and its students as it would be situated outside
school premises and beyond the school administration’s control.

In affirming the RTC ruling that the ordinance was not a curative statute, the CA found that the
petitioner failed to point out any irregularity or invalidity in the provisions of the National Building
Code that required correction or cure. It noted that any correction in the Code should be properly
undertaken by the Congress and not by the City Council of Marikina through an ordinance.

The CA, thus, disposed:

WHEREFORE, all foregoing premises considered, the instant appeal is DENIED. The October 2,
1âwphi 1

2002 Decision and the January 13, 2003 Order of the Regional Trial Court (RTC) of Marikina City,
Branch 273, granting petitioners-appellees’ petition for Prohibition in SCA Case No. 2000-381-MK
are hereby AFFIRMED.

SO ORDERED.18

Aggrieved by the decision of the CA, the petitioners are now before this Court presenting the
following

ASSIGNMENT OF ERRORS
 1. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN DECLARING
THAT CITY ORDINANCE NO. 192, SERIES OF 1994 IS NOT A VALID EXERCISE OF
POLICE POWER;

2. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN RULING

THAT THE AFOREMENTIONED ORDINANCE IS AN EXERCISE OF THE CITY OF THE
POWER OF EMINENT DOMAIN;

3. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN DECLARING

THAT THE CITY VIOLATED THE DUE PROCESS CLAUSE IN IMPLEMENTING
ORDINANCE NO. 192, SERIES OF 1994; AND

4. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN RULING

THAT THE ABOVE-MENTIONED ORDINANCE CANNOT BE GIVEN RETROACTIVE
APPLICATION.19

In this case, the petitioners admit that Section 5 of the assailed ordinance, pertaining to the five-
meter setback requirement is, as held by the lower courts, invalid.20 Nonetheless, the petitioners
argue that such invalidity was subsequently cured by Zoning Ordinance No. 303, series of 2000.
They also contend that Section 3, relating to the 80% see-thru fence requirement, must be complied
with, as it remains to be valid.

Ruling of the Court

The ultimate question before the Court is whether Sections 3.1 and 5 of Ordinance No. 192 are valid
exercises of police power by the City Government of Marikina.

"Police power is the plenary power vested in the legislature to make statutes and ordinances to
promote the health, morals, peace, education, good order or safety and general welfare of the
people."21 The State, through the legislature, has delegated the exercise of police power to local
government units, as agencies of the State. This delegation of police power is embodied in Section
1622 of the Local Government Code of 1991 (R.A. No. 7160), known as the General Welfare
Clause,23 which has two branches. "The first, known as the general legislative power, authorizes the
municipal council to enact ordinances and make regulations not repugnant to law, as may be
necessary to carry into effect and discharge the powers and duties conferred upon the municipal
council by law. The second, known as the police power proper, authorizes the municipality to enact
ordinances as may be necessary and proper for the health and safety, prosperity, morals, peace,
good order, comfort, and convenience of the municipality and its inhabitants, and for the protection
of their property."24

White Light Corporation v. City of Manila,25 discusses the test of a valid ordinance:

The test of a valid ordinance is well established. A long line of decisions including City of Manila has
held that for an ordinance to be valid, it must not only be within the corporate powers of the local
government unit to enact and pass according to the procedure prescribed by law, it must also
conform to the following substantive requirements: (1) must not contravene the

Constitution or any statute; (2) must not be unfair or oppressive; (3) must not be partial or
discriminatory; (4) must not prohibit but may regulate trade; (5) must be general and consistent with
public policy; and (6) must not be unreasonable.26
Ordinance No. 192 was passed by the City Council of Marikina in the apparent exercise of its police
power. To successfully invoke the exercise of police power as the rationale for the enactment of an
ordinance and to free it from the imputation of constitutional infirmity, two tests have been used by
the Court – the rational relationship test and the strict scrutiny test:

We ourselves have often applied the rational basis test mainly in analysis of equal protection
challenges. Using the rational basis examination, laws or ordinances are upheld if they rationally
further a legitimate governmental interest. Under intermediate review, governmental interest is
extensively examined and the availability of less restrictive measures is considered. Applying strict
scrutiny, the focus is on the presence of compelling, rather than substantial, governmental interest
and on the absence of less restrictive means for achieving that interest.27

Even without going to a discussion of the strict scrutiny test, Ordinance No. 192, series of 1994 must
be struck down for not being reasonably necessary to accomplish the City’s purpose. More
importantly, it is oppressive of private rights.

Under the rational relationship test, an ordinance must pass the following requisites as discussed in
Social Justice Society (SJS) v. Atienza, Jr.:28

As with the State, local governments may be considered as having properly exercised their police
power only if the following requisites are met: (1) the interests of the public generally, as
distinguished from those of a particular class, require its exercise and (2) the means employed are
reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon
individuals. In short, there must be a concurrence of a lawful subject and lawful method.29

Lacking a concurrence of these two requisites, the police power measure shall be struck down as an
arbitrary intrusion into private rights and a violation of the due process clause.30

Section 3.1 and 5 of the assailed ordinance are pertinent to the issue at hand, to wit:

Section 3. The standard height of fences of walls allowed under this ordinance are as follows:

(1) Fences on the front yard – shall be no more than one (1) meter in height. Fences in excess of
one (1) meter shall be an open fence type, at least eighty percent (80%) see-thru;

xxx xxx xxx

Section 5. In no case shall walls and fences be built within the five (5) meter parking area allowance
located between the front monument line and the building line of commercial and industrial
establishments and educational and religious institutions.

The respondents, thus, sought to prohibit the petitioners from requiring them to (1) demolish their
existing concrete wall, (2) build a fence (in excess of one meter) which must be 80% see-thru, and
(3) build the said fence six meters back in order to provide a parking area.

Setback Requirement

The Court first turns its attention to Section 5 which requires the five-meter setback of the fence to
provide for a parking area. The petitioners initially argued that the ownership of the parking area to
be created would remain with the respondents as it would primarily be for the use of its students and
faculty, and that its use by the public on non-school days would only be incidental. In their Reply,
however, the petitioners admitted that Section 5 was, in fact, invalid for being repugnant to the
Constitution.31

The Court agrees with the latter position.

The Court joins the CA in finding that the real intent of the setback requirement was to make the
parking space free for use by the public, considering that it would no longer be for the exclusive use
of the respondents as it would also be available for use by the general public. Section 9 of Article III
of the 1987 Constitution, a provision on eminent domain, provides that private property shall not be
taken for public use without just compensation.

The petitioners cannot justify the setback by arguing that the ownership of the property will continue
to remain with the respondents. It is a settled rule that neither the acquisition of title nor the total
destruction of value is essential to taking. In fact, it is usually in cases where the title remains with
the private owner that inquiry should be made to determine whether the impairment of a property is
merely regulated or amounts to a compensable taking.32 The Court is of the view that the
implementation of the setback requirement would be tantamount to a taking of a total of 3,762.36
square meters of the respondents’ private property for public use without just compensation, in
contravention to the Constitution.

Anent the objectives of prevention of concealment of unlawful acts and "un-neighborliness," it is

obvious that providing for a parking area has no logical connection to, and is not reasonably
necessary for, the accomplishment of these goals.

Regarding the beautification purpose of the setback requirement, it has long been settled that the
State may not, under the guise of police power, permanently divest owners of the beneficial use of
their property solely to preserve or enhance the aesthetic appearance of the community.33 The
Court, thus, finds Section 5 to be unreasonable and oppressive as it will substantially divest the
respondents of the beneficial use of their property solely for aesthetic purposes. Accordingly, Section
5 of Ordinance No. 192 is invalid.

The petitioners, however, argue that the invalidity of Section 5 was properly cured by Zoning
Ordinance No. 303,34Series of 2000, which classified the respondents’ property to be within an
institutional zone, under which a five-meter setback has been required.

The petitioners are mistaken. Ordinance No. 303, Series of 2000, has no bearing to the case at
hand.

The Court notes with displeasure that this argument was only raised for the first time on appeal in
this Court in the petitioners’ Reply. Considering that Ordinance No. 303 was enacted on December
20, 2000, the petitioners could very well have raised it in their defense before the RTC in 2002. The
settled rule in this jurisdiction is that a party cannot change the legal theory of this case under which
the controversy was heard and decided in the trial court. It should be the same theory under which
the review on appeal is conducted. Points of law, theories, issues, and arguments not adequately
brought to the attention of the lower court will not be ordinarily considered by a reviewing court,
inasmuch as they cannot be raised for the first time on appeal. This will be offensive to the basic
rules of fair play, justice, and due process.35

Furthermore, the two ordinances have completely different purposes and subjects. Ordinance No.
192 aims to regulate the construction of fences, while Ordinance No. 303 is a zoning ordinance
which classifies the city into specific land uses. In fact, the five-meter setback required by Ordinance
No. 303 does not even appear to be for the purpose of providing a parking area.
By no stretch of the imagination, therefore, can Ordinance No. 303, "cure" Section 5 of Ordinance
No. 192.

In any case, the clear subject of the petition for prohibition filed by the respondents is Ordinance No.
192 and, as such, the precise issue to be determined is whether the petitioners can be prohibited
from enforcing the said ordinance, and no other, against the respondents.

80% See-Thru Fence Requirement

The petitioners argue that while Section 5 of Ordinance No. 192 may be invalid, Section 3.1 limiting
the height of fences to one meter and requiring fences in excess of one meter to be at least 80%
see-thru, should remain valid and enforceable against the respondents.

The Court cannot accommodate the petitioner.

For Section 3.1 to pass the rational relationship test, the petitioners must show the reasonable
relation between the purpose of the police power 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.36

The principal purpose of Section 3.1 is "to discourage, suppress or prevent the concealment of
prohibited or unlawful acts." The ultimate goal of this objective is clearly the prevention of crime to
ensure public safety and security. The means employed by the petitioners, however, is not
reasonably necessary for the accomplishment of this purpose and is unduly oppressive to private
rights. The petitioners have not adequately shown, and it does not appear obvious to this Court, that
an 80% see-thru fence would provide better protection and a higher level of security, or serve as a
more satisfactory criminal deterrent, than a tall solid concrete wall. It may even be argued that such
exposed premises could entice and tempt would-be criminals to the property, and that a see-thru
fence would be easier to bypass and breach. It also appears that the respondents’ concrete wall has
served as more than sufficient protection over the last 40 years. `

As to the beautification purpose of the assailed ordinance, as previously discussed, the State may
not, under the guise of police power, infringe on private rights solely for the sake of the aesthetic
appearance of the community. Similarly, the Court cannot perceive how a see-thru fence will foster
"neighborliness" between members of a community.

Compelling the respondents to construct their fence in accordance with the assailed ordinance is,
thus, a clear encroachment on their right to property, which necessarily includes their right to decide
how best to protect their property.

It also appears that requiring the exposure of their property via a see-thru fence is violative of their
right to privacy, considering that the residence of the Benedictine nuns is also located within the
property. The right to privacy has long been considered a fundamental right guaranteed by the
Constitution that must be protected from intrusion or constraint. The right to privacy is essentially the
right to be let alone,37 as governmental powers should stop short of certain intrusions into the
personal life of its citizens.38 It is inherent in the concept of liberty, enshrined in the Bill of Rights
(Article III) in Sections 1, 2, 3(1), 6, 8, and 17, Article III of the 1987 Constitution.39

The enforcement of Section 3.1 would, therefore, result in an undue interference with the
respondents’ rights to property and privacy. Section 3.1 of Ordinance No. 192 is, thus, also invalid
and cannot be enforced against the respondents.
No Retroactivity

Ordinance No. 217 amended Section 7 of Ordinance No. 192 by including the regulation of
educational institutions which was unintentionally omitted, and giving said educational institutions
five (5) years from the passage of Ordinance No. 192 (and not Ordinance No. 217) to conform to its
provisions.40 The petitioners argued that the amendment could be retroactively applied because the
assailed ordinance is a curative statute which is retroactive in nature.

Considering that Sections 3.1 and 5 of Ordinance No. 192 cannot be enforced against the
respondents, it is no longer necessary to rule on the issue of retroactivity. The Court shall,
nevertheless, pass upon the issue for the sake of clarity.

"Curative statutes are enacted to cure defects in a prior law or to validate legal proceedings which
would otherwise be void for want of conformity with certain legal requirements. They are intended to
supply defects, abridge superfluities and curb certain evils. They are intended to enable persons to
carry into effect that which they have designed or intended, but has failed of expected legal
consequence by reason of some statutory disability or irregularity in their own action. They make
valid that which, before the enactment of the statute was invalid. Their purpose is to give validity to
acts done that would have been invalid under existing laws, as if existing laws have been complied
with. Curative statutes, therefore, by their very essence, are retroactive."41

The petitioners argue that Ordinance No. 192 is a curative statute as it aims to correct or cure a
defect in the National Building Code, namely, its failure to provide for adequate guidelines for the
construction of fences. They ultimately seek to remedy an insufficiency in the law. In aiming to cure
this insufficiency, the petitioners attempt to add lacking provisions to the National Building Code.
This is not what is contemplated by curative statutes, which intend to correct irregularities or
invalidity in the law. The petitioners fail to point out any irregular or invalid provision. As such, the
assailed ordinance cannot qualify as curative and retroactive in nature.

At any rate, there appears to be no insufficiency in the National Building Code with respect to
parking provisions in relation to the issue of the respondents. Paragraph 1.16.1, Rule XIX of the
Rules and Regulations of the said code requires an educational institution to provide one parking
slot for every ten classrooms. As found by the lower courts, the respondents provide a total of 76
parking slots for their 80 classrooms and, thus, had more than sufficiently complied with the law.

Ordinance No. 192, as amended, is, therefore, not a curative statute which may be applied
retroactively.

Separability

Sections 3.1 and 5 of Ordinance No. 192, as amended, are, thus, invalid and cannot be enforced
against the respondents. Nonetheless, "the general rule is that where part of a statute is void as
repugnant to the Constitution, while another part is valid, the valid portion, if susceptible to being
separated from the invalid, may stand and be enforced."42 Thus, the other sections of the assailed
ordinance remain valid and enforceable.

Conclusion

Considering the invalidity of Sections 3.1 and 5, it is clear that the petitioners were acting in excess
of their jurisdiction in enforcing Ordinance No. 192 against the respondents. The CA was correct in
affirming the decision of the RTC in issuing the writ of prohibition. The petitioners must permanently
desist from enforcing Sections 3.1 and 5 of the assailed ordinance on the respondents' property in
Marikina City.

WHEREFORE, the petition is DENIED. The October 2, 2002 Decision of the Regional Trial Court in
SCA Case No. 2000-381-MK is AFFIRMED but MODIFIED to read as follows:

WHEREFORE, the petition is GRANTED. The writ of prohibition is hereby issued commanding the
respondents to permanently desist from enforcing or implementing Sections 3.1 and 5 of Ordinance
No. 192, Series of 1994, as amended, on the petitioners' property in question located in Marikina
Heights, Marikina, Metro Manila.

No pronouncement as to costs.

SO ORDERED.
EN BANC

April 25, 2017

G.R. No. 199669

SOUTHERN LUZON DRUG CORPORATION, Petitioner,

vs.
THE DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT, THE NATIONAL COUNCIL
FOR THE WELFARE OF DISABLED PERSONS, THE DEPARTMENT OF FINANCE, and THE
BUREAU OF INTERNAL REVENUE, Respondents

DECISION

REYES, J.:

Before the Court is a Petition for Review on Certiorari1under Rule 45 of the Rules of Court, assailing
the Decision2dated June 17, 2011, and Resolution3 dated November 25, 2011 of the Court of
Appeals (CA) in CA-G.R. SP No. 102486, which dismissed the petition for prohibition filed by
Southern Luzon Drug Corporation (petitioner) against the Department of1 Social Welfare and
Development (DSWD), the National Council for the Welfare of Disabled Persons (NCWDP) (now
National Council on Disability Affairs or NCDA), the Department of Finance (DOF) and the Bureau
of: Internal Revenue (collectively, the respondents), which sought to prohibit the implementation of
Section 4(a) of Republic Act (R.A.) No. 9257, otherwise known as the "Expanded Senior Citizens Act
of 2003" and Section 32 of R.A. No. 9442, which amends the "Magna Carta for Disabled
Persons," particularly the granting of 20% discount on the purchase of medicines by senior citizens
and persons with disability (PWD),: respectively, and treating them as tax deduction.
The petitioner is a domestic corporation engaged in the business of: drugstore operation in the
Philippines while the respondents are government' agencies, office and bureau tasked to monitor
compliance with R.A. Nos. 9257 and 9442, promulgate implementing rules and regulations for their
effective implementation, as well as prosecute and revoke licenses of erring1 establishments.

Factual Antecedents

On April 23, 1992, R.A. No. 7432, entitled "An Act to Maximize the Contribution of Senior Citizens to
Nation-Building, Grant Benefits and Special Privileges and For Other Purposes," was enacted.
Under the said law, a senior citizen, who must be at least 60 years old and has an annual income of
not more than P60,000.00,4 may avail of the privileges provided in Section 4 thereof, one of which is
20% discount on the purchase of medicines. The said provision states:

Sec. 4. Privileges for the Senior Citizen. - x x x:

a) the grant of twenty percent (20%) discount from all establishments relative to utilization of
transportation services, hotels and similar lodging establishment, restaurants and recreation centers
and purchase of medicine anywhere in the country: Provided, That private establishments may
claim the cost as tax credit[.]

x x x x (Emphasis ours)

To recoup the amount given as discount to qualified senior citizens, covered establishments can
claim an equal amount as tax credit which can be applied against the income tax due from them.

On February 26, 2004, then President Gloria Macapagal-Arroyo signed R.A. No. 9257, amending
some provisions of R.A. No. 7432. The new law retained the 20% discount on the purchase of
medicines but removed the annual income ceiling thereby qualifying all senior citizens to the
privileges under the law. Further, R.A. No. 9257 modified the tax treatment of the discount granted to
senior citizens, from tax credit to tax deduction from gross income, computed based on the net cost
of goods sold or services rendered. The pertinent provision, as amended by R.A. No. 9257, reads as
follows:

SEC. 4. Privileges for the Senior Citizens. - The senior citizens shall be entitled to the following:

(a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of
services in hotels and similar lodging establishments, restaurants and recreation centers, and
purchase of medicines in all establishments for the exclusive use or enjoyment of senior citizens,
including funeral and burial services for the death of senior citizens;

xxxx

The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax deduction
based on the net cost of the goods sold or services rendered: Provided, That the cost of the
discount shall be allowed as deduction from gross income for the same taxable year that the
discount is granted. Provided, further, That the total amount of the claimed tax deduction net of
value-added tax if applicable, shall be included in their gross sales receipts for tax purposes and
shall be subject to proper documentation and to the provisions of the National Internal Revenue
Code, as amended. (Emphasis ours)
On May 28, 2004, the DSWD issued the Implementing Rules and Regulations (IRR) of R.A. No.
9257. Article 8 of Rule VI of the said IRR provides:

Article 8. Tax Deduction of Establishments. - The establishment may claim the discounts granted
under Rule V, Section 4 - Discounts for Establishments; Section 9, Medical and Dental Services in
Private Facilities and Sections 10 and 11 -Air, Sea and Land Transportation as tax deduction based
on the net cost of the goods sold or services rendered. Provided, That the cost of the discount
shall be allowed as deduction from gross income for the same taxable year that the discount
is granted; Provided, further, That the total amount of the claimed tax deduction net of value-added
tax if applicable, shall be included in their gross sales receipts for tax purposes and shall be subject
to proper documentation and to the provisions of the National Internal Revenue Code, as amended;
Provided, finally, that the implementation of the tax deduction shall be subject to the Revenue
Regulations to be issued by the Bureau of Internal Revenue (BIR) and approved by the Department
of Finance (DOF). (Emphasis ours)

The change in the tax treatment of the discount given to senior citizens did not sit well with some
drug store owners and corporations, claiming it affected the profitability of their business. Thus, on
January 13, 2005, I Carlos Superdrug Corporation (Carlos Superdrug), together with other.
corporation and proprietors operating drugstores in the Philippines, filed a Petition for Prohibition
with Prayer for Temporary Restraining Order (TRO) I and/or Preliminary Injunction before this Court,
entitled Carlos Superdrug I Corporation v. DSWD,5docketed as G.R. No. 166494, assailing the
constitutionality of Section 4(a) of R.A. No. 9257 primarily on the ground that it amounts to taking of
private property without payment of just compensation. In a Decision dated June 29, 2007, the Court
upheld the constitutionality of the assailed provision, holding that the same is a legitimate exercise of
police power. The relevant portions of the decision read, thus:

The law is a legitimate exercise of police power which, similar to the power of eminent domain, has
general welfare for its object. Police power is not capable of an exact definition, but has been
purposely veiled in general terms to underscore its comprehensiveness to meet all exigencies and
provide enough room for an efficient and flexible response to conditions and circumstances, thus
assuring the greatest benefits. Accordingly, it has been described as "the most essential, insistent
and the least limitable of powers, extending as it does to all the great public needs." It is "[t]he power
vested in the legislature by the constitution to make, ordain, and establish all manner of wholesome
and reasonable laws, statutes, and ordinances, either with penalties or without, not repugnant to the
constitution, as they shall judge to be for the good and welfare of the commonwealth, and of the
subjects of the same."

For this reason, when the conditions so demand as determined by the legislature, property rights
must bow to the primacy of police power because property rights, though sheltered by due process,
must yield to general welfare.

xxxx

Moreover, the right to property has a social dimension. While Article XIII of the Constitution provides
the precept for the protection of property, various laws and jurisprudence, particularly on agrarian
reform and the regulation of contracts and public utilities, continuously serve as a reminder that the
right to property can be relinquished upon the command of the State for the promotion of public
good. Undeniably, the success of the senior citizens program rests largely on the support imparted
by petitioners and the other private establishments concerned. This being the case, the means
employed in invoking the active participation of the private sector, in order to achieve the purpose or
objective of the law, is reasonably and directly related. Without sufficient proof that Section 4(a) of
RA. No. 9257 is arbitrary, and that the continued implementation of the same would be
unconscionably detrimental to petitioners, the Court will refrain from quashing a legislative act.

WHEREFORE, the petition is DISMISSED for lack of merit.6 (Citations omitted)

On August 1, 2007, Carlos Superdrug filed a motion for reconsideration of the foregoing decision.
Subsequently, the Court issued Resolution dated August 21, 2007, denying the said motion with
finality. 7

Meanwhile, on March 24, 1992, R.A. No. 7277 pertaining to the "Magna Carta for Disabled
Persons" was enacted, codifying the rights and privileges of PWDs. Thereafter, on April 30, 2007,
R.A. No. 9442 was enacted, amending R.A. No. 7277. One of the salient amendments in the law is
the insertion of Chapter 8 in Title 2 thereof, which enumerates the other privileges and incentives of
PWDs, including the grant of 20% discount on the purchase of medicines. Similar to R.A. No. 9257,
covered establishments shall claim the discounts given to PWDs as tax deductions from the gross
income, based on the net cost of goods sold or services rendered. Section 32 ofR.A. No. 9442
reads:

CHAPTER 8. Other Privileges and Incentives

SEC. 32. Persons with disability shall be entitled to the following:

xxxx

(c) At least twenty percent (20%) discount for the purchase of medicines in all drugstores for the
exclusive use or enjoyment of persons with disability;

xxxx

The establishments may claim the discounts granted in subsections (a), (b), (c), (e), (t) and (g)
as taxdeductions based on the net cost of the goods sold or services rendered: Provided,
however, That the cost of the discount shall be allowed as deduction from gross income for the
same taxable year that the discount is granted: Provided, further, That the total amount of the
claimed tax deduction net of value-added tax if applicable, shall be included in their gross sales
receipts for tax purposes and shall be subject to proper documentation and to the provisions of the
National Internal Revenue Code (NIRC), as amended. (Emphasis ours)

Pursuant to the foregoing, the IRR of R.A. No. 9442 was promulgated by the DSWD, Department of
Education, DOF, Department of Tourism and the Department of Transportation and
Communications.8Sections 5 .1 and 6.1.d thereof provide:

Sec. 5. Definition of Terms. For purposes of these Rules and Regulations, these terms are defined
as follows:

5.1. Persons with Disability are those individuals defined under Section 4 of RA
7277, "An Act Providing for the Rehabilitation, Self-Development and Self-Reliance
of Persons with Disability as amended and their integration into the Mainstream of
Society and for Other Purposes." This is defined as a person suffering from
restriction or different abilities, as a result of a mental, physical or sensory
impairment, to perform an activity in a manner or within the range considered normal
for human being. Disability shall mean: (1) a physical or mental impairment that
 substantially limits one or more psychological, physiological or anatomical function of
an individual or activities of such individual; (2) a record of such an impairment; or (3)
being regarded as having such an impairment.

xxxx

6.1.d Purchase of Medicine - At least twenty percent (20%) discount on the

purchase of medicine for the exclusive use and enjoyment of persons with disability.
All drug stores, hospital, pharmacies, clinics and other similar establishments selling
medicines are required to provide at least twenty percent (20%) discount subject to
the guidelines issued by DOH and PHILHEALTH.

On February 26, 2008, the petitioner filed a Petition for Prohibition with Application for TRO and/or
Writ of Preliminary Injunction9 with the CA, seeking to declare as unconstitutional (a) Section 4(a) of
R.A. No. 9257, and (b) Section 32 of R.A. No. 9442 and Section 5.1 of its IRR, insofar as these
provisions only allow tax deduction on the gross income based on the net cost of goods sold or
services rendered as compensation to private establishments for the 20% discount that they are
required to grant to senior citizens and PWDs. Further, the petitioner prayed that the respondents be
permanently enjoined from implementing the assailed provisions.

Ruling of the CA

On June 17, 2011, the CA dismissed the petition, reiterating the ruling of the Court in Carlos
Superdrug10particularly that Section 4(a) of R.A. No. 9257 was a valid exercise of police power.
Moreover, the CA held that considering that the same question had been raised by parties similarly
situated and was resolved in Carlos Superdrug, the rule of stare decisis stood as a hindrance to any
further attempt to relitigate the same issue. It further noted that jurisdictional considerations also
compel the dismissal of the action. It particularly emphasized that it has no original or appellate
jurisdiction to pass upon the constitutionality of the assailed laws, 11 the same pertaining to the
Regional Trial Court (RTC). Even assuming that it had concurrent jurisdiction with the RTC, the
principle of hierarchy of courts mandates that the case be commenced and heard by the lower
court. 12 The CA further ruled that the petitioner resorted to the wrong remedy as a petition for
prohibition will not lie to restrain the actions of the respondents for the simple reason that they do not
exercise judicial, quasi-judicial or ministerial duties relative to the issuance or implementation of the
questioned provisions. Also, the petition was wanting of the allegations of the specific acts
committed by the respondents that demonstrate the exercise of these powers which may be properly
challenged in a petition for prohibition.13

The petitioner filed its Motion for Reconsideration 14 of the Decision dated June 17, 2011 of the CA,
but the same was denied in a Resolution 15 dated November 25, 2011.

Unyielding, the petitioner filed the instant petition, raising the following assignment of errors, to wit:

THE CA SERIOUSLY ERRED WHEN IT RULED THAT A PETITION FOR PROHIBITION FILED
WITH THE CA IS AN IMPROPER REMEDY TO ASSAIL THE CONSTITUTIONALITY OF THE
20%, SALES DISCOUNT FOR SENIOR CITIZENS AND PWDs;

II
THE CA SERIOUSLY ERRED WHEN IT HELD THAT THE SUPREME COURT'S RULING
IN CARLOS SUPERDRUG CONSTITUTES STARE DECISIS;

III

THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT THE

20%, SALES DISCOUNT FOR SENIOR CITIZENS AND PWDs IS A VALID EXERCISE OF
POLICE POWER. ON THE CONTRARY, IT IS AN INVALID EXERCISE OF THE POWER OF
EMINENT DOMAIN BECAUSE IT FAILS TO PROVIDE JUST COMPENSATION TO THE
PETITIONER AND OTHER SIMILARLY SITUATED DRUGSTORES;

IV

THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT THE

20°/o SALES DISCOUNT FOR SENIOR CITIZENS AND PWDs DOES NOT VIOLATE THE
PETITIONER'S RIGHT TO EQUAL PROTECTION OF THE LAW; and

THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT THE

DEFINITIONS OF DISABILITIES AND PWDs ARE NOT VAGUE AND DO NOT VIOLATE THE
PETITIONER'S RIGHT TO DUE PROCESS OF LAW.16

Ruling of the Court

Prohibition may be filed to question

the constitutionality of a law

In the assailed decision, the CA noted that the action, although denominated as one for prohibition,
seeks the declaration of the unconstitutionality of Section 4(a) of R.A. No. 9257 and Section 32 of
R.A. No.9442. It held that in such a case, the proper remedy is not a special civil 1 action but a
petition for declaratory relief, which falls under the exclusive original jurisdiction of the RTC, in the
first instance, and of the Supreme Court, on appeal. 17

The Court clarifies.

Generally, the office of prohibition is to prevent the unlawful and oppressive exercise of authority and
is directed against proceedings that are done without or in excess of jurisdiction, or with grave abuse
of discretion, there being no appeal or other plain, speedy, and adequate remedy in the ordinary
course of law. It is the remedy to prevent inferior courts, corporations, boards, or persons from
usurping or exercising a jurisdiction or power with which they have not been vested by law. 18 This is,
however, not the lone office of an action for prohibition. In Diaz, et al. v. The Secretary of Finance, et
al., 19 prohibition was also recognized as a proper remedy to prohibit or nullify acts of executive
officials that amount to usurpation of legislative authority. 20 And, in a number of jurisprudence,
prohibition was allowed as a proper action to assail the constitutionality of a law or prohibit its
implementation.

In Social Weather Stations, Inc. v. Commission on Elections,21therein petitioner filed a petition for
prohibition to assail the constitutionality of Section 5.4 of R.A. No. 9006, or the "Fair Elections
Act," which prohibited the publication of surveys within 15 days before an election for national
candidates, and seven days for local candidates. Included in the petition is a prayer to prohibit the
Commission on Elections from enforcing the said provision. The Court granted the Petition and
struck down the assailed provision for being unconstitutional. 22

In Social Justice Society (SJS) v. Dangerous Drugs Board, et al.,23 therein petitioner assailed the
constitutionality of paragraphs (c ), (d), (f) and (g) of Section 36 of R.A. No. 9165, otherwise known
as the "Comprehensive Dangerous Drugs Act of 2002," on the ground that they constitute undue
delegation of legislative power for granting unbridled discretion to schools and private employers in
determining the manner of drug 'testing of their employees, and that the law constitutes a violation of
the right against unreasonable searches and seizures. It also sought to enjoin the Dangerous Drugs
Board and the Philippine Drug Enforcement Agency from enforcing the challenged provision.24The
Court partially granted the petition by declaring Section 36(f) and (g) of R.A. No. 9165
unconstitutional, and permanently enjoined the concerned agencies from implementing them. 25

In another instance, consolidated petitions for prohibitions26 questioning the constitutionality of the
Priority Development Assistance Fund were deliberated upon by this Court which ultimately granted
the same.

Clearly, prohibition has been found an appropriate remedy to challenge the constitutionality of
various laws, rules, and regulations.

There is also no question regarding the jurisdiction of the CA to hear and decide a petition for
prohibition. By express provision of the law, particularly Section 9(1) of Batas Pambansa Bilang
129,27 the CA was granted "original jurisdiction to issue writs of mandamus, prohibition, certiorari,
habeas corpus, and quo warranto, and auxiliary writs or I processes, whether or not in aid of its
appellate jurisdiction." This authority· the CA enjoys concurrently with RTCs and this Court.

In the same manner, the supposed violation of the principle of the ·. hierarchy of courts does not
pose any hindrance to the full deliberation of the issues at hand. It is well to remember that "the
judicial hierarchy of courts is not an iron-clad rule. It generally applies to cases involving warring
factual allegations. For this reason, litigants are required to [refer] to the trial courts at the first
instance to determine the truth or falsity of these contending allegations on the basis of the evidence
of the parties. Cases which depend on disputed facts for decision cannot be brought immediately
before appellate courts as they are not triers of facts. Therefore, a strict application of the rule of
hierarchy of courts is not necessary when the cases brought before the appellate courts do not
involve factual but legal questions."28

Moreover, the principle of hierarchy of courts may be set aside for special and important reasons,
such as when dictated by public welfare and ' the advancement of public policy, or demanded by the
broader interest of justice.29Thus, when based on the good judgment of the court, the urgency and
significance of the issues presented calls for its intervention, it should not hesitate to exercise its
duty to resolve.

The instant petition presents an exception to the principle as it basically raises a legal question on
the constitutionality of the mandatory discount and the breadth of its rightful beneficiaries. More
importantly, the resolution of the issues will redound to the benefit of the public as it will put to rest
the questions on the propriety of the granting of discounts to senior citizens and PWDs amid the
fervent insistence of affected establishments that the measure transgresses their property rights.
The Court, therefore, finds it to the best interest of justice that the instant petition be resolved.

The instant case is not barred by

stare decisis
The petitioner contends that the CA erred in holding that the ruling in Carlos Superdrug constitutes
as stare decisis or law of the case which bars the relitigation of the issues that had been resolved
therein and had been raised anew in the instant petition. It argues that there are substantial
differences between Carlos Superdrug and the circumstances in the instant case which take it out
from the operation of the doctrine of stare decisis. It cites that in Carlos Superdrug, the Court denied
the petition because the petitioner therein failed to prove the confiscatory effect of the tax deduction
scheme as no proof of actual loss was submitted. It believes that its submission of financial
statements for the years 2006 and 2007 to prove the confiscatory effect of the law is a material fact
that distinguishes the instant case from that of Carlos Superdrug. 30

The Court agrees that the ruling in Carlos Superdrug does not constitute stare decisis to the instant
case, not because of the petitioner's submission of financial statements which were wanting in the
first case, but because it had the good sense of including questions that had not been raised or
deliberated in the former case of Carlos Superdrug, i.e., validity of the 20% discount granted to
PWDs, the supposed vagueness of the provisions of R.A. No. 9442 and violation of the equal
protection clause.

Nonetheless, the Court finds nothing in the instant case that merits a reversal of the earlier ruling of
the Court in Carlos Superdrug. Contrary to the petitioner's claim, there is a very slim difference
between the issues in Carlos Superdrug and the instant case with respect to the nature of the senior
citizen discount. A perfunctory reading of the circumstances of the two cases easily discloses
marked similarities in the issues and the arguments raised by the petitioners in both cases that
semantics nor careful play of words can hardly obscure.

In both cases, it is apparent that what the petitioners are ultimately questioning is not the grant of the
senior citizen discount per se, but the manner by which they were allowed to recoup the said
discount. In particular, they are protesting the change in the tax treatment of the senior citizen
discount from tax credit to being merely a deduction from gross income which they claimed to have
significantly reduced their profits.

This question had been settled in Carlos Superdrug, where the Court ruled that the change in the tax
treatment of the discount was a valid exercise of police power, thus:

Theoretically, the treatment of the discount as a deduction reduces the net income of the private
establishments concerned. The discounts given would have entered the coffers and formed part of
the gross sales of the private establishments, were it not for R.A. No. 9257.

xxxx

A tax deduction does not offer full reimbursement of the senior citizen discount. As such, it would not
meet the definition of just compensation.

Having said that, this raises the question of whether the State, in promoting the health and welfare of
a special group of citizens, can impose upon private establishments the burden of partly subsidizing
a government program.

The Court believes so.

The Senior Citizens Act was enacted primarily to maximize the contribution of senior citizens to
nation-building, and to grant benefits and privileges to them for their improvement and well-being as
the State considers them an integral part of our society.
The priority given to senior citizens finds its basis in the Constitution as set forth in the law itself.
Thus, the Act provides:

SEC. 2. [R.A.] No. 7432 is hereby amended to read as follows:

SEC. 1. Declaration of Policies and Objectives.- Pursuant to Article XV, Section 4 of the Constitution,
it is the duty of the family to take care of its elderly members while the State may design programs of
social security for them. In addition to this, Section 10 in the Declaration of Principles and State
Policies provides: "The State shall provide social justice in all phases of national development."
Further, Article XIII, Section 11, provides: "The State shall adopt an integrated and comprehensive
approach to health development which shall endeavor to make essential goods, health and other
social services available to all the people at affordable cost. There shall be priority for the needs of
the underprivileged sick, elderly, disabled, women and children." Consonant with these constitutional
principles the following are the declared policies of this Act:

xxxx

(f) To recognize the important role of the private sector in the improvement of the welfare of
senior citizens and to actively seek their partnership.

To implement the above policy, the law grants a twenty percent discount to senior citizens for
medical and dental services, and diagnostic and laboratory fees; admission fees charged by
theaters, concert halls, circuses, carnivals, and other similar places of culture, leisure and
amusement; fares for domestic land, air and sea travel; utilization of services in hotels and similar
lodging establishments, restaurants and recreation centers; and purchases of medicines for the
exclusive use or enjoyment of senior citizens. As a form of reimbursement, the law provides that
business establishments extending the twenty percent discount to senior citizens may claim the
discount as a tax deduction.

The law is a legitimate exercise of police power which, similar to the power of eminent domain, has
general welfare for its object. Police power is not capable of an exact definition, but has been
purposely veiled in general terms to underscore its comprehensiveness to meet all exigencies and
provide enough room for an efficient and flexible response to conditions and circumstances, thus
assuring the greatest benefits. Accordingly, it has been described as "the most essential, insistent
and the least limitable of powers, extending as it does to all the great public needs." It is "[t]he power
vested in the legislature by the constitution to make, ordain, and establish all manner of wholesome
and reasonable laws, statutes, and ordinances, either with penalties or without, not repugnant to the
constitution, as they shall judge to be for the good and welfare of the commonwealth, and of the
subjects of the same."

For this reason, when the conditions so demand as determined by the legislature, property rights
must bow to the primacy of police power because proper rights, though sheltered by due process,
must yield to general welfare. 31 (Citations omitted and emphasis in the original)

Verily, it is the bounden duty of the State to care for the elderly as they reach the point in their lives
when the vigor of their youth has diminished and resources have become scarce. Not much because
of choice, they become needing of support from the society for whom they presumably spent their
productive days and for whose betterment they' exhausted their energy, know-how and experience
to make our days better to live.

In the same way, providing aid for the disabled persons is an equally important State responsibility.
Thus, the State is obliged to give full support to the improvement of the total well-being of disabled
persons and their integration into the mainstream of society. 32This entails the creation of
opportunities for them and according them privileges if only to balance the playing field which had
been unduly tilted against them because of their limitations.

The duty to care for the elderly and the disabled lies not only upon the State, but also on the
community and even private entities. As to the State, the duty emanates from its role as parens
patriae which holds it under obligation to provide protection and look after the welfare of its people
especially those who cannot tend to themselves. Parens patriae means parent of his or her country,
and refers to the State in its role as "sovereign", or the State in its capacity as a provider of
protection to those unable to care for themselves. 33 In fulfilling this duty, the State may resort to the
exercise of its inherent powers: police power, eminent domain and power of taxation.

In Gerochi v. Department of Energy,34the Court passed upon one of the inherent powers of the state,
the police power, where it emphasized, thus:

[P]olice power is the power of the state to promote public welfare by restraining and regulating the
use of liberty and property. It is the most pervasive, the least limitable, and the most demanding of
the three fundamental powers of the State. The justification is found in the Latin maxim salus populi
est suprema lex (the welfare of the people is the supreme law) and sic utere tuo ut alienum non
laedas (so use your property as not to injure the property of others). As an inherent attribute of
sovereignty which virtually extends to all public needs, police power grants a wide panoply of
instruments through which the State, as parens patriae, gives effect to a host of its regulatory
powers. We have held that the power to "regulate" means the power to protect, foster, promote,
preserve, and control, with due regard for the interests, first and foremost, of the public, then of the
utility and of its patrons. 35 (Citations omitted)

It is in the exercise of its police power that the Congress enacted R.A. Nos. 9257 and 9442, the laws
mandating a 20% discount on purchases of medicines made by senior citizens and PWDs. It is also
in further exercise of this power that the legislature opted that the said discount be claimed as tax
deduction, rather than tax credit, by covered establishments.

The petitioner, however, claims that the change in the tax treatment of the discount is illegal as it
constitutes taking without just compensation. It even submitted financial statements for the years
2006 and 2007 to support its claim of declining profits when the change in the policy was
implemented.

The Court is not swayed.

To begin with, the issue of just compensation finds no relevance in the instant case as it had already
been made clear in Carlos Superdrug that the power being exercised by the State in the imposition
of senior citizen discount was its police power. Unlike in the exercise of the power of eminent
domain, just compensation is not required in wielding police power. This is precisely because there
is no taking involved, but only an imposition of burden.

In Manila Memorial Park, Inc., et al. v. Secretary of the DSWD, et al., 36 the Court ruled that by
examining the nature and the effects of R.A. No. 9257, it becomes apparent that the challenged
governmental act was an exercise of police power. It was held, thus:

[W]e now look at the nature and effects of the 20% discount to determine if it constitutes an exercise
of police power or eminent domain.
The 20% discount is intended to improve the welfare of senior citizens who, at their age, are less
likely to be gainfully employed, more prone to illnesses and other disabilities, and, thus, in need of
subsidy in purchasing basic commodities. It may not be amiss to mention also that the discount
serves to honor senior citizens who presumably spent the productive years of their lives on
contributing to the development and progress of the nation. This distinct cultural Filipino practice of
honoring the elderly is an integral part of this law.

As to its nature and effects, the 20% discount is a regulation affecting the ability of private
establishments to price their products and services relative to a special class of individuals, senior
citizens, for which the Constitution affords preferential concern. In turn, this affects the amount of
profits or income/gross sales that a private establishment can derive from senior citizens. In other
words, the subject regulation affects the pricing, and, hence, the profitability of a private
establishment. However, it does not purport to appropriate or burden specific properties, used in the
operation or conduct of the business of private establishments, for the use or benefit of the public, or
senior citizens for that matter, but merely regulates the pricing of goods and services relative to, and
the amount of profits or income/gross sales that such private establishments may derive from, senior
citizens.

The subject regulation may be said to be similar to, but with substantial distinctions from, price
control or rate of 'return on investment control laws which are traditionally regarded as police power
measures. x x x.37 (Citations omitted)

In the exercise of police power, "property rights of private individuals are subjected to restraints and
burdens in order to secure the general comfort, health, and prosperity of the State."38 Even then, the
State's claim of police power cannot be arbitrary or unreasonable. After all, the overriding purpose of
the exercise of the power is to promote general welfare, public health and safety, among others. It is
a measure, which by sheer necessity, the State exercises, even to the point of interfering with
personal liberties or property rights in order to advance common good. To warrant such interference,
two requisites must concur: (a) the interests of the public generally, as distinguished from those of a
particular class, require the interference of the! State; and (b) the means employed are reasonably
necessary to the: attainment of the object sought to be accomplished and not unduly oppressive
upon individuals. In other words, the proper exercise of the police power requires the concurrence of
a lawful subject and a lawful method.39

The subjects of R.A. Nos. 9257 and 9442, i.e., senior citizens and PWDs, are individuals whose
well-being is a recognized public duty. As a public duty, the responsibility for their care devolves
upon the concerted efforts of the State, the family and the community. In Article XIII, Section 1 of the
Constitution, the State is mandated to give highest priority to the enactment of measures that protect
and enhance the right of all the people to human dignity, reduce social, economic, and political
inequalities, and remove cultural inequities by equitably diffusing wealth and political power1 for the
common good. The more apparent manifestation of these social inequities is the unequal distribution
or access to healthcare services. To: abet in alleviating this concern, the State is committed to adopt
an integrated! and comprehensive approach to health development which shall endeavor to make
essential goods, health and other social services available to all the people at affordable cost, with
priority for the needs of the underprivileged sick, elderly, disabled, women, and children.40

In the same manner, the family and the community have equally significant duties to perform in
reducing social inequality. The family as the basic social institution has the foremost duty to care for
its elderly members.41 On the other hand, the community, which include the private sector, is
recognized as an active partner of the State in pursuing greater causes. The private sector, being
recipients of the privilege to engage business in our land, utilize our goods as well as the services of
our people for proprietary purposes, it is only fitting to expect their support in measures that
contribute to common good. Moreover, their right to own, establish and operate economic
enterprises is always subject to the duty of the State to promote distributive justice and to intervene
when the common good so demands.42

The Court also entertains no doubt on the legality of the method taken by the legislature to
implement the declared policies of the subject laws, that is, to impose discounts on the medical
services and purchases of senior citizens and PWDs and to treat the said discounts as tax deduction
rather than tax credit. The measure is fair and reasonable and no credible proof was presented to
prove the claim that it was confiscatory. To be considered confiscatory, there must be taking of
property without just compensation.

Illuminating on this point is the discussion of the Court on the concept of taking in City of Manila v.
Hon. Laguio, Jr.,43viz.:

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

xxxx

No formula or rule can be devised to answer the questions of what is too far and when regulation
becomes a taking. In Mahon, Justice Holmes recognized that it was "a question of degree and
therefore cannot be disposed of by general propositions." On many other occasions as well, the U.S.
Supreme Court has said that the issue of when regulation constitutes a taking is a matter of
considering the facts in each case. x x x.

What is crucial in judicial consideration of regulatory takings is that government regulation is a taking
if it leaves no reasonable economically viable use of property in a manner that interferes with
reasonable expectations for use. A regulation that permanently denies all economically beneficial or
productive use of land is, from the owner's point of view, equivalent to a "taking" unless principles of
nuisance or property law that existed when the owner acquired the land make the use prohibitable.
When the owner of real property has been called upon to sacrifice all economically beneficial uses in
the name of the common good, that is, to leave his property economically idle, he has suffered a
taking.

xxxx

A restriction on use of property may also constitute a "taking" if not reasonably necessary to the
effectuation of a substantial public purpose or if it has an unduly harsh impact on the distinct
investment-backed expectations of the owner.44 (Citations omitted)

The petitioner herein attempts to prove its claim that the pertinent provisions of R.A. Nos. 9257 and
9442 amount to taking by presenting financial statements purportedly showing financial losses
incurred by them due to the adoption of the tax deduction scheme.

For the petitioner's clarification, the presentation of the financial statement is not of compelling
significance in justifying its claim for just compensation. What is imperative is for it to establish that
there was taking in the constitutional sense or that, in the imposition of the mandatory discount, the
power exercised by the state was eminent domain.
According to Republic of the Philippines v. Vda. de Castellvi,45five circumstances must be present in
order to qualify "taking" as an exercise of eminent domain. First, the expropriator must enter a
private property. Second, the entrance into private property must be for more than a momentary
period. Third, the entry into the property should be under warrant or color of legal
authority. Fourth, the property must be devoted to a public use or otherwise informally appropriated
or injuriously affected. Fifth, the utilization of the property for public use must be in such a way as to
oust the owner and deprive him of all beneficial enjoyment of the property. 46

The first requirement speaks of entry into a private property which clearly does not obtain in this
case. There is no private property that is; invaded or appropriated by the State. As it is, the petitioner
precipitately deemed future profits as private property and then proceeded to argue that the State
took it away without full compensation. This seemed preposterous considering that the subject of
what the petitioner supposed as taking was not even earned profits but merely an expectation of
profits, which may not even occur. For obvious reasons, there cannot be taking of a contingency or
of a mere possibility because it lacks physical existence that is necessary before there could be any
taking. Further, it is impossible to quantify the compensation for the loss of supposed profits before it
is earned.

The supposed taking also lacked the characteristics of permanence 47 and consistency. The 1âwphi1

presence of these characteristics is significant because they can establish that the effect of the
questioned provisions is the same on all establishments and those losses are indeed its unavoidable
consequence. But apparently these indications are wanting in this case. The reason is that the
impact on the establishments varies depending on their response to the changes brought about by
the subject provisions. To be clear, establishments, are not prevented from adjusting their prices to
accommodate the effects of the granting of the discount and retain their profitability while being fully
compliant to the laws. It follows that losses are not inevitable because establishments are free to
take business measures to accommodate the contingency. Lacking in permanence and consistency,
there can be no taking in the constitutional sense. There cannot be taking in one establishment and
none in another, such that the former can claim compensation but the other may not. Simply told,
there is no taking to justify compensation; there is only poor business decision to blame.

There is also no ousting of the owner or deprivation of ownership. Establishments are neither
divested of ownership of any of their properties nor is anything forcibly taken from them. They
remain the owner of their goods and their profit or loss still depends on the performance of their
sales.

Apart from the foregoing, covered establishments are also provided with a mechanism to recoup the
amount of discounts they grant the senior citizens and PWDs. It is provided in Section 4(a) of R.A.
No. 9257 and Section 32 of R.A. No. 9442 that establishments may claim the discounts as "tax
deduction based on the net cost of the goods sold or services rendered." Basically, whatever amount
was given as discount, covered establishments may claim an equal amount as an expense or tax
deduction. The trouble is that the petitioner, in protesting the change in the tax treatment of the
discounts, apparently seeks tax incentive and not merely a return of the amount given as discounts.
It premised its interpretation of financial losses in terms of the effect of the change in the tax
treatment of the discount on its tax liability; hence, the claim that the measure was confiscatory.
However, as mentioned earlier in the discussion, loss of profits is not the inevitable result of the
change in tax treatment of the discounts; it is more appropriately a consequence of poor business
decision.

It bears emphasizing that the law does not place a cap on the amount of mark up that covered
establishments may impose on their items. This rests on the discretion of the establishment which,
of course, is expected to put in the price of the overhead costs, expectation of profits and other
considerations into the selling price of an item. In a simple illustration, here is Drug A, with
acquisition cost of ₱8.00, and selling price of ₱10.00. Then comes a law that imposes 20% on senior
citizens and PWDs, which affected Establishments 1, 2 and 3. Let us suppose that the approximate
number of patrons who purchases Drug A is 100, half of which are senior citizens and PWDs. Before
the passage of the law, all of the establishments are earning the same amount from profit from the
sale of Drug A, viz.:

Before the passage of the law:

Drug A
Acquisition cost ₱8.00
Selling price ₱10.00
Number of patrons 100
Sales:
100 x ₱10.00 = ₱1,000.00
Profit: ₱200

After the passage of the law, the three establishments reacted differently. Establishment 1 was
passive and maintained the price of Drug A at ₱8.00 which understandably resulted in diminution of
profits.

Establishment 1

Drug A
Acquisition cost ₱8.00
Selling price ;₱10.00
Number of patrons 100
Senior Citizens/PWD 50
Sales
100 x ₱10.00 = ₱1,000.00
Deduction: ₱100.00
Profit: ₱100.00

On the other hand, Establishment 2, mindful that the new law will affect the profitability of the
business, made a calculated decision by increasing the mark up of Drug A to ₱3.20, instead of only
₱2.00. This brought a positive result to the earnings of the company.

Establishment 2

Drug A
Acquisition cost ;₱8.00
Selling price ₱11.20
 Number of patron 100
Senior Citizens/PWDs 50
Sales
100 x ₱10.00 = ₱1,000.00
Deduction: ₱112.00
Profit: ₱208.00

For its part, Establishment 3 raised the mark up on Drug A to only ₱3.00 just to even out the effect of
the law. This measure left a negligible effect on its profit, but Establishment 3 took it as a social duty:
to share in the cause being promoted by the government while still maintaining profitability.

Establishment 3

Drug A
Acquisition cost ₱8.00
Selling price ₱11.20
Number of patrons 100
Senior Citizens/PWD 50
Sales
100 x ₱10.00 = ₱1,000.00
Deduction: ₱110.00
Profit: ₱190.00

The foregoing demonstrates that it is not the law per se which occasioned the losses in the covered
establishments but bad business I judgment. One of the main considerations in making business
decisions is the law because its effect is widespread and inevitable. Literally, anything can be a
subject of legislation. It is therefore incumbent upon business managers to cover this contingency
and consider it in making business strategies. As shown in the illustration, the better responses were
exemplified by Establishments 2 and 3 which promptly put in the additional costs brought about by
the law into the price of Drug A. In doing so, they were able to maintain the profitability of the
business, even earning some more, while at the same time being fully compliant with the law. This is
not to mention that the illustration is even too simplistic and not' the most ideal since it dealt only with
a single drug being purchased by both regular patrons and senior citizens and PWDs. It did not
consider the accumulated profits from the other medical and non-medical products being sold by the
establishments which are expected to further curb the effect of the granting of the discounts in the
business.

It is therefore unthinkable how the petitioner could have suffered losses due to the mandated
discounts in R.A. Nos. 9257 and 9442, when a fractional increase in the prices of items could bring
the business standing at a balance even with the introduction of the subject laws. A level adjustment
in the pricing of items is a reasonable business measure to take in order to adapt to the contingency.
This could even make establishments earn more, as shown in the illustration, since every fractional
increase in the price of covered items translates to a wider cushion to taper off the effect of the
granting of discounts and ultimately results to additional profits gained from the purchases of the
same items by regular patrons who are not entitled to the discount. Clearly, the effect of the subject
laws in the financial standing of covered companies depends largely on how they respond and forge
a balance between profitability and their sense of social responsibility. The adaptation is entirely up
to them and they are not powerless to make adjustments to accommodate the subject legislations.

Still, the petitioner argues that the law is confiscatory in the sense that the State takes away a
portion of its supposed profits which could have gone into its coffers and utilizes it for public purpose.
The petitioner claims that the action of the State amounts to taking for which it should be
compensated.

To reiterate, the subject provisions only affect the petitioner's right to profit, and not earned profits.
Unfortunately for the petitioner, the right to profit is not a vested right or an entitlement that has
accrued on the person or entity such that its invasion or deprivation warrants compensation. Vested
rights are "fixed, unalterable, or irrevocable."48 More extensively, they are depicted as follows:

Rights which have so completely and definitely accrued to or settled in a person that they are not
subject to be defeated or cancelled by the act of any other private person, and which it is right and
equitable that the government should recognize and protect, as being lawful in themselves, and
settled according to the then current rules of law, and of which the individual could not be deprived
arbitrarily without injustice, or of which he could not justly be deprived otherwise than by the
established methods of procedure and for the public welfare. x x x A right is not 'vested' unless it is
more than a mere expectation based on the anticipated continuance of present laws; it must be an
established interest in property, not open to doubt. x x x To be vested in its accurate legal sense,
a right must be complete and consummated, and one of which the person to whom it belongs
cannot be divested without his consent.x x x.49 (Emphasis ours)

Right to profits does not give the petitioner the cause of action to ask for just compensation, it being
only an inchoate right or one that has not fully developed50 and therefore cannot be claimed as one's
own. An inchoate right is a mere expectation, which may or may not come into existence. It is
contingent as it only comes "into existence on an event or condition which may not happen or be
performed until some other event may prevent their vesting."51Certainly, the petitioner cannot claim
confiscation or taking of something that has yet to exist. It cannot claim deprivation of profit before
the consummation of a sale and the purchase by a senior citizen or PWD.

Right to profit is not an accrued right; it is not fixed, absolute nor indefeasible. It does not come into
being until the occurrence or realization of a condition precedent. It is a mere "contingency that might
never eventuate into a right. It stands for a mere possibility of profit but nothing might ever be
payable under it."52

The inchoate nature of the right to profit precludes the possibility of compensation because it lacks
the quality or characteristic which is necessary before any act of taking or expropriation can be
effected. Moreover, there is no yardstick fitting to quantify a contingency or to determine
compensation for a mere possibility. Certainly, "taking" presupposes the existence of a subject that
has a quantifiable or determinable value, characteristics which a mere contingency does not
possess.

Anent the question regarding the shift from tax credit to tax deduction, suffice it is to say that it is
within the province of Congress to do so in the exercise of its legislative power. It has the authority to
choose the subject of legislation, outline the effective measures to achieve its declared policies and
even impose penalties in case of non-compliance. It has the sole discretion to decide which policies
to pursue and devise means to achieve them, and courts often do not interfere in this exercise for as
long as it does not transcend constitutional limitations. "In performing this duty, the legislature has no
guide but its judgment and discretion and the wisdom of experience."53 In Carter v. Carter Coal
Co.,54legislative discretion has been described as follows:

Legislative congressional discretion begins with the choice of means, and ends with the adoption
of methods and details to carry the delegated powers into effect. x x x [W]hile the powers are rigidly
limited to the enumerations of the Constitution, the means which may be employed to carry the
powers into effect are not restricted, save that they must be appropriate, plainly adapted to the end,
and not prohibited by, but consistent with, the letter and spirit of the Constitution. x x x. 55 (Emphasis
ours)

Corollary, whether to treat the discount as a tax deduction or tax credit is a matter addressed to the
wisdom of the legislature. After all, it is within its prerogative to enact laws which it deems sufficient
to address a specific public concern. And, in the process of legislation, a bill goes through rigorous
tests of validity, necessity and sufficiency in both houses of Congress before enrolment. It
undergoes close scrutiny of the members of Congress and necessarily had to surpass the
arguments hurled against its passage. Thus, the presumption of validity that goes with every law as
a form of deference to the process it had gone through and also to the legislature's exercise of
discretion. Thus, in lchong, etc., et al. v. Hernandez) etc., and Sarmiento,56the Court emphasized,
thus:

It must not be overlooked, in the first place, that the legislature, which is the constitutional
repository of police power and exercises the prerogative of determining the policy of the State, is by
force of circumstances primarily the judge of necessity, adequacy or reasonableness and
wisdom, of any law promulgated in the exercise of the police power, or of the measures
adopted to implement the public policy or to achieve public interest.x x x.57 (Emphasis ours)

The legislature may also grant rights and impose additional burdens: It may also regulate industries,
in the exercise of police power, for the protection of the public. R.A. Nos. 9257 and 9442 are akin to
regulatory laws, the issuance of which is within the ambit of police power. The minimum wage law,
zoning ordinances, price control laws, laws regulating the operation of motels and hotels, laws
limiting the working hours to eight, and the like fall under this category. 58

Indeed, regulatory laws are within the category of police power measures from which affected
persons or entities cannot claim exclusion or compensation. For instance, private establishments
cannot protest that the imposition of the minimum wage is confiscatory since it eats up a
considerable chunk of its profits or that the mandated remuneration is not commensurate for the
work done. The compulsory nature of the provision for minimum wages underlies the effort of the
State; as R.A. No. 672759 expresses it, to promote productivity-improvement and gain-sharing
measures to ensure a decent standard of living for the workers and their families; to guarantee the
rights of labor to its just share in the fruits of production; to enhance employment generation in the
countryside through industry dispersal; and to allow business and industry reasonable returns on
investment, expansion and growth, and as the Constitution expresses it, to affirm labor as a primary
social economic force. 60

Similarly, the imposition of price control on staple goods in R.A. No. 758161 is likewise a valid
exercise of police power and affected establishments cannot argue that the law was depriving them
of supposed gains. The law seeks to ensure the availability of basic necessities and prime
commodities at reasonable prices at all times without denying legitimate business a fair return on
investment. It likewise aims to provide effective and sufficient protection to consumers against
hoarding, profiteering and cartels with respect to the supply, distribution, marketing and pricing of
said goods, especially during periods of calamity, emergency, widespread illegal price manipulation
and other similar situations.62
More relevantly, in Manila Memorial Park, Inc.,63it was ruled that it is within the bounds of the police
power of the state to impose burden on private entities, even if it may affect their profits, such as in
the imposition of price control measures. There is no compensable taking but only a recognition of
the fact that they are subject to the regulation of the State and that all personal or private interests
must bow down to the more paramount interest of the State.

This notwithstanding, the regulatory power of the State does not authorize the destruction of the
business. While a business may be regulated, such regulation must be within the bounds of
reason, i.e., the regulatory ordinance must be reasonable, and its provision cannot be oppressive
amounting to an arbitrary interference with the business or calling subject of regulation. A lawful
business or calling may not, under the guise of regulation, be unreasonably interfered with even by
the exercise of police power. 64 After all, regulation only signifies control or restraint, it does not mean
suppression or absolute prohibition. Thus, in Philippine Communications Satellite
Corporation v. Alcuaz, 65the Court emphasized:

The power to regulate is not the power to destroy useful and harmless enterprises, but is the power
to protect, foster, promote, preserve, and control with due regard for the interest, first and foremost,
of the public, then of the utility and of its patrons. Any regulation, therefore, which operates as an
effective confiscation of private property or constitutes an arbitrary or unreasonable infringement of
property rights is void, because it is repugnant to the constitutional guaranties of due process and
equal protection of the laws. 66 (Citation omitted)

Here, the petitioner failed to show that R.A. Nos. 9257 and 9442, under the guise of regulation, allow
undue interference in an otherwise legitimate business. On the contrary, it was shown that the
1avv phi1

questioned laws do not meddle in the business or take anything from it but only regulate its
realization of profits.

The subject laws do not violate the

equal protection clause

The petitioner argues that R.A. Nos. 9257 and 9442 are violative of the equal protection clause in
that it failed to distinguish between those who have the capacity to pay and those who do not, in
granting the 20% discount. R.A. No. 9257, in particular, removed the income qualification in R.A. No.
7432 of'₱60,000.00 per annum before a senior citizen may be entitled to the 20o/o discount.

The contention lacks merit.

The petitioner's argument is dismissive of the reasonable qualification on which the subject laws
were based. In City of Manila v. Hon. Laguio, Jr., 67 the Court emphasized:

Equal protection requires that all persons or things similarly situated should be treated alike, both as
to rights conferred and responsibilities imposed. Similar subjects, in other words, should not be
treated differently, so as to give undue favor to some and unjustly discriminate against others. The
guarantee means that no person or class of persons shall be denied the same protection of laws
which is enjoyed by other persons or other classes in like circumstances.68 (Citations omitted)

"The equal protection clause is not infringed by legislation which applies only to those persons falling
within a specified class. If the groupings are characterized by substantial distinctions that make real
differences, one class may be treated and regulated differently from another."69 For a classification to
be valid, (1) it must be based upon substantial distinctions, (2) it must be germane to the purposes of
the law, (3) it must not be limited to existing conditions only, and (4) it must apply equally to all
members of the same class. 70
To recognize all senior citizens as a group, without distinction as to income, is a valid classification.
The Constitution itself considered the elderly as a class of their own and deemed it a priority to
address their needs. When the Constitution declared its intention to prioritize the predicament of the
underprivileged sick, elderly, disabled, women, and children,71 it did not make any reservation as to
income, race, religion or any other personal circumstances. It was a blanket privilege afforded the
group of citizens in the enumeration in view of the vulnerability of their class.

R.A. No. 9257 is an implementation of the avowed policy of the Constitution to enact measures that
protect and enhance the right of all the people to human dignity, reduce social, economic, and
political inequalities. 72 Specifically, it caters to the welfare of all senior citizens. The classification is
based on age and therefore qualifies all who have attained the age of 60. Senior citizens are a class
of their own, who are in need and should be entitled to government support, and the fact that they
may still be earning for their own sustenance should not disqualify them from the privilege.

It is well to consider that our senior citizens have already reached the age when work opportunities
have dwindled concurrently as their physical health. They are no longer expected to work, but there
1âwphi 1

are still those who continue to work and contribute what they can to the country. Thus, to single them
out and take them out of the privileges of the law for continuing to strive and earn income to fend for
themselves is inimical to a welfare state that the Constitution envisions. It is tantamount to penalizing
them for their persistence. It is commending indolence rather than rewarding diligence. It
encourages them to become wards of the State rather than productive partners.

Our senior citizens were the laborers, professionals and overseas contract workers of the past.
While some may be well to do or may have the capacity to support their sustenance, the discretion
to avail of the privileges of the law is up to them. But to instantly tag them. as undeserving of the
privilege would be the height of ingratitude; it is an outright discrimination.

The same ratiocination may be said of the recognition of PWDs as a class in R.A. No. 9442 and in
granting them discounts. It needs no further explanation that PWDs have special needs which, for
1âwphi1

most,' last their entire lifetime. They constitute a class of their own, equally deserving of government
support as our elderlies. While some of them maybe willing to work and earn income for themselves,
their disability deters them from living their full potential. Thus, the need for assistance from the
government to augment the reduced income or productivity brought about by their physical or
intellectual limitations.

There is also no question that the grant of mandatory discount is germane to the purpose of R.A.
Nos. 9257 and 9442, that is, to adopt an integrated and comprehensive approach to health
development and make essential goods and other social services available to all the people at
affordable cost, with special priority given to the elderlies and the disabled, among others. The
privileges granted by the laws ease their concerns and allow them to live more comfortably.

The subject laws also address a continuing concern of the government for the welfare of the senior
citizens and PWDs. It is not some random predicament but an actual, continuing and pressing
concern that requires preferential attention. Also, the laws apply to all senior citizens and PWDs,
respectively, without further distinction or reservation. Without a doubt, all the elements for a valid
classification were met.

The definitions of "disabilities" and

"PWDs" are clear and unequivocal

Undeterred, the petitioner claims that R.A. No. 9442 is ambiguous particularly in defining the terms
"disability" and "PWDs," such that it lack comprehensible standards that men of common intelligence
must guess at its meaning. It likewise bewails the futility of the given safeguards to prevent abuse
since government officials who are neither experts nor practitioners of medicine are given the
authority to issue identification cards that authorizes the granting of the privileges under the law.

The Court disagrees.

Section 4(a) of R.A. No. 7277, the precursor of R.A. No. 94421 defines "disabled persons" as
follows:

(a) Disabled persons are those suffering from restriction or different abilities, as a result of a
mental, physical or sensory impairment, to perform an activity in the manner or within the range
considered normal for a human being[.]

On the other hand, the term "PWDs" is defined in Section 5.1 of the IRR of R.A. No. 9442 as follows:

5.1. PersonswithDisability are those individuals defined under Section 4 of [R.A. No.] 7277 [or] An
Act Providing for the Rehabilitation, Self-Development and Self-Reliance of Persons with Disability
as amended and their integration into the Mainstream of Society and for Other Purposes. This is
defined as a person suffering from restriction or different abilities, as a result of a mental, physical or
sensory impairment, to perform an activity in a manner or within the range considered normal for
human being. Disability shall mean (1) a physical 1or mental impairment that substantially limits one
or more psychological, physiological or anatomical function of an individual or activities of such
individual; (2) a record of such an impairment; or (3) being regarded as having such an impairment.

The foregoing definitions have a striking conformity with the definition of "PWDs" in Article 1 of
the United Nations Convention on the Rights of Persons with Disabilities which reads:

Persons with disabilities include those who have long-term physical, mental, intellectual or
sensory impairments which in interaction with various barriers may hinder their full and effective
participation in society on an equal basis with others. (Emphasis and italics ours)

The seemingly broad definition of the terms was not without good reasons. It recognizes that
"disability is an evolving concept"73 and appreciates the "diversity of PWDs."74 The terms were given
comprehensive definitions so as to accommodate the various forms of disabilities, and not confine it
to a particular case as this would effectively exclude other forms of physical, intellectual or
psychological impairments.

Moreover, in Estrada v. Sandiganbayan, 75 it was declared, thus:

A statute is not rendered uncertain and void merely because general terms are used therein, or
because of the employment of terms without defining them; much less do we have to define every
word we use. Besides, there is no positive constitutional or statutory command requiring the
legislature to define each and every word in an enactment. Congress is not restricted in the form of
expression of its will, and its inability to so define the words employed in a statute will not necessarily
result in the vagueness or ambiguity of the law so long as the legislative will is clear, or at least, can
be gathered from the whole act x x x.76 (Citation omitted)

At any rate, the Court gathers no ambiguity in the provisions of R.A. No. 9442. As regards the
petitioner's claim that the law lacked reasonable standards in determining the persons entitled to the
discount, Section 32 thereof is on point as it identifies who may avail of the privilege and the manner
of its availment. It states:
Sec. 32. x x x

The abovementioned privileges are available only to persons with disability who are Filipino citizens
upon submission of any of the following as proof of his/her entitlement thereto:

(I) An identification card issued by the city or municipal mayor or the barangay
captain of the place where the persons with disability resides;

(II) The passport of the persons with disability concerned; or

(III) Transportation discount fare Identification Card (ID) issued by the National
Council for the Welfare of Disabled Persons (NCWDP).

It is, however, the petitioner's contention that the foregoing authorizes government officials who had
no medical background to exercise discretion in issuing identification cards to those claiming to be
PWDs. It argues that the provision lends to the indiscriminate availment of the privileges even by
those who are not qualified.

The petitioner's apprehension demonstrates a superficial understanding of the law and its
implementing rules. To be clear, the issuance of identification cards to PWDs does not depend on
the authority of the city or municipal mayor, the DSWD or officials of the NCDA (formerly NCWDP). It
is well to remember that what entitles a person to the privileges of the law is his disability, the fact of
which he must prove to qualify. Thus, in NCDA Administrative Order (A.O.) No. 001, series of
2008, 77 it is required that the person claiming disability must submit the following requirements
before he shall be issued a PWD Identification Card:

1. Two "1 x l" recent ID pictures with the names, and signatures or thumb marks at the back of the
picture.

2. One (1) Valid ID

3. Document to confirm the medical or disability condition 78

To confirm his disability, the person must obtain a medical certificate or assessment, as the case
maybe, issued by a licensed private or government physician, licensed teacher or head of a
business establishment attesting to his impairment. The issuing entity depends on whether the
disability is apparent or non-apparent. NCDAA.O. No. 001 further provides:79

DISABILITY DOCUMENT ISSUING ENTITY

Apparent Medical Licensed Private or
Disability Certificate Government Physician

School Licensed Teacher duly

Assessment signed by the School
Principal
Certificate of  Head of the Business
Disability

Establishment
  Head of Non-
Government
Organization

Non-Apparent Medical Licensed Private or

Disability Certificate Government Physician

To provide further safeguard, the Department of Health issued A.O. No. 2009-0011, providing
guidelines for the availment of the 20% discount on the purchase of medicines by PWDs. In making
a purchase, the individual must present the documents enumerated in Section VI(4)(b ), to wit:

i. PWD identification card x x x

ii. Doctor's prescription stating the name of the PWD, age, sex, address, date, generic name
of the medicine, dosage form, dosage strength, quantity, signature over printed name of
physician, physician's address, contact number of physician or dentist, professional license
number, professional tax receipt number and narcotic license number, if applicable. To
safeguard the health of PWDs and to prevent abuse of [R.A. No.] 9257, a doctor's
prescription is required in the purchase of over-the-counter medicines. x x x.

iii. Purchase booklet issued by the local social/health office to PWDs for free containing the
following basic information:

a) PWD ID number

b) Booklet control number

c) Name of PWD

d) Sex

e) Address

f) Date of Birth

g) Picture

h) Signature of PWD

i) Information of medicine purchased:

i.1 Name of medicine

i.2 Quantity

i.3 Attending Physician

 i.4 License Number

i.5 Servicing drug store name

i.6 Name of dispensing pharmacist

j) Authorization letter of the PWD x x x in case the medicine is bought by the

representative or caregiver of the PWD.

The PWD identification card also has a validity period of only three years which facilitate in the
monitoring of those who may need continued support and who have been relieved of their disability,
and therefore may be taken out of the coverage of the law.

At any rate, the law has penal provisions which give concerned establishments the option to file a
case against those abusing the privilege Section 46(b) of R.A. No. 9442 provides that "[a]ny person
who abuses the privileges granted herein shall be punished with imprisonment of not less than six
months or a fine of not less than Five Thousand pesos (₱5,000.00), but not more than Fifty
Thousand pesos (₱50,000.00), or both, at the discretion of the court." Thus, concerned
establishments, together with the proper government agencies, must actively participate in
monitoring compliance with the law so that only the intended beneficiaries of the law can avail of the
privileges.

Indubitably, the law is clear and unequivocal, and the petitioner claim of vagueness to cast
uncertainty in the validity of the law does not stand.

WHEREFORE, in view of the foregoing disquisition, Section 4(a) of Republic Act No. 9257 and
Section 32 of Republic Act No. 9442 are hereby declared CONSTITUTIONAL.

<<page>>

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 156052 March 7, 2007

SOCIAL JUSTICE SOCIETY (SJS), VLADIMIR ALARIQUE T. CABIGAO, and BONIFACIO S.

TUMBOKON, Petitioners,
vs.
HON. JOSE L. ATIENZA, JR., in his capacity as Mayor of the City of Manila, Respondent.

DECISION
CORONA, J.:

In this original petition for mandamus,1 petitioners Social Justice Society (SJS), Vladimir Alarique T.
Cabigao and Bonifacio S. Tumbokon seek to compel respondent Hon. Jose L. Atienza, Jr., mayor of
the City of Manila, to enforce Ordinance No. 8027.

The antecedents are as follows.

On November 20, 2001, the Sangguniang Panlungsod of Manila enacted Ordinance No.
8027.2 Respondent mayor approved the ordinance on November 28, 2001.3 It became effective on
December 28, 2001, after its publication.4

Ordinance No. 8027 was enacted pursuant to the police power delegated to local government units,
a principle described as the power inherent in a government to enact laws, within constitutional
limits, to promote the order, safety, health, morals and general welfare of the society.5 This is evident
from Sections 1 and 3 thereof which state:

SECTION 1. For the purpose of promoting sound urban planning and ensuring health, public safety,
and general welfare of the residents of Pandacan and Sta. Ana as well as its adjoining areas, the
land use of [those] portions of land bounded by the Pasig River in the north, PNR Railroad Track in
the east, Beata St. in the south, Palumpong St. in the southwest, and Estero de Pancacan in the
west[,] PNR Railroad in the northwest area, Estero de Pandacan in the [n]ortheast, Pasig River in
the southeast and Dr. M.L. Carreon in the southwest. The area of Punta, Sta. Ana bounded by the
Pasig River, Marcelino Obrero St., Mayo 28 St., and F. Manalo Street, are hereby reclassified from
Industrial II to Commercial I.

xxx xxx xxx

SEC. 3. Owners or operators of industries and other businesses, the operation of which are no
longer permitted under Section 1 hereof, are hereby given a period of six (6) months from the date of
effectivity of this Ordinance within which to cease and desist from the operation of businesses which
are hereby in consequence, disallowed.

Ordinance No. 8027 reclassified the area described therein from industrial to commercial and
directed the owners and operators of businesses disallowed under Section 1 to cease and desist
from operating their businesses within six months from the date of effectivity of the ordinance.
Among the businesses situated in the area are the so-called "Pandacan Terminals" of the oil
companies Caltex (Philippines), Inc., Petron Corporation and Pilipinas Shell Petroleum Corporation.

However, on June 26, 2002, the City of Manila and the Department of Energy (DOE) entered into a
memorandum of understanding (MOU)6 with the oil companies in which they agreed that "the scaling
down of the Pandacan Terminals [was] the most viable and practicable option." Under the MOU, the
oil companies agreed to perform the following:

Section 1. - Consistent with the objectives stated above, the OIL COMPANIES shall, upon signing
of this MOU, undertake a program to scale down the Pandacan Terminals which shall include,
among others, the immediate removal/decommissioning process of TWENTY EIGHT (28) tanks
starting with the LPG spheres and the commencing of works for the creation of safety buffer and
green zones surrounding the Pandacan Terminals. xxx
Section 2. – Consistent with the scale-down program mentioned above, the OIL COMPANIES shall
establish joint operations and management, including the operation of common, integrated and/or
shared facilities, consistent with international and domestic technical, safety, environmental and
economic considerations and standards. Consequently, the joint operations of the OIL COMPANIES
in the Pandacan Terminals shall be limited to the common and integrated areas/facilities. A separate
agreement covering the commercial and operational terms and conditions of the joint operations,
shall be entered into by the OIL COMPANIES.

Section 3. - The development and maintenance of the safety and green buffer zones mentioned
therein, which shall be taken from the properties of the OIL COMPANIES and not from the
surrounding communities, shall be the sole responsibility of the OIL COMPANIES.

The City of Manila and the DOE, on the other hand, committed to do the following:

Section 1. - The City Mayor shall endorse to the City Council this MOU for its appropriate action with
the view of implementing the spirit and intent thereof.

Section 2. - The City Mayor and the DOE shall, consistent with the spirit and intent of this MOU,
enable the OIL COMPANIES to continuously operate in compliance with legal requirements, within
the limited area resulting from the joint operations and the scale down program.

Section 3. - The DOE and the City Mayor shall monitor the OIL COMPANIES’ compliance with the
provisions of this MOU.

Section 4. - The CITY OF MANILA and the national government shall protect the safety buffer and
green zones and shall exert all efforts at preventing future occupation or encroachment into these
areas by illegal settlers and other unauthorized parties.

The Sangguniang Panlungsod ratified the MOU in Resolution No. 97.7 In the same resolution,
the Sangguniandeclared that the MOU was effective only for a period of six months starting July 25,
2002.8 Thereafter, on January 30, 2003, the Sanggunian adopted Resolution No. 139 extending the
validity of Resolution No. 97 to April 30, 2003 and authorizing Mayor Atienza to issue special
business permits to the oil companies. Resolution No. 13, s. 2003 also called for a reassessment of
the ordinance.10

Meanwhile, petitioners filed this original action for mandamus on December 4, 2002 praying that
Mayor Atienza be compelled to enforce Ordinance No. 8027 and order the immediate removal of the
terminals of the oil companies.11

The issues raised by petitioners are as follows:

1. whether respondent has the mandatory legal duty to enforce Ordinance No. 8027 and
order the removal of the Pandacan Terminals, and

2. whether the June 26, 2002 MOU and the resolutions ratifying it can amend or repeal
Ordinance No. 8027.12

Petitioners contend that respondent has the mandatory legal duty, under Section 455 (b) (2) of the
Local Government Code (RA 7160),13 to enforce Ordinance No. 8027 and order the removal of the
Pandacan Terminals of the oil companies. Instead, he has allowed them to stay.
Respondent’s defense is that Ordinance No. 8027 has been superseded by the MOU and the
resolutions.14However, he also confusingly argues that the ordinance and MOU are not inconsistent
with each other and that the latter has not amended the former. He insists that the ordinance
remains valid and in full force and effect and that the MOU did not in any way prevent him from
enforcing and implementing it. He maintains that the MOU should be considered as a mere guideline
for its full implementation.15

Under Rule 65, Section 316 of the Rules of Court, a petition for mandamus may be filed when any
tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which
the law specifically enjoins as a duty resulting from an office, trust or station. Mandamus is an
extraordinary writ that is employed to compel the performance, when refused, of a ministerial duty
that is already imposed on the respondent and there is no other plain, speedy and adequate remedy
in the ordinary course of law. The petitioner should have a well-defined, clear and certain legal right
to the performance of the act and it must be the clear and imperative duty of respondent to do the
act required to be done.17

Mandamus will not issue to enforce a right, or to compel compliance with a duty, which is
questionable or over which a substantial doubt exists. The principal function of the writ
of mandamus is to command and to expedite, not to inquire and to adjudicate; thus, it is neither the
office nor the aim of the writ to secure a legal right but to implement that which is already
established. Unless the right to the relief sought is unclouded, mandamus will not issue.18

To support the assertion that petitioners have a clear legal right to the enforcement of the ordinance,
petitioner SJS states that it is a political party registered with the Commission on Elections and has
its offices in Manila. It claims to have many members who are residents of Manila. The other
petitioners, Cabigao and Tumbokon, are allegedly residents of Manila.

We need not belabor this point. We have ruled in previous cases that when a mandamus proceeding
concerns a public right and its object is to compel a public duty, the people who are interested in the
execution of the laws are regarded as the real parties in interest and they need not show any
specific interest.19 Besides, as residents of Manila, petitioners have a direct interest in the
enforcement of the city’s ordinances. Respondent never questioned the right of petitioners to
institute this proceeding.

On the other hand, the Local Government Code imposes upon respondent the duty, as city mayor,
to "enforce all laws and ordinances relative to the governance of the city.">20 One of these is
Ordinance No. 8027. As the chief executive of the city, he has the duty to enforce Ordinance No.
8027 as long as it has not been repealed by the Sanggunian or annulled by the courts.21 He has no other
choice. It is his ministerial duty to do so. In Dimaporo v. Mitra, Jr.,22 we stated the reason for this:

These officers cannot refuse to perform their duty on the ground of an alleged invalidity of the statute imposing the duty. The reason for this is obvious.
It might seriously hinder the transaction of public business if these officers were to be permitted in all cases to question the constitutionality of statutes
and ordinances imposing duties upon them and which have not judicially been declared unconstitutional. Officers of the government from the highest to
the lowest are creatures of the law and are bound to obey it.23

The question now is whether the MOU entered into by respondent with the oil companies and the subsequent resolutions passed by
the Sanggunian have made the respondent’s duty to enforce Ordinance No. 8027 doubtful, unclear or uncertain. This is also connected to the second
issue raised by petitioners, that is, whether the MOU and Resolution Nos. 97, s. 2002 and 13, s. 2003 of the Sanggunian can amend or repeal
Ordinance No. 8027.
We need not resolve this issue. Assuming that the terms of the MOU were inconsistent with Ordinance No. 8027, the resolutions which ratified it and
made it binding on the City of Manila expressly gave it full force and effect only until April 30, 2003. Thus, at present, there is nothing that legally
hinders respondent from enforcing Ordinance No. 8027.24

Ordinance No. 8027 was enacted right after the Philippines, along with the rest of the world, witnessed the horror of the September 11, 2001 attack on
the Twin Towers of the World Trade Center in New York City. The objective of the ordinance is to protect the residents of Manila from the catastrophic
devastation that will surely occur in case of a terrorist attack 25 on the Pandacan Terminals. No reason exists why such a protective measure should be
delayed.

WHEREFORE, the petition is hereby GRANTED. Respondent Hon. Jose L. Atienza, Jr., as mayor of the City of Manila, is directed to immediately
enforce Ordinance No. 8027.

SO ORDERED.

EN BANC
CARLOS SUPERDRUG CORP., G.R. No. 166494
doing business under the name
and style Carlos Superdrug, Present:
ELSIE M. CANO, doing business
under the name and style Advance PUNO, C.J.,
Drug, Dr. SIMPLICIO L. YAP, JR., QUISUMBING,*
doing business under the name and YNARES-SANTIAGO,
style City Pharmacy, MELVIN S. SANDOVAL-GUTIERREZ,**
DELA SERNA, doing business under CARPIO,
the name and style Botica dela Serna, AUSTRIA-MARTINEZ,
and LEYTE SERV-WELL CORP., CORONA,
doing business under the name and CARPIO MORALES,
style Leyte Serv-Well Drugstore, AZCUNA,
Petitioners, TINGA,
CHICO-NAZARIO,
- versus - GARCIA,
VELASCO, JR., and
DEPARTMENT OF SOCIAL NACHURA, JJ.
WELFARE and DEVELOPMENT
(DSWD), DEPARTMENT OF Promulgated:
HEALTH (DOH), DEPARTMENT
OF FINANCE (DOF), DEPARTMENT June 29, 2007
OF JUSTICE (DOJ), and
DEPARTMENT OF INTERIOR and
LOCAL GOVERNMENT (DILG),
Respondents.
x ---------------------------------------------------------------------------------------- x

DECISION

AZCUNA, J.:
This is a petition[1] for Prohibition with Prayer for Preliminary Injunction
assailing the constitutionality of Section 4(a) of Republic Act (R.A.) No.
9257,[2] otherwise known as the Expanded Senior Citizens Act of 2003.

Petitioners are domestic corporations and proprietors operating drugstores in

the Philippines.

Public respondents, on the other hand, include the Department of Social Welfare and
Development (DSWD), the Department of Health (DOH), the Department of
Finance (DOF), the Department of Justice (DOJ), and the Department of Interior and
Local Government (DILG) which have been specifically tasked to monitor the
drugstores compliance with the law; promulgate the implementing rules and
regulations for the effective implementation of the law; and prosecute and revoke
the licenses of erring drugstore establishments.

The antecedents are as follows:

On February 26, 2004, R.A. No. 9257, amending R.A. No. 7432,[3] was signed
into law by President Gloria Macapagal-Arroyo and it became effective on March
21, 2004. Section 4(a) of the Act states:

SEC. 4. Privileges for the Senior Citizens. The senior citizens shall be
entitled to the following:

(a) the grant of twenty percent (20%) discount from all

establishments relative to the utilization of services in hotels and similar
lodging establishments, restaurants and recreation centers, and purchase
of medicines in all establishments for the exclusive use or enjoyment of
 senior citizens, including funeral and burial services for the death of senior
citizens;

...

The establishment may claim the discounts granted under (a), (f),
(g) and (h) as tax deduction based on the net cost of the goods sold or
services rendered: Provided, That the cost of the discount shall be allowed
as deduction from gross income for the same taxable year that the discount
is granted. Provided, further, That the total amount of the claimed tax
deduction net of value added tax if applicable, shall be included in their
gross sales receipts for tax purposes and shall be subject to proper
documentation and to the provisions of the National Internal Revenue
Code, as amended.[4]

On May 28, 2004, the DSWD approved and adopted the Implementing Rules
and Regulations of R.A. No. 9257, Rule VI, Article 8 of which states:

Article 8. Tax Deduction of Establishments. The establishment

may claim the discounts granted under Rule V, Section 4 Discounts for
Establishments;[5] Section 9, Medical and Dental Services in Private
Facilities[,][6] and Sections 10[7] and 11[8] Air, Sea and Land
Transportation as tax deduction based on the net cost of the goods sold or
services rendered. Provided, That the cost of the discount shall be allowed
as deduction from gross income for the same taxable year that the discount
is granted; Provided, further, That the total amount of the claimed tax
deduction net of value added tax if applicable, shall be included in their
gross sales receipts for tax purposes and shall be subject to proper
documentation and to the provisions of the National Internal Revenue
Code, as amended; Provided, finally, that the implementation of the tax
deduction shall be subject to the Revenue Regulations to be issued by the
Bureau of Internal Revenue (BIR) and approved by the Department of
Finance (DOF).[9]
On July 10, 2004, in reference to the query of the Drug Stores Association of
the Philippines (DSAP) concerning the meaning of a tax deduction under the
Expanded Senior Citizens Act, the DOF, through Director IV Ma. Lourdes B.
Recente, clarified as follows:
 1) The difference between the Tax Credit (under the Old Senior
Citizens Act) and Tax Deduction (under the Expanded Senior Citizens
Act).

1.1. The provision of Section 4 of R.A. No. 7432 (the old

Senior Citizens Act) grants twenty percent (20%) discount from all
establishments relative to the utilization of transportation services,
hotels and similar lodging establishment, restaurants and recreation
centers and purchase of medicines anywhere in the country, the
costs of which may be claimed by the private establishments
concerned as tax credit.

Effectively, a tax credit is a peso-for-peso deduction from a

taxpayers tax liability due to the government of the amount of
discounts such establishment has granted to a senior citizen. The
establishment recovers the full amount of discount given to a senior
citizen and hence, the government shoulders 100% of the discounts
granted.

It must be noted, however, that conceptually, a tax

credit scheme under the Philippine tax system, necessitates that
prior payments of taxes have been made and the taxpayer is
attempting to recover this tax payment from his/her income tax due.
The tax credit scheme under R.A. No. 7432 is, therefore,
inapplicable since no tax payments have previously occurred.

1.2. The provision under R.A. No. 9257, on the other

hand, provides that the establishment concerned may claim the
discounts under Section 4(a), (f), (g) and (h) as tax deduction from
gross income, based on the net cost of goods sold or services
rendered.

Under this scheme, the establishment concerned is allowed

to deduct from gross income, in computing for its tax liability, the
amount of discounts granted to senior citizens. Effectively, the
government loses in terms of foregone revenues an amount
equivalent to the marginal tax rate the said establishment is liable
to pay the government. This will be an amount equivalent to 32%
of the twenty percent (20%) discounts so granted. The
establishment shoulders the remaining portion of the granted
discounts.
 It may be necessary to note that while the burden on [the]
government is slightly diminished in terms of its percentage share
on the discounts granted to senior citizens, the number of potential
establishments that may claim tax deductions, have however, been
broadened. Aside from the establishments that may claim tax
credits under the old law, more establishments were added under
the new law such as: establishments providing medical and dental
services, diagnostic and laboratory services, including professional
fees of attending doctors in all private hospitals and medical
facilities, operators of domestic air and sea transport services,
public railways and skyways and bus transport services.

A simple illustration might help amplify the points discussed

above, as follows:

Tax Deduction Tax Credit

Gross Sales x x x x x x x x x x x x
Less : Cost of goods sold x x x x x x x x x x
Net Sales x x x x x x x x x x x x
Less: Operating Expenses:
Tax Deduction on Discounts x x x x --
Other deductions: x x x x x x x x
Net Taxable Income x x x x x x x x x x
Tax Due x x x x x x
Less: Tax Credit -- ______x x
Net Tax Due -- x x
As shown above, under a tax deduction scheme, the tax
deduction on discounts was subtracted from Net Sales together with
other deductions which are considered as operating expenses before the
Tax Due was computed based on the Net Taxable Income. On the other
hand, under a tax credit scheme, the amount of discounts which is the tax
credit item, was deducted directly from the tax due amount.[10]

Meanwhile, on October 1, 2004, Administrative Order (A.O.) No. 171 or

the Policies and Guidelines to Implement the Relevant Provisions of Republic Act
9257, otherwise known as the Expanded Senior Citizens Act of 2003 [11] was issued
by the DOH, providing the grant of twenty percent (20%) discount in the purchase
of unbranded generic medicines from all establishments dispensing medicines for
the exclusive use of the senior citizens.
On November 12, 2004, the DOH issued Administrative Order No 177[12] amending
A.O. No. 171. Under A.O. No. 177, the twenty percent discount shall not be limited
to the purchase of unbranded generic medicines only, but shall extend to both
prescription and non-prescription medicines whether branded or generic. Thus, it
stated that [t]he grant of twenty percent (20%) discount shall be provided in the
purchase of medicines from all establishments dispensing medicines for the
exclusive use of the senior citizens.

Petitioners assail the constitutionality of Section 4(a) of the Expanded Senior

Citizens Act based on the following grounds:[13]

1) The law is confiscatory because it infringes Art. III, Sec. 9 of the

Constitution which provides that private property shall not be taken
for public use without just compensation;

2) It violates the equal protection clause (Art. III, Sec. 1) enshrined

in our Constitution which states that no person shall be deprived of
life, liberty or property without due process of law, nor shall any
person be denied of the equal protection of the laws; and

3) The 20% discount on medicines violates the constitutional

guarantee in Article XIII, Section 11 that makes essential goods,
health and other social services available to all people at affordable
cost.[14]

Petitioners assert that Section 4(a) of the law is unconstitutional because it

constitutes deprivation of private property. Compelling drugstore owners and
establishments to grant the discount will result in a loss of profit

and capital because 1) drugstores impose a mark-up of only 5% to 10% on branded

medicines; and 2) the law failed to provide a scheme whereby drugstores will be
justly compensated for the discount.
 Examining petitioners arguments, it is apparent that what petitioners are
ultimately questioning is the validity of the tax deduction scheme as a reimbursement
mechanism for the twenty percent (20%) discount that they extend to senior citizens.
Based on the afore-stated DOF Opinion, the tax deduction scheme does not
fully reimburse petitioners for the discount privilege accorded to senior citizens. This
is because the discount is treated as a deduction, a tax-deductible expense that is
subtracted from the gross income and results in a lower taxable income. Stated
otherwise, it is an amount that is allowed by law[15] to reduce the income prior to the
application of the tax rate to compute the amount of tax which is due.[16] Being a tax
deduction, the discount does not reduce taxes owed on a peso for peso basis but
merely offers a fractional reduction in taxes owed.

Theoretically, the treatment of the discount as a deduction reduces the net

income of the private establishments concerned. The discounts given would have
entered the coffers and formed part of the gross sales of the private establishments,
were it not for R.A. No. 9257.

The permanent reduction in their total revenues is a forced subsidy

corresponding to the taking of private property for public use or benefit.[17] This
constitutes compensable taking for which petitioners would ordinarily become
entitled to a just compensation.

Just compensation is defined as the full and fair equivalent of the property
taken from its owner by the expropriator. The measure is not the takers gain but the
owners loss. The word just is used to intensify the meaning of the
word compensation, and to convey the idea that the equivalent to be rendered for
the property to be taken shall be real, substantial, full and ample.[18]

A tax deduction does not offer full reimbursement of the senior citizen
discount. As such, it would not meet the definition of just compensation.[19]

Having said that, this raises the question of whether the State, in promoting
the health and welfare of a special group of citizens, can impose upon private
establishments the burden of partly subsidizing a government program.
 The Court believes so.

The Senior Citizens Act was enacted primarily to maximize the contribution
of senior citizens to nation-building, and to grant benefits and privileges to them for
their improvement and well-being as the State considers them an integral part of our
society.[20]

The priority given to senior citizens finds its basis in the Constitution as set
forth in the law itself. Thus, the Act provides:

SEC. 2. Republic Act No. 7432 is hereby amended to read as

follows:

SECTION 1. Declaration of Policies and Objectives. Pursuant to

Article XV, Section 4 of the Constitution, it is the duty of the family to
take care of its elderly members while the State may design programs of
social security for them. In addition to this, Section 10 in the Declaration
of Principles and State Policies provides: The State shall provide social
justice in all phases of national development. Further, Article XIII,
Section 11, provides: The State shall adopt an integrated and
comprehensive approach to health development which shall endeavor to
make essential goods, health and other social services available to all the
people at affordable cost. There shall be priority for the needs of the
underprivileged sick, elderly, disabled, women and children. Consonant
with these constitutional principles the following are the declared policies
of this Act:

...

(f) To recognize the important role of the private sector in the

improvement of the welfare of senior citizens and to actively seek their
partnership.[21]

To implement the above policy, the law grants a twenty percent discount to senior
citizens for medical and dental services, and diagnostic and laboratory fees;
admission fees charged by theaters, concert halls, circuses, carnivals, and other
similar places of culture, leisure and amusement; fares for domestic land, air and sea
travel; utilization of services in hotels and similar lodging establishments,
restaurants and recreation centers; and purchases of medicines for the exclusive use
or enjoyment of senior citizens. As a form of reimbursement, the law provides that
business establishments extending the twenty percent discount to senior citizens may
claim the discount as a tax deduction.

The law is a legitimate exercise of police power which, similar to the power of
eminent domain, has general welfare for its object. Police power is not capable of an
exact definition, but has been purposely veiled in general terms to underscore its
comprehensiveness to meet all exigencies and provide enough room for an efficient
and flexible response to conditions and circumstances, thus assuring the greatest
benefits. [22] Accordingly, it has been described as the most essential, insistent and
the least limitable of powers, extending as it does to all the great public needs. [23] It
is [t]he power vested in the legislature by the constitution to make, ordain, and
establish all manner of wholesome and reasonable laws, statutes, and ordinances,
either with penalties or without, not repugnant to the constitution, as they shall judge
to be for the good and welfare of the commonwealth, and of the subjects of the
same.[24]

For this reason, when the conditions so demand as determined by the

legislature, property rights must bow to the primacy of police power because
property rights, though sheltered by due process, must yield to general welfare.[25]

Police power as an attribute to promote the common good would be diluted

considerably if on the mere plea of petitioners that they will suffer loss of earnings
and capital, the questioned provision is invalidated. Moreover, in the absence of
evidence demonstrating the alleged confiscatory effect of the provision in question,
there is no basis for its nullification in view of the presumption of validity which
every law has in its favor.[26]

Given these, it is incorrect for petitioners to insist that the grant of the senior
citizen discount is unduly oppressive to their business, because petitioners have not
taken time to calculate correctly and come up with a financial report, so that they
have not been able to show properly whether or not the tax deduction scheme really
works greatly to their disadvantage.[27]
 In treating the discount as a tax deduction, petitioners insist that they will incur
losses because, referring to the DOF Opinion, for every P1.00 senior citizen discount
that petitioners would give, P0.68 will be shouldered by them as only P0.32 will be
refunded by the government by way of a tax deduction.

To illustrate this point, petitioner Carlos Super Drug cited the anti-
hypertensive maintenance drug Norvasc as an example. According to the latter, it
acquires Norvasc from the distributors at P37.57 per tablet, and retails it at P39.60
(or at a margin of 5%). If it grants a 20% discount to senior citizens or an amount
equivalent to P7.92, then it would have to sell Norvasc at P31.68 which translates to
a loss from capital of P5.89 per tablet. Even if the government will allow a tax
deduction, only P2.53 per tablet will be refunded and not the full amount of the
discount which is P7.92. In short, only 32% of the 20% discount will be reimbursed
to the drugstores.[28]

Petitioners computation is flawed. For purposes of reimbursement, the law

states that the cost of the discount shall be deducted from gross income,[29] the
amount of income derived from all sources before deducting allowable expenses,
which will result in net income. Here, petitioners tried to show a loss on a per
transaction basis, which should not be the case. An income statement, showing an
accounting of petitioners sales, expenses, and net profit (or loss) for a given period
could have accurately reflected the effect of the discount on their income. Absent
any financial statement, petitioners cannot substantiate their claim that they will be
operating at a loss should they give the discount. In addition, the computation was
erroneously based on the assumption that their customers consisted wholly of senior
citizens. Lastly, the 32% tax rate is to be imposed on income, not on the amount of
the discount.

Furthermore, it is unfair for petitioners to criticize the law because they cannot
raise the prices of their medicines given the cutthroat nature of the players in the
industry. It is a business decision on the part of petitioners to peg the mark-up at 5%.
Selling the medicines below acquisition cost, as alleged by petitioners, is merely a
result of this decision. Inasmuch as pricing is a property right, petitioners cannot
reproach the law for being oppressive, simply because they cannot afford to raise
their prices for fear of losing their customers to competition.
 The Court is not oblivious of the retail side of the pharmaceutical industry and
the competitive pricing component of the business. While the Constitution protects
property rights, petitioners must accept the realities of business and the State, in the
exercise of police power, can intervene in the operations of a business which may
result in an impairment of property rights in the process.

Moreover, the right to property has a social dimension. While Article XIII of
the Constitution provides the precept for the protection of property, various laws and
jurisprudence, particularly on agrarian reform and the regulation of contracts and
public utilities, continuously serve as a reminder that the right to property can be
relinquished upon the command of the State for the promotion of public good.[30]

Undeniably, the success of the senior citizens program rests largely on the
support imparted by petitioners and the other private establishments concerned. This
being the case, the means employed in invoking the active participation of the private
sector, in order to achieve the purpose or objective of the law, is reasonably and
directly related. Without sufficient proof that Section 4(a) of R.A. No. 9257 is
arbitrary, and that the continued implementation of the same would be
unconscionably detrimental to petitioners, the Court will refrain from quashing a
legislative act.[31]
WHEREFORE, the petition is DISMISSED for lack of merit.

No costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 175356 December 3, 2013

MANILA MEMORIAL PARK, INC. AND LA FUNERARIA PAZ-SUCAT, INC., Petitioners,

vs.
SECRETARY OF THE DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT and THE
SECRETARY OF THE DEPARTMENT OF FINANCE, Respondents.
 DECISION

DEL CASTILLO, J.:

When a party challeges the constitutionality of a law, the burden of proof rests upon him.

Before us is a Petition for Prohibition2 under Rule 65 of the Rules of Court filed by petitioners Manila
Memorial Park, Inc. and La Funeraria Paz-Sucat, Inc., domestic corporations engaged in the
business of providing funeral and burial services, against public respondents Secretaries of the
Department of Social Welfare and Development (DSWD) and the Department of Finance (DOF).

Petitioners assail the constitutionality of Section 4 of Republic Act (RA) No. 7432,3 as amended by
RA 9257,4 and the implementing rules and regulations issued by the DSWD and DOF insofar as
these allow business establishments to claim the 20% discount given to senior citizens as a tax
deduction.

Factual Antecedents

On April 23, 1992, RA 7432 was passed into law, granting senior citizens the following privileges:

SECTION 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the following:

a) the grant of twenty percent (20%) discount from all establishments relative to utilization of
transportation services, hotels and similar lodging establishment[s], restaurants and
recreation centers and purchase of medicine anywhere in the country: Provided, That private
establishments may claim the cost as tax credit;

b) a minimum of twenty percent (20%) discount on admission fees charged by theaters,

cinema houses and concert halls, circuses, carnivals and other similar places of culture,
leisure, and amusement;

c) exemption from the payment of individual income taxes: Provided, That their annual
taxable income does not exceed the property level as determined by the National Economic
and Development Authority (NEDA) for that year;

d) exemption from training fees for socioeconomic programs undertaken by the OSCA as
part of its work;

e) free medical and dental services in government establishment[s] anywhere in the country,
subject to guidelines to be issued by the Department of Health, the Government Service
Insurance System and the Social Security System;

f) to the extent practicable and feasible, the continuance of the same benefits and privileges
given by the Government Service Insurance System (GSIS), Social Security System (SSS)
and PAG-IBIG, as the case may be, as are enjoyed by those in actual service.

On August 23, 1993, Revenue Regulations (RR) No. 02-94 was issued to implement RA 7432.
Sections 2(i) and 4 of RR No. 02-94 provide:

Sec. 2. DEFINITIONS. – For purposes of these regulations: i. Tax Credit – refers to the amount
representing the 20% discount granted to a qualified senior citizen by all establishments relative to
their utilization of transportation services, hotels and similar lodging establishments, restaurants,
drugstores, recreation centers, theaters, cinema houses, concert halls, circuses, carnivals and other
similar places of culture, leisure and amusement, which discount shall be deducted by the said
establishments from their gross income for income tax purposes and from their gross sales for
value-added tax or other percentage tax purposes. x x x x Sec. 4. RECORDING/BOOKKEEPING
REQUIREMENTS FOR PRIVATE ESTABLISHMENTS. – Private establishments, i.e., transport
services, hotels and similar lodging establishments, restaurants, recreation centers, drugstores,
theaters, cinema houses, concert halls, circuses, carnivals and other similar places of culture[,]
leisure and amusement, giving 20% discounts to qualified senior citizens are required to keep
separate and accurate record[s] of sales made to senior citizens, which shall include the name,
identification number, gross sales/receipts, discounts, dates of transactions and invoice number for
every transaction. The amount of 20% discount shall be deducted from the gross income for income
tax purposes and from gross sales of the business enterprise concerned for purposes of the VAT
and other percentage taxes.

In Commissioner of Internal Revenue v. Central Luzon Drug Corporation,5 the Court declared
Sections 2(i) and 4 of RR No. 02-94 as erroneous because these contravene RA 7432,6 thus:

RA 7432 specifically allows private establishments to claim as tax credit the amount of discounts
they grant. In turn, the Implementing Rules and Regulations, issued pursuant thereto, provide the
procedures for its availment. To deny such credit, despite the plain mandate of the law and the
regulations carrying out that mandate, is indefensible. First, the definition given by petitioner is
erroneous. It refers to tax credit as the amount representing the 20 percent discount that "shall be
deducted by the said establishments from their gross income for income tax purposes and from their
gross sales for value-added tax or other percentage tax purposes." In ordinary business language,
the tax credit represents the amount of such discount. However, the manner by which the discount
shall be credited against taxes has not been clarified by the revenue regulations. By ordinary
acceptation, a discount is an "abatement or reduction made from the gross amount or value of
anything." To be more precise, it is in business parlance "a deduction or lowering of an amount of
money;" or "a reduction from the full amount or value of something, especially a price." In business
there are many kinds of discount, the most common of which is that affecting the income statement
or financial report upon which the income tax is based.

xxxx

Sections 2.i and 4 of Revenue Regulations No. (RR) 2-94 define tax credit as the 20 percent
discount deductible from gross income for income tax purposes, or from gross sales for VAT or other
percentage tax purposes. In effect, the tax credit benefit under RA 7432 is related to a sales
discount. This contrived definition is improper, considering that the latter has to be deducted from
gross sales in order to compute the gross income in the income statement and cannot be deducted
again, even for purposes of computing the income tax. When the law says that the cost of the
discount may be claimed as a tax credit, it means that the amount — when claimed — shall be
treated as a reduction from any tax liability, plain and simple. The option to avail of the tax credit
benefit depends upon the existence of a tax liability, but to limit the benefit to a sales discount —
which is not even identical to the discount privilege that is granted by law — does not define it at all
and serves no useful purpose. The definition must, therefore, be stricken down.

Laws Not Amended by Regulations

Second, the law cannot be amended by a mere regulation. In fact, a regulation that "operates to
create a rule out of harmony with the statute is a mere nullity;" it cannot prevail. It is a cardinal rule
that courts "will and should respect the contemporaneous construction placed upon a statute by the
executive officers whose duty it is to enforce it x x x." In the scheme of judicial tax administration, the
need for certainty and predictability in the implementation of tax laws is crucial. Our tax authorities fill
in the details that "Congress may not have the opportunity or competence to provide." The
regulations these authorities issue are relied upon by taxpayers, who are certain that these will be
followed by the courts. Courts, however, will not uphold these authorities’ interpretations when
clearly absurd, erroneous or improper. In the present case, the tax authorities have given the term
tax credit in Sections 2.i and 4 of RR 2-94 a meaning utterly in contrast to what RA 7432 provides.
Their interpretation has muddled x x x the intent of Congress in granting a mere discount privilege,
not a sales discount. The administrative agency issuing these regulations may not enlarge, alter or
restrict the provisions of the law it administers; it cannot engraft additional requirements not
contemplated by the legislature.

In case of conflict, the law must prevail. A "regulation adopted pursuant to law is law." Conversely, a
regulation or any portion thereof not adopted pursuant to law is no law and has neither the force nor
the effect of law.7

On February 26, 2004, RA 92578 amended certain provisions of RA 7432, to wit:

SECTION 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the following:

(a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of
services in hotels and similar lodging establishments, restaurants and recreation centers, and
purchase of medicines in all establishments for the exclusive use or enjoyment of senior citizens,
including funeral and burial services for the death of senior citizens;

xxxx

The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax deduction based
on the net cost of the goods sold or services rendered: Provided, That the cost of the discount shall
be allowed as deduction from gross income for the same taxable year that the discount is granted.
Provided, further, That the total amount of the claimed tax deduction net of value added tax if
applicable, shall be included in their gross sales receipts for tax purposes and shall be subject to
proper documentation and to the provisions of the National Internal Revenue Code, as amended.

To implement the tax provisions of RA 9257, the Secretary of Finance issued RR No. 4-2006, the
pertinent provision of which provides:

SEC. 8. AVAILMENT BY ESTABLISHMENTS OF SALES DISCOUNTS AS DEDUCTION FROM

GROSS INCOME. – Establishments enumerated in subparagraph (6) hereunder granting sales
discounts to senior citizens on the sale of goods and/or services specified thereunder are entitled to
deduct the said discount from gross income subject to the following conditions:

(1) Only that portion of the gross sales EXCLUSIVELY USED, CONSUMED OR ENJOYED
BY THE SENIOR CITIZEN shall be eligible for the deductible sales discount.

(2) The gross selling price and the sales discount MUST BE SEPARATELY INDICATED IN
THE OFFICIAL RECEIPT OR SALES INVOICE issued by the establishment for the sale of
goods or services to the senior citizen.

(3) Only the actual amount of the discount granted or a sales discount not exceeding 20% of
the gross selling price can be deducted from the gross income, net of value added tax, if
 applicable, for income tax purposes, and from gross sales or gross receipts of the business
enterprise concerned, for VAT or other percentage tax purposes.

(4) The discount can only be allowed as deduction from gross income for the same taxable
year that the discount is granted.

(5) The business establishment giving sales discounts to qualified senior citizens is required
to keep separate and accurate record[s] of sales, which shall include the name of the senior
citizen, TIN, OSCA ID, gross sales/receipts, sales discount granted, [date] of [transaction]
and invoice number for every sale transaction to senior citizen.

(6) Only the following business establishments which granted sales discount to senior
citizens on their sale of goods and/or services may claim the said discount granted as
deduction from gross income, namely:

xxxx

(i) Funeral parlors and similar establishments – The beneficiary or any person who shall shoulder the
funeral and burial expenses of the deceased senior citizen shall claim the discount, such as casket,
embalmment, cremation cost and other related services for the senior citizen upon payment and
presentation of [his] death certificate.

The DSWD likewise issued its own Rules and Regulations Implementing RA 9257, to wit:

RULE VI DISCOUNTS AS TAX DEDUCTION OF ESTABLISHMENTS

Article 8. Tax Deduction of Establishments. – The establishment may claim the discounts granted
under Rule V, Section 4 – Discounts for Establishments, Section 9, Medical and Dental Services in
Private Facilities and Sections 10 and 11 – Air, Sea and Land Transportation as tax deduction based
on the net cost of the goods sold or services rendered.

Provided, That the cost of the discount shall be allowed as deduction from gross income for the
same taxable year that the discount is granted; Provided, further, That the total amount of the
claimed tax deduction net of value added tax if applicable, shall be included in their gross sales
receipts for tax purposes and shall be subject to proper documentation and to the provisions of the
National Internal Revenue Code, as amended; Provided, finally, that the implementation of the tax
deduction shall be subject to the Revenue Regulations to be issued by the Bureau of Internal
Revenue (BIR) and approved by the Department of Finance (DOF).

Feeling aggrieved by the tax deduction scheme, petitioners filed the present recourse, praying that
Section 4 of RA 7432, as amended by RA 9257, and the implementing rules and regulations issued
by the DSWD and the DOF be declared unconstitutional insofar as these allow business
establishments to claim the 20% discount given to senior citizens as a tax deduction; that the DSWD
and the DOF be prohibited from enforcing the same; and that the tax credit treatment of the 20%
discount under the former Section 4 (a) of RA 7432 be reinstated.

Issues

Petitioners raise the following issues:

A.
WHETHER THE PETITION PRESENTS AN ACTUAL CASE OR CONTROVERSY.

B.

WHETHER SECTION 4 OF REPUBLIC ACT NO. 9257 AND X X X ITS IMPLEMENTING RULES
AND REGULATIONS, INSOFAR AS THEY PROVIDE THAT THE TWENTY PERCENT (20%)
DISCOUNT TO SENIOR CITIZENS MAY BE CLAIMED AS A TAX DEDUCTION BY THE PRIVATE
ESTABLISHMENTS, ARE INVALID AND UNCONSTITUTIONAL.9

Petitioners’ Arguments

Petitioners emphasize that they are not questioning the 20% discount granted to senior citizens but
are only assailing the constitutionality of the tax deduction scheme prescribed under RA 9257 and
the implementing rules and regulations issued by the DSWD and the DOF.10

Petitioners posit that the tax deduction scheme contravenes Article III, Section 9 of the Constitution,
which provides that: "[p]rivate property shall not be taken for public use without just compensation."11

In support of their position, petitioners cite Central Luzon Drug Corporation,12 where it was ruled that
the 20% discount privilege constitutes taking of private property for public use which requires the
payment of just compensation,13 and Carlos Superdrug Corporation v. Department of Social Welfare
and Development,14 where it was acknowledged that the tax deduction scheme does not meet the
definition of just compensation.15

Petitioners likewise seek a reversal of the ruling in Carlos Superdrug Corporation16 that the tax
deduction scheme adopted by the government is justified by police power.17

They assert that "[a]lthough both police power and the power of eminent domain have the general
welfare for their object, there are still traditional distinctions between the two"18 and that "eminent
domain cannot be made less supreme than police power."19

Petitioners further claim that the legislature, in amending RA 7432, relied on an erroneous
contemporaneous construction that prior payment of taxes is required for tax credit.20

Petitioners also contend that the tax deduction scheme violates Article XV, Section 421 and Article
XIII, Section 1122of the Constitution because it shifts the State’s constitutional mandate or duty of
improving the welfare of the elderly to the private sector.23

Under the tax deduction scheme, the private sector shoulders 65% of the discount because only
35%24 of it is actually returned by the government.25

Consequently, the implementation of the tax deduction scheme prescribed under Section 4 of RA
9257 affects the businesses of petitioners.26

Thus, there exists an actual case or controversy of transcendental importance which deserves
judicious disposition on the merits by the highest court of the land.27

Respondents’ Arguments

Respondents, on the other hand, question the filing of the instant Petition directly with the Supreme
Court as this disregards the hierarchy of courts.28
They likewise assert that there is no justiciable controversy as petitioners failed to prove that the tax
deduction treatment is not a "fair and full equivalent of the loss sustained" by them.29

As to the constitutionality of RA 9257 and its implementing rules and regulations, respondents
contend that petitioners failed to overturn its presumption of constitutionality.30

More important, respondents maintain that the tax deduction scheme is a legitimate exercise of the
State’s police power.31

Our Ruling

The Petition lacks merit.

There exists an actual case or controversy.

We shall first resolve the procedural issue. When the constitutionality of a law is put in issue, judicial
review may be availed of only if the following requisites concur: "(1) the existence of an actual and
appropriate case; (2) the existence of personal and substantial interest on the part of the party
raising the [question of constitutionality]; (3) recourse to judicial review is made at the earliest
opportunity; and (4) the [question of constitutionality] is the lis mota of the case."32

In this case, petitioners are challenging the constitutionality of the tax deduction scheme provided in
RA 9257 and the implementing rules and regulations issued by the DSWD and the DOF.
Respondents, however, oppose the Petition on the ground that there is no actual case or
controversy. We do not agree with respondents. An actual case or controversy exists when there is
"a conflict of legal rights" or "an assertion of opposite legal claims susceptible of judicial resolution."33

The Petition must therefore show that "the governmental act being challenged has a direct adverse
effect on the individual challenging it."34

In this case, the tax deduction scheme challenged by petitioners has a direct adverse effect on them.
Thus, it cannot be denied that there exists an actual case or controversy.

The validity of the 20% senior citizen discount and tax deduction scheme under RA 9257, as
an exercise of police power of the State, has already been settled in Carlos Superdrug
Corporation.

Petitioners posit that the resolution of this case lies in the determination of whether the legally
mandated 20% senior citizen discount is an exercise of police power or eminent domain. If it is
police power, no just compensation is warranted. But if it is eminent domain, the tax deduction
scheme is unconstitutional because it is not a peso for peso reimbursement of the 20% discount
given to senior citizens. Thus, it constitutes taking of private property without payment of just
compensation. At the outset, we note that this question has been settled in Carlos Superdrug
Corporation.35

In that case, we ruled:

Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes deprivation of
private property. Compelling drugstore owners and establishments to grant the discount will result in
a loss of profit and capital because 1) drugstores impose a mark-up of only 5% to 10% on branded
medicines; and 2) the law failed to provide a scheme whereby drugstores will be justly compensated
for the discount. Examining petitioners’ arguments, it is apparent that what petitioners are ultimately
questioning is the validity of the tax deduction scheme as a reimbursement mechanism for the
twenty percent (20%) discount that they extend to senior citizens. Based on the afore-stated DOF
Opinion, the tax deduction scheme does not fully reimburse petitioners for the discount privilege
accorded to senior citizens. This is because the discount is treated as a deduction, a tax-deductible
expense that is subtracted from the gross income and results in a lower taxable income. Stated
otherwise, it is an amount that is allowed by law to reduce the income prior to the application of the
tax rate to compute the amount of tax which is due. Being a tax deduction, the discount does not
reduce taxes owed on a peso for peso basis but merely offers a fractional reduction in taxes owed.
Theoretically, the treatment of the discount as a deduction reduces the net income of the private
establishments concerned. The discounts given would have entered the coffers and formed part of
the gross sales of the private establishments, were it not for R.A. No. 9257. The permanent
reduction in their total revenues is a forced subsidy corresponding to the taking of private property
for public use or benefit. This constitutes compensable taking for which petitioners would ordinarily
become entitled to a just compensation. Just compensation is defined as the full and fair equivalent
of the property taken from its owner by the expropriator. The measure is not the taker’s gain but the
owner’s loss. The word just is used to intensify the meaning of the word compensation, and to
convey the idea that the equivalent to be rendered for the property to be taken shall be real,
substantial, full and ample. A tax deduction does not offer full reimbursement of the senior citizen
discount. As such, it would not meet the definition of just compensation. Having said that, this raises
the question of whether the State, in promoting the health and welfare of a special group of citizens,
can impose upon private establishments the burden of partly subsidizing a government program.
The Court believes so. The Senior Citizens Act was enacted primarily to maximize the contribution of
senior citizens to nation-building, and to grant benefits and privileges to them for their improvement
and well-being as the State considers them an integral part of our society. The priority given to
senior citizens finds its basis in the Constitution as set forth in the law itself. Thus, the Act provides:
1âwphi 1

SEC. 2. Republic Act No. 7432 is hereby amended to read as follows:

SECTION 1. Declaration of Policies and Objectives. — Pursuant to Article XV, Section 4 of the
Constitution, it is the duty of the family to take care of its elderly members while the State may
design programs of social security for them. In addition to this, Section 10 in the Declaration of
Principles and State Policies provides: "The State shall provide social justice in all phases of national
development." Further, Article XIII, Section 11, provides: "The State shall adopt an integrated and
comprehensive approach to health development which shall endeavor to make essential goods,
health and other social services available to all the people at affordable cost. There shall be priority
for the needs of the underprivileged sick, elderly, disabled, women and children." Consonant with
these constitutional principles the following are the declared policies of this Act:

xxx xxx xxx

(f) To recognize the important role of the private sector in the improvement of the welfare of senior
citizens and to actively seek their partnership.

To implement the above policy, the law grants a twenty percent discount to senior citizens for
medical and dental services, and diagnostic and laboratory fees; admission fees charged by
theaters, concert halls, circuses, carnivals, and other similar places of culture, leisure and
amusement; fares for domestic land, air and sea travel; utilization of services in hotels and similar
lodging establishments, restaurants and recreation centers; and purchases of medicines for the
exclusive use or enjoyment of senior citizens. As a form of reimbursement, the law provides that
business establishments extending the twenty percent discount to senior citizens may claim the
discount as a tax deduction. The law is a legitimate exercise of police power which, similar to the
power of eminent domain, has general welfare for its object. Police power is not capable of an exact
definition, but has been purposely veiled in general terms to underscore its comprehensiveness to
meet all exigencies and provide enough room for an efficient and flexible response to conditions and
circumstances, thus assuring the greatest benefits. Accordingly, it has been described as "the most
essential, insistent and the least limitable of powers, extending as it does to all the great public
needs." It is "[t]he power vested in the legislature by the constitution to make, ordain, and establish
all manner of wholesome and reasonable laws, statutes, and ordinances, either with penalties or
without, not repugnant to the constitution, as they shall judge to be for the good and welfare of the
commonwealth, and of the subjects of the same." For this reason, when the conditions so demand
as determined by the legislature, property rights must bow to the primacy of police power because
property rights, though sheltered by due process, must yield to general welfare. Police power as an
attribute to promote the common good would be diluted considerably if on the mere plea of
petitioners that they will suffer loss of earnings and capital, the questioned provision is invalidated.
Moreover, in the absence of evidence demonstrating the alleged confiscatory effect of the provision
in question, there is no basis for its nullification in view of the presumption of validity which every law
has in its favor. Given these, it is incorrect for petitioners to insist that the grant of the senior citizen
discount is unduly oppressive to their business, because petitioners have not taken time to calculate
correctly and come up with a financial report, so that they have not been able to show properly
whether or not the tax deduction scheme really works greatly to their disadvantage. In treating the
discount as a tax deduction, petitioners insist that they will incur losses because, referring to the
DOF Opinion, for every ₱1.00 senior citizen discount that petitioners would give, P0.68 will be
shouldered by them as only P0.32 will be refunded by the government by way of a tax deduction. To
illustrate this point, petitioner Carlos Super Drug cited the anti-hypertensive maintenance drug
Norvasc as an example. According to the latter, it acquires Norvasc from the distributors at ₱37.57
per tablet, and retails it at ₱39.60 (or at a margin of 5%). If it grants a 20% discount to senior citizens
or an amount equivalent to ₱7.92, then it would have to sell Norvasc at ₱31.68 which translates to a
loss from capital of ₱5.89 per tablet. Even if the government will allow a tax deduction, only ₱2.53
per tablet will be refunded and not the full amount of the discount which is ₱7.92. In short, only 32%
of the 20% discount will be reimbursed to the drugstores. Petitioners’ computation is flawed. For
purposes of reimbursement, the law states that the cost of the discount shall be deducted from gross
income, the amount of income derived from all sources before deducting allowable expenses, which
will result in net income. Here, petitioners tried to show a loss on a per transaction basis, which
should not be the case. An income statement, showing an accounting of petitioners' sales,
expenses, and net profit (or loss) for a given period could have accurately reflected the effect of the
discount on their income. Absent any financial statement, petitioners cannot substantiate their claim
that they will be operating at a loss should they give the discount. In addition, the computation was
erroneously based on the assumption that their customers consisted wholly of senior citizens. Lastly,
the 32% tax rate is to be imposed on income, not on the amount of the discount.

Furthermore, it is unfair for petitioners to criticize the law because they cannot raise the prices of
their medicines given the cutthroat nature of the players in the industry. It is a business decision on
the part of petitioners to peg the mark-up at 5%. Selling the medicines below acquisition cost, as
alleged by petitioners, is merely a result of this decision. Inasmuch as pricing is a property right,
petitioners cannot reproach the law for being oppressive, simply because they cannot afford to raise
their prices for fear of losing their customers to competition. The Court is not oblivious of the retail
side of the pharmaceutical industry and the competitive pricing component of the business. While
the Constitution protects property rights, petitioners must accept the realities of business and the
State, in the exercise of police power, can intervene in the operations of a business which may result
in an impairment of property rights in the process.

Moreover, the right to property has a social dimension. While Article XIII of the Constitution provides
the precept for the protection of property, various laws and jurisprudence, particularly on agrarian
reform and the regulation of contracts and public utilities, continuously serve as x x x reminder[s] that
the right to property can be relinquished upon the command of the State for the promotion of public
good. Undeniably, the success of the senior citizens program rests largely on the support imparted
by petitioners and the other private establishments concerned. This being the case, the means
employed in invoking the active participation of the private sector, in order to achieve the purpose or
objective of the law, is reasonably and directly related. Without sufficient proof that Section 4 (a) of
R.A. No. 9257 is arbitrary, and that the continued implementation of the same would be
unconscionably detrimental to petitioners, the Court will refrain from quashing a legislative
act.36 (Bold in the original; underline supplied)

We, thus, found that the 20% discount as well as the tax deduction scheme is a valid exercise of the
police power of the State.

No compelling reason has been proffered to overturn, modify or abandon the ruling in Carlos
Superdrug Corporation.

Petitioners argue that we have previously ruled in Central Luzon Drug Corporation37 that the 20%
discount is an exercise of the power of eminent domain, thus, requiring the payment of just
compensation. They urge us to re-examine our ruling in Carlos Superdrug Corporation38 which
allegedly reversed the ruling in Central Luzon Drug Corporation.39

They also point out that Carlos Superdrug Corporation40 recognized that the tax deduction scheme
under the assailed law does not provide for sufficient just compensation. We agree with petitioners’
observation that there are statements in Central Luzon Drug Corporation41 describing the 20%
discount as an exercise of the power of eminent domain, viz.:

[T]he privilege enjoyed by senior citizens does not come directly from the State, but rather from the
private establishments concerned. Accordingly, the tax credit benefit granted to these
establishments can be deemed as their just compensation for private property taken by the State for
public use. The concept of public use is no longer confined to the traditional notion of use by the
public, but held synonymous with public interest, public benefit, public welfare, and public
convenience. The discount privilege to which our senior citizens are entitled is actually a benefit
enjoyed by the general public to which these citizens belong. The discounts given would have
entered the coffers and formed part of the gross sales of the private establishments concerned, were
it not for RA 7432. The permanent reduction in their total revenues is a forced subsidy corresponding
to the taking of private property for public use or benefit. As a result of the 20 percent discount
imposed by RA 7432, respondent becomes entitled to a just compensation. This term refers not only
to the issuance of a tax credit certificate indicating the correct amount of the discounts given, but
also to the promptness in its release. Equivalent to the payment of property taken by the State, such
issuance — when not done within a reasonable time from the grant of the discounts — cannot be
considered as just compensation. In effect, respondent is made to suffer the consequences of being
immediately deprived of its revenues while awaiting actual receipt, through the certificate, of the
equivalent amount it needs to cope with the reduction in its revenues. Besides, the taxation power
can also be used as an implement for the exercise of the power of eminent domain. Tax measures
are but "enforced contributions exacted on pain of penal sanctions" and "clearly imposed for a public
purpose." In recent years, the power to tax has indeed become a most effective tool to realize social
justice, public welfare, and the equitable distribution of wealth. While it is a declared commitment
under Section 1 of RA 7432, social justice "cannot be invoked to trample on the rights of property
owners who under our Constitution and laws are also entitled to protection. The social justice
consecrated in our [C]onstitution [is] not intended to take away rights from a person and give them to
another who is not entitled thereto." For this reason, a just compensation for income that is taken
away from respondent becomes necessary. It is in the tax credit that our legislators find support to
realize social justice, and no administrative body can alter that fact. To put it differently, a private
establishment that merely breaks even — without the discounts yet — will surely start to incur losses
because of such discounts. The same effect is expected if its mark-up is less than 20 percent, and if
all its sales come from retail purchases by senior citizens. Aside from the observation we have
already raised earlier, it will also be grossly unfair to an establishment if the discounts will be treated
merely as deductions from either its gross income or its gross sales. Operating at a loss through no
1âwphi 1

fault of its own, it will realize that the tax credit limitation under RR 2-94 is inutile, if not improper.
Worse, profit-generating businesses will be put in a better position if they avail themselves of tax
credits denied those that are losing, because no taxes are due from the latter.42 (Italics in the original;
emphasis supplied)

The above was partly incorporated in our ruling in Carlos Superdrug Corporation43 when we stated
preliminarily that—

Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes deprivation of
private property. Compelling drugstore owners and establishments to grant the discount will result in
a loss of profit and capital because 1) drugstores impose a mark-up of only 5% to 10% on branded
medicines; and 2) the law failed to provide a scheme whereby drugstores will be justly compensated
for the discount. Examining petitioners’ arguments, it is apparent that what petitioners are ultimately
questioning is the validity of the tax deduction scheme as a reimbursement mechanism for the
twenty percent (20%) discount that they extend to senior citizens. Based on the afore-stated DOF
Opinion, the tax deduction scheme does not fully reimburse petitioners for the discount privilege
accorded to senior citizens. This is because the discount is treated as a deduction, a tax-deductible
expense that is subtracted from the gross income and results in a lower taxable income. Stated
otherwise, it is an amount that is allowed by law to reduce the income prior to the application of the
tax rate to compute the amount of tax which is due. Being a tax deduction, the discount does not
reduce taxes owed on a peso for peso basis but merely offers a fractional reduction in taxes owed.
Theoretically, the treatment of the discount as a deduction reduces the net income of the private
establishments concerned. The discounts given would have entered the coffers and formed part of
the gross sales of the private establishments, were it not for R.A. No. 9257. The permanent
reduction in their total revenues is a forced subsidy corresponding to the taking of private property
for public use or benefit. This constitutes compensable taking for which petitioners would ordinarily
become entitled to a just compensation. Just compensation is defined as the full and fair equivalent
of the property taken from its owner by the expropriator. The measure is not the taker’s gain but the
owner’s loss. The word just is used to intensify the meaning of the word compensation, and to
convey the idea that the equivalent to be rendered for the property to be taken shall be real,
substantial, full and ample. A tax deduction does not offer full reimbursement of the senior citizen
discount. As such, it would not meet the definition of just compensation. Having said that, this raises
the question of whether the State, in promoting the health and welfare of a special group of citizens,
can impose upon private establishments the burden of partly subsidizing a government program.
The Court believes so.44

This, notwithstanding, we went on to rule in Carlos Superdrug Corporation45 that the 20% discount
and tax deduction scheme is a valid exercise of the police power of the State. The present case,
thus, affords an opportunity for us to clarify the above-quoted statements in Central Luzon Drug
Corporation46 and Carlos Superdrug Corporation.47

First, we note that the above-quoted disquisition on eminent domain in Central Luzon Drug
Corporation48 is obiter dicta and, thus, not binding precedent. As stated earlier, in Central Luzon Drug
Corporation,49 we ruled that the BIR acted ultra vires when it effectively treated the 20% discount as
a tax deduction, under Sections 2.i and 4 of RR No. 2-94, despite the clear wording of the previous
law that the same should be treated as a tax credit. We were, therefore, not confronted in that case
with the issue as to whether the 20% discount is an exercise of police power or eminent domain.
Second, although we adverted to Central Luzon Drug Corporation50 in our ruling in Carlos Superdrug
Corporation,51 this referred only to preliminary matters. A fair reading of Carlos Superdrug
Corporation52would show that we categorically ruled therein that the 20% discount is a valid exercise
of police power. Thus, even if the current law, through its tax deduction scheme (which abandoned
the tax credit scheme under the previous law), does not provide for a peso for peso reimbursement
of the 20% discount given by private establishments, no constitutional infirmity obtains because,
being a valid exercise of police power, payment of just compensation is not warranted. We have
carefully reviewed the basis of our ruling in Carlos Superdrug Corporation53 and we find no cogent
reason to overturn, modify or abandon it. We also note that petitioners’ arguments are a mere
reiteration of those raised and resolved in Carlos Superdrug Corporation.54 Thus, we sustain Carlos
Superdrug Corporation.55

Nonetheless, we deem it proper, in what follows, to amplify our explanation in Carlos Superdrug
Corporation56 as to why the 20% discount is a valid exercise of police power and why it may not,
under the specific circumstances of this case, be considered as an exercise of the power of eminent
domain contrary to the obiter in Central Luzon Drug Corporation.57

Police power versus eminent domain.

Police power is the inherent power of the State to regulate or to restrain the use of liberty and
property for public welfare.58

The only limitation is that the restriction imposed should be reasonable, not oppressive.59

In other words, to be a valid exercise of police power, it must have a lawful subject or objective and a
lawful method of accomplishing the goal.60

Under the police power of the State, "property rights of individuals may be subjected to restraints
and burdens in order to fulfill the objectives of the government."61

The State "may interfere with personal liberty, property, lawful businesses and occupations to
promote the general welfare [as long as] the interference [is] reasonable and not arbitrary."62

Eminent domain, on the other hand, is the inherent power of the State to take or appropriate private
property for public use.63

The Constitution, however, requires that private property shall not be taken without due process of
law and the payment of just compensation.64

Traditional distinctions exist between police power and eminent domain. In the exercise of police
power, a property right is impaired by regulation,65 or the use of property is merely prohibited,
regulated or restricted66 to promote public welfare. In such cases, there is no compensable taking,
hence, payment of just compensation is not required. Examples of these regulations are property
condemned for being noxious or intended for noxious purposes (e.g., a building on the verge of
collapse to be demolished for public safety, or obscene materials to be destroyed in the interest of
public morals)67 as well as zoning ordinances prohibiting the use of property for purposes injurious to
the health, morals or safety of the community (e.g., dividing a city’s territory into residential and
industrial areas).68

It has, thus, been observed that, in the exercise of police power (as distinguished from eminent
domain), although the regulation affects the right of ownership, none of the bundle of rights which
constitute ownership is appropriated for use by or for the benefit of the public.69
On the other hand, in the exercise of the power of eminent domain, property interests are
appropriated and applied to some public purpose which necessitates the payment of just
compensation therefor. Normally, the title to and possession of the property are transferred to the
expropriating authority. Examples include the acquisition of lands for the construction of public
highways as well as agricultural lands acquired by the government under the agrarian reform law for
redistribution to qualified farmer beneficiaries. However, it is a settled rule that the acquisition of title
or total destruction of the property is not essential for "taking" under the power of eminent domain to
be present.70

Examples of these include establishment of easements such as where the land owner is perpetually
deprived of his proprietary rights because of the hazards posed by electric transmission lines
constructed above his property71 or the compelled interconnection of the telephone system between
the government and a private company.72

In these cases, although the private property owner is not divested of ownership or possession,
payment of just compensation is warranted because of the burden placed on the property for the use
or benefit of the public.

The 20% senior citizen discount is an exercise of police power.

It may not always be easy to determine whether a challenged governmental act is an exercise of
police power or eminent domain. The very nature of police power as elastic and responsive to
various social conditions73 as well as the evolving meaning and scope of public use74 and just
compensation75 in eminent domain evinces that these are not static concepts. Because of the
exigencies of rapidly changing times, Congress may be compelled to adopt or experiment with
different measures to promote the general welfare which may not fall squarely within the traditionally
recognized categories of police power and eminent domain. The judicious approach, therefore, is to
look at the nature and effects of the challenged governmental act and decide, on the basis thereof,
whether the act is the exercise of police power or eminent domain. Thus, we now look at the nature
and effects of the 20% discount to determine if it constitutes an exercise of police power or eminent
domain. The 20% discount is intended to improve the welfare of senior citizens who, at their age, are
less likely to be gainfully employed, more prone to illnesses and other disabilities, and, thus, in need
of subsidy in purchasing basic commodities. It may not be amiss to mention also that the discount
serves to honor senior citizens who presumably spent the productive years of their lives on
contributing to the development and progress of the nation. This distinct cultural Filipino practice of
honoring the elderly is an integral part of this law. As to its nature and effects, the 20% discount is a
regulation affecting the ability of private establishments to price their products and services relative
to a special class of individuals, senior citizens, for which the Constitution affords preferential
concern.76

In turn, this affects the amount of profits or income/gross sales that a private establishment can
derive from senior citizens. In other words, the subject regulation affects the pricing, and, hence, the
profitability of a private establishment. However, it does not purport to appropriate or burden specific
properties, used in the operation or conduct of the business of private establishments, for the use or
benefit of the public, or senior citizens for that matter, but merely regulates the pricing of goods and
services relative to, and the amount of profits or income/gross sales that such private establishments
may derive from, senior citizens. The subject regulation may be said to be similar to, but with
substantial distinctions from, price control or rate of return on investment control laws which are
traditionally regarded as police power measures.77

These laws generally regulate public utilities or industries/enterprises imbued with public interest in
order to protect consumers from exorbitant or unreasonable pricing as well as temper corporate
greed by controlling the rate of return on investment of these corporations considering that they have
a monopoly over the goods or services that they provide to the general public. The subject regulation
differs therefrom in that (1) the discount does not prevent the establishments from adjusting the level
of prices of their goods and services, and (2) the discount does not apply to all customers of a given
establishment but only to the class of senior citizens. Nonetheless, to the degree material to the
resolution of this case, the 20% discount may be properly viewed as belonging to the category of
price regulatory measures which affect the profitability of establishments subjected thereto. On its
face, therefore, the subject regulation is a police power measure. The obiter in Central Luzon Drug
Corporation,78 however, describes the 20% discount as an exercise of the power of eminent domain
and the tax credit, under the previous law, equivalent to the amount of discount given as the just
compensation therefor. The reason is that (1) the discount would have formed part of the gross sales
of the establishment were it not for the law prescribing the 20% discount, and (2) the permanent
reduction in total revenues is a forced subsidy corresponding to the taking of private property for
public use or benefit. The flaw in this reasoning is in its premise. It presupposes that the subject
regulation, which impacts the pricing and, hence, the profitability of a private establishment,
automatically amounts to a deprivation of property without due process of law. If this were so, then
all price and rate of return on investment control laws would have to be invalidated because they
impact, at some level, the regulated establishment’s profits or income/gross sales, yet there is no
provision for payment of just compensation. It would also mean that overnment cannot set price or
rate of return on investment limits, which reduce the profits or income/gross sales of private
establishments, if no just compensation is paid even if the measure is not confiscatory. The obiter is,
thus, at odds with the settled octrine that the State can employ police power measures to regulate
the pricing of goods and services, and, hence, the profitability of business establishments in order to
pursue legitimate State objectives for the common good, provided that the regulation does not go too
far as to amount to "taking."79

In City of Manila v. Laguio, Jr.,80 we recognized that— x x x 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. 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.81

The impact or effect of a regulation, such as the one under consideration, must, thus, be determined
on a case-to-case basis. Whether that line between permissible regulation under police power and
"taking" under eminent domain has been crossed must, under the specific circumstances of this
case, be subject to proof and the one assailing the constitutionality of the regulation carries the
heavy burden of proving that the measure is unreasonable, oppressive or confiscatory. The time-
honored rule is that the burden of proving the unconstitutionality of a law rests upon the one
assailing it and "the burden becomes heavier when police power is at issue."82

The 20% senior citizen discount has not been shown to be unreasonable, oppressive or
confiscatory.

In Alalayan v. National Power Corporation,83 petitioners, who were franchise holders of electric
plants, challenged the validity of a law limiting their allowable net profits to no more than 12% per
annum of their investments plus two-month operating expenses. In rejecting their plea, we ruled that,
in an earlier case, it was found that 12% is a reasonable rate of return and that petitioners failed to
prove that the aforesaid rate is confiscatory in view of the presumption of constitutionality.84

We adopted a similar line of reasoning in Carlos Superdrug Corporation85 when we ruled that
petitioners therein failed to prove that the 20% discount is arbitrary, oppressive or confiscatory. We
noted that no evidence, such as a financial report, to establish the impact of the 20% discount on the
overall profitability of petitioners was presented in order to show that they would be operating at a
loss due to the subject regulation or that the continued implementation of the law would be
unconscionably detrimental to the business operations of petitioners. In the case at bar, petitioners
proceeded with a hypothetical computation of the alleged loss that they will suffer similar to what the
petitioners in Carlos Superdrug Corporation86 did. Petitioners went directly to this Court without first
establishing the factual bases of their claims. Hence, the present recourse must, likewise, fail.
Because all laws enjoy the presumption of constitutionality, courts will uphold a law’s validity if any
set of facts may be conceived to sustain it.87

On its face, we find that there are at least two conceivable bases to sustain the subject regulation’s
validity absent clear and convincing proof that it is unreasonable, oppressive or confiscatory.
Congress may have legitimately concluded that business establishments have the capacity to
absorb a decrease in profits or income/gross sales due to the 20% discount without substantially
affecting the reasonable rate of return on their investments considering (1) not all customers of a
business establishment are senior citizens and (2) the level of its profit margins on goods and
services offered to the general public. Concurrently, Congress may have, likewise, legitimately
concluded that the establishments, which will be required to extend the 20% discount, have the
capacity to revise their pricing strategy so that whatever reduction in profits or income/gross sales
that they may sustain because of sales to senior citizens, can be recouped through higher mark-ups
or from other products not subject of discounts. As a result, the discounts resulting from sales to
senior citizens will not be confiscatory or unduly oppressive. In sum, we sustain our ruling in Carlos
Superdrug Corporation88 that the 20% senior citizen discount and tax deduction scheme are valid
exercises of police power of the State absent a clear showing that it is arbitrary, oppressive or
confiscatory.

Conclusion

In closing, we note that petitioners hypothesize, consistent with our previous ratiocinations, that the
discount will force establishments to raise their prices in order to compensate for its impact on
overall profits or income/gross sales. The general public, or those not belonging to the senior citizen
class, are, thus, made to effectively shoulder the subsidy for senior citizens. This, in petitioners’
view, is unfair.

As already mentioned, Congress may be reasonably assumed to have foreseen this eventuality. But,
more importantly, this goes into the wisdom, efficacy and expediency of the subject law which is not
proper for judicial review. In a way, this law pursues its social equity objective in a non-traditional
manner unlike past and existing direct subsidy programs of the government for the poor and
marginalized sectors of our society. Verily, Congress must be given sufficient leeway in formulating
welfare legislations given the enormous challenges that the government faces relative to, among
others, resource adequacy and administrative capability in implementing social reform measures
which aim to protect and uphold the interests of those most vulnerable in our society. In the process,
the individual, who enjoys the rights, benefits and privileges of living in a democratic polity, must
bear his share in supporting measures intended for the common good. This is only fair. In fine,
without the requisite showing of a clear and unequivocal breach of the Constitution, the validity of the
assailed law must be sustained.
Refutation of the Dissent

The main points of Justice Carpio’s Dissent may be summarized as follows: (1) the discussion on
eminent domain in Central Luzon Drug Corporation89 is not obiter dicta ; (2) allowable taking, in
police power, is limited to property that is destroyed or placed outside the commerce of man for
public welfare; (3) the amount of mandatory discount is private property within the ambit of Article III,
Section 990 of the Constitution; and (4) the permanent reduction in a private establishment’s total
revenue, arising from the mandatory discount, is a taking of private property for public use or benefit,
hence, an exercise of the power of eminent domain requiring the payment of just compensation. I
We maintain that the discussion on eminent domain in Central Luzon Drug Corporation91 is obiter
dicta. As previously discussed, in Central Luzon Drug Corporation,92 the BIR, pursuant to Sections 2.i
and 4 of RR No. 2-94, treated the senior citizen discount in the previous law, RA 7432, as a tax
deduction instead of a tax credit despite the clear provision in that law which stated –

SECTION 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the following:

a) The grant of twenty percent (20%) discount from all establishments relative to
utilization of transportation services, hotels and similar lodging establishment,
restaurants and recreation centers and purchase of medicines anywhere in the
country: Provided, That private establishments may claim the cost as tax credit;
(Emphasis supplied)

Thus, the Court ruled that the subject revenue regulation violated the law, viz:

The 20 percent discount required by the law to be given to senior citizens is a tax credit, not merely
a tax deduction from the gross income or gross sale of the establishment concerned. A tax credit is
used by a private establishment only after the tax has been computed; a tax deduction, before the
tax is computed. RA 7432 unconditionally grants a tax credit to all covered entities. Thus, the
provisions of the revenue regulation that withdraw or modify such grant are void. Basic is the rule
that administrative regulations cannot amend or revoke the law.93

As can be readily seen, the discussion on eminent domain was not necessary in order to arrive at
this conclusion. All that was needed was to point out that the revenue regulation contravened the law
which it sought to implement. And, precisely, this was done in Central Luzon Drug Corporation94 by
comparing the wording of the previous law vis-à-vis the revenue regulation; employing the rules of
statutory construction; and applying the settled principle that a regulation cannot amend the law it
seeks to implement. A close reading of Central Luzon Drug Corporation95 would show that the Court
went on to state that the tax credit "can be deemed" as just compensation only to explain why the
previous law provides for a tax credit instead of a tax deduction. The Court surmised that the tax
credit was a form of just compensation given to the establishments covered by the 20% discount.
However, the reason why the previous law provided for a tax credit and not a tax deduction was not
necessary to resolve the issue as to whether the revenue regulation contravenes the law. Hence, the
discussion on eminent domain is obiter dicta.

A court, in resolving cases before it, may look into the possible purposes or reasons that impelled
the enactment of a particular statute or legal provision. However, statements made relative thereto
are not always necessary in resolving the actual controversies presented before it. This was the
case in Central Luzon Drug Corporation96resulting in that unfortunate statement that the tax credit
"can be deemed" as just compensation. This, in turn, led to the erroneous conclusion, by deductive
reasoning, that the 20% discount is an exercise of the power of eminent domain. The Dissent
essentially adopts this theory and reasoning which, as will be shown below, is contrary to settled
principles in police power and eminent domain analysis. II The Dissent discusses at length the
doctrine on "taking" in police power which occurs when private property is destroyed or placed
outside the commerce of man. Indeed, there is a whole class of police power measures which justify
the destruction of private property in order to preserve public health, morals, safety or welfare. As
earlier mentioned, these would include a building on the verge of collapse or confiscated obscene
materials as well as those mentioned by the Dissent with regard to property used in violating a
criminal statute or one which constitutes a nuisance. In such cases, no compensation is required.
However, it is equally true that there is another class of police power measures which do not involve
the destruction of private property but merely regulate its use. The minimum wage law, zoning
ordinances, price control laws, laws regulating the operation of motels and hotels, laws limiting the
working hours to eight, and the like would fall under this category. The examples cited by the
Dissent, likewise, fall under this category: Article 157 of the Labor Code, Sections 19 and 18 of the
Social Security Law, and Section 7 of the Pag-IBIG Fund Law. These laws merely regulate or, to use
the term of the Dissent, burden the conduct of the affairs of business establishments. In such cases,
payment of just compensation is not required because they fall within the sphere of permissible
police power measures. The senior citizen discount law falls under this latter category. III The
Dissent proceeds from the theory that the permanent reduction of profits or income/gross sales, due
to the 20% discount, is a "taking" of private property for public purpose without payment of just
compensation. At the outset, it must be emphasized that petitioners never presented any evidence
to establish that they were forced to suffer enormous losses or operate at a loss due to the effects of
the assailed law. They came directly to this Court and provided a hypothetical computation of the
loss they would allegedly suffer due to the operation of the assailed law. The central premise of the
Dissent’s argument that the 20% discount results in a permanent reduction in profits or income/gross
sales, or forces a business establishment to operate at a loss is, thus, wholly unsupported by
competent evidence. To be sure, the Court can invalidate a law which, on its face, is arbitrary,
oppressive or confiscatory.97

But this is not the case here.

In the case at bar, evidence is indispensable before a determination of a constitutional violation can
be made because of the following reasons. First, the assailed law, by imposing the senior citizen
discount, does not take any of the properties used by a business establishment like, say, the land on
which a manufacturing plant is constructed or the equipment being used to produce goods or
services. Second, rather than taking specific properties of a business establishment, the senior
citizen discount law merely regulates the prices of the goods or services being sold to senior citizens
by mandating a 20% discount. Thus, if a product is sold at ₱10.00 to the general public, then it shall
be sold at ₱8.00 ( i.e., ₱10.00 less 20%) to senior citizens. Note that the law does not impose at
what specific price the product shall be sold, only that a 20% discount shall be given to senior
citizens based on the price set by the business establishment. A business establishment is, thus,
free to adjust the prices of the goods or services it provides to the general public. Accordingly, it can
increase the price of the above product to ₱20.00 but is required to sell it at ₱16.00 (i.e. , ₱20.00
less 20%) to senior citizens. Third, because the law impacts the prices of the goods or services of a
particular establishment relative to its sales to senior citizens, its profits or income/gross sales are
affected. The extent of the impact would, however, depend on the profit margin of the business
establishment on a particular good or service. If a product costs ₱5.00 to produce and is sold at
₱10.00, then the profit98 is ₱5.0099 or a profit margin100 of 50%.101

Under the assailed law, the aforesaid product would have to be sold at ₱8.00 to senior citizens yet
the business would still earn ₱3.00102 or a 30%103 profit margin. On the other hand, if the product costs
₱9.00 to produce and is required to be sold at ₱8.00 to senior citizens, then the business would
experience a loss of ₱1.00.104
But note that since not all customers of a business establishment are senior citizens, the business
establishment may continue to earn ₱1.00 from non-senior citizens which, in turn, can offset any
loss arising from sales to senior citizens.

Fourth, when the law imposes the 20% discount in favor of senior citizens, it does not prevent the
business establishment from revising its pricing strategy.

By revising its pricing strategy, a business establishment can recoup any reduction of profits or
income/gross sales which would otherwise arise from the giving of the 20% discount. To illustrate,
suppose A has two customers: X, a senior citizen, and Y, a non-senior citizen. Prior to the law, A
sells his products at ₱10.00 a piece to X and Y resulting in income/gross sales of ₱20.00 (₱10.00 +
₱10.00). With the passage of the law, A must now sell his product to X at ₱8.00 (i.e., ₱10.00 less
20%) so that his income/gross sales would be ₱18.00 (₱8.00 + ₱10.00) or lower by ₱2.00. To
prevent this from happening, A decides to increase the price of his products to ₱11.11 per piece.
Thus, he sells his product to X at ₱8.89 (i.e. , ₱11.11 less 20%) and to Y at ₱11.11. As a result, his
income/gross sales would still be ₱20.00105 (₱8.89 + ₱11.11). The capacity, then, of business
establishments to revise their pricing strategy makes it possible for them not to suffer any reduction
in profits or income/gross sales, or, in the alternative, mitigate the reduction of their profits or
income/gross sales even after the passage of the law. In other words, business establishments have
the capacity to adjust their prices so that they may remain profitable even under the operation of the
assailed law.

The Dissent, however, states that – The explanation by the majority that private establishments can
always increase their prices to recover the mandatory discount will only encourage private
establishments to adjust their prices upwards to the prejudice of customers who do not enjoy the
20% discount. It was likewise suggested that if a company increases its prices, despite the
application of the 20% discount, the establishment becomes more profitable than it was before the
implementation of R.A. 7432. Such an economic justification is self-defeating, for more consumers
will suffer from the price increase than will benefit from the 20% discount. Even then, such ability to
increase prices cannot legally validate a violation of the eminent domain clause.106

But, if it is possible that the business establishment, by adjusting its prices, will suffer no reduction in
its profits or income/gross sales (or suffer some reduction but continue to operate profitably) despite
giving the discount, what would be the basis to strike down the law? If it is possible that the business
establishment, by adjusting its prices, will not be unduly burdened, how can there be a finding that
the assailed law is an unconstitutional exercise of police power or eminent domain? That there may
be a burden placed on business establishments or the consuming public as a result of the operation
of the assailed law is not, by itself, a ground to declare it unconstitutional for this goes into the
wisdom and expediency of the law.

The cost of most, if not all, regulatory measures of the government on business establishments is
ultimately passed on to the consumers but that, by itself, does not justify the wholesale nullification
of these measures. It is a basic postulate of our democratic system of government that the
Constitution is a social contract whereby the people have surrendered their sovereign powers to the
State for the common good.107

All persons may be burdened by regulatory measures intended for the common good or to serve
some important governmental interest, such as protecting or improving the welfare of a special class
of people for which the Constitution affords preferential concern. Indubitably, the one assailing the
law has the heavy burden of proving that the regulation is unreasonable, oppressive or confiscatory,
or has gone "too far" as to amount to a "taking." Yet, here, the Dissent would have this Court nullify
the law without any proof of such nature.
Further, this Court is not the proper forum to debate the economic theories or realities that impelled
Congress to shift from the tax credit to the tax deduction scheme. It is not within our power or
competence to judge which scheme is more or less burdensome to business establishments or the
consuming public and, thereafter, to choose which scheme the State should use or pursue. The shift
from the tax credit to tax deduction scheme is a policy determination by Congress and the Court will
respect it for as long as there is no showing, as here, that the subject regulation has transgressed
constitutional limitations. Unavoidably, the lack of evidence constrains the Dissent to rely on
speculative and hypothetical argumentation when it states that the 20% discount is a significant
amount and not a minimal loss (which erroneously assumes that the discount automatically results in
a loss when it is possible that the profit margin is greater than 20% and/or the pricing strategy can be
revised to prevent or mitigate any reduction in profits or income/gross sales as illustrated
above),108 and not all private establishments make a 20% profit margin (which conversely implies that
there are those who make more and, thus, would not be greatly affected by this regulation).109

In fine, because of the possible scenarios discussed above, we cannot assume that the 20%
discount results in a permanent reduction in profits or income/gross sales, much less that business
establishments are forced to operate at a loss under the assailed law. And, even if we gratuitously
assume that the 20% discount results in some degree of reduction in profits or income/gross sales,
we cannot assume that such reduction is arbitrary, oppressive or confiscatory. To repeat, there is no
actual proof to back up this claim, and it could be that the loss suffered by a business establishment
was occasioned through its fault or negligence in not adapting to the effects of the assailed law. The
law uniformly applies to all business establishments covered thereunder. There is, therefore, no
unjust discrimination as the aforesaid business establishments are faced with the same constraints.
The necessity of proof is all the more pertinent in this case because, as similarly observed by Justice
Velasco in his Concurring Opinion, the law has been in operation for over nine years now. However,
the grim picture painted by petitioners on the unconscionable losses to be indiscriminately suffered
by business establishments, which should have led to the closure of numerous business
establishments, has not come to pass. Verily, we cannot invalidate the assailed law based on
assumptions and conjectures. Without adequate proof, the presumption of constitutionality must
prevail. IV At this juncture, we note that the Dissent modified its original arguments by including a
new paragraph, to wit:

Section 9, Article III of the 1987 Constitution speaks of private property without any distinction. It
does not state that there should be profit before the taking of property is subject to just
compensation. The private property referred to for purposes of taking could be inherited, donated,
purchased, mortgaged, or as in this case, part of the gross sales of private establishments. They are
all private property and any taking should be attended by corresponding payment of just
compensation. The 20% discount granted to senior citizens belong to private establishments,
whether these establishments make a profit or suffer a loss. In fact, the 20% discount applies to non-
profit establishments like country, social, or golf clubs which are open to the public and not only for
exclusive membership. The issue of profit or loss to the establishments is immaterial.110

Two things may be said of this argument. First, it contradicts the rest of the arguments of the
Dissent. After it states that the issue of profit or loss is immaterial, the Dissent proceeds to argue that
the 20% discount is not a minimal loss111 and that the 20% discount forces business establishments
to operate at a loss.112

Even the obiter in Central Luzon Drug Corporation,113 which the Dissent essentially adopts and relies
on, is premised on the permanent reduction of total revenues and the loss that business
establishments will be forced to suffer in arguing that the 20% discount constitutes a "taking" under
the power of eminent domain. Thus, when the Dissent now argues that the issue of profit or loss is
immaterial, it contradicts itself because it later argues, in order to justify that there is a "taking" under
the power of eminent domain in this case, that the 20% discount forces business establishments to
suffer a significant loss or to operate at a loss. Second, this argument suffers from the same flaw as
the Dissent's original arguments. It is an erroneous characterization of the 20% discount. According
to the Dissent, the 20% discount is part of the gross sales and, hence, private property belonging to
business establishments. However, as previously discussed, the 20% discount is not private
property actually owned and/or used by the business establishment. It should be distinguished from
properties like lands or buildings actually used in the operation of a business establishment which, if
appropriated for public use, would amount to a "taking" under the power of eminent domain. Instead,
the 20% discount is a regulatory measure which impacts the pricing and, hence, the profitability of
business establishments. At the time the discount is imposed, no particular property of the business
establishment can be said to be "taken." That is, the State does not acquire or take anything from
the business establishment in the way that it takes a piece of private land to build a public road.
While the 20% discount may form part of the potential profits or income/gross sales114 of the business
establishment, as similarly characterized by Justice Bersamin in his Concurring Opinion, potential
profits or income/gross sales are not private property, specifically cash or money, already belonging
to the business establishment. They are a mere expectancy because they are potential fruits of the
successful conduct of the business. Prior to the sale of goods or services, a business establishment
may be subject to State regulations, such as the 20% senior citizen discount, which may impact the
level or amount of profits or income/gross sales that can be generated by such establishment. For
this reason, the validity of the discount is to be determined based on its overall effects on the
operations of the business establishment.

Again, as previously discussed, the 20% discount does not automatically result in a 20% reduction in
profits, or, to align it with the term used by the Dissent, the 20% discount does not mean that a 20%
reduction in gross sales necessarily results. Because (1) the profit margin of a product is not
necessarily less than 20%, (2) not all customers of a business establishment are senior citizens, and
(3) the establishment may revise its pricing strategy, such reduction in profits or income/gross sales
may be prevented or, in the alternative, mitigated so that the business establishment continues to
operate profitably. Thus, even if we gratuitously assume that some degree of reduction in profits or
income/gross sales occurs because of the 20% discount, it does not follow that the regulation is
unreasonable, oppressive or confiscatory because the business establishment may make the
necessary adjustments to continue to operate profitably. No evidence was presented by petitioners
to show otherwise. In fact, no evidence was presented by petitioners at all. Justice Leonen, in his
Concurring and Dissenting Opinion, characterizes "profits" (or income/gross sales) as an inchoate
right. Another way to view it, as stated by Justice Velasco in his Concurring Opinion, is that the
business establishment merely has a right to profits. The Constitution adverts to it as the right of an
enterprise to a reasonable return on investment.115

Undeniably, this right, like any other right, may be regulated under the police power of the State to
achieve important governmental objectives like protecting the interests and improving the welfare of
senior citizens. It should be noted though that potential profits or income/gross sales are relevant in
police power and eminent domain analyses because they may, in appropriate cases, serve as an
indicia when a regulation has gone "too far" as to amount to a "taking" under the power of eminent
domain. When the deprivation or reduction of profits or income/gross sales is shown to be
unreasonable, oppressive or confiscatory, then the challenged governmental regulation may be
nullified for being a "taking" under the power of eminent domain. In such a case, it is not profits or
income/gross sales which are actually taken and appropriated for public use. Rather, when the
regulation causes an establishment to incur losses in an unreasonable, oppressive or confiscatory
manner, what is actually taken is capital and the right of the business establishment to a reasonable
return on investment. If the business losses are not halted because of the continued operation of the
regulation, this eventually leads to the destruction of the business and the total loss of the capital
invested therein. But, again, petitioners in this case failed to prove that the subject regulation is
unreasonable, oppressive or confiscatory.
 V.

The Dissent further argues that we erroneously used price and rate of return on investment control
laws to justify the senior citizen discount law. According to the Dissent, only profits from industries
imbued with public interest may be regulated because this is a condition of their franchises. Profits of
establishments without franchises cannot be regulated permanently because there is no law
regulating their profits. The Dissent concludes that the permanent reduction of total revenues or
gross sales of business establishments without franchises is a taking of private property under the
power of eminent domain. In making this argument, it is unfortunate that the Dissent quotes only a
portion of the ponencia – The subject regulation may be said to be similar to, but with substantial
distinctions from, price control or rate of return on investment control laws which are traditionally
regarded as police power measures. These laws generally regulate public utilities or
industries/enterprises imbued with public interest in order to protect consumers from exorbitant or
unreasonable pricing as well as temper corporate greed by controlling the rate of return on
investment of these corporations considering that they have a monopoly over the goods or services
that they provide to the general public. The subject regulation differs therefrom in that (1) the
discount does not prevent the establishments from adjusting the level of prices of their goods and
services, and (2) the discount does not apply to all customers of a given establishment but only to
the class of senior citizens. x x x116

The above paragraph, in full, states –

The subject regulation may be said to be similar to, but with substantial distinctions from, price
control or rate of return on investment control laws which are traditionally regarded as police power
measures. These laws generally regulate public utilities or industries/enterprises imbued with public
interest in order to protect consumers from exorbitant or unreasonable pricing as well as temper
corporate greed by controlling the rate of return on investment of these corporations considering that
they have a monopoly over the goods or services that they provide to the general public. The subject
regulation differs therefrom in that (1) the discount does not prevent the establishments from
adjusting the level of prices of their goods and services, and (2) the discount does not apply to all
customers of a given establishment but only to the class of senior citizens.

Nonetheless, to the degree material to the resolution of this case, the 20% discount may be properly
viewed as belonging to the category of price regulatory measures which affects the profitability of
establishments subjected thereto. (Emphasis supplied)

The point of this paragraph is to simply show that the State has, in the past, regulated prices and
profits of business establishments. In other words, this type of regulatory measures is traditionally
recognized as police power measures so that the senior citizen discount may be considered as a
police power measure as well. What is more, the substantial distinctions between price and rate of
return on investment control laws vis-à-vis the senior citizen discount law provide greater reason to
uphold the validity of the senior citizen discount law. As previously discussed, the ability to adjust
prices allows the establishment subject to the senior citizen discount to prevent or mitigate any
reduction of profits or income/gross sales arising from the giving of the discount. In contrast,
establishments subject to price and rate of return on investment control laws cannot adjust prices
accordingly. Certainly, there is no intention to say that price and rate of return on investment control
laws are the justification for the senior citizen discount law. Not at all. The justification for the senior
citizen discount law is the plenary powers of Congress. The legislative power to regulate business
establishments is broad and covers a wide array of areas and subjects. It is well within Congress’
legislative powers to regulate the profits or income/gross sales of industries and enterprises, even
those without franchises. For what are franchises but mere legislative enactments? There is nothing
in the Constitution that prohibits Congress from regulating the profits or income/gross sales of
industries and enterprises without franchises. On the contrary, the social justice provisions of the
Constitution enjoin the State to regulate the "acquisition, ownership, use, and disposition" of property
and its increments.117

This may cover the regulation of profits or income/gross sales of all businesses, without qualification,
to attain the objective of diffusing wealth in order to protect and enhance the right of all the people to
human dignity.118

Thus, under the social justice policy of the Constitution, business establishments may be compelled
to contribute to uplifting the plight of vulnerable or marginalized groups in our society provided that
the regulation is not arbitrary, oppressive or confiscatory, or is not in breach of some specific
constitutional limitation. When the Dissent, therefore, states that the "profits of private
establishments which are non-franchisees cannot be regulated permanently, and there is no such
law regulating their profits permanently,"119 it is assuming what it ought to prove. First, there are laws
which, in effect, permanently regulate profits or income/gross sales of establishments without
franchises, and RA 9257 is one such law. And, second, Congress can regulate such profits or
income/gross sales because, as previously noted, there is nothing in the Constitution to prevent it
from doing so. Here, again, it must be emphasized that petitioners failed to present any proof to
show that the effects of the assailed law on their operations has been unreasonable, oppressive or
confiscatory. The permanent regulation of profits or income/gross sales of business establishments,
even those without franchises, is not as uncommon as the Dissent depicts it to be. For instance, the
minimum wage law allows the State to set the minimum wage of employees in a given region or
geographical area. Because of the added labor costs arising from the minimum wage, a permanent
reduction of profits or income/gross sales would result, assuming that the employer does not
increase the prices of his goods or services. To illustrate, suppose it costs a company ₱5.00 to
produce a product and it sells the same at ₱10.00 with a 50% profit margin. Later, the State
increases the minimum wage. As a result, the company incurs greater labor costs so that it now
costs ₱7.00 to produce the same product. The profit per product of the company would be reduced
to ₱3.00 with a profit margin of 30%. The net effect would be the same as in the earlier example of
granting a 20% senior citizen discount. As can be seen, the minimum wage law could, likewise, lead
to a permanent reduction of profits. Does this mean that the minimum wage law should, likewise, be
declared unconstitutional on the mere plea that it results in a permanent reduction of profits? Taking
it a step further, suppose the company decides to increase the price of its product in order to offset
the effects of the increase in labor cost; does this mean that the minimum wage law, following the
reasoning of the Dissent, is unconstitutional because the consuming public is effectively made to
subsidize the wage of a group of laborers, i.e., minimum wage earners? The same reasoning can be
adopted relative to the examples cited by the Dissent which, according to it, are valid police power
regulations. Article 157 of the Labor Code, Sections 19 and 18 of the Social Security Law, and
Section 7 of the Pag-IBIG Fund Law would effectively increase the labor cost of a business
establishment. This would, in turn, be integrated as part of the cost of its goods or services. Again, if
1âwphi1

the establishment does not increase its prices, the net effect would be a permanent reduction in its
profits or income/gross sales. Following the reasoning of the Dissent that "any form of permanent
taking of private property (including profits or income/gross sales)120 is an exercise of eminent domain
that requires the State to pay just compensation,"121 then these statutory provisions would, likewise,
have to be declared unconstitutional. It does not matter that these benefits are deemed part of the
employees’ legislated wages because the net effect is the same, that is, it leads to higher labor costs
and a permanent reduction in the profits or income/gross sales of the business establishments.122

The point then is this – most, if not all, regulatory measures imposed by the State on business
establishments impact, at some level, the latter’s prices and/or profits or income/gross sales.123

If the Court were to sustain the Dissent’s theory, then a wholesale nullification of such measures
would inevitably result. The police power of the State and the social justice provisions of the
Constitution would, thus, be rendered nugatory. There is nothing sacrosanct about profits or
income/gross sales. This, we made clear in Carlos Superdrug Corporation:124

Police power as an attribute to promote the common good would be diluted considerably if on the
mere plea of petitioners that they will suffer loss of earnings and capital, the questioned provision is
invalidated. Moreover, in the absence of evidence demonstrating the alleged confiscatory effect of
the provision in question, there is no basis for its nullification in view of the presumption of validity
which every law has in its favor.

xxxx

The Court is not oblivious of the retail side of the pharmaceutical industry and the competitive pricing
component of the business. While the Constitution protects property rights petitioners must the
realities of business and the State, in the exercise of police power, can intervene in the operations of
a business which may result in an impairment of property rights in the process.

Moreover, the right to property has a social dimension. While Article XIII of the Constitution provides
the percept for the protection of property, various laws and jurisprudence, particularly on agrarian
reform and the regulation of contracts and public utilities, continously serve as a reminder for the
promotion of public good.

Undeniably, the success of the senior citizens program rests largely on the support imparted by
petitioners and the other private establishments concerned. This being the case, the means
employed in invoking the active participation of the private sector, in order to achieve the purpose or
objective of the law, is reasonably and directly related. Without sufficient proof that Section 4(a) of
R.A. No. 9257 is arbitrary, and that the continued implementation of the same would be
unconscionably detrimental to petitioners, the Court will refrain form quashing a legislative act.125

In conclusion, we maintain that the correct rule in determining whether the subject regulatory
measure has amounted to a "taking" under the power of eminent domain is the one laid down
in Alalayan v. National Power Corporation126 and followed in Carlos Superdurg
Corporation127 consistent with long standing principles in police power and eminent domain analysis.
Thus, the deprivation or reduction of profits or income. Gross sales must be clearly shown to be
unreasonable, oppressive or confiscatory. Under the specific circumstances of this case, such
determination can only be made upon the presentation of competent proof which petitioners failed to
do. A law, which has been in operation for many years and promotes the welfare of a group
accorded special concern by the Constitution, cannot and should not be summarily invalidated on a
mere allegation that it reduces the profits or income/gross sales of business establishments.

WHEREFORE, the Petition is hereby DISMISSED for lack of merit.

SO ORDERED.

G.R. No. 194561, September 14, 2016 - DRUGSTORES ASSOCIATION OF THE PHILIPPINES, INC. AND
NORTHERN LUZON DRUG CORPORATION, Petitioners, v. NATIONAL COUNCIL ON DISABILITY AFFAIRS;
DEPARTMENT OF HEALTH; DEPARTMENT OF FINANCE; BUREAU OF INTERNAL REVENUE; DEPARTMENT OF
THE INTERIOR AND LOCAL GOVERNMENT; AND DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT,
Respondent.
 THIRD DIVISION

G.R. No. 194561, September 14, 2016

DRUGSTORES ASSOCIATION OF THE PHILIPPINES, INC. AND NORTHERN LUZON DRUG

CORPORATION, Petitioners, v. NATIONAL COUNCIL ON DISABILITY AFFAIRS; DEPARTMENT OF
HEALTH; DEPARTMENT OF FINANCE; BUREAU OF INTERNAL REVENUE; DEPARTMENT OF THE
INTERIOR AND LOCAL GOVERNMENT; AND DEPARTMENT OF SOCIAL WELFARE AND
DEVELOPMENT, Respondent.

DECISION

PERALTA, J.:

Before us is a Petition for Review on Certiorari1 with a Prayer for a Temporary Restraining Order and/or Writ
of Preliminary Injunction which seeks to annul and set aside the Decision2 dated July 26, 2010, and the
Resolution3 dated November 19, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 109903. The CA
dismissed petitioners' Petition for Prohibition4 and upheld the constitutionality of the mandatory twenty
percent (20%) discount on the purchase of medicine by persons with disability (PWD).

The antecedents are as follows:

On March 24, 1992, Republic Act (R.A.) No. 7277, entitled "An Act Providing for the Rehabilitation, Self-
chanRoble svirtual Lawlib ra ry

Development and Self-Reliance of Disabled Persons and their Integration into the Mainstream of Society and
for Other Purposes," otherwise known as the "Magna Carta for Disabled Persons," was passed into law.5 The
law defines "disabled persons", "impairment" and "disability" as follows: ChanRobles Vi rtua lawlib rary

SECTION 4. Definition of Terms. - For purposes of this Act, these terms are defined as follows:

(a) Disabled Persons are those suffering from restriction of different abilities, as a result of a mental,
chanRoble svirtual Lawlib ra ry

physical or sensory impairment, to perform an activity in the manner or within the range considered normal
for a human being;

(b) Impairment is any loss, diminution or aberration of psychological, physiological, or anatomical structure
of function;

(c) Disability shall mean (1) a physical or mental impairment that substantially limits one or more
psychological, physiological or anatomical function of an individual or activities of such individual; (2) a
record of such an impairment; or (3) being regarded as having such an impairment.6 chan roblesv irt uallawl ibrary

On April 30, 2007, Republic Act No. 9442 was enacted amending R.A. No. 7277. The Title of R.A. No. 7277
7

was amended to read as "Magna Carta for Persons with Disability" and all references on the law to "disabled
persons" were amended to read as "persons with disability" (PWD).8 Specifically, R.A. No. 9442 granted the
PWDs a twenty (20) percent discount on the purchase of medicine, and a tax deduction scheme was
adopted wherein covered establishments may deduct the discount granted from gross income based on the
net cost of goods sold or services rendered: ChanRoble sVirt ualawli bra ry

CHAPTER 8. Other Privileges and Incentives. SEC. 32. Persons with disability shall be entitled to the
following:

chanRoble svirtual Lawlib ra ry xxxx

 (d) At least twenty percent (20%) discount for the purchase of medicines
in all drugstores for the exclusive use or enjoyment of persons with
disability;

xxxx

The abovementioned privileges are available only to persons with disability who are Filipino citizens upon
submission of any of the following as proof of his/her entitlement thereto:
chanRoble svirtual Lawlib ra ry

(i) An identification card issued by the city or municipal mayor or the

barangay captain of the place where the person with disability resides;

(ii) The passport of the person with disability concerned; or

(ii) Transportation discount fare Identification Card (ID) issued by the

National Council for the Welfare of Disabled Persons (NCWDP).

xxxx

The establishments may claim the discounts granted in subsections (a), (b), (c), (f) and (g) as tax
deductions based on the net cost of the goods sold or services rendered: Provided, however, That the cost
of the discount shall be allowed as deduction from gross income for the same taxable year that the discount
is granted: Provided, further, That the total amount of the claimed tax deduction net of value-added tax if
applicable, shall be included in their gross sales receipts for tax purposes and shall be subject to proper
documentation and to the provisions of the National Internal Revenue Code (NIRC), as amended.9 chanroble svirtuallaw lib rary

The Implementing Rules and Regulations (IRR) of R.A. No. 9442 was jointly promulgated by the
10

Department of Social Welfare and Development (DSWD), Department of Education, Department of Finance
(DOF), Department of Tourism, Department of Transportation and Communication, Department of the
Interior and Local Government (DILG) and Department of Agriculture. Insofar as pertinent to this petition,
the salient portions of the IRR are hereunder quoted:11
RULE III. DEFINITION OF TERMS

Section 5. Definition of Terms. For purposes of these Rules and Regulations, these terms are defined as
follows:

5.1. Persons with Disability - are those individuals defined under Section 4 of RA 7277 "An Act Providing
chanRoble svirtual Lawlib ra ry

for the Rehabilitation, Self-Development and Self-Reliance of Persons with Disability as amended and their
integration into the Mainstream of Society and for Other Purposes". This is defined as a person suffering
from restriction or different abilities, as a result of a mental, physical or sensory impairment, to perform an
activity in a manner or within the range considered normal for human being. Disability shall mean (1) a
physical or mental impairment that substantially limits one or more psychological, physiological or
anatomical function of an individual or activities of such individual; (2) a record of such an impairment; or
(3) being regarded as having such an impairment.

xxxx

RULE IV. PRIVILEGES AND INCENTIVES FOR THE PERSONS WITH DISABILITY

Section 6. Other Privileges and Incentives. Persons with disability shall be entitled to the following:

chanRoble svirtual Lawlib ra ry xxxx

6.1.d. Purchase of Medicine - at least twenty percent (20%) discount on the purchase of medicine for the
exclusive use and enjoyment of persons with disability. All drugstores, hospital, pharmacies, clinics and
other similar establishments selling medicines are required to provide at least twenty percent (20%)
discount subject to the guidelines issued by DOH and PHILHEALTH.12 chanroble slaw

xxxx

6.11 The abovementioned privileges are available only to persons with disability who are Filipino citizens
upon submission of any of the following as proof of his/her entitlement thereto subject to the guidelines
issued by the NCWDP in coordination with DSWD, DOH and DILG.
6.11.1 An identification card issued by the city or municipal mayor or the barangay captain of the place
where the person with disability resides;

6.11.2 The passport of the persons with disability concerned; or

6.11.3 Transportation discount fare Identification Card (ID) issued by the National Council for the Welfare of
Disabled Persons (NCWDP). However, upon effectivity of this Implementing Rules and Regulations, NCWDP
will already adopt the Identification Card issued by the Local Government Unit for purposes of uniformity in
the implementation. NCWDP will provide the design and specification of the identification card that will be
issued by the Local Government Units.13 chanrob lesvi rtua llawli bra ry

6.14. Availmenl of Tax Deductions by Establishment Granting Twenty Percent. 20% Discount - The
establishments may claim the discounts granted in sub-sections (6.1), (6.2), (6.4), (6.5) and (6.6) as tax
deductions based on the net cost of the goods sold or services rendered: Provided, however, that the cost of
the discount shall be allowed as deduction from gross income for the same taxable year that the discount is
granted: Provided, further, That the total amount of the claimed tax deduction net of value-added tax if
applicable, shall be included in their gross sales receipts for tax purposes and shall be subject to proper
documentation and to the provisions of the National Internal Revenue Code, as amended.
On April 23, 2008, the National Council on Disability Affairs (NCDA)14 issued Administrative Order (A.O.) No.
1, Series of 2008,15 prescribing guidelines which should serve as a mechanism for the issuance of a PWD
Identification Card (IDC) which shall be the basis for providing privileges and discounts to bona fidePWDs in
accordance with R.A. 9442: ChanRoblesVirtualawl ibra ry

IV. INSTITUTIONAL ARRANGEMENTS

A. The Local Government Unit of the City or Municipal Office shall implement these guidelines
in the issuance of the PWD-IDC

xxxx

D. Issuance of the appropriate document to confirm the medical condition of the applicant is as follows: ChanRobles Vi rt ualawlib ra ry

Disability Document Issuing Entity

Apparent Medical Licensed Private or Government
Disability Certificate Physician
School Licensed Teacher duly signed by the
Assessment School Principal
Certificate of Head of the Business Establishment or
Disability Head of Non-Government Organization
Non-Apparent Medical Licensed Private or Government
Disability Certificate Physician
E. PWD Registration Forms and ID Cards shall be issued and signed by the City or Municipal Mayor, or
Barangay Captain.
xxxx
V. IMPLEMENTING GUIDELINES AND PROCEDURES
Any bonafide person with permanent disability can apply for the issuance of the PWD-IDC. His/her caregiver
can assist in the application process. Procedures for the issuance of the ID Cards are as follows:

chanRoble svirtual Lawlib ra ry A. Completion of the Requirements. Complete and/or make available the following requirements: Cha nRobles Vi rtua lawlib rary

1. Two "1x1" recent ID pictures with the names, and signatures or thumbmarks at the
back of the picture

2. One (1) Valid ID

3. Document to confirm the medical or disability condition (See Section IV, D for the
required document).

On December 9, 2008, the DOF issued Revenue Regulations No. 1-200916 prescribing rules and regulations
to implement R.A. 9442 relative to the tax privileges of PWDs and tax incentives for establishments granting
the discount. Section 4 of Revenue Regulations No. 001-09 states that drugstores can only deduct the 20%
discount from their gross income subject to some conditions.17 chanrob leslaw

On May 20, 2009, the DOH issued A.O. No. 2009-001118 specifically stating that the grant of 20% discount
shall be provided in the purchase of branded medicines and unbranded generic medicines from all
establishments dispensing medicines for the exclusive use of the PWDs.19 It also detailed the guidelines for
the provision of medical and related discounts and special privileges to PWDs pursuant to R.A. 9442.20 chanrob leslaw

On July 28, 2009, petitioners filed a Petition for Prohibition with application for a Temporary Restraining
Order and/or a Writ of Preliminary Injunction21 before the Court of Appeals to annul and enjoin the
implementation of the following laws: ChanRobles Vi rtua lawlib rary

1) Section 32 of R.A. No. 7277 as amended by R.A. No. 9442;

2) Section 6, Rule IV of the Implementing Rules and Regulations of R.A. No. 9442;

3) NCDA A.O. No. 1;

4) DOF Revenue Regulation No. 1-2009;

5) DOH A.O. No. 2009-0011.

On July 26, 2010, the CA rendered a Decision upholding the constitutionality of R.A. 7277 as amended, as
well as the assailed administrative issuances. However, the CA suspended the effectivity of NCDA A.O. No. 1
pending proof of respondent NCDA's compliance with filing of said administrative order with the Office of the
National Administrative Register (ONAR) and its publication in a newspaper of general circulation. The
dispositive portion of the Decision states: ChanRobles Vi rtualawl ib rary

WHEREFORE, the petition is PARTLY GRANTED. The effectivity of NCDA Administrative Order No. 1 is hereby
SUSPENDED pending Respondent's compliance with the proof of filing of NCDA Administrative Order No. 1
with the Office of the National Administrative Register and its publication in a newspaper of general
circulation.
Respondent NCDA filed a motion for reconsideration before the CA to lift the suspension of the
implementation of NCDA A.O. No. 1 attaching thereto proof of its publication in the Philippine Star and Daily
Tribune on August 12, 2010, as well as a certification from the ONAR showing that the same was filed with
the said office on October 22, 2009.22 Likewise, petitioners filed a motion for reconsideration of the CA
Decision.

In a Resolution dated November 19, 2010, the CA dismissed petitioners' motion for reconsideration and
lifted the suspension of the effectivity of NCDA A.O. No. 1 considering the filing of the same with ONAR and
its publication in a newspaper of general circulation.

Hence, the instant petition raising the following issues: ChanRobles Vi rtualawlib ra ry

I. THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT RULED THAT THE MANDATED PWD
DISCOUNT IS A VALID EXERCISE OF POLICE POWER. ON THE CONTRARY, IT IS AN INVALID EXERCISE OF
THE POWER OF EMINENT DOMAIN BECAUSE IT FAILS TO PROVIDE JUST COMPENSATION TO PETITIONERS
AND OTHER SIMILARLY SITUATED DRUGSTORES;

II. THE CA SERIOUSLY ERRED WHEN IT RULED THAT SECTION 32 OF RA 7277 AS AMENDED BY RA 9442,
NCDA AO 1 AND THE OTHER IMPLEMENTING REGULATIONS DID NOT VIOLATE THE DUE PROCESS CLAUSE;

III. THE CA SERIOUSLY ERRED WHEN IT RULED THAT THE DEFINITIONS OF DISABILITIES UNDER SECTION
4(A), SECTION 4(B) AND SECTION 4(C) OF RA 7277 AS AMENDED BY RA 9442, RULE 1 OF THE
IMPLEMENTING RULES AND REGULATIONS23 OF RA 7277, SECTION 5.1 OF THE IMPLEMENTING RULES AND
REGULATIONS OF RA 9442, NCDA AO 1 AND DOH AO 2009-11 ARE NOT VAGUE, AMBIGUOUS AND
UNCONSTITUTIONAL;

IV. THE CA SERIOUSLY ERRED WHEN IT RULED THAT THE MANDATED PWD DISCOUNT DOES NOT VIOLATE
THE EQUAL PROTECTION CLAUSE.
We deny the petition.

The CA is correct when it applied by analogy the case of Carlos Superdrug Corporation et al. v. DSWD, et
al.24 wherein We pronouced that Section 4 of R.A. No. 9257 which grants 20% discount on the purchase of
medicine of senior citizens is a legitimate exercise of police power: ChanRoble sVirtualawl ibra ry

The law is a legitimate exercise of police power which, similar to the power of eminent domain, has general
welfare for its object. Police power is not capable of an exact definition, but has been purposely veiled in
general terms to underscore its comprehensiveness to meet all exigencies and provide enough room for an
efficient and flexible response to conditions and circumstances, thus assuring the greatest
benefits.25 Accordingly, it has been described as the most essential, insistent and the least limitable of
cra lawred

powers, extending as it does to all the great public needs.26 It is [t]he power vested in the legislature by the
constitution to make, ordain, and establish all manner of wholesome and reasonable laws, statutes, and
ordinances, either with penalties or without, not repugnant to the constitution, as they shall judge to be for
the good and welfare of the commonwealth, and of the subjects of the same.27 chanroble slaw

For this reason, when the conditions so demand as determined by the legislature, property rights must bow
to the primacy of police power because property rights, though sheltered by due process, must yield to
general welfare.28 c hanrobles law

Police power as an attribute to promote the common good would be diluted considerably if on the mere plea
of petitioners that they will suffer loss of earnings and capital, the questioned provision is invalidated.
Moreover, in the absence of evidence demonstrating the alleged confiscatory effect of the provision in
question, there is no basis for its nullification in view of the presumption of validity which every law has in
its favor.29chanro blesvi rtua llawli bra ry

Police power is the power of the state to promote public welfare by restraining and regulating the use of
liberty and property. On the other hand, the power of eminent domain is the inherent right of the state (and
of those entities to which the power has been lawfully delegated) to condemn private property to public use
upon payment of just compensation. In the exercise of police power, property rights of private individuals
are subjected to restraints and burdens in order to secure the general comfort, health, and prosperity of the
state.30 A legislative act based on the police power requires the concurrence of a lawful subject and a lawful
method. In more familiar words, (a) the interests of the public generally, as distinguished from those of a
particular class, should justify the interference of the state; and (b) the means employed are reasonably
necessary for the accomplishment of the purpose and not unduly oppressive upon individuals.31 cha nrob leslaw

R.A. No. 7277 was enacted primarily to provide full support to the improvement of the total well-being of
PWDs and their integration into the mainstream of society. The priority given to PWDs finds its basis in the
Constitution: ChanRoblesVirt ualawli bra ry

ARTICLE XII

NATIONAL ECONOMY AND PATRIMONY

xxxx

Section 6. The use of property bears a social function, and all economic agents shall contribute to the
common good. Individuals and private groups, including corporations, cooperatives, and similar collective
organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty
of the State to promote distributive justice and to intervene when the common good so demands.32 chanroble slaw
 ARTICLE XIII

SOCIAL JUSTICE AND HUMAN RIGHTS

xxxx

Section 11. The State shall adopt an integrated and comprehensive approach to health development which
shall endeavor to make essential goods, health and other social services available to all the people at
affordable cost. There shall be priority for the needsof the underprivileged, sick, elderly, disabled, women,
and children. The State shall endeavor to provide free medical care to paupers.33 chan roblesv irtuallaw lib rary

Thus, R.A. No. 7277 provides: ChanRobles Vi rtualaw lib rary

SECTION 2. Declaration of Policy. The grant of the rights and privileges for disabled persons shall be guided
by the following principles:

(a). Disabled persons are part of the Philippine society, thus the Senate shall give full support to the
chanRoble svirtual Lawlib ra ry

improvement of the total well-being of disabled persons and their integration into the mainstream of society.

Toward this end, the State shall adopt policies ensuring the rehabilitation, self-development and self-reliance
of disabled persons.

It shall develop their skills and potentials to enable them to compete favorably for available opportunities.

(b). Disabled persons have the same rights as other people to take their proper place in society. They
should be able to live freely and as independently as possible. This must be the concern of everyone - the
family, community and all government and non-government organizations.

Disabled person's rights must never be perceived as welfare services by the Government.
xxxx

(d). The State also recognizes the role of the private sector in promoting the welfare of disabled persons and
shall encourage partnership in programs that address their needs and concerns.34 chan roble svirtuallaw lib rary

To implement the above policies, R.A. No. 9442 which amended R.A. No. 7277 grants incentives and
benefits including a twenty percent (20%) discount to PWDs in the purchase of medicines; fares for
domestic air, sea and land travels including public railways and skyways; recreation and amusement centers
including theaters, food chains and restaurants.35 This is specifically stated in Section 4 of the IRR of R.A.
No. 9442: ChanRobles Vi rtualawl ib rary

Section 4. Policies and Objectives - It is the objective of Republic Act No. 9442 to provide persons with
disability, the opportunity to participate fully into the mainstream of society by granting them at
least twenty percent (20%) discount in all basic services. It is a declared policy of RA 7277 that
persons with disability are part of Philippine society, and thus the State shall give full support to the
improvement of their total wellbeing and their integration into the mainstream of society. They
have the same rights as other people to take their proper place in society. They should be able to live freely
and as independently as possible. This must be the concern of everyone the family, community and all
government and non-government organizations. Rights of persons with disability must never be perceived
as welfare services. Prohibitions on verbal, non-verbal ridicule and vilification against persons with disability
shall always be observed at all times.36 cha nrob lesvi rtua llawli bra ry

Hence, the PWD mandatory discount on the purchase of medicine is supported by a valid objective or
purpose as aforementioned. It has a valid subject considering that the concept of public use is no longer
confined to the traditional notion of use by the public, but held synonymous with public interest, public
benefit, public welfare, and public convenience. As in the case of senior citizens,37 the discount privilege to
which the PWDs are entitled is actually a benefit enjoyed by the general public to which these citizens
belong. The means employed in invoking the active participation of the private sector, in order to achieve
the purpose or objective of the law, is reasonably and directly related.38 Also, the means employed to
provide a fair, just and quality health care to PWDs are reasonably related to its accomplishment, and are
not oppressive, considering that as a form of reimbursement, the discount extended to PWDs in the
purchase of medicine can be claimed by the establishments as allowable tax deductions pursuant to Section
32 of R.A. No. 9442 as implemented in Section 4 of DOF Revenue Regulations No. 1-2009. Otherwise stated,
the discount reduces taxable income upon which the tax liability of the establishments is computed.

Further, petitioners aver that Section 32 of R.A. No. 7277 as amended by R.A. No. 9442 is unconstitutional
and void for violating the due process clause of the Constitution since entitlement to the 20% discount is
allegedly merely based on any of the three documents mentioned in the provision, namely: (i) an
identification card issued by the city or municipal mayor or the barangay captain of the place where the PWD
resides; (ii) the passport of the PWD; or (iii) transportation discount fare identification card issued by NCDA.
Petitioners, thus, maintain that none of the said documents has any relation to a medical finding of
disability, and the grant of the discount is allegedly without any process for the determination of a PWD in
accordance with law.

Section 32 of R.A. No. 7277, as amended by R.A. No. 9442, must be read with its IRR which stated that
upon its effectivity, NCWDP (which is the government agency tasked to ensure the implementation of RA
7277), would adopt the IDC issued by the local government units for purposes of uniformity in the
implementation.39 Thus, NCDA A.O. No. 1 provides the reasonable guidelines in the issuance of IDCs to
PWDs as proof of their entitlement to the privileges and incentives under the law40 and fills the details in the
implementation of the law.

As stated in NCDA A.O. No. 1, before an IDC is issued by the city or municipal mayor or the barangay
captain,41 or the Chairman of the NCDA,42 the applicant must first secure a medical certificate issued by a
licensed private or government physician that will confirm his medical or disability condition. If an applicant
is an employee with apparent disability, a "certificate of disability" issued by the head of the business
establishment or the head of the non-governmental organization is needed for him to be issued a PWD-IDC.
For a student with apparent disability, the "school assessment" issued by the teacher and signed by the
school principal should be presented to avail of a PWD-ID.

Petitioners' insistence that Part IV (D) of NCDA Administrative Order No. 1 is void because it allows allegedly
non-competent persons like teachers, head of establishments and heads of Non-Governmental Organizations
(NGOs) to confirm the medical condition of the applicant is misplaced. It must be stressed that only for
apparent disabilities can the teacher or head of a business establishment validly issue the mentioned
required document because, obviously, the disability is easily seen or clearly visible. It is, therefore, not an
unqualified grant of authority for the said non-medical persons as it is simply limited to apparent disabilities.
For a non-apparent disability or a disability condition that is not easily seen or clearly visible, the disability
can only be validated by a licensed private or government physician, and a medical certificate has to be
presented in the procurement of an IDC. Relative to this issue, the CA validly ruled, thus: ChanRoblesVirt ualawli bra ry

We agree with the Office of the Solicitor General's (OSG) ratiocination that teachers, heads of business
establishments and heads of NGOs can validly confirm the medical condition of their students/employees
with apparent disability for obvious reasons as compared to non-apparent disability which can only be
determined by licensed physicians. Under the Labor Code, disabled persons are eligible as apprentices
or learners provided that their handicap are not as much as to effectively impede the performance of their
job. We find that heads of business establishments can validly issue certificates of disability of their
employees because aside from the fact that they can obviously validate the disability, they also
have medical records of the employees as a pre-requisite in the hiring of employees. Hence, Part IV
(D) of NCDA AO No. 1 is logical and valid.43 chanrob lesvi rtua llawli bra ry

Furthermore, DOH A.O. No. 2009-11 prescribes additional guidelines for the 20% discount in the purchase
of all medicines for the exclusive use of PWD.44 To avail of the discount, the PWD must not only present his
I.D. but also the doctor's prescription stating, among others, the generic name of the medicine, the
physician's address, contact number and professional license number, professional tax receipt number and
narcotic license number, if applicable. A purchase booklet issued by the local social/health office is also
required in the purchase of over-the-counter medicines. Likewise, any single dispensing of medicine must be
in accordance with the prescription issued by the physician and should not exceed a one (1) month supply.
Therefore, as correctly argued by the respondents, Section 32 of R.A. No. 7277 as amended by R.A. No.
9442 complies with the standards of substantive due process.

We are likewise not persuaded by the argument of petitioners that the definition of "disabilities" under the
subject laws is vague and ambiguous because it is allegedly so general and broad that the person tasked
with implementing the law will undoubtedly arrive at different interpretations and applications of the law.
Aside from the definitions of a "person with disability" or "disabled persons" under Section 4 of R.A. No.
7277 as amended by R.A. No. 9442 and in the IRR of RA 9442, NCDA A.O. No. 1 also provides: ChanRob les Virtualawl ibra ry

4. Identification Cards shall be issued to any bonafide PWD with permanent disabilities due to
any one or more of the following conditions: psychosocial, chronic illness, learning, mental,
visual, orthopedic, speech and hearing conditions. This includes persons suffering from
disabling diseases resulting to the person's limitations to do day to day activities as
normally as possible such as but not limited to those undergoing dialysis, heart disorders,
 severe cancer cases and such other similar cases resulting to temporary or permanent
disability.45

Similarly, DOH A.O. No. 2009-0011 defines the different categories of disability as follows: ChanRob les Virtualawl ibra ry

Rule IV, Section 4, Paragraph B of the Implementing Rules and Regulations (IRR) of this Act required the
Department of Health to address the health concerns of seven (7) different categories of disability, which
include the following: (1) Psychological and behavioral disabilities (2) Chronic illness with disabilities
(3)Learning(cognitive or intellectual) disabilities (4) Mental disabilities (5) Visual/seeing disabilities (6)
Orthopedic/moving, and (7) communication deficits.46 chan roblesv irt uallawl ib rary

Elementary is the rule that when laws or rules are clear, when the law is unambiguous and unequivocal,
application not interpretation thereof is imperative. However, where the language of a statute is vague and
ambiguous, an interpretation thereof is resorted to. A law is deemed ambiguous when it is capable of being
understood by reasonably well-informed persons in either of two or more senses. The fact that a law admits
of different interpretations is the best evidence that it is vague and ambiguous.47 chanrob leslaw

In the instant case, We do not find the aforestated definition of terms as vague and ambiguous. Settled is
the rule that courts will not interfere in matters which are addressed to the sound discretion of the
government agency entrusted with the regulation of activities coming under the special and technical
training and knowledge of such agency.48 As a matter of policy, We accord great respect to the decisions
and/or actions of administrative authorities not only because of the doctrine of separation of powers but also
for their presumed knowledge, ability, and expertise in the enforcement of laws and regulations entrusted to
their jurisdiction. The rationale for this rule relates not only to the emergence of the multifarious needs of a
modern or modernizing society and the establishment of diverse administrative agencies for addressing and
satisfying those needs; it also relates to the accumulation of experience and growth of specialized
capabilities by the administrative agency charged with implementing a particular statute.49 chanroble slaw

Lastly, petitioners contend that R.A. No. 7227, as amended by R.A. No. 9442, violates the equal protection
clause of the Constitution because it fairly singles out drugstores to bear the burden of the discount, and
that it can hardly be said to "rationally" meet a legitimate government objective which is the purpose of the
law. The law allegedly targets only retailers such as petitioners, and that the other enterprises in the drug
industry are not imposed with similar burden. This same argument had been raised in the case of Carlos
Superdrug Corp., et al. v. DSWD, et al.,50 and We reaffirm and apply the ruling therein in the case at
bar:ChanRobles Vi rtualaw lib rary

The Court is not oblivious of the retail side of the pharmaceutical industry and the competitive pricing
component of the business. While the Constitution protects property rights, petitioners must accept the
realities of business and the State, in the exercise of police power, can intervene in the operations of a
business which may result in an impairment of property rights in the process.

Moreover, the right to property has a social dimension. While Article XIII of the Constitution provides the
precept for the protection of property, various laws and jurisprudence, particularly on agrarian reform and
the regulation of contracts and public utilities, continuously serve as a reminder that the right to property
can be relinquished upon the command of the State for the promotion of public good.51 chan roblesv irtuallaw lib rary

Under the equal protection clause, all persons or things similarly situated must be treated alike, both in the
privileges conferred and the obligations imposed. Conversely, all persons or things differently situated
should be treated differently.52 In the case of ABAKADA Guro Party List, et al. v. Hon. Purisima, et al.,53We
held: ChanRoble sVirtualawl ibra ry

Equality guaranteed under the equal protection clause is equality under the same conditions and among
persons similarly situated; it is equality among equals, not similarity of treatment of persons who are
classified based on substantial differences in relation to the object to be accomplished. When things or
persons are different in fact or circumstance, they may be treated in law differently. In Victoriano v. Elizalde
Rope Workers' Union, this Court declared: ChanRob les Virtualawl ibra ry

The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon
all citizens of the State. It is not, therefore, a requirement, in order to avoid the constitutional prohibition
against inequality, that every man, woman and child should be affected alike by a statute. Equality of
operation of statutes does not mean indiscriminate operation on persons merely as such, but on persons
according to the circumstances surrounding them. It guarantees equality, not identity of rights. The
Constitution does not require that things which are different in fact be treated in law as though
they were the same. The equal protection clause does not forbid discrimination as to things that
are different. It does not prohibit legislation which is limited either in the object to which it is
directed or by the territory within which it is to operate.
The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in
the other departments of knowledge or practice, is the grouping of things in speculation or practice because
they agree with one another in certain particulars. A law is not invalid because of simple inequality. The very
idea of classification is that of inequality, so that it goes without saying that the mere fact of inequality in no
manner determines the matter of constitutionality. All that is required of a valid classification is that it
be reasonable, which means that the classification should be based on substantial distinctions
which make for real differences, that it must be germane to the purpose of the law; that it must
not be limited to existing conditions only; and that it must apply equally to each member of the
class. This Court has held that the standard is satisfied if the classification or distinction is based
on a reasonable foundation or rational basis and is not palpably arbitrary.

In the exercise of its power to make classifications for the purpose of enacting laws over matters within its
jurisdiction, the state is recognized as enjoying a wide range of discretion. It is not necessary that the
classification be based on scientific or marked differences of things or in their relation. Neither is it
necessary that the classification be made with mathematical nicety. Hence, legislative classification may in
many cases properly rest on narrow distinctions, for the equal protection guaranty does not preclude the
legislature from recognizing degrees of evil or harm, and legislation is addressed to evils as they may
appear.
The equal protection clause recognizes a valid classification, that is, a classification that has a reasonable
foundation or rational basis and not arbitrary.54 With respect to R.A. No. 9442, its expressed public policy is
the rehabilitation, self-development and self-reliance of PWDs. Persons with disability form a class separate
and distinct from the other citizens of the country. Indubitably, such substantial distinction is germane and
intimately related to the purpose of the law. Hence, the classification and treatment accorded to the PWDs
fully satisfy the demands of equal protection. Thus, Congress may pass a law providing for a different
treatment to persons with disability apart from the other citizens of the country.

Subject to the determination of the courts as to what is a proper exercise of police power using the due
process clause and the equal protection clause as yardsticks, the State may interfere wherever the public
interests demand it, and in this particular, a large discretion is necessarily vested in the legislature to
determine, not only what interests of the public require, but what measures are necessary for the protection
of such interests.55 Thus, We are mindful of the fundamental criteria in cases of this nature that all
reasonable doubts should be resolved in favor of the constitutionality of a statute.56 The burden of proof is
on him who claims that a statute is unconstitutional. Petitioners failed to discharge such burden of proof.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated July 26, 2010, and the
Resolution dated November 19, 2010, in CA-G.R. SP No. 109903 are AFFIRMED.

SO ORDERED. chanRoblesvirt ual Lawlib rary

G.R. No. 195145, February 10, 2016 - MANILA ELECTRIC COMPANY, Petitioner, v. SPOUSES
SULPICIO AND PATRICIA RAMOS, Respondents.

SECOND DIVISION

G.R. No. 195145, February 10, 2016

MANILA ELECTRIC COMPANY, Petitioner, v. SPOUSES SULPICIO AND PATRICIA

RAMOS, Respondents.

DECISION
 BRION, J.:

We resolve the petition for review on certiorari1 assailing the July 30, 2010 decision2 of the Court
of Appeals (CA) in CA-G.R. CV No. 87843 entitled "Spouses Sulpicio and Patricia Ramos v. Manila
Electric Company" that affirmed the Regional Trial Court's (RTC) August 22, 2006 decision3 in Civil
Case No. 99-95975.

The August 22, 2006 RTC decision ordered the Manila Electric Company (MERALCO) to restore the
electric power connection of Spouses Sulpicio and Patricia Ramos (respondents) and awarded them
P2,000,000.00, with legal interest, in total damages. chanRoblesvirtual Lawlib ra ry

The Factual Antecedents

MERALCO is a private corporation engaged in the business of selling and distributing electricity to
its customers in Metro Manila and other franchise areas. The respondents are registered customers
of MERALCO under Service Identification Number (SIN) 409076401.

MERALCO entered into a contract of service with the respondents agreeing to supply the latter with
electric power in their residence at 2760-B Molave St., Manuguit, Tondo, Manila. To measure the
respondents' electric consumption, it installed the electric meter with serial number 330ZN43953
outside the front wall of the property occupied by Patricia's brother, Isidoro Sales, and his wife,
Nieves Sales (Nieves), located beside the respondents' house.

On November 5, 1999, MERALCO's service inspector inspected the respondents' electrical facilities
and found an outside connection attached to their electric meter. The service inspector traced the
connection, an illegal one, to the residence and appliances of Nieves. Nieves was the only one
present during the inspection and she was the one who signed the Metering Facilities Inspection
Report.

Due to the discovery of the illegal connection, the service inspector disconnected the respondents'
electric services on the same day. The inspection and disconnection were done without the
knowledge of the respondents as they were not at home and their house was closed at the time.

The respondents denied that they had been, using an illegal electrical connection and they
requested MERALCO to immediately reconnect their electric services. Despite the respondents'
request, MERALCO instead demanded from them the payment of P179,231.70 as differential
billing.

On December 20, 1999, the respondents filed a complaint for breach of contract with
preliminary mandatory injunction and damages against MERALCO before the RTC, Branch 40,
City of Manila. They prayed for the immediate reconnection of their electric service and the award
of actual, moral, and exemplary damages, attorney's fees, and litigation expenses.

In a decision dated August 22, 2006, the RTC ordered MERALCO to reconnect the respondents'
electric service and awarded damages as follows: ChanRobles Vi rtua lawlib rary

WHEREFORE, Judgment is rendered directing defendant MERALCO to permanently reconnect

immediately the plaintiffs electric services, and for said defendant to pay the following: ChanRobles Vi rtua lawlib rary

1. P100,000.00 as actual or compensatory damages;

2. P1,500,000.00 as moral damages;

3. P300,000.00 as exemplary damages;

4. P100,000.00 as attorney's fees; and,

5. Costs of suit;
with legal interest on the total damages of P2,000,000.00 from the date of this Judgment until
fully paid.

SO ORDERED.4 chanroblesv irt uallawl ibra ry

MERALCO appealed the RTC's decision to the CA.

In its assailed July 30, 2010 decision,5 the CA denied the appeal for lack of merit and affirmed the
RTC's order of reconnection and award for payment of damages. The appellate court held that
MERALCO failed to comply not only with its own contract of service, but also with the requirements
under Sections 4 and 6 of Republic Act No. 7832, or the Anti-Electricity and Electric Transmission
Lines/Materials Pilferage Act of 1994 (R.A. 7832), when it resorted to the immediate disconnection
of the respondents' electric service without due notice. It also ruled that the respondents were not
liable for the differential billing as it had not been established that they knew or consented to the
illegal connection or even benefited from it.

MERALCO moved for the reconsideration of the decision, but the CA denied its motion in a
resolution6dated January 3, 2011. The present petition for review on certiorari7 was filed with
this Court on March 4, 2011, as a consequence. chanRoblesvirtual Lawli bra ry

The Petition

MERALCO argues that under R.A. 7832, it had the right and authority to immediately disconnect
the electric service of the respondents after they were caught in flagrante delicto using a tampered
electrical installation.

MERALCO also claims that by virtue of their contract of service, the respondents are liable to pay
the differential billing regardless of whether the latter benefited from the illegal electric service or
not. It adds that this is true even if the respondents did not personally tamper with the electrical
facilities.

Finally, MERALCO contends that there is no basis for the award of damages as the disconnection of
the respondents' electric service was done in good faith and in the lawful exercise of its rights as a
public utility company. chanRoblesvi rtua lLaw lib rary

The Respondents' Comment

In their comment8 of June 29, 2011, the respondents pray for the denial of the present petition for
lack of merit. They argue that the discovery of an outside connection attached to their electric
meter does not give MERALCO the right to automatically disconnect their electric service as the
law provides certain mandatory requirements that should be observed before a disconnection
could be effected. They claim that MERALCO failed to comply with these statutory requirements.

Also, the respondents contend that MERALCO breached its contractual obligations when its service
inspector immediately disconnected their electric service without notice. They claim that this
breach of contract, coupled with MERALCO's failure to observe the requirements under R.A. 7832,
entitled them to damages which were sufficiently established with evidence and were rightfully
awarded by the RTC and affirmed by the CA.

Lastly, the respondents argue that they are not liable to MERALCO for the differential billing as
they were not the ones who illegally consumed the unbilled electricity through the illegal
connection. chanRoblesvi rtua lLaw lib rary

The Court's Ruling

We DENY the petition for review on certiorari as we find no reversible error committed
by the CA in issuing its assailed decision.

The core issue in this case is whether MERALCO had the right to immediately disconnect the
electric service of the respondents upon discovery of an outside connection attached to their
electric meter.

The distribution of electricity is a basic necessity that is imbued with public interest. Its provider is
considered as a public utility subject to the strict regulation by the State in the exercise of its
police power. Failure to comply with these regulations gives rise to the presumption of
bad faith or abuse of right.9 chanroblesv irt uallawl ibra ry
Nevertheless, the State also recognizes that electricity is the property of the service provider. R.A.
7832 was enacted by Congress to afford electric service providers multiple remedies to. protect
themselves from electricity pilferage. These remedies include the immediate disconnection of
the electric service of an erring customer, criminal prosecution, and the imposition of
surcharges.10 However, the service provider must avail of any or all of these remedies within legal
bounds, in strict compliance with the requirements and/or conditions set forth by law.

Section 4(a) of R.A. 7832 provides that the discovery of an outside connection attached on the
electric meter shall constitute as prima facie evidence of illegal use of electricity by the person
who benefits from the illegal use if the discovery is personally witnessed and attested to by
an officer of the law or a duly authorized representative of the Energy Regulatory
Board (ERB). With the presence of such prima facie evidence, the electric service provider is
within its rights to immediately disconnect the electric service of the consumer after due notice.

This Court has repeatedly stressed the significance of the presence of an authorized government
representative during an inspection of electric facilities, viz.: ChanRobles Vi rt ualawlib ra ry

The presence of government agents who may authorize immediate disconnections go

into the essence of due process. Indeed, we cannot allow respondent to act virtually as
prosecutor and judge in imposing the penalty of disconnection due to alleged meter
tampering. That would not sit well in a democratic country. After all, Meralco is a monopoly that
derives its power from the government. Clothing it with unilateral authority to disconnect would be
equivalent to giving it a license to tyrannize its hapless customers.11 (Emphasis supplied)
Additionally, Section 6 of R.A. 7832 affords a private electric utility the right and authority to
immediately disconnect the electric service of a consumer who has been caught in flagrante
delicto doing any of the acts covered by Section 4(a). However, the law clearly states that the
disconnection may only be done after serving a written notice or warning to the consumer.

To reiterate, R.A. 7832 has two requisites for an electric service provider to be authorized to
disconnect its customer's electric service on the basis of alleged electricity pilferage: first, an
officer of the law or an authorized ERB representative must be present during the inspection of the
electric facilities; and second, even if there is prima facie evidence of illegal use of electricity and
the customer is caught in flagrante delicto committing the acts under Section 4(a), the customer
must still be given due notice prior to the disconnection.12 chan roble svirtuallaw lib rary

In its defense, MERALCO insists that it observed due process when its service inspector
disconnected the respondents' electric service, viz.: ChanRob les Virtualawl ibra ry

Under the present situation, there is no doubt that due process, as required by R.A. 7832, was
observed [when] the petitioner discontinued the electric supply of respondent: there was an
inspection conducted in the premises of respondent with the consent of their authorized
representative; it was discovered during the said inspection that private respondents were using
outside connection; the nature of the violation was explained to private respondents'
representative; the inspection and discovery was personally witnessed and attested to by private
respondents' representative; private respondents failed and refused to pay the differential
billing amounting to P179,231.70 before their electric service was
disconnected.13 (Emphasis supplied)
After a thorough examination of the records of the case, we find no proof that MERALCO complied
with these two requirements under R.A. 7832. MERALCO never even alleged in its submissions
that an ERB representative or an officer of the law was present during the inspection of the
respondents' electric meter. Also, it did not claim that the respondents were ever notified
beforehand of the impending disconnection of their electric service.

In view of MERALCO's failure to comply with the strict requirements under Sections 4 and 6 of R.
A. No. 7832, we hold that MERALCO had no authority to immediately disconnect the
respondents' electric service. As a result, the immediate disconnection of the respondents'
electric service is presumed to be in bad faith.

We point out, too, that MERALCO's allegation that the respondents refused to pay the differential
billing before the disconnection of their electric service is an obvious falsity. MERALCO never
disputed the fact that the respondents' electric service was disconnected on November 5, 1999 -
the same day as when the electric meter was inspected. Also, MERALCO's demand letter for
payment of the differential billing is dated December 4, 1999. Thus, there is no truth to the
statement that the respondents first failed to pay the differential billing and only then was their
electric service disconnected.

The disconnection of respondents' electric service is not supported by MERALCO's own

Terms and Conditions of Service.

In addition, we observe that MERALCO also failed to follow its own procedure for the
discontinuance of service under its contract of service with the respondents. We quote in this
regard the relevant terms of service: ChanRob les Virtualawl ibra ry

DISCONTINUANCE OF SERVICE:

The Company reserves the right to discontinue service in case the customer is in arrears in the
payment of bills in those cases where the meter stopped or failed to register the correct amount of
energy consumed, or failure to comply with any of these terms and conditions or in case of or to
prevent fraud upon the Company. Before disconnection is made in case of or to prevent
fraud, the Company may adjust the bill of said customer accordingly and if the adjusted
bill is not paid, the Company may disconnect the same. In case of disconnection, the
provisions of Revised Order No. 1 of the former Public Service Commission (now ERC) shall be
observed. Any such suspension of service shall not terminate the contract between the Company
and the customer.14(Emphasis supplied)
There is nothing in its contract of service that gives MERALCO the authority to immediately
disconnect a customer's electric connection. MERALCO's contractual right to disconnect electric
service arises only after the customer has been notified of his adjusted bill and has been afforded
the opportunity to pay the differential billing.

In this case, the disconnection of the respondents' electric service happened on November 5,
1999, while the demand for the payment of differential billing was made through a letter dated
December 4, 1999. Thus, we hold that MERALCO breached its contract of service with the
respondents as it disconnected the latter's electric service before they were ever
notified of the differential billing.

Differential billing

Section 6 of R.A. 7832 defines differential billing as "the amount to be charged to the person
concerned for the unbilled electricity illegally consumed by him." Clearly, the law provides that the
person who actually consumed the electricity illegally shall be liable for the differential billing. It
does not ipso facto make liable for payment of the differential billing the registered customer
whose electrical facilities had been tampered with and utilized for the illegal use of electricity.

In this case, as the prima facie presumption afforded by Section 4 of R.A. 7832 does not apply, it
falls upon MERALCO to first prove that the respondents had actually installed the outside
connection attached on their electric meter and that they had benefited from the electricity
consumed through the outside connection before it could hold them liable for the differential
billing.

The records show that MERALCO presented no proof that it ever caught the respondents, or
anyone acting in the respondents' behalf, in the act of tampering with their electric meter. As the
CA correctly held, the respondents could not have been caught in flagrante delicto committing the
tampering since they were not present during the inspection of the electric meter, nor were any of
their representatives at hand.15 Moreover, the presence of an outside connection attached to the
electric meter operates only as a prima facie evidence of electricity pilferage under R.A. 7832; it is
not enough to declare the respondents in flagrante delicto tampering with the electric meter.16 In
fact, MERALCO itself admitted in its submissions that Nieves was the illegal user of the outside
connection attached to the respondents' electric meter.17 chan roblesv irt uallawl ibrary

On this point, MERALCO argues that Nieves was an authorized representative of the respondents.
However, the records are bereft of any sufficient proof to support this claim. The fact that she is
an occupant of the premises where the electric meter was installed does not make her the
respondents' representative considering that the unit occupied by the respondents is separate and
distinct from the one occupied by Nieves and her family. Similarly, the fact that Nieves was able to
show the respondents' latest electric bill does not make her the latter's authorized representative.
While this Court recognizes the right of MERALCO as a public utility to collect system losses, the
courts cannot and will not blindly grant a public utility's claim for differential billing if there is no
sufficient evidence to prove entitlement.18As MERALCO failed to sufficiently prove its claim
for payment of the differential billing, we rule that the respondents cannot be held liable
for the billed amount.

On the issue of damages

With MERALCO in bad faith for its failure to follow the strict requirements under R.A. 7832 in the
disconnection of the respondents' electric service, we agree with the CA that the award of
damages is in order. However, we deem it proper to modify the award in accordance with
prevailing jurisprudence.

First, actual damages pertain to such injuries or losses that are actually sustained and are
susceptible of measurement. They are intended not to enrich the injured party but to put him in
the position in which he was in before he was injured.19 c hanrobles virtua llawli bra ry

In Viron Transportation Co., Inc. v. Delos Santos,20 we explained that in order to recover actual
damages, there must be pleading and proof of the damages suffered, viz.: ChanRoble sVirt ualawli bra ry

Actual damages, to be recoverable, must not only be capable of proof, but must actually be proved
with a reasonable degree of certainty. Courts cannot simply rely on speculation, conjecture or
guesswork in determining the fact and amount of damages. To justify an award of actual
damages, there must be competent proof of the actual amount of loss, credence can be
given only to claims which are duly supported by receipts.(Emphasis supplied)
In this case, Patricia stated that her family's food expenses doubled after MERALCO disconnected
their electric services as they could no longer cook at home. We note, however, that there is no-
sufficient proof presented to show the actual food expenses that the respondents incurred.
Nevertheless, Patricia also testified that they were forced to move to a new residence after living
without electricity for eight (8) months at their home in Tondo, Manila. They proved this allegation
through the presentation of a contract of lease and receipts for payment of monthly rentals for 42
months amounting to P210,000.00. Thus, we find it proper to increase the award of actual
damages from P100,000.00 to P210,000.00.

Second, moral damages are designed to compensate and alleviate the physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar harm unjustly caused to a person.21 They may be properly awarded to
persons who have been unjustly deprived of property without due process of law.22 chanro ble svirt uallawl ibra ry

In Regala v. Carin,23 we discussed the requisites for the award of moral damages, viz: ChanRobles Vi rtu alawlib rary

In fine, an award of moral damages calls for the presentation of 1) evidence of besmirched
reputation or physical, mental or psychological suffering sustained by the claimant; 2) a culpable
act or omission factually established; 3) proof that the wrongful act or omission of the defendant is
the proximate cause of the damages sustained by the claimant; and 4) the proof that the act is
predicated on any of the instances expressed or envisioned by Article 2219 and Article 2220 of the
Civil Code.
Applied to this case, after due consideration of the manner of disconnection of the respondents'
electric service and the length of time that the respondents had to endure without electricity, we
find the award of moral damages proper. Aside from having to spend eight (8) months in the dark
at their own residence, Patricia testified that they suffered extreme social humiliation,
embarrassment, and serious anxiety as they were subjected to gossip in their neighborhood of
stealing electricity through the use of an illegal connection. The damage to the respondents'
reputation and social standing was aggravated by their decision to move to a new residence
following the absolute refusal of MERALCO to restore their electric services.

However, we find the award of P1,500,000.00 in moral damages to be excessive. Moral damages
are not intended to enrich the complainant as a penalty for the defendant. It is awarded as a
means to ease the moral suffering the complainant suffered due to the defendant's culpable
action.24 While prevailing jurisprudence deems it appropriate to award 100,000.00 in moral
damages in cases where MERALCO wrongfully disconnected electric service,25 we hold that such
amount is not commensurate with the injury suffered by the respondents. Thus, in view of the
specific circumstances present in this case, we reduce the award of moral damages from
 P1,500,000.00 to P300,000.00.

Third, exemplary or corrective damages are imposed by way of example or correction for the
public good, in addition to moral, temperate, liquidated, or compensatory damages. The award of
exemplary damages is allowed by law as a warning to the public and as a deterrent against the
repetition of socially deleterious actions.26
chanroble svirtuallaw lib rary

In numerous cases,27 this Court found that MERALCO failed to comply with the requirements under
R.A. 7832 before a disconnection of a customer's electric service could be effected. In these cases,
we aptly awarded exemplary damages against MERALCO to serve as a warning against repeating
the same actions.

In this case, MERALCO totally failed to comply with the two requirements under R.A. 7832 before
disconnecting the respondents' electric service. While MERALCO insists that R.A. 7832 gives it the
right to disconnect the respondents' electric service, nothing in the records indicates that it
attempted to comply with the statutory requirements before effecting the disconnection.

Under these circumstances, we find that the previous awards against MERALCO have not served
their purpose as a means to prevent the repetition of the same damaging actions that it has
committed in the past. Therefore, we increase the award of exemplary damages from
P300,000.00 to P500,000.00 in the hope that this will persuade MERALCO to be more prudent
and responsible in its observance of the requirements under the law in disconnecting a customer's
electrical supply.

Lastly, in view of the award of exemplary damages, we find the award of attorney's fees proper, in
accordance with Article 2208(1) of the Civil Code. We find the CA's award of attorney's fees in
the amount of P100,000.00 just and reasonable under the circumstances.

WHEREFORE, the petition is DENIED. The decision dated July 30,2010 and resolution dated
January 3,2011 of the Court of Appeals in CA-G.R. CV No. 87843 are AFFIRMED with the
following modifications: MERALCO is ordered to pay respondents Spouses Sulpicio and Patricia
Ramos P210,000.00 as actual damages, P300,000.00 as moral damages, P500,000.00 as
exemplary damages, and P100,000.00 as attorneys fees. Costs against Manila Electric Company.

SO ORDERED. cralawlawli

Who exercises the power?

Republic of the Philippines

Supreme Court
Baguio City
THIRD DIVISION

SPOUSES ANTONIO and FE G.R. No. 156684

YUSAY,
Petitioners, Present:

CARPIO MORALES, Chairperson,

BRION,
-versus - BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.
 COURT OF APPEALS, CITY
MAYOR and CITY COUNCIL Promulgated:
OF MANDALUYONG CITY,
Respondents. April 6, 2011
x-----------------------------------------------------------------------------------------x

RESOLUTION

BERSAMIN, J.:

The petitioners appeal the adverse decision promulgated on October 18, 2002[1] and
resolution promulgated on January 17, 2003,[2] whereby the Court of Appeals (CA)
reversed and set aside the order issued in their favor on February 19, 2002 by the
Regional Trial Court, Branch 214, in Mandaluyong City (RTC).[3] Thereby, the CA
upheld Resolution No. 552, Series of 1997, adopted by the City of Mandaluyong
(City) authorizing its then City Mayor to take the necessary legal steps for the
expropriation of the parcel of land registered in the names of the petitioners.

We affirm the CA.

Antecedents

The petitioners owned a parcel of land with an area of 1,044 square meters situated
between Nueve de Febrero Street and Fernandez Street in Barangay
Mauway, Mandaluyong City. Half of their land they used as their residence, and the
rest they rented out to nine other families. Allegedly, the land was their only property
and only source of income.

On October 2, 1997, the Sangguniang Panglungsod of Mandaluyong City adopted

Resolution No. 552, Series of 1997, to authorize then City Mayor Benjamin S.
Abalos, Sr. to take the necessary legal steps for the expropriation of the land of the
petitioners for the purpose of developing it for low cost housing for the less
privileged but deserving city inhabitants. The resolution reads as follows:

RESOLUTION NO. 552, S-1997[4]

 RESOLUTION AUTHORIZING HON. BENJAMIN S. ABALOS TO
TAKE THE NECESSARY LEGAL STEPS FOR THE
EXPROPRIATION OF A PARCEL OF LAND SITUATED ALONG
DR.
JOSE FERNANDEZ STREET, BARANGAY MAUWAY, CITY
OF MANDALUYONG, OWNED BY MR. ANTONIO YUSAY

WHEREAS, there is a parcel of land situated along Dr. Jose Fernandez

Street, Barangay Mauway, City of Mandaluyong, owned and registered in
the name of MR. ANTONIO YUSAY;

WHEREAS, this piece of land have been occupied for about ten (10) years
by many financially hard-up families which the City Government of
Mandaluyong desires, among other things, to provide modest and decent
dwelling;

WHEREAS, the said families have already negotiated to acquire this land
but was refused by the above-named owner in total disregard to the City
Governments effort of providing land for the landless;

WHEREAS, the expropriation of said land would certainly benefit public

interest, let alone, a step towards the implementation of social justice and
urban land reform in this City;

WHEREAS, under the present situation, the City Council deems it

necessary to authorize Hon. Mayor BENJAMIN S. ABALOS to institute
expropriation proceedings to achieve the noble purpose of the City
Government of Mandaluyong.

NOW, THEREFORE, upon motion duly seconded, the City Council of

Mandaluyong, in session assembled, RESOLVED, as it hereby
RESOLVES, to authorize, as it is hereby authorizing, Hon. Mayor
BENJAMIN S. ABALOS, to institute expropriation proceedings against
the above-named registered owner of that parcel of land situated along Dr.
Jose Fernandez Street, Barangay Mauway, City of Mandaluyong, (f)or the
purpose of developing it to a low-cost housing project for the less
privileged but deserving constituents of this City.

ADOPTED on this 2nd day of October 1997 at the City of Mandaluyong.

Sgd. Adventor R. Delos Santos

 Acting Sanggunian Secretary

Attested: Approved:

Sgd. Roberto J. Francisco Sgd. Benjamin S. Abalos

City Councilor & Acting City Mayor
Presiding Officer

Notwithstanding that the enactment of Resolution No. 552 was but the initial step in
the Citys exercise of its power of eminent domain granted under Section 19 of
the Local Government Code of 1991, the petitioners became alarmed, and filed a
petition for certiorari and prohibition in the RTC, praying for the annulment of
Resolution No. 552 due to its being unconstitutional, confiscatory, improper, and
without force and effect.

The City countered that Resolution No. 552 was a mere authorization given to the
City Mayor to initiate the legal steps towards expropriation, which included making
a definite offer to purchase the property of the petitioners; hence, the suit of the
petitioners was premature.

On January 31, 2001, the RTC ruled in favor of the City and dismissed the petition
for lack of merit, opining that certiorari did not lie against a legislative act of the
City Government, because the special civil action of certiorari was only available to
assail judicial or quasi-judicial acts done without or in excess of jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction; that the special
civil action of prohibition did not also lie under the circumstances considering that
the act of passing the resolution was not a judicial, or quasi-judicial, or ministerial
act; and that notwithstanding the issuance of Resolution No. 552, the City had yet to
commit acts of encroachment, excess, or usurpation, or had yet to act without or in
excess of jurisdiction or with grave abuse of discretion amounting lack or in excess
of jurisdiction.

However, on February 19, 2002, the RTC, acting upon the petitioners motion for
reconsideration, set aside its decision and declared that Resolution No. 552 was null
and void. The RTC held that the petition was not premature because the passage of
Resolution No. 552 would already pave the way for the City to deprive the
petitioners and their heirs of their only property; that there was no due process in the
passage of Resolution No. 552 because the petitioners had not been invited to the
subsequent hearings on the resolution to enable them to ventilate their opposition;
and that the purpose for the expropriation was not for public use and the
expropriation would not benefit the greater number of inhabitants.

Aggrieved, the City appealed to the CA.

In its decision promulgated on October 18, 2002, the CA concluded that the
reversal of the January 31, 2001 decision by the RTC was not justified because
Resolution No. 552 deserved to be accorded the benefit of the presumption of
regularity and validity absent any sufficient showing to the contrary; that notice to
the petitioners (Spouses Yusay) of the succeeding hearings conducted by the City
was not a part of due process, for it was enough that their views had been consulted
and that they had been given the full opportunity to voice their protest; that to rule
otherwise would be to give every affected resident effective veto powers in law-
making by a local government unit; and that a public hearing, although necessary at
times, was not indispensable and merely aided in law-making.

The CA disposed as follows:

WHEREFORE, premises considered, the questioned order of the Regional

Trial Court, Branch 214, Mandaluyong City dated February 19, 2002 in
SCA Case No. 15-MD, which declared Resolution No. 552, Series of 1997
of the City of Mandaluyong null and void, is hereby REVERSED and SET
ASIDE. No costs.

SO ORDERED.[5]

The petitioners moved for reconsideration, but the CA denied their motion. Thus,
they appeal to the Court, posing the following issues, namely:

1. Can the validity of Resolution No. 552 be assailed even before its
implementation?
 2. Must a citizen await the takeover and possession of his property by
the local government before he can go to court to nullify an unjust
expropriation?
Before resolving these issues, however, the Court considers it necessary to
first determine whether or not the action for certiorari and prohibition commenced
by the petitioners in the RTC was a proper recourse of the petitioners.

Ruling

We deny the petition for review, and find that certiorari and prohibition were
not available to the petitioners under the circumstances. Thus, we sustain, albeit
upon different grounds, the result announced by the CA, and declare that the RTC
gravely erred in giving due course to the petition for certiorari and prohibition.

1.
Certiorari does not lie to assail the issuance of
a resolution by the Sanggunian Panglungsod

The special civil action for certiorari is governed by Rule 65 of

the 1997 Rules of Civil Procedure, whose Section 1 provides:

Section 1. Petition for certiorari. When any tribunal, board or officer

exercising judicial or quasi-judicial functions has acted without or in
excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, nor any
plain, speedy, and adequate remedy in the ordinary course of law, a person
aggrieved thereby may file a verified petition in the proper court, alleging
the facts with certainty and praying that judgment be rendered annulling
or modifying the proceedings of such tribunal, board or officer, and
granting such incidental reliefs as law and justice may require.
xxx

For certiorari to prosper, therefore, the petitioner must allege and establish
the concurrence of the following requisites, namely:
 (a) The writ is directed against a tribunal, board, or officer exercising
judicial or quasi-judicial functions;

(b) Such tribunal, board, or officer has acted without or in excess of

jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction; and

(c) There is no appeal or any plain, speedy, and adequate remedy in the
ordinary course of law.[6]

It is further emphasized that a petition for certiorari seeks solely to correct

defects in jurisdiction,[7] and does not correct just any error or mistake committed by
a court, board, or officerexercising judicial or quasi-judicial functions unless such
court, board, or officer thereby acts without jurisdiction or in excess of jurisdiction
or with such grave abuse of discretion amounting to lack of jurisdiction.[8]

The first requisite is that the respondent tribunal, board, or officer must be
exercising judicial or quasi-judicial functions. Judicial function, according to
Bouvier,[9] is the exercise of the judicial faculty or office; it also means the capacity
to act in a specific way which appertains to the judicial power, as one of the powers
of government. The term, Bouvier continues,[10] is used to describe generally those
modes of action which appertain to the judiciary as a department of organized
government, and through and by means of which it accomplishes its purpose and
exercises its peculiar powers.

Based on the foregoing, certiorari did not lie against the Sangguniang
Panglungsod, which was not a part of the Judiciary settling an actual controversy
involving legally demandable and enforceable rights when it adopted Resolution No.
552, but a legislative and policy-making body declaring its sentiment or opinion.

Nor did the Sangguniang Panglungsod abuse its discretion in adopting

Resolution No. 552. To demonstrate the absence of abuse of discretion, it is well to
differentiate between a resolution and an ordinance. The first is upon a specific
matter of a temporary nature while the latter is a law that is permanent in
character.[11] No rights can be conferred by and be inferred from a resolution, which
is nothing but an embodiment of what the lawmaking body has to say in the light of
attendant circumstances. In simply expressing its sentiment or opinion through the
resolution, therefore, the Sangguniang Panglungsod in no way abused its discretion,
least of all gravely, for its expression of sentiment or opinion was a constitutionally
protected right.

Moreover, Republic Act No. 7160 (The Local Government Code) required the
City to pass an ordinance, not adopt a resolution, for the purpose of initiating an
expropriation proceeding. In this regard, Section 19 of The Local Government
Code clearly provides, viz:

Section 19. Eminent Domain. A local government unit may, through

its chief executive and acting pursuant to an ordinance, exercise the
power of eminent domain for public use, or purpose, or welfare for the
benefit of the poor and the landless, upon payment of just compensation,
pursuant to the provisions of the Constitution and pertinent
laws: Provided, however, That the power of eminent domain may not be
exercised unless a valid and definite offer has been previously made to the
owner, and such offer was not accepted: Provided, further, That the local
government unit may immediately take possession of the property upon
the filing of the expropriation proceedings and upon making a deposit with
the proper court of at least fifteen percent (15%) of the fair market value
of the property based on the current tax declaration of the property to be
expropriated: Provided, finally, That, the amount to be paid for the
expropriated property shall be determined by the proper court, based on
the fair market value at the time of the taking of the property.

A resolution like Resolution No. 552 that merely expresses the sentiment of
the Sangguniang Panglungsod is not sufficient for the purpose of initiating an
expropriation proceeding. Indeed, in Municipality of Paraaque v. V.M. Realty
Corporation,[12] a case in which the Municipality of Paraaque based its complaint for
expropriation on a resolution, not an ordinance, the Court ruled so:

The power of eminent domain is lodged in the legislative branch of

government, which may delegate the exercise thereof to LGUs, other
public entities and public utilities. An LGU may therefore exercise the
power to expropriate private property only when authorized by Congress
and subject to the latters control and restraints, imposed through the law
conferring the power or in other legislations. In this case, Section 19 of
RA 7160, which delegates to LGUs the power of eminent domain, also
lays down the parameters for its exercise. It provides as follows:

Section 19. Eminent Domain. A local government unit may,

through its chief executive and acting pursuant to an ordinance,
exercise the power of eminent domain for public use, or purpose,
or welfare for the benefit of the poor and the landless, upon
payment of just compensation, pursuant to the provisions of the
Constitution and pertinent laws: Provided, however, That the
power of eminent domain may not be exercised unless a valid and
definite offer has been previously made to the owner, and such
offer was not accepted: Provided, further, That the local
government unit may immediately take possession of the property
upon the filing of the expropriation proceedings and upon making
a deposit with the proper court of at least fifteen percent (15%) of
the fair market value of the property based on the current tax
declaration of the property to be expropriated: Provided, finally,
That, the amount to be paid for the expropriated property shall be
determined by the proper court, based on the fair market value at
the time of the taking of the property. (Emphasis supplied)

Thus, the following essential requisites must concur before an LGU

can exercise the power of eminent domain:

1. An ordinance is enacted by the local legislative

council authorizing the local chief executive, in behalf of the
LGU, to exercise the power of eminent domain or pursue
expropriation proceedings over a particular private property.

2. The power of eminent domain is exercised for public use,

purpose or welfare, or for the benefit of the poor and the landless.

3. There is payment of just compensation, as required under

Section 9 Article III of the Constitution and other pertinent laws.

4. A valid and definite offer has been previously made to the

owner of the property sought to be expropriated, but said offer
was not accepted.
 In the case at bar, the local chief executive sought to exercise the
power of eminent domain pursuant to a resolution of the municipal
council. Thus, there was no compliance with the first requisite that the
mayor be authorized through an ordinance. Petitioner cites Camarines Sur
vs. Court of Appeals to show that a resolution may suffice to support the
exercise of eminent domain by an LGU. This case, however, is not in point
because the applicable law at that time was BP 337, the previous Local
Government Code, which had provided that a mere resolution would
enable an LGU to exercise eminent domain. In contrast, RA 7160, the
present Local Government Code which was already in force when the
Complaint for expropriation was filed, explicitly required an
ordinance for this purpose.

We are not convinced by petitioners insistence that the terms

resolution and ordinance are synonymous. A municipal ordinance is
different from a resolution. An ordinance is a law, but a resolution is
merely a declaration of the sentiment or opinion of a lawmaking body
on a specific matter. An ordinance possesses a general and permanent
character, but a resolution is temporary in nature. Additionally, the
two are enacted differently -- a third reading is necessary for an
ordinance, but not for a resolution, unless decided otherwise by a
majority of all the Sanggunian members.

If Congress intended to allow LGUs to exercise eminent domain

through a mere resolution, it would have simply adopted the language of
the previous Local Government Code. But Congress did not. In a clear
divergence from the previous Local Government Code, Section 19 of RA
7160 categorically requires that the local chief executive act pursuant to
an ordinance. Indeed, [l]egislative intent is determined principally from
the language of a statute. Where the language of a statute is clear and
unambiguous, the law is applied according to its express terms, and
interpretation would be resorted to only where a literal interpretation
would be either impossible or absurd or would lead to an injustice. In the
instant case, there is no reason to depart from this rule, since the law
requiring an ordinance is not at all impossible, absurd, or unjust.

Moreover, the power of eminent domain necessarily involves a

derogation of a fundamental or private right of the people. Accordingly,
the manifest change in the legislative language from resolution under BP
337 to ordinance under RA 7160 demands a strict construction. No species
of property is held by individuals with greater tenacity, and is guarded by
 the Constitution and laws more sedulously, than the right to the freehold
of inhabitants. When the legislature interferes with that right and, for
greater public purposes, appropriates the land of an individual without his
consent, the plain meaning of the law should not be enlarged by doubtful
interpretation.

xxx

In its Brief filed before Respondent Court, petitioner argues that its
Sangguniang Bayan passed an ordinance on October 11, 1994 which
reiterated its Resolution No. 93-35, Series of 1993, and ratified all the acts
of its mayor regarding the subject expropriation.

This argument is bereft of merit. In the first place, petitioner merely

alleged the existence of such an ordinance, but it did not present any
certified true copy thereof. In the second place, petitioner did not raise this
point before this Court. In fact, it was mentioned by private respondent,
and only in passing. In any event, this allegation does not cure the inherent
defect of petitioners Complaint for expropriation filed on September 23,
1993. It is hornbook doctrine that:

x x x in a motion to dismiss based on the ground that the

complaint fails to state a cause of action, the question submitted
before the court for determination is the sufficiency of the
allegations in the complaint itself. Whether those allegations are
true or not is beside the point, for their truth is hypothetically
admitted by the motion. The issue rather is: admitting them to be
true, may the court render a valid judgment in accordance with
the prayer of the complaint?

The fact that there is no cause of action is evident from the face
of the Complaint for expropriation which was based on a mere
resolution. The absence of an ordinance authorizing the same is
equivalent to lack of cause of action. Consequently, the Court of
Appeals committed no reversible error in affirming the trial courts
Decision which dismissed the expropriation suit.[13] (Emphasis supplied)

In view of the absence of the proper expropriation ordinance authorizing and

providing for the expropriation, the petition for certiorari filed in the RTC was
dismissible for lack of cause of action.
 2.
Prohibition does not lie against expropriation

The special civil action for prohibition is governed also by Section 2 of Rule
65 of the 1997 Rules of Civil Procedure, which states:

Section 2. Petition for prohibition. When the proceedings of any

tribunal, corporation, board, officer or person, whether exercising judicial,
quasi-judicial or ministerial functions, are without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess
of jurisdiction, and there is no appeal or any other plain, speedy, and
adequate remedy in the ordinary course of law, a person aggrieved thereby
may file a verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered commanding the
respondent to desist from further proceedings in the action or matter
specified therein, or otherwise granting such incidental reliefs as law and
justice may require.
xxx

The function of prohibition is to prevent the unlawful and oppressive exercise

of legal authority and to provide for a fair and orderly administration of
justice.[14] The writ of prohibition is directed against proceedings that are done
without or in excess of jurisdiction, or with grave abuse of discretion, there being no
appeal or other plain, speedy and adequate remedy in the ordinary course of
law.[15] For grave abuse of discretion to be a ground for prohibition, the petitioner
must first demonstrate that the tribunal, corporation, board, officer, or person,
whether exercising judicial, quasi-judicial or ministerial functions, has exercised its
or his power in an arbitrary or despotic manner, by reason of passion or personal
hostility, which must be so patent and gross as would amount to an evasion, or to a
virtual refusal to perform the duty enjoined or to act in contemplation of law. [16] On
the other hand, the term excess of jurisdiction signifies that the court, board, or
officer has jurisdiction over a case but has transcended such jurisdiction or acted
without any authority.[17]

The petitioner must further allege in the petition and establish facts to show
that any other existing remedy is not speedy or adequate.[18] A remedy is plain,
speedy and adequate if it will promptly relieve the petitioner from the injurious
effects of that judgment and the acts of the tribunal or inferior court.[19]

The rule and relevant jurisprudence indicate that prohibition was not available
to the petitioners as a remedy against the adoption of Resolution No. 552, for
the Sangguniang Panglungsod, by such adoption, was not exercising judicial, quasi-
judicial or ministerial functions, but only expressing its collective sentiment or
opinion.

Verily, there can be no prohibition against a procedure whereby the immediate

possession of the land under expropriation proceedings may be taken, provided
always that due provision is made to secure the prompt adjudication and payment of
just compensation to the owner. [20] This bar against prohibition comes from the
nature of the power of eminent domain as necessitating the taking of private land
intended for public use,[21] and the interest of the affected landowner is thus made
subordinate to the power of the State. Once the State decides to exercise its power
of eminent domain, the power of judicial review becomes limited in scope, and the
courts will be left to determine the appropriate amount of just compensation to be
paid to the affected landowners. Only when the landowners are not given their just
compensation for the taking of their property or when there has been no agreement
on the amount of just compensation may the remedy of prohibition become
available.

Here, however, the remedy of prohibition was not called for, considering that
only a resolution expressing the desire of the Sangguniang Panglungsod to
expropriate the petitioners property was issued. As of then, it was premature for the
petitioners to mount any judicial challenge, for the
power of eminent domain could be exercised by the City only through the filing of
a verified complaint in the proper court.[22] Before the City as the expropriating
authority filed such verified complaint, no expropriation proceeding could be said to
exist. Until then, the petitioners as the owners could not also be deprived of their
property under the power of eminent domain.[23]

WHEREFORE, we affirm the decision promulgated on October 18, 2002 in

CA-G.R. SP No. 70618.
 Costs to be paid by the petitioners.

SO ORDERED.

Objects of Expropriation

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-18841 January 27, 1969

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant,

vs.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, defendant-appellant.

Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Antonio A. Torres and
Solicitor Camilo D. Quiason for plaintiff-appellant.
Ponce Enrile, Siguion Reyna, Montecillo and Belo for defendant-appellant.

REYES, J.B.L., J.:

Direct appeals, upon a joint record on appeal, by both the plaintiff and the defendant from the
dismissal, after hearing, by the Court of First Instance of Manila, in its Civil Case No. 35805, of their
respective complaint and counterclaims, but making permanent a preliminary mandatory injunction
theretofore issued against the defendant on the interconnection of telephone facilities owned and
operated by said parties.

The plaintiff, Republic of the Philippines, is a political entity exercising governmental powers
through its branches and instrumentalities, one of which is the Bureau of Telecommunications. That
office was created on 1 July 1947, under Executive Order No. 94, with the following powers and
duties, in addition to certain powers and duties formerly vested in the Director of Posts: 1aw phil.ñêt

SEC. 79. The Bureau of Telecommunications shall exercise the following powers and duties:

(a) To operate and maintain existing wire-telegraph and radio-telegraph offices, stations, and
facilities, and those to be established to restore the pre-war telecommunication service under
the Bureau of Posts, as well as such additional offices or stations as may hereafter be
established to provide telecommunication service in places requiring such service;

(b) To investigate, consolidate, negotiate for, operate and maintain wire-telephone or radio
telephone communication service throughout the Philippines by utilizing such existing
facilities in cities, towns, and provinces as may be found feasible and under such terms and
conditions or arrangements with the present owners or operators thereof as may be agreed
upon to the satisfaction of all concerned;
 (c) To prescribe, subject to approval by the Department Head, equitable rates of charges for
messages handled by the system and/or for time calls and other services that may be
rendered by said system;

(d) To establish and maintain coastal stations to serve ships at sea or aircrafts and, when
public interest so requires, to engage in the international telecommunication service in
agreement with other countries desiring to establish such service with the Republic of the
Philippines; and

(e) To abide by all existing rules and regulations prescribed by the International
Telecommunication Convention relative to the accounting, disposition and exchange of
messages handled in the international service, and those that may hereafter be promulgated
by said convention and adhered to by the Government of the Republic of the Philippines. 1

The defendant, Philippine Long Distance Telephone Company (PLDT for short), is a public service
corporation holding a legislative franchise, Act 3426, as amended by Commonwealth Act 407, to
install, operate and maintain a telephone system throughout the Philippines and to carry on the
business of electrical transmission of messages within the Philippines and between the Philippines
and the telephone systems of other countries. 2 The RCA Communications, Inc., (which is not a party
to the present case but has contractual relations with the parties) is an American corporation
authorized to transact business in the Philippines and is the grantee, by assignment, of a legislative
franchise to operate a domestic station for the reception and transmission of long distance wireless
messages (Act 2178) and to operate broadcasting and radio-telephone and radio-telegraphic
communications services (Act 3180). 3

Sometime in 1933, the defendant, PLDT, and the RCA Communications, Inc., entered into an
agreement whereby telephone messages, coming from the United States and received by RCA's
domestic station, could automatically be transferred to the lines of PLDT; and vice-versa, for calls
collected by the PLDT for transmission from the Philippines to the United States. The contracting
parties agreed to divide the tolls, as follows: 25% to PLDT and 75% to RCA. The sharing was
amended in 1941 to 30% for PLDT and 70% for RCA, and again amended in 1947 to a 50-50 basis.
The arrangement was later extended to radio-telephone messages to and from European and
Asiatic countries. Their contract contained a stipulation that either party could terminate it on a 24-
month notice to the other.4 On 2 February 1956, PLDT gave notice to RCA to terminate their contract
on 2 February 1958. 5

Soon after its creation in 1947, the Bureau of Telecommunications set up its own Government
Telephone System by utilizing its own appropriation and equipment and by renting trunk lines of the
PLDT to enable government offices to call private parties. 6 Its application for the use of these trunk
lines was in the usual form of applications for telephone service, containing a statement, above the
signature of the applicant, that the latter will abide by the rules and regulations of the PLDT which
are on file with the Public Service Commission. 7 One of the many rules prohibits the public use of the
service furnished the telephone subscriber for his private use. 8 The Bureau has extended its
services to the general public since 1948, 9 using the same trunk lines owned by, and rented from,
the PLDT, and prescribing its (the Bureau's) own schedule of rates. 10 Through these trunk lines, a
Government Telephone System (GTS) subscriber could make a call to a PLDT subscriber in the
same way that the latter could make a call to the former.

On 5 March 1958, the plaintiff, through the Director of Telecommunications, entered into an
agreement with RCA Communications, Inc., for a joint overseas telephone service whereby the
Bureau would convey radio-telephone overseas calls received by RCA's station to and from local
residents. 11 Actually, they inaugurated this joint operation on 2 February 1958, under a "provisional"
agreement. 12

On 7 April 1958, the defendant Philippine Long Distance Telephone Company, complained to the
Bureau of Telecommunications that said bureau was violating the conditions under which their
Private Branch Exchange (PBX) is inter-connected with the PLDT's facilities, referring to the rented
trunk lines, for the Bureau had used the trunk lines not only for the use of government offices but
even to serve private persons or the general public, in competition with the business of the PLDT;
and gave notice that if said violations were not stopped by midnight of 12 April 1958, the PLDT
would sever the telephone connections. 13 When the PLDT received no reply, it disconnected the
trunk lines being rented by the Bureau at midnight on 12 April 1958. 14 The result was the isolation of
the Philippines, on telephone services, from the rest of the world, except the United States. 15

At that time, the Bureau was maintaining 5,000 telephones and had 5,000 pending applications for
telephone connection. 16 The PLDT was also maintaining 60,000 telephones and had also 20,000
pending applications. 17Through the years, neither of them has been able to fill up the demand for
telephone service.

The Bureau of Telecommunications had proposed to the PLDT on 8 January 1958 that both enter
into an interconnecting agreement, with the government paying (on a call basis) for all calls passing
through the interconnecting facilities from the Government Telephone System to the PLDT. 18 The
PLDT replied that it was willing to enter into an agreement on overseas telephone service to Europe
and Asian countries provided that the Bureau would submit to the jurisdiction and regulations of the
Public Service Commission and in consideration of 37 1/2% of the gross revenues. 19 In its
memorandum in lieu of oral argument in this Court dated 9 February 1964, on page 8, the defendant
reduced its offer to 33 1/3 % (1/3) as its share in the overseas telephone service. The proposals
were not accepted by either party.

On 12 April 1958, plaintiff Republic commenced suit against the defendant, Philippine Long
Distance Telephone Company, in the Court of First Instance of Manila (Civil Case No. 35805),
praying in its complaint for judgment commanding the PLDT to execute a contract with plaintiff,
through the Bureau, for the use of the facilities of defendant's telephone system throughout the
Philippines under such terms and conditions as the court might consider reasonable, and for a writ of
preliminary injunction against the defendant company to restrain the severance of the existing
telephone connections and/or restore those severed.

Acting on the application of the plaintiff, and on the ground that the severance of telephone
connections by the defendant company would isolate the Philippines from other countries, the court
a quo, on 14 April 1958, issued an order for the defendant:

(1) to forthwith reconnect and restore the seventy-eight (78) trunk lines that it has
disconnected between the facilities of the Government Telephone System, including its
overseas telephone services, and the facilities of defendant; (2) to refrain from carrying into
effect its threat to sever the existing telephone communication between the Bureau of
Telecommunications and defendant, and not to make connection over its telephone system
of telephone calls coming to the Philippines from foreign countries through the said Bureau's
telephone facilities and the radio facilities of RCA Communications, Inc.; and (3) to accept
and connect through its telephone system all such telephone calls coming to the Philippines
from foreign countries — until further order of this Court.

On 28 April 1958, the defendant company filed its answer, with counterclaims.
 It denied any obligation on its part to execute a contrary of services with the Bureau of
Telecommunications; contested the jurisdiction of the Court of First Instance to compel it to enter
into interconnecting agreements, and averred that it was justified to disconnect the trunk lines
heretofore leased to the Bureau of Telecommunications under the existing agreement because its
facilities were being used in fraud of its rights. PLDT further claimed that the Bureau was engaging in
commercial telephone operations in excess of authority, in competition with, and to the prejudice of,
the PLDT, using defendants own telephone poles, without proper accounting of revenues.

After trial, the lower court rendered judgment that it could not compel the PLDT to enter into an
agreement with the Bureau because the parties were not in agreement; that under Executive Order
94, establishing the Bureau of Telecommunications, said Bureau was not limited to servicing
government offices alone, nor was there any in the contract of lease of the trunk lines, since the
PLDT knew, or ought to have known, at the time that their use by the Bureau was to be public
throughout the Islands, hence the Bureau was neither guilty of fraud, abuse, or misuse of the poles
of the PLDT; and, in view of serious public prejudice that would result from the disconnection of the
trunk lines, declared the preliminary injunction permanent, although it dismissed both the complaint
and the counterclaims.

Both parties appealed.

Taking up first the appeal of the Republic, the latter complains of the action of the trial court in
dismissing the part of its complaint seeking to compel the defendant to enter into an interconnecting
contract with it, because the parties could not agree on the terms and conditions of the
interconnection, and of its refusal to fix the terms and conditions therefor.

We agree with the court below that parties can not be coerced to enter into a contract where no
agreement is had between them as to the principal terms and conditions of the contract. Freedom to
stipulate such terms and conditions is of the essence of our contractual system, and by express
provision of the statute, a contract may be annulled if tainted by violence, intimidation, or undue
influence (Articles 1306, 1336, 1337, Civil Code of the Philippines). But the court a quo has
apparently overlooked that while the Republic may not compel the PLDT to celebrate a contract with
it, the Republic may, in the exercise of the sovereign power of eminent domain, require the
telephone company to permit interconnection of the government telephone system and that of the
PLDT, as the needs of the government service may require, subject to the payment of just
compensation to be determined by the court. Nominally, of course, the power of eminent domain
results in the taking or appropriation of title to, and possession of, the expropriated property; but no
cogent reason appears why the said power may not be availed of to impose only a burden upon the
owner of condemned property, without loss of title and possession. It is unquestionable that real
property may, through expropriation, be subjected to an easement of right of way. The use of the
PLDT's lines and services to allow inter-service connection between both telephone systems is not
much different. In either case private property is subjected to a burden for public use and benefit. If,
under section 6, Article XIII, of the Constitution, the State may, in the interest of national welfare,
transfer utilities to public ownership upon payment of just compensation, there is no reason why the
State may not require a public utility to render services in the general interest, provided just
compensation is paid therefor. Ultimately, the beneficiary of the interconnecting service would be the
users of both telephone systems, so that the condemnation would be for public use.

The Bureau of Telecommunications, under section 78 (b) of Executive Order No. 94, may operate
and maintain wire telephone or radio telephone communications throughout the Philippines by
utilizing existing facilities in cities, towns, and provinces under such terms and conditions or
arrangement with present owners or operators as may be agreed upon to the satisfaction of all
concerned; but there is nothing in this section that would exclude resort to condemnation
proceedings where unreasonable or unjust terms and conditions are exacted, to the extent of
crippling or seriously hampering the operations of said Bureau.

A perusal of the complaint shows that the Republic's cause of action is predicated upon the radio
telephonic isolation of the Bureau's facilities from the outside world if the severance of
interconnection were to be carried out by the PLDT, thereby preventing the Bureau of
Telecommunications from properly discharging its functions, to the prejudice of the general public.
Save for the prayer to compel the PLDT to enter into a contract (and the prayer is no essential part
of the pleading), the averments make out a case for compulsory rendering of inter-connecting
services by the telephone company upon such terms and conditions as the court may determine to
be just. And since the lower court found that both parties "are practically at one that defendant
(PLDT) is entitled to reasonable compensation from plaintiff for the reasonable use of the former's
telephone facilities" (Decision, Record on Appeal, page 224), the lower court should have proceeded
to treat the case as one of condemnation of such services independently of contract and proceeded
to determine the just and reasonable compensation for the same, instead of dismissing the petition.

This view we have taken of the true nature of the Republic's petition necessarily results in
overruling the plea of defendant-appellant PLDT that the court of first instance had no jurisdiction to
entertain the petition and that the proper forum for the action was the Public Service Commission.
That body, under the law, has no authority to pass upon actions for the taking of private property
under the sovereign right of eminent domain. Furthermore, while the defendant telephone company
is a public utility corporation whose franchise, equipment and other properties are under the
jurisdiction, supervision and control of the Public Service Commission (Sec. 13, Public Service Act),
yet the plaintiff's telecommunications network is a public service owned by the Republic and
operated by an instrumentality of the National Government, hence exempt, under Section 14 of the
Public Service Act, from such jurisdiction, supervision and control. The Bureau of
Telecommunications was created in pursuance of a state policy reorganizing the government offices
—

to meet the exigencies attendant upon the establishment of the free and independent
Government of the Republic of the Philippines, and for the purpose of promoting simplicity,
economy and efficiency in its operation (Section 1, Republic Act No. 51) —

and the determination of state policy is not vested in the Commission (Utilities Com. vs. Bartonville
Bus Line, 290 Ill. 574; 124 N.E. 373).

Defendant PLDT, as appellant, contends that the court below was in error in not holding that the
Bureau of Telecommunications was not empowered to engage in commercial telephone business,
and in ruling that said defendant was not justified in disconnecting the telephone trunk lines it had
previously leased to the Bureau. We find that the court a quo ruled correctly in rejecting both
assertions.

Executive Order No. 94, Series of 1947, reorganizing the Bureau of Telecommunications, expressly
empowered the latter in its Section 79, subsection (b), to "negotiate for, operate and maintain wire
telephone or radio telephone communication service throughout the Philippines", and, in subsection
(c), "to prescribe, subject to approval by the Department Head, equitable rates of charges for
messages handled by the system and/or for time calls and other services that may be rendered by
the system". Nothing in these provisions limits the Bureau to non-commercial activities or prevents it
from serving the general public. It may be that in its original prospectuses the Bureau officials had
stated that the service would be limited to government offices: but such limitations could not block
future expansion of the system, as authorized by the terms of the Executive Order, nor could the
officials of the Bureau bind the Government not to engage in services that are authorized by law. It is
a well-known rule that erroneous application and enforcement of the law by public officers do not
block subsequent correct application of the statute (PLDT vs. Collector of Internal Revenue, 90 Phil.
676), and that the Government is never estopped by mistake or error on the part of its agents
(Pineda vs. Court of First Instance of Tayabas, 52 Phil. 803, 807; Benguet Consolidated Mining Co.
vs. Pineda, 98 Phil. 711, 724).

The theses that the Bureau's commercial services constituted unfair competition, and that the
Bureau was guilty of fraud and abuse under its contract, are, likewise, untenable.

First, the competition is merely hypothetical, the demand for telephone service being very much
more than the supposed competitors can supply. As previously noted, the PLDT had 20,000 pending
applications at the time, and the Bureau had another 5,000. The telephone company's inability to
meet the demands for service are notorious even now. Second, the charter of the defendant
expressly provides:

SEC. 14. The rights herein granted shall not be exclusive, and the rights and power to grant
to any corporation, association or person other than the grantee franchise for the telephone
or electrical transmission of message or signals shall not be impaired or affected by the
granting of this franchise: — (Act 3436)

And third, as the trial court correctly stated, "when the Bureau of Telecommunications subscribed to
the trunk lines, defendant knew or should have known that their use by the subscriber was more or
less public and all embracing in nature, that is, throughout the Philippines, if not abroad" (Decision,
Record on Appeal, page 216).

The acceptance by the defendant of the payment of rentals, despite its knowledge that the plaintiff
had extended the use of the trunk lines to commercial purposes, continuously since 1948, implies
assent by the defendant to such extended use. Since this relationship has been maintained for a
long time and the public has patronized both telephone systems, and their interconnection is to the
public convenience, it is too late for the defendant to claim misuse of its facilities, and it is not now at
liberty to unilaterally sever the physical connection of the trunk lines.

..., but there is high authority for the position that, when such physical connection has been
voluntarily made, under a fair and workable arrangement and guaranteed by contract and the
continuous line has come to be patronized and established as a great public convenience,
such connection shall not in breach of the agreement be severed by one of the parties. In
that case, the public is held to have such an interest in the arrangement that its rights must
receive due consideration. This position finds approval in State ex rel. vs. Cadwaller, 172
Ind. 619, 636, 87 N.E. 650, and is stated in the elaborate and learned opinion of Chief
Justice Myers as follows: "Such physical connection cannot be required as of right, but if
such connection is voluntarily made by contract, as is here alleged to be the case, so that the
public acquires an interest in its continuance, the act of the parties in making such
connection is equivalent to a declaration of a purpose to waive the primary right of
independence, and it imposes upon the property such a public status that it may not be
disregarded" — citing Mahan v. Mich. Tel. Co., 132 Mich. 242, 93 N.W. 629, and the reasons
upon which it is in part made to rest are referred to in the same opinion, as follows: "Where
private property is by the consent of the owner invested with a public interest or privilege for
the benefit of the public, the owner can no longer deal with it as private property only, but
must hold it subject to the right of the public in the exercise of that public interest or privilege
conferred for their benefit." Allnut v. Inglis (1810) 12 East, 527. The doctrine of this early
case is the acknowledged law. (Clinton-Dunn Tel. Co. v. Carolina Tel. & Tel. Co., 74 S.E.
636, 638).
 It is clear that the main reason for the objection of the PLDT lies in the fact that said appellant did
not expect that the Bureau's telephone system would expand with such rapidity as it has done; but
this expansion is no ground for the discontinuance of the service agreed upon.

The last issue urged by the PLDT as appellant is its right to compensation for the use of its poles
for bearing telephone wires of the Bureau of Telecommunications. Admitting that section 19 of the
PLDT charter reserves to the Government —

the privilege without compensation of using the poles of the grantee to attach one ten-pin
cross-arm, and to install, maintain and operate wires of its telegraph system
thereon; Provided, however, That the Bureau of Posts shall have the right to place additional
cross-arms and wires on the poles of the grantee by paying a compensation, the rate of
which is to be agreed upon by the Director of Posts and the grantee; —

the defendant counterclaimed for P8,772.00 for the use of its poles by the plaintiff, contending that
what was allowed free use, under the aforequoted provision, was one ten-pin cross-arm attachment
and only for plaintiff's telegraph system, not for its telephone system; that said section could not refer
to the plaintiff's telephone system, because it did not have such telephone system when defendant
acquired its franchise. The implication of the argument is that plaintiff has to pay for the use of
defendant's poles if such use is for plaintiff's telephone system and has to pay also if it attaches
more than one (1) ten-pin cross-arm for telegraphic purposes.

As there is no proof that the telephone wires strain the poles of the PLDT more than the telegraph
wires, nor that they cause more damage than the wires of the telegraph system, or that the
Government has attached to the poles more than one ten-pin cross-arm as permitted by the PLDT
charter, we see no point in this assignment of error. So long as the burden to be borne by the PLDT
poles is not increased, we see no reason why the reservation in favor of the telegraph wires of the
government should not be extended to its telephone lines, any time that the government decided to
engage also in this kind of communication.

In the ultimate analysis, the true objection of the PLDT to continue the link between its network and
that of the Government is that the latter competes "parasitically" (sic) with its own telephone
services. Considering, however, that the PLDT franchise is non-exclusive; that it is well-known that
defendant PLDT is unable to adequately cope with the current demands for telephone service, as
shown by the number of pending applications therefor; and that the PLDT's right to just
compensation for the services rendered to the Government telephone system and its users is herein
recognized and preserved, the objections of defendant-appellant are without merit. To uphold the
PLDT's contention is to subordinate the needs of the general public to the right of the PLDT to derive
profit from the future expansion of its services under its non-exclusive franchise.

WHEREFORE, the decision of the Court of First Instance, now under appeal, is affirmed, except in
so far as it dismisses the petition of the Republic of the Philippines to compel the Philippine Long
Distance Telephone Company to continue servicing the Government telephone system upon such
terms, and for a compensation, that the trial court may determine to be just, including the period
elapsed from the filing of the original complaint or petition. And for this purpose, the records are
ordered returned to the court of origin for further hearings and other proceedings not inconsistent
with this opinion. No costs.
 Republic of the Philippines
Supreme Court
Manila

SECOND DIVISION

REPUBLIC OF THE PHILIPPINES, G. R. No. 185124

represented by the NATIONAL
IRRIGATION ADMINISTRATION
(NIA),
Petitioner,

- versus - Present:

RURAL BANK OF KABACAN, INC., CARPIO, J., Chairperson,

LITTIE SARAH A. AGDEPPA, PEREZ,
LEOSA NANETTE AGDEPPA and SERENO,
MARCELINO VIERNES, REYES, and
MARGARITA TABOADA, PORTIA PERLAS-BERNABE, JJ.
CHARISMA RUTH ORTIZ,
represented by LINA ERLINDA A. Promulgated:
ORTIZ and MARIO ORTIZ, JUAN
MAMAC and GLORIA MATAS, January 25, 2012
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

SERENO, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court, seeking the reversal of the 12 August 2008 Court of Appeals (CA)
Decision and 22 October 2008 Resolution in CA-G.R. CV No. 65196.
The assailed issuances affirmed with modification the 31 August 1999
Judgment promulgated by the Regional Trial Court (RTC), Branch 22, Judicial
Region, Kabacan, Cotabato. The RTC had fixed the just compensation for the value
of the land and improvements thereon that were expropriated by petitioner, but
excluded the value of the excavated soil. Petitioner Republic of the Philippines is
represented in this case by the National Irrigation Authority (NIA).
The Facts
NIA is a government-owned-and-controlled corporation created under
Republic Act No. (R.A.) 3601 on 22 June 1963. It is primarily responsible for
irrigation development and management in the country. Its charter was amended by
Presidential Decree (P.D.) 552 on 11 September 1974 and P.D. 1702 on 17 July
1980. To carry out its purpose, NIA was specifically authorized under P.D. 552 to
exercise the power of eminent domain.[1]
NIA needed some parcels of land for the purpose of constructing the
Malitubog-Marigadao Irrigation Project. On 08 September 1994, it filed with the
RTC of Kabacan, Cotabato a Complaint for the expropriation of a portion of three
(3) parcels of land covering a total of 14,497.91 square meters. [2] The case was
docketed as Special Civil Case No. 61 and was assigned to RTC-Branch 22. The
affected parcels of land were the following:
1) Lot No. 3080 covered by Transfer Certificate of Title (TCT) No. T-
61963 and registered under the Rural Bank of Kabacan
2) Lot No. 455 covered by TCT No. T-74516 and registered under the
names of RG May, Ronald and Rolando, all surnamed Lao
3) Lot No. 3039 registered under the name of Littie Sarah Agdeppa[3]

On 11 July 1995, NIA filed an Amended Complaint to include Leosa Nanette

A. Agdeppa and Marcelino Viernes as registered owners of Lot No. 3039.[4]

On 25 September 1995, NIA filed a Second Amended Complaint to allege

properly the area sought to be expropriated, the exact address of the expropriated
properties and the owners thereof. NIA further prayed that it be authorized to take
immediate possession of the properties after depositing with the Philippine National
Bank the amount of ₱19,246.58 representing the provisional value thereof.[5]

On 31 October 1995, respondents filed their Answer with Affirmative and

Special Defenses and Counterclaim.[6] They alleged, inter alia, that NIA had no
authority to expropriate portions of their land, because it was not a sovereign
political entity; that it was not necessary to expropriate their properties, because
there was an abandoned government property adjacent to theirs, where the project
could pass through; that Lot No. 3080 was no longer owned by the Rural Bank of
Kabacan; that NIAs valuation of their expropriated properties was inaccurate
because of the improvements on the land that should have placed its value at ₱5
million; and that NIA never negotiated with the landowners before taking their
properties for the project, causing permanent and irreparable damages to their
properties valued at ₱250,000.[7]

On 11 September 1996, the RTC issued an Order forming a committee tasked

to determine the fair market value of the expropriated
properties to establish the just compensation to be paid to the owners. The committee
was composed of the Clerk of Court of RTC Branch 22 as chairperson and two (2)
members of the parties to the case.[8]

On 20 September 1996, in response to the expropriation Complaint,

respondents-intervenors Margarita Tabaoda, Portia Charisma Ruth Ortiz, Lina
Erlinda Ortiz, Mario Ortiz, Juan Mamac and Gloria Matas filed their Answer-in-
Intervention with Affirmative and Special Defenses and Counter-Claim. They
essentially adopted the allegations in the Answer of the other respondents and
pointed out that Margarita Tabaoda and Portia Charisma Ruth Ortiz were the new
owners of Lot No. 3080, which the two acquired from the Rural Bank of Kabacan.
They further alleged that the four other respondents-intervenors were joint tenants-
cultivators of Lot Nos. 3080 and 3039.[9]

On 10 October 1996, the lower court issued an Order stating it would issue a
writ of possession in favor of NIA upon the determination of the fair market value
of the properties, subject of the expropriation proceedings.[10] The lower court later
amended its ruling and, on 21 October 1996, issued a Writ of Possession in favor of
NIA.[11]

On 15 October 1996, the committee submitted a Commissioners Report [12] to

the RTC stating the following observations:
In the process of ocular inspection, the following were jointly observed:

1) The area that was already occupied is 6x200 meters which is equivalent to
1,200 square meters;

2) The area which is to be occupied is 18,930 square meters, more or less;

3) That the area to be occupied is fully planted by gmelina trees with a spacing of
1x1 meters;
 4) That the gmelina tress found in the area already occupied and used for [the]
road is planted with gmelina with spacing of 2x2 and more or less one (1) year
old;

5) That the gmelina trees found in the area to be occupied are already four (4)
years old;

6) That the number of banana clumps (is) two hundred twenty (220);

7) That the number of coco trees found (is) fifteen (15).[13]

The report, however, stated that the committee members could not agree on
the market value of the subject properties and recommended the appointment of
new independent commissioners to replace the ones coming from the parties
only.[14] On 22 October 1996, the RTC issued an Order[15] revoking the
appointments of Atty. Agdeppa and Engr. Mabang as members of the committee
and, in their stead, appointed Renato Sambrano, Assistant Provincial Assessor of
the Province of Cotabato; and Jack Tumacmol, Division Chief of the Land Bank of
the PhilippinesKidapawan Branch.[16]

On 25 November 1996, the new committee submitted its Commissioners

Report to the lower court. The committee had agreed that the fair market value of
the land to be expropriated should be ₱65 per square meter based on the zonal
valuation of the Bureau of Internal Revenue (BIR). As regards the improvement on
the properties, the report recommended the following compensation:

a. ₱200 for each gmelina tree that are more than four (4) years old
b. ₱150 for each gmelina tree that are more than one (1) year old
c. ₱164 for each coco tree
d. ₱270 for each banana clump[17]

On 03 December 1997, the committee submitted to the RTC another report,

which had adopted the first Committee Report, as well as the formers 25 November
1996 report. However, the committee added to its computation the value of the
earthfill excavated from portions of Lot Nos. 3039 and 3080. [18] Petitioner objected
to the inclusion of the value of the excavated soil in the computation of the value of
the land.[19]

The Ruling of the Trial Court

 On 31 August 1999, the RTC promulgated its Judgment, [20] the dispositive
portion of which reads:
WHEREFORE, IN VIEW of all the foregoing considerations, the court
finds and so holds that the commissioners have arrived at and were able to
determine the fair market value of the properties. The court adopts their findings,
and orders:

1. That 18,930 square meters of the lands owned by the defendants is

hereby expropriated in favor of the Republic of the Philippines through
the National Irrigation Administration;

2. That the NIA shall pay to the defendants the amount of ₱1,230,450 for
the 18,930 square meters expropriated in proportion to the areas so
expropriated;

3. That the NIA shall pay to the defendant-intervenors, owners of Lot No.
3080, the sum of ₱5,128,375.50, representing removed earthfill;

4. That the NIA shall pay to the defendants, owners of Lot No. 3039, the
sum of P1,929,611.30 representing earthfill;

5. To pay to the defendants the sum of ₱60,000 for the destroyed G-melina
trees (1 year old);

6. To pay to the defendants the sum of ₱3,786,000.00 for the 4-year old
G-melina trees;

7. That NIA shall pay to the defendants the sum of ₱2,460.00 for the
coconut trees;

8. That all payments intended for the defendant Rural Bank of Kabacan
shall be given to the defendants and intervenors who have already
acquired ownership over the land titled in the name of the Bank.[21]

NIA, through the Office of the Solicitor General (OSG), appealed the
Decision of the RTC to the CA, which docketed the case as CA-G.R. CV No. 65196.
NIA assailed the trial courts adoption of the Commissioners Report, which had
determined the just compensation to be awarded to the owners of the lands
expropriated. NIA also impugned as error the RTCs inclusion for compensation of
the excavated soil from the expropriated properties. Finally, it disputed the trial
courts Order to deliver the payment intended for the Rural Bank of Kabacan to
defendants-intervenors, who allegedly acquired ownership of the land still titled in
the name of the said rural bank.[22]
 The Ruling of the Court of Appeals

On 12 August 2008, the CA through its Twenty-First (21st) Division,

promulgated a Decision[23] affirming with modification the RTC Decision. It ruled
that the committee tasked to determine the fair market value of the properties and
improvements for the purpose of arriving at the just compensation, properly
performed its function. The appellate court noted that the committee members had
conducted ocular inspections of the area surrounding the expropriated properties and
made their recommendations based on official documents from the BIR with regard
to the zonal valuations of the affected properties.[24] The CA observed that, as far as
the valuation of the improvements on the properties was concerned, the committee
members took into consideration the provincial assessors appraisal of the age of the
trees, their productivity and the inputs made.[25] The appellate court further noted
that despite the Manifestation of NIA that it be allowed to present evidence to rebut
the recommendation of the committee on the valuations of the expropriated
properties, NIA failed to do so.[26]

The assailed CA Decision, however, deleted the inclusion of the value of the
soil excavated from the properties in the just compensation. It ruled that the property
owner was entitled to compensation only for the value of the property at the time of
the taking.[27] In the construction of irrigation projects, excavations are necessary to
build the canals, and the excavated soil cannot be valued separately from the land
expropriated. Thus, it concluded that NIA, as the new owner of the affected
properties, had the right to enjoy and make use of the property, including the
excavated soil, pursuant to the latters objectives.[28]

Finally, the CA affirmed the trial courts ruling that recognized defendants-
intervenors Margarita Tabaoda and Portia Charisma Ruth Ortiz as the new owners
of Lot No. 3080 and held that they were thus entitled to just compensation. The
appellate court based its conclusion on the non-participation by the Rural Bank of
Kabacan in the expropriation proceedings and the latters Manifestation that it no
longer owned Lot No. 3080.[29]

On 11 September 2008, the NIA through the OSG filed a Motion for
Reconsideration of the 12 August 2008 Decision, but that motion was denied.[30]

Aggrieved by the appellate courts Decision, NIA now comes to this Court via
a Petition for Review on Certiorari under Rule 45.

The Issues
The following are the issues proffered by petitioner:
THE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE TRIAL
COURTS FINDING OF JUST COMPENSATION OF THE LAND AND THE
IMPROVEMENTS THEREON BASED ON THE REPORT OF THE
COMMISSIONERS.

THE COURT OF APPEALS ERRED IN RULING THAT THE PAYMENT OF

JUST COMPENSATION FOR LOT NO. 3080 SHOULD BE MADE TO
RESPONDENTS MARGARITA TABOADA AND PORTIA CHARISMA RUTH
ORTIZ.[31]

The Courts Ruling

On the first issue, the Petition is not meritorious.

In expropriation proceedings, just compensation is defined as the full and fair

equivalent of the property taken from its owner by the expropriator. The measure is
not the taker's gain, but the owner's loss. The word just is used to intensify the
meaning of the word compensation and to convey thereby the idea that the equivalent
to be rendered for the property to be taken shall be real, substantial, full and
ample.[32] The constitutional limitation of just compensation is considered to be a
sum equivalent to the market value of the property, broadly defined 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 one who receives and one
who desires to sell it, fixed at the time of the actual taking by the government.[33]

In the instant case, we affirm the appellate courts ruling that the
commissioners properly determined the just compensation to be awarded to the
landowners whose properties were expropriated by petitioner.

The records show that the trial court dutifully followed the procedure under
Rule 67 of the 1997 Rules of Civil Procedure when it formed a committee that was
tasked to determine the just compensation for the expropriated properties. The first
set of committee members made an ocular inspection of the properties, subject of
the expropriation. They also determined the exact areas affected, as well as the kinds
and the number of improvements on the properties.[34] When the members were
unable to agree on the valuation of the land and the improvements thereon, the trial
court selected another batch of disinterested members to carry out the task of
determining the value of the land and the improvements.

The new committee members even made a second ocular inspection of the
expropriated areas. They also obtained data from the BIR to determine the zonal
valuation of the expropriated properties, interviewed the adjacent property owners,
and considered other factors such as distance from the highway and the nearby town
center.[35] Further, the committee members also considered Provincial Ordinance
No. 173, which was promulgated by the Province of Cotabato on 15 June 1999, and
which provide for the value of the properties and the improvements for taxation
purposes.[36]

We can readily deduce from these established facts that the committee members
endeavored a rigorous process to determine the just compensation to be awarded to
the owners of the expropriated properties. We cannot, as petitioner would want us
to, oversimplify the process undertaken by the committee in arriving at its
recommendations, because these were not based on mere conjectures and unreliable
data.

In National Power Corporation v. Diato-Bernal,[37] this Court emphasized that the

just-ness of the compensation could only be attained by using reliable and actual
data as bases for fixing the value of the condemned property. The reliable and actual
data we referred to in that case were the sworn declarations of realtors in the area, as
well as tax declarations and zonal valuation from the BIR. In disregarding the
Committee Report assailed by the National Power Corporation in the said case, we
ruled thus:
It is evident that the above conclusions are highly speculative and devoid of any
actual and reliable basis. First, the market values of the subject propertys neighboring
lots were mere estimates and unsupported by any corroborative documents, such as
sworn declarations of realtors in the area concerned, tax declarations or zonal valuation
from the Bureau of Internal Revenue for the contiguous residential dwellings and
commercial establishments. The report also failed to elaborate on how and by how
much the community centers and convenience facilities enhanced the value of
respondents property. Finally, the market sales data and price listings alluded to in the
report were not even appended thereto.

As correctly invoked by NAPOCOR, a commissioners report of land prices which

is not based on any documentary evidence is manifestly hearsay and should be
disregarded by the court.
 The trial court adopted the flawed findings of the commissioners hook, line, and
sinker. It did not even bother to require the submission of the alleged market sales data
and price listings. Further, the RTC overlooked the fact that the recommended just
compensation was gauged as of September 10, 1999 or more than two years after the
complaint was filed on January 8, 1997. It is settled that just compensation is to be
ascertained as of the time of the taking, which usually coincides with the
commencement of the expropriation proceedings. Where the institution of the action
precedes entry into the property, the just compensation is to be ascertained as of the
time of the filing of the complaint. Clearly, the recommended just compensation in the
commissioners report is unacceptable.[38]

In the instant case, the committee members based their recommendations on

reliable data and, as aptly noted by the appellate court, considered various factors
that affected the value of the land and the improvements.[39]

Petitioner, however, strongly objects to the CAs affirmation of the trial courts
adoption of Provincial Ordinance No. 173. The OSG, on behalf of petitioner,
strongly argues that the recommendations of the committee formed by the trial court
were inaccurate. The OSG contends that the ordinance reflects the 1999 market
values of real properties in the Province of Cotabato, while the actual taking was
made in 1996.[40]

We are not persuaded.

We note that petitioner had ample opportunity to rebut the testimonial, as well
as documentary evidence presented by respondents when the case was still on trial. It
failed to do so, however. The issue raised by petitioner was adequately addresses by
the CAs assailed Decision in this wise:
A thorough scrutiny of the records reveals that the second set of
Commissioners, with Atty. Marasigan still being the Chairperson and Mr.
Zambrano and Mr. Tomacmol as members, was not arbitrary and capricious in
performing the task assigned to them. We note that these Commissioners were
competent and disinterested persons who were handpicked by the court a quo due
to their expertise in appraising the value of the land and the improvements thereon
in the province of Cotabato. They made a careful study of the area affected by the
expropriation, mindful of the fact that the value of the land and its may be affected
by many factors. The duly appointed Commissioners made a second ocular
inspection of the subject area on 4 September 1997; went to the BIR office in order
to get the BIR zonal valuation of the properties located in Carmen, Cotabato;
interviewed adjacent property owners; and took into consideration various factors
such as the location of the land which is just less than a kilometer away from the
Poblacion and half a kilometer away from the highway and the fact that it is near a
military reservation. With regard to the improvements, the Commissioners took
 into consideration the valuation of the Provincial Assessor, the age of the trees, and
the inputs and their productivity.

Thus, it could not be said that the schedule of market values in Ordinance No.
173 was the sole basis of the Commissioners in arriving at their valuation. Said
ordinance merely gave credence to their valuation which is comparable to the
current price at that time. Besides, Mr. Zambrano testified that the date used as
bases for Ordinance No. 173 were taken from 1995 to 1996.[41]

Moreover, factual findings of the CA are generally binding on this Court. The
rule admits of exceptions, though, such as when the factual findings of the appellate
court and the trial court are contradictory, or when the findings are not supported by
the evidence on record.[42] These exceptions, however, are not present in the instant
case.

Thus, in the absence of contrary evidence, we affirm the findings of the CA,
which sustained the trial courts Decision adopting the committees recommendations
on the just compensation to be awarded to herein respondents.

We also uphold the CA ruling, which deleted the inclusion of the value of the
excavated soil in the payment for just compensation. There is no legal basis to
separate the value of the excavated soil from that of the expropriated properties,
contrary to what the trial court did. In the context of expropriation proceedings, the
soil has no value separate from that of the expropriated land. Just compensation
ordinarily refers to the value of the land to compensate for what the owner actually
loses. Such value could only be that which prevailed at the time of the taking.

In National Power Corporation v. Ibrahim, et al.,[43] we held that rights over

lands are indivisible, viz:
[C]onsequently, the CAs findings which upheld those of the trial court that
respondents owned and possessed the property and that its substrata was possessed
by petitioner since 1978 for the underground tunnels, cannot be
disturbed. Moreover, the Court sustains the finding of the lower courts that the sub-
terrain portion of the property similarly belongs to respondents. This conclusion is
drawn from Article 437 of the Civil Code which provides:

ART. 437. The owner of a parcel of land is the owner of its surface
and of everything under it, and he can construct thereon any works or make
any plantations and excavations which he may deem proper, without
detriment to servitudes and subject to special laws and ordinances. He
cannot complain of the reasonable requirements of aerial navigation.
 Thus, the ownership of land extends to the surface as well as to the subsoil under
it.

xxx xxx xxx

Registered landowners may even be ousted of ownership and possession of their

properties in the event the latter are reclassified as mineral lands because real
properties are characteristically indivisible. For the loss sustained by such owners,
they are entitled to just compensation under the Mining Laws or in appropriate
expropriation proceedings.

Moreover, petitioners argument that the landowners right extends to the sub-soil
insofar as necessary for their practical interests serves only to further weaken its
case. The theory would limit the right to the sub-soil upon the economic utility
which such area offers to the surface owners. Presumably, the landowners right
extends to such height or depth where it is possible for them to obtain some benefit
or enjoyment, and it is extinguished beyond such limit as there would be no more
interest protected by law.

Hence, the CA correctly modified the trial courts Decision when it ruled thus:
We agree with the OSG that NIA, in the construction of irrigation projects,
must necessarily make excavations in order to build the canals. Indeed it is
preposterous that NIA will be made to pay not only for the value of the land but
also for the soil excavated from such land when such excavation is a necessary
phase in the building of irrigation projects. That NIA will make use of the excavated
soil is of no moment and is of no concern to the landowner who has been paid the
fair market value of his land. As pointed out by the OSG, the law does not limit the
use of the expropriated land to the surface area only. Further, NIA, now being the
owner of the expropriated property, has the right to enjoy and make use of the
property in accordance with its mandate and objectives as provided by law. To
sanction the payment of the excavated soil is to allow the landowners to recover
more than the value of the land at the time when it was taken, which is the true
measure of the damages, or just compensation, and would discourage the
construction of important public improvements.[44]

On the second issue, the Petition is meritorious.

The CA affirmed the ruling of the trial court, which had awarded the payment
of just compensation intended for Lot No. 3080 registered in the name of the Rural
Bank of Kabacan to the defendants-intervenors on the basis of the non-participation
of the rural bank in the proceedings and the latters subsequent Manifestation that it
was no longer the owner of that lot. The appellate court erred on this matter.
 It should be noted that eminent domain cases involve the expenditure of public
[45]
funds. In this kind of proceeding, we require trial courts to be more circumspect
in their evaluation of the just compensation to be awarded to the owner of the
expropriated property.[46] Thus, it was imprudent for the appellate court to rely on
the Rural Bank of Kabacans mere declaration of non-ownership and non-
participation in the expropriation proceeding to validate defendants-intervenors
claim of entitlement to that payment.

The law imposes certain legal requirements in order for a conveyance of real
property to be valid. It should be noted that Lot No. 3080 is a registered parcel of
land covered by TCT No. T-61963. In order for the reconveyance of real property to
be valid, the conveyance must be embodied in a public document [47] and registered
in the office of the Register of Deeds where the property is situated.[48]

We have scrupulously examined the records of the case and found no proof
of conveyance or evidence of transfer of ownership of Lot No. 3080 from its
registered owner, the Rural Bank of Kabacan, to defendants-intervenors. As it is, the
TCT is still registered in the name of the said rural bank. It is not disputed that the
bank did not participate in the expropriation proceedings, and that it manifested that
it no longer owned Lot No. 3080. The trial court should have nevertheless required
the rural bank and the defendants-intervenors to show proof or evidence pertaining
to the conveyance of the subject lot. The court cannot rely on mere inference,
considering that the payment of just compensation is intended to be awarded solely
owner based on the latters proof of ownership.

The trial court should have been guided by Rule 67, Section 9 of the 1997
Rules of Court, which provides thus:
SEC. 9. Uncertain ownership; conflicting claims. If the ownership of the
property taken is uncertain, or there are conflicting claims to any part thereof, the
court may order any sum or sums awarded as compensation for the property to be
paid to the court for the benefit of the person adjudged in the same proceeding to
be entitled thereto. But the judgment shall require the payment of the sum or sums
awarded to either the defendant or the court before the plaintiff can enter upon the
property, or retain it for the public use or purpose if entry has already been made.

Hence, the appellate court erred in affirming the trial courts Order to award
payment of just compensation to the defendants-intervenors. There is doubt as to the
real owner of Lot No. 3080. Despite the fact that the lot was covered by TCT No. T-
61963 and was registered under its name, the Rural Bank of Kabacan manifested
that the owner of the lot was no longer the bank, but the defendants-intervenors;
however, it presented no proof as to the conveyance thereof. In this regard, we deem
it proper to remand this case to the trial court for the reception of evidence to
establish the present owner of Lot No. 3080 who will be entitled to receive the
payment of just compensation.

WHEREFORE, the Petition is PARTLY GRANTED. The 12 August 2008

CA Decision in CA-G.R. CV No. 65196, awarding just compensation to the
defendants as owners of the expropriated properties and deleting the inclusion of the
value of the excavated soil, is hereby AFFIRMED with MODIFICATION. The
case is hereby REMANDED to the trial court for the reception of evidence to
establish the present owner of Lot No. 3080. No pronouncements as to cost.

SO ORDERED.

Taking

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-20620 August 15, 1974

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant,

vs.
CARMEN M. VDA. DE CASTELLVI, ET AL., defendants-appellees.

Office of the Solicitor General for plaintiff-appellant.

C.A. Mendoza & A. V. Raquiza and Alberto Cacnio & Associates for defendant-appellees.

ZALDIVAR, J.:p

Appeal from the decision of the Court of First Instance of Pampanga in its Civil Case No. 1623, an expropriation proceeding.

Plaintiff-appellant, the Republic of the Philippines, (hereinafter referred to as the Republic) filed, on
June 26, 1959, a complaint for eminent domain against defendant-appellee, Carmen M. Vda. de
Castellvi, judicial administratrix of the estate of the late Alfonso de Castellvi (hereinafter referred to
as Castellvi), over a parcel of land situated in the barrio of San Jose, Floridablanca, Pampanga,
described as follows:

A parcel of land, Lot No. 199-B Bureau of Lands Plan Swo 23666. Bounded on the
NE by Maria Nieves Toledo-Gozun; on the SE by national road; on the SW by AFP
reservation, and on the NW by AFP reservation. Containing an area of 759,299
square meters, more or less, and registered in the name of Alfonso Castellvi under
TCT No. 13631 of the Register of Pampanga ...;

and against defendant-appellee Maria Nieves Toledo Gozun (hereinafter referred to as Toledo-
Gozun over two parcels of land described as follows:

A parcel of land (Portion Lot Blk-1, Bureau of Lands Plan Psd, 26254. Bounded on
the NE by Lot 3, on the SE by Lot 3; on the SW by Lot 1-B, Blk. 2 (equivalent to Lot
199-B Swo 23666; on the NW by AFP military reservation. Containing an area of
450,273 square meters, more or less and registered in the name of Maria Nieves
Toledo-Gozun under TCT No. 8708 of the Register of Deeds of Pampanga. ..., and

A parcel of land (Portion of lot 3, Blk-1, Bureau of Lands Plan Psd 26254. Bounded
on the NE by Lot No. 3, on the SE by school lot and national road, on the SW by Lot
1-B Blk 2 (equivalent to Lot 199-B Swo 23666), on the NW by Lot 1-B, Blk-1.
Containing an area of 88,772 square meters, more or less, and registered in the
name of Maria Nieves Toledo Gozun under TCT No. 8708 of the Register of Deeds
of Pampanga, ....

In its complaint, the Republic alleged, among other things, that the fair market value of the above-
mentioned lands, according to the Committee on Appraisal for the Province of Pampanga, was not
more than P2,000 per hectare, or a total market value of P259,669.10; and prayed, that the
provisional value of the lands be fixed at P259.669.10, that the court authorizes plaintiff to take
immediate possession of the lands upon deposit of that amount with the Provincial Treasurer of
Pampanga; that the court appoints three commissioners to ascertain and report to the court the just
compensation for the property sought to be expropriated, and that the court issues thereafter a final
order of condemnation.

On June 29, 1959 the trial court issued an order fixing the provisional value of the lands at
P259,669.10.

In her "motion to dismiss" filed on July 14, 1959, Castellvi alleged, among other things, that the land
under her administration, being a residential land, had a fair market value of P15.00 per square
meter, so it had a total market value of P11,389,485.00; that the Republic, through the Armed
Forces of the Philippines, particularly the Philippine Air Force, had been, despite repeated demands,
illegally occupying her property since July 1, 1956, thereby preventing her from using and disposing
of it, thus causing her damages by way of unrealized profits. This defendant prayed that the
complaint be dismissed, or that the Republic be ordered to pay her P15.00 per square meter, or a
total of P11,389,485.00, plus interest thereon at 6% per annum from July 1, 1956; that the Republic
be ordered to pay her P5,000,000.00 as unrealized profits, and the costs of the suit.

By order of the trial court, dated August, 1959, Amparo C. Diaz, Dolores G. viuda de Gil, Paloma
Castellvi, Carmen Castellvi, Rafael Castellvi, Luis Castellvi, Natividad Castellvi de Raquiza, Jose
Castellvi and Consuelo Castellvi were allowed to intervene as parties defendants. Subsequently,
Joaquin V. Gozun, Jr., husband of defendant Nieves Toledo Gozun, was also allowed by the court to
intervene as a party defendant.
After the Republic had deposited with the Provincial Treasurer of Pampanga the amount of
P259,669.10, the trial court ordered that the Republic be placed in possession of the lands. The
Republic was actually placed in possession of the lands on August 10,
1959.1

In her "motion to dismiss", dated October 22, 1959, Toledo-Gozun alleged, among other things, that
her two parcels of land were residential lands, in fact a portion with an area of 343,303 square
meters had already been subdivided into different lots for sale to the general public, and the
remaining portion had already been set aside for expansion sites of the already completed
subdivisions; that the fair market value of said lands was P15.00 per square meter, so they had a
total market value of P8,085,675.00; and she prayed that the complaint be dismissed, or that she be
paid the amount of P8,085,675.00, plus interest thereon at the rate of 6% per annum from October
13, 1959, and attorney's fees in the amount of P50,000.00.

Intervenors Jose Castellvi and Consuelo Castellvi in their answer, filed on February 11, 1960, and
also intervenor Joaquin Gozun, Jr., husband of defendant Maria Nieves Toledo-Gozun, in his motion
to dismiss, dated May 27, 1960, all alleged that the value of the lands sought to be expropriated was
at the rate of P15.00 per square meter.

On November 4, 1959, the trial court authorized the Provincial Treasurer of Pampanga to pay
defendant Toledo-Gozun the sum of P107,609.00 as provisional value of her lands.2 On May 16,
1960 the trial Court authorized the Provincial Treasurer of Pampanga to pay defendant Castellvi the
amount of P151,859.80 as provisional value of the land under her administration, and ordered said
defendant to deposit the amount with the Philippine National Bank under the supervision of the
Deputy Clerk of Court. In another order of May 16, 1960 the trial Court entered an order of
condemnation.3

The trial Court appointed three commissioners: Atty. Amadeo Yuzon, Clerk of Court, as
commissioner for the court; Atty. Felicisimo G. Pamandanan, counsel of the Philippine National Bank
Branch at Floridablanca, for the plaintiff; and Atty. Leonardo F. Lansangan, Filipino legal counsel at
Clark Air Base, for the defendants. The Commissioners, after having qualified themselves,
proceeded to the performance of their duties.

On March 15,1961 the Commissioners submitted their report and recommendation, wherein, after
having determined that the lands sought to be expropriated were residential lands, they
recommended unanimously that the lowest price that should be paid was P10.00 per square meter,
for both the lands of Castellvi and Toledo-Gozun; that an additional P5,000.00 be paid to Toledo-
Gozun for improvements found on her land; that legal interest on the compensation, computed from
August 10, 1959, be paid after deducting the amounts already paid to the owners, and that no
consequential damages be awarded.4 The Commissioners' report was objected to by all the parties
in the case — by defendants Castellvi and Toledo-Gozun, who insisted that the fair market value of
their lands should be fixed at P15.00 per square meter; and by the Republic, which insisted that the
price to be paid for the lands should be fixed at P0.20 per square meter.5

After the parties-defendants and intervenors had filed their respective memoranda, and the
Republic, after several extensions of time, had adopted as its memorandum its objections to the
report of the Commissioners, the trial court, on May 26, 1961, rendered its decision6 the dispositive
portion of which reads as follows:

WHEREFORE, taking into account all the foregoing circumstances, and that the
lands are titled, ... the rising trend of land values ..., and the lowered purchasing
power of the Philippine peso, the court finds that the unanimous recommendation of
 the commissioners of ten (P10.00) pesos per square meter for the three lots of the
defendants subject of this action is fair and just.

xxx xxx xxx

The plaintiff will pay 6% interest per annum on the total value of the lands of
defendant Toledo-Gozun since (sic) the amount deposited as provisional value from
August 10, 1959 until full payment is made to said defendant or deposit therefor is
made in court.

In respect to the defendant Castellvi, interest at 6% per annum will also be paid by
the plaintiff to defendant Castellvi from July 1, 1956 when plaintiff commenced its
illegal possession of the Castellvi land when the instant action had not yet been
commenced to July 10, 1959 when the provisional value thereof was actually
deposited in court, on the total value of the said (Castellvi) land as herein adjudged.
The same rate of interest shall be paid from July 11, 1959 on the total value of the
land herein adjudged minus the amount deposited as provisional value, or
P151,859.80, such interest to run until full payment is made to said defendant or
deposit therefor is made in court. All the intervenors having failed to produce
evidence in support of their respective interventions, said interventions are ordered
dismissed.

The costs shall be charged to the plaintiff.

On June 21, 1961 the Republic filed a motion for a new trial and/or reconsideration, upon the
grounds of newly-discovered evidence, that the decision was not supported by the evidence, and
that the decision was against the law, against which motion defendants Castellvi and Toledo-Gozun
filed their respective oppositions. On July 8, 1961 when the motion of the Republic for new trial
and/or reconsideration was called for hearing, the Republic filed a supplemental motion for new trial
upon the ground of additional newly-discovered evidence. This motion for new trial and/or
reconsideration was denied by the court on July 12, 1961.

On July 17, 1961 the Republic gave notice of its intention to appeal from the decision of May 26,
1961 and the order of July 12, 1961. Defendant Castellvi also filed, on July 17, 1961, her notice of
appeal from the decision of the trial court.

The Republic filed various ex-parte motions for extension of time within which to file its record on
appeal. The Republic's record on appeal was finally submitted on December 6, 1961.

Defendants Castellvi and Toledo-Gozun filed not only a joint opposition to the approval of the
Republic's record on appeal, but also a joint memorandum in support of their opposition. The
Republic also filed a memorandum in support of its prayer for the approval of its record on appeal.
On December 27, 1961 the trial court issued an order declaring both the record on appeal filed by
the Republic, and the record on appeal filed by defendant Castellvi as having been filed out of time,
thereby dismissing both appeals.

On January 11, 1962 the Republic filed a "motion to strike out the order of December 27, 1961 and
for reconsideration", and subsequently an amended record on appeal, against which motion the
defendants Castellvi and Toledo-Gozun filed their opposition. On July 26, 1962 the trial court issued
an order, stating that "in the interest of expediency, the questions raised may be properly and finally
determined by the Supreme Court," and at the same time it ordered the Solicitor General to submit a
record on appeal containing copies of orders and pleadings specified therein. In an order dated
November 19, 1962, the trial court approved the Republic's record on appeal as amended.

Defendant Castellvi did not insist on her appeal. Defendant Toledo-Gozun did not appeal.

The motion to dismiss the Republic's appeal was reiterated by appellees Castellvi and Toledo-
Gozun before this Court, but this Court denied the motion.

In her motion of August 11, 1964, appellee Castellvi sought to increase the provisional value of her
land. The Republic, in its comment on Castellvi's motion, opposed the same. This Court denied
Castellvi's motion in a resolution dated October 2,1964.

The motion of appellees, Castellvi and Toledo-Gozun, dated October 6, 1969, praying that they be
authorized to mortgage the lands subject of expropriation, was denied by this Court or October 14,
1969.

On February 14, 1972, Attys. Alberto Cacnio, and Associates, counsel for the estate of the late Don
Alfonso de Castellvi in the expropriation proceedings, filed a notice of attorney's lien, stating that as
per agreement with the administrator of the estate of Don Alfonso de Castellvi they shall receive by
way of attorney's fees, "the sum equivalent to ten per centum of whatever the court may finally
decide as the expropriated price of the property subject matter of the case."

---------

Before this Court, the Republic contends that the lower court erred:

1. In finding the price of P10 per square meter of the lands subject of the instant
proceedings as just compensation;

2. In holding that the "taking" of the properties under expropriation commenced with
the filing of this action;

3. In ordering plaintiff-appellant to pay 6% interest on the adjudged value of the

Castellvi property to start from July of 1956;

4. In denying plaintiff-appellant's motion for new trial based on newly discovered

evidence.

In its brief, the Republic discusses the second error assigned as the first issue to be considered. We
shall follow the sequence of the Republic's discussion.

1. In support of the assigned error that the lower court erred in holding that the "taking" of the
properties under expropriation commenced with the filing of the complaint in this case, the Republic
argues that the "taking" should be reckoned from the year 1947 when by virtue of a special lease
agreement between the Republic and appellee Castellvi, the former was granted the "right and
privilege" to buy the property should the lessor wish to terminate the lease, and that in the event of
such sale, it was stipulated that the fair market value should be as of the time of occupancy; and that
the permanent improvements amounting to more that half a million pesos constructed during a
period of twelve years on the land, subject of expropriation, were indicative of an agreed pattern of
permanency and stability of occupancy by the Philippine Air Force in the interest of national
Security.7
Appellee Castellvi, on the other hand, maintains that the "taking" of property under the power of
eminent domain requires two essential elements, to wit: (1) entrance and occupation by condemn or
upon the private property for more than a momentary or limited period, and (2) devoting it to a public
use in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property.
This appellee argues that in the instant case the first element is wanting, for the contract of lease
relied upon provides for a lease from year to year; that the second element is also wanting, because
the Republic was paying the lessor Castellvi a monthly rental of P445.58; and that the contract of
lease does not grant the Republic the "right and privilege" to buy the premises "at the value at the
time of occupancy."8

Appellee Toledo-Gozun did not comment on the Republic's argument in support of the second error
assigned, because as far as she was concerned the Republic had not taken possession of her lands
prior to August 10, 1959.9

In order to better comprehend the issues raised in the appeal, in so far as the Castellvi property is
concerned, it should be noted that the Castellvi property had been occupied by the Philippine Air
Force since 1947 under a contract of lease, typified by the contract marked Exh. 4-Castellvi, the
pertinent portions of which read:

CONTRACT OF LEASE

This AGREEMENT OF LEASE MADE AND ENTERED into by and between

INTESTATE ESTATE OF ALFONSO DE CASTELLVI, represented by CARMEN M.
DE CASTELLVI, Judicial Administratrix ... hereinafter called the LESSOR and THE
REPUBLIC OF THE PHILIPPINES represented by MAJ. GEN. CALIXTO DUQUE,
Chief of Staff of the ARMED FORCES OF THE PHILIPPINES, hereinafter called the
LESSEE,

WITNESSETH:

1. For and in consideration of the rentals hereinafter reserved and the mutual terms,
covenants and conditions of the parties, the LESSOR has, and by these presents
does, lease and let unto the LESSEE the following described land together with the
improvements thereon and appurtenances thereof, viz:

Un Terreno, Lote No. 27 del Plano de subdivision Psu 34752, parte de la hacienda
de Campauit, situado en el Barrio de San Jose, Municipio de Floridablanca
Pampanga. ... midiendo una extension superficial de cuatro milliones once mil cuatro
cientos trienta y cinco (4,001,435) [sic] metros cuadrados, mas o menos.

Out of the above described property, 75.93 hectares thereof are actually occupied
and covered by this contract. .

Above lot is more particularly described in TCT No. 1016, province of

Pampanga ...

of which premises, the LESSOR warrants that he/she/they/is/are the registered owner(s) and with
full authority to execute a contract of this nature.

2. The term of this lease shall be for the period beginning July 1, 1952 the date the
premises were occupied by the PHILIPPINE AIR FORCE, AFP until June 30, 1953,
 subject to renewal for another year at the option of the LESSEE or unless sooner
terminated by the LESSEE as hereinafter provided.

3. The LESSOR hereby warrants that the LESSEE shall have quiet, peaceful and
undisturbed possession of the demised premises throughout the full term or period of
this lease and the LESSOR undertakes without cost to the LESSEE to eject all
trespassers, but should the LESSOR fail to do so, the LESSEE at its option may
proceed to do so at the expense of the LESSOR. The LESSOR further agrees that
should he/she/they sell or encumber all or any part of the herein described premises
during the period of this lease, any conveyance will be conditioned on the right of the
LESSEE hereunder.

4. The LESSEE shall pay to the LESSOR as monthly rentals under this lease the
sum of FOUR HUNDRED FIFTY-FIVE PESOS & 58/100 (P455.58) ...

5. The LESSEE may, at any time prior to the termination of this lease, use the
property for any purpose or purposes and, at its own costs and expense make
alteration, install facilities and fixtures and errect additions ... which facilities or
fixtures ... so placed in, upon or attached to the said premises shall be and remain
property of the LESSEE and may be removed therefrom by the LESSEE prior to the
termination of this lease. The LESSEE shall surrender possession of the premises
upon the expiration or termination of this lease and if so required by the LESSOR,
shall return the premises in substantially the same condition as that existing at the
time same were first occupied by the AFP, reasonable and ordinary wear and tear
and damages by the elements or by circumstances over which the LESSEE has no
control excepted: PROVIDED, that if the LESSOR so requires the return of the
premises in such condition, the LESSOR shall give written notice thereof to the
LESSEE at least twenty (20) days before the termination of the lease and provided,
further, that should the LESSOR give notice within the time specified above, the
LESSEE shall have the right and privilege to compensate the LESSOR at the fair
value or the equivalent, in lieu of performance of its obligation, if any, to restore the
premises. Fair value is to be determined as the value at the time of occupancy less
fair wear and tear and depreciation during the period of this lease.

6. The LESSEE may terminate this lease at any time during the term hereof by giving
written notice to the LESSOR at least thirty (30) days in advance ...

7. The LESSEE should not be responsible, except under special legislation for any
damages to the premises by reason of combat operations, acts of GOD, the
elements or other acts and deeds not due to the negligence on the part of the
LESSEE.

8. This LEASE AGREEMENT supersedes and voids any and all agreements and
undertakings, oral or written, previously entered into between the parties covering the
property herein leased, the same having been merged herein. This AGREEMENT
may not be modified or altered except by instrument in writing only duly signed by the
parties. 10

It was stipulated by the parties, that "the foregoing contract of lease (Exh. 4, Castellvi) is 'similar in
terms and conditions, including the date', with the annual contracts entered into from year to year
between defendant Castellvi and the Republic of the Philippines (p. 17, t.s.n., Vol. III)". 11 It is
undisputed, therefore, that the Republic occupied Castellvi's land from July 1, 1947, by virtue of the
above-mentioned contract, on a year to year basis (from July 1 of each year to June 30 of the
succeeding year) under the terms and conditions therein stated.

Before the expiration of the contract of lease on June 30, 1956 the Republic sought to renew the
same but Castellvi refused. When the AFP refused to vacate the leased premises after the
termination of the contract, on July 11, 1956, Castellvi wrote to the Chief of Staff, AFP, informing the
latter that the heirs of the property had decided not to continue leasing the property in question
because they had decided to subdivide the land for sale to the general public, demanding that the
property be vacated within 30 days from receipt of the letter, and that the premises be returned in
substantially the same condition as before occupancy (Exh. 5 — Castellvi). A follow-up letter was
sent on January 12, 1957, demanding the delivery and return of the property within one month from
said date (Exh. 6 Castellvi). On January 30, 1957, Lieutenant General Alfonso Arellano, Chief of
Staff, answered the letter of Castellvi, saying that it was difficult for the army to vacate the premises
in view of the permanent installations and other facilities worth almost P500,000.00 that were
erected and already established on the property, and that, there being no other recourse, the
acquisition of the property by means of expropriation proceedings would be recommended to the
President (Exhibit "7" — Castellvi).

Defendant Castellvi then brought suit in the Court of First Instance of Pampanga, in Civil Case No.
1458, to eject the Philippine Air Force from the land. While this ejectment case was pending, the
Republic instituted these expropriation proceedings, and, as stated earlier in this opinion, the
Republic was placed in possession of the lands on August 10, 1959, On November 21, 1959, the
Court of First Instance of Pampanga, dismissed Civil Case No. 1458, upon petition of the parties, in
an order which, in part, reads as follows:

1. Plaintiff has agreed, as a matter of fact has already signed an agreement with
defendants, whereby she has agreed to receive the rent of the lands, subject matter
of the instant case from June 30, 1966 up to 1959 when the Philippine Air Force was
placed in possession by virtue of an order of the Court upon depositing the
provisional amount as fixed by the Provincial Appraisal Committee with the Provincial
Treasurer of Pampanga;

2. That because of the above-cited agreement wherein the administratrix decided to

get the rent corresponding to the rent from 1956 up to 1959 and considering that this
action is one of illegal detainer and/or to recover the possession of said land by virtue
of non-payment of rents, the instant case now has become moot and academic
and/or by virtue of the agreement signed by plaintiff, she has waived her cause of
action in the above-entitled case. 12

The Republic urges that the "taking " of Castellvi's property should be deemed as of the year 1947
by virtue of afore-quoted lease agreement. In American Jurisprudence, Vol. 26, 2nd edition, Section
157, on the subject of "Eminent Domain, we read the definition of "taking" (in eminent domain) as
follows:

Taking' under the power of eminent domain may be defined generally as entering
upon private property for more than a momentary period, and, under the warrant or
color of legal authority, devoting it to a public use, or otherwise informally
appropriating or injuriously affecting it in such a way as substantially to oust the
owner and deprive him of all beneficial enjoyment thereof. 13

Pursuant to the aforecited authority, a number of circumstances must be present in the "taking" of
property for purposes of eminent domain.
First, the expropriator must enter a private property. This circumstance is present in the instant case,
when by virtue of the lease agreement the Republic, through the AFP, took possession of the
property of Castellvi.

Second, the entrance into private property must be for more than a momentary period. "Momentary"
means, "lasting but a moment; of but a moment's duration" (The Oxford English Dictionary, Volume
VI, page 596); "lasting a very short time; transitory; having a very brief life; operative or recurring at
every moment" (Webster's Third International Dictionary, 1963 edition.) The word "momentary" when
applied to possession or occupancy of (real) property should be construed to mean "a limited period"
— not indefinite or permanent. The aforecited lease contract was for a period of one year, renewable
from year to year. The entry on the property, under the lease, is temporary, and considered
transitory. The fact that the Republic, through the AFP, constructed some installations of a
permanent nature does not alter the fact that the entry into the land was transitory, or intended to
last a year, although renewable from year to year by consent of 'The owner of the land. By express
provision of the lease agreement the Republic, as lessee, undertook to return the premises in
substantially the same condition as at the time the property was first occupied by the AFP. It is
claimed that the intention of the lessee was to occupy the land permanently, as may be inferred from
the construction of permanent improvements. But this "intention" cannot prevail over the clear and
express terms of the lease contract. Intent is to be deduced from the language employed by the
parties, and the terms 'of the contract, when unambiguous, as in the instant case, are conclusive in
the absence of averment and proof of mistake or fraud — the question being not what the intention
was, but what is expressed in the language used. (City of Manila v. Rizal Park Co., Inc., 53 Phil. 515,
525); Magdalena Estate, Inc. v. Myrick, 71 Phil. 344, 348). Moreover, in order to judge the intention
of the contracting parties, their contemporaneous and subsequent acts shall be principally
considered (Art. 1371, Civil Code). If the intention of the lessee (Republic) in 1947 was really to
occupy permanently Castellvi's property, why was the contract of lease entered into on year to year
basis? Why was the lease agreement renewed from year to year? Why did not the Republic
expropriate this land of Castellvi in 1949 when, according to the Republic itself, it expropriated the
other parcels of land that it occupied at the same time as the Castellvi land, for the purpose of
converting them into a jet air base? 14 It might really have been the intention of the Republic to
expropriate the lands in question at some future time, but certainly mere notice - much less an
implied notice — of such intention on the part of the Republic to expropriate the lands in the future
did not, and could not, bind the landowner, nor bind the land itself. The expropriation must be
actually commenced in court (Republic vs. Baylosis, et al., 96 Phil. 461, 484).

Third, the entry into the property should be under warrant or color of legal authority. This
circumstance in the "taking" may be considered as present in the instant case, because the Republic
entered the Castellvi property as lessee.

Fourth, the property must be devoted to a public use or otherwise informally appropriated or
injuriously affected. It may be conceded that the circumstance of the property being devoted to
public use is present because the property was used by the air force of the AFP.

Fifth, the utilization of the property for public use must be in such a way as to oust the owner and
deprive him of all beneficial enjoyment of the property. In the instant case, the entry of the Republic
into the property and its utilization of the same for public use did not oust Castellvi and deprive her of
all beneficial enjoyment of the property. Castellvi remained as owner, and was continuously
recognized as owner by the Republic, as shown by the renewal of the lease contract from year to
year, and by the provision in the lease contract whereby the Republic undertook to return the
property to Castellvi when the lease was terminated. Neither was Castellvi deprived of all the
beneficial enjoyment of the property, because the Republic was bound to pay, and had been paying,
Castellvi the agreed monthly rentals until the time when it filed the complaint for eminent domain on
June 26, 1959.
It is clear, therefore, that the "taking" of Catellvi's property for purposes of eminent domain cannot be
considered to have taken place in 1947 when the Republic commenced to occupy the property as
lessee thereof. We find merit in the contention of Castellvi that two essential elements in the "taking"
of property under the power of eminent domain, namely: (1) that the entrance and occupation by the
condemnor must be for a permanent, or indefinite period, and (2) that in devoting the property to
public use the owner was ousted from the property and deprived of its beneficial use, were not
present when the Republic entered and occupied the Castellvi property in 1947.

Untenable also is the Republic's contention that although the contract between the parties was one
of lease on a year to year basis, it was "in reality a more or less permanent right to occupy the
premises under the guise of lease with the 'right and privilege' to buy the property should the lessor
wish to terminate the lease," and "the right to buy the property is merged as an integral part of the
lease relationship ... so much so that the fair market value has been agreed upon, not, as of the time
of purchase, but as of the time of occupancy" 15 We cannot accept the Republic's contention that a
lease on a year to year basis can give rise to a permanent right to occupy, since by express legal
provision a lease made for a determinate time, as was the lease of Castellvi's land in the instant
case, ceases upon the day fixed, without need of a demand (Article 1669, Civil Code). Neither can it
be said that the right of eminent domain may be exercised by simply leasing the premises to be
expropriated (Rule 67, Section 1, Rules of Court). Nor can it be accepted that the Republic would
enter into a contract of lease where its real intention was to buy, or why the Republic should enter
into a simulated contract of lease ("under the guise of lease", as expressed by counsel for the
Republic) when all the time the Republic had the right of eminent domain, and could expropriate
Castellvi's land if it wanted to without resorting to any guise whatsoever. Neither can we see how a
right to buy could be merged in a contract of lease in the absence of any agreement between the
parties to that effect. To sustain the contention of the Republic is to sanction a practice whereby in
order to secure a low price for a land which the government intends to expropriate (or would
eventually expropriate) it would first negotiate with the owner of the land to lease the land (for say
ten or twenty years) then expropriate the same when the lease is about to terminate, then claim that
the "taking" of the property for the purposes of the expropriation be reckoned as of the date when
the Government started to occupy the property under the lease, and then assert that the value of the
property being expropriated be reckoned as of the start of the lease, in spite of the fact that the value
of the property, for many good reasons, had in the meantime increased during the period of the
lease. This would be sanctioning what obviously is a deceptive scheme, which would have the effect
of depriving the owner of the property of its true and fair market value at the time when the
expropriation proceedings were actually instituted in court. The Republic's claim that it had the "right
and privilege" to buy the property at the value that it had at the time when it first occupied the
property as lessee nowhere appears in the lease contract. What was agreed expressly in paragraph
No. 5 of the lease agreement was that, should the lessor require the lessee to return the premises in
the same condition as at the time the same was first occupied by the AFP, the lessee would have
the "right and privilege" (or option) of paying the lessor what it would fairly cost to put the premises in
the same condition as it was at the commencement of the lease, in lieu of the lessee's performance
of the undertaking to put the land in said condition. The "fair value" at the time of occupancy,
mentioned in the lease agreement, does not refer to the value of the property if bought by the
lessee, but refers to the cost of restoring the property in the same condition as of the time when the
lessee took possession of the property. Such fair value cannot refer to the purchase price, for
purchase was never intended by the parties to the lease contract. It is a rule in the interpretation of
contracts that "However general the terms of a contract may be, they shall not be understood to
comprehend things that are distinct and cases that are different from those upon which the parties
intended to agree" (Art. 1372, Civil Code).

We hold, therefore, that the "taking" of the Castellvi property should not be reckoned as of the year
1947 when the Republic first occupied the same pursuant to the contract of lease, and that the just
compensation to be paid for the Castellvi property should not be determined on the basis of the
value of the property as of that year. The lower court did not commit an error when it held that the
"taking" of the property under expropriation commenced with the filing of the complaint in this case.

Under Section 4 of Rule 67 of the Rules of Court, 16 the "just compensation" is to be determined as of
the date of the filing of the complaint. This Court has ruled that when the taking of the property
sought to be expropriated coincides with the commencement of the expropriation proceedings, or
takes place subsequent to the filing of the complaint for eminent domain, the just compensation
should be determined as of the date of the filing of the complaint. (Republic vs. Philippine National
Bank, L-14158, April 12, 1961, 1 SCRA 957, 961-962). In the instant case, it is undisputed that the
Republic was placed in possession of the Castellvi property, by authority of the court, on August 10,
1959. The "taking" of the Castellvi property for the purposes of determining the just compensation to
be paid must, therefore, be reckoned as of June 26, 1959 when the complaint for eminent domain
was filed.

Regarding the two parcels of land of Toledo-Gozun, also sought to be expropriated, which had never
been under lease to the Republic, the Republic was placed in possession of said lands, also by
authority of the court, on August 10, 1959, The taking of those lands, therefore, must also be
reckoned as of June 26, 1959, the date of the filing of the complaint for eminent domain.

2. Regarding the first assigned error — discussed as the second issue — the Republic maintains
that, even assuming that the value of the expropriated lands is to be determined as of June 26,
1959, the price of P10.00 per square meter fixed by the lower court "is not only exhorbitant but also
unconscionable, and almost fantastic". On the other hand, both Castellvi and Toledo-Gozun maintain
that their lands are residential lands with a fair market value of not less than P15.00 per square
meter.

The lower court found, and declared, that the lands of Castellvi and Toledo-Gozun are residential
lands. The finding of the lower court is in consonance with the unanimous opinion of the three
commissioners who, in their report to the court, declared that the lands are residential lands.

The Republic assails the finding that the lands are residential, contending that the plans of the
appellees to convert the lands into subdivision for residential purposes were only on paper, there
being no overt acts on the part of the appellees which indicated that the subdivision project had been
commenced, so that any compensation to be awarded on the basis of the plans would be
speculative. The Republic's contention is not well taken. We find evidence showing that the lands in
question had ceased to be devoted to the production of agricultural crops, that they had become
adaptable for residential purposes, and that the appellees had actually taken steps to convert their
lands into residential subdivisions even before the Republic filed the complaint for eminent domain.
In the case of City of Manila vs. Corrales (32 Phil. 82, 98) this Court laid down basic guidelines in
determining the value of the property expropriated for public purposes. This Court said:

In determining the value of land appropriated for public purposes, the same
consideration are to be regarded as in a sale of property between private parties.
The inquiry, in such cases, must be what is the property worth in the market, viewed
not merely with reference to the uses to which it is at the time applied, but with
reference to the uses to which it is plainly adapted, that is to say, What is it worth
from its availability for valuable uses?

So many and varied are the circumstances to be taken into account in determining
the value of property condemned for public purposes, that it is practically impossible
to formulate a rule to govern its appraisement in all cases. Exceptional
circumstances will modify the most carefully guarded rule, but, as a general thing, we
 should say that the compensation of the owner is to be estimated by reference to the
use for which the property is suitable, having regard to the existing business or wants
of the community, or such as may be reasonably expected in the immediate future.
(Miss. and Rum River Boom Co. vs. Patterson, 98 U.S., 403).

In expropriation proceedings, therefore, the owner of the land has the right to its value for the use for
which it would bring the most in the market. 17 The owner may thus show every advantage that his
property possesses, present and prospective, in order that the price it could be sold for in the market
may be satisfactorily determined. 18 The owner may also show that the property is suitable for
division into village or town lots. 19

The trial court, therefore, correctly considered, among other circumstances, the proposed
subdivision plans of the lands sought to be expropriated in finding that those lands are residential
lots. This finding of the lower court is supported not only by the unanimous opinion of the
commissioners, as embodied in their report, but also by the Provincial Appraisal Committee of the
province of Pampanga composed of the Provincial Treasurer, the Provincial Auditor and the District
Engineer. In the minutes of the meeting of the Provincial Appraisal Committee, held on May 14,
1959 (Exh. 13-Castellvi) We read in its Resolution No. 10 the following:

3. Since 1957 the land has been classified as residential in view of its proximity to the
air base and due to the fact that it was not being devoted to agriculture. In fact, there
is a plan to convert it into a subdivision for residential purposes. The taxes due on
the property have been paid based on its classification as residential land;

The evidence shows that Castellvi broached the idea of subdividing her land into residential lots as
early as July 11, 1956 in her letter to the Chief of Staff of the Armed Forces of the Philippines. (Exh.
5-Castellvi) As a matter of fact, the layout of the subdivision plan was tentatively approved by the
National Planning Commission on September 7, 1956. (Exh. 8-Castellvi). The land of Castellvi had
not been devoted to agriculture since 1947 when it was leased to the Philippine Army. In 1957 said
land was classified as residential, and taxes based on its classification as residential had been paid
since then (Exh. 13-Castellvi). The location of the Castellvi land justifies its suitability for a residential
subdivision. As found by the trial court, "It is at the left side of the entrance of the Basa Air Base and
bounded on two sides by roads (Exh. 13-Castellvi), paragraphs 1 and 2, Exh. 12-Castellvi), the
poblacion, (of Floridablanca) the municipal building, and the Pampanga Sugar Mills are closed by.
The barrio schoolhouse and chapel are also near (T.S.N. November 23,1960, p. 68)." 20

The lands of Toledo-Gozun (Lot 1-B and Lot 3) are practically of the same condition as the land of
Castellvi. The lands of Toledo-Gozun adjoin the land of Castellvi. They are also contiguous to the
Basa Air Base, and are along the road. These lands are near the barrio schoolhouse, the barrio
chapel, the Pampanga Sugar Mills, and the poblacion of Floridablanca (Exhs. 1, 3 and 4-Toledo-
Gozun). As a matter of fact, regarding lot 1-B it had already been surveyed and subdivided, and its
conversion into a residential subdivision was tentatively approved by the National Planning
Commission on July 8, 1959 (Exhs. 5 and 6 Toledo-Gozun). As early as June, 1958, no less than 32
man connected with the Philippine Air Force among them commissioned officers, non-commission
officers, and enlisted men had requested Mr. and Mrs. Joaquin D. Gozun to open a subdivision on
their lands in question (Exhs. 8, 8-A to 8-ZZ-Toledo-Gozun). 21

We agree with the findings, and the conclusions, of the lower court that the lands that are the subject
of expropriation in the present case, as of August 10, 1959 when the same were taken possession of
by the Republic, were residential lands and were adaptable for use as residential subdivisions.
Indeed, the owners of these lands have the right to their value for the use for which they would bring
the most in the market at the time the same were taken from them. The most important issue to be
resolved in the present case relates to the question of what is the just compensation that should be
paid to the appellees.

The Republic asserts that the fair market value of the lands of the appellees is P.20 per square
meter. The Republic cites the case of Republic vs. Narciso, et al., L-6594, which this Court decided
on May 18, 1956. The Narciso case involved lands that belonged to Castellvi and Toledo-Gozun,
and to one Donata Montemayor, which were expropriated by the Republic in 1949 and which are
now the site of the Basa Air Base. In the Narciso case this Court fixed the fair market value at P.20
per square meter. The lands that are sought to be expropriated in the present case being contiguous
to the lands involved in the Narciso case, it is the stand of the Republic that the price that should be
fixed for the lands now in question should also be at P.20 per square meter.

We can not sustain the stand of the Republic. We find that the price of P.20 per square meter, as
fixed by this Court in the Narciso case, was based on the allegation of the defendants (owners) in
their answer to the complaint for eminent domain in that case that the price of their lands was
P2,000.00 per hectare and that was the price that they asked the court to pay them. This Court said,
then, that the owners of the land could not be given more than what they had asked, notwithstanding
the recommendation of the majority of the Commission on Appraisal — which was adopted by the
trial court — that the fair market value of the lands was P3,000.00 per hectare. We also find that the
price of P.20 per square meter in the Narciso case was considered the fair market value of the lands
as of the year 1949 when the expropriation proceedings were instituted, and at that time the lands
were classified as sugar lands, and assessed for taxation purposes at around P400.00 per hectare,
or P.04 per square meter. 22 While the lands involved in the present case, like the lands involved in
the Narciso case, might have a fair market value of P.20 per square meter in 1949, it can not be
denied that ten years later, in 1959, when the present proceedings were instituted, the value of those
lands had increased considerably. The evidence shows that since 1949 those lands were no longer
cultivated as sugar lands, and in 1959 those lands were already classified, and assessed for taxation
purposes, as residential lands. In 1959 the land of Castellvi was assessed at P1.00 per square
meter. 23

The Republic also points out that the Provincial Appraisal Committee of Pampanga, in its resolution
No. 5 of February 15, 1957 (Exhibit D), recommended the sum of P.20 per square meter as the fair
valuation of the Castellvi property. We find that this resolution was made by the Republic the basis in
asking the court to fix the provisional value of the lands sought to be expropriated at P259,669.10,
which was approved by the court. 24 It must be considered, however, that the amount fixed as the
provisional value of the lands that are being expropriated does not necessarily represent the true
and correct value of the land. The value is only "provisional" or "tentative", to serve as the basis for
the immediate occupancy of the property being expropriated by the condemnor. The records show
that this resolution No. 5 was repealed by the same Provincial Committee on Appraisal in its
resolution No. 10 of May 14, 1959 (Exhibit 13-Castellvi). In that resolution No. 10, the appraisal
committee stated that "The Committee has observed that the value of the land in this locality has
increased since 1957 ...", and recommended the price of P1.50 per square meter. It follows,
therefore, that, contrary to the stand of the Republic, that resolution No. 5 of the Provincial Appraisal
Committee can not be made the basis for fixing the fair market value of the lands of Castellvi and
Toledo-Gozun.

The Republic further relied on the certification of the Acting Assistant Provincial Assessor of
Pampanga, dated February 8, 1961 (Exhibit K), to the effect that in 1950 the lands of Toledo-Gozun
were classified partly as sugar land and partly as urban land, and that the sugar land was assessed
at P.40 per square meter, while part of the urban land was assessed at P.40 per square meter and
part at P.20 per square meter; and that in 1956 the Castellvi land was classified as sugar land and
was assessed at P450.00 per hectare, or P.045 per square meter. We can not also consider this
certification of the Acting Assistant Provincial Assessor as a basis for fixing the fair market value of
the lands of Castellvi and Toledo-Gozun because, as the evidence shows, the lands in question, in
1957, were already classified and assessed for taxation purposes as residential lands. The
certification of the assessor refers to the year 1950 as far as the lands of Toledo-Gozun are
concerned, and to the year 1956 as far as the land of Castellvi is concerned. Moreover, this Court
has held that the valuation fixed for the purposes of the assessment of the land for taxation purposes
can not bind the landowner where the latter did not intervene in fixing it. 25

On the other hand, the Commissioners, appointed by the court to appraise the lands that were being
expropriated, recommended to the court that the price of P10.00 per square meter would be the fair
market value of the lands. The commissioners made their recommendation on the basis of their
observation after several ocular inspections of the lands, of their own personal knowledge of land
values in the province of Pampanga, of the testimonies of the owners of the land, and other
witnesses, and of documentary evidence presented by the appellees. Both Castellvi and Toledo-
Gozun testified that the fair market value of their respective land was at P15.00 per square meter.
The documentary evidence considered by the commissioners consisted of deeds of sale of
residential lands in the town of San Fernando and in Angeles City, in the province of Pampanga,
which were sold at prices ranging from P8.00 to P20.00 per square meter (Exhibits 15, 16, 17, 18,
19, 20, 21, 22, 23-Castellvi). The commissioners also considered the decision in Civil Case No. 1531
of the Court of First Instance of Pampanga, entitled Republic vs. Sabina Tablante, which was
expropriation case filed on January 13, 1959, involving a parcel of land adjacent to the Clark Air
Base in Angeles City, where the court fixed the price at P18.00 per square meter (Exhibit 14-
Castellvi). In their report, the commissioners, among other things, said:

... This expropriation case is specially pointed out, because the circumstances and
factors involved therein are similar in many respects to the defendants' lands in this
case. The land in Civil Case No. 1531 of this Court and the lands in the present case
(Civil Case No. 1623) are both near the air bases, the Clark Air Base and the Basa
Air Base respectively. There is a national road fronting them and are situated in a
first-class municipality. As added advantage it may be said that the Basa Air Base
land is very near the sugar mill at Del Carmen, Floridablanca, Pampanga, owned by
the Pampanga Sugar Mills. Also just stone's throw away from the same lands is a
beautiful vacation spot at Palacol, a sitio of the town of Floridablanca, which counts
with a natural swimming pool for vacationists on weekends. These advantages are
not found in the case of the Clark Air Base. The defendants' lands are nearer to the
poblacion of Floridablanca then Clark Air Base is nearer (sic) to the poblacion of
Angeles, Pampanga.

The deeds of absolute sale, according to the undersigned commissioners, as well as

the land in Civil Case No. 1531 are competent evidence, because they were
executed during the year 1959 and before August 10 of the same year. More
specifically so the land at Clark Air Base which coincidentally is the subject matter in
the complaint in said Civil Case No. 1531, it having been filed on January 13, 1959
and the taking of the land involved therein was ordered by the Court of First Instance
of Pampanga on January 15, 1959, several months before the lands in this case
were taken by the plaintiffs ....

From the above and considering further that the lowest as well as the highest price
per square meter obtainable in the market of Pampanga relative to subdivision lots
within its jurisdiction in the year 1959 is very well known by the Commissioners, the
Commission finds that the lowest price that can be awarded to the lands in question
is P10.00 per square meter. 26
The lower court did not altogether accept the findings of the Commissioners based on the
documentary evidence, but it considered the documentary evidence as basis for comparison in
determining land values. The lower court arrived at the conclusion that "the unanimous
recommendation of the commissioners of ten (P10.00) pesos per square meter for the three lots of
the defendants subject of this action is fair and just". 27 In arriving at its conclusion, the lower court
took into consideration, among other circumstances, that the lands are titled, that there is a rising
trend of land values, and the lowered purchasing power of the Philippine peso.

In the case of Manila Railroad Co. vs. Caligsihan, 40 Phil. 326, 328, this Court said:

A court of first instance or, on appeal, the Supreme Court, may change or modify the
report of the commissioners by increasing or reducing the amount of the award if the
facts of the case so justify. While great weight is attached to the report of the
commissioners, yet a court may substitute therefor its estimate of the value of the
property as gathered from the record in certain cases, as, 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 palpably inadequate or excessive. 28

The report of the commissioners of appraisal in condemnation proceedings are not binding, but
merely advisory in character, as far as the court is concerned. 29 In our analysis of the report of the
commissioners, We find points that merit serious consideration in the determination of the just
compensation that should be paid to Castellvi and Toledo-Gozun for their lands. It should be noted
that the commissioners had made ocular inspections of the lands and had considered the nature and
similarities of said lands in relation to the lands in other places in the province of Pampanga, like San
Fernando and Angeles City. We cannot disregard the observations of the commissioners regarding
the circumstances that make the lands in question suited for residential purposes — their location
near the Basa Air Base, just like the lands in Angeles City that are near the Clark Air Base, and the
facilities that obtain because of their nearness to the big sugar central of the Pampanga Sugar mills,
and to the flourishing first class town of Floridablanca. It is true that the lands in question are not in
the territory of San Fernando and Angeles City, but, considering the facilities of modern
communications, the town of Floridablanca may be considered practically adjacent to San Fernando
and Angeles City. It is not out of place, therefore, to compare the land values in Floridablanca to the
land values in San Fernando and Angeles City, and form an idea of the value of the lands in
Floridablanca with reference to the land values in those two other communities.

The important factor in expropriation proceeding is that the owner is awarded the just compensation
for his property. We have carefully studied the record, and the evidence, in this case, and after
considering the circumstances attending the lands in question We have arrived at the conclusion
that the price of P10.00 per square meter, as recommended by the commissioners and adopted by
the lower court, is quite high. It is Our considered view that the price of P5.00 per square meter
would be a fair valuation of the lands in question and would constitute a just compensation to the
owners thereof. In arriving at this conclusion We have particularly taken into consideration the
resolution of the Provincial Committee on Appraisal of the province of Pampanga informing, among
others, that in the year 1959 the land of Castellvi could be sold for from P3.00 to P4.00 per square
meter, while the land of Toledo-Gozun could be sold for from P2.50 to P3.00 per square meter. The
Court has weighed all the circumstances relating to this expropriations proceedings, and in fixing the
price of the lands that are being expropriated the Court arrived at a happy medium between the price
as recommended by the commissioners and approved by the court, and the price advocated by the
Republic. This Court has also taken judicial notice of the fact that the value of the Philippine peso
has considerably gone down since the year 1959. 30 Considering that the lands of Castellvi and
Toledo-Gozun are adjoining each other, and are of the same nature, the Court has deemed it proper
to fix the same price for all these lands.
 3. The third issue raised by the Republic relates to the payment of interest. The
Republic maintains that the lower court erred when it ordered the Republic to pay
Castellvi interest at the rate of 6% per annum on the total amount adjudged as the
value of the land of Castellvi, from July 1, 1956 to July 10, 1959. We find merit in this
assignment of error.

In ordering the Republic to pay 6% interest on the total value of the land of Castellvi from July 1,
1956 to July 10, 1959, the lower court held that the Republic had illegally possessed the land of
Castellvi from July 1, 1956, after its lease of the land had expired on June 30, 1956, until August 10,
1959 when the Republic was placed in possession of the land pursuant to the writ of possession
issued by the court. What really happened was that the Republic continued to occupy the land of
Castellvi after the expiration of its lease on June 30, 1956, so much so that Castellvi filed an
ejectment case against the Republic in the Court of First Instance of Pampanga. 31 However, while
that ejectment case was pending, the Republic filed the complaint for eminent domain in the present
case and was placed in possession of the land on August 10, 1959, and because of the institution of
the expropriation proceedings the ejectment case was later dismissed. In the order dismissing the
ejectment case, the Court of First Instance of Pampanga said:

Plaintiff has agreed, as a matter of fact has already signed an agreement with
defendants, whereby she had agreed to receive the rent of the lands, subject matter
of the instant case from June 30, 1956 up to 1959 when the Philippine Air Force was
placed in possession by virtue of an order of the Court upon depositing the
provisional amount as fixed by the Provincial Appraisal Committee with the Provincial
Treasurer of
Pampanga; ...

If Castellvi had agreed to receive the rentals from June 30, 1956 to August 10, 1959, she should be
considered as having allowed her land to be leased to the Republic until August 10, 1959, and she
could not at the same time be entitled to the payment of interest during the same period on the
amount awarded her as the just compensation of her land. The Republic, therefore, should pay
Castellvi interest at the rate of 6% per annum on the value of her land, minus the provisional value
that was deposited, only from July 10, 1959 when it deposited in court the provisional value of the
land.

4. The fourth error assigned by the Republic relates to the denial by the lower court of its motion for
a new trial based on nearly discovered evidence. We do not find merit in this assignment of error.

After the lower court had decided this case on May 26, 1961, the Republic filed a motion for a new
trial, supplemented by another motion, both based upon the ground of newly discovered evidence.
The alleged newly discovered evidence in the motion filed on June 21, 1961 was a deed of absolute
sale-executed on January 25, 1961, showing that a certain Serafin Francisco had sold to Pablo L.
Narciso a parcel of sugar land having an area of 100,000 square meters with a sugar quota of 100
piculs, covered by P.A. No. 1701, situated in Barrio Fortuna, Floridablanca, for P14,000, or P.14 per
square meter.

In the supplemental motion, the alleged newly discovered evidence were: (1) a deed of sale of some
35,000 square meters of land situated at Floridablanca for P7,500.00 (or about P.21 per square
meter) executed in July, 1959, by the spouses Evelyn D. Laird and Cornelio G. Laird in favor of
spouses Bienvenido S. Aguas and Josefina Q. Aguas; and (2) a deed of absolute sale of a parcel of
land having an area of 4,120,101 square meters, including the sugar quota covered by Plantation
Audit No. 161 1345, situated at Floridablanca, Pampanga, for P860.00 per hectare (a little less than
P.09 per square meter) executed on October 22, 1957 by Jesus Toledo y Mendoza in favor of the
Land Tenure Administration.

We find that the lower court acted correctly when it denied the motions for a new trial.

To warrant the granting of a new trial based on the ground of newly discovered evidence, it must
appear that the evidence was discovered after the trial; that even with the exercise of due diligence,
the evidence could not have been discovered and produced at the trial; and that the evidence is of
such a nature as to alter the result of the case if admitted. 32 The lower court correctly ruled that
these requisites were not complied with.

The lower court, in a well-reasoned order, found that the sales made by Serafin Francisco to Pablo
Narciso and that made by Jesus Toledo to the Land Tenure Administration were immaterial and
irrelevant, because those sales covered sugarlands with sugar quotas, while the lands sought to be
expropriated in the instant case are residential lands. The lower court also concluded that the land
sold by the spouses Laird to the spouses Aguas was a sugar land.

We agree with the trial court. In eminent domain proceedings, in order that evidence as to the sale
price of other lands may be admitted in evidence to prove the fair market value of the land sought to
be expropriated, the lands must, among other things, be shown to be similar.

But even assuming, gratia argumenti, that the lands mentioned in those deeds of sale were
residential, the evidence would still not warrant the grant of a new trial, for said evidence could have
been discovered and produced at the trial, and they cannot be considered newly discovered
evidence as contemplated in Section 1(b) of Rule 37 of the Rules of Court. Regarding this point, the
trial court said:

The Court will now show that there was no reasonable diligence employed.

The land described in the deed of sale executed by Serafin Francisco, copy of which
is attached to the original motion, is covered by a Certificate of Title issued by the
Office of the Register of Deeds of Pampanga. There is no question in the mind of the
court but this document passed through the Office of the Register of Deeds for the
purpose of transferring the title or annotating the sale on the certificate of title. It is
true that Fiscal Lagman went to the Office of the Register of Deeds to check
conveyances which may be presented in the evidence in this case as it is now
sought to be done by virtue of the motions at bar, Fiscal Lagman, one of the lawyers
of the plaintiff, did not exercise reasonable diligence as required by the rules. The
assertion that he only went to the office of the Register of Deeds 'now and then' to
check the records in that office only shows the half-hazard [sic] manner by which the
plaintiff looked for evidence to be presented during the hearing before the
Commissioners, if it is at all true that Fiscal Lagman did what he is supposed to have
done according to Solicitor Padua. It would have been the easiest matter for plaintiff
to move for the issuance of a subpoena duces tecum directing the Register of Deeds
of Pampanga to come to testify and to bring with him all documents found in his
office pertaining to sales of land in Floridablanca adjacent to or near the lands in
question executed or recorded from 1958 to the present. Even this elementary
precaution was not done by plaintiff's numerous attorneys.

The same can be said of the deeds of sale attached to the supplementary motion.
They refer to lands covered by certificate of title issued by the Register of Deeds of
Pampanga. For the same reason they could have been easily discovered if
 reasonable diligence has been exerted by the numerous lawyers of the plaintiff in this
case. It is noteworthy that all these deeds of sale could be found in several
government offices, namely, in the Office of the Register of Deeds of Pampanga, the
Office of the Provincial Assessor of Pampanga, the Office of the Clerk of Court as a
part of notarial reports of notaries public that acknowledged these documents, or in
the archives of the National Library. In respect to Annex 'B' of the supplementary
motion copy of the document could also be found in the Office of the Land Tenure
Administration, another government entity. Any lawyer with a modicum of ability
handling this expropriation case would have right away though [sic] of digging up
documents diligently showing conveyances of lands near or around the parcels of
land sought to be expropriated in this case in the offices that would have naturally
come to his mind such as the offices mentioned above, and had counsel for the
movant really exercised the reasonable diligence required by the Rule' undoubtedly
they would have been able to find these documents and/or caused the issuance of
subpoena duces tecum. ...

It is also recalled that during the hearing before the Court of the Report and
Recommendation of the Commissioners and objection thereto, Solicitor Padua made
the observation:

I understand, Your Honor, that there was a sale that took place in this place of land
recently where the land was sold for P0.20 which is contiguous to this land.

The Court gave him permission to submit said document subject to the approval of
the Court. ... This was before the decision was rendered, and later promulgated on
May 26, 1961 or more than one month after Solicitor Padua made the above
observation. He could have, therefore, checked up the alleged sale and moved for a
reopening to adduce further evidence. He did not do so. He forgot to present the
evidence at a more propitious time. Now, he seeks to introduce said evidence under
the guise of newly-discovered evidence. Unfortunately the Court cannot classify it as
newly-discovered evidence, because tinder the circumstances, the correct
qualification that can be given is 'forgotten evidence'. Forgotten however, is not
newly-discovered
evidence. 33

The granting or denial of a motion for new trial is, as a general rule, discretionary with the trial court,
whose judgment should not be disturbed unless there is a clear showing of abuse of discretion. 34 We
do not see any abuse of discretion on the part of the lower court when it denied the motions for a
new trial.

WHEREFORE, the decision appealed from is modified, as follows:

(a) the lands of appellees Carmen Vda. de Castellvi and Maria Nieves Toledo-
Gozun, as described in the complaint, are declared expropriated for public use;

(b) the fair market value of the lands of the appellees is fixed at P5.00 per square
meter;

(c) the Republic must pay appellee Castellvi the sum of P3,796,495.00 as just
compensation for her one parcel of land that has an area of 759,299 square meters,
minus the sum of P151,859.80 that she withdrew out of the amount that was
deposited in court as the provisional value of the land, with interest at the rate of 6%
 per annum from July 10, 1959 until the day full payment is made or deposited in
court;

(d) the Republic must pay appellee Toledo-Gozun the sum of P2,695,225.00 as the
just compensation for her two parcels of land that have a total area of 539,045
square meters, minus the sum of P107,809.00 that she withdrew out of the amount
that was deposited in court as the provisional value of her lands, with interest at the
rate of 6%, per annum from July 10, 1959 until the day full payment is made or
deposited in court; (e) the attorney's lien of Atty. Alberto Cacnio is enforced; and

(f) the costs should be paid by appellant Republic of the Philippines, as provided in
Section 12, Rule 67, and in Section 13, Rule 141, of the Rules of Court.

IT IS SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 165354 January 12, 2015

REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL POWER

CORPORATION, Petitioner,
vs.
HEIRS OF SATURNINO Q. BORBON, AND COURT OF APPEALS, Respondents.

DECISION

BERSAMIN, J.:

The expropriator who has taken possession of the property subject of expropriation is obliged to pay
reasonable compensation to the landowner for the period of such possession although the
proceedings had been discontinued on the ground that the public purpose for the expropriation had
meanwhile ceased.

Antecedents

The National Power Corporation (NAPOCOR) is a government-owned and -controlled corporation

vested with authority under Republic Act No. 6395, as amended, to undertake the development of
hydro-electric generation of power, production of electricity from any and all sources, construction,
operation and maintenance of power plants, auxiliary plants, dams, reservoirs, pipes, main
transmission lines, power stations and substations, and other works for the purpose of developing
hydraulic power from any river, lake, creek, spring and waterfalls in the Philippines and to supply
such power to the inhabitants thereof.1

In February 1993, NAPOCOR entered a property located in Barangay San Isidro, Batangas City in
order to construct and maintain transmission lines for the 230 KV Mahabang Parang-Pinamucan
Power Transmission Project.2 Respondents heirs of Saturnino Q. Borbon owned the property, with a
total area of 14,257 square meters, which was registered under Transfer Certificate of Title No. T-
9696 of the Registry of Deeds of Batangas.3

On May 26, 1995, NAPOCOR filed a complaint for expropriation in the Regional Trial Court in
Batangas City (RTC),4seeking the acquisition of an easement of right of way over a portion of the
property involving an area of only 6,326 square meters, more or less,5 alleging that it had negotiated
with the respondents for the acquisition of the easement but they had failed to reach any agreement;
and that, nonetheless, it was willing to deposit the amount of ₱9,790.00 representing the assessed
value of the portion sought to be expropriated.6 It prayed for the issuance of a writ of possession
upon deposit to enable it to enter and take possession and control of the affected portion of the
property; to demolish all improvements existing thereon; and to commence construction of the
transmission line project. It likewise prayed for the appointment of three commissioners to determine
the just compensation to be paid.7

In their answer with motion to dismiss,8 the respondents staunchly maintained that NAPOCOR had
not negotiated with them before entering the property and that the entry was done without their
consent in the process, destroying some fruit trees without payment, and installing five transmission
line posts and five woodpoles for its project;9 that the area being expropriated only covered the
portion directly affected by the transmission lines; that the remaining portion of the property was also
affected because the transmission line passed through the center of the land, thereby dividing the
land into three lots; that the presence of the high tension transmission line had rendered the entire
property inutile for any future use and capabilities;10 that, nonetheless, they tendered no objection to
NAPOCOR’s entry provided it would pay just compensation not only for the portion sought to be
expropriated but for the entire property whose potential was greatly diminished, if not totally lost, due
to the project;11 and that their property was classified as industrial land. Thus, they sought the
dismissal of the complaint, the payment of just compensation of ₱1,000.00/square meter, and
attorney’s fees;12 and to be allowed to nominate their representative to the panel of commissioners to
be appointed by the trial court.13

In the pre-trial conference conducted on December 20, 1995, the parties stipulated on: (1) the
location of the property; (2) the number of the heirs of the late Saturnino Q. Borbon; (3) the names of
the persons upon whom title to the property was issued; and (4) the ownership and possession of
the property.14 In its order of that date, the RTC directed the parties to submit the names of their
nominees to sit in the panel of commissioners within 10 days from the date of the pre-trial.15

The RTC constituted the panel of three commissioners. Two commissioners submitted a joint report
on April 8, 1999,16 in which they found that the property was classified as industrial land located
within the Industrial 2 Zone;17that although the property used to be classified as agricultural (i.e.,
horticultural and pasture land), it was reclassified to industrial land for appraisal or taxation purposes
on June 30, 1994; and that the reclassification was made on the basis of a certification issued by the
Zoning Administrator pursuant to Section 3.10 (d) of the Amended Zoning Ordinance (1989) of the
City of Batangas.18 The two commissioners appraised the value at ₱550.00/square meter.19However,
the third commissioner filed a separate report dated March 16, 1999,20 whereby he recommended
the payment of "an easement fee of at least ten percent (10%) of the assessed value indicated in the
tax declaration21plus cost of damages in the course of the construction, improvements affected and
tower occupancy fee."22

The parties then submitted their respective objections to the reports. On their part, the respondents
maintained that NAPOCOR should compensate them for the entire property at the rate of
₱550.00/square meter because the property was already classified as industrial land at the time
NAPOCOR entered it.23 In contrast, NAPOCOR objected to the joint report, insisting that the property
was classified as agricultural land at the time of its taking in March 1993; and clarifying that it was
only seeking an easement of right of way over a portion of the property, not the entire area thereof,
so that it should pay only 10% of the assessed value of the portion thus occupied.24

In the judgment dated November 27, 2000,25 the RTC adopted the recommendation contained in the
joint report, and ruled thusly:

The price to be paid for an expropriated land is its value at the time of taking, which is the date when
the plaintiff actually entered the property or the date of the filing of the complaint for expropriation. In
this case, there is no evidence as to when the plaintiff actually entered the property in question, so
the reference point should be the date of filing of the complaint, which is May 5, 1995.

On this date, the property in question was already classified as industrial. So, the Joint Report
(Exhibit "1") is credible on this point. The two Commissioners who submitted the Joint Report are
government officials who were not shown to be biased. So, that their report should be given more
weight than the minority report submitted by a private lawyer representing the plaintiff. In view of
these, the Court adopts the Joint Report and rejects the minority report. The former fixed the just
compensation at ₱550.00 per square meter for the whole lot of 14,257 square meters.26

Accordingly, the RTC ordered NAPOCOR to pay the respondents: (1) just compensation for the
whole area of 14,257 square meters at the rate of ₱550.00/square meter; (2) legal rate of interest
from May 5, 1995 until full payment; and (3) the costs of suit.27

NAPOCOR appealed (CA-G.R. No. 72069).

On April 29, 2004,28 the CA promulgated its decision, viz:

WHEREFORE, premises considered, the Decision dated November 27, 2000 of Branch I of the
Regional Trial Court of Batangas City, is hereby AFFIRMED with the MODIFICATION that plaintiff-
appellant shall pay only for the occupied 6,326 square meters of the subject real property at the rate
of ₱550.00 per square meter and to pay legal interest therefrom until fully paid.

SO ORDERED.29

Hence, this appeal by NAPOCOR.

Issue

On December 3, 2012, during the pendency of the appeal, NAPOCOR filed a Motion to Defer
Proceedings stating that negotiations between the parties were going on with a view to the amicable
settlement of the case.30

On January 3, 2014, NAPOCOR filed a Manifestation and Motion to Discontinue Expropriation

Proceedings,31informing that the parties failed to reach an amicable agreement; that the property
sought to be expropriated was no longer necessary for public purpose because of the intervening
retirement of the transmission lines installed on the respondents’ property;32 that because the public
purpose for which such property would be used thereby ceased to exist, the proceedings for
expropriation should no longer continue, and the State was now duty-bound to return the property to
its owners; and that the dismissal or discontinuance of the expropriation proceedings was in
accordance with Section 4, Rule 67 of the Rules of Court. Hence, NAPOCOR prayed that the
proceedings be discontinued "under such terms as the court deems just and equitable,"33 and that
the compensation to be awarded the respondents be reduced by the equivalent of the benefit they
received from the land during the time of its occupation, for which purpose the case could be
remanded to the trial court for the determination of reasonable compensation to be paid to them.34

In light of its Manifestation and Motion to Discontinue Expropriation Proceedings, NAPOCOR

contends that the expropriation has become without basis for lack of public purpose as a result of
the retirement of the transmission lines; that if expropriation still proceeds, the Government will be
unduly burdened by payment of just compensation for property it no longer requires; and that there
is legal basis in dismissing the proceedings, citing Metropolitan Water District v. De los
Angeles35 where the Court granted petitioner’s prayer for the quashal of expropriation proceedings
and the eventual dismissal of the proceedings on the ground that the land sought to be expropriated
was no longer "indispensably necessary" in the maintenance and operation of petitioner's
waterworks system.

The issue to be considered and resolved is whether or not the expropriation proceedings should be
discontinued or dismissed pending appeal.

Ruling of the Court

The dismissal of the proceedings for expropriation at the instance of NAPOCOR is proper, but,
conformably with Section 4,36 Rule 67 of the Rules of Court, the dismissal or discontinuance of the
proceedings must be upon such terms as the court deems just and equitable.

Before anything more, we remind the parties about the nature of the power of eminent domain. The
right of eminent domain is "the ultimate right of the sovereign power to appropriate, not only the
public but the private property of all citizens within the territorial sovereignty, to public purpose."37 But
the exercise of such right is not unlimited, for two mandatory requirements should underlie the
Government’s exercise of the power of eminent domain, namely: (1) that it is for a particular public
purpose; and (2) that just compensation be paid to the property owner.38 These requirements partake
the nature of implied conditions that should be complied with to enable the condemnor to keep the
property expropriated.39

Public use, in common acceptation, means "use by the public." However, the concept has expanded
to include utility, advantage or productivity for the benefit of the public.40 In Asia's Emerging Dragon
Corporation v. Department of Transportation and Communications,41 Justice Corona, in his
dissenting opinion said that:

To be valid, the taking must be for public use. The meaning of the term "public use" has evolved
over time in response to changing public needs and exigencies. Public use which was traditionally
understood as strictly limited to actual "use by the public" has already been abandoned. "Public use"
has now been held to be synonymous with "public interest," "public benefit," and "public
convenience."

It is essential that the element of public use of the property be maintained throughout the
proceedings for expropriation. The effects of abandoning the public purpose were explained in
Mactan-Cebu International Airport Authority v. Lozada, Sr.,42 to wit:

More particularly, with respect to the element of public use, the expropriator should commit to use
the property pursuant to the purpose stated in the petition for expropriation filed, failing which, it
should file another petition for the new purpose. If not, it is then incumbent upon the expropriator to
return the said property to its private owner, if the latter desires to reacquire the same. Otherwise,
the judgment of expropriation suffers an intrinsic flaw, as it would lack one indispensable element for
the proper exercise of the power of eminent domain, namely, the particular public purpose for which
the property will be devoted. Accordingly, the private property owner would be denied due process of
law, and the judgment would violate the property owner's right to justice, fairness and equity.43

A review reveals that Metropolitan Water District v. De los Angeles44 is an appropriate precedent
herein. There, the Metropolitan Water District passed a board resolution requesting the Attorney-
General to file a petition in the Court of First Instance of the Province of Rizal praying that it be
permitted to discontinue the condemnation proceedings it had initiated for the expropriation of a
parcel of land in Montalban, Rizal to be used in the construction of the Angat Waterworks System. It
claimed that the land was no longer indispensably necessary in the maintenance and operation of its
waterworks system, and that the expropriation complaint should then be dismissed. The Court,
expounding on the power of the State to exercise the right of eminent domain, then pronounced:

There is no question raised concerning the right of the plaintiff here to acquire the land under the
power of eminent domain. That power was expressly granted it by its charter. The power of eminent
1âwphi 1

domain is a right reserved to the people or Government to take property for public use. It is the right
of the state, through its regular organization, to reassert either temporarily or permanently its
dominion over any portion of the soil of the state on account of public necessity and for the public
good. The right of eminent domain is the right which the Government or the people retains over the
estates of individuals to resume them for public use. It is the right of the people, or the sovereign, to
dispose, in case of public necessity and for the public safety, of all the wealth contained in the state.45

Indeed, public use is the fundamental basis for the action for expropriation; hence, NAPOCOR’s
motion to discontinue the proceedings is warranted and should be granted. The Court has observed
in Metropolitan Water District v. De los Angeles:

It is not denied that the purpose of the plaintiff was to acquire the land in question for public use. The
fundamental basis then of all actions brought for the expropriation of lands, under the power of
eminent domain, is public use. That being true, the very moment that it appears at any stage of the
proceedings that the expropriation is not for a public use, the action must necessarily fail and should
be dismissed, for the reason that the action cannot be maintained at all except when the
expropriation is for some public use. That must be true even during the pendency of the appeal or at
any other stage of the proceedings. If, for example, during the trial in the lower court, it should be
made to appear to the satisfaction of the court that the expropriation is not for some public use, it
would be the duty and the obligation of the trial court to dismiss the action. And even during the
pendency of the appeal, if it should be made to appear to the satisfaction of the appellate court that
the expropriation is not for public use, then it would become the duty and the obligation of the
appellate court to dismiss it.

In the present case the petitioner admits that the expropriation of the land in question is no longer
necessary for public use. Had that admission been made in the trial court the case should have been
dismissed there. It now appearing positively, by resolution of the plaintiff, that the expropriation is not
necessary for public use, the action should be dismissed even without a motion on the part of the
plaintiff. The moment it appears in whatever stage of the proceedings that the expropriation is not for
a public use the complaint should be dismissed and all the parties thereto should be relieved from
further annoyance or litigation.46 (underscoring and emphasis supplied)

It is notable that the dismissal of the expropriation proceedings in Metropolitan Water District v. De
los Angeles was made subject to several conditions in order to address the dispossession of the
defendants of their land, and the inconvenience, annoyance and damages suffered by the
defendants on account of the proceedings. Accordingly, the Court remanded the case to the trial
court for the issuance of a writ of possession ordering Metropolitan Water District to immediately
return possession of the land to the defendants, and for the determination of damages in favor of the
defendants, the claims for which must be presented within 30 days from the return of the record to
the court of origin and notice thereof.47

Here, NAPOCOR seeks to discontinue the expropriation proceedings on the ground that the
transmission lines constructed on the respondents’ property had already been retired. Considering
that the Court has consistently upheld the primordial importance of public use in expropriation
proceedings, NAPOCOR’s reliance on Metropolitan Water District v. De los Angeles was apt and
correct. Verily, the retirement of the transmission lines necessarily stripped the expropriation
proceedings of the element of public use. To continue with the expropriation proceedings despite the
definite cessation of the public purpose of the project would result in the rendition of an invalid
judgment in favor of the expropriator due to the absence of the essential element of public use.

Unlike in Metropolitan Water District v. De los Angeles where the request to discontinue the
expropriation proceedings was made upon the authority appearing in the board resolution issued on
July 14, 1930,48 counsel for NAPOCOR has not presented herein any document to show that
NAPOCOR had decided, as a corporate body, to discontinue the expropriation proceedings.
Nonetheless, the Court points to the Memorandum dated December 13, 201249 and the Certificate of
Inspection/Accomplishment dated February 5, 200550 attached to NAPOCOR’s motion attesting to
the retirement of the transmission lines. Also, Metropolitan Water District v. De los Angeles
emphasized that it became the duty and the obligation of the court, regardless of the stage of the
proceedings, to dismiss the action "if it should be made to appear to the satisfaction of the court that
the expropriation is not for some public use."51 Despite the lack of the board resolution, therefore, the
Court now considers the documents attached to NAPOCOR’s Manifestation and Motion to
Discontinue Expropriation Proceedings to be sufficient to establish that the expropriation sought is
no longer for some public purpose.

Accordingly, the Court grants the motion to discontinue the proceedings subject to the conditions to
be shortly mentioned hereunder, and requires the return of the property to the respondents. Having
said that, we must point out that NAPOCOR entered the property without the owners’ consent and
without paying just compensation to the respondents. Neither did it deposit any amount as required
by law prior to its entry. The Constitution is explicit in obliging the Government and its entities to pay
just compensation before depriving any person of his or her property for public use.52 Considering
that in the process of installing transmission lines, NAPOCOR destroyed some fruit trees and plants
without payment, and the installation of the transmission lines went through the middle of the land as
to divide the property into three lots, thereby effectively rendering the entire property inutile for any
future use, it would be unfair for NAPOCOR not to be made liable to the respondents for the
disturbance of their property rights from the time of entry until the time of restoration of the
possession of the property. There should be no question about the taking. In several rulings, notably
National Power Corporation v. Zabala,53 Republic v. Libunao,54 National Power Corporation v.
Tuazon,55 and National Power Corporation v. Saludares,56 this Court has already declared that "since
the high-tension electric current passing through the transmission lines will perpetually deprive the
property owners of the normal use of their land, it is only just and proper to require Napocor to
recompense them for the full market value of their property."

There is a sufficient showing that NAPOCOR entered into and took possession of the respondents’
property as early as in March 1993 without the benefit of first filing a petition for eminent domain. For
all intents and purposes, therefore, March 1993 is the reckoning point of NAPOCOR’s taking of the
property, instead of May 5, 1995, the time NAPOCOR filed the petition for expropriation. The
reckoning conforms to the pronouncement in Ansaldo v. Tantuico, Jr.,57 to wit:
Normally, of course, where the institution of an expropriation action precedes the taking of the
property subject thereof, the just compensation is fixed as of the time of the filing of the complaint.
This is so provided by the Rules of Court, the assumption of possession by the expropriator
ordinarily being conditioned on its deposits with the National or Provincial Treasurer of the value of
the property as provisionally ascertained by the court having jurisdiction of the proceedings.

There are instances, however, where the expropriating agency takes over the property prior to the
expropriation suit, as in this case although, to repeat, the case at bar is quite extraordinary in that
possession was taken by the expropriator more than 40 years prior to suit. In these instances, this
Court has ruled that the just compensation shall be determined as of the time of taking, not as of the
time of filing of the action of eminent domain.

In the context of the State's inherent power of eminent domain, there is a "taking" when the owner is
actually deprived or dispossessed of his property; when there is a practical destruction or a material
impairment of the value of his property or when he is deprived of the ordinary use thereof. There is a
"taking" in this sense when the expropriator enters private property not only for a momentary period
but for a more permanent duration, for the purpose of devoting the property to a public use in such a
manner as to oust the owner and deprive him of all beneficial enjoyment thereof. For ownership,
after all, "is nothing without the inherent rights of possession, control and enjoyment. Where the
owner is deprived of the ordinary and beneficial use of his property or of its value by its being
diverted to public use, there is taking within the Constitutional sense." x x x.58

In view of the discontinuance of the proceedings and the eventual return of the property to the
respondents, there is no need to pay "just compensation" to them because their property would not
be taken by NAPOCOR. Instead of full market value of the property, therefore, NAPOCOR should
compensate the respondents for the disturbance of their property rights from the time of entry in
March 1993 until the time of restoration of the possession by paying to them actual or other
compensatory damages. This conforms with the following pronouncement in Mactan-Cebu
International Airport Authority v. Lozada, Sr.:59

In light of these premises, we now expressly hold that the taking of private property, consequent to
the Government’s exercise of its power of eminent domain, is always subject to the condition that the
property be devoted to the specific public purpose for which it was taken. Corollarily, if this particular
purpose or intent is not initiated or not at all pursued, and is peremptorily abandoned, then the
former owners, if they so desire, may seek the reversion of the property, subject to the return of the
amount of just compensation received. In such a case, the exercise of the power of eminent domain
has become improper for lack of the required factual justification.60

This should mean that the compensation must be based on what they actually lost as a result and by
reason of their dispossession of the property and of its use, including the value of the fruit trees,
plants and crops destroyed by NAPOCOR’s construction of the transmission lines. Considering that
the dismissal of the expropriation proceedings is a development occurring during the appeal, the
Court now treats the dismissal of the expropriation proceedings as producing the effect of converting
the case into an action for damages. For that purpose, the Court remands the case to the court of
origin for further proceedings, with instruction to the court of origin to enable the parties to fully
litigate the action for damages by giving them the opportunity to re-define the factual and legal
issues by the submission of the proper pleadings on the extent of the taking, the value of the
compensation to be paid to the respondents by NAPOCOR, and other relevant matters as they
deem fit. Trial shall be limited to matters the evidence upon which had not been heretofore heard or
adduced. The assessment and payment of the correct amount of filing fees due from the
respondents shall be made in the judgment, and such amount shall constitute a first lien on the
recovery. Subject to these conditions, the court of origin shall treat the case as if originally filed as an
action for damages.

WHEREFORE, the Court DISMISSES the expropriation proceedings due to the intervening
cessation of the need for public use; REMANDS the records to the Regional Trial Court, Branch 1, in
Batangas City as the court of origin for further proceedings to be conducted in accordance with the
foregoing instructions; and ORDERS said trial court to try and decide the issues with dispatch.

SO ORDERED.

o Deprivation of Use
o 328 U.S. 256 (1946)
o UNITED STATES
v.
CAUSBY ET UX.
o No. 630.
o Supreme Court of United States.
o Argued May 1, 1946.
o Decided May 27, 1946.
o CERTIORARI TO THE COURT OF CLAIMS.
o 257*257 Walter J. Cummings, Jr. argued the cause for the United States.
With him on the brief were Solicitor General McGrath, J. Edward Williams,
Roger P. Marquisand Alvin O. West.
o William E. Comer argued the cause and filed a brief for respondents.
o 258*258 MR. JUSTICE DOUGLAS delivered the opinion of the Court.
o This is a case of first impression. The problem presented is whether
respondents' property was taken, within the meaning of the Fifth
Amendment, by frequent and regular flights of army and navy aircraft over
respondents' land at low altitudes. The Court of Claims held tlat there was
a taking and entered judgment for respondents, one judge dissenting. 104
Ct. Cls. 342, 60 F. Supp. 751. The case is here on a petition for a writ of
certiorari which we granted because of the importance of the question
presented.
o Respondents own 2.8 acres near an airport outside of Greensboro, North
Carolina. It has on it a dwelling house, and also various outbuildings
which were mainly used for raising chickens. The end of the airport's
northwest-southeast runway is 2,220 feet from respondents' barn and
2,275 feet from their house. The path of glide to this runway passes
directly over the property — which is 100 feet wide and 1,200 feet long.
The 30 to 1 safe glide angle[1] approved by the Civil Aeronautics
Authority[2] passes over this property at 83 feet, which is 67 feet above the
house, 63 feet above the barn and 18 feet above the highest tree. [3] The
use by the United States of this airport is pursuant to a lease executed in
May, 1942, for a term commencing June 1, 1942 and ending June 30,
1942, with a provision for renewals until June 30, 1967, or
six 259*259 months after the end of the national emergency, whichever is
the earlier.
o Various aircraft of the United States use this airport — bombers,
transports and fighters. The direction of the prevailing wind determines
when a particular runway is used. The northwest-southeast runway in
question is used about four per cent of the time in taking off and about
seven per cent of the time in landing. Since the United States began
operations in May, 1942, its four-motored heavy bombers, other planes of
the heavier type, and its fighter planes have frequently passed over
respondents' land and buildings in considerable numbers and rather close
together. They come close enough at times to appear barely to miss the
tops of the trees and at times so close to the tops of the trees as to blow
the old leaves off. The noise is startling. And at night the glare from the
planes brightly lights up the place. As a result of the noise, respondents
had to give up their chicken business. As many as six to ten of their
chickens were killed in one day by flying into the walls from fright. The
total chickens lost in that manner was about 150. Production also fell off.
The result was the destruction of the use of the property as a commercial
chicken farm. Respondents are frequently deprived of their sleep and the
family has become nervous and frightened. Although there have been no
airplane accidents on respondents' property, there have been several
accidents near the airport and close to respondents' place. These are the
essential facts found by the Court of Claims. On the basis of these facts, it
found that respondents' property had depreciated in value. It held that the
United States had taken an easement over the property on June 1, 1942,
and that the value of the property destroyed and the easement taken was
$2,000.
o 260*260 I. The United States relies on the Air Commerce Act of 1926, 44
Stat. 568, 49 U.S.C. § 171, as amended by the Civil Aeronautics Act of
1938, 52 Stat. 973, 49 U.S.C. § 401. Under those statutes the United
States has "complete and exclusive national sovereignty in the air space"
over this country. 49 U.S.C. § 176 (a). They grant any citizen of the United
States "a public right of freedom of transit in air commerce[4] through the
navigable air space of the United States." 49 U.S.C. § 403. And
"navigable air space" is defined as "airspace above the minimum safe
altitudes of flight prescribed by the Civil Aeronautics Authority." 49 U.S.C.
§ 180. And it is provided that "such navigable airspace shall be subject to
a public right of freedom of interstate and foreign air navigation." Id. It is,
therefore, argued that since these flights were within the minimum safe
altitudes of flight which had been prescribed, they were an exercise of the
declared right of travel through the airspace. The United States concludes
that when flights are made within the navigable airspace without any
physical invasion of the property of the landowners, there has been no
taking of property. It says that at most there was merely incidental
damage occurring as a consequence of authorized air navigation. It also
argues that the landowner does not own superadjacent airspace which he
has not subjected to possession by the erection of structures or other
occupancy. Moreover, it is argued that even if the United States took
airspace owned by respondents, no compensable damage was shown.
Any damages are said to be merely consequential for which no
compensation may be obtained under the Fifth Amendment.
o It is ancient doctrine that at common law ownership of the land extended
to the periphery of the universe — Cujusest 261*261 solum ejus est usque
ad coelum.[5] But that doctrine has no place in the modern world. The air is
a public highway, as Congress has declared. Were that not true, every
transcontinental flight would subject the operator to countless trespass
suits. Common sense revolts at the idea. To recognize such private
claims to the airspace would clog these highways, seriously interfere with
their control and development in the public interest, and transfer into
private ownership that to which only the public has a just claim.
o But that general principle does not control the present case. For the
United States conceded on oral argument that if the flights over
respondents' property rendered it uninhabitable, there would be a taking
compensable under the Fifth Amendment. It is the owner's loss, not the
taker's gain, which is the measure of the value of the property
taken. United States v. Miller, 317 U.S. 369. Market value fairly
determined is the normal measure of the recovery. Id. And that value may
reflect the use to which the land could readily be converted, as well as the
existing use. United States v. Powelson, 319 U.S. 266, 275, and cases
cited. If, by reason of the frequency and altitude of the flights, respondents
could not use this land for any purpose, their loss would be complete.[6] It
would be as complete as if the United States had entered upon the
surface of the land and taken exclusive possession of it.
o We agree that in those circumstances there would be a taking. Though it
would be only an easement of flight 262*262 which was taken, that
easement, if permanent and not merely temporary, normally would be the
equivalent of a fee interest. It would be a definite exercise of complete
dominion and control over the surface of the land. The fact that the planes
never touched the surface would be as irrelevant as the absence in this
day of the feudal livery of seisin on the transfer of real estate. The owner's
right to possess and exploit the land — that is to say, his beneficial
ownership of it — would be destroyed. It would not be a case of incidental
damages arising from a legalized nuisance such as was involved
in Richards v. Washington Terminal Co., 233 U.S. 546. In that case,
property owners whose lands adjoined a railroad line were denied
recovery for damages resulting from the noise, vibrations, smoke and the
like, incidental to the operations of the trains. In the supposed case, the
line of flight is over the land. And the land is appropriated as directly and
completely as if it were used for the runways themselves.
o There is no material difference between the supposed case and the
present one, except that here enjoyment and use of the land are not
completely destroyed. But that does not seem to us to be controlling. The
path of glide for airplanes might reduce a valuable factory site to grazing
land, an orchard to a vegetable patch, a residential section to a wheat
field. Some value would remain. But the use of the airspace immediately
above the land would limit the utility of the land and cause a diminution in
its value.[7] That was the philosophy of Portsmouth Co. v. 263*263 United
States, 260 U.S. 327. In that case the petition alleged that the United
States erected a fort on nearby land, established a battery and a fire
control station there, and fired guns over petitioner's land. The Court,
 speaking through Mr. Justice Holmes, reversed the Court of Claims, which
dismissed the petition on a demurrer, holding that "the specific facts set
forth would warrant a finding that a servitude has been imposed."[8] 260
U.S. p. 330. And see Delta Air Corp. v. Kersey, 193 Ga. 862, 20 S.E.2d
245. Cf. United States v. 357.25 Acres of Land, 55 F. Supp. 461.
o The fact that the path of glide taken by the planes was that approved by
the Civil Aeronautics Authority does not change the result. The navigable
airspace which Congress has placed in the public domain is "airspace
above the minimum safe altitudes of flight prescribed by the Civil
Aeronautics Authority." 49 U.S.C. § 180. If that agency prescribed 83 feet
as the minimum safe altitude, then we would have presented the question
of the validity of the regulation. But nothing of the sort has been done. The
path of glide governs the method of operating — of landing or taking off.
The altitude required for that operation is not the minimum safe altitude of
flight which is the downward reach of the navigable airspace. The
minimum prescribed by the Authority is 500 feet during the day and 1,000
feet at night for air carriers (Civil Air Regulations, Pt. 61, §§ 61.7400, 61.
7401, Code Fed. Reg. Cum. Supp., Tit. 14, ch. 1), and from 300 feet to
1,000 feet for 264*264 other aircraft, depending on the type of plane and
the character of the terrain. Id., Pt. 60, §§ 60.350-60.3505, Fed. Reg.
Cum. Supp., supra. Hence, the flights in question were not within the
navigable airspace which Congress placed within the public domain. If
any airspace needed for landing or taking off were included, flights which
were so close to the land as to render it uninhabitable would be immune.
But the United States concedes, as we have said, that in that event there
would be a taking. Thus, it is apparent that the path of glide is not the
minimum safe altitude of flight within the meaning of the statute. The Civil
Aeronautics Authority has, of course, the power to prescribe air traffic
rules. But Congress has defined navigable airspace only in terms of one
of them — the minimum safe altitudes of flight.
o We have said that the airspace is a public highway. Yet it is obvious that if
the landowner is to have full enjoyment of the land, he must have
exclusive control of the immediate reaches of the enveloping atmosphere.
Otherwise buildings could not be erected, trees could not be planted, and
even fences could not be run. The principle is recognized when the law
gives a remedy in case overhanging structures are erected on adjoining
land.[9] The landowner owns at least as much of the space above the
ground as he can occupy or use in connection with the land.
See Hinman v. Pacific Air Transport, 84 F.2d 755. The fact that he does
not occupy it in a physical sense — by the erection of buildings and the
like — is not material. As we have said, the flight of airplanes, which skim
the surface but do not touch it, is as much an appropriation of the use of
the land as a more conventional entry upon it. We would not doubt that, if
the United States erected 265*265 an elevated railway over respondents'
land at the precise altitude where its planes now fly, there would be a
partial taking, even though none of the supports of the structure rested on
the land.[10] The reason is that there would be an intrusion so immediate
and direct as to subtract from the owner's full enjoyment of the property
and to limit his exploitation of it. While the owner does not in any physical
 manner occupy that stratum of airspace or make use of it in the
conventional sense, he does use it in somewhat the same sense that
space left between buildings for the purpose of light and air is used. The
superadjacent airspace at this low altitude is so close to the land that
continuous invasions of it affect the use of the surface of the land itself.
We think that the landowner, as an incident to his ownership, has a claim
to it and that invasions of it are in the same category as invasions of the
surface.[11]
o In this case, as in Portsmouth Co. v. United States, supra, the damages
were not merely consequential. They were the product of a direct invasion
of respondents' domain. 266*266 As stated in United States v. Cress, 243
U.S. 316, 328, ". .. it is the character of the invasion, not the amount of
damage resulting from it, so long as the damage is substantial, that
determines the question whether it is a taking."
o We said in United States v. Powelson, supra, p. 279, that while the
meaning of "property" as used in the Fifth Amendment was a federal
question, "it will normally obtain its content by reference to local law." If we
look to North Carolina law, we reach the same result. Sovereignty in the
airspace rests in the State "except where granted to and assumed by the
United States." Gen. Stats. 1943, § 63-11. The flight of aircraft is lawful
"unless at such a low altitude as to interfere with the then existing use to
which the land or water, or the space over the land or water, is put by the
owner, or unless so conducted as to be imminently dangerous to persons
or property lawfully on the land or water beneath." Id., § 63-13. Subject to
that right of flight, "ownership of the space above the lands and waters of
this State is declared to be vested in the several owners of the surface
beneath . . ." Id., § 63-12. Our holding that there was an invasion of
respondents' property is thus not inconsistent with the local law governing
a landowner's claim to the immediate reaches of the superadjacent
airspace.
o The airplane is part of the modern environment of life, and the
inconveniences which it causes are normally not compensable under the
Fifth Amendment. The airspace, apart from the immediate reaches above
the land, is part of the public domain. We need not determine at this time
what those precise limits are. Flights over private land are not a taking,
unless they are so low and so frequent as to be a direct and immediate
interference with the enjoyment and use of the land. We need not
speculate on that phase of the present case. For the findings of the
Court 267*267 of Claims plainly establish that there was a diminution in
value of the property and that the frequent, low-level flights were the direct
and immediate cause. We agree with the Court of Claims that a servitude
has been imposed upon the land.
o II. By § 145 (1) of the Judicial Code, 28 U.S.C. § 250 (1), the Court of
Claims has jurisdiction to hear and determine "All claims (except for
pensions) founded upon the Constitution of the United States or . . . upon
any contract, express or implied, with the Government of the United
States . . ."
o We need not decide whether repeated trespasses might give rise to an
implied contract. Cf. Portsmouth Co. v. United States, supra. If there is a
 taking, the claim is "founded upon the Constitution" and within the
jurisdiction of the Court of Claims to hear and determine.
See Hollister v. Benedict Mfg. Co., 113 U.S. 59, 67; Hurleyv. Kincaid, 285
U.S. 95, 104; Yearsley v. Ross Construction Co., 309 U.S. 18, 21. Thus,
the jurisdiction of the Court of Claims in this case is clear.
o III. The Court of Claims held, as we have noted, that an easement was
taken. But the findings of fact contain no precise description as to its
nature. It is not described in terms of frequency of flight, permissible
altitude, or type of airplane. Nor is there a finding as to whether the
easement taken was temporary or permanent. Yet an accurate description
of the property taken is essential, since that interest vests in the United
States. United States v. Cress, supra, 328-329 and cases cited. It is true
that the Court of Claims stated in its opinion that the easement taken was
permanent. But the deficiency in findings cannot be rectified by
statements in the opinion. United States v. Esnault-Pelterie, 299 U.S. 201,
205-206; United States v. Seminole Nation, 299 U.S. 417, 422. Findings
of fact on every "material issue" are a statutory 268*268 requirement. 53
Stat. 752, 28 U.S.C. § 288. The importance of findings of fact based on
evidence is emphasized here by the Court of Claims' treatment of the
nature of the easement. It stated in its opinion that the easement was
permanent because the United States "no doubt intended to make some
sort of arrangement whereby it could use the airport for its military planes
whenever it had occasion to do so." That sounds more like conjecture
rather than a conclusion from evidence; and if so, it would not be a proper
foundation for liability of the United States. We do not stop to examine the
evidence to determine whether it would support such a finding, if made.
For that is not our function. United States v. Esnault-Pelterie, supra, p.
206.
o Since on this record it is not clear whether the easement taken is a
permanent or a temporary one, it would be premature for us to consider
whether the amount of the award made by the Court of Claims was
proper.
o The judgment is reversed and the cause is remanded to the Court of
Claims so that it may make the necessary findings in conformity with this
opinion.
o Reversed.
o MR. JUSTICE JACKSON took no part in the consideration or decision of
this case.
o MR. JUSTICE BLACK, dissenting.
o The Fifth Amendment provides that "private property" shall not "be taken
for public use without just compensation." The Court holds today that the
Government has "taken" respondents' property by repeatedly flying Army
bombers directly above respondents' land at a height of eighty-three feet
where the light and noise from these planes caused respondents to lose
sleep and their chickens to be killed. Since the effect of the Court's
decision is 269*269 to limit, by the imposition of relatively absolute
constitutional barriers, possible future adjustments through legislation and
regulation which might become necessary with the growth of air
 transportation, and since in my view the Constitution does not contain
such barriers, I dissent.
o The following is a brief statement of the background and of the events that
the Court's opinion terms a "taking" within the meaning of the Fifth
Amendment: Since 1928 there has been an airfield some eight miles from
Greensboro, North Carolina. In April, 1942, this airport was taken over by
the Greensboro-High Point Municipal Airport Authority and it has since
then operated as a municipal airport. In 1942 the Government, by
contract, obtained the right to use the field "concurrently, jointly, and in
common" with other users. Years before, in 1934, respondents had
bought their property, located more than one-third of a mile from the
airport. Private planes from the airport flew over their land and farm
buildings from 1934 to 1942 and are still doing so. But though these
planes disturbed respondents to some extent, Army bombers, which
started to fly over the land in 1942 at a height of eighty-three feet,
disturbed them more because they were larger, came over more
frequently, made a louder noise, and at night a greater glare was caused
by their lights. This noise and glare disturbed respondents' sleep,
frightened them, and made them nervous. The noise and light also
frightened respondents' chickens so much that many of them flew against
buildings and were killed.
o The Court's opinion seems to indicate that the mere flying of planes
through the column of air directly above respondents' land does not
constitute a "taking." Consequently, it appears to be noise and glare, to
the extent and under the circumstances shown here, which make the
Government a seizer of private property. But the allegation 270*270 of
noise and glare resulting in damages, constitutes at best an action in tort
where there might be recovery if the noise and light constituted a
nuisance, a violation of a statute,[1] or were the result of negligence.[2] But
the Government has not consented to be sued in the Court of Claims
except in actions based on express or implied contract. And there is no
implied contract here, unless by reason of the noise and glare caused by
the bombers the Government can be said to have "taken" respondents'
property in a constitutional sense. The concept of taking property as used
in the Constitution has heretofore never been given so sweeping a
meaning. The Court's opinion presents no case where a man who makes
noise or shines light onto his neighbor's property has been ejected from
that property for wrongfully taking possession of it. Nor would anyone take
seriously a claim that noisy automobiles passing on a highway are taking
wrongful possession of the homes located thereon, or that a city elevated
train which greatly interferes with the sleep of those who live next to it
wrongfully takes their property. Even the one case in this Court which in
considering the sufficiency of a complaint gave the most elastic meaning
to the phrase "private property be taken" as used in the Fifth Amendment,
did not go so far. Portsmouth Co. v. United States, 260 U.S. 271*271 327. I
am not willing, nor do I think the Constitution and the decisions authorize
me, to extend that phrase so as to guarantee an absolute constitutional
right to relief not subject to legislative change, which is based on
averments that at best show mere torts committed by government agents
 while flying over land. The future adjustment of the rights and remedies of
property owners, which might be found necessary because of the flight of
planes at safe altitudes, should, especially in view of the imminent
expansion of air navigation, be left where I think the Constitution left it,
with Congress.
o Nor do I reach a different conclusion because of the fact that the particular
circumstance which under the Court's opinion makes the tort here
absolutely actionable, is the passing of planes through a column of air at
an elevation of eighty-three feet directly over respondents' property. It is
inconceivable to me that the Constitution guarantees that the airspace of
this Nation needed for air navigation is owned by the particular persons
who happen to own the land beneath to the same degree as they own the
surface below.[1a] No rigid constitutional rule, in my judgment, commands
that the air must be considered as marked off into separate compartments
by imaginary metes and bounds in order to synchronize air ownership with
land ownership. I think that the Constitution entrusts Congress with full
power to control all navigable airspace. Congress has already acted under
that power. It has by statute, 44 Stat. 568, 52 Stat. 973, provided that "the
United States of America is . . . to possess and exercise complete and
exclusive national sovereignty in the 272*272 air space above the United
States . . ." This was done under the assumption that the Commerce
Clause of the Constitution gave Congress the same plenary power to
control navigable airspace as its plenary power over navigable waters. H.
Rep. No. 572, 69th Cong., 1st Sess., p. 10; H. Rep. No. 1162, 69th Cong.,
1st Sess., p. 14; see United States v. Commodore Park, 324 U.S. 386. To
make sure that the airspace used for air navigation would remain free,
Congress further declared that "navigable airspace shall be subject to a
public right of freedom of interstate and foreign air navigation," and finally
stated emphatically that there exists "a public right of freedom of transit . .
. through the navigable air space of the United States." Congress thus
declared that the air is free, not subject to private ownership, and not
subject to delimitation by the courts. Congress and those acting under its
authority were the only ones who had power to control and regulate the
flight of planes. "Navigable airspace" was defined as "airspace above the
minimum safe altitudes of flight prescribed by the Civil Aeronautics
Authority . . ." 49 U.S.C. § 180. Thus, Congress has given the Civil
Aeronautics Authority exclusive power to determine what is navigable
airspace subject to its exclusive control. This power derives specifically
from the Section which authorizes the Authority to prescribe "air traffic
rules governing the flight of, and for the navigation, protection, and
identification of, aircraft, including rules as to safe altitudes of flight and
rules for the prevention of collisions between aircraft, and between aircraft
and land or water vehicles." Here there was no showing that the bombers
flying over respondents' land violated any rule or regulation of the Civil
Aeronautics Authority. Yet, unless we hold the Act unconstitutional, at
least such a showing would be necessary before the courts could act
without interfering with the exclusive authority which Congress gave to the
administrative agency. Not even a 273*273 showing that the Authority has
not acted would be sufficient. For in that event, were the courts to have
 any authority to act in this case at all, they should stay their hand till the
Authority has acted.
o The broad provisions of the congressional statute cannot properly be
circumscribed by making a distinction, as the Court's opinion does,
between rules of safe altitude of flight while on the level of cross-country
flight and rules of safe altitude during landing and taking off. First, such a
distinction cannot be maintained from the practical standpoint. It is unlikely
that Congress intended that the Authority prescribe safe altitudes for
planes making cross-country flights, while at the same time it left the more
hazardous landing and take-off operations unregulated. The legislative
history, moreover, clearly shows that the Authority's power to prescribe air
traffic rules includes the power to make rules governing landing and take-
off. Nor is the Court justified in ignoring that history by labeling rules of
safe altitude while on the level of cross-country flight as rules prescribing
the safe altitude proper and rules governing take-off and landing as rules
of operation. For the Conference Report explicitly states that such
distinctions were purposely eliminated from the original House Bill in order
that the Section on air traffic rules "might be given the broadest possible
construction by the . . . [Civil Aeronautics Authority] and the courts."[2a] In
construing the statute narrowly, the Court 274*274 thwarts the intent of
Congress. A proper broad construction, such as Congress commanded,
would not permit the Court to decide what it has today without declaring
the Act of Congress unconstitutional. I think the Act given the broad
construction intended is constitutional.
o No greater confusion could be brought about in the coming age of air
transportation than that which would result were courts by constitutional
interpretation to hamper Congress in its efforts to keep the air free. Old
concepts of private ownership of land should not be introduced into the
field of air regulation. I have no doubt that Congress will, if not
handicapped by judicial interpretations of the Constitution, preserve the
freedom of the air, and at the same time, satisfy the just claims of
aggrieved persons. The noise of newer, larger, and more powerful planes
may grow louder and louder and disturb people more and more. But the
solution of the problems precipitated by these technological advances and
new ways of living cannot come about through the application of rigid
constitutional restraints formulated and enforced by the courts. What
adjustments may have to be made, only the future can reveal. It seems
certain, however, 275*275 that courts do not possess the techniques or the
personnel to consider and act upon the complex combinations of factors
entering into the problems. The contribution of courts must be made
through the awarding of damages for injuries suffered from the flying of
planes, or by the granting of injunctions to prohibit their flying. When these
two simple remedial devices are elevated to a constitutional level under
the Fifth Amendment, as the Court today seems to have done, they can
stand as obstacles to better adapted techniques that might be offered by
experienced experts and accepted by Congress. Today's opinion is, I fear,
an opening wedge for an unwarranted judicial interference with the power
of Congress to develop solutions for new and vital national problems. In
 my opinion this case should be reversed on the ground that there has
been no "taking" in the constitutional sense.
o MR. JUSTICE BURTON joins in this dissent.

GR. No. 194190, January 25, 2017 - REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT
OF PUBLIC WORKS AND HIGHWAYS (DPWH), Petitioner, v. SPOUSES FRANCISCO R. LLAMAS, Respondents.

SECOND DIVISION

GR. No. 194190, January 25, 2017

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND

HIGHWAYS (DPWH), Petitioner, v. SPOUSES FRANCISCO R. LLAMAS, Respondents.

DECISION

LEONEN, J.:

This resolves a Petition for Review on Certiorari1 praying that the assailed October 14, 2010 Decision2 of the
Fifth Division of the Court of Appeals in CA-G.R. SP No. 104178 be reversed and set aside, and that in lieu of
it, the Orders dated October 8, 20073 and May 19, 20084 of Branch 257 of the Regional Trial Court of
Paraiiaque City be reinstated.

The Regional Trial Court's October 8, 2007 Order required the Department of Public Works and Highways to
pay respondents Francisco and Carmelita Llamas (the Llamas Spouses) P12,000.00 per square meter as
compensation for the expropriated 41-square-meter portion of a lot that they owned.5 The same Order
denied the Llamas Spouses' prater that they be similarly compensated for two (2) expropriated road
lots.6The Regional Trial Court's May 19, 2008 Order denied the Llamas Spouses' Motion for Reconsideration.7

In its assailed Decision, the Court of Appeals set aside the Regional Trial Court's October 8, 2007 and May
19, 2008 Orders and required the Department of Public Works and Highways to similarly compensate the
Llamas Spouses for the two (2) road lots at P12,000.00 per square meter.8

On April 23, 1990, the Department of Public Works and Highways initiated an action for expropriation for the
widening of Dr. A. Santos Ave. (also known as Sucat Road) in what was then the Municipality of Parañaque,
Metro Manila.9 This action was brought against 26 defendants, none of whom are respondents in this case.10

On November 2, 1993, the Commissioners appointed by the Regional Trial Court in the expropriation case
submitted a resolution recommending that just compensation for the expropriated areas be set to
P12,000.00 per square meter.11

On January 27, 1994, the Llamas Spouses filed before the Regional Trial Court a "Most Urgent and
Respectful Motion for Leave to be Allowed Intervention as Defendants-Intervenors-Oppositors."12 They
claimed that they were excluded from the expropriation case despite having properties affected by the road
widening project. After a hearing on this Motion, the Regional Trial Court allowed the Llamas Spouses to file
their Answer-in-Intervention.13
The Llamas Spouses filed their Answer-in-Intervention on March 21, 1994.14 In it, they claimed that a total
area of 298 square meters was taken from them during the road widening project: chanRob les virtua lLawl ibra ry

(1) 102 square meters from a parcel of land identified as Lot 4, Block 3,
covered by Transfer Certificate of Title (TCT) No. 217167;
(2) 84 square meters from a parcel of land identified as Lot 1, covered by
TCT No. 179165; and
(3) 112 square meters from a parcel of land identified as Lot 2, also
covered by TCT No. 179165.15

On August 2, 1994, the Llamas Spouses filed a "Most Urgent Motion for the Issuance of [a]n Order Directing
the Immediate Payment of 40% of Zonal Value of Expropriated Land and Improvements."16

On December 9, 1994, the Department of Public Works and Highways filed its Comment/Opposition to the
Llamas Spouses' August 2, 1994 Motion.17 It noted that, from its verification with the project engineer, only
41 square meters in the parcel of land covered by TCT No. 179165 was affected by the road widening
project. Thus, it emphasized that the Llamas Spouses were entitled to just compensation only to the extent
of those 41 square meters. It added that the Llamas Spouses failed to adduce evidence of any
improvements on the affected area. It interposed no objection to the P12,000.00 per square meter as
valuation of just compensation.18

On May 29, 1996, the Regional Trial Court issued the Order19 directing the payment of the value of the lots
of the defendants in the expropriation case. The lots subject of the Llamas Spouses' intervention were not
included in this Order.20

After years of not obtaining a favorable ruling, the Llamas Spouses filed a "Motion for Issuance of an Order
to Pay and/or Writ of Execution dated May 14, 2002."21 In this Motion, the Llamas Spouses faulted the
Department of Public Works and Highways for what was supposedly its deliberate failure to comply with the
Regional Trial Court's previous Orders and even with its own undertaking to facilitate the payment of just
compensation to the Llamas Spouses.22 In response, the Department of Public Works and Highways filed a
Comment dated October 25, 2002.23

On November 28, 2002, the Department of Public Works and Highways and the Llamas Spouses filed a Joint
Manifestation and Motion seeking to suspend the Llamas Spouses' pending Motions.24 This Joint Motion
stated that the Department of Public Works and Highways and the Llamas Spouses had an understanding
that the resolution of the latter's claims required the submission of: (1) certified true copies of the TCTs
covering the lots; and (2) certified true copies of the tax declarations, tax clearances, and tax receipts over
the lots.25 It added that the Llamas Spouses had undertaken to submit these documents as soon as
possible.26

In an August 8, 2005 hearing, the Department of Public Works and Highways manifested that the non-
payment of the Llamas Spouses' claims was due to their continued failure to comply with their
undertaking.27 On the same date, the Llamas Spouses filed a Manifestation seeking the payment of their
claims.28

The Department of Public Works and Highways then filed a Comment/Opposition asserting that, from its
inquiries with the City Assessor's Office and the Parañaque City Registry of Deeds, the documents the
Llamas Spouses submitted "did not originate from the concerned offices."29

On October 8, 2007, the Regional Trial Court issued the Order30 directing the payment to the Llamas
Spouses of just compensation at P12,000.00 per square meter for 41 square meters for the lot covered by
TCT No. 217267. It denied payment for areas covered by TCT No. 179165 and noted that these were
subdivision road lots, which the Llamas Spouses "no longer owned"31 and which "belong[ed] to the
community for whom they were made."32 In the Order dated May 19, 2008, the Regional Trial Court denied
the Llamas Spouses' Motion for Reconsideration.33
The Llamas Spouses then filed before the Court of Appeals a Petition for Certiorari.

In its assailed October 14, 2010 Decision,34 the Court of Appeals reversed and set aside the assailed Orders
of the Regional Trial Court and ordered the Department of Public Works and Highways to pay the Llamas
Spouses P12,000.00 per square meter as just compensation for a total of 237 square meters across three
(3) lots, inclusive of the portions excluded by the Regional Trial Court.35 The Court of Appeals added that the
amount due to the Llamas Spouses was subject to 12% interest per annum from the time of the taking.36

The Court of Appeals reasoned that the disputed area (covered by TCT No. 179165) did not lose its private
character, the easement of right of way over it notwithstanding.37 Further, it anchored its ruling on interest
liability on Rule 67, Section 10 of the 1997 Rules of Civil Procedure.38

For resolution is the issue of whether just compensation must be paid to respondents Francisco and
Carmelita Llamas for the subdivision road lots covered by TCT No. 179165.

The Department of Public Works and Highways insists that the road lots are not compensable since they
have "already been withdrawn from the commerce of man."39 It relies chiefly on this Court's 1991 Decision
in White Plains Association, Inc. v. Legaspi,40 which pertained to "the widening of the Katipunan Road in the
White Plains Subdivision in Quezon City."41 More specifically, it capitalizes on the following statement in the
1991 White Plains Decision that shows a compulsion for subdivision owners to set aside open spaces for
public use, such as roads, and for which they need not be compensated by government: chanRoble svirtual Lawlib ra ry

Subdivision owners are mandated to set aside such open spaces before their proposed subdivision plans
may be approved by the government authorities, and that such open spaces shall be devoted exclusively for
the use of the general public and the subdivision owner need not be compensated for the same. A
subdivision owner must comply with such requirement before the subdivision plan is approved and the
authority to sell is issued.42

Under this compulsion, the dispositive portion of the 1991 White Plains Decision proceeds to state: chanRoblesvi rt ual Lawlib rary

WHEREFORE, the petition is GRANTED. The questioned orders of respondent judge dated July 10, 1990 and
September 26, 1990 are hereby reversed and set aside. Respondent QCDFC is hereby directed to execute a
deed of donation of the remaining undeveloped portion of Road Lot 1 consisting of about 18 meters wide in
favor of the Quezon City government, otherwise, the Register of Deeds of Quezon City is hereby directed to
cancel the registration of said Road Lot 1 in the name of respondent QCDFC under TCT No. 112637 and to
issue a new title covering said property in the name of the Quezon City government. Costs against
respondent QCDFC.

SO ORDERED.43 (Emphasis supplied)

The Department of Public Works and Highways is in grave error.

Petitioner's reliance on the 1991 White Plains Decision is misplaced. The same 1991 Decision was not the
end of litigation relating to the widening of Katipunan Road. The owner and developer of White Plains
Subdivision, Quezon City Development and Financing Corporation (QCDFC), went on to file motions for
reconsideration. The second of these motions was granted in this Court's July 27, 1994 Resolution.44 This
Resolution expressly discarded the compulsion underscored by the Department of Public Works and
Highways, and the dispositive portion of the 1991 White Plains Decision was modified accordingly. As this
Court recounted in its 1998 Decision in White Plains Homeowners Association, Inc. v. Court of Appeals:45

[T]he dictum in G.R. No. 95522, White Plains Association, Inc. vs. Legaspi[,] that the developer can be
compelled to execute a deed of donation of the undeveloped strip of Road Lot 1 and, in the event QCDFC
refuses to donate the land, that the Register of Deeds of Quezon City may be ordered to cancel its old title
and issue a new one in the name of the city was questioned by the respondent QCDFC as contrary to law.
We agree with QCDFC that the final judgment in G.R. No. 95522 is not what appears in the
published on February 7, 1991 decision in White Plains Association, Inc. vs. Legaspi. [Rather, it] is
the following resolution issued three (3) years later, on July 27, 1991 [sic], which states, inter alia:
". . . (T)he Court is constrained to grant the Instant Motion for Reconsideration but only insofar as the
motion seeks to delete from the dispositive portion of the decision of 07 February 1991 the order of this
Court requiring the execution of the deed of donation in question and directing the Register of Deeds of
Quezon City, in the event that such deed is not executed, to cancel the title of QCDFC and to issue a new
one in the name of the Quezon City government. It may well be that the public respondents would not be
aversed [sic] to such modification of the Court's decision since they shall in effect have everything to gain
and nothing to lose.

WHEREFORE the second motion for reconsideration is hereby partly granted by MODIFYING the dispositive
portion of this Court's decision of 07 February 1991 and to now read as follows: chanRoblesvi rtua lLaw lib rary

'WHEREFORE the petition is GRANTED. The questioned orders of respondent judge dated July 10, 1990 and
September 25 1990 are hereby reversed and set aside. Costs against respondent QCDFC.

SO ORDERED."'46 (Emphasis supplied)

The 1998 White Plains Decision unequivocally repudiated the 1991 White Plains Decision's allusion to a
compulsion on subdivision developers to cede subdivision road lots to government, so much that it
characterized such compulsion as an "illegal taking."47 It did away with any preference for government's
capacity to compel cession and, instead, emphasized the primacy of subdivision owners' and developers'
freedom in retaining or disposing of spaces developed as roads. In making its characterization of an "illegal
taking," this Court quoted with approval the statement of the Court of Appeals: chanRoblesvi rt ual Lawlib rary

Only after a subdivision owner has developed a road may it be donated to the local government, if it so
desires. On the other hand, a subdivision owner may even opt to retain ownership of private subdivision
roads, as in fact is the usual practice of exclusive residential subdivisions for example those in Makati City.48

II

In insisting on a compulsion on subdivision owners and developers to cede open spaces to government, the
Department of Public Works and Highways references Presidential Decree No. 957, as amended by
Presidential Decree No. 1216, otherwise known as the Subdivision and Condominium Buyer's Protective
Decree.

The first paragraph of Section 31 of Presidential Decree No. 957 spells out the minimum area requirement
for roads and other open spaces in subdivision projects. Its second paragraph spells out taxonomic or
classification parameters for areas reserved for parks, playgrounds, and for recreational use. It also requires
the planting of trees. The last paragraph of Section 31 requires—note the use of the word "shall"—
subdivision developers to donate to the city or municipality with territorial jurisdiction over the subdivision
project all such roads, alleys, sidewalks, and open spaces. It also imposes upon cities and municipalities the
concomitant obligation or compulsion to accept such donations: chanRoblesv irt ual Lawlib rary

SEC. 31. Roads, Alleys, Sidewalks and Open Spaces. — The owner as developer of a subdivision shall
provide adequate roads, alleys and sidewalks. For subdivision projects one (1) hectare or more, the owner
or developer shall reserve thirty percent (30%) of the gross area for open space. Such open space shall
have the following standards allocated exclusively for parks, playgrounds and recreational use: chanRoblesvi rt ual Lawlib rary

a. 9% of gross area for high density or social housing (66 to 100 family lot per gross hectare).
b. 7% of gross area for medium-density or economic housing (21 to 65 family lot per gross
hectare).
c. 3.5% of gross area low-density or open market housing (20 family lots and below per gross
hectare).

These areas reserved for parks, playgrounds and recreational use shall be non-alienable public lands, and
non-buildable. The plans of the subdivision project shall include tree planting on such parts of the
subdivision as may be designated by the Authority.
Upon their completion as certified to by the Authority, the roads, alleys, sidewalks and playgrounds shall be
donated by the owner or developer to the city or municipality and it shall be mandatory for the local
governments to accept; provided, however, that the parks and playgrounds may be donated to the
Homeowners Association of the project with the consent of the city or municipality concerned. No portion of
the parks and playgrounds donated thereafter shall be converted to any other purpose or purposes.
(Emphasis supplied)

The last paragraph of Section 31 is oxymoronic. One cannot speak of a donation and compulsion in the same
breath.

A donation is, by definition, "an act of liberality." Article 725 of the Civil Code provides: chanRob lesvi rtual Lawli bra ry

Article 725. Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor
of another, who accepts it.

To be considered a donation, an act of conveyance must necessarily proceed freely from the donor's own,
unrestrained volition. A donation cannot be forced: it cannot arise from compulsion, be borne by a
requirement, or otherwise be impelled by a mandate imposed upon the donor by forces that are external to
him or her. Article 726 of the Civil Code reflects this commonsensical wisdom when it specifically states that
conveyances made in view of a "demandable debt" cannot be considered true or valid donations.49

In jurisprudence, animus donandi (that is, the intent to do an act of liberality) is an indispensable element of
a valid donation, along with the reduction of the donor's patrimony and the corresponding increase in the
donee's patrimony.50

Section 31's compulsion to donate (and concomitant compulsion to accept) cannot be sustained as valid. Not
only does it run afoul of basic legal concepts; it also fails to withstand the more elementary test of logic and
common sense. As opposed to this, the position that not only is more reasonable and logical, but also
maintains harmony between our laws, is that which maintains the subdivision owner's or developer's
freedom to donate or not to donate. This is the position of the 1998 White Plains Decision. Moreover, as this
1998 Decision has emphasized, to force this donation—and to preclude any compensation—is to suffer an
illegal taking.

III

The Court of Appeals correctly stated that a "positive act"51 must first be made by the "owner-developer
before the city or municipality can acquire dominion over the subdivision roads."52 As there is no such thing
as an automatic cession to government of subdivision road lots, an actual transfer must first be effected by
the subdivision owner: "subdivision streets belonged to the owner until donated to the government or until
expropriated upon payment of just compensation."53 Stated otherwise, "the local government should first
acquire them by donation, purchase, or expropriation, if they are to be utilized as a public road."54

This Court's 2014 Decision in Republic v. Ortigas55 succinctly captures all that we have previously stated: cha nRoblesvi rt ual Lawlib rary

Delineated roads and streets, whether part of a subdivision or segregated for public use, remain private and
will remain as such until conveyed to the government by donation or through expropriation proceedings. An
owner may not be forced to donate his or her property even if it has been delineated as road lots because
that would partake of an illegal taking. He or she may even choose to retain said properties.56

The Department of Public Works and Highways makes no claim here that the road lots covered by TCT No.
179165 have actually been donated to the government or that their transfer has otherwise been
consummated by respondents. It only theorizes that they have been automatically transferred. Neither has
expropriation ever been fully effected. Precisely, we are resolving this expropriation controversy only now.

Respondents have not made any positive act enabling the City Government of Parañaque to acquire
dominion over the disputed road lots. Therefore, they retain their private character (albeit all parties
acknowledge them to be subject to an easement of right of way). Accordingly, just compensation must be
paid to respondents as the government takes the road lots in the course of a road widening project.

WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed October 14, 2010 Decision of
the Fifth Division of the Court of Appeals in CA-G.R. SP No. 104178 is AFFIRMED.

SO ORDERED. chanroblesvi rtua llawli bra ry

G.R. No. 189185, August 16, 2016 - WILFREDO MOSQUEDA, MARCELO VILLAGANES, JULIETA LAWAGON,
CRISPIN ALCOMENDRAS, CORAZON SABINADA, VIRGINIA CATA-AG, FLORENCIA SABANDON, AND
LEDEVINA ADLAWAN, Petitioners, v. PILIPINO BANANA GROWERS & EXPORTERS ASSOCIATION, INC.,
DAVAO FRUITS CORPORATION, AND LAPANDAY AGRICULTURAL AND DEVELOPMENT CORPORATION,
Respondents.; G.R. No. 189305 - CITY GOVERNMENT OF DAVAO, Petitioner, v. COURT OF APPEALS,
PILIPINO BANANA GROWERS & EXPORTERS ASSOCIATION (PBGEA), DAVAO FRUITS CORPORATION, AND
LAPANDAY AGRICULTURAL AND DEVELOPMENT CORPORATION, Respondent.

EN BANC

G.R. No. 189185, August 16, 2016

WILFREDO MOSQUEDA, MARCELO VILLAGANES, JULIETA LAWAGON, CRISPIN ALCOMENDRAS,

CORAZON SABINADA, VIRGINIA CATA-AG, FLORENCIA SABANDON, AND LEDEVINA
ADLAWAN, Petitioners, v. PILIPINO BANANA GROWERS & EXPORTERS ASSOCIATION, INC., DAVAO
FRUITS CORPORATION, AND LAPANDAY AGRICULTURAL AND DEVELOPMENT
CORPORATION, Respondents.

G.R. No. 189305

CITY GOVERNMENT OF DAVAO, Petitioner, v. COURT OF APPEALS, PILIPINO BANANA GROWERS &
EXPORTERS ASSOCIATION (PBGEA), DAVAO FRUITS CORPORATION, AND LAPANDAY
AGRICULTURAL AND DEVELOPMENT CORPORATION, Respondent.

DECISION

BERSAMIN, J.:

This appeal through the consolidated petitions for review on certiorari assails the decision promulgated on
January 9, 20091 whereby the Court of Appeals (CA) reversed and set aside the judgment rendered on
September 22, 2007 by the Regional Trial Court (RTC), Branch 17, in Davao City upholding the validity and
constitutionality of Davao City Ordinance No. 0309-07, to wit: ChanRobles Vi rt ualawlib ra ry

WHEREFORE, premises considered, the appeal is GRANTED. The assailed September 22, 2007 Decision of
the Regional Trial Court (RTC), 11th Judicial Region, Branch 17, Davao City, upholding the validity and
constitutionality of Davao City Ordinance No. 0309-07, is hereby REVERSED and SET ASIDE.

FURTHER, the Writ of Preliminary Injunction dated 28 January 2008 enjoining the City Government of
Davao, and any other person or entity acting in its behalf, from enforcing and implementing City Ordinance
No. 0309-07, is hereby made permanent.

SO ORDERED.
 Antecedents

After several committee hearings and consultations with various stakeholders, the Sangguniang
Panlungsod of Davao City enacted Ordinance No. 0309, Series of 2007, to impose a ban against aerial
spraying as an agricultural practice by all agricultural entities within Davao City, viz.: ChanRobles Virtualawl ibra ry

ORDINANCE NO. 0309-07

Series of 2007

AN ORDINANCE BANNING AERIAL SPRAYING AS AN AGRICULTURAL PRACTICE IN ALL AGRICULTURAL

ACTIVITIES BY ALL AGRICULTURAL ENTITIES IN DAVAO CITY

Be it enacted by the Sangguniang Panlungsod of Davao City in session assembled that:

SECTION 1. TITLE. This Ordinance shall be known as "An Ordinance Banning Aerial Spraying as an
chanRoble svirtual Lawlib ra ry

Agricultural Practice in all Agricultural Activities by all Agricultural Entities in Davao City";

SECTION 2. POLICY OF THE CITY. It shall be the policy of the City of Davao to eliminate the method of aerial
spraying as an agricultural practice in all agricultural activities by all entities within Davao City;

SECTION 3. DEFINITION OF TERMS:

a. Aerial Spraying - refers to application of substances through the use of aircraft of any form which
chanRoble svirtual Lawlib ra ry

dispenses the substances in the air.

b. Agricultural Practices - refer to the practices conducted by agricultural entities in relation to their
agricultural activities;

c. Agricultural Activities - refer to activities that include, but not limited to, land preparation, seeding,
planting, cultivation, harvesting and bagging;

d. Agricultural Entities - refer to persons, natural or juridical, involved in agricultural activities

e. Buffer Zone - is an identified 30-meter zone within and around the boundaries of agricultural
farms/plantations that need special monitoring to avoid or minimize harm to the environment and
inhabitants pursuant to policies and guidelines set forth in this Ordinance and other government regulations.
It is an area of land that must lie within the property which does not include public lands, public
thoroughfares or adjacent private properties. It must be planted with diversified trees that grow taller than
what are usually planted and grown in the plantation to protect those within the adjacent fields, neighboring
farms, residential area, schools and workplaces.

SECTION 4. SCOPE AND APPLICABILITY - The provisions of this Ordinance shall apply to all agricultural
entities within the territorial jurisdiction of Davao City;

SECTION 5. BAN OF AERIAL SPRAYING - A ban on aerial spraying shall be strictly enforced in the territorial
jurisdiction of Davao City three (3) months after the effectivity of this Ordinance.

SECTION 6. BUFFER ZONE - Consistent with national legislation and government regulations, all agricultural
entities must provide for a thirty (30) meter buffer zone within the boundaries of their agricultural
farms/plantations. This buffer zone must be properly identified through Global Positioning System (GPS)
survey. A survey plan showing the metes and bounds of each agricultural farm/plantation must be
submitted to the City Mayor's Office, with the buffer zone clearly identified therein;

SECTION 7. PENAL PROVISION - Violation of any provision of this Ordinance shall be punished as follows:

a. First Offense: Fine of P5,000.00 and imprisonment of not less than one (1) month but not more than
chanRoble svirtual Lawlib ra ry

three (3) months;

b. Second Offense: Fine of P5,000.00 and imprisonment of not less than three (3) months but not more
than six (6) months and suspension of City-issued permits and licenses for one (1) year;

c. Third Offense: Fine of P5,000.00 and imprisonment of not less than six (6) months but not more than one
(1) year and perpetual cancellation of City issued permits and licenses;
Provided, that in case the violation has been committed by a juridical person, the person in charge of the
management thereof shall be held liable;

SECTION 8. REPEALING CLAUSE - Any Ordinance that is contrary to or inconsistent with any of the
provisions of this Ordinance shall be deemed amended or repealed accordingly.

SECTION 9. EFFECTIVITY - This Ordinance shall take effect thirty (30) days from its publication in a
newspaper of general circulation in Davao City;

ENACTED, January 23, 2007 by a majority vote of all the Members of the Sangguniang Panlungsod.2 chanroblesv irt uallawl ibra ry

City Mayor Rodrigo Duterte approved the ordinance on February 9, 2007.3 The ordinance took effect on
March 23, 2007 after its publication in the newspaper Mindanao Pioneer.4 Pursuant to Section 5 of the
ordinance, the ban against aerial spraying would be strictly enforced three months thereafter.

The Pilipino Banana Growers and Exporters Association, Inc. (PBGEA) and two of its members, namely:
Davao Fruits Corporation and Lapanday Agricultural and Development Corporation (PBGEA, et al.), filed their
petition in the RTC to challenge the constitutionality of the ordinance, and to seek the issuance of provisional
reliefs through a temporary restraining order (TRO) and/or writ of preliminary injunction.5They alleged that
the ordinance exemplified the unreasonable exercise of police power; violated the equal protection clause;
amounted to the confiscation of property without due process of law; and lacked publication pursuant] to
Section 5116 of Republic Act No. 7160 (Local Government Code).

On May 8, 2007, the residents living within and adjacent to banana plantations in Davao City led by Wilfredo
Mosqueda,7 joined by other residents of Davao City,8 (Mosqueda, et al.) submitted their Motion for Leave to
Intervene and Opposition to the Issuance of a Preliminary Injunction.9 The RTC granted their motion on June
4, 2007.10chanro bleslaw

On June 20, 2007, the RTC granted the prayer for issuance of the writ of preliminary injunction, and
subsequently issued the writ.11 chan robles law

Judgment of the RTC

On September 22, 2007, after trial, the RTC rendered judgment declaring Ordinance No. 0309-07 valid and
constitutional, decreeing thusly: ChanRobles Vi rt ualawlib ra ry

WHEREFORE, finding the subject [O]rdinance No. 0309-07 valid and constitutional in all aspect of the
grounds assailed by the petitioner, said [C]ity [O]rdinance No. 0309-07, is sustained of its validity and
constitutionality.

Accordingly, the order of this court dated June 20, 2007, granting the writ of preliminary injunction as
prayed for by petitioner is ordered cancelled and set aside as a result of this decision.

SO ORDERED.12 chanroblesv irtuallawl ib rary

The RTC opined that the City of Davao had validly exercised police power13 under the General Welfare
Clause of the Local Government Code;14 that the ordinance, being based on a valid classification, was
consistent with the Equal Protection Clause; that aerial spraying was distinct from other methods of
pesticides application because it exposed the residents to a higher degree of health risk caused by aerial
drift;15 and that the ordinance enjoyed the presumption of constitutionality, and could be invalidated only
upon a clear showing that it had violated the Constitution.16 chanro bleslaw

However, the RTC, recognizing the impracticability of the 3-month transition period under Section 5 of
Ordinance No. 0309-07, recommended the parties to agree on an extended transition period.17 c hanro bles law

Decision of the CA

PBGEA, et al. appealed,18 and applied for injunctive relief from the CA,19 which granted the application20and
consequently issued a TRO to meanwhile enjoin the effectivity of the ordinance.21 chan robles law

On January 9, 2009, the CA promulgated its assailed decision reversing the judgment of the RTC.22 It
declared Section 5 of Ordinance No. 0309-07 as void and unconstitutional for being unreasonable and
oppressive; found the three-month transition period impractical and oppressive in view of the engineering
and technical requirements of switching from aerial spraying to truck-mounted boom spraying; and opined
that the ban ran afoul with the Equal Protection Clause inasmuch as Section 3(a) of the ordinance - which
defined the term aerial spraying - did not make reasonable distinction between the hazards, safety and
beneficial effects of liquid substances that were being applied aerially; the different classes of pesticides or
fungicides; and the levels of concentration of these substances that could be beneficial and could enhance
agricultural production.

The CA did not see any established relation between the purpose of protecting the public and the
environment against the harmful effects of aerial spraying, on one hand, and the imposition of the ban
against aerial spraying of all forms of substances, on the other. It ruled that the maintenance of the 30-
meter buffer zone within and around the agricultural plantations under Section 6 of Ordinance No. 0309-07
constituted taking of property without due process because the landowners were thereby compelled to cede
portions of their property without just compensation; that the exercise of police power to require the buffer
zone was invalid because there was no finding that the 30-meter surrounding belt was obnoxious to the
public welfare; and that, accordingly, Ordinance No. 0309-07 was unconstitutional because of the absence of
a separability clause.

The City of Davao and the intervenors filed their respective motions for reconsideration, but the CA denied
the motions on August 7, 2009.23 chan robles law

Hence, the separate, but now consolidated, appeals by petition for review on certiorari.

Issues

In G.R. No. 189185, petitioners Mosqueda, et al. rely on the following grounds, namely: ChanRoble sVirt ualawli bra ry

THE COURT OF APPEALS IGNORED FUNDAMENTAL PRECEPTS AND CONCEPTS OF LAW WHICH, PROPERLY
CONSIDERED, NECESSARILY LEAD TO THE CONCLUSION THAT THE DAVAO ORDINANCE IS
CONSTITUTIONAL AND VALID

II

THE DAVAO ORDINANCE IS CONSISTENT WITH THE EQUAL PROTECTION CLAUSE

III

THE MEANS EMPLOYED BY THE DAVAO ORDINANCE IS MORE THAN REASONABLY RELATED TO THE
PURPOSE IT SEEKS TO ACHIEVE

IV

THE DAVAO ORDINANCE IS VALID, BEING DEMONSTRABLY REASONABLE AND FAIR

THE REQUIREMENT RELATING TO THE 30-METER BUFFER ZONE ARE [SIC] CONSISTENT WITH DUE
PROCESS OF LAW, BEING A VALID EXERCISE OF POLICE POWER
Mosqueda, et al. state that the CA ignored well-established precepts like the primacy of human rights over
property rights and the presumption of validity in favor of the ordinance; that the CA preferred the
preservation of the profits of respondents PBGEA, et al. to the residents' right to life, health and
ecology,24 thereby disregarding the benevolent purpose of the ordinance; that the CA assumed the functions
of the lawmaker when it set aside the wisdom behind the enactment of the ordinance; that the CA failed to
apply the precautionary principle, by which the State was allowed to take positive actions to prevent harm
to the environment and to human health despite the lack of scientific certainty; that the CA erred in applying
the "strict scrutiny method" in holding that the ordinance violated the Equal Protection Clause because it
only thereby applied in reviewing classifications that affected fundamental rights; that there was nothing
wrong with prohibiting aerial spraying per se considering that even the aerial spraying of water produced
drift that could affect unwilling neighbors whose, constitutional right to a clean and healthy environment
might be impinged;25 that as far as the three-month period was concerned, the CA should have considered
c ralaw red

that manual spraying could be conducted while the PBGEA, et al. laid down the preparations for the conduct
of boom spraying;26 that "reasonableness" could be more appropriately weighed by balancing the interests
of the parties against the protection of basic rights, like the right to life, to health, and to a balanced and
healthful ecology;27 that PBGEA, et al. did not substantiate their claim of potential profit losses that would
result from the shift; that business profits should remain inferior and subordinate to their fundamental rights
as residents of Davao City, which were the rights that the assailed ordinance has sought to protect;28 that
PBGEA, et al. did not explore other modes of pesticide treatment either as a stop-gap or as a temporary
measure while shifting to truck mounted boom spraying;29 that the imposition of the 30-meter buffer zone
was a valid exercise of police power that necessarily flowed from the protection afforded by the ordinance
from the unwanted effects of ground spraying; that the imposition of the buffer zone did not constitute
compensable taking under police power, pursuant to the pronouncements in Seng Kee & Co. v. Earnshaw
and Piatt30Patalinghug v. Court of Appeals,31 and Social Justice Society (SJS) v. Atienza, Jr.;32 and that the
30-meter buffer zone conformed with the ISO 1400033 and the DENR Environmental Compliance Certificate
(ECC) requirement.34 chan robles law

In G.R. No. 189305, petitioner City of Davao submits the following as the issues to be considered and
resolved, to wit:
ChanRob les Vi rtualaw lib rary

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT SECTION 5 OF
ORDINANCE NO. 0309-07, SERIES OF 2007 IS OPPRESSIVE AND AN UNREASONABLE EXERCISE OF
DELEGATED POLICE POWER

II

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT ORDINANCE NO. 0309-
07 IS VIOLATIVE OF THE EQUAL PROTECTION CLAUSE OF THE CONSTITUTION;

III

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT ORDINANCE NO. 0309-
07 CONSTITUTES TAKING OF PROPERTY WITHOUT COMPENSATION, THUS, VIOLATIVE OF THE DUE
PROCESS CLAUSE OF THE CONSTITUTION

IV

WHETHER OR NOT AERIAL SPRAYING OF FUNGICIDES IS SAFE TO THE PEOPLE AND THE ENVIRONMENT
The City of Davao explains that it had the authority to enact the assailed ordinance because it would thereby
protect the environment and regulate property and business in the interest of the general welfare pursuant
to Section 458 of the Local Government Code;35 that the ordinance was enacted to carry out its mandate of
promoting the public welfare under the General Welfare Clause (Section 16 of the Local Government Code);
that the ordinance did not violate the Equal Protection Clause because the distinction lies in aerial spray as a
method of application being more deleterious than other modes; that aerial spraying produces more drift
that causes discomfort, and an extremely offensive and obnoxious experience the part of the residents; that
spray drift cannot be controlled even with use by the respondents of highly advanced apparatus, such as the
Differential Global Positioning System, Micronair Rotary Drift Control Atomizers, Intellimap, Intelliflow Spray
Valve System, Control and Display Unit and the Target Flow Spray Valve Switch System;36 that because of
the inherent toxicity of Mancozeb (the fungicide aerially applied by the respondents), there is no need to
provide for a substantial distinction based on the level of concentration;37 that as soon as fungicides are
released in the air, they become air pollutants pursuant to Section 5 of Republic Act No. 8749 (Philippine
Clean Air Act of 1999),38 and the activity thus falls under the authority of the local government units to ban;
and that the ordinance does not only seek to protect and promote human health but also serves as a
measure against air pollution.

The City of Davao insists that it validly exercised police power because it does not thereby oblige the shift
from aerial to truck-mounted boom spraying; that the respondents only choose boom spraying to justify the
alleged impracticability of the transition period by erroneously adding the months required for each of the
stages without considering other steps that may be simultaneously undertaken;39 that the Court should
apply its ruling in Social Justice Society v. Atienza, Jr.,40 by which the six-month period for the folding-up of
business operations was declared a legitimate exercise of police power; that the respondents did not present
any documentary evidence on the feasibility of adopting other methods;41that only 1,800 hectares out of
5,200 hectares of plantations owned and operated by PBGEA's members use aerial spraying, hence, the
perceived ominous consequence of imposing a ban on aerial spray to the banana industry is entirely
misleading;42 that the urgency of prohibiting aerial spray justifies the three-month transition period; that the
complaints of the community residents - ranging from skin itchiness, contraction and/or tightening in the
chest, nausea, appetite loss and difficulty in breathing after exposure to spray mist - only prove that aerial
spraying brings discomfort and harm to the residents; that considering that the testimony of Dr. Lynn
Crisanta R. Panganiban, a pharmacologist and toxicologist, established that fungicides could cause
debilitating effects on the human body once inhaled or digested, the CA erred in holding that there was no
correlation between aerial application and the complaints of the residents; that given that aerial spray
produces more drift and is uncontrollable compared to the other methods of applying fungicides, the
ordinance becomes reasonable;43 and that the medical-related complaints of the residents need not be
proven by medical records considering that these were based on personal knowledge.44 chan robles law

The City of Davao contends that the imposition of the 30-meter buffer zone is a valid exercise of police
power, rendering the claim for just compensation untenable; that the maintenance of the buffer zone does
not require the respondents to cede a portion of their landholdings; that the planting of diversified trees
within the buffer zone will serve to insulate the residents from spray drift; that such buffer zone does not
deprive the landowners of the lawful and beneficial use of their property;45 and that the buffer zone is
consistent with the Constitution, which reminds property owners that the use of property bears a social
function.46
chanrob leslaw

In their comment, the respondents posit that the petition of the City; of Davao should be dismissed for
failure to attach material portions of the records, and for raising factual errors that are not within the realm
of this appeal by petition for review on certiorari;47 that the CA correctly declared the ordinance as
unreasonable due to the impossibility of complying with the three-month transition period; that shifting from
aerial to truck-mounted boom spraying will take at least three years and entails careful planning, equipment
and machineries, civil works, and capital funding of at least P400,000,000.00;48 that the Court could rely on
its ruling in City of Manila v. Laguio, Jr.,49 where an ordinance directing an existing establishment to wind up
or to transfer its business was declared as confiscatory in nature, and, therefore, unconstitutional;50 that the
total ban against aerial sprayig, coupled with the inadequate time to shift to truck-mounted boom spraying,
effectively deprives the respondents with an efficient means to control the spread of the Black Sigatoka
disease that threatens the banana plantations; that the ordinance will only expose the plantations to the
virulent disease that is capable of infecting 60% of the plantations on a single cycle51 missed;52 that
compared with other modes of application, aerial spraying is more cost-efficient, safe and accurate; that
truck-mounted boom spraying, for instance, requires 80-200 liters of solution per hectare,53 while manual
spraying uses 200-300 liters of solution per hectare; that aerial spraying oily requires 30 liters per hectare;
that in terms of safety and accuracy, manual spraying is the least safe and accurate,54 and produces more
drift than aerial spraying;55 that due to the 300-liter solution required, the workers will be more exposed to
the solution during manual application and such application will thus be more in conflict with the purpose of
the ordinance to prevent human exposure;56 that the respondents also find the irrigation sprinklers
suggested by the City of Davao as wasteful, unsafe and impractical because it cannot provide the needed
coverage for application of the solution to effectively control. the Black Sigatoka disease; that in contrast,
aerial application, coupled with the latest state of the art technology and equipment, ensures accuracy,
effectiveness, efficiency and safety compared to the other methods of application; that the respondents
vouch for the safety of the fungicides they use by virtue of such fungicides having been registered with the
Fertilizer and Pesticide Authority (FPA) and classified as Category IV,57 and found to be mild; and that oral
ingestion in large doses is required before any adverse effects to humans may result.58 chan robles law

The respondents lament that the ban was imposed without any scientific basis; that the report59prepared by
a fact-finding team (composed of the Vice Mayor, the City Health Officer, The City Planning and
Development Coordinator and the Assistance City Planning and Development Coordinator) organized by the
City of Davao revealed that there was no scientific evidence to support the clamor for the ban against aerial
spraying; that furthermore, national government agencies like the Department of Agriculture (DA),
Department of Health (DOR) and the Department of Trade and Industry (DTI) similarly concluded that there
was no scientific evidence to support the ban;60 that for four decades since the adoption of aerial spraying,
there has been no reported outbreak or any predisposition to ailment connected with the pesticides applied;
that the testimonies of the residents during the trial were mere "emotional anecdotal evidence" that did not
establish any scientific or medical bases of any causal connection between the alleged health conditions
complained of and the fungicides applied during aerial spraying;61 that the allegations of health and
environmental harm brought by the pesticides used to treat the banana plantations were unfounded; that
the 2001 study of the International Agency for Research on Cancer showed that, contrary to the claim of
Dra. Panganiban, the by-product of Mancozeb (Ethylenethiourea or ETU) was "non-genotoxic" and not
expected to produce thyroid cancer;62 that Carlos Mendoza, a geo-hydrologist and geophysicist, testified
that underground water contamination through aerial spraying would be impossible because of the presence
of latex, thick layers of clay and underlying rock formations;63 that even the study conducted by the
Philippine Coconut Authority (PCA) showed that the rhinoceros beetle infestation in coconut plantations
adjacent to the banana plantations was due to the farmer's failure to observe phyto-sanitary measures, not
to aerial spraying;64 that furthermore, aerial spraying is internationally accepted as a "Good Agricultural
Practice" (GAP)65 under the International Code of Conduct on the Distribution and Use of Pesticides by the
United Nations-Food and Agricultural Organization (UN-FAO); that as such, they observe the standards laid
down by the UN-FAO, and utilize aerial spraying equipment that will ensure accuracy, safety and efficiency
in applying the substances, and which more than complies with the requirement under the Guidelines on
Good Practice for Aerial Application of Pesticides (Rome 2001);66 that in addition, they strictly observe
standard operating procedures prior to take-off,67 in-flight68 and post-flight;69 that they substantially
invested in state-of-the-art technology and equipment designed to ensure safety, accuracy, and
effectiveness of aerial spraying operations, to avoid aerial drift;70 that their equipment include: wind meters
(to measure the wind velocity in a specific area), wind cones (to determine the wind direction, and whether
the wind is a headwind, tailwind or a crosswind); central weather station (to measure wind speed, the
temperature and relative humidity), Differential Global Positioning System (DGPS),71 Intellimap,72 Control
and Display Unit,73 Micronair Rotary Drift Control Atomizers (AU 5000 Low-Drift model),74 Intelliflow Spray
Valve System,75 and Target Flow Spray Valve Switch System;76 and that they want to minimize, if not,
eliminate the occurrence of spray drift in order to minimize wastage of resources and reduced efficiency of
spraying programs implemented to control the Black Sigatoka disease.77 chanroble slaw

The respondents maintain that Ordinance No. 0309-07 will regulate aerial spraying as a method of
application, instead of the substances being used therein; that the prohibition is overbroad in light of other
available reasonable measures that may be resorted to by the local government; that the ordinance is
unreasonable, unfair, oppressive, and tantamount to a restriction or prohibition of trade;78 that the
ordinance will effectively impose a prohibition against all pesticides, including fungicides that fall under the
mildest type of substance; that as such, the petitioner has disregarded existing valid and substantive
classifications established and recognized by the World Health Organization (WHO) that are adopted by the
FPA; that the FPA is the national agency armed with the professional competence, technical expertise, and
legal mandate to deal with the issue of use and application of pesticides in our country; that the fungicides
they administer are duly registered with the FPA, and with other more developed countries that have
observed a stricter environmental and public health regulation such as the United States Environmental
Protection Agency (EPA) and the European Union (EU); that as such, the City of Davao has disregarded
valid, substantial and significant distinctions between levels of concentration of the fungicides in the water
solution aerially sprayed; that it is the FPA that regulates the level of concentration of agricultural chemicals
prior to commercial distribution and use in the country; that the members of PBGEA only spray a water
solution (water cocktail) containing 0.1 liter to 1.5 liters of the active ingredient of fungicide in a 30-liter
water solution per hectare that has undergone rigorous testing and .evaluation prior to registration by the
FPA; that the active ingredients of the fungicide are so diluted that no harm may be posed to public health
or to the environment through aerial application;79 that the ordinance was so broad that it prohibits aerial
application of any substance, including water;80 and that aside from fungicides, the respondents also aerially
apply vitamins, minerals and organic fertilizers.81chan robles law

The respondents submit that the maintenance of the 30-meter buffer zone under Section 5 of the ordinance
constitutes an improper exercise of police power; that the ordinance will require all landholdings to maintain
the buffer zone, thereby diminishing to a mere 1,600 square meters of usable and productive land for every
hectare of the plantation bounding residential areas, with the zone being reserved for planting "diversified
trees;" that this requirement amounts to taking without just compensation or due process; and that the
imposition of the buffer zone unduly deprives all landowners within the City of Davao the beneficial use of
their property;82 that the precautionary principle cannot be applied blindly, because its application still
requires some scientific basis; that the principle is also based on a mere declaration that has not even
reached the level of customary international law, not on a treaty binding on the Government.83 chan robles law

The respondents argue that the illegality of the transition period results in the invalidity of the ordinance as
it does not carry a separability clause; and that the absence of such clause signifies the intention of the
Sangguniang Panlungsod of City of Davao to make the ordinance effective as a whole.84 chan roble slaw

The main issue is whether or not Ordinance No. 0309-07 is unconstitutional on due process and equal
protection grounds for being unreasonable and oppressive, and an invalid exercise of police power: (a) in
imposing a ban on aerial spraying as an agricultural practice in Davao City under Section 5; (b) in decreeing
a 3-month transition-period to shift to other modes of pesticide application under Section 5; and (c) in
requiring the maintenance of the 30-meter buffer zone under Section 6 thereof in all agricultural lands in
Davao City.

Ruling of the Court

We deny the petitions for review for their lack of merit.

I
Preliminary considerations:
The significant role of the banana industry
in ensuring economic stability and food security

There is no question that the implementation of Ordinance No. 0309-07, although the ordinance concerns
the imposition of the ban against aerial spraying in all agricultural lands within Davao City, will inevitably
have a considerable impact on the country's banana industry, particularly on export trading.

Banana exportation plays a significant role in the maintenance of the country's economic, stability and food
security. Banana is a consistent dollar earner and the fourth largest produced commodity in the
Philippines.85 In 2010, the Philippines figured among the top three banana producing countries in the
world.86 In 2014, fresh bananas accounted for 17% of the country's top agricultural export commodities,
gaining a close second to coconut oil with 18%.87 The Davao Region (Region XI)88 was the top banana
producing region in 2013, with a production growth rate of 16.4%, and 33.76% share in the total
agricultural output of the Region.89chan roble slaw

Despite these optimistic statistics, the banana industry players struggle to keep up with the demands of the
trade by combatting the main threat to production posed by two major fungal diseases: the Panama Disease
Tropical Race 4 (Fusarium oxysprum f.sp. cubense) and the Black Sigatoka leaf spot disease
(Mycosphaerella ffiensis morelet). Pesticides have proven to be effective only against the Black Sigatoka
disease. There is yet no known cure for the Panama disease.90 chanrob leslaw

The menace of the Black Sigatoka disease cannot be taken lightly. The disease causes destruction of the
plant by significantly reducing the leaf area, leading to premature ripening of the produce and resulting in
yield losses of at least 50%.91 Due to its effects on banana export trading, the disease has emerged as a
global concern that has correspondingly forced banana producers to increase the use of chemical
pesticides.92 Protectant fungicides such as Mancozeb, chlorothalonil and Propiconazole are applied to combat
the disease.93 These agricultural chemicals are aerially applied by the respondents in the banana plantations
within the jurisdiction of Davao City to arrest the proliferation of the disease.

Considering that banana export plantations exist in vast monocultures, effective treatment of the Black
Sigatoka disease is done by frequent aerial application of fungicides. This is an expensive practice because it
requires permanent landing strips, facilities for the mixing and loading of fungicides, and high recurring
expense of spray materials.94 The cost of aerial spraying accounts to 15-20% of the final retail price of the
crop, making the technology essentially unavailable to small landholdings that are more vulnerable to the
disease.95chan roble slaw

Aerial spraying has become an agricultural practice in Davao City since the establishment of the banana
plantations in 1960.96 Out of the 5,205 hectares of commercial plantations devoted to Cavendish banana
being operated by the respondents in Davao City,97 around 1,800 hectares receive treatment through aerial
application. These plantations are situated in Barangays Sirib, Manuel Guianga, Tamayong, Subasta
Dacudao, Lasang, Mandug, Waan, Tigatto and Callawa,98 and are affected by the ban imposed by Ordinance
No. 0309-07. The DTI has issued a statement to the effect that the ban against aerial spraying in banana
plantations "is expected to kill the banana industry," affects the socio-economic development of the
barangays hosting the affected plantations, and has a disastrous impact on export trading. The DTI has
forecasted that the ban would discourage the entry of new players in the locality, which would have a
potential drawback in employment generation.99 chanrobles law

II
The Sangguniang Bayan of Davao City
enacted Ordinance No. 0309-07
under its corporate powers

The petitioners assert that Ordinance No. 0309-07 is a valid act of the Sangguniang Bayan of Davao City-
pursuant to its delegated authority to exercise police power in the furtherance of public welfare and in
ensuring a sound and balanced environment for its constituents. The respondents negate this assertion,
describing the ordinance as unreasonable, discriminatory and oppressive.

The petitioners' assertion of its authority to enact Ordinance No. 0309-07 is upheld.

To be considered as a valid police power measure, an ordinance must pass a two-pronged test:
the formal (i.e., whether the ordinance is enacted within the corporate powers of the local government unit,
and whether it is passed in accordance with the procedure prescribed by law); and the substantive (i.e.,
involving inherent merit, like the conformity of the ordinance with the limitations under the Constitution and
the statutes, as well as with the requirements of fairness and reason, and its consistency with public
policy).100 chan robles law

The formalities in enacting an ordinance are laid down in Section 53101 and Section 54102 of The Local
Government Code. These provisions require the ordinance to be passed by the majority of the members of
the sanggunian concerned, and to be presented to the mayor for approval. With no issues regarding quorum
during its deliberation having been raised, and with its approval of by City Mayor Duterte not being
disputed, we see no reason to strike down Ordinance No. 0309-07 for non-compliance with the formal
requisites under the Local Government Code.

We next ascertain whether the City of Davao acted within the limits of its corporate powers in enacting
Ordinance No. 0309-07.

The corporate powers of the local government unit confer the basic authority to enact legislation that may
interfere with personal liberty, property, lawful businesses and occupations in order to promote the general
welfare.103 Such legislative powers spring from the delegation thereof by Congress through either the Local
Government Code or a special law. The General Welfare Clause in Section 16 of the Local Government
Code embodies the legislative grant that enables the local government unit to effectively accomplish and
carry out the declared objects of its creation, and to promote and maintain local autonomy.104 Section 16
reads:ChanRobles Vi rtua lawlib rary

Sec. 16. General Welfare. — Every local government unit shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and
effective governance, and those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support among other things, the
preservation and enrichment of culture, promote health and safety, enhance the right of the people to a
balanced ecology, encourage and support the development of appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance economic prosperity and social justice, promote
full employment among their residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants.
Section 16 comprehends two branches of delegated powers, namely: the general legislative power and
the police power proper. General legislative power refers to the power delegated by Congress to the local
legislative body, or the Sangguniang Panlungsod in the case of Dayao City,105 to enable the local legislative
body to enact ordinances and make regulations. This power is limited in that the enacted ordinances must
not be repugnant to law, and the power must be exercised to effectuate and discharge the powers and
duties legally conferred to the local legislative body. The police power proper, on the other hand, authorizes
the local government unit to enact ordinances necessary and proper for the health and safety, prosperity,
morals, peace, good order, comfort, and convenience of the local government unit and its constituents, and
for the protection of their property.106 chan rob leslaw

Section 458 of the Local Government Code explicitly vests the local government unit with the authority to
enact legislation .aimed at promoting the general welfare, viz.: ChanRobles Vi rtua lawlib rary

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. x x x
In terms of the right of the citizens to health and to a balanced and healthful ecology, the local government
unit takes its cue from Section 15 and Section 16, Article II of the 1987 Constitution. Following the
provisions of the Local Government Code and the Constitution, the acts of the local government unit
designed to ensure the health and lives of its constituents and to promote a balanced and healthful ecology
are well within the corporate powers vested in the local government unit. Accordingly, the Sangguniang
Bayan of Davao City is vested with the requisite authority to enact an ordinance that seeks to protect the
health and well-being of its constituents.

The respondents pose a challenge against Ordinance No. 0309-07 on the ground that the Sangguniang
Bayan of Davao City has disregarded the health of the plantation workers, contending that by imposing the
ban against aerial spraying the ordinance would place the plantation workers at a higher health risk because
the alternatives of either manual or truck-boom spraying method would be adopted; and that exposing the
workers to the same risk sought to be prevented by the ordinance would defeat its purported purpose.

We disagree with the respondents.

With or without the ban against aerial spraying, the health and safety of plantation workers are secured by
existing state policies, rules and regulations implemented by the FPA, among others, which the respondents
are lawfully bound to comply with. The respondents even manifested their strict compliance with these rules,
including those in the UN-FAO Guidelines on Good Practice for Aerial Application of Pesticides (Rome 2001).
We should note that the Rome 2001 guidelines require the pesticide applicators to observe the standards
provided therein to ensure the health and safety of plantation workers. As such, there cannot be any
imbalance between the right to health of the residents vis-a-vis the workers even if a ban will be imposed
against aerial spraying and the consequent adoption of other modes of pesticide treatment.

Furthermore, the constitutional right to health and maintaining environmental integrity are privileges that do
not only advance the interests of a group of individuals. The benefits of protecting human health and the
environment transcend geographical locations and even generations. This is the essence of Sections 15 and
16, Article II of the Constitution. In Oposa v. Factoran, Jr.107 we declared that the right to a balanced and
healthful ecology under Section 16 is an issue of transcendental importance with intergenerational
implications. It is under this milieu that the questioned ordinance should be appreciated.

Advancing the interests of the residents who are vulnerable to the alleged health risks due to their exposure
to pesticide drift justifies the motivation behind the enactment of the ordinance. The City of Davao has the
authority to enact pieces of legislation that will promote the general welfare, specifically the health of its
constituents. Such authority should not be construed, however, as a valid license for the City of Davao to
enact any ordinance it deems fit to discharge its mandate. A thin but well-defined line separates authority to
enact legislations from the method of accomplishing the same.

By distinguishing authority from method we face this question: Is a prohibition against aerial spraying a
lawfully permissible method that the local government unit of Davao City may adopt to prevent the
purported effects of aerial drift? To resolve this question, the Court must dig deeper into the intricate issues
arising from these petitions.

II
Ordinance No. 0309-07 violates the Due Process Clause

A valid ordinance must not only be enacted within the corporate powers of the local government and passed
according to the procedure prescribed by law.108 In order to declare it as a valid piece of local legislation, it
must also comply with the following substantive requirements, namely: (1) it must not contravene the
Constitution or any statute; (2) it must be fair, not oppressive; (3) it must not be partial or discriminatory;
(4) it must not prohibit but may regulate trade; (5) it must be general and consistent with public policy; and
(6) it must not be unreasonable.109 chan roble slaw

In the State's exercise of police power, the property rights of individuals may be subjected to restraints and
burdens in order to fulfill the objectives of the Government.110 A local government unit is considered to have
properly exercised its police powers only if it satisfies the following requisites, to wit: (1) the interests of the
public generally, as distinguished from those of a particular class, require the interference of the State; and
(2) the means employed are reasonably necessary for the attainment of the object sought to be
accomplished and not unduly oppressive.111 The first requirement refers to the Equal Protection Clause of
the Constitution; the second, to the Due Process Clause of the Constitution.112 chanroble slaw

Substantive due process requires that a valid ordinance must have a sufficient justification for the
Government's action.113 This means that in exercising police power the local government unit must not
arbitrarily, whimsically or despotically enact the ordinance regardless of its salutary purpose. So long as the
ordinance realistically serves a legitimate public purpose, and it employs means that are reasonably
necessary to achieve that purpose without unduly oppressing the individuals regulated, the ordinance must
survive a due process challenge.114 chan roble slaw
The respondents challenge Section 5 of Ordinance No. 0309-07 for being unreasonable and oppressive in
that it sets the effectivity of the ban at three months after publication of the ordinance. They allege that
three months will be inadequate time to shift from aerial to truck-mounted boom spraying, and effectively
deprives them of efficient means to combat the Black Sigatoka disease.

The petitioners counter that the period is justified considering the urgency of protecting the health of the
residents.

We find for the respondents.

The impossibility of carrying out a shift to another mode of pesticide application within three months can
readily be appreciated given the vast area of the affected plantations and the corresponding resources
required therefor. To recall, even the RTC recognized the impracticality of attaining a full-shift to other
modes of spraying within three months in view of the costly financial and civil works required for the
conversion.115 In the assailed decision, the CA appropriately observed: Cha nRobles Vi rtua lawlib rary

There appears to be three (3) forms of ground spraying, as distinguished from aerial spraying, which are: 1.
"Truck-mounted boom spraying;" 2. "manual or backpack spraying." and 3. "sprinkler spraying." Petitioners-
appellants claim that it was physically impossible for them to shift to "truck-mounted boom spraying" within
three (3) months before the aerial spraying ban is actually enforced. They cited the testimony of Dr. Maria
Emilia Rita G. Fabregar, Ph.D, PBGEA Chairperson, to the effect that since banana plantations in Davao City
were configured for aerial spraying, the same lack the road network to make "truck-mounted boom
spraying" possible. According to Dr. Fabregar, it was impossible to construct such road networks in a span of
three (3) months. Engr. Magno P. Porticos, Jr., confirmed that the shift demands the construction of three
hundred sixty (360) linear kilometers of road which cannot be completed in three (3) months.

In their separate testimonies, Dr. Fabregar and Engr. Porticos explained that a shift to "truck-mounted boom
spraying" requires the following steps which may be completed in three (3) years: ChanRoble sVi rtua lawlib rary

1. six (6) months for planning the reconfiguration of banana plantations to ensure effective truck-mounted
boom spraying for the adequate protections of the plantations from the Black Sigatoka fungus and other
diseases, while maximizing land use;

2. two (2) months to secure government permits for infrastructure works to be undertaken thereon;

3. clearing banana plants and dismantling or reconstructing fixed infrastructures, such as roads, drains,
cable ways, and irrigation facilities, which phase may be completed in eighteen (18) months;

4. importation and purchase of trucks mounted with boom spraying, nurse trucks and protective gears. The
placing of orders and delivery of these equipments, including the training [of] the personnel who would man
the same, would take six (6) months; and cralawlawlibra ry

5. securing the needed capitalization to finance these undertakings would take six (6) months to a year.
Ms. Maria Victoria E. Sembrano, CPA, Chairperson of the PBGEA Finance Committee, testified that her
committee and the Technical Committee and Engineering Group of PBGEA conducted a feasibility study to
determine the cost in undertaking the shift to ground spraying. Their findings fixed the estimated cost for
the purpose at Php 400 Million.

xxxx

Both appellees failed to rebut the foregoing testimonies with empirical findings to the contrary.

xxxx

Thus, in view of the infrastructural requirements as methodically explained, We are convinced that it was
physically impossible for petitioners-appellants to carry out a carefully planned configuration of vast
hectares of banana plantations and be able to actually adopt "truck-mounted boom spraying" within three
(3) months. To compel petitioners-appellants to abandon aerial spraying in favor of "manual or backpack
spraying" or "sprinkler spraying" within 3 months puts petitioners-appellants in a vicious dilemma between
protecting its investments and the health of its workers, on the one hand, and the threat of prosecution if
they refuse to comply with the imposition. We even find the 3-months transition period insufficient, not only
in acquiring and gearing-up the plantation workers of safety appurtenances, but more importantly in
reviewing safety procedures for "manual or backpack spraying" and in training such workers for the
purpose. Additionally, the engineering works for a sprinkler system in vast hectares of banana plantations
could not possibly be completed within such period, considering that safety and efficiency factors need to be
considered in its structural re-designing.

xxxx

Respondent-appellee argues that the Ordinance merely banned an agricultural practice and did not actually
prohibit the operation of banana plantations; hence, it is not oppressive. While We agree that the measure
did not impose a closure of a lawful enterprise, the proviso in Section 5, however, compels petitioners-
appellants to abandon aerial spraying without affording them enough time to convert and adopt other
spraying practices. This would preclude petitioners-appellants from being able to fertilize their plantations
with essential vitamins and minerals substances, aside from applying thereon the needed fungicides or
pesticides to control, if not eliminate the threat of, plant diseases. Such an apparent eventuality would
prejudice the operation of the plantations, and the economic repercussions thereof would just be akin to
shutting down the venture.

This Court, therefore, finds Section 5 of Ordinance No. 0309-07 an invalid provision because the compulsion
thereunder to abandon aerial spraying within an impracticable period of "three (3) months after the
effectivity of this Ordinance" is "unreasonable, oppressive and impossible to comply with."116 chanro blesvi rtua llawli bra ry

The required civil works for the conversion to truck-mounted boom spraying alone will consume considerable
time and financial resources given the topography and geographical features of the plantations.117 As such,
the conversion could not be completed within the short timeframe of three months. Requiring the
respondents and other affected individuals to comply with the consequences of the ban within the three-
month period under pain of penalty like fine, imprisonment and even cancellation of business permits would
definitely be oppressive as to constitute abuse of police power.

The respondents posit that the requirement of maintaining a buffer zone under Section 6 of the ordinance
violates due process for being confiscatory; and that the imposition unduly deprives all agricultural
landowners within Davao City of the beneficial use of their property that amounts to taking without just
compensation.

The position of the respondents is untenable.

In City of Manila v. Laguio, Jr.,118 we have thoroughly explained that taking only becomes confiscatory if it
substantially divests the owner of the beneficial use of its property, viz.:
ChanRoble sVirt ualawli bra ry

An ordinance which permanently restricts the use of property that it cannot be used for any reasonable
purpose goes beyond regulation and must be recognized as a taking of the property without just
compensation. 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.

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.

In the landmark case of Pennsylvania Coal v. Mahon, 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.

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.

What is crucial in judicial consideration of regulatory takings is that government regulation is a taking if it
leaves no reasonable economically viable use of property in a manner that interferes with reasonable
expectations for use. A regulation that permanently denies all economically beneficial or productive use of
land is, from the owner's point of view, equivalent to a "taking" unless principles of nuisance or property law
that existed when the owner acquired the land make the use prohibitable. When the owner of real property
has been called upon to sacrifice all economically beneficial uses in the name of the common good, that is,
to leave his property economically idle, he has suffered a taking.

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.

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. (bold Emphasis supplied)
The establishment of the buffer zone is required for the purpose of minimizing the effects of aerial spraying
within and near the plantations. Although Section 3(e) of the ordinance requires the planting of diversified
trees within the identified buffer zone, the requirement cannot be construed and deemed as confiscatory
requiring payment of just compensation. A landowner may only be entitled to compensation if the taking
amounts to a permanent denial of all economically beneficial or productive uses of the land. The
respondents cannot be said to be permanently and completely deprived of their landholdings because they
can still cultivate or make other productive uses of the areas to be identified as the buffer zones.

III
Ordinance No. 0309-07 violates the Equal Protection Clause

A serious challenge being posed against Ordinance No. 0309-07 rests on its supposed collision with the
Equal Protection Clause. The respondents submit that the ordinance transgresses this constitutional
guaranty on two counts, to wit: (1) by prohibiting aerial spraying per se, regardless of the substance or the
level of concentration of the chemicals to be applied; and (2) by imposing the 30-meter buffer zone in all
agricultural lands in Davao City regardless of the sizes of the landholding.

The constitutional right to equal protection requires that all persons or things similarly situated should be
treated alike, both as to rights conferred and responsibilities imposed. It requires public bodies and
institutions to treat similarly situated individuals in a similar manner. The guaranty equal protection secures
every person within the State's jurisdiction against intentional and arbitrary discrimination, whether
occasioned by the express terms of a statue or by its improper execution through the State's duly
constituted authorities. The concept of equal justice under the law demands that the State governs
impartially, and not to draw distinctions between individuals solely on differences that are irrelevant to the
legitimate governmental objective.119 cha nrob leslaw

Equal treatment neither requires universal application of laws to all persons or things without
distinction,120 nor intends to prohibit legislation by limiting the object to which it is directed or by the
territory in which it is to operate.121 The guaranty of equal protection envisions equality among equals
determined according to a valid classification.122 If the groupings are characterized by substantial
distinctions that make real differences, one class may be treated and regulated differently from
another.123 In other word, a valid classification must be: (1) based on substantial distinctions; (2) germane
to the purposes of the law; (3) not limited to existing conditions only; and (4) equally applicable to all
members of the class.124 chanro bles law

Based on these parameters, we find for the respondents.

The reasonability of a distinction and sufficiency of the justification given by the Government for its conduct
is gauged by using the means-end test.125 This test requires analysis of: (1) the interests of the public that
generally require its exercise, as distinguished from those of a particular class; and (2) the means employed
that are reasonably necessary for the accomplishment of the purpose and are not unduly oppressive upon
individuals.126 To determine the propriety of the classification, courts resort to three levels of scrutiny, viz:
the rational scrutiny, intermediate scrutiny and strict scrutiny.

The rational basis scrutiny (also known as the rational relation test or rational basis test) demands that the
classification reasonably relate to the legislative purpose.127 The rational basis test often applies in cases
involving economics or social welfare,128 or to any other case not involving a suspect class.129 chanro bleslaw

When the classification puts a quasi-suspect class at a disadvantage, it will be treated under intermediate or
heightened review. Classifications based on gender or illegitimacy receives intermediate scrutiny.130 To
survive intermediate scrutiny, the law must not only further an important governmental interest and be
substantially related to that interest, but the justification for the classification must be genuine and must not
depend on broad generalizations.131 chan roble slaw

The strict scrutiny review applies when a legislative classification impermissibly interferes with the exercise
of a fundamental right or operates to the peculiar class disadvantage of a suspect class. The Government
carries the burden to prove that the classification is necessary to achieve a compelling state interest, and
that it is the least restrictive means to protect such interest.132 chan roble slaw

The petitioners advocate the rational basis test. In particular, the petitioning residents of Davao City argue
that the CA erroneously applied the strict scrutiny approach when it declared that the ordinance violated the
Equal Protection Clause because the ban included all substances including water and vitamins. The
respondents agree with the CA, however, and add that the ordinance does not rest on a valid distinction
because it has lacked scientific basis and has ignored the classifications of pesticides observed by the FPA.

We partly agree with both parties.

In our view, the petitioners correctly argue that the rational basis approach appropriately applies herein.
Under the rational basis test, we shall: (1) discern the reasonable relationship between the means and the
purpose of the ordinance; and (2) examine whether the means or the prohibition against aerial spraying is
based on a substantial or reasonable distinction. A reasonable classification includes all persons or things
similarly situated with respect to the purpose of the law.133 chan roble slaw

Applying the test, the established classification under Ordinance No. 0309-07 is to be viewed in relation to
the group of individuals similarly situated with respect to the avowed purpose. This gives rise to two classes,
namely: (1) the classification under Ordinance No. 0309-07 (legislative classification); and (2) the
classification based on purpose (elimination of the mischief). The legislative classification found in Section 4
of the ordinance refers to "all agricultural entities" within Davao City. Meanwhile, the classification based on
the purpose of the ordinance cannot be easily discerned because the ordinance does not make any express
or implied reference to it. We have to search the voluminous records of this case to divine
the animus behind the action of the Sangguniang Panglungsod in prohibiting aerial spraying as an
agricultural activity. The effort has led uS to the following proposed resolution of the Sangguniang
Panglungsod,134viz.:ChanRobles Vi rtua lawlib rary

RESOLUTION NO. ____

Series of 2007

A RESOLUTION TO ENACT AN ORDINANCE BANNING AERIAL SPRAYING AS AN AGRICULTURAL PRACTICE IN

ALL AGRICULTURAL ENTITIES IN DAVAO CITY

WHEREAS, the City of Davao, with fertile lands and ideal climactic condition, hosts various large farms
planted with different crops;

WHEREAS, these farms, lay adjacent to other agricultural businesses and that residential areas abuts these
farm boundaries;

WHEREAS, aerial spraying as a mode of applying chemical substances such as fungicides and pesticides is
being used by investors/companies over large agricultural plantations in Davao City;

WHEREAS, the Davao City watersheds and ground water sources, located within and adjacent to Mount Apo
may be affected by the aerial spraying of chemical substances on the agricultural farms and plantations
therein;

WHEREAS, the effects of aerial spraying are found to be detrimental to the health of the residents of Davao
City most especially the inhabitants nearby agricultural plantations practicing aerials spraying;

WHEREAS, the unstable wind direction during the conduct of aerial spray application of these chemical
substances pose health hazards to people, animals, other crops and ground water sources;

WHEREAS, in order to achieve sustainable development, politics must be based on the Precautionary
Principle. Environment measures must anticipate, prevent, and attack the causes of environmental
degradation. Where there are threats of serious, irreversible damage, lack of scientific certainty should not
be used as a reason for postponing measures to prevent environmental degradation;

WHEREAS, it is the policy of the City of Davao to ensure the safety of its inhabitants from all forms of
hazards, especially if such hazards come from development activities that are supposed to be beneficial to
everybody;

WHEREAS, pesticides are by its nature poisonous, it is all the more dangerous when dispensed aerially
through aircraft because of unstable wind conditions which in turn makes aerial spray drifting to unintended
targets a commonplace.

WHEREAS, aerial spraying of pesticides is undeniably a nuisance.

WHEREAS, looking at the plight of the complainants and other stakeholders opposed to aerial spraying, the
issue of aerial spraying of pesticides is in all fours a nuisance. Given the vastness of the reach of aerial
spraying, the said form of dispensation falls into the category of a public nuisance. Public nuisance is defined
by the New Civil Code as one which affects a community or neighborhood or any considerable number of
persons, although the extent of the annoyance, danger or damage upon individuals may be unequal.

WHEREAS, the General Welfare Clause of the Local Government Code empowers Local Government Units to
enact ordinances that provide for the health and safety, promote the comfort and convenience of the City
and the inhabitants thereof.

NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that for the health, safety and
peace of mind of all the inhabitants of Davao City, let an ordinance be enacted banning aerial spraying as an
agricultural practice in all agricultural entities in Davao City.

xxxx
The proposed resolution identified aerial spraying of pesticides as a nuisance because of the unstable wind
direction during the aerial application, which (1) could potentially contaminate the Davao City watersheds
and ground water sources; (2) was detrimental to the health of Davao City residents, most especially those
living in the. nearby plantations; and (3) posed a hazard to animals and other crops. Plainly, the mischief
that the prohibition sought to address was the fungicide drift resulting from the aerial application; hence,
the classification based on the intent of the proposed ordinance covered all agricultural entities conducting
aerial spraying of fungicides that caused drift.

The assailed ordinance thus becomes riddled with several distinction issues.

A brief discussion on the occurrence of the drift that the ordinance seeks to address is necessary.

Pesticide treatment is based on the use of different methods of application and equipment,135 the choice of
which methods depend largely on the objective of distributing the correct dose to a defined target with the
minimum of wastage due to "drift."136 The term "drift" refers to the movement of airborne spray droplets,
vapors, or dust particles away from the target area during pesticide application.137 Inevitably, any method of
application causes drift, which may either be primary or secondary. As fittingly described by scholars:138
Primary drift is the off-site movement of spray droplets at, or very close to, the time of application. For
example, a field application using a boom in a gusty wind situation could easily lead to a primary
drift. Primary spray drift is not product specific, and the active ingredients do not differ in their potential to
drift. However, the type of formulation, surfactant, or other adjuvant may affect spray drift potential.

Secondary drift is associated with pesticide vapor. Pesticide vapor drift is the movement of the gas that
forms when an active ingredient evaporates from plants, soil, or other surfaces. And while vapor drift is an
important issue, it only pertains to certain volatile products. Vapor drift and other forms
of secondary drift are product specific. Water-based sprays will volatize more quickly than oil-based sprays.
However, oil-based sprays can drift farther, especially above 95°F, because they are lighter.
Understandably, aerial drift occurs using any method of application, be it through airplanes, ground
sprayers, airblast sprayers or irrigation systems.139 Several factors contribute to the occurrence of drift
depending on the method of application, viz.: ChanRobles Vi rtua lawlib rary

AERIAL AIRBLAST GROUND CHEMIGATION

Crop Application
Droplet size Droplet size
canopy height
Boom
Application height Droplet size Wind speed
height
Wind speed Wind speed Wind speed
Swath adjustment
Canopy
Boom length
Tank mix physical
properties
Source: F.M. Fishel and J.A. Ferrell, "Managing Pesticide Drift," available at http://edis.ifas.edu/pi232. citing
Pesticide Notes, MSU Extension.

The four most common pesticide treatment methods adopted in Davao City are aerial, truck-mounted boom,
truck-mounted mechanical, and manual spraying.140 However, Ordinance No. 0309-07 imposes the
prohibition only against aerial spraying.

Davao City justifies the prohibition against aerial spraying by insisting that the occurrence of drift causes
inconvenience and harm to the residents and degrades the environment. Given this justification, does the
ordinance satisfy the requirement that the classification must rest on substantial distinction?

We answer in the negative.

The occurrence of pesticide drift is not limited to aerial spraying but results from the conduct of any mode of
pesticide application. Even manual spraying or truck-mounted boom spraying produces drift that may bring
about the same inconvenience, discomfort and alleged health risks to the community and to the
environment.141 A ban against aerial spraying does not weed out the harm that the ordinance seeks to
achieve.142 In the process, the ordinance suffers from being "underinclusive" because the classification does
not include all individuals tainted with the same mischief that the law seeks to eliminate.143 A classification
that is drastically underinclusive with respect to the purpose or end appears as an irrational means to the
legislative end because it poorly serves the intended purpose of the law.144 chanro bles law

The claim that aerial spraying produces more aerial drift cannot likewise be sustained in view of the
petitioners' failure to substantiate the same. The respondents have refuted this claim, and have maintained
that on the contrary, manual spraying produces more drift than aerial treatment145 As such, the decision of
prohibiting only aerial spraying is tainted with arbitrariness.

Aside from its being underinclusive, the assailed ordinance also tends to be "overinclusive" because its
.impending implementation will affect groups that have no relation to the accomplishment of the legislative
purpose. Its implementation will unnecessarily impose a burden on a wider range of individuals than those
included in the intended class based on the purpose of the law.146 chan robles law

It can be noted that the imposition of the ban is too broad because the ordinance applies irrespective of the
substance to be aerially applied and irrespective of the agricultural activity to be conducted. The
respondents admit that they aerially treat their plantations not only with pesticides but also vitamins and
other substances. The imposition of the ban against aerial spraying of substances other than fungicides and
regardless of the agricultural activity being performed becomes unreasonable inasmuch as it patently bears
no relation to the purported inconvenience, discomfort, health risk and environmental danger which the
ordinance, seeks to address. The burden now will become more onerous to various entities including the
respondents and even others with no connection whatsoever to the intended purpose of the ordinance.

In this respect, the CA correctly observed:ChanRob les Vi rtualawl ib rary

Ordinance No. 0309-07 defines "aerial spraying" as the "application of substances through the use of aircraft
of any form which dispenses the substances in the air." Inevitably, the ban imposed therein encompasses
aerial application of practically all substances, not only pesticides or fungicides but including water and all
forms of chemicals, regardless of its elements, composition, or degree of safety.

Going along with respondent-appellee's ratiocination that the prohibition in the Ordinance refers to aerial
spraying as a method of spraying pesticides or fungicides, there appears to be a need to single out
pesticides or fungicides in imposing such a ban because there is a striking distinction between such
chemicals and other substances (including water), particularly with respect to its safety implications to the
public welfare and ecology.

xxxx

We are, therefore, convinced that the total ban on aerial spraying runs afoul with the equal protection clause
because it does not classify which substances are prohibited from being applied aerially even as reasonable
distinctions should be made in terms of the hazards, safety or beneficial effects of liquid substances to the
public health, livelihood and the environment.147 chan roble svirtuallaw lib rary

We clarify that the CA did not thereby apply the strict scrutiny approach but only evaluated the classification
established by the ordinance in relation to the purpose. This is the essence of the rational basis approach.

The petitioners should be made aware that the rational basis scrutiny is not based on a simple means-
purpose correlation; nor does the rational basis scrutiny automatically result in a presumption of validity of
the ordinance or deference to the wisdom of the local legislature.148 To reiterate, aside from ascertaining
that the means and purpose of the ordinance are reasonably related, the classification should be based on a
substantial distinction.

However, we do not subscribe to the respondents' position that there must be a distinction based on the
level of concentration or the classification imposed by the FPA on pesticides. This strenuous requirement
cannot be expected from a local government unit that should only be concerned with general policies in local
administration and should not be restricted by technical concerns that are best left to agencies vested with
the appropriate special competencies. The disregard of the pesticide classification is not an equal protection
issue but is more relevant in another aspect of delegated police power that we consider to be more
appropriate in a later discussion.

The overinclusiveness of Ordinance No. 0309-07 may also be traced to its Section 6 by virtue of its
requirement for the maintenance of the 30- meter buffer zone. This requirement applies regardless of the
area of the agricultural landholding, geographical location, topography, crops grown and other distinguishing
characteristics that ideally should bear a reasonable relation to the evil sought to be avoided. As earlier
discussed, only large banana plantations could rely on aerial technology because of the financial capital
required therefor.

The establishment and maintenance of the buffer zone will become more burdensome to the small
agricultural landholders because: (1) they have to reserve the 30-meter belt surrounding their property; (2)
that will have to be identified through GPS; (3) the metes and bounds of the buffer zone will have to be
plotted in a survey plan for submission to the local government unit; and (4) will be limited as to the crops
that may be cultivated therein based on the mandate that the zone shall be devoted to "diversified trees"
taller than what are being grown therein.149 The arbitrariness of Section 6 all the more becomes evident
when the land is presently devoted to the cultivation of root crops and vegetables, and trees or plants
slightly taller than the root crops and vegetables are then to be planted. It is seriously to be doubted
whether such circumstance will prevent the occurrence of the drift to the nearby residential areas.

Section 6 also subjects to the 30-meter buffer zone requirement agricultural entities engaging in organic
farming, and' do not contribute to the occurrence of pesticide drift. The classification indisputably becomes
arbitrary and whimsical.

A substantially overinclusive or underinclusive classification tends to undercut the governmental claim that
the classification serves legitimate political ends.150 Where overinclusiveness is the problem, the vice is that
the law has a greater discriminatory or burdensome effect than necessary.151 In this light, we strike down
Section 5 and Section 6 of Ordinance No. 0309-07 for carrying an invidious classification, and for thereby
violating the Equal Protection Clause.

The discriminatory nature of the ordinance can be seen from its policy as stated in its Section 2, to wit: ChanRoblesVi rt ualawlib ra ry

Section 2. POLICY OF THE CITY. It shall be the policy of the City of Davao to eliminate the method of aerial
spraying as an agricultural practice in all agricultural activities by all entities within Davao City.
Evidently, the ordinance discriminates against large farmholdings that are the only ideal venues for the
investment of machineries and equipment capable of aerial spraying. It effectively denies the affected
individuals the technology aimed at efficient and cost-effective operations and cultivation not only of banana
but of other crops as well. The prohibition against aerial spraying will seriously hamper the operations of the
banana plantations that depend on aerial technology to arrest the spread of the Black Sigatoka disease and
other menaces that threaten their production and harvest. As earlier shown, the effect of the ban will not be
limited to Davao City in view of the significant contribution of banana export trading to the country's
economy.

The discriminatory character of the ordinance makes it oppressive and unreasonable in light of the existence
and availability of more permissible and practical alternatives that will not overburden the respondents and
those dependent on their operations as well as those who stand to be affected by the ordinance. In the view
of Regional Director Roger C. Chio of DA Regional Field Unit XI, the alleged harm caused by aerial spraying
may be addressed by following the GAP that the DA has been promoting among plantation operators. He
explained his view thusly: Cha nRobles Vi rtua lawli brary

The allegation that aerial spraying is hazardous to animal and human being remains an allegation and
assumptions until otherwise scientifically proven by concerned authorities and agencies. This issue can be
addressed by following Good Agricultural Practices, which DA is promoting among fruit and vegetable
growers/plantations. Any method of agri-chemical application whether aerial or non-aerial if not properly
done in accordance with established procedures and code of good agricultural practices and if the chemical
applicators and or handlers lack of necessary competency, certainly it could be hazardous. For the assurance
that commercial applicators/aerial applicators possessed the competency and responsibility of handling agri-
chemical, such applicators are required under Article III, Paragraph 2 of FPA Rules and Regulation No. 1 to
secure license from FPA.

Furthermore users and applicators of agri-chemicals are also guided by Section 6 Paragraph 2 and 3 under
column of Pesticides and Other agricultural Chemicals of PD 11445 which stated: "FPA shall establish and
enforce tolerance levels and good agricultural practices in raw agricultural commodities; to restrict or ban
the use of any chemical or the formulation of certain pesticides in specific areas or during certain period
upon evidence that the pesticide is eminent [sic] hazards has caused, or is causing widespread serious
damage to crops, fish, livestock or to public health and environment."

Besides the aforecited policy, rules and regulation enforced by DA, there are other laws and regulations
protecting and preserving the environment. If the implementation and monitoring of all these laws and
regulation are closely coordinated with concerned LGUs, Gas and NGAs and other private sectors, perhaps
we can maintain a sound and health environment x x x.152 chan roble svirtuallaw lib rary

Indeed, based on the Summary Report on the Assessment and Factfinding Activities on the Issue of Aerial
Spraying in Banana Plantations,153 submitted by the fact-finding team organized by Davao City, only three
out of the 13 barangays consulted by the fact-finding team opposed the conduct of aerial spraying; and of
the three barangays, aerial spraying was conducted only in Barangay Subasta. In fact, the fact-finding team
found that the residents in those barangays were generally in favor of the operations of the banana
plantations, and did not oppose the conduct of aerial spraying.

IV
The Precautionary Principle still requires scientific basis

The petitioners finally plead that the Court should look at the merits of the ordinance based on the
precautionary principle. They argue that under the precautionary principle, the City of Davao is justified in
enacting Ordinance No. 0309-07 in order to prevent harm to the environment and human health despite the
lack of scientific certainty.
The petitioners' plea and argument cannot be sustained.

The principle of precaution originated as a social planning principle in Germany. In the 1980s, the Federal
Republic of Germany used the Vorsogeprinzip ("foresight principle") to justify the implementation of
vigorous policies to tackle acid rain, global warming and pollution of the North Sea.154 It has since emerged
from a need to protect humans and the environment from increasingly unpredictable, uncertain, and
unquantifiable but possibly catastrophic risks such as those associated with Genetically Modified Organisms
and climate change,155 among others. The oft-cited Principle 15 of the 1992 Rio Declaration on Environment
and Development (1992 Rio Agenda), first embodied this principle, as follows: ChanRobles Vi rt ualawlib ra ry

Principle 15

In order to protect the environment, the precautionary approach shall be widely applied by States according
to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty
shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.
In this jurisdiction, the principle of precaution appearing in the Rules of Procedure for Environmental
Cases (A.M. No. 09-6-8-SC) involves matters of evidence in cases where there is lack of full scientific
certainty in establishing a causal link between human activity and environmental effect.156 In such an event,
the courts may construe a set of facts as warranting either judicial action or inaction with the goal of
preserving and protecting the environment.157 chan rob leslaw

It is notable, therefore, that the precautionary principle shall only be relevant if there is concurrence of three
elements, namely: uncertainty, threat of environmental damage and serious or irreversible harm. In
situations where the threat is relatively certain, or that the causal link between an action and environmental
damage can be established, or the probability of occurrence can be calculated, only preventive, not
precautionary measures, may be taken. Neither will the precautionary principle apply if there is no indication
of a threat of environmental harm; or if the threatened harm is trivial or easily reversible.158 chan rob leslaw

We cannot see the presence of all the elements. To begin with, there has been no scientific study. Although
the precautionary principle allows lack of full scientific certainty in establishing a connection between the
serious or irreversible harm and the human activity, its application is still premised on empirical studies.
Scientific analysis is still a necessary basis for effective policy choices under the precautionary principle.159 c hanrobles law

Precaution is a risk management principle invoked after scientific inquiry takes place. This scientific stage is
often considered synonympus with risk assessment.160 As such, resort to the principle shall not be based on
anxiety or emotion, but from a rational decision rule, based in ethics.161 As much as possible, a complete
and objective scientific evaluation of the risk to the environment or health should be conducted and made
available to decision-makers for them to choose the most appropriate course of action.162Furthermore, the
positive and negative effects of an activity is also important in the application of the principle. The potential
harm resulting from certain activities should always be judged in view of the potential benefits they offer,
while the positive and negative effects of potential precautionary measures should be considered.163 chan roble slaw

The only study conducted to validate the effects of aerial spraying appears to be the Summary Report on the
Assessment and Fact-Finding Activities on the Issue of Aerial Spraying in Banana Plantations.164 Yet, the
fact-finding team that generated the report was not a scientific study that could justify the resort to the
.precautionary principle. In fact, the Sangguniang Bayan ignored the findings and conclusions of the fact-
finding team that recommended only a regulation, not a ban, against aerial spraying. The recommendation
was in line with the advocacy of judicious handling and application of chemical pesticides by the DOH-Center
for Health Development in the Davao Region in view of the scarcity of scientific studies to support the ban
against aerial spraying.165chanro bleslaw

We should not apply the precautionary approach in sustaining the ban against aerial spraying if little or
nothing is known of the exact or potential dangers that aerial spraying may bring to the health of the
residents within and near the plantations and to the integrity and balance of the environment. It is
dangerous to quickly presume that the effects of aerial spraying would be adverse even in the absence of
evidence. Accordingly, for lack of scientific data supporting a ban on aerial spraying, Ordinance No. 0309-07
should be struck down for being unreasonable.

V
Ordinance No. 0309-07 is an ultra vires act

The Court further holds that in addition to its unconstitutionality for carrying an unwarranted classification
that contravenes the Equal Protection Clause, Ordinance No. 0309-07 suffers from another legal infirmity.

The petitioners represent that Ordinance No. 0309-07 is a valid exercise of legislative and police powers by
the Sangguniang Bayan of Davao City pursuant to Section 458 in relation to Section 16 both of the Local
Government Code. The respondents counter that Davao City thereby disregarded the regulations
implemented by the Fertilizer and Pesticide Authority (FPA), including its identification and classification of
safe pesticides and other agricultural chemicals.

We uphold the respondents.

An ordinance enjoys the presumption of validity on the basis that: ChanRoblesVi rtua lawlib rary

The action of the elected representatives of the people cannot be lightly set aside. The councilors must, in
the very nature of things, be familiar with the necessities of their particular municipality and with all the
facts and circumstances which surround the subject, and necessities of their particular municipality and with
all the facts and circumstances which surround the subject, and necessitate action. The local legislative
body, by enacting the ordinance, has in effect given notice that the regulations are essential to the well-
being of the people.166chan rob lesvi rtua llawlib ra ry

Section 5(c) of the Local Government Code accords a liberal interpretation to its general welfare provisions.
The policy of liberal construction is consistent with the spirit of local autonomy that endows local
government units with sufficient power and discretion to accelerate their economic development and uplift
the quality of life for their constituents.

Verily, the Court has championed the cause of public welfare on several occasions. In so doing, it has
accorded liberality to the general welfare provisions of the Local Government Code by upholding the validity
of local ordinances enacted for the common good. For instance, in Social Justice Society (SJS) v. Atienza,
Jr.,167 the Court validated a zoning ordinance that reclassified areas covered by a large oil depot from
industrial to commercial in order to ensure the life, health and property of the inhabitants residing within the
periphery of the oil depot. Another instance is Gancayco v. City Government of Quezon City,168 where the
Court declared as valid a city ordinance ordering the construction of arcades that would ensure the health
and safety of the city and its inhabitants, improvement of their morals, peace, good order, comfort and
convenience, as well as the promotion of their prosperity. Even in its early years, the Court already
extended liberality towards the exercise by the local government units; of their legislative powers in order to
promote the general welfare of their communities. This was exemplified in United States v.
Salaveria,169 wherein gambling was characterized as "an act beyond the pale of good morals" that the local
legislative council could validly suppress to protect the well-being of its constituents; and in United States v.
Abendan,170 whereby the right of the then Municipality of Cebu to enact an ordinance relating to sanitation
and public health was upheld.

The power to legislate under the General Welfare Clause is not meant to be an invincible authority. In
fact, Salaveria and Abendan emphasized the reasonableness and consistency of the exercise by the local
government units with the laws or policies of the State.171 More importantly, because the police power of the
local government units flows from the express delegation of the power by Congress, its exercise is to be
construed in strictissimi juris. Any doubt or ambiguity arising out of the terms used in granting the power
should be construed against the local legislative units.172 Judicial scrutiny comes into play whenever the
exercise of police power affects life, liberty or property.173 The presumption of validity and the policy of
liberality are not restraints on the power of judicial review in the face of questions about whether an
ordinance conforms with the Constitution, the laws or public policy, or if it is unreasonable, oppressive,
partial, discriminating or in derogation of a common right. The ordinance must pass the test of
constitutionality and the test of consistency with the prevailing laws.174 cha nrob leslaw

Although the Local Government Code vests the municipal corporations with sufficient power to govern
themselves and manage their affairs and activities, they definitely have no right to enact ordinances
dissonant with the State's laws and policy. The Local Government Code has been fashioned to delineate the
specific parameters and limitations to guide each local government unit in exercising its delegated powers
with the view of making the local government unit a fully functioning subdivision of the State within the
constitutional and statutory restraints.175 The Local Government Code is not intended to vest in the local
government unit the blanket authority to legislate upon any subject that it finds proper to legislate upon in
the guise of serving the common good.

The function of pesticides control, regulation and development is within the jurisdiction of the FPA under
Presidential Decree No. 1144.176 The FPA was established in recognition of the need for a technically
oriented government entity177 that will protect the public from the risks inherent in the use of
pesticides.178 To perform its mandate, it was given under Section 6 of Presidential Decree No. 1144 the
following powers and functions with respect to pesticides and other agricultural chemicals, viz.: ChanRobles Vi rtua lawlib rary

Section 6. Powers and functions. The FPA shall have jurisdiction, on over all existing handlers of pesticides,
fertilizers and other agricultural chemical inputs. The FPA shall have the following powers and functions:

chanRoble svirtual Lawlib ra ry xxxx

III. Pesticides and Other Agricultural Chemicals

1. To determine specific uses or manners of use for each pesticide or pesticide formulation;

2. To establish and enforce levels and good agricultural practices for use of pesticides in raw agricultural
commodities;

3. To restrict or ban the use of any pesticide or the formulation of certain pesticides in specific areas or
during certain periods upon evidence that the pesticide is an imminent hazard, has caused, or is causing
widespread serious damage to crops, fish or livestock, or to public health and environment;

xxxx

5. To inspect the establishment and premises of pesticide handlers to insure that industrial health and safety
rules and anti-pollution regulations are followed;

6. To enter and inspect farmers' fields to ensure that only the recommended pesticides are used in specific
crops in accordance with good agricultural practice;

x x x x (Emphasis supplied).
Evidently, the FPA was responsible for ensuring the compatibility between the usage and the application of
pesticides in agricultural activities and the demands for human health and environmental safety. This
responsibility includes not only the identification of safe and unsafe pesticides, but also the prescription of
the safe modes of application in keeping with the standard of good agricultural practices.

On the other hand, the enumerated devolved functions to the local government units do not include the
regulation and control of pesticides and other agricultural chemicals.179 The non-inclusion should preclude
the Sangguniang Bayan of Davao City from enacting Ordinance No. 0309-07, for otherwise it would be
arrogating unto itself the authority to prohibit the aerial application of pesticides in derogation of the
authority expressly vested in the FPA by Presidential Decree No. 1144.

In enacting Ordinance No. 0309-07 without the inherent and explicit authority to do so, the City of Davao
performed an ultra vires act. As a local government unit, the City of Davao could act only as an agent of
Congress, and its every act should always conform to and reflect the will of its principal.180 As clarified in
Batangas CATV, Inc. v. Court of Appeals:181
[W]here the state legislature has made provision for the regulation of conduct, it has manifested its
intention that the subject matter shall be fully covered by the statute, and that a municipality, under its
general powers, cannot regulate the same conduct. In Keller vs. State, it was held that: "Where there is no
express power in the charter of a municipality authorizing it to adopt ordinances regulating certain matters
which are specifically covered by a general statute, a municipal ordinance, insofar as it attempts to regulate
the subject which is completely covered by a general statute of the legislature, may be rendered invalid. x x
x Where the subject is of statewide concern, and the legislature has appropriated the field and declared the
rule, its declaration is binding throughout the State." A reason advanced for this view is that such
ordinances are in excess of the powers granted to the municipal corporation.

Since E.O. No. 205, a general law, mandates that the regulation of CATV operations shall be exercised by
the NTC, an LGU cannot enact an ordinance or approve a resolution in violation of the said law.

It is a fundamental principle that municipal ordinances are inferior in status and subordinate to the laws of
the state. An ordinance in conflict with a state law of general character and statewide application is
universally held to be invalid. The principle is frequently expressed in the declaration that municipal
authorities, under a general grant of power, cannot adopt ordinances which infringe the spirit of a state law
or repugnant to the general policy of the state. In every power to pass ordinances given to a municipality,
there is an implied restriction that the ordinances shall be consistent with the general law.182(Emphasis ours)
For sure, every local government unit only derives its legislative authority from Congress. In no instance can
the local government unit rise above its source of authority. As such, its ordinance cannot run against or
contravene existing laws, precisely because its authority is only by virtue of the valid delegation from
Congress. As emphasized in City of Manila v. Laguio, Jr.:183
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.

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.184
c hanroblesv irt uallawl ibra ry

Moreover, Ordinance No. 0309-07 proposes to prohibit an activity already covered by the jurisdiction of the
FPA, which has issued its own regulations under its Memorandum Circular No. 02, Series of 2009,
entitled Good Agricultural Practices for Aerial Spraying of Fungicide in Banana Plantations.185 While
Ordinance No. 0309-07 prohibits aerial spraying in banana plantations within the City of Davao,
Memorandum Circular No. 02 seeks to regulate the conduct of aerial spraying in banana
plantations186pursuant to Section 6, Presidential Decree No. 1144, and in conformity with the standard of
Good Agricultural Practices (GAP). Memorandum Circular No. 02 covers safety procedures,187 handling188 and
post-application,189 including the qualifications of applicators,190 storing of fungicides,191 safety and
equipment of plantation personnel,192 all of which are incompatible with the prohibition against aerial
spraying under Ordinance No. 0309-07.

Although Memorandum Circular No. 02 and Ordinance No. 0309-07 both require the maintenance of the
buffer zone, they differ as to their treatment and maintenance of the buffer zone. Under Memorandum
Circular No. 02, a 50-meter "no-spray boundary" buffer zone should be observed by the spray pilots,193and
the observance of the zone should be recorded in the Aerial Spray Final Report (ASFR) as a post-application
safety measure.194 On the other hand, Ordinance No. 0309-07 requires the maintenance of the 30-meter
buffer zone to be planted with diversified trees.195 c han robles law

Devoid of the specific delegation to its local legislative body, the City of Davao exceeded its delegated
authority to enact Ordinance No. 0309-07. Hence, Ordinance No. 0309-07 must be struck down also for
being an ultra vires act on the part of the Sangguniang Bayan of Davao City.

We must emphasize that our ruling herein does not seek to deprive the LGUs their right to regulate activities
within their jurisdiction. They are empowered under Section 16 of the Local Government Codeto promote
the general welfare of the people through regulatory, not prohibitive, ordinances that conform with the
policy directions of the National Government. Ordinance No. 0309-07 failed to pass this test as it
contravenes the specific regulatory policy on aerial spraying in banana plantations on a nationwide scale of
the National Government, through the FPA.

Finally, the unconstitutionality of the ban renders nugatory Ordinance No. 0309-07 in its entirety.
Consequently, any discussion on the lack of the separability clause becomes entirely irrelevant.

WHEREFORE, the Court DENIES the consolidated petitions for review on certiorari for their lack of
merit; AFFIRMS the decision promulgated on January 9, 2009 in C.A.-G.R. CV No. 01389-MIN. declaring
Ordinance No. 0309-07 UNCONSTITUTIONAL; PERMANENTLY ENJOINS respondent City of Davao, and
all persons or entities acting in its behalf or under its authority, from enforcing and implementing Ordinance
No. 0309-07; and ORDERS the petitioners to pay the costs of suit.

SO ORDERED. chanRoblesvirt ual Lawlib rary

o Public use

Republic of the Philippines

SUPREME COURT
Manila
 EN BANC

G.R. Nos. L-60549, 60553 to 60555 October 26, 1983

HEIRS OF JUANCHO ARDONA (represented by Gloria Ardona) ANASTACIO C. CABILAO,

HEIRS OF CIPRIANO CABILAO (represented by Jose Cabilao) MODESTA CABILAO, HEIRS
OF ROMAN CABUENAS (represented by Alberto Cabuenas), AGRIPINO GABISAY and
PRUDENCIA MABINI, ANTONIO LABRADOR and LUCIA GABISAY, GERONIMO MABINI and
MARCELINA SABAL, INOCENCIO MABINI and ARSENIA REYES, PATRICIO MABINI and
GREGORIA BORRES, ANICETO GADAPAN and MAXIMA GABISAY, BARTOLOME MAGNO
and CALINECA E. MAGNO, ALBERTO CABUENAS, NARCISO CABUENAS and VICTORIA
CABUENAS, EUTIQUIOSENO, HEIRS OF ESPERIDION CABUENAS (represented by Alberto
Cabuenas), MAXIMINA NAVARO, SULPICIO NAVARO, EDUARDO NAVARO, MARTINIANO
ROMA (in representation of Arcadio Mabini, deceased), MARTIN SENO, FAUSTO ARDA,
MAXIMA CABILAO, ESTRELLA SENO, EDUVEGIS S. CABILAO, ROSARIO CABILAO, MINORS
DANILO, SOCORRO, JOSEFINA and MARITES, all surnamed Cabilao, JUAN BORRES
(represented by Francisca Borres), RAMON JABADAN, JESUS ALIPAR and LEONILA
KABAHAR, ANTONIO LABRADOR, HEIRS OF NICASIO GABISAY (represented by Arsenio
Gabisay), PACIFICO LABRADOR, DEMETRIO LABRADOR and FRUCTOSA TABURA,
VENANCIO DEL MAR, MARINO DEL MAR, HEIRS OF TEODORA ARCILLO (represented by
Brigida Arcillo) DIONISIA GABUNADA, HEIRS OF BUENAVENTURA FRANCISCO (represented
by Felicidad Sadaya Francisco), HEIRS OF VICTORIA C. CABUENAS (represented by Alberto
Cabuenas) HEIRS OF CIPRIANO GABUNADA (represented by Claudio Gabunada), petitioners,
vs.
HON. JUAN Y. REYES, Executive Judge and Presiding Judge of Branch I, COURT OF FIRST
instance OF CEBU, and the PHILIPPINE TOURISM AUTHORITY, respondents.

George M. Baladjay, Mario G. dela Victoria, Olegario Sarmiento, Jr., and Democrito Barcenas for
petitioners.

The Solicitor General for respondent Judge.

F.A. Sugue & Elino B. Lingas for Philippine Tourism Authoirity

GUTIERREZ, JR., J.:

This is a petition for certiorari with preliminary injunction challenging the constitutionality of
Presidential Decree No. 564, the Revised Charter of the Philippine Tourism Authority, and
Proclamation No. 2052 declaring the barangays of Sibugay, Malubog, Babag and Sirao including the
proposed Lusaran Dam in the City of Cebu and in the municipalities of Argao and Dalaguete in the
province of Cebu as tourist zones. The petitioners ask that we restrain respondent Court of First
Instance of Cebu and the Philippine Tourism Authority (PTA) from enforcing and implementing the
writs of possession issued in four (4) expropriation cases filed by PTA against the petitioners: Civil
Cases Nos. R-19562, R-19684, R-20701, and R-21608 of the Court of First Instance of Cebu
(Branch 1).

The Philippine Tourism Authority filed four (4) Complaints with the Court of First Instance of Cebu
City for the expropriation of some 282 hectares of rolling land situated in barangays Malubog and
Babag, Cebu City, under PTA's express authority "to acquire by purchase, by negotiation or by
condemnation proceedings any private land within and without the tourist zones" for the purposes
indicated in Section 5, paragraph B(2), of its Revised Charter (PD 564), more specifically, for the
development into integrated resort complexes of selected and well-defined geographic areas with
potential tourism value. As uniformly alleged in the complaints, the purposes of the expropriation are:

xxx xxx xxx

Plaintiff, in line with the policy of the government to promote tourism and
development of tourism projects will construct in Barangays Malubog, Busay and
Babag, all of Cebu City, a sports complex (basketball courts, tennis courts, volleyball
courts, track and field, baseball and softball diamonds, and swimming pools),
clubhouse, gold course, children's playground and a nature area for picnics and
horseback riding for the use of the public.

The development plan, covering approximately 1,000 hectares, includes the

establishment of an electric power grid in the area by the National Power
Corporation, thus assuring the supply of electricity therein for the benefit of the whole
community. Deep wells will also be constructed to generate water supply within the
area. Likewise, a complex sewerage and drainage system will be devised and
constructed to protect the tourists and nearby residents from the dangers of pollution.

Complimentary and support facilities for the project will be constructed, including
public rest houses, lockers, dressing rooms, coffee shops, shopping malls, etc. Said
facilities will create and offer employment opportunities to residents of the community
and further generate income for the whole of Cebu City.

Plaintiff needs the property above described which is directly covered by the
proposed golf court.

xxx xxx xxx

The defendants in Civil Cases Nos. R-20701 and R-21608 filed their respective Opposition with
Motion to Dismiss and/or Reconsideration. The defendants in Civil Case No. R-19562 filed a
manifestation adopting the answer of defendants in Civil Case No. R-19864. The defendants, now
petitioners, had a common allegation in that the taking is allegedly not impressed with public use
under the Constitution.

In their motions to dismiss, the petitioners alleged, in addition to the issue of public use, that there is
no specific constitutional provision authorizing the taking of private property for tourism purposes;
that assuming that PTA has such power, the intended use cannot be paramount to the determination
of the land as a land reform area; that limiting the amount of compensation by Legislative fiat is
constitutionally repugnant; and that since the land is under the land reform program, it is the Court of
Agrarian Relations and not the Court of First Instance that has jurisdiction over the expropriation
cases.

The Philippine Tourism Authority having deposited with The Philippine National Bank, Cebu City
Branch, an amount equivalent to 10% of the value of the properties pursuant to Presidential Decree
No. 1533. the lower court issued separate orders authorizing PTA to take immediate possession of
the premises and directing the issuance of writs of possession.
On May 25, 1982, petitioners filed this petition questioning the orders of the respondent Judge, The
respondents have correctly restated the grounds in the petition as follows:

xxx xxx xxx

A. The complaints for expropriation lack basis because the Constitution does not
provide for the expropriation of private property for tourism or other related purposes;

B. The writs of possession or orders authorizing PTA to take immediate possession

is premature because the "public use" character of the taking has not been
previously demonstrated;

C. The taking is not for public use in contemplation of eminent domain law;

D. The properties in question have been previously declared a land reform area;
consequently, the implementation of the social justice pro- ,vision of the Constitution
on agrarian reform is paramount to the right of the State to expropriate for the
purposes intended;

E. Proclamation No. 2052 declaring certain barangays in Cebu City, which include
the lands subject of expropriation as within a tourist zone, is unconstitutional for it
impairs the obligation of contracts; "F. Since the properties are within a land reform
area, it is the Court of Agrarian Relations, not the lower court, that has jurisdiction
pursuant to Pres. Decree No. 946;

F. The forcible ejectment of defendants from the premises constitutes a criminal act
under Pres. Decree No. 583;

In their memorandum, the petitioners have summarized the issues as follows:

I. Enforcement of the Writ of Possession is Premature:

II. Presidential Decree 564 Amending Presidential Decree l89 is Constitutionally

Repugnant:

III. The Condemnation is not for Public Use, Therefore, Unconstitutional:

IV. The Expropriation for Tourism Purposes of Lands Covered by the Land Reform
Program Violates the Constitution:

V. Presidential Proclamation 2052 is Unconstitutional:

VI. Presidential Decree No 1533 is Unconstitutional:

VII. The Court of First Instance has no Jurisdiction:

VIII. The Filing of the Present Petition is not Premature.

The issues raised by the petitioners revolve around the proposition that the actions to expropriate
their properties are constitutionally infirm because nowhere in the Constitution can a provision be
found which allows the taking of private property for the promotion of tourism.

The petitioners' arguments in their pleadings in support of the above proposition are subsumed
under the following headings:

1. Non-compliance with the "public use" requirement under the eminent domain
provision of the Bill of Rights.

2. Disregard of the land reform nature of the property being expropriated.

3. Impairment of the obligation of contracts.

There are three provisions of the Constitution which directly provide for the exercise of the power of
eminent domain. Section 2, Article IV states that private property shall not be taken for public use
without just compensation. Section 6, Article XIV allows the State, in the interest of national welfare
or defense and upon payment of just compensation to transfer to public ownership, utilities and other
private enterprises to be operated by the government. Section 13, Article XIV states that the
Batasang Pambansa may authorize upon payment of just compensation the expropriation of private
lands to be subdivided into small lots and conveyed at cost to deserving citizens.

While not directly mentioning the expropriation of private properties upon payment of just
compensation, the provisions on social justice and agrarian reforms which allow the exercise of
police power together with the power of eminent domain in the implementation of constitutional
objectives are even more far-reaching insofar as taking of private property is concerned.

Section 6, Article II provides:

Sec. 6. The State shall promote social justice to ensure the dignity, welfare, and
security of all the people. Towards its end, the State shall regulate the acquisition,
ownership, use, enjoyment, and disposition of private property, and equitably diffuse
property ownership and profits.

xxx xxx xxx

Section 12, Article XIV provides:

See. 12. The State shall formulate and implement an agrarian reform program aimed
at emancipating the tenant from the bondage of the soil and achieving the goals
enunciated in this Constitution.

The equitable diffusion of property ownership in the promotion of social justice implies the exercise,
whenever necessary, of the power to expropriate private property. Likewise there can be no
meaningful agrarian reform program unless the power to expropriate is utilized.

We cite all the above provisions on the power to expropriate because of the petitioners' insistence on
a restrictive view of the eminent domain provision. The thrust of all constitutional provisions on
expropriation is in the opposite direction.
As early as 1919, this Court in Visayan Refining Co. v. Samus (40 Phil. 550) categorized the
restrictive view as wholly erroneous and based on a misconception of fundamentals.

The petitioners look for the word "tourism" in the Constitution. Understandably the search would be
in vain. The policy objectives of the framers can be expressed only in general terms such as social
justice, local autonomy, conservation and development of the national patrimony, public interest, and
general welfare, among others. The programs to achieve these objectives vary from time to time and
according to place, To freeze specific programs like Tourism into express constitutional provisions
would make the Constitution more prolix than a bulky code and require of the framers a prescience
beyond Delphic proportions. The particular mention in the Constitution of agrarian reform and the
transfer of utilities and other private enterprises to public ownership merely underscores the
magnitude of the problems sought to be remedied by these programs. They do not preclude nor limit
the exercise of the power of eminent domain for such purposes like tourism and other development
programs.

In the leading case of Visayan Refining Co. v. Camus (supra), this Court emphasized that the power
of eminent domain is inseparable from sovereignty being essential to the existence of the State and
inherent in government even in its most primitive forms. The only purpose of the provision in the Bill
of Rights is to provide some form of restraint on the sovereign power. It is not a grant of authority -

The power of eminent domain does not depend for its existence on a specific grant in
the constitution. It is inherent in sovereignty and exists in a sovereign state without
any recognition of it in the constitution. The provision found in most of the state
constitutions relating to the taking of property for the public use do not by implication
grant the power to the government of the state, but limit a power which would
otherwise be without limit.

The constitutional restraints are public use and just compensation.

Do the purposes of the taking in this case constitute "public use"?

The petitioners ask us to adopt a strict construction and declare that "public use" means literally use
by the public and that "public use" is not synonymous with "public interest", "public benefit", or
"public welfare" and much less "public convenience. "

The petitioners face two major obstacles. First, their contention which is rather sweeping in its call
for a retreat from the public welfare orientation is unduly restrictive and outmoded. Second, no less
than the lawmaker has made a policy determination that the power of eminent domain may be
exercised in the promotion and development of Philippine tourism.

The restrictive view of public use may be appropriate for a nation which circumscribes the scope of
government activities and public concerns and which possesses big and correctly located public
lands that obviate the need to take private property for public purposes. Neither circumstance
applies to the Philippines. We have never been a laissez faire State, And the necessities which
impel the exertion of sovereign power are all too often found in areas of scarce public land or limited
government resources.

Certain aspects of parliamentary government were introduced by the 1973 amendments to the
Constitution with further modifications in the 1976 and 1981 amendments. Insofar as the executive
and legislative departments are concerned, the traditional concept of checks and balances in a
presidential form was considerably modified to remove some roadblocks in the expeditious
implementation of national policies. There was no such change for the judiciary. We remain as a
checking and balancing department even as all strive to maintain respect for constitutional
boundaries. At the same time, the philosophy of coordination in the pursuit of developmental goals
implicit in the amendments also constrains in the judiciary to defer to legislative discretion iii the
judicial review of programs for economic development and social progress unless a clear case of
constitutional infirmity is established. We cannot stop the legitimate exercise of power on an
invocation of grounds better left interred in a bygone age and time.* As we review the efforts of the
political departments to bring about self-sufficiency, if not eventual abundance, we continue to
maintain the liberal approach because the primary responsibility and the discretion belong to them.

There can be no doubt that expropriation for such traditions' purposes as the construction of roads,
bridges, ports, waterworks, schools, electric and telecommunications systems, hydroelectric power
plants, markets and slaughterhouses, parks, hospitals, government office buildings, and flood control
or irrigation systems is valid. However, the concept of public use is not limited to traditional
purposes. Here as elsewhere the Idea that "public use" is strictly limited to clear cases of "use by the
public" has been discarded.

In the United States, the rule was enunciated in Berman v. Parker (348 U.S. 25; 99 L. ed. 27) as
follows:

We do not sit to determine whether a particular housing project is or is not desirable.

The concept of the public welfare is broad and inclusive. See DayBrite Lighting, Inc.
v. Missouri, 342 US 421, 424, 96 L ed 469, 472, 72 S Ct 405. The values it
represents are spiritual as well as physical, aesthetic as well as monetary. It is within
the power of the legislature to determine that the community should be beautiful as
well as healthy, spacious as well as clean, well-balanced as well as carefully
patrolled. In the present case, the Congress and its authorized agencies have made
determinations that take into account a wide variety of values. It is not for us to
reappraise them. If those who govern the District of Columbia decide that the
Nation's Capital should be beautiful as well as sanitary, there is nothing in the Fifth
Amendment that stands in the way.

Once the object is within the authority of Congress, the right to realize it through the
exercise of eminent domain is clear. For the power of eminent domain is merely the
means to the end. See Luxton v. North River Bridge Co. 153 US 525, 529, 530, 38 L
ed 808, 810, 14 S Ct 891; United States v. Gettysburg Electric R. Co. 160 US 668,
679, 40 L ed 576, 580, 16 S Ct 427.

In an earlier American case, where a village was isolated from the rest of North Carolina because of
the flooding of the reservoir of a dam thus making the provision of police, school, and health services
unjustifiably expensive, the government decided to expropriate the private properties in the village
and the entire area was made part of an adjoining national park. The district court and the appellate
court ruled against the expropriation or excess condemnation. The Court of Appeals applied the "use
by the public" test and stated that the only land needed for public use was the area directly flooded
by the reservoir. The village may have been cut off by the dam but to also condemn it was excess
condemnation not valid under the "Public use" requirement. The U.S. Supreme Court in United
States ex rel TVA v. Welch (327 U.S, 546; 90 L. ed 843) unanimously reversed the lower courts. It
stated:

The Circuit Court of Appeals, without expressly relying on a compelling rule of

construction that would give the restrictive scope to the T.V.A. Act given it by the
district court, also interpreted the statute narrowly. It first analyzed the facts by
segregating the total problem into distinct parts, and thus came to the conclusion that
 T.V.A.'s purpose in condemning the land in question was only one to reduce its
liability arising from the destruction of the highway. The Court held that use of the
lands for that purpose is a "private" and not a "public use" or, at best, a "public use"
not authorized by the statute. we are unable to agree with the reasoning and
conclusion of the Circuit Court of Appeals.

We think that it is the function of Congress to decide what type of taking is for a
public use and that the agency authorized to do the taking may do so to the still
extent of its statutory authority, United States v. Gettysburg Electric R. Co. 160 US
668, 679, 40 L ed 576, 580, 16 S Ct 427. ...

xxx xxx xxx

... But whatever may be the scope of the judicial power to determine what is a "public
use" in Fourteenth Amendment controversies, this Court has said that when
Congress has spoken on this subject "Its decision is entitled to deference until it is
shown to involve an impossibility." Old Dominion Land Co. v. United States, 269, US
55, 66, 70 L ed 162, 46 S Ct 39. Any departure from this judicial restraint would result
in courts deciding on what is and is not a governmental function and in their
invalidating legislation on the basis of their view on that question at the moment of
decision, a practice which has proved impracticable in other fields. See Case v.
Bowles decided February 4, 1946, 437 US 92, 101, ante, 552, 559, 66 S Ct 438.
New York v. United States, 326 US 572 ante 326, 66 S Ct 310). We hold that the
T.V.A. took the tracts here involved for a public purpose, if, as we think is the case,
Congress authorized the Authority to acquire, hold, and use the lands to carry out the
purposes of the T.V.A. Act.

In the Philippines, Chief Justice Enrique M. Fernando has aptly summarized the statutory and
judicial trend as follows:

The taking to be valid must be for public use. There was a time when it was felt that a
literal meaning should be attached to such a requirement. Whatever project is
undertaken must be for the public to enjoy, as in the case of streets or parks.
Otherwise, expropriation is not allowable. It is not any more. As long as the purpose
of the taking is public, then the power of eminent domain comes into play. As just
noted, the constitution in at least two cases, to remove any doubt, determines what is
public use. One is the expropriation of lands to be subdivided into small lots for
resale at cost to individuals. The other is in the transfer, through the exercise of this
power, of utilities and other private enterprise to the government. It is accurate to
state then that at present whatever may be beneficially employed for the general
welfare satisfies the requirement of public use. (Fernando, The Constitution of the
Philippines, 2nd ed., pp. 523-524)

The petitioners' contention that the promotion of tourism is not "public use" because private
concessioners would be allowed to maintain various facilities such as restaurants, hotels, stores, etc.
inside the tourist complex is impressed with even less merit. Private bus firms, taxicab fleets,
roadside restaurants, and other private businesses using public streets end highways do not
diminish in the least bit the public character of expropriations for roads and streets. The lease of
store spaces in underpasses of streets built on expropriated land does not make the taking for a
private purpose. Airports and piers catering exclusively to private airlines and shipping companies
are still for public use. The expropriation of private land for slum clearance and urban development is
for a public purpose even if the developed area is later sold to private homeowners, commercial
firms, entertainment and service companies, and other private concerns.

The petitioners have also failed to overcome the deference that is appropriately accorded to
formulations of national policy expressed in legislation. The rule in Berman u. Parker (supra) of
deference to legislative policy even if such policy might mean taking from one private person and
conferring on another private person applies as well as in the Philippines.

... Once the object is within the authority of Congress, the means by which it will be
attained is also for Congress to determine. Here one of the means chosen is the use
of private enterprise for redevelopment of the area. Appellants argue that this makes
the project a taking from one businessman for the benefit of another businessman.
But the means of executing the project are for Congress and Congress alone to
determine, once the public purpose has been established. Selb Luxton v. North River
Bridge Co. (US) supra; cf. Highland v. Russel Car & Snow Plow Co. 279 US 253, 73
L ed 688, 49 S Ct 314. The public end may be as well or better served through an
agency of private enterprise than through a department of government-or so the
Congress might conclude. We cannot say that public ownership is the sole method of
promoting the public purposes of community redevelopment projects. What we have
said also disposes of any contention concerning the fact that certain property owners
in the area may be permitted to repurchase their properties for redevelopment in
harmony with the over-all plan. That, too, is a legitimate means which Congress and
its agencies may adopt, if they choose. (Berman v. Parker, 99 L ed 38, 348 US 33,
34)

An examination of the language in the 1919 cases of City of Manila v. Chinese Community of
Manila (40 Phil, 349) and Visayan Refining Co. vs. Camus, earlier cited, shows that from the very
start of constitutional government in our country judicial deference to legislative policy has been
clear and manifest in eminent domain proceedings.

The expressions of national policy are found in the revised charter of the Philippine Tourism
Authority, Presidential Decree No. 564:

WHEREAS, it is the avowed aim of the government to promote Philippine tourism

and work for its accelerated and balanced growth as well as for economy and
expediency in the development of the tourism plant of the country;

xxx xxx xxx

SECTION 1. Declaration of Policy. - It is hereby declared to be the policy of the State

to promote, encourage, and develop Philippine tourism as an instrument in
accelerating the development of the country, of strengthening the country's foreign
exchange reserve position, and of protecting Philippine culture, history, traditions and
natural beauty, internationally as well as domestically.

The power of eminent domain is expressly provided for under Section 5 B(2) as follows:

xxx xxx xxx

2. Acquisition of Private Lands, Power of Eminent Domain. — To acquire by

purchase, by negotiation or by condemnation proceedings any private land within
and without the tourist zones for any of the following reasons: (a) consolidation of
 lands for tourist zone development purposes, (b) prevention of land speculation in
areas declared as tourist zones, (c) acquisition of right of way to the zones, (d)
protection of water shed areas and natural assets with tourism value, and (e) for any
other purpose expressly authorized under this Decree and accordingly, to exercise
the power of eminent domain under its own name, which shall proceed in the manner
prescribed by law and/or the Rules of Court on condemnation proceedings. The
Authority may use any mode of payment which it may deem expedient and
acceptable to the land owners: Provided, That in case bonds are used as payment,
the conditions and restrictions set forth in Chapter III, Section 8 to 13 inclusively, of
this Decree shall apply.

xxx xxx xxx

The petitioners rely on the Land Reform Program of the government in raising their second
argument. According to them, assuming that PTA has the right to expropriate, the properties subject
of expropriation may not be taken for the purposes intended since they are within the coverage of
"operation land transfer" under the land reform program. Petitioners claim that certificates of land
transfer (CLT'S) and emancipation patents have already been issued to them thereby making the
lands expropriated within the coverage of the land reform area under Presidential Decree No. 2; that
the agrarian reform program occupies a higher level in the order of priorities than other State policies
like those relating to the health and physical well- being of the people; and that property already
taken for public use may not be taken for another public use.

We have considered the above arguments with scrupulous and thorough circumspection. For indeed
any claim of rights under the social justice and land reform provisions of the Constitution deserves
the most serious consideration. The Petitioners, however, have failed to show that the area being
developed is indeed a land reform area and that the affected persons have emancipation patents
and certificates of land transfer.

The records show that the area being developed into a tourism complex consists of more than 808
hectares, almost all of which is not affected by the land reform program. The portion being
expropriated is 282 hectares of hilly and unproductive land where even subsistence farming of crops
other than rice and corn can hardly survive. And of the 282 disputed hectares, only 8,970 square
meters-less than one hectare-is affected by Operation Land Transfer. Of the 40 defendants, only two
have emancipation patents for the less than one hectare of land affected. And this 8,970 square
meters parcel of land is not even within the sports complex proper but forms part of the 32 hectares
resettlement area where the petitioners and others similarly situated would be provided with proper
housing, subsidiary employment, community centers, schools, and essential services like water and
electricity-which are non-existent in the expropriated lands. We see no need under the facts of this
petition to rule on whether one public purpose is superior or inferior to another purpose or engage in
a balancing of competing public interests. The petitioners have also failed to overcome the showing
that the taking of the 8,970 square meters covered by Operation Land Transfer forms a necessary
part of an inseparable transaction involving the development of the 808 hectares tourism complex.
And certainly, the human settlement needs of the many beneficiaries of the 32 hectares resettlement
area should prevail over the property rights of two of their compatriots.

The invocation of the contracts clause has no merit. The non-impairment clause has never been a
barrier to the exercise of police power and likewise eminent domain. As stated in Manigault v.
Springs (199 U.S. 473) "parties by entering into contracts may not stop the legislature from enacting
laws intended for the public good."
The applicable doctrine is expressed in Arce v. Genato (69 SCRA 544) which involved the
expropriation of land for a public plaza. The Court stated:

xxx xxx xxx

... What is claimed is that there must be a showing of necessity for such
condemnation and that it was not done in this case in support of such a view,
reliance is placed on City of Manila v. Arenano Law Colleges. (85 Phil. 663 [1950])
That doctrine itself is based on the earlier case of City of Manila v. Chinese
Community of Manila, (50 Phil. 349) also, like Camus, a 1919 decision. As could be
discerned, however, in the Arellano Law Colleges decision. it was the antiquarian
view of Blackstone with its sanctification of the right to one's estate on which such an
observation was based. As did appear in his Commentaries: "So great is the regard
of the law for private property that it will not, authorize the least violation of it, even
for the public good, unless there exists a very great necessity thereof." Even the
most , cursory glance at such well-nigh absolutist concept of property would show its
obsolete character at least for Philippine constitutional law. It cannot survive the test
of the 1935 Constitution with its mandates on social justice and protection to labor.
(Article II, Section 5 of the 1935 Constitution reads: "The promotion of social justice
to unsure the well-being and economic security of all the people should be the
concern of the State." Article XI, Section 6 of the same Constitution provides: "The
State shall afford protection to labor, especially to working women and minors, and
shall regulate the relation between landowner and tenant, and between labor and
capital in industry and in agriculture. The State may provide for compulsory
arbitration.") What is more, the present Constitution pays even less heed to the
claims of property and rightly so. After stating that the State shall promote social
justice, it continues: "Towards this end, the State shall regulate the acquisition,
ownership, use, enjoyment, and disposition of private property, and equitably diffuse
property ownership and profits." (That is the second sentence of Article II, Section 6
of the Constitution) If there is any need for explicit confirmation of what was set forth
in Presidential Decree No. 42, the above provision supplies it. Moreover, that is
merely to accord to what of late has been the consistent course of decisions of this
Court whenever property rights are pressed unduly. (Cf. Alalayan v. National Power
Corporation, L-24396, July 29, 1968, 24 SCRA 172; Agricultural Credit and
Cooperative Financing Administration v. Confederation of Unions, L-21484, Nov. 29,
1969, 30 SCRA 649; Edu v. Ericta, L-32096, Oct. 24, 1970, 35 SCRA 481; Phil.
Virginia Tobacco Administration v. Court of Industrial Relations, L-32052, July 25,
1975, 65 SCRA 416) The statement therefore, that there could be discerned a
constitutional objection to a lower court applying a Presidential Decree, when it
leaves no doubt that a grantee of the power of eminent domain need not prove the
necessity for the expropriation, carries its own refutation.

xxx xxx xxx

The issue of prematurity is also raised by the petitioners. They claim that since the necessity for the
taking has not been previously established, the issuance of the orders authorizing the PTA to take
immediate possession of the premises, as well as the corresponding writs of possession was
premature.

Under Presidential Decree No. 42, as amended by Presidential Decree No. 1533, the government,
its agency or instrumentality, as plaintiff in an expropriation proceedings is authorized to take
immediate possession, control and disposition of the property and the improvements, with power of
demolition, notwithstanding the pendency of the issues before the court, upon deposit with the
Philippine National Bank of an amount equivalent to 10% of the value of the property expropriated.
The issue of immediate possession has been settled in Arce v. Genato (supra). In answer to the
issue:

... whether the order of respondent Judge in an expropriation case allowing the other
respondent, ... to take immediate possession of the parcel of land sought to be
condemned for the beautification of its public plaza, without a prior hearing to
determine the necessity for the exercise of the power of eminent domain, is vitiated
by jurisdictional defect, ...

this Court held that:

... It is not disputed that in issuing such order, respondent Judge relied on
Presidential Decree No. 42 issued on the 9th of November, 1972. (Presidential
Decree No. 42 is entitled "Authorizing the Plaintiff in Eminent Domain Proceedings to
Take Possession of the Property involved Upon Depositing the Assessed Value for
Purposes of Taxation.") The question as thus posed does not occasion any difficulty
as to the answer to be given. This petition for certiorari must fail, there being no
showing that compliance with the Presidential Decree, which under the Transitory
Provisions is deemed a part of the law of the land, (According to Article XVII, Section
3 par. (2) of the Constitution: "All proclamations, orders, decrees, instructions and
acts promulgated, issued, or done by the incumbent President shall be part of the
law of the land, and shall remain valid, legal, binding, and effective even after lifting
of martial law or the ratification of this Constitution, unless modified, revoked, or
superseded by subsequent proclamations. orders, decrees instructions, or other acts
of the incumbent President, or unless expressly and explicitly modified or repealed
by the regular National Assembly") would be characterized as either an act in excess
of jurisdiction or a grave abuse of discretion. So we rule.

Likewise in Ramos v. Philippine Tourism Authority (G.R. Nos. 52449-50, June 9, 1980), this Court
held:

... condemnation or expropriation proceedings is in the nature of one that is quasi-in-

rem wherein the fact that the owner of the property is made a party is not essentially
indispensable insofar was least as it conncerns is the immediate taking of
possession of the property and the preliminary determination of its value, including
the amount to be deposited.

In their last argument, the petitioners claim that a consequence of the expropriation proceedings
would be their forcible ejectment. They contend that such forcible ejectment is a criminal act under
Presidential Decree No. 583. This contention is not valid. Presidential Decree No. 583 prohibits the
taking cognizance or implementation of orders designed to obstruct the land reform program. It
refers to the harassment of tenant- farmers who try to enforce emancipation rights. It has nothing to
do with the expropriation by the State of lands needed for public purposes. As a matter of fact, the
expropriated area does not appear in the master lists of the Ministry of Agrarian Reforms as a
teranted area. The petitioners' bare allegations have not been supported with particulars pointing to
specific parcels which are subject of tenancy contracts. The petitioners may be owner-tillers or may
have some form of possessory or ownership rights but there has been no showing of their being
tenants on the disputed lands.
The petitioners have failed to overcome the burden of anyone trying to strike down a statute or
decree whose avowed purpose is the legislative perception is the public good. A statute has in its
favor the presumption of validity. All reasonable doubts should be resolved in favor of the
constitutionality of a law. The courts will not set aside a law as violative of the Constitution except in
a clear case (People v. Vera, 65 Phil. 56). And in the absence of factual findings or evidence to rebut
the presumption of validity, the presumption prevails (Ermita-Malate Hotel, etc. v. Mayor of Manila,
20 SCRA 849; Morfe v. Mutuc, 22 SCRA 424).

The public respondents have stressed that the development of the 808 hectares includes plans that
would give the petitioners and other displaced persons productive employment, higher incomes,
decent housing, water and electric facilities, and better living standards. Our dismissing this petition
is, in part, predicated on those assurances. The right of the PTA to proceed with the expropriation of
the 282 hectares already Identified as fit for the establishment of a resort complex to promote
tourism is, therefore, sustained.

WHEREFORE, the instant petition for certiorari is hereby DISMISSE D for lack of merit.

SO ORDERED.

FIRST DIVISION

[G.R. No. 106440. January 29, 1996]

ALEJANDRO MANOSCA, ASUNCION MANOSCA and LEONICA

MANOSCA, petitioners, vs. HON. COURT OF APPEALS, HON.
BENJAMIN V. PELAYO, Presiding Judge, RTC-Pasig, Metro
Manila, Branch 168, HON. GRADUACION A. REYES CLARAVAL,
Presiding Judge, RTC-Pasig, Metro Manila, Branch 71,
and REPUBLIC OF THE PHILIPPINES, respondents.

DECISION
VITUG, J.:

In this appeal, via a petition for review on certiorari, from the decision of the [1]

Court of Appeals, dated 15 January 1992, in CA-G.R. SP No. 24969 (entitled

Alejandro Manosca, et al. v. Hon. Benjamin V. Pelayo, et al.), this Court is
asked to resolve whether or not the public use requirement of Eminent Domain
is extant in the attempted expropriation by the Republic of a 492-square-meter
parcel of land so declared by the National Historical Institute (NHI) as a national
historical landmark.
 The facts of the case are not in dispute.
Petitioners inherited a piece of land located at P. Burgos Street, Calzada,
Taguig, Metro Manila, with an area of about four hundred ninety-two (492)
square meters. When the parcel was ascertained by the NHI to have been the
birthsite of Felix Y. Manalo, the founder of Iglesia Ni Cristo, it passed Resolution
No. 1, Series of 1986, pursuant to Section 4 of Presidential Decree No. 260,
[2]

declaring the land to be a national historical landmark. The resolution was,

on 06 January 1986, approved by the Minister of Education, Culture and
Sports. Later, the opinion of the Secretary of Justice was asked on the legality
of the measure. In his Opinion No. 133, Series of 1987, the Secretary of Justice
replied in the affirmative; he explained:

According to your guidelines, national landmarks are places or objects that are
associated with an event, achievement, characteristic, or modification that makes a
turning point or stage in Philippine history. Thus, the birthsite of the founder of
the Iglesia ni Cristo, the late Felix Y. Manalo, who, admittedly, had made
contributions to Philippine history and culture has been declared as a national
landmark. It has been held that places invested with unusual historical interest is a
public use for which the power of eminent domain may be authorized x x x.

In view thereof, it is believed that the National Historical Institute as an agency of the
Government charged with the maintenance and care of national shrines, monuments
and landmarks and the development of historical sites that may be declared as national
shrines, monuments and/or landmarks, may initiate the institution of condemnation
proceedings for the purpose of acquiring the lot in question in accordance with the
procedure provided for in Rule 67 of the Revised Rules of Court. The proceedings
should be instituted by the Office of the Solicitor General in behalf of the Republic.

Accordingly, on 29 May 1989, the Republic, through the Office of the

Solicitor-General, instituted a complaint for expropriation before the Regional
[3]

Trial Court of Pasig for and in behalf of the NHI alleging,inter alia, that:

Pursuant to Section 4 of Presidential Decree No. 260, the National Historical Institute
issued Resolution No. 1, Series of 1986, which was approved on January, 1986 by the
then Minister of Education, Culture and Sports, declaring the above described parcel
of land which is the birthsite of Felix Y. Manalo, founder of the Iglesia ni Cristo, as a
National Historical Landmark. The plaintiff perforce needs the land as such national
historical landmark which is a public purpose.

At the same time, respondent Republic filed an urgent motion for the
issuance of an order to permit it to take immediate possession of the
property. The motion was opposed by petitioners. After a hearing, the trial court
issued, on 03 August 1989, an order fixing the provisional market
[4]

(P54,120.00) and assessed (P16,236.00) values of the property and

authorizing the Republic to take over the property once the required sum would
have been deposited with the Municipal Treasurer of Taguig, Metro Manila.
Petitioners moved to dismiss the complaint on the main thesis that the
intended expropriation was not for a public purpose and, incidentally, that
the act would constitute an application of public funds, directly or indirectly, for
the use, benefit, or support of Iglesia ni Cristo, a religious entity, contrary to the
provision of Section 29(2), Article VI, of the 1987 Constitution. Petitioners
[5]

sought, in the meanwhile, a suspension in the implementation of the 03rd

August 1989 order of the trial court.
On 15 February 1990, following the filing by respondent Republic of its reply
to petitioners motion seeking the dismissal of the case, the trial court issued its
denial of said motion to dismiss. Five (5) days later, or on 20 February
[6]

1990, another order was issued by the trial court, declaring moot and
[7]

academic the motion for reconsideration and/or suspension of the order of 03

August 1989 with the rejection of petitioners motion to dismiss. Petitioners
motion for the reconsideration of the 20th February 1990 order was likewise
denied by the trial court in its 16th April 1991 order. [8]

Petitioners then lodged a petition for certiorari and prohibition with the Court
of Appeals. In its now disputed 15th January 1992 decision, the appellate court
dismissed the petition on the ground that the remedy of appeal in the ordinary
course of law was an adequate remedy and that the petition itself, in any case,
had failed to show any grave abuse of discretion or lack of jurisdictional
competence on the part of the trial court. A motion for the reconsideration of the
decision was denied in the 23rd July 1992 resolution of the appellate court.
We begin, in this present recourse of petitioners, with a few known
postulates.
Eminent domain, also often referred to as expropriation and, with less
frequency, as condemnation, is, like police power and taxation, an inherent
power of sovereignty. It need not be clothed with any constitutional gear to exist;
instead, provisions in our Constitution on the subject are meant more to
regulate, rather than to grant, the exercise of the power. Eminent domain is
generally so described as the highest and most exact idea of property remaining
in the government that may be acquired for some public purpose through a
method in the nature of a forced purchase by the State. It is a right to take or
[9]

reassert dominion over property within the state for public use or to meet a
public exigency. It is said to be an essential part of governance even in its most
primitive form and thus inseparable from sovereignty. The only direct
[10]

constitutional qualification is that private property shall not be taken for public
use without just compensation. This proscription is intended to provide a
[11]

safeguard against possible abuse and so to protect as well the individual

against whose property the power is sought to be enforced.
Petitioners assert that the expropriation has failed to meet the guidelines set
by this Court in the case of Guido v. Rural Progress Administration, to wit: (a)
[12]

the size of the land expropriated; (b) the large number of people benefited; and,
(c) the extent of social and economic reform. Petitioners suggest that we
[13]

confine the concept of expropriation only to the following public uses, i.e., the [14]

x x x taking of property for military posts, roads, streets, sidewalks, bridges, ferries,
levees, wharves, piers, public buildings including schoolhouses, parks, playgrounds,
plazas, market places, artesian wells, water supply and sewerage systems, cemeteries,
crematories, and railroads.

This view of petitioners is much too limitative and restrictive.

The court, in Guido, merely passed upon the issue of the extent of the
Presidents power under Commonwealth Act No. 539 to, specifically, acquire
private lands for subdivision into smaller home lots or farms for resale to bona
fide tenants or occupants. It was in this particular context of the statute that the
Court had made the pronouncement. The guidelines in Guido were not meant
to be preclusive in nature and, most certainly, the power of eminent domain
should not now be understood as being confined only to the expropriation of
vast tracts of land and landed estates. [15]

The term public use, not having been otherwise defined by the constitution,
must be considered in its general concept of meeting a public need or a public
exigency. Black summarizes the characterization given by various courts to
[16]

the term; thus:

Public Use. Eminent domain. The constitutional and statutory basis for taking
property by eminent domain. For condemnation purposes, public use is one which
confers same benefit or advantage to the public; it is not confined to actual use by
public. It is measured in terms of right of public to use proposed facilities for which
condemnation is sought and, as long as public has right of use, whether exercised by
one or many members of public, a public advantage or public benefit accrues
sufficient to constitute a public use. Montana Power Co. vs. Bokma, Mont. 457 P. 2d
769, 772, 773.
Public use, in constitutional provisions restricting the exercise of the right to take
private property in virtue of eminent domain, means a use concerning the whole
community as distinguished from particular individuals. But each and every member
of society need not be equally interested in such use, or be personally and directly
affected by it; if the object is to satisfy a great public want or exigency, that is
sufficient. Rindge Co. vs. Los Angeles County, 262 U.S.700, 43 S.Ct. 689, 692, 67
L.Ed. 1186. The term may be said to mean public usefulness, utility, or advantage, or
what is productive of general benefit. It may be limited to the inhabitants of a small or
restricted locality, but must be in common, and not for a particular individual. The use
must be a needful one for the public, which cannot be surrendered without obvious
general loss and inconvenience. A public use for which land may be taken defies
absolute definition for it changes with varying conditions of society, new appliances
in the sciences, changing conceptions of scope and functions of government, and other
differing circumstances brought about by an increase in population and new modes of
communication and transportation. Katz v. Brandon, 156 Conn., 521, 245 A.2d
579,586. [17]

The validity of the exercise of the power of eminent domain for traditional
purposes is beyond question; it is not at all to be said, however, that public use
should thereby be restricted to such traditional uses.The idea that public use is
strictly limited to clear cases of use by the public has long been discarded. This
Court in Heirs of Juancho Ardona v. Reyes, quoting from Berman v. Parker
[18]

(348 U.S. 25; 99 L. ed. 27), held:

We do not sit to determine whether a particular housing project is or is not

desirable. The concept of the public welfare is broad and inclusive. See DayBrite
Lighting, Inc. v. Missouri, 342 US 421, 424, 96 L. Ed. 469, 472, 72 S Ct 405.The
values it represents are spiritual as well as physical, aesthetic as well as monetary. It is
within the power of the legislature to determine that the community should be
beautiful as well as healthy, spacious as well as clean, well-balanced as well as
carefully patrolled. In the present case, the Congress and its authorized agencies have
made determinations that take into account a wide variety of values. It is not for us to
reappraise them. If those who govern the District of Columbia decide that the Nations
Capital should be beautiful as well as sanitary, there is nothing in the Fifth
Amendment that stands in the way.

Once the object is within the authority of Congress, the right to realize it through the
exercise of eminent domain is clear. For the power of eminent domain is merely the
means to the end. See Luxton v. North River Bridge Co. 153 US 525, 529, 530, 38 L.
ed. 808, 810, 14 S Ct 891; United States v. Gettysburg Electric R. Co. 160 US 668,
679, 40 L. ed. 576, 580, 16 S Ct 427.
 It has been explained as early as Sea v. Manila Railroad Co., that: [19]

x x x A historical research discloses the meaning of the term public use to be one of
constant growth. As society advances, its demands upon the individual increase and
each demand is a new use to which the resources of the individual may be devoted. x
x x for whatever is beneficially employed for the community is a public use.

Chief Justice Enrique M. Fernando states:

The taking to be valid must be for public use. There was a time when it was felt that a
literal meaning should be attached to such a requirement. Whatever project is
undertaken must be for the public to enjoy, as in the case of streets or parks.
Otherwise, expropriation is not allowable. It is not so any more. As long as the
purpose of the taking is public, then the power of eminent domain comes into play. As
just noted, the constitution in at least two cases, to remove any doubt, determines what
is public use. One is the expropriation of lands to be subdivided into small lots for
resale at cost to individuals. The other is the transfer, through the exercise of this
power, of utilities and other private enterprise to the government. It is accurate to state
then that at present whatever may be beneficially employed for the general welfare
satisfies the requirement of public use.[20]

Chief Justice Fernando, writing the ponencia in J.M. Tuason & Co. vs. Land
Tenure Administration, has viewed the Constitution a dynamic instrument and
[21]

one that is not to be construed narrowly or pedantically so as to enable it to

meet adequately whatever problems the future has in store. Fr. Joaquin Bernas,
a noted constitutionalist himself, has aptly observed that what, in fact, has
ultimately emerged is a concept of public use which is just as broad as public
welfare. [22]

Petitioners ask: But (w)hat is the so-called unusual interest that the
expropriation of (Felix Manalos) birthplace become so vital as to be a public use
appropriate for the exercise of the power of eminent domain when only
members of the Iglesia ni Cristo would benefit? This attempt to give some
religious perspective to the case deserves little consideration, for what should
be significant is the principal objective of, not the casual consequences that
might follow from, the exercise of the power. The purpose in setting up the
marker is essentially to recognize the distinctive contribution of the late Felix
Manalo to the culture of the Philippines, rather than to commemorate his
founding and leadership of the Iglesia ni Cristo. The practical reality that greater
benefit may be derived by members of the Iglesia ni Cristo than by most others
could well be true but such a peculiar advantage still remains to be merely
incidental and secondary in nature. Indeed, that only a few would actually
benefit from the expropriation of property does not necessarily diminish the
essence and character of public use. [23]

Petitioners contend that they have been denied due process in the fixing of
the provisional value of their property. Petitioners need merely to be reminded
that what the law prohibits is the lack of opportunity to be heard; contrary to [24]

petitioners argument, the records of this case are replete with pleadings that [25]

could have dealt, directly or indirectly, with the provisional value of the property.
Petitioners, finally, would fault respondent appellate court in sustaining the
trial courts order which considered inapplicable the case of Noble v. City
of Manila. Both courts held correctly. The Republic was not a party to the
[26]

alleged contract of exchange between the Iglesia ni Cristo and petitioners

which (the contracting parties) alone, not the Republic, could properly be bound.
All considered, the Court finds the assailed decision to be in accord with law
and jurisprudence.
WHEREFORE, the petition is DENIED. No costs.
SO ORDERED.

o Tax Exemptions
o Republic of the Philippines
SUPREME COURT
Manila
o SECOND DIVISION
o G.R. No. L-49336 August 31, 1981
o THE PROVINCE OF ABRA, represented by LADISLAO ANCHETA, Provincial
Assessor, petitioner,
vs.
HONORABLE HAROLD M. HERNANDO, in his capacity as Presiding Judge of
Branch I, Court of First Instance Abra; THE ROMAN CATHOLIC BISHOP OF
BANGUED, INC., represented by Bishop Odilo etspueler and Reverend Felipe
Flores, respondents.
o
o FERNANDO, C.J.:
o On the face of this certiorari and mandamus petition filed by the Province of Abra, 1 it
clearly appears that the actuation of respondent Judge Harold M. Hernando of the
Court of First Instance of Abra left much to be desired. First, there was a denial of a
motion to dismiss 2 an action for declaratory relief by private respondent Roman
Catholic Bishop of Bangued desirous of being exempted from a real estate tax
followed by a summary judgment 3granting such exemption, without even hearing the
side of petitioner. In the rather vigorous language of the Acting Provincial Fiscal, as
counsel for petitioner, respondent Judge "virtually ignored the pertinent provisions of
the Rules of Court; ... wantonly violated the rights of petitioner to due process, by
giving due course to the petition of private respondent for declaratory relief, and
thereafter without allowing petitioner to answer and without any hearing, adjudged
 the case; all in total disregard of basic laws of procedure and basic provisions of due
process in the constitution, thereby indicating a failure to grasp and understand the
law, which goes into the competence of the Honorable Presiding Judge." 4
o It was the submission of counsel that an action for declaratory relief would be proper
only before a breach or violation of any statute, executive order or
regulation. 5 Moreover, there being a tax assessment made by the Provincial
Assessor on the properties of respondent Roman Catholic Bishop, petitioner failed to
exhaust the administrative remedies available under Presidential Decree No. 464
before filing such court action. Further, it was pointed out to respondent Judge that
he failed to abide by the pertinent provision of such Presidential Decree which
provides as follows: "No court shall entertain any suit assailing the validity of a tax
assessed under this Code until the taxpayer, shall have paid, under protest, the tax
assessed against him nor shall any court declare any tax invalid by reason of
irregularities or informalities in the proceedings of the officers charged with the
assessment or collection of taxes, or of failure to perform their duties within this time
herein specified for their performance unless such irregularities, informalities or
failure shall have impaired the substantial rights of the taxpayer; nor shall any court
declare any portion of the tax assessed under the provisions of this Code invalid
except upon condition that the taxpayer shall pay the just amount of the tax, as
determined by the court in the pending proceeding." 6
o When asked to comment, respondent Judge began with the allegation that there "is
no question that the real properties sought to be taxed by the Province of Abra are
properties of the respondent Roman Catholic Bishop of Bangued, Inc." 7 The very
next sentence assumed the very point it asked when he categorically stated:
"Likewise, there is no dispute that the properties including their procedure
are actually, directly and exclusively used by the Roman Catholic Bishop of
Bangued, Inc. for religious or charitable purposes." 8 For him then: "The proper
remedy of the petitioner is appeal and not this special civil action." 9 A more
exhaustive comment was submitted by private respondent Roman Catholic Bishop of
Bangued, Inc. It was, however, unable to lessen the force of the objection raised by
petitioner Province of Abra, especially the due process aspect. it is to be admitted
that his opposition to the petition, pressed with vigor, ostensibly finds a semblance of
support from the authorities cited. It is thus impressed with a scholarly aspect. It
suffers, however, from the grave infirmity of stating that only a pure question of law is
presented when a claim for exemption is made.
o The petition must be granted.
o 1. Respondent Judge would not have erred so grievously had he merely compared
the provisions of the present Constitution with that appearing in the 1935 Charter on
the tax exemption of "lands, buildings, and improvements." There is a marked
difference. Under the 1935 Constitution: "Cemeteries, churches, and parsonages or
convents appurtenant thereto, and all lands, buildings, and improvements used
exclusively for religious, charitable, or educational purposes shall be exempt from
taxation." 10 The present Constitution added "charitable institutions, mosques, and
non-profit cemeteries" and required that for the exemption of ":lands, buildings, and
improvements," they should not only be "exclusively" but also "actually and "directly"
used for religious or charitable purposes. 11 The Constitution is worded differently.
The change should not be ignored. It must be duly taken into consideration. Reliance
on past decisions would have sufficed were the words "actually" as well as "directly"
not added. There must be proof therefore of the actual and direct use of the lands,
buildings, and improvements for religious or charitable purposes to be exempt from
taxation. According to Commissioner of Internal Revenue v. Guerrero: 12"From 1906,
in Catholic Church v. Hastings to 1966, in Esso Standard Eastern, Inc. v. Acting
Commissioner of Customs, it has been the constant and uniform holding that
 exemption from taxation is not favored and is never presumed, so that if granted it
must be strictly construed against the taxpayer. Affirmatively put, the law frowns on
exemption from taxation, hence, an exempting provision should be
construed strictissimi juris." 13 In Manila Electric Company v. Vera, 14 a 1975 decision,
such principle was reiterated, reference being made to Republic Flour Mills, Inc. v.
Commissioner of Internal Revenue; 15 Commissioner of Customs v. Philippine
Acetylene Co. & CTA; 16 and Davao Light and Power Co., Inc. v. Commissioner of
Customs. 17
o 2. Petitioner Province of Abra is therefore fully justified in invoking the protection of
procedural due process. If there is any case where proof is necessary to
demonstrate that there is compliance with the constitutional provision that allows an
exemption, this is it. Instead, respondent Judge accepted at its face the allegation of
private respondent. All that was alleged in the petition for declaratory relief filed by
private respondents, after mentioning certain parcels of land owned by it, are that
they are used "actually, directly and exclusively" as sources of support of the parish
priest and his helpers and also of private respondent Bishop. 18 In the motion to
dismiss filed on behalf of petitioner Province of Abra, the objection was based
primarily on the lack of jurisdiction, as the validity of a tax assessment may be
questioned before the Local Board of Assessment Appeals and not with a court.
There was also mention of a lack of a cause of action, but only because, in its view,
declaratory relief is not proper, as there had been breach or violation of the right of
government to assess and collect taxes on such property. It clearly appears,
therefore, that in failing to accord a hearing to petitioner Province of Abra and
deciding the case immediately in favor of private respondent, respondent Judge
failed to abide by the constitutional command of procedural due process.
o WHEREFORE, the petition is granted and the resolution of June 19, 1978 is set
aside. Respondent Judge, or who ever is acting on his behalf, is ordered to hear the
case on the merit. No costs.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-39086 June 15, 1988

ABRA VALLEY COLLEGE, INC., represented by PEDRO V. BORGONIA, petitioner,

vs.
HON. JUAN P. AQUINO, Judge, Court of First Instance, Abra; ARMIN M. CARIAGA, Provincial
Treasurer, Abra; GASPAR V. BOSQUE, Municipal Treasurer, Bangued, Abra; HEIRS OF
PATERNO MILLARE, respondents.

PARAS, J.:
This is a petition for review on certiorari of the decision * of the defunct Court of First Instance of Abra, Branch I, dated June 14, 1974,
rendered in Civil Case No. 656, entitled "Abra Valley Junior College, Inc., represented by Pedro V. Borgonia, plaintiff vs. Armin M. Cariaga as
Provincial Treasurer of Abra, Gaspar V. Bosque as Municipal Treasurer of Bangued, Abra and Paterno Millare, defendants," the decretal
portion of which reads:

IN VIEW OF ALL THE FOREGOING, the Court hereby declares:

That the distraint seizure and sale by the Municipal Treasurer of Bangued, Abra, the
Provincial Treasurer of said province against the lot and building of the Abra Valley
Junior College, Inc., represented by Director Pedro Borgonia located at Bangued,
Abra, is valid;

That since the school is not exempt from paying taxes, it should therefore pay all
back taxes in the amount of P5,140.31 and back taxes and penalties from the
promulgation of this decision;

That the amount deposited by the plaintaff him the sum of P60,000.00 before the
trial, be confiscated to apply for the payment of the back taxes and for the
redemption of the property in question, if the amount is less than P6,000.00, the
remainder must be returned to the Director of Pedro Borgonia, who represents the
plaintiff herein;

That the deposit of the Municipal Treasurer in the amount of P6,000.00 also before
the trial must be returned to said Municipal Treasurer of Bangued, Abra;

And finally the case is hereby ordered dismissed with costs against the plaintiff.

SO ORDERED. (Rollo, pp. 22-23)

Petitioner, an educational corporation and institution of higher learning duly incorporated with the
Securities and Exchange Commission in 1948, filed a complaint (Annex "1" of Answer by the
respondents Heirs of Paterno Millare; Rollo, pp. 95-97) on July 10, 1972 in the court a quo to annul
and declare void the "Notice of Seizure' and the "Notice of Sale" of its lot and building located at
Bangued, Abra, for non-payment of real estate taxes and penalties amounting to P5,140.31. Said
"Notice of Seizure" of the college lot and building covered by Original Certificate of Title No. Q-83
duly registered in the name of petitioner, plaintiff below, on July 6, 1972, by respondents Municipal
Treasurer and Provincial Treasurer, defendants below, was issued for the satisfaction of the said
taxes thereon. The "Notice of Sale" was caused to be served upon the petitioner by the respondent
treasurers on July 8, 1972 for the sale at public auction of said college lot and building, which sale
was held on the same date. Dr. Paterno Millare, then Municipal Mayor of Bangued, Abra, offered the
highest bid of P6,000.00 which was duly accepted. The certificate of sale was correspondingly
issued to him.

On August 10, 1972, the respondent Paterno Millare (now deceased) filed through counstel a motion
to dismiss the complaint.

On August 23, 1972, the respondent Provincial Treasurer and Municipal Treasurer, through then
Provincial Fiscal Loreto C. Roldan, filed their answer (Annex "2" of Answer by the respondents Heirs
of Patemo Millare; Rollo, pp. 98-100) to the complaint. This was followed by an amended answer
(Annex "3," ibid, Rollo, pp. 101-103) on August 31, 1972.

On September 1, 1972 the respondent Paterno Millare filed his answer (Annex "5," ibid; Rollo, pp.
106-108).
On October 12, 1972, with the aforesaid sale of the school premises at public auction, the
respondent Judge, Hon. Juan P. Aquino of the Court of First Instance of Abra, Branch I, ordered
(Annex "6," ibid; Rollo, pp. 109-110) the respondents provincial and municipal treasurers to deliver to
the Clerk of Court the proceeds of the auction sale. Hence, on December 14, 1972, petitioner,
through Director Borgonia, deposited with the trial court the sum of P6,000.00 evidenced by PNB
Check No. 904369.

On April 12, 1973, the parties entered into a stipulation of facts adopted and embodied by the trial
court in its questioned decision. Said Stipulations reads:

STIPULATION OF FACTS

COME NOW the parties, assisted by counsels, and to this Honorable Court
respectfully enter into the following agreed stipulation of facts:

1. That the personal circumstances of the parties as stated in paragraph 1 of the

complaint is admitted; but the particular person of Mr. Armin M. Cariaga is to be
substituted, however, by anyone who is actually holding the position of Provincial
Treasurer of the Province of Abra;

2. That the plaintiff Abra Valley Junior College, Inc. is the owner of the lot and
buildings thereon located in Bangued, Abra under Original Certificate of Title No. 0-
83;

3. That the defendant Gaspar V. Bosque, as Municipal treasurer of Bangued, Abra

caused to be served upon the Abra Valley Junior College, Inc. a Notice of Seizure on
the property of said school under Original Certificate of Title No. 0-83 for the
satisfaction of real property taxes thereon, amounting to P5,140.31; the Notice of
Seizure being the one attached to the complaint as Exhibit A;

4. That on June 8, 1972 the above properties of the Abra Valley Junior College, Inc.
was sold at public auction for the satisfaction of the unpaid real property taxes
thereon and the same was sold to defendant Paterno Millare who offered the highest
bid of P6,000.00 and a Certificate of Sale in his favor was issued by the defendant
Municipal Treasurer.

5. That all other matters not particularly and specially covered by this stipulation of
facts will be the subject of evidence by the parties.

WHEREFORE, it is respectfully prayed of the Honorable Court to consider and admit

this stipulation of facts on the point agreed upon by the parties.

Bangued, Abra, April 12, 1973.

Sgd.
Agripin
o
Brillant
es
Typ
AGRIPI
NO
BRILL
ANTES

Attorne
y for
Plaintiff

Sgd.
Loreto
Roldan

Typ
LORET
O
ROLD
AN
Provinc
ial
Fiscal
Couns
el for
Defend
ants
Provinc
ial
Treasu
rer of
Abra
and the
Munici
pal
Treasu
rer of
Bangu
ed,
Abra

Sgd.
Demetr
io V.
Pre
Typ.
DEME
TRIO
V.
PRE
Attorne
y for
Defend
ant
Patern
o
 Millare
(Rollo,
pp. 17-
18)

Aside from the Stipulation of Facts, the trial court among others, found the following: (a) that the
school is recognized by the government and is offering Primary, High School and College Courses,
and has a school population of more than one thousand students all in all; (b) that it is located right
in the heart of the town of Bangued, a few meters from the plaza and about 120 meters from the
Court of First Instance building; (c) that the elementary pupils are housed in a two-storey building
across the street; (d) that the high school and college students are housed in the main building; (e)
that the Director with his family is in the second floor of the main building; and (f) that the annual
gross income of the school reaches more than one hundred thousand pesos.

From all the foregoing, the only issue left for the Court to determine and as agreed by the parties, is
whether or not the lot and building in question are used exclusively for educational purposes. (Rollo,
p. 20)

The succeeding Provincial Fiscal, Hon. Jose A. Solomon and his Assistant, Hon. Eustaquio Z.
Montero, filed a Memorandum for the Government on March 25, 1974, and a Supplemental
Memorandum on May 7, 1974, wherein they opined "that based on the evidence, the laws
applicable, court decisions and jurisprudence, the school building and school lot used for educational
purposes of the Abra Valley College, Inc., are exempted from the payment of taxes." (Annexes "B,"
"B-1" of Petition; Rollo, pp. 24-49; 44 and 49).

Nonetheless, the trial court disagreed because of the use of the second floor by the Director of
petitioner school for residential purposes. He thus ruled for the government and rendered the
assailed decision.

After having been granted by the trial court ten (10) days from August 6, 1974 within which to perfect
its appeal (Per Order dated August 6, 1974; Annex "G" of Petition; Rollo, p. 57) petitioner instead
availed of the instant petition for review on certiorari with prayer for preliminary injunction before this
Court, which petition was filed on August 17, 1974 (Rollo, p.2).

In the resolution dated August 16, 1974, this Court resolved to give DUE COURSE to the petition
(Rollo, p. 58). Respondents were required to answer said petition (Rollo, p. 74).

Petitioner raised the following assignments of error:

THE COURT A QUO ERRED IN SUSTAINING AS VALID THE SEIZURE AND SALE OF THE
COLLEGE LOT AND BUILDING USED FOR EDUCATIONAL PURPOSES OF THE PETITIONER.

II

THE COURT A QUO ERRED IN DECLARING THAT THE COLLEGE LOT AND BUILDING OF THE
PETITIONER ARE NOT USED EXCLUSIVELY FOR EDUCATIONAL PURPOSES MERELY
BECAUSE THE COLLEGE PRESIDENT RESIDES IN ONE ROOM OF THE COLLEGE BUILDING.

III
THE COURT A QUO ERRED IN DECLARING THAT THE COLLEGE LOT AND BUILDING OF THE
PETITIONER ARE NOT EXEMPT FROM PROPERTY TAXES AND IN ORDERING PETITIONER
TO PAY P5,140.31 AS REALTY TAXES.

IV

THE COURT A QUO ERRED IN ORDERING THE CONFISCATION OF THE P6,000.00 DEPOSIT
MADE IN THE COURT BY PETITIONER AS PAYMENT OF THE P5,140.31 REALTY TAXES. (See
Brief for the Petitioner, pp. 1-2)

The main issue in this case is the proper interpretation of the phrase "used exclusively for
educational purposes."

Petitioner contends that the primary use of the lot and building for educational purposes, and not the
incidental use thereof, determines and exemption from property taxes under Section 22 (3), Article
VI of the 1935 Constitution. Hence, the seizure and sale of subject college lot and building, which
are contrary thereto as well as to the provision of Commonwealth Act No. 470, otherwise known as
the Assessment Law, are without legal basis and therefore void.

On the other hand, private respondents maintain that the college lot and building in question which
were subjected to seizure and sale to answer for the unpaid tax are used: (1) for the educational
purposes of the college; (2) as the permanent residence of the President and Director thereof, Mr.
Pedro V. Borgonia, and his family including the in-laws and grandchildren; and (3) for commercial
purposes because the ground floor of the college building is being used and rented by a commercial
establishment, the Northern Marketing Corporation (See photograph attached as Annex "8"
(Comment; Rollo, p. 90]).

Due to its time frame, the constitutional provision which finds application in the case at bar is Section
22, paragraph 3, Article VI, of the then 1935 Philippine Constitution, which expressly grants
exemption from realty taxes for "Cemeteries, churches and parsonages or convents appurtenant
thereto, and all lands, buildings, and improvements used exclusively for religious, charitable or
educational purposes ...

Relative thereto, Section 54, paragraph c, Commonwealth Act No. 470 as amended by Republic Act
No. 409, otherwise known as the Assessment Law, provides:

The following are exempted from real property tax under the Assessment Law:

xxx xxx xxx

(c) churches and parsonages or convents appurtenant thereto, and all lands,
buildings, and improvements used exclusively for religious, charitable, scientific or
educational purposes.

xxx xxx xxx

In this regard petitioner argues that the primary use of the school lot and building is the basic and
controlling guide, norm and standard to determine tax exemption, and not the mere incidental use
thereof.
As early as 1916 in YMCA of Manila vs. Collector of lnternal Revenue, 33 Phil. 217 [1916], this Court
ruled that while it may be true that the YMCA keeps a lodging and a boarding house and maintains a
restaurant for its members, still these do not constitute business in the ordinary acceptance of the
word, but an institution used exclusively for religious, charitable and educational purposes, and as
such, it is entitled to be exempted from taxation.

In the case of Bishop of Nueva Segovia v. Provincial Board of Ilocos Norte, 51 Phil. 352 [1972], this
Court included in the exemption a vegetable garden in an adjacent lot and another lot formerly used
as a cemetery. It was clarified that the term "used exclusively" considers incidental use also. Thus,
the exemption from payment of land tax in favor of the convent includes, not only the land actually
occupied by the building but also the adjacent garden devoted to the incidental use of the parish
priest. The lot which is not used for commercial purposes but serves solely as a sort of lodging
place, also qualifies for exemption because this constitutes incidental use in religious functions.

The phrase "exclusively used for educational purposes" was further clarified by this Court in the
cases of Herrera vs. Quezon City Board of assessment Appeals, 3 SCRA 186 [1961]
and Commissioner of Internal Revenue vs. Bishop of the Missionary District, 14 SCRA 991 [1965],
thus —

Moreover, the exemption in favor of property used exclusively for charitable or

educational purposes is 'not limited to property actually indispensable' therefor
(Cooley on Taxation, Vol. 2, p. 1430), but extends to facilities which are incidental to
and reasonably necessary for the accomplishment of said purposes, such as in the
case of hospitals, "a school for training nurses, a nurses' home, property use to
provide housing facilities for interns, resident doctors, superintendents, and other
members of the hospital staff, and recreational facilities for student nurses, interns,
and residents' (84 CJS 6621), such as "Athletic fields" including "a firm used for the
inmates of the institution. (Cooley on Taxation, Vol. 2, p. 1430).

The test of exemption from taxation is the use of the property for purposes mentioned in the
Constitution (Apostolic Prefect v. City Treasurer of Baguio, 71 Phil, 547 [1941]).

It must be stressed however, that while this Court allows a more liberal and non-restrictive
interpretation of the phrase "exclusively used for educational purposes" as provided for in Article VI,
Section 22, paragraph 3 of the 1935 Philippine Constitution, reasonable emphasis has always been
made that exemption extends to facilities which are incidental to and reasonably necessary for the
accomplishment of the main purposes. Otherwise stated, the use of the school building or lot for
commercial purposes is neither contemplated by law, nor by jurisprudence. Thus, while the use of
the second floor of the main building in the case at bar for residential purposes of the Director and
his family, may find justification under the concept of incidental use, which is complimentary to the
main or primary purpose—educational, the lease of the first floor thereof to the Northern Marketing
Corporation cannot by any stretch of the imagination be considered incidental to the purpose of
education.

It will be noted however that the aforementioned lease appears to have been raised for the first time
in this Court. That the matter was not taken up in the to court is really apparent in the decision of
respondent Judge. No mention thereof was made in the stipulation of facts, not even in the
description of the school building by the trial judge, both embodied in the decision nor as one of the
issues to resolve in order to determine whether or not said properly may be exempted from payment
of real estate taxes (Rollo, pp. 17-23). On the other hand, it is noteworthy that such fact was not
disputed even after it was raised in this Court.
Indeed, it is axiomatic that facts not raised in the lower court cannot be taken up for the first time on
appeal. Nonetheless, as an exception to the rule, this Court has held that although a factual issue is
not squarely raised below, still in the interest of substantial justice, this Court is not prevented from
considering a pivotal factual matter. "The Supreme Court is clothed with ample authority to review
palpable errors not assigned as such if it finds that their consideration is necessary in arriving at a
just decision." (Perez vs. Court of Appeals, 127 SCRA 645 [1984]).

Under the 1935 Constitution, the trial court correctly arrived at the conclusion that the school building
as well as the lot where it is built, should be taxed, not because the second floor of the same is being
used by the Director and his family for residential purposes, but because the first floor thereof is
being used for commercial purposes. However, since only a portion is used for purposes of
commerce, it is only fair that half of the assessed tax be returned to the school involved.

PREMISES CONSIDERED, the decision of the Court of First Instance of Abra, Branch I, is hereby
AFFIRMED subject to the modification that half of the assessed tax be returned to the petitioner.

SO ORDERED.

SECOND DIVISION

November 9, 2016

G.R. No. 196596

COMMISSIONER OF INTERNAL REVENUE, Petitioner

vs.
DE LA SALLE UNIVERSITY, INC., Respondent

x-----------------------x

G.R. No. 198841

DE LA SALLE UNIVERSITY INC., Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.

x-----------------------x

G.R. No. 198941

COMMISSIONER OF INTERNAL REVENUE, Petitioner,
vs.
DE LA SALLE UNIVERSITY, INC., Respondent.

DECISION

BRION, J.:

Before the Court are consolidated petitions for review on certiorari:1

1. G.R. No. 196596 filed by the Commissioner of Internal Revenue (Commissioner) to assail the
December 10, 2010 decision and March 29, 2011 resolution of the Court of Tax Appeals (CTA) in En
Banc Case No. 622;2

2. G.R. No. 198841 filed by De La Salle University, Inc. (DLSU) to assail the June 8, 2011 decision
and October 4, 2011 resolution in CTA En Banc Case No. 671;3 and

3. G.R. No. 198941 filed by the Commissioner to assail the June 8, 2011 decision and October 4,
2011 resolution in CTA En Banc Case No. 671.4

G.R. Nos. 196596, 198841 and 198941 all originated from CTA Special First Division (CTA
Division) Case No. 7303. G.R. No. 196596 stemmed from CTA En Banc Case No. 622 filed by the
Commissioner to challenge CTA Case No. 7303. G.R. No. 198841 and 198941 both stemmed
from CTA En Banc Case No. 671 filed by DLSU to also challenge CTA Case No. 7303.

The Factual Antecedents

Sometime in 2004, the Bureau of Internal Revenue (BIR) issued to DLSU Letter of Authority (LOA)
No. 2794 authorizing its revenue officers to examine the latter's books of accounts and other
accounting records for all internal revenue taxes for the period Fiscal Year Ending 2003 and
Unverified Prior Years.5

On May 19, 2004, BIR issued a Preliminary Assessment Notice to DLSU.6

Subsequently on August 18, 2004, the BIR through a Formal Letter of Demand assessed DLSU the
following deficiency taxes: (1) income tax on rental earnings from restaurants/canteens and
bookstores operating within the campus; (2) value-added tax (VAI) on business income; and
(3) documentary stamp tax (DSI) on loans and lease contracts. The BIR demanded the payment
of ₱17,303,001.12, inclusive of surcharge, interest and penalty for taxable years 2001, 2002 and
2003.7

DLSU protested the assessment. The Commissioner failed to act on the protest; thus, DLSU filed on
August 3, 2005 a petition for review with the CTA Division.8

DLSU, a non-stock, non-profit educational institution, principally anchored its petition on Article XIV,
Section 4 (3)of the Constitution, which reads:

(3) All revenues and assets of non-stock, non-profit educational institutions used actually, directly,
and exclusively for educational purposes shall be exempt from taxes and duties. xxx.
On January 5, 2010, the CTA Division partially granted DLSU's petition for review. The dispositive
portion of the decision reads:

WHEREFORE, the Petition for Review is PARTIALLY GRANTED. The DST assessment on the loan
transactions of [DLSU] in the amount of ₱1,1681,774.00 is hereby CANCELLED. However, [DLSU]
is ORDERED TO PAY deficiency income tax, VAT and DST on its lease contracts, plus 25%
surcharge for the fiscal years 2001, 2002 and 2003 in the total amount of ₱18,421,363.53 ... xxx.

In addition, [DLSU] is hereby held liable to pay 20% delinquency interest on the total amount due
computed from September 30, 2004 until full payment thereof pursuant to Section 249(C)(3) of the
[National Internal Revenue Code]. Further, the compromise penalties imposed by [the
Commissioner] were excluded, there being no compromise agreement between the parties.

SO ORDERED.9

Both the Commissioner and DLSU moved for the reconsideration of the January 5, 2010
decision.10 On April 6, 2010, the CTA Division denied the Commissioner's motion for reconsideration
while it held in abeyance the resolution on DLSU's motion for reconsideration.11

On May 13, 2010, the Commissioner appealed to the CTA En Banc (CTA En Banc Case No. 622)
arguing that DLSU's use of its revenues and assets for non-educational or commercial purposes
removed these items from the exemption coverage under the Constitution.12

On May 18, 2010, DLSU formally offered to the CTA Division supplemental pieces of documentary
evidence to prove that its rental income was used actually, directly and exclusively for educational
purposes.13 The Commissioner did not promptly object to the formal offer of supplemental evidence
despite notice.14

On July 29, 2010, the CTA Division, in view of the supplemental evidence submitted, reduced the
amount of DLSU's tax deficiencies. The dispositive portion of the amended decision reads:

WHEREFORE, [DLSU]'s Motion for Partial Reconsideration is hereby PARTIALLY GRANTED.

[DLSU] is hereby ORDERED TO PAY for deficiency income tax, VAT and DST plus 25% surcharge
for the fiscal years 2001, 2002 and 2003 in the total adjusted amount of ₱5,506,456.71 ... xxx.

In addition, [DLSU] is hereby held liable to pay 20% per annum deficiency interest on the ... basic
deficiency taxes ... until full payment thereof pursuant to Section 249(B) of the [National Internal
Revenue Code] ... xxx.

Further, [DLSU] is hereby held liable to pay 20% per annum delinquency interest on the deficiency
taxes, surcharge and deficiency interest which have accrued ... from September 30, 2004 until fully
paid.15

Consequently, the Commissioner supplemented its petition with the CTA En Banc and argued that
the CTA Division erred in admitting DLSU's additional evidence.16

Dissatisfied with the partial reduction of its tax liabilities, DLSU filed a separate petition for review
with the CTA En Banc (CTA En Banc Case No. 671) on the following grounds: (1) the entire
assessment should have been cancelled because it was based on an invalid LOA; (2) assuming the
LOA was valid, the CTA Division should still have cancelled the entire assessment because DLSU
submitted evidence similar to those submitted by Ateneo De Manila University (Ateneo) in
a separate case where the CTA cancelled Ateneo's tax assessment;17 and (3) the CTA Division erred
in finding that a portion of DLSU's rental income was not proved to have been used actually, directly
and exclusively for educational purposes.18

The CTA En Banc Rulings

CTA En Banc Case No. 622

The CTA En Banc dismissed the Commissioner's petition for review and sustained the findings of
the CTA Division.19

Tax on rental income

Relying on the findings of the court-commissioned Independent Certified Public Accountant

(Independent CPA), the CTA En Banc found that DLSU was able to prove that a portion of the
assessed rental income was used actually, directly and exclusively for educational purposes; hence,
exempt from tax.20 The CTA En Banc was satisfied with DLSU's supporting evidence confirming that
part of its rental income had indeed been used to pay the loan it obtained to build the university's
Physical Education – Sports Complex.21

Parenthetically, DLSU's unsubstantiated claim for exemption, i.e., the part of its income that was not
shown by supporting documents to have been actually, directly and exclusively used for educational
purposes, must be subjected to income tax and VAT.22

DST on loan and mortgage transactions

Contrary to the Commissioner's contention, DLSU froved its remittance of the DST due on its loan
and mortgage documents.23 The CTA En Banc found that DLSU's DST payments had been remitted
to the BIR, evidenced by the stamp on the documents made by a DST imprinting machine, which is
allowed under Section 200 (D) of the National Internal Revenue Code (Tax Code)24 and Section 2 of
Revenue Regulations (RR) No. 15-2001.25

Admissibility of DLSU's supplemental evidence

The CTA En Banc held that the supplemental pieces of documentary evidence were admissible
even if DLSU formally offered them only when it moved for reconsideration of the CTA Division's
original decision. Notably, the law creating the CTA provides that proceedings before it shall not be
governed strictly by the technical rules of evidence.26

The Commissioner moved but failed to obtain a reconsideration of the CTA En Banc's December 10,
2010 decision.27 Thus, she came to this court for relief through a petition for review on certiorari (G.R.
No. 196596).

CTA En Banc Case No. 671

The CTA En Banc partially granted DLSU's petition for review and further reduced its tax liabilities
to ₱2,554,825.47inclusive of surcharge.28

On the validity of the Letter of Authority

The issue of the LOA' s validity was raised during trial;29 hence, the issue was deemed properly
submitted for decision and reviewable on appeal.

Citing jurisprudence, the CTA En Banc held that a LOA should cover only one taxable period and
that the practice of issuing a LOA covering audit of unverified prior years is prohibited.30 The
prohibition is consistent with Revenue Memorandum Order (RMO) No. 43-90, which provides that if
the audit includes more than one taxable period, the other periods or years shall be specifically
indicated in the LOA.31

In the present case, the LOA issued to DLSU is for Fiscal Year Ending 2003 and Unverified Prior
Years. Hence, the assessments for deficiency income tax, VAT and DST for taxable years 2001 and
2002 are void, but the assessment for taxable year 2003 is valid.32

On the applicability of the Ateneo case

The CTA En Banc held that the Ateneo case is not a valid precedent because it involved different
parties, factual settings, bases of assessments, sets of evidence, and defenses.33

On the CTA Division's appreciation of the evidence

The CTA En Banc affirmed the CTA Division's appreciation of DLSU' s evidence. It held that while
DLSU successfully proved that a portion of its rental income was transmitted and used to pay the
loan obtained to fund the construction of the Sports Complex, the rental income from other sources
were not shown to have been actually, directly and exclusively used for educational purposes.34

Not pleased with the CTA En Banc's ruling, both DLSU (G.R. No. 198841) and the Commissioner
(G.R. No. 198941) came to this Court for relief.

The Consolidated Petitions

G.R. No. 196596

The Commissioner submits the following arguments:

First, DLSU's rental income is taxable regardless of how such income is derived, used or disposed
of.35 DLSU's operations of canteens and bookstores within its campus even though exclusively
serving the university community do not negate income tax liability.36

The Commissioner contends that Article XIV, Section 4 (3) of the Constitution must be harmonized
with Section 30 (H) of the Tax Code, which states among others, that the income of whatever kind
and character of [a non-stock and non-profit educational institution] from any of [its] properties, real
or personal, or from any of [its] activities conducted for profit regardless of the disposition made of
such income, shall be subject to tax imposed by this Code.37

The Commissioner argues that the CTA En Banc misread and misapplied the case
of Commissioner of Internal Revenue v. YMCA38 to support its conclusion that revenues however
generated are covered by the constitutional exemption, provided that, the revenues will be used for
educational purposes or will be held in reserve for such purposes.39

On the contrary, the Commissioner posits that a tax-exempt organization like DLSU is exempt only
from property tax but not from income tax on the rentals earned from property.40 Thus, DLSU's
income from the leases of its real properties is not exempt from taxation even if the income would be
used for educational purposes.41

Second, the Commissioner insists that DLSU did not prove the fact of DST payment42 and that it is
not qualified to use the On-Line Electronic DST Imprinting Machine, which is available only to certain
classes of taxpayers under RR No. 9-2000.43

Finally, the Commissioner objects to the admission of DLSU's supplemental offer of evidence. The
belated submission of supplemental evidence reopened the case for trial, and worse, DLSU offered
the supplemental evidence only after it received the unfavorable CTA Division's original decision.44 In
any case, DLSU's submission of supplemental documentary evidence was unnecessary since its
rental income was taxable regardless of its disposition.45

G.R. No. 198841

DLSU argues as that:

First, RMO No. 43-90 prohibits the practice of issuing a LOA with any indication of unverified prior
years. A LOA issued contrary to RMO No. 43-90 is void, thus, an assessment issued based on such
defective LOA must also be void.46

DLSU points out that the LOA issued to it covered the Fiscal Year Ending 2003 and Unverified Prior
Years. On the basis of this defective LOA, the Commissioner assessed DLSU for deficiency income
tax, VAT and DST for taxable years 2001, 2002 and 2003.47 DLSU objects to the CTA En
Banc's conclusion that the LOA is valid for taxable year 2003. According to DLSU, when RMO No.
43-90 provides that:

The practice of issuing [LOAs] covering audit of 'unverified prior years' is hereby prohibited.

it refers to the LOA which has the format "Base Year + Unverified Prior Years." Since the LOA
issued to DLSU follows this format, then any assessment arising from it must be entirely voided.48

Second, DLSU invokes the principle of uniformity in taxation, which mandates that for similarly
situated parties, the same set of evidence should be appreciated and weighed in the same
manner.49 The CTA En Banc erred when it did not similarly appreciate DLSU' s evidence as it did to
the pieces of evidence submitted by Ateneo, also a non-stock, non-profit educational institution.50

G.R. No. 198941

The issues and arguments raised by the Commissioner in G.R. No. 198941 petition are exactly the
same as those she raised in her: (1) petition docketed as G.R. No. 196596 and (2) comment on
DLSU's petition docketed as G.R. No. 198841.51

Counter-arguments

DLSU's Comment on G.R. No. 196596

First, DLSU questions the defective verification attached to the petition.52

Second, DLSU stresses that Article XIV, Section 4 (3) of the Constitution is clear that all assets and
revenues of non-stock, non-profit educational institutions used actually, directly and exclusively for
educational purposes are exempt from taxes and duties.53

On this point, DLSU explains that: (1) the tax exemption of non-stock, non-profit educational
institutions is novel to the 1987 Constitution and that Section 30 (H) of the 1997 Tax Code cannot
amend the 1987 Constitution;54 (2) Section 30 of the 1997 Tax Code is almost an exact replica of
Section 26 of the 1977 Tax Code -with the addition of non-stock, non-profit educational institutions
to the list of tax-exempt entities; and (3) that the 1977 Tax Code was promulgated when the 1973
Constitution was still in place.

DLSU elaborates that the tax exemption granted to a private educational institution under the 1973
Constitution was only for real property tax. Back then, the special tax treatment on income of private
educational institutions only emanates from statute, i.e., the 1977 Tax Code. Only under the 1987
Constitution that exemption from tax of all the assets and revenues of non-stock, non-profit
educational institutions used actually, directly and exclusively for educational purposes, was
expressly and categorically enshrined.55

DLSU thus invokes the doctrine of constitutional supremacy, which renders any subsequent law that
is contrary to the Constitution void and without any force and effect.56 Section 30 (H) of the 1997 Tax
Code insofar as it subjects to tax the income of whatever kind and character of a non-stock and non-
profit educational institution from any of its properties, real or personal, or from any of its activities
conducted for profit regardless of the disposition made of such income, should be declared without
force and effect in view of the constitutionally granted tax exemption on "all revenues and assets of
non-stock, non-profit educational institutions used actually, directly, and exclusively for educational
purposes."57

DLSU further submits that it complies with the requirements enunciated in the YMCA case, that for
an exemption to be granted under Article XIV, Section 4 (3) of the Constitution, the taxpayer must
prove that: (1) it falls under the classification non-stock, non-profit educational institution; and (2) the
income it seeks to be exempted from taxation is used actually, directly and exclusively for
educational purposes.58 Unlike YMCA, which is not an educational institution, DLSU is undisputedly a
non-stock, non-profit educational institution. It had also submitted evidence to prove that it actually,
directly and exclusively used its income for educational purposes.59

DLSU also cites the deliberations of the 1986 Constitutional Commission where they recognized that
the tax exemption was granted "to incentivize private educational institutions to share with the State
the responsibility of educating the youth."60

Third, DLSU highlights that both the CTA En Banc and Division found that the bank that handled
DLSU' s loan and mortgage transactions had remitted to the BIR the DST through an imprinting
machine, a method allowed under RR No. 15-2001.61 In any case, DLSU argues that it cannot be
held liable for DST owing to the exemption granted under the Constitution.62

Finally, DLSU underscores that the Commissioner, despite notice, did not oppose the formal offer of
supplemental evidence. Because of the Commissioner's failure to timely object, she became bound
by the results of the submission of such supplemental evidence.63

The CIR's Comment on G.R. No. 198841

The Commissioner submits that DLSU is estopped from questioning the LOA's validity because it
failed to raise this issue in both the administrative and judicial proceedings.64 That it was asked on
cross-examination during the trial does not make it an issue that the CTA could resolve.65 The
Commissioner also maintains that DLSU's rental income is not tax-exempt because an educational
institution is only exempt from property tax but not from tax on the income earned from the property.66

DLSU's Comment on G.R. No. 198941

DLSU puts forward the same counter-arguments discussed above.67 In addition, DLSU prays that the
Court award attorney's fees in its favor because it was constrained to unnecessarily retain the
services of counsel in this separate petition.68

Issues

Although the parties raised a number of issues, the Court shall decide only the pivotal issues, which
we summarize as follows:

I. Whether DLSU' s income and revenues proved to have been used actually, directly and
exclusively for educational purposes are exempt from duties and taxes;

II. Whether the entire assessment should be voided because of the defective LOA;

III. Whether the CTA correctly admitted DLSU's supplemental pieces of evidence; and

IV. Whether the CTA's appreciation of the sufficiency of DLSU's evidence may be disturbed
by the Court.

Our Ruling

As we explain in full below, we rule that:

I. The income, revenues and assets of non-stock, non-profit educational institutions proved
to have been used actually, directly and exclusively for educational purposes are exempt
from duties and taxes.

II. The LOA issued to DLSU is not entirely void. The assessment for taxable year 2003 is
valid.

III. The CTA correctly admitted DLSU's formal offer of supplemental evidence; and

IV. The CTA's appreciation of evidence is conclusive unless the CTA is shown to have
manifestly overlooked certain relevant facts not disputed by the parties and which, if properly
considered, would justify a different conclusion.

The parties failed to convince the Court that the CTA overlooked or failed to consider relevant facts.
We thus sustain the CTA En Banc's findings that:

a. DLSU proved that a portion of its rental income was used actually, directly and exclusively
for educational purposes; and

b. DLSU proved the payment of the DST through its bank's on-line imprinting machine.
I. The revenues and assets of non-stock,
non-profit educational institutions
proved to have been used actually,
directly, and exclusively for educational
purposes are exempt from duties and
taxes.

DLSU rests it case on Article XIV, Section 4 (3) of the 1987 Constitution, which reads:

(3) All revenues and assets of non-stock, non-profit educational institutions used actually,
directly, and exclusively for educational purposes shall
be exempt from taxes and duties. Upon the dissolution or cessation of the corporate existence of
such institutions, their assets shall be disposed of in the manner provided by law.

Proprietary educational institutions, including those cooperatively owned, may likewise be

entitled to such exemptions subject to the limitations provided by law including restrictions on
dividends and provisions for reinvestment. [underscoring and emphasis supplied]

Before fully discussing the merits of the case, we observe that:

First, the constitutional provision refers to two kinds of educational institutions: (1) non-stock, non-
profit educational institutions and (2) proprietary educational institutions.69

Second, DLSU falls under the first category. Even the Commissioner admits the status of DLSU as a
non-stock, non-profit educational institution.70

Third, while DLSU's claim for tax exemption arises from and is based on the Constitution, the
Constitution, in the same provision, also imposes certain conditions to avail of the exemption. We
discuss below the import of the constitutional text vis-a-vis the Commissioner's counter-arguments.

Fourth, there is a marked distinction between the treatment of non-stock, non-profit educational
institutions and proprietary educational institutions. The tax exemption granted to non-stock, non-
profit educational institutions is conditioned only on the actual, direct and exclusive use of their
revenues and assets for educational purposes. While tax exemptions may also be granted to
proprietary educational institutions, these exemptions may be subject to limitations imposed by
Congress.

As we explain below, the marked distinction between a non-stock, non-profit and a proprietary
educational institution is crucial in determining the nature and extent of the tax exemption granted to
non-stock, non-profit educational institutions.

The Commissioner opposes DLSU's claim for tax exemption on the basis of Section 30 (H) of the
Tax Code. The relevant text reads:

The following organizations shall not be taxed under this Title [Tax on

Income] in respect to income received by them as such:

xxxx

(H) A non-stock and non-profit educational institution

 xxxx

Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and
character of the foregoing organizations from any of their properties, real or personal, or from
any of their activities conducted for
profit regardless of the disposition made of such income shall be subject to tax imposed
under this Code. [underscoring and emphasis supplied]

The Commissioner posits that the 1997 Tax Code qualified the tax exemption granted to non-stock,
non-profit educational institutions such that the revenues and income they derived from their assets,
or from any of their activities conducted for profit, are taxable even if these revenues and income are
used for educational purposes.

Did the 1997 Tax Code qualify the tax exemption constitutionally-granted to non-stock, non-profit
educational institutions?

We answer in the negative.

While the present petition appears to be a case of first impression,71 the Court in the YMCA case had
in fact already analyzed and explained the meaning of Article XIV, Section 4 (3) of the Constitution.
The Court in that case made doctrinal pronouncements that are relevant to the present case.

The issue in YMCA was whether the income derived from rentals of real property owned by the
YMCA, established as a "welfare, educational and charitable non-profit corporation," was subject to
income tax under the Tax Code and the Constitution.72

The Court denied YMCA's claim for exemption on the ground that as a charitable institution falling
under Article VI, Section 28 (3) of the Constitution,73 the YMCA is not tax-exempt per se; " what is
exempted is not the institution itself... those exempted from real estate taxes are lands, buildings and
improvements actually, directly and exclusively used for religious, charitable or educational
purposes."74

The Court held that the exemption claimed by the YMCA is expressly disallowed by the last
paragraph of then Section 27 (now Section 30) of the Tax Code, which mandates that the income of
exempt organizations from any of their properties, real or personal, are subject to the same tax
imposed by the Tax Code, regardless of how that income is used. The Court ruled that the last
paragraph of Section 27 unequivocally subjects to tax the rent income of the YMCA from its
property.75

In short, the YMCA is exempt only from property tax but not from income tax.

As a last ditch effort to avoid paying the taxes on its rental income, the YMCA invoked the tax
privilege granted under Article XIV, Section 4 (3) of the Constitution.

The Court denied YMCA's claim that it falls under Article XIV, Section 4 (3) of the Constitution
holding that the term educational institution, when used in laws granting tax exemptions, refers to the
school system (synonymous with formal education); it includes a college or an educational
establishment; it refers to the hierarchically structured and chronologically graded learnings
organized and provided by the formal school system.76
The Court then significantly laid down the requisites for availing the tax exemption under Article XIV,
Section 4 (3), namely: (1) the taxpayer falls under the classification non-stock, non-profit
educational institution; and (2) the income it seeks to be exempted from taxation is used
actually, directly and exclusively for educational purposes.77

We now adopt YMCA as precedent and hold that:

1. The last paragraph of Section 30 of the Tax Code is without force and effect with respect to non-
stock, non-profit educational institutions, provided, that the non-stock, non-profit educational
institutions prove that its assets and revenues are used actually, directly and exclusively for
educational purposes.

2. The tax-exemption constitutionally-granted to non-stock, non-profit educational institutions, is not

subject to limitations imposed by law.

The tax exemption granted by the

Constitution to non-stock, non-profit
educational institutions is conditioned only
on the actual, direct and exclusive use of
their assets, revenues and income78 for
educational purposes.

We find that unlike Article VI, Section 28 (3) of the Constitution (pertaining to charitable institutions,
churches, parsonages or convents, mosques, and non-profit cemeteries), which exempts from
tax only the assets, i.e., "all lands, buildings, and improvements, actually, directly, and
exclusively used for religious, charitable, or educational purposes ... ," Article XIV, Section 4
(3) categorically states that "[a]ll revenues and assets ... used actually, directly, and exclusively for
educational purposes shall be exempt from taxes and duties."

The addition and express use of the word revenues in Article XIV, Section 4 (3) of the Constitution is
not without significance.

We find that the text demonstrates the policy of the 1987 Constitution, discernible from the records
of the 1986 Constitutional Commission79 to provide broader tax privilege to non-stock, non-profit
educational institutions as recognition of their role in assisting the State provide a public good. The
tax exemption was seen as beneficial to students who may otherwise be charged unreasonable
tuition fees if not for the tax exemption extended to all revenues and assets of non-stock, non-profit
educational institutions.80

Further, a plain reading of the Constitution would show that Article XIV, Section 4 (3) does not
require that the revenues and income must have also been sourced from educational activities or
activities related to the purposes of an educational institution. The phrase all revenues is unqualified
by any reference to the source of revenues. Thus, so long as the revenues and income are used
actually, directly and exclusively for educational purposes, then said revenues and income shall be
exempt from taxes and duties.81

We find it helpful to discuss at this point the taxation of revenues versus the taxation of assets.

Revenues consist of the amounts earned by a person or entity from the conduct of business
operations.82 It may refer to the sale of goods, rendition of services, or the return of an investment.
Revenue is a component of the tax base in income tax,83 VAT,84 and local business tax (LBT).85
Assets, on the other hand, are the tangible and intangible properties owned by a person or entity.86 It
may refer to real estate, cash deposit in a bank, investment in the stocks of a corporation, inventory
of goods, or any property from which the person or entity may derive income or use to generate the
same. In Philippine taxation, the fair market value of real property is a component of the tax base in
real property tax (RPT).87 Also, the landed cost of imported goods is a component of the tax base in
VAT on importation88 and tariff duties.89

Thus, when a non-stock, non-profit educational institution proves that it uses its revenues actually,
directly, and exclusively for educational purposes, it shall be exempted from income tax, VAT, and
LBT. On the other hand, when it also shows that it uses its assets in the form of real property for
educational purposes, it shall be exempted from RPT.

To be clear, proving the actual use of the taxable item will result in an exemption, but the specific tax
from which the entity shall be exempted from shall depend on whether the item is an item of revenue
or asset.

To illustrate, if a university leases a portion of its school building to a bookstore or cafeteria, the
leased portion is not actually, directly and exclusively used for educational purposes, even if the
bookstore or canteen caters only to university students, faculty and staff.

The leased portion of the building may be subject to real property tax, as held in Abra Valley
College, Inc. v. Aquino.90 We ruled in that case that the test of exemption from taxation is the use of
the property for purposes mentioned in the Constitution. We also held that the exemption extends to
facilities which are incidental to and reasonably necessary for the accomplishment of the main
purposes.

In concrete terms, the lease of a portion of a school building for commercial purposes, removes
such asset from the property tax exemption granted under the Constitution.91 There is no exemption
because the asset is not used actually, directly and exclusively for educational purposes. The
commercial use of the property is also not incidental to and reasonably necessary for the
accomplishment of the main purpose of a university, which is to educate its students.

However, if the university actually, directly and exclusively uses for educational
purposes the revenues earned from the lease of its school building, such revenues shall be exempt
from taxes and duties. The tax exemption no longer hinges on the use of the asset from which the
revenues were earned, but on the actual, direct and exclusive use of the revenues for educational
purposes.

Parenthetically, income and revenues of non-stock, non-profit educational institution not used
actually, directly and exclusively for educational purposes are not exempt from duties and taxes. To
avail of the exemption, the taxpayer must factually prove that it used actually, directly and
exclusively for educational purposes the revenues or income sought to be exempted.

The crucial point of inquiry then is on the use of the assets or on the use of the revenues. These
are two things that must be viewed and treated separately. But so long as the assets or revenues
are used actually, directly and exclusively for educational purposes, they are exempt from duties and
taxes.

The tax exemption granted by the

Constitution to non-stock, non-profit
educational institutions, unlike the exemption
that may be availed of by proprietary
educational institutions, is not subject to
limitations imposed by law.

That the Constitution treats non-stock, non-profit educational institutions differently from proprietary
educational institutions cannot be doubted. As discussed, the privilege granted to the former is
conditioned only on the actual, direct and exclusive use of their revenues and assets for educational
purposes. In clear contrast, the tax privilege granted to the latter may be subject to limitations
imposed by law.

We spell out below the difference in treatment if only to highlight the privileged status of non-stock,
non-profit educational institutions compared with their proprietary counterparts.

While a non-stock, non-profit educational institution is classified as a tax-exempt entity under Section
30 (Exemptions from Tax on Corporations) of the Tax Code, a proprietary educational institution is
covered by Section 27 (Rates of Income Tax on Domestic Corporations).

To be specific, Section 30 provides that exempt organizations like non-stock, non-profit educational
institutions shall not be taxed on income received by them as such.

Section 27 (B), on the other hand, states that "[p]roprietary educational institutions ... which are
nonprofit shall pay a tax of ten percent (10%) on their taxable income .. . Provided, that if the gross
income from unrelated trade, business or other activity exceeds fifty percent (50%) of the total gross
income derived by such educational institutions ... [the regular corporate income tax of 30%] shall be
imposed on the entire taxable income ... "92

By the Tax Code's clear terms, a proprietary educational institution is entitled only to the reduced
rate of 10% corporate income tax. The reduced rate is applicable only if: (1) the proprietary
educational institution is nonprofit and (2) its gross income from unrelated trade, business or activity
does not exceed 50% of its total gross income.

Consistent with Article XIV, Section 4 (3) of the Constitution, these limitations do not apply to non-
stock, non-profit educational institutions.

Thus, we declare the last paragraph of Section 30 of the Tax Code without force and effect for being
contrary to the Constitution insofar as it subjects to tax the income and revenues of non-stock, non-
profit educational institutions used actually, directly and exclusively for educational purpose. We
make this declaration in the exercise of and consistent with our duty93 to uphold the primacy of the
Constitution.94

Finally, we stress that our holding here pertains only to non-stock, non-profit educational institutions
and does not cover the other exempt organizations under Section 30 of the Tax Code.

For all these reasons, we hold that the income and revenues of DLSU proven to have been used
actually, directly and exclusively for educational purposes are exempt from duties and taxes.

II. The LOA issued to DLSU is

not entirely void. The
assessment for taxable year
2003 is valid.
DLSU objects to the CTA En Banc 's conclusion that the LOA is valid for taxable year 2003 and
insists that the entire LOA should be voided for being contrary to RMO No. 43-90, which provides
that if tax audit includes more than one taxable period, the other periods or years shall be specifically
indicated in the LOA.

A LOA is the authority given to the appropriate revenue officer to examine the books of account and
other accounting records of the taxpayer in order to determine the taxpayer's correct internal
revenue liabilities95 and for the purpose of collecting the correct amount of tax,96 in accordance with
Section 5 of the Tax Code, which gives the CIR the power to obtain information, to
summon/examine, and take testimony of persons. The LOA commences the audit process97 and
informs the taxpayer that it is under audit for possible deficiency tax assessment.

Given the purposes of a LOA, is there basis to completely nullify the LOA issued to DLSU, and
consequently, disregard the BIR and the CTA's findings of tax deficiency for taxable year 2003?

We answer in the negative.

The relevant provision is Section C of RMO No. 43-90, the pertinent portion of which reads:

3. A Letter of Authority [LOA] should cover a taxable period not exceeding one taxable year. The
practice of issuing [LO As] covering audit of unverified prior years is hereby prohibited. If the audit of
a taxpayer shall include more than one taxable period, the other periods or years shall be specifically
indicated in the [LOA].98

What this provision clearly prohibits is the practice of issuing LOAs covering audit of unverified prior
years. RMO 43-90 does not say that a LOA which contains unverified prior years is void. It merely
prescribes that if the audit includes more than one taxable period, the other periods or years must be
specified. The provision read as a whole requires that if a taxpayer is audited for more than one
taxable year, the BIR must specify each taxable year or taxable period on separate LOAs.

Read in this light, the requirement to specify the taxable period covered by the LOA is simply to
inform the taxpayer of the extent of the audit and the scope of the revenue officer's authority. Without
this rule, a revenue officer can unduly burden the taxpayer by demanding random accounting
records from random unverified years, which may include documents from as far back as ten years
in cases of fraud audit.99

In the present case, the LOA issued to DLSU is for Fiscal Year Ending 2003 and Unverified Prior
Years. The LOA does not strictly comply with RMO 43-90 because it includes unverified prior years.
This does not mean, however, that the entire LOA is void.

As the CTA correctly held, the assessment for taxable year 2003 is valid because this taxable period
is specified in the LOA. DLSU was fully apprised that it was being audited for taxable year 2003.
Corollarily, the assessments for taxable years 2001 and 2002 are void for having
been unspecified on separate LOAs as required under RMO No. 43-90.

Lastly, the Commissioner's claim that DLSU failed to raise the issue of the LOA' s validity at the CTA
Division, and thus, should not have been entertained on appeal, is not accurate.

On the contrary, the CTA En Banc found that the issue of the LOA's validity came up during the
trial.100 DLSU then raised the issue in its memorandum and motion for partial reconsideration with the
CTA Division. DLSU raised it again on appeal to the CTA En Banc. Thus, the CTA En Banc could,
as it did, pass upon the validity of the LOA.101Besides, the Commissioner had the opportunity to
argue for the validity of the LOA at the CTA En Banc but she chose not to file her comment and
memorandum despite notice.102

III.The CTA correctly admitted

the supplemental evidence
formally offered by DLSU.

The Commissioner objects to the CTA Division's admission of DLSU's supplemental pieces of
documentary evidence.

To recall, DLSU formally offered its supplemental evidence upon filing its motion for reconsideration
with the CTA Division.103 The CTA Division admitted the supplemental evidence, which proved that a
portion of DLSU's rental income was used actually, directly and exclusively for educational purposes.
Consequently, the CTA Division reduced DLSU's tax liabilities.

We uphold the CTA Division's admission of the supplemental evidence on distinct but mutually
reinforcing grounds, to wit: (1) the Commissioner failed to timely object to the formal offer of
supplemental evidence; and (2) the CTA is not governed strictly by the technical rules of evidence.

First, the failure to object to the offered evidence renders it admissible, and the court cannot, on its
own, disregard such evidence.104

The Court has held that if a party desires the court to reject the evidence offered, it must so state in
the form of a timely objection and it cannot raise the objection to the evidence for the first time on
appeal.105 Because of a party's failure to timely object, the evidence offered becomes part of the
evidence in the case. As a consequence, all the parties are considered bound by any outcome
arising from the offer of evidence properly presented.106

As disclosed by DLSU, the Commissioner did not oppose the supplemental formal offer of evidence
despite notice.107 The Commissioner objected to the admission of the supplemental evidence only
when the case was on appeal to the CTA En Banc. By the time the Commissioner raised her
objection, it was too late; the formal offer, admission and evaluation of the supplemental evidence
were all fait accompli.

We clarify that while the Commissioner's failure to promptly object had no bearing on the materiality
or sufficiency of the supplemental evidence admitted, she was bound by the outcome of the CTA
Division's assessment of the evidence.108

Second, the CTA is not governed strictly by the technical rules of evidence. The CTA Division's
admission of the formal offer of supplemental evidence, without prompt objection from the
Commissioner, was thus justified.

Notably, this Court had in the past admitted and considered evidence attached to the taxpayers'
motion for reconsideration. 1âwphi1

In the case of BPI-Family Savings Bank v. Court of Appeals,109 the tax refund claimant attached to its
motion for reconsideration with the CT A its Final Adjustment Return. The Commissioner, as in the
present case, did not oppose the taxpayer's motion for reconsideration and the admission of
the Final Adjustment Return.110 We thus admitted and gave weight to the Final Adjustment
Return although it was only submitted upon motion for reconsideration.
We held that while it is true that strict procedural rules generally frown upon the submission of
documents after the trial, the law creating the CTA specifically provides that proceedings before it
shall not be governed strictly by the technical rules of evidence111 and that the paramount
consideration remains the ascertainment of truth. We ruled that procedural rules should not bar
courts from considering undisputed facts to arrive at a just determination of a controversy.112

We applied the same reasoning in the subsequent cases of Filinvest Development Corporation v.
Commissioner of Internal Revenue113 and Commissioner of Internal Revenue v. PERF Realty
Corporation,114 where the taxpayers also submitted the supplemental supporting document only upon
filing their motions for reconsideration.

Although the cited cases involved claims for tax refunds, we also dispense with the strict application
of the technical rules of evidence in the present tax assessment case. If anything, the liberal
application of the rules assumes greater force and significance in the case of a taxpayer who claims
a constitutionally granted tax exemption. While the taxpayers in the cited cases claimed refund of
excess tax payments based on the Tax Code,115 DLSU is claiming tax exemption based on the
Constitution. If liberality is afforded to taxpayers who paid more than they should have under a
statute, then with more reason that we should allow a taxpayer to prove its exemption from tax
based on the Constitution.

Hence, we sustain the CTA's admission of DLSU's supplemental offer of evidence not only because
the Commissioner failed to promptly object, but more so because the strict application of the
technical rules of evidence may defeat the intent of the Constitution.

IV. The CTA's appreciation of

evidence is generally binding on
the Court unless compelling
reasons justify otherwise.

It is doctrinal that the Court will not lightly set aside the conclusions reached by the CTA which, by
the very nature of its function of being dedicated exclusively to the resolution of tax problems, has
developed an expertise on the subject, unless there has been an abuse or improvident exercise of
authority.116 We thus accord the findings of fact by the CTA with the highest respect. These findings
of facts can only be disturbed on appeal if they are not supported by substantial evidence or there is
a showing of gross error or abuse on the part of the CTA. In the absence of any clear and convincing
proof to the contrary, this Court must presume that the CTA rendered a decision which is valid in
every respect.117

We sustain the factual findings of the CTA.

The parties failed to raise credible basis for us to disturb the CTA's findings that DLSU had used
actually, directly and exclusively for educational purposes a portion of its assessed income and that
it had remitted the DST payments though an online imprinting machine.

a. DLSU used actually, directly, and exclusively for educational purposes a portion of its assessed
income.

To see how the CTA arrived at its factual findings, we review the process undertaken, from which it
deduced that DLSU successfully proved that it used actually, directly and exclusively for educational
purposes a portion of its rental income.
The CTA reduced DLSU' s deficiency income tax and VAT liabilities in view of the submission of the
supplemental evidence, which consisted of statement of receipts, statement of disbursement and
fund balance and statement of fund changes.118

These documents showed that DLSU borrowed ₱93.86 Million,119 which was used to build the
university's Sports Complex. Based on these pieces of evidence, the CTA found that DLSU' s rental
income from its concessionaires were indeed transmitted and used for the payment of this loan. The
CTA held that the degree of preponderance of evidence was sufficiently met to prove actual, direct
and exclusive use for educational purposes.

The CTA also found that DLSU's rental income from other concessionaires, which were allegedly
deposited to a fund (CF-CPA Account),120 intended for the university's capital projects, was not
proved to have been used actually, directly and exclusively for educational purposes. The
CTA observed that "[DLSU] ... failed to fully account for and substantiate all the disbursements from
the [fund]." Thus, the CTA "cannot ascertain whether rental income from the [other] concessionaires
was indeed used for educational purposes."121

To stress, the CTA's factual findings were based on and supported by the report of the Independent
CPA who reviewed, audited and examined the voluminous documents submitted by DLSU.

Under the CTA Revised Rules, an Independent CPA's functions include: (a) examination and
verification of receipts, invoices, vouchers and other long accounts; (b) reproduction of, and
comparison of such reproduction with, and certification that the same are faithful copies of original
documents, and pre-marking of documentary exhibits consisting of voluminous documents; (c)
preparation of schedules or summaries containing a chronological listing of the numbers, dates and
amounts covered by receipts or invoices or other relevant documents and the amount(s) of taxes
paid; (d) making findings as to compliance with substantiation requirements under pertinent
tax laws, regulations and jurisprudence; (e) submission of a formal report with certification of
authenticity and veracity of findings and conclusions in the performance of the audit; (f) testifying on
such formal report; and (g) performing such other functions as the CTA may direct.122

Based on the Independent CPA's report and on its own appreciation of the evidence, the CTA held
that only the portion of the rental income pertaining to the substantiated disbursements (i.e., proved
by receipts, vouchers, etc.) from the CF-CPA Account was considered as used actually, directly and
exclusively for educational purposes. Consequently, the unaccounted and unsubstantiated
disbursements must be subjected to income tax and VAT.123

The CTA then further reduced DLSU's tax liabilities by cancelling the assessments for taxable years
2001 and 2002 due to the defective LOA.124

The Court finds that the above fact-finding process undertaken by the CTA shows that it based its
ruling on the evidence on record, which we reiterate, were examined and verified by the Independent
CPA. Thus, we see no persuasive reason to deviate from these factual findings.

However, while we generally respect the factual findings of the CTA, it does not mean that we are
bound by its conclusions. In the present case, we do not agree with the method used by the CTA to
arrive at DLSU' s unsubstantiated rental income (i.e., income not proved to have been actually,
directly and exclusively used for educational purposes).

To recall, the CTA found that DLSU earned a rental income of ₱l0,610,379.00 in taxable year
2003.125 DLSU earned this income from leasing a portion of its premises to: 1) MTG-Sports Complex,
2) La Casita, 3) Alarey, Inc., 4) Zaide Food Corp., 5) Capri International, and 6) MTO Bookstore.126
To prove that its rental income was used for educational purposes, DLSU identified the transactions
where the rental income was expended, viz.: 1) ₱4,007,724.00127 used to pay the loan obtained by
DLSU to build the Sports Complex; and 2) ₱6,602,655.00 transferred to the CF-CPA Account.128

DLSU also submitted documents to the Independent CPA to prove that the ₱6,602,655.00
transferred to the CF-CPA Account was used actually, directly and exclusively for educational
purposes. According to the Independent CPA' findings, DLSU was able to substantiate
disbursements from the CF-CPA Account amounting to ₱6,259,078.30.

Contradicting the findings of the Independent CPA, the CTA concluded that out of
the ₱l0,610,379.00 rental income, ₱4,841,066.65 was unsubstantiated, and thus, subject to income
tax and VAT.129

The CTA then concluded that the ratio of substantiated disbursements to the total disbursements
from the CF-CPA Account for taxable year 2003 is only 26.68%.130 The CTA held as follows:

However, as regards petitioner's rental income from Alarey, Inc., Zaide Food Corp., Capri
International and MTO Bookstore, which were transmitted to the CF-CPA Account, petitioner again
failed to fully account for and substantiate all the disbursements from the CF-CPA Account; thus
failing to prove that the rental income derived therein were actually, directly and exclusively used for
educational purposes. Likewise, the findings of the Court-Commissioned Independent CPA show
that the disbursements from the CF-CPA Account for fiscal year 2003 amounts to ₱6,259,078.30
only. Hence, this portion of the rental income, being the substantiated disbursements of the CF-CPA
Account, was considered by the Special First Division as used actually, directly and exclusively for
educational purposes. Since for fiscal year 2003, the total disbursements per voucher is
₱6,259,078.3 (Exhibit "LL-25-C"), and the total disbursements per subsidiary ledger amounts to
₱23,463,543.02 (Exhibit "LL-29-C"), the ratio of substantiated disbursements for fiscal year 2003 is
26.68% (₱6,259,078.30/₱23,463,543.02). Thus, the substantiated portion of CF-CPA Disbursements
for fiscal year 2003, arrived at by multiplying the ratio of 26.68% with the total rent income added to
and used in the CF-CPA Account in the amount of ₱6,602,655.00 is ₱1,761,588.35.131 (emphasis
supplied)

For better understanding, we summarize the CTA's computation as follows:

1. The CTA subtracted the rent income used in the construction of the Sports Complex
(₱4,007,724.00) from the rental income (₱10,610,379.00) earned from the abovementioned
concessionaries. The difference (₱6,602,655.00) was the portion claimed to have been deposited to
the CF-CPA Account.

2. The CTA then subtracted the supposed substantiated portion of CF-CPA disbursements
(₱1,761,308.37) from the ₱6,602,655.00 to arrive at the supposed unsubstantiated portion of the
rental income (₱4,841,066.65).132

3. The substantiated portion of CF-CPA disbursements (₱l,761,308.37)133 was derived by multiplying

the rental income claimed to have been added to the CF-CPA Account (₱6,602,655.00) by 26.68%
or the ratio of substantiated disbursements to total disbursements (₱23,463,543.02).

4. The 26.68% ratio134 was the result of dividing the substantiated disbursements from the CF-CPA
Account as found by the Independent CPA (₱6,259,078.30) by the total disbursements
(₱23,463,543.02) from the same account.
We find that this system of calculation is incorrect and does not truly give effect to the constitutional
grant of tax exemption to non-stock, non-profit educational institutions. The CTA's reasoning is
flawed because it required DLSU to substantiate an amount that is greater than the rental income
deposited in the CF-CPA Account in 2003.

To reiterate, to be exempt from tax, DLSU has the burden of proving that the proceeds of its rental
income (which amounted to a total of ₱10.61 million)135 were used for educational purposes. This
amount was divided into two parts: (a) the ₱4.0l million, which was used to pay the loan obtained for
the construction of the Sports Complex; and (b) the ₱6.60 million,136 which was transferred to the CF-
CPA account.

For year 2003, the total disbursement from the CF-CPA account amounted to ₱23 .46
million.137 These figures, read in light of the constitutional exemption, raises the question: does DLSU
claim that the whole total CF-CPA disbursement of ₱23.46 million is tax-exempt so that it is
required to prove that all these disbursements had been made for educational purposes?

We answer in the negative.

The records show that DLSU never claimed that the total CF-CPA disbursements of ₱23.46 million
had been for educational purposes and should thus be tax-exempt; DLSU only claimed ₱10.61
million for tax-exemption and should thus be required to prove that this amount had been used as
claimed.

Of this amount, ₱4.01 had been proven to have been used for educational purposes, as confirmed
by the Independent CPA. The amount in issue is therefore the balance of ₱6.60 million which was
transferred to the CF-CPA which in turn made disbursements of ₱23.46 million for various general
purposes, among them the ₱6.60 million transferred by DLSU.

Significantly, the Independent CPA confirmed that the CF-CPA made disbursements for educational
purposes in year 2003 in the amount ₱6.26 million. Based on these given figures, the CT A
concluded that the expenses for educational purposes that had been coursed through the CF-CPA
should be prorated so that only the portion that ₱6.26 million bears to the total CF-CPA
disbursements should be credited to DLSU for tax exemption.

This approach, in our view, is flawed given the constitutional requirement that revenues actually and
directly used for educational purposes should be tax-exempt. As already mentioned above, DLSU is
not claiming that the whole ₱23.46 million CF-CPA disbursement had been used for educational
purposes; it only claims that ₱6.60 million transferred to CF-CPA had been used for educational
purposes. This was what DLSU needed to prove to have actually and directly used for educational
purposes.

That this fund had been first deposited into a separate fund (the CF -CPA established to fund capital
projects) lends peculiarity to the facts of this case, but does not detract from the fact that the
deposited funds were DLSU revenue funds that had been confirmed and proven to have been
actually and directly used for educational purposes via the CF-CPA. That the CF-CPA might have
had other sources of funding is irrelevant because the assessment in the present case pertains only
to the rental income which DLSU indisputably earned as revenue in 2003. That the proven CF-CPA
funds used for educational purposes should not be prorated as part of its total CF-CPA
disbursements for purposes of crediting to DLSU is also logical because no claim whatsoever had
been made that the totality of the CF-CPA disbursements had been for educational purposes. No
prorating is necessary; to state the obvious, exemption is based on actual and direct use and this
DLSU has indisputably proven.
Based on these considerations, DLSU should therefore be liable only for the difference between
what it claimed and what it has proven. In more concrete terms, DLSU only had to prove that its
rental income for taxable year 2003 (₱10,610,379.00) was used for educational purposes. Hence,
while the total disbursements from the CF-CPA Account amounted to ₱23,463,543.02, DLSU only
had to substantiate its Pl0.6 million rental income, part of which was the ₱6,602,655.00 transferred
to the CF-CPA account. Of this latter amount, ₱6.259 million was substantiated to have been used
for educational purposes.

To summarize, we thus revise the tax base for deficiency income tax and VAT for taxable year 2003
as follows:

CTA
Decision138 Revised
Rental income 10,610,379.00 10,610,379.00

Less: Rent income used in construction of the Sports 4,007,724.00 4,007,724.00

Complex

Rental income deposited to the CF-CPA Account 6,602,655.00 6,602,655.00

Less: Substantiated portion of CF-CPA 1,761,588.35 6,259,078.30

disbursements

Tax base for deficiency income tax and VAT 4,841,066.65 343.576.70

On DLSU' s argument that the CTA should have appreciated its evidence in the same way as it did
with the evidence submitted by Ateneo in another separate case, the CTA explained that the issue in
the Ateneo case was not the same as the issue in the present case.

The issue in the Ateneo case was whether or not Ateneo could be held liable to pay income taxes
and VAT under certain BIR and Department of Finance issuances139 that required the educational
institution to own and operate the canteens, or other commercial enterprises within its campus, as
condition for tax exemption. The CTA held that the Constitution does not require the educational
institution to own or operate these commercial establishments to avail of the exemption.140

Given the lack of complete identity of the issues involved, the CTA held that it had to evaluate the
separate sets of evidence differently. The CTA likewise stressed that DLSU and Ateneo gave distinct
defenses and that its wisdom "cannot be equated on its decision on two different cases with two
different issues."141

DLSU disagrees with the CTA and argues that the entire assessment must be cancelled because it
submitted similar, if not stronger sets of evidence, as Ateneo. We reject DLSU's argument for
being non sequitur. Its reliance on the concept of uniformity of taxation is also incorrect.

First, even granting that Ateneo and DLSU submitted similar evidence, the sufficiency and
materiality of the evidence supporting their respective claims for tax exemption would necessarily
differ because their attendant issues and facts differ.
To state the obvious, the amount of income received by DLSU and by Ateneo during the taxable
years they were assessed varied. The amount of tax assessment also varied. The amount of
income proven to have been used for educational purposes
also varied because the amount substantiated varied.142 Thus, the amount of tax assessment
cancelled by the CTA varied.

On the one hand, the BIR assessed DLSU a total tax deficiency of ₱17,303,001.12 for taxable years
2001, 2002 and 2003. On the other hand, the BIR assessed Ateneo a total deficiency tax
of ₱8,864,042.35 for the same period. Notably, DLSU was assessed deficiency DST, while Ateneo
was not.143

Thus, although both Ateneo and DLSU claimed that they used their rental income actually, directly
and exclusively for educational purposes by submitting similar evidence, e.g., the testimony of their
employees on the use of university revenues, the report of the Independent CPA, their income
summaries, financial statements, vouchers, etc., the fact remains that DLSU failed to prove that a
portion of its income and revenues had indeed been used for educational purposes.

The CTA significantly found that some documents that could have fully supported DLSU's claim
were not produced in court. Indeed, the Independent CPA testified that some disbursements had not
been proven to have been used actually, directly and exclusively for educational purposes.144

The final nail on the question of evidence is DLSU's own admission that the original of these
documents had not in fact been produced before the CTA although it claimed that there was no bad
faith on its part.145 To our mind, this admission is a good indicator of how the Ateneo and the DLSU
cases varied, resulting in DLSU's failure to substantiate a portion of its claimed exemption.

Further, DLSU's invocation of Section 5, Rule 130 of the Revised

Rules on Evidence, that the contents of the missing supporting documents were proven by its recital
in some other authentic documents on record,146 can no longer be entertained at this late stage of the
proceeding. The CTA did not rule on this particular claim. The CTA also made no finding on DLSU' s
assertion of lack of bad faith. Besides, it is not our duty to go over these documents to test the
truthfulness of their contents, this Court not being a trier of facts.

Second, DLSU misunderstands the concept of uniformity of taxation.

Equality and uniformity of taxation means that all taxable articles or kinds of property of the same
class shall be taxed at the same rate.147 A tax is uniform when it operates with the same force and
effect in every place where the subject of it is found.148 The concept requires that all subjects of
taxation similarly situated should be treated alike and placed in equal footing.149

In our view, the CTA placed Ateneo and DLSU in equal footing. The CTA treated them alike because
their income proved to have been used actually, directly and exclusively for educational purposes
were exempted from taxes. The CTA equally applied the requirements in the YMCA case to test if
they indeed used their revenues for educational purposes.

DLSU can only assert that the CTA violated the rule on uniformity if it can show that,
despite proving that it used actually, directly and exclusively for educational purposes its income and
revenues, the CTA still affirmed the imposition of taxes. That the DLSU secured a different result
happened because it failed to fully prove that it used actually, directly and exclusively for educational
purposes its revenues and income.
On this point, we remind DLSU that the rule on uniformity of taxation does not mean that subjects of
taxation similarly situated are treated in literally the same way in all and every occasion. The fact that
the Ateneo and DLSU are both non-stock, non-profit educational institutions, does not mean that the
CTA or this Court would similarly decide every case for (or against) both universities. Success in tax
litigation, like in any other litigation, depends to a large extent on the sufficiency of evidence. DLSU's
evidence was wanting, thus, the CTA was correct in not fully cancelling its tax liabilities.

b. DLSU proved its payment of the DST

The CTA affirmed DLSU's claim that the DST due on its mortgage and loan transactions were paid
and remitted through its bank's On-Line Electronic DST Imprinting Machine. The Commissioner
argues that DLSU is not allowed to use this method of payment because an educational institution is
excluded from the class of taxpayers who can use the On-Line Electronic DST Imprinting Machine.

We sustain the findings of the CTA. The Commissioner's argument lacks basis in both the Tax Code
and the relevant revenue regulations.

DST on documents, loan agreements, and papers shall be levied, collected and paid for by the
person making, signing, issuing, accepting, or transferring the same.150 The Tax Code provides that
whenever one party to the document enjoys exemption from DST, the other party not exempt from
DST shall be directly liable for the tax. Thus, it is clear that DST shall be payable by any party to the
document, such that the payment and compliance by one shall mean the full settlement of the DST
due on the document.

In the present case, DLSU entered into mortgage and loan agreements with banks. These
agreements are subject to DST.151 For the purpose of showing that the DST on the loan agreement
has been paid, DLSU presented its agreements bearing the imprint showing that DST on the
document has been paid by the bank, its counterparty. The imprint should be sufficient proof that
DST has been paid. Thus, DLSU cannot be further assessed for deficiency DST on the said
documents.

Finally, it is true that educational institutions are not included in the class of taxpayers who can pay
and remit DST through the On-Line Electronic DST Imprinting Machine under RR No. 9-2000. As
correctly held by the CTA, this is irrelevant because it was not DLSU who used the On-Line
Electronic DST Imprinting Machine but the bank that handled its mortgage and loan transactions. RR
No. 9-2000 expressly includes banks in the class of taxpayers that can use the On-Line Electronic
DST Imprinting Machine.

Thus, the Court sustains the finding of the CTA that DLSU proved the

payment of the assessed DST deficiency, except for the unpaid balance of

₱13,265.48.152

WHEREFORE, premises considered, we DENY the petition of the Commissioner of Internal

Revenue in G.R. No. 196596 and AFFIRM the December 10, 2010 decision and March 29, 2011
resolution of the Court of Tax Appeals En Banc in CTA En Banc Case No. 622, except for the total
amount of deficiency tax liabilities of De La Salle University, Inc., which had been reduced.

We also DENY both the petition of De La Salle University, Inc. in G.R. No. 198841 and the petition of
the Commissioner of Internal Revenue in G.R. No. 198941 and thus AFFIRM the June 8, 2011
decision and October 4, 2011 resolution of the Court of Tax Appeals En Banc in CTA En Banc Case
No. 671, with the MODIFICATION that the base for the deficiency income tax and VAT for taxable
year 2003 is ₱343,576.70.

SO ORDERED.

Double Taxation

G.R. No. 196681, June 27, 2018 - CITY OF MANILA AND OFFICE OF THE CITY TREASURER OF MANILA,
Petitioners, v. COSMOS BOTTLING CORPORATION, Respondent.

THIRD DIVISION

G.R. No. 196681, June 27, 2018

CITY OF MANILA AND OFFICE OF THE CITY TREASURER OF MANILA, Petitioners, v. COSMOS
BOTTLING CORPORATION, Respondent.

DECISION

MARTIRES, J.:

The filing of a motion for reconsideration or new trial to question the decision of a division of the Court of
Tax Appeals (CTA) is mandatory. An appeal brought directly to the CTA En Banc is dismissible for lack of
jurisdiction.

In local taxation, an assessment for deficiency taxes made by the local government unit may be protested
before the local treasurer without necessity of payment under protest. But if payment is made simultaneous
with or following a protest against an assessment, the taxpayer may subsequently maintain an action in
court, whether as an appeal from assessment or a claim for refund, so long as it is initiated within thirty
(30) days from either decision or inaction of the local treasurer on the protest.

THE CASE

This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the 16 February
20111 and 20 April 20112 Resolutions of the CTA En Banc. The 16 February 2011 Resolution dismissed the
petition for review of the petitioners for failure to file a motion for reconsideration or new trial before the
CTA Third Division (CTA Division); while the 20 April 2011 Resolution denied the motion for reconsideration
of the first assailed resolution. The CTA Division's 9 November 2010 Decision3 ruled in favor of respondent
Cosmos Bottling Corporation (Cosmos) by partially granting its appeal from the decision of the Regional Trial
Court, Branch 49, Manila (RTC), in Civil Case No. 01-116881 entitled Cosmos Bottling Corporation v. City of
Manila and Liberty Toledo (City Treasurer of Manila).
 THE FACTS

Antecedents

The CTA Division, narrates the antecedents as follows:

For the first quarter of 2007, the City of Manila assessed [Cosmos] local business taxes and regulatory fees
in the total amount of P1,226,781.05, as contained in the Statement of Account dated January 15, 2007.
[Cosmos] protested the assessment through a letter dated January 18, 2007, arguing that Tax Ordinance
Nos. 7988 and 8011, amending the Revenue Code of Manila (RCM), have been declared null and void.
[Cosmos] also argued that the collection of local business tax under Section 21 of the RCM in addition to
Section 14 of the same code constitutes double taxation.

[Cosmos] also tendered payment of only P131,994.23 which they posit is the correct computation of their
local business tax for the first quarter of 2007. This payment was refused by the City Treasurer. [Cosmos]
also received a letter from the City Treasurer denying their protest, stating as follows:

In view thereof, this Office, much to our regret, has to deny your protest and that any action taken thereon
will be sub-judice. Rest assured, however, that once we receive a final ruling on the matter, we will act in
accordance therewith. [Cosmos] was thus constrained to pay the assessment of P1,226,78,1.05 as
evidenced by Official Receipt No. BAJ-005340 dated February 13, 2007. On March 1, 2007, [Cosmos] filed a
claim for refund of P1,094,786.82 with the Office of the City Treasurer raising the same grounds as
discussed in their protest.

On March 8, 2007, [Cosmos] filed its complaint with the RTC of Manila praying for the refund or issuance of
a tax credit certificate in the amount of P1,094,786.82. The RTC in its decision ruled in favor of [Cosmos]
but denied the claim for refund. The dispositive portion of the assailed Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered enjoining the respondent Treasurer of the
City of Manila to refrain henceforth from imposing tax under Section 21 of the Revenue Code of Manila if it
had already imposed tax on .manufacturers under Section 14 of the same Code. As to the prayer in the
petition for refund, the same is denied.

[Cosmos'] motion for partial reconsideration was also denied, hence, [the] Petition for Review [before the
CTA].4

The petition for review was raffled to the CTA Division and docketed as CTA A.C. No. 60.

The Ruling of the CTA Division

The CTA Division essentially ruled that the collection by the City Treasurer of Manila of local business tax
under both Section 21 and Section 14 of the Revenue Code of Manila constituted double taxation.5 It also
ruled that the City Treasurer cannot validly assess local business tax based on the increased rates under Tax
Ordinance Nos. 7988 and 8011 after the same have been declared null and void.6 Finally, the court held that
Cosmos Bottling Corporation's (Cosmos) local business tax liability for the calendar year 2007 shall be
computed based on the gross sales or receipts for the year 2006.7

The dispositive portion of the decision of the CTA Division reads:

WHEREFORE, finding merit in the instant Petition for Review, the same is hereby granted. The assailed
Decision dated April 14, 2009 of the Regional Trial Court of Manila, Branch 49 in Civil Case No. 07-116881 is
hereby PARTIALLY REVERSED. Accordingly, respondent is ENJOINED from imposing the business tax under
Section 21 of the Revenue Code of Manila if it had already imposed tax on manufacturers under Section 14
of the same Code. Respondent, furthermore, is ORDERED to REFUND or to issue a TAX CREDIT
CERTIFICATE to petitioner the amount of P1,094,786.82, representing excess business taxes collected for
the first quarter of year 2007.8
Instead of filing a motion for reconsideration or new trial, the petitioners directly filed with the CTA En Banc
a petition for review9 praying that the decision of the CTA Division be reversed or set aside.

The Ruling of the CTA En Banc

In its Resolution of 16 February 2011, the CTA En Banc ruled that the direct resort to it without a prior
motion for reconsideration or new trial before the CTA Division violated Section 18 of Republic Act (R.A.) No.
1125,10 as amended by R.A. No. 9282 and R.A. No. 9503, and Section 1, Rule 8 of the Revised Rules of the
CTA (CTA Rules).11

The petitioners sought reconsideration, but their motion was denied by the CTA En Banc. Hence, the appeal
before this Court.

The Present Petition for Review

The petitioners assigned the following errors allegedly committed by the CTA En Banc:

1. The Honorable CTA En Banc erred in not reconsidering its Order dismissing the case on procedural
grounds.

2. The 3rd Division of the CTA committed reversible error when it ruled in favor of respondent Cosmos
despite its failure to appeal the assessment within 30 days from receipt of the denial by the City
Treasurer.

3. The 3rd Division of the CTA committed grave error when it failed to consider that the assessment
subject of this case has already become final and executory and no longer appealable.

4. The 3rd Division of the CTA gravely erred in granting Cosmos' claim despite erroneously filing the
instant case under the provision of Section 196 of the LGC.12

On the first ground, the petitioners essentially invoke excusable mistake on the part of their handling lawyer
in asking the Court to resolve the case on the merits. They argue that the Court had on many occasions set
aside the rules of procedure in order to afford substantial justice.

On the second, third, and fourth grounds, the petitioners claim that Cosmos' remedy was one of protest
against assessment as demonstrated by its letter dated 18 January 2007. Being so, Cosmos' adopted
remedy should be governed by Section 195 of the Local Government Code (LGC). Pursuant to such
provision, Cosmos had only thirty (30) days from receipt of denial of the protest within which to file an
appeal before a court of competent jurisdiction. However, Cosmos failed to comply with the period of appeal,
conveniently shifting its theory from tax protest to tax refund under Section 196 of the LGC when it later on
filed a "claim for refund/tax credit of illegally/erroneously paid taxes" on 1 March 2007. The petitioners,
thus, argue that Cosmos had already lost its right to appeal and is already precluded from questioning the
denial of its protest.

In its comment,13 Cosmos counters that the rules should not be lightly disregarded by harping on substantial
justice and the policy of liberal construction. It also insists that it is not Section 195 of the LGC that is
applicable to it but Section 196 of the same code.

ISSUES

Whether the CTA En Banc correctly dismissed the petition for review before it for failure of the petitioners to
file a motion for reconsideration or new trial with the CTA Division.

Whether a taxpayer who had initially protested and paid the assessment may shift its remedy to one of
refund.

OUR RULING
We rule for Cosmos.

I.

The filing of a motion for reconsideration or new trial before the

CTA Division is an indispensable requirement for filing an appeal
before the CTA En Banc.

The CTA En Banc was correct in interpreting Section 18 of R.A. No. 1125, as amended by R.A. 9282 and
R.A. No. 9503, which states –

Section 18. Appeal to the Court of Tax Appeals En Banc. – No civil proceeding involving matter arising under
the National Internal Revenue Code, the Tariff and Customs Code or the Local Government Code shall be
maintained, except as herein provided, until and unless an appeal has been previously filed with the CTA
and disposed of this Act.

A party adversely affected by a resolution of a Division of the CTA on motion for reconsideration or new trial,
may file a petition for review with the CTA en banc. (underlining supplied)

as requiring a prior motion for reconsideration or new trial before the same division of the CTA that rendered
the assailed decision before filing a petition for review with the CTA En Banc. Failure to file such motion for
reconsideration or new trial is cause for dismissal of the appeal before the CTA En Banc.

Corollarily, Section 1, Rule 8 of the CTA Rules provides:

Section 1. Review of cases in the Court en banc. — In cases falling under the exclusive appellate jurisdiction
of the Court en banc, the petition for review of a decision or resolution of the Court in Division must be
preceded by the filing of a timely motion for reconsideration or new trial with the Division. (emphasis
supplied)

Clear it is from the cited rule that the filing of a motion for reconsideration or new trial is mandatory – not
merely directory – as indicated by the word "must."

Thus, in Asiatrust Development Bank, Inc. v. Commissioner of Internal Revenue (Asiatrust),14 we declared
that a timely motion for reconsideration or new trial must first be filed with the CTA Division that issued the
assailed decision or resolution in order for the CTA En Banc to take cognizance of an appeal via a petition for
review. Failure to do so is a ground for the dismissal of the appeal as the word "must" indicates that the
filing of a prior motion is mandatory, and not merely directory.15 In Commissioner of Customs v. Marina
Sales, Inc. (Marina Sales),16 which was cited in Asiatrust, we held:

The rules are clear. Before the CTA En Banc could take cognizance of the petition for review concerning a
case falling under its exclusive appellate jurisdiction, the litigant must sufficiently show that it sought prior
reconsideration or moved for a new trial with the concerned CTA division. Procedural rules are not to be
trifled with or be excused simply because their noncompliance may have resulted in prejudicing a party's
substantive rights. Rules are meant to be followed. They may be relaxed only for very exigent and
persuasive reasons to relieve a litigant of an injustice not commensurate to his careless non-observance of
the prescribed rules.17 (citations omitted)
 The rules are to be relaxed only in the interest of justice and to
benefit the deserving.18

We cannot lend to the petitioners the benefit of liberal application of the rules.. As in Marina Sales, the rules
may be relaxed when to do so would afford a litigant substantial justice. After a cursory examination of the
records of the case, we find that the petitioners, as determined by the CTA Division, erroneously assessed
and collected from Cosmos local business taxes for the first quarter of 2007; thus, a refund is warranted.

The ruling of the CTA Division is anchored on the following findings:

(1) the assessment against Cosmos was based on Ordinance Nos. 7988
and 8011 (Revenue Code of Manila);

(2) the assessment against Cosmos included taxes imposed under Section
21, in addition to Section 14, of the Revenue Code of Manila; and

(3) the local taxes collected from Cosmos for the first quarter of 2007 was
based on its gross receipts in 2005.

We cannot help but sustain the ruling of the CTA Division that the City of Manila cannot validly assess local
business taxes under Ordinance Nos. 7988 and 8011 because they are void and of no legal effect; the
collection of local business taxes under Section 21 in addition to Section 14 of the Revenue Code of Manila
constitutes double taxation; and the 2007 local business tax assessed against Cosmos should be computed
based on the latter's gross receipts in 2006.

1. Ordinance Nos. 7988 and 8011 have been declared null and void,
hence, invalid bases for the imposition of business taxes.

At .the time the CTA Division rendered the assailed decision, the cases of Coca-Cola Bottlers Philippines, Inc.
v. City of Manila (2006),19 The City of Manila v. Coca-Cola Bottlers, Inc. (2009)20 and City of Manila v. Coca-
Cola Bottlers, Inc. (2010)21 had already settled the matter concerning the validity of Ordinance Nos. 7988
and 8011. The said cases clarified that Ordinance Nos. 7988 and 8011, which amended Ordinance No. 7794,
were null and void for failure to comply with the required publication for three (3) consecutive days and thus
cannot be the basis for the collection of business taxes.

It is not disputed that Cosmos was assessed with the tax on manufacturers under Section 14 and the tax on
other businesses under Section 21 of Ordinance No. 7988, as amended by Ordinance No. 8011. Consistent
with the settled jurisprudence above, the taxes assessed in this case, insofar as they are based on such void
ordinances, must perforce be nullified. Thus, what remains enforceable is the old Ordinance No. 7794.
Accordingly, the business tax assessable against Cosmos should be based on the rates provided by this
Ordinance.

2. The collection of taxes under both Sections 14 and 21 of the

Revenue Code of Manila constitutes double taxation.
While the City of Manila could impose against Cosmos a manufacturer's tax under Section 14 of Ordinance
No. 7794, or the Revenue Code of Manila, it cannot at the same time impose the tax under Section 21 of the
same code; otherwise, an obnoxious double taxation would set in. The petitioners erroneously argue that
double taxation is wanting for the reason that the tax imposed under Section 21 is imposed on a different
object and of a different nature as that in Section 14. The argument is not novel. In The City of Manila v.
Coca-Cola Bottlers, Inc. (2009),22 the Court explained –

[T]here is indeed double taxation if respondent is subjected to the taxes under both Sections 14 and 21 of
Tax Ordinance No. 7794, since these are being imposed: (1) on the same subject matter — the privilege of
doing business in the City of Manila; (2) for the same purpose — to make persons conducting business
within the City of Manila contribute to city revenues; '(3) by the same taxing authority — petitioner City of
Manila; (4) within the same taxing jurisdiction — within the territorial jurisdiction of the City of Manila; (5)
for the same taxing periods per calendar year; and (6) of the same kind or character — a local business tax
imposed on gross sales or receipts of the business.

The distinction petitioners attempt to make between the taxes under Sections 14 and 21 of Tax Ordinance
No. 7794 is specious. The Court revisits Section 143 of the LGC, the very source of the power of
municipalities and cities to impose a local business tax, and to which any local business tax imposed by
petitioner City of Manila must conform. It is apparent from a perusal thereof that when a municipality or
city has already imposed a business tax on manufacturers, etc. of liquors, distilled spirits, wines, and
any other article of commerce, pursuant to Section 143(a) of the LGC, said municipality or city may
no longer subject the same manufacturers, etc. to a business tax under Section 143(h) of the
same Code. Section 143(h) may be imposed only on businesses that are subject to excise tax, VAT, or
percentage tax under the NIRC, and that are "not otherwise specified in preceding paragraphs." In the same
way, businesses such as respondent's, already subject to a local business tax under Section 14 of
Tax Ordinance No. 7794 [which is based on Section 143(a) of the LGC], can no longer be made liable for
local business tax under Section 21 of the same Tax Ordinance [which is based on Section 143(h) of the
LGC].23 (emphases supplied)

In reality, Cosmos, being a manufacturer of beverages,24 is similarly situated with Coca-Cola Bottlers, Inc. in
the cited cases, with the difference only in the taxable periods of assessment. Thus, given that Cosmos is
already paying taxes under Section 14 (just like Coca-Cola), it is not totally misplaced to consider the
additional imposition of a tax under Section 21 as constituting double taxation, therefore excessive,
warranting its refund to Cosmos as the CTA Division has correctly ordered.

Computation of Business Tax Under Section 14

We consider next the proper basis for the computation of the business tax under Section 14 that is
imposable against Cosmos.

3. The computation of local business tax is based on gross sales or

receipts of the preceding calendar year.

It is undisputed that Section 14 of the Revenue Code of Manila is derived from Section 143(a) of the LGC
which provides:

Section 143. Tax on Business. – The municipality may impose taxes on the following businesses:

(a) On manufacturers, assemblers, repackers, processors, brewers,

distillers, rectifiers, and compounders x x x in accordance with the
following schedule: With gross sales or receipts for the preceding
calendar year in the amount of:

x x x x (emphasis supplied)
Consistent with the above provision, an assessment for business tax under Section 14 of Ordinance No.
7794 for the taxable year 2007 should be computed based on the taxpayer's gross sales or receipts of
the preceding calendar year 2006. In this case, however, the petitioners based the computation of
manufacturer's tax on Cosmos' gross sales for the calendar year 2005. The CTA Division was therefore
correct in adjusting the computation of the business tax on the basis of Cosmos' gross sales in 2006 which
amount, incidentally, was lower than Cosmos' gross sales in 2005. The business tax paid corresponding to
the difference is consequently refundable to Cosmos.

II.

A taxpayer who had protested and paid an assessment may later

on institute an action for refund.

The petitioners submit that the assessment against Cosmos became final and executory when the latter
effectively abandoned its protest and instead sued in court for the refund of the assessed taxes and charges.

We cannot agree mainly for two reasons.

First, even a cursory glance at the complaint filed by Cosmos would readily reveal that the action is not just
for the refund of its paid taxes but also one assailing the assessment in question. Cosmos captioned its
petition before the RTC as "For: The Revision of Statement of Account (Preliminary Assessment) and For
Refund or Credit of Local Business Tax Erroneously/Illegally Collected."25 The allegations in said
complaint26 likewise confirm that Cosmos did not agree with the assessment prepared by Liberty M. Toledo
(Toledo) who was the City Treasurer of the City of Manila at the time. In asking the court to refund the
assessed taxes it had paid, Cosmos essentially alleged that the basis of the payment, which is the
assessment issued by Toledo, is erroneous or illegal.

It is, thus, totally misplaced to consider Cosmos as having abandoned its protest against the assessment. By
seasonably instituting the petition before the RTC, the assessment had not attained finality.

Second, a taxpayer who had protested and paid an assessment is not precluded from later on instituting an
action for refund or credit.

The taxpayers' remedies of protesting an assessment and refund of taxes are stated in Sections 195 and
196 of the LGC, to wit:

Section 195. Protest of Assessment. – When the local treasurer or his duly authorized representative finds
that correct taxes, fees, or charges have not been paid, he shall issue a notice of assessment stating the
nature of the tax, fee, or charge, the amount of deficiency, the surcharges, interests and penalties. Within
sixty (60) days from the receipt of the notice of assessment, the taxpayer may file a written protest with the
local treasurer contesting the assessment; otherwise, the assessment shall become final and executory. The
local treasurer shall decide the protest within sixty (60) days from the time of its filing. If the local treasurer
finds the protest to be wholly or partly meritorious, he shall issue a notice cancelling wholly or partially the
assessment. However, if the local treasurer finds the assessment to be wholly or partly correct, he shall
deny the protest wholly or partly with notice to the taxpayer. The taxpayer shall have thirty (30) days from
the receipt of the denial of the protest or from the lapse of the sixty (60)-day period prescribed herein within
which to appeal with the court of competent jurisdiction otherwise the assessment becomes conclusive and
unappealable.

Section 196. Claim for Refund of Tax Credit. – No case or proceeding shall be maintained in any court for
the recovery of any tax, fee, or charge erroneously or illegally collected until a written claim for refund or
credit has been filed with the local treasurer. No case or proceeding shall be entertained in any court after
the expiration of two (2) years from the date of the payment of such tax, fee, or charge, or from the date
the taxpayer is entitled to a refund or credit.
The first provides the procedure for contesting an assessment issued by the local treasurer; whereas, the
second provides the procedure for the recovery of an erroneously paid or illegally collected tax, fee or
charge. Both Sections 195 and 196 mention an administrative remedy that the taxpayer should first exhaust
before bringing the appropriate action in court. In Section 195, it is the written protest with the local
treasurer that constitutes the administrative remedy; while in Section 196, it is the written claim for refund
or credit with the same office. As to form, the law does not particularly provide any for a protest or refund
claim to be considered valid. It suffices that the written protest or refund is addressed to the local treasurer
expressing in substance its desired relief. The title or denomination used in describing the letter would not
ordinarily put control over the content of the letter.

Obviously, the application of Section 195 is triggered by an assessment made by the local treasurer or his
duly authorized representative for nonpayment of the correct taxes, fees or charges. Should the taxpayer
find the assessment to be erroneous or excessive, he may contest it by filing a written protest before the
local treasurer within the reglementary period of sixty (60) days from receipt of the notice; otherwise, the
assessment shall become conclusive. The local treasurer has sixty (60) days to decide said protest. In case
of denial of the protest or inaction by the local treasurer, the taxpayer may appeal27 with the court of
competent jurisdiction; otherwise, the assessment becomes conclusive and unappealable.

On the other hand, Section 196 may be invoked by a taxpayer who claims to have erroneously paid a tax,
fee or charge, or that such tax, fee or charge had been illegally collected from him. The provision requires
the taxpayer to first file a written claim for refund before bringing a suit in court which must be initiated
within two years from the date of payment. By necessary implication, the administrative remedy of claim for
refund with the local treasurer must be initiated also within such two-year prescriptive period but before the
judicial action.

Unlike Section 195, however, Section 196 does not expressly provide a specific period within which the local
treasurer must decide the written claim for refund or credit. It is, therefore, possible for a taxpayer to
submit an administrative claim for refund very early in the two-year period and initiate the judicial claim
already near the end of such two-year period due to an extended inaction by the local treasurer. In this
instance, the taxpayer cannot be required to await the decision of the local treasurer any longer, otherwise,
his judicial action shall be barred by prescription.

Additionally, Section 196 does not expressly mention an assessment made by the local treasurer. This
simply means that its applicability does not depend upon the existence of an assessment notice. By
consequence, a taxpayer may proceed to the remedy of refund of taxes even without a prior protest against
an assessment that was not issued in the first place. This is not to say that an application for refund can
never be precipitated by a previously issued assessment, for it is entirely possible that the taxpayer, who
had received a notice of assessment, paid the assessed tax, fee or charge believing it to be erroneous or
illegal. Thus, under such circumstance, the taxpayer may subsequently direct his claim pursuant to
Section 196 of the LGC.

Clearly, when a taxpayer is assessed a deficiency local tax, fee or charge, he may protest it under Section
195 even without making payment of such assessed tax, fee or charge. This is because the law on local
government taxation, save in the case of real property tax,28 does not expressly require "payment under
protest" as a procedure prior to instituting the appropriate proceeding in court. This implies that the success
of a judicial action questioning the validity or correctness of the assessment is not necessarily hinged on the
previous payment of the tax under protest.

Needless to say, there is nothing to prevent the taxpayer from paying the tax under protest or simultaneous
to a protest. There are compelling reasons why a taxpayer would prefer to pay while maintaining a protest
against the assessment For instance, a taxpayer who is engaged in business would be hard-pressed to
secure a business permit unless he pays an assessment for business tax and/or regulatory fees. Also, a
taxpayer may pay the assessment in order to avoid further penalties, or save his properties from levy and
distraint proceedings.

The foregoing clearly shows that a taxpayer facing an assessment may protest it and alternatively: (1)
appeal the assessment in court, or (2) pay the tax and thereafter seek a refund.29 Such procedure may find
jurisprudential mooring in San Juan v. Castro30 wherein the Court described for the first and only time the
alternative remedies for a taxpayer protesting an assessment – either appeal the assessment before the
court of competent jurisdiction, or pay the tax and then seek a refund.31 The Court, however, did not
elucidate on the relation of the second mentioned alternative option, i.e., pay the tax and then seek a
refund, to the remedy stated in Section 196.

As this has a direct bearing on the arguments raised in the petition, we thus clarify.

Where an assessment is to be protested or disputed, the taxpayer may proceed (a) without payment, or (b)
with payment32 of the assessed tax, fee or charge. Whether there is payment of the assessed tax or not, it is
clear that the protest in writing must be made within sixty (60) days from receipt of the notice of
assessment; otherwise, the assessment shall become final and conclusive. Additionally, the subsequent
court action must be initiated within thirty (30) days from denial or inaction by the local
treasurer; otherwise, the assessment becomes conclusive and unappealable.

(a) Where no payment is made, the taxpayer's procedural remedy is governed strictly by Section 195. That
is, in case of whole or partial denial of the protest, or inaction by the local treasurer, the taxpayer's only
recourse is to appeal the assessment with the court of competent jurisdiction. The appeal before the court
does not seek a refund but only questions the validity or correctness of the assessment.

(b) Where payment was made, the taxpayer may thereafter maintain an action in court questioning the
validity and correctness of the assessment (Section 195, LGC) and at the same time seeking a refund of
the taxes. In truth, it would be illogical for the taxpayer to only seek a reversal of the assessment without
praying for the refund of taxes. Once the assessment is set aside by the court, it follows as a matter of
course that all taxes paid under the erroneous or invalid assessment are refunded to the taxpayer.

The same implication should ensue even if the taxpayer were to style his suit in court as an action for refund
or recovery of erroneously paid or illegally collected tax as pursued under Section 196 of the LGC. In such
a suit for refund, the taxpayer cannot successfully prosecute his theory of erroneous payment or illegal
collection of taxes without necessarily assailing the validity or correctness of the assessment he had
administratively protested.

It must be understood, however, that in such latter case, the suit for refund is conditioned on the prior filing
of a written claim for refund or credit with the local treasurer. In this instance, what may be considered as
the administrative claim for refund is the letter-protest submitted to the treasurer. Where the taxpayer had
paid the assessment, it can be expected that in the same letter-protest, he would also pray that the taxes
paid should be refunded to him.33 As previously mentioned, there is really no particular form or style
necessary for the protest of an assessment or claim of refund of taxes. What is material is the substance of
the letter submitted to the local treasurer.

Equally important is the institution of the judicial action for refund within thirty (30) days from the
denial of or inaction on the letter-protest or claim, not any time later, even if within two (2) years
from the date of payment (as expressly stated in Section 196). Notice that the filing of such judicial claim
for refund after questioning the assessment is within the two-year prescriptive period specified in Section
196. Note too that the filing date of such judicial action necessarily falls on the beginning portion of the two-
year period from the date of payment. Even though the suit is seemingly grounded on Section 196,the
taxpayer could not avail of the full extent of the two-year period within which to initiate the
action in court.

The reason is obvious. This is because an assessment was made, and if not appealed in court within thirty
(30) days from decision or inaction on the protest, it becomes conclusive and unappealable. Even if the
action in court is one of claim for refund, the taxpayer cannot escape assailing the assessment, invalidity or
incorrectness, the very foundation of his theory that the taxes were paid erroneously or otherwise collected
from him illegally. Perforce, the subsequent judicial action, after the local treasurer's decision or inaction,
must be initiated within thirty (30) days later. It cannot be anytime thereafter because the lapse of 30 days
from decision or inaction results in the assessment becoming conclusive and unappealable. In short, the
scenario wherein the administrative claim for refund falls on the early stage of the two-year period but the
judicial claim on the last day or late stage of such two-year period does not apply in this specific instance
where an assessment is issued.

To stress, where an assessment is issued, the taxpayer cannot choose to pay the assessment and thereafter
seek a refund at any time within the full period of two years from the date of payment as Section 196 may
suggest. If refund is pursued, the taxpayer must administratively question the validity or correctness of the
assessment in the 'letter-claim for refund' within 60 days from receipt of the notice of assessment, and
thereafter bring suit in court within 30 days from either decision or inaction by the local treasurer.

Simply put, there are two conditions that must be satisfied in order to successfully prosecute an action for
refund in case the taxpayer had received an assessment. One, pay the tax and administratively assail within
60 days the assessment before the local treasurer, whether in a letter-protest or in a claim for refund. Two,
bring an action in court within thirty (30) days from decision or inaction by the local treasurer, whether such
action 1s denominated as an appeal from assessment and/or claim for refund of erroneously or illegally
collected tax.

In this case, after Cosmos received the assessment of Toledo on 15 January 2007, it forthwith protested
such assessment through a letter dated 18 January 2007.34 Constrained to pay the assessed taxes and
charges, Cosmos subsequently wrote the Office of the City Treasurer another letter asking for the refund
and reiterating the grounds raised in the previous submitted protest letter.35 In the meantime, Cosmos
received on 6 February 2007 the letter of Toledo denying its protest.36 Thus, on 8 March 2007, or exactly
thirty (30) days from its receipt of the denial, Cosmos brought the action before the RTC of Manila.

Under the circumstances, it is evident that Cosmos was fully justified in asking for the refund of the assailed
taxes after protesting the same before the local treasurer. Consistent with the discussion in the premises,
Cosmos may resort to, as it actually did, the alternative procedure of seeking a refund after timely
protesting and paying the assessment. Considering that Cosmos initiated the judicial claim for refund within
30 days from receipt of the denial of its protest, it stands to reason that the assessment which was validly
protested had not yet attained finality.

To reiterate, Cosmos, after it had protested and paid the assessed tax, is permitted by law to seek a refund
having fully satisfied the twin conditions for prosecuting an action for refund before the court.

Consequently, the CTA did not commit a reversible error when it allowed the refund in favor of Cosmos.

WHEREFORE, the petition is DENIED for lack of merit. The 16 February 2011 and 20 April 2011
Resolutions of the Court of Tax Appeals En Banc in C.T.A. E.B. No. 702 are hereby AFFIRMED.

The 9 November 2010 Decision of the Court of Tax Appeals Third Division in C.T.A. AC No. 60 is
likewise AFFIRMED.

SO ORDERED.

Due Process

EN BANC

[G.R. No. 111953. December 12, 1997]

HON. RENATO C. CORONA, in his capacity as Assistant Secretary for

Legal Affairs, HON. JESUS B. GARCIA, in his capacity as Acting
Secretary, Department of Transportation and Communications,
and ROGELIO A. DAYAN, in his capacity as General Manager of
 Philippine Ports Authority, petitioners, vs. UNITED HARBOR
PILOTS ASSOCIATION OF THE PHILIPPINES and MANILA
PILOTS ASSOCIATION, respondents.

DECISION
ROMERO, J.:

In issuing Administrative Order No. 04-92 (PPA-AO No. 04-92), limiting the
term of appointment of harbor pilots to one year subject to yearly renewal or
cancellation, did the Philippine Ports Authority (PPA) violate respondents right
to exercise their profession and their right to due process of law?
The PPA was created on July 11, 1974, by virtue of Presidential Decree No.
505. On December 23, 1975, Presidential Decree No. 857 was issued revising
the PPAs charter. Pursuant to its power of control, regulation, and supervision
of pilots and the pilotage profession, the PPA promulgated PPA-AO-03-
[1]

85 on March 21, 1985, which embodied the Rules and Regulations Governing
[2]

Pilotage Services, the Conduct of Pilots and Pilotage Fees in Philippine

Ports. These rules mandate, inter alia, that aspiring pilots must be holders of
pilot licenses and must train as probationary pilots in outports for three months
[3]

and in the Port of Manila for four months. It is only after they have achieved
satisfactory performance that they are given permanent and regular
[4]

appointments by the PPA itself to exercise harbor pilotage until they reach the
[5]

age of 70, unless sooner removed by reason of mental or physical unfitness by

the PPA General Manager. Harbor pilots in every harbor district are further
[6]

required to organize themselves into pilot associations which would make

available such equipment as may be required by the PPA for effective pilotage
services. In view of this mandate, pilot associations invested in floating,
communications, and office equipment. In fact, every new pilot appointed by the
PPA automatically becomes a member of a pilot association and is required to
pay a proportionate equivalent equity or capital before being allowed to assume
his duties, as reimbursement to the association concerned of the amount it paid
to his predecessor.
Subsequently, then PPA General Manager Rogelio A. Dayan issued PPA-
AO No. 04-92 on July 15, 1992, whose avowed policy was to instill effective
[7]

discipline and thereby afford better protection to the port users through the
improvement of pilotage services. This was implemented by providing therein
that all existing regular appointments which have been previously issued either
by the Bureau of Customs or the PPA shall remain valid up to 31 December
1992 only and that all appointments to harbor pilot positions in all pilotage
districts shall, henceforth, be only for a term of one (1) year from date of
effectivity subject to yearly renewal or cancellation by the Authority after
conduct of a rigid evaluation of performance.
On August 12, 1992, respondents United Harbor Pilots Association and the
Manila Pilots Association, through Capt. Alberto C. Compas, questioned PPA-
AO No. 04-92 before the Department of Transportation and Communication,
but they were informed by then DOTC Secretary Jesus B. Garcia that the matter
of reviewing, recalling or annulling PPAs administrative issuances lies
exclusively with its Board of Directors as its governing body.
Meanwhile, on August 31, 1992, the PPA issued Memorandum Order No.
08-92 which laid down the criteria or factors to be considered in the
[8]

reappointment of harbor pilots, viz.: (1) Qualifying Factors: safety record and
[9]

physical/mental medical exam report and (2) Criteria for

Evaluation: promptness in servicing vessels, compliance with PPA Pilotage
[10]

Guidelines, number of years as a harbor pilot, average GRT of vessels serviced

as pilot, awards/commendations as harbor pilot, and age.
Respondents reiterated their request for the suspension of the
implementation of PPA-AO No. 04-92, but Secretary Garcia insisted on his
position that the matter was within the jurisdiction of the Board of Directors of
the PPA. Compas appealed this ruling to the Office of the President (OP),
reiterating his arguments before the DOTC.
On December 23, 1992, the OP issued an order directing the PPA to hold
in abeyance the implementation of PPA-AO No. 04-92. In its answer, the PPA
countered that said administrative order was issued in the exercise of its
administrative control and supervision over harbor pilots under Section 6-a (viii),
Article IV of P. D. No. 857, as amended, and it, along with its implementing
guidelines, was intended to restore order in the ports and to improve the quality
of port services.
On March 17, 1993, the OP, through then Assistant Executive Secretary for
Legal Affairs Renato C. Corona, dismissed the appeal/petition and lifted the
restraining order issued earlier. He concluded that PPA-AO No. 04-92 applied
[11]

to all harbor pilots and, for all intents and purposes, was not the act of Dayan,
but of the PPA, which was merely implementing Section 6 of P.D. No. 857,
mandating it to control, regulate and supervise pilotage and conduct of pilots in
any port district.
On the alleged unconstitutionality and illegality of PPA-AO No. 04-92 and
its implementing memoranda and circulars, Secretary Corona opined that:

The exercise of ones profession falls within the constitutional guarantee against
wrongful deprivation of, or interference with, property rights without due process. In
the limited context of this case, PPA-AO 04-92 does not constitute a wrongful
interference with, let alone a wrongful deprivation of, the property rights of those
affected thereby. As may be noted, the issuance aims no more than to improve
pilotage services by limiting the appointment to harbor pilot positions to one year,
subject to renewal or cancellation after a rigid evaluation of the appointees
performance.

PPA-AO 04-92 does not forbid, but merely regulates, the exercise by harbor pilots of
their profession in PPAs jurisdictional area. (Emphasis supplied)

Finally, as regards the alleged absence of ample prior consultation before

the issuance of the administrative order, Secretary Corona cited Section 26 of
P.D. No. 857, which merely requires the PPA to consult with relevant
Government agencies. Since the PPA Board of Directors is composed of the
Secretaries of the DOTC, the Department of Public Works and Highways, the
Department of Finance, and the Department of Environment and Natural
Resources, as well as the Director-General of the National Economic
Development Agency, the Administrator of the Maritime Industry Authority
(MARINA), and the private sector representative who, due to his knowledge and
expertise, was appointed by the President to the Board, he concluded that the
law has been sufficiently complied with by the PPA in issuing the assailed
administrative order.
Consequently, respondents filed a petition for certiorari, prohibition and
injunction with prayer for the issuance of a temporary restraining order and
damages, before Branch 6 of the Regional Trial Court of Manila, which was
docketed as Civil Case No. 93-65673. On September 6, 1993, the trial court
rendered the following judgment: [12]

WHEREFORE, for all the foregoing, this Court hereby rules that:

1. Respondents (herein petitioners) have acted in excess of jurisdiction and with grave
abuse of discretion and in a capricious, whimsical and arbitrary manner in
promulgating PPA Administrative Order 04-92 including all its implementing
Memoranda, Circulars and Orders;

2. PPA Administrative Order 04-92 and its implementing Circulars and Orders are
declared null and void;

3. The respondents are permanently enjoined from implementing PPA Administrative

Order 04-92 and its implementing Memoranda, Circulars and Orders.

No costs.
SO ORDERED.

The court a quo pointed out that the Bureau of Customs, the precursor of
the PPA, recognized pilotage as a profession and, therefore, a property right
under Callanta v. Carnation Philippines, Inc. Thus, abbreviating the term
[13]

within which that privilege may be exercised would be an interference with the
property rights of the harbor pilots. Consequently, any withdrawal or alteration
of such property right must be strictly made in accordance with the constitutional
mandate of due process of law. This was apparently not followed by the PPA
when it did not conduct public hearings prior to the issuance of PPA-AO No. 04-
92; respondents allegedly learned about it only after its publication in the
newspapers. From this decision, petitioners elevated their case to this Court
on certiorari.
After carefully examining the records and deliberating on the arguments of
the parties, the Court is convinced that PPA-AO No. 04-92 was issued in stark
disregard of respondents right against deprivation of property without due
process of law. Consequently, the instant petition must be denied.
Section 1 of the Bill of Rights lays down what is known as the due process
clause of the Constitution, viz.:
SECTION 1. No person shall be deprived of life, liberty, or property without due process
of law, x x x.

In order to fall within the aegis of this provision, two conditions must concur,
namely, that there is a deprivation and that such deprivation is done without
proper observance of due process. When one speaks of due process of law,
however, a distinction must be made between matters of procedure and matters
of substance. In essence, procedural due process refers to the method or
manner by which the law is enforced, while substantive due process requires
that the law itself, not merely the procedures by which the law would be
enforced, is fair, reasonable, and just. PPA-AO No. 04-92 must be examined
[14]

in light of this distinction.

Respondents argue that due process was not observed in the adoption of
PPA-AO No. 04-92 allegedly because no hearing was conducted whereby
relevant government agencies and the pilots themselves could ventilate their
views. They are obviously referring to the procedural aspect of the
enactment. Fortunately, the Court has maintained a clear position in this regard,
a stance it has stressed in the recent case of Lumiqued v. Hon.
Exevea, where it declared that (a)s long as a party was given the opportunity
[15]

to defend his interests in due course, he cannot be said to have been denied
due process of law, for this opportunity to be heard is the very essence of due
process. Moreover, this constitutional mandate is deemed satisfied if a person
is granted an opportunity to seek reconsideration of the action or ruling
complained of.
In the case at bar, respondents questioned PPA-AO No. 04-92 no less than
four times before the matter was finally elevated to this Tribunal. Their
[16]

arguments on this score, however, fail to persuade. While respondents

emphasize that the Philippine Coast Guard, which issues the licenses of pilots
after administering the pilots examinations, was not consulted, the facts show
[17]

that the MARINA, which took over the licensing function of the Philippine Coast
Guard, was duly represented in the Board of Directors of the PPA. Thus,
petitioners correctly argued that, there being no matters of naval defense
involved in the issuance of the administrative order, the Philippine Coast Guard
need not be consulted. [18]

Neither does the fact that the pilots themselves were not consulted in any
way taint the validity of the administrative order. As a general rule, notice and
hearing, as the fundamental requirements of procedural due process, are
essential only when an administrative body exercises its quasi-judicial
function. In the performance of its executive or legislative functions, such as
issuing rules and regulations, an administrative body need not comply with the
requirements of notice and hearing. [19]

Upon the other hand, it is also contended that the sole and exclusive right
to the exercise of harbor pilotage by pilots is a settled issue. Respondents aver
that said right has become vested and can only be withdrawn or shortened by
observing the constitutional mandate of due process of law. Their argument has
thus shifted from the procedural to one of substance. It is here where PPA-AO
No. 04-92 fails to meet the condition set by the organic law.
There is no dispute that pilotage as a profession has taken on the nature of
a property right. Even petitioner Corona recognized this when he stated in his
March 17, 1993, decision that (t)he exercise of ones profession falls within the
constitutional guarantee against wrongful deprivation of, or interference with,
property rights without due process. He merely expressed the opinion that
[20]

(i)n the limited context of this case, PPA-AO 04-92 does not constitute a
wrongful interference with, let alone a wrongful deprivation of, the property
rights of those affected thereby, and that PPA-AO 04-92 does not forbid, but
merely regulates, the exercise by harbor pilots of their profession. As will be
presently demonstrated, such supposition is gravely erroneous and tends to
perpetuate an administrative order which is not only unreasonable but also
superfluous.
 Pilotage, just like other professions, may be practiced only by duly licensed
individuals. Licensure is the granting of license especially to practice a
profession. It is also the system of granting licenses (as for professional
practice) in accordance with established standards. A license is a right or
[21]

permission granted by some competent authority to carry on a business or do

an act which, without such license, would be illegal. [22]

Before harbor pilots can earn a license to practice their profession, they
literally have to pass through the proverbial eye of a needle by taking, not one
but five examinations, each followed by actual training and practice. Thus, the
court a quo observed:

Petitioners (herein respondents) contend, and the respondents (herein petitioners) do

not deny, that here (sic) in this jurisdiction, before a person can be a harbor pilot, he
must pass five (5) government professional examinations, namely, (1) For Third Mate
and after which he must work, train and practice on board a vessel for at least a year;
(2) For Second Mate and after which he must work, train and practice for at least a
year; (3) For Chief Mate and after which he must work, train and practice for at least a
year; (4) For a Master Mariner and after which he must work as Captain of vessels for
at least two (2) years to qualify for an examination to be a pilot; and finally, of course,
that given for pilots.

Their license is granted in the form of an appointment which allows them to

engage in pilotage until they retire at the age 70 years. This is a vested
right. Under the terms of PPA-AO No. 04-92, (a)ll existing regular appointments
which have been previously issued by the Bureau of Customs or the PPA shall
remain valid up to 31 December 1992 only, and (a)ll appointments to harbor
pilot positions in all pilotage districts shall, henceforth, be only for a term of one
(1) year from date of effectivity subject to renewal or cancellation by the
Authority after conduct of a rigid evaluation of performance.
It is readily apparent that PPA-AO No. 04-92 unduly restricts the right of
harbor pilots to enjoy their profession before their compulsory retirement. In the
past, they enjoyed a measure of security knowing that after passing five
examinations and undergoing years of on-the-job training, they would have a
license which they could use until their retirement, unless sooner revoked by
the PPA for mental or physical unfitness. Under the new issuance, they have to
contend with an annual cancellation of their license which can be temporary or
permanent depending on the outcome of their performance evaluation. Veteran
pilots and neophytes alike are suddenly confronted with one-year terms
which ipso facto expire at the end of that period. Renewal of their license is now
dependent on a rigid evaluation of performance which is conducted only after
the license has already been cancelled. Hence, the use of the term renewal. It
is this pre-evaluation cancellation which primarily makes PPA-AO No. 04-92
unreasonable and constitutionally infirm. In a real sense, it is a deprivation of
property without due process of law.
The Court notes that PPA-AO No. 04-92 and PPA-MO No. 08-92 are
already covered by PPA-AO No. 03-85, which is still operational. Respondents
are correct in pointing out that PPA-AO No. 04-92 is a surplusage and, [23]

therefore, an unnecessary enactment. PPA-AO 03-85 is a comprehensive

order setting forth the Rules and Regulations Governing Pilotage Services, the
Conduct of Pilots and Pilotage Fees in Philippine Ports. It provides, inter alia,
for the qualification, appointment, performance evaluation, disciplining and
removal of harbor pilots - matters which are duplicated in PPA-AO No. 04-92
and its implementing memorandum order. Since it adds nothing new or
substantial, PPA-AO No. 04-92 must be struck down.
Finally, respondents insinuation that then PPA General Manager Dayan
was responsible for the issuance of the questioned administrative order may
have some factual basis; after all, power and authority were vested in his office
to propose rules and regulations. The trial courts finding of animosity between
him and private respondents might likewise have a grain of truth. Yet the
number of cases filed in court between private respondents and Dayan,
including cases which have reached this Court, cannot certainly be considered
the primordial reason for the issuance of PPA-AO No. 04-92. In the absence of
proof to the contrary,Dayan should be presumed to have acted in accordance
with law and the best of professional motives. In any event, his actions are
certainly always subject to scrutiny by higher administrative authorities.
WHEREFORE, the instant petition is hereby DISMISSED and the assailed
decision of the court a quo dated September 6, 1993, in Civil Case No. 93-
65673 is AFFIRMED. No pronouncement as to costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-14078 March 7, 1919

RUBI, ET AL. (manguianes), plaintiffs,

vs.
THE PROVINCIAL BOARD OF MINDORO, defendant.
D. R. Williams & Filemon Sotto for plaintiff.
Office of the Solicitor-General Paredes for defendant.

MALCOLM, J.:

In one of the cases which denote a landmark in American Constitutional History

(Worcester vs. Georgia [1832], 6 Pet., 515), Chief Justice Marshall, the first luminary of American
jurisprudence, began his opinion (relating to the status of an Indian) with words which, with a slight
change in phraseology, can be made to introduce the present opinion — This cause, in every point
of view in which it can be placed, is of the deepest interest. The legislative power of state, the
controlling power of the constitution and laws, the rights if they have any, the political existence of a
people, the personal liberty of a citizen, are all involved in the subject now to be considered.

To imitate still further the opinion of the Chief Justice, we adopt his outline and proceed first, to
introduce the facts and the issues, next to give a history of the so called "non-Christians," next to
compare the status of the "non-Christians" with that of the American Indians, and, lastly, to resolve
the constitutional questions presented.

I. INTRODUCTION.

This is an application for habeas corpus in favor of Rubi and other Manguianes of the Province of
Mindoro. It is alleged that the Maguianes are being illegally deprived of their liberty by the provincial
officials of that province. Rubi and his companions are said to be held on the reservation established
at Tigbao, Mindoro, against their will, and one Dabalos is said to be held under the custody of the
provincial sheriff in the prison at Calapan for having run away form the reservation.

The return of the Solicitor-General alleges:

1. That on February 1, 1917, the provincial board of Mindoro adopted resolution No. 25
which is as follows:

The provincial governor, Hon. Juan Morente, Jr., presented the following resolution:

"Whereas several attempts and schemes have been made for the advancement of
the non-Christian people of Mindoro, which were all a failure,

"Whereas it has been found out and proved that unless some other measure is taken
for the Mangyan work of this province, no successful result will be obtained toward
educating these people.

"Whereas it is deemed necessary to obliged them to live in one place in order to

make a permanent settlement,

"Whereas the provincial governor of any province in which non-Christian inhabitants

are found is authorized, when such a course is deemed necessary in the interest of
law and order, to direct such inhabitants to take up their habitation on sites on
unoccupied public lands to be selected by him and approved by the provincial board.

"Whereas the provincial governor is of the opinion that the sitio of Tigbao on Lake
Naujan is a place most convenient for the Mangyanes to live on, Now, therefore be it
 "Resolved, that under section 2077 of the Administrative Code, 800 hectares of public land in
the sitio of Tigbao on Naujan Lake be selected as a site for the permanent settlement of
Mangyanes in Mindoro subject to the approval of the Honorable Secretary of the Interior, and

"Resolved further, That Mangyans may only solicit homesteads on this reservation providing
that said homestead applications are previously recommended by the provincial governor."

2. That said resolution No. 25 (series 1917) of the provincial board of Mindoro was approved
by the Secretary of the Interior of February 21, 1917.

3. That on December 4, 1917, the provincial governor of Mindoro issued executive order No.
2 which says:

"Whereas the provincial board, by Resolution No. 25, current series, has selected a
site in the sitio of Tigbao on Naujan Lake for the permanent settlement of Mangyanes
in Mindoro.

"Whereas said resolution has been duly approve by the Honorable, the Secretary of
the Interior, on February 21, 1917.

"Now, therefore, I, Juan Morente, jr., provincial governor of Mindoro, pursuant to the
provisions of section 2145 of the revised Administrative Code, do hereby direct that
all the Mangyans in the townships of Naujan and Pola and the Mangyans east of the
Baco River including those in the districts of Dulangan and Rubi's place in Calapan,
to take up their habitation on the site of Tigbao, Naujan Lake, not later than
December 31, 1917.

"Any Mangyan who shall refuse to comply with this order shall upon conviction be
imprisoned not exceed in sixty days, in accordance with section 2759 of the revised
Administrative Code."

4. That the resolution of the provincial board of Mindoro copied in paragraph 1 and the
executive order of the governor of the same province copied in paragraph 3, were necessary
measures for the protection of the Mangyanes of Mindoro as well as the protection of public
forests in which they roam, and to introduce civilized customs among them.

5. That Rubi and those living in his rancheria have not fixed their dwelling within the
reservation of Tigbao and are liable to be punished in accordance with section 2759 of Act
No. 2711.

6. That the undersigned has not information that Doroteo Dabalos is being detained by the
sheriff of Mindoro but if he is so detained it must be by virtue of the provisions of articles Nos.
2145 and 2759 of Act No. 2711.

It thus appears that the provincial governor of Mindoro and the provincial board thereof directed the
Manguianes in question to take up their habitation in Tigbao, a site on the shore of Lake Naujan,
selected by the provincial governor and approved by the provincial board. The action was taken in
accordance with section 2145 of the Administrative Code of 1917, and was duly approved by the
Secretary of the Interior as required by said action. Petitioners, however, challenge the validity of this
section of the Administrative Code. This, therefore, becomes the paramount question which the
court is called upon the decide.
Section 2145 of the Administrative Code of 1917 reads as follows:

SEC. 2145. Establishment of non-Christina upon sites selected by provincial governor. —

With the prior approval of the Department Head, the provincial governor of any province in
which non-Christian inhabitants are found is authorized, when such a course is deemed
necessary in the interest of law and order, to direct such inhabitants to take up their
habitation on sites on unoccupied public lands to be selected by him an approved by the
provincial board.

In connection with the above-quoted provisions, there should be noted section 2759 of the same
Code, which read as follows:

SEC. 2759. Refusal of a non-Christian to take up appointed habitation. — Any non-Christian

who shall refuse to comply with the directions lawfully given by a provincial governor,
pursuant to section two thousand one hundred and forty-five of this Code, to take up
habitation upon a site designated by said governor shall upon conviction be imprisonment for
a period not exceeding sixty days.

The substance of what is now found in said section 2145 is not new to Philippine law. The
genealogical tree of this section, if we may be permitted to use such terminology, would read:
Section 2077, Administrative Code of 1916; section 62, Act No. 1397; section 2 of various special
provincial laws, notably of Act No. 547, specifically relating to the Manguianes; section 69, Act No.
387.

Section 2145 and its antecedent laws make use of the term "non-Christians." This word, as will later
be disclosed, is also found in varying forms in other laws of the Philippine Islands. In order to put the
phrase in its proper category, and in order to understand the policy of the Government of the
Philippine Islands with reference to the uncivilized elements of the Islands, it is well first of all to set
down a skeleton history of the attitude assumed by the authorities towards these "non-Christians,"
with particular regard for the legislation on the subject.

II. HISTORY.

A. BEFORE ACQUISITION OF THE PHILIPPINE BY THE UNITED STATES.

The most important of the laws of the Indies having reference to the subject at hand are compiled in
Book VI, Title III, in the following language.

LAW I.

The Emperor Charles and the Prince, the governor, at Cigales, on March 21, 1551. Philip II
at Toledo, on February 19, 1560. In the forest of Segovia on September 13, 1565. In the
Escorial on November 10, 1568. Ordinance 149 of the poblaciones of 1573. In San Lorenzo,
on May 20, 1578,

THAT THE "INDIOS" BE REDUCED INTO "POBLACIONES" COMMUNITIES).

In order that the indios may be instructed in the Sacred Catholic Faith and the evangelical
law, and in order that they may forget the blunders of their ancient rites and ceremonies to
the end that they may live in harmony and in a civilized manner, it has always been
endeavored, with great care and special attention, to use all the means most convenient to
 the attainment of these purposes. To carry out this work with success, our Council of the
Indies and other religious persons met at various times; the prelates of new Spain
assembled by order of Emperor Charles V of glorious memory in the year one thousand five
hundred and forty-six — all of which meetings were actuated with a desire to serve God an
our Kingdom. At these meetings it was resolved that indios be made to live in communities,
and not to live in places divided and separated from one another by sierras and mountains,
wherein they are deprived of all spiritual and temporal benefits and wherein they cannot
profit from the aid of our ministers and from that which gives rise to those human necessities
which men are obliged to give one another. Having realized that convenience of this
resolution, our kings, our predecessors, by different orders, have entrusted and ordered the
viceroys, presidents, and governors to execute with great care and moderation the
concentration of the indios into reducciones; and to deal with their doctrine with such
forbearance and gentleness, without causing inconveniences, so that those who would not
presently settle and who would see the good treatment and the protection of those already in
settlements would, of their own accord, present themselves, and it is ordained that they be
not required to pay taxes more than what is ordered. Because the above has been executed
in the greater part of our Indies, we hereby order and decree that the same be complied with
in all the remaining parts of the Indies, and the encomederos shall entreat compliance
thereof in the manner and form prescribed by the laws of this title.

xxx xxx xxx

LAW VIII.

Philip II at the Pardo, on December 1, 1573. Philip III at Madrid, October 10, 1618.

THE "REDUCCTIONES" BE MADE IN ACCORDANCE WITH THE CONDITIONS OF THIS LAW.

The places wherein the pueblos and reducciones shall be formed should have the facilities of
waters. lands, and mountains, ingress and egress, husbandry and passageway of one
league long, wherein the indios can have their live stock that they may not be mixed with
those of the Spaniards.

LAW IX.

Philip II at Toledo, on February 19, 1956.

THAT THE "INDIOS" IN "REDUCCIONES" BE NOT DEPRIVED OF THE LANDS PREVIOUSLY

HELD BY THEM.

With more good-will and promptness, the indios shall be concentrated in reducciones.
Provided they shall not be deprived of the lands and granaries which they may have in the
places left by them. We hereby order that no change shall be made in this respect, and that
they be allowed to retain the lands held by them previously so that they may cultivate them
and profit therefrom.

xxx xxx xxx

LAW XIII.

THE SAME AS ABOVE.

THAT THE "REDUCCIONES" BE NOT REMOVED WITHOUT ORDER OF THE KING, VICEROY,
OR COURT.

No governor, or magistrate, or alcalde mayor, or any other court, has the right to alter or to
remove thepueblos or the reducciones once constituted and founded, without our express
order or that of the viceroy, president, or the royal district court, provided, however, that
the encomenderos, priests, or indios request such a change or consent to it by offering or
giving information to that en. And, because these claims are often made for private interests
and not for those of the indios, we hereby order that this law be always complied with,
otherwise the change will be considered fraudulently obtained. The penalty of one thousand
pesos shall be imposed upon the judge or encomendero who should violate this law.

LAW XV.

Philip III at Madrid, on October 10, 1618.

THAT THERE BE MAYORS AND ALDERMEN IN THE "REDUCTIONES," WHO SHALL BE

"INDIOS."

We order that in each town and reduccion there be a mayor, who should be an indio of the
same reduccion; if there be more than eighty houses, there should be two mayors and two
aldermen, also indios; and, even if the town be a big one, there should, nevertheless, be
more than two mayors and four aldermen, If there be less than eighty indios but not less than
forty, there should be not more than one mayor and one alderman, who should annually
elect nine others, in the presence of the priests , as is the practice in town inhabited by
Spaniards and indios.

LAW XXI.

Philip II, in Madrid, On May 2, 1563, and on November 25, 1578. At Tomar, on May 8, 1581.
At Madrid, on January 10, 1589. Philip III, at Todesillas, on July 12, 1600. Philip IV, at
Madrid, on October 1 and December 17, 1646. For this law and the one following, see Law I,
Tit. 4, Book 7.

THAT IN THE TOWNS OF THE "INDIOS," THERE SHALL LIVE NO SPANIARDS, NEGROES,
"MESTIZOS," AND MULATTOES.

We hereby prohibit and forbid Spaniards, negroes, mulattores, or mestizos to live to live in
the reduccionesand towns and towns of the indios, because it has been found that some
Spaniards who deal, trade, live, and associate with the indios are men of troublesome
nature, of dirty ways of living; robbers, gamblers, and vicious and useless men; and, to avoid
the wrongs done them, the indios would leave their towns and provinces; and the
negroes, mestizos, and mulattoes, besides maltreating them and utilizing their services,
contaminate them with their bad customs, idleness, and also some of their blunders and
vices which may corrupt and pervert the goal which we desire to reach with regard to their
salvation, increase, and tranquillity. We hereby order the imposition of grave penalties upon
the commission of the acts above-mentioned which should not be tolerated in the towns, and
that the viceroys, presidents, governors, and courts take great care in executing the law
within their powers and avail themselves of the cooperation of the ministers who are truly
honest. As regards the mestizos and Indian and Chinese half-breeds (zambaigos), who are
children of indiasand born among them, and who are to inherit their houses and haciendas,
 they all not be affected by this law, it appearing to be a harsh thing to separate them from
their parents. (Law of the Indies, vol. 2, pp. 228, 229, 230, 231.)

A clear exposition of the purposes of the Spanish government, in its efforts to improve the condition
of the less advanced inhabitants of the Islands by concentrating them in "reducciones," is found in
the Decree of the Governor-General of the Philippine Islands of January 14, 1881, reading as
follows:

It is a legal principle as well as a national right that every inhabitant of a territory recognized
as an integral part of a nation should respect and obey the laws in force therein; while, on
other hand, it is the duty to conscience and to humanity for all governments to civilize those
backward races that might exist in the nation, and which living in the obscurity of ignorance,
lack of all the nations which enable them to grasp the moral and material advantages that
may be acquired in those towns under the protection and vigilance afforded them by the
same laws.

It is equally highly depressive to our national honor to tolerate any longer the separation and
isolation of the non-Christian races from the social life of the civilized and Christian towns; to
allow any longer the commission of depredations, precisely in the Island of Luzon wherein is
located the seat of the representative of the Government of the, metropolis.

It is but just to admit the fact that all the governments have occupied themselves with this
most important question, and that much has been heretofore accomplished with the help and
self-denial of the missionary fathers who have even sacrificed their lives to the end that those
degenerate races might be brought to the principles of Christianity, but the means and the
preaching employed to allure them have been insufficient to complete the work undertaken.
Neither have the punishments imposed been sufficient in certain cases and in those which
have not been guarded against, thus giving and customs of isolation.

As it is impossible to consent to the continuation of such a lamentable state of things, taking

into account the prestige which the country demands and the inevitable duty which every
government has in enforcing respect and obedience to the national laws on the part of all
who reside within the territory under its control, I have proceeded in the premises by giving
the most careful study of this serious question which involves important interests for
civilization, from the moral and material as well as the political standpoints. After hearing the
illustrious opinions of all the local authorities, ecclesiastics, and missionaries of the provinces
of Northern Luzon, and also after finding the unanimous conformity of the meeting held with
the Archbishop of Manila, the Bishops of Jaro and Cebu, and the provincial prelates of the
orders of the Dominicans, Agustinians, Recoletos, Franciscans, and Jesuits as also of the
meeting of the Council of Authorities, held for the object so indicated, I have arrived at an
intimate conviction of the inevitable necessity of proceeding in a practical manner for the
submission of the said pagan and isolated races, as well as of the manner and the only form
of accomplishing such a task.

For the reasons above stated and for the purpose of carrying out these objects, I hereby
promulgate the following:

DECREE.

1. All the indian inhabitants (indios) of the Islands of Luzon are, from this date, to be
governed by the common law, save those exceptions prescribed in this decree which are
bases upon the differences of instructions, of the customs, and of the necessities of the
different pagan races which occupy a part of its territory.

2. The diverse rules which should be promulgated for each of these races — which may be
divided into three classes; one, which comprises those which live isolated and roaming about
without forming a town nor a home; another, made up of those subdued pagans who have
not as yet entered completely the social life; and the third, of those mountain and rebellious
pagans — shall be published in their respective dialects, and the officials, priests, and
missionaries of the provinces wherein they are found are hereby entrusted in the work of
having these races learn these rules. These rules shall have executive character, beginning
with the first day of next April, and, as to their compliance, they must be observed in the
manner prescribed below.

3. The provincial authorities in conjunction with the priests shall proceed, from now on, with
all the means which their zeal may suggest to them, to the taking of the census of the
inhabitants of the towns or settlement already subdued, and shall adopt the necessary
regulations for the appointment of local authorities, if there be none as yet; for the
construction of courts and schools, and for the opening or fixing up of means of
communication, endeavoring, as regards the administrative organization of the said towns or
settlements, that this be finished before the first day of next July, so that at the beginning of
the fiscal year they shall have the same rights and obligations which affect the remaining
towns of the archipelago, with the only exception that in the first two years they shall not be
obliged to render personal services other than those previously indicated.

4. So long as these subdued towns or settlements are located infertile lands appropriate for
cultivation, the inhabitants thereof shall not be obliged to move their dwelling-houses; and
only in case of absolute necessity shall a new residence be fixed for them, choosing for this
purpose the place most convenient for them and which prejudices the least their interest;
and, in either of these cases, an effort must be made to establish their homes with the reach
of the sound of the bell.

5. For the protection and defense of these new towns, there shall be established an armed
force composed precisely of native Christian, the organization and service of which shall be
determined in a regulations based upon that of the abolished Tercios de Policia (division of
the Guardia Civil).

6. The authorities shall see to it that the inhabitants of the new towns understand all the
rights and duties affecting them and the liberty which they have as to where and now they
shall till their lands and sell the products thereof, with the only exception of the tobacco which
shall be bought by the Hacienda at the same price and conditions allowed other producers,
and with the prohibition against these new towns as well as the others from engaging in
commerce of any other transaction with the rebellious indios, the violation of which shall be
punished with deportation.

7. In order to properly carry out this express prohibition, the limits of the territory of the
rebellious indios shall be fixed; and whoever should go beyond the said limits shall be
detained and assigned governmentally wherever convenient.

8. For the purpose of assisting in the conversion of the pagans into the fraternity of the
Catholic Church, all by this fact along be exempt for eight years from rendering personal
labor.
9. The authorities shall offer in the name of the State to the races not subdued (aetas and
mountains igorrots the following advantages in returns for their voluntary submission: to live
in towns; unity among their families; concession of good lands and the right to cultivate them
in the manner they wish and in the way them deem most productive; support during a year,
and clothes upon effecting submission; respect for their habits and customs in so far as the
same are not opposed to natural law; freedom to decide of their own accord as to whether
they want to be Christians or not; the establishment of missions and families of recognized
honesty who shall teach, direct, protect, and give them security and trust them; the purchase
or facility of the sale of their harvests; the exemption from contributions and tributes for ten
years and from the quintas (a kind of tax) for twenty years; and lastly, that those who are
governed by the local authorities as the ones who elect such officials under the direct charge
of the authorities of the province or district.

10. The races indicated in the preceding article, who voluntarily admit the advantages
offered, shall, in return, have the obligation of constituting their new towns, of constructing
their town hall, schools, and country roads which place them in communication with one
another and with the Christians; provided, the location of these towns be distant from their
actual residences, when the latter do not have the good conditions of location and
cultivations, and provided further the putting of families in a place so selected by them be
authorized in the towns already constituted.

11. The armed force shall proceed to the prosecution and punishment of the tribes, that,
disregarding the peace, protection, and advantages offered them, continue in their rebellious
attitude on the first of next April, committing from now on the crimes and vexations against
the Christian towns; and for the this purposes, the Captain General's Office shall proceed
with the organization of the divisions of the Army which, in conjunction with the rural guards
(cuadrilleros), shall have to enter the territory of such tribes. On the expiration of the term,
they shall destroy their dwelling-houses, labors, and implements, and confiscate their
products and cattle. Such a punishment shall necessarily be repeated twice a year, and for
this purpose the military headquarters shall immediately order a detachment of the military
staff to study the zones where such operations shall take place and everything conducive to
the successful accomplishment of the same.

12. The chiefs of provinces, priests, and missioners, local authorities, and other subordinates
to my authorities, local authorities, and other subordinates to may authority, civil as well as
military authorities, shall give the most effective aid and cooperation to the said forces in all
that is within the attributes and the scope of the authority of each.

13. With respect to the reduccion of the pagan races found in some of the provinces in the
southern part of the Archipelago, which I intend to visit, the preceding provisions shall
conveniently be applied to them.

14. There shall be created, under my presidency as Governor-General, Vice-Royal Patron, a

council or permanent commission which shall attend to and decide all the questions relative
to the application of the foregoing regulations that may be brought to it for consultations by
the chiefs of provinces and priests and missionaries.

15. The secondary provisions which may be necessary, as a complement to the foregoing, in
brining about due compliance with this decree, shall be promulgated by the respective official
centers within their respective jurisdictions. (Gaceta de Manila, No. 15) (Diccionario de la
Administracion, vol. 7, pp. 128-134.)
B. AFTER ACQUISITON OF THE PHILIPPINES BY THE UNITED STATES.

Ever since the acquisition of the Philippine Islands by the United States, the question as to the best
method for dealing with the primitive inhabitants has been a perplexing one.

1. Organic law.

The first order of an organic character after the inauguration of the American Government in the
Philippines was President McKinley's Instructions to the Commission of April 7, 1900, later expressly
approved and ratified by section 1 of the Philippine Bill, the Act of Congress of July 1, 1902. Portions
of these instructions have remained undisturbed by subsequent congressional legislation. One
paragraph of particular interest should here be quoted, namely:

In dealing with the uncivilized tribes of the Islands, the Commission should adopt the same
course followed by Congress in permitting the tribes of our North American Indians to
maintain their tribal organization and government and under which many of these tribes are
now living in peace and contentment, surrounded by civilization to which they are unable or
unwilling to conform. Such tribal governments should, however, be subjected to wise and
firm regulation; and, without undue or petty interference, constant and active effort should be
exercised to prevent barbarous practices and introduce civilized customs.

Next comes the Philippine Bill, the Act of Congress of July 1, 1902, in the nature of an Organic Act
for the Philippines. The purpose of section 7 of the Philippine Bill was to provide for a legislative
body and, with this end in view, to name the prerequisites for the organization of the Philippine
Assembly. The Philippine Legislature, composed of the Philippine Commission and the Philippine
Assembly, was to have jurisdiction over the Christian portion of the Islands. The Philippine
Commission was to retain exclusive jurisdiction of that part of said Islands inhabited by Moros or
other non-Christian tribes.

The latest Act of Congress, nearest to a Constitution for the Philippines, is the Act of Congress of
August 29, 1916, commonly known as the Jones Law. This transferred the exclusive legislative
jurisdiction and authority theretofore exercised by the Philippine Commission, to the Philippine
Legislature (sec. 12). It divided the Philippine Islands into twelve senatorial districts, the twelfth
district to be composed of the Mountain Province, Baguio, Nueva Vizcaya, and the Department of
Mindanao and Sulu. The Governor-General of the Philippine Islands was authorized to appoint
senators and representatives for the territory which, at the time of the passage of the Jones Law,
was not represented in the Philippine Assembly, that is, for the twelfth district (sec. 16). The law
establish a bureau to be known as the "Bureau of non-Christian Tribes" which shall have general
supervision over the public affairs of the inhabitants which are represented in the Legislature by
appointed senators and representatives( sec. 22).

Philippine organic law may, therefore, be said to recognized a dividing line between the territory not
inhabited by Moros or other non-Christian tribes, and the territory which Moros or other non-Christian
tribes, and the territory which is inhabited by Moros or other non-Christian tribes.

2. Statute law.

Local governments in the Philippines have been provided for by various acts of the Philippine
Commission and Legislature. The most notable are Acts Nos. 48 and 49 concerning the Province of
Benguet and the Igorots; Act NO. 82, the Municipal Code; ;Act no. 83, the Provincial Government
Act; Act No. 183, the Character of the city of Manila; Act No. 7887, providing for the organization and
government of the Moro Province; Act No. 1396, the Special Provincial Government Act; Act No.
1397, the Township Government Act; Act No. 1667, relating to the organization of settlements; Act
No. 1963, the Baguio charger; and Act No. 2408, the Organic Act of the Department of Mindanao
and Sulu. The major portion of these laws have been carried forward into the Administrative Codes
of 1916 an d1917.

Of more particular interest are certain special laws concerning the government of the primitive
peoples. Beginning with Act No. 387, sections 68-71, enacted on April 9, 1902, by the United States
Philippine Commission, having reference to the Province of Nueva Vizcaya, Acts Nos. 4111, 422,
445, 500, 547, 548, 549, 550, 579, 753, 855, 1113, 1145, 4568, 1306 were enacted for the provinces
of Abra, Antique, Bataan, Ilocos Norte, Ilocos Sur, Isabela. Lepanto-Bontoc, Mindoro, Misamis,
Nueva Vizcaya, Pangasinan, Paragua (Palawan), Tarlac, Tayabas, and Zambales. As an example of
these laws, because referring to the Manguianes, we insert Act No. 547:

No. 547. — AN ACT PROVIDING FOR THE ESTABLISHMENT OF LOCAL CIVIL

GOVERNMENTS FOR THE MANGUIANES IN THE PROVINCE OF MINDORO.

By authority of the United States, be it enacted by the Philippine Commission, that:

SECTION 1. Whereas the Manguianes of the Provinces of Mindoro have not progressed
sufficiently in civilization to make it practicable to bring them under any form of municipal
government, the provincial governor is authorized, subject to the approval of the Secretary of
the Interior, in dealing with these Manguianes to appoint officers from among them, to fix
their designations and badges of office, and to prescribe their powers and duties: Provided,
That the powers and duties thus prescribed shall not be in excess of those conferred upon
township officers by Act Numbered Three hundred and eighty-seven entitled "An Act
providing for the establishment of local civil Governments in the townships and settlements
of Nueva Vizcaya."

SEC. 2. Subject to the approval of the Secretary of the Interior, the provincial governor is
further authorized, when he deems such a course necessary in the interest of law and order,
to direct such Manguianes to take up their habitation on sites on unoccupied public lands to
be selected by him and approved by the provincial board. Manguianes who refuse to comply
with such directions shall upon conviction be imprisonment for a period not exceeding sixty
days.

SEC. 3. The constant aim of the governor shall be to aid the Manguianes of his province to
acquire the knowledge and experience necessary for successful local popular government,
and his supervision and control over them shall be exercised to this end, an to the end that
law and order and individual freedom shall be maintained.

SEC. 4. When in the opinion of the provincial board of Mindoro any settlement of
Manguianes has advanced sufficiently to make such a course practicable, it may be
organized under the provisions of sections one to sixty-seven, inclusive, of Act Numbered
three hundred and eighty-seven, as a township, and the geographical limits of such township
shall be fixed by the provincial board.

SEC. 5. The public good requiring the speedy enactment of this bill, the passage of the same
is hereby expedited in accordance with section two of 'An Act prescribing the order of
procedure by the Commission in the enactment of laws,' passed September twenty-sixth,
nineteen hundred.

SEC. 6. This Act shall take effect on its passage.

 Enacted, December 4, 1902.

All of these special laws, with the exception of Act No. 1306, were repealed by Act No. 1396 and
1397. The last named Act incorporated and embodied the provisions in general language. In turn,
Act No. 1397 was repealed by the Administrative Code of 1916. The two Administrative Codes
retained the provisions in questions.

These different laws, if they of the non-Christian inhabitants of the Philippines and a settled and
consistent practice with reference to the methods to be followed for their advancement.

C. TERMINOLOGY.

The terms made use of by these laws, organic and statutory, are found in varying forms.

"Uncivilized tribes" is the denomination in President McKinley's instruction to the Commission.

The most commonly accepted usage has sanctioned the term "non-Christian tribes." These words
are to be found in section 7 of the Philippine Bill and in section 22 of the Jones Law. They are also to
be found in Act No. 253 of the Philippines Commission, establishing a Bureau of non-Christian
Tribes and in Act No. 2674 of the Philippine Legislature, carried forward into sections 701-705 of the
Administrative Code of 1917, reestablishing this Bureau. Among other laws which contain the
phrase, there can be mentioned Acts Nos. 127, 128, 387, 547, 548, 549, 550, 1397, 1639, and 2551.

"Non-Christian people," "non-Christian inhabitants," and "non-Christian Filipinos" have been the
favorite nomenclature, in lieu of the unpopular word "tribes," since the coming into being of a
Filipinized legislature. These terms can be found in sections 2076, 2077, 2390, 2394, Administrative
Code of 1916; sections 701-705, 2145, 2422, 2426, Administrative Code of 1917; and in Acts Nos.
2404, 2435, 2444, 2674 of the Philippine Legislatures, as well as in Act No. 1667 of the Philippine
Commission.

The Administrative Code specifically provides that the term "non-Christian" shall include
Mohammedans and pagans. (Sec. 2576, Administrative Code of 1917; sec. 2561, Administrative
Code of 1916, taken from Act No. 2408, sec. 3.)

D. MEANING OF TERM "NON-CHRISTIAN."

If we were to follow the literal meaning of the word "non-Christian," it would of course result in giving
to it a religious signification. Obviously, Christian would be those who profess the Christian religion,
and non-Christians, would be those who do not profess the Christian religion. In partial corroboration
of this view, there could also be cited section 2576 of the last Administrative Code and certain well-
known authorities, as Zuñiga, "Estadismo de las Islas Filipinas," Professor Ferdinand Blumentritt,
"Philippine Tribes and Languages," and Dr. N. M. Saleeby, "The Origin of Malayan Filipinos." (See
Blair & Robertson, "The Philippine Islands," 1493-1898, vol. III, p. 300, note; Craig-Benitez,
"Philippine Progress prior to 1898," vol. I. p. 107.)

Not content with the apparent definition of the word, we shall investigate further to ascertain what is
its true meaning.

In one sense, the word can have a geographical signification. This is plainly to be seen by the
provisions of many laws. Thus, according to the Philippine Bill, the authority of the Philippine
Assembly was recognized in the "territory" of the Islands not inhabited by Moros or other non-
Christian tribes. Again, the Jones Law confers similar recognition in the authorization of the twelfth
senatorial district for the "territory not now represented in the Philippine Assembly." The Philippines
Legislature has, time and again, adopted acts making certain other acts applicable to that "part" of
the Philippine Islands inhabited by Moros or other non-Christian tribes.

Section 2145, is found in article XII of the Provincial Law of the Administrative Code. The first section
of this article, preceding section 2145, makes the provisions of the article applicable only in specially
organized provinces. The specially organized provinces are the Mountain Province, Nueva Vizcaya,
Mindoro, Batanes, and Palawan. These are the provinces to which the Philippine Legislature has
never seen fit to give all the powers of local self-government. They do not, however, exactly coincide
with the portion of the Philippines which is not granted popular representation. Nevertheless, it is still
a geographical description.

It is well-known that within the specially organized provinces, there live persons some of who are
Christians and some of whom are not Christians. In fact, the law specifically recognizes this. ( Sec.
2422, Administrative Code of 1917, etc.)

If the religious conception is not satisfactory, so against the geographical conception is likewise
inadquate. The reason it that the motive of the law relates not to a particular people, because of their
religion, or to a particular province because of its location, but the whole intent of the law is
predicated n the civilization or lack of civilization of the inhabitants.

At most, "non-Christian" is an awkward and unsatisfactory word. Apologetic words usually introduce
the term. "The so-called non-Christian" is a favorite expression. The Secretary of the Interior who for
so many years had these people under his jurisdiction, recognizing the difficulty of selecting an exact
designation, speaks of the "backward Philippine peoples, commonly known as the 'non-Christian
tribes."' (See Hearings before the Committee on the Philippines, United States Senate, Sixty-third
Congress, third session on H.R. 18459, An Act to declare the purpose of the People of the United
States as to the future political status of the Philippine Islands and to provide a more autonomous
government for the Islands, pp. 346, 351; letter of the Secretary of the Interior of June 30, 1906,
circulated by the Executive Secretary.)

The idea that the term "non-Christian" is intended to relate to degree of civilization, is substantiated
by reference to legislative, judicial, and executive authority.

The legislative intent is borne out by Acts Nos. 48, 253, 387, 1667, and 2674, and sections 701 et
seq, and sections 2422 et seq, of the Administrative Code of 1917. For instance, Act No. 253
charged the Bureau of non-Christian tribes to conduct "systematic investigations with reference to
non-Christian tribes . . . with special view to determining the most practicable means for bringing
about their advancement in civilization and material property prosperity."

As authority of a judicial nature is the decision of the Supreme Court in the case of United
States vs. Tubban [Kalinga] ([1915], 29, Phil., 434). The question here arose as to the effect of a
tribal marriage in connection with article 423 of the Penal code concerning the husband who
surprises his wife in the act of adultery. In discussing the point, the court makes use of the following
language:

. . . we are not advised of any provision of law which recognizes as legal a tribal marriage
of so-called non-Christians or members of uncivilized tribes, celebrated within that province
without compliance with the requisites prescribed by General Orders no. 68. . . . We hold
also that the fact that the accused is shown to be a member of an uncivilized tribe, of a low
 order of intelligence, uncultured and uneducated, should be taken into consideration as a
second marked extenuating circumstance.

Of much more moment is the uniform construction of execution officials who have been called upon
to interpret and enforce the law. The official who, as a member of the Philippine Commission, drafted
much of the legislation relating to the so-called Christians and who had these people under his
authority, was the former Secretary of the Interior. Under date of June 30, 1906, this official
addressed a letter to all governor of provinces, organized under the Special Provincial Government
Act, a letter which later received recognition by the Governor-General and was circulated by the
Executive Secretary, reading as follows:

Sir: Within the past few months, the question has arisen as to whether people who were
originally non-Christian but have recently been baptized or who are children of persons who
have been recently baptized are, for the purposes of Act 1396 and 1397, to be considered
Christian or non-Christians.

It has been extremely difficult, in framing legislation for the tribes in these islands which are
not advanced far in civilization, to hit upon any suitable designation which will fit all cases.
The number of individual tribes is so great that it is almost out of the question to enumerate
all of them in an Act. It was finally decided to adopt the designation 'non-Christians' as the
one most satisfactory, but the real purpose of the Commission was not so much to legislate
for people having any particular religious belief as for those lacking sufficient advancement
so that they could, to their own advantage, be brought under the Provincial Government Act
and the Municipal Code.

The mere act of baptism does not, of course, in itself change the degree of civilization to
which the person baptized has attained at the time the act of baptism is performed. For
practical purposes, therefore, you will give the member of so-called "wild tribes" of your
province the benefit of the doubt even though they may recently have embraced Christianity.

The determining factor in deciding whether they are to be allowed to remain under the
jurisdiction of regularly organized municipalities or what form of government shall be afforded
to them should be the degree of civilization to which they have attained and you are
requested to govern yourself accordingly.

I have discussed this matter with the Honorable, the Governor-General, who concurs in the
opinion above expressed and who will have the necessary instructions given to the
governors of the provinces organized under the Provincial Government Act. (Internal
Revenue Manual, p. 214.)

The present Secretary of the Interior, in a memorandum furnished a member of this court, has the
following to say on the subject:

As far as names are concerned the classification is indeed unfortunate, but while no other
better classification has as yet been made the present classification should be allowed to
stand . . . I believe the term carries the same meaning as the expressed in the letter of the
Secretary of the Interior (of June 30, 1906, herein quoted). It is indicative of the degree of
civilization rather than of religious denomination, for the hold that it is indicative of religious
denomination will make the law invalid as against that Constitutional guaranty of religious
freedom.
Another official who was concerned with the status of the non-Christians, was the Collector of
Internal Revenue. The question arose for ruling relatives to the cedula taxation of the Manobos and
the Aetas. Thereupon, the view of the Secretary of the Interior was requested on the point, who, by
return indorsement, agreed with the interpretation of the Collector of Internal Revenue. This
Construction of the Collector of Internal Revenue can be found in circular letter No. 188 of the
Bureau of Internal Revenue, dated June 11, 1907, reading as follows (Internal Revenue Manual, p.
214):

The internal revenue law exempts "members of non-Christian tribes" from the payment of
cedula taxes. The Collector of Internal Revenue has interpreted this provision of law to mean
not that persons who profess some form of Christian worship are alone subject to the cedula
tax, and that all other person are exempt; he has interpreted it to mean that all persons
preserving tribal relations with the so-called non-Christian tribes are exempt from the cedula
tax, and that all others, including Jews, Mohammedans, Confucians, Buddists, etc., are
subject to said tax so long as they live in cities or towns, or in the country in a civilized
condition. In other words, it is not so much a matter of a man's form of religious worship or
profession that decides whether or not he is subject to the cedula tax; it is more dependent
on whether he is living in a civilized manner or is associated with the mountain tribes, either
as a member thereof or as a recruit. So far, this question has not come up as to whether a
Christian, maintaining his religious belief, but throwing his lot and living with a non-Christian
tribe, would or would not be subject to the cedula tax. On one occasion a prominent Hebrew
of Manila claimed to this office that he was exempt from the cedula tax, inasmuch as he was
not a Christian. This Office, however, continued to collect cedula taxes from all the Jews,
East Indians, Arabs, Chinamen, etc., residing in Manila. Quite a large proportion of the
cedula taxes paid in this city are paid by men belonging to the nationalities mentioned.
Chinamen, Arabs and other s are quite widely scattered throughout the Islands, and a
condition similar to that which exist in Manila also exists in most of the large provincial towns.
Cedula taxes are therefore being collected by this Office in all parts of these Islands on the
broad ground that civilized people are subject to such taxes, and non-civilized people
preserving their tribal relations are not subject thereto.

(Sgd.) JNO. S. HORD,

Collector of Internal Revenue.

On September 17, 1910, the Collector of Internal Revenue addressed circular letter No. 327,
approved by the Secretary of Finance and Justice, to all provincial treasurers. This letter in part
reads:

In view of the many questions that have been raised by provincial treasurers regarding
cedula taxes due from members of non-Christian tribes when they come in from the hills for
the purposes of settling down and becoming members of the body politic of the Philippine
Islands, the following clarification of the laws governing such questions and digest of rulings
thereunder is hereby published for the information of all concerned:

Non-Christian inhabitants of the Philippine Islands are so classed, not by reason of the fact
that they do not profess Christianity, but because of their uncivilized mode of life and low
state of development. All inhabitants of the Philippine Islands classed as members of non-
Christian tribes may be divided into three classes in so far as the cedula tax law is concerned
...

Whenever any member of an non-Christian tribe leaves his wild and uncivilized mode of life,
severs whatever tribal relations he may have had and attaches himself civilized community,
 belonging a member of the body politic, he thereby makes himself subject to precisely the
same law that governs the other members of that community and from and after the date
when he so attaches himself to the community the same cedula and other taxes are due
from him as from other members thereof. If he comes in after the expiration of the
delinquency period the same rule should apply to him as to persons arriving from foreign
countries or reaching the age of eighteen subsequent to the expiration of such period, and a
regular class A, D, F, or H cedula, as the case may be, should be furnished him without
penalty and without requiring him to pay the tax for former years.

In conclusion, it should be borne in mind that the prime factors in determining whether or not
a man is subject to the regular cedula tax is not the circumstance that he does or does not
profess Christianity, nor even his maintenance of or failure to maintain tribal relations with
some of the well known wild tribes, but his mode of life, degree of advancement in civilization
and connection or lack of connection with some civilized community. For this reason so
called "Remontados" and "Montescos" will be classed by this office as members of non-
Christian tribes in so far as the application of the Internal Revenue Law is concerned, since,
even though they belong to no well recognized tribe, their mode of life, degree of
advancement and so forth are practically the same as those of the Igorrots and members of
other recognized non-Christina tribes.

Very respectfully,

(Sgd.) ELLIS CROMWELL,

Collector of Internal Revenue,

Approved:
(Sgd.) GREGORIO ARANETA,
Secretary of Finance and Justice.

The two circular above quoted have since been repealed by Bureau of Internal Revenue Regulations
No. 1, promulgated by Venancio Concepcion, Acting Collector of Internal Revenue, and approved on
April 16, 1915, by Honorable Victorino Mapa, Secretary of Finance and Justice. Section 30 of the
regulations is practically a transcript of Circular Letter No. 327.

The subject has come before the Attorney-General for consideration. The Chief of Constabulary
request the opinion of the Attorney-General as to the status of a non-Christian who has been
baptized by a minister of the Gospel. The precise questions were these: "Does he remain non-
Christian or is he entitled to the privileges of a Christian? By purchasing intoxicating liquors, does he
commit an infraction of the law and does the person selling same lay himself liable under the
provision of Act No. 1639?" The opinion of Attorney-General Avanceña, after quoting the same
authorities hereinbefore set out, concludes:

In conformity with the above quoted constructions, it is probable that is probable that the
person in question remains a non-Christian, so that, in purchasing intoxicating liquors both
he and the person selling the same make themselves liable to prosecution under the
provisions of Act No. 1639. At least, I advise you that these should be the constructions
place upon the law until a court shall hold otherwise.

Solicitor-General Paredes in his brief in this case says:

With respect to the meaning which the phrase non-Christian inhabitants has in the provisions
of the Administrative code which we are studying, we submit that said phrase does not have
 its natural meaning which would include all non-Christian inhabitants of the Islands, whether
Filipino or strangers, civilized or uncivilized, but simply refers to those uncivilized members of
the non-Christian tribes of the Philippines who, living without home or fixed residence, roam
in the mountains, beyond the reach of law and order . . .

The Philippine Commission in denominating in its laws that portion of the inhabitants of the
Philippines which live in tribes as non-Christian tribes, as distinguished from the common
Filipinos which carry on a social and civilized life, did not intended to establish a distinction
based on the religious beliefs of the individual, but, without dwelling on the difficulties which
later would be occasioned by the phrase, adopted the expression which the Spanish
legislation employed to designate the uncivilized portion of the inhabitants of the Philippines.

The phrase 'non-Christian inhabitants' used in the provisions of articles 2077 and 2741 of Act
No. 2657 (articles 2145 and 2759) should be understood as equivalent to members of
uncivilized tribes of the Philippines, not only because this is the evident intention of the law,
but because to give it its lateral meaning would make the law null and unconstitutional as
making distinctions base the religion of the individual.

The Official Census of 1903, in the portion written by no less an authority than De. David P. Barrows,
then "Chief of the Bureau of non-Christian Tribes," divides the population in the Christian or Civilized
Tribes, and non-Christian or Wild Tribes. (Census of the Philippine Islands [1903], vol. 1, pp. 411 et
seq). The present Director of the Census, Hon. Ignacio Villamor, writes that the classification likely to
be used in the Census now being taken is: "Filipinos and Primitive Filipinos." In a Pronouncing
Gazetteer and Geographical Dictionary of the Philippine Islands, prepared in the Bureau of Insular
Affairs, War Department, a sub-division under the title non-Christian tribes is, "Physical and Political
Characteristics of the non-Christian Tribes," which sufficiently shows that the terms refers to culture
and not to religion.

In resume, therefore, the Legislature and the Judiciary, inferentially, and different executive officials,
specifically, join in the proposition that the term "non-Christian" refers, not to religious belief, but, in a
way , to geographical area, and, more directly, to natives of the Philippine Islands of a law grade of
civilization, usually living in tribal relationship apart from settled communities.

E. THE MANGUIANES.

The so-called non-Christians are in various state approaching civilization. The Philippine Census of
1903 divided them into four classes. Of the third class, are the Manguianes (or Mangyans) of
Mindoro.

Of the derivation of the name "Manguian" Dr. T. H. Pardo de Tavera in his Etimilogia de los nombres
de Rozas de Filipinas, says:

In Tagalog, Bicol, and Visaya, Manguian signifies "savage," "mountainer," "pagan," "negro."
It may be that the use of this word is applicable to a great number of Filipinos, but
nevertheless it has been applied only to certain inhabitants of Mindoro. Even in primitive
times without doubt this name was given to those of that island who bear it to-day, but its
employed in three Filipino languages shows that the radical ngian had in all these languages
a sense to-day forgotten. In Pampango this ending still exists and signifies "ancient," from
which we can deduce that the name was applied to men considered to be the ancient
inhabitants, and that these men were pushed back into the interior by the modern invaders,
in whose language they were called the "ancients."
The Manguianes are very low in culture. They have considerable Negrito blood and have not
advanced beyond the Negritos in civilization. They are a peaceful, timid, primitive, semi-nomadic
people. They number approximately 15,000. The manguianes have shown no desire for community
life, and, as indicated in the preamble to Act No. 547, have not progressed sufficiently in civilization
to make it practicable to bring them under any form of municipal government. (See Census of the
Philippine (Islands [1903], vol. I, pp. 22, 23, 460.)

III. COMPARATIVE — THE AMERICAN INDIANS.

Reference was made in the Presidents' instructions to the Commission to the policy adopted by the
United States for the Indian Tribes. The methods followed by the Government of the Philippines
Islands in its dealings with the so-called non-Christian people is said, on argument, to be practically
identical with that followed by the United States Government in its dealings with the Indian tribes.
Valuable lessons, it is insisted, can be derived by an investigation of the American-Indian policy.

From the beginning of the United States, and even before, the Indians have been treated as "in a
state of pupilage." The recognized relation between the Government of the United States and the
Indians may be described as that of guardian and ward. It is for the Congress to determine when
and how the guardianship shall be terminated. The Indians are always subject to the plenary
authority of the United States.

Chief Justice Marshall in his opinion in Worcester vs. Georgia, hereinbefore mentioned, tells how the
Congress passed an Act in 1819 "for promoting those humane designs of civilizing the neighboring
Indians." After quoting the Act, the opinion goes on — "This act avowedly contemplates the
preservation of the Indian nations as an object sought by the United States, and proposes to effect
this object by civilizing and converting them from hunters into agriculturists."

A leading case which discusses the status of the Indians is that of the United States vs. Kagama
([1886], 118 U.S., 375). Reference is herein made to the clause of the United States Constitution
which gives Congress "power to regulate commerce with foreign nations, and among the several
States, and with the Indian tribes." The court then proceeds to indicate a brief history of the position
of the Indians in the United States (a more extended account of which can be found in Marshall's
opinion in Worcester vs. Georgia, supra), as follows:

The relation of the Indian tribes living within the borders of the United States, both before and
since the Revolution, to the people of the United States, has always been an anomalous one
and of a complex character.

Following the policy of the European Governments in the discovery of American towards the
Indians who were found here, the colonies before the Revolution and the States and the
United States since, have recognized in the Indians a possessory right to the soil over which
they roamed and hunted and established occasional villages. But they asserted an ultimate
title in the land itself, by which the Indian tribes were forbidden to sell or transfer it to other
nations or peoples without the consent of this paramount authority. When a tribe wished to
dispose of its lands, or any part of it, or the State or the United States wished to purchase it,
a treaty with the tribe was the only mode in which this could be done. The United States
recognized no right in private persons, or in other nations, to make such a purchase by treaty
or otherwise. With the Indians themselves these relation are equally difficult to define. They
were, and always have been, regarded as having a semi-independent position when they
preserved their tribal relations; not as States, not as nation not a possessed of the fall
attributes of sovereignty, but as a separate people, with the power of regulating their internal
 and social relations, and thus far not brought under the laws of the Union or of the State
within whose limits they resided.

The opinion then continues:

It seems to us that this (effect of the law) is within the competency of Congress. These Indian
tribes are the wards of the nation. The are communities dependent on the United States.
dependent largely for their daily food. Dependent for their political rights. They owe no
allegiance to the States, and receive from the no protection. Because of the local ill feeling,
the people of the States where they are found are often their deadliest enemies. From their
very weakness and helplessness, so largely due to the course of dealing of the Federal
Government with them and the treaties in which it has been promised, there arise the duty of
protection, and with it the power. This has always been recognized by the Executive and by
Congress, and by this court, whenever the question has arisen . . . The power of the General
Government over these remnants of race once powerful, now weak and diminished in
numbers, is necessary to their protection, as well as to the safety of those among whom they
dwell. it must exist in that government, because it never has existed anywhere else, because
the theater of its exercise is within the geographical limits of the United States, because it
has never been denied, and because it alone can enforce its laws on all the tribes.

In the later case of United States vs. Sandoval ([1913], 231 U.S., 28) the question to be considered
was whether the status of the Pueblo Indians and their lands was such that Congress could prohibit
the introduction of intoxicating liquor into those lands notwithstanding the admission of New Mexico
to statehood. The court looked to the reports of the different superintendent charged with guarding
their interests and founds that these Indians are dependent upon the fostering care and protection of
the government "like reservation Indians in general." Continuing, the court said "that during the
Spanish dominion, the Indians of the pueblos were treated as wards requiring special protection,
where subjected to restraints and official supervisions in the alienation of their property." And finally,
we not the following: "Not only does the Constitution expressly authorize Congress to regulate
commerce with the Indians tribes, but long-continued legislative and executive usage and an
unbroken current of judicial decisions have attributed to the United States as a superior and civilized
nation the power and the duty of exercising a fostering care and protection over all dependent Indian
communities within its borders, whether within its original territory or territory subsequently acquired,
and whether within or without the limits of a state."

With reference to laws affecting the Indians, it has been held that it is not within the power of the
courts to overrule the judgment of Congress. For very good reason, the subject has always been
deemed political in nature, not subject to the jurisdiction of the judicial department of the
government. (Matter of Heff [1905], 197 U.S., 488; U.S. vs. Celestine [1909], 215 U.S., 278;
U.S. vs. Sandoval, supra; Worcester vs. Georgia, supra; U.S. vs. Rogers [1846], 4 How., 567; the
Cherokee Tobacco [1871], 11 Wall, 616; Roff vs. Burney [1897], 168 U.S., 218; Thomas vs.Gay
[1898], 169 U.S.., 264; Lone Wolf vs. Hitchcock[1903], 187 U.S., 553; Wallace vs. Adams [1907],
204 U.S., 415; Conley vs. Bollinger [1910], 216 U.S., 84; Tiger vs. Western Invest. Co. [1911], 221
U.S., 286; U.S. vs. Lane [1913], 232 U.S.., 598; Cyr vs. Walker (1911], 29 Okla, 281; 35 L.R.A. [N.
S.], 795.) Whenever, therefore, the United States sets apart any public land as an Indian reservation,
it has full authority to pass such laws and authorize such measures as may be necessary to give to
the Indians thereon full protection in their persons and property. (U.S. vs.Thomas [1894], 151 U.S.,
577.)

All this borne out by long-continued legislative and executive usage, and an unbroken line of judicial
decisions.
The only case which is even remotely in point and which, if followed literally, might result in the
issuance of habeas corpus, is that of United States vs. Crook ([1879], Fed. Cas. No. 14891). This
was a hearing upon return to a writ of habeas corpus issued against Brigadier General George
Crook at the relation of Standing Bear and other Indians, formerly belonging to the Ponca Tribe of
Indians. The petition alleged in substance that the relators are Indians who have formerly belonged
to the Ponca tribe of Indians, now located in the Indian Territory; that they had some time previously
withdrawn from the tribe, and completely severed their tribal relations therewith, and had adopted
the general habits of the whites, and were then endeavoring to maintain themselves by their own
exertions, and without aid or assistance from the general government; that whilst they were thus
engaged, and without being guilty of violating any of the laws of the United States, they were
arrested and restrained of their liberty by order of the respondent, George Crook. The substance of
the return to the writ was that the relators are individual members of, and connected with, the Ponca
tribe of Indians; that they had fled or escaped form a reservation situated some place within the
limits of the Indian Territory — had departed therefrom without permission from the Government;
and, at the request of the Secretary of the Interior, the General of the Army had issued an order
which required the respondent to arrest and return the relators to their tribe in the Indian Territory,
and that, pursuant to the said order, he had caused the relators to be arrested on the Omaha Indian
Territory.

The first question was whether an Indian can test the validity of an illegal imprisonment by habeas
corpus. The second question, of much greater importance, related to the right of the Government to
arrest and hold the relators for a time, for the purpose of being returned to the Indian Territory from
which it was alleged the Indian escaped. In discussing this question, the court reviewed the policy
the Government had adopted in its dealing with the friendly tribe of Poncase. Then, continuing, the
court said: "Laws passed for the government of the Indian country, and for the purpose of regulating
trade and intercourse with the Indian tribes, confer upon certain officers of the Government almost
unlimited power over the persons who go upon the reservations without lawful authority . . . Whether
such an extensive discretionary power is wisely vested in the commissioner of Indian affairs or not ,
need not be questioned. It is enough to know that the power rightfully exists, and, where existing, the
exercise of the power must be upheld." The decision concluded as follows:

The reasoning advanced in support of my views, leads me to conclude:

1. that an Indian is a 'person' within the meaning of the laws of the United States, and has,
therefore, the right to sue out a writ of habeas corpus in a federal court, or before a federal
judge, in all cases where he may be confined or in custody under color of authority of the
United States or where he is restrained of liberty in violation of the constitution or laws of the
United States.

2. That General George Crook, the respondent, being commander of the military department
of the Platte, has the custody of the relators, under color of authority of the United States,
and in violation of the laws therefore.

3. That n rightful authority exists for removing by force any of the relators to the Indian
Territory, as the respondent has been directed to do.

4. that the Indians possess the inherent right of expatriation, as well as the more fortunate
white race, and have the inalienable right to "life, liberty, and the pursuit of happiness," so
long as they obey the laws and do not trespass on forbidden ground. And,

5. Being restrained of liberty under color of authority of the United States, and in violation of
the laws thereof, the relators must be discharged from custody, and it is so ordered.
As far as the first point is concerned, the decision just quoted could be used as authority to
determine that Rubi, the Manguian petitioner, a Filipino, and a citizen of the Philippine Islands, is a
"person" within the meaning of the Habeas Corpus Act, and as such, entitled to sue out a writ in the
Philippine courts. (See also In re Race Horse [1895], 70 Fed., 598.) We so decide.

As to the second point the facts in the Standing Bear case an the Rubi case are not exactly identical.
But even admitting similarity of facts, yet it is known to all that Indian reservations do exist in the
United States, that Indians have been taken from different parts of the country and placed on these
reservation, without any previous consultation as to their own wishes, and that, when once so
located, they have been made to remain on the reservation for their own good and for the general
good of the country. If any lesson can be drawn form the Indian policy of the United States, it is that
the determination of this policy is for the legislative and executive branches of the government and
that when once so decided upon, the courts should not interfere to upset a carefully planned
governmental system. Perhaps, just as may forceful reasons exists for the segregation as existed for
the segregation of the different Indian tribes in the United States.

IV. CONSTITUTIONAL QUESTIONS.

A. DELEGATION OF LEGISLATIVE POWER.

The first constitutional objection which confronts us is that the Legislature could not delegate this
power to provincial authorities. In so attempting, it is contended, the Philippine Legislature has
abdicated its authority and avoided its full responsibility.

That the maxim of Constitutional Law forbidding the delegation of legislative power should be
zealously protected, we agree. An understanding of the rule will, however, disclose that it has not
bee violated in his instance.

The rule has nowhere been better stated than in the early Ohio case decided by Judge Ranney, and
since followed in a multitude of case, namely: "The true distinction therefore is between the
delegation of power to make the law, which necessarily involves a discretion as to what it shall be,
and conferring an authority or discretion as to its execution, to be exercised under and in pursuance
of the law. The first cannot be done; to the later no valid objection can be made." (Cincinnati, W. & Z.
R. Co. vs. Comm'rs. Clinton County [1852], 1 Ohio S.t, 88.) Discretion, as held by Chief Justice
Marshall in Wayman vs. Southard ([1825], 10 Wheat., 1) may be committed by the Legislature to an
executive department or official. The Legislature may make decisions of executive departments of
subordinate official thereof, to whom t has committed the execution of certain acts, final on questions
of fact. (U.S. vs. Kinkead [1918], 248 Fed., 141.) The growing tendency in the decision is to give
prominence to the "necessity" of the case.

Is not all this exactly what the Legislature has attempted to accomplish by the enactment of section
21454 of the Administrative Code? Has not the Legislature merely conferred upon the provincial
governor, with the approval of the provincial board and the Department Head, discretionary authority
as to the execution of the law? Is not this "necessary"?

The case of West vs. Hitchock, ([1906], 205 U.S., 80) was a petition for mandamus to require the
Secretary of the Interior to approve the selection and taking of one hundred and sixty acres by the
relator out of the lands ceded to the United States by the Wichita and affiliated bands of Indians.
Section 463 of the United States Revised Statutes provided: "The Commissioner of Indian Affairs
shall, under the direction of the Secretary of the Interior, and agreeably to such regulations as the
President may prescribe, have the management of all Indian affairs, and of all matters arising out to
the Indian relations." Justice Holmes said: "We should hesitate a good deal, especially in view of the
long established practice of the Department, before saying that this language was not broad enough
to warrant a regulation obviously made for the welfare of the rather helpless people concerned. The
power of Congress is not doubted. The Indians have been treated as wards of the nation. Some
such supervision was necessary, and has been exercised. In the absence of special provisions
naturally it would be exercised by the Indian Department." (See also as corroborative authority, it any
is needed, Union Bridge Co. vs. U.S. [1907], 204 U.S.., 364, reviewing the previous decisions of the
United States Supreme Court: U.S. vs. Lane [1914], 232 U.S., 598.)

There is another aspect of the question, which once accepted, is decisive. An exception to the
general rule. sanctioned by immemorial practice, permits the central legislative body to delegate
legislative powers to local authorities. The Philippine Legislature has here conferred authority upon
the Province of Mindoro, to be exercised by the provincial governor and the provincial board.

Who but the provincial governor and the provincial board, as the official representatives of the
province, are better qualified to judge "when such as course is deemed necessary in the interest of
law and order?" As officials charged with the administration of the province and the protection of its
inhabitants, who but they are better fitted to select sites which have the conditions most favorable for
improving the people who have the misfortune of being in a backward state?

Section 2145 of the Administrative Code of 1917 is not an unlawful delegation of legislative power by
the Philippine Legislature to provincial official and a department head.

B. RELIGIOUS DISCRIMINATION

The attorney de officio, for petitioners, in a truly remarkable brief, submitted on behalf of his
unknown clients, says that — "The statute is perfectly clear and unambiguous. In limpid English, and
in words as plain and unequivocal as language can express, it provides for the segregation of 'non-
Christians' and none other." The inevitable result, them, is that the law "constitutes an attempt by the
Legislature to discriminate between individuals because of their religious beliefs, and is,
consequently, unconstitutional."

Counsel's premise once being conceded, his arguments is answerable — the Legislature must be
understood to mean what it has plainly expressed; judicial construction is then excluded; religious
equality is demanded by the Organic Law; the statute has violated this constitutional guaranty, and
Q. E. D. is invalid. But, as hereinbefore stated, we do not feel free to discard the long continued
meaning given to a common expression, especially as classification of inhabitants according to
religious belief leads the court to what it should avoid, the nullification of legislative action. We hold
that the term "non-Christian" refers to natives of the Philippines Islands of a low grade of civilization,
and that section 2145 of the Administrative Code of 1917, does not discriminate between individuals
an account of religious differences.

C. LIBERTY; DUE PROCESS OF LAW; EQUAL PROTECTION OF THE LAWS.

The third constitutional argument is grounded on those portions of the President's instructions of to
the Commission, the Philippine Bill, and the Jones Law, providing "That no law shall be enacted in
said Islands which shall deprive any person of life, liberty, or property without due process of law, or
deny to any person therein the equal protection of the laws." This constitutional limitation is derived
from the Fourteenth Amendment to the United States Constitution — and these provisions, it has
been said "are universal in their application, to all persons within the territorial jurisdiction, without
regard to any differences of race, of color, or of nationality." (Yick Wo vs. Hopkins [1886], 118 U.S.,
356.) The protection afforded the individual is then as much for the non-Christian as for the
Christian.
The conception of civil liberty has been variously expressed thus:

Every man may claim the fullest liberty to exercise his faculties, compatible with the
possession of like liberty by every other. (Spencer, Social Statistics, p. 94.)

Liberty is the creature of law, essentially different from that authorized licentiousness that
trespasses on right. That authorized licentiousness that trespasses on right. It is a legal and
a refined idea, the offspring of high civilization, which the savage never understood, and
never can understand. Liberty exists in proportion to wholesome restraint; the more restraint
on others to keep off from us, the more liberty we have . . . that man is free who is protected
from injury. (II Webster's Works, p. 393.)

Liberty consists in the ability to do what one caught to desire and in not being forced to do
what one ought not do desire. (Montesque, spirit of the Laws.)

Even liberty itself, the greatest of all rights, is no unrestricted license to ac according to one's
own will. It is only freedom from restraint under conditions essential to the equal enjoyment
of the same right by others. (Field, J., in Crowley vs. Christensen [1890], 137 U.S., 86.)

Liberty does not import "an absolute right in each person to be, at all times and in all
circumstances, wholly freed from restraint. There are manifold restraints to which every
person is necessarily subject for the common good. On any other basis, organized society
could not exist with safety to its members. Society based on the rule that each one is a law
unto himself would soon be confronted with disorder and anarchy. Real liberty for all could
not exist under the operation of a principle which recognizes the right of each individual
person to use his own, whether in respect of his person or his property, regardless of the
injury that may be done to others . . . There is, of course, a sphere with which the individual
may asserts the supremacy of his own will, and rightfully dispute the authority of any human
government — especially of any free government existing under a written Constitution — to
interfere with the exercise of that will. But it is equally true that in very well-ordered society
charged with the duty of conserving the safety of its members, the rights of the individual in
respect of his liberty may at times, under the pressure of great dangers, be subjected to such
restraint to be enforced by reasonable regulations, as the safety of the general public may
demand." (Harlan, J., In Jacobson vs. Massachusetts [1905] 197 U.S., 11.)

Liberty is freedom to do right and never wrong; it is ever guided by reason and the upright
and honorable conscience of the individual. (Apolinario Mabini.)

Civil Liberty may be said to mean that measure of freedom which may be enjoyed in a civilized
community, consistently with the peaceful enjoyment of like freedom in others. The right to Liberty
guaranteed by the Constitution includes the right to exist and the right to be free from arbitrary
personal 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 faculties
with which he has been endowed by this Creator, subject only to such restraints as are necessary
for the common welfare. As enunciated in a long array of authorities including epoch-making
decisions of the United States Supreme Court, Liberty includes the right of the citizens to be free to
use his faculties in all lawful ways; to live an work where he will; to earn his livelihood by an lawful
calling; to pursue any avocations, an for that purpose. to enter into all contracts which may be
proper, necessary, and essential to his carrying out these purposes to a successful conclusion. The
chief elements of the guaranty are the right to contract, the right to choose one's employment, the
right to labor, and the right of locomotion.
In general, it may be said that Liberty means the opportunity to do those things which are ordinarily
done by free men. (There can be noted Cummings vs. Missouri [1866], 4 Wall, 277;
Wilkinson vs. Leland [1829], 2 Pet., 627; Williams vs. Fears [1900], 179 U.S., 274;
Allgeyer vs. Louisiana [1896], 165, U.S., 578; State vs. Kreutzberg [1902], 114 Wis., 530. See 6
R.C.L., 258, 261.)

One thought which runs through all these different conceptions of Liberty is plainly apparent. It is
this: "Liberty" as understood in democracies, is not license; it is "Liberty regulated by law." Implied in
the term is restraint by law for the good of the individual and for the greater good of the peace and
order of society and the general well-being. No man can do exactly as he pleases. Every man must
renounce unbridled license. The right of the individual is necessarily subject to reasonable restraint
by general law for the common good. Whenever and wherever the natural rights of citizen would, if
exercises without restraint, deprive other citizens of rights which are also and equally natural, such
assumed rights must yield to the regulation of law. The Liberty of the citizens may be restrained in
the interest of the public health, or of the public order and safety, or otherwise within the proper
scope of the police power. (See Hall vs. Geiger-Jones [1916], 242 U.S., 539; Hardie-Tynes
Manufacturing Co. vs. Cruz [1914], 189 Al., 66.)

None of the rights of the citizen can be taken away except by due process of law. Daniel Webster, in
the course of the argument in the Dartmouth College Case before the United States Supreme Court,
since a classic in forensic literature, said that the meaning of "due process of law" is, that "every
citizen shall hold his life, liberty, property, an immunities under the protection of the general rules
which govern society." To constitute "due process of law," as has been often held, a judicial
proceeding is not always necessary. In some instances, even a hearing and notice are not requisite
a rule which is especially true where much must be left to the discretion of the administrative officers
in applying a law to particular cases. (See McGehee, Due Process of Law, p. 371.) Neither is due
process a stationary and blind sentinel of liberty. "Any legal proceeding enforced by public authority,
whether sanctioned by age and customs, or newly devised in the discretion of the legislative power,
in furtherance of the public good, which regards and preserves these principles of liberty and justice,
must be held to be due process of law." (Hurtado vs.California [1883], 110, U.S., 516.) "Due process
of law" means simply . . . "first, that there shall be a law prescribed in harmony with the general
powers of the legislative department of the Government; second, that this law shall be reasonable in
its operation; third, that it shall be enforced according to the regular methods of procedure
prescribed; and fourth, that it shall be applicable alike to all the citizens of the state or to all of a
class." (U.S. vs. Ling Su Fan [1908], 10 Phil., 104, affirmed on appeal to the United States Supreme
Court. 1) "What is due process of law depends on circumstances. It varies with the subject-matter
and necessities of the situation." (Moyer vs. Peablody [1909], 212 U. S., 82.)

The pledge that no person shall be denied the equal protection of the laws is not infringed by a
statute which is applicable to all of a class. The classification must have a reasonable basis and
cannot be purely arbitrary in nature.

We break off with the foregoing statement, leaving the logical deductions to be made later on.

D. SLAVERY AND INVOLUNTARY SERVITUDE.

The fourth constitutional contention of petitioner relates to the Thirteen Amendment to the United
States Constitution particularly as found in those portions of Philippine Organic Law providing "That
slavery shall not exist in said Islands; nor shall involuntary servitude exist except as a punishment for
crime whereof the party shall have been duly convicted." It is quite possible that the Thirteenth
Amendment, since reaching to "any place subject to" the "jurisdiction" of the United States, has force
in the Philippine. However this may be, the Philippine Legislature has, by adoption, with necessary
modifications, of sections 268 to 271 inclusive of the United States Criminal Code, prescribed the
punishment for these crimes. Slavery and involuntary servitude, together wit their corollary,
peonage, all denote "a condition of enforced, compulsory service of one to another."
(Hodges vs. U.S. [1906], 203 U.S., 1.) The term of broadest scope is possibly involuntary servitude.
It has been applied to any servitude in fact involuntary, no matter under what form such servitude
may have been disguised. (Bailey vs. Alabama [1910], 219 U.S., 219.)

So much for an analysis of those constitutional provisions on which petitioners rely for their freedom.
Next must come a description of the police power under which the State must act if section 2145 is
to be held valid.

E. THE POLICE POWER.

Not attempting to phrase a definition of police power, all that it is necessary to note at this moment is
the farreaching scope of the power, that it has become almost possible to limit its weep, and that
among its purposes is the power to prescribe regulations to promote the health, peace, morals,
education, and good order of the people, and to legislate so as to increase the industries of the
State, develop its resources and add to is wealth and prosperity. (See Barbier vs. Connolly [1884],
113 U.S., 27.) What we are not interested in is the right of the government to restrain liberty by the
exercise of the police power.

"The police power of the State," one court has said, . . . "is a power coextensive with self-protection,
and is not inaptly termed the 'law of overruling necessity.' It may be said to be that inherent and
plenary power in the State which enables it to prohibit all things hurtful to the comfort, safety and
welfare of society." (Lake View vs. Rose Hill Cemetery Co. [1873], 70 Ill., 191.) Carried onward by
the current of legislation, the judiciary rarely attempt to dam the on rushing power of legislative
discretion, provided the purposes of the law do not go beyond the great principles that mean security
for the public welfare or do not arbitrarily interfere with the right of the individual.

The Government of the Philippine Islands has both on reason and authority the right to exercise the
sovereign police power in the promotion of the general welfare and the public interest. "There can be
not doubt that the exercise of the police power of the Philippine Government belongs to the
Legislature and that this power is limited only by the Acts of Congress and those fundamental
principles which lie at the foundation of all republican forms of government." (Churchill and
Tait vs. Rafferty [1915], 32 Phil., 580; U.S. vs. Pompeya [1915], 31 Phil., 245.)

With the foregoing approximation of the applicable basic principles before us, before finally deciding
whether any constitutional provision has indeed been violated by section 2145 of the Administrative
Code, we should endeavor to ascertain the intention of the Legislature in enacting this section. If
legally possible, such legislative intention should be effectuated.

F. LEGISLATIVE INTENT.

The preamble of the resolution of the provincial board of Mindoro which set apart the Tigbao
reservation, it will be remembered, assigned as reasons fort the action, the following: (1) The failure
of former attempts for the advancement of the non-Christian people of the province; and (2) the only
successfully method for educating the Manguianes was to oblige them to live in a permanent
settlement. The Solicitor-General adds the following; (3) The protection of the Manguianes; (4) the
protection of the public forests in which they roam; (5) the necessity of introducing civilized customs
among the Manguianes.
The present Secretary of the Interior says of the Tigbao reservation and of the motives for its
selection, the following:

To inform himself of the conditions of those Manguianes who were taken together to Tigbao,
the Secretary of the Interior on June 10 to 13, 1918, made a trip to the place. There he found
that the site selected is a good one; that creditable progress has been made in the clearing
of forests, construction of buildings, etc., that there appears to be encouraging reaction by
the boys to the work of the school the requirements of which they appear to meet with
enthusiastic interest after the first weeks which are necessarily a somewhat trying period for
children wholly unaccustomed to orderly behaviour and habit of life. He also gathered the
impression that the results obtained during the period of less than one year since the
beginning of the institution definitely justify its continuance and development.

Of course, there were many who were protesting against that segregation. Such was
naturally to be expected. But the Secretary of the Interior, upon his return to Manila, made
the following statement to the press:

"It is not deemed wise to abandon the present policy over those who prefer to live a
nomadic life and evade the influence of civilization. The Government will follow its
policy to organize them into political communities and to educate their children with
the object of making them useful citizens of this country. To permit them to live a
wayfaring life will ultimately result in a burden to the state and on account of their
ignorance, they will commit crimes and make depredation, or if not they will be
subject to involuntary servitude by those who may want to abuse them."

The Secretary of the Interior, who is the official charged with the supervision of all the non-Christian
people, has adopted as the polaris of his administration — "the advancement of the non-Christian
elements of our population to equality and unification with the highly civilized Christian inhabitants."
This is carried on by the adoption of the following measures:

(a) Pursuance of the closer settlement policy whereby people of seminomadic race are
induced to leave their wild habitat and settle in organized communities.

(b) The extension of the public school system and the system of public health throughout the
regions inhabited by the non-Christian people.

(c) The extention of public works throughout the Mohammedan regions to facilitate their
development and the extention of government control.

(d) Construction of roads and trials between one place and another among non-Christians, to
promote social and commercial intercourse and maintain amicable relations among them
and with the Christian people.

(e) Pursuance of the development of natural economic resources, especially agriculture.

( f ) The encouragement of immigration into, and of the investment of private capital in, the
fertile regions of Mindanao and Sulu.

The Secretary adds:

 To attain the end desired, work of a civilizing influence have been continued among the non-
Christian people. These people are being taught and guided to improve their living conditions
in order that they may fully appreciate the benefits of civilization. Those of them who are still
given to nomadic habits are being persuaded to abandon their wild habitat and settle in
organized settlements. They are being made to understand that it is the purpose of the
Government to organize them politically into fixed and per manent communities, thus
bringing them under the control of the Government, to aid them to live and work, protect
them from involuntary servitude and abuse, educate their children, and show them the
advantages of leading a civilized life with their civilized brothers. In short, they are being
impressed with the purposes and objectives of the Government of leading them to economic,
social, and political equality, and unification with the more highly civilized inhabitants of the
country. (See Report of the Department for 1917.)

The fundamental objective of governmental policy is to establish friendly relations with the so-called
non-Christians, and to promote their educational, agricultural, industrial, and economic development
and advancement in civilization. (Note Acts Nos. 2208, 2404, 2444.) Act No. 2674 in reestablishing
the Bureau of non-Christian Tribes, defines the aim of the Government towards the non-Christian
people in the following unequivocal terms:

It shall be the duty of the Bureau of non-Christian Tribes to continue the work for
advancement and liberty in favor of the region inhabited by non-Christian Filipinos and foster
by all adequate means and in a systematical, rapid, and complete manner the moral,
material, economic, social, and political development of those regions, always having in view
the aim of rendering permanent the mutual intelligence between, and complete fusion of, all
the Christian and non-Christian elements populating the provinces of the Archipelago. (Sec.
3.)

May the Manguianes not be considered, as are the Indians in the United States, proper wards of the
Filipino people? By the fostering care of a wise Government, may not these unfortunates advance in
the "habits and arts of civilization?" Would it be advisable for the courts to intrude upon a plan,
carefully formulated, and apparently working out for the ultimate good of these people?

In so far as the Manguianes themselves are concerned, the purpose of the Government is evident.
Here, we have on the Island of Mindoro, the Manguianes, leading a nomadic life, making
depredations on their more fortunate neighbors, uneducated in the ways of civilization, and doing
nothing for the advancement of the Philippine Islands. What the Government wished to do by
bringing than into a reservation was to gather together the children for educational purposes, and to
improve the health and morals — was in fine, to begin the process of civilization. this method was
termed in Spanish times, "bringing under the bells." The same idea adapted to the existing situation,
has been followed with reference to the Manguianes and other peoples of the same class, because
it required, if they are to be improved, that they be gathered together. On these few reservations
there live under restraint in some cases, and in other instances voluntarily, a few thousands of the
uncivilized people. Segregation really constitutes protection for the manguianes.

Theoretically, one may assert that all men are created free and equal. Practically, we know that the
axiom is not precisely accurate. The Manguianes, for instance, are not free, as civilized men are
free, and they are not the equals of their more fortunate brothers. True, indeed, they are citizens,
with many but not all the rights which citizenship implies. And true, indeed, they are Filipinos. But
just as surely, the Manguianes are citizens of a low degree of intelligence, and Filipinos who are a
drag upon the progress of the State.
In so far as the relation of the Manguianes to the State is concerned, the purposes of the Legislature
in enacting the law, and of the executive branch in enforcing it, are again plain. Settlers in Mindoro
must have their crops and persons protected from predatory men, or they will leave the country. It is
no argument to say that such crimes are punished by the Penal Code, because these penalties are
imposed after commission of the offense and not before. If immigrants are to be encouraged to
develop the resources of the great Islands of Mindoro, and its, as yet, unproductive regions, the
Government must be in a position to guarantee peace and order.

Waste lands do not produce wealth. Waste people do not advance the interest of the State. Illiteracy
and thriftlessness are not conducive to homogeneity. The State to protect itself from destruction
must prod on the laggard and the sluggard. The great law of overwhelming necessity is all
convincing.

To quote again from the instructive memorandum of the Secretary of the Interior:

Living a nomadic and a wayfaring life and evading the influence of civilization, they (the
manguianes) are engaged in the works of destruction — burning and destroying the forests
and making illegal caiñgins thereon. Not bringing any benefit to the State but instead injuring
and damaging its interests, what will ultimately become of these people with the sort of
liberty they wish to preserve and for which they are now fighting in court? They will ultimately
become a heavy burden to the State and on account of their ignorance they will commit
crimes and make depredations, or if not they will be subjected to involuntary servitude by
those who may want to abuse them.

There is no doubt in my mind that this people a right conception of liberty and does not
practice liberty in a rightful way. They understand liberty as the right to do anything they will
— going from one place to another in the mountains, burning and destroying forests and
making illegal caiñgins thereon.

Not knowing what true liberty is and not practising the same rightfully, how can they allege
that they are being deprived thereof without due process of law?

xxx xxx xxx

But does the Constitutional guaranty that 'no person shall be deprived of his liberty without
due process of law' apply to a class of persons who do not have a correct idea of what liberty
is and do not practise liberty in a rightful way?

To say that it does will mean to sanction and defend an erroneous idea of such class of
persons as to what liberty is. It will mean, in the case at bar, that the Government should not
adopt any measures looking to the welfare and advancement of the class of persons in
question. It will mean that this people should be let along in the mountains and in a
permanent state of savagery without even the remotest hope of coming to understand liberty
in its true and noble sense.

In dealing with the backward population, like the Manguianes, the Government has been
placed in the alternative of either letting them alone or guiding them in the path of civilization.
The latter measure was adopted as the one more in accord with humanity and with national
conscience.

xxx xxx xxx

 The national legislation on the subject of non-Christian people has tended more and more
towards the education and civilization of such people and fitting them to be citizens. The
progress of those people under the tutelage of the Government is indeed encouraging and
the signs of the times point to a day which is not far distant when they will become useful
citizens. In the light of what has already been accomplished which has been winning the
gratitude of most of the backward people, shall we give up the noble work simply because a
certain element, believing that their personal interests would be injured by such a measure
has come forward and challenged the authority of the Government to lead this people in the
pat of civilization? Shall we, after expending sweat, treasure, and even blood only to redeem
this people from the claws of ignorance and superstition, now willingly retire because there
has been erroneously invoked in their favor that Constitutional guaranty that no person shall
be deprived of his liberty without due process of law? To allow them to successfully invoke
that Constitutional guaranty at this time will leave the Government without recourse to pursue
the works of civilizing them and making them useful citizens. They will thus left in a
permanent state of savagery and become a vulnerable point to attack by those who doubt,
nay challenge, the ability of the nation to deal with our backward brothers.

The manguianes in question have been directed to live together at Tigbao. There they are
being taught and guided to improve their living conditions. They are being made to
understand that they object of the government is to organize them politically into fixed and
permanent communities. They are being aided to live and work. Their children are being
educated in a school especially established for them. In short, everything is being done from
them in order that their advancement in civilization and material prosperity may be assured.
Certainly their living together in Tigbao does not make them slaves or put them in a condition
compelled to do services for another. They do not work for anybody but for themselves.
There is, therefore, no involuntary servitude.

But they are compelled to live there and prohibited from emigrating to some other places
under penalty of imprisonment. Attention in this connection is invited to the fact that this
people, living a nomadic and wayfaring life, do not have permanent individual property. They
move from one place to another as the conditions of living warrants, and the entire space
where they are roving about is the property of the nation, the greater part being lands of
public domain. Wandering from one place to another on the public lands, why can not the
government adopt a measure to concentrate them in a certain fixed place on the public
lands, instead of permitting them to roam all over the entire territory? This measure is
necessary both in the interest of the public as owner of the lands about which they are roving
and for the proper accomplishment of the purposes and objectives of the government. For as
people accustomed to nomadic habit, they will always long to return to the mountains and
follow a wayfaring life, and unless a penalty is provinced for, you can not make them live
together and the noble intention of the Government of organizing them politically will come to
naught.

G. APPLICATION AND CONCLUSION.

Our exhaustive study should have left us in a position to answer specific objections and to reach a
general conclusion.

In the first place, it is argued that the citizen has the right, generally speaking, to go where he
pleases. Could be not, however, be kept away from certain localities ? To furnish an example from
the Indian legislation. The early Act of Congress of 1802 (2 U.S. Stat. at L., p. 141) Indian
reservation. Those citizens certainly did not possess absolute freedom of locomotion. Again the
same law provided for the apprehension of marauding Indians. Without any doubt, this law and other
similar were accepted and followed time and again without question.

It is said that, if we hold this section to be constitutional, we leave this weak and defenseless people
confined as in a prison at the mercy of unscrupulous official. What, it is asked, would be the remedy
of any oppressed Manguian? The answer would naturally be that the official into whose hands are
given the enforcement of the law would have little or not motive to oppress these people; on the
contrary, the presumption would all be that they would endeavor to carry out the purposes of the law
intelligently and patriotically. If, indeed, they did ill-treat any person thus confined, there always
exists the power of removal in the hands of superior officers, and the courts are always open for a
redress of grievances. When, however, only the validity of the law is generally challenged and no
particular case of oppression is called to the attention of the courts, it would seems that the Judiciary
should not unnecessarily hamper the Government in the accomplishment of its laudable purpose.

The question is above all one of sociology. How far, consistently with freedom, may the right and
liberties of the individual members of society be subordinated to the will of the Government? It is a
question which has assailed the very existence of government from the beginning of time. Now
purely an ethical or philosophical subject, nor now to be decided by force, it has been transferred to
the peaceful forum of the Judiciary. In resolving such an issue, the Judiciary must realize that the
very existence of government renders imperatives a power to restrain the individual to some extent,
dependent, of course, on the necessities of the class attempted to be benefited. As to the particular
degree to which the Legislature and the Executive can go in interfering with the rights of the citizen,
this is, and for a along time to come will be, impossible for the courts to determine.

The doctrines of laissez faire and of unrestricted freedom of the individual, as axioms of economics
and political theory, are of the past. The modern period has shown as widespread belief in the
amplest possible demonstration of governmental activity. The courts unfortunately have sometimes
seemed to trial after the other two branches of the government in this progressive march.

Considered, therefore, purely as an exercise of the police power, the courts cannot fairly say that the
Legislature has exceeded its rightful authority. it is, indeed, an unusual exercise of that power. But a
great malady requires an equally drastic remedy.

Further, one cannot hold that the liberty of the citizen is unduly interfered without when the degree of
civilization of the Manguianes is considered. They are restrained for their own good and the general
good of the Philippines. Nor can one say that due process of law has not been followed. To go back
to our definition of due process of law and equal protection of the law, there exists a law ; the law
seems to be reasonable; it is enforced according to the regular methods of procedure prescribed;
and it applies alike to all of a class.

As a point which has been left for the end of this decision and which, in case of doubt, would lead to
the determination that section 2145 is valid. it the attitude which the courts should assume towards
the settled policy of the Government. In a late decision with which we are in full accord,
Gambles vs. Vanderbilt University (200 Southwestern Reporter, 510) the Chief Justice of the
Supreme Court of Tennessee writes:

We can seen objection to the application of public policy as a ratio decidendi. Every really new
question that comes before the courts is, in the last analysis, determined on that theory, when not
determined by differentiation of the principle of a prior case or line of cases, or by the aid of
analogies furnished by such prior case. In balancing conflicting solutions, that one is perceived to tip
the scales which the court believes will best promote the public welfare in its probable operation as a
general rule or principle. But public policy is not a thing inflexible. No court is wise enough to forecast
its influence in all possible contingencies. Distinctions must be made from time to time as sound
reason and a true sense of justice may dictate."

Our attempt at giving a brief history of the Philippines with reference to the so-called non-Christians
has been in vain, if we fail to realize that a consistent governmental policy has been effective in the
Philippines from early days to the present. The idea to unify the people of the Philippines so that
they may approach the highest conception of nationality. If all are to be equal before the law, all
must be approximately equal in intelligence. If the Philippines is to be a rich and powerful country,
Mindoro must be populated, and its fertile regions must be developed. The public policy of the
Government of the Philippine Islands is shaped with a view to benefit the Filipino people as a whole.
The Manguianes, in order to fulfill this governmental policy, must be confined for a time, as we have
said, for their own good and the good of the country.

Most cautiously should the power of this court to overrule the judgment of the Philippine Legislature,
a coordinate branch, be exercised. The whole tendency of the best considered case is toward non-
interference on the part of the courts whenever political ideas are the moving consideration. Justice
Holmes, in one of the aphorisms for which he is justly famous, said that "constitutional law, like other
mortal contrivances, has to take some chances." (Blinn vs.Nelson [1911], 222 U.S., 1.) If in the final
decision of the many grave questions which this case presents, the courts must take "a chance," it
should be with a view to upholding the law, with a view to the effectuation of the general
governmental policy, and with a view to the court's performing its duty in no narrow and bigoted
sense, but with that broad conception which will make the courts as progressive and effective a force
as are the other departments of the Government.

We are of the opinion that action pursuant to section 2145 of the Administrative Code does not
deprive a person of his liberty without due process of law and does not deny to him the equal
protection of the laws, and that confinement in reservations in accordance with said section does not
constitute slavery and involuntary servitude. We are further of the opinion that section 2145 of the
Administrative Code is a legitimate exertion of the police power, somewhat analogous to the Indian
policy of the United States. Section 2145 of the Administrative Code of 1917 is constitutional.

Petitioners are not unlawfully imprisoned or restrained of their liberty. Habeas corpus can, therefore,
not issue. This is the true ruling of the court. Costs shall be taxes against petitioners. So ordered.

EN BANC

April 18, 2017

G.R. No. 213948

KNIGHTS OF RIZAL, Petitioner.
vs.
DMCI HOMES, INC., DMCI PROJECT DEVELOPERS, INC., CITY OF MANILA, NATIONAL
COMMISSION FOR CULTURE AND THE ARTS, NATIONAL HISTORICAL COMMISSION OF
THE PHILIPPINES, Respondents.

DECISION

CARPIO, J.:

Bury me in the ground, place a stone and a cross over it.

My name, the date of my birth, and of my death. Nothing more.
If you later wish to surround my grave with a fence, you may do so.
No anniversaries. I prefer Paang Bundok.

- Jose Rizal

The Case

Before this Court is a Petition for Injunction, with Applications for Temporary Restraining Order, Writ
of Preliminary Injunction, and Others 1 filed by the Knights of Rizal (KOR) seeking, among others, for
an order to stop the construction of respondent DMCI Homes, Inc. 's condominium development
project known as the Torre de Manila. In its Resolution dated 25 November 2014, the Court resolved
to treat the petition as one for mandamus. 2

The Facts

On 1 September 2011, DMCI Project Developers, Inc. (DMCI-PDI) 3 acquired a 7,716.60-square

meter lot in the City of Manila, located near Taft Avenue, Ermita, beside the former Manila Jai-Alai
Building and Adamson University.4The lot was earmarked for the construction of DMCI-PDI's Torre
de Manila condominium project.

On 2 April 2012, DMCI-PDI secured its Barangay Clearance to start the construction of its project. It
then obtained a Zoning Permit from the City of Manila's City Planning and Development Office
(CPDO) on 19 June 2012.5

Then, on 5 July 2012, the City of Manila's Office of the Building Official granted DMCI-PDI a Building
Permit, allowing it to build a "Forty Nine (49) Storey w/ Basement & 2 penthouse Level
Res'l./Condominium" on the property. 6

On 24 July 2012, the City Council of Manila issued Resolution No. 121 enjoining the Office of the
Building Official to temporarily suspend the Building Permit of DMCI-PDI, citing among others, that
"the Torre de Manila Condominium, based on their development plans, upon completion, will rise up
high above the back of the national monument, to clearly dwarf the statue of our hero, and with such
towering heights, would certainly ruin the line of sight of the Rizal Shrine from the frontal Roxas
Boulevard vantage point[.]"7

Building Official Melvin Q. Balagot then sought the opinion of the City of Manila's City Legal Officer
on whether he is bound to comply with Resolution No. 121.8 In his letter dated 12 September 2012,
City Legal Officer Renato G. Dela Cruz stated that there is "no legal justification for the temporary
suspension of the Building Permit issued in favor of [DMCI-PDI]" since the construction "lies outside
the Luneta Park" and is "simply too far to I be a repulsive distraction or have an objectionable effect
on the artistic and historical significance" of the Rizal Monument. 9 He also pointed out that "there is
no showing that the [area of subject property has been officially declared as an anthropological or
archeological area. Neither has it ' been categorically designated by the National Historical Institute
as a heritage zone, a cultural property, a historical landmark or even a national treasure."

Subsequently, both the City of Manila and DMCI-PDI sought the opinion or the National Historical
Commission of the Philippines (NHCP) on the matter. In the letter10 dated 6 November 2012 from
NHCP I Chairperson Dr. Maria Serena I. Diokno addressed to DMCI-PDI and the letter 11 dated 7
November 2012 from NHCP Executive Director III Ludovico D. Bado)f addressed to then Manila
Mayor Alfredo S. Lim, the NHCP maintained that the Torre de Manila project site is outside the
boundaries of the Rizal f.ark and well to the rear of the Rizal Monument, and thus, cannot possibly
obstruct the frontal view of the National Monument.

On 26 November 2013, following an online petition against the Torre de Manila project that garnered
about 7,800 signatures, the City Council of Manila issued Resolution No. 146, reiterating its directive
in Resolution No. 121 1 enjoining the City of Manila's building officials to temporarily suspend ~MCI-
PDI's Building Permit. 12

In a letter to Mayor Joseph Ejercito Estrada dated 18 December 2013, DMCI-PIDI President Alfredo
R. Austria sought clarification on the controversy surrounding its Zoning Permit. He stated that since
the CPDO granted its Zoning Permit, DMCI-PDI continued with the application for the Building
Permit, which was granted, and did not deem it necessary to go through the process of appealing to
the local zoning board. He then expressed DMCI-PDI's willingness to comply with the process if the
City of Manila deemed it necessary. 13

On 23 December 2013, the Manila Zoning Board of Adjustments and Appeals (MZBAA) issued
Zoning Board Resolution No. 06, Series of 2013, 14 recommending the approval of DMCI-PDI's
application for variance. ;The MZBAA noted that the Torre de Manila project "exceeds the prescribed
maximum Percentage of Land Occupancy (PLO) and exceeds the prescribeµ Floor Area Ratio
(FAR) as stipulated in Article V, Section 17 of City Ordinance No. 8119[.]" However, the MZBAA still
recommended the approval of the variance subject to the five conditions set under the same
resolution.

After some clarification sought by DMCI-PDI, the MZBAA issued Zoning Board Resolution No. 06-A,
Series of 2013, 15 on 8 January 2014, amending condition (c) in the earlier resolution. 16

On 16 January 2014, the City Council of Manila issued Resolution No. 5, Series of 2014, 17 adopting
Zoning Board Resolution Nos. 06 and 06- A. The City Council resolution states that "the City Council
of Manila find[ s] no cogent reason to deny and/or reverse the aforesaid recommendation of the
[MZBAA] and hereby ratif[ies] and confirm[s] all previously issued permits, licenses and approvals
issued by the City [Council] of Manila for Torre de Manila[.]"

Arguments of the KOR

On 12 September 2014, the KOR, a "civic, patriotic, cultural, nonpartisan, non-sectarian and non-
profit organization" 18 created under Republic Act No. 646, 19 filed a Petition for Injunction seeking a
temporary restraining I order, and later a permanent injunction, against the construction of
DMCIPDI's Torre de Manila condominium project. The KOR argues that the subject matter of the
present suit is one of "transcendental importance, paramount public interest, of overarching
significance to society, or with far-reaching implication" involving the desecration of the Rizal
Monument.

The KOR asserts that the completed Torre de Manila structure will "[stick] out like a sore thumb,
[dwarf] all surrounding buildings within a radius of two kilometer/s" and "forever ruin the sightline of
the Rizal Monument in Luneta Park: Torre de Manila building would loom at the back I and
overshadow the entire monument, whether up close or viewed from a distance. ''20

Further, the KOR argues that the Rizal Monument, as a National Treasure, is entitled to "full
protection of the law"21and the national government must abate the act or activity that endangers the
nation's cultural heritage "even against the wishes of the local government hosting it." 22

Next, the KOR contends that the project is a nuisance per se23 because "[t]he despoliation of the
sight view of the Rizal Monument is a situation that annoy's or offends the senses' of every Filipino
who honors the memory of the National Hero Jose Rizal. It is a present, continuing, worsening and
aggravating status or condition. Hence, the PROJECT is a nuisance per se. It deserves I to be
abated summarily, even without need of judicial proceeding. "24

The KOR also claims that the Torre de Manila project violates the NHCP's Guidelines on
Monuments Honoring National Heroes, Illustrious Filipinos and Other Personages, which state that
historic monuments should assert a visual "dominance" over its surroundings,25 as well as the
country's commitment under the International Charter for the Conservation and Restoration of
Monuments and Sites, otherwise known as the Venice Charter. 26

Lastly, the KOR claims that the DMCI-PDI's construction was commenced and continues in bad
faith, and is in violation of the City of Manila's zoning ordinance. 27

Arguments of DMCI-PDI

In its Comment, DMCI-PDI argues that the KOR's petition should be dismissed on the following
grounds:

I.

THXS HONORABLE COURT HAS NO JURISDICTION OVER THIS ACTION.

II.

KOR HAS NO LEGAL RIGHT OR INTEREST TO FILE OR PR0SECUTE THIS ACTION.

III.

TORRE DE MANILA IS NOT A NUISANCE PER SE.

IV.
DMCI-PDI ACTED IN GOOD FAITH IN CONSTRUCTING TORRE DE MANILA; AND

V.

KOR IS NOT ENTITLED TO A TEMPORARY RESTRAINING ORPER AND/OR A WRIT OF

PRELIMINARY INJUNCTION. 28

First, DMCI-PDI asserts that the Court has no original jurisdiction over actions for injunction.29 Even
assuming that the Court has concurrent jurisdiction, DMCI-PDI maintains that the petition should still
have been filed with the Regional Trial Court under the doctrine of hierarchy of courts and because
the petition involves questions of fact. 30

DMCI-PDI also contends that the KOR's petition is in actuality an opposition' or appeal from the
exemption granted by the City of Manila's MZBAA, a matter which is also not within the jurisdiction of
the Court. 31 DMCI-PDI claims that the proper forum should be the MZBAA, and should the KOR fail
there, it should appeal the same to the Housing and Land Use Regulatory Board (HLURB). 32

DMCI-PDI further argues that since the Rizal Monument has been declared a National Treasure, the
power to issue a cease and desist order is lodged with the "appropriate cultural agency" under
Section 25 of Republic Act No. li0066 or the National Cultural Heritage Act of 2009. 33 Moreover,
DMCI-PDI asserts that the KOR availed of the wrong remedy since an action for injunction is not the
proper remedy for abatement of a nuisance. 34

Second, DMCI-PDI maintains that the KOR has no standing to institute this proceeding because it is
not a real party in interest in this case. The purposes of the KOR as a public corporation do not
include the preservation of the Rizal Monument as a cultural or historical heritage site.35 The KOR
has also not shown that it suffered an actual or threatened injury as a result of the alleged illegal
conduct of the City of Manila. If there is any injury to the KOR at all, the same was caused by the
private conduct of a private entity and not the City of Manila. 36

Third, DMCI-PDI argues that the Torre de Manila is not a nuisance per se. DMCI-PDI reiterates that
it obtained all the necessary permits, licenses, clearances, and certificates for its construction. 37 It
also refutes the KOR's claim that the Torre de Manila would dwarf all other structures around it;
considering that there are other tall buildings even closer to the Rizal Monument itself, namely, the
Eton Baypark Tower at the corner of Roxas Boulevard and T.M. Kalaw Street (29 storeys; 235
meters from the Rizal Monument) and Sunview Palace at the corner of M.H. Del Pilar and T.M.
Kalaw Streets (42 storeys; 250 meters from the Rizal Monument). 38

Fourth, DMCI-PDI next argues that it did not act in bad faith when it started construction of its Torre
de Manila project. Bad faith cannot be attributed to it since it was within the "lawful exercise of [its]
rights." 39 The KOR failed to present any proof that DMCI-PDI did not follow the proper procedure
and zoning restrictions of the City of Manila. Aside from obtaining all the necessary permits from the
appropriate government agencies,40 DMCI-PDI also sought clarification on its right to build on its site
from the Office of the City Legal Officer of Manila, the Manila CPDO, and the NHCP.41 Moreover,
even if the KOR proffered such proof, the Court would be 1 in no position to declare DMCI-PDI's acts
as illegal since the Court is not a trier of facts. 42

Finally, DMCI-PDI opposes the KOR's application for a Temporary Restraining Order (TRO) and writ
of preliminary injunction. DMCI-PDI asserts that the KOR has failed to establish "a clear and
unmistakable right to enjoin I the construction of Torre de Manila, much less request its
demolitior."43 DMCI-PDI further argues that it "has complied with all the legal requirements for the
construction of Torre de Manila x x x [and] has violated o right of KOR that must be protected.
Further, KOR stands to suffer o damage because of its lack of direct pecuniary interest in this petiti1
on. To grant the KOR's application for injunctive relief would constitute an unjust taking of property
without due process of law. "44

Arguments of the City of Manila

In its Comment, the City of Manila argues that the writ of mandamus cannot issue "considering that
no property or substantive rights whatsoever in favor of [the KOR] is being affected or x x x entitled
to judicial protection[.]"45

The City of Manila also asserts that the "issuance and revocation of a Building Permit undoubtedly
fall under the category of a discretionary act or duty performed by the proper officer in light of his
meticulous appraisal and evaluation of the pertinent supporting documents of the application in
accordance with the rules laid out under the National Building Code [and] Presidential Decree No.
1096,"46 while the remedy of mandamus is available only to compel the performance of a ministerial
duty. 47

Further, the City of Manila maintains that the construction of the Torre de Manila did not violate any
existing law, since the "edifice [is] well behind (some 789 meters away) the line of sight of the Rizal
Monument."48 It adds that the City of Manila's "prevailing Land Use and Zoning Ordinance [Ordinance
No. 8119] x xx allows an adjustment in Floor Area Ratios thru the [MZBAA] subject to further final
approval of the City Council."49 The City Council adopted the MZBAA's favorable: recommendation in
its Resolution No. 5, ratifying all the licenses and permits issued to DMCI-PDI for its Torre de Manila
project.

In its Position Paper dated 15 July 2015, the City of Manila admitted that the Zoning Permit issued to
DMCI-PDI was "in breach of certain provisions of City Ordinance No. 8119."50 It maintained,
however, 1 that the deficiency is "procedural in nature and pertains mostly td the failure of [DMCI-
PDI] to comply with the stipulations that allow an excess in the [FAR] provisions." 51 Further, the City
of Manila argued that the MZBAA, when it recommended the allowance of the project's variance,
imposed certain conditions upon the Torre de Manila project in order to mitigate the possible
adverse effects of an excess FAR. 52

The Issue

The issues raised by the parties can be summed up into one main point: Can the Court issue a writ
of mandamus against the officials of the City of Manila to stop the construction of DMCI-PDI's Torre
de Manila project?

The Court's Ruling

The petition for mandamus lacks merit and must be dismissed.

There is no law prohibiting the construction of the Torre de Manila.

In Manila Electric Company v. Public Service Commission,53 the Court held that "what is not
expressly or impliedly prohibited by law may be done, except when the act is contrary to
morals, customs and I public order." This principle is fundamental in a democratic society, to
protect the weak against the strong, the minority against the majority, and the individual citizen
against the government. In essence, this principle, which is the foundation of a civilized society
under the rule of law, prescribes that the freedom to act can be curtailed only through law. Without
this principle, the rights, freedoms, and civil liberties of citizens can be arbitrarily and whimsically
trampled upon by the shifting passions of those who can spout the loudest, or those who can gather
the biggest crowd or the most number of Internet trolls. In other instances,54 the Court has allowed or
upheld actions that were not expressly prohibited by statutes when it determined that these acts
were not contrary to morals, customs, and public order, or that upholding the same would lead to a
more equitable solution to the controversy. However, it is the law itself - Articles 130655 and
1409(1)56 of the Civil Code - which prescribes that acts not contrary to morals, good customs, public
order, or public policy are allowed if also not contrary to law.

In this case, there is no allegation or proof that the Torre de Manila project is "contrary to morals,
customs, and public order" or that it brings harm, danger, or hazard to the community. On the
contrary, the City of Manila has determined that DMCI-PDI complied with the standards set under
the pertinent laws and local ordinances to construct its Torre de Manila project.

There is one fact that is crystal clear in this case. There is no law prohibiting the construction of the
Torre de Manila due to its effect on the background "view, vista, sightline, or setting" of the Rizal
Monument.

Specifically, Section 47 reads:

SEC. 47. Historical Preservation and Conservation Standards. - Historic site and facilities shall be
conserved and preserved. These shall, to the extent possible, be made accessible for the
educational and cultural enrichment of the general public.

The following shall guide the development of historic sites and facilities:

1. Sites with historic buildings or places shall be developed to conserve and enhance their heritage
values.

2. Historic sites and facilities shall be adaptively re-used.

3. Any person who proposes to add, to alter, or partially demolish a designated heritage property will
require the approval of the City Planning and Development Office (CPDO) and shall be required to
prepare a heritage impact statement that will demonstrate to the satisfaction of CPDO that the
proposal will not adversely impact the heritage significance of the property and shall submit plans for
review by the CPDO in coordination with the National Historical Institute (NHI).

4. Any proposed alteration and/or re-use of designated heritage properties shall be evaluated based
on criteria established by the heritage significance of the particular property or site.

5. Where an owner of a heritage property applies for approval to demolish a designated heritage
property or properties, the owner shall be required to provide evidence to satisfaction that
demonstrates that rehabilitation and re-use of the property is not viable.

6. Any designated heritage property which is to be demolished or significantly altered shall be

thoroughly documented for archival purposes with! a history, photographic records, and measured
drawings, in accordance with accepted heritage recording guidelines, prior to demolition or
alteration.
7. Residential and commercial infill in heritage areas will be sensitive to the existing scale and
pattern of those areas, which maintains the existing landscape and streetscape qualities of those
areas, and which does not result in the loss of any heritage resources.

8. Development plans shall ensure that parking facilities (surface lots residential garages, stand-
alone parking garages and parking components as parts of larger developments) are compatibly
integrated into heritage areas, and/or are compatible with adjacent heritage resources.

9. Local utility companies (hydro, gas, telephone, cable) shall be required to place metering
equipment, transformer boxes, power lines, conduit, equipment boxes, piping, wireless
telecommunication towers and other utility equipment and devices in locations which do not detract
from the visual character of heritage resources, and which do not have a negative impact on its
architectural integrity.

10. Design review approval shall be secured from the CPDO for any alteration of the heritage
property to ensure that design guidelines and standards are met and shall promote preservation and
conservation of the heritage property. (Emphasis supplied)

It is clear that the standards laid down in Section 47 of Ordinance No. 8119 only serve as guides, as
it expressly states that "the following shall guide the :development of historic sites and facilities."
A guide simply sets a direction 'or gives an instruction to be followed by prope1iy owners and
developers in order to conserve and enhance a property's heritage values.

On the other hand, Section 48 states:

SEC. 48. Site Performance Standards. - The City considers it in the public interest that all projects
are designed and developed in a safe, efficient and aesthetically pleasing manner. Site development
shall consider the environmental character and limitations of the site and its adjacent properties. All
project elements shall be in complete harmony according to good design principles and the
subsequent development must be visually pleasing as well as efficiently functioning especially in
relation to the adjacent properties and bordering streets.

The design, construction, operation and maintenance of every facility shall be in harmony with the
existing and intended character of its neighborhood. It shall not change the essential character of the
said area but will be a substantial improvement to the value of the properties in the neighborhood in
particular and the community in general.

Furthermore, designs should consider the following:

1. Sites, buildings and facilities shall be designed and developed with1 regard to safety, efficiency
and high standards of design. The natural environmental character of the site and its adjacent
properties shall be considered in the site development of each building and facility.

2. The height and bulk of buildings and structures shall be so designed that it does not impair the
entry of light and ventilation, cause the loss I of privacy and/or create nuisances, hazards or
inconveniences to adjacent developments.

3. Abutments to adjacent properties shall not be allowed without the neighbor's prior written consent
which shall be required by the City Planning and Development Office (CPDO) prior to the granting of
a Zoning Permit (Locational Clearance).
4. The capacity of parking areas/lots shall be per the minimum requirements of the National Building
Code. These shall be located, developed and landscaped in order to enhance the aesthetic quality
of the facility. In no case, shall parking areas/lots encroach into street rights-of-way and shall follow
the Traffic Code as set by the City.

5. Developments that attract a significant volume of public modes of transportation, such as tricycles,
jeepneys, buses, etc., shall provide on-site parking for the same. These shall also provide vehicular
loading and unloading bays so as street traffic flow will not be impeded.

6. Buffers, silencers, mufflers, enclosures and other noise-absorbing I materials shall be provided to
all noise and vibration-producing machinery. Noise levels shall be maintained according to levels
specified in DENR DA9 No. 30 - Abatement of Noise and Other Forms of Nuisance as Defined by
Law.

7. Glare and heat from any operation or activity shall not be radiated, seen or felt from any point
beyond the limits of the property.

8. No large commercial signage and/or pylon, which will be detrimental to the skyline, shall
be allowed.

9. Design guidelines, deeds of restriction, property management plans and other regulatory tools
that will ensure high quality developments shall be required from developers of commercial
subdivisions and condominiums. These shall be submitted to the City Planning and Development
Office (CPDO) for review and approval. (Emphasis supplied)

Se9tion 4 7 of Ordinance No. 8119 specifically regulates the "development of historic sites and
facilities."Section 48 regulates "large commercial signage and/or pylon." There is nothing in
Sections 47 and 48 of Ordinance No. 8119 that disallows the construction of a building outside the
boundaries of a historic site or facility, where such building may affect the1 background of a
historic site. In this case, the Torre de Manila stands 870 meters outside and to the rear of the Rizal
Monument and "cannot possibly obstruct the front view of the [Rizal] Monument." 57 Likewise, ;the
Torre de Manila is not in an area that has been declared as an "anthropological or archeological
area" or in an area designated as a heritage zone, cultural property, historical landmark, or a
national treasure by the NHCP. 58

Section 15, Article XIV of the Constitution, which deals with the subject of arts and culture, provides
that "[t]he State shall conserve, promote and popularize the nation's historical and cultural heritage
and resources x x x." Since this provision is not self-executory, Congress passed laws dealing with
the preservation and conservation of our cultural heritage.

One such law is Republic Act No. 10066,59 or the National Cultural Heritage Act of 2009, which
empowers the National Commission for Culture and the Arts and other cultural agencies to issue a
cease and desist order "when the physical integrity of the national cultural treasures or important
cultural properties [is] found to be in danger of destruction or significant alteration from its
original state."60 This law declares that the State should protect the "physical integrity" of the
heritage property or building if there is "danger of destruction or significant alteration from its original
state." Physical integrity refers to the structure itself - how strong and sound the structure is.
The same law does not mention that another project, building, or property, not itself a heritage
property or building, may be the subject of a cease and desist order when it adversely affects the
background view, vista, or sightline of a heritage property or building. Thus, Republic Act No. 10066
cannot apply to the Torre de Manila condominium project.
 Mandamus does not lie against the City of Manila.

The Constitution states that "[n]o person shall be deprived of life, liberty or 1property without due
process of law x x x." 61 It is a fundamental principle that no property shall be taken away from an
individual without due process, whether substantive or procedural. The dispossession of property, or
in this case the stoppage of the construction of a building in one's own property would violate
substantive due process.

The Rules on Civil Procedure are clear that mandamus only issues when there is a clear legal duty
imposed upon the office or the officer sought to be compelled to perform an act, and when the party
seeking mandamus has a clear legal right to the performance of such act.

In the present case, nowhere is it found in Ordinance No. 8119 or in any law, ordinance, or rule for
that matter, that the construction of a building outside the Rizal Park is prohibited if the building is
within the background sightline or view of the Rizal Monument. Thus, there is no legal duty on the
part of the City of Manila "to consider," in the words of the Dissenting Opinion, "the standards set
under Ordinance No. 8119" in relation to the applications of DMCI-PDI for the Torre de Manila
since under the ordinance these standards can never be applied outside the boundaries of
Rizal Park. While the Rizal Park has been declared a National Historical Site, the area where Torre
de Manila is being built is a privately-owned property that is "not pap: of the Rizal Park that has been
declared as a National Heritage Site in 1095," and the Torre de Manila area is in fact "well-beyond"
the Rizal Park, according to NHCP Chairperson Dr. Maria Serena I. Diokno. 62 Neither has the area
of the Torre de Manila been designated as a "heritage zone, a cultural property, a historical
landmark or even a national treasure."63

Also, to declare that the City of Manila failed to consider the standards under Ordinance No. 8119
would involve making a finding of fact. A finding lot fact requires notice, hearing, and the submission
of evidence to ascertain compliance with the law or regulation. In such a case, it is the Regional Trial
Court which has the jurisdiction to hear the case, receive evidence, make a proper finding of fact,
and determine whether the Torre de Manila project properly complied with the standards set by the
ordinance. In Meralco v. Public Service Commission, 64 we held that it is the cardinal right of a party
in trials and administrative proceedings to be heard, which includes the right of the party interested
or affected to present his own case and submit evidence in support thereof and to have such
evidence presented considered by the proper court or tribunal.

To compel the City of Manila to consider the standards under Ordinance No. 8119 to the Torre de
Manila project will be an empty exercise since these standards cannot apply outside of the Rizal
Park - and the Torre de Manila is outside the Rizal Park. Mandamus will lie only if the officials

The KOR also invokes this Court's exercise of its extraordinary certiorari power of review under
Section 1, Article VIII65 of the Constitution. However, this Court can only exercise its
extraordinary certiorari power if the City of Manila, in issuing the required permits and
licenses, gravely abused its discretion amounting to lack or excess of jurisdiction. Tellingly,
neither the majority nor minority opinion in this case has found that the City of Manila committed
grave abuse of discretion in issuing the permits and licenses to DMCI-PDI. Thus, there is no
justification at all for this Court to exercise its extraordinary certiorari power.

Moreover, the exercise of this Court's extraordinary certiorari power is limited to actual cases and
controversies that necessarily involve a violation of the Constitution or the determination of the
constitutionality or validity of a governmental act or issuance. Specific violation of a statute that does
not raise the issue of constitutionality or validity of the statute cannot, as a rule, be the subject of the
Court's direct exercise of its expanded certiorari power. Thus, the KOR's recourse lies with other
judicial remedies or proceedings allowed under the Rules of Court.

In Association of Medical Clinics for Overseas Workers, Inc. v. GCC Approved Medical Centers
Association, Inc., 66we held that in cases where the question of constitutionality of a governmental
action is raised, the judicial power that the courts exercise is likewise identified as the power of
judicial review - the power to review the constitutionality of the actions of other branches of
government. As a rule, as required by the hierarchy of courts principle, these cases are filed with the
lowest court with jurisdiction over the 1subject matter. The judicial review that the courts undertake
requires:

1) there be an actual case or controversy calling for the exercise of judicial power;

2) the person challenging the act must have "standing" to challenge; he must have a personal and
substantial interest in the case such that he has sustained, or will sustain, direct injury as a result of
its enforcement;

3) the question of constitutionality must be raised at the earliest possible opportunity; and

4) the issue of constitutionality must be the very lismota of the case.

The lower court's decision under the constitutional scheme reaches the Supreme Court through the
appeal process, through a petition for review on certiorari under Rule 45 of the Rules of Court.

In the present case, the KOR elevated this case immediately to this Court in an original petition for
injunction which we later on treated as one for mandamus under Rule 65. There is, however, no
clear legal duty on the City of Manila to consider the provisions of Ordinance No. 8119 for
applications for permits to build outside the protected areas of the Rizal Park. Even if there were
such legal duty, the determination of whether the City of .Manila failed to abide by this legal duty
would involve factual matters which have not been admitted or established in this case. Establishing
factual matters is not within the realm of this Court. Findings of fact are the province of the trial
courts.

There is no standard in Ordinance No. 8119 for defining or determining the background sightline that
is supposed to be protected or that is part of the "physical integrity" of the Rizal Monument. How far
should a building like the Torre de Manila be from the Rizal Monument - one, two, three, four, or five
kilometers? Even the Solicitor General, during the Oral Arguments, conceded that the ordinance
does not prescribe how sightline is determined, neither is there any way to measure by metes and
bounds whether al construction that is not part of the historic monument itself or is outside the
protected area can be said to violate the Rizal Monument's physicalintegrity, except only to say
"when you stand in front of the Rizal Monument, there can be no doubt that your view is marred and
impaired." This kind of a standard has no parameters and can include a sightline or a construction as
far as the human eyes can see when standing in front of the Rizal Monument. Obviously, this Court
cannot apply such a subjective and non-uniform standard that adversely affects property rights
several kilometers away from a historical sight or facility.

The Dissenting Opinion claims that "the City, by reason of a mistaken or erroneous construction of
its own Ordinance, had failed to consider its duties under [Ordinance No. 8119] when it issued
permits in DMCI-PDI's favor." However, MZBAA Zoning Board Resolution Nos. 06 and 06-A67 easily
dispel this claim. According to the resolutions, the City of Manila, through the MZBAA, acted on
DMCI-PDI's application for variance under the powers and standards set forth in Ordinance No.
8119.
Without further proof that the MZBAA acted whimsically, capriciously, or arbitrarily in issuing said
resolution, the Court should respect MZBAA's exercise of discretion. The Court cannot "substitute its
I judgment :for that of said officials who are in a better position to consider and weigh the same in
the light of the authority specifically vested in them by law." 68 Since the Court has "no supervisory
power over the proceedings I and actions of the administrative departments of the government," it
"should not generally interfere with purely administrative and discretionary functions.; 69 The power of
the Court in mandamus petitions does not extend "to direct the exercise of judgment or
discretion in a particular way or the retraction or reversal of an action already taken in the
exercise of either."70

Still, the Dissenting Opinion insists on directing the re-evaluation by the City of Manila, through the
CPDO, of the permits previously issued in favor of the Torre de Manila project to determine
compliance with the standards ]under Ordinance No. 8119. It also declares that the circumstances in
this case warrant the prohacvice conversion of the proceedings in the issuance of the permits into a
"contested case" necessitating notice and hearing with all the parties involved.

Prohac vice means a specific decision does not constitute a precedent because the decision is for
the specific case only, not to be followed in other cases. A prohac vice decision violates statutory law
- Article 8 of the Civil Code - which states that "judicial decisions applying or interpreting the laws or
the Constitution shall form part of the legal system of the Philippines." The decision of the Court in
this case cannot be prohac vice because by mandate bf the law everydecision of the Court forms
part of the legal system of the Philippines. If another case comes up with the same facts as the
present case, that case must be decided in the same way as this case to comply with the
constitutional mandate of equal protection of the law. Thus, a prohac vice decision also violates the
equal protection clause of the Constitution.

It is the policy of the courts not to interfere with the discretionary executive acts of the executive
branch unless there is a clear showing of grave abuse of discretion amounting to lack or excess of
jurisdiction. Mandamus does not lie against the legislative and executive branches or their members
acting in the exercise of their official discretionary functions. This emanates from the respect
accorded by the judiciary to said branches as co-equal entities under the principle of separation of
powers.

In De Castro v. Salas,71 we held that no rule of law is better established than the one that provides
that mandamus will not issue to control the discretion of an officer or a court when honestly
exercised and when such power and authority is not abused.

In exceptional cases, the Court has granted a prayer for mandamus to compel action in matters
involving judgment and discretion, only "to act, but not to act lone way or the other," 72 and only in
cases where there has been a clear showing of grave abuse of discretion, manifest injustice,
or palpable excess of authority.73

In this case, there can be no determination by this Court that the City of Manila had been negligent
or remiss in its duty under Ordinance No. 8119 considering that this determination will involve
questions of fact. DMCI- PDI had been issued the proper permits and had secured all approvals and
licenses months before the actual construction began. Even the KOR could not point to any law that
respondent City of Manila had violated and could only point to declarations of policies by the NHCP
and the Venice Charter which do not constitute clear legal bases for the issuance of a writ of
mandam1s.

The Venice Charter is merely a codification of guiding principles for the preservation and restoration
of ancient monuments, sites, and buildings. It brings I together principles in the field of historical
conservation and restoration that have been developed, agreed upon, and and laid down by experts
over the years. Each country, however, remains "responsible for applying the plan within the
framework of its own culture and traditions."74

The Venice Charter is not a treaty and therefore does not become enforceable as law. The
Philippines is not legally bound to follow its directive, as in fact, these are not directives but mere
guidelines - a set of the best practices and techniques that have been proven over the years to be
the most effective in preserving and restoring historical monuments, sites and buildings.

The City of Manila concedes that DMCI-PDI's Zoning Permit was granted without going through the
process under Ordinance No. 8119. However, the same was properly rectified when, faced with
mounting opposition, DMCI-PDI itself sought clarification from the City of Manila and immediately
began complying with the procedure for applying for a variance. The MZBAA did subsequently
recommend the approval of the variance and the City Council of Manila approved the same, ratifying
the licenses and permits already given to DMCI-PDI. Such ratification was well within the right of the
City Council of Manila. The City Council of Manila could have denied the application had it seen any
reason to do so. Again, the ratification is a function of the City Council of Manila, an exercise of its
discretion1 and well within the authority granted it by law and the City's own Ordinance No. 8119.

The main purpose of zoning is the protection of public safety, health, convenience, and welfare.
There is no indication that the Torre de Manila project brings any harm, danger, or hazard to the
people in the surrounding areas except that the building allegedly poses an unsightly view on the
taking of photos or the visual appreciation of the Rizal Monument by locals and tourists. In fact, the
Court must take the approval of the MZBAA, and its subsequent ratification by the City Council of
Manila, as the duly authorized exercise of discretion by the city officials. Great care must be taken
that the Court does not unduly tread upon the local government's performance of its duties. It is not
for this Court to dictate upon the other branches bf the government how their discretion must be
exercised so long as these branches do not commit grave abuse of discretion amounting to lack or
excess of jurisdiction.

Likewise, any violation of Ordinance No. 8119 must be determined in the proper case and before the
proper forum. It is not within the power of this Court in this case to make such determination. Without
such determination, this Court cannot simply declare that the City of Manila had failed to consider its
duties under Ordinance No. 8119 when it issued the permits in DMCI-PDI's favor without making a
finding of fact how the City of Manila failed "to consider" its duties with respect to areas outside the
boundaries of the Rizal Park. In the first place, this Court has no jurisdiction to make findings of fact
in an original action like this before this Court. Moreover the City of Manila could not legally apply
standards to sites outside the area covered by the ordinance that prescribed the standards. With
this, I taken in light of the lack of finding that there was grave abuse of discretion I on the part of the
City of Manila, there is no basis to issue the writ of mandamus against the City of Manila.

During the Oral Arguments, it was established that the granting of a variance neither uncommon nor
irregular. On the contrary, current practice has made granting of a variance the rule rather than the
exception:

JUSTICE CARPIO: Let's go to Ordinance 8119. For residential condominium that stand alone, in
other words not part of a commercial complex or an industrial complex ...

ATTY. FLAMINIANO: Yes, Your Honor.

JUSTICE CARPIO: The [Floor Area Ratio (FAR)] is uniform for the entire City of Manila, the FAR 4,
correct? ATTY. FLAMINIANO: I believe so, Your Honor, it's FAR 4.
JUSTICE CARPIO: So it's FAR 4 for all residential condominium complex or industrial projects.

ATTY. FLAMINIANO: There might be, the FAR might be different when it comes to condominiums in
commercial areas, Your Honor.

JUSTICE CARPIO: Yes, I'm talking of stand-alone ...

ATTY. FLAMINIANO: Yes, Your Honor.

JUITICE CARPIO: ... residential condominiums...

ATTY. FLAMINIANO: Uniform at FAR 4, Your Honor.

JUSTICE CARPIO: And the percentage of land occupancy is always 60 percent.

ATTY. FLAMINIANO: 60 percent correct, Your Honor.

JUSTICE CARPIO: Okay ... how many square meters is this Torre de Manila?

xxx

ATTY. FLAMINIANO: The land area, Your Honor, it's almost 5,000 ... 5,556.

JUSTICE CARPIO: So, it's almost half a hectare.

ATTY. FLAMINIANO: Yes, Your Honor.

JUSTICE CARPIO: And at FAR 4, it can only build up to 18 storeys, I mean at FAR 4, is that
correct?

ATTY. FLAMINIANO: If the 60 percent of the lot...

JUSTICE CARPIO: Yes, but that is a rule.

ATTY. FLAMINIANO: That is a rule, that's the rule, Your Honor.

JUSTICE CARPIO: 60 percent of...

ATTY. FLAMINIANO: Of the land area.

JUSTICE CARPIO: ... buildable, the rest not buildable.

ATTY. FLAMINIANO: Yes, Your Honor.

JUSTICE CARPIO: Okay, so if you look around here in the City of Manila anywhere you go, you look
at stand alone residential condominium buildings...

ATTY. FLAMINIANO: There's a lot of them, Your Honor.

JUSTICE CARPIO: It's always not FAR 4, it's more than FAR 4.
ATTY. FLAMINIANO: Yes, Your Honor.

JUSTICE CARPIO: And the buildable area is to the edge of the property ...it's not 60 percent,
correct?

ATTY. FLAMINIANO: Yes, Your Honor.

JUSTICE CARPIO: So, if you look at all the ... residential buildings in the last ten years, they
[have] all variances. They did not follow the original FAR 4 or the 60 percent (of land
occupancy). Every residential building that stand alone was a variance. ATTY. FLAMINIANO:
That's correct, Your Honor.

JUSTICE CARPIO: So the rule really in the City of Manila is variance, and the exception which
is never followed is FAR 4.

ATTY. FLAMINIANO: FAR 4, it appears to be that way, Your Honor.

xxxx

JUSTICE CARPIO: Every developer will have to get a variance because it doesn't make sense
to follow FAR 4 because the land is so expensive and if you can build only two storeys on a
1,000-square meter lot, you will surely lose money, correct? ATTY. FLAMINIANO: Exactly,
Your Honor. 75 (Emphasis supplied)

This, the MZBAA's grant of the variance cannot be used as a basis to grant the mandamus
petition absent any clear finding that said act amo'1nted to "grave abuse of discretion,
manifest injustice, or palpable excess of authority."

The KOR is Estopped from Questioning the

Torre de Manila Construction.

The KOR is now estopped from questioning the construction of the Torre de Manila project. The
KOR itself came up with the idea to build a structure right behind the Rizal Monument that would
dwarf the Rizal Monument.

In the mid-1950s, the Jose Rizal National Centennial Commission (JRNCC) l formulated a plan to
build an Educational Center within the Rizal Park. In July 1955, the KOR proposed the inclusion of a
national theater on the site of the Educational Center. The JRNCC adopted the proposal. The
following[ year, a law - Republic Act No. 142776 - authorized the establishment of the Jose Rizal
National Cultural Shrine consisting of a national theater, a national museum, and a national library
on a single site. 77

To be built on the open space right behind the 12.7 meter high Rizal Monument were: the KOR's
proposed nationaltheater, standing 29.25 meters high and 286 meters in distance from the Rizal
Monument; the nationallibrary, standing 25 .6 meters high and 180 meters in distance from the Rizal
;Monument, with its rear along San Luis Street (now T.M. Kalaw Street); and facing it,
the nationalmuseum, at 19.5 meters high and 190 meters in I distance from the Rizal Monument,
with its back along P. Burgos Street. 78

However, several sectors voiced their objections to the construction for various reasons. Among
them, the need to preserve the open space of the park, the high cost of construction, the desecration
of the park's hallowed grounds, and the fact that the proposed cultural center including the
129.25 meter high national theater proposed by the KOR would dwarf the 12.7 meter high
Rizal Monument. 79 The JRNCC revised the plan and only the National Library - which still stands
today - was built. 80

According to the NHCP, the KOR even proposed to build a Rizal Center on the park as recently as
2013.81 The proposal was disapproved by the NHCR and the Department of Tourism.

Surely, as noble as the KOR's intentions were, its proposed center would have dwarfed the Rizal
Monument with its size and proximity.

In contrast, the Torre de Manila is located well outside the Rizal Park, and to the rear of the Rizal
Monument - approximately 870 meters from the Rizal Monument and 3 0 meters from the edge of
Rizal Park. 82

It is a basic principle that "one who seeks equity and justice must come to court with clean hands.
"83 In Jenosa v. Delariarte, 84 the Court reiterated ,that he who seeks equity must do equity, and he
who comes into equity must come with clean hands. This "signifies that a litigant may be denied
relief by a court of equity on the ground that his conduct has been inequitable, unfair and dishonest,
or fraudulent, or deceitful as to the controversy in issue. " 85Thus, the KOR, having earlier proposed a
national theater a mere 286meters in distance from the back of the Rizal Monument that would have
dwarfed the Rizal Monument, comes to this I Court with unclean hands. It is now precluded from
"seeking any equitable refuge" 86 from the Court. The KOR's petition should be dismissed on this
ground alone.

Torre de Manila is Not a Nuisance Per Se.

In its petition, the KOR claims that the Torre de Manila is a nuisance perse that deserves to be
summarily abated even without judicial proceedings. 87 However, during the Oral Arguments, counsel
for the KOR argued that the KOR now believes that the Torre de Manila is a nuisance
per accidens and not a nuisance perse. 88

Article 694 of the Civil Code defines a nuisance as any act, omission, establishment, business,
condition of property, or anything else which: (1) injures or endangers the health or safety of others;
(2) annoys or offends the senses; (3) shocks, defies or disregards decency or morality; (4) obstructs
or interferes with the free passage of any public highway or street, or any body of water; or (5)
hinders or impairs the use of property.

Thy Court recognizes two kinds of nuisances. The first, nuisance perse, is on "recognized as a
nuisance under any and all circumstances, because it constitutes a direct menace to public health or
safety, and, for that reason, may be abated summarily under the undefined law of necessity." 89 The
second, nuisance peraccidens, is that which "depends upon certain conditions and circumstances,
and its existence being a question of fact, it cannot be abated without due hearing thereon in a
tribunal authorized to decide whether such a thing in law constitutes a nuisance. "90

It can easily be gleaned that the Torre de Manila is not a nuisance per se. The Torre de Manila
project cannot be considered as a "direct menace to I public health or safety." Not only is a
condominium project commonplace in the City of Manila, DMCI-PDI has, according to the proper
government agencies, complied with health and safety standards set by law. DMCI-PDI has been
granted the following permits and clearances prior to starting the project: (1) Height Clearance
Permit from the Civil Aviation Authority of the Philippines;91 (2) Development Permit from the
HLURB;92 (3) Zoning Certification from the HLURB;93 (4) Certificate of Environmental Compliance
Commitment from the Environment Management Bureau of the Department of Environment and
Natural Resources;94 (5) Barangay Clearance95 (6) Zoning Permit;96 (7) Building Permit;97 (8) and
Electrical and Mechanical Permit.98

Later, DMCI-PDI also obtained the right to build under a variance recommended by the MZBAA and
granted by the City Council of Manila. Thus, there can be no doubt that the Torre de Manila project
is not a nuisance perse.

On the other hand, the KOR now claims that the Torre de Manila is a nuisance peraccidens.

By definition, a nuisance peraccidens is determined based on its surrounding conditions and

circumstances. These conditions and circumstances must be well established, not merely alleged.
The Court cannot simply accept these conditions and circumstances as established facts as the
KOR would have us do in this case. 99 The KOR itself concedes that the question of whether the
Torre de Manila is a nuisance peraccidens is a question of fact. 100

The authority to decide when a nuisance exists is an authority to find facts, to estimate their force,
and to apply rules of law to the case thus made. 101 1lhis Court is no such authority. It is not a trier of
facts. It cannot simply take the allegations in the petition and accept these as facts, more so in this
case where these allegations are contested by the respondents.

The task to receive and evaluate evidence is lodged with the trial courts. The question, then, of
whether the Torre de Manila project is a nuisance peraccidens must be settled after due
proceedings brought before the proper Regional Trial Court. The KOR cannot circumvent the
process in the guise be protecting national culture and heritage.

The TRO must be lifted.

Injunctive reliefs are meant to preserve substantive rights and prevent further injury102 until final
adjudication on the merits of the case. In the present case, since the legal rights of the KOR are not
well-defined, clear, and certain, the petition for mandamus must be dismissed and the TRO lifted.

The general rule is that courts will not disturb the findings of I administrative agencies when they are
supported by substantial evidence. In this case, DMCI-PDI already acquired vested rights in the
various permits, licenses, or even variances it had applied for in order to build a 49-storey building
which is, and had been, allowed by the City of Manila's zoning ordinance.

As we have time and again held, courts generally hesitate to review discretionary decisions or
actions of administrative agencies in the absence of proof that such decisions or actions were
arrived at with grave abuse of discretion amounting to lack or excess of jurisdiction.

In JRS Business Corp. v. Montesa, 103 we held that mandamus is the proper remedy if it could be
shown that there was neglect on the part of a tribunal in the performance of an act which the law
specifically enjoins as a duty, or there was an unlawful exclusion of a party from the use and
enjoyment be a right to which he is clearly entitled. Only specific legal rights may be enforced by
mandamus if they are clear and certain. If the legal rights of th6 petitioner are not well-defined,
definite, clear, and certain, 104 the petition must be dismissed. Stated otherwise, the writ never issues
in doubtful cases. It neither confers powers nor imposes duties. It is simply a command to exercise a
power already possessed and to perform a duty already imposed. 105
In sum, bearing in mind the Court does not intervene in discretionary acts of the executive
department in the absence of grave abuse of discretion, 106 and considering that mandamus may only
be issued to enforce a clear and certain legal right, 107 the present special civil action for mandamus
must be dismissed and the TRO issued earlier must be lifted.

A FINAL WORD

It had been Rizal’s wish to die facing the rising sun. In his Mi Ultimo Adios, the poem he left for his
family the night before he was executed, Rizal wrote:

Yo muero cuando veo que el cielo se colora

Y al fin anuncia el dia tras lobrego capuz 108

[Ako’y mamamatay, ngayong namamalas

na sa Silanganan ay namamanaag
yaong maligayang araw na sisikat
sa likod ng luksang nagtabing na ulap.] 109

[I die just when I see the dawn break,

Through the gloom of night, to herald the day] 110

Yet at the point of his execution, he was made to stand facing West towards Manila Bay, with his
back to the firing squad, like the traitor the colonial government wished to portray him. He asked to
face his executioners, facing the East where the sun would be rising since it was early morning, but
the Spanish captain did not allow it. As he was shot and a single bullet struck his frail body, Rizal
forced himself, with his last remaining strength, to turn around to face the East and thus he fell on his
back with] his face to the sky and the rising sun. Then, the Spanish captain approached Rizal and
finished him off with one pistol shot to his head.

Before his death, Rizal wrote a letter to his family. He asked for a simple tomb, marked with a cross
and a stone with only his name and the date of his birth and death; no anniversary celebrations; and
interment at Paang Bundok(now, the Manila North Cemetery). Rizal never wanted his grave to be a
burden to future generations.

The letter never made it to his family and his wishes were not carried out. The letter was discovered
many years later, in 1953. By then, his remains had been entombed at the Rizal Monument,
countless anniversaries had been . celebrated, with memorials and monuments built throughout the
world.

Rizal's wish was unmistakable: to be buried without pomp or pageantry; to the point of reaching
oblivion or obscurity in the future. 111 For Rizal's life was never about fame or vainglory, but for the
country he loved dearly and for which he gave up his life.

The Rizal Monument is expressly against Rizal' s own wishes. That Rizal's statue now stands facing
West towards Manila Bay, with Rizal's back to the East, adds salt to the wound. If we continue the
present orientation of Rizal's statue, with Rizal facing West, we would be like the Spanish captain
who refused Rizal's request to die facing the rising sun in the East. On the other hand, if Rizal' s
statue is made to face East, as Rizal had desired when he was about to be shot, the background -
the blue sky above Manila Bay - would forever be clear of obstruction, and we would be faithful to
Rizal's dying wish.
WHEREFORE, the petition for mandamus is DISMISSED for lack of merit. The Temporary
Restraining Order issued by the Court on 16 June 2015 is LIFTED effective immediately.

SO ORDERED.

G.R. No. 199172, February 21, 2018 - HON. LEONCIO EVASCO, JR., IN HIS CAPACITY AS OIG CITY
ENGINEER OF DAVAO CITY AND HON. WENDEL AVISADO, IN HIS CAPACITY AS THE CITY ADMINISTRATOR
OF DAVAO CITY, Petitioners, v. ALEX P. MONTANEZ, DOING BUSINESS UNDER THE NAME AND STYLE APM
OR AD AND PROMO MANAGEMENT, Respondents.; DAVAO BILLBOARD AND SIGNMAKERS ASSOCIATION
(DABASA), INC., Respondent-Intervenor.

FIRST DIVISION

G.R. No. 199172, February 21, 2018

HON. LEONCIO EVASCO, JR., IN HIS CAPACITY AS OIG CITY ENGINEER OF DAVAO CITY AND
HON. WENDEL AVISADO, IN HIS CAPACITY AS THE CITY ADMINISTRATOR OF DAVAO
CITY,Petitioners, v. ALEX P. MONTANEZ, DOING BUSINESS UNDER THE NAME AND STYLE APM OR
AD AND PROMO MANAGEMENT, Respondents,

DAVAO BILLBOARD AND SIGNMAKERS ASSOCIATION (DABASA), INC., Respondent-Intervenor.

DECISION

LEONARDO-DE CASTRO,** J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, as amended,
seeking to reverse and set aside the Decision1 dated June 14, 2011 and Amended Decision2 dated October
13, 2011 of the Court of Appeals in CA-G.R. CV No. 02281-MIN, where it declared null and void Sections 7,
8, 37 and 45 of the Davao City Ordinance No. 092, Series of 2000 (hereinafter referred to as "Ordinance No.
092-2000" or "the Ordinance").3

The facts are as follows:

On August 8, 2000, the city government of Davao (City Government), through its Sangguniang Panlungsod,
approved Ordinance No. 092-2000 entitled "An Ordinance Regulating the Construction, Repair, Renovation,
Erection, Installation and Maintenance of Outdoor Advertising Materials and For Related Purposes." Sections
7, 8, 37, and 45 of the ordinance provided as follows:
CHAPTER 5 SPECIFIC
PROVISIONS

Article 1
Advertising Sign

SECTION 7 - BILLBOARD - Outdoor advertising signs shall not be allowed in a residential zone as designated
in the Official Zoning Map. Adjacent billboards shall be erected in such a way as to maintain 150.00 meters
unobstructed line of sight.
Billboards and other self-supporting outdoor signs along highways shall be located within a minimum of
10.00 meters away from the property lines abutting the road right-of-way.

SECTION 8 - REGULATED AREAS - Bridge approach areas within 200 meters of the following bridges shall be
designated as "regulated areas" in order to preserve, among others, the natural view and beauty of the
Davao River, Mt. Apo, the Davao City Skyline and the view of Samal Island, to wit:
1. Generoso Bridge I and II;
2. Bolton Bridge I and II;
3. Lasang Bridge

xxxx
CHAPTER 10
FEES

SECTION 37 - FEES - Fees for the application of Sign Permits to be paid at the Office of the City Treasurer
shall be as follows:

I. DISPLAY SURFACE

a) Sign fee shall be collected per square meter of the display surface of billboards, business signs, electrical
signs, ground signs, projecting signs, roof signs, signboards and wall signs for such amount as follows:

a.1 outdoor video screen....................... P 150.00

a.2 tri-wind billboard............................. P 100.00
a. 3 neon................................................ P 75.00
a.4 illuminated....................................... P 50.00
a.5 painted-on....................................... P 30.00
a.6 others............................................. P 15.00

b) Posters (per piece)................................................................................... P 5.00

c) Temporary signs (per square meter).......................................................... P 5.00

d) Other advertising and/or propaganda Materials (per square meter)......... .. P 10.00

e) Building lines/staking line and Grade (fixed amount)........................... ..... P 200.00

II. STRUCTURE

Erection of support for any signboard, billboard and the like shall be charged a fee as follows:

1) up to 4 square meter of signboard.......................................................... P 100.00

2) in every square meter or fraction thereof.................................................. P 50.00

III. RENEWAL FEE

Renewal of sign permit shall include among others the corresponding payment for the display surface and
support structure of the sign as determined in accordance with this Section and Section 35 of this
Ordinance.

IV. OTHER FEES

Sign fees paid under this Ordinance shall be without prejudice to an additional payment of electrical permit
fee for signs with electrical devices as required in accordance with the provisions of the National Building
Code.

xxxx

CHAPTER 14
REMOVAL OF ILLEGAL MATERIALS

SECTION 45 - REMOVAL. The City Engineer or his duly authorized representative shall remove, upon
recommendation of the Building Official, the following at the expense of the displaying party:

1. Those displayed without permit from the Local Building Official, provided that the displaying
party shall be given a reasonable period of sixty (60) days from receipt of the notice to
comply with the sign permit requirement provided hereof;

2. Those displayed with a permit but without bearing the necessary permit marking
requirement as provided in Section 39 hereof, provided that the displaying party shall be
given a reasonable period of sixty (60) days from receipt of the notice to comply with the
marking permit requirement provided hereof;

3. Those displayed beyond the expiry date as provided in Section 34 hereof, however, if the
displaying party intends to renew such permit even beyond the period sought to be
extended, the same shall be given a reasonable period of sixty (60) days from receipt of
the notice to comply with the renewal requirement provided hereof without prejudice to the
payment of surcharge of 25% of the total fees for such delay.

4. Those displayed in public places and/or structures as stated in section 41;

5. Those billboards, business signs, electrical signs, ground signs, projecting signs, roof signs
or wall signs which are installed or constructed in violation of this Ordinance or other
applicable statues and ordinances.

As early as 2003, the City Engineer of Davao City (City Engineer) started sending notices of illegal
construction to various outdoor advertising businesses, including Ad & Promo Management (APM), owned by
herein respondent Alex P. Montanez, that constructed the billboards in different areas within the city. The
City Engineer reminded the entities to secure a sign permit or apply for a renewal for each billboard
structure as required by Ordinance No. 092-2000.

In February4 and March 2006, the City Engineer issued orders5 of demolition directing erring outdoor
advertising businesses, including APM, to "voluntarily dismantle" their billboards that violate Ordinance No.
092-2000 within three days from receipt of the order. Otherwise, the city government shall summarily
remove these structures without further notice. In the orders of demolition dated March 17, 2006, the
summary removal was scheduled on March 30, 2006 at 8:30 in the morning.

With the impending demolition of APM's billboard structures, respondent Montanez sought recourse before
the Regional Trial Court (RTC), Branch 14, Davao City on March 28, 2006 and filed a petition for injunction
and declaration of nullity of Ordinance No. 092-2000 and order of demolition dated March 17, 2006 with
application for a writ of preliminary injunction and temporary restraining order docketed as Sp. Civil Case
No. 31,346-06.

In his petition,6 respondent Montanez claimed that Ordinance No. 092-2000 is unconstitutional for being
overbreadth in its application, vague, and inconsistent with Presidential Decree No. 1096 or the National
Building Code of the Philippines (National Building Code).

In an Order7 dated April 17, 2006, the RTC granted respondent Montafiez's application for the issuance of a
writ of preliminary injunction, to wit:
WHEREFORE, conformably with the foregoing, the instant prayer for the issuance of the writ of preliminary
injunction is hereby GRANTED. The respondents, namely, OIC Leoncio Evasco, Jr. of the Davao City
Engineer's Office and Davao City Administrator Wendel Avisado are hereby restrained from implementing
the Order of demolition dated March 17, 2006 and from actually demolishing the advertising structures of
petitioner Alex P. Montañez along Bolton Bridge and Bankerohan Bridge until the main case is decided and
tried on the merits or until further orders from this Court.
Meanwhile, in response to the damage caused by typhoon Milenyo in September 2006 especially to various
billboard structures within Metro Manila, former President Gloria Macapagal-Arroyo (President Arroyo) issued
Administrative Order (AO) No. 1608 directing the Department of Public Works and Highways (DPWH) to
conduct nationwide field inspections, evaluations, and assessments of billboards and to abate and dismantle
those: (a) posing imminent danger or threat to the life, health, safety and property of the public; (b)
violating applicable laws, rules and regulations; (c) constructed within the easement of road right-of-way;
and/or, (d) constructed without the necessary permits. President Arroyo also issued AO No. 160-
A9 specifying the legal grounds and procedures in the abatement of billboards and signboards constituting
public nuisance or other violations of law.

Assuming the role given by AO No. 160, Acting DPWH Secretary Hermogenes E. Ebdane, Jr. issued National
Building Code Development Office (NBCDO) Memorandum Circular No. 310 directing all local government
Building Officials to cease and desist from processing application for and issuing and renewing billboard
permits.

Pursuant to this directive, the city government suspended all pending applications for billboard permits.

While petitioner Montafiez's case was still pending before the RTC, the city government issued another order
of demolition dated September 25, 2008, this time directed against Prime Advertisements & Signs (Prime),
on the ground that the latter's billboards had no sign permits and encroached a portion of the road right of
way. The city government gave Prime until October 8, 2008 to voluntarily trim its structures. Otherwise, the
same shall be removed by the city demolition team.

The directive against Prime prompted herein respondent Davao Billboards and Signmakers Association, Inc.
(DABASA) to intervene11 in Sp. Civil Case No. 31,346-06 in behalf of its members consisting of outdoor
advertising and signmaker businesses in Davao City such as APM and Prime.

The RTC Decision

In its Decision12 dated January 19, 2009, the RTC ruled in favor of herein respondents Montanez and
DABASA, to wit:
WHEREFORE, and in view of all the foregoing, judgment is rendered declaring as void and unconstitutional
the following provisions of City Ordinance No. 092-2000 as follows:
(a) Sections 7, 8 and 41
for being contrary to P.D. 1096 or the National Building Code of the Philippines.

The injunction previously issued base (sic) on the aforesaid provisions of the ordinance is hereby made
permanent.13
Both parties moved for reconsideration. Thus, in its Joint Order dated April 1, 2009, the RTC modified its
original decision, to wit:
WHEREFORE, and in view of all the foregoing, the instant motion for partial reconsideration of petitioner is
GRANTED modifying the court's decision dated JANUARY 19, 2009 as follows:

(a) declaring as void and unconstitutional the following provisions of City Ordinance No. 092-2000, as
follows:

aa) Sections 7, 8 and 37, for being contrary to P.D. 1096 or the National Building Code of the Philippines;

[bb] declaring herein Section 41 of City Ordinance No. 092-2000 as deleted; and

[cc] declaring the injunction previously issued by the Court based on the aforesaid provisions of the
Ordinance, permanent.

Respondents' (sic) motion for reconsideration is DENIED.14

Aggrieved, the petitioner City Engineer sought recourse before the Court of Appeals.

The Ruling of the Court of Appeals

In its assailed Decision, the Court of Appeals denied the City Engineer's appeal, to wit:
WHEREFORE, premises foregoing, the appeal is hereby DENIED and the January 19, 2009 Decision and April
1, 2009 Joint Order of Branch 14 of the Regional Trial Court of Davao City in Civil Case No. 31,346-06 the
Regional Trial Court (sic) AFFIRMED with modification.

The appealed Decision and Joint Order are affirmed insofar as it declares Section 7 and 8 of City Ordinance
of Davao No. 092 series of 2002 (sic) null and void. Section 45 of the challenged Order (sic) is likewise
declared null and void. We, however, reinstate Section 41 of the challenged Ordinance.15
Again, both parties moved for reconsideration. Subsequently, the Court of Appeals promulgated its Amended
Decision, to wit:
WHEREFORE, premises foregoing, respondent-appellant City of Davao's Motion for Reconsideration is hereby
DENIED. Petitioner-appellee's prayer for the categorical declaration of the nullity of Section 37 of the
challenged Ordinance and rectification of the dispositive portion of our June 14, 2011 Decision are
GRANTED. The fallo of said decision should now read:
"WHEREFORE, premises foregoing, the appeal is hereby DENIED and the January 19, 2009 Decision and
April 1, 2009 Joint Order of Branch 14 of the Regional Trial Court of Davao City in Civil Case No. 31,346-06
are AFFIRMED with modification.

The appealed Decision and Joint Order are affirmed insofar as it declares Section 7, 8 and 37 of City
Ordinance of Davao No. 092 series of 2002 (sic) null and void. Section 45 of the challenged Ordinance is
likewise declared null and void. We however, reinstate Section 41 of the challenged Ordinance."16
Hence, the present petition.

On the basis of City of Manila v. Laguio, Jr.,17 the appellate court held that Ordinance No. 092-2000 is not
consistent with the National Building Code and, thus, invalid. It cited the following inconsistencies: First,
Section 7 of Ordinance No. 092-2000 requires that signs and signboards must be constructed at least 10
meters away from the property line while the National Building Code allows projection of not more than 300
millimeters over alleys and roads. The Ordinance unduly interferes with proprietary rights inasmuch as it
requires a larger setback distance. Second, Section 8 of the Ordinance regulates building and construction of
signs and signboards within certain areas to preserve the natural beauty of the Davao River, Mt. Apo, the
Davao City Skyline, and the view of Samal Island. Upholding People v. Fajardo,18 the local government
cannot rely solely on aesthetics in justifying its exercise of police power. Third, Section 45 of the Ordinance
authorizes the City Engineer, upon the Building Official's recommendation, to demolish advertising materials
that have been found to be illegally constructed. In effect, the Ordinance expanded the Building Official's
authority, which, under the National Building Code, was limited to determining ruinous and dangerous
buildings or structures and to recommending its repair or demolition. Further, the National Building Code
does not allow the demolition of signs based on a supposed lack of permit. Instead, it allows these
structures to continue to operate so long as a duly accredited engineer certifies the structures' structural
integrity.19

The Issues

The petitioner City Engineer now comes before this Court raising the following issues:
I

WHETHER OR NOT SECTION 7 OF SIGNAGE ORDINANCE, WHICH IS LIFTED/COPIED FROM UNCHALLENGED

PROVISION OF THE IMPLEMENTING RULES AND REGULATION (SIC) OF NATIONAL BUILDING CODE OF THE
PHILIPPINES, RUNS CONTRA[R]Y TO THE NATIONAL BUILDING CODE ITSELF?

II

WHETHER OR NOT THE COURT OF APPEALS ERRED IN DECLARING SECTION 8 OF SIGNAGE ORDINANCE
NULL AND VOID

III

WHETHER OR NOT THE COURT OF APPEALS ERRED IN DECLARING SECTION 37 OF SIGNAGE ORDINANCE
NULL AND VOID

IV
WHETHER OR NOT THE COURT OF APPEALS ERRED IN DECLARING SECTION 45 OF SIGNAGE ORDINANCE
NULL AND VOID20
The petitioner City Engineer argues that Ordinance No. 092-2000 is not inconsistent with the National
Building Code as follows: as to Section 7, it cannot be held to be inconsistent with Section 1002,21 which is
under Chapter 10, of the National Building Code because said provision applies to all building projections, in
general. Signs and billboards are specifically governed by Chapter 20 thereof. As to Section ff, Section
458(a)(3)(iv)22 of Republic Act No. 7160 or the Local Government Code of the Philippines (LGC), the city
government has the power to regulate the display of signs for the purpose of preserving the natural view
and beauty of the surroundings. Aesthetic considerations do not constitute undue interference on property
rights because it merely sets a limitation and, in fact, still allows construction of property provided it is done
beyond the setback. As to Section 37, when it nullified the same, the Court of Appeals did not state the
specific legal findings and bases supporting its nullity. Thus, the assailed decision violated Section 14, Article
VIII23 of the Constitution. As to Section 45, the Court of Appeals went beyond its authority when it
invalidated the said Section because the parties, both petitioners and respondents, did not raise any issue as
to the validity of said section. Moreover, the city engineer is mandated to act as the local building official. In
turn, under the LGC, the city engineer is empowered to perform duties and functions prescribed by
ordinances, such as Ordinance No. 092-2000. Thus, the city engineer has the authority to cause the removal
of structures found to have violated the ordinance.

On the other hand, herein respondents maintain that Ordinance No. 092-2000 is invalid for the following
reasons: first. Section 7 thereof contradicts the National Building Code because while the latter does not
impose a minimum setback from the property lines abutting the road right-of-way, the said provision
requires a 10-meter setback. Second, Section 8's establishment of "regulated areas" in keeping with
aesthetic purposes of the surroundings is not a valid exercise of police power. Third, the fees required by
Section 37 of the ordinance are excessive, confiscatory, and oppressive. Fourth, Section 45, insofar as it
empowers the building official to cause the removal of erring billboards, is an undue delegation of derivative
power. Under the National Building Code, the building official's authority is limited to the determination of
ruinous and dangerous buildings and structures.24

The Ruling of the Court

The petition is meritorious.

We disagree with the Court of Appeals when it declared Sections 7, 8, 37, and 45 of Ordinance No. 092-
2000 as unconstitutional, thus, null and void for being inconsistent with the National Building Code.
However, the validity of Ordinance No. 092-2000 is being upheld for reasons different from those espoused
by the petitioners.

It is settled that an ordinance's validity shall be upheld if the following requisites are present: First, the local
government unit must possess the power to enact an ordinance covering a particular subject matter and
according to the procedure prescribed by law. Second, the ordinance must not contravene the fundamental
law of the land, or an act of the legislature, or must not be against public policy or must not be
unreasonable, oppressive, partial, discriminating or in derogation of a common right.25

The power to regulate billboards was validly delegated to the local city council via Davao 's charter

Ordinance No. 092-2000, which regulates the construction and installation of building and other structures
such as billboards within Davao City, is an exercise of police power.26 It has been stressed in Metropolitan
Manila Development Authority v. Bel-Air Village Association27 that while police power is lodged primarily in
the National Legislature, Congress may delegate this power to local government units. Once delegated, the
agents can exercise only such legislative powers as are conferred on them by the national lawmaking body.

Republic Act No. 4354 otherwise known as the Revised Charter of the City of Davao (Davao City
Charter),28 enacted on June 19, 1965, vested the local Sangguniang Panlungsod with the legislative
power to regulate, prohibit, and fix license fees for the display, construction, and maintenance of
billboards and similar structures.

With the aforementioned law, Congress expressly granted the Davao City government, through the
Sangguniang Panlungsod, police power to regulate billboard structures within its territorial jurisdiction.29

Petitioners failed to allege the specific constitutional provision violated

The records reveal that while petitioners claim that Ordinance No. 092-2000 is unconstitutional, they have
not pointed to any specific constitutional provision it allegedly violated. The settled rule is that an ordinance
is presumed constitutional and valid.30 This presumption may only be overcome by a showing of the
ordinance's clear and unequivocal breach of the Constitution.31

To invalidate an ordinance based on a bare and unilateral declaration that it is unconstitutional is an affront
to the wisdom not only of the legislature that passed it but also of the executive which approved it.32

Consistency between Ordinance No. 092-2000 and the National Building Code is irrelevant

The Court of Appeals ruled that Ordinance No. 092-2000 is invalid because it contradicts the provisions of
the National Building Code, i.e., the Ordinance imposes additional requirements not provided in the National
Building Code and even expanded the authority of the city building official in the removal of erring billboard
structures.

We disagree.

As stated earlier, the power to regulate billboards within its territorial jurisdiction has been delegated by
Congress to the city government via the Davao City Charter. This direct and specific grant takes precedence
over requirements set forth in another law of general application,33 in this case the National Building Code.
Stated differently, the city government does not need to refer to the procedures laid down in the National
Building Code to exercise this power.

Thus, the consistency between Ordinance No. 092-2000 with the National Building Code is
irrelevant to the validity of the former.

To be clear, even if the National Building Code imposes minimum requirements as to the construction and
regulation of billboards, the city government may impose stricter limitations because its police
power to do so originates from its charter and not from the National Building Code. The ordinance
specifically governs billboards and other similar structures situated within Davao City, independent of the
provisions of the National Building Code.

Ordinance No. 092-2000 is a valid exercise of police power

An ordinance constitutes a valid exercise of police power if: (a) it has a lawful subject such that the
interests of the public generally, as distinguished from those of a particular class, require its exercise; and
(b) it uses a lawful method such that its implementing measures must be reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals.34

First, Ordinance No. 092-2000 seeks to regulate all signs and sign structures based on prescribed standards
as to its location, design, size, quality of materials, construction and maintenance35 to: (a) safeguard the life
and property of Davao City's inhabitants; (b) keep the surroundings clean and orderly; (c) ensure public
decency and good taste; and (d) preserve a harmonious aesthetic relationship of these structures as against
the general surroundings.36

Second, the ordinance employs the following rules in implementing its policy, viz.: (a) Minimum distances
must be observed in installing and constructing outdoor billboards (i.e., 150 meters unobstructed line of
sight, 10 meters away from the property lines abutting the right-of-way);37 (b) Additional requirements shall
be observed (i.e., billboards shall have a maximum total height of 17 meters, the top and bottom lines of
billboards shall follow a common base)38 in locations designated as "regulated areas" to preserve the natural
view and beauty of the Davao River, Mt. Apo, the Davao City Skyline, and the view of Samal Island;39 (c)
Sign permits must be secured from and proper fees paid to the city government;40 and (d) Billboards
without permits, without the required marking signs, or otherwise violative of any provision thereof shall be
removed, allowing the owner 60 days from receipt of notice to correct and address its violation.41

The Court will not be quick at invalidating an ordinance as unreasonable unless the rules imposed are so
excessive as to be prohibitive, arbitrary, unreasonable, oppressive, or confiscatory.42 It must be
remembered that the local legislative authority has a wide discretion to determine not only what the
interests of the public require but also what measures are necessary for the protection of such
interests.43 We accord high respect to the Sanggunian's issuance because the local council is in the best
position to determine the needs of its constituents.44
In the same vein, Ordinance No. 092-2000 reflects the wisdom of the Sangguniang Panlungsod
as elected representatives of the people of Davao City. In local affairs, acts of local officials must
be upheld when it is clear that these were performed squarely within the statutory authority
granted to them and in the exercise of their sound discretion.45

For the foregoing reasons, the validity of Ordinance No. 092-2000, including the provisions at issue in the
present petition, viz.: Sections 7, 8, 37, and 45 must be upheld.

By way of an observation, We note that petitioner City Engineer issued orders of demolition that required
erring outdoor advertising businesses to correct the defects of their structures within three days from
receipt of notice. Otherwise, the billboard will be summarily removed. In said orders dated March 17,
200646 and September 25, 2008,47 the summary removal operations were March 30, 2006 and October 8,
2008, respectively. These orders of demolition, however, violate Section 45 of the ordinance inasmuch as
the orders do not observe the reglementary periods granted to erring billboard owners. Section 45 clearly
gives the owners at least 60 days to correct any defect suffered by their structures and altogether comply
with the ordinance requirements.

WHEREFORE, in view of all the foregoing, the instant petition is GRANTED. The Decision and Amended
Decision of the Court of Appeals dated June 14, 2011 and October 13, 2011, respectively, in CA-G.R. CV No.
02281-MIN are hereby REVERSED and SET ASIDE.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 161107 March 12, 2013

HON. MA. LOURDES C. FERNANDO, in her capacity as City Mayor of Marikina City,
JOSEPHINE C. EVANGELIST A, in her capacity as Chief, Permit Division, Office of the City
Engineer, and ALFONSO ESPIRITU, in his capacity as City Engineer of Marikina
City, Petitioners,
vs.
ST. SCHOLASTICA'S COLLEGE and ST. SCHOLASTICA'S ACADEMY-MARIKINA,
INC., Respondents.

DECISION

MENDOZA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court, which
seeks to set aside the December 1, 2003 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No.
75691.

The Facts

Respondents St. Scholastica’s College (SSC) and St. Scholastica’s Academy-Marikina, Inc. (SSA-
Marikina) are educational institutions organized under the laws of the Republic of the Philippines,
with principal offices and business addresses at Leon Guinto Street, Malate, Manila, and at West
Drive, Marikina Heights, Marikina City, respectively.2
Respondent SSC is the owner of four (4) parcels of land measuring a total of 56,306.80 square
meters, located in Marikina Heights and covered by Transfer Certificate Title (TCT) No. 91537.
Located within the property are SSA-Marikina, the residence of the sisters of the Benedictine Order,
the formation house of the novices, and the retirement house for the elderly sisters. The property is
enclosed by a tall concrete perimeter fence built some thirty (30) years ago. Abutting the fence along
the West Drive are buildings, facilities, and other improvements.3

The petitioners are the officials of the City Government of Marikina. On September 30, 1994, the
Sangguniang Panlungsod of Marikina City enacted Ordinance No. 192,4 entitled "Regulating the
Construction of Fences and Walls in the Municipality of Marikina." In 1995 and 1998, Ordinance Nos.
2175 and 2006 were enacted to amend Sections 7 and 5, respectively. Ordinance No. 192, as
amended, is reproduced hereunder, as follows:

ORDINANCE No. 192

Series of 1994

ORDINANCE REGULATING THE CONSTRUCTION OF FENCES AND WALLS IN THE

MUNICIPALITY OF MARIKINA

WHEREAS, under Section 447.2 of Republic Act No. 7160 otherwise known as the Local
Government Code of 1991 empowers the Sangguniang Bayan as the local legislative body of the
municipality to "x x x Prescribe reasonable limits and restraints on the use of property within the
jurisdiction of the municipality, x x x";

WHEREAS the effort of the municipality to accelerate its economic and physical development,
coupled with urbanization and modernization, makes imperative the adoption of an ordinance which
shall embody up-to-date and modern technical design in the construction of fences of residential,
commercial and industrial buildings;

WHEREAS, Presidential Decree No. 1096, otherwise known as the National Building Code of the
Philippines, does not adequately provide technical guidelines for the construction of fences, in terms
of design, construction, and criteria;

WHEREAS, the adoption of such technical standards shall provide more efficient and effective
enforcement of laws on public safety and security;

WHEREAS, it has occurred in not just a few occasions that high fences or walls did not actually
discourage but, in fact, even protected burglars, robbers, and other lawless elements from the view
of outsiders once they have gained ingress into these walls, hence, fences not necessarily providing
security, but becomes itself a "security problem";

WHEREAS, to discourage, suppress or prevent the concealment of prohibited or unlawful acts

earlier enumerated, and as guardian of the people of Marikina, the municipal government seeks to
enact and implement rules and ordinances to protect and promote the health, safety and morals of
its constituents;

WHEREAS, consistent too, with the "Clean and Green Program" of the government, lowering of
fences and walls shall encourage people to plant more trees and ornamental plants in their yards,
and when visible, such trees and ornamental plants are expected to create an aura of a clean, green
and beautiful environment for Marikeños;
WHEREAS, high fences are unsightly that, in the past, people planted on sidewalks to "beautify" the
façade of their residences but, however, become hazards and obstructions to pedestrians;

WHEREAS, high and solid walls as fences are considered "un-neighborly" preventing community
members to easily communicate and socialize and deemed to create "boxed-in" mentality among the
populace;

WHEREAS, to gather as wide-range of opinions and comments on this proposal, and as a

requirement of the Local Government Code of 1991 (R.A. 7160), the Sangguniang Bayan of
Marikina invited presidents or officers of homeowners associations, and commercial and industrial
establishments in Marikina to two public hearings held on July 28, 1994 and August 25, 1994;

WHEREAS, the rationale and mechanics of the proposed ordinance were fully presented to the
attendees and no vehement objection was presented to the municipal government;

NOW, THEREFORE, BE IT ORDAINED BY THE SANGGUINANG BAYAN OF MARIKINA IN

SESSION DULY ASSEMBLED:

Section 1. Coverage: This Ordinance regulates the construction of all fences, walls and gates on lots
classified or used for residential, commercial, industrial, or special purposes.

Section 2. Definition of Terms:

a. Front Yard – refers to the area of the lot fronting a street, alley or public thoroughfare.

b. Back Yard – the part of the lot at the rear of the structure constructed therein.

c. Open fence – type of fence which allows a view of "thru-see" of the inner yard and the
improvements therein. (Examples: wrought iron, wooden lattice, cyclone wire)

d. Front gate – refers to the gate which serves as a passage of persons or vehicles fronting a
street, alley, or public thoroughfare.

Section 3. The standard height of fences or walls allowed under this ordinance are as follows:

(1) Fences on the front yard – shall be no more than one (1) meter in height. Fences in
excess of one (1) meter shall be of an open fence type, at least eighty percent (80%) see-
thru; and

(2) Fences on the side and back yard – shall be in accordance with the provisions of P.D.
1096 otherwise known as the National Building Code.

Section 4. No fence of any kind shall be allowed in areas specifically reserved or classified as parks.

Section 5. In no case shall walls and fences be built within the five (5) meter parking area allowance
located between the front monument line and the building line of commercial and industrial
establishments and educational and religious institutions.7

Section 6. Exemption.
 (1) The Ordinance does not cover perimeter walls of residential subdivisions.

(2) When public safety or public welfare requires, the Sangguniang Bayan may allow the
construction and/or maintenance of walls higher than as prescribed herein and shall issue a
special permit or exemption.

Section 7. Transitory Provision. Real property owners whose existing fences and walls do not
conform to the specifications herein are allowed adequate period of time from the passage of this
Ordinance within which to conform, as follows:

(1) Residential houses – eight (8) years

(2) Commercial establishments – five (5) years

(3) Industrial establishments – three (3) years

(4) Educational institutions – five (5) years8 (public and privately owned)

Section 8. Penalty. Walls found not conforming to the provisions of this Ordinance shall be
demolished by the municipal government at the expense of the owner of the lot or structure.

Section 9. The Municipal Engineering Office is tasked to strictly implement this ordinance, including
the issuance of the necessary implementing guidelines, issuance of building and fencing permits,
and demolition of non-conforming walls at the lapse of the grace period herein provided.

Section 10. Repealing Clause. All existing Ordinances and Resolutions, Rules and Regulations
inconsistent with the foregoing provisions are hereby repealed, amended or modified.

Section 11. Separability Clause. If for any reason or reasons, local executive orders, rules and
regulations or parts thereof in conflict with this Ordinance are hereby repealed and/or modified
accordingly.

Section 12. Effectivity. This ordinance takes effect after publication.

APPROVED: September 30, 1994

(Emphases supplied)

On April 2, 2000, the City Government of Marikina sent a letter to the respondents ordering them to
demolish and replace the fence of their Marikina property to make it 80% see-thru, and, at the same
time, to move it back about six (6) meters to provide parking space for vehicles to park.9 On April 26,
2000, the respondents requested for an extension of time to comply with the directive.10 In response,
the petitioners, through then City Mayor Bayani F. Fernando, insisted on the enforcement of the
subject ordinance.

Not in conformity, the respondents filed a petition for prohibition with an application for a writ of
preliminary injunction and temporary restraining order before the Regional Trial Court, Marikina,
Branch 273 (RTC), docketed as SCA Case No. 2000-381-MK.11

The respondents argued that the petitioners were acting in excess of jurisdiction in enforcing
Ordinance No. 192, asserting that such contravenes Section 1, Article III of the 1987 Constitution.
That demolishing their fence and constructing it six (6) meters back would result in the loss of at
least 1,808.34 square meters, worth about ₱9,041,700.00, along West Drive, and at least 1,954.02
square meters, worth roughly ₱9,770,100.00, along East Drive. It would also result in the destruction
of the garbage house, covered walk, electric house, storage house, comfort rooms, guards’ room,
guards’ post, waiting area for visitors, waiting area for students, Blessed Virgin Shrine, P.E. area,
and the multi-purpose hall, resulting in the permanent loss of their beneficial use. The respondents,
thus, asserted that the implementation of the ordinance on their property would be tantamount to an
appropriation of property without due process of law; and that the petitioners could only appropriate
a portion of their property through eminent domain. They also pointed out that the goal of the
provisions to deter lawless elements and criminality did not exist as the solid concrete walls of the
school had served as sufficient protection for many years.12

The petitioners, on the other hand, countered that the ordinance was a valid exercise of police
power, by virtue of which, they could restrain property rights for the protection of public safety,
health, morals, or the promotion of public convenience and general prosperity.13

On June 30, 2000, the RTC issued a writ of preliminary injunction, enjoining the petitioners from
implementing the demolition of the fence at SSC’s Marikina property.14

Ruling of the RTC

On the merits, the RTC rendered a Decision,15 dated October 2, 2002, granting the petition and
ordering the issuance of a writ of prohibition commanding the petitioners to permanently desist from
enforcing or implementing Ordinance No. 192 on the respondents’ property.

The RTC agreed with the respondents that the order of the petitioners to demolish the fence at the
SSC property in Marikina and to move it back six (6) meters would amount to an appropriation of
property which could only be done through the exercise of eminent domain. It held that the
petitioners could not take the respondents’ property under the guise of police power to evade the
payment of just compensation.

It did not give weight to the petitioners’ contention that the parking space was for the benefit of the
students and patrons of SSA-Marikina, considering that the respondents were already providing for
sufficient parking in compliance with the standards under Rule XIX of the National Building Code.

It further found that the 80% see-thru fence requirement could run counter to the respondents’ right
to privacy, considering that the property also served as a residence of the Benedictine sisters, who
were entitled to some sense of privacy in their affairs. It also found that the respondents were able to
prove that the danger to security had no basis in their case. Moreover, it held that the purpose of
beautification could not be used to justify the exercise of police power.

It also observed that Section 7 of Ordinance No. 192, as amended, provided for retroactive
application. It held, however, that such retroactive effect should not impair the respondents’ vested
substantive rights over the perimeter walls, the six-meter strips of land along the walls, and the
building, structures, facilities, and improvements, which would be destroyed by the demolition of the
walls and the seizure of the strips of land.

The RTC also found untenable the petitioners’ argument that Ordinance No. 192 was a remedial or
curative statute intended to correct the defects of buildings and structures, which were brought about
by the absence or insufficiency of laws. It ruled that the assailed ordinance was neither remedial nor
curative in nature, considering that at the time the respondents’ perimeter wall was built, the same
was valid and legal, and the ordinance did not refer to any previous legislation that it sought to
correct.

The RTC noted that the petitioners could still take action to expropriate the subject property through
eminent domain.

The RTC, thus, disposed:

WHEREFORE, the petition is GRANTED. The writ of prohibition is hereby issued commanding the
respondents to permanently desist from enforcing or implementing Ordinance No. 192, Series of
1994, as amended, on petitioners’ property in question located at Marikina Heights, Marikina, Metro
Manila.

No pronouncement as to costs.

SO ORDERED.16

Ruling of the CA

In its December 1, 2003 Decision, the CA dismissed the petitioners’ appeal and affirmed the RTC
decision.

The CA reasoned out that the objectives stated in Ordinance No. 192 did not justify the exercise of
police power, as it did not only seek to regulate, but also involved the taking of the respondents’
property without due process of law. The respondents were bound to lose an unquantifiable sense of
security, the beneficial use of their structures, and a total of 3,762.36 square meters of property. It,
thus, ruled that the assailed ordinance could not be upheld as valid as it clearly invaded the personal
and property rights of the respondents and "[f]or being unreasonable, and undue restraint of trade."17

It noted that although the petitioners complied with procedural due process in enacting Ordinance
No. 192, they failed to comply with substantive due process. Hence, the failure of the respondents to
attend the public hearings in order to raise objections did not amount to a waiver of their right to
question the validity of the ordinance.

The CA also shot down the argument that the five-meter setback provision for parking was a legal
easement, the use and ownership of which would remain with, and inure to, the benefit of the
respondents for whom the easement was primarily intended. It found that the real intent of the
setback provision was to make the parking space free for use by the public, considering that such
would cease to be for the exclusive use of the school and its students as it would be situated outside
school premises and beyond the school administration’s control.

In affirming the RTC ruling that the ordinance was not a curative statute, the CA found that the
petitioner failed to point out any irregularity or invalidity in the provisions of the National Building
Code that required correction or cure. It noted that any correction in the Code should be properly
undertaken by the Congress and not by the City Council of Marikina through an ordinance.

The CA, thus, disposed:

WHEREFORE, all foregoing premises considered, the instant appeal is DENIED. The October 2,
1âwphi 1

2002 Decision and the January 13, 2003 Order of the Regional Trial Court (RTC) of Marikina City,
Branch 273, granting petitioners-appellees’ petition for Prohibition in SCA Case No. 2000-381-MK
are hereby AFFIRMED.

SO ORDERED.18

Aggrieved by the decision of the CA, the petitioners are now before this Court presenting the
following

ASSIGNMENT OF ERRORS

1. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN DECLARING

THAT CITY ORDINANCE NO. 192, SERIES OF 1994 IS NOT A VALID EXERCISE OF
POLICE POWER;

2. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN RULING

THAT THE AFOREMENTIONED ORDINANCE IS AN EXERCISE OF THE CITY OF THE
POWER OF EMINENT DOMAIN;

3. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN DECLARING

THAT THE CITY VIOLATED THE DUE PROCESS CLAUSE IN IMPLEMENTING
ORDINANCE NO. 192, SERIES OF 1994; AND

4. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN RULING

THAT THE ABOVE-MENTIONED ORDINANCE CANNOT BE GIVEN RETROACTIVE
APPLICATION.19

In this case, the petitioners admit that Section 5 of the assailed ordinance, pertaining to the five-
meter setback requirement is, as held by the lower courts, invalid.20 Nonetheless, the petitioners
argue that such invalidity was subsequently cured by Zoning Ordinance No. 303, series of 2000.
They also contend that Section 3, relating to the 80% see-thru fence requirement, must be complied
with, as it remains to be valid.

Ruling of the Court

The ultimate question before the Court is whether Sections 3.1 and 5 of Ordinance No. 192 are valid
exercises of police power by the City Government of Marikina.

"Police power is the plenary power vested in the legislature to make statutes and ordinances to
promote the health, morals, peace, education, good order or safety and general welfare of the
people."21 The State, through the legislature, has delegated the exercise of police power to local
government units, as agencies of the State. This delegation of police power is embodied in Section
1622 of the Local Government Code of 1991 (R.A. No. 7160), known as the General Welfare
Clause,23 which has two branches. "The first, known as the general legislative power, authorizes the
municipal council to enact ordinances and make regulations not repugnant to law, as may be
necessary to carry into effect and discharge the powers and duties conferred upon the municipal
council by law. The second, known as the police power proper, authorizes the municipality to enact
ordinances as may be necessary and proper for the health and safety, prosperity, morals, peace,
good order, comfort, and convenience of the municipality and its inhabitants, and for the protection
of their property."24

White Light Corporation v. City of Manila,25 discusses the test of a valid ordinance:
The test of a valid ordinance is well established. A long line of decisions including City of Manila has
held that for an ordinance to be valid, it must not only be within the corporate powers of the local
government unit to enact and pass according to the procedure prescribed by law, it must also
conform to the following substantive requirements: (1) must not contravene the

Constitution or any statute; (2) must not be unfair or oppressive; (3) must not be partial or
discriminatory; (4) must not prohibit but may regulate trade; (5) must be general and consistent with
public policy; and (6) must not be unreasonable.26

Ordinance No. 192 was passed by the City Council of Marikina in the apparent exercise of its police
power. To successfully invoke the exercise of police power as the rationale for the enactment of an
ordinance and to free it from the imputation of constitutional infirmity, two tests have been used by
the Court – the rational relationship test and the strict scrutiny test:

We ourselves have often applied the rational basis test mainly in analysis of equal protection
challenges. Using the rational basis examination, laws or ordinances are upheld if they rationally
further a legitimate governmental interest. Under intermediate review, governmental interest is
extensively examined and the availability of less restrictive measures is considered. Applying strict
scrutiny, the focus is on the presence of compelling, rather than substantial, governmental interest
and on the absence of less restrictive means for achieving that interest.27

Even without going to a discussion of the strict scrutiny test, Ordinance No. 192, series of 1994 must
be struck down for not being reasonably necessary to accomplish the City’s purpose. More
importantly, it is oppressive of private rights.

Under the rational relationship test, an ordinance must pass the following requisites as discussed in
Social Justice Society (SJS) v. Atienza, Jr.:28

As with the State, local governments may be considered as having properly exercised their police
power only if the following requisites are met: (1) the interests of the public generally, as
distinguished from those of a particular class, require its exercise and (2) the means employed are
reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon
individuals. In short, there must be a concurrence of a lawful subject and lawful method.29

Lacking a concurrence of these two requisites, the police power measure shall be struck down as an
arbitrary intrusion into private rights and a violation of the due process clause.30

Section 3.1 and 5 of the assailed ordinance are pertinent to the issue at hand, to wit:

Section 3. The standard height of fences of walls allowed under this ordinance are as follows:

(1) Fences on the front yard – shall be no more than one (1) meter in height. Fences in excess of
one (1) meter shall be an open fence type, at least eighty percent (80%) see-thru;

xxx xxx xxx

Section 5. In no case shall walls and fences be built within the five (5) meter parking area allowance
located between the front monument line and the building line of commercial and industrial
establishments and educational and religious institutions.
The respondents, thus, sought to prohibit the petitioners from requiring them to (1) demolish their
existing concrete wall, (2) build a fence (in excess of one meter) which must be 80% see-thru, and
(3) build the said fence six meters back in order to provide a parking area.

Setback Requirement

The Court first turns its attention to Section 5 which requires the five-meter setback of the fence to
provide for a parking area. The petitioners initially argued that the ownership of the parking area to
be created would remain with the respondents as it would primarily be for the use of its students and
faculty, and that its use by the public on non-school days would only be incidental. In their Reply,
however, the petitioners admitted that Section 5 was, in fact, invalid for being repugnant to the
Constitution.31

The Court agrees with the latter position.

The Court joins the CA in finding that the real intent of the setback requirement was to make the
parking space free for use by the public, considering that it would no longer be for the exclusive use
of the respondents as it would also be available for use by the general public. Section 9 of Article III
of the 1987 Constitution, a provision on eminent domain, provides that private property shall not be
taken for public use without just compensation.

The petitioners cannot justify the setback by arguing that the ownership of the property will continue
to remain with the respondents. It is a settled rule that neither the acquisition of title nor the total
destruction of value is essential to taking. In fact, it is usually in cases where the title remains with
the private owner that inquiry should be made to determine whether the impairment of a property is
merely regulated or amounts to a compensable taking.32 The Court is of the view that the
implementation of the setback requirement would be tantamount to a taking of a total of 3,762.36
square meters of the respondents’ private property for public use without just compensation, in
contravention to the Constitution.

Anent the objectives of prevention of concealment of unlawful acts and "un-neighborliness," it is

obvious that providing for a parking area has no logical connection to, and is not reasonably
necessary for, the accomplishment of these goals.

Regarding the beautification purpose of the setback requirement, it has long been settled that the
State may not, under the guise of police power, permanently divest owners of the beneficial use of
their property solely to preserve or enhance the aesthetic appearance of the community.33 The
Court, thus, finds Section 5 to be unreasonable and oppressive as it will substantially divest the
respondents of the beneficial use of their property solely for aesthetic purposes. Accordingly, Section
5 of Ordinance No. 192 is invalid.

The petitioners, however, argue that the invalidity of Section 5 was properly cured by Zoning
Ordinance No. 303,34Series of 2000, which classified the respondents’ property to be within an
institutional zone, under which a five-meter setback has been required.

The petitioners are mistaken. Ordinance No. 303, Series of 2000, has no bearing to the case at
hand.

The Court notes with displeasure that this argument was only raised for the first time on appeal in
this Court in the petitioners’ Reply. Considering that Ordinance No. 303 was enacted on December
20, 2000, the petitioners could very well have raised it in their defense before the RTC in 2002. The
settled rule in this jurisdiction is that a party cannot change the legal theory of this case under which
the controversy was heard and decided in the trial court. It should be the same theory under which
the review on appeal is conducted. Points of law, theories, issues, and arguments not adequately
brought to the attention of the lower court will not be ordinarily considered by a reviewing court,
inasmuch as they cannot be raised for the first time on appeal. This will be offensive to the basic
rules of fair play, justice, and due process.35

Furthermore, the two ordinances have completely different purposes and subjects. Ordinance No.
192 aims to regulate the construction of fences, while Ordinance No. 303 is a zoning ordinance
which classifies the city into specific land uses. In fact, the five-meter setback required by Ordinance
No. 303 does not even appear to be for the purpose of providing a parking area.

By no stretch of the imagination, therefore, can Ordinance No. 303, "cure" Section 5 of Ordinance
No. 192.

In any case, the clear subject of the petition for prohibition filed by the respondents is Ordinance No.
192 and, as such, the precise issue to be determined is whether the petitioners can be prohibited
from enforcing the said ordinance, and no other, against the respondents.

80% See-Thru Fence Requirement

The petitioners argue that while Section 5 of Ordinance No. 192 may be invalid, Section 3.1 limiting
the height of fences to one meter and requiring fences in excess of one meter to be at least 80%
see-thru, should remain valid and enforceable against the respondents.

The Court cannot accommodate the petitioner.

For Section 3.1 to pass the rational relationship test, the petitioners must show the reasonable
relation between the purpose of the police power 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.36

The principal purpose of Section 3.1 is "to discourage, suppress or prevent the concealment of
prohibited or unlawful acts." The ultimate goal of this objective is clearly the prevention of crime to
ensure public safety and security. The means employed by the petitioners, however, is not
reasonably necessary for the accomplishment of this purpose and is unduly oppressive to private
rights. The petitioners have not adequately shown, and it does not appear obvious to this Court, that
an 80% see-thru fence would provide better protection and a higher level of security, or serve as a
more satisfactory criminal deterrent, than a tall solid concrete wall. It may even be argued that such
exposed premises could entice and tempt would-be criminals to the property, and that a see-thru
fence would be easier to bypass and breach. It also appears that the respondents’ concrete wall has
served as more than sufficient protection over the last 40 years. `

As to the beautification purpose of the assailed ordinance, as previously discussed, the State may
not, under the guise of police power, infringe on private rights solely for the sake of the aesthetic
appearance of the community. Similarly, the Court cannot perceive how a see-thru fence will foster
"neighborliness" between members of a community.

Compelling the respondents to construct their fence in accordance with the assailed ordinance is,
thus, a clear encroachment on their right to property, which necessarily includes their right to decide
how best to protect their property.
It also appears that requiring the exposure of their property via a see-thru fence is violative of their
right to privacy, considering that the residence of the Benedictine nuns is also located within the
property. The right to privacy has long been considered a fundamental right guaranteed by the
Constitution that must be protected from intrusion or constraint. The right to privacy is essentially the
right to be let alone,37 as governmental powers should stop short of certain intrusions into the
personal life of its citizens.38 It is inherent in the concept of liberty, enshrined in the Bill of Rights
(Article III) in Sections 1, 2, 3(1), 6, 8, and 17, Article III of the 1987 Constitution.39

The enforcement of Section 3.1 would, therefore, result in an undue interference with the
respondents’ rights to property and privacy. Section 3.1 of Ordinance No. 192 is, thus, also invalid
and cannot be enforced against the respondents.

No Retroactivity

Ordinance No. 217 amended Section 7 of Ordinance No. 192 by including the regulation of
educational institutions which was unintentionally omitted, and giving said educational institutions
five (5) years from the passage of Ordinance No. 192 (and not Ordinance No. 217) to conform to its
provisions.40 The petitioners argued that the amendment could be retroactively applied because the
assailed ordinance is a curative statute which is retroactive in nature.

Considering that Sections 3.1 and 5 of Ordinance No. 192 cannot be enforced against the
respondents, it is no longer necessary to rule on the issue of retroactivity. The Court shall,
nevertheless, pass upon the issue for the sake of clarity.

"Curative statutes are enacted to cure defects in a prior law or to validate legal proceedings which
would otherwise be void for want of conformity with certain legal requirements. They are intended to
supply defects, abridge superfluities and curb certain evils. They are intended to enable persons to
carry into effect that which they have designed or intended, but has failed of expected legal
consequence by reason of some statutory disability or irregularity in their own action. They make
valid that which, before the enactment of the statute was invalid. Their purpose is to give validity to
acts done that would have been invalid under existing laws, as if existing laws have been complied
with. Curative statutes, therefore, by their very essence, are retroactive."41

The petitioners argue that Ordinance No. 192 is a curative statute as it aims to correct or cure a
defect in the National Building Code, namely, its failure to provide for adequate guidelines for the
construction of fences. They ultimately seek to remedy an insufficiency in the law. In aiming to cure
this insufficiency, the petitioners attempt to add lacking provisions to the National Building Code.
This is not what is contemplated by curative statutes, which intend to correct irregularities or
invalidity in the law. The petitioners fail to point out any irregular or invalid provision. As such, the
assailed ordinance cannot qualify as curative and retroactive in nature.

At any rate, there appears to be no insufficiency in the National Building Code with respect to
parking provisions in relation to the issue of the respondents. Paragraph 1.16.1, Rule XIX of the
Rules and Regulations of the said code requires an educational institution to provide one parking
slot for every ten classrooms. As found by the lower courts, the respondents provide a total of 76
parking slots for their 80 classrooms and, thus, had more than sufficiently complied with the law.

Ordinance No. 192, as amended, is, therefore, not a curative statute which may be applied
retroactively.

Separability
Sections 3.1 and 5 of Ordinance No. 192, as amended, are, thus, invalid and cannot be enforced
against the respondents. Nonetheless, "the general rule is that where part of a statute is void as
repugnant to the Constitution, while another part is valid, the valid portion, if susceptible to being
separated from the invalid, may stand and be enforced."42 Thus, the other sections of the assailed
ordinance remain valid and enforceable.

Conclusion

Considering the invalidity of Sections 3.1 and 5, it is clear that the petitioners were acting in excess
of their jurisdiction in enforcing Ordinance No. 192 against the respondents. The CA was correct in
affirming the decision of the RTC in issuing the writ of prohibition. The petitioners must permanently
desist from enforcing Sections 3.1 and 5 of the assailed ordinance on the respondents' property in
Marikina City.

WHEREFORE, the petition is DENIED. The October 2, 2002 Decision of the Regional Trial Court in
SCA Case No. 2000-381-MK is AFFIRMED but MODIFIED to read as follows:

WHEREFORE, the petition is GRANTED. The writ of prohibition is hereby issued commanding the
respondents to permanently desist from enforcing or implementing Sections 3.1 and 5 of Ordinance
No. 192, Series of 1994, as amended, on the petitioners' property in question located in Marikina
Heights, Marikina, Metro Manila.

No pronouncement as to costs.

SO ORDERED.

EN BANC

[G.R. No. 148560. November 19, 2001]

JOSEPH EJERCITO ESTRADA, petitioner, vs. SANDIGANBAYAN (Third

Division) and PEOPLE OF THE PHILIPPINES, respondents.

DECISION
BELLOSILLO, J.:

JOHN STUART MILL, in his essay On Liberty, unleashes the full fury of his pen in defense
of the rights of the individual from the vast powers of the State and the inroads of societal
pressure. But even as he draws a sacrosanct line demarcating the limits on individuality beyond
which the State cannot tread - asserting that "individual spontaneity" must be allowed to flourish
with very little regard to social interference - he veritably acknowledges that the exercise of rights
and liberties is imbued with a civic obligation, which society is justified in enforcing at all cost,
against those who would endeavor to withhold fulfillment. Thus he says -
The sole end for which mankind is warranted, individually or collectively, in
interfering with the liberty of action of any of their number, is self-protection. The
only purpose for which power can be rightfully exercised over any member of a
civilized community, against his will, is to prevent harm to others.

Parallel to individual liberty is the natural and illimitable right of the State to self-
preservation. With the end of maintaining the integrity and cohesiveness of the body politic, it
behooves the State to formulate a system of laws that would compel obeisance to its collective
wisdom and inflict punishment for non-observance.
The movement from Mill's individual liberalism to unsystematic collectivism wrought
changes in the social order, carrying with it a new formulation of fundamental rights and duties
more attuned to the imperatives of contemporary socio-political ideologies. In the process, the web
of rights and State impositions became tangled and obscured, enmeshed in threads of multiple
shades and colors, the skein irregular and broken. Antagonism, often outright collision, between
the law as the expression of the will of the State, and the zealous attempts by its members to
preserve their individuality and dignity, inevitably followed. It is when individual rights are pitted
against State authority that judicial conscience is put to its severest test.
Petitioner Joseph Ejercito Estrada, the highest-ranking official to be prosecuted under RA
7080 (An Act Defining and Penalizing the Crime of Plunder),[1] as amended by RA 7659,[2] wishes
to impress upon us that the assailed law is so defectively fashioned that it crosses that thin but
distinct line which divides the valid from the constitutionally infirm. He therefore makes a
stringent call for this Court to subject the Plunder Law to the crucible of constitutionality mainly
because, according to him, (a) it suffers from the vice of vagueness; (b) it dispenses with the
"reasonable doubt" standard in criminal prosecutions; and, (c) it abolishes the element of mens
rea in crimes already punishable under The Revised Penal Code, all of which are purportedly clear
violations of the fundamental rights of the accused to due process and to be informed of the nature
and cause of the accusation against him.
Specifically, the provisions of the Plunder Law claimed by petitioner to have transgressed
constitutional boundaries are Secs. 1, par. (d), 2 and 4 which are reproduced hereunder:

Section 1. x x x x (d) "Ill-gotten wealth" means any asset, property, business,

enterprise or material possession of any person within the purview of Section Two (2)
hereof, acquired by him directly or indirectly through dummies, nominees, agents,
subordinates and/or business associates by any combination or series of the following
means or similar schemes:

(1) Through misappropriation, conversion, misuse, or malversation of public funds or

raids on the public treasury;

(2) By receiving, directly or indirectly, any commission, gift, share, percentage,

kickbacks or any other form of pecuniary benefit from any person and/or entity in
connection with any government contract or project or by reason of the office or
position of the public office concerned;
(3) By the illegal or fraudulent conveyance or disposition of assets belonging to the
National Government or any of its subdivisions, agencies or instrumentalities, or
government owned or controlled corporations and their subsidiaries;

(4) By obtaining, receiving or accepting directly or indirectly any shares of stock,

equity or any other form of interest or participation including the promise of future
employment in any business enterprise or undertaking;

(5) By establishing agricultural, industrial or commercial monopolies or other

combinations and/or implementation of decrees and orders intended to benefit
particular persons or special interests; or

(6) By taking advantage of official position, authority, relationship, connection or

influence to unjustly enrich himself or themselves at the expense and to the damage
and prejudice of the Filipino people and the Republic of the Philippines.

Section 2. Definition of the Crime of Plunder, Penalties. - Any public officer who, by
himself or in connivance with members of his family, relatives by affinity or
consanguinity, business associates, subordinates or other persons, amasses,
accumulates or acquires ill-gotten wealth through a combination or series of overt or
criminal acts as described in Section 1 (d) hereof, in the aggregate amount or total
value of at least fifty million pesos (P50,000,000.00) shall be guilty of the crime of
plunder and shall be punished by reclusion perpetua to death. Any person who
participated with the said public officer in the commission of an offense contributing
to the crime of plunder shall likewise be punished for such offense. In the imposition
of penalties, the degree of participation and the attendance of mitigating and
extenuating circumstances as provided by the Revised Penal Code shall be considered
by the court. The court shall declare any and all ill-gotten wealth and their interests
and other incomes and assets including the properties and shares of stocks derived
from the deposit or investment thereof forfeited in favor of the State (underscoring
supplied).

Section 4. Rule of Evidence. - For purposes of establishing the crime of plunder, it

shall not be necessary to prove each and every criminal act done by the accused in
furtherance of the scheme or conspiracy to amass, accumulate or acquire ill-gotten
wealth, it being sufficient to establish beyond reasonable doubt a pattern of overt or
criminal acts indicative of the overall unlawful scheme or conspiracy (underscoring
supplied).

On 4 April 2001 the Office of the Ombudsman filed before the Sandiganbayan eight (8)
separate Informations, docketed as: (a) Crim. Case No. 26558, for violation of RA 7080, as
amended by RA 7659; (b) Crim. Cases Nos. 26559 to 26562, inclusive, for violation of Secs. 3,
par. (a), 3, par. (a), 3, par. (e) and 3, par. (e), of RA 3019 (Anti-Graft and Corrupt Practices
Act), respectively; (c) Crim. Case No. 26563, for violation of Sec. 7, par. (d), of RA 6713
(The Code of Conduct and Ethical Standards for Public Officials and Employees); (d) Crim. Case
No. 26564, for Perjury (Art. 183 of The Revised Penal Code); and, (e) Crim. Case No. 26565, for
Illegal Use Of An Alias (CA No. 142, as amended by RA 6085).
On 11 April 2001 petitioner filed an Omnibus Motion for the remand of the case to the
Ombudsman for preliminary investigation with respect to specification "d" of the charges in the
Information in Crim. Case No. 26558; and, for reconsideration/reinvestigation of the offenses
under specifications "a," "b," and "c" to give the accused an opportunity to file counter-affidavits
and other documents necessary to prove lack of probable cause. Noticeably, the grounds raised
were only lack of preliminary investigation, reconsideration/reinvestigation of offenses, and
opportunity to prove lack of probable cause. The purported ambiguity of the charges and the
vagueness of the law under which they are charged were never raised in that Omnibus Motion thus
indicating the explicitness and comprehensibility of the Plunder Law.
On 25 April 2001 the Sandiganbayan, Third Division, issued a Resolution in Crim. Case No.
26558 finding that "a probable cause for the offense of PLUNDER exists to justify the issuance of
warrants for the arrest of the accused." On 25 June 2001 petitioner's motion for
reconsideration was denied by the Sandiganbayan.
On 14 June 2001 petitioner moved to quash the Information in Crim. Case No. 26558 on the
ground that the facts alleged therein did not constitute an indictable offense since the law on which
it was based was unconstitutional for vagueness, and that the Amended Information for Plunder
charged more than one (1) offense. On 21 June 2001 the Government filed its Opposition to the
Motion to Quash, and five (5) days later or on 26 June 2001 petitioner submitted his Reply to the
Opposition. On 9 July 2001 the Sandiganbayan denied petitioner's Motion to Quash.
As concisely delineated by this Court during the oral arguments on 18 September 2001, the
issues for resolution in the instant petition for certiorari are: (a) The Plunder Law is
unconstitutional for being vague; (b) The Plunder Law requires less evidence for proving the
predicate crimes of plunder and therefore violates the rights of the accused to due process; and, (c)
Whether Plunder as defined in RA 7080 is a malum prohibitum, and if so, whether it is within the
power of Congress to so classify it.
Preliminarily, the whole gamut of legal concepts pertaining to the validity of legislation is
predicated on the basic principle that a legislative measure is presumed to be in harmony with the
Constitution.[3] Courts invariably train their sights on this fundamental rule whenever a legislative
act is under a constitutional attack, for it is the postulate of constitutional adjudication. This strong
predilection for constitutionality takes its bearings on the idea that it is forbidden for one branch
of the government to encroach upon the duties and powers of another. Thus it has been said that
the presumption is based on the deference the judicial branch accords to its coordinate branch - the
legislature.
If there is any reasonable basis upon which the legislation may firmly rest, the courts must
assume that the legislature is ever conscious of the borders and edges of its plenary powers, and
has passed the law with full knowledge of the facts and for the purpose of promoting what is right
and advancing the welfare of the majority. Hence in determining whether the acts of the legislature
are in tune with the fundamental law, courts should proceed with judicial restraint and act with
caution and forbearance. Every intendment of the law must be adjudged by the courts in favor of
its constitutionality, invalidity being a measure of last resort. In construing therefore the provisions
of a statute, courts must first ascertain whether an interpretation is fairly possible to sidestep the
question of constitutionality.
In La Union Credit Cooperative, Inc. v. Yaranon[4] we held that as
long as there is some basis for the decision of the court, the constitutionality of the challenged law
will not be touched and the case will be decided on other available grounds. Yet the force of the
presumption is not sufficient to catapult a fundamentally deficient law into the safe environs of
constitutionality. Of course, where the law clearly and palpably transgresses the hallowed domain
of the organic law, it must be struck down on sight lest the positive commands of the fundamental
law be unduly eroded.
Verily, the onerous task of rebutting the presumption weighs heavily on the party challenging
the validity of the statute. He must demonstrate beyond any tinge of doubt that there is indeed an
infringement of the constitution, forabsent such a showing, there can be no finding of
unconstitutionality. A doubt, even if well-founded, will hardly suffice. As tersely put by Justice
Malcolm, "To doubt is to sustain."[5] And petitioner has miserably failed in the instant case to
discharge his burden and overcome the presumption of constitutionality of the Plunder Law.
As it is written, the Plunder Law contains ascertainable standards and well-defined parameters
which would enable the accused to determine the nature of his violation. Section 2 is
sufficiently explicit in its description of the acts,conduct and conditions required or forbidden,
and prescribes the elements of the crime with reasonable certainty and particularity. Thus -

1. That the offender is a public officer who acts by himself or in connivance with
members of his family, relatives by affinity or consanguinity, business associates,
subordinates or other persons;

2. That he amassed, accumulated or acquired ill-gotten wealth through a combination

or series of the following overt or criminal acts: (a) through misappropriation,
conversion, misuse, or malversation of public funds or raids on the public treasury;
(b) by receiving, directly or indirectly, any commission, gift, share, percentage,
kickback or any other form of pecuniary benefits from any person and/or entity in
connection with any government contract or project or by reason of the office or
position of the public officer; (c) by the illegal or fraudulent conveyance or
disposition of assets belonging to the National Government or any of its subdivisions,
agencies or instrumentalities of Government owned or controlled corporations or
their subsidiaries; (d) by obtaining, receiving or accepting directly or indirectly any
shares of stock, equity or any other form of interest or participation including the
promise of future employment in any business enterprise or undertaking; (e) by
establishing agricultural, industrial or commercial monopolies or other combinations
and/or implementation of decrees and orders intended to benefit particular persons or
special interests; or (f) by taking advantage of official position, authority,
relationship, connection or influence to unjustly enrich himself or themselves at the
expense and to the damage and prejudice of the Filipino people and the Republic of
the Philippines; and,

3. That the aggregate amount or total value of the ill-gotten wealth amassed,
accumulated or acquired is at least P50,000,000.00.

As long as the law affords some comprehensible guide or rule that would inform those who
are subject to it what conduct would render them liable to its penalties, its validity will be
sustained. It must sufficiently guide the judge in its application; the counsel, in defending one
charged with its violation; and more importantly, the accused, in identifying the realm of the
proscribed conduct. Indeed, it can be understood with little difficulty that what the assailed statute
punishes is the act of a public officer in amassing or accumulating ill-gotten wealth of at
least P50,000,000.00 through a series or combination of acts enumerated in Sec. 1, par. (d), of the
Plunder Law.
In fact, the amended Information itself closely tracks the language of the law, indicating with
reasonable certainty the various elements of the offense which petitioner is alleged to have
committed:

"The undersigned Ombudsman, Prosecutor and OIC-Director, EPIB, Office of the

Ombudsman, hereby accuses former PRESIDENT OF THE REPUBLIC OF THE
PHILIPPINES, Joseph Ejercito Estrada, a.k.a. 'ASIONG SALONGA' and a.k.a.
'JOSE VELARDE,' together with Jose 'Jinggoy' Estrada, Charlie 'Atong' Ang, Edward
Serapio, Yolanda T. Ricaforte, Alma Alfaro, JOHN DOE a.k.a. Eleuterio
Tan OR Eleuterio Ramos Tan or Mr. Uy, Jane Doe a.k.a. Delia Rajas, and
John DOES & Jane Does, of the crime of Plunder, defined and penalized under R.A.
No. 7080, as amended by Sec. 12 of R.A. No. 7659, committed as follows:

That during the period from June, 1998 to January 2001, in the Philippines, and within
the jurisdiction of this Honorable Court, accused Joseph Ejercito Estrada, THEN A
PRESIDENT OF THE REPUBLIC OF THE PHILIPPINES, by
himself AND/OR in CONNIVANCE/CONSPIRACY with his co-accused, WHO
ARE MEMBERS OF HIS FAMILY, RELATIVES BY AFFINITY OR
CONSANGUINITY, BUSINESS ASSOCIATES, SUBORDINATES AND/OR
OTHER PERSONS, BY TAKING UNDUE ADVANTAGE OF HIS OFFICIAL
POSITION, AUTHORITY, RELATIONSHIP, CONNECTION, OR
INFLUENCE, did then and there willfully, unlawfully and criminally amass,
accumulate and acquire BY HIMSELF, DIRECTLY OR INDIRECTLY, ill-gotten
wealth in the aggregate amount or TOTAL VALUE of FOUR BILLION NINETY
SEVEN MILLION EIGHT HUNDRED FOUR THOUSAND ONE HUNDRED
SEVENTY THREE PESOS AND SEVENTEEN
CENTAVOS (P4,097,804,173.17), more or less, THEREBY UNJUSTLY
ENRICHING HIMSELF OR THEMSELVES AT THE EXPENSE AND TO
THE DAMAGE OF THE FILIPINO PEOPLE AND THE REPUBLIC OF THE
PHILIPPINES, through ANY OR A combination OR A series of overt OR criminal
acts, OR SIMILAR SCHEMES OR MEANS, described as follows:

(a) by receiving OR collecting, directly or indirectly, on SEVERAL INSTANCES,

MONEY IN THE AGGREGATE AMOUNT OF FIVE HUNDRED FORTY-
FIVE MILLION PESOS (P545,000,000.00), MORE OR LESS, FROM
ILLEGAL GAMBLING IN THE FORM OF GIFT, SHARE, PERCENTAGE,
KICKBACK OR ANY FORM OF PECUNIARY BENEFIT, BY HIMSELF
AND/OR in connection with co-accused CHARLIE 'ATONG' ANG, Jose 'Jinggoy'
Estrada, Yolanda T. Ricaforte, Edward Serapio, AND JOHN DOES AND JANE
DOES, in consideration OF TOLERATION OR PROTECTION OF ILLEGAL
GAMBLING;

(b) by DIVERTING, RECEIVING, misappropriating,

converting OR misusing DIRECTLY OR INDIRECTLY, for HIS OR THEIR
PERSONAL gain and benefit, public funds in the amount of ONE HUNDRED
THIRTY MILLION PESOS (P130,000,000.00), more or less, representing a portion
of the TWO HUNDRED MILLION PESOS (P200,000,000.00) tobacco excise tax
share allocated for the province of Ilocos Sur under R.A. No. 7171, by himself
and/or in connivance with co-accused Charlie 'Atong' Ang, Alma Alfaro, JOHN
DOE a.k.a. Eleuterio Ramos Tan or Mr. Uy, Jane Doe a.k.a. Delia Rajas, AND
OTHER JOHN DOES & JANE DOES; (italic supplied).

(c) by directing, ordering and compelling, FOR HIS PERSONAL GAIN AND
BENEFIT, the Government Service Insurance System (GSIS) TO PURCHASE
351,878,000 SHARES OF STOCKS, MORE OR LESS, and the Social Security
System (SSS), 329,855,000 SHARES OF STOCK, MORE OR LESS, OF THE
BELLE CORPORATION IN THE AMOUNT OF MORE OR LESS ONE
BILLION ONE HUNDRED TWO MILLION NINE HUNDRED SIXTY FIVE
THOUSAND SIX HUNDRED SEVEN PESOS AND FIFTY CENTAVOS
(P1,102,965,607.50) AND MORE OR LESS SEVEN HUNDRED FORTY FOUR
MILLION SIX HUNDRED TWELVE THOUSAND AND FOUR HUNDRED
FIFTY PESOS (P744,612,450.00), RESPECTIVELY, OR A TOTAL OF MORE
OR LESS ONE BILLION EIGHT HUNDRED FORTY SEVEN MILLION
FIVE HUNDRED SEVENTY EIGHT THOUSAND FIFTY SEVEN PESOS
AND FIFTY CENTAVOS (P1,847,578,057.50); AND BY COLLECTING OR
RECEIVING, DIRECTLY OR INDIRECTLY, BY HIMSELF AND/OR IN
CONNIVANCE WITH JOHN DOES AND JANE DOES, COMMISSIONS OR
PERCENTAGES BY REASON OF SAID PURCHASES OF SHARES OF
STOCK IN THE AMOUNT OF ONE HUNDRED EIGHTY NINE MILLION
SEVEN HUNDRED THOUSAND PESOS (P189,700,000.00) MORE OR LESS,
FROM THE BELLE CORPORATION WHICH BECAME PART OF THE
DEPOSIT IN THE EQUITABLE-PCI BANK UNDER THE ACCOUNT
NAME 'JOSE VELARDE;'

(d) by unjustly enriching himself FROM COMMISSIONS, GIFTS, SHARES,

PERCENTAGES, KICKBACKS, OR ANY FORM OF PECUNIARY
BENEFITS, IN CONNIVANCE WITH JOHN DOES AND JANE DOES, in the
amount of MORE OR LESS THREE BILLION TWO HUNDRED THIRTY THREE
MILLION ONE HUNDRED FOUR THOUSAND ONE HUNDRED SEVENTY
THREE PESOS AND SEVENTEEN CENTAVOS (P3,233,104,173.17) AND
DEPOSITING THE SAME UNDER HIS ACCOUNT NAME 'JOSE
VELARDE' AT THE EQUITABLE-PCI BANK."

We discern nothing in the foregoing that is vague or ambiguous - as there is obviously none -
that will confuse petitioner in his defense. Although subject to proof, these factual assertions
clearly show that the elements of the crime are easily understood and provide adequate contrast
between the innocent and the prohibited acts. Upon such unequivocal assertions, petitioner is
completely informed of the accusations against him as to enable him to prepare for an intelligent
defense.
Petitioner, however, bewails the failure of the law to provide for the statutory definition of the
terms "combination" and "series" in the key phrase "a combination or series of overt or criminal
acts" found in Sec. 1, par. (d), and Sec. 2, and the word "pattern" in Sec. 4. These omissions,
according to petitioner, render the Plunder Law unconstitutional for being impermissibly vague
and overbroad and deny him the right to be informed of the nature and cause of the accusation
against him, hence, violative of his fundamental right to due process.
The rationalization seems to us to be pure sophistry. A statute is not rendered uncertain and
void merely because general terms are used therein, or because of the employment of terms without
defining them;[6] much less do we have to define every word we use. Besides, there is no positive
constitutional or statutory command requiring the legislature to define each and every word in an
enactment. Congress is not restricted in the form of expression of its will, and its inability to so
define the words employed in a statute will not necessarily result in the vagueness or ambiguity of
the law so long as the legislative will is clear, or at least, can be gathered from the whole act, which
is distinctly expressed in the Plunder Law.
Moreover, it is a well-settled principle of legal hermeneutics that words of a statute will be
interpreted in their natural, plain and ordinary acceptation and signification,[7] unless it is evident
that the legislature intended a technical or special legal meaning to those words.[8] The intention of
the lawmakers - who are, ordinarily, untrained philologists and lexicographers - to use statutory
phraseology in such a manner is always presumed. Thus, Webster's New Collegiate Dictionary
contains the following commonly accepted definition of the words "combination" and "series:"

Combination - the result or product of combining; the act or process of

combining. To combine is to bring into such close relationship as to obscure
individual characters.
Series - a number of things or events of the same class coming one after another in
spatial and temporal succession.

That Congress intended the words "combination" and "series" to be understood in their
popular meanings is pristinely evident from the legislative deliberations on the bill which
eventually became RA 7080 or the Plunder Law:

DELIBERATIONS OF THE BICAMERAL COMMITTEE ON JUSTICE, 7 May

1991

REP. ISIDRO: I am just intrigued again by our definition of plunder. We say

THROUGH A COMBINATION OR SERIES OF OVERT OR CRIMINAL ACTS AS
MENTIONED IN SECTION ONE HEREOF. Now when we say combination, we
actually mean to say, if there are two or more means, we mean to say that number one
and two or number one and something else are included, how about a series of the
same act? For example, through misappropriation, conversion, misuse, will these be
included also?

REP. GARCIA: Yeah, because we say a series.

REP. ISIDRO: Series.
REP. GARCIA: Yeah, we include series.
REP. ISIDRO: But we say we begin with a combination.
REP. GARCIA: Yes.
REP. ISIDRO: When we say combination, it seems that -
REP. GARCIA: Two.
REP. ISIDRO: Not only two but we seem to mean that two of the enumerated means not twice of one
enumeration.
REP. GARCIA: No, no, not twice.
REP. ISIDRO: Not twice?
REP. GARCIA: Yes. Combination is not twice - but combination, two acts.
REP. ISIDRO: So in other words, thats it. When we say combination, we mean, two different acts. It
cannot be a repetition of the same act.
REP. GARCIA: That be referred to series, yeah.
REP. ISIDRO: No, no. Supposing one act is repeated, so there are two.
REP. GARCIA: A series.
REP. ISIDRO: Thats not series. Its a combination. Because when we say combination or series, we
seem to say that two or more, di ba?
 REP. GARCIA: Yes, this distinguishes it really from ordinary crimes. That is why, I said, that is a very
good suggestion because if it is only one act, it may fall under ordinary crime but we have here a
combination or series of overt or criminal acts. So x x x x
REP. GARCIA: Series. One after the other eh di....
SEN. TANADA: So that would fall under the term series?
REP. GARCIA: Series, oo.
REP. ISIDRO: Now, if it is a combination, ano, two misappropriations....
REP. GARCIA: Its not... Two misappropriations will not be combination. Series.
REP. ISIDRO: So, it is not a combination?
REP. GARCIA: Yes.
REP. ISIDRO: When you say combination, two different?
REP. GARCIA: Yes.
SEN. TANADA: Two different.
REP. ISIDRO: Two different acts.
REP. GARCIA: For example, ha...
REP. ISIDRO: Now a series, meaning, repetition...
DELIBERATIONS ON SENATE BILL NO. 733, 6 June 1989
SENATOR MACEDA: In line with our interpellations that sometimes one or maybe even two acts may
already result in such a big amount, on line 25, would the Sponsor consider deleting the words a
series of overt or, to read, therefore: or conspiracy COMMITTED by criminal acts such as.
Remove the idea of necessitating a series. Anyway, the criminal acts are in the plural.
SENATOR TANADA: That would mean a combination of two or more of the acts mentioned in this.
THE PRESIDENT: Probably two or more would be....
SENATOR MACEDA: Yes, because a series implies several or many; two or more.
SENATOR TANADA: Accepted, Mr. President x x x x
THE PRESIDENT: If there is only one, then he has to be prosecuted under the particular crime. But
when we say acts of plunder there should be, at least, two or more.
SENATOR ROMULO: In other words, that is already covered by existing laws, Mr. President.
Thus when the Plunder Law speaks of "combination," it is referring to at least two (2) acts
falling under different categories of enumeration provided in Sec. 1, par. (d), e.g., raids on the
public treasury in Sec. 1, par. (d), subpar. (1), and fraudulent conveyance of assets belonging to
the National Government under Sec. 1, par. (d), subpar. (3).
On the other hand, to constitute a series" there must be two (2) or more overt or criminal acts
falling under the same category of enumeration found in Sec. 1, par. (d), say, misappropriation,
malversation and raids on the publictreasury, all of which fall under Sec. 1, par. (d), subpar.
(1). Verily, had the legislature intended a technical or distinctive meaning for "combination" and
"series," it would have taken greater pains in specifically providing for it in the law.
 As for "pattern," we agree with the observations of the Sandiganbayan[9] that this term is
sufficiently defined in Sec. 4, in relation to Sec. 1, par. (d), and Sec. 2 -

x x x x under Sec. 1 (d) of the law, a 'pattern' consists of at least a combination or

series of overt or criminal acts enumerated in subsections (1) to (6) of Sec. 1
(d). Secondly, pursuant to Sec. 2 of the law, the pattern of overt or criminal acts is
directed towards a common purpose or goal which is to enable the public officer to
amass, accumulate or acquire ill-gotten wealth. And thirdly, there must either be an
'overall unlawful scheme' or 'conspiracy' to achieve said common goal. As commonly
understood, the term 'overall unlawful scheme' indicates a 'general plan of action or
method' which the principal accused and public officer and others conniving with him
follow to achieve the aforesaid common goal. In the alternative, if there is no such
overall scheme or where the schemes or methods used by multiple accused vary, the
overt or criminal acts must form part of a conspiracy to attain a common goal.

Hence, it cannot plausibly be contended that the law does not give a fair warning and sufficient
notice of what it seeks to penalize. Under the circumstances, petitioner's reliance on the "void-for-
vagueness" doctrine is manifestly misplaced. The doctrine has been formulated in various ways,
but is most commonly stated to the effect that a statute establishing a criminal offense must define
the offense with sufficient definiteness that persons of ordinary intelligence can understand what
conduct is prohibited by the statute. It can only be invoked against that specie of legislation that is
utterly vague on its face, i.e., that which cannot be clarified either by a saving clause or by
construction.
A statute or act may be said to be vague when it lacks comprehensible standards that men of
common intelligence must necessarily guess at its meaning and differ in its application. In
such instance, the statute is repugnant to the Constitution in two (2) respects - it violates due
process for failure to accord persons, especially the parties targeted by it, fair notice of what
conduct to avoid; and, it leaves law enforcers unbridled discretion in carrying out its provisions
and becomes an arbitrary flexing of the Government muscle.[10] But the doctrine does not apply as
against legislations that are merely couched in imprecise language but which nonetheless specify
a standard thoughdefectively phrased; or to those that are apparently ambiguous yet fairly
applicable to certain types of activities. The first may be "saved" by proper construction, while no
challenge may be mounted as against the second whenever directed against such activities.[11] With
more reason, the doctrine cannot be invoked where the assailed statute is clear and free from
ambiguity, as in this case.
The test in determining whether a criminal statute is void for uncertainty is whether the
language conveys a sufficiently definite warning as to the proscribed conduct when measured by
common understanding and practice.[12] It must be stressed, however, that the "vagueness" doctrine
merely requires a reasonable degree of certainty for the statute to be upheld - not absolute precision
or mathematical exactitude, as petitioner seems to suggest. Flexibility, rather than meticulous
specificity, is permissible as long as the metes and bounds of the statute are clearly delineated. An
act will not be held invalid merely because it might have been more explicit in its wordings or
detailed in its provisions, especially where, because of the nature of the act, it would be impossible
to provide all the details in advance as in all other statutes.
 Moreover, we agree with, hence we adopt, the observations of Mr. Justice Vicente V.
Mendoza during the deliberations of the Court that the allegations that the Plunder Law is vague
and overbroad do not justify a facial review of its validity -

The void-for-vagueness doctrine states that "a statute which either forbids or requires
the doing of an act in terms so vague that men of common intelligence must
necessarily guess at its meaning and differ as to its application, violates the first
essential of due process of law."[13] The overbreadth doctrine, on the other hand, decrees that
"a governmental purpose may not be achieved by means which sweep unnecessarily broadly and
thereby invade the area of protected freedoms."[14]

A facial challenge is allowed to be made to a vague statute and to one which is

overbroad because of possible "chilling effect" upon protected speech. The theory is
that "[w]hen statutes regulate or proscribe speech and no readily apparent construction
suggests itself as a vehicle for rehabilitating the statutes in a single prosecution, the
transcendent value to all society of constitutionally protected expression is deemed to
justify allowing attacks on overly broad statutes with no requirement that the person
making the attack demonstrate that his own conduct could not be regulated by a
statute drawn with narrow specificity."[15] The possible harm to society in permitting
some unprotected speech to go unpunished is outweighed by the possibility that the
protected speech of others may be deterred and perceived grievances left to fester
because of possible inhibitory effects of overly broad statutes.

This rationale does not apply to penal statutes. Criminal statutes have general in
terrorem effect resulting from their very existence, and, if facial challenge is allowed
for this reason alone, the State may well be prevented from enacting laws against
socially harmful conduct. In the area of criminal law, the law cannot take chances as
in the area of free speech.

The overbreadth and vagueness doctrines then have special application only to free
speech cases. They are inapt for testing the validity of penal statutes. As the U.S.
Supreme Court put it, in an opinion by Chief Justice Rehnquist, "we have not
recognized an 'overbreadth' doctrine outside the limited context of the First
Amendment."[16] In Broadrick v. Oklahoma,[17] the Court ruled that "claims of facial
overbreadth have been entertained in cases involving statutes which, by their terms,
seek to regulate only spoken words" and, again, that "overbreadth claims, if
entertained at all, have been curtailed when invoked against ordinary criminal laws
that are sought to be applied to protected conduct." For this reason, it has been held
that "a facial challenge to a legislative act is the most difficult challenge to mount
successfully, since the challenger must establish that no set of circumstances exists
under which the Act would be valid."[18] As for the vagueness doctrine, it is said that a
litigant may challenge a statute on its face only if it is vague in all its possible
applications. "A plaintiff who engages in some conduct that is clearly proscribed
cannot complain of the vagueness of the law as applied to the conduct of others."[19]

In sum, the doctrines of strict scrutiny, overbreadth, and vagueness are analytical tools
developed for testing "on their faces" statutes in free speech cases or, as they are
called in American law, First Amendment cases. They cannot be made to do service
when what is involved is a criminal statute. With respect to such statute, the
established rule is that "one to whom application of a statute is constitutional will not
be heard to attack the statute on the ground that impliedly it might also be taken as
applying to other persons or other situations in which its application might be
unconstitutional."[20] As has been pointed out, "vagueness challenges in the First
Amendment context, like overbreadth challenges typically produce facial invalidation,
while statutes found vague as a matter of due process typically are invalidated [only]
'as applied' to a particular defendant."[21] Consequently, there is no basis for
petitioner's claim that this Court review the Anti-Plunder Law on its face and in its
entirety.

Indeed, "on its face" invalidation of statutes results in striking them down entirely on
the ground that they might be applied to parties not before the Court whose activities
are constitutionally protected.[22] It constitutes a departure from the case and
controversy requirement of the Constitution and permits decisions to be made without
concrete factual settings and in sterile abstract contexts.[23] But, as the U.S. Supreme
Court pointed out in Younger v. Harris[24]

[T]he task of analyzing a proposed statute, pinpointing its deficiencies, and requiring
correction of these deficiencies before the statute is put into effect, is rarely if ever an
appropriate task for the judiciary. The combination of the relative remoteness of the
controversy, the impact on the legislative process of the relief sought, and above all
the speculative and amorphous nature of the required line-by-line analysis of detailed
statutes, . . . ordinarily results in a kind of case that is wholly unsatisfactory for
deciding constitutional questions, whichever way they might be decided.

For these reasons, "on its face" invalidation of statutes has been described as
"manifestly strong medicine," to be employed "sparingly and only as a last
resort,"[25] and is generally disfavored.[26] In determining the constitutionality of a
statute, therefore, its provisions which are alleged to have been violated in a case must
be examined in the light of the conduct with which the defendant is charged.[27]

In light of the foregoing disquisition, it is evident that the purported ambiguity of the Plunder
Law, so tenaciously claimed and argued at length by petitioner, is more imagined than
real. Ambiguity, where none exists, cannot be created by dissecting parts and words in the statute
to furnish support to critics who cavil at the want of scientific precision in the law. Every provision
of the law should be construed in relation and with reference to every other part. To be sure, it will
take more than nitpicking to overturn the well-entrenched presumption of constitutionality and
validity of the Plunder Law. A fortiori, petitioner cannot feign ignorance of what the Plunder Law
is all about. Being one of the Senators who voted for its passage, petitioner must be aware that the
law was extensively deliberated upon by the Senate and its appropriate committees by reason of
which he even registered his affirmative vote with full knowledge of its legal implications and
sound constitutional anchorage.
The parallel case of Gallego v. Sandiganbayan[28] must be mentioned if only to illustrate and
emphasize the point that courts are loathed to declare a statute void for uncertainty unless the law
itself is so imperfect and deficient in its details, and is susceptible of no reasonable construction
that will support and give it effect. In that case, petitioners Gallego and Agoncillo challenged the
constitutionality of Sec. 3, par. (e), of The Anti-Graft and Corrupt Practices Act for being
vague. Petitioners posited, among others, that the term "unwarranted" is highly imprecise and
elastic with no common law meaning or settled definition by prior judicial or administrative
precedents; that, for its vagueness, Sec. 3, par. (e), violates due process in that it does not give fair
warning or sufficient notice of what it seeks to penalize. Petitioners further argued that the
Information charged them with three (3) distinct offenses, to wit: (a) giving of "unwarranted"
benefits through manifest partiality; (b) giving of "unwarranted" benefits through evident bad faith;
and, (c) giving of "unwarranted" benefits through gross inexcusable negligence while in the
discharge of their official function and that their right to be informed of the nature and cause of
the accusation against them was violated because they were left to guess which of the three (3)
offenses, if not all, they were being charged and prosecuted.
In dismissing the petition, this Court held that Sec. 3, par. (e), of The Anti-Graft and Corrupt
Practices Act does not suffer from the constitutional defect of vagueness. The phrases "manifest
partiality," "evident bad faith," and "gross and inexcusable negligence" merely describe the
different modes by which the offense penalized in Sec. 3, par. (e), of the statute may be committed,
and the use of all these phrases in the same Information does not mean that the indictment charges
three (3) distinct offenses.

The word 'unwarranted' is not uncertain. It seems lacking adequate or official support;
unjustified; unauthorized (Webster, Third International Dictionary, p. 2514); or
without justification or adequate reason (Philadelphia Newspapers, Inc. v. US Dept. of
Justice, C.D. Pa., 405 F. Supp. 8, 12, cited in Words and Phrases, Permanent Edition,
Vol. 43-A 1978, Cumulative Annual Pocket Part, p. 19).

The assailed provisions of the Anti-Graft and Corrupt Practices Act consider a corrupt
practice and make unlawful the act of the public officer in:

x x x or giving any private party any unwarranted benefits, advantage or preference in

the discharge of his official, administrative or judicial functions through manifest
partiality, evident bad faith or gross inexcusable negligence, x x x(Section 3 [e], Rep.
Act 3019, as amended).
It is not at all difficult to comprehend that what the aforequoted penal provisions
penalize is the act of a public officer, in the discharge of his official, administrative or
judicial functions, in giving any private party benefits, advantage or preference which
is unjustified, unauthorized or without justification or adequate reason, through
manifest partiality, evident bad faith or gross inexcusable negligence.

In other words, this Court found that there was nothing vague or ambiguous in the use of the
term "unwarranted" in Sec. 3, par. (e), of The Anti-Graft and Corrupt Practices Act, which was
understood in its primary and general acceptation. Consequently, in that case, petitioners' objection
thereto was held inadequate to declare the section unconstitutional.
On the second issue, petitioner advances the highly stretched theory that Sec. 4 of the Plunder
Law circumvents the immutable obligation of the prosecution to prove beyond reasonable doubt
the predicate acts constituting the crime of plunder when it requires only proof of a pattern of overt
or criminal acts showing unlawful scheme or conspiracy -

SEC. 4. Rule of Evidence. - For purposes of establishing the crime of plunder, it shall
not be necessary to prove each and every criminal act done by the accused in
furtherance of the scheme or conspiracy to amass, accumulate or acquire ill-gotten
wealth, it being sufficient to establish beyond reasonable doubt a pattern of overt or
criminal acts indicative of the overall unlawful scheme or conspiracy.

The running fault in this reasoning is obvious even to the simplistic mind. In a criminal
prosecution for plunder, as in all other crimes, the accused always has in his favor the presumption
of innocence which is guaranteed by the Bill of Rights, and unless the State succeeds in
demonstrating by proof beyond reasonable doubt that culpability lies, the accused is entitled to an
acquittal.[29] The use of the "reasonable doubt" standard is indispensable to command the respect
and confidence of the community in the application of criminal law. It is critical that the moral
force of criminal law be not diluted by a standard of proof that leaves people in doubt whether
innocent men are being condemned. It is also important in our free society that every individual
going about his ordinary affairs has confidence that his government cannot adjudge him guilty of
a criminal offense without convincing a proper factfinder of his guilt with utmost
certainty. This "reasonable doubt" standard has acquired such exalted stature in the realm of
constitutional law as it gives life to the Due Process Clause which protects the accused against
conviction except upon proof beyond reasonable doubt of every fact necessary to constitute the
crime with which he is charged.[30] The following exchanges between Rep. Rodolfo Albano and
Rep. Pablo Garcia on this score during the deliberations in the floor of the House of
Representatives are elucidating -

DELIBERATIONS OF THE HOUSE OF REPRESENTATIVES ON RA 7080, 9

October 1990

MR. ALBANO: Now, Mr. Speaker, it is also elementary in our criminal law that what is alleged in the
information must be proven beyond reasonable doubt. If we will prove only one act and find him
guilty of the other acts enumerated in the information, does that not work against the right of the
accused especially so if the amount committed, say, by falsification is less than P100 million, but
 the totality of the crime committed is P100 million since there is malversation, bribery,
falsification of public document, coercion, theft?
MR. GARCIA: Mr. Speaker, not everything alleged in the information needs to be proved beyond
reasonable doubt. What is required to be proved beyond reasonable doubt is every element of the
crime charged. For example, Mr. Speaker, there is anenumeration of the things taken by the
robber in the information three pairs of pants, pieces of jewelry. These need not be proved
beyond reasonable doubt, but these will not prevent the conviction of a crime for which he was
charged just because, say, instead of 3 pairs of diamond earrings the prosecution proved
two. Now, what is required to be proved beyond reasonable doubt is the element of the offense.
MR. ALBANO: I am aware of that, Mr. Speaker, but considering that in the crime of plunder the
totality of the amount is very important, I feel that such a series of overt criminal acts has to be
taken singly. For instance, in the act of bribery, he was able to accumulate only P50,000 and in
the crime of extortion, he was only able to accumulate P1 million. Now, when we add the totality
of the other acts as required under this bill through the interpretation on the rule of evidence, it is
just one single act, so how can we now convict him?
MR. GARCIA: With due respect, Mr. Speaker, for purposes of proving an essential element of the
crime, there is a need to prove that element beyond reasonable doubt. For example, one essential
element of the crime is that the amount involved is P100 million. Now, in a series of defalcations
and other acts of corruption in the enumeration the total amount would be P110 or P120 million,
but there are certain acts that could not be proved, so, we will sum up the amounts involved in
those transactions which were proved. Now, if the amount involved in these transactions, proved
beyond reasonable doubt, is P100 million, then there is a crime of plunder (underscoring
supplied).
It is thus plain from the foregoing that the legislature did not in any manner refashion the
standard quantum of proof in the crime of plunder. The burden still remains with the prosecution
to prove beyond any iota of doubt every fact or element necessary to constitute the crime.
The thesis that Sec. 4 does away with proof of each and every component of the crime suffers
from a dismal misconception of the import of that provision. What the prosecution needs to prove
beyond reasonable doubt is only a number of acts sufficient to form a combination or series which
would constitute a pattern and involving an amount of at least P50,000,000.00. There is no need
to prove each and every other act alleged in the Information to have been committed by the accused
in furtherance of the overall unlawful scheme or conspiracy to amass, accumulate or acquire ill-
gotten wealth. To illustrate, supposing that the accused is charged in an Information for plunder
with having committed fifty (50) raids on the public
treasury. The prosecution need not prove all these fifty (50) raids, it being sufficient to prove by
pattern at least two (2) of the raids beyond reasonable doubt provided only that they amounted to
at least P50,000,000.00.[31]
A reading of Sec. 2 in conjunction with Sec. 4, brings us to the logical conclusion that "pattern
of overt or criminal acts indicative of the overall unlawful scheme or conspiracy" inheres in the
very acts of accumulating, acquiring or amassing hidden wealth. Stated otherwise, such pattern
arises where the prosecution is able to prove beyond reasonable doubt the predicate acts as defined
in Sec. 1, par. (d). Pattern is merely a by-product of the proof of the predicate acts. This conclusion
is consistent with reason and common sense. There would be no other explanation for a
combination or series of
overt or criminal acts to stash P50,000,000.00 or more, than "a scheme or conspiracy to amass,
accumulate or acquire ill gotten wealth." The prosecution is therefore not required to make a
deliberate and conscious effort to prove pattern as it necessarily follows with the establishment of
a series or combination of the predicate acts.
Relative to petitioner's contentions on the purported defect of Sec. 4 is his submission that
"pattern" is "a very important element of the crime of plunder;" and that Sec. 4 is "two pronged,
(as) it contains a rule of evidence and a substantive element of the crime," such that without it the
accused cannot be convicted of plunder -
JUSTICE BELLOSILLO: In other words, cannot an accused be convicted under the Plunder Law
without applying Section 4 on the Rule of Evidence if there is proof beyond reasonable doubt of
the commission of the acts complained of?
ATTY. AGABIN: In that case he can be convicted of individual crimes enumerated in the Revised
Penal Code, but not plunder.
JUSTICE BELLOSILLO: In other words, if all the elements of the crime are proved beyond
reasonable doubt without applying Section 4, can you not have a conviction under the Plunder
Law?
ATTY. AGABIN: Not a conviction for plunder, your Honor.
JUSTICE BELLOSILLO: Can you not disregard the application of Sec. 4 in convicting an accused
charged for violation of the Plunder Law?
ATTY. AGABIN: Well, your Honor, in the first place Section 4 lays down a substantive element of the
law x x x x
JUSTICE BELLOSILLO: What I said is - do we have to avail of Section 4 when there is proof beyond
reasonable doubt on the acts charged constituting plunder?
ATTY. AGABIN: Yes, your Honor, because Section 4 is two pronged, it contains a rule of evidence and
it contains a substantive element of the crime of plunder. So, there is no way by which we can
avoid Section 4.
JUSTICE BELLOSILLO: But there is proof beyond reasonable doubt insofar as the predicate crimes
charged are concerned that you do not have to go that far by applying Section 4?
ATTY. AGABIN: Your Honor, our thinking is that Section 4 contains a very important element of the
crime of plunder and that cannot be avoided by the prosecution.[32]
We do not subscribe to petitioner's stand. Primarily, all the essential elements of plunder can
be culled and understood from its definition in Sec. 2, in relation to Sec. 1, par. (d), and "pattern"
is not one of them. Moreover, the epigraph and opening clause of Sec. 4 is clear and unequivocal:
SEC. 4. Rule of Evidence. - For purposes of establishing the crime of plunder
xxxx
It purports to do no more than prescribe a rule of procedure for the prosecution of a criminal
case for plunder. Being a purely procedural measure, Sec. 4 does not define or establish any
substantive right in favor of the accused but only operates in furtherance of a remedy. It is only a
means to an end, an aid to substantive law. Indubitably, even without invoking Sec. 4, a conviction
for plunder may be had, for what is crucial for the prosecution is to present sufficient evidence to
engender that moral certitude exacted by the fundamental law to prove the guilt of the accused
beyond reasonable doubt. Thus, even granting for the sake of argument that Sec. 4 is flawed
and vitiated for the reasons advanced by petitioner, it may simply be severed from the rest of the
provisions without necessarily resulting in the demise of the law; after all, the existing rules on
evidence can supplant Sec. 4 more than enough. Besides, Sec. 7 of RA 7080 provides for a
separability clause -

Sec. 7. Separability of Provisions. - If any provisions of this Act or the application

thereof to any person or circumstance
is held invalid, the remaining provisions of this Act and the application of such
provisions to other persons or circumstances shall not be affected thereby.

Implicit in the foregoing section is that to avoid the whole act from being declared invalid as
a result of the nullity of some of its provisions, assuming that to be the case although it is not really
so, all the provisions thereof should accordingly be treated independently of each other, especially
if by doing so, the objectives of the statute can best be achieved.
As regards the third issue, again we agree with Justice Mendoza that plunder is a malum in
se which requires proof of criminal intent. Thus, he says, in his Concurring Opinion -

x x x Precisely because the constitutive crimes are mala in se the element of mens
rea must be proven in a prosecution for plunder. It is noteworthy that the amended
information alleges that the crime of plunder was committed "willfully, unlawfully
and criminally." It thus alleges guilty knowledge on the part of petitioner.

In support of his contention that the statute eliminates the requirement of mens
rea and that is the reason he claims the statute is void, petitioner cites the following
remarks of Senator Taada made during the deliberation on S.B. No. 733:

SENATOR TAADA . . . And the evidence that will be required to convict him would
not be evidence for each and every individual criminal act but only evidence sufficient
to establish the conspiracy or scheme to commit this crime of plunder.[33]

However, Senator Taada was discussing 4 as shown by the succeeding portion of the
transcript quoted by petitioner:

SENATOR ROMULO: And, Mr. President, the Gentleman feels that it is contained in
Section 4, Rule of Evidence, which, in the Gentleman's view, would provide for a
speedier and faster process of attending to this kind of cases?

SENATOR TAADA: Yes, Mr. President . . .[34]

Senator Taada was only saying that where the charge is conspiracy to commit plunder,
the prosecution need not prove each and every criminal act done to further the scheme
or conspiracy, it being enough if it proves beyond reasonable doubt a pattern of overt
or ciminal acts indicative of the overall unlawful scheme or conspiracy. As far as the
acts constituting the pattern are concerned, however, the elements of the crime must
be proved and the requisite mens reamust be shown.

Indeed, 2 provides that -

Any person who participated with the said public officer in the commission of an
offense contributing to the crime of plunder shall likewise be punished for such
offense. In the imposition of penalties, the degree of participation and the attendance
of mitigating and extenuating circumstances, as provided by the Revised Penal Code,
shall be considered by the court.

The application of mitigating and extenuating circumstances in the Revised Penal

Code to prosecutions under the Anti-Plunder Law indicates quite clearly that mens
rea is an element of plunder since the degree of responsibility of the offender is
determined by his criminal intent. It is true that 2 refers to "any person who
participates with the said public officer in the commission of an offense contributing
to the crime of plunder." There is no reason to believe, however, that it does not apply
as well to the public officer as principal in the crime. As Justice Holmes said: "We
agree to all the generalities about not supplying criminal laws with what they omit,
but there is no canon against using common sense in construing laws as saying what
they obviously mean."[35]

Finally, any doubt as to whether the crime of plunder is a malum in se must be

deemed to have been resolved in the affirmative by the decision of Congress in 1993
to include it among the heinous crimes punishable by reclusion perpetua to
death. Other heinous crimes are punished with death as a straight penalty in R.A. No.
7659. Referring to these groups of heinous crimes, this Court held in People v.
Echegaray:[36]

The evil of a crime may take various forms. There are crimes that are, by their very
nature, despicable, either because life was callously taken or the victim is treated like
an animal and utterly dehumanized as to completely disrupt the normal course of his
or her growth as a human being . . . . Seen in this light, the capital crimes of
kidnapping and serious illegal detention for ransom resulting in the death of the victim
or the victim is raped, tortured, or subjected to dehumanizing acts; destructive arson
resulting in death; and drug offenses involving minors or resulting in the death of the
victim in the case of other crimes; as well as murder, rape,
parricide, infanticide, kidnapping and serious illegal detention, where the victim is
detained for more than three days or serious physical injuries were inflicted on the
victim or threats to kill him were made or the victim is a minor, robbery with
homicide, rape or intentional mutilation, destructive arson, and carnapping where the
owner, driver or occupant of the carnapped vehicle is killed or raped, which are
penalized by reclusion perpetua to death, are clearly heinous by their very nature.

There are crimes, however, in which the abomination lies in the significance and
implications of the subject criminal acts in the scheme of the larger socio-political and
economic context in which the state finds itself to be struggling to develop and
provide for its poor and underprivileged masses. Reeling from decades of corrupt
tyrannical rule that bankrupted the government and impoverished the population, the
Philippine Government must muster the political will to dismantle the culture of
corruption, dishonesty, greed and syndicated criminality that so deeply entrenched
itself in the structures of society and the psyche of the populace. [With the
government] terribly lacking the money to provide even the most basic services to its
people, any form of misappropriation or misapplication of government funds
translates to an actual threat to the very existence of government, and in turn, the very
survival of the people it governs over. Viewed in this context, no less heinous are the
effects and repercussions of crimes like qualified bribery, destructive arson resulting
in death, and drug offenses involving government officials, employees or officers, that
their perpetrators must not be allowed to cause further destruction and damage to
society.

The legislative declaration in R.A. No. 7659 that plunder is a heinous offense implies
that it is a malum in se. For when the acts punished are inherently immoral or
inherently wrong, they are mala in se[37] and it does not matter that such acts are
punished in a special law, especially since in the case of plunder the predicate crimes
are mainly mala in se. Indeed, it would be absurd to treat prosecutions for plunder as
though they are mere prosecutions for violations of the Bouncing Check Law (B.P.
Blg. 22) or of an ordinance against jaywalking, without regard to the inherent
wrongness of the acts.

To clinch, petitioner likewise assails the validity of RA 7659, the amendatory law of RA 7080,
on constitutional grounds. Suffice it to say however that it is now too late in the day for him to
resurrect this long dead issue, the same having been eternally consigned by People v.
Echegaray[38] to the archives of jurisprudential history. The declaration of this Court therein that
RA 7659 is constitutionally valid stands as a declaration of the State, and becomes, by necessary
effect, assimilated in the Constitution now as an integral part of it.
Our nation has been racked by scandals of corruption and obscene profligacy of officials in
high places which have shaken its very foundation. The anatomy of graft and corruption has
become more elaborate in the corridors oftime as unscrupulous people relentlessly contrive more
and more ingenious ways to bilk the coffers of the government. Drastic and radical measures are
imperative to fight the increasingly sophisticated, extraordinarily methodical and
economically catastrophic looting of the national treasury. Such is the Plunder Law, especially
designed to disentangle those ghastly tissues of grand-scale corruption which, if left unchecked,
will spread like a malignant tumor and ultimately consume the moral and institutional fiber of our
nation. The Plunder Law, indeed, is a living testament to the will of the legislature to ultimately
eradicate this scourge and thus secure society against the avarice and other venalities in public
office.
These are times that try men's souls. In the checkered history of this nation, few issues of
national importance can equal the amount of interest and passion generated by petitioner's
ignominious fall from the highest office, and his eventual prosecution and trial under a virginal
statute. This continuing saga has driven a wedge of dissension among our people that may linger
for a long time. Only by responding to the clarion call for patriotism, to rise above factionalism
and prejudices, shall we emerge triumphant in the midst of ferment.
PREMISES CONSIDERED, this Court holds that RA 7080 otherwise known as the Plunder
Law, as amended by RA 7659, is CONSTITUTIONAL. Consequently, the petition to declare the
law unconstitutional is DISMISSEDfor lack of merit.
SO ORDERED.

SECOND DIVISION

JOSE U. ONG and G.R. No. 126858

NELLY M. ONG,
Petitioners, Present:

PUNO, J.,
Chairman,
- versus - AUSTRIA-MARTINEZ ,
CALLEJO, SR.,
TINGA, and
SANDIGANBAYAN (THIRD CHICO-NAZARIO, JJ.
DIVISION) and OFFICE OF
THE OMBUDSMAN,
Respondents. Promulgated:
September 16, 2005

x --------------------------------------------------------------------x

DECISION

TINGA, J.:

This Petition for Certiorari,[1] dated December 13, 1996 seeks the
nullification of the Resolutions of the Sandiganbayan dated August
18, 1994[2] and October 22, 1996.[3] The first
assailed Resolution denied petitioners motion to dismiss the petition
for forfeiture filed against them, while the second
questioned Resolutiondenied their motion for reconsideration.

The antecedents are as follows:

Congressman Bonifacio H. Gillego executed a Complaint-

Affidavit[4] on February 4, 1992, claiming that petitioner Jose U. Ong,
then Commissioner of the Bureau of Internal Revenue (BIR), has
amassed properties worth disproportionately more than his lawful
income. The complaint pertinently states:

In his Statement of Assets and Liabilities as of

December 31, 1989 (Annex A), Commissioner Jose U. Ong
declared P750,000.00 as his cash on hand and in banks.
Within a short period thereafter, he was able to acquire
prime real estate properties mostly in the millionaires choice
areas in Alabang, Muntinglupa, Metro Manila costing
millions of pesos as follows:

1. A house and lot in Alabang bought on October 9, 1990

for P5,500,000.00, now titled in the name of Jose U. Ong
under Transfer Certificate of Title No. 172168, Registry of
Deeds for Makati (Annexes B & C);

2. Another lot in Alabang bought for P5,700,000.00, now

titled in the name of Jose U. Ong and Nelly M. Ong under
Transfer Certificate of Title No. 173901. Registered on
January 25, 1991 in the Registry of Deeds for Makati
(Annex D);

3. Still another lot in Alabang bought for P4,675,000.00 on

January 16, 1991, now titled in the name of spouses Jose
U. Ong and Nelly Mercado Ong under Transfer Certificate
of Title No. 173760 in the Registry of Deeds for Makati
(Annexes E and F);

4. Again, another lot in Alabang bought on December 3,

1990 for P5,055,000.00, now titled in the name of the
Children of Commissioner Ong and his son-in-law under
transfer Certificate of Title No. 173386 in the Registry of
Deeds for Makati (Annex G and H);
 5. Again, a lot in Makati bought for P832,000.00 on July 1,
1990, now titled in the name of the Daughter of
Commissioner Ong and his son-in-law under transfer
certificate of title No. 171210 in the Registry of Deeds of
Makati (Annex I & J).

The above documented purchases of Commissioner

Ong alone which are worth millions of pesos are obviously
disproportionate to his income of just a little more
than P200,000.00 per annum.[5]

Ong submitted an explanation and analysis of fund sourcing,

reporting his net worth covering the calendar years 1989 to 1991 and
showing his sources and uses of funds, the sources of the increase
in his net worth and his net worth as of December 13, 1991.[6]

The Director of the Fact-Finding and Intelligence Bureau of the

Office of the Ombudsman (Ombudsman) ordered the conduct of a
pre-charge investigation on the matter. A Fact-Finding Report[7] was
promptly submitted with the following recommendation:

1. Forfeiture Proceedings be instituted against the

properties of Jose U. Ong which he illegitimately acquired in
just a span of two (2) years as Commissioner of the Bureau
of Internal Revenue. Such properties are briefly specified as
follows:

a) House and lot in Ayala Alabang bought on October

9, 1990 for P5.5 million under TCT No. 172168 of
the Registry of Deeds for Makati, Metro Manila;
 b) Lot in Ayala Alabang bought on January 23, 1991
for P5.5 million under TCT No. 173901;

c) Lot in Ayala Alabang bought on January 16, 1991

for P4,675,000.00 under TCT No. 173760;

d) Lot in Ayala Alabang bought on December 3, 1990

for P5,055,000.00 under TCT No. 173386; and

e) Condominium Unit 804, located at the eight floor of

the Asian Mansion, bought for P744,585.00 under
CCT No. 20735 of the Registry of Deeds for Makati,
Metro Manila.[8]

Finding that a preliminary inquiry under Sec. 2 of Republic Act

No. 1379 (RA 1379) should be conducted, Ong was directed to submit
his counter-affidavit and other controverting evidence in
the Order[9] dated November 18, 1992. For this purpose, Ong was
furnished copies of Gillegos Complaint-Affidavit and the Fact-Finding
Report, with annexes and supporting documents.

Ong filed a Counter-Affidavit[10] dated December 21, 1992,

submitting his Statement of Assets and Liabilities for the years 1988-
1990, income tax return for 1988, bank certificate showing that he
obtained a loan from Allied Banking Corporation (Allied Bank),
certificate from SGV & Co. (SGV) showing that he received retirement
benefits from the latter, a document entitled Acknowledgement of
Trust showing that he acquired one of the questioned assets for his
brother-in-law, and other documents explaining the sources of funds
with which he acquired the questioned assets.

In view of Ongs arguments, the Ombudsman issued

another Order[11] dated February 11, 1993, the pertinent portions of
which state:

Results of the subpoena duces tecum ad testificandum

issued to Allied Banking Corporation, Sycip, Gorres, Velayo
& Co., including the BIR insofar as it pertains to the
production of the documents that respondents claimed in
justification of the sources of his funding/income, proved
negative since Allied Bank could not produce documents
that would show availment of the loan, nor could SGV
itemize the documents/vouchers that would, indeed signify
the grant and receipt of the claimed retirement benefits, as
well as the BIR insofar as it pertains on respondents filed
income tax returns for the years 1987, 1988, 1989, 1990 and
1991.

Such being the case, and in line with respondents

defense as claimed in his counter-affidavit that all his
acquisitions were from legitimate and valid sources based
from his (respondents) salary and other sources of income,
and he being the recipient thereof, copies of which he is
entitled as a matter of right and party recipient on the
claimed loan and retirement benefits, respondent Jose U.
Ong, is hereby directed to submit in writing within a period
of fifteen (15) days from receipt of this ORDER, the following,
namely:--
 a) all documents in his possession relevant to the
approval by the Allied Banking Corporation on the P6.5
million term loan including documents in availment of the
loan such as the execution of promissory note/s, execution
of real/chattel mortgage/s and the fact of its registration
with the Register of Deeds, credit agreements, receipt of
payment on amortization of the loan, if any, and such other
pertinent documents that will show existence and availment
of the loan granted;

b) All documents in his possession that he was indeed

granted by SGV and Co. P7.8 million as retirement benefits
including such additional benefits as claimed as evidenced
by vouchers, accounting records, computation of benefits,
that would signify fact of receipt of the claimed retirement
benefits;

c) All documents showing the money market placements

such as but not limited to the (a) confirmation sale on the
placements and (b) confirmation of the purchase on the
placements;

d) Income tax returns as filed in the Bureau of Internal

Revenue for the years, 1987, 1988, 1989, 1990 and 1991.

Failure of the respondent to comply with this ORDER

within the period hereinabove prescribed shall be deemed a
waiver on his part to submit the required controverting
evidence and that he has no evidence on hand to show proof
on the existence of the claimed defenses as above set forth
and that this case shall be considered for resolution without
further notice.[12]
 Instead of complying with the Order, Ong filed
a Motion,[13] dated February 17, 1993 for its recall, the voluntary
inhibition of the handling investigators, and reassignment of the
case. Ong objected to the proceedings taken thus far, claiming that
he was not notified of the subpoenas issued to SGV and Allied Bank
requiring them to substantiate Ongs claims. The Order allegedly
violates his right to due process and to be presumed innocent
because it requires him to produce evidence to exculpate himself.

A Resolution[14] dated May 31, 1993 was thereafter issued

finding that Ong miserably failed to substantiate his claim that the
sources of financing his said acquisition came from his other lawful
income, taking into account his annual salary of P200,000.00 more
or less and his cash standing at the time, even without considering
his normal expenses befitting his stature and position in the
Government, as well as his acquisition of movable properties for the
calendar year[s] 1989 to 1991, totaling P930,000.00, and concluding
that the properties acquired by him in a matter of ELEVEN (11)
MONTHS from October, 1990 to September, 1991, during his
incumbency as Commissioner of the Bureau of Internal Revenue, are
manifestly and grossly disproportionate to his salary as a public
official and his other lawful income.[15]

The Resolution directed the filing by the Ombudsman, in

collaboration with the Office of the Solicitor General (OSG), of a
petition for recovery of ill-gotten/unexplained wealth under RA 1379,
in relation to RAs 3019 and 6770, against Ong and all other persons
concerned.
The Resolution was reviewed by the Office of the Special
Prosecutor (Special Prosecutor) which concurred with the findings
and recommendation of the Ombudsman.[16]
 A Petition[17] dated November 15, 1993 for forfeiture of
unlawfully acquired property was accordingly filed before the
Sandiganbayan by the Republic, through the Special Prosecutor and
the Deputy Ombudsman for Luzon,[18] against Ong and his wife,
petitioner Nelly Ong, and docketed as Civil Case No. 0160.

The Petition alleged that the total value of the questioned assets
is P21,474,585.00 which is grossly disproportionate to Ongs lawful
income from his public employment and other sources amounting
to P1,060,412.50, considering that Nelly Ong has no visible means of
income. This circumstance allegedly gave rise to the presumption
under Sec. 2 of RA 1379 that the questioned properties were
unlawfully acquired.

In its Order[19] dated November 17, 1993, the Sandiganbayan

directed the issuance of a writ of preliminary attachment against the
properties of petitioners. The writ, issued on November 18, 1993, was
duly served and implemented as shown in the Sheriffs Return dated
December 1, 1993.[20]

Petitioners Jose and Nelly Ong filed an Answer[21] dated

January 27, 1994, denying that their lawful income is grossly
disproportionate to the cost of the real properties they acquired
during the incumbency of Ong as BIR Commissioner. According to
them, the Special Prosecutor and the Ombudsman intentionally
failed to consider the retirement and separation pay Ong received
from SGV and other lawful sources of funds used in the acquisition
of the questioned properties.

They presented several affirmative defenses, such as the alleged

deprivation of their right to due process considering that no
preliminary investigation was conducted as regards Nelly Ong, and
the nullity of the proceedings before the Ombudsman because the
latter, who acted both as investigator and adjudicator in the
determination of the existence of probable cause for the filing of the
case, will also prosecute the same. Moreover, the Petition also
allegedly failed to state a cause of action because RA 1379 is
unconstitutional as it is vague and does not sufficiently define ill-
gotten wealth and how it can be determined in violation of the non-
delegation of legislative power provision, and insofar as it disregards
the presumption of innocence by requiring them to show cause why
the properties in question should not be declared property of the
state. They also objected to the fact that they were not notified of
the Resolution directing the filing of the case and were thereby
prevented from filing a motion for reconsideration.

A hearing of petitioners affirmative defenses was conducted as

in a motion to dismiss, after which the Sandiganbayan issued the
assailed Resolution dated August 18, 1994. The Sandiganbayan
ruled that a petition for forfeiture is an action in rem, civil in
character. As such, the participation of Nelly Ong in the inquiry to
determine whether the properties acquired by her husband are
manifestly disproportionate to his salary and other lawful income is
not a mandatory requirement. Neither is the conduct of a preliminary
investigation as regards Nelly Ong required. Further, Nelly Ong was
only impleaded in the petition as a formal party.

The court held that the power of the Ombudsman to investigate

and prosecute unexplained wealth cases is founded on RAs 1379,
3019 and 6770. The Sandiganbayan, moreover, declared that
the Petition sufficiently states a cause of action.
 Petitioners filed a Motion for Reconsideration[22] dated
September 11, 1994, averring that although a forfeiture proceeding
is technically a civil action, it is in substance a criminal proceeding
as forfeiture is deemed a penalty for the violation of RA 1379. Hence,
Nelly Ong is entitled to a preliminary investigation. To proceed
against her conjugal share of the questioned assets without giving
her the opportunity to present her side in a preliminary investigation
violates her right to due process.

Petitioners reiterated their argument that they were not notified

of the Resolution directing the filing of the petition for forfeiture and
were consequently deprived of their right to file a motion for
reconsideration under RA 6770 and pertinent rules.

The Sandiganbayan issued the second

assailed Resolution dated October 22, 1996, directing the
Ombudsman to furnish petitioners with a copy of the Resolution to
file the forfeiture case and giving them a period of five (5) days from
receipt of the Resolution within which to file a motion for
reconsideration. The Ombudsman was given a period of sixty (60)
days to resolve the motion for reconsideration and to report to the
court the action it has taken thereon.

Instead of awaiting the Ombudsmans compliance with

the Resolution, petitioners filed the instant Petition for
Certiorari contending that the Sandiganbayan gravely abused its
discretion in ruling that Nelly Ong is not entitled to preliminary
investigation; failing to annul the proceedings taken before the
Ombudsman despite the alleged bias and prejudice exhibited by the
latter and the disqualification of the Ombudsman from acting both
as prosecutor and judge in the determination of probable cause
against petitioners; and failing to declare RA 1379 unconstitutional.
 The OSG filed a Comment[23] dated December 10, 1997, averring
that the reason why Nelly Ong was not made a party to the
proceedings before the Ombudsman is because her husband never
mentioned any specific property acquired solely and exclusively by
her. What he stated was that all the acquisitions were through his
own efforts. Hence, the Sandiganbayan correctly held that Nelly Ong
is a mere formal party.

Furthermore, the presumption of innocence clause of the

Constitution refers to criminal prosecutions and not to forfeiture
proceedings which are civil actions in rem. The Constitution is
likewise not violated by RA 1379 because statutes which declare that
as a matter of law a particular inference follows from the proof of a
particular fact, one fact becoming prima facie evidence of another,
are not necessarily invalid, the effect of the presumption being merely
to shift the burden of proof upon the adverse party.

Neither is the constitutional authority of the Supreme Court to

promulgate rules concerning the protection and enforcement of
constitutional rights, pleading, practice and procedure in all courts
violated by RA 1379 merely by authorizing the OSG to grant
immunity from criminal prosecution to any person who testifies to
the unlawful manner in which a respondent has acquired any
property. There is no showing that the OSG or the Ombudsman is
about to grant immunity to anybody under RA 1379. At any rate, the
power to grant immunity in exchange for testimony has allegedly
been upheld by the Court.
 The OSG further argued that the Ombudsman did not exhibit
any bias and partiality against Ong. It considered his claim that he
received retirement benefits from SGV, obtained a loan from Allied
Bank, and had high yielding money market placements, although it
found that these claims were unsubstantiated based on its
investigation. Moreover, the sending of subpoenas to SGV and Allied
Bank was in accordance with the powers of the Ombudsman under
RA 6770.

The OSG likewise alleged that RA 1379 is not vague as it defines

legitimately acquired property and specifies that the acquisition of
property out of proportion to the legitimate income of a public officer
is proscribed.

Petitioners filed a Reply to Comment[24] dated April 1, 1998,

reiterating their arguments.

In the Resolution[25] dated April 14, 1999, the Court gave due
course to the petition and required the parties to submit their
respective memoranda. Accordingly, petitioners filed
their Memorandum[26] dated June 29, 1999,
while the OSG submitted its Memorandum[27] dated September 27,
1999. The Special Prosecutor submitted its
own Memorandum dated June 20, 1999.
[28]

We deny the petition.

 Petitioners contend that Nelly Ong was denied due process
inasmuch as no separate notices or subpoena were sent to her during
the preliminary investigation conducted by the Ombudsman. They
aver that Nelly Ong is entitled to a preliminary investigation because
a forfeiture proceeding is criminal in nature.

On the other hand, the OSG and the Ombudsman contend that
Nelly Ong is not entitled to preliminary investigation, first, because
forfeiture proceedings under RA 1379 are in the nature of civil
actions in rem and preliminary investigation is not
required; second, because even assuming that the proceeding is
penal in character, the right to a preliminary investigation is a mere
statutory privilege which may be, and was in this case, withheld by
law; and third, because a preliminary investigation would serve no
useful purpose considering that none of the questioned assets are
claimed to have been acquired through Nelly Ongs funds.

In Republic v. Sandiganbayan,[29] we ruled that forfeiture

proceedings under RA 1379 are civil in nature and not penal or
criminal in character, as they do not terminate in the imposition of a
penalty but merely in the forfeiture of the properties illegally acquired
in favor of the State. Moreover, the procedure outlined in the law is
that provided for in a civil action, viz:

Sec. 3. The petition.The petition shall contain the

following information:

(a) The name and address of the respondent.

(b) The public office or employment he holds and such other
public officer or employment which he has previously
held.

(c) The approximate amount of property he has acquired

during his incumbency in his past and present offices and
employments.

(d) A description of said property, or such thereof as has been

identified by the Solicitor General.

(e) The total amount of his government salary and other

proper earnings and incomes from legitimately acquired
property, and

(f) Such other information as may enable the court to

determine whether or not the respondent has unlawfully
acquired property during his incumbency.

Sec. 4. Period for the answer.The respondent shall have a

period of fifteen days within which to present his answer.

Sec. 5. Hearing.The court shall set a date for a hearing

which may be open to the public, and during which the
respondent shall be given ample opportunity to explain, to
the satisfaction of the court, how he has acquired the
property in question.

Sec. 6. Judgment.If the respondent is unable to show to

the satisfaction of the court that he has lawfully acquired the
property in question, then the court shall declare such
 property, forfeited in favor of the State, and by virtue of such
judgment the property aforesaid shall become property of the
State: Provided, that no judgment shall be rendered within
six months before any general election or within three
months before any special election. The court may, in
addition, refer this case to the corresponding Executive
Department for administrative or criminal action, or
both. [Emphasis supplied.]

Hence, unlike in a criminal proceeding, there is to be no reading of

the information, arraignment, trial and reading of the judgment in
the presence of the accused.[30]

In the earlier case of Cabal v. Kapunan,[31] however, we declared

that forfeiture to the State of property of a public official or employee
partakes of the nature of a penalty and proceedings for forfeiture of
property, although technically civil in form, are deemed criminal or
penal. We clarified therein that the doctrine laid down in Almeda v.
Perez[32] that forfeiture proceedings are civil in nature applies purely
to the procedural aspect of such proceedings and has no bearing on
the substantial rights of the respondents therein. This ruling was
reiterated in Katigbak v. Solicitor General,[33] where we held that the
forfeiture of property provided for in RA 1379 is in the nature of a
penalty.

It is in recognition of the fact that forfeiture partakes the nature

of a penalty that RA 1379 affords the respondent therein the right to
a previous inquiry similarto a preliminary investigation in criminal
cases.

Preliminary investigation is an inquiry or proceeding to

determine whether there is sufficient ground to engender a well-
founded belief that a crime has been committed and the respondent
is probably guilty thereof, and should be held for trial. Although the
right to a preliminary investigation is not a fundamental right
guaranteed by the Constitution but a mere statutory privilege, it is
nonetheless considered a component part of due process in criminal
justice.[34]

It is argued, however, that even if RA 1379 is considered a

criminal proceeding, Nelly Ong is still not entitled to a preliminary
investigation because the law itself withholds such right from a
respondent who is not himself or herself a public officer or employee,
such as Nelly Ong.

RA 1379, entitled An Act Declaring Forfeiture in Favor of the

State of Any Property Found to Have Been Unlawfully Acquired by Any
Public Officer or Employee and Providing for the Procedure
Therefor, expressly affords a respondent public officer or employee
the right to a previous inquiry similar to preliminary investigation in
criminal cases, but is silent as to whether the same right is enjoyed
by a co-respondent who is not a public officer or employee. Sec. 2
thereof provides:

Sec. 2. Filing of petition.Whenever any public officer or

employee has acquired during his incumbency an amount
of property which is manifestly out of proportion to his salary
as such public officer or employee and to his other lawful
income and the income from legitimately acquired property,
said property shall be presumed prima facie to have been
unlawfully acquired. The Solicitor General, upon complaint
by any taxpayer to the city or provincial fiscal who
shall conduct a previous inquiry similar to preliminary
investigations in criminal cases and shall certify to the
Solicitor General that there is reasonable ground to believe
that there has been committed a violation of this Act and
 the respondent is probably guilty thereof, shall file, in the
name and on behalf of the Republic of the Philippines, in the
Court of First Instance of the city or province where said
public officer or employee resides or holds office, a petition
for a writ commanding said officer or employee to show cause
why the property aforesaid, or any part thereof, should not
be declared property of the State: Provided, That no such
petition shall be filed within one year before any general
election or within three months before any special
election.[Emphasis supplied.]

Is this silence to be construed to mean that the right to a

preliminary investigation is withheld by RA 1379 from a co-
respondent, such as Nelly Ong, who is not herself a public officer or
employee?

The answer is no.

It is a significant fact in this case that the questioned assets are

invariably registered under the names of both Jose and Nelly Ong
owing to their conjugal partnership. Thus, even as RA 1379 appears
to be directed only against the public officer or employee who has
acquired during his incumbency an amount of property which is
manifestly out of proportion to his salary as such public officer or
employee and his other lawful income and the income from
legitimately acquired property, the reality that the application of the
law is such that the conjugal share of Nelly Ong stands to be
subjected to the penalty of forfeiture grants her the right, in line with
the due process clause of the Constitution, to a preliminary
investigation.
 There is in this case, however, another legal complexion which
we have to deal with. As the OSG noted, there is nothing in the
affidavits and pleadings filed by petitioners which attributes the
acquisition of any of the questioned assets to Nelly Ong.

In his Counter-Affidavit, Ong explained that the questioned

assets were purchased using his retirement benefits from SGV
amounting to P7.8 Million, various money market placements, and
loan from Allied Bank in the amount of P6.5 Million. He averred:

6. To fully explain the valid and legal acquisition of the

foregoing listed property pointing out the sources of funding,
circumstances and details of acquisition, the following
information is related:

A. As to the acquisition of the lot covered by TCT

No. 172168, located at Ayala Alabang,
Muntinlupa, Metro Manila, for P5,500,000.00
on October 9, 1990.

Respondents sources for the P5,500,000.00 were:

a. Interest from his money market placements up to

September 30, 1990 --------------P2,404,643
b. Partial liquidation of money market placements -----
--------------------------------------------P3,095,357
Total -----------------------------------------P5,500,000
 A brief historical narration of the money placements
made by Respondent is included in the Report on the
Statement of Net Worth of Com. Jose U. Ong Calendar Year
1989 to 1991, submitted by him to the Office of the
Ombudsman, on or about March 24, 1992.

After the acquisition of the above property,

Respondents money market placements were reduced to
P4,365,834 (inclusive of interest which was not used to
finance the above acquisition, and which remaining balance
was rolled over as part of the placements.

B. As to the acquisition of the lot covered by TCT

No. 173386, located at Ayala Alabang,
Muntinlupa, Metro Manila, on December 3,
1990, for P5,055,000.00.

Respondent was offered this lot, and finding the same

to be a good investment, he obtained a loan from the Allied
Banking Corporation for P6,500,000.00. P5,500,000 was
used by him in the purchase of the above property.
Respondents credit worthiness is self evident from his
Statement of Assets and Liabilities as of end of December,
1989 where his net worth is duly reflected to be P10.9
Million.

Xerox copy of the Certification executed by the

Corporate Secretary of Allied Banking Corporation attesting
to the grant of a five (5) year Term Loan of P6.5 Million pesos
to Respondent on October 24, 1990, is attached and
incorporated as Annex 3.

C. As to the acquisition of the lot covered by TCT

No. 173760, located at Ayala Alabang,
Muntinlupa, Metro Manila, on January 16,
1991, for P4,675,000.00.

After the acquisition of the property described in the

next preceding sub-paragraph B, Respondent had available
investible funds, money market placements, in the total sum
of P5,894,815.00, the details of which are as follows:

Balance of Money Market placements after acquisition of the

property covered by TCT No. 173386 ------------ 4,365,834.00
Interest earned in the above money market placements up
to December 31, 1990 ------------------------ 83,981.00
Unused portion of the loan of P6.5 Million ----
.P1,445,000.00
Total --------------------------- ..P5,894,815.00

From the foregoing balance of P5,894,815.00, came the

P4,375,000.00 with which Respondent purchased the real
property covered by TCT No. 173760. There remained a
balance of P1,219,815.00.
D. As to the acquisition in Respondents name of
the lot at Ayala Alabang, Muntinlupa, Metro
Manila, covered by TCT No. 173901, on July 1,
1990.

This is an acquisition that had to be made in

Respondents name for the benefit of Hamplish D. Mercado
(respondents brother-in-law) and Florentina S. Mercado,
Filipino/Americans, both residents of Persippany, New
Jersey, U.S.A. The funding of this purchase came from
Hamplish D. Mercado who previously left funds with
Respondent for the purpose of acquiring suitable property
where the Mercado spouses could stay when they return to
the Philippines upon retirement. Due to circumstances
prevailing at the time when the sale was executed, it was
done in the name of Respondent and his wife. Respondent
immediately thereafter executed an Acknowledgment of
Trust stating the aforementioned fact, duly notarized under
date of 5 February 1991. Respondent has likewise executed
and signed a Deed of Absolute Sale, confirming the truth of
all the foregoing. Xerox copy of the said Acknowledgment of
Trust dated February 5, 1991, and the duly signed Deed of
Absolute Sale still undated, are hereto attached as Annexes
4 and 4-A, respectively.

E. As to the alleged acquisition of the lot at Makati, Metro Manila,

covered by TCT No. 171210 on July 1, 1990 for P832,000.00.
 Regarding the aforementioned alleged acquisition,
there was even an acknowledgment of error in the very
making of the charge. Suffice it just to say that the Fact-
Finding Report itself stated, Hence, the accusation that it
was Com. Ong who provided funds for such acquisition is
DEVOID of merit.

F. As to the acquisition of Condominium Unit

covered by CCT No. 20785.

Though not included in the Complaint-Affidavit, this

was added by Investigator Soguilon, and who unilaterally
and arbitrarily declared its acquisition by Respondent as
coming from illegal means without affording Respondent his
constitutional right to due process. Had respondent been
afforded the opportunity to comment on the acquisition of
subject Condominium Unit, he could have readily explained
the purchase price of P744,585.00. Under No. 6-C of this
statement, it appears that there still remained an unused
balance of P1,219,815.60. Thus, even Respondents
remaining investible funds easily covered the purchase
price.

He acknowledges the unintentional omission of the

Condominium Unit in the listing of the same in his
Statements of Assets and Liabilities. However, as explained
in the preceding paragraph the acquisition cost
of P744,585.00 is well within his readily available balance
for investment after the acquisition of the property covered
by TCT No. 173760, which is P1,219,815.60.[35]
 Even as petitioners denied the allegation in the petition for
forfeiture that Nelly Ong has no visible means of income with which
she could have purchased the questioned assets, there is neither
indication nor pretense that Nelly Ong had a hand in the acquisition
of the properties. Jose Ong clearly declared that he purchased the
properties with his retirement funds, money market placements, and
proceeds from a bank loan. Whatever defenses which Nelly Ong could
have raised relative to the sources of funds used in the purchase of
the questioned assets are deemed waived owing to the fact that they
are subsumed in the submissions of her husband. Hence, even if she
is entitled to a preliminary investigation, such an inquiry would be
an empty ceremony.

We now consider Ongs allegations of bias and prejudice

exhibited by the Ombudsman during the preliminary investigation.

A perusal of the records reveals that the Graft Investigation

Officer duly considered Ongs explanation as to the sources of funds
with which he acquired the questioned assets. His averment that he
received retirement benefits from the SGV was understandably
disregarded because the only supporting document he presented
then was the certification of the controller of SGV to the effect that
he received such benefits. Ong was likewise unable to substantiate
his claim that he had money market placements as he did not present
any document evidencing such placements. Further, apart from a
certification from the corporate secretary of Allied Bank to the effect
that he obtained a loan from the said bank, no other
document, e.g., loan application, credit investigation report, loan
approval, schedule of loan releases, real estate mortgage document,
promissory notes, cancelled checks, receipts for amortization
payments, and statement of account, was presented to support the
claim.

Ong was even given the opportunity to present the documents

in his possession relevant to the approval of the Allied Bank loan, his
receipt of retirement benefits from SGV, and money market
placements which would have validated his assertion that all the
questioned acquisitions were from legitimate sources.[36]Up to this
point, therefore, we find that the Ombudsman did not make any
unwarranted conclusions or proceed with arbitrariness in the
conduct of the preliminary inquiry.

However, Ong calls the Courts attention to the fact that he was
not notified of the subpoenas duces tecum ad
testificandum apparently issued to SGV, Allied Bank and the BIR and
the proceedings taken thereon. This objection was raised in
his Motion[37] dated February 17, 1993, which was, unfortunately,
perfunctorily denied.

The Rules of Procedure of the Office of the

Ombudsman[38] provides that the preliminary investigation of cases
falling under the jurisdiction of the Sandiganbayan and Regional
Trial Court shall be conducted in the manner prescribed in Section
3, Rule 112 of the Rules of Court, subject to the following provisions:

(f) If, after the filing of the requisite affidavits and their
supporting evidences, there are facts material to the case
which the investigating officer may need to be clarified on,
 he may conduct a clarificatory hearing during which the
parties shall be afforded the opportunity to be present but
without the right to examine or cross-examine the witness
being questioned. Where the appearance of the parties or
witness is impracticable, the clarificatory questioning may
be conducted in writing, whereby the questions desired to be
asked by the investigating officer or a party shall be reduced
into writing and served on the witness concerned who shall
be required to answer the same in writing and under oath.

Ong, therefore, should have been notified of the subpoenas

duces tecum ad testificandum issued to SGV, Allied Bank and the
BIR. Although there is no indication on record that clarificatory
hearings were conducted pursuant to the subpoenas, Ong is entitled
to be notified of the proceedings and to be present thereat. The fact
that he was not so notified is a denial of fundamental fairness which
taints the preliminary investigation.

So, too, did the fact that Ong was not served a copy of
the Resolution directing the filing of a petition for forfeiture deprive
him of his statutory right to be furnished with a copy of
the Resolution to file a petition for forfeiture and to file a motion for
reconsideration therefrom with the Ombudsman within five (5) days
from receipt of such Resolution pursuant to Sec. 27 of RA 6770. The
law provides:

Sec. 27. Effectivity and Finality of Decisions.(1) All

provisionary orders of the Office of the Ombudsman are
immediately effective and executory.
 A motion for reconsideration of any order, directive or
decision of the Office of the Ombudsman must be filed within
five (5) days after receipt of written notice . . . .

For these reasons, we find that the Sandiganbayan, in its

second assailed Resolution, correctly ordered the Ombudsman to
immediately furnish petitioners a copy of the Resolution to file the
petition for forfeiture, and gave petitioners a period of five (5) days
from receipt of such Resolution within which to file a motion for
reconsideration. Although the second Sandiganbayan Resolution was
only intended to remedy the Ombudsmans failure to give petitioners
a copy of the Resolution to file the petition for forfeiture, it would also
have served to cure the Ombudsmans failure to notify petitioners of
the issuance of subpoenas duces tecum ad testificandum to SGV,
Allied Bank and the BIR.

Instead of awaiting the Ombudsmans compliance with

the Resolution and filing their motion for reconsideration
therefrom, however, petitioners opted to go directly to this Court.
With this maneuver, petitioners effectively deprived themselves of an
avenue of redress with the Sandiganbayan. They are deemed to have
waived their right to avail of the remedy afforded by the
second Resolution.

The next question is whether we should direct the Ombudsman

to rectify the errors committed during the preliminary
investigation, i.e., the failure to give Ong notice of the subpoenas
issued to SGV, Allied Bank and the BIR and notice of
the Resolution directing the filing of the petition for forfeiture.
 To so order the Ombudsman at this point would no longer serve
any useful purpose and would only further delay the proceedings in
this case. Verily, petitioners have been allowed to fully plead their
arguments before this Court. After all has been said, this case should
now be allowed to proceed in its course.

Nonetheless, we find this an opportune time to admonish the

Ombudsman to be more circumspect in its conduct of preliminary
investigation to the end that participants therein are accorded the
full measure of their rights under the Constitution and our laws.

The other issues raised by petitioners concern the alleged

disqualification of the Ombudsman to file a petition for forfeiture
considering that it also conducted the preliminary investigation to
determine probable cause. According to petitioners, the duality of the
functions of the Ombudsman, as investigator and prosecutor,
impairs its ability to act as a fair and impartial magistrate in the
determination of probable cause.

Petitioners are the first to agree that the Ombudsman is vested

with jurisdiction to investigate and prosecute any act or omission of
a public officer or employee when such act or omission appears to be
illegal, unjust, improper or inefficient. They recognize that the
Ombudsman has primary jurisdiction over cases, such as the
present one, cognizable by the Sandiganbayan.

The problem with petitioners contention is their assumption

that the Ombudsman, a constitutionally-created body, will not
perform its functions faithfully. The duality of roles which the
Ombudsman exercises does not necessarily warrant a conclusion
that it will be given to making a finding of probable cause in every
case.
 At any rate, [I]n the debates on this matter in the Constitutional
Commission, it was stressed by the sponsors of the Office of the
Ombudsman that, whereas the original Tanodbayan was supposed
to be limited to the function of prosecution of cases against public
functionaries, generally for graft and corruption, the former would be
considered the champion of the citizen, to entertain complaints
addressed to him and to take all necessary action thereon.[39] This
should leave no doubt as regards the constitutionality and propriety
of the functions exercised by the Ombudsman in this case.

Verily, the Court in Republic v. Sandiganbayan,[40] reviewed the

powers of the Ombudsman and held:

At present, the powers of the Ombudsman, as defined

by Republic Act No. 6770 corollary to Section 13, Article XI
of the 1987 Constitution, include, inter alia, the authority to:
(1) investigate and prosecute on its own or on complaint by
any person, any act or omission of any public officer or
employee, office or agency, when such act or omission
appears to be illegal, unjust, improper or inefficient. It has
primary jurisdiction over cases cognizable by the
Sandiganbayan and, in the exercise of this primary
jurisdiction, it may take over, at any stage, from any
investigatory agency of Government, the investigation of
such cases; and (2) investigate and intiate the proper action
for the recovery of ill-gotten wealth and/or unexplained
wealth amassed after February 25, 1986 and the
prosecution of the parties involved there.[41]

In the same case, we declared that the Ombudsman has the

correlative powers to investigate and initiate the proper action for the
recovery of ill-gotten and/or unexplained wealth which were amassed
after February 25, 1986. There is therefore no merit in petitioners
contention that the absence of participation of the OSG taints the
petition for forfeiture with nullity.

Finally, the attacks against the constitutionality of RA 1379

because it is vague, violates the presumption of innocence and the
right against self incrimination, and breaches the authority and
prerogative of the Supreme Court to promulgate rules concerning the
protection and enforcement of constitutional rights, are
unmeritorious.

The law is not vague as it defines with sufficient particularity

unlawfully acquired property of a public officer or employee as that
which is manifestly out of proportion to his salary as such public
officer or employee and to his other lawful income and the income
from legitimately acquired property. It also provides a definition of
what is legitimately acquired property. Based on these parameters,
the public is given fair notice of what acts are proscribed. The law,
therefore, does not offend the basic concept of fairness and the due
process clause of the Constitution.

Neither is the presumption of innocence clause violated by Sec.

2 of RA 1379 which states that property acquired by a public officer
or employee during his incumbency in an amount which is manifestly
out of proportion to his salary as such public officer or employee and
to his other lawful income and the income from legitimately acquired
property shall be presumed prima facie to have been unlawfully
acquired. As elaborated by Fr. Joaquin Bernas, under the principle
of presumption of innocence, it is merely required of the State to
establish a prima facie case, after which the burden of proof shifts to
the accused.[42] In People v. Alicante,[43] the Court held:
 No rule has been better established in criminal law
than that every man is presumed to be innocent until his
guilt is proved beyond a reasonable doubt. In a criminal
prosecution, therefore, the burden is upon the State to prove
every fact and circumstance constituting the crime charged,
for the purpose of showing the guilt of the accused.

While that is the rule, many of the States have

established a different rule and have provided that certain
facts only shall constitute prima facie evidence, and that
then the burden is put upon the defendant to show or to
explain that such facts or acts are not criminal.

It has been frequently decided, in case of statutory

crimes, that no constitutional provision is violated by a
statute providing that proof by the State of some material fact
or facts shall constitute prima facie evidence of guilt, and
that then the burden is shifted to the defendant for the
purpose of showing that such act or acts are innocent and
are committed without unlawful intention.

. . . The State having the right to declare what acts are

criminal, within certain well defined limitations, has a right
to specify what act or acts shall constitute a crime, as well
as what proof shall constitute prima facie evidence of guilt,
and then to put upon the defendant the burden of showing
that such act or acts are innocent and are not committed
with any criminal intent or intention.[44]

The constitutional assurance of the right against self

incrimination likewise cannot be invoked by petitioners. The right is
a prohibition against the use of physical or moral compulsion to
extort communications from the accused. It is simply a prohibition
against legal process to extract from the accuseds own lips, against
his will, admission of his guilt.[45] In this case, petitioners are not
compelled to present themselves as witnesses in rebutting the
presumption established by law. They may present documents
evidencing the purported bank loans, money market placements and
other fund sources in their defense.

As regards the alleged infringement of the Courts authority to

promulgate rules concerning the protection and enforcement of
constitutional rights, suffice it to state that there is no showing that
the Ombudsman or the OSG is about to grant immunity to anyone
under RA 1379. The question, therefore, is not ripe for adjudication.

WHEREFORE, the petition is hereby DISMISSED. Costs against

petitioners.

SO ORDERED.

EN BANC

SOUTHERN HEMISPHERE G.R. No. 178552

ENGAGEMENT NETWORK, INC.,
on behalf of the South-South
Present:
Network (SSN) for Non-State
Armed Group Engagement, and
ATTY. SOLIMAN M. SANTOS, JR., CORONA, C.J.,
Petitioners, CARPIO,
 CARPIO MORALES,
- versus - VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
ANTI-TERRORISM COUNCIL, THE BRION,
EXECUTIVE SECRETARY, THE
PERALTA,
SECRETARY OF JUSTICE, THE
SECRETARY OF FOREIGN BERSAMIN,
AFFAIRS, THE SECRETARY OF DEL CASTILLO,
NATIONAL DEFENSE, THE
SECRETARY OF THE INTERIOR ABAD,
AND LOCAL GOVERNMENT, THE VILLARAMA, JR.,
SECRETARY OF FINANCE, THE
PEREZ,
NATIONAL SECURITY ADVISER,
THE CHIEF OF STAFF OF THE MENDOZA, and
ARMED FORCES OF THE
SERENO, JJ.
PHILIPPINES, AND THE CHIEF OF
THE PHILIPPINE NATIONAL
POLICE,
Respondents.

x ------------------------------- x

KILUSANG MAYO UNO (KMU),

represented by its Chairperson
Elmer Labog, NATIONAL
FEDERATION OF LABOR
UNIONS-KILUSANG MAYO UNO
(NAFLU-KMU), represented by
its National President Joselito V. Promulgated:
Ustarez and Secretary General
Antonio C. Pascual, and CENTER
October 5, 2010
FOR TRADE UNION AND
HUMAN RIGHTS, represented
by its Executive Director Daisy
Arago,
G.R. No. 178554
Petitioners,

- versus -

HON. EDUARDO ERMITA, in his

capacity as Executive Secretary,
NORBERTO GONZALES, in his
capacity as Acting Secretary of
National Defense, HON. RAUL
GONZALES, in his capacity as
Secretary of Justice, HON.
RONALDO PUNO, in his capacity
as Secretary of the Interior and
Local Government, GEN.
HERMOGENES ESPERON, in his
capacity as AFP Chief of Staff,
and DIRECTOR GENERAL OSCAR
CALDERON, in his capacity as
PNP Chief of Staff,
Respondents.

x ------------------------------------ x
BAGONG ALYANSANG
MAKABAYAN (BAYAN),
GENERAL ALLIANCE BINDING
WOMEN FOR REFORMS,
INTEGRITY, EQUALITY,
LEADERSHIP AND ACTION
(GABRIELA), KILUSANG
MAGBUBUKID NG PILIPINAS
(KMP), MOVEMENT OF
CONCERNED CITIZENS FOR CIVIL
LIBERTIES (MCCCL),
CONFEDERATION FOR UNITY,
RECOGNITION AND
ADVANCEMENT OF
GOVERNMENT EMPLOYEES
(COURAGE), KALIPUNAN NG
DAMAYANG MAHIHIRAP
(KADAMAY), SOLIDARITY OF
CAVITE WORKERS, LEAGUE OF
FILIPINO STUDENTS (LFS),
ANAKBAYAN, PAMBANSANG
LAKAS NG KILUSANG
MAMAMALAKAYA
(PAMALAKAYA), ALLIANCE OF
CONCERNED TEACHERS (ACT),
MIGRANTE, HEALTH ALLIANCE
FOR DEMOCRACY (HEAD),
AGHAM, TEOFISTO GUINGONA,
JR., DR. BIENVENIDO LUMBERA,
RENATO CONSTANTINO, JR.,
SISTER MARY JOHN MANANSAN
OSB, DEAN CONSUELO PAZ,
ATTY. JOSEFINA LICHAUCO,
COL. GERRY CUNANAN (ret.), G.R. No. 178581
CARLITOS SIGUION-REYNA, DR.
CAROLINA PAGADUAN-
ARAULLO, RENATO REYES,
DANILO RAMOS, EMERENCIANA
DE LESUS, RITA BAUA, REY
CLARO CASAMBRE,
Petitioners,

- versus -

GLORIA MACAPAGAL-ARROYO,
in her capacity as President and
Commander-in-Chief,
EXECUTIVE SECRETARY
EDUARDO ERMITA,
DEPARTMENT OF JUSTICE
SECRETARY RAUL GONZALES,
DEPARTMENT OF FOREIGN
AFFAIRS SECRETARY ALBERTO
ROMULO, DEPARTMENT OF
NATIONAL DEFENSE ACTING
SECRETARY NORBERTO
GONZALES, DEPARTMENT OF
INTERIOR AND LOCAL
GOVERNMENT SECRETARY
RONALDO PUNO. DEPARTMENT
OF FINANCE SECRETARY
MARGARITO TEVES, NATIONAL
SECURITY ADVISER NORBERTO
GONZALES, THE NATIONAL
INTELLIGENCE COORDINATING
AGENCY (NICA), THE NATIONAL
BUREAU OF INVESTIGATION
(NBI), THE BUREAU OF
IMMIGRATION, THE OFFICE OF
CIVIL DEFENSE, THE
INTELLIGENCE SERVICE OF THE
ARMED FORCES OF THE
PHILIPPINES (ISAFP), THE ANTI-
MONEY LAUNDERING COUNCIL
(AMLC), THE PHILIPPINE CENTER
ON TRANSNATIONAL CRIME,
THE CHIEF OF THE PHILIPPINE
NATIONAL POLICE GEN. OSCAR
CALDERON, THE PNP, including
its intelligence and investigative
elements, AFP CHIEF GEN.
HERMOGENES ESPERON,
Respondents.
x ------------------------------------ x
KARAPATAN, ALLIANCE FOR
THE ADVANCEMENT OF
PEOPLES RIGHTS, represented
herein by Dr. Edelina de la Paz,
and representing the following
organizations: HUSTISYA,
represented by Evangeline
Hernandez and also on her own
behalf; DESAPARECIDOS,
represented by Mary Guy
Portajada and also on her own
behalf, SAMAHAN NG MGA EX-
DETAINEES LABAN SA
DETENSYON AT PARA SA
AMNESTIYA (SELDA),
represented by Donato
Continente and also on his own
behalf, ECUMENICAL
MOVEMENT FOR JUSTICE AND
PEACE (EMJP), represented by
Bishop Elmer M. Bolocon, UCCP,
and PROMOTION OF CHURCH
PEOPLES RESPONSE,
represented by Fr. Gilbert
Sabado, OCARM,
Petitioners,

- versus -

GLORIA MACAPAGAL-ARROYO,
in her capacity as President and
Commander-in-Chief,
EXECUTIVE SECRETARTY
EDUARDO ERMITA,
DEPARTMENT OF JUSTICE
SECRETARY RAUL GONZALEZ,
DEPARTMENT OF FOREIGN
AFFAIRS SECRETARY ALBERTO
ROMULO, DEPARTMENT OF
NATIONAL DEFENSE ACTING
SECRETARY NORBERTO
GONZALES, DEPARTMENT OF
INTERIOR AND LOCAL
GOVERNMENT SECRETARY
RONALDO PUNO, DEPARTMENT
OF FINANCE SECRETARY
MARGARITO TEVES, NATIONAL
SECURITY ADVISER NORBERTO
GONZALES, THE NATIONAL
INTELLIGENCE COORDINATING
AGENCY (NICA), THE NATIONAL
BUREAU OF INVESTIGATION
(NBI), THE BUREAU OF
IMMIGRATION, THE OFFICE OF
CIVIL DEFENSE, THE
INTELLIGENCE SERVICE OF THE
ARMED FORCES OF THE
PHILIPPINES (ISAFP), THE ANTI-
MONEY LAUNDERING COUNCIL
(AMLC), THE PHILIPPINE CENTER
ON TRANSNATIONAL CRIME,
THE CHIEF OF THE PHILIPPINE
NATIONAL POLICE GEN. OSCAR
CALDERON, THE PNP, including
its intelligence and investigative
elements, AFP CHIEF GEN.
HERMOGENES ESPERON,
Respondents.

x------------------------------------ x

THE INTEGRATED BAR OF THE

PHILIPPINES (IBP), represented
by Atty. Feliciano M. Bautista,
COUNSELS FOR THE DEFENSE
OF LIBERTY(CODAL), SEN. MA.
ANA CONSUELO A.S. MADRIGAL
and FORMER SENATORS SERGIO
OSMEA III and WIGBERTO E.
TAADA,
Petitioners,

- versus -

EXECUTIVE SECRETARY
EDUARDO ERMITA AND THE
MEMBERS OF THE ANTI- G.R. No. 178890
TERRORISM COUNCIL (ATC),
Respondents.

x------------------------------------- x

BAGONG ALYANSANG
MAKABAYAN-SOUTHERN
TAGALOG (BAYAN-ST),
GABRIELA-ST, KATIPUNAN NG
MGA SAMAHYANG
MAGSASAKA-TIMOG
KATAGALUGAN (KASAMA-TK),
MOVEMENT OF CONCERNED
CITIZENS FOR CIVIL LIBERTIES
(MCCCL), PEOPLES MARTYRS,
ANAKBAYAN-ST,
PAMALAKAYA-ST,
CONFEDERATION FOR UNITY,
RECOGNITION AND
ADVANCEMENT OF
GOVERNMENT EMPLOYEES
(COURAGE-ST), PAGKAKAISAT
UGNAYAN NG MGA
MAGBUBUKID SA LAGUNA
(PUMALAG), SAMAHAN NG
MGA MAMAMAYAN SA TABING
RILES (SMTR-ST), LEAGUE OF
FILIPINO STUDENTS (LFS),
BAYAN MUNA-ST, KONGRESO
NG MGA MAGBUBUKID PARA
SA REPORMANG AGRARYO
KOMPRA, BIGKIS AT LAKAS NG
MGA KATUTUBO SA TIMOG
KATAGALUGAN (BALATIK),
SAMAHAN AT UGNAYAN NG
MGA MAGSASAKANG
KABABAIHAN SA TIMOG
KATAGALUGAN (SUMAMAKA-
TK), STARTER, LOSOS RURAL
POOR ORGANIZATION FOR
PROGRESS & EQUALITY,
CHRISTIAN NIO LAJARA,
TEODORO REYES, FRANCESCA B.
TOLENTINO, JANNETTE E.
BARRIENTOS, OSCAR T. LAPIDA,
JR., DELFIN DE CLARO, SALLY P.
ASTRERA, ARNEL SEGUNE
BELTRAN,
Petitioners,

- versus -

GLORIA MACAPAGAL-ARROYO,
in her capacity as President and
Commander-in-Chief,
EXECUTIVE SECRETARY
EDUARDO ERMITA,
DEPARTMENT OF JUSTICE
SECRETARY RAUL GONZALEZ,
DEPARTMENT OF FOREIGN
AFFAIRS SECRETARY ALBERTO
ROMULO, DEPARTMENT OF
NATIONAL DEFENSE ACTING
SECRETARY NORBERTO
GONZALES, DEPARTMENT OF
INTERIOR AND LOCAL
GOVERNMEN T SECRETARY
RONALDO PUNO, DEPARTMENT
OF FINCANCE SECRETARY
MARGARITO TEVES, NATIONAL
SECURITY ADVISER NORBERTO
GONZALES, THE NATIONAL
INTELLIGENCE COORDINATING
AGENCY (NICA), THE NATIONAL
BUREAU OF INVESTIGATION
(NBI), THE BUREAU OF
IMMIGRATION, THE OFFICE OF
CIVIL DEFENSE, THE
INTELLIGENCE SERVICE OF THE
ARMED FORCES OF THE
PHILIPPINES (ISAFP), THE ANTI-
MONEY LAUNDERING COUNCIL
(AMLC), THE PHILIPPINE CENTER
ON TRANSNATIONAL CRIME,
THE CHIEF OF THE PHILIPPINE
NATIONAL POLICE GEN. OSCAR
CALDERON, THE PNP, including
its intelligence and investigative
elements, AFP CHIEF GEN.
HERMOGENES ESPERON,
Respondents.
G.R. No. 179157
G.R. No. 179461
x--------------------------------------------------------------------------x

DECISION

CARPIO MORALES, J.:

Before the Court are six petitions challenging the constitutionality of Republic Act
No. 9372 (RA 9372), An Act to Secure the State and Protect our People from
Terrorism, otherwise known as the Human Security Act of 2007,[1] signed into law
on March 6, 2007.
Following the effectivity of RA 9372 on July 15, 2007,[2] petitioner Southern
Hemisphere Engagement Network, Inc., a non-government organization, and Atty.
Soliman Santos, Jr., a concerned citizen, taxpayer and lawyer, filed a petition for
certiorari and prohibition on July 16, 2007 docketed as G.R. No. 178552. On even
date, petitioners Kilusang Mayo Uno (KMU), National Federation of Labor Unions-
Kilusang Mayo Uno (NAFLU-KMU), and Center for Trade Union and Human Rights
(CTUHR), represented by their respective officers[3] who are also bringing the action
in their capacity as citizens, filed a petition for certiorari and prohibition docketed
as G.R. No. 178554.

The following day, July 17, 2007, organizations Bagong Alyansang Makabayan
(BAYAN), General Alliance Binding Women for Reforms, Integrity, Equality,
Leadership and Action (GABRIELA), Kilusang Magbubukid ng Pilipinas (KMP),
Movement of Concerned Citizens for Civil Liberties (MCCCL), Confederation for
Unity, Recognition and Advancement of Government Employees (COURAGE),
Kalipunan ng Damayang Mahihirap (KADAMAY), Solidarity of Cavite Workers
(SCW), League of Filipino Students (LFS), Anakbayan, Pambansang Lakas ng
Kilusang Mamamalakaya (PAMALAKAYA), Alliance of Concerned Teachers (ACT),
Migrante, Health Alliance for Democracy (HEAD), and Agham, represented by their
respective officers,[4] and joined by concerned citizens and taxpayers Teofisto
Guingona, Jr., Dr. Bienvenido Lumbera, Renato Constantino, Jr., Sister Mary John
Manansan, OSB, Dean Consuelo Paz, Atty. Josefina Lichauco, Retired Col. Gerry
Cunanan, Carlitos Siguion-Reyna, Dr. Carolina Pagaduan-Araullo, Renato Reyes,
Danilo Ramos, Emerenciana de Jesus, Rita Baua and Rey Claro Casambre filed a
petition for certiorari and prohibition docketed as G.R. No. 178581.
On August 6, 2007, Karapatan and its alliance member organizations Hustisya,
Desaparecidos, Samahan ng mga Ex-Detainees Laban sa Detensyon at para sa
Amnestiya (SELDA), Ecumenical Movement for Justice and Peace (EMJP), and
Promotion of Church Peoples Response (PCPR), which were represented by their
respective officers[5] who are also bringing action on their own behalf, filed a
petition for certiorari and prohibition docketed as G.R. No. 178890.

On August 29, 2007, the Integrated Bar of the Philippines (IBP), Counsels for the
Defense of Liberty (CODAL),[6] Senator Ma. Ana Consuelo A.S. Madrigal, Sergio
Osmea III, and Wigberto E. Taada filed a petition for certiorari and prohibition
docketed as G.R. No. 179157.

Bagong Alyansang Makabayan-Southern Tagalog (BAYAN-ST), other regional

chapters and organizations mostly based in the Southern Tagalog Region,[7] and
individuals[8] followed suit by filing on September 19, 2007 a petition for certiorari
and prohibition docketed as G.R. No. 179461 that replicates the allegations raised
in the BAYAN petition in G.R. No. 178581.

Impleaded as respondents in the various petitions are the Anti-Terrorism

Council[9] composed of, at the time of the filing of the petitions, Executive Secretary
Eduardo Ermita as Chairperson, Justice Secretary Raul Gonzales as Vice
Chairperson, and Foreign Affairs Secretary Alberto Romulo, Acting Defense
Secretary and National Security Adviser Norberto Gonzales, Interior and Local
Government Secretary Ronaldo Puno, and Finance Secretary Margarito Teves as
members. All the petitions, except that of the IBP, also impleaded Armed Forces of
the Philippines (AFP) Chief of Staff Gen. Hermogenes Esperon and Philippine
National Police (PNP) Chief Gen. Oscar Calderon.

The Karapatan, BAYAN and BAYAN-ST petitions likewise impleaded President Gloria
Macapagal-Arroyo and the support agencies for the Anti-Terrorism Council like the
National Intelligence Coordinating Agency, National Bureau of Investigation,
Bureau of Immigration, Office of Civil Defense, Intelligence Service of the AFP, Anti-
Money Laundering Center, Philippine Center on Transnational Crime, and the PNP
intelligence and investigative elements.
 The petitions fail.

Petitioners resort to certiorari is

improper

Preliminarily, certiorari does not lie against respondents who do not exercise
judicial or quasi-judicial functions. Section 1, Rule 65 of the Rules of Court is clear:

Section 1. Petition for certiorari.When any tribunal, board or

officer exercising judicial or quasi-judicial functions has acted
without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is no
appeal, nor any plain, speedy, and adequate remedy in the ordinary
course of law, a person aggrieved thereby may file a verified petition
in the proper court, alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the proceedings of such
tribunal, board or officer, and granting such incidental reliefs as law
and justice may require. (Emphasis and underscoring supplied)

Parenthetically, petitioners do not even allege with any modicum of particularity

how respondents acted without or in excess of their respective jurisdictions, or with
grave abuse of discretion amounting to lack or excess of jurisdiction.

The impropriety of certiorari as a remedy aside, the petitions fail just the same.
In constitutional litigations, the power of judicial review is limited by four exacting
requisites, viz: (a) there must be an actual case or controversy; (b) petitioners must
possess locus standi; (c) the question of constitutionality must be raised at the
earliest opportunity; and (d) the issue of constitutionality must be the lis mota of
the case.[10]

In the present case, the dismal absence of the first two requisites, which are the
most essential, renders the discussion of the last two superfluous.

Petitioners lack locus standi

Locus standi or legal standing requires a personal stake in the outcome of the
controversy as to assure that concrete adverseness which sharpens the
presentation of issues upon which the court so largely depends for illumination of
difficult constitutional questions.[11]

Anak Mindanao Party-List Group v. The Executive Secretary[12] summarized the rule
on locus standi, thus:

Locus standi or legal standing has been defined as a personal and

substantial interest in a case such that the party has sustained or will
sustain direct injury as a result of the governmental act that is being
challenged. The gist of the question on standing is whether a party
alleges such personal stake in the outcome of the controversy as to
assure that concrete adverseness which sharpens the presentation of
issues upon which the court depends for illumination of difficult
constitutional questions.

[A] party who assails the constitutionality of a statute must have a direct
and personal interest. It must show not only that the law or any
 governmental act is invalid, but also that it sustained or is in immediate
danger of sustaining some direct injury as a result of its enforcement,
and not merely that it suffers thereby in some indefinite way. It must
show that it has been or is about to be denied some right or privilege to
which it is lawfully entitled or that it is about to be subjected to some
burdens or penalties by reason of the statute or act complained of.

For a concerned party to be allowed to raise a constitutional question, it

must show that (1) it has personally suffered some actual or threatened
injury as a result of the allegedly illegal conduct of the government, (2)
the injury is fairly traceable to the challenged action, and (3) the injury is
likely to be redressed by a favorable action. (emphasis and underscoring
supplied.)

Petitioner-organizations assert locus standi on the basis of being suspected

communist fronts by the government, especially the military; whereas individual
petitioners invariably invoke the transcendental importance doctrine and their
status as citizens and taxpayers.

While Chavez v. PCGG[13] holds that transcendental public importance dispenses

with the requirement that petitioner has experienced or is in actual danger of
suffering direct and personal injury, cases involving the constitutionality
of penal legislation belong to an altogether different genus of constitutional
litigation. Compelling State and societal interests in the proscription of harmful
conduct, as will later be elucidated, necessitate a closer judicial scrutiny of locus
standi.

Petitioners have not presented any personal stake in the outcome of the
controversy. None of them faces any charge under RA 9372.
KARAPATAN, Hustisya, Desaparecidos, SELDA, EMJP and PCR, petitioners in G.R.
No. 178890, allege that they have been subjected to close security surveillance by
state security forces, their members followed by suspicious persons and vehicles
with dark windshields, and their offices monitored by men with military build. They
likewise claim that they have been branded as enemies of the [S]tate.[14]

Even conceding such gratuitous allegations, the Office of the Solicitor General
(OSG) correctly points out that petitioners have yet to show
any connection between the purported surveillance and the implementation
of RA 9372.

BAYAN, GABRIELA, KMP, MCCCL, COURAGE, KADAMAY, SCW, LFS, Anakbayan,

PAMALAKAYA, ACT, Migrante, HEAD and Agham, petitioner-organizations in G.R.
No. 178581, would like the Court to take judicial notice of
respondents alleged action of tagging them as militant organizations fronting for
the Communist Party of the Philippines (CPP) and its armed wing, the National
Peoples Army (NPA). The tagging, according to petitioners, is tantamount to the
effects of proscription without following the procedure under the law. [15] The
petition of BAYAN-ST, et al. in G.R. No. 179461 pleads the same allegations.

The Court cannot take judicial notice of the alleged tagging of petitioners.

Generally speaking, matters of judicial notice have three material

requisites: (1) the matter must be one of common and general
knowledge; (2) it must be well and authoritatively settled and not
doubtful or uncertain; and (3) it must be known to be within the limits
of the jurisdiction of the court. The principal guide in determining what
facts may be assumed to be judicially known is that of notoriety. Hence,
it can be said that judicial notice is limited to facts evidenced by public
records and facts of general notoriety. Moreover, a judicially noticed fact
must be one not subject to a reasonable dispute in that it is either:
(1) generally knownwithin the territorial jurisdiction of the trial
 court; or (2) capable of accurate and ready determination by resorting
to sources whose accuracy cannot reasonably be questionable.

Things of common knowledge, of which courts take judicial matters

coming to the knowledge of men generally in the course of the ordinary
experiences of life, or they may be matters which are generally accepted
by mankind as true and are capable of ready and unquestioned
demonstration. Thus, facts which are universally known, and which may
be found in encyclopedias, dictionaries or other publications, are
judicially noticed, provided, they are of such universal notoriety and so
generally understood that they may be regarded as forming part of the
common knowledge of every person. As the common knowledge of man
ranges far and wide, a wide variety of particular facts have been judicially
noticed as being matters of common knowledge. But a court cannot take
judicial notice of any fact which, in part, is dependent on the existence
or non-existence of a fact of which the court has no constructive
knowledge.[16] (emphasis and underscoring supplied.)

No ground was properly established by petitioners for the taking of judicial

notice. Petitioners apprehension is insufficient to substantiate their plea. That no
specific charge or proscription under RA 9372 has been filed against them, three
years after its effectivity, belies any claim of imminence of their perceived threat
emanating from the so-called tagging.

The same is true with petitioners KMU, NAFLU and CTUHR in G.R. No. 178554, who
merely harp as well on their supposed link to the CPP and NPA. They fail to
particularize how the implementation of specific provisions of RA 9372 would result
in direct injury to their organization and members.

While in our jurisdiction there is still no judicially declared terrorist organization,

the United States of America[17] (US) and the European Union[18] (EU) have both
classified the CPP, NPA and Abu Sayyaf Group as foreign terrorist
organizations. The Court takes note of the joint statement of Executive Secretary
Eduardo Ermita and Justice Secretary Raul Gonzales that the Arroyo Administration
would adopt the US and EU classification of the CPP and NPA as terrorist
organizations.[19] Such statement notwithstanding, there is yet to be filed before
the courts an application to declare the CPP and NPA organizations as domestic
terrorist or outlawed organizations under RA 9372. Again, RA 9372 has been in
effect for three years now. From July 2007 up to the present, petitioner-
organizations have conducted their activities fully and freely without any threat of,
much less an actual, prosecution or proscription under RA 9372.

Parenthetically, the Fourteenth Congress, in a resolution initiated by Party-list

Representatives Saturnino Ocampo, Teodoro Casio, Rafael Mariano and
Luzviminda Ilagan,[20] urged the government to resume peace negotiations with the
NDF by removing the impediments thereto, one of which is the adoption of
designation of the CPP and NPA by the US and EU as foreign terrorist
organizations.Considering the policy statement of the Aquino Administration[21] of
resuming peace talks with the NDF, the government is not imminently disposed to
ask for the judicial proscription of the CPP-NPA consortium and its allied
organizations.

More important, there are other parties not before the Court with direct and
specific interests in the questions being raised.[22] Of recent development is the
filing of the first case for proscription under Section 17[23] of RA 9372 by the
Department of Justice before the Basilan Regional Trial Court against the Abu
Sayyaf Group.[24] Petitioner-organizations do not in the least allege any link to
the Abu Sayyaf Group.

Some petitioners attempt, in vain though, to show the imminence of a prosecution

under RA 9372 by alluding to past rebellion charges against them.
In Ladlad v. Velasco,[25] the Court ordered the dismissal of rebellion charges filed in
2006 against then Party-List Representatives Crispin Beltran and Rafael Mariano of
Anakpawis, Liza Maza of GABRIELA, and Joel Virador, Teodoro Casio and Saturnino
Ocampo of Bayan Muna. Also named in the dismissed rebellion charges were
petitioners Rey Claro Casambre, Carolina Pagaduan-Araullo, Renato Reyes, Rita
Baua, Emerencia de Jesus and Danilo Ramos; and accused of being front
organizations for the Communist movement were petitioner-organizations KMU,
BAYAN, GABRIELA, PAMALAKAYA, KMP, KADAMAY, LFS and COURAGE.[26]

The dismissed rebellion charges, however, do not save the day for petitioners. For
one, those charges were filed in 2006, prior to the enactment of RA 9372, and
dismissed by this Court. For another, rebellion is defined and punished under the
Revised Penal Code. Prosecution for rebellion is not made more imminent by the
enactment of RA 9372, nor does the enactment thereof make it easier to charge a
person with rebellion, its elements not having been altered.

Conversely, previously filed but dismissed rebellion charges bear no relation to

prospective charges under RA 9372. It cannot be overemphasized that three years
after the enactment of RA 9372, none of petitioners has been charged.

Petitioners IBP and CODAL in G.R. No. 179157 base their claim of locus standi on
their sworn duty to uphold the Constitution. The IBP zeroes in on Section 21 of RA
9372 directing it to render assistance to those arrested or detained under the law.

The mere invocation of the duty to preserve the rule of law does not, however,
suffice to clothe the IBP or any of its members with standing. [27] The IBP failed to
sufficiently demonstrate how its mandate under the assailed statute revolts against
its constitutional rights and duties. Moreover, both the IBP and CODAL have not
pointed to even a single arrest or detention effected under RA 9372.
Former Senator Ma. Ana Consuelo Madrigal, who claims to have been the subject
of political surveillance, also lacks locus standi. Prescinding from the veracity, let
alone legal basis, of the claim of political surveillance, the Court finds that she has
not shown even the slightest threat of being charged under RA 9372. Similarly
lacking in locus standi are former Senator Wigberto Taada and Senator Sergio
Osmea III, who cite their being respectively a human rights advocate and an
oppositor to the passage of RA 9372. Outside these gratuitous statements, no
concrete injury to them has been pinpointed.

Petitioners Southern Hemisphere Engagement Network and Atty. Soliman Santos

Jr. in G.R. No. 178552 also conveniently state that the issues they raise are of
transcendental importance, which must be settled early and are of far-reaching
implications, without mention of any specific provision of RA 9372 under which
they have been charged, or may be charged. Mere invocation of human rights
advocacy has nowhere been held sufficient to clothe litigants with locus
standi. Petitioners must show an actual, or immediate danger of sustaining, direct
injury as a result of the laws enforcement. To rule otherwise would be to corrupt
the settled doctrine of locus standi, as every worthy cause is an interest shared by
the general public.

Neither can locus standi be conferred upon individual petitioners

as taxpayers and citizens. A taxpayer suit is proper only when there is an exercise
of the spending or taxing power of Congress,[28]whereas citizen standing must rest
on direct and personal interest in the proceeding.[29]

RA 9372 is a penal statute and does not even provide for any appropriation from
Congress for its implementation, while none of the individual petitioner-citizens
has alleged any direct and personal interest in the implementation of the law.

It bears to stress that generalized interests, albeit accompanied by the assertion of

a public right, do not establish locus standi. Evidence of a direct and personal
interest is key.
Petitioners fail to present an actual case
or controversy

By constitutional fiat, judicial power operates only when there is an actual case or
controversy.

Section 1. The judicial power shall be vested in one Supreme Court and
in such lower courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave abuse
of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.[30] (emphasis and
underscoring supplied.)

As early as Angara v. Electoral Commission,[31] the Court ruled that the power of
judicial review is limited to actual cases or controversies to be exercised after full
opportunity of argument by the parties. Any attempt at abstraction could only lead
to dialectics and barren legal questions and to sterile conclusions unrelated to
actualities.
An actual case or controversy means an existing case or controversy that is
appropriate or ripe for determination, not conjectural or anticipatory, lest the
decision of the court would amount to an advisory opinion.[32]

Information Technology Foundation of the Philippines v. COMELEC[33] cannot be

more emphatic:

[C]ourts do not sit to adjudicate mere academic questions to

satisfy scholarly interest, however intellectually challenging. The
controversy must be justiciabledefinite and concrete, touching on the
legal relations of parties having adverse legal interests. In other
 words, the pleadings must show an active antagonistic assertion of a
legal right, on the one hand, and a denial thereof on the other hand;
that is, it must concern a real and not merely a theoretical question
or issue. There ought to be an actual and substantial
controversy admitting of specific relief through a decree conclusive in
nature, as distinguished from an opinion advising what the law would
be upon a hypothetical state of facts. (Emphasis and underscoring
supplied)

Thus, a petition to declare unconstitutional a law converting

the Municipality of Makati into a Highly Urbanized City was held to be premature
as it was tacked on uncertain, contingent events.[34]Similarly, a petition that fails to
allege that an application for a license to operate a radio or television station has
been denied or granted by the authorities does not present a justiciable
controversy, and merely wheedles the Court to rule on a hypothetical problem.[35]

The Court dismissed the petition in Philippine Press Institute v. Commission on

Elections[36] for failure to cite any specific affirmative action of the Commission on
Elections to implement the assailed resolution. It refused, in Abbas v. Commission
on Elections,[37] to rule on the religious freedom claim of the therein petitioners
based merely on a perceived potential conflict between the provisions of the
Muslim Code and those of the national law, there being no actual controversy
between real litigants.

The list of cases denying claims resting on purely hypothetical or anticipatory

grounds goes on ad infinitum.

The Court is not unaware that a reasonable certainty of the occurrence of

a perceived threat to any constitutional interest
suffices to provide a basis for mounting a constitutional challenge. This, however,
is qualified by the requirement that there must be sufficient facts to enable the
Court to intelligently adjudicate the issues.[38]
Very recently, the US Supreme Court, in Holder v. Humanitarian Law
Project,[39] allowed the pre-enforcement review of a criminal statute, challenged on
vagueness grounds, since plaintiffs faced a credible threat of
prosecution and should not be required to await and undergo a criminal
prosecution as the sole means of seeking relief.[40] The plaintiffs therein filed an
action before a federal court to assail the constitutionality of the material support
statute, 18 U.S.C. 2339B (a) (1),[41] proscribing the provision of material support to
organizations declared by the Secretary of State as foreign terrorist
organizations. They claimed that they intended to provide support for the
humanitarian and political activities of two such organizations.

Prevailing American jurisprudence allows an adjudication on the merits when an

anticipatory petition clearly shows that the challenged prohibition forbids the
conduct or activity that a petitioner seeks to do, as there would then be a
justiciable controversy.[42]

Unlike the plaintiffs in Holder, however, herein petitioners have failed to show that
the challenged provisions of RA 9372 forbid constitutionally
protected conduct or activity that they seek to do. No demonstrable threat has
been established, much less a real and existing one.

Petitioners obscure allegations of sporadic surveillance and supposedly being

tagged as communist fronts in no way approximate a credible threat of
prosecution. From these allegations, the Court is being lured to render an advisory
opinion, which is not its function.[43]

Without any justiciable controversy, the petitions have become pleas for
declaratory relief, over which the Court has no original jurisdiction. Then again,
declaratory actions characterized by double contingency, where both the activity
the petitioners intend to undertake and the anticipated reaction to it of a public
official are merely theorized, lie beyond judicial review for lack of ripeness.[44]

The possibility of abuse in the implementation of RA 9372 does not avail to take
the present petitions out of the realm of the surreal and merely imagined. Such
possibility is not peculiar to RA 9372 since the exercise of any power granted by law
may be abused.[45] Allegations of abuse must be anchored on real events before
courts may step in to settle actual controversies involving rights which are legally
demandable and enforceable.

A facial invalidation of a statute is allowed only

in free speech cases, wherein certain rules of
constitutional litigation are rightly excepted

Petitioners assail for being intrinsically vague and impermissibly broad the
definition of the crime of terrorism[46] under RA 9372 in that terms like widespread
and extraordinary fear and panic among the populace and coerce the government
to give in to an unlawful demand are nebulous, leaving law enforcement agencies
with no standard to measure the prohibited acts.

Respondents, through the OSG, counter that the doctrines of void-for-vagueness

and overbreadth find no application in the present case since these doctrines apply
only to free speech cases; and that RA 9372 regulates conduct, not speech.

For a jurisprudentially guided understanding of these doctrines, it is imperative to

outline the schools of thought on whether the void-for-vagueness and overbreadth
doctrines are equally applicablegrounds to assail a penal statute.
Respondents interpret recent jurisprudence as slanting toward the idea of limiting
the application of the two doctrines to free speech cases. They particularly
cite Romualdez v. Hon. Sandiganbayan[47]and Estrada v. Sandiganbayan.[48]

The Court clarifies.

At issue in Romualdez v. Sandiganbayan was whether the word intervene in

Section 5[49] of the Anti-Graft and Corrupt Practices Act was intrinsically vague and
impermissibly broad. The Court stated that the overbreadth and the vagueness
doctrines have special application only to free-speech cases, and are not
appropriate for testing the validity of penal statutes.[50] It added that, at any rate,
the challenged provision, under which the therein petitioner was charged, is not
vague.[51]

While in the subsequent case of Romualdez v. Commission on Elections,[52] the

Court stated that a facial invalidation of criminal statutes is not appropriate, it
nonetheless proceeded to conduct a vagueness analysis, and concluded that the
therein subject election offense[53] under the Voters Registration Act of 1996, with
which the therein petitioners were charged, is couched in precise language.[54]

The two Romualdez cases rely heavily on the Separate Opinion[55] of Justice Vicente
V. Mendoza in the Estrada case, where the Court found the Anti-Plunder Law
(Republic Act No. 7080) clear and free from ambiguity respecting the definition of
the crime of plunder.

The position taken by Justice Mendoza in Estrada relates these two doctrines to
the concept of a facial invalidation as opposed to an as-applied challenge. He
basically postulated that allegations that a penal statute is vague and overbroad do
not justify a facial review of its validity. The pertinent portion of the Concurring
Opinion of Justice Mendoza, which was quoted at length in the
main Estradadecision, reads:
 A facial challenge is allowed to be made to a vague statute and to one which
is overbroad because of possible "chilling effect" upon protected speech. The
theory is that "[w]hen statutes regulate or proscribe speech and no readily apparent
construction suggests itself as a vehicle for rehabilitating the statutes in a single
prosecution, the transcendent value to all society of constitutionally protected
expression is deemed to justify allowing attacks on overly broad statutes with no
requirement that the person making the attack demonstrate that his own conduct
could not be regulated by a statute drawn with narrow specificity." The possible
harm to society in permitting some unprotected speech to go unpunished is
outweighed by the possibility that the protected speech of others may be deterred
and perceived grievances left to fester because of possible inhibitory effects of
overly broad statutes.

This rationale does not apply to penal statutes. Criminal statutes have
general in terrorem effect resulting from their very existence, and, if facial
challenge is allowed for this reason alone, the State may well be prevented from
enacting laws against socially harmful conduct. In the area of criminal law, the law
cannot take chances as in the area of free speech.

The overbreadth and vagueness doctrines then have special application

only to free speech cases. They are inapt for testing the validity of penal
statutes. As the U.S. Supreme Court put it, in an opinion by Chief Justice
Rehnquist, "we have not recognized an 'overbreadth' doctrine outside the limited
context of the First Amendment." In Broadrick v. Oklahoma, the Court ruled that
"claims of facial overbreadth have been entertained in cases involving statutes
which, by their terms, seek to regulate only spoken words" and, again, that
"overbreadth claims, if entertained at all, have been curtailed when invoked against
ordinary criminal laws that are sought to be applied to protected conduct." For this
reason, it has been held that "a facial challenge to a legislative act is the most
difficult challenge to mount successfully, since the challenger must establish that
no set of circumstances exists under which the Act would be valid." As for the
vagueness doctrine, it is said that a litigant may challenge a statute on its face only
if it is vague in all its possible applications. "A plaintiff who engages in some
conduct that is clearly proscribed cannot complain of the vagueness of the law as
applied to the conduct of others."

In sum, the doctrines of strict scrutiny, overbreadth, and vagueness are

analytical tools developed for testing "on their faces" statutes in free speech
cases or, as they are called in American law, First Amendment cases. They
cannot be made to do service when what is involved is a criminal statute. With
respect to such statute, the established rule is that "one to whom application of a
statute is constitutional will not be heard to attack the statute on the ground that
impliedly it might also be taken as applying to other persons or other situations in
which its application might be unconstitutional." As has been pointed out,
"vagueness challenges in the First Amendment context, like overbreadth challenges
typically produce facial invalidation, while statutes found vague as a matter of
 due process typically are invalidated [only] 'as applied' to a particular
defendant." Consequently, there is no basis for petitioner's claim that this Court
review the Anti-Plunder Law on its face and in its entirety.

Indeed, "on its face" invalidation of statutes results in striking them down
entirely on the ground that they might be applied to parties not before the Court
whose activities are constitutionally protected. It constitutes a departure from the
case and controversy requirement of the Constitution and permits decisions to be
made without concrete factual settings and in sterile abstract contexts. But, as the
U.S. Supreme Court pointed out in Younger v. Harris

[T]he task of analyzing a proposed statute, pinpointing its

deficiencies, and requiring correction of these deficiencies before
the statute is put into effect, is rarely if ever an appropriate task for
the judiciary. The combination of the relative remoteness of the
controversy, the impact on the legislative process of the relief
sought, and above all the speculative and amorphous nature of the
required line-by-line analysis of detailed statutes, . . . ordinarily
results in a kind of case that is wholly unsatisfactory for deciding
constitutional questions, whichever way they might be decided.

For these reasons, "on its face" invalidation of statutes has been described
as "manifestly strong medicine," to be employed "sparingly and only as a last
resort," and is generally disfavored. In determining the constitutionality of a statute,
therefore, its provisions which are alleged to have been violated in a case must be
examined in the light of the conduct with which the defendant is
charged.[56] (Underscoring supplied.)

The confusion apparently stems from the interlocking relation of

the overbreadth and vagueness doctrines as grounds for a facial or as-
applied challenge against a penal statute (under a claim of violation of due process
of law) or a speech regulation (under a claim of abridgement of the freedom of
speech and cognate rights).

To be sure, the doctrine of vagueness and the doctrine of overbreadth do not

operate on the same plane.
A statute or act suffers from the defect of vagueness when it lacks comprehensible
standards that men of common intelligence must necessarily guess at its meaning
and differ as to its application. It is repugnant to the Constitution in two respects:
(1) it violates due process for failure to accord persons, especially the parties
targeted by it, fair notice of the conduct to avoid; and (2) it leaves law enforcers
unbridled discretion in carrying out its provisions and becomes an arbitrary flexing
of the Government muscle.[57] The overbreadth doctrine, meanwhile, decrees that
a governmental purpose to control or prevent activities constitutionally subject to
state regulations may not be achieved by means which sweep unnecessarily
broadly and thereby invade the area of protected freedoms.[58]

As distinguished from the vagueness doctrine, the overbreadth doctrine assumes

that individuals will understand what a statute prohibits and will accordingly refrain
from that behavior, even though some of it is protected.[59]

A facial challenge is likewise different from an as-applied challenge.

Distinguished from an as-applied challenge which considers only extant facts

affecting real litigants, a facial invalidation is an examination of the entire law,
pinpointing its flaws and defects, not only on the basis of its actual operation to the
parties, but also on the assumption or prediction that its very existence may cause
others not before the court to refrain from constitutionally protected speech or
activities.[60]

Justice Mendoza accurately phrased the subtitle[61] in his concurring opinion that
the vagueness and overbreadth doctrines, as grounds for a facial challenge, are not
applicable to penal laws. A litigant cannot thus successfully mount
a facial challenge against a criminal statute on either vagueness or overbreadth
grounds.
The allowance of a facial challenge in free speech cases is justified by the aim to
avert the chilling effect on protected speech, the exercise of which should not at all
times be abridged.[62] As reflected earlier, this rationale is inapplicable to plain
penal statutes that generally bear an in terrorem effect in deterring socially harmful
conduct. In fact, the legislature may even forbid and penalize acts formerly
considered innocent and lawful, so long as it refrains from diminishing or
dissuading the exercise of constitutionally protected rights.[63]

The Court reiterated that there are critical limitations by which a criminal statute
may be challenged and underscored that an on-its-face invalidation of penal
statutes x x x may not be allowed.[64]

[T]he rule established in our jurisdiction is, only statutes on free speech,
religious freedom, and other fundamental rights may be facially
challenged. Under no case may ordinary penal statutes be subjected to a
facial challenge. The rationale is obvious. If a facial challenge to a penal
statute is permitted, the prosecution of crimes may be hampered. No
prosecution would be possible. A strong criticism against employing a
facial challenge in the case of penal statutes, if the same is allowed, would
effectively go against the grain of the doctrinal requirement of an existing
and concrete controversy before judicial power may be appropriately
exercised. A facial challenge against a penal statute is, at best, amorphous
and speculative. It would, essentially, force the court to consider third
parties who are not before it. As I have said in my opposition to the
allowance of a facial challenge to attack penal statutes, such a test will
impair the States ability to deal with crime. If warranted, there would be
nothing that can hinder an accused from defeating the States power to
prosecute on a mere showing that, as applied to third parties, the penal
statute is vague or overbroad, notwithstanding that the law is clear as
applied to him.[65] (Emphasis and underscoring supplied)
It is settled, on the other hand, that the application of the overbreadth doctrine is
limited to a facial kind of challenge and, owing to the given rationale of a facial
challenge, applicable only to free speech cases.

By its nature, the overbreadth doctrine has to necessarily apply a facial type of
invalidation in order to plot areas of protected speech, inevitably almost
always under situations not before the court, that are impermissibly swept by the
substantially overbroad regulation. Otherwise stated, a statute cannot be properly
analyzed for being substantially overbroad if the court confines itself only to facts
as applied to the litigants.

The most distinctive feature of the overbreadth technique is that it marks an

exception to some of the usual rules of constitutional litigation. Ordinarily,
a particular litigant claims that a statute is unconstitutional as applied to him
or her; if the litigant prevails, the courts carve away the unconstitutional
aspects of the law by invalidating its improper applications on a case to case
basis. Moreover, challengers to a law are not permitted to raise the rights of
third parties and can only assert their own interests. In overbreadth analysis,
those rules give way; challenges are permitted to raise the rights of third
parties; and the court invalidates the entire statute "on its face," not
merely "as applied for" so that the overbroad law becomes unenforceable
until a properly authorized court construes it more narrowly. The factor that
motivates courts to depart from the normal adjudicatory rules is the concern
with the "chilling;" deterrent effect of the overbroad statute on third parties
not courageous enough to bring suit. The Court assumes that an overbroad
laws "very existence may cause others not before the court to refrain from
constitutionally protected speech or expression." An overbreadth ruling is
designed to remove that deterrent effect on the speech of those third
parties.[66] (Emphasis in the original omitted; underscoring supplied.)

In restricting the overbreadth doctrine to free speech claims, the Court, in at least
two cases,[67] observed that the US Supreme Court has not recognized an
overbreadth doctrine outside the limited context of the First Amendment,[68] and
that claims of facial overbreadth have been entertained in cases involving statutes
which, by their terms, seek to regulate only spoken words.[69] In Virginia v.
Hicks,[70] it was held that rarely, if ever, will an overbreadth challenge succeed
against a law or regulation that is not specifically addressed to speech or speech-
related conduct. Attacks on overly broad statutes are justified by the transcendent
value to all society of constitutionally protected expression.[71]

Since a penal statute may only be assailed for being

vague as applied to petitioners, a limited
vagueness analysis of the definition of terrorism in
RA 9372 is legally impermissible absent an actual or
imminent charge against them

While Estrada did not apply the overbreadth doctrine, it did not preclude the
operation of the vagueness test on the Anti-Plunder Law as applied to the therein
petitioner, finding, however, that there was no basis to review the law on its face
and in its entirety.[72] It stressed that statutes found vague as a matter of due
process typically are invalidated only 'as applied' to a particular defendant.[73]

American jurisprudence[74] instructs that vagueness challenges that do not involve

the First Amendment must be examined in light of the specific facts of the case at
hand and not with regard to the statute's facial validity.

For more than 125 years, the US Supreme Court has evaluated defendants claims
that criminal statutes are unconstitutionally vague, developing a doctrine hailed as
among the most important guarantees of liberty under law.[75]

In this jurisdiction, the void-for-vagueness doctrine asserted under the due process
clause has been utilized in examining the constitutionality of criminal statutes. In
at least three cases,[76] the Court brought the doctrine into play in analyzing an
ordinance penalizing the non-payment of municipal tax on fishponds, the crime of
illegal recruitment punishable under Article 132(b) of the Labor Code, and the
vagrancy provision under Article 202 (2) of the Revised Penal Code. Notably, the
petitioners in these three cases, similar to those in the
two Romualdez and Estrada cases, were actually charged with the therein assailed
penal statute, unlike in the present case.

There is no merit in the claim that RA 9372

regulates speech so as to permit a facial
analysis of its validity

From the definition of the crime of terrorism in the earlier cited Section 3 of RA
9372, the following elements may be culled: (1) the offender commits an act
punishable under any of the cited provisions of the Revised Penal Code, or under
any of the enumerated special penal laws; (2) the commission of the predicate
crime sows and creates a condition of widespread and extraordinary fear and panic
among the populace; and (3) the offender is actuated by the desire to coerce the
government to give in to an unlawful demand.

In insisting on a facial challenge on the invocation that the law penalizes speech,
petitioners contend that the element of unlawful demand in the definition of
terrorism[77] must necessarily be transmitted through some form of expression
protected by the free speech clause.

The argument does not persuade. What the law seeks to penalize is conduct, not
speech.

Before a charge for terrorism may be filed under RA 9372, there must first be a
predicate crime actually committed to trigger the operation of the key qualifying
phrases in the other elements of the crime, including the coercion of the
government to accede to an unlawful demand. Given the presence of the first
element, any attempt at singling out or highlighting the communicative component
of the prohibition cannot recategorize the unprotected conduct into a protected
speech.

Petitioners notion on the transmission of message is entirely inaccurate, as it

unduly focuses on just one particle of an element of the crime. Almost every
commission of a crime entails some mincing of words on the part of the offender
like in declaring to launch overt criminal acts against a victim, in haggling on the
amount of ransom or conditions, or in negotiating a deceitful transaction. An
analogy in one U.S. case[78] illustrated that the fact that the prohibition on
discrimination in hiring on the basis of race will require an employer to take down
a sign reading White Applicants Only hardly means that the law should be analyzed
as one regulating speech rather than conduct.
Utterances not elemental but inevitably incidental to the doing of the criminal
conduct alter neither the intent of the law to punish socially harmful conduct nor
the essence of the whole act as conductand not speech. This holds true a fortiori in
the present case where the expression figures only as an inevitable incident of
making the element of coercion perceptible.

[I]t is true that the agreements and course of conduct here were as in most
instances brought about through speaking or writing. But it has
never been deemed an abridgement of freedom of speech or press to
make a course of conduct illegal merely because the conduct was, in part,
initiated, evidenced, or carried out by means of language, either spoken,
written, or printed. Such an expansive interpretation of the constitutional
guaranties of speech and press would make it practically impossible ever
to enforce laws against agreements in restraint of trade as well as many
other agreements and conspiracies deemed injurious to society.[79] (italics
and underscoring supplied)
Certain kinds of speech have been treated as unprotected conduct, because they
merely evidence a prohibited conduct.[80] Since speech is not involved here, the
Court cannot heed the call for a facial analysis.

IN FINE, Estrada and the other cited authorities engaged in a vagueness analysis of
the therein subject penal statute as applied to the therein petitioners inasmuch as
they were actually charged with the pertinent crimes challenged on vagueness
grounds. The Court in said cases, however, found no basis to review the assailed
penal statute on its face and in its entirety.

In Holder, on the other hand, the US Supreme Court allowed the pre-enforcement
review of a criminal statute, challenged on vagueness grounds, since the therein
plaintiffs faced a credible threat of prosecution and should not be required to
await and undergo a criminal prosecution as the sole means of seeking relief.

As earlier reflected, petitioners have established neither an actual charge nor a

credible threat of prosecution under RA 9372. Even a limited vagueness analysis of
the assailed definition of terrorism is thus legally impermissible. The Court reminds
litigants that judicial power neither contemplates speculative counseling on a
statutes future effect on hypothetical scenarios nor allows the courts to be used as
an extension of a failed legislative lobbying in Congress.
WHEREFORE, the petitions are DISMISSED.

SO ORDERED.