Constitutional Law 2
alien residents, corporations and partnerships
Case Digest
1. Ichong vs Hernandez
FACTS:
The Legislature passed R.A. 1180 (An Act to
Regulate the Retail Business). Its purpose was to
prevent persons who are not citizens of the Phil.
from having a stranglehold upon the people’s
economic life.
 a prohibition against aliens and against
associations, partnerships, or
corporations the capital of which are not
wholly owned by Filipinos, from
engaging directly or indirectly in the
retail trade
 aliens actually engaged in the retail
business on May 15, 1954 are allowed to
continue their business, unless their
licenses are forfeited in accordance with
law, until their death or voluntary
retirement. In case of juridical persons,
ten years after the approval of the Act or
until the expiration of term.
Citizens and juridical entities of the United States
were exempted from this Act.
 provision for the forfeiture of licenses to
engage in the retail business for violation
of the laws on nationalization, economic
control weights and measures and labor
and other laws relating to trade,
commerce and industry.
 provision against the establishment or
opening by aliens actually engaged in the
retail business of additional stores or
branches of retail business
Lao Ichong, in his own behalf and behalf of other
affected by the Act, filed an action to declare it
unconstitutional for the ff: reasons:
1. it denies to alien residents the equal
protection of the laws and deprives
them of their liberty and property
without due process
2. the subject of the Act is not expressed in
the title
3. the Act violates international and treaty
obligations
4. the provisions of the Act against the
transmission by aliens of their retail
business thru hereditary succession
ISSUE: WON the Act deprives the aliens of the
equal protection of the laws.
HELD: The law is a valid exercise of police power
and it does not deny the aliens the equal
protection of the laws. There are real and actual,
positive and fundamental differences between
an alien and a citizen, which fully justify the
legislative classification adopted.
RATIO:
The equal protection clause does not demand
absolute equality among residents. It merely
requires that all persons shall be treated alike,
under like circumstances and conditions both as
to privileges conferred and liabilities enforced.
The classification is actual, real and reasonable,
and all persons of one class are treated alike.
The difference in status between citizens and
aliens constitutes a basis for reasonable
classification in the exercise of police power.
Official statistics point out to the ever-increasing
dominance and control by alien of the retail
trade. It is this domination and control that is the
legislature’s target in the enactment of the Act.
The mere fact of alienage is the root cause of the
distinction between the alien and the national as
a trader. The alien is naturally lacking in that
spirit of loyalty and enthusiasm for the Phil.
where he temporarily stays and makes his living.
The alien owes no allegiance or loyalty to the
State, and the State cannot rely on him/her in
times of crisis or emergency.
While the citizen holds his life, his person and his
property subject to the needs of the country, the
alien may become the potential enemy of the
State.
The alien retailer has shown such utter disregard
for his customers and the people on whom he
makes his profit. Through the illegitimate use of
pernicious designs and practices, the alien now
enjoys a monopolistic control on the nation’s
economy endangering the national security in
times of crisis and emergency.
TIO VS. VIDEOGRAM REGULATORY BOARD [151
SCRA 208; G.R. No. L-75697; 18 Jun 1987]
Facts: The case is a petition filed by petitioner on
behalf of videogram operators adversely
affected by Presidential Decree No. 1987, “An
Act Creating the Videogram Regulatory Board"
with broad powers to regulate and supervise the
videogram industry.
A month after the promulgation of the said
Presidential Decree, the amended the National
Internal Revenue Code provided that:
"SEC. 134. Video Tapes. — There shall be
collected on each processed video-tape cassette,
ready for playback, regardless of length, an
annual tax of five pesos; Provided, That locally
manufactured or imported blank video tapes
shall be subject to sales tax."
"Section 10. Tax on Sale, Lease or Disposition of
Videograms. — Notwithstanding any provision
of law to the contrary, the province shall collect
a tax of thirty percent (30%) of the purchase
price or rental rate, as the case may be, for every
sale, lease or disposition of a videogram
containing a reproduction of any motion picture
or audiovisual program.”
“Fifty percent (50%) of the proceeds of the tax
collected shall accrue to the province, and the
other fifty percent (50%) shall accrue to the
municipality where the tax is collected;
PROVIDED, That in Metropolitan Manila, the tax
shall be shared equally by the City/Municipality
and the Metropolitan Manila Commission.”
The rationale behind the tax provision is to curb
the proliferation and unregulated circulation of
videograms including, among others,
videotapes, discs, cassettes or any technical
improvement or variation thereof, have greatly
prejudiced the operations of movie houses and
theaters. Such unregulated circulation have
caused a sharp decline in theatrical attendance
by at least forty percent (40%) and a tremendous
drop in the collection of sales, contractor's
specific, amusement and other taxes, thereby
resulting in substantial losses estimated at P450
Million annually in government revenues.
Videogram(s) establishments collectively earn
around P600 Million per annum from rentals,
sales and disposition of videograms, and these
earnings have not been subjected to tax, thereby
depriving the Government of approximately
P180 Million in taxes each year.
The unregulated activities of videogram
establishments have also affected the viability of
the movie industry.
Issues:
(1) Whether or not tax imposed by the DECREE is
a valid exercise of police power.
(2) Whether or nor the DECREE is constitutional.
Held: Taxation has been made the implement of
the state's police power. The levy of the 30% tax
is for a public purpose. It was imposed primarily
to answer the need for regulating the video
industry, particularly because of the rampant
film piracy, the flagrant violation of intellectual
property rights, and the proliferation of
pornographic video tapes. And while it was also
an objective of the DECREE to protect the movie
industry, the tax remains a valid imposition.
We find no clear violation of the Constitution
which would justify us in pronouncing
Presidential Decree No. 1987 as unconstitutional
and void. While the underlying objective of the
DECREE is to protect the moribund movie
industry, there is no question that public welfare
is at bottom of its enactment, considering "the
unfair competition posed by rampant film piracy;
the erosion of the moral fiber of the viewing
public brought about by the availability of
unclassified and unreviewed video tapes
containing pornographic films and films with
brutally violent sequences; and losses in
government revenues due to the drop in
theatrical attendance, not to mention the fact
that the activities of video establishments are
virtually untaxed since mere payment of Mayor's
permit and municipal license fees are required to
engage in business."
WHEREFORE, the instant Petition is hereby
dismissed. No costs.
Gaston v, Republic Planters Bank
Osmena v. Orbos
FACTS: October 10, 1984, President Ferdinand
Marcos issued P.D. 1956 creating a Special
Account in the General Fund, designated as the
Oil Price Stabilization Fund (OPSF). The OPSF was
designed to reimburse oil companies for cost
increases in crude oil and imported petroleum
products resulting from exchange rate
adjustments and from increases in the world
market prices of crude oil. Subsequently, the
OPSF was reclassified into a "trust liability
account,". President Corazon C. Aquino
promulgated E. O. 137 expanding the grounds
for reimbursement to oil companies for possible
cost under recovery incurred as a result of the
reduction of domestic prices of petroleum
products.
The petitioner argues inter alia that "the monies
collected pursuant to . . P.D. 1956, as amended,
must be treated as a 'SPECIAL FUND,' not as a
'trust account' or a 'trust fund,' and that "if a
special tax is collected for a specific purpose, the
revenue generated therefrom shall 'be treated
as a special fund' to be used only for the purpose
indicated, and not channeled to another
government objective." Petitioner further points
out that since "a 'special fund' consists of monies
collected through the taxing power of a State,
such amounts belong to the State, although the
use thereof is limited to the special
purpose/objective for which it was created."
ISSUE: Whether or not the funds collected under
PD 1956 is an exercise of the power of taxation
RULING: The levy is primarily in the exercise of
the police power of the State. While the funds
collected may be referred to as taxes, they are
exacted in the exercise of the police power of the
State.
What petitioner would wish is the fixing of some
definite, quantitative restriction, or "a specific
limit on how much to tax." The Court is cited to
this requirement by the petitioner on the
premise that what is involved here is the power
of taxation; but as already discussed, this is not
the case. What is here involved is not so much
the power of taxation as police power. Although
the provision authorizing the ERB to impose
additional amounts could be construed to refer
to the power of taxation, it cannot be overlooked
that the overriding consideration is to enable the
delegate to act with expediency in carrying out
the objectives of the law which are embraced by
the police power of the State.
It would seem that from the above-quoted
ruling, the petition for prohibition should fail.
Association of Small Landowners in the
Philippines vs. Honorable Secretary of Agrarian
Reform
G.R. No. 78742 July 14, 1989
Petitioner: Association of Small Landowners in
the Philippines
Respondent: Honorable Secretary of Agrarian
Reform
Facts: These are consolidated cases which
involve common legal, including serious
challenges to the constitutionality of the several
measures such as P.D. No. 27, E.O. No. 228,
Presidential Proclamation No. 131, E.O. No. 229,
and R.A. No. 6657.
G.R. No. 79777
The petitioners are questioning P.D. No. 27 and
E.O. Nos. 228 and 229 on grounds inter alia of
separation of powers, due process, equal
protection and the constitutional limitation that
no private property shall be taken for public use
without just compensation. G.R. No. 79310
G.R. No. 79310
This petition seeks to prohibit the
implementation of Proc. No. 131 and E.O. No.
229. They contend that taking must be
simultaneous with payment of just
compensation as it is traditionally understood,
i.e., with money and in full, but no such payment
is contemplated in Section 5 of the E.O. No. 229.
G.R. No. 79744
The petitioner argues that E.O. Nos. 228 and 229
are violative of the constitutional provision that
no private property shall be taken without due
process or just compensation.
G.R. No. 78742
Petitioners claim they cannot eject their tenants
and so are unable to enjoy their right of
retention because the Department of Agrarian
Reform has so far not issued the implementing
rules required under the above-quoted decree.
Issue: Whether agrarian reform is an exercise of
police power or eminent domain
Ruling: There are traditional distinctions
between the police power and the power of
eminent domain that logically preclude the
application of both powers at the same time on
the same subject. Property condemned under
the police power is noxious or intended for a
noxious purpose, such as a building on the verge
of collapse, which should be demolished for the
public safety, or obscene materials, which should
be destroyed in the interest of public morals. The
confiscation of such property is not
compensable, unlike the taking of property
under the power of expropriation, which
requires the payment of just compensation to
the owner.
The cases before us present no knotty
complication insofar as the question of
compensable taking is concerned. To the extent
that the measures under challenge merely
prescribe retention limits for landowners, there
is an exercise of the police power for the
regulation of private property in accordance with
the Constitution. But where, to carry out such
regulation, it becomes necessary to deprive such
owners of whatever lands they may own in
excess of the maximum area allowed, there is
definitely a taking under the power of eminent
domain for which payment of just compensation
is imperative. The taking contemplated is not a
mere limitation of the use of the land. What is
required is the surrender of the title to and the
physical possession of the said excess and all
beneficial rights accruing to the owner in favor of
the farmer-beneficiary. This is definitely an
exercise not of the police power but of the power
of eminent domain
Ortigas and Co. v. CA
Petitioner Ortigas sold to the Hermosos a parcel
of land in Greenhills Subdivision. The contract of
sale provided that the lot will be used for single-
family residential building only and this was
annotated at the back of the title of the lot. In
1981, the Metropolitan Commission enacted
MMC Ordinance No. 81-01 reclassifying as a
commercial zone the stretch of Ortigas Avenue
from Roosevelt Street to Madison Street.
Subsequently in 1984, private respondent
Mathay III leased the lot from Hermoso and
constructed a commercial building for Greenhills
Autohaus, Inc., a car sales company. Petitioner
􀀺led Civil Case No. 4 seeking to enjoin the
building by respondent ofstructure on the lot
and sought the demolition of the commercial
structure for having violated the terms and
conditions of the Deed of Sale. The trial court
issued the injunctive order ruling that the
ordinance should be given prospective
application. On certiorari, however, the CA
granted the petition, ruling that the trial court
gravely abused its discretion in refusing to treat
MMC Ordinance No. 81-01 as applicable to Civil
Case No. 64931.
CAheld that the ordinance effectively nulli􀀺ed
the restrictions allowing only residential use of
the property in question. In this petition,
petitioner claims that even with the zoning
ordinance, the seller and buyer of the re-
classi􀀺ed lot can voluntarily agree to an exclusive
residential use thereof; and that respondent
Mathay III as a mere lessee of the lot in question,
is a total stranger to the deed of sale and is thus
barred from questioning the condition of said
deed. The Supreme Court denied the petition,
ruling: that while as a rule, laws are to be
construed as having only prospective operation,
one exception is a law which involves police
power, which could be given retroactive effect
and may reasonably impair vested rights or
contracts; that the MMC Ordinance No. 81-01
has been held to be a legitimate police power
measure to which the non-impairment of
contracts or vested rights clauses will have to
yield; and that Mathay III in this case is clearly a
real party in interest because
he holds the lot pursuant to a valid lease and it is
his building of a commercial structure
which petitioner seeks to enjoin.
St. Luke’s Medical Center Employees
Association-AFW v. National Labor Relations
Commission
Facts: Petitioner was hired as XRAY Technician in
the Radiology Department of St. Lukes on
October 1984. On April 1992 Congress passed
and enacted Republic Act No. 7431 known as the
"Radiologic Technology Act of 1992." Said law
requires that no person shall practice or offer to
practice as a radiology and/or x-ray technologist
in the Philippines without having obtained the
proper certicate of registration from the Board
of Radiologic Technology. SLMC issued a notice
to all practioners of radio technology to comply
with the requirement by Dec. 31, 1995. Maribel
did not comply with the requirement, thus on
May 1997 SLMC gave notice to Maribel once
again to remind her of the requirement. On
November 1998, theDirector of radiology issued
a notice to Maribel that slmc has approved her
retirement in lieu of separation pay.
Maribel filed a complaint in the NLRC against
SLMC for illegal dismissal and non-payment of
salaries, allowance and other monetary benefits.
the Labor Arbiter came out with a Decision
ordering private respondent SLMC to pay
petitioner Maribel S. Santos the amount of One
Hundred Fifteen Thousand Five Hundred Pesos
(P115,500.00) representing her
separation pay. All other claims of petitioner
were dismissed for lack of merit.
ISSUE: Ultimately, the issue raised by the parties
boils down to whether petitioner Santos was
illegally dismissed by private respondent SLMC
on the basis of her inability to secure a certificate
of registration from the Board of Radiologic
Technology.The requirement for a certi􀀺cate of
registration is set forth under R.A. No. 7431
Held: petitioner Santos' failure to comply with
the certi􀀺cation requirement did not constitute
just cause for termination as it violated her
constitutional right to security of tenure. This
contention is untenable. While the right of
workers to security of tenure is guaranteed by
the Constitution, its exercise may be reasonably
regulated pursuant to the police power of the
State to safeguard health, morals, peace,
education, order, safety, and the general welfare
of the people. Consequently, persons who desire
to engage in the learned professions requiring
scientific or technical knowledge may be
required to take an examination as a
prerequisite to engaging in their chosen careers.
9 The most concrete example of this would be in
the Field of medicine, the practice of which in all
its branches has been closely regulated by the
State. It has long been recognized that the
regulation of this 􀀺eld is a reasonable method
of protecting the health and safety of the public
to protect the public from the potentially deadly
effects of incompetence and ignorance among
those who would practice medicine.
PRC vs. De Guzman, G. R. No. 144681, June 21,
2004
Constitutional Law: Police Power
Facts: The respondents are all graduates of the
Fatima College of Medicine, Valenzuela City,
Metro Manila. They passed the Physician
Licensure Examination conducted in February
1993 by the Board of Medicine (Board).
Petitioner Professional Regulation Commission
(PRC) then released their names as successful
examinees in the medical licensure examination.
Shortly thereafter, the Board observed that the
grades of the seventy-nine successful
examinees from Fatima College in the two most
difficult subjects in the medical licensure exam,
Biochemistry (Bio-Chem) and Obstetrics and
Gynecology (OB-Gyne), were unusually and
exceptionally high. Eleven Fatima examinees
scored 100% in Bio-Chem and ten got 100% in
OB-Gyne, another eleven got 99% in Bio-Chem,
and twenty-one scored 99% in OB-Gyne. The
Board also observed that many of those who
passed from Fatima got marks of 95% or better
in both subjects, and no one got a mark lower
than 90%. A comparison of the performances of
the candidates from other schools was made.
The Board observed that strangely, the unusually
high ratings were true only for Fatima College
examinees. It was a record-breaking
phenomenon in the history of the Physician
Licensure Examination.
For its part, the NBI found that “the
questionable passing rate of Fatima examinees
in the [1993] Physician Examination leads to the
conclusion that the Fatima examinees gained
early access to the test questions.”
The Board issued Resolution No. 26, dated July
21, 1993, charging respondents with
"immorality, dishonest conduct, fraud, and
deceit" in connection with the Bio-Chem and Ob-
Gyne examinations. It recommended that the
test results of the Fatima examinees be
nullified. Trial court’s judgment is rendered
ordering the respondents to allow the
petitioners and intervenors to take the
physician’s oath and to register them as
physicians without prejudice to any
administrative disciplinary action which may be
taken against any of the petitioners for such
causes and in the manner provided by law and
consistent with the requirements of the
Constitution as any other professionals.
Issue: Whether or not the act pursuant to R.A.
2382 (prescribes that a person who aspires to
practice medicine in the Philippines, must have
“satisfactorily passed the corresponding Board
Examination) known as The Medical Act of 1959
a valid exercise of police power.
Held:
Yes. It is true that this Court has upheld the
constitutional right of every citizen to select a
profession or course of study subject to a fair,
reasonable, and equitable admission and
academic requirements. But like all rights and
freedoms guaranteed by the Charter, their
exercise may be so regulated pursuant to the
police power of the State to safeguard health,
morals, peace, education, order, safety, and
general welfare of the people. Thus, persons
who desire to engage in the learned professions
requiring scientific or technical knowledge may
be required to take an examination as a
prerequisite to engaging in their chosen careers.
This regulation takes particular pertinence in the
field of medicine, to protect the public from the
potentially deadly effects of incompetence and
ignorance among those who would practice
medicine.
*satisfactorily- defined as “sufficient to meet a
condition or obligation” or “capable of dispelling
doubt or ignorance”
It must be stressed, nevertheless, that the
power to regulate the exercise of a profession
or pursuit of an occupation cannot be exercised
by the State or its agents in an arbitrary,
despotic, or oppressive manner. A political body
that regulates the exercise of a particular
privilege has the authority to both forbid and
grant such privilege in accordance with certain
conditions. Such conditions may not, however,
require giving up ones constitutional rights as a
condition to acquiring the license.
FRANCISCO I. CHAVEZ, petitioner
vs.
HON. ALBERTO G. ROMULO, IN HIS CAPACITY
AS EXECUTIVE SECRETARY; DIRECTOR GENERAL
HERMOGENES E. EBDANE, JR., IN HIS CAPACITY
AS THE CHIEF OF THE PNP, et al., respondents
G.R. No. 157036. June 9, 2004
Facts:
Petition for prohibition and injunction seeking
to enjoin the implementation of the
“Guidelines in the Implementation of the Ban
on the Carrying of Firearms Outside of
Residence” (Guidelines) issued by respondent
Hermogenes E. Ebdane, Jr., Chief of the
Philippine National Police (PNP).
Petitioner Francisco I. Chavez, a licensed gun
owner to whom a PTCFOR has been issued,
requested the DILG to reconsider the
implementation of the assailed Guidelines.
However, his request was denied. Thus, he filed
the present petition impleading public
respondents Ebdane, as Chief of PNP; Alberto G.
Romulo, as Executive Secretary; and Gerry L.
Barias, as Chief of the PNP-Firearms and
Explosives Division.
Issues:
1. whether the issuance of the assailed
Guidelines is a valid exercise of police
power?;
1. Police Power
At any rate, assuming that petitioner’s
PTCFOR constitutes a property right
protected by the Constitution, the same
cannot be considered as absolute as to be
placed beyond the reach of the State’s
police power. All property in the state is
held subject to its general regulations,
necessary to the common good and
general welfare.
The Court laid down the test to determine
the validity of a police measure, thus:
(1) The interests of the public generally, as
distinguished from those of a particular
class, require the exercise of the police
power; and
(2) The means employed are reasonably
necessary for the accomplishment of the
purpose and not unduly oppressive upon
individuals.
It is apparent from the assailed Guidelines
that the basis for its issuance was the need
for peace and order in the society. Owing
to the proliferation of crimes, particularly
those committed by the New People’s Army
(NPA), which tends to disturb the peace of
the community, President Arroyo deemed it
best to impose a nationwide gun ban.
Undeniably, the motivating factor in the
issuance of the assailed Guidelines is the
interest of the public in general.
The only question that can then arise is
whether the means employed are
appropriate and reasonably necessary for
the accomplishment of the purpose and
are not unduly oppressive. In the instant
case, the assailed Guidelines do not
entirely prohibit possession of firearms.
What they proscribe is merely the
carrying of firearms outside of residence.
However, those who wish to carry their
firearms outside of their residences may re-
apply for a new PTCFOR. This is a
reasonable regulation. If the carrying of
firearms is regulated, necessarily, crime
incidents will be curtailed. Criminals carry
their weapon to hunt for their victims; they
do not wait in the comfort of their homes.
With the revocation of all PTCFOR, it
would be difficult for criminals to roam
around with their guns. On the other hand, it
 would be easier for the PNP to apprehend
them.
SOUTHEAST MINDANAO
GOLDMINING CORP. vs. BALITE
PORTALMINING COOP., et al.[G.R. No.
135190, April 3, 2002]
FACTS:
On March 10, 1988, Marcopper Mining
Corporation (Marcopper) was granted
Exploration Permit No. 133 (EP No. 133) over
4,491 hectares of land, which included the
Diwalwal area. On June 27, 2991, Congress
enacted Republic Act No. 7076, or the People's
Small-Scale Mining Act. The law established a
People's Small-Scale Mining Program to
beimplemented by the Secretary of the DENR
and created the Provincial Mining Regulatory
Board (PMRB) under the DENR Secretary's
direct supervision and control.
Subsequently, a petition for the
cancellation of EP No. 133 and the admission
of a Mineral Production Sharing
Arrangement (MPSA) proposal over
Diwalwal was filed before the DENR
Regional Executive Director, docketed as
RED Mines Case.
On February 16, 1994, while the
RED Mines case was pending, Marcopper
assigned its EP No. 133 to petitioner
Southeast Mindanao Gold Mining
Corporation (SEM), which in turn applied for
an integrated MPSA over the land covered by
the permit. In due time, the Mines and
Geosciences Bureau Regional Office No. XI
in Davao City (MGB-XI) accepted and
registered the integrated MPSA application
of petitioner and thereafter, several MAC
cases were filed.
On March 3, 1995, Republic Act
No. 7942, the Philippine Mining Act, was
enacted. Pursuant to this statute, the MAC
cases were referred to a Regional Panel of
Arbitrators (RPA) tasked to resolve disputes
involving conflicting mining rights. The RPA
subsequently took cognizance of the RED
Mines case, which was consolidated with the
MAC cases.
On June 24, 1997, the DENR
Secretary issued Memorandum Order No. 97-
03 which provided that the DENR shall study
thoroughly and exhaustively the option of
diret state utilization of the mineral resources
in the Diwalwal Gold-Rush Area.
On July 16, 1997, petitioner filed a
special civil action for certiorari, prohibition
and mandamus before the Court of Appeals
against PMRB-Davao, the DENR Secretary
and Balite Communal Portal Mining
Cooperative (BCPMC). It prayed for the
nullification of the above-quoted
Memorandum Order No. 97-03 on the ground
that the "direct state utilization" espoused
therein would effectively impair its vested
rights under EP No. 133; and that the
memorandum order arbitrarily imposed the
unwarranted condition that certain studies be
conducted before mining and environmental
laws are enforced by the DENR.
ISSUE:
Whether or not the "direct state
utilization scheme" espoused in MO 97-03
divested petitioner of its vested right to the
gold rush area under its EP No. 133.
HELD:
 No. MO 97-03 did not conclusively
adopt "direct state utilization" as a policy in
resolving the Diwalwal dispute. The terms of
the memorandum clearly indicate that what
was directed hereunder was merely a study of
this option and nothing else. Contrary to
petitioner's contention, it did not grant any
management/operating or profit-sharing
agreement to small-scale miners or to any
party, for that matter, but simply instructed
the DENR officials concerned to undertake
studies to determine its feasibility. As to the
alleged "vested rights" claimed by petitioner,
it is well to note that the same is invariably
based on EP No. 133, whose validity is still
being disputed in the Consolidated Mines
cases. A reading of the appealed MAB
decision reveals that the continued efficacy of
EP No. 133 is one of the issues raised in said
cases, with respondents therein asserting that
Marcopper cannot legally assign the permit
which purportedly had expired. In other
words, whether or not petitioner actually has
a vested right over Diwalwal under EP No.
133 is still an indefinite and unsettled matter.
And until a positive pronouncement is made
by the appellate court in the Consolidated
Mines cases, EP No. 133 cannot be deemed
as a source of any conclusive rights that can
be impaired by the issuance of MO 97-03. It
must likewise be pointed out that under no
circumstances may petitioner's rights under
EP No. 133 be regarded as total and absolute.
As correctly held by the Court of Appeals EP
No.133 merely evidences a privilege granted
by the State, which may be amended,
modified or rescinded when the national
interest so requires. This is necessarily so
since the exploration, development and
utilization of the country's natural mineral
resources are matters impressed with great
public interest. Like timber permits, mining
exploration permits do not vest in the grantee
any permanent or irrevocable right within the
purview of the non-impairment of contract
and due process clauses of the Constitution,
since the State, under its all-encompassing
police power, may alter, modify or amend the
same, in accordance with the demands of the
general welfare. Additionally, there can be no
valid opposition raised against a mere study
of an alternative which the State, through the
DENR, is authorized to undertake in the first
place. Worth noting is Article XII, Section 2,
of the 1987 Constitution and Section 4,
Chapter II of the Philippine Mining Act of
1995. Thus, the State may pursue the
constitutional policy of full control and
supervision of the exploration, development
and utilization of the country's natural
mineral resources, by either directly
undertaking the same or by entering into
agreements with qualified entities. The
DENR Secretary acted within his authority
when he ordered a study of the first option,
which may be undertaken consistently in
accordance with the constitutional policy
enunciated above. Obviously, the State may
not be precluded from considering a direct
takeover of the mines, if it is the only
plausible remedy in sight to the gnawing
complexities generated by the gold rush
MMDA vs. Garin, GR No. 130239, April
15, 2005
FACTS: The issue arose from an incident
involving the respondent Dante O. Garin, a
lawyer, who was issued a traffic violation
receipt (TVR) by MMDA and his driver's
license confiscated for parking illegally
along Gandara Street, Binondo, Manila, on
August 1995. Shortly before the expiration
of the TVR's validity, the respondent
addressed a letter to then MMDA Chairman
Prospero Oreta requesting the return of his
driver's license, and expressing his
preference for his case to be filed in court.
Receiving no immediate reply, Garin filed
the original complaint with application for
preliminary injunction, contending that, in
the absence of any implementing rules and
regulations, Sec. 5(f) of Rep. Act No. 7924
grants the MMDA unbridled discretion to
deprive erring motorists of their licenses,
preempting a judicial determination of the
validity of the deprivation, thereby violating
the due process clause of the Constitution.
The respondent further contended that the
provision violates the constitutional
prohibition against undue delegation of
legislative authority, allowing as it does the
MMDA to fix and impose unspecified —
and therefore unlimited — fines and other
penalties on erring motorists. The trial court
rendered the assailed decision in favor of
herein respondent. ISSUE: Whether or not
MMDA, through Sec. 5(f) of Rep. Act No.
7924 could validly exercise police power.
HELD: NO. Unlike the legislative bodies of
local government units, there is no provision
in R.A. 7924 that empowers the Metro
Manila Development Authority (MMDA) or
its Council to “enact ordinances, approve
resolutions and appropriate funds for the
general welfare” of the inhabitants of Metro
Manila. Thus, MMDA may not order the
opening of Neptune St. in the Bel-Air
Subdivision to public traffic, as it does not
possess delegated police power . While Sec.
5(f), R.A. 7924, does not grant the MMDA
the power to confiscate and suspend or
revoke drivers’ licenses without need of any
other legislative enactment, the same law
vests the MMDA with the duty to enforce
existing traffic rules and regulations. Thus,
where there is a traffic law or regulation
validly enacted by the legislature or those
agencies to whom legislative power has
been delegated (the City of Manila, in this
case), the MMDA is not precluded — and in
fact is duty-bound — to confiscate and
suspend or revoke drivers’ licenses in the
exercise of its mandate of transport and
traffic management, as well as the
administration and implementation of all
traffic enforcement operations, traffic
engineering services and traffic education
programs.
Carlos Superdrug Corporation vs.
DSWD, et al., GR No. 166494, (June 29,
2007)
FACTS: Petitioners are domestic
corporations and proprietors operating
drugstores in the Philippines. Meanwhile,
AO 171 or the Policies and Guidelines to
Implement Relevant Provisions of Republic
Act 9257, otherwise known as the
“Expanded Senior Citizens Act of 2003”
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. DOH issued Administrative Order
No 177 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 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.
ISSUE: Whether or not RA 9257 is
unconstitutional? HELD: NO. The law is a
legitimate exercise of police power which,
similar to the power of eminent domain, has
general welfare for its object. 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.
SURIGAO DEL NORTE ELECTRIC
COOPERATIVE, INC. (SURNECO),
Petitioner,v. ENERGY REGULATORY
COMMISSION, Respondent.
FACTS:
The Association of Mindanao Rural Electric
Cooperatives, as representative of SURNECO
and of the other 33 rural electric cooperatives in
Mindanao, filed a petition before the then
Energy Regulatory Board (ERB) for the
approval of the formula for automatic cost
adjustment and adoption of the National Power
Corporation (NPC) restructured rate adjustment
to comply with Republic Act (R.A.) No. 7832.
The ERB granted SURNECO and other rural
electric cooperatives provisional authority to use
and implement the Purchased Power Adjustment
(PPA). In the meantime, the passage of R.A. No.
9136led to the creation of the Energy Regulatory
Commission (ERC), replacing and succeeding
the ERB. All pending cases before the ERB
were transferred to the ERC. Thereafter, the
ERC continued its review, verification, and
confirmation of the electric cooperatives
implementation of the PPA formula based on the
available data and information submitted by the
latter.
The ERC issued its assailed Order,
mandating that the discounts earned by
SURNECO from its power supplier should
be deducted from the computation of the
power cost. SURNECO filed a motion for
reconsideration, but it was denied.
Aggrieved, SURNECO filed a petition for
review to the CA but the same was denied.
Upon denial of the motion for
reconsideration, SURNECO files the instant
petition.
ISSUE: Whether or not the CA erred in
affirming the ERC Decision
HELD: No. CA Decision Affirmed
POLITICAL LAW- The State, in its
exercise of police power, can regulate the
rates imposed by a public utility such as
SURNECO

The ERC was merely implementing the
system loss caps in R.A. No. 7832 when it
reviewed and confirmed SURNECOS PPA
charges, and ordered the refund of the
amount collected in excess of the allowable
system loss caps through its continued use of
the multiplier scheme. The Commission
deemed it appropriate to clarify its PPA
confirmation process particularly on the
treatment of the Prompt Payment Discount
(PPD) granted to distribution utilities (DUs)
by their power suppliers. The foregoing
clarification was intended to ensure that only
the actual costs of purchased power are
recovered by the DUs.
In directing SURNECO to refund its over-
recoveries based on PPA policies, which
only ensured that the PPA mechanism
remains a purely cost-recovery mechanism
and not a revenue-generating scheme for the
electric cooperatives, the ERC merely
exercised its authority to regulate and
approve the rates imposed by the electric
cooperatives on their consumers. The ERC
simply performed its mandate to protect the
public interest imbued in those rates.
As held in the case of Republic v. Manila
Electric Company, the regulation of rates to
be charged by public utilities is founded
upon the police powers of the State and
statutes prescribing rules for the control and
regulation of public utilities are a valid
exercise thereof. When private property is
used for a public purpose and is affected
with public interest, it ceases to be juris
privati only and becomes subject to
regulation. The regulation is to promote the
common good. Submission to regulation
may be withdrawn by the owner by
discontinuing use; but as long as use of the
property is continued, the same is subject to
public regulation.
Likewise, SURNECO cannot validly assert
that the caps set by R.A. No. 7832 are
arbitrary, or that they violate the non-
impairment clause of the Constitution for
allegedly traversing the loan agreement
between NEA and ADB. Striking down a
legislative enactment, or any of its
provisions, can be done only by way of a
direct action, not through a collateral attack,
and more so, not for the first time on appeal
in order to avoid compliance. The challenge
to the laws constitutionality should also be
raised at the earliest opportunity.
Even assuming, merely for arguments sake,
that the ERC issuances violated the NEA
and ADB covenant, the contract had to yield
to the greater authority of the States exercise
of police power. It has long been settled that
police power legislation, adopted by the
State to promote the health, morals, peace,
education, good order, safety, and general
welfare of the people prevail not only over
future contracts but even over those already
in existence, for all private contracts must
yield to the superior and legitimate measures
taken by the State to promote public welfare.
CAMARINES NORTE ELECTRIC COOPERATIVE,
INC. vs. HON. RUBEN D. TORRES
Neither can police power be invoked to clothe
with validity the assailed Memorandum Order
No. 409. Police power is the power inherent in a
government to enact laws, within constitutional
limits, to promote the order, safety, health,
morals, and general welfare of society. It is
lodged primarily in the legislature. By virtue of a
valid delegation of legislative power, it may also
be exercised by the President and administrative
boards, as well as the lawmaking bodies on all
municipal levels, including the barangay.
Delegation of legislative powers to the President
is permitted in Sections 23(2) and 28(2) of Article
VI of the Constitution. The pertinent laws on
cooperatives, namely, R.A. No. 6938, R.A. No.
6939, and P.D. No. 269 as amended by P.D. No.
1645 do not provide for the President or any
other administrative body to take over the
internal management of a cooperative. We do
not then hesitate to rule that Memorandum
Order No. 409 has no constitutional and
statutory basis. It violates the basic underlying
principle enshrined in Article 4(2) of R.A. No.
6938 that cooperatives are democratic
organizations and that their affairs shall be
administered by persons elected or appointed in
a manner agreed upon by the members.
FACTS: Petitioner CANORECO is an electric
cooperative organized under the provisions of
P.D. No. 269, otherwise known as the National
Electrification Administration Decree, as
amended by P.D. No. 1645. On 3 December
1996, the President of the Philippines issued
Memorandum Order No. 409 constituting an Ad
Hoc Committee to temporarily take over and
manage the affairs of CANORECO. It reads as
follows: To efficiently and effectively address the
worsening problem of the Camarines Norte
Electric Cooperative, Inc. (CANORECO) and in
order not to prejudice and endanger the interest
of the people who rely on the said cooperative
for their supply of electricity, an AD HOC
Committee is hereby constituted to take over
and manage the affairs of CANORECO until such
time as a general membership meeting can be
called to decide the serious issues affecting the
said cooperative and normalcy in operations is
restored. Further, if and when warranted, the
present Board of Directors may be called upon
by the Committee for advisory services without
prejudice to the receipt of their per diems as may
be authorized by existing rules and regulations.
On 11 December 1996, the petitioners filed this
petition wherein they claim that the president
has no power to take over and manage or to
order the take-over or management of
CANORECO.
ISSUE: Whether Memorandum Order No. 409 is
constitutional. (NO)
RULING: Neither can police power be invoked to
clothe with validity the assailed Memorandum
Order No. 409. Police power is the power
inherent in a government to enact laws, within
constitutional limits, to promote the order,
safety, health, morals, and general welfare of
society. It is lodged primarily in the legislature.
By virtue of a valid delegation of legislative
power, it may also be exercised by the President
and administrative boards, as well as the
lawmaking bodies on all municipal levels,
including the barangay. Delegation of legislative
powers to the President is permitted in Sections
23(2) and 28(2) of Article VI of the Constitution.
The pertinent laws on cooperatives, namely, R.A.
No. 6938, R.A. No. 6939, and P.D. No. 269 as
amended by P.D. No. 1645 do not provide for the
President or any other administrative body to
take over the internal management of a
cooperative. Article 98 of R.A. 6938 instead
provides: Art. 98.Regulation of Public Service
Cooperatives. — (1) The internal affairs of public
service cooperatives such as the rights and
privileges of members, the rules and procedures
for meetings of the general assembly, board of
directors and committees; for the election and
qualification of officers, directors, and
committee members; allocation and distribution
of surpluses, and all other matters relating to
their internal affairs shall be governed by this
Code. We do not then hesitate to rule that
Memorandum Order No. 409 has no
constitutional and statutory basis. It violates the
basic underlying principle enshrined in Article
4(2) of R.A. No. 6938 that cooperatives are
democratic organizations and that their affairs
shall be administered by persons elected or
appointed in a manner agreed upon by the
members. Likewise, it runs counter to the policy
set forth in Section 1 of R.A. No. 6939 that the
State shall, except as provided in said Act,
maintain a policy of non-interference in the
management and operation of cooperatives